Fill and Sign the Plan Reorganization Template Form

AGREEMENT AND PLAN OF REORGANIZATION DATED AS OF SEPTEMBER 17, 1999 AMONG VOICESTREAM WIRELESS CORPORATION VOICESTREAM WIRELESS HOLDING CORPORATION VOICESTREAM SUBSIDIARY III CORPORATION AERIAL COMMUNICATIONS, INC. AND TELEPHONE AND DATA SYSTEMS, INC. D-i 366 TABLE OF CONTENTS PAGE ----- Article I -- The Reorganization............................................... D-2 Section 1.0 The Reorganization.......................................... D-2 Section 1.1 The Merger.................................................. D-3 Section 1.2 Closing..................................................... D-3 Section 1.3 Effective Time.............................................. D-3 Section 1.4 Effects of the Merger....................................... D-4 Section 1.5 Restated Certificate of Incorporation and By-laws; Officers D-4 and Directors............................................... Article II -- Effect of the Merger on the Stock of the Constituent Corporations; Surrender of Certificates................................................................ D-4 Section 2.1 Effect on Stock............................................. D-4 Section 2.2 Surrender of Certificates................................... D-6 Article III -- Representations and Warranties of the Company.................. D-9 Section 3.1 Organization................................................ D-9 Section 3.2 Subsidiaries................................................ D-9 Section 3.3 Capital Structure........................................... D-9 Section 3.4 Authority................................................... D-10 Section 3.5 Consents and Approvals; No Violations....................... D-10 Section 3.6 SEC Documents and Other Reports............................. D-11 Section 3.7 Absence of Material Adverse Change.......................... D-11 Section 3.8 Information Supplied........................................ D-12 Section 3.9 Permits; Compliance with Laws............................... D-12 Section 3.10 Tax Matters................................................. D-13 Section 3.11 Liabilities................................................. D-14 Section 3.12 Benefit Plans; Employees and Employment Practices........... D-14 Section 3.13 Litigation.................................................. D-16 Section 3.14 Environmental Matters....................................... D-16 Section 3.15 Section 203 of DGCL......................................... D-17 Section 3.16 Intellectual Property....................................... D-17 Section 3.17 Opinion of Financial Advisor................................ D-18 Section 3.18 Brokers..................................................... D-18 Section 3.19 Tax Status.................................................. D-18 Section 3.20 Contracts................................................... D-18 Section 3.21 Vote Required............................................... D-19 Section 3.22 Transactions with Affiliates................................ D-19 Article IV -- Representations and Warranties of Parent and Sub................ D-19 Section 4.1 Organization................................................ D-19 Section 4.2 Ownership of Merger Subs.................................... D-19 Section 4.3 Capital Structure........................................... D-19 Section 4.4 Authority................................................... D-20 Section 4.5 Consents and Approvals; No Violations....................... D-20 Section 4.6 SEC Documents and Other Reports............................. D-21 Section 4.7 Absence of Material Adverse Change.......................... D-21 Section 4.8 Information Supplied........................................ D-22 Section 4.9 Permits; Compliance with Laws............................... D-22 Section 4.10 Tax Matters................................................. D-23 D-ii 367 PAGE ----- Section 4.11 Liabilities................................................. D-23 Section 4.12 Litigation.................................................. D-24 Section 4.13 State Takeover Statutes..................................... D-24 Section 4.14 Brokers..................................................... D-24 Section 4.15 Tax Status.................................................. D-24 Section 4.16 Interim Operations of Sub................................... D-24 Section 4.17 Vote Required............................................... D-24 Section 4.18 Transactions with Affiliates................................ D-24 Section 4.19 Opinion of Goldman, Sachs & Co.............................. D-24 Article V -- Covenants Relating to Conduct of Business........................ D-25 Section 5.1 Conduct of Business by the Company Pending the D-25 Reorganization.............................................. Section 5.2 Conduct of Business by Parent Pending the Reorganization.... D-26 Section 5.3 No Solicitation............................................. D-27 Section 5.4 Third Party Standstill Agreements........................... D-28 Section 5.5 Disclosure of Certain Matters; Delivery of Certain D-28 Filings..................................................... Section 5.6 Tax Status.................................................. D-28 Article VI -- Additional Agreements........................................... D-28 Section 6.1 Employee Benefits........................................... D-28 Section 6.2 Options; Restricted Stock Awards............................ D-30 Section 6.3 Company Stockholders Meeting................................ D-30 Section 6.4 Preparation of the Registration Statement and Joint Proxy D-31 Statement................................................... Section 6.5 Comfort Letters............................................. D-32 Section 6.6 Access to Information....................................... D-32 Section 6.7 Compliance with the Securities Act.......................... D-32 Section 6.8 Stock Exchange Listings..................................... D-33 Section 6.9 Fees and Expenses........................................... D-33 Section 6.10 Public Announcements........................................ D-33 Section 6.11 Real Estate Transfer Tax.................................... D-33 Section 6.12 State Takeover Laws......................................... D-33 Section 6.13 Indemnification; Directors and Officers Insurance........... D-34 Section 6.14 Best Efforts................................................ D-35 Section 6.15 Certain Litigation.......................................... D-36 Section 6.16 Transition Services Agreement............................... D-36 Section 6.17 Registration Rights Agreement............................... D-36 Section 6.18 Investor Claim.............................................. D-37 Section 6.19 Intercompany Service Agreements............................. D-37 Section 6.20 Revolving Credit Agreement.................................. D-37 Section 6.21 Series A and B Notes........................................ D-37 Section 6.22 Nokia Credit Agreement...................................... D-38 Section 6.23 Intercompany Accounts....................................... D-38 Section 6.24 Tax Allocation Agreement and Tax Settlement Agreement....... D-38 Section 6.25 Parent Stockholder Voting Agreement......................... D-38 Section 6.26 Agreements Regarding Taxes.................................. D-38 D-iii 368 PAGE ----- Article VII -- Conditions Precedent........................................... D-41 Section 7.1 Conditions to Each Party's Obligation to Effect the D-41 Reorganization.............................................. Section 7.2 Conditions to Obligation of the Company to Effect the D-42 Reorganization.............................................. Section 7.3 Conditions to Obligations of Parent and Merger Sub C to D-44 Effect the Reorganization................................... Article VIII -- Termination and Amendment..................................... D-46 Section 8.1 Termination................................................. D-46 Section 8.2 Effect of Termination....................................... D-47 Section 8.3 Amendment................................................... D-47 Section 8.4 Extension; Waiver........................................... D-47 Article IX -- General Provisions.............................................. D-47 Section 9.1 Non-Survival of Representations and Warranties and D-47 Agreements.................................................. Section 9.2 Notices..................................................... D-47 Section 9.3 Interpretation; Definitions................................. D-48 Section 9.4 Counterparts................................................ D-57 Section 9.5 Entire Agreement; No Third-Party Beneficiaries.............. D-57 Section 9.6 Governing Law............................................... D-58 Section 9.7 Assignment.................................................. D-58 Section 9.8 Severability................................................ D-58 Section 9.9 Enforcement of this Agreement............................... D-58 Section 9.10 Obligations of Subsidiaries................................. D-58 Section 9.11 Reliance on Representations................................. D-58 ANNEX A -- RESTATED CERTIFICATE OF INCORPORATION ANNEX B -- COMPANY'S RESTATED BYLAWS ANNEX C -- TRANSITION SERVICES AGREEMENT ANNEX D -- STOCKHOLDER AGREEMENT ANNEX E -- INDEMNITY AGREEMENT ANNEX F -- DEBT/EQUITY REPLACEMENT AGREEMENT ANNEX G -- PARENT STOCKHOLDER AGREEMENT ANNEX H -- INVESTOR AGREEMENT ANNEX I -- FORM OF PARENT FCC COUNSEL OPINION ANNEX J -- FORM OF PRESTON GATES & ELLIS LLP OPINION ANNEX K -- FORM OF COMPANY FCC COUNSEL OPINION ANNEX L -- FORM OF SIDLEY & AUSTIN OPINION ANNEX M -- TAX CERTIFICATES ANNEX N -- TAX CERTIFICATES ANNEX O -- STOCKHOLDER TAX CERTIFICATE D-iv 369 AGREEMENT AND PLAN OF REORGANIZATION AGREEMENT AND PLAN OF REORGANIZATION, dated as of September 17, 1999 (this "Agreement") among VoiceStream Wireless Corporation, a Washington corporation ("VoiceStream"), VoiceStream Wireless Holding Corporation, a Delaware corporation ("Holding"), (VoiceStream and Holding are collectively referred to herein as "Parent" as explained below) VoiceStream Subsidiary III Corporation, a Delaware corporation ("Merger Sub C"), which shall be a wholly owned direct subsidiary of Holding as of the Effective Time, Aerial Communications, Inc., a Delaware corporation (the "Company") (Merger Sub C and the Company being hereinafter collectively referred to as the "Constituent Corporations"), and Telephone and Data Systems, Inc., a Delaware corporation ("Series A Stockholder"). Except as otherwise set forth herein, capitalized (and certain other) terms used herein shall have the meanings set forth in Section 9.3. WITNESSETH: WHEREAS, VoiceStream, Holding and Omnipoint Corporation, a Delaware corporation ("Omnipoint"), have entered into an Agreement and Plan of Reorganization dated as of June 23, 1999 (the "Omnipoint Agreement") providing for, among other things, the merger of a subsidiary of Holding ("Merger Sub A") into VoiceStream (the "VoiceStream Merger"), and the merger of another subsidiary of Holding ("Merger Sub B") into Omnipoint (the "Omnipoint Merger")(the VoiceStream Merger, the Omnipoint Merger and the other transactions contemplated by the Omnipoint Agreement are herein referred to as the "Omnipoint Reorganization"); WHEREAS, the reorganization provided herein (the "Reorganization") shall include the merger (the "Merger") of Merger Sub C with and into the Company and, if applicable, the other transactions described below; WHEREAS, if the Omnipoint Reorganization is consummated prior to the consummation of the transactions contemplated by this Agreement, and the other conditions to the Reorganization specified in Article VII are satisfied or waived, in the Reorganization, Holding shall be Parent and shall acquire all of the common stock of the Company through the Merger, in which case the Merger will occur as part of and concurrently with or promptly after the Omnipoint Reorganization; WHEREAS, if the transactions contemplated by the Omnipoint Agreement are terminated or not consummated by the Omnipoint End Date (as defined herein), and the other conditions to the Reorganization specified in Article VII are satisfied or waived by the Omnipoint End Date, in the Reorganization, Holding shall be Parent and shall concurrently acquire (i) all of the common stock of the Company through the Merger and (ii) all of the common stock of VoiceStream through the VoiceStream Merger; WHEREAS, the respective Boards of Directors of VoiceStream, Holding, Merger Sub C and the Company have approved and declared advisable the Reorganization, upon the terms and subject to the conditions herein set forth whereby each issued and outstanding Series A Common Share, $1.00 par value, of the Company ("Company Series A Common Shares") and each issued and outstanding Common Share, $1.00 par value of the Company ("Company Common Shares" and together with the Company Series A Common Shares, "Company Common Stock"), other than shares of Company Common Stock owned directly or indirectly by Parent or the Company, will be converted into shares of Common Stock, $0.001 par value, of Parent ("Parent Common Stock") or, to the extent provided herein, cash; WHEREAS, the respective Boards of Directors of VoiceStream, Holding and the Company have determined that the Reorganization is in furtherance of and consistent with their respective long-term business strategies and is fair to and in the best interests of their respective stockholders; D-1 370 WHEREAS, for federal income tax purposes, it is intended that the Reorganization shall qualify as a reorganization within the meaning of Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the "Code"), and/or as an exchange described in Section 351(a) of the Code; WHEREAS, VoiceStream, Holding, Merger Sub C and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Reorganization and also to prescribe various conditions to the Reorganization. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, VoiceStream, Holding, Merger Sub C and the Company hereby agree as follows: ARTICLE I THE REORGANIZATION SECTION 1.0 The Reorganization. (a) Holding has caused Merger Sub A, Merger Sub B and Merger Sub C to be organized for the purposes of effectuating the Omnipoint Merger, the VoiceStream Merger, and the Merger. Merger Sub A, Merger Sub B and Merger Sub C are collectively referred to as "Merger Subs". (b) If the Omnipoint Reorganization is consummated by the Omnipoint End Date, the Merger shall occur as specified herein as part of and concurrently with or promptly after the Omnipoint Reorganization. (c) If the transactions contemplated by the Omnipoint Agreement are terminated or not consummated by the Omnipoint End Date and the other conditions to the Reorganization specified in Article VII are satisfied or waived by the Omnipoint End Date, Holding shall concurrently acquire (i) all of the common stock of the Company through the Merger as specified herein, and (ii) all of the common stock of VoiceStream through the VoiceStream Merger as specified in this Section 1.0(c). In such event, pursuant to Articles of Merger and a Plan of Merger, in a form to be mutually agreed upon by VoiceStream and the Company (sometimes hereinafter referred to collectively as the "Merger Document" or "Merger Documents"), upon the terms and subject to the conditions set forth in this Agreement and in the Merger Documents: (i) In the VoiceStream Merger, Merger Sub A shall be merged with and into VoiceStream in accordance with the applicable provisions of Washington law. VoiceStream shall be the surviving corporation in the VoiceStream Merger and shall continue its corporate existence under Washington law. As a result of the VoiceStream Merger, VoiceStream shall become a wholly owned Subsidiary of Holding. The effects and consequences of the VoiceStream Merger shall be as set forth in the VoiceStream Merger Documents. (ii) The parties shall (i) file Merger Documents as are required by and executed in accordance with Washington law and (ii) make all other filings or recordings required under applicable Washington law. (iii) In the case of this Section 1.0(c), the Effective Time shall be the later of (i) the date and time of the filing of the Merger Documents with respect to the VoiceStream Merger (or such other date and time as may be specified in such documents as may be permitted by Washington law) and (ii) the date and time of the filing of the Certificate of Merger (as defined below) with respect to the Merger (or such other date and time as may be specified in such certificate as may be permitted by Delaware law). D-2 371 (iv) At the Effective Time, by virtue of the VoiceStream Merger and without any action on the part of any of the parties, each share of the common stock of Merger Sub A outstanding immediately prior to the Effective Time shall be converted into and shall become one share of common stock of the surviving corporation of the VoiceStream Merger. (v) At the Effective Time, the one share of the capital stock of Holding issued to VoiceStream and outstanding immediately prior to the Effective Time shall be cancelled and cease to exist. (vi) At the Effective Time, each share of VoiceStream Common Stock that is issued and outstanding immediately prior to the Effective Time shall be converted into one share of Holding Common Stock. Upon such conversion, all such shares of VoiceStream Common Stock shall be cancelled and cease to exist, and each certificate theretofore representing any such shares shall, without any action on the part of the holder thereof, be deemed to represent an equivalent number of shares of Holding Common Stock. (vii) Notwithstanding the foregoing, VoiceStream Common Stock outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the Reorganization and has demanded appraisal for such shares in accordance with Washington law ("Dissenting Shares") shall not be converted into a right to receive shares of Holding Common Stock unless such holder fails to perfect, withdraws or otherwise loses its right to appraisal. If, after the Effective Time, such holder fails to perfect, withdraws or loses its right to appraisal, such shares shall be treated as if they had been converted as of the Effective Time into a right to receive Holding Common Stock. (d) All representations, warranties and covenants of Parent are hereby made on a joint and several basis by VoiceStream and Holding. SECTION 1.1 The Merger. Upon the terms and subject to the conditions hereof, and in accordance with the DGCL, in the Reorganization, Merger Sub C shall be merged with and into the Company at the Effective Time. Following the Effective Time, the separate corporate existence of Merger Sub C shall cease and the Company shall continue as the surviving corporation (the "Surviving Corporation") and shall succeed to and assume all the rights and obligations of Merger Sub C and the Company in accordance with the DGCL. SECTION 1.2 Closing. Unless waived by Parent, the Company and Parent shall use their reasonable commercial efforts to cause the closing of the transactions contemplated by this Agreement (the "Closing") to take place concurrently with the closing of the Omnipoint Reorganization or as soon as practicable thereafter, subject to the satisfaction or waiver of the conditions set forth in Article VII. If the Omnipoint Reorganization does not take place, the Closing will take place at 10:00 a.m. on the fifth Business Day after satisfaction or waiver of the conditions set forth in Article VII, at the offices of Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, or, at the request of Parent, at the offices of Sidley & Austin, 873 Third Avenue, New York, New York 10022, unless another date, time or place is agreed to in writing by the parties hereto. The date on which the Closing takes place is herein referred to as the "Closing Date." SECTION 1.3 Effective Time. The Merger shall become effective when a Certificate of Merger (the "Certificate of Merger"), executed in accordance with the relevant provisions of the DGCL, is duly filed with the Secretary of State of the State of Delaware, or at such other time as Merger Sub C and the Company shall agree should be specified in the Certificate of Merger. Except as provided in Section 1.0(c)(iii), the term "Effective Time" shall mean the later of the date and time at which the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware or such later time established by the Certificate of Merger. The filing of the Certificate of Merger shall be made as soon as practicable after the satisfaction or waiver of the conditions set forth herein. D-3 372 SECTION 1.4 Effects of the Merger. The Merger shall have the effects set forth in the DGCL. SECTION 1.5 Restated Certificate of Incorporation and By-laws; Officers and Directors. (a) The Restated Certificate of Incorporation of the Company, as in effect immediately prior to the Effective Time, shall be amended as of the Effective Time as set forth on Annex A hereto. As so amended, such Restated Certificate of Incorporation shall be the Restated Certificate of Incorporation of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable law. (b) The