UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a)
of
the Securities Exchange Act of 1934
Filed
by
the Registrant x
Filed
by
a Party other than the Registrant o
Check
the
appropriate box:
x Preliminary
Proxy Statement
o Confidential,
for Use of the Commission
Only
(as permitted by Rule
14a-6(e)(2))
o
Definitive Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to § 240.14a-12
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ALLTEL
CORPORATION
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(Name
of
Registrant as Specified in Its Charter)
(Name
of
Person(s) Filing Proxy Statement, if other than Registrant)
Payment
of Filing Fee (Check the appropriate box):
o No
fee required.
x Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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Common
Stock of Alltel Corporation, par value $1.00 per share; $2.06 No
Par
Cumulative Convertible Preferred Stock, Series C of Alltel Corporation;
$2.25 No Par Cumulative Convertible Preferred Stock, Series D of
Alltel
Corporation.
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(2)
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Aggregate
number of securities to which transaction
applies:
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343,852,797
shares of Common Stock; 16,525,416 options to purchase Alltel Corporation
Common Stock; 85,360 shares of Alltel Corporation Common Stock related
to
other rights to receive Alltel Corporation Common Stock; 10,127 shares
of
$2.06 No Par Cumulative Convertible Preferred Stock, Series C of
Alltel
Corporation; 26,073 shares of $2.25 No Par Cumulative Convertible
Preferred Stock, Series D of Alltel
Corporation.
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(3)
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Per
unit price or other underlying value of transaction computed pursuant
to
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Exchange
Act Rule 0-11 (set forth the amount on which the filing fee is
calculated
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and
state how it was determined):
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Calculated
solely for the purpose of determining the filing
fee. The transaction valuation is determined based
upon the sum of (A) 343,852,797 shares of Common Stock multiplied
by
$71.50 per share; (B) an aggregate of $384,741,075 expected to be
paid
upon the cancellation of outstanding options having an exercise price
less
than $71.50; (C) 85,360 shares of Common Stock related to other rights
to
receive Alltel Corporation Common Stock multiplied by $71.50 per
share;
(D) 10,127 shares of $2.06 No Par Cumulative Convertible Preferred
Stock,
Series C multiplied by $523.22 per share; and (E) 26,073 shares of
$2.25
No Par Cumulative Convertible Preferred Stock, Series D multiplied
by
$481.37 per share. In accordance with Section 14(g) of the
Securities Exchange Act of 1934, as amended, the filing fee was determined
by multiplying 0.00003070 by the sum calculated in the preceding
sentence.
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(4)
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Proposed
maximum aggregate value of
transaction:
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$24,994,168,710
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(5)
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Total
fee paid:
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$767,321
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o Fee
paid previously with preliminary materials.
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o
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and
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identify
the filing for which the offsetting fee was paid
previously. Identify the
previous
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filing
by registration statement number, or the Form or Schedule and the
date of
its filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement
No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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ALLTEL
CORPORATION
One
Allied Drive • Little Rock, Arkansas 72202
Telephone
(501) 905-8000
www.alltel.com
PRELIMINARY
COPIES
[ ],
2007
Dear
Fellow Stockholder:
You
are
cordially invited to attend a special meeting of Alltel Corporation stockholders
to be held on [___], 2007, starting at [ ] a.m.,
local time, at
[ ].
At
the
special meeting, you will be asked to consider and vote upon a proposal to
adopt
a merger agreement under which Alltel Corporation would be acquired by Atlantis
Holdings LLC, an entity controlled by private investment funds affiliated with
TPG Partners V, L.P. and GS Capital Partners VI Fund, L.P. We entered
into this merger agreement on May 20, 2007. If the merger is
completed, you, as a holder of Alltel common stock, will be entitled to receive
$71.50 in cash, without interest, for each share of Alltel Corporation common
stock owned by you at completion of the merger, as more fully described in
the
enclosed proxy statement. In addition, if you are a holder of Alltel
Corporation’s $2.06 No Par Cumulative Convertible Preferred Stock, Series C or a
holder of Alltel Corporation’s $2.25 No Par Cumulative Convertible Preferred
Stock, Series D, you will be entitled to receive $523.22 and $481.37 in cash,
per share, respectively, without interest, as more fully described in the
enclosed proxy statement.
Alltel
Corporation’s board of directors has unanimously approved and declared advisable
the merger agreement and the transactions contemplated by the merger agreement,
determined that the transactions contemplated by the merger agreement are in
the
best interests of Alltel Corporation and its stockholders and resolved to
recommend that Alltel Corporation’s stockholders vote in favor of the adoption
and approval of the merger agreement.
Accordingly,
our board of directors unanimously recommends that you vote “FOR” the
adoption of the merger agreement and “FOR” the adjournment or
postponement of the special meeting, if necessary or appropriate, to solicit
additional proxies.
Your
vote is very important, regardless of the number of shares of common stock
you
own. We cannot complete the merger unless the merger agreement is
approved by the affirmative vote of the holders of outstanding shares of our
common stock representing at least a majority of all of the votes entitled
to
vote at the special meeting. Therefore, the failure of any
stockholder holding Alltel common stock to vote on the proposal to adopt the
merger agreement will have the same effect as a vote by that stockholder against
the adoption of the merger agreement. Whether or not you
plan to attend the special meeting, please complete, date, sign and return,
as
promptly as possible, the enclosed proxy card in the accompanying reply
envelope, or submit your proxy by telephone or the Internet. If you
have Internet access, we
encourage
you to record your vote via the Internet. If you attend the special
meeting and vote in person, your vote by ballot will revoke any proxy previously
submitted.
The
attached proxy statement provides you with detailed information about the
special meeting, the merger agreement and the merger. A copy of the
merger agreement is attached as Annex A to this document. We
encourage you to read this document and the merger agreement carefully and
in
their entirety. You may also obtain more information about Alltel
Corporation from documents we have filed with the Securities and Exchange
Commission.
Thank
you
in advance for your continued support and your consideration of this
matter.
Sincerely,
Scott
T.
Ford
President
and Chief Executive Officer
Neither
the Securities and Exchange Commission nor any state securities regulatory
agency has approved or disapproved the merger, passed upon the merits or
fairness of the merger or passed upon the adequacy or accuracy of the disclosure
in this document. Any representation to the contrary is a criminal
offense.
The
proxy
statement is dated [___], 2007, and is first being mailed to stockholders on
or
about [ ],
2007.
-2-
ALLTEL
CORPORATION
One
Allied Drive • Little Rock, Arkansas 72202
PRELIMINARY
COPIES
NOTICE
OF SPECIAL MEETING OF STOCKHOLDERS
To
Be Held On [ ], 2007
To
the
Stockholders of Alltel Corporation:
A
special
meeting of stockholders of Alltel Corporation, a Delaware corporation, will
be
held on [ ], 2007, starting at
[ ] a.m., local time, at
[ ], for the following
purposes:
1. To
consider and vote on a proposal to adopt the Agreement and Plan of Merger (the
“merger agreement”), dated as of May 20, 2007, by and among Alltel Corporation,
a Delaware corporation (“Alltel”), Atlantis Holdings LLC, a Delaware limited
liability company (“Parent”) and Atlantis Merger Sub, Inc., a Delaware
corporation and wholly owned subsidiary of Parent (“Merger Sub”), as it may be
amended from time to time. A copy of the merger agreement is attached
as Annex A to the accompanying proxy statement. Pursuant to the terms
of the merger agreement, Merger Sub will merge with and into Alltel (the
“merger”) and upon the merger becoming effective each outstanding share (other
than any shares held by any wholly owned subsidiary of the Company, shares
owned
by Parent or Merger Sub or held by Alltel and shares owned by stockholders
who
perfect their appraisal rights under Delaware law) of Alltel’s (i) common stock,
par value $1.00 per share, will be converted into the right to receive $71.50
in
cash, without interest, and (ii) $2.06 No Par Cumulative Convertible Preferred
Stock, Series C will be converted into the right to receive $523.22 in cash,
without interest, and (iii) $2.25 No Par Cumulative Convertible Preferred Stock,
Series D will be converted into the right to receive $481.37 in cash, without
interest, as more fully described in the accompanying proxy
statement.
2. To
consider and vote on any proposal to adjourn or postpone the special meeting
to
a later date or time, if necessary or appropriate, to solicit additional proxies
in favor of the proposal to approve the merger agreement if there are
insufficient votes at the time of such adjournment or postponement to approve
the merger agreement.
3. To
consider and vote on such other business as may properly come before the special
meeting or any adjournments or postponements thereof.
Our
board
of directors has specified [ ], 2007, as the record date
for the purpose of determining the stockholders who are entitled to receive
notice of, and to vote at, the special meeting. All stockholders of
record at the close of business on the record date are entitled to notice of
and
to attend the special meeting and any adjournment or postponement
thereof. However, only holders of record of our common stock at the
close of business on the record date are entitled to vote at the special meeting
and at any adjournment or postponement thereof. The vote of our
preferred stockholders is not required to approve the merger and the merger
agreement and is not being solicited.
Under
Delaware law, Alltel stockholders who do not vote in favor of the merger
agreement will have the right to seek appraisal of the fair value of their
shares as determined by the Delaware Court of Chancery if the merger is
completed, but only if they submit a written demand for such an appraisal prior
to the vote on the merger agreement and comply with the other Delaware law
procedures explained in the accompanying proxy statement.
Our
board of directors has unanimously approved and declared advisable the merger
agreement and the transactions contemplated by the merger agreement, determined
that the transactions contemplated by the merger agreement are advisable and
in
the best interests of Alltel and its stockholders and resolved to recommend
that
Alltel’s stockholders vote in favor of the adoption of the merger agreement and
the transactions contemplated by the merger agreement, including the
merger.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ADOPTION OF
THE MERGER AGREEMENT AND “FOR” THE ADJOURNMENT OR POSTPONEMENT OF THE SPECIAL
MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL
PROXIES.
Your
vote
is important. The adoption of the merger agreement requires the
affirmative vote of the holders of outstanding shares of our common stock
representing at least a majority of all the votes entitled to vote at the
special meeting. Therefore, your failure to vote in person at the
special meeting or to submit a signed proxy card will have the same effect
as a
vote by you “AGAINST” the approval of the merger agreement. Properly
executed proxy cards with no instructions indicated on the proxy card will
be
voted “FOR” the adoption of the merger agreement and
“FOR” the adjournment or postponement
of the special
meeting, if necessary or appropriate, to solicit additional
proxies. Even if you plan to attend the special meeting in person, we
request that you complete, sign, date and return the enclosed proxy or submit
your proxy by telephone or the Internet prior to the special meeting to ensure
that your shares will be represented at the special meeting if you are unable
to
attend. If you have Internet access, we encourage you to record your
vote via the Internet. If you fail to return your proxy card or fail
to submit your proxy by phone or the Internet and you fail to attend the special
meeting, your shares will not be counted for purposes of determining whether
a
quorum is present at the meeting, but will not affect the outcome of the vote
regarding the adjournment proposal, if necessary. If you hold your
shares through a bank, broker or other custodian, you must obtain a legal proxy
from such custodian in order to vote in person at the special
meeting. If you attend the special meeting, you may revoke your proxy
and vote in person if you wish, even if you have previously returned your proxy
card. Your prompt attention is greatly appreciated.
Please
note that space limitations make it necessary to limit attendance at the special
meeting to stockholders as of the record date (or their authorized
representatives). If you attend, please note that you may be asked to
present valid photo identification. If your shares are held by a bank
or broker, please bring to the special meeting your statement evidencing your
beneficial ownership of common stock. The list of stockholders
entitled to vote at the special meeting will be available for inspection at
our
principal executive offices at One Allied Drive, Little Rock, Arkansas 72202,
at
least 10 days prior to the date of the special meeting and continuing through
the special meeting for any purpose germane to the meeting; the list will also
be available at the meeting for inspection by any stockholder present at the
meeting.
-2-
By
Order
of the Board of Directors,
Richard
N. Massey
Secretary
Little
Rock, Arkansas
[___],
2007
-3-
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SUMMARY
TERM
SHEET
The
following summary highlights selected information in this proxy statement and
may not contain all the information that may be important to
you. Accordingly, we encourage you to read carefully this entire
proxy statement, its annexes and the documents referred to or incorporated
by
reference in this proxy statement. Each item in this summary includes
a page reference directing you to a more complete description of that
topic. See “Where You Can Find More Information” beginning on page
[ ]. We sometimes make reference to Alltel Corporation and
its subsidiaries in this proxy statement by using the terms “Alltel,” the
“Company,” “we,” “our” or “us.”
The
Merger (Page [ ])
The
Agreement and Plan of Merger, dated
as of May 20, 2007, which we refer to as the merger agreement, by and among
Alltel, Atlantis Holdings LLC, a Delaware limited liability company (which
we
refer to as Parent), and Atlantis Merger Sub, Inc., a Delaware corporation
and
wholly owned subsidiary of Parent (which we refer to as Merger Sub), provides
that Merger Sub, which is controlled through Parent by TPG Partners V, L.P.
and
GS Capital Partners VI Fund, L.P. (which we collectively refer to as the
Sponsors) will merge with and into Alltel. As a result of the merger,
Alltel will become a private company, controlled by the
Sponsors. Alltel will be the surviving corporation in the merger
(which we refer to as the surviving corporation) and, following the merger,
will
continue to do business as “Alltel Corporation.” As a private
company, the registration of Alltel’s common stock and Alltel’s $2.06 No Par
Cumulative Convertible Preferred Stock (which we refer to as the Series C
Preferred) and its reporting obligations with respect to such stock under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), will be
terminated upon application to the Securities and Exchange Commission (the
“SEC”). In addition, upon completion of the proposed merger, shares
of Alltel’s common stock and the Series C Preferred will no longer be listed on
any stock exchange or quotation system, including the New York Stock Exchange
(“NYSE”).
Effects
of the Merger (Page
[ ])
If
the
merger is completed, each outstanding share of Alltel common stock will be
converted into the right to receive $71.50 in cash, without
interest. We refer to this amount in this proxy statement as the
common stock merger consideration. As a stockholder, you will be
entitled to receive the common stock merger consideration for each share of
our
common stock owned by you. In addition, if the merger is completed,
each share of the Series C Preferred will be converted into the right to receive
$523.22, in cash, without interest. We refer to this amount as the
Series C merger consideration. Similarly, each share of Alltel’s
$2.25 No Par Cumulative Convertible Preferred Stock, Series D (which we refer
to
as the Series D Preferred) will be converted into the right to receive $481.37,
in cash, without interest. We refer to this amount as the Series D
merger consideration. We refer to the common stock merger
consideration, the Series C merger consideration and the Series D merger
consideration, collectively, as the merger consideration. Following
the merger, you will no longer own any shares of the surviving corporation
and
Alltel will cease to be a publicly traded company. If the merger
agreement is not adopted, Alltel will remain an independent public company
and
our common stock and the Series C Preferred will continue to be listed and
traded on the NYSE.
Completion
of the Merger (Page
[ ])
We
are
working toward completing the merger as quickly as possible, and we currently
anticipate that it will be completed in the fourth quarter of 2007 or the first
quarter of 2008. However, we cannot predict the exact timing of the
completion of the merger and whether the merger will be completed. In
order to complete the merger, we must obtain stockholder approval and the other
closing conditions under the merger agreement, including receipt of certain
regulatory approvals, must be satisfied or, to the extent legally permitted,
waived. In addition, Parent is not obligated to complete the merger
until the final day of a 20-calendar day “Marketing Period” beginning after the
receipt of stockholder approval and such regulatory approvals and during which
certain required information is provided that it may use to complete its
financing for the merger. The Marketing Period may recommence in
certain circumstances.
The
Parties to the Merger (Page
[ ])
Alltel
Corporation. Alltel provides wireless
voice and data communications services to 12 million wireless customers in
35
states. In terms of both the number of customers served and revenues
earned, Alltel is the fifth largest provider of wireless services in the United
States.
Atlantis
Holdings LLC. Atlantis Holdings LLC is a Delaware
limited liability company and is controlled by the Sponsors. Atlantis
Holdings LLC was formed solely for the purpose of acquiring Alltel and has
not
carried on any activities to date, except for activities incidental to its
formation and activities undertaken in connection with the transactions
contemplated by the merger agreement.
Atlantis
Merger Sub, Inc. Atlantis Merger Sub, Inc. is a
Delaware corporation and a wholly owned subsidiary of Parent. Merger
Sub was formed solely for the purpose of facilitating Parent’s acquisition of
Alltel. Merger Sub has not carried on any activities to date, except
for activities incidental to its formation and activities undertaken in
connection with the transactions contemplated by the merger
agreement. Upon consummation of the proposed merger, Merger Sub will
merge with and into Alltel and will cease to exist, with Alltel continuing
as
the surviving corporation.
The
Special Meeting (Page
[ ])
Date,
Time and Place. The special meeting
will be held on [ ], 2007, starting at [ ], at
[ ].
Purpose. You
will be asked to consider and vote upon (1) the adoption of the merger
agreement, (2) the adjournment or postponement of the special meeting to a
later
date, if necessary or appropriate, to solicit additional proxies in favor of
the
proposal to approve the merger agreement if there are insufficient votes at
the
time of the meeting to approve the merger agreement and (3) such other business
as may properly come before the special meeting or any adjournments or
postponements thereof.
Record
Date and Quorum. You are entitled to
vote at the special meeting if you owned shares of our common stock at the
close
of business on [ ], 2007, the record date for the special
meeting. You will have one vote for each share of our common stock
that you owned on the
record
date. As of the record date, there were [ ] shares of our common
stock issued and outstanding and entitled to vote. A majority of our
common stock issued, outstanding and entitled to vote at the special meeting
constitutes a quorum for the purpose of considering the proposals. In
the event that a quorum is not present at the special meeting, the meeting
may
be adjourned or postponed to solicit additional proxies.
Vote
Required. The adoption of the merger
agreement requires the affirmative vote of the holders of outstanding shares
of
our common stock representing at least a majority of all the votes entitled
to
vote at the special meeting. Approval of any proposal to adjourn or
postpone the special meeting, if necessary or appropriate, for the purpose
of
soliciting additional proxies requires the affirmative vote of the holders
of a
majority of the shares of our common stock present in person or represented
by
proxy at the special meeting and entitled to vote on the matter.
Common
Stock Ownership of Directors and Executive
Officers. As of the record date, the
directors and executive officers of Alltel beneficially owned in the aggregate
[ ] of the shares of our common stock
entitled to vote at the special meeting. All of our directors and
executive officers have informed Alltel that they currently intend to vote
all
of their shares of common stock “FOR” the approval of
the merger agreement and “FOR” the postponement
proposal.
Voting
and Proxies. Any stockholder of record
entitled to vote at the special meeting may submit a proxy by telephone, via
the
Internet, by returning the enclosed proxy card by mail, or by voting in person
at the special meeting. If you intend to submit your proxy by
telephone or the Internet you must do so no later than
[ ] on
[ ], 2007, and if you intend to submit your proxy by mail it must be
received by the Company prior to the commencement of the special
meeting. If your shares of our common stock are held in “street name”
by your broker, you should instruct your broker on how to vote such shares
of
common stock using the instructions provided by your broker. If you
do not provide your broker with instructions, your shares of our common stock
will not be voted, which will have the same effect as a vote “AGAINST” the
adoption of the merger agreement. The persons named in the
accompanying proxy will also have discretionary authority to vote on any
adjournments or postponements of the special meeting. Even if you
plan to attend the special meeting, after carefully reading and considering
the
information contained in this proxy statement, if you hold your shares of common
stock in your own name as the stockholder of record, please vote your shares
by
completing, signing, dating and returning the enclosed proxy card or by using
the telephone number printed on your proxy card or by using the Internet voting
instructions printed on your proxy card.
If
you
return your signed proxy card, but do not mark the boxes showing how you wish
to
vote, your shares will be voted “FOR” the proposal to
adopt the merger agreement and “FOR” the adjournment
proposal, if applicable.
Revocability
of Proxy. Any stockholder of record
who executes and returns a proxy card (or submits a proxy via telephone or
the
Internet) may revoke the proxy at any time before it is voted at the special
meeting by attending the special meeting and voting in person. Your
attendance at the special meeting will not, by itself, revoke your
proxy. To revoke your proxy, you must vote in person at the special
meeting. If you hold your shares in your name as a
stockholder
of record, you may also revoke the proxy by notifying
[ ]. Further, the proxy may
be revoked by submitting a later-dated proxy card, or, if you voted by telephone
or the Internet, by voting a second time by telephone or Internet. In
the event you have instructed a broker, bank or other nominee to vote your
shares of our common stock, you have to follow the directions received from
your
broker, bank or other nominee and change those instructions in order to revoke
your proxy.
Sale
of Shares. The record date of the
special meeting is earlier than the date of the special meeting and the date
that the merger is expected to be completed. If you transfer your
shares of common stock after the record date but before the special meeting,
you
will retain the right to vote at the special meeting, but you will have
transferred the right to receive the merger consideration. In order
to receive the merger consideration, you must beneficially own your shares
of
common stock through completion of the merger.
Dissenters’
Rights. Under Delaware law,
Alltel stockholders who do not vote in favor of the merger agreement will have
the right to seek appraisal of the fair value of their shares as determined
by
the Delaware Court of Chancery if the merger is completed, but only if they
submit a written demand for such an appraisal prior to the vote on the merger
agreement and comply with the other Delaware law procedures explained in this
proxy statement.
Solicitation
of Proxies; Costs. Alltel will pay all
expenses of this solicitation, including the cost of preparing and mailing
this
document. The proxies are being solicited by and on behalf of our
board of directors. In addition to solicitation by use of the mails,
proxies may be solicited by our directors, officers and employees in person
or
by telephone, telegram, electronic mail, facsimile transmission or other means
of communication. Those persons will not be additionally compensated
for solicitation activities, but may be reimbursed for out-of-pocket expenses
in
connection with any solicitation. We also may reimburse custodians,
nominees and fiduciaries for their expenses in sending proxies and proxy
material to beneficial owners. In addition, we have retained
[ ] to assist in the solicitation of proxies for the
special meeting for a fee of approximately [ ].
Treatment
of
Options and Other Awards (Page
[ ])
Stock
Options. Options to acquire shares of
our common stock will vest immediately prior to the effective time of the merger
and holders of such options will, unless otherwise agreed by the holder and
Parent, be entitled to receive an amount in cash equal to the excess, if any,
of
the common stock merger consideration over the exercise price per share of
common stock subject to the option for each share subject to the
option.
Restricted
Shares. Immediately prior to the
effective time of the merger, all shares of Company restricted stock, unless
otherwise agreed by the holder and Parent, will vest and will be converted
into
the right to receive the common stock merger consideration.
Recommendation
of Our Board of Directors (Page
[ ])
Our
board
of directors unanimously approved and declared advisable the merger agreement,
the merger and the transactions contemplated by the merger agreement, determined
that the transactions contemplated by the merger agreement are advisable and
in
the best interests
of
Alltel
and its stockholders and resolved to recommend that Alltel’s stockholders vote
in favor of the adoption of the merger agreement. The board of
directors unanimously recommends that our stockholders vote
“FOR” the adoption of the merger agreement and
“FOR” the adjournment or postponement
of the special
meeting, if necessary or appropriate, to solicit additional
proxies.
Opinions
of
Alltel’s Financial Advisors (Page
[ ])
The
board
of directors received separate written opinions, dated May 20, 2007, from each
of its financial advisors, J.P. Morgan Securities Inc., Merrill, Lynch, Pierce,
Fenner & Smith Inc. and Stephens Inc., which we refer to as JPMorgan,
Merrill Lynch and Stephens, respectively, to the effect that, as of the date
of
their respective opinions, the $71.50 per share in cash consideration to be
paid
to the holders of Alltel’s common stock, other than Parent and its affiliates,
in the merger was fair to such holders from a financial point of
view. The
opinions of
JPMorgan, Merrill Lynch and Stephens, are subject to the assumptions,
limitations and qualifications set forth in such opinions, which are attached
as
Annex B, Annex C and Annex D, respectively, to this proxy
statement. We encourage you to read the opinions and the section “The
Merger—Opinions of Alltel’s Financial Advisors” beginning on page
[ ] carefully and in their entirety. The opinions of
each of JPMorgan, Merrill Lynch and Stephens were provided to Alltel’s board of
directors in connection with their evaluation of the merger, do not address
any
other aspect of the merger and do not constitute a recommendation to any
stockholder as to how you should vote on any matter at the special
meeting.
Interests
of
Alltel’s Directors and Executive Officers in the
Merger (Page [ ])
In
considering the recommendation of the board of directors, you should be aware
that our directors and executive officers may be considered to have interests
in
the merger that are different from, or in addition to, your interests as a
stockholder. Such interests include (i) severance payments and
benefits payable to executive officers upon a qualifying actual or constructive
termination of employment pursuant to agreements previously entered into between
the executive officers and Alltel, (ii) the accelerated vesting and cashing
out
of certain compensation and equity awards and the accelerated vesting and/or
payment of deferred compensation arrangements for certain directors and officers
and (iii) rights to continued indemnification and insurance coverage after
the
merger for acts or omissions occurring prior to the merger.
We
understand that Parent currently intends to have discussions with members of
our
management team regarding their employment by the Company after the
merger, possibly including the opportunity to serve on the board of
directors of the post-closing company, and that in connection with their
continued employment these members may be offered the opportunity to
exchange some portion of their current Alltel shares, stock options and other
equity interests, instead of receiving a cash payment for them, for
equity in the post-closing company. Further, Parent has informed us
that it currently intends to establish equity-based incentive compensation
plans
for management of the surviving corporation, a portion of which may be allocated
to our executive officers. It is anticipated that equity awards
granted under these incentive compensation plans would generally vest over
a
number of years of continued employment and would entitle management to share
in
the future appreciation of the surviving corporation.
Although
certain members of our current management team may enter into new arrangements
with Parent or its affiliates regarding employment (and severance arrangements)
with, and the right to purchase or participate in the equity of, the
post-closing company, there can be no assurance that any parties will reach
an
agreement. Scott Ford, Alltel's Chief Executive Officer, has
expressed a willingness to remain in his current role after the closing of
the
merger. However, these matters are subject to further
discussion and negotiation and, as of the date of this document, no terms or
conditions have been finalized and no agreements relating to these matters
have
been entered into.
Financing
(Page
[ ])
Parent
estimates that the total amount of funds necessary to complete the merger is
anticipated to be approximately $26.3 billion, a portion of which is payable
to
Alltel’s stockholders and holders of other options and other awards, with the
remainder used to repay and refinance existing indebtedness, and to pay
customary fees and expenses in connection with the merger, the financing
arrangements and related transactions.
Equity
Financing. Parent has received equity commitment
letters from the Sponsors, pursuant to which, subject to the conditions
contained therein, the Sponsors have agreed severally to make or secure
aggregate capital contributions of up to $4.6 billion to Parent in connection
with the completion of the merger. Such equity commitment obligations
may be assigned by each of the Sponsors, in whole or in part, to its respective
affiliates or to one or more private equity funds sponsored or managed by its
respective affiliates, and such assignment will relieve each of the Sponsors,
as
applicable, of a corresponding portion of its obligations, provided such
affiliates or private equity funds represent to Parent that they are capable
of
performing all of their obligations under the equity commitment letters.
Debt
Financing. Parent has received a
debt commitment letter from Citigroup Global Markets Inc., Goldman Sachs Credit
Partners L.P., Barclays Bank PLC, Barclays Capital, RBS Securities Corporation
and The Royal Bank of Scotland plc to provide (1) a senior secured term loan
facility of up to $14.0 billion and a senior secured revolving credit facility
of up to $1.5 billion, (2) a senior unsecured cash pay bridge facility of up
to
$4.7 billion less the amount of any senior unsecured cash pay notes issued
in
lieu of such bridge facility and (3) a senior unsecured PIK option bridge
facility of up to $3.0 billion less the amount of any senior unsecured PIK
notes
issued in lieu of such bridge facility. In addition, the aggregate
principal amount of the senior secured term loan facility may be increased
by up
to $750.0 million under certain circumstances.
Regulatory
Approvals (Page
[ ])
Under
the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder (the “HSR Act”), the merger may not be
completed until notification and report forms have been filed with the U.S.
Federal Trade Commission (the “FTC”) and the Antitrust Division of the U.S.
Department of Justice (the “Antitrust Division”) and the applicable waiting
period has expired or been terminated. Effective June 5, 2007, Alltel
and Parent each filed its notification and report form under the HSR Act with
the FTC and the Antitrust Division.
In
order to complete the merger, we and Parent must also obtain approvals from
the
Federal Communications Commission (the “FCC”). We, our relevant
subsidiaries and Parent filed the required applications with the FCC on June
4
and June 6, 2007, respectively, seeking approval of the transfer of control
to
Parent of the FCC licenses and authorizations held by us.
Material
U.S. Federal Income Tax Consequences (Page
[ ])
The
exchange of shares of our stock for cash pursuant to the merger agreement in
the
merger generally will be a taxable transaction for U.S. federal income tax
purposes. Stockholders who exchange their shares of our stock for cash in
the merger will generally recognize gain or loss in an amount equal to the
difference, if any, between the cash received in the merger and their adjusted
tax basis in their shares of our stock. You should consult your tax
advisor for a complete analysis of the effect of the merger on your federal,
state and local and/or foreign taxes.
Conditions
to
the Merger (Page
[ ])
Conditions
to Each Party’s Obligations. Each
party’s obligation to complete the merger is subject to the satisfaction or
waiver of the following mutual conditions:
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adoption
of the merger agreement by Alltel’s common
stockholders;
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no
governmental entity of competent jurisdiction shall have enacted,
issued
or entered any restraining order, preliminary or permanent injunction
or
similar order or legal restraint or prohibition which remains in
effect
that enjoins or otherwise prohibits consummation of the
merger;
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the
expiration or earlier termination of any applicable waiting period
under
the HSR Act; and
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all
approvals and authorizations required to be obtained from the FCC
for the
transfer of control of the Alltel entities that hold FCC licenses
and
authorizations in connection with the merger shall have been obtained,
except for those approvals and authorizations to be obtained from
the FCC
that in the aggregate are immaterial to the Company and have not
been
denied by the FCC, regardless of whether the FCC shall have issued
a final
order.
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Conditions
to Alltel’s Obligations. Our
obligation to complete the merger is subject to the satisfaction or waiver
of
further conditions, including:
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Parent
and Merger Sub’s representations and warranties must be true and correct,
as of May 20, 2007, and as of the closing date of the merger, except
to
the extent the failure of such representations and warranties to
be true
and correct would not prevent or materially delay or materially impair
the
ability of Parent and Merger Sub to consummate the merger;
and
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Parent
and Merger Sub must have performed, in all material respects, their
covenants and agreements in the merger
agreement.
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Conditions
to Parent’s and Merger Sub’s
Obligations. The obligation of Parent
and Merger Sub to complete the merger is subject to the satisfaction or waiver
of further conditions, including:
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our
representations and warranties must be true and correct without regard
to
the materiality thresholds specified in the merger agreement, as
of May
20, 2007, and as of the closing date of the merger, except to the
extent
the failure of such representations and warranties to be true and
correct
would not constitute a material adverse effect on the Company (other
than
limited representations and warranties regarding (x) the capitalization
of
Alltel which must be true in all material respects and (y) the absence
of
an event since December 31, 2006 that would have a Company Material
Adverse Effect (as defined in the merger agreement and as
described below under “The Merger Agreement—Representations and
Warranties”) which must be true in all respects);
and
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we
must have performed, in all material respects, our covenants and
agreements in the merger agreement.
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No
Solicitations of Transactions (Page
[ ])
The
merger agreement restricts our ability to, among other things, solicit or engage
in discussions or negotiations with any third parties regarding specified
transactions involving us or our subsidiaries and our board of directors’
ability to change or withdraw its recommendation in favor of the merger
agreement. Notwithstanding these restrictions, under circumstances
specified in the merger agreement, in order to comply with its fiduciary duties
under applicable law, our board of directors may respond to certain unsolicited
competing proposals or terminate the merger agreement and enter into an
agreement with respect to a superior competing proposal or withdraw its
recommendation in favor of the approval of the merger agreement.
Termination
of the Merger Agreement (Page
[ ])
We
and
Parent may terminate the merger agreement by mutual written consent at any
time
before the completion of the merger (including after our stockholders have
adopted the merger agreement). In addition, with certain exceptions,
either Parent or Alltel may terminate the merger agreement at any time before
the completion of the merger:
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if
the merger has not been completed before May 20, 2008, but which
may be
extended up to July 20, 2008 if certain regulatory conditions to
closing
have not yet been met (which we refer to as the “end date”), and until
August 20, 2008 under certain
circumstances;
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if
any court of competent jurisdiction issues or enters an injunction
or
similar legal restraint or order permanently enjoining or otherwise
prohibiting the consummation of the merger and such injunction, legal
restraint or order is final and non-appealable;
or
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if
the Company’s stockholders fail to adopt the merger
agreement.
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Alltel
may also terminate the merger agreement:
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if
Parent or Merger Sub has breached or failed to perform any of its
representations, warranties, covenants or other agreements in the
merger
agreement and such breach or failure would result in the failure
of a
closing condition and cannot be cured by the end date, so long as
we have
given Parent 30 days’ written notice and we are not then in material
breach of the merger agreement;
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if,
prior to the receipt of the stockholder vote, our board of directors
has
received a superior proposal, notified Parent of the termination
in
accordance with the merger agreement, negotiated in good faith with
Parent
(to the extent Parent desires to negotiate) during a five business
day
period to revise the terms of the merger agreement, determined after
such
period that the proposal continues to be a superior proposal, pays
the
termination fee and concurrent with the termination enters into a
definitive agreement with respect to the superior proposal as further
described under “The Merger Agreement—No Solicitation of Transactions,”
“The Merger Agreement—Termination” and “The Merger Agreement—Fees and
Expenses” beginning on page [ ], respectively;
or
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if
the merger has not been consummated by the third business day after
the
final day of the Marketing Period as described in “The Merger
Agreement—Effective Time; Marketing Period,” beginning on page
[ ]; provided the conditions to closing relating to the
accuracy of Alltel’s representations and warranties and compliance with
its covenants under the merger agreement are then
satisfied.
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Parent
may also terminate the merger agreement:
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if
we have breached or failed to perform any of our representations,
warranties, covenants or other agreements in the merger agreement
and such
breach or failure would result in the failure of a closing condition
and
cannot be cured by the end date, so long as Parent has given us 30
days’
written notice and Parent is not then in material breach of the merger
agreement;
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if
our board of directors changes its recommendation of the merger or
fails
to include its recommendation in the proxy
statement;
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if
our board of directors publicly approves, endorses or recommends
an
alternative transaction or fails to publicly recommend against acceptance
of a tender or exchange offer that is a competing business combination
proposal within 10 business days after the commencement of the offer;
or
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if
our board of directors notifies Parent that it intends to terminate
the
agreement to enter into a superior proposal as described under “The Merger
Agreement—No Solicitation of Transactions” beginning on page
[ ].
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Termination
Fees (Page
[ ])
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If
the merger agreement is terminated under certain specified circumstances
principally relating to the existence of an alternative acquisition
proposal, we would be obligated to pay a termination fee of $625
million
to Parent.
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If
the merger agreement is terminated under certain specified circumstances,
Parent would be obligated to pay a termination fee of $625 million
to
us. Each Sponsor has severally agreed to guarantee one-half of
any such amounts payable by Parent to the Company, as further described
under “Financing of the Merger—Guarantee; Remedies” beginning on page
[ ].
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Market
Price of Common Stock (Page
[ ])
The
closing sale price of our common stock on the NYSE on May 18, 2007, the last
trading day prior to the announcement of the merger, was $65.21. The
closing sale price of our common stock on the NYSE on December 28, 2006, the
last trading day prior to the publication of an article in The Wall Street
Journal speculating that Alltel could be acquired by private equity sponsors
or
by certain other wireless communications firms, was $58.31.
For
additional questions about the merger, assistance in submitting proxies or
voting shares of our common stock, or additional copies of the proxy statement
or the enclosed proxy card, please contact:
[ ]
or
our
proxy solicitor,
[ ]
This
proxy statement, and the documents to which we refer you in this proxy
statement, include forward-looking statements based on estimates and
assumptions. There are forward-looking statements throughout this
proxy statement, including, without limitation, under the headings “Summary Term
Sheet,” “Questions and Answers about the Special Meeting and the Merger,” “The
Merger,” “Opinions of Alltel’s Financial Advisors,” “Projected Financial
Information,” “Regulatory Approvals,” and “Litigation Related to the Merger,”
and in statements containing words such as “believes,” “estimates,”
“anticipates,” “continues,” “contemplates,” “expects,” “may,” “will,” “could,”
“should” or “would” or other similar words or phrases. These
statements, which are based on information currently available to us, are not
guarantees of future performance and may involve risks and uncertainties that
could cause our actual growth, results of operations, performance and business
prospects, and opportunities to materially differ from those expressed in,
or
implied by, these statements. These forward-looking statements speak only as
of
the date on which the statements were made and we expressly disclaim any
obligation to release publicly any updates or revisions to any forward-looking
statement included in this proxy statement or elsewhere. In addition
to other factors and matters contained or incorporated in this document, these
statements are subject to risks, uncertainties, and other factors, including,
among others:
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the
occurrence of any event, change or other circumstances that could
give
rise to the termination of the merger
agreement;
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the
outcome of any legal proceedings that have been or may be instituted
against Alltel and others relating to the merger agreement including
the
terms of any settlements of such legal proceedings that may be subject
to
court approval;
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the
inability to complete the merger due to the failure to obtain stockholder
approval or the failure to satisfy other conditions to consummation
of the
merger;
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the
failure by Parent or Merger Sub to obtain the necessary debt financing
contemplated by the commitment letter received in connection with
the
merger;
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the
failure of the merger to close for any other
reason;
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risks
that the proposed transaction disrupts current plans and operations
and
the potential difficulties in employee retention as a result of the
merger;
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the
effect of the announcement of the merger on our business relationships,
operating results and business
generally;
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the
amount of the costs, fees, expenses and charges related to the
merger;
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changes
in communications technology;
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the
risks associated with the integration of acquired
businesses;
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adverse
changes in economic conditions in the markets served by
Alltel;
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adverse
changes in the terms and conditions of the wireless roaming agreements
of
Alltel;
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the
extent, timing, and overall effects of competition in the communications
business;
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material
changes in the communications industry generally that could adversely
affect vendor relationships with equipment and network suppliers
and
customer relationships with wholesale
customers;
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the
potential for adverse changes in the ratings given to Alltel's debt
securities by nationally accredited ratings
organizations;
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our
failure to comply with regulations and any changes in
regulations;
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the
uncertainties related to Alltel's strategic
investments;
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the
effects of federal and state legislation, rules, and regulations
governing
the communications industry; and
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changes
in general industry and market conditions and growth rates, economic
conditions, and governmental and public policy
changes.
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In
addition, for a more detailed discussion of these risks and uncertainties and
other factors, please refer to our annual report on Form 10-K for the fiscal
year ended December 31, 2006, filed with the SEC on February 20, 2007 and our
quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2007,
filed
with the SEC on May 8, 2007. Many of the factors that will determine
our future results are beyond our ability to control or predict. In
light of the significant uncertainties inherent in the forward-looking
statements contained herein, readers should not place undue reliance on
forward-looking statements, which reflect management’s views only as of the date
hereof. We cannot guarantee any future results, levels of activity,
performance or achievements. The statements made in this proxy
statement represent our views as of the date of this proxy statement, and it
should not be assumed that the statements made herein remain accurate as of
any
future date. Moreover, we assume no obligation to update
forward-looking statements or update the reasons that actual results could
differ materially from those anticipated in forward-looking statements, except
as required by law.
Alltel
provides wireless voice and data communications services to 12 million wireless
customers in 35 states. Alltel provides a wide array of wireless
communication services to individual and business customers. In terms of both
the number of customers served and revenues earned, Alltel is the fifth largest
provider of wireless services in the United States. As of May 31, 2007, Alltel
owns a majority interest in wireless operations in 116 Metropolitan Statistical
Areas, representing approximately 48.7 million potential customers and a
majority interest in 239 Rural Service Areas, representing approximately 30.9
million potential customers. In addition, Alltel owns a minority interest
in 23 other wireless markets, including the Chicago, Illinois and Houston,
Texas
Metropolitan Statistical Areas. Alltel also offers Personal Communications
Services in five markets, including Jacksonville, Florida and Wichita, Kansas.
As of May 31, 2007, Alltel has 154 Personal Communication Services licenses
representing approximately 34.2 million potential customers.
Alltel’s
principal address is One Allied Drive, Little Rock, Arkansas
72202. The telephone number is (501) 905-8000. For
more information about Alltel, please visit our website at
www.alltel.com. Our website address is provided as an inactive
textual reference only. The information provided on our website is
not part of this proxy statement, and is not incorporated herein by
reference. See also “Where You Can Find More Information” beginning
on page [ ]. Alltel’s common stock is publicly
traded on the NYSE under the symbol “AT.”
Atlantis
Holdings LLC, which we refer to as Parent, is a Delaware limited liability
company and is controlled by the Sponsors. Parent was formed solely
for the purpose of acquiring Alltel and has not carried on any activities to
date, except for activities incidental to its formation and activities
undertaken in connection with the transactions contemplated by the merger
agreement. Each of the Sponsors currently holds 50% of the membership
interests of Parent. The Sponsors may ultimately include additional
equity participants (who may include one or more holders of our common stock),
subject to the limitations and conditions contained in the merger
agreement. Parent’s address is c/o TPG Partners V, L.P., 301 Commerce
Street, Suite 3300, Fort Worth, Texas 76102. The telephone number is
(817) 871-4651.
Atlantis
Merger Sub, Inc., which we refer to as Merger Sub, is a Delaware corporation
and
a wholly owned subsidiary of Parent. Merger Sub was formed solely for
the purpose of facilitating Parent’s acquisition of Alltel. Merger
Sub has not carried on any activities to date, except for activities incidental
to its formation and activities undertaken in connection with the transactions
contemplated by the merger agreement. Upon consummation of the
proposed merger, Merger Sub will merge with and into Alltel and will cease
to
exist, with Alltel continuing as the surviving corporation. Merger
Sub’s address is c/o TPG Partners V, L.P., 301 Commerce Street, Suite 3300, Fort
Worth, Texas 76102. The telephone number is (817)
871-4651.
This
proxy statement is being furnished to our stockholders as part of the
solicitation of proxies by our board of directors for use at the special meeting
to be held on [ ], 2007, starting at [ ],
local time, at [ ], or at any postponement or adjournment
thereof. The purpose of the special meeting is for our stockholders
to consider and vote upon adoption of the merger agreement (and to approve
the
adjournment or postponement of the special meeting, if necessary or appropriate,
to solicit additional proxies). Our stockholders must adopt the
merger agreement in order for the merger to occur. If our
stockholders fail to adopt the merger agreement, the merger will not
occur. A copy of the merger agreement is attached to this proxy
statement as Annex A. You are urged to read the merger agreement in
its entirety.
We
have
fixed the close of business on [ ], 2007, as the record date for the
special meeting, and only holders of record of our common stock on the record
date are entitled to vote at the special meeting. On the record date,
there were [ ] shares of our common stock outstanding and entitled to
vote. Each share of our common stock entitles its holder to one vote
on all matters properly coming before the special meeting.
A
majority of the shares of our common stock issued, outstanding and entitled
to
vote at the special meeting constitutes a quorum for the purpose of considering
the proposals. Shares of our common stock represented at the special
meeting but not voted, including shares of our common stock for which proxies
have been received but for which stockholders have abstained, will be treated
as
present at the special meeting for purposes of determining the presence or
absence of a quorum for the transaction of all business. In the event
that a quorum is not present at the special meeting, the meeting may be
adjourned or postponed to solicit additional proxies.
You
may
vote FOR or AGAINST, or you may ABSTAIN from voting on, the proposal to adopt
the merger agreement. Abstentions will not be counted as votes cast
or shares voting on the proposal to approve the merger agreement, but will
count
for the purpose of determining whether a quorum is present.
Completion
of the merger requires the adoption of the merger agreement by the affirmative
vote of the holders of outstanding shares of our common stock representing
at
least a majority of all the votes entitled to vote at the special
meeting. Therefore, if you abstain, it will have the same
effect as a vote “AGAINST” the adoption of the merger
agreement.
Under
the
rules of the NYSE, brokers who hold shares in street name for customers have
the
authority to vote on “routine” proposals when they have not received
instructions from beneficial owners. However, brokers are precluded
from exercising their voting discretion with respect to approving non-routine
matters such as the adoption of the merger agreement and, as a result, absent
specific instructions from the beneficial owner of such shares, brokers are
not
empowered to vote those shares, referred to generally as “broker
non-votes.” Therefore, while
“broker
non-votes” will be counted for the purpose of determining a quorum, because
completion of the merger requires the adoption of the merger agreement by the
affirmative vote of the holders of outstanding shares of our common stock
representing at least a majority of the holders entitled to vote at the special
meeting, any “broker non-votes” will have the same effect as a vote “AGAINST”
the adoption of the merger agreement.
As
of
[ ], 2007, the record date for the special meeting, our directors and
executive officers held and are entitled to vote, in the aggregate,
[ ] shares of our common stock, representing approximately
[ ]% of our outstanding common stock. All of
our directors and executive officers have informed Alltel that they currently
intend to vote all of their shares of common stock “FOR”
the adoption of the merger agreement and the proposal
to postpone the special
meeting if required to solicit additional proxies.
If
you
submit a proxy by telephone or the Internet or by returning a signed and dated
proxy card by mail, your shares will be voted at the special meeting as you
indicate. If you sign your proxy card without indicating your vote,
your shares will be voted “FOR” the adoption of the
merger agreement and “FOR” the adjournment or
postponement of the special meeting, if necessary or appropriate, to solicit
additional proxies, and in accordance with the recommendations of our board
of
directors on any other matters properly brought before the special meeting,
or
at any adjournment or postponement thereof, for a vote.
If
your
shares of common stock are held in street name, you will receive instructions
from your broker, bank or other nominee that you must follow in order to have
your shares voted. If you do not instruct your broker, bank or
nominee to vote your shares, it has the same effect as a vote against adoption
of the merger agreement.
Proxies
received at any time before the special meeting, and not revoked or superseded
before being voted, will be voted at the special meeting. You have
the right to change or revoke your proxy at any time before the vote taken
at
the special meeting:
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if
you hold your shares in your name as a stockholder of record, by
notifying
[ ];
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by
attending the special meeting and voting in person (your attendance
at the
meeting will not, by itself, revoke your proxy; you must vote in
person at
the meeting);
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by
submitting a later-dated proxy
card;
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if
you voted by telephone or the Internet, by voting again by telephone
or
Internet; or
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·
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if
you have instructed a broker, bank or other nominee to vote your
shares,
by following the directions received from your broker, bank or other
nominee to change those
instructions.
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Adjournments
and Postponements
Although
it is not currently expected, the special meeting may be adjourned or postponed
for the purpose of soliciting additional proxies. Alltel’s amended
and restated bylaws provide that any adjournment may be made without notice
if
the adjournment is to a date that is not greater than 30 days after the original
date fixed for the special meeting and an announcement is made at the special
meeting of the time, date and place of the adjourned meeting. Any
signed proxies received by Alltel in which no voting instructions are provided
on such matter will be voted “FOR” an adjournment or postponement of the special
meeting, if necessary or appropriate, to solicit additional
proxies. Any adjournment or postponement of the special meeting for
the purpose of soliciting additional proxies will allow Alltel’s shareholders
who have already sent in their proxies to revoke them at any time prior to
their
use at the special meeting as adjourned or postponed.
Under
Delaware law, Alltel’s stockholders are entitled to appraisal rights in
connection with the merger.
If
the
merger is consummated, dissenting holders of stock who follow the procedures
described below within the appropriate time periods will be entitled to have
their shares of stock appraised by a court and to receive the “fair value” of
such shares in cash as determined by the Delaware Court of Chancery, together
with a fair rate of interest, if any, as determined by the court, in lieu of
the
consideration that such stockholder would otherwise be entitled to receive
pursuant to the merger agreement. These rights are known as appraisal
rights.
If
a
stockholder wishes to exercise appraisal rights in connection with the merger,
the stockholder must not vote in favor of adoption of the merger agreement,
must
continually be the holder of record of such shares through the effective time
of
the merger, and must meet the conditions described below.
Section
262 of the Delaware General Corporation Law, or DGCL, which contains the
conditions necessary to secure appraisal rights, is set forth in full in Annex
E. The following is a brief summary of Section 262, which sets forth the
procedures for dissenting from the merger and demanding statutory appraisal
rights. Failure to follow the procedures set forth in Section 262 precisely
could result in the loss of appraisal rights. This proxy statement constitutes
notice to holders of stock concerning the availability of appraisal rights
under
Section 262.
Stockholders
who desire to exercise their appraisal rights must satisfy all of the conditions
of Section 262. A written demand for appraisal of shares must be filed with
Alltel before the special meeting on [ ], 2007. This
written demand for appraisal of shares must be in addition to and separate
from
a vote against the merger. Stockholders electing to exercise their appraisal
rights must not vote for the merger. Any proxy or such vote against the
merger,
abstention
from voting or failure to vote on the merger will not in and of itself
constitute a demand for appraisal within the meaning of Section
262.
A
demand
for appraisal must be executed by or for the stockholder of record, fully and
correctly, as such stockholder's name appears on the share certificate. If
the
shares are owned of record in a fiduciary capacity, such as by a trustee,
guardian or custodian, this demand must be executed by or for the fiduciary.
If
the shares are owned by or for more than one person, as in a joint tenancy
or
tenancy in common, such demand must be executed by or for all joint owners.
An
authorized agent, including an agent for two or more joint owners, may execute
the demand for appraisal for a stockholder of record; however, the agent must
identify the record owner and expressly disclose the fact that, in exercising
the demand, he is acting as agent for the record owner. A person having a
beneficial interest in stock held of record in the name of another person,
such
as a broker or nominee, must act promptly to cause the record holder to follow
the steps summarized below and in a timely manner to perfect whatever appraisal
rights the beneficial owners may have.
An
Alltel
stockholder who elects to exercise appraisal rights should mail or deliver
his,
her or its written demand to Alltel at its address at One Allied Drive, Little
Rock, Arkansas 72202, Attention: Secretary. The written demand for
appraisal should specify the stockholder's name and mailing address, and that
the stockholder is thereby demanding appraisal of his or her stock. Within
ten
days after the effective time of the merger, Alltel must provide notice of
the
effective time of the merger to all of its stockholders who have complied with
Section 262 and have not voted for the merger.
Within
120 days after the effective time of the merger, any stockholder who has
satisfied the requirements of Section 262 may deliver to Alltel a written demand
for a statement listing the aggregate number of
shares not voted in favor of the merger and with respect to which demands for
appraisal have been received and the aggregate number of holders of such
shares.
Within
120 days after the effective time of the merger (but not thereafter), either
Alltel or any stockholder who has complied with the required conditions of
Section 262 and who is otherwise entitled to appraisal rights may file a
petition in the Delaware Court of Chancery demanding a determination of the
fair
value of his or her Alltel shares. Alltel has no present intention to file
such
a petition if demand for appraisal is made.
Upon
the
filing of any petition by a stockholder in accordance with Section 262, service
of a copy must be made upon Alltel, which must, within 20 days after service,
file in the office of the Register in Chancery in which the petition was filed,
a duly verified list containing the names and addresses of all stockholders
who
have demanded payment for their shares and with whom agreements as to the value
of their shares have not been reached by Alltel. If a petition is filed by
Alltel, the petition must be accompanied by the verified list. The Register
in
Chancery, if so ordered by the court, will give notice of the time and place
fixed for the hearing of such petition by registered or certified mail to Alltel
and to the stockholders shown on the list at the addresses therein stated,
and
notice will also be given by publishing a notice at least one week before the
day of the hearing in a newspaper of general circulation published in the City
of Wilmington, Delaware, or such publication as the court deems advisable.
The
forms of the notices by mail and by publication must be approved by the court,
and the costs thereof will be borne by Alltel.
If
a
petition for an appraisal is filed in a timely fashion, after a hearing on
the
petition, the court will determine which stockholders are entitled to appraisal
rights and will appraise the shares owned by these stockholders, determining
the
fair value of such shares, exclusive of any element of value arising from the
accomplishment or expectation of the merger, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair
value.
Alltel
stockholders considering seeking appraisal of their shares should note that
the
fair value of their shares determined under Section 262 could be more, the
same
or less than the consideration they would receive pursuant to the merger
agreement if they did not seek appraisal of their shares. The costs of the
appraisal proceeding may be determined by the court and taxed against the
parties as the court deems equitable under the circumstances. Upon application
of a dissenting stockholder, the court may order that all or a portion of the
expenses incurred by any dissenting stockholder in connection with the appraisal
proceeding, including reasonable attorneys' fees and the fees and expenses
of
experts, be charged pro rata against the value of all shares entitled to
appraisal. In the absence of a determination or assessment, each party bears
his, her or its own expenses.
Any
stockholder who has duly demanded appraisal in compliance with Section 262
will
not, after the effective time of the merger, be entitled to vote for any purpose
the shares subject to demand or to receive payment of dividends or other
distributions on such shares, except for dividends or distributions payable
to
stockholders of record at a date prior to the effective time of the
merger.
