Toggle SGML Header (+)


Section 1: 8-K (8-K)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): April 30, 2018 (April 27, 2018)

 

 

T-MOBILE US, INC.

(Exact Name of Registrant as Specified in Charter)

 

DELAWARE

 

1-33409

 

20-0836269

(State or other jurisdiction

 

(Commission File Number)

 

(I.R.S. Employer

of incorporation or organization)

 

 

 

Identification No.)

 

12920 SE 38th Street

 

 

Bellevue, Washington

 

98006-1350

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (425) 378-4000

 

 

(Former Name or Former Address, if Changed Since Last Report):

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instructions A.2. below):

 

x                                  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o                                    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o                                    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o                                    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2). o

 

Emerging growth company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

 

 



 

Item 1.01                                           Entry Into a Material Definitive Agreement.

 

Business Combination Agreement

 

On April 29, 2018, T-Mobile US, Inc. (“T-Mobile”) entered into a Business Combination Agreement (the “Business Combination Agreement”) with Sprint Corporation, a Delaware corporation (“Sprint”), Huron Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of T-Mobile (“T-Mobile Merger Company”), Superior Merger Sub Corporation, a Delaware corporation and a wholly owned subsidiary of T-Mobile Merger Company (“Merger Sub”), Starburst I, Inc., a Delaware corporation (“Starburst”), Galaxy Investment Holdings, Inc., a Delaware corporation (“Galaxy,” and together with Starburst, the “SoftBank US HoldCos”), and for the limited purposes set forth therein, Deutsche Telekom AG, an Aktiengesellschaft organized and existing under the laws of the Federal Republic of Germany (“Deutsche Telekom”), Deutsche Telekom Holding B.V., a besloten vennootschap met beperkte aansprakelijkheid organized and existing under the laws of the Netherlands (“DT Holding”), and SoftBank Group Corp., a Japanese kabushiki kaisha (“SoftBank”).

 

Pursuant to the Business Combination Agreement and upon the terms and subject to the conditions described therein, the SoftBank US HoldCos will merge with and into T-Mobile Merger Company, with T-Mobile Merger Company continuing as the surviving entity and as a wholly owned subsidiary of T-Mobile (the “HoldCo Mergers”).  Immediately following the HoldCo Mergers, Merger Sub will merge with and into Sprint, with Sprint continuing as the surviving corporation and as a wholly owned indirect subsidiary of T-Mobile (the “Merger” and, together with the HoldCo Mergers, the “Merger Transactions”).  Pursuant to the Business Combination Agreement, (i) at the effective time of the HoldCo Mergers, all the issued and outstanding shares of common stock of Galaxy, par value $0.01 per share, and all the issued and outstanding shares of common stock of Starburst, par value $0.01 per share, held by SoftBank Group Capital Limited, a private limited company incorporated in England and Wales and a wholly owned subsidiary of SoftBank and the sole stockholder of Galaxy and Starburst (“SoftBank UK”), will be converted such that SoftBank UK will receive an aggregate number of shares of common stock of T-Mobile, par value $0.00001 per share (the “T-Mobile Common Stock”), equal to the product of (x) 0.10256 (the “Exchange Ratio”) and (y) the aggregate number of shares of common stock of Sprint, par value $0.01 per share (“Sprint Common Stock”), held by the SoftBank US HoldCos, collectively, immediately prior to the effective time of the HoldCo Mergers, and (ii) at the effective time of the Merger, each share of Sprint Common Stock issued and outstanding immediately prior to the effective time of the Merger (other than shares of Sprint Common Stock that were held by the SoftBank US HoldCos or are held by Sprint as treasury stock) will be converted into the right to receive a number of shares of T-Mobile Common Stock equal to the Exchange Ratio.  SoftBank and its affiliates will receive the same amount of T-Mobile Common Stock per share of Sprint Common Stock as all other Sprint stockholders.

 

Immediately following the Merger Transactions, Deutsche Telekom and SoftBank are expected to hold approximately 42% and 27% of the fully diluted shares of T-Mobile Common Stock, respectively, with the remaining approximately 31% of the fully diluted shares of T-Mobile Common Stock held by public stockholders.

 

Pursuant to the Business Combination Agreement and upon the terms and subject to the conditions described therein, in connection with the Merger, each option to purchase Sprint Common Stock (other than under the Sprint Employees Stock Purchase Plan) will be converted into an option to purchase T-Mobile Common Stock; each time-based restricted stock unit award covering Sprint Common Stock will be converted into a time-based restricted stock unit award covering T-Mobile Common Stock; with respect to each performance stock unit award covering Sprint Common Stock (a “PSU Award”) for which performance is measured using the volume-weighted average price of Sprint Common Stock (the “VWAP”), for the portion of such PSU Award subject to performance-based vesting, the VWAP will be deemed equal to the greatest of (x) the VWAP over the five (5) consecutive trading day period ending with the second complete trading day prior to the effective time of the Merger, (y) the VWAP over any 150 calendar day period as specified in the applicable award agreement as of the effective time of the Merger, and (z) the VWAP corresponding to “target” level performance for such PSU Award, and the entire portion of such PSU Award will be converted into a time-based restricted stock unit award covering T-Mobile Common Stock; with respect to each PSU Award for which performance is not measured using the VWAP, for the portion of any such PSU Award subject to performance-based vesting, performance will be deemed met at “target” levels, and the entire portion of such PSU Award will be converted into a time-based restricted stock unit award covering T-Mobile Common Stock; and the purchase period underway under the Sprint Employees Stock Purchase Plan will terminate and each outstanding purchase right thereunder will be exercised.

 

The consummation of the Merger Transactions and the other transactions contemplated by the Business Combination Agreement (collectively, the “Transactions”) is subject to obtaining the consent of the holders of a majority of the outstanding shares of Sprint Common Stock in favor of the adoption of the Business Combination Agreement (the “Sprint Stockholder Approval”).  Subsequent to the execution of the Business Combination Agreement, SoftBank entered into a support agreement (the “SoftBank Support Agreement”), pursuant to which it has agreed to cause SoftBank UK, Galaxy and Starburst to deliver a written consent in favor of the adoption of the Business Combination Agreement, which will constitute receipt by Sprint of the Sprint Stockholder Approval.  As of April 25, 2018, SoftBank beneficially owned approximately 84.8% of Sprint Common

 

2



 

Stock outstanding.  Under the terms of the SoftBank Support Agreement, SoftBank and its affiliates are generally prohibited from transferring ownership of Sprint Common Stock prior to the earlier of the consummation of the Merger and the termination of the Business Combination Agreement in accordance with its terms.  The consummation of the Transactions is also subject to obtaining the consent of the holders of a majority of the outstanding shares of T-Mobile Common Stock in favor of the issuance of T-Mobile Common Stock in the Merger Transactions (the “T-Mobile Stock Issuance Approval”) and in favor of the amendment and restatement of T-Mobile’s Certificate of Incorporation in its entirety in the form attached as Exhibit A to the Business Combination Agreement (the “T-Mobile Charter Amendment” ) (collectively, the “T-Mobile Stockholder Approval”).  Subsequent to the execution of the Business Combination Agreement, Deutsche Telekom entered into a support agreement (the “Deutsche Telekom Support Agreement”), pursuant to which it has agreed to deliver a written consent in favor of the T-Mobile Stock Issuance Approval and the T-Mobile Charter Amendment, which will constitute receipt by T-Mobile of the T-Mobile Stockholder Approval.  As of April 25, 2018, Deutsche Telekom beneficially owned approximately 63.5% of the T-Mobile Common Stock outstanding.  Under the terms of the Deutsche Telekom Support Agreement, Deutsche Telekom and its affiliates are generally prohibited from transferring ownership of T-Mobile Common Stock prior to the earlier of the consummation of the Merger and the termination of the Business Combination Agreement in accordance with its terms.

 

The consummation of the Transactions is also subject to the satisfaction or waiver, if legally permitted, of certain other conditions, including, among other things, (i) the accuracy of representations and warranties and performance of covenants of the parties, (ii) the effectiveness of the registration statement for the shares of T-Mobile Common Stock to be issued in the Merger Transactions, and the approval of the listing of such shares on the NASDAQ Global Select Market (“NASDAQ”), (iii) receipt of certain regulatory approvals, including approvals of the Federal Communications Commission, applicable state public utility commissions and expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and favorable completion of review by the Committee on Foreign Investments in the United States, (iv) specified minimum credit ratings for T-Mobile on the closing date of the Merger Transactions (after giving effect to the Merger) from at least two of the three credit rating agencies, subject to certain qualifications, and (v) no material adverse effect with respect to Sprint or T-Mobile since the date of the Business Combination Agreement.

 

The Business Combination Agreement contains representations and warranties and covenants customary for a transaction of this nature. Sprint and SoftBank, and T-Mobile and Deutsche Telekom, are each subject to restrictions on their ability to solicit alternative acquisition proposals and to provide information to, and engage in discussion with, third parties regarding such proposals, except under limited circumstances to permit Sprint’s and T-Mobile’s boards of directors to comply with their respective fiduciary duties.  Subject to certain exceptions, each of the parties has agreed to use its reasonable best efforts to take or cause to be taken actions necessary to consummate the Transactions, including with respect to obtaining required government approvals.  The Business Combination Agreement also contains certain termination rights for both Sprint and T-Mobile.  In the event that T-Mobile terminates the Business Combination Agreement in connection with a failure to satisfy the closing condition related to the specified minimum credit ratings noted above, then in certain circumstances, T-Mobile may be required to pay Sprint $600 million.

 

In accordance with the Business Combination Agreement, upon consummation of the Transactions, the T-Mobile board of directors will consist of fourteen members, comprising nine directors designated by Deutsche Telekom (of which nine directors, at least two will be independent directors under the listing standards of NASDAQ), four directors designated by SoftBank (of which four directors, at least two will be independent directors under the listing standards of NASDAQ), and T-Mobile’s chief executive officer.  Pursuant to the terms of the Business Combination Agreement, T-Mobile, SoftBank and Deutsche Telekom will also enter into an amended and restated stockholders’ agreement (the “Stockholders Agreement”), a form of which is attached as Exhibit E to the Business Combination Agreement, which will become effective upon the closing of the Transactions, and which will govern, among other things, the composition of T-Mobile’s board of directors following the closing of the Transactions.  The Stockholders Agreement will also set forth certain consent rights for each of SoftBank and Deutsche Telekom over certain material transactions of T-Mobile and will contain a non-compete which will apply to SoftBank, Deutsche Telekom and their respective affiliates, subject to certain exceptions, until such time as SoftBank’s or Deutsche Telekom’s ownership in T-Mobile has been reduced below an agreed threshold.

 

In addition, pursuant to the terms of the Business Combination Agreement, SoftBank and Deutsche Telekom will enter into a proxy, lock-up and right of first refusal agreement (the “PLR Agreement”), a form of which is attached as Exhibit F to the Business Combination Agreement, which will become effective upon the closing of the Transactions, and which will set forth certain rights and obligations in respect to the shares of T-Mobile Common Stock owned by each of SoftBank, Deutsche Telekom and their respective affiliates to enable Deutsche Telekom to consolidate T-Mobile into Deutsche Telekom’s financial statements following the consummation of the Transactions.  Among other terms, these rights and obligations will require SoftBank to agree to vote its shares of T-Mobile Common Stock as directed by Deutsche Telekom and will restrict SoftBank from transferring its shares of T-Mobile Common Stock in a manner that would prevent Deutsche Telekom from consolidating T-Mobile into Deutsche Telekom’s financial statements following the consummation of the Transactions, subject in each case to certain exceptions set forth in the PLR Agreement.  In addition, the PLR Agreement will impose certain restrictions on

 

3



 

SoftBank’s and Deutsche Telekom’s ability to transfer their shares of T-Mobile Common Stock in the four year period following the closing of the Transactions and will provide each of SoftBank and Deutsche Telekom with a right of first refusal with respect to proposed transfers of shares of T-Mobile Common Stock by the other party, subject in each case to certain exceptions and limitations set forth in the PLR Agreement.  As a result of the PLR Agreement, T-Mobile is expected to continue to be a “Controlled Company” for purposes of NASDAQ rules following consummation of the Merger, which provides T-Mobile with exemptions from certain corporate governance requirements under the NASDAQ rules.

 

The foregoing description of the Business Combination Agreement, the Deutsche Telekom Support Agreement, the SoftBank Support Agreement, the Stockholders Agreement and the PLR Agreement is not complete and is qualified in its entirety by reference to the Business Combination Agreement, which is filed as Exhibit 2.1 hereto, the form of Deutsche Telekom Support Agreement attached as Exhibit C to the Business Combination Agreement, the SoftBank Support Agreement, which is filed as Exhibit 10.1 hereto, the form of Stockholders Agreement attached as Exhibit E to the Business Combination Agreement, and the form of PLR Agreement attached as Exhibit F to the Business Combination Agreement, each of which is incorporated herein by reference.

 

Important Statement regarding the Business Combination Agreement.  The Business Combination Agreement has been included to provide investors with information regarding terms of the Transactions. It is not intended to provide any other factual information about T-Mobile, Sprint or their respective subsidiaries or affiliates. The representations, warranties, and covenants contained in the Business Combination Agreement were made only for purposes of the Business Combination Agreement and as of specific dates, were solely for the benefit of the parties to the Business Combination Agreement, may be subject to limitations, qualifications or other particulars agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Business Combination Agreement instead of establishing these matters as facts or made for other purposes, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Business Combination Agreement and should not rely on the representations, warranties, and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Business Combination Agreement, which subsequent information may or may not be fully reflected in Sprint’s public disclosures.

 

Commitment Letter

 

In connection with entry into the Business Combination Agreement, T-Mobile USA, Inc. (“T-Mobile USA”) entered into a commitment letter, dated as of April 29, 2018 (the “Commitment Letter”), with Barclays Bank PLC, Credit Suisse AG, Deutsche Bank AG, Goldman Sachs Bank USA, Morgan Stanley Senior Funding, Inc., RBC Capital Markets, and certain of their affiliates (collectively, the “Commitment Parties”), pursuant to which, subject to the terms and conditions set forth therein, certain of the Commitment Parties have committed to provide up to $38.0 billion in secured and unsecured debt financing, including a $4.0 billion secured revolving credit facility, a $7.0 billion secured term loan facility, a $19.0 billion secured bridge loan facility and a $8.0 billion unsecured bridge loan facility. The funding of the debt facilities provided for in the Commitment Letter is subject to the satisfaction of the conditions set forth therein, including consummation of the proposed merger with Sprint. The proceeds of the debt financing provided for in the Commitment Letter will be used to refinance certain existing debt of T-Mobile, Sprint and their respective subsidiaries and for post-closing working capital needs of the combined company.

 

The foregoing description of the Commitment Letter and the transactions contemplated thereby is not complete and is qualified in its entirety by reference to the Commitment Letter, which is filed as Exhibit 10.2 hereto and is incorporated herein by reference.

 

Financing Matters Agreement

 

In connection with the entry into the Business Combination Agreement, Deutsche Telekom and T-Mobile USA entered into a Financing Matters Agreement, dated as of April 29, 2018 (the “Financing Matters Agreement”).  Pursuant to the Financing Matters Agreement, Deutsche Telekom agreed, among other things, to consent to the incurrence by T-Mobile USA of secured debt in connection with and after the consummation of the Merger, and to provide a lock up on sales thereby as to certain senior notes of T-Mobile USA held thereby.  In addition, T-Mobile USA agreed, among other things, to repay and terminate, upon closing of the Merger, the existing credit facilities of T-Mobile USA which are provided by Deutsche Telekom, as well as $2 billion of T-Mobile USA’s 5.300% senior notes due 2021 and $2 billion of T-Mobile USA’s 6.000% senior notes due 2024.  In addition, T-Mobile USA and Deutsche Telekom agreed, upon closing of the Merger, to amend the $1.25 billion of T-Mobile USA’s 5.125% senior notes due 2025 and $1.25 billion of T-Mobile USA’s 5.375% senior notes due 2027 to change the maturity dates thereof to April 15, 2021 and April 15, 2022, respectively.

 

The foregoing description of the Financing Matters Agreement and the transactions contemplated thereby is not complete and is qualified in its entirety by reference to the Financing Matters Agreement, which is filed as Exhibit 10.3 hereto and is

 

4



 

incorporated herein by reference.

 

Item 5.02    Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

 

Executive Severance Letters

 

On April 27, 2018, the compensation committee of the board of directors of T-Mobile approved the entry into severance letter agreements (the “Letter Agreements”) with each of J. Braxton Carter, T-Mobile’s Executive Vice President and Chief Financial Officer, Neville R. Ray, T-Mobile’s Executive Vice President and Chief Technology Officer, and Thomas C. Keys, T-Mobile’s President, MetroPCS (collectively, the “Executives”), which became effective on April 29, 2018.

 

Each Letter Agreement provides that, upon a termination of the applicable Executive’s employment by T-Mobile without “cause” or by the Executive for “good reason” (each as defined in the applicable Letter Agreement) (each, a “qualifying termination”) in either case, within twelve (12) months following the first to occur of (i) the closing of the Transactions or (ii) the date on which T-Mobile publicly announces that the Transactions will not close, and subject to the Executive’s timely execution and non-revocation of a release of claims in favor of T-Mobile and continued compliance with certain non-competition and non-solicitation restrictions for eighteen (18) months following such qualifying termination (or, if such qualifying termination occurs within twelve (12) months following the date on which T-Mobile publicly announces that the Transactions will not close, twelve (12) months), the Executive will receive:

 

·                  a lump-sum payment equal to two (2) times the sum of (I) the Executive’s then-current base salary plus (II) the Executive’s then-current target short-term (annual) incentive award;

 

·                  a pro-rata short-term incentive award for the calendar year in which the qualifying termination occurs, based on actual performance results for such year;

 

·                  any earned, unpaid short-term incentive award for the calendar year ending immediately prior to the year of such qualifying termination;

 

·                  full vesting of the Executive’s time-based long-term incentive awards;

 

·                  vesting of the Executive’s performance-based long-term incentive awards based on actual performance through the termination date;

 

·                  company-paid health coverage for up to eighteen (18) months following such qualifying termination; and

 

·                  company-paid outplacement services for twelve (12) months following such qualifying termination.

 

The foregoing severance benefits will apply in lieu of any other severance benefits that the applicable Executive would otherwise be entitled to receive upon a qualifying termination (unless such other benefits are more favorable to the Executive).

 

To the extent that any payment or benefit received by any Executive pursuant to his Letter Agreement or otherwise would be subject to an excise tax under Internal Revenue Code Section 4999, such payments and/or benefits will be subject to a “best pay cap” reduction if such reduction would result in a greater net after-tax benefit to the Executive than receiving the full amount of such payments.

 

The foregoing description of the Letter Agreement is qualified in its entirety by the full text of the Letter Agreement, a copy of which will subsequently be filed with the Securities and Exchange Commission.

 

Amendments to Executive Employment Arrangements

 

On April 27, 2018, T-Mobile adopted (i) an amendment to the amended and restated employment agreement, dated April 1, 2017, with John J. Legere, T-Mobile’s President and Chief Executive Officer (the “Legere Amendment”), (ii) an amendment to the compensation term sheet, dated April 1, 2017, with G. Michael Sievert, T-Mobile’s Chief Operating Officer (the “Sievert Amendment”) and (iii) an amendment to the amended and restated employment agreement, dated December 20, 2017, with Mr. Carter (the “Carter Amendment”), each of which became effective on April 29, 2018.  The material terms of the amendments are described below.

 

5



 

On April 29, 2018, T-Mobile announced that Mr. Sievert will succeed Mr. Legere as President upon ratification by the T-Mobile board of directors.

 

Legere Amendment

 

The Legere Amendment amends Mr. Legere’s employment agreement to extend the term of such employment agreement through April 30, 2020 (with Mr. Legere’s employment terminating on such date, unless earlier terminated).  In addition, under the Legere Amendment, (i) Mr. Legere’s annual base salary was increased to $2,000,000, (ii) the target value of Mr. Legere’s short-term (annual) incentive award was increased to $4,000,000, and (iii) the target grant-date value of Mr. Legere’s long-term incentive awards was increased to $17,250,000.  The Legere Amendment also provides for the grant to Mr. Legere of a one-time award of performance-based restricted stock units (“PRSUs”) under T-Mobile’s 2013 Omnibus Incentive Plan (the “Plan”) with an aggregate grant date value equal to $37,000,000. The PRSUs are generally subject to the same terms and conditions as the PRSUs granted to Mr. Legere under the Plan on February 15, 2018, except that (i) fifty percent (50%) of the PRSUs will vest on the earlier of the closing of the Transactions or the date on which Mr. Legere’s employment term expires, and (ii) the remaining fifty percent (50%) of the PRSUs will vest on the date on which Mr. Legere’s employment term expires, subject to Mr. Legere’s continued employment through the applicable vesting date (except as otherwise set forth in his employment agreement and PRSU award agreement).

 

The Legere Amendment also amends the severance benefits that Mr. Legere will, subject to his timely execution and non-revocation of a release of claims in favor of T-Mobile, be eligible to receive upon a termination of his employment by T-Mobile without “cause” (including due to the expiration of the employment term) or by Mr. Legere for “good reason” (each as defined in Mr. Legere’s employment agreement) to include (a) company-paid COBRA coverage for up to eighteen (18) months following such termination and (b) company payment or reimbursement for an exclusive office and exclusive executive assistant for eighteen (18) months following such termination (capped at $25,000 per month).

 

The Legere Amendment also provides that T-Mobile will reimburse Mr. Legere for up to $25,000 in legal fees incurred by him in connection with the Legere Amendment.

 

The foregoing description of the Legere Amendment is qualified in its entirety by the full text of the Legere Amendment, a copy of which will subsequently be filed with the Securities and Exchange Commission.

 

Sievert Amendment

 

The Sievert Amendment amends Mr. Sievert’s compensation term sheet to reflect his new position as President and Chief Operating Officer of T-Mobile, effective as of April 29, 2018 and to provide for Mr. Sievert’s service as President and Chief Operating Officer of the combined entity resulting from the closing of the Transactions.  In addition, under the Sievert Amendment: (i) Mr. Sievert’s annual base salary was increased to $1,200,000, (ii) the target value of Mr. Sievert’s short-term (annual) incentive award was increased to $2,400,000, and (iii) the target grant-date value of Mr. Sievert’s long-term incentive awards was increased to $10,350,000.  The Sievert Amendment also provides for the grant to Mr. Sievert of a one-time award of PRSUs under the Plan with an aggregate grant date value equal to $20,000,000. The PRSUs are generally subject to the same terms and conditions as the PRSUs granted to Mr. Sievert under the Plan on February 15, 2018, except that (i) fifty percent (50%) of the PRSUs will vest on the earlier of the closing of the Transactions or the third anniversary of the grant date, and (ii) the remaining fifty percent (50%) of the PRSUs will vest on the third anniversary of the grant date, subject to Mr. Sievert’s continued employment through the applicable vesting date (except as otherwise set forth in his term sheet and PRSU award agreement).

 

The Sievert Amendment also amends Mr. Sievert’s compensation term sheet to provide that, upon Mr. Sievert’s termination of the employment by T-Mobile without “cause” or due to a “constructive termination” (each as defined in Mr. Sievert’s compensation term sheet), then, subject to his timely execution and non-revocation of a release of claims in favor of T-Mobile, Mr. Sievert will be entitled to receive the same severance payments and benefits provided under the Letter Agreements described above under the heading “Executive Letter Agreements,” except that Mr. Sievert’s performance-based long-term incentive awards will be treated as follows:

 

·                  A portion of each performance-based long-term incentive award, determined by multiplying (i) the total number of shares or units, as applicable, subject to such award by (ii) a fraction, the numerator of which is the number of days between the commencement of the applicable performance period in effect as of Mr. Sievert’s termination of employment through the date of such termination, and the denominator of which is the number of days in the full performance period, will vest based on actual performance through the termination date; and

 

6



 

·                  A portion of each performance-based long-term incentive award, determined by multiplying (i) the total number of shares or units, as applicable, subject to such award by (ii) a fraction, the numerator of which is the number of days between the date of Mr. Sievert’s termination of employment and the end of the applicable performance period in effect as of such termination, and the denominator of which is the number of days in the full performance period, will vest at target.

 

The foregoing description of the Sievert Amendment is qualified in its entirety by the full text of the Sievert Amendment, a copy of which will subsequently be filed with the Securities and Exchange Commission.

 

Carter Amendment

 

The Carter Amendment amends Mr. Carter’s employment agreement to extend the term of such employment agreement through the earlier of: (i) if the Transactions close, the twentieth (20th) day following the first quarterly or annual financial filing made by T-Mobile following the closing of the Transactions, (ii) if (A) prior to March 1, 2019, T-Mobile publicly announces that the Transactions will not close and (B) the deadline for T-Mobile’s next quarterly or annual financial filing after such public announcement is after March 1, 2019, the twentieth (20th) day following the date on which such quarterly or annual filing is made by T-Mobile, (iii) if (A) prior to March 1, 2019, T-Mobile publicly announces that the closing of the Transactions will not occur for any reason and (B) the deadline for T-Mobile’s next quarterly or annual financial filing after such public announcement is before March 1, 2019, and (iv) if, after March 1, 2019, T-Mobile publicly announces that the closing of the Transactions will not occur for any reason, the twentieth (20th) day following the first quarterly or annual financial filing made by T-Mobile after such public announcement.  The Carter Amendment also clarifies that Mr. Carter will be eligible for severance benefits under his employment agreement or Letter Agreement (as applicable) upon a termination of his employment due to the expiration of the employment term and subject to the terms and conditions thereof (including the requirement that Mr. Carter timely execute and not revoke a release of claims in favor of T-Mobile).

 

The foregoing description of the Carter Amendment is qualified in its entirety by the full text of the Carter Amendment, a copy of which will subsequently be filed with the Securities and Exchange Commission.

 

Item 8.01 Other Events.

 

On April 29, 2018, T-Mobile and Sprint issued a joint press release announcing that they have entered into the Business Combination Agreement. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated into this Form 8-K by reference.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit
No.

 

Description

 

 

 

2.1

 

Business Combination Agreement, dated as of April 29, 2018, by and among T-Mobile US, Inc., Huron Merger Sub LLC, Superior Merger Sub Corporation, Sprint Corporation, Starburst I, Inc., Galaxy Investment Holdings, Inc., and for the limited purposes set forth therein, Deutsche Telekom AG, Deutsche Telekom Holding B.V., and SoftBank Group Corp.*

10.1

 

Support Agreement, dated as of April 29, 2018, by and among SoftBank Group Corp., SoftBank Group Capital Limited, Starburst I, Inc., Galaxy Investment Holdings, Inc., T-Mobile US, Inc., and Deutsche Telekom AG.

10.2

 

Commitment Letter, dated as of April 29, 2018, by and among T-Mobile USA, Inc. and the financial institutions party thereto.

10.3

 

Financing Matters Agreement, dated as of April 29, 2018, by and between T-Mobile USA, Inc. and Deutsche Telekom AG.

99.1

 

Press Release, dated April 29, 2018.

 


*     This filing excludes certain schedules and exhibits pursuant to Item 601(b)(2) of Regulation S-K, which the registrant agrees to furnish supplementally to the Securities and Exchange Commission upon request by the Commission; provided, however, that the registrant may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedules or exhibits so furnished.

 

7



 

Important Additional Information

 

In connection with the proposed transaction, T-Mobile US, Inc. (“T-Mobile”) will file a registration statement on Form S-4, which will contain a joint consent solicitation statement of T-Mobile and Sprint Corporation (“Sprint”), that also constitutes a prospectus of T-Mobile (the “joint consent solicitation statement/prospectus”), and each party will file other documents regarding the proposed transaction with the U.S. Securities and Exchange Commission (the “SEC”).  INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT CONSENT SOLICITATION STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.  When final, a definitive copy of the joint consent solicitation statement/prospectus will be sent to T-Mobile and Sprint stockholders.  Investors and security holders will be able to obtain the registration statement and the joint consent solicitation statement/prospectus free of charge from the SEC’s website or from T-Mobile or Sprint.  The documents filed by T-Mobile with the SEC may be obtained free of charge at T-Mobile’s website, at www.t-mobile.com, or at the SEC’s website, at www.sec.gov.  These documents may also be obtained free of charge from T-Mobile by requesting them by mail at T-Mobile US, Inc., Investor Relations, 1 Park Avenue, 14th Floor, New York, NY 10016, or by telephone at 212-358-3210.  The documents filed by Sprint with the SEC may be obtained free of charge at Sprint’s website, at www.sprint.com, or at the SEC’s website, at www.sec.gov.  These documents may also be obtained free of charge from Sprint by requesting them by mail at Sprint Corporation, Shareholder Relations, 6200 Sprint Parkway, Mailstop KSOPHF0302-3B679, Overland Park, Kansas 66251, or by telephone at 913-794-1091.

 

Participants in the Solicitation

 

T-Mobile and Sprint and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of consents in respect of the proposed transaction.  Information about T-Mobile’s directors and executive officers is available in T-Mobile’s proxy statement dated April 26, 2018, for its 2018 Annual Meeting of Stockholders.  Information about Sprint’s directors and executive officers is available in Sprint’s proxy statement dated June 19, 2017, for its 2017 Annual Meeting of Stockholders, and in Sprint’s subsequent reports on Form 8-K filed with the SEC on January 4, 2018 and January 17, 2018.  Other information regarding the participants in the consent solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint consent solicitation statement/prospectus and other relevant materials to be filed with the SEC regarding the acquisition when they become available.  Investors should read the joint consent solicitation statement/prospectus carefully when it becomes available before making any voting or investment decisions.  You may obtain free copies of these documents from T-Mobile or Sprint as indicated above.

 

No Offer or Solicitation

 

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.  No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.

 

Cautionary Statement Regarding Forward-Looking Statements

 

This communication contains certain forward-looking statements concerning T-Mobile, Sprint and the proposed transaction between T-Mobile and Sprint. All statements other than statements of fact, including information concerning future results, are forward-looking statements. These forward-looking statements are generally identified by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “could” or similar expressions. Such forward-looking statements include, but are not limited to, statements about the benefits of the proposed transaction, including anticipated future financial and operating results, synergies, accretion and growth rates, T-Mobile’s, Sprint’s and the combined company’s plans, objectives, expectations and intentions, and the expected timing of completion of the proposed transaction. There are several factors which could cause actual plans and results to differ materially from those expressed or implied in forward-looking statements. Such factors include, but are not limited to, the failure to obtain, or delays in obtaining, required regulatory approvals, and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction, or the failure to satisfy any of the other conditions to the proposed transaction on a timely basis or at all; the occurrence of events that may give rise to a right of one or both of the parties to terminate the business combination agreement; adverse effects on the market price of T-Mobile’s or Sprint’s common stock and on T-Mobile’s or Sprint’s operating results because of a failure to complete the proposed transaction in the anticipated timeframe or at all; inability to obtain the financing contemplated to be obtained in connection with the proposed transaction on the expected terms or timing or at all; the ability of T-Mobile, Sprint and the combined company to make payments on debt or to repay existing or future indebtedness when due or to comply with the covenants contained therein; adverse changes in the ratings of T-Mobile’s or

 

8



 

Sprint’s debt securities or adverse conditions in the credit markets; negative effects of the announcement, pendency or consummation of the transaction on the market price of T-Mobile’s or Sprint’s common stock and on T-Mobile’s or Sprint’s operating results, including as a result of changes in key customer, supplier, employee or other business relationships; significant transaction costs, including financing costs, and unknown liabilities; failure to realize the expected benefits and synergies of the proposed transaction in the expected timeframes or at all; costs or difficulties related to the integration of Sprint’s network and operations into T-Mobile; the risk of litigation or regulatory actions; the inability of T-Mobile, Sprint or the combined company to retain and hire key personnel; the risk that certain contractual restrictions contained in the business combination agreement during the pendency of the proposed transaction could adversely affect T-Mobile’s or Sprint’s ability to pursue business opportunities or strategic transactions; effects of changes in the regulatory environment in which T-Mobile and Sprint operate; changes in global, political, economic, business, competitive and market conditions; changes in tax and other laws and regulations; and other risks and uncertainties detailed in T-Mobile’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and in its subsequent reports on Form 10-Q, including in the sections thereof captioned “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements,” as well as in its subsequent reports on Form 8-K, all of which are filed with the SEC and available at www.sec.gov and www.t-mobile.com. Forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties that may cause actual results to differ materially from those expressed in or implied by such forward-looking statements. Given these risks and uncertainties, persons reading this communication are cautioned not to place undue reliance on such forward-looking statements. T-Mobile assumes no obligation to update or revise the information contained in this communication (whether as a result of new information, future events or otherwise), except as required by applicable law.

 

9



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: April 30, 2018

T-MOBILE US, INC.

 

 

 

By:

/s/ J. Braxton Carter

 

 

J. Braxton Carter

 

 

Executive Vice President and Chief Financial Officer

 

10


(Back To Top)

Section 2: EX-2.1 (EX-2.1)

Exhibit 2.1

 

EXECUTION VERSION

 

BUSINESS COMBINATION AGREEMENT

 

by and among

 

T-MOBILE US, INC.,

 

HURON MERGER SUB LLC,

 

SUPERIOR MERGER SUB CORPORATION,

 

SPRINT CORPORATION,

 

STARBURST I, INC.,

 

GALAXY INVESTMENT HOLDINGS, INC.

 

and for the limited purposes set forth in this Agreement,

 

DEUTSCHE TELEKOM AG,

 

DEUTSCHE TELEKOM HOLDING B.V.,

 

and

 

SOFTBANK GROUP CORP.

 

Dated as of April 29, 2018

 



 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

ARTICLE I

 

 

 

 

 

THE MERGER TRANSACTIONS

 

 

 

 

Section 1.1.

The SoftBank US Mergers

2

Section 1.2.

The Merger

3

Section 1.3.

Closing

3

Section 1.4.

SoftBank US Mergers Effective Time and Effective Time

4

Section 1.5.

Effects of the Merger Transactions

4

 

 

 

 

ARTICLE II

 

 

 

 

 

CERTAIN GOVERNANCE MATTERS

 

 

 

 

Section 2.1.

Combined Company Name and Ticker

4

Section 2.2.

Headquarters

4

Section 2.3.

Management of Combined Company

4

Section 2.4.

Board of Directors of Combined Company

5

Section 2.5.

Organizational Documents; Subsidiary Arrangements

5

Section 2.6.

Certain Other Agreements

6

 

 

 

 

ARTICLE III

 

 

 

 

 

EFFECT OF THE MERGER TRANSACTIONS ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES

 

 

 

 

Section 3.1.

Effect of the SoftBank US Mergers on the Capital Stock of Starburst and Galaxy and the Limited Liability Interests of Merger Company

6

Section 3.2.

Effect of the Merger on the Capital Stock of Sprint

7

Section 3.3.

Treatment of Sprint Equity Awards

8

Section 3.4.

No Dissenters’ Rights

10

Section 3.5.

Exchange of Shares and Certificates; Fractional Shares

10

Section 3.6.

Certain Adjustments

14

Section 3.7.

Certain Subsidiaries; Further Assurances

15

 

 

 

 

ARTICLE IV

 

 

 

 

 

REPRESENTATIONS AND WARRANTIES

 

 

 

 

Section 4.1.

Representations and Warranties of Sprint

15

Section 4.2.

Representations and Warranties of T-Mobile, Merger Sub and Merger Company

40

 

i



 

Section 4.3.

Representations and Warranties of the SoftBank Parties

65

Section 4.4.

Representations and Warranties of the DT Parties

69

Section 4.5.

No Other Representations and Warranties

70

 

 

 

 

ARTICLE V

 

 

 

 

 

COVENANTS RELATING TO CONDUCT OF BUSINESS

 

 

 

 

Section 5.1.

Conduct of Business

70

Section 5.2.

No Solicitation by Sprint

84

Section 5.3.

No Solicitation by T-Mobile

85

 

 

 

 

ARTICLE VI

 

 

 

 

 

ADDITIONAL AGREEMENTS

 

 

 

 

Section 6.1.

Preparation of the Form S-4 and the Consent Solicitation Statement; Recommendations

87

Section 6.2.

Access to Information; Confidentiality

89

Section 6.3.

Reasonable Best Efforts; Filings; Notification

90

Section 6.4.

Regulatory Compliance

94

Section 6.5.

Communications

94

Section 6.6.

Indemnification, Exculpation and Insurance

95

Section 6.7.

Fees and Expenses

96

Section 6.8.

Public Announcements

97

Section 6.9.

Listing; Delisting and Deregistration

97

Section 6.10.

Certain Tax Matters

97

Section 6.11.

Takeover Statutes

98

Section 6.12.

Conveyance Taxes

98

Section 6.13.

Employee Benefits

98

Section 6.14.

Section 16(b)

100

Section 6.15.

Notification of Certain Matters

101

Section 6.16.

Certain Litigation

101

Section 6.17.

Financing Matters

101

Section 6.18.

Merger Sub Approval and Merger Company Approval

105

Section 6.19.

Termination of Certain Agreements

106

Section 6.20.

FCC Auction Procedures

106

 

 

 

 

ARTICLE VII

 

 

 

 

 

CONDITIONS PRECEDENT

 

 

 

 

Section 7.1.

Conditions to Each Party’s Obligation to Effect the Merger Transactions

107

Section 7.2.

Conditions to Obligations of T-Mobile, Merger Sub, Merger Company and the DT Parties

108

Section 7.3.

Conditions to Obligations of Sprint and the SoftBank Parties

109

 

ii



 

 

ARTICLE VIII

 

 

 

 

 

TERMINATION, AMENDMENT AND WAIVER

 

 

 

 

Section 8.1.

Termination

111

Section 8.2.

Effect of Termination

112

Section 8.3.

Amendment

114

Section 8.4.

Extension; Waiver

114

 

 

 

 

ARTICLE IX

 

 

 

 

 

SOFTBANK INDEMNIFICATION

 

 

 

 

Section 9.1.

SoftBank US Mergers Indemnification

114

Section 9.2.

SoftBank Tax Indemnification

115

Section 9.3.

Additional Agreements

115

 

 

 

 

ARTICLE X

 

 

 

 

 

GENERAL PROVISIONS

 

 

 

 

Section 10.1.

Nonsurvival of Representations and Warranties

117

Section 10.2.

Notices

118

Section 10.3.

Definitions

120

Section 10.4.

Interpretation

130

Section 10.5.

Counterparts

130

Section 10.6.

Entire Agreement; No Third-Party Beneficiaries; No Additional Representations

130

Section 10.7.

GOVERNING LAW

130

Section 10.8.

WAIVER OF JURY TRIAL

131

Section 10.9.

Assignment

131

Section 10.10.

Specific Enforcement

131

Section 10.11.

Jurisdiction

131

Section 10.12.

Headings, etc.

132

Section 10.13.

Severability

132

Section 10.14.