Restated By-laws of the Company, as in effect immediately prior to the Effective Time, shall be amended as of the Effective Time as set forth on Annex B. As so amended, such Restated By-laws shall be the By-laws of the Surviving Corporation until thereafter changed or amended as provided by the Restated Certificate of Incorporation of the Surviving Corporation or by applicable law. (c) Subject to Section 2.2 of the Investment Agreement, the directors of Merger Sub C immediately prior to the Effective Time shall be the directors of the Surviving Corporation, until the next annual meeting of stockholders (or the earlier of their resignation or removal) and until their respective successors are duly elected and qualified, as the case may be. (d) Subject to the Management Side Letter, the officers of Merger Sub C immediately prior to the Effective Time shall be the officers of the Surviving Corporation until the earlier of their resignation or removal and until their respective successors are duly elected and qualified, as the case may be. ARTICLE II EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT CORPORATIONS; SURRENDER OF CERTIFICATES SECTION 2.1 Effect on Stock. As of the Effective Time, by virtue of the Merger and without any action on the part of any of Sub, the Company or the holders of any securities of the Constituent Corporations: (a) Capital Stock of Sub. Each issued and outstanding share of capital stock of Merger Sub C shall be converted into and become one validly issued, fully paid and nonassessable share of Common Stock, no par value, of the Surviving Corporation. (b) Treasury Stock and Parent Owned Stock. Each share of Company Common Stock that is owned by the Company or by any Subsidiary of the Company and each share of Company Common Stock that is owned by Parent, Merger Sub C or any other Subsidiary of Parent shall automatically be cancelled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor. (c) Conversion of Company Common Stock. Except as set forth in Item 2.1(c) of the Company Letter, as of the date hereof, no shares of Company Common Stock or Stock Equivalents were issued, reserved for issuance or outstanding. Each share of Company Common Stock issued and outstanding (other than shares of Company Common Stock to be cancelled in accordance with Section 2.1(b)) shall be converted into .455 (the "Conversion Number") validly issued, fully paid and nonassessable shares of Parent Common Stock (the "Per Share Stock Consideration"); provided, that each share of Company Common Stock with respect to which an election to receive only cash has been effectively made by a Public Holder and not revoked or lost pursuant to Section 2.1(d) (a "Cash Election"), shall be converted into the right to receive $18.00 in cash, without interest (the "Per Share Cash Consideration"). Notwithstanding the foregoing, in the event that (i) the Omnipoint Agreement is terminated or the transactions contemplated by the Omnipoint Agreement are not consummated by the Omnipoint D-4 373 End Date and (ii) the Closing Date Market Price is less than $39.56, the Conversion Number shall be the amount determined by dividing $18.00 by the Closing Date Market Price, but shall not be greater than .50 or less than .455. In the event Investor exercises its right under Section 10.6 of the Investment Agreement ("Tag-Along Right"), the Operating Company Shares owned by Investor (as described in the Company Letter) shall be converted immediately prior to the Effective Time into such number of shares of Company Common Stock equal to the product of (i) such number of Operating Company Shares and (ii) the Exchange Rate, and the shares of Company Common Stock obtained by Investor through such conversion shall be converted into shares of Parent Common Stock pursuant to the Merger. In the event Investor does not exercise its Tag-Along Right, subject to the authorization, execution and delivery of the Indemnity Agreement, Parent hereby agrees to accept and be bound by all of the rights of Investor and its Affiliates under the Investment Agreement and the Joint Venture Agreement. As of the Effective Time, all such shares of Company Common Stock shall be converted in accordance with this paragraph, and when so converted, shall no longer be outstanding and shall automatically be retired and shall cease to exist, and each holder of a certificate representing any such shares of Company Common Stock shall cease to have any rights with respect thereto, except the right to receive (i) certificates representing the shares of Parent Common Stock into which such shares of Company Common Stock have been converted, (ii) any dividends and other distributions in accordance with Section 2.2(d) and (iii) any cash, without interest, to be paid in lieu of any fractional share of Parent Common Stock in accordance with Section 2.2(e). (d) Cash Election by Public Holders. Each person who, at the Effective Time, is a record holder of shares of Company Common Stock other than the Series A Stockholder, Investor (with respect to Operating Company Shares owned by Investor which are converted into Company Common Stock immediately prior to the Merger pursuant to the Tag-Along Right) and holders of shares of Company Common Stock to be cancelled as set forth in Section 2.1(b) (such eligible holders hereinafter being referred to as the "Public Holders"), shall have the right to submit an election form (the "Cash Election Form") specifying the number of shares of Company Common Stock that such person desires to have converted into the right to receive the Per Share Cash Consideration pursuant to the Cash Election. Any eligible record holder who fails properly to submit a Cash Election Form on or prior to the Election Deadline in accordance with the procedures set forth in this Section 2.1(d) shall be entitled to receive the Per Share Stock Consideration for each share of Company Common Stock registered in the name of such holder. Any Cash Election shall be validly made only if the Exchange Agent shall have received a Cash Election Form by 5:00 p.m., New York City time on the twentieth Business Day (the "Election Deadline") after the date on which the Letter of Transmittal and Cash Election Form are sent to the Public Holders pursuant to Section 2.2(b). For a Cash Election made by a Public Holder to be valid, a Cash Election Form properly completed and executed (with the signature or signatures thereon guaranteed to the extent required by the Cash Election Form) must be delivered by such holder accompanied by such holder's Certificates, or by an appropriate guarantee of delivery of such Certificates from a member of any registered national securities exchange or of the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States as set forth in such Cash Election Form. Any holder of Company Common Stock who has made an election by submitting an Election Form to the Exchange Agent may at any time prior to the Election Deadline change such holder's election by submitting a revised Cash Election Form and/or a Letter of Transmittal, properly completed and signed, that is received by the Exchange Agent prior to the