At
any
time within 60 days after the effective time of the merger, any stockholder
will
have the right to withdraw his demand for appraisal and to accept the terms
offered in the merger agreement. After this period, a stockholder may withdraw
his demand for appraisal and receive payment for his shares as provided in
the
merger agreement only with the consent of Alltel and Parent. If no petition
for
appraisal is filed with the court within 120 days after the effective time
of
the merger, stockholders' rights to appraisal (if available) will cease.
Inasmuch as Alltel has no obligation to file such a petition, any stockholder
who desires a petition to be filed is advised to file it on a timely basis.
No
petition timely filed in the court demanding appraisal may be dismissed as
to
any stockholder without the approval of the court, which approval may be
conditioned upon such terms as the court deems just.
Failure
by any Alltel stockholder to comply fully with the procedures described above
and set forth in Annex E to this proxy statement may result in termination
of a
stockholder's appraisal rights.
This
proxy solicitation is being made and paid for by Alltel on behalf of its board
of directors. In addition, we have retained [ ] to
assist in the solicitation of proxies for the special meeting for a fee of
approximately $[ ]. Our directors, officers
and employees may also solicit proxies by personal interview, mail, e-mail,
telephone, facsimile or other means of communication. These persons
will not be paid additional remuneration for their efforts. We will
also request brokers and other fiduciaries to forward proxy solicitation
material to the
beneficial
owners of shares of our common stock that the brokers and fiduciaries hold
of
record. Upon request, we will reimburse them for their reasonable
out-of-pocket expenses.
If
you
have more questions about the merger or how to submit your proxy, or if you
need
additional copies of this proxy statement or the enclosed proxy card or voting
instructions, please call [ ] or [ ],
our proxy solicitor, at [ ].
Documents
incorporated by reference (excluding exhibits to those documents unless the
exhibit is specifically incorporated by reference into those documents) will
be
provided without charge, to each person to whom this proxy statement is
delivered, upon written or oral request of such person and by first class
mail. In addition, our list of stockholders entitled to vote at the
special meeting will be available for inspection at our principal executive
offices at least 10 days prior to the date of the special meeting and continuing
through the special meeting for any purpose germane to the meeting; the list
will also be available at the meeting for inspection by any stockholder present
at the meeting.
This
discussion of the merger is qualified in its entirety by reference to the merger
agreement, which is attached to this proxy statement as Annex A and which is
incorporated by reference into this proxy statement. You should read
the entire merger agreement carefully as it is the legal document that governs
the merger.
Over
the
past several years, the board of directors of Alltel, together with the senior
management, has regularly engaged in a comprehensive review of Alltel’s business
and strategic opportunities, including the possibility of acquisitions,
recapitalizations (such as a self-tender offer, stock buyback or special
dividend), spin-offs, mergers or a sale of Alltel, with a view to determining
alternatives that would be in the best interests of Alltel’s
stockholders. As a part of this process, Alltel from time to time
engaged in preliminary discussions with potential strategic partners about
possible business combinations and other strategic initiatives, as well as
preliminary exploratory contacts with private equity sponsors.
These
strategic reviews suggested that Alltel’s wireline and wireless businesses would
be more valuable as separate companies and, as a result, the board of directors
of Alltel authorized the spin-off by Alltel of its wireline business in
2006. Following completion of the spin-off in July 2006, the board of
directors instructed management to continue to explore the full array of
strategic options available to Alltel as a pure-play wireless carrier,
including a potential recapitalization, possible acquisitions and a merger
or
sale of the Company, and authorized management to have discussions with
potential strategic partners and private equity sponsors to assess the general
level of interest in a potential transaction, and to report back to the
board. Also, Alltel’s Chief Executive Officer mentioned during
Alltel’s 2006 third and fourth quarter earnings calls with investors and
analysts that Alltel was reviewing all of its strategic
alternatives.
Further
to the board’s directive, during the latter half of 2006, members of management
had several discussions with third parties regarding the potential benefits
of a
merger. These third parties included several major telecommunications
companies. One series of discussions, with a company referred to here
as Company A, involved a dialogue regarding technology issues and synergies
as
well as the exchange of a limited amount of non-public information under a
non-disclosure agreement. Otherwise, the third parties did not
further pursue such discussions at this time. On December 29, 2006, an article
appeared in the Wall Street Journal containing speculation about
possible sale or merger transactions involving Alltel.
At
a
meeting of the Alltel board in January 2007, the directors again discussed
with
senior management various potential strategic options for Alltel (including
a
recapitalization, acquisitions or a merger or sale of the Company) and directed
management to consider initiating a process for receiving indications of
interest from potentially interested acquirors, with a view to concluding such
a
process by late spring or early summer of 2007. The board took note
of favorable financial market conditions and the upcoming 700 MHz spectrum
auction and the potential impact of the Federal Communication Commission’s
anti-collusion rules (prohibiting strategic discussions among auction
participants) and how they might impact timing of a process.
During
February and March 2007, management met with Alltel’s financial and legal
advisors to discuss a process for obtaining indications of interest from private
equity sponsors while continuing discussions with potential strategic
partners. Management also continued to evaluate the potential
benefits and feasibility of a self-tender offer, stock buyback, special dividend
or other recapitalization. In late March 2007, following further
contacts, Company A advised management that it was not interested in pursuing
additional discussions regarding a potential transaction. During this
time, Alltel renewed discussions with other potential strategic partners about
the possible merits of a business combination.
Throughout
this period, Alltel management provided the members of the board of directors
with periodic updates regarding these discussions.
In
early
April 2007, Alltel’s board of directors met with Alltel’s management and
Alltel’s outside advisors to discuss the status of the process and available
alternatives. As part of this meeting, the board received from
management and Alltel’s financial advisors a comprehensive analysis of its
strategic and financial alternatives, including information about Alltel’s
potential value in a sale scenario and the potential ability of private equity
sponsors to finance a transaction at given price levels, along with an
illustrative timeline and an overview by Wachtell, Lipton, Rosen & Katz of
the board of directors’ legal and fiduciary duties. The board
discussed with the Company’s advisors the process that might best achieve the
most attractive value to stockholders. After discussion, the board of
directors authorized the commencement of a formal, competitive process involving
a number of private equity sponsors that called for final proposals from
interested bidders by early June 2007. However, the board noted that
an earlier deadline or a preemptive offer by one such group might provide the
most attractive results for stockholders. As part of the process,
management agreed not to discuss or enter into arrangements with any potential
bidder regarding prospective employment or the terms of any potential investment
during the sales process. The board also approved continued efforts
to explore a possible transaction with a major telecommunication’s firm, which
we refer to as Company B, and, although prior experience did not suggest a
high
likelihood that certain other strategic partners were currently prepared to
move
forward on a business combination with Alltel, the board authorized Alltel’s
financial advisors to contact, or renew contacts with, key potential strategic
partners to determine their current interest in a transaction.
In
the
first half of April 2007, Alltel continued discussions with Company B regarding
the strategic benefits of a possible business combination. Alltel also entered
into a confidentiality agreement with Company B. Also during this
time, Alltel entered into confidentiality agreements with TPG and three other
private equity sponsors, which we refer to as Sponsor A, Sponsor B and Sponsor
C
and requested that each such sponsor provide a preliminary indication of
interest based on public information. These private equity sponsors
were chosen based on Alltel’s and its advisors’ understanding of their
capacity, resources, industry expertise, reputation and experience in
consummating large transactions. In addition to requirements to
maintain confidentiality of information, the confidentiality agreements included
provisions that restricted the ability of the private equity sponsors to discuss
the potential transaction or share the Alltel information with other private
equity firms without Alltel’s prior consent. In response to these
requests, each of the private equity sponsors provided an initial indication
of
interest. Each indication of interest was preliminary and non-binding, was
not
based on any non-public information provided by Alltel or its representatives
and was subject to significant contingencies
including
receipt of committed financing and satisfactory completion of a due diligence
review of non-public information about Alltel.
After
receipt of these initial indications of interest, discussions ensued between
representatives of Alltel, on the one hand, and each of TPG and Sponsors A,
B
and C, on the other, regarding the key assumptions underlying the indications
of
interest and the possibility of each of the private equity sponsors teaming
with
other private equity sponsors. After discussion, it was determined
that TPG would be permitted to team with Goldman Sachs Capital Partners, L.P.
(which we refer to as GSCP), Sponsor A with Sponsor C, and Sponsor B with an
additional private equity firm, Sponsor D.
At
a
further board meeting in mid-April 2007, the directors reviewed with Alltel
management and the Company’s outside financial and legal advisors the
preliminary indications of interest. The participants also discussed
the proposed process and timeframe going forward. Members of the
board inquired about the amount of time proposed to be allocated to reach the
end of the process and the potential risks involved with an extended
period. In response, management and the Company’s outside counsel
indicated that they would be alert to opportunities to accelerate the process
consistent with achieving the goal of optimizing value for stockholders,
including by informing each of the sponsor teams that the Company would be
willing to accelerate the process if it received a very compelling financial
proposal from a bidder that was prepared to move quickly to execute a definitive
agreement for a firmly committed transaction.
Following
this board meeting, representatives of Alltel contacted an additional potential
strategic partner, but such party did not express interest in pursuing a
strategic business combination. Between May 2, 2007 and May 4, 2007, management
made presentations to each private equity sponsor group. At the
conclusion of each presentation, the private equity sponsor groups were informed
that Alltel believed that Alltel stockholders’ interests might best be served by
moving expeditiously to negotiate, execute and announce a definitive agreement
and therefore was open to any or all private equity sponsor groups moving more
quickly than the proposed final bid date by making a highly compelling
bid. On May 6, 2007, The Wall Street Journal published an article
that reported in detail on the process. Alltel did not publicly
comment on this article. Alltel representatives contacted each of the
private equity sponsor groups to discuss the article and the heightened need
for
the process to be concluded as quickly as possible. Alltel stressed
to the potential bidders that there might be a need to accelerate the process
deadline under the circumstances and advised the potential bidders to accelerate
their diligence process.
On
May 8,
2007, Alltel distributed a letter containing an invitation and instructions
for
submitting final bids to acquire Alltel, including a draft merger agreement,
to
each of the private equity sponsor groups. The deadline for bids was
given as June 6, 2007 but the letters expressly stated that Alltel reserved
full
discretion to accelerate or preempt the process, including by negotiating with
one or more buyers and entering into a merger agreement without notice to other
prospective purchasers. During this period, representatives of Alltel
continued contacts with Company A and Company B, and with other companies,
including providing draft confidentiality agreements, that were thought to
have
a possible strategic interest in a transaction with Alltel, but none of these
contacts led to additional confidentiality agreements being entered
into
or
any of those companies (as well as Company A and Company B) moving to further
pursue a potential business combination with Alltel.
Based
on
the requests of the private equity sponsors, Alltel’s management delivered a
second series of separate management presentations from May 14, 2007 to May
16,
2007. At the conclusion of each of these meetings, management again
stressed its desire to reach a conclusion to the process expeditiously and
advised that the Alltel board would be receptive to an accelerated bid by a
sponsor at a compelling price. Management also asked each private
equity sponsor group whether additional information would be necessary in order
to make a firm offer and sign a definitive agreement. The TPG/GSCP
and Sponsor B/Sponsor D teams both requested specific information relative
to
performance of certain of Alltel’s markets. The Sponsor A/Sponsor C
team was unable to provide its request at that time. Following these
meetings, the TPG/GSCP and Sponsor B/Sponsor D teams were provided with the
requested market information. Following its review of the additional
material, the Sponsor B/Sponsor D team submitted additional diligence
requests.
On
Friday, May 18, 2007, a representative of the TPG/GSCP team called Scott Ford,
the President and Chief Executive Officer of Alltel, and Richard Massey, General
Counsel of Alltel, to indicate that TPG and GSCP were enthusiastic about
acquiring Alltel and wished to enter into final negotiations with Alltel that
would lead to the execution of a definitive agreement on an accelerated
basis. TPG and GSCP indicated that they were prepared to make a bid
that would be at or near the top of the price range indicated by TPG in its
preliminary indication of interest and to move quickly to finalize a definitive
agreement over the weekend. More particularly, the TPG/GSCP team was
prepared to deliver to Alltel an agreement in the form it would be prepared
to
sign, along with committed financing, on the condition that Alltel provide
certain market–specific business information for diligence purposes and commit
to the accelerated discussions with TPG/GSCP. The TPG/GSCP team emphasized
that
their willingness to submit a proposal and proceed on this basis was conditioned
on Alltel’s agreement not to “shop” its bid to other participants,
and indicated that it would withdraw if Alltel advised the other private
equity teams that a proposal had been made. Following discussion with
Wachtell, Lipton and various board members, Alltel indicated that Alltel’s
willingness to move forward on this basis was dependent on the strength of
the
final bid that TPG/GSCP would make.
On
the
evening of May 18, 2007, Alltel received a marked merger agreement and committed
financing papers from the TPG/GSCP team and in return provided the requested
diligence materials. That evening, Alltel sent a revised draft of the
merger agreement to Cleary Gottlieb Steen & Hamilton LLP, counsel for the
TPG/GSCP team. On May 19, 2007, Wachtell, Lipton and Cleary Gottlieb
discussed remaining open points on the merger agreement.
Over
the
next two days, Wachtell, Lipton and Cleary Gottlieb continued to negotiate
the
terms of the definitive merger agreement, and the parties also discussed changes
to the other related documents, including the draft debt and equity commitment
letters, the guarantee that would be provided by TPG and GSCP and the disclosure
schedules related to the merger agreement.
On
the
afternoon of May 19, 2007, the TPG/GSCP team communicated an offer of $71.00
in
cash for each share of Alltel common stock. Alltel responded that it
would require a
higher
price to proceed. Shortly thereafter, the TPG/GSCP team responded
with a “best and final” offer of $71.50 per share.
On
May
20, 2007, the board of directors met at the offices of Wachtell, Lipton with
senior management and Alltel’s outside legal and financial advisors. The board
first received an overview of the events occurring since the last meeting of
the
board from Mr. Ford and Mr. Massey. Representatives of JPMorgan,
Merrill Lynch and Stephens discussed with the board of directors the financial
aspects of the proposed transaction, including the proposed financing
arrangements, reviewed various financial analyses of the proposed transaction
with the board, and each of the financial advisors rendered to the board of
directors its oral opinion (subsequently confirmed in writing), as described
under “—Opinion of Alltel’s Financial Advisors,” that, as of May 20, 2007 and
based on and subject to the matters described in its opinion, the $71.50 per
share cash merger consideration to be received by holders of shares of Alltel
common stock is fair from a financial point of view to such holders.
Representatives of Wachtell, Lipton reviewed with the board of directors its
legal obligations relative to considering the proposal and summarized the
proposed merger agreement and related agreements and updated the board of
directors on the status of the documentation with respect to the potential
transaction. Representatives of Wachtell, Lipton also discussed with the board
of directors the stockholder and regulatory approvals that would be required
to
complete the proposed merger and the likely process and timetable of the merger,
including expected timing for obtaining the required stockholder and regulatory
approvals. Wachtell, Lipton also discussed employee benefits issues
in connection with the merger and reviewed for the board of directors a set
of
draft resolutions relating to the proposed merger.
Following
these discussions, and discussions among the members of the board of directors,
management and Alltel’s advisors, including consideration of the factors
described under “—Reasons for the Merger; Recommendation of the Company’s Board
of Directors,” the board of directors unanimously determined that the
transactions contemplated by the merger agreement and the related transactions
and agreements are advisable and in the best interests of Alltel and its
stockholders, and the directors voted unanimously to approve the merger, to
approve and adopt the merger agreement and to approve the related transactions
and agreements. In
that
regard, the board determined to approve the merger without first seeking to
engage in further discussions with the other private equity teams. In
making that determination, the directors considered, among other things, the
risk that TPG/GSCP would withdraw if Alltel did so; that there was a risk that
continuing the process further could result in a lower price, especially after
the withdrawal of TPG/GSCP; that all of the private equity sponsors had had
the
same opportunity and been encouraged to make an accelerated bid at a compelling
price; that the board had been advised that there had not been any conversations
between management and any of the sponsors regarding any proposed economic
terms
for management in the event of a transaction; and that under the terms of the
merger agreement, Alltel would remain free to respond to any subsequent bid
that
was (or was likely to lead to) a superior proposal, including by further
negotiating with and providing information to such a bidder, and to terminate
the merger agreement in favor of such a superior proposal, subject to payment
of
a termination fee that was well within the range of customary practice and
was
not believed to be a substantial deterrent to receipt of a higher bid (see
the
discussion under “The Merger Agreement—No Solicitation of Transactions” and
“—Termination” beginning on pages [ ]).
There
was
then a discussion of next steps and the estimated timetable, including
communication plans.
Following
the meeting of the board of directors, the parties and their representatives
finalized the definitive documentation and entered into the merger agreement.
The merger agreement was announced by the parties prior to the opening of the
financial markets in New York City on May 21, 2007.
Reasons
for the Merger; Recommendation of the Company’s Board
of Directors
The
board
of directors, acting with the advice and assistance of its outside legal and
financial advisors, unanimously (i) adopted and declared advisable the merger,
the merger agreement and the transactions contemplated by the merger agreement,
(ii) determined that the transactions contemplated by the merger agreement
were
advisable and in the best interests of Alltel and its stockholders and (iii)
resolved to recommend that Alltel’s stockholders vote in favor of the adoption
of the merger agreement and the transactions contemplated by the merger
agreement, including the merger.
In
the
course of reaching its determination, the board of directors considered a number
of factors. The material factors considered by the board of directors
were:
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the
value of the cash consideration to be paid to Alltel stockholders
upon
consummation of the merger;
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the
current and historical market prices of the Company’s common stock and the
fact that the price of $71.50 per share represented a premium of
approximately 22.6% over the market closing price of $58.31 of the
Company’s common stock prior to the publication of an article by the Wall
Street Journal on December 29, 2006, speculating that Alltel could
be
acquired by private equity sponsors or by certain other wireless
communications firms;
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the
board of directors’ understanding of Alltel’s business, historical and
current financial performance, competitive and operating environment,
operations, management strength and future
prospects;
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conditions
and trends in the wireless business and Alltel’s prospects as the fifth
largest provider of wireless services in the United States in view
of the
evolution of the business and its competitors, including a trend
toward
consolidation in the telecommunications
industry;
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the
process leading to the announcement of the merger agreement and the
board’s understanding, as a result of such process, of the level of
interest of both potential strategic partners and private equity
sponsors
in a transaction with Alltel;
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that
discussions had been held with, and feedback received from, the various
participants in the process and management’s reports on the prospects for
a merger with other industry
participants;
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management’s
understanding of the competitive landscape and its exploratory discussions
with potential strategic partners;
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that
the preliminary, non-binding indications of interest received from
the
private equity sponsors other than TPG included indicative price
ranges
that were both below and above the amount ultimately agreed to with
TPG
and GSCP;
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the
terms of the TPG/GSCP proposal, including the requirement that Alltel
agree not to “shop” the proposal to other participants in the
process;
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the
relative interest and readiness of the respective private equity
sponsors
to reach a definitive agreement on an acquisition transaction, and
the
risk that the TPG/GSCP proposal would be withdrawn if Alltel did
not
accede to their “no-shop” request;
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financial
analyses, information and perspectives provided to the board of directors
by management and the Company’s financial
advisors;
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the
opinions of each of JPMorgan, Merrill Lynch and Stephens that, as
of the
date of their respective opinions and based upon and subject to the
matters described in their respective opinions, the common stock
merger
consideration to be paid in the merger was fair, from a financial
point of
view, to the holders of Alltel common stock, other than Parent and
its
affiliates;
|
|
·
|
the
proposed financial and other terms of the merger and the merger agreement,
and the other terms and conditions of the merger
agreement;
|
|
·
|
the
deal protection terms contained in the merger agreement, particularly
the
fact that the termination fee payable by Alltel in the event that
the
merger agreement were terminated for a superior proposal would be
approximately 2.5% of the aggregate merger
consideration;
|
|
·
|
the
fact that the consideration to be paid to Alltel stockholders would
be all
cash, that following the completion of the merger Alltel stockholders
will
no longer have an ownership interest in Alltel and thus an opportunity
to
participate in the financial risks and rewards of Alltel’s business
performance;
|
|
·
|
the
contingencies to completion of the proposed merger, including the
fact
that completion of the merger requires regulatory approvals as well
as
approval by the stockholders of
Alltel;
|
|
·
|
the
board of directors’ understanding of the reputation and experience of the
Sponsors, the current state of the capital markets and the likelihood
that
Parent could successfully obtain the equity and debt financing required
to
fully fund the payment of the merger consideration, and its understanding
of the proposed financing arrangements for the
merger;
|
|
·
|
the
fact that receipt of the merger consideration will be taxable to
U.S.
stockholders of Alltel for U.S. federal income tax purposes;
and
|
|
·
|
the
potential risks and costs to us if the merger does not close, including
the diversion of management and employee attention and potential
effects
on the Company’s relationships with suppliers, vendors and other business
partners.
|
In
addition, the board of directors was aware of and considered the interests
that
certain of the Company’s directors and executive officers may have with respect
to the merger that may be considered to be different from, or are in addition
to, their interests as stockholders of Alltel, as described in “—Interests of
Alltel’s Directors and Executive Officers in the Merger.”
The
foregoing discussion summarizes the material factors considered by the board
of
directors in its consideration of the merger. After considering these
factors, as well as others, the board of directors concluded that the positive
factors relating to the merger agreement and the merger significantly outweighed
the potential negative factors and the merger agreement and the merger were
advisable and in the best interests of Alltel and its
stockholders. In view of the wide variety of factors considered by
the board of directors, and the complexity of these matters, the board of
directors did not find it practicable to quantify or otherwise assign relative
weights to the foregoing factors. In addition, individual members of
the board of directors may have assigned different weights to various
factors. The board of directors unanimously recommended the merger
agreement and the merger based upon the totality of the information presented
to
and considered by it.
The
Company’s board of directors recommends that you vote “FOR” the adoption of the
merger agreement and “FOR” the adjournment or postponement of the special
meeting, if necessary or appropriate, to solicit additional
proxies.
Each
of
JPMorgan, Merrill Lynch and Stephens (the “Advisors”) rendered its opinion to
Alltel's board of directors that, as of May 20, 2007 and based upon and subject
to the factors and assumptions set forth in their respective opinions, the
merger consideration of $71.50 in cash per share of Alltel common stock to
be
paid to the holders of that stock is fair from a financial point of view to
such
holders. The respective opinions of the Advisors were necessarily
based on economic, market, tax, legal and other conditions as in effect on,
and
the information made available to them as of, May 20,
2007. Subsequent developments may affect the opinions and
none of the Advisors has any obligation to update, revise or reaffirm its
opinion.
The
full
text of the written opinions of the Advisors, dated May 20, 2007, which set
forth the assumptions made, matters considered and limitations on the review
undertaken in connection with the opinions, are attached as Annexes B, C and
D,
respectively. Each of the Advisors provided its advisory services and
opinion for the information and assistance of the board of directors of Alltel
in connection with its consideration of the proposed merger. The
opinions of the Advisors do not constitute a recommendation as to how any
stockholder should vote with respect to the proposed merger.
In
connection with rendering the opinions described above and performing the
related financial analysis, each of the Advisors has, among other
things: (1) reviewed certain publicly available business and
financial information relating to Alltel that it deemed to be relevant;
(2)
reviewed
certain information, including financial forecasts, relating to the business,
earnings, cash flow, assets, liabilities and prospects of Alltel furnished
to it
by Alltel; (3) conducted discussions with certain members of management of
Alltel concerning the proposed merger, the matters described in clauses 1 and
2
above, the past and current business operations, financial condition and future
prospects of the company and certain other matters it deemed to be relevant;
(4)
reviewed the market prices and valuation multiples for the common shares and
compared them with those of certain publicly traded companies that it deemed
to
be relevant; (5) reviewed the results of operations of Alltel and compared
them
with those of certain publicly traded companies that it deemed to be relevant;
(6) compared the proposed financial terms of the transaction with the financial
terms of certain other transactions that it deemed to be relevant; (7)
participated in certain discussions and negotiations among representatives
of
Alltel and Parent and their financial and legal advisors; (8) reviewed the
merger agreement; and (9) reviewed such other financial studies and analyses
and
took into account such other matters as it deemed relevant, including its
assessment of general economic, market and monetary conditions.
In
giving
their opinions, the Advisors each relied upon and assumed, without undertaking
any responsibility or liability for independent verification, the accuracy
and
completeness of all the information discussed with or reviewed by or for
it. In addition, none of the Advisors made an independent evaluation
or appraisal of any assets or liabilities of Alltel, nor has any such evaluation
or appraisal of the assets or liabilities of Alltel been furnished to the
Advisors, nor did the Advisors evaluate the solvency of Alltel under any state
or federal laws relating to bankruptcy,
insolvency or similar matters. In relying on financial forecasts
provided to them, the Advisors assumed that they had been reasonably prepared
based on assumptions reflecting the best currently available estimates and
judgments by the management of Alltel as to the expected future financial
performance of Alltel to which such forecasts relate. The Advisors
expressed no view as to such forecasts or the assumptions on which they were
based. The Advisors also assumed that the proposed merger and the
other transactions contemplated by the merger agreement will be consummated
as
described in the merger agreement. The Advisors each further assumed
that all material governmental, regulatory or other consents and approvals
necessary for the completion of the proposed merger will be obtained without
any
adverse effect on Alltel.
The
opinions described above are directed only to the fairness from a financial
point of view to the holders of shares of the Alltel common stock, par value
$1.00, of the merger consideration to be paid to such holders in the proposed
merger and do not address the underlying decision by Alltel to engage in the
proposed merger or any of the transactions relating thereto. None of the
Advisors expressed any opinion as to the prices at which the shares of Alltel
common stock will trade at any future time. The opinions of the
Advisors do not constitute recommendations as to how any stockholder should
vote
with respect to the proposed merger.
Financial
Analysis of Alltel's Financial
Advisors
The
following is a summary of the material financial analyses jointly performed
by
the Advisors in connection with rendering their opinions described above. The
following summary, however, does not purport to be a complete description of
the
financial analyses performed by the Advisors. The order of analyses described
does not represent the relative importance or weight given to those analyses
by
the Advisors. The Advisors all worked on developing these
analyses,
and these analyses represent the joint work product of the Advisors. Some of
the
summaries of the financial analyses include information presented in tabular
format. The tables must be read together with the full text of each summary
and
are alone not a complete description of the financial analyses performed by
the
Advisors. Except as otherwise noted, the following quantitative information,
to
the extent that it is based on market data, is based on market data as it
existed on or before May 20, 2007 and is not necessarily indicative of current
market conditions.
Historical
Common Stock Performance. The Advisors reviewed the performance of Alltel
common stock from July 18, 2006, the day after the wireline spin-off, to May
18,
2007, the last trading day prior to the signing of the definitive merger
agreement. The Advisors classified this period into two
sub-segments: the periods prior to and post December 29, 2006, the
day reports speculating that Alltel could be acquired were published in the
media.
|
·
|
Alltel
common stock achieved a closing price high of $58.31 per share and a
closing price low of $52.80 per share on December 28, 2006 and July
20, 2006, respectively, during the period July 18, 2006 to before
December
29, 2006.
|
|
·
|
Alltel
common stock achieved a closing price high of $66.56 per share and a
closing price low of $58.60 per share on May 9, 2007 and March 5,
2007, respectively, during the period December 29, 2006 to May 18,
2007.
|
While
reviewing common stock performance the Advisors noted that the trading price
of
Alltel’s stock had significantly risen following press speculation of a
potential transaction relating to Alltel several months before the transaction
was announced.
Discounted
Cash Flow Analysis. The Advisors calculated the range of implied equity
value per share for Alltel common stock by performing a discounted cash flow
analysis. The discounted cash flow analysis assumed a valuation date of
March 31, 2007.
A
discounted cash flow analysis is a traditional method of evaluating the value
of
an asset by estimating the future unlevered free cash flows of an asset and
taking into consideration the time value of money by calculating the “present
value” of these estimated cash flows. “Present value” refers to the current
value of one or more future cash payments, or cash flows, from an asset and
is
obtained by discounting those future unlevered free cash flows by a discount
rate that takes into account macro-economic assumptions and estimates of risk,
the opportunity cost of capital, expected returns and other appropriate factors.
Other financial terms utilized below are “terminal value,” which refers to the
value of all future cash flows from an asset at a particular point in time,
and
“unlevered free cash flows,” which refers to a calculation of the future free
cash flows of an asset without factoring in any debt servicing
costs.
The
management projections for the calendar years ending December 31, 2007-2012
were used to calculate unlevered free cash flows for the corresponding period.
The Advisors also calculated terminal values as of December 31, 2012 by
applying a range of perpetual free cash flow growth rates of 2.0% to 3.0% and
a
range of discount rates of 8.0% to 9.0%. The estimated unlevered free cash
flows
for the calendar years 2007 through 2012 and the terminal value as of
December 31, 2012 were then discounted to present values using a range of
discount rates of
8.0%
to
9.0% in order to derive the unlevered firm values for Alltel. In addition,
the
firm values for Alltel were adjusted to reflect the present value of tax
benefits derived from Alltel’s incremental tax deductible amortization in excess
of the GAAP amortization.
In
arriving at the estimated equity values per share of Alltel common stock, the
Advisors calculated the equity values for Alltel by deducting net debt of Alltel
from the unlevered firm values. Net debt includes short term and long term
debt
adjusted for the value of cash and short term investments. The net debt used
for
the purpose of this analysis was approximately $2.5 billion based on information
provided by Alltel.
Based
on the assumptions set forth above, this analysis implied a range for Alltel
common stock of $53.04 to $73.81 per share.
Publicly
Traded Comparable Company Analysis. The Advisors compared the financial and
operating performance of Alltel with publicly available information of selected
publicly traded companies engaged in businesses which the Advisors deemed
relevant to Alltel’s businesses. The companies chosen included publicly traded
wireless companies with nationwide or regional service offerings whose wireless
operations form a majority of their businesses. The companies
included the following:
|
|
•
|
Sprint
Nextel Corporation
|
|
|
•
|
Centennial
Communications Corp.
|
|
|
•
|
Dobson
Communications Corporation
|
|
|
•
|
United
States Cellular Corporation
|
These
companies were selected, among other reasons, because they share similar
business characteristics to Alltel. However, none of the companies selected
is
identical or directly comparable to Alltel. Accordingly, the Advisors made
judgments and assumptions concerning differences in financial and operating
characteristics of the selected companies and other factors that could affect
the public trading value of the selected companies.
For
each
of the selected companies, the Advisors calculated Firm Value divided by the
estimated EBITDA for calendar years ending December 31, 2007 and
December 31, 2008, which we refer to as Firm Value/ EBITDA
multiple.
For
this analysis, Firm Value of a particular company was calculated as market
value
of the company’s equity (as of May 18, 2007); plus the value of the
company’s indebtedness, capital leases, minority interest and preferred stock;
minus the company’s cash and cash equivalents, and marketable
securities.
The
estimates of EBITDA for each of the selected companies were based on publicly
available Wall Street research estimates.
The
following table reflects the results of the analysis:
|
Trading
Multiples Analysis
|
Range
|
Mean
|
||||||
|
Firm
Value/ EBITDA (calendar 2007)
|
|
|
7.0x-9.0x
|
|
|
|
7.8x
|
|
|
Firm
Value/ EBITDA (calendar 2008)
|
|
|
6.4x-8.2x
|
|
|
|
7.0x
|
|
The
Advisors applied a range of 7.0x to 9.0x Firm Value/ EBITDA (calendar 2007)
which, using Alltel managements’ estimates for calendar 2007 EBITDA, implied a
range for Alltel common stock of $53.04 to $70.28 per share.
The
Advisors applied a range of 6.5x to 8.0x Firm Value / EBITDA (calendar 2008)
which, using Alltel management’s estimates for calendar 2008 EBITDA, implied a
range for Alltel common stock of $51.81 to $65.45 per share.
Selected
Transactions Analysis: The Advisors also reviewed publicly
available information relating to the following selected telecom industry
transactions:
|
|
•
|
Alltel
/ Midwest Wireless;
|
|
|
•
|
Alltel
/ Western Wireless;
|
|
|
•
|
Sprint
/ Nextel;
|
|
|
•
|
Cingular
/ AT&T Wireless;
|
Specifically,
the Advisors calculated the transaction value, the transaction value divided
by
the forecasted one year forward EBITDA and two-year forward EBITDA multiples,
the equity
value divided by free cash flow multiple, and the premium paid for the equity
of
the acquired company relative to the price one-month before the transaction
was
announced.
The
following table reflects the results of the analysis:
|
Selected
Transaction Analysis
|
Range
|
Mean
|
|||||
|
|
|
|
|||||
|
Transaction
Value / 1 Year Forward EBITDA Multiple
|
7.5x-9.4x
|
8.4x
|
|||||
|
Transaction
Value / 2 Year Forward EBITDA Multiple
|
6.8x-8.5x
|
|
7.6x
|
||||
|
Equity
Value/ 2 Year Forward FCF Multiple
|
18.9x-28.9x
|
23.8x
|
|||||
|
%
Premium from One Month to Announcement
|
11.1%-105.8%
|
50.9% | |||||
In
the
opinion of the Advisors, Transaction Value / 1 Year Forward EBITDA Multiple
was
the most relevant metric for this analysis.
Based
on
this analysis, the Advisors applied a range of 7.5x to 9.5x Transaction Value
/
1 Year Forward EBITDA Multiple which, using Alltel management’s estimates for
calendar 2007 EBITDA, implied a range for Alltel common stock of $57.35 to
$74.58 per share.
Miscellaneous
The
preparation of a fairness opinion is a complex process and is not necessarily
susceptible to partial analysis or summary description. Selecting portions
of
the analyses or of the summary set forth above, without considering the analyses
as a whole, could create an incomplete view of the processes underlying the
Advisors’ analyses. In arriving at its fairness
determinations,
each of the Advisors considered the results of all of its analyses and did
not
attribute any particular weight to any factor or analysis considered by it.
Rather, each of the Advisors made its determination as to fairness on the basis
of its experience and professional judgment after considering the results of
all
of its analyses. No company or transaction used in the above analyses as a
comparison is directly comparable to Alltel, Parent or the contemplated
transaction.
The
Advisors prepared these analyses for purposes of providing their respective
opinions to Alltel's board of directors as to the fairness from a financial
point of view of the merger consideration to be paid to the holders of Alltel
common stock, par value $1.00, in the proposed merger. These analyses do not
purport to be appraisals or necessarily reflect the prices at which businesses
or securities actually may be sold. Analyses based upon forecasts of future
results are not necessarily indicative of actual future results, which may
be
significantly more or less favorable than suggested by these analyses. Because
these analyses are inherently subject to uncertainty, being based upon numerous
factors or events beyond the control of the parties or their respective
advisors, none of Alltel, Parent, J.P. Morgan Securities Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Stephens Inc. or any other person
assumes responsibility if future results are materially different from those
forecasted.
As
described above, the Advisors' opinions to Alltel's board of directors were
one
of many factors taken into consideration by the Alltel board of directors in
making its determination to approve the merger agreement. The foregoing summary
does not purport to be a complete description
of the analyses performed by each of the Advisors in connection with the
fairness opinions and is qualified in its entirety by reference to the written
opinions of the Advisors attached as Annexes B, C and D,
respectively, which are incorporated by reference into this proxy
statement.
J.P.
Morgan Securities Inc. and its affiliates, as part of their investment banking
business, are continually engaged in performing financial analyses with respect
to businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements, and other transactions,
as
well as for estate, corporate and other purposes. J.P. Morgan Securities Inc.
has acted as financial advisor to Alltel in connection with, and has
participated in certain of the negotiations leading to, the proposed merger
contemplated by the merger agreement. In the past, J.P. Morgan Securities Inc.
has provided financial advisory and financing services to Alltel and affiliates
of Parent and may continue to do so and have received, and may receive, fees
for
the rendering of such services. Specifically, in the past two years, J.P.
Morgan Securities Inc. or its affiliates acted as (i) financial advisor to
Alltel in connection with the spinoff of its wireline business as Windstream
Corp. and the merger of Windstream Corp. into Valor Communications Group Inc.
in
2006, (ii) lead arranger and bookrunner in connection with credit facilities
for, and debt securities offering by, Windstream Corp. in connection with such
spin-off and merger in 2006, (iii) dealer manager in connection with Alltel's
tender offer for certain of its outstanding debt securities in 2006, (iv)
repurchase agent in connection with Alltel's repurchase of certain outstanding
debt securities of Western Wireless in 2005, and (v) remarketing agent for
certain of Alltel's outstanding debt securities in 2005. J.P. Morgan
Securities Inc.'s commercial bank affiliate is a lender to Alltel and to certain
affiliates of Parent. In addition, although no agreements currently exist
with Parent, J.P. Morgan Securities Inc. and its affiliates may
also
arrange
and/or provide financing in connection with Parent's financing of the
Merger. In the ordinary course of their business, J.P. Morgan
Securities Inc. and its affiliates may actively trade Alltel's common stock,
par
value $1.00, and other securities of Alltel for its own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
Merrill
Lynch, Pierce, Fenner & Smith Incorporated has acted as financial advisor to
Alltel with respect to the proposed merger. Merrill Lynch, Pierce, Fenner &
Smith Incorporated and its affiliates have performed in the past, and may
perform in the future, a variety of investment banking and commercial banking
services for each of Alltel and affiliates of Parent for which they may receive
customary fees. During the past two years, Merrill Lynch, Pierce,
Fenner & Smith Incorporated has acted as financial advisor to Alltel in
connection with (i) the spinoff of its wireline business as Windstream Corp.
and
the merger of Windstream into Valor Communications Group in 2006, (ii) Alltel's
acquisition of Midwest Wireless in 2006 and (iii) Alltel's acquisition of
Western Wireless in 2005. Merrill Lynch, Pierce, Fenner & Smith
Incorporated also acted as lead remarketing agent for Alltel's equity units
remarketing in 2005 and joint lead arranger in connection with Alltel’s 2005
senior secured credit facility. In addition, although no agreements
currently exist with Parent, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and its affiliates may also arrange and/or provide financing in
connection with Parent's financing of the merger. In the ordinary
course of their business, Merrill Lynch, Pierce, Fenner & Smith Incorporated
and its affiliates may actively trade Alltel's common stock, par
value
$1.00, and other securities of Alltel for its own account and for the accounts
of customers and, accordingly, may at any time hold a long or short position
in
such securities.
Stephens
Inc. has acted as investment banker to Alltel in connection with the proposed
merger. Stephens Inc. has in the past provided to Alltel, and may in the future
provide to Alltel or Parent, investment banking services for which they may
receive customary fees. In the past, Stephens Inc. has provided financial
advisory services to Alltel, including acting as financial advisor for Alltel's
2006 acquisition of Midwest Wireless, Alltel's 2006 spin-off of its wireline
business and merger with Valor Communications and Alltel's 2006 acquisition
of
Southern Illinois Cellular, and may continue to do so and has received, and
may
receive, fees for the rendering of such services. In addition, in the
ordinary course of its business, Stephens Inc. may actively trade Alltel's
common stock, par value $1.00, and other securities of Alltel for its own
account and for the accounts of customers and, accordingly, may at any time
hold
a long or short position in such securities. Certain of Stephens
Inc.'s affiliates collectively own approximately 2.6% of the outstanding shares
of Alltel's common stock, par value $1.00, and its Chief Executive Officer
serves on the board of directors of Alltel.
The
Alltel board of directors selected the Advisors as its financial advisors
because each is an internationally recognized investment banking firm that
has
substantial experience in transactions similar to the proposed merger. Pursuant
to separate letter agreements, Alltel engaged each of the Advisors to act as
its
financial advisor in connection with the proposed merger. Pursuant to the terms
of these engagement letters, Alltel has agreed to pay each of the Advisors
(i)
an announcement fee of $7.5 million, contingent and payable in cash upon the
execution by Alltel of a definitive agreement to effect the merger and (ii)
a
success fee, if during the term of each of the engagement letters or within
12
months after notice of termination of the engagement is given, a merger or
similar transaction is consummated or an agreement regarding
a
merger
or similar transaction is entered into (which is subsequently consummated),
of
$17.5 million payable in cash upon the closing of such
transaction. In addition, Alltel has agreed to reimburse each of the
Advisors for an agreed upon amount of its reasonable and documented expenses,
including reasonable attorneys' fees and disbursements, and to indemnify each
of
the Advisors and related persons against various liabilities, including certain
liabilities under the federal securities laws. The Advisors also have
provided certain investment banking services to TPG and GSCP or their affiliates
from time to time. According to information provided by TPG and GSCP,
fees paid to the Advisors for such services in 2006 exceeded $100
million.
Alltel
does not as a matter of course make public long-term projections as to future
revenues, earnings or other results. However, we have included
certain financial projections in this proxy statement to provide our
stockholders access to certain nonpublic information provided to our board
of
directors, Parent, the Sponsors and our Advisors for purposes of considering
and
evaluating the merger. The inclusion of this information should not
be regarded as an indication that Parent, Merger Sub, our board of directors,
the Sponsors, JPMorgan, Merrill Lynch or Stephens, or any other recipient of
this information considered, or now considers, it to be a reliable prediction
of
future results.
The
projections below, which do not consider the impact of the contemplated
transaction, are based on internal financial forecasts, which in general are
prepared solely for capital budgeting and other internal management decisions
and are subjective in many respects. Furthermore, the assumptions and
estimates underlying the projected financial information set forth below are
inherently uncertain and are subject to significant business, economic and
competitive risks and uncertainties that are difficult to predict and beyond
our
control, including, among others, risks and uncertainties relating to Alltel’s
business (including Alltel’s ability to achieve strategic goals, objectives and
targets over applicable periods), industry performance, the regulatory
environment, general business and economic conditions and other factors
described under “Cautionary Statement Regarding Forward-Looking Statements”
beginning on page [ ]. As a result, actual results may
differ materially from those contained in the projected financial
information.
The
projected financial information set forth below was not prepared with a view
toward public disclosure or with a view toward complying with the rules and
regulations established by the Securities and Exchange Commission, generally
accepted accounting principles (“GAAP”) or the guidelines established by the
American Institute of Certified Public Accountants with respect to the
preparation and presentation of projected financial information. The
projections are included solely for the purpose of giving Alltel’s stockholders
access to the same non-public information that was provided to Alltel’s board of
directors, Parent, the Sponsors and our Advisors. The projected
financial information has been prepared by, and is the responsibility of,
Alltel’s management, and PricewaterhouseCoopers LLP has neither examined nor
compiled the accompanying projected financial information. Accordingly,
PricewaterhouseCoopers LLP does not express an opinion or any other form of
assurance with respect thereto. The PricewaterhouseCoopers LLP report
incorporated by reference in this proxy statement relates to Alltel’s historical
financial information. It does not extend to the projected financial
information and should not be read to do so.
The
projected financial information includes financial measures that were not
calculated in accordance with GAAP, namely EBITDA and EBITDA
Margin. EBITDA is calculated as operating income plus depreciation
and amortization expense, while EBITDA Margin is calculated as EBITDA divided
by
total service revenues. Alltel believes that these measures provide
management with an alternative method for assessing its operating results in
a
manner that enables management to evaluate operating cash flow available to
service Alltel’s debt obligations, pay its taxes and fund its capital
expenditures. In addition, Alltel believes that these measures
provide management with useful information about Alltel’s performance because
they eliminate the effects of period to period changes in taxes, costs
associated with capital investments, interest expense and other non-operating
items. These non-GAAP measures are the types of measures that
management uses in analyzing Alltel’s results of operations and in determining a
component of employee incentive compensation. However, these measures do
not provide a complete picture of Alltel’s operations. Non-GAAP
measures should not be considered a substitute for or superior to GAAP
results.
The
following table presents selected projected financial data for the fiscal years
ended December 31 of the year indicated. The projections were
prepared in April 2007 based upon assumptions management believed to be reliable
at that time. Amounts presented for 2007 represent actual results for
the three months ended March 31, 2007 and estimated results for the nine
month period from April 1, 2007 through December 31, 2007. The
projections do not take into account any circumstances, events or accounting
pronouncements occurring after the date they were prepared, nor does Alltel
intend to update or otherwise revise the projected financial information to
reflect circumstances arising since its preparation or to reflect the occurrence
of unanticipated events.
|
(Millions)
|
2007E
|
2008P
|
2009P
|
2010P
|
2011P
|
2012P
|
||||||||||||||||||
|
Service
Revenues
|
$ |
7,906
|
$ |
8,535
|
$ |
9,081
|
$ |
9,506
|
$ |
9,865
|
$ |
10,180
|
||||||||||||
|
Cash
Operating Expenses
|
4,904
|
5,368
|
5,757
|
6,022
|
6,232
|
6,406
|
||||||||||||||||||
|
EBITDA
|
$ |
3,002
|
$ |
3,167
|
$ |
3,324
|
$ |
3,484
|
$ |
3,633
|
$ |
3,774
|
||||||||||||
|
EBITDA
Margin
|
38.0% | 37.1% | 36.6% | 36.7% | 36.8% | 37.1% | ||||||||||||||||||
The
following key assumptions have been used to develop the information set forth
in
the above table. For all periods presented, the assumptions used in
the projected financial information are consistent with the accounting policies
disclosed in Alltel’s historical consolidated financial statements for periods
ending prior to April 2007, the date the projections were prepared.
Projected
Service Revenues:
Service
revenue projections for the years ended December 31, 2008 through 2012 reflected
overall annual growth rates of 8.0 percent in 2008, 6.4 percent in 2009, 4.7
percent in
2010,
3.8
percent in 2011 and 3.2 percent in 2012, respectively. Revenue
projections for the years ended December 31, 2008 through 2012 reflected the
following:
|
·
|
Projected
growth rates in gross customer additions of 5.1 percent in 2008,
3.1
percent in 2009, 1.5 percent in 2010, 0.4 percent in 2011 and (0.6)
percent in 2012. The declining growth rates in gross customer
additions were attributable to continued competition from other wireless
services providers and an overall increase in market penetration
for
wireless services, the effects of which are expected to limit future
opportunities to acquire new customers. Post-pay and total
churn rates were expected to decline slightly or remain flat each
year
during the period 2008 through 2012 helping to offset the effects
on
recurring revenue growth resulting from the projected declines in
annual
growth rates in customer additions.
|
|
·
|
Revenues
derived from data services, including text and picture messaging
and
downloadable applications were expected to increase each year during
the
period 2008 through 2012, consistent with projected wireless industry
trends and the continued demand for these
services.
|
|
·
|
Revenues
from prepaid services were also expected to grow annually due to
continued
success of both Alltel’s “U” prepaid service, which was launched during
the first quarter of 2006, and Simple Freedom, Alltel’s phone-in-the-box
prepay service that is or will be sold through large retailers, such
as
Target and Wal-Mart.
|
|
· |
Airtime
revenues were projected to decrease each year due to the continued
migration of customers to family and national rate plans. Such
rate plans, for a flat monthly service fee, provide customers with
a large
number of packaged minutes and include at no extra charge unlimited
weekend, nighttime and mobile-to-mobile
minutes.
|
Projected
Cash Operating Expenses:
Cash
operating expenses are projected to increase 9.4 percent in 2008, 7.3 percent
in
2009, 4.6 percent in 2010, 3.5 percent in 2011 and 2.8 percent in 2012,
respectively, and relatively consistent with the growth in service revenues
discussed above. Cash operating expense projections for the years
ended December 31, 2008 through 2012 reflected the following:
|
·
|
Cost
of services were projected to increase due to the acquisition/construction
of additional cell sites, increased usage and interconnection charges,
consistent with the projected growth in gross customer
additions.
|
|
·
|
Payments
to data content providers were expected to increase each year, consistent
with the growth in revenues derived from data services discussed
above.
|
|
·
|
Net
equipment cost (product sales less cost of products sold) was expected
to
increase proportionately with the increase in gross customer additions
and
the effects of selling higher-cost, more technologically-advanced
wireless
handsets and accessories. Consistent with historical trends,
the cost of the wireless equipment was projected to exceed the related
sales revenues for all periods
presented.
|
|
·
|
Selling,
general and administrative expenses were expected to increase
significantly in 2008 and 2009 due to higher commissions expense
and
advertising costs incurred to drive
|
|
the
growth in gross customer additions. Growth of selling, general
and administrative expenses in 2010 through 2012 was expected to
slow,
consistent with the slowing growth in gross customer
additions.
|
|
·
|
Employee-related
costs were projected to increase slightly during the period 2008
through
2012, reflecting Alltel’s focus on maintaining an appropriate size work
force to support customer growth and ongoing
operations.
|
Parent
estimates that the total amount of funds necessary to complete the merger is
anticipated to be approximately $26.3 billion, consisting of:
|
·
|
approximately $25.0 billion to pay Alltel’s stockholders and holders of
other equity-based interests the amounts due to them under the merger
agreement;
|
|
·
|
approximately $0.4 billion to repay and refinance certain existing
indebtedness; and
|
|
·
|
approximately $0.9 billion to pay customary fees and expenses in
connection with the merger, the financing arrangements and related
transactions.
|
Pursuant
to the merger agreement, Parent is obligated to use its reasonable best efforts
to obtain the financing described below on the terms and conditions described
in
the related financing commitment papers or terms that would not adversely impact
the ability of Parent or Merger Sub to timely consummate the transactions
contemplated by the merger agreement.
In
the
event that Parent becomes aware of any event or circumstance that makes
procurement of any portion of the debt financing unlikely to occur on the terms
and conditions contemplated in the debt commitment letter, Parent must use
its
reasonable best efforts to arrange to obtain alternative financing for such
portion from alternative sources on terms and conditions that are no less
favorable to Parent and no more adverse to the ability of Parent to consummate
the merger (in each case, as determined in the reasonable judgment of Parent)
than as contemplated by the debt commitment letter as promptly as practicable
following the occurrence of such event but no later than one day prior to the
closing date.
The
following arrangements are intended to provide the necessary financing for
the
merger:
Debt
Financing
Parent
has received a debt commitment letter, dated as of May 20, 2007, from Citigroup
Global Markets Inc. (“CGMI”), GSCP, Barclays Bank PLC and Barclays Capital
(together “Barclays”), RBS Securities Corporation and The Royal Bank of Scotland
(together “RBS” and, collectively with CGMI, GSCP and Barclays, the “Lender
Parties”), to provide the following, subject to the conditions set forth in the
debt commitment letter:
|
·
|
to
Alltel Communications Inc. (the “Borrower”), up to $15.5 billion senior
secured credit facilities consisting of a $14.0 billion senior secured
term loan credit facility expected to be drawn at the closing of
the
merger and a $1.5 billion senior secured revolving credit facility
for the
purpose of financing the merger, repaying or refinancing
certain existing indebtedness of the Company and its subsidiaries,
paying
fees and expenses incurred in connection with the merger and for
providing
ongoing working capital and other investments and for other general
corporate purposes of the surviving corporation and its
subsidiaries. The aggregate amount of the senior secured term
loans and, correlatively, the aggregate amount of the senior secured
credit facilities, may be increased by up to $750.0 million under
certain
circumstances;
|
|
·
|
to
Borrower up to $4.7 billion in senior unsecured increasing rate loans
under the senior unsecured cash pay bridge facility less the aggregate
principal amount of senior unsecured cash pay notes issued by the
Borrower
(the “Senior Unsecured Cash Pay Notes”) prior to the closing of the merger
for the purpose of financing the merger, repaying or refinancing
certain
existing indebtedness of the Company and its subsidiaries and paying
fees
and expenses incurred in connection with the merger;
and
|
|
·
|
to
Borrower up to $3.0 billion in senior unsecured increasing rate loans
under the senior unsecured PIK option bridge facility, less the aggregate
principal amount of senior unsecured PIK option notes issued by the
Borrower (the “Senior Unsecured PIK Option Notes”) prior to the
closing of the merger for the purpose of financing the merger,
repaying or refinancing certain existing indebtedness of the Company
and
its subsidiaries and paying fees and expenses incurred in connection
with
the merger.
|
The
debt
commitments expire on the end date (as described below under “The Merger
Agreement—Termination”) under the merger agreement. Nothing in the
merger agreement will require the Company or the Borrower to be an issuer or
other obligor prior to the closing of the merger for the debt contemplated
by
the debt commitments.
The
documentation governing the senior secured credit facilities and the bridge
facilities has not been finalized. In addition, the financing is
subject to the right of the Lender Parties and Parent to change the terms of
the
financing. In particular, Parent may in consultation with the joint
lead arrangers, amend the debt financing commitments to add lenders, up to
two
additional joint bookrunners and such other additional agents or co-agents
for
each of the facilities which had not executed the debt financing commitments
as
of the date of the merger agreement, each on a several
basis. Accordingly, the actual terms and amounts of such facilities
may differ from those described in this proxy statement.