Financing Parties

132

 

Exhibits

 

Exhibit A – Form of Amended and Restated Certificate of Incorporation

Exhibit B – Form of Amended and Restated Bylaws

Exhibit C – Form of DT Support Agreement

Exhibit D – Form of SoftBank Support Agreement

Exhibit E – Form of Amended and Restated Stockholders’ Agreement

Exhibit F – Form of Voting and Proxy Agreement

Exhibit G – License Agreement Amendment

 

iii



 

INDEX OF DEFINED TERMS

 

Defined Term

 

Page

Action

 

26

affiliate

 

120

Agreement

 

1

Annual Bonus Plan

 

100

Anti-Corruption Laws

 

38

Antitrust Laws

 

18

Apportioned Expenses

 

97

Article IX Indemnitee

 

114

Board of Directors

 

121

Book-Entry Share

 

12

Business Counterparties

 

95

business day

 

121

Certificate

 

11

CFIUS

 

18

Change of Control Waiver Offer

 

102

Change of Control Waiver Supplemental Indentures

 

102

Clearance List

 

37

Closing

 

3

Closing Date

 

3

COBRA

 

27

Code

 

2

Communications Act

 

18

Compliant

 

121

Confidentiality Agreement

 

121

Consent Solicitation Statement

 

87

contract

 

121

control

 

120

Controlled Group Liability

 

121

Debt Offers

 

102

DGCL

 

1

DLLCA

 

1

DSS

 

18

DT

 

1

DT Holdco

 

1

DT Parties

 

1

DT Support Agreement

 

2

EDGAR

 

20

Effect

 

125

Effective Time

 

4

Employees

 

99

Enforceability Exceptions

 

17

Environmental Claim

 

121

Environmental Laws

 

122

Environmental Permits

 

37

 

iv



 

ERISA

 

122

ERISA Affiliate

 

122

Excess Shares

 

13

Exchange Act

 

18

Exchange Agent

 

11

Exchange Fund

 

11

Exchange Ratio

 

8

Existing Stockholder’s Agreement

 

122

FAA

 

24

FAA Rules

 

26

FAR

 

36

FASB

 

76

FCC

 

24

FCC Licenses

 

122

FCC Rules

 

26

Final Purchase Period

 

10

FOCI

 

91

Form S-4

 

87

GAAP

 

21

Galaxy

 

1

Galaxy Common Stock

 

7

Galaxy Exchange Ratio

 

7

Galaxy Merger Consideration

 

7

Government Contract

 

123

Governmental Bid

 

123

Governmental Consents

 

122

Governmental Entity

 

17

Hazardous Materials

 

123

HSR Act

 

17

Indebtedness

 

123

Indemnified Parties

 

95

Intellectual Property

 

123

IRS

 

26

IT Assets

 

124

knowledge

 

124

Labor Agreement

 

124

Laws

 

23

Licenses

 

23

Liens

 

17

Losses

 

114

Marketing Period

 

124

Material Adverse Effect

 

125

Maximum Amount

 

96

Measurement Date

 

18

Merger

 

1

Merger Certificate

 

4

 

v



 

Merger Company

 

1

Merger Consideration

 

8

Merger Sub

 

1

Merger Transactions

 

125

Multiemployer Plan

 

126

Multiple Employer Plan

 

126

NASDAQ

 

18

National Security Agreement

 

93

New Plans

 

99

NISPOM

 

18

Non-SoftBank Sprint Warrants

 

8

NSA

 

37

NYSE

 

18

Old Plans

 

99

Outside Date

 

111

Payment Amount

 

113

PBGC

 

28

Permitted Liens

 

126

person

 

126

Personal Data

 

126

Post-Closing Tax Period

 

127

Pre-Closing Tax Period

 

127

Pre-Merger Financing Transaction

 

102

Protection Period

 

98

PUCs

 

18

Regulatory Material Adverse Condition

 

94

Representative

 

84

Restraint

 

107

Revised Structure Notice

 

3

Roaming Agreement

 

2

Sarbanes-Oxley Act

 

20

SEC

 

15

Section 721

 

18

Securities Act

 

18

SoftBank

 

1, 2

SoftBank Book-Entry Share

 

11

SoftBank Certificate

 

11

SoftBank Parties

 

1

SoftBank Sprint Warrant

 

123

SoftBank Support Agreement

 

2

SoftBank Surviving Entity

 

3

SoftBank US HoldCos

 

1

SoftBank US Merger Certificates

 

4

SoftBank US Mergers

 

1

SoftBank US Mergers Effective Time

 

4

Specified Counsel

 

127

 

vi



 

Specified Termination

 

113

Spectrum Notes

 

103

Spectrum Notes Change of Control Waiver

 

103

Sprint

 

1

Sprint 401(k) Plan

 

99

Sprint Alternative Transaction

 

85

Sprint Benefit Plan

 

127

Sprint Board Recommendation

 

16

Sprint Certificate of Incorporation

 

16

Sprint Classified Contracts

 

37

Sprint CoC Notes

 

102

Sprint Common Stock

 

8

Sprint Communications Licenses

 

24

Sprint Disclosure Letter

 

15

Sprint Equity Award

 

10

Sprint Equity Plans

 

128

Sprint ESPP

 

10

Sprint FCC Licenses

 

24

Sprint Filed SEC Documents

 

15

Sprint Financial Statements

 

20

Sprint Independent Committee

 

16

Sprint Material Contracts

 

33

Sprint Material Licenses

 

24

Sprint Non-Voting Common Stock

 

18

Sprint Notes

 

102

Sprint Option

 

128

Sprint Preferred Stock

 

18

Sprint PSU Award

 

128

Sprint RSU Award

 

128

Sprint SEC Documents

 

20

Sprint State Licenses

 

24

Sprint Stockholder Approval

 

128

Sprint Subject Shares

 

66

Sprint Third Party

 

85

Sprint TIA Award

 

128

Sprint Title IV Plan

 

27

Sprint Warrants

 

128

Starburst

 

1

Starburst Common Stock

 

7

Starburst Exchange Ratio

 

7

Starburst Merger Consideration

 

7

Stockholder Litigation

 

101

Stockholders’ Agreement

 

6

Straddle Period

 

127

subsidiary

 

127

Surviving Corporation

 

3

 

vii



 

Tax Attribute

 

128

Tax Certificates

 

109

Tax Return

 

128

Taxes

 

128

Taxing Authority

 

129

T-Mobile

 

1

T-Mobile 401(k) Plan

 

100

T-Mobile Alternative Transaction

 

86

T-Mobile Benefit Plan

 

129

T-Mobile Board Recommendation

 

41

T-Mobile Certificate of Incorporation

 

41

T-Mobile Charter Amendment

 

129

T-Mobile Charter Amendment Approval

 

129

T-Mobile Clearance List

 

60

T-Mobile Common Stock

 

4

T-Mobile Communications Licenses

 

48

T-Mobile Disclosure Letter

 

40

T-Mobile Equity Award

 

129

T-Mobile FCC Licenses

 

48

T-Mobile Filed SEC Documents

 

40

T-Mobile Financial Statements

 

45

T-Mobile Independent Committee

 

41

T-Mobile Material Contracts

 

56

T-Mobile Material Licenses

 

48

T-Mobile Option

 

129

T-Mobile Preferred Stock

 

42

T-Mobile PSU Award

 

129

T-Mobile RSU Award

 

129

T-Mobile SEC Documents

 

44

T-Mobile Share Issuance

 

129

T-Mobile Share Issuance Approval

 

129

T-Mobile State Licenses

 

48

T-Mobile Stockholder Approval

 

130

T-Mobile Third Party

 

86

Voting and Proxy Agreement

 

6

WARN Act

 

29

Willful Breach

 

130

 

viii



 

BUSINESS COMBINATION AGREEMENT

 

This BUSINESS COMBINATION AGREEMENT, dated as of April 29, 2018 (this “Agreement”), is made by and among T-Mobile US, Inc., a Delaware corporation (“T-Mobile”), Huron Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of T-Mobile (“Merger Company”), Superior Merger Sub Corporation, a Delaware corporation and a wholly owned subsidiary of Merger Company (“Merger Sub”), Sprint Corporation, a Delaware corporation (“Sprint”), Starburst I, Inc., a Delaware corporation (“Starburst”), Galaxy Investment Holdings, Inc., a Delaware corporation (“Galaxy” and, collectively with Starburst, the “SoftBank US HoldCos”), and for the limited purposes of the covenants and representations and warranties set forth herein that are expressly obligations of such persons, Deutsche Telekom AG, an Aktiengesellschaft organized and existing under the laws of the Federal Republic of Germany (“DT”), Deutsche Telekom Holding B.V., a besloten vennootschap met beperkte aansprakelijkheid organized and existing under the laws of the Netherlands (“DT Holdco” and, collectively with DT, the “DT Parties”), and SoftBank Group Corp., a Japanese kabushiki kaisha (“SoftBank” and, collectively with the SoftBank US HoldCos, the “SoftBank Parties”).

 

W I T N E S S E T H:

 

WHEREAS, the respective Boards of Directors of T-Mobile and Sprint have deemed it advisable and in the best interests of the respective corporations and their respective stockholders that, on the terms and subject to the conditions set forth in this Agreement, T-Mobile and Sprint effect a business combination through the SoftBank US Mergers and the merger of Merger Sub with and into Sprint in accordance herewith, with Sprint continuing as the surviving corporation and as a wholly owned subsidiary of T-Mobile (the “Merger”), pursuant to Section 251 of the General Corporation Law of the State of Delaware (the “DGCL”);

 

WHEREAS, immediately prior to the Merger, Starburst and Galaxy shall each merge with and into Merger Company, with Merger Company continuing as the surviving entity and as a wholly owned subsidiary of T-Mobile (the “SoftBank US Mergers”), pursuant to Section 264 of the DGCL and Section 18-209(b) of the Delaware Limited Liability Company Act (the “DLLCA”), on the terms and subject to the conditions set forth in this Agreement;

 

WHEREAS, the Board of Directors of T-Mobile has unanimously (a) approved and declared advisable this Agreement and the transactions contemplated by this Agreement, including the Merger Transactions, the T-Mobile Charter Amendment and the T-Mobile Share Issuance, on the terms and subject to the conditions set forth in this Agreement, (b) determined that this Agreement and the transactions contemplated by this Agreement, including the Merger Transactions, the T-Mobile Charter Amendment and the T-Mobile Share Issuance, are fair to, and in the best interests of, T-Mobile and the stockholders of T-Mobile, (c) recommended the approval of the T-Mobile Charter Amendment and the T-Mobile Share Issuance to the stockholders of T-Mobile, on the terms and subject to the conditions set forth in this Agreement, and (d) directed that the T-Mobile Charter Amendment and the T-Mobile Share Issuance be submitted to the stockholders of T-Mobile for approval;

 

WHEREAS, the Board of Directors of Sprint has unanimously (a) approved and declared advisable this Agreement and the transactions contemplated by this Agreement, including the

 



 

Merger Transactions, on the terms and subject to the conditions set forth in this Agreement, (b) determined that this Agreement and the transactions contemplated by this Agreement, including the Merger Transactions, are fair to, and in the best interests of, Sprint and the stockholders of Sprint, (c) recommended the adoption of this Agreement to the stockholders of Sprint, on the terms and subject to the conditions set forth in this Agreement, and (d) directed that this Agreement be submitted to the stockholders of Sprint for adoption;

 

WHEREAS, concurrently with the execution and delivery of this Agreement, T-Mobile USA, Inc., Sprint Spectrum L.P. and Sprint (solely for purposes of Section 20 thereof) are entering into that certain Domestic LTE Roaming Data Services Agreement (the “Roaming Agreement”);

 

WHEREAS, following the execution and delivery of this Agreement, it is anticipated that (a) each DT Party, in its capacity as a direct or indirect holder of T-Mobile Common Stock, will enter into a support agreement in the form attached hereto as Exhibit C (the “DT Support Agreement”) and (b) each SoftBank Party and SoftBank Group Capital Limited, a limited company organized under the laws of England and Wales (“SoftBank UK HoldCo”), in its capacity as a direct or indirect holder of Sprint Common Stock, will enter into a support agreement in the form attached hereto as Exhibit D (the “SoftBank Support Agreement”);

 

WHEREAS, for United States federal income tax purposes, it is intended that the Merger (and, if consummated, each of the SoftBank US Mergers) will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”);

 

WHEREAS, this Agreement is intended to be, and is hereby adopted as, a “plan of reorganization” with respect to the Merger (and, if consummated, each of the SoftBank US Mergers) for purposes of Sections 354, 361 and 368 of the Code and within the meaning of Treasury Regulations Section 1.368-2(g); and

 

WHEREAS, the parties desire to make certain representations, warranties, covenants and agreements in connection with this Agreement and to set forth certain conditions to the Merger Transactions.

 

NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

ARTICLE I

 

THE MERGER TRANSACTIONS

 

Section 1.1.                                 The SoftBank US Mergers.  Upon the terms and subject to the conditions set forth in this Agreement (which, for the purposes of the SoftBank US Mergers, shall constitute an agreement and plan of merger contemplated by Section 264 of the DGCL and Section 18-209(b) of the DLLCA) and in accordance with the DGCL and the DLLCA, at the SoftBank US Mergers Effective Time, each of Starburst and Galaxy will be merged with and into Merger Company, and the separate company existence of each of Starburst and Galaxy shall thereupon

 

2



 

cease.  Merger Company shall continue as the surviving entity in the SoftBank US Mergers (sometimes referred to herein as the “SoftBank Surviving Entity”) and, following the SoftBank US Mergers, shall continue to be a wholly owned subsidiary of T-Mobile.  Notwithstanding the foregoing or anything in this Agreement to the contrary, in the event that (i) T-Mobile is unable to obtain the opinion contemplated by Section 7.2(e) or Sprint is unable to obtain the opinion contemplated by Section 7.3(e), but all other conditions shall have been satisfied or waived or shall then be capable of being satisfied or waived, then T-Mobile or Sprint, as the case may be, shall give prompt written notice to Sprint or T-Mobile, respectively (each, a “Revised Structure Notice”), and upon delivery thereof, the parties shall be required to complete the transactions contemplated hereby, including the Merger, other than the SoftBank US Mergers, and (A) the provisions of this Agreement providing for the SoftBank US Mergers, including the first two sentences of this Section 1.1, Section 1.4(a)(i), Section 1.4(b)(i), the second sentence of Section 1.4, Section 3.1, Section 3.5(b), the reference to the SoftBank US Mergers in Section 6.10(a)(i) and the first sentence of Section 6.10(b) shall not be given effect, Section 6.10(c) shall not be given effect, and the conditions in Section 7.2(e) and Section 7.3(e) shall, notwithstanding anything to the contrary herein, be deemed automatically waived by the applicable parties entitled to waive such conditions without any further action on the part of such parties, the SoftBank US Mergers shall be abandoned and shall not occur, and the SoftBank US Mergers Effective Time shall not occur and references herein to the SoftBank US Mergers Effective Time shall, where appropriate, be deemed to be references to the Effective Time, but (B) all other provisions of this Agreement shall be given effect and shall continue in full force and effect and the Merger and the other transactions contemplated by this Agreement (other than the SoftBank US Mergers) shall (subject to the terms and conditions hereof) occur.

 

Section 1.2.                                 The Merger.  Upon the terms and subject to the conditions set forth in this Agreement (which, for purposes of the Merger, shall constitute an agreement and plan of merger contemplated by Section 251 of the DGCL) and in accordance with the DGCL, at the Effective Time, Merger Sub shall be merged with and into Sprint, and the separate corporate existence of Merger Sub shall thereupon cease.  Sprint shall continue as the surviving corporation in the Merger (sometimes referred to herein as the “Surviving Corporation”) and, following the Merger, shall be a wholly owned subsidiary of T-Mobile.

 

Section 1.3.                                 Closing.  Unless otherwise mutually agreed in writing between Sprint and T-Mobile, the closing of the Merger Transactions (the “Closing”) shall take place at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York  10019, at 9:00 a.m., New York time, on the third business day (the “Closing Date”) following the day on which the last to be satisfied or waived (other than those conditions that are not legally permitted to be waived) of the conditions set forth in Article VII (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions) shall be satisfied or waived in accordance with this Agreement, or at such other time and place as may be mutually agreed in writing among the parties;  providedhowever, that if the Marketing Period has not ended at the time of the satisfaction or waiver of the conditions set forth in Article VII (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions), the Closing shall occur on the earlier to occur of (a) a date during the Marketing Period specified by T-Mobile on no less than three (3) business days’ notice to Sprint and (b) the third business day immediately following the final day of the Marketing Period.

 

3



 

Section 1.4.                                 SoftBank US Mergers Effective Time and Effective Time.  Subject to the provisions of this Agreement, as soon as practicable on the Closing Date, the parties shall cause (a) (i) with respect to each of the SoftBank US Mergers, a certificate of merger (the “SoftBank US Merger Certificates”) satisfying the applicable requirements of the DGCL and the DLLCA to be duly executed, and (ii) with respect to the Merger, a certificate of merger (the “Merger Certificate”) satisfying the applicable requirements of the DGCL to be duly executed, and (b) each of (i) the SoftBank US Merger Certificates and (ii) the Merger Certificate to be filed with the Secretary of State of the State of Delaware.  The SoftBank US Mergers shall become effective at the time that shall be mutually agreed by the parties and specified in the SoftBank US Merger Certificates (the “SoftBank US Mergers Effective Time”).  The Merger shall become effective at the time when the Merger Certificate has been duly filed with the Secretary of State of the State of Delaware or at such later time as may be mutually agreed by the parties and specified in the Merger Certificate (the “Effective Time”); provided that if no Revised Structure Notice shall have been delivered in accordance with Section 1.1, the Effective Time (as specified in the Merger Certificate) shall be at least one minute after the SoftBank US Mergers Effective Time (and shall be so specified in the SoftBank US Merger Certificates).

 

Section 1.5.                                 Effects of the Merger Transactions.  Each of the Merger Transactions shall have the effects set forth in this Agreement and in the applicable provisions of the DGCL and, unless the Revised Structure Notice shall have been delivered in accordance with Section 1.1, the DLLCA.

 

ARTICLE II

 

CERTAIN GOVERNANCE MATTERS

 

Section 2.1.                                 Combined Company Name and Ticker.  The parties intend that, following the Merger, (a) the name of T-Mobile shall continue to be “T-Mobile US, Inc.”, (b) T-Mobile shall continue to conduct its business under such name (unless otherwise determined by the Board of Directors of T-Mobile) and (c) the shares of common stock, par value $0.00001 per share, of T-Mobile (the “T-Mobile Common Stock”) shall continue to trade under the ticker symbol “TMUS.”

 

Section 2.2.                                 Headquarters.  The parties intend that, immediately following the Effective Time, T-Mobile shall have its headquarters in Bellevue, Washington, with a secondary headquarters in Overland Park, Kansas.

 

Section 2.3.                                 Management of Combined Company.  T-Mobile and Sprint shall cooperate to take all reasonable actions necessary to cause, effective as of the Effective Time, (a) the Chief Executive Officer of T-Mobile immediately prior to the Effective Time to serve as the Chief Executive Officer of T-Mobile from and after the Effective Time and (b) the officers of T-Mobile from and after the Effective Time to be such individuals as T-Mobile and Sprint shall agree, through a process overseen by their respective Chief Executive Officers and in consultation with DT and SoftBank, cooperating in good faith to identify such individuals prior to the Effective Time, in the case of each of clauses (a) and (b), serving until the earlier of their death, resignation or removal or until their respective successors are duly elected and qualified.

 

4



 

Section 2.4.                                 Board of Directors of Combined Company.

 

(a)                                 Board of DirectorsT-Mobile, Sprint, DT and SoftBank shall cooperate to take all actions necessary to cause the Board of Directors of T-Mobile as of immediately following the Effective Time to consist of a total of 14 directors as follows:

 

(i)                                     DT shall designate nine of such 14 directors prior to the Effective Time.  Of such nine designees, (x) at least two of such designees shall be designated following consultation with SoftBank and the independent directors of T-Mobile and shall qualify as an “independent director” under the listing standards of NASDAQ and the applicable rules of the SEC and (y) one of such designees shall be the Chief Executive Officer of DT as of immediately prior to the Effective Time;

 

(ii)                                  SoftBank shall designate four of such 14 directors prior to the Effective Time.  Of such four designees, (x) at least two of such designees shall be designated following consultation with DT and the independent directors of Sprint and shall qualify as an “independent director” under the listing standards of NASDAQ and the applicable rules of the SEC, one of whom shall also qualify as the “Security Director” (or equivalent) to the extent required by the national security agreement among Sprint, SoftBank, the Department of Justice, the Department of Homeland Security and the Department of Defense, or any successor or replacement agreement or arrangement that may be entered into in connection with the transactions contemplated hereby or by the Stockholders’ Agreement or the Voting and Proxy Agreement, and (y) one of such designees shall be the Chief Executive Officer of SoftBank as of the date hereof (or, if such Person is unable to serve, another Person designated by SoftBank); and

 

(iii)                               the remaining director of T-Mobile shall be the Chief Executive Officer of T-Mobile as determined in accordance with Section 2.3.

 

(b)                                 Chairperson of the Board of DirectorsT-Mobile, Sprint, DT and SoftBank shall cooperate to take all actions necessary to cause the Chairperson of the Board of Directors of T-Mobile as of immediately following the Effective Time to be the Chief Executive Officer of DT as of immediately prior to the Effective Time.

 

(c)                                  CEO Selection Committee of the Board of Directors.  T-Mobile, Sprint, DT and SoftBank shall cooperate to take all actions necessary to cause the Board of Directors of T-Mobile to establish, effective as of the Effective Time, a CEO Selection Committee in accordance with the terms of the Stockholders’ Agreement.

 

Section 2.5.                                 Organizational Documents; Subsidiary Arrangements.

 

(a)                                 The parties shall take all necessary actions so that, at the Effective Time, subject in the case of the T-Mobile Certificate of Incorporation to the T-Mobile Charter Amendment Approval, the T-Mobile Certificate of Incorporation and the Bylaws of T-Mobile shall be amended and restated in their entirety to be in the forms attached hereto as Exhibit A and Exhibit B, respectively, in each case until thereafter amended in accordance with their respective terms and applicable Law.

 

5



 

(b)                                 The parties shall take all necessary actions so that, at the Effective Time, the Sprint Certificate of Incorporation and the Bylaws of Sprint shall be amended and restated in their entirety to be in the forms of the Certificate of Incorporation and Bylaws, respectively, of Merger Sub as in effect immediately prior to the Effective Time (except that (i) the name of the Surviving Corporation shall be “Sprint Corporation” and (ii) the reference to the incorporator will be removed) and, as so amended and restated, shall be the Certificate of Incorporation and Bylaws, respectively, of the Surviving Corporation, in each case until thereafter amended in accordance with their respective terms and applicable Law.

 

(c)                                  The parties shall take all actions necessary so that the directors of Merger Sub at the Effective Time shall, from and after the Effective Time, be the directors of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Certificate of Incorporation and the Bylaws of the Surviving Corporation.  The parties shall take all actions necessary so that the officers of Sprint at the Effective Time shall, from and after the Effective Time, be the officers of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Certificate of Incorporation and the Bylaws of the Surviving Corporation.

 

(d)                                 The limited liability company agreement of Merger Company in effect immediately prior to the SoftBank US Mergers Effective Time shall be the limited liability company agreement of the SoftBank Surviving Entity from and after the SoftBank US Mergers Effective Time until thereafter amended in accordance with its terms and applicable Law.

 

(e)                                  The officers of Merger Company at the SoftBank US Mergers Effective Time shall, from and after the SoftBank US Mergers Effective Time, be the officers of the SoftBank Surviving Entity until their successors shall have been duly elected, appointed or qualified or until their earlier death, resignation or removal in accordance with the limited liability company agreement of the SoftBank Surviving Entity and applicable Law.

 

Section 2.6.                                 Certain Other Agreements.  Prior to the Closing, (a) T-Mobile, DT and SoftBank shall enter into an amended and restated stockholders’ agreement (the “Stockholders’ Agreement”) in the form attached hereto as Exhibit E, (b) DT and SoftBank shall enter into a voting and proxy agreement (the “Voting and Proxy Agreement”) in the form attached hereto as Exhibit F, in each case effective as of the Effective Time, and (c) DT and T-Mobile shall enter into an amendment to that certain License Agreement, dated as of April 30, 2013, by and between T-Mobile and DT (the “License Agreement Amendment”) in the form attached hereto as Exhibit G.

 

ARTICLE III

 

EFFECT OF THE MERGER TRANSACTIONS ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES

 

Section 3.1.                                 Effect of the SoftBank US Mergers on the Capital Stock of Starburst and Galaxy and the Limited Liability Interests of Merger Company.  At the SoftBank US Mergers Effective Time, by virtue of the SoftBank US Mergers and without any action on the part of

 

6



 

Starburst, Galaxy, T-Mobile, Merger Company, SoftBank, any other holder of any shares of common stock, par value $0.01 per share, of Starburst (the “Starburst Common Stock”), any other holder of any shares of common stock, par value $0.01 per share, of Galaxy (the “Galaxy Common Stock”), or any other person:

 

(a)                                 Starburst Merger Consideration and Galaxy Merger Consideration.  (i) The shares of Galaxy Common Stock outstanding immediately prior to the SoftBank US Mergers Effective Time shall cease to be outstanding, shall be canceled and shall cease to exist and shall be automatically converted into the right to receive, in the aggregate, a number of validly issued, fully paid and nonassessable shares of T-Mobile Common Stock equal to the product (the “Galaxy Exchange Ratio”) of (A) the Exchange Ratio and (B) the number of shares of Sprint Common Stock then held by Galaxy (the “Galaxy Merger Consideration”); and (ii) the shares of Starburst Common Stock outstanding immediately prior to the Effective Time shall cease to be outstanding, shall be canceled and shall cease to exist and shall be automatically converted into the right to receive, in the aggregate, a number of validly issued, fully paid and nonassessable shares of T-Mobile Common Stock equal to the product (the “Starburst Exchange Ratio”) of (A) the Exchange Ratio and (B) the number of shares of Sprint Common Stock then held by Starburst (the “Starburst Merger Consideration”).  From and after the SoftBank US Mergers Effective Time, (I) each SoftBank Certificate or SoftBank Book-Entry Share that immediately prior to the SoftBank US Mergers Effective Time represented outstanding shares of Galaxy Common Stock shall represent only the right to receive, upon the surrender thereof, its pro rata portion of the Galaxy Merger Consideration and (II) each SoftBank Certificate or SoftBank Book-Entry Share that immediately prior to the SoftBank US Mergers Effective Time represented outstanding shares of Starburst Common Stock shall thereafter represent only the right to receive, upon the surrender thereof, its pro rata portion of the Starburst Merger Consideration, in each case pursuant to Section 3.5; provided that (after taking into account all such certificates and book-entry shares delivered by any holder of Starburst Common Stock or Galaxy Common Stock in connection with the SoftBank US Mergers) (i) no fractional shares of T-Mobile Common Stock shall be issued to any holder of Starburst Common Stock or Galaxy Common Stock in the SoftBank US Mergers and (ii) cash in lieu of fractional shares of T-Mobile Common Stock shall be paid to any such holder, in each case in accordance with Section 3.5(f).

 

(b)                                 Conversion of Merger Company Limited Liability Company Interests.  Each limited liability company interest of Merger Company outstanding immediately prior to the SoftBank US Mergers Effective Time shall remain outstanding as a limited liability company interest of the SoftBank Surviving Entity.

 

Section 3.2.                                 Effect of the Merger on the Capital Stock of Sprint.  At the Effective Time, by virtue of the Merger and without any action on the part of Sprint, T-Mobile, Merger Sub, Merger Company, the holders of any shares of Sprint Common Stock or any other person:

 

(a)                                 Merger Consideration.  Each share of common stock, par value $0.01 per share, of Sprint (the “Sprint Common Stock”) issued and outstanding immediately prior to the Effective Time (other than any shares of Sprint Common Stock to be canceled pursuant to Section 3.2(b) and any shares of Sprint Common Stock to remain outstanding pursuant to Section 3.2(c)) shall be automatically converted into the right to receive 0.10256 (the “Exchange Ratio”) validly issued, fully paid and nonassessable shares of T-Mobile Common Stock (the “Merger

 

7



 

Consideration”); provided, that cash shall be payable in lieu of any fractional share of T-Mobile Common Stock as specified in Section 3.5(f).  At the Effective Time, each share of Sprint Common Stock (other than any shares of Sprint Common Stock to be canceled pursuant to Section 3.2(b) or to remain outstanding pursuant to Section 3.2(c)) shall cease to be outstanding, shall be canceled and shall cease to exist and each Certificate or Book-Entry Share shall thereafter represent only, and any holder thereof shall cease to have any rights with respect thereto except, the right to receive, upon the surrender thereof, the Merger Consideration in accordance with Section 3.5.

 

(b)                                 Cancellation of Certain Sprint Common Stock.  Each share of Sprint Common Stock held directly by Sprint as treasury stock immediately prior to the Effective Time shall automatically be canceled and retired and shall cease to exist, and no consideration shall be payable in respect thereof or in exchange therefor.

 

(c)                                  Treatment of Sprint Common Stock Held by SoftBank Surviving Entity.  Each share of Sprint Common Stock held by the SoftBank Surviving Entity immediately prior to the Effective Time shall be unaffected by the Merger and shall remain outstanding as a share of common stock of the Surviving Corporation, par value $0.01 per share.

 

(d)                                 Cancellation of Merger Sub Common Stock.  Each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time and all rights in respect thereof shall automatically be canceled and retired and shall cease to exist, and no consideration shall be payable in respect thereof or in exchange therefor.

 

(e)                                  Sprint Warrants.  Except for the Sprint Warrant described in Section 3.2(e) of the Sprint Disclosure Letter (the “Non-SoftBank Sprint Warrant”), each Sprint Warrant outstanding immediately prior to the Effective Time and all rights in respect thereof shall automatically be canceled and retired and shall cease to exist, and no consideration shall be payable in respect thereof or in exchange therefor.  None of the Sprint Warrants, other than the Non-SoftBank Sprint Warrant, shall be assumed by T-Mobile or its subsidiaries (including Merger Sub, Merger Company, the Surviving Corporation or the SoftBank Surviving Entity) in connection with the transactions contemplated by this Agreement, including the Merger Transactions.

 

Section 3.3.                                 Treatment of Sprint Equity Awards.

 

(a)                                 Conversion.  At the Effective Time, by virtue of the Merger and without any action on the part of Sprint, T-Mobile, Merger Sub, the holders of any Sprint Equity Awards or any other person:

 

(i)                                     Each Sprint Option, whether vested or unvested, that is outstanding immediately prior to the Effective Time shall, as of the Effective Time, automatically and without any action on the part of the holder thereof, be converted into an option to purchase, on the terms and conditions (including, if applicable, any continuing vesting requirements) under the applicable plan and award agreement in effect immediately prior to the Effective Time, (A) that number of shares of T-Mobile Common Stock, rounded

 

8



 

down to the nearest whole share, equal to the product determined by multiplying (I) the total number of shares of Sprint Common Stock subject to such Sprint Option immediately prior to the Effective Time by (II) the Exchange Ratio, (B) at a per-share exercise price, rounded up to the nearest whole cent, equal to the quotient determined by dividing (I) the exercise price per share of Sprint Common Stock covered by such Sprint Option immediately prior to the Effective Time by (II) the Exchange Ratio.

 

(ii)                                  Each Sprint RSU Award, whether vested or unvested, that is outstanding immediately prior to the Effective Time shall, as of the Effective Time, automatically and without any action on the part of the holder thereof, be converted into a T-Mobile RSU Award on the terms and conditions (including, if applicable, any continuing vesting requirements) under the applicable plan and award agreement in effect immediately prior to the Effective Time, with respect to a number of shares of T-Mobile Common Stock, rounded up to the nearest whole share, determined by multiplying (A) the number of shares of Sprint Common Stock subject to such Sprint RSU Award immediately prior to the Effective Time by (B) the Exchange Ratio.  Any accrued but unpaid dividend equivalents with respect to any Sprint RSU Award will be assumed and become an obligation with respect to the applicable T-Mobile RSU Award.

 

(iii)                               Each Sprint PSU Award, whether vested or unvested, that is outstanding immediately prior to the Effective Time shall, as of the Effective Time, automatically and without any action on the part of the holder thereof, be converted into a T-Mobile RSU Award on the terms and conditions (including, if applicable, any continuing vesting requirements, but not the performance-based vesting conditions applicable to such Sprint PSU Awards immediately prior to the Effective Time) under the applicable plan and award agreement in effect immediately prior to the Effective Time, with respect to a number of shares of T-Mobile Common Stock, rounded up to the nearest whole share, determined by multiplying (A) the number of shares of Sprint Common Stock subject to such Sprint PSU Award immediately prior to the Effective Time by (B) the Exchange Ratio.  Any accrued but unpaid dividend equivalents with respect to any such Sprint PSU Award will be assumed and become an obligation with respect to the applicable T-Mobile RSU Award.  For purposes of this Section 3.3(a)(iii), the number of shares of Sprint Common Stock subject to each Sprint PSU Award immediately prior to the Effective Time shall be based on the assumed level of performance to equal (1) in the case of a Sprint TIA Award the greatest of (x) the volume-weighted average price of Sprint Common Stock over any 150-calendar day period as specified in the applicable award agreement as of the Effective Time, (y) the volume-weighted average price of Sprint Common Stock over the five (5) consecutive trading day period ending with the second (2nd) complete trading day prior to the Effective Time and (z) the volume-weighted average price of Sprint Common Stock equal to 100% of the target award; and (2) in the case of a Sprint PSU Award other than a Sprint TIA Award, in respect of outstanding performance periods as of the Effective Time, the target number of shares of Sprint Common Stock underlying such Sprint PSU Award and in respect of completed performance periods as of the Effective Time, the actual number of shares of Sprint Common Stock underlying such Sprint PSU Award.

 

9



 

(b)                                 Sprint ESPP.  Prior to the Effective Time, Sprint shall take all actions necessary or required under the Sprint Employees Stock Purchase Plan (the “Sprint ESPP”) and applicable Law to, contingent on the Effective Time, (i) cause the purchase period then underway under the Sprint ESPP (the “Final Purchase Period”), to the extent that it would otherwise be outstanding at the Effective Time, to be terminated no later than five (5) business days prior to the date on which the Effective Time occurs; (ii) make any pro rata adjustments that may be necessary to reflect the Final Purchase Period, but otherwise treat the Final Purchase Period as a fully effective and completed purchase period for all purposes pursuant to the Sprint ESPP; and (iii) cause the exercise (as of no later than five (5) business days prior to the date on which the Effective Time occurs) of each outstanding purchase right pursuant to the Sprint ESPP.  On such exercise date, Sprint shall apply the funds credited as of such date pursuant to the Sprint ESPP within each participant’s payroll withholding account to the purchase of whole shares of Sprint Common Stock in accordance with the terms of the Sprint ESPP, and such shares of Sprint Common Stock shall be outstanding shares of Sprint Common Stock and entitled to receive the Merger Consideration in accordance with Section 3.2.

 

(c)                                  Assumption of Sprint Equity Awards.  Effective as of the Effective Time, T-Mobile shall assume (i) the Sprint Options, Sprint RSU Awards and Sprint PSU Awards (any such award, a “Sprint Equity Award”) in accordance with the terms of this Section 3.3 and (ii) sponsorship of each Sprint Equity Plan; provided that references to Sprint therein shall thereupon be deemed references to T-Mobile and references to Sprint Common Stock therein shall be deemed references to T-Mobile Common Stock with appropriate equitable adjustments to reflect the transactions contemplated by this Agreement.

 

(d)                                 Corporate Actions.  Prior to the Effective Time, the Board of Directors of Sprint or the appropriate committee thereof shall adopt resolutions providing for the treatment of the Sprint Equity Awards and the Sprint Equity Plans as contemplated by this Section 3.3.

 

(e)                                  Registration Statement.  As soon as practicable after the Effective Time, T-Mobile shall prepare and file with the SEC a Form S-8 (or any successor form, or if Form S-8 is not available, such other appropriate forms) registering a number of shares of T-Mobile Common Stock necessary to fulfill T-Mobile’s obligations under this Section 3.3.  T-Mobile shall take all corporate action necessary to reserve for issuance a sufficient number of shares of T-Mobile Common Stock for delivery with respect to the Sprint Equity Awards assumed by it in accordance with this Section 3.3.  T-Mobile shall use commercially reasonable efforts to maintain the effectiveness of such registration statement (and maintain the current status of the prospectus or prospectuses with respect thereto) for so long as any of such assumed Sprint Equity Awards remain outstanding.

 

Section 3.4.                                 No Dissenters’ Rights.  In accordance with Section 262 of the DGCL, no appraisal rights shall be available to holders of T-Mobile Common Stock or Sprint Common Stock in connection with the Merger Transactions.

 

Section 3.5.                                 Exchange of Shares and Certificates; Fractional Shares.

 

(a)                                 Exchange Agent.  Prior to the Effective Time, T-Mobile shall designate a bank, trust company or nationally recognized stockholder services provider (the “Exchange

 

10



 

Agent”) reasonably acceptable to Sprint on terms reasonably acceptable to Sprint for the purpose of exchanging, in accordance with this Article III, Certificates and Book-Entry Shares for the Merger Consideration.  In addition, on or prior to the Effective Time, T-Mobile shall deposit or cause to be deposited with the Exchange Agent for the benefit of the holders of shares of Sprint Common Stock evidence of shares of T-Mobile Common Stock representing the aggregate amount of shares of T-Mobile Common Stock sufficient to deliver the Merger Consideration (such shares, the “Exchange Fund”) payable in respect thereof.  The Exchange Agent shall deliver the Merger Consideration to be issued pursuant to Section 3.2 out of the Exchange Fund.

 

(b)                                 Exchange Procedures for the SoftBank US Mergers.  On the Closing Date, promptly following the SoftBank US Mergers Effective Time, SoftBank shall cause the certificates (each, a “SoftBank Certificate”) and book-entry shares (each, a “SoftBank Book-Entry Share”) that immediately prior to the SoftBank US Mergers Effective Time represented outstanding shares of Starburst Common Stock and Galaxy Common Stock (or affidavits of loss in lieu of SoftBank Certificates pursuant to Section 3.5(j)) to be surrendered to the Exchange Agent, and upon such surrender, the holder of such SoftBank Certificates and such SoftBank Book-Entry Shares shall be entitled to receive, in exchange therefor, that number of whole shares of T-Mobile Common Stock (which shall be in book-entry form) that such holder has the right to receive pursuant to the provisions of this Article III, and such SoftBank Certificates and SoftBank Book-Entry Shares so surrendered shall forthwith be canceled.  Until surrendered as contemplated by this Section 3.5, each SoftBank Certificate or SoftBank Book-Entry Share shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the applicable pro rata portion of the Galaxy Merger Consideration or the applicable pro rata portion of the Starburst Merger Consideration, as applicable.  No interest shall be paid or shall accrue for the benefit of holders of SoftBank Certificates or SoftBank Book-Entry Shares on the Galaxy Merger Consideration or the Starburst Merger Consideration payable upon the surrender of SoftBank Certificates or SoftBank Book-Entry Shares.

 

(c)                                  Exchange Procedures for the Merger.  As soon as reasonably practicable after the Effective Time (and in any event within five (5) business days thereafter), the Exchange Agent shall mail to each holder of record of a certificate (a “Certificate”) that immediately prior to the Effective Time represented outstanding shares of Sprint Common Stock and whose shares were converted into the right to receive the Merger Consideration, (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates (or affidavits of loss in lieu of Certificates pursuant to Section 3.5(j)) to the Exchange Agent, and which shall be in a form reasonably acceptable to T-Mobile and Sprint) and (ii) instructions for use in effecting the surrender of the Certificates (or affidavits of loss in lieu of Certificates pursuant to Section 3.5(j)) in exchange for the Merger Consideration.  Upon surrender of a Certificate for cancellation to the Exchange Agent or to such other agent or agents as may be appointed by T-Mobile, together with such letter of transmittal, duly executed, or, in the case of a book-entry share (a “Book-Entry Share”) that immediately prior to the Effective Time represented outstanding shares of Sprint Common Stock and whose shares were converted into the right to receive the Merger Consideration, upon the surrender of such Book-Entry Share, and in each case upon delivery of such other documents as may reasonably be required by the Exchange Agent, the holder of such Certificate or Book-Entry Share shall be entitled to receive in exchange therefor that number of whole shares of T-Mobile Common Stock (which shall be in book-entry form) and, if any, cash in lieu of fractional

 

11



 

shares as set forth in Section 3.5(f) that such holder has the right to receive pursuant to the provisions of this Article III, and the Certificate or Book-Entry Share so surrendered shall forthwith be canceled.  If any portion of the Merger Consideration is to be registered in the name of a person other than the person in whose name the applicable surrendered Certificate or Book-Entry Share is registered, it shall be a condition to the registration of such Merger Consideration that the surrendered Certificate or Book-Entry Share shall be properly endorsed or otherwise be in proper form for transfer and the person requesting such delivery of the Merger Consideration shall pay to the Exchange Agent any transfer or other taxes required by reason of such registration in the name of a person other than the registered holder of such Certificate or Book-Entry Share or establish to the reasonable satisfaction of the Exchange Agent that such tax has been paid or is not applicable.  Until surrendered as contemplated by this Section 3.5, each Certificate or Book-Entry Share shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration.  No interest shall be paid or shall accrue for the benefit of holders of Certificates or Book-Entry Shares on the Merger Consideration payable upon the surrender of Certificates or Book-Entry Shares.

 

(d)                                 Distributions with Respect to Unexchanged Shares.  No dividends or other distributions with respect to T-Mobile Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate, SoftBank Certificate, Book-Entry Share or SoftBank Book-Entry Share with respect to any shares of T-Mobile Common Stock represented thereby, and no cash payment in lieu of fractional shares shall be paid to any such holder pursuant to Section 3.5(f), in each case until the later of the surrender of such Certificate, SoftBank Certificate, Book-Entry Share or SoftBank Book-Entry Share in accordance with this Article III and the payment date for such dividends or distributions.

 

(e)                                  No Further Ownership Rights in Sprint Common Stock.  The Merger Consideration, the Galaxy Merger Consideration and the Starburst Merger Consideration paid upon the surrender for exchange of Certificates, SoftBank Certificates, Book-Entry Shares or SoftBank Book-Entry Shares in accordance with the terms of this Article III shall be deemed to have been issued (and paid) in full satisfaction of all rights pertaining to the shares of Sprint Common Stock theretofore represented by such Certificates, SoftBank Certificates, Book-Entry Shares or SoftBank Book-Entry Shares, and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Sprint Common Stock that were outstanding immediately prior to the Effective Time.  If, after the Effective Time, Certificates, SoftBank Certificates, Book-Entry Shares or SoftBank Book-Entry Shares are presented to T-Mobile, the Surviving Corporation or the Exchange Agent for any reason, they shall be canceled and exchanged as provided in this Article III.

 

(f)                                   Fractional Shares.

 

(i)                                     No certificates or scrip or book-entry notations representing fractional shares of T-Mobile Common Stock shall be issued upon the surrender for exchange of Certificates, SoftBank Certificates, Book-Entry Shares or SoftBank Book-Entry Shares, and such fractional share interests shall not entitle the owner thereof to vote or to any other rights of a stockholder of T-Mobile.

 

12



 

(ii)                                  Notwithstanding any other provision of this Agreement, each holder of shares of Sprint Common Stock converted pursuant to the Merger who would otherwise have been entitled to receive a fraction of a share of T-Mobile Common Stock (after taking into account all Certificates and Book-Entry Shares delivered by such holder) shall receive, in lieu thereof, cash (without interest) in an amount as determined below.  As promptly as practicable following the Effective Time, the Exchange Agent shall determine the excess of (A) the aggregate number of shares of T-Mobile Common Stock delivered to the Exchange Agent by T-Mobile for issuance to holders of Certificates or Book-Entry Shares over (B) the aggregate number of whole shares of T-Mobile Common Stock to be distributed to holders of Certificates or Book-Entry Shares (such excess being herein referred to as the “Excess Shares”).  As soon as practicable after the Effective Time, the Exchange Agent, as agent for such holders of Certificates or Book-Entry Shares, shall sell the Excess Shares at then prevailing prices on NASDAQ, all in the manner provided herein.