Election Deadline. Any holder of Company Common Stock may at any time prior to the Election Deadline revoke such holder's election by written notice to the Exchange Agent received by the close of business on the day prior to the Election Deadline, in which event such holder shall be entitled to receive only the Per Share Stock Consideration with respect to each share of Company Common Stock registered D-5 374 in the name of such holder immediately prior to the Effective Time. Parent shall have the right to make reasonable rules (which will be described in the Cash Election Form), not inconsistent with the terms of this Agreement, governing the validity of Cash Election Forms and the procedures for making Cash Elections. (e) Adjustment of Conversion Number. Except in connection with the Omnipoint Agreement, in the event of any reclassification, stock split or stock dividend with respect to Parent Common Stock, any change or conversion of Parent Common Stock into other securities or any other dividend or distribution with respect to Parent Common Stock (other than normal quarterly cash dividends as the same may be modified from time to time in the ordinary course), or if a record date with respect to any of the foregoing should occur, prior to the Effective Time, appropriate and proportionate adjustments, if any, shall be made to the Conversion Number and the Per Share Cash Election Consideration, and thereafter all references in this Agreement to the Conversion Number and the Per Share Cash Election Consideration shall be deemed to be to the Conversion Number and the Per Share Cash Election Consideration, respectively, as so adjusted. Notwithstanding the foregoing, in the event of any amendment of the Omnipoint Agreement that would result in a reclassification, stock split, or stock dividend with respect to Parent Common Stock, any change or conversion of Parent Common Shares into other securities or any other dividend or distribution with respect to Parent Common Stock, appropriate and proportionate adjustments, if any, shall be made to the Conversion Number and the Per Share Cash Election Consideration, and thereafter all references in this Agreement shall be deemed to be the Conversion Number and the Per Share Cash Election Consideration, respectively, as so adjusted. In the event that the aggregate number of shares of Company Common Stock and Stock Equivalents, not including shares issued or to be issued pursuant to the Debt/Equity Replacement Agreement and to TDS and Investor or shares which are or may be issued pursuant to Performance Options ("Adjusted Fully Diluted Shares") exceeds 85,839,161 shares as of the Effective Time, the Conversion Number shall be determined by dividing 39,056,818 by such number of Adjusted Fully Diluted Shares as of the Effective Time. The number of shares of Company Common Stock and Stock Equivalents for the purpose of such recalculation shall be determined in a manner consistent with the methodologies used in preparing Item 2.1(c) of the Company Letter including without limitation the shares of Company Common Stock actually outstanding and shares of Company Common Stock issuable (i) in exchange for the Operating Company Shares whether or not Investor exercises its Tag-Along Rights as set forth in Section 10.6 of the Investment Agreement, (ii) pursuant to Company Stock Options determined using the treasury stock method, (iii) pursuant to the Restricted Stock Plan regardless of whether payment for the Restricted Stock units is made in cash or Company Common Stock, (iv) pursuant to the Tax-Deferred Savings Plan, (v) pursuant to the Compensation Plan for Non-Employee Directors, and (vi) any other Company Common Stock and Stock Equivalents outstanding as of the Effective Time; provided, for the purpose of such recalculation the shares of Company Common Stock issued or issuable pursuant to Performance Options and the shares issued or issuable pursuant to the Debt/Equity Replacement Agreement and to TDS and Investor shall be disregarded for purpose of the recalculation. The Conversion Number shall be subject to further adjustment as provided in the third sentence of Section 2.1(c) in the event that the Omnipoint Agreement is terminated or the transactions contemplated by the Omnipoint Agreement are not consummated by the Omnipoint End Date, provided that the Conversion Number determined pursuant to this Section 2.1(e) shall be used in lieu of .455. SECTION 2.2 Surrender of Certificates. (a) Exchange Agent. ChaseMellon Shareholder Services LLC shall act as exchange agent in the Merger (the "Exchange Agent"). As and when needed, but no later than twenty-five Business Days after the Effective Time, Parent shall deposit with the D-6 375 Exchange Agent, in trust for the holders of certificates (the "Company Certificates") which immediately prior to the Effective Time represented shares of Company Common Stock converted in the Merger, (i) certificates (the "Parent Certificates") representing the shares of Parent Common Stock issuable pursuant to Section 2.1(c) with respect to shares of Company Common Stock which have been converted into the right to receive Parent Common Stock (such shares of Parent Common Stock, together with cash in lieu of fractional shares and any dividends or distributions with respect thereto in accordance with Section 2.2(d) being hereinafter referred to as the "Stock Consideration Fund"), and (ii) cash with respect to shares of Company Common Stock with respect to which a Cash Election has been properly made and not withdrawn or lost (the "Cash Consideration Fund") (the Stock Consideration Fund and the Cash Consideration Fund are hereinafter referred to as the "Exchange Fund"). (b) Exchange Procedure. As soon as reasonably practicable after the Effective Time, but no later than five Business Days after the Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail to each holder of record of a Company Certificate, (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to a Company Certificate shall pass, only upon delivery of such Company Certificate to the Exchange Agent and shall be in a form and have such other provisions as Parent may reasonably specify), (ii) with respect to the Public Holders, the Cash Election Form and (iii) instructions for use in effecting the surrender of Company Certificates in exchange for the property described in the next sentence. Upon surrender for cancellation to the Exchange Agent of all Company Certificate(s) held by any holder of record of a Company Certificate, together with such letter of transmittal duly executed, such holder shall be entitled to receive in exchange therefor (x) the Per Share Cash Consideration if a Cash Election is properly and timely made or (y) a Parent Certificate (which shall not include any restrictive legends) representing the number of whole shares of Parent Common Stock into which the shares of Company Common Stock represented by the surrendered Company Certificate(s) shall have been converted at the Effective Time pursuant to Section 2.1(c), cash in lieu of any fractional share of Parent Common Stock in accordance with Section 2.2(e) and