EXHIBIT 2.1
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AMENDED AND RESTATED
CONTRIBUTION AND FORMATION AGREEMENT
among
SBC COMMUNICATIONS INC.,
BELLSOUTH CORPORATION
and
ALLOY LLC
Dated as of April 4, 2000
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND TERMS
1.4 Specific Definitions .............................................................................2
1.5 Other Terms .....................................................................................20
1.6 Other Definitional Provisions ...................................................................20
ARTICLE II
FORMATION AND CONTRIBUTIONS
2.1 Formation of Newco and Manager ..................................................................21
2.2 Contribution of SBC Wireless LLC Shares .........................................................22
2.3 Contribution of BellSouth Shares ................................................................22
2.4 Issuance of Newco LLC Units .....................................................................22
2.5 Closing .........................................................................................23
2.6 Additional Closing Deliveries by SBC ............................................................23
2.7 Additional Closing Deliveries by BellSouth ......................................................24
2.8 Deliveries by Newco .............................................................................24
2.9 SBC Additional Closing ..........................................................................24
2.10 BellSouth Additional Closing ...................................................................25
2.11 Net Debt....................................................................................... 28
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of SBC ...........................................................29
3.2 Representations and Warranties of BellSouth .....................................................41
ARTICLE IV
CERTAIN COVENANTS AND AGREEMENTS OF SBC and Bellsouth
4.1 Access and Information ..........................................................................52
4.2 Conduct of Business .............................................................................53
4.3 Registrations, Filings and Consents .............................................................57
4.4 Employee Benefit Plan/Employees .................................................................59
4.5 Transferred Businesses ..........................................................................66
4.6 Divestitures ....................................................................................66
4.7 Acquisitions by SBC or BellSouth ................................................................67
4.8 Accountants' Letter .............................................................................67
4.9 Transition Group ................................................................................67
4.10 Initial Marketing Plan .........................................................................67
4.11 [Intentionally omitted] ........................................................................68
4.12 Ancillary Agreements ...........................................................................68
4.13 Resale and Agency Agreements ...................................................................68
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4.14 Headquarters ...................................................................................68
4.15 Branding; Corporate Name .......................................................................68
4.16 Intercompany Obligations .......................................................................68
4.17 Taxes ..........................................................................................72
4.18 Business Assets ................................................................................73
4.19 Notification of Certain Matters ................................................................74
4.20 Regulatory Compliance ..........................................................................74
4.21 Control of Operations ..........................................................................75
4.22 Conversions ....................................................................................75
4.23 Certain Exclusions .............................................................................76
4.24 Consent of Third Parties .......................................................................76
4.25 Additional Properties ..........................................................................77
4.26 Consents to Additional Acquisitions ............................................................79
4.27 Intercompany Indebtedness ......................................................................80
4.28 Transaction Costs ..............................................................................80
4.29 Minority Interests .............................................................................80
4.30 Crown Castle Shares ............................................................................80
4.31 Further Assurances .............................................................................80
ARTICLE V
CONDITIONS TO CLOSING
5.1 Conditions to Each Party's Obligation to Effect the Transaction .................................81
5.2 Conditions to Obligation of BellSouth ...........................................................82
5.3 Conditions to Obligation of SBC .................................................................83
ARTICLE VI
TERMINATION
6.1 Termination .....................................................................................84
6.2 Effect of Termination ...........................................................................85
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
7.1 Survival of Representations, Warranties, Covenants and Agreements; Knowledge of Breach ..........85
7.2 Indemnification by BellSouth ....................................................................86
7.3 Indemnification by SBC ..........................................................................87
7.4 Indemnification as Sole Remedy; Specific Performance ............................................88
7.5 Method of Asserting Claims, Etc .................................................................88
7.6 No Additional Recoveries. .......................................................................89
7.7 Calculation of Losses ...........................................................................90
7.8 Assignment of Claims ............................................................................90
7.9 Tower Indemnity .................................................................................90
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ARTICLE VIII
MISCELLANEOUS
8.1 Amendment and Waiver ............................................................................91
8.2 Expenses ........................................................................................91
8.3 Public Disclosure ...............................................................................91
8.4 Assignment ......................................................................................91
8.5 Entire Agreement ................................................................................92
8.6 Fulfillment of Obligations ......................................................................92
8.7 Parties in Interest; No Third Party Beneficiaries ...............................................92
8.8 Counterparts ....................................................................................92
8.9 Section Headings ................................................................................92
8.10 Notices ........................................................................................92
8.11 Governing Law; Submission to Jurisdiction; Selection of Forum ..................................94
8.12 Submission to Jurisdiction .....................................................................94
8.13 Waiver of Jury Trial ...........................................................................95
8.14 Severability ...................................................................................95
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EXHIBITS AND SCHEDULES
Exhibit A Form of Certificate of Formation of Newco
Exhibit B Form of Certificate of Incorporation of Manager
Exhibit C Form of By-laws of Manager
Exhibit D [Reserved]
Exhibit E [Reserved]
Exhibit F Form of Newco LLC Agreement
Exhibit G Form of Registration Rights Agreement
Exhibit H Form of Resale Agreements
Exhibit I Form of Agency Agreements (consisting of the Wireless Agency
Agreements and the Wireline Agency Agreements)
Exhibit J Form of Transition Services Agreement
Exhibit K Form of Management Agreement
Exhibit L Form of Intellectual Property License Agreement
Exhibit M Form of Stockholders' Agreement
Exhibit N Form of Transition Marks Agreement
Schedule 1 Excluded BellSouth Business
Schedule 2 SBC Additional Subsidiary Dates
Schedule 3 Arkansas Market and Los Angeles Market
Schedule 4 SBC Companies and Certain Definitions
Schedule 5(a) SBC Other Interests
Schedule 5(b) BellSouth Other Interests
Schedule 6(a) Value of SBC Other Interests
Schedule 6(b) Value of BellSouth Other Interests
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AMENDED AND RESTATED CONTRIBUTION AND FORMATION AGREEMENT,
dated as of April 4, 2000 and amended and restated as of October 2, 2000, among
SBC Communications Inc., a Delaware corporation ("SBC"), and BellSouth
Corporation, a Georgia corporation ("BellSouth"), and Alloy LLC, a Delaware
limited liability company ("Newco").
WITNESSETH:
WHEREAS, SBC and BellSouth (each, a "Party" and, collectively,
the "Parties") wish to combine their respective Domestic mobile wireless voice
and data services businesses, to be conducted through Newco and governed by the
terms of the Newco LLC Agreement;
WHEREAS, the Boards of Directors of each Party and the Manager
of Newco have approved the Transaction;
WHEREAS, the Parties are entering into this Agreement to set
forth their agreement as to the creation of and contribution of certain assets
to Newco and the conditions to such contributions;
WHEREAS, subject to the terms and conditions set forth herein,
SBC will cause certain Subsidiaries to contribute the SBC Business to Newco,
including its indirect equity interests in the SBC Companies;
WHEREAS, subject to the terms and conditions set forth herein,
BellSouth will cause certain Subsidiaries to contribute the BellSouth Business
to Newco, including its indirect equity interests in the BellSouth Companies;
WHEREAS, in connection with the execution and delivery of this
Agreement, BellSouth, SBC and Newco will also be entering into the Newco LLC
Agreement and the Stockholders' Agreement in accordance with the terms hereof;
and
WHEREAS, the Parties intend that for federal income tax
purposes the contributions of the SBC Business and the BellSouth Business shall
(a) qualify as a transfer of assets under the provisions of Section 721 of the
Internal Revenue Code of 1986, as amended (the "Code"), and (b) not interfere
with the accounting by SBC of prior business combinations using the
"pooling-of-interests" method of accounting;
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants and undertakings contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
1.4 Specific Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
"20B2" shall mean, collectively, the properties acquired pursuant to the
Purchase Agreement between GTE Wireless Incorporated and SBC, dated as
of June 30, 2000, with respect to Texas RSA 20B2.
"AB Account" shall have the meaning set forth in Section 2.10(b).
"ABC Agreement" shall mean the ABC Holding Limited Liability Company Agreement,
dated November 13, 1998.
"ABC Holding" shall mean AB Cellular Holding, LLC, a Delaware limited liability
company.
"AB Excess" shall have the meaning set forth in Section 2.10(a).
"Additional Subsidiaries" shall mean collectively, the SBC Additional
Subsidiaries and the BellSouth Additional Subsidiary.
"Affiliates" shall mean with respect to any Person, any Person directly or
indirectly Controlling, Controlled by, or under Common Control with
such other Person at any time during the period for which the
determination of affiliation is being made.
"Agency Agreements" shall mean, collectively, the Wireline Agency Agreements and
the Wireless Agency Agreements.
"Agreement" shall mean this Contribution and Formation Agreement, the Schedules
hereto, the BellSouth Disclosure Letter, the SBC Disclosure Letter and
the Exhibits hereto, as the same may be amended or supplemented from
time to time in accordance with the terms hereof.
"Air-Ground Service" shall mean air-ground wireless voice and data service
provided pursuant to licenses issued by the FCC pursuant to Subpart G
of Part 22 of the FCC Rules and all air-ground wireless voice and data
services reasonably ancillary thereto.
"Ancillary Agreements" shall mean, collectively, the Agency Agreements,
Intellectual Property License Agreements, Newco LLC Agreement,
Registration Rights Agreement, Resale Agreements, Stockholders'
Agreement, Management
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Agreement, Transition Marks Agreements and Transition Services
Agreement, in each case substantially in the form attached as an
Exhibit hereto.
"Arkansas Assets" shall mean all right, title and interest of the applicable SBC
Additional Subsidiary in and to (i) all FCC Licenses held by the SBC
Companies or any Subsidiary of a SBC Company covering the Arkansas
Market, (ii) all other Licenses held by the SBC Companies or any
Subsidiary of a SBC Company relating exclusively to the wireless
telecommunications systems serving the Arkansas Market; and (iii) all
other assets, rights and properties owned or leased by SBC or any
Subsidiary of SBC and used exclusively by SBC or its Affiliates in
connection with the SBC Business in the Arkansas Market.
"Arkansas Liabilities" shall mean any direct or indirect liability,
indebtedness, obligation, cost, expense, claim, loss, damage,
deficiency, guaranty or endorsements of or by any SBC Company or any
Subsidiary of a SBC Company relating exclusively (i) to the Arkansas
Assets or (ii) the SBC Business in the Arkansas Market.
"Arkansas Market" shall have the meaning set forth on Schedule 3 hereto.
"Austin" shall mean, collectively, the properties acquired pursuant to the
Purchase Agreement between GTE Wireless Incorporated and SBC, dated as
of June 30, 2000, with respect to Austin, Texas.
"Bankruptcy and Equity Exception" shall have the meaning set forth in Section
3.1(e).
"BellSouth" shall have the meaning set forth in the Preamble.
"BellSouth Additional Closing" shall have the meaning set forth in Section
2.10(d).
"BellSouth Additional Closing Date" shall have the meaning set forth in Section
2.10(e).
"BellSouth Additional Subsidiary" shall have the meaning set forth in Section
2.10(d).
"BellSouth Additional Subsidiary Value" shall mean the Fair Market Value of the
BellSouth Additional Subsidiary as of December 31, 2002.
"BellSouth After Acquired Properties" shall mean businesses and other properties
acquired by BellSouth or a Subsidiary thereof, with the consent of SBC,
listed on Schedule 5(b) hereto.
"BellSouth Benefits Liabilities" shall have the meaning set forth in Section
4.4(m).
"BellSouth Books and Records" shall mean all books, ledgers, files, reports,
plans and operating records of, or maintained for the BellSouth
Business; provided that with respect to any of the foregoing items that
are not held by the BellSouth
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Companies or any of their Subsidiaries, BellSouth Books and Records
shall be deemed to refer only to items materially related to the
BellSouth Business.
"BellSouth Business" shall mean the Business as conducted by BellSouth and its
Affiliates, but shall not include the Excluded BellSouth Business.
"BellSouth Carolinas" shall mean BellSouth Carolinas PCS, L.P., a Delaware
limited partnership.
"BellSouth Cellular" shall mean BellSouth Cellular Corp., a Georgia corporation.
"BellSouth Closing Net Debt" shall mean the BellSouth Net Debt as of the
Closing.
"BellSouth Companies" shall mean collectively RAM Communications, BellSouth PCS,
BellSouth Data, Huntsville Cellular, BellSouth Mobility and National
Marketing and shall be deemed to include the BellSouth Additional
Subsidiary. For purposes of Sections 3.2 and 4.2 hereof, the term
BellSouth Companies shall include the Subsidiaries listed on Schedule
3.2(d) of the BellSouth Disclosure Letter.
"BellSouth Companies' Licenses" shall have the meaning set forth in Section
3.2(n).
"BellSouth Compensation and Benefit Plans" shall have the meaning set forth in
Section 3.2(i)(i).
"BellSouth Contribution" shall have the meaning set forth in Section 2.3.
"BellSouth Data" shall mean RAM/BSE Communications, L.P., a Delaware limited
partnership, and its successor companies.
"BellSouth Data Shares" shall mean all of the issued and outstanding equity
interests of BellSouth Data in whatever form such equity interests may
be held.
"BellSouth Deductible" shall have the meaning set forth in Section 7.2(b).
"BellSouth Disclosure Letter" shall mean the disclosure letter, dated the date
hereof, delivered by BellSouth to SBC.
"BellSouth Employees" shall have the meaning set forth in Section 3.2(i)(i).
"BellSouth Financial Statements" shall have the meaning set forth in Section
3.2(f).
"BellSouth Holdings Entities" shall mean, collectively, BellSouth Mobile Data,
Inc., a Georgia corporation, BSCC of Houston, Inc., a Texas
corporation, ACCC of Los Angeles, Inc., a California corporation,
BellSouth Cellular and RAM
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Broadcasting Corporation, a New York corporation, and their respective
successor companies.
"BellSouth Interim Financial Statements" shall have the meaning set forth in
Section 3.2(f).
"BellSouth Leasing Company" shall have the meaning set forth in Section 4.4(a).
"BellSouth Mobility" shall mean BellSouth Mobility Inc, a Georgia corporation,
and its successor companies.
"BellSouth Mobility Shares" shall mean all of the issued and outstanding equity
interests of BellSouth Mobility in whatever form such equity interests
may be held.
"BellSouth Net Debt" shall mean, as calculated as of the Closing Date, (x) the
sum of the liabilities of (a) each of the BellSouth Companies
(including for such purposes, each direct and indirect wholly owned
Subsidiary of a BellSouth Company, but excluding the BellSouth
Additional Subsidiary) and (b) each other Subsidiary of the BellSouth
Companies, but excluding the BellSouth Additional Subsidiary,
multiplied by the respective direct or indirect percentage ownership of
the BellSouth Companies, as set forth in Schedule 3.2(d)(i) of the
BellSouth Disclosure Letter, minus (y) the sum of the current assets
(including cash and cash equivalents owned by such companies and by
Wireless Investco) of (a) each of the BellSouth Companies (including
for such purposes each direct and indirect wholly owned Subsidiary of a
BellSouth Company, but excluding the BellSouth Additional Subsidiary
that are operating companies) and (b) each other Subsidiary of the
BellSouth Companies (but excluding the BellSouth Additional Subsidiary)
by the respective direct or indirect percentage ownership of BellSouth,
as set forth in Schedule 3.2(d)(i) of the BellSouth Disclosure Letter,
clauses (x) and (y) being calculated from time to time in a manner
consistent with GAAP. The amounts set forth on Schedule 6(b)(1) and
6(b)(2) hereto shall be deemed to be current assets of the BellSouth
Companies for purposes of the calculation of the BellSouth Net Debt.
All fees and expenses of advisors paid or accrued as of the Closing
Date by BellSouth, a BellSouth Company or a Subsidiary thereof, in
connection with the acquisition of the BellSouth After Acquired
Properties prior to Closing shall be deemed to be a current asset of
the BellSouth Companies, other than fees and expenditures relating
solely to litigation.
"BellSouth Pension Plans" shall have the meaning set forth in Section 3.2(i)(i).
"BellSouth PCS" shall mean BellSouth Personal Communications, Inc., a Delaware
corporation and its successor companies.
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"BellSouth PCS Shares" shall mean all of the issued and outstanding equity
interests of BellSouth PCS in whatever form such equity interests may
be held.
"BellSouth Proportionate Share" shall have the meaning set forth in Section
4.4(m).
"BellSouth Required Consents" shall have the meaning set forth in Section
3.2(b)(i).
"BellSouth Shares" shall mean, collectively, the RAM Communications Shares, the
BellSouth PCS Shares, the BellSouth Mobility Shares, the BellSouth Data
Shares and the Huntsville Shares.
"BellSouth Subsidiary Restructuring" shall have the meaning set forth in Section
4.22(b).
"BellSouth Transferred Employees" shall have the meaning set forth in Section
4.4(b).
"BellSouth Wireless Data" shall have the meaning set forth in Section 4.25(i).
"BellSouth Wireless Employees" shall have the meaning set forth in Section
4.4(b).
"Benefits Calculation" shall have the meaning set forth in Section 4.4(j).
"Books and Records" shall mean the BellSouth Books and Records or the SBC Books
and Records, as the context requires.
"Business" shall mean (a) the acquisition, development, ownership and operation
of businesses engaged in the Domestic provision of mobile wireless
voice and data services utilizing radio frequencies licensed by the FCC
for the provision of Cellular Service, PCS Service, Wireless Data
Service, Satellite Services, Part 27 Service and Paging Services in
Puerto Rico and the U.S. Virgin Islands, and (b) business activities
customarily ancillary to the provision of any of the foregoing.
"Business Day" shall mean any day other than a Saturday, a Sunday or a day on
which banks in New York City are authorized or obligated by law or
executive order to close.
"Calculation" shall have the meaning set forth in Section 2.11(a).
"Cellular Service" shall mean mobile wireless voice and data service provided
pursuant to licenses issued by the FCC pursuant to Subpart H of Part 22
of the FCC Rules and all mobile voice and data services reasonably
ancillary thereto.
"Certificate of Formation" shall have the meaning set forth in Section 2.1(b).
"Chosen Courts" shall have the meaning set forth in Section 8.11.
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"Claim Notice" shall have the meaning set forth in Section 7.5.
"Closing" shall have the meaning set forth in Section 2.5(a).
"Closing Date" shall have the meaning set forth in Section 2.5(a).
"Closing Net Debt" shall mean the sum of the SBC Closing Net Debt and the
BellSouth Closing Net Debt.
"CMRS" shall mean Commercial mobile radio service, as defined in 47 X.X.X.xx.
20.3.
"Code" shall have the meaning set forth in the Recitals.
"Communications Act" shall mean the Communications Act of 1934, as amended or
any successor statute.
"Compensation and Benefit Plans" shall mean, collectively, the SBC Compensation
and Benefit Plans and the BellSouth Compensation and Benefit Plans.
"Confidentiality Agreement" shall have the meaning set forth in Section 4.1(c).
"Conflicted Systems" shall have the meaning set forth in Section 4.6.
"Contracts" shall mean all agreements, contracts, leases and subleases, purchase
orders, arrangements, commitments, non-governmental licenses, notes,
mortgages, indentures or other obligations.
"Control"(including the correlative meanings of the terms "Controlled by" and
"under Common Control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or
cause the direction of management policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
"CPA Firm" shall have the meaning set forth in Section 2.11(c).
"Credits" shall have the meaning set forth in Section 3.2(v).
"Crown Castle Shares" shall mean the shares of common stock of Crown Castle
International Corp., a Delaware corporation, held by the BellSouth
Companies and their Subsidiaries.
"Disposition Committee" shall have the meaning set forth in Section 4.6.
"Disposition Systems" shall have the meaning set forth in Section 4.6.
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"Domestic" shall mean the fifty states comprising the United States of America,
the District of Columbia, the U.S. Virgin Islands and the Commonwealth
of Puerto Rico, but excluding all other territories and possessions of
the United States of America.
"Encumbrances" shall mean liens, charges, encumbrances, security interests,
options, or any other restrictions or third party rights.
"Entity" shall mean any corporation, firm, unincorporated organization,
association, partnership, limited liability company, business trust,
joint stock company, joint venture organization, entity or business.
"Environmental Law" shall mean any Law related to (A) the protection,
investigation or restoration of the environment, health, safety or
natural resources, (B) the handling, use, presence, disposal, release
or threatened release of any Hazardous Substance or (C) noise, odor,
wetlands, pollution, contamination or any injury or threat of injury to
persons or property in connection with any Hazardous Substance.
"Ericsson" shall have the meaning set forth in Section 3.2(v).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall have the meaning set forth in Section 3.1(i)(iii).
"ERISA Affiliate Plan" shall have the meaning set forth in Section 3.1(i)(iii).
"EU Merger Regulation" shall mean the Merger Regulation of the European Union,
adopted in Council Regulation (EEC) 4064/89, as amended.
"Excluded BellSouth Business" shall mean (i) all microwave licenses and related
assets, rights and interests used by BellSouth or any of its Affiliates
in any of its businesses outside of the BellSouth Business, (ii) the
rights to any Contracts with a customer of any of the BellSouth
Companies or their Subsidiaries if such Person is billed or directly
charged by BellSouth for Cellular Service or PCS Service in a manner
packaged with any Telecom Services provided by BellSouth or an
Affiliate of BellSouth and (iii) the assets listed in Schedule 1
hereto.
"Excluded SBC Business" shall mean (i) all microwave licenses and related
assets, rights and interests used by SBC or any of its Affiliates in
any of its businesses outside of the SBC Business, (ii) the rights to
any Contracts with a customer of any of the SBC Companies or their
Subsidiaries, if such Person is billed by SBC or an Affiliate of SBC
for Cellular Service or PCS Service in a manner packaged with
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any Telecom Services provided by SBC or an Affiliate of SBC, (iii) all
assets, rights and interests related to SBC PR's and SBC Wireless's
status as a competitive local exchange carrier, (iv) all assets related
to Paging Services provided by the SBC Companies (other than SBC PR) or
any of their Subsidiaries, (v) the business of Radiofone and its
Subsidiaries and all assets held by Radiofone and its Subsidiaries
together with all assets acquired from Radiofone PCS LLC, a limited
liability company, other than the businesses and assets referred to in
clauses (a) and (b) of Section 4.25, and (vi) assets related to
Air-Ground Service.
"Extended Termination Date" shall have the meaning set forth in Section 6.1(d).
"FAA" shall mean the Federal Aviation Administration or the successor agency
thereof.
"FACIC" shall mean French American Cellular Investment Corp., a Delaware
corporation.
"FAA Rules" shall have the meaning set forth in Section 4.20(a).
"Fair Market Value" shall mean, with respect to any asset, as of the date of
determination, the cash price at which a willing seller would sell, and
a willing buyer would buy, each being apprised of all relevant facts
and neither acting under compulsion, such asset in an arm's length,
negotiated transaction with an unaffiliated third party without time
constraints, determined in accordance with Section 11.3 of the Newco
LLC Agreement, treating the asset to be valued as if it were
"Securities" as set forth in Section 11.3 of the Newco LLC Agreement
and the parties disputing the Fair Market Value as the Initial Members
(as defined in the Newco LLC Agreement).
"FCC" shall mean the Federal Communications Commission or the successor agency
thereof.
"FCC Licenses" shall have the meaning set forth in Section 3.1(n).
"FCC Rules" shall have the meaning set forth in Section 4.20(a).
"Final Order" shall have the meaning set forth in Section 5.1(a)(i).
"401(k) Plans" shall have the meaning set forth in Section 4.4(i).
"GAAP" shall mean United States generally accepted accounting principles.
"Governmental Entity" shall mean any governmental or regulatory authority,
court, agency, commission, body or other governmental entity.
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"Hammond License" shall mean the E Block license for PCS Service granted by the
FCC with respect to Hammond, Louisiana Basic Trading Area 180.
"Hazardous Substance" shall mean any substance that is listed, classified or
regulated pursuant to any Environmental Law, including any petroleum
product or by-product, asbestos-containing material, lead-containing
paint or plumbing, polychlorinated biphenyls, radioactive materials or
radon.
"Houma-Thibodaux" shall mean Houma-Thibodaux Cellular Partnership, a Louisiana
general partnership.
"Houma-Thibodaux Management Agreement" shall have the meaning set forth in
Section 4.25(a).
"Houston Partnership Agreement" shall mean the Houston Cellular Telephone
Company, L.P. Limited Partnership Agreement, dated October 2, 1998.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"Huntsville Cellular" shall mean Huntsville Cellular Telephone Corp., Inc., an
Alabama corporation and its successor companies.
"Huntsville Shares" shall mean all of the issued and outstanding equity
interests of Huntsville Cellular in whatever form such equity
securities may be held.
"Indemnified Parties" shall have the meaning set forth in Section 7.2(a).
"Indemnifying Party" shall have the meaning set forth in Section 7.5.
"Indianapolis License Assignment Agreement" shall mean the Assignment Agreement
between Ameritech Wireless Communications, Inc., a Delaware
corporation, as assignor and Eclipse PCS of Indianapolis, LLC, a
Delaware limited liability company and a wholly-owned subsidiary of
assignor, dated as of July 24, 2000.
"Indianapolis 10 MHz License" shall mean the PCS Licenses relating to the
Indianapolis, Indiana MTA, identified by the FCC as call signs XXXX000,
XXXX000, XXXX000, KNLG403, KNLG451, KNLG460, KNLG461, XXXX000, XXXX000,
XXXX000 and KNLG572.
"Intellectual Property License Agreement" shall mean the Intellectual Property
License Agreements between Newco, as licensor, and each of SBC and
BellSouth, as licensees, and between each of SBC and BellSouth as
licensors and Newco, as licensee, substantially in the form of Exhibit
L hereto.
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"Intellectual Property Rights" shall have the meaning set forth in Section
3.1(u).
"Knowledge" or any similar phrase shall mean, with respect to SBC, the actual
knowledge of Xxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxxx Xxxx,
Xxxxx Xxxxxx or Xxxx Xxxxxxxx, and, with respect to BellSouth, the
actual knowledge of Xxxx Xxxxxxx, Xxxxxxx X. Xxxxxxxxx, Xxxxx Xxxxx,
Xxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxx or Xxxxxxx X. Xxxxxxxxxx, III.
"Laws" shall have the meaning set forth in Section 3.1(j).
"Leased Employees" shall have the meaning set forth in Section 4.4(e).
"Leasing Companies" shall have the meaning set forth in Section 4.4(a).
"Leasing Company Contribution Date" shall have the meaning set forth in Section
4.4(g).
"Licenses" shall have the meaning set forth in Section 3.1(n).
"LLC Unit" shall have the meaning ascribed to such term in the Newco LLC
Agreement.
"Losses" shall have the meaning set forth in Section 7.2(a).