Parent
has agreed to use its reasonable best efforts to obtain the debt financing
on
the terms and conditions described in the debt commitment letter or, at Parent’s
election, on other terms that would not adversely impact the ability of Parent
or Merger Sub to timely consummate the transactions contemplated by the merger
agreement. If Parent becomes aware of any event or circumstance that
makes any portion of the debt financing unlikely to be procured in the manner
and from the sources contemplated in the debt commitment letter, Parent must
use
its reasonable best efforts to obtain alternative financing for any such portion
as promptly as possible on terms that are no less favorable to Parent and no
more adverse to the ability of Parent to consummate
the
transactions contemplated by the merger agreement. If all conditions to the
closing of the merger have been satisfied but any portion of the senior secured
notes described above have not been consummated and the bridge financing is
available, then Parent will use the committed bridge financing to the extent
available as promptly as practicable but no later than the final day of the
Marketing Period (as defined below under “The Merger Agreement—Effective Time;
Marketing Period).
Although
the debt financing described in this proxy statement is not subject to due
diligence or “market out” conditions, such financing may not be considered
assured. As of the date of this proxy statement, no alternative
financing arrangements or alternative financing plans have been made in the
event that the debt financing described herein is not available as
anticipated.
Conditions
Precedent to the Debt Commitments
The
availability of the senior secured credit facilities and the bridge facilities
is subject to, among other things, consummation of the merger in accordance
with
the merger agreement (without giving effect to any consents, modifications,
amendments or express waivers thereto that are materially adverse to the lenders
under such facilities without the reasonable consent of the joint lead arrangers
thereunder), the funding of the equity financing, the absence of competing
financing of the Company or its subsidiaries, delivery of certain historical
and
pro forma financial and other information, the execution of certain guarantees
and the creation of security
interests and the execution and delivery of definitive documentation and
customary closing documents.
Senior
Secured Credit Facilities
General. The
borrower under the senior secured credit facilities at the closing of the merger
will be Alltel Communications, Inc. (in such capacity, the
“Borrower”). The senior secured credit facilities will comprise (1) a
$14.0 billion term loan facility with a term of seven and half years (which
is
expected to be drawn in full as of the closing date of the merger) and (2)
a
$1.5 billion revolving credit facility with a term of six years (which may
be
drawn in part on the closing date of the merger). The term loan facility may
be
increased by up to $750.0 million under certain circumstances. The revolving
credit facility will include sublimits for the issuance of letters of credit
and
swingline loans and will be available in U.S. dollars as well as such other
currencies as may be agreed, in each case with sublimits to be agreed
upon.
CGMI
and
GSCP have been appointed as joint lead arrangers for the senior secured credit
facilities. CGMI, GSCP, Barclays and RBS have been appointed as joint
bookrunners for the senior secured credit facilities. An affiliate of
CGMI will act as the sole administrative agent and sole collateral agent for
the
senior secured credit facilities. Barclays and RBS will act as
co-documentation agents for the senior secured credit facilities.
Interest
Rate and Fees. Loans under the senior secured credit
facilities are expected to bear interest, at the Borrower’s option, at a rate
equal to the adjusted London interbank offer rate or an alternate base rate,
in
each case plus a spread. After the Borrower’s delivery of financial
statements with respect to at least one full fiscal quarter ending after the
effective date of the
merger,
interest rates under the senior secured credit facilities shall be subject
to
change based on a senior secured leverage ratio (which means the ratio of the
Borrower’s total net senior secured debt to adjusted EBITDA), with step-downs as
agreed upon between the Borrower and the arrangers.
Guarantors. All
obligations under the senior secured credit facilities and under any interest
rate protection or other hedging and cash management arrangements entered into
with a lender or any of its affiliates will be unconditionally guaranteed
jointly and severally at the closing of the merger by the Company and each
of
the existing and subsequently acquired or organized direct and indirect, wholly
owned domestic subsidiaries of the Company (other than the Borrower and certain
subsidiaries to be mutually agreed upon) (such guaranteeing subsidiary, a
“Subsidiary Guarantor”).
Security. The
obligations of the Borrower and the guarantors under the senior secured credit
facilities and the guarantees, and under any interest rate protection or other
hedging and cash management arrangements entered into with a lender or any
of
its affiliates, will be secured, subject to permitted liens and other agreed
upon exceptions, (1) by all the capital stock of wholly owned subsidiaries
held
by the Borrower or any Subsidiary Guarantor (limited, in the case of foreign
subsidiaries, to 100% of the non-voting capital stock and 65% of the voting
capital stock of such subsidiaries) and (2) by a pledge of substantially all
present and future assets of the Borrower and each Subsidiary
Guarantor. If certain security is not provided at the closing of the
merger despite the use of commercially reasonable efforts to so provide, the
delivery
of such security will not be a condition to the availability of the senior
secured credit facilities on the closing date, but instead will be required
to
be delivered following the closing date pursuant to arrangements to be agreed
upon.
Other
Terms. The senior secured credit facilities will contain
customary representations and warranties and customary affirmative and negative
covenants, including, among other things, restrictions on indebtedness,
investments, sales of assets, mergers and consolidations, prepayments of
subordinated indebtedness, liens and dividends and other
distributions. The senior secured credit facilities will also include
customary events of default, including a change of control to be
defined.
Issuing
of Debt Securities and/or Bridge Facilities
The
Borrower is expected to issue up to $4.7 billion aggregate principal amount
of
senior unsecured cash pay notes and up to $3.0 billion senior unsecured PIK
option notes. The notes will not be registered under the Securities Act
and may not be offered in the United States absent registration or an applicable
exemption from registration requirements.
If
the
offering of notes by the Borrower is not completed on or prior to the closing
of
the merger, the Lender Parties have committed to provide up to $7.7 billion
in
loans comprising a senior unsecured increasing rate cash pay bridge facility
of
up to $4.7 billion and a senior unsecured PIK option bridge facility of up
to
$3.0 billion. The Borrower would be the borrower under each bridge
facility. If the bridge facilities are funded, the Borrower is
expected to attempt to issue debt securities to refinance the bridge facilities,
in whole or in part, as soon as
practicable
following the closing date of the merger, subject to the restrictions on
offering and sale described above.
CGMI
and
GSCP have been appointed as joint lead arrangers for each of the bridge
facilities. CGMI, GSCP, Barclays and RBS have been appointed as joint
bookrunners for each of the bridge facilities. An affiliate of CGMI
will act as the sole administrative agent and sole collateral agent for each
of
the bridge facilities. Barclays and RBS will act as co-documentation
agents for each of the bridge facilities.
Interest
Rate. Initially, bridge loans under each of the bridge
facilities are expected to bear interest at a rate equal to the adjusted London
interbank offer rate plus a spread that will increase over time. Interest is
payable at the end of each interest period and at least quarterly in cash,
except that, at the option of the Borrower made each quarter, interest on the
principal amount of the bridge loans under the senior unsecured PIK option
bridge facility may be made in cash, in kind or half in cash and half in kind.
Any interest rate with respect to any amount elected to be paid in kind will
be
the rate otherwise applicable plus an additional premium. On the
first year anniversary of the closing of the merger, the bridge loans will,
to
the extent not repaid, convert into senior unsecured term
loans. After conversion to senior unsecured term loans, the
applicable Lender Party may choose to exchange such loans for senior unsecured
exchange notes, which will be entitled to registration rights. The
bridge loans and unsecured term loans are subject to a maximum rate of interest,
with step-downs as agreed upon between the Borrower and the arrangers if the
aggregate amount of commitments under the debt commitment letter is reduced
at
the option of the Borrower by certain agreed amounts within three months
following the
date
of the debt commitment letter. Any senior unsecured term loans or
exchange notes in respect of the senior unsecured cash pay bridge facility
will
mature on the eighth anniversary of the closing date of the merger and any
senior unsecured term loans or exchange notes in respect of the senior unsecured
PIK option bridge facility will mature on the tenth anniversary of the closing
date of the merger.
Guarantors. The
bridge facilities will be unconditionally guaranteed jointly and severally
at
the closing of the merger by the Subsidiary Guarantors that guarantee the senior
secured credit facilities.
Other
Terms. The bridge facilities will contain customary
representations and warranties and customary affirmative and negative covenants,
including, among other things, restrictions on indebtedness, investments, sales
of assets, mergers and consolidations, prepayments of subordinated indebtedness,
liens and dividends and other distributions. The bridge facilities
will also include customary events of default, including a change of control
to
be defined.
Equity
Financing
The
Sponsors have collectively agreed to cause up to $4.6 billion of cash to be
contributed to Parent, which will constitute the equity portion of the merger
financing. Subject to certain conditions, each of the Sponsors may
assign all or a portion of its equity commitment obligation to one or more
of
its affiliates or to one or more private equity funds sponsored or
managed
by its affiliates, in which case it will be relieved of a corresponding portion
of its equity commitment.
The
commitment of each of the Sponsors pursuant to the equity commitment letters
is
as follows:
|
TPG
Partners V, L.P.
|
$2,750,000,000
|
|
GS
Capital Partners VI Fund, L.P.
|
$1,850,000,000
|
As
of the
date of this proxy statement, each of CGMI and RBS Securities Corporation (“RBS
Securities” and, collectively with CGMI in this context, the “Bridge Financing
Sources”) entered into a letter agreement in favor of TPG Partners V, L.P. in
which each of the Bridge Financing Sources has committed, subject to the terms
and conditions set forth therein, to purchase at the effective time of the
merger securities of Parent, directly or through an entity established by TPG
or
its affiliates, for an aggregate cash purchase price of $450
million. The Sponsors and the Bridge Financing Sources intend to
further assign their commitments in the future.
The
equity commitments described above are generally subject to the satisfaction
or
waiver of all of the conditions to the obligations of Parent and Merger Sub
to
effect the closing of the merger under the merger agreement in accordance with
its terms.
The
equity commitment letter provided by each of the Sponsors will
terminate:
|
·
|
upon
the occurrence of the end date;
|
|
·
|
upon
the valid termination of the merger
agreement;
|
|
·
|
if
Alltel or any of its affiliates asserts any claim under any limited
guarantee of the Sponsors (described
below);
|
|
·
|
if
Alltel or any of its affiliates asserts any claim against either
of the
Sponsors or any of their affiliates in connection with the merger
agreement or any of the transactions contemplated by the equity commitment
letters or the merger agreement; or
|
|
·
|
if
the other equity commitment letter
terminates.
|
Guarantee;
Remedies
In
connection with the merger agreement, TPG Partners V, L.P. and GS Capital
Partners VI Fund, L.P. (which we refer to in this context as guarantors) each
provided Alltel a guarantee of certain payment obligations of Parent, including
the parent termination fee described below, up to a maximum amount equal for
each of the guarantors to $312.5 million (plus, if applicable, accrued interest
on an unpaid termination fee due by Parent). The guarantees may be
assigned to one or more affiliates of each of the guarantors or to one or more
private equity funds in connection with any assignment of the equity commitment;
however, no such assignment relieves any of the guarantors of their obligations
to Alltel under the guarantees. The guarantees will remain in full
force and effect until the earliest of (1) the effective time of the merger
(but
only
if
Parent’s obligation to deposit the merger consideration with the paying agent
has been performed in full), (2) termination of the merger agreement in
accordance with its terms by mutual consent of Parent, Merger Sub and Alltel
or
under circumstances set forth in the merger agreement in which Parent or Merger
Sub would not be obligated to pay the termination fee payable by Parent or
otherwise make payments pursuant to the merger agreement and (3) 240 days after
any termination of the merger agreement pursuant to which Parent or Merger
Sub
would be obligated to make termination payments, provided that the guarantee
will not terminate as to any claim for payments for which notice has been given
to the respective guarantor prior to such 240th day until
final
resolution of such claim. However, if we bring certain legal claims
relating to certain provisions of the guarantee, then (1) the guarantor’s
obligations under the guarantee may terminate and (2) the guarantor may be
entitled to recover certain payments made to Alltel under any of the
guarantees.
We
cannot
seek specific performance to require Parent or Merger Sub to complete the
merger, and our exclusive remedy for the failure of Parent and Merger Sub to
complete the merger is a termination fee of $625 million payable to us under
the
circumstances described under “The Merger Agreement—Fees and Expenses” beginning
on page [ ]. The merger agreement also provides that in no
event can we seek to recover in excess of $625 million for a breach of the
merger agreement by Parent or Merger Sub.
In
considering the recommendation
of the Alltel board of directors that you vote to approve the merger agreement,
you should be aware that some of Alltel’s executive officers and directors have
interests in the merger and have arrangements that may be considered to be
different
from, or in addition to, those of Alltel’s stockholders
generally. The Alltel board of directors was aware of these interests
and considered them, among other matters, in reaching its decisions to approve
the merger agreement and to recommend that you vote in favor of approving the
merger agreement.
Equity
Compensation Awards.
The
merger agreement provides that, upon completion of the merger, each Alltel
stock
option that is outstanding immediately prior to closing will be canceled, with
the holder of each option becoming entitled to receive, for each share subject
to the option, an amount in cash equal to the excess, if any, of $71.50 over
the
exercise price per share of stock subject to the option. In addition,
the merger agreement provides that each Alltel restricted share outstanding
immediately before closing will vest and be converted at closing into the right
to receive $71.50.
Change
of Control Arrangements
Alltel
is
party to change of control employment agreements with each of its executive
officers, including each of Messrs. Ford, Beebe, Fox and Massey and Ms. Gasaway
(the “Named Executive Officers”). Each agreement provides generally
that the executive’s terms and conditions of employment, including position,
location, compensation and benefits, will not be adversely changed during the
three-year period after a change of control such as consummation of the
merger. If the executive’s employment is terminated by us other than
for cause, death or
disability
or if the executive resigns for “good reason,” as defined in the agreements,
during this three-year period or upon certain terminations in connection with
or
in anticipation of a change of control or, in the case of the Named Executive
Officers, if the executive resigns for any reason during the 90-day period
commencing on the first anniversary of a change of control, the executive will
be generally entitled to receive:
|
·
|
an
annual incentive bonus for the year in which the termination of employment
occurs, pro-rated through the date of
termination,
|
|
·
|
a
long-term incentive bonus for each performance period outstanding
in which
the termination of employment occurs, pro-rated through the date
of
termination,
|
|
·
|
three
times the executive’s annual base salary, annual incentive bonus and
long-term incentive bonus,
|
|
·
|
three
years of continued welfare and fringe
benefits,
|
|
·
|
a
lump sum payment equal to the actuarial value of the additional benefits
under Alltel’s qualified and supplemental defined benefit and defined
contribution retirement plans the executive would have received had
he
remained employed for three years after the date of termination,
and
|
|
·
|
outplacement
services.
|
The
annual incentive bonus components of this severance amount will be based on
the
annualized maximum short-term bonus payable to the executive for the fiscal
year
in which the change
of
control occurs or, if no short-term bonus(es) are established for that year,
the
fiscal year immediately preceding the fiscal year in which the change of control
occurs or, if higher, the annualized amount of the pre-established maximum
short-term bonus(es) that may be earned by the executive under Alltel’s
short-term bonus plans for the fiscal year in which the termination of
employment occurs. The long-term incentive bonus components of this severance
amount will be based on the pre-established maximum bonus that may be earned
by
the executive for the performance period commencing immediately prior to the
change of control or, if higher, the pre-established maximum bonus that may
be
earned by the executive under the long-term incentive plan for the performance
period commencing immediately prior to the termination of
employment. Each change-of-control employment agreement also provides
that if any payments or benefits that the executive receives are subject to
the
excise tax imposed under Section 4999 of the Internal Revenue Code of 1986,
as
amended (the “Code”), the executive will be entitled to an additional payment so
that the executive is placed in the same after-tax position as if no excise
tax
had been imposed.
Under
an
employment agreement with Mr. Joe Ford, Mr. Ford will receive a lump sum
$750,000 payment upon closing of the merger.
Supplemental
Executive Retirement Plan
Alltel
maintains a supplemental executive retirement plan, which we refer to as the
SERP, under which each of the Named Executive Officers of Alltel are eligible
for retirement benefits. If a participant’s employment terminates
under circumstances giving rise to severance benefits under the change of
control employment agreement described above, the participant will receive
the
following benefits under the SERP: (1) the benefit under the SERP
will be increased to (a) the normal retirement benefit formula (60% of SERP
eligible compensation), if the participant was entitled to an early retirement
benefit before termination of employment, (b) the early retirement benefit
formula (45% of SERP-eligible compensation increased ratably for years of
service after early retirement eligibility, up to a maximum of 60%), if the
participant was not entitled to any benefit under the SERP before termination
of
employment or (c) the greater of the early retirement benefit formula and the
special early retirement benefit formula (40% of SERP-eligible compensation
increased ratably for years of service and age after special early retirement
benefit eligibility, up to a maximum of 60%), if the participant was entitled
to
a special early retirement benefit before termination of employment; (2) the
“compensation” used to determine these benefits under the SERP will include
amounts payable under all of Alltel’s incentive compensation plans at the
maximum payout levels; and (3) to the extent not previously vested, the
participant would become fully vested in the post−retirement medical benefits
and the related tax gross−up.
Deferred
Compensation Plans
Alltel
maintains deferred
compensation plans for its directors and executive officers under which, unless
otherwise elected prior to December 31, 2007, all account balances will be
distributed upon a change of control, such as consummation of the
merger.
Indemnification
and Insurance
Parent
and Merger Sub agreed that all rights to exculpation, indemnification and
advancement of expenses for acts or omissions occurring at or prior to the
completion of the merger, whenever asserted or claimed, now existing in favor
of
the current or former directors, officers or employees, as the case may be,
of
Alltel or its subsidiaries as provided in their respective charters or by-laws
or other organizational documents or in any agreement as in effect on the date
of the merger agreement will survive the merger and continue in full force
and
effect. Parent will cause the surviving corporation to maintain in
effect any and all exculpation, indemnification and advancement of expenses
provisions of Alltel’s and any of its subsidiaries’ charters and by-laws or
similar organizational documents or in any indemnification agreements of Alltel
or its subsidiaries with any of their respective current or former directors,
officers or employees, in each case in effect as of the date of the merger
agreement, and will not, for a period of six years from the date of the merger
agreement, amend, repeal or otherwise modify any such provisions in any manner
that would adversely affect the rights thereunder of any individuals who at
the
effective time of the merger were current or former directors, officers or
employees of Alltel or any of its subsidiaries and all rights to indemnification
thereunder in respect of any action pending or asserted or any claim made within
such period will continue until the disposition of such action or resolution
of
such claim.
From
and
after the completion of the merger, Alltel will, to the fullest extent permitted
under applicable law, indemnify and hold harmless (and advance funds in respect
of each of the foregoing) each current and former director, officer or employee
of Alltel or any of its subsidiaries against any costs or expenses (including
advancing reasonable attorneys’ fees and expenses), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement in connection with
any actual or threatened action arising out of, relating to or in connection
with any action or omission occurring or alleged to have occurred whether before
or at the completion of the merger in connection with that person’s serving as
an officer, director, employee or other fiduciary of Alltel or any of its
Subsidiaries, or of any other entity if such service was at the request or
for
the benefit of Alltel.
For
a
period of six years from the completion of the merger, Parent will either cause
to be maintained in effect the current policies of directors’ and officers’
liability insurance and fiduciary liability insurance maintained by Alltel
and
its subsidiaries or cause to be provided substitute policies or purchase, or
cause Alltel to purchase, a “tail policy,” in either case of at least the same
coverage and amounts and containing terms and conditions that are not less
advantageous than such policy with respect to matters arising on or before
the
effective time of the merger. However, Parent and the surviving
corporation will not be required to pay for these insurance policies in respect
of any one policy year annual premiums in excess of a specified dollar amount
prior to the date of the merger agreement, but in such case will purchase
policies with the greatest coverage available for a cost not exceeding such
amount. If the surviving corporation purchases a “tail policy” and
the annualized cost of coverage for the six-year period exceeds a specified
dollar amount, the surviving corporation will purchase a policy with the
greatest coverage available for a cost not exceeding such
amount.
Employment
Arrangements with the Surviving Corporation
We
understand that Parent currently intends to have discussions with members of
our
management team regarding their employment by the Company after the
merger, possibly including
the opportunity to serve on the board of directors of the post-closing
company, and that in connection with their continued employment these
members may be offered the opportunity to exchange some portion of their current
Alltel shares, stock options and other equity interests, instead
of receiving a cash payment for them, for equity in the post-closing
company. Further, Parent has informed us that it currently intends to
establish equity-based incentive compensation plans for management of the
surviving corporation, a portion of which may be allocated to our executive
officers. It is anticipated that equity awards granted under these
incentive compensation plans would generally vest over a number of years of
continued employment and would entitle management to share in the future
appreciation of the surviving corporation.
Although
certain members of our current management team may enter into new arrangements
with Parent or its affiliates regarding employment (and severance arrangements)
with, and the right to purchase or participate in the equity of, the
post-closing company, there can be no assurance that any parties will reach
an
agreement. Scott Ford, Alltel's Chief Executive Officer, has
expressed a willingness to remain in his current role after the closing of
the
merger. However, these matters are subject to further
discussion and negotiation and, as of the date of this document, no terms or
conditions have been finalized and no agreements relating to these matters
have
been entered into.
Material
U.S. Federal Income Tax Consequences of the
Merger to Our Stockholders
The
following discussion is a summary of the anticipated material U.S. federal
income tax consequences of the merger to “U.S. holders” (as defined below) of
Alltel stock whose shares are converted into the right to receive cash in the
merger. This summary is based on the provisions of the Code, U.S.
Treasury regulations promulgated thereunder, judicial authorities and
administrative rulings, all as in effect as of the date of the proxy statement
and all of which are subject to change, possibly with retroactive
effect.
For
purposes of this discussion, the term “U.S. holder” means a beneficial owner of
shares of our stock that is, for U.S. federal income tax purposes:
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an
individual who is a citizen or resident of the United
States;
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a
corporation (including any entity treated as a corporation for U.S.
federal income tax purposes) created or organized under the laws
of the
United States, any state thereof, or the District of
Columbia;
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a
trust that (i) is subject to the supervision of a court within the
United
States and the control of one or more U.S. persons or (ii) has a
valid
election in effect under applicable U.S. Treasury regulations to
be
treated as a U.S. person; or
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an
estate that is subject to U.S. federal income tax on its income regardless
of its source.
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Holders
of our stock who are not U.S. holders may be subject to different tax
consequences than those described below and are urged to consult their tax
advisors regarding their tax treatment under U.S. and non-U.S. tax
laws.
The
following does not purport to consider all aspects of U.S. federal income
taxation of the merger that might be relevant to U.S. holders in light of their
particular circumstances, or those U.S. holders that may be subject to special
rules (for example, dealers in securities or currencies, brokers, banks,
financial institutions, insurance companies, mutual funds, tax-exempt
organizations, stockholders subject to the alternative minimum tax, partnerships
or other flow-through entities and their partners or members), persons whose
functional currency is not the U.S. dollar, stockholders who hold our stock
as
part of a hedge, straddle, constructive sale or conversion transaction or other
integrated investment, stockholders who acquired our stock pursuant to the
exercise of an employee stock option or otherwise as compensation, or U.S.
holders who exercise statutory appraisal rights, if available), nor does it
address the U.S. federal income tax consequences to U.S. holders that do not
hold our stock as “capital assets” within the meaning of Section 1221 of the
Code (generally, property held for investment). In addition, the
discussion does not address any aspect of foreign, state, local, estate, gift
or
other tax law that may be applicable to a U.S. holder.
The
tax
consequences to stockholders that hold our stock through a partnership or other
pass-through entity, generally, will depend on the status of the stockholder
and
the activities of the partnership. Partners in a partnership or other
pass-through entity holding our stock should consult their tax
advisors.
This
summary of certain material U.S. federal income tax consequences is for general
information only and is not tax advice. Holders are urged to consult
their tax advisors with respect to the application of U.S. federal income tax
laws to their particular situations as well as any tax consequences arising
under the U.S. federal estate or gift tax rules, or under the laws of any state,
local, foreign or other taxing jurisdiction or under any applicable tax
treaty.
Exchange
of Shares of Stock for Cash Pursuant to the Merger
Agreement. The receipt of cash in exchange for shares of our
stock pursuant to the merger agreement in the merger will be a taxable
transaction for U.S. federal income tax purposes. In general, a U.S.
holder whose shares of stock are converted into the right to receive cash in
the
merger will recognize capital gain or loss for U.S. federal income tax purposes
in an amount equal to the difference, if any, between the amount of cash
received with respect to such shares and the stockholder’s adjusted tax basis in
such shares. Gain or loss will be determined separately for each
block of shares (i.e., shares acquired at the same cost in a single
transaction) surrendered for cash pursuant to the merger. Such gain
or loss will be long-term capital gain or loss provided that a stockholder’s
holding period for such shares is more than 12 months at the time of the
consummation of the merger. Long-term capital gains of individuals
are generally eligible for reduced rates of taxation. The
deductibility of capital losses is subject to certain limitations.
Backup
Withholding and Information Reporting. A stockholder may be
subject to backup withholding at the applicable rate (currently 28 percent)
on
the cash payments to which such stockholder is entitled pursuant to the merger,
unless the stockholder properly establishes an exemption or provides a taxpayer
identification number and otherwise complies with the backup withholding
rules. Each stockholder should complete and sign the substitute
Internal Revenue Service (“IRS”) Form W-9 included as part of the letter of
transmittal and return it to the paying agent in accordance with the procedures
described below under “—Exchange and Payment Procedures”
beginning on page [ ], in order to provide the information and
certification necessary to avoid backup withholding, unless an applicable
exemption applies and is established in a manner satisfactory to the paying
agent. Backup withholding is not an additional tax. Any
amounts withheld under the backup withholding rules generally will be allowable
as a refund or a credit against a stockholder’s U.S. federal income tax
liability provided the required information is timely furnished to the
IRS.
Under
the
provisions of the HSR Act, the merger may not be completed until the expiration
of a 30-day waiting period following the filing of notification and report
forms
with the Antitrust Division and the FTC, unless a request for additional
information and documentary material is received from the Antitrust Division
or
the FTC or unless early termination of the waiting period is
granted. Effective June 5, 2007 Alltel and Parent filed their
respective notification and report forms with the FTC and the Antitrust
Division.
At
any
time before or after the merger, the Antitrust Division, the FTC, or a state
attorney general could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin
the
merger or seeking divestiture of substantial assets
of
Alltel, Parent, or their subsidiaries and affiliates. Private parties
may also bring legal actions under the antitrust laws under certain
circumstances.
In
order
to complete the merger, we and Parent must also obtain approvals from the
Federal Communications Commission (the “FCC”). We, our relevant
subsidiaries and Parent filed the required applications with the FCC on June
4
and June 6, 2007, respectively, seeking approval of the transfer of control
to Parent of the FCC licenses and authorizations held by us.
There
can
be no assurance that a challenge to the merger on antitrust grounds or in
connection with FCC approval or of any federal, state or foreign governmental
entity regulating competition and telecommunications businesses, will not be
made or, if a challenge is made, of the result of such challenge. We
and Parent are required to take certain actions as further described under
“The Merger Agreement—Agreement to Take Further Action and to Use
Reasonable Best Efforts” beginning on page [ ].
Delisting
and Deregistration of Our Common Stock and Series C
Preferred Stock
If
the
merger is completed, our common stock and the Series C Preferred will be
delisted from the NYSE and deregistered under the Exchange Act and we will
no
longer file periodic reports with the SEC on account of our common stock and
the
Series C Preferred.
Subsequent
to the announcement of the merger agreement, Alltel, its directors, and in
certain cases the Sponsors (or entities purported to be affiliates thereof),
were named in sixteen putative class actions alleging claims for breach of
fiduciary duty and aiding and abetting such alleged breaches arising out of
the
proposed sale of Alltel. Eight of the complaints were filed in the Circuit
Court of Pulaski County, Arkansas: Hockstein v. Alltel
Corporation, et al., Case No. CV07-6406; Suprina v. Alltel
Corporation, et al., Case No. CV07-6526; Pirelli Armstrong Tire
Corporation
Retiree Medical Benefits Trust v. Alltel Corporation, et al., Case
No. CV07-6573; Perrin v. Alltel Corporation, et al., Case No.
CV07-6631; Plumbers & Pipefitters Local 572 Pension Fund v.
Alltel Corporation, et al., Case No. CV07-6734; Young v.
Alltel Corporation, et al., Case No. CV07-6751; Dalton v.
Alltel Corporation,
et al., Case No. CV07-6976; and Houston v.
Alltel Corporation, et al., Case No.
CV07-7088 (collectively, the “Arkansas Actions”). The
remaining eight complaints were filed in the Delaware Court of
Chancery: Engel v. Alltel Corporation, et al., No.
CA2970-CC; Schwartz v. Alltel Corporation, et al., No.
CA2972-CC; Cottrell v. Alltel Corporation, et al., No.
CA2975-CC; Director v. Alltel Corporation, et al., No.
CA2977-CC; Seinfeld v. Alltel Corporation, et al., No.
CA2979-CC; Laborers Local 235 Pension Fund v. Alltel Corporation,
et al., No. CA2987-CC; Philadelphia Marine Trade
Association/International Longshoremen’s Association Pension Fund v.
Alltel Corporation, et al., No. CA2992-CC; and City of Tallahassee
Pension Plan v. Alltel Corporation, et al., No.
CA3004-CC (collectively, the “Delaware Actions”). By an Order of the
Delaware Court of Chancery, the Delaware Actions, except for the City of
Tallahassee Pension Plan action, have been consolidated in an action styled
In re Alltel Corporation Shareholders Litigation, No.
CA2975-CC. The complaints in the Arkansas and Delaware Actions allege
that the directors of Alltel breached their fiduciary duties by failing to
maximize shareholder value in connection with the proposed transaction with
the
Sponsors, and (in certain cases) that the
Sponsors
(or entities purported to be affiliates thereof) aided and abetted those alleged
breaches. Among other things, one or more of the Actions alleges that
(1) Alltel conducted an inadequate process for extracting maximum value for
Alltel shareholders, including by prematurely terminating an auction process
by
entering into a merger agreement with Parent on May 20, 2007, despite previously
setting June 6, 2007, as the outside date for submitting bids; (2) the Alltel
directors are in possession of material non-public information about Alltel;
(3)
the Alltel directors have material conflicts of interest and are acting to
better their own interests at the expense of Alltel’s shareholders, including
through the vesting of certain options for Scott Ford, the retention of an
equity interest in Alltel, after the merger, by certain of Alltel’s directors
and executive officers, and the employment of certain Alltel executives,
including Scott Ford, by Alltel (or its successors) after the merger is
completed; (4) taking into account the current value of Alltel stock, the
strength of its business, revenues, cash flow and earnings power, the intrinsic
value of Alltel’s equity, the consideration offered in connection with the
proposed merger is inadequate; (5) the merger agreement contained provisions
that will deter higher bids, including a $625 million termination fee payable
to
the Sponsors and restrictions on Alltel’s ability to solicit higher bids; and
(6) that the Advisors have conflicts, including because of their relationships
with the Sponsors. The complaints seek, among other things, class
action status, a court order enjoining Alltel and its directors from
consummating the merger, and the payment of attorneys’ fees and
expenses. Alltel believes that these lawsuits are without merit and
intends to defend them vigorously.
The
summary of the material provisions of the merger agreement below and elsewhere
in this proxy statement is qualified in its entirety by reference to the merger
agreement, a copy of which is attached to this proxy statement as Annex A and
which we incorporate by reference into this document. This summary
does not purport to be complete and may not contain all of the information
about
the merger agreement that is important to you. We encourage you to
read carefully the merger agreement in its entirety.
The
description of the merger agreement in this proxy statement has been included
to
provide you with information regarding its terms. It is not intended
to provide any factual information about the Company. Such
information can be found elsewhere in this proxy statement and in the other
public filings the Company makes with the Securities and Exchange Commission,
which are available without charge at www.sec.gov.
The
merger agreement provides for the merger of Merger Sub with and into Alltel
upon
the terms, and subject to the conditions, of the merger agreement, upon which
Merger Sub will cease to exist. As the surviving corporation, Alltel
will continue to exist following the merger. Upon consummation of the
merger, the directors of Merger Sub will be the initial directors of the
surviving corporation and the officers of Alltel will be the initial officers
of
the surviving corporation.
Effective
Time; Marketing Period
The
effective time of the merger will occur at the time that we file the certificate
of merger with the Secretary of State of the State of Delaware on the closing
date of the merger (or such later time as Parent and Alltel may agree and as
provided in the certificate of merger). The closing date will occur
on the date following the satisfaction or waiver of the conditions described
under “Conditions to the Merger” beginning on page [ ] that is the
earlier to occur of a date specified by Parent on at least three business days’
notice to us and the final day of the Marketing Period (as defined below),
or
such other date as Alltel and Parent may agree.
For
purposes of the merger agreement, “Marketing Period” means the first period of
20 consecutive calendar days throughout and at the end of which (i) Parent
has
received certain required, current financial information (with valid audit
opinions) from us and (ii) the mutual closing conditions have all been satisfied
and nothing has occurred and no condition exists that would cause any of the
conditions to the obligations of Parent and Merger Sub (other than delivery
of
an officer’s certificate by us) to fail to be satisfied assuming the closing
date was to be scheduled at any time during such 20 calendar day
period. Furthermore the Marketing Period must occur either entirely
before or entirely after each of the periods (1) from and including
August 17, 2007 through and including September 3, 2007, (2) from and
including November 21, 2007 through and including November 25, 2007
and (3) from and including December 21, 2007 through and including
January 1, 2008. The Marketing Period shall not be deemed to
have commenced if, prior to the completion of the Marketing Period:
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our
independent auditor shall have withdrawn its audit opinion, until
such
time as a new unqualified audit opinion is
issued;
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we
shall have publicly announced any intention to restate our financial
statements, until any restatement has been completed;
or
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we
shall fail to file certain reports with the SEC when required, until
such
reports have been filed.
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Finally,
if the required financial statements available to Parent on the first day of
any
such 20-consecutive-day period would not be sufficiently current on any day
during such 20-consecutive-day period to permit (1) a registration
statement using such financial statements to be declared effective by the SEC
on
the last day of the 20-consecutive-day period and (2) our independent
auditor to issue a customary comfort letter on the last day of the
20-consecutive-day period, then a new Marketing Period shall commence upon
Parent receiving updated required financial statements.
The
purpose of the Marketing Period is to provide Parent a reasonable and
appropriate period of time during which it can market and place the permanent
debt financing contemplated by the debt financing commitment for the purposes
of
financing the merger. To the extent Parent determines it does not
need the benefit of the Marketing Period to market and place the debt financing,
it may, in its sole discretion, determine to waive the Marketing Period and
close the merger prior to the expiration of the Marketing Period if all closing
conditions are otherwise satisfied or waived.
Each
share of our common stock issued and outstanding immediately prior to the
effective time of the merger will be converted into the right to receive $71.50
in cash, without interest, and each share of the Series C Preferred and Series
D
Preferred will be converted into the right to receive $523.22 and $481.37,
respectively, in cash, without interest, other than, with respect to each class
of stock, the following shares:
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shares
held by any direct or indirect wholly owned subsidiary of Alltel
(which
will remain outstanding);
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shares
owned, directly or indirectly, by Parent or Merger Sub, or held by
Alltel
(which will be cancelled without any
consideration);
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any
shares the holders of which have perfected their appraisal rights
in
accordance with Delaware law.
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After
the
merger is effective, each holder of any shares of our common stock, the Series
C
Preferred or Series D Preferred (other than the excepted shares described above)
will no longer have any rights with respect to the shares, except for the right
to receive the merger consideration.
Stock
Options. Immediately prior to the
effective time of the merger, except as separately agreed by Parent and a holder
thereof, all outstanding options to acquire our common stock, whether or not
then vested or exercisable, will become fully vested and, subject to the terms
of the Company stock option plans, be converted into the right to receive,
on or
as soon as reasonably practicable after the effective time of the merger, but
in
any event within five business days thereafter, a cash payment equal to the
number of shares of our common stock underlying the options multiplied by the
amount (if any) by which $71.50 exceeds the exercise price, without interest
and
less any applicable withholding taxes.
Restricted
Shares. Immediately prior to the effective time of the
merger, except as separately agreed by Parent and a holder thereof, each
outstanding share of restricted stock and any accrued stock dividends will
vest
in full and each outstanding restricted share will be converted into the right
to receive $71.50 in cash, less any required withholding taxes. The
surviving corporation will pay all cash dividends accrued on such shares of
restricted stock to the holders thereof within five business days after the
effective time of the merger. The cash payment for the shares of
restricted stock that vest will be paid in accordance with the exchange and
payment procedures applicable to all outstanding shares as described under
“—Exchange and Payment Procedures” beginning on page
[ ].
Employee
Stock Purchase Plan. No later than
seven days prior to the effective time of the merger, each participant in the
Company’s Employee Stock Purchase Plan (the “ESPP”) will be entitled to apply
the payroll deductions of such participant accumulated as of the final date
for
the then-current period to the purchase of whole shares of Alltel common stock
in accordance with the terms of the ESPP, which number of shares will be
canceled and be converted into the right to receive the common stock merger
consideration.
At
or
immediately prior to the effective time of the merger, Parent will deposit,
or
will cause to be deposited, with a U.S. bank or trust company chosen by Parent
and approved in advance by us (our approval not to be unreasonably withheld),
sufficient cash to pay the merger consideration to each holder of shares of
Alltel common stock. As soon as reasonably practicable after the
effective time of the merger and in any event not later than five business
days
following the effective time, this bank or trust company, which we refer to
as
the paying agent, will mail a letter of transmittal and instructions to you
and
the other stockholders. The letter of transmittal and instructions
will tell you how to surrender your common stock certificates or shares you
may
hold represented by book entry in exchange for the merger
consideration.
You
should not return your stock certificates with the enclosed proxy card, and
you
should not forward your stock certificates to the paying agent without a letter
of transmittal.
You
will
not be entitled to receive the merger consideration until you surrender your
stock certificate or certificates (or book-entry shares) to the paying agent,
together with a duly
completed
and executed letter of transmittal and any other documents as may be required
by
the letter of transmittal. The merger consideration may be paid to a
person other than the person in whose name the corresponding certificate is
registered if the certificate is properly endorsed or is otherwise in the proper
form for transfer. In addition, the person who surrenders such
certificate must either pay any transfer or other applicable taxes or establish
to the satisfaction of the surviving corporation that such taxes have been
paid
or are not applicable.
No
interest will be paid or will accrue on the cash payable upon surrender of
the
certificates (or book-entry shares). The paying agent will be
entitled to deduct, withhold, and pay to the appropriate taxing authorities,
any
applicable taxes from the merger consideration. Any sum that is
withheld and paid to a taxing authority by the paying agent will be deemed
to
have been paid to the person with regard to whom it is withheld.
At
the
effective time of the merger, our stock transfer books will be closed and there
will be no further registration of transfers on our stock transfer books of
shares of Alltel stock that were outstanding immediately prior to the effective
time of the merger. If, after the effective time of the merger,
certificates are presented to the surviving corporation for transfer, they
will
be cancelled and exchanged for the applicable merger consideration.
Any
portion of the merger consideration deposited with the paying agent that remains
undistributed to former holders of our stock for one year after the effective
time of the merger will be delivered, upon demand, to the surviving
corporation. Former holders of our stock who have not complied with
the above-described exchange and payment procedures will thereafter only look
to
the surviving corporation for payment of the applicable merger
consideration. None of Alltel, Parent, Merger Sub, the surviving
corporation, the paying agent or any other person will be liable to any former
holders of Alltel stock for any cash delivered to a public official pursuant
to
any applicable abandoned property, escheat or similar laws.
If
you
have lost a certificate, or if it has been stolen or destroyed, then before
you
will be entitled to receive the merger consideration, you will have to make
an
affidavit, in form and substance reasonably acceptable to Parent, of the loss,
theft or destruction, and if required by Parent or the paying agent, post an
indemnity agreement or, at the election of Parent or the paying agent, a bond
in
a customary amount sufficient to protect it or the surviving corporation against
any claim that may be made against it with respect to that certificate.
These procedures will be described in the letter of transmittal that you will
receive, which you should read carefully in its entirety.
All
cash
paid upon surrender of certificates in accordance with the above terms will
be
deemed to have been paid in full satisfaction of all rights pertaining to the
shares of our stock formerly represented by such certificates.
The
merger agreement contains representations and warranties by each of the parties
to the merger agreement made to each other as of a specific
date. These representations and warranties (and the assertions
embodied therein) have been made for purposes of allocating risk to one of
the
parties if those statements prove to be inaccurate rather than for the purpose
of
establishing
matters as facts. The representations and warranties have been
qualified by certain disclosures that were made to the other party in connection
with the negotiation of the merger agreement, which disclosures are not
reflected in the merger agreement. In general, standards of
materiality may apply under the merger agreement in a way that is different
from
what may be viewed as material to you or other investors. The
representations and warranties were made only as of the date of the merger
agreement or such other date or dates as may be specified in the merger
agreement and are subject to more recent developments. Accordingly,
these representations and warranties may not describe the actual state of
affairs as of the date they were made or at any other time. The
representations and warranties in the merger agreement and the description
of
them in this document should be read in conjunction with the other information
contained in the reports, statements and filings Alltel publicly files with
the
Securities and Exchange Commission.
In
the
merger agreement, Alltel made representations and warranties relating to, among
other things:
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our
and our subsidiaries’ proper organization, good standing and qualification
to do business;
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our
capitalization, including in particular the number of shares of our
stock
(including our common stock, the Series C Preferred and the Series
D
Preferred), stock options and restricted
stock;
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our
subsidiaries and our equity interests in
them;
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our
corporate power and authority to enter into the merger agreement
and to
consummate the transactions contemplated by the merger
agreement;
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the
adoption and recommendation of our board of directors of the merger,
the
merger agreement and the other transactions contemplated by the merger
agreement;
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the
enforceability of the merger agreement against
us;
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the
required consents and approvals of governmental entities in connection
with the transactions contemplated by the merger
agreement;
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the
absence of conflicts with or defaults under our or our subsidiaries’
governing documents, applicable laws or certain agreements as a result
of
entering into the merger agreement and the consummation of the
merger;
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our
SEC filings since January 1, 2004, including financial statements
contained therein;
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the
absence of undisclosed liabilities;
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our
and our subsidiaries’ permits and compliance with applicable legal
requirements;
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environmental
matters;
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matters
relating to our and our subsidiaries’ employee benefit
plans;
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absence
of related-party transactions;
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the
absence of certain changes relating to us or our subsidiaries since
December 31, 2006 through May 20, 2007 and the absence of a material
adverse effect since December 31,
2006;
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investigations,
legal proceedings and governmental
orders;
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accuracy
and compliance with applicable securities law of the information
supplied
by Alltel for inclusion in this proxy statement and other filings
made
with the SEC in connection with the merger and the other transactions
contemplated by the merger
agreement;
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tax
matters;
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labor
matters affecting us or our
subsidiaries;
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intellectual
property;
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real
property;
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the
required vote of our stockholders in connection with the approval
of the
merger agreement and the approval of the merger and the other transactions
contemplated by the merger
agreement;
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our
insurance policies;
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material
contracts and performance of obligations
thereunder;
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the
absence of undisclosed brokers’
fees;
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·
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the
receipt by the board of directors of a fairness opinion from each
of
JPMorgan, Merrill Lynch and Stephens;
and
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·
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state
takeover statutes and anti-takeover provisions in our certificate
of
incorporation.
|
Many
of
Alltel’s representations and warranties are qualified by a “Company Material
Adverse Effect” standard (that is, they will not be deemed to be untrue or
incorrect unless their failure to be true or correct, individually or in the
aggregate, has or is reasonably expected to have a Company Material Adverse
Effect). “Company Material Adverse Effect” means any fact,
circumstance, event, change, effect or occurrence (other than the excepted
events described in the next paragraph) that, individually or in the aggregate
with all other facts, circumstances, events, changes, effects, or occurrences,
(1) has or would be reasonably expected to have a material adverse effect on
or
with respect to the business, results of operations or financial condition
of
the Company and its Subsidiaries taken as a whole, or (2) that prevents the
Company from consummating, or materially delays or materially impairs the
ability of the Company to consummate, the merger.
A
“Company Material Adverse Effect,” however, would not include facts,
circumstances, events, changes, effects or occurrences:
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generally
affecting the U.S. mobile wireless voice and data communications
industry
or the segments thereof in which the Company and its subsidiaries
operate
except to the extent that the impact of such fact, circumstance,
event,
change, effect or occurrence is materially disproportionately adverse
to
the business, results of operations or financial condition of the
Company
and its subsidiaries, taken as a whole, and is not otherwise excluded
from
the definition of “Company Material Adverse
Effect”;
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generally
affecting the economy or the financial, debt, credit or securities
markets, in the United States, including effects on such industry,
segments, economy or markets resulting from any political conditions
or
developments in general, or resulting from any outbreak or escalation
of
hostilities, declared or undeclared acts of war or terrorism except
to the
extent that (x) such fact, circumstance, event, change, effect or
occurrence causes any direct damage or destruction to or renders
physically unusable or inaccessible any facility or property of the
Company or any of its subsidiaries and that (y) the impact of such
fact,
circumstance, event, change, effect or occurrence is materially
disproportionately adverse to the business, results of operations
or
financial condition of the Company and its subsidiaries, taken as
a whole,
and is not otherwise excluded from the definition of “Company Material
Adverse Effect”);
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reflecting
or resulting from changes or proposed changes in law (including rules
and
regulations), interpretations thereof, regulatory conditions or U.S.
generally accepted accounting principles (or authoritative interpretations
thereof); or
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resulting
from actions of the Company or any of its subsidiaries which Parent
has
expressly requested in writing, or resulting from the announcement of
the merger agreement and the transactions contemplated
thereby.
|
The
merger agreement also contains various representations and warranties made
by
Parent and Merger Sub that are subject, in some cases, to specified exceptions
and qualifications. The representations and warranties relate to,
among other things:
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their
organization, valid existence and good
standing;
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·
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their
corporate or other power and authority to enter into the merger agreement
and to consummate the transactions contemplated by the merger
agreement;
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the
enforceability of the merger agreement as against Parent and Merger
Sub;
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the
required consents and approvals of governmental entities in connection
with the transactions contemplated by the merger
agreement;
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the
absence of any violation of or conflict with their governing documents,
applicable law or certain agreements as a result of entering into
the
merger agreement and consummating the
merger;
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accuracy
of the information supplied by Parent or Merger Sub for inclusion
in this
proxy statement and other filings made with the SEC in connection
with the
merger and the other transactions contemplated by the merger
agreement;
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validity
of debt and equity financing
commitments;
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the
ownership and lack of prior operations of Merger
Sub;
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the
absence of undisclosed brokers’
fees;
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the
absence of contracts between Parent, Merger Sub and the Sponsors
on the
one hand and our officers and directors on the other hand relating
to the
transactions contemplated by the merger
agreement;
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investigations,
legal proceedings and governmental
orders;
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the
delivery by the Sponsors of their respective
guarantees;
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the
solvency of the surviving corporation;
and
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the
ownership interests of the members of the Parent
group.
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Some
of
Parent’s and Merger Sub’s representations and warranties are qualified by a
“Parent Material Adverse Effect” standard. For the purposes of the
merger agreement, “Parent Material Adverse Effect” means any fact, circumstance,
event, change, effect or occurrence that, individually or in the aggregate,
prevents or materially delays or materially impairs the ability of Parent and
Merger Sub to consummate the merger prior to the end date of the merger
agreement, or would be reasonably expected to do so.
The
representations and warranties of each of the parties to the merger agreement
will expire upon the effective time of the merger.
Under
the
merger agreement, we have agreed that, subject to certain exceptions and unless
Parent gives its prior written consent (not to be unreasonably withheld or
delayed), between May 20, 2007 and the effective time of the merger, we and
our
subsidiaries will:
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conduct
business in all materials respects in the ordinary course;
and
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use
reasonable best efforts to maintain and preserve intact our and our
subsidiaries’ business organization and business relationships, preserve
our and our subsidiaries’ assets, rights and properties in good repair and
condition and to retain the services of our and our subsidiaries’ key
officers and key employees, in each case, in all material
respects.
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We
have
also agreed that, between May 20, 2007 and the effective time of the merger,
subject to certain exceptions or unless Parent gives its prior written consent
(not to be unreasonably withheld or delayed), we will not, and will cause each
of our subsidiaries not to:
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adjust,
split, combine or reclassify any capital stock or other equity interests
or otherwise amend the terms of our capital stock or other equity
interests;
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other
than as required by the terms of the Series C Preferred or Series
D
Preferred, make, declare or pay any dividend, or make any other
distribution on, or directly or indirectly redeem, purchase or otherwise
acquire or encumber, any shares of our capital stock or other equity
interests or any securities or obligations convertible into or
exchangeable for any shares of our capital stock or other equity
interests, except in connection with the exercise of stock options
or
settlement of other awards or obligations outstanding as of May 20,
2007
(or permitted by the merger agreement to be granted after that date);
we
are, however, expressly permitted to continue to pay our quarterly
cash
dividends in the ordinary course of business consistent with past
practices (but in no event in an amount in excess of $0.125 per quarter
per share of our common stock) and dividends required by the terms
of the
Series C Preferred and Series D Preferred, in each case with record
dates
consistent with the record dates for comparable quarterly periods
of
2006;
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grant
any person any right to acquire any shares of our capital stock or
other
equity interests;
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other
than as required by the terms of the Series C Preferred or the Series
D
Preferred, issue or sell any shares of capital stock or other equity
interests, any securities convertible into, or any rights, warrants
or
options to acquire, any such shares of capital stock or other equity
interests, except pursuant to the exercise of conversion rights of
currently outstanding securities, the exercise of stock options or
settlement of other awards outstanding as of May 20, 2007 (or permitted
by
the merger agreement to be granted after that date) and in accordance
with
the terms of such instruments or as required under any Company benefit
plan;
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except
with respect to the repayment of indebtedness, sell, lease, license,
transfer, mortgage, abandon, encumber or otherwise subject to a lien
or
otherwise dispose of, in whole or in part, any properties, rights
or
assets having a value in excess of $50 million individually or $100
million in the aggregate (other than (x) sales of inventory, (y)
commodity, sale or hedging agreements which can be terminated on
90 days
or less notice without penalty, in each case in the ordinary course
of
business consistent with past practice or (z) the use of cash as
payment
consideration);
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make
or authorize any capital expenditures in a manner reasonably expected
to
cause expenditures to exceed budgeted
amounts;
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except
(i) in connection with refinancings of existing indebtedness at its
maturity, (ii) for borrowings under the Company’s existing credit and
securitization facilities or issuances or repayment of commercial
paper in
the ordinary course of business or (iii) in connection with outstanding
surety bonds or surety bonds entered into in the ordinary course
of
business, incur or otherwise become liable for, or repay or prepay
any
specified indebtedness (including the issuance of any debt security)
in an
aggregate principal amount in excess of $100
million;
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other
than in connection with capital expenditures, make any investment
in
excess of $75 million individually or $100 million in the aggregate,
whether by purchase of stock or securities, contributions to capital,
loans to, property transfers, or entering into binding agreements
with
respect to such investment;
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make
any acquisition (or enter into a binding agreement with respect to
an
acquisition) in excess of $75 million individually or $100 million
in the
aggregate;
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except
in the ordinary course of business, enter into, renew, extend, materially
amend, cancel or terminate any specified material contract other
than
permitted loan agreements and permitted contracts relating to compensation
or benefits or the Company benefit
plans;
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increase
the compensation or benefits of employees, independent contractors
or
directors, other than increases for persons who are not executive
officers
or directors (other than in the ordinary course of business consistent
with past practice), amend or adopt any Company benefit plan except
for amendments or adoptions that are immaterial and otherwise made
in the
ordinary course of business consistent with past practice or accelerate
the vesting of, or the lapsing of restrictions with respect to, or
payment
of the compensation payable or the benefits provided or to become
payable
or provided to any of its current or former directors, officers,
employees, consultants or service providers, or otherwise pay any
amounts
not due or otherwise payable to such individual in the ordinary course
of
business consistent with past practice or grant any stock or
stock-based awards or any other award that may be settled in shares
or other securities of the Company or any of its subsidiaries or
any
restricted stock units or stock appreciation rights, regardless of
whether
they are settled in cash or shares or other securities of the Company
or
any of its subsidiaries, except that the Company may establish a
retention
pool of up to $114 million in consultation with the
Sponsors;
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settle
litigation other than in the ordinary course of business consistent
with
past practice that involve only payment of monetary damages (x) not
in
excess of $10 million individually or $25 million in the aggregate
or (y)
consistent with the reserves reflected in the Company’s balance sheet at
December 31, 2006, in any case without the imposition of material
equitable relief on, or the admission of wrongdoing by, the Company
or any
of its subsidiaries;
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amend
or waive any material provision of our organizational documents or,
in the
case of Alltel, enter into any agreement with any of its stockholders
in
their capacity as such;
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enter
into any new line of business outside of our existing
business;
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enter
into any new lease or amend the terms of any existing lease of real
property which would require payments over the remaining term in
excess of
$15 million;
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adopt
or enter into a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization;
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implement
or adopt any material change in our financial accounting principles,
practices or methods;
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change
any method of tax accounting, enter into any closing agreement with
respect to material taxes, settle or compromise any material liability
for
taxes (except to the extent any such settlement or compromise is
consistent with reserves reflected in the Company’s balance sheet at
December 31, 2006), make, revoke or change any material tax election,
file
or surrender any claim for a material refund of taxes or file any
material
amended tax return, in each case other than in the ordinary course
of
business consistent with past practice;
or
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agree
or commit to do any of the
foregoing.
|
The
merger agreement further provides that, from and after May 20, 2007, neither
party to the merger agreement may take any action which is intended to or which
would reasonably be expected to materially adversely affect or materially delay
the ability of such party from obtaining any necessary approvals of any
regulatory agency or other governmental entity required for the transactions
contemplated by the merger agreement, performing its covenants and agreements
under the merger agreement or consummating the transactions contemplated by
the
merger agreement or otherwise materially delay or prohibit consummation of
the
merger or other transactions contemplated by the merger agreement.