 

(iii)                               The sale of the Excess Shares by the Exchange Agent on NASDAQ shall be executed in round lots to the extent practicable.  Until the net proceeds of any such sale or sales have been distributed to the holders of Certificates or Book-Entry Shares, the Exchange Agent shall hold such proceeds in trust for such holders.  The net proceeds of any such sale or sales of Excess Shares to be distributed to the holders of Certificates or Book-Entry Shares shall be reduced by any and all commissions, transfer taxes and other out-of-pocket transaction costs, as well as any expenses, of the Exchange Agent incurred in connection with such sale or sales.  The Exchange Agent shall determine the portion of such net proceeds to which each holder of Certificates or Book-Entry Shares shall be entitled, if any, by multiplying the amount of the aggregate net proceeds by a fraction, the numerator of which is the amount of the fractional share interest to which such holder of Certificates or Book-Entry Shares is entitled (after taking into account all Certificates and Book-Entry Shares of such holder) and the denominator of which is the aggregate amount of fractional share interests to which all holders of Certificates or Book-Entry Shares are entitled.  As soon as practicable after the determination of the amount of cash, if any, to be paid to holders of Certificates or Book-Entry Shares with respect to any fractional share interests, the Exchange Agent shall promptly pay such amounts to such holders subject to and in accordance with this Section 3.5(f).

 

(g)                                  Return of Merger Consideration.  Any portion of the Merger Consideration made available to the Exchange Agent that remains undistributed to the holders of Certificates or Book-Entry Shares for one year after the Effective Time shall be delivered to T-Mobile, upon demand, and any holders of Certificates or Book-Entry Shares who have not theretofore complied with this Article III shall thereafter be entitled to look only to T-Mobile for payment of their claim for the Merger Consideration payable in respect of such shares and any dividends or distributions with respect to T-Mobile Common Stock.

 

(h)                                 No Liability.  None of Sprint, T-Mobile, Merger Sub, Merger Company, the Surviving Corporation, the SoftBank Surviving Entity, the DT Parties, the SoftBank Parties or the Exchange Agent shall be liable to any person in respect of any portion of the Merger Consideration delivered to a public official pursuant to any applicable abandoned property,

 

13



 

escheat or similar law.  If any Certificate or Book-Entry Share has not been surrendered prior to seven years after the Effective Time, or immediately prior to such earlier date on which any cash, any shares of T-Mobile Common Stock, any cash in lieu of fractional shares of T-Mobile Common Stock or any dividends or distributions with respect to T-Mobile Common Stock in respect of such Certificate or Book-Entry Share would otherwise escheat to or become the property of any Governmental Entity, any such shares, cash or dividends or distributions in respect of such Certificate or Book-Entry Share shall, to the extent permitted by applicable Law, become the property of T-Mobile, free and clear of all claims or interests of any person previously entitled thereto.

 

(i)                                     Withholding Rights.  Each of T-Mobile and the Exchange Agent shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement (including any shares of T-Mobile Common Stock otherwise required to be delivered pursuant to this Article III) such amounts as it is required to deduct and withhold with respect to the making of such payment (or delivery) under the Code or any provision of state, local or foreign Tax Law.  To the extent that amounts are so withheld or paid over to or deposited with the relevant Taxing Authority, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the person in respect of which such deduction and withholding was made.

 

(j)                                    Lost, Stolen or Destroyed Certificates.  If any Certificate or SoftBank Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate or SoftBank Certificate to be lost, stolen or destroyed and, if required by T-Mobile or the Exchange Agent, the posting by such person of a bond in such reasonable amount as T-Mobile or the Exchange Agent, as applicable, may direct as indemnity against any claim that may be made against it with respect to such Certificate or SoftBank Certificate, as applicable, the Exchange Agent shall deliver (i) in exchange for such lost, stolen or destroyed Certificate, the Merger Consideration with respect to the shares of Sprint Common Stock formerly represented thereby, any cash in lieu of fractional shares of T-Mobile Common Stock, and any unpaid dividends and distributions on shares of T-Mobile Common Stock deliverable in respect thereof, pursuant to this Agreement and (ii) in exchange for such lost, stolen or destroyed SoftBank Certificate, the applicable pro rata portion of the Galaxy Merger Consideration or the applicable pro rata portion of the Starburst Merger Consideration, as applicable, with respect to the shares of Galaxy Common Stock or Starburst Common Stock formerly represented thereby and any unpaid dividends and distributions on shares of T-Mobile Common Stock deliverable in respect thereof, pursuant to this Agreement.

 

Section 3.6.                                 Certain Adjustments.  If, between the date of this Agreement and the Effective Time, the outstanding shares of Sprint Common Stock or T-Mobile Common Stock are changed into a different number of shares by reason of any reclassification, recapitalization, split-up, combination, exchange of shares, dividend payable in stock or other securities or other similar transaction, the Exchange Ratio and related provisions shall be appropriately adjusted to provide to the holders of Sprint Common Stock, Galaxy Common Stock, Starburst Common Stock or Sprint Equity Awards the same economic effect as contemplated by this Agreement prior to such reclassification, recapitalization, split-up, combination, exchange, dividend or other similar transaction.  Nothing in this Section 3.6 shall be construed to permit any party to take any action that is otherwise prohibited or restricted by any other provision of this Agreement.

 

14



 

Section 3.7.                                 Certain Subsidiaries; Further Assurances.

 

(a)                                 DT shall cause its subsidiaries (other than T-Mobile and its subsidiaries) to comply with this Agreement.  SoftBank shall cause its subsidiaries (other than Sprint and its subsidiaries) to comply with this Agreement.

 

(b)                                 In the event DT, T-Mobile, SoftBank or Sprint shall have given a Revised Structure Notice prior to the SoftBank US Mergers Effective Time, the parties shall take all actions necessary or advisable in order to give effect to the last sentence of Section 1.1.

 

(c)                                  At and after the Effective Time, the officers and directors, as applicable, of T-Mobile, the Surviving Corporation and the SoftBank Surviving Entity shall be authorized to execute and deliver, in the name and on behalf of Sprint, Merger Sub, Merger Company, the Surviving Corporation or the SoftBank Surviving Entity any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf thereof, any other actions and things necessary to vest, perfect or confirm of record or otherwise in T-Mobile or a subsidiary of T-Mobile, as the case may be, any and all right, title and interest in, to and under any of the rights, properties or assets acquired or to be acquired by T-Mobile or a subsidiary of T-Mobile, as the case may be, as a result of, or in connection with, the Merger Transactions.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

Section 4.1.                                 Representations and Warranties of Sprint.  Except as set forth in any Sprint SEC Document filed with the U.S. Securities and Exchange Commission (the “SEC”) since January 1, 2016 (including all exhibits and other information filed therewith or incorporated therein (including by reference), regardless of when such exhibits and other information were filed) and publicly available prior to the date of this Agreement (as amended prior to the date of this Agreement, the “Sprint Filed SEC Documents”), excluding any disclosures in such Sprint Filed SEC Documents contained in any risk factors section, any section related to forward-looking statements and other disclosures that are predictive, cautionary or forward-looking in nature, or except as disclosed in the disclosure letter delivered by Sprint to T-Mobile at or prior to the execution of this Agreement (the “Sprint Disclosure Letter”) and making reference to the particular subsection of this Agreement to which exception is being taken (provided that such disclosure shall be deemed to qualify that particular subsection and any other subsection of this Agreement to the extent that it is reasonably apparent from the face of such disclosure that such disclosure also qualifies such other subsection), Sprint represents and warrants to T-Mobile, Merger Sub, Merger Company and the DT Parties as follows:

 

(a)                                 Organization, Standing and Corporate Power.  Each of Sprint and its subsidiaries is a corporation or other legal entity duly organized, validly existing and in good standing (with respect to jurisdictions that recognize such concept) under the laws of the jurisdiction in which it is organized and has the requisite corporate or other power, as the case may be, and authority to carry on its business as now being conducted, except, as to subsidiaries, for those jurisdictions where the failure to be so organized, existing or in good standing, or to have such power, individually or in the aggregate, would not reasonably be expected to have a

 

15



 

Material Adverse Effect on Sprint.  Each of Sprint and its subsidiaries is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions that recognize such concept) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, except for those jurisdictions where the failure to be so qualified, licensed or in good standing, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint.  Sprint has delivered or made available to T-Mobile prior to the date of this Agreement true and complete copies of any amendments to the Certificate of Incorporation of Sprint (the “Sprint Certificate of Incorporation”) and the Bylaws of Sprint not filed prior to the date of this Agreement with the Sprint Filed SEC Documents.

 

(b)                                 Corporate Authority; Non-contravention.

 

(i)                                     Sprint has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and, subject only to the Sprint Stockholder Approval, to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement by Sprint and the consummation by Sprint of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Sprint, subject, in the case of the Merger, to the Sprint Stockholder Approval and the filing of the Merger Certificate pursuant to the DGCL.  The Board of Directors of Sprint (at a meeting duly called and held) has, by the unanimous vote of all directors of Sprint, duly adopted resolutions:  (A) approving and declaring advisable this Agreement and the transactions contemplated by this Agreement, including the Merger Transactions, on the terms and subject to the conditions set forth in this Agreement, (B) determining that this Agreement and the transactions contemplated by this Agreement, including the Merger Transactions, are fair to, and in the best interests of, Sprint and the stockholders of Sprint, (C) recommending the adoption of this Agreement to the stockholders of Sprint (the “Sprint Board Recommendation”) and (D) directing that this Agreement be submitted to the stockholders of Sprint for adoption, which resolutions have not been rescinded, modified or withdrawn in any way as of the date of this Agreement.  A committee of the Board of Directors of Sprint consisting solely of independent directors of Sprint (the “Sprint Independent Committee”) (at a meeting duly called and held) has, by unanimous vote, duly adopted resolutions:  (A) determining that entering into this Agreement and consummating the transactions contemplated hereby, including the Merger Transactions, are advisable and fair to, and in the best interests of, all of the stockholders of Sprint (including such stockholders other than the SoftBank Parties), and (B) recommending the submission of this Agreement to the full Board of Directors of Sprint and the approval this Agreement and the transactions contemplated hereby, including the Merger Transactions, by the full Board of Directors of Sprint.  This Agreement has been duly executed and delivered by Sprint and, assuming the due authorization, execution and delivery of this Agreement by the other parties hereto, constitutes the legal, valid and binding obligation of Sprint, enforceable against Sprint in accordance with its terms, except that such enforcement may be subject to (A) applicable bankruptcy, insolvency, examinership, fraudulent transfer, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting or relating to the enforcement of creditors’ rights generally and (B) equitable remedies of specific

 

16



 

performance and injunctive and other forms of equitable relief (collectively, the “Enforceability Exceptions”).

 

(ii)                                  The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby and compliance with the provisions of this Agreement shall not, conflict with, or result in any violation or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or loss of a benefit under, or result in the creation of any pledge, claim, lien, charge, encumbrance, option, right of first refusal, preemptive right, hypothecation, mortgage, security interest or other similar restriction of any kind or nature whatsoever (collectively, “Liens”) upon any of the properties or assets of Sprint or any of its subsidiaries under, (A) the Sprint Certificate of Incorporation or the Bylaws of Sprint or the comparable organizational documents of any of its subsidiaries, (B) any loan or credit agreement, note, bond, mortgage, indenture, trust document, lease or other agreement, instrument, permit, concession, franchise, license or similar authorization to which Sprint or any of its subsidiaries is a party or by which Sprint, any of its subsidiaries or their respective properties or assets may be bound or (C) subject to the governmental filings and other matters referred to in Section 4.1(b)(iii), any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Sprint or any of its subsidiaries or their respective properties or assets, other than, in the case of clauses (A) (with respect to the certificate of incorporation and bylaws or comparable organizational documents of Sprint’s subsidiaries), (B) and (C), any such conflicts, violations, defaults, rights, losses or Liens that, individually or in the aggregate, would not reasonably be expected to (1) have a Material Adverse Effect on Sprint or (2) prevent or materially delay the consummation of any of the transactions contemplated hereby.

 

(iii)                               No consent, approval, order or authorization of, action by or in respect of, or registration, declaration or filing with, any federal, state, local, foreign or supranational government, any court, administrative, regulatory or other governmental agency, commission or authority or any non-governmental self-regulatory agency, commission or authority (each, a “Governmental Entity”) is required by or with respect to Sprint or any of its subsidiaries in connection with the execution and delivery of this Agreement by Sprint or the consummation by Sprint of the transactions contemplated hereby, except for (A) compliance with any applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the “HSR Act”), and with any other applicable federal, state or foreign laws that are designed to govern foreign investment or competition, or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization, lessening of competition or restraint of trade (together with the HSR Act, the “Antitrust Laws”), (B) compliance with any applicable requirements of the Communications Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Communications Act”), (C) pursuant to any applicable Laws of any state or territorial public utility commissions (“PUCs”) or any similar foreign public utility bodies regulating telecommunications businesses, (D) pursuant to Section 721 of the Defense Production Act of 1950, as amended, including amendments made by the Foreign Investment and National Security Act of 2007 (codified at 50 U.S.C. § 4565), and the

 

17



 

regulations promulgated by the Committee on Foreign Investment in the United States (“CFIUS”) thereunder, codified at 31 C.F.R. Part 800, et seq., or any successor statute and/or regulations thereto (collectively, “Section 721”), (E) pursuant to the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (F) pursuant to the DGCL, (G) in accordance with the rules and policies of the New York Stock Exchange (“NYSE”) or the NASDAQ Global Select Market (“NASDAQ”), (H) such filings with the Defense Security Service (“DSS”) as are necessary to comply with the National Industrial Security Program Operating Manual (DOD 5220.22-M) (February 28, 2006) (together with any supplements, amendments or revised editions thereof, the “NISPOM”) and (I) such other consents, approvals, orders or authorizations the failure of which to be made or obtained, individually or in the aggregate, would not reasonably be expected to (1) have a Material Adverse Effect on Sprint or (2) prevent or materially delay the consummation of any of the transactions contemplated hereby.

 

(c)                                  Capital Structure.

 

(i)                                     The authorized capital stock of Sprint consists of 9,000,000,000 shares of Sprint Common Stock, 1,000,000,000 shares of non-voting common stock, par value $0.01 per share (the “Sprint Non-Voting Common Stock”), and 20,000,000 shares of preferred stock, par value $0.0001 per share (the “Sprint Preferred Stock”).  At the close of business on April 25, 2018 (the “Measurement Date”), (A) 4,006,698,492 shares of Sprint Common Stock were issued and outstanding, (B) 8,279 shares of Sprint Common Stock were held by Sprint in its treasury, (C) no shares of Sprint Non-Voting Common Stock were outstanding, (D) no shares of Sprint Preferred Stock were outstanding, (E) 28,403,976 shares of Sprint Common Stock were subject to issuance pursuant to Sprint Options, (F) 8,724,233 shares of Sprint Common Stock were subject to issuance pursuant to Sprint RSU Awards, (G) 70,075,588 shares (assuming satisfaction of any performance vesting conditions at target levels) or 89,994,614 shares (assuming satisfaction of any performance vesting conditions at maximum levels) of Sprint Common Stock were subject to issuance pursuant to Sprint PSU Awards, (H) 54,579,924 shares of Sprint Common Stock were subject to issuance at a purchase price of $5.25 per share pursuant to the SoftBank Sprint Warrant, and 7,288,630 shares of Sprint Common Stock were subject to issuance at a purchase price of $3.43 per share pursuant to the Non-SoftBank Sprint Warrant and (I) 68,030,781 shares of Sprint Common Stock were reserved for issuance under the Sprint ESPP.

 

(ii)                                  All outstanding shares of capital stock of Sprint are, and all shares of capital stock of Sprint that may be issued as permitted by this Agreement or otherwise shall be when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights.  Except as set forth in this Section 4.1(c) and except for changes since the Measurement Date resulting from the issuance of shares of Sprint Common Stock pursuant to the Sprint ESPP or the exercise or settlement of Sprint Options, Sprint RSU Awards or Sprint PSU Awards, or otherwise, to the extent expressly permitted by Section 5.1(a)(ii) (including Section 5.1(a)(ii) of the Sprint Disclosure Letter) or otherwise by this Agreement, (A) there are not issued or outstanding (x) any shares of capital stock or other voting or equity securities or interests of Sprint, (y) any

 

18



 

securities or interests of Sprint or any of its subsidiaries convertible into, or exchangeable or exercisable for, or based upon the value of, any shares of capital stock or other voting or equity securities or interests of Sprint or (z) any warrants, calls, options, preemptive rights, subscriptions or other securities or rights to acquire from Sprint or any of its subsidiaries (including any subsidiary trust), or any agreements, arrangements or obligations of Sprint or any of its subsidiaries to issue, any shares of capital stock or other voting or equity securities or interests of Sprint, or any securities or interests convertible into, or exchangeable or exercisable for, or based upon the value of, any shares of capital stock or other voting or equity securities or interests of Sprint, (B) there are no outstanding obligations of Sprint or any of its subsidiaries to repurchase, redeem or otherwise acquire any such securities or interests or to issue, deliver or sell, or cause to be issued, delivered or sold, any such securities or interests and (C) there are no outstanding or authorized equity or equity-based compensation awards, including any equity appreciation rights, security-based performance units, “phantom” stock, profit-participation or other security rights issued by Sprint or any of its subsidiaries, or other agreements, arrangements or commitments of any character (contingent or otherwise) to which Sprint or any of its subsidiaries is party, in each case pursuant to which any person is entitled to receive any payment from Sprint based in whole or in part on the value of any shares of capital stock or other voting or equity securities or interests of Sprint or any of its subsidiaries.

 

(iii)                               There are no stockholder agreements, voting agreements, voting trusts or other agreements or understandings to which Sprint or any of its subsidiaries is a party, including any such agreements or understandings restricting the transfer of the capital stock or other voting or equity securities or interests of Sprint or its subsidiaries or affecting the voting rights of the capital stock or other voting or equity securities or interests of Sprint or its subsidiaries.  Neither Sprint nor any of its subsidiaries has granted any preemptive rights, anti-dilutive rights or rights of first refusal, registration rights, buy-sell rights or similar rights with respect to its shares of capital stock that are in effect.  No shares of capital stock of Sprint are held by any subsidiary of Sprint.

 

(d)                                 Subsidiaries.

 

(i)                                     All outstanding shares of capital stock or other voting or equity securities or interests of each “Significant Subsidiary” (as defined in Rule 1-02 of Regulation S-X of the SEC) of Sprint have been validly issued and are fully paid and nonassessable and are owned directly or indirectly by Sprint, free and clear of any Liens and free of any other restriction, including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other securities or interests.

 

(ii)                                  There are no outstanding (A) securities or interests of Sprint or any of its subsidiaries convertible into, or exchangeable or exercisable for, or based upon the value of, any shares of capital stock or other voting or equity securities or interests of any subsidiary of Sprint, (B) warrants, calls, options, preemptive rights, subscriptions or other securities or rights to acquire from Sprint or any of its subsidiaries (including any subsidiary trust), or agreements, arrangements or obligations of Sprint or any of its subsidiaries to issue, any shares of capital stock or other voting or equity securities or

 

19



 

interests of any subsidiary of Sprint, or any securities or interests convertible into, or exchangeable or exercisable for, or based on the value of, any shares of capital stock or other voting or equity securities or interests of any subsidiary of Sprint or (C) obligations of Sprint or any of its subsidiaries to repurchase, redeem or otherwise acquire any such securities or interests of any subsidiary of Sprint or to issue, deliver or sell, or cause to be issued, delivered or sold, any such securities or interests.

 

(e)                                  SEC Documents; Financial Statements; Undisclosed Liabilities.

 

(i)                                     Sprint and its subsidiaries have filed or furnished all required registration statements, prospectuses, reports, schedules, forms, statements, certifications and other documents (including all exhibits and other information filed therewith or incorporated therein (including by reference), regardless of when such exhibits and other information were filed) with the SEC since January 1, 2016 (the “Sprint SEC Documents”).  As of their respective dates, the Sprint SEC Documents complied in all material respects with the requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to the Sprint SEC Documents, and none of the Sprint SEC Documents when filed and at their respective effective times, if applicable, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  Prior to the date of this Agreement, Sprint has furnished to T-Mobile true and complete copies of all comment letters from the SEC since January 1, 2016 through the date of this Agreement with respect to any of the Sprint SEC Documents, together with all written responses of Sprint thereto, other than any such letters and responses that are publicly available on the SEC’s Electronic Data Gathering, Analysis and Retrieval database (“EDGAR”) prior to the date of this Agreement.  As of the date of this Agreement, there are no outstanding or unresolved comments received from the SEC with respect to any of the Sprint SEC Documents, and, to the knowledge of Sprint, none of the Sprint SEC Documents is the subject of any outstanding SEC comment or investigation.  No subsidiary of Sprint is required to file periodic reports with the SEC pursuant to the requirements of the Exchange Act.

 

(ii)                                  The consolidated financial statements (including all related notes and schedules) of Sprint and its subsidiaries included in the Sprint SEC Documents (the “Sprint Financial Statements”) when filed complied in all material respects with the applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with United States generally accepted accounting principles (“GAAP”) (except, in the case of unaudited statements, as permitted by the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of Sprint and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which are not material and to any other adjustments described therein, including the notes thereto).

 

20



 

(iii)                               Except (A) as (and to the extent) reflected or reserved against in Sprint’s unaudited balance sheet as of December 31, 2017 (or the notes thereto) included in the Sprint Filed SEC Documents, (B) for liabilities and obligations incurred in the ordinary course of business consistent with past practice since December 31, 2017, and (C) for liabilities and obligations incurred in connection with or contemplated by this Agreement, neither Sprint nor any of its subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise, and whether or not required by GAAP to be reflected on a consolidated balance sheet of Sprint and its subsidiaries (or in the notes thereto)) that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on Sprint.

 

(iv)                              Sprint maintains a system of “internal control over financial reporting” (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) reasonably designed to provide reasonable assurance regarding the reliability of Sprint’s financial reporting and the preparation of Sprint’s financial statements for external purposes in accordance with GAAP and that includes policies and procedures that (A) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of Sprint, (B) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of Sprint are being made only in accordance with authorizations of management and directors of Sprint and (C) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Sprint’s assets that could have a material effect on its financial statements.  Since January 1, 2016, none of Sprint, Sprint’s independent accountants, the Board of Directors of Sprint or its audit committee has received any written or, to the knowledge of Sprint, oral notification of any (1) “significant deficiency” in the internal controls over financial reporting of Sprint, (2) “material weakness” in the internal controls over financial reporting of Sprint or (3) fraud, whether or not material, that involves management or other employees of Sprint who have a significant role in the internal controls over financial reporting of Sprint.  Since January 1, 2016 through the date of this Agreement, there have been no material internal investigations regarding accounting, auditing or revenue recognition discussed with, reviewed by or initiated at the direction of the chief executive officer, chief financial officer, chief accounting officer or general counsel of Sprint or the Board of Directors of Sprint or any committee thereof.

 

(v)                                 The “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) utilized by Sprint are reasonably designed to ensure that all information (both financial and non-financial) required to be disclosed by Sprint in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that all such information required to be disclosed is accumulated and communicated to the management of Sprint, as appropriate, to allow timely decisions regarding required disclosure and to enable the chief executive officer and chief financial officer of Sprint to make the certifications required under the Exchange Act with respect to such reports.

 

21



 

(vi)                              Since January 1, 2016, (A) neither Sprint nor any of its subsidiaries has received any written or, to the knowledge of Sprint, oral complaint, allegation, assertion or claim regarding accounting, internal accounting controls or auditing practices, procedures, methodologies or methods of Sprint or any of its subsidiaries, or unlawful accounting or auditing matters with respect to Sprint or any of its subsidiaries, and (B) no attorney representing Sprint or any of its subsidiaries, whether or not employed by Sprint or any of its subsidiaries, has reported evidence of a violation of securities Laws, breach of fiduciary duty or similar violation by Sprint or any of its subsidiaries or any of their respective officers, directors, employees or agents to the Board of Directors of Sprint or any committee thereof or to the general counsel or chief executive officer of Sprint pursuant to the rules of the SEC adopted under Section 307 of the Sarbanes-Oxley Act, in each case (A) and (B), except as, individually or in the aggregate, has not been, and would not reasonably be expected to be, materially adverse to Sprint and its subsidiaries, taken as a whole.

 

(vii)                           Neither Sprint nor any of its subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or similar contract (including any contract or arrangement relating to any transaction or relationship between or among Sprint and any of its subsidiaries, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose entity or person, on the other hand, or any “off-balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K under the Exchange Act)), where the result, purpose or intended effect of such contract is to avoid disclosure of any material transaction involving, or material liabilities of, Sprint or any of its subsidiaries in the Sprint Financial Statements or otherwise in the Sprint SEC Documents.

 

(viii)                        Sprint is in compliance in all material respects with the applicable rules and regulations of the NYSE and the applicable listing requirements of the NYSE.

 

(f)                                   Information Supplied.  None of the information supplied or to be supplied by Sprint specifically for inclusion or incorporation by reference in (i) the Form S-4 will, at the time the Form S-4 is filed with the SEC, and at any time it is amended or supplemented or at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading or (ii) the Consent Solicitation Statement will, at the date it is first mailed to the respective stockholders of Sprint and T-Mobile, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.  The Form S-4 and the Consent Solicitation Statement shall comply as to form in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations thereunder.  Notwithstanding the foregoing, no representation or warranty is made by Sprint with respect to statements made or incorporated by reference therein based on information supplied by T-Mobile or a DT Party specifically for inclusion or incorporation by reference in the Form S-4 or the Consent Solicitation Statement.

 

22



 

(g)                                  Absence of Certain Changes or Events.

 

(i)                                     From December 31, 2017 through the date of this Agreement, other than with respect to the transactions contemplated hereby, the businesses of Sprint and its subsidiaries have been conducted in all material respects in the ordinary course of business in a manner consistent with past practice.

 

(ii)                                  From December 31, 2017 through the date of this Agreement, neither Sprint nor any of its subsidiaries has taken any action that, if taken after the date of this Agreement, would constitute a breach of clause (i), (iv), (viii), (ix), (xi), (xii), (xv), (xvii) or (xx) (in the case of (xx), to the extent relating to any of the foregoing clauses) of Section 5.1(a).

 

(iii)                               Since March 31, 2017, there have been no Effects that, individually or in the aggregate, have had or would reasonably be expected to have a Material Adverse Effect on Sprint.

 

(h)                                 Compliance with Laws; Licenses.

 

(i)                                     Sprint and its subsidiaries have been and are, and the businesses of Sprint and its subsidiaries have been and are being, conducted, in compliance with all federal, state, local and foreign laws, statutes and ordinances, common law and all rules, regulations, guidelines, standards, judgments, orders, writs, injunctions, decrees, arbitration awards, agency requirements, licenses and permits of any Governmental Entity (collectively, “Laws”) relating to Sprint and its subsidiaries or their respective businesses or properties, except where the failure to be in compliance with such applicable Laws, individually or in the aggregate, would not reasonably be expected to (A) have a Material Adverse Effect on Sprint or (B) prevent or materially delay the consummation of any of the transactions contemplated hereby.  No investigation or review by any Governmental Entity with respect to Sprint or any of its subsidiaries is pending or, to the knowledge of Sprint, threatened, except for such investigations or reviews that, individually or in the aggregate, would not reasonably be expected to (A) have a Material Adverse Effect on Sprint or (B) prevent or materially delay the consummation of any of the transactions contemplated hereby.  Each of Sprint and its subsidiaries has obtained, holds and is in compliance with all permits, licenses, certifications, approvals, registrations, consents, authorizations, franchises, variances, exemptions and orders issued or granted by a Governmental Entity (“Licenses”) necessary to conduct its business as currently conducted (the “Sprint Material Licenses”), except where the failure to have any such License, individually or in the aggregate, would not reasonably be expected to (A) have a Material Adverse Effect on Sprint or (B) prevent or materially delay the consummation of any of the transactions contemplated hereby.

 

(ii)                                  Each of Sprint and its subsidiaries is in compliance with its obligations under each of the Licenses issued or granted to it by the Federal Communications Commission (the “FCC”) and all leases for the use of wireless spectrum between Sprint or any of its subsidiaries, as lessee(s), and the FCC licensees of such

 

23



 

spectrum, as lessors (the “Sprint FCC Licenses”) and the rules and regulations of the FCC, and with its obligations under each of the Licenses issued or granted to it by PUCs regulating telecommunications businesses (the “Sprint State Licenses”), and with its obligations under each of the Licenses issued or granted to it by foreign Governmental Entities regulating telecommunications businesses (together with the Sprint Material Licenses, the Sprint FCC Licenses and the Sprint State Licenses, the “Sprint Communications Licenses”), in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to Sprint and its subsidiaries, taken as a whole.

 

(iii)                               Sprint and its subsidiaries are not the subject of, and there are no pending or, to the knowledge of Sprint, threatened proceedings, notices of violation, orders of forfeiture, complaints or investigations relating to the Sprint Communications Licenses before the FCC, the Federal Aviation Administration (the “FAA”) or any other Governmental Entity, in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to Sprint and its subsidiaries, taken as a whole.  The FCC actions granting all Sprint Communications Licenses, together with all underlying construction permits, have not been reversed, stayed, enjoined, annulled or suspended, and there is no pending or, to the knowledge of Sprint, threatened application, petition, objection or other pleading with the FCC, the FAA or any other Governmental Entity that challenges or questions the validity of or any rights of the holder under any such Sprint Communications License, in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to Sprint and its subsidiaries, taken as a whole.

 

(iv)                              Sprint or its subsidiaries have good and valid title to, or in the case of leases, a valid leasehold interest in, free and clear of all Liens, other than Sprint Permitted Liens, all of the Sprint Communications Licenses.  Each of the Sprint Communications Licenses is issued in the name of Sprint or one of its subsidiaries.  Each of the Sprint Communications Licenses is in full force and effect, is granted without conditions, except for those conditions on the face of such Sprint Communications License, conditions imposed by the FCC’s 800 MHz Report and Order, or conditions generally applicable to all similarly situated licenses of comparable spectrum, and is free and clear of all Liens (other than Permitted Liens), in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to Sprint and its subsidiaries, taken as a whole.

 

(v)                                 Each lease pursuant to which Sprint or any of its subsidiaries has the right to use wireless spectrum licensed by the FCC is (A) valid and binding, (B) in compliance with all applicable Laws and (C) enforceable in accordance with its terms, in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to Sprint and its subsidiaries, taken as a whole.  To the knowledge of Sprint, each licensee of such wireless spectrum is in compliance with all of its obligations under the FCC Rules with respect to each License to which any such lease relates, and, to the knowledge of Sprint, there are no facts or circumstances that would reasonably be likely (whether with or without notice, lapse of time or the occurrence of any other event) to preclude the renewal or extension of any such lease in the ordinary course of business,

 

24



 

except as, individually or in the aggregate, would not reasonably be expected to be material to Sprint and its subsidiaries, taken as a whole.  None of Sprint or its subsidiaries has, nor to the knowledge of Sprint has any other party to any such lease, claimed that any party to any such lease is in breach or default under such lease, and any past breach or default has been waived, cured or otherwise settled, in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to Sprint and its subsidiaries, taken as a whole.  No party to any such lease has claimed in writing nor, to the knowledge of Sprint, has any party threatened in writing that Sprint or any of its subsidiaries is in violation of or default under any such lease, or that such party has the right to terminate such lease, in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to Sprint and its subsidiaries, taken as a whole.  To the knowledge of Sprint, all FCC licenses underlying all such leases were validly issued and are in full force and effect, and are not subject to proceedings or threatened proceedings that could reasonably be expected to result in the revocation, modification, restriction, cancellation, termination, suspension or non-renewal of any such FCC license, in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to Sprint and its subsidiaries, taken as a whole.

 

(vi)                              All of the currently operating cell sites, microwave paths, fiber routes and other network facilities of Sprint and its subsidiaries in respect of which a filing with the FCC or any other Governmental Entity was required have been constructed and are currently operated as represented to the FCC or such other Governmental Entity in currently effective filings, and modifications to such cell sites, microwave paths, fiber routes or other network facilities have been preceded by the submission to the FCC or any other applicable Governmental Entity of all required filings, in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to Sprint and its subsidiaries, taken as a whole.  All facilities constructed by Sprint or its subsidiaries for the purpose of demonstrating compliance with FCC substantial service or build-out requirements, or educational use requirements, whether such filings were made by Sprint or a lessor leasing spectrum to Sprint, remain constructed and are currently being operated as represented to the FCC, except as, individually or in the aggregate, would not reasonably be expected to be material to Sprint and its subsidiaries, taken as a whole.

 

(vii)                           All transmission towers owned or leased by Sprint and its subsidiaries are (to the knowledge of Sprint with respect to leased towers) obstruction-marked and lighted by Sprint or its subsidiaries to the extent required by, and in accordance with, the rules and regulations of the FAA (the “FAA Rules”), except as, individually or in the aggregate, would not reasonably be expected to be material to Sprint and its subsidiaries, taken as a whole.  Appropriate notification to the FAA has been made for each transmission tower owned or leased by Sprint and its subsidiaries to the extent required to be made by Sprint or any of its subsidiaries by, and in accordance with, the FAA Rules, in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to Sprint and its subsidiaries, taken as a whole.

 

(viii)                        Neither Sprint nor any of its subsidiaries holds any Sprint Communications Licenses through a partnership, joint venture or other person that is not

 

25



 

a subsidiary of Sprint, or any structured finance, special purpose or limited purpose entity or person.

 

(ix)                              Sprint and its subsidiaries are fully qualified under the Communications Act and the rules and regulations of the FCC to hold the Sprint FCC Licenses generally.  To the knowledge of Sprint, there are no facts or circumstances relating to the qualifications of Sprint and its subsidiaries that would prevent or materially delay the grant of any FCC Form 603 application (or other appropriate form) under the rules and regulations of the FCC (the “FCC Rules”) and the Communications Act with respect to the Merger Transactions.

 

(i)                                     Litigation.  There is no legal, administrative, arbitral or other action, suit, investigation, proceeding, claim, audit, hearing, charge, complaint, indictment, litigation or examination (each, an “Action”) pending or, to the knowledge of Sprint, threatened in writing against or affecting Sprint or any of its subsidiaries or any of their respective properties or any of their respective officers or directors before any court or arbitrator or any Governmental Entity, except as, individually or in the aggregate, would not reasonably be expected to (A) have a Material Adverse Effect on Sprint or (B) prevent or materially delay the consummation of any of the transactions contemplated hereby.  Neither Sprint nor any of its subsidiaries is subject to any outstanding order, injunction or decree that, individually or in the aggregate, would reasonably be expected to (A) have a Material Adverse Effect on Sprint or (B) prevent or materially delay the consummation of any of the transactions contemplated hereby.

 

(j)                                    Benefit Plans.

 

(i)                                     Section 4.1(j)(i) of the Sprint Disclosure Letter contains a complete and correct list of each material Sprint Benefit Plan.  With respect to each material Sprint Benefit Plan, Sprint has made available to T-Mobile complete and accurate copies of the following documents (if applicable):  (A) such Sprint Benefit Plan and summary plan description thereof, (B) each trust, insurance, annuity or other funding contract related thereto, (C) the most recent audited financial statements and actuarial or other valuation reports prepared with respect thereto, (D) the most recent annual report on Form 5500 required to be filed with the Internal Revenue Service (the “IRS”) with respect thereto, and (E) the most recently received IRS determination letter or opinion.

 

(ii)                                  Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint, (A) each of the Sprint Benefit Plans has been operated and administered in compliance with its terms and in accordance with applicable Laws, including ERISA, the Code and in each case the regulations thereunder, (B) no Sprint Benefit Plan provides welfare benefits, including death or medical benefits (whether or not insured), with respect to current or former employees or directors of Sprint or its subsidiaries beyond their retirement or other termination of service, other than coverage mandated by the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), or comparable U.S. state or foreign law, (C) all contributions or other amounts payable by Sprint or its subsidiaries as of the Effective Time pursuant to each Sprint Benefit Plan in respect of current or prior plan years have been timely paid or, to the extent not yet due, have been accrued in

 

26



 

accordance with GAAP, (D) neither Sprint nor any of its subsidiaries has engaged in a transaction in connection with which Sprint or its subsidiaries could be subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code, and (E) there are no pending or, to the knowledge of Sprint, threatened in writing or anticipated claims, actions, investigations or audits (other than routine claims for benefits) by, on behalf of or against any of the Sprint Benefit Plans or any trusts related thereto.

 

(iii)                               Except as set forth on Section 4.1(j)(iii) of the Sprint Disclosure Letter or as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint, none of Sprint, any of its subsidiaries or any of their respective ERISA Affiliates contributes to or is obligated to contribute to, or within the six years preceding the date of this Agreement contributed to, or was obligated to contribute to, a Multiemployer Plan or Multiple Employer Plan, and none of Sprint, any of its subsidiaries or any of their respective ERISA Affiliates has, within the preceding six years, withdrawn in a complete or partial withdrawal from any Multiemployer Plan or incurred any liability under Section 4202 of ERISA.

 

(iv)                              Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint, each of the Sprint Benefit Plans intended to be “qualified” within the meaning of Section 401(a) of the Code, (A) is so qualified and, to the knowledge of Sprint, there are no existing circumstances or any events that have occurred that would reasonably be expected to adversely affect the qualified status of any such plan and (B) has received a favorable determination letter or opinion letter as to its qualification.

 

(v)                                 Section 4.1(j)(v) of the Sprint Disclosure Letter sets forth each Sprint Benefit Plan that is subject to Section 302 or Title IV or Section 412, 430 or 4971 of the Code (each, a “Sprint Title IV Plan”).  With respect to each Sprint Title IV Plan, except for matters that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint, (A) there does not exist any accumulated funding deficiency within the meaning of Section 412 of the Code or Section 302 of ERISA, whether or not waived, (B) no such Sprint Title IV Plan is currently in “at risk” status within the meaning of Section 430 of the Code or Section 303(i) of ERISA, (C) no reportable event within the meaning of Section 4043(c) of ERISA for which the 30-day notice requirement has not been waived has occurred, (D) none of Sprint, any of its subsidiaries or any of their respective ERISA Affiliates has engaged in any transaction described in Section 4069, 4204(a) or 4212(c) of ERISA, (E) all premiums to the Pension Benefit Guaranty Corporation (the “PBGC”) have been timely paid in full, (F) no liability (other than for premiums to the PBGC) has been or, to the knowledge of Sprint, is expected to be incurred by Sprint or any of its subsidiaries, and (G) the PBGC has not instituted proceedings to terminate any such Sprint Title IV Plan.  Except for matters that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint, there does not now exist, nor do any circumstances exist that could result in, any Controlled Group Liability that would be a liability following the Closing of Sprint, any of its subsidiaries or any of their respective ERISA Affiliates.  Since December 31, 2016, there has not been any material change in

 

27



 

any actuarial or other assumption used to calculate funding obligations with respect to any Sprint Title IV Plan, or any material change in the manner in which contributions to any Sprint Title IV Plan are made or the basis on which such contributions are determined.

 

(vi)                              Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby (either alone or in conjunction with any other event) will (A) result in any payment (including severance, unemployment compensation, forgiveness of Indebtedness or otherwise) becoming due to any current or former employee, director or other individual service provider of Sprint or its subsidiaries under any Sprint Benefit Plan, (B) increase any compensation or benefits otherwise payable under any Sprint Benefit Plan, (C) result in any acceleration of the time of payment, funding or vesting of any such compensation or benefits, (D) impose any restrictions or limitations on the rights of T-Mobile or its affiliates to amend, merge, terminate or receive a reversion of assets from any Sprint Benefit Plan or (E) result in the payment of any compensation or benefits to any person who would be a “disqualified individual” (as such term is defined in Treasury Regulations Section 1.280G-1) with respect to Sprint or its affiliates that could reasonably, individually or in combination with any other such payment, constitute an “excess parachute payment” (as defined in Section 280G(b)(1) of the Code).

 

(vii)                           No person is entitled to receive any additional payment (including any Tax gross-up or other payment) from Sprint or any of its subsidiaries as a result of the imposition of the excise Taxes required by Section 4999 of the Code or any Taxes required by Section 409A of the Code.

 

(viii)                        Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint, all Sprint Benefit Plans subject to the laws of any jurisdiction outside of the United States (A) have been maintained in accordance with all applicable requirements, (B) that are intended to qualify for special tax treatment meet all requirements for such treatment, and (C) that are intended to be funded and/or book-reserved are funded and/or book reserved, as required under applicable Laws and GAAP, based upon reasonable actuarial assumptions.

 

(k)                                 Labor and Employment Matters.

 

(i)                                     Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint, neither Sprint nor any of its subsidiaries has received written notice during the past three years of the intent of any Governmental Entity responsible for the enforcement of labor, employment, affirmative action, immigration, occupational health and safety or workplace safety and workers compensation insurance laws to conduct an investigation of Sprint or any of its subsidiaries and, to the knowledge of Sprint, no such investigation is in progress.  Except in each case as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint, (A) there are no (and have not been during the three-year period preceding the date of this Agreement) strikes or lockouts with respect to any employees of Sprint or any of its subsidiaries, (B) to the knowledge of Sprint, there is

 

28



 

no (and has not been during the three-year period preceding the date of this Agreement) labor organizing effort pending or threatened in writing against Sprint or any of its subsidiaries, (C) there is no (and has not been during the three-year period preceding the date of this Agreement) unfair labor practice, labor dispute (other than routine individual grievances) or labor arbitration proceeding pending or, to the knowledge of Sprint, threatened in writing against Sprint or any of its subsidiaries, (D) there is no (and has not been during the three-year period preceding the date of this Agreement) slowdown or work stoppage in effect or, to the knowledge of Sprint, threatened in writing, with respect to any employees of Sprint or any of its subsidiaries, (E) neither Sprint nor any of its subsidiaries has, or is reasonably expected to have, any liabilities under the Worker Adjustment and Retraining Act of 1988 or any similar applicable state, local or foreign law (the “WARN Act”), and (F) to the knowledge of Sprint, no current or former employee, independent contractor or consultant of Sprint or any of its subsidiaries has breached any nondisclosure obligation to, non-competition agreement with or other restrictive covenant with:  (i) Sprint or any of its subsidiaries or (ii) a former employer of any such individual relating to (a) the right of any such individual to be employed or engaged by Sprint or any of its subsidiaries or (b) the use or disclosure of confidential information in connection with such individual’s employment with or engagement by Sprint or any of its subsidiaries.  Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint, Sprint and each of its subsidiaries are in compliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment, wages and hours, affirmative action, immigration and occupational safety and health (including classifications of service providers as employees and/or independent contractors).