"Management Agreement" shall mean each management agreement between Newco and
each of the SBC Additional Subsidiaries, substantially in the form
attached hereto as Exhibit K.
"Manager" shall mean Alloy Management Corp., a corporation to be formed as a
Delaware corporation.
"Marketing Agreement" shall have the meaning set forth in Section 4.25(e).
"Material Adverse Effect" shall have the meaning set forth in Section 3.1(a).
"MI-5 Assets" shall mean the assets and liabilities related to the Business held
by SBC and its Affiliates (other than Radiofone) relating to Michigan
Rural Service Area 5.
"MI-5 Management Agreement" shall have the meaning set forth in Section 4.25(b).
"Minority Interest" shall have the meaning set forth in Section 4.25(i).
"MSA" shall mean Metropolitan Statistical Area (as defined in Section 22.909 of
the FCC Rules).
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"National Marketing" shall mean BellSouth Cellular National Marketing, Inc., a
Georgia corporation.
"National Marketing Shares" shall mean all of the issued and outstanding equity
interests of National Marketing in whatever form such equity interests
may be held.
"Newco" shall have the meaning set forth in the Recitals.
"Newco LLC Agreement" shall mean the Limited Liability Company Agreement of
Newco, by and among, SBC, BellSouth and Manager in the form attached
hereto as Exhibit F.
"Newco LLC Unit" shall mean a unit of ownership in Newco.
"Newco Plans" shall have the meaning set forth in Section 4.4(k).
"Notice Period" shall have the meaning set forth in Section 7.5.
"Order" shall have the meaning set forth in Section 5.1(b).
"Other BellSouth Assets" shall mean all assets or rights of BellSouth or any of
its Subsidiaries that principally relate to or are principally used in
the conduct of the BellSouth Business, to the extent not held or owned
by the BellSouth Companies or their Subsidiaries on the Closing Date,
but not including any Excluded BellSouth Assets.
"Other SBC Assets" shall mean all assets or rights of SBC or any of its
Subsidiaries that principally relate to or are principally used in the
conduct of the SBC Business, to the extent not held or owned by the SBC
Companies or their Subsidiaries on the Closing Date, but not including
any Excluded SBC Assets.
"Overlap Laws" shall have the meaning set forth in Section 4.6.
"Paging Service" shall mean the provision of Domestic one- and two-way paging
and radiotelephone service pursuant to licenses issued by the FCC
pursuant to Subpart E of Part 22 and Subpart P of Part 90 of the FCC
Rules and all one- and two-way paging and radiotelephone services
reasonably ancillary thereto.
"Part 27 Service" shall mean mobile wireless voice and data service provided
pursuant to licenses issued by the FCC pursuant to Part 27 of the FCC
rules and all mobile voice and data services reasonably ancillary
thereto, other than with respect to the provision of multi-channel
video programming service and data services reasonably ancillary
thereto.
"Party" shall have the meaning set forth in the Recitals.
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"PCS Service" shall mean mobile wireless voice and data service provided
pursuant to licenses issued by the FCC pursuant to Part 24 of the FCC
rules regardless of the frequency block designated by the FCC under 47
C.F.R. ss. 24.229 and all mobile voice and data services reasonably
ancillary thereto.
"Permits" shall have the meaning set forth in Section 3.1(j).
"Permitted Encumbrances" shall mean, as to any Person, (i) mechanics',
carriers', workers', materialmen's, warehousemen's and other similar
liens arising or incurred in the ordinary course of business for sums
not yet due and payable or such liens as are being contested by such
Person in good faith, (ii) liens for Taxes not yet due and payable or
which are being contested in good faith by such Person, and (iii)
covenants, restrictions, reservations, rights, liens, easements and
other matters affecting title which do not individually or in the
aggregate materially impair the value or marketability of the property
subject thereto or materially interfere with the use of such property
in the conduct of the business of such Person as it is currently
conducted thereon.
"Person" shall mean any natural person or Entity.
"Pittsburgh Assets" shall mean all right, title and interest of the applicable
SBC Additional Subsidiary in and to (i) all FCC Licenses held by an
entity, in which the SBC Companies or any Subsidiary of a SBC Company
holds an equity interest (the "Pittsburgh Licensee"), covering Cellular
Market Area 013 (Pittsburgh, PA MSA) (the "Pittsburgh Market"); (ii)
all other Licenses held the Pittsburgh Licensee that relate exclusively
to its wireless telecommunications systems serving the Pittsburgh
Market; and (iii) all other assets, rights and properties that are (a)
owned or leased by SBC, a Subsidiary of SBC or the Pittsburgh Licensee
and (b) used exclusively by SBC, an Affiliate or the Pittsburgh
Licensee in connection with the Pittsburgh Licensee's Business in the
Pittsburgh Market.
"Pittsburgh Liabilities" shall mean any direct or indirect liability,
indebtedness, obligation, cost, expense, claim, loss, damage,
deficiency, guaranty or endorsements of or by any SBC Company or any
Subsidiary of a SBC Company relating exclusively (i) to the Pittsburgh
Assets or (ii) the SBC Business in the Pittsburgh Market.
"Pittsburgh Market" shall have the meaning set forth in the definition of
Pittsburgh Assets.
"Potential Contributor" shall have the meaning set forth in Section 7.8.
"PR Management Agreement" shall have the meaning set forth in Section 4.25(d).
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"PUC" shall have the meaning set forth in Section 3.1(b)(i).
"Radiofone" shall mean Radiofone, Inc, a Louisiana corporation.
"RAM Communications" shall mean RAM Communications Group, Inc., a Delaware
corporation and its successor companies.
"RAM Communications Shares" shall mean all of the issued and outstanding equity
interests of RAM Communications in whatever form such equity interests
may be held.
"Registration Rights Agreement" shall mean the Registration Rights Agreement to
be entered into among Manager, SBC and BellSouth, substantially in the
form of Exhibit G hereto.
"Resale Agreements" shall mean those Resale Agreements regarding resale of
Wireless Services to be entered into between Newco and each of SBC and
BellSouth, substantially in the form of Exhibit H hereto.
"Resolution Period" shall have the meaning set forth in Section 2.11(b).
"Resolved Items" shall have the meaning set forth in Section 2.11(b).
"San Antonio/Dallas" shall mean, collectively, the properties acquired pursuant
to the Purchase Agreement between GTE Wireless Incorporated and SBC,
dated as of June 30, 2000, with respect to San Antonio, Texas and
Dallas, Texas.
"Satellite Services" shall mean mobile wireless voice and data services (other
than multi-channel video services and data services reasonably
ancillary thereto) provided directly or indirectly via fixed or
non-geostationary satellite, directly or indirectly pursuant to
licenses issued by the FCC pursuant to Part 25 of the FCC Rules and all
mobile wireless voice and data services reasonably ancillary thereto
that are also provided via fixed or non-geostationary satellite.
"SBC" shall have the meaning set forth in the Preamble.
"SBC Additional Closing" shall have the meaning set forth in Section 2.9.
"SBC Additional Closing Date" shall have the meaning set forth in Section 2.9.
"SBC Additional Subsidiary" shall have the meaning set forth in Section 4.23.
"SBC Additional Subsidiary Value" shall mean, with respect to the SBC Additional
Subsidiary, the Fair Market Value of such Subsidiary as of the dates
set forth on Schedule 2 hereto for such Subsidiary.
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"SBC After Acquired Properties" shall mean businesses and other assets and
liabilities acquired by SBC or a Subsidiary thereof, with the consent
of BellSouth, pursuant to Section 4.26(a) hereof and listed on Schedule
5(a) hereto.
"SBC American" shall mean American Cellular Network Company, LLC, a Delaware
limited liability company.
"SBC American Shares" shall mean all of the issued and outstanding equity
interests of SBC American in whatever form such equity securities may
be held.
"SBC Benefits Liabilities" shall have the meaning set forth in Section 4.4(m).
"SBC Books and Records" shall mean all books, ledgers, files, reports, plans and
operating records of, or maintained for, the SBC Business, provided
that with respect to any of the foregoing items that are not held by
the SBC Companies or any of their Subsidiaries, SBC Books and Records
shall only be deemed to refer to items materially related to the SBC
Business.
"SBC Business" shall mean the Business as conducted by SBC and its Affiliates,
but shall not include the Excluded SBC Business.
"SBC Closing Net Debt" shall mean the SBC Net Debt as of the Closing.
"SBC Companies" shall have the meaning set forth on Schedule 4.
"SBC Companies' Licenses" shall have the meaning set forth in Section 3.1(n).
"SBC Compensation and Benefit Plans" shall have the meaning set forth in Section
3.1(i)(i).
"SBC Contribution" shall have the meaning set forth in Section 2.2.
"SBC CT 1" shall mean SNET Cellular, Inc., a Connecticut corporation and its
successor companies.
"SBC CT 1 Shares" shall mean all of the issued and outstanding equity interests
of SBC CT 1 in whatever form such equity interests may be held.
"SBC CT 2" shall mean SNET Mobility, Inc., a Connecticut corporation, and its
successor companies.
"SBC CT 2 Shares" shall mean all of the issued and outstanding equity interests
of SBC CT 2 in whatever form such equity interests may be held.
"SBC Deductible" shall have the meaning set forth in Section 7.3(b).
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"SBC Disclosure Letter" shall mean the disclosure letter, dated the date hereof,
delivered by SBC to BellSouth.
"SBC Domestic Wireless Group" shall have the meaning set forth in Section
3.1(f).
"SBC Employees" shall have the meaning set forth in Section 3.1(i)(i).
"SBC Financial Statements" shall have the meaning set forth in Section 3.1(f).
"SBC Holdings" shall mean SBC Alloy Holdings, Inc., a Delaware corporation.
"SBC Leasing Company" shall have the meaning set forth in Section 4.4(a).
"SBC Midwest" shall mean Ameritech Mobile Communications, Inc., a Delaware
corporation, and its successor companies.
"SBC Midwest Shares" shall mean all of the issued and outstanding equity
interests of SBC Midwest in whatever form such equity interests may be
held.
"SBC Midwest Wireless" shall mean Ameritech Wireless Communications Inc., a
Delaware corporation, and its successor companies.
"SBC Mobile" shall mean Southwestern Xxxx Mobile Systems, Inc., a Delaware and
Virginia corporation, and its successor companies.
"SBC Mobile Shares" shall mean the issued and outstanding equity interests of
SBC Mobile held by SBC PAC and SBC Wireless in whatever form such
equity interests may be held.
"SBC Net Debt" shall mean, as calculated at the Closing Date, (x) the sum of the
liabilities (other than capital lease obligations under the Tower
Transaction of SBC) of (a) each of the SBC Companies (including for
such purposes, each direct and indirect wholly owned Subsidiary of a
SBC Company) and (b) each other Subsidiary of the SBC Companies
multiplied by the direct or indirect percentage ownership as set forth
in Schedule 3.1(d)(i) of the SBC Disclosure Letter, minus (y) the sum
of the current assets (including cash and cash equivalents, but
excluding assets relating to a Tower Transaction of SBC to the extent
that SBC is solely entitled to such asset) of (a) each of the SBC
Companies (including for such purposes each direct and indirect wholly
owned Subsidiary of a SBC Company) and (b) each other Subsidiary of the
SBC Companies multiplied by the percentage ownership as set forth in
Schedule 3.1(d)(i) of the SBC Disclosure Letter, clauses (x) and (y)
being calculated from time to time in a manner consistent with GAAP.
The Fair Market Value on the Closing Date of the securities of @Track
Communications, Inc. owned by the SBC Companies on the
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Closing Date shall be deemed a current asset of the SBC Companies for
purposes of the calculation of the SBC Net Debt. The amounts set forth
on Schedules 6(a)(1) and 6(a)(2) hereto shall be deemed to be current
assets of the SBC Companies for purposes of calculating SBC Net Debt.
All fees and expenses paid or accrued by SBC, an SBC Company or a
Subsidiary thereof, in connection with the acquisition of the SBC After
Acquired Properties prior to Closing shall be deemed to be a current
asset of the SBC Companies.
"SBC New York" shall mean New York Holdings, LLC, a Delaware limited liability
company.
"SBC New York Shares" shall mean all of the issued and outstanding equity
interests of SBC New York in whatever form such equity securities may
be held.
"SBC PAC" shall mean Pacific Telesis Group, a Nevada corporation, and its
successor companies.
"SBC Pacific" shall mean Pacific Telesis Mobile Services, a California
corporation, and its successor companies.
"SBC Pacific Shares" shall mean all of the issued and outstanding equity
interests of SBC Pacific in whatever form such equity interests may be.
"SBC Pension Plans" shall have the meaning set forth in Section 3.1(i)(ii).
"SBC PR" shall mean SBC Wireless-Puerto Rico, Inc., a Delaware corporation and
its successor companies.
"SBC Proportionate Share" shall have the meaning set forth in Section 4.4(m).
"SBC Required Consents" shall have the meaning set forth in Section 3.1(b)(i).
"SBC Shares" shall mean collectively the XXX XX 0 Shares, SBC CT 2 Shares, SBC
Midwest Shares, SBC American Shares, SBC Mobile Shares, SBC New York
Shares and SBC Pacific Shares.
"SBC Subsidiary Restructuring" shall have the meaning set forth in Section
4.22(a).
"SBC Transferred Employees" shall have the meaning set forth in Section 4.4(b).
"SBC Wireless" shall mean SBC Wireless, Inc., a Delaware corporation, and its
successor companies.
"SBC Wireless Employees" shall have the meaning set forth in Section 4.4(b).
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"SBC Wireless LLC" shall mean the limited liability company formed under the
laws of Delaware holding all of the SBC Shares, a 0.96% limited
partnership interest in Springwich Cellular L.P., partnership interests
in Houma-Thibodaux Cellular Partnership, common stock in @Track
Communications, Inc. and all of the equity interests in Southwestern
Mobile Systems Long Distance LLC, GTE Wireless Seattle, LLC and GTE
Wireless Victoria, LLC.
"SBC Wireless LLC Shares" shall mean all of the issued and outstanding equity
interests of SBC Wireless LLC in whatever form such equity interests
may be.
"Seattle" shall refer to the properties acquired pursuant to the Purchase
Agreement between GTE Wireless Incorporated and SBC Communications
Inc., dated as of June 30, 2000 with respect to Seattle, Washington.
"Stockholders' Agreement" shall mean the Stockholders' Agreement to be entered
into by and among SBC, BellSouth and Manager, substantially in the form
set forth in Exhibit M.
"Strategic Review Committee" shall have the meaning ascribed to such term in the
Newco LLC Agreement.
"Subsidiary" shall mean, as to any Person, any Person (i) of which such Person
directly or indirectly owns securities or other equity interests
representing fifty percent or more of the aggregate voting power, (ii)
of which such Person possesses fifty percent or more of the right to
elect directors or Persons holding similar positions or (iii) which
such person Controls directly or indirectly through one or more
intermediaries.
"Target BellSouth Net Debt" shall mean $3,150,000,000.
"Target SBC Net Debt" shall mean $6,000,000,000.
"Tax Returns" shall mean all reports and returns (including elections,
declarations, disclosures, schedules, estimates, information returns
and claims for refund) required to be supplied to a taxing authority
with respect to Taxes.
"Taxes" shall mean all federal, state, local and foreign income, profits,
franchise, gross receipts, environmental, customs duty, capital stock,
severance, stamp, payroll, sales, employment, unemployment, disability,
use, property, withholding, excise, production, value added, occupancy
and other taxes, duties or assessments of any nature whatsoever,
together with all interest, penalties and additions imposed with
respect to such amounts and any interest in respect of such penalties
and additions.
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"Telecom Services" shall have the meaning set forth in the Newco LLC Agreement.
"Termination Date" shall have the meaning set forth in Section 6.1(d).
"Texas RSAs" shall refer to the properties acquired pursuant to the Purchase
Agreement between GTE Wireless Incorporated and SBC, dated as of June
30, 2000 with respect to Texas RSAs 10B3, 11 and 16.
"Total Benefits Liabilities" shall have the meaning set forth in Section 4.4(m).
"Tower Bankruptcy" shall mean the appointment of a receiver or liquidator or
trustee or assignee in bankruptcy or insolvency of the Tower Lessor or
of its property, the Tower Lessor's inability to pay its debts
generally as they become due or the adjudication of a Tower Lessor as a
bankrupt.
"Tower Lessor" shall have the meaning set forth in Section 7.9.
"Tower Transaction" shall have the meaning set forth in Schedule 4.2 of the SBC
Disclosure Letter.
"Transaction" shall mean collectively the transactions contemplated by this
Agreement, including (i) the SBC Contribution and (ii) the BellSouth
Contribution.
"Transfer Date" shall have the meaning set forth in Section 4.4(b).
"Transfer Taxes" means all federal, state, local or foreign sales, use, value
added, documentary, stamp or similar Taxes that may be imposed in
connection with the transfers contemplated by this Agreement, together
with all interest, penalties and additions imposed with respect to such
amounts and any interest in respect of such penalties and additions.
"Transferred Employees" shall have the meaning set forth in Section 4.4(b).
"Transition Group" shall have the meaning set forth in Section 4.9.
"Transition Marks Agreements" shall mean the Transition Marks Agreements between
Newco and each of BellSouth Intellectual Property Marketing
Corporation, a Georgia corporation, and SBC, substantially in the form
of Exhibit N hereto.
"Transition Services Agreement" shall mean the Transition Services Agreement
between each of BellSouth and SBC, as service providers, and Newco,
substantially in the form of Exhibit J hereto.
"Unresolved Items" shall have the meaning set forth in Section 2.11(c).
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"Utilities Laws" shall have the meaning set forth in Section 3.1(b)(i).
"Victoria" shall refer to the properties acquired pursuant to the Purchase
Agreement between GTE Wireless Incorporated and SBC, dated as of June
30, 2000 with respect to Victoria, Texas.
"West Texas" shall refer to the properties acquired pursuant to the Asset
Purchase Agreement, dated as of April 27, 2000 by and between Corpus
Christi SMSA Limited Partnership, E.N.M.R. Telephone Cooperative and
Plateau Telecommunication Incorporated.
"Wireless Agency Agreements" shall mean the agency agreements between Newco and
each of BellSouth and SBC or a Subsidiary thereof, each as an agent,
relating to Wireless Services (as defined in the LLC Agreement),
substantially in the form of Exhibit I hereto.
"Wireless Data Service" shall mean the provision of Domestic wireless data
service pursuant to licenses issued by the FCC pursuant to Subparts E
and H of Part 22 of the FCC Rules and Subpart S of Part 90 of the FCC
Rules and all wireless data services customarily ancillary thereto.
"Wireless Investco" shall mean Wireless Telecommunications Investment Company
LLC, a Delaware limited liability company which shall be deemed to be
the sole non-operating company of BellSouth.
"Wireline Agency Agreements" shall mean the agency agreements between Newco, as
an agent, and each of BellSouth and SBC or a Subsidiary thereof
relating to Telecom Services, substantially in the form of Exhibit I
hereto.
1.5 Other Terms. Other terms may be defined elsewhere in the text
of this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.
1.6 Other Definitional Provisions. The words "hereof," "herein,"
and "hereunder" and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement.
(a) The terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
(b) The terms "dollars" and "$" shall mean United States
dollars.
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(c) References herein to a specific Section, Subsection
or Schedule shall refer, respectively, to Sections, Subsections or Schedules of
this Agreement, unless the express context otherwise requires.
(d) The words "include," "includes," and "including" when
used in this Agreement, shall be deemed to be followed by the words "without
limitation."
(e) Any reference herein to any law, rule, regulation,
order or other act of a Governmental Entity, or to any Ancillary Agreement
between the Parties hereto or their Subsidiaries, shall be deemed to include a
reference to any such law, rule, regulation, order or other act or any such
agreement, in each case as it may be amended or supplemented from time to time,
and any reference to a form under the Securities Act of 1933, as amended, or the
Securities and Exchange Act of 1934, as amended, shall include any successor
forms thereto. In addition, any reference to the date hereof shall be deemed to
mean April 4, 2000.
(f) Any reference contained herein to Subsidiary and SBC
Companies, shall, except in connection with Section 3.1(d) be deemed to exclude
any SBC After Acquired Properties listed on Schedule 5(a)(1) hereto (including
for the purposes of calculating the SBC Net Debt), provided that, for purposes
of Article IV hereof, the term SBC Companies shall include all SBC After
Acquired Properties for any period following such time as the particular
property becomes owned by one of the SBC Companies or a Subsidiary thereof.
ARTICLE II
FORMATION AND CONTRIBUTIONS
2.1 Formation of Newco and Manager. (a) The Parties agree that
promptly following the receipt of approval or suspension under the EU Merger
Regulation, a certificate of incorporation of Manager substantially in the form
attached hereto as Exhibit B shall be filed with the Secretary of State of
Delaware for Manager and the initial bylaws of Manager shall be substantially in
the form attached hereto as Exhibit C. Promptly following the contribution to
Newco by BellSouth described in Section 2.1(b), one share of Class B common
stock, par value $0.01 per share, of Manager will be issued to SBC and one share
of Class B common stock, par value $0.01 per share, of Manager will be issued to
BellSouth each in exchange for $31. At or prior to the Closing, the Parties
agree to, and agree to cause Manager to enter into the Stockholders' Agreement.
(b) Reasonably promptly after the incorporation of
Manager, SBC shall, or shall cause an Affiliate to, form Newco and shall, or
shall cause an Affiliate to, file a certificate of formation with the Secretary
of State of Delaware, substantially in the form attached hereto as Exhibit A
(the "Certificate of Formation"). Prior to the Closing, SBC agrees to contribute
$150 to Newco in exchange for 5 LLC Units, BellSouth agrees
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to contribute $90 to Newco in exchange for 3 LLC Units and SBC and BellSouth
agree to cause Manager to contribute $60 to Newco in exchange for 2 LLC Units.
(c) It is understood that all agreements and obligations
entered into in this Agreement by SBC in favor of BellSouth, and by BellSouth in
favor of SBC shall be deemed in each case to have also been made in favor of
Newco whether such agreements or obligations relate to periods prior to or after
the Closing.
(d) SBC agrees that upon its formation Manager shall not
have any assets, liabilities or obligations of any nature other than those
incident to its formation and any acquired pursuant to this Agreement or any of
the Ancillary Agreements.
2.2 Contribution of SBC Wireless LLC Shares. On the terms and
subject to the conditions set forth herein, at the Closing, SBC shall or shall
cause its Subsidiaries to convey, transfer and assign to Newco all of the right,
title and interest in and to the SBC Wireless LLC Shares and to the extent
permitted by Law or any relevant Contract, the Other SBC Assets (except the SBC
Additional Subsidiaries and those properties of SBC described in Section 4.25
may not be so contributed) to the extent held by SBC or any Subsidiary thereof,
in each case, free and clear of all Encumbrances except for the Encumbrances set
forth on Schedule 2.2 of the SBC Disclosure Letter and, except with respect to
the Other SBC Assets, Permitted Encumbrances (the "SBC Contribution").
2.3 Contribution of BellSouth Shares. On the terms and subject to
the conditions set forth herein, at the Closing, BellSouth shall or shall cause
its Subsidiaries to convey, transfer and assign to Newco all of the right, title
and interest in and to the BellSouth Shares and, to the extent permitted by Law
or any relevant Contract, the Other BellSouth Assets (except the BellSouth
Additional Subsidiary and those properties of BellSouth described in Section
4.25 may not be so contributed) to the extent held by BellSouth or any
Subsidiary of BellSouth, in each case, free and clear of all Encumbrances except
for the Encumbrances set forth on Schedule 2.3 of the BellSouth Disclosure
Letter and, except with respect to the Other BellSouth Assets being contributed,
Permitted Encumbrances (the "BellSouth Contribution").
2.4 Issuance of Newco LLC Units. On the terms and subject to the
conditions set forth herein, at the Closing, in exchange for the SBC
Contribution and the BellSouth Contribution, respectively, SBC and BellSouth
shall cause Newco to issue LLC Units to SBC Holdings and the BellSouth Holdings
Entities such that SBC Holdings and the BellSouth Holdings Entities shall be
issued the number of LLC Units specified on Schedule 2.4 hereto; provided that
at the Closing SBC and its direct and indirect wholly owned Subsidiaries shall
own 60% of the outstanding LLC Units, disregarding for such purpose any LLC
Units owned by Manager outstanding at such time, and BellSouth and its direct
and indirect wholly owned Subsidiaries shall own 40% of the outstanding LLC
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Units, disregarding for such purpose any LLC Units owned by Manager outstanding
at such time.
2.5 Closing. (a) The consummation of the transactions contemplated
hereby, including the delivery of the SBC Wireless LLC Shares, and the BellSouth
Shares, and the issuance of Newco LLC Units in the number specified in Section
2.4 (the "Closing") shall take place at the offices of Xxxxxxxx & Xxxxxxxx, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx as promptly as is practicable on the third
Business Day following the day on which the conditions set forth in Article V
hereof have been satisfied or duly waived (other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the satisfaction
or waiver of those conditions), or at such other time and place as the Parties
may mutually agree. The date on which the Closing occurs is called the "Closing
Date."
(b) At the Closing:
(i) BellSouth shall deliver or cause to be
delivered to Newco assignments effective to convey the BellSouth
Shares, in form reasonably acceptable to Newco and SBC, free and clear
of all Encumbrances, except as provided in Section 2.3;
(ii) SBC shall deliver or cause to be delivered
to Newco assignments effective to convey the SBC Wireless LLC Shares,
in form reasonably acceptable to Newco and BellSouth, free and clear of
all Encumbrances, except as provided in Section 2.2; and
(iii) SBC and BellSouth shall cause the issuance
of LLC Units by Newco in the amounts specified in Section 2.4, free and
clear of all Encumbrances, other than those Encumbrances contained in
the Newco LLC Agreement.
2.6 Additional Closing Deliveries by SBC. At the Closing, SBC
shall also deliver, or cause to be delivered, to Newco the following:
(a) such other instruments or documents, in form and
substance reasonably acceptable to Newco and BellSouth, as may be necessary to
transfer the SBC Wireless LLC Shares and to vest in Newco all of SBC Holding's
right, title and interest therein;
(b) such other instruments or documents, in form and
substance reasonably acceptable to Newco and BellSouth, as may be necessary to
transfer all rights of ownership in any Other SBC Assets, subject to Section
4.18 hereof;
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(c) a copy of each of the Ancillary Agreements not
previously executed, to which it or its Subsidiary is to be a party, duly
executed by it or the applicable Subsidiary; and
(d) the certificates and opinions to be delivered
pursuant to Section 5.2 hereof.