The
merger agreement requires us, as promptly as reasonably practicable, to call,
give notice of and hold a meeting of our stockholders for the purpose of
obtaining the vote of our stockholders necessary to satisfy the vote condition
described in “—Conditions to the Merger” beginning on page
[ ]. Subject to our board of directors withdrawing or
modifying its recommendation that our stockholders vote in favor of approval
of
the merger agreement and the transactions contemplated by the merger agreement
as described in “No Solicitation of Transactions” beginning on page
[ ], we are required to use reasonable best efforts to solicit
stockholder proxies in favor of the approval of the merger
agreement. Unless the merger agreement has been terminated prior to
the meeting of stockholders, we are required to submit the merger agreement
to a
vote of stockholders even if our board has approved, endorsed or recommended
another takeover proposal or withdraws, modifies or amends its recommendation,
as described in “No Solicitation of Transactions” beginning on page
[ ], that our stockholders vote in favor of approval of the
merger agreement.
The
merger agreement provides that if
on a date for which the special meeting is scheduled, we have not received
proxies representing a sufficient number of shares to approve the merger,
whether or not a quorum is present, we will have the right to postpone or
adjourn the special meeting no more than 45 days. If we continue not
to receive proxies representing a sufficient number of shares to approve the
merger, whether or not a quorum is present, we may make one or more successive
postponements or adjournments thereof as long as the date of the special meeting
is not postponed or adjourned more than an aggregate of 45 days from the
original date of the special meeting in reliance on this provision of the merger
agreement. In the event that the special meeting is adjourned or
postponed as a result of applicable law, including the need to supplement this
proxy statement, any days resulting from such adjournment or postponement shall
not be included for purposes of these calculations.
We
have
agreed that between May 20, 2007 and the effective time of the merger, we and
our subsidiaries (and our subsidiaries’ officers, directors, employees,
agents and representatives) will not directly or indirectly:
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initiate,
solicit, knowingly encourage (including by providing information)
or
knowingly facilitate any inquiries, proposals or offers with respect
to
any Alternative Proposal (as defined below) or any inquiry, proposal
or
offer that is reasonably likely to lead to an Alternative
Proposal;
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engage,
continue or participate in any negotiations concerning, or provide
or
cause to be provided any information or data relating to us or any
of our
subsidiaries in connection with, or have any discussions (other than
to
state that such persons are not permitted to have discussions) with
any
person relating to, or that is reasonably likely to lead to, an actual
or
proposed Alternative Proposal, or otherwise knowingly encourage or
knowingly facilitate any effort or attempt to make or implement an
Alternative Proposal;
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approve,
endorse or recommend, or propose publicly to approve, endorse or
recommend, any Alternative
Proposal;
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·
|
execute
or enter into, any letter of intent, agreement in principle, merger
agreement, acquisition agreement, option agreement or other similar
agreement relating to any Alternative Proposal;
or
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|
resolve
to propose or agree to do any of the
foregoing.
|
In
addition, we have agreed to, and to cause our subsidiaries and direct our
representatives to, immediately cease any existing solicitations, discussions
or
negotiations existing on May 20, 2007 with any person who has made or indicated
an intention to make an Alternative Proposal, and to request the prompt return
or destruction of all confidential information previously furnished in
connection therewith.
An
“Alternative Proposal” is defined in the merger agreement to mean any inquiry,
proposal or offer relating to, in a single transaction or series of
transactions:
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a
merger, reorganization, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving a direct or indirect acquisition of Alltel
(or any
subsidiaries of Alltel whose business constitutes 20% or more of
the net
revenues, net income or assets (based on fair market value) of Alltel
and
its subsidiaries, taken as a whole);
or
|
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·
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the
acquisition (including by way of tender or exchange offer) in any
manner,
directly or indirectly, of over 20% of (x) our common stock or (y)
the
consolidated total assets (based on fair market value) of Alltel
and its
subsidiaries.
|
We
have
agreed that, if we receive:
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any
inquiries, proposals or offers regarding any Alternative
Proposal;
|
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·
|
any
request for information (other than requests not reasonably expected
to be
related or lead to an Alternative Proposal);
or
|
|
·
|
any
inquiry or request for discussions or negotiations regarding or that
would
reasonably be expected to result in an Alternative
Proposal,
|
We
will
notify Parent promptly (and in any event within 48 hours) of the identity of
the
person making the Alternative Proposal or indication or inquiry or offer or
request and the material terms and conditions of any such Alternative Proposal
or indication or inquiry or offer or request. We have agreed to keep
Parent reasonably informed on a reasonably current basis of the status of any
such discussions or negotiations regarding any such Alternative Proposal or
indication or inquiry or offer or any material developments relating
thereto.
We
have
also agreed that neither we nor any of our subsidiaries will enter into any
confidentiality agreement with any person subsequent to May 20, 2007 which
prohibits the Company from providing information to Parent.
We
may,
however, prior to obtaining the requisite vote of our stockholders at the
special meeting:
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engage
in discussions or negotiations with, or furnish or disclose non-public
information to, a person who has made a bona fide written Alternative
Proposal received after May 20, 2007 and not solicited by us in violation
of our above-described obligations, so long
as:
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o
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our
board has determined in good faith, after consultation with its outside
counsel and financial advisors, that the Alternative Proposal constitutes
or is reasonably expected to lead to a “Superior Proposal” (as defined
below), and that failure to take such action would be inconsistent
with
our board’s fiduciary obligations to our stockholders;
and
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o
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if
we are furnishing material non-public information to such a person,
we
must (i) enter into a confidentiality agreement with that person
containing terms substantially similar to, and no less favorable
to us
than, those set forth in the confidentiality agreements between us
and the
Sponsors and (ii) disclose that information to Parent (if it has
not
already been disclosed) concurrently with or as soon as practicable
after
providing such information to such other Person;
and
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withhold,
withdraw or modify our board recommendation in a manner adverse to
Parent
or Merger Sub or propose to do so, if our board of directors determines
in
good faith, after consultation with outside counsel and its financial
advisor, that an unsolicited bona fide written Alternative Proposal
received by us constitutes a Superior Proposal (after taking into
account
any adjustments to the terms of the merger made by Parent during
a five
business day negotiation period we must provide Parent (and each
material
amendment to the Superior Proposal would trigger another negotiation
period of two-days with Parent)) and the failure to take such action
would
be inconsistent with its fiduciary obligations to our
stockholders.
|
A
“Superior Proposal” is defined as any bona fide written Alternative Proposal on
terms which our board of directors determines in good faith, after consultation
with its outside legal counsel and financial advisors, to be more favorable
from
a financial point of view to the holders of our common stock than the merger,
taking into account all the terms and conditions of the proposal (including
the
likelihood and timing of the consummation of the proposal), and the merger
agreement (including any changes to the terms of the merger agreement committed
to by Parent in good faith to us in response to such proposal or otherwise);
provided that for purposes of the definition of “Superior Proposal,” the
references to “20%” in the definition of Alternative Proposal are deemed to be
references to “50%.”
These
provisions will not prevent our board of directors from making certain
disclosures contemplated by the securities laws, except that in specified
circumstances our board of directors will be deemed to have withdrawn its
recommendation unless it expressly reaffirms its recommendation in favor of
approval of the merger agreement at least two business days prior to the special
meeting of stockholders.
The
parties have agreed that:
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from
the date of completion of the merger until December 31, 2009, the
surviving corporation will provide our current employees with annual
base
salary and base wages, cash incentive compensation opportunities
and
benefits, in each case, that are no less favorable than those that
we
provide (excluding equity-based compensation) as of immediately prior
to
the effective time of the merger;
and
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the
surviving corporation will provide employees terminated within two years
following completion of the merger (other than those covered by an
individual agreement providing severance benefits outside of our
severance
policies) with severance benefits at the level and pursuant to the
terms
of the Alltel severance plan, as amended, substantially in the form
set
forth in the merger agreement.
|
From
and
after the effective time of the merger, Parent will cause the surviving
corporation and its subsidiaries to honor all obligations under Alltel’s benefit
plans and compensation and severance arrangements and agreements in accordance
with their terms as in effect immediately before the effective time of the
merger and recognize past service for all purposes, including vesting,
eligibility to participate and level of benefits generally.
Each
of
the parties to the merger agreement has agreed to use its reasonable best
efforts to do anything necessary, proper or advisable to ensure that the
conditions to the merger are satisfied and that the merger is consummated as
promptly as practicable. In particular, the parties have agreed to
use such efforts to make necessary filings and obtain necessary governmental
consents and approvals, including those required to be filed with the FCC,
under
the HSR Act and state regulatory commissions. To the extent necessary
to obtain such approvals, the parties have agreed to take all steps as may
be
necessary to obtain an approval,
clearance,
or waiver from, or avoid an action or proceeding by, any governmental entity
which would prevent or delay the closing beyond the end date in the merger
agreement (except that the Company, Parent and their respective affiliates
will
only agree to dispose of any of their assets or businesses if such disposition
is conditional on the closing). We have also agreed to use our
reasonable best efforts to obtain necessary consents or waivers from third
parties (although neither the Company nor its subsidiaries is required to pay
prior to the consummation of the merger any consideration or incur any liability
in connection with obtaining such consents or waivers and must not commit to
any
such payment without the prior consent of Parent), to defend any lawsuit
challenging the merger or the merger agreement, and to execute and deliver
any
additional documents necessary to complete the merger.
The
parties have agreed to keep each other reasonably apprised of the status of
matters relating to the completion of the merger and the other transactions
contemplated by the merger agreement, including promptly furnishing the other
with copies of notices or other written communications received from any third
party and/or governmental entity. The parties have also agreed to
give each other a reasonable opportunity to review in advance, and will consider
in good faith the views of the other party in connection with, any proposed
written communication to a governmental entity. To the extent
practicable under the circumstances, the parties will not participate in any
substantive meeting or discussion with a governmental entity in connection
with
the proposed transactions without consulting with the other party in advance
and, to the extent permitted, giving the other party the opportunity to attend
and participate. If any administrative or judicial proceeding is
instituted (or threatened to be instituted) challenging the merger or any other
transaction contemplated by the merger agreement, the parties will cooperate
in
all reasonable respects with each other and use their reasonable best efforts
to
contest and resist the proceeding and any order, whether temporary, preliminary
or permanent, prohibiting, preventing or restricting the merger or any related
transaction.
Parent
has agreed to use its reasonable best efforts to arrange the financing in
connection with the merger on terms described in the equity and debt financing
commitment letters delivered in connection with the signing of the merger
agreement or, at Parent’s election, on other terms that would not adversely
impact the ability of Parent or Merger Sub to timely consummate the merger
and
the other transactions contemplated by the merger agreement, including using
its
reasonable best efforts to:
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negotiate
definitive documents on the terms contained in the financing commitment
letters (or, at Parent’s election, on other terms that would not adversely
impact the ability of Parent or Merger Sub to timely consummate the
merger
and the other transactions contemplated by the merger
agreement);
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|
·
|
satisfy
the conditions applicable to Parent in the definitive financing documents
and consummate the financing at or before closing (except to the
extent
requiring action by us);
|
|
·
|
comply
with its obligations under the financing commitment letters;
and
|
|
·
|
enforce
its rights under the financing commitment
letters.
|
Parent
has agreed to give us prompt notice upon learning of any material breach by
any
party or any termination of the financing commitment letters. Parent
has also agreed to keep us informed on a reasonably current basis and in
reasonable detail of the status of its efforts to arrange the financing
(including providing us with copies of documents related to the
financing).
Parent
will be permitted to amend, modify or replace the debt commitment letters
delivered in connection with the signing of the merger agreement with new
financing commitments, so long as the change in the new commitment:
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does
not reduce the aggregate amount of the debt financing below the amount
required to consummate the merger and the related
transactions;
|
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·
|
does
not adversely amend or expand the conditions to the drawdown of the
debt
financing in any respect that could make the conditions less likely
to be
satisfied by the end date of the merger agreement or that would expand
the
possible circumstances under which the conditions would not be satisfied
by such date;
|
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·
|
is
not reasonably expected to delay the closing or the date on which
financing could be obtained; or
|
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·
|
is
not otherwise adverse to our interests in any other material
respect.
|
In
the
event that all conditions to the financing commitments (other than, in
connection with the debt financing, the availability or funding of any of the
equity financing) have been satisfied, Parent has agreed to, from and after
the
final day of the Marketing Period and subject to the satisfaction of the mutual
closing conditions and the conditions to the obligation of Parent and Merger
Sub
to effect the merger, as described in “—Conditions to the Merger” beginning on
page [ ], use its reasonable best efforts to cause the lenders and
other persons providing such financing to fund the financing required to
consummate the merger on the closing date.
In
the
event that Parent becomes aware of any event or circumstance that makes
procurement of any portion of the financing unlikely to occur as contemplated
in
the financing commitment letters, Parent has agreed to notify us and to use
its
reasonable best efforts to obtain, as promptly as practicable but in no event
later than one day prior to the closing date, any such portion from alternative
debt financing sources on terms no less favorable to Parent and no more adverse
to the ability of Parent to consummate the merger and the other transactions
contemplated in the merger agreement (in each case, as determined in the
reasonable judgment of Parent).
In
the
event that on the final day of the Marketing Period:
|
·
|
all
or any portion of the debt financing to be structured as high yield
securities has not been
consummated;
|
|
·
|
all
closing conditions described in “—Conditions to the Merger” beginning on
page [ ] have been satisfied or waived (other than those
conditions that by their nature will not be satisfied until the closing);
and
|
|
·
|
the
bridge financing is available substantially on the terms and conditions
described in the debt commitment
letters,
|
then
Parent shall borrow under and use the proceeds of the bridge financing to
replace such affected portion of the high yield financing no later than the
last
day of the Marketing Period.
We
have
agreed to provide, and to cause our subsidiaries to provide, and to use
reasonable best efforts to cause our representatives to provide, all cooperation
reasonably requested by Parent in obtaining financing, including:
|
·
|
providing
financial and other information as Parent reasonably requests in
order to
consummate the debt financing, including our financial statements
and
other financial data;
|
|
·
|
participating
in meetings, drafting sessions and due diligence
sessions;
|
|
·
|
assisting
in the preparation of materials and offering documents in connection
with
the financing;
|
|
·
|
cooperating
with the marketing efforts for any of the debt financing, including
helping to prepare for and participating in road shows, meetings,
drafting
sessions and due diligence sessions with prospective lenders, investors,
rating agencies and others;
|
|
·
|
providing
monthly financial statements (excluding footnotes) within 30 days
after
the end of each month prior to the closing
date;
|
|
·
|
executing
and delivering necessary pledge, security, or other legal documents
and
entering into one or more credit or other agreements and documents
reasonably requested by Parent in connection with the debt
financing;
|
|
·
|
taking
all actions reasonably necessary to permit potential lenders to evaluate
our current assets, cash management and accounting systems, policies
and
procedures relating thereto for the purpose of establishing collateral
agreements and to establish bank accounts and other accounts and
blocked
account agreements and lock box arrangements;
and
|
|
·
|
using
reasonable best efforts to permit any cash of the Company and its
subsidiaries to be made available to the Company at the effective
time of
the merger.
|
The
merger agreement limits our obligation to incur any fees or liabilities with
respect to the debt financing prior to the effective time of the
merger. Parent has also agreed to reimburse us for all reasonable
out-of-pocket costs (including reasonable attorneys’ fees) incurred in
connection with our cooperation, and to indemnify us against losses we incur
in
connection with the arrangement of the financing and any information used in
connection therewith, except with respect to any information provided by
us.
We
agreed
to take certain actions with regard to outstanding notes of the Borrower and
certain other subsidiaries of the Company, including a tender offer and consent
solicitation, or an
optional
redemption or satisfaction and discharge of the notes after the effective time
of the merger, if requested by Parent. In addition, we agreed to use
commercially reasonable efforts to negotiate payoff letters from third-party
lenders and trustees with respect to certain other indebtedness specified by
Parent. Our obligation to consummate any actions described in this
paragraph is subject to the closing of the merger.
The
merger agreement contains additional agreements among Alltel, Parent and Merger
Sub relating to, among other things:
|
·
|
the
filing of this proxy statement with the SEC, and cooperation in preparing
this proxy statement and in responding to any comments received from
the
SEC on those documents;
|
|
·
|
actions
necessary to exempt the transactions contemplated by the merger agreement
and related agreements from the effect of any takeover
statutes;
|
|
·
|
coordination
of press releases and other public statements about the merger and
the
merger agreement;
|
|
·
|
indemnification
and insurance of directors and officers, including maintaining, or
providing a “tail” policy, to Alltel’s directors’ and officers’ liability
insurance with a claims period of six years following the effective
time
of the merger;
|
|
·
|
giving
Parent and its advisors access to our properties, contracts, books,
records, officers, employees and
agents;
|
|
·
|
notices
of certain events, and consultation to mitigate any adverse consequences
of those events;
|
|
·
|
actions
necessary to exempt dispositions of equity securities by our directors
and
officers pursuant to the merger under Rule 16b-3 under the Exchange
Act;
|
|
·
|
the
payment of real estate transfer taxes;
and
|
|
·
|
actions
by Parent to cause Merger Sub to fulfill its
obligations.
|
The
obligations of the parties to complete the merger are subject to the
satisfaction or waiver of the following mutual conditions:
|
·
|
Stockholder
Approval. The merger agreement must be adopted by the vote
of holders of at least a majority of the votes entitled to be cast
at the
close of business on the record
date.
|
|
·
|
No
Law or Orders. No governmental entity of competent
jurisdiction shall have enacted, issued or entered any restraining
order,
preliminary or permanent injunction or similar order
|
| or legal restraint or prohibition which remains in effect that enjoins or otherwise prohibits consummation of the merger. |
|
·
|
HSR
Approval. The waiting period under the HSR Act (and any
extension thereof) must have expired or been
terminated.
|
|
·
|
FCC
Approval. All approvals and authorizations required to be
obtained from the FCC for the transfer of control of the Alltel entities
holding FCC licenses and authorizations in connection with the merger
shall have been obtained, except for those approvals and authorizations
to
be obtained from the FCC that in the aggregate are immaterial to
the
Company and have not been denied by the FCC, regardless of whether
the FCC
shall have issued a final order.
|
Our
obligation to complete the merger is subject to the satisfaction or waiver
of
the following additional conditions:
|
·
|
Representations
and Warranties. Parent’s and Merger Sub’s representations
and warranties must be true and correct as of May 20, 2007 and as
of the
closing date of the merger (unless any such representation or warranty
is
made only as of a specific date, in which event such representation
or
warranty must be true and correct only as of such specific date),
except
to the extent the failure of such representations and warranties
to be
true and correct would not prevent or materially delay or materially
impair the ability of Parent and Merger Sub to consummate the merger
prior
to the end date of the merger.
|
|
·
|
Performance
of Covenants. Parent and Merger Sub must have performed,
in all material respects, their covenants and agreements in the merger
agreement.
|
|
·
|
Officer’s
Certificate. Parent must deliver to us at closing a
certificate with respect to the satisfaction of the conditions relating
to
Parent’s and Merger Sub’s representations, warranties, covenants and
agreements.
|
The
obligations of Parent and Merger Sub to complete the merger are subject to
the
satisfaction or waiver of the following additional conditions:
|
·
|
Representations
and Warranties. Our representations and warranties (other
than our representations and warranties with respect to capitalization
and
absence of any Company Material Adverse Effect since December 31,
2006)
must be true and correct (disregarding all qualifications or limitations
as to “materiality,” “Company Material Adverse Effect” and words of
similar import set forth therein) as of May 20, 2007 and as of the
closing
date (except to the extent such representations and warranties expressly
relate to an earlier date, in which case as of such earlier date),
except
where the failure of such representations and warranties to be true
and
correct would not, individually or in the aggregate, have a Company
Material Adverse Effect. Our representations and warranties
with respect to (i) capitalization must be true and correct in all
material respects as of May 20, 2007 and as of the closing date (except
to
the extent such representations and warranties expressly relate to
an
earlier date, in which case as of such earlier date) and (ii) absence
of
any Company Material Adverse Effect
|
| since December 31, 2006 must be true and correct in all respects as of May 20, 2007 and as of the closing date. |
|
·
|
Performance
of Covenants. We must have performed, in all material
respects, our covenants and agreements in the merger
agreement.
|
|
·
|
Officer’s
Certificate. We must deliver to Parent at closing an
officer’s certificate with respect to the satisfaction of the conditions
relating to our representations, warranties, covenants and
agreements.
|
We
and
Parent may terminate the merger agreement by mutual written consent at any
time
before the completion of the merger (including after our stockholders have
approved the merger agreement). In addition, with certain exceptions,
either Parent or Alltel may terminate the merger agreement at any time before
the completion of the merger:
|
·
|
if
the merger has not been completed by the end date, which is May 20,
2008,
but which may be extended by Parent or Alltel one or more times until
July
20, 2008 if the mutual conditions to the closing (other than the
receipt
of stockholder approval) have not been satisfied (we refer to this
deadline as the end date); in addition, the end date will be extended,
if
at either of those dates the Marketing Period has commenced but not
have
ended, until 30 days following the initial commencement date of the
Marketing Period, but in no event later will the end date be later
than
August 20, 2008;
|
|
·
|
if
any court of competent jurisdiction has issued or entered a final
non-appealable order enjoining or prohibiting the completion of the
merger, so long as the party seeking to terminate has used reasonable
best
efforts as may be required by the merger agreement to prevent, oppose
and
remove such injunction or restraint;
or
|
|
·
|
if
the merger agreement has been submitted to our stockholders for approval
and the required vote has not been
obtained.
|
In
addition, we may terminate the merger agreement at any time before the
completion of the merger if:
|
·
|
Parent
or Merger Sub has breached or failed to perform any of its
representations, warranties, covenants or other agreements in the
merger
agreement and such breach or failure would result in the failure
of a
closing condition and cannot be cured by the end date of the merger
agreement, so long as we have given Parent 30 days’ written notice and are
not in material breach of our representations, warranties, covenants
or
other agreements in the merger
agreement;
|
|
·
|
in
order to enter into a transaction that is a Superior Proposal, if,
prior
to the receipt of our stockholder approval and at such time we are
not in
material breach of any of our obligations in the merger agreement
regarding non-solicitation described above in “—No Solicitation of
Transactions” beginning on page
[ ]:
|
|
o
|
our
board of directors has received a Superior
Proposal;
|
|
o
|
we
have notified Parent in writing of our intention to terminate the
merger
agreement in order to enter into a transaction that is a Superior
Proposal, and included with such notice the identity of the person
making
such proposal, the most current written agreement relating to the
transaction that constitutes such Superior Proposal and all related
transaction agreements;
|
|
o
|
at
least five business days following Parent’s receipt of the notice, and
taking into account any revised proposal made by Parent since receipt
of
the notice, our board of directors has determined in good faith and
after
consultation with its outside counsel and financial advisors that
such
Superior Proposal continues to be more favorable to our stockholders
from
a financial point of view than the revised proposal made by Parent,
if any
(it being understood and agreed that during such five business day
period
we will, and will cause our representatives to, negotiate in good
faith
with Parent and its representatives, to the extent Parent wishes
to
negotiate), provided that any amendment to the terms of such Superior
Proposal requires a new notice and a new two business day period;
and
|
|
o
|
prior
to or concurrently with such termination, we pay the termination
fee
described below in “—Fees and Expenses” beginning on page [ ]
and enter into a definitive agreement with respect to the Superior
Proposal; or
|
|
·
|
if
the merger has not been completed on the third business day after
the
final day of the Marketing Period and all of the mutual closing conditions
and all of the conditions to the obligations of Parent and Merger
Sub have
been satisfied and at the time of such termination such conditions
continue to be satisfied.
|
Parent
may terminate the merger agreement at any time before the completion of the
merger if:
|
·
|
we
have breached or failed to perform any of our representations, warranties,
covenants or other agreements in the merger agreement and such breach
or
failure would result in the failure of a closing condition and cannot
be
cured by the end date of the merger agreement, so long as Parent
has given
us 30 days’ written notice and neither it nor Merger Sub is in material
breach of its representations, warranties, covenants or other agreements
in the merger agreement;
|
|
·
|
our
board of directors:
|
|
o
|
withdraws,
modifies or qualifies in a manner adverse to Parent or Merger Sub
its
recommendation that our stockholders approve the merger agreement
and the
transactions contemplated by the merger
agreement;
|
|
o
|
fails
to include in the proxy statement its recommendation to our stockholders
that they approve the merger agreement and the transactions contemplated
by the merger agreement;
|
|
o
|
publicly
approves, endorses or recommends any Alternative Proposal;
or
|
|
o
|
fails
to recommend against acceptance of a tender or exchange offer for
any
outstanding shares of our capital stock that constitutes an Alternative
Proposal (other than by Parent or any of its affiliates), including,
for
these purposes, by taking no position with respect to the acceptance
of
such tender offer or exchange offer by its stockholders, which will
constitute a failure to recommend against acceptance of such tender
offer
or exchange offer, within ten business days after commencement;
or
|
|
·
|
we
have notified Parent in writing of our intention to terminate the
merger
agreement in order to enter into a transaction that is a Superior
Proposal.
|
In
general, all expenses incurred by a party to the merger agreement will be paid
by that party (except for certain expenses incurred by Alltel in connection
with
the debt financing, as described above in “—Financing Commitments; Company
Cooperation” beginning on page [ ]). However, if the
merger agreement is terminated in certain circumstances described below, we
may
be required to pay as directed by Parent, or Parent may be required to pay
to
us, a termination fee of $625 million. In addition, if Alltel or
Parent fails to pay any termination fee when due, it will be obligated to pay
the costs and expenses (including legal fees) incurred in connection with any
action to collect payment of the fee. We will also be obligated to
reimburse Parent for its reasonable out-of-pocket expenses in an amount not
to
exceed $35,000,000 under the circumstances specified below. Any
termination fee subsequently payable by us will be net of any expense
reimbursement.
Fees
and Expenses Payable by Alltel
We
will
have to pay, as directed by Parent, a termination fee of $625 million in cash
if:
|
·
|
we
terminate the merger agreement to enter into a definitive agreement
with
respect to a Superior Proposal as described above in “—Termination”
beginning on page [ ] (in which case we will pay Parent
concurrently with the termination of the merger agreement);
or
|
|
·
|
Parent
terminates the merger agreement for one of the following reasons
(in which
case we will pay as directed by Parent promptly following the termination
of the merger agreement and in any event not later than two business
days
after delivery to Alltel of notice of demand for
payment):
|
|
o
|
we
have (i) withdrawn, modified or qualified our recommendation in favor
of
the approval of the merger agreement, (ii) failed to include our
recommendation that our stockholders approve the merger agreement
and the
transactions contemplated by the merger agreement in the proxy statement,
(iii) have endorsed or recommended an Alternative Proposal or (iv)
failed
to recommend against acceptance of a tender or exchange offer, as
described above in “—Termination” beginning on page [ ];
or
|
|
o
|
we
have notified Parent in writing of our intention to terminate the
merger
agreement in order to enter into a transaction that is a Superior
Proposal.
|
We
will
also have to pay, as directed by Parent, a termination fee of $625 million
in
cash promptly following the earlier of the execution of a definitive agreement
with respect to, or the consummation of, any transaction contemplated by an
alternative takeover proposal (and in any event not later than two business
days
after delivery to Alltel of notice of demand for payment) if:
|
·
|
after
the date of the merger agreement, a bona fide Alternative Proposal
shall
have been publicly disclosed or any person shall have publicly announced
or publicly made known any intention (whether or not conditional)
to make
any Alternative Proposal (and such Alternative Proposal or publicly
announced intention shall not have been abandoned);
and
|
|
·
|
one
of the following occurs:
|
|
o
|
Alltel
or Parent terminates the merger agreement because of the failure
to obtain
the requisite stockholder vote; or
|
|
o
|
Parent
terminates the merger agreement because we have breached or failed
to
perform any of our representations, warranties, covenants or other
agreements in the merger agreement and such breach or failure would
result
in the failure of a closing condition and cannot be cured by the
end date
of the merger agreement; and
|
|
·
|
we
consummate, or enter into a definitive agreement providing for, any
Alternative Proposal within twelve months of the date the merger
agreement
is terminated, which need not be the same Alternative Proposal that
shall
have been publicly disclosed (provided that for purposes of this
test the references to “20%” in the definition of Alternative
Proposal shall be deemed to be references to “50%”); in which case we must
pay the termination fee before or at the time we enter into the definitive
agreement or consummate the takeover
proposal.
|
In
addition, we will be required to reimburse Parent for its reasonable
out-of-pocket expenses in an amount not to exceed $35,000,000 if either we
or
Parent terminates the merger agreement because the stockholder approval is
not
obtained. Any termination fee subsequently payable by us will be net
of any expense reimbursement.
Fees
and Expenses Payable by Parent
Parent
has agreed to pay us a termination fee of $625 million within two business
days
following termination if the merger agreement is terminated:
|
·
|
by
us because Parent or Merger Sub has breached or failed to perform
any of
its representations, warranties, covenants or other agreements
in the
merger agreement and such breach or failure would result in the
failure of
a closing condition and cannot be cured by the end date of the
merger
agreement and there is no state of facts or circumstances that
would
reasonably be expected to prevent the conditions to the obligations
of
Parent and Merger Sub
|
| to complete the merger (other than the condition with respect to the delivery of officer’s certificates) from being satisfied by the end date of the merger agreement; |
|
·
|
because
the merger has not taken place by the end date of the merger agreement
and
at that time of termination (1) the stockholder vote has been obtained,
(2) the conditions to closing relating to restraining orders and
injunctions, the HSR waiting period and FCC approvals have been satisfied
and (3) the conditions relating to the accuracy of Alltel’s
representations and warranties and compliance with its covenants
under the
merger agreement have been
satisfied;
|
|
·
|
because
the merger has not taken place by the end date of the merger agreement
or
a final and non-appealable regulatory-related injunction, legal restraint,
or permanent restraining order has been entered prohibiting completion
of
the merger, and at the time of such termination (1) the conditions
to
closing relating to restraining orders and injunctions (if such
restriction relates to a regulatory law), the HSR waiting period
or FCC
approvals have not been satisfied, or (2) the conditions relating
to the
accuracy of Parent’s representations and warranties and compliance with
its covenants under the merger agreement have not been satisfied;
or
|
|
·
|
because
the merger has not been completed on the third business after the
final
day of the Marketing Period and the conditions to the obligations
of
Parent and Merger Sub to complete the merger have been satisfied
and at
the time of such termination such conditions continue to be
satisfied.
|
The
merger agreement provides that our right to receive payment of the $625 million
termination fee in the circumstances described above, and the guarantee thereof
pursuant to the Guarantees (see “Financing of the Merger—Guarantees; Remedies”
beginning on page [ ]), is the sole and exclusive remedy available to
us, our affiliates and our subsidiaries against Parent, Merger Sub, the
guarantors and any of their respective former, current or future general or
limited partners, stockholders, managers, members, directors, officers,
affiliates or agents for the loss suffered as a result of the failure of the
merger to be completed. We have agreed that we will in no event seek
to recover on money damages in excess of $625 million from any of the foregoing
persons, and we may not seek specific performance of the merger.
The
merger agreement may be amended by a written agreement signed by us, Parent
and
Merger Sub at any time prior to the completion of the merger, whether or not
our
stockholders have approved the merger agreement. However, no
amendment that requires further approval of our stockholders will be made
without obtaining that approval. At any time prior to the completion
of the merger, we, Parent or Merger Sub may waive the other party’s compliance
with certain provisions of the merger agreement.
Our
common stock is listed for trading on the New York Stock Exchange (“NYSE”) under
the symbol “AT.” The following table sets forth, for the fiscal
quarters indicated, dividends and the high and low intra-day sales prices per
share of Alltel common stock as reported on the NYSE composite
tape.
|
Common
Stock
|
|||||
|
Low
|
High
|
Dividends
Declared
|
|||
|
FISCAL
YEAR ENDED DECEMBER 31, 2005
|
|||||
|
First
Quarter
|
$54.20
|
$59.85
|
$0.380
|
||
|
Second
Quarter
|
$54.82
|
$62.36
|
$0.380
|
||
|
Third
Quarter
|
$60.45
|
$66.95
|
$0.380
|
||
|
Fourth
Quarter
|
$58.00
|
$68.19
|
$0.385
|
||
|
FISCAL
YEAR ENDED DECEMBER 31, 2006
|
|
|
|
||
|
First
Quarter
|
$58.80
|
$67.96
|
$0.385
|
||
|
Second
Quarter
|
$59.32
|
$66.45
|
$0.385
|
||
|
Third
Quarter(1)
|
$52.34
|
$65.64
|
$0.173(2)
|
||
|
Fourth
Quarter
|
$52.83
|
$62.66
|
$0.125
|
||
|
FISCAL
YEAR ENDING DECEMBER, 2007
|
|
|
|
||
|
First
Quarter
|
$58.59
|
$63.96
|
$0.125
|
||
|
Second
Quarter (through June 8, 2007)
|
$59.69
|
$70.45
|
$0.125
|
||
|
|
Note: The
above table reflects the high and low intra-day sales prices as reported
by Thomson Financial.
|
| (1) On July 17, 2006, Alltel completed the spin-off of its wireline business. Alltel's stock price was adjusted to reflect thespin-off beginning July 18, 2006. |
|
|
(2)
Includes a
one-time dividend of $0.048 related to the
spin-off.
|
The
closing sale price of our common stock on the NYSE on May 18, 2007, the last
trading day prior to the announcement of the merger, was $65.21. The
$71.50 per share to be paid for each share of our common stock in the merger
represents a premium of approximately 9.6% to the closing price on May 18,
2007
and a premium of approximately 22.6% over the market closing price of $58.31
of
the Company’s common stock prior to the publication of an article by the Wall
Street Journal on December 29, 2006, speculating that Alltel could be acquired
by private equity sponsors or by certain other wireless communications
firms.
On
[ ], 2007, the date of this proxy statement, the closing price
for our common stock on the NYSE was $[ ] per
share. You are encouraged to obtain current market quotations for our
common stock in connection with voting your shares.
If
the merger is consummated we will
not have public stockholders, and there will be no public participation in
any
future meetings of stockholders. However, if the merger is not
completed,
we expect to hold a 2008 annual meeting of stockholders. Stockholders
may present proposals for action at the 2008 annual meeting, if held, only
if
they comply with the requirements of the proxy rules established by the
Securities and Exchange Commission and our bylaws. For
a stockholder proposal to be presented at the 2008 annual meeting, if held,
it
must have been received by us at our principal executive offices not later
than
November 16, 2007. Stockholder proposals should be mailed to
Corporate Secretary, Alltel Corporation, One Allied Drive, Little Rock, Arkansas
72202.
The
following table shows the amount of
our common stock beneficially owned by those who, as of May 31, 2007, were
known
by us to beneficially own more than 5% of our common stock. Unless
otherwise noted, these persons have sole voting and investment power over the
shares listed. Percentage computations are based on 343,852,797
shares of our stock outstanding as of June 7, 2007.
|
Name
and Address
|
Amount
and Nature
|
Percent
of
|
||||
|
Title
of Class
|
of
Beneficial Owner
|
of
Beneficial Ownership
|
Class
|
|||
|
Common
Stock
|
Private
Capital Management, L. P.
|
29,503,268
shares(a)
|
8.6%
|
|||
|
8889
Pelican Bay Boulevard
|
||||||
|
Suite
500
|
||||||
|
Naples,
FL 34108-7512
|
|
(a)
|
Based
upon information contained in the Schedule 13G/A filed by Private
Capital
Management (“PCM”) on February 14, 2007, it has shared voting and
investment power with respect to 28,455,968 of these
shares.
|
The
following table shows the amount of our common stock beneficially owned, as
of
May 31, 2007, by our directors and the Named Executive Officers individually
and
by our directors and all of our executive officers as a group, calculated in
accordance with Rule 13d-3 of the Exchange Act under which a person generally
is
deemed to beneficially own a security if he has or shares voting or investment
power over the security, or if he has the right to acquire beneficial ownership
within 60 days. Unless otherwise noted, these persons may be
contacted at our executive offices, and they have sole voting and investment
power over the shares indicated. Percentage computations are based on
343,852,797 shares of our stock outstanding as of June 7, 2007.
|
Name
of
|
Amount
and Nature
|
Percent
of Class
|
||||
|
Beneficial
Owner
|
of
Beneficial Ownership
|
(if
1% or more)
|
||||
|
DiDirectors
|
John
R. Belk
|
80,779(a)
|
¾
|
|||
|
Peter
A. Bridgman
|
14,067(a)
|
¾
|
||||
|
William
H. Crown
|
5,744,886(a)(b)
|
1.6%
|
||||
|
Joe
T. Ford
|
3,404,571(a)(c)
|
¾
|
||||
|
Lawrence
L. Gellerstedt, III
|
80,371(a)
|
¾
|
||||
|
Emon
A. Mahony, Jr.
|
134,189(a)(d)
|
¾
|
||||
|
John
P. McConnell
|
88,499 (a) |
¾
|
||||
|
Josie
C. Natori
|
81,164 (a) |
¾
|
||||
|
John
W. Stanton
|
2,221,915 (a)(e) |
¾
|
||||
|
Warren
A. Stephens
|
9,101,668
(a)(f)
|
2.6%
|
||||
|
Ronald
Townsend
|
27,559
(a)
|
¾
|
||||
|
Named
Executive
|
Scott
T. Ford
|
2,571,469(g)(h)
|
¾
|
|||
|
Officers
|
Sharilyn
S. Gasaway
|
119,592(g)
|
¾
|
|||
|
Kevin
L. Beebe
|
1,525,466(g)
|
¾
|
||||
|
Jeffrey
H. Fox
|
1,589,925(g)(i)
|
¾
|
||||
|
Richard
N. Massey
|
59,665(g)
|
¾
|
||||
|
All
Directors and
Executive
Officers as a
Group
|
27,626,244 (j)
|
8.0%
|
|
(a)
|
Includes
shares that the indicated persons have the right to acquire (through
the
exercise of options) on or within 60 days after May 31, 2007, as
follows: John R. Belk (67,821); Peter A. Bridgman (12,220);
William H. Crown (28,106); Joe T. Ford (2,407,340); Lawrence L.
Gellerstedt, III (67,821); Emon A. Mahony, Jr. (67,821); John P.
McConnell
(67,821); Josie C. Natori (67,821); John W. Stanton (10,000); Warren
A.
Stephens (51,935); and Ronald Townsend
(22,607).
|
|
(b)
|
The
nature of the beneficial ownership is shared voting and investment
power
with respect to all of the shares reported above, but for 99 shares
owned
by Mr. Crown’s spouse, with respect to which Mr. Crown has no voting or
investment power. Mr. Crown disclaims beneficial ownership of
all these shares, except 1,542 shares owned by him, and his pro rata
share
of 5,713,292 shares owned directly or indirectly by partnerships
of which
he is a partner and corporations of which he is a
shareholder.
|
|
(c)
|
Includes
97,962 shares held by Mr. Ford’s spouse, with respect to which Mr. Ford
has no voting or investment power.
|
|
(d)
|
Includes
2,595 shares held by Mr. Mahony’s spouse, with respect to which Mr. Mahony
has shared investment power and no voting
power.
|
|
(e)
|
The
nature of the beneficial ownership is shared voting and investment
power
with respect to all of the shares reported above. Mr. Stanton
disclaims beneficial ownership of 12,249 of these shares, except
to the
extent of his pecuniary interest in
them.
|
|
(f)
|
Mr.
Stephens has shared voting and investment power with respect to 7,342,321
of the shares reported above and no voting or investment power with
respect to 10,000 shares owned by Mr. Stephens wife. Mr.
Stephens disclaims beneficial ownership of all shares reported except
to
the extent of his pecuniary interest in
them.
|
|
(g)
|
Includes
shares that the indicated persons have the right to acquire (through
the
exercise of options) on or within 60 days after May 31, 2007, as
follows: Scott T. Ford (2,342,576); Kevin L. Beebe (1,434,610);
Jeffrey H. Fox (1,492,064); Richard N. Massey (14,665); and Sharilyn
S.
Gasaway (80,654).
|
|
(h)
|
Includes
1,478 shares held by Mr. Ford’s spouse with respect to which Mr. Ford has
no voting or investment power.
|
|
(i)
|
Includes
10 shares held by Mr. Fox’s spouse as custodian, with respect to which Mr.
Fox has no investment or voting
power.
|
|
(j)
|
Includes
a total of 8,927,053 shares that members of the group have the right
to
acquire (through the exercise of options) on or within 60 days after
May
31, 2007.
|
We
file
annual, quarterly and current reports, proxy statements and other information
with the SEC. You may read and copy any document we file at the SEC’s
public reference room located at 100 F Street, N.E., Room 1580, Washington,
D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference room. Our SEC filings are also available to
the public at the SEC’s website at http://www.sec.gov. You also may
obtain free copies of the documents we file with the SEC by going to the
investor relations section of our website at www.alltel.com. Our
website address is provided as an inactive textual reference
only. The information provided on our website is not part of this
proxy statement, and therefore is not incorporated herein by
reference.
Reports,
proxy statements or other information concerning us may also be inspected at
the
offices of the NYSE at 20 Broad Street, New York, New York 10005.
Statements
contained in this proxy statement, or in any document incorporated by reference
in this proxy statement regarding the contents of any contract or other
document, are not necessarily complete and each such statement is qualified
in
its entirety by reference to that contract or other document filed as an exhibit
with the SEC. The SEC allows us to “incorporate by reference” into
this proxy statement documents we file with the SEC. This means that
we can disclose important information to you by referring you to those
documents. The information incorporated by reference is considered to be a
part of this proxy statement, and later information that we file with the SEC
will update and supersede that information. We incorporate by
reference the documents listed below and any documents filed by us pursuant
to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
proxy statement and before the date of the special meeting:
|
·
|
Annual
Report on Form 10-K for the fiscal year ended December 31,
2006;
|
|
·
|
Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 2007;
and
|
|
·
|
Current
Reports on Form 8-K filed on May 24,
2007.
|
Any
person, including any beneficial owner, to whom this proxy statement is
delivered may request copies of proxy statements and any of the documents
incorporated by reference in this document or other information concerning
us,
without charge, by written or telephonic request directed to Director Investor
Relations, Alltel Corporation, One Allied Drive, Little Rock, Arkansas 72202,
(800) 446-3628, on the investor relations section of the Company’s website at
www.alltel.com or from the SEC through the SEC’s website at the address provided
above. Documents incorporated by reference are available without
charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference into those documents.
THIS
PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY
JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE
SUCH PROXY SOLICITATION IN THAT JURISDICTION. YOU SHOULD RELY ONLY ON
THE INFORMATION CONTAINED OR
INCORPORATED
BY REFERENCE IN THIS PROXY STATEMENT TO VOTE YOUR SHARES AT THE SPECIAL
MEETING. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY
STATEMENT. THIS PROXY STATEMENT IS DATED [ ],
2007. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS
PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND THE MAILING
OF THIS PROXY STATEMENT TO STOCKHOLDERS DOES NOT CREATE ANY IMPLICATION TO
THE
CONTRARY.
AGREEMENT
AND PLAN OF MERGER
among
ATLANTIS
HOLDINGS LLC,
ATLANTIS
MERGER SUB, INC.
and
ALLTEL
CORPORATION
Dated
as
of May 20, 2007
|
|
TABLE
OF CONTENTS
|
Pages
|
||
|
ARTICLE
I THE MERGER
|
||
|
Section
1.1
|
The
Merger
|
A-1
|
|
Section
1.2
|
Closing
|
A-2
|
|
Section
1.3
|
Effective
Time
|
A-2
|
|
Section
1.4
|
Effects
of the Merger
|
A-2
|
|
Section
1.5
|
Company
Charter and By-laws of the Surviving Corporation
|
A-2
|
|
Section
1.6
|
Directors
|
A-2
|
|
Section
1.7
|
Officers
|
A-2
|
|
Section
1.8
|
Further
Assurances
|
A-2
|
|
ARTICLE
II CONVERSION OF SHARES; EXCHANGE OF
CERTIFICATES
|
A-3
|
|
|
Section
2.1
|
Effect
on Capital Stock
|
A-3
|
|
Section
2.2
|
Exchange
of Certificates
|
A-5
|
|
Section
2.3
|
Effect
of the Merger on Company Stock Options and Company Restricted
Shares
|
A-7
|
|
ARTICLE
III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
|
A-9
|
|
|
Section
3.1
|
Qualification,
Organization, Subsidiaries, etc.
|
A-9
|
|
Section
3.2
|
Capital
Stock
|
A-10
|
|
Section
3.3
|
Subsidiaries
|
A-11
|
|
Section
3.4
|
Corporate
Authority Relative to This Agreement; No Violation
|
A-11
|
|
Section
3.5
|
Reports
and Financial Statements
|
A-13
|
|
Section
3.6
|
No
Undisclosed Liabilities
|
A-14
|
|
Section
3.7
|
Compliance
with Law; Permits
|
A-14
|
|
Section
3.8
|
Environmental
Laws and Regulations
|
A-15
|
|
Section
3.9
|
Employee
Benefit Plans
|
A-16
|
|
Section
3.10
|
Interested
Party Transactions
|
A-17
|
|
Section
3.11
|
Absence
of Certain Changes or Events
|
A-18
|
|
Section
3.12
|
Investigations;
Litigation
|
A-18
|
|
Section
3.13
|
Proxy
Statement; Other Information
|
A-18
|
|
Section
3.14
|
Tax
Matters
|
A-18
|
|
Section
3.15
|
Labor
Matters
|
A-19
|
|
Section
3.16
|
Intellectual
Property
|
A-20
|
|
Section
3.17
|
Property
|
A-20
|
|
Section
3.18
|
Required
Vote of the Company Shareholders
|
A-21
|
|
Section
3.19
|
Material
Contracts
|
A-21
|
|
Section
3.20
|
Insurance
|
A-23
|
|
Section
3.21
|
Finders
or Brokers
|
A-23
|
|
Section
3.22
|
Fairness
Opinion
|
A-23
|
|
Section
3.23
|
State
Takeover Statutes; Charter Provisions; Company Rights
Agreement
|
A-23
|
|
ARTICLE
IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB
|
A-24
|
|
|
Section
4.1
|
Qualification;
Organization
|
A-24
|
|
Section
4.2
|
Corporate
Authority Relative to This Agreement; No Violation
|
A-24
|
|
Section
4.3
|
Proxy
Statement; Other Information
|
A-25
|
|
Section
4.4
|
Financing
|
A-25
|
|
Section
4.5
|
Ownership
and Operations of Merger Sub
|
A-26
|
|
Section
4.6
|
Finders
or Brokers
|
A-26
|
|
Section
4.7
|
Certain
Arrangements
|
A-26
|
|
Section
4.8
|
Investigations;
Litigation
|
A-27
|
|
Section
4.9
|
Guarantee
|
A-27
|
|
Section
4.10
|
Solvency
|
A-27
|
|
Section
4.11
|
No
Other Information
|
A-27
|
|
Section
4.12
|
Ownership
of Parent; Other Investments of Parent Affiliates
|
A-28
|
|
ARTICLE
V COVENANTS AND AGREEMENTS
|
A-28
|
|
|
Section
5.1
|
Conduct
of Business
|
A-28
|
|
Section
5.2
|
No
Solicitation
|
A-32
|
|
Section
5.3
|
Filings;
Other Actions
|
A-35
|
|
Section
5.4
|
Employee
Matters
|
A-36
|
|
Section
5.5
|
Required
Approvals
|
A-37
|
|
Section
5.6
|
Takeover
Statute
|
A-40
|
|
Section
5.7
|
Public
Announcements
|
A-40
|
|
Section
5.8
|
Indemnification
and Insurance
|
A-41
|
|
Section
5.9
|
Financing
|
A-42
|
|
Section
5.10
|
Access;
Confidentiality
|
A-46
|
|
Section
5.11
|
Notification
of Certain Matters
|
A-46
|
|
Section
5.12
|
Rule
16b-3
|
A-47
|
|
Section
5.13
|
Control
of Operations
|
A-47
|
|
Section
5.14
|
Certain
Transfer Taxes
|
A-47
|
|
Section
5.15
|
Obligations
of Merger Sub
|
A-47
|
|
Section
5.16
|
Treatment
of Certain Notes
|
A-47
|
|
Section
5.17
|
Termination
of Certain Other Indebtedness
|
A-49
|
|
ARTICLE
VI CONDITIONS TO THE MERGER
|
A-50
|
|
|
Section
6.1
|
Conditions
to Each Party’s Obligation to Effect the Merger
|
A-50
|
|
Section
6.2
|
Conditions
to Obligation of the Company to Effect the Merger
|
A-50
|
|
Section
6.3
|
Conditions
to Obligation of Parent and Merger Sub to Effect the
Merger
|
A-50
|
|
Section
6.4
|
Frustration
of Closing Conditions
|
A-51
|
|
ARTICLE
VII TERMINATION
|
A-51
|
|
|
Section
7.1
|
Termination
or Abandonment
|
A-51
|
|
Section
7.2
|
Termination
Fees
|
A-54
|
|
ARTICLE
VIII MISCELLANEOUS
|
A-56
|
|
|
Section
8.1
|
No
Survival of Representations and Warranties
|
A-56
|
|
Section
8.2
|
Expenses
|
A-56
|
|
Section
8.3
|
Counterparts;
Effectiveness
|
A-56
|
|
Section
8.4
|
Governing
Law
|
A-57
|
|
Section
8.5
|
Jurisdiction;
Enforcement
|
A-57
|
|
Section
8.6
|
WAIVER
OF JURY TRIAL
|
A-57
|
|
Section
8.7
|
Notices
|
A-58
|
|
Section
8.8
|
Assignment;
Binding Effect
|
A-59
|
|
Section
8.9
|
Severability
|
A-59
|
|
Section
8.10
|
Entire
Agreement; No Third-Party Beneficiaries
|
A-59
|
|
Section
8.11
|
Amendments;
Waivers
|
A-60
|
|
Section
8.12
|
Headings
|
A-60
|
|
Section
8.13
|
Interpretation
|
A-60
|
|
Section
8.14
|
No
Recourse
|
A-60
|
|
Section
8.15
|
Certain
Definitions
|
A-61
|
|
|
AGREEMENT
AND PLAN OF MERGER, dated as of May 20, 2007 (this “Agreement”),
among
Atlantis Holdings LLC, a Delaware limited liability company (“Parent”),
Atlantis Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary
of Parent (“Merger
Sub”),
and
Alltel Corporation, a Delaware corporation (the “Company”).
W
I T N E S
S E T H
:
WHEREAS,
the parties intend that Merger Sub be merged with and into the Company, with
the
Company surviving that merger on the terms and subject to the conditions set
forth in this Agreement (the “Merger”);
WHEREAS,
the Board of Directors of the Company has (i) determined that it is in the
best
interests of the Company and its shareholders, and declared it advisable, to
enter into this Agreement, (ii) approved the execution, delivery and performance
by the Company of this Agreement and the consummation of the transactions
contemplated hereby, including the Merger and (iii) resolved to recommend
adoption of this Agreement by the shareholders of the Company;
WHEREAS,
the members of Parent and the Board of Directors of Merger Sub have each
approved this Agreement and declared it advisable for Parent and Merger Sub,
respectively, to enter into this Agreement;
WHEREAS,
concurrently with the execution of this Agreement, and as a condition and
inducement to the Company’s willingness to enter into this Agreement, each of
TPG Partners V, L.P. and GS Capital Partners VI Fund, L.P. (the “Guarantors”)
has
provided a guarantee (the “Guarantee”)
in
favor of the Company, in the form set forth on Section 4.9 of the Parent
Disclosure Letter, with respect to certain of Parent’s obligations under this
Agreement; and
WHEREAS,
Parent, Merger Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and the
transactions contemplated by this Agreement and also to prescribe certain
conditions to the Merger as specified herein.
NOW,
THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, and intending to be
legally bound hereby, Parent, Merger Sub and the Company hereby agree as
follows:
ARTICLE
I
THE
MERGER
Section
1.1 The
Merger.
At the
Effective Time, upon the terms and subject to the conditions set forth in this
Agreement and in accordance with the applicable provisions of the Delaware
General Corporation Law (the “DGCL”),
Merger Sub shall be merged with and into the Company, whereupon the separate
corporate existence of Merger Sub shall cease, and the Company shall continue
as
the surviving company in the Merger (the “Surviving
Corporation”)
and a
wholly owned subsidiary of Parent.
A-1
Section
1.2 Closing.
The
closing of the Merger (the “Closing”)
shall
take place at the offices of Wachtell,
Lipton, Rosen & Katz, 51 West 52nd
Street,
New
York,
New York at 10:00 a.m., local time, on the date (the “Closing
Date”)
following the satisfaction or waiver (to the extent permitted by applicable
Law)
of the conditions set forth in Article VI (other than those conditions that
by
their nature are to be satisfied at the Closing, but subject to the satisfaction
or waiver of such conditions)
that is
the earlier of (a) any Business Day as may be specified by Parent on no less
than three Business Days’ prior notice to the Company and (b) the final day of
the Marketing Period, or such other date or time specified by the parties in
writing.