 

(ii)                                  Neither Sprint nor any of its subsidiaries is a party or subject to, or otherwise bound by, any Labor Agreement, and none of the employees of Sprint or its subsidiaries are represented by a works council, union or similar labor organization with respect to their services to Sprint or its subsidiaries.  Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby (either alone or in conjunction with any other event) will require the consent of, or advance notification to, any works councils, unions or similar labor organizations with respect to employees of Sprint or any of its subsidiaries.

 

(l)                                     Taxes.  Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint:

 

(i)                                     (A) All Tax Returns required to be filed by Sprint and its subsidiaries, have been timely filed, (B) all such Tax Returns are true, complete and correct in all respects, (C) all Taxes (whether or not reflected on such Tax Returns) required to have been paid by Sprint and its subsidiaries have been timely paid, except, in the case of clause (B) or (C), with respect to Taxes for which adequate reserves have been established in accordance with GAAP in the Sprint Financial Statements, and (D) Sprint and its subsidiaries have duly and timely withheld all Taxes required to be withheld and such withheld Taxes have been either duly and timely paid to the proper Taxing Authority or properly set aside in accounts for such purpose and will be duly and timely paid to the proper Taxing Authority.

 

29



 

(ii)                                  As of the date hereof, there is no written agreement or other written document waiving or extending, or having the effect of waiving or extending, the statute of limitations or the period of assessment or collection of any Taxes relating to Sprint or any of its subsidiaries that remains in effect.

 

(iii)                               (A) No investigation, examination, audit or other administrative proceeding with regard to any Taxes or Tax Return of Sprint or any of its subsidiaries is currently pending or has been threatened in writing, and (B) no Taxing Authority has asserted in writing any deficiency or claim for Taxes or any adjustment to Taxes with respect to which Sprint or any of its subsidiaries may be liable which has not been adequately reserved for in the Sprint Financial Statements, fully paid or finally settled.

 

(iv)                              Neither Sprint nor any of its subsidiaries is bound by any closing agreement within the meaning of Section 7121 of the Code (or any similar provision of state, local or foreign Law), or has received or requested any private letter ruling, technical advice memorandum or other written ruling from a Taxing Authority, which agreement, ruling or memorandum is or would be binding with respect to any taxable period for which the applicable statute of limitations has not yet expired.

 

(v)                                 In the past three years, no claim has been made in writing by a Governmental Entity in a jurisdiction where Sprint or any of its subsidiaries does not file Tax Returns with respect to a particular type of Tax that it is or may be subject to taxation for such Tax by that jurisdiction.

 

(vi)                              Neither Sprint nor any of its subsidiaries (A) is a party to or bound by or has any obligation under any Tax indemnification, separation, sharing or similar agreement or arrangement (other than (x) any such agreements solely between Sprint and one or more wholly owned subsidiaries of Sprint or (y) customary Tax indemnification provisions in commercial contracts entered into in the ordinary course of business and not primarily related to Taxes), (B) is or has been a member of any consolidated, combined, unitary or similar group for purposes of filing Tax Returns or paying Taxes (other than a group of which Sprint is the common parent corporation), or (C) has any liability for the payment of Taxes of any person (other than Sprint or any of its subsidiaries) as a successor or transferee, or otherwise.

 

(vii)                           None of the assets of Sprint or any of its subsidiaries is subject to any Liens for Taxes (other than Permitted Liens).

 

(viii)                        In the past two years, neither Sprint nor any of its subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code.

 

(ix)                              Neither Sprint nor any of its subsidiaries has taken any action or knows of the existence of any fact, agreement, plan or other circumstance that could reasonably be expected to prevent or impede (i) the qualification of any of the SoftBank US Mergers or the Merger as a “reorganization” within the meaning of Section 368(a) of

 

30



 

the Code, (ii) Starburst or Galaxy from delivering their respective Tax Certificates, or (iii) Sprint obtaining the opinion described in Section 7.3(e).

 

(x)                                 Neither Sprint nor any of its subsidiaries has participated in any “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(2) (or any similar provision of state, local or foreign Law).

 

(m)                             Voting Requirements.  The Sprint Stockholder Approval is the only vote of holders of any securities of Sprint or its subsidiaries necessary to approve the transactions contemplated by this Agreement.  The execution and delivery to Sprint by the SoftBank Stockholder (as defined in the SoftBank Support Agreement) of the written consent contemplated by Section 2 of the SoftBank Support Agreement will constitute receipt of the Sprint Stockholder Approval.

 

(n)                                 Intellectual Property.

 

(i)                                     Sprint and its subsidiaries own, free and clear of all Liens (except Permitted Liens), or have the right to use pursuant to valid licenses, sublicenses, agreements or permissions, all items of Intellectual Property necessary for their operations as currently conducted or as contemplated by them to be conducted, except where the failure to own or have such rights, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint.  All such rights shall survive the consummation of the Merger unchanged in all respects, except as would not reasonably be expected to have a Material Adverse Effect on Sprint.

 

(ii)                                  The conduct of Sprint’s and its subsidiaries’ businesses as currently conducted or as contemplated by them to be conducted does not infringe, misappropriate, dilute or otherwise violate any of the Intellectual Property rights of any third party, except for infringements, misappropriations, dilutions or other violations that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint.  No claims are pending or, to the knowledge of Sprint, threatened in writing adversely affecting the Intellectual Property rights of Sprint, except for claims that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint.  To the knowledge of Sprint, no third party has infringed upon, misappropriated, diluted, or otherwise violated any Intellectual Property rights of Sprint or any of its subsidiaries, except for infringements, misappropriations, dilutions or other violations that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint.

 

(iii)                               Sprint and its subsidiaries have taken reasonable measures to protect the confidentiality of material trade secrets and other material confidential information, owned by or provided to them under conditions of confidentiality, including requiring all persons having access thereto to execute written non-disclosure agreements or otherwise be bound by obligations of confidentiality, except where the failure to take such measures, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint.  To the knowledge of Sprint, there has been no disclosure of any such trade secrets or confidential information of or relating to Sprint or

 

31



 

any of its subsidiaries to any person, except for disclosures that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint.

 

(iv)                              The material IT Assets of Sprint and its subsidiaries operate and perform as needed by Sprint and its subsidiaries to adequately conduct their respective businesses as currently conducted or as contemplated by them to be conducted, except for failures to operate or perform that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint.  Since January 1, 2015, to the knowledge of Sprint, there have been no security breaches, unauthorized access, failures or unplanned outages or other adverse integrity or security access incidents affecting the IT Assets of Sprint or its subsidiaries or any other persons to the extent used by or on behalf of Sprint or its subsidiaries (or, in each case, information and transactions stored or contained therein or transmitted thereby), in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to Sprint and its subsidiaries, taken as a whole.

 

(o)                                 Data Protection.

 

(i)                                     Sprint and its subsidiaries (A) are and have been since January 1, 2015 in compliance with all applicable Laws, as well as their own rules, policies and procedures, relating to privacy, data protection and the collection, retention, protection, transfer, use and processing of Personal Data, except as, individually or in the aggregate, would not reasonably be expected to be material to Sprint and its subsidiaries, taken as a whole, and (B) have implemented and maintained a data security plan with commercially reasonable administrative, technical and physical safeguards to protect Personal Data against unauthorized access, use, loss and damage.

 

(ii)                                  To the knowledge of Sprint, since January 1, 2015, there has been no unauthorized access to, or use, misuse or loss of, or damage to, any Personal Data maintained by or on behalf of Sprint or any of its subsidiaries, in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to Sprint and its subsidiaries, taken as a whole.  Since January 1, 2015, no person (including any Governmental Entity) has made any claim or commenced any Action with respect to any unauthorized access to, or use, misuse or loss of, or damage to, any Personal Data maintained by or on behalf of Sprint or any of its subsidiaries, except as, individually or in the aggregate, would not reasonably be expected to be material to Sprint and its subsidiaries, taken as a whole.

 

(p)                                 Material Contracts.

 

(i)                                     Except for this Agreement, the Sprint Benefit Plans or any contracts filed as exhibits to or incorporated by reference in (regardless of when such contract was originally filed) any Sprint Filed SEC Document, Section 4.1(p)(i) of the Sprint Disclosure Letter contains a complete and correct list, as of the date of this Agreement, of each contract described below in this Section 4.1(p)(i) that is unexpired and effective as of the date of this Agreement to which Sprint or any subsidiary of Sprint is a party or by which any of their respective properties or assets is bound or affected (all

 

32



 

contracts of the type described in this Section 4.1(p)(i), other than the Sprint Benefit Plans, whether or not set forth on Section 4.1(p)(i) of the Sprint Disclosure Letter, being referred to herein as the “Sprint Material Contracts”):

 

(A)                               any partnership, joint venture, strategic alliance or collaboration contract which is material to Sprint and its subsidiaries, taken as a whole;

 

(B)                               any contract pursuant to which any Indebtedness of Sprint or any of its subsidiaries, in each case in excess of $100,000,000, is outstanding or secured, other than any such contract or instrument solely between or among Sprint and any of its wholly owned subsidiaries;

 

(C)                               any contract related to an acquisition, divestiture, merger or similar transaction that contains financial covenants, indemnities or other similar payment obligations (including “earn-out” or other contingent payment obligations) that are still in effect and that would reasonably be expected to result in the receipt or making of future payments in excess of $100,000,000;

 

(D)                               any contract requiring or reasonably likely to result in (x) payments by Sprint and its subsidiaries in excess of (I) for any interconnection, bundling or similar agreement in connection with which the equipment, networks and services of Sprint or any of its subsidiaries are connected to those of another service provider in order to allow their respective customers access to each other’s services and networks, $50,000,000 during any 12-month period or $100,000,000 for the period beginning on the date hereof and ending at the stated termination date of such contract, or, if no termination date is stated therein, for the period beginning on the date hereof and ending on the second anniversary of the date hereof, or (II) for all other contracts, $200,000,000 during any 12-month period or $400,000,000 for the period beginning on the date hereof and ending at the stated termination date of such contract, or, if no termination date is stated therein, for the period beginning on the date hereof and ending on the second anniversary of the date hereof, or (y) payments to Sprint and its subsidiaries in excess of (I) for any interconnection, bundling or similar agreement in connection with which the equipment, networks and services of Sprint or any of its subsidiaries are connected to those of another service provider in order to allow their respective customers access to each other’s services and networks, $50,000,000 during any 12-month period or $100,000,000 for the period beginning on the date hereof and ending at the stated termination date of such contract, or, if no termination date is stated therein, for the period beginning on the date hereof and ending on the second anniversary of the date hereof, or (II) for all other contracts, $200,000,000 during any 12-month period or $400,000,000 for the period beginning on the date hereof and ending at the stated termination date of such contract, or, if no termination date is stated therein, for the period beginning on the date hereof and ending on the second anniversary of the date hereof;

 

33



 

(E)                                any contract containing a non-competition or similar provision that materially restricts the ability of Sprint or any of its subsidiaries to compete in any material line of business or in any material geographic region or with any person;

 

(F)                                 any contract that provides for exclusive rights for the benefit of any third party, grants “most favored nation” status, contains minimum volume or purchase commitments, or requires Sprint or any of its subsidiaries to provide any minimum level of service, in each case which are, or in a manner that is, material to Sprint and its subsidiaries, taken as a whole;

 

(G)                               any contract obligating Sprint or any of its subsidiaries to make any capital expenditures in excess of $100,000,000, other than acquisitions of inventory and equipment in the ordinary course of business;

 

(H)                              any contract pursuant to which Sprint or any of its subsidiaries (x) leases wireless spectrum requiring or reasonably likely to result in annual payments by or to Sprint and its subsidiaries in excess of $100,000,000, (y) would reasonably be expected to be required to purchase, sell, lease or exchange any wireless spectrum with a value in excess of $100,000,000 or (z) provides mobile virtual network operator or other wholesale mobile network services to any third person and requiring or reasonably likely to result in annual payments by or to Sprint and its subsidiaries in excess of $100,000,000;

 

(I)                                   any contract involving the settlement of any claim, action, suit or proceeding or any threatened claim, action, suit or proceeding (or series of related claims, actions, suits or proceedings) which (x) involves payments after the date hereof in excess of $100,000,000 or (y) imposes material monitoring, reporting or other non-monetary obligations to any third party or Governmental Entity;

 

(J)                                   (x) any NSA, (y) any Government Contract of Sprint or any of its subsidiaries involving payments in excess of $50,000,000, the period of performance of which is still active or for which final payment has not been received or (z) any other material contract with a Governmental Entity;

 

(K)                               any contract that contains a put, call, right of first refusal, right of first negotiation, right of first offer, redemption, repurchase or similar right pursuant to which Sprint or any of its subsidiaries would be required to purchase or sell, as applicable, any material equity interests, businesses, lines of business, divisions, joint ventures, partnerships or other assets;

 

(L)                                (x) any contract providing for a sale-leaseback, lease-leaseback or similar arrangement of tower sites and related assets involving, or that would reasonably be expected to involve, proceeds in excess of $100,000,000 and (y) any material lease, sublease, sub-sublease license or other agreement under which Sprint or any of its subsidiaries leases, subleases, licenses, uses or

 

34



 

occupies (in each case whether as landlord, tenant, sublandlord, subtenant or by other occupancy arrangement), or has the right to use or occupy, now or in the future, any real property;

 

(M)                            any contract or binding oral or other arrangement between Sprint or any of its subsidiaries, on the one hand, and SoftBank or any of its affiliates (other than Sprint and its subsidiaries), on the other hand reasonably likely to result in (x) payments by Sprint and its subsidiaries in excess of $25,000,000 in any fiscal year or (y) payments to Sprint and its subsidiaries in excess of $25,000,000 in any fiscal year; and

 

(N)                               any contract not otherwise described in any other subsection of this Section 4.1(p)(i) that would be required to be filed by Sprint as a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC).

 

(ii)                                  Sprint has delivered or made available to T-Mobile, or its external legal advisors pursuant to a confidential review process, prior to the date of this Agreement, true and complete copies (with the exception of redactions) of all Sprint Material Contracts that exist as of the date of this Agreement and have not been filed as exhibits to the Sprint Filed SEC Documents.  Except to the extent it has previously expired in accordance with its terms, each Sprint Material Contract is valid and binding on Sprint (or, to the extent that a subsidiary of Sprint is a party, such subsidiary) and is in full force and effect in all material respects (subject to the Enforceability Exceptions).  Sprint and each of its subsidiaries have performed all obligations required to be performed by them to date under each Sprint Material Contract, except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint.  Neither Sprint nor any of its subsidiaries has knowledge of, or has received written notice of, any material violation or default under (nor, to the knowledge of Sprint, does there exist any condition that with or without notice or lapse of time, or both, would result in such a material violation or default under) any Sprint Material Contract.  To the knowledge of Sprint, no other party to any Sprint Material Contract is in breach of or default under the terms of any Sprint Material Contract, except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect on Sprint.

 

(iii)                               Since December 31, 2013, (A) neither Sprint nor any of its subsidiaries has been suspended or debarred from bidding on or entering into contracts or subcontracts for or with any Governmental Entity, (B) no suspension or debarment actions with respect to any Government Contract have been commenced or threatened in writing against Sprint or any of its subsidiaries, (C) all representations and certifications made by Sprint or any of its subsidiaries in connection with each of such entity’s Government Contracts and Government Bids were accurate and complete in all material respects as of the date of submission, and all such representations and certifications have been kept current, to the extent required, (D) neither Sprint nor any of its subsidiaries has received any written notice of investigations or audits planned, underway or unresolved by any Governmental Entity with respect to any Government Contract or Government

 

35



 

Bid, and to the knowledge of Sprint, there are no such investigations planned, underway or unresolved for which Sprint or any of its subsidiaries has not received notice, (E) there are no material outstanding claims or disputes against or with Sprint or any of its subsidiaries relating to any Government Contracts and involving either the U.S. government, any prime contractor, any higher-tier subcontractor or any third party, (F) neither Sprint nor any of its subsidiaries has received a written negative determination of responsibility with respect to any quotation, bid or proposal for a Government Contract, (G) Sprint and its subsidiaries are in compliance, in all material respects, with all applicable statutory, regulatory and contractual requirements, including the Armed Services Procurement Act, the Federal Procurement and Administrative Services Act, the Federal Acquisition Regulation, as set forth under Title 48 of the Code of Federal Regulations (“FAR”) and applicable agency supplements thereto, the FAR Cost Principles and the Cost Accounting Standards, (H) there are no adverse or negative government past performance evaluations or ratings that would reasonably be expected to adversely affect in any material respect the evaluation of bids or proposals for future Government Contracts, (I) to the knowledge of Sprint, no facts exist which are reasonably likely to give rise to a material claim for price adjustment under the False Claims Act (31 U.S.C. §§ 3729 - 3733), the Truth in Negotiations Act (10 U.S.C. § 2306a, 41 U.S.C. Chapter 35) or to any other request for a material reduction in the price of any Government Contract of Sprint or any of its subsidiaries, (J) the business systems of Sprint and each of its subsidiaries, including their accounting systems and related processes, are in compliance, in all material respects, with applicable requirements of each Government Contract and Government Bid and all applicable Laws, and no Governmental Entity has notified Sprint or any of its subsidiaries of a significant weakness or deficiency with respect to any such business system, (K) no termination for default, show cause notice, cure notice or letter of concern has been issued to or against Sprint or any of its subsidiaries with respect to any Government Contract and (L) no Government Contracts were awarded to Sprint or any of its subsidiaries pursuant to a procurement process that was limited to persons having 8(a), small business, small disadvantaged business, historically underutilized business zone small business, women owned small business, veteran-owned small business or service-disabled veteran-owned small business status or other preferential status.  Section 4.1(p)(iii) of the Sprint Disclosure Letter contains a true and complete list of each Government Bid by Sprint or any of its subsidiaries outstanding as of the date of this Agreement, which Government Bid is material to the business of Sprint and its subsidiaries, taken as a whole.

 

(iv)                              A true and complete list of all facility security clearances held by Sprint or any of its subsidiaries, and aggregate data on all personnel security clearances held by their respective employees (the “Clearance List”), in each case as of the date of this Agreement, has been provided orally or in writing to T-Mobile’s external legal advisors prior to the date of this Agreement.  Each Sprint entity holding any such facility security clearance holds, and at all relevant times has held, at least a “satisfactory” rating from DSS with respect to its facility clearance.  The Clearance List contains all of the facility and aggregate data on personnel security clearances necessary to conduct the business of Sprint and its subsidiaries as currently being conducted, and are in full force and effect.  No notice of revocation from DSS or any other Governmental Entity has been issued and remains unresolved with respect to any facility or personnel security clearance

 

36



 

of Sprint, any of its subsidiaries or any of their respective employees.  To the knowledge of Sprint, no information, fact, condition or circumstance currently exists that is reasonably likely to give rise to the revocation of any such clearance.  Each of Sprint and its subsidiaries is in compliance with all applicable Laws regarding national security, including those obligations specified in the NISPOM, and in compliance with all national security agreements or other similar agreements with a Governmental Entity relating to U.S. national security (each, a “NSA”) to which it is a party.  Prior to the date of this Agreement, Sprint has provided to T-Mobile’s external legal advisors a true and complete copy of each such NSA.  A true and complete list of all Government Contracts that require access to U.S. classified information to which Sprint or any of its subsidiaries is a party except to the extent disclosure thereon is not permitted by Law (the “Sprint Classified Contracts”) will be provided to T-Mobile’s outside legal advisors after disclosure to and consent by the customers associated with the Sprint Classified Contracts.

 

(q)                                 Environmental Protection.  Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint:

 

(i)                                     Sprint and each of its subsidiaries are and have been since January 1, 2014 in compliance with all applicable Environmental Laws and neither Sprint nor any of its subsidiaries has received any written communication from any person or Governmental Entity that alleges that Sprint or any of its subsidiaries is not in such compliance with, or has any liability under, applicable Environmental Laws.

 

(ii)                                  Sprint and each of its subsidiaries have obtained or have applied for all environmental, health and safety permits and governmental authorizations (“Environmental Permits”) necessary for the construction of their facilities and the conduct of their operations, and all such Environmental Permits are in good standing or, where applicable, a renewal application has been timely filed and is pending agency approval, and Sprint and its subsidiaries are in compliance with all terms and conditions of their material Environmental Permits.

 

(iii)                               There are no Environmental Claims pending or, to the knowledge of Sprint, threatened against (1) Sprint or any of its subsidiaries, (2) any person or entity whose liability for any Environmental Claim Sprint or any of its subsidiaries has or may have retained or assumed, either contractually or by operation of law, or (3) any real or personal property or operations which Sprint or any of its subsidiaries owns, leases or manages, or any such property formerly owned, leased or managed by any of them since January 1, 2014, in whole or in part.

 

(iv)                              There has been no release of any Hazardous Material that would be reasonably likely to form the basis of any Environmental Claim against Sprint or any of its subsidiaries, or, to the knowledge of Sprint, against any person or entity whose liability for any Environmental Claim Sprint or any of its subsidiaries has or may have retained or assumed, either contractually or by operation of law.

 

37



 

(r)                                    Prohibited Payments.  Except as, individually or in the aggregate, has not been, and would not reasonably be expected to be, material to Sprint and its subsidiaries, taken as a whole, since January 1, 2014, none of Sprint or any of its subsidiaries or, to the knowledge of Sprint, any of their respective directors, officers, agents, employees or other persons associated with them or acting on their behalf has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.K. Bribery Act 2010, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions or any other applicable Law relating to anti-corruption or anti-bribery (“Anti-Corruption Laws”) or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other payment.  Neither Sprint nor any of its subsidiaries, as of the date of this Agreement, (i) to the knowledge of Sprint, is under external or internal investigation for any material violation of any Anti-Corruption Laws, (ii) has received any written or, to the knowledge of Sprint, other communication from any Governmental Entity regarding any material violation of, or failure to comply with, any Anti-Corruption Laws or (iii) to the knowledge of Sprint, is the subject of any internal complaint, audit or review process regarding a material violation of, or failure to comply with, any Anti-Corruption Laws.  Except as, individually or in the aggregate, has not been, and would not reasonably be expected to be, material to Sprint and its subsidiaries, taken as a whole, since January 1, 2014, neither Sprint nor any of its subsidiaries has made any disclosure (voluntary or otherwise) to any Governmental Entity with respect to any alleged irregularity, misstatement or omission or other potential violation or liability arising under or relating to any Anti-Corruption Laws.

 

(s)                                   Real Property.  Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Sprint:  (i) Sprint and each of its subsidiaries have good and marketable fee title (or the equivalent in any applicable foreign jurisdiction) to all of their owned real property, and good and valid leasehold title to all of their leased property pursuant to leases with third parties which are enforceable in accordance with their terms, in each case subject only to Permitted Liens, (ii) all such real property (A) complies with all applicable zoning and land use ordinances, laws and regulations, or is a valid nonconforming use thereunder, (B) has sufficient access to a public road, and (C) is improved with all necessary and sufficient buildings, structures and improvements sufficient for the continuation of its business as currently conducted, in accordance with all applicable Licenses of Sprint and its subsidiaries and applicable Laws, (iii) there are no existing (or, to the knowledge of Sprint, threatened in writing) condemnation proceedings with respect to any such real property, and (iv) with respect to all such leased real property, Sprint and each of its subsidiaries are in compliance with all material terms and conditions of each lease therefor, and neither Sprint nor any of its subsidiaries has received any written notice of default thereunder which is outstanding and remains uncured beyond any applicable period of cure.

 

(t)                                    Related Party Agreements.  As of the date hereof, there are no agreements or arrangements between Sprint and/or any of its subsidiaries, on the one hand, and SoftBank and/or any affiliate of SoftBank or Sprint (other than Sprint and its subsidiaries), on the other hand, that are material to the operation of the businesses of Sprint and its subsidiaries as currently conducted, or that otherwise provide for rights or obligations of Sprint or any of its

 

38



 

subsidiaries that, individually or in the aggregate, are, or would reasonably be expected to be, material to Sprint and its subsidiaries, taken as a whole, other than as set forth on Section 4.1(t) of the Sprint Disclosure Letter.  Sprint has delivered or made available to T-Mobile, prior to the date of this Agreement, true and complete copies of all such agreements or arrangements that exist as of the date of this Agreement and have not been filed as exhibits to the Sprint Filed SEC Documents.

 

(u)                                 Opinion of Financial Advisors.  The Board of Directors of Sprint has received the opinion of J.P. Morgan Securities LLC, dated the date of this Agreement, to the effect that, as of such date, based upon and subject to the assumptions, limitations, qualifications, conditions and other matters set forth in such opinion, the Exchange Ratio in the Merger is fair, from a financial point of view, to the holders of Sprint Common Stock as of immediately prior to the SoftBank US Mergers.  The Board of Directors of Sprint has received the opinion of Raine Securities LLC, dated the date of this Agreement, to the effect that, as of such date, based upon and subject to the assumptions, limitations, qualifications, conditions and other matters set forth in such opinion, the Exchange Ratio pursuant to this Agreement and taking into account the Merger is fair, from a financial point of view, to the holders of Sprint Common Stock as of immediately prior to the SoftBank US Mergers.  The Sprint Transaction Committee has received the opinion of Centerview Partners LLC, dated the date of this Agreement, to the effect that, as of such date, based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations set forth in such opinion, that Exchange Ratio is fair, from a financial point of view, to the holders of Sprint Common Stock, other than Sprint Common Stock held in treasury and Sprint Common Stock held by the SoftBank Parties, the DT Parties or any affiliate of Sprint or T-Mobile.

 

(v)                                 Brokers.  Except as set forth in Section 4.1(v) of the Sprint Disclosure Letter, no broker, investment banker, financial advisor or other person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Sprint.

 

(w)                               Takeover Statutes and Charter Provisions.  Assuming the accuracy of the representations and warranties set forth in Section 4.2(x), the Board of Directors of Sprint has taken all action necessary so that the restrictions on a “business combination” (as such term is used in Section 203 of the DGCL) contained in Section 203 of the DGCL will be inapplicable to this Agreement and the transactions contemplated hereby, including the Merger Transactions.  As of the date of this Agreement, no “fair price,” “moratorium,” “control share acquisition” or other antitakeover statute or similar statute or regulation applies with respect to Sprint or any of its subsidiaries in connection with this Agreement, the Merger Transactions or any of the other transactions contemplated hereby.  As of the date of this Agreement, there is no stockholder rights plan, “poison pill” or similar antitakeover agreement or plan in effect to which Sprint or any of its subsidiaries is subject, party or otherwise bound.

 

(x)                                 Ownership of T-Mobile Common Stock.  Neither Sprint nor any of its affiliates is, nor at any time during the last three years, has Sprint or any of its affiliates been, an “interested stockholder” of T-Mobile as defined in Section 203 of the DGCL.  Sprint and its affiliates do not beneficially own any shares of T-Mobile Common Stock or other securities of

 

39



 

T-Mobile or any option, warrants or other rights to acquire T-Mobile Common Stock or other securities of, or any other economic interest in, T-Mobile.

 

Section 4.2.                                 Representations and Warranties of T-Mobile, Merger Sub and Merger Company.  Except as set forth in any T-Mobile SEC Document filed with the SEC since January 1, 2016 (including all exhibits and other information filed therewith or incorporated therein (including by reference), regardless of when such exhibits and other information were filed) and publicly available prior to the date of this Agreement (as amended prior to the date of this Agreement, the “T-Mobile Filed SEC Documents”), excluding any disclosures in such T-Mobile Filed SEC Documents contained in any risk factors section, any section related to forward-looking statements and other disclosures that are predictive, cautionary or forward-looking in nature, or except as disclosed in the disclosure letter delivered by T-Mobile to Sprint at or prior to the execution of this Agreement (the “T-Mobile Disclosure Letter”) and making reference to the particular subsection of this Agreement to which exception is being taken (provided, that such disclosure shall be deemed to qualify that particular subsection and any other subsection of this Agreement to the extent that it is reasonably apparent from the face of such disclosure that such disclosure also qualifies such other subsection), T-Mobile, Merger Sub and Merger Company represent and warrant to Sprint and SoftBank as follows:

 

(a)                                 Organization, Standing and Corporate Power.  Each of T-Mobile and its subsidiaries is a corporation or other legal entity duly organized, validly existing and in good standing (with respect to jurisdictions that recognize such concept) under the laws of the jurisdiction in which it is organized and has the requisite corporate or other power, as the case may be, and authority to carry on its business as now being conducted, except, as to subsidiaries, for those jurisdictions where the failure to be so organized, existing or in good standing, or to have such power, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile.  Each of T-Mobile and its subsidiaries is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions that recognize such concept) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, except for those jurisdictions where the failure to be so qualified, licensed or in good standing, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile.  T-Mobile has delivered or made available to Sprint prior to the date of this Agreement true and complete copies of any amendments to the Certificate of Incorporation of T-Mobile (the “T-Mobile Certificate of Incorporation”) and the Bylaws of T-Mobile not filed prior to the date of this Agreement with the T-Mobile Filed SEC Documents.

 

(b)                                 Corporate Authority; Non-contravention.

 

(i)                                     T-Mobile has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and, subject only to the T-Mobile Stockholder Approval, to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement by T-Mobile and the consummation by T-Mobile of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of T-Mobile, subject, in the case of the T-Mobile Share Issuance and the T-Mobile Charter Amendment, to the T-Mobile Stockholder Approval, and in the case of the Merger Transactions, to the adoption of this Agreement

 

40



 

by the sole stockholder of Merger Sub and the sole member of Merger Company pursuant to Section 6.18.  The Board of Directors of T-Mobile (at a meeting duly called and held) has, by the unanimous vote of all directors of T-Mobile, duly adopted resolutions:  (A) approving and declaring advisable this Agreement and the transactions contemplated by this Agreement, including the Merger Transactions, the T-Mobile Charter Amendment and the T-Mobile Share Issuance, on the terms and subject to the conditions set forth in this Agreement, (B) determining that this Agreement and the transactions contemplated by this Agreement, including the Merger Transactions, the T-Mobile Charter Amendment and the T-Mobile Share Issuance, are fair to, and in the best interests of, T-Mobile and the stockholders of T-Mobile, (C) recommending the approval of the T-Mobile Charter Amendment and the T-Mobile Share Issuance to the stockholders of T-Mobile (the “T-Mobile Board Recommendation”) and (D) directing that the T-Mobile Charter Amendment and the T-Mobile Share Issuance be submitted to the stockholders of T-Mobile for approval, which resolutions have not been rescinded, modified or withdrawn in any way as of the date of this Agreement.  A committee of the Board of Directors of T-Mobile consisting solely of independent directors of T-Mobile (the “T-Mobile Independent Committee”) (at a meeting duly called and held) has, by unanimous vote, duly adopted resolutions:  (A) determining that entering into this Agreement and consummating the transactions contemplated hereby, including the Merger Transactions, the T-Mobile Charter Amendment and the T-Mobile Share Issuance, are advisable and fair to, and in the best interests of, all of the stockholders of T-Mobile (including such stockholders other than DT and its affiliates (other than T-Mobile and its subsidiaries)), and (B) recommending the submission of this Agreement to the full Board of Directors of T-Mobile and the approval of this Agreement and the transactions contemplated hereby, including the Merger Transactions, the T-Mobile Charter Amendment and the T-Mobile Share Issuance, by the full Board of Directors of T-Mobile.  This Agreement has been duly executed and delivered by T-Mobile and, assuming the due authorization, execution and delivery of this Agreement by the other parties hereto, constitutes the legal, valid and binding obligation of T-Mobile, enforceable against T-Mobile in accordance with its terms, except that such enforcement may be subject to the Enforceability Exceptions.

 

(ii)                                  The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby and compliance with the provisions of this Agreement shall not, conflict with, or result in any violation or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or loss of a benefit under, or result in the creation of any Liens upon any of the properties or assets of T-Mobile or any of its subsidiaries under, (A) the T-Mobile Certificate of Incorporation or the Bylaws of T-Mobile or the comparable organizational documents of any of its subsidiaries, (B) any loan or credit agreement, note, bond, mortgage, indenture, trust document, lease or other agreement, instrument, permit, concession, franchise, license or similar authorization to which T-Mobile or any of its subsidiaries is a party or by which T-Mobile, any of its subsidiaries or their respective properties or assets may be bound or (C) subject to the governmental filings and other matters referred to in Section 4.2(b)(iii), any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to T-Mobile or any of its subsidiaries or their respective properties or assets, other than, in the case of clauses (A) (with respect to the certificate of incorporation and bylaws or comparable

 

41



 

organizational documents of T-Mobile’s subsidiaries), (B) and (C), any such conflicts, violations, defaults, rights, losses or Liens that, individually or in the aggregate, would not reasonably be expected to (1) have a Material Adverse Effect on T-Mobile or (2) prevent or materially delay the consummation of any of the transactions contemplated hereby.

 

(iii)                               No consent, approval, order or authorization of, action by or in respect of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to T-Mobile or any of its subsidiaries in connection with the execution and delivery of this Agreement by T-Mobile or the consummation by T-Mobile of the transactions contemplated hereby, except for (A) compliance with any applicable requirements of the HSR Act, and with any other applicable Antitrust Laws, (B) compliance with any applicable requirements of the Communications Act, (C) pursuant to any applicable Laws of any PUCs or any similar foreign public utility bodies regulating telecommunications businesses, (D) pursuant to Section 721, (E) pursuant to the Securities Act and the Exchange Act, (F) pursuant to the DGCL, (G) in accordance with the rules and policies of the NYSE and NASDAQ, (H) such filings with DSS as are necessary to comply with the NISPOM and (I) such other consents, approvals, orders or authorizations the failure of which to be made or obtained, individually or in the aggregate, would not reasonably be expected to (1) have a Material Adverse Effect on T-Mobile or (2) prevent or materially delay the consummation of any of the transactions contemplated hereby.

 

(c)                                  Capital Structure.

 

(i)                                     The authorized capital stock of T-Mobile consists of 1,000,000,000 shares of T-Mobile Common Stock and 100,000,000 shares of preferred stock, par value $0.00001 per share, of which 20,000,000 shares have been designated as 5.50% Mandatory Convertible Preferred Stock, Series A (the “T-Mobile Preferred Stock”).  At the close of business on the Measurement Date, (A) 847,947,274 shares of T-Mobile Common Stock were issued and outstanding, (B) 1,510,742 shares of T-Mobile Common Stock were held by T-Mobile in its treasury, (C) no shares of T-Mobile Preferred Stock were outstanding, (D) 397,541 shares of T-Mobile Common Stock were subject to issuance pursuant to T-Mobile Options, (E) 14,356,507 shares of T-Mobile Common Stock were subject to issuance pursuant to T-Mobile RSU Awards, (F) 2,218,614 shares (assuming satisfaction of any performance vesting conditions at target levels) or 4,437,228 shares (assuming satisfaction of any performance vesting conditions at maximum levels) of T-Mobile Common Stock were subject to issuance pursuant to T-Mobile PSU Awards, and (G) 4,431,843 shares of T-Mobile Common Stock were reserved for issuance under the T-Mobile ESPP.

 

(ii)                                  All outstanding shares of capital stock of T-Mobile are, and all shares of capital stock of T-Mobile that may be issued as permitted by this Agreement or otherwise shall be when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights.  Except as set forth in this Section 4.2(c) and except for changes since the Measurement Date resulting from the issuance of shares of T-Mobile Common Stock pursuant to the T-Mobile ESPP or the

 

42



 

exercise or settlement of T-Mobile Options, T-Mobile RSU Awards or T-Mobile PSU Awards, or otherwise, to the extent expressly permitted by Section 5.1(b)(ii) (including Section 5.1(b)(ii) of the T-Mobile Disclosure Letter) or otherwise by this Agreement, (A) there are not issued or outstanding (x) any shares of capital stock or other voting or equity securities or interests of T-Mobile, (y) any securities or interests of T-Mobile or any of its subsidiaries convertible into, or exchangeable or exercisable for, or based upon the value of, any shares of capital stock or other voting or equity securities or interests of T-Mobile or (z) any warrants, calls, options, preemptive rights, subscriptions or other securities or rights to acquire from T-Mobile or any of its subsidiaries (including any subsidiary trust), or any agreements, arrangements or obligations of T-Mobile or any of its subsidiaries to issue, any shares of capital stock or other voting or equity securities or interests of T-Mobile, or any securities or interests convertible into, or exchangeable or exercisable for, or based upon the value of, any shares of capital stock or other voting or equity securities or interests of T-Mobile, (B) there are no outstanding obligations of T-Mobile or any of its subsidiaries to repurchase, redeem or otherwise acquire any such securities or interests or to issue, deliver or sell, or cause to be issued, delivered or sold, any such securities or interests, and (C) there are no outstanding or authorized equity or equity-based compensation awards, including any equity appreciation rights, security-based performance units, “phantom” stock, profit-participation or other security rights issued by T-Mobile or any of its subsidiaries, or other agreements, arrangements or commitments of any character (contingent or otherwise) to which T-Mobile or any of its subsidiaries is party, in each case pursuant to which any person is entitled to receive any payment from T-Mobile based in whole or in part on the value of any shares of capital stock or other voting or equity securities or interests of T-Mobile or any of its subsidiaries.

 

(iii)                               There are no stockholder agreements, voting agreements, voting trusts or other agreements or understandings to which T-Mobile or any of its subsidiaries is a party, including any such agreements or understandings restricting the transfer of the capital stock or other voting or equity securities or interests of T-Mobile or its subsidiaries or affecting the voting rights of the capital stock or other voting or equity securities or interests of T-Mobile or its subsidiaries.  Neither T-Mobile nor any of its subsidiaries has granted any preemptive rights, anti-dilutive rights or rights of first refusal, registration rights, buy-sell rights or similar rights with respect to its shares of capital stock that are in effect.  No shares of capital stock of T-Mobile are held by any subsidiary of T-Mobile.

 

(d)                                 Subsidiaries.

 

(i)                                     All outstanding shares of capital stock or other voting or equity securities or interests of each “Significant Subsidiary” (as defined in Rule 1-02 of Regulation S-X of the SEC) of T-Mobile have been validly issued and are fully paid and nonassessable and are owned directly or indirectly by T-Mobile, free and clear of any Liens and free of any other restriction, including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other securities or interests.

 

43



 

(ii)                                  There are no outstanding (A) securities or interests of T-Mobile or any of its subsidiaries convertible into, or exchangeable or exercisable for, or based upon the value of, any shares of capital stock or other voting or equity securities or interests of any subsidiary of T-Mobile, (B) warrants, calls, options, preemptive rights, subscriptions or other securities or rights to acquire from T-Mobile or any of its subsidiaries (including any subsidiary trust), or agreements, arrangements or obligations of T-Mobile or any of its subsidiaries to issue, any shares of capital stock or other voting or equity securities or interests of any subsidiary of T-Mobile, or any securities or interests convertible into, or exchangeable or exercisable for, or based on the value of, any shares of capital stock or other voting or equity securities or interests of any subsidiary of T-Mobile or (C) obligations of T-Mobile or any of its subsidiaries to repurchase, redeem or otherwise acquire any such securities or interests of any subsidiary of T-Mobile or to issue, deliver or sell, or cause to be issued, delivered or sold, any such securities or interests (in the case of clauses (B) and (C), other than in the case of Merger Sub and Merger Company pursuant to this Agreement).

 

(e)                                  SEC Documents; Financial Statements; Undisclosed Liabilities.

 

(i)                                     T-Mobile and its subsidiaries have filed or furnished all required registration statements, prospectuses, reports, schedules, forms, statements, certifications and other documents (including all exhibits and other information filed therewith or incorporated therein (including by reference), regardless of when such exhibits and other information were filed) with the SEC since January 1, 2016 (the “T-Mobile SEC Documents”).  As of their respective dates, the T-Mobile SEC Documents complied in all material respects with the requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to the T-Mobile SEC Documents, and none of the T-Mobile SEC Documents when filed and at their respective effective times, if applicable, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  Prior to the date of this Agreement, T-Mobile has furnished to Sprint true and complete copies of all comment letters from the SEC since January 1, 2016 through the date of this Agreement with respect to any of the T-Mobile SEC Documents, together with all written responses of T-Mobile thereto, other than any such letters and responses that are publicly available on EDGAR prior to the date of this Agreement.  As of the date of this Agreement, there are no outstanding or unresolved comments received from the SEC with respect to any of the T-Mobile SEC Documents, and, to the knowledge of T-Mobile, none of the T-Mobile SEC Documents is the subject of any outstanding SEC comment or investigation.  No subsidiary of T-Mobile is required to file periodic reports with the SEC pursuant to the requirements of the Exchange Act.

 

(ii)                                  The consolidated financial statements (including all related notes and schedules) of T-Mobile and its subsidiaries included in the T-Mobile SEC Documents (the “T-Mobile Financial Statements”) when filed complied in all material respects with the applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with GAAP

 

44



 

(except, in the case of unaudited statements, as permitted by the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of T-Mobile and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which are not material and to any other adjustments described therein, including the notes thereto).

