AGREEMENT AND PLAN OF MERGER
Exhibit
2.2
DATED AS OF DECEMBER
8, 2005
AMONG
ALLTEL CORPORATION,
ALLTEL HOLDING
CORP.
AND
VALOR COMMUNICATIONS
GROUP, INC.
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS | 2 | |||||||
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ARTICLE II THE MERGER | 16 | |||||||
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2.1 | The Merger | 16 | |||||
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2.2 | Closing | 16 | |||||
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2.3 | Effective Time | 17 | |||||
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2.4 | Effects of the Merger | 17 | |||||
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2.5 | Certificate of Incorporation and Bylaws of the Surviving Corporation | 17 | |||||
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2.6 | Directors and Officers of the Surviving Corporation | 17 | |||||
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2.7 | Stockholders Meeting | 18 | |||||
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2.8 | Restructuring of the Merger | 18 | |||||
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ARTICLE III CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES | 19 | |||||||
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3.1 | Effect on Capital Stock | 19 | |||||
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3.2 | Distribution of Per Share Merger Consideration | 19 | |||||
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ARTICLE IV RELATED TRANSACTIONS | 22 | |||||||
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4.1 | Distribution | 22 | |||||
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4.2 | AT Co./Spinco Transaction Agreements | 22 | |||||
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4.3 | Corporate Offices | 22 | |||||
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4.4 | Directors and Officers of Spinco | 22 | |||||
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4.5 | Financing Cooperation | 23 | |||||
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF AT CO. | 24 | |||||||
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5.1 | Organization; Qualification | 24 | |||||
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5.2 | Corporate Authority; No Violation | 24 | |||||
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5.3 | Information Supplied | 26 | |||||
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5.4 | AT Co. Reports and Financial Statements | 26 | |||||
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5.5 | Brokers or Finders | 27 | |||||
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ARTICLE VI REPRESENTATIONS AND WARRANTIES OF AT CO. AND SPINCO | 27 | |||||||
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6.1 | Organization, Qualification | 28 | |||||
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6.2 | Capital Stock and Other Matters | 28 | |||||
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6.3 | Corporate Authority; No Violation | 29 | |||||
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6.4 | Financial Statements | 30 | |||||
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6.5 | Absence of Certain Changes or Events | 31 | |||||
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6.6 | Investigations; Litigation | 32 | |||||
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6.7 | Compliance with Laws; Permits | 32 | |||||
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6.8 | Proxy Statement/Prospectus; Registration Statement | 32 |
Page | ||||||||
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6.9 | Information Supplied | 33 | |||||
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6.10 | Environmental Matters | 33 | |||||
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6.11 | Tax Matters | 34 | |||||
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6.12 | Benefit Plans | 36 | |||||
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6.13 | Labor Matters | 37 | |||||
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6.14 | Intellectual Property Matters | 38 | |||||
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6.15 | Material Contracts | 38 | |||||
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6.16 | Brokers or Finders | 39 | |||||
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6.17 | Board and Stockholder Approval | 39 | |||||
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6.18 | Assets | 40 | |||||
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6.19 | Spinco Real Property | 40 | |||||
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6.20 | Communications Regulatory Matters | 41 | |||||
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6.21 | Spinco Operations | 42 | |||||
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6.22 | Opinion of Spinco Financial Advisor | 42 | |||||
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6.23 | Company Common Stock | 42 | |||||
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6.24 | Affiliate Transactions | 42 | |||||
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ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE COMPANY | 43 | |||||||
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7.1 | Organization, Qualification | 43 | |||||
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7.2 | Capital Stock and Other Matters | 43 | |||||
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7.3 | Corporate Authority; No Violation | 44 | |||||
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7.4 | Company Reports and Financial Statements | 45 | |||||
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7.5 | Absence of Certain Changes or Events | 46 | |||||
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7.6 | Investigations; Litigation | 47 | |||||
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7.7 | Compliance with Laws; Permits | 47 | |||||
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7.8 | Proxy Statement/Prospectus; Registration Statement | 47 | |||||
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7.9 | Information Supplied | 48 | |||||
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7.10 | Environmental Matters | 48 | |||||
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7.11 | Tax Matters | 49 | |||||
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7.12 | Benefit Plans | 50 | |||||
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7.13 | Labor Matters | 52 | |||||
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7.14 | Intellectual Property Matters | 52 | |||||
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7.15 | Communications Regulatory Matters | 53 | |||||
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7.16 | Material Contracts | 54 | |||||
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7.17 | Company Real Property | 55 | |||||
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7.18 | Opinion of Company Financial Advisors | 55 | |||||
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7.19 | Brokers or Finders | 56 | |||||
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7.20 | Takeover Statutes | 56 | |||||
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7.21 | Certain Board Findings | 56 | |||||
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7.22 | Vote Required | 56 | |||||
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7.23 | Affiliate Transactions | 56 | |||||
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ARTICLE VIII COVENANTS AND AGREEMENTS | 57 | |||||||
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8.1 | Conduct of Business by the Company Pending the Merger | 57 | |||||
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8.2 | Conduct of Business by Spinco and AT Co. Pending the Merger | 60 |
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8.3 | Tax Matters | 63 | |||||
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8.4 | Proxy Statement/Prospectus | 63 | |||||
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8.5 | Listing | 64 | |||||
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8.6 | Reasonable Best Efforts; Regulatory Matters | 64 | |||||
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8.7 | IRS Distribution Ruling; Other IRS Rulings; Tax Opinions | 66 | |||||
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8.8 | Letter of Spinco's Accountants | 67 | |||||
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8.9 | Letter of the Company's Accountants | 67 | |||||
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8.10 | Employee Matters | 68 | |||||
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8.11 | Access to Information | 69 | |||||
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8.12 | No Solicitation by the Company. | 69 | |||||
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8.13 | Director and Officer Indemnification; Insurance. | 71 | |||||
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8.14 | Rule 145 Affiliates | 72 | |||||
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8.15 | Public Announcements | 73 | |||||
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8.16 | Defense of Litigation | 73 | |||||
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8.17 | Notification | 73 | |||||
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8.18 | SEC Reports | 74 | |||||
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8.19 | Section 16 Matters | 74 | |||||
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8.20 | Control of Other Party's Business | 74 | |||||
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8.21 | Dividend Policy of the Surviving Corporation | 74 | |||||
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8.22 | Amendment of Company Securityholders Agreement | 74 | |||||
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8.23 | Disclosure Controls | 74 | |||||
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8.24 | Corporate Name; Branding | 75 | |||||
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ARTICLE IX CONDITIONS TO THE MERGER | 75 | |||||||
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9.1 | Conditions to the Obligations of Spinco, AT Co. and the Company to | ||||||
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Effect the Merger | 75 | ||||||
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9.2 | Additional Conditions to the Obligations of AT Co. and Spinco | 77 | |||||
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9.3 | Additional Conditions to the Obligations of the Company | 78 | |||||
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ARTICLE X TAX MATTERS | 79 | |||||||
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10.1 | Representations | 79 | |||||
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10.2 | Restrictions Relating to the Distribution. | 80 | |||||
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10.3 | Cooperation and Other Covenants. | 82 | |||||
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10.4 | Indemnification for Disqualifying Actions. | 82 | |||||
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10.5 | Procedure for Indemnification for Tax Liabilities | 84 | |||||
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10.6 | Exclusivity of Article X | 85 | |||||
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ARTICLE XI TERMINATION, AMENDMENT AND WAIVERS | 85 | |||||||
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11.1 | Termination | 85 | |||||
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11.2 | Effect of Termination | 87 | |||||
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11.3 | Termination Fee Payable in Certain Circumstances | 87 | |||||
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11.4 | Amendment | 87 | |||||
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11.5 | Waivers | 88 |
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ARTICLE XII MISCELLANEOUS | 88 | |||||||
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12.1 | Survival of Representations, Warranties and Agreements; Indemnification | 88 | |||||
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12.2 | Expenses | 89 | |||||
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12.3 | Notices | 89 | |||||
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12.4 | Interpretation | 90 | |||||
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12.5 | Severability | 91 | |||||
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12.6 | Assignment; Binding Effect | 91 | |||||
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12.7 | No Third Party Beneficiaries | 91 | |||||
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12.8 | Limited Liability | 91 | |||||
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12.9 | Entire Agreement | 91 | |||||
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12.10 | Governing Law | 91 | |||||
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12.11 | Counterparts | 92 | |||||
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12.12 | Waiver of Jury Trial | 92 | |||||
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12.13 | Jurisdiction; Enforcement | 92 |
THIS
AGREEMENT AND PLAN OF MERGER, dated as of December 8, 2005 (this
“Agreement”), is among ALLTEL Corporation, a Delaware corporation (“AT
Co.”), ALLTEL Holding Corp., a newly formed Delaware corporation and a
wholly owned subsidiary of AT Co. (“Spinco”), and Valor Communications
Group, Inc., a Delaware corporation (the “Company”).
WHEREAS,
prior to the Distribution Date (as such term, and each other capitalized
term
used herein and not defined, is defined in Article I hereof), and
subject
to the terms and conditions set forth in the Distribution Agreement entered
into
by and between AT Co. and Spinco on the date hereof, a copy of which is attached
hereto as Exhibit A (the “Distribution Agreement”), AT Co.
will (i) engage in the Preliminary Restructuring (as defined in the
Distribution Agreement) in order to separate the Spinco Assets from the AT
Co.
Assets and (ii) in exchange for the contribution to Spinco, directly
or
indirectly, of all of the issued and outstanding capital stock or other equity
securities of the Spinco Subsidiaries, Spinco will issue to AT Co. the Spinco
Common Stock (as defined in the Distribution Agreement), distribute to AT
Co.
the Spinco Exchange Notes (as defined in the Distribution Agreement) and
pay to
AT Co. the Special Dividend (as defined in the Distribution Agreement), all
upon
the terms and subject to the conditions set forth therein (the transactions
described in this clause (ii), collectively, the “Contribution”); and
WHEREAS,
upon the terms and subject to the conditions set forth in the Distribution
Agreement, on the Distribution Date, AT Co. will distribute all of the issued
and outstanding shares of Spinco Common Stock to the Distribution Agent for
the
benefit of the holders as of the Record Date (as defined in the Distribution
Agreement) of the outstanding AT Co. Common Stock (the “Distribution”);
and
WHEREAS,
at the Effective Time, the parties will effect the merger of Spinco with
and
into the Company, with the Company continuing as the surviving corporation,
all
upon the terms and subject to the conditions set forth herein; and
WHEREAS,
concurrent with the execution of this Agreement, as an inducement to AT Co.’s
willingness to enter into this Agreement and incur the obligations set forth
herein, certain of the Company’s stockholders, who beneficially or of record
hold an aggregate of approximately 39.7% of the voting power of the outstanding
shares of capital stock of the Company, have entered into a Voting Agreement
with Spinco, dated as of the date hereof, a copy of which is attached hereto
as
Exhibit B (the “Voting Agreement”), pursuant to which such
stockholders have agreed to vote all of the shares of capital stock of the
Company over which such stockholders have voting power to adopt this Agreement;
and
WHEREAS,
the Board of Directors of the Company (i) has determined that the
Merger
and this Agreement are advisable, fair to, and in the best interests of,
the
Company and its stockholders and has approved this Agreement and the
transactions contemplated thereby, including the Merger, and the issuance
of
shares of Company Common Stock pursuant to the Merger, and (ii) has
recommended the adoption by the stockholders of the Company of this Agreement
and the approval of the transactions contemplated hereby; and
1
WHEREAS,
the Board of Directors of Spinco has (i) determined that the Merger
and
this Agreement are advisable, fair to and in the best interests of Spinco
and
its sole stockholder, AT Co., and has approved this Agreement and the
Distribution Agreement and the transactions contemplated hereby and thereby,
including the Contribution, the Distribution and the Merger, and
(ii) recommended the adoption by AT Co., as the sole stockholder of
Spinco,
of this Agreement and the approval of the transactions contemplated hereby;
and
WHEREAS,
the Board of Directors of AT Co. has approved this Agreement and the
Distribution Agreement and the transactions contemplated hereby and thereby,
including the Contribution, the Distribution and the Merger; and
WHEREAS,
the parties to this Agreement intend that the Contribution, together with
the
Debt Exchange, qualify as a tax-free reorganization under Section 368
of
the Internal Revenue Code of 1986, as amended (the “Code”), that the
Distribution qualify as a distribution of Spinco stock to AT Co. stockholders
pursuant to Section 355 of the Code, that the Merger qualify as a
tax-free
reorganization pursuant to Section 368 of the Code, and that no gain
or
loss be recognized as a result of such transactions for federal income tax
purposes by any of AT Co., Spinco, and their respective stockholders (except
to
the extent of cash received in lieu of fractional shares).
NOW,
THEREFORE, in consideration of the representations, warranties, covenants
and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties, intending to be legally bound hereby, agree as follows:
ARTICLE
I
DEFINITIONS
1.1
“Action” shall
have the
meaning set forth in Section 8.13(a).
1.2
“Additional
Company SEC
Documents” shall have the meaning set forth in Section 7.4(b).
1.3
“Affiliate” means
a Person
that, directly or indirectly, through one or more intermediaries, controls
or is
controlled by, or is under common control with, a specified Person. The term
“control” (including, with correlative meanings, the terms “controlled by” and
“under common control with”), as applied to any Person, means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
voting
securities or other ownership interest, by contract or otherwise; provided,
however, that for purposes of this Agreement, from and after the Distribution
Date, no member of either Group shall be deemed an Affiliate of any member
of
the other Group.
1.4
“Aggregate Merger
Consideration” shall have the meaning set forth in Section 3.1(a).
1.5
“Agreement” shall
have the
meaning set forth in the Preamble hereto.
2
1.6
“Approved for
Listing”
means, with respect to the shares of Company Common Stock to be issued pursuant
to the Merger, that such shares have been approved for listing on the NYSE,
subject to official notice of issuance.
1.7
“AT Co.” shall
have the
meaning set forth in the Preamble hereto.
1.8
“AT Co. Action” means
(i) any transaction with respect to the stock or assets of AT Co.
that
occurs after the Distribution, (ii) any failure by AT Co. after the
Distribution Date to maintain its status as a company engaged in the conduct
of
an active trade or business or (iii) (x) the failure of any representation
made by AT Co. in connection with the IRS Contribution Ruling, the IRS
Distribution Ruling, the IRS Debt Exchange Ruling, the IRS Special Dividend
Ruling or the Distribution Tax Opinion or any subsequent ruling or opinion
in
connection with the Distribution, in each case with respect to AT Co. or
the AT
Co. Business or the plans, proposals, intentions and policies of AT Co. after
the Distribution, to have been true and correct in all material respects
when
made, or (y) the failure by AT Co. or the AT Co. Subsidiaries to comply
with any covenant made by AT Co. in connection with the IRS Contribution
Ruling,
the IRS Distribution Ruling, the IRS Debt Exchange Ruling, the IRS Special
Dividend Ruling or the Distribution Tax Opinion or any subsequent ruling
or
opinion in connection with the Distribution.