2.7 Additional Closing Deliveries by BellSouth. At the Closing,
BellSouth shall also deliver or cause to be delivered to Newco the following:
(a) such other documents or instruments in form and
substance reasonably acceptable to Newco and SBC as may be necessary to transfer
the BellSouth Shares and to vest in Newco all of the BellSouth Holdings
Entities' right, title and interest therein;
(b) such other instruments or documents, in form and
substance reasonably acceptable to Newco and SBC, as may be necessary to
transfer all rights of ownership in any Other BellSouth Assets, subject to
Section 4.20 hereof;
(c) a copy of each of the Ancillary Agreements not
previously executed, to which it or its Subsidiary is to be a party, duly
executed by it or the applicable Subsidiary; and
(d) the certificates and opinions to be delivered by or
on behalf of BellSouth pursuant to Section 5.3 hereof.
2.8 Deliveries by Newco. At the Closing, BellSouth and SBC shall
cause Newco to deliver to BellSouth and SBC a duly executed copy of each of the
Ancillary Agreements not previously executed to which Newco is to be a party.
2.9 SBC Additional Closing. (a) After the Closing and prior to
December 31, 2009, SBC may contribute or cause to be contributed to Newco the
SBC Additional Subsidiary (provided that the SBC Additional Subsidiary shall not
contribute the Pittsburgh Assets and the Pittsburgh Liabilities) together with
all cash distributions, which have been made to the SBC Additional Subsidiary
with respect to the assets and liabilities being contributed, between the
Closing Date and the SBC Additional Closing Date with respect to the SBC
Additional Subsidiary, net of Taxes required to be paid with respect to such
distributions, plus interest from the date of each such distribution at the
prime rate publicly announced from time to time by Bank of America or any
successor thereto compounded annually from the date of each such distribution
(such contribution shall be the "SBC Additional Closing"). The SBC Additional
Closing shall occur on the fifth Business Day following the date on which SBC
provides notice to Newco that the SBC Additional Closing is to occur; provided
that, if any notice to or approval shall be required to be made or obtained from
any Governmental Entity, the SBC Additional
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Closing shall take place on the second Business Day following the time that the
last to be made or obtained of such filings or approvals is made or obtained;
provided that the SBC Additional Closing shall always occur on the last Business
Day of a month or at such other time as SBC and Newco shall agree in writing
(the date of such SBC Additional Closing shall be the "SBC Additional Closing
Date"). SBC shall not be required to effect the SBC Additional Closing if any
Governmental Entity of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law (whether temporary, preliminary or
permanent) that is in effect and enjoins or otherwise prohibits such SBC
Additional Closing or any Governmental Entity shall have notified SBC of any
proceeding seeking the foregoing.
(b) The SBC Additional Closing shall take place at the
main offices of Newco, as promptly as practicable after 10 a.m., local time, on
the SBC Additional Closing Date or at such other time or place as SBC and Newco
shall agree in writing. At the SBC Additional Closing, SBC shall deliver or
cause to be delivered to Newco all of the equity interests in the SBC Additional
Subsidiary, free and clear of all Encumbrances, together with all instruments or
documents, in form and substance reasonably acceptable to Newco, as may be
necessary to transfer such equity interests to Newco and to vest in Newco all of
SBC Holding's right, title and interest therein.
(c) In the event that the SBC Additional Subsidiary shall
not have been contributed to Newco prior to December 31, 2009, SBC shall
promptly pay to Newco in cash an amount equal to the product of (x) 2 and (y)
the SBC Additional Subsidiary Value not contributed to Newco. The provisions of
this subsection (c) shall not apply to the value attributed to (i) the
Pittsburgh Assets and the Pittsburgh Liabilities if the Arkansas Assets and the
Arkansas Liabilities are contributed or (ii) the Arkansas Assets and the
Arkansas Liabilities if the Pittsburgh Assets and the Pittsburgh Liabilities are
contributed.
2.10 BellSouth Additional Closing. (a) Newco shall have the right
to direct BellSouth and its Subsidiaries to make the election provided in
Section 9.1 of the ABC Agreement. BellSouth and SBC shall cause the Strategic
Review Committee of Manager to meet at least once during the 10-day period
beginning on December 13, 2000 to determine which election, if any, it shall
make. The Persons nominated by BellSouth to be directors of Manager who serve as
members of the Strategic Review Committee shall vote as directed by the persons
nominated by SBC as members of such Committee as to the making of such election.
Promptly following such meeting, BellSouth shall cause the applicable BellSouth
Subsidiaries to provide notice of the election, if any, in accordance with the
applicable procedure in the ABC Agreement.
(b) BellSouth shall effect Manager's election in
accordance with the ABC Agreement and, at the applicable BellSouth Additional
Closing, shall contribute to Newco its interest in the Subsidiaries of ABC
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Holding or its remaining interest in ABC Holding in accordance with paragraph
(g) below, and $1.150 billion (in the event that Wireless Investco is not
contributed with at least $1.150 billion in cash or cash equivalents) (the "AB
Account"), net of income Taxes payable with respect to any such cash. In
addition, BellSouth shall contribute to Newco cash in an amount equal to the
interest payments on the AB Account and the distributions received by BellSouth
or its Affiliates since the Closing attributable to the interest being
contributed to Newco, other than distributions from Wireless Investco of cash or
cash equivalents held by Wireless Investco on the Closing Date in excess of the
AB Account ("AB Excess") and interest payments on the AB Excess, net of any
Taxes paid or to be payable on income reported by BellSouth or its Affiliates
attributable to the interest being contributed, plus interest at the rate of
7.5% on a per annum basis from the date of each such distribution.
(c) If Newco does not make an election under Section 9.1
of the ABC Agreement, but an election later is made under Section 9.2 of the ABC
Agreement, following the closing of the transaction contemplated by such
election, BellSouth shall make the applicable contribution to Newco in
accordance with Section 2.10(b) above.
(d) The contribution made by a BellSouth Subsidiary or
Subsidiaries as provided in 2.10(b) or (c) above shall be a "BellSouth
Additional Closing." Each Entity in which BellSouth contributes equity interests
shall be a "BellSouth Additional Subsidiary."
(e) A BellSouth Additional Closing shall occur on the
fifth Business Day following the date on which BellSouth provides notice to
Newco that a BellSouth Additional Closing is to occur; provided that, if any
notice or approval shall be required to be made to or obtained from any
Governmental Entity, such BellSouth Additional Closing shall take place on the
second Business Day following the time that the last to be made or obtained of
such filings or approvals is made or obtained; provided that a BellSouth
Additional Closing shall always occur on the last Business Day of a month or at
such other time as BellSouth and Newco shall agree in writing (the date of each
such BellSouth Additional Closing shall be a "BellSouth Additional Closing
Date"). BellSouth shall not be required to effect a BellSouth Additional Closing
if any Governmental Entity of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law (whether temporary, preliminary or
permanent) that is in effect and enjoins or otherwise prohibits the BellSouth
Additional Closing or any Governmental Entity shall have notified BellSouth of
any proceeding seeking the foregoing.
(f) Each BellSouth Additional Closing shall take place at
the main offices of Newco, as promptly as practicable after 10 a.m., local time
on the relevant BellSouth Additional Closing Date or at such other time or place
as BellSouth and Newco shall agree in writing.
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(g) If Newco shall have made the election set forth in
Section 2.10(b) and the BellSouth Additional Subsidiary shall not have been
contributed to Newco by December 31, 2002, then BellSouth shall promptly pay
cash to Newco in the amount of the BellSouth Additional Subsidiary Value.
(h) At each BellSouth Additional Closing, BellSouth shall
deliver, or cause to be delivered, to Newco all of its equity interests in the
relevant BellSouth Additional Subsidiary, free and clear of all Encumbrances
together with all instruments or documents, in form and substance reasonably
acceptable to Newco as may be necessary to transfer such equity interests to
Newco and to vest in Newco all right, title and interest therein.
(i) As soon as practicable, but in no event later than
forty-five (45) days following the BellSouth Additional Closing Date, Newco
shall, on a basis consistent with GAAP consistently applied, prepare and deliver
to BellSouth a statement showing (x) the liabilities of the BellSouth Additional
Subsidiary calculated in a manner consistent with GAAP and (y) the current
assets (including cash and cash equivalents) of such BellSouth Additional
Subsidiary (including for purposes of this calculation the current assets of
only those Subsidiaries that are operating companies) calculated in accordance
with GAAP consistently applied, each as of the BellSouth Additional Closing
Date. In the event of any disputes over the calculation prepared by Newco, the
procedures set forth in Section 2.11(b) and (c) shall apply. Within five
Business Days following either (i) an agreement by BellSouth and Newco as to the
calculation, or (ii) the determination of the CPA Firm pursuant to Section
2.11(c), the following payments shall be made:
(A) To the extent the number in (x)
above exceeds the number in (y) above, such BellSouth Additional
Subsidiary shall pay to Newco, in cash, the amount by which the number
in (x) above exceeds the number in (y) above.
(B) To the extent the number in (y)
above exceeds the number in (x) above, Newco shall pay to such
BellSouth Additional Subsidiary, in cash, the amount by which the
number in (y) above exceeds the number in (x) above.
(j) BellSouth shall cause Wireless Investco, a
non-operating company that is a Subsidiary of a BellSouth Additional Subsidiary
to own, free and clear of all Encumbrances, $1.150 billion in cash and cash
equivalents as of the Closing Date and shall maintain at least such level of
cash and cash equivalents in such entity, together with all interest payments
related to the AB Account, through the BellSouth Additional Closing or, if there
is no such closing, until the time of determination of the BellSouth Additional
Subsidiary Value pursuant to Section 2.10(g).
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(k) Any payments made pursuant to this Section 2.10 shall
be made according to the procedures set forth in Section 2.11(e).
2.11 Net Debt. (a) As soon as practicable, but in no event later
than ninety (90) days following the Closing Date, Newco shall, on a basis
consistent with GAAP prepare and deliver to each of SBC and BellSouth a
statement showing the calculation of the Closing Net Debt (the "Calculation").
The Calculation shall separately set forth the SBC Closing Net Debt and
BellSouth Closing Net Debt.
(b) After receipt of the Calculation, SBC and BellSouth
shall each have 60 days to review the Calculation. Newco, SBC and BellSouth
shall each provide the others and their authorized representatives reasonable
access during normal business hours and without significant disruption to their
respective business, to (i) all of their and their Subsidiaries' respective
books, records and employees having relevant information concerning the
Calculation and (ii) the accountants who assisted Newco in preparing the
Calculation and such accountants' relevant supporting workpapers. Unless SBC or
BellSouth delivers written notice to Newco and to SBC or BellSouth, as the case
may be, on or prior to the 60th day after Newco's delivery of the Calculation
stating that SBC or BellSouth, as the case may be, has objections to the
Calculation and describing any such objections with reasonable particularity,
SBC and BellSouth shall be deemed to have accepted and agreed to the
Calculation. In addition, any item included in the Calculation which is not
objected to by either SBC or BellSouth shall be deemed to be accepted by SBC and
BellSouth (the "Resolved Items") and any amounts included within a Resolved Item
shall be deemed to be final, binding and conclusive. If SBC or BellSouth
notifies Newco of its objections to the Calculation, SBC, BellSouth and Newco
shall, within 10 days (or such longer period as the parties may agree) following
such notice (the "Resolution Period"), attempt to resolve their differences, and
any written resolution by them as to any disputed amounts shall be final,
binding and conclusive.
(c) Any amounts remaining in dispute at the conclusion of
the Resolution Period ("Unresolved Items") shall be submitted to Xxxxxx Xxxxxxxx
LLP (such firm being referred to as the "CPA Firm") or, if such firm shall be
unable or unwilling to serve in such capacity or if the parties shall otherwise
mutually agree, such other nationally recognized firm of independent accountants
mutually agreed by SBC, BellSouth and Newco (and, in such case, such firm shall
be deemed to be the CPA Firm), within 10 days after the expiration of the
Resolution Period. Each Party agrees to execute, if requested by the CPA Firm,
an engagement letter with the CPA Firm containing reasonable terms. All fees and
expenses relating to the work, if any, to be performed by the CPA Firm shall be
borne by all of the parties equally. The CPA Firm shall act as an arbitrator and
not as an expert in determining the Unresolved Items. The CPA Firm's
determination of the Unresolved Items shall be made within 30 days after the
submission of the Unresolved Items to the CPA Firm, and, together with a
calculation of the Closing Working Capital and the Closing Long Term Liabilities
based upon the
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amount of Resolved Items and the CPA Firm's determinations of the Unresolved
Items, shall be set forth in a written statement delivered to SBC, BellSouth and
Newco by the CPA Firm and shall be final, binding and conclusive on the Parties
and Newco for all purposes.
(d) Within five (5) Business Days following either (i) an
agreement by SBC, BellSouth and Newco as to the Calculation or (ii) the CPA
Firm's determination of the Calculation, the following payments shall be made
(or, as to amounts payable to BellSouth, if the SBC Debt Threshold (as defined
in the Newco LLC Agreement) shall not have been met at such time, within five
(5) Business Days after the satisfaction of the SBC Debt Threshold):
(x) If the SBC Closing Net Debt exceeds the
Target SBC Net Debt, then SBC shall pay to Newco, in cash, an
amount equal to the amount by which the SBC Closing Net Debt
exceeds the Target SBC Net Debt. If the BellSouth Closing Net
Debt exceeds the Target BellSouth Net Debt, then BellSouth
shall pay to Newco, in cash, an amount equal to the amount by
which the BellSouth Closing Net Debt exceeds the Target
BellSouth Net Debt.
(y) If the Target SBC Net Debt exceeds the SBC
Closing Net Debt, then Newco shall pay to SBC, in cash, an
amount equal to the amount by which the Target SBC Net Debt
exceeds the SBC Closing Net Debt. If the Target BellSouth Net
Debt exceeds the BellSouth Closing Net Debt, then Newco shall
pay to BellSouth, in cash, an amount equal to the amount by
which the Target BellSouth Net Debt exceeds the BellSouth
Closing Net Debt.
(e) Any payments made pursuant to this Section 2.11 shall
be made by wire transfer of immediately available funds to an account indicated
in writing by the party to receive such funds and shall be accompanied by
interest at the rate of 7.5% calculated on the basis of a year of 360 days for
the actual number of days elapsed, accrued from the Closing Date up to and
including the date of payment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of SBC. Except as set forth in
the corresponding sections or subsections of the SBC Disclosure Letter, SBC
hereby represents and warrants to BellSouth and Newco as of the date hereof and
as of the Closing that except as modified by SBC Subsidiary Restructuring:
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(a) Organization, Good Standing and Qualification. Each
of it and its Subsidiaries that is a SBC Company or holds (beneficially or of
record) SBC Shares or any Other SBC Assets is a corporation, partnership,
limited liability company or other entity duly organized, validly existing and
in good standing under the laws of its respective jurisdiction of organization
and has all requisite corporate or similar power and authority to own and
operate its properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification, except where
the failure to be so qualified or in good standing is not, individually or in
the aggregate, reasonably likely to have a Material Adverse Effect on the SBC
Companies. It has made available to BellSouth a complete and correct copy of
its, its Subsidiaries that own of record SBC Shares, the SBC Companies' and the
SBC Companies' Subsidiaries' certificates of incorporation, articles of
incorporation or other comparable governing instruments, as the case may be, and
by-laws or other comparable governing instruments, each as in effect and as
amended through the date hereof. Such certificates of incorporation, articles of
incorporation, by-laws and other comparable governing documents as so made
available are in full force and effect.
As used in this Agreement, the term "Material Adverse Effect"
means, with respect to the SBC Companies, a material adverse effect on the
financial condition, properties, business or results of operations of the SBC
Companies and their Subsidiaries, taken as a whole, with respect to the
BellSouth Companies, a material adverse effect on the financial condition,
properties, business or results of operations of the BellSouth Companies and
their Subsidiaries taken as a whole, and, with respect to Newco, a material
adverse effect on the financial condition, properties, business or results of
operations of Newco and its Subsidiaries, assuming for such purposes the
completion of the Transaction in each case, other than effects arising out of
(i) general changes in economic conditions in the United States, (ii) changes
affecting the mobile wireless voice and data services industry generally or
(iii) changes resulting from the entry into this Agreement.
(b) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A)
under the HSR Act, (B) the necessary notices and, if any, approvals of
the FCC pursuant to the Communications Act or the FCC Rules, (C) the
necessary notices and necessary approvals, if any, of the state and
foreign public utility commissions or similar state or foreign
regulatory bodies (each a "PUC") identified in the SBC Disclosure
Letter pursuant to applicable state or foreign laws regulating CMRS
(together with the FCC Rules and the FAA Rules, "Utilities Laws") and
(D) the necessary notices and approvals of foreign Governmental
Entities identified in the SBC Disclosure Letter (such filings and/or
notices being the "SBC Required
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Consents"), no notices, reports or other filings are required to be
made by it or its Subsidiaries with, nor are any consents,
registrations, approvals, permits or authorizations required to be
obtained by it or its Subsidiaries from, any Governmental Entity, in
connection with the execution and delivery of this Agreement by it and
the consummation by it of the SBC Contribution or the SBC Additional
Closings hereby, except those that the failure to make or obtain would
not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect on the SBC Companies or prevent, materially
delay or materially impair its ability to consummate the transactions
contemplated by this Agreement.
(ii) The execution, delivery and performance of
this Agreement by it do not, and the consummation by it of the
transactions contemplated hereby will not, constitute or result in (A)
a breach or violation of, or a default under, its certificate of
incorporation or by-laws or the certificate of incorporation, by-laws
or other organizational documents, including partnership agreements and
limited liability company agreements, of any of the SBC Companies (B) a
breach or violation of, or a default under, the certificate of
incorporation or other organizational documents, including partnership
agreements and limited liability company agreements, of any
Subsidiaries of the SBC Companies (C) a breach or violation of, or a
default under, the acceleration of any obligations or the creation of a
lien, pledge, security interest or other Encumbrance on its assets or
the assets of any of its Subsidiaries (with or without notice, lapse of
time or both) pursuant to any Contract binding upon it or any of its
Subsidiaries or any Law or governmental or non-governmental permit or
license to which it or any of its Subsidiaries is subject or (D) any
change in the rights or obligations of any party under any of its or
its Subsidiaries' Contracts, except, in the case of clause (B), (C) or
(D) above, for any breach, violation, default, acceleration, creation
or change that, individually or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect on the SBC
Companies or prevent, materially delay or materially impair its ability
to consummate the transactions contemplated by this Agreement.
(c) Capitalization of the SBC Companies. The issued and
outstanding SBC Shares have been duly authorized and validly issued, are fully
paid and as of the date hereof are nonassessable and are owned by SBC or direct
or indirect wholly owned Subsidiaries of SBC free and clear of any Encumbrances.
There are no preemptive or other outstanding rights, options, warrants,
conversion rights, stock appreciation rights, redemption rights, agreements,
arrangements or commitments to issue or sell any shares of capital stock or
other securities of any of the SBC Companies or any securities or obligations
convertible or exchangeable into or exercisable for, or giving any Person a
right to subscribe for or acquire, any securities of any of the SBC Companies,
and no securities or obligations evidencing such rights are authorized, issued
or outstanding.
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(d) Subsidiaries of the SBC Companies.
(i) Schedule 3.1(d)(i) of the SBC Disclosure
Letter lists, as of the date hereof the name of each Subsidiary of each
of the SBC Companies and the equity interest of the SBC Company or one
or more of its Subsidiaries therein and lists the organizational name
of each other equity interest held by a SBC Company in one or more of
its Subsidiaries. All equity interests of each Subsidiary of a SBC
Company that are owned by such SBC Company or a Subsidiary of a SBC
Company are owned by a SBC Company or the applicable Subsidiary free
and clear of all Encumbrances, and all equity interests are duly
authorized, validly issued and fully paid. All other equity interests
that are owned by a SBC Company or a subsidiary of a SBC Company are
owned by the applicable SBC Company or subsidiary free and clear of all
Encumbrances.
(ii) As of the date hereof, none of the SBC
Companies or any of their Subsidiaries has any obligation to sell,
transfer or assign or has entered into a Contract regarding the sale,
transfer or assignment of any of its rights, securities or interests in
any Subsidiary of the SBC Companies or any of the other equity
interests owned by a SBC Company or any Subsidiary of a SBC Company.
(e) Corporate Authority; Approval. SBC has all requisite
corporate power and authority and has taken all corporate action necessary in
order to execute, deliver and perform its obligations under this Agreement and
the Ancillary Agreements and, prior to Closing, SBC Holdings shall have taken
all limited liability company action necessary to contribute, transfer and
assign the SBC Wireless LLC Shares to Newco. This Agreement and each of the
Ancillary Agreements are, or will be when executed, legal, valid and binding
agreements of SBC or the Subsidiary or Subsidiaries of SBC executing such
agreements enforceable against SBC or the applicable Subsidiary of SBC, as the
case may be, in accordance with their respective terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles (the "Bankruptcy and Equity Exception").
(f) Financial Statements. Schedule 3.1(f) of the SBC
Disclosure Letter contains true, complete and correct copies of (i) the
unaudited SBC Domestic Wireless Group Historical Combined Statements of Income
for the year ended December 31, 1999; and (ii) the unaudited SBC Domestic
Wireless Group Historical Combined Balance Sheets as of December 31, 1999 (the
"SBC Financial Statements"). The SBC Financial Statements fairly present in all
material respects and consistent with GAAP, the financial position of SBC
Wireless; SBC Pacific; SBC Midwest; SBC Midwest Wireless; SBC CT1 and SBC CT2;
and SBC Mobile (the "SBC Domestic Wireless Group") as of the date indicated and
the results of operations of the SBC Domestic Wireless Group for the period then
ended (subject to the absence of notes).
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(g) Absence of Certain Changes. Except as expressly
contemplated by this Agreement and except with respect to the Excluded SBC
Business, since December 31, 1999 (i) the SBC Companies have conducted their
respective businesses only in the ordinary and usual course of such businesses;
(ii) there has not been any change in the financial condition, properties,
business or results of operations of the SBC Companies and their Subsidiaries,
except those changes that have not had and would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect on the SBC
Companies; (iii) there has not been any damage, destruction or other casualty
loss with respect to any asset or property owned, leased or otherwise used by
the SBC Companies and their Subsidiaries, whether or not covered by insurance,
which damage, destruction or loss is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the SBC Companies; (iv) there
has not been any sale, transfer, conveyance, lease, creation of an Encumbrance
or other disposition of assets of the SBC Companies and their Subsidiaries
outside of the ordinary course of business; and (v) there has not been any
change by it or any SBC Company in accounting principles, practices or methods
of the SBC Companies.
(h) Litigation and Liabilities. There are no (i) civil,
criminal or administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the Knowledge of SBC, threatened against the SBC
Companies or any of their Affiliates or otherwise in connection with the SBC
Business or (ii) obligations or liabilities, whether or not accrued, contingent
or otherwise that are required to be disclosed under GAAP, or any other facts or
circumstances, in either such case, of which SBC has Knowledge that are
reasonably likely to result in any claims against or obligations or liabilities
of it or any of its Affiliates, except for those that have not had and are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect on the SBC Companies or prevent or materially impair or delay SBC's
ability to consummate the transactions contemplated by this Agreement.
(i) SBC Employee Benefits.
(i) A listing of each bonus, deferred
compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted
stock, stock option, employment, termination, severance, compensation,
medical, health or other plan, agreement, policy or arrangement (the
"SBC Compensation and Benefit Plans") that covers employees, directors,
former employees or former directors of the SBC Companies or their
Subsidiaries and any other employee of SBC or a Subsidiary of SBC whose
services are primarily related (or, for persons who no longer perform
such services, were related) to the SBC Business (the "SBC Employees")
and any trust agreements or insurance contracts forming a part of the
SBC Compensation and Benefit Plans is set forth in Schedule 3.1(i)(i)
of the SBC Disclosure Letter.
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(ii) All of the SBC Compensation and Benefit
Plans are in compliance with their terms and with all applicable Law,
including the Code and ERISA, except for failures to comply which are
not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on the SBC Companies. Each of the SBC
Compensation and Benefit Plans that is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA (a "SBC Pension Plan"
and collectively, the "SBC Pension Plans") and that is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS, and SBC does not have Knowledge of
any circumstances likely to result in revocation of any such favorable
determination letter. There is no pending or, to the Knowledge of SBC,
threatened claim, audit, investigation, litigation or other proceeding
relating to the SBC Compensation and Benefit Plans, except for
proceedings which are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on the SBC Companies. Neither
SBC nor any Subsidiary of SBC has engaged in a transaction with respect
to any of the SBC Compensation and Benefit Plans that, assuming the
taxable period of such transaction expired as of the date hereof, would
subject the SBC Companies or any of their Subsidiaries to a material
tax or penalty imposed by either Section 4975 of the Code or Section
502 of ERISA.
(iii) As of the date hereof, no liability under
Subtitle C or D of Title IV of ERISA (other than the payment of
prospective premium amounts to the Pension Benefit Guaranty Corporation
in the normal course) has been or is expected to be incurred by the SBC
Companies or any of their Subsidiaries with respect to any ongoing,
frozen or terminated "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any
of them, or the single-employer plan of any entity which is considered
one employer with it under Section 4001 of ERISA or Section 414 of the
Code (its "ERISA Affiliate") (each such single-employer plan, an "ERISA
Affiliate Plan"). The SBC Companies, their Subsidiaries and their ERISA
Affiliates have not contributed, or been obligated to contribute, to a
multiemployer plan under Subtitle E of Title IV of ERISA at any time
since September 26, 1980. No notice of a "reportable event," within the
meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed for any
of the SBC's Pension Plans or any of its ERISA Affiliate Plans within
the 12-month period ending on the date hereof or will be required to be
filed in connection with the transactions contemplated by this
Agreement.
(iv) None of the SBC Pension Plans nor any of
SBC's ERISA Affiliate Plans has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the Code
or Section 302 of ERISA. Neither SBC nor any of its Subsidiaries has
provided, or is required to provide, security to
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any SBC Pension Plans or to any of its ERISA Affiliate Plans pursuant
to Section 401(a)(29) of the Code.
(v) Under each of the SBC Pension Plans which is
a single-employer plan and each of SBC's ERISA Affiliate Plans, as of
the last day of the most recent plan year ended prior to the date
hereof, the actuarially determined present value of all "benefit
liabilities," within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in such
SBC Pension Plan's or SBC ERISA Affiliate Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such
SBC Pension Plan or SBC ERISA Affiliate Plan, and there has been no
material change in the financial condition of such SBC Pension Plan or
SBC ERISA Affiliate Plan since the last day of the most recent plan
year as such would affect any of the SBC Companies.
(vi) Except as set forth on Schedule 3.1(i)(vi)
to the SBC Disclosure Letter, there are no material obligations to the
SBC Employees for retiree health and life benefits under any of the SBC
Compensation and Benefit Plans or as required by applicable law.
