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EXHIBIT 2.1
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 8, 2000
BETWEEN
MCI WORLDCOM, INC.
and
SPRINT CORPORATION
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TABLE OF CONTENTS
ARTICLE I THE MERGER
1.1 The Merger.......................................................... 1-1
1.2 Closing............................................................. 1-1
1.3 Effective Time...................................................... 1-2
1.4 Effects of the Merger............................................... 1-2
1.5 Articles of Incorporation........................................... 1-2
1.6 Bylaws.............................................................. 1-2
1.7 Certain Surviving Corporation Matters............................... 1-2
1.8 Effect on Capital Stock............................................. 1-2
ARTICLE II EXCHANGE OF CERTIFICATES
2.1 Exchange Agent...................................................... 1-6
2.2 Exchange Procedures................................................. 1-6
2.3 Distributions with Respect to Unexchanged Shares.................... 1-7
2.4 No Further Ownership Rights in Sprint Capital Stock................. 1-7
2.5 No Fractional Shares of MCI WorldCom Capital Stock.................. 1-7
2.6 No Liability........................................................ 1-7
2.7 Lost Certificates................................................... 1-8
2.8 Withholding Rights.................................................. 1-8
2.9 Stock Transfer Books................................................ 1-8
ARTICLE III REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Sprint............................ 1-8
(a) Organization, Standing and Power................................ 1-8
(b) Capital Structure............................................... 1-9
(c) Authority; No Conflicts......................................... 1-10
(d) Reports and Financial Statements................................ 1-11
(e) Information Supplied............................................ 1-11
(f) Litigation...................................................... 1-11
(g) Compliance with Applicable Laws................................. 1-12
(h) State Takeover Statutes; Approvals.............................. 1-12
(i) Intellectual Property; Year 2000................................ 1-12
(j) Absence of Certain Changes or Events............................ 1-13
(k) Vote Required................................................... 1-13
(l) Sprint Rights Agreement......................................... 1-13
(m) Brokers or Finders.............................................. 1-13
(n) Opinion of Financial Advisor.................................... 1-13
(o) Absence of Changes in Sprint's Benefit Plans.................... 1-14
(p) ERISA Compliance; No Parachute Payments......................... 1-14
(q) Taxes........................................................... 1-15
3.2 Representations and Warranties of MCI WorldCom...................... 1-16
(a) Organization, Standing and Power................................ 1-16
(b) Capital Structure............................................... 1-16
(c) Authority; No Conflicts......................................... 1-17
(d) Reports and Financial Statements................................ 1-17
(e) Information Supplied............................................ 1-18
(f) Litigation...................................................... 1-18
(g) Compliance with Applicable Laws................................. 1-18
i
(h) State Takeover Statutes; Approvals....................................................... 1-18
(i) Intellectual Property; Year 2000......................................................... 1-19
(j) Absence of Certain Changes or Events..................................................... 1-19
(k) Vote Required............................................................................ 1-20
(l) MCI WorldCom Rights Agreement............................................................ 1-20
(m) Brokers or Finders....................................................................... 1-20
(n) Opinion of Financial Advisor............................................................. 1-20
(o) ERISA Compliance......................................................................... 1-20
(p) Taxes.................................................................................... 1-21
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of Sprint.......................................................................... 1-22
(a) Ordinary Course.......................................................................... 1-22
(b) Dividends; Changes in Share Capital...................................................... 1-22
(c) Issuance of Securities................................................................... 1-22
(d) Governing Documents...................................................................... 1-23
(e) No Acquisitions.......................................................................... 1-23
(f) No Dispositions.......................................................................... 1-23
(g) Indebtedness; Investments................................................................ 1-23
(h) New Line of Business; Capital Expenditures............................................... 1-24
(i) Tax-Free Qualification................................................................... 1-24
(j) Other Actions............................................................................ 1-24
(k) Accounting Methods....................................................................... 1-24
(l) Representations and Warranties........................................................... 1-24
(m) Authorization of the Foregoing........................................................... 1-24
4.2 Covenants of MCI WorldCom.................................................................... 1-24
(a) Ordinary Course.......................................................................... 1-24
(b) Dividends; Changes in Share Capital...................................................... 1-24
(c) No Acquisitions.......................................................................... 1-25
(d) No Dispositions.......................................................................... 1-25
(e) Tax-Free Qualification................................................................... 1-25
(f) Other Actions............................................................................ 1-25
(g) Representations and Warranties........................................................... 1-25
(h) Authorization of the Foregoing........................................................... 1-25
4.3 Control of Other Party's Business............................................................ 1-25
4.4 FT/DT Arrangements........................................................................... 1-25
ARTICLE V ADDITIONAL AGREEMENTS
5.1 Preparation of the Form S-4 and the Joint Proxy Statement/Prospectus; Stockholders Meetings.. 1-26
5.2 Access to Information........................................................................ 1-27
5.3 Reasonable Best Efforts...................................................................... 1-27
5.4 No Solicitation by Sprint.................................................................... 1-29
5.5 No Solicitation by MCI WorldCom.............................................................. 1-30
5.6 Sprint Stock Options......................................................................... 1-32
5.7 Employee Matters............................................................................. 1-33
5.8 Fees and Expenses............................................................................ 1-34
5.9 Indemnification, Exculpation and Insurance................................................... 1-35
5.10 Sprint Rights Agreement...................................................................... 1-36
5.11 MCI WorldCom Rights Agreement................................................................ 1-36
5.12 Public Announcements......................................................................... 1-36
5.13 Listing...................................................................................... 1-36
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5.14 Redemption of Sprint First Series Preferred Stock and Sprint Second Series Preferred Stock.. 1-36
5.15 Affiliate Letter............................................................................ 1-36
5.16 Tax Treatment............................................................................... 1-36
5.17 Assumption Agreement and Supplemental Indentures............................................ 1-37
5.18 Other Actions............................................................................... 1-37
ARTICLE VI CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger.................................. 1-37
(a) Stockholder Approvals................................................................... 1-37
(b) No Injunctions or Restraints; Illegality................................................ 1-37
(c) FCC and Public Utility Commission Approvals............................................. 1-37
(d) HSR Act................................................................................. 1-37
(e) EU Antitrust............................................................................ 1-38
(f) Nasdaq Listing.......................................................................... 1-38
(g) Effectiveness of the Form S-4........................................................... 1-38
6.2 Additional Conditions to Obligations of MCI WorldCom........................................ 1-38
(a) Representations and Warranties.......................................................... 1-38
(b) Performance of Obligations of Sprint.................................................... 1-38
(c) Tax Opinion............................................................................. 1-38
(d) No Material Adverse Change.............................................................. 1-39
6.3 Additional Conditions to Obligations of Sprint.............................................. 1-39
(a) Representations and Warranties.......................................................... 1-39
(b) Performance of Obligations of MCI WorldCom.............................................. 1-39
(c) Tax Opinion............................................................................. 1-39
(d) No Material Adverse Change.............................................................. 1-39
ARTICLE VII TERMINATION AND AMENDMENT
7.1 Termination................................................................................. 1-39
7.2 Effect of Termination....................................................................... 1-40
7.3 Amendment................................................................................... 1-41
7.4 Extension; Waiver; Consent.................................................................. 1-41
ARTICLE VIII GENERAL PROVISIONS
8.1 Non-Survival of Representations, Warranties and Agreements.................................. 1-41
8.2 Notices..................................................................................... 1-41
8.3 Interpretation.............................................................................. 1-42
8.4 Counterparts................................................................................ 1-42
8.5 Entire Agreement; No Third Party Beneficiaries.............................................. 1-42
8.6 Governing Law............................................................................... 1-43
8.7 Severability................................................................................ 1-43
8.8 Assignment.................................................................................. 1-43
8.9 Submission to Jurisdiction; Waivers......................................................... 1-43
8.10 Enforcement................................................................................. 1-43
8.11 Definitions................................................................................. 1-43
Exhibit A Amendments to Articles of Incorporation of MCI WorldCom
Exhibit B Amendments to Bylaws of MCI WorldCom
Annex 1 Certain Matters Relating to Surviving Corporation
Appendix 1 Form of MCI WorldCom Tax Opinion
Appendix 2 Form of Sprint Tax Opinion
Appendix 3 Form of MCI WorldCom Representations Letter
Appendix 4 Form of Sprint Representations Letter
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of March 8, 2000
(this "Agreement"), between MCI WORLDCOM, INC., a Georgia corporation ("MCI
WorldCom"), and SPRINT CORPORATION, a Kansas corporation ("Sprint").
WITNESSETH:
WHEREAS, MCI WorldCom and Sprint entered into an Agreement and Plan of
Merger, dated as of October 4, 1999 (the "Original Merger Agreement"), and they
now desire to amend and restate the Original Merger Agreement (it being
understood that all references to "the date hereof" or "the date of this
Agreement" refer to October 4, 1999);
WHEREAS, the respective Boards of Directors of MCI WorldCom and Sprint have
each determined that the merger of Sprint with and into MCI WorldCom (the
"Merger") is in the best interests of their respective stockholders, such
Boards of Directors have adopted resolutions approving the Merger and
recommending that their respective stockholders adopt and approve this
Agreement, and the Board of Directors of Sprint has also determined that the
terms of the Merger are fair to holders of Sprint FON Stock, taken as a
separate class, and holders of Sprint PCS Stock, taken as a separate class,
upon the terms and subject to the conditions set forth in this Agreement,
pursuant to which each outstanding share of capital stock of Sprint issued and
outstanding immediately prior to the Effective Time, other than shares owned or
held by MCI WorldCom or Sprint and other than Dissenting Shares, will be
converted into the right to receive the applicable Merger Consideration as set
forth in Section 1.8;
WHEREAS, MCI WorldCom and Sprint desire to make certain representations,
warranties, covenants and agreements in connection with the transactions
contemplated hereby and also to prescribe various conditions to the
transactions contemplated hereby;
WHEREAS, MCI WorldCom and Sprint intend, by approving resolutions
authorizing this Agreement, to adopt this Agreement as a plan of reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations promulgated thereunder; and
WHEREAS, Sprint has entered into or is entering into the MTA Transaction
Documents with France Telecom S.A. ("FT"), Deutsche Telekom A.G. ("DT") and
certain other parties thereto relating to the interest of Sprint and its
Subsidiaries in the Global One joint venture and the investment by FT and DT
and certain of their Subsidiaries in Sprint.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
The Merger
1.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the Kansas General Corporation Code (the
"KGCC") and the Georgia Business Corporation Code (the "GBCC"), Sprint shall be
merged with and into MCI WorldCom at the Effective Time. Following the Merger,
the separate corporate existence of Sprint shall cease and MCI WorldCom shall
continue as the surviving corporation (the "Surviving Corporation").
1.2 Closing. The closing of the Merger (the "Closing") will take place at
10:00 a.m., New York City time, on the second Business Day after the
satisfaction or (subject to applicable law) waiver of the conditions (excluding
conditions that, by their terms, cannot be satisfied until the Closing Date)
set forth in Article VI (the "Closing Date"), unless another time or date is
agreed to in writing by the parties hereto. The Closing shall be held at the
offices of Cravath, Swaine & ▇▇▇▇▇, Worldwide Plaza, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, unless another place is agreed to in writing by the
parties hereto.
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1.3 Effective Time. As soon as practicable following the Closing, the
parties shall (a) (i) file a certificate of merger (the "Kansas Certificate of
Merger") in such form as is required by and executed in accordance with the
relevant provisions of the KGCC and (ii) make all other filings or recordings
required under the KGCC, and (b) (i) file a certificate of merger (the "Georgia
Certificate of Merger") in such form as is required by and executed in
accordance with the relevant provisions of the GBCC and (ii) make all other
filings or recordings required under the GBCC. The Merger shall become
effective upon the later to occur of the filing of (i) the Kansas Certificate
of Merger with the Kansas Secretary of State and (ii) the Georgia Certificate
of Merger with the Georgia Secretary of State, or at such subsequent time as
MCI WorldCom and Sprint shall agree and be specified in the Kansas Certificate
of Merger and the Georgia Certificate of Merger (the date and time the Merger
becomes effective being the "Effective Time").
1.4 Effects of the Merger. At and after the Effective Time, the Merger will
have the effects set forth in the KGCC and GBCC. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all
the property, rights, privileges, powers and franchises of Sprint shall be
vested in the Surviving Corporation, and all debts, liabilities and duties of
Sprint shall become the debts, liabilities and duties of the Surviving
Corporation. Without limiting the generality of the foregoing, at the Effective
Time, the Surviving Corporation hereby expressly assumes all of Sprint's
obligations in respect of the rights of the other parties granted pursuant to
the Amended and Restated Stockholders' Agreement dated as of November 23, 1998,
as amended (as amended by the MTA), the Amended and Restated Registration
Rights Agreement dated as of November 23, 1998, as amended (as amended by the
MTA), the Amended and Restated Standstill Agreement dated as of November 23,
1998 (as amended by the MTA), in each case between Sprint, FT, DT and certain
other parties thereto, the Qualified Subsidiary Standstill Agreement dated
December 29, 1999 (as amended by the MTA) between Sprint and a Subsidiary of
DT, and the MTA Transaction Documents.
1.5 Articles of Incorporation. The articles of incorporation of MCI
WorldCom, as in effect immediately prior to the Effective Time, shall be
amended as of the Effective Time as set forth in Exhibit A hereto and, as so
amended, such articles of incorporation shall be the articles of incorporation
of the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
1.6 Bylaws. The Bylaws of MCI WorldCom, as in effect immediately prior to
the Effective Time, shall be amended as of the Effective Time as set forth in
Exhibit B hereto and, as so amended, such Bylaws shall be the Bylaws of the
Surviving Corporation until thereafter changed or amended as provided therein
or by applicable law.
1.7 Certain Surviving Corporation Matters. MCI WorldCom and Sprint shall
cause the matters set forth in Annex 1 hereto regarding the Surviving
Corporation to be effected as of the Effective Time.
1.8 Effect on Capital Stock.
(a) As contemplated by Exhibit A, at the Effective Time, the articles of
incorporation of MCI WorldCom will be amended to provide for the creation of
the following series of capital stock of:
(i) Common Stock, Series 2, par value $0.01 per share (the "MCI WorldCom
Series 2 Common Stock");
(ii) PCS Common Stock, Series 1, par value $1.00 per share (the "MCI
WorldCom Series 1 PCS Stock");
(iii) PCS Common Stock, Series 2, par value $1.00 per share (the "MCI
WorldCom Series 2 PCS Stock" and, together with the MCI WorldCom Series 1
PCS Stock, the "MCI WorldCom PCS Stock");
(iv) Series 5 Preferred Stock, par value $0.01 per share (the "MCI
WorldCom Series 5 Preferred Stock");
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(v) Series 7 Preferred Stock, par value $0.01 per share (the "MCI
WorldCom Series 7 Preferred Stock"); and
(vi) Series 8 Junior Participating Preferred Stock, par value $0.01 per
share.
The foregoing series of capital stock, together with the series and classes
of capital stock of MCI WorldCom authorized as of the date hereof, are hereby
collectively referred to as "MCI WorldCom Capital Stock".
(b) At the Effective Time by virtue of the Merger and without any action on
the part of the holder thereof (in each of the following cases other than such
shares owned or held by MCI WorldCom or Sprint, which shall automatically be
retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor, and other than Dissenting Shares):
(i) each share of Old Class A Common Stock, par value $2.50 per share, of
Sprint ("Sprint Series FT Common Stock") issued and outstanding immediately
prior to the Effective Time will be converted into the right to receive
(collectively, the "Series FT Merger Consideration"):
(A) that number of shares of common stock, par value $0.01 per share, of
MCI WorldCom ("MCI WorldCom Common Stock") equal to the sum of
(x) the Number Of Shares Issuable With Respect To The Old Class A
Equity Interest In The FON Group (as defined in Sprint's articles of
incorporation) represented by such share of Sprint Series FT Common
Stock immediately prior to the Effective Time times the FON Exchange
Ratio and
(y) the Number Of Shares Issuable With Respect To The Old Class A
Equity Interest In The PCS Group (as defined in Sprint's articles of
incorporation) represented by such share of Sprint Series FT Common
Stock immediately prior to the Effective Time times the PCS Exchange
Ratio,
and
(B) that number of shares of MCI WorldCom Series 1 PCS Stock equal to
the Number Of Shares Issuable With Respect To The Old Class A Equity
Interest In The PCS Group (as defined in Sprint's articles of
incorporation) represented by such share of Sprint Series FT Common Stock
immediately prior to the Effective Time;
(ii) each share of Class A Common Stock, Series DT, par value $2.50 per
share, of Sprint ("Sprint Series DT Common Stock" and, together with the Sprint
Series FT Common Stock, the "Sprint Class A Common Stock") issued and
outstanding immediately prior to the Effective Time will be converted into the
right to receive (collectively, the "Series DT Merger Consideration"):
(A) that number of shares of MCI WorldCom Common Stock equal to the sum
of
(x) the Number Of Shares Issuable With Respect To The Class A--
Series DT Equity Interest In The FON Group (as defined in Sprint's
articles of incorporation) represented by such share of Sprint Series
DT Common Stock immediately prior to the Effective Time times the FON
Exchange Ratio and
(y) the Number Of Shares Issuable With Respect To The Class A--
Series DT Equity Interest In The PCS Group (as defined in Sprint's
articles of incorporation) represented by such share of Sprint Series
DT Common Stock immediately prior to the Effective Time times the PCS
Exchange Ratio,
and
(B) that number of shares of MCI WorldCom Series 1 PCS Stock equal to
the Number Of Shares Issuable With Respect To The Class A--Series DT Equity
Interest In The PCS Group (as defined in Sprint's articles of
incorporation) represented by such share of Sprint Series DT Common Stock
immediately prior to the Effective Time;
1-3
(iii) each share of Series 1 FON Stock, par value $2.00 per share, of
Sprint ("Sprint Series 1 FON Stock") issued and outstanding immediately
prior to the Effective Time will be converted into the right to receive
that number of shares of MCI WorldCom Common Stock equal to the FON
Exchange Ratio (the "Series 1 FON Merger Consideration");
(iv) each share of Series 3 FON Stock, par value $2.00 per share, of
Sprint ("Sprint Series 3 FON Stock" and, together with the Sprint Series 1
FON Stock and the Series 2 FON Stock, par value $2.00 per share, of Sprint
("Sprint Series 2 FON Stock"), the "Sprint FON Stock"), issued and
outstanding immediately prior to the Effective Time will be converted into
the right to receive a number of shares of MCI WorldCom Common Stock equal
to the FON Exchange Ratio (the "Series 3 FON Merger Consideration");
(v) each share of Series 1 PCS Stock, par value $1.00 per share, of
Sprint ("Sprint Series 1 PCS Stock") issued and outstanding immediately
prior to the Effective Time will be converted into the right to receive (A)
one share of MCI WorldCom Series 1 PCS Stock and (B) that number of shares
of MCI WorldCom Common Stock equal to the PCS Exchange Ratio (collectively,
the "Series 1 PCS Merger Consideration");
(vi) each share of Series 2 PCS Stock, par value $1.00 per share, of
Sprint ("Sprint Series 2 PCS Stock") issued and outstanding immediately
prior to the Effective Time will be converted into the right to receive (A)
one share of MCI WorldCom Series 2 PCS Stock and (B) a number of shares of
MCI WorldCom Series 2 Common Stock equal to the PCS Exchange Ratio
(collectively, the "Series 2 PCS Merger Consideration");
(vii) each share of Series 3 PCS Stock, par value $1.00 per share, of
Sprint ("Sprint Series 3 PCS Stock" and, together with the Sprint Series 1
PCS Stock and the Sprint Series 2 PCS Stock, the "Sprint PCS Stock") issued
and outstanding immediately prior to the Effective Time will be converted
into the right to receive (A) one share of MCI WorldCom Series 1 PCS Stock
and (B) a number of shares of MCI WorldCom Common Stock equal to the PCS
Exchange Ratio (collectively, the "Series 3 PCS Merger Consideration" and,
together with the Series 1 PCS Merger Consideration and the Series 2 PCS
Merger Consideration, the "PCS Stock Merger Consideration");
(viii) each share of Preferred Stock-First Series, Convertible, without
par value, of Sprint ("Sprint First Series Preferred Stock") shall be
redeemed by Sprint prior to the Effective Time pursuant to Section 5.14;
(ix) each share of Preferred Stock-Second Series, Convertible, without
par value, of Sprint ("Sprint Second Series Preferred Stock") shall be
redeemed by Sprint prior to the Effective Time pursuant to Section 5.14;
(x) each share of Preferred Stock-Fifth Series, without par value, of
Sprint ("Sprint Fifth Series Preferred Stock") issued and outstanding
immediately prior to the Effective Time will be converted into the right to
receive one share of MCI WorldCom Series 5 Preferred Stock (the "Fifth
Series Preferred Merger Consideration"); and
(xi) each share of Preferred Stock-Seventh Series, Convertible, without
par value, of Sprint ("Sprint Seventh Series Preferred Stock" and, together
with the Sprint First Series Preferred Stock, the Sprint Second Series
Preferred Stock and the Sprint Fifth Series Preferred Stock, the "Sprint
Preferred Stock") issued and outstanding immediately prior to the Effective
Time will be converted into the right to receive one share of MCI WorldCom
Series 7 Preferred Stock (the "Seventh Series Preferred Merger
Consideration").