Section
1.3 Effective
Time.
On
the Closing Date,
the
Company
shall
cause the Merger to be consummated by executing, delivering and filing the
Certificate of Merger (the “Certificate
of Merger”)
with
the Secretary of State of the State of Delaware in accordance with the relevant
provisions of the DGCL and other applicable Delaware Law. The Merger shall
become effective at such time as the Certificate of Merger is duly filed with
the Secretary of State of the State of Delaware, or at such later date or time
as may be agreed by Parent and the Company in writing and specified in the
Certificate of Merger in accordance with the DGCL (such time as the Merger
becomes effective is referred to herein as the “Effective
Time”).
Section
1.4 Effects
of the Merger.
The
Merger shall have the effects set forth in this Agreement and the applicable
provisions of the DGCL.
Section
1.5 Company
Charter and By-laws of the Surviving Corporation.
(a) The
Amended and Restated Certificate of Incorporation of the Company (the
“Company
Charter”)
shall,
by virtue of the Merger, be amended in its entirety to be the same as set forth
in Exhibit 1.5(a) and, as so amended, shall be the certificate of
incorporation of the Surviving Corporation following the Merger until thereafter
amended in accordance with the provisions thereof, hereof and of applicable
Law,
in each case consistent with the obligations set forth in Section
5.8.
(b) The
by-laws of Merger Sub, as in effect as of immediately prior to the Effective
Time, shall, by virtue of the Merger, be the by-laws of the Surviving
Corporation until thereafter amended in accordance with the provisions thereof,
hereof and of applicable Law, in each case consistent with the obligations
set
forth in Section 5.8.
Section
1.6 Directors.
The
directors of Merger Sub as of immediately prior to the Effective Time shall
be
the initial directors of the Surviving Corporation and shall hold office until
their respective successors are duly elected and qualified, or their earlier
death, resignation or removal.
Section
1.7 Officers.
The
officers of the Company as of immediately prior to the Effective Time Date
shall
be the initial officers of the Surviving Corporation and shall hold office
until
their respective successors are duly elected and qualified, or their earlier
death, resignation or removal.
Section
1.8 Further
Assurances.
If at
any time after the Effective Time the Surviving Corporation shall consider
or be
advised that any deeds, bills of sale, assignments or assurances or any other
acts or things are necessary, desirable or proper (a) to vest, perfect or
A-2
confirm,
of record or otherwise, in the Surviving Corporation its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of either Merger Sub or the Company, or (b) otherwise
to carry out the purposes of this Agreement, the Surviving Corporation and
its
proper officers and directors or their designees shall be authorized to execute
and deliver, in the name and on behalf of either of Merger Sub and the
Company, all such deeds, bills of sale, assignments and assurances and to do,
in
the name and on behalf of either Merger Sub or the Company, all such other
acts and things as may be necessary, desirable or proper to vest, perfect or
confirm the Surviving Corporation’s right, title or interest in, to or under any
of the rights, privileges, powers, franchises, properties or assets
of Merger Sub or the Company and otherwise to carry out the purposes of
this Agreement.
ARTICLE
II
CONVERSION
OF SHARES; EXCHANGE OF CERTIFICATES
Section
2.1 Effect
on Capital Stock.
At the
Effective Time, by virtue of the Merger and without any action on the part
of
the Company, Parent, Merger Sub or the holders of any securities of the Company,
Parent or Merger Sub:
(a) Conversion
of Company Common Stock and Company Preferred Stock.
(i)
Subject to Section 2.1(b), 2.1(d) and 2.1(e), each issued and outstanding share
of common stock, par value $1.00, of the Company outstanding immediately prior
to the Effective Time (such shares, collectively, “Company
Common Stock”,
and
each, a “Common
Share”),
other
than (i) any Common Shares held by any direct or indirect wholly owned
subsidiary of the Company, which Common Shares shall remain outstanding except
that the number of such Common Shares shall be appropriately adjusted in the
Merger to maintain relative ownership percentages (if any, the “Remaining
Common Shares”),
(ii)
any shares of Company Common Stock (the “Dissenting
Common Shares”)
that
are owned by stockholders (the “Dissenting
Common Stockholders”)
properly exercising appraisal rights pursuant to Section 262 of the DGCL,
and (iii) any Cancelled Shares (as defined, and to the extent provided in
Section 2.1(b)), shall thereupon be converted automatically into and shall
thereafter represent the right to receive an amount in cash equal to $71.50
(the
“Common
Stock Merger Consideration”).
(ii)
Subject to Section 2.1(b), 2.1(d) and 2.1(e), each issued and outstanding share
of $2.06 No Par Cumulative Convertible Preferred Stock, Series C, of the Company
outstanding immediately prior to the Effective Time (such shares, collectively,
“Company
Series C Preferred Stock”
and
each, a “Series
C Preferred Share”),
other
than (i) any Series C Preferred Shares held by any direct or indirect wholly
owned subsidiary of the Company, which Series C Preferred Shares shall remain
outstanding except that the number of such Series C Preferred Shares shall
be
appropriately adjusted in the Merger to maintain relative ownership percentages
(if any, the “Remaining
Series C Preferred Shares”),
(ii)
any shares of Company Series C Preferred Stock (the “Dissenting
Series C Preferred Shares”)
that
are owned by stockholders (the “Dissenting
Series C Preferred Stockholders”)
properly exercising appraisal rights pursuant to Section 262 of the DGCL,
and (iii) any Cancelled Shares (to the extent provided in Section 2.1(b)),
shall
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thereupon
be converted automatically into and shall thereafter represent the right to
receive an amount in cash equal to $523.22 (the “Series
C Preferred Stock Merger Consideration”).
(iii)
Subject to Section 2.1(b), 2.1(d) and 2.1(e), each issued and outstanding share
of $2.25 No Par Cumulative Convertible Preferred Stock, Series D, of the Company
outstanding immediately prior to the Effective Time (such shares, collectively,
“Company
Series D Preferred Stock”,
and
each, a “Series
D Preferred Share”
and
collectively with the Series C Preferred Shares and the Common Shares, the
“Shares”),
other
than (i) any Series D Preferred Shares held by any direct or indirect wholly
owned subsidiary of the Company, which Series D Preferred Shares shall remain
outstanding except that the number of such Series D Preferred Shares shall
be
appropriately adjusted in the Merger to maintain relative ownership percentages
(if any, the “Remaining
Series D Preferred Shares”
and
collectively with the Remaining Series C Preferred Shares and the Remaining
Common Shares, the “Remaining
Shares”),
(ii)
any shares of Company Series D Preferred Stock (the “Dissenting
Series D Preferred Shares”
and
collectively with the Dissenting Series C Preferred Shares and the Dissenting
Common Shares, the “Dissenting
Shares”)
that
are owned by stockholders (the “Dissenting
Series D Preferred Stockholders”
and,
collectively with the Dissenting Common Stockholders and the Dissenting Series
C
Preferred Stockholders, the “Dissenting
Stockholders”)
properly exercising appraisal rights pursuant to Section 262 of the DGCL,
and (iii) any Cancelled Shares (to the extent provided in Section 2.1(b)),
shall
thereupon be converted automatically into and shall thereafter represent the
right to receive an amount in cash equal to $481.37 (the “Series
D Preferred Stock Merger Consideration”
and
collectively with the Series C Preferred Stock Merger Consideration and the
Common Stock Merger Consideration, the “Merger
Consideration”).
(iv)
All
Shares that have been converted into the right to receive the Merger
Consideration as provided in this Section 2.1 shall be automatically cancelled
and shall cease to exist, and the holders of certificates which immediately
prior to the Effective Time represented such Shares shall cease to have any
rights with respect to such Shares other than the right to receive the
applicable Merger Consideration in accordance with Section 2.2.
(b) Parent,
Merger Sub and Company-Owned Shares.
Each
Share that is owned, directly or indirectly, by Parent or Merger Sub immediately
prior to the Effective Time, if any, or held by the Company immediately prior
to
the Effective Time (in each case, other than any such Shares held on behalf
of
third parties or Shares held in the trust to fund Company obligations) (the
“Cancelled
Shares”)
shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be cancelled and retired and shall cease to exist, and no consideration
shall be delivered in exchange for such cancellation and retirement.
(c) Conversion
of Merger Sub Common Stock.
At the
Effective Time, by virtue of the Merger and without any action on the part
of
the holder thereof, each share of common stock, par value $0.01 per share,
of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
be converted into and become one validly issued, fully paid and nonassessable
share of common stock, par value $0.01 per share, of the Surviving Corporation
and shall with the Remaining Shares, if any, constitute the only outstanding
shares of capital stock of the Surviving Corporation. From and after the
Effective Time, all certificates representing the common stock of Merger Sub
shall be deemed for all purposes to represent the
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number
of
shares of common stock of the Surviving Corporation into which they were
converted in accordance with the immediately preceding sentence.
(d) Adjustments.
If at
any time during the period between the date of this Agreement and the Effective
Time there is any change in the outstanding shares of capital stock of the
Company, or securities convertible or exchangeable into or exercisable for
shares of capital stock, shall occur as a result of any reclassification,
recapitalization, stock split (including a reverse stock split) or subdivision
or combination, exchange or readjustment of shares, or any stock dividend or
stock distribution with a record date during such period (excluding, in each
case, normal quarterly cash dividends), merger or other similar transaction,
the
applicable Merger Consideration shall be equitably adjusted, without
duplication, to reflect such change; provided
that
nothing in this Section 2.1(d) shall be construed to permit the Company to
take
any action with respect to its securities that is prohibited by the terms of
this Agreement.
(e) Dissenters’
Rights.
Any
Person who otherwise would be deemed a Dissenting Stockholder shall not be
entitled to receive the applicable Merger Consideration with respect to the
Shares owned by such Person unless and until such Person shall have failed
to
perfect or shall have effectively withdrawn or lost such holder’s right to
dissent from the Merger under the DGCL. Each Dissenting Stockholder shall be
entitled to receive only the payment provided by Section 262 of the DGCL
with respect to Shares owned by such Dissenting Stockholder. The Company shall
give Parent (i) prompt notice of any written demands for appraisal,
attempted withdrawals of such demands, and any other instruments served pursuant
to applicable Law received by the Company relating to stockholders’ rights of
appraisal and (ii) the opportunity to direct all negotiations and proceedings
with respect to demand for appraisal under the DGCL. The Company shall not,
except with the prior written consent of Parent, voluntarily make any payment
with respect to any demands for appraisals of Dissenting Shares, offer to settle
or settle any such demands or approve any withdrawal of any such
demands.
Section
2.2 Exchange
of Certificates.
(a) Paying
Agent.
At or
immediately prior to the Effective Time, Parent shall deposit, or shall cause
to
be deposited, with a U.S. bank or trust company that shall be appointed by
Parent and approved in advance by the Company (such approval not to be
unreasonably withheld) to act as a paying agent hereunder (the “Paying
Agent”),
in
trust for the benefit of holders of the Shares, cash in U.S. dollars sufficient
to pay the aggregate Merger Consideration in exchange for all of the Shares
outstanding immediately prior to the Effective Time pursuant to the provisions
of this Article II (such cash being hereinafter referred to as the “Exchange
Fund”).
(b) Payment
Procedures.
(i) As
soon
as reasonably practicable after the Effective Time and in any event not later
than the fifth Business Day following the Effective Time, the Paying Agent
shall
mail to each holder of record of Shares whose Shares were converted into the
Merger Consideration pursuant to Section 2.1, (A) a letter of transmittal
which shall specify that delivery shall be effected, and risk of loss and title
to the certificates that immediately prior to the Effective Time represented
Shares (“Certificates”)
shall
pass, only upon delivery of Certificates to the Paying Agent (and shall be
in
such form and have such other provisions as Parent and the
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Company
may reasonably determine prior to the Effective Time) and (B) instructions
for use in effecting the surrender of Certificates (or effective affidavits
of
loss in lieu thereof) or non-certificated Shares represented by book-entry
(“Book-Entry
Shares”)
in
exchange for the Merger Consideration.
(ii) Upon
surrender of Certificates (or effective affidavits of loss in lieu thereof)
or
Book-Entry Shares to the Paying Agent together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
and such other documents as may customarily be required by the Paying Agent,
the
holder of such Certificates or Book-Entry Shares shall be entitled to receive
in
exchange therefor an amount (after giving effect to any required Tax
withholdings) equal to the product of (x) the number of Shares represented
by such holder’s properly surrendered Certificates (or effective affidavits of
loss in lieu thereof) and Book-Entry Shares multiplied by (y) the
applicable Merger Consideration. No interest will be paid or accrued on any
amount payable upon due surrender of Certificates or Book-Entry Shares. In
the
event of a transfer of ownership of Shares that is not registered in the
transfer or stock records of the Company, any cash to be paid upon due surrender
of the Certificate formerly representing such Shares may be paid to such a
transferee if such Certificate is presented to the Paying Agent, accompanied
by
all documents required to evidence and effect such transfer and to evidence
that
any applicable stock transfer or other similar Taxes have been paid or are
not
applicable.
(iii) The
Surviving Corporation, Parent and the Paying Agent shall be entitled to deduct
and withhold from the consideration otherwise payable under this Agreement
to
any Person such amounts as are required to be withheld or deducted under the
Internal Revenue Code of 1986, as amended (the “Code”),
or
any provision of U.S. state, local or foreign Tax Law with respect to the making
of such payment. To the extent that amounts are so withheld or deducted and
paid
over to the applicable Governmental Entity, such withheld or deducted amounts
shall be treated for all purposes of this Agreement as having been paid to
such
Person in respect of which such deduction and withholding were made.
(c) Closing
of Transfer Books.
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 that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or Parent for transfer, they shall be
cancelled and exchanged for the proper amount pursuant to and subject to the
requirements of this Article II.
(d) Termination
of Exchange Fund.
Any
portion of the Exchange Fund (including the proceeds of any investments thereof)
that remains undistributed to the former holders of Shares for one year after
the Effective Time shall be delivered to the Surviving Corporation upon demand,
and any former holders of Shares who have not surrendered their Shares in
accordance with this Section 2.2 shall thereafter look only to the Surviving
Corporation for payment of their claim for the Merger Consideration, without
any
interest thereon, upon due surrender of their Shares.
(e) No
Liability.
Notwithstanding anything herein to the contrary, none of the Company, Parent,
Merger Sub, the Surviving Corporation, the Paying Agent or any other person
A-6
shall
be
liable to any former holder of Shares for any amount properly delivered to
a
public official pursuant to any applicable abandoned property, escheat or
similar Law. If any Certificate or Book-Entry Share shall not have been
surrendered prior to the date on which the related Merger Consideration would,
pursuant to applicable Law, escheat to or become the property of any
Governmental Entity, any such Merger Consideration shall, to the extent
permitted by applicable Law, immediately prior to such time, become the property
of the Surviving Corporation, free and clear of all claims or interests of
any
Person previously entitled thereto.
(f) Investment
of Exchange Fund.
The
Paying Agent shall invest all cash included in the Exchange Fund as reasonably
directed by Parent; provided,
however,
that any
investment of such cash shall in all events be limited to direct short-term
obligations of, or short-term obligations fully guaranteed as to principal
and
interest by, the U.S. government, in commercial paper rated A-1 or P-1 or better
by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation,
respectively, or in certificates of deposit, bank repurchase agreements or
banker’s acceptances of commercial banks with capital exceeding $10 billion
(based on the most recent financial statements of such bank that are then
publicly available), and that no such investment or loss thereon shall affect
the amounts payable to holders of Certificates or Book-Entry Shares pursuant
to
this Article II. Any interest and other income resulting from such investments
shall be paid to the Surviving Corporation upon demand.
(g) Lost
Certificates.
In the
case of any Certificate that has been lost, stolen or destroyed, upon the making
of an affidavit, in form and substance reasonably acceptable to Parent, of
that
fact by the person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent or the Paying Agent, the posting by such person
of an
indemnity agreement or, at the election of Parent or the Paying Agent, a bond
in
customary amount as indemnity against any claim that may be made against it
or
the Surviving Corporation with respect to such Certificate, the Paying Agent
will deliver in exchange for such lost, stolen or destroyed Certificate an
amount equal to the number of Shares represented by such lost, stolen or
destroyed Certificate multiplied by the Merger Consideration.
(h) No
Further Ownership Rights.
All
cash paid upon the surrender of Certificates in accordance with the terms of
this Article II shall be deemed to have been paid in full satisfaction of all
rights pertaining to the Shares formerly represented by such Certificates.
Section
2.3 Effect
of the Merger on Company Stock Options and Company Restricted
Shares.
Except
for Company Stock Options and Restricted Shares as to which the treatment in
the
Merger is hereafter separately agreed by Parent and the holder thereof, which
Company Stock Options and Restricted Shares shall be treated as so
agreed:
(a) Each
outstanding option to acquire shares of Company Common Stock (each, a
“Company
Stock Option”),
whether or not then vested or exercisable, that is outstanding immediately
prior
to the Effective Time shall, as of immediately prior to the Effective Time,
become fully vested and, subject to the terms of the Company Stock Plans, be
converted into the right to receive a payment in cash, payable in U.S. dollars
and without interest, equal to the product of (i) the excess, if any, of (x)
the
Common Stock Merger Consideration over (y) the exercise price per share of
Company Common Stock subject to such Company Stock Option,
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multiplied
by (ii) the number of shares of Company Common Stock for which such Company
Stock Option shall not theretofore have been exercised. The Surviving
Corporation shall pay the holders of Company Stock Options the cash payments
described in this Section 2.3(a) on or as soon as reasonably practicable after
the date on which the Effective Time occurs, but in any event within five
Business Days thereafter.
(b) Immediately
prior to the Effective Time, except as separately agreed by Parent and the
holder thereof, each award of restricted Company Common Stock (the “Company
Restricted Shares”)
and
any accrued stock dividends shall
vest in full and be converted into the right to receive the Common Stock Merger
Consideration as provided in Section 2.1(a). The Surviving Corporation will
vest
and pay all cash dividends accrued on such Company Restricted Shares to the
holders thereof within five Business Days after the Effective Time.
(c)
No later
than seven days prior to the Effective Time, the then-current Option Period
(as
defined in the Company’s Employee Stock Purchase Plan (the “ESPP”))
shall
terminate (the “Final
Date”)
and
each participant therein shall be entitled to apply the payroll deductions
of
such participant accumulated as of the Final Date for the then-current Option
Period to the purchase of whole shares of Company Common Stock in accordance
with the terms of the ESPP, which number of shares shall be canceled and be
converted into the right to receive the Common Stock Merger Consideration as
provided in Section 2.1(a).
(d) The
Surviving Corporation shall be entitled to deduct and withhold from the amounts
otherwise payable pursuant to this Section 2.3 to any holder of Company Stock
Options or Company Restricted Shares such amounts as the Surviving Corporation
is required to deduct and withhold with respect to the making of such payment
under the Code, or any provision of state, or local Tax Law, and the Surviving
Corporation shall make any required filings with and payments to Tax authorities
relating to any such deduction or withholding. To the extent that amounts are
so
deducted and withheld by the Surviving Corporation, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the holder
of the Company Stock Options or Company Restricted Shares in respect of which
such deduction and withholding was made by the Surviving
Corporation.
(e) The
Board
of Directors of the Company (or the appropriate committee thereof) shall take
such actions of such Board or Committee as are necessary in connection with
the
foregoing provisions of this Section 2.3, it being understood that, except
to
the extent otherwise agreed between Parent and a holder of a Company Stock
Option or Company Restricted Share, the intention of the parties is that
following the Effective Time no holder of an Option or Restricted Share or
any
participant in any Plan or other employee benefit arrangement of the Company
shall have any right thereunder to acquire any capital stock (including any
“phantom” stock or stock appreciation rights) of the Company, any Subsidiary or
the Surviving Corporation.
A-8
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except
(i) as disclosed in, and reasonably apparent from, the Company SEC Documents
publicly available prior to the date of this Agreement and only as and to the
extent disclosed therein (other than any forward looking disclosures set forth
in any risk factor section, any disclosures in any section relating to forward
looking statements and any other disclosures included therein to the extent
they
are primarily predictive or forward-looking in nature) or (ii) as
disclosed in the disclosure letter delivered by the Company to Parent
immediately prior to the execution of this Agreement (the “Company
Disclosure Letter”,
it
being agreed that disclosure of any item in any section of the Company
Disclosure Letter shall also be deemed disclosure with respect to any other
section of this Agreement to which the relevance of such item is reasonably
apparent), the Company represents and warrants to Parent and Merger Sub as
follows:
Section
3.1 Qualification,
Organization, Subsidiaries, etc.
(a) Each
of
the Company and its Subsidiaries is a legal entity duly organized, validly
existing and in good standing under the Laws of its respective jurisdiction
of
organization, except for such failures with respect to any Subsidiaries that
would not, individually or in the aggregate, have a Company Material Adverse
Effect. Each of the Company and its Subsidiaries has all requisite corporate,
partnership or similar power and authority to own, lease and operate its
properties and assets and to carry on its business as presently conducted,
except for such failures that would not, individually or in the aggregate,
have
a Company Material Adverse Effect.
(b) Each
of
the Company and its Subsidiaries is duly qualified to do business and is in
good
standing as a foreign corporation (or other legal entity) in each jurisdiction
where the ownership, leasing or operation of its assets or properties or conduct
of its business requires such qualification, except where the failure to be
so
qualified or in good standing would not, individually or in the aggregate,
have
a Company Material Adverse Effect. The organizational or governing documents
of
the Company and each of its Subsidiaries, as previously provided to Parent,
are
in full force and effect and neither the Company nor any Subsidiary is in
violation of its organizational or governing documents, in each case except
for
such failures with respect to any Subsidiaries that would not, individually
or
in the aggregate, have a Company Material Adverse Effect.
(c) As
used
in this Agreement, any reference to any fact, circumstance, event, change,
effect or occurrence having a “Company
Material Adverse Effect”
means
any fact, circumstance, event, change, effect or occurrence that, individually
or in the aggregate with all other facts, circumstances, events, changes,
effects, or occurrences, (1) has or would be reasonably expected to have a
material adverse effect on or with respect to the business, results of operation
or financial condition of the Company and its Subsidiaries taken as a whole,
or
(2) that prevents the Company from consummating, or materially delays or
materially impairs the ability of the Company to consummate, the Merger,
provided,
however,
that,
Company Material Adverse Effect shall not include facts, circumstances, events,
changes, effects or occurrences (i) (A) generally affecting the U.S. mobile
wireless voice and data communications industry or
A-9
the
segments thereof in which the Company and its Subsidiaries operate, or (B)
generally affecting the economy or the financial, debt, credit or securities
markets, in the United States, including effects on such industry, segments,
economy or markets resulting from any political conditions or developments
in
general, or resulting from any outbreak or escalation of hostilities, declared
or undeclared acts of war or terrorism (other than any of the foregoing to
the
extent that it causes any direct damage or destruction to or renders physically
unusable or inaccessible any facility or property of the Company or any of
its
Subsidiaries); (ii) reflecting or resulting from changes or proposed changes
in
Law (including rules and regulations), interpretations thereof, regulatory
conditions or GAAP (or authoritative interpretations thereof);
or
(iii) resulting from actions of the Company or any of its Subsidiaries
which Parent has expressly requested in writing, or resulting from the
announcement of this Agreement and the transactions contemplated hereby;
except
to
the extent that, with respect to clause (i), the impact of such fact,
circumstance, event, change, effect or occurrence is materially
disproportionately adverse to the business, results of operations or financial
condition of the Company and its Subsidiaries, taken as a whole, and is not
otherwise excluded from the definition thereof.
Section
3.2 Capital
Stock.
(a) (x)
The
authorized capital stock of the Company consists of 1,000,000,000 shares of
Company Common Stock, 50,000,000 shares of Cumulative Preferred Stock, par
value
$25.00 per share, and 50,000,000 shares of No Par Cumulative Preferred Stock
(together, the “Authorized
Preferred Stock”),
600,000 of which have been designated as Company Series C Preferred Stock and
773,111 of which have been designated as Company Series D Preferred Stock.
As of
May 17, 2007, (i) 343,781,230 shares of Company Common Stock were issued and
outstanding, (ii) no shares of Company Common Stock were held in treasury,
(iii)
(A) 16,587,512 shares of Company Common Stock were reserved for issuance
pursuant to the outstanding Company Stock Options and 85,360 shares of Company
Common Stock were reserved for issuance upon conversion of convertible
debentures of a Subsidiary of the Company, (B) 12,600,186
additional shares of Company Common Stock were reserved for issuance for future
grant pursuant to the Company Stock Plans and (C) 74,107 shares of Company
Common Stock were reserved for issuance upon conversion of the Company Series
C
Preferred Stock and 175,534 shares of Company Common Stock were reserved for
issuance upon conversion of the Company Series D Preferred Stock,
and (iv)
10,127 shares of Company Series C Preferred Stock were issued and outstanding
and 26,073 shares of Company Series D Preferred Stock were issued and
outstanding. All outstanding Shares, and all shares of Company Common Stock
reserved for issuance as noted in clause (iii) of the foregoing sentence, when
issued in accordance with the respective terms thereof, are or will be duly
authorized, validly issued, fully paid and non-assessable and free of
pre-emptive or similar rights.
(y) No
Subsidiary of the Company owns any Shares. Section 3.2(a) of the Company
Disclosure Letter lists, as of May 18, 2007, each outstanding Company Stock
Option and share of Restricted Stock, and, as applicable, the exercise price
and
expiration date thereof. The per share exercise price or purchase price for
each
Company Stock Option is equal to or greater than the fair market value of the
underlying Shares on the date of the corporate action effectuating the grant
of
such Company Stock Option.
(b) Except
as
set forth in subsection (a) above, as of the date hereof, (i) the
Company does not have any shares of its capital stock issued or outstanding
other than shares of Company Common Stock that have become outstanding after
May
18, 2007 upon exercise of
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Company
Stock Options outstanding as of such date and (ii) there are no outstanding
subscriptions, options, warrants, calls, convertible securities, stock-based
performance units or other similar rights, agreements or commitments relating
to
the issuance of capital stock or other equity interests to which the Company
or
any of its Subsidiaries is a party obligating the Company or any of its
Subsidiaries to (A) issue, transfer or sell any shares of capital stock or
other equity interests of the Company or any of its Subsidiaries or securities
convertible into or exchangeable for such shares or equity interests,
(B) issue, grant, extend or enter into any such subscription, option,
warrant, call, convertible securities or other similar right, agreement or
arrangement, (C) redeem or otherwise acquire any such shares of capital
stock or other equity interests or (D) provide a material amount of funds
to, or make any material investment (in the form of a loan, capital contribution
or otherwise) in, the Company or any Subsidiary of the Company.
(c) Except
as
set forth in subsection (a) or (b) above, neither the Company nor any of its
Subsidiaries has outstanding bonds, debentures, notes or other obligations,
the
holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the shareholders
of
the Company on any matter.
(d) There
are
no shareholder agreements, voting trusts or other agreements or understandings
to which the Company or any of its Subsidiaries is a party with respect to
the
voting, registration, redemption, repurchase or disposition of the capital
stock
or other equity interest of the Company or any of its Subsidiaries.
Section
3.3 Subsidiaries. Section
3.3 of the Company Disclosure Letter sets forth a complete and correct list
of each “significant subsidiary” of the Company as such term is defined in
Regulation S-X promulgated by the SEC (each, a “Significant
Subsidiary”).
Section 3.3 of the Company Disclosure Letter also sets forth the
jurisdiction of organization and percentage of outstanding equity interests
(including partnership interests and limited liability company interests) owned
by the Company or its Subsidiaries of each Significant Subsidiary. All equity
interests (including partnership interests and limited liability company
interests) of the Company’s Subsidiaries held by the Company or by any other
Subsidiary have been duly and validly authorized and are validly issued, fully
paid and non-assessable and were not issued in violation of any preemptive
or
similar rights, purchase option, call or right of first refusal or similar
rights. All such equity interests owned by the Company or its Subsidiaries
are
free and clear of any Liens, other than restrictions on transfer imposed by
applicable Law. Except for its interests in Subsidiaries of the Company, the
Company does not own, directly or indirectly, 5% or more of the outstanding
capital stock of, or other equity interests, in any Person, or any options,
warrants, rights or securities convertible, exchangeable or exercisable
therefor, in each case if the book value thereof as of December 31, 2006
exceeded $25 million.
Section
3.4 Corporate
Authority Relative to This Agreement; No Violation.
(a) The
Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement and, subject to receipt of the
Company Shareholder Approval, to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of the
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Company
and, except for (i) the Company Shareholder Approval and (ii) the filing of
the
Certificate of Merger with the Secretary of State of the State of Delaware,
no
other corporate proceedings on the part of the Company are necessary to
authorize the consummation of or to consummate the transactions contemplated
hereby. Subject to Section 5.2(d), the Board of Directors of the Company has,
by
resolutions duly adopted at a meeting duly called and held, (x) duly and validly
approved and declared advisable this Agreement and the transactions contemplated
hereby, (y) determined that the transactions contemplated by this Agreement
are
advisable and in the best interests of the Company and its shareholders and
(z)
resolved to recommend in accordance with applicable Law that the Company’s
shareholders vote in favor of adoption and approval of this Agreement and the
transactions contemplated hereby, including the Merger (the “Recommendation”).
This
Agreement has been duly and validly executed and delivered by the Company and,
assuming this Agreement constitutes the valid and binding agreement of Parent
and Merger Sub, constitutes the valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar Laws relating to or affecting creditors’ rights
generally, general equitable principles (whether considered in a proceeding
in
equity or at Law).
(b) Other
than the filing of the Certificate of Merger pursuant to the DGCL or as required
by (i) the Securities Exchange Act of 1934, as amended (the “Exchange
Act”),
and
the rules and regulations promulgated thereunder, (ii) the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder (the “HSR
Act”),
(iii) the Federal Communications Commission (the “FCC”);
(iv) those state public service or public utility commissions or similar
state regulatory bodies (“State
Commissions”)
set
forth in Section 3.4(b)(iv) of the Company Disclosure Letter, (v) foreign
Governmental Entities regulating competition and telecommunications businesses
(the “Foreign
Regulators”)
set
forth in Section 3.4(b)(v) of the Company Disclosure Letter, and (vi) the
approvals set forth on Section 3.4(b)(vi) of the Company Disclosure
Letter (collectively, the “Company
Approvals”),
no
authorization, consent, approval or order of, or filing with, or notice to,
any
United States or foreign governmental or regulatory agency, commission, court,
body, entity or authority (each, a “Governmental
Entity”)
is
necessary, under applicable Law, in connection with the execution, delivery
and
performance of this Agreement by the Company or the consummation by the Company
of the transactions contemplated hereby, except for such authorizations,
consents, approvals, orders, filings or notices that, if not obtained or made,
would not, individually or in the aggregate, have a Company Material Adverse
Effect.
(c) The
execution, delivery and performance by the Company of this Agreement does not,
and the consummation of the transactions contemplated hereby and compliance
with
the provisions hereof by the Company will not, (i) result in any breach or
violation of, or default (with or without notice or lapse of time, or both)
under, require consent under, or give rise to a right of termination,
cancellation, modification or acceleration of any obligation or to the loss
of
any benefit under any loan, guarantee of indebtedness or credit agreement,
note,
bond, mortgage, indenture, lease, agreement, contract, purchase or sale order,
instrument, permit, concession, franchise, right or license binding upon the
Company or any of its Subsidiaries or result in the creation of any liens,
claims, mortgages, encumbrances, pledges, security interests, equities or
charges of any kind (each, a “Lien”)
upon
any of the properties, assets or rights of the Company or any of its
Subsidiaries, (ii) conflict with or result in any
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violation
of any provision of the certificate or articles of incorporation or by-laws
or
other equivalent organizational document of the Company or any of its
Subsidiaries or (iii) assuming that all Company Approvals are duly
obtained, conflict with or violate any applicable Laws, other than, in the
case
of clauses (i), (ii) (to the extent relating to Subsidiaries) and (iii), as
would not, individually or in the aggregate, have a Company Material Adverse
Effect and other than as may arise in connection with the Financing or facts
and
circumstances particular to Parent and its Affiliates.
Section
3.5 Reports
and Financial Statements; Internal Controls.
(a) The
Company and its Subsidiaries have timely filed all forms, documents, statements
and reports required to be filed by them with the Securities and Exchange
Commission (the “SEC”)
since
January 1, 2004 (the forms, documents, statements and reports filed with
the SEC since January 1, 2004, including any amendments thereto, the
“Company
SEC Documents”).
As of
their respective dates, or, if amended or superseded by a subsequent filing,
as
of the date of the last such amendment or superseding filing prior to the date
hereof, the Company SEC Documents complied, and each of the Company SEC
Documents filed subsequent to the date of this Agreement will comply, in all
material respects with the requirements of the Securities Act of 1933, as
amended (the “Securities
Act”),
the
Exchange Act and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
Act”),
as
the case may be, and the applicable rules and regulations promulgated
thereunder. As of the time of filing with the SEC, none of the Company SEC
Documents so filed or that will be filed subsequent to the date of this
Agreement contained or will contain, as the case may be, any untrue statement
of
a material fact or omitted 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 were made, not misleading. No Subsidiary
of
the Company is subject to the periodic reporting requirements of the Exchange
Act.
(b) Each
of
the financial statements (including all related notes and schedules) of the
Company and its Subsidiaries included in the Company SEC Documents complied
as
to form in all material respects with the published rules and regulations of
the
SEC with respect thereto, fairly present in all material respects the financial
position of the Company and its Subsidiaries, as at the respective dates
thereof, and the results of their operations and their cash flows for the
respective periods then ended (subject, in the case of the unaudited statements,
to normal year-end audit adjustments and to any other adjustments expressly
described therein, including the notes thereto, none of which are expected
to
have a Company Material Adverse Effect) and were prepared in conformity with
United States generally accepted accounting principles (“GAAP”)
(except, in the case of the unaudited statements, as permitted by the SEC)
applied on a consistent basis during the periods involved (except as may be
expressly indicated therein or in the notes thereto).
(c) The
Company (i) has implemented and maintains disclosure controls and procedures
(as
such terms are defined in Rule 13a-15(e) under the Exchange Act) to ensure
the
material information relating to the Company, including its Subsidiaries, is
made known to the chief executive officer and the chief financial officer of
the
Company by others within those entities and (ii) has disclosed, based on its
most recent evaluation prior to the date hereof, to the Company’s outside
auditors and the audit committee of the Board of Directors of the
Company
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(A)
any
significant deficiencies and material weaknesses in the design or operation
of
internal controls over financial reporting (as defined in Rule 13a-15(f) of
the
Exchange Act) which are reasonably likely to adversely affect the Company’s
ability to record, process, summarize and report financial information and
(B)
any fraud, whether or not material, that involves management or other employees
who have a significant role in the Company’s internal controls over financial
reporting.
Section
3.6 No
Undisclosed Liabilities.
Except
(i) as reflected or reserved against in the Company’s consolidated balance
sheet as of December 31, 2006 (or the notes thereto) included in the Company
SEC
Documents filed prior to the date hereof, (ii) for liabilities or
obligations incurred in connection with the transactions contemplated by this
Agreement or the financing of such transactions and
(iii)
for liabilities and obligations incurred in the ordinary course of
business,
neither
the Company nor any Subsidiary of the Company has any liabilities or obligations
of any nature, whether or not accrued, contingent or otherwise and whether
due
or to become due, that would, individually or in the aggregate, have a Company
Material Adverse Effect.
Section
3.7 Compliance
with Law; Permits.
(a) Since
January 1, 2004, the businesses of each of the Company and its Subsidiaries
have
not been conducted in violation of any federal, state, local or foreign law,
statute, ordinance, rule, regulation, judgment, order, injunction, decree,
arbitration award, agency requirement or License of any Governmental Entity
(collectively, “Laws”),
except for such violations that would not, individually or in the aggregate,
have a Company Material Adverse Effect. No investigation or review by any
Governmental Entity with respect to the Company or any of its Subsidiaries
is
pending or, to the Knowledge of the Company, threatened, nor has any
Governmental Entity indicated an intention to conduct the same except for such
investigations or reviews that would not, individually or in the aggregate,
have
a Company Material Adverse Effect. The Company and its Subsidiaries each has
all
governmental permits, licenses, franchises, variances, exemptions, orders issued
or granted by a Governmental Entity and all other authorizations, consents
and
approvals issued or granted by a Governmental Entity (“Licenses”)
necessary to conduct its business as presently conducted, except those the
absence of which would not, individually or in the aggregate, have a Company
Material Adverse Effect (the “Material
Licenses”).
(b) Section
3.7(b) of the Company Disclosure Letter sets forth a list, as of the date of
this Agreement, of (A) all Material Licenses and, to the extent not otherwise
constituting Material Licenses, all Licenses issued or granted to the Company
or
any of its Subsidiaries by the FCC (“FCC
Licenses”)
(other
than point to point microwave licenses), all Licenses issued or granted to
the
Company or any of its Subsidiaries by State Commissions regulating
telecommunications businesses (“State
Licenses”),
and
all Licenses issued or granted to the Company or any of its Subsidiaries by
foreign Governmental Entities regulating telecommunications businesses (together
with such Material Licenses, FCC Licenses and State Licenses, the “Company
Licenses”);
(B)
all pending applications for Licenses that would be Company Licenses if issued
or granted; and (C) all pending applications by the Company or any of its
Subsidiaries for modification, extension or renewal of any Company License.
Each
of the Company and its Subsidiaries is in compliance with its obligations under
each of the FCC
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Licenses
and the rules and regulations of the FCC, and with its obligations under each
of
the other Company Licenses, in each case except for such failures to be in
compliance as would not, individually or in the aggregate, have a Company
Material Adverse Effect. There is not pending or, to the Knowledge of the
Company, threatened before the FCC, the Federal Aviation Administration (the
“FAA”)
or any
other Governmental Entity any proceeding, notice of violation, order of
forfeiture or complaint or investigation against the Company or any of its
Subsidiaries relating to any of the Company Licenses, in each case, except
as
would not, individually or in the aggregate, have a Material Adverse Effect.
The
FCC actions granting all FCC Licenses, together with all underlying construction
permits, have not been reversed, stayed, enjoined, annulled or suspended, and
there is not pending or, to the Knowledge of the Company, threatened, any
application, petition, objection or other pleading with the FCC, the FAA or
any
other Governmental Entity which challenges or questions the validity of or
any
rights of the holder under any such License, in each case, except as would
not,
individually or in the aggregate, have a Company Material Adverse
Effect.
Section
3.8 Environmental
Laws and Regulations.
(a) Except
as
would not, individually or in the aggregate, have a Company Material Adverse
Effect, (i) the Company and each of its Subsidiaries have conducted their
respective businesses in compliance with all, and have not violated any,
applicable Environmental Laws, (ii) there has been no release of any
Hazardous Substance by the Company or any of its Subsidiaries or at, on or
under
any property currently or, to the Knowledge of the Company, formerly owned,
leased or operated by the Company or any of its Subsidiaries in any manner
that
could reasonably be expected to give rise to any remedial obligation, corrective
action requirement or liability under applicable Environmental Laws,
(iii) since January 1, 2004, neither the Company nor any of its
Subsidiaries has received in writing any claims, notices, demand letters or
requests for information (except for such claims, notices, demand letters or
requests for information the subject matter of which has been resolved prior
to
the date of this Agreement) from any Governmental Entity or any other Person
asserting that the Company or any of its Subsidiaries is or may be in violation
of, or liable under, any Environmental Law, (iv) no Hazardous Substance has
been disposed of, arranged to be disposed of, released or transported in
violation of any applicable Environmental Law, or in a manner giving rise to,
or
that would reasonably be expected to give rise to, any liability under
Environmental Law, from any current or former properties or facilities while
owned or operated by the Company or any of its Subsidiaries or as a result
of
any operations or activities of the Company or any of its Subsidiaries at any
location and, to the Knowledge of the Company, Hazardous Substances are not
otherwise present at or about any such properties or facilities in amount or
condition that would reasonably be expected to result in liability to the
Company or any of its Subsidiaries under Environmental Law, and (v) neither
the Company, its Subsidiaries nor any of their respective properties or
facilities are subject to, or are threatened to become subject to, any
liabilities relating to any suit, settlement, court order, administrative order,
regulatory requirement, judgment or written claim asserted or arising under
any
Environmental Law or any agreement relating to environmental
liabilities.
(b) As
used
herein, “Environmental
Law”
means
any Law relating to (i) the protection, preservation or restoration of the
environment (including air, surface water, groundwater, drinking water supply,
surface land, subsurface land, plant and animal life or any
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other
natural resource), or (ii) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Substances.
(c) As
used
herein, “Hazardous
Substance”
means
any substance listed, defined, designated, classified or regulated as a waste,
pollutant or contaminant or as hazardous, toxic, radioactive or dangerous or
any
other term of similar import under any Environmental Law, including petroleum,
radon, asbestos, toxic molds, urea formaldehyde or polychlorinated biphenyls.
Section
3.9 Employee
Benefit Plans.
(a) Section
3.9(a) of the Company Disclosure Letter sets forth a true and complete list
of
each material Company Benefit Plan. For purposes of this Agreement, the term
“Company
Benefit Plan”
shall
mean any employee or director benefit plan, program, arrangement or agreement,
including, without limitation, any such plan, program, arrangement or agreement
that is an employee welfare benefit plan within the meaning of Section 3(1)
of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
an
employee pension benefit plan within the meaning of Section 3(2) of ERISA
(whether or not such plan is subject to ERISA) or a bonus, incentive, deferred
compensation, vacation, stock purchase, stock option, severance, employment,
change of control or fringe benefit plan, program, arrangement or agreement
for
the benefit of the current or former employees, independent contractors or
directors of the Company or its Subsidiaries that is sponsored or maintained
by
the Company or any of its Subsidiaries to or for which Company or any of its
Subsidiaries has any liability, whether contingent or otherwise.
(b) The
Company has heretofore made available to Parent true and complete copies of
each
of the material Company Benefit Plans and (i) each writing constituting a part
of such Company Benefit Plan, including all amendments thereto; (ii) the most
recent (A) Annual Reports (Form 5500 Series) and accompanying schedules, if
any,
(B) audited financial statements and (C) actuarial valuation reports; (iii)
the
most recent determination letter from the Internal Revenue Service
(“IRS”)
(if
applicable) for such Company Benefit Plan; and (iv) any related trust agreement
or funding instrument now in effect or required in the future as a result of
the
transactions contemplated by this Agreement.
(c) Except
as
would not, individually or in the aggregate, have a Company Material Adverse
Effect: (i) each of the Company Benefit Plans has been established, operated
and
administered in all respects with applicable Laws, including, but not limited
to, ERISA, the Code and in each case the regulations thereunder; (ii) each
of
the Company Benefit Plans intended to be “qualified” within the meaning of
Section 401(a) of the Code has received a favorable determination letter from
the IRS, and to the Knowledge of the Company, there are no existing
circumstances or events that have occurred that could reasonably be expected
to
result in the revocation of such letter; (iii) no Company Benefit Plan is
subject to Title IV of ERISA; (iv) no Company Benefit Plan provides health,
life
insurance or disability benefits (whether or not insured), with respect to
current or former employees or directors of the Company or its Subsidiaries
beyond their retirement or other termination of service, other than (A) coverage
mandated by applicable Law or (B) death benefits or retirement benefits under
any “employee
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pension
plan” (as such term is defined in Section 3(2) of ERISA); (v) no liability under
Title IV of ERISA has been incurred by the Company, its Subsidiaries or any
ERISA Affiliate of the Company that has not been satisfied in full, and, to
the
Knowledge of the Company, no condition exists that presents a risk to the
Company, its Subsidiaries or any ERISA Affiliate of the Company of incurring
a
liability thereunder; (vi) no
Company Benefit Plan is a “multiemployer pension plan” (as such term is defined
in Section 3(37) of ERISA) or a plan that has two or more contributing sponsors
at least two of whom are not under common control, within the meaning of Section
4063 of ERISA; (vii)
all
contributions or other amounts payable by the Company or its Subsidiaries as
of
the date hereof with respect to each Company Benefit Plan in respect of current
or prior plan years have been paid or accrued in accordance with GAAP; (viii)
neither the Company nor its Subsidiaries has engaged in a transaction in
connection with which the Company or its Subsidiaries could reasonably be
expected to 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; (ix) each Company Benefit Plan that is a “nonqualified deferred
compensation plan” within the meaning of Section 409A(d)(1) of the Code and any
award thereunder, in each case that is subject to Section 409A of the Code,
has
been operated in good faith compliance with Section 409A of the Code since
January 1, 2005 and all applicable regulations and notices issued thereunder,
(x) no “reportable event” (as defined in Section 4043 of ERISA) has occurred
with respect to any Company Benefit Plan and no Company Benefit Plan has
incurred any “accumulated funding deficiency” (as defined in Section 302 of
ERISA and section 412 of the Code, respectively), whether or not waived, and
neither the Company nor any of its Subsidiaries has provided, or is required
to
provide, security to any Company Benefit Plan pursuant to Section 401(a)(29)
of
the Code; and (xi) there are no pending, threatened or anticipated claims (other
than routine claims for benefits) by, on behalf of or against any of the Company
Benefit Plans or any trusts related thereto which could reasonably be expected
to result in any liability of the Company or any of its Subsidiaries.
“ERISA
Affiliate”
means,
with respect to any entity, trade or business, any other entity, trade or
business that is a member of a group described in Section 414(b), (c), (m)
or
(o) of the Code or Section 4001(b)(1) of ERISA that includes the first entity,
trade or business, or that is a member of the same “controlled group” as the
first entity, trade or business pursuant to Section 4001(a)(14) of
ERISA.
(d) Neither
the execution of this Agreement nor the consummation of the transactions
contemplated by this Agreement will, either alone or in combination with another
event, (i) entitle any employee or officer of the Company or any of its
Subsidiaries to severance pay, unemployment compensation or any other payment,
except as expressly provided in this Agreement or as required by applicable
Law,
(ii) accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee, consultant or officer, except as expressly
provided in this Agreement, or (iii) result in payments under any of the Company
Benefit Plans which would not be deductible under Section 280G of the
Code.
Section
3.10 Interested
Party Transactions.
Except
for employment-related Contracts filed or incorporated by reference as an
exhibit to the Company SEC Documents filed prior to the date of this Agreement
or Company Benefit Plans, Section 3.10 of the Company Disclosure
Letter sets forth a correct and complete list of the contracts or
arrangements that are in existence as of the date of this Agreement between
the
Company or any of its Subsidiaries, on the one hand, and, on the other hand,
any
(A) present executive officer or director of either the Company or any of
its Subsidiaries or any person that has served as such an executive officer
or
A-17
director
within the last two years or any of such officer’s or director’s immediate
family members or (B) record or beneficial owner of more than 5% of the
Shares as of the date hereof (each, an “Affiliate
Transaction”).
Section
3.11 Absence
of Certain Changes or Events.
(a)
Since December 31, 2006 through the date of this Agreement, except for the
transactions contemplated hereby, the business of the Company and its
Subsidiaries has been conducted, in all material respects, in the ordinary
course of business consistent with past practice and neither the Company nor
any
of its Subsidiaries has taken or permitted to occur any action that were it
to
be taken from and after the date hereof would require the approval of Parent
pursuant to clauses (ii), (v), (vi), (vii), (viii), (ix), (xiii), (xiv), (xvi),
(xvii), (xviii) or, with respect to such preceding clauses, (xix) of Section
5.1(b); and (b) since December 31, 2006, there have not been any facts,
circumstances, events, changes, effects or occurrences that, individually or
in
the aggregate, have had or would have a Company Material Adverse
Effect.
Section
3.12 Investigations;
Litigation.
There
are no
(i) actions, suits, or proceedings pending or, to the Knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries,
any Company Benefit Plan or any of their respective properties or assets, at
Law
or in equity, or (ii) material orders, judgments or decrees of any Governmental
Entity against the Company or any of its Subsidiaries or any Company Benefit
Plan, which, in the case of clause (i), individually or in the aggregate, have
had or would have a Company Material Adverse Effect.
Section
3.13 Proxy
Statement; Other Information.
The
Proxy Statement will not at the time of the mailing of the Proxy Statement
to
the shareholders of the Company, at the time of the Company Meeting, and at
the
time of any amendments thereof or supplements thereto, contain any untrue
statement of a material fact or omit to state any material fact required to
be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they were made, not misleading; provided
that no
representation is made by the Company with respect to information supplied
by,
or the sufficiency of disclosures related to, Parent, Merger Sub or any
Affiliate of Parent or Merger Sub. The Proxy Statement will comply as to form
in
all material respects with the requirements of the Exchange Act. The letter
to
shareholders, notice of meeting, proxy statement, forms of proxy and any other
soliciting materials to be distributed to shareholders in connection with the
Merger to be filed with the SEC in connection with seeking the adoption and
approval of this Agreement are collectively referred to herein as the
“Proxy
Statement.”
Section
3.14 Tax
Matters.
(a) Except
as
would not have, individually or in the aggregate, a Company Material Adverse
Effect, (i) the Company and each of its Subsidiaries have prepared and
timely filed (taking into account any valid extension of time within which
to
file) all Tax Returns required to be filed by any of them and all such Tax
Returns are complete and accurate, (ii) the Company and each of its
Subsidiaries have timely paid all Taxes that are required to be paid by any
of
them (whether or not shown on any Tax Return), except with respect to matters
contested in good faith through appropriate proceedings and for which adequate
reserves have been established on the financial statements of the Company and
its Subsidiaries in accordance with
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GAAP,
(iii) the U.S. consolidated federal income Tax Returns of the Company
through the Tax year ending December 31, 2003 have been examined and the U.S.
consolidated federal income Tax Returns of the Company for the Tax years ending
December 31, 2004 and 2005 are as of the date hereof being examined by the
IRS
(or the period for assessment of the Taxes in respect of which such Tax Returns
were required to be filed has expired), (iv) all assessments for Taxes due
with respect to completed and settled examinations or any concluded litigation
have been fully paid, (v) there are no audits, examinations, investigations
or other proceedings pending or threatened in writing in respect of Taxes or
Tax
matters of the Company or any of its Subsidiaries, (vi) there are no Liens
for Taxes on any of the assets of the Company or any of its Subsidiaries other
than statutory Liens for Taxes not yet due and payable or Liens for Taxes that
are being contested in good faith through appropriate proceedings and for which
adequate reserves have been established on the financial statements of the
Company and its Subsidiaries in accordance with GAAP, (vii) none of the
Company or any of its Subsidiaries has been a “controlled corporation” or a
“distributing corporation” in any distribution that was purported or intended to
be governed by Section 355 of the Code (or any similar provision of state,
local or foreign Law) occurring during the two-year period ending on the date
hereof, (viii) neither the Company nor any of its Subsidiaries is a party
to any agreement or arrangement relating to the apportionment, sharing,
assignment or allocation of any Tax or Tax asset (other than an agreement or
arrangement solely among members of a group the common parent of which is the
Company or a Subsidiary of the Company) or has any liability for Taxes of any
Person (other than the Company or any of its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any analogous or similar provision of
state, local or foreign Tax Law), and (ix) none of the Company or any of its
Subsidiaries has been a party to any “listed transaction” within the meaning of
Treasury Regulation 1.6011-4(b)(2).
(b) As
used
in this Agreement, (i) ”Tax”
or
“Taxes”
means
any and all federal, state, local or foreign taxes, imposts, levies or other
like assessments, including all net income, gross receipts, capital, sales,
use,
ad valorem, value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes, customs
duties, and other taxes of any kind whatsoever, including any and all interest,
penalties, additions to tax or additional amounts imposed by any Governmental
Entity in connection with respect thereto, and (ii) ”Tax
Return”
means
any return, report or similar filing (including any attached schedules,
supplements and additional or supporting material) filed or required to be
filed
with respect to Taxes, including any information return, claim for refund,
amended return or declaration of estimated Taxes (and including any amendments
with respect thereto).
Section
3.15 Labor
Matters.
Neither
the Company nor any of its Subsidiaries is a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization. Neither the Company nor any of its
Subsidiaries is subject to a dispute, strike or work stoppage except as would
not, individually or in the aggregate, have a Company Material Adverse Effect.
To the Knowledge of the Company, there are no organizational efforts with
respect to the formation of a collective bargaining unit presently being made
or
threatened involving employees of the Company or any of its
Subsidiaries.
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Section
3.16 Intellectual
Property.
(a)
Except
as would not, individually or in the aggregate, have a Company Material Adverse
Effect, either the Company or a Subsidiary of the Company owns, or is licensed
or otherwise possesses adequate rights to use, all trademarks, trade names,
service marks, service names, mark registrations, logos, assumed names, domain
names, registered and unregistered copyrights, software, patents or other
intellectual property, and all applications and registrations used in their
respective businesses as currently conducted (collectively, the “Intellectual
Property”).