certain dividends and other distributions in accordance with Section 2.2(d); and the Company Certificate(s) so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of shares of Company Common Stock that is not registered in the transfer records of the Company, cash or a Parent Certificate representing shares of Parent Common Stock may be paid to or issued in a name other than that in which the Company Certificate surrendered in exchange therefor is registered, if such Company Certificate shall be properly endorsed or otherwise be in proper form for transfer and the person requesting such payment shall pay any transfer or other Taxes required by reason of the payment to a person other than the registered holder of such Company Certificate or establish to the satisfaction of the Surviving Corporation that such Tax has been paid or is not applicable. Until surrendered as contemplated by this Section 2.2, each Company Certificate shall be deemed at any time after the Effective Time to represent only the right to receive (i) the Per Share Cash Consideration, subject to the delivery of a proper and timely Cash Election Form, or (ii)(A) certificates representing the shares of Parent Common Stock into which the shares of Company Common Stock represented by such Company Certificate have been converted, (B) any dividends and other distributions in accordance with Section 2.2(d) and (C) any cash, without interest, to be paid in lieu of any fractional share of Parent Common Stock in accordance with Section 2.2(e). Parent or the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of shares of Company Common Stock such amounts as Parent or the Exchange Agent is required to deduct and withhold with respect to the making of such payment under the Code or under any provision of state, local or foreign Tax law. To the extent that amounts are so withheld by Parent or the Exchange Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of Company Common Stock in respect of which such deduction and withholding was made by Parent or the Exchange Agent. D-7 376 (c) No Further Ownership Rights in Shares. All shares of Parent Common Stock issued and cash paid upon the surrender of Company Certificates in accordance with the terms of this Article II (including any cash paid pursuant to Section 2.2(d) or Section 2.2(e)) shall be deemed to have been issued (and paid) in full satisfaction of all rights pertaining to the shares of Company Common Stock theretofore represented by such Company Certificates. At the Effective Time, the stock transfer books of the Company shall be closed, and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Company Common Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Company Certificates are presented to the Surviving Corporation or the Exchange Agent for any reason, they shall be cancelled and exchanged as provided in this Article II. (d) Dividends. No dividends or other distributions that are declared on or after the Effective Time on Parent Common Stock, or are payable to the holders of record thereof on or after the Effective Time, shall be paid to any person entitled by reason of the Merger to receive Parent Certificates, and no cash payment in lieu of any fractional share of Parent Common Stock shall be paid to any such person pursuant to Section 2.2(e), until such person shall have surrendered its Company Certificate(s) as provided in Section 2.2(b). Subject to applicable law, there shall be paid to each person receiving a Parent Certificate: (i) at the time of such surrender or as promptly as practicable thereafter, the amount of any dividends or other distributions theretofore paid with respect to the shares of Parent Common Stock represented by such Parent Certificate and having a record date on or after the Effective Time and a payment date prior to such surrender; and (ii) at the appropriate payment date or as promptly as practicable thereafter, the amount of any dividends or other distributions payable with respect to such shares of Parent Common Stock and having a record date on or after the Effective Time but prior to such surrender and a payment date on or subsequent to such surrender. In no event shall the person entitled to receive such dividends or other distributions be entitled to receive interest on such dividends or other distributions. (e) No Fractional Shares. No certificates or scrip representing fractional shares of Parent Common Stock shall be issued upon the surrender for exchange of Company Certificates pursuant to this Article II; no dividend or other distribution by Parent and no stock split shall relate to any such fractional share; and no such fractional share shall entitle the record or beneficial owner thereof to vote or to any other rights of a stockholder of Parent. In lieu of any such fractional share, each holder of shares of Company Common Stock who would otherwise have been entitled thereto upon the surrender of Company Certificate(s) for exchange pursuant to this Article II (other than with respect to shares of Company Common Stock for which an effective Cash Election has been made) will be paid an amount in cash (without interest), rounded to the nearest whole cent, determined by multiplying (i) the per share closing price on the Nasdaq National Market System ("Nasdaq") of Parent Common Stock (as reported on the Nasdaq) on the date on which the Effective Time shall occur (or, if Parent Common Stock shall not trade on the Nasdaq on such date, the first day of trading in Parent Common Stock on the Nasdaq thereafter) by (ii) the fractional share to which such holder would otherwise be entitled. (f) Termination of Exchange Fund. Any portion of the Exchange Fund which remains undistributed to holders of Company Common Stock for twelve months after the Effective Time shall be delivered to Parent, upon demand, and any holders of Company Common Stock who have not theretofore complied with this Article II and the instructions set forth in the letter of transmittal mailed to such holders after the Effective Time shall thereafter look only to the Surviving Corporation (subject to abandoned property, escheat or other similar laws) for payment of cash pursuant to the Cash Election or shares of Parent Common Stock, any cash in lieu of fractional shares of Parent Common Stock and any dividends or distributions with respect to such shares of Parent Common Stock to which they are entitled. D-8 377 (g) No Liability. None of Parent, Sub, the Company or the Exchange Agent shall be liable to any person in respect of any cash delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Parent and Merger Sub C as follows: SECTION 3.1 Organization. The Company and each of its Subsidiaries (collectively, the "Company Subsidiaries") is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has requisite corporate power and authority to carry on its business as now being conducted, except where the failure to be so organized, existing and in good standing or to have such power and authority has not had and would not reasonably be expected to have a Material Adverse Effect on the Company or prevent or materially delay the consummation of