Exhibit 2
RESTRUCTURING AND MERGER AGREEMENT
BY AND AMONG
SPRINT CORPORATION
TELE-COMMUNICATIONS, INC.
COMCAST CORPORATION
▇▇▇ COMMUNICATIONS, INC.
SPRINT ENTERPRISES, L.P.
TCI SPECTRUM HOLDINGS, INC.
COMCAST TELEPHONY SERVICES
COX TELEPHONY PARTNERSHIP
TCI PHILADELPHIA HOLDINGS, INC.
COMCAST TELEPHONY SERVICES, INC.
COM TELEPHONY SERVICES, INC.
COX TELEPHONY PARTNERS, INC.
▇▇▇ COMMUNICATIONS WIRELESS, INC.
SWV ONE, INC.
SWV TWO, INC.
SWV THREE, INC.
SWV FOUR, INC.
SWV FIVE, INC.
SWV SIX, INC.
May 26, 1998
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS 3
Section 1.1 Certain Definitions 3
Section 1.2 Other Defined Terms 12
Section 1.3 Terms Generally 14
ARTICLE 2
THE MERGERS; EFFECTIVE TIME 14
Section 2.1 The Mergers 14
Section 2.2 The Mergers; Adoption
and Approval; Effective Time 15
ARTICLE 3
TERMS OF THE MERGERS 15
Section 3.1 Charters 15
Section 3.2 The By-Laws 15
Section 3.3 Directors 15
Section 3.4 Officers 16
ARTICLE 4
SHARE CONSIDERATION; CONVERSION OR
CANCELLATION OF SHARES IN THE MERGERS 16
Section 4.1 Share Consideration;
Conversion or Cancellation of Shares
in the Mergers 16
Section 4.2 Payment for Shares in
the Mergers 18
Section 4.3 Warrant Intergroup Interest 18
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PARTIES 19
Section 5.1 Mutual Representations 19
(a) Due Incorporation or
Formation; Authorization of
Agreements 19
(b) No Conflict; No Default 19
(c) Litigation 20
(d) Finders Fees 20
Section 5.2 Representations and
Warranties of the Cable Parents 20
(a) Interests in Sprint PCS
Owned by the Cable Partners 20
(b) Partnership Interests in
Cable Partners Owned by
HoldCo Entities 21
(c) Capital Stock of the HoldCo
Entities and TCI Partner 21
(d) Availability 22
i
(e) Consents, Approvals and
Authorizations 22
(f) Contracts 22
(g) Taxes 22
(h) Tax Opinions 25
(i) Ownership of Sprint
Securities 25
Section 5.3 Representations and
Warranties of Sprint 25
(a) Merger Subs 25
(b) Consents, Approvals and
Notifications 25
(c) Sprint Board Action 25
(d) FT/DT Agreements 26
(e) PCS Percentage Group
Interests; Intergroup
Interests 26
(f) PCS Group Constituents 26
(g) King & Spalding Opinion 26
(h) Representations and
Warranties Regarding Sprint
Partner 27
(i) Reports and Financial
Statements 30
(j) Capitalization of Sprint 30
Section 5.4 Representations and
Warranties Concerning PhillieCo 30
(a) Due Organization 30
(b) Interests in PhillieCo Owned
by the PhillieCo Partners 30
(c) Licenses 31
(d) Compliance with Laws 31
(e) Litigation 31
(f) Title to Licenses 32
(g) No Breach 32
(h) Environmental Protection 32
(i) Intellectual Property 32
(j) Financial Information 32
(k) Sole Line of Business 33
(l) Liabilities 33
Section 5.5 Representations and
Warranties Concerning SprintCom and
EquipmentCo 33
(a) Due Organization; Title 33
(b) Licenses 34
(c) Compliance with Laws 34
(d) Litigation 34
(e) Title to Licenses 34
(f) No Breach 34
(g) Environmental Protection 35
(h) Intellectual Property 35
(i) Financial Information 35
(j) Sole Line of Business; 36
(k) Liabilities 36
ii
ARTICLE 6
COVENANTS OF THE PARTIES 36
Section 6.1 Cooperation 36
Section 6.2 Certain Actions by Sprint 37
(a) SEC Filings 37
(b) Stockholders Meeting 38
(c) Concurrent IPO 39
(d) Concurrent Recapitalization 39
(e) Extension of Trigger Date 40
Section 6.3 IPO Matters 40
Section 6.4 Capital Requirements of
Sprint PCS Prior to Closing 41
Section 6.5 Capital Requirements of
SprintCom Prior to Closing 42
Section 6.6 Capitalization or Purchase
of PCS Notes and SprintCom Loans 42
Section 6.7 Loans to PhillieCo 46
Section 6.8 Equity Purchase Rights 46
Section 6.9 Conduct of Business of
the HoldCo Entities and Cable Partners 51
Section 6.10 Conduct of Business of
SprintCom and EquipmentCo. 52
Section 6.11 Access to Information 53
Section 6.12 Tax Matters 54
Section 6.13 Chairman of Sprint PCS 55
Section 6.14 Agreement Not to Trigger
Buy/Sell 55
Section 6.15 Management and Allocation
Policies 55
Section 6.16 Informational Rights 55
Section 6.17 Transfer of Series 2 PCS
Stock 56
Section 6.18 Spin-off 56
Section 6.19 Parents Agreements:
Non-Competition 56
Section 6.20 Confidentiality 57
Section 6.21 Conduct of Business of
Phillieco 57
Section 6.22 Intergroup Interests 58
Section 6.23 Rights Plan 58
ARTICLE 7
TAX MATTERS 58
Section 7.1 Tax Returns 58
Section 7.2 Termination of Prior Tax
Settlement Agreements 59
Section 7.3 Pre-Closing Taxes 59
Section 7.4 Transfer Taxes 60
Section 7.5 Post-Closing Taxes 61
Section 7.6 Carrybacks 61
Section 7.7 Tax Cooperation 61
Section 7.8 Notification of Proceedings 62
Section 7.9 Audits 62
Section 7.10 SRLY Losses 63
iii
Section 7.11 Tax Indemnification 68
ARTICLE 8
CONDITIONS TO CLOSING 69
Section 8.1 Conditions of All Parties
to Closing 69
(a) Sprint Stockholder Approval 69
(b) HSR Act; FCC 69
(c) No Injunction 70
(d) Listing of Series 1 PCS Stock 70
(e) IPO or Recapitalization 70
(f) Initial Charter Amendment;
Certificate of Designations 70
(g) Certificates of Merger 70
Section 8.2 Sprint's Conditions Precedent
to Closing 70
(a) Correctness of Representations
and Warranties 70
(b) Performance of Agreements 71
(c) Tax Opinion 71
Section 8.3 Cable Parents' Conditions
Precedent to Closing 71
(a) Correctness of Representations
and Warranties 71
(b) Performance of Agreements 71
(c) Tax Opinions 72
ARTICLE 9
CLOSING 72
Section 9.1 Closing 72
ARTICLE 10
TERMINATION 74
Section 10.1 Events of Termination 74
Section 10.2 Effect of Termination 74
ARTICLE 11
EXTENT AND SURVIVAL OF REPRESENTATIONS,
WARRANTIES,COVENANTS AND AGREEMENTS;
INDEMNIFICATION 75
Section 11.1 Scope of Representations
of the Parties 75
Section 11.2 Indemnification of Parties 76
Section 11.3 Survival 77
Section 11.4 Indemnification Procedures 77
Section 11.5 Acknowledgment of the
Parties 79
Section 11.6 Limitation on Obligation
to Indemnify 79
Section 11.7 Allocation of Losses 80
ARTICLE 12
MISCELLANEOUS 80
Section 12.1 Notices 80
iv
Section 12.2 Binding Effect 82
Section 12.3 Construction 82
Section 12.4 Expenses 82
Section 12.5 Table of Contents; Headings 83
Section 12.6 Governing Law 83
Section 12.7 Severability 83
Section 12.8 Amendments 83
Section 12.9 Entire Agreement 83
Section 12.10 Confidentiality 83
Section 12.11 Assignment 83
Section 12.12 Waivers; Remedies 83
Section 12.13 Consent to Jurisdiction;
Specific Performance 84
Section 12.14 WAIVER OF JURY TRIAL 84
Section 12.15 Further Assurances 84
Section 12.16 Counterparts 84
Section 12.17 Limitation on Rights of
Others 85
Section 12.18 Restrictive Legends 85
v
EXHIBITS
Exhibit A - Certificate of Designations
Exhibit B-1 - Form of Delaware Certificates of Merger
Exhibit B-2 - Form of Colorado Articles of Merger
Exhibit C-1 - Amendment to Cox L.A. Partnership
Agreement
Exhibit C-2 - Amendment to Cox L.A. Affiliation
Agreement
Exhibit D - Intentionally Omitted
Exhibit E - Initial Charter Amendment
Exhibit F - Management and Allocation Policies
Exhibit G - Mutual Release and Waiver
Exhibit H - Registration Rights Agreement
Exhibit I - Standstill Agreements
Exhibit J - Subsequent Charter Amendment
Exhibit K - Tax Sharing Agreement
Exhibit M - Voting Agreements
Exhibit N - Warrant Agreements
Exhibit O - Bylaw Amendment
Exhibit P - FT/DT Agreements
Exhibit Q - Proxy Statement Excerpts
Exhibit R - Form of Promissory Note for PCS Loans
Exhibit S - Form of Promissory Note for SprintCom
Loans
Exhibit T - Tax Matters Certificate
vi
SCHEDULES
Schedule 5.2(a) - Cable Partners' Ownership Interest
in Sprint PCS
Schedule 5.2(b) - Owned Interests
Schedule 5.2(c) - HoldCo Entities and TCI Partner
Capital Stock
Schedule 5.2(f)(i) - Contracts
Schedule 5.2(g)(ii) - Tax Attributes
Schedule 5.2(g)(v) - Other Tax Matters
Schedule 5.2(g)(viii) - Tax Returns
Schedule 5.3(f) - PCS Group Constituent Entities
Schedule 5.3(h)(ii) - Interests in Sprint Partner
Schedule 5.4(b) - PhillieCo Ownership Interests
Schedule 5.4(c) - PhillieCo Licenses
Schedule 5.5(b) - SprintCom Licenses
Schedule 5.5(d) - SprintCom Litigation
THIS RESTRUCTURING AND MERGER AGREEMENT is made as
of this 26th day of May, 1998, by and among
TELE-COMMUNICATIONS, INC., a Delaware corporation ("TCI"),
COMCAST CORPORATION, a Pennsylvania corporation ("Comcast"),
▇▇▇ COMMUNICATIONS, INC., a Delaware corporation ("Cox",
and together with TCI and Comcast, the "Cable Parents"),
SPRINT CORPORATION, a Kansas corporation ("Sprint", and
together with the Cable Parents, the "Parents"), TCI
SPECTRUM HOLDINGS, INC., a Colorado corporation ("TCI
Partner"), COMCAST TELEPHONY SERVICES, a Delaware general
partnership ("Comcast Partner"), COX TELEPHONY PARTNERSHIP,
a Delaware general partnership ("Cox Partner", and together
with TCI Partner and Comcast Partner, the "Cable Partners"),
SPRINT ENTERPRISES, L.P., a Delaware limited partnership
("Sprint Partner", and together with the Cable Partners, the
"PCS Partners"), TCI PHILADELPHIA HOLDINGS, INC., a Delaware
corporation ("TCI PhillieCo Sub"), COM TELEPHONY SERVICES,
INC., a Delaware corporation ("Comcast HoldCo Sub1"), COMCAST
TELEPHONY SERVICES, INC., a Delaware corporation ("Comcast
HoldCo Sub2"), COX TELEPHONY PARTNERS, INC., a Delaware
corporation ("Cox HoldCo Sub1") and ▇▇▇ COMMUNICATIONS
WIRELESS, INC., a Delaware corporation ("Cox HoldCo Sub2",
and together with TCI PhillieCo Sub, Comcast HoldCo Sub1,
Comcast HoldCo Sub2 and Cox HoldCo Sub1, the "HoldCo
Entities"), SWV ONE, INC., a Delaware corporation ("Comcast
Merger Sub1"), SWV TWO, INC., a Delaware corporation
("Comcast Merger Sub2"), SWV THREE, INC., a Delaware
corporation ("Cox Merger Sub1"), SWV FOUR, INC., a Delaware
corporation ("Cox Merger Sub2"), SWV FIVE, INC., a Delaware
corporation ("TCI Merger Sub1"), and SWV SIX, INC., a
Colorado corporation ("TCI Merger Sub2", and together with
Cox Merger Sub1, Cox Merger Sub2, Comcast Merger Sub1,
Comcast Merger Sub2 and TCI Merger Sub1, the "Merger Subs").
RECITALS:
WHEREAS, each of the PCS Partners is a general partner
and a limited partner of each of Sprint Spectrum Holding
Company, L.P., a Delaware limited partnership ("Sprint PCS
GP"), and MinorCo, L.P., a Delaware limited partnership
("Sprint PCS LP");
WHEREAS, Sprint PCS GP is the sole general partner
and Sprint PCS LP is the sole limited partner of Sprint
Spectrum, L.P., a Delaware limited partnership ("Sprint
PCS");
WHEREAS, TCI Partner is an indirect Wholly-Owned
Subsidiary of TCI, Comcast Partner is wholly owned by
Comcast HoldCo Sub1 and Comcast HoldCo Sub2 (which in turn
are indirect Wholly-Owned Subsidiaries of Comcast), and Cox
Partner is wholly owned by Cox HoldCo Sub1 and Cox HoldCo
Sub2 (which in turn are Wholly-Owned Subsidiaries of Cox);
WHEREAS, TCI PhillieCo Sub, Cox HoldCo Sub2 and
Sprint Partner (collectively, the "PhillieCo Partners")
are the sole partners, each holding a general partnership
and a limited partnership interest, in PhillieCo Partners
I, L.P., a Delaware limited partnership ("PhillieCo GP"),
and PhillieCo Partners II, L.P., a Delaware limited
partnership ("PhillieCo LP");
WHEREAS, PhillieCo GP is the sole general partner
and PhillieCo LP is the sole limited partner of PhillieCo
Sub, L.P., a Delaware limited partnership ("PhillieCo Sub"),
which in turn is the sole general partner of PhillieCo,
L.P., a Delaware limited partnership ("PhillieCo1"), and
PhillieCo Equipment & Realty Company, L.P., a Delaware
limited partnership ("PhillieCo2") (PhillieCo Sub,
PhillieCo1 and PhillieCo2 are collectively referred to
herein as "PhillieCo");
WHEREAS, each of the Merger Subs is a direct
Wholly-Owned Subsidiary of Sprint;
WHEREAS, SprintCom, Inc., a Kansas corporation
("SprintCom"), and SprintCom Equipment Company, L.P.,
a Delaware limited partnership ("EquipmentCo"), are
Wholly-Owned Subsidiaries of Sprint;
WHEREAS, the Board of Directors of each of the
Parents, TCI Partner, the HoldCo Entities and the Merger
Subs has determined that it is in the best interests of
their respective stockholders for (A) TCI Merger Sub1 to
merge with and into TCI PhillieCo Sub, (B) TCI Merger
Sub2 to merge with and into TCI Partner, (C) Comcast
Merger Sub1 to merge with and into Comcast HoldCo Sub1,
(D) Comcast Merger Sub2 to merge with and into Comcast
HoldCo Sub2, (E) Cox Merger Sub1 to merge with and into
Cox HoldCo Sub1 and (F) Cox Merger Sub2 to merge with
and into Cox HoldCo Sub2, all upon the terms and subject
to the conditions of this Agreement (each, a "Merger"
and together, the "Mergers");
WHEREAS, the outstanding stock of TCI Partner
and the HoldCo Entities will be converted in the Mergers
into (i) shares of a special series of a new class of
common stock of Sprint that will reflect the performance
of the PCS Group (as defined herein), (ii) certain warrants
to acquire additional shares of such special series of
common stock and (iii) in certain cases, shares of a new
series of preferred stock of Sprint;
WHEREAS, concurrently with the Closing of the
Mergers, Sprint currently intends to complete the IPO
(as defined herein) and, within 120 days thereafter, to
complete the Recapitalization (as defined herein);
WHEREAS, if the IPO is not completed on the
Closing Date, Sprint will effect the Recapitalization
concurrently with the Closing and intends to complete the
IPO within 120 days following the Closing;
WHEREAS, immediately following the Mergers, TCI,
Comcast and Cox will hold (directly or indirectly
through their respective Subsidiaries) shares of such
special series of common stock and Warrants (as defined
herein) representing Initial PCS Group Percentage Interests
(as defined herein) of 23.83074%, 11.42370%, and 11.91537%,
respectively, and the Sprint FON Group (as defined herein)
will hold a notional equity "intergroup" interest in the
PCS Group equal to a 52.83019% Initial PCS Group Percentage
Interest; and
WHEREAS, in connection with the Mergers, the parties
hereto intend to enter into other agreements and covenants
as specified herein;
NOW, THEREFORE, in consideration of the premises and
the representations, warranties, covenants and agreements
contained herein and in the Other Agreements (as defined
herein), and
2
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1. Certain Definitions. As used in
this Agreement, the following terms shall have the
meanings specified below:
"Act" means the Delaware Revised Uniform Limited
Partnership Act, as set forth in Del. Code ▇▇▇. tit.6,
Sections 17-101 to 17-1111.
"Additional Capital Contribution" has the meaning
set forth in Section 1.10 of the PCS Partnership Agreement.
"Affiliate" means, with respect to any Person, any
other Person that directly or indirectly through one or
more intermediaries controls, is controlled by, or is under
common control with such Person. For purposes of this
definition, the term "controls" (including its correlative
meanings "controlled by" and "under common control with")
shall mean the possession, direct or indirect, of the power
to direct or cause the direction of the management and
policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
Notwithstanding the foregoing, (i) neither Sprint PCS LP,
Sprint PCS GP, Sprint PCS or any of its Subsidiaries,
PhillieCo GP, PhillieCo LP, PhillieCo or any of its
Subsidiaries nor any Person controlled by any of such
entities, shall be deemed to be an Affiliate of any Parent
or of any Affiliate of any Parent prior to the Closing
and (ii) no Parent or any Affiliate thereof shall be deemed
to be an Affiliate of any other Parent or any Affiliate
thereof solely by virtue of the ownership by such Parent or
any of its Affiliates of interests in Sprint PCS LP, Sprint
PCS GP, PhillieCo GP or PhillieCo LP.
"Agreement" means this Restructuring and Merger
Agreement, including the Schedules and Exhibits attached
hereto.
"Business Day" means a day of the year on which
banks are not required or authorized to be closed in the
State of New York.
"Capital Contribution" has the meaning set forth
in Section 1.10 of the PCS Partnership Agreement.
"CBCA" means the Colorado Business Corporation Act.
"Certificate of Designations" means the form of
certificate of designations attached hereto as Exhibit A
setting forth the rights, preferences and limitations of
the PCS Preferred Stock, which will be filed with the
Kansas Secretary of State on the Closing Date.
3
"Certificates of Merger" means, collectively, the
Colorado Articles of Merger and the Delaware Certificates
of Merger.
"Class A Stock" means the Class A Common Stock, par
value $2.50 per share, of Sprint, as provided for in the
Current Sprint Charter.
"Closing" means the consummation of the Mergers and
the other transactions contemplated by this Agreement
(including those set forth in Article 9), concurrently with
either the IPO or the Recapitalization, as contemplated by
this Agreement, held on the date and at the place fixed in
accordance with Article 9.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Colorado Articles of Merger" means the articles of
merger in the form of Exhibit B-2, to be filed with the
Colorado Secretary of State to effect the Merger of TCI
Merger Sub2 with and into TCI Partner.
"Colorado Plan of Merger" means the plan of merger in
the form of Annex 1 to Exhibit B-2, to be filed with the
Colorado Secretary of State to effect the Merger of TCI
Merger Sub2 with and into TCI Partner.
"Comcast" means Comcast Corporation, a Pennsylvania
corporation, and any successor (by merger, consolidation,
Transfer or otherwise) to all or substantially all of its
business or assets.
"Controlled Affiliate" of (i) any Person (other than
a Parent or any Subsidiary of a Parent) means the Parent
Entity of such Person as of the date of this Agreement and
each Subsidiary of such Parent Entity as of the date of
determination, and (ii) any Parent or its Subsidiary means
such Parent and each Subsidiary of such Parent as of the
date of determination.
"Cox" means ▇▇▇ Communications, Inc., a Delaware
corporation, and any successor (by merger, consolidation,
Transfer or otherwise) to all or substantially all of its
business or assets.
"Cox L.A. Amendments" means (i) the amendment to the
Agreement of Limited Partnership of ▇▇▇ Communications PCS,
L.P. by and between Sprint PCS GP and Cox Pioneer
Partnership dated as of December 31, 1996, as amended, in
the form of Exhibit C-1, to be entered into at the Closing
among Sprint, Sprint PCS GP and Cox Pioneer Partnership;
and (ii) the amendment to the Affiliation Agreement by and
between Sprint PCS and ▇▇▇ Communications PCS, L.P. dated
as of December 31, 1996, as amended, in the form of Exhibit
C-2, to be entered into at the Closing by Sprint PCS and
▇▇▇ Communications PCS, L.P.
"Current Sprint Charter" means the Restated Articles
of Incorporation of Sprint as in effect on the date hereof.
4
"Delaware Certificates of Merger" means each of the
five certificates of merger in the form of Exhibit B-1 to
be filed with the Delaware Secretary of State to effect the
Mergers other than the Merger of TCI Merger Sub2 with and
into TCI Partner.
"DGCL" means the Delaware General Corporation Law.
"DT" means Deutsche Telekom AG, an Aktiengesellschaft
formed under the laws of Germany.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"FCC" means the Federal Communications Commission.
"FT" means France Telecom, S.A., a societe anonyme
formed under the laws of France.
"FT/DT Agreements" means the following agreements
to be entered into among Sprint, FT and DT in connection
with the transactions contemplated by this Agreement:
(i) Master Restructuring Agreement; (ii) Amended and
Restated Stockholders' Agreement; (iii) Amended and
Restated Registration Rights Agreement; (iv) Amended and
Restated Standstill Agreement; (v) Amended and Restated
Acquiring Person's Statement; (vi) Amended and Restated
Investor Confidentiality Agreement (DT only); and (vii)
Amended and Restated Investor Confidentiality Agreement
(FT only).
"GAAP" means generally accepted accounting principles
in effect from time to time in the United States of America.
"Governmental Authority" means any federation,
nation, state, sovereign, or government, any federal,
supranational, regional, state, local or political
subdivision, any governmental or administrative body,
instrumentality, department or agency or any court,
administrative hearing body, arbitration tribunal,
commission or other similar dispute resolving panel or
body, and any other entity exercising executive, legislative,
judicial, regulatory or administrative functions of a
government.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder.
"Initial Charter Amendment" means the Amended and
Restated Articles of Incorporation of Sprint effecting
the creation of the PCS Stock and the creation of the PCS
Group and the Sprint FON Group, the form of which is attached
hereto as Exhibit E.
"Initial PCS Group Percentage Interest" means, for
any Person, the PCS Group Percentage Interest owned by
such Person at the Effective Time, after giving effect to
the issuance of the Series 2 PCS Stock and the Warrants in
the Mergers and the creation of the Warrant Intergroup
Interest, but without giving effect to (i) the IPO, (ii)
the Recapitalization, (iii) the issuance of the PCS
5
Preferred Stock, (iv) the creation of the Preferred
Intergroup Interest, or (v) the exercise of any Top-Up
Rights.
"IPO" means the initial primary underwritten
public offering of Series 1 PCS Stock, proposed to be
conducted by Sprint in accordance with Sections 6.2 and
6.3.
"IPO Price" means the initial price per share at
which shares of Series 1 PCS Stock are purchased by the
public in the IPO.
"Knowledge", or any phrase or term of similar
meaning, when used with respect to any of the Parents,
means the actual knowledge of the executive officers of
such Parent, without having made any special
investigation or inquiry regarding the applicable subject
matter.
"IRS" means the Internal Revenue Service or any
successor agency or entity performing substantially the
same functions.
"Law" means any foreign or domestic law, statute,
code, ordinance, rule or regulation promulgated, or any
order, judgment, writ, stipulation, award, injunction or
decree entered, by a Governmental Authority.
"Lien" means any lien, pledge, claim, encumbrance,
mortgage or security interest in real or personal property.
"Management and Allocation Policies" means those
policies in the form of Exhibit F (which include the Tax
Sharing Agreement) to be adopted by the Sprint Board of
Directors, effective as of the Closing Date, addressing
the relationship between the PCS Group (on the one hand)
and the Sprint FON Group (on the other hand).
"Material Adverse Effect" on any party hereto
means (i) with respect to any party to this Agreement an
adverse change in, or an adverse effect on, the ability
of such party to perform its obligations in any material
respect under this Agreement or the Other Agreements
and (ii) with respect to PhillieCo GP, PhillieCo LP,
PhillieCo, SprintCom, EquipmentCo, any of the HoldCo
Entities, or the Cable Partners, a material adverse
effect on the business, properties, operations or
financial condition of such party and its Subsidiaries
taken as a whole, other than any such effect resulting
primarily from (A) general economic or industry conditions
(including any changes in applicable Law), (B) the
announcement or proposed consummation of the transactions
contemplated by this Agreement or (C) any adverse change
in the business, properties, operations or financial
condition of Sprint PCS or PhillieCo.
"MinorCo Partnership Agreement" means the Amended
and Restated Agreement of Limited Partnership of
MinorCo, L.P. dated as of January 31, 1996, among Sprint
Partner, TCI Partner, Comcast Partner and Cox Partner.
"Mutual Release and Waiver" means the Mutual
Release and Waiver to be executed at the Closing by
Sprint and the Cable Parents, in the form of Exhibit G.
6
"Other Agreements" means (i) the Registration
Rights Agreement, (ii) the Standstill Agreements, (iii)
the Tax Sharing Agreement, (iv) the Cox L.A. Amendments,
(v) the Warrant Agreements, (vi) the Mutual Release and
Waiver, (vii) the FT/DT Purchase Rights Agreement and
(viii) the Voting Agreements, (ix) the Cable Parent PCS
Notes, (x) the Sprint PCS Notes and (xi) the SprintCom
Notes.
"Parent Entity" of any Person means the ultimate
parent entity (as determined in accordance with the HSR
Act) of such Person.
"Parent" (i) with respect to Cox (and its
Controlled Affiliates) means Cox, (ii) with respect to
Comcast (and its Controlled Affiliates) means Comcast,
(iii) with respect to TCI (and its Controlled Affiliates)
means TCI and (iv) with respect to Sprint (and its
Controlled Affiliates) means Sprint.
"Parents Agreements" means the three Parents
Agreements, dated January 31, 1996, between Sprint and
each Cable Parent.
"PCS Group" has the meaning set forth in the
Initial Charter Amendment.
"PCS Group Percentage Interest" means, with
respect to any Person at any given time, the percentage
of the notional equity interest in the PCS Group owned
by such Person, taking into account (i) the outstanding
shares of PCS Stock, (ii) the shares of PCS Stock that
would be outstanding if the intergroup interest in the
PCS Group then held by the Sprint FON Group were
represented by shares of PCS Stock, (iii) after the
Recapitalization, the shares of PCS Stock that would be
outstanding if all of the outstanding shares of Class A
Stock were converted into Series 3 PCS Stock and Series
3 FON Stock pursuant to Article SIXTH, Section 8.5 of
the Subsequent Charter Amendment, and (iv) the maximum
number of shares of PCS Stock that are issuable upon the
exercise, conversion or exchange of the PCS Options (or
that would be issuable in the case of a PCS Option
represented by an intergroup interest held by the Sprint
FON Group in the PCS Group), excluding from clause (iv)
any Pre-Closing Options to the extent reflected as part
of the intergroup interest referred to in clause (ii).
"PCS Interest" means, as to any PCS Partner, all
of the interests of such PCS Partner in Sprint PCS GP
and Sprint PCS LP, including any and all benefits to
which the holder of an interest in Sprint PCS GP and
Sprint PCS LP may be entitled as provided in the PCS
Partnership Agreement and the MinorCo Partnership
Agreement and under the Act, together with all
obligations of such PCS Partner to comply with the terms
and provisions of the PCS Partnership Agreement and the
MinorCo Partnership Agreement.
"PCS Options" means, at any time of determination,
(i) the options, warrants or other securities of Sprint
or any of its Controlled Affiliates outstanding at such
time that are exercisable or exchangeable for or
convertible into shares of PCS Stock, but excluding (A)
any rights of Cox Pioneer Partnership or its Affiliates
under the Agreement of Limited Partnership of ▇▇▇
Communications, PCS, L.P., dated as of December 31,
1996, as it is to be amended pursuant to the Cox L.A.
Amendments,(B) the outstanding shares of Class A Common
Stock, and (C) any such
7
options, warrants or other securities that will be
satisfied by Sprint without the allocation of any cost
or expense to the PCS Group or otherwise economically
diluting the PCS Group Percentage Interest of any Cable
Parent, and (ii) the Preferred Intergroup Interest,
the Warrant Intergroup Interest and any other intergroup
interests held by the Sprint FON Group in the PCS Group
that have the same effect as the options, warrants and
other securities referred to in clause (i) above.
"PCS Partner" means Sprint Partner and the
Cable Partners in their capacities as general and/or
limited partners of Sprint PCS GP and Sprint PCS LP.
"PCS Partnership Agreement" means the Amended and
Restated Agreement of Limited Partnership of Sprint
Spectrum Holding Company, L.P. dated as of January 31,
1996, among Sprint Partner, TCI Partner, Comcast
Partner and Cox Partner.
"PCS Percentage Interest" means, with respect to
any PCS Partner as of any relevant date prior to the
Closing, the "Percentage Interest" of such PCS Partner
as defined in Section 1.10 of the PCS Partnership
Agreement.
"PCS Preferred Stock" means the Seventh Series,
Convertible Preferred Stock of Sprint, no par value,
which shall be created by the filing of the Certificate
of Designations.
"PCS Stock" means the Series 1 PCS Stock, the
Series 2 PCS Stock, the Series 3 PCS Stock and any
other series of common stock hereafter created by Sprint
that tracks the performance of the PCS Group.