Except as would not, individually or in the aggregate, have a Company Material
Adverse Effect, (i) there are no pending or, to the Knowledge of the
Company, threatened claims by any person alleging (x) infringement by the
Company or any of its Subsidiaries of any intellectual property rights of any
person or conduct by Company or any of its Subsidiaries that constitutes unfair
competition or unfair trade practices or (y) challenging the ownership, validity
or enforceability of any Intellectual Property owned or exclusively licensed
by
Company or its Subsidiaries, and there have not been any claims or threats
against Company or its Subsidiaries within the past five years that would fall
within the scope of (x) or (y), (ii) to the Knowledge of the Company, the
conduct of the business of the Company and its Subsidiaries does not infringe
any intellectual property rights of any person or otherwise constitute unfair
competition or unfair trade practices, (iii) neither the Company nor any of
its Subsidiaries has made any claim of a violation or infringement by others
of
its rights to or in connection with the Intellectual Property of the Company
or
any of its Subsidiaries and (iv) to the Knowledge of the Company, no person
is infringing any Intellectual Property of the Company or any of its
Subsidiaries.
(b) Except
as
would not, individually or in the aggregate, have a Company Material Adverse
Effect, the Company and its Subsidiaries (i) take reasonable actions to protect
the security of their software, systems, networks and the confidentiality of
their data, information, and trade secrets, (ii) abide by all Laws and internal
policies regarding the collection, use and disclosure of personally identifiable
information, including customer and client information, and (iii) are not
subject to any pending or, to the Knowledge of the Company, threatened claim
that alleges a breach of the foregoing.
(c) Except
as
would not, individually or in the aggregate, have a Company Material Adverse
Effect, the Intellectual Property owned or exclusively licensed by Company
and
its Subsidiaries are (i) free and clear of any Liens, (ii) not subject to any
judgment, order, writ, injunction or decree that would restrict or impair their
use, and (iii) to the Knowledge of Company, valid and enforceable.
Section
3.17 Property. (a)
Except
as would not, individually or in the aggregate, have a Company Material Adverse
Effect, the Company or a Subsidiary of the Company owns and has good and valid
title to all of its owned real property and good title to all its personal
property and has valid leasehold interests in all of its leased properties,
sufficient to conduct their respective businesses as currently conducted, free
and clear of all Liens (except in all cases for Liens permissible under any
applicable loan agreements and indentures and for title exceptions, defects,
encumbrances, liens, charges, restrictions, restrictive covenants and other
matters, whether or not of record, which in the aggregate do not materially
affect the continued use of the property for the purposes for which the property
is currently being used). Except as would not, individually or in the aggregate,
have a Company Material Adverse Effect, all leases under which the Company
or
any of its Subsidiaries lease any real or personal property are valid and
in
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full
force and effect against the Company or any of its Subsidiaries and, as of
the
date hereof, to the Company’s Knowledge, the counterparties thereto, in
accordance with their respective terms, and there is not, under any of such
leases, any event which, with notice or lapse of time or both, would become
a
default by the Company or any of its Subsidiaries or, to the Knowledge of the
Company, the other parties thereto.
(b) Except
as
would not, individually or in the aggregate, have a Company Material Adverse
Effect, neither the Company nor any of its Subsidiaries is obligated under
or
bound by any option, right of first refusal, purchase contract or other
contractual right to sell, lease or purchase any real property or any portions
thereof or interests therein.
Section
3.18 Required
Vote of the Company Shareholders.
Assuming the accuracy of the representations and warranties in Section 4.5,
the
affirmative vote of the holders of outstanding shares of Company Common Stock,
voting together as a single class, representing at least a majority of all
the
votes then entitled to vote at a meeting of shareholders, is the only vote
of
holders of any class of securities of the Company which is required to approve
this Agreement, the Merger and the other transactions contemplated hereby (the
“Company
Shareholder Approval”).
Section
3.19 Material
Contracts.
(a) The
Company has made available to Parent, true, correct and complete copies of
(including all amendments or modifications to), as of the date of this
Agreement, all Contracts to which the Company or any of its Subsidiaries is
a
party or by which the Company, any of its Subsidiaries or any of their
respective properties or assets is bound (other than Plans) that:
(i) are
or
would be required to be filed by the Company as a “material contract” pursuant
to Item 601(b)(10)(i) of Regulation S-K under the Securities Act or disclosed
by
the Company on a Current Report on Form 8-K;
(ii) with
respect to a joint venture, partnership, limited liability or other similar
agreement or arrangement, relate to the formation, creation, operation,
management or control of any partnership or joint venture that is material
to
the business of the Company and the Subsidiaries, taken as a whole;
(iii) relate
to
Indebtedness and having an outstanding principal amount in excess of $100
million;
(iv) were
entered into after December 31, 2006 or not yet consummated, and involve the
acquisition from another person or disposition to another Person, directly
or
indirectly (by merger or otherwise), of assets or capital stock or other equity
interests of another Person for aggregate consideration under such Contract
(or
series of related Contracts) in excess of $50 million (other than acquisitions
or dispositions of inventory in the ordinary course of business; capital
expenditures and capital commitments (which are covered in clause (vi) and
dispositions of cash in connection with the repayment of Indebtedness at the
maturity thereof);
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(v) relate
to
an acquisition, divestiture, merger or similar transaction that contains
representations, covenants, indemnities or other obligations (including
indemnification, “earn-out” or other contingent obligations), that are still in
effect and, individually or in the aggregate, could reasonably be expected
to
result in payments in excess of $50 million;
(vi) other
than an acquisition subject to clause (v) above, obligate the Company to make
any capital commitment or capital expenditure, other than acquisitions of
inventory, (including pursuant to any joint venture) in excess of $50
million;
(vii) relate
to
any guarantee or assumption of other obligations of any third party or
reimbursement of any maker of a letter of credit, except for agreements entered
into in the ordinary course of business consistent with past practice which
agreements relate to obligations which do not exceed $50 million in the
aggregate for all such agreements;
(viii) are
license agreements that are material to the business of the Company and its
Subsidiaries, taken as a whole, pursuant to which the Company or any of its
Subsidiaries is a party and licenses in Intellectual Property owned by a third
party or licenses out Intellectual Property owned by the Company or its
Subsidiaries, other than license agreements for software that is generally
commercially available;
(ix) any
Affiliate Transaction;
(x) are
development, marketing, distribution or resale agreements that are material
to
the business of Company and its Subsidiaries, taken as a whole;
(xi) are
roaming or interconnection agreements that are material to the business of
the
Company and its Subsidiaries, taken as a whole; or
(xii) would
by
their terms impair or restrict in any material respect the Company or any of
its
Affiliates (including, following the consummation of the Merger, Parent and
any
of its Affiliates) from developing, conducting or otherwise engaging in any
line
of business, product or service, including without limitation by means of a
noncompete, grant of exclusivity, right of first refusal or most-favored-pricing
provision.
Each
contract of the type described in clauses (i) through (xii) above is referred
to
herein as a “Company
Material Contract.”
(b) (i)
Each Company Material Contract is valid and binding on the Company and any
of
its Subsidiaries to the extent such Subsidiary is a party thereto, as
applicable, and, as of the date hereof, to the Knowledge of the Company, each
other party thereto, and is in full force and effect and enforceable in
accordance with its terms, except for such failures that would not, either
individually or in the aggregate, have a Company Material Adverse Effect,
(ii) the Company and each of its Subsidiaries, and, as of the date hereof,
to the Knowledge of the Company, any other party thereto, has performed all
obligations required to be performed by it under each Company Material Contract,
except where such noncompliance, would not, individually or in the aggregate,
have a Company Material Adverse Effect, and (iii) neither the
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Company
nor any of its Subsidiaries has received written notice of, the existence of
any
event or condition which constitutes, or, after notice or lapse of time or
both,
will constitute, a default on the part of the Company or any of its Subsidiaries
under any such Company Material Contract, except where such default would not,
either individually or in the aggregate, have a Company Material Adverse Effect.
Section
3.20 Insurance.
Each of
the Company and its Subsidiaries maintains insurance policies with reputable
insurance carriers against all risks of a character and in such amounts as
are
usually insured against by similarly situated companies in the same or similar
businesses. Except in each case as would not, individually or in the aggregate,
have a Company Material Adverse Effect, all such policies are in full force
and
effect and were in full force and effect during the periods of time such
insurance policies are purported to be in effect, and neither the Company nor
any of its Subsidiaries is in breach or default (including any such breach
or
default with respect to the payment of premiums or the giving of notice), and
no
event has occurred which, with notice or the lapse of time, would constitute
such a breach or default, or permit termination or modification, under any
such
policy. There is no claim by the Company or any of its Subsidiaries pending
under any such policies that (a) has been denied or disputed by the insurer
other than denials and disputes in the ordinary course of business consistent
with past practice or (b) if not paid would have, individually or in the
aggregate, a Company Material Adverse Effect.
Section
3.21 Finders
or Brokers.
Except
for J.P. Morgan Securities Inc., Merrill Lynch & Co., Inc., and Stephens
Inc., neither the Company nor any of its Subsidiaries has engaged any investment
banker, broker or finder in connection with the transactions contemplated by
this Agreement who might be entitled to any fee or any commission in connection
with or upon consummation of the Merger or the other transactions contemplated
hereby.
The
Company has provided Parent with true, correct and complete information with
respect to the fees payable in connection with the transactions contemplated
hereby.
Section
3.22 Fairness
Opinion.
The
Company has received the opinion of each of Stephens, Inc., J.P. Morgan
Securities Inc. and Merrill Lynch & Co., Inc., dated the date of this
Agreement, to the effect that, as of such date, the Common Stock Merger
Consideration is fair, from a financial point of view, to the holders of Shares
of the Company Common Stock.
Section
3.23 State
Takeover Statutes; Charter Provisions.
Assuming
the accuracy of the representations and warranties in Sections 4.7, the Board
of
Directors of the Company has taken all actions necessary so that neither Article
VIII of the Company Charter nor any “fair price,” “moratorium,” “business
combination,” “control share acquisition” or other form of anti-takeover statute
or regulation shall be applicable to the execution, delivery or performance
of
this Agreement, the consummation of the Merger and the other transactions
contemplated by this Agreement.
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ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
Except
as
disclosed in the disclosure letter delivered by Parent to the Company
immediately prior to the execution of this Agreement (the “Parent
Disclosure Letter”),
Parent and Merger Sub jointly and severally represent and warrant to the Company
as follows:
Section
4.1 Qualification;
Organization.
(a) Each
of
Parent and Merger Sub is a legal entity duly organized, validly existing and
in
good standing under the Laws of its respective jurisdiction of organization.
Each of Parent and Merger Sub has all requisite corporate, partnership or
similar power and authority to own, lease and operate its properties and assets
and to carry on its business as presently conducted.
(b) Each
of
Parent and Merger Sub is duly qualified to do business and is in good standing
as a foreign corporation (or other legal entity) in each jurisdiction where
the
ownership, leasing or operation of its assets or properties or conduct of its
business requires such qualification, except where the failure to be so
qualified or in good standing would not, individually or in the aggregate,
have
a Parent Material Adverse Effect. The organizational or governing documents
of
the Parent and Merger Sub, as previously provided to the Company, are in full
force and effect. Neither Parent nor Merger Sub is in violation of its
organizational or governing documents.
Section
4.2 Corporate
Authority Relative to This Agreement; No Violation.
(a) Each
of
Parent and Merger Sub has all requisite limited liability company or corporate
power and authority to enter into and perform its obligations under this
Agreement and to consummate the transactions contemplated by this Agreement,
including the consummation of the Financing by Parent. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated by this Agreement, including the Financing, have been duly and
validly authorized by the members of Parent and the Board of Directors of Merger
Sub and no other limited liability company or corporate proceedings on the
part
of Parent or Merger Sub are necessary to authorize the consummation of or to
consummate the transactions contemplated hereby (other than the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware).
This Agreement has been duly and validly executed and delivered by Parent and
Merger Sub and, assuming this Agreement constitutes the valid and binding
agreement of the Company, this Agreement constitutes the valid and binding
agreement of Parent and Merger Sub, enforceable against each of Parent and
Merger Sub in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
Laws relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at
Law).
(b) Other
than the filing of the Certificate of Merger pursuant to the DGCL or as required
by (i) the Exchange Act, (ii) the HSR Act, the FCC, the State
Commissions and the Foreign Regulators, and (iii) the approvals set forth
on Section 4.2(b) of the Parent Disclosure
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Letter (collectively,
the “Parent
Approvals”),
no
authorization, consent, approval or order of, or filing with, or notification
to, any Governmental Entity is necessary, under applicable Law, in connection
with the execution, delivery and performance of this Agreement by Parent or
Merger Sub or the consummation by Parent or Merger Sub of the transactions
contemplated by this Agreement, except for such authorizations, consents,
approvals, orders, filings or notices that, if not obtained or made, would
not,
individually or in the aggregate, have a Parent Material Adverse
Effect.
(c) The
execution, delivery and performance by Parent and Merger Sub of this Agreement
does not, and the consummation of the transactions contemplated hereby,
including the Financing, and compliance with the provisions hereof will not
(i) result in any breach or violation of, or default (with or without
notice or lapse of time, or both) under, require consent under, or give rise
to
a right of termination, cancellation, modification or acceleration of any
obligation or to the loss of any benefit under any loan, guarantee of
indebtedness or credit agreement, note, bond, mortgage, indenture, lease,
agreement, contract, purchase or sale order, instrument, permit, concession,
franchise, right or license binding upon Parent or any of its Subsidiaries
or
result in the creation of any Lien upon any of the properties, assets or rights
of Parent or any of its Subsidiaries, (ii) conflict with or result in any
violation of any provision of the certificate of incorporation or by-laws or
other equivalent organizational document, in each case as amended, of Parent
or
any of its Subsidiaries or (iii) assuming that all Parent Approvals are
obtained, conflict with or violate any applicable Laws, other than, (x) in
the
case of clauses (i) and (iii), as would not, individually or in the aggregate,
have a Parent Material Adverse Effect and (y) in the case of clause (i) or
(iii), to the extent relating to the Company or its Subsidiaries or a change
of
control thereof.
Section
4.3 Proxy
Statement; Other Information.
None of
the information supplied or to be supplied by Parent or Merger Sub expressly
for
inclusion or incorporation by reference in the Proxy Statement will at the
time
of the mailing of the Proxy Statement to the shareholders of the Company, at
the
time of the Company Meeting, and at the time of any amendments thereof or
supplements thereto, contain any untrue statement of a material fact or omit
to
state any material fact required to be stated therein or necessary in order
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading.
Parent
and Merger Sub will take all commercially reasonable efforts to supply
information necessary for the Proxy Statement as promptly as
practicable.
Section
4.4 Financing.
Section
4.4 of the Parent Disclosure Letter sets forth true, accurate and complete
copies, as of the date hereof, of (i) the executed equity commitment
letters to provide equity financing to Parent (the “Equity
Commitment Letters”)
and
(ii) executed debt commitment letters and related term sheets (the
“Debt
Commitment Letters”
and
together with the Equity Commitment Letters, the “Financing
Commitments”)
pursuant to which, and subject to the terms and conditions thereof, certain
lenders have committed to provide Parent or the Surviving Corporation with
funds
in the amounts described therein, the proceeds of which may be used to
consummate the Merger and the other transactions contemplated hereby (the
“Debt
Financing”
and,
together with the equity financing referred to in clause (i), the “Financing”).
As of
the date hereof, each of the Financing Commitments, in the form so delivered,
is
a legal, valid and binding obligation of Parent and, to the Knowledge of Parent,
of the other parties thereto. As of the date hereof, the Financing Commitments
are in full force and
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effect
and have not been withdrawn or terminated (and no party thereto has indicated
an
intent to so withdraw or terminate) or otherwise amended or modified in any
respect and Parent is not in breach of any of the terms or conditions set forth
therein and, subject to the accuracy of the representations and warranties
of
the Company set forth in Article III, no event has occurred which, with or
without notice, lapse of time or both, could reasonably be expected to
constitute a breach or failure to satisfy a condition precedent set forth
therein or a default thereunder. As of the date hereof, subject to the accuracy
of the representations and warranties of the Company set forth in Article III
and assuming compliance by the Company with its covenants in this Agreement,
Parent has no reason to believe that it will be unable to satisfy on a timely
basis any term or condition contemplated to be satisfied by it contained in
the
Financing Commitments. The proceeds from the Financing when funded in accordance
with the Financing Commitments are sufficient for the satisfaction of all of
Parent’s and Merger Sub’s obligations under this Agreement, including the
payment of the Merger Consideration and the consideration in respect of the
Company Stock Options and other equity-based awards under Section 2.3, to fund
any required refinancings or repayments of any existing indebtedness and to
pay
all related fees and expenses. As of the date hereof, Parent has fully paid
any
and all commitment fees or other fees on the dates and to the extent required
by
the Financing Commitments. The Financing Commitments contain all of the
conditions precedent to the obligations of the parties thereunder to make the
Financing available to Parent. Notwithstanding anything in this Agreement to
the
contrary, the Debt Commitment Letters may be superseded at the option of Parent
after the date of this Agreement but prior to the Effective Time, but only
by
the New Financing Commitments in accordance with Section 5.9. In such event,
the
term “Debt Commitment Letters” and “Financing Commitments” as used herein shall
be deemed to include the New Financing Commitments to the extent then in
effect.
Section
4.5 Ownership
and Operations of Merger Sub.
As of
the date of this Agreement, the authorized capital stock of Merger Sub consists
of 900 shares of common stock, par value $0.01 per share, 100 shares of which
are validly issued and outstanding, and 100 shares of preferred stock, par
value
$0.01 per share. All of the issued and outstanding capital stock of Merger
Sub
is, and at the Effective Time will be, owned by Parent or a direct or indirect
wholly owned Subsidiary of Parent. Neither Parent nor Merger Sub has conducted
any business other than (x) incident to its formation for the sole purpose
of
carrying out the transactions contemplated by this Agreement and (y) in relation
to this Agreement, the Merger and the other transactions contemplated hereby
and
the financing of such transactions.
Section
4.6 Finders
or Brokers.
Neither
Parent nor any of its Subsidiaries has engaged any investment banker, broker
or
finder in connection with the transactions contemplated by this Agreement who,
if the Merger is not consummated, might be entitled to any fee or any commission
from the Company.
Section
4.7 Certain
Arrangements.
There
are no Contracts between Parent, Merger Sub or the Guarantor, on the one hand,
and any member of the Company’s management or directors, on the other hand, as
of the date hereof that relate in any way to the Company or the transactions
contemplated by this Agreement.
Prior to
the Board of Directors of the Company approving this Agreement, the Merger
and
the other transactions contemplated thereby for purposes of the applicable
provisions of the DGCL, neither Parent nor Merger Sub, alone or together with
any other person, was at any time, or became, an “interested
shareholder”
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thereunder
or has taken any action that would cause any anti-takeover statute under the
DGCL to be applicable to this Agreement, the Merger, or any transactions
contemplated by this Agreement.
Section
4.8 Investigations;
Litigation.
There
are no suits, claims, actions, proceedings, arbitrations, mediations or
investigations pending or, to the Knowledge of Parent, threatened against Parent
or any of its Subsidiaries that would, individually or in the aggregate, have
a
Parent Material Adverse Effect. Neither Parent nor any of its Subsidiaries
nor
any of their respective properties is or are subject to any order, writ,
judgment, injunction, decree or award that would, individually or in the
aggregate, have a Parent Material Adverse Effect.
Section
4.9 Guarantee.
Concurrently with the execution of this Agreement, the Guarantors have delivered
to the Company the Guarantees, dated as of the date hereof, in favor of the
Company, in the form set forth in Section 4.9 of the Parent Disclosure
Letter.
Each
Guarantee is in full force and effect.
Section
4.10 Solvency.
As of
the Effective Time, assuming (a) satisfaction of the conditions to Parent’s
obligation to consummate the Merger as set forth herein, or the waiver of such
conditions, and (b) the accuracy of the representations and warranties of the
Company set forth in Article III hereof (for such purposes, such representations
and warranties shall be true and correct in all material respects without giving
effect to any knowledge, materiality or “Company Material Adverse Effect”
qualification or exception) and (c) any estimates, projections or forecasts
of
the Company and its Subsidiaries provided by the Company to Parent have been
prepared in good faith based upon reasonable assumptions, immediately after
giving effect to all of the transactions contemplated by this Agreement,
including, without limitation, the Financing, any alternative financing and
the
payment of the aggregate Merger Consideration and the consideration in respect
of the Company Stock Options and other equity-based awards under Section 2.3
and
any other repayment or refinancing of debt that may be contemplated in the
Financing Commitments, and payment of all related fees and expenses, the
Surviving Corporation will be Solvent. For purposes of this Section 4.11, the
term “Solvent” with respect to the Surviving Corporation means that, as of any
date of determination, (a) the amount of the fair saleable value of the assets
of the Surviving Corporation and
its
Subsidiaries, taken as a whole,
exceeds,
as of such date, the sum of (i) the value of all liabilities of the Surviving
Corporation and its Subsidiaries, taken as a whole, including contingent and
other liabilities, as of such date, as such quoted terms are generally
determined in accordance with the applicable federal Laws governing
determinations of the solvency of debtors, and (ii) the amount that will be
required to pay the probable liabilities of the Surviving Corporation and its
Subsidiaries, taken as a whole on its existing debts (including contingent
liabilities) as such debts become absolute and matured; (b) the Surviving
Corporation will not have, as of such date, an unreasonably small amount of
capital for the operation of the business in which it is engaged or proposed
to
be engaged by Parent following such date; and (c) the Surviving Corporation
will
be able to pay its liabilities, including contingent and other liabilities,
as
they mature.
Section
4.11 No
Other Information.
Parent
and Merger Sub acknowledge that the Company makes no representations or
warranties as to any matter whatsoever except as expressly set forth in Article
III.
The
representations and warranties set forth in Article III are made solely by
the
Company, and no Representative of the Company shall have any responsibility
or
liability related thereto.
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Section 4.12 Ownership
of Parent; Other Investments of Parent Affiliates.
The term
“Parent
Group”
shall
mean each of the Guarantors and each of their respective corporate or other
parent entities, Affiliates and any other person or entity under common control
with any of the foregoing. Except as set forth on Section 4.12 of the Parent
Disclosure Letter, no member of the Parent Group nor any person or entity
holding 5% or more of the issued common or preferred stock (or other comparable
equity interests) of any member of the Parent Group owns or controls, directly
or indirectly, 5% or more of the issued common or preferred stock (or other
comparable equity interest) of any entity that directly or indirectly offers
commercial mobile radio service in the United States. No member of the Parent
Group or any of its shareholders or other owners or affiliates is controlled
by
a foreign government or a representative thereof. Individually and collectively
the members of the Parent Group and such shareholders and other owners and
affiliates (a) do not have more than one-fifth of their capital stock or other
equity interests directly or indirectly owned of record or voted by aliens
or
their representatives or by a foreign government or representative thereof
or by
any corporation organized under the laws of a foreign country, or (b)
are not directly or indirectly controlled by any other corporation or other
entity of which more than one-fourth of the capital stock or other equity
interests is owned of record or voted by aliens, their representatives, or
by a
foreign government or representative thereof, or by any corporation organized
under the laws of a foreign country.
ARTICLE
V
COVENANTS
AND AGREEMENTS
Section 5.1 Conduct
of Business.
(a) From
and
after the date hereof and prior to the earlier of the Effective Time and the
date, if any, on which this Agreement is terminated pursuant to Section 7.1
(the
“Termination
Date”),
and
except (i) as may be otherwise required by applicable Law, (ii) with
the prior written consent of Parent (not to be unreasonably withheld or
delayed), (iii) as expressly contemplated or required by this Agreement or
(iv)
as disclosed in Section 5.1(a) of the Company Disclosure Letter, the Company
shall, and shall cause each of its Subsidiaries to, (1) conduct its
business in all material respects in the ordinary course, and (2) use reasonable
best efforts to maintain and preserve intact its business organization and
business relationships, preserve its assets, rights and properties in good
repair and condition and to retain the services of its key officers and key
employees in each case, in all material respects.
(b) Without
limiting the foregoing, the Company agrees with Parent that between the date
hereof and the earlier of the Effective Time and the Termination Date, except
as
set forth in Section 5.1(b) of the Company Disclosure Letter or as
otherwise expressly contemplated or expressly required by this Agreement, the
Company shall not, and shall not permit any of its Subsidiaries to, without
the
prior written consent of Parent (not to be unreasonably withheld or
delayed):
(i) adjust,
split, combine or reclassify any capital stock or other equity interests or
otherwise amend the terms of its capital stock or other equity
interests;
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(ii) other
than as required by the terms of any Company Series C Preferred Stock or the
Company Series D Preferred Stock (together, the “Company
Preferred Stock”),
make,
declare or pay any dividend, or make any other distribution on, or directly
or
indirectly redeem, purchase or otherwise acquire or encumber, any shares of
its
capital stock or other equity interests or any securities or obligations
convertible (whether currently convertible or convertible only after the passage
of time or the occurrence of certain events) into or exchangeable for any shares
of its capital stock or other equity interests, except in connection with the
exercise of stock options or settlement of other awards or obligations
outstanding as of the date hereof (or permitted hereunder to be granted after
the date hereof); provided
that the
Company may continue to pay its quarterly cash dividends in the ordinary course
of its business consistent with past practices (but in no event in an amount
in
excess of $0.125 per quarter per share of Company Common Stock) and dividends
required by the terms of the Company Preferred Stock, in each case with record
dates consistent with the record dates for comparable quarterly periods of
2006;
provided,
further,
that
this Section 5.1(b)(ii) shall not apply to dividends or distributions paid
in
cash by Subsidiaries to the Company or to other wholly-owned
Subsidiaries;
(iii) except
as
set forth in Section 5.1(b)(iii) of the Company Disclosure Letter, grant any
person any right to acquire any shares of its capital stock or other equity
interests, other than as may be contemplated pursuant to any applicable
exceptions to Section 5.1(b)(iv);
(iv) except
as
set forth in Section 5.1(b)(iv) of the Company Disclosure Letter, other than
as
required by the terms of any Company Preferred Stock, issue or sell any shares
of capital stock or other equity interests, any securities convertible into,
or
any rights, warrants or options to acquire, any such shares of capital stock
or
other equity interests, except pursuant to the exercise of conversion rights
of
currently outstanding securities, the exercise of stock options or settlement
of
other awards outstanding as of the date hereof (or permitted hereunder to be
granted after the date hereof) and in accordance with the terms of such
instruments or as required under any Company Benefit Plan;
(v) except
with respect to the repayment of Indebtedness, sell, lease, license, transfer,
mortgage, abandon, encumber or otherwise subject to a Lien or otherwise dispose
of, in whole or in part, any properties, rights or assets having a value in
excess of $50 million individually or $100 million in the aggregate (other
than
(x) sales of inventory, (y) commodity, sale or hedging agreements which can
be
terminated on 90 days or less notice without penalty, in each case in the
ordinary course of business consistent with past practice or (z) the use of
cash
as payment consideration);
(vi) except
as
set forth in Section 5.1(b)(vi) of the Company Disclosure Letter, make any
capital expenditures (or authorization or commitment with respect thereto)
in a
manner reasonably expected to cause expenditures to exceed the respective
amounts set forth in such Section for the applicable periods;
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(vii) except
(i) as set forth in Section 5.1(b)(vii) of the Company Disclosure Letter, (ii)
in
connection with refinancings of existing Indebtedness at the maturity thereof
(provided that any such refinancing Indebtedness may be prepaid without premium
or penalty on the Closing Date), (iii) for
borrowings under the Company’s existing credit and securitization facilities or
issuances or repayment of commercial paper in the ordinary course of business,
(iv) in connection with outstanding surety bonds or surety bonds entered into
in
the ordinary course of business or (v) in an aggregate amount not exceeding
$100
million in aggregate principal amount and not subject to any premium or penalty
if prepaid at Closing, incur, create, assume or otherwise become liable for,
or
repay or prepay, any indebtedness for borrowed money (including the issuance
of
any debt security), any capital lease obligations, any guarantee of any such
indebtedness or debt securities of any other Person, or any “keep well” or other
agreement to maintain any financial statement condition of another Person (such
obligations collectively, “Indebtedness”),
or
amend, modify or refinance any existing Indebtedness;
(viii) other
than in connection with capital expenditures, except as set forth in Section
5.1(b)(viii) of the Company Disclosure Letter, make any investment in excess
of
$75 million individually or $100 million in the aggregate, whether by purchase
of stock or securities, contributions to capital, loans to, property transfers,
or entering into binding agreements with respect to any such investment;
(ix) make
any
acquisition of another Person or business in excess of $75 million individually
or $100 million in the aggregate, whether by merger, purchase of stock or
securities, contributions to capital, loans to, property transfers, or entering
into binding agreements with respect to any such acquisition (including any
conditional or installment sale Contract or other retention Contract relating
to
purchased property);
(x) except
in
the ordinary course of business or as set forth in Section 5.1(b)(x) of the
Company Disclosure Letter, enter into, renew, extend, materially amend, cancel
or terminate any Contract that is a Material Contract under clause (i), (ii),
(viii), (ix), (xi) or (xii) of the definition thereof or Contract which if
entered into prior to the date hereof would be a Material Contract under clause
(i), (ii), (viii), (ix), (xi) or (xii) of the definition thereof; in
each
case, other than any Contract relating to Indebtedness that would not be
prohibited under clause (vii) of this Section 5.1(b) or Contracts relating
to
compensation or benefits or Company Benefit Plans to the extent not prohibited
under clause (xi) of this Section 5.1(b);
(xi) except
as
required by Company Benefit Plans in effect as of the date hereof,
(A) increase the compensation or benefits of any of its current or former
employees, independent contractors or directors, other than increases for
Persons who are not executive officers or directors in the ordinary course
of
business consistent with past practice, (B) amend or adopt any Company
Benefit Plan or any other plan, program arrangement or agreement (including
without limitation any employment, severance or change in control agreement)
that would be a Company Benefit Plan were it in effect on the date hereof except
for amendments or adoptions that are immaterial and otherwise made in the
ordinary course of business consistent with past practice or (C) accelerate
the
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vesting
of, or the lapsing of restrictions with respect to, or
payment of the compensation payable or the benefits provided or to become
payable or provided to any of its current or former directors, officers,
employees, consultants or service providers, or otherwise pay any amounts not
due or otherwise payable to such individual in the ordinary course of business
consistent with past practice, including, without limitation, with respect
to
severance, any stock options or other stock-based compensation or (D) agree
to
grant or grant any stock or stock-based awards or any other award that may
be
settled in Shares or other securities of the Company or any of its Subsidiaries
or any restricted stock units or stock appreciation rights, regardless of
whether they are settled in cash or Shares or other securities of the Company
or
any of its Subsidiaries;
(xii) except
with respect to Taxes (which are covered in clause (xviii)) or as set forth
in
Section 5.1(b)(xii) of the Company Disclosure Letter, compromise, settle or
agree to settle any suit, action, claim, proceeding or investigation (including
any suit, action, claim, proceeding or investigation relating to this Agreement
or the transactions contemplated hereby), or consent to the same, other than
compromises, settlements or agreements in the ordinary course of business
consistent with past practice that involve only the payment of monetary damages
(x) not in excess of $10 million individually or $25 million in the aggregate
or
(y) consistent with the reserves reflected in the Company's balance sheet at
December 31, 2006, in any case without the imposition of material equitable
relief on, or the admission of wrongdoing by, the Company or any of its
Subsidiaries;
(xiii) amend
or
waive any material provision of its Charter or its by-laws or other equivalent
organizational documents or, in the case of the Company, enter into any
agreement with any of its shareholders in their capacity as such;
(xiv) enter
into any new line of business outside of its existing business and reasonable
extensions thereof;
(xv) enter
into any new lease or amend the terms of any existing lease of real property
which would require payments over the remaining term of such lease in excess
of
$15 million (excluding any renewal terms);
(xvi) adopt
or
enter into a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of such
entity (other than among wholly owned Subsidiaries);
(xvii) implement
or adopt any material change in its financial accounting principles, practices
or methods, other than as required by GAAP, the Company’s outside auditors,
applicable Law or regulatory guidelines;
(xviii) except
as
set forth in Section 5.1(b)(xviii) of the Company Disclosure Letter or to the
extent any such settlement or compromise is consistent with reserves reflected
in the Company’s balance sheet at December 31, 2006, change any method of Tax
accounting, enter into any closing agreement with respect to material Taxes,
settle or compromise any material liability for Taxes, make, revoke or change
any
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material
Tax election, file or surrender any claim for a material refund of Taxes or
file
any material amended Tax Return, in each case other than in the ordinary course
of business consistent with past practice; or
(xix) agree
to
take, make any commitment to take, or adopt any resolutions of its Board of
Directors in support of, any of the actions prohibited by this Section
5.1(b).
(c) From
and
after the date hereof and prior to the earlier of the Effective Time or the
Termination Date, and except (i) as may be otherwise required by applicable
Law or (ii) as expressly contemplated or permitted by this Agreement, neither
party shall take, or permit any of its Affiliates to take, any action which
is
intended to or which would reasonably be expected to materially adversely affect
or materially delay the ability of such party from obtaining any necessary
approvals of any regulatory agency or other Governmental Entity required for
the
transactions contemplated hereby, performing its covenants and agreements under
this Agreement or consummating the transactions contemplated hereby or otherwise
materially delay or prohibit consummation of the Merger or other transactions
contemplated hereby.
(d) The
parties hereto agree to take the actions set forth on Schedule 5.1(d)
hereto.
Section 5.2 No
Solicitation.
(a) Subject
to Section 5.2(c), the Company agrees that neither it nor any Subsidiary of
the
Company shall, and that it shall cause its and their respective officers,
directors, employees, agents and representatives, including any investment
banker, attorney or accountant retained by it or any of its Subsidiaries
(“Representatives”)
not
to, directly or indirectly, (i) initiate, solicit, knowingly encourage
(including by providing information) or knowingly facilitate any inquiries,
proposals or offers with respect to, or the making or completion of, an
Alternative Proposal or any inquiry, proposal or offer that is reasonably likely
to lead to an Alternative Proposal, (ii) engage, continue or participate in
any negotiations concerning, or provide or cause to be provided any information
or data relating to the Company or any of its Subsidiaries in connection with,
or have any discussions (other than to state that they are not permitted to
have
discussions and to refer to this Agreement) with any person relating to, or
that
is reasonably likely to lead to, an actual or proposed Alternative Proposal,
or
otherwise knowingly encourage or knowingly facilitate any effort or attempt
to
make or implement an Alternative Proposal, (iii) approve, endorse or
recommend, or propose publicly to approve, endorse or recommend, any Alternative
Proposal, (iv) execute or enter into, any letter of intent, agreement in
principle, merger agreement, acquisition agreement, option agreement or other
similar agreement relating to any Alternative Proposal, or (v) resolve to
propose or agree to do any of the foregoing; provided,
however,
it is
understood and agreed that any determination or action by the Board of Directors
of the Company permitted under Section 5.2(c) or (d), or Section 7.1(c)(ii),
shall not, in and of itself, be deemed to be a breach or violation of this
Section 5.2(a) or, in the case of Section 5.2(c), give Parent a right to
terminate this Agreement pursuant to Section 7.1(d)(ii).
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(b) The
Company shall, shall cause each of its Subsidiaries to, and shall direct each
of
its Representatives to, immediately cease any solicitations, discussions or
negotiations with any Person (other than the parties hereto) that has made
or
indicated an intention to make an Alternative Proposal, in each case that exist
as of the date hereof, and shall request the prompt return or destruction of
all
confidential information previously furnished in connection
therewith.
(c) Notwithstanding
anything to the contrary in Section 5.2(a) or (b), at any time prior to the
Company Shareholder Approval, the Company may, in response to an unsolicited
bona fide written Alternative Proposal received after the date hereof which
the
Board of Directors of the Company determines, in good faith, after consultation
with its outside counsel and financial advisors, constitutes or is reasonably
expected to lead to a Superior Proposal, and subject to the Board of Directors
of the Company determining, after consultation with its outside counsel, that
the failure to take such action would be inconsistent with its fiduciary duties
under applicable law, (i) furnish
non-public information with respect to the Company and its Subsidiaries to
the
person or group making such Alternative Proposal and their Representatives
and
potential debt and equity financing sources pursuant to a customary
confidentiality agreement that contains provisions that are no less favorable
in
the aggregate to the Company than those contained in the Confidentiality
Agreements, and (ii) participate in discussions or negotiations with such
person or group and their respective Representatives regarding such Alternative
Proposal; provided,
however,
that the
Company shall provide or make available to Parent any non-public information
concerning the Company or any of its Subsidiaries that is provided to the person
making such Alternative Proposal or its Representatives which was not previously
provided or made available to Parent prior to or, concurrently with or as soon
as practicable after providing such information to such other
Person.
(d) Except
as
set forth in Section 7.1(c)(ii) or this Section 5.2(d), neither the Board of
Directors of the Company nor any committee thereof shall (i) withhold,
withdraw or modify in a manner adverse to Parent or Merger Sub, or publicly
propose to withhold, withdraw or modify in a manner adverse to Parent or Merger
Sub, the Recommendation, (ii) approve or recommend any letter of intent,
agreement in principle, acquisition agreement, option agreement or similar
agreement constituting or relating to, or that is intended to be or would
reasonably be likely to result in, any Alternative Proposal or
(iii) approve or recommend, or publicly propose to approve, endorse or
recommend, any Alternative Proposal. Notwithstanding the foregoing, if, prior
to
receipt of the Company Shareholder Approval, the Board of Directors of the
Company determines in good faith, after consultation with outside counsel and
its financial advisor, that (A) an unsolicited bona fide written Alternative
Proposal received by the Company constitutes a Superior Proposal (after
complying with, and giving effect to any commitments offered by Parent pursuant
to, Section 7.1(c)(ii)) and (B) the failure to take such action would be
inconsistent with the Board of Directors of the Company’s exercise of its
fiduciary duties under the DGCL, the Board of Directors of the Company or any
committee thereof may withdraw, or modify or qualify its Recommendation (a
“Change
of Recommendation”);
provided
that
prior to
such Change of Recommendation, (A) the Company shall have notified Parent
in writing, at least five Business Days in advance, of its intention to effect
a
Change of Recommendation and included with such notice the identity of the
person making such Superior Proposal, the most current written draft agreement
relating to the transaction that constitutes such Superior Proposal and all
related transaction agreements to which the Company would be a party,
(B) the Company shall, and shall cause its financial and legal advisers to,
negotiate with Parent in good faith
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during
such five Business Day period (to the extent Parent desires to negotiate) to
make any adjustments in the terms and conditions of this Agreement as would
permit the Board of Directors not to effect a Change of Recommendation and
(C)
the Board of Directors shall have determined in good faith and after
consultation with its outside counsel and financial advisors that such Superior
Proposal continues to be more favorable to the shareholders of the Company
from
a financial point of view than any revised proposal committed to by Parent;
provided that any material amendment to the terms of such Superior Proposal
shall require a new notice and new two Business Day advance notice
period.
(e) The
Company promptly (and in any event within 48 hours) shall advise Parent orally
and in writing of (i) any inquiries, proposals or offers regarding any
Alternative Proposal, (ii) any request for information relating to the
Company or its Subsidiaries, other than requests for information not reasonably
expected to be related or lead to an Alternative Proposal, and (iii) any
inquiry or request for discussion or negotiation regarding or that would
reasonably be expected to result in an Alternative Proposal, including in each
case the identity of the person making any such Alternative Proposal or
indication or inquiry or offer or request and the material terms and conditions
of any such Alternative Proposal or indication or inquiry or offer. The Company
shall keep Parent reasonably informed on a reasonably current basis of the
status (including any material changes to the terms thereof) of any such
discussions or negotiations regarding any such Alternative Proposal or
indication or inquiry or offer or any material developments relating thereto
(the Company agreeing that it shall not, and shall cause its Subsidiaries not
to, enter into any confidentiality agreement with any person subsequent to
the
date of this Agreement which prohibits the Company from providing such
information to Parent but it being agreed that the third parties’ debt financing
sources may impose confidentiality restrictions on the Company with respect
to
their proposed financing).
(f) Nothing
contained in this Agreement shall prohibit the Company or its Board of Directors
from (i) disclosing to its shareholders a position contemplated by Rules 14d-9
and 14e-2(a) promulgated under the Exchange Act
or (ii)
making any required disclosure to the Company’s shareholders if, in the good
faith judgment of such Board of Directors, after consultation with its outside
counsel, it is required to do so under applicable Law; provided,
however,
that in
no event shall this Section 5.2(f) affect the obligations of the Company
specified in Sections 5.2(d) or (e); and provided, further
that,
any such
disclosure (other than a “stop, look and listen” communication or similar
communication of the type contemplated by Section 14d-9(f) under the Exchange
Act) which would otherwise constitute a Change of Recommendation shall be deemed
to be a Change of Recommendation unless the Board of Directors of the Company
expressly publicly reaffirms its Recommendation at least two Business Days
prior
to the Company Meeting (after giving effect to any postponement or adjournment
thereof).
(g) As
used
in this Agreement, “Alternative
Proposal”
shall
mean any bona
fide inquiry,
proposal or offer from any Person or group of Persons other than Parent or
one
of its Subsidiaries relating to, in a single transaction or series of related
transactions, (i) a merger, reorganization, consolidation, share exchange,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving a direct or indirect acquisition of the Company (or any
Subsidiary or Subsidiaries of the Company whose business constitutes 20% or
more
of the net revenues, net income or assets (based on fair market value) of the
Company and its Subsidiaries, taken as a whole) or (ii) the acquisition
(including by way of tender or exchange
A-34
offer)
in
any manner, directly or indirectly, of over 20% of (x) the Company Common Stock
or (y) consolidated total assets (based on fair market value) of the Company
and
its Subsidiaries, in each case other than the Merger.
(h) As
used
in this Agreement, “Superior
Proposal”
shall
mean any bona fide written Alternative Proposal on terms which the Board of
Directors of the Company determines in good faith, after consultation with
the
Company’s outside legal counsel and financial advisors, to be more favorable
from a financial point of view to the holders of Company Common Stock than
the
Merger, taking into account all the terms and conditions of such proposal
(including the likelihood and timing of consummation thereof), and this
Agreement (including any changes to the terms of this Agreement committed to
by
Parent in good faith to the Company in response to such proposal or otherwise)
provided
that for
purposes of the definition of “Superior Proposal”, the references to “20%” in
the definition of Alternative Proposal shall be deemed to be references to
“50%.”
Section 5.3 Filings;
Other Actions.
(a) As
promptly as reasonably practicable following the date of this Agreement, the
Company shall prepare and file with the SEC the Proxy Statement, and Parent
and
the Company shall cooperate with each other in connection with the preparation
of the Proxy Statement. The Company will use its reasonable best efforts to
have
the Proxy Statement cleared by the staff of the SEC as promptly as reasonably
practicable after such filing. The Company will use its reasonable best efforts
to cause the Proxy Statement to be mailed to the Company’s shareholders as
promptly as reasonably practicable after the Proxy Statement is cleared by
the
staff of the SEC. The Company shall as promptly as reasonably practicable notify
Parent of the receipt of any oral or written comments from the staff of the
SEC
relating to the Proxy Statement. The Company shall cooperate and provide Parent
with a reasonable opportunity to review and comment on, (i) the draft of the
Proxy Statement (including each amendment or supplement thereto) and (ii) all
written responses to requests for additional information by and replies to
written comments of the staff of the SEC, prior to filing of the Proxy Statement
with or sending such to the SEC, and the Company will provide to Parent copies
of all such filings made and correspondence with the SEC or its staff with
respect thereto. If at any time prior to the Effective Time, any information
should be discovered by any party hereto which should be set forth in an
amendment or supplement to the Proxy Statement so that the Proxy Statement
would
not include any misstatement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the 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, to the extent required by applicable Law, an appropriate
amendment or supplement describing such information shall be promptly filed
by
the Company with the SEC and disseminated by the Company to the shareholders
of
the Company.
(b) Subject
to Section 5.3(c), the Company shall (i) take all action necessary in
accordance with the DGCL and the Company Charter and the by-laws of the Company
(the “By-laws”)
to
duly call, give notice of, convene and hold a meeting of its shareholders as
promptly as reasonably practicable following the clearance of the Proxy
Statement by the SEC for the purpose of obtaining the Company Shareholder
Approval (such meeting or any adjournment or postponement thereof, the
“Company
Meeting”),
and
(ii) subject to the Board of
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Directors
of the Company’s withdrawal or modification of its Recommendation in accordance
with Section 5.2(d), use reasonable best efforts to solicit from its
shareholders proxies in favor of the adoption and approval of this Agreement,
the Merger and the other transactions contemplated hereby and include its
Recommendation in the Proxy Statement. Notwithstanding anything in this
Agreement to the contrary, unless this Agreement is terminated in accordance
with Section 7.1 and subject to compliance with Section 7.2, the Company,
regardless of whether the Board of Directors has approved, endorsed or
recommended an Alternative Proposal or has withdrawn, modified or amended the
Recommendation, will submit this Agreement for adoption by the shareholders
of
the Company at the Company Meeting.
(c) Notwithstanding
Section 5.3(a) or (b), if on a date for which the Company Meeting is scheduled
(the “Original
Date”),
the
Company has not received proxies representing a sufficient number of shares
of
Company Common Stock to approve the Merger, whether or not a quorum is present,
the Company shall have the right to postpone or adjourn the Company Meeting
to a
date which shall not be more than 45 days after the Original Date. If the
Company continues not to receive proxies representing a sufficient number of
shares of Company Common Stock to approve the Merger, whether or not a quorum
is
present, the Company may make one or more successive postponements or
adjournments of the Company Meeting as long as the date of the Company Meeting
is not postponed or adjourned more than an aggregate of 45 days from the
Original Date in reliance on this subsection. In the event that the Company
Meeting is adjourned or postponed as a result of applicable Law, including
the
need to supplement the Proxy Statement, any days resulting from such adjournment
or postponement shall not be included for purposes of the calculations of
numbers of days pursuant to this Section.
Section
5.4 Employee
Matters.
(a) From
the
Effective Time until December 31, 2009, Parent shall provide, or shall cause
to
be provided, to those individuals employed by the Company or any of its
Subsidiaries at the Effective Time (“Company
Employees”)
annual
base salary and base wages, cash incentive compensation opportunities (excluding
equity-based compensation and benefits under any supplemental or excess
retirement plans) and benefits, that are no less favorable in the aggregate
than
such annual base salary and base wages, cash incentive compensation
opportunities (excluding equity-based compensation and benefits under any
supplemental or excess retirement plans) and benefits provided to the Company
Employees immediately prior to the Effective Time. Notwithstanding any other
provision of this Agreement to the contrary, (x) (i) Parent shall or shall
cause
the Surviving Corporation to provide Company Employees whose employment
terminates during the two-year period following the Effective Time with
severance benefits at the levels and pursuant to the terms of the Company’s
severance plan set forth on Section 5.4(a) of the Company Disclosure Letter
and
(ii) during such two-year period following the Effective Time, severance
benefits offered to Company Employees thereunder shall be determined without
taking into account any reduction after the Effective Time in base salary or
base wages paid to Company Employees and taking into account the service
crediting provisions set forth in Section 5.4(b) below, and (y) the Company
shall be entitled to establish a retention plan (the “Retention
Plan”)
pursuant to which awards not in the aggregate in excess of the amount set forth
on Section 5.4(a) of the Company Disclosure Letter may be granted by the Chief
Executive Officer of the Company to officers and employees of the Company and
its Subsidiaries, payable on such terms and conditions as determined by the
Chief Executive Officer
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of
the
Company in consultation with Parent.
Parent
shall or shall cause the Surviving Corporation to honor the Retention Plan
in
accordance with its terms.
(b) For
all
purposes (including purposes of vesting, eligibility to participate and level
of
benefits) under the employee benefit plans of Parent and its Subsidiaries
providing benefits to any Company Employees after the Effective Time (including
the Company Benefits Plans) (the “New
Plans”),
each
Company Employee shall be credited with his or her years of service with the
Company and its Subsidiaries and their respective predecessors before the
Effective Time, to the same extent as such Company Employee was entitled, before
the Effective Time, to credit for such service under any similar Company
employee benefit plan in which such Company Employee participated or was
eligible to participate immediately prior to the Effective Time, provided
that the
foregoing shall not apply with respect to benefit accrual under any final
average pay defined benefit pension plan or to the extent that its application
would result in a duplication of benefits with respect to the same period of
service. In addition, and without limiting the generality of the foregoing,
to
the extent legally permissible, (i) each Company Employee shall be
immediately eligible to participate, without any waiting time, in any and all
New Plans to the extent coverage under such New Plan is replacing comparable
coverage under a Company Benefit Plan in which such Company 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 Company Employee, Parent shall
cause 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,
unless such conditions would not have been waived under the comparable Old
Plans
of the Company or its Subsidiaries in which such employee participated
immediately prior to the Effective Time and Parent shall cause 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) From
and
after the Effective Time, Parent shall cause the Surviving Corporation and
its
Subsidiaries to honor all obligations under the Company Benefit Plans in
accordance with their terms as in effect on the date hereof or as may be amended
in accordance with Section 5.1, provided that, subject to the requirements
of
Section 5.4(a), nothing herein shall prohibit the Surviving Corporation from
amending or terminating any particular Company Benefit Plan to the extent
permitted by its terms or applicable Law.
(d) The
provisions of this Section 5.4 are solely for the benefit of the parties to
this
Agreement, and no current or former employee or any other individual associate
therewith shall be regarded for any purpose as a third party beneficiary of
the
Agreement and nothing herein shall be construed as an amendment to any Company
Benefit Plan for any purpose.
Section 5.5 Required
Approvals.
(a) Subject
to the terms and conditions set forth in this Agreement, each of the parties
hereto shall use its reasonable best efforts to take, or to cause to be taken,
all actions, to
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file,
or
cause to be filed, all documents and to do, or to cause to be done, and to
assist, to cooperate and, in the case of Parent, to cause the members of the
Parent Group to cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective the Merger and the other
transactions contemplated hereby, including using reasonable best efforts to
accomplish the following, (i) the obtaining as promptly as practicable of
all necessary actions or nonactions, waivers, consents, clearances, approvals,
and expirations or terminations of waiting periods, including the Company
Approvals and the Parent Approvals, from Governmental Entities and the making
of
all necessary registrations and filings and the taking of all steps as may
be
necessary to obtain an approval, clearance, or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the obtaining as
promptly as practicable of all necessary consents, approvals or waivers from,
or
participation in other discussions or negotiations with, third parties and
cooperating with the other party to obtain any consents or waivers reasonably
requested by such other party in connection with the consummation of the Merger
and the other transactions contemplated hereby, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the Merger and the other
transactions contemplated hereby and (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated
hereby; provided,
however,
that in
no event shall the Company or any of its Subsidiaries be required to pay prior
to the Effective Time any fee, penalties or other consideration to any third
party to obtain any consent or approval required for the consummation of the
Merger under any Contract and neither the Company nor any of its Subsidiaries
shall commit to the payment of any fee, penalty or other consideration in
connection with obtaining any consent without the prior consent of Parent.
(b) Subject
to the terms and conditions herein provided and without limiting the foregoing,
the Company and Parent shall (i) promptly,
but in
no event later than 15 Business Days after the date hereof,
file any
and all Notification and Report Forms required under the HSR Act with respect
to
the Merger and the other transactions contemplated hereby, and use best efforts
to cause the expiration or termination of any applicable waiting periods under
the HSR Act, and promptly, but in no event later than 15 Business Days after
the
date hereof, file all initial applications required to be filed with the FCC,
(ii) use best efforts to cooperate with each other and, in the case of Parent,
to cause each member of the Parent Group to cooperate in (x) determining
promptly whether any filings are required to be made with, or consents, permits,
authorizations, waivers, clearances, approvals, and expirations or terminations
of waiting periods are required to be obtained from, any third parties or other
Governmental Entities in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
(y) making promptly all such filings and obtaining all such consents,
permits, authorizations or approvals, in each case, as promptly as practicable,
(iii) supplying to any Governmental Entity as promptly as reasonably practicable
any additional information or documentary material that may be requested
pursuant to any Regulatory Law or by such Governmental Entity, and (iv) use
reasonable best efforts to take promptly, or cause to be taken promptly, all
other actions and do, or cause to be done, all other things necessary, proper
or
advisable to consummate and make effective the Merger, the Financing and the
other transactions contemplated hereby, as promptly as practicable, including
using reasonable best efforts to take all such further action, and, in the
case
of Parent, to cause each member of the Parent Group to take all such further
action, as may be necessary (A) to resolve such objections, if any, as the
United States Federal Trade Commission, the Antitrust Division of the
United
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States
Department of Justice, state antitrust enforcement authorities or competition
authorities of any other nation or other jurisdiction, the FCC or any State
Commission or any other person may assert under any Regulatory Law with respect
to the Merger and the other transactions contemplated hereby, and (B) to avoid
or eliminate each and every impediment under any Law that may be asserted by
any
Governmental Entity with respect to the Merger so as to enable the Closing
to
occur as promptly as practicable and in any event no later than the End Date,
including, without limitation (x) proposing, negotiating, committing to and
effecting, by consent decree, preservation of assets or other trust, hold
separate order or otherwise, the sale, divestiture or disposition of any assets
or businesses of any member of the Parent Group, Parent or its partners or
any
of their respective Subsidiaries or Affiliates or of the Company or its
Subsidiaries and (y) otherwise taking or committing to take any actions, or,
in
the case of Parent, to cause the members of the Parent Group to take any action,
that after the Closing would limit the freedom of the Parent Group, Parent
or
its Subsidiaries’ (including the Surviving Corporation’s) or Affiliates’ freedom
of action with respect to, or its ability to retain, one or more of its or
its
Subsidiaries’ (including the Surviving Corporation’s) or Affiliates’ businesses,
product lines or assets, in each case as may be required in order to avoid
the
entry of, or to effect the dissolution of, any injunction, temporary restraining
order or other order in any suit or proceeding which would otherwise have the
effect of preventing the Closing or delaying the Closing beyond the End Date;
provided
that,
neither the Company nor any of its Subsidiaries shall, nor shall Parent or
any
of its Subsidiaries or Affiliates be obligated to, become subject to, or consent
or agree to or otherwise take any action with respect to, any requirement,
condition, understanding, agreement or order of a Governmental Entity to sell,
to hold separate or otherwise dispose of, or to conduct, restrict, operate,
invest or otherwise change the assets or business of the Company or any of
its
Subsidiaries or Parent or any of its Subsidiaries or Affiliates, as the case
may
be, unless such requirement, condition, understanding, agreement or order is
binding on the Company or Parent, its Subsidiaries or Affiliates, respectively,
only in the event that the Closing occurs.