(vii) The consummation of the transactions
contemplated by this Agreement (whether alone or in connection with any
other event) will not (x) entitle any SBC Employee to severance pay,
directly or indirectly, upon termination of employment, (y) accelerate
the time of payment or vesting or trigger any payment of compensation
or benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any of the SBC Compensation and
Benefit Plans or (z) result in any breach or violation of, or a default
under, any of the SBC Compensation and Benefit Plans, but excluding any
exceptions to (x), (y) and (z) which are not, individually or in the
aggregate, material.
(viii) Since December 31, 1999, except as
contemplated hereby, there has not been any increase in the
compensation payable or that could become payable by the SBC Companies
or any of their Subsidiaries to any SBC Employee or any amendment of
any of the SBC Compensation and Benefit Plans other than increases or
amendments in the ordinary course of business consistent with past
practice.
(j) Compliance with Laws. The SBC Business and businesses
of each of the SBC Companies and their Subsidiaries have not been, and are not
being, conducted in violation of any federal, state, local or foreign law,
statute, ordinance, regulation, judgment, order, decree, injunction, arbitration
award, franchise, license, authorization, opinion, agency requirement or permit
of any Governmental Entity or common law
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(collectively, "Laws"), except for violations or possible violations that have
not had and would not, individually or in the aggregate, be reasonably likely to
have a Material Adverse Effect on the SBC Companies or prevent or materially
impair SBC's ability to consummate the transactions contemplated by this
Agreement. No investigation or review by any Governmental Entity with respect to
the SBC Companies or any of their Subsidiaries is pending or, to the Knowledge
of SBC, threatened, nor has any Governmental Entity indicated an intention to
conduct the same, except for those the outcome of which have not had and would
not, individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on the SBC Companies or prevent or materially impair SBC's
ability to consummate the transactions contemplated by this Agreement. Each of
the SBC Companies and their Subsidiaries has all permits, licenses, franchises,
variances, exemptions, orders and other governmental authorizations, consents
and approvals (collectively, "Permits"), necessary to conduct their businesses
as presently conducted, except for those Permits the absence of which has not
had and would not, individually or in the aggregate, be reasonably likely to
have a Material Adverse Effect on the SBC Companies or prevent or materially
impair SBC's ability to consummate the transactions contemplated by this
Agreement.
(k) Environmental Matters. Except for such matters that,
individually or in the aggregate, have not had and would not be reasonably
likely to have a Material Adverse Effect on the SBC Companies: (i) each of the
SBC Companies and their Subsidiaries has complied with all applicable
Environmental Laws; (ii) the properties currently owned or operated by the SBC
Companies or any of their Subsidiaries (including soils, groundwater, surface
water, buildings or other structures) are not contaminated with any Hazardous
Substances; (iii) the properties formerly owned or operated by the SBC Companies
or any of their Subsidiaries were not contaminated with Hazardous Substances
during the period of ownership or operation by the SBC Companies or any of their
Subsidiaries; (iv) neither the SBC Companies nor any of their Subsidiaries is
subject to liability for any Hazardous Substance disposal or contamination on
any third party property; (v) neither the SBC Companies nor any of their
Subsidiaries has received any notice, demand, letter, claim or request for
information alleging that the SBC Companies or any of their Subsidiaries may be
in violation of or liable under any Environmental Law.
(l) Labor Matters. None of the SBC Companies nor any of
their Subsidiaries is the subject of any proceeding relating to any SBC Employee
before the National Labor Relations Board asserting the commission of an unfair
labor practice or is seeking to compel any of them to bargain with any labor
union or labor organization nor is there pending or, to the Knowledge of SBC,
threatened, nor has there been since January 1, 1995, any labor strike, dispute,
walkout, work stoppage, slow-down or lockout relating to any SBC Employee,
except in each case as has not had and would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect on the SBC
Companies. The collective bargaining agreements set forth on Schedule
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3.1(l) of the SBC Disclosure Letter are the only collective bargaining
agreements relating to any SBC Employee.
(m) Taxes. (i) SBC, the SBC Companies and each of their
Subsidiaries have prepared in good faith and duly and timely filed (taking into
account any extension of time within which to file) all material Tax Returns
required to be filed by any of them with respect to the SBC Companies or any of
their Subsidiaries and all such filed tax returns are complete and accurate in
all material respects; (ii) the SBC Companies and each of their Subsidiaries
have paid all Taxes that are shown as due on such filed Tax Returns or that the
SBC Companies or any of their Subsidiaries are obligated to withhold from
amounts owing to any employee, creditor or third party, except with respect to
matters contested in good faith or for such amounts that, individually or in the
aggregate, have not had and would not be reasonably likely to have a Material
Adverse Effect on the SBC Companies; (iii) as of the date hereof, there are not
pending or, to the Knowledge of SBC, threatened, in writing, any audits,
examinations, investigations or other proceedings in respect of Taxes or Tax
matters with respect to the SBC Companies; and (iv) there are not, to the
Knowledge of SBC, any unresolved questions or claims concerning the SBC
Companies' or any of their Subsidiaries' Tax liability that have had or would be
reasonably likely to have a Material Adverse Effect on the SBC Companies. No
material payments to be made to any of the officers or employees of the SBC
Companies or any of their Subsidiaries will as a result of consummation of the
transactions contemplated hereby be subject to the deduction limitations under
Section 280G of the Code.
(n) Regulatory Matters. The SBC Companies and their
Subsidiaries hold all licenses, franchises, certificates, consents, Permits,
qualifications and authorizations (including, without limitation, licenses
granted by the FCC ("FCC Licenses"), and licenses, authorizations and
certificates of public convenience and necessity from applicable state and local
authorities) from all Governmental Entities required under Utilities Laws
("Licenses") necessary for the lawful conduct of the SBC Business, other than
Licenses the lack of which, individually or in the aggregate, have not had and
would not be reasonably likely to have a Material Adverse Effect on the SBC
Companies. Schedule 3.1(n) of the SBC Disclosure Letter sets forth each License
obtained by SBC or any of its Subsidiaries as of the date hereof and which is,
or in the absence of a violation thereof, would be in full force and effect with
respect to the SBC Business (the "SBC Companies' Licenses"). To the Knowledge of
SBC, no event has occurred or fact exists with respect to the SBC Companies'
Licenses (other than the requirement to file in the future applications for
renewal and obtain renewals in the ordinary course) which permits, or after
notice or lapse of time or both would permit, revocation, non-renewal or
termination of any of such licenses or would result in any other impairment of
the rights of the holder of any of such licenses or which would be reasonably
likely to limit the operation of the SBC Companies' and their Subsidiaries'
businesses as they are currently conducted, except for revocations, limitations,
non-
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renewals or other terminations which, individually or in the aggregate, have not
had and would not be reasonably likely to have a Material Adverse Effect on the
SBC Companies. The SBC Companies and their Subsidiaries have performed their
respective obligations under the SBC Companies' Licenses with such exceptions
which, individually or in the aggregate, have not had and would not be
reasonably likely to have a Material Adverse Effect on the SBC Companies. The
FCC actions granting the SBC Companies' Licenses, together with all underlying
construction permits, have not been reversed, stayed, enjoined, annulled or
suspended, and there is not pending or, to the Knowledge of SBC, threatened, any
application, petition, objection or other pleading with the FCC or other
Governmental Entity which challenges or questions the validity of or any rights
of the holder under any of the SBC Companies' Licenses, except for such
reversals, stays, injunctions, annulments, suspensions, applications, petitions,
objections or other pleadings, which have not had and would not, individually or
in the aggregate, be reasonably likely to have a Material Adverse Effect on the
SBC Companies.
(o) Contracts. Schedule 3.1(o) of the SBC Disclosure
Letter lists the following Contracts to which any of the SBC Companies or any of
their Subsidiaries is a party:
(A) any agreement which materially restricts or
materially limits their ability or the ability of any of their
respective Affiliates to freely conduct the SBC Business or any other
business or otherwise operate in any geographic market;
(B) any collective bargaining agreement and any
written employment agreement;
(C) all agreements with respect to outstanding
indebtedness for money borrowed in excess of $50,000,000 or any
guaranty thereof;
(D) all material leases of real property, which
shall be deemed to include all leases of real property, with an annual
rental payment in excess of $50,000, and all sale/leaseback
arrangements relating to cellular towers;
(E) all partnership, shareholder or joint
venture agreements or other agreements relating to the management or
Control of any such partnership, joint venture or non-wholly owned
Subsidiary;
(F) all interconnection agreements; and
(G) any roaming agreements not terminable at the
option of either party thereto on 90 days or less notice.
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(ii) Each Contract listed on Schedule 3.1(o) to
the SBC Disclosure Letter is valid, binding, enforceable, and in full
force and effect, the SBC Companies or the applicable Subsidiary are
not in breach or default under any such Contract and no event has
occurred which, with notice or lapse of time or both, would constitute
such a breach or default, or permit termination, modification, or
acceleration, under such Contract, except where the failure to be so
valid, binding, enforceable or in full force and effect or such breach
or default, termination, modification or acceleration has not had and
would not be, either individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on the SBC Companies.
(p) Property and Leases. Schedule 3.1(p) to the SBC
Disclosure Letter contains a list of all real property owned by the SBC
Companies or any of their respective Subsidiaries or otherwise used primarily in
the SBC Business and real property leased pursuant to a lease agreement set
forth on Schedule 3.1(o) to the SBC Disclosure Letter. The SBC Companies and
their Subsidiaries have marketable title to all material owned real property set
forth on Schedule 3.1(p) and valid leasehold title to all material leased real
property set forth on Schedule 3.1(o) of the SBC Disclosure Letter, in each case
free and clear of all Encumbrances, other than Permitted Encumbrances.
(q) Brokers and Finders. Neither the SBC Companies nor
any of their respective officers, directors or employees has employed any broker
or finder or incurred any liability for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated in this
Agreement.
(r) Ownership of Assets. Substantially all of the assets,
properties, businesses, licenses and other assets, owned or leased by SBC, SBC
Wireless LLC and its Subsidiaries and forming a part of the SBC Business are
owned or leased by the SBC Companies and their respective Subsidiaries.
(s) Sufficiency of Assets. The assets and properties
owned or leased by the SBC Companies, SBC Wireless LLC or their respective
Subsidiaries, together with all Contracts to which the SBC Companies or their
respective Subsidiaries are a party, constitute the assets, properties and
Contract rights reasonably necessary to conduct the SBC Business in accordance
with past practice.
(t) Other Business. Other than with respect to the
Excluded SBC Business, none of the SBC Companies, their respective Subsidiaries
or the SBC Additional Subsidiaries conducts or engages in any business material
to the SBC Companies and their Subsidiaries taken as a whole other than the SBC
Business or owns or leases any assets material to the SBC Companies and their
Subsidiaries taken as a whole that are not used or intended for the use in the
SBC Business, other than obsolete assets.
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(u) Intellectual Property. Subject to Section 4.16
(Intercompany Obligations), the SBC Companies and their Subsidiaries each own,
or possess adequate licenses or other valid rights to use, all trademarks,
trademark rights, trade names, trade name rights, patents, patent rights,
industrial models, inventions, copyrights, service marks, trade secrets,
applications for trademarks and for service marks, know-how and other
proprietary rights and information, including rights to software (collectively,
"Intellectual Property Rights") used or held for use in connection with the SBC
Business except where the failure to have such ownership, possession or rights
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect on the SBC Companies. To the Knowledge of SBC, the SBC
Companies and their Subsidiaries are not the subject of any threatened or
pending lawsuits alleging the violation or infringement of any Intellectual
Property Rights of any third party that, individually or in the aggregate, would
be reasonably likely to have a Material Adverse Effect on the SBC Companies. To
the Knowledge of SBC, there are no material infringements of any Intellectual
Property Right owned by any of the SBC Companies or their Subsidiaries. None of
the SBC Companies or their Subsidiaries is in material breach of any agreements
pursuant to which any of them has a license to use Intellectual Property Rights,
and consummation of the transactions contemplated hereby will not constitute
such a material breach or otherwise reduce or impair, in any material respect,
the rights of any of them under such license agreements other than any breach
which would not, individually or in the aggregate, be reasonably likely to have
a Material Adverse Effect on the SBC Companies. No claims are pending or, to the
Knowledge of SBC, threatened by any Person with respect to the ownership,
validity or enforceability of any Intellectual Property Rights owned by any of
the SBC Companies or their Subsidiaries, or challenging or questioning the right
of the SBC Companies or their Subsidiaries to use any Intellectual Property
Rights owned by them, except claims that would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.
(v) After Acquired Properties. (i) The purchase prices
paid by SBC on August 29, 2000 for Seattle, Austin, Xxxxxxxx, Xxxxx XXXx, Xxx
Xxxxxxx/Xxxxxx, 00X0 and West Texas were at least the respective amounts set
forth next to the name of such property on Schedule 6(a)(2); (ii) the purchase
price offered by SBC or its Subsidiaries for the purchase of the equity
interests which they did not directly or indirectly own as of the time of such
offers for SBMS Cellular Telecommunications Springfield, Inc., Decatur Cellular
Telephone Company, Inc., SBMS Cellular Telecommunications Bloomington, Inc.,
Amcell of Atlantic City, Inc., Vineland Cellular Telephone Company, Inc.,
CellSouth of New Jersey, Inc., Aurora/Elgin Cellular Telephone Company, Inc.,
and Joliet Cellular Telephone Company, Inc. was not more than $20,632,961 in the
aggregate; and (iii) the offers made or to be made by SBC or its Subsidiaries to
the limited partners of each of AMPS of Detroit, AMPS of Cincinnati and AMPS of
Wisconsin in connection with the SBC Subsidiaries Restructuring were or will be
not
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more than the respective amounts set forth next to the name of such property on
Schedule 6(a)(4).
(w) No Other Representations and Warranties. Except for
representations and warranties contained in this Agreement, none of SBC, the SBC
Companies or their Affiliates, or any other Person makes any express or implied
representation or warranty on behalf of SBC with respect to the subject matter
of this Agreement.
3.2 Representations and Warranties of BellSouth. Except as set
forth in the corresponding sections or subsections of the BellSouth Disclosure
Letter, BellSouth hereby represents and warrants to SBC and Newco as of the date
hereof and as of the Closing that except as modified by the BellSouth Subsidiary
Restructuring:
(a) Organization, Good Standing and Qualification. Each
of it and its Subsidiaries that is a BellSouth Company or holds (beneficially or
of record) BellSouth Shares or any Other BellSouth Assets is a corporation,
partnership, limited liability company or other entity duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority to
own and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification, except where
the failure to be so qualified or in good standing is not, individually or in
the aggregate, reasonably likely to have a Material Adverse Effect on the
BellSouth Companies. It has made available to SBC a complete and correct copy of
its, its Subsidiaries that own of record BellSouth Shares, the BellSouth
Companies' and the BellSouth Companies' Subsidiaries' certificates of
incorporation, articles of incorporation or other comparable governing
instruments, as the case may be, and by-laws or other comparable governing
instruments, each as in effect and as amended through the date hereof. Such
certificates of incorporation, articles of incorporation, other comparable
governing instruments and by-laws as so made available are in full force and
effect.
(b) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A)
under the HSR Act, (B) the necessary notices and, if any, approvals of
the FCC pursuant to the Communications Act or the FCC Rules, (C) the
necessary notices and necessary approvals, if any, of the PUCs
identified in the BellSouth Disclosure Letter pursuant to Utilities
Laws and (D) the necessary notices and approvals of Foreign
Governmental Entities identified in the BellSouth Disclosure Letter
(such filings and/or notices of BellSouth being the "BellSouth Required
Consents"), no notices, reports or other filings are required to be
made by it with, nor are any
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consents, registrations, approvals, permits or authorizations required
to be obtained by it or its Subsidiaries from, any Governmental Entity,
in connection with the execution and delivery of this Agreement by it
and the consummation by it of the BellSouth Contribution or the
BellSouth Additional Closings hereby, except those that the failure to
make or obtain would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect on the BellSouth
Companies or prevent, materially delay or materially impair its ability
to consummate the transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of
this Agreement by it do not, and the consummation by it of the
transactions contemplated hereby will not, constitute or result in (A)
a breach or violation of, or a default under, its certificate of
incorporation, by-laws or the certificate of incorporation, by-laws or
other organizational documents, including partnership agreements and
limited liability company agreements, of any of the BellSouth
Companies, (B) a breach or violation of, or any default under the
certificate of incorporation or other organizational documents,
including partnership agreements and limited liability company
agreements, of any Subsidiaries of the BellSouth Companies, (C) a
breach or violation of, or a default under, the acceleration of any
obligations or the creation of a lien, pledge, security interest or
other Encumbrance on its assets or the assets of any of its
Subsidiaries (with or without notice, lapse of time or both) pursuant
to any Contract binding upon it or any of its Subsidiaries of the
BellSouth Companies or any Law or governmental or non-governmental
permit or license to which it or any of its Subsidiaries is subject or
(D) any change in the rights or obligations of any party under any of
its or its Subsidiaries' Contracts, except, in the case of clause (B),
(C) or (D) above, for any breach, violation, default, acceleration,
creation or change that, individually or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect on the BellSouth
Companies or prevent, materially delay or materially impair its ability
to consummate the transactions contemplated by this Agreement.
(c) Capitalization of the BellSouth Companies. The issued
and outstanding BellSouth Shares have been duly authorized and validly issued,
are fully paid and nonassessable and are owned by BellSouth or direct or
indirect wholly owned Subsidiaries of BellSouth free and clear of any
Encumbrances. There are no preemptive or other outstanding rights, options,
warrants, conversion rights, stock appreciation rights, redemption rights,
agreements, arrangements or commitments to issue or sell any shares of capital
stock or other securities of any of the BellSouth Companies or any of their
Subsidiaries or any securities or obligations convertible or exchangeable into
or exercisable for, or giving any Person a right to subscribe for or acquire,
any securities of any of the BellSouth Companies, and no securities or
obligations evidencing such rights are authorized, issued or outstanding. All
other equity interests that are owned by a BellSouth Company or a Subsidiary of
a BellSouth Company are owned by the
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applicable BellSouth Company or Subsidiary of a BellSouth Company free and clear
of all encumbrances.
(d) Subsidiaries of the BellSouth Companies.
(i) Schedule 3.2(d)(i) of the BellSouth
Disclosure Letter lists, as of the date hereof, the name of each
Subsidiary of each of the BellSouth Companies and the equity interest
of the BellSouth Company or one or more of its Subsidiaries therein and
lists the organizational name of each other equity interest held by a
BellSouth Company in one or more of its Subsidiaries. All shares of or
similar equity interests of each Subsidiary of a BellSouth Company that
are owned by such BellSouth Company or a Subsidiary of a BellSouth
Company are owned by a BellSouth Company or the applicable Subsidiary
free and clear of all Encumbrances, and all such equity interests are
duly authorized, validly issued and fully paid.
(ii) As of the date hereof, none of the BellSouth
Companies or any of their Subsidiaries has any obligation to sell,
transfer or assign or has entered into a Contract regarding the sale,
transfer or assignment of any of its rights, securities or interests in
any Subsidiary of the BellSouth Companies or any of the other equity
interests owned by a BellSouth Company or any Subsidiary of a BellSouth
Company.
(e) Corporate Authority; Approval. BellSouth has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement and the Ancillary Agreements and, prior to Closing, each of the
BellSouth Holdings Entities shall have taken all limited liability company
action necessary to contribute, transfer and assign the BellSouth Shares to
Newco. This Agreement and each of the Ancillary Agreements is, or will be when
executed, legal, valid and binding agreements of BellSouth or the Subsidiary or
Subsidiaries executing such agreements enforceable against BellSouth or the
applicable Subsidiary of BellSouth, as the case may be, in accordance with their
respective terms, subject to the Bankruptcy and Equity Exception.
(f) Financial Statements. Schedule 3.2(f) of the
BellSouth Disclosure Letter contains true, complete and correct copies of (i)
the BellSouth Cellular unaudited financial statements as at November 30, 1999,
(ii) the unaudited financial statements for the year ended December 31, 1999 of
BellSouth Wireless Data, and (iii) audited financial statements for the year
ended December 31, 1999 for BellSouth PCS, which include the balance sheet and
related statements of income for the year then ended (the "BellSouth Financial
Statements"). The BellSouth Financial Statements fairly represent in all
material respects, in accordance with GAAP, the financial position of BellSouth
Cellular, BellSouth Wireless Data and BellSouth PCS as of the date indicated and
the results of
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operations of such companies for the period then ended (subject to the absence
of notes with respect to the unaudited financial statements).
(g) Absence of Certain Changes. (i) Except as expressly
contemplated by this Agreement and except with respect to the Excluded BellSouth
Business, since November 30, 1999 (i) the BellSouth Companies have conducted
their respective businesses only in the ordinary and usual course of such
businesses; (ii) there has not been any change in the financial condition,
properties, business or results of operations of the BellSouth Companies and
their Subsidiaries, except those changes that have not had and would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on the BellSouth Companies; (iii) there has not been any damage,
destruction or other casualty loss with respect to any asset or property owned,
leased or otherwise used by the BellSouth Companies and their Subsidiaries,
whether or not covered by insurance, which damage, destruction or loss is
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on the BellSouth Companies; (iv) there has not been any sale, transfer,
conveyance, lease, creation of an Encumbrance or other disposition of assets of
the BellSouth Companies and their Subsidiaries outside of the ordinary course of
business; and (v) there has not been any change by it or any BellSouth Company
in accounting principles, practices or methods of the BellSouth Companies.
(h) Litigation and Liabilities. There are no (i) civil,
criminal or administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the Knowledge of BellSouth, threatened against the
BellSouth Companies or any of their Affiliates or otherwise in connection with
the BellSouth Business or (ii) obligations or liabilities, whether or not
accrued, contingent or otherwise that are required to be disclosed under GAAP,
or any other facts or circumstances, in either such case, of which BellSouth has
Knowledge that are reasonably likely to result in any claims against or
obligations or liabilities of it or any of its Affiliates, except for those that
have not had and are not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect on the BellSouth Companies or prevent or
materially impair or delay BellSouth's ability to consummate the transactions
contemplated by this Agreement.
(i) BellSouth Employee Benefits.
(i) A listing of each bonus, deferred
compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted
stock, stock option, employment, termination, severance, compensation,
medical, health or other plan, agreement, policy or arrangement (the
"BellSouth Compensation and Benefit Plans") that covers employees,
directors, former employees or former directors of the BellSouth
Companies or their Subsidiaries and any other employee of BellSouth or
an employee of BellSouth Companies whose duties are primarily related
(or, for
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persons who no longer perform such services, were related) to the
BellSouth Business (the "BellSouth Employees") and any trust agreements
or insurance contracts forming a part of the BellSouth Compensation and
Benefit Plans is set forth in Schedule 3.2(i)(i) of the BellSouth
Disclosure Letter.
(ii) All of the BellSouth Compensation and
Benefit Plans are in compliance with the terms and with all applicable
Law, including the Code and ERISA, except for failures to comply which
are not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on the BellSouth Companies. Each of the
BellSouth Compensation and Benefit Plans that is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA (a "BellSouth
Pension Plan" and, collectively, the "BellSouth Pension Plans") and
that is intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the IRS, and BellSouth
does not have Knowledge of any circumstances likely to result in
revocation of any such favorable determination letter. There is no
pending or, to the Knowledge of BellSouth, threatened claim, audit,
investigation, litigation or other proceeding relating to the BellSouth
Compensation and Benefit Plans, except for proceedings which are not,
individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on the BellSouth Companies. Neither BellSouth nor any
Subsidiary of BellSouth has engaged in a transaction with respect to
any of the BellSouth Compensation and Benefit Plans that, assuming the
taxable period of such transaction expired as of the date hereof, would
subject the BellSouth Companies or any of their Subsidiaries to a
material tax or penalty imposed by either Section 4975 of the Code or
Section 502 of ERISA.
(iii) As of the date hereof, no liability under
Subtitle C or D of Title IV of ERISA (other than the payment of
prospective premium amounts to the Pension Benefit Guaranty Corporation
in the normal course) has been or is expected to be incurred by the
BellSouth Companies or any of their Subsidiaries with respect to any
ongoing, frozen or terminated "single-employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or any of its ERISA Affiliate Plans. The
BellSouth Companies, their Subsidiaries and their ERISA Affiliates have
not contributed, or been obligated to contribute, to a multiemployer
plan under Subtitle E of Title IV of ERISA at any time since September
26, 1980. No notice of a "reportable event," within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has
not been waived, has been required to be filed for any of the
BellSouth's Pension Plans or any of its ERISA Affiliate Plans within
the 12-month period ending on the date hereof or will be required to be
filed in connection with the transactions contemplated by this
Agreement.
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(iv) None of the BellSouth Pension Plans nor any
of BellSouth's ERISA Affiliate Plans has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412
of the Code or Section 302 of ERISA. Neither BellSouth nor any of its
Subsidiaries has provided, or is required to provide, security to any
BellSouth Pension Plans or to any of its ERISA Affiliate Plans pursuant
to Section 401(a)(29) of the Code.
(v) Under each of the BellSouth Pension Plans
which is a single-employer plan and each of BellSouth's ERISA Affiliate
Plans, as of the last day of the most recent plan year ended prior to
the date hereof, the actuarially determined present value of all
"benefit liabilities," within the meaning of Section 4001(a)(16) of
ERISA (as determined on the basis of the actuarial assumptions
contained in such BellSouth Pension Plan's or BellSouth ERISA Affiliate
Plan's most recent actuarial valuation), did not exceed the then
current value of the assets of such BellSouth Pension Plan or BellSouth
ERISA Affiliate Plan, and there has been no material change in the
financial condition of such BellSouth Pension Plan or BellSouth ERISA
Affiliate Plan since the last day of the most recent plan year as such
would affect any of the BellSouth Companies.
(vi) Except as set forth on Schedule 3.2(i)(vi)
to the BellSouth Disclosure Letter, there are no material obligations
to the BellSouth Employees for retiree health and life benefits under
any of the BellSouth Compensation and Benefit Plans or as required by
applicable law.
(vii) The consummation of the transactions
contemplated by this Agreement (whether alone or in connection with any
other event) will not (x) entitle any BellSouth Employee to severance
pay, directly or indirectly, upon termination of employment, (y)
accelerate the time of payment or vesting or trigger any payment of
compensation or benefits under, increase the amount payable or trigger
any other material obligation pursuant to, any of the BellSouth
Compensation and Benefit Plans or (z) result in any breach or violation
of, or a default under, any of the BellSouth Compensation and Benefit
Plans, but excluding any exceptions to (x), (y) and (z) which are not,
individually or in the aggregate, material.
(viii) Since November 30, 1999, except as
contemplated hereby, there has not been any increase in the
compensation payable or that could become payable by the BellSouth
Companies or any of their Subsidiaries to any BellSouth Employee or any
amendment of any of the BellSouth Compensation and Benefit Plans other
than increases or amendments in the ordinary course of business
consistent with past practice.