"Permitted Liens" means (i) Liens for Taxes not
yet due and payable, (ii) Liens for Taxes, the validity
of which is being contested in good faith in appropriate
proceedings and with respect to which appropriate
reserves have been set aside on the books of the party
against which such Liens have been created and (iii)
Liens arising under this Agreement, the Other Agreements,
the PCS Partnership Agreement, the MinorCo Partnership
Agreement, the PhillieCo Partnership Agreement and the
PhillieCo LP Partnership Agreement.
"Person" means any individual, corporation,
partnership, limited liability company, trust,
unincorporated association or other entity.
"PhillieCo Interest" means, as to any PhillieCo
Partner, all of the interests of such partner in
PhillieCo GP and PhillieCo LP, including any and all
benefits to which the holder of an interest in
PhillieCo GP and PhillieCo LP may be entitled as provided
in the PhillieCo Partnership Agreement, the PhillieCo LP
Partnership Agreement and under the Act, together with
all obligations of such PhillieCo Partner to comply with
the terms and provisions of the PhillieCo Partnership
Agreement and the PhillieCo LP Partnership Agreement.
"PhillieCo LP Partnership Agreement" means the
Agreement of Limited Partnership of PhillieCo Partners
II, L.P., dated March 12, 1997, among the PhillieCo
Partners.
"PhillieCo Parents" means Sprint, TCI and Cox.
8
"PhillieCo Partners" means TCI PhillieCo Sub, Cox
HoldCo Sub2 and Sprint Partner in their capacities as
general and/or limited partners of PhillieCo GP and
PhillieCo LP.
"PhillieCo Partnership Agreement" means the
Agreement of Limited Partnership of PhillieCo Partners
I, L.P., dated March 12, 1997, by and among the PhillieCo
Partners.
"Pre-Closing Options" means the options, warrants
and other securities of Sprint or any of its Subsidiaries
that were issued prior to and are outstanding as of the
Closing and that are exercisable or exchangeable for or
convertible into shares of Sprint Common Stock, which, in
connection with the Recapitalization, will become, in
whole or in part, options, warrants or other securities
that are exercisable or exchangeable for or convertible
into shares of Series 1 PCS Stock (but excluding any PCS
Options held by FT or DT).
"Preferred Intergroup Interest" means the intergroup
interest of the Sprint FON Group in the PCS Group created
by the Sprint Board of Directors in accordance with Section
6.6 hereof that will have terms equivalent to the PCS
Preferred Stock.
"Recapitalization" means (i) the reclassification of
each outstanding share of Sprint Common Stock into one share
of FON Stock and a certain number of shares of Series 1 PCS
Stock and (ii) the amendment of the terms of the Class A
Stock to represent interests in the PCS Group and the Sprint
FON Group, in each case to be effected by the filing of the
Subsequent Charter Amendment.
"Registration Rights Agreement" means the Registration
Rights Agreement in the form of Exhibit H to be entered into
at the Closing among Sprint, TCI, Comcast and Cox.
"Registration Rights Commencement Date" has the meaning
set forth in the Registration Rights Agreement.
"Required Approvals" means the events contemplated in
Sections 8.1(a), 8.1(b) and 8.1(d).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933,
as amended.
"Series 1 FON Stock" means the Series 1 FON Group
Common Stock, par value per share to be determined, of
Sprint, which will be created by the filing of the Subsequent
Charter Amendment and which, together with the Series 1 PCS
Stock, will be exchanged for the outstanding Sprint Common
Stock upon completion of the Recapitalization.
"Series 3 FON Stock" means the Series 3 FON Group
Common Stock, par value per share to be determined, of Sprint,
which will be created by the filing of the Subsequent Charter
Amendment.
9
"Series 1 PCS Stock" means the Series 1 PCS Group
Common Stock, par value per share to be determined, of
Sprint, which will be created on the Closing Date by the
filing of the Initial Charter Amendment.
"Series 2 PCS Stock" means the Series 2 PCS Group
Common Stock, par value per share to be determined, of
Sprint, which will be created on the Closing Date by the
filing of the Initial Charter Amendment.
"Series 3 PCS Stock" means the Series 3 PCS Group
Common Stock, par value per share to be determined, of
Sprint, which will be created on the Closing Date by the
filing of the Initial Charter Amendment.
"Sprint" means Sprint Corporation, a Kansas
corporation, and any successor (by merger, consolidation,
Transfer or otherwise) to all or substantially all of its
business or assets.
"Sprint Common Stock" means the Common Stock, par
value $2.50 per share, of Sprint, as provided for in the
Current Sprint Charter.
"Sprint FON Group" has the meaning set forth in the
Initial Charter Amendment.
"Standstill Agreements" means the Standstill
Agreements in the form of Exhibit I entered into on the date
hereof between Sprint and each of TCI, Comcast and Cox.
"Subsequent Charter Amendment" means the Amendment to
the Restated Articles of Incorporation of Sprint effecting
the Recapitalization, the form of which is attached hereto as
Exhibit J.
"Subsidiary" of any Person as of any relevant date
means a corporation, company or other entity (i) more than 50%
of whose outstanding shares or equity securities are, as of
such date, owned or controlled, directly or indirectly through
one or more Subsidiaries, by such Person, and the shares or
securities so owned entitle such Person and/or its Subsidiaries
to elect at least a majority of the members of the board of
directors or other managing authority of such corporation,
company or other entity notwithstanding the vote of the holders
of the remaining shares or equity securities so entitled to
vote or (ii) which does not have outstanding shares or securities,
as may be the case in a partnership, joint venture or
unincorporated association, but more than 50% of whose
ownership interest is, as of such date, owned or controlled,
directly or indirectly through one or more Subsidiaries, by such
Person, and in which the ownership interest so owned entitles
such Person and/or Subsidiaries to make the decisions for such
corporation, company or other entity.
"Surviving Corporation" means the surviving corporation in
each Merger as set forth herein.
"Tax" or "Taxes" means all federal, state, local and foreign
income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise and other taxes,
duties or assessments of any nature whatsoever, together with all
interest, penalties and additions imposed
10
with respect to such amounts; provided, however, that "Tax" and
"Taxes" shall not include amounts paid to municipalities with
respect to operating franchise arrangements.
"Tax Return" or "Tax Returns" means all returns or reports
required to be filed under any statute, rule or regulation
relating to Taxes.
"Tax Sharing Agreement" means the Tax Sharing Agreement
in the form of Exhibit K to be executed at the Closing by Sprint
for the benefit of each entity in the PCS Group and the Sprint
FON Group.
"TCI" means Tele-Communications, Inc., a Delaware
corporation, and any successor (by merger, consolidation, Transfer
or otherwise) to all or substantially all of its business or
assets.
"Top-Up Rights" means (i) the "Equity Purchase Rights" of
FT and DT pursuant to Article 5 of the Amended and Restated
Stockholders Agreement to be entered into on the Closing Date
among Sprint, FT and DT and (ii) the Equity Purchase Rights of
the Cable Parents pursuant to Section 6.8 of this Agreement.
"Transfer" means any act pursuant to which, directly or
indirectly, the ownership of assets or securities in question is
sold, exchanged, assigned, transferred, conveyed, delivered or
otherwise disposed of.
"Voting Agreements" means the three Irrevocable Proxy and
Voting Agreements in the form of Exhibit M to be entered into at
the Closing between Sprint and each of the Cable Parents.
"Warrant Agreements" means the three Warrant Agreements in
the form of Exhibit N to be entered into at the Closing between
Sprint and each initial holder of the Warrants.
"Warrant Intergroup Interest" means the intergroup
interest of the Sprint FON Group in the PCS Group created by
the Sprint Board of Directors in accordance with Section 4.3
hereof on terms equivalent to the Warrants.
"Warrants" means those warrants to be issued in the
Mergers as described in Section 4.1, which shall be in the form
attached to the Warrant Agreement.
"Wholly-Owned Subsidiary" means, as to any Person, a
Subsidiary of such Person in which 100% of the equity and
voting interest is owned, directly or indirectly, by such Person.
"Year 2000 Liability" means, with respect to any Person,
any cost, expense, liability or obligation (actual, potential,
contingent or otherwise) of such Person and its Subsidiaries
arising out of the failure or inability of any software,
hardware, or systems (whether owned or used by such Person and
its Subsidiaries or any of their vendors, customers or other
third parties) to correctly (i) process, provide and receive date
data within and between the years 1999 and 2000 and (ii) account
for all required leap year calculations for the year 2000.
11
Section 1.2 Other Defined Terms.
Defined Term Defined In
"Acquired PCS Sub" Section 7.10(a)
"Additional Securities" Section 6.8(a)
"Affiliated Group" Section 5.2(g)(i)
"Allocated Cash Proceeds" Section 6.6(d)(v)(D)
"Available Cash Proceeds" Section 6.6(d)(v)(A)
"Available Proceeds" Section 6.6(v)(A)
"Basket Claims" Section 11.2(a)
"Basket Limitation" Section 11.2(a)
"Bylaw Amendment" Section 5.3(c)
"Cable Holder" Section 6.8(a)
"Cable Parent PCS Loan" Section 6.4(b)
"Cable Parent PCS Notes" Section 6.4(b)
"Cable Partners" Recitals
"Cash Request Amount" Section 6.6(d)(ii)
and (iii)
"Chairman" Section 6.13
"Claim Notice" Section 11.4(a)
"Colorado Merger" Section 2.2
"Colorado Plan of Merger" Section 2.2
"Comcast HoldCo Sub1" Recitals
"Comcast HoldCo Sub2" Recitals
"Comcast Merger Sub1" Recitals
"Comcast Merger Sub2" Recitals
"Comcast Partner" Recitals
"Contractual Liens" Section 5.2(a)
"Contribution Date" Section 6.4(a)
"Cox HoldCo Sub1" Recitals
"Cox HoldCo Sub2" Recitals
"Cox L.A. Amendments" Recitals
"Cox Merger Sub1" Recitals
"Cox Merger Sub2" Recitals
"Cox Partner" Recitals
"CP Contracts" Section 5.2(f)
"CP Representatives" Section 6.11(b)
"Determination Date" Section 7.10(i)(ii)
"Determination Summary" Section 7.10(f)
"Effective Time" Section 2.2
"Election Period" Section 11.4(a)
"EquipmentCo" Recitals
"Equity Purchase Right" Section 6.8(a)
"Historic Sprint PCS Section 7.10(a)
Business"
"HoldCo Entities" Recitals
12
"Indemnified Loss" Section 11.2(a)
"Indemnified Party" Section 11.2(a)
"Indemnitor" Section 11.2(a)
"Indemnity Notice" Section 11.4(d)
"IPO Prospectus" Section 6.2(a)
"Loss" Section 11.2(a)
"Merger" Recitals
"Merger Subs" Recitals
"Net Equity" Section 10.2(b)
"Non-Basket Claim" Section 11.2(a)(i)
"Non-Controlled Affiliate" Section 6.19(a)
"Overpayment Rate" Section 7.11(a)
"Owned Interests" Section 5.2(b)
"Parent Response" Section 6.6(d)(ii)
"PCS Group Constituents" Section 5.3(f)
"PCS Partners" Recitals
"PhillieCo" Recitals
"PhillieCo1" Recitals
"PhillieCo2" Recitals
"PhillieCo GP" Recitals
"PhillieCo Licenses" Section 5.4(c)
"PhillieCo Loss" Section 11.6
"PhillieCo LP" Recitals
"PhillieCo Sub" Recitals
"Proposed Term" Section 6.4(d)
"Proxy Statement" Section 6.2(a)
"Registration Statement" Section 6.2(a)
"Rights" Section 5.2(a)
"Share Consideration" Section 4.1(b)
"Sprint Contracts" Section 5.3(h)(v)
"Sprint Notice" Section 6.6(d)(i)
"Sprint Partner Recitals
"Sprint PCS" Recitals
"Sprint PCS Loan" Section 6.4(b)
"Sprint PCS Notes" Section 6.4(b)
"Sprint PCS GP" Recitals
"Sprint PCS LP" Recitals
"SprintCom" Recitals
"SprintCom Licenses" Section 5.5(c)
"SprintCom Loans" Section 6.5
"SprintCom Notes" Section 6.5
"Sprint Representatives" Section 6.11
"Sprint SEC Reports" Section 5.3(i)
"SRLY Entity" Section 7.10(a)
"SRLY Measurement Period" Section 7.10(f)
13
"SRLY Tax Benefit" Section 7.10(b)
"SRLY Tax Savings" Section 7.10(c)
"Stockholders Meeting" Section 6.2(a)
"Tax Benefit" Section 11.2(c)
"TCI Merger Sub1" Recitals
"TCI Merger Sub2" Recitals
"TCI Partner" Recitals
"TCI PhillieCo Sub" Recitals
"TCI Spectrum" Section 2.2
"Third Party Claim" Section 11.4(a)
"Total Proceeds" Section 6.3(a)
"Trigger Date" Section 6.2(c)
"Underwriters" Section 6.3(a)
Section 1.3 Terms Generally. The
definitions in Article 1 and elsewhere in this Agreement
shall apply equally to both the singular and plural forms
of the terms defined. Whenever the context may require,
any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed
by the phrase "without limitation." The words "herein",
"hereof", "hereto" and "hereunder" and words of similar
import refer to this Agreement (including the Schedules
and Exhibits) in its entirety and not to any part hereof
unless the context shall otherwise require. All
references herein to Articles, Sections, Exhibits and
Schedules shall be deemed references to Articles and
Sections of, and Exhibits and Schedules to, this
Agreement unless the context shall otherwise require.
Unless the context shall otherwise require, any references
to any agreement or other instrument (other than in the
Schedules hereto) or statute or regulation are to it as
amended and supplemented from time to time (and, in the
case of a statute or regulation, to any corresponding
provisions of successor statutes or regulations). Any
reference in this Agreement to a "day" or number of
"days" (without the explicit qualification of "Business")
shall be interpreted as a reference to a calendar day or
number of calendar days. If any action or notice is to
be taken or given on or by a particular calendar day, and
such calendar day is not a Business Day, then such action
or notice shall be deferred until, or may be taken or
given on, the next Business Day.
ARTICLE 2
THE MERGERS; EFFECTIVE TIME
Section 2.1 The Mergers. Subject to the terms
and conditions of this Agreement (including the conditions
set forth in Article 8), on the Closing Date, (a) TCI
Merger Sub1 will be merged with and into TCI PhillieCo Sub,
(b) Comcast Merger Sub1 will be merged with and into
Comcast HoldCo Sub1, (c) Cox Merger Sub1 will be merged
with and into Cox HoldCo Sub1, (d) TCI Merger Sub2 will
be merged with and into TCI Partner, (e) Comcast Merger
Sub2 will be merged with and into Comcast HoldCo Sub2, and
(f) Cox Merger Sub2 will be merged with and into Cox HoldCo
Sub2, all in accordance with the provisions of applicable
Law. The separate corporate existence of each Merger Sub
shall thereupon cease. Each of TCI PhillieCo Sub, TCI
Partner, Comcast HoldCo Sub1, Comcast HoldCo Sub2, Cox
HoldCo Sub1 and Cox HoldCo Sub2
14
shall be the Surviving Corporation in the applicable
Merger and shall continue its corporate existence as a
Wholly-Owned Subsidiary of Sprint. Each Merger shall
have the effects specified in the DGCL or the CBCA, as
applicable.
Section 2.2 The Mergers; Adoption and
Approval; Effective Time. This Agreement constitutes
an agreement of merger for the purposes of Section 251(b)
of the DGCL with respect to each of the Mergers other
than the Merger of TCI Merger Sub1 with and into TCI
Partner (the "Colorado Merger"). The plan of merger
attached hereto as Annex 1 to Exhibit B-2 constitutes a
plan of merger for the purposes of Section ▇-▇▇▇-▇▇▇ of
the CBCA with respect to the Colorado Merger (the
"Colorado Plan of Merger"). Also, by executing and
delivering this Agreement, Sprint, as the sole
shareholder of TCI Merger Sub2, hereby approves and
adopts, and TCI, as the Parent Entity of TCI Spectrum
Investment, Inc. ("TCI Spectrum"), the sole shareholder
of TCI Partner, hereby agrees to cause TCI Spectrum to
approve and adopt, the Colorado Plan of Merger. Each
Merger shall become effective (a) if clause (b) does not
apply, at the time of filing of (i) the Colorado
Articles of Merger with the Secretary of State of the
State of Colorado in accordance with the provisions of
the CBCA, in the case of the Colorado Merger, or (ii)
the appropriate Delaware Certificate of Merger with the
Secretary of State of the State of Delaware in accordance
with the provisions of the DGCL, in the case of the other
Mergers, or (b) at the time specified as the effective
time in the applicable Delaware Certificate of Merger or
Colorado Articles of Merger. The Delaware Certificates
of Merger and Colorado Articles of Merger shall be filed
on the Closing Date. The date and time when each Merger
shall become effective is hereinafter referred to as
the "Effective Time".
ARTICLE 3
TERMS OF THE MERGERS
Section 3.1 Charters. At the Effective Time,
the charter of each of TCI PhillieCo Sub, TCI Partner,
Comcast HoldCo Sub1, Comcast HoldCo Sub2, Cox HoldCo
Sub1 and Cox HoldCo Sub2 shall be amended pursuant to
the respective Certificates of Merger to be identical to
the charter of ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ Merger Sub1, Comcast Merger Sub2, Cox Merger
Sub1 and Cox Merger Sub2, respectively, as in effect
immediately prior to the Effective Time. With respect
to each Merger, such charter as so amended shall be
the charter of the Surviving Corporation, until duly
amended in accordance with the terms thereof and
applicable Law.
Section 3.2 The By-Laws. The By-Laws of
each of TCI PhillieCo Sub, TCI Partner, Comcast HoldCo
Sub1, Comcast HoldCo Sub2, Cox HoldCo Sub1 and Cox HoldCo
Sub2 shall be amended at the Effective Time to be
identical to the By-Laws of ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ Merger Sub1, Comcast Merger Sub2, Cox
Merger Sub1 and Cox Merger Sub2, respectively, as in
effect immediately prior to the Effective Time. With
respect to each Merger, such By-Laws as so amended shall
be the By-Laws of the Surviving Corporation, until duly
amended in accordance with the terms thereof, of the
charter of the Surviving Corporation and applicable Law.
Section 3.3 Directors. The directors of
each of ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ Merger
Sub1, Comcast Merger Sub2, Cox Merger Sub1 and Cox
Merger Sub2 immediately prior to the Effective Time shall,
from and after the Effective Time, serve as the
15
directors of TCI PhillieCo Sub, TCI Partner, Comcast
HoldCo Sub1, Comcast HoldCo Sub2, Cox HoldCo Sub1 and
Cox HoldCo Sub2, respectively, until their successors
have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in
accordance with each such entity's charter and By-Laws.
Section 3.4 Officers. The officers of each
of ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ Merger Sub1,
Comcast Merger Sub2, Cox Merger Sub1 and Cox Merger Sub2
immediately prior to the Effective Time shall, from and after
the Effective Time, serve as the officers of TCI PhillieCo
Sub, TCI Partner, Comcast HoldCo Sub1, Comcast HoldCo Sub2,
Cox HoldCo Sub1 and Cox HoldCo Sub2, respectively, until their
successors have been duly elected or appointed and qualified
or until their earlier death, resignation or removal in
accordance with each such entity's charter and By-Laws.
ARTICLE 4
SHARE CONSIDERATION; CONVERSION OR
CANCELLATION OF SHARES IN THE MERGERS
Section 4.1 Share Consideration; Conversion or
Cancellation of Shares in the Mergers.
(a) Subject to the provisions of this Article 4,
at the Effective Time, by virtue of the Mergers and without any
action on the part of the holders thereof, the shares of
TCI Partner, TCI PhillieCo Sub, Comcast HoldCo Sub1, Comcast
HoldCo Sub2, Cox HoldCo Sub1 and Cox HoldCo Sub2 shall be converted
into shares of Series 2 PCS Stock, the Warrants and (in certain
cases) shares of the PCS Preferred Stock in the following manner:
(i) Each share of common stock of TCI Partner
issued and outstanding immediately prior to the Effective
Time shall be converted into (A)a number of shares of
Series 2 PCS Stock equal to (x) such number of shares
of Series 2 PCS Stock as represents at the Effective
Time a 21.47655% Initial PCS Group Percentage Interest
divided by (y) the number of outstanding shares of
common stock of TCI Partner at the Effective Time,
(B) a number of Warrants equal to (x) such number of
Warrants as represents at the Effective Time a 1.37085%
Initial PCS Group Percentage Interest divided by (y)
the number of outstanding shares of common stock of TCI
Partner at the Effective Time and (C) a number of shares
of PCS Preferred Stock equal to (x) the aggregate number
of shares of PCS Preferred Stock (if any) to be issued
in the Mergers with respect to the common stock of TCI
Partner pursuant to Section 6.6 divided by (y) the number
of outstanding shares of common stock of TCI Partner at
the Effective Time.
(ii) Each share of common stock of TCI PhillieCo
Sub issued and outstanding immediately prior to the
Effective Time shall be converted into (A) a number
of shares of Series 2 PCS Stock equal to (x) such number
of shares of Series 2 PCS Stock as represents at the
Effective Time a 0.92434% Initial PCS Group
16
Percentage Interest divided by (y) the number of
outstanding shares of common stock of TCI PhillieCo
Sub at the Effective Time and (B) a number of Warrants
equal to (x) such number of Warrants as represents at
the Effective Time a 0.05900% Initial PCS Group Percentage
Interest divided by (y) the number of outstanding shares of
common stock of TCI PhillieCo Sub at the Effective Time.
(iii) Each share of common stock of Comcast
HoldCo Sub1 issued and outstanding immediately prior
to the Effective Time shall be converted into (A) a number
of shares of Series 2 PCS Stock equal to (x) such number
of shares of Series 2 PCS Stock as represents at the
Effective Time a 0.10738% Initial PCS Group Percentage
Interest divided by (y) the number of outstanding shares of
common stock of Comcast HoldCo Sub1 at the Effective Time,
(B) a number of Warrants equal to (x) such number of
Warrants as represents at the Effective Time a 0.00685%
Initial PCS Group Percentage Interest divided by (y) the
number of outstanding shares of common stock of Comcast
HoldCo Sub1 at the Effective Time and (C) a number of
shares of PCS Preferred Stock equal to (x) the aggregate
number of shares of PCS Preferred Stock (if any) to be
issued in the Mergers with respect to the common stock
of Comcast HoldCo Sub1 pursuant to Section 6.6 divided
by (y) the number of outstanding shares of common stock
of Comcast HoldCo Sub1 at the Effective Time.
(iv) Each share of common stock of Comcast HoldCo
Sub2 issued and outstanding immediately prior to the
Effective Time shall be converted into (A) a number of
shares of Series 2 PCS Stock equal to (x) such number
of shares of Series 2 PCS Stock as represents at the
Effective Time a 10.63090% Initial PCS Group Percentage
Interest divided by (y) the number of outstanding shares
of common stock of Comcast HoldCo Sub2 at the Effective
Time, (B) a number of Warrants equal to (x) such number
of Warrants as represents at the Effective Time a
0.67857% Initial PCS Group Percentage Interest divided
by (y) the number of outstanding shares of common stock
of Comcast HoldCo Sub2 at the Effective Time and (C) a
number of shares of PCS Preferred Stock equal to (x) the
aggregate number of shares of PCS Preferred Stock (if
any) to be issued in the Mergers with respect to the
common stock of Comcast HoldCo Sub2 pursuant to Section
6.6 divided by (y) the number of outstanding shares of
common stock of Comcast HoldCo Sub2 at the Effective
Time.
(v) Each share of common stock of Cox HoldCo Sub1
issued and outstanding immediately prior to the Effective
Time shall be converted into (A) a number of shares of
Series 2 PCS Stock equal to (x) such number of shares of
Series 2 PCS Stock as represents at the Effective Time a
0.10738% Initial PCS Group Percentage Interest divided by
(y) the number of outstanding shares of common stock of
Cox HoldCo Sub1 at the Effective Time and (B) a number of
Warrants equal to (x) such number of Warrants as represents
at the Effective Time a 0.00685% Initial PCS Group
Percentage Interest divided by (y) the number of
outstanding shares of common stock of Cox HoldCo Sub1 at
the Effective Time.
17
(vi) Each share of common stock of Cox HoldCo Sub2
issued and outstanding immediately prior to the Effective
Time shall be converted into (A) a number of shares of
Series 2 PCS Stock equal to (x) such number of shares of
Series 2 PCS Stock as represents at the Effective Time a
11.09307% Initial PCS Group Percentage Interest
divided by (y) the number of outstanding shares of
common stock of Cox HoldCo Sub2 at the Effective Time,
(B) a number of Warrants equal to (x) such number of
Warrants as represents at the Effective Time a 0.70807%
Initial PCS Group Percentage Interest divided by (y) the
number of outstanding shares of common stock of Cox HoldCo
Sub2 at the Effective Time and (C) a number of shares of PCS
Preferred Stock equal to (x) the aggregate number of shares
of PCS Preferred Stock (if any) to be issued in the Mergers
with respect to the Common Stock of Cox HoldCo Sub2
pursuant to Section 6.6 divided by (y) the number of
outstanding shares of common stock of Cox HoldCo Sub2
at the Effective Time.
(vii) Each share of capital stock other than
common stock of each of the HoldCo Entities and TCI
Partner shall be cancelled.
(b) All shares of the HoldCo Entities and TCI Partner
to be converted into Series 2 PCS Stock, Warrants and (if applicable)
PCS Preferred Stock pursuant to this Section 4.1 shall, at the
Effective Time, cease to be outstanding, shall be canceled and
retired and shall cease to exist, and shall thereafter represent
only the right to receive for each of such shares, upon the
surrender of such certificate in accordance with Section 4.2,
the amount of Series 2 PCS Stock, Warrants and (if applicable)
PCS Preferred Stock specified above (the "Share
Consideration"). No fractional shares of Series 2 PCS
Stock or PCS Preferred Stock or fractional Warrants shall be
issued as a result of the Mergers, and the number of shares of
Series 2 PCS Stock and PCS Preferred Stock and Warrants to be
received by any shareholder of the HoldCo Entities or TCI
Partner shall be rounded to the nearest whole number of shares
or Warrants.
(c) Each share of common stock of ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ Merger Sub1, Comcast Merger Sub2,
Cox Merger Sub1 and Cox Merger Sub2 issued and outstanding
immediately prior to the Effective Time shall at the Effective Time
be converted into one share of common stock of the applicable
Surviving Corporation.
Section 4.2 Payment for Shares in the Mergers. At the
Closing, Sprint will deliver to the holders of shares of the
HoldCo Entities and TCI Partner stock and warrant
certificates representing the Share Consideration (together
with the executed Warrant Agreements) in exchange for certificates
representing all of the outstanding shares of the HoldCo Entities
and TCI Partner. Such certificates representing the outstanding
shares of the HoldCo Entities and TCI Partner shall forthwith
be canceled.
Section 4.3 Warrant Intergroup Interest. Effective
at the Effective Time, the Sprint Board of Directors will create
an intergroup interest of the Sprint FON Group in the
PCS Group that will have terms equivalent to the Warrants
and will represent a 2.83019% Initial PCS Group Percentage Interest.
18
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
Section 5.1 Mutual Representations. Each Parent hereby
represents and warrants to each other Parent, as to itself and
each of its Controlled Affiliates that is a party to this Agreement,
as follows:
(a) Due Incorporation or Formation; Authorization
of Agreements. Such party is duly organized or formed and validly
existing under the laws of the jurisdiction of its organization or
formation and has the corporate or partnership power and authority
to own its property and carry on its business as owned and carried
on at the date hereof. Such party is duly qualified to do business
and in good standing (if applicable) in each jurisdiction in which
it conducts business or in which it is otherwise required to be
qualified, except for failures to be so qualified which, individually
or in the aggregate, would not have a Material Adverse Effect on
such party. Such party has the corporate or partnership power and
authority to execute and deliver this Agreement and the Other
Agreements to which it is or will be a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. This Agreement and the Other
Agreements to which it is or will be a party have been (or at
the Closing will be) duly executed and delivered by such party,
and the execution, delivery and performance of this Agreement
and such Other Agreements by such party have been duly authorized
by all necessary corporate or partnership action. This
Agreement and the Other Agreements to which it is or will be
a party constitute (or, as to Other Agreements not executed
on or prior to the date hereof and (in the case of Sprint) the
Warrants, will constitute) the legal, valid and binding
obligation of such party, enforceable in accordance with its
terms (except as such enforceability may be limited by bankruptcy,
insolvency (including all laws relating to fraudulent transfers),
reorganization, moratorium and similar laws affecting the rights
and remedies of creditors generally and the application of
general principles of equity).
(b) No Conflict; No Default. Except as to clauses
(i), (iii), (iv) and (v) below, as would not have a Material
Adverse Effect on such party, neither the execution or
delivery of this Agreement or the Other Agreements to which
it is a party or (in the case of Sprint) the Warrants by such
party nor (assuming the Required Approvals have been obtained)
the performance of this Agreement or the Other Agreements by
such party or the consummation by such party of the transactions
contemplated hereby or thereby in accordance with the terms and
conditions hereof and thereof (i) will conflict with, violate or
result in a breach of any of the terms, conditions or provisions
of any Law applicable to such party or any of its Controlled
Affiliates, (ii) will conflict with, violate, result in a breach
of or constitute a default under any of the terms, conditions or
provisions of the certificate or articles of incorporation,
bylaws or partnership agreement (or other governing documents)
of such party or any of its Controlled Affiliates, (iii) will
conflict with, violate, result in a breach of or constitute a
default under any of the terms, conditions or provisions of any
material agreement or instrument to which such party or any of its
Controlled Affiliates is a party or by which such party or any
of its Controlled Affiliates is or may be bound or to which any
of its material properties or assets is subject, (iv) will conflict
with, violate, result in a breach of, constitute a default under
(whether with notice or lapse of time or both), accelerate or permit
the acceleration of the performance required by, give to others any
interests or rights or require any consent, authorization
19
or approval under any indenture, mortgage, lease agreement or
similar instrument to which such party or any of its Controlled
Affiliates is a party or by which such party or any of its
Controlled Affiliates is or may be bound, or (v) will result in
the creation or imposition of any Lien upon any of the other
material properties or assets of such party or any of its
Controlled Affiliates.