(c) Subject
to applicable legal limitations, the Company and Parent shall keep each other
reasonably apprised of the status of matters relating to the completion of
the
Merger and the other transactions contemplated by this Agreement, including
promptly furnishing the other with copies of notices or other written
communications received by the Company or Parent, as the case may be, or any
of
their respective Subsidiaries or Affiliates, from any third party and/or any
Governmental Entity with respect to such Merger or transactions. The
Company
and Parent shall permit counsel for the other party reasonable opportunity
to
review in advance, and consider in good faith the views of the other party
in
connection with, any proposed written communication to any Governmental Entity.
Each
of
the Company and Parent agrees that, during the term of this Agreement, it will
not withdraw its filing under the HSR Act or any other applicable Regulatory
Law
without the written consent of the other party, and each of the Company and
Parent agrees that it will not enter into any timing agreement with any
Governmental Entity without the written consent of the other party. To
the
extent practicable under the circumstances, each of the Company and Parent
agrees not to participate in any substantive meeting or discussion, either
in
person or by telephone, with any Governmental Entity in connection with the
proposed transactions unless it consults with the other party in advance and,
to
the extent not prohibited by such Governmental Entity, gives the other party
the
opportunity to attend and participate.
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(d) In
furtherance and not in limitation of the covenants of the parties contained
in
this Section 5.5, if any administrative or judicial action or proceeding,
including any proceeding by a private party, is instituted (or threatened to
be
instituted) challenging the Merger or any other transaction contemplated by
this
Agreement as violative of any Regulatory Law, each of the Company and Parent
shall cooperate, and Parent shall cause each of the members of the Parent Group
to cooperate, in all reasonable respects with each other and shall use its
respective reasonable best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the Merger or any other transaction contemplated hereby.
(e) For
purposes of this Agreement, “Regulatory
Law”
means
any and all state, federal and foreign statutes, acts, rules, regulations,
orders, decrees, administrative and judicial doctrines and other Laws requiring
notice to, filings with, or the consent, clearance or approval of, any
Governmental Entity, or that otherwise may cause any restriction, in connection
with the Merger and the transactions contemplated thereby, including
(i) the Sherman Act of 1890, the Clayton Antitrust Act of 1914, the HSR
Act, the Federal Trade Commission Act of 1914 and all other Laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade or lessening
competition through merger or acquisition, (ii) any rules or regulations of
the
FCC or any State Commission or any other Laws relating to the provision of
mobile wireless voice or data services and any statute under the authority
of
which such rules or regulations have been promulgated, (iii) any Law
governing the direct or indirect ownership or control of any of the operations
or assets of the Company and its Subsidiaries or (iv) any Law with the
purpose of protecting the national security or the national economy of any
nation. For the avoidance of doubt, “Regulatory Law” shall not include any
corporation, contract, partnership or similar Law.
Section
5.6 Takeover
Statute.
If any
“fair price,” “moratorium,” “business combination,” “control share acquisition”
or other form of anti-takeover statute or regulation shall become applicable
to
the Merger or the other transactions contemplated by this Agreement after the
date of this Agreement, each of the Company and Parent and the members of their
respective Boards of Directors shall grant such approvals and take such actions
as are reasonably necessary so that the Merger and the other transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated herein and otherwise act to eliminate or minimize the effects
of
such statute or regulation on the Merger, and the other transactions
contemplated hereby.
Nothing
in this Section 5.6 shall be construed to permit Parent or Merger Sub to do
any
act that would constitute a violation or breach of, or as a waiver of any of
the
Company’s rights under, any other provision of this Agreement.
Section
5.7 Public
Announcements.
The
Company and Parent will consult with and provide each other the reasonable
opportunity to review and comment upon any press release or other public
statement or comment prior to the issuance of such press release or other public
statement or comment relating to this Agreement or the transactions contemplated
herein and shall not issue any such press release or other public statement
or
comment prior to such consultation except as may be required by applicable
Law
or by obligations pursuant to any listing agreement with any national securities
exchange. Parent and the Company agree that the
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press
release announcing the execution and delivery of this Agreement shall be a
joint
release of, and shall not be issued prior to the approval of each of, Parent
and
the Company.
Section
5.8 Indemnification
and Insurance.
(a) Parent
and Merger Sub agree that all rights to exculpation, indemnification and
advancement of expenses for acts or omissions occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, now existing in favor of the current or former directors, officers or
employees, as the case may be, of the Company or its Subsidiaries as provided
in
their respective certificates of incorporation or by-laws or other organization
documents or in any agreement as in effect on the date hereof and which has
previously been or will be made available to Parent shall survive the Merger
and
shall continue in full force and effect to the extent provided in the following
sentence. Parent shall cause the Surviving Corporation to maintain in effect
any
and all exculpation, indemnification and advancement of expenses provisions
of
the Company’s and any of its Subsidiaries’ articles of incorporation and by-laws
or similar organization documents or in any indemnification agreements of the
Company or its Subsidiaries with any of their respective current or former
directors, officers or employees, in each case in effect as of the date hereof
and which has previously been provided to Parent, and shall not, for a period
of
six years from the date hereof, amend, repeal or otherwise modify any such
provisions in any manner that would adversely affect the rights thereunder
of
any individuals who at the Effective Time were current or former directors,
officers or employees of the Company or any of its Subsidiaries and all rights
to indemnification thereunder in respect of any Action pending or asserted
or
any claim made within such period shall continue until the disposition of such
Action or resolution of such claim.
(b) From
and
after the Effective Time, the Surviving Corporation shall, and Parent shall
cause the Surviving Corporation to, to the fullest extent permitted under
applicable Law, indemnify and hold harmless (and advance funds in respect of
each of the foregoing) each current and former director, officer or employee
of
the Company or any of its Subsidiaries (each, together with such person’s heirs,
executors or administrators, an “Indemnified
Party”)
against any costs or expenses (including advancing reasonable attorneys’ fees
and expenses in advance of the final disposition of any claim, suit, proceeding
or investigation to each Indemnified Party to the fullest extent permitted
by
Law upon the receipt of any customary undertaking required by the Surviving
Corporation), judgments, fines, losses, claims, damages, liabilities and amounts
paid in settlement in connection with any actual or threatened claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative
or
investigative (an “Action”),
arising out of, relating to or in connection with any action or omission
occurring or alleged to have occurred whether before or at the Effective Time
in
connection with such persons serving as an officer, director, employee or other
fiduciary of the Company or any of its Subsidiaries or of any entity if such
service was at the request or for the benefit of the Company.
(c) For
a
period of six (6) years from the Effective Time, Parent shall either cause
to be
maintained in effect the current policies of directors’ and officers’ liability
insurance and fiduciary liability insurance maintained by the Company and its
Subsidiaries or cause to be provided substitute policies or purchase or cause
the Surviving Corporation to purchase, a “tail policy,” in either case of at
least the same coverage and amounts containing terms and conditions that are
not
less advantageous than such policy with respect to matters arising on or before
the
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Effective
Time and from insurance carriers with comparable credit ratings. The Company
may, and shall upon request of Parent, in lieu of the foregoing insurance
coverage, purchase, prior to the Effective Time, a six-year prepaid “tail
policy” on terms and conditions (in both amount and scope) providing
substantially equivalent benefits as the current policies of directors’ and
officers’ liability insurance and fiduciary liability insurance maintained by
the Company and its Subsidiaries with respect to matters arising on or before
the Effective Time, covering without limitation the transactions contemplated
hereby. Notwithstanding the foregoing, Parent and the Surviving Corporation
shall not be obligated to, and the Company shall not, incur costs with respect
to such policies of directors’ and officers’ liability insurance in excess of
the amount specified on Section 5.8(c)(i) of the Company Disclosure Letter
in
the case of an annual payment or in excess of the amount specified on Section
5.8(c)(ii) of the Company Disclosure Letter in the case of a tail policy;
provided that Parent and the Surviving Corporation shall be obligated to obtain
policies with the greatest coverage available for a cost not exceeding such
amount.
(d) The
rights of each Indemnified Party hereunder shall be in addition to, and not
in
limitation of, any other rights such Indemnified Party may have under the
Company Charter, the By-laws or other similar organizational documents of the
Company or any of its Subsidiaries or the Surviving Corporation, any other
indemnification agreement or arrangement, the DGCL or otherwise. The agreements
and covenants contained herein shall not be deemed to be exclusive of any other
rights to which any Indemnified Party is entitled, whether pursuant to Law,
contract or otherwise. Nothing in this Agreement is intended to, shall be
construed to or shall release, waive or impair any rights to directors’ and
officers’ insurance claims under any policy that is or has been in existence
with respect to the Company or any of its Subsidiaries or their respective
officers, directors and employees, it being understood and agreed that the
indemnification provided for in this Section 5.8 is not prior to, or in
substitution for, any such claims under any such policies. The provisions of
this Section 5.8 shall survive the consummation of the Merger and,
notwithstanding any other provision of this Agreement that may be to the
contrary, expressly are intended to benefit, and are enforceable by, each of
the
Indemnified Parties.
(e) In
the
event Parent, the Surviving Corporation or any of their respective successors
or
assigns (i) consolidates with or merges into any other Person and shall not
be the continuing or surviving corporation or entity in such consolidation
or
merger or (ii) transfers all or substantially all of its properties and
assets to any person, then, and in either such case, proper provision shall
be
made so that the successors and assigns of Parent or the Surviving Corporation,
as the case may be, shall assume all of the obligations set forth in this
Section 5.8.
Section
5.9 Financing.
(a) Parent
shall use its reasonable best efforts to obtain the Financing on the terms
and
conditions described in the Financing Commitments or, at Parent’s election, on
other terms that would not adversely impact the ability of Parent or Merger
Sub
to timely consummate the transactions contemplated hereby, including using
its
reasonable best efforts (i) to maintain in effect the Financing Commitments
and to negotiate definitive agreements with respect thereto on the terms and
conditions contained in the Financing Commitments (or, at Parent’s election, on
other terms that would not adversely impact the ability of Parent or Merger
Sub
to timely consummate the transactions contemplated hereby), (ii) to satisfy
all conditions applicable to
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Parent
in
such definitive agreements and consummate the Financing at or prior to the
Closing, except to the extent requiring action by the Company or any of its
Subsidiaries, (iii) to comply with its obligations under the Financing
Commitments and
(iv)
to enforce all of its rights under the Financing Commitments.
Parent
shall give the Company prompt notice upon becoming aware of any material breach
by any party of the Financing Commitments or any termination of the Financing
Commitments. Parent shall keep the Company informed on a reasonably current
basis and in reasonable detail of the status of its efforts to arrange the
Financing and provide to the Company copies of all documents related to the
Financing (other than any ancillary documents subject to confidentiality
agreements). In connection with its obligations under this Section 5.9, Parent
shall be permitted to amend, modify or replace the Debt Commitment Letters
with
new Debt Commitment Letters (the “New
Financing Commitments”),
provided
that
Parent shall not permit any replacement of, or amendment or modification to
be
made to, or any waiver of any material provision or remedy under, the Debt
Commitment Letter if, in the reasonable judgment of Parent, such replacement,
amendment, modification, waiver or remedy (1) reduces the aggregate amount
of
the Debt Financing below that amount required to consummate the Merger and
the
other transactions contemplated hereby, (2) adversely amends or expands the
conditions to the drawdown of the Debt Financing in any respect that could
make
such conditions less likely to be satisfied by the End Date or that would expand
the possible circumstances under which such conditions would not be satisfied
by
such date, (3) can reasonably be expected to delay the Closing or the date
on
which the Financing would be obtained, or (4) is otherwise adverse to the
interests of the Company prior to the occurrence of the Closing in any other
material respect; and provided,
further,
that
nothing in this Section 5.9 shall be deemed to excuse, waive compliance with
or
modify any of the obligations set forth in the Confidentiality Agreement. In
the
event that all conditions to the Financing Commitments (other than, in
connection with the Debt Financing, the availability or funding of any of the
Equity Financing) have been satisfied, Parent shall, from and after the final
day of the Marketing Period and subject to the satisfaction of the conditions
set forth in Sections 6.1 and 6.3 hereof, use its reasonable best efforts to
cause the lenders and other Persons providing such Financing to fund the
Financing required to consummate the Merger on the Closing Date. In the event
that Parent becomes aware of any event or circumstance that makes procurement
of
any portion of the Financing unlikely to occur in the manner or from the sources
contemplated in the Financing Commitments, Parent shall notify the Company
and
shall use its reasonable best efforts to arrange as promptly as practicable,
but
in no event later than one day prior to the Closing Date, any such portion
from
alternative debt financing sources on terms and conditions no less favorable
to
Parent and no more adverse to the ability of Parent to consummate the
transactions contemplated by this Agreement (in each case, as determined in
the
reasonable judgment of Parent). In the event that on the final day of the
Marketing Period (1) all or any portion of the Debt Financing structured as
high
yield financing has not been consummated, (2) all closing conditions contained
in Article VI shall have been satisfied or waived (other than those conditions
that by their nature will not be satisfied until the Closing) and (3) the bridge
financing as described in the Debt Commitment Letters, (or alternative bridge
financing obtained in accordance with the preceding sentence) is available
substantially on the terms and conditions described in the Debt Commitment
Letters (or replacements thereof as contemplated by the preceding sentence),
then Parent shall borrow under and use the proceeds of the bridge financing
(or
such alternative bridge financing) to replace such affected portion of the
high
yield financing no later than the last day of the Marketing Period. For purposes
of this Agreement, “Marketing
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Period”
shall
mean the first period of 20 consecutive calendar days after the date hereof
throughout and at the end of which (x) Parent shall have all of the Required
Information (as defined below), including updates thereof prior to any such
information going stale under applicable SEC rules and regulations and for
purposes of the issuance by the Company’s independent registered accounting firm
of a customary comfort letter (including “negative assurance” comfort) to
purchasers (in accordance with its normal practices and procedures) of debt
securities contemplated by the Debt Financing Commitments, and during which
period such information shall remain compliant at all times with applicable
provisions of Regulation S-X and Regulation S-K under the Securities Act ,
(y)
the conditions set forth in Section 6.1(a), (b), (c) and (d) shall have been
satisfied and (z) nothing has occurred and no condition exists that would cause
any of the conditions set forth in Section 6.3(a) or (b) to fail to be satisfied
assuming the Closing were to be scheduled for any time during such period;
provided
that (i)
the Marketing Period occurs
either entirely before or entirely after each of the periods (1) from and
including August 17, 2007 through and including September 3, 2007, (2)
from and including November 21, 2007 through and including
November 25, 2007 and (3) from and including December 21, 2007
through and including January 1, 2008;
and
(ii) the Marketing Period shall not be deemed to have commenced if, prior to
the
completion of the Marketing Period, (A) the Company’s independent registered
accounting firm shall have withdrawn its audit opinion with respect to any
financial statements contained in the Required Information, in which case the
Marketing Period will be deemed to commence at such time as a new unqualified
audit opinion is issued with respect to the consolidated financial statements
for the applicable periods by the Company’s independent registered accounting
firm or another independent registered accounting firm reasonably acceptable
to
Parent, (B) the Company shall have publicly announced any intention to restate
any of its financial information contained in any SEC filing (including annual
or quarterly financial statements), in which case the Marketing Period will
be
deemed to commence at such time as the restatement has been completed and the
Company SEC Documents have been amended to reflect such restatement or the
Company has announced that it has concluded that no restatement shall be
required in accordance with GAAP, or (C) the Company shall have failed to file
any Annual Report on Form 10-K, Quarterly Report on Form 10-Q or Current Report
on Form 8-K, with the SEC by the date required under the Exchange Act, in which
case the Marketing Period will not be deemed to commence at the earliest unless
and until all such reports have been filed and (iii) if the financial statements
included in the Required Information that is available to Parent on the first
day of any such 20-consecutive-day period would not be sufficiently current
on
any day during such 20-consecutive-day period to permit (I) a registration
statement using such financial statements to be declared effective by the SEC
on
the last day of the 20-consecutive-day period and (II) the Company’s
independent registered accounting firm to issue a customary comfort letter
(including “negative assurance” comfort) to purchasers (in accordance with its
normal practices and procedures) on the last day of the 20-consecutive-day
period, then a new 20-consecutive day Marketing Period shall commence upon
Parent receiving updated Required Information that would be sufficiently current
to permit the actions described in (I) and (II) on the last day of such
20-consecutive-day-period.
(b) The
Company shall provide, shall cause its Subsidiaries to provide, and shall use
reasonable best efforts to cause its Representatives, including legal and
accounting, to provide, all cooperation reasonably requested by Parent in
connection with the Financing and the other transactions contemplated by this
Agreement (provided
that
such requested cooperation does not unreasonably interfere with the ongoing
operations of the Company and its
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Subsidiaries),
including (i) as promptly as practical, providing such financial and other
information as Parent shall reasonably request in order to consummate the Debt
Financing, including all Company information, financial statements and financial
data of the type required by Regulation S-X and Regulation S-K under the
Securities Act and the other accounting rules and regulations of the SEC, and
of
a type and form customarily included in private placements pursuant to Rule
144A
under the Securities Act (including, to the extent applicable with respect
to
such financial statements, the report of the Company’s auditors thereon and
related management discussion and analysis of financial condition and results
of
operations) or as is necessary to satisfy the conditions set forth in the Debt
Commitment Letters (as in effect on the date hereof) (all such information
in
this clause (i), the “Required
Information”),
(ii) participating in meetings, drafting sessions and due diligence
sessions in connection with the Financing, (iii) assisting in the
preparation of (A) one or more offering documents or confidential
information memoranda for any of the Debt Financing (including the execution
and
delivery of one or more customary representation letters in connection
therewith), provided
that any
private placement memoranda or prospectuses in relation to high yield debt
securities need not be issued by the Company or any of its Subsidiaries, and
provided,
further,
that
any private placement memoranda or prospectuses shall contain disclosure and
financial statements reflecting the Surviving Corporation and/or its
Subsidiaries as the obligor and (B) materials for rating agency
presentations, (iv) reasonably cooperating with the marketing efforts for
any of the Debt Financing, including providing assistance in the preparation
for, and participating in, road shows, meetings, due diligence sessions and
similar presentations to and with, among others, prospective lenders, investors
and rating agencies, (v) providing monthly financial statements (excluding
footnotes) within 30 days after the end of each month prior to the Closing
Date,
(vi) taking all actions reasonably necessary to (A) permit the prospective
lenders involved in the Financing to evaluate the Company’s current assets, cash
management and accounting systems, policies and procedures relating thereto
for
the purpose of establishing collateral arrangements and (B) establish bank
and
other accounts and blocked account agreements and lock box arrangements in
connection with the foregoing, (vii) executing and delivering (or using
reasonable best efforts to obtain from advisors), and causing its Subsidiaries
to execute and deliver (or use reasonable best efforts to obtain from advisors),
on or more credit agreements or indentures, customary certificates (including
with respect to solvency matters), representation letters, accounting comfort
letters, consents of accountants, legal opinions (which may be reasoned if
circumstances require), hedging agreements, appraisals, surveys, engineering
reports, title insurance or other documents and instruments relating to
guarantees, the pledge of collateral and other matters ancillary to the
Financing, including the pay-off of existing indebtedness and release of any
related Liens, as may be reasonably requested by Parent in connection with
the
Financing and otherwise reasonably facilitating the pledge of collateral and
providing of guarantees contemplated by the Debt Commitment Letter, and (viii)
use its reasonable best efforts to permit any cash of the Company and its
Subsidiaries to be made available to the Company at the Effective Time;
provided,
however,
that the
foregoing shall not be deemed to require the Company or any Subsidiary of the
Company to, prior to the Effective Time, consummate any tender offer or consent
solicitation with respect to, or enter into any supplemental indenture with
respect to or otherwise amend the terms of any instruments governing, any
existing outstanding indebtedness of the Company or its Subsidiaries; and
provided
further,
that,
except for fees and liabilities subject to reimbursement or indemnification
pursuant to the next sentence, no obligation of the Company or any of its
Subsidiaries under any
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such
certificate, document or instrument (other than the representation letter
referred to above) shall be effective until the Effective Time and, except
for
fees and liabilities subject to reimbursement or indemnification pursuant to
the
next sentence, none of the Company or any of its Subsidiaries shall be required
to pay any commitment or other similar fee or incur any other liability or
obligation in connection with the Financing prior to the Effective
Time.
The
Company will, to the extent it is aware of any applicable developments,
periodically update any such Required Information to be included in an offering
document to be used in connection with the Debt Financing in order to ensure
that such Required Information does not contain any untrue statement of material
fact or omit to state any material fact necessary in order to make the
statements contained therein, in light of the circumstances in which they were
made, not misleading. The Company consents, prior to the termination of this
Agreement, to the reasonable use of its and its Subsidiaries’ logos in
connection with the Debt Financing in a manner customary for such financing
transactions. Parent shall promptly, upon request by the Company, reimburse
the
Company for all reasonable out-of-pocket costs (including reasonable attorneys’
fees) incurred by the Company or any of its Subsidiaries in connection with
the
cooperation of the Company and its Subsidiaries contemplated by this Section
5.9
and shall indemnify and hold harmless the Company, its Subsidiaries and their
respective directors, officers, employees and representatives from and against
any and all losses, damages, claims, costs or expenses suffered or incurred
by
any of them in connection with the arrangement of the Financing and any
information used in connection therewith, except with respect to any information
provided by the Company or any of its Subsidiaries. The immediately preceding
sentence shall survive termination of this Agreement.
Section
5.10 Access;
Confidentiality.
Subject
to applicable Law and to any contractual confidentiality restrictions, the
Company shall afford to Parent, and to Parent’s officers, employees,
accountants, counsel, consultants, financial advisors and other Representatives
and financing sources, reasonable access during normal business hours during
the
period prior to the earlier of the Effective Time and the Termination Date
to
all of its and its Subsidiaries’ properties, Contracts, books and records and to
those officers, employees and agents of the Company to whom Parent reasonably
requests access, and, during such period, the Company shall furnish, as promptly
as practicable, to Parent all information concerning its and its Subsidiaries’
business, properties, personnel and financial information as Parent may
reasonably request. Parent shall treat, and shall cause its officers, employees,
accountants, counsel, financial advisors and other Representatives to treat,
all
information received from the Company or its Representatives, directly or
indirectly, in accordance with the Confidentiality Agreement.
Section
5.11 Notification
of Certain Matters.
The
Company shall keep Parent informed, on a current basis, of any material events,
discussions, notices or changes with respect to any criminal or regulatory
investigation or action involving the Company or any of its Subsidiaries.
Without limiting the foregoing, the Company shall give prompt notice to Parent,
and Parent shall give prompt notice to the Company, of (i) any notice or
other communication received by such party from any Governmental Entity in
connection with the Merger or the other transactions contemplated hereby or
from
any person alleging that the consent of such person is or may be required in
connection with the Merger or the other transactions contemplated hereby, if
the
subject matter of such communication or the failure of such party to obtain
such
consent could be material to the Company, the Surviving Corporation or Parent,
(ii) any actions, suits,
A-46
claims,
investigations or proceedings commenced or, to such party’s Knowledge,
threatened against, relating to or involving or otherwise affecting such party
or any of its Subsidiaries which relate to the Merger or the other transactions
contemplated hereby, (iii) the discovery of any fact or circumstance that,
or the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which, would cause or result in any of the Conditions to
the
Merger set forth in Article VI not being satisfied or satisfaction of those
conditions being materially delayed in violation of any provision of this
Agreement; provided,
however,
that the
delivery of any notice pursuant to this Section 5.11 shall not (x) cure any
breach of, or non-compliance with, any other provision of this Agreement or
(y) limit the remedies available to the party receiving such notice; and,
provided,
further,
that an
unintentional failure to give prompt notice hereunder pursuant to clause (iii)
shall not constitute a failure of a Condition to the Merger set forth in Article
VI except to the extent that the underlying fact or circumstance not so notified
would standing alone constitute such a failure.
Section
5.12 Rule
16b-3.
Prior
to the Effective Time, the Company shall be permitted to take such steps as
may
be reasonably necessary or advisable hereto to cause dispositions of Company
equity securities (including derivative securities) pursuant to the transactions
contemplated by this Agreement by each individual who is a director or officer
of the Company to be exempt under Rule 16b-3 promulgated under the Exchange
Act.
Section
5.13 Control
of Operations.
Without
in any way limiting any party’s rights or obligations under this Agreement, the
parties understand and agree that (i) nothing contained in this Agreement shall
give Parent, directly or indirectly, the right to control or direct the
Company’s operations prior to the Effective Time, and (ii) prior to the
Effective Time, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over its
operations.
Section
5.14 Certain
Transfer Taxes.
Any
liability arising out of any real estate transfer Tax with respect to interests
in real property owned directly or indirectly by the Company or any of its
Subsidiaries immediately prior to the Merger, if applicable and due with respect
to the Merger, shall be borne by the Surviving Corporation and expressly shall
not be a liability of shareholders of the Company.
Section
5.15 Obligations
of Merger Sub.
Parent
shall take all action necessary to cause Merger Sub and the Surviving
Corporation to perform their respective obligations under this
Agreement.
Section
5.16 Treatment
of Certain Notes.
(a) The
Company shall, and shall cause its Subsidiaries to, use their reasonable best
efforts to commence, promptly after the receipt of a written request from Parent
to do so, one or more offers to purchase, and related consent solicitations
with
respect to, all of the outstanding aggregate principal amount of the notes
identified on Section 5.16 of the Parent Disclosure Letter (collectively, the
“Notes”)
on the
terms and conditions specified by Parent (collectively, the “Debt
Offers”),
it
being understood that Parent may elect to exclude one or more series of such
Notes from the Debt Offers; provided,
that
the Company shall not be required to commence any Debt Offers until Parent
shall
have provided the Company with the
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necessary
offer to purchase, related letter of transmittal, and other related documents
(collectively, the “Offer
Documents”).
The
closing of the Debt Offers shall be conditioned on the completion of the Merger
and shall be conducted in compliance with applicable Laws, including SEC rules
and regulations. The Company and Parent shall, and shall cause their respective
Subsidiaries to, and shall use their reasonable best efforts to cause their
respective Representatives to, provide cooperation and assistance reasonably
requested by the other in connection with the Debt Offers.
(b) With
respect to any series of Notes, if requested by Parent in writing, the Company
will cooperate with Parent to permit the Surviving Corporation after the
Effective Time, to the extent permitted by the indenture and officers’
certificates or supplemental indenture governing such series of Notes, to
redeem, satisfy or discharge or defease any series of Notes.
(c) The
Company shall, and shall cause its Subsidiaries to, waive any of the conditions
to the Debt Offers (other than that the Merger shall have been consummated
and
that there shall be no Law, injunction or other legal restraint prohibiting
consummation of the Debt Offers) as may be reasonably requested by Parent and
shall not, without the written consent of Parent, waive any condition to the
Debt Offers or make any changes to the Debt Offers other than as agreed in
writing between Parent and the Company. Notwithstanding the immediately
preceding sentence, neither the Company nor any of its Subsidiaries shall be
required to make any change to the terms and conditions of the Debt Offers
requested by Parent that decreases the price per Note payable in the Debt Offers
or related consent solicitation as set forth in Section 5.16(c) of the Parent
Disclosure Letter or imposes conditions to the Debt Offers or related consent
solicitation in addition to those set forth in Section 5.16(c) of the Parent
Disclosure Letter that are adverse to the holders of the Notes, unless such
change is previously approved by the Company in writing.
(d) The
Company covenants and agrees that, promptly following the consent solicitation
expiration date, assuming the requisite consents are received, each of the
Company and its applicable Subsidiaries as is necessary shall (and shall use
their commercially reasonable efforts to cause the applicable trustee to)
execute supplemental indentures to the indentures governing each series of
Notes
for which the requisite consent has been received, which supplemental indentures
shall implement the amendments described in the Offer Documents and shall become
operative only concurrently with the Effective Time, subject to the terms and
conditions of this Agreement (including the conditions to the Debt Offers).
Concurrently with the Effective Time, Parent shall cause the Surviving
Corporation to accept for payment and thereafter promptly pay for the Notes
that
have been properly tendered and not properly withdrawn pursuant to the Debt
Offers and in accordance with the Debt Offers using funds provided by or at
the
direction of Parent.
(e) Parent
shall prepare all necessary and appropriate documentation in connection with
the
Debt Offers, including the Offer Documents. Parent and the Company shall, and
shall cause their respective Subsidiaries to, reasonably cooperate with each
other in the preparation of the Offer Documents. The Offer Documents (including
all amendments or supplements thereto) and all mailings to the holders of the
Notes in connection with the Debt Offers shall be subject to the prior review
of, and comment by, the Company and Parent and
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shall
be
reasonably acceptable to each of them. If at any time prior to the completion
of
the Debt Offers, any information should be discovered by the Company or Parent
which should be set forth in an amendment or supplement to the Offer Documents,
so that the Offer Documents shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of circumstances
under which they are made, not misleading, the party that discovers such
information shall use commercially reasonable efforts to promptly notify the
other party, and an appropriate amendment or supplement prepared by Parent
describing such information shall be disseminated by or on behalf of the Company
to the holders of the applicable Notes (which supplement or amendment and
dissemination may, at the reasonable direction of Parent, take the form of
a
filing of a Current Report on Form 8−K). Notwithstanding anything to the
contrary in this Section 5.16(e), the Company shall and shall cause its
Subsidiaries to comply with the requirements of Rule 14e−1 under the Exchange
Act and any other applicable Law to the extent such laws are applicable in
connection with the Debt Offers and such compliance will not be deemed a breach
hereof.
(f) In
connection with the Debt Offers, Parent may select one or more dealer managers,
information agents, depositaries and other agents, in each case as shall be
reasonably acceptable to the Company, to provide assistance in connection
therewith and the Company shall, and shall cause its Subsidiaries to, enter
into
customary agreements (including indemnities) with such parties so selected.
Parent shall pay the fees and out-of-pocket expenses of any dealer manager,
information agent, depositary or other agent retained in connection with the
Debt Offers upon the incurrence of such fees and out-of-pocket expenses, and
Parent further agrees to reimburse the Company and their Subsidiaries for all
of
their reasonable and documented out-of-pocket costs incurred in connection
with
the Debt Offers promptly following the incurrence thereof.
Section 5.17 Termination
of Certain Other Indebtedness.
(a) The
Company shall use commercially reasonable efforts to (i) negotiate payoff
letters from third-party lenders and trustees, in form and substance reasonably
satisfactory to Parent, with respect to the Indebtedness of the Company and
its
Subsidiaries identified on Section 5.17(a) of the Parent Disclosure Letter
and
any other indebtedness specified by Parent to the Company no later than 10
days
prior to the Closing and (ii) deliver or cause to be delivered such payoff
letters to Parent at the Closing.
(b) On
the
Closing Date, subject to Parent making available necessary funds to do so,
the
Company shall use commercially reasonable efforts to, and to cause its
Subsidiaries to, permanently (i) terminate the credit facilities requested
by
Parent to be so terminated, if and to the extent such facilities are either
identified on Section 5.17(b) of the Parent Disclosure Letter or specified
by
Parent to the Company no later than five days prior to Closing, and all related
Contracts to which the Company and its Subsidiaries is a party and (ii) to
the
extent the related facility is terminated pursuant to this Section 5.17, release
any Liens on its assets relating to those facilities.
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ARTICLE
VI
CONDITIONS
TO THE MERGER
Section
6.1 Conditions
to Each Party’s Obligation to Effect the Merger.
The
respective obligations of each party to effect the Merger shall be subject
to
the fulfillment (or waiver by all parties) at or prior to the Effective Time
of
the following conditions:
(a) The
Company Shareholder Approval shall have been obtained.
(b) No
Governmental Entity of competent jurisdiction shall have enacted, issued or
entered any restraining order, preliminary or permanent injunction or similar
order or legal restraint or prohibition which remains in effect that enjoins
or
otherwise prohibits consummation of the Merger.
(c) Any
applicable waiting period under the HSR Act (and any extension thereof) shall
have expired or been terminated.
(d) All
approvals and authorizations required to be obtained from the FCC for the
transfer of control of the FCC Licenses in connection with the Merger shall
have
been obtained, except for those approvals and authorizations to be obtained
from
the FCC that in the aggregate are immaterial to the Company and have not been
denied by the FCC regardless of whether a Final Order shall have been
issued.
Section
6.2 Conditions
to Obligation of the Company to Effect the Merger.
The
obligation
of the
Company to effect the Merger is further subject to the fulfillment or waiver
by
the Company of the following
conditions:
(a) The
representations and warranties of Parent and Merger Sub set forth in this
Agreement shall be true and correct as of the date of this Agreement and as
of
the Closing Date as though made on and as of the Closing Date (unless any such
representation or warranty is made only as of a specific date, in which event
such representation or warranty shall be true and correct only as of such
specific date),
except
where the failure of such representations and warranties to be so true and
correct would not, individually or in the aggregate, have a Parent Material
Adverse Effect.
(b) Parent
and Merger Sub shall have in all material respects performed all obligations
and
complied with all covenants required by this Agreement to be performed or
complied with by them prior to the Effective Time.
(c) Parent
shall have delivered to the Company a certificate, dated as of the Closing
Date
and signed by its Chief Executive Officer or another senior executive officer,
certifying to the effect that the conditions set forth in Section 6.2(a)
and
6.2(b) have been satisfied.
Section
6.3 Conditions
to Obligation of Parent and Merger Sub to Effect the Merger.
The
obligation of Parent and Merger Sub to effect the Merger is further subject
to
the fulfillment or waiver by Parent and Merger Sub of the following
conditions:
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(a) The
representations and warranties of the Company (i) set forth in (A) Section
3.2(a)(x) and 3.2(b),(c) and (d) shall be true and correct in all material
respects, and (B) 3.11(b) shall be true and correct in all respects, as at
the
date of this Agreement and as of the Closing Date as if made on the Closing
Date
(except to the extent such representations and warranties expressly relate
to an
earlier date, in which case as of such earlier date), and (ii) set forth in
this
Agreement (other than those described in clause (i) above) shall be true and
correct (disregarding all qualifications or limitations as to “materiality”,
“Company Material Adverse Effect” and words of similar import set forth therein)
as of the date of this Agreement and as of the Closing Date as though made
on
the Closing Date (except to the extent such representations and warranties
expressly relate to an earlier date, in which case as of such earlier date),
except, in the case of this clause (ii), where the failure of such
representations and warranties to be so true and correct would not, individually
or in the aggregate, have a Company Material Adverse Effect.
(b) The
Company shall have in all material respects performed all obligations and
complied with all covenants required by this Agreement to be performed or
complied with by it prior to the Effective Time.
(c) The
Company shall have delivered to Parent a certificate, dated as of the Closing
Date and signed by its Chief Executive Officer or another senior executive
officer, certifying to the effect that the conditions set forth in Section
6.3(a)and Section 6.3(b) have been satisfied.
Section 6.4 Frustration
of Closing Conditions.
Neither
the Company nor Parent may rely, either as a basis for not consummating the
Merger or terminating this Agreement and abandoning the Merger, on the failure
of any condition set forth in Section 6.1, 6.2 or 6.3, as the case may be,
to be
satisfied if such failure was caused by such party’s breach in any material
respect of any provision of this Agreement or failure to use all best efforts
to
consummate the Merger and the other transactions contemplated hereby, as
required by and subject to Section 5.5.
ARTICLE
VII
TERMINATION
Section
7.1 Termination
or Abandonment.
Notwithstanding anything contained in this Agreement to the contrary, this
Agreement may be terminated and abandoned at any time prior to the Effective
Time, whether before or after any approval of the matters presented in
connection with the Merger by the shareholders of the Company:
(a) by
the
mutual written consent of the Company and Parent;
(b) by
either
the Company or Parent, if:
(i) the
Effective Time shall not have occurred on or before the 12-month anniversary
of
the date hereof (provided however
that in
the event that as of such 12-month anniversary any of the conditions set forth
in any of Section 6.1(b), (c) or (d) has not been satisfied, the Termination
Date may be extended from time to time by either Parent or the Company one
or
more times to a date not beyond the 14-month anniversary of the date hereof
(such later date, including as it may be further extended pursuant to
the
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proviso
at the end of this Section 7.1(b)(i), the “End
Date”)),
and
the party seeking to terminate this Agreement pursuant to this Section 7.1(b)(i)
shall not have breached in any material respect its obligations under this
Agreement in any manner that shall have proximately caused the failure to
consummate the Merger on or before the End Date;
provided
however
that if
the Marketing Period shall have commenced on or before the End Date, but not
ended on or before the End Date, the End Date shall (x) be automatically
extended by 30 days after the initial commencement date of such Marketing Period
and (y) in no event occur sooner than three business days after the final day
of
the Marketing Period; provided,
further,
that in
no event shall the End Date be later than the 15-month anniversary of the date
hereof;
(ii) if
any
court of competent jurisdiction shall have issued or entered an injunction
or
similar legal restraint or order permanently enjoining or otherwise prohibiting
the consummation of the Merger and such injunction, legal restraint or order
shall have become final and non-appealable, provided
that the
party seeking to terminate this Agreement pursuant to this Section 7.1(b)(ii)
shall have used such efforts as may be required by Section 5.5 to prevent,
oppose and remove such injunction;
(iii) the
Company Meeting (including any adjournments or postponements thereof) shall
have
concluded and the Company Shareholder Approval contemplated by this Agreement
shall not have been obtained;
(c) by
the
Company:
(i) if
Parent
or
Merger
Sub shall
have breached or failed to perform any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (A) would result in a failure of a condition set forth
in Section 6.1 or Section 6.2 and (B) cannot be cured by the End Date,
provided
that (x)
the Company shall have given Parent written notice, delivered at least thirty
(30) days prior to such termination, stating the Company’s intention to
terminate this Agreement pursuant to this Section 7.1(c)(i) and the basis for
such termination and (y) the Company is not then in material breach of this
Agreement;
(ii) in
order
to enter into a transaction that is a Superior Proposal, if, prior to the
receipt of the Company Shareholder Approval, (A) the Board of Directors of
the Company determines that it has received a Superior Proposal, (B) the
Company has notified Parent in writing of its intention to terminate this
Agreement pursuant to this Section 7.1(c)(ii), and included with such notice
the
identity of the person making such proposal, the most current written draft
agreement relating to the transaction that constitutes such Superior Proposal
and all related transaction agreements to which the Company would be a party,
(C) the Company has negotiated with Parent in good faith during the five
Business Day period following receipt by Parent of the notice referred to in
clause (B) above (to the extent Parent desires to negotiate) regarding
adjustments in the terms and conditions of this Agreement as would permit the
Board of Directors to determine that such Superior Proposal no longer
constitutes a Superior Proposal, (D) following such period referred to in
clause (C) above, and taking into account any revised proposal committed to
by
Parent during such period, the Board of Directors shall
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have
determined in good faith and after consultation with its outside counsel and
financial advisors that such Superior Proposal continues to be more favorable
to
the shareholders of the Company from a financial point of view than the revised
proposal committed to by Parent, if any, (E) concurrently with such termination,
the Company enters into a definitive agreement with respect to such Superior
Proposal, and (F) prior to or concurrently with such termination, the
Company pays the fee due under Section 7.2;
provided
that any material amendment to the terms of such Superior Proposal shall require
a new notice and a new two Business Day period;
(iii) if
the
Merger shall not have been consummated on the third Business Day after the
final
day of the Marketing Period and all of the conditions set forth in Section
6.3(a) and Section 6.3(b) have been satisfied and at the time of such
termination such conditions continue to be satisfied; or
(d) by
Parent, if:
(i) the
Company shall have breached or failed to perform any of its representations,
warranties, covenants or other agreements contained in this Agreement, which
breach or failure to perform (A) would result in a failure of a condition
set forth in Section 6.1 or Section 6.3 to be satisfied and (B) cannot be
cured by the End Date, provided
that (x)
Parent shall have given the Company written notice, delivered at least thirty
(30) days prior to such termination, stating Parent’s intention to terminate
this Agreement pursuant to this Section 7.1(d)(i) and the basis for such
termination and (y) neither Parent nor Merger Sub is then in material breach
of
this Agreement;
(ii) the
Board
of Directors of the Company (A) effects a Change of Recommendation, (B) fails
to
include in the Proxy Statement its recommendation to the Company’s shareholders
that they give the Company Shareholder Approval, (C) publicly approves, endorses
or recommends any Alternative Proposal
(it
being agreed that the taking by the Company or any of its Representatives of
any
of the actions permitted by Section 5.2(c) shall not give rise to a right to
terminate pursuant to this clause (ii)) or (D) fails to publicly recommend
against acceptance of a tender offer or exchange offer that constitutes an
Alternative Proposal (other than by Parent or any of its Affiliates), including
by taking no position with respect to the acceptance of such tender offer or
exchange offer by its shareholders, within 10 Business Days after commencement
thereof; or
(iii) the
Company gives Parent the notification contemplated by Section
7.1(c)(ii)(B).
In
the
event of termination of this Agreement pursuant to this Section 7.1, this
Agreement shall forthwith become null and void and there shall be no liability
or obligation on the part of the Company, Parent, Merger Sub or their respective
Subsidiaries or Affiliates, except that the Confidentiality Agreements, the
Guarantees (only to the extent reflected therein) and the provisions of Section
5.9, Section 7.2 and Article VIII will survive the termination hereof;
provided,
however,
that,
without limiting the right to receive any payment pursuant to Section 7.2,
the
Company agrees that, to the extent it has incurred losses or damages in
connection with
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this
Agreement, the maximum aggregate liability of Parent and Merger Sub shall be
limited to an amount equal to the aggregate amount of the Guarantees (to the
extent any amount is payable thereunder), and in no event shall the Company
seek
to recover any money damages in excess of such amount from Parent, Merger Sub
or
any Guarantor (only to the extent reflected in any Guarantee) or any of their
respective Representatives or Affiliates; and provided,
further,
that
subject to Section 7.2(e), nothing herein shall relieve the Company from
liability for willful and material breach of its covenants or agreements set
forth in this Agreement prior to such termination.
Section
7.2 Termination
Fees.
(a) In
the
event that:
(i) (A)
after
the date hereof, a bona fide Alternative Proposal shall have been publicly
disclosed or any Person shall have publicly announced or publicly made known
any
intention (whether or not conditional) to make any Alternative Proposal (and
such Alternative Proposal or publicly announced intention shall not have been
abandoned), and (B) following the occurrence of an event described in the
preceding clause (A), this Agreement is terminated by the Company or Parent
pursuant to Section 7.1(b)(iii) or 7.1(d)(i), and (C) the Company
consummates, or enters into a definitive agreement providing for, any
Alternative Proposal within twelve months of the date this Agreement is
terminated, which need not be the same Alternative Proposal that shall have
been
publicly disclosed after the date hereof in respect of the preceding clause
(A)
(provided
that for
purposes of this Section 7.2(a)(i), the references to “20%” in the definition of
Alternative Proposal shall be deemed to be references to “50%”);
or
(ii) this
Agreement is terminated by the Company pursuant to Section 7.1(c)(ii);
or
(iii) this
Agreement is terminated by Parent pursuant to Section 7.1(d)(ii) or
7.1(d)(iii);
then
in
any such event under clause (i), (ii) or (iii) of this Section 7.2(a), the
Company shall pay at the direction of Parent to
any
Person that is a U.S. person for U.S. federal income tax purposes, a
termination fee of $625,000,000 in cash (the “Termination
Fee”),
less
the amount of any Expenses previously reimbursed by the Company pursuant to
Section 8.2, it being understood that in no event shall the Company be required
to pay the Termination Fee on more than one occasion.
(b) In
the
event that
(i) (x)
the
Company shall terminate this Agreement pursuant to Section 7.1(c)(i) and (y)
at
the time of such termination there are not facts or circumstances that would
reasonably be expected to cause the conditions in Section 6.3(a) or Section
6.3(b) not to be satisfied on the End Date, or
(ii) the
Company shall terminate this Agreement pursuant to Section 7.1(c)(iii),
or
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(iii) this
Agreement shall be terminated by the Company or Parent pursuant to (x) Section
7.1(b)(i) and at the time of such termination the conditions set forth in
Sections 6.1 and Sections 6.3(a) and (b) (substituting the time of such
termination for references to the “Closing Date” and the “Effective Time” in
such Sections 6.3(a) and (b)) are satisfied, or (y) Section 7.1(b)(i) or Section
7.1(b)(ii) (in the case of clause (ii), if the applicable injunction, legal
restraint or order relates to a Regulatory Law) and at the time of such
termination any of the conditions set forth in Section 6.1(b) (in the case
of
clause (b), if the applicable order, injunction, restraint or prohibition
relates to a Regulatory Law), (c) or (d) or Section 6.2 shall not have been
satisfied,
then
in
any such event under clause (i), (ii) or (iii) of this Section 7.2(b), Parent
shall pay to the Company a termination fee of $625,000,000 in cash (the
“Parent
Termination Fee”),
it
being understood that in no event shall Parent be required to pay the Parent
Termination Fee on more than one occasion.
(c) Any
payment required to be made pursuant to clause (i) of Section 7.2(a) shall
be
made at the direction of Parent to any Person that is a U.S. person for U.S.
federal income tax purposes, promptly following the earlier of the consummation
of or entry into a definitive agreement with respect to the transaction referred
to therein, as the case may be (and in any event not later than two Business
Days after delivery to the Company of notice of demand for payment after such
event); any payment required to be made pursuant to clause (ii) of Section
7.2(a) shall be made at the direction of Parent to any Person that is a U.S.
person for U.S. federal income tax purposes, concurrently with, and as a
condition to the effectiveness of, the termination of this Agreement by the
Company pursuant to Section 7.1(c)(ii); any payment required to be made pursuant
to clause (iii) of Section 7.2(a) shall be made at the direction of Parent
to
any Person that is a U.S. person for U.S. federal income tax purposes, promptly
following termination of this Agreement by Parent pursuant to Section 7.1(d)(ii)
or (iii), as applicable (and in any event not later than two Business Days
after
delivery to the Company of notice of demand for payment after such event),
and
such payment shall be made by wire transfer of immediately available funds
to an
account to be designated by Parent. Any payment required to be made pursuant
to
Section 7.2(b) shall be made to the Company promptly following termination
of
this Agreement by the Company or Parent, as applicable (and in any event not
later than two Business Days after delivery to Parent of notice of demand for
payment), and such payment shall be made by wire transfer of immediately
available funds to an account to be designated by the Company.
(d) In
the
event that the Company shall fail to pay the Termination Fee, or Parent shall
fail to pay the Parent Termination Fee, required pursuant to this Section 7.2
when due, such fee shall accrue interest for the period commencing on the date
such fee became past due, at a rate equal to the rate of interest publicly
announced by JP Morgan Chase from time to time during such period, as such
bank’s prime lending rate. In addition, if either party shall fail to pay such
fee when due, such owing party shall also pay to the owed party all of the
owed
party’s costs and expenses (including reasonable attorneys’ fees) in connection
with efforts to collect such fee or expenses. Each of Parent and the Company
acknowledges that the fees and the other provisions of this Section 7.2 are
an
integral part of the Merger and that, without these agreements, Parent and
the
Company would not enter into this Agreement.
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(e) Each
of
the parties hereto acknowledges that the agreements contained in this Section
7.2 are an integral part of the transactions contemplated by this Agreement
and
that neither the Termination Fee nor the Parent Termination Fee is a penalty,
but rather is liquidated damages in a reasonable amount that will compensate
Parent and Merger Sub or the Company, as the case may be, in the circumstances
in which such Termination Fee is payable for the efforts and resources expended
and opportunities foregone while negotiating this Agreement and in reliance
on
this Agreement and on the expectation of the consummation of the transactions
contemplated hereby, which amount would otherwise be impossible to calculate
with precision. Notwithstanding anything to the contrary in this Agreement,
the
Company’s right to receive payment of the Parent Termination Fee from Parent
pursuant to this Section 7.2 or the guarantee thereof pursuant to the Guarantees
shall be the sole and exclusive remedy of the Company and its Subsidiaries
against Parent, Merger Sub, the Guarantors and any of their respective former,
current or future general or limited partners, stockholders, managers, members,
directors, officers, Affiliates or agents for the loss suffered as a result
of
the failure of the Merger to be consummated, and upon payment of such amount,
none of Parent, Merger Sub, the Guarantors or any of their former, current
or
future general or limited partners, stockholders, managers, members, directors,
officers, Affiliates or agents shall have any further liability or obligation
relating to or arising out of this Agreement or the transactions contemplated
hereby.
ARTICLE
VIII
MISCELLANEOUS
Section
8.1 No
Survival of Representations and Warranties.
None of
the representations and warranties in this Agreement
or in
any instrument delivered pursuant to this Agreement shall survive the occurrence
of the Merger.
Section
8.2 Expenses.
Whether
or not the Merger is consummated, all costs and expenses incurred in
connection
with the Merger, this Agreement and the transactions contemplated
hereby shall be paid by the party incurring or required to incur such expenses,
except (x) all fees paid in respect of any HSR Act, FCC or other regulatory
filing shall be borne one-half by the Company and one-half by Parent and (y)
as
otherwise set forth in Section 5.9
or
Section 7.2(d). Notwithstanding the foregoing, in the event this Agreement
is
terminated pursuant to Section 7.1(b)(iii), the Company shall reimburse and
pay
to Parent all of its reasonable out-of-pocket expenses (including fees and
expenses of accountants, counsel, investment bankers, financing sources, experts
and consultants to Parent and its affiliates and equity holders) incurred in
connection with the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby
(“Expenses”),
in an
amount not exceeding $35,000,000.
Section
8.3 Counterparts;
Effectiveness.
This
Agreement may be executed in two or more consecutive counterparts (including
by
facsimile), each of which shall be an original, with the same effect as if
the
signatures thereto and hereto were upon the same instrument, and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered (by telecopy or otherwise) to the other parties.
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Section
8.4 Governing
Law.
This
Agreement, and all claims or causes of action (whether at Law, in contract
or in
tort) that may be based upon, arise out of or relate to this Agreement or the
negotiation, execution or performance hereof, shall be governed by and construed
in accordance with the Laws of the State of Delaware, without giving effect
to
any choice or conflict of Law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the
Laws
of any jurisdiction other than the State of Delaware.
Section
8.5 Jurisdiction;
Enforcement.
The
parties agree that irreparable damage would occur in the event that any of
the
provisions of this Agreement to be performed by the Company or any of its
Subsidiaries were not performed in accordance with their specific terms or
were
otherwise breached. It is accordingly agreed that prior to the valid and
effective termination of this Agreement in accordance with Article VII Parent
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this Agreement
exclusively in the Delaware Court of Chancery and any state appellate court
therefrom within the State of Delaware (or, if the Delaware Court of Chancery
declines to accept jurisdiction over a particular matter, any state or federal
court within the State of Delaware). The parties acknowledge and agree that
neither the Company nor any of its Subsidiaries shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement or to enforce
specifically the terms and provisions of this Agreement and their sole and
exclusive remedy with respect to any such breach shall be the monetary damages
set forth in Section 7.2(b). In addition, each of the parties hereto irrevocably
agrees that any legal action or proceeding with respect to this Agreement and
the rights and obligations arising hereunder, or for recognition and enforcement
of any judgment in respect of this Agreement and the rights and obligations
arising hereunder brought by the other party hereto or its successors or
assigns, shall be brought and determined exclusively in the Delaware Court
of
Chancery and any state appellate court therefrom within the State of Delaware
(or, if the Delaware Court of Chancery declines to accept jurisdiction over
a
particular matter, any state or federal court within the State of Delaware).
Each of the parties hereto hereby irrevocably submits with regard to any such
action or proceeding for itself and in respect of its property, generally and
unconditionally, to the personal jurisdiction of the aforesaid courts and agrees
that it will not bring any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court other than the
aforesaid courts. Each of the parties hereto hereby irrevocably waives, and
agrees not to assert as a defense, counterclaim or otherwise, in any action
or
proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above named courts for any reason
other than the failure to serve in accordance with this Section 8.5,
(b) any claim that it or its property is exempt or immune from jurisdiction
of any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid
of
execution of judgment, execution of judgment or otherwise) and (c) to the
fullest extent permitted by the applicable Law, any claim that (i) the
suit, action or proceeding in such court is brought in an inconvenient forum,
(ii) the venue of such suit, action or proceeding is improper or
(iii) this Agreement, or the subject mater hereof, may not be enforced in
or by such courts.