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(j) Compliance with Laws. The BellSouth Business and
businesses of each of the BellSouth Companies and their Subsidiaries have not
been, and are not being, conducted in violation of any Law, except for
violations or possible violations that have not had and would not, individually
or in the aggregate, be reasonably likely to have a Material Adverse Effect on
the BellSouth Companies or prevent or materially impair BellSouth's ability to
consummate the transactions contemplated by this Agreement. No investigation or
review by any Governmental Entity with respect to the BellSouth Companies or any
of their Subsidiaries is pending or, to the Knowledge of BellSouth, threatened,
nor has any Governmental Entity indicated an intention to conduct the same,
except for those the outcome of which have not had and would not, individually
or in the aggregate, be reasonably likely to have a Material Adverse Effect on
the BellSouth Companies or prevent or materially impair BellSouth's ability to
consummate the transactions contemplated by this Agreement. Each of the
BellSouth Companies and their Subsidiaries has all Permits, necessary to conduct
their businesses as presently conducted, except for those Permits the absence of
which has not had and would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on the BellSouth Companies or prevent
or materially delay BellSouth's ability to consummate the transactions
contemplated by this Agreement.
(k) Environmental Matters. Except for such matters that,
individually or in the aggregate, have not had and would not be reasonably
likely to have a Material Adverse Effect on the BellSouth Companies, taken as a
whole: (i) each of the BellSouth Companies and their Subsidiaries has complied
with all applicable Environmental Laws; (ii) the properties currently owned or
operated by the BellSouth Companies or any of their Subsidiaries (including
soils, groundwater, surface water, buildings or other structures) are not
contaminated with any Hazardous Substances; (iii) the properties formerly owned
or operated by the BellSouth Companies or any of their respective Subsidiaries
were not contaminated with Hazardous Substances during the period of ownership
or operation by the BellSouth Companies or any of their Subsidiaries; (iv)
neither the BellSouth Companies nor any of their Subsidiaries is subject to
liability for any Hazardous Substance disposal or contamination on any third
party property; (v) neither the BellSouth Companies nor any of their
Subsidiaries has received any notice, demand, letter, claim or request for
information alleging that the BellSouth Companies nor any of their respective
Subsidiaries may be in violation of or liable under any Environmental Law.
(l) Labor Matters. None of the BellSouth Companies nor
any of their Subsidiaries is the subject of any proceeding relating to any
BellSouth Employee before the National Labor Relations Board asserting the
commission of an unfair labor practice or is seeking to compel any of them to
bargain with any labor union or labor organization nor is there pending or, to
the Knowledge of BellSouth, threatened, nor has there been since January 1,
1995, any labor strike, dispute, walkout, work stoppage, slow-down or lockout
relating to any BellSouth Employee, except in each case as has not and would
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not, individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on the BellSouth Companies. The collective bargaining agreements
set forth on Schedule 3.2(l) to the BellSouth Disclosure Letter are the only
collective bargaining agreements relating to any BellSouth Employee.
(m) Taxes. (i) BellSouth, the BellSouth Companies and
each of their Subsidiaries have prepared in good faith and duly and timely filed
(taking into account any extension of time within which to file) all material
Tax Returns required to be filed by any of them with respect to the BellSouth
Companies or any of their Subsidiaries and all such filed tax returns are
complete and accurate in all material respects; (ii) the BellSouth Companies and
each of their Subsidiaries have paid all Taxes that are shown as due on such
filed Tax Returns or that the BellSouth Companies or any of their Subsidiaries
are obligated to withhold from amounts owing to any employee, creditor or third
party, except with respect to matters contested in good faith or for such
amounts that, individually or in the aggregate have not had and would not be
reasonably likely to have a Material Adverse Effect on the BellSouth Companies;
(iii) as of the date hereof, there are not pending or, to the Knowledge of
BellSouth, threatened, in writing, any audits, examinations, investigations or
other proceedings in respect of Taxes or Tax matters with respect to the
BellSouth Companies; and (iv) there are not, to the Knowledge of BellSouth, any
unresolved questions or claims concerning the BellSouth Companies' or any of
their Subsidiaries' Tax liability that have had or would be reasonably likely to
have a Material Adverse Effect on the BellSouth Companies. No material payments
to be made to any of the officers or employees of the BellSouth Companies or any
of their Subsidiaries will as a result of consummation of the transactions
contemplated hereby be subject to the deduction limitations under Section 280G
of the Code.
(n) Regulatory Matters. The BellSouth Companies and their
Subsidiaries hold all Licenses necessary for the lawful conduct of the BellSouth
Business other than Licenses the lack of which, individually or in the
aggregate, have not had and would not be reasonably likely to have a Material
Adverse Effect on the BellSouth Companies. Schedule 3.2(n) of the BellSouth
Disclosure Letter sets forth each License obtained by BellSouth or any of its
Subsidiaries and which is, or in the absence of a violation thereof, would be in
full force and effect with respect to the BellSouth Business (the "BellSouth
Companies' Licenses"). To the Knowledge of BellSouth, no event has occurred or
fact exists with respect to the BellSouth Companies Licenses (other than the
requirement to file in the future applications for renewal and obtain renewals
in the ordinary course) which permits, or after notice or lapse of time or both
would permit, revocation, non-renewal or termination of any of such licenses or
would result in any other impairment of the rights of the holder of any of such
licenses or which would be reasonably likely to limit the operation of the
BellSouth Companies' and their Subsidiaries' businesses as they are currently
conducted, except for revocations, limitations, non-renewals or other
terminations which, individually or in the aggregate,
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have not had and would not be reasonably likely to have a Material Adverse
Effect on the BellSouth Companies. The BellSouth Companies and their
Subsidiaries have performed their respective obligations under such BellSouth
Companies' Licenses with such exceptions which, individually or in the
aggregate, have not had and would not be reasonably likely to have a Material
Adverse Effect on the BellSouth Companies. The FCC actions granting the
BellSouth Companies' Licenses, together with all underlying construction
permits, have not been reversed, stayed, enjoined, annulled or suspended, and
there is not pending or, to the Knowledge of BellSouth, threatened, any
application, petition, objection or other pleading with the FCC or other
Governmental Entity which challenges or questions the validity of or any rights
of the holder under any of the BellSouth Companies' Licenses, except for such
reversals, stays, injunctions, annulments, suspensions, applications, petitions,
objections or other pleadings, which have not had and would not, individually or
in the aggregate, be reasonably likely to have a Material Adverse Effect on the
BellSouth Companies.
(o) Contracts. (i) Schedule 3.2(o) of the BellSouth
Disclosure Letter lists the following Contracts to which any of the BellSouth
Companies or one of their Subsidiaries is a party:
(A) any agreement which materially restricts or
materially limits their ability or the ability of any of their
respective Affiliates to freely conduct the BellSouth Business or any
other business or otherwise operate in any geographic market;
(B) any collective bargaining agreement and any
written employment agreement;
(C) all agreements with respect to outstanding
indebtedness for money borrowed in excess of $50,000,000 or any
guaranty thereof;
(D) all material leases of real property, which
shall be deemed to include all leases of real property, with an annual
rental payment in excess of $50,000, and all arrangements relating to a
sublease of space on the cellular towers;
(E) all partnership, shareholder or joint
venture agreements or other agreements relating to the management or
Control of any such partnership, joint venture or non-wholly owned
Subsidiary;
(F) all interconnection agreements; and
(G) any roaming agreements not terminable at the
option of either party thereto on 90 days or less notice.
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(ii) Each Contract listed on Schedule 3.2(o) to
the BellSouth Disclosure Letter is valid, binding, enforceable, and in
full force and effect, the BellSouth Companies or the applicable
Subsidiary are not in breach or default under any such Contract and no
event has occurred which, with notice or lapse of time or both, would
constitute such a breach or default, or permit termination,
modification, or acceleration, under such Contract, except where the
failure to be so valid, binding, enforceable or in full force and
effect or such breach or default, termination, modification or
acceleration would not be, either individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on the BellSouth
Companies.
(p) Property and Leases. Schedule 3.2(p) to the BellSouth
Disclosure Letter contains a list of all real property owned by the BellSouth
Companies or any of their respective Subsidiaries or otherwise used primarily in
the BellSouth Business and real property leased pursuant to lease agreements set
forth on Schedule 3.2(o). The BellSouth Companies and their Subsidiaries have
marketable title to all material owned real property set forth on Schedule
3.2(p) and valid leasehold title to all material leased real property set forth
on Schedule 3.2(o), in each case free and clear of all Encumbrances, other than
Permitted Encumbrances.
(q) Brokers and Finders. Neither the BellSouth Companies
nor any of their respective officers, directors or employees has employed any
broker or finder or incurred any liability for any brokerage fees, commissions
or finders' fees in connection with the BellSouth transactions contemplated in
this Agreement.
(r) Ownership of Assets. Substantially all of the assets,
properties, businesses, licenses and other assets, owned or leased by BellSouth
and its Subsidiaries and forming a part of the BellSouth Business are owned or
leased by the BellSouth Companies and their respective Subsidiaries.
(s) Sufficiency of Assets. The assets and properties
owned or leased by the BellSouth Companies or their respective Subsidiaries,
together with all Contracts to which the BellSouth Companies or their respective
Subsidiaries are a party, constitute the assets, properties and Contract rights
reasonably necessary to conduct the BellSouth Business in accordance with past
practice.
(t) Other Business. Other than with respect to the
Excluded BellSouth Business, none of the BellSouth Companies, their respective
Subsidiaries or the BellSouth Additional Subsidiary conducts or engages in any
business material to the BellSouth Companies and their Subsidiaries taken as a
whole other than the BellSouth Business or owns or leases any assets material to
the BellSouth Companies and their Subsidiaries taken as a whole that are not
used or intended for the use in the BellSouth Business, other than obsolete
assets.
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(u) Intellectual Property. Subject to Section 4.16
(Intercompany Obligations), the BellSouth Companies and their Subsidiaries each
own, or possess adequate licenses or other valid rights to use, all Intellectual
Property Rights used or held for use in connection with the BellSouth Business
except where the failure to have such ownership or rights would not,
individually or in the aggregate be reasonably likely to have a Material Adverse
Effect on the BellSouth Companies. To the Knowledge of BellSouth, the BellSouth
Companies and their Subsidiaries are not the subject of any threatened or
pending lawsuits alleging the violation or infringement of any Intellectual
Property Rights of any third party that, individually or in the aggregate, would
be reasonably likely to have a Material Adverse Effect on the BellSouth
Companies. To the Knowledge of BellSouth, there are no material infringements of
any Intellectual Property Right owned by any of the BellSouth Companies or their
Subsidiaries. None of the BellSouth Companies or their Subsidiaries is in
material breach of any agreements pursuant to which any of them has a license to
use Intellectual Property Rights, and consummation of the transactions
contemplated hereby will not constitute such a material breach or otherwise
reduce or impair, in any material respect, the rights of any of them under such
license agreements, other than any breach which would not, individually or in
the aggregate, be reasonably likely to have a Material Adverse Effect on the
BellSouth Companies. No claims are pending or, to the Knowledge of BellSouth,
threatened by any Person with respect to the ownership, validity or
enforceability of any Intellectual Property Rights owned by any of the BellSouth
Companies or their Subsidiaries, or challenging or questioning the right of the
BellSouth Companies or their Subsidiaries to use any Intellectual Property
Rights owned by them, except claims that would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.
(v) Ericsson Credits. As of the Closing, the net present
value (assuming a discount rate of 12%) of the incentives available to BellSouth
Cellular from Ericsson Inc. ("Ericsson") pursuant to the letter agreement dated
May 25, 1999 between BellSouth Cellular and Ericsson (the "Ericsson Agreement")
is at least the amount set forth on Schedule 6(b)(1) next to the words Ericsson
Credits (the "Credits"). The Credits are collectible in full in accordance with
the terms of the Ericsson Agreement.
(w) After Acquired Properties. (i) The purchase price
paid by BellSouth for interests in BellSouth Carolinas not owned by BellSouth or
its Subsidiaries was at least the amount set forth on Schedule 6(b)(2) and (ii)
the purchase prices offered by BellSouth or its Subsidiaries for the purchase of
the equity interests which they did not directly or indirectly own as of the
time of such offers for Muncie Cellular Telephone Company, Inc., Terre Haute
Cellular Telephone Company, Inc. and Cellular Radio of Chattanooga were not more
than the respective amounts set forth next to the name of such property on
Schedule 6(b)(3).
(x) No Other Representations and Warranties. Except for
representations and warranties contained in this Agreement, none of BellSouth,
the
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BellSouth Companies or their Affiliates, or any other Person makes any express
or implied representation or warranty on behalf of BellSouth with respect to the
subject matter of this Agreement.
ARTICLE IV
CERTAIN COVENANTS AND AGREEMENTS OF SBC and Bellsouth
4.1 Access and Information.
(a) Prior to the Closing (and with respect to each of the
Additional Subsidiaries, prior to the earlier to occur of the time such
Additional Subsidiary is conveyed to Newco and December 31, 2009), SBC and
BellSouth shall each permit the other and the other's representatives to have
reasonable access to its Books and Records, officers and Subsidiaries, in each
case (i) during regular business hours and upon reasonable advance notice to the
other, (ii) to the extent that such access does not unreasonably interfere with
the business of the SBC Companies or their Subsidiaries or the BellSouth
Companies or their Subsidiaries, as the case may be and (iii) to the extent
relating to the SBC Companies, the BellSouth Companies and their respective
Subsidiaries; provided that any such representatives shall comply with the
confidentiality obligations contained herein and in the Confidentiality
Agreement; and provided, further, that the foregoing shall not (i) require SBC
or BellSouth to permit any inspection, or to disclose any information, that in
its reasonable judgment would result in the disclosure of any trade secrets of
third parties or trade secrets of SBC or BellSouth unrelated to the SBC
Companies and their Subsidiaries or the BellSouth Companies and their
Subsidiaries, as the case may be, or violate any of SBC's, BellSouth's, the SBC
Companies', the BellSouth Companies' or any of their respective Subsidiaries'
legal obligations or obligations with respect to confidentiality if SBC or
BellSouth, as the case may be, shall have used reasonable best efforts to obtain
the consent of such third party to such inspection or disclosure, or (ii)
require any disclosure by SBC, BellSouth, the SBC Companies, the BellSouth
Companies or any of their Subsidiaries that would be reasonably likely to, as a
result of such disclosure, have the effect of causing the waiver of any
attorney-client privilege; provided, that SBC or BellSouth, as the case may be,
shall have used its commercially reasonable efforts to effect disclosure without
the waiver of attorney-client privilege.
(b) In the event of the termination of this Agreement,
SBC and BellSouth, each at its own expense, shall promptly deliver (without
retaining any copies thereof) to BellSouth or SBC, as the case may be, or
confirm to the other in writing that it has destroyed, all information furnished
to it or its representatives by the other or any of the other's Subsidiaries or
any of their respective agents, employees or representatives as a result hereof
or in connection herewith, whether so obtained before or after the execution
hereof, and all analyses, compilations, forecasts, studies or other documents
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prepared by it or its representatives which contain or reflect any such
information. SBC and BellSouth shall, and shall cause their respective
employees, officers, directors and Subsidiaries and the employees, officers and
directors of their Subsidiaries to, subject to any exceptions set forth in the
Confidentiality Agreement, cause any information so obtained to be kept
confidential and will not use, or permit the use of, such information in its
business or in any other manner or for any other purpose except as contemplated
hereby.
(c) In addition to the confidentiality arrangements
contained herein, all information provided or obtained in connection with the
transactions contemplated by this Agreement (including pursuant to clause (a)
above) shall be held in accordance with and subject to the terms of the
Confidentiality Agreement, dated February 18, 2000, between SBC and BellSouth
(the "Confidentiality Agreement"). In the event of a conflict or inconsistency
between the terms of this Agreement and the Confidentiality Agreement, the terms
of this Agreement shall govern.
4.2 Conduct of Business. (a) During the period from the date
hereof until the Closing, except (x) as otherwise expressly contemplated by this
Agreement or any Ancillary Agreement in effect prior to the Closing, (y) as set
forth on Schedule 4.2(a) to the SBC Disclosure Letter, or (z) as BellSouth shall
otherwise agree in writing (such agreement not to be unreasonably withheld or
delayed), and subject to fiduciary duties to third parties, SBC covenants and
agrees that it shall cause the SBC Companies and their Subsidiaries to operate
their businesses in the ordinary course consistent with past practice and to use
their commercially reasonable efforts to preserve intact the business and
relationships of the SBC Business, the SBC Companies and their Subsidiaries with
third parties, and, in addition, cause the SBC Companies and their Subsidiaries,
taken together, to not:
(i) approve any new individual capital
expenditure (or series of related expenditures) requiring expenditures
in excess of $50,000,000 during any twelve-month period, except for (A)
any expenditures currently approved by the SBC Companies or any of
their respective Subsidiaries, (B) pursuant to projects for which
material work has already been performed, (C) projects included in the
SBC Companies' or their Subsidiaries' 2000 or 2001 capital investment
projections or (D) expenditures required by the organizational
documents of any Subsidiary of any of the SBC Companies;
(ii) dispose of any individual capital asset,
other than dispositions in the ordinary course of business for
consideration equal to or greater than fair market value;
(iii) dispose of capital assets for consideration
in the aggregate during any twelve month period in excess of
$10,000,000;
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(iv) by any means make any acquisition of, or
investment in, (A) the assets of any Person other than in the ordinary
course of business or (B) the stock of any Person in excess of
$50,000,000 in the aggregate for acquisitions or investments pursuant
to (A) and (B) during any twelve month period, except as required by
the certificate of incorporation or bylaws or other organizational
documents of a Subsidiary of the SBC Companies;
(v) except in the ordinary course of business
consistent with past practice (except that such exception shall not
apply to the properties referred to in Schedule 6(a)(2)), incur or
assume any indebtedness for borrowed money or guarantee any such
obligations or place an Encumbrance material to the SBC Companies taken
as a whole on any assets of the SBC Companies or any of their
Subsidiaries;
(vi) except in the ordinary course of business
consistent with past practice and except as required by Law or any
collective bargaining agreement, grant material salary or wage
increases, or modify or amend any SBC Compensation and Benefit Plan (by
SBC) or adopt any similar plan (whether by SBC or any SBC Company) in
any manner that materially increases the amount of the liability
attributable to the SBC Companies in respect of such plan;
(vii) except as required by Contract, issue, sell,
pledge, dispose of or encumber any shares of, or securities convertible
into or exchangeable or exercisable for, or options, warrants, calls,
commitments or rights of any kind to acquire any shares of the capital
stock of the SBC Companies or the capital stock of any of the
Subsidiaries of the SBC Companies;
(viii) in any material respect amend their
respective certificates of incorporation, by-laws or other similar
organizational documents, except as required pursuant to the terms
thereof;
(ix) materially amend or modify or knowingly
waive or fail to enforce any material rights under any of the Contracts
set forth on Schedule 3.1(o) of the SBC Disclosure Letter;
(x) engage in any business other than the SBC
Business and the Excluded SBC Business;
(xi) declare, set aside or pay any dividend
payable in stock or property in respect of any capital stock other than
dividends (A) from a Subsidiary of a SBC Company to a SBC Company or
another wholly owned Subsidiary of a SBC Company (other than SBC
Holdings), (B) as required so as not to breach or violate a Contract or
applicable Law or (C) in accordance with past practice; or
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(xii) authorize or enter into an agreement to do
any of the foregoing.
(b) During the period from the date hereof until the
Closing except (x) as otherwise expressly contemplated by this Agreement or any
Ancillary Agreement in effect prior to the Closing, (y) as set forth on Schedule
4.2(b) to the BellSouth Disclosure Letter, or (z) as SBC shall otherwise agree
in writing (such agreement not to be unreasonably withheld or delayed), and
subject to fiduciary duties to third parties, BellSouth covenants and agrees
that it shall cause the BellSouth Companies and their Subsidiaries to operate
their businesses in the ordinary course consistent with past practice and to use
their commercially reasonable efforts to preserve intact the business and
relationships of the BellSouth Business, the BellSouth Companies and their
Subsidiaries with third parties, and cause the BellSouth Companies and their
Subsidiaries, taken together, to not:
(i) approve any new individual capital
expenditure (or series of related expenditures) requiring expenditures
in excess of $50,000,000 during any twelve-month period, except for (A)
any expenditures currently approved by the SBC Companies or any of
their respective Subsidiaries, (B) pursuant to projects for which work
has already been performed, (C) projects included in the BellSouth
Companies' or their Subsidiaries' 2000 or 2001 capital investment
projections or (D) expenditures required by their organizational
documents of any Subsidiary of any of the BellSouth Companies;
(ii) dispose of any individual capital asset,
other than dispositions in the ordinary course of business for
consideration equal to or greater than fair market value,
(iii) dispose of capital assets for consideration
in the aggregate during any twelve-month period in excess of
$10,000,000;
(iv) by any means make any acquisition of, or
investment in (A) the assets of any Person other than in the ordinary
course of business or (B) the stock of any Person in excess of
$50,000,000 in the aggregate for acquisitions or investments pursuant
to (A) and (B) during any twelve month period, except as required by
the certificate of incorporation or bylaws or other organizational
documents of a Subsidiary of the BellSouth Companies;
(v) except in the ordinary course of business
consistent with past practice (except that such exception shall not
apply to the properties referred to in Schedule 6(b)(2)), incur or
assume any indebtedness for borrowed money or guarantee any such
obligations or place an Encumbrance material to the BellSouth Companies
taken as a whole on any assets of the BellSouth Companies or any of
their Subsidiaries;
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(vi) except in the ordinary course of business
consistent with past practice and except as required by Law or any
collective bargaining agreement, grant material salary or wage
increases, or modify or amend any BellSouth Compensation and Benefit
Plan (by BellSouth) or adopt any similar plan (whether by BellSouth or
any BellSouth Company) in any manner that materially increases the
amount of the liability attributable to the BellSouth Companies in
respect of such plan;
(vii) except as required by Contract, issue, sell,
pledge, dispose of or encumber any shares of, or securities convertible
into or exchangeable or exercisable for, or options, warrants, calls,
commitments or rights of any kind to acquire any shares of the capital
stock the BellSouth Companies or the capital stock of any of the
Subsidiaries of the BellSouth Companies;
(viii) in any material respect amend their
respective certificates of incorporation, by-laws or other similar
organizational documents, except as required pursuant to the terms
thereof;
(ix) materially amend or modify or knowingly
waive or fail to enforce any material rights under any of the Contracts
set forth on Schedule 3.2(o) of the BellSouth Disclosure Letter;
(x) engage in any business other than the
BellSouth Business and the Excluded BellSouth Business;
(xi) declare, set aside or pay any dividend
payable in cash, stock or property in respect of any capital stock
other than dividends (A) from a Subsidiary of a BellSouth Company to a
BellSouth Company or another wholly owned Subsidiary of a BellSouth
Company (other than the BellSouth Holdings Entities), (B) as required
so as not to breach or violate a Contract or applicable Law or (C) in
accordance with past practice; or
(xii) authorize or enter into an agreement to do
any of the foregoing.
(c) With respect to the SBC Additional Subsidiaries,
during the period from the Closing until the earlier to occur of the time such
SBC Additional Subsidiary is contributed to Newco and December 31, 2009, except
(x) as expressly contemplated by the Management Agreement or (y) as Newco shall
otherwise agree in writing (such agreement not to be unreasonably withheld or
delayed), and subject to fiduciary duties to third parties, SBC covenants and
agrees that it shall cause the SBC Additional Subsidiaries to operate their
businesses in the ordinary course consistent with past practice (taking into
account industry-wide changes), and in addition cause the SBC Additional
Subsidiaries to not:
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(i) except in the ordinary course of business
consistent with past practice, incur or assume any indebtedness for
borrowed money or guarantee any such obligation, if such indebtedness
or guarantee would be in effect following the relevant SBC Additional
Closing; and
(ii) engage in any business other than the SBC
Business; or
(iii) engage in any business not engaged in by
Newco.
(d) With respect to the BellSouth Additional Subsidiary,
during the period from the Closing until the earlier to occur of the time such
BellSouth Additional Subsidiary is contributed to Newco and December 31, 2002,
except (x) as expressly contemplated by the Management Agreement, dated November
13, 1998, between Houston Cellular Telephone Company, L.P., a Texas limited
partnership and American Cellular Communications Corporation, the Houston
Partnership Agreement and the ABC Agreement, or (y) as Newco shall otherwise
agree in writing (such agreement not to be unreasonably withheld or delayed),
and subject to fiduciary duties to third parties, BellSouth covenants and agrees
that it shall cause the BellSouth Additional Subsidiary to operate its business
in the ordinary course consistent with past practice (taking into account
industry-wide changes), and in addition cause the BellSouth Additional
Subsidiary to not:
(i) except in the ordinary course of business
consistent with past practice, incur or assume any indebtedness for
borrowed money or guarantee any such obligation, if such indebtedness
or guarantee would be in effect following the relevant BellSouth
Additional Closing;
(ii) amend the Houston Partnership Agreement or
the ABC Agreement; or
(iii) engage in any business other than the
BellSouth Business; or
(iv) engage in any business not engaged in by
Newco.
4.3 Registrations, Filings and Consents. (a) SBC and BellSouth
shall cooperate with each other and use (and shall cause their respective
Subsidiaries to use) all their respective reasonable best efforts to take or
cause to be taken all actions, and do or cause to be done all things, necessary,
proper or advisable on its part under this Agreement and applicable Laws to
consummate and make effective the transactions contemplated by this Agreement as
soon as reasonably practicable, including preparing and filing as promptly as
reasonably practicable all documentation to effect all necessary applications,
notices, petitions, filings and other documents and to obtain as promptly as
reasonably practicable all consents, registrations, approvals, permits and
authorizations
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necessary or advisable to be obtained from any third party and/or any
Governmental Entity in order to consummate the transactions contemplated by this
Agreement; provided, however, that nothing set forth in this Section 4.3 shall
require or be construed to require, SBC or BellSouth to agree to, or comply with
any conditions to the granting of any such consent, registration, approval,
permit or authorization, by any Governmental Entity which (i) relate to any
material business of SBC or BellSouth, as the case may be, that is not included
in the SBC Business or the BellSouth Business and which would be reasonably
likely to be material and adverse to such businesses or would be reasonably
likely to have a Material Adverse Effect on Newco following the Closing;
provided, further, that any divestiture by either SBC or BellSouth or any of
their respective Subsidiaries reasonably required by a Governmental Entity to
cause Newco to be in compliance with the CMRS spectrum aggregation limits
established by the FCC in 47 C.F.R. Section 20.6 and the Cellular Cross
Ownership limits contained in 47 C.F.R. Section 22.942 shall be deemed not to
have a Material Adverse Effect on Newco and not to be materially adverse to SBC
or BellSouth. In addition to the foregoing, each of SBC and BellSouth agree to
file or cause to be filed within thirty (30) days following the date of this
Agreement all documentation, filings and other documents necessary in connection
with (i) the notification and report form required under the HSR Act and (ii)
any required application, report or other filing or request for approval or
notifications with the FCC, any PUC and any Foreign Governmental Entity from
which consent, approval or clearance is required to be obtained in connection
with the transactions contemplated by this Agreement; provided, that neither SBC
nor BellSouth shall be deemed to be in breach of this Agreement if any such
filing is not made within thirty (30) days following the date of this Agreement.