The Sprint Class A Common Stock, the Sprint FON Stock and the Sprint PCS
Stock are referred to herein collectively as the "Sprint Common Stock". The
Sprint Common Stock and the Sprint Preferred Stock are referred to herein
collectively as the "Sprint Capital Stock". Shares of Sprint Capital Stock that
are convertible by the holders thereof or by Sprint into a different class or
series of Sprint Capital Stock pursuant to the terms of Sprint's articles of
incorporation are referred to herein collectively as the "Sprint Conversion
Securities".
1-4
The Series 1 FON Merger Consideration and the Series 3 FON Merger
Consideration are referred to herein collectively as the "FON Stock Merger
Consideration". The Fifth Series Preferred Merger Consideration and the Seventh
Series Preferred Merger Consideration are referred to collectively herein as
the "Preferred Stock Merger Consideration". The Series FT Merger Consideration,
the Series DT Merger Consideration, the FON Stock Merger Consideration, the PCS
Stock Merger Consideration and the Preferred Stock Merger Consideration are
referred to herein collectively as the "Merger Consideration".
(c) As a result of the Merger and without any action on the part of the
holders thereof, at the Effective Time, all shares of Sprint Capital Stock
shall cease to be outstanding and shall be canceled and retired and shall cease
to exist, and each holder of a certificate which immediately prior to the
Effective Time represented any such shares of Sprint Capital Stock (a
"Certificate") shall thereafter cease to have any rights with respect to such
shares of Sprint Capital Stock, except the right to receive the applicable
Merger Consideration and any cash in lieu of fractional shares of applicable
MCI WorldCom Capital Stock to be issued in consideration therefor and any
dividends or other distributions to which holders of Sprint Capital Stock
become entitled all in accordance with Article II upon the surrender of such
certificate.
(d) Each share of Sprint Capital Stock issued and owned or held by MCI
WorldCom or Sprint at the Effective Time shall, by virtue of the Merger, cease
to be outstanding and shall be canceled and retired and no stock of MCI
WorldCom or other consideration shall be delivered in exchange therefor.
(e) (i) Notwithstanding anything in this Agreement to the contrary and
unless provided for by applicable law, shares of Sprint Series FT Common Stock,
Sprint Series DT Common Stock, Sprint Series 3 FON Stock, Sprint Series 2 PCS
Stock, Sprint Series 3 PCS Stock, Sprint Fifth Series Preferred Stock and
Sprint Seventh Series Preferred Stock that are issued and outstanding
immediately prior to the Effective Time and that are owned by stockholders who
have properly perfected their rights of appraisal within the meaning of Section
17-6712 of the KGCC (the "Sprint Dissenting Shares") shall not be converted
into the right to receive the Series FT Merger Consideration, the Series DT
Merger Consideration, the Series 3 FON Merger Consideration, the Series 2 PCS
Merger Consideration, the Series 3 PCS Merger Consideration, the Fifth Series
Preferred Merger Consideration and the Seventh Series Preferred Merger
Consideration, respectively, unless and until such stockholders shall have
failed to perfect their right of payment under applicable law, but, instead,
the holders thereof shall be entitled to payment of the appraised value of such
Sprint Dissenting Shares in accordance with Section 17-6712 of the KGCC. If any
such holder shall have failed to perfect or shall have effectively withdrawn or
lost such right of appraisal, each share of Sprint Series FT Common Stock,
Sprint Series DT Common Stock, Sprint Series 3 FON Stock, Sprint Series 2 PCS
Stock, Sprint Series 3 PCS Stock, Sprint Fifth Series Preferred Stock and
Sprint Seventh Series Preferred Stock held by such stockholder shall thereupon
be deemed to have been converted into the right to receive and become
exchangeable for, at the Effective Time, the Series FT Merger Consideration,
the Series DT Merger Consideration, the Series 3 FON Merger Consideration, the
Series 2 PCS Merger Consideration, the Series 3 PCS Merger Consideration, the
Fifth Series Preferred Merger Consideration and the Seventh Series Preferred
Merger Consideration, respectively, in the manner provided for in Section
1.8(b).
(ii) Sprint shall give MCI WorldCom (A) prompt notice of any objections
filed pursuant to Section 17-6712 of the KGCC received by Sprint, withdrawals
of such objections and any other instruments served in connection with such
objections pursuant to the KGCC and received by Sprint and (B) the opportunity
to direct all negotiations and proceedings with respect to objections under the
KGCC consistent with the obligations of Sprint thereunder. Sprint shall not,
except with the prior written consent of MCI WorldCom, (x) make any payment
with respect to any such objection, (y) offer to settle or settle any such
objection or (z) waive any failure to timely deliver a written objection in
accordance with the KGCC.
(f) (i) Notwithstanding anything in this Agreement to the contrary and
unless provided for by applicable law, holders of shares of MCI WorldCom Series
B Preferred Stock that are issued and outstanding immediately prior to the
Effective Time and that are owned by stockholders who have properly perfected
their rights of
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appraisal within the meaning of Section 14-2-1301 et seq. of the GBCC (the "MCI
WorldCom Dissenting Shares") shall be entitled to payment of the fair value of
such MCI WorldCom Dissenting Shares determined in accordance with Section 14-2-
1301 et seq. of the GBCC. If any such holder shall have failed to perfect or
shall have effectively withdrawn or lost such right of appraisal, each share of
MCI WorldCom Series B Preferred Stock held by such stockholder shall thereupon
be deemed to remain issued and outstanding and unchanged as a validly issued,
fully paid and nonassessable share of capital stock of the Surviving
Corporation.
(ii) MCI WorldCom shall give Sprint (A) prompt notice of MCI WorldCom's
receipt of any notice of intent to demand payment pursuant to Section 14-2-1301
et seq. of the GBCC, withdrawals of such notice and any other instruments
served in connection with such notice pursuant to the GBCC and received by MCI
WorldCom and (B) the opportunity to direct all negotiations and proceedings
with respect to such notice under the GBCC consistent with the obligations of
MCI WorldCom thereunder.
ARTICLE II
Exchange of Certificates
2.1 Exchange Agent. Prior to the Effective Time, MCI WorldCom shall appoint
The Bank of New York or another commercial bank or trust company reasonably
satisfactory to Sprint to act as exchange agent hereunder for the purpose of
exchanging Certificates for the applicable Merger Consideration (the "Exchange
Agent"). At or prior to the Effective Time, MCI WorldCom shall deposit with the
Exchange Agent, in trust for the benefit of holders of shares of Sprint Capital
Stock, certificates representing the applicable MCI WorldCom Capital Stock
issuable pursuant to Section 1.8 in exchange for outstanding shares of Sprint
Capital Stock in the Merger pursuant to Section 1.8. MCI WorldCom agrees to
make available to the Exchange Agent from time to time as needed, cash
sufficient to pay cash in lieu of fractional shares pursuant to Section 2.5 and
any dividends and other distributions pursuant to Section 2.3.
2.2 Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall cause the Exchange Agent to
mail to each holder of a Certificate (i) a letter of transmittal which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent, and which letter shall be in such form and have such other provisions as
MCI WorldCom may reasonably specify and (ii) instructions for effecting the
surrender of such Certificates in exchange for the applicable Merger
Consideration. Upon surrender of a Certificate to the Exchange Agent together
with such letter of transmittal, duly executed and completed in accordance with
the instructions thereto, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate, if it is a
Certificate for Sprint Capital Stock shall be entitled to receive in exchange
therefor (A) one or more shares of applicable MCI WorldCom Capital Stock
representing, in the aggregate, the whole number of shares that such holder has
the right to receive pursuant to Section 1.8, and (B) a check in the amount
equal to the cash that such holder has the right to receive pursuant to the
provisions of this Article II including cash in lieu of any fractional shares
of applicable MCI WorldCom Capital Stock pursuant to Section 2.5 and any
dividends or other distributions pursuant to Section 2.3, and in each case the
Certificate so surrendered shall forthwith be canceled. No interest will be
paid or will accrue on any cash payable pursuant to Section 2.3 or Section 2.5.
In the event of a transfer of ownership of Sprint Capital Stock which is not
registered in the transfer records of Sprint, one or more shares of applicable
MCI WorldCom Capital Stock evidencing, in the aggregate, the proper number of
shares of applicable MCI WorldCom Capital Stock and a check in the proper
amount of cash in lieu of any fractional shares of applicable MCI WorldCom
Capital Stock pursuant to Section 2.5 and any dividends or other distributions
to which such holder is entitled pursuant to Section 2.3, may be issued with
respect to such Sprint Capital Stock to such a transferee if the Certificate
representing such shares of Sprint Capital Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and to evidence that any applicable stock transfer taxes have been
paid.
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2.3 Distributions with Respect to Unexchanged Shares. No dividends or other
distributions declared or made with respect to shares of MCI WorldCom Capital
Stock with a record date after the Effective Time shall be paid to the holder
of any unsurrendered Certificate with respect to the shares of MCI WorldCom
Capital Stock that such holder would be entitled to receive upon surrender of
such Certificate and no cash payment in lieu of fractional shares of MCI
WorldCom Capital Stock shall be paid to any such holder pursuant to Section 2.5
until such holder shall surrender such Certificate in accordance with Section
2.2. Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to such holder of shares of MCI WorldCom
Capital Stock issuable in exchange therefor, without interest, (a) promptly
after the time of such surrender, the amount of any cash payable in lieu of
fractional shares of MCI WorldCom Capital Stock to which such holder is
entitled pursuant to Section 2.5 and the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole shares of MCI WorldCom Capital Stock and (b) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to such surrender and a payment
date subsequent to such surrender payable with respect to such shares of MCI
WorldCom Capital Stock.
2.4 No Further Ownership Rights in Sprint Capital Stock. All shares of MCI
WorldCom Capital Stock issued and cash paid upon conversion of shares of Sprint
Capital Stock in accordance with the terms of Article I and this Article II
(including any cash paid pursuant to Section 2.3 or 2.5) shall be deemed to
have been issued or paid in full satisfaction of all rights pertaining to the
shares of Sprint Capital Stock, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which may have been declared or
made by Sprint on such shares of Sprint Capital Stock which remain unpaid at
the Effective Time, and there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the shares of Sprint
Capital Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation or the Exchange Agent for any reason, they shall be canceled and
exchanged as provided in this Article II.
2.5 No Fractional Shares of MCI WorldCom Capital Stock. (a) No certificates
or scrip or shares of MCI WorldCom Capital Stock representing fractional shares
of MCI WorldCom Capital Stock shall be issued upon the surrender for exchange
of Certificates and such fractional share interests will not entitle the owner
thereof to vote or to have any rights of a shareholder of MCI WorldCom or a
holder of shares of MCI WorldCom Capital Stock.
(b) Notwithstanding any other provision of this Agreement, each holder of
shares of Sprint Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of applicable MCI
WorldCom Capital Stock (after taking into account all Certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to the product of (i) such fractional part of a share of
applicable MCI WorldCom Capital Stock multiplied by (ii) the per share closing
price of applicable MCI WorldCom Common Stock quoted on Nasdaq on the Closing
Date. The fractional share interests of MCI WorldCom Capital Stock will be
aggregated, and no recordholder of Sprint Capital Stock will receive cash in an
amount equal to or greater than the value of one full share of MCI WorldCom
Capital Stock determined as of the Effective Time.
2.6 No Liability. None of Sprint, MCI WorldCom, the Surviving Corporation or
the Exchange Agent shall be liable to any Person in respect of any Merger
Consideration, any dividends or distributions with respect thereto or any cash
in lieu of fractional shares of applicable MCI WorldCom Capital Stock, in each
case delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any Certificate shall not have been
surrendered prior to three years after the Effective Time (or immediately prior
to such earlier date on which any Merger Consideration, any dividends or
distributions payable to the holder of such Certificate or any cash payable in
lieu of fractional shares of MCI WorldCom Capital Stock pursuant to this
Article II, would otherwise escheat to or become the property of any
Governmental Entity), any such Merger Consideration, dividends or distributions
in respect thereof or such cash shall, to the extent permitted by applicable
law, be delivered to MCI WorldCom, upon demand, and any holders of Sprint
Capital Stock who
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have not theretofore complied with the provisions of this Article II shall
thereafter look only to MCI WorldCom for satisfaction of their claims for such
Merger Consideration, dividends or distributions in respect thereof or such
cash.
2.7 Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such Person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange
Agent will deliver in exchange for such lost, stolen or destroyed Certificate
the applicable Merger Consideration with respect to the shares of Sprint
Capital Stock formerly represented thereby, any cash in lieu of fractional
shares of MCI WorldCom Capital Stock, and unpaid dividends and distributions on
shares of MCI WorldCom Capital Stock deliverable in respect thereof, pursuant
to this Agreement.
2.8 Withholding Rights. The Surviving Corporation shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Sprint Capital Stock such amounts as it is
required to deduct and withhold with respect to the making of such payment
under the Code and the rules and regulations promulgated thereunder, or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by the Surviving Corporation such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
shares of Sprint Capital Stock in respect of which such deduction and
withholding was made by the Surviving Corporation.
2.9 Stock Transfer Books. At the close of business, New York City time, on
the day the Effective Time occurs, the stock transfer books of Sprint shall be
closed and there shall be no further registration of transfers of shares of
Sprint Capital Stock thereafter on the records of Sprint. From and after the
Effective Time, the holders of Certificates shall cease to have any rights with
respect to such shares of Sprint Capital Stock formerly represented thereby,
except as otherwise provided herein or by law. On or after the Effective Time,
any Certificates presented to the Exchange Agent or MCI WorldCom for any reason
shall be converted into the Merger Consideration with respect to the shares of
Sprint Capital Stock formerly represented thereby, any cash in lieu of
fractional shares of MCI WorldCom Capital Stock to which the holders thereof
are entitled pursuant to Section 2.5 and any dividends or other distributions
to which the holders thereof are entitled pursuant to Section 2.3.
ARTICLE III
Representations and Warranties
3.1 Representations and Warranties of Sprint. Except as disclosed in the
Sprint SEC Reports filed and publicly available prior to the date of this
Agreement (the "Sprint Filed SEC Reports") or as set forth in the Sprint
Disclosure Schedule delivered by Sprint to MCI WorldCom prior to the execution
of this Agreement (the "Sprint Disclosure Schedule"), Sprint represents and
warrants to MCI WorldCom as follows:
(a) Organization, Standing and Power. Each of Sprint and its Significant
Subsidiaries is a corporation or other legal entity duly organized or formed,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite corporate, partnership or
similar power and authority to own, lease and operate its properties and to
carry on its business as now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary other than in such jurisdictions where the failure so to qualify or
to be in good standing is not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on Sprint. The copies of the
articles of incorporation and by-laws of Sprint which were previously furnished
to MCI WorldCom are true, complete and correct copies of such documents as in
effect on the date of this Agreement.
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(b) Capital Structure. (i) As of September 30, 1999, the authorized capital
stock of Sprint consisted of (A) 100,000,000 shares of Sprint Series FT Common
Stock, of which 43,118,018 shares were outstanding, (B) 100,000,000 shares of
Sprint Series DT Common Stock, of which 43,118,018 shares were outstanding, (C)
2,500,000,000 shares of Sprint Series 1 FON Stock, of which 696,949,268 shares
were outstanding, (D) 500,000,000 shares of Sprint Series 2 FON Stock, of which
no shares were outstanding, (E) 1,200,000,000 shares of Sprint Series 3 FON
Stock, of which 88,111,036 shares were outstanding, (F) 1,250,000,000 shares of
Sprint Series 1 PCS Stock, of which 198,422,792 shares were outstanding, (G)
500,000,000 shares of Sprint Series 2 PCS Stock, of which 219,393,844 shares
were outstanding, (H) 600,000,000 shares of Sprint Series 3 PCS Stock, of which
13,089,418 shares were outstanding, and (I) 20,000,000 shares of Preferred
Stock, without par value, of which (I) 1,742,853 shares have been designated as
Sprint First Series Preferred Stock, of which 36,150 shares were outstanding,
(II) 8,758,472 shares have been designated as Sprint Second Series Preferred
Stock, of which 219,045 shares were outstanding, (III) 95 shares have been
designated as Sprint Fifth Series Preferred Stock, of which 95 shares were
outstanding, (IV) 1,500,000 shares of Preferred Stock-Sixth Series, Junior
Participating, without par value, have been designated and reserved for
issuance upon exercise of the rights (the "Sprint Rights") distributed to
holders of Sprint FON Stock and Sprint Class A Common Stock pursuant to the
Rights Agreement dated as of November 23, 1998, between Sprint and UMB Bank,
N.A., as rights agent (the "Sprint Rights Agreement"), (V) 1,250,000 shares of
Preferred Stock-Eighth Series, Junior Participating, without par value, have
been designated and reserved for issuance upon exercise of the Sprint Rights
distributed to holders of Sprint PCS Stock and Sprint Class A Common Stock
pursuant to the Sprint Rights Agreement and (VI) 300,000 shares have been
designated as Sprint Seventh Series Preferred Stock, of which 246,766 shares
were outstanding. As of September 30, 1999, 2,409,990 shares of Sprint Series 1
FON Stock and 67,927 shares of Sprint Series 1 PCS Stock were held by Sprint in
its treasury. Since September 30, 1999 to the date of this Agreement, there
have been no issuances of shares of the capital stock of Sprint or any other
securities of Sprint other than issuances of shares (and accompanying Sprint
Rights) pursuant to options or rights outstanding as of September 30, 1999
under the Benefit Plans of Sprint or pursuant to the conversion of the Sprint
Conversion Securities. All issued and outstanding shares of the capital stock
of Sprint are duly authorized, validly issued, fully paid and nonassessable,
and no class of capital stock is entitled to preemptive rights. There were
outstanding as of September 30, 1999 no options, warrants or other rights to
acquire capital stock from Sprint other than (v) shares of Sprint Capital Stock
issuable upon conversion of the Sprint Conversion Securities, (w) 12,452,831
shares of Sprint Series 2 PCS Stock reserved for future issuance upon the
exercise of warrants ("Warrants") issued pursuant to the terms of the Warrant
Agreements, each dated as of November 23, 1998 between Sprint, on the one hand,
and Cox Teleport Partners, Inc., ▇▇▇ Communications, Inc., Comcast Telephony
Services Holdings, Inc., TCI Wireless Holdings, Inc. and TCI Spectrum
Investment, Inc., on the other hand, (x) the Sprint Rights, (y) options
representing in the aggregate the right to purchase 54,628,805 shares of Sprint
FON Stock and 21,525,703 shares of Sprint PCS Stock under Sprint's 1985 Stock
Option Plan, Sprint's 1990 Stock Option Plan, Sprint's Management Incentive
Stock Option Plan, Sprint's 1997 Long-Term Stock Incentive Program, Sprint's
Long-Term Incentive Compensation Plan, the Amended and Restated Centel Director
Stock Option Plan and the Amended and Restated Centel Stock Option Plan
(collectively with Sprint's 1990 Restricted Stock Plan, the "Sprint Stock
Option Plans"), and (z) rights to purchase shares of Sprint Common Stock under
Sprint's Employees Stock Purchase Plan. Sprint has delivered to MCI WorldCom a
complete and correct list, as of September 30, 1999, of the number of shares of
Sprint Common Stock subject to outstanding stock option or other rights to
purchase or receive Sprint Common Stock granted under (i) the Sprint Stock
Option Plans (collectively, "Sprint Stock Options") and (ii) the Warrants and
the exercise prices thereof. No options or warrants or other rights to acquire
capital stock from Sprint have been issued or granted since September 30, 1999
to the date of this Agreement.