(c) Litigation. Except for the Petition of Sprint
Spectrum Partners and Sprint Spectrum, L.P. d/b/a Sprint PCS
for Declaratory Relief filed on March 13, 1997, with the FCC,
there are no actions, suits, proceedings or investigations pending
or, to the knowledge of such Parent, threatened against such party
or any of its properties, assets or businesses (other than any
actions, suits or proceedings pending or threatened against Sprint
PCS, PhillieCo, SprintCom or EquipmentCo or their respective properties,
assets or businesses) before or by any Governmental Authority which
would, individually or in the aggregate, if adversely determined
(or, in the case of an investigation, could lead to any action,
suit or proceeding, which if adversely determined would), have a
Material Adverse Effect on such party, and such party has not
received any currently effective notice of any default, and
such party is not in default, under any applicable order, writ,
injunction, decree, permit, determination or award of any
Governmental Authority, which default would have a Material
Adverse Effect on such party.
(d) Finders Fees. Other ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
(whose fees other than in connection with its role as underwriter
(if any) in the IPO shall be paid by the Cable Parents)
and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney and SBC Warburg Dillon Read, Inc.
(whose fees shall be paid by Sprint and allocated to the Sprint
FON Group, except as provided in Section 12.4), there is no
investment banker, broker or finder that has been retained by
or is authorized to act on behalf of any Parent or its
Controlled Affiliates who would be entitled to any fee or
commission upon consummation of or otherwise in connection
with the transactions contemplated by this Agreement; provided
that the Parents acknowledge that they have previously jointly
retained ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ with respect to services provided
prior to October 10, 1997, and each Parent will pay its pro rata
share (based on the PCS Percentage Interest of its respective
Partner) of the fees and expenses for such services (which, in
the case of Sprint, will be allocated to the Sprint FON Group).
Section 5.2 Representations and Warranties of the
Cable Parents. Each Cable Parent hereby represents and warrants
to each other Parent, as to itself and each of its Controlled
Affiliates that is a party to this Agreement, as follows:
(a) Interests in Sprint PCS Owned by the Cable Partners.
Such Cable Parent's respective Cable Partner has good legal title to,
and beneficial ownership of, the PCS Interest indicated as owned by
it on Schedule 5.2(a), free and clear of all Liens other than
Liens described in clause (iii) of the definition of Permitted Liens
("Contractual Liens"). Except as provided in the PCS Partnership
Agreement and the MinorCo Partnership Agreement, such Cable Partner
has the sole right to vote and dispose of the PCS Interest
indicated as owned by it on Schedule 5.2(a). Such Cable Partner
has no assets or liabilities or obligations (absolute, accrued,
contingent or otherwise, including any liability for Taxes of
itself or any other Person) except (i) its PCS Interest, (ii) as
contemplated by Section 6.4, (iii) obligations under the CP Contracts,
(iv) certain other intercompany indebtedness that will be extinguished
by means of capital contribution prior to the Effective Time and (v)
obligations imposed solely as a matter of Laws to which such Cable Partner
20
is subject. Such Cable Partner has not engaged in any business
or activities of any type or kind whatsoever except as relates
to its ownership of the PCS Interest. Except as provided
in the CP Contracts and in Section 6.4, there are no subscriptions,
options, warrants, call rights or rights of conversion or other
rights, agreements, arrangements or commitments (collectively,
"Rights") obligating such Cable Partner to issue additional
capital stock or interests in such Cable Partner to any party
or to Transfer its PCS Interest or any equity or voting interest
therein in whole or in part, or any voting agreement, voting trust
agreement or similar agreement relating to the voting by such
Cable Partner of any of its PCS Interests.
(b) Partnership Interests in Cable Partners Owned by
HoldCo Entities. Each of such Cable Parent's respective HoldCo
Entities has good legal title to, and record and beneficial ownership
of, all capital stock and all general partnership, limited partnership
and any other equity interests indicated as owned by it on Schedule
5.2(b) (the "Owned Interests"), free and clear of all Liens (other
than Contractual Liens). Other than the Owned Interests and,
in the case of Cox HoldCo Sub 2, its PhillieCo Interest, such
HoldCo Entity has no assets or liabilities or obligations
(absolute, accrued, contingent or otherwise, including any
liability for Taxes of itself or any other Person) except for (i)
its rights and obligations under the CP Contracts and obligations
imposed solely as a matter of Laws to which such HoldCo Entity is
subject, (ii) as provided in Section 6.4 and (iii) certain other
intercompany indebtedness that will be extinguished by means of
capital contribution prior to the Effective Time. Such
HoldCo Entity has not engaged in any business or activities of
any type or kind whatsoever except as relates to its ownership
of its respective Owned Interests. The Owned Interests held
by such HoldCo Entity are duly authorized and validly issued and
were not issued in violation of any preemptive rights or any
applicable securities laws. Following the Mergers, such
HoldCo Entity will continue to have good legal title to, and
beneficial ownership of, its Owned Interests, free and clear
of any Lien arising as a result of the Mergers. Except as
provided in the CP Contracts and in Section 6.4, there are no
Rights obligating such HoldCo Entity to issue additional
capital stock or other securities of such HoldCo Entity, Transfer
any of its Owned Interests or any equity or voting interest
therein in whole or in part, or any voting agreement, voting
trust agreement or similar agreement relating to the voting by
such HoldCo Entity of any such Owned Interests. Solely for
the purposes of this Section 5.2(b), TCI PhillieCo Sub will be
excluded from the definition of HoldCo Entities, and TCI Parent shall
not make any representation with respect to this Section.
(c) Capital Stock of the HoldCo Entities and TCI Partner.
The number of authorized and outstanding shares of each series and
class of capital stock of such Cable Parent's HoldCo Entity and
TCI Partner, as to TCI, is set forth on Schedule 5.2(c). All issued
shares of such capital stock are duly authorized, validly issued,
fully paid and nonassessable, and were not issued in violation of
any preemptive rights or securities laws. Such Cable Parent
(as to Cox with respect to Cox HoldCo Sub2) or the Subsidiary of
such Cable Parent indicated on Schedule 5.2(c) has good legal title
to, and beneficial ownership of, the shares of capital
stock of its respective HoldCo Entity and TCI Partner, as to TCI,
indicated as owned by it on Schedule 5.2(c), free and clear of all
Liens (other than Contractual Liens). Except as provided
in the CP Contracts, such Cable Parent (as to Cox with respect to
Cox HoldCo Sub2) or such Subsidiary of the Cable Parent has the sole
right to vote and dispose of such capital stock. There are no Rights
obligating such Cable Parent (as to Cox with respect to Cox HoldCo
Sub2) or such Subsidiary of the Cable Parent to Transfer any such
21
shares of capital stock or any equity or voting interest therein in
whole or in part, or any voting agreement, voting trust agreement
or similar agreement relating to the voting by such Subsidiary of
the Cable Parent of any of such shares of capital stock.
(d) Availability. Such Cable Parent has made
available to Sprint true and correct copies of the charter,
bylaws, stockholders agreements, partnership agreement and
other constituent documents, as applicable, of each HoldCo
Entity and Cable Partner.
(e) Consents, Approvals and Authorizations. The
execution, delivery and performance of this Agreement and the
Other Agreements by such Cable Parent and its respective
Controlled Affiliates do not and will not require any consent,
approval, authorization or other action by, or filing with or
notification to, any Governmental Authority or any other Person
on the part of such Cable Parent or its respective Controlled Affiliates,
except (i) for (to the extent applicable to such Person) the
Required Approvals or (ii) to the extent the failure to obtain
or make any of the foregoing, individually or in the aggregate,
would not have a Material Adverse Effect on such party.
(f) Contracts.
(i) Except as set forth on Schedule 5.2(f)(i) and
for promissory notes representing the loans referred to
in Section 6.4, none of such Cable Parent's respective
HoldCo Entities or Cable Partner is a party to, nor are its
properties or assets bound by, any contracts or agreements
except written contracts to which Sprint or its Controlled
Affiliates is a party (the "CP Contracts").
(ii) Neither the Cable Partner of such Cable Parent
nor any of its Controlled Affiliates is in material breach
of Section 6.6 of the PCS Partnership Agreement.
(g) Taxes. For the purposes of this Section, any tax item
shown on a return or report furnished by Sprint, Sprint PCS GP, Sprint
PCS LP, Sprint PCS, PhillieCo GP, PhillieCo LP or PhillieCo (or their
respective predecessors) to any Cable Parent or any member of its
Affiliated Group (as defined herein) shall be deemed correct.
(i) Since its formation, each of such Cable Parent's
HoldCo Entities (and TCI Partner, as to TCI) has been a
member of an affiliated group, as defined in Code section
1504, of which its respective Cable Parent (or an
Affiliate of its Cable Parent) is the common parent, which
has elected to file consolidated federal income tax returns
for all taxable periods ending after the formation of such
entity and on or prior to the last day of the first taxable
year of such affiliated group to close after the Closing
Date (each, an "Affiliated Group").
(ii) Except as set forth on Schedule 5.2(g)(ii),
since its formation, each of such Cable Parent's HoldCo
Entities (and TCI Partner, as to TCI) has derived no
material item of income, loss, deduction or credit during
its existence other than such items which were or are
included in its direct or indirect distributive share
of such
22
items of Sprint PCS GP, Sprint PCS LP, PhillieCo GP and
PhillieCo LP. Each of such Cable Parent's HoldCo Entities
(and TCI Partner, as to TCI) has no subsidiaries other
than direct interests or interests in partnerships which
hold direct interests (or indirect interests through other
partnerships) in Sprint PCS GP, Sprint PCS LP, PhillieCo GP
and PhillieCo LP.
(iii) Such Cable Parent's Affiliated Group has filed
all federal income tax returns that it was required to file
for each period during which its respective HoldCo Entities
(and TCI Partner, as to TCI) was a member of the Affiliated
Group. All such returns were correct and complete in all
material respects in so far as they relate to such Cable
Parent's HoldCo Entities (and TCI Partner, as to TCI). All
material federal income taxes owed by such Cable Parent's
Affiliated Group with respect to its HoldCo Entities (or
TCI Partner, as to TCI) (whether or not shown on a Tax
Return) have been paid for each taxable period during
which such Cable Parent's HoldCo Entities (and TCI Partner,
as to TCI) was a member of its respective Affiliated Group.
(iv) If the income of any of such Cable Parent's
HoldCo Entities (or TCI Partner, as to TCI) is required
under state, local, or foreign tax rules, to be included on
a consolidated, unitary, combined or other such tax returns
filed by an entity other than such HoldCo Entities or TCI
Partner, each such group has filed all income tax returns
that it was required to file with respect to such
HoldCo Entity (or TCI Partner, as to TCI) for each period
during which its respective HoldCo Entities or TCI Partner
was a member of such group. All such returns were correct
and complete in all material respects in so far as they
relate to such Cable Parent's HoldCo Entities (and TCI
Partner, as to TCI). All material income taxes owed by such
group with respect to such HoldCo Entities (or TCI Partner,
as to TCI) (whether or not shown on a Tax Return) have
been paid for each taxable period during which such Cable
Parent's HoldCo Entities (and TCI Partner, as to TCI) was a
member of its respective group.
(v) Except as set forth on Schedule 5.2(g)(v), each
of such Cable Parent's HoldCo Entities (and TCI Partner, as
to TCI) and each of its Subsidiaries (if any) have filed all
Tax Returns that it was required to file through the date
hereof. All such Tax Returns were correct and complete in
all material respects. All Taxes owed by each of such Cable
Parent's HoldCo Entities (and TCI Partner, as to TCI) or
its Subsidiaries (if any) (whether or not shown on any Tax
Return) have been paid. Except as provided in Schedule
5.2(g)(v) and except for any extension relating to the
entire Affiliated Group or any consolidated, unitary,
combined or other such group of which such HoldCo Entity
or TCI Partner is a member, none of such Cable Parent's
HoldCo Entities (nor TCI Partner, as to TCI) nor its
respective Subsidiaries (if any) is currently the bene-
ficiary of any extension of time within which to file a
Tax Return. No claim has ever been made by an authority,
in a jurisdiction where such Cable Parent's HoldCo
Entities (or TCI Partner, as to TCI) or its respective
Subsidiaries (if any) do not file Tax Returns, that it
or they may be subject to taxation
23
by that jurisdiction. There are no security interests on
any of the assets of such Cable Parent's HoldCo Entities
(or TCI Partner, as to TCI) or its respective Subsidiaries
(if any) that arose in connection with any failure (or
alleged failure) to pay any Tax.
(vi) Each of such Cable Parent's HoldCo Entities
(and TCI Partner, as to TCI) and each of the respective
Subsidiaries (if any) of such Cable Parent's HoldCo
Entities has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(vii) There is no dispute or claim concerning any Tax
Liability of such Cable Parent's HoldCo Entities (or TCI
Partner, as to TCI) or its respective Subsidiaries (if any)
either claimed or raised by any authority in writing to such
HoldCo Entity (or TCI Partner, as to TCI) (or its respective
Cable Parent) or as to which any of such entities has
knowledge based upon direct personal contact with any agent
of such authority.
(viii) Schedule 5.2(g)(viii) lists all Tax
Returns filed by such Cable Parent's HoldCo Entities
(and TCI Partner, as to TCI) and each of the respective
Subsidiaries (if any) of such Cable Parent's HoldCo
Entities for all taxable periods ending on or before the
date hereof and indicates those Tax Returns that have
been audited and those which are currently under audit,
except that such schedule does not include consolidated,
unitary, combined or other such Tax Returns filed by a
Cable Parent (or an Affiliate of a Cable Parent) which
includes such Cable Parent's HoldCo Entities (or TCI
Partner, as to TCI). Each Cable Parent has delivered
(or will deliver within 30 days following the date
hereof) to Sprint correct and complete copies of all
Tax Returns (except for those Tax Returns not required
to be included in Schedule 5.2(g)(viii)), examination
reports, and statements of deficiencies assessed against
or agreed to by its respective HoldCo Entities (or TCI
Partner, as to TCI) and its respective Subsidiaries
(if any).
(ix) Except for waivers and extensions that apply
to such Cable Parent's HoldCo Entities (or TCI Partner,
as to TCI) or its Subsidiaries (if any) with respect to
consolidated, unitary or combined Tax Returns that
include the income of any such entities and the income
of their respective Cable Parents (or Affiliates of the
Cable Parents), the normal period within which to examine
and/or assess Taxes on the income of any such entity has
not been extended with respect to any such entity by
waiver of, or agreement to extend, the applicable
statute of limitations or otherwise.
(x) None of such Cable Parent's HoldCo Entities
(nor TCI Partner, as to TCI) nor any of the respective
Subsidiaries (if any) of such Cable Parent's HoldCo
Entities has filed a consent under Code section 341(f)
concerning collapsible corporations, or has made or
is required to make any payments, or is a party to any
24
agreement that under certain circumstances could obligate
it to make any payment that will not be deductible under
Code section 280G.
(h) Tax Opinions. On the date hereof, each of the Cable
Parents has received from its respective outside counsel an opinion to
the effect that, although not free from doubt, the Mergers involving
such Cable Parent's respective HoldCo Entities or Cable Partner
(as applicable) should constitute a "reorganization" under Section
368(a) of the Code. In rendering such opinions, outside counsel
for each of the Cable Parents has received and relied upon
representations contained in (A) certificates of such Cable
Parent in form and substance reasonably acceptable to such counsel
and (B) the certificate referred to in Section 6.12(c).
(i) Ownership of Sprint Securities. Except as
provided in this Agreement and the Other Agreements, neither
such Cable Parent nor any of its Subsidiaries owns or has a
contractual right or obligation to acquire any shares of Sprint
Common Stock or any other capital stock of Sprint or any security
convertible into or exercisable or exchangeable for
Sprint Common Stock or any other capital stock of Sprint.
Section 5.3 Representations and Warranties of Sprint.
Sprint hereby represents and warrants that:
(a) Merger Subs.
(i) The Merger Subs were formed by Sprint solely
for the purpose of engaging in the transactions
contemplated hereby.
(ii) All of the issued and outstanding capital stock
of each Merger Sub is directly owned beneficially and of
record by Sprint free and clear of any Liens (other than
Contractual Liens).
(iii) Except for obligations or liabilities arising
under this Agreement, each Merger Sub has not incurred any
obligations or liabilities or engaged in any business or
activities of any type or kind whatsoever or entered into
any agreements or arrangements with any Person.
(b) Consents, Approvals and Notifications. The execution,
delivery and performance of this Agreement and the Other Agreements by
Sprint and its respective Controlled Affiliates do not and will not
require any consent, approval, authorization or other action by, or
filing with or notification to, any Governmental Authority or any
other Person on the part of Sprint on its Controlled Affiliates,
except (i) for the Required Approvals or (ii) to the extent the failure
to obtain or make any of the foregoing, individually or in the
aggregate, would not have a Material Adverse Effect on such party.
(c) Sprint Board Action. Prior to the date hereof, the
Board of Directors of Sprint has approved (i) an amendment to
Sprint's Bylaws, to be effective at the Closing, in the form of
Exhibit O (the "Bylaw Amendment"), (ii) the Management and Allocation
Policies, to be effective
25
at the Closing, (iii) the Initial Charter Amendment and the Subsequent
Charter Amendment and (iv) this Agreement and the transactions
contemplated hereby. This Agreement and the transactions contemplated
hereby (including the future exercise by the Cable Holders of their
respective Equity Purchase Rights) have been approved by the Board of
Directors of Sprint (including by a majority of the "Continuing
Directors" of Sprint at a meeting at which at least seven of such
Continuing Directors were present, as contemplated by Article Seventh
of the Current Sprint Charter). With respect to those matters
described in clauses (i), (iii) and (iv) above, the Board of Directors
of Sprint has directed that such matters be submitted for the approval
of the stockholders of Sprint at the Stockholders Meeting and has
recommended to the stockholders of Sprint that such matters be
approved.
(d) FT/DT Agreements. Attached hereto as Exhibit P are
true and correct copies of the FT/DT Agreements. The execution and
delivery of this Agreement and the Other Agreements (including the
Registration Rights Agreement), and the consummation and
performance of the transactions contemplated hereby and thereby,
by Sprint and its Controlled Affiliates will not violate or conflict
with the FT/DT Agreements (including the Amended and Restated
Registration Rights Agreement included therein) or any other agreement
between Sprint or any of its Controlled Affiliates (on the one hand)
and FT or DT or any of their respective Controlled Affiliates (on the
other hand), or conflict with the consummation and performance by
Sprint and its Controlled Affiliates of the transactions contemplated
thereby.
(e) PCS Percentage Group Interests; Intergroup Interests.
At the Effective Time, the number of shares of Series 2 PCS Stock and
Warrants held by each of the Cable Parents and its Subsidiaries will
represent the following Initial PCS Group Percentage Interests: TCI
Parent - 23.83074%; Comcast Parent - 11.42370%; and Cox Parent -
11.91537%. Immediately following the Recapitalization, the Sprint
FON Group will not hold an intergroup interest in the PCS Group except
for (i) the Preferred Intergroup Interest, (ii) the Warrant Intergroup
Interest, and (iii) any intergroup interest retained by Sprint relating
to Pre-Closing Options (which, in the case of clause (iii), will
represent a PCS Group Percentage Interest of less than 5.0%). Sprint
covenants that all Pre-Closing Options shall be satisfied out of
the Sprint FON Group's intergroup interest in the PCS Group or
otherwise satisfied by Sprint without the allocation of any cost or
expense to the PCS Group and without otherwise economically diluting
the PCS Group Percentage Interest of any Cable Parent.
(f) PCS Group Constituents. Assuming the accuracy of the
representations and warranties of the Cable Parents contained in this
Agreement, immediately following the Closing, the PCS Group shall
consist of the entities and ownership interests therein shown on
Schedule 5.3(f) (other than Sprint, UCOM, Inc., US Telecom, Inc.,
UC PhoneCo, Inc. and UST PhoneCo, Inc.) and the corresponding interests
in their respective assets and liabilities and the businesses conducted
by such entities ("PCS Group Constituents").
(g) King & Spalding Opinion. On the date hereof, Sprint
has received from King & Spalding its opinion to the effect that (i)
the Recapitalization will constitute a recapitalization within the
meaning of Section 368(a)(1)(E) of the Code, (ii) any outstanding
stock which is designated as common stock of Sprint in
Sprint's Articles of Incorporation will constitute
26
voting stock of Sprint for federal income tax purposes, and (iii)
except with respect to cash paid in lieu of fractional shares, if any,
the holders of such stock of Sprint will not recognize income,
gain or loss in and as a result of the Recapitalization. In rendering
such opinion, King & Spalding has received and relied upon
representations contained in certificates of Sprint in form and
substance reasonably acceptable to King & Spalding.
(h) Representations and Warranties Regarding Sprint
Partner. With respect to Sprint Partner, Sprint hereby represents
and warrants to each other Parent as follows:
(i) Sprint Partner has good legal title to, and
beneficial ownership of, a 40% PCS Interest (consisting of
a 40% interest in Sprint PCS GP and a 40% interest in Sprint
PCS LP), free and clear of all Liens (other than Contractual
Liens). Except as provided in the PCS Partnership Agreement
and the MinorCo Partnership Agreement, Sprint Partner has
the sole right to vote and dispose of such PCS Interest.
Other than such PCS Interest and its PhillieCo Interest,
Sprint Partner has no assets or liabilities or obligations
(absolute, accrued, contingent or otherwise, including any
liability for Taxes of itself or any other Person) except
for obligations under the Sprint Contracts, obligations
imposed solely as a matter of Laws to which Sprint Partner
is subject and liabilities and obligations attributable to
its PCS Interest and PhillieCo Interest. Sprint Partner
has not engaged in any business or activities of any type
or kind whatsoever except as relates to its ownership of
the PCS Interest and its PhillieCo Interest. There are
no Rights obligating Sprint Partner to issue additional
interests in Sprint Partner to any party or (except as
provided in the PCS Partnership Agreement and the MinorCo
Partnership Agreement) to Transfer its PCS Interest or any
equity or voting interest therein in whole or in part, or
(except for the Sprint Contracts) any voting agreement,
voting trust agreement or similar agreement relating to the
voting by Sprint Partner of any of its PCS Interests.
(ii) Interests in Sprint Partner. The subsidiaries
of Sprint holding direct interests in Sprint Partner have
good legal title to all of the general partnership and
limited partnership interests in Sprint Partner indicated
as owned by them on Schedule 5.3(h)(ii), free and clear of
all Liens (other than Contractual Liens). Such interests
are duly authorized and validly issued and were not issued
in violation of any preemptive rights or any applicable
securities laws. There are no Rights obligating such
subsidiaries to issue additional interests in, or capital
stock of, such subsidiaries, Transfer any of their
interests in Sprint Partner or any equity or voting
interest therein in whole or in part, or (except for the
Sprint Contracts) any voting agreement, voting trust
agreement or similar agreement relating to the voting by
such subsidiaries of any of the general or limited
partnership interests of Sprint Partner.
(iii) Availability. Sprint has made available to each
Cable Parent true and correct copies of the charter, bylaws,
stockholders agreements, partnership agreement and other
constituent documents, as applicable, of Sprint Partner.
27
(iv) Consents, Approvals and Authorizations. The
execution, delivery and performance of this Agreement and
the Other Agreements by Sprint Partner do not and will
not require any consent, approval, authorization or other
action by, or filing with or notification to, any
Governmental Authority or any other Person on the part of
Sprint Partner, except (i) for the Required Approvals or
(ii) to the extent the failure to obtain or make any of
the foregoing, individually or in the aggregate, would
not have a Material Adverse Effect on Sprint Partner.
(v) Contracts.
(A) Sprint Partner is not a party to, nor are
its properties or assets
bound by, any contracts or agreements
except those to which one
or more of the Cable Partners or their
Affiliates are a party (the
"Sprint Contracts").
(B) Neither Sprint Partner nor any of its
Controlled Affiliates is in
material breach of Section 6.6 of
the PCS Partnership Agreement.
(vi) Taxes.
(A) Since its formation, SprintCom has been
a member of an Affiliated Group of
which Sprint is the common parent, which
has elected to file consolidated federal
income tax returns.
(B) Since its formation, Sprint Partner has
not derived any material
item of income, loss, deduction or credit
during its existence other than such
items which were or are included in
its direct or indirect distributive share
of such items of Sprint PCS GP, Sprint
PCS LP, PhillieCo GP and PhillieCo LP.
Neither SprintCom nor Sprint Partner has
Subsidiaries other than interests in
partnerships which hold direct interests
(or indirect interests through other
partnerships) in Sprint PCS GP, Sprint PCS
LP, PhillieCo GP and PhillieCo LP.
(C) Sprint's Affiliated Group has filed all
federal income tax returns that it was
required to file for each period during
which SprintCom was a member of the
Affiliated Group. All such returns were
correct and complete in all material
respects insofar as they relate to
SprintCom.
(D) If the income of SprintCom or Sprint
Partner is required under state, local,
or foreign tax rules, to be included on
a consolidated, unitary, combined or
other tax return filed by an
28
entity other than itself, each such
group has filed all income tax
returns that it was required to file with
respect to SprintCom or Sprint Partner for
each period during which SprintCom or
Sprint Partner was a member of such group.
All such returns were correct and complete
in all material respects insofar as they
relate to SprintCom or Sprint Partner.
All material income taxes owed by such
group with respect to SprintCom or Sprint
Partner (whether or not shown on a Tax
Return) have been paid for each taxable
period during which SprintCom or Sprint
Partner was a member of its respective
group.
(E) Each of SprintCom and Sprint Partner
(and each of their Subsidiaries (if any))
has filed all Tax Returns that it was
required to file through the date hereof.
All such Tax Returns were correct and
complete in all material respects.
All Taxes owed by each of such entities
(or its Subsidiaries (if any))
(whether or not shown on any Tax Return)
have been paid. No claim has ever been
made by an authority, in a jurisdiction
where SprintCom or Sprint Partner (or
their respective Subsidiaries (if any))
do not file Tax Returns, that it or they
may be subject to taxation by that
jurisdiction. There are no security
interests on any of the assets of
SprintCom or Sprint Partner (or their
respective Subsidiaries (if any)) that
arose in connection with any failure
(or alleged failure) to pay any Tax.
(F) Each of Sprint Com and Sprint Partner
(and each of their respective Subsidiaries
(if any)) has withheld and paid all Taxes
required to have been withheld and paid in
connection with amounts paid or owing to
any employee, independent contractor,
creditor, stockholder, or other third
party.
(G) There is no dispute or claim concerning
any Tax Liability of SprintCom or Sprint
Partner (or their respective Subsidiaries
(if any)) either claimed or raised by any
authority in writing to such entity as to
which any of such entities has knowledge
based upon direct personal contact with
any agent of such authority.
(H) Neither SprintCom nor Sprint Partner
(nor any of their respective
Subsidiaries (if any)) has filed a consent
under Code section 341(f) concerning
collapsible corporations, or has made or
is required to make any payments, or
is a party to any agreement that under
certain circumstances could
29
obligate it to make any payment,
that will not be deductible under
Code section 280G.
(i) Reports and Financial Statements. Sprint has
filed all reports (including proxy statements) and registration
statements required to be filed with the SEC since January
1, 1996 (collectively, the "Sprint SEC Reports"). None of
the Sprint SEC Reports (including the financial statements
contained therein), as of their respective dates, contained
any untrue statement of 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. All of the Sprint
SEC Reports, as of their respective dates, complied in
all material respects with the requirements of the Exchange
Act, the Securities Act and the applicable rules and regulations
thereunder. Except (i) as and to the extent disclosed or
reserved against on the balance sheet of Sprint as of December
31, 1997 included in the Sprint SEC Reports, (ii) as incurred
after the date thereof in the ordinary course of business consistent
with prior practice and not prohibited by this Agreement and
(iii) as may result from any Year 2000 Liability, Sprint does
not have any liabilities or obligations of any nature, absolute,
accrued, contingent or otherwise and whether due or to become due,
that, individually or in the aggregate, have or would have a
Material Adverse Effect on Sprint. During the period since
December 31, 1997, except as disclosed in the Sprint SEC Reports
filed prior to the date hereof, there has not been, and nothing
has occurred that has had, a Material Adverse Effect on Sprint.
(j) Capitalization of Sprint. The certificate delivered
to the Cable Parents at the Closing as contemplated by Section 9.1(xvi)
will be true and correct. All such issued and outstanding shares of
Sprint capital stock immediately following the Effective Time will
have been duly authorized and validly issued, and will be fully paid
and nonassessable, and issued in compliance with all applicable state
and federal securities laws. All PCS Options outstanding immediately
following the Effective Time will have been duly authorized and
validly issued, and will be fully paid and nonassessable (except as
to the payment of any exercise price for the underlying securities)
and issued in compliance with all applicable state and federal securities
laws.
Section 5.4 Representations and Warranties Concerning
PhillieCo. Each PhillieCo Parent hereby represents and warrants to
each other Parent (in the case of Sections 5.4(a) and (b)) and to
Comcast only (in the case of Sections 5.4(c)-(l)), as to itself and
its respective PhillieCo Partner, as follows:
(a) Due Organization. Such PhillieCo Partner is duly
formed and validly existing under the laws of the State of Delaware
and has the corporate or partnership power (as applicable) and authority
to own its property and carry on its business as owned and carried on
at the date hereof. Such PhillieCo Partner is duly qualified to do
business in each jurisdiction in which it conducts business or in
which it is otherwise required to be qualified, except for
failures to be so qualified which, individually or in the aggregate,
would not have a Material Adverse Effect on such PhillieCo Partner.
(b) Interests in PhillieCo Owned by the PhillieCo
Partners. Such PhillieCo Partner has good legal title to, and
beneficial ownership of, the PhillieCo Interest indicated as owned
30
by it on Schedule 5.4(b), free and clear of all Liens (other than
Contractual Liens). Except as provided in the PhillieCo
Partnership Agreement and the PhillieCo LP Partnership Agreement,
such PhillieCo Partner has the sole right to vote and dispose
of the PhillieCo Interest indicated as owned by it
on Schedule 5.4(b). Other than (i) its PhillieCo Interest, (ii)
notes receivable from PhillieCo GP, (iii) in the case of Sprint
Partner, its PCS Interest, (iv) in the case of Cox HoldCo Sub2,
its interest in Cox Partner (and liabilities and obligations
attributable to Cox Partner's PCS Interest) and the note
receivable from Cox HoldCo Sub1 that will be contributed to Cox
HoldCo Sub2 prior to Closing pursuant to Section 6.6, and (v)
as contemplated by Section 6.4 and (in the case of Cox HoldCo Sub2)
as contemplated by Section 6.6(a)(i)(A), such PhillieCo Partner
has no assets or liabilities or obligations (absolute, accrued,
contingent or otherwise, including any liability for Taxes of
itself or any other Person) other than obligations imposed
solely as a matter of Laws to which such PhillieCo Partner
is subject. Such PhillieCo Partner has not engaged in any
business or activities of any type or kind whatsoever
except as relates to its ownership of the PhillieCo Interest
(and, in the case of Cox HoldCo Sub2 and Sprint Partner, its PCS
Interest). Except as set forth in the CP Contracts and Section
6.4, there are no Rights obligating such PhillieCo Partner to issue
additional capital stock or interests in such PhillieCo Partner
to any party or to Transfer its PhillieCo Interest or any equity
or voting interest therein in whole or in part, or any voting
agreement, voting trust agreement or similar agreement relating
to the voting by such PhillieCo Partner of any of its PhillieCo
Interests.