Subject to applicable Laws relating to the exchange of information, SBC and
BellSouth shall have the right to review in advance, and to the extent
practicable each will consult the other on, all the information relating to SBC,
the SBC Companies, BellSouth or the BellSouth Companies as the case may be, with
respect to the contents of any filing made with, or written materials submitted
to, any third party and/or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of SBC and BellSouth shall act reasonably and as promptly as reasonably
practicable.
(b) SBC and BellSouth each shall, upon request by the other,
furnish the other with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with any statement, filing, notice or
application made by or on behalf of SBC, the SBC Companies, BellSouth and the
BellSouth Companies, or any of their respective Subsidiaries or Affiliates to
any third party and/or any Governmental Entity in connection with the
transactions contemplated by this Agreement.
(c) SBC and BellSouth each shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by
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SBC, the SBC Companies, BellSouth, the BellSouth Companies or any of their
respective Subsidiaries, as the case may be from any third party and/or any
Governmental Entity with respect to the transactions contemplated by this
Agreement.
4.4 Employee Benefit Plan/Employees. (a) Prior to the Closing
Date, SBC and BellSouth shall each form one or more new Subsidiaries (each such
Subsidiary or Subsidiaries of SBC being the "SBC Leasing Company," and,
together, the "SBC Leasing Companies;" each such Subsidiary or Subsidiaries of
BellSouth being the "BellSouth Leasing Company," and, together, the "BellSouth
Leasing Companies;" and all such Persons together, being the "Leasing
Companies"); provided that, instead of such formation, either of the Parties may
designate one or more existing Subsidiaries with no assets or liabilities as its
Leasing Companies. SBC and BellSouth shall as soon as reasonably practicable,
but in no event later than 90 days from the date hereof, agree on the terms and
conditions of the leasing agreements (which shall be substantially similar) to
be entered into by each SBC Leasing Company and BellSouth Leasing Company,
respectively, with Newco, which shall be consistent with the terms and
conditions of this Section 4.4. SBC and BellSouth shall take and shall cause to
be taken all action necessary to effectuate the provisions of this Section 4.4
(including, without limitation, the adoption and amendment of applicable benefit
plans and arrangements). SBC and BellSouth shall cause their respective Leasing
Companies to be participating employers, as of the Closing Date, in the SBC
Compensation and Benefit Plans and the BellSouth Compensation and Benefit Plans,
as the case may be, which provide compensation and employee benefits to the
Transferred Employees (as defined below) immediately prior to the Closing Date.
(b) Following the formation of the Leasing Companies, and
on a date (such date, the "Transfer Date") prior to the Closing Date, SBC and
BellSouth each respectively agree, to the extent it has the unilateral right to,
and to the extent it does not have the unilateral right to, to use its
reasonable best efforts to cause all Persons employed by either of them or any
affiliate of either of them whose employment is primarily related to the SBC
Business or the BellSouth Business, as the case may be, as of the Transfer Date
(or such earlier date as the transfer of employment occurs) to become employed
not later than the Transfer Date by an applicable Leasing Company (such
employees, collectively, the "Transferred Employees"). The Transferred Employees
shall be employed at rates of compensation and with employee benefits which are
substantially equivalent to the respective rates of compensation and benefits
paid or provided to such Transferred Employees immediately prior to the Closing.
Only the Transferred Employees and individuals hired following the Transfer Date
whose employment is primarily related to the SBC Business or the BellSouth
Business, as the case may be, shall be employed by the Leasing Companies.
Employees so employed by the SBC Leasing Companies will be referred to herein as
"SBC Wireless Employees" and employees so employed by the BellSouth Leasing
Companies are referred to as "BellSouth Wireless Employees."
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(c) The SBC Leasing Companies shall, as of the Transfer
Date, assume (i) all employment-related obligations and liabilities (without
regard to when such obligations and liabilities arise or are incurred whether
before or after the Transfer Date), including all obligations and liabilities
under the SBC Compensation and Benefit Plans for which representations and
warranties have been made in Section 3.1(i) herein, in respect of the SBC
Wireless Employees as of the date each such employee becomes employed by a SBC
Leasing Company, and (ii) all employment-related obligations and liabilities
(without regard to when such obligations and liabilities arose or were incurred
whether before or after the Transfer Date) in respect of former employees whose
employment was primarily related to the SBC Business prior to the Closing Date
(but excluding obligations and liabilities relating to former employees under
tax-qualified defined contribution and defined benefit plans).
(d) The BellSouth Leasing Companies shall, as of the
Transfer Date, assume (i) all employment-related obligations and liabilities
(without regard to when such obligations and liabilities arise or are incurred
whether before or after the Transfer Date), including all obligations and
liabilities under the BellSouth Compensation and Benefit Plans for which
representations and warranties have been made in Section 3.2(i) herein, in
respect of the BellSouth Wireless Employees as of the date each such employee
becomes employed by a BellSouth Leasing Company, and (ii) all employment-related
obligations and liabilities (without regard to when such obligations and
liabilities arose or were incurred whether before or after the Transfer Date) in
respect of former employees whose employment was primarily related to the
BellSouth Business prior to the Closing Date (but excluding obligations and
liabilities relating to former employees under tax-qualified defined
contribution and defined benefit plans).
(e) From time to time prior to the Leasing Company
Contribution Date, Newco shall have the sole discretion to select which of the
Transferred Employees of the SBC Leasing Companies and the BellSouth Leasing
Companies (the "Leased Employees") will cease to provide services to Newco prior
to the Leasing Company Contribution Date. Leased Employees so selected shall at
the discretion of the Leasing Company employing such Person be terminated by the
applicable Leasing Companies or transferred by the applicable Leasing Companies
to SBC or BellSouth or one of their Affiliates, as the case may be, in each case
prior to the Leasing Company Contribution Date. Notwithstanding any other
provisions of this Agreement to the contrary, including Sections 4.4(c) and
4.4(d), (i) all employment related obligations and liabilities in respect of any
Leased Employee transferred to SBC, BellSouth or any of their Affiliates
pursuant to the preceding sentence shall cease to be an obligation or liability
of the Leasing Company and become the sole responsibility and obligation of SBC,
BellSouth or such Affiliates, as applicable, and (ii) neither the Leasing
Companies nor Newco shall have any liabilities or obligations under any SBC
Compensation and Benefit Plan or BellSouth Compensation and Benefit Plan, as the
case may be, that is a severance plan in respect of
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a Leased Employee whose employment with a Leasing Company and all of its
affiliates is terminated prior to the Leasing Company Contribution Date.
(f) Following the Closing Date, Newco shall reimburse
each of the BellSouth Leasing Companies and the SBC Leasing Companies for all
employment expenses, out-of-pocket expenses and related costs associated with
the provision of services by the Transferred Employees. All reimbursements will
be determined and made in a manner consistent with the determination of
reimbursements under the Leasing Agreements. Such expenses and costs shall
include, but are not limited to (i) all costs incurred by the Leasing Companies
associated with payroll services to be provided hereunder (including (A) gross
wages before deductions for state and federal income taxes, employment taxes and
other tax deductions and before reductions for pre-tax salary deferrals related
to Code Sections 401(k) and 125 plans and plans of executive compensation, and
(B) employer's share of Federal Social Security taxes (FICA), Federal
Unemployment Insurance taxes (FUTA) and State Unemployment Insurance taxes
(SUTA)); (ii) all costs associated with and arising out of the provision of
benefits to the Leased Employees and their dependents as contemplated in
Sections 4.4(c) and 4.4(d) other than cash severance payments as described in
Section 4.4(e) (all expenses incurred by the Leasing Companies in the payment
and processing of benefit claims, costs associated with administering denied
claims, premiums and premium taxes); and (iii) all costs and expenses relating
to the relocation of Transferred Employees that are relocated at the request of
Newco. Promptly after the date hereof, BellSouth and SBC shall agree on a
reciprocal retention program for the Transferred Employees, which program shall
be subject to reimbursement in accordance with this Section 4.4(f).
(g) On or prior to December 31, 2001 or such other date
as the Parties and Newco agree (the "Leasing Company Contribution Date"), each
of SBC and BellSouth shall cause to be contributed to Newco all of the
outstanding stock of or other equity interests in their respective Leasing
Companies in consideration of the acceptance by Newco of the obligations and
liabilities of the Leasing Companies; it being understood that both
contributions shall be made on the same Business Day. The Leasing Companies
shall cease participating in (or otherwise provide benefits under) the SBC
Compensation and Benefit Plans and BellSouth Compensation and Benefit Plans, as
applicable, as of the Leasing Company Contribution Date and shall commence to
participate in (or otherwise provide benefits under) the Newco Plans established
pursuant to Section 4.4(k) hereof.
(h) SBC and BellSouth shall cause Newco to establish a
severance policy, effective as of and following the Leasing Company Contribution
Date. Newco shall bear and be responsible for all obligations and liabilities
under such policy as to the employees of the Leasing Companies and Newco on and
after the Leasing Company Contribution Date.
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(i) Unless the Parties and Newco agree otherwise, the
assets and liabilities of the SBC Wireless Employees and the BellSouth Wireless
Employees held under their respective Pension Plans with Code Section 401(k)
features ("401(k) Plans") to be transferred to the Newco 401(k) Plan in a
trust-to-trust transfer as soon as practicable following the later of (i) the
Leasing Company Contribution Date and (ii) the date that Newco has demonstrated,
to the reasonable satisfaction of BellSouth or SBC, as applicable, that the
Newco 401(k) Plan satisfies the qualification requirements of Section 401 of the
Code.
(j) If the Parties and Newco agree, the Parties shall,
and the Parties shall cause their respective Leasing Companies to, and Newco
shall take all actions necessary to cause the assets and liabilities
corresponding to the SBC Wireless Employees and the BellSouth Wireless Employees
held under any defined benefit Pension Plans to be transferred to a Newco
Pension Plan on a projected benefit obligation basis at the Leasing Company
Contribution Date or as of a later date determined to be permissible under the
appropriate Pension Plan documents (such transfers to be effected on the basis
of actuarial assumptions agreed to by BellSouth and SBC).
(k) Newco shall establish and sponsor, or cause to be
established and sponsored, Compensation and Benefit Plans (the "Newco Plans")
which are separate from the BellSouth Compensation and Benefit Plans and the SBC
Compensation and Benefit Plans. The Newco Plans shall provide that the SBC
Wireless Employees and the BellSouth Wireless Employees and each other person
who becomes an employee of Newco or any of its Subsidiaries subsequent to the
Closing Date upon a direct transfer of employment from SBC, a Subsidiary of SBC,
BellSouth or a Subsidiary of BellSouth shall be credited with such years of
service with SBC, a Subsidiary of SBC, BellSouth, or a Subsidiary of BellSouth
for purposes of eligibility, participation, and determining the level of
benefits (but not benefit accrual) under the Newco Plans.
(l) From and after the Leasing Company Contribution Date,
Newco shall indemnify, defend and hold harmless each of BellSouth and SBC and
the affiliates of each of them and hold BellSouth and SBC and the affiliates of
each of them harmless from and against any Losses which may be incurred or
suffered by any of them in connection with the obligations and liabilities of
the Leasing Companies and the obligations and liabilities assumed by Newco
relating to compensation and employee benefits (whether arising in connection
with the transactions contemplated by this Section 4.4, or otherwise). In
addition, from and after the Leasing Company Contribution Date, (i) BellSouth
agrees to indemnify, defend and hold harmless Newco from and against all Losses
arising out of or relating to the BellSouth Leasing Company, other than the
BellSouth Benefits Liabilities, and (ii) SBC agrees to indemnify, defend and
hold harmless Newco from and against all Losses arising out of or relating to
the SBC Leasing Company, other than the SBC Benefits Liabilities. The procedures
with respect to the
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indemnities set forth in this Section 4.4(l) shall be the same as those
indemnification procedures set forth in Article VII.
(m) Benefits True-Up Payment.
(i) Definitions. For purposes of this Section
4.4(m):
(v) "Total Benefits Liabilities" shall
mean the sum of the SBC Benefits Liabilities
and the BellSouth Benefits Liabilities.
(w) "SBC Benefits Liabilities" shall
mean the aggregate employment-related
liabilities assumed by the SBC Leasing
Companies, determined as of the Leasing
Company Contribution Date (including,
without limitation, (A) all such liabilities
assumed pursuant to Section 4.4(c), (B)
post-retirement and post-employment benefit
liabilities determined pursuant to FAS 106
and FAS 112, (C) non-qualified retirement
and deferred compensation plan liabilities
and (D) accrued vacation pay liabilities,
but excluding liabilities under
tax-qualified defined contribution and
defined benefit plans), reduced to the
extent that such liabilities have been
funded or are subject to payment for the
benefit of the SBC Leasing Companies under
contracts of insurance.
(x) "BellSouth Benefits Liabilities"
shall mean the aggregate employment-related
liabilities assumed by the BellSouth Leasing
Companies, determined as of the Leasing
Company Contribution Date (including,
without limitation, (A) all such liabilities
assumed pursuant to Section 4.4(d), (B)
post-retirement and post-employment benefit
liabilities determined pursuant to FAS 106
and FAS 112, (C) non-qualified retirement
and deferred compensation plan liabilities
and (D) accrued vacation pay liabilities,
but excluding liabilities under
tax-qualified defined contribution and
defined benefit plans), reduced to the
extent that such liabilities have been
funded or are subject to payment for the
benefit of the BellSouth Leasing Companies
under contracts of insurance.
(y) "SBC Proportionate Share" shall
mean the quotient, expressed as a
percentage, of the SBC Benefits Liabilities,
divided by the Total Benefits Liabilities.
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(z) "BellSouth Proportionate Share"
shall mean the quotient, expressed as a
percentage, of the BellSouth Benefits
Liabilities, divided by the Total Benefits
Liabilities.
(ii) Procedures.
(x) As soon as practicable, but in no
event later than ninety (90) days following
the Leasing Company Contribution Date, Newco
shall, on a basis consistent with GAAP and
generally accepted actuarial principles,
prepare and deliver to each of SBC and
BellSouth a statement showing the
calculation of the SBC Benefits Liabilities
and the BellSouth Benefits Liabilities (the
"Statement").
(y) After receipt of the Statement, SBC
and BellSouth shall each have sixty (60)
days to review the Statement. Newco, SBC and
BellSouth shall each provide each other and
their authorized representatives reasonable
access during normal business hours and
without significant disruption to their
respective business to (i) all of their and
their Subsidiaries' respective books,
records and employees having relevant
information concerning the calculation of
the Statement to the extent that such
information was used in the calculation of
the Statement, and (ii) the accountants and
actuaries who assisted Newco in preparing
the calculation of the Statement and such
accountants' and actuaries' relevant
supporting workpapers (such access to be
provided by Newco). Unless SBC or BellSouth
delivers written notice to Newco and to SBC
or BellSouth, as the case may be, on or
prior to the 60th day after Newco's delivery
of the Statement stating that SBC or
BellSouth, as the case may be, has
objections to the Statement and describing
any such objections with reasonable
particularity, SBC and BellSouth shall be
deemed to have accepted and agreed to the
calculation of the Statement. In addition,
any item included in the Statement which is
not objected to by either SBC or BellSouth
shall be deemed to be accepted by SBC and
BellSouth and any amounts included within
any such item shall be deemed to be final,
binding and conclusive. If SBC or BellSouth
notifies Newco of its objections to the
calculation, SBC, BellSouth and Newco shall,
within ten (10) days, attempt to resolve
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their differences, and any written
resolution by them as to any disputed
amounts shall be final, binding and
conclusive on all Parties and Newco for all
purposes.
(z) Any amounts remaining in dispute at
the conclusion of the seventieth (70th) day
following the delivery of the Statement
shall be submitted, within ten (10) days
after the expiration of such period, to
Xxxxxx Xxxxxxxx LLP or another accounting or
actuarial consulting firm mutually agreed to
by the Parties and Newco. Each Party and
Newco agrees to execute, if requested by
such firm, an engagement letter with such
firm containing reasonable terms. All fees
and expenses relating to the work, if any,
to be performed by such firm shall be borne
by the Parties and Newco equally. Such firm
shall act as an arbitrator and not as an
expert in resolving any disputed items
hereunder. Such firm's determination of such
items shall be made within thirty (30) days
after the submission of such items to such
firm. Such firm's resolution of such
disputed items shall be set forth in a
written statement delivered to the parties
and shall be final, binding and conclusive
on all Parties and Newco for all purposes.
(iii) Payment.
(x) In the event that the BellSouth
Proportionate Share is greater than .40,
BellSouth shall make a cash payment to Newco
equal to the quotient of (A) divided by (B),
where (A) is the excess of (I) the BellSouth
Benefits Liabilities over (II) the product
of the Total Benefits Liabilities and .40
and (B) is .60.
(y) In the event that the SBC
Proportionate Share is greater than .60, SBC
shall make a cash payment to Newco equal to
the quotient of (A) divided by (B), where
(A) is the excess of (I) the SBC Benefits
Liabilities over (II) the product of the
Total Benefits Liabilities and .60 and (B)
is .40.
(iv) The payment to be made pursuant to Section
4.4(m)(iii)(x) or 4.4(m)(iii)(y), as applicable, shall be made within
five (5) Business Days following the resolution of all disputes in
accordance with Section 4.4(m)(ii) hereof.
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4.5 Transferred Businesses. (a) Notwithstanding anything to the
contrary contained herein, prior to Closing, SBC shall be permitted to cause to
be transferred, conveyed or assigned to SBC or any other Person designated by
SBC, any assets, rights or interests primarily related to the Excluded SBC
Business and prior to such transfer, conveyance or assignment shall be free to
continue to operate such businesses. The Parties and Newco acknowledge that
following the Closing, Newco shall be required to cause any such assets, rights
or interests to be transferred, conveyed or assigned to SBC or a Person
designated by SBC as soon as practicable after receiving written notice from SBC
that it or any of its Subsidiaries is in possession of any such assets, rights
or interests. In each case, SBC or the Person designated by SBC shall not be
required to pay consideration in respect of the transfer, conveyance or
assignment referred to in the preceding sentence.
(b) Notwithstanding anything to the contrary contained
herein, prior to Closing, BellSouth shall be permitted to cause to be
transferred, conveyed or assigned to BellSouth or any other Person designated by
BellSouth, any assets, rights or interests primarily related to the Excluded
BellSouth Business and prior to such transfer, conveyance or assignment shall be
free to continue to operate such businesses. The Parties and Newco acknowledge
that following the Closing, Newco shall be required to cause any such assets,
rights or interests to be transferred, conveyed or assigned to BellSouth or a
Person designated by BellSouth as soon as practicable after receiving written
notice from BellSouth that it or any of its Subsidiaries is in possession of any
such assets, rights or interests. In each case, BellSouth or the Person
designated by BellSouth shall not be required to pay consideration in respect of
the transfer, conveyance or assignment referred to in the preceding sentence.
4.6 Divestitures. In the event that any properties or assets of
either of the Parties or their Subsidiaries are required to be divested (such
properties or assets, "Conflicted Systems") under the CMRS station spectrum
aggregation limits established by the FCC in 47 C.F.R. Section 20.6 and the
Cellular Cross Ownership Limits contained in 47 C.F.R. Section 22.942 (together,
the "Overlap Laws"), the Parties shall establish a committee (the "Disposition
Committee") comprised of one member representing BellSouth and one member
representing SBC, which shall determine within 45 days after the date hereof
which Conflicted Systems will be required to be disposed (the "Disposition
Systems"). The Parties may cause some or all of the Disposition Systems to be
marketed as a single transaction or in such other manner as the Disposition
Committee shall determine will be in the best interests of Newco and the Party
making the divestiture. With respect to each of the Disposition Systems, the
Party which is, or whose Affiliate is, the holder of a Person which is the
current licensee of such Disposition System, shall, with the approval of the
other Party, (i) take all reasonably necessary steps to conclude a binding
agreement to transfer such Disposition System as promptly as practicable at a
reasonable price, (ii) file all necessary applications for all Governmental
Approvals required to consummate such transfer, (iii) seek such applications and
the
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satisfaction of any other conditions to closing such transaction promptly,
diligently and in good faith; provided that nothing set forth in this Section
4.6 shall be deemed to affect the obligations of SBC and BellSouth under Section
4.3 hereof. Closing of the transfer of each of the Disposition Systems shall
take place concurrently with (or earlier, if the selling Party consents in
writing) the Closing.
4.7 Acquisitions by SBC or BellSouth. Notwithstanding any action
permitted to be taken by Sections 4.2(a) and 4.2(b) hereof, SBC and BellSouth
shall not, and shall cause their Subsidiaries (other than the SBC Companies and
their Subsidiaries and the BellSouth Companies and their Subsidiaries) not to
purchase or otherwise become the owner of, or enter into an agreement to
purchase or otherwise become the owner of any property or assets that would
result in the SBC Contribution and the BellSouth Contribution causing Newco to
be in violation of the Overlap Laws, if not divested prior to the Closing.
4.8 Accountants' Letter. SBC shall use its reasonable best
efforts, to obtain a letter from Ernst & Young LLP or another nationally
recognized independent accounting firm, dated the Closing Date, addressing
whether or not the consummation of the transactions contemplated hereby will
require SBC to restate the accounting for any of the transactions set forth on
Schedule 4.8 of the SBC Disclosure Letter from a "pooling-of-interests"
transaction to a "purchase" transaction; provided that the failure of SBC to use
its reasonable best efforts to obtain such a letter shall not constitute a
breach of this covenant if the condition in Section 5.3(e) shall have been
waived or deemed waived.
4.9 Transition Group. Promptly after the date hereof, the Parties
will create a transition group (the "Transition Group") to consist of at least
one marketing executive, one technical executive, one financial executive, one
human resources executive, one regulatory executive and one designated team
leader (who may be one of such executives) from each of the Parties. The
Transition Group will have responsibility for developing and implementing
transitional arrangements until the Closing, including, without limitation,
issues with respect to Newco relating to technology, human resources, wireless
coverage area, service offerings to be made available after the Closing and
marketing. The financial members of the Transition Group will also work together
to assist in the preparation of pro forma financial statements required by the
Parties in connection with the operation of their respective companies'
businesses (including in connection with offerings of securities).
4.10 Initial Marketing Plan. Prior to the Closing Date, BellSouth
and SBC shall prepare an initial marketing plan covering the balance of the year
2000 (if the Closing is to occur in the year 2000) and all of the year 2001 that
will include, among other things, a branding strategy and a packaging strategy,
including a determination as to the uses, if any, of BellSouth and SBC brand
names by Newco.
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4.11 [Intentionally omitted]
4.12 Ancillary Agreements. On the Closing Date, the Parties shall,
and shall cause their applicable Affiliates (including Newco) to, enter into
each of the Ancillary Agreements that has not been entered into prior to the
Closing.
4.13 Resale and Agency Agreements. On or prior to the Closing Date,
SBC agrees to enter into and to cause the SBC Companies, their Subsidiaries and
Newco, and BellSouth agrees to enter into and to cause the BellSouth Companies
and their Subsidiaries to enter into the Resale Agreements and, subject to the
next succeeding sentence, the Agency Agreements. The Parties agree, between the
date hereof and the Closing Date, to negotiate in good faith with respect to any
revisions the Parties may suggest with respect to the Agency Agreements. If the
Parties agree to any such revisions, the term Agency Agreements shall be deemed
to be the Agency Agreements as so revised.
4.14 Headquarters. The location of Newco's initial principal place
of business shall be determined by the Transition Group.
4.15 Branding; Corporate Name. (a) Prior to Closing the Parties
shall agree upon a brand name and logo or logos for Newco. In no event shall any
of such brand name and logo or logos include any reference to the SBC or
BellSouth names or any derivative thereof, subject to Section 4.10.
(b) The Parties agree that they shall promptly meet after
the date hereof to agree upon Newco's company name following the Closing. The
Parties agree that Newco's company name following the Closing will not be
directly or indirectly tied to either SBC or BellSouth or to any of their
respective Subsidiaries or Affiliates. Newco shall do business under a company
name that will reflect Newco's broad geographic strategy of local, regional and
national wireless coverage and future wireless opportunities in voice, data,
Internet and other telecommunications services. The Parties will ensure that
such name shall be the exclusive property of Newco, and no Party shall have any
right to use, and each Party agrees not to use, such name other than on behalf
of Newco, except as may be permitted from time to time by the Board of Directors
of Manager or as set forth in this Agreement, or the Ancillary Agreements.
4.16 Intercompany Obligations(a) . (a) As of the Closing, all
intercompany allocations charged by SBC and its Subsidiaries (other than persons
that will be, immediately following the Closing, Subsidiaries of Newco) in
respect of the SBC Business shall cease and any services provided to Newco and
its Subsidiaries (the cost of which was previously allocated) for which Newco
and its Subsidiary shall be charged a fee shall be provided only pursuant to a
Transition Services Agreement or if SBC and BellSouth shall otherwise agree in
writing. On or prior to the nine month anniversary of the Closing Date, Newco
and SBC shall cause all intercompany obligations and
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agreements that existed at the time of the Closing between the SBC Companies and
their Subsidiaries, on the one hand, and SBC and its other Affiliates, on the
other hand, to be settled and/or terminated so that by such anniversary of the
Closing no such intercompany obligations shall remain outstanding, other than
those intercompany arrangements (i) set forth in the Ancillary Agreements, (ii)
as otherwise agreed by the Parties in writing, (iii) intercompany obligations
for money borrowed, and (iv) set forth on Schedule 4.16(a) of the SBC Disclosure
Letter.
(b) As of the Closing, all intercompany allocations
charged by BellSouth and its Subsidiaries (other than Persons that will be,
immediately following the Closing, Subsidiaries of Newco) in respect of the
BellSouth Business shall cease and all services provided to Newco and its
Subsidiaries (the cost of which was previously allocated) for which Newco and
its Subsidiary shall be charged a fee shall be provided only pursuant to a
Transition Services Agreement or if SBC and BellSouth shall otherwise agree in
writing. On or prior to the nine month anniversary of the Closing Date, Newco
and BellSouth shall cause all intercompany obligations and agreements that
existed at the time of the Closing between the BellSouth Companies and their
Subsidiaries, on the one hand, and BellSouth and its other Subsidiaries, on the
other hand, to be settled and/or terminated so that by such anniversary of the
Closing no such intercompany obligations shall remain outstanding other than
those intercompany arrangements (i) set forth in the Ancillary Agreements, (ii)
as otherwise agreed by the Parties in writing, (iii) intercompany obligations
for money borrowed, and (iv) those set forth on Schedule 4.16(b) hereto.