(ii) As of the date of this Agreement, no bonds, debentures, notes or other
indebtedness of Sprint having the right to vote on any matters on which
stockholders may vote ("Sprint Voting Debt") are issued or outstanding.
(iii) Except as otherwise set forth in this Section 3.1(b) and as
contemplated by Section 5.6, as of the date of this Agreement, there are no
securities, options, warrants, calls, rights, commitments, agreements,
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arrangements or undertakings of any kind to which Sprint or any of its
Subsidiaries is a party or by which any of them is bound obligating Sprint or
any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting
securities of Sprint or any of its Subsidiaries or obligating Sprint or any of
its Subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or
undertaking. As of the date of this Agreement, there are no outstanding
obligations of Sprint or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of Sprint or any of its
Subsidiaries.
(iv) Exhibit 21 to Sprint's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 (the "Sprint 1998 10-K"), sets forth each Significant
Subsidiary of Sprint as of the date hereof. As of the date hereof, all the
outstanding shares of capital stock of, or other equity interests in, each
Significant Subsidiary of Sprint have been validly issued and are fully paid
and nonassessable and are owned directly or indirectly by Sprint, free and
clear of all pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens") and free of
any restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests. Except for the capital stock or other
ownership interests of its Subsidiaries, as of the date hereof, Sprint does not
beneficially own directly or indirectly any capital stock, membership interest,
partnership interest, joint venture interest or other equity interest in any
Person which constitutes a Material Investment.
(c) Authority; No Conflicts. (i) Sprint has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby, subject in the case of the consummation of the Merger to
the adoption of this Agreement by the Required Sprint Vote. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Sprint, subject to the adoption of this Agreement by the
Required Sprint Vote. This Agreement has been duly executed and delivered by
Sprint and constitutes a valid and binding agreement of Sprint, enforceable
against it in accordance with its terms.
(ii) The execution and delivery of this Agreement do not or will not, as the
case may be, and the consummation of the Merger and the other transactions
contemplated hereby will not, subject to the adoption of this Agreement by the
Required Sprint Vote, conflict with, or result in any violation of, or
constitute a default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, amendment, cancelation or acceleration
of any obligation or the loss of a material benefit under, or the creation of a
lien, pledge, security interest, charge or other encumbrance on any assets (any
such conflict, violation, default, right of termination, amendment, cancelation
or acceleration, loss or creation, a "Violation") pursuant to: (A) any
provision of the articles of incorporation or by-laws of Sprint or the
governing documents of any Subsidiary of Sprint, or (B) except as is not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on Sprint and subject to obtaining or making the consents, approvals,
orders, authorizations, registrations, declarations and filings referred to in
paragraph (iii) below, any loan or credit agreement, note, mortgage, bond,
indenture, lease, benefit plan or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Sprint or any Subsidiary of Sprint
or their respective properties or assets.
(iii) No consent, approval, order or authorization of, or registration,
declaration or filing with, any supranational, national, state, municipal or
local government, any instrumentality, subdivision, court, administrative
agency or commission or other authority thereof, or any quasi-governmental or
private body exercising any regulatory, taxing, importing or other governmental
or quasi-governmental authority, including the European Union (a "Governmental
Entity"), is required by or with respect to Sprint or any Subsidiary of Sprint
in connection with the execution and delivery of this Agreement by Sprint or
the consummation of the Merger and the other transactions contemplated hereby,
except for those required under or in relation to (A) the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act") and Council Regulation (EEC) No. 4064/89
("Regulation 4064/89"), (B) the Communications Act of 1934, as amended, and the
rules and regulations promulgated thereunder (the
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"Communications Act"), and any other rules, regulations, practices and policies
promulgated by the Federal Communications Commission ("FCC"), (C) state
securities or "blue sky" laws (the "Blue Sky Laws"), (D) the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder (the
"Securities Act"), (E) the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder (the "Exchange Act"), (F) the KGCC
with respect to the filing of the Kansas Certificate of Merger and the GBCC
with respect to the filing of the Georgia Certificate of Merger, (G) laws,
rules, regulations, practices and orders of any state public service
commissions ("PUCs"), foreign telecommunications regulatory agencies or similar
state or foreign regulatory bodies, (H) rules and regulations of the New York
Stock Exchange, Inc. ("NYSE"), (I) antitrust or other competition laws of other
jurisdictions, and (J) such consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to make or obtain
is not reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on Sprint. Consents, approvals, orders, authorizations,
registrations, declarations and filings required under or in relation to any of
the foregoing clauses (A) through (G) and clause (I) are hereinafter referred
to as "Required Consents".
(d) Reports and Financial Statements. Sprint has filed all reports,
schedules, forms, statements and other documents required to be filed by it
with the Securities and Exchange Commission (the "SEC") since January 1, 1998
(collectively, including all exhibits thereto, the "Sprint SEC Reports"). No
Significant Subsidiary of Sprint is required to file any form, report or other
document with the SEC. None of the Sprint SEC Reports when filed contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Each of
the financial statements (including the related notes) included in the Sprint
SEC Reports presents fairly, in all material respects, the consolidated
financial position and consolidated results of operations and cash flows of
Sprint and its Subsidiaries as of the respective dates or for the respective
periods set forth therein, all in conformity with United States generally
accepted accounting principles ("U.S. GAAP") consistently applied during the
periods involved except as otherwise noted therein, and subject, in the case of
the unaudited interim financial statements, to normal and recurring year-end
adjustments. All of such Sprint SEC Reports, as of their respective dates (and
as of the date of any amendment to the respective Sprint SEC Report), complied
as to form in all material respects with the applicable requirements of the
Securities Act and the Exchange Act.
(e) Information Supplied. (i) None of the information supplied or to be
supplied by Sprint for inclusion or incorporation by reference in (A) the Form
S-4 to be filed with the SEC by MCI WorldCom in connection with the issuance of
the MCI WorldCom Capital Stock in the Merger will, at the time the Form S-4
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and (B) the Joint
Proxy Statement/Prospectus included in the Form S-4 related to the Sprint
Stockholders Meeting and the MCI WorldCom Shareholders Meeting and the MCI
WorldCom Capital Stock to be issued in the Merger will, on the date it is first
mailed to Sprint stockholders or MCI WorldCom shareholders or at the time of
the Sprint Stockholders Meeting or the MCI WorldCom Shareholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Joint Proxy Statement/Prospectus will comply as to form in all
material respects with the requirements of the Exchange Act.
(ii) Notwithstanding the foregoing provisions of this Section 3.1(e), no
representation or warranty is made by Sprint with respect to statements made or
incorporated by reference in the Form S-4 or the Joint Proxy
Statement/Prospectus based on information supplied by MCI WorldCom for
inclusion or incorporation by reference therein.
(f) Litigation. There is no suit, action, proceeding, claim or investigation
pending or, to the Knowledge of Sprint, threatened against or affecting Sprint
or any of its Subsidiaries that is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on Sprint nor is there any
judgment, decree, injunction,
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rule or order of any Governmental Entity or arbitrator outstanding against
Sprint or any of its Subsidiaries having, or that is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on Sprint.
(g) Compliance with Applicable Laws. Sprint and its Subsidiaries hold all
permits, licenses, variances, exemptions, orders, registrations and approvals
of all Governmental Entities which are required for the operation of the
business of Sprint and its Subsidiaries taken as a whole (the "Sprint
Permits"), except where the failure to have any such Sprint Permits is not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on Sprint. Sprint and its Subsidiaries are in compliance with the terms
of the Sprint Permits and all applicable statutes, laws, ordinances, rules and
regulations, except where the failure so to comply is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on Sprint.
Subject to obtaining the Required Consents, the Merger, in and of itself, would
not cause the revocation or cancelation of any Sprint Permit that is reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
Sprint.
(h) State Takeover Statutes; Approvals. Each of the Board of Directors of
Sprint (including the disinterested directors thereof) and the Capital Stock
Committee of such Board of Directors has approved and recommended the terms of
this Agreement and the consummation of the Merger and the other transactions
contemplated by this Agreement and such approval of the Board of Directors of
Sprint constitutes approval of the Merger and the other transactions
contemplated by this Agreement by the Board of Directors of Sprint to the
extent applicable under the provisions of Section 17-1286 et seq. and Section
17-12,100 et seq. of the KGCC and Article Seventh of Sprint's articles of
incorporation and represents all the action necessary to ensure that Section
17-1286 et seq. and Section 17-12,100 et seq. of the KGCC and Article Seventh
of Sprint's articles of incorporation do not apply to MCI WorldCom in
connection with the Merger and the other transactions contemplated by this
Agreement. No other Kansas or Georgia state takeover statute is applicable to
Sprint in connection with this Agreement, the Merger or the other transactions
contemplated hereby. Other than those that have been made prior to the date
hereof, no approval or determination of the Board of Directors of Sprint or any
committee thereof is required with respect to any class or series of Sprint
Capital Stock or under Sprint's articles of incorporation, Bylaws or governance
policies to approve this Agreement or any of the transactions contemplated
hereby.
(i) Intellectual Property; Year 2000. (i) Sprint and its Subsidiaries own,
or are validly licensed or otherwise have the right to use, all patents, patent
rights, trademarks, trade secrets, trade names, service marks, copyrights and
other proprietary intellectual property rights and computer programs (the
"Intellectual Property Rights") used in the business of Sprint and its
Subsidiaries, except for such Intellectual Property Rights the failure of which
to own, license or otherwise have the right to use is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on Sprint.
(ii) To the Knowledge of Sprint, neither Sprint nor any of its Subsidiaries
has interfered with, infringed upon, misappropriated or otherwise come into
conflict with any Intellectual Property Rights or other proprietary information
of any other Person, except for any such interference, infringement,
misappropriation or other conflict which is not reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect on Sprint. To the
Knowledge of Sprint, neither Sprint nor any of its Subsidiaries has received
any written charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation or other conflict (including any
claim that Sprint or any such Subsidiary must license or refrain from using any
Intellectual Property Rights or other proprietary information of any other
Person) which has not been settled or otherwise fully resolved, except with
respect to any such interference, infringement, misappropriation or other
conflict which is not reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on Sprint. To the Knowledge of Sprint, no other
Person has interfered with, infringed upon, misappropriated or otherwise come
into conflict with any Intellectual Property Rights of Sprint or any of its
Subsidiaries, except for any such interference, infringement, misappropriation
or other conflict which is not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on Sprint.
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(iii) As of the date of this Agreement, Sprint and its Subsidiaries have
undertaken a concerted effort to ensure that all of the computer software,
computer firmware, computer hardware, and other similar or related items of
automated, computerized, and/or software system(s) that are to be used or
relied on by Sprint or any of its Subsidiaries in the conduct of their
respective businesses will not malfunction, will not cease to function, will
not generate incorrect data, and will not provide incorrect results when
processing, providing and/or receiving (i) date-related data into and between
the years 1999 and 2000 and (ii) date-related data in connection with any valid
date in the twentieth and twenty-first centuries. As of the date of this
Agreement, Sprint reasonably believes that such effort will be successful.
(j) Absence of Certain Changes or Events. Except for liabilities incurred in
connection with this Agreement or the transactions contemplated hereby, since
June 30, 1999, Sprint and its Subsidiaries have conducted their business only
in the ordinary course, and there has not been (i) any Material Adverse Change
in Sprint, (ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
Sprint's capital stock, other than regular quarterly cash dividends of $0.125
per share of Sprint FON Stock and a corresponding cash dividend on the Class A
Common Stock and dividends payable on Sprint Preferred Stock in accordance with
their terms as of the date of this Agreement, (iii) any split, combination or
reclassification of any of Sprint's capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of Sprint's capital stock, (iv) (A) any granting
by Sprint or any of its Subsidiaries to any current or former director,
executive officer or other key employee of Sprint or its Subsidiaries of any
increase in compensation, bonus or other benefits, except for normal increases
in the ordinary course of business consistent with past practice or as was
required under any employment agreements in effect as of the date of the most
recent audited financial statements included in the Sprint Filed SEC Reports,
(B) any granting by Sprint or any of its Subsidiaries to any such current or
former director, executive officer or key employee of any increase in severance
or termination pay or (C) any entry by Sprint or any of its Subsidiaries into,
or any amendment of, any employment, deferred compensation, consulting,
severance, termination or indemnification agreement with any such current or
former director, executive officer or key employee, other than in the ordinary
course of business consistent with past practice, (v) except insofar as may be
required by a change in U.S. GAAP, any change in accounting methods, principles
or practices by Sprint materially affecting its consolidated financial position
or consolidated results of operations or (vi) except insofar as MCI WorldCom
has given its consent, which consent shall not be unreasonably withheld or
delayed, any tax election (or settlement or compromise of any material income
tax liability) that is reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on Sprint.
(k) Vote Required. The affirmative vote of the holders of shares
representing a majority of the total voting power of Sprint Common Stock and
Sprint Preferred Stock entitled to vote at the Sprint Stockholders Meeting to
adopt this Agreement voting together as a single class (the "Required Sprint
Vote") is the only vote or approval of the holders of any class or series of
capital stock of Sprint necessary to adopt this Agreement and to approve the
transactions contemplated hereby.
(l) Sprint Rights Agreement. No amendment to the Sprint Rights Agreement is
required to be made by Sprint in connection with the approval, execution or
delivery of this Agreement or the consummation of the transactions contemplated
hereby.
(m) Brokers or Finders. No agent, broker, investment banker, financial
advisor or other firm or Person on behalf of Sprint is or will be entitled to
any broker's or finder's fee or any other similar commission or fee in
connection with any of the transactions contemplated by this Agreement, except
Warburg Dillon Read LLC, whose fees and expenses will be paid by Sprint in
accordance with Sprint's agreement with such firm, based upon arrangements made
by or on behalf of Sprint and previously disclosed to MCI WorldCom.
(n) Opinion of Financial Advisor. Sprint has received the opinion of Warburg
Dillon Read LLC, dated the date of this Agreement, to the effect that, as of
the date hereof, (i) the FON Exchange Ratio was fair, from a financial point of
view, to the holders of each series of Sprint FON Stock, (ii) the consideration
to be received
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by holders of each series of Sprint Common Stock in the Merger was fair, from a
financial point of view, to the holders of such series and (iii) the Merger
Consideration applicable to the Sprint Common Stock was fair, from a financial
point of view, to the holders of Sprint Common Stock taken as a whole, a copy
of which opinion has been made available to MCI WorldCom.
(o) Absence of Changes in Sprint's Benefit Plans. Except as expressly
permitted by this Agreement, since the date of the most recent audited
financial statements included in the Sprint Filed SEC Reports, there has not
been any adoption or amendment in any material respect by Sprint or any of its
Subsidiaries of any of Sprint's Benefit Plans, or any material change in any
actuarial or other assumption used to calculate funding obligations with
respect to any Sprint pension plans, or any material change in the manner in
which contributions to any Sprint pension plans are made or the basis on which
such contributions are determined other than a change required under the terms
of such plans as in effect on the date hereof or as required by applicable law.
(p) ERISA Compliance; No Parachute Payments. (i) With respect to Sprint's
Benefit Plans, no liability has been incurred and to the Knowledge of Sprint
there exists no condition or circumstances in connection with which Sprint or
any of its Subsidiaries could be subject to any liability that is reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
Sprint, in each case under the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), the Code or any other applicable law.
(ii) Each of Sprint's Benefit Plans has been administered in accordance with
its terms, except for any failures so to administer any such Benefit Plan that
are not reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on Sprint. Sprint, its Subsidiaries and all Sprint's Benefit
Plans are in compliance with the applicable provisions of ERISA, the Code and
all other applicable laws and the terms of all applicable collective bargaining
agreements, except for any failures to be in such compliance that are not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on Sprint.
(iii) None of Sprint or any of its Subsidiaries sponsors or contributes to
any of Sprint's Benefit Plans that is subject to Title IV of ERISA.
(iv) Sprint and its Subsidiaries are in compliance with all Federal, state,
local and foreign requirements regarding employment, except for any failures to
comply that are not reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on Sprint. As of the date of this Agreement,
there is no labor dispute, strike or work stoppage against Sprint or any of its
Subsidiaries pending or, to the Knowledge of Sprint, threatened which may
interfere with the respective business activities of Sprint or any of its
Subsidiaries, except where such dispute, strike or work stoppage is not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on Sprint. As of the date of this Agreement, to the Knowledge of Sprint,
none of Sprint, any of its Subsidiaries or any of their respective
representatives or employees has committed any unfair labor practice in
connection with the operation of the respective businesses of Sprint or any of
its Subsidiaries, and there is no action, charge or complaint against Sprint or
any of its Subsidiaries by the National Labor Relations Board or any comparable
Governmental Entity pending or threatened in writing, in each case except where
such practices, actions, charges or complaints are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on Sprint.
(v) No employee of Sprint or its Subsidiaries will be entitled to any
additional benefits or any acceleration of the time of payment or vesting of
any benefits under any of Sprint's Benefit Plans as a result of the
transactions contemplated by this Agreement. No amount payable, or economic
benefit provided, by Sprint or its Subsidiaries (including any acceleration of
the time of payment or vesting of any benefit) could be considered an "excess
parachute payment" under Section 280G of the Code. No Person is entitled to
receive any additional payment from Sprint or its Subsidiaries or any other
Person in the event that the excise tax of Section 4999 of the Code is imposed
on such Person.
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(q) Taxes. (i) (A) Each of Sprint and its Subsidiaries and each Sprint
Consolidated Group has timely filed or has caused to be timely filed all
material tax returns and reports required to be filed by it or requests for
extensions to file such returns or reports have been timely filed, granted and
have not expired, (B) all tax returns and reports filed by Sprint and each of
its Subsidiaries and each Sprint Consolidated Group are complete and accurate
in all respects and (C) Sprint and each of its Subsidiaries and each Sprint
Consolidated Group has paid (or Sprint or another member of such Sprint
Consolidated Group has paid on its behalf) all taxes shown as due on such
returns and reports, and the reserve for current taxes shown on the most recent
financial statements contained in the Sprint Filed SEC Reports (in addition to
any reserve for deferred taxes established to reflect timing differences
between book and tax income) is adequate to cover all taxes payable by Sprint
and its Subsidiaries and each Sprint Consolidated Group for all taxable periods
and portions thereof through the date of such financial statements, except for
any such failure to file, incompleteness or inaccuracy, failure to pay, or
inadequacy of such reserve, that is not reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect on Sprint.
(ii) No deficiencies for any taxes have been proposed, asserted or assessed
in writing against Sprint or any of its Subsidiaries or any Sprint Consolidated
Group that are not adequately reserved for, except for deficiencies that are
not reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on Sprint, and no requests for waivers of the time to assess any
such taxes have been granted or are pending (other than with respect to years
that are currently under examination by the Internal Revenue Service or other
applicable taxing authorities). The statute of limitations on assessment or
collection of any Federal taxes due from Sprint and its Subsidiaries has
expired for all taxable years of Sprint and each of its Subsidiaries through
1985. The Federal income tax returns of Sprint and each of its Subsidiaries
have been examined by and settled with the Internal Revenue Service for all
years through 1987.
(iii) Neither Sprint nor any of its Subsidiaries has taken or has agreed to
take any action or has any Knowledge of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Merger from qualifying as
a "reorganization" within the meaning of Section 368(a) of the Code.
(iv) Neither Sprint nor any of its Subsidiaries has constituted either a
"distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355 of the Code (A) in the two years prior to
the date of this Agreement or (B) in a distribution which could otherwise
constitute part of a "plan" or series of "related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the Merger.
(v) Sprint does not believe that it is a "United States real property
holding corporation" within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code,
although it has not determined or established whether it will be a United
States real property holding corporation in the future.
(vi) Sprint has "nexus" for state tax law purposes in Kansas and
Pennsylvania.
(vii) As used in this Agreement, "taxes" shall include all (A) Federal,
state, local or foreign income tax, property, sales, excise or other taxes or
similar governmental charges, including any interest, penalties or additions
with respect thereto, (B) liability for the payment of the amounts described in
clause (A) as a result of being a member of an affiliated, consolidated,
combined or unitary group, and (C) liability for the payment of any amounts as
a result of being a party to any tax sharing agreement or as a result of any
express or implied obligation to indemnify any other Person with respect to the
payment of any amounts of the type described in clause (A) or (B).