 

(iii)                               Except (A) as (and to the extent) reflected or reserved against in T-Mobile’s audited balance sheet as of December 31, 2017 (or the notes thereto) included in the T-Mobile Filed SEC Documents, (B) for liabilities and obligations incurred in the ordinary course of business consistent with past practice since December 31, 2017, and (C) for liabilities and obligations incurred in connection with or contemplated by this Agreement, neither T-Mobile nor any of its subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise, and whether or not required by GAAP to be reflected on a consolidated balance sheet of T-Mobile and its subsidiaries (or in the notes thereto)) that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on T-Mobile.

 

(iv)                              T-Mobile maintains a system of “internal control over financial reporting” (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) reasonably designed to provide reasonable assurance regarding the reliability of T-Mobile’s financial reporting and the preparation of T-Mobile’s financial statements for external purposes in accordance with GAAP and that includes policies and procedures that (A) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of T-Mobile, (B) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of T-Mobile are being made only in accordance with authorizations of management and directors of T-Mobile and (C) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of T-Mobile’s assets that could have a material effect on its financial statements.  Since January 1, 2016, none of T-Mobile, T-Mobile’s independent accountants, the Board of Directors of T-Mobile or its audit committee has received any written or, to the knowledge of T-Mobile, oral notification of any (1) “significant deficiency” in the internal controls over financial reporting of T-Mobile, (2) “material weakness” in the internal controls over financial reporting of T-Mobile or (3) fraud, whether or not material, that involves management or other employees of T-Mobile who have a significant role in the internal controls over financial reporting of T-Mobile.  Since January 1, 2016 through the date of this Agreement, there have been no material internal investigations regarding accounting, auditing or revenue recognition discussed with, reviewed by or initiated at the direction of the chief executive officer, chief financial officer, chief accounting officer or general counsel of T-Mobile or the Board of Directors of T-Mobile or any committee thereof.

 

(v)                                 The “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) utilized by T-Mobile are reasonably designed to ensure that all information (both financial and non-financial) required to be

 

45


 


 

disclosed by T-Mobile in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that all such information required to be disclosed is accumulated and communicated to the management of T-Mobile, as appropriate, to allow timely decisions regarding required disclosure and to enable the chief executive officer and chief financial officer of T-Mobile to make the certifications required under the Exchange Act with respect to such reports.

 

(vi)                              Since January 1, 2016, (A) neither T-Mobile nor any of its subsidiaries has received any written or, to the knowledge of T-Mobile, oral complaint, allegation, assertion or claim regarding accounting, internal accounting controls or auditing practices, procedures, methodologies or methods of T-Mobile or any of its subsidiaries, or unlawful accounting or auditing matters with respect to T-Mobile or any of its subsidiaries, and (B) no attorney representing T-Mobile or any of its subsidiaries, whether or not employed by T-Mobile or any of its subsidiaries, has reported evidence of a violation of securities Laws, breach of fiduciary duty or similar violation by T-Mobile or any of its subsidiaries or any of their respective officers, directors, employees or agents to the Board of Directors of T-Mobile or any committee thereof or to the general counsel or chief executive officer of T-Mobile pursuant to the rules of the SEC adopted under Section 307 of the Sarbanes-Oxley Act, in each case (A) and (B), except as, individually or in the aggregate, has not been, and would not reasonably be expected to be, materially adverse to T-Mobile and its subsidiaries, taken as a whole.

 

(vii)                           Neither T-Mobile nor any of its subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or similar contract (including any contract or arrangement relating to any transaction or relationship between or among T-Mobile and any of its subsidiaries, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose entity or person, on the other hand, or any “off-balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K under the Exchange Act)), where the result, purpose or intended effect of such contract is to avoid disclosure of any material transaction involving, or material liabilities of, T-Mobile or any of its subsidiaries in the T-Mobile Financial Statements or otherwise in the T-Mobile SEC Documents.

 

(viii)                        T-Mobile is in compliance in all material respects with the applicable rules and regulations of NASDAQ and the applicable listing requirements of NASDAQ.

 

(f)                                   Information Supplied.  None of the information supplied or to be supplied by T-Mobile specifically for inclusion or incorporation by reference in (i) the Form S-4 will, at the time the Form S-4 is filed with the SEC, and at any time it is amended or supplemented or at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading or (ii) the Consent Solicitation Statement will, at the date it is first mailed to the respective stockholders of Sprint and T-Mobile, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the

 

46



 

statements therein, in light of the circumstances under which they are made, not misleading.  The Form S-4 and the Consent Solicitation Statement shall comply as to form in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations thereunder.  Notwithstanding the foregoing, no representation or warranty is made by T-Mobile with respect to statements made or incorporated by reference therein based on information supplied by Sprint or a SoftBank Party specifically for inclusion or incorporation by reference in the Form S-4 or the Consent Solicitation Statement.

 

(g)                                  Absence of Certain Changes or Events.

 

(i)                                     From December 31, 2017 through the date of this Agreement, other than with respect to the transactions contemplated hereby, the businesses of T-Mobile and its subsidiaries have been conducted in all material respects in the ordinary course of business in a manner consistent with past practice.

 

(ii)                                  From December 31, 2017 through the date of this Agreement, neither T-Mobile nor any of its subsidiaries has taken any action that, if taken after the date of this Agreement, would constitute a breach of clause (i), (iv), (viii), (ix), (xi), (xii), (xv), (xvii) or (xx) (in the case of (xx), to the extent relating to any of the foregoing clauses) of Section 5.1(b).

 

(iii)                               Since March 31, 2017, there have been no Effects that, individually or in the aggregate, have had or would reasonably be expected to have a Material Adverse Effect on T-Mobile.

 

(h)                                 Compliance with Laws; Licenses.

 

(i)                                     T-Mobile and its subsidiaries have been and are, and the businesses of T-Mobile and its subsidiaries have been and are being, conducted, in compliance with all Laws relating to T-Mobile and its subsidiaries or their respective businesses or properties, except where the failure to be in compliance with such applicable Laws, individually or in the aggregate, would not reasonably be expected to (A) have a Material Adverse Effect on T-Mobile or (B) prevent or materially delay the consummation of any of the transactions contemplated hereby.  No investigation or review by any Governmental Entity with respect to T-Mobile or any of its subsidiaries is pending or, to the knowledge of T-Mobile, threatened, except for such investigations or reviews that, individually or in the aggregate, would not reasonably be expected to (A) have a Material Adverse Effect on T-Mobile or (B) prevent or materially delay the consummation of any of the transactions contemplated hereby.  Each of T-Mobile and its subsidiaries has obtained, holds and is in compliance with all Licenses necessary to conduct its business as currently conducted (the “T-Mobile Material Licenses”), except where the failure to have any such License, individually or in the aggregate, would not reasonably be expected to (A) have a Material Adverse Effect on T-Mobile or (B) prevent or materially delay the consummation of any of the transactions contemplated hereby.

 

(ii)                                  Each of T-Mobile and its subsidiaries is in compliance with its obligations under each of the Licenses issued or granted to it by the FCC and all leases

 

47



 

for the use of wireless spectrum between T-Mobile or any of its subsidiaries, as lessee(s), and the FCC licensees of such spectrum, as lessors (the “T-Mobile FCC Licenses”) and the rules and regulations of the FCC, and with its obligations under each of the Licenses issued or granted to it by PUCs regulating telecommunications businesses (the “T-Mobile State Licenses”), and with its obligations under each of the Licenses issued or granted to it by foreign Governmental Entities regulating telecommunications businesses (together with the T-Mobile Material Licenses, the T-Mobile FCC Licenses and the T-Mobile State Licenses, the “T-Mobile Communications Licenses”), in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to T-Mobile and its subsidiaries, taken as a whole.

 

(iii)                               T-Mobile and its subsidiaries are not the subject of, and there are no pending or, to the knowledge of T-Mobile, threatened proceedings, notices of violation, orders of forfeiture, complaints or investigations relating to the T-Mobile Communications Licenses before the FCC, the FAA or any other Governmental Entity, in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to T-Mobile and its subsidiaries, taken as a whole.  The FCC actions granting all T-Mobile Communications Licenses, together with all underlying construction permits, have not been reversed, stayed, enjoined, annulled or suspended, and there is no pending or, to the knowledge of T-Mobile, threatened application, petition, objection or other pleading with the FCC, the FAA or any other Governmental Entity that challenges or questions the validity of or any rights of the holder under any such T-Mobile Communications License, in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to T-Mobile and its subsidiaries, taken as a whole.

 

(iv)                              T-Mobile or its subsidiaries have good and valid title to, or in the case of leases, a valid leasehold interest in, free and clear of all Liens, other than T-Mobile Permitted Liens, all of the T-Mobile Communications Licenses.  Each of the T-Mobile Communications Licenses is issued in the name of T-Mobile or one of its subsidiaries.  Each of the T-Mobile Communications Licenses is in full force and effect, is granted without conditions, except for those conditions on the face of such T-Mobile Communications License or conditions generally applicable to all similarly situated licenses of comparable spectrum, and is free and clear of all Liens (other than Permitted Liens), in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to T-Mobile and its subsidiaries, taken as a whole.

 

(v)                                 Each lease pursuant to which T-Mobile or any of its subsidiaries has the right to use wireless spectrum licensed by the FCC is (i) valid and binding, (ii) in compliance with all applicable Laws and (iii) enforceable in accordance with its terms, in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to T-Mobile and its subsidiaries, taken as a whole.  To the knowledge of T-Mobile, each licensee of such wireless spectrum is in compliance with all of its obligations under the FCC Rules with respect to each License to which any such lease relates, and, to the knowledge of T-Mobile, there are no facts or circumstances that would reasonably be likely (whether with or without notice, lapse of time or the occurrence of any other event) to preclude the renewal or extension of any such lease in the ordinary

 

48



 

course of business, except as, individually or in the aggregate, would not reasonably be expected to be material to T-Mobile and its subsidiaries, taken as a whole.  None of T-Mobile or its subsidiaries has, nor to the knowledge of T-Mobile has any other party to any such lease, claimed that any party to any such lease is in breach or default under such lease, and any past breach or default has been waived, cured or otherwise settled, in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to T-Mobile and its subsidiaries, taken as a whole.  No party to any such lease has claimed in writing nor, to the knowledge of T-Mobile, has any party threatened in writing that T-Mobile or any of its subsidiaries is in violation of or default under any such lease, or that such party has the right to terminate such lease, in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to T-Mobile and its subsidiaries, taken as a whole.  To the knowledge of T-Mobile, all FCC licenses underlying all such leases were validly issued and are in full force and effect, and are not subject to proceedings or threatened proceedings that could reasonably be expected to result in the revocation, modification, restriction, cancellation, termination, suspension or non-renewal of any such FCC license, in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to T-Mobile and its subsidiaries, taken as a whole.

 

(vi)                              All of the currently operating cell sites, microwave paths, fiber routes and other network facilities of T-Mobile and its subsidiaries in respect of which a filing with the FCC or any other Governmental Entity was required have been constructed and are currently operated as represented to the FCC or such other Governmental Entity in currently effective filings, and modifications to such cell sites, microwave paths, fiber routes or other network facilities have been preceded by the submission to the FCC or any other applicable Governmental Entity of all required filings, in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to T-Mobile and its subsidiaries, taken as a whole.  All facilities constructed by T-Mobile or its subsidiaries for the purpose of demonstrating compliance with FCC substantial service or build-out requirements, or educational use requirements, whether such filings were made by T-Mobile or a lessor leasing spectrum to T-Mobile, remain constructed and are currently being operated as represented to the FCC, except as, individually or in the aggregate, would not reasonably be expected to be material to T-Mobile and its subsidiaries, taken as a whole.

 

(vii)                           All transmission towers owned or leased by T-Mobile and its subsidiaries are (to the knowledge of T-Mobile with respect to leased towers) obstruction-marked and lighted by T-Mobile or its subsidiaries to the extent required by, and in accordance with, the FAA Rules, except as, individually or in the aggregate, would not reasonably be expected to be material to T-Mobile and its subsidiaries, taken as a whole.  Appropriate notification to the FAA has been made for each transmission tower owned or leased by T-Mobile and its subsidiaries to the extent required to be made by T-Mobile or any of its subsidiaries by, and in accordance with, the FAA Rules, in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to T-Mobile and its subsidiaries, taken as a whole.

 

49



 

(viii)                        Neither T-Mobile nor any of its subsidiaries holds any T-Mobile Communications Licenses through a partnership, joint venture or other person that is not a subsidiary of T-Mobile, or any structured finance, special purpose or limited purpose entity or person.

 

(ix)                              T-Mobile and its subsidiaries are fully qualified under the Communications Act and the rules and regulations of the FCC to hold the T-Mobile FCC Licenses generally.  To the knowledge of T-Mobile, there are no facts or circumstances relating to the qualifications of T-Mobile and its subsidiaries that would prevent or materially delay the grant of any FCC Form 603 application (or other appropriate form) under the FCC Rules and the Communications Act with respect to the Merger Transactions.

 

(i)                                     Litigation.  There is no Action pending or, to the knowledge of T-Mobile, threatened in writing against or affecting T-Mobile or any of its subsidiaries or any of their respective properties or any of their respective officers or directors before any court or arbitrator or any Governmental Entity, except as, individually or in the aggregate, would not reasonably be expected to (A) have a Material Adverse Effect on T-Mobile or (B) prevent or materially delay the consummation of any of the transactions contemplated hereby.  Neither T-Mobile nor any of its subsidiaries is subject to any outstanding order, injunction or decree that, individually or in the aggregate, would reasonably be expected to (A) have a Material Adverse Effect on T-Mobile or (B) prevent or materially delay the consummation of any of the transactions contemplated hereby.

 

(j)                                    Benefit Plans.

 

(i)                                     Section 4.2(j)(i) of the T-Mobile Disclosure Letter contains a complete and correct list of each material T-Mobile Benefit Plan.  With respect to each material T-Mobile Benefit Plan, T-Mobile has made available to Sprint complete and accurate copies of the following documents (if applicable):  (A) such T-Mobile Benefit Plan and summary plan description thereof, (B) each trust, insurance, annuity or other funding contract related thereto, (C) the most recent audited financial statements and actuarial or other valuation reports prepared with respect thereto, (D) the most recent annual report on Form 5500 required to be filed with the IRS with respect thereto, and (E) the most recently received IRS determination letter or opinion.

 

(ii)                                  Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile, (A) each of the T-Mobile Benefit Plans has been operated and administered in compliance with its terms and in accordance with applicable Laws, including ERISA, the Code and in each case the regulations thereunder, (B) no T-Mobile Benefit Plan provides welfare benefits, including death or medical benefits (whether or not insured), with respect to current or former employees or directors of T-Mobile or its subsidiaries beyond their retirement or other termination of service, other than coverage mandated by COBRA, or comparable U.S. state or foreign law, (C) all contributions or other amounts payable by T-Mobile or its subsidiaries as of the Effective Time pursuant to each T-Mobile Benefit Plan in respect of current or prior plan years have been timely paid or, to the extent not yet due, have been

 

50



 

accrued in accordance with GAAP, (D) neither T-Mobile nor any of its subsidiaries has engaged in a transaction in connection with which T-Mobile or its subsidiaries could be subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code, and (E) there are no pending or, to the knowledge of T-Mobile, threatened in writing or anticipated claims, actions, investigations or audits (other than routine claims for benefits) by, on behalf of or against any of the T-Mobile Benefit Plans or any trusts related thereto.

 

(iii)                               Except as set forth on Section 4.2(j)(iii) of the T-Mobile Disclosure Letter or as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile, none of T-Mobile, any of its subsidiaries or any of their respective ERISA Affiliates contributes to or is obligated to contribute to, or within the six years preceding the date of this Agreement contributed to, or was obligated to contribute to, a Multiemployer Plan or Multiple Employer Plan, and none of T-Mobile, any of its subsidiaries or any of their respective ERISA Affiliates has, within the preceding six years, withdrawn in a complete or partial withdrawal from any Multiemployer Plan or incurred any liability under Section 4202 of ERISA.

 

(iv)                              Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile, each of the T-Mobile Benefit Plans intended to be “qualified” within the meaning of Section 401(a) of the Code, (A) is so qualified and, to the knowledge of T-Mobile, there are no existing circumstances or any events that have occurred that would reasonably be expected to adversely affect the qualified status of any such plan and (B) has received a favorable determination letter or opinion letter as to its qualification.

 

(v)                                 No T-Mobile Benefit Plan is subject to Section 302 or Title IV or Section 412, 430 or 4971 of the Code.  Except for matters that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile, there does not now exist, nor do any circumstances exist that could result in, any Controlled Group Liability that would be a liability following the Closing of T-Mobile, any of its subsidiaries or any of their respective ERISA Affiliates.

 

(vi)                              Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby (either alone or in conjunction with any other event) will (A) result in any payment (including severance, unemployment compensation, forgiveness of Indebtedness or otherwise) becoming due to any current or former employee, director or other individual service provider of T-Mobile or its subsidiaries under any T-Mobile Benefit Plan, (B) increase any compensation or benefits otherwise payable under any T-Mobile Benefit Plan, (C) result in any acceleration of the time of payment, funding or vesting of any such compensation or benefits, (D) impose any restrictions or limitations on the rights of T-Mobile or its affiliates to amend, merge, terminate or receive a reversion of assets from any T-Mobile Benefit Plan, or (E) result in the payment of any compensation or benefits to any person who would be a “disqualified individual” (as such term is defined in Treasury Regulations Section 1.280G-1) with respect to T-Mobile or its affiliates that could reasonably, individually or in combination

 

51



 

with any other such payment, constitute an “excess parachute payment” (as defined in Section 280G(b)(1) of the Code).

 

(vii)                           No person is entitled to receive any additional payment (including any Tax gross-up or other payment) from T-Mobile or any of its subsidiaries as a result of the imposition of the excise Taxes required by Section 4999 of the Code or any Taxes required by Section 409A of the Code.

 

(viii)                        Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile, all T-Mobile Benefit Plans subject to the laws of any jurisdiction outside of the United States (A) have been maintained in accordance with all applicable requirements, (B) that are intended to qualify for special tax treatment meet all requirements for such treatment, and (C) that are intended to be funded and/or book-reserved are funded and/or book reserved, as required under applicable Laws and GAAP, based upon reasonable actuarial assumptions.

 

(k)                                 Labor and Employment Matters.

 

(i)                                     Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile, neither T-Mobile nor any of its subsidiaries has received written notice during the past three years of the intent of any Governmental Entity responsible for the enforcement of labor, employment, affirmative action, immigration, occupational health and safety or workplace safety and workers compensation insurance laws to conduct an investigation of T-Mobile or any of its subsidiaries and, to the knowledge of T-Mobile, no such investigation is in progress.  Except in each case as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile, (A) there are no (and have not been during the three-year period preceding the date of this Agreement) strikes or lockouts with respect to any employees of T-Mobile or any of its subsidiaries, (B) to the knowledge of T-Mobile, there is no (and has not been during the three-year period preceding the date of this Agreement) labor organizing effort pending or threatened in writing against T-Mobile or any of its subsidiaries, (C) there is no (and has not been during the three-year period preceding the date of this Agreement) unfair labor practice, labor dispute (other than routine individual grievances) or labor arbitration proceeding pending or, to the knowledge of T-Mobile, threatened in writing against T-Mobile or any of its subsidiaries, (D) there is no (and has not been during the three-year period preceding the date of this Agreement) slowdown or work stoppage in effect or, to the knowledge of T-Mobile, threatened in writing, with respect to any employees of T-Mobile or any of its subsidiaries, (E) neither T-Mobile nor any of its subsidiaries has, or is reasonably expected to have, any liabilities under the WARN Act, and (F) to the knowledge of T-Mobile, no current or former employee, independent contractor or consultant of T-Mobile or any of its subsidiaries has breached any nondisclosure obligation to, non-competition agreement with or other restrictive covenant with:  (i) T-Mobile or any of its subsidiaries or (ii) a former employer of any such individual relating to (a) the right of any such individual to be employed or engaged by T-Mobile or any of its subsidiaries or (b) the use or disclosure of confidential information in connection with such individual’s employment with or engagement by T-Mobile or any of its subsidiaries.

 

52



 

Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile, T-Mobile and each of its subsidiaries are in compliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment, wages and hours, affirmative action, immigration and occupational safety and health (including classifications of service providers as employees and/or independent contractors).

 

(ii)                                  Neither T-Mobile nor any of its subsidiaries is a party or subject to, or otherwise bound by, any Labor Agreement, and none of the employees of T-Mobile or its subsidiaries are represented by a works council, union or similar labor organization with respect to their services to T-Mobile or its subsidiaries.  Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby (either alone or in conjunction with any other event) will require the consent of, or advance notification to, any works councils, unions or similar labor organizations with respect to employees of T-Mobile or any of its subsidiaries.

 

(l)                                     Taxes.  Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile:

 

(i)                                     (A) All Tax Returns required to be filed by T-Mobile and its subsidiaries, have been timely filed, (B) all such Tax Returns are true, complete and correct in all respects, (C) all Taxes (whether or not reflected on such Tax Returns) required to have been paid by T-Mobile and its subsidiaries have been timely paid, except, in the case of clause (B) or (C), with respect to Taxes for which adequate reserves have been established in accordance with GAAP in the T-Mobile Financial Statements, and (D) T-Mobile and its subsidiaries have duly and timely withheld all Taxes required to be withheld and such withheld Taxes have been either duly and timely paid to the proper Taxing Authority or properly set aside in accounts for such purpose and will be duly and timely paid to the proper Taxing Authority.

 

(ii)                                  As of the date hereof, there is no written agreement or other written document waiving or extending, or having the effect of waiving or extending, the statute of limitations or the period of assessment or collection of any Taxes relating to T-Mobile or any of its subsidiaries that remains in effect.

 

(iii)                               (A) No investigation, examination, audit or other administrative proceeding with regard to any Taxes or Tax Return of T-Mobile or any of its subsidiaries is currently pending or has been threatened in writing, and (B) no Taxing Authority has asserted in writing any deficiency or claim for Taxes or any adjustment to Taxes with respect to which T-Mobile or any of its subsidiaries may be liable which has not been adequately reserved for in the T-Mobile Financial Statements, fully paid or finally settled.

 

(iv)                              Neither T-Mobile nor any of its subsidiaries is bound by any closing agreement within the meaning of Section 7121 of the Code (or any similar provision of state, local or foreign Law), or has received or requested any private letter ruling, technical advice memorandum or other written ruling from a Taxing Authority,

 

53



 

which agreement, ruling or memorandum is or would be binding with respect to any taxable period for which the applicable statute of limitations has not yet expired.

 

(v)                                 In the past three years, no claim has been made in writing by a Governmental Entity in a jurisdiction where T-Mobile or any of its subsidiaries does not file Tax Returns with respect to a particular type of Tax that it is or may be subject to taxation for such Tax by that jurisdiction.

 

(vi)                              Neither T-Mobile nor any of its subsidiaries (A) is a party to or bound by or has any obligation under any Tax indemnification, separation, sharing or similar agreement or arrangement (other than (x) any such agreements solely between T-Mobile and one or more wholly owned subsidiaries of T-Mobile or (y) customary Tax indemnification provisions in commercial contracts entered into in the ordinary course of business and not primarily related to Taxes), (B) is or has been a member of any consolidated, combined, unitary or similar group for purposes of filing Tax Returns or paying Taxes (other than a group of which T-Mobile is the common parent corporation) or (C) has any liability for the payment of Taxes of any person (other than T-Mobile or any of its subsidiaries) as a successor or transferee, or otherwise.

 

(vii)                           None of the assets of T-Mobile or any of its subsidiaries is subject to any Liens for Taxes (other than Permitted Liens).

 

(viii)                        In the past two years, neither T-Mobile nor any of its subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code.

 

(ix)                              Neither T-Mobile nor any of its subsidiaries has taken any action or knows of the existence of any fact, agreement, plan or other circumstance that could reasonably be expected to prevent or impede (i) the qualification of any of the SoftBank US Mergers or the Merger as a “reorganization” within the meaning of Section 368(a) of the Code, (ii) T-Mobile from delivering its Tax Certificate, or (iii) T-Mobile obtaining the opinion described in Section 7.2(e).

 

(x)                                 Neither T-Mobile nor any of its subsidiaries has participated in any “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(2) (or any similar provision of state, local or foreign Law).

 

(m)                             Voting Requirements.  The T-Mobile Stockholder Approval is the only vote of holders of any securities of T-Mobile or its subsidiaries necessary to approve the transactions contemplated by this Agreement.  The execution and delivery to T-Mobile by the DT Stockholder (as defined in the DT Support Agreement) of the written consent contemplated by Section 2 of the DT Support Agreement will constitute receipt of the T-Mobile Stockholder Approval.

 

54



 

(n)                                 Intellectual Property.

 

(i)                                     T-Mobile and its subsidiaries own, free and clear of all Liens (except Permitted Liens), or have the right to use pursuant to valid licenses, sublicenses, agreements or permissions, all items of Intellectual Property necessary for their operations, as currently conducted or as contemplated by them to be conducted, except where the failure to own or have such rights, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile.  All such rights shall survive the consummation of the Merger unchanged in all respects, except as would not reasonably be expected to have a Material Adverse Effect on T-Mobile.

 

(ii)                                  The conduct of T-Mobile’s and its subsidiaries’ businesses, as currently conducted or as contemplated by them to be conducted does not infringe, misappropriate, dilute or otherwise violate any of the Intellectual Property rights of any third party, except for infringements, misappropriations, dilutions or other violations that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile.  No claims are pending or, to the knowledge of T-Mobile, threatened in writing adversely affecting the Intellectual Property rights of T-Mobile, except for claims that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile.  To the knowledge of T-Mobile, no third party has infringed upon, misappropriated, diluted, or otherwise violated any Intellectual Property rights of T-Mobile or any of its subsidiaries, except for infringements, misappropriations, dilutions or other violations that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile.

 

(iii)                               T-Mobile and its subsidiaries have taken reasonable measures to protect the confidentiality of material trade secrets and other material confidential information, owned by or provided to them under conditions of confidentiality, including requiring all persons having access thereto to execute written non-disclosure agreements or otherwise be bound by obligations of confidentiality, except where the failure to take such measures, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile.  To the knowledge of T-Mobile, there has been no disclosure of any such trade secrets or confidential information of or relating to T-Mobile or any of its subsidiaries to any person, except for disclosures that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile.

 

(iv)                              The material IT Assets of T-Mobile and its subsidiaries operate and perform as needed by T-Mobile and its subsidiaries to adequately conduct their respective businesses as currently conducted or as contemplated by them to be conducted, except for failures to operate or perform that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile.  Since January 1, 2015, to the knowledge of T-Mobile, there have been no security breaches, unauthorized access, failures or unplanned outages or other adverse integrity or security access incidents affecting the IT Assets of T-Mobile or its subsidiaries or any other persons to the extent used by or on behalf of T-Mobile or its subsidiaries (or, in each case, information and transactions stored or contained therein or transmitted thereby), in each

 

55



 

case, except as, individually or in the aggregate, would not reasonably be expected to be material to T-Mobile and its subsidiaries, taken as a whole.

 

(o)                                 Data Protection.

 

(i)                                     T-Mobile and its subsidiaries (A) are and have been since January 1, 2015 in compliance with all applicable Laws, as well as their own rules, policies and procedures, relating to privacy, data protection and the collection, retention, protection, transfer, use and processing of Personal Data, except as, individually or in the aggregate, would not reasonably be expected to be material to T-Mobile and its subsidiaries, taken as a whole, and (B) have implemented and maintained a data security plan with commercially reasonable administrative, technical and physical safeguards to protect Personal Data against unauthorized access, use, loss and damage.

 

(ii)                                  To the knowledge of T-Mobile, since January 1, 2015, there has been no unauthorized access to, or use, misuse or loss of, or damage to, any Personal Data maintained by or on behalf of T-Mobile or any of its subsidiaries, in each case, except as, individually or in the aggregate, would not reasonably be expected to be material to T-Mobile and its subsidiaries, taken as a whole.  Since January 1, 2015, no person (including any Governmental Entity) has made any claim or commenced any Action with respect to any unauthorized access to, or use, misuse or loss of, or damage to, any Personal Data maintained by or on behalf of T-Mobile or any of its subsidiaries, except as, individually or in the aggregate, would not reasonably be expected to be material to T-Mobile and its subsidiaries, taken as a whole.

 

(p)                                 Material Contracts.

 

(i)                                     Except for this Agreement, the T-Mobile Benefit Plans or any contracts filed as exhibits to or incorporated by reference in (regardless of when originally filed) any T-Mobile Filed SEC Document, Section 4.2(p)(i) of the T-Mobile Disclosure Letter contains a complete and correct list, as of the date of this Agreement, of each contract described below in this Section 4.2(p)(i) that is unexpired and effective as of the date of this Agreement to which T-Mobile or any subsidiary of T-Mobile is a party or by which any of their respective properties or assets is bound or affected (all contracts of the type described in this Section 4.2(p)(i), other than the T-Mobile Benefit Plans, whether or not set forth on Section 4.2(p)(i) of the T-Mobile Disclosure Letter, being referred to herein as the “T-Mobile Material Contracts”):

 

(A)                               any partnership, joint venture, strategic alliance or collaboration contract which is material to T-Mobile and its subsidiaries, taken as a whole;

 

(B)                               any contract pursuant to which any Indebtedness of T-Mobile or any of its subsidiaries, in each case in excess of $100,000,000, is outstanding or secured, other than any such contract or instrument solely between or among T-Mobile and any of its wholly owned subsidiaries;

 

56



 

(C)                               any contract related to an acquisition, divestiture, merger or similar transaction that contains financial covenants, indemnities or other similar payment obligations (including “earn-out” or other contingent payment obligations) that are still in effect and would reasonably be expected to result in the receipt or making of future payments in excess of $150,000,000;

 

(D)                               any contract requiring or reasonably likely to result in (x) payments by T-Mobile and its subsidiaries in excess of (I) for any interconnection, bundling or similar agreement in connection with which the equipment, networks and services of T-Mobile or any of its subsidiaries are connected to those of another service provider in order to allow their respective customers access to each other’s services and networks, $75,000,000 during any 12-month period or $150,000,000 for the period beginning on the date hereof and ending at the stated termination date of such contract, or, if no termination date is stated therein, for the period beginning on the date hereof and ending on the second anniversary of the date hereof, or (II) for all other contracts, $300,000,000 during any 12-month period or $600,000,000 for the period beginning on the date hereof and ending at the stated termination date of such contract, or, if no termination date is stated therein, for the period beginning on the date hereof and ending on the second anniversary of the date hereof, or (y) payments to T-Mobile and its subsidiaries in excess of (I) for any interconnection, bundling or similar agreement in connection with which the equipment, networks and services of T-Mobile or any of its subsidiaries are connected to those of another service provider in order to allow their respective customers access to each other’s services and networks, $75,000,000 during any 12-month period or $150,000,000 for the period beginning on the date hereof and ending at the stated termination date of such contract, or, if no termination date is stated therein, for the period beginning on the date hereof and ending on the second anniversary of the date hereof, or (II) for all other contracts, $300,000,000 during any 12-month period or $600,000,000 for the period beginning on the date hereof and ending at the stated termination date of such contract, or, if no termination date is stated therein, for the period beginning on the date hereof and ending on the second anniversary of the date hereof;

 

(E)                                any contract containing a non-competition or similar provision that materially restricts the ability of T-Mobile or any of its subsidiaries to compete in any material line of business or in any material geographic region or with any person;

 

(F)                                 any contract that provides for exclusive rights for the benefit of any third party, grants “most favored nation” status, contains minimum volume or purchase commitments, or requires T-Mobile or any of its subsidiaries to provide any minimum level of service, in each case which are, or in a manner that is, material to T-Mobile and its subsidiaries, taken as a whole;

 

57



 

(G)                               any contract obligating T-Mobile or any of its subsidiaries to make any capital expenditures in excess of $150,000,000, other than acquisitions of inventory and equipment in the ordinary course of business;

 

(H)                              any contract pursuant to which T-Mobile or any of its subsidiaries (x) leases wireless spectrum requiring or reasonably likely to result in annual payments by or to T-Mobile and its subsidiaries in excess of $150,000,000, (y) would reasonably be expected to be required to purchase, sell, lease or exchange any wireless spectrum with a value in excess of $150,000,000 or (z) provides mobile virtual network operator or other wholesale mobile network services to any third person and requiring or reasonably likely to result in annual payments by or to T-Mobile and its subsidiaries in excess of $150,000,000;

 

(I)                                   any contract involving the settlement of any claim, action, suit or proceeding or any threatened claim, action, suit or proceeding (or series of related claims, actions, suits or proceedings) which (x) involves payments after the date hereof in excess of $150,000,000 or (y) imposes material monitoring, reporting or other non-monetary obligations to any third party or Governmental Entity;

 

(J)                                   (x) any NSA, (y) any Government Contract of T-Mobile or any of its subsidiaries involving payments in excess of $50,000,000, the period of performance of which is still active or for which final payment has not been received or (z) any other material contract with a Governmental Entity;

 

(K)                               any contract that contains a put, call, right of first refusal, right of first negotiation, right of first offer, redemption, repurchase or similar right pursuant to which T-Mobile or any of its subsidiaries would be required to purchase or sell, as applicable, any material equity interests, businesses, lines of business, divisions, joint ventures, partnerships or other assets;

 

(L)                                (x) any contract providing for a sale-leaseback, lease-leaseback or similar arrangement of tower sites and related assets involving, or that would reasonably be expected to involve, proceeds in excess of $150,000,000 and (y) any material lease, sublease, sub-sublease license or other agreement under which T-Mobile or any of its subsidiaries leases, subleases, licenses, uses or occupies (in each case whether as landlord, tenant, sublandlord, subtenant or by other occupancy arrangement), or has the right to use or occupy, now or in the future, any real property;

 

(M)                            any contract or binding oral or other arrangement between T-Mobile or any of its subsidiaries, on the one hand, and DT or any of its affiliates (other than T-Mobile and its subsidiaries), on the other hand, reasonably likely to result in (x) payments by T-Mobile and its subsidiaries in excess of $25,000,000 in any fiscal year or (y) payments to T-Mobile and its subsidiaries in excess of $25,000,000 in any fiscal year; and

 

58



 

(N)                               any contract not otherwise described in any other subsection of this Section 4.2(p)(i) that would be required to be filed by T-Mobile as a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC).

 

(ii)                                  T-Mobile has delivered or made available to Sprint, or its external legal advisors pursuant to a confidential review process, prior to the date of this Agreement, true and complete copies (with the exception of redactions) of all T-Mobile Material Contracts that exist as of the date of this Agreement and have not been filed as exhibits to the T-Mobile Filed SEC Documents.  Except to the extent it has previously expired in accordance with its terms, each T-Mobile Material Contract is valid and binding on T-Mobile (or, to the extent that a subsidiary of T-Mobile is a party, such subsidiary) and is in full force and effect in all material respects (subject to the Enforceability Exceptions).  T-Mobile and each of its subsidiaries have performed all obligations required to be performed by them to date under each T-Mobile Material Contract, except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile.  Neither T-Mobile nor any of its subsidiaries has knowledge of, or has received written notice of, any material violation or default under (nor, to the knowledge of T-Mobile, does there exist any condition that with or without notice or lapse of time, or both, would result in such a material violation or default under) any T-Mobile Material Contract.  To the knowledge of T-Mobile, no other party to any T-Mobile Material Contract is in breach of or default under the terms of any T-Mobile Material Contract, except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect on T-Mobile.

 

(iii)                               Since December 31, 2013, (A) neither T-Mobile nor any of its subsidiaries has been suspended or debarred from bidding on or entering into contracts or subcontracts for or with any Governmental Entity, (B) no suspension or debarment actions with respect to any Government Contract have been commenced or threatened in writing against T-Mobile or any of its subsidiaries, (C) all representations and certifications made by T-Mobile or any of its subsidiaries in connection with each of such entity’s Government Contracts and Government Bids were accurate and complete in all material respects as of the date of submission, and all such representations and certifications have been kept current, to the extent required, (D) neither T-Mobile nor any of its subsidiaries has received any written notice of investigations or audits planned, underway or unresolved by any Governmental Entity with respect to any Government Contract or Government Bid, and to the knowledge of T-Mobile, there are no such investigations planned, underway or unresolved for which T-Mobile or any of its subsidiaries has not received notice, (E) there are no material outstanding claims or disputes against or with T-Mobile or any of its subsidiaries relating to any Government Contracts and involving either the U.S. government, any prime contractor, any higher-tier subcontractor or any third party, (F) neither T-Mobile nor any of its subsidiaries has received a written negative determination of responsibility with respect to any quotation, bid or proposal for a Government Contract, (G) T-Mobile and its subsidiaries are in compliance, in all material respects, with all applicable statutory, regulatory and contractual requirements, including the Armed Services Procurement Act, the Federal Procurement and Administrative Services Act, the Federal Acquisition Regulation, as set

 

59



 

forth under FAR and applicable agency supplements thereto, the FAR Cost Principles and the Cost Accounting Standards, (H) there are no adverse or negative government past performance evaluations or ratings that would reasonably be expected to adversely affect in any material respect the evaluation of bids or proposals for future Government Contracts, (I) to the knowledge of T-Mobile, no facts exist which are reasonably likely to give rise to a material claim for price adjustment under the False Claims Act (31 U.S.C. §§ 3729 - 3733), the Truth in Negotiations Act (10 U.S.C. § 2306a, 41 U.S.C. Chapter 35) or to any other request for a material reduction in the price of any Government Contract of T-Mobile or any of its subsidiaries, (J) the business systems of T-Mobile and each of its subsidiaries, including their accounting systems and related processes, are in compliance, in all material respects, with applicable requirements of each Government Contract and Government Bid and all applicable Laws, and no Governmental Entity has notified T-Mobile or any of its subsidiaries of a significant weakness or deficiency with respect to any such business system, (K) no termination for default, show cause notice, cure notice or letter of concern has been issued to or against T-Mobile or any of its subsidiaries with respect to any Government Contract and (L) no Government Contracts were awarded to T-Mobile or any of its subsidiaries pursuant to a procurement process that was limited to persons having 8(a), small business, small disadvantaged business, historically underutilized business zone small business, women owned small business, veteran-owned small business or service-disabled veteran-owned small business status or other preferential status.  Section 4.1(p)(iii) of the T-Mobile Disclosure Letter contains a true and complete list of each Government Bid by T-Mobile or any of its subsidiaries outstanding as of the date of this Agreement, which Government Bid is material to the business of T-Mobile and its subsidiaries, taken as a whole.

 

(iv)                              Neither T-Mobile nor any subsidiary of T-Mobile (A) has a facility security clearance under U.S. national industrial security regulations, or (B) performs, or since December 31, 2013, has performed, on any classified Government Contracts or programs. Aggregate data on all personnel security clearances held by T-Mobile’s and its subsidiaries’ employees (the “T-Mobile Clearance List”), as of the date of this Agreement, has been provided orally or in writing to Sprint’s external legal advisors prior to the date of this Agreement.  The T-Mobile Clearance List provided to T-Mobile prior to the date hereof contains aggregate data on personnel security clearances necessary to conduct the business of T-Mobile and its subsidiaries as currently being conducted, and are in full force and effect.  No notice of revocation from DSS or any other Governmental Entity has been issued to T-Mobile and remains unresolved with respect to any personnel security clearance of any employee of T-Mobile or any of its subsidiaries.  To the knowledge of T-Mobile, no information, fact, condition or circumstance currently exists that is reasonably likely to give rise to the revocation of any such clearance.

 

(q)                                 Environmental Protection.  Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile:

 

(i)                                     T-Mobile and each of its subsidiaries are and have been since January 1, 2014 in compliance with all applicable Environmental Laws and neither T-Mobile nor any of its subsidiaries has received any written communication from any

 

60



 

person or Governmental Entity that alleges that T-Mobile or any of its subsidiaries is not in such compliance with, or has any liability under, applicable Environmental Laws.

 

(ii)                                  T-Mobile and each of its subsidiaries have obtained or have applied for all Environmental Permits necessary for the construction of their facilities and the conduct of their operations, and all such Environmental Permits are in good standing or, where applicable, a renewal application has been timely filed and is pending agency approval, and T-Mobile and its subsidiaries are in compliance with all terms and conditions of their material Environmental Permits.

 

(iii)                               There are no Environmental Claims pending or, to the knowledge of T-Mobile, threatened against (1) T-Mobile or any of its subsidiaries, (2) any person or entity whose liability for any Environmental Claim T-Mobile or any of its subsidiaries has or may have retained or assumed, either contractually or by operation of law or (3) any real or personal property or operations which T-Mobile or any of its subsidiaries owns, leases or manages, or any such property formerly owned, leased or managed by any of them since January 1, 2014, in whole or in part.

 

(iv)                              There has been no release of any Hazardous Material that would be reasonably likely to form the basis of any Environmental Claim against T-Mobile or any of its subsidiaries or, to the knowledge of T-Mobile, against any person or entity whose liability for any Environmental Claim T-Mobile or any of its subsidiaries has or may have retained or assumed, either contractually or by operation of law.