4.17 Taxes. (a) SBC Liability for Pre-Closing Taxes. SBC shall be
liable for and indemnify Newco for all Taxes imposed on the SBC Companies or
their Subsidiaries or for which the SBC Companies or their Subsidiaries may
otherwise by liable for any taxable year or period that ends on or before the
Closing Date and, with respect to any taxable year or period beginning before
and ending after the Closing Date, the portion of such taxable year ending on
and including the Closing Date. Except as set forth in paragraph (d), SBC shall
be entitled to any refund of Taxes of the SBC Companies or any of their
Subsidiaries received for such pre-closing periods.
(b) BellSouth Liability for Pre-Closing Taxes. BellSouth
shall be liable for and indemnify Newco for all Taxes imposed on the BellSouth
Companies or their Subsidiaries or for which the BellSouth Companies or their
Subsidiaries may otherwise by liable for any taxable year or period that ends on
or before the Closing Date and, with respect to any taxable year or period
beginning before and ending after the Closing Date, the portion of such taxable
year ending on and including the Closing Date. Except as set forth in paragraph
(e), BellSouth shall be entitled to any refund of Taxes of the BellSouth
Companies or any of their Subsidiaries received for such pre-closing periods.
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(c) Taxes for Short Taxable Year. For purposes of
paragraphs (a) and (b), whenever it is necessary to determine the liability for
Taxes of the SBC Companies, the BellSouth Companies or any of their respective
Subsidiaries for a portion of a taxable year or period that begins before and
ends after the Closing Date, the determination of the Taxes of the relevant
entity for the portion of the year or period ending on, and the portion of the
year or period beginning after, the Closing Date shall be determined by assuming
that the relevant entity had a taxable year or period which ended at the close
of the Closing Date, except that exemptions, allowances or deductions that are
calculated on an annual basis, such as the deduction for depreciation and Taxes
on real or personal property, shall be apportioned on a daily basis.
(d) Refunds from SBC Carrybacks. If SBC becomes entitled
to a refund or credit of Taxes for any period for which it is liable under
Section 4.17(a) to indemnify Newco and such Taxes are attributable solely to the
carryback of losses, credits or similar items attributable to the SBC Companies
or their Subsidiaries and from a taxable year or period that begins after the
Closing Date, SBC shall promptly pay to Newco the amount of such refund or
credit together with any interest thereon. In the event that any refund or
credit of Taxes for which a payment has been made is subsequently reduced or
disallowed, SBC and BellSouth shall cause Newco to indemnify and hold harmless
SBC for any tax liability, including interest and penalties, assessed against
SBC by reason of the reduction or disallowance. SBC and BellSouth will cause
Newco to waive this carryback option, if possible.
(e) Refunds from BellSouth Carrybacks. If BellSouth
becomes entitled to a refund or credit of Taxes for any period for which it is
liable under Section 4.17(b) to indemnify Newco and such Taxes are attributable
solely to the carryback of losses, credits or similar items attributable to the
BellSouth Companies or their Subsidiaries and from a taxable year or period that
begins after the Closing Date, BellSouth shall promptly pay to Newco the amount
of such refund or credit together with any interest thereon. In the event that
any refund or credit of Taxes for which a payment has been made is subsequently
reduced or disallowed, SBC and BellSouth shall cause Newco to indemnify and hold
harmless BellSouth for any tax liability, including interest and penalties,
assessed against BellSouth by reason of the reduction or disallowance. SBC and
BellSouth will cause Newco to waive this carryback option, if possible.
(f) SBC Tax Returns. SBC shall file or cause to be filed
when due all Tax Returns that are required to be filed by or with respect to the
SBC Companies or any of their Subsidiaries for taxable years or periods ending
on or before the Closing Date and shall pay any Taxes due in respect of such Tax
Returns, and SBC and BellSouth shall cause Newco to file or cause to be filed
when due all Tax Returns that are required to be filed by or with respect to the
SBC Companies or any of their Subsidiaries for taxable years or periods ending
after the Closing Date and to remit any Taxes due in respect of such Tax
Returns. SBC shall pay Newco the Taxes for which SBC is liable pursuant to
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Section 4.17(a) but which are payable with Tax Returns to be filed by Newco
pursuant to the previous sentence within 10 days prior to the due date for the
filing of such Tax Returns.
(g) BellSouth Tax Returns. BellSouth shall file or cause
to be filed when due all Tax Returns that are required to be filed by or with
respect to the BellSouth Companies or any of their Subsidiaries for taxable
years or periods ending on or before the Closing Date and shall pay any Taxes
due in respect of such Tax Returns, and SBC and BellSouth shall cause Newco to
file or cause to be filed when due all Tax Returns that are required to be filed
by or with respect to the BellSouth Companies or any of their Subsidiaries for
taxable years or periods ending after the Closing Date and to remit any Taxes
due in respect of such Tax Returns. BellSouth shall pay Newco the Taxes for
which BellSouth is liable pursuant to Section 4.17(b) but which are payable with
Tax Returns to be filed by Newco pursuant to the previous sentence within 10
days prior to the due date for the filing of such Tax Returns.
4.18 Business Assets. (a) SBC agrees to use its reasonable best
efforts to cause as soon as reasonably practicable after the Closing the sale,
assignment, transfer or other conveyance of the Other SBC Assets (other than the
SBC Additional Subsidiaries) to Newco without cost to Newco. In the event and to
the extent that any such Other SBC Assets cannot be sold, assigned, transferred
or otherwise conveyed to Newco within 30 days after Closing, SBC shall make
arrangements to provide to Newco, without cost to Newco, the material benefits
of any such Other SBC Assets, to the extent permitted by Law. The provisions of
this Section 4.8 shall not be deemed to affect the provisions of Section 4.23.
(b) BellSouth agrees to use its reasonable best efforts
to cause as soon as reasonably practicable after the Closing the sale,
assignment, transfer or other conveyance of the Other BellSouth Assets (other
than the BellSouth Additional Subsidiary and other than as provided in Section
4.25) to Newco. In the event and to the extent that any such Other BellSouth
Assets cannot be sold, assigned, transfer or otherwise conveyed to Newco within
30 days after Closing, BellSouth shall make arrangements to provide Newco,
without cost to Newco, the material benefits of any such Other BellSouth Assets,
to the extent permitted by Law. The provisions of this Section 4.18 shall not be
deemed to affect the provisions of Section 4.23.
4.19 Notification of Certain Matters. Each Party shall prior to the
Closing give prompt written notice to the other of (a) the occurrence of
circumstances which provide it with knowledge of the occurrence of any employee
strikes, work stoppings, slowdowns or lockouts related to the SBC Companies or
their Subsidiaries or the BellSouth Companies and their Subsidiaries, as the
case may be, and (b) the entry into any collective bargaining agreement related
to the SBC Companies and their Subsidiaries or
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the BellSouth Companies and their Subsidiaries, as the case may be, and each
Party agrees to consult with the other prior to taking actions related to such
events.
4.20 Regulatory Compliance. (a) SBC shall take all actions
reasonably requested in writing by BellSouth to (i) cure no later than the
Closing, or, with respect to any Additional SBC Subsidiary, the applicable SBC
Additional Closing, any material violations and defaults under any applicable
rules and regulations of the FCC (the "FCC Rules") and the FAA (the "FAA
Rules"), (ii) comply, in all material respects, with the FCC Rules and the FAA
Rules and cause each of the SBC Companies to file or cause to be filed with the
FCC and the FAA all reports and other filings required to be filed under
applicable FCC Rules and FAA Rules, and (iii) cause SBC and each of the SBC
Companies on or before the Closing to be in compliance upon the consummation of
the Closing with the provisions of Sections 271 and 272 of the Communications
Act (including any Final Orders issued by the FCC interpreting or implementing
such provisions); provided that the foregoing shall not be deemed to require SBC
to take any actions prior to the Closing that would adversely affect the SBC
Companies if the transactions contemplated by this Agreement were not
consummated or to take any actions beyond its control.
(b) BellSouth shall take all actions reasonably requested
in writing by SBC to (i) cure no later than the Closing, or, with respect to any
BellSouth Additional Subsidiary, the applicable BellSouth Additional Closing,
any material violations and defaults under the FCC Rules and the FAA Rules, (ii)
comply, in all material respects, with the FCC Rules and the FAA Rules and cause
each of the BellSouth Companies to file or cause to be filed with the FCC Rules
and the FAA all reports and other filings required to be filed under applicable
FCC Rules and FAA Rules, and (iii) cause BellSouth and each of the BellSouth
Companies on or before the Closing to be in compliance upon the consummation of
the Closing with the provisions of Sections 271 and 272 of the Communications
Act (including any Final Orders issued by the FCC interpreting or implementing
such provisions); provided that the foregoing shall not be deemed to require
BellSouth to take any actions prior to the Closing that would adversely affect
the BellSouth Companies if the transactions contemplated by this Agreement were
not consummated or to take any actions beyond its control.
4.21 Control of Operations. Nothing contained in this Agreement
shall give SBC, directly or indirectly, the right to control or direct the
operations of BellSouth or its Affiliates with respect to the BellSouth Business
prior to the Closing. Nothing contained in this Agreement shall give BellSouth,
directly or indirectly, the right to control or direct the operations of SBC or
its Affiliates with respect to the SBC Business prior to the Closing.
4.22 Conversions. (a) SBC agrees that prior to Closing it shall use
commercially reasonable efforts to cause each SBC Company and each Subsidiary of
a
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SBC Company that is a corporation or treated as a corporation for United States
federal income Tax purposes, to the extent permitted by Law to be either
converted into or merged into an entity that is a United States person and that
is taxable as a partnership for United States federal income tax purposes or
that is a disregarded entity under Treasury Regulation Section
301.7701-3(b)(l)(ii); provided that the terms of any agreement providing for the
foregoing shall (i) ensure that SBC's direct or indirect ownership percentage of
each such entity shall not be affected and (ii) only provide for those matters
required to effect such merger or conversion. In addition, prior to Closing, SBC
agrees to form SBC Holdings as a direct, wholly owned Subsidiary of SBC, and SBC
Wireless LLC as a Delaware limited liability company and a direct, wholly owned
Subsidiary of SBC Holdings. In addition, SBC agrees that prior to the Closing it
shall cause to occur the transactions specified on Schedule 4.22(a) of the SBC
Disclosure Letter or shall cause to occur similar transactions such that the SBC
Companies own all of the Business of SBC which shall be contributed to Newco in
accordance with the terms of this Agreement (the "SBC Subsidiary
Restructuring"). The SBC Companies shall not have any liabilities as a result of
the SBC Subsidiary Restructuring that are not taken into account in the
Calculation.
(b) BellSouth agrees that prior to Closing it shall use
commercially reasonable efforts to cause each BellSouth Company and each
Subsidiary of a BellSouth Company that is a corporation or treated as a
corporation for United States federal income Tax purposes, to the extent
permitted by Law to be either converted into or merged into an entity that is a
United States person and that is taxable as a partnership for United States
federal income tax purposes or that is a disregarded entity under Treasury
Regulation Section 301.7701-3(b)(1)(ii); provided that the terms of any
agreement providing for the foregoing shall (i) ensure that BellSouth's direct
or indirect ownership percentage of each such entity shall not be affected and
(ii) only provide for those matters required to effect such merger or
conversion. In addition, BellSouth agrees that prior to the Closing it shall
cause to occur the transactions specified on Schedule 4.22(b) of the BellSouth
Disclosure Letter or shall cause to occur similar transactions such that the
BellSouth Companies own all of the Business of BellSouth which shall be
contributed to Newco in accordance with the terms of this Agreement (the
"BellSouth Subsidiary Restructuring"). The BellSouth Companies shall not have
any liabilities as a result of the BellSouth Subsidiary Restructuring that are
not taken into account in the Calculation.
4.23 Certain Exclusions. Prior to the Closing, SBC shall cause the
SBC Companies and certain Subsidiaries of the SBC Companies, respectively, to
distribute the Arkansas Assets and the Arkansas Liabilities, and the Pittsburgh
Assets and the Pittsburgh Liabilities to a separate Entity wholly owned by SBC
or a Subsidiary of SBC (the "SBC Additional Subsidiary"). The Parties and Newco
agree that prior to the Closing, Newco shall enter into a Management Agreement
with the SBC Additional Subsidiary (other than with respect to the Pittsburgh
Market) on terms reasonably acceptable to Newco, which Management Agreement
shall permit the SBC Additional
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Subsidiary to, along with the assets owned or leased by the SBC Additional
Subsidiary, conduct its business in all material respects as it is conducted on
the Closing Date. SBC agrees to file all relevant notices, forms and
applications required to be made with any Governmental Entity with respect to
such distributions. At any time following the Closing Date, SBC and BellSouth
shall cause Newco to or cause to be promptly executed and delivered any other
documents or assurances, as shall be reasonably requested by SBC in order to
vest in SBC its rights in such assets, and SBC shall promptly execute and
deliver any other documents as shall be reasonably requested by Newco in order
that the liabilities specified above shall be assumed by the SBC Additional
Subsidiary.
4.24 Consent of Third Parties. Except as otherwise provided herein,
nothing in this Agreement shall be construed as an attempt by any Party to
assign to Newco pursuant to this Agreement any Contract, License, franchise,
claim or asset that is by its terms or by Law non-assignable without the consent
of any other Person, unless such consent or approval shall have been given.
4.25 Additional Properties. (a) SBC agrees to, or enter into a
binding agreement to, cause the partnership interests in Houma-Thibodaux that it
owns indirectly through Radiofone to be owned, directly or indirectly, by one of
the SBC Companies prior to the Closing, and, if such transaction cannot be
consummated prior to Closing, SBC agrees to cause its Subsidiaries and
Affiliates to and Newco agrees to enter into a management agreement (the
"Houma-Thibodaux Management Agreement"), and SBC agrees to cause to be
contributed to Newco all assets and liabilities of Houma-Thibodaux promptly upon
obtaining the consent of all applicable Governmental Entities to such
contribution and Newco agrees to taking such steps as shall be required to cause
such contribution to occur.
(b) SBC agrees to, or enter into a binding agreement to,
cause the MI-5 Assets and the Xxxxxxx License to be transferred to one of the
SBC Companies prior to Closing, and, if such transactions cannot be consummated
prior to Closing, SBC agrees to cause its Subsidiaries and Affiliates to and
Newco agrees to enter into a management agreement with respect to the MI-5
Assets which cannot be contributed (the "MI-5 Management Agreement"), and SBC
agrees to cause to be contributed to Newco all of the MI-5 Assets promptly upon
obtaining the consent of all applicable Governmental Entities to such
contribution and Newco agrees to taking such steps as shall be required to cause
such contribution to occur.
(c) SBC agrees to, or enter into a binding agreement to,
cause prior to the closings of the transactions contemplated thereby, the
Indianapolis License Assignment Agreement to be assigned to one of the SBC
Companies.
(d) SBC agrees to, or enter into a binding agreement to,
cause the assets and liabilities relating to the Paging Services of SBC PR to be
transferred to one of
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the SBC Companies prior to Closing, and, if such transaction cannot be
consummated prior to Closing, SBC agrees to cause its Subsidiaries and
Affiliates to and Newco agrees to enter into a management agreement (the "PR
Management Agreement"), and SBC agrees to cause to be contributed to Newco all
assets and liabilities relating to the Paging Services of SBC PR promptly upon
obtaining the consent of all applicable Governmental Entities to such
contribution and Newco agrees to taking such steps as shall be required to cause
such contribution to occur.
(e) With respect to those contributions specified in
Sections 4.25(a), 4.25(b), 4.25(c) and 4.25(d) that are not contributed to a SBC
Company or a Subsidiary thereof at or prior to the Closing, the calculation of
the SBC Net Debt shall include the current assets (including cash and cash
equivalents) of each respective contribution and the liabilities of each
respective contribution as of the time of the respective contributions,
calculated in accordance with GAAP consistently applied and subject to the
procedures set forth in Section 2.11; provided that with respect to the assets
and liabilities of the contribution referred to in Section 4.25(d), only 50% of
the assets and liabilities shall be included.
(f) SBC shall not be required to cause its indirect
interest in FACIC to be indirectly owned by Newco at the Closing. SBC agrees
that it shall cause its indirect interest in FACIC to be transferred to Newco
within 90 days after the Closing. All distributions (with a record date after
the Closing Date) received by SBC in respect of its indirect interest in FACIC
for the period between the Closing Date and the date of such transfer (net of
Taxes in respect of such distributions and any capital calls) shall be paid to
Newco at the time of the transfer of SBC's indirect interest in FACIC.
(g) BellSouth agrees to cause to be contributed to Newco
all National Marketing Shares as soon as practicable following the Closing and
promptly upon obtaining the consent of all applicable Governmental Entities
(after taking all steps necessary in connection with any such consent) to such
contribution and Newco agrees to taking such steps as shall be required to cause
such contribution to occur. BellSouth agrees to cause National Marketing to
continue to operate its business in the ordinary course and to continue to
provide services to the BellSouth Companies and its Subsidiaries on
substantially the same terms as such services are provided immediately prior to
the date hereof. BellSouth further agrees to cause National Marketing not to
make any distributions prior to its contribution of National Marketing to Newco
or any Subsidiary thereof.
(h) In the event that the contribution specified in
Section 4.25(g) is not contributed to a BellSouth Company or a Subsidiary
thereof at or prior to the Closing, the calculations of the BellSouth Net Debt
shall include the current assets (including cash and cash equivalents) of such
contribution and the liabilities of such contribution as of the
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time of such contribution to Newco or its Subsidiaries calculated in accordance
with GAAP consistently applied and subject to the procedures set forth in
Section 2.1.
(i) BellSouth agrees to cause to be contributed to Newco
the 4.46% limited partnership interest in BellSouth Wireless Data, L.P., a
Delaware limited partnership ("BellSouth Wireless Data"), owned by third parties
(the "Minority Interest"), free of Encumbrances, as soon as reasonably
practicable after Closing and in any event not later than December 31, 2001 and
Newco agrees to take such steps as shall be required to cause such contribution
to occur. BellSouth shall indemnify and hold Newco harmless against any
distributions or other payments made in respect of the Minority Interest and any
costs, expenses or other adverse consequences, including any distribution or
other payments to minority partners in BLS Wireless Data, arising out of or
related to the existence of the Minority Interest or the acquisition of such
Minority Interest. For purposes of this Agreement, BellSouth shall be treated
for all purposes (e.g., Net Debt calculations) as having contributed 100% of the
equity interests in BLS Wireless Data as of the Closing.
4.26 Consents to Additional Acquisitions. (a) If SBC proposes to
cause any business and other assets and liabilities to become an SBC After
Acquired Property, SBC shall provide BellSouth with a written request to consent
to the proposed acquisition of such a wireless business, assets and liabilities
which request shall include a summary of the major terms of the transaction, the
selling party, the proposed purchase price (or range of prices), or,
alternatively, a copy of definitive documentation with respect to such
transaction. BellSouth shall, if the proposed consideration for such transaction
or series of related transactions is less than or equal to $500 million, within
ten Business Days after such request, approve or reject the acquisition which is
the subject of such request. If the proposed consideration for such transaction
or series of related transactions is more than $500 million, BellSouth shall,
within ten Business Days following such request, call a meeting of or circulate
a consent to its Board of Directors to approve or reject the transaction and (i)
in the case of a meeting, shall hold such meeting within five Business Days
following such call and (ii) in the case of a consent, obtain such consent
within 5 days of the mailing or distribution of the consent. In the event
BellSouth does not consent to the transaction and SBC nonetheless purchases the
property, SBC may offer it to Newco pursuant to Section 11.2 of the LLC
Agreement.
(b) If BellSouth proposes to cause any business and other
assets and liabilities to become BellSouth After Acquired Property, BellSouth
shall provide SBC with a written request to consent to the proposed acquisition
by BellSouth of a wireless business, assets and liabilities which request shall
include a summary of the major terms of the transaction, the selling party, the
proposed purchase price (or range of prices) or, alternatively, a copy of
definitive documentation with respect to such transaction. SBC shall, if the
proposed consideration for such transaction or series of related transactions is
less than or equal to $500 million, within ten Business Days after such request
approve or
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reject the acquisition which is the subject of such request. If the proposed
consideration for such transaction or series of related transactions is more
than $500 million, SBC shall, within ten Business Days following such request,
call a meeting of or circulate a consent to its Board of Directors to approve or
reject the transaction and (i) in the case of a meeting, shall hold such meeting
within five Business Days following such call and (ii) in the case of a consent,
obtain such consent within 5 days of the mailing or distribution of the consent.
In the event SBC does not consent to the transaction and BellSouth nonetheless
purchases the property, BellSouth may offer it to Newco pursuant to Section 11.2
of the LLC Agreement.
4.27 Intercompany Indebtedness. SBC, BellSouth and Newco agree that
all terms (other than the principal amount) with respect to all monies owed by
Newco or any of its Subsidiaries immediately following the Closing to (a) SBC or
any of its Subsidiaries (other than Newco and its Subsidiaries), and (b)
BellSouth or any of its Subsidiaries (other than Newco and its Subsidiaries),
shall be the same, including, but not limited to, annual interest rate (which
shall be 7.5% per annum as of the Closing), compounding periods, prepayment
terms, time to maturity and other repayment terms.
4.28 Transaction Costs. Newco agrees to assume, from time to time
after the Closing, the obligations of SBC, BellSouth, and their respective
Subsidiaries with respect to fees and expenses of their respective advisors
relating to the acquisition of the properties listed on Schedule 6(a)(2),
6(a)(3) and 6(a)(4) and the "Indianapolis 10MHz License" referred to in Schedule
6(a)(1) and Schedule 6(b)(3), other than fees and expenses with respect to
litigation.
4.29 Minority Interests. Any payments made by SBC or a Subsidiary
of SBC (other than Newco and its Subsidiaries) in connection with (i) the
acquisition of the minority interests described in Schedule 6(a)(3) (regardless
of the representation set forth in Section 3.1(v)) and (ii) any payments made to
obtain consents with respect to the properties referenced in Schedule 6(a)(4)
shall be refunded to SBC by Newco in cash promptly after receipt of evidence of
such payment (regardless of the representations set forth in Section 3.1(v));
provided, that such amounts are determined by a court or follow arm's length
negotiations.
4.30 Crown Castle Shares. As of the Closing, BellSouth shall have
recorded as a liability on the financial statements of the BellSouth Companies
and their Subsidiaries in an amount equal to the corresponding current assets
reflected on the financial statements of the BellSouth Companies and their
Subsidiaries with respect to the Crown Castle Shares.
4.31 Further Assurances. At any time following the Closing Date,
SBC and BellSouth shall, and shall cause Newco and their respective Subsidiaries
to, promptly execute, acknowledge and deliver any other assurances or documents
reasonably requested
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by Newco, SBC or BellSouth, as the case may be, and necessary for SBC, BellSouth
or Newco, as the case may be, to satisfy its obligations under this Agreement or
obtain the benefits contemplated by this Agreement, including with respect to
the SBC Additional Subsidiaries and the BellSouth Additional Subsidiary.
ARTICLE V
CONDITIONS TO CLOSING
5.1 Conditions to Each Party's Obligation to Effect the
Transaction. The respective obligations of the Parties to consummate the
transactions contemplated hereby are subject to the satisfaction or waiver on or
prior to the Closing Date of each of the following conditions:
(a) (i) The waiting periods applicable to the consummation of
the transactions contemplated hereby under the HSR Act and the EU Merger
Regulation shall have expired or been earlier terminated, and all SBC
Required Consents and BellSouth Required Consents, the failure of which to be
made or obtained would be reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect on Newco following consummation of the
Transaction or prevent or materially delay or impair the consummation of the
transactions contemplated hereby in each case shall have been made or obtained
(as the case may be) pursuant to a Final Order, free of any conditions (other
than conditions that (x) would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on Newco following the Closing, and
(y) would not be reasonably likely to be material and adverse to any material
business of SBC or BellSouth, as the case may be, that is not included in the
SBC Business or the BellSouth Business). For the purposes of this Agreement,
"Final Order" means an action or decision that has been granted as to which (i)
no request for a stay or any similar request is pending, no stay is in effect,
the action or decision has not been vacated, reversed, set aside, annulled or
suspended and any deadline for filing such a request that may be designated by
statute or regulation has passed, (ii) no petition for rehearing or
reconsideration or application for review is pending and the time for the filing
of any such petition or application has passed, (iii) no Governmental Entity has
undertaken to reconsider the action on its own motion and the time within which
it may initiate such reconsideration has passed, and (iv) no appeal is pending
or in effect and any deadline for filing any such appeal that may be specified
by statute or rule has passed, which in each case (i), (ii), (iii) or (iv) is
reasonably likely to result in vacating, reversing, setting aside, annulling,
suspending or modifying such action or decision.
(b) No Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any Law (whether
temporary, preliminary or permanent) that is in effect and enjoins or otherwise
prohibits
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consummation of the transactions contemplated by this Agreement (an "Order"),
and no Governmental Entity shall have instituted any proceeding seeking any such
Order.
5.2 Conditions to Obligation of BellSouth. The obligation of
BellSouth to consummate the transactions contemplated by this Agreement is
further subject to the satisfaction or due waiver by BellSouth at or prior to
the Closing of each of the following conditions:
(a) The representations and warranties of SBC (other than
those related to the Pittsburgh Assets and Pittsburgh Liabilities) contained
herein that are qualified by reference to Material Adverse Effect, another
materiality qualifier or Knowledge shall be true and correct as of the date
hereof and as of the Closing Date as if made as of the Closing Date and all
other representations and warranties of SBC shall be true and correct as of the
date hereof and as of Closing as if made as of the Closing Date, except for such
inaccuracies as would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the SBC Companies (except in
each case that representations and warranties that are made as of a specific
date or as of the date hereof need be so true and correct only as of such date),
and BellSouth shall have received a certificate to such effect dated the Closing
Date and executed by a duly authorized officer of SBC.
(b) The covenants and agreements of SBC to be performed
or complied with on or prior to the Closing shall have been duly performed or
complied with, as the case may be, in all material respects, and BellSouth shall
have received a certificate to such effect dated the Closing Date and executed
by a duly authorized officer of SBC.
(c) SBC and/or the applicable Affiliate of SBC shall have
executed and delivered each of the Ancillary Agreements, to which they are
respective parties, and any Ancillary Agreements in effect prior to the Closing
shall not have been terminated.