(viii) As used in this Agreement, "Sprint Consolidated Group" means any
affiliated group within the meaning of Section 1504(a) of the Code, in which
Sprint (or any Subsidiary of Sprint) is or has ever been a member or any group
of corporations with which Sprint files, has filed or is or was required to
file an affiliated, consolidated, combined, unitary or aggregate tax return.
1-15
3.2 Representations and Warranties of MCI WorldCom. Except as disclosed in
the MCI WorldCom SEC Reports filed and publicly available prior to the date of
this Agreement (the "MCI WorldCom Filed SEC Reports") or as set forth in the
MCI WorldCom Disclosure Schedule delivered by MCI WorldCom to Sprint prior to
the execution of this Agreement (the "MCI WorldCom Disclosure Schedule"), MCI
WorldCom represents and warrants to Sprint as follows:
(a) Organization, Standing and Power. Each of MCI WorldCom and its
Significant Subsidiaries is a corporation or other legal entity duly organized
or formed, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has all requisite corporate,
partnership or similar power and authority to own, lease and operate its
properties and to carry on its business as now being conducted and is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification necessary other than in such jurisdictions where the failure so
to qualify or to be in good standing is not reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect on MCI WorldCom. The copies
of the articles of incorporation and by-laws of MCI WorldCom which were
previously furnished to Sprint are true, complete and correct copies of such
documents as in effect on the date of this Agreement.
(b) Capital Structure. (i) As of September 30, 1999, the authorized capital
stock of MCI WorldCom consisted of (A) 5,000,000,000 shares of MCI WorldCom
Common Stock of which 1,880,219,054 shares were outstanding and (B) 50,000,000
shares of Preferred Stock, par value $0.01 per share, of which (1) 94,992
shares have been designated as Series A 8% Cumulative Convertible Preferred
Stock, of which no shares were outstanding, (2) 15,000,000 shares have been
designated Series B Convertible Preferred Stock ("MCI WorldCom Series B
Preferred Stock"), of which 11,190,244 shares were outstanding, (3) 3,750,000
shares have been designated Series C $2.25 Cumulative Convertible Exchangeable
Preferred Stock ("MCI WorldCom Series C Preferred Stock"), of which no shares
were outstanding, and (4) 5,000,000 shares have been designated Series 3 Junior
Participating Preferred Stock and reserved for issuance upon exercise of the
rights (the "MCI WorldCom Rights") distributed to holders of MCI WorldCom
Common Stock pursuant to the Rights Agreement dated as of August 25, 1996, as
amended, between MCI WorldCom and The Bank of New York, as rights agent (the
"MCI WorldCom Rights Agreement"). As of September 30, 1999, 4,510,211 shares of
MCI WorldCom Common Stock were held by MCI WorldCom in its treasury. Since
September 30, 1999 to the date of this Agreement, there have been no issuances
of shares of the capital stock of MCI WorldCom or any other securities of MCI
WorldCom other than issuances of shares (and accompanying MCI WorldCom Rights)
pursuant to options or rights outstanding as of September 30, 1999 under the
Benefit Plans of MCI WorldCom or pursuant to MCI WorldCom's acquisition of
SkyTel Communications, Inc. All issued and outstanding shares of the capital
stock of MCI WorldCom are duly authorized, validly issued, fully paid and
nonassessable, and no class of capital stock is entitled to preemptive rights.
There were outstanding as of September 30, 1999 no options, warrants or other
rights to acquire capital stock from MCI WorldCom other than pursuant to MCI
WorldCom's pending acquisitions as of such date. MCI WorldCom's Benefit Plans
and MCI WorldCom's convertible preferred stock. No options or warrants or other
rights to acquire capital stock from MCI WorldCom have been issued or granted
since September 30, 1999 to the date of this Agreement other than pursuant to
MCI WorldCom's acquisition of SkyTel Communications, Inc. or pursuant to MCI
WorldCom's Benefit Plans. The shares of MCI WorldCom Capital Stock to be issued
pursuant to this Agreement, when issued in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable, and no Person
will have any preemptive right, subscription right or other purchase right in
respect thereof other than pursuant to agreements with Sprint or any of its
Subsidiaries as in effect on the date hereof.
(ii) As of the date of this Agreement, no bonds, debentures, notes or other
indebtedness of MCI WorldCom having the right to vote on any matters on which
shareholders may vote ("MCI WorldCom Voting Debt") are issued or outstanding.
(iii) Except as otherwise set forth in this Section 3.2(b), as of the date
of this Agreement, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which MCI
WorldCom or any of its Subsidiaries is a party or by which any of them is bound
obligating
1-16
MCI WorldCom or any of its Subsidiaries to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock or other
voting securities of MCI WorldCom or any of its Subsidiaries or obligating MCI
WorldCom or any of its Subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking. As of the date of this Agreement, there are no outstanding
obligations of MCI WorldCom or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of MCI WorldCom or any of its
Subsidiaries.
(iv) Exhibit 21 to MCI WorldCom's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 (the "MCI WorldCom 1998 10-K"), sets forth each
Significant Subsidiary of MCI WorldCom as of the date hereof. As of the date
hereof, all the outstanding shares of capital stock of, or other equity
interests in, each Significant Subsidiary of MCI WorldCom have been validly
issued and are fully paid and nonassessable and are owned directly or
indirectly by MCI WorldCom, free and clear of all Liens and free of any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests. Except for the capital stock or other
ownership interests of its Subsidiaries, as of the date hereof, MCI WorldCom
does not beneficially own directly or indirectly any capital stock, membership
interest, partnership interest, joint venture interest or other equity interest
in any Person which constitutes a Material Investment.
(c) Authority; No Conflicts. (i) MCI WorldCom has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby, subject in the case of the approval of this
Agreement and the MCI WorldCom Stock Issuance to obtaining the Required MCI
WorldCom Vote. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of MCI WorldCom, subject to the
approval of this Agreement and the MCI WorldCom Stock Issuance by the Required
MCI WorldCom Vote. This Agreement has been duly executed and delivered by MCI
WorldCom and constitutes a valid and binding agreement of MCI WorldCom,
enforceable against it in accordance with its terms.
(ii) The execution and delivery of this Agreement do not or will not, as the
case may be, and the consummation of the Merger and the other transactions
contemplated hereby will not, subject to the approval of this Agreement and the
MCI WorldCom Stock Issuance by the Required MCI WorldCom Vote, conflict with,
or result in, a Violation pursuant to: (A) any provision of the articles of
incorporation or by-laws of MCI WorldCom or the governing documents of any
Subsidiary of MCI WorldCom, or (B) except as is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on MCI
WorldCom and subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in
paragraph (iii) below, any loan or credit agreement, note, mortgage, bond,
indenture, lease, benefit plan or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to MCI WorldCom or any Subsidiary of
MCI WorldCom or their respective properties or assets.
(iii) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to MCI WorldCom or any Subsidiary of MCI WorldCom in connection with
the execution and delivery of this Agreement by MCI WorldCom or the
consummation of the Merger and the other transactions contemplated hereby,
except for (A) those required under or in relation to the rules and regulations
of Nasdaq, (B) the Required Consents and (C) such consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
make or obtain is not reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on MCI WorldCom.
(d) Reports and Financial Statements. MCI WorldCom has filed all reports,
schedules, forms, statements and other documents required to be filed by it
with the SEC since January 1, 1998 (collectively, including all exhibits
thereto, the "MCI WorldCom SEC Reports"). No Significant Subsidiary of MCI
WorldCom is required to file any form, report or other document with the SEC.
None of the MCI WorldCom SEC Reports when filed contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the financial
statements (including the related notes) included in the MCI WorldCom SEC
1-17
Reports presents fairly, in all material respects, the consolidated financial
position and consolidated results of operations and cash flows of MCI WorldCom
and its Subsidiaries as of the respective dates or for the respective periods
set forth therein, all in conformity with U.S. GAAP consistently applied during
the periods involved except as otherwise noted therein, and subject, in the
case of the unaudited interim financial statements, to normal and recurring
year-end adjustments. All of such MCI WorldCom SEC Reports, as of their
respective dates (and as of the date of any amendment to the respective MCI
WorldCom SEC Report), complied as to form in all material respects with the
applicable requirements of the Securities Act and the Exchange Act.
(e) Information Supplied. (i) None of the information supplied or to be
supplied by MCI WorldCom for inclusion or incorporation by reference in (A) the
Form S-4 will, at the time the Form S-4 becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (B) the Joint Proxy Statement/Prospectus will, on
the date it is first mailed to Sprint stockholders or MCI WorldCom shareholders
or at the time of the Sprint Stockholders Meeting or the MCI WorldCom
Shareholders Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The Form S-4 and the Joint Proxy
Statement/Prospectus will comply as to form in all material respects with the
requirements of the Securities Act and the Exchange Act.
(ii) Notwithstanding the foregoing provisions of this Section 3.2(e), no
representation or warranty is made by MCI WorldCom with respect to statements
made or incorporated by reference in the Form S-4 or the Joint Proxy
Statement/Prospectus based on information supplied by Sprint for inclusion or
incorporation by reference therein.
(f) Litigation. There is no suit, action, proceeding, claim or investigation
pending or, to the Knowledge of MCI WorldCom, threatened against or affecting
MCI WorldCom or any of its Subsidiaries that is reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect on MCI WorldCom nor is
there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against MCI WorldCom or any of its
Subsidiaries having, or that is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on MCI WorldCom.
(g) Compliance with Applicable Laws. MCI WorldCom and its Subsidiaries hold
all permits, licenses, variances, exemptions, orders, registrations and
approvals of all Governmental Entities which are required for the operation of
the business of MCI WorldCom and its Subsidiaries taken as a whole (the "MCI
WorldCom Permits"), except where the failure to have any such MCI WorldCom
Permits is not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on MCI WorldCom. MCI WorldCom and its Subsidiaries are
in compliance with the terms of the MCI WorldCom Permits and all applicable
statutes, laws, ordinances, rules and regulations, except where the failure so
to comply is not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on MCI WorldCom. Subject to obtaining the Required
Consents, the Merger, in and of itself, would not cause the revocation or
cancelation of any MCI WorldCom Permit that is reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect on MCI WorldCom.
(h) State Takeover Statutes; Approvals. The Board of Directors of MCI
WorldCom has approved and recommended the terms of this Agreement and the
consummation of the Merger and the other transactions contemplated hereby
(including the amendments to MCI WorldCom's articles of incorporation
contemplated hereby) and such approval of the Board of Directors of MCI
WorldCom constitutes approval of the Merger and the other transactions
contemplated hereby (including the amendments to MCI WorldCom's articles of
incorporation contemplated hereby) by the Board of Directors of MCI WorldCom to
the extent applicable under Article Eleven of MCI WorldCom's articles of
incorporation and represents all the action necessary to ensure that Article
Eleven of MCI WorldCom's articles of incorporation does not apply to Sprint in
connection with the Merger and the other transactions contemplated hereby. No
Georgia or Kansas state takeover statute
1-18
(including Section 14-2-1110 et seq. and Section 14-2-1131 et seq. of the GBCC)
is applicable to MCI WorldCom in connection with this Agreement, the Merger or
the other transactions contemplated by this Agreement. Other than those that
have been made prior to the date hereof, no approval or determination of the
Board of Directors of MCI WorldCom or any committee thereof is required with
respect to any class or series of MCI WorldCom Capital Stock or under MCI
WorldCom's articles of incorporation or by-laws to approve this Agreement or
any of the transactions contemplated hereby.
(i) Intellectual Property; Year 2000. (i) MCI WorldCom and its Subsidiaries
own, or are validly licensed or otherwise have the right to use, all
Intellectual Property Rights used in the business of MCI WorldCom and its
Subsidiaries, except for such Intellectual Property Rights the failure of which
to own, license or otherwise have the right to use is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on MCI
WorldCom.
(ii) To the Knowledge of MCI WorldCom, neither MCI WorldCom nor any of its
Subsidiaries has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property Rights or other proprietary
information of any other Person, except for any such interference,
infringement, misappropriation or other conflict which is not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
MCI WorldCom. To the Knowledge of MCI WorldCom, neither MCI WorldCom nor any of
its Subsidiaries has received any written charge, complaint, claim, demand or
notice alleging any such interference, infringement, misappropriation or other
conflict (including any claim that MCI WorldCom or any such Subsidiary must
license or refrain from using any Intellectual Property Rights or other
proprietary information of any other Person) which has not been settled or
otherwise fully resolved, except with respect to any such interference,
infringement, misappropriation or other conflict which is not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
MCI WorldCom. To the Knowledge of MCI WorldCom, no other Person has interfered
with, infringed upon, misappropriated or otherwise come into conflict with any
Intellectual Property Rights of MCI WorldCom or any of its Subsidiaries, except
for any such interference, infringement, misappropriation or other conflict
which is not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on MCI WorldCom.
(iii) As of the date of this Agreement, MCI WorldCom and its Subsidiaries
have undertaken a concerted effort to ensure that all of the computer software,
computer firmware, computer hardware, and other similar or related items of
automated, computerized, and/or software system(s) that are to be used or
relied on by MCI WorldCom or any of its Subsidiaries in the conduct of their
respective businesses will not malfunction, will not cease to function, will
not generate incorrect data, and will not provide incorrect results when
processing, providing and/or receiving (i) date/related data into and between
the years 1999 and 2000 and (ii) date-related data in connection with any valid
date in the twentieth and twenty-first centuries. As of the date of this
Agreement, MCI WorldCom reasonably believes that such effort will be
successful.
(j) Absence of Certain Changes or Events. Except for liabilities incurred in
connection with this Agreement or the transactions contemplated hereby, since
June 30, 1999, MCI WorldCom and its Subsidiaries have conducted their business
only in the ordinary course, and there has not been (i) any Material Adverse
Change in MCI WorldCom, (ii) until the date of this Agreement, any declaration,
setting aside or payment of any dividend or other distribution (whether in
cash, stock or property) with respect to any of MCI WorldCom's capital stock,
other than dividends payable on MCI WorldCom's preferred stock in accordance
with their terms as of the date of this Agreement, (iii) until the date of this
Agreement, any split, combination or reclassification of any of MCI WorldCom's
capital stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of MCI
WorldCom's capital stock, (iv) until the date of this Agreement, except insofar
as may be required by a change in U.S. GAAP, any change in accounting methods,
principles or practices by MCI WorldCom materially affecting its consolidated
financial position or consolidated results of operations or (v) until the date
of this Agreement, except insofar as Sprint has given its consent, which
consent shall not be unreasonably withheld or delayed, any tax election (or
settlement or compromise of any material income tax liability) that is
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on MCI WorldCom.
1-19
(k) Vote Required. The affirmative vote (the "Required MCI WorldCom Vote")
of (i) holders of shares of MCI WorldCom Common Stock and MCI WorldCom Series B
Preferred Stock representing a majority of all the votes entitled to be cast at
a meeting of the holders of outstanding shares of capital stock of MCI
WorldCom, voting as a single voting group, is the only vote of the holders of
any class or series of MCI WorldCom capital stock necessary to approve the
Merger (which would include the amendment to MCI WorldCom's articles of
incorporation contemplated hereby) and (ii) a majority of the total votes cast
by the holders of shares of MCI WorldCom Common Stock is the only vote of the
holders of any class or series of capital stock of MCI WorldCom necessary to
approve, in accordance with the applicable rules of Nasdaq, the issuance (the
"MCI WorldCom Stock Issuance") of MCI WorldCom Capital Stock pursuant to the
Merger.
(l) MCI WorldCom Rights Agreement. No amendment to the MCI WorldCom Rights
Agreement is required to be made by MCI WorldCom in connection with the
approval, execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby.
(m) Brokers or Finders. No agent, broker, investment banker, financial
advisor or other firm or Person on behalf of MCI WorldCom is or will be
entitled to any broker's or finder's fee or any other similar commission or fee
in connection with any of the transactions contemplated by this Agreement,
except ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., whose fees and expenses will be paid by MCI
WorldCom in accordance with MCI WorldCom's agreement with such firm, based upon
arrangements made by or on behalf of MCI WorldCom and previously disclosed to
Sprint.
(n) Opinion of Financial Advisor. MCI WorldCom has received the opinion of
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., dated the date of this Agreement, to the effect
that, as of the date hereof, the FON Exchange Ratio and the PCS Stock Merger
Consideration were fair, from a financial point of view, to MCI WorldCom, a
copy of which opinion has been made available to Sprint.
(o) ERISA Compliance. (i) With respect to MCI WorldCom's Benefit Plans, no
liability has been incurred and to the Knowledge of MCI WorldCom there exists
no condition or circumstances in connection with which MCI WorldCom or any of
its Subsidiaries could be subject to any liability that is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on MCI
WorldCom, in each case under ERISA, the Code or any other applicable law.
(ii) Each of MCI WorldCom's Benefit Plans has been administered in
accordance with its terms, except for any failures so to administer any such
Benefit Plan that are not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect on MCI WorldCom. MCI WorldCom, its
Subsidiaries and all MCI WorldCom's Benefit Plans are in compliance with the
applicable provisions of ERISA, the Code and all other applicable laws and the
terms of all applicable collective bargaining agreements, except for any
failures to be in such compliance that are not reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect on MCI WorldCom.
(iii) None of MCI WorldCom or any of its Subsidiaries sponsors or
contributes to any of MCI WorldCom's Benefit Plans that is subject to Title IV
of ERISA.
(iv) MCI WorldCom and its Subsidiaries are in compliance with all Federal,
state, local and foreign requirements regarding employment, except for any
failures to comply that are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on MCI WorldCom. As of the date of
this Agreement, there is no labor dispute, strike or work stoppage against MCI
WorldCom or any of its Subsidiaries pending or, to the Knowledge of MCI
WorldCom, threatened which may interfere with the respective business
activities of MCI WorldCom or any of its Subsidiaries, except where such
dispute, strike or work stoppage is not reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect on MCI WorldCom. As of the
date of this Agreement, to the Knowledge of MCI WorldCom, none of MCI WorldCom,
any of its Subsidiaries or any of their respective representatives or employees
has committed any unfair labor practice in connection with the operation of the
respective businesses of MCI WorldCom or any of its Subsidiaries, and
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there is no action, charge or complaint against MCI WorldCom or any of its
Subsidiaries by the National Labor Relations Board or any comparable
Governmental Entity pending or threatened in writing, in each case except where
such practices, actions, charges or complaints are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on MCI
WorldCom.
(v) No employee of MCI WorldCom or its Subsidiaries will be entitled to any
additional benefits or any acceleration of the time of payment or vesting of
any benefits under any of MCI WorldCom's Benefit Plans as a result of the
transactions contemplated by this Agreement, except to the extent that such
benefits, acceleration or vesting are not reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect on MCI WorldCom. No amount
payable, or economic benefit provided, by MCI WorldCom or its Subsidiaries
(including any acceleration of the time of payment or vesting of any benefit)
could be considered an "excess parachute payment" under Section 280G of the
Code, except to the extent that, if such payment or benefit was an "excess
parachute payment", such payment or benefit is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on MCI
WorldCom. No Person is entitled to receive any additional payment from MCI
WorldCom or its Subsidiaries or any other Person in the event that the excise
tax of Section 4999 of the Code is imposed on such Person, except to the extent
that any such additional payment is not reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect on MCI WorldCom.
(p) Taxes. (i) (A) Each of MCI WorldCom and its Subsidiaries and each MCI
WorldCom Consolidated Group has timely filed or has caused to be timely filed
all material tax returns and reports required to be filed by it or requests for
extensions to file such returns or reports have been timely filed, granted and
have not expired, (B) all tax returns and reports filed by MCI WorldCom and
each of its Subsidiaries and each MCI WorldCom Consolidated Group are complete
and accurate in all respects and (C) MCI WorldCom and each of its Subsidiaries
and each MCI WorldCom Consolidated Group has paid (or MCI WorldCom or another
member of such MCI WorldCom Consolidated Group has paid on its behalf) all
taxes shown as due on such returns and reports, and the reserve for current
taxes shown on the most recent financial statements contained in the MCI
WorldCom Filed SEC Reports (in addition to any reserve for deferred taxes
established to reflect timing differences between book and tax income) is
adequate to cover all taxes payable by MCI WorldCom and its Subsidiaries and
each MCI WorldCom Consolidated Group for all taxable periods and portions
thereof through the date of such financial statements, except for any such
failure to file, incompleteness or inaccuracy, failure to pay, or inadequacy of
such reserve, that is not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect on MCI WorldCom.