 

(r)                                    Prohibited Payments.  Except as, individually or in the aggregate, has not been, and would not reasonably be expected to be, material to T-Mobile and its subsidiaries, taken as a whole, since January 1, 2014, none of T-Mobile or any of its subsidiaries or, to the knowledge of T-Mobile, any of their respective directors, officers, agents, employees or other persons associated with them or acting on their behalf has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.K. Bribery Act 2010, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions or any other applicable Anti-Corruption Laws or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other payment.  Neither T-Mobile nor any of its subsidiaries, as of the date of this Agreement, (i) to the knowledge of T-Mobile, is under external or internal investigation for any material violation of any Anti-Corruption Laws, (ii) has received any written or, to the knowledge of T-Mobile, other communication from any Governmental Entity regarding any material violation of, or failure to comply with, any Anti-Corruption Laws or (iii) to the knowledge of T-Mobile, is the subject of any internal complaint, audit or review process regarding a material violation of, or failure to comply with, any Anti-Corruption Laws.  Except as, individually or in the aggregate, has not been, and would not reasonably be expected to be, material to T-Mobile and its subsidiaries, taken as a whole, since January 1, 2014, neither T-Mobile nor any of its subsidiaries has made any disclosure (voluntary or otherwise) to any Governmental Entity with respect to any alleged irregularity, misstatement or omission or other potential violation or liability arising under or relating to any Anti-Corruption Laws.

 

61



 

(s)                                   Real Property.  Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on T-Mobile:  (i) T-Mobile and each of its subsidiaries have good and marketable fee title (or the equivalent in any applicable foreign jurisdiction) to all of their owned real property, and good and valid leasehold title to all of their leased property pursuant to leases with third parties which are enforceable in accordance with their terms, in each case subject only to Permitted Liens, (ii) all such real property (A) complies with all applicable zoning and land use ordinances, laws and regulations, or is a valid nonconforming use thereunder, (B) has sufficient access to a public road, and (C) is improved with all necessary and sufficient buildings, structures and improvements sufficient for the continuation of its business as currently conducted, in accordance with all applicable Licenses of T-Mobile and its subsidiaries and applicable Laws, (iii) there are no existing (or, to the knowledge of T-Mobile, threatened in writing) condemnation proceedings with respect to any such real property, and (iv) with respect to all such leased real property, T-Mobile and each of its subsidiaries are in compliance with all material terms and conditions of each lease therefor, and neither T-Mobile nor any of its subsidiaries has received any written notice of default thereunder which is outstanding and remains uncured beyond any applicable period of cure.

 

(t)                                    Related Party Agreements.  As of the date hereof, there are no agreements or arrangements between T-Mobile and/or any of its subsidiaries, on the one hand, and DT and/or any affiliate of DT or T-Mobile (other than T-Mobile and its subsidiaries), on the other hand, that are material to the operation of the businesses of T-Mobile and its subsidiaries as currently conducted, or that otherwise provide for rights or obligations of T-Mobile or any of its subsidiaries that, individually or in the aggregate, are, or would reasonably be expected to be, material to T-Mobile and its subsidiaries, taken as a whole, other than as set forth on Section 4.2(t) of the T-Mobile Disclosure Letter.  T-Mobile has delivered or made available to Sprint, prior to the date of this Agreement, true and complete copies of all such agreements or arrangements that exist as of the date of this Agreement and have not been filed as exhibits to the T-Mobile Filed SEC Documents.

 

(u)                                 Opinion of Financial Advisors.  The Board of Directors of T-Mobile has received the opinion of PJT Partners LP, dated the date of this Agreement, to the effect that, as of such date and subject to the assumptions, limitations, qualifications and other matters set forth in such opinion, the Exchange Ratio pursuant to this Agreement is fair from a financial point of view to T-Mobile.  The Board of Directors of T-Mobile has received the opinion of Goldman Sachs & Co. LLC, dated the date of this Agreement, to the effect that, as of such date and subject to the assumptions, limitations, qualifications and other matters set forth in such opinion, the Exchange Ratio pursuant to this Agreement is fair from a financial point of view to T-Mobile.  The T-Mobile Independent Committee has received the opinion of Evercore Group L.L.C., dated the date of this Agreement, to the effect that, as of such date and subject to the assumptions, limitations, qualifications and other matters set forth in such opinion, the Exchange Ratio is fair, from a financial point of view, to the holders of shares of T-Mobile Common Stock (including such holders of T-Mobile Common Stock other than DT and its affiliates).

 

(v)                                 Brokers.  Except as set forth in Section 4.2(v) of the T-Mobile Disclosure Letter, no broker, investment banker, financial advisor or other person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the

 

62



 

transactions contemplated by this Agreement based upon arrangements made by or on behalf of T-Mobile.

 

(w)                               Takeover Statutes and Charter Provisions.  Assuming the accuracy of the representations and warranties set forth in Section 4.1(x), the Board of Directors of T-Mobile has taken all action necessary so that the restrictions on a “business combination” (as such term is used in Section 203 of the DGCL) contained in Section 203 of the DGCL will be inapplicable to this Agreement and the transactions contemplated hereby, including the Merger Transactions.  As of the date of this Agreement, no “fair price,” “moratorium,” “control share acquisition” or other antitakeover statute or similar statute or regulation applies with respect to T-Mobile or any of its subsidiaries in connection with this Agreement, the Merger Transactions or any of the other transactions contemplated hereby.  As of the date of this Agreement, there is no stockholder rights plan, “poison pill” or similar antitakeover agreement or plan in effect to which T-Mobile or any of its subsidiaries is subject, party or otherwise bound.

 

(x)                                 Ownership of Sprint Common Stock.  Neither T-Mobile nor any of its affiliates is, nor at any time during the last three years, has T-Mobile or any of its affiliates been, an “interested stockholder” of Sprint as defined in Section 203 of the DGCL.  T-Mobile and its affiliates do not beneficially own any shares of Sprint Common Stock or other securities of Sprint or any option, warrants or other rights to acquire Sprint Common Stock or other securities of, or any other economic interest in, Sprint.

 

(y)                                 Financing.

 

(i)                                     T-Mobile has delivered to Sprint a true, complete and correct copy of an executed commitment letter, dated the date of this Agreement (such commitment letter as the same may be amended from time-to-time  is referred to herein as the “Commitment Letter”, together with the customary fee letters referred to in clause (ii) below), among T-Mobile USA, Inc. and the Financing Parties party thereto, pursuant to which, among other things, each of the Financing Parties has agreed, subject to the terms and conditions of the Commitment Letter, to provide or cause to be provided the financing commitments specified in the Commitment Letter subject to the terms and conditions thereof, the proceeds of which are intended by T-Mobile to be utilized as specified in the Commitment Letter. The financing commitments contemplated under the Commitment Letter and the financing contemplated thereby are referred to herein, individually and collectively, as the “Financing”.

 

(ii)                                  The Commitment Letter as of the date hereof, (x)is in full force and effect, (y) is a legal, valid and binding obligation of the T-Mobile USA, Inc. and, to the knowledge of T-Mobile, the other parties thereto (z) has not been amended or modified prior to the date hereof. As of the date hereof, (i) no event has occurred which, with or without notice, lapse of time or both, would constitute a material default or material breach on the part of T-Mobile USA, Inc. under the Commitment Letter, and (ii) subject the satisfaction of the conditions set forth in Section 7.1 and Section 7.2 hereof, and assuming the accuracy in all material respects of the representations and warranties contained in Section 4.1, 4.3 and 4.4, T-Mobile has no reason to believe that it will be unable to satisfy on a timely basis any material term or condition of closing to be satisfied by the

 

63



 

Commitment Letter on or prior to the Closing Date. As of the date hereof, there are no conditions precedent related to the funding of the full amount of the Financing (including any “market flex” provisions contained in the Commitment Letter) other than as expressly set forth in or expressly contemplated by the Commitment Letter.  As of the date hereof, there are no side letters or other agreements, contracts or arrangements (except for customary fee letters, fee credit letters, and engagement letters, a correct and complete copy of which have been delivered by T-Mobile to Sprint on or prior to the date of this Agreement (other than with respect to redacted fees, fee amounts, pricing terms, pricing caps, “market flex” provisions and other economic terms) which do not contain provisions that impose any additional conditions to the funding of the Financing not otherwise set forth in the Commitment Letter) related to the funding of the full amount of the Financing other than as expressly set forth in or expressly contemplated by the Commitment Letter.

 

(z)                                  Merger Sub.  The authorized capital stock of Merger Sub consists of 100 shares of common stock, par value $0.01 per share, all of which are validly issued and outstanding.  All of the issued and outstanding capital stock of Merger Sub is, and at the Effective Time will be, owned by Merger Company.  Merger Sub was formed solely for the purpose of entering into the transactions contemplated by this Agreement and, since the date of its formation, has not carried on any business, conducted any operations or incurred any liabilities or obligations other than the execution of this Agreement, the performance of its obligations hereunder and matters ancillary thereto.  Subject only to the adoption of this Agreement by the sole stockholder of Merger Sub, Merger Sub has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the Merger and the other transactions contemplated hereby.  The execution and delivery of this Agreement by Merger Sub and the consummation by Merger Sub of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Merger Sub, subject only to the adoption of this Agreement by the sole stockholder of Merger Sub and the filing of the Merger Certificate pursuant to the DGCL.  This Agreement has been duly executed and delivered by Merger Sub and, assuming the due authorization, execution and delivery of this Agreement by the other parties hereto, constitutes the legal, valid and binding obligation of Merger Sub, enforceable against Merger Sub in accordance with its terms, except that such enforcement may be subject to the Enforceability Exceptions.

 

(aa)                          Merger Company.  All of the limited liability interests of Merger Company are, and at the Effective Time will be, owned by T-Mobile.  Merger Company was formed solely for the purpose of entering into the transactions contemplated by this Agreement and, since the date of its formation, has not carried on any business, conducted any operations or incurred any liabilities or obligations other than the execution of this Agreement, the performance of its obligations hereunder and matters ancillary thereto.  Subject only to the adoption of this Agreement by the sole member of Merger Company, Merger Company has all requisite limited liability company power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the SoftBank US Mergers and the other transactions contemplated hereby.  The execution and delivery of this Agreement by Merger Company and the consummation by Merger Company of the transactions contemplated hereby have been duly authorized by all necessary limited liability company action on the part of Merger Company, subject only to the adoption of this Agreement by the sole member of Merger Company and the filing of the

 

64



 

SoftBank US Merger Certificates pursuant to the DGCL.  This Agreement has been duly executed and delivered by Merger Company and, assuming the due authorization, execution and delivery of this Agreement by the other parties hereto, constitutes the legal, valid and binding obligation of Merger Company, enforceable against Merger Company in accordance with its terms, except that such enforcement may be subject to the Enforceability Exceptions. No entity classification election has been made to treat Merger Company, for U.S. federal income tax purposes, other than as an entity disregarded as separate from T-Mobile.

 

Section 4.3.                                 Representations and Warranties of the SoftBank Parties.  The SoftBank Parties represent and warrant to T-Mobile, Merger Sub, Merger Company and the DT Parties as follows:

 

(a)                                 Organization, Standing and Corporate Power.  Each SoftBank Party is a corporation or other legal entity duly organized, validly existing and in good standing (with respect to jurisdictions that recognize such concept) under the laws of the jurisdiction in which it is organized and has the requisite corporate or other power, as the case may be, and authority to carry on its business as now being conducted.  Each SoftBank US HoldCo is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions that recognize such concept) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary.  Each SoftBank US HoldCo has delivered or made available to T-Mobile prior to the date of this Agreement true and complete copies of its certificate of incorporation and bylaws.

 

(b)                                 Corporate Authority.  Subject, in the case of the SoftBank US HoldCos, only to the adoption of this Agreement by SoftBank UK HoldCo, in its capacity as the sole stockholder of each SoftBank US HoldCo, each of the SoftBank Parties has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement by the SoftBank Parties and the consummation by the SoftBank Parties of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the SoftBank Parties, subject, in the case of the SoftBank US HoldCos, only to the adoption of this Agreement by SoftBank UK HoldCo in its capacity as the sole stockholder of such SoftBank US HoldCo and the filing of the SoftBank US Merger Certificates pursuant to the DGCL.  This Agreement has been duly executed and delivered by the SoftBank Parties and, assuming the due authorization, execution and delivery of this Agreement by the other parties hereto, constitutes the legal, valid and binding obligation of each of the SoftBank Parties, enforceable against each of the SoftBank Parties in accordance with its terms, except that such enforcement may be subject to the Enforceability Exceptions.  Other than, in the case of the SoftBank US HoldCos, the adoption of this Agreement by SoftBank UK HoldCo in its capacity as the sole stockholder of each SoftBank US HoldCo, no approval by the stockholders of any of the SoftBank Parties is required in order for each of the SoftBank Parties to execute, deliver and perform its obligations under this Agreement or to consummate the transactions hereby on the terms and subject to the conditions of this Agreement.

 

(c)                                  Ownership of Sprint Shares; Total Shares; Assets.  As of the date hereof, Starburst is the record and beneficial owner of 3,076,525,523 shares of Sprint Common Stock, Galaxy is the record and beneficial owner of 314,980,663 shares of Sprint Common Stock (such

 

65



 

shares of Sprint Common Stock held by the SoftBank US HoldCos, together with any shares of Sprint Common Stock acquired by the SoftBank Parties from and after the Effective Date as permitted under Section 5.1(d), collectively, the “Sprint Subject Shares”) and SoftBank is the indirect beneficial owner of all of the shares of common stock of each of Starburst and Galaxy.  The Sprint Subject Shares are free and clear of any Lien and any other limitation or restriction (including any restriction on the right to vote or transfer the Sprint Subject Shares), except (i) for the obligation to settle the Galaxy RSUs in Sprint Capital Stock, (ii) as provided hereunder or (iii) pursuant to any applicable restrictions on transfer under the Securities Act.  As of the date hereof, neither SoftBank US HoldCo owns any assets, directly or indirectly, beneficially or otherwise, other than its respective Sprint Subject Shares.  As of the date hereof, none of the SoftBank Parties owns, directly or indirectly, beneficially or otherwise, any shares of Sprint Common Stock other than the Sprint Subject Shares and 54,579,924 shares of Sprint Common Stock issuable upon exercise of the SoftBank Sprint Warrants.

 

(d)                                 Voting Power.  Collectively, SoftBank and its wholly owned subsidiaries have full voting power, full power of disposition, full power to issue instructions with respect to the matters set forth herein, and full power to agree to all of the matters set forth in the SoftBank Support Agreement, in each case with respect to all of the Sprint Subject Shares.  None of the Sprint Subject Shares are subject to any voting trust or other agreement or arrangement with respect to the voting of such shares, except as provided in the SoftBank Support Agreement.

 

(e)                                  Capitalization.  The authorized capital stock of Galaxy consists of 2,000 shares of Galaxy Common Stock.  As of the date hereof and as of the Closing Date, (i) 1,501 shares of Galaxy Common Stock are issued and outstanding, all of which are owned of record and beneficially by SoftBank UK HoldCo, and (ii) no shares of Galaxy Common Stock are held by Galaxy in its treasury.  The authorized capital stock of Starburst consists of 100,000 shares of Starburst Common Stock.  As of the date hereof and as of the Closing Date, (i) 34,122 shares of Starburst Common Stock are issued and outstanding, all of which are owned of record and beneficially by SoftBank UK HoldCo, and (ii) no shares of Starburst Common Stock are held by Starburst in its treasury.  All outstanding shares of capital stock of each SoftBank US HoldCo are, and all shares of capital stock of each SoftBank US HoldCo that may be issued shall be when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights.

 

(f)                                   Legal Proceedings.  As of the date of this Agreement, there are no Actions pending or, to the knowledge of SoftBank, threatened against either SoftBank or any subsidiary of SoftBank (other than the SoftBank US HoldCos and other than Sprint or any subsidiary of Sprint) arising out of or relating to (i) the SoftBank Parties’ ownership of the Sprint Subject Shares or (ii) this Agreement or any of the transactions contemplated hereby, in each case, except as, individually or in the aggregate, would not reasonably be expected to prevent or materially delay the consummation of any of the transactions contemplated hereby.  As of the date of this Agreement and as of the Closing Date, there are no Actions pending or threatened against either SoftBank US HoldCo.

 

(g)                                  Holdco Status.  Each SoftBank US HoldCo was formed solely for the purpose of acquiring and holding shares of Sprint Common Stock and, since the date of its formation, has not carried on any other business, conducted any other operations, owned any

 

66



 

assets other than the Sprint Subject Shares, or incurred any liabilities or obligations of any kind other than those incident to its ownership of the Sprint Subject Shares and the execution of this Agreement.

 

(h)                                 Taxes.  With respect to each SoftBank US HoldCo:

 

(i)                                     (A) All material Tax Returns required to be filed by or with respect to such SoftBank US HoldCo have been timely filed, (B) all such Tax Returns are true, complete and correct in all material respects, (C) all material Taxes (whether or not reflected on such Tax Returns) required to have been paid have been timely paid and (D) all material Taxes required to be withheld have been duly and timely withheld, and such withheld Taxes have been either duly and timely paid to the proper Taxing Authority or properly set aside in accounts for such purpose and will be duly and timely paid to the proper Taxing Authority.

 

(ii)                                  There is no written agreement or other written document waiving or extending, or having the effect of waiving or extending, the statute of limitations or the period of assessment or collection of any material amount of Taxes that remains in effect.

 

(iii)                               (A) No material investigation, examination, audit or other administrative proceeding with regard to any Taxes or Tax Return is currently pending or has been threatened and (B) no Taxing Authority has asserted in writing, or has threatened, any material deficiency or claim for Taxes or any material adjustment to Taxes.

 

(iv)                              Such SoftBank US HoldCo is not bound by any closing agreement within the meaning of Section 7121 of the Code (or any similar provision of state, local or foreign Law) and has not received or requested any private letter ruling, technical advice memorandum or other written ruling from a Taxing Authority.

 

(v)                                 In the past three years, no claim has been made in writing by a Governmental Entity in a jurisdiction where such SoftBank US HoldCo does not file Tax Returns with respect to a particular type of Tax that it is or may be subject to taxation for such Tax by that jurisdiction.

 

(vi)                              Such SoftBank US HoldCo (A) is not a party to or bound by, or does not have any obligation under, any Tax indemnification, separation, sharing or similar agreement or arrangement, (B) is not and has not been a member of any consolidated, combined, unitary or similar group for purposes of filing Tax Returns or paying Taxes (except that, from October 5, 2012 to July 10, 2013, Starburst was the common parent of a consolidated federal income tax return group that included Sprint and its subsidiaries), and (C) has no liability for the payment of Taxes of any person as a successor or transferee, or otherwise.

 

(vii)                           None of such SoftBank US HoldCo’s assets is subject to any Liens for Taxes (other than statutory Liens for Taxes that are not yet delinquent).

 

67



 

(viii)        Such SoftBank US HoldCo has not constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code.

 

(ix)          Such SoftBank US HoldCo has not taken any action, nor does it know of the existence of any fact, agreement, plan or other circumstance, that could reasonably be expected to prevent or impede (i) the qualification of any of the SoftBank US Mergers or the Merger as a “reorganization” within the meaning of Section 368(a) of the Code, (ii) Starburst or Galaxy from delivering their respective Tax Certificates, or (iii) Sprint obtaining the opinion described in Section 7.3(e).

 

(x)           Such SoftBank US HoldCo has not participated in any “reportable transaction” within the meaning of Treasury Regulations Section 1.6011-4(b) (or any similar provision of state, local or foreign Law).

 

(xi)          No power of attorney has been granted to any person with respect to any Tax matter of such SoftBank US HoldCo that will remain in force after the Closing.

 

(xii)         Such SoftBank US HoldCo (or any successor thereto) will not be required to include any material item of income in, or exclude any material item of deduction from, its taxable income for any taxable period (or portion thereof) beginning after the Closing Date as a result of any (A) adjustment required by reason of a change in method of accounting under Section 481(c) of the Code (or any similar provision of state, local or foreign Law), (B) closing agreement within the meaning of Section 7121 of the Code (or any similar provision of state, local or foreign Law) entered into prior to the Closing, or (C) installment sale or intercompany transaction made prior to the Closing.

 

(xiii)        No such SoftBank US HoldCo has been or will have been, at any time during the five-year period ending on the date on which the SoftBank US Mergers Effective Time occurs, a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code.

 

(i)            Information Supplied.  None of the information supplied or to be supplied by the SoftBank Parties specifically for inclusion or incorporation by reference in (i) the Form S-4 will, at the time the Form S-4 is filed with the SEC, and at any time it is amended or supplemented or at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading or (ii) the Consent Solicitation Statement will, at the date it is first mailed to the respective stockholders of Sprint and T-Mobile, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.  Notwithstanding the foregoing, no representation or warranty is made by the SoftBank Parties with respect to statements made or incorporated by reference therein based on

 

68



 

information supplied by T-Mobile or a DT Party specifically for inclusion or incorporation by reference in the Form S-4 or the Consent Solicitation Statement.

 

Section 4.4.           Representations and Warranties of the DT Parties.  The DT Parties represents and warrants to Sprint and SoftBank as follows:

 

(a)           Organization, Standing and Corporate Power.  Each DT Party is a corporation or other legal entity duly organized, validly existing and in good standing (with respect to jurisdictions that recognize such concept) under the laws of the jurisdiction in which it is organized and has the requisite corporate or other power and authority to carry on its business as now being conducted.

 

(b)           Corporate Authority.  Each DT Party has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement by the DT Parties and the consummation by the DT Parties of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the DT Parties.  This Agreement has been duly executed and delivered by the DT Parties and, assuming the due authorization, execution and delivery of this Agreement by the other parties hereto, constitutes the legal, valid and binding obligation of the DT Parties, enforceable against the DT Parties in accordance with its terms, except that such enforcement may be subject to the Enforceability Exceptions.  No approval by the stockholders of the DT Parties is required in order for the DT Parties to execute, deliver and perform its obligations under this Agreement or to consummate the transactions hereby on the terms and subject to the conditions of this Agreement.

 

(c)           Legal Proceedings.  As of the date of this Agreement, there are no Actions pending or, to the knowledge of DT, threatened against either DT or any subsidiary of DT (other than T-Mobile or any subsidiary of T-Mobile) arising out of or relating to this Agreement or any of the transactions contemplated hereby, in each case, except as, individually or in the aggregate, would not reasonably be expected to prevent or materially delay the consummation of any of the transactions contemplated hereby.

 

(d)           Information Supplied.  None of the information supplied or to be supplied by the DT Parties specifically for inclusion or incorporation by reference in (i) the Form S-4 will, at the time the Form S-4 is filed with the SEC, and at any time it is amended or supplemented or at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading or (ii) the Consent Solicitation Statement will, at the date it is first mailed to the respective stockholders of Sprint and T-Mobile, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.  Notwithstanding the foregoing, no representation or warranty is made by the DT Parties with respect to statements made or incorporated by reference therein based on information supplied by Sprint or SoftBank specifically for inclusion or incorporation by reference in the Form S-4 or the Consent Solicitation Statement.

 

69



 

Section 4.5.           No Other Representations and Warranties.

 

(a)           Except for the representations and warranties of Sprint contained in Section 4.1 or in any certificates delivered by Sprint in connection with the Merger Transactions pursuant to Section 7.2(c) and the representations and warranties of the SoftBank Parties contained in Section 4.3, T-Mobile, Merger Sub, Merger Company and the DT Parties acknowledge that none of Sprint, the SoftBank Parties or any of their respective affiliates or such parties’ or their affiliates’ respective Representatives, nor any other person on behalf of Sprint or the SoftBank Parties, makes, and none of T-Mobile, Merger Sub, Merger Company or the DT Parties has relied upon, any other express or implied representation or warranty with respect to Sprint, the SoftBank Parties or any of their respective affiliates or with respect to any other information provided or made available by them or on their behalf to T-Mobile, Merger Sub, Merger Company, the DT Parties or their respective Representatives in connection with this Agreement, including any information, documents, projections, forecasts or other material made available to T-Mobile, Merger Sub, Merger Company, the DT Parties or their respective Representatives in certain “data rooms” or management presentations or meetings in expectation of the Merger Transactions.

 

(b)           Except for the representations and warranties of T-Mobile, Merger Sub and Merger Company contained in Section 4.2 or in any certificates delivered by T-Mobile in connection with the Merger Transactions pursuant to Section 7.3(c) and the representations and warranties of the DT Parties contained in Section 4.4, Sprint and the SoftBank Parties acknowledge that none of T-Mobile, Merger Sub, Merger Company, the DT Parties or any of their respective affiliates or such parties’ or their affiliates’ respective Representatives, nor any other person on behalf of T-Mobile, Merger Sub, Merger Company or the DT Parties, makes, and none of Sprint or the SoftBank Parties has relied upon, any other express or implied representation or warranty with respect to T-Mobile, Merger Sub, Merger Company, the DT Parties or their respective affiliates or with respect to any other information provided or made available by them or on their behalf to Sprint, the SoftBank Parties or their respective Representatives in connection with this Agreement, including any information, documents, projections, forecasts or other material made available to Sprint, the SoftBank Parties or their respective Representatives in certain “data rooms” or management presentations or meetings in expectation of the Merger Transactions.

 

ARTICLE V

 

COVENANTS RELATING TO CONDUCT OF BUSINESS

 

Section 5.1.           Conduct of Business.

 

(a)           Conduct of Business by Sprint.  Except (w) as set forth in Section 5.1(a) of the Sprint Disclosure Letter, (x) as otherwise expressly permitted by this Agreement, (y) as required by applicable Law or (z) as consented to by T-Mobile in writing (such consent not to be unreasonably withheld, conditioned or delayed), during the period from the date of this Agreement to the earlier of the Effective Time and the termination of this Agreement pursuant to its terms, Sprint (1) shall, and shall cause its subsidiaries to, use reasonable best efforts to carry on their respective businesses in the ordinary course of business consistent with past practice

 

70



 

and, to the extent consistent therewith, use reasonable best efforts to preserve intact their current business organizations, preserve their assets and properties in good repair and condition and preserve their relationships with those persons having business dealings with them to the end that their goodwill and ongoing businesses shall be unimpaired at the Effective Time and (2) shall not, and shall not permit any of its subsidiaries to:

 

(i)            (A) other than dividends and distributions by a direct or indirect wholly owned subsidiary of Sprint to its parent, declare, set aside or pay any dividends on, make any other distributions in respect of, or enter into any agreement with respect to the voting of, any of its capital stock, (B) (I) other than with respect to the capital stock or securities of direct or indirect wholly owned subsidiaries of Sprint, split, combine or reclassify any shares of its capital stock or (II) issue any other securities in respect of, in lieu of or in substitution for shares of its capital stock, unless such issuance is to other direct or indirect wholly owned subsidiaries of Sprint, or (C) purchase, redeem or otherwise acquire any shares of capital stock of Sprint or any non-wholly owned subsidiary of Sprint or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities of Sprint or any non-wholly owned subsidiary of Sprint (other than the acquisition of shares from a holder of a Sprint Equity Award in satisfaction of withholding obligations or in payment of the exercise price in accordance with the terms thereof or in connection with the forfeiture of a Sprint Equity Award);

 

(ii)           issue, deliver, sell, pledge or otherwise encumber or subject to any Lien any shares of its capital stock, any other voting or equity securities or interests or any securities or interests convertible into, or any rights, warrants or options to acquire, any such shares, securities or interests or convertible securities other than (A) in connection with the exercise or settlement of Sprint Equity Awards outstanding as of the date of this Agreement in accordance with their present terms (or granted following the date of this Agreement in accordance with the terms of this Agreement), (B) in accordance with Section 5.1(a)(ii) of the Sprint Disclosure Letter, (C) the issuance, delivery or sale of capital stock or other voting or equity securities or interests to another direct or indirect wholly owned subsidiary of Sprint, (D) Liens on the capital stock of any subsidiaries of Sprint which are required to be granted pursuant to the terms of any Indebtedness existing on the date hereof or permitted to be incurred in accordance with Section 5.1(a)(viii) or that constitutes or is incurred because it represents a Pre-Merger Financing Transaction, or (E) the issuance by Sprint of up to 61,868,554 shares of Sprint Common Stock upon the exercise of Sprint Warrants in accordance with the terms thereof;

 

(iii)          except as set forth in Section 5.1(a)(iii)(X) of the Sprint Disclosure Letter, (X) amend or modify in any material respect, renew, waive any material provision of, or terminate, any Sprint Material Contract, or enter into any contract that would have been a Sprint Material Contract had it been in effect as of the date of this Agreement, except (A) in the ordinary course of business consistent with past practice (other than materially increasing the financial commitments of Sprint or any of its subsidiaries under any contract of the type described in clause (D)(x)(II) of the definition of “Sprint Material Contracts “ (with the references to “$200,000,000” and “$400,000,000” in such clause replaced with “$300,000,000” and “$600,000,000,” respectively, for purposes of this

 

71



 

Section 5.1(a)(iii)) and other than with respect to any contract of the type described in clauses (H)(z), (J)(x), (L)(x) and (M) of the definition of “Sprint Material Contracts,” to which the foregoing ordinary course exception shall not apply), (B) in connection with any matter to the extent such matter is expressly permitted by another clause of this Section 5.1(a) or (C) for any renewal or extension of a Sprint Material Contract in the ordinary course of business consistent with past practice and in accordance with the express terms of such Sprint Material Contract as in effect on the date hereof;  or (Y) permit to exist as of the Closing Date any condition that is or would result in an event of termination or an event of default with respect to any of the Sprint Material Contracts set forth on Section 5.1(a)(iii)(Y) to the Sprint Disclosure Letter, or otherwise would result in a right of the applicable counterparty to terminate such Sprint Material Contract;

 

(iv)          other than acquisitions of wireless spectrum, which shall be governed by Section 5.1(a)(v), and except for transactions solely between Sprint and its wholly owned subsidiaries, or among Sprint’s wholly owned subsidiaries, (A) acquire any equity interests in, or make any investment in or any capital contribution to, any person, or acquire a substantial portion of the assets or business of any person (or any division or line of business thereof), including in each case by merger or consolidation, or (B) otherwise acquire (including through leases, subleases and licenses of real property) any assets, except (I) in the case of clause (B), inventory, equipment, tower leases and assets acquired in the ordinary course of business consistent with past practice and (II) in the case of clauses (A) and (B), (w) pursuant to any agreement in effect on the date hereof (and without giving effect to any amendment or modification thereto after the date hereof) and made available to T-Mobile prior to the date hereof, (x) acquisitions in the investment portfolio of Sprint or its subsidiaries made in the ordinary course of business consistent with past practice and consistent with Sprint’s bona fide cash management policies, (y) assets required for, and reasonably acquired for, a disaster recovery operation or (z) in one or more transactions with respect to which the aggregate consideration for all such transactions during the period from the date of this Agreement to the Closing Date does not exceed $250,000,000;

 

(v)           acquire any wireless spectrum, except (A) fair market value exchanges of spectrum licenses in the ordinary course of business consistent with past practice that do not adversely affect existing operations of Sprint or its subsidiaries, (B) pursuant to any agreement in effect on the date hereof (and without giving effect to any amendment or modification thereto after the date hereof) and made available to T-Mobile prior to the date hereof, (C) pursuant to an auction of wireless spectrum by a Governmental Entity or (D) in one or more transactions with respect to which the aggregate consideration for all such transactions (including any cash component of an otherwise fair market value exchange of spectrum licenses) during the period from the date of this Agreement to the Closing Date does not exceed $1,000,000,000;

 

(vi)          transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon, voluntarily fail to renew on commercially reasonable terms, allow to lapse or expire or otherwise dispose of (in each case except among Sprint and its wholly owned subsidiaries, including transactions between such subsidiaries) any Sprint Communications Licenses or wireless spectrum (or leases therefor) (or authorize,

 

72



 

by action or inaction, any licensee leasing spectrum to Sprint or any of its subsidiaries to do any of the foregoing to the extent it would impair rights of Sprint or its subsidiaries to leased spectrum), other than (A) fair market value exchanges of spectrum licenses in the ordinary course of business consistent with past practice that do not adversely affect existing operations of Sprint or its subsidiaries, and would not reasonably be expected to adversely affect the expected benefits of the transactions contemplated by this Agreement to T-Mobile and Sprint, in each case, in any material respect, (B) pursuant to any agreement in effect on the date hereof and made available to T-Mobile prior to the date hereof (and without giving effect to any amendment or modification thereto after the date hereof), (C) effecting any of the foregoing in one or more transactions (including any cash component of an otherwise fair market value exchange of spectrum licenses and fair market value of the wireless spectrum for any lease not so renewed) during the period from the date of this Agreement to the Closing Date does not exceed $50,000,000, or (C) Liens which are required to be granted pursuant to the terms of any Indebtedness existing on the date hereof or permitted to be incurred in accordance with Section 5.1(a)(viii);

 

(vii)         except in the ordinary course of business, transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon, voluntarily fail to renew on commercially reasonable terms, allow to lapse or expire or otherwise dispose of (except transfers, sales, leases or licenses solely among Sprint and its wholly owned subsidiaries, including transactions between such subsidiaries) any Licenses (other than Sprint Communications Licenses), assets (other than wireless spectrum and Intellectual Property), operations, rights, businesses or interests therein of Sprint or its subsidiaries, other than (A) any such Licenses, assets, operations, rights, businesses or interests therein with a fair market value or purchase price in the aggregate not in excess of $250,000,000 for all such transactions during the period from the date of this Agreement to the Closing Date or (B) pursuant to any agreement in effect on the date hereof (and without giving effect to any amendment or modification thereto after the date hereof) and made available to T-Mobile prior to the date hereof;

 

(viii)        create, incur or assume any Indebtedness for borrowed money; issue any debt securities or any right to acquire debt securities; assume, guarantee, endorse or otherwise become liable or responsible (whether, directly, contingently or otherwise) for the Indebtedness of another person; enter into any agreement to maintain any financial condition of another person; enter into any securitization or factoring arrangement; or enter into any arrangement having the economic effect of any of the foregoing, except for:

 

(A)          Indebtedness under Sprint’s current revolving credit facilities, and securitization facilities;

 

(B)          any Indebtedness incurred to refinance or replace Indebtedness in existence on the date hereof or permitted to be incurred by this Section 5.1(a)(viii), which refinancing Indebtedness shall be in an amount not to exceed the amount of Indebtedness refinanced thereby, plus accrued and unpaid interest, customary fees and expenses relating thereto;

 

73



 

(C)          any intercompany Indebtedness solely among Sprint and/or its direct or indirect wholly owned subsidiaries;

 

(D)          incremental Indebtedness for borrowed money used to finance the acquisition of wireless spectrum under Section 5.1(a)(v)(C) after the date hereof and prior to the Closing Date, not to exceed $1,000,000,000 in the aggregate outstanding at any time;

 

(E)           incremental Indebtedness for borrowed money not to exceed $2,000,000,000 in the aggregate outstanding at any time; and

 

(F)           guarantees by Sprint or its wholly owned subsidiaries of Indebtedness for borrowed money of Sprint or its wholly owned subsidiaries (other than intercompany Indebtedness) to the extent that (1) such guarantee is required by the terms of such Indebtedness and (2) such Indebtedness is in existence on the date hereof or incurred in compliance with clauses (A) through (E) of this Section 5.1(a)(viii);

 

provided that any such Indebtedness incurred pursuant to the foregoing clauses (B), (D) or (E) is prepayable at par at any time (except, in the case of any term loan B, for any customary 101 “soft call”); provided, further, that the foregoing shall not limit the incurrence of Indebtedness pursuant to any Pre-Merger Financing Transaction in accordance with Section 6.17;

 

(ix)          except in the ordinary course of business consistent with past practice, make any loans or advances, except (A) to the extent required under any agreement in effect on the date hereof (and without giving effect to any amendment or modification thereto after the date hereof) and made available to T-Mobile prior to the date hereof, (B) to Sprint or any of its wholly owned subsidiaries (including loans and advances between such subsidiaries) or (C) loans or advances not in excess of $30,000,000 in the aggregate for all such loans and advances during the period from the date of this Agreement to the Closing Date;

 

(x)           make or forgive any loans or advances to any of its employees, directors or officers (other than making travel and similar advances in the ordinary course of business consistent with past practice), except in the ordinary course of business in amounts not in excess of $5,000 per employee;

 

(xi)          other than any Action with respect to Taxes (which are governed by Section 5.1(a)(xii)), waive, release, assign, settle or compromise any pending or threatened (in writing) Action, other than (A) settlements that result in recoveries by Sprint or any of its subsidiaries, (B) settlements involving de minimis non-monetary obligations entered into in the ordinary course of business consistent with past practice or (C) settlements that result solely in monetary obligations of Sprint or its subsidiaries (without the admission of wrongdoing or a nolo contendere or similar plea by, the imposition of injunctive or other equitable relief on, or restrictions on the future activity or conduct of, Sprint or any of its subsidiaries, and excluding any Action subject to Section 6.16) involving the payment by Sprint or any of its subsidiaries of (i) amounts not

 

74



 

in excess of the amounts specifically reserved in accordance with GAAP with respect to such Action on Sprint’s consolidated financial statements for the quarterly period ending December 31, 2017, or (ii) amounts not in excess of $100,000,000 for a single Action or $167,000,000 in the aggregate for all such Actions during the period from the date of this Agreement to the Closing Date;

 

(xii)         other than in the ordinary course of business consistent with past practice, (A) make, change or revoke any material Tax election, (B) settle or compromise any claim, audit, proceeding or liability relating to a material amount of Taxes, (C) change (or make a request to any Taxing Authority to change) any Tax accounting period or any material aspect of its method of accounting for Tax purposes, (D) amend any material Tax Return, (E) enter into any closing agreement within the meaning of Section 7121 of the Code (or any similar provision of state, local or foreign Law) with respect to any material Tax or (F) surrender any claim for a refund of a material amount of Taxes;

 

(xiii)        other than (1) in the ordinary course of business and consistent with past practice, (2) as set forth on Section 5.1(a)(xiii) of the Sprint Disclosure Letter, (3) as required by any Sprint Benefit Plan as in effect on the date of this Agreement or (4) as required by applicable Law, (A) increase any compensation or benefits of any executive officer or director of Sprint, (B) grant any cash or equity incentive compensation to any executive officer or director of Sprint, or pay or settle any cash or equity incentive compensation, other than in accordance with the terms of the applicable Sprint Benefit Plan based, if applicable, on actual performance, (C) enter into or adopt any new Sprint Benefit Plan or amend in any material respect or terminate any existing Sprint Benefit Plan, (D) accelerate the vesting of any compensation or benefits (including Sprint Equity Awards), (E) provide any funding for any rabbi trust or similar arrangement, or take any other action to fund or secure the payment of any compensation or benefit, (F) amend the funding obligation or contribution rate of any Sprint Benefit Plan or change any underlying assumptions to calculate benefits payable under any Sprint Benefit Plan, except as may be required by GAAP, or (G) grant to any executive officer or director of Sprint any right to receive any severance, change-in-control, retention, termination or similar compensation or benefits or increases therein;

 

(xiv)        (A) negotiate, enter into, materially modify or (except in accordance with its terms) extend any Labor Agreement or (B) voluntarily recognize or certify any labor or trade union, works council, employee representative body or other labor organization as the representative of any employees of Sprint or any of its subsidiaries;

 

(xv)         change any of its material financial accounting policies or procedures currently in effect, except (A) as required by GAAP (or with respect to permitted early adoption of changes required by GAAP), Regulation S-X of the Exchange Act or a Governmental Entity or quasi-governmental authority (including the Financial Accounting Standards Board (the “FASB”) or any similar organization) as determined in consultation with Sprint’s outside auditor or (B) as required by applicable Law;

 

75



 

(xvi)        make any payment or accrual of aggregate capital expenditures (excluding leased handsets in the ordinary course of business consistent with past practice) that are greater than 110% of the amounts set forth in Section 5.1(a)(xvi) of the Sprint Disclosure Letter for the respective periods set forth therein;

 

(xvii)       write up, write down or write off the book value of any of its assets, other than (A) in the ordinary course of business consistent with past practice or (B) as may be consistent with Sprint’s financial accounting policies and procedures and GAAP as determined in consultation with Sprint’s outside auditor;

 

(xviii)      transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest or otherwise dispose of (in each case except among Sprint and its wholly owned subsidiaries), or cancel, dedicate to the public, disclaim, forfeit, reexamine, abandon or allow to lapse (except with respect to patents expiring in accordance with their terms), any rights in, or registrations or applications for, Intellectual Property, other than immaterial rights in, or registrations or applications for, Intellectual Property in the ordinary course of business consistent with past practice;

 

(xix)        (A) amend the Sprint Certificate of Incorporation or Bylaws of Sprint or the comparable organizational documents of any of its subsidiaries (other than any amendment to the organizational documents of any of its wholly owned subsidiaries that would not reasonably be expected to be materially adverse to T-Mobile or Merger Sub or to prevent or materially delay the consummation of any of the transactions contemplated hereby) or (B) merge or consolidate with any person (other than any merger or consolidation involving only Sprint’s direct and indirect wholly owned subsidiaries) or adopt or implement any plan of complete or partial liquidation, dissolution, consolidation, restructuring, recapitalization or other reorganization; or

 

(xx)         authorize, commit, agree or publicly announce an intention to take any of the foregoing actions.