the Reorganization. The Company and each of the Company Subsidiaries is duly qualified or licensed to do business and in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so duly qualified or licensed and in good standing would not reasonably be expected to have a Material Adverse Effect on the Company or prevent or materially delay the consummation of the Reorganization. The Company has delivered to Parent complete and correct copies of its Restated Certificate of Incorporation and By-laws and has made available to Parent the Certificate of Incorporation and By-laws (or similar organizational documents) of each of the Company Subsidiaries. SECTION 3.2 Subsidiaries. Item 3.2 of the Company Letter lists each Company Subsidiary and any Investment Entities. All of the outstanding shares of capital stock of each Company Subsidiary that is a corporation have been validly issued and are fully paid and nonassessable. Except as set forth in Item 3.2 of the Company Letter, all of the outstanding shares of capital stock of each Subsidiary of the Company are owned by the Company, by Subsidiaries of the Company or by the Company and Subsidiaries of the Company, free and clear of all Liens. Except as set forth in Item 3.2 of the Company Letter, (i) the Company and its Subsidiaries have no on-going obligations, agreements, commitments, rights, understandings or arrangements with respect to any Investment Entities, including funding obligations; and (ii) all Investment Interests are owned by the Company or its Subsidiaries free and clear of all Liens. Except as set forth in Item 3.2 of the Company Letter and except for the capital stock owned by the Company in its Subsidiaries, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, joint venture, limited liability company or other entity. SECTION 3.3 Capital Structure. The authorized capital stock of the Company consists of 60,000,000 Company Series A Common Shares, 100,000,000 Company Common Shares, 60,000,000 Series B Common Shares, $1.00 par value (the "Company Series B Common Shares") and 10,000,000 shares of Preferred Stock, $1.00 par value (the "Company Preferred Stock"). At the close of business on September 16, 1999, (i) no shares of Company Preferred Stock and no Series B Common Shares were outstanding, (ii) 40,000,000 Company Series A Common Shares and 31,930,588 Company Common Shares were issued and outstanding, (iii) no shares of Company Common Stock were held by the Company in treasury, (iv) 40,000,000 Company Common Shares were reserved for issuance upon conversion of the Company Series A Common Shares, (v) 2,960,480 Company Common Shares were reserved for issuance pursuant to outstanding stock options (the "Company Stock Options") to purchase Company Common Shares under the Company's 1996 Long-Term Incentive Plan (the "Company Long-Term Incentive Plan"), (vi) 456,000 Company Common D-9 378 Shares were reserved for issuance pursuant to the Company's Retention Restricted Stock Unit Plan (the "Restricted Stock Plan"), (vii) 114,514 Company Common Shares were reserved for issuance pursuant to the Tax Deferred Savings Plan, (viii) 6,056 Company Common Shares were reserved for issuance pursuant to the Company's Compensation Plan for Non-Employee Directors and (ix) as described in Item 3.2 of the Company Letter, Company Common Shares were reserved for issuance to the Investor in Aerial Operating Company, Inc. ("Operating Company"). Except as set forth above and in Item 3.2 and 3.3 of the Company Letter, and except for Company Common Shares which are reserved for issuance in exchange for shares of Company Series A Common Shares in accordance with the Company's Restated Certificate of Incorporation, as of the date hereof, no shares of Company Common Stock or shares of capital stock of any Subsidiary of the Company were issued, reserved for issuance or outstanding and there are no stock appreciation rights, phantom stock rights or other contractual rights the value of which is determined in whole or in part by the value of any capital stock ("Stock Equivalents") of the Company or any Subsidiary of the Company. Each outstanding share of Company Common Stock is, and each share of Company Common Stock which may be issued pursuant to the Company Benefit Plans and the other agreements and instruments listed above will be, when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights. There are no outstanding bonds, debentures, notes or other indebtedness of the Company or any Subsidiary of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter on which the Company's stockholders may vote. Except as set forth above or in Item 3.3 of the Company Letter, as of the date of this Agreement, there are no securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind obligating the Company or any of the Company Subsidiaries to issue, deliver or sell or create, or cause to be issued, delivered or sold or created, additional shares of capital stock or other voting securities or Stock Equivalents of the Company or of any of the Company Subsidiaries or obligating the Company or any of the Company Subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking. Except as set forth in Item 3.3 of the Company Letter, as of the date of this Agreement, there are no outstanding contractual obligations of the Company or any of the Company Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of the Company or any of the Company Subsidiaries. SECTION 3.4 Authority. The Board of Directors of the Company, at a meeting duly called and held, duly adopted resolutions approving this Agreement, the Reorganization and the Stockholder Agreement, determining that the Reorganization, including the Merger, is fair to, and in the best interests of, the Company's stockholders and recommending that the Company's stockholders adopt this Agreement. The Company has requisite corporate power and authority to execute and deliver this Agreement and, subject to approval by the Company's stockholders of the Reorganization, to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the Reorganization and of the other transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company, subject to approval by the Company's stockholders of this Agreement and the Reorganization. This Agreement has been duly executed and delivered by the Company and (assuming the valid authorization, execution and delivery of this Agreement by Parent and Sub) constitutes the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity. SECTION 3.5 Consents and Approvals; No Violations. Except as set forth in Item 3.5 of the Company Letter, except for filings, permits, authorizations, consents and approvals as may be D-10 379 required under the Securities Act, the Exchange Act, the Communications Act, the HSR Act, the DGCL, and under the rules, regulations and published decisions of the FAA, the FCC and state public utility or service commissions or similar agencies, and except as may be required in connection with the Transfer Taxes described in Section 6.11, neither the execution, delivery or performance of this Agreement by the Company nor the consummation by the Company of the transactions