(ii) No deficiencies for any taxes have been proposed, asserted or assessed
in writing against MCI WorldCom or any of its Subsidiaries or any MCI WorldCom
Consolidated Group that are not adequately reserved for, except for
deficiencies that are not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect on MCI WorldCom and no requests for waivers
of time to assess any such taxes have been granted or are pending (other than
with respect to years that are currently under examination by the Internal
Revenue Service or other applicable taxing authorities). The statute of
limitations on assessment or collection of any Federal taxes due from MCI
WorldCom and its Subsidiaries has expired for all taxable years of MCI WorldCom
and each of its Subsidiaries through 1987. The Federal income tax returns of
MCI WorldCom and each of its Subsidiaries have been examined by and settled
with the Internal Revenue Services for all years through 1987.
(iii) Neither MCI WorldCom nor any of its Subsidiaries has taken or has
agreed to take any action or has any Knowledge of any fact, agreement, plan or
other circumstance that is reasonably likely to prevent the Merger from
qualifying as a "reorganization" within the meaning of Section 368(a) of the
Code.
(iv) Neither MCI WorldCom nor any of its Subsidiaries has constituted either
a "distributing corporation" or a "controlled corporation" (within the meaning
of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355 of the Code (A) in the two years prior to
the date of this Agreement or (B) in a distribution which could otherwise
constitute part of a "plan" or series of "related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the Merger.
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(v) MCI WorldCom does not believe that it is a "United States real property
holding corporation" within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code,
although it has not determined or established whether it will be a United
States real property holding corporation in the future.
(vi) As used in this Agreement, "MCI WorldCom Consolidated Group" means any
affiliated group within the meaning of Section 1504(a) of the Code, in which
MCI WorldCom (or any Subsidiary of MCI WorldCom) is or has ever been a member
or any group of corporations with which MCI WorldCom files, has filed or is or
was required to file an affiliated, consolidated, combined, unitary or
aggregate tax return.
ARTICLE IV
Covenants Relating to Conduct of Business
4.1 Covenants of Sprint. During the period from the date of this Agreement
and continuing until the Effective Time, Sprint agrees as to itself and its
Subsidiaries that (except as expressly contemplated, permitted or required by
this Agreement or as otherwise indicated on the Sprint Disclosure Schedule or
to the extent that MCI WorldCom shall otherwise consent in writing, which
consent shall not be unreasonably withheld or delayed):
(a) Ordinary Course. Except to the extent not reasonably practicable in
light of the announcement or existence of this Agreement and the transactions
contemplated hereby, Sprint shall, and shall cause its Subsidiaries taken as a
whole to, carry on its business in the usual, regular and ordinary course in
all material respects, in substantially the same manner as heretofore
conducted, and shall use all reasonable efforts to maintain its rights and
franchises and preserve its relationships with customers, suppliers and others
having business dealings with it with the objective to minimize the impairment
of its ongoing business; provided, however, that no action by Sprint or its
Subsidiaries with respect to matters specifically addressed by any other
provisions of this Section 4.1 or Section 4.1 of the Sprint Disclosure Schedule
shall be deemed a breach of this Section 4.1(a) unless such action would
constitute a breach of one or more of such other provisions.
(b) Dividends; Changes in Share Capital. Sprint shall not, and shall not
permit any of its Subsidiaries to, and shall not propose to, (i) declare or pay
any dividends on or make other distributions in respect of any of its capital
stock, except (A) Sprint may continue the declaration and payment of regular
quarterly cash dividends not in excess of $0.125 per share of Sprint FON Stock
(and any corresponding cash dividends on shares held by the Class A Holders)
and regular dividends required by the terms of the Sprint Preferred Stock as in
effect on the date hereof, in each case with usual record and payment dates for
such dividends in accordance with Sprint's past practice and (B) dividends by
wholly owned Subsidiaries of Sprint to its parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of its capital stock, except for any such transaction by a wholly
owned Subsidiary of Sprint which remains a wholly owned Subsidiary after
consummation of such transaction, or (iii) repurchase, redeem or otherwise
acquire any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock except for the purchase from
time to time by Sprint of Sprint Common Stock (and the associated Sprint
Rights) in the ordinary course of business consistent with past practice in
connection with the Sprint Benefit Plans and the terms of the Sprint Conversion
Shares as in effect on the date hereof and except for the redemption of the
Sprint First Series Preferred Stock and Sprint Second Series Preferred Stock
pursuant to Section 5.14.
(c) Issuance of Securities. Sprint shall not, and shall not permit any of
its Subsidiaries to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any class,
any Sprint Voting Debt or any securities convertible into or exercisable for,
or any rights, warrants or options to acquire, any such shares or Sprint Voting
Debt, or enter into any agreement with respect to any of the foregoing, other
than (i) the issuance of Sprint Common Stock (and the associated Sprint Rights)
upon the exercise of stock options or in connection with rights under other
stock-based benefits plans, to the extent such
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options or rights are outstanding on the date hereof in accordance with their
present terms or upon the exercise of the stock options issued pursuant to
clause (vi) below, (ii) the issuance of Sprint Capital Stock upon the
conversion of Sprint Conversion Securities pursuant to the terms thereof as in
effect on the date hereof, (iii) the issuance of Sprint PCS Stock pursuant to
the exercise of Warrants pursuant to the terms of the Warrant Agreements as in
effect on the date hereof, (iv) issuances by a wholly owned Subsidiary of
Sprint of capital stock to such Subsidiary's parent, (v) issuances in
accordance with the Sprint Rights Agreement, (vi) issuances of stock options in
connection with regular option grants by Sprint or issuances of stock options
for new hires or issuances of restricted stock, in each case in the ordinary
course of business and consistent with past practice pursuant to the Sprint
Benefit Plans, (vii) the issuance of shares of Sprint Capital Stock pursuant to
purchase rights or preemptive rights held by stockholders of Sprint under the
terms of the instruments or agreements as in effect on the date hereof pursuant
to which such shares were issued, (viii) the issuance of Sprint Capital Stock
pursuant to acquisitions permitted under Section 4.1(e) hereof or under Section
4.1 of the Sprint Disclosure Schedule or (ix) as provided in Section 5.7 of the
Sprint Disclosure Schedule.
(d) Governing Documents. Except to the extent required to comply with their
respective obligations hereunder, required by law or required by the rules and
regulations of the NYSE, Sprint shall not amend its articles of incorporation
or by-laws.
(e) No Acquisitions. Sprint shall not, and shall not permit any of its
Subsidiaries to, acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets; provided, however, that the
foregoing shall not prohibit (i) acquisitions of assets used in the operations
of the business of Sprint and its Subsidiaries in the ordinary course of
business consistent with past practice, (ii) internal reorganizations or
consolidations involving existing Subsidiaries of Sprint or (iii) the creation
of new Subsidiaries of Sprint organized to conduct or continue activities
otherwise permitted by this Agreement, so long as any action otherwise
permitted by this proviso could not reasonably be expected to result in (A) any
of the conditions to the Merger set forth in Article VI not being satisfied or
(B) a material delay in the satisfaction of any such conditions.
(f) No Dispositions. Other than (i) in the ordinary course of business
consistent with past practice and, in any event, which are not material,
individually or in the aggregate, to Sprint and its Subsidiaries taken as a
whole or (ii) internal reorganizations or consolidations involving existing
Subsidiaries of Sprint, Sprint shall not, and shall not permit any of its
Subsidiaries to, sell, lease, encumber or otherwise dispose of, or agree to
sell, lease, encumber or otherwise dispose of (including by way of a spin-off
or similar transaction), any of its assets.
(g) Indebtedness; Investments. Sprint shall not, and shall not permit any of
its Subsidiaries to, (i) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another Person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of Sprint or any of its
Subsidiaries, guarantee any debt securities of another Person, enter into any
"keep well" or other agreement to maintain any financial statement condition of
another Person (other than any wholly owned Subsidiary) or enter into any
arrangement having the economic effect of any of the foregoing, except for (A)
short-term borrowings, senior bank or similar bank financing or, subject to
prior consultation with MCI WorldCom, any other indebtedness incurred by Sprint
or any of its Subsidiaries with a maturity date not to exceed five years from
the date of its original issuance (provided that the consummation of this
Agreement or any of the transactions contemplated hereby shall not give rise
to, cause or result in, a default or event of default under the agreement or
instrument governing any such indebtedness or, an obligation to pay any amount
thereunder solely as a result of the consummation of this Agreement or any of
the transactions contemplated hereby) incurred in the ordinary course of
business consistent with past practice (or to refund existing or maturing
indebtedness) and (B) intercompany indebtedness between Sprint and any of its
wholly owned Subsidiaries or between such wholly owned Subsidiaries, (ii) make
any loans or advances to any other Person, other than (A) employee loans or
advances made by Sprint in the ordinary course of business consistent with past
practice and (B) loans or
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advances made between Sprint and any of its wholly owned Subsidiaries or
between such wholly owned Subsidiaries, or (iii) investments in any Person
other than (A) investments in wholly owned Subsidiaries and (B) investments in
the ordinary course of business consistent with past practice and, in any
event, which are not material, individually or in the aggregate, to Sprint.
(h) New Line of Business; Capital Expenditures. Sprint shall not, and shall
not permit any of its Subsidiaries to, (i) enter into any new material line of
business outside its Core Businesses (as defined in Sprint's articles of
incorporation) or (ii) incur or commit to any capital expenditures other than
capital expenditures incurred or committed to in the ordinary course of
business and which are not in excess of the amounts set forth in Section 4.1(h)
of the Sprint Disclosure Schedule.
(i) Tax-Free Qualification. Sprint shall not, and shall not permit any of
its Subsidiaries to, take any action that would prevent or impede the Merger
from qualifying as a reorganization under Section 368 of the Code.
(j) Other Actions. Sprint shall not, and shall not permit any of its
Subsidiaries to, take any action that would, or that could reasonably be
expected to, result in (i) any of the conditions to the Merger set forth in
Article VI not being satisfied or (ii) a material delay in the satisfaction of
any such conditions.
(k) Accounting Methods. Except as disclosed in the Sprint Filed SEC Reports,
or as required by a Governmental Entity, Sprint shall not make any material
change in its methods of accounting in effect at December 31, 1998, except as
required by changes in U.S. GAAP as concurred in by Sprint's independent
auditors. Sprint shall not change its fiscal year.
(l) Representations and Warranties. Sprint shall not take any action that
would cause the representations and warranties set forth in Section 3.1(j) to
no longer be true and correct.
(m) Authorization of the Foregoing. Sprint shall not, and shall not permit
any of its Subsidiaries to, authorize, commit or agree to take any of the
foregoing actions.
4.2 Covenants of MCI WorldCom. During the period from the date of this
Agreement and continuing until the Effective Time, MCI WorldCom agrees as to
itself and its Subsidiaries that (except as expressly contemplated, permitted
or required by this Agreement or as otherwise indicated on the MCI WorldCom
Disclosure Schedule or to the extent that Sprint shall otherwise consent in
writing, which consent shall not be unreasonably withheld or delayed):
(a) Ordinary Course. Except to the extent not reasonably practicable in
light of the announcement or existence of this Agreement and the transactions
contemplated hereby, MCI WorldCom shall, and shall cause its Subsidiaries taken
as a whole to, carry on its business in the usual, regular and ordinary course
in all material respects, in substantially the same manner as heretofore
conducted, and shall use all reasonable efforts to maintain its rights and
franchises and preserve its relationships with customers, suppliers and others
having business dealings with it with the objective to minimize the impairment
of its ongoing business; provided, however, that no action by MCI WorldCom or
its Subsidiaries with respect to matters specifically addressed by any other
provisions of this Section 4.2 shall be deemed a breach of this Section 4.2(a)
unless such action would constitute a breach of one or more of such other
provisions.
(b) Dividends; Changes in Share Capital. MCI WorldCom shall not, and shall
not permit any of its Subsidiaries to, and shall not propose to, repurchase,
redeem or otherwise acquire any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock except for
the purchase from time to time by MCI WorldCom of MCI WorldCom Capital Stock
(and the associated MCI WorldCom Rights) in the ordinary course of business
consistent with past practice in connection with share options, share incentive
schemes, profit sharing schemes or other benefit plans of MCI WorldCom or
repurchases of shares of MCI WorldCom Common Stock in open market or privately
negotiated transactions. In the event MCI WorldCom
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changes (or establishes a record date for changing) the number of shares of MCI
WorldCom Common Stock issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend, recapitalization, subdivision,
reclassification, combination, exchange of shares or similar transaction with
respect to the outstanding MCI WorldCom Common Stock and the record date
therefor shall be prior to the Effective Time, the applicable Merger
Consideration shall be appropriately adjusted to reflect such stock split,
stock dividend, recapitalization, subdivision, reclassification, combination,
exchange of shares or similar transaction. In addition, in the event MCI
WorldCom pays (or establishes a record date for payment of) any dividend on, or
makes any other distribution in respect of, MCI WorldCom Common Stock, the
applicable Merger Consideration shall be appropriately adjusted to reflect such
dividend or distribution. Without limiting the foregoing, the issuance of MCI
WorldCom Rights pursuant to the MCI WorldCom Rights Agreement in respect of
each share of MCI WorldCom PCS Stock shall not cause, or result in, any
adjustment pursuant to this Section 4.2(b).
(c) No Acquisitions. MCI WorldCom shall not, and shall not permit any of its
Subsidiaries to, acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or all or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof, in any event (i) with a value in excess of an amount equal to
20% of the market capitalization of MCI WorldCom, for any one acquisition and
30% thereof for all acquisitions before the Closing, in each case as determined
on the date of its entering into an agreement therefor or (ii) that could
reasonably be expected to result in (A) any of the conditions to the Merger set
forth in Article VI not being satisfied or (B) a material delay in the
satisfaction of any such conditions. MCI WorldCom shall not, and shall not
permit any of its Subsidiaries to, enter into any new material line of business
outside its existing core businesses.
(d) No Dispositions. MCI WorldCom shall not, and shall not permit any of its
Subsidiaries to, sell, lease, encumber or otherwise dispose of all or
substantially all of any material line of business for MCI WorldCom and its
Subsidiaries taken as a whole.
(e) Tax-Free Qualification. MCI WorldCom shall not and shall not permit any
of its Subsidiaries to, take any action that would prevent or impede the Merger
from qualifying as a reorganization under Section 368 of the Code.
(f) Other Actions. MCI WorldCom shall not, and shall not permit any of its
Subsidiaries to, take any action that would, or could reasonably be expected
to, result in (i) any of the conditions to the Merger set forth in Article VI
not being satisfied or (ii) a material delay in the satisfaction of such
conditions.
(g) Representations and Warranties. MCI WorldCom shall not take any action
that would cause the representations and warranties set forth in Section
3.2(j)(i) to no longer be true and correct.
(h) Authorization of the Foregoing. MCI WorldCom shall not, and shall not
permit any of its Subsidiaries to, authorize, commit or agree to take, any of
the foregoing actions.
4.3 Control of Other Party's Business. Nothing contained in this Agreement
shall give Sprint, directly or indirectly, the right to control or direct MCI
WorldCom's operations prior to the Effective Time. Nothing contained in this
Agreement shall give MCI WorldCom, directly or indirectly, the right to control
or direct Sprint's operations prior to the Effective Time. Prior to the
Effective Time, each of Sprint and MCI WorldCom shall exercise, consistent with
the terms and conditions of this Agreement, complete control and supervision
over its respective operations.
4.4 FT/DT Arrangements. Notwithstanding anything in this Agreement to the
contrary:
(a) MCI WorldCom expressly consents and agrees to (i) the execution and
delivery by Sprint, Sprint Global Venture, Inc. ("SGVI") and any other
Subsidiary of Sprint of (A) the Master Transfer Agreement dated as of January
21, 2000 (the "MTA") between and among FT, DT, NAB Nordamerika Beteiligungs
Holding GmbH,
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Atlas Telecommunications S.A., Sprint, SGVI and the JV Entities which are
parties thereto and (B) the agreements contemplated by, or to be executed and
delivered pursuant to, the MTA (together with the MTA, the "MTA Transaction
Documents"), and (ii) the performance by Sprint, SGVI and any other Subsidiary
of Sprint of their obligations thereunder and the consummation by Sprint, SGVI
and any other Subsidiary of Sprint of the transactions contemplated thereby.
(b) MCI WorldCom agrees that neither the execution and delivery of the MTA
Transaction Documents nor the performance of the obligations thereunder or the
consummation of the transactions contemplated thereby will constitute a breach
of this Agreement or be included in determining whether a Material Adverse
Effect on Sprint or a Material Adverse Change in Sprint has occurred for any
purpose of this Agreement.
(c) Sprint shall not, and shall not permit any of its Subsidiaries to,
amend, modify or waive any of the provisions of the MTA Transaction Documents
in any material respect without the consent of MCI WorldCom (which consent
shall not be unreasonably withheld or delayed). Sprint shall consult
immediately with MCI WorldCom regarding any communication or advisory from FT
or DT under Section 5.06(b) of the MTA.
ARTICLE V
Additional Agreements
5.1 Preparation of the Form S-4 and the Joint Proxy Statement/Prospectus;
Stockholders Meetings. (a) As promptly as practicable following the date
hereof, MCI WorldCom and Sprint shall jointly prepare and file with the SEC
preliminary proxy materials and any amendments or supplements thereto which
shall constitute the joint proxy statement/prospectus (such proxy
statement/prospectus, and any amendments or supplements thereto, the "Joint
Proxy Statement/Prospectus") and MCI WorldCom shall prepare and file with the
SEC the Registration Statement on Form S-4 with respect to the issuance of MCI
WorldCom Capital Stock in the Merger (the "Form S-4") in which the Joint Proxy
Statement/Prospectus will be included as a prospectus. The Form S-4 and the
Joint Proxy Statement/Prospectus shall comply as to form in all material
respects with the applicable provisions of the Securities Act and the Exchange
Act. Each of MCI WorldCom and Sprint shall use all reasonable efforts to have
the Form S-4 declared effective under the Securities Act as promptly as
practicable after filing with the SEC and to keep the Form S-4 effective as
long as is necessary to consummate the Merger. The parties shall promptly
provide copies to and consult with each other and prepare written responses
with respect to any written comments received from the SEC with respect to the
Form S-4 and the Joint Proxy Statement/Prospectus and promptly advise the other
party of any oral comments received from the SEC. MCI WorldCom agrees that none
of the information supplied or to be supplied by MCI WorldCom for inclusion or
incorporation by reference in the Joint Proxy Statement/Prospectus and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the Sprint Stockholders Meeting or the MCI WorldCom Shareholders Meeting,
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Sprint agrees that none of the information supplied or to be supplied by Sprint
for inclusion or incorporation by reference in the Joint Proxy
Statement/Prospectus and each amendment or supplement thereto, at the time of
mailing thereof and at the time of the Sprint Stockholders Meeting or the MCI
WorldCom Shareholders Meeting, will contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. For purposes of the foregoing, it is
understood and agreed that information concerning or related to MCI WorldCom
and the MCI WorldCom Shareholders Meeting will be deemed to have been supplied
by MCI WorldCom and information concerning or related to Sprint and the Sprint
Stockholders Meeting shall be deemed to have been supplied by Sprint. No
amendment or supplement to the information supplied by Sprint for inclusion in
the Joint Proxy Statement/Prospectus shall be made without the approval of
Sprint, which approval shall not be unreasonably withheld or delayed.
1-26
(b) Sprint shall, as promptly as practicable following the execution of this
Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Sprint Stockholders Meeting") for the purpose of obtaining
the Required Sprint Vote with respect to the transactions contemplated by this
Agreement, shall use its reasonable best efforts, subject to Section 5.4, to
solicit the adoption of this Agreement by the Required Sprint Vote and, subject
to Section 5.4, the Board of Directors of Sprint shall recommend adoption of
this Agreement by the stockholders of Sprint. Without limiting the generality
of the foregoing but subject to its rights pursuant to Sections 5.4 and 7.1(e),
Sprint agrees that its obligations pursuant to the first sentence of this
Section 5.1(b) shall not be affected by the commencement, public proposal,
public disclosure or communication to Sprint of any Sprint Acquisition
Proposal.