(c) Licenses. PhillieCo1 holds the licenses issued
by the FCC that are listed on Schedule 5.4(c) (the "PhillieCo
Licenses") and has satisfied all terms and conditions required to
be satisfied on or before the date hereof imposed by the FCC,
by any other Governmental Authority, or by federal law as a
condition of the award of the PhillieCo Licenses, the failure to
satisfy of which could reasonably be expected to cause PhillieCo1
to forfeit its right to hold or use the PhillieCo Licenses,
including: the payment of all lump sums due the FCC under 47 C.F.R.
Section 24.708 in payment for award of the PhillieCo Licenses;
the payment of all withdrawal, disqualification or default penalties
associated with participation in competitive bidding for the
PhillieCo Licenses; and the satisfaction of all FCC technical
requirements for construction and operation of the PhillieCo Licenses,
including frequency coordination, microwave relocation, antenna
height and power limitations.
(d) Compliance with Laws. PhillieCo GP and its Controlled
Affiliates have not made any untrue statement of fact, or omitted to
disclose any facts, to the FCC or any other Governmental Authority
or taken or failed to take any action, which misstatements, omissions,
actions or failures to act, individually or in the aggregate, could
reasonably be expected to cause PhillieCo1 to forfeit its right to
hold or use the PhillieCo Licenses or that, insofar as can
reasonably be foreseen, could have a material adverse effect on the
ability of Sprint to allocate the business of PhillieCo and the PhillieCo
Licenses to the PCS Group or otherwise have the PhillieCo Licenses
attributed to the PCS Group.
(e) Litigation. Except for the Petition of Sprint
Spectrum Partners and Sprint Spectrum, L.P. d/b/a Sprint PCS for
Declaratory Relief filed on March 13, 1997 with the FCC, there
are no actions, suits, proceedings or investigations pending or,
to the knowledge of the PhillieCo Parents, threatened against
PhillieCo in, before or by any Governmental Authority or any arbitrator
31
that could, if adversely determined (or, in the case of an
investigation could lead to any action, suit or proceeding,
that, if adversely determined, could), reasonably be
expected to have a material adverse effect on the right of PhillieCo1 to
hold or use the PhillieCo Licenses or for PhillieCo1 to allocate the
PhillieCo Licenses to the PCS Group, or impose any material adverse
restrictions or limitations on the operation of the business attributed
to the PCS Group; PhillieCo1 has not received any currently effective
notice of any default, and PhillieCo is not in default, under any
applicable order, writ, injunction, decree, permit, determination or
award of any Governmental Authority or any arbitrator that could
reasonably be expected to have a material adverse effect on the right of
PhillieCo1 to hold or use the PhillieCo Licenses or for PhillieCo1 to
allocate the PhillieCo Licenses to the PCS Group or a material adverse
effect on PhillieCo.
(f) Title to Licenses. On the Closing Date, the PhillieCo
Licenses will be owned by PhillieCo1 free and clear of all Liens, except
for any Permitted Liens and Liens that, individually or in the aggregate,
are not material to the PhillieCo Licenses (taken as a whole).
(g) No Breach. As of the date of this Agreement, (i) each
material permit, license, contract, agreement, lease and insurance policy
held by PhillieCo or to which PhillieCo is a party (whether evidenced
by a written document or otherwise), is in full force and effect in
accordance with its terms, and (ii) there does not exist under any such
permit, license, contract, agreement, lease or insurance policy any default,
or event which, with the giving of notice or the lapse of time or both,
would become a breach or default, the consequences of which (in the
case of either (i) or (ii) above) would result in a Material Adverse
Effect on PhillieCo.
(h) Environmental Protection. The PhillieCo Partners do
not have knowledge of, nor has PhillieCo received notice of, any events,
conditions, circumstances, activities, practices, incidents, actions or
plans that PhillieCo Partners reasonably expect would result in claims or
liabilities, (A) based on or related to alleged on-site or off-site
contamination with respect to or affecting the assets of PhillieCo or
(B) arising out of or related to the assets of PhillieCo under any law,
statute, rule, regulation, order, decree or judgment related to public
or occupational safety and health, pollution and/or protection of the
environment, including the Resource Conservation and Recovery Act of
1976 and the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 (collectively, "Environmental Laws"),
in each case that, individually or in the aggregate, would have a
Material Adverse Effect on PhillieCo. As of the date of this Agreement,
PhillieCo has owned and operated its assets in compliance with all
Environmental Laws except where any such noncompliance, individually
or in the aggregate, would not have a Material Adverse Effect on
PhillieCo.
(i) Intellectual Property. To the knowledge of the
PhillieCo Partners, PhillieCo is not using any copyright, patent,
proprietary information, technical information or other similar
intangible property right that is owned by any Person in a manner
that is not in compliance in all material respects with the applicable
license of such intangible property right to PhillieCo, except where
such noncompliance would not result in a Material Adverse Effect
on PhillieCo.
32
(j) Financial Information. Incorporated by reference into
this Agreement are (i) the unaudited combined balance sheets of
PhillieCo GP and PhillieCo LP as of December 31, 1997, and the related
unaudited combined statements of operations and cash flows for the year
then ended, including the notes thereto and (ii) the unaudited combined
balance sheets of PhillieCo GP and PhillieCo LP as of March 31, 1998,
and the related unaudited combined statement of operations for the three
months then ended (the documents referred to in (i) and (ii) being
collectively, the "PhillieCo Financial Statements"). The
PhillieCo Financial Statements present fairly in all material respects
the financial position and results of operations of PhillieCo GP
and PhillieCo LP at the dates and for the periods to
which they relate and have been prepared in accordance with generally
accepted accounting principles consistently followed throughout the
periods involved. Except (i) as and to the extent disclosed or
reserved against on the combined balance sheets of PhillieCo GP and
PhillieCo LP as of December 31, 1997, (ii) as incurred after the
date thereof in the ordinary course of business consistent with
prior practice and not prohibited by this Agreement and (iii)
as may result from any Year 2000 Liability, PhillieCo GP and
PhillieCo LP and their Subsidiaries (taken as a whole) do not
have any liabilities or obligations of any nature, absolute,
accrued, contingent or otherwise and whether due or to become due, that,
individually or in the aggregate, would have a Material Adverse
Effect on PhillieCo GP and PhillieCo LP and their Subsidiaries
(taken as a whole). During the period since December 31,
1997, there has not been, and nothing has occurred that has had,
a Material Adverse Effect on PhillieCo GP and PhillieCo LP and their
Subsidiaries (taken as a whole).
(k) Sole Line of Business. PhillieCo conducts no
material businesses or activities other than those relating to the
provision of wireless telephony services pursuant to the PhillieCo
Licenses.
(l) Liabilities. Except as shown on the PhillieCo
Financial Statements, to the knowledge of the PhillieCo Partners,
PhillieCo is not subject to any liabilities arising outside the
ordinary course of business that might reasonably be expected to
have a Material Adverse Effect on PhillieCo.
Section 5.5 Representations and Warranties Concerning
SprintCom and EquipmentCo. Sprint hereby represents and warrants
to the Cable Parents as follows:
(a) Due Organization; Title. Each of SprintCom and
EquipmentCo is a corporation and limited partnership, respectively,
duly organized and validly existing under the laws of the State of
Kansas, and Delaware, respectively, and has the corporate and
partnership, respectively, power and authority to own its property
and carry on its business as owned and carried on at the date hereof.
Each of SprintCom and EquipmentCo is duly qualified to do business
in each jurisdiction in which it conducts business or in which it is
otherwise required to be qualified, except for failures to be so
qualified which, individually or in the aggregate, would not have a
Material Adverse Effect on SprintCom and EquipmentCo (taken as a
whole). Sprint (through its Wholly Owned Subsidiaries) has good legal
title to, and record and beneficial ownership of, all the outstanding
capital stock of SprintCom free and clear of all Liens. There are no
Rights obligating Sprint to issue additional capital stock or other
securities of SprintCom. Sprint has good legal title to, and beneficial
ownership of, the general partnership and limited partnership interests in
33
EquipmentCo, free and clear of all Liens. There are no
Rights obligating Sprint or its Subsidiaries to Transfer any of its
interests in EquipmentCo.
(b) Licenses. SprintCom holds the licenses issued by the
FCC that are listed on Schedule 5.5(b) (the "SprintCom Licenses") and
has satisfied all terms and conditions required to be satisfied on or
before the date hereof imposed by the FCC, by any other Governmental
Authority, or by federal law as a condition of the award of the
SprintCom Licenses, the failure to satisfy of which could reasonably be
expected to cause SprintCom to forfeit its right to hold or use the
SprintCom Licenses, including: the payment of all lump sums due the FCC
under 47 C.F.R. Section 24.708 in payment for award of the SprintCom
Licenses; the payment of all withdrawal, disqualification or default
penalties associated with participation in competitive bidding for the
SprintCom Licenses; and the satisfaction of all FCC technical
requirements for construction and operation of the SprintCom Licenses,
including frequency coordination, microwave relocation, antenna height
and power limitations.
(c) Compliance with Laws. SprintCom and its Controlled
Affiliates have not made any untrue statement of fact, or omitted to
disclose any facts, to the FCC or any other Governmental Authority or
taken or failed to take any action, which misstatements, omissions,
actions or failures to act, individually or in the aggregate, could
reasonably be expected to cause SprintCom to forfeit its right to hold
or use the SprintCom Licenses or that, insofar as can reasonably be
foreseen, could have a material adverse effect on the ability of Sprint
to allocate the business of SprintCom and the SprintCom Licenses to the
PCS Group or otherwise have the SprintCom Licenses attributed to the
PCS Group.
(d) Litigation. Except as set forth on Schedule 5.5(d),
there are no actions, suits, proceedings or investigations pending or,
to the knowledge of Sprint, threatened against SprintCom or EquipmentCo
in, before or by any Governmental Authority or any arbitrator that
could, if adversely determined (or, in the case of an investigation
could lead to any action, suit or proceeding, that, if adversely
determined, could), reasonably be expected to have a material
adverse effect on the right of SprintCom to hold or use the SprintCom
Licenses or for Sprint to allocate the SprintCom Licenses to the PCS
Group, or impose any material adverse restrictions or limitations on
the operation of the business attributed to the PCS Group; and none of
Sprint, SprintCom or EquipmentCo have received any currently effective
notice of any default, and SprintCom and EquipmentCo are not in default,
under any applicable order, writ, injunction, decree, permit,
determination or award of any Governmental Authority or any arbitrator
that could reasonably be expected to have a material adverse effect
on the right of SprintCom to hold or use the SprintCom Licenses or
for Sprint to allocate the SprintCom Licenses to the PCS Group or a
material adverse effect on SprintCom and Equipment Co (taken as a
whole).
(e) Title to Licenses. On the Closing Date, the SprintCom
Licenses will be owned by SprintCom free and clear of all Liens, except
for any Permitted Liens and Liens that, individually or in the
aggregate, are not material to the SprintCom Licenses (taken as a
whole).
(f) No Breach. As of the date of this Agreement, (i)
each material permit, license, contract, agreement, lease
and insurance policy held by SprintCom or EquipmentCo or to
34
which either of them is a party (whether evidenced by a written document
or otherwise), is in full force and effect in accordance with its terms,
and (ii) there does not exist under any such permit, license, contract,
agreement, lease or insurance policy any default, or event which, with
the giving of notice or the lapse of time or both, would become a
breach or default, the consequences of which (in the case of either
(i) or (ii) above) would result in a Material Adverse Effect on
SprintCom and EquipmentCo (taken as a whole).
(g) Environmental Protection. Sprint does not have
knowledge of, nor has Sprint or any of its Controlled Affiliates
received notice of, any events, conditions, circumstances, activities,
practices, incidents, actions or plans that Sprint reasonably expects
would result in claims or liabilities, (A) based on or related to
alleged on-site or off-site contamination with respect to or affecting
the assets of SprintCom or EquipmentCo or (B) arising out of or
related to the assets of SprintCom and EquipmentCo under any
Environmental Laws, in each case that, individually or in the
aggregate, would have a Material Adverse Effect on SprintCom and
EquipmentCo (taken as a whole). As of the date of this Agreement,
SprintCom and EquipmentCo have owned and operated their assets in
compliance with all Environmental Laws except where any such
noncompliance, individually or in the aggregate, would not have a
Material Adverse Effect on SprintCom and EquipmentCo (taken as a whole).
(h) Intellectual Property. To the knowledge of Sprint,
neither SprintCom nor EquipmentCo is using any copyright, patent,
proprietary information, technical information or other similar
intangible property right that is owned by any Person in a manner
that is not in compliance in all material respects with the applicable
license of such intangible property right to Sprint or its Controlled
Affiliate, except where such noncompliance would not result in a
Material Adverse Effect on SprintCom and EquipmentCo (taken as a whole).
(i) Financial Information. Sprint has delivered to the
Cable Parents copies of (i) the combined balance sheet of SprintCom
and EquipmentCo as of December 31, 1997, and the related combined
statements of operations, changes in equity (deficit) and cash flows
for the year then ended, certified by independent auditors, including
the notes thereto and (ii) the unaudited combined balance sheet of
SprintCom and EquipmentCo as of March 31, 1998, and the related
combined statement of operations for the three months then ended (the
documents referred to in (i) and (ii) being collectively, the "SprintCom
and EquipmentCo Financial Statements"). The SprintCom and EquipmentCo
Financial Statements present fairly in all material respects the
combined financial position and combined results of operations of
SprintCom and EquipmentCo at the dates and for the periods to which
they relate and have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the periods
involved. Except (i) as and to the extent disclosed or reserved against
on the combined balance sheet of SprintCom and EquipmentCo as of
December 31, 1997, (ii) as incurred after the date thereof in the
ordinary course of business consistent with prior practice (including
leveraged lease transactions that have heretofore been disclosed to the
Cable Partners) and not prohibited by this Agreement and (iii) as may
result from any Year 2000 Liability, SprintCom and EquipmentCo do not
have any liabilities or obligations of any nature, absolute, accrued,
contingent or otherwise and whether due or to become due, that,
individually in the aggregate, would have a Material Adverse Effect on
SprintCom and EquipmentCo taken as a whole. During the period since
December 31, 1997, there has not been,
35
and nothing has occurred that has had, a Material Adverse Effect on
SprintCom and EquipmentCo taken as a whole.
(j) Sole Line of Business. Neither SprintCom nor
EquipmentCo conducts any material businesses or activities other
than those relating to the provision of wireless telephony services
pursuant to the SprintCom Licenses (including any acquisitions of PCS
licenses and related assets and leveraged lease financing programs
that have heretofore been disclosed to the Cable Parents).
(k) Liabilities. Except as shown on the SprintCom and
EquipmentCo Financial Statements, to the knowledge of Sprint, neither
SprintCom nor EquipmentCo is subject to any liabilities arising outside
the ordinary course of business that might reasonably be expected to
have a Material Adverse Effect on SprintCom and EquipmentCo, taken as a
whole, other than any acquisitions of PCS licenses and related assets
and leveraged lease transactions that have heretofore been disclosed to
the Cable Parents.
ARTICLE 6
COVENANTS OF THE PARTIES
Section 6.1 Cooperation.
(a) Between the date hereof and the earlier of the Closing
or the termination of this Agreement, subject to the terms and
conditions of this Agreement, the parties shall cooperate with each
other and use all commercially reasonable efforts to obtain all
necessary consents and approvals for the consummation of the
transactions contemplated hereby and otherwise to satisfy the conditions
to closing set forth in Article 8. Without limiting the generality
of the foregoing, (A) each PCS Partner shall vote its PCS Interest
at any meeting of the PCS Partners and shall cause its representatives
to vote at any meeting of the Partnership Board of Sprint PCS GP, and
each PhillieCo Partner shall vote its PhillieCo Interest at any
meeting of the PhillieCo Partners and shall cause its representatives
to vote at any meeting of the Partnership Board of PhillieCo GP, so as
to facilitate the completion of the transactions contemplated by this
Agreement, (B) each party hereto shall use its commercially reasonable
efforts, and shall cause each of Sprint PCS and PhillieCo to use its
commercially reasonable efforts, to obtain all consents and
authorizations of third parties and Governmental Authorities and to make
all filings with and give all notices to third parties and Governmental
Authorities which may be necessary or reasonably required in order to
effect the transactions contemplated hereby, and (C) the Cable Parents
shall, and the PCS Partners shall cause Sprint PCS to, and the PhillieCo
Partners shall cause PhillieCo to, make qualified personnel available to
Sprint for (i) supplying all information reasonably requested by Sprint
for inclusion in the Proxy Statement and the other filings contemplated
by Section 6.2, (ii) meetings or correspondence with counsel for Sprint
and the underwriters for purposes of conducting customary due diligence
in connection with the IPO and (iii) with respect to Sprint PCS and
PhillieCo only, meetings with underwriters and potential investors. In
addition, subject to the other provisions of this Section 6.1, none of
the parties shall take any action that such party knows would cause any
of such party's representations and warranties in this Agreement to be
inaccurate or that such party
36
knows would prevent or materially delay the satisfaction of the
conditions to closing set forth in Article 8 of this Agreement or the
receipt of any required approvals or consents; provided that no
party will be required to conduct itself in a manner that is not
commercially reasonable. "Commercially reasonable efforts" as
used in this Agreement shall not require any party to
undertake extraordinary or unreasonable measures
to obtain any consents or other authorizations, including requiring such
party to make any material expenditures (other than normal filing fees
or the like) or to accept any material changes in the terms of the
contract, license or other instrument for which a consent is sought.
(b) Notwithstanding the foregoing, in connection with any
filing or submission required or action to be taken by either Sprint or
a Cable Parent or its respective Controlled Affiliates to effect the
Mergers and to consummate the other transactions contemplated hereby no
Parent nor any of its Affiliates shall be required to divest or hold
separate or otherwise take (or refrain from taking) or commit to take
(or refrain from taking) any action that limits its freedom of action
with respect to, or its ability to retain, any of the businesses, product
lines or assets of such Parent or any of its Affiliates (including, in
the case of Sprint, TCI Partner and the HoldCo Entities and their
respective Subsidiaries.)
Section 6.2 Certain Actions by Sprint.
(a) SEC Filings. As soon as is reasonably practicable
after the execution of this Agreement, Sprint shall prepare and file
with the SEC (i) a proxy statement (the "Proxy Statement") to be
mailed to Sprint stockholders in connection with a special meeting (the
"Stockholders Meeting") to be held for the purpose of approving this
Agreement and the transactions contemplated hereby, the Initial
Charter Amendment, the Subsequent Charter Amendment, the Bylaw
Amendment and amendments to certain of Sprint's equity-based
incentive plans in connection with the creation of the PCS Stock,
among other things, and (ii) a registration statement on Form S-3
(the "Registration Statement") containing a prospectus (the
"IPO Prospectus") covering the shares of Series 1 PCS Stock to be
sold in the IPO. Sprint shall use its commercially reasonable
efforts to cause the Proxy Statement to be approved for
mailing and the Registration Statement to become effective under
the Securities Act, each as promptly as practicable after such
filing, and shall take all commercially reasonable actions
required to be taken under any applicable state blue sky or
securities laws in connection with the IPO and the Recapitalization.
Sprint shall use its commercially reasonable efforts to cause
the Series 1 PCS Stock required to be issued in the IPO and the
Recapitalization to be approved for listing or quotation in
satisfaction of the condition to Closing set forth in Section
8.1(d).
Sprint will provide the Cable Parents with a reasonable
opportunity to review and comment upon drafts of the Proxy Statement
and the Registration Statement and any amendments thereto prior to
filing any such documents with the SEC. Sprint shall not make
any changes to the Proxy Statement from the draft dated May 18,
1998 (which has been reviewed by the Cable Parents) or include
any statements in the Registration Statement that are
inconsistent with the provisions of this Agreement, the Other
Agreements, the Management and Allocation Policies and the Bylaw
Amendment. Attached hereto as Exhibit Q are certain provisions
that Sprint will include in the Proxy Statement (in any form filed
with the SEC) relating to the Management and Allocation
37
Policies, the Tax Sharing Agreement and related matters. Sprint
will not include in the Proxy Statement or the Registration
Statement any language reasonably objected to by any
Cable Parent that changes, limits or qualifies, or is otherwise
inconsistent with, such provisions on Exhibit Q or the "Risk Factors"
section of the May 18 draft of the Proxy Statement. Also included
as part of Exhibit Q is language that reflects Sprint's current
expectation for disclosure in the Proxy Statement regarding
SprintCom's rollout schedule.
Each of the Cable Parents covenants that none of the
information supplied or to be supplied by such Cable Parent or its
Subsidiaries in writing at the request of Sprint for inclusion or
incorporation by reference in the Registration Statement or the Proxy
Statement will, at the respective times such documents are filed
and (in the case of the Registration Statement) at the time such
document becomes effective or at the time any amendment or
supplement thereto becomes effective and (in the case of the Proxy
Statement) at the time it is mailed to the stockholders of Sprint,
contain any untrue statement of a material fact, or omit to
state any material fact required or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. However, a Cable Parent will not be
deemed in breach of this covenant due to any misstatement or omission
that is attributable to information supplied to such Cable Parent
or any of its Subsidiaries by Sprint PCS GP, PhillieCo GP or any
of their Subsidiaries.
Sprint covenants that (i) the Registration Statement,
when it becomes effective and at the time any amendment or
supplement thereto becomes effective, will not 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 not misleading; (ii) the Proxy Statement, when first
mailed to the stockholders of Sprint, will not 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; and (iii) the Proxy Statement and the
Registration Statement will comply as to form in all material respects
with the provisions of applicable law and any applicable rules or
regulations thereunder, except that no representation is made by Sprint
with respect to statements made therein based on information supplied
by any Cable Parent or its Subsidiary in writing at the request of
Sprint for inclusion in the Registration Statement or the
Proxy Statement. Sprint acknowledges that the Cable Parents, in
entering into this Agreement and agreeing to consummate the
transactions contemplated hereby, are relying on the covenant
contained in this paragraph and the information to be contained
in the Proxy Statement and the Registration Statement as if the
forms of final Proxy Statement and Registration Statement
were delivered in connection herewith.
(b) Stockholders Meeting. Sprint shall cause the
Stockholders' Meeting to be held as soon as practicable after the
date hereof (without regard to the condition of the equity markets,
including the market for initial public offerings, wireless
communications companies or tracking stocks). The Board of
Directors of Sprint shall recommend that its stockholders
approve this Agreement, the Initial Charter Amendment, the Subsequent
Charter Amendment, and the other matters related thereto presented
for a vote in the Proxy Statement, and Sprint shall use commercially
reasonable efforts to obtain such stockholder approval. Sprint shall
not be deemed to have breached any obligation under this Agreement by
reason of the disclosure of information in the Proxy Statement or any
public announcement or other communication with Sprint's
38
stockholders if such disclosure is required by Law, so long as
the Board of Directors of Sprint shall not have withdrawn,
limited, conditioned or qualified the recommendation referred
to above. Sprint's conclusion that any such disclosure is required
by Law will be final and binding on all the parties hereto if
Sprint has received a written opinion of counsel that such
disclosure or communication is required by Law. "Commercially
reasonable" efforts shall not be deemed to require any action that
would prevent Sprint's compliance with Section 3(a)(9) of the
Securities Act in connection with the Recapitalization.
(c) Concurrent IPO. Sprint intends to close the IPO
as soon as practicable following the date that the conditions to
Closing set forth in Sections 8.1(a), 8.1(b) and 8.1(d) have been
satisfied (subject to Section 6.2(e), the "Trigger Date"), assuming
that the other conditions to Closing have been satisfied or are
capable of being satisfied at or prior to the Closing; provided
that the determination to proceed with the IPO at any time shall
remain in Sprint's sole discretion. If the IPO occurs prior to
the Recapitalization, the Closing shall occur simultaneously with
the closing of the IPO. If Sprint causes the IPO to be completed
simultaneously with the Closing, (i) Sprint shall complete the
Recapitalization by filing the Subsequent Charter Amendment with
the Kansas Secretary of State within 120 days following the Closing,
and (ii) each Cable Parent will, and will cause its Controlled
Affiliates to, for a period of one hundred eighty (180) days
following the Closing Date, refrain from engaging in any public
sale or distribution of any PCS Stock or securities convertible
into, or exchangeable or exercisable for, or the value of which
relates to or is based upon, PCS Stock.
(d) Concurrent Recapitalization. Subject to Section
6.2(e), if the IPO is not completed on or prior to the 30th day
following the Trigger Date, then Sprint shall, on the earlier of
(i) the date which is 10 days following such date subsequent to the
Trigger Date that Sprint reasonably determines that the IPO is not
capable of being completed on or prior to the 30th day following
the Trigger Date or (ii) the 40th day following the Trigger Date,
effect the Recapitalization by filing the Initial Charter Amendment,
the Subsequent Charter Amendment and the Certificate of Designations
with the Kansas Secretary of State, assuming that the other conditions
to Closing have been satisfied or are capable of being satisfied at the
Closing. If Sprint causes the Recapitalization to be completed as
provided in this Section 6.2(d), the Closing shall occur simultaneously
with the completion of the Recapitalization. In such event, Sprint
currently intends to complete the IPO within 120 days after the Closing
Date. If Sprint completes the Recapitalization simultaneously with the
Closing and the IPO is completed within such 120-day period, each Cable
Parent will, and will cause its Controlled Affiliates to, for a period
commencing at the time of Closing and ending on the later of (i) 90 days
following the closing of the IPO and (ii) 180 days following the Closing
Date, refrain from engaging in any public sale or distribution of any
PCS Stock or securities convertible into, or exchangeable or exercisable
for, or the value of which relates to or is based upon, PCS Stock.
If the IPO is not completed within 120 days following the Closing,
Sprint will not engage in any public sale or distribution of any PCS
Stock or securities convertible into, or exchangeable or exercisable
for, or the value of which relates to or is based upon, PCS Stock
until after the Registration Rights Commencement Date, and then,
only after (i) providing notices to the Cable Parents (and any
required Affiliates) as required by Section 3(a) of the Registration
Rights Agreement, (ii) providing the Cable Parents with priority in
such sale or distribution in accordance with Section 3 thereof,
and (iii) amending the Registration Statement (and amending or
39
supplementing the related preliminary prospectus if preliminary
prospectuses have been distributed) if necessary to register and
offer the shares that the Cable Parents have elected to sell in
such sale or distribution in accordance with the Registration
Rights Agreement.
(e) Extension of Trigger Date. If the Trigger Date would
occur (but for this Section 6.2(e)) after August 1, 1998, and before
September 1, 1998, the Trigger Date will be deemed to occur on the
earlier of (i) September 1, 1998 or (ii) such date after August 1,
1998, that Sprint reasonably determines that the IPO is not capable
of being completed on or prior to October 1, 1998.
Section 6.3 IPO Matters.
(a) All of the net proceeds of the shares of Series 1 PCS
Stock sold in the IPO will be allocated to the PCS Group. Sprint will
select the lead (book-running) managing underwriter(s) for the IPO,
and the Cable Partners shall select a co-lead managing underwriter
(who shall be reasonably acceptable to Sprint) (such underwriters as
selected by Sprint and the Cable Partners being the "Underwriters").
Except as provided in Section 6.2 and this Section 6.3, Sprint will have
sole discretion to determine the pricing and other terms of the IPO.
The total proceeds raised in the IPO (net of underwriting commissions
and discounts and excluding the proceeds from any exercise of the
Top-Up Rights) are referred to herein as the "Total Proceeds".
(b) Prior to the filing of the Registration Statement, the
Underwriters will advise the Parents as to the expected range of the
IPO Price. Sprint will be entitled to sell in the IPO without any
further approval of the Cable Parents a number of shares of Series 1
PCS Stock up to the greater of (i) $500 million divided by the
midpoint of the price range indicated on the cover of the "red ▇▇▇▇▇▇▇"
prospectus used to market such shares, regardless of the Total
Proceeds that would result from the sale of such shares and (ii)
such number of shares as is required to be sold in the IPO to
achieve Total Proceeds of between $500 million and $525 million
(in Sprint's discretion).
(c) In addition, prior to filing of the Registration
Statement, the Underwriters will advise the Parents as to the aggregate
proceeds that, in the opinion of the Underwriters, could be raised in
the IPO without adversely affecting the IPO Price or the after-
market trading price of the Series 1 PCS Stock. If such recommendation
is for Total Proceeds of more than $525 million and any of the Parents
notifies the other Parents within ten days following the receipt of
such advice from the Underwriters that such Parent is unwilling to
proceed with an IPO of the size recommended by the Underwriters, then
the Total Proceeds of the IPO shall not exceed $525 million unless a
larger amount is permitted by clause (i) of Section 6.3(b) or a larger
amount of Total Proceeds is thereafter unanimously agreed to by the
Parents.
(d) The dollar amounts set forth above in this Section 6.3
do not include a 15% over-allotment option on the shares sold to the
public in the IPO or any amounts paid by FT, DT or the Cable Partners
on exercise of their Top-Up Rights in connection with the IPO, which
will be incremental to the amounts specified above and may be effected
by Sprint without the approval of any of the Cable Parents.
40
Section 6.4 Capital Requirements of Sprint PCS Prior to
Closing.