contemplated hereby will (i) conflict with or result in any breach of any provision of the Restated Certificate of Incorporation or By-laws of the Company or of the similar organizational documents of any of the Company Subsidiaries, (ii) require any filing with, or permit, authorization, consent or approval of, any Governmental Entity (except where the failure to obtain such permits, authorizations, consents or approvals or to make such filings would not reasonably be expected to have a Material Adverse Effect on the Company or prevent or materially delay the consummation of the Reorganization), (iii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which the Company or any of its Subsidiaries is a party or by which any of them or any of their properties or assets may be bound, (iv) violate any order, writ, judgment, injunction, decree, statute, rule or regulation applicable to the Company, any of the Company Subsidiaries or any of their properties or assets, or (v) result in the creation or imposition of any Lien on any asset of the Company or its Subsidiaries except in the case of clauses (iii), (iv) or (v) for violations, breaches or defaults that would not reasonably be expected to have a Material Adverse Effect on the Company or prevent or materially delay the consummation of the Reorganization. SECTION 3.6 SEC Documents and Other Reports. The Company has filed with the SEC all documents required to be filed by it since April 25, 1996 under the Securities Act or the Exchange Act (the "Company SEC Documents"). As of their respective filing dates, the Company SEC Documents complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, each as in effect on the date so filed, and at the time filed with the SEC none of the Company SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the Company SEC Documents comply as of their respective dates in all material respects with the then applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles (except in the case of the unaudited statements, as permitted by Form 10-Q under the Exchange Act) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly present the consolidated financial position of the Company and its consolidated Subsidiaries as at the dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein). The Company and its Subsidiaries have not made any material misstatements of fact, or omitted to disclose any fact, to any Government Entity or in any report, document or certificate filed therewith, which misstatements or omissions, individually or in the aggregate, could reasonably be expected to subject any material licenses or authorizations to revocation or failure to renew, except to the extent that such revocation or failure to renew would not have a Material Adverse Effect on the Company or the transactions contemplated by this Agreement. SECTION 3.7 Absence of Material Adverse Change. Except as disclosed in Item 3.7 of the Company Letter or in the documents filed by the Company with the SEC and publicly available prior to the date of this Agreement (the "Company Filed SEC Documents"), since December 31, 1998 the Company and its Subsidiaries have conducted their respective businesses in all material respects only D-11 380 in the ordinary course, consistent with past practices, and there has not been (i) any Material Adverse Change with respect to the Company, (ii) any declaration, setting aside or payment of any dividend or other distribution with respect to its capital stock or any redemption, purchase or other acquisition of any of its capital stock, (iii) any split, combination or reclassification of any of its capital stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or (iv) any change in accounting methods, principles or practices by the Company affecting its assets, liabilities or business, except insofar as may have been required by a change in generally accepted accounting principles. SECTION 3.8 Information Supplied. None of the information supplied or to be supplied by the Company specifically for inclusion or incorporation by reference in (i) the Registration Statement or (ii) the proxy statement (together with any amendments or supplements thereto, the "Joint Proxy Statement") relating to the Stockholders Meetings, will, in the case of the Registration Statement, at the time it becomes effective, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading, or in the case of the Joint Proxy Statement, at the time of the mailing of the Joint Proxy Statement, the time of the Stockholders Meetings and at the Effective Time, 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 or necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Stockholders Meetings which has become false or misleading. The Registration Statement will comply (with respect to the Company) as to form in all material respects with the requirements of the Securities Act, and the Joint Proxy Statement will comply (with respect to the Company) as to form in all material respects with the requirements of the Exchange Act. SECTION 3.9 Permits; Compliance with Laws. (a) Each of the Company and its Subsidiaries is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders of any Governmental Entity necessary for the Company or any of its Subsidiaries to own, lease and operate its properties or to carry on its business as it is now being conducted (the "Company Permits"), except where the failure to have any of the Company Permits would not, individually or in the aggregate, have a Material Adverse Effect on the Company, and, as of the date of this Agreement, no suspension or cancellation of any of the Company Permits is pending or, to the knowledge of the Company, threatened, except where the suspension or cancellation of any of the Company Permits would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect on the Company. The businesses of the Company and its Subsidiaries are not being conducted in violation of any law, ordinance or regulation of any Governmental Entity, except for possible violations that would not reasonably be expected to have a Material Adverse Effect on the Company or prevent, or result in a material delay in, the consummation of the Reorganization. (b)(i) The Company and each of its Subsidiaries holds, and is qualified and eligible to hold, all material licenses, permits and other authorizations issued or to be issued by the FCC to such entity for the operation of their respective businesses, all of which are set forth in Item 3.9(b)(i) of the Company Letter (the "Company FCC Licenses"). (ii) The Company FCC Licenses are valid and in full force and effect and neither the Company nor any of its Subsidiaries is or has been delinquent in payment on or in default under any installment obligation owed to the United States Treasury in connection with the Company FCC Licenses. As used herein, the term "full force and effect" means that (i) the orders issuing the Company FCC Licenses have become effective, (ii) no stay of effectiveness of such orders D-12 381 has been issued by the FCC, and (iii) the Company FCC Licenses have not been invalidated by any subsequent published FCC action. (iii) All