(c) MCI WorldCom shall, as promptly as practicable following the execution
of this Agreement, duly call, give notice of, convene and hold a meeting of its
shareholders (the "MCI WorldCom Shareholders Meeting") for the purpose of
obtaining the Required MCI WorldCom Vote with respect to the transactions
contemplated by this Agreement, shall use its reasonable best efforts, subject
to Section 5.5, to solicit the approval of this Agreement by the Required MCI
WorldCom Vote and, subject to Section 5.5, the Board of Directors of MCI
WorldCom shall recommend the approval of this Agreement by the shareholders of
MCI WorldCom. Without limiting the generality of the foregoing but subject to
its rights pursuant to Sections 5.5 and 7.1(f), MCI WorldCom agrees that its
obligations pursuant to the first sentence of this Section 5.1(c) shall not be
affected by the commencement, public proposal, public disclosure or
communication to MCI WorldCom of any MCI WorldCom Acquisition Proposal.
(d) The Sprint Stockholders Meeting and the MCI WorldCom Shareholders
Meeting shall take place on the same date, to the extent practicable; provided
that, notwithstanding anything in this Agreement, neither such meeting shall
take place earlier than the 121st day following the date of this Agreement.
5.2 Access to Information. Upon reasonable notice, each of MCI WorldCom and
Sprint shall, and shall cause its Subsidiaries to, afford to the other party
and to the officers, employees, accountants, counsel, financial advisors and
other representatives of such other party reasonable access during normal
business hours, during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records and, during such period,
each of MCI WorldCom and Sprint shall, and shall cause its Subsidiaries to,
furnish promptly to the other party consistent with its legal obligations, all
other information concerning its business, properties and personnel as such
other party may reasonably request; provided, however, that each of MCI
WorldCom and Sprint may restrict the foregoing access to the extent that (i) a
Governmental Entity requires either party or any of its Subsidiaries to
restrict access to any properties or information reasonably related to any such
contract on the basis of applicable laws and regulations with respect to
national security matters or (ii) in the reasonable judgment of such party, any
law, treaty, rule or regulation of any Governmental Entity applicable to such
party requires it or its Subsidiaries to restrict access to any properties or
information. The parties will hold any such information in confidence to the
extent required by, and in accordance with, the provisions of the letter dated
September 22, 1999, between Sprint and MCI WorldCom (the "Confidentiality
Agreement"). Any investigation by MCI WorldCom or Sprint shall not affect the
representations and warranties of Sprint or MCI WorldCom, as the case may be.
5.3 Reasonable Best Efforts. (a) Subject to the terms and conditions of this
Agreement, each party hereto will use its reasonable best efforts to (i) take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the Merger and the other transactions contemplated by this Agreement
as soon as practicable after the date hereof and (ii) obtain and maintain all
approvals, consents, waivers, registrations, permits, authorizations,
clearances and other confirmations required to be obtained from any third party
and/or any Governmental Entity that are reasonably necessary to consummate the
Merger and the transactions contemplated hereby (each a "Required Approval").
In furtherance and not in limitation of the foregoing, each party hereto agrees
to make, as promptly as practicable, to the extent it has not already done so,
(i) an appropriate filing of a Notification and Report Form pursuant to the HSR
Act with respect to the transactions contemplated hereby (which filing shall be
made in any event within five Business Days of the date hereof), (ii)
appropriate filings with the FCC and PUCs with
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respect to the transactions contemplated hereby, (iii) appropriate filings with
the European Commission in accordance with applicable competition, merger
control, antitrust or similar laws within the time periods specified
thereunder, and (iv) all necessary filings with other Governmental Entities
relating to the Merger, and, in each case, to supply as promptly as practicable
any additional information and documentary material that may be requested
pursuant to such laws and to use reasonable best efforts to cause the
expiration or termination of the applicable waiting periods under the HSR Act
and the receipt of Required Approvals under such other laws as soon as
practicable. Notwithstanding the foregoing, nothing in this Section 5.3 shall
require, or be deemed to require, (i) MCI WorldCom or Sprint to agree to or
effect any divestiture or take any other action if doing so would, individually
or in the aggregate, reasonably be expected to materially impair the parties'
ability to achieve the overall benefits expected, as of the date hereof, to be
realized from the consummation of the Merger or (ii) MCI WorldCom or Sprint to
agree to or effect any divestiture or take any other action that is not
conditional on the consummation of the Merger.
(b) Each of MCI WorldCom and Sprint shall, in connection with the efforts
referenced in Section 5.3(a) to obtain all Required Approvals, use its
reasonable best efforts to (i) cooperate in all respects with each other in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party; (ii) promptly inform the other party of any communication received by
such party from, or given by such party to, the FCC, PUCs, the Antitrust
Division of the Department of Justice (the "DOJ") or any other Governmental
Entity and of any material communication received or given in connection with
any proceeding by a private party, in each case regarding any of the
transactions contemplated hereby, and (iii) permit the other party to review
any communications given by it to, and consult with each other in advance to
the extent practicable of any meeting or conference with, the FCC, PUCs, the
DOJ or any such other Governmental Entity or, in connection with any proceeding
by a private party, with any other Person, and to the extent permitted by the
FCC, PUCs, the DOJ or such other applicable Governmental Entity or other
Person, give the other party the opportunity to attend and participate in such
meetings and conferences.
(c) In furtherance and not in limitation of the covenants of the parties
contained in Sections 5.3(a) and 5.3(b), if any administrative or judicial
action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Regulatory Law, or if any
statute, rule, regulation, executive order, decree, injunction or
administrative order is enacted, entered, promulgated or enforced by a
Governmental Entity which would make the Merger or the transactions
contemplated hereby illegal or would otherwise prohibit or materially impair or
delay the consummation of the Merger or the transactions contemplated hereby,
each of MCI WorldCom and Sprint shall cooperate in all respects with each other
and use its respective reasonable best efforts to contest and resist any such
action or proceeding and to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the Merger or the transactions contemplated by this Agreement
and to have such statute, rule, regulation, executive order, decree, injunction
or administrative order repealed, rescinded or made inapplicable.
Notwithstanding the foregoing or any other provision of this Agreement, nothing
in this Section 5.3 shall limit a party's right to terminate this Agreement
pursuant to Section 7.1(b) or 7.1(c) so long as such party has up to then
complied in all respects with its obligations under this Section 5.3. For
purposes of this Agreement, "Regulatory Law" means the ▇▇▇▇▇▇▇ Act, as amended,
the ▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, the Federal Communications Act, as amended, Regulation 4064/89 and all
other Federal, state and foreign, if any, statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines and other laws that are designed
or intended to regulate mergers, acquisitions or other business combinations.
(d) Sprint and its Board of Directors shall, if any state takeover statute
or similar statute becomes applicable to this Agreement, the Merger or any
other transactions contemplated hereby or thereby, take all action reasonably
necessary to ensure that the Merger and the other transactions contemplated by
this Agreement may be consummated as promptly as practicable on the terms
contemplated hereby or thereby and
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otherwise to minimize the effect of such statute or regulation on this
Agreement, the Merger and the other transactions contemplated hereby.
(e) MCI WorldCom and its Board of Directors shall, if any state takeover
statute or similar statute becomes applicable to this Agreement, the Merger or
any other transactions contemplated hereby, to the extent legally permissible
take all action reasonably necessary to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise to minimize the
effect of such statute or regulation on this Agreement, the Merger and the
other transactions contemplated hereby.
5.4 No Solicitation by Sprint. (a) Sprint shall not, nor shall it permit any
of its Subsidiaries to, nor shall it authorize or permit any of its directors,
officers or employees or any investment banker, financial advisor, attorney,
accountant or other representative retained by it or any of its Subsidiaries
to, directly or indirectly through another Person, (i) solicit, initiate or
knowingly encourage (including by way of furnishing information), or knowingly
take any other action to facilitate, the making of any proposal that
constitutes a Sprint Competing Proposal or (ii) participate in any discussions
or negotiations regarding any Sprint Competing Proposal; provided, however,
that if, at any time during the period commencing on the 61st day after the
date hereof and ending on the date the Required Sprint Vote is obtained (the
"Sprint Applicable Period"), the Board of Directors of Sprint, in the exercise
of its fiduciary duties, determines in good faith, after consultation with
outside counsel, that to do otherwise would not be in the best interests of
Sprint's stockholders, Sprint and its representatives may, in response to a
Sprint Superior Proposal which did not result from a breach of this Section
5.4(a), and subject to providing prior or contemporaneous notice of its
decision to take such action to MCI WorldCom, (x) furnish information with
respect to Sprint and its Subsidiaries to any Person making a Sprint Superior
Proposal pursuant to a customary confidentiality agreement (as determined by
Sprint after consultation with its outside counsel) and (y) participate in
discussions or negotiations regarding such Sprint Superior Proposal. This
Section 5.4 is subject to Section 5.4 of the Sprint Disclosure Schedule. For
purposes of this Agreement, "Sprint Competing Proposal" means any bona fide
proposal or offer from any Person relating to any direct or indirect
acquisition or purchase of 20% or more of the assets of Sprint and its
Subsidiaries, taken as a whole, or 20% or more of the combined voting power of
the shares of Sprint Common Stock, any tender offer or exchange offer that if
consummated would result in any Person beneficially owning 20% or more of the
combined voting power of the shares of Sprint Common Stock, or any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving Sprint or any of its Subsidiaries in which the
other party thereto or its stockholders will own 20% or more of the combined
voting power of the parent entity resulting from any such transaction, other
than the transactions contemplated by this Agreement. For purposes of this
Agreement, a "Sprint Superior Proposal" means (i) any proposal made by a third
party relating to any direct or indirect acquisition or purchase of 50% or more
of the assets of Sprint and its Subsidiaries, taken as a whole, or 50% or more
of the combined voting power of the shares of Sprint Common Stock, any tender
offer or exchange offer that if consummated would result in any Person
beneficially owning 50% or more of the combined voting power of the shares of
Sprint Common Stock or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Sprint or any of its Subsidiaries in which the other party thereto or its
stockholders will own 40% or more of the combined voting power of the parent
entity resulting from any such transaction and (ii) otherwise on terms which
the Board of Directors of Sprint determines in its good faith judgment (based
on the advice of a financial advisor of nationally recognized reputation),
taking into account the Person making the proposal and the legal, financial,
regulatory and other aspects of the proposal deemed appropriate by the Board of
Directors of Sprint, (x) would be more favorable than the Merger to Sprint's
stockholders taken as a whole, (y) is reasonably capable of being completed and
(z) for which financing, to the extent required, is then committed or is
reasonably capable of being obtained by such third party.
(b) Neither the Board of Directors of Sprint nor any committee thereof shall
(i) withdraw, or propose publicly to withdraw, in a manner adverse to MCI
WorldCom, the approval or recommendation by such Board of Directors or such
committee of the Merger or this Agreement, (ii) subject to Section 5.4(d),
modify, or
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propose publicly to modify, in a manner adverse to MCI WorldCom, the approval
or recommendation by such Board of Directors or such committee of the Merger or
this Agreement, (iii) approve or recommend, or propose publicly to approve or
recommend, any Sprint Competing Proposal or (iv) approve or recommend, or
propose to approve or recommend, or execute or enter into, any letter of
intent, agreement in principle, merger agreement, acquisition agreement, option
agreement or other similar agreement or propose publicly or agree to do any of
the foregoing (each, a "Sprint Acquisition Agreement") related to any Sprint
Competing Proposal. Notwithstanding the foregoing, during the Sprint Applicable
Period, in response to a Sprint Superior Proposal which did not result from a
breach of Section 5.4(a), if the Board of Directors of Sprint, in the exercise
of its fiduciary duties, determines in good faith, after consultation with
outside counsel, that to do otherwise would not be in the best interests of
Sprint's stockholders, the Board of Directors of Sprint may (x) modify or
propose publicly to modify, in a manner adverse to MCI WorldCom, the approval
or recommendation of the Merger or this Agreement by the Board of Directors of
Sprint and/or (y) terminate this Agreement (and concurrently with or after such
termination, if it so chooses, cause Sprint to enter into any Sprint
Acquisition Agreement with respect to any Sprint Superior Proposal), but, in
the case of clause (y), only at a time that is during the Sprint Applicable
Period and is after the fourth Business Day (or the second calendar day in the
case of a material amendment to a Sprint Superior Proposal) following MCI
WorldCom's receipt of written notice advising MCI WorldCom that the Board of
Directors of Sprint is prepared to accept a Sprint Superior Proposal (or any
material amendment thereto), specifying the material terms and conditions of
such Sprint Superior Proposal (or any material amendment thereto) and
identifying the Person making such Sprint Superior Proposal (or any material
amendment thereto).
(c) In addition to the obligations of Sprint set forth in paragraphs (a) and
(b) of this Section 5.4, Sprint shall promptly advise MCI WorldCom of any
Sprint Competing Proposal or any inquiry or request for information relating
thereto, the material terms and conditions of such request or Sprint Competing
Proposal and the identity of the Person making such request or Sprint Competing
Proposal. Sprint will promptly keep MCI WorldCom reasonably informed of the
status (including amendments) of any such request or Sprint Competing Proposal.
(d) Nothing contained in this Section 5.4 shall prohibit Sprint from taking
and disclosing to its stockholders a position contemplated by Rule 14d-9 or
14e-2 promulgated under the Exchange Act or from making any disclosure to
Sprint's stockholders if, in the good faith judgment of the Board of Directors
of Sprint, after consultation with outside counsel, failure so to disclose
would be inconsistent with its obligations under applicable law; provided,
however, that, subject to Section 5.4(b), neither Sprint nor its Board of
Directors nor any committee thereof shall withdraw, or propose publicly to
withdraw, its position with respect to this Agreement or the Merger or approve
or recommend, or propose publicly to approve or recommend, a Sprint Competing
Proposal.
5.5 No Solicitation by MCI WorldCom. (a) MCI WorldCom shall not, nor shall
it permit any of its Subsidiaries to, nor shall it authorize or permit any of
its directors, officers or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
its Subsidiaries to, directly or indirectly through another Person, (i)
solicit, initiate or knowingly encourage (including by way of furnishing
information), or knowingly take any other action to facilitate, the making of
any proposal that constitutes an MCI WorldCom Competing Proposal or (ii)
participate in any discussions or negotiations regarding any MCI WorldCom
Competing Proposal; provided, however, that if, at any time during the period
commencing on the 61st day after the date hereof and ending on the date
Required MCI WorldCom Vote is obtained (the "MCI WorldCom Applicable Period"),
the Board of Directors of MCI WorldCom, in the exercise of its fiduciary
duties, determines in good faith, after consultation with outside counsel, that
to do otherwise would not be in the best interests of MCI WorldCom's
shareholders, MCI WorldCom and its representatives may, in response to an MCI
WorldCom Superior Proposal which did not result from a breach of this Section
5.5(a), and subject to providing prior or contemporaneous notice of its
decision to take such action to Sprint, (x) furnish information with respect to
MCI WorldCom and its Subsidiaries to any Person making an MCI WorldCom Superior
Proposal pursuant to a customary confidentiality agreement (as determined by
MCI
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WorldCom after consultation with its outside counsel) and (y) participate in
discussions or negotiations regarding such MCI WorldCom Superior Proposal. For
purposes of this Agreement, "MCI WorldCom Competing Proposal" means any bona
fide proposal or offer from any Person relating to any direct or indirect
acquisition or purchase of 20% or more of the assets of MCI WorldCom and its
Subsidiaries, taken as a whole, or 20% or more of the combined voting power of
the shares of MCI WorldCom Common Stock, any tender offer or exchange offer
that if consummated would result in any Person beneficially owning 20% or more
of the combined voting power of the shares of MCI WorldCom Common Stock, or any
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving MCI WorldCom or any of its
Subsidiaries in which the other party thereto or its shareholders will own 20%
or more of the combined voting power of the shares of the parent entity
resulting from any such transaction, other than the transactions contemplated
by this Agreement. For purposes of this Agreement, an "MCI WorldCom Superior
Proposal" means (i) (A) any proposal made by a third party relating to any
direct or indirect acquisition or purchase of 50% or more of the assets of MCI
WorldCom and its Subsidiaries, taken as a whole, or 50% or more of the combined
voting power of the shares of MCI WorldCom Common Stock, any tender offer or
exchange offer that if consummated would result in any Person beneficially
owning 50% or more of the combined voting power of the shares of MCI WorldCom
Common Stock, or (B) any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving MCI
WorldCom or any of its Subsidiaries in which (1) the other party thereto or its
shareholders will own 50% or more of the combined voting power of the shares of
the parent entity resulting from any such transaction and (2) representatives
of such other party shall represent a majority of the Board of Directors of
such parent entity, and (ii) otherwise on terms which the Board of Directors of
MCI WorldCom determines in its good faith judgment (based on the advice of a
financial advisor of nationally recognized reputation), taking into account the
Person making the proposal and the legal, financial, regulatory and other
aspects of the proposal deemed appropriate by the Board of Directors of MCI
WorldCom, (x) would be more favorable than the Merger to MCI WorldCom's
shareholders taken as a whole, (y) is reasonably capable of being completed and
(z) for which financing, to the extent required, is then committed or is
reasonably capable of being obtained by such third party.
(b) Neither the Board of Directors of MCI WorldCom nor any committee thereof
shall (i) withdraw, or propose publicly to withdraw, in a manner adverse to
Sprint, the approval or recommendation by such Board of Directors or such
committee of the Merger or this Agreement, (ii) subject to Section 5.5(d),
modify, or propose publicly to modify, in a manner adverse to Sprint, the
approval or recommendation by such Board of Directors or such committee of the
Merger or this Agreement, (iii) approve or recommend, or propose publicly to
approve or recommend, any MCI WorldCom Competing Proposal or (iv) approve or
recommend, or propose to approve or recommend, or execute or enter into, any
letter of intent, agreement in principle, merger agreement, acquisition
agreement, option agreement or other similar agreement or propose publicly or
agree to do any of the foregoing (each, an "MCI WorldCom Acquisition
Agreement") related to any MCI WorldCom Competing Proposal. Notwithstanding the
foregoing, during the MCI WorldCom Applicable Period, in response to an MCI
WorldCom Superior Proposal which did not result from a breach of Section
5.5(a), if the Board of Directors of MCI WorldCom, in the exercise of its
fiduciary duties, determines in good faith, after consultation with outside
counsel, that to do otherwise would not be in the best interests of MCI
WorldCom's shareholders, the Board of Directors of MCI WorldCom may (x) modify
or propose publicly to modify, in a manner adverse to Sprint, the approval or
recommendation of the Merger or this Agreement by the Board of Directors of MCI
WorldCom and/or (y) terminate this Agreement (and concurrently with or after
such termination, if it so chooses, cause MCI WorldCom to enter into any MCI
WorldCom Acquisition Agreement with respect to any MCI WorldCom Superior
Proposal), but, in the case of clause (y), only at a time that is during the
MCI WorldCom Applicable Period and is after the fourth Business Day (or the
second calendar day in the case of a material amendment to an MCI WorldCom
Superior Proposal) following Sprint's receipt of written notice advising Sprint
that the Board of Directors of MCI WorldCom is prepared to accept an MCI
WorldCom Superior Proposal (or any material amendment thereto), specifying the
material terms and conditions of such MCI WorldCom Superior Proposal (or any
material amendment thereto) and identifying the Person making such MCI WorldCom
Superior Proposal (or any material amendment thereto).
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(c) In addition to the obligations of MCI WorldCom set forth in paragraphs
(a) and (b) of this Section 5.5, MCI WorldCom shall promptly advise Sprint of
any MCI WorldCom Competing Proposal or any inquiry or request for information
relating thereto, the material terms and conditions of such request or MCI
WorldCom Competing Proposal and the identity of the Person making such request
or MCI WorldCom Competing Proposal. MCI WorldCom will promptly keep Sprint
reasonably informed of the status (including amendments) of any such request
or MCI WorldCom Competing Proposal.
(d) Nothing contained in this Section 5.5 shall prohibit MCI WorldCom from
taking and disclosing to its shareholders a position contemplated by Rule 14d-
9 or 14e-2 promulgated under the Exchange Act or from making any disclosure to
MCI WorldCom's shareholders if, in the good faith judgment of the Board of
Directors of MCI WorldCom, after consultation with outside counsel, failure so
to disclose would be inconsistent with its obligations under applicable law;
provided, however, that, subject to Section 5.5(b), neither MCI WorldCom nor
its Board of Directors nor any committee thereof shall withdraw, or propose
publicly to withdraw, its position with respect to this Agreement or the
Merger or approve or recommend, or propose publicly to approve or recommend,
an MCI WorldCom Competing Proposal.