(a) The capital requirements of Sprint PCS GP and its
Subsidiaries during the period from the date of this Agreement through
the Closing Date will be satisfied by capital contributions from the
PCS Partners to Sprint PCS GP to be made from time to time pursuant to
this Section 6.4(a) up to an aggregate amount of $400 million (the "PCS
Contributions"). The chief executive officer of Sprint PCS GP may call
all or a portion of the PCS Contributions at any time prior to the
Closing Date by giving written notice to each of the PCS Partners
specifying (i) the aggregate amount required to be contributed to Sprint
PCS GP and (ii) the date (the "Contribution Date") that such amount is
required to be contributed to Sprint PCS GP, which shall be at least 20
Business Days following the date of such notice. On each Contribution
Date, each PCS Partner will contribute (by wire transfer of immediately
available funds to an account designated by Sprint PCS GP) its pro rata
portion of any PCS Contribution based on its PCS Interest on the date of
such contribution.
(b) The PCS Contributions will be funded by loans from the
Parents as follows: (i) Sprint (directly or through its Subsidiaries)
will lend Sprint Partner's portion of any PCS Contribution to Sprint
Partner (the "Sprint PCS Loan"); (ii) TCI will lend TCI Partner's
portion of any PCS Contribution to TCI Partner; (iii) Comcast agrees
that Comcast Telephony Communications, Inc. will lend Comcast Partner's
portion of any PCS Contribution to either or both of its respective
HoldCo Entities; and (iv) Cox will lend Cox Partner's portion of any PCS
Contribution to Cox HoldCo Sub1 (each such loan described in clauses
(ii), (iii), and (iv) is referred to herein as a "Cable Parent PCS
Loan"). Notwithstanding the foregoing, in no event will the Cable Parent
PCS Loans be made to a direct Subsidiary of the lending entity. The
HoldCo Entity or Entities of Comcast that receive a Cable Parent PCS
Loan will in turn loan the proceeds of Comcast's Cable Parent PCS Loan
to Comcast Partner, and Cox HoldCo Sub1 will in turn loan the proceeds
of ▇▇▇'▇ Cable Parent PCS Loan to Cox Partner. Each entity
receiving a Cable Parent PCS Loan will issue to the lender in
consideration for such loans promissory notes in the form of Exhibit R
(the "Cable Parent PCS Notes"). Sprint Partner will issue similar
promissory notes to Sprint for the Sprint PCS Loans (the "Sprint PCS
Notes").
(c) The PCS Partners hereby agree that, notwithstanding
any requirements of the PCS Partnership Agreement, except as provided
in this Section 6.4, or otherwise agreed in writing by all the PCS
Partners simultaneously with or subsequent to the execution of this
Agreement, no further Additional Capital Contributions under the PCS
Partnership Agreement shall be required prior to the Closing; provided
that if this Agreement is terminated prior to Closing, the provisions
of the PCS Partnership Agreement with respect to Additional Capital
Contributions will be fully restored. Any failure of a PCS Partner to
fund its pro rata share of the PCS Contributions (which obligation shall
be deemed a material covenant for all purposes hereunder) will give rise
to a remedy of the other parties for breach of this Agreement, but will
not trigger an "Adverse Act" or other remedies under the PCS Partnership
Agreement.
(d) If the PCS Contributions are not adequate to meet the
capital requirements of Sprint PCS GP and its Subsidiaries pending the
Closing, the PCS Partners will cause Sprint PCS GP to obtain a financing
proposal from a financial institution or an opinion from an investment
41
banking firm as to the terms on which such additional required capital
would be available in a placement of debt securities by Sprint PCS GP.
Any such financing proposal must contemplate debt with a maturity of at
least three years, except that such debt must be payable in full at the
closing of the buy-sell arrangements set forth in Section 14.7 of
the PCS Partnership Agreement (but shall not otherwise mature or
accelerate as a result of a termination of this Agreement) (the
"Proposed Term"). Upon its receipt of written notice from the Sprint
PCS chief executive officer or the Sprint PCS Partnership Board
specifying the terms of third party financing proposed to be obtained
by Sprint PCS GP, Sprint Partner will have the right to provide debt
financing to Sprint PCS GP (directly or through an Affiliate) on
terms that result in substantially the same net economic cost to Sprint
PCS GP as the terms contemplated by such proposed financing (including
any expenses that would be incurred by Sprint PCS GP in effecting
financing through a third party). Sprint Partner or its Affiliate may
elect to provide such financing for a term equivalent to the Proposed
Term. At the Effective Time, any such debt financing provided by
Sprint Partner or its Affiliate would become debt of the PCS Group
owed to the Sprint FON Group.
Section 6.5 Capital Requirements of SprintCom Prior to
Closing. Subject to the next sentence, the capital requirements of
SprintCom and EquipmentCo during the period from the date of this
Agreement through the Closing Date will be provided by loans from
Sprint or its Affiliate or third party financing. The minimum
aggregate amount of loans from Sprint or its Affiliates will be (i)
$110.6 million times (ii) a fraction, the numerator of which equals
the total amount of PCS Contributions between the date of this Agreement
and the Closing Date and the denominator of which equals $400 million.
Such minimum aggregate amount (determined in accordance with the
formula set forth above) of the loans made by Sprint or its Affiliates
pursuant to this Section 6.5 is referred to herein as the "SprintCom
Loans." The SprintCom Loans shall be evidenced by promissory notes
(the "SprintCom Notes") in the form of Exhibit S hereto. Any
indebtedness of SprintCom or EquipmentCo to Sprint or its Affiliates
that was advanced or otherwise existed prior to January 1, 1998, shall
be contributed to the equity of SprintCom or EquipmentCo on the
Closing Date, and any such indebtedness advanced on or after January 1,
1998 and through the Closing Date (other than the SprintCom Loans),
shall on the Closing Date become intergroup debt of the PCS Group on
terms consistent with the Management and Allocation Policies.
Section 6.6 Capitalization or Purchase of PCS Notes and
SprintCom Loans.
(a) Each Cable Parent may elect to capitalize all or
any portion of its Cable Parent PCS Loans, subject to and in accordance
with the following terms and conditions:
(i) Such capitalization shall be effected no
later than immediately prior to Closing in the
following manner:
(A) to the extent Cox elects to
capitalize any portion of its Cable Parent PCS
Loans, Cox shall contribute such portion of its
Cable Parent PCS Loans to Cox HoldCo Sub2, and
(B) to the extent either Comcast or
TCI elects to capitalize any portion of its Cable
Parent PCS Loans, Comcast or TCI, as
42
applicable, shall contribute such portion of its
Cable Parent PCS Loans as sequential capital
contributions through all intermediate corporations
from the creditor to the obligor of such Cable Parent
PCS Loans, including a capital contribution by the
owner of the stock of such obligor to such obligor.
(ii) In the Mergers, pursuant to Section 4.1, the
holder of the common stock of any entity to which any
Cable Parent PCS Loans have been contributed pursuant to
this Section 6.6(a) will receive, as consideration in the
Merger of such entity, for the equity representing the
Cable Parent PCS Loans contributed to such entity, a number
of shares of PCS Preferred Stock equal to the aggregate
principal amount of the Cable Parent PCS Loans and accrued
and unpaid interest thereon contributed to such entity,
divided by $1,000.
(iii) If the IPO is to be completed concurrently
with the Closing and a Cable Parent has elected pursuant to
Section 6.6(d)(ii) to receive any Available Cash Proceeds,
then such Cable Parent may not capitalize that portion of
its Cable Parent PCS Loans at the Closing.
(b) At the Closing, Sprint will purchase any Cable Parent
PCS Loans that (i) have not been capitalized pursuant to Section 6.6(a)
and (ii) are not required to be purchased by Sprint for cash at the
Closing pursuant to Section 6.6(d)(vi)(A). Sprint shall pay the purchase
price for any Cable Parent PCS Loans that it is required to purchase
pursuant to this Section 6.6(b) by delivering to the holder of such Cable
Parent PCS Loans a number of shares of PCS Preferred Stock equal to the
aggregate principal amount of such Cable Parent PCS Loans, plus all
accrued and unpaid interest thereon, divided by $1,000.
(c) At the Closing, any portion of the Sprint PCS Notes
and SprintCom Loans that is not required to be repaid at the Closing
pursuant to Section 6.6(d)(vii)(A), will be repaid by the creation of
the Preferred Intergroup Interest, which shall be the economic
equivalent of a number of shares of PCS Preferred Stock equal to the
outstanding principal amount of such Sprint PCS Notes and SprintCom
Loans, plus all accrued unpaid interest thereon, divided by $1,000.
(d) In connection with the consummation of the IPO
(which term, for purposes of this Section 6.6, includes any initial
primary offering of shares of Series 1 PCS Stock prior to the
Registration Rights Commencement Date), each Cable Parent may elect
to require that Sprint purchase for cash all or any portion of its
Cable Parent PCS Loans, or all or any portion of the shares of PCS
Preferred Stock issued to such Cable Parent or any Subsidiary of such
Cable Parent at the Closing pursuant to Section 6.6(b), but not any
shares of PCS Preferred Stock issued as consideration in any of the
Mergers in accordance with Section 6.6(a)(ii), subject to and in
accordance with the following terms and conditions:
(i) Not later than twelve Business Days prior
to the scheduled commencement of the road show for the
IPO, Sprint will notify each Cable Parent
43
in writing (the "Sprint Notice") of Sprint's
good faith, reasonable estimate of the net proceeds
of the IPO (not including the proceeds of any
exercise by FT, DT or any Cable Parent of its Top-Up
Rights).
(ii) Each Cable Parent will, at least seven
Business Days prior to the scheduled commencement of
the road show for the IPO (but in any event within
two Business Days following the date that Sprint notifies
the Cable Parents that Sprint is prepared to print the
"red ▇▇▇▇▇▇▇" prospectus to be used in connection
with the IPO roadshow (but for inclusion of the
information contained in the Parent Responses)),
deliver a binding written response (each, a "Parent
Response") to Sprint indicating the total cash that
such Cable Parent desires to have paid to it and its
Subsidiaries in consideration for the purchase of its Cable
Parent PCS Loans or PCS Preferred Stock issued at Closing
pursuant to Section 6.6(b), as applicable (such Cable
Parent's "Cash Request Amount"). If Sprint proposes to
consummate the IPO concurrently with the Closing and, after
receiving each Cable Parent's Parent Response, (A) Sprint
elects to postpone commencing the road show or printing
the "red ▇▇▇▇▇▇▇" prospectus by more than 10 Business
Days from the schedule contemplated at the time of the
giving of the Sprint Notice or (B) delays in consummating
the IPO require that Sprint reprint the "red ▇▇▇▇▇▇▇"
prospectus, then, in either such case, any Cable Parent
may amend its Parent Response by written notice to Sprint
given prior to the printing or reprinting, respectively,
of the "red ▇▇▇▇▇▇▇" prospectus, as applicable, to reduce
its Cash Request Amount. If the IPO is proposed to be
consummated after the Closing, a Cable Parent's Cash
Request Amount may not exceed the product of $1,000
times the number of shares of PCS Preferred Stock
issued to such Cable Parent and its Subsidiaries at
Closing pursuant to Section 6.6(b).
(iii) Within five Business Days after giving the
Sprint Notice, Sprint will notify each of the Cable
Parents of the total cash that Sprint desires to
receive in repayment of its Sprint PCS Notes and
SprintCom Loans or for the reduction of the Preferred
Intergroup Interest created pursuant to Section 6.6(c),
as applicable (Sprint's "Cash Request Amount").
(iv) If the IPO is proposed to be consummated
simultaneously with the Closing, neither Sprint's nor
a Cable Parent's Cash Request Amount may exceed the
balance of principal and unpaid and accrued interest
on its Cable Parent PCS Loans (in the case of the Cable
Parents) or its Sprint PCS Loans and SprintCom Loans
(in the case of Sprint).
(v) The Available Cash Proceeds shall be
allocated among the Parents for purposes of this
Section 6.6(d) in accordance with the following:
(A) "Available Cash Proceeds" means
the amount by which the net proceeds
of the IPO (not including the
proceeds of any exercise by FT or DT
of its Top-Up Rights but including the
44
proceeds of any exercise by any Cable
Parent of its Top-Up Rights )
exceed $500 million.
(B) The Available Cash Proceeds shall first
be allocated (1) to Sprint, to the extent
of the lesser of 53% of the Available
Cash Proceeds or Sprint's Cash Request
Amount, (2) to TCI, to the extent of the
lesser of 23.5% of the Available Cash
Proceeds or TCI's Cash Request
Amount, (3) to Comcast, to the extent
of the lesser of 11.75% of the Available
Cash Proceeds or Comcast's Cash Request
Amount, and (4) to Cox, to the extent of
the lesser of 11.75% of the Available Cash
Proceeds or ▇▇▇'▇ Cash Request Amount.
(C) After the allocations pursuant to Section
6.6(d)(v)(B), if all of the Available Cash
Proceeds have not been allocated and any
Parent has not been allocated a portion
of the Available Cash Proceeds equal to
its Cash Request Amount, then the portion
of the Available Cash Proceeds
that was not allocated pursuant to the
preceding paragraph shall be allocated
among those Parents that have not been
allocated all of their respective Cash
Request Amounts, in proportion to their
Cash Request Amounts, until (1) each
Parent has been allocated its Cash Request
Amount or (2) all of the Available Cash
Proceeds have been allocated among the
Parents.
(D) The sum of the portion of the Available
Cash Amount allocated to a Parent
pursuant to 6.6(d)(v)(B) plus the
portion of the Available Cash Amount
allocated to a Parent pursuant to
6.6(d)(v)(C) is such Parent's
"Allocated Cash Proceeds."
(vi) Upon the consummation of the IPO, Sprint shall
pay to each Cable Parent in cash the amount of such Cable
Parent's Allocated Cash Proceeds as consideration for the
purchase from such Cable Parent or any Subsidiary of such
Cable Parent of:
(A) in the case of an IPO consummated
concurrently with the Closing, a portion
of such Cable Parent's Cable Parent
PCS Loans having a principal amount,
together with all accrued and unpaid
interest thereon, equal to such Cable
Parent's Allocated Cash Proceeds, and
(B) in the case of an IPO consummated after
the Closing, that number of shares of
the PCS Preferred Stock issued to such
Cable Parent or any Subsidiary of such
Cable Parent at the Closing pursuant
to Section 6.6(b) having a Liquidation
45
Preference (as defined in the
Certificate of Designations), plus
accumulated unpaid dividends, equal
to such Cable Parent's Allocated Cash
Proceeds.
(vii) Upon the consummation of the IPO,
(A) in the case of an IPO consummated
concurrently with the Closing, an amount
equal to Sprint's Allocated Cash
Proceeds shall be used to repay any
outstanding Sprint PCS Loans and
SprintCom Loans and to pay accrued
interest thereon (which payment shall
be allocated to the Sprint FON Group),
and
(B) in the case of an IPO consummated after
the Closing, an amount equal to Sprint's
Allocated Cash Proceeds shall be used to
reduce the Preferred Intergroup Interest
created pursuant to Section 6.6(c), in a
manner comparable to a redemption of
PCS Preferred Stock pursuant to Section
6.6(d)(vi)(B).
(e) Notwithstanding any other provision of this Section
6.6, Sprint will in no event issue any fractional shares of PCS
Preferred Stock. Any fractional share of PCS Preferred Stock otherwise
required to be issued pursuant to this Section 6.6 shall be rounded to
the nearest whole share.
Section 6.7 Loans to PhillieCo. The Parents of the
PhillieCo Partners have loaned to PhillieCo GP in proportion to the
respective PhillieCo Interests of the PhillieCo Partners $50 million in
the aggregate pursuant to promissory notes dated as of April 13, 1998.
Sprint will arrange for or provide any additional financing required
by PhillieCo GP on the same basis as contemplated with respect to
Sprint PCS GP in Section 6.4(d). The parties hereto agree that Sprint
shall cause all loans advanced by the Parents of the PhillieCo Partners
or their respective Affiliates to PhillieCo GP prior to the Closing
(whether included in the $50 million or otherwise) to be repaid by
PhillieCo GP (together with accrued interest) on the 90th day
following the Closing Date, and the PhillieCo Parents will cause
PhillieCo GP and their respective Affiliates to enter into agreements
prior to May 31, 1998, extending the maturity of the notes representing
such loans to such date. Such agreements will provide that, if this
Agreement is terminated prior to Closing, such financing (and all
secured interest thereon) will be repayable to the applicable PhillieCo
Partner or its Affiliate at the closing of the buy/sell arrangements set
forth in Section 14.7 of the PhillieCo Partnership Agreement.
Section 6.8 Equity Purchase Rights.
(a) From and including the Closing Date, each Cable Parent
and any Subsidiary of a Cable Parent that holds shares of PCS Stock
(a "Cable Holder"), shall have the right (an "Equity Purchase Right")
to purchase from Sprint:
46
(i) if on or after the Closing Date (including
in connection with the IPO), Sprint shall issue shares of
PCS Stock for cash, that number of additional shares of
Series 2 PCS Stock sufficient for such Cable Holder to
avoid any reduction in its PCS Group Percentage
Interest as in effect immediately prior to the issuance
of such shares (which, for the purposes of the IPO,
shall be determined as if the Mergers occurred immediately
prior to the consummation of the IPO) solely as a result
of such issuance; such shares of Series 2 PCS Stock to be
purchased from Sprint at a per share purchase price equal
to the purchase price paid for such shares of PCS Stock
whose issuance gave rise to such Equity Purchase Right,
which purchase price shall be net of any underwriting
discounts in connection with a public offering of shares
of PCS Stock;
(ii) if after the Closing, Sprint shall issue
for cash options, warrants or other securities of Sprint
or any of its Controlled Affiliates that are exercisable
or exchangeable for or convertible into shares of PCS Stock,
that number of such options, warrants or other securities
sufficient for such Cable Holder to avoid any reduction in
its PCS Group Percentage Interest as in effect immediately
prior to such issuance solely as a result of such issuance;
such options, warrants or other securities to be purchased
from Sprint at a price per unit equal to the per unit
purchase price paid for such options, warrants or other
securities whose issuance gave rise to such Equity
Purchase Right, which purchase price shall be net of any
underwriting discounts in connection with a public
offering of such options, warrants or other securities;
(iii) if after the Closing, the Sprint FON Group
contributes to the PCS Group cash or other assets in
exchange for an increase in the Sprint FON Group common
intergroup interest in the PCS Group, that number of
additional shares of Series 2 PCS Stock sufficient for
such Cable Holder to avoid any reduction in its PCS Group
Percentage Interest as in effect immediately prior to
such contribution solely as a result of such contribution,
such Series 2 PCS Stock to be purchased at a price per
share based on the corresponding per unit price used by
the Sprint Board of Directors or its Capital Stock
Committee in determining the appropriate adjustment to
the Sprint FON Group common intergroup interest as a
result of such contribution of cash or assets; and
(iv) if after the Closing, the Sprint FON Group
contributes to the PCS Group cash or other assets in
exchange for a preferred or other intergroup interest that
is convertible into or exchangeable for a common intergroup
interest in the PCS Group, that number of securities having
substantially the same terms as such preferred or other
intergroup interest sufficient for such Cable Holder to
avoid any reduction in its PCS Group Percentage Interest
as in effect immediately prior to such contribution solely
as a result of such contribution; such securities to be
purchased at a price per share based on the corresponding
per unit price used by the Sprint Board of Directors or
its Capital Stock Committee in determining the amount of the
47
Sprint FON Group intergroup interest as a result of such
contribution of cash or assets.
The additional shares, options, warrants or other securities to be
purchased pursuant to paragraphs (i), (ii), (iii) and (iv) above
are referred to herein as the "Additional Securities."
(b) Sprint shall deliver to each Cable Parent written
notice of any proposed action that would give rise to Equity Purchase
Rights not less than fifteen days prior to such action, such notice
to describe in reasonable detail the price per share of PCS Stock
(or price per warrant, option or security exercisable or exchangeable
for or convertible into shares of PCS Stock) reflected in such
transaction and contain the calculation thereof (or, in the case of a
public offering, the anticipated price per share or other unit);
provided, that no such notices need be given (and the Cable Holders
shall not have any rights under this Section 6.8) with respect to
shares of PCS Stock issued pursuant to (i) the Recapitalization,
(ii) exercises of the Warrants, (iii) conversion of the PCS Preferred
Stock, (iv) qualified or non-qualified employee and director benefit
plans, arrangements or contracts (including stock purchase plans),
(v) dividend reinvestment plans, (vi) conversion rights under capital
stock of Sprint outstanding as of the date hereof or (vii) purchase
rights that are exercised by FT and/or DT as a result of the
issuance of PCS Stock in connection with any of the matters described
in clauses (ii)-(vi) above. In addition, a Cable Holder shall have no
rights under this Section 6.8 with respect to the exercise of purchase
rights by FT or DT that are triggered by sales of Series 2 PCS Stock
by such Cable Holder or any of its Affiliates.
(c) The Cable Holders may exercise their Equity Purchase
Rights pursuant to Section 6.8(a) by binding written notice (subject
to consummation of the underlying transaction) to Sprint delivered
prior to the fifteenth day after the date of the related notice
provided for in Section 6.8(b) specifying the number of Additional
Securities to be purchased.
(i) Notwithstanding the foregoing, in connection
with a public offering of PCS Stock by Sprint to which
this Section 6.8 is applicable, at least twelve (12)
Business Days prior to the printing of the "red ▇▇▇▇▇▇▇"
prospectus for such offering, Sprint shall give written
notice to the Cable Parents setting forth Sprint's
then-current estimate of the number of shares of PCS
Stock Sprint intends to offer and the anticipated per
share range for the offering price (the "Price Range").
If the midpoint of the Price Range is $15 or less, the
Price Range shall extend not more than $1 above the
midpoint nor more than $1 below the midpoint. At least
seven (7) Business Days prior to the printing of
the "red ▇▇▇▇▇▇▇" prospectus for such offering, each
Cable Parent shall be required to deliver a binding
notice to Sprint (the "EPR Notice") stating
whether and as to how many shares the Cable Parent
and its Subsidiaries will exercise their Equity
Purchase Rights as follows:
(A) for the IPO, whether Equity Purchase
Rights will be exercised if the actual
price per share at which shares are
sold in the IPO is in a range (the
"Decision Range") as follows: (x) if
the midpoint of the Price Range is $15 or
less, the Price Range; (y) if the midpoint
of the Price Range is $15 or more, then
48
from a price per share 10% above
the midpoint of the Price Range
(but in no event more than $1 above the
high point) to a price per share
10% below the midpoint of the Price Range
(but in no event lower than $1 below the
low point);
(B) for other primary offerings, whether and
as to how many shares the Cable Parent
and its Subsidiaries will exercise
Equity Purchase Rights without regard to a
price range (subject to Section 6.8(c)(iii)).
(ii) In the case of (i)(A): (I) if the actual price
per share in the IPO is greater than the high point of the
Decision Range, (1) a decision to not exercise Equity
Purchase Rights shall nevertheless be binding and (2) any
Cable Holder that originally exercised its Equity Purchase
Rights with respect to the IPO, in whole or in part, shall
be entitled to rescind such exercise, in whole or in part,
at the time of pricing of the IPO; and (II) if the actual
price per share in the IPO is less than the low point of the
Decision Range, (1) an exercise of Equity Purchase Rights
shall nevertheless be binding and (2) any Cable Holder
that originally declined to exercise its Equity
Purchase Rights with respect to the IPO, or originally
exercised its Equity Purchase Rights with respect to the
IPO only in part, will be entitled to exercise its Equity
Purchase Rights with respect to the IPO, in whole or in part
(or in greater part, if its Equity Purchase Rights were
previously exercised), at the time of pricing of the IPO.
(iii) In the case of (i)(B): (I) if the actual price
per share in such offering is less than 95% of the closing
price of the Series 1 PCS Stock on the date of pricing of
such offering, (1) an exercise of Equity Purchase Rights
shall nevertheless be binding and (2) any Cable Holder that
originally declined to exercise its Equity Purchase Rights
with respect to such public offering, or originally
exercised its Equity Purchase Rights with respect to such
public offering only in part, will be entitled to exercise
its Equity Purchase Rights with respect to such public
offering, in whole or in part (or in greater part, if its
Equity Purchase Rights were previously exercised), at the
time of pricing of such public offering.
(iv) With respect to any decision to be made by a
Cable Holder at the time of pricing pursuant to paragraph
(ii) or (iii) above or with respect to any primary public
offerings by Sprint of securities that are exercisable or
exchangeable for or convertible into shares of PCS Stock,
Sprint and each affected Cable Holder will cooperate to
develop procedures that will permit such Cable Holder to
exercise its rights under paragraph (ii) or (iii) or with
respect to such offerings concurrently with the applicable
pricing decision without any disruption or delay to the
public offering.
(v) Payment for any Additional Securities purchased
by the Cable Holders that exercise their Equity Purchase
Rights shall be made as provided in Section 6.8(e) hereof.
The total number of Additional Securities specified by each
49
exercising Cable Holder shall be issued and delivered
to such Cable Holder against delivery to Sprint of
the purchase price therefor as provided in Section 6.8(e)
hereof.
(d) If Sprint issues to the Cable Holders upon exercise of
their Equity Purchase Rights Additional Securities on a date after the
date the related PCS Stock is issued, then (i) the per share purchase
price paid by the Cable Holders shall be reduced to reflect the
fair market value (as determined by the Board of Directors of Sprint)
of any dividend or distribution made in respect of the PCS Stock after
the date the related PCS Stock is issued and prior to such issuance
and (ii) such purchase price and the number of shares of Additional
Securities purchased shall be appropriately adjusted to reflect any
stock split, stock dividend or other combination or reclassification
of the PCS Stock.
(e) The closing of purchases of Additional Securities
pursuant to the exercise of Equity Purchase Rights by the exercising
Cable Holders shall take place on a date specified by the exercising
Cable Holders, which date shall be within 30 days after the exercise
of such Equity Purchase Rights or (if later) within 10 days after
the receipt of all required regulatory approvals (in each case assuming
the action giving rise to such Equity Purchase Rights has occurred),
at the executive offices of Sprint, at 10:00 a.m., Kansas City time,
or at such other date, time or place as Sprint and such exercising
Cable Holder may otherwise agree. At such closing:
(i) Sprint shall deliver, or cause to be delivered,
to such exercising Cable Holder, certificates representing
the shares of Additional Securities to be purchased by
such exercising Cable Holder, in the name of such holder,
against payment of the purchase price therefor, as
provided below; and
(ii) such exercising Cable Holder shall deliver
to Sprint an amount in cash by wire transfer in immediately
available funds equal to the product of (i) the applicable
price per share determined pursuant to Section 6.8(a) (as
adjusted pursuant to Section 6.8(d)) and (ii) the number
of shares of Additional Securities to be acquired by
such exercising Cable Holder.
(f) In connection with the occurrence of any issuance or
contribution that gives rise to Equity Purchase Rights and to purchase
rights of FT and DT, Sprint shall use its reasonable efforts to
coordinate the exercise of purchase rights by the Cable Holders and FT
and DT to avoid a series of successive exercises of purchase rights
triggered by a single issuance or contribution.
(g) The Equity Purchase Rights of a Cable Parent and its
Subsidiaries shall terminate simultaneously with the termination of
the Standstill Agreement between Sprint and such Cable Parent.
(h) Notwithstanding the provisions of the Standstill
Agreement, with respect to each action giving rise to Equity Purchase
Rights, if a Cable Holder elects not to purchase all of the Additional
Securities that it is entitled to purchase after such action, such
Cable Holder will thereafter be entitled to purchase, in open market
purchases on the New York Stock Exchange or other applicable exchange
or otherwise from a third party:
50
(i) as to Sections 6.8(a)(i) and (iii), a number of
shares of Series 1 PCS Stock equal to the number of shares
of Series 2 PCS Stock that such Cable Holder was entitled
to purchase from Sprint and elected not to so purchase; or
(ii) as to Sections 6.8(a)(ii) and (iv), either (A)
a number of shares of Series 1 PCS Stock equal to the number
of shares of PCS Stock into which the options, warrants or
other securities that such Cable Holder elected not to
purchase would have been convertible, exercisable or
exchangeable on the date of the action giving rise to such
Equity Purchase Rights (disregarding for such purpose any
time or other limitations on the holder's right to convert,
exercise, or exchange) or (B) that number of such securities
(other than PCS Stock) that such Cable Holder was entitled
to purchase and elected not to so purchase;
in each case as adjusted to reflect any stock split, stock dividend or
other combination or reclassification of the PCS Stock or other
security.
(i) Notwithstanding the provisions of the Standstill
Agreement, if after the Closing Date Sprint shall issue shares of
PCS Stock (or options, warrants or other securities of Sprint or
any of its Controlled Affiliates that are exercisable or exchangeable
for or convertible into shares of PCS Stock) other than for cash
(including pursuant to a merger, acquisition, share exchange or
similar transaction), each Cable Holder shall thereafter have the
right to acquire, in open market purchases on the New York Stock
Exchange or other applicable exchange or otherwise, that number of
additional shares of Series 1 PCS Stock sufficient for such Cable
Holder to avoid any reduction in its PCS Group Percentage Interest
as in effect immediately prior to the issuance of such shares solely
as a result of such issuance, assuming that any such options,
warrants or other securities were converted into shares of PCS Stock as
of the date of issuance of such options, warrants or other securities,
and appropriately adjusted to reflect any stock split, stock dividend
or other combination or reclassification of the PCS Stock.
(j) Any shares of Series 1 PCS Stock acquired by any Cable
Holder will be subject to the applicable Voting Agreement.