 

(b)           Conduct of Business by T-Mobile.  Except (w) as set forth in Section 5.1(b) of the T-Mobile Disclosure Letter, (x) as otherwise expressly permitted by this Agreement, (y) as required by applicable Law or (z) as consented to by Sprint in writing (such consent not to be unreasonably withheld, conditioned or delayed), during the period from the date of this Agreement to the earlier of the Effective Time and the termination of this Agreement pursuant to its terms, T-Mobile (1) shall, and shall cause its subsidiaries to, use reasonable best efforts to carry on their respective businesses in the ordinary course of business consistent with past practice and, to the extent consistent therewith, use reasonable best efforts to preserve intact their current business organizations, preserve their assets and properties in good repair and condition and preserve their relationships with those persons having business dealings with them to the end that their goodwill and ongoing businesses shall be unimpaired at the Effective Time and (2) shall not, and shall not permit any of its subsidiaries to:

 

(i)            (A) other than dividends and distributions by a direct or indirect wholly owned subsidiary of T-Mobile to its parent, declare, set aside or pay any dividends on, make any other distributions in respect of, or enter into any agreement with

 

76



 

respect to the voting of, any of its capital stock, (B) (I) other than with respect to the capital stock or securities of direct or indirect wholly owned subsidiaries of T-Mobile, split, combine or reclassify any shares of its capital stock or (II) issue any other securities in respect of, in lieu of or in substitution for shares of its capital stock, unless such issuance is to other direct or indirect wholly owned subsidiaries of T-Mobile, or (C) purchase, redeem or otherwise acquire any shares of capital stock of T-Mobile or any non-wholly owned subsidiary of T-Mobile or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities of T-Mobile or any non-wholly owned subsidiary of T-Mobile (other than the acquisition of shares from a holder of a T-Mobile Equity Award in satisfaction of withholding obligations or in payment of the exercise price in accordance with the terms thereof or in connection with the forfeiture of a T-Mobile Equity Award);

 

(ii)           issue, deliver, sell, pledge or otherwise encumber or subject to any Lien any shares of its capital stock, any other voting or equity securities or interests or any securities or interests convertible into, or any rights, warrants or options to acquire, any such shares, securities or interests or convertible securities other than (A) in connection with the exercise or settlement of T-Mobile Equity Awards outstanding as of the date of this Agreement in accordance with their present terms (or granted following the date of this Agreement in accordance with the terms of this Agreement), (B) in accordance with Section 5.1(b)(ii) of the T-Mobile Disclosure Letter, (C) the issuance, delivery or sale of capital stock or other voting or equity securities or interests to another direct or indirect wholly owned subsidiary of T-Mobile, or (D) Liens on the capital stock of any subsidiaries of T-Mobile which are required to be granted pursuant to the terms of any Indebtedness existing on the date hereof or permitted to be incurred in accordance with Section 5.1(b)(viii) or that constitutes or is incurred because it represents a Pre-Merger Financing Transaction;

 

(iii)          (X) amend or modify in any material respect, renew, waive any material provision of, or terminate, any T-Mobile Material Contract, or enter into any contract that would have been a T-Mobile Material Contract had it been in effect as of the date of this Agreement, except (A) in the ordinary course of business consistent with past practice (other than with respect to any contract of the type described in clause (M) of the definition of “T-Mobile Material Contracts”, to which the foregoing ordinary course exception does not apply), (B) in connection with any matter to the extent such matter is expressly permitted by another clause of this Section 5.1(b) or (C) for any renewal or extension of a T-Mobile Material Contract in the ordinary course of business consistent with past practice and in accordance with the express terms of such T-Mobile Material Contract as in effect on the date hereof; or (Y) permit to exist as of the Closing Date any condition that is or would result in an event of termination or an event of default with respect to any of the T-Mobile Material Contracts set forth on Section 5.1(b)(iii)(Y) to the T-Mobile Disclosure Letter, or otherwise would result in a right of the applicable counterparty to terminate such T-Mobile Material Contract;

 

(iv)          other than acquisitions of wireless spectrum, which shall be governed by Section 5.1(b)(v), and except for transactions solely between T-Mobile and its wholly owned subsidiaries, or among T-Mobile’s wholly owned subsidiaries, (A)

 

77



 

acquire any equity interests in, or make any investment in or any capital contribution to, any person, or acquire a substantial portion of the assets or business of any person (or any division or line of business thereof), including in each case by merger or consolidation, or (B) otherwise acquire (including through leases, subleases and licenses of real property) any assets, except (I) in the case of clause (B), inventory, equipment, tower leases and assets acquired in the ordinary course of business consistent with past practice and (II) in the case of clauses (A) and (B), (w) pursuant to any agreement in effect on the date hereof (and without giving effect to any amendment or modification thereto after the date hereof) and made available to Sprint prior to the date hereof, (x) acquisitions in the investment portfolio of T-Mobile or its subsidiaries made in the ordinary course of business consistent with past practice and consistent with T-Mobile’s bona fide cash management policies, (y) assets required for, and reasonably acquired for, a disaster recovery operation or (z) in one or more transactions with respect to which the aggregate consideration for all such transactions during the period from the date of this Agreement to the Closing Date does not exceed $375,000,000;

 

(v)           acquire any wireless spectrum, except (A) fair market value exchanges of spectrum licenses in the ordinary course of business consistent with past practice that do not adversely affect existing operations of T-Mobile or its subsidiaries, (B) pursuant to any agreement in effect on the date hereof (and without giving effect to any amendment or modification thereto after the date hereof) and made available to Sprint prior to the date hereof, (C) pursuant to an auction of wireless spectrum by a Governmental Entity or (D) in one or more transactions with respect to which the aggregate consideration for all such transactions (including any cash component of an otherwise fair market value exchange of spectrum licenses) during the period from the date of this Agreement to the Closing Date does not exceed $2,000,000,000;

 

(vi)          transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon, voluntarily fail to renew on commercially reasonable terms, allow to lapse or expire or otherwise dispose of (in each case except among T-Mobile and its wholly owned subsidiaries, including transactions between such subsidiaries) any T-Mobile Communications Licenses or wireless spectrum (or leases therefor) (or authorize, by action or inaction, any licensee leasing spectrum to T-Mobile or any of its subsidiaries to do any of the foregoing to the extent it would impair rights of T-Mobile or its subsidiaries to leased spectrum), other than (A) fair market value exchanges of spectrum licenses in the ordinary course of business consistent with past practice that do not adversely affect existing operations of T-Mobile or its subsidiaries, and would not reasonably be expected to adversely affect the expected benefits of the transactions contemplated by this Agreement to T-Mobile and Sprint, in each case, in any material respect, (B) pursuant to any agreement in effect on the date hereof and made available to Sprint prior to the date hereof (and without giving effect to any amendment or modification thereto after the date hereof), or (C) effecting any of the foregoing in one or more transactions (including any cash component of an otherwise fair market value exchange of spectrum licenses and fair market value of the wireless spectrum for any lease not so renewed) during the period from the date of this Agreement to the Closing Date does not exceed $50,000,000, or (D) Liens which are required to be granted

 

78



 

pursuant to the terms of any Indebtedness existing on the date hereof or permitted to be incurred in accordance with Section 5.1(b)(viii);

 

(vii)         except in the ordinary course of business, transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon, voluntarily fail to renew on commercially reasonable terms, allow to lapse or expire or otherwise dispose of (except transfers, sales, leases or licenses solely among T-Mobile and its wholly owned subsidiaries, including transactions between such subsidiaries) any Licenses (other than T-Mobile Communications Licenses), assets (other than wireless spectrum and Intellectual Property), operations, rights, businesses or interests therein of T-Mobile or its subsidiaries, other than (A) any such Licenses, assets, operations, rights, businesses or interests therein with a fair market value or purchase price in the aggregate not in excess of $375,000,000 for all such transactions during the period from the date of this Agreement to the Closing Date or (B) pursuant to any agreement in effect on the date hereof (and without giving effect to any amendment or modification thereto after the date hereof) and made available to T-Mobile prior to the date hereof;

 

(viii)        create, incur or assume any Indebtedness for borrowed money; issue any debt securities or any right to acquire debt securities; assume, guarantee, endorse or otherwise become liable or responsible (whether, directly, contingently or otherwise) for the Indebtedness of another person; enter into any agreement to maintain any financial condition of another person; or enter into any arrangement having the economic effect of any of the foregoing, except for:

 

(A)          Indebtedness under T-Mobile’s current revolving credit agreements and securitization facilities;

 

(B)          any Indebtedness incurred to refinance or replace Indebtedness in existence on the date hereof or permitted to be incurred by this Section 5.1(b)(viii), which refinancing Indebtedness shall be in an amount not to exceed the amount of Indebtedness refinanced thereby, plus accrued and unpaid interest,  customary fees and expenses relating thereto;

 

(C)          any intercompany Indebtedness solely among T-Mobile and/or its direct or indirect wholly owned subsidiaries;

 

(D)          incremental Indebtedness for borrowed money used to finance the acquisition of wireless spectrum under Section 5.1(b)(v)(C) after the date hereof and prior to the Closing Date, not to exceed $2,500,000,000 in the aggregate outstanding at any time;

 

(E)           incremental Indebtedness for borrowed money not to exceed $2,000,000,000 in the aggregate outstanding at any time; and

 

(F)           guarantees by T-Mobile or its wholly owned subsidiaries of Indebtedness for borrowed money of T-Mobile or its wholly owned subsidiaries (other than intercompany Indebtedness) to the extent that (1) such guarantee is required by the terms of such Indebtedness and (2) such Indebtedness is in existence

 

79



 

on the date hereof or incurred in compliance with clauses (A) through (E) of this Section 5.1(b)(viii);

 

provided that the foregoing shall not limit the incurrence of Indebtedness pursuant to any Pre-Merger Financing Transaction in accordance with Section 6.17;

 

(ix)          except in the ordinary course of business consistent with past practice, make any loans or advances, except (A) to the extent required under any agreement in effect on the date hereof (and without giving effect to any amendment or modification thereto after the date hereof) and made available to Sprint prior to the date hereof, (B) to T-Mobile or any of its wholly owned subsidiaries (including loans and advances between such subsidiaries) or (C) loans or advances not in excess of $30,000,000 in the aggregate for all such loans and advances during the period from the date of this Agreement to the Closing Date;

 

(x)           make or forgive any loans or advances to any of its employees, directors or officers (other than making travel and similar advances in the ordinary course of business consistent with past practice), except in the ordinary course of business in amounts not in excess of $5,000 per employee;

 

(xi)          other than any Action with respect to Taxes (which are governed by Section 5.1(b)(xii)), waive, release, assign, settle or compromise any pending or threatened (in writing) Action, other than (A) settlements that result in recoveries by T-Mobile or any of its subsidiaries, (B) settlements involving de minimis non-monetary obligations entered into in the ordinary course of business consistent with past practice or (C) settlements that result solely in monetary obligations of T-Mobile or its subsidiaries (without the admission of wrongdoing or a nolo contendere or similar plea by, the imposition of injunctive or other equitable relief on, or restrictions on the future activity or conduct of, T-Mobile or any of its subsidiaries, and excluding any Action subject to Section 6.16) involving the payment by T-Mobile or any of its subsidiaries of (A) amounts not in excess of the amounts specifically reserved in accordance with GAAP with respect to such Action on T-Mobile’s consolidated financial statements for the annual period ending December 31, 2017 or (B) amounts not in excess of $150,000,000 for a single Action or $250,000,000 in the aggregate for all such Actions during the period from the date of this Agreement to the Closing Date;

 

(xii)         other than in the ordinary course of business consistent with past practice, (A) make, change or revoke any material Tax election, (B) settle or compromise any claim, audit, proceeding or liability relating to a material amount of Taxes, (C) change (or make a request to any Taxing Authority to change) any Tax accounting period or any material aspect of its method of accounting for Tax purposes, (D) amend any material Tax Return, (E) enter into any closing agreement within the meaning of Section 7121 of the Code (or any similar provision of state, local or foreign Law) with respect to any material Tax, (F) surrender any claim for a refund of a material amount of Taxes or (G) take any action or make any election pursuant to Treasury Regulations Section 301.7701-3(c) to treat Merger Company as other than disregarded as an entity separate from T-Mobile for U.S. federal income Tax purposes;

 

80



 

(xiii)                        other than (1) in the ordinary course of business and consistent with past practice, (2) as set forth on Section 5.1(b)(xiii) of the T-Mobile Disclosure Letter, (3) as required by any T-Mobile Benefit Plan as in effect on the date of this Agreement or (4) as required by applicable Law, (A) increase any compensation or benefits of any executive officer or director of T-Mobile, (B) grant any cash or equity incentive compensation to any executive officer or director of T-Mobile, or pay or settle any cash or equity incentive compensation, other than in accordance with the terms of the applicable T-Mobile Benefit Plan based, if applicable, on actual performance, (C) enter into or adopt any new T-Mobile Benefit Plan or amend in any material respect or terminate any existing T-Mobile Benefit Plan, (D) accelerate the vesting of any compensation or benefits (including T-Mobile Equity Awards), (E) provide any funding for any rabbi trust or similar arrangement, or take any other action to fund or secure the payment of any compensation or benefit, (F) amend the funding obligation or contribution rate of any T-Mobile Benefit Plan or change any underlying assumptions to calculate benefits payable under any T-Mobile Benefit Plan, except as may be required by GAAP, or (G) grant to any executive officer or director of T-Mobile any right to receive any severance, change-in-control, retention, termination or similar compensation or benefits or increases therein;

 

(xiv)                       (A) negotiate, enter into, materially modify or (except in accordance with its terms) extend any Labor Agreement or (B) voluntarily recognize or certify any labor or trade union, works council, employee representative body or other labor organization as the representative of any employees of T-Mobile or any of its subsidiaries;

 

(xv)                          change any of its material financial accounting policies or procedures currently in effect, except (A) as required by GAAP (or with respect to permitted early adoption of changes required by GAAP), Regulation S-X of the Exchange Act or a Governmental Entity or quasi-governmental authority (including the FASB or any similar organization) as determined in consultation with T-Mobile’s outside auditor or (B) as required by applicable Law;

 

(xvi)                       make any payment or accrual of aggregate capital expenditures (excluding leased handsets in the ordinary course of business consistent with past practice) that are greater than 110% of the amounts set forth in Section 5.2(b)(xvi) of the T-Mobile Disclosure Letter for the respective periods set forth therein;

 

(xvii)                    write up, write down or write off the book value of any of its assets, other than (A) in the ordinary course of business consistent with past practice or (B) as may be consistent with T-Mobile’s financial accounting policies and procedures and GAAP as determined in consultation with T-Mobile’s outside auditor;

 

(xviii)                 transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest or otherwise dispose of (in each case except among T-Mobile and its wholly owned subsidiaries), cancel, dedicate to the public, disclaim, forfeit, reexamine, abandon or allow to lapse (except with respect to patents expiring in accordance with their terms), any rights in, or registrations or applications for, Intellectual Property, other

 

81



 

than immaterial rights in, or registrations or applications for, Intellectual Property in the ordinary course of business consistent with past practice;

 

(xix)                       (A) amend the T-Mobile Certificate of Incorporation or Bylaws of T-Mobile or the comparable organizational documents of any of its subsidiaries (other than any amendment to the organizational documents of any of its wholly owned subsidiaries that would not reasonably be expected to be materially adverse to Sprint or to prevent or materially delay the consummation of any of the transactions contemplated hereby) or (B) merge or consolidate with any person (other than any merger or consolidation involving only T-Mobile’s direct and indirect wholly owned subsidiaries) or adopt or implement any plan of complete or partial liquidation, dissolution, consolidation, restructuring, recapitalization or other reorganization of T-Mobile; or

 

(xx)                          authorize, commit, agree or publicly announce an intention to take any of the foregoing actions.

 

(c)                                  Conduct of the SoftBank US HoldCos.  Except (x) as required by applicable Law or (y) as consented to by T-Mobile in writing, during the period from the date of this Agreement to the earlier of the Effective Time and the termination of this Agreement pursuant to its terms, each SoftBank US HoldCo shall not, SoftBank shall cause each SoftBank US HoldCo not to:

 

(i)                                     (A) enter into any agreement with respect to the voting of any shares of its capital stock, (B) (I) split, combine or reclassify any shares of its capital stock or (II) issue any other securities in respect of, in lieu of or in substitution for any shares of its capital stock, or (C) purchase, redeem or otherwise acquire any shares of its capital stock or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities;

 

(ii)                                  issue, deliver, sell, pledge or otherwise encumber or subject to any Lien any shares of its capital stock, any other voting or equity securities or interests or any securities or interests convertible into, or any rights, warrants or options to acquire, any such shares, securities or interests or convertible securities;

 

(iii)                               (A) acquire any equity interests in, or make any investment in or any capital contribution to, any person, or acquire any other assets, or (B) transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon, voluntarily fail to renew on commercially reasonable terms, allow to lapse or expire or otherwise dispose of any assets, operations, rights, businesses or interests therein;

 

(iv)                              create, incur or assume any Indebtedness; issue any debt securities or any right to acquire debt securities; assume, guarantee, endorse or otherwise become liable or responsible (whether, directly, contingently or otherwise) for the Indebtedness of another person; enter into any agreement to maintain any financial condition of another person; enter into any arrangement having the economic effect of any of the foregoing; or make any loans or advances;

 

82



 

(v)                                 (A) amend its certificate of incorporation or bylaws or (B) merge or consolidate with any person or adopt or implement any plan of complete or partial liquidation, dissolution, consolidation, restructuring, recapitalization or other reorganization;

 

(vi)                              (A) make, change or revoke any Tax election, (B) settle or compromise any claim, audit, proceeding or liability relating to Taxes, (C) change (or make a request to any Taxing Authority to change) any Tax accounting period or any aspect of its method of accounting for Tax purposes, (D) file any amended Tax Return, (E) enter into any closing agreement within the meaning of Section 7121 of the Code (or any similar provision of state, local or foreign Law) or (F) surrender any claim for a refund of Taxes; or

 

(vii)                           authorize, commit, agree or publicly announce an intention to take any of the foregoing actions;

 

provided, however, that notwithstanding the foregoing, (x) Galaxy is permitted to settle Galaxy RSUs by distributing up to 711,627 shares of Sprint Common Stock and (y) Starburst is permitted to exercise the SoftBank Sprint Warrant in accordance with its terms.

 

(d)                                 Conduct of the SoftBank Parties.  During the period from the date of this Agreement to the earlier of the Effective Time and the termination of this Agreement pursuant to its terms, the SoftBank Parties shall not, and shall cause their respective subsidiaries not to, enter into or effect any acquisition of beneficial ownership of shares of Sprint Common Stock that would reasonably be expected to result in (i) SoftBank’s Voting Interest (as defined in the Sprint Certificate of Incorporation) equaling or exceeding 85% for purposes of Section 6.5 of the Sprint Certificate of Incorporation, (ii) the Voting Percentage of both Stockholders (as each such term in this clause (ii) is defined in the Stockholders’ Agreement), taken together, exceeding 80.1%, as of immediately following the Effective Time or (iii) SoftBank having Beneficial Ownership of Voting Securities (as each such term in this clause (iii) is defined in the Voting and Proxy Agreement) in excess of the ratio contemplated by Section 5(a) of the Voting and Proxy Agreement.

 

(e)                                  Conduct of DT.  During the period from the date of this Agreement to the earlier of the Effective Time and the termination of this Agreement pursuant to its terms, DT shall not, and shall cause its subsidiaries not to, enter into or effect any acquisition of beneficial ownership of shares of T-Mobile Common Stock that would reasonably be expected to result in the Voting Percentage of both Stockholders (as each such term is defined in the Stockholders’ Agreement), taken together, exceeding 80.1% as of immediately following the Effective Time.

 

(f)                                   Other Actions.  Except as required by applicable Law, during the period from the date of this Agreement to the Effective Time, neither Sprint nor T-Mobile shall, nor shall either permit any of its subsidiaries to, consummate, enter into any agreement providing for or announce any investment, acquisition, disposition, divestiture, business combination or other similar transaction, or enter into any new line of business, in each case that would or would reasonably be expected to prevent or materially delay the satisfaction of any of the conditions to the Merger set forth in Article VII.

 

83



 

(g)                                  No Right to Control or Direct Operations.  Nothing contained in this Agreement is intended to give T-Mobile, Merger Sub, Merger Company or DT, directly or indirectly, the right to control or direct the operations of Sprint or its subsidiaries prior to the Effective Time, and nothing contained in this Agreement is intended to give Sprint or SoftBank, directly or indirectly, the right to control or direct the operations of T-Mobile or its subsidiaries prior to the Effective Time, in each case, in violation of applicable Law.  Prior to the Effective Time, each of T-Mobile, Merger Sub, Merger Company and Sprint shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its subsidiaries’ operations.

 

Section 5.2.                                 No Solicitation by Sprint.  Each of Sprint and the SoftBank Parties shall not, shall cause its controlled affiliates and its officers and directors not to, and shall use reasonable best efforts to cause its other employees, and any investment banker, financial advisor, attorney, accountant or other representative or agent (a “Representative”) retained by it or any of its controlled affiliates not to, directly or indirectly through another person, (i) solicit, initiate or knowingly encourage (including by way of furnishing information), or knowingly take any other action designed to facilitate, any inquiries regarding, or the making of, any proposal the consummation of which would constitute a Sprint Alternative Transaction, (ii) participate in any discussions or negotiations, or cooperate in any way with any person (or group of persons) (including by furnishing non-public information regarding Sprint and its subsidiaries), with respect to any inquiries regarding, or the making of, any proposal the consummation of which would constitute a Sprint Alternative Transaction, or (iii) approve, endorse or recommend any proposal the consummation of which would constitute, or enter into any letter of intent, agreement in principle, memorandum of understanding, merger, acquisition, option, joint venture, partnership or other agreement, or any other commitment, arrangement or understanding providing for, contemplating or otherwise in connection with, a Sprint Alternative Transaction.  Sprint or SoftBank will promptly (and in no event later than 48 hours after receipt) advise T-Mobile in writing of the receipt of any inquiry regarding, or the making of, any proposal the consummation of which would constitute a Sprint Alternative Transaction, including the identity of the person making or submitting such inquiry or proposal, a summary of all of the material terms thereof and copies of all written materials relating thereto, and thereafter shall keep T-Mobile informed on a reasonably prompt basis regarding the status and material details (including modifications and proposed modifications) of any such inquiry or proposal, and neither Sprint nor SoftBank will enter into any confidentiality agreement with any person after the date of this Agreement that prohibits it from complying with the foregoing obligations.  Each of Sprint and SoftBank shall, and shall cause its controlled affiliates and its respective officers and directors to, and shall use reasonable best efforts to cause its other employees and Representatives to, immediately cease and cause to be terminated any discussions or negotiations with any person (or group of persons) other than T-Mobile, DT and their respective subsidiaries (including Merger Sub) (any such person (or group of persons) other than T-Mobile, DT and their respective subsidiaries, a “Sprint Third Party”) conducted heretofore with respect to any Sprint Alternative Transaction.  Sprint shall promptly (and in any event within one business day) after the date hereof (A) terminate access of any such Sprint Third Party to any data room (virtual or actual) containing any information of or relating to Sprint or its subsidiaries and (B) instruct each such Sprint Third Party that has heretofore executed a confidentiality agreement relating to a Sprint Alternative Transaction promptly to return to Sprint or destroy all information, documents and materials relating to such Sprint Alternative Transaction or to Sprint

 

84



 

or its businesses, operations or affairs heretofore furnished by Sprint or any of its Representatives to such Sprint Third Party or any of its Representatives in accordance with the terms of the confidentiality agreement with such Sprint Third Party.  In addition, to the extent any material non-public information, documents or materials (and that have not already been provided to T-Mobile) shall thereafter be made available by or on behalf of Sprint to any Sprint Third Party as required to be provided to such Sprint Third Party in response to any Sprint Alternative Transaction pursuant to the fiduciary duties of the Sprint Board of Directors, all such information, documents and materials shall promptly (and in any event within 48 hours) be made available to T-Mobile and DT.  For purposes of this Agreement, “Sprint Alternative Transaction” means any of (I) a transaction or series of transactions pursuant to which any Sprint Third Party acquires or would acquire, directly or indirectly, beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of more than 15% of the outstanding shares of Sprint Common Stock or securities (or options, rights or warrants to purchase, or securities convertible into or exchangeable for, such securities) representing 15% or more of the voting power of Sprint, whether from Sprint or pursuant to a tender offer or exchange offer or otherwise, (II) a merger, consolidation, share exchange or similar transaction pursuant to which any Sprint Third Party acquires or would acquire, directly or indirectly, assets or businesses of Sprint or any of its subsidiaries representing 15% or more of the revenues, net income or assets (in each case on a consolidated basis) of Sprint and its subsidiaries, taken as a whole, (III) any transaction pursuant to which any Sprint Third Party acquires or would acquire, directly or indirectly, control of assets (including for this purpose the outstanding equity securities of subsidiaries of Sprint and any entity surviving any merger or combination including any of them) of Sprint or any of its subsidiaries representing 15% or more of the revenues, net income or assets (in each case on a consolidated basis) of Sprint and its subsidiaries, taken as a whole, (IV) any disposition of assets to a Sprint Third Party representing 15% or more of the revenues, net income or assets (in each case on a consolidated basis) of Sprint and its subsidiaries, taken as a whole, or (V) other than arrangements in effect as of the date hereof and arrangements in the ordinary course of business consistent with past practice, any agreement or transaction pursuant to which Sprint or any of its subsidiaries provides or would provide mobile virtual network operator or other wholesale mobile network services to any Sprint Third Party which, individually or together with all related agreements or transactions with such Sprint Third Party or any affiliate thereof, would provide annual billed revenue to Sprint in excess of $3,000,000,000.

 

Section 5.3.                                 No Solicitation by T-Mobile.  Each of T-Mobile and DT shall not, shall cause its controlled affiliates and its officers and directors not to, and shall use reasonable best efforts to cause its other employees and Representatives retained by it or any of its controlled affiliates not to, directly or indirectly through another person, (i) solicit, initiate or knowingly encourage (including by way of furnishing information), or knowingly take any other action designed to facilitate, any inquiries regarding, or the making of, any proposal the consummation of which would constitute a T-Mobile Alternative Transaction,  (ii) participate in any discussions or negotiations, or cooperate in any way with any person (or group of persons) (including by furnishing non-public information regarding T-Mobile and its subsidiaries), with respect to any inquiries regarding, or the making of, any proposal the consummation of which would constitute a T-Mobile Alternative Transaction, or (iii) approve, endorse or recommend any proposal the consummation of which would constitute, or enter into any letter of intent, agreement in principle, memorandum of understanding, merger, acquisition, option, joint venture, partnership or other agreement, or any other commitment, arrangement or understanding providing for,

 

85



 

contemplating or otherwise in connection with, a T-Mobile Alternative Transaction.  T-Mobile or DT will promptly (and in no event later than 48 hours after receipt) advise Sprint in writing of the receipt of any inquiry regarding, or the making of, any proposal the consummation of which would constitute a T-Mobile Alternative Transaction, including the identity of the person making or submitting such inquiry or proposal, a summary of all of the material terms thereof and copies of all written materials relating thereto, and thereafter shall keep Sprint informed on a reasonably prompt basis regarding the status and material details (including modifications and proposed modifications) of any such inquiry or proposal, and neither T-Mobile nor DT will enter into any confidentiality agreement with any person after the date of this Agreement that prohibits it from complying with the foregoing obligations.  Each of T-Mobile and DT shall, and shall cause its controlled affiliates and its respective officers and directors to, and shall use reasonable best efforts to cause its other employees and Representatives to, immediately cease and cause to be terminated any discussions or negotiations with any person (or group of persons) other than Sprint, SoftBank and their respective subsidiaries (any such person (or group of persons) other than Sprint, SoftBank and their respective subsidiaries, a “T-Mobile Third Party”) conducted heretofore with respect to any T-Mobile Alternative Transaction.  T-Mobile shall promptly (and in any event within one business day) after the date hereof (A) terminate access of any such T-Mobile Third Party to any data room (virtual or actual) containing any information of or relating to T-Mobile or its subsidiaries and (B) instruct each such T-Mobile Third Party that has heretofore executed a confidentiality agreement relating to a T-Mobile Alternative Transaction promptly to return to T-Mobile or destroy all information, documents and materials relating to such T-Mobile Alternative Transaction or to T-Mobile or its businesses, operations or affairs heretofore furnished by T-Mobile or any of its Representatives to such T-Mobile Third Party or any of its Representatives in accordance with the terms of the confidentiality agreement with such T-Mobile Third Party.  In addition, to the extent any material non-public information, documents or materials (that have not already been provided to Sprint) shall thereafter be made available by or on behalf of T-Mobile to any T-Mobile Third Party as required to be provided to such T-Mobile Third Party in response to any T-Mobile Alternative Transaction pursuant to the fiduciary duties of the T-Mobile Board of Directors, all such information, documents and materials shall promptly (and in any event within 48 hours) be made available to Sprint and SoftBank. For purposes of this Agreement, “T-Mobile Alternative Transaction” means any of (I) a transaction or series of transactions pursuant to which any T-Mobile Third Party acquires or would acquire, directly or indirectly, beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of more than 15% of the outstanding shares of T-Mobile Common Stock or securities (or options, rights or warrants to purchase, or securities convertible into or exchangeable for, such securities) representing 15% or more of the voting power of T-Mobile, whether from T-Mobile or pursuant to a tender offer or exchange offer or otherwise, (II) a merger, consolidation, share exchange or similar transaction pursuant to which any T-Mobile Third Party acquires or would acquire, directly or indirectly, assets or businesses of T-Mobile or any of its subsidiaries representing 15% or more of the revenues, net income or assets (in each case on a consolidated basis) of T-Mobile and its subsidiaries, taken as a whole, (III) any transaction pursuant to which any T-Mobile Third Party acquires or would acquire, directly or indirectly, control of assets (including for this purpose the outstanding equity securities of subsidiaries of T-Mobile and any entity surviving any merger or combination including any of them) of T-Mobile or any of its subsidiaries representing 15% or more of the revenues, net income or assets (in each case on a consolidated basis) of T-Mobile and its subsidiaries, taken as

 

86



 

a whole, (IV) any disposition of assets to a T-Mobile Third Party representing 15% or more of the revenues, net income or assets (in each case on a consolidated basis) of T-Mobile and its subsidiaries, taken as a whole, or (V) other than arrangements in effect as of the date hereof and arrangements in the ordinary course of business consistent with past practice, any agreement or transaction pursuant to which T-Mobile or any of its subsidiaries provides or would provide mobile virtual network operator or other wholesale mobile network services to any T-Mobile Third Party which, individually or together with all related agreements or transactions with such T-Mobile Third Party or any affiliate thereof, would provide annual billed revenue to T-Mobile in excess of $3,000,000,000.

 

ARTICLE VI

 

ADDITIONAL AGREEMENTS

 

Section 6.1.                                 Preparation of the Form S-4 and the Consent Solicitation Statement; Recommendations.

 

(a)                                 As soon as practicable following the date of this Agreement, (i) Sprint and T-Mobile shall prepare, and the parties shall file with the SEC, a joint consent solicitation statement with respect to the solicitation of consents from the stockholders of Sprint and T-Mobile in connection with the Sprint Stockholder Approval and the T-Mobile Stockholder Approval, respectively (such consent solicitation statement, as amended or supplemented from time to time, the “Consent Solicitation Statement”), and (ii) T-Mobile and Sprint shall prepare, and T-Mobile shall file with the SEC, a registration statement on Form S-4 in connection with the issuance of shares of T-Mobile Common Stock in the Merger Transactions (such registration statement, as amended or supplemented from time to time, the “Form S-4”), in which the Consent Solicitation Statement shall be included as a prospectus.  Each of Sprint and T-Mobile shall use reasonable best efforts to have the Form S-4 declared effective under the Securities Act as promptly as practicable after such filing.  Sprint and T-Mobile shall, as promptly as practicable after receipt thereof, provide the other party with copies of any written comments and advise the other party of any oral comments, with respect to the Form S-4 or the Consent Solicitation Statement received from the SEC.  Each of Sprint and T-Mobile shall cooperate and provide the other party with a reasonable opportunity to review and comment on any amendment or supplement to the Form S-4 or the Consent Solicitation Statement prior to filing such Form S-4 or Consent Solicitation Statement with the SEC, and with a copy of all such filings made with the SEC.  Notwithstanding any other provision herein to the contrary, no amendment or supplement (including by incorporation by reference) to the Form S-4 or the Consent Solicitation Statement shall be made without the approval of both Sprint and T-Mobile, which approval shall not be unreasonably withheld, conditioned or delayed; provided, that with respect to documents filed by a party that are incorporated by reference in the Form S-4 or the Consent Solicitation Statement, this right of approval shall apply only with respect to information relating to the other party or its business, financial condition or results of operations, or the combined entity (including the Merger Transactions and the other transactions contemplated by this Agreement).  Sprint shall use reasonable best efforts to cause the Consent Solicitation Statement to be mailed to the stockholders of Sprint, to seek the Sprint Stockholder Approval via written consent and to take such other actions as may be necessary under applicable Law in connection with obtaining the Sprint Stockholder Approval via written consent, in each case as promptly as practicable

 

87



 

after the Form S-4 is declared effective under the Securities Act.  T-Mobile shall use reasonable best efforts to cause the Consent Solicitation Statement to be mailed to the stockholders of T-Mobile, to seek the T-Mobile Stockholder Approval via written consent and to take such other actions as may be necessary under applicable Law in connection with obtaining the T-Mobile Stockholder Approval via written consent, in each case as promptly as practicable after the Form S-4 is declared effective under the Securities Act.  Each party shall advise the other parties, promptly after it receives notice thereof, of the time when the Form S-4 has become effective or any supplement or amendment has been filed, the issuance of any stop order or any request by the SEC for amendment of the Consent Solicitation Statement or the Form S-4 or comments thereon and responses thereto or requests by the SEC for additional information.  If at any time prior to the Effective Time any information relating to Sprint, T-Mobile or any of their respective affiliates, officers or directors, should be discovered by Sprint or T-Mobile that should be set forth in an amendment or supplement to the Form S-4 or the Consent Solicitation Statement, so that any such documents would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the party which discovers such information shall promptly notify the other parties hereto and an appropriate amendment or supplement disclosing such information shall be promptly filed with the SEC and, to the extent required by applicable Law, disseminated to the stockholders of Sprint and T-Mobile.

 

(b)                                 T-Mobile shall include the T-Mobile Board Recommendation in the Form S-4 and Consent Solicitation Statement, subject to the fiduciary duties of the Board of Directors of T-Mobile under applicable Law; provided that, notwithstanding anything to the contrary in this Agreement, prior to obtaining the T-Mobile Stockholder Approval, (i) nothing in this Agreement shall prohibit T-Mobile or the Board of Directors of T-Mobile from (A) disclosing to the stockholders of T-Mobile a position contemplated by Rules 14d-9 and 14e-2(a) under the Exchange Act or issuing a “stop, look and listen” statement to the stockholders of T-Mobile pursuant to Rule 14d-9(f) under the Exchange Act or (B) making any disclosure to the stockholders of T-Mobile and (ii) the Board of Directors of T-Mobile shall be permitted to change or withdraw the T-Mobile Board Recommendation, but, in the case of clause (i)(B) or (ii), solely to the extent any such disclosure, change or withdrawal is required for the Board of Directors of T-Mobile to carry out its fiduciary duties under applicable Law; provided, further, however, that in no event shall any such disclosure, change or withdrawal (I) affect the validity and enforceability of this Agreement or the DT Support Agreement, including T-Mobile’s or the DT Parties’ obligations to consummate the transactions contemplated by this Agreement, including the Merger Transactions, or the DT Parties’ obligations to deliver (or cause to be delivered) the written consent contemplated by Section 2 of the DT Support Agreement, or (II) cause any state corporate takeover statute or other similar statute to be applicable to the Merger Transactions or the other transactions contemplated by this Agreement.

 

(c)                                  Sprint shall include the Sprint Board Recommendation in the Form S-4 and Consent Solicitation Statement, subject to the fiduciary duties of the Board of Directors of Sprint under applicable Law; provided that, notwithstanding anything to the contrary in this Agreement, prior to obtaining the Sprint Stockholder Approval, (i) nothing in this Agreement shall prohibit Sprint or the Board of Directors of Sprint from (A) disclosing to the stockholders of Sprint a position contemplated by Rules 14d-9 and 14e-2(a) under the Exchange Act or issuing a “stop, look and listen” statement to the stockholders of Sprint pursuant to Rule 14d-9(f)

 

88



 

under the Exchange Act or (B) making any disclosure to the stockholders of Sprint and (ii) the Board of Directors of Sprint shall be permitted to change or withdraw the Sprint Board Recommendation, but, in the case of clause (i)(B) or (ii), solely to the extent any such disclosure, change or withdrawal is required for the Board of Directors of Sprint to carry out its fiduciary duties under applicable Law; provided, further, however, that in no event shall any such disclosure, change or withdrawal (I) affect the validity and enforceability of this Agreement or the SoftBank Support Agreement, including Sprint’s or the SoftBank Parties’ obligations to consummate the transactions contemplated by this Agreement, including the Merger Transactions, or the SoftBank Parties’ or SoftBank UK HoldCo’s obligations to deliver (or cause to be delivered) the written consent contemplated by Section 2 of the SoftBank Support Agreement, or (II) cause any state corporate takeover statute or other similar statute to be applicable to the Merger Transactions or the other transactions contemplated by this Agreement.

 

(d)                                 Neither Sprint nor T-Mobile shall call or convene any meeting of its stockholders in connection with the Sprint Stockholder Approval or the T-Mobile Stockholder Approval, respectively.  The only corporate actions to be set forth in the Consent Solicitation Statement are (i) the adoption of this Agreement by the holders of Sprint Common Stock, (ii) the approval of the T-Mobile Share Issuance by the holders of the T-Mobile Common Stock, (iii) the approval of the T-Mobile Charter Amendment by the holders of T-Mobile Common Stock and, if applicable, by the holders of the Sprint Common Stock and (iv) any other matters contemplated by this Agreement that may be required to be approved by the holders of the T-Mobile Common Stock and/or the holders of Sprint Common Stock under applicable Law.

 

Section 6.2.                                 Access to Information; Confidentiality.

 

(a)                                 Subject to the terms and conditions of the Confidentiality Agreement and subject to applicable Law, and solely for purposes of furthering the Merger Transactions and the other transactions contemplated hereby or integration planning relating thereto, upon reasonable notice, each of Sprint and T-Mobile shall, and shall cause its subsidiaries to, afford the other party and the officers, employees and Representatives of such other party reasonable access, during normal business hours during the period from the date of this Agreement to the Effective Time, to its properties, books, contracts, commitments, personnel and records (provided that such access shall not unreasonably interfere with the business or operations of such party and its subsidiaries), and during such period, each of Sprint and T-Mobile shall, and shall cause its subsidiaries to, furnish promptly to the other party all information concerning its business, properties and personnel as such other party may reasonably request; provided, however, that the foregoing shall not require Sprint or T-Mobile to disclose any information pursuant to this Section 6.2 to the extent that (i) in the reasonable good faith judgment of such party, any applicable Law requires such party or its subsidiaries to restrict or prohibit access to any such information, (ii) in the reasonable good faith judgment of such party, the information is subject to confidentiality obligations to a third party or (iii) disclosure of any such information or document would result in the loss of attorney-client privilege, attorney work product or other relevant legal privilege; provided, further, that with respect to clauses (i) through (iii) of this Section 6.2(a), Sprint or T-Mobile, as applicable, shall use its commercially reasonable efforts (without payment of any consideration, fees or expenses) to (1) obtain the required consent of any third party necessary to provide such disclosure, (2) develop an alternative to providing such information so as to address such matters that is reasonably acceptable to Sprint or T-Mobile, as

 

89



 

applicable, and (3) utilize the procedures of a joint defense agreement or implement such other techniques if the parties determine that doing so would reasonably permit the disclosure of such information without violating applicable Law or jeopardizing such privilege.  No review pursuant to this Section 6.2 shall affect any representation or warranty given by the other party hereto.

 

(b)                                 Notwithstanding anything to the contrary in this Agreement, none of Sprint, T-Mobile or any of their respective subsidiaries shall be obligated to afford any other party or its Representatives access to any properties, books, contracts, commitments, personnel or records relating to, or in respect of, any forward product plans, product specific cost information, pricing information, customer specific information, merchandising information or other similar competitively sensitive information, except pursuant to reasonable “clean room” procedures approved by counsel to Sprint and T-Mobile.  Any information provided or made available pursuant to this Section 6.2 shall be governed by the terms and conditions of the Confidentiality Agreement.

 

(c)                                  Subject to applicable Law, and solely for purposes of furthering the Merger Transactions and the other transactions contemplated hereby or integration planning relating thereto, upon reasonable notice, each of the SoftBank US HoldCos shall afford T-Mobile and the officers, employees and Representatives of T-Mobile reasonable access, during normal business hours during the period from the date of this Agreement to the Effective Time, to its properties, books, contracts, commitments, personnel and records, and during such period, each of the SoftBank US HoldCos shall furnish promptly to T-Mobile all information concerning its business, properties and personnel as T-Mobile may reasonably request.

 

Section 6.3.                                 Reasonable Best Efforts; Filings; Notification.

 

(a)                                 Upon the terms and subject to the conditions set forth in this Agreement, each of the parties agrees to use reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, as soon as possible following the date hereof, the Merger Transactions and the other transactions contemplated by this Agreement, including using reasonable best efforts in (i) obtaining all Governmental Consents, including making all necessary registrations and filings and taking all steps as may be necessary to obtain a Governmental Consent from, or to avoid an action or proceeding by, any Governmental Entity, (ii) obtaining all necessary consents, approvals or waivers, and any necessary or appropriate financing arrangements, from third parties, (iii) contesting and defending any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated by this Agreement, including seeking to have any adverse decision, stay or temporary restraining order entered by any court or other Governmental Entity vacated or reversed, (iv) executing and delivering any additional instruments necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement, and (v) refraining from taking any action that would reasonably be expected to prevent or materially delay the consummation of the transactions contemplated by this Agreement.