5.6 Sprint Stock Options. (a) As soon as practicable following the date of
this Agreement, the Board of Directors of Sprint (or, if appropriate, any
committee administering the Sprint Stock Option Plans) shall adopt such
resolutions or take such other actions as may be required to effect the
following:
(i) adjust the terms of all outstanding Sprint Stock Options (each, as
so adjusted, an "Adjusted Option"), whether vested or unvested, as
necessary to provide that, at the Effective Time, each Sprint Stock Option
outstanding immediately prior to the Effective Time shall be amended and
converted, on the same terms and conditions as were applicable under such
Sprint Stock Option, as follows:
(A) each Sprint Stock Option to acquire shares of Sprint FON Stock
will be converted into an option to acquire the number of shares of MCI
WorldCom Common Stock determined by multiplying the number of shares of
Sprint FON Stock subject to such Sprint Stock Option by the FON
Exchange Ratio (rounded up to the nearest whole share) at an exercise
price determined by dividing the exercise price set forth in such
Sprint Stock Option by the FON Exchange Ratio (rounded up to the
nearest whole cent); and
(B) each Sprint Stock Option to acquire shares of any class of
Sprint PCS Stock will be converted into an option to acquire:
(x) an equivalent number of shares of MCI WorldCom Series 1 PCS
Stock at the same exercise price as the exercise price for such
Sprint PCS Stock plus
(y) an amount of MCI WorldCom Common Stock for no additional
consideration equal to the number of shares of such Sprint PCS Stock
subject to such Sprint Stock Option multiplied by the PCS Exchange
Ratio, (rounded up to the nearest whole share) (the "MCI WorldCom
Common Stock Option Shares"), where such option shall automatically
be exercised (as part of the exercise of the option to acquire MCI
WorldCom Series 1 PCS Stock described in the preceding clause (x))
for a number of shares of MCI WorldCom Common Stock each time that
such option to acquire MCI WorldCom Series 1 PCS Stock is exercised,
and where the number of shares of MCI WorldCom Common Stock to be
acquired upon such exercise shall:
(1) equal "Z" (rounded up to the nearest whole share), where
"Z" equals (i) the number of shares of MCI WorldCom Series 1 PCS
Stock to be acquired pursuant to such exercise of such option
multiplied by (ii) the PCS Exchange Ratio; or
(2) equal the number of shares of MCI WorldCom Common Stock
which remain subject to such option, if such exercise is for all
the shares of MCI WorldCom Series 1 PCS Stock which remain
subject to such option;
provided, however, that the maximum number of shares of MCI WorldCom
Common Stock issuable pursuant to all such exercises of an Adjusted
Option described in this Section
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5.6(a)(i)(B) shall not in the aggregate exceed the number of MCI
WorldCom Common Stock Option Shares; and
(ii) make such other changes to the Sprint Stock Option Plans as MCI
WorldCom and Sprint may agree are appropriate to give effect to the Merger.
(b) The adjustments provided in this Section 5.6 with respect to any Sprint
Stock Options to which Section 421(a) of the Code applies shall be and are
intended to be effected in a manner which is consistent with Section 424(a) of
the Code.
(c) Prior to the Effective Time, MCI WorldCom shall take all necessary
actions (including, if required to comply with Section 162(m) of the Code (and
the regulations thereunder) or applicable law or rule of Nasdaq, obtaining the
approval of its shareholders at the next regularly scheduled annual meeting of
MCI WorldCom following the Effective Time) to assume as of the Effective Time
all obligations undertaken by, or on behalf of, Sprint under Section 5.6(a)
and to adopt at the Effective Time the Sprint Stock Option Plans and each
Adjusted Option and to take all other action called for in this Section 5.6,
including the reservation, issuance and listing of MCI WorldCom Capital Stock
in a number at least equal to the number of shares of MCI WorldCom Common
Stock that will be subject to the Adjusted Options.
(d) As soon as practicable following the Effective Time, MCI WorldCom shall
prepare and file with the SEC a registration statement on Form S-8 (or another
appropriate form) registering a number of shares of MCI WorldCom Common Stock
equal to the number of shares subject to the Adjusted Options. Such
registration statement shall be kept effective (and the current status of the
prospectus or prospectuses required thereby shall be maintained) at least for
so long as any Adjusted Options or any unsettled awards granted under the
Sprint Stock Option Plans after the Effective Time may remain outstanding.
(e) As soon as practicable after the Effective Time, MCI WorldCom shall
deliver to the holders of the Sprint Stock Options appropriate notices setting
forth such holders' rights pursuant to the respective Sprint Stock Option
Plans and the agreements evidencing the grants of such Sprint Stock Options
and that such Sprint Stock Options and agreements shall be assumed by MCI
WorldCom and shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 5.6 after giving effect
to the Merger).
(f) Except as otherwise expressly provided in this Section 5.6 and except
to the extent required under the respective terms of the Sprint Stock Options,
all restrictions or limitations on transfer and vesting with respect to the
Sprint Stock Options awarded under the Sprint Stock Option Plans or any other
plan, program or arrangement of Sprint or any of its Subsidiaries, to the
extent that such restrictions or limitations shall not have already lapsed,
and all other terms thereof, shall remain in full force and effect with
respect to such options after giving effect to the Merger and the assumption
by MCI WorldCom as set forth above.
5.7 Employee Matters. (a) During the one-year period following the
Effective Time (the "Transition Period"), MCI WorldCom shall maintain employee
benefit plans, programs and policies for the employees of Sprint and its
Subsidiaries which, in the aggregate, are substantially comparable to the
employee benefit plans, programs and policies provided by Sprint and its
Subsidiaries before the Effective Time (other than Sprint's Employees Stock
Purchase Plan). Furthermore, no employee of Sprint or a Subsidiary of Sprint
shall have his or her base hourly rate of pay, base salary or bonus
opportunity reduced during the Transition Period except to the extent such
reduction is called for as a result of a violation of MCI WorldCom's generally
applicable policies or a failure to satisfy MCI WorldCom's generally
applicable performance standards for similarly situated MCI WorldCom
employees. The participant accounts in each unfunded plan, program or policy
of Sprint and each Subsidiary of Sprint which are designed to track the
performance of Sprint Capital Stock but which only pay benefits in cash shall
be converted at the Effective Time to accounts which track the performance of
the corresponding MCI WorldCom Capital Stock based upon the principles set
forth in this Agreement for converting Sprint Capital Stock to MCI WorldCom
Capital Stock except that there shall be no rounding up or down as part of
such conversions.
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(b) During the one-year period following the Transition Period, the
employees of Sprint and each Subsidiary of Sprint shall be eligible to
participate in employee benefit plans, programs and policies which, in the
aggregate, are substantially comparable to the employee benefit plans, programs
and policies maintained by MCI WorldCom for similarly situated employees. Each
employee of Sprint and each Subsidiary of Sprint shall receive full credit
under each applicable MCI WorldCom plan, program or policy for his or her
service as an employee of Sprint and any Subsidiary of Sprint on the same basis
that he or she would have received such credit if such service had been
completed as an employee of MCI WorldCom for purposes of satisfying any service
requirement to participate in such plan, program or policy (including any plan,
program or policy which provides post-retirement medical benefits) and any
service requirement to receive a non-forfeitable interest in the benefits under
such plan, program or policy. Furthermore, if any such MCI WorldCom plan,
program or policy has any active employment requirements, pre-existing
condition requirements, co-pay, coinsurance or deductible requirements in
effect for a year and an employee of Sprint or a Subsidiary of Sprint had
satisfied (or had made payments towards satisfying) such requirements for a
part of such year as a participant in a Sprint plan, program or policy, such
employee shall receive full credit for satisfying (or for payments made towards
satisfying) such requirements in the MCI WorldCom plan, program or policy for
such year when he or she begins to participate in such plan, program or policy
and any such co-pay, coinsurance or deductible requirements for such year under
the MCI WorldCom plan, program or policy shall be no greater than the co-pay,
coinsurance or deductible requirement under the Sprint plan, program or policy
for such year.
(c) MCI WorldCom and Sprint will implement the provisions relating to Sprint
employee matters set forth in Section 5.7 of the Sprint Disclosure Schedule.
5.8 Fees and Expenses. (a) Whether or not the Merger is consummated, all
Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such Expenses, except
Expenses incurred in connection with the filing, printing and mailing of the
Form S-4 and the Joint Proxy Statement/Prospectus (including SEC filing fees)
and the filing fees for the premerger notification and report forms under the
HSR Act and for filings with the European Commission, which shall be shared
equally by MCI WorldCom and Sprint. As used in this Agreement, "Expenses"
includes all out-of-pocket expenses (including all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby,
including the preparation, printing, filing and mailing of the Form Su-4 and
the Joint Proxy Statement/Prospectus and the solicitation of stockholder
approvals and all other matters related to the transactions contemplated
hereby.
(b) If (1) prior to the date the Required Sprint Vote is obtained a Sprint
Competing Proposal shall have been made to Sprint or any of its Subsidiaries or
shall have been made directly to the stockholders of Sprint generally or any
Person shall have publicly announced an intention (whether or not conditional)
to make a Sprint Competing Proposal and thereafter this Agreement is terminated
by either MCI WorldCom or Sprint pursuant to Section 7.1(b) without a Sprint
Stockholders Meeting having occurred or 7.1(d)(i) or (2) this Agreement is
terminated (i) by Sprint pursuant to Section 7.1(e) or (ii) by MCI WorldCom
pursuant to Section 7.1(j), then Sprint shall promptly, but in no event later
than the date of such termination, pay MCI WorldCom a fee equal to $2.5 billion
(the "Termination Fee"), payable by wire transfer of same day funds; provided,
however, that no Termination Fee shall be payable to MCI WorldCom pursuant to
clause (1) or (2)(ii) of this paragraph (b) unless and until within 12 months
of such termination Sprint or any of its Subsidiaries enters into any Sprint
Acquisition Agreement with respect to, or approves or consummates, any Sprint
Competing Proposal (for the purposes of the foregoing proviso the term "Sprint
Competing Proposal" shall mean a Sprint Superior Proposal pursuant to clause
(i) (without giving effect to clause (ii)) of the definition thereof in Section
5.4(a), in which event the Termination Fee shall be payable upon the first to
occur of such events. Sprint acknowledges that the agreements contained in this
Section 5.8(b) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, MCI WorldCom would not enter
into this Agreement; accordingly, if Sprint fails promptly to pay the amount
due pursuant to this Section 5.8(b), and, in
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order to obtain such payment, MCI WorldCom commences a suit which results in a
judgment against Sprint for the fee set forth in this Section 5.8(b), Sprint
shall pay to MCI WorldCom its costs and expenses (including attorneys' fees and
expenses) in connection with such suit, together with interest on the amount of
the fee at the prime rate of Citibank, N.A. in effect on the date such payment
was required to be made.
(c) If (1) prior to the date the Required MCI WorldCom Vote is obtained an
MCI WorldCom Competing Proposal shall have been made to MCI WorldCom or any of
its Subsidiaries or shall have been made directly to the shareholders of MCI
WorldCom generally or any Person shall have publicly announced an intention
(whether or not conditional) to make an MCI WorldCom Competing Proposal and
thereafter this Agreement is terminated by either MCI WorldCom or Sprint
pursuant to Section 7.1(b) without an MCI WorldCom Shareholders Meeting having
occurred or 7.1(d)(ii) or (2) this Agreement is terminated (i) by MCI WorldCom
pursuant to Section 7.1(f) or (ii) by Sprint pursuant to Section 7.1(i), then
MCI WorldCom shall promptly, but in no event later than the date of such
termination, pay Sprint the Termination Fee, payable by wire transfer of same
day funds; provided, however, that no Termination Fee shall be payable to
Sprint pursuant to clause (1) or (2)(ii) of this paragraph (c) unless and until
within 12 months of such termination MCI WorldCom or any of its Subsidiaries
enters into any MCI WorldCom Acquisition Agreement with respect to, or approves
or consummates, any MCI WorldCom Competing Proposal (for the purposes of the
foregoing proviso the term "MCI WorldCom Competing Proposal" shall mean an MCI
WorldCom Superior Proposal pursuant to clause (i) (without giving effect to
clause (ii)) of the definition thereof in Section 5.5(a), in which event the
Termination Fee shall be payable upon the first to occur of such events. MCI
WorldCom acknowledges that the agreements contained in this Section 5.8(c) are
an integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Sprint would not enter into this Agreement;
accordingly, if MCI WorldCom fails promptly to pay the amount due pursuant to
this Section 5.8(c), and, in order to obtain such payment, Sprint commences a
suit which results in a judgment against MCI WorldCom for the fee set forth in
this Section 5.8(c), MCI WorldCom shall pay to Sprint its costs and expenses
(including attorneys' fees and expenses) in connection with such suit, together
with interest on the amount of the fee at the prime rate of Citibank, N.A. in
effect on the date such payment was required to be made.
5.9 Indemnification, Exculpation and Insurance. (a) MCI WorldCom agrees that
all rights to indemnification and exculpation from liabilities for acts or
omissions occurring at or prior to the Effective Time now existing in favor of
the current or former directors or officers of Sprint and its Subsidiaries as
provided in their respective articles of incorporation or by-laws (or
comparable organizational documents) and any indemnification agreements of
Sprint, the existence of which does not constitute a breach of this Agreement,
shall be assumed by MCI WorldCom, as the Surviving Corporation in the Merger,
without further action, as of the Effective Time and shall survive the Merger
and shall continue in full force and effect in accordance with their terms.
(b) In the event that MCI WorldCom or any of its successors or assigns (i)
consolidates with or merges into any other Person and is not the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all of its properties and assets to
any Person, then, and in each such case, proper provision will be made so that
the successors and assigns of MCI WorldCom assume the obligations set forth in
this Section 5.9.
(c) For six years after the Effective Time, MCI WorldCom shall maintain in
effect Sprint's current directors' and officers' liability insurance covering
acts or omissions occurring prior to the Effective Time with respect to those
Persons who are currently covered by Sprint's directors' and officers'
liability insurance policy on terms with respect to such coverage and amount no
less favorable than those of such policy in effect on the date hereof;
provided, however, that in no event shall MCI WorldCom be required to expend in
any one year an amount in excess of 200% of the annual premiums currently paid
by Sprint for such insurance; and, provided, further, that if the annual
premiums of such insurance coverage exceed such amount, MCI WorldCom shall be
obligated to obtain a policy with the greatest coverage available for such
amount.
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5.10 Sprint Rights Agreement. The Board of Directors of Sprint shall take
all action to the extent necessary (including amending the Sprint Rights
Agreement) in order to render the Sprint Rights inapplicable to the Merger and
the other transactions contemplated by this Agreement. Except in connection
with the foregoing sentence or, with respect to a Sprint Superior Proposal,
concurrently with or after a termination of this Agreement by Sprint in
accordance with Section 5.4(b), the Board of Directors of Sprint shall not,
without the prior written consent of MCI WorldCom, (a) amend the Sprint Rights
Agreement or (b) take any action with respect to, or make any determination
under, the Sprint Rights Agreement, including a redemption of the Sprint
Rights, in each case in order to facilitate a Sprint Competing Proposal.
5.11 MCI WorldCom Rights Agreement. The Board of Directors of MCI WorldCom
shall take all action to the extent necessary (including amending the MCI
WorldCom Rights Agreement) in order to render the MCI WorldCom Rights
inapplicable to the Merger and the other transactions contemplated by this
Agreement. Except in connection with the foregoing sentence or, with respect to
an MCI WorldCom Superior Proposal, concurrently with or after a termination of
this Agreement by MCI WorldCom in accordance with Section 5.5(b), the Board of
Directors of MCI WorldCom shall not, without the prior written consent of
Sprint, (a) amend the MCI WorldCom Rights Agreement or (b) take any action with
respect to, or make any determination under, the MCI WorldCom Rights Agreement,
including a redemption of the MCI WorldCom Rights, in each case in order to
facilitate an MCI WorldCom Competing Proposal. Notwithstanding the foregoing,
MCI WorldCom may amend the MCI WorldCom Rights Agreement to effect a
transaction permitted by Section 4.2(c) of this Agreement.
5.12 Public Announcements. Sprint and MCI WorldCom shall use all reasonable
efforts to develop a joint communications plan and each party shall use all
reasonable efforts (i) to ensure that all press releases and other public
statements with respect to the transactions contemplated hereby shall be
consistent with such joint communications plan, and (ii) unless otherwise
required by applicable law or by obligations pursuant to any listing agreement
with or rules of any securities exchange, to consult with each other before
issuing any press release or otherwise making any public statement with respect
to this Agreement or the transactions contemplated hereby.
5.13 Listing. MCI WorldCom shall use its reasonable best efforts to cause
the shares of MCI WorldCom Common Stock and MCI WorldCom Series 1 PCS Stock to
be issued in the Merger to be approved for quotation on Nasdaq, subject to
official notice of issuance.
5.14 Redemption of Sprint First Series Preferred Stock and Sprint Second
Series Preferred Stock. Prior to the Effective Time, Sprint shall have redeemed
all the issued and outstanding shares of Sprint First Series Preferred Stock
and Sprint Second Series Preferred Stock in accordance with the terms of
Sprint's articles of incorporation.
5.15 Affiliate Letter. On or prior to the date of the Sprint Stockholders
Meeting, Sprint will deliver to MCI WorldCom a letter (the "Sprint Affiliate
Letter") identifying all Persons who are, or may be, "affiliates" of Sprint for
purposes of Rule 145 under the Securities Act ("Rule 145"). On or prior to the
Closing Date, Sprint will use its reasonable efforts to deliver on behalf of
each Person identified as an "affiliate" in the Sprint Affiliate Letter a
written agreement in connection with restrictions on affiliates under Rule 145.
5.16 Tax Treatment. Each of MCI WorldCom and Sprint shall use reasonable
efforts to cause the Merger to qualify as a "reorganization" under the
provisions of Section 368 of the Code and to obtain the opinions of counsel
referred to in Sections 6.2(c) and 6.3(c), including the execution of the
letters of representation referred to therein updated as necessary. Sprint and
MCI WorldCom and their respective Subsidiaries shall treat the MCI WorldCom
Common Stock, MCI WorldCom PCS Stock and MCI WorldCom
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Series 2 Common Stock (together, the "MCI WorldCom Relevant Stock") received in
the Merger by holders of Sprint Common Stock as property permitted to be
received under Section 354 of the Code without the recognition of gain. Each of
Sprint and MCI WorldCom covenants and agrees to, and agrees to cause its
affiliates to, vigorously and in good faith defend all challenges to the
treatment of the reorganization as described in this Section 5.16, including
any such challenge to the treatment of the MCI WorldCom Relevant Stock as
property permitted to be received under Section 354 of the Code without the
recognition of gain. Each of Sprint and MCI WorldCom agrees that if it becomes
aware of any such fact or circumstance that is reasonably likely to prevent the
Merger from qualifying as a reorganization described in Section 368(a) of the
Code, including any such fact or circumstance that is reasonably likely to
prevent the MCI WorldCom Relevant Stock from being treated as property
permitted to be received under Section 354 of the Code without the recognition
of gain, it will promptly notify the other party in writing.
5.17 Assumption Agreement and Supplemental Indentures. Prior to or at the
Effective Time, MCI WorldCom will execute and deliver (a) a written instrument
to Sprint evidencing its obligation to deliver to each holder of a warrant
granted pursuant to one of the Warrant Agreements other securities, cash or
other assets as such holder may be entitled to purchase and the other
obligations under the applicable Warrant Agreement, and (b) a supplemental
indenture to each of the trustees with respect to the indentures named in
Section 5.17 of the Sprint Disclosure Schedule, in form satisfactory to each
such trustee, as required under such indentures.
5.18 Other Actions. Sprint will use reasonable efforts to cooperate with any
request by MCI WorldCom to transfer certain assets of Sprint to any Subsidiary
of Sprint, so long as such transfer(s) (a) would be permitted by applicable
regulations, laws and contracts, (b) would not, individually or in the
aggregate, adversely affect Sprint and (c) would be executed by Sprint at any
time (as determined by Sprint) prior to the Effective Time.
ARTICLE VI
Conditions Precedent
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
obligations of Sprint and MCI WorldCom to effect the Merger are subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approvals. (i) Sprint shall have obtained the Required
Sprint Vote and (ii) MCI WorldCom shall have obtained the Required MCI WorldCom
Vote.