Section 6.9 Conduct of Business of the HoldCo Entities and
Cable Partners. From and including the date hereof to the Effective
Time (or the earlier termination of this Agreement), except as
expressly contemplated by this Agreement and the Other Agreements, none
of the HoldCo Entities or Cable Partners will, and none of the Cable
Parents will permit any of its respective HoldCo Entities or its
respective Cable Partner to:
(a) transfer, issue, deliver, sell, dispose of, pledge or
otherwise encumber, or authorize or propose the Transfer, issuance,
sale, disposition or pledge or other encumbrance of (i) any
additional shares of capital stock of any class, or any securities
or rights convertible into, exchangeable for, or evidencing the
right to subscribe for any shares of capital stock, or any rights,
warrants, options, calls, commitments or any other agreements of
any character to purchase or acquire any shares of capital stock
or any securities or rights convertible into, exchangeable for, or
51
evidencing the right to subscribe for, any shares of capital stock
of such HoldCo Entity or Cable Partner (as the case may be), or
(ii) any other securities in respect of, in lieu of, or in
substitution for, shares of capital stock of such HoldCo Entity
or Cable Partner (as the case may be) outstanding on the date hereof;
(b) acquire or dispose of any property or assets of such
HoldCo Entity or Cable Partner (as the case may be) or enter into any
contracts, arrangements or understandings;
(c) adopt any amendments to the charter or By-Laws of
such HoldCo Entity or Cable Partner (as the case may be) or alter
through merger, liquidation, reorganization, restructuring or in
any other fashion the corporate structure or ownership of such HoldCo
Entity or Cable Partner;
(d) incur any indebtedness, liabilities or obligations
of any kind, except those imposed solely as a matter of Law without
any action of such HoldCo Entity or Cable Partner (as the case may be);
provided that the HoldCo Entities and the Cable Partners may
incur intercompany indebtedness that will be extinguished by means of
capital contribution prior to the Effective Time;
(e) engage in any conduct or business other than holding
the general and limited partnership interests in the respective Cable
Partner, Sprint PCS GP, Sprint PCS LP, PhillieCo GP or PhillieCo LP
(as applicable); or
(f) enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Section 6.10 Conduct of Business of SprintCom and
EquipmentCo. From and including the date hereof to the earlier to
occur of the Closing Date or the termination of this Agreement
pursuant to Section 10.1, except as expressly contemplated by this
Agreement or the Other Agreements and excluding third party
affiliation arrangements that will be entered into by SprintCom,
Sprint shall cause SprintCom and EquipmentCo:
(a) to operate the business of SprintCom and EquipmentCo
in the ordinary course of business;
(b) not to transfer, issue, deliver, sell, dispose of,
pledge or otherwise encumber, or authorize the transfer, issuance, sale,
disposition or pledge or other encumbrance of (i) any additional shares
of capital stock of any class or other equity interests (including
limited or general partnership interests in the case of EquipmentCo),
or any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for any shares of capital
stock or other equity interests (including limited or general
partnership interests in the case of EquipmentCo), or any rights,
warrants, options, calls, commitments or any other agreements
of any character to purchase or acquire any shares of capital
stock or other equity interests (including limited or general
partnership interests in the case of EquipmentCo) or any
securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of capital stock or
other equity interests (including limited or general partnership interests
in the case of EquipmentCo), or (ii) any other securities in respect of,
in lieu of, or in substitution for, shares of capital stock or other equity
52
interests (including limited or general partnership interests in the
case of EquipmentCo) outstanding on the date hereof;
(c) not to acquire or dispose of any property or assets
or enter into any contracts, arrangements or understandings other
than in the ordinary course of business (which shall include any
acquisitions of PCS licenses and related assets and leveraged lease
transactions that have heretofore been disclosed to Cable Parents);
(d) not to adopt any amendments to the charter or By-Laws
or organizational documents or alter through merger, liquidation,
reorganization, restructuring or in any other fashion the corporate
structure or ownership of SprintCom or EquipmentCo;
(e) not to incur any indebtedness other than in the
ordinary course of business (which shall include any acquisitions of
PCS licenses and related assets and leveraged lease transactions that
have heretofore been disclosed to the Cable Parents);
(f) not to enter in any contract, agreement, commitment
or arrangement to do any of the foregoing;
(g) not to take any other action that could be
reasonably expected to have a Material Adverse Effect on SprintCom
or EquipmentCo, whether individually or taken as a whole; and
(h) not to take any action or knowingly fail to take
any action (including actions relating to the buildout of PCS systems)
within its control that would result in the revocation of Sprint's
or SprintCom's right to hold or use the SprintCom licenses.
Section 6.11 Access to Information.
(a) Upon reasonable notice, each Cable Partner and HoldCo
Entity will afford to officers, employees, counsel, accountants and
other authorized representatives of Sprint ("Sprint Representatives")
reasonable access, during normal business hours throughout the period
prior to the Effective Time, to its properties, books and records
(including, subject to execution of appropriate access letters, the
work papers of independent accountants), and, during such period, shall
(and shall cause each of its Subsidiaries to) furnish promptly to such
Sprint Representatives all information concerning its business,
properties and personnel as may reasonably be requested, provided
that no investigation pursuant to this Section 6.11(a) shall affect
or be deemed to modify any of the respective representations or
warranties made herein by such Cable Parents, HoldCo Entities or
Cable Partners thereof. Sprint agrees that it will not, and will
cause the Sprint Representatives not to, use any information obtained
pursuant to this Section 6.11(a) for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement.
Sprint will keep confidential, and will cause the Sprint Representatives
to keep confidential, all information and documents obtained pursuant
to this Section 6.11(a) except as otherwise consented to by the
applicable Cable Parent; provided, however, that Sprint shall not
be precluded from making any disclosure which it deems required by
Law in connection with the Mergers, the IPO or the
53
Recapitalization. In the event Sprint is required to disclose any
information or documents pursuant to the immediately preceding
sentence, Sprint shall promptly give prior written notice of such
disclosure that is proposed to be made to the applicable Cable
Parent so that Sprint and such Cable Parent can work together to
limit the disclosure to the greatest extent possible and, in the
event that Sprint is legally compelled to disclose any information,
to seek a protective order or other appropriate remedy or both.
Upon any termination of this Agreement, as and when requested by
the applicable Cable Parent, Sprint will collect and deliver to
such Cable Parent all documents obtained pursuant to this Section
6.11(a) by Sprint or the Sprint Representatives then in their
possession and any copies thereof.
(b) Upon reasonable notice, Sprint will afford to
officers, employees, counsel, accountants and other authorized
representatives of any of the Cable Parents ("CP Representatives")
reasonable access, during normal business hours throughout the
period prior to the Effective Time, to the properties, books and
records of SprintCom and EquipmentCo (including, subject to
execution of appropriate access letters, the work papers of
independent accountants), and, during such period, shall furnish
promptly to such CP Representatives all information concerning the
business, properties and personnel of SprintCom and EquipmentCo as
may reasonably be requested, provided that no investigation pursuant
to this Section 6.11(b) shall affect or be deemed to modify any of
the respective representations or warranties made herein by Sprint.
Each of the Cable Parents agrees that it will not, and will cause its
respective CP Representatives not to, use any information obtained
pursuant to this Section 6.11(b) for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement.
The Cable Parents will keep confidential, and will cause its
respective CP Representatives to keep confidential, all information
and documents obtained pursuant to this Section 6.11(b) except as
otherwise consented to by Sprint; provided, however, that any Cable
Parent shall not be precluded from making any disclosure which it
deems required by Law in connection with the Mergers. In the event
a Cable Parent is required to disclose any information or documents
pursuant to the immediately preceding sentence, such Cable Parent
shall promptly give prior written notice of such disclosure that is
proposed to be made to Sprint so that Sprint and such Cable Parent can
work together to limit the disclosure to the greatest extent possible
and, in the event that such Cable Parent is legally compelled to
disclose any information, to seek a protective order or other
appropriate remedy or both. Upon any termination of this Agreement,
as and when requested by Sprint, each Cable Parent will collect and
deliver to Sprint all documents obtained pursuant to this Section
6.11(b) by any Cable Parent or its CP Representatives then in their
possession and any copies thereof.
Section 6.12 Tax Matters.
(a) Each of the parties shall use all reasonable efforts
to cause each of the Mergers to constitute a "reorganization" under
Section 368(a) of the Code. Each party agrees that it will not take
any action, and will not permit any of its Subsidiaries or Affiliates
to take any action, that such party knows would cause the Mergers to
fail to qualify as a reorganization under Section 368(a) of the Code.
Each party agrees to report the Mergers on all tax returns and other
filings as a reorganization under Section 368(a) of the Code.
54
(b) Sprint shall use all reasonable efforts to cause the
Recapitalization to constitute a recapitalization as defined in Code
section 368(a)(1)(E). Sprint agrees that it will not take any action,
and will not permit any of its Subsidiaries or Affiliates to take any
action, that Sprint knows would cause the Recapitalization to fail to
qualify as a recapitalization under Code section 368(a)(1)(E).
(c) On the date hereof Sprint has, and on the Closing
Date Sprint will, execute and deliver to counsel to each Cable Parent
a certificate substantially in the form attached as Exhibit T, signed
by an officer of Sprint, setting forth factual representations and
covenants (stated in such Exhibit) that will serve as the basis of
the tax opinions required pursuant to Section 5.2(h).
Section 6.13 Chairman of Sprint PCS. Concurrently
with the execution of this Agreement, the PCS Partners will appoint
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as Chairman of the Partnership Board of Sprint
PCS GP (the "Chairman").
Section 6.14 Agreement Not to Trigger Buy/Sell.
Until the termination of this Agreement, (i) each of the PCS Partners
agrees that the provisions of Section 5.8 of the PCS Partnership
Agreement shall be suspended and (ii) none of the PCS Partners will
take any action to implement the determination of Net Equity (as
defined in the Partnership Agreement) of each PCS Partner pursuant
to Section 14.7 of the Partnership Agreement, or take any other
action that would cause a Liquidating Event (as defined in the
Partnership Agreement).
Section 6.15 Management and Allocation Policies.
Sprint will not make any change in or amendment to the Management
and Allocation Policies or the Bylaw Amendment (or waive or otherwise
disregard any provision thereof) prior to the Recapitalization without
the consent of each of the Cable Parents.
Section 6.16 Informational Rights.
(a) Until the later to occur of (i) the termination of the
Standstill Agreement between Sprint and the applicable Cable Parent and
(ii) the earliest time that such Cable Parent and its Subsidiaries
beneficially own securities of Sprint representing a number of Votes (as
defined in the Standstill Agreement) that is less than 1.5% of the
number of Votes (as defined in the Standstill Agreement) represented by
all outstanding capital stock of Sprint (assuming for this purpose that
each share of Series 2 PCS Stock had the same voting right as a share of
Series 1 PCS Stock and that each share of Series 2 FON Stock had the same
voting rights as a share of Series 1 FON Stock), Sprint will provide such
Cable Parent with substantially the same informational rights that Sprint
provides to its major institutional stockholders. In addition, Sprint
will provide such Cable Parent with any information regarding the PCS Group
as may be reasonably requested by such Cable Parent to permit it to comply
with disclosure and financial reporting requirements under applicable
securities laws.
(b) If Sprint is required to include audited financial
statements of the HoldCo Entities and their Subsidiaries and TCI
Partner in the Proxy Statement or the Registration Statement,
55
each Cable Parent shall provide such financial statements in the
necessary form at such Cable Parent's expense, promptly following the
request of Sprint.
Section 6.17 Transfer of Series 2 PCS Stock. Each of
the Cable Parents agrees that it will not (nor will it permit any of
its Subsidiaries to) Transfer any Series 2 PCS Stock, the Warrants or
any other securities of Sprint acquired by such Cable Parent and its
Subsidiaries pursuant to this Agreement unless such Transfer complies
with applicable federal and state securities laws.
Section 6.18 Spin-off. In the event of a Spin-off
(as defined in the Initial Charter Amendment) of all or substantially
all of the PCS Group or in case of a redemption of PCS Stock in exchange
for stock of the PCS Group Subsidiary of the type set forth in Section
7.2 of the Initial Charter Amendment, Sprint or its Subsidiary will
enter into a trademark license agreement with the PCS Group on
substantially the same terms as the Amended and Restated Sprint
Trademark License, dated as of January 31, 1996, between Sprint
Communications Company L.P. and Sprint PCS GP, except that,
notwithstanding the termination provisions of such agreement, such
trademark license (i) will be non-exclusive and (ii) will terminate
in its entirety on the date that is six months following the effective
date of the Spin-off.
Section 6.19 Parents Agreements: Non-Competition.
(a) The parties agree that for purposes of the Parents
Agreements, the terms "Subsidiary" and "Controlled Affiliate" and
(with respect to the Cable Parents) "Cable Subsidiary" shall not
include any Person in which a Cable Parent or Sprint, directly or
indirectly, holds an equity interest of not more than 50% so long
as such Cable Parent or Sprint, respectively, does not have direct
or indirect control over the management of the day-to-day operations
of such Person (each, a "Non-Controlled Affiliate"). In addition,
the parties agree that the release or waiver by a party of any
obligations of a Non-Controlled Affiliate of such party comparable
to the obligations of a Controlled Affiliate, Subsidiary or Cable
Subsidiary under the Parents Agreement (and the engaging in
activities by such Non-Controlled Affiliate that would otherwise
have been inconsistent with such obligations) shall not be deemed
to be inconsistent with the obligations of such party under the
applicable Parents Agreement. The parties further agree that
each of the Parents Agreements and the rights and obligations of the
parties thereunder shall terminate at the Effective Time pursuant
to clause (ii) of Section 13 of the Parents Agreements.
(b) The parties agree that, for the purposes of Section
6.3(c) of the PCS Partnership Agreement, no PCS Partner (nor any of
its Controlled Affiliates) is required in connection with the
acquisition of an equity interest in any Person that does not represent
a majority of the outstanding equity or voting interests in such
Person to require such Person not to engage in Competitive Activities
(as defined in the PCS Partnership Agreement) so long as (i) such
person is not engaged in any Competitive Activities as of the date
of the acquisition of such equity interest and (ii) neither such
PCS Partner nor any of its Controlled Affiliates allows its name to
be used in connection with any Competitive Activities engaged in by
such Person. The applicable parties agree that the prior sentences
shall also be applied with respect to the noncompetition restrictions
56
contained in the PhillieCo Partnership Agreement and the
partnership agreement of ▇▇▇ Communications PCS, L.P.
(c) The provisions of Sections 6.19(a) and 6.19(b)
shall survive any termination of this Agreement, but only with
respect to any equity interest acquired (or subject to a binding
agreement to be acquired) by a Cable Parent or its Subsidiaries
or Sprint or its Subsidiaries prior to such termination, whether
or not such equity interest was acquired prior to the date of
this Agreement.
Section 6.20 Confidentiality. Each Cable Parent
and its Subsidiaries shall be bound by the provisions of Sections
6.6(a), (b), (d) and (g) of the PCS Partnership Agreement,
as if references to the "Partners" therein referred to the Cable
Parents. The provisions of Section 6.6(c) and (e) of the PCS
Partnership Agreement shall not apply to any Cable Parent.
Section 6.6(f) of the PCS Partnership Agreement shall also
apply to each Cable Parent and its Subsidiaries, except that
the two (2) year period referred to therein shall be deemed to
commence on the Closing Date.
Section 6.21 Conduct of Business of PhillieCo.
From and including the date hereof to the earlier to occur of the
Closing Date or the termination of this Agreement pursuant
to Section 10.1, each PhillieCo Parent through its respective
PhillieCo Partner shall cause PhillieCo:
(a) to operate the business of PhillieCo in the ordinary
course of business;
(b) not to transfer, issue, deliver, sell, dispose of,
pledge or otherwise encumber, or authorize the transfer, issuance,
sale, disposition or pledge or other encumbrance of (i) any additional
limited or general partnership interests or other equity interests or any
securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for any limited or general partnership interests
or other equity interests or any commitments or other agreements of
any character to purchase or acquire any limited or general partnership
interests or other equity interests, or (ii) any other securities in
respect of, in lieu of, or in substitution for, limited or general
partnership interests or other equity interests outstanding on
the date hereof;
(c) not to acquire or dispose of any property or assets
or enter into any contracts, arrangements or understandings other than
in the ordinary course of business;
(d) not to adopt any amendments to the PhillieCo LP
Partnership Agreement or PhillieCo Partnership Agreement or
organizational documents or alter through merger, liquidation,
reorganization, restructuring or alter in any other fashion the
partnership structure or ownership of PhillieCo;
(e) not to incur any indebtedness other than in the
ordinary course of business;
(f) not to enter in any contract, agreement,
commitment or arrangement to do any of the foregoing;
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(g) not to engage in any other activities, except
the provisions of wireless telephone service pursuant to the PhillieCo
Licenses; and
(h) not to take any action or knowingly fail to take any
action (including actions relating to the buildout of PCS systems)
within its control that would result in the revocation of PhillieCo's
right to hold or use the PhillieCo Licenses.
Section 6.22 Intergroup Interests. Sprint agrees that
it will effect such changes from time-to-time to the Preferred Intergroup
Interest and the Warrant Intergroup Interest as may be necessary to
reflect any changes to the terms, rights, powers or privileges of
the PCS Preferred Stock and the Warrants, respectively, including
as a result of the redemption of the PCS Preferred Stock.
Section 6.23 Rights Plan. Sprint agrees that under
the applicable governing documents for any stockholder rights
plan in effect for stockholders of Sprint following the Closing:
(a) a holder of Series 2 PCS Stock (or Series 2 FON Stock)
shall not be deemed to "beneficially own" the shares of Series 1 PCS
Stock (or Series 1 FON Stock) issuable upon conversion thereof prior
to the time of such conversion (including for purposes
of calculating the voting power of the shares held by such holder);
(b) the beneficial ownership by a Cable Parent or its
Affiliates of the shares of common stock of Sprint acquired by such
Cable Parent or its Affiliates pursuant to this Restructuring Agreement
(including Article 4, Section 6.8 and Section 7.10 and including any
other shares of common stock of Sprint acquired upon conversion or
reclassification thereof, or upon payment of any dividend or other
distribution thereon), or acquired upon the conversion
of any such shares, shall not in and of itself constitute beneficial
ownership of shares sufficient so as to result in such Cable Parent
or its Affiliates being an "acquiring person" or the like
thereunder; and
(c) in the event any transferee of shares of common
stock of Sprint from a Cable Parent or any of its Affiliates
(whose beneficial ownership of common stock of Sprint
(and the voting power thereof) did not exceed the applicable
threshold as of the time of the acquisition of such shares
(including following any conversion of shares of Series 2 PCS Stock
or Series 2 FON Stock into Series 1 PCS Stock or Series 1 FON Stock
in connection therewith) so as to make such an "acquiring person"
or the like thereunder) subsequently exceeds such threshold as a
result of the operation of the provisions of Section 3.2 (or any
successor provisions) of the Amended and Restated Articles of
Incorporation of Sprint, Sprint shall provide such holder with a
period of 30 days in which to divest itself of a sufficient
number of shares (or to make other appropriate arrangements
reasonably acceptable to Sprint) to decrease its beneficial
ownership to below the applicable threshold prior to such holder's
becoming an "acquiring person" or the like thereunder.
ARTICLE 7
TAX MATTERS
Section 7.1 Tax Returns. Each Cable Parent has made
available (or, in the case of Tax Returns filed after the
Closing Date, will make available) to Sprint all Tax Returns, and any
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amendments thereto, filed by or on behalf of the HoldCo Entities, TCI
Partner and their Subsidiaries (if any) (or with respect to their assets
or businesses) for all taxable years or applicable periods ending on
or prior to the Closing Date, in each case, to the extent such Tax
Returns are relevant in the preparation by or on behalf of the HoldCo
Entities, TCI Partner and their Subsidiaries (if any) of Tax Returns
subsequent to the Closing Date.
Section 7.2 Termination of Prior Tax Settlement Agreements.
Except with respect to the Tax Sharing Agreement, all tax settlement
and tax-sharing agreements, arrangements, policies and guidelines,
formal or informal, express or implied, that may exist between the
HoldCo Entities, TCI Partner and their Subsidiaries (if any) and any
person or between any entity that will be part of the PCS Group and
any person ("Settlement Agreements") and all obligations thereunder
shall terminate prior to the Closing, and after the Closing Date,
none of the HoldCo Entities, TCI Partner and their Subsidiaries
(if any) on any such entities in the PCS Group shall be bound by
such Settlement Agreements or have any liability thereunder.
Section 7.3 Pre-Closing Taxes.
(a) Each of the HoldCo Entities, TCI Partner and their
Subsidiaries (if any) shall continue to be included for all taxable
periods (or portions thereof) ending on or before the Closing Date
in the consolidated Federal income Tax Return and any required state or
local consolidated or combined income or franchise Tax Returns of
any affiliated group of which any of them is or was a member (each
of which is herein referred to as a "Selling Affiliated Group")
which Tax Returns include any of the HoldCo Entities, TCI Partner and
their Subsidiaries (if any) (all such Tax Returns including taxable
periods (or portions thereof) of the HoldCo Entities, TCI Partner
and their Subsidiaries (if any) ending on or before the
Closing Date are hereinafter referred to, collectively, as
"Pre-Closing Consolidated Returns"). Each Cable Parent or Cox
Partner shall cause its Selling Affiliated Group to timely prepare and
file (or cause to be prepared and filed) all Pre-Closing Consolidated
Returns and shall timely pay all Taxes shown as due and payable on
Pre-Closing Consolidated Returns (including any Taxes with respect to
any deferred income triggered into income by Treasury Regulations
Sections 1.1502-13, -14 and any excess loss accounts taken into income
under Treasury Regulation Section 1.1502-19). Without limiting the
generality of the foregoing, Sprint and the Cable Parents acknowledge
that, pursuant to Treasury Regulation Section 1.1502-76(b)(2)(v),
(i) Sprint shall include on its consolidated federal income tax
return for the first year ending after the Closing Date that portion
of the distributive share of each HoldCo Entity and TCI Partner for
the current taxable year of each partnership in which any HoldCo Entity
or TCI Partner is a partner that relates to the portion of such
taxable year beginning on the day after the Closing Date, and
(ii) each Cable Parent, with respect to any HoldCo Entity or TCI
Partner of which it is the former Parent following the Closing,
shall include on its consolidated federal income tax return for
the first year ending after the Closing Date that portion of the
distributive share of such HoldCo Entity or TCI Partner for the
current taxable year of each partnership in which such HoldCo
Entity or TCI Partner is a partner that relates to the portion
of such taxable year ending on the Closing Date. Sprint, the
Cable Parents, and Cox Partner agree that any such distributive
share shall be allocated between the portion of the applicable
taxable year ending on the Closing Date and the portion of the
applicable taxable year beginning on the day after the Closing
Date by hypothetically closing the books of all relevant
entities as of the Closing Date.
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(b) Each Cable Parent shall timely prepare (or cause
to be so prepared) all other Tax Returns of the HoldCo Entities,
TCI Partner and their Subsidiaries (if any) which such Cable
Parent formerly owned or controlled that are required by Law for
all taxable periods ending on or before the Closing Date ("Pre-
Closing Non-Consolidated Returns"). All Pre-Closing Non-Consolidated
Returns shall be prepared in a manner consistent with prior
practice and shall properly include and reflect the income, activities,
operations and transactions of the HoldCo Entities, TCI Partner and
their Subsidiaries (if any), as applicable. No Pre-Closing
Non-Consolidated return shall be amended in a manner inconsistent
with prior practice except as required by applicable Law. Each
Cable Parent shall timely file (or cause to be so filed) all
Pre-Closing Non-Consolidated Returns which are due on or before the
Closing Date and shall pay (or cause the HoldCo Entities, TCI
Partner and their Subsidiaries (if any) to pay as each may be
liable) all Taxes due thereon. Each Cable Parent shall also pay
(or cause the HoldCo Entities, TCI Partner and their Subsidiaries
(if any) to pay as each may be liable) the full amount of any
Tax which is payable by the HoldCo Entities, TCI Partner and their
Subsidiaries (if any) without the filing of a Tax Return
("Non-Return Taxes"), payment of which is due on or before the Closing
Date.
(c) With respect to each Pre-Closing Non-Consolidated
Return due after the Closing Date, each Cable Parent shall deliver
(or cause to be so delivered) each such Pre-Closing Non-Consolidated
Return to Sprint at least 15 days prior to the due date of such Tax
Return, together with a payment in an amount equal to the amount of
Tax shown as due and payable on such Pre-Closing Non-Consolidated
Return (after giving effect to any credits for the amount of Tax,
if any, previously paid as shown on such Tax Return). Subject to the
foregoing, Sprint shall cause the HoldCo Entities, TCI Partner and
their Subsidiaries (if any) to file all such Pre-Closing
Non-Consolidated Returns that are due after the Closing Date and to
pay the amount of Tax shown as due and payable thereon to the extent
each is liable for such payment (after giving effect to any credits
for the amount of Tax, if any, previously paid as shown on such Tax
Return).
(d) In the event that after the Closing Date, any
HoldCo Entity, TCI Partner or their Subsidiaries (if any) is
required to pay any Taxes for any period ending on before the
Closing Date, the former Cable Parent of such entity shall promptly
pay to the applicable taxing authority the amount of such Taxes,
or indemnify any other person required to pay such
Taxes for the amount so paid pursuant to Section 7.11.
For purposes of the preceding sentence, the portion of the taxable
year of any partnership described in clause (ii) of the
penultimate sentence of Section 7.3(a) shall be treated as a
period ending on the Closing Date.
(e) Except as provided in Section 7.3(d), all
Taxes required to be paid by Sprint and its Subsidiaries with
respect to all periods ending on or before the Closing Date and
that portion of any period which includes but does not end on
such Closing Date shall be charged to the Sprint FON Group.
Section 7.4 Transfer Taxes. All sales, use,
transfer, stamp, value added, duty, excise, stock transfer,
real property transfer, recording and other similar taxes
and fees arising out of or in connection with the
transactions contemplated by this Agreement shall be paid by each
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Cable Parent to the extent such taxes or fees directly result
from the transfer of the stock of such Cable Parent's HoldCo
Entities or (in the case of TCI) TCI Partner.
Section 7.5 Post-Closing Taxes. Sprint shall timely
prepare and file (or cause to be so prepared and filed) all Tax
Returns required by Law for all Taxes, covering solely the HoldCo
Entities, TCI Partner and their Subsidiaries (if any), for taxable
periods ending after the Closing Date ("Post-Closing Returns").
Sprint shall timely pay or cause to be paid all Taxes relating
to Post-Closing Returns ("Post-Closing Taxes"). Each Cable Parent
shall reimburse Sprint for (i) the amount of Post-Closing Taxes
reported as payable on each Post-Closing Return that is attributable
to the portion of the period covered by such Tax Return ending on
the close of business on the Closing Date (the "Pre-Closing Tax Period"),
determined by treating the close of business on the Closing Date as
the last date of the taxable period and (ii) the amount of any
Non-Return Tax payable after the Closing Date that is
attributable to the portion of the period covered by such payment
which ends on or before the close of business on the Closing Date
(pro rata based upon the number of days covered by such
payment), in each case after giving effect to any credits for the
amount of such Post-Closing Tax or such Non-Return Tax, if any,
previously paid by such Cable Parent, the HoldCo Entities, TCI Partner
or their Subsidiaries (if any) or any of their predecessors or
affiliates. Such reimbursements shall be made on or before the later
of the date on which such return is filed or 15 days after receipt of a
copy of such return or evidence of such payment, and Sprint shall
provide Cable Parent with copies of workpapers which will permit Cable
Parent to review and substantiate the accuracy of such return or such
payment.
Section 7.6 Carrybacks. If any HoldCo Entity, or TCI Partner
or any of their Subsidiaries (if any) incurs a net operating loss, net
capital loss, or other tax benefit with respect to any taxable period
beginning on or after the Closing Date which tax benefit may be
carried back to a period ending on or before such date and a refund
of Taxes attributable to such benefit is required to be requested by
the former Cable Parent owning or controlling such HoldCo Entity or
TCI Partner or would be paid to such Cable Parent, then, upon request by
Sprint, such former Cable Parent will cooperate fully with Sprint to
file, process and pursue such refund and will immediately pay over to
such HoldCo Entity or TCI Partner any refund resulting therefrom.
Section 7.7 Tax Cooperation.
(a) Sprint, the HoldCo Entities, TCI Partner and their
Subsidiaries (if any) and the Cable Parents shall cooperate fully,
as and to the extent reasonably requested by the other party, in
connection with the filing of Tax Returns and any audit, litigation
or other proceeding with respect to Taxes. Such cooperation shall
include providing information necessary or appropriate to the filing
of such Tax Returns, the retention and (upon the other party's request)
the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and
making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided
hereunder. The HoldCo Entities, TCI Partner and their Subsidiaries
(if any) and Cable Partners agree (A) to retain all books and records
with respect to Tax matters pertinent to the HoldCo Entities, TCI
Partner and their respective Subsidiaries (if any) relating to any
taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent
notified by Sprint or the Cable Parents, any extensions thereof) of
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the respective taxable periods, and to abide by all record
retention agreements entered into with any taxing authority,
and (B) to give the other party reasonable written notice
prior to transferring, destroying or discarding any such
books and records and, if the other party so requests,
the HoldCo Entities, TCI Partner and their Subsidiaries (if any)
or the Cable Partners, as the case may be, shall allow the other
party to take possession of such books and records.
(b) Sprint and the Cable Parents further agree,
upon request, to use their best efforts to obtain any certificate
or other document from any Governmental Authority or any other
Person as may be necessary to mitigate, reduce or eliminate any
Tax that could be imposed.
(c) Sprint and the Cable Parents further agree,
upon request, to provide the other party with all information that
either party may be required to report pursuant to Section
6043 of the Code and all Treasury Department Regulations promulgated
thereunder.
Section 7.8 Notification of Proceedings. In the event
that Sprint or any of the HoldCo Entities, TCI Partner, or their
Subsidiaries (if any) receive notice, whether orally
or in writing, of any pending or threatened United States federal,
state, local, municipal or foreign tax examinations, claims settlements,
proposed adjustments, assessments or reassessments or related matters
with respect to Taxes that could affect any of the Cable Parents or
their Subsidiaries, or if any of the Cable Parents or any of their
Subsidiaries receive notice of any matter that could affect Sprint or
any of the HoldCo Entities, TCI Partner or their Subsidiaries (if any),
the party receiving notice shall notify in writing the potentially
affected party within 10 calendar days thereof. The failure of any
party to give the notice required by this Section 7.8 shall not impair
that party's rights under this Agreement except to the extent
that the other party demonstrates that it has been damaged thereby.
Section 7.9 Audits.
(a) Except as provided in Section 7.9(b), each of Cable
Parents and Sprint shall have the right to control any audit or
examination by any taxing authority, initiate any claim for refund,
file any amended return, contest, resolve and defend against any
assessment, notice of deficiency or other adjustment or proposed
adjustment relating or with respect to any Taxes, the ultimate
liability for which is the responsibility of that party or its
Affiliates under this Agreement, and each of Cable Parents and
Sprint shall be entitled to, and to the extent received by the
other shall be promptly paid by the other, all refunds with respect
to any such Taxes.
(b) With respect to any examination of Sprint PCS GP,
PhillieCo GP or their respective Subsidiaries for periods before
the Closing Date, Sprint shall act as the "tax matters partner."