(d) SBC shall have obtained and made available to
BellSouth the consent or approval of each Person whose consent or approval shall
be required in order to consummate the transactions contemplated by this
Agreement under any Contract to which the SBC Companies or any of their
Subsidiaries is a party, except those for which the failure to obtain such
consent or approval is not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect on the SBC Companies.
(e) SBC shall have furnished to BellSouth the opinion of
in-house counsel for SBC, dated the Closing Date, to the effect that:
(i) SBC has been duly incorporated and is an
existing corporation in good standing under the law of the state of
Delaware; and
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(ii) this Agreement and the Ancillary Agreements
to be executed by SBC have been validly authorized, duly executed and
delivered by SBC.
5.3 Conditions to Obligation of SBC. The obligation of SBC to
consummate the transactions contemplated by this Agreement is further subject to
the satisfaction or due waiver by SBC on or prior to the Closing Date of each of
the following conditions:
(a) The representations and warranties of BellSouth
contained herein that are qualified by reference to Material Adverse Effect,
another materiality qualifier or Knowledge, shall be true and correct as of the
date hereof and as of the Closing Date as if made as of the Closing Date and all
other representations and warranties of BellSouth shall be true and correct as
of the date hereof and as of the Closing as if made as of the Closing Date,
except for such inaccuracies as would not be reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect on the BellSouth Companies
(except that in each case representations and warranties that are made as of a
specific date or as of the date hereof need be so true and correct only as of
such date), and SBC shall have received a certificate to such effect dated the
Closing Date and executed by a duly authorized officer of BellSouth.
(b) The covenants and agreements of BellSouth to be
performed or complied with on or prior to the Closing shall have been duly
performed or complied with, as the case may be, in all material respects, and
SBC shall have received a certificate to such effect dated the Closing Date and
executed by a duly authorized officer of BellSouth.
(c) BellSouth and/or the applicable Affiliate of
BellSouth shall have executed and delivered each of the Ancillary Agreements, to
which they are respective parties, and any Ancillary Agreements in effect prior
to the Closing shall not have been terminated.
(d) BellSouth shall have obtained and made available to
SBC the consent or approval of each Person whose consent or approval shall be
required in order to consummate the transactions contemplated by this Agreement
under any Contract to which the BellSouth Companies or any of their Subsidiaries
is a party, except those for which the failure to obtain such consent or
approval is not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on the BellSouth Companies.
(e) SBC shall have received a letter substantially
similar to the Ernst & Young letter dated April 4, 2000 to SBC, dated the
Closing Date, from Ernst & Young LLP or another nationally recognized
independent accounting firm to the effect that the consummation of the
transactions contemplated hereby will not require SBC to restate the accounting
for any of the transactions set forth on Schedule 4.10(a) of the SBC Disclosure
Letter from a "pooling-of-interests" transaction to a "purchase" transaction;
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provided that this condition shall be deemed to have been satisfied if SBC shall
have been required to restate the accounting for any of such transactions
whether or not the transactions contemplated hereby are consummated.
(f) BellSouth shall have furnished to SBC the opinion of
in-house counsel for BellSouth, dated the Closing Date, to the effect that:
(i) BellSouth has been duly incorporated and is
an existing corporation in good standing under the law of the state of
Georgia; and
(ii) this Agreement and the Ancillary Agreements
to be executed by BellSouth have been validly authorized, duly executed
and delivered by BellSouth.
ARTICLE VI
TERMINATION
6.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written agreement of SBC and BellSouth; or
(b) by either SBC or BellSouth, by giving written notice
of such termination to the other party, if such other party shall have breached
any of its material obligations or agreements under this Agreement and such
breach shall be incapable of cure or has not been cured within 60 days following
the giving of written notice by the non-breaching party to the breaching party
of such breach; or
(c) by either SBC or BellSouth, by giving written notice
of such termination to the other party, if any Order permanently enjoining or
otherwise prohibiting consummation of the transactions contemplated hereby shall
become final and non-appealable; or
(d) by either SBC or BellSouth, by giving written notice
of such termination to the other, if the Closing shall not have occurred on or
prior to December 1, 2000 (the "Termination Date"); provided that the
terminating party shall not be in material breach of its obligations under this
Agreement; and provided, further, that the Termination Date shall be extended to
March 31, 2001 (the "Extended Termination Date") if either party provides
written notice thereof to the other on or prior to November 30, 2000 that such
party has reasonably determined that additional time is necessary in connection
with obtaining required consent or approval from any Governmental Entity; or
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(e) by BellSouth, by giving written notice of such
termination to SBC, if there has been a breach of the representations and
warranties of SBC contained in this Agreement which (x) would result in the
failure of the condition set forth in Section 5.2(a) and (y) cannot be or is not
cured prior to the Termination Date, or, if extended, the Extended Termination
Date; or
(f) by SBC, by giving written notice of such termination
to BellSouth, if there has been a breach of the representations and warranties
of BellSouth contained in this Agreement which (x) would result in the failure
of the condition set forth in Section 5.3(a) and (y) cannot be or is not cured
prior to the Termination Date, or, if extended, the Extended Termination Date.
6.2 Effect of Termination. In the event of the termination of this
Agreement in accordance with Section 6.1 (Termination) hereof, this Agreement
shall thereafter become void and have no effect, and no party hereto or its
respective Affiliates or their directors, officers, employees, agents or
advisors shall have any liability to the other party hereto or their respective
Affiliates, directors, officers or employees, except for the obligations of the
parties hereto contained in this Section 6.2 and in Sections 8.2 (Expenses), 8.3
(Public Disclosure), 8.11 (Notices), 8.12 (Governing Law) and 8.13 (Waiver of
Jury Trial) hereof, and except that nothing herein will relieve any party from
liability for any breach of this Agreement prior to such termination.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
7.1 Survival of Representations, Warranties, Covenants and
Agreements; Knowledge of Breach. Except as set forth in this Section 7.1, the
representations and warranties contained in this Agreement shall expire on the
eighteenth month anniversary of the Closing Date (provided that with respect to
the SBC Additional Subsidiaries and the BellSouth Additional Subsidiary, the
relevant eighteenth month anniversary shall be the eighteenth month following
the applicable SBC Additional Closing or BellSouth Additional Closing, as the
case may be). The representations and warranties included or provided for (x) in
Sections 3.1(m) and 3.2(m) (Tax Matters) herein shall survive the Closing until
the expiration of the applicable statute of limitations (including any waivers
or extensions thereof) with respect to such matters and shall expire at such
time, (y) in Sections 3.1(k) and 3.2(k) (Environmental Matters) shall survive
until the third anniversary of the Closing Date (provided that with respect to
the SBC Additional Subsidiaries and the BellSouth Additional Subsidiary, the
relevant third anniversary shall be the third anniversary following the
applicable SBC Additional Closing or BellSouth Additional Closing, as the case
may be) and shall expire at such time, and (z) in Sections 3.1(a) and 3.2(a)
(Organization, Good Standing and Qualification), 3.1(c) and 3.2(c)
(Capitalization), 3.1(d) and 3.2(d) (Subsidiaries), 3.1(e) and 3.2(e) (Corporate
Authority
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and Approval), 3.1(q) and 3.2(q) (Brokers and Finders), 3.1(v) and 3.2(w) (After
Acquired Properties) and 3.2(v) (Ericsson Credits) shall have no expiration
date. In the event that any Claim Notice or any other written notice of a claim
shall be given hereunder within the applicable survival period, the
representations and warranties that are the subject of such indemnity claim
shall survive until such claim is finally resolved but only with respect to such
claim and any directly related matters. The covenants and other agreements
contained in this Agreement shall survive the Closing until the date or dates
specified therein or the expiration of the applicable statute of limitations
(including any waivers or extensions thereof) with respect to such matters,
whichever is later.
7.2 Indemnification by BellSouth. (a) For the period commencing on
the Closing Date and ending, as the case may be, upon the expiration of the
periods specified in Section 7.1, BellSouth shall, subject to the limitations
set forth in Section 7.1 and this Section 7.2, indemnify, defend and hold
harmless Newco and its Affiliates (other than SBC and BellSouth), and their
respective directors, officers, employees, shareholders and agents (the
"Indemnified Parties") against and in respect of all losses, damages (excluding
punitive and consequential damages other than for lost profits), liabilities,
costs and expenses (including reasonable attorneys' fees and expenses incurred
in investigating, preparing or defending any claims covered hereby)
(collectively, "Losses") sustained or incurred arising out of, in connection
with or relating to any breaches of any of BellSouth's representations and
warranties set forth in this Agreement (disregarding for purposes of this
Article VII all qualifications and exceptions contained therein relating to
materiality (including Material Adverse Effect)); provided that no individual
Loss or series of related Losses arising out of, in connection with or relating
to any breaches of any of BellSouth's representations and warranties set forth
in this Agreement shall be deemed to be a Loss until the amount of such Loss or
series of related Losses exceeds $2,000,000 and then only the amount in excess
of $2,000,000 shall be deemed a Loss. In determining whether a representation or
warranty set forth in this Agreement has been breached, the matters set forth in
the BellSouth Disclosure Schedule that qualify the accuracy of a representation
or warranty shall be disregarded; provided that with respect to a Loss or a
series of related Losses arising out of a representation or warranty as to which
disclosure to qualify such a representation or warranty has been made on
BellSouth Disclosure Schedule there shall be no Loss until the amount of such
Loss or series of related Losses exceeds $4,000,000 and then only the amount in
excess of $4,000,000 shall be deemed a Loss.
(b) BellSouth shall not be liable for any Losses (other
than Losses resulting from a breach of the representations set forth in 3.2(v)
and 3.2(w)(i)) arising in connection with a breach of BellSouth's
representations and warranties set forth in this Agreement unless and until the
amount of such Losses sustained or incurred by the Indemnified Parties arising
out of, in connection with or relating to any breaches of BellSouth's
representations and warranties set forth in this Agreement exceeds $250 million
in the aggregate (the "BellSouth Deductible"), it being understood that for
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purposes of calculating whether the BellSouth Deductible has been met, the
losses of equity holders shall not be counted if a similar Loss of Newco arising
out of or related to the same breach of a representation or warranty has been
included in such calculation. If the aggregate amount of such Losses exceeds the
BellSouth Deductible, BellSouth shall be liable only for the amount by which
such Losses exceed the BellSouth Deductible. In addition, except for breaches of
Section 3.2(c) (Capitalization), 3.2(d) (Subsidiaries), 3.2(f) (Financial
Statements), 3.2(m) (Taxes), 3.2(q) (Brokers and Finders), and 3.2(w)(i) (After
Acquired Properties) and 3.2(v) (Ericsson Credits) for which there shall be no
limit, any payments under this Section 7.2 by BellSouth to the Indemnified
Parties for Losses shall not exceed in the aggregate $3 billion.
7.3 Indemnification by SBC. (a) For the period commencing on the
Closing Date and ending, as the case may be, upon the expiration of the periods
specified in Section 7.1, SBC shall, subject to the limitations set forth in
Section 7.1 and this Section 7.3, indemnify, defend and hold harmless the
Indemnified Parties against and in respect of all Losses sustained or incurred
arising out of, in connection with or relating to any breaches of any of SBC's
representations and warranties set forth in this Agreement (disregarding for
purposes of this Article VII all qualifications and exceptions contained therein
relating to materiality (including Material Adverse Effect); provided that no
individual Loss or series of related Losses arising out of, in connection with
or relating to any breaches of any of SBC's representations and warranties set
forth in this Agreement shall be deemed to be a Loss until the amount of such
Loss or series of related Losses exceeds $2,000,000 and then only the amount in
excess of $2,000,000 shall be deemed a Loss. In determining whether a
representation or warranty set forth in this Agreement has been breached, the
matters set forth in the BellSouth Disclosure Schedule that qualify the accuracy
of a representation or warranty shall be disregarded; provided that with respect
to Loss or a series of related Losses arising out of a representation or
warranty as to which disclosure to qualify such representation or warranty has
been made on SBC Disclosure Schedule there shall be no Loss until the amount of
such Loss or series of related Losses exceeds $4,000,000 and then only the
amount in excess of $4,000,000 shall be deemed a Loss.
(b) SBC shall not be liable for any Losses (other than
Losses resulting from a breach of the representations set forth in Section
3.1(v)(i)) arising in connection with a breach of SBC's representations and
warranties set forth in this Agreement unless and until the amount of such
Losses sustained or incurred by the Indemnified Parties arising out of, in
connection with or relating to any breaches of SBC's representations and
warranties set forth in this Agreement exceeds $250 million in the aggregate
(the "SBC Deductible"), it being understood that for purposes of calculating
whether the SBC Deductible has been met, the losses of equity holders shall not
be counted if a similar Loss of Newco arising out of or related to the same
breach of a representation or warranty has been included in such calculation. If
the aggregate amount of such Losses
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exceeds the SBC Deductible, SBC shall be liable only for the amount by which
such Losses exceed the SBC Deductible. In addition, except for breaches of
Section 3.1(c) (Capitalization), 3.1(d) (Subsidiaries), 3.1(f) (Financial
Statements), 3.1(m) (Taxes), 3.1(q) (Brokers and Finders) and 3.1(v) (After
Acquired Properties) for which there shall be no limit, any payments under this
Section 7.3 by SBC to the Indemnified Parties for Losses shall not exceed in the
aggregate $3 billion.
7.4 Indemnification as Sole Remedy; Specific Performance.
Following the Closing, the indemnities provided in this Article VII and in
Section 4.17 shall be the sole and exclusive remedy of the Parties hereto,
Newco, their Affiliates, successors and assigns with respect to any and all
claims for Losses sustained or incurred arising out of, in connection with or
relating to this Agreement and the transactions contemplated by this Agreement,
except for damages for breach of any covenants, agreements (other than any
covenant or agreement providing for the maintenance of the accuracy of
representations or warranties) or willful or fraudulent breach of the
representations and warranties set forth in this Agreement or any of the other
agreements contemplated hereby. Notwithstanding the foregoing, SBC, BellSouth
and Newco may seek specific performance of the obligations set forth in Article
II and Section 4.18 (Business Assets) of this Agreement.
7.5 Method of Asserting Claims, Etc. All claims for
indemnification by the Indemnified Party hereunder shall be asserted and
resolved as set forth in this Section 7.5. In the event that any written claim
or demand for which SBC or BellSouth, as the case may be (an "Indemnifying
Party"), may be liable to any Indemnified Party hereunder is asserted against or
sought to be collected from any Indemnified Party by a third party, such
Indemnified Party shall promptly, but in no event later than 15 days following
such Indemnified Party's receipt of such claim or demand, notify in writing the
Indemnifying Party of such claim or demand (the "Claim Notice"). The
Indemnifying Party shall be relieved of its obligations to indemnify the
Indemnified Party with respect to such claim or demand if the Indemnified Party
fails to timely deliver the Claim Notice and the Indemnifying Party is
materially prejudiced thereby. The Indemnifying Party shall have 30 days after
the personal delivery or mailing of the Claim Notice, whichever is later, (the
"Notice Period") to notify the Indemnified Party whether or not it desires to
defend the Indemnified Party against such claim or demand and shall during the
Notice Period and thereafter be provided by the Indemnified Party with such
information relating to the claim or demand as the Indemnifying Party shall
request. All costs and expenses incurred by the Indemnifying Party in defending
such claim or demand shall be borne by the Indemnifying Party. Except as
hereinafter provided, in the event that the Indemnifying Party notifies the
Indemnified Party within the Notice Period that it desires to defend the
Indemnified Party against such claim or demand, the Indemnifying Party shall
have the sole power to direct and control such defense. If the Indemnifying
Party so elects to assume the defense of such claim, the Indemnifying Party
shall not be liable to the Indemnified Party for any legal expenses subsequently
incurred by the Indemnified Party, except as hereinafter provided. The
Indemnifying Party shall be liable for the reasonable
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fees and expenses of the Indemnified Party in connection with the defense of a
Claim if the Indemnified Party shall have been advised in writing by outside
counsel that there are actual conflicts of interests between the Indemnified
Party and the Indemnifying Party in connection with the defense of such Claim;
provided, however, that the Indemnifying Party shall not be responsible for the
fees and expenses of more than one separate firm of attorneys at any time for
all Indemnified Parties. If any Indemnified Party desires to participate in, but
not control, any such defense it may do so at its sole cost and expense (except
as provided in the preceding sentence), provided that in any action seeking an
injunction or decree which would restrict the future activity or conduct of the
Indemnified Party or any Subsidiary or Affiliate thereof, the Indemnified Party
shall be entitled to participate in the defense of such action at the expense of
the Indemnifying Party. The Indemnified Party shall not settle, compromise or
discharge a claim or demand for which it is indemnified by the Indemnifying
Party or admit to any liability with respect to such claim or demand without the
prior written consent of the Indemnifying Party. The Indemnifying Party shall
not, without the written consent of the Indemnified Party settle, compromise or
offer to settle or compromise any such claim or demand on a basis which would
result in the imposition of a consent order, injunction or decree which would
restrict the future activity or conduct of the Indemnified Party or any
Subsidiary or Affiliate thereof. To the extent the Indemnifying Party shall
direct, control or participate in the defense or settlement of any third party
claim or demand, the Indemnified Party will provide the Indemnifying Party and
its counsel access to all relevant business records and other documents, and
shall use its reasonable best efforts to assist, and to cause the employees and
counsel of the Indemnified Party to assist, in defense of such claim. If the
Indemnifying Party elects not to defend the Indemnified Party, the Indemnified
Party shall have the right and the obligation to defend the claim or demand by
appropriate proceedings and shall have the sole power to direct and control such
defense.
7.6 No Additional Recoveries. No indemnity shall be recoverable by
the Indemnified Parties with respect to any matter to the extent such matter was
reflected in (i) the final calculation of the Closing Net Debt, if any, pursuant
to Section 2.11 or (ii) the Benefits Calculation, if any, pursuant to Section
4.4(i) and any Losses related thereto to the extent reflected in the final
calculation of the adjustment to the Closing Net Debt or the Benefits True-Up,
as the case may be, shall not be counted as Losses.
7.7 Calculation of Losses. The amount of any Losses payable by the
Indemnifying Party to the Indemnified Party shall be net of any (i) amounts
recovered or recoverable by the Indemnified Party under applicable insurance
policies, (ii) Tax cost incurred by the Indemnified Party arising from the
receipt of indemnity payments and (iii) Tax benefit realized by the Indemnified
Party arising from the incurrence or payment of any such Loss, but only to the
extent of such Loss. In computing the amount of any such Tax cost or Tax
benefit, the Indemnified Party shall be deemed to fully utilize all Tax items
arising from the receipt of any indemnity payment hereunder or the incurrence or
payment of any indemnified Loss. Nothing in this Section 7.6 shall require SBC
or
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BellSouth to disclose any information regarding the calculation of Taxes
(including, without limitation, any Tax Return), other than to the extent such
information relates directly to the computation of Tax cost or Tax benefit for
these purposes.
7.8 Assignment of Claims. If the Indemnified Party receives any
payment from an Indemnifying Party in respect of any Losses and the Indemnified
Party could have recovered all or a part of such Losses from a third party (a
"Potential Contributor") based on the underlying claim or demand asserted
against the Indemnifying Party, the Indemnified Party shall, to the extent
permitted by Law or any applicable contractual arrangement, assign such of its
rights to proceed against the Potential Contributor as are necessary to permit
the Indemnifying Party to recover from the Potential Contributor the amount of
such payment.
7.9 Tower Indemnity. For the period commencing on the Closing Date
and ending on the fourth anniversary thereof, SBC shall indemnify, defend and
hold harmless the Indemnified Parties against and in respect of all Losses
sustained, incurred, arising out of, in connection with or relating to the Tower
Bankruptcy of the lessor of any Towers that are subject to and part of the Tower
Transaction (as defined in Schedule 4.2 of the SBC Disclosure Letter) (each, a
"Tower Lessor"); provided that if the counterparty to the Tower Transaction is
described as on Schedule 7.9 of the SBC Disclosure Letter the maximum amount of
Losses related to the foregoing for which SBC may be liable shall not exceed 50%
of the proceeds received by SBC or its Subsidiaries by the Tower Lessor in
connection with the Tower Transaction; and provided further that such
indemnification shall not apply if the Tower Transaction is substantially
similar to the arrangement described on Schedule 3.2(o)(D) of the BellSouth
Disclosure Letter. The indemnification procedures set forth in the preceding
Sections of this Article VII shall apply to any indemnifications under this
Section 7.9.
ARTICLE VIII
MISCELLANEOUS
8.1 Amendment and Waiver. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by SBC and BellSouth, or in the case of a
waiver, by the party against whom the waiver is to be effective. No failure or
delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
8.2 Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, the Parties shall bear their own respective expenses (including,
but not limited to, Transfer Taxes and all compensation and expenses of counsel,
financial advisors, consultants,
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actuaries and independent accountants) incurred in connection with this
Agreement and the transactions contemplated hereby.
8.3 Public Disclosure. Each Party hereby agrees with the other
Party that prior to the Closing, except as may be required to comply with the
requirements of applicable Law or the rules and regulations of any national
securities exchange upon which the securities of one of the Parties or its
Affiliates is listed, no press release or similar public announcement or
communication will be made or caused to be made concerning the execution or
performance of this Agreement unless specifically approved in advance by the
Parties; provided, however, that to the extent that either Party to this
Agreement is required by Law or the rules and regulations of any stock exchange
upon which the securities of one or more of the Parties or its Affiliates is
listed to make such a public disclosure, such public disclosure shall only be
made after prior consultation with and delivery of a copy of the proposed
disclosure substantially in the form it will be disclosed to the public to the
other Party, if consultation and delivery is reasonably practicable.
8.4 Assignment. No Party nor Newco may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
Parties and Newco; provided that any Party may assign this Agreement to a wholly
owned Subsidiary so long as the Party assigning this Agreement agrees to
guarantee, without restriction, the performance of all such Subsidiary's
obligations hereunder.
8.5 Entire Agreement. This Agreement and the Ancillary Agreements
(including all Annexes, Exhibits and Schedules hereto and thereto) contain the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, except for the Confidentiality Agreement which
will remain in full force and effect for the term provided for therein.
8.6 Fulfillment of Obligations. Any obligation of any Party to any
other Party under this Agreement, which obligation is performed, satisfied or
fulfilled by an Affiliate of such Party, shall be deemed to have been performed,
satisfied or fulfilled by such Party.
8.7 Parties in Interest; No Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the Parties and
Newco and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any Person other than
SBC, BellSouth, Newco or their respective successors any rights or remedies
under or by reason of this Agreement.
8.8 Counterparts. This Agreement and any amendments hereto may be
executed in one or more counterparts, each of which shall be deemed to be an
original by
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the parties executing such counterpart, but all of which shall be considered one
and the same instrument.
8.9 Section Headings. The section and paragraph headings and table
of contents contained in this Agreement are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
8.10 Notices. All notices or other communications hereunder shall
be deemed to have been duly given and made if in writing and if served by
personal delivery upon the party for whom it is intended, if delivered by
registered or certified mail, return receipt requested, or by a national courier
service, or if sent by facsimile; provided that the facsimile is promptly
confirmed by written confirmation by registered mail thereof, to the person at
the address set forth below, or such other address as may be designated in
writing hereafter, in the same manner, by such person:
(a) if to SBC, to:
SBC Communications Inc.
000 X. Xxxxxxx
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Chairman and Chief
Executive Officer
With a copy to:
SBC Communications Inc.
000 X. Xxxxxxx
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Senior Executive Vice
President and General
Counsel
With an additional copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
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and
(b) if to BellSouth, to:
BellSouth Corporation
0000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
With a copy to:
BellSouth Corporation
0000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
and
(c) if to Newco, to:
Alloy LLC
0000 Xxxxxxxxx Xxxxxx.
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
Any notice given by mail shall be effective when received.
8.11 Governing Law; Submission to Jurisdiction; Selection of Forum.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF DELAWARE WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES
THEREOF. EACH PARTY AND NEWCO HERETO AGREES THAT IT SHALL BRING ANY ACTION OR
PROCEEDING IN RESPECT OF ANY CLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR THE TRANSACTIONS CONTAINED IN OR CONTEMPLATED BY THIS AGREEMENT, WHETHER IN
TORT OR CONTRACT OR AT LAW OR IN EQUITY, EXCLUSIVELY IN THE COURTS OF THE STATE
OF DELAWARE AND THE FEDERAL
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XXXXXX XX XXX XXXXXX XXXXXX XX XXXXXXX LOCATED IN THE STATE OF DELAWARE (THE
"CHOSEN COURTS").
8.12 Submission to Jurisdiction. Each of SBC, BellSouth and Newco
hereby irrevocably submits in any action, suit or proceeding arising out of this
Agreement or any of the transactions contemplated hereby to the exclusive
jurisdiction of the courts of the State of Delaware and the Federal courts of
the United States of America located in the State of Delaware. The Parties and
Newco irrevocably waive, to the fullest extent permitted by law, any objections
which they may now or hereafter have to the laying of the venue of any such
action, suit or proceeding in any such court or that any such action, suit or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such action, suit or proceeding may be served
on any Party anywhere in the world, whether within or without the jurisdiction
of any such court.
8.13 Waiver of Jury Trial. Each Party and Newco acknowledges and
agrees that any controversy which may arise under this Agreement is likely to
involve complicated and difficult issues, and therefore each such Party and
Newco hereby irrevocably and unconditionally waives any right such Party and
Newco may have to a trial by jury in respect of any litigation directly or
indirectly arising out of or relating to this Agreement, or the transactions
contemplated by this Agreement. Each Party and Newco certifies and acknowledges
that (i) no representative, agent or attorney of any other Party or Newco has
represented, expressly or otherwise, that such other Party or Newco would not,
in the event of litigation, seek to enforce the foregoing waiver, (ii) each such
Party and Newco understands and has considered the implications of this waiver,
(iii) each such Party and Newco makes this waiver voluntarily and (iv) each such
Party and Newco has been induced to enter into this Agreement by, among other
things, the mutual waivers and certifications in this Section 8.13.
8.14 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof unless such
invalidity or unenforceability, after taking into account the mitigation
contemplated by the next sentence, deprives a party of a material benefit
contemplated by this Agreement. If any provision of this Agreement, or the
application thereof to any Person or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
persons, entities or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction.
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IN WITNESS WHEREOF, this Agreement has been signed on behalf
of each of the parties hereto as of the date first written above.
SBC COMMUNICATIONS INC.
By: /s/ Xxxxx X. Xxxxx
------------------
Name: Xxxxx X. Xxxxx
Title: Senior Executive Vice President -
Corporate Development
BELLSOUTH CORPORATION
By: /s/ Xxxxx X. Xxxxx
------------------
Name: Xxxxx X. Xxxxx
Title: Vice President - Corporate Development
ALLOY LLC
By: ALLOY MANAGEMENT CORP., its Manager
By: /s/ Xxxx X. Xxxxxxx
-------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Operating Officer