(b) No Injunctions or Restraints; Illegality. No Laws shall have been
adopted or promulgated, and no temporary restraining order, preliminary or
permanent injunction or other order issued by a court or other Governmental
Entity of competent jurisdiction shall be in effect, having the effect of
making the Merger illegal or otherwise prohibiting consummation of the Merger;
provided, however, that the provisions of this Section 6.1(b) shall not be
available to any party whose failure to fulfill its obligations pursuant to
Section 5.3 shall have been the cause of, or shall have resulted in, such order
or injunction.
(c) FCC and Public Utility Commission Approvals. All approvals for the
Merger from the FCC and from the PUCs shall have been obtained other than those
the failure of which to be obtained would not, individually or in the
aggregate, reasonably be expected to materially impair the parties' ability to
achieve the overall benefits expected, as of the date hereof, to be realized
from the consummation of the Merger; provided, however, that the provisions of
this Section 6.1(c) shall not be available to any party whose failure to
fulfill its obligations pursuant to Section 5.3 shall have been the cause of,
or shall have resulted in, such failure.
(d) HSR Act. The waiting period (and any extension thereof) applicable to
the Merger under the HSR Act shall have been terminated or shall have expired;
provided, however, that the provisions of this Section
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6.1(d) shall not be available to any party whose failure to fulfill its
obligations pursuant to Section 5.3 shall have been the cause of, or shall have
resulted in, the failure to obtain such termination or expiration.
(e) EU Antitrust. To the extent that such a decision is required by
Regulation 4064/89, MCI WorldCom and Sprint shall have received in respect of
the Merger and any matters arising therefrom: confirmation by way of a decision
from the Commission of the European Union under Regulation 4064/89 (with or
without the initiation of proceedings under Article 6(1)(c) thereof) that the
Merger and any matters arising therefrom are compatible with the common market;
provided, however, that the provisions of this Section 6.1(e) shall not be
available to any party whose failure to fulfill its obligations pursuant to
Section 5.3 shall have been the cause of, or shall have resulted in, the
failure to obtain such confirmation.
(f) Nasdaq Listing. The shares of MCI WorldCom Common Stock and MCI WorldCom
Series 1 PCS Stock to be issued in the Merger shall have been approved for
quotation on Nasdaq, subject to official notice of issuance.
(g) Effectiveness of the Form S-4. The Form S-4 shall have been declared
effective by the SEC under the Securities Act. No stop order suspending the
effectiveness of the Form S-4 shall have been issued by the SEC and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
6.2 Additional Conditions to Obligations of MCI WorldCom. Other than as set
forth in the Sprint Disclosure Schedule, the obligations of MCI WorldCom to
effect the Merger are subject to the satisfaction of, or waiver by MCI
WorldCom, on or prior to the Closing Date of the following additional
conditions:
(a) Representations and Warranties. (i) Each of the representations and
warranties (other than as set forth in Section 3.1(b)(i), (ii) and (iii)) of
Sprint set forth in this Agreement shall be true and correct on the date of
this Agreement, and as of the Closing Date, as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case as of
such date), except for changes expressly permitted under Article IV and except
where the failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein), individually or in the aggregate,
does not have, and is not reasonably likely to have, a Material Adverse Effect
on Sprint, and (ii) the representations and warranties of Sprint set forth in
Section 3.1(b)(i), (ii) and (iii) shall be true and correct in all material
respects on the date of this Agreement, and as of the Closing Date, as if made
at and as of such time (except to the extent expressly made as of an earlier
date, in which case as of such date), except for changes expressly permitted
under Article IV. MCI WorldCom shall have received a certificate of the chief
executive officer and the chief financial officer of Sprint to such effect.
(b) Performance of Obligations of Sprint. Sprint shall have performed or
complied in all material respects with all material agreements and covenants
required to be performed by it or complied with under this Agreement at or
prior to the Closing Date. MCI WorldCom shall have received a certificate of
the chief executive officer and the chief financial officer of Sprint to such
effect.
(c) Tax Opinion. MCI WorldCom shall have received from Cravath, Swaine &
▇▇▇▇▇, counsel to MCI WorldCom, on the date on which the Form S-4 is declared
effective by the SEC and on the Closing Date, a written opinion dated as of
such date stating that: (i) the Merger will qualify as a "reorganization"
within the meaning of Section 368(a) of the Code, (ii) MCI WorldCom and Sprint
will each be a "party" to that reorganization within the meaning of Section
368(b) of the Code and (iii) the issuance of the MCI WorldCom Relevant Stock to
the holders of the Sprint Common Stock in the Merger will not result in MCI
WorldCom's recognizing an amount of income or gain or being subject to an
amount of tax, in each case that individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on MCI WorldCom. In
rendering such opinions, counsel to MCI WorldCom shall be entitled to rely upon
representations of officers of MCI WorldCom and Sprint substantially in the
form of Appendices 3 and 4, respectively, and updated as necessary. The
opinions shall be in substantially the same form as Appendix 1.
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(d) No Material Adverse Change. Since the date of this Agreement, there
shall not have been any Material Adverse Change in Sprint.
6.3 Additional Conditions to Obligations of Sprint. The obligations of
Sprint to effect the Merger are subject to the satisfaction of, or waiver by
Sprint, on or prior to the Closing Date of the following additional conditions:
(a) Representations and Warranties. (i) Each of the representations and
warranties (other than as set forth in Section 3.2(b)(i), (ii) and (iii)) of
MCI WorldCom set forth in this Agreement shall be true and correct on the date
of this Agreement and as of the Closing Date, as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case as of
such date), except for changes expressly permitted under Article IV and except
where the failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein), individually or in the aggregate,
does not have, and is not reasonably likely to have, a Material Adverse Effect
on MCI WorldCom, and (ii) the representations and warranties of MCI WorldCom
set forth in Section 3.2(b)(i), (ii) and (iii) shall be true and correct in all
material respects on the date of this Agreement, and as of the Closing Date, as
if made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such date). Sprint shall have received a
certificate of the chief executive officer and the chief financial officer of
MCI WorldCom to such effect.
(b) Performance of Obligations of MCI WorldCom. MCI WorldCom shall have
performed or complied in all material respects with all material agreements and
covenants required to be performed by it or complied with under this Agreement
at or prior to the Closing Date. Sprint shall have received a certificate of
the chief executive officer and the chief financial officer of MCI WorldCom to
such effect.
(c) Tax Opinion. Sprint shall have received from King & Spalding, counsel to
Sprint, on the date on which the Form S-4 is declared effective by the SEC and
on the Closing Date, a written opinion dated as of such date stating that: (i)
the Merger will qualify as a "reorganization" within the meaning of Section
368(a) of the Code, (ii) Sprint and MCI WorldCom will each be a "party" to that
reorganization within the meaning of Section 368(b) of the Code and (iii) the
MCI WorldCom Relevant Stock received in the Merger by holders of Sprint Common
Stock is property permitted to be received under Section 354 of the Code
without the recognition of gain. In rendering such opinions, counsel to Sprint
shall be entitled to rely upon representations of officers of MCI WorldCom and
Sprint substantially in the form of Appendices 3 and 4, respectively, and
updated as necessary. The opinions shall be in substantially the same form as
Appendix 2.
(d) No Material Adverse Change. Since the date of this Agreement, there
shall not have been any Material Adverse Change in MCI WorldCom.
ARTICLE VII
Termination and Amendment
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, by action taken or authorized by the Board of Directors of the
terminating party or parties, and except as provided below, whether before or
after approval of the matters presented in connection with the Merger by the
stockholders of Sprint or MCI WorldCom:
(a) By mutual written consent of MCI WorldCom and Sprint, by action of their
respective Boards of Directors;
(b) By either Sprint or MCI WorldCom if the Effective Time shall not have
occurred on or before December 31, 2000 (the "Termination Date"); provided,
however, that the right to terminate this Agreement under this Section 7.1(b)
shall not be available to any party whose failure to fulfill any obligation
under this
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Agreement (including Section 5.3) has caused, or resulted in, the failure of
the Effective Time to occur on or before the Termination Date;
(c) By either Sprint or MCI WorldCom if any Governmental Entity (i) shall
have issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement, and such order, decree, ruling or other action shall have
become final and nonappealable or (ii) shall have failed to issue an order,
decree or ruling or to take any other action (which order, decree, ruling or
other action the parties shall have used their reasonable best efforts to
obtain, in accordance with Section 5.3), in each case (i) and (ii) which is
necessary to fulfill the conditions set forth in Sections 6.1(c), (d) and (e),
as applicable, and such denial of a request to issue such order, decree, ruling
or take such other action shall have become final and nonappealable; provided,
however, that the right to terminate this Agreement under this Section 7.1(c)
shall not be available to any party whose failure to comply with Section 5.3
has caused or resulted in such action or inaction;
(d) By either Sprint or MCI WorldCom if (i) the approval by the stockholders
of Sprint required for the consummation of the Merger shall not have been
obtained by reason of the failure to obtain the Required Sprint Vote at a duly
held Sprint Stockholders Meeting or at any adjournment or postponement thereof
or (ii) the approval by the shareholders of MCI WorldCom required for the
consummation of the Merger shall not have been obtained by reason of the
failure to obtain the Required MCI WorldCom Vote at a duly held MCI WorldCom
Shareholders Meeting or at any adjournment or postponement thereof;
(e) By Sprint in accordance with Section 5.4(b); provided that, in order for
the termination of this Agreement pursuant to this paragraph (e) to be deemed
effective, Sprint shall have complied with the notice provisions of Section 5.4
and shall have paid the Termination Fee in accordance with Section 5.8(b);
(f) By MCI WorldCom in accordance with Section 5.5(b); provided that, in
order for the termination of this Agreement pursuant to this paragraph (f) to
be deemed effective, MCI WorldCom shall have complied with the notice
provisions of Section 5.5 and shall have paid the Termination Fee in accordance
with Section 5.8(c);
(g) By Sprint, if MCI WorldCom shall have breached or failed to perform any
of its representations, warranties, covenants or other agreements contained in
this Agreement, which breach or failure to perform (A) would give rise to the
failure of a condition set forth in Section 6.3(a) or (b) and (B) has not been
or is incapable of being cured by MCI WorldCom within 45 calendar days after
its receipt of written notice thereof from Sprint;
(h) By MCI WorldCom, if Sprint shall have breached or failed to perform any
of its representations, warranties, covenants or other agreements contained in
this Agreement, which breach or failure to perform (A) would give rise to the
failure of a condition set forth in Section 6.2(a) or (b) and (B) has not been
or is incapable of being cured by Sprint within 45 calendar days after its
receipt of written notice thereof from MCI WorldCom;
(i) By Sprint, in the event that MCI WorldCom takes any action set forth in
Section 5.5(b)(x); or
(j) By MCI WorldCom, in the event that Sprint takes any action set forth in
Section 5.4(b)(x).
Notwithstanding anything else contained in this Agreement, the right to
terminate this Agreement under this Section 7.1 shall not be available to any
party (a) that is in material breach of its obligations hereunder or (b) whose
failure to fulfill its obligations or to comply with its covenants under this
Agreement has been the cause of, or resulted in, the failure to satisfy any
condition to the obligations of either party hereunder.
7.2 Effect of Termination. In the event of termination of this Agreement by
either Sprint or MCI WorldCom as provided in Section 7.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of MCI WorldCom or Sprint or their respective directors or officers except with
respect to Section 3.1(m), Section 3.2(m), the second sentence of Section 5.2,
Section 5.8, this Section 7.2
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and Article VIII. Termination of this Agreement will not relieve a breaching
party from liability for any willful and material breach by such party of any
of its representations, warranties, covenants or agreements set forth in this
Agreement.
7.3 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Merger
by the stockholders of Sprint and MCI WorldCom, but, after any such approval,
no amendment shall be made which by law or in accordance with the rules of any
relevant stock exchange requires further approval by such stockholders without
such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
7.4 Extension; Waiver; Consent. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with or give a consent under any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to any such
extension, waiver or consent shall be valid only if set forth in a written
instrument signed on behalf of such party in its sole discretion. The failure
of any party to this Agreement to assert any of its rights under this Agreement
or otherwise shall not constitute a waiver of those rights.
ARTICLE VIII
General Provisions
8.1 Non-Survival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants and other agreements in this Agreement
or in any instrument delivered pursuant to this Agreement, including any rights
arising out of any breach of such representations, warranties, covenants and
other agreements, shall survive the Effective Time, except for those covenants
and agreements contained herein that by their terms apply or are to be
performed in whole or in part after the Effective Time and this Article VIII.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally, or by telecopy or telefacsimile, upon confirmation of receipt, (b)
on the first Business Day following the date of dispatch if delivered by a
recognized next-day courier service, or (c) on the tenth Business Day following
the date of mailing if delivered by registered or certified mail, return
receipt requested, postage prepaid. All notices hereunder shall be delivered as
set forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice:
(a) if to MCI WorldCom, to
MCI WORLDCOM, Inc
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
MCI WORLDCOM, Inc
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: P. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
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with a copy to
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III, Esq.
Facsimile No.: 212-474-3700
(b) if to Sprint, to
Sprint Corporation
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▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Sprint Corporation
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▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to
King & Spalding
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
8.3 Interpretation. When a reference is made in this Agreement to Sections,
exhibits or Schedules, such reference shall be to a Section of or Exhibit or
Schedule to this Agreement unless otherwise indicated. The table of contents,
glossary of defined terms and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
8.5 Entire Agreement; No Third Party Beneficiaries. (a) This Agreement and
the Confidentiality Agreement constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof.
(b) This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement, other than
Section 5.9 (which is intended to be for the benefit of the Persons covered
thereby and may be enforced by such Persons) or as provided in Section 5.7 of
the Sprint Disclosure Schedule.
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8.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, except that the Merger
shall be governed by the laws of the State of Kansas and the laws of the State
of Georgia.
8.7 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
8.8 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto, in whole
or in part (whether by operation of law or otherwise), without the prior
written consent of the other party, and any attempt to make any such
assignment without such consent shall be null and void. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns.
8.9 Submission to Jurisdiction; Waivers. Each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Delaware state
court or any Federal court located in the State of Delaware in the event any
dispute arises out of or under or relates to this Agreement or any of the
transactions contemplated hereby and agrees, to the extent that such party is
not resident in the State of Delaware, to irrevocably appoint CSC The United
States Corporation Company as its agent for service of process, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, (c) agrees that it will
not bring any action, suit or proceeding arising out of or under or relating
to this Agreement or any of the transactions contemplated hereby, in any court
other than any Delaware state court or any Federal court located in the State
of Delaware and (d) waives any right to trial by jury with respect to any
action, suit or proceeding arising out of or under or relating to this
Agreement or any of the transactions contemplated hereby. Each of the parties
hereto hereby irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of or under or
relating to this Agreement or any of the transactions contemplated hereby in
any Delaware state court or any Federal court located in the State of
Delaware, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient
forum.
8.10 Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the
parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.11 Definitions. As used in this Agreement:
(a) "Benefit Plans" means, with respect to any Person, each employee
benefit plan, program, arrangement and contract (including any "employee
benefit plan" (as defined in ERISA) and any bonus, deferred compensation,
stock bonus, stock purchase, restricted stock, stock option, employment,
termination, stay agreement or bonus, change in control and severance plan,
program, arrangement and contract) all of the foregoing in effect on the date
of this Agreement, to which such Person is a party, which is maintained or
contributed to by such Person, or with respect to which such Person could
incur material liability under Section 4069, 4201 or 4212(c) of ERISA.
(b) "Board of Directors" means the Board of Directors of any specified
Person or any committee thereof.
(c) "Business Day" means any day on which banks are not required or
authorized to close in the City of New York.
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(d) "Class A Holder" has the meaning ascribed thereto in Sprint's articles
of incorporation.
(e) "Knowledge" of any Person that is not an individual means, with respect
to any specific matter, the actual knowledge of such Person's executive
officers and other officers having primary responsibility for such matter.
(f) "Material Adverse Effect" or "Material Adverse Change" means, with
respect to any entity, any adverse change, circumstance or effect that,
individually or in the aggregate with all other adverse changes, circumstances
and effects, is or is reasonably likely to be materially adverse to the
business, financial condition or results of operations of such entity and its
Subsidiaries taken as a whole, other than any change, circumstance or effect
(i) relating to or resulting from the economy or securities markets in general,
(ii) relating to or resulting from the industries in which MCI WorldCom or
Sprint operate and not uniquely relating to MCI WorldCom or Sprint or (iii)
resulting from the announcement or the existence of this Agreement and the
transactions contemplated hereby.
(g) "Material Investment" means (a) as to Sprint, any Person which Sprint
directly or indirectly holds the stock of, or other ownership interest in,
provided that the lesser of the fair market value and the book value of such
stock or interest exceeds $250 million, excluding any Person that is a wholly
owned Subsidiary of Sprint; and (b) as to MCI WorldCom, any Person which MCI
WorldCom directly or indirectly holds the stock of, or other ownership interest
in, provided that the lesser of the fair market value and the book value of
such stock or interest exceeds $250 million, excluding any Person that is a
wholly owned Subsidiary of MCI WorldCom.
(h) "the other party" means, with respect to Sprint, MCI WorldCom and means,
with respect to MCI WorldCom, Sprint.
(i) "Person" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in the Exchange Act).
(j) "Significant Subsidiary" has the meaning ascribed thereto in Rule 1-
02(w) of Regulation S-X of the SEC.
(k) "Subsidiary" when used with respect to any party means any corporation
or other organization, whether incorporated or unincorporated, (i) of which
such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by
such party or any Subsidiary of such party do not have a majority of the voting
interests in such partnership) or (ii) at least a majority of the securities or
other interests of which having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries.
(l) "FON Exchange Ratio" means the quotient (rounded to the nearest
1/10,000) determined by dividing $76 by the Average Price; provided that the
FON Exchange Ratio shall not be less than 1.4100 or greater than 1.8342 (it
being understood and agreed that such numbers have been adjusted from the
0.9400 and 1.2228 numbers, respectively, contained in the Original Merger
Agreement to reflect MCI WorldCom's three-for-two stock split in the form of a
50% stock dividend which was distributed on December 30, 1999 (the "December
1999 MCI WorldCom Stock Split") and that no further adjustment will be made to
the FON Exchange Ratio to reflect the December 1999 MCI WorldCom Stock Split).
(m) "PCS Exchange Ratio" means 0.116025 (it being understood and agreed that
such number has been adjusted from the 0.1547 number contained in the Original
Merger Agreement to reflect both the December 1999 MCI WorldCom Stock Split and
Sprint's two-for-one stock split of its Sprint PCS Stock in the form of a stock
dividend which was distributed on February 4, 2000 (the "February PCS Stock
Split") and that no further adjustment will be made to the PCS Exchange Ratio
to reflect the December 1999 MCI WorldCom Stock Split or the February PCS Stock
Split).
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(n) "Average Price" means the average (rounded to the nearest 1/10,000) of
the volume weighted averages (rounded to the nearest 1/10,000) of the trading
prices of MCI WorldCom Common Stock on The Nasdaq National Market ("Nasdaq"),
as reported by Bloomberg Financial Markets (or such other source as the parties
shall agree in writing), for the 15 trading days randomly selected by lot by
MCI WorldCom and Sprint together from the 30 consecutive trading days ending on
the third trading day immediately preceding the Effective Time.
IN WITNESS WHEREOF, MCI WorldCom and Sprint have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
MCI WorldCom, Inc.,
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
by __________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief
Executive Officer
Sprint Corporation,
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
by __________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
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ANNEX 1 TO
THE MERGER AGREEMENT
CERTAIN MATTERS RELATING TO SURVIVING CORPORATION
Board of Directors
The Board of Directors of the Surviving Corporation will initially consist
of 16 members, 10 of whom shall be initially designated by MCI WorldCom and 6
of whom shall be initially designated by Sprint.
Prior to the Effective Time, each party will designate in writing the
individual directors that it is entitled to designate to the Board of Directors
as provided above.
Tracking Stock Policies; Tax Sharing Agreement
As of the Effective Time, MCI WorldCom shall adopt Tracking Stock Policies
identical to the Sprint Tracking Stock Policies as in effect on the date hereof
and will assume the related Tax Sharing Agreement dated as of November 23,
1998.
MCI WorldCom agrees that, at the Closing, no other policies shall have been
adopted by MCI WorldCom which are inconsistent with such Tracking Stock
Policies or otherwise impair the relative position of the holders of capital
stock as set forth in such Tracking Stock Policies.
MCI WorldCom Shareholder Rights Plan
As of the Effective Time, MCI WorldCom shall modify the terms of the MCI
WorldCom shareholder rights plan in a manner to take into account the creation
of the PCS stock.
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