Sprint shall take reasonable action to cause each other Parent to
be treated as a "notice partner" within the meaning of Section
6231(a)(9) of the Code. All reasonable expenses incurred by Sprint
while acting in its capacity as tax matters partner of Sprint PCS
GP and its Subsidiaries shall be paid or reimbursed by each Parent
pro rata based on the PCS Percentage Interest of its PCS Partner
immediately prior to Closing, and in its capacity as tax
matters partner of PhillieCo GP shall be paid or reimbursed by Sprint,
TCI and Cox based on the respective percentage interests of the
PhillieCo Partners in PhillieCo GP immediately prior
to Closing. Each Parent (except, with respect
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to PhillieCo GP, Comcast) shall be given at least five (5) Business
Days advance notice from Sprint of the time and place of, and shall
have the right to participate in (i) any material aspect of any
administrative proceeding relating to the determination of
partnership items at the Sprint PCS GP level or PhillieCo GP level
(or at the level of any Subsidiary thereof) and (ii) any material
discussions with the Internal Revenue Service relating to the
allocations pursuant to Section 3 of the PCS Partnership Agreement or
the PhillieCo Partnership Agreement or pursuant to the partnership
agreement of any Subsidiary. Sprint shall not, and neither Sprint
PCS GP nor PhillieCo GP shall permit the tax matters partner of
any Subsidiary to, initiate any action or proceeding in any court,
extend any statute of limitations, or take any other action
contemplated by Sections 6222 through 6232 of the Code that would
legally bind any other Parent, Sprint PCS GP, PhillieCo GP or any
Subsidiary without approval (in the case of Sprint PCS GP and its
Subsidiaries) of TCI and either of Cox or Comcast and (in the case
of PhillieCo GP and its Subsidiaries), TCI and Cox. Sprint shall
from time to time upon reasonable request of any other Parent confer,
and cause Sprint PCS GP's and PhillieCo GP's and any Subsidiary's
tax attorneys and accountants to confer, with such other Parent
and its attorneys and accountants on any matters relating to a
Sprint PCS GP or PhillieCo GP or Subsidiary tax return or any
tax election.
Section 7.10 SRLY Losses.
(a) As a result of the transactions contemplated hereby,
certain assets and businesses of Sprint and its Subsidiaries will
be allocated to the PCS Group (all of such assets and businesses
being referred to in this Section 7.10 collectively as the "Historic
Sprint PCS Business"). Further, TCI Partner and each of the HoldCo
Entities will become direct Wholly-Owned Subsidiaries of Sprint and
will be allocated to the PCS Group (each of such acquired corporations
being referred to in this Section 7.10 as an "Acquired PCS Sub").
The Historic Sprint PCS Business and the Acquired PCS Subs are each
referred to in this Section 7.10 as a "SRLY Entity."
(b) For purposes of this Section 7.10, a "SRLY Tax
Benefit" is any item of federal or state income Tax or state franchise
Tax benefit which (1) was realized by a SRLY Entity on or before the
Closing Date, but which Tax benefit was not utilized on or before the
Closing Date, (2) is available for use by Sprint or a Subsidiary of
Sprint after the Closing Date, and (3) if utilized on the day after
the Closing Date, would (but for this Section 7.10) be allocated to
the PCS Group. Without limitation, a Tax benefit includes any realized
but unused item of Tax loss, deduction or credit that may be applied
to offset income, gain or Tax (or any item thereof) under any applicable
federal or state Tax regime. Unrealized losses or deductions shall
not be treated as SRLY Tax Benefits. In the event that the Historic
Sprint PCS Business has previously realized Tax benefits that, for
Tax purposes, are attributable to Subsidiaries of Sprint that will
not be allocated to the PCS Group, Sprint agrees that any such
benefits that have not been utilized, but exist as carryovers, on
the day after the Closing Date shall be allocated to the PCS Group
to the same extent as if they were attributed for Tax purposes to
an entity that was allocated to the PCS Group as of such date, and
that such benefits shall be treated as SRLY Tax Benefits. For
purposes of the preceding sentence, whether a previously
realized Tax benefit of the Historic Sprint PCS Business
exists as a carryover on the day after the Closing Date
shall be determined as if the entity to which such benefit
is attributed for Tax purposes ceased on the Closing Date
to be a member of the affiliated group (as defined by Section 1504
of the Code) of which Sprint is the common parent. Accordingly, except
63
as otherwise provided in this Section 7.10, any Tax savings
resulting from any SRLY Tax Benefit attributable to the
Historic Sprint PCS Business will be allocated to the PCS Group.
(c) For purposes of this Section 7.10, a "SRLY Tax
Savings" means, for any SRLY Measurement Period, the amount by which
(i) the aggregate amount of Taxes required to be paid by Sprint and
all Subsidiaries of Sprint that, during the SRLY Measurement Period,
are members of the affiliated group (as defined in Section 1504 of the
Code) (or any consolidated, unitary or combined group under
corresponding provisions of state tax laws) of which Sprint (or a
Subsidiary of Sprint) is the common parent, for such SRLY
Measurement Period, is less than (ii) the amount of Taxes that
would have been required to be paid by Sprint and all such
Subsidiaries for such SRLY Measurement Period if no SRLY Tax
Benefits existed.
(d) The parties hereto hereby agree that, if
SRLY Tax Savings exist for any SRLY Measurement Period, the
following shall occur:
(i) To the extent that the SRLY Tax Savings
result from a SRLY Tax Benefit attributable to an
Acquired PCS Sub, Sprint shall issue to the Cable
Parent or Subsidiary of a Cable Parent that owned
such Acquired PCS Sub before the Merger (or its
successor-in-interest) a number of fully paid and
nonassessable shares of Sprint common stock (or other
voting common stock permitted by Section 7.10(j)(i))
having a value equal to sixty percent (60%) of
such SRLY Tax Savings. The remaining forty percent
(40%) of such SRLY Tax Savings shall be retained by
Sprint and allocated to the PCS Group or such
other business group of Sprint to which the Acquired
PCS Sub from which such SRLY Tax Benefit was derived
or its successor was allocated on the last day of
the SRLY Measurement Period in which such SRLY Tax Savings
arose.
(ii) To the extent that the SRLY Tax Savings
results from a SRLY Tax Benefit attributable to the
Historic Sprint PCS Business, sixty percent (60%)
of such SRLY Tax Savings shall be allocated to the Sprint
FON Group (or any successor thereto). The remaining
forty percent (40%) of such SRLY Tax Savings shall be
allocated to the PCS Group or such other business group
of Sprint to which the Historic Sprint PCS Business or
relevant part thereof is allocated on the last day of the
SRLY Measurement Period in which such SRLY Tax Savings
arose.
(e) Whether a SRLY Tax Benefit has resulted in a SRLY
Tax Savings shall be determined by Sprint, taking into account all
of the relevant facts and circumstances, including (for example,
but without limitation), whether such SRLY Tax Benefit has been
utilized on a nominal or prima facie basis to reduce the amount
of Taxes that Sprint (or any of its Subsidiaries) is required to
pay; whether, but for such use, other Tax benefits realized
during or prior to such SRLY Measurement Period would be available
to offset the Taxes nominally offset by such SRLY Tax Benefit;
and whether the nominal savings from the utilization of a SRLY
Tax Benefit in computing Taxes due to one jurisdiction is offset
by a corresponding Tax detriment in the same or another
jurisdiction. Time value considerations and any Tax benefits
that have not been realized as of the end of the SRLY Measurement
Period (even if then projected to be realized in future periods from
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which such Tax benefits could be carried back to the SRLY
Measurement Period) shall not be taken into account in
making the determinations required by the preceding sentence.
(f) Sprint shall make the determination required by
Section 7.10(e) within ninety days after the filing of each
Sprint consolidated federal income Tax Return and each such
determination shall relate to the federal Tax period covered by
such Tax Return and to any state Tax periods ending simultaneously
with or before such federal Tax period that were not included
in a prior SRLY Measurement Period (such federal and state Tax
periods, collectively, the "SRLY Measurement Period"). A written
overview summary of each such determination (a "Determination
Summary") shall be provided within the ninety day period
described in the preceding sentence to each Cable Parent,
which summary shall be accompanied by a statement by the
incumbent senior financial officer of Sprint that he or she
has reviewed and is familiar such determination and the bases
therefor and believes that such determination applies the
requirements of this Section 7.10. If such determination
is that a SRLY Tax Savings has resulted from a SRLY Tax Benefit
attributable to an Acquired PCS Sub, the Determination Summary
shall also state the number of shares and class of voting
common stock in which payment will be made and shall set forth
the calculation of the value of such shares.
(g) The obligations imposed hereby apply only to Sprint
and shall not be binding on any other party, except that, if Sprint
distributes to some or all of its shareholders, with respect to or
in redemption of, some or all of the outstanding shares of capital
stock of Sprint, stock of a corporation that owns, directly or
indirectly, substantially all of the assets and businesses
constituting the Historic Sprint PCS Business and the outstanding
capital stock of the Acquired PCS Subs, then Sprint shall cause such
corporation to assume the obligations of Sprint hereunder and such
obligations shall be binding upon such corporation as if it were
"Sprint" hereunder.
(h) The parties hereto agree and acknowledge that Sprint
is not required or expected to take any action, or refrain from taking
any action, in order to preserve or accelerate or enhance the use of
any SRLY Tax Benefit, and that Sprint may take, or refrain from taking,
any action without considering any adverse effect thereof on its
ability to realize a SRLY Tax Savings from a SRLY Tax Benefit.
Sprint agrees to use its reasonable efforts to account for
both federal and non-federal SRLY Tax Benefits and SRLY Tax
Savings; provided that Sprint may, in its sole discretion, cease to
track and account for non-federal SRLY Tax Benefits and
non-federal SRLY Tax Savings at such time as the aggregate amount
of potential remaining non-federal SRLY Tax Savings is reasonably
estimated to be less than $1,000,000.
(i) Readjustments.
(i) If, as a result of any post-filing adjustment
to any Tax Return taken into account in computing the
SRLY Tax Savings for any SRLY Measurement Period, the
amount of such SRLY Tax Savings, as originally determined
for such SRLY Measurement Period, differs from the amount
of such SRLY Tax Savings that would have been determined
if the adjustments had been included on such original Tax
Return, then payments required by this Section 7.10
for such SRLY Measurement Period shall also be
adjusted as provided in this Section 7.10(i). If
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such adjustment results in or is associated with
adjustments to other Tax Returns taken into
account with respect to other SRLY Tax Measurement
Periods (or is made at the same time as adjustments
are made to returns taken into account with respect
to other SRLY Measurement Periods), the cumulative
differences in SRLY Tax Savings for all affected
SRLY Measurement Periods shall be recomputed for
each SRLY Entity; provided that, in making
such all such computations, tax benefits realized after
a SRLY Measurement Period, such as a later operating
loss that can be carried back to a prior period,
shall be ignored.
(ii) If for all the Acquired PCS Subs that were
previously Subsidiaries of a single Cable Parent (such
Acquired PCS Subs being referred to in this Section 7.10(i)
as such Cable Parent's Acquired PCS Subs), taken in the
aggregate, as a result of such recomputations, the SRLY Tax
Savings for such SRLY Measurement Period (or the cumulative
SRLY Tax Savings attributable to all SRLY Measurement
Periods involved in such related adjustments) exceeds
the SRLY Tax Savings for such SRLY Measurement
Period (or the cumulative SRLY Tax Savings for all such
periods) as originally computed for such SRLY Measurement
Period or SRLY Measurement Periods, as applicable, then
Sprint, within ninety days after such adjustment or
adjustments become final, shall make an incremental payment
to such Cable Parent (for itself or on behalf of any
Subsidiary of such Cable Parent that owned the relevant
Acquired PCS Sub before the Merger), in the form
described in Section 7.10(d)(i), in an amount equal to
60 percent of such increase (or cumulative increase).
(iii) If for the Historic Sprint PCS Business, as a
result of such recomputations, the SRLY Tax Savings for such
SRLY Measurement Period (or the cumulative SRLY Tax Savings
attributable to all SRLY Measurement Periods involved in
such related adjustments) exceeds the SRLY Tax Savings for
such SRLY Measurement Period (or the cumulative SRLY Tax
Savings for all such periods) as originally computed for
such SRLY Measurement Period or SRLY Measurement Periods,
as applicable, then sixty percent of such net increase
(or cumulative increase) shall be allocated to the Sprint
FON Group (or any successor thereto), effective no earlier
than the date that payments, if any, are made to the Cable
Parents with respect to any adjustments for such SRLY
Measurement Period or SRLY Measurement Periods pursuant to
Section 7.10(i)(ii).
(iv) If, for any Cable Parent's Acquired PCS Subs,
as a result of such recomputations, the SRLY Tax Savings
for such SRLY Measurement Period (or the cumulative SRLY
Tax Savings attributable to all SRLY Measurement
Periods involved in such related adjustments) is exceeded
by the SRLY Tax Savings for such SRLY Measurement Period
(or the cumulative SRLY Tax Savings for all such periods) as
originally computed for such periods, then such Cable Parent
(for itself or on behalf of any Subsidiary of such Cable
Parent that owned the relevant Acquired PCS Sub before the
Merger), shall promptly pay to Sprint for the benefit of
the PCS Group (or any successor) an amount in either cash or
shares of the voting common stock issued pursuant to Section
7.10(j) equal in value to 60 percent of the amount
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of such excess (without interest). For these
purposes, the voting common stock will be valued as
contemplated by the last sentence of Section 7.10(j)(ii),
with the "Determination Date" being five Business Days
prior to the delivery of such shares to Sprint.
(v) If, for the Historic PCS Business, as a result
of such recomputations, the SRLY Tax Savings for such SRLY
Measurement Period (or the cumulative SRLY Tax Savings
attributable to all SRLY Measurement Periods involved in
such related adjustments) is exceeded by the SRLY Tax
Savings for such SRLY Measurement Period (or the cumulative
SRLY Tax Savings for all such periods) as originally
computed for such periods, then an amount in cash equal to
60 percent of the amount of such excess (without interest)
shall be reallocated from the FON Group to the PCS Group.
(j) Any issuances of common stock required by Section
7.10(d) and Section 7.10(i) to be made to a Cable Parent or Subsidiary
of a Cable Parent shall be made as follows:
(i) If the SRLY Tax Savings with respect to which
such stock is being issued resulted from a SRLY Tax Benefit
that is attributable to a business as to which, at the time
such issuance is to be made, Sprint has outstanding a
class of publicly traded voting common stock that is
intended to track the performance of a business group to
which such business is attributed, then payment shall be
made in shares of such voting common stock, and such shares
shall be deemed to have been issued for the benefit of such
business group. If such SRLY Tax Benefit is attributable
to a business as to which, at the time such issuance is to
be made, Sprint does not have outstanding a class of
publicly traded voting common stock that is intended to
track the performance of a business group to which such
business is attributed, then payment shall be
made in shares of any class of outstanding publicly traded
Sprint voting common stock or, if Sprint does not have any
such outstanding class of common stock, in shares of the
publicly traded voting common stock of the
Parent Entity of Sprint or of any Subsidiary of such Parent
Entity.
(ii) The value of the shares of voting common
stock issued to a Cable Parent or Subsidiary of a Cable
Parent shall be established as of (A) the last Trading
Day (as defined in the Initial Charter Amendment) of the
SRLY Measurement Period with respect to the relevant
SRLY Tax Benefit or (B) in the case of shares of
voting common stock issued pursuant to Section 7.10(i),
the date on which the relevant adjustments described in
Section 7.10(i) become final (the "Determination Date").
Such value will equal the average of the Closing Prices
(as defined in the Initial Charter Amendment) for the
relevant stock for the period of 30 consecutive Trading
Days ending on the Determination Date.
(iii) Sprint shall issue any shares of voting common
stock required to be issued by it under this Section 7.10
within 60 days after the delivery of a Determination Sum-
▇▇▇▇ which includes a determination that a Cable Parent or
67
Subsidiary of a Cable Parent is entitled to receive
shares of voting common stock under this Section 7.10.
(iv) The shares of voting common stock issued
by Sprint under this Section 7.10 shall not reduce the
Number of Shares Issuable With Respect to the Intergroup
Interest as defined in the Initial Charter Amendment.
(v) Notwithstanding anything in this Section
7.10 to the contrary, no rights or obligations regarding the
issuance of voting common stock under this Section 7.10
shall accrue or become fixed with respect to any Cable
Parent, and the applicable Determination Date for
purposes of clause (ii) above which would otherwise
cause the same to occur shall automatically be delayed
with respect to such Cable Parent, for a period up to six
months from the otherwise applicable Determination Date
if the accrual or fixing of such rights would cause such
Cable Parent or Subsidiary of a Cable Parent to be subject
to liability under Section 16(b) of the Exchange Act;
provided that such period shall not exceed the minimum
period necessary for any such Cable Parent to be
exempt from such liability.
Section 7.11 Tax Indemnification
(a) After the Closing Date, each Cable Parent, with
respect only to its formerly owned or controlled HoldCo Entities and
their respective Subsidiaries and (in the case of TCI) TCI Partner,
shall indemnify and hold harmless Sprint, the HoldCo Entities, TCI
Partner, their Subsidiaries (if any) and each of their respective
affiliates, successors and assigns from and against any Tax liability
with respect to any Pre-Closing Non-Consolidated Return and with
respect to any Tax liability for the Pre-Closing Tax Period on a
Post-Closing Return (determined by treating the Closing Date as the
last date of the taxable period) and with respect to any Non-Return
Taxes attributable to the portion of the period covered by any payment
of such Taxes which ends on or before the Closing Date (determined on
a pro rata basis based upon the number of days covered by such payment
which are on or before the Closing Date and the total number of days
covered by such payment), in each case, to the extent such amount
exceeds any amount previously paid to Sprint, the HoldCo Entities,
TCI Partner, or their Subsidiaries (if any) with respect to such Tax
pursuant to Section 7.3 or 7.5, as applicable. Each Cable Parent
shall pay such amounts as it is obligated to pay to Sprint or the
HoldCo Entities, TCI Partner or their Subsidiaries (if any) within 10
calendar days after payment of any applicable Tax liability by Sprint
or the HoldCo Entities, TCI Partner, or their Subsidiaries (if any)
and to the extent not paid by each Cable Parent within such 10-day
period, the amount due shall thereafter include interest thereon at a
rate per annum equal to the "overpayment rate" under Section 6621(a)
of the Code (the "Overpayment Rate"), adjusted as and when changes to
such Overpayment Rate shall occur, compounded semi-annually. Each
Cable Parent shall indemnify and hold harmless Sprint and the HoldCo
Entities, TCI Partner and their Subsidiaries (if any) and each of their
respective affiliates, successors and assigns, from and against (i) any
Tax liability for periods prior to and including the Closing Date
resulting from the HoldCo Entities, TCI Partner, or their Subsidiaries
(if any) which such Cable Parent formerly owned or controlled being
severally liable for any Taxes of any consolidated group of which any
of the HoldCo Entities, TCI Partner, or their Subsidiaries (if
any) are or were members pursuant to Treasury Regulations
68
Section 1.1502-6 or any analogous state or local tax provision
(including, without limitation, any Tax liability with respect to any
Pre-Closing Consolidated Return), and (ii) any Tax liability resulting
from the HoldCo Entities, TCI Partner, or their Subsidiaries (if any)
which such Cable Parent formerly owned or controlled ceasing to be a
member of any Selling Affiliated Group filing consolidated or
combined Tax Returns. Any indemnification payments made by a Cable
Parent under this Section 7.11(a) shall be allocated to the PCS Group.
(b) After the Closing Date, Sprint and each of the HoldCo
Entities and their Subsidiaries and TCI Partner, jointly and severally
shall indemnify and hold harmless each Cable Parent and its Affiliates,
successors and assigns from and against any Tax liability with
respect to Post-Closing Taxes, other than Post-Closing Taxes for
which a Cable Parent is responsible pursuant to Section 7.11(a).
Sprint shall cause the appropriate HoldCo Entity, TCI Partner, or
their Subsidiaries (if any) to pay such amounts within 10 calendar
days after payment of any such Tax liability by each Cable Parent and,
to the extent not paid by such HoldCo Entity, TCI Partner, or their
Subsidiaries (if any) within such 10-day period, the amount due
shall thereafter include interest thereon at the Overpayment Rate,
compounded semi-annually. Any indemnification payments made by
Sprint, any of the HoldCo Entities, TCI Partner or their Subsidiaries
under this Section 7.11(b) shall be charged to the PCS Group.
(c) All claims for indemnification under this Section
7.11 (i) will be asserted and resolved as provided in Section 11.4 and
(ii) shall be subject to the limitations set forth in Sections 11.2(b)
and 11.2(c). The right of the parties to commence a claim for
indemnification under this Section 7.11 shall survive until the 30th
day following the expiration of the applicable statute of limitations
period with respect to the subject matter of such claim.
ARTICLE 8
CONDITIONS TO CLOSING
Section 8.1 Conditions of All Parties to Closing. The
respective obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or
prior to the Effective Time of each of the following conditions, any
or all of which may be waived in whole or in part by the party being
benefitted thereby, to the extent permitted by applicable Law:
(a) Sprint Stockholder Approval. The following matters
presented for a vote of the stockholders of Sprint at the Stockholders
Meeting shall have been duly approved by the requisite holders of
capital stock in accordance with applicable Law and the Articles of
Incorporation and By-Laws of Sprint: (i) the Initial Charter Amendment;
(ii) the Subsequent Charter Amendment; (iii) this Agreement and the
transactions contemplated hereby and (iv) the Bylaw Amendment.
(b) HSR Act; FCC. Any waiting period applicable to the
transactions contemplated by this Agreement under the HSR Act shall
have expired or termination thereof shall have been granted, and all
consents required from the Federal Communications Commission shall
have been granted, in each case without any material limitation,
restriction, requirement or condition on Sprint PCS, any HoldCo
Entity, any PCS Partner or on any Parent or any of its Subsidiaries.
69
(c) No Injunction. No preliminary or permanent
injunction or other order, decree or ruling issued by a Governmental
Authority, nor any statute, rule, regulation or executive order
promulgated or enacted by any Governmental Authority, shall be in
effect that enjoins the consummation of the transactions to be
effected at the Closing and which would result in material adverse
consequences to any Parent or any of its Subsidiaries if the Closing
occurred in violation thereof or imposes any material restrictions
or requirements thereon or on any of the parties in connection
therewith.
(d) Listing of Series 1 PCS Stock. The Series 1 PCS
Stock required to be issued in the IPO or in the Recapitalization
(whichever Sprint has elected to complete simultaneously with the
Closing) hereunder shall have been approved for listing on the New
York Stock Exchange, or if not so approved, shall have been approved
for listing on the American Stock Exchange or approved for quotation
on the National Market Tier of The Nasdaq Stock Market, subject
only to official notice of issuance.
(e) IPO or Recapitalization. The IPO or the
Recapitalization (whichever Sprint has elected to complete
simultaneously with the Closing) shall be consummated simultaneously
with the Closing.
(f) Initial Charter Amendment; Certificate of
Designations. The Initial Charter Amendment and the Certificate
of Designations (and, if the Recapitalization occurs on the Closing
Date, the Subsequent Charter Amendment) shall have been filed with
the Kansas Secretary of State.
(g) Certificates of Merger. Each of the Certificates
of Merger shall have been filed with the Delaware Secretary of State
or the Colorado Secretary of State, as applicable.
Section 8.2 Sprint's Conditions Precedent to Closing. The
obligations of Sprint and its Subsidiaries to effect the transactions
contemplated by this Agreement are subject to the satisfaction, on or
prior to the Closing Date, of each of the following conditions,
compliance with which or the occurrence of which may be waived in
whole or in part by Sprint:
(a) Correctness of Representations and Warranties.
(i) The representations and warranties of each
Cable Parent contained in this Agreement shall be accurate
in all material respects on the Closing Date with the same
effect as if made on the Closing Date (except that
any such statements which are expressly made as of a
particular date shall have been accurate as of such
particular date); provided that with respect to the
representations and warranties contained in Section
5.2(g), any inaccuracies, individually or in the aggregate,
shall not be considered material unless such inaccuracies
have a material adverse effect on the ability of a Cable
Parent to perform its obligations under Section 7.3(d) or
7.11(a). For purposes of the last clause of the preceding
sentence, in determining whether an inaccuracy is material,
it is presumed that any tax item shown on a return
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or report furnished by Sprint, Sprint PCS GP,
Sprint PCS LP, PhillieCo GP or PhillieCo LP is
correct.
(ii) At the Closing, Sprint shall be provided
with a certificate to such effect from each of the Cable
Parents, signed by a duly authorized officer thereof.
(b) Performance of Agreements. All covenants and
agreements of each Cable Parent and its respective
Subsidiaries contained in this Agreement and required to be
performed on or before the Closing Date shall have been performed
in all material respects on or prior to the Closing Date. At
the Closing, Sprint shall be provided with a certificate to such
effect from each of the Cable Parents, signed by a duly
authorized officer thereof.
(c) Tax Opinion. There shall not have occurred any
change in applicable Law or any change in facts beyond Sprint's
reasonable control, in either case occurring after the date hereof,
that would prevent King & Spalding from reaffirming to Sprint at the
Closing its opinion described in Section 5.3(g). For purposes of this
Section 8.2(c), Law also includes any Revenue Ruling, proposed
regulations or official notice of intent to propose regulations
issued by the Internal Revenue Service, or a ▇▇▇▇ introduced in
the House of Representatives or Senate of the United States, or
legislation proposed by the United States Treasury Department.
Section 8.3 Cable Parents' Conditions Precedent to Closing.
The obligations of each Cable Parent and its Subsidiaries to effect
the transactions contemplated by this Agreement are subject to the
satisfaction, on or prior to the Closing Date, of the following
conditions, compliance with which or the occurrence of which may be
waived in whole or in part by unanimous action of the Cable Parents.
(a) Correctness of Representations and Warranties. All
representations and warranties of Sprint and the other Cable Parents
shall be accurate in all material respects on the Closing Date with
the same effect as if made on the Closing Date (except that any such
statements which are expressly made as of a particular date shall have
been accurate as of such particular date). At the Closing, the Cable
Parents shall be provided with a certificate to such effect from Sprint
with respect to its representations and warranties, signed by a duly
authorized officer thereof.
(b) Performance of Agreements. All covenants and agreements
of Sprint and its Subsidiaries contained in this Agreement and required
to be performed on or before the Closing Date shall have been performed
in all material respects on or prior to the Closing Date. At the Closing,
the Cable Parents shall be provided with a certificate to such effect from
Sprint, signed by a duly authorized officer thereof.
(c) Tax Opinions. There shall not have occurred any
change in applicable Law or any change in facts beyond the
respective Cable Parent's reasonable control, in either
case occurring after the date hereof, that would prevent outside
counsel for such Cable Parent from reaffirming to such Cable
Parent at the Closing its opinion described in Section 5.2(h).
For purposes of this Section 8.3(c), Law also includes any Revenue
Ruling, proposed regulations or official notice of intent to propose
regulations issued by the Internal Revenue Service, or a ▇▇▇▇
71
introduced in the House of Representatives or Senate of the United
States, or legislation proposed by the United States Treasury
Department.
ARTICLE 9
CLOSING
Section 9.1 Closing. The Closing shall take place at
the offices of King & ▇▇▇▇▇▇▇▇, ▇▇▇▇ Avenue of the Americas,
New York, New York, at 10:00 a.m. (local time at the
place of Closing) on the date determined by Sprint in
accordance with Sections 6.2(c), 6.2(d) and 6.2(e) or at
such other location or on such other date or time as the parties
hereto shall agree. At the Closing, the IPO or Recapitalization
shall be consummated, and the parties shall take such actions and
execute and deliver such documents and agreements as are contemplated
herein or as may be reasonably requested by any other party hereto,
including the following actions:
(i) The Initial Charter Amendment and the
Certificate of Designations and (if the Recapitalization
is to occur simultaneously with the Closing) the Subsequent
Charter Amendment shall be filed with the Kansas
Secretary of State.
(ii) (A) Sprint shall deliver to each of the
Cable Partners copies of the resolutions adopted by the
Sprint Board of Directors in connection with the
transactions contemplated by this Agreement, which
resolutions shall (among other things) (v) appoint the
Capital Stock Committee and delegate to it the
powers described on Exhibit Q, (w) adopt the Management
and Allocation Policies, (x) approve the Bylaw Amendment,
(y) approve the formation of the PCS Group and the Sprint
FON Group and (z) create the Preferred Intergroup
Interest and the Warrant Intergroup Interest, certified
by the Secretary or an Assistant Secretary of Sprint, and
(B) each of the Cable Parents shall deliver to
Sprint copies of the resolutions adopted by such Cable
Parent's Board of Directors in connection with the
transactions contemplated by this Agreement,
certified by the Secretary or Assistant Secretary of such
Cable Parent.
(iii) Each of the Parents shall deliver to each of
the other Parents a certification that such Parent's
representations and warranties set forth herein
are true and accurate as of the Closing Date, as though
such representations and warranties were made on and as
of the Closing Date.
(iv) Each of the Parents shall deliver to each
of the other Parents a certification that the covenants
contained herein that are required to be performed by
such Parent or its Subsidiaries prior to the Closing
have been performed in all material respects.
(v) (A) Certificates representing the shares
of Series 2 PCS Stock and the Warrants and (if
applicable) PCS Preferred Stock to be issued in the
Mergers (and, if applicable, pursuant to Equity
Purchase Rights exercised by the Cable
72
Partners in connection with the IPO) shall be delivered
by Sprint to each of the Cable Partners, (B) the cash
and/or certificates representing PCS Preferred Stock
consisting of the purchase price for the Cable Parent
PCS Notes pursuant to Section 6.6 shall be paid or
delivered by Sprint to the Cable Parents or their
Subsidiaries and (C) the cash and/or Preferred Intergroup
Interest consisting of the purchase price for the Sprint
PCS Loans and the SprintCom Loans shall be paid to Sprint
or its Subsidiaries and/or created for the benefit of
the Sprint FON Group.
(vi) The Warrant Agreements shall be duly executed
and delivered by the parties thereto.
(vii) The Voting Agreements shall be duly executed
and delivered by the parties thereto.
(viii) The Cox L.A. Amendments shall be duly
executed and delivered by the parties thereto.
(ix) The Certificates of Merger shall be duly
executed and delivered by the parties thereto for
filing with the Delaware and Colorado Secretaries of
State.
(x) The Tax Sharing Agreement shall be duly
executed and delivered by Sprint.
(xi) The Registration Rights Agreement shall be
duly executed and delivered by the parties thereto.
(xii) The Mutual Release and Waiver shall be
duly executed and delivered by the parties thereto.