 

90



 

(b)                                 In furtherance and not in limitation of Section 6.3(a), each of Sprint and T-Mobile agrees to submit (i) an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated hereby as promptly as practicable, (ii) appropriate filings, if any are required, pursuant to other Antitrust Laws as promptly as practicable, (iii) appropriate filings with the FCC (including any petition for declaratory ruling regarding foreign ownership and any applications and filings pertaining to the transfer of control of the Sprint FCC Licenses and, if required, the T-Mobile FCC Licenses pursuant to the Merger Transactions) and any PUCs or similar state or foreign regulatory bodies, (iv) appropriate filings with CFIUS, (v) appropriate submissions to DSS and, to the extent applicable, any other Governmental Entity, pursuant to the NISPOM and any other applicable national or industrial security regulations, and appropriate submissions and requests for approval under any applicable foreign ownership, control or influence requirements (“FOCI”), and (v) any other necessary filings with other Governmental Entities relating to the Merger Transactions, and, in each case, to supply as promptly as practicable any additional information and documentary material that may be formally or informally requested pursuant to such Laws or by such authorities and to use reasonable best efforts to cause the expiration or termination of any applicable waiting periods under the Antitrust Laws and the receipt of the Governmental Consents as soon as practicable.  The parties agree that the use of “reasonable best efforts” in this Section 6.3 shall include (A) contesting and defending any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated by this Agreement, including seeking to have any adverse decision, stay or temporary restraining order entered by any court or other Governmental Entity vacated or reversed, and (B) proposing, negotiating, committing to and effecting by consent decree, hold separate order or otherwise, (I) the sale, divestiture, license or disposition of such assets or businesses of either party or its subsidiaries and (II) restrictions, limitations or conditions relating to, or actions that after the Effective Time would limit T-Mobile’s or its subsidiaries’ freedom of action or operations with respect to, or its ability to retain, one or more of its or its subsidiaries’ businesses, product lines or assets, in each case (x) as may be required in order to avoid the entry, or to effect the dissolution, of any injunction, temporary restraining order or other order in any suit or proceeding that would otherwise have the effect of preventing or materially delaying the consummation of the transactions contemplated by this Agreement and (y) conditioned upon the consummation of the Merger Transactions, in all cases subject to Section 6.3(d).

 

(c)                                  Each of the parties shall (i) promptly notify the other party of any substantive communication inquiry or investigation received by that party from, or given by it to, any Governmental Entity and, subject to applicable Law, permit the other party to review in advance any proposed substantive communication to any such Governmental Entity and incorporate the other party’s reasonable comments, (ii) not agree to participate in any substantive meeting or discussion with any such Governmental Entity in respect of any filing, investigation or inquiry concerning this Agreement or the Merger Transactions unless, to the extent reasonably practicable, it consults with the other party in advance and, to the extent permitted by such Governmental Entity, gives the other party the opportunity to attend and participate therein, and (iii) promptly furnish the other party with copies of all substantive correspondence, filings and written communications between them and their respective affiliates, officers, directors, employees and Representatives, on the one hand, and any such Governmental Entity or its staff, on the other hand, with respect to this Agreement and the Merger Transactions in order for such other party to meaningfully consult and participate in accordance with the preceding clauses (i)

 

91



 

and (ii); provided, that materials furnished pursuant to this Section 6.3(c) may be redacted as necessary to address reasonable attorney-client privilege or other relevant legal privilege or confidentiality concerns.  In furtherance and not in limitation of Section 6.3(a) and Section 6.3(b), but subject to Section 6.3(d), each of the parties agrees to make or submit all filings, registrations, analyses, appearances, presentations, memoranda, briefs, arguments, opinions, proposals, correspondence and written communications, and to take all other actions or steps to be taken, in connection with or subject to this Section 6.3 in accordance with a strategy (including as to the timing and substance thereof) jointly developed by T-Mobile and Sprint, with each of the parties to consult and cooperate reasonably promptly and in good faith with the other parties with respect thereto; provided, that in the event any party reasonably objects in writing to any filing, registration, analysis, appearance, presentation, memorandum, brief, argument, opinion, proposal, correspondence or written communication to be (or proposed to be) made or submitted, or any other action or step (including any action or step contemplated by the last sentence of Section 6.3(b)) to be (or proposed to be) taken, in connection with obtaining any Governmental Consent necessary, proper or advisable to consummate and make effective the Merger Transactions and the other transactions contemplated by this Agreement, then such matters may be escalated for discussion to the Chief Executive Officer of SoftBank and the Chief Executive Officer of DT, such discussion to be held no later than 24 hours  following the date of the objection, and if such representatives are not in good faith able to resolve such objection during such discussion, such matter shall thereafter be resolved by the Chief Executive Officer of DT in his sole discretion (it being understood that any such resolution shall not (a) relieve any party of its express obligations under Section 6.3(a) or Section 6.3(b), including such party’s general obligation to use its reasonable best efforts to consummate the Merger and the other transactions contemplated by this Agreement, or (b) affect the scope of the Regulatory Material Adverse Condition as such term is defined in Section 6.3(d) or any rights of, or remedies available to, any party relating to or arising out of a Regulatory Material Adverse Condition), and the parties shall in good faith, promptly following such resolution by the Chief Executive Officer of DT, make or submit any such filing, registration, analysis, appearance, presentation, memorandum, brief, argument, opinion, proposal, correspondence or written communication, or take any such other action or step, in accordance with such resolution by the Chief Executive Officer of DT.

 

(d)                                 Notwithstanding the foregoing, nothing in this Section 6.3 or otherwise in this Agreement shall require Sprint, T-Mobile, any SoftBank Party or either DT Party to take, or cause to be taken, any action (including proposing, negotiating, committing to, agreeing to or effecting, by consent decree, hold separate order, any agreement or letter to address U.S. national security, law enforcement or public safety interests or to mitigate any foreign ownership, control or influence over the businesses of Sprint or T-Mobile, or otherwise, (x) the sale, divestiture, license or disposition of any of the assets or businesses of Sprint or T-Mobile or their respective subsidiaries or (y) restrictions, limitations or conditions, or actions that would limit Sprint or T-Mobile, or their respective subsidiaries, in its freedom of action or operations or ability to retain any businesses, product lines or assets, or any combination thereof), that, individually or in the aggregate (when taken together with all other actions undertaken with respect to the matters contemplated by this Section 6.3), would or would reasonably be expected to result in any of the following:

 

92



 

(i)                                     any of the consequences set forth on Section 6.3(d)(i) of the T-Mobile Disclosure Letter;

 

(ii)                                  a materially adverse impact on the business, financial condition or results of operations of T-Mobile, Sprint and their respective subsidiaries following the Merger, taking into account the impact on the expected synergies of the Merger (in each case with materiality measured on a scale consistent with the financial standard set forth in Section 6.3(d)(iii)), as compared to such persons if such action (when taken together with all other actions undertaken with respect to the matters contemplated by this Section 6.3) were not taken;

 

(iii)                               any loss, cost or diminution in value of $7,000,000,000 or more, measured on a net present value basis, to T-Mobile, Sprint and their respective subsidiaries following the Merger, taking into account the loss, cost or diminution in value of the expected synergies of the Merger, as compared to such persons if such action (when taken together with all other actions undertaken with respect to the matters contemplated by this Section 6.3) were not taken;

 

(iv)                              any limit, restrictions or conditions (including as a result of any national security agreement or similar agreement or arrangement with CFIUS or any of its constituent members, whether as part of or separate from any review by CFIUS (each, a “National Security Agreement”)) on:

 

(A)                               the ability of DT or SoftBank to designate members of the Board of Directors of T-Mobile after the Merger or committees thereof (other than a minority of the compensation committee thereof) in all respects as contemplated by Section 2.4(a) of this Agreement and/or the Stockholders Agreement and in accordance with the existing qualification criteria for T-Mobile directors as of the date of hereof (other than any requirement that one of each of DT’s and SoftBank’s designees qualify as a “Security Director” or substantial equivalent to the extent required by any National Security Agreement);

 

(B)                               the scope of authority provided to the Board of Directors of T-Mobile after the Merger or the exercise of any rights of any directors of such Board of Directors, in his or her capacity as a member of such Board of Directors or any committee thereof, other than with respect to oversight of, or participation in, a national security committee or related national security matters;

 

(C)                               the exercise of any material right contemplated to be provided to DT (unless waived by DT) or SoftBank (unless waived by SoftBank) under the Stockholders Agreement or the Voting and Proxy Agreement; or

 

(D)                               except in any de minimis respect, any business or operations of DT, SoftBank or any of their respective affiliates, apart from the business or operations of T-Mobile, Sprint or their respective subsidiaries;

 

(v)                                 any requirement to adopt a FOCI mitigation agreement or similar arrangement with DSS that results in a material change in, or material impact to, the network

 

93



 

operations or the business operations of T-Mobile and its subsidiaries following the Effective Time, including T-Mobile’s control over such network operations or the business operations, as compared to such operations as conducted and controlled by T-Mobile and Sprint and their respective subsidiaries prior to the Effective Time (it being agreed that restrictions having the same terms and operational scope of the FOCI mitigation agreement in effect as of the date hereof (including the Affiliated Operations Plan in effect as of the date hereof) between Sprint and DSS, and solely with respect to the business currently conducted by Sprint Federal Operations LLC and Sprint Federal Management LLC, shall not be deemed to result in any such change or impact); or

 

(vi)                              any requirement to change the ownership, including the interests held by any shareholders, of DT, SoftBank or any of their respective affiliates.

 

(e)                                  (any of the items described in clauses (i) through (vi), a (“Regulatory Material Adverse Condition”); it being agreed that each of (x) the existing Sprint Security Agreement and any other National Security Agreement with substantially similar or less conditions as applied to T-Mobile after the Merger and (y) the FOCI mitigation agreement in effect as of the date hereof (including the Affiliated Operations Plan in effect as of the date hereof between Sprint and DSS), and solely with respect to the business currently conducted by Sprint Federal Operations LLC and Sprint Federal Management LLC is not a Regulatory Material Adverse Condition).

 

Section 6.4.                                 Regulatory Compliance.

 

(a)                                 Each of Sprint and T-Mobile shall, and shall cause its respective subsidiaries to, use commercially reasonable efforts to (i) cure no later than the Closing any material violations and material defaults by any of them under applicable FCC Rules and FAA Rules, (ii) comply in all material respects with the terms of their respective FCC Licenses and the FAA Rules, and (iii) file or cause to be filed with the FCC and the FAA all material reports and other material filings required to be filed under applicable FCC Rules and FAA Rules.

 

(b)                                 During the period from the date hereof through the earlier of the Closing and the date this Agreement is terminated pursuant to the terms hereof, each of Sprint and T-Mobile shall, and shall cause its subsidiaries to, use reasonable best efforts to (i) take such actions as are reasonably necessary to maintain and preserve the Sprint Communications Licenses and the T-Mobile Communications Licenses, respectively, (ii) take such steps as are reasonably necessary to renew any expiring Sprint Communications License or T-Mobile Communications License, respectively, including preparing and filing with the appropriate Governmental Entities all necessary applications in connection therewith as soon as reasonably practicable after the commencement of the period during which such applications may be made, and (iii) refrain from taking any action that would reasonably be expected to cause the FCC or any other Governmental Entity with jurisdiction over such party or any of its subsidiaries to institute proceedings for the suspension, revocation or adverse modification of any Sprint Communications License or T-Mobile Communications License, respectively.

 

Section 6.5.                                 Communications.  Subject to applicable Law, the parties shall cooperate in developing an agreed upon communications program for communications relating to the Merger

 

94



 

with customers, vendors, suppliers, contractors and other service providers (other than Representatives of the parties) (collectively, “Business Counterparties”) of Sprint, T-Mobile and their respective subsidiaries on or after the date hereof and prior to the Closing.  Until the earlier of the Closing, or the termination of this Agreement pursuant to its terms, each party and its respective subsidiaries shall not, and each party shall use its reasonable best efforts to cause its Representatives not to, make any communication to any Business Counterparties of Sprint, T-Mobile or their respective subsidiaries that (i) primarily relates to the transactions contemplated hereby and (ii) is not in accordance with the agreed communications program described in the first sentence of this Section 6.5, other than in each case (x) with the prior written consent of Sprint or T-Mobile, as applicable, such consent not to be unreasonably withheld, conditioned or delayed, (y) as required by applicable Law or (z) as otherwise expressly permitted by the terms of this Agreement.

 

Section 6.6.                                 Indemnification, Exculpation and Insurance.

 

(a)                                 From and after the Effective Time, the Surviving Corporation shall, and T-Mobile shall cause the Surviving Corporation to, indemnify and hold harmless each individual who is or was, or who becomes prior to the Effective Time, a director or officer of Sprint or any of its subsidiaries or T-Mobile or who is as of the date of this Agreement, or who thereafter commences prior to the Effective Time, serving at the request of Sprint or any of its subsidiaries as a director, officer or employee of another person (the “Indemnified Parties”), against all claims, losses, liabilities, damages, judgments, inquiries, fines and reasonable fees, costs and expenses, including attorneys’ fees and disbursements, incurred in connection with any claim, action, suit or proceeding, whether civil, criminal, administrative or investigative (including with respect to matters existing or occurring at or prior to the Effective Time (including this Agreement and the transactions contemplated hereby)), arising out of or pertaining to the fact that the Indemnified Party is or was a director, officer or employee of Sprint or any of its subsidiaries or T-Mobile or is or was serving at the request of Sprint or any of its subsidiaries as a director, officer or employee of another person or in respect of any acts or omissions in their capacities as such directors or officers occurring prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, to the same extent as such Indemnified Parties are indemnified as of the date of this Agreement by Sprint or T-Mobile (as applicable) pursuant to the Sprint Certificate of Incorporation, the Bylaws of Sprint, the governing organizational documents of any subsidiary of Sprint, the T-Mobile Certificate of Incorporation, the Bylaws of T-Mobile and any indemnification agreements in existence as of the date of this Agreement.  Without limiting the indemnification obligations set forth in the immediately preceding sentence, in the event of any such claim, action, suit or proceeding, (i) each Indemnified Party will be entitled to advancement of costs and expenses incurred in the defense of any such claim, action, suit or proceeding from the Surviving Corporation to the same extent as such Indemnified Party is entitled to advancement of expenses as of the date of this Agreement by Sprint or T-Mobile (as applicable) pursuant to the Sprint Certificate of Incorporation, the Bylaws of Sprint, the governing or organizational documents of any subsidiary of Sprint, the T-Mobile Certificate of Incorporation, the Bylaws of T-Mobile and any indemnification agreements in existence as of the date of this Agreement; provided, that any person to whom expenses are advanced provides an undertaking, if and only to the extent required by the DGCL, the Sprint Certificate of Incorporation, the Bylaws of Sprint, the governing organizational documents of any subsidiary of Sprint, the T-Mobile Certificate of Incorporation, the Bylaws of T-Mobile and any

 

95



 

indemnification agreements in existence as of the date of this Agreement, to repay such advances if it is ultimately determined that such person is not entitled to indemnification, and (ii) T-Mobile and Sprint (as applicable) shall, and shall cause its subsidiaries to, cooperate in the defense of any such matter.  In the event that T-Mobile or the Surviving Corporation or any of their respective successors or assigns (i) consolidates with or merges into any other person and is not the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any person, T-Mobile and/or the Surviving Corporation, as applicable, shall cause proper provision to be made so that the successors and assigns of T-Mobile and/or the Surviving Corporation, as applicable, assume the obligations set forth in this Section 6.6.

 

(b)                                 For a period of six years from and after the Effective Time, T-Mobile shall either cause to be maintained in effect the current policies of directors’ and officers’ liability insurance and fiduciary liability insurance maintained by Sprint or T-Mobile (as applicable) or any of their respective subsidiaries or provide substitute policies for not less than the existing coverage and with other terms not less favorable to the insured persons with respect to claims arising from facts or events that occurred prior to the Effective Time, except that in no event shall T-Mobile be required to pay with respect to such insurance policies (or substitute insurance policies) of Sprint or T-Mobile (as applicable) in respect of any one policy year more than 300% of the annual premium payable by Sprint or T-Mobile (as applicable) for such insurance for the prior 12 months (the “Maximum Amount”), and if T-Mobile is unable to obtain the insurance required by this Section 6.6 it shall obtain as much comparable insurance as possible for the years within such six-year period for an annual premium equal to the Maximum Amount, in respect of each policy year within such period; provided, that in lieu of the foregoing, Sprint or T-Mobile (as applicable) may obtain at or prior to the Effective Time a six-year “tail” policy under Sprint’s or T-Mobile’s existing directors’ and officers’ liability insurance policy (as applicable) providing equivalent coverage to that described in the preceding sentence if and to the extent that the same may be obtained for an amount that, on an annual basis, does not exceed the Maximum Amount.

 

(c)                                  The provisions of this Section 6.6 (i) shall survive the consummation of the Merger, (ii) are intended to be for the benefit of, and will be enforceable by, each indemnified or insured party (including the Indemnified Parties), his or her heirs and his or her representatives, and (iii) are in addition to, and not in substitution for, any other rights to indemnification or contribution that any such person may have by contract or otherwise.

 

Section 6.7.                                 Fees and Expenses.  Except as set forth in this Section 6.7, Section 6.17 or Section 8.2 or as otherwise explicitly provided in this Agreement, all fees and expenses incurred in connection with the Merger Transactions, this Agreement and the other transactions contemplated by this Agreement shall be paid by the party incurring such fees or expenses, whether or not the Merger Transactions are consummated, except that each of T-Mobile and Sprint shall bear and pay the costs and expenses (other than the fees and expenses of each party’s attorneys and accountants, which shall be borne by the party incurring such expenses) (collectively, the “Apportioned Expenses”) incurred by the parties hereto in connection with (i) the filing, printing and mailing of the Form S-4 and the Consent Solicitation Statement (including SEC filing fees), of which Apportioned Expenses each of Sprint and T-Mobile will pay 50%, and (ii) (A) the filings of the premerger notification and report forms under the HSR

 

96



 

Act and similar laws of other jurisdictions (including filing fees) and (B) FCC filing fees, of which Apportioned Expenses, in each case (A) and (B), Sprint will pay 33% and T-Mobile will pay 67%.

 

Section 6.8.                                 Public Announcements.  The initial press release with respect to the execution of this Agreement shall be a joint press release agreed by Sprint, T-Mobile, SoftBank and DT.  Each of Sprint, T-Mobile, SoftBank and DT agrees that it shall consult with the other parties before issuing any press release or other public statement with respect to this Agreement or the transactions contemplated hereby and shall not issue any such press release or other public statement, except (a) with the prior consent of Sprint, in the case of T-Mobile and DT, or T-Mobile, in the case of Sprint and SoftBank, such consent not to be unreasonably withheld, conditioned or delayed, (b) to the extent required by applicable Law (or any applicable securities exchange rule or requirement) or (c) to the extent the information contained therein relating to this Agreement or the transactions contemplated hereby is substantially consistent with (x) information included in a press release or other public statement to which Sprint (in the case of T-Mobile and DT) or T-Mobile (in the case of Sprint and SoftBank), as applicable, has previously consented pursuant to clause (a) or (y) a communications plan approved in writing in advance by T-Mobile and Sprint which has not been modified or rescinded by T-Mobile and Sprint; provided, that in the case of clause (b), to the extent not prohibited by applicable Law, the party issuing such press release or other public statement gives the other party reasonable advance notice of (including the contents of) such release or statement, and the opportunity to comment thereon, if giving such opportunity is practicable.

 

Section 6.9.                                 Listing; Delisting and Deregistration.  T-Mobile shall use reasonable best efforts to cause the T-Mobile Common Stock issuable under Article III to be approved for listing on NASDAQ, subject to official notice of issuance, at or prior to the SoftBank US Mergers Effective Time.  Prior to the Closing Date, Sprint shall cooperate with T-Mobile and use reasonable best efforts to take such actions as are necessary or advisable to cause the Sprint Common Stock to be delisted from the NYSE and deregistered under the Exchange Act as soon as practicable following the Effective Time.  Prior to the Effective Time, Sprint shall not voluntarily delist the Sprint Common Stock from the NYSE.

 

Section 6.10.                          Certain Tax Matters.

 

(a)                                 Each of SoftBank, Starburst, Galaxy, Sprint and T-Mobile shall use reasonable best efforts (i) to cause each of the SoftBank US Mergers and the Merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Code and (ii) to obtain the opinions of Specified Counsel referred to in Section 7.2(e) and Section 7.3(e).  None of the parties hereto or any of their respective subsidiaries shall take any action, or allow any controlled affiliate to take any action, that could reasonably be expected to prevent or impede such qualification or the ability of counsel to deliver such opinion.

 

(b)                                 If pursuant to this Agreement the SoftBank US Mergers are to be consummated, T-Mobile hereby requests, and SoftBank shall cause each of Starburst and Galaxy to deliver to T-Mobile prior to the Closing, (i) a certificate pursuant to Treasury Regulations Sections 1.1445-2(c)(3) and 1.897-2(h), dated not more than thirty (30) days prior to the Closing Date and signed by a responsible corporate officer of Starburst or Galaxy, as applicable,

 

97



 

certifying that the equity interests in Starburst and Galaxy, as applicable, are not “United States real property interests” (as defined in Section 897(c)(1) of the Code) and (ii) a copy of the notification provided to the IRS regarding such certificate, in accordance with the provisions of Treasury Regulations Section 1.897-2(h)(2).  If pursuant to this Agreement the SoftBank US Mergers will not be consummated, each of Starburst and Galaxy shall deliver to T-Mobile prior to the Closing a duly executed certificate of non-foreign status, substantially in the form of the sample certification contained in Treasury Regulations Section 1.1445-2(b)(2)(iv)(B).

 

(c)                                  To the extent Treasury Regulations Section 1.358-6 were to apply with respect to the SoftBank US Mergers and the Merger, taken together, T-Mobile agrees to determine its tax basis in the Sprint shares acquired from Starburst and Galaxy in accordance with Treasury Regulations Section 1.358-6(c)(2)(ii)(B).

 

Section 6.11.                          Takeover Statutes.  If any antitakeover or similar statute or regulation is or may become applicable to the transactions contemplated by this Agreement, each of the parties hereto and its Board of Directors shall (i) grant such approvals and take all such actions as are legally permissible so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and (ii) otherwise act to eliminate or, if it is not possible to eliminate, then to minimize the effects of any such statute or regulation on the transactions contemplated hereby.

 

Section 6.12.                          Conveyance Taxes.  Sprint and T-Mobile shall cooperate in the preparation, execution and filing of all Tax Returns, questionnaires, applications or other documents regarding any sales, use, transfer (including real property transfer), value added, stock transfer and stamp taxes, any transfer, recording, registration and other fees or any similar Taxes which become payable in connection with the transactions contemplated by this Agreement.

 

Section 6.13.                          Employee Benefits.

 

(a)                                 For a period of eighteen (18) months following the Effective Time (the “Protection Period”), T-Mobile shall provide, or cause to be provided, to each employee of Sprint or its subsidiaries (i) base salary and base wages that are each on a basis no less favorable than those in effect immediately prior to the Effective Time, (ii) short-term or annual cash incentive compensation opportunities, equity compensation and commission opportunities that are no less favorable in the aggregate than those in effect immediately prior to the Effective Time, and (iii) other benefits that are no less favorable in the aggregate than the benefits provided to such employee immediately prior to the Effective Time or, commencing with the year immediately following the year in which the Effective Time occurs, that are no less favorable in the aggregate than the benefits provided to similarly situated employees of T-Mobile or its subsidiaries.  In addition, during the Protection Period, T-Mobile shall provide, or cause to be provided, to each employee of Sprint or its subsidiaries with severance payments and severance benefits that are no less favorable than the greater of (i) the severance payments and severance benefits that were provided to such employee immediately prior to the Closing and (ii) the severance payments and severance benefits that are provided to similarly situated employees of T-Mobile and its affiliates from time to time.

 

98



 

(b)                                 Effective as of the Effective Time, T-Mobile shall cause, for all purposes under the benefit plans of T-Mobile or its subsidiaries in which individuals who were employed by Sprint, T-Mobile or their respective subsidiaries as of immediately prior to the Effective Time (the “Employees”) are eligible to participate following the Effective Time (the “New Plans”), each Employee to be credited with his or her years of service with Sprint or T-Mobile or any of their respective affiliates, as the case may be, before the Effective Time, to the same extent as such Employee was entitled, before the Effective Time, to credit for such service under any similar Sprint Benefit Plans or T-Mobile Benefit Plans, as applicable, except to the extent such credit would result in a duplication of benefits.  In addition, and without limiting the generality of the foregoing:  T-Mobile shall, to the extent permitted by the terms of the applicable New Plans, cause (i) each Employee to be immediately eligible to participate, without any waiting time, in any and all New Plans that are welfare benefit plans to the extent coverage under such New Plan replaces coverage under a comparable Sprint Benefit Plan or T-Mobile Benefit Plan, as applicable, in which such Employee participated immediately before the Effective Time (such plans, collectively, the “Old Plans”), and (ii) for purposes of each New Plan providing medical, dental, pharmaceutical and/or vision benefits to any Employee, all pre-existing condition exclusions and actively-at-work requirements of such New Plan to be waived for such Employee and his or her covered dependents, and any eligible expenses incurred by such Employee and his or her covered dependents during the portion of the plan year of the Old Plan ending on the date such Employee’s participation in the corresponding New Plan begins to be taken into account under such New Plan for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such Employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such New Plan.

 

(c)                                  Prior to making any material broad-based communications to Employees pertaining to employment, compensation or benefits matters addressed in this Agreement or related, directly or indirectly, to the transactions contemplated by this Agreement, each of Sprint and T-Mobile shall provide the other party with a copy of the intended communication, the other party shall have a reasonable opportunity to review and comment on the proposed communication, and the party seeking to make the communication shall consider in good faith all comments of such other party.

 

(d)                                 If requested by T-Mobile in writing not less than ten (10) business days before the Closing Date, the Board of Directors of Sprint (or the appropriate committee thereof) shall adopt resolutions and take such corporate action as is necessary to terminate Sprint’s 401(k) plan (the “Sprint 401(k) Plan”), effective as of the day prior to the Closing Date.  The form and substance of such resolutions and any other actions taken in connection with the foregoing termination shall be subject to the review and approval of T-Mobile (which review and approval shall not be unreasonably withheld, conditioned or delayed).  If the Sprint 401(k) Plan is terminated prior to the Closing Date pursuant to this Section 6.13(d), then following the Effective Time, the account balances of the participants in the Sprint 401(k) Plan shall be distributed to the participants, and T-Mobile shall permit the Employees who are then actively employed by T-Mobile or its subsidiaries to make rollover contributions of “eligible rollover distributions” (within the meaning of Section 401(a)(31) of the Code including loans) in an amount equal to the full account balance (including loans) distributed to such Employee from the Sprint 401(k) Plan to T-Mobile’s 401(k) plan (the “T-Mobile 401(k) Plan”).

 

99



 

(e)                                  Each Employee participating in any Sprint Benefit Plan that is an annual bonus plan (an “Annual Bonus Plan”) during Sprint’s fiscal year in which the Effective Time occurs shall be eligible to receive a bonus equal to the product obtained by multiplying (i) such Employee’s full bonus entitlement under all such Annual Bonus Plans for Sprint’s fiscal year in which the Effective Time occurs, based on the greater of (A) deemed performance at “target” levels and (B) actual performance through the latest practicable date prior to the Effective Time, with such level of achievement (1) determined by the Compensation Committee of the Board of Directors of Sprint or such other applicable committee and (2) annualized, on a straight line basis, through the end of the quarter in which the Closing occurs, by (ii) a fraction, the numerator of which equals the number of days that have elapsed during such fiscal year through the Effective Time and the denominator of which equals 365 (a “Pro-Rata Bonus”), payable following the end of Sprint’s fiscal year in which the Effective Time occurs (but in no event later than sixty (60) days following the end of such fiscal year), subject to the applicable Employee’s continued employment with T-Mobile, Sprint or any of their respective affiliates through the end of Sprint’s fiscal year in which the Effective Time occurs; provided, however, that if any such Employee becomes eligible for severance payments or severance benefits pursuant to either a Sprint Benefit Plan or T-Mobile Benefit Plan, as applicable, following the Effective Time, such Pro-Rata Bonus shall be paid to such Employee within sixty (60) days following such termination of employment (and such payment shall, if requested by T-Mobile, Sprint or any of their affiliates, be subject to the applicable Employee’s execution and non-revocation of a general release of claims in a form customarily used by T-Mobile, Sprint or their respective affiliates for their similarly situated employees).

 

(f)                                   T-Mobile hereby agrees and acknowledges that a “change of control” (or similar phrase) within the meaning of the Sprint Benefit Plans shall occur at or prior to the Effective Time, as applicable.

 

(g)                                  Nothing contained in this Section 6.13 shall (i) be construed to establish, amend, or modify any benefit or compensation plan, program, agreement, contract, policy or arrangement, (ii) limit the ability of Sprint, T-Mobile or any of their respective subsidiaries or affiliates to amend, modify or terminate any benefit or compensation plan, program, agreement, contract, policy or arrangement at any time assumed, established, sponsored or maintained by any of them, (iii) create any third-party beneficiary rights or obligations in any person (including any Employee) other than the parties to this Agreement or any right to employment or continued employment or to a particular term or condition of employment with Sprint, T-Mobile or any of their respective subsidiaries or affiliates or (iv) limit the right of Sprint, T-Mobile or any of their respective subsidiaries or affiliates to terminate the employment or service of any employee or other service provider following the Closing Date at any time and for any or no reason.

 

Section 6.14.                          Section 16(b).  Sprint and T-Mobile shall each take all such steps as are reasonably necessary to cause the transactions contemplated by this Agreement and any other dispositions of equity securities of Sprint (including derivative securities) or acquisitions of equity securities of T-Mobile (including derivative securities) in connection herewith by any individual who (a) is a director or officer of Sprint or (b) at the Effective Time, will become a director or officer of T-Mobile, in each case to be exempt under Rule 16b-3 promulgated under the Exchange Act.

 

100



 

Section 6.15.                          Notification of Certain Matters.  Each of Sprint and T-Mobile shall promptly advise the other party of any Effect (a) that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on Sprint or T-Mobile, respectively, or (b) that it believes has caused or constituted or would reasonably be expected to cause or constitute a breach of any of its representations, warranties, covenants or agreements contained in this Agreement such that it would cause a failure of the applicable condition related to such breach in Article VII if the Closing were otherwise to occur on the date such Effect occurs; provided, however, that no such notification shall affect the representations, warranties, covenants or agreements of the parties (or remedies with respect thereto) or the conditions to the obligations of the parties under this Agreement; provided, further, that a failure to comply with this Section 6.15 shall not constitute the failure of any condition set forth in Article VII to be satisfied unless the underlying Material Adverse Effect or breach would independently result in the failure of a condition set forth in Article VII to be satisfied.

 

Section 6.16.                          Certain Litigation.  Each party shall promptly advise the other party of any litigation commenced before, on or after the date hereof against such party or any of its directors or officers (in their capacities as such) by any stockholders of such party (on their own behalf or on behalf of such party) relating to this Agreement or the transactions contemplated hereby (any such litigation, “Stockholder Litigation”), and shall keep the other party reasonably informed regarding any such Stockholder Litigation.  With respect to Stockholder Litigation commenced against Sprint or any of its directors or officers, Sprint shall give T-Mobile the opportunity to participate in the defense or settlement of any such Stockholder Litigation and no settlement shall be offered or agreed to by Sprint without T-Mobile’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed).  With respect to Stockholder Litigation commenced against T-Mobile or any of its directors or officers, T-Mobile shall give Sprint the opportunity to participate in the defense or settlement of any such Stockholder Litigation, and no settlement shall be offered or agreed to by T-Mobile without Sprint’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed).

 

Section 6.17.                          Financing Matters.

 

(a)                                 The parties hereto acknowledge and agree that, prior to the Effective Time, but subject to the limitations set forth in Section 5.1, it may be necessary for Sprint, T-Mobile and/or their respective subsidiaries to enter into financing transactions (including (i) the raising of new financing by Sprint, T-Mobile and/or their respective subsidiaries, (ii) the refinancing of existing Indebtedness by Sprint, T-Mobile and/or their respective subsidiaries, (iii) the repayment or retirement of existing Indebtedness of Sprint, T-Mobile and/or their respective subsidiaries, (iv) tendering or exchanging (or offering to tender or exchange) existing Indebtedness of Sprint, T-Mobile and/or their respective subsidiaries, and/or (v) entering into amendments or modifications or obtaining consents or waivers (including waivers of change of control provisions) in relation to agreements governing existing Indebtedness or other financing arrangements of Sprint, T-Mobile and/or their respective subsidiaries, including the Change of Control Waiver Offers and the Spectrum Notes Change of Control Waiver) (any such financing transaction, other than any financing transaction permitted by Section 5.1(a)(viii)(A)-(F) or Section 5.1(b)(viii)(A)-(F), a “Pre-Merger Financing Transaction”).

 

101



 

(b)                                 Management; Certain Requirements.

 

(i)                                     T-Mobile shall, in reasonable consultation with Sprint and in a reasonable manner, direct and control all decisions, communications and discussions relating to any Pre-Merger Financing Transaction, including as to the amount, type, providers, economic and other terms, syndication and marketing thereof, and documentation in respect thereof.  Sprint shall not, and shall cause its subsidiaries and use its reasonable best efforts to cause its Representatives not to, enter into any Pre-Merger Financing Transaction without the prior written consent of T-Mobile, such consent not to be unreasonably withheld.  Without limiting the foregoing, T-Mobile may commence, or may direct Sprint to commence, one or more offers to purchase or exchange, and/or consent solicitations with respect to, or amendment requests relating to, all or any portion of notes issued by Sprint or its subsidiaries (the “Sprint Notes”) or any other Indebtedness of Sprint or its subsidiaries, on terms determined by T-Mobile and otherwise in compliance with applicable Law and the indentures relating to the applicable Sprint Notes (collectively, the “Debt Offers”).  None of the Sprint Notes or such other Indebtedness shall be required to be purchased pursuant to the Debt Offers prior to the Closing.

 

(ii)                                  In addition, without limiting the foregoing, Sprint shall:

 

(A)                               in consultation with T-Mobile, commence consent solicitations with respect to each of the following series of Sprint Notes: (I) all Sprint Notes issued by Sprint Corporation and (II) the 11.500% Senior Notes due 2021, the 7.000% Senior Notes due 2020 and the $2.28 billion 6.000% Senior Notes due 2022, each issued by Sprint Communications  (collectively, the notes described in clauses (I) and (II), the “Sprint CoC Notes”) for the purpose of changing the relevant definitions under the Sprint CoC Notes such that (x) T-Mobile and DT and their affiliates will constitute “Permitted Holders” and (y) the Merger and related transactions will not constitute a change of control thereunder (each, a “Change of Control Waiver Offer”), as soon as reasonably practicable following the date hereof on terms reasonably determined by T-Mobile in consultation with Sprint;

 

(B)                               use its reasonable best efforts, and T-Mobile shall also use its reasonable best efforts to cause the consummation of the closing of such Change of Control Waiver Offers (including paying all consent fees in connection therewith, to be allocated in the manner described in Section 6.17(f)) not later than the date which is 60 days after the date hereof; and

 

(C)                               in connection with and subject to the closing of the Change of Control Waiver Offers, execute, and use its reasonable best efforts to cause the applicable trustees to execute, supplemental indentures (“Change of Control Waiver Supplemental Indentures”) with respect to each series of Sprint CoC Notes effecting the consents contemplated in clause (A) above.

 

102



 

(iii)                               In addition, without limiting the foregoing, Sprint shall:

 

(A)                               upon request of T-Mobile on reasonable notice, use its reasonable best efforts to obtain (and T-Mobile shall also use its reasonable best efforts to assist in obtaining) the consents necessary such that (x) T-Mobile and DT and their affiliates will constitute “Permitted Holders”, (y) the Merger and related transactions will not constitute a change of control thereunder ((x) and (y) together, the “Spectrum Notes Change of Control Waiver”) with respect to the Series 2016-1 3.360% Senior Secured Notes, Series 2018-1 4.738% Senior Secured Notes, and Series 2018-1 5.152% Senior Secured Notes (the “Spectrum Notes”) issued under that certain Base Indenture dated as of October 27, 2016, among Sprint Spectrum Co LLC, Sprint Spectrum Co II LLC, and Sprint Spectrum Co III LLC, as issuers, and Deutsche Bank Trust Company Americas, as trustee and securities intermediary on terms reasonably determined by T-Mobile in consultation with Sprint; and

 

(B)                               upon receipt of the necessary consents, Sprint shall execute, and use its reasonable best efforts to cause the applicable trustee to execute, a supplemental indenture effecting the Spectrum Notes Change of Control Waiver.

 

(iv)                              Sprint covenants and agrees that, promptly following the expiry of any consent solicitation forming part of any Debt Offer and assuming the requisite consents are received, Sprint or its applicable subsidiaries shall (and shall use reasonable best efforts to cause the applicable Sprint Notes trustee to, including by delivering to the Trustee any deliverables required to be delivered under the applicable indenture for the Sprint Notes subject to such Debt Offer), execute a supplemental indenture in the form contemplated by the Debt Offer, which supplemental indenture shall become operative upon the Effective Time.  In addition, in connection with the Debt Offer, T-Mobile may select one or more dealer managers, information agents, depositaries and other agents to provide assistance in connection therewith, and at T-Mobile’s request, Sprint shall enter into customary agreements therewith.

 

(c)                                  Without limiting the generality of this Section 6.17, (i) each of T-Mobile and Sprint agrees that it shall timely file all periodic and current reports required to be filed by it with the SEC by the date required under the Exchange Act and (ii) each of T-Mobile and Sprint agrees that it shall, and shall cause (x) its officers and employees, (y) its subsidiaries and (z) the officers and employees of its subsidiaries to, and shall use reasonable best efforts to cause its Representatives (including legal and accounting advisors) to, provide all reasonable cooperation in consummating any Pre-Merger Financing Transaction (and, in particular, each of T-Mobile and Sprint agree to use reasonable best efforts to consummate and obtain the financing contemplated by the Commitment Letter in amounts reasonably necessary to effect the Merger and related transactions), including to:

 

(i)                                     designate members of senior management to participate in a reasonable and customary number of meetings, drafting sessions, presentations, “road show” meetings and conference calls, sessions with rating agencies and due diligence sessions;

 

103



 

(ii)                                  assist in preparing the documentation required in connection with such Pre-Merger Financing Transaction, including requesting any consents of accountants for use of their historical reports in any materials relating to such Pre-Merger Financing Transaction, and assist in preparing materials for rating agency presentations, “road show” meetings and conference calls, bank information memoranda, private placement memoranda and other customary marketing materials, and assist in the preparation of pro forma financial statements;

 

(iii)                               furnish financial and other information necessary, customary or otherwise advisable in connection with such Pre-Merger Financing Transaction, including as necessary to prepare any pro forma financial statements or information;

 

(iv)                              provide all documentation and other information required by U.S. bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act;

 

(v)                                 agree to deliver such officer’s certificates as are reasonable and customary and as are, in the good faith determination of the persons executing such officer’s certificates, accurate;

 

(vi)                              obtain customary accountants’ comfort letters, if applicable (and the participation of outside auditors in customary accounting due diligence calls), legal opinions, consents, approvals and other documentation and items relating to or reasonably requested in connection with such Pre-Merger Financing Transaction; and

 

(vii)                           cooperate in connection with the prepayment or discharge (or defeasance), in each case with is fully effective as of the Closing Date, of any Sprint Indebtedness, including delivery of notices and deliverables with respect thereto.

 

(d)                                 Notwithstanding anything to the contrary in this Section 6.17, none of Sprint, T-Mobile or their respective subsidiaries shall be required to disclose any information pursuant to this Section 6.17 to the extent that (i) in the reasonable good faith judgment of such party, any applicable Law requires such party or its subsidiaries to restrict or prohibit access to any such information, (ii) in the reasonable good faith judgment of such party, the information is subject to confidentiality obligations to a third party, or (iii) disclosure of any such information or document would result in the loss of attorney-client privilege (but, for absence of doubt, this clause (iii) shall not apply to disclosure of the underlying nonprivileged facts); provided, that Sprint or T-Mobile, as applicable, shall use its commercially reasonable efforts to (A) obtain the required consent of any third party necessary to provide such disclosure, (B) develop an alternative to providing such information that is reasonably acceptable to T-Mobile or Sprint, as applicable, and (C) utilize the procedures of a joint defense agreement or implement such other techniques if the parties determine that doing so would reasonably permit the disclosure of such information without violating applicable Law or jeopardizing such attorney-client privilege.  Additionally, except as otherwise provided in this Section 6.17 (including with respect to the Change of Control Waiver Offers and the Spectrum Notes Change of Control Waiver), neither party will be required to consummate any Pre-Merger Financing Transaction prior to the Closing.

 

104



 

(e)                                  T-Mobile shall indemnify and hold harmless Sprint, its subsidiaries and their respective directors, officers, employees and Representatives from and against any and all losses, damages, claims, costs or expenses (including reasonable, documented out-of-pocket attorneys’ fees) suffered or incurred by any of them in connection with any Pre-Merger Financing Transaction solely to the extent arising from (i) information provided by or on behalf of T-Mobile, its subsidiaries or their respective affiliates or shareholders or the Representatives thereof for inclusion in any offering documents or similar materials relating to any Pre-Merger Financing Transaction or (ii) the bad faith, gross negligence or willful misconduct of T-Mobile, its subsidiaries or their respective affiliates or shareholders or the Representatives thereof in connection with any Pre-Merger Financing Transaction.  Sprint shall indemnify and hold harmless T-Mobile, its subsidiaries and their respective directors, officers, employees and Representatives from and against any and all losses, damages, claims, costs or expenses (including reasonable attorneys’ fees) suffered or incurred by any of them in connection with any Pre-Merger Financing Transaction solely to the extent arising from (i) information provided by or on behalf of Sprint, its subsidiaries or their respective affiliates or shareholders or the Representatives thereof to T-Mobile, its subsidiaries or their respective affiliates or shareholders or the Representatives thereof for inclusion in any offering documents or similar materials relating t