1.9
“AT Co. Approvals” shall
have the meaning set forth in Section 5.2(c).
1.10
“AT Co. Business” shall
have the meaning set forth in the Distribution Agreement.
1.11
“AT Co. Common
Stock” means
the common stock, par value $1.00 per share, of AT Co.
1.12
“AT Co. Disclosure
Letter”
shall have the meaning set forth in the first paragraph of Article V.
1.13
“AT Co. Group” means
AT Co.
and the AT Co. Subsidiaries.
1.14
“AT Co. SEC
Documents”
shall have the meaning set forth in Section 5.4(a).
1.15
“AT Co. Subsidiaries” means
all direct and indirect Subsidiaries of AT Co., other than any Spinco
Subsidiaries.
1.16
“AT Co. Tax
Counsel” means
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP.
1.17
“AT Excess Expenses” shall
have the meaning set forth in the Distribution Agreement.
1.18
“Audited Financial
Statements” shall have the meaning set forth in Section 6.4(a)(i).
3
1.19
“Certificate
of Merger”
shall have the meaning set forth in Section 2.3.
1.20
“Certificates” shall
have
the meaning set forth in Section 3.1(c).
1.21
“Closing” shall
have the
meaning set forth in Section 2.2.
1.22
“Closing Date” shall
have
the meaning set forth in Section 2.2.
1.23
“Code” shall
have the
meaning set forth in the recitals hereto.
1.24
“Communications
Act” means
the Communications Act of 1934, as amended.
1.25
“Company” shall
have the
meaning set forth in the Preamble hereto.
1.26
“Company Acquisition”
means, in each case other than the Merger or as otherwise specifically
contemplated by this Agreement, (i) any merger, consolidation, share
exchange, business combination, recapitalization or other similar transaction
or
series of related transactions involving the Company or any of its Significant
Subsidiaries; (ii) any direct or indirect purchase or sale, lease,
exchange, transfer or other disposition of the consolidated assets (including
stock of the Company’s Subsidiaries) of the Company and its Subsidiaries, taken
as a whole, constituting 15% or more of the total consolidated assets of
the
Company and its Subsidiaries, taken as a whole, or accounting for 15% or
more of
the total consolidated revenues of the Company and its Subsidiaries, taken
as a
whole, in any one transaction or in a series of transactions; (iii) any
direct or indirect purchase or sale of or tender offer, exchange offer or
any
similar transaction or series of related transactions engaged in by any Person
involving 15% or more of the outstanding shares of Company Common Stock;
or
(iv) any other substantially similar transaction or series of related
transactions that would reasonably be expected to prevent or materially impair
or delay the consummation of the transactions contemplated by this Agreement
or
the other Transaction Agreements.
1.27
“Company Acquisition
Proposal” means any proposal regarding a Company Acquisition.
1.28
“Company Approvals” shall
have the meaning set forth in Section 7.3(c).
1.29
“Company Benefit
Plans”
shall have the meaning set forth in Section 7.12(a).
1.30
“Company Common
Stock”
means the common stock, par value $.0001 per share, of the Company.
1.31
“Company Credit
Agreement”
means the Senior Credit Agreement, dated as of November 10, 2004,
among
Valor Telecommunications Enterprises, LLC, Valor Telecommunications Enterprises
II, LLC and certain of their respective domestic subsidiaries, as Borrowers,
Valor Telecommunications, LLC, Valor Telecommunications Southwest, LLC, Valor
Telecommunications Southwest II, LLC and certain of their
4
respective domestic
subsidiaries, including such borrowers, as Guarantors, Bank of America, N.A.,
as
Senior Administrative Agent, Swing Line Lender and L/C Issuer, JPMorgan Chase
Bank and Wachovia Bank, N.A., as Senior Syndication Agents, CIBC World Markets
Corp. and Merrill, Lynch, Xxxxxx, Xxxxxx & Xxxxx Incorporated, as Senior
Documentation Agents, and the lenders party thereto.
1.32
“Company Disclosure
Letter”
shall have the meaning set forth in the first paragraph of Article VII.
1.33
“Company Employee” shall
have the meaning set forth in Section 7.12(a).
1.34
“Company IP
Rights” shall
have the meaning set forth in Section 7.14.
1.35
“Company Leased
Real
Property” means all leased Real Property held by the Company or Company
Subsidiaries.
1.36
“Company Leasehold
Improvements” means all Leasehold Improvements held by the Company or
Company Subsidiaries.
1.37
“Company Leases” means
all
Leases of the Company or Company Subsidiaries.
1.38
“Company Licenses” shall
have the meaning set forth in Section 7.15(a).
1.39
“Company Material
Contracts” shall have the meaning set forth in Section 7.16(a).
1.40
“Company Owned
Real
Property” means all Owned Real Property of the Company or the Company
Subsidiaries.
1.41
“Company Permits” shall
have the meaning set forth in Section 7.7(b).
1.42
“Company Pre-IPO
Financial
Statements” shall have the meaning set forth in Section 7.4(a)(i).
1.43
“Company SEC
Documents”
shall have the meaning set forth in Section 7.4(a).
1.44
“Company Securityholders
Agreement” shall have the meaning set forth in Section 8.22.
1.45
“Company Stock
Plans” means
the Xxxxxx Communications Group 2005 Long-Term Incentive Plan.
1.46
“Company Stockholders
Meeting” shall have the meaning set forth in Section 2.7(a).
1.47
“Company Subsidiaries”
means all direct and indirect Subsidiaries of the Company.
5
1.48
“Company Superior
Proposal”
shall have the meaning set forth in Section 8.12(c).
1.49
“Company Tax
Counsel” shall
have the meaning set forth in Section 8.7(c).
1.50
“Company Voting
Debt” shall
have the meaning set forth in Section 7.2(b).
1.51
“Confidentiality
Agreement”
means the Confidentiality Agreement, dated as of September 22, 2005
between
AT Co. and the Company.
1.52
“Contract” or
“agreement”
means any loan or credit agreement, note, bond, indenture,
mortgage, deed of trust, lease, sublease, franchise, permit, authorization,
license, contract, instrument, employee benefit plan or other binding
commitment, obligation or arrangement, whether written or oral.
1.53
“Contribution” shall
have
the meaning set forth in the recitals hereto.
1.54
“Controlling
Person” shall
have the meaning set forth in Section 12.1(b).
1.55
“DGCL” means
the General
Corporation Law of the State of Delaware.
1.56
“Disclosure
Letters” means,
collectively, the AT Co. Disclosure Letter, the Spinco Disclosure Letter
and the
Company Disclosure Letter.
1.57
“Dispute Date” shall
have
the meaning set forth in Section 10.5(f).
1.58
“Disqualifying
Action”
shall have the meaning set forth in Section 10.2(a).
1.59
“Distribution” shall
have
the meaning set forth in the recitals hereto.
1.60
“Distribution
Agreement”
shall have the meaning set forth in the recitals hereto.
1.61
“Distribution
Date” shall
mean the date and time that the Distribution shall become effective.
1.62
“Distribution
Disqualification” means that (i) the Contribution, taken together with
the Distribution, fails to qualify as a tax-free reorganization under Section
368 of the Code; (ii) the Distribution, as such, fails to qualify
as a
distribution of Spinco stock to AT Co. stockholders pursuant to Section 355
of the Code, pursuant to which no gain or loss is recognized for federal
income
tax purposes by any of AT Co., Spinco, or the stockholders of AT Co., except
to
the extent of cash received in lieu of fractional shares; (iii) the
Debt
Exchange fails to constitute a transfer of qualified property to AT Co.’s
creditors in connection with the reorganization within the meaning of Section
361(c)(3) of the Code, but only to the extent that, but for any action on
the
part of Spinco or the Surviving Corporation after the Distribution, the Spinco
Exchange Notes would
6
have qualified
as
“securities” for federal income tax purposes; and/or (iv) the Special
Dividend fails to qualify as money transferred to creditors or distributed
to
shareholders in connection with the reorganization within the meaning of
Section 361(b)(1) of the Code, but only to the extent that AT Co.
distributes the Special Dividend to its creditors or shareholders in connection
with the Contribution.
1.63
“Distribution
Fund” shall
have the meaning set forth in Section 3.2(a).
1.64
“Distribution
Tax Opinion”
means a written opinion of AT Co. Tax Counsel, addressed to AT Co. and dated
as
of the Distribution Date, in form and substance reasonably satisfactory to
AT
Co., Spinco and the Company, to the effect that the Distribution, as such,
will
qualify as a distribution of Spinco stock to the stockholders of AT Co. pursuant
to Section 355 of the Code, pursuant to which no gain or loss will
be
recognized for federal income tax purposes by any of AT Co., Spinco or the
stockholders of AT Co., except as to cash received in lieu of fractional
shares
by the stockholders of AT Co.
1.65
“Distribution
Tax
Representations” shall have the meaning set forth in Section 8.7(b).
1.66
“Effective Time” shall
have
the meaning set forth in Section 2.3.
1.67
“Employee Benefits
Agreement” means the Employee Benefits Agreement to be entered into between
AT Co. and Spinco, substantially in the form attached to the Distribution
Agreement.
1.68
“Environmental
Claims”
shall have the meaning set forth in Section 6.10(b).
1.69
“Environmental
Law” means
any and all foreign, federal, state or local statute, rule, regulation,
ordinance, or other legal requirement as well as any order, decree,
determination, judgment or injunction issued, promulgated, approved or entered
thereunder by any Governmental Authority, including requirements of common
law,
relating to pollution or the protection, cleanup or restoration of the
environment, to the protection of human health from environmental hazards,
including the Federal Clean Air Act, the Federal Clean Water Act, the Federal
Resource Conservation and Recovery Act, the Federal Comprehensive Environmental
Response, Compensation, and Liability Act and the Federal Toxic Substances
Control Act.
1.70
“ERISA” means
the Employee
Retirement Income Security Act of 1974, as amended.
1.71
“ERISA Affiliate” means,
with respect to any Person, any other Person or any trade or business, whether
or not incorporated, that, together with such first Person, would be deemed
a
“single employer” within the meaning of section 4001(b) of ERISA.
1.72
“Exchange Act” means
the
Securities Exchange Act of 1934, as amended, together with the rules and
regulations of the SEC promulgated thereunder.
7
1.73
“FCC” means
the Federal
Communications Commission.
1.74
“FCC Applications” shall
have the meaning set forth in Section 8.6(b).
1.75
“FCC Rules” shall
have the
meaning set forth in Section 6.20(c).
1.76
“Final Determination” shall
mean a determination within the meaning of Section 1313 of the Code
or any
similar provision of state or local tax law.
1.77
“Former Employees” shall
have the meaning set forth in Section 8.10(d).
1.78
“Fully Diluted
Basis” shall
mean, as of any date, the aggregate number of shares of Company Common Stock
outstanding on such date assuming: (i) the prior exercise of all options
and similar rights to purchase Company Common Stock; (ii) the prior
conversion into, or exchange for, shares of Company Common Stock of all then
issued and outstanding securities which are convertible into, or exchangeable
for, shares of Company Common Stock; and (iii) the prior exercise
of any
similar subscription or other rights to acquire, or to cause the Company
to
issue, shares of Company Common Stock; provided, however, that the
term “Fully Diluted Basis” shall not take into account any shares held in the
Company’s treasury; providedfurther, that the term “Fully Diluted
Basis”, when used with respect to the calculation of the Per Share Merger
Consideration, shall take into account the pro forma effect of the surrender
to
the Company of certain restricted shares of Company Common Stock that will
be
surrendered to the Company at the direction of the holders thereof in
satisfaction of certain tax liabilities incurred by such holders as a result
of
the accelerated vesting of such restricted shares on the Closing Date (rather
than the originally scheduled vesting date of January 1, 2007).
1.79
“GAAP” means
United States
generally accepted accounting principles.
1.80
“Governmental
Authority”
means any foreign, federal, state or local court, administrative agency,
official board, bureau, governmental or quasi-governmental entities, having
competent jurisdiction over AT Co., Spinco or the Company, any of their
respective Subsidiaries and any other tribunal or commission or other
governmental department, authority or instrumentality or any subdivision,
agency, mediator, commission or authority of competent jurisdiction.
1.81
“Group” means
the AT Co.
Group or the Spinco Group, as the case may be.
1.82
“Hazardous Material” shall
mean any substance, material or waste regulated under Environmental Laws
because
of its dangerous or deleterious properties or characteristics, and includes,
without limitation, petroleum and any derivative thereof.
1.83
“HSR Act” means
the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended and the
rules
and regulations promulgated thereunder.
8
1.84
“HSR Agencies” means
the
Federal Trade Commission and the Antitrust Division of the Department of
Justice.
1.85
“Indemnified
Party” or
“Indemnified Parties” shall have the meaning set forth in
Section 8.13(a).
1.86
“Intellectual
Property
Rights” means all United States and foreign issued and pending patents,
trademarks, service marks, slogans, logos, trade names, service names, Internet
domain names, trade styles, trade dress and other indicia of origin, and
all
goodwill associated with any of the foregoing, copyrights, copyrightable
works,
trade secrets, know-how, processes, methods, designs, computer programs,
plans,
specifications, data, inventions (whether or not patentable or reduced to
practice), improvements, confidential, business and other information and
all
intangible property, proprietary rights and other intellectual property,
and all
registrations, applications and renewals (including divisionals, continuations,
continuations-in-part, reissues, renewals, registrations, re-examinations
and
extensions) for, and tangible embodiments of, and all rights with respect
to,
any of the foregoing.
1.87
“Interim Balance
Sheet
Date” shall have the meaning set forth in Section 6.4(e).
1.88
“Interim Financial
Statements” shall have the meaning set forth in Section 6.4(a)(ii).
1.89
“IRS” means
the United
States Internal Revenue Service or any successor thereto, including, but
not
limited to, its agents, representatives and attorneys.
1.90
“IRS Contribution
Ruling”
shall mean a private letter ruling from the IRS to the effect that the
Contribution, taken together with the Distribution, will qualify as a tax-free
reorganization under Section 368(a)(1)(D) of the Code.
1.91
“IRS Debt Exchange
Ruling”
shall mean a private letter ruling from the IRS to the effect that AT Co.
will
not recognize gain or loss for federal income tax purposes in connection
with
the receipt of the Spinco Exchange Notes or the consummation of the Debt
Exchange.
1.92
“IRS Distribution
Ruling”
shall mean a private letter ruling from the IRS to the effect that the
Distribution, as such, will qualify as a distribution of Spinco stock to
the
stockholders of AT Co. pursuant to Section 355 of the Code, pursuant
to
which no gain or loss will be recognized for federal income tax purposes
by any
of AT Co., Spinco and, except as to cash received in lieu of fractional shares,
by the stockholders of AT Co.
1.93
“IRS Special
Dividend
Ruling” shall mean a private letter ruling from the IRS to the effect that
the Special Dividend will qualify as money transferred to creditors or
distributed to shareholders in connection with the reorganization within
the
meaning of Section 361(b)(1) of the Code, to the extent that AT Co.
distributes the Special Dividend to its creditors and/or shareholders in
connection with the Contribution.