(xiii) The PCS Partners and the PhillieCo Partners
shall enter into amended restated partnership agreements
for Sprint PCS GP and PhillieCo GP in form reasonably
satisfactory to the Cable Parents.
(xiv) Sprint shall deliver to the Cable Parents a
certificate signed by an executive officer of Sprint
setting forth (i) the number of shares of each class
and series of capital stock of Sprint that will be
authorized and outstanding immediately following the
Effective Time, (ii) a list of all PCS Options that
will be outstanding immediately following the Effective
Time, (iii) a list of all shares of each class and
series of capital stock of Sprint that will be held in
treasury by Sprint immediately following the Effective
Time and (iv) the number of shares of each class and
series of PCS Stock that will have been reserved for
issuance by the Board of Directors of Sprint immediately
following the Effective Time. Such certificate shall
further certify that, other than (i) the PCS Options,
(ii) the rights of Cox Pioneer Partnership and its
Affiliates under the Agreement of Limited Partnership of
▇▇▇ Communications PCS, L.P., dated as of December 31,
1996, as amended, (iii) the
73
rights of FT and DT under the FT/DT Agreements
and (iv) the rights of the Cable Parents and their
Affiliates under this Agreement and the Other Agreements,
there are no preemptive rights, rights of first refusal,
participation rights or other similar rights outstanding
at the Effective Time to purchase any of the authorized but
unissued PCS Stock or any PCS Stock held in treasury.
All of the actions contemplated to occur at the Closing (including
each of the Mergers) shall be deemed to have occurred simultaneously,
and none of such actions shall be effective unless all of such
actions have occurred or are waived by the necessary parties
(or, in the case of any of the Mergers, by unanimous written
consent of each party hereto).
ARTICLE 10
TERMINATION
Section 10.1 Events of Termination. This Agreement
may be terminated and the transactions contemplated hereby abandoned
at any time prior to the Closing:
(a) by mutual written consent of the Parents;
(b) by any Parent, by notice to the other Parents, if
the Closing shall be prohibited by any final, nonappealable order,
decree or injunction of a Governmental Authority, which would result
in material adverse consequences to any Parent or any of its
Subsidiaries if the Closing occurred in violation of such order,
decree or injunction;
(c) by any Parent that is not in material breach of
any material covenant contained in this Agreement, by notice to the
other Parents if the Closing has not occurred on or before December
31, 1998;
(d) by any Parent that is not in material breach of
any material covenant contained in this Agreement, by notice to the
other Parents following the time that any condition to closing set
forth in Article 8 has become incapable of being satisfied on or
prior to December 31, 1998; or
(e) by any Parent that is not in material breach of
any material covenant contained in this Agreement, by notice to
the other Parents following a material breach of any
material covenant contained in this Agreement by any other
Parent or its Subsidiary if such breach remains uncured in
any material respect for thirty (30) days following the giving of
notice of the breach of such material covenant from the Parent
seeking to terminate this Agreement to each other party; provided,
that the Parent seeking to terminate this Agreement gives written
notice of such termination to each other Parent within thirty (30)
days following the end of such thirty (30) day cure period.
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Section 10.2 Effect of Termination.
(a) If this Agreement is terminated in accordance with
Section 10.1, then this Agreement shall become null and void and
have no further effect, without any liability of any party to any
other party, except that the obligations of the parties pursuant
to Article 12 and under any provision of this Agreement that
expressly provides for certain actions to occur simultaneously
with or following the termination of this Agreement shall survive
the termination of this Agreement indefinitely; provided, that no
such termination shall release or relieve any party hereto from
liability for any willful material breach of any material provision
of this Agreement occurring prior to such termination.
(b) If this Agreement is terminated in accordance with
Section 10.1, the PCS Partnership Agreement, the PhillieCo
Partnership Agreement and the Parents Agreements shall continue in
full force and effect until terminated in accordance with their
respective terms, without any amendment to the rights and
obligations of the parties thereto, except (i) the PCS Partners
agree that an event described in Section 14.1(a)(iii) of the PCS
Partnership Agreement shall be deemed to have occurred simultaneously
with such termination such that the PCS Partners proceed immediately
to the determination of "Net Equity" under Section 14.7 of the PCS
Partnership Agreement, thus bypassing the escalation procedures of
Section 5.8 of the PCS Partnership Agreement and (ii) the PhillieCo
Partners agree that an event described in Section 14.1(a)(iii) of the
PhillieCo Partnership Agreement shall be deemed to have occurred
simultaneously with such termination such that the PhillieCo Partners
proceed immediately to the determination of "Net Equity" under
Section 14.7 of the PhillieCo Partnership Agreement,
thus bypassing the escalation procedures of Section 5.8 of the
PhillieCo Partnership Agreement.
ARTICLE 11
EXTENT AND SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS; INDEMNIFICATION
Section 11.1 Scope of Representations of the Parties.
Except as and to the extent set forth in this Agreement, none of the
parties makes any representation, warranty, covenant or agreement
whatsoever, and each party disclaims all liability and responsibility
for any representation, warranty, covenant, agreement or statement
made or information communicated (orally or in writing) to any other
party (including any opinion, information or advice which may have
been provided to any other party or any Affiliate thereof by any
stockholder, partner, director, officer, employee, accounting firm,
legal counsel or any other agent, consultant or representative of
a party). Each of the parties expressly agrees and acknowledges
that, in consummating the transactions contemplated hereby, it is
only relying on the representations and warranties of the other
parties made in this Agreement, the Other Agreements and any other
agreements or certificates expressly contemplated by this Agreement,
and is not relying on any representation or warranty of any
present, former or future stockholder or partner, director,
officer, employee, accounting firm, legal counsel or any other agent,
consultant or representative of any of the parties or any of their
respective Affiliates. Each of the parties further acknowledges and
agrees that it has access to all available information about Sprint
PCS and its Subsidiaries and that such party is not relying on any
75
representation or warranty whatsoever, except as expressly provided
in this Agreement, or any other party hereto or any of their
Affiliates with respect to Sprint PCS and its Subsidiaries.
Section 11.2 Indemnification of Parties.
(a) Following the Closing and subject to the other
terms and conditions of this Agreement, each party (as applicable
with respect to any specific party, the "Indemnitor") agrees to
indemnify, defend and hold harmless each other party hereto that
is not an Affiliate of the Indemnitor and their respective
successors and assigns (each an "Indemnified Party" and
collectively, the "Indemnified Parties") from and against any
and all losses, claims, costs, fines, damages (excluding consequential
and special damages other than amounts paid as consequential or
special damages to a third party pursuant to a Third Party Claim),
Taxes (other than those for which indemnity is provided under
Section 7.11), liabilities and deficiencies, including (subject
to Section 11.4) reasonable legal and other fees and expenses
incurred in the investigation and defense of claims and actions,
and amounts paid as indemnification to directors, officers,
employees or agents, whether such claims and actions are brought
by third parties or parties hereto (each a "Loss" and collectively,
"Losses"), incurred by an Indemnified Party and arising out of or
resulting from (A) any inaccuracy in the representations and
warranties of the Indemnitor set forth in this Agreement or
in any Other Agreement or (B) any failure to perform by the
Indemnitor of any of its covenants or agreements contained in
this Agreement or any Other Agreement (any such Loss or Losses
being referred to herein as an "Indemnified Loss" or "Indemnified
Losses"). Notwithstanding the foregoing, no Indemnitor shall be
required to indemnify the Indemnified Parties with respect to
any Indemnified Loss arising under clause (A) above unless and
until the aggregate amount of the Indemnified Losses incurred
by all Indemnified Parties with respect to the representations
and warranties made by such Indemnitor and its Affiliates, if
any, as finally determined pursuant to Section 11.4 (other than
Losses with respect to Non-Basket Claims) exceeds $50 million;
provided, however, that at such time as the aggregate amount of
Indemnified Losses from such claims other than Non-Basket Claims
("Basket Claims") exceeds $50 million, the Indemnified Parties
shall be entitled to indemnification for the full amount of the
Indemnified Losses, if any, as finally determined pursuant to
Section 11.4 from Basket Claims in excess of $10 million (the
limitation contained in this sentence referred to herein as
the "Basket Limitation"). As used herein the term "Non-Basket
Claim" means any claim arising out of an inaccuracy of any of
the representations and warranties set forth in Sections 5.1(a),
5.1(b), 5.2(a), 5.2(b), 5.2(c), 5.3(a), the second sentence of
5.3(c), 5.3(d), 5.3(e), 5.3(f), 5.3(h)(i), 5.3(h)(ii), 5.4(b),
5.5(a) and 5.5(b). The Basket Limitation shall not apply to
any Indemnified Losses from claims that are Non-Basket Claims.
(b) The amount of any Indemnified Loss shall be reduced
by any insurance proceeds and any indemnity, contribution or other
similar payment recovered by the Indemnified Parties from any third
party with respect to the facts or circumstances which gave rise to
the Indemnified Loss (net of any Taxes thereon). If any
indemnification payment is payable by an Indemnitor pursuant to
Section 11.4 prior to the date of the receipt of any payment
referred to in this paragraph by an Indemnified Party, the
Indemnified Party will be required to reimburse an appropriate
portion thereof to the Indemnitor upon its receipt of such
payment.
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(c) If any Indemnitor's obligation under this Section
11.2 arises in respect to an adjustment that makes allowable to any
Indemnified Party, or any Affiliate of an Indemnified Party, any
present or future deduction, amortization, exclusion from income or
other allowance (a "Tax Benefit") that would not, but for such
adjustment, have been allowable, then any payment by the Indemnitor
to the relevant Indemnified Party or Indemnified Parties shall be
an amount equal to the Indemnified Loss minus the sum of the
present values (calculated using a 5.77% discount rate) of all
Tax Benefits that arise as a consequence of the relevant
adjustment multiplied, in each case, by (i) the maximum federal,
state, local or foreign, as the case may be, corporate tax rate
in effect at the time of the payment of such Indemnified Loss or
(ii) in the case of a credit, 100%.
Section 11.3 Survival. The representations and
warranties set forth in this Agreement will terminate and expire
on the first anniversary of the Closing Date, after which
time no party may institute any action or present any claim for
an inaccuracy of such statements; provided that the representations
and warranties set forth in Sections 5.1(a), 5.1(b), 5.2(a), 5.2(b),
5.2(c), 5.2(g), 5.3(a), the second sentence of 5.3(c), 5.3(d), 5.3(e),
5.3(f), 5.3(h)(i), 5.3(h)(ii), 5.4(b), 5.5(a) and 5.5(b) will survive
until the expiration of the applicable statute of limitations period
with respect to claims made thereunder for any inaccuracy thereof.
Any action or claim for the breach of any covenant or agreement
contained herein must be instituted or presented prior to the
expiration of the applicable statute of limitations period with
respect to such claim or action.
Section 11.4 Indemnification Procedures. Except
to the extent otherwise provided herein, all claims for indemnification
under this Agreement will be asserted and resolved as follows:
(a) An Indemnified Party claiming indemnification
under this Agreement will promptly (i) notify the Indemnitor from
whom indemnification is sought of any third party claim or claims
("Third Party Claim") asserted against the Indemnified Party which
could give rise to a right of indemnification under this Agreement
and (ii) transmit to the Indemnitor a written notice ("Claim Notice")
describing in reasonable detail the nature of the Third Party
Claim, a copy of all papers served with respect to such claim
(if any), an estimate of the amount of damages attributable to the
Third Party Claim, if reasonably possible, and the basis
of the Indemnified Party's request for indemnification under this
Agreement. Within thirty (30) days after receipt of any Claim
Notice (the "Election Period"), the Indemnitor will notify
the Indemnified Party (i) whether the Indemnitor disputes its
potential liability to the Indemnified Party under this Agreement
with respect to such Third Party Claim and (ii) whether the
Indemnitor desires to defend the Indemnified Party against
such Third Party Claim.
(b) If the Indemnitor notifies the Indemnified Party
within the Election Period that the Indemnitor does not dispute its
potential liability to the Indemnified Party under this Agreement and
that the Indemnitor elects to assume the defense of the Third Party
Claim, then the Indemnitor will have the right to defend, at its
sole cost and expense, such Third Party Claim by all appropriate
proceedings, which proceedings will be prosecuted promptly and
diligently by the Indemnitor to a final conclusion or settled at
the discretion of the Indemnitor in accordance with this Section
11.4(b). Subject to the last sentence of this Section 11.4(b),
the Indemnitor will have full control of such defense and
proceedings, including any compromise or settlement thereof.
The Indemnified Party is hereby authorized, at the sole cost
and expense of the Indemnitor (but only if the Indemnified
77
Party is ultimately determined to be actually entitled to
indemnification hereunder with respect to such Third Party Claim
or if the Indemnitor assumes the defense with respect to the
Third Party Claim), to file, during the Election Period, any motion,
answer or other pleadings which the Indemnified Party deems
necessary or appropriate to protect its interests or those of the
Indemnitor and which are not unnecessarily prejudicial to the
Indemnitor. If requested by the Indemnitor, the Indemnified
Party will, at the sole cost and expense of the Indemnitor,
cooperate with the Indemnitor and its counsel in contesting
any Third Party Claim which the Indemnitor elects to
contest, including the making of any bona fide directly related
counterclaim against the person asserting the Third Party Claim
or any cross-complaint against any Person. The Indemnified Party
may participate in, but not control, any defense or settlement of
any Third Party Claim controlled by the Indemnitor pursuant to
this Section 11.4(b) and, except as permitted above or
pursuant to Section 11.4(c), will bear its own costs and expenses
with respect to such participation; provided, however, that if the
Indemnified Party asserts that there exists a conflict of interest
that would make it inappropriate for the same counsel to represent
the Indemnitor, then the Indemnitor shall reimburse the Indemnified
Party for the reasonable fees and expenses of separate counsel, to
the extent such fees and expenses are incurred solely in connection
with the matters with respect to which there is a conflict of
interest. Notwithstanding anything in this Section 11.4 to the
contrary, the Indemnitor will not, without the written consent of
the Indemnified Party, (i) settle or compromise any action, suit or
proceeding or consent to the entry of any judgment which does not
include as an unconditional term thereof the delivery by the
claimant or plaintiff to the Indemnified Party of a written
release from all liability in respect of such action, suit or
proceeding or (ii) settle or compromise any action, suit or
proceeding in any manner that (A) involves the sale, forfeiture
or loss of, or the creation of any Lien on, any property of such
Indemnified Party, (B) involves an award which together with
previous awards would exceed the available amount of the
indemnity hereunder, or (C) involves equitable remedies
against the Indemnified Party or any of its Affiliates.
(c) If the Indemnitor fails to notify the Indemnified
Party within the Election Period that the Indemnitor elects to
assume the defense of a Third Party Claim pursuant to Section 11.4(b),
or if the Indemnitor elects to assume such defense pursuant to
Section 11.4(b) but fails to diligently and promptly defend the
Third Party Claim, then the Indemnified Party will have the right
to defend, at the sole cost and expense of the Indemnitor,
the Third Party Claim by all appropriate proceedings, which
proceedings will be promptly and diligently prosecuted by the
Indemnified Party to a final conclusion or settled. The
Indemnified Party will have full control of such defense and
proceedings; provided, however, that the Indemnified Party will
not, without the Indemnitor's written consent, settle or
compromise any action, suit or proceeding in any manner that
(A) involves the sale, forfeiture or loss of, or the creation of
any Lien on, any property of such Indemnitor or (B) involves
equitable remedies against the Indemnitor or any of its Affiliates.
Notwithstanding the foregoing, if the Indemnitor has delivered a
written notice to the Indemnified Party to the effect that the
Indemnitor disputes its potential liability to the Indemnified
Party under this Agreement with respect to such Third Party Claim
and if such dispute is resolved in favor of the Indemnitor, the
Indemnitor will not be required to bear the costs and expenses of
the Indemnified Party's defense pursuant to this Section 11.4(c)
or of the Indemnitor's participation therein at the Indemnified
Party's request, and the Indemnified Party will reimburse the
Indemnitor in full for all costs and expenses of such litigation.
The Indemnitor may participate in, but not control, any defense
or settlement controlled
78
by the Indemnified Party pursuant to this Section 11.4(c), and
the Indemnitor will bear its own costs and expenses with respect
to such participation.
(d) If an Indemnified Party has a claim against an
Indemnitor hereunder which does not involve a Third Party Claim,
the Indemnified Party will transmit to the Indemnitor a written
notice (the "Indemnity Notice") describing in reasonable detail
the nature of the claim, an estimate of the amount of damages
attributable to such claim, and the basis of the Indemnified
Party's request for indemnification under this Agreement. If
the Indemnitor does not notify the Indemnified Party within sixty
(60) days from its receipt of the Indemnity Notice that the
Indemnitor disputes such claim, the claim specified by the
Indemnified Party in the Indemnity Notice will be deemed a liability
of the Indemnitor hereunder. If the Indemnitor has timely disputed
such claim, as provided above, such dispute will be resolved by
litigation in an appropriate court of competent jurisdiction.
(e) No Indemnitor will be obligated to make any
payment of indemnity under this Agreement except pursuant to the
procedures set forth in this Article 11. Payments of all amounts
owing by the Indemnitor pursuant to Sections 11.4(b) and (c) will
be made within ten (10) days after (A) if the Indemnitor gives the
notice contemplated by Section 11.4(a) stating that it does not
dispute its liability hereunder or fails to give the notice
contemplated by Section 11.4(a) within the Election Period, (i)
the effective date of a settlement of the Third Party Claim or
(ii) the date an adjudication of such Third Party Claim
becomes final and nonappealable, as the case may be, or (B) if
the Indemnitor does give the notice contemplated by Section 11.4(a)
that it disputes its liability hereunder, (i) the date an
adjudication of the Indemnitor's liability to the Indemnified
Party under this Agreement becomes final and nonappealable or
(ii) the effective date of a settlement between the Indemnitor
and the Indemnified Party as to such liability, as the case may
be. Payments of all amounts owing by the Indemnitor pursuant to
Section 11.4(d) will be made within ten (10) days after (X) if
the Indemnitor has disputed the relevant claim, (i) the date an
adjudication of the Indemnitor's liability to the Indemnified
Party under this Agreement becomes final and nonappealable or
(ii) the effective date of a settlement between the Indemnitor
and the Indemnified Party as to the Indemnitor's liability under
this Agreement, as the case may be, or (Y) if the relevant claim
has not been disputed by the Indemnitor, the expiration of the sixty
(60) day Indemnity Notice period.
(f) The failure by a party to give a notice required
pursuant to this Section 11.4 shall not relieve the other party or
parties of its obligations under this Section 11.4 or result in the
loss of any rights of such party under this Section 11.4, except to
the extent that such failure results in the failure of such other
party or parties to receive actual notice of the events or
circumstances giving rise to such notice requirement and such
other party or parties are damaged solely as a result of the
failure of such party to give such notice, and then only to
the extent of such damage.
Section 11.5 Acknowledgment of the Parties. Each
of the parties hereto expressly agrees and acknowledges that after
the Closing, such party's sole and exclusive remedies with respect
to any and all claims under this Agreement shall be pursuant to
Section 7.11 and this Article 11, except that specific performance
with respect to breaches of covenants may be sought as provided in
Section 12.13(d).
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Section 11.6 Limitation on Obligation to Indemnify.
Notwithstanding any other provision of this Agreement, none of the
PhillieCo Partners shall be liable or bear responsibility for any
portion of an Indemnified Loss attributable to any breach of the
representations and warranties set forth in Section 5.4 with respect
to PhillieCo (a "PhillieCo Loss") for more than a percentage of the
total amount of any such Indemnified Loss equal to such PhillieCo
Partner's PhillieCo Percentage Interest. In the event that any
PhillieCo Partner shall be required, other than by reason of such
PhillieCo Partner's gross negligence, fraud or willful misconduct,
to pay, discharge or otherwise bear responsibility for any amount
of any PhillieCo Loss pursuant to this Article 11 in excess of
such PhillieCo Partner's proportionate share thereof, the other
PhillieCo Partners hereby agree to indemnify, hold harmless and
reimburse such PhillieCo Partner against and for such other
PhillieCo Partners' share of such excess. It is the intention
of the PhillieCo Partners that, following the operation of this
Section, each PhillieCo Partner will have borne exactly its
proportionate share (determined as provided in the first
sentence of this Section) of the PhillieCo Loss at issue.
Section 11.7 Allocation of Losses. Any payment
made by Sprint or any of its Subsidiaries under this Article 11
shall be charged to the Sprint FON Group. Any payments
received by Sprint or any of its Subsidiaries under this Section
11 shall be allocated to the PCS Group. If any claim for Loss
by a Cable Parent or any of its Subsidiaries against Sprint under
this Article 11 derived in whole or in part from any Loss sustained
by the PCS Group the derivative portion of such claim will be
satisfied to the extent that Sprint allocates from the
Sprint FON Group to the PCS Group an amount of cash equal to
the Loss suffered by the PCS Group.
ARTICLE 12
MISCELLANEOUS
Section 12.1 Notices. Except as expressly provided
herein, all notices, consents, waivers and other communications
required or permitted to be given by any provision of this Agreement
shall be in writing and mailed (certified or registered mail,
postage prepaid, return receipt requested) or sent by hand or
overnight courier, or by facsimile transmission (with acknowledgment
received and confirmation sent as provided below), charges
prepaid and addressed to the intended recipient as follows,
or to such other address or number as such Person may from
time to time specify by like notice to the parties:
(a) If to TCI or any of its Subsidiaries:
Tele-Communications, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
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with copies to:
Tele-Communications, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Te1ecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
(b) If to Cox or any of its Subsidiaries:
▇▇▇ Communications, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Wild
(c) If to Comcast or any of its Subsidiaries:
Comcast Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
81
with a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(d) If to Sprint or any of its Subsidiaries:
Sprint Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
with copies to:
Sprint Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Secretary
King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Any party may from time to time specify a different address for notices
by like notice to the other parties. All notices and other
communications given in accordance with the provisions
of this Agreement shall be deemed to have been given and
received (i) four (4) Business Days after the same are sent by
certified or registered mail, postage prepaid, return receipt
requested, (ii) when delivered by hand or transmitted by
facsimile (with acknowledgment received and, in the case of a
facsimile only, a copy of such notice is sent no later than the
next Business Day by a reliable overnight courier service,
with acknowledgment of receipt) or (iii) one (1) Business
Day after the same are sent by a reliable overnight courier
service, with acknowledgment of receipt.
Section 12.2 Binding Effect. Except as otherwise
provided in this Agreement, this Agreement shall be binding upon
and inure to the benefit of the parties and their respective
successors, permitted transferees, and permitted assigns.
82
Section 12.3 Construction. This Agreement shall
be construed simply according to its fair meaning and not strictly
for or against any party.
Section 12.4 Expenses. Whether or not the
transactions contemplated hereby are consummated, each of the
parties shall bear the fees and expenses relating to its
compliance with the various provisions of this Agreement,
and each of the parties agrees to pay all of its own expenses
(including all legal and accounting fees) incurred in connection
with this Agreement, the transactions contemplated hereby, the
negotiations leading to the same and the preparation made for
carrying the same into effect. Notwithstanding the
foregoing and Section 5.1(d), if and only to the extent that
Sprint makes a cash capital contribution prior to Closing to
a Subsidiary of Sprint that will be a member of the PCS Group
after the Closing, the fees and expenses will be paid by such
Subsidiary of Sprint in connection with the transactions
contemplated by this Agreement and will be allocated to the
PCS Group. Neither this Section nor Section 5.1(d) limits in
any way the discretion of Sprint to allocate expenses relating
to the IPO to the PCS Group in accordance with the Management and
Allocation Policies.
Section 12.5 Table of Contents; Headings. The
table of contents and section and other headings contained in this
Agreement are for reference purposes only and are not intended to
describe, interpret, define or limit the scope, extent or intent
of this Agreement.
Section 12.6 Governing Law. The validity of
this Agreement, the construction of its terms and the
interpretation of the rights and duties of the parties shall be
governed by the internal laws of the State of Delaware without
regard to principles of conflict of laws.
Section 12.7 Severability. Every provision of this
Agreement is intended to be severable. If any term or provision
hereof is illegal, invalid or unenforceable for any reason
whatsoever, that term or provision will be enforced to the
maximum extent permissible so as to effect the intent of the
parties, and such illegality, invalidity or unenforceability
shall not affect the validity, legality or enforceability of
the remainder of this Agreement. If necessary to effect the
intent of the parties hereto, the parties hereto will negotiate
in good faith to amend this Agreement to replace the
unenforceable language with enforceable language which as
closely as possible reflects such intent.
Section 12.8 Amendments. This Agreement may be
modified or amended only by a written amendment signed by Persons
authorized to so bind each party hereto.
Section 12.9 Entire Agreement. The provisions
of this Agreement and any other agreements executed by the
parties concurrently herewith set forth the entire agreement
and understanding between the parties hereto as to the
subject matter hereof and supersede all prior agreements,
oral or written, and other communications between the parties
hereto relating to the subject matter hereof.
Section 12.10 Confidentiality. Each party hereto
agrees that, with respect to any non-public information obtained
in connection with this Agreement or the transactions
contemplated hereunder, the use or treatment of such information
shall be fully subject to the terms and provisions of Section
6.6 of the PCS Partnership Agreement.
83
Section 12.11 Assignment. No party shall assign
any of its rights under this Agreement or delegate its duties
hereunder unless it obtains the prior written consent of the
other parties hereto, which consent may be withheld at such
party's absolute discretion. Notwithstanding the immediately
preceding sentence, any party may assign its rights (but not
its obligations) under this Agreement to any Controlled
Affiliate of such party.
Section 12.12 Waivers; Remedies. The observance
of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively
or prospectively) by the party or parties entitled to enforce
such term, but any such waiver shall be effective only if in a
writing signed by the party or parties against which such waiver
is to be asserted. Except as otherwise provided herein, no failure
or delay of any party hereto in exercising any power or right
under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such right
or power, preclude any other or further exercise thereof or the
exercise of any other right or power.
Section 12.13 Consent to Jurisdiction; Specific
Performance.
(a) Each party hereto irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court sitting in the County
of New York or any Federal court of the United States of America
sitting in the Southern District of New York, and any appellate
court from any such court, in any suit, action or proceeding
arising out of or relating to this Agreement, or for recognition
or enforcement of any judgment, and each party hereto irrevocably
and unconditionally agrees that all claims in respect of any such
suit, action or proceeding may be heard and determined in such
New York State court or, to the extent permitted by law, in
such Federal court.
(b) Each party hereto irrevocably and unconditionally
waives, to the fullest extent it may legally do so, any objection
which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this
Agreement in any New York State court sitting in the County of
New York or any Federal court sitting in the Southern
District of New York. Each party hereto irrevocably waives,
to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such suit, action or
proceeding in any such court and further waives the right to
object, with respect to such suit, action or proceeding, that
such court does not have jurisdiction over such party.
(c) Each party hereto irrevocably consents to
service of process in the manner provided for the giving of
notices pursuant to this Agreement; provided, that such
service shall be deemed to have been given only when actually
received by such party. Nothing in this Agreement shall affect
the right of a party to serve process in any other manner
permitted by law.
(d) Each party hereto agrees with the other parties
that the other parties would be irreparably damaged if any of the
provisions of this Agreement are not performed in accordance with
their specific terms and that monetary damages would not provide
an adequate remedy in such event. Accordingly, in addition to any
other remedy to which the non-breaching parties may be entitled, at
84
law or in equity, the non-breaching parties shall be entitled to
injunctive relief to prevent breaches of this Agreement and
specifically to enforce the terms and provisions hereof.
Section 12.14 WAIVER OF JURY TRIAL. EACH PARTY
HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION,
SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
Section 12.15 Further Assurances. Upon reasonable
request from time to time, each party hereto shall execute,
acknowledge and deliver any documents and perform all
further acts that may be reasonably necessary, appropriate
or desirable to carry out the intent and purposes of this Agreement.
Section 12.16 Counterparts. This Agreement may be
executed in any number of counterparts with the same effect as if
all parties hereto had signed the same document. All counterparts
shall be construed together and shall constitute one agreement.
Section 12.17 Limitation on Rights of Others.
Nothing in this Agreement, whether express or implied, shall be
construed to give any Person other than the parties hereto
any legal or equitable right, remedy or claim under or in
respect of this Agreement.
Section 12.18 Restrictive Legends.
(a) Upon original issuance of any certificate issued
pursuant to this Agreement representing the Series 2 PCS Stock,
PCS Preferred Stock, the Warrants or any other securities of
Sprint issued in connection with this Agreement, such certificate
shall bear the following restrictive legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED OR SOLD EXCEPT
AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF
THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND
ANY APPLICABLE STATE SECURITIES LAWS.
(b) After such time as the above legend is no longer
required to appear on any certificate representing a security of
Sprint issued in connection with this Agreement, at the request of
the holder of such certificate, Sprint shall cause such
certificate to be exchanged for a certificate that does not
bear such legend.
(c) Sprint may make a notation on its records or give
instructions to any transfer agents or registrars for the securities
of Sprint issued in connection with this Agreement that bear the
above legend reflecting the restrictions set forth in such legend.
85
(d) Sprint shall not incur any liability for any
delay in recognizing any transfer of any certificate bearing the
above legend and representing a security of Sprint issued
in connection with this Agreement if Sprint reasonably believes in
good faith that such transfer may have been or would be in violation
of the provisions of applicable securities law or this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed
this Restructuring and Merger Agreement as of the day and year
first above written.
TELE-COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice
President
COMCAST CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. Block
Title: Vice President
▇▇▇ COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
SPRINT CORPORATION
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
TCI SPECTRUM HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
87
COMCAST TELEPHONY SERVICES
By: Comcast Telephony
Services, Inc.,
Its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. Block
Title: Vice President
COX TELEPHONY PARTNERSHIP
By: ▇▇▇ Communications
Wireless, Inc.
Its Managing General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
SPRINT ENTERPRISES, L.P.
By: US Telecom, Inc.,
Its Managing General Partner
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
TCI PHILADELPHIA HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
88
COM TELEPHONY SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. Block
Title: Vice President
COMCAST TELEPHONY SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. Block
Title: Vice President
COX TELEPHONY PARTNERS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
▇▇▇ COMMUNICATIONS WIRELESS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
SWV ONE, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
89
SWV TWO, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
SWV THREE, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
SWV FOUR, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
SWV FIVE, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
SWV SIX, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
90