Section
8.6 WAIVER
OF JURY TRIAL.
EACH OF
THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY
LEGAL PROCEEDING BETWEEN THE PARTIES HERETO ARISING OUT OF OR
A-57
RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section
8.7 Notices.
Any
notice required to be given hereunder shall be sufficient if in writing, and
sent by facsimile transmission with electronic confirmation, by reliable
overnight delivery service (with proof of service), hand delivery or certified
or registered mail (return receipt requested and first-class postage prepaid),
addressed as follows:
To
Parent
or Merger Sub:
Atlantis
Holdings LLC
c/o
TPG
Partners V, L.P.
301
Commerce Street
Suite
3300
Fort
Worth, Texas 76102
Attention: Clive
Bode
Facsimile: (817)
871-4001
with
a
copy to:
Cleary
Gottlieb Steen & Hamilton LLP
One
Liberty Plaza
New
York,
New York 10006
Attention:
Paul
J.
Shim
Facsimile: (212)
225-3999
Weil,
Gotshal & Manges LLP
767
Fifth
Avenue
New
York,
NY 10153
Attention: Thomas
A.
Roberts
Michael
J. Aiello
Facsimile: (212)
310-8007
To
the
Company:
Alltel
Corporation
One
Allied Drive
Little
Rock, Arkansas 72202
Attention: Richard
N. Massey
Facsimile: (501)
905-0962
A-58
with
a
copy to:
Wachtell,
Lipton, Rosen & Katz
51
West
52nd Street
New
York,
New York 10019
Attention: Edward
D.
Herlihy
Lawrence
S. Makow
Stephanie
Seligman
Facsimile: (212)
403-2000
or
to
such other address as any party shall specify by written notice so given, and
such notice shall be deemed to have been delivered as of the date so
telecommunicated and confirmed, personally delivered or mailed. Any party to
this Agreement may notify any other party of any changes to the address or
any
of the other details specified in this paragraph; provided,
however,
that
such notification shall only be effective on the date specified in such notice
or five (5) Business Days after the notice is given, whichever is later.
Rejection or other refusal to accept or the inability to deliver because of
changed address or facsimile of which no notice was given shall be deemed to
be
receipt of the notice as of the date of such rejection, refusal or inability
to
deliver.
Section
8.8 Assignment;
Binding Effect.
Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of Law or
otherwise) without the prior written consent of the other parties, except that
Parent and Merger Sub may assign, in its sole discretion, any of or all of
its
rights, interest and obligations under this Agreement to Parent or any of its
Affiliates, but no such assignment shall relieve the assigning party of its
obligations hereunder or under the Guarantee. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.
Parent
shall cause Merger Sub, and any assignee thereof, to perform its obligations
under this Agreement and shall be responsible for any failure of Merger Sub
or
such assignee to comply with any representation, warranty, covenant or other
provision of this Agreement.
Section
8.9 Severability.
Any
term or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement in any other jurisdiction.
If any provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only as broad as is
enforceable.
Section
8.10 Entire
Agreement; No Third-Party Beneficiaries.
This
Agreement (including the exhibits and letters hereto), the Confidentiality
Agreements and the Guarantees constitute the entire agreement, and supersede
all
other prior agreements and understandings, both written and oral, between the
parties, or any of them, with respect to the subject matter hereof and thereof
and, other than as set forth in Section 5.8, is not intended to and shall not
confer upon any person other than the parties hereto any rights or remedies
hereunder.
A-59
Section
8.11 Amendments;
Waivers.
At any
time prior to the Effective Time, any provision of this Agreement may be amended
or waived if, and only if, such amendment or waiver is in writing and signed,
in
the case of an amendment, by the Company, Parent and Merger Sub, or in the
case
of a waiver, by the party against whom the waiver is to be effective;
provided,
however,
that
after receipt of Company Shareholder Approval, if any such amendment or waiver
shall by applicable Law or in accordance with the rules and regulations of
the
New York Stock Exchange require further approval of the shareholders of the
Company, the effectiveness of such amendment or waiver shall be subject to
the
approval of the shareholders of the Company. Notwithstanding the foregoing,
no
failure or delay by the Company or Parent in exercising any right hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise of any other right
hereunder.
Section
8.12 Headings.
Headings of the Articles and Sections of this Agreement are for convenience
of
the parties only and shall be given no substantive or interpretive effect
whatsoever. The table of contents to this Agreement is for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
Section
8.13 Interpretation.
When a
reference is made in this Agreement to an Article or Section, such reference
shall be to an Article or Section of this Agreement unless otherwise
indicated. Whenever the words “include,” “includes” or “including” are used in
this Agreement, they shall be deemed to be followed by the words “without
limitation.” The words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and
not to any particular provision of this Agreement. The word “or” shall be deemed
to mean “and/or.” All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant thereto unless otherwise defined therein. The definitions contained
in
this Agreement are applicable to the singular as well as the plural forms of
such terms and to the masculine as well as to the feminine and neuter genders
of
such term. Any agreement, instrument or statute defined or referred to herein
or
in any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
Each
of the parties has participated in the drafting and negotiation of this
Agreement. If an ambiguity or question of intent or interpretation arises,
this
Agreement must be construed as if it is drafted by all the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party
by
virtue of authorship of any of the provisions of this Agreement.
Section
8.14 No
Recourse.
This
Agreement may only be enforced against, and any claims or causes of action
that
may be based upon, arise out of or relate to this Agreement, or the negotiation,
execution or performance of this Agreement may only be made against the entities
that are expressly identified as parties hereto or the Guarantors (to the extent
set forth in the Guarantees) and no past, present or future Affiliate, director,
officer, employee, incorporator, member, manager, partner, shareholder, agent,
attorney or representative of any party hereto (other than the Guarantors (to
the extent set forth in the Guarantees)) shall have any liability for any
obligations or liabilities of the parties to this Agreement or for any claim
based on, in respect of, or by reason of, the transactions contemplated
hereby.
A-60
Section
8.15 Certain
Definitions.
For
purposes of this Agreement, the following terms will have the following meanings
when used herein:
(a) “Affiliates”
shall
mean, as to any person, any other person which, directly or indirectly,
controls, or is controlled by, or is under common control with, such person.
As
used in this definition, “control”
(including, with its correlative meanings, “controlled by” and “under common
control with”) shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of management or policies of a person, whether
through the ownership of securities or partnership or other ownership interests,
by Contract or otherwise. Without limiting the foregoing, the “Affiliates” of
Parent shall include the Guarantors and their respective
Affiliates.
(b) “Business
Day”
shall
mean any day other than a Saturday, Sunday or a day on which the banks in New
York, New York are authorized by Law or executive order to be closed.
(c) “Company
Stock Plans”
means
each of the plans providing for the grant of Company Stock Options or Company
Restricted Stock and the Employee Stock Purchase Plan.
(d) “Confidentiality
Agreements”
means
the confidentiality agreement, dated as of April 9, 2007, by and between TPG
Capital, L.P. and the Company and the confidentiality agreement, dated as of
April 25, 2007, by and between GS Capital Partners VI Fund, L.P. and the
Company.
(e) “Contracts”
means
any contracts, agreements, licenses (or sublicenses), notes, bonds, mortgages,
indentures, commitments, leases (or subleases) or other instruments or
obligations, whether written or oral.
(f) “Final
Order”
means
an action or decision that has been granted as to which (I) no request for
a
stay or any similar request is pending, no stay is in effect, the action or
decision has not been vacated, reversed, set aside, annulled or suspended and
any deadline for filing such a request that may be designated by statute or
regulation has passed, (ii) no petition for rehearing or reconsideration or
application for review is pending and the time for the filings of any such
petition or application has passed, (iii) no Governmental Entity has undertaken
to reconsider the action on its own motion and the time within which it may
effect such reconsideration has passed and (iv) no appeal is pending (including
other administrative or judicial review) or in effect and any deadline for
filing any such appeal that may be specified by statute or rule has
passed.
(g) “Governmental
Consents”
mean
all notices, reports, and other filings required to be made prior to the
Effective Time by the Company or Parent or any of their respective Subsidiaries
with, and all consents, registrations, approvals, permits, clearances and
authorizations required to be obtained prior to the Effective Time by the
Company or Parent or any of their respective Subsidiaries from, any Governmental
Entity in connection with the execution and delivery of this Agreement and
the
consummation of the Merger and the other transactions contemplated
hereby.
A-61
(h) “Knowledge”
means
(i) with respect to Parent, the actual knowledge after due inquiry of the
individuals listed on Section 8.15(h)(i) of the Parent Disclosure Letter and
(ii) with respect to the Company, the actual knowledge after due inquiry of
the individuals listed on Section 8.15(h)(ii) of the Company Disclosure
Letter.
(i) “orders”
means
any orders, judgments, injunctions, awards, decrees, writs or other legally
enforceable requirement handed down, adopted or imposed by, including any
consent decree, settlement agreement or similar written agreement with, any
Governmental Entity.
(j) “Parent
Material Adverse Effect”
means
any fact, condition, circumstance, event, change effect or occurrence that,
individually or in the aggregate, prevents or materially delays or materially
impairs the ability of Parent and Merger Sub to consummate the Merger prior
to
the End Date, or would reasonably be expected to do so.
(k) “person”
or
“Person”
shall
mean an individual, a corporation, a partnership, a limited liability company,
an association, a trust or any other entity, group (as such term is used in
Section 13 of the Exchange Act) or organization, including, without
limitation, a Governmental Entity, and any permitted successors and assigns
of
such person.
(l) “Subsidiaries”
of
any
party shall mean any corporation, partnership, association, trust or other
form
of legal entity of which (i) more than 50% of the outstanding voting
securities (or other voting interests or, if there are no voting interests,
equity interests) are directly or indirectly owned by such party, or
(ii) such party or any Subsidiary of such party is a general partner
(excluding partnerships in which such party or any Subsidiary of such party
does
not have a majority of the voting interests in such partnership).
(m) Each
of
the following terms is defined on the page set forth opposite such
term:
|
Action
|
Section
5.8(b)
|
|
Affiliate
Transaction
|
Section
3.10
|
|
Affiliates
|
Section
8.15(a)
|
|
Agreement
|
Preamble
|
|
Alternative
Proposal
|
Section
5.2(g)
|
|
Authorized
Preferred Stock
|
Section
3.2(a)
|
|
Book-Entry
Shares
|
Section
2.2(b)(i)
|
|
Business
Day
|
Section
8.15(b)
|
|
By-laws
|
Section
5.3(b)
|
|
Cancelled
Shares
|
Section
2.1(b)
|
|
Certificate
of Merger
|
Section
1.3
|
|
Certificates
|
Section
2.2(b)(i)
|
|
Change
of Recommendation
|
Section
5.2(d)
|
|
Closing
Date
|
Section
1.2
|
|
Closing
|
Section
1.2
|
|
Code
|
Section
2.2(b)(iii)
|
|
Common
Share
|
Section
2.1(a)(i)
|
A-62
|
Common
Stock Merger Consideration
|
Section
2.1(a)(i)
|
|
Company
|
Preamble
|
|
Company
Approvals
|
Section
3.4(b)
|
|
Company
Benefit Plan
|
Section
3.9(a)
|
|
Company
Charter
|
Section
1.5(a)
|
|
Company
Common Stock
|
Section
2.1(a)
|
|
Company
Disclosure Letter
|
Article
III
|
|
Company
Employees
|
Section
5.4(a)
|
|
Company
Licenses
|
Section
3.7(b)
|
|
Company
Material Adverse Effect
|
Section
3.1(c)
|
|
Company
Meeting
|
Section
5.3(b)
|
|
Company
Preferred Stock
|
Section
2.1(a)(ii)
|
|
Company
Restricted Shares
|
Section
2.3(b)
|
|
Company
SEC Documents
|
Section
3.5(a)
|
|
Company
Series C Preferred Stock
|
Section
2.1(a)(ii)
|
|
Company
Series D Preferred Stock
|
Section
2.1(a)(iii)
|
|
Company
Shareholder Approval
|
Section
3.18
|
|
Company
Stock Option
|
Section
2.3(a)
|
|
Company
Stock Plans
|
Section
8.15(c)
|
|
Confidentiality
Agreement
|
Section
8.15(d)
|
|
Contracts
|
Section
8.15(e)
|
|
control
|
Section
8.15(a)
|
|
Debt
Commitment Letters
|
Section
4.4
|
|
Debt
Financing
|
Section
4.4
|
|
Debt
Offers
|
Section
5.16(a)
|
|
DGCL
|
Section
1.1
|
|
Dissenting
Common Shares
|
Section
2.1(a)(i)
|
|
Dissenting
Common Stockholders
|
Section
2.1(a)(i)
|
|
Dissenting
Series C Preferred Shares
|
Section
2.1(a)(ii)
|
|
Dissenting
Series D Preferred Shares
|
Section
2.1(a)(iii)
|
|
Dissenting
Series C Preferred Stockholders
|
Section
2.1(a)(ii)
|
|
Dissenting
Series D Preferred Stockholders
|
Section
2.1(a)(iii)
|
|
Dissenting
Shares
|
Section
2.1(a)(iii)
|
|
Dissenting
Stockholders
|
Section
2.1(a)(iii)
|
|
Effective
Time
|
Section
1.3
|
|
End
Date
|
Section
7.1(b)(i)
|
|
Environmental
Law
|
Section
3.8(b)
|
|
Equity
Commitment Letter
|
Section
4.4
|
|
ERISA
|
Section
3.9(a)
|
|
ERISA
Affiliate
|
Section
3.9(c)
|
|
ESPP
|
Section
2.3(d)
|
|
Exchange
Act
|
Section
3.4(b)
|
|
Exchange
Fund
|
Section
2.2(a)
|
|
Expenses
|
Section
8.2
|
|
FAA
|
Section
3.7(b)
|
|
FCC
|
Section
3.4(b)
|
A-63
|
FCC
Licenses
|
Section
3.7(b)
|
|
Final
Date
|
Section
2.3(d)
|
|
Financing
|
Section
4.4
|
|
Financing
Commitments
|
Section
4.4
|
|
GAAP
|
Section
3.5(b)
|
|
Governmental
Consents
|
Section
8.15(f)
|
|
Governmental
Entity
|
Section
3.4(b)
|
|
Guarantee
|
Recitals
|
|
Guarantor
|
Recitals
|
|
Hazardous
Substance
|
Section
3.8(c)
|
|
HSR
Act
|
Section
3.4(b)
|
|
Indebtedness
|
Section
5.1(b)(vii)
|
|
Indemnified
Party
|
Section
5.8(b)
|
|
Intellectual
Property
|
Section
3.16
|
|
IRS
|
Section
3.9(b)
|
|
Knowledge
|
Section
8.15(g)
|
|
Laws
|
Section
3.7(a)
|
|
Licenses
|
Section
3.7(a)
|
|
Lien
|
Section
3.4(c)
|
|
Marketing
Period
|
Section
5.9(a)
|
|
Material
Contract
|
Section
3.19
|
|
Material
Licenses
|
Section
3.7(a)
|
|
Merger
|
Recitals
|
|
Merger
Consideration
|
Section
2.1(a)(iii)
|
|
Merger
Sub
|
Preamble
|
|
New
Financing Commitments
|
Section
5.9(a)
|
|
New
Plans
|
Section
5.4(b)
|
|
Notes
|
Section
5.16(a)
|
|
Offer
Documents
|
Section
5.16(a)
|
|
Old
Plans
|
Section
5.4(b)
|
|
orders
|
Section
8.15(h)
|
|
Original
Date
|
Section
5.3(c)
|
|
Parent
Approvals
|
Section
4.2(b)
|
|
Parent
|
Preamble
|
|
Parent
Disclosure Letter
|
Article
IV
|
|
Parent
Group
|
Section
4.13
|
|
Parent
Termination Fee
|
Section
7.2(b)(ii)
|
|
Parent
Group
|
Section
4.12
|
|
Parent
Material Adverse Effect
|
Section
8.15(i)
|
|
Paying
Agent
|
Section
2.2(a)
|
|
person
|
Section
8.15(j)
|
|
Person
|
Section
8.15(j)
|
|
Preferred
Share
|
Section
2.1(a)(ii)
|
|
Preferred
Stock Merger Consideration
|
Section
2.1(a)(ii)
|
|
Proxy
Statement
|
Section
3.13
|
|
Recommendation
|
Section
3.4(a)
|
A-64
|
Regulatory
Law
|
Section
5.5(e)
|
|
Remaining
Common Shares
|
Section
2.1(a)(i)
|
|
Remaining
Series C Preferred Shares
|
Section
2.1(a)(ii)
|
|
Remaining
Series D Preferred Shares
|
Section
2.1(a)(iii)
|
|
Remaining
Shares
|
Section
2.1(a)(iii)
|
|
Representatives
|
Section
5.2(a)
|
|
Required
Information
|
Section
5.9(b)
|
|
Retention
Plan
|
Section
5.4(a)
|
|
Sarbanes-Oxley
Act
|
Section
3.5(a)
|
|
SEC
|
Section
3.5(a)
|
|
Securities
Act
|
Section
3.5(a)
|
|
Series
C Preferred Stock Merger Consideration
|
Section
2.1(a)(ii)
|
|
Series
D Preferred Stock Merger Consideration
|
Section
2.1(a)(iii)
|
|
Series
C Preferred Share
|
Section
2.1(a)(ii)
|
|
Series
D Preferred Share
|
Section
2.1(a)(iii)
|
|
Shares
|
Section
2.1(a)(iii)
|
|
Significant
Subsidiary
|
Section
3.3
|
|
State
Commissions
|
Section
3.4(b)
|
|
State
Licenses
|
Section
3.7(b)
|
|
Subsidiaries
|
Section
8.15(k)
|
|
Superior
Proposal
|
Section
5.2(h)
|
|
Surviving
Corporation
|
Section
1.1
|
|
Tax
|
Section
3.14(b)(i)
|
|
Tax
Return
|
Section
3.14(b)(ii)
|
|
Taxes
|
Section
3.14(b)(i)
|
|
Termination
Date
|
Section
5.1(a)
|
|
Termination
Fee
|
Section
7.2(a)(iii)
|
A-65
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.
ATLANTIS
HOLDINGS LLC
By:
/s/ Gene J.
Frantz
Gene
J.
Frantz
Vice
President
ATLANTIS
MERGER SUB,
INC.
By: /s/Joseph H. Gleberman
Joseph
H.
Gleberman
Co-President
ALLTEL CORPORATION
By:
/s/ Scott Ford
Scott
Ford
President
and Chief
Executive Officer
May 20, 2007
Board
of
Directors
Alltel
Corporation
One
Allied Drive
Little
Rock, AR 72202
Members
of the Board of Directors:
Alltel
Corporation (the "Company"), and Atlantis Holdings LLC (the "Acquiror")
and
Atlantis Merger Sub, a newly formed, wholly owned subsidiary of the Acquiror
(the "Acquisition Sub"), have entered into an Agreement and Plan of Merger,
dated May 20, 2007 (the "Agreement"), pursuant to which Acquisition Sub
would be
merged with and into the Company in a merger (the "Merger") in which
(i) each
issued and outstanding share of the Company's common stock, par value
$1.00,
outstanding immediately prior to the effective time of the Merger (the
"Common
Shares"), other than (1) any Common Shares held by any direct or indirect
wholly
owned subsidiary of the Company, (2) any Dissenting Common Shares (as
defined
therein) and (3) any Cancelled Shares (as defined therein), would be
converted
into the right to receive $71.50 per share in cash (the "Common Consideration"),
(ii) each issued and outstanding share of $2.06 No Par Cumulative Convertible
Preferred Stock, Series C, of the Company outstanding immediately prior
to the
effective time of the Merger (the "Series C Preferred Shares"), other
than (1)
any Series C Preferred Shares held by any direct or indirect wholly owned
subsidiary of the Company, (2) any Dissenting Series C Preferred Shares
(as
defined therein) and (3) any Cancelled Shares (as defined therein), would
be
converted into the right to receive $523.22 per share in cash and (iii)
each
issued and outstanding share of $2.25 No Par Cumulative Convertible Preferred
Stock, Series D, of the Company outstanding immediately prior to the
effective
time of the Merger (the "Series D Preferred Shares"), other than (1)
any Series
D Preferred Shares held by any direct or indirect wholly owned subsidiary
of the
Company, (2) any Dissenting Series D Preferred Shares (as defined therein)
and
(3) any Cancelled Shares (as defined therein), would be converted into
the right
to receive $481.37 per share in cash.
You
have
asked us whether, in our opinion, the Common Consideration to be received
by the
holders of the Common Shares pursuant to the Transaction is fair from
a
financial point of view to such holders, other than the Acquiror and
its
affiliates.
In
arriving at the opinion set forth below, we have, among other
things:
B-1
|
(1)
|
Reviewed
certain publicly available business and financial information
relating to
the Company that we deemed to be
relevant;
|
|
(2)
|
Reviewed
certain information, including financial forecasts, relating
to the
business, earnings, cash flow, assets, liabilities and prospects
of the
Company furnished
to us
by the Company;
|
|
(3)
|
Conducted
discussions with certain members of management of the Company
concerning
the Merger, the matters described in clauses 1 and 2 above,
and certain
other matters we deemed to be
relevant;
|
|
(4)
|
Reviewed
the market prices and valuation multiples for the Common Shares
and
compared them with those of certain publicly traded companies
that we
deemed to be relevant;
|
|
(5)
|
Reviewed
the results of operations of the Company and compared them
with those of
certain publicly traded companies that we deemed to be
relevant;
|
|
(6)
|
Compared
the proposed financial terms of the Transaction with the financial
terms
of certain other transactions that we deemed to be
relevant;
|
|
(7)
|
Participated
in certain discussions and negotiations among representatives
of the
Company and the Acquiror and their financial and legal
advisors;
|
|
(8)
|
Reviewed
the Agreement; and
|
|
(9)
|
Reviewed
such other financial studies and analyses and took into account
such other
matters as we deemed relevant, including our assessment of
general
economic, market and monetary
conditions.
|
In
preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available
to us,
discussed with or reviewed by or for us, or publicly available, and we
have not
assumed any responsibility for independently verifying such information
or
undertaken an independent evaluation or appraisal of any of the assets
or
liabilities of the Company or been furnished with any such evaluation
or
appraisal, nor have we evaluated the solvency or fair value of the Company
under
any state or federal laws relating to bankruptcy, insolvency or similar
matters. In addition, we have not assumed any obligation to conduct
any physical inspection of the properties or facilities of the
Company. With respect to the financial forecast information furnished
to or discussed with us by the Company, we have assumed that such forecast
information has been reasonably prepared and reflects the best currently
available estimates and judgment of the Company's management as to the
expected
future financial performance of the Company. We express no view as to
such forecast information or the assumptions on which such forecast information
was based. We have also assumed that the Merger and the other
transactions contemplated by the Agreement will be consummated as described
in
the Agreement. We
have also assumed that the representations and warranties made by the
Company,
the Acquiror and the Acquisition Sub in the Agreement and the related
agreements
are and will be true and correct in all respects material to our analysis.
We
are not legal, regulatory or tax experts and have relied on the assessments
made
by advisors to the Company with respect to such issues. We have
further assumed that all material governmental, regulatory or other consents
and
approvals necessary for the consummation of the Merger will be obtained
without
any adverse effect on the Company.
We
are
acting as financial advisor to the Company in connection with the Transaction
and will receive a fee from the Company for our services, a significant
portion
of which is contingent upon the
B-2
execution
by the Company of a definitive agreement to effect the Transaction and
the
subsequent consummation of the Transaction. In addition, the Company
has agreed to indemnify us for certain liabilities arising out of our
engagement. We and our affiliates have, in the past, provided
financial advisory and financing services to the Company and affiliates
of the
Acquiror and may continue to do so and have received, and may receive,
fees for
the rendering of such services. Specifically, in the past two years, we or
our affiliates acted as (i) financial advisor to the Company in connection
with
the spinoff of its wireline business as Windstream Corp. and the merger
of
Windstream Corp. into VALOR Communications Group Inc. in 2006, (ii) lead
arranger and bookrunner in connection with credit facilities for, and debt
securities offering by, Windstream Corp. in connection with such spin-off
and
merger in 2006, (iii) dealer manager in connection with the Company's
tender offer for certain of its outstanding debt securities in 2006,
(iv)
repurchase agent in connection with the Company's repurchase of certain
outstanding debt securities of Western Wireless in 2005, and (v) remarketing
agent for certain of Company's outstanding debt securities in 2005.
Our commercial bank affiliate is a lender to the Company and to certain
affiliates of the Acquiror. In addition, we and our affiliates may also
arrange and/or provide financing in connection with the Acquiror's financing
of
the Merger. In the ordinary course of our business, we and our
affiliates may actively trade the Common Shares and other securities
of the
Company for our own account and for the accounts of customers and, accordingly,
may at any time hold a long or short position in such securities.
This
opinion is for the use and benefit of the Board of Directors of the Company
in
connection with and for the purposes of its evaluation of the
Merger. Our opinion does not address the merits of the underlying
decision by the Company to engage in the Transaction and does not constitute
a
recommendation to any shareholder as to how such shareholder should vote
on the
proposed Merger or any matter related thereto. Our opinion is
necessarily based on economic, market and other conditions as in effect
on, and
the information made available to us as of, the date hereof. It
should be understood that subsequent developments may affect this opinion
and
that we do not have any obligation to update, revise, or reaffirm this
opinion. In addition, you have not asked us to address, and this
opinion does not address, the fairness to, or any other consideration
of, the
holders of any class of securities, creditors or other constituencies
of the
Company, other than the holders of the Common Shares. This opinion
may not be disclosed, referred to, or communicated (in whole or in part)
to any
third party for any purpose whatsoever except with our prior written
approval. This opinion may be reproduced in full in any proxy or
information statement mailed to shareholders of the Company but may not
otherwise be disclosed publicly in any matter without our prior written
approval.
As
we
indicated orally prior to the execution of the Agreement, on the basis
of and
subject to the foregoing, we are of the opinion that, as of the date
hereof, the
Common Consideration to be received by the holders of the Common Shares
pursuant
to the Transaction is fair from a financial point of view to the holders
of such
shares, other than the Acquiror and its affiliates.
Very truly yours,
/s/ J.
P. Morgan Securities Inc.
|
|
J. P. MORGAN SECURITIES INC.
|
B-3
May
20, 2007
Board
of
Directors
Alltel
Corporation
One
Allied Drive
Little
Rock, AR 72202
Members
of the Board of Directors:
Alltel
Corporation (the "Company"), and Atlantis Holdings LLC (the "Acquiror")
and
Atlantis Merger Sub, a newly formed, wholly owned subsidiary
of the Acquiror
(the "Acquisition Sub"), have entered into an Agreement and Plan
of Merger,
dated May 20, 2007 (the "Agreement"), pursuant to which Acquisition
Sub would be
merged with and into the Company in a merger (the "Merger") in
which (i) each
issued and outstanding share of the Company's common stock, par
value $1.00,
outstanding immediately prior to the effective time of the Merger
(the "Common
Shares"), other than (1) any Common Shares held by any direct
or indirect wholly
owned subsidiary of the Company, (2) any Dissenting Common Shares
(as defined
therein) and (3) any Cancelled Shares (as defined therein), would
be converted
into the right to receive $71.50 per share in cash (the "Common
Consideration"),
(ii) each issued and outstanding share of $2.06 No Par Cumulative
Convertible
Preferred Stock, Series C, of the Company outstanding immediately
prior to the
effective time of the Merger (the "Series C Preferred Shares"),
other than (1)
any Series C Preferred Shares held by any direct or indirect
wholly owned
subsidiary of the Company, (2) any Dissenting Series C Preferred
Shares (as
defined therein) and (3) any Cancelled Shares (as defined therein),
would be
converted into the right to receive $523.22 per share in cash
and (iii) each
issued and outstanding share of $2.25 No Par Cumulative Convertible
Preferred
Stock, Series D, of the Company outstanding immediately prior
to the effective
time of the Merger (the "Series D Preferred Shares"), other than
(1) any Series
D Preferred Shares held by any direct or indirect wholly owned
subsidiary of the
Company, (2) any Dissenting Series D Preferred Shares (as defined
therein) and
(3) any Cancelled Shares (as defined therein), would be converted
into the right
to receive $481.37 per share in cash.
You
have
asked us whether, in our opinion, the Common Consideration to
be received by the
holders of the Common Shares pursuant to the Transaction is fair
from a
financial point of view to such holders, other than the Acquiror
and its
affiliates.
In
arriving at the opinion set forth below, we have, among other
things:
|
(1)
|
Reviewed
certain publicly available business and financial information
relating to
the Company that we deemed to be
relevant;
|
C-1
|
(2)
|
Reviewed
certain information, including financial forecasts,
relating to the
business, earnings, cash flow, assets, liabilities
and prospects of the
Company furnished to us by the
Company;
|
|
(3)
|
Conducted
discussions with certain members of management of the
Company concerning
the Merger, the matters described in clauses 1 and
2 above, and certain
other matters we deemed to be
relevant;
|
|
(4)
|
Reviewed
the market prices and valuation multiples for the Common
Shares and
compared them with those of certain publicly traded
companies that we
deemed to be relevant;
|
|
(5)
|
Reviewed
the results of operations of the Company and compared
them with those of
certain publicly traded companies that we deemed to
be
relevant;
|
|
(6)
|
Compared
the proposed financial terms of the Transaction with
the financial terms
of certain other transactions that we deemed to be
relevant;
|
|
(7)
|
Participated
in certain discussions and negotiations among representatives
of the
Company and the Acquiror and their financial and legal
advisors;
|
|
(8)
|
Reviewed
the Agreement; and
|
|
(9)
|
Reviewed
such other financial studies and analyses and took
into account such other
matters as we deemed relevant, including our assessment
of general
economic, market and monetary
conditions.
|
In
preparing our opinion, we have assumed and relied on the accuracy
and
completeness of all information supplied or otherwise made available
to us,
discussed with or reviewed by or for us, or publicly available,
and we have not
assumed any responsibility for independently verifying such information
or
undertaken an independent evaluation or appraisal of any of the
assets or
liabilities of the Company or been furnished with any such evaluation
or
appraisal, nor have we evaluated the solvency or fair value of
the Company under
any state or federal laws relating to bankruptcy, insolvency
or similar
matters. In addition, we have not assumed any obligation to conduct
any physical inspection of the properties or facilities of the
Company. With respect to the financial forecast information furnished
to or discussed with us by the Company, we have assumed that
such forecast
information has been reasonably prepared and reflects the best
currently
available estimates and judgment of the Company's management
as to the expected
future financial performance of the Company. We express no view as to
such forecast information or the assumptions on which such forecast
information
was based. We have also assumed that the Merger and the other
transactions contemplated by the Agreement will be consummated
as described in
the Agreement. We
have also assumed that the representations and warranties made
by the Company,
the Acquiror and the Acquisition Sub in the Agreement and the
related agreements
are and will be true and correct in all respects material to
our analysis. We
are not legal, regulatory or tax experts and have relied on the
assessments made
by advisors to the Company with respect to such issues. We have
further assumed that all material governmental, regulatory or
other consents and
approvals necessary for the consummation of the Merger will be
obtained without
any adverse effect on the Company.
C-2
We
are
acting as financial advisor to the Company in connection with
the Transaction
and will receive a fee from the Company for our services, a significant
portion
of which is contingent upon the execution by the Company of a
definitive
agreement to effect the Transaction and the subsequent consummation
of the
Transaction. In addition, the Company has agreed to indemnify us for
certain liabilities arising out of our engagement. We have, in the
past, provided financial advisory and financing services to the
Company and
affiliates of the Acquiror and may continue to do so and have
received, and may
receive, fees for the rendering of such services. Specifically, in
the past two years, we acted as financial advisor to the Company
in connection
with (i) the spin-off of its wireline business as Windstream
Corp. and the
merger of Windstream into VALOR Communications Group in 2006,
(ii) the Company's
acquisition of Midwest Wireless in 2006 and (iii) the Company's
acquisition of
Western Wireless in 2005. We also acted as lead remarketing agent for
Alltel's equity units remarketing in 2005 and joint lead arranger
in connection
with the Company’s 2005 senior secured credit facility. In addition,
we and our affiliates may also arrange and/or provide financing
in connection
with the Acquiror's financing of the Merger. In the ordinary course
of our business, we and our affiliates may actively trade the
Common Shares and
other securities of the Company for our own account and for the
accounts of
customers and, accordingly, may at any time hold a long or short
position in
such securities.
This
opinion is for the use and benefit of the Board of Directors
of the Company in
connection with and for the purposes of its evaluation of the
Merger. Our opinion does not address the merits of the underlying
decision by the Company to engage in the Transaction and does
not constitute a
recommendation to any shareholder as to how such shareholder
should vote on the
proposed Merger or any matter related thereto. Our opinion is
necessarily based on economic, market and other conditions as
in effect on, and
the information made available to us as of, the date hereof. It
should be understood that subsequent developments may affect
this opinion and
that we do not have any obligation to update, revise, or reaffirm
this
opinion. In addition, you have not asked us to address, and this
opinion does not address, the fairness to, or any other consideration
of, the
holders of any class of securities, creditors or other constituencies
of the
Company, other than the holders of the Common Shares. This opinion
may not be disclosed, referred to, or communicated (in whole
or in part) to any
third party for any purpose whatsoever except with our prior
written
approval. This opinion may be reproduced in full in any proxy or
information statement mailed to shareholders of the Company but
may not
otherwise be disclosed publicly in any matter without our prior
written
approval.
As
we
indicated orally prior to the execution of the Agreement, on
the basis of and
subject to the foregoing, we are of the opinion that, as of the
date hereof, the
Common Consideration to be received by the holders of the Common
Shares pursuant
to the Transaction is fair from a financial point of view to
the holders of such
shares, other than the Acquiror and its affiliates.
Very truly
yours,
/s/Merrill
Lynch,
Pierce, Fenner & Smith
MERRILL
LYNCH,
PIERCE, FENNER & SMITH
INCORPORATED
May
20, 2007
Board
of
Directors
Alltel
Corporation
One
Allied Drive
Little
Rock, AR 72202
Members
of the Board of Directors:
Alltel
Corporation (the "Company"), and Atlantis Holdings LLC (the "Acquiror")
and
Atlantis Merger Sub, a newly formed, wholly owned subsidiary of the
Acquiror
(the "Acquisition Sub"), have entered into an Agreement and Plan
of Merger,
dated May 20, 2007 (the "Agreement"), pursuant to which Acquisition
Sub would be
merged with and into the Company in a merger (the "Merger") in which
(i) each
issued and outstanding share of the Company's common stock, par value
$1.00,
outstanding immediately prior to the effective time of the Merger
(the "Common
Shares"), other than (1) any Common Shares held by any direct or
indirect wholly
owned subsidiary of the Company, (2) any Dissenting Common Shares
(as defined
therein) and (3) any Cancelled Shares (as defined therein), would
be converted
into the right to receive $71.50 per share in cash (the "Common Consideration"),
(ii) each issued and outstanding share of $2.06 No Par Cumulative
Convertible
Preferred Stock, Series C, of the Company outstanding immediately
prior to the
effective time of the Merger (the "Series C Preferred Shares"), other
than (1)
any Series C Preferred Shares held by any direct or indirect wholly
owned
subsidiary of the Company, (2) any Dissenting Series C Preferred
Shares (as
defined therein) and (3) any Cancelled Shares (as defined therein),
would be
converted into the right to receive $523.22 per share in cash and
(iii) each
issued and outstanding share of $2.25 No Par Cumulative Convertible
Preferred
Stock, Series D, of the Company outstanding immediately prior to
the effective
time of the Merger (the "Series D Preferred Shares"), other than
(1) any Series
D Preferred Shares held by any direct or indirect wholly owned subsidiary
of the
Company, (2) any Dissenting Series D Preferred Shares (as defined
therein) and
(3) any Cancelled Shares (as defined therein), would be converted
into the right
to receive $481.37 per share in cash.
You
have
asked us whether, in our opinion, the Common Consideration to be
received by the
holders of the Common Shares pursuant to the Transaction is fair
from a
financial point of view to such holders, other than the Acquiror
and its
affiliates.
In
arriving at the opinion set forth below, we have, among other
things:
|
(1)
|
Reviewed
certain publicly available business and financial information
relating to
the Company that we deemed to be
relevant;
|
D-1
|
(2)
|
Reviewed
certain information, including financial forecasts, relating
to the
business, earnings, cash flow, assets, liabilities and
prospects of the
Company furnished to us by the
Company;
|
|
(3)
|
Conducted
discussions with certain members of management of the Company
concerning
the Merger, the matters described in clauses 1 and 2 above,
and certain
other matters we deemed to be
relevant;
|
|
(4)
|
Reviewed
the market prices and valuation multiples for the Common
Shares and
compared them with those of certain publicly traded companies
that we
deemed to be relevant;
|
|
(5)
|
Reviewed
the results of operations of the Company and compared them
with those of
certain publicly traded companies that we deemed to be
relevant;
|
|
(6)
|
Compared
the proposed financial terms of the Transaction with the
financial terms
of certain other transactions that we deemed to be
relevant;
|
|
(7)
|
Participated
in certain discussions and negotiations among representatives
of the
Company and the Acquiror and their financial and legal
advisors;
|
|
(8)
|
Reviewed
the Agreement; and
|
|
(9)
|
Reviewed
such other financial studies and analyses and took into
account such other
matters as we deemed relevant, including our assessment
of general
economic, market and monetary
conditions.
|
In
preparing our opinion, we have assumed and relied on the accuracy
and
completeness of all information supplied or otherwise made available
to us,
discussed with or reviewed by or for us, or publicly available, and
we have not
assumed any responsibility for independently verifying such information
or
undertaken an independent evaluation or appraisal of any of the assets
or
liabilities of the Company or been furnished with any such evaluation
or
appraisal, nor have we evaluated the solvency or fair value of the
Company under
any state or federal laws relating to bankruptcy, insolvency or similar
matters. In addition, we have not assumed any obligation to conduct
any physical inspection of the properties or facilities of the
Company. With respect to the financial forecast information furnished
to or discussed with us by the Company, we have assumed that such
forecast
information has been reasonably prepared and reflects the best currently
available estimates and judgment of the Company's management as to
the expected
future financial performance of the Company. We express no view as to
such forecast information or the assumptions on which such forecast
information
was based. We have also assumed that the Merger and the other
transactions contemplated by the Agreement will be consummated as
described in
the Agreement. We
have also assumed that the representations and warranties made by
the Company,
the Acquiror and the Acquisition Sub in the Agreement and the related
agreements
are and will be true and correct in all respects material to our
analysis. We
are not legal, regulatory or tax experts and have relied on the assessments
made
by advisors to the Company with respect to such issues. We have
further assumed that all material governmental, regulatory or other
consents and
approvals necessary for the consummation of the Merger will be obtained
without
any adverse effect on the Company.
We
are
acting as financial advisor to the Company in connection with the
Transaction
and will receive a fee from the Company for our services, a significant
portion
of which is contingent upon the execution
by the Company of a definitive agreement to effect the Transaction
and the
subsequent consummation of the Transaction. In addition, the Company
has agreed to indemnify us for certain liabilities arising out of
our
engagement. We have, in the past, provided financial advisory
services to the
D-2
Company,
including acting as financial advisor for the Company's 2006 acquisition
of
Midwest Wireless, the Company's 2006 spin-off of its wireline business
and
merger with Valor Communications and the Company's 2006 acquisition
of Southern Illinois Cellular, and may continue to do so and have
received, and
may receive, fees for the rendering of such services. In addition, in
the ordinary course of our business, we may actively trade the Common
Shares and
other securities of the Company for our own account and for the accounts
of
customers and, accordingly, may at any time hold a long or short
position in
such securities. Certain of our affiliates collectively own
approximately 2.6% of the outstanding shares of the Common Shares,
and our Chief
Executive Officer serves on the Board of Directors of the Company.
This
opinion is for the use and benefit of the Board of Directors of the
Company in
connection with and for the purposes of its evaluation of the
Merger. Our opinion does not address the merits of the underlying
decision by the Company to engage in the Transaction and does not
constitute a
recommendation to any shareholder as to how such shareholder should
vote on the
proposed Merger or any matter related thereto. Our opinion is
necessarily based on economic, market and other conditions as in
effect on, and
the information made available to us as of, the date hereof. It
should be understood that subsequent developments may affect this
opinion and
that we do not have any obligation to update, revise, or reaffirm
this
opinion. In addition, you have not asked us to address, and this
opinion does not address, the fairness to, or any other consideration
of, the
holders of any class of securities, creditors or other constituencies
of the
Company, other than the holders of the Common Shares. This opinion
may not be disclosed, referred to, or communicated (in whole or in
part) to any
third party for any purpose whatsoever except with our prior written
approval. This opinion may be reproduced in full in any proxy or
information statement mailed to shareholders of the Company but may
not
otherwise be disclosed publicly in any matter without our prior written
approval.
As
we
indicated orally prior to the execution of the Agreement, on the
basis of and
subject to the foregoing, we are of the opinion that, as of the date
hereof, the
Common Consideration to be received by the holders of the Common
Shares pursuant
to the Transaction is fair from a financial point of view to the
holders of such
shares, other than the Acquiror and its affiliates.
Very truly yours,
/s/ STEPHENS INC.
|
|
STEPHENS INC.
|
§
262. Appraisal rights.
(a)
Any
stockholder of a corporation of this State who holds shares of stock on the
date
of the making of a demand pursuant to subsection (d) of this section with
respect to such shares, who continuously holds such shares through the effective
date of the merger or consolidation, who has otherwise complied with subsection
(d) of this section and who has neither voted in favor of the merger or
consolidation nor consented thereto in writing pursuant to § 228 of this title
shall be entitled to an appraisal by the Court of Chancery of the fair value
of
the stockholder's shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and
also
a member of record of a nonstock corporation; the words "stock" and "share"
mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely
of
stock of a corporation, which stock is deposited with the
depository.
(b)
Appraisal rights shall be available for the shares of any class or series of
stock of a constituent corporation in a merger or consolidation to be effected
pursuant to § 251 (other than a merger effected pursuant to § 251(g) of this
title), § 252, § 254, § 257, § 258, § 263 or § 264 of this title:
(1)
Provided, however, that no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did
not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of § 251 of this title.
(2)
Notwithstanding paragraph (1) of this subsection, appraisal rights under this
section shall be available for the shares of any class or series of stock of
a
constituent corporation if the holders thereof are required by the terms of
an
agreement of merger or consolidation pursuant to §§ 251, 252, 254, 257, 258, 263
and 264 of this title to accept for such stock anything except:
a.
Shares
of stock of the corporation surviving or resulting from such merger or
consolidation, or depository receipts in respect thereof;
b.
Shares
of stock of any other corporation, or depository receipts in respect thereof,
which shares of stock (or depository receipts in respect thereof) or depository
receipts at the
effective
date of the merger or consolidation will be either listed on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc. or held of record by more than 2,000 holders;
E-1
c.
Cash
in lieu of fractional shares or fractional depository receipts described in
the
foregoing subparagraphs a. and b. of this paragraph; or
d.
Any
combination of the shares of stock, depository receipts and cash in lieu of
fractional shares or fractional depository receipts described in the foregoing
subparagraphs a., b.
and
c. of
this paragraph.
(3)
In
the event all of the stock of a subsidiary Delaware corporation party to a
merger effected under § 253 of this title is not owned by the parent corporation
immediately prior to the merger, appraisal rights shall be available for the
shares of the subsidiary Delaware corporation.
(c)
Any
corporation may provide in its certificate of incorporation that appraisal
rights under this section shall be available for the shares of any class or
series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d)
and
(e) of this section, shall apply as nearly as is practicable.
(d)
Appraisal rights shall be perfected as follows:
(1)
If a
proposed merger or consolidation for which appraisal rights are provided under
this section is to be submitted for approval at a meeting of stockholders,
the
corporation, not less than 20 days prior to the meeting, shall notify each
of
its stockholders who was such on the record date for such meeting with respect
to shares for which appraisal rights are available pursuant to subsection (b)
or
(c) hereof that appraisal rights are available for any or all of the shares
of
the constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such stockholder's
shares shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of such stockholder's
shares. Such demand will be sufficient if it reasonably informs the corporation
of the identity of the stockholder and that the stockholder intends thereby
to
demand the appraisal of such stockholder's shares. A proxy or vote against
the
merger or consolidation shall not constitute such a demand. A stockholder
electing to take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become effective;
or
(2)
If
the merger or consolidation was approved pursuant to § 228 or § 253 of this
title, then either a constituent corporation before the effective date of the
merger or consolidation or the surviving or resulting corporation within 10
days
thereafter shall notify each of the holders of any class or series of stock
of
such constituent corporation who are entitled to appraisal rights of the
approval of the merger or consolidation and that appraisal rights are available
for any or all shares of such class or series of stock of such constituent
corporation, and shall include in such notice a copy of this section. Such
notice may, and, if given on or after the effective date of the merger or
consolidation, shall, also notify such stockholders of the effective date of
the
merger
E-2
or
consolidation. Any stockholder entitled to appraisal rights may, within 20
days
after the date of mailing of such notice, demand in writing from the surviving
or resulting corporation the appraisal of such holder's shares. Such demand
will
be sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal
of
such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date of the merger
or consolidation notifying each of the holders of any class or series of stock
of such constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on or within
10
days after such effective date; provided, however, that if such second notice
is
sent more than 20 days following the sending of the first notice, such second
notice need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that is required to give either notice that
such notice has been given shall, in the absence of fraud, be prima facie
evidence of the facts stated therein. For purposes of determining the
stockholders entitled to receive either notice, each constituent corporation
may
fix, in advance, a record date that shall be not more than 10 days prior to
the
date the notice is given, provided, that if the notice is given on or after
the
effective date of the merger or consolidation, the record date shall be such
effective date. If no record date is fixed and the notice is given prior to
the
effective date, the record date shall be the close of business on the day next
preceding the day on which the notice is given.
(e)
Within 120 days after the effective date of the merger or consolidation, the
surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger
or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not
voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f)
Upon
the filing of any such petition by a stockholder, service of a copy thereof
shall be made upon the surviving or resulting corporation, which shall within
20
days after such service file in the office of the Register in Chancery in which
the petition was filed a duly verified list containing the names and addresses
of all stockholders who have demanded payment for their shares and with whom
agreements as to the value of their shares have not been reached by the
surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting
E-3
corporation,
the petition shall be accompanied by such a duly verified list. The Register
in
Chancery, if so ordered by the Court, shall give notice of the time and place
fixed for the hearing of such petition by registered or certified mail to the
surviving or resulting corporation and to the stockholders shown on the list
at
the addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper
of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail
and
by publication shall be approved by the Court, and the costs thereof shall
be
borne by the surviving or resulting corporation.
(g)
At
the hearing on such petition, the Court shall determine the stockholders who
have complied with this section and who have become entitled to appraisal
rights. The Court may require the stockholders who have demanded an appraisal
for their shares and who hold stock represented by certificates to submit their
certificates of stock to the Register in Chancery for notation thereon of the
pendency of the appraisal proceedings; and if any stockholder fails to comply
with such direction, the Court may dismiss the proceedings as to such
stockholder.
(h)
After
determining the stockholders entitled to an appraisal, the Court shall appraise
the shares, determining their fair value exclusive of any element of value
arising from the accomplishment or expectation of the merger or consolidation,
together with a fair rate of interest, if any, to be paid upon the amount
determined to be the fair value. In determining such fair value, the Court
shall
take into account all relevant factors. In determining the fair rate of
interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay
to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such
is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under
this
section.
(i)
The
Court shall direct the payment of the fair value of the shares, together with
interest, if any, by the surviving or resulting corporation to the stockholders
entitled thereto. Interest may be simple or compound, as the Court may direct.
Payment shall be so made to each such stockholder, in the case of holders of
uncertificated stock forthwith, and the case of holders of shares represented
by
certificates upon the surrender to the corporation of the certificates
representing such stock. The Court's decree may be enforced as other decrees
in
the Court of Chancery may be enforced, whether such surviving or resulting
corporation be a corporation of this State or of any state.
(j)
The
costs of the proceeding may be determined by the Court and taxed upon the
parties as the Court deems equitable in the circumstances. Upon application
of a
stockholder, the Court may order all or a portion of the expenses incurred
by
any stockholder in connection with the appraisal proceeding, including, without
limitation, reasonable attorney's fees and the fees and expenses of experts,
to
be charged pro rata against the value of all the shares entitled to an
appraisal.
E-4
(k)
From
and after the effective date of the merger or consolidation, no stockholder
who
has demanded appraisal rights as provided in subsection (d) of this section
shall be entitled to vote such stock for any purpose or to receive payment
of
dividends or other distributions on the stock (except dividends or other
distributions payable to stockholders of record at a date which is prior to
the
effective date of the merger or consolidation); provided, however, that if
no
petition for an appraisal shall be filed within the time provided in subsection
(e) of this section, or if such stockholder shall deliver to the surviving
or
resulting corporation a written withdrawal of such stockholder's demand for
an
appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court,
and
such approval may be conditioned upon such terms as the Court deems
just.
(l)
The
shares of the surviving or resulting corporation to which the shares of such
objecting stockholders would have been converted had they assented to the merger
or consolidation shall have the status of authorized and unissued shares of
the
surviving or resulting corporation.
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PRELIMINARY
COPIES
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Electronic
Voting Instructions
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You
can vote by Internet or telephone!
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Available
24 hours a day, 7 days a week!
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| Instead of mailing your proxy, you may choose one of the two | |||
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voting
methods outlined below to vote your proxy.
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VALIDATION
DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
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Proxies
submitted by the Internet or telephone must be received
by
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[ ],
Central Time, on XXXXXX XX, 2007.
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Vote
by Internet
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• Log
on to the Internet and go to
[www.investorvote.com]
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•
Follow the steps outlined on the secured
website.
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Vote
by telephone
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• Call
toll free 1−800−652−VOTE (8683) within
the United States, Canada & Puerto Rico any
time on a touch tone telephone. There is
NO
CHARGE to you for the call.
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• Follow
the instructions provided by the recorded
message.
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Using
a black ink pen, mark your votes with an
X as shown in
this
example. Please do not write outside the designated
areas. x
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Special
Meeting Proxy
Card
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IF
YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE
PERFORATION, DETACH AND
RETURN
THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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A
Proposals—The Board of Directors recommends a vote FOR the following
proposals.
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1.
Board proposal to adopt the Agreement and Plan of Merger, dated as
of May
20, 2007, by and among Alltel Corporation, Atlantis Holdings LLC
and
Atlantis Merger Sub, Inc. as it may be amended from time to time,
and to
approve the Merger.
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For Against
Abstain
o o o
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2.
Board proposal to adjourn or postpone the special meeting to a later
date
or time, if necessary or appropriate, to solicit additional proxies
in
favor of proposal number 1 if there are insufficient
votes at the time of such adjournment or postponement to approve
proposal
number 1.
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For Against Abstain
o o o
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B
Non−Voting
Items
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Change
of Address—Please print your new address below.
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Comments—Please
print your comments below.
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Meeting
Attendance
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Mark
the box to the right if you
o
plan
to attend the Special Meeting.
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C
Authorized
Signatures—This section must be completed for your vote to be
counted.—Date and Sign Below
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Please
sign exactly as name(s) appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator,
corporate officer, trustee, guardian, or custodian, please
give full title.
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Date
(mm/dd/yyyy)—Please print date below.
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Signature
1—Please keep signature within the box.
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Signature
2—Please keep signature within the box.
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/ /
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IF
YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE
PERFORATION, DETACH AND
RETURN
THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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Proxy—Alltel
Corporation
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THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALLTEL
CORPORATION.
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The
undersigned, whose signature appears on the reverse, hereby appoints
Scott
T. Ford and Richard N. Massey, or either of them, as proxies with
full
power of substitution for and in the name of the undersigned to vote
all
the shares of Common Stock of Alltel Corporation which the undersigned
would be entitled to vote if personally present at the Special Meeting
of
Stockholders to be held [ ], 2007 and at any and all
adjournments or postponements thereof, on all matters that may properly
come before the meeting. Your shares will be voted as directed on
this
card. If signed and no direction is given for any item, it will
be voted in favor of items 1 and 2. The shares represented by
this proxy will be voted in the discretion of said proxies with respect
to
such other business as may properly come before the meeting and any
adjournments or postponements thereof. To vote by telephone or
Internet please see the reverse side. To vote by mail, please
sign and date this card on the reverse side, and mail promptly in
the
enclosed postage−paid envelope. If you have comments or a change of
address, mark the appropriate box on the reverse side.
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Your
vote is important. By returning your voting instruction promptly,
you can
avoid the inconvenience of receiving follow−up mailings plus help the
company avoid additional expenses.
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This
proxy, when properly executed, will be voted in the manner directed
on the
reverse side. If no direction is made, this proxy will be voted
“FOR”
Proposals
1 and 2.
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