9
1.94
“IRS 357(c)
Ruling” shall
mean a ruling to the effect that Section 357(c) of the Code will not apply
to
the Merger.
1.95
“IRS Submission” shall
have
the meaning set forth in Section 8.7(a).
1.96
“Law” means
any federal,
state, local or foreign law, statute, code, ordinance, rule, regulation,
judgment, order, injunction, decree, arbitration award, agency requirement,
license or permit of any Governmental Authority.
1.97
“Leased Real
Property”
shall have the meaning set forth in the Distribution Agreement.
1.98
“Leasehold Improvements”
means all buildings, structures, improvements and fixtures located on any
Leased
Real Property which are owned, regardless of whether title to such buildings,
structures, improvements or fixtures are subject to reversion to the landlord
or
other third party upon the expiration or termination of the Lease for such
Leased Real Property.
1.99
“Leases” means
all leases,
subleases, licenses, concessions and other agreements (written or oral),
including all amendments, extensions, renewals, guaranties and other agreements
with respect thereto, pursuant to which any Person holds any Leased Real
Property.
1.100
“Liens” means
all
mortgages, deeds of trust, liens, security interests, pledges, leases,
conditional sale contracts, claims, charges, liabilities, obligations,
privileges, easements, rights of way, limitations, reservations, restrictions,
options, rights of first refusal and other encumbrances of every kind. For
the
avoidance of doubt, the license of Intellectual Property Rights shall not
itself
constitute a Lien.
1.101
“Losses” shall
have the
meaning set forth in Section 12.1(b).
1.102
“Material Adverse
Effect”
means, with respect to any business or Person, any state of facts, change,
development, event, effect, condition or occurrence materially adverse to
the
business, assets, properties, liabilities or condition (financial or otherwise)
of such business or Person and its Subsidiaries, as applicable, taken as
a
whole, or that, directly or indirectly, prevents or materially impairs or
delays
the ability of such Person to perform its obligations under this Agreement;
but
shall not include facts, events, changes, effects or developments (i)
(A) generally affecting the rural, regional or nationwide wireline
voice
and data industry in the United States or in other countries in which such
Person or its Subsidiaries conduct business, including regulatory and political
developments and changes in Law or GAAP, or (B) generally affecting
the
economy or financial markets in the United States or in other countries in
which
such Person or its Subsidiaries conduct business, (ii) resulting from
the
announcement of this Agreement and the transactions contemplated hereby or
by
the other Transaction Agreements or the taking of any action required by
this
Agreement or the other Transaction Agreements in connection with the Merger
(including any decrease in customer demand, any reduction in revenues, any
disruption in supplier, partner or similar relationships, or any loss of
employees) or (iii) resulting from any natural disaster, or any engagement
by the United
10
States in hostilities,
whether or not pursuant to the declaration of a national emergency or war,
or
the occurrence of any act or acts of terrorism; and provided that any reduction
in the market price or trading volume of such Person’s publicly traded common
stock, in itself, shall not be deemed to constitute a Material Adverse Effect
hereunder.
1.103
“Merger” shall
have the
meaning set forth in Section 2.1.
1.104
“Merger Tax
Opinion” shall
have the meaning set forth in Section 8.7(c).
1.105
“NYSE” means
the New York
Stock Exchange, Inc.
1.106
“Order” means
any decree,
judgment, injunction, writ, rule or other order of any Governmental Authority.
1.107
“Owned Real
Property”
shall have the meaning set forth in the Distribution Agreement.
1.108
“PBGC” means
the U.S.
Pension Benefit Guaranty Corporation.
1.109
“Per Share Merger
Consideration” shall have the meaning set forth in Section 3.1(a).
1.110
“Permitted Encumbrances”
shall mean (A) statutory Liens for Taxes that are not due and payable
as of
the Closing Date, or that are being contested in good faith and for which
appropriate reserves have been established in accordance with GAAP; (B)
mechanics liens and similar Liens for labor, materials or supplies provided,
incurred in the ordinary course of business for amounts which are not due
and
payable or are subject to dispute and with respect to which reserves have
been
established in accordance with GAAP; (C) zoning, building codes and
other
land use Laws regulating the use or occupancy of such Owned Real Property
or
Leasehold Improvement (as the case may be) or the activities conducted thereon
which are imposed by any governmental authority having jurisdiction over
such
Owned Real Property or Leasehold Improvement (as the case may be) which are
not
violated by the current use or occupancy of such Owned Real Property or
Leasehold Improvement (as the case may be) or the operation of the business
thereon; (D) easements, covenants, conditions, restrictions and other
similar matters of record affecting title to any Owned Real Property or
Leasehold Improvement (as the case may be) which do not or would not materially
impair the use or occupancy of such Owned Real Property or Leasehold Improvement
(as the case may be) in the operation of the business conducted thereon;
and
(E) Liens securing Indebtedness incurred in connection with the Spinco
Financing or disclosed in the Company SEC Documents or the Spinco Financial
Statements, as applicable.
1.111
“Person” or
“person”
means a natural person, corporation, company, joint venture,
individual business trust, trust association, partnership, limited partnership,
limited liability company or other entity, including a Governmental Authority.
1.112
“Potential Disqualifying
Action” shall have the meaning set forth in Section 10.2(b).
11
1.113
“Preliminary
Restructuring” shall have the meaning set forth in the Distribution
Agreement.
1.114
“Proxy
Statement/Prospectus” means the letters to stockholders, notices of meeting,
proxy statement and forms of proxies to be distributed to stockholders in
connection with the Merger and the transactions contemplated by this Agreement
and any additional soliciting material or schedules required to be filed
with
the SEC in connection therewith.
1.115
“PSC Applications” shall
have the meaning set forth in Section 8.6(b).
1.116
“Real Property” shall
have
the meaning set forth in the Distribution Agreement.
1.117
“Record Date” shall
have
the meaning set forth in the Distribution Agreement.
1.118
“Redactable
Information”
shall have the meaning set forth in Section 8.7(a).
1.119
“Registration
Statement”
means the registration statement on Form S-4 to be filed by the Company with
the
SEC to effect the registration under the Securities Act of the issuance of
the
shares of Company Common Stock into which shares of Spinco Common Stock will
be
converted pursuant to the Merger (as amended and supplemented from time to
time).
1.120
“Regulation S-K”
means Regulation S-K promulgated under the Exchange Act.
1.121
“Regulatory
Law” shall
have the meaning set forth in Section 8.6(d).
1.122
“Requisite Approval” shall
have the meaning set forth in Section 7.22.
1.123
“Restraint” shall
have the
meaning set forth in Section 9.1(g).
1.124
“Rule 145
Affiliate”
shall have the meaning set forth in Section 8.14.
1.125
“Rule 145
Affiliate
Agreement” shall have the meaning set forth in Section 8.14.
1.126
“Ruling Request” shall
have the meaning set forth in Section 8.7(a).
1.127
“Xxxxxxxx-Xxxxx
Act” shall
have the meaning set forth in Section 6.4(f).
1.128
“SEC” means
the U.S.
Securities and Exchange Commission.
1.129
“Securities
Act” means the
Securities Act of 1933, as amended, together with the rules and regulations
promulgated thereunder.
12
1.130
“Senior Debt
Commitment
Letter” shall have the meaning set forth in the Distribution Agreement.
1.131
“Shared Assets
Agreement”
shall have the meaning set forth in the Distribution Agreement.
1.132
“Shared Contracts
Agreement” shall have the meaning set forth in the Distribution Agreement.
1.133
“Significant
Subsidiary”
shall have the meaning set forth in Rule 1-02 of Regulation S-X
promulgated under the Exchange Act.
1.134
“Special Dividend” shall
have the meaning set forth in the Distribution Agreement.
1.135
“Specified Fund
Shareholder” shall have the meaning set forth in Section 10.1(c).
1.136
“Spinco” shall
have the
meaning set forth in the Preamble hereto.
1.137
“Spinco Approvals“shall
have the meaning set forth in Section 6.3(d).
1.138
“Spinco Assets” shall
have
the meaning set forth in the Distribution Agreement.
1.139
“Spinco Benefit
Plans”
shall have the meaning set forth in Section 6.12(a).
1.140
“Spinco Business” shall
have the meaning set forth in the Distribution Agreement.
1.141
“Spinco Common
Stock”
means the Common Stock, par value $0.01 per share, of Spinco.
1.142
“Spinco Disclosure
Letter”
shall have the meaning set forth in the first paragraph of Article VI.
1.143
“Spinco Employee” shall
have the meaning set forth in Section 6.12(a).
1.144
“Spinco Financial
Statements” shall have the meaning set forth in Section 6.4(a)(iii).
1.145
“Spinco IP Rights” shall
have the meaning set forth in Section 6.14.
1.146
“Spinco Group” means
Spinco and the Spinco Subsidiaries.
1.147
“Spinco Leased
Real
Property” means all Leased Real Property held by Spinco or Spinco
Subsidiaries.
13
1.148
“Spinco Leasehold
Improvements” means all Leasehold Improvements of Spinco or Spinco
Subsidiaries.
1.149
“Spinco Leases” means
all
Leases of Spinco or Spinco Subsidiaries.
1.150
“Spinco Liabilities” shall
have the meaning set forth in the Distribution Agreement.
1.151
“Spinco Licenses” shall
have the meaning set forth in Section 6.20(a).
1.152
“Spinco Material
Contracts” shall have the meaning set forth in Section 6.15(a).
1.153
“Spinco Owned
Real
Property” means all Owned Real Property of Spinco or Spinco Subsidiaries.
1.154
“Spinco Permits” shall
have the meaning set forth in Section 6.7(b).
1.155
“Spinco Stockholder
Approval” shall have the meaning set forth in Section 6.17.
1.156
“Spinco Subsidiaries”
means all direct and indirect Subsidiaries of Spinco immediately following
the
Contribution, including any direct or indirect Subsidiaries of AT Co. that
become Subsidiaries of Spinco after the date hereof.
1.157
“Spinco Voting
Debt” shall
have the meaning set forth in Section 6.2(b).
1.158
“State Regulators” shall
have the meaning set forth in Section 6.20(a).
1.159
“Subsidiary” means,
with
respect to any Person, a corporation, partnership, association, limited
liability company, trust or other form of legal entity in which such Person,
a
Subsidiary of such Person or such Person and one or more Subsidiaries of
such
Person, directly or indirectly, has either (i) a majority ownership
in the
equity thereof, (ii) the power, under ordinary circumstances, to elect,
or
to direct the election of, a majority of the board of directors or other
analogous governing body of such entity, or (iii) the title or function
of
general partner or manager, or the right to designate the Person having such
title or function.
1.160
“Surviving Corporation”
shall have the meaning set forth in Section 2.1(a).
1.161
“Tax” or “Taxes”
means (i) all taxes, charges, fees, duties, levies, imposts, rates
or other
assessments or governmental charges of any kind imposed by any federal, state,
local or foreign Taxing Authority, including income, gross receipts, employment,
excise, severance, stamp, occupation, premium, windfall profits, environmental
(including Taxes under Section 59A of the Code), custom duties, property,
sales, use, license, capital stock, transfer, franchise, registration, payroll,
withholding, social security (or similar), unemployment, disability, value
added, alternative or add-on minimum or other taxes, whether disputed or
not,
and including any interest, penalties or additions
14
attributable thereto;
(ii) liability for the payment of any amount of the type described
in
clause (i) above arising as a result of being (or having been) a member
of
any group or being (or having been) included or required to be included in
any
Tax Return related thereto; and (iii) liability for the payment of
any
amount of the type described in clauses (i) or (ii) above as
a result
of any express or implied obligation to indemnify or otherwise assume or
succeed
to the liability of any other Person.
1.162
“Tax-Free Status
of the
Transactions” shall mean that (i) the Contribution, taken together with
the Distribution, qualifies as a tax-free reorganization pursuant to
Section 368(a)(1)(D) of the Code, (ii) the Debt Exchange constitutes
a
transfer of qualified property to AT Co.’s creditors in connection with the
reorganization within the meaning of Section 361(c)(3) of the Code,
(iii) the Distribution, as such, qualifies as a distribution of Spinco
stock to AT Co. stockholders pursuant to Section 355 of the Code,
pursuant
to which no gain or loss is recognized for federal income tax purposes by
any of
AT Co., Spinco, the Company and their respective stockholders, except to
the
extent of cash received in lieu of fractional shares, (iv) the Special
Dividend qualifies as money transferred to creditors or distributed to
shareholders in connection with the reorganization within the meaning of
Section 361(b)(1) of the Code to the extent that AT Co. distributes
the
Special Dividend to its creditors or shareholders in connection with the
Contribution, and (v) the Merger qualifies as a tax-free reorganization
pursuant to Section 368(a) of the Code, pursuant to which no gain or loss
is
recognized for federal income tax purposes by any of AT Co., Spinco, the
Company
and their respective stockholders, except to the extent of cash received
in lieu
of fractional shares.
1.163
“Tax Materials” shall
have
the meaning set forth in Section 10.1(a).
1.164
“Tax-Related
Losses” shall
have the meaning set forth in Section 10.4(a).
1.165
“Tax Return” means
any
return, report, certificate, form or similar statement or document (including
any related or supporting information or schedule attached thereto and any
information return, amended tax return, claim for refund or declaration of
estimated tax) required to be supplied to, or filed with, a Taxing Authority
in
connection with the determination, assessment or collection of any Tax or
the
administration of any laws, regulations or administrative requirements relating
to any Tax.
1.166
“Tax Sharing
Agreement”
means the Tax Sharing Agreement to be entered into between AT Co. and its
Affiliates and Spinco substantially in the form attached to the Distribution
Agreement.
1.167
“Taxing Authority” means
any Governmental Authority or any quasi-governmental or private body having
jurisdiction over the assessment, determination, collection or imposition
of any
Tax (including the IRS).
1.168
“Telecommunications
Regulatory
Consents” shall have the meaning set forth in Section 8.6(b).
15
1.169
“Termination
Date” means
the date, if any, on which this Agreement is terminated pursuant to
Section 11.1(b).
1.170
“Third-Party
Claim” shall
mean any claim, suit, arbitration, inquiry, proceeding or investigation by
or
before any Governmental Authority or asserted by a Person other than AT Co.
or
any AT Co. Affiliate, Spinco or any Spinco Affiliate or the Company or any
Company Affiliate.
1.171
“Transaction
Agreements”
means this Agreement, the Distribution Agreement, the Employee Benefits
Agreement, the Shared Assets Agreement, the Shared Contracts Agreement, the
Transition Services Agreement and the Tax Sharing Agreement.
1.172
“Transferred
Employees”
shall have the meaning set forth in Section 8.10(a).
1.173
“Transition
Services
Agreement” means the Transition Services Agreement to be entered into by and
between AT Co. and Spinco substantially on the terms set forth in
Exhibit D to the Distribution Agreement.
1.174
“Vestar Persons” means
all
investment funds of Vestar Capital Partners and individuals affiliated therewith
who hold Company Common Stock.
1.175
“Voting Agreement” shall
have the meaning set forth in the recitals hereto.
1.176
“WARN Act” means
the
Worker Adjustment and Retraining Notification Act of 1988, as amended and
any
similar state or local law, regulation or ordinance.
1.177
“WCAS Persons” means
all
investment funds of Welsh, Carson, Xxxxxxxx & Xxxxx and individuals
affiliated therewith who hold Company Common Stock.
ARTICLE
II
THE MERGER
2.1
The Merger. At the Effective Time and upon the terms and subject to the
conditions of this Agreement, Spinco shall be merged with and into the Company
(the “Merger”) in accordance with the applicable provisions of the DGCL,
the separate existence of Spinco shall cease and the Company shall continue
as
the surviving corporation of the Merger (sometimes referred to herein as
the
“Surviving Corporation”) and shall succeed to and assume all the rights,
powers and privileges and be subject to all of the obligations of Spinco
in
accordance with the DGCL and upon the terms set forth in this Agreement.
2.2
Closing. Unless the transactions herein contemplated shall have been
abandoned and this Agreement terminated pursuant to Section 11.1,
the
closing of the Merger and the other transactions contemplated hereby (the
“Closing”) shall take place at 10:00 a.m., Little Rock, Arkansas
time, on a date to be specified by the parties (the “Closing Date”) which
shall be no later than the second business day after the satisfaction or,
to the
extent permitted by
16
applicable Law,
waiver
of the conditions set forth in Article IX (other than those that are
to be
satisfied by action at the Closing) at a location specified in writing by
AT Co.
2.3
Effective Time. Upon the terms and subject to the conditions of this
Agreement, on the Closing Date, a certificate of merger shall be filed with
the
Secretary of State of the State of Delaware with respect to the Merger (the
“Certificate of Merger”), in such form as is required by, and executed in
accordance with, the applicable provisions of the DGCL. The Merger shall
become
effective at the time of filing of the Certificate of Merger or at such later
time as the parties hereto may agree and as is provided in the Certificate
of
Merger. The date and time at which the Merger shall become so effective is
herein referred to as the “Effective Time.”
2.4
Effects of the Merger. At the Effective Time, the effects of the Merger
shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of the DGCL. Without limiting the generality of the
foregoing, at the Effective Time, all the property, rights, privileges, powers
and franchises of the Company and Spinco shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Spinco
shall become the debts, liabilities and duties of the Surviving Corporation.
2.5
Certificate of Incorporation and Bylaws of the Surviving Corporation.
(a) Upon
the terms and subject to the conditions set forth in this Agreement, at the
Effective Time, without any further action on the part of Spinco or the Company,
the Certificate of Incorporation of the Company shall be amended by virtue
of
the Merger to read in its entirety in the form attached hereto as
Exhibit C, and, as so amended, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter duly amended
in
accordance with such Certificate of Incorporation and applicable Law.
(b) Upon
the terms and subject to the conditions set forth in this Agreement, at the
Effective Time, without any further action on the part of Spinco or the Company,
the Bylaws of the Company shall be amended and restated by virtue of the
Merger
to read in their entirety in the form attached hereto as Exhibit D,
and, as so amended and restated, shall be the Bylaws of the Surviving
Corporation until thereafter duly amended in accordance with the Certificate
of
Incorporation of the Surviving Corporation, such Bylaws and applicable Law.
2.6
Directors and Officers of the Surviving Corporation. Subject to
Section 4.4, the directors of Spinco at the Effective Time shall,
from and
after the Effective Time, be the initial directors of the Surviving Corporation.
In furtherance of the foregoing, the Company shall take all action reasonably
necessary to obtain the resignations of a number of the current directors
of the
Company sufficient to permit the Company’s Board of Directors to be comprised
entirely of the directors constituting the Spinco board of directors as of
the
Effective Time. Subject to Section 4.4, the officers of Spinco at
the
Effective Time shall, from and after the Effective Time, be the initial officers
of the Surviving Corporation. Such directors and officers shall serve until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation’s Amended and Restated Certificate of Incorporation and Amended and
Restated Bylaws.
17
2.7
Stockholders Meeting.
(a) As
promptly as practicable following the date hereof and the effectiveness of
the
Registration Statement, the Company shall call a special meeting of its
stockholders (the “Company Stockholders Meeting”) to be held as promptly
as practicable for the purpose of voting upon (i) the adoption of
this
Agreement, (ii) the increase in the authorized shares of Company Common
Stock and the issuance of shares of Company Common Stock pursuant to the
Merger
and (iii) related matters. This Agreement shall be submitted for adoption
to the stockholders of the Company at such special meeting. The Company shall
deliver, or cause to be delivered, to the Company’s stockholders the Proxy
Statement/Prospectus in definitive form in connection with the Company
Stockholders Meeting at the time and in the manner provided by the applicable
provisions of the DGCL, the Exchange Act and the Company’s Certificate of
Incorporation and Bylaws and shall conduct the Company Stockholders Meeting
and
the solicitation of proxies in connection therewith in compliance with such
statutes, certificate of incorporation and bylaws.
(b) Subject
to Section 8.12(c) the Board of Directors of the Company shall recommend
that the Company’s stockholders adopt this Agreement, and such recommendations
shall be set forth in the Proxy Statement/Prospectus. Unless and until this
Agreement shall have been terminated in accordance with its terms, the Company
shall comply with its obligations under Section 2.7(a) whether or
not its
Board of Directors withdraws, modifies or changes its recommendation regarding
this Agreement or recommends any other offer or proposal.
2.8
Potential Restructuring of Transactions. If, prior to the date on which
the Company intends to commence solicitation of proxies for use at the Company
Stockholders Meeting, which date, unless the parties otherwise agree, shall
be
no earlier than March 15, 2006, the IRS notifies AT Co. that the IRS
will
not issue the IRS 357(c) Ruling, then, during the ensuing 30 day period,
the parties will collaborate reasonably and in good faith in order to determine
a possible alternative structure for the transactions contemplated hereby
that
the parties determine, with the assistance of their respective tax advisors,
will either make likely the receipt from the IRS of the IRS 357(c) Ruling
or
eliminate the necessity for an IRS 357(c) Ruling, in either case, without
(a) substantially increasing the costs to any party associated with
the
transactions contemplated hereby, (b) causing the performance of the
covenants and agreements of any party hereunder to become substantially more
burdensome, (c) substantially increasing the regulatory or other consents
or approvals required to consummate the transactions contemplated hereby,
or
(d) otherwise resulting in any substantial impediment to the consummation
of the transactions contemplated hereby. In the event the parties reasonably,
and in good faith, agree upon such an alternative structure, they shall be
obligated, as soon as practicable thereafter, to modify the covenants and
agreements set forth in this Agreement and the other Transaction Agreements
accordingly to reflect the change in transaction structure referenced in
the
immediately preceding sentence. In furtherance of the foregoing, each of
the
parties shall take all action reasonably necessary to modify the Ruling Request
to reflect the transactions as so modified and effectuate the change in
transaction structure contemplated by this Section 2.8, and each such
party
shall use its reasonable best efforts to cause the transactions contemplated
hereby, as so modified, to be consummated as soon as practicable thereafter.
To
the extent that the filing or effectiveness of the materials necessary for
the
solicitation of proxies
18
for use at the
Company
Stockholders Meeting is delayed in order to afford the parties the time
necessary to obtain a response with respect to the IRS 357(c) Ruling such
delay
will be deemed to not constitute, nor constitute any basis for a claim of,
a
breach of the Company’s covenants under Article VIII hereof or otherwise.
ARTICLE
III
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
3.1
Effect on Capital Stock. At the Effective Time, by virtue of the Merger
and without any action on the part of Spinco, the Company or any holder of
any
Spinco Common Stock:
(a) All
of the shares of Spinco Common Stock issued and outstanding immediately prior
to
the Effective Time (other than shares canceled in accordance with
Section 3.1(b)) shall be automatically converted into the right to
receive
an aggregate number of duly authorized, validly issued, fully paid and
nonassessable shares of Company Common Stock equal to the product of (x)
5.6667
multiplied by (y) the aggregate number of shares of Company Common
Stock
issued and outstanding, on a Fully Diluted Basis, immediately prior to the
Effective Time (the “Aggregate Merger Consideration”), with each such
share of Spinco Common Stock issued and outstanding as of the Effective Time
to
be converted into the right to receive a number of shares of Company Common
Stock equal to (i) the Aggregate Merger Consideration divided by
(ii) the aggregate number of shares of Spinco Common Stock issued
and
outstanding as of immediately prior to the Effective Time (other than shares
canceled in accordance with Section 3.1(b)) (the “Per Share Merger
Consideration”).
(b) Each
share of Spinco Common Stock held by Spinco as treasury stock and each share
of
Spinco Common Stock owned by the Company or any wholly owned Subsidiary of
the
Company or Spinco, in each case immediately prior to the Effective Time,
shall
be canceled and shall cease to exist and no stock or other consideration
shall
be issued or delivered in exchange therefor.
(c) Each
share of Spinco Common Stock issued and outstanding immediately prior to
the
Effective Time, when converted in accordance with this Section 3.1,
shall
no longer be outstanding and shall automatically be canceled and shall cease
to
exist. Each holder of a certificate that, immediately prior to the Effective
Time, represented outstanding shares of Spinco Common Stock (collectively,
the
“Certificates”) shall cease to have any rights with respect thereto,
except the right to receive, upon the surrender of any such Certificate,
the Per
Share Merger Consideration.
(d) Each
share of Company Common Stock that is issued and outstanding immediately
prior
to and at the Effective Time shall remain outstanding following the Effective
Time.
3.2
Distribution of Per Share Merger Consideration.
(a) Agent.
Prior to or at the Effective Time, the Company shall deposit with the Agent
(as
defined in the Distribution Agreement), for the benefit of persons entitled
to
receive shares of Spinco Common Stock in the Distribution and for distribution
in
19
accordance with
this
Article III, through the Agent, certificates or book-entry authorizations
representing the shares of Company Common Stock (such shares of Company Common
Stock, together with any dividends or distributions with respect thereto
to
which the holders thereof may be entitled pursuant to Section 3.2(c), being
hereinafter referred to as the “Distribution Fund”) issuable pursuant to
Section 3.1 in exchange for outstanding shares of Spinco Common Stock.
The
Agent shall, pursuant to irrevocable instructions, deliver the Company Common
Stock contemplated to be issued pursuant to Section 3.1 from the shares
of
stock held in the Distribution Fund. If the Company deposits the Shares into
the
Distribution Fund prior to the Effective Time and the Merger is not consummated,
the Agent shall promptly return the shares to the Company. The Distribution
Fund
shall not be used for any other purpose.
(b) Distribution
Procedures. At the Effective Time, all shares of Spinco Common Stock shall
be converted into shares of Company Common Stock pursuant to, and in accordance
with the terms of this Agreement, immediately following which the Agent shall
distribute on the same basis as the shares of Spinco Common Stock would have
been distributed in the Distribution and to the persons entitled to receive
such
Distribution, in respect of the outstanding shares of AT Co. Common Stock
held
by holders of record of AT Co. Common Stock on the Record Date, all of the
shares of Company Common Stock into which the shares of Spinco Common Stock
that
otherwise would have been distributed in the Distribution have been converted
pursuant to the Merger. Each person entitled to receive Spinco Common Stock
in
the Distribution shall be entitled to receive in respect of the shares of
Spinco
Common Stock otherwise distributable to such person a certificate or book-entry
authorization representing the number of whole shares of Company Common Stock
that such holder has the right to receive pursuant to this Article III
(and
cash in lieu of fractional shares of Company Common Stock, as contemplated
by
Section 3.2(e)) (and any dividends or distributions pursuant to
Section 3.2(c)). The Agent shall not be entitled to vote or exercise
any
rights of ownership with respect to the Company Common Stock held by it from
time to time hereunder, except that it shall receive and hold all dividends
or
other distributions paid or distributed with respect thereto for the account
of
persons entitled thereto.
(c) Distributions
with Respect to Undistributed Shares. No dividends or other distributions
declared or made after the Effective Time with respect to Company Common
Stock
with a record date after the Effective Time shall be paid with respect to
any
shares of Company Common Stock that are not able to be distributed by the
Distribution Agent promptly after the Effective Time, whether due to a legal
impediment to such distribution or otherwise. Subject to the effect of
applicable laws, following the distribution of any such previously undistributed
shares of Common Stock of the Company, there shall be paid to the record
holder
of the certificates representing such shares of Company Common Stock, without
interest (i) at the time of the distribution, the amount of cash payable
in
lieu of fractional shares of Company Common Stock to which such holder is
entitled pursuant to Section 3.2(e) and the amount of dividends or
other
distributions with a record date after the Effective Time theretofore paid
with
respect to such whole shares of Company Common Stock and (ii) at the
appropriate payment date therefor, the amount of dividends or other
distributions with a record date after the Effective Time but prior to the
distribution of such shares and a payment date subsequent to the distribution
of
such shares payable with respect to such whole shares of Company Common Stock.
The Company shall deposit in the Distribution Fund all such dividends and
distributions.
20
(d) No
Further Ownership Rights in Spinco Common Stock. All shares of Company
Common Stock issued in respect of shares of Spinco Common Stock (including
any
cash paid pursuant to Section 3.2(c)) shall be deemed to have been
issued
in full satisfaction of all rights pertaining to such shares of Spinco Common
Stock.
(e) No
Fractional Shares. Notwithstanding anything herein to the contrary, no
certificate or scrip representing fractional shares of Company Common Stock
shall be issued in respect of shares of Spinco Common Stock, and such fractional
share interests will not entitle the owner thereof to vote or to any rights
as a
stockholder of the Company. All fractional shares of Company Common Stock
that a
holder of Spinco Common Stock would otherwise be entitled to receive as a
result
of the Merger shall be aggregated and if a fractional share results from
such
aggregation, such holder shall be entitled to receive, in lieu thereof, an
amount in cash determined by multiplying (i) the closing sale price
per
share of Company Common Stock on the NYSE on the business day preceding the
Effective Time, if the stock is being traded on such date, or if the stock
is
not being traded on such date, the closing sale price per share of Company
Common Stock on the NYSE on the first business day that such stock is traded,
by
(ii) the fraction of a share of Company Common Stock to which such
holder
would otherwise have been entitled. The Company shall timely make available
to
the Agent any cash necessary to make payments in lieu of fractional shares
as
aforesaid. Alternatively, the Company shall have the option of instructing
the
Agent to aggregate all fractional shares of Company Common Stock, sell such
shares in the public market and distribute to holders of Spinco Common Stock
who
otherwise would have been entitled to such fractional shares of Company Common
Stock a pro rata portion of the proceeds of such sale.
(f) Termination
of Distribution Fund. Any portion of the Distribution Fund made available to
the Agent that remains undistributed to the former stockholders of Spinco
on the
one-year anniversary of the Effective Time shall be delivered to the Company,
upon demand, and any stockholders of Spinco who have not received shares
of
Company Common Stock in accordance with this Article III shall thereafter
look only to the Company for payment of their claim for Company Common Stock
and
any dividends or distributions with respect to Company Common Stock.
(g) No
Liability. Neither Spinco nor the Surviving Corporation shall be liable to
any holder of Spinco Common Stock or any holder of shares of AT Co. Common
Stock
for shares of Company Common Stock (or dividends or distributions with respect
thereto or with respect to Spinco Common Stock) delivered to a public official
pursuant to any applicable abandoned property, escheat or similar Law.
(h) Closing
of Transfer Books. From and after the Effective Time, the stock transfer
books of Spinco shall be closed and no transfer shall be made of any shares
of
capital stock of Spinco that were outstanding immediately prior to the Effective
Time.
(i)
Withholding Rights. Spinco, the Company and the Surviving Corporation
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of any Spinco Common Stock
such
amounts as they determine in good faith are required to be deducted and withheld
with respect to the making of such payment under the Code, or under any
provision of state, local or foreign Tax Law. To the
21
extent that amounts
are
so withheld and paid over to the appropriate Taxing Authority, such withheld
amounts will be treated for all purposes of this Agreement as having been
paid
to the recipient.
ARTICLE
IV
RELATED TRANSACTIONS
RELATED TRANSACTIONS
The
following transactions shall occur at or prior to the Effective Time.
4.1
Distribution. Upon the terms and subject to the conditions of the
Distribution Agreement, prior to the Effective Time, AT Co. and Spinco each
shall take, or cause to be taken, all actions, and do, or cause to be done,
all
things necessary, proper or advisable, including obtaining any consent, approval
or waiver from, and satisfying any notification requirements to, any
Governmental Authority or other third party, that is required under applicable
Laws or pursuant to any Contract to which AT Co., Spinco or any of their
respective Subsidiaries is a party or by which any of their respective assets
are based, to consummate and make effective the Contribution and the
Distribution and the other transactions contemplated by the Distribution
Agreement and shall use their respective reasonable best efforts to cause
to be
effected the Contribution and the Distribution in accordance with the terms
of
the Distribution Agreement.
4.2
AT
Co./Spinco Transaction Agreements. Upon the terms and subject to the
conditions of the Distribution Agreement, at or prior to the Effective Time,
AT
Co. and Spinco shall each execute and deliver the Tax Sharing Agreement,
the
Transition Services Agreement and the Employee Matters Agreement, each
substantially in the form attached to the Distribution Agreement, as well
as the
Shared Assets Agreement, the Shared Contracts Agreement and all other
agreements, if any, required in connection with the Contribution and the
Distribution.
4.3
Corporate Offices. From and after the Effective Time, the location of the
headquarters and principal executive offices of the Surviving Corporation
shall
be the executive offices of Spinco as of immediately prior to the Effective
Time.
4.4
Directors and Officers of Spinco. AT Co. and Spinco shall take all action
reasonably necessary to cause the Board of Directors of Spinco immediately
prior
to the Effective Time to consist of nine (9) members, one (1) of
whom
shall be the Chairman of the Board of Directors of Spinco, as set forth on
Exhibit E hereto, one (1) of whom shall be the Chief Executive
Officer of Spinco, as set forth on Exhibit E hereto, six (6) of
whom shall be designated by AT Co. and one (1) of whom shall be designated
by the Company. Each of the parties hereby acknowledges and agrees that the
Company’s designee and at least four (4) of AT Co.’s designees shall be
“independent directors” within the meaning given such term under the rules of
the NYSE. At the Effective Time, Xxxxxxx X. Xxxxxx shall serve as Chairman
of
the Board of Directors of the Surviving Corporation. The Board of Directors
of
the Surviving Corporation shall be divided into three classes, each initially
comprised of three (3) directors, with directors serving staggered
three
(3) year terms and only one (1) class of directors standing
for
election each year, it being acknowledged and agreed that (i) the
Company’s
designee shall be appointed as a Class II director of Spinco with
a term
expiring at the 2008 annual meeting and
22
(ii) the
Chairman
of the Board of Directors, the Chief Executive Officer and one director
designated by AT Co. shall be appointed as Class III directors of
Spinco
with terms expiring at the 2009 annual meeting. By no later than the date
on
which the Company commences solicitation of proxies for use at the Company
Stockholders Meeting, (i) AT Co. shall give written notice to the
Company
setting forth AT Co.’s designees to the Spinco Board of Directors and
(ii) the Company shall give written notice to AT Co. setting forth
the
Company’s designee to the Spinco Board of Directors and, in each case,
specifying such information with respect to each such designee as is required
to
be disclosed in the Proxy Statement/Prospectus. Spinco shall take all action
reasonably necessary so that the officers of Spinco immediately prior to
the
Effective Time shall consist of the individuals set forth in
Exhibit E attached hereto.
4.5
Financing Cooperation.
(a) Each
of AT Co., Spinco and, if reasonably requested by AT Co. or Spinco, the Company
shall cooperate in connection with the preparation of all documents and the
making of all filings required in connection with the Spinco Financing (as
defined in the Distribution Agreement) and the Debt Exchange (as defined
in the
Distribution Agreement) and shall use their respective reasonable best efforts
to take, or cause to be taken, all actions and to do, or cause to be done,
all
other things necessary, proper or advisable to consummate the Spinco Financing
and the Debt Exchange and the other transactions contemplated in connection
therewith. Without limiting the generality of the foregoing, each of AT Co.,
Spinco and, if reasonably requested by AT Co. or Spinco, the Company shall
use
their respective reasonable best efforts to cause their respective employees,
accountants, counsel and other representatives to cooperate with each other
in
(i) participating in meetings, drafting sessions, due diligence sessions,
management presentation sessions, “road shows” and sessions with rating agencies
in connection with the syndication or marketing of the Spinco Credit Agreement
(as defined in the Distribution Agreement) and the consummation of the Spinco
Notes Offering (as defined in the Distribution Agreement), (ii) preparing
business projections, financial statements, offering memoranda, private
placement memoranda, prospectuses and similar documents deemed reasonably
necessary by AT Co., Spinco or the Company, to be used in connection with
consummating the Spinco Financing and the Debt Exchange, (iii) executing
and delivering all documents and instruments deemed reasonably necessary
by AT
Co., Spinco or the Company, including any underwriting or placement agreements,
pledge and security documents, other definitive financing documents, including
any indemnity agreements, or other requested certificates or documents, legal
opinions, engineering reports, environmental assessment reports, surveys
and
title insurance as may be reasonably requested by Spinco, provided, however,
that no such agreements or documents shall impose any monetary obligation
or
liability on the Company prior to the Effective Time, (iv) disclosing the
Spinco
Financing and the Debt Exchange, as reasonably appropriate, in the Registration
Statement, and (v) taking all other actions reasonably necessary in
connection with the Spinco Financing, including any such actions required
to
permit the assumption by the Surviving Corporation of such Spinco Credit
Agreement, Spinco Exchange Notes and Spinco Notes at the Effective Time.
(b) The
Company shall use all reasonable best efforts to cause Deloitte & Touche
LLP, the independent auditors of the Company, to provide any unqualified
opinions, consents or customary comfort letters with respect to the financial
statements of the Company needed in connection with the Spinco Financing.
The
Company agrees to allow Spinco’s
23
accounting
representatives the opportunity to review any financial statements pursuant
to
this Section 4.5 and to allow such representatives reasonable access
to the
Company and its Subsidiaries and supporting documentation with respect to
the
preparation of such financial statements and to use reasonable best efforts
to
cause its independent auditors to provide reasonable access to their working
papers relating to procedures performed with respect to such financial
statements.
(c) AT
Co. and Spinco shall use all reasonable best efforts to cause Pricewaterhouse
Coopers LLP, the independent auditors of Spinco, to provide any unqualified
opinions, consents or customary comfort letters with respect to the financial
statements of Spinco needed in connection with the Spinco Financing, the
Proxy
Statement/Prospectus or the Registration Statement. Spinco agrees to allow
the
Company’s accounting representatives the opportunity to review any financial
statements pursuant to this Section 4.5 and to allow such representatives
reasonable access to Spinco and its Subsidiaries and supporting documentation
with respect to the preparation of such financial statements and to use
reasonable best efforts to cause its independent auditors to provide reasonable
access to their working papers relating to procedures performed with respect
to
such financial statements.
ARTICLE
V
REPRESENTATIONS AND WARRANTIES OF AT CO.
REPRESENTATIONS AND WARRANTIES OF AT CO.
Except
as disclosed in the
corresponding section of the Disclosure Letter delivered by AT Co. to the
Company immediately prior to the execution of this Agreement and signed by
an
authorized officer of AT Co. (the “AT Co. Disclosure Letter”) (it being
agreed that disclosure of any item in any section of the AT Co. Disclosure
Letter shall be deemed disclosure with respect to any other section of this
Agreement to which the relevance of such item is reasonably apparent on its
face), AT Co. hereby represents and warrants to the Company as follows:
5.1
Organization; Qualification. AT Co. is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
AT Co. and its Subsidiaries have all requisite corporate power and authority
to
own, lease and operate their properties and assets that will be contributed
to
Spinco pursuant to the Distribution Agreement, except where the failure to
have
such power and authority would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Spinco Business. Each
of
AT Co. and its Subsidiaries is duly qualified or licensed to do business
and is
in good standing in each jurisdiction in which the property owned, leased
or
operated by the Spinco Business that will be contributed to Spinco pursuant
to
the Distribution Agreement or the nature of the Spinco Business operated
by it
makes such qualification necessary, except in such jurisdictions where the
failure to be so qualified or licensed or in good standing would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect
on the Spinco Business.
5.2
Corporate Authority; No Violation.
(a) AT
Co. has the corporate power and authority to enter into this Agreement and
each
other Transaction Agreement to which it is a party and to carry out its
obligations hereunder and thereunder. The execution, delivery and performance
by
AT Co. of this Agreement and each other Transaction Agreement to which it
is a
party and the
24
consummation of
the
transactions contemplated hereby and thereby have been duly authorized by
all
requisite corporate action on the part of AT Co., except for such further
action
of the Board of Directors of AT Co. required to establish the Record Date
and
the Distribution Date, and the effectiveness of the declaration of the
Distribution by the Board of Directors of AT Co. (which is subject to the
satisfaction or, to the extent permitted by applicable Law, waiver of the
conditions set forth in the Distribution Agreement). This Agreement has been
duly executed and delivered by AT Co. and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
agreement of AT Co., enforceable against AT Co. in accordance with its terms
(except insofar as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally, or by principles governing the availability of equitable
remedies). As of the Distribution Date, each other Transaction Agreement
to
which AT Co. is a party will have been duly executed and delivered by AT
Co.
and, assuming the due authorization, execution and delivery by the other
parties
thereto, will constitute a legal, valid and binding agreement of AT Co.,
enforceable against AT Co. in accordance with its terms (except insofar as
such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights
generally, or by principles governing the availability of equitable remedies).
(b) Neither
the execution and delivery by AT Co. of this Agreement and other Transaction
Agreements to which it is a party nor the consummation by AT Co. of the
transactions contemplated hereby or thereby or compliance by AT Co. with
any of
the provisions hereof or thereof will (i) violate or conflict with any
provisions of AT Co.’s Certificate of Incorporation or Bylaws; (ii) result in a
default (or an event that, with notice or lapse of time or both, would become
a
default) or give rise to any right of termination by any third party,
cancellation, amendment or acceleration of any obligation or the loss of
any
benefit under, any Contract to which AT Co. or any of its Subsidiaries is
a
party or by which AT Co. or any of its Subsidiaries is bound or affected;
(iii) result in the creation of a Lien, pledge, security interest,
claim or
other encumbrance on any of the issued and outstanding shares of Spinco Common
Stock, capital stock of any Spinco Subsidiary or on any of the Spinco Assets
pursuant to any Contract to which AT Co. or any of its Subsidiaries (including
Spinco and its Subsidiaries) is a party or by which AT Co. or its Subsidiaries
is bound or affected; or (iv) assuming the consents and approvals
contemplated by Section 5.2(c) below are obtained, violate or conflict
with
any order, writ, injunction, decree, Law, ordinance, rule or regulation
applicable to AT Co. or any of its Subsidiaries (including Spinco and its
Subsidiaries), or any of the properties, business or assets of any of the
foregoing, other than, in the case of each of clauses (i) through
(iv), any
such violation, conflict, default, right, loss or Lien which would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Spinco Business.
(c) Other
than in connection with or in compliance with (i) the provisions of
the
DGCL, (ii) the Securities Act, (iii) the Exchange Act, (iv) the
HSR
Act, (v) the Communications Act and applicable rules and regulations
thereunder and FCC Rules, (vi) the approvals set forth on Section
5.2(c) of
the AT Co. Disclosure Letter, and (vii) the rules and regulations
of the
NYSE (collectively, the “AT Co. Approvals”), no authorization, consent or
approval of, or filing with, any Governmental Authority is necessary for
the
consummation by AT Co. of the transactions contemplated by this Agreement
and
the other Transaction Agreements, except for such authorizations, consents,
approvals or filings that, if not obtained or
25
made, would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Spinco Business.
5.3
Information Supplied. All documents that AT Co. is responsible for filing
with any Governmental Authority in connection with the transactions contemplated
hereby and by each other Transaction Agreement will comply in all material
respects with the provisions of applicable Law. All information supplied
or to
be supplied by AT Co. in any document, other than the Registration Statement
which is addressed in Section 6.8 hereof, filed with any Governmental
Authority in connection with the transactions contemplated hereby and by
the
other Transaction Agreements will be, at the time of filing, at the Distribution
Date and at the Effective Time, true and correct in all material respects.
5.4
AT
Co. Reports and Financial Statements.
(a) AT
Co. has previously made available to the Company complete and correct copies
of:
(i)
AT Co.’s Annual Reports on Form 10-K filed with the SEC under the Exchange Act
for each of the years ended December 31, 2004, 2003 and 2002;
(ii)
AT Co.’s Quarterly Reports on Form 10-Q filed with the SEC under the Exchange
Act for the quarters ended March 31, 2005, June 30, 2005 and
September 30, 2005;
(iii)
each definitive proxy statement filed by AT Co. with the SEC under the Exchange
Act since January 1, 2003;
(iv)
all current reports on Form 8-K filed by AT Co. with the SEC under the Exchange
Act since January 1, 2003; and
(v)
each other form, report, schedule, registration statement and definitive
proxy
statement filed by AT Co. or any of its Subsidiaries with the SEC since
January 1, 2003 and prior to the date hereof (collectively, and together
with the items specified in clauses (i) through (iv) above, the “AT Co.
SEC Documents”).
(b) As
of their respective dates, the AT Co. SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act,
as the
case may be, and none of such AT Co. SEC Documents when filed contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light
of
the circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim financial
statements included in the AT Co. SEC Documents (including any related notes
and
schedules) fairly present in all material respects the financial position
of AT
Co. and its consolidated Subsidiaries as of the respective dates thereof
and the
results of operations and changes in cash flows, changes in stockholder’s equity
or other information included therein for the periods or as of the respective
dates then ended, subject, where appropriate, to normal year-end audit
adjustments (none of which AT Co. management expects to be material), in
each
case in accordance with past practice and GAAP, consistently applied, during
the
periods involved
26
(except as otherwise
stated therein). Since January 1, 2002, AT Co. has timely filed all
reports, registration statements and other filings required to be filed with
the
SEC under the rules and regulations of the SEC. Except as set forth in the
AT
Co. SEC Documents filed prior to the date hereof or Section 5.4 of
the AT
Co. Disclosure Letter or liabilities incurred in the ordinary course of
business, consistent with past practice, since the Interim Balance Sheet
Date,
AT Co. and its Subsidiaries have not incurred any liability or obligation
that
is of a nature that would be required to be disclosed on a consolidated balance
sheet of AT Co. and its Subsidiaries or in the notes thereto prepared in
conformity with GAAP, other than liabilities or obligations that would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Spinco Business.
(c) AT
Co. has designed and maintains a system of internal controls over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act)
sufficient to provide reasonable assurances regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with GAAP. AT Co. (A) has designed and maintains
disclosure controls and procedures (as defined in Rules 13a-15(e)
and
15d-15(e) of the Exchange Act) to ensure that material information required
to
be disclosed by AT Co. in the reports that it files or submits under the
Exchange Act with respect to the AT Co. Business and the Spinco Business
is
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms and is accumulated and communicated to AT Co.’s
management as appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the principal executive officer
and
principal financial officer of AT Co. required pursuant to Sections 302
and
906 of the Xxxxxxxx-Xxxxx Act and (B) has disclosed, based on its
most
recent evaluation of such disclosure controls and procedures prior to the
date
hereof to AT Co.’s auditors and the audit committee of AT Co.’s Board of
Directors, (x) any significant deficiencies and material weaknesses
in the
design or operation of internal controls over financial reporting that are
reasonably likely to adversely affect in any material respect AT Co.’s ability
to record, process, summarize and report financial information with respect
to
the AT Co. Business and the Spinco Business and (y) any fraud, whether or
not
material, that involves management or other employees who have a significant
role in the AT Co.’s internal controls over financial reporting with respect to
the AT Co. Business and the Spinco Business. AT Co. has made available to
the
Company any such disclosure made by management to AT Co.’s auditors and the
audit committee of AT Co.’s Board of Directors.
5.5
Brokers or Finders. Other xxxx Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated, XX Xxxxxx Securities Inc. and Xxxxxxxx, Inc., no agent, broker,
investment banker, financial advisor or other similar Person is or will be
entitled, by reason of any agreement, act or statement by AT Co. or any of
its
Subsidiaries, directors, officers or employees, to any financial advisory,
broker’s, finder’s or similar fee or commission, to reimbursement of expenses or
to indemnification or contribution in connection with any of the transactions
contemplated by this Agreement or other Transaction Agreement.
ARTICLE
VI
REPRESENTATIONS AND WARRANTIES OF AT CO. AND SPINCO
REPRESENTATIONS AND WARRANTIES OF AT CO. AND SPINCO
Except
as disclosed in the
corresponding section of the Disclosure Letter delivered by Spinco to the
Company immediately prior to the execution of this Agreement and signed by
an
27
authorized officer
of
Spinco (the “Spinco Disclosure Letter”) (it being agreed that disclosure
of any item in any section of the Spinco Disclosure Letter shall be deemed
disclosure with respect to any other section of this Agreement to which the
relevance of such item is reasonably apparent on its face), AT Co. and Spinco,
jointly and severally, represent and warrant to the Company as follows:
6.1
Organization, Qualification.
(a) Spinco
and each of the Spinco Subsidiaries is, or on the date of its incorporation
will
be a corporation duly organized, validly existing and in good standing under
the
Laws of its jurisdiction of incorporation, has, or will have, all requisite
power and authority to own, lease and operate its properties and assets and
to
carry on its business as presently conducted or as proposed to be conducted,
except where the failure to be so organized, existing and in good standing
or to
have such power and authority would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Spinco, and
is,
or will be, duly qualified and licensed to do business and is, or will be,
in
good standing in each jurisdiction in which the ownership or leasing of its
property or the conduct of its business requires such qualification, except
for
jurisdictions in which the failure to be so qualified or to be in good standing
would not reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect on Spinco. The copies of the Spinco Certificate of
Incorporation and Bylaws and the Certificate of Incorporation and Bylaws
(or
analogous governing documents) of each Spinco Subsidiary that is, or upon
completion of the Contribution will be, a Significant Subsidiary of Spinco
previously made available to the Company are complete and correct copies
of such
documents as in full force and effect on the date hereof.
(b) Section 6.1(b)
of the Spinco Disclosure Letter sets forth a list of the Spinco Subsidiaries
and
their respective jurisdictions of incorporation, together with a designation
of
those Spinco Subsidiaries that upon completion of the Contribution will
constitute Significant Subsidiaries of Spinco.
6.2
Capital Stock and Other Matters.
(a) As
of the date hereof, (i) the authorized capital stock of Spinco consists
of
1,000 shares of Spinco Common Stock, (ii) 1,000 shares of Spinco Common
Stock are issued and outstanding, and (iii) no shares of Spinco Common
Stock are held by Spinco in its treasury. All of the issued and outstanding
shares of Spinco Common Stock immediately prior to the Effective Time will
be
validly issued, fully paid and nonassessable and free of pre-emptive rights.
(b) No
bonds, debentures, notes or other indebtedness of Spinco or any of the Spinco
Subsidiaries having the right to vote (or convertible into or exercisable
for
securities having the right to vote) on any matters on which holders of shares
of capital stock of Spinco (including Spinco Common Stock) may vote (“Spinco
Voting Debt”) are, or immediately prior to the Effective Time will be,
issued or outstanding.
(c) Except
in connection with the Merger or as otherwise provided for in the Transaction
Agreements, there are not, and immediately prior to the Effective Time there
28
will not be, any
outstanding, securities, options, warrants, convertible securities, calls,
rights, commitments, agreements, arrangements, undertakings or Contracts
of any
kind to which Spinco or any Spinco Subsidiary is a party or by which any
of them
is bound obligating Spinco or any Spinco Subsidiary to issue, deliver or
sell,
or cause to be issued, delivered or sold, additional shares of capital stock,
Spinco Voting Debt or other voting securities of Spinco or any Spinco Subsidiary
or obligating Spinco or any Spinco Subsidiary to issue, grant, extend, redeem,
acquire or enter into any such security, option, warrant, convertible security,
call, right, commitment, agreement, arrangement, undertaking or Contract.
(d) There
are not, and immediately prior to the Effective Time there will not be, any
stockholder agreements, voting trusts or other Contracts (other than the
Distribution Agreement) to which Spinco is a party or by which it is bound
relating to voting or transfer of any shares of capital stock of Spinco.
6.3
Corporate Authority; No Violation.
(a) Spinco
has the corporate power and authority to enter into this Agreement and each
other Transaction Agreement to which it is a party and to carry out its
obligations hereunder and thereunder. The execution, delivery and performance
by
Spinco of this Agreement and each other Transaction Agreement to which it
is a
party and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by all requisite corporate action on the part of
Spinco, except for such further action by the Board of Directors of Spinco
required to effect the reclassification of the Spinco Common Stock, the
distribution of the Spinco Exchange Notes to AT Co. and the payment of the
Special Dividend, each as contemplated by the Distribution Agreement.
(b) This
Agreement has been duly executed and delivered by Spinco and, assuming the
due
authorization, execution and delivery by the Company and AT Co., constitutes
a
legal, valid and binding agreement of Spinco, enforceable against Spinco
in
accordance with its terms (except insofar as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws
affecting creditors’ rights generally, or by principles governing the
availability of equitable remedies). As of immediately prior to the Effective
Time, each other Transaction Agreement to which Spinco is a party will have
been
duly executed and delivered by Spinco and will, assuming the due authorization,
execution and delivery by the other parties thereto, constitute a legal,
valid
and binding agreement of Spinco, enforceable against Spinco in accordance
with
its terms (except insofar as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally, or by principles governing the availability of
equitable remedies).
(c) Neither
the execution and delivery by Spinco of this Agreement and each other
Transaction Agreement to which Spinco is a party, nor the consummation by
Spinco
of the transactions contemplated hereby or thereby, or performance by Spinco
of
the provisions hereof or thereof will (i) violate or conflict with
any
provision of Spinco’s Certificate of Incorporation or Bylaws; (ii) result in a
default (or an event that, with notice or lapse of time or both, would become
a
default) or give rise to any right of termination or buy-out by any third
party,
cancellation, amendment or acceleration of any obligation or the loss of
any
benefit under
29
any Contract to
which
Spinco or any Spinco Subsidiary is a party or by which Spinco or any Spinco
Subsidiary or any of the Spinco Assets is bound or affected; (iii) result
in the creation of a Lien, pledge, security interest, claim or other encumbrance
on any of the issued and outstanding shares of Spinco Common Stock or capital
stock of any Spinco Subsidiary or on any of the Spinco Assets pursuant to
any
Contract to which Spinco or any Spinco Subsidiary is a party or by which
Spinco
or any Spinco Subsidiary or any of the Spinco Assets is bound or affected;
or
(iv) assuming the consents and approvals contemplated by Section 6.3(d)
below are obtained, violate or conflict with any order, writ, injunction,
decree, Law, ordinance, rule or regulation applicable to Spinco or any Spinco
Subsidiary, or any of the properties, businesses or assets of any of the
foregoing, other than, in the case of each of clauses (i) through
(iv), any
such violation, conflict, default, right, loss or Lien which would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Spinco.
(d) Other
than in connection with or in compliance with (i) the provisions of
the
DGCL, (ii) the Securities Act, (iii) the Exchange Act, (iv) the
HSR
Act, (v) the Communications Act and FCC Rules, and (vi) the
approvals
set forth on Section 6.3(d) of the Spinco Disclosure Letter (collectively,
the “Spinco Approvals”), no authorization, consent or approval of, or
filing with, any Governmental Authority is necessary for the consummation
by
Spinco of the transactions contemplated by this Agreement and the other
Transaction Agreements to which Spinco is a party, except for such
authorizations, consents, approvals or filings that, if not obtained or made,
would not reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect on Spinco.
6.4
Financial Statements.
(a) AT
Co. and Spinco have previously made available to the Company:
(i)
the audited combined balance sheets of Spinco and its Subsidiaries at
December 31, 2002, 2003 and 2004, and the related audited combined
statements of operations, cash flows and stockholder’s equity for the fiscal
years ended December 31, 2002, 2003 and 2004, including the notes
thereto
(collectively, the “Audited Financial Statements”); and
(ii)
the unaudited interim combined balance sheet at September 30, 2005,
and the
related unaudited interim combined statements of operations, cash flows and
stockholder’s equity for the nine months ended September 30, 2005
(collectively, the “Interim Financial Statements” and, together with the
Audited Financial Statements, the “Spinco Financial Statements”).
(b) AT
Co. and Spinco will deliver to the Company promptly upon request any and
all
other financial other financial statements for Spinco and Spinco Subsidiaries
required to be included by Regulation S-X of the Exchange Act in the
Registration Statement and the Proxy Statement/Prospectus.
(c) The
Spinco Financial Statements fairly present in all material respects, and
any
other financial statements prepared in accordance with Section 6.4(b)
will
30
fairly present
in all
material respects, the financial position of the Spinco Business as of the
dates
thereof, and the results of operations and changes in cash flows, changes
in
stockholder’s equity or other information included therein for the periods or as
of the dates then ended, in each case except as otherwise noted therein and
subject, where appropriate, to normal year-end audit adjustments (none of
which
Spinco management expects to be material). The Spinco Financial Statements
and
such other financial statements have been or will be prepared in accordance
with
GAAP, and on a consistent basis, except as otherwise noted therein.
(d) As
of the date hereof, neither Spinco nor any of the Spinco Subsidiaries is
required to file any form, report, registration statement, prospectus or
other
document with the SEC.
(e) Except
for liabilities incurred in the ordinary course of business, consistent with
past practice, since the date of the balance sheet included in the Interim
Financial Statements (the “Interim Balance Sheet Date”) or as set forth
in the Spinco Financial Statements or the notes thereto, since the Interim
Balance Sheet Date, Spinco and the Spinco Subsidiaries have not incurred
any
liabilities or obligations that are of a nature that would be required to
be
disclosed on a consolidated balance sheet of Spinco and the Spinco Subsidiaries
or in the notes thereto prepared in conformity with GAAP, other than liabilities
or obligations that would not reasonably be expected to have, individually
or in
the aggregate, a Material Adverse Effect on Spinco.
(f) At
or prior to the Effective Time, Spinco will have (A) designed and
be
maintaining a system of internal controls over financial reporting (as defined
in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to
provide
reasonable assurances regarding the reliability of financial reporting with
respect to the Spinco Business and the preparation of financial statements
with
respect to the Spinco Business for external purposes in accordance with GAAP,
and (B) designed and be maintaining disclosure controls and procedures
(as
defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure
that material information that AT Co. is required to disclose with respect
to
the Spinco Business in the reports AT Co. is required to file or submit under
the Exchange Act is recorded, processed, summarized and reported within the
time
periods specified in the SEC’s rules and forms and is accumulated and
communicated to AT Co.’s management as appropriate to allow timely decisions
regarding required disclosure and to make the certifications of the principal
executive officer and principal financial officer of AT Co. required pursuant
to
Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act of 2002, as amended (the
“Xxxxxxxx-Xxxxx Act”).
6.5
Absence of Certain Changes or Events. Except as specifically contemplated
by this Agreement or the other Transaction Agreements, since the Interim
Balance
Sheet Date, the Spinco Business has been conducted in the ordinary course,
consistent with past practice, and there has not been any event, occurrence,
development or state of circumstances or facts that has had, or would reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect
on Spinco. From the Interim Balance Sheet Date to the date hereof, none of
AT
Co., Spinco or any of their respective Subsidiaries has taken any action
or
failed to take any action, which action or failure, as the case may be, would
constitute a breach of Section 8.2 if taken without the Company’s consent
after the date hereof.
31
6.6
Investigations; Litigation.
(a) There
is no investigation or review pending (or, to the knowledge of Spinco or
AT Co.,
threatened) by any Governmental Authority with respect to Spinco or any of
the
Spinco Subsidiaries, or with respect to AT Co. or any AT Co. Subsidiary relating
to the Spinco Business.
(b) There
are no actions, suits, inquiries, grievances, arbitrations, investigations
or
proceedings pending (or, to the knowledge of Spinco or AT Co., threatened)
against or affecting Spinco or any of the Spinco Subsidiaries or any of their
respective properties or otherwise affecting the Spinco Business at law or
in
equity and there are no orders, judgments or decrees of any Governmental
Authority, in each case which would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Spinco.
6.7
Compliance with Laws; Permits
(a) Spinco
and the Spinco Subsidiaries are, or on the Distribution Date will be, and
have
been since January 1, 2003, in compliance with all, and have received
no
notice of any violation (as yet unremedied) of any, Laws applicable to Spinco,
such Spinco Subsidiaries or any of their respective properties or assets
or
otherwise affecting the Spinco Business, except where such non-compliance,
default or violation has not had, and would not reasonably be expected to
have,
individually or in the aggregate, a Material Adverse Effect on Spinco.
Notwithstanding anything contained in this Section 6.7(a), no
representation or warranty shall be deemed to be made in this
Section 6.7(a) in respect of environmental, tax, employee benefits,
labor
or communications Laws, which are the subject of the representations and
warranties made in Sections 6.10, 6.11, 6.12, 6.13 and 6.21 of this
Agreement, respectively.
(b) Spinco
and the Spinco Subsidiaries are, or on the Distribution Date will be, in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Authority necessary for Spinco and the Spinco Subsidiaries
to own, lease and operate the Spinco Assets or to carry on the Spinco Business
as it is now conducted, or on the Distribution Date will be conducted (the
“Spinco Permits”), except where the failure to have any of the Spinco
Permits has not had, and would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Spinco. All Spinco Permits
are
in full force and effect, or immediately prior to the Effective Time will
be in
full force and effect, except where the failure to be in full force and effect
has not had, and would not reasonably be expected to have, individually or
in
the aggregate, a Material Adverse Effect on Spinco.
6.8
Proxy Statement/Prospectus; Registration Statement. None of the
information regarding AT Co. or its Subsidiaries, Spinco or the Spinco
Subsidiaries, or the Spinco Business, or the transactions contemplated by
this
Agreement or any other Transaction Agreement provided by AT Co. or Spinco
or any
of their respective Subsidiaries specifically for inclusion in, or incorporation
by reference into, the Proxy Statement/Prospectus or the Registration Statement
will, in the case of the definitive Proxy
32
Statement/Prospectus
or
any amendment or supplement thereto, at the time of the mailing of the
definitive Proxy Statement/Prospectus and any amendment or supplement thereto
and at the time of the Company Stockholders Meeting, or, in the case of the
Registration Statement, at the time it becomes effective, at the time of
the
Company Stockholders Meeting and at the Effective Time contain an untrue
statement of a material fact or omit to state any material fact required
to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading.
6.9
Information Supplied. All documents that Spinco is responsible for filing
with any Governmental Authority in connection with the transactions contemplated
hereby or by any other Transaction Agreement will comply in all material
respects with the provisions of applicable Law. All information supplied
or to
be supplied by Spinco in any document, other than the Registration Statement,
which is addressed in Section 6.8, filed with any Governmental Authority
in
connection with the transactions contemplated hereby and by the other
Transaction Agreements will be, at the time of filing, at the Distribution
Date
and at the Effective Time, true and correct in all material respects.
6.10
Environmental Matters. Except as would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Spinco:
(a) Spinco
and each of the Spinco Subsidiaries is, or on the Distribution Date will
be, and
since January 1, 2003 has been, in compliance with all applicable
Environmental Laws and Spinco and the Spinco Subsidiaries possess, or on
the
Distribution Date will possess, all Spinco Permits that are required under
applicable Environmental Laws and are, or on the Distribution Date will be,
in
compliance with the terms and conditions thereof;
(b) neither
Spinco nor any of the Spinco Subsidiaries has received written notice of,
or is
the subject of, any actions, causes of action, claims, investigations, demands
or notices by any person asserting an obligation on the part of Spinco or
the
Spinco Subsidiaries to conduct investigations or clean-up activities under
Environmental Law or alleging liability under or non-compliance with any
Environmental Law (collectively, “Environmental Claims”);
(c) neither
Spinco nor any of the Spinco Subsidiaries is subject to any indemnification
obligation with respect to Environmental Laws or Hazardous Materials, including
such obligations regarding businesses currently or formerly owned or operated
by
Spinco or any of the Spinco Subsidiaries or regarding properties formerly
owned
or leased by Spinco or any of the Spinco Subsidiaries;
(d) there
is no condition on, at, under or related to any property (including any release
of a Hazardous Material into the air, soil, surface water, sediment or ground
water at, under or migrating to or from such property) including related
to
property currently owned, leased or used by AT Co., Spinco or any of their
respective Subsidiaries or created by AT Co.’s, Spinco’s or any Spinco
Subsidiary’s operations that would give rise to liability for Spinco or any of
the Spinco Subsidiaries under applicable Environmental Laws, and, to AT Co.’s
and Spinco’s knowledge, the foregoing representation is true and correct with
regard to property formerly owned, leased or used by AT Co., Spinco or any
of
their respective Subsidiaries;
33
(e) neither
AT Co., Spinco nor any of their respective Subsidiaries has any liability
with
respect to asbestos in any product or within any building or structure;
(f) AT
Co. or Spinco has made available to the Company all material site assessments,
environmental compliance audits, and other documents relating to environmental
matters and relating to the Spinco Business, or the current or former properties
or facilities of Spinco and the Spinco Subsidiaries to the extent such documents
are in the possession, custody or control of AT Co., Spinco or any of their
Subsidiaries, including, without limitation, such documents relating to (i)
the
environmental conditions on, under or about the properties or assets currently
or formerly owned, leased, operated or used by Spinco, any of the Spinco
Subsidiaries or any predecessor in interest thereto and (ii) any Hazardous
Materials used, managed, handled, transported, treated, generated, stored,
discharged, emitted, or otherwise released by Spinco, any of the Spinco
Subsidiaries or any other Person on, under, about or from any of the properties
currently or formerly owned or leased by, or otherwise in connection with
the
use or operation of any of the properties owned or leased, or otherwise in
connection with the use or operation of any of the properties and assets
of
Spinco or any of the Spinco Subsidiaries, or their respective businesses
and
operations.
(g) This
Section 6.10 contains the sole and exclusive representations and warranties
of AT Co. and Spinco with respect to environmental matters, including matters
relating to Environmental Laws and Hazardous Materials.
6.11
Tax Matters.
(a) Except
as would not, individually or in the aggregate, reasonably be expected to
have a
Material Adverse Effect on Spinco or the Spinco Business, (i) all
Tax
Returns relating to AT Co. and its Subsidiaries, including Spinco and the
Spinco
Subsidiaries, or the Spinco Business required to be filed have been filed,
(ii) all such Tax Returns are or will be true and correct in all respects,
(iii) all Taxes shown as due and payable on such Tax Returns, and
all Taxes
(whether or not reflected on such Tax Returns) relating to AT Co. and its
Subsidiaries, including Spinco and the Spinco Subsidiaries, in respect of
the
Spinco Business or otherwise in respect of the Spinco Business required to
be
paid, have been paid, (iv) all Taxes relating to AT Co. or its
Subsidiaries, including Spinco and the Spinco Subsidiaries, in respect of
the
Spinco Business or otherwise in respect of the Spinco Business for any taxable
period (or a portion thereof) beginning on or prior to the Closing Date (which
are not yet due and payable) have been properly reserved for in the Spinco
Financial Statements and (v) AT Co. and its Subsidiaries, including
Spinco
and the Spinco Subsidiaries, have duly and timely withheld all Taxes required
to
be withheld and such withheld Taxes have been either duly and timely paid
to the
proper Taxing Authority or properly set aside in accounts for such purpose
and
will be duly and timely paid to the proper Taxing Authority.
(b) No
written agreement or other written document waiving or extending, or having
the
effect of waiving or extending, the statute of limitations or the period
of
assessment or collection of any Taxes relating to Spinco, any Spinco Subsidiary
or the Spinco Business, and no power of attorney with respect to any such
Taxes
has been filed or entered into with any Taxing Authority.
34
(c) (i) No
audits or other administrative proceedings or proceedings before any Taxing
Authority are presently pending with regard to any Taxes or Tax Return of
Spinco
or any Spinco Subsidiary or the Spinco Business, as to which any Taxing
Authority has asserted in writing any claim which, if adversely determined,
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Spinco, any Spinco Subsidiary or the Spinco Business,
and (ii) no Taxing Authority is now asserting in writing any deficiency
or
claim for Taxes or any adjustment to Taxes with respect to which Spinco or
any
Spinco Subsidiary or the Spinco Business, may be liable with respect to income
or other material Taxes which has not been fully paid or finally settled.
(d) Neither
Spinco nor any Spinco Subsidiary (i) is a party to or bound by or
has any
obligation under any Tax separation, sharing or similar agreement or arrangement
other than the Tax Sharing Agreement, and the AT Co. and Subsidiaries Tax
Sharing Policy currently in effect for taxable periods ending on or after
December 31, 1991 (which shall be terminated with respect to Spinco
and any
Spinco Subsidiary as of the Closing Date), (ii) is or has been a member
of
any consolidated, combined or unitary group for purposes of filing Tax Returns
or paying Taxes (other than a group of which AT Co. is the common parent
corporation) or (iii) has entered into a closing agreement pursuant
to
Section 7121 of the Code, or any predecessor provision or any similar
provision of state or local law.
(e) None
of the Spinco Assets is subject to any Tax lien (other than liens for Taxes
that
are not yet due and payable.
(f) Section 6.11
of the Spinco Disclosure Letter lists all foreign jurisdictions in which
Spinco
or any Spinco Subsidiary files a material Tax Return.
(g) Neither
Spinco nor any Spinco Subsidiary has agreed to make or is required to make
any
adjustment for a taxable period ending after the Effective Time under Section
481(a) of the Code by reason of a change in accounting method or otherwise,
except where such adjustments have not had, and could not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on Spinco
or the Spinco Business.
(h) Neither
Spinco nor any Spinco Subsidiary has constituted either a “distributing
corporation” or a “controlled corporation” (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock (other
than
the Distribution) qualifying for tax-free treatment under Section 355
of
the Code (i) in the two years prior to the date of this Agreement
or
(ii) in a distribution that could otherwise constitute part of a “plan” or
“series of related transactions” (within the meaning of Section 355(e) of the
Code) in connection with the Merger.
(i) None
of AT Co., Spinco, and their respective Subsidiaries has taken or agreed
to take
any action that is reasonably likely to (nor is any of them aware of any
agreement, plan or other circumstance that would) prevent the Tax-Free Status
of
the Transactions.
(j) None
of AT Co., Spinco, and any of their Subsidiaries in respect of the Spinco
Business has engaged in any listed transaction, or any reportable transaction
the
35
principal purpose
of
which was tax avoidance, within the meaning of Sections 6011, 6111
and 6112
of the Code.
6.12
Benefit Plans.
(a) Section 6.12(a)
of the Spinco Disclosure Letter lists each “employee benefit plan” (as defined
in Section 3(3) of ERISA), and all other benefit, bonus, incentive,
deferred compensation, stock option (or other equity-based), severance, change
in control, welfare (including post-retirement medical and life insurance)
and
fringe benefit plans, whether or not subject to ERISA and whether written
or
oral, sponsored, maintained or contributed to or required to be contributed
to
by Spinco or any of the Spinco Subsidiaries, to which Spinco or any of the
Spinco Subsidiaries will be a party on the Distribution Date, as provided
in the
Employee Benefits Agreement, or in which any Person who is currently, has
been
or, on or prior to the Effective Time, is expected to become an employee
of
Spinco or any of the Spinco Subsidiaries (a “Spinco Employee”) will be a
participant on the Distribution Date, or with respect to which Spinco or
any of
the Spinco Subsidiaries has any material liability (the “Spinco Benefit
Plans”).
(b) No
material liability under Title IV (including Sections 4069 and 4212(c)
of
ERISA) or Section 302 of ERISA has been or as of the Effective Time
will
have been incurred by Spinco, any of the Spinco Subsidiaries or any ERISA
Affiliate of any of them, and no condition exists that would reasonably be
expected to result in Spinco or any of the Spinco Subsidiaries incurring
any
such liability, other than liability for premiums due the PBGC as of the
Distribution Date. The present value of accrued benefits under each Spinco
Benefit Plan that is subject to Title IV of ERISA, determined based upon
the
actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such plan’s actuary with respect to such plan, will not
exceed the then current value of the assets of such plan allocable to such
accrued benefits.
(c) No
Spinco Benefit Plan is or will be at the Effective Time a “multiemployer plan,”
as defined in Section 3(37) of ERISA and (ii) none of Spinco,
any of
the Spinco Subsidiaries or any ERISA Affiliate of any of them has made or
suffered or will as of the Effective Time have made or suffered a “complete
withdrawal” or a “partial withdrawal,” as such terms are respectively defined in
Section 4203 and 4205 of ERISA, the liability for which has not been
satisfied in full.
(d) Each
Spinco Benefit Plan has been or for periods on or prior to the Distribution
Date
will have been operated and administered in all material respects in accordance
with its terms and applicable Law, including ERISA and the Code. All
contributions and premium payments required to be made with respect to any
Spinco Benefit Plan have now been, or on the Distribution Date will have
been,
timely made, except as may otherwise be specifically permitted under the
terms
of the Employee Benefits Agreement. There are no pending or, to the knowledge
of
Spinco or AT Co., threatened claims by, on behalf of or against any of the
Spinco Benefit Plans in effect as of the date hereof or any assets thereof,
other than routine benefit claim matters, that, if adversely determined,
would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Spinco, and no matter is pending (other than routine
qualification determination filings, copies of which have been furnished
to the
Company
36
or will be promptly
furnished to the Company when made) before the IRS, the United States Department
of Labor or the PBGC with respect to any Spinco Benefit Plan.
(e) Subject
to the initial qualification determination filings to be made to the Internal
Revenue Service (copies of which will be promptly furnished to the Company
when
made), each Spinco Benefit Plan intended to be “qualified” within the meaning of
Section 401(a) of the Code is, or on the Distribution Date will be, so qualified
and the trusts maintained thereunder are, or on the Distribution Date will
be,
exempt from taxation under Section 501(a) of the Code, each trust maintained
under any Spinco Benefit Plan intended to satisfy the requirements of
Section 501(c)(9) of the Code has, or on the Distribution Date will
have,
satisfied such requirements and, in either such case, no event has occurred
or
condition is known to exist that would reasonably be expected to have a material
adverse effect on such tax-qualified status for any such Spinco Benefit Plan
or
any such trust.
(f) No
Spinco Benefit Plan provides, or on the Distribution Date will provide, medical,
surgical, hospitalization, death or similar benefits (whether or not insured)
for employees or former employees of Spinco or any Spinco Subsidiary or for
any
other Person for periods extending beyond their retirement or other termination
of service, other than (i) coverage mandated by applicable Law,
(ii) death benefits under any “pension plan,” or (iii) benefits the
full cost of which is borne by the current or former employee (or his
beneficiary).
(g) Except
as contemplated by this Agreement and each other Transaction Agreement, no
Spinco Benefit Plan or employment arrangement, no similar plan or arrangement
sponsored or maintained by AT Co. in which any Spinco Employee is, or on
the
Distribution Date will be, a participant and no contractual arrangement between
Spinco and any third party exists, or on the Distribution Date will exist,
that
could result in the payment to any current, former or future director, officer,
stockholder or employee of Spinco or any of the Spinco Subsidiaries, or of
any
entity the assets or capital stock of which have been acquired by Spinco
or a
Spinco Subsidiary, of any money or other property or rights or accelerate
or
provide any other rights or benefits to any such individual as a result of
the
consummation of the transactions contemplated by the Transaction Agreements
(including the Distribution), whether or not (a) such payment, acceleration
or provision would constitute a “parachute payment” (within the meaning of
Section 280G of the Code) or (b) some other subsequent action
or event
would be required to cause such payment, acceleration or provision to be
triggered.
6.13
Labor Matters. Except to the extent listed in Section 6.13 of the
Spinco Disclosure Letter, neither Spinco nor any of the Spinco Subsidiaries
is a
party to, or bound by, any collective bargaining agreement or other Contract
with employees, a labor union or labor organization. Except for such matters
which have not had, and would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Spinco, (a) as of
the
date hereof, (i) there are no strikes or lockouts with respect to
Spinco
Employees, and (ii) there are not now, and to the knowledge of Spinco
or AT
Co., since January 1, 2003 there has not been, any union organizing
effort
pending or threatened against Spinco or any of the Spinco Subsidiaries;
(b) there is no unfair labor practice, charge, complaint, labor dispute
(other than routine individual grievances) or labor arbitration proceeding
pending or, to the knowledge of Spinco or AT Co., threatened against Spinco
or
any of the Spinco Subsidiaries; (c) there is no slowdown, or work
stoppage
in effect or, to the knowledge of Spinco or AT Co., threatened with
37
respect to Spinco
Employees; and (d) Spinco and the Spinco Subsidiaries are in compliance
with all applicable Laws respecting (i) employment and employment
practices, (ii) terms and conditions of employment and wages and hours,
(iii) collective bargaining and labor relations practices,
(iv) layoffs, (v) immigration, and (vi) the payment
of taxes and
other withholdings. As of the date hereof, neither Spinco nor any of the
Spinco
Subsidiaries has any liabilities under the WARN Act as a result of any action
taken by Spinco and that would reasonably be expected to have, individually
or
in the aggregate, a Material Adverse Effect on Spinco.
6.14
Intellectual Property Matters. Section 6.14 of the Spinco Disclosure
Letter contains a complete and accurate list of (i) all patented or
registered Intellectual Property Rights (and pending applications therefore)
owned by Spinco or any of the Spinco Subsidiaries, and (ii) all other
patented or registered Intellectual Property Rights (and pending applications
therefor) used by Spinco or any of the Spinco Subsidiaries, in each case,
to the
extent material to the Spinco Business taken as a whole. Spinco and the Spinco
Subsidiaries own and possess, or will immediately prior to the Effective
Time
own and possess, free and clear of any Liens, except Permitted Encumbrances,
all
right, title and interest in and to, or have, or will immediately prior to
the
Effective Time have, adequate licenses or other valid and enforceable rights
to
use, all material Intellectual Property Rights used or held for use in
connection with the Spinco Business as currently conducted and as proposed
to be
conducted immediately prior to the Effective Time (including in connection
with
services provided by Spinco and the Spinco Subsidiaries to third parties)
(the
“Spinco IP Rights”), except where the failure to own or possess such
items would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Spinco. To the best of AT Co.’s or
Spinco’s knowledge, there is no assertion or claim challenging the validity,
enforceability, ownership or use of any of the foregoing that would reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect
on Spinco. The conduct of the Spinco Business as currently conducted and
proposed to be conducted immediately prior to the Effective Time does not
infringe, misappropriate or otherwise conflict in any way with any Intellectual
Property Rights of any third party that would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Spinco. To
the
best of AT Co.’s or Spinco’s knowledge, there are no infringements or
misappropriations of, or other conflicts with, any Intellectual Property
Rights
owned by or licensed by or to Spinco or any Spinco Subsidiary that would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Spinco. The transactions contemplated by this Agreement
shall
not impair the right, title or interest of Spinco or any Spinco Subsidiary
in
and to the Spinco IP Rights, and all of the Spinco IP Rights shall be owned
or
available for use by the Surviving Corporation immediately after the Effective
Time on terms and conditions identical, in all material respects, to those
under
which Spinco and the Spinco Subsidiaries owned or used the Spinco IP Rights
immediately prior to the Effective Time, except where such impairment or
failure
to be owned or available for use would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Spinco.
6.15
Material Contracts.
(a)
Except for this Agreement, each other Transaction Agreement, the Spinco Credit
Agreement, the Indenture governing the Spinco Notes, the Voting Agreement,
the
Spinco Benefit Plans and except as filed as an exhibit to any AT Co. SEC
Document or as disclosed in Section 6.15 of the Spinco Disclosure
Letter,
neither AT Co. nor any of its
38
Subsidiaries with
respect to the Spinco Business is, and neither Spinco nor any Spinco Subsidiary
will be immediately prior to the Effective Time a party to or bound by any
“material contract” (as such term is defined in item 601(b)(10) of
Regulation S-K of the SEC) (all contracts of the type described in
this
Section 6.15 being referred to herein as “Spinco Material
Contracts”).
(b) Neither
Spinco nor any Spinco Subsidiary nor AT Co. nor any AT Co. Subsidiary is
in
breach of or default under the terms of any Spinco Material Contract where
such
breach or default has had, or would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Spinco. To the knowledge
of
Spinco or AT Co. and their respective Subsidiaries, no other party to any
Spinco
Material Contract is in breach of or in default under the terms of any Spinco
Material Contract where such breach or default has had, or would reasonably
be
expected to have, individually or in the aggregate, a Material Adverse Effect
on
Spinco. Each Spinco Material Contract is a valid and binding obligation of
Spinco or any Spinco Subsidiary or AT Co. or any AT Co. Subsidiary which
is a
party thereto and, to the knowledge of Spinco or AT Co. and their respective
Subsidiaries, of each other party thereto, and is in full force and effect,
except that (i) such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws, now or hereafter
in effect, relating to creditors’ rights generally and (ii) equitable
remedies of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court
before which any proceeding therefor may be brought.
6.16
Brokers or Finders. Except for Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated, XX Xxxxxx Securities Inc. and Xxxxxxxx, Inc., no agent, broker,
investment banker, financial advisor or other similar Person is or will be
entitled, by reason of any agreement, act or statement by Spinco or any Spinco
Subsidiaries, directors, officers or employees, to any financial advisory,
broker’s, finder’s or similar fee or commission, to reimbursement of expenses or
to indemnification or contribution in connection with any of the transactions
contemplated by this Agreement or each other Transaction Agreement.
6.17
Board and Stockholder Approval. The Boards of Directors of AT Co. and
Spinco, in each case, at a meeting duly called, have unanimously approved
this
Agreement and declared it advisable. As of the date hereof, the sole stockholder
of Spinco is AT Co. Immediately after execution of this Agreement, AT Co.
will
approve and adopt (the “Spinco Stockholder Approval”) at a meeting of AT
Co., as Spinco’s sole stockholder, all aspects of this Agreement and other
Transaction Agreements and the transactions contemplated hereby and thereby
which require the consent of Spinco’s stockholders under the DGCL, the NYSE
rules, Spinco’s Certificate of Incorporation or Spinco’s Bylaws. The approval of
AT Co.’s stockholders is not required to effect the transactions contemplated by
the Distribution Agreement, this Agreement or the other Transaction Agreements.
Upon obtaining the Spinco Stockholder Approval, the approval of Spinco’s
stockholders after the Distribution Date will not be required to effect the
transactions contemplated by this Agreement, including the Merger, unless
this
Agreement is amended in accordance with Section 251(d) of the DGCL after
the
Distribution Date and such approval is required, solely as a result of such
amendment, under the DGCL, Spinco’s Certificate of Incorporation or Spinco’s
Bylaws or by the IRS.
39
6.18
Assets.
(a) After
giving effect to the Contribution and the other transactions described in
or
contemplated by the Distribution Agreement, Spinco, together with the Spinco
Subsidiaries, will have, in all material respects, good and valid title (and,
with respect to the Owned Real Property and Spinco Leasehold Improvements,
good
and marketable title) or, in the case of the Leased Real Property, valid
leasehold interests in, all of the Spinco Assets, except where the failure
to
have such good and valid or marketable title, or valid leasehold interest,
would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Spinco.
(b) At
the Effective Time, the Assets of Spinco and the Spinco Subsidiaries, take
together with the services available from AT Co. under the Transition Services
Agreement, the Assets subject to the Shared Assets Agreement and the Contracts
subject to the Shared Contracts Agreement, will be sufficient for the operation
of the Spinco Business in all material respects as currently conducted and
as
proposed to be conducted at the Effective Time.
6.19
Spinco Real Property.
(a) Section 6.19(a)
of the Spinco Disclosure Letter sets forth the address and description of
all
Real Property that is, or following the Contribution will be, Spinco Owned
Real
Property, the loss of which would be material and adverse to the Spinco Business
as a whole. With respect to such Spinco Owned Real Property: (A) except
as
set forth in Section 6.19(a) of the Spinco Disclosure Letter, Spinco
or
Spinco Subsidiaries have not leased or otherwise granted to any Person the
right
to use or occupy such Spinco Owned Real Property or any material portion
thereof; and (B) other than the right of the Company pursuant to this Agreement,
there are no outstanding options, rights of first offer or rights of first
refusal to purchase such Spinco Owned Real Property or any material portion
thereof or interest therein.
(b) Section 6.19(b)
of the Spinco Disclosure Letter sets forth the address of all Spinco Leased
Real
Property, the loss of which would be material and adverse to the Spinco Business
as a whole, and a true and complete list of all Spinco Leases for such
properties (including all amendments, extensions, renewals, guaranties and
other
agreements with respect thereto) for each such Spinco Leased Real Property.
Spinco has made available to the Company a true and complete copy of each
such
Spinco Lease document, and in the case of any such Lease that is an oral
Lease,
a written summary of the material terms of such Lease. Except as set forth
in
Section 6.19(b) of the Spinco Disclosure Letter, or as would not be
reasonably expected to have a Material Adverse Effect on Spinco, with respect
to
each such Spinco Lease: (i) Spinco or Spinco’s Subsidiaries’ possession and
quiet enjoyment of the Spinco Leased Real Property under such Spinco Lease
has
not been disturbed, and, to Spinco’s knowledge, there are no disputes with
respect to such Spinco Lease; (ii) neither Spinco nor Spinco Subsidiaries
owe any material brokerage commissions or finder’s fees with respect to such
Spinco Lease; (iii) Spinco or Spinco Subsidiaries have not subleased,
licensed or otherwise granted any Person the right to use or occupy such
Spinco
Leased Real Property or any portion thereof; (iv) Spinco or Spinco
Subsidiaries have not collaterally assigned or granted any other security
interest in such Spinco Lease or any interest therein; and (v) there
are no
Liens on the estate or interest created by such Spinco Lease other than
Permitted Encumbrances.
40
(c) Except
as would not be reasonably expected to have a Material Adverse Effect on
Spinco,
the Spinco Leasehold Improvements and all buildings, structures, improvements,
fixtures, building systems and equipment, and all components thereof, included
in the Spinco Owned Real Property are in good condition and repair and
sufficient for the operation of the Spinco Business.
6.20
Communications Regulatory Matters.
(a) Spinco
and the Spinco Subsidiaries hold, or on the Distribution Date will hold,
all
approvals, authorizations, certificates and licenses issued by the FCC, state
public service or public utility commissions (the “State Regulators”) set
forth in Section 6.19(a) of the Spinco Disclosure Letter, and all
other
material regulatory permits, approvals, licenses, and other authorizations,
including but not limited to franchises, ordinances and other agreements
granting access to public rights of way, issued or granted to Spinco or any
Spinco Subsidiary by a state or federal agency or commission or other federal,
state or local or foreign regulatory bodies regulating competition and
telecommunications businesses (the “Spinco Licenses”) that are required
for the conduct of the Spinco Business, as presently conducted and as proposed
to be conducted, except such Spinco Licenses the failure of which to so hold
would not reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect on Spinco.
(b) Each
Spinco License is, or will be on the Distribution Date, valid and in full
force
and effect and has not been, or will not have been, suspended, revoked,
cancelled or adversely modified, except where the failure to be in full force
and effect, or the suspension, revocation, cancellation or modification of
which
has not had or would not reasonably be expected to have, individually or
in the
aggregate, a Material Adverse Effect on Spinco. No Spinco License is subject
to
(i) any conditions or requirements that have not been imposed generally
upon licenses in the same service, unless such conditions or requirements
would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Spinco, or (ii) any pending regulatory proceeding
(other
than those affecting the wireline industry generally) or judicial review
before
a Governmental Authority, unless such pending regulatory proceedings or judicial
review would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Spinco. Neither AT Co. nor Spinco
has
knowledge of any event, condition or circumstance that would preclude any
Spinco
License from being renewed in the ordinary course (to the extent that such
Spinco License is renewable by its terms), except where the failure to be
renewed has not had or would not reasonably be expected to have, individually
or
in the aggregate, a Material Adverse Effect on Spinco.
(c) The
licensee of each Spinco License is, or on the Distribution Date will be in
compliance with each Spinco License and has fulfilled and performed, or will
fulfill or perform, all of its material obligations with respect thereto,
including all reports, notifications and applications required by the
Communications Act or the rules, regulations, policies, instructions and
orders
of the FCC (the “FCC Rules”) or similar rules, regulations, policies,
instructions and orders of State Regulators and the payment of all regulatory
fees, except (i) for exemptions, waivers or similar concessions or
allowances and (ii) where such failure to be in compliance, fulfill
or
perform its obligations or pay such fees or contributions has not had, or
41
would not reasonably
be
expected to have, individually or in the aggregate, a Material Adverse Effect
on
Spinco.
(d) Spinco
or a wholly owned Spinco Subsidiary owns, or on the Distribution Date will
own,
one hundred percent (100%) of the equity and controls, or on the Distribution
Date will control, one hundred percent (100%) of the voting power and
decision-making authority of each licensee of the Spinco Licenses, except
where
the failure to own such equity or control such voting power and decision-making
authority of such licensees would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Spinco.
6.21
Spinco Operations. Spinco is a direct, wholly owned Subsidiary of AT Co.
that, subject to the terms of the Distribution Agreement, following the
Contribution will own, directly or indirectly, the Spinco Assets, and will
have
assumed, directly or indirectly, the Spinco Liabilities, all as provided
in the
Distribution Agreement.
6.22
Opinion of Spinco Financial Advisor. Spinco and AT Co., as the sole
stockholder of Spinco, have received the written opinions of Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated, XX Xxxxxx Securities Inc. and Xxxxxxxx,
Inc., to the effect that, as of the date hereof the Exchange Ratio (as defined
therein) is fair from a financial point of view to holders of AT Co. Common
Stock who become holders of Spinco Common Stock in the Distribution. Spinco
has
previously delivered a copy of such opinion to the Company.
6.23
Company Common Stock. Neither AT Co. nor Spinco owns (directly or
indirectly, beneficially or of record) nor is a party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting
or
disposing of, in each case, any shares of capital stock of the Company (other
than as contemplated by this Agreement).
6.24
Affiliate Transactions. Except as specifically provided in this Agreement
or any of the other Transaction Agreements or as disclosed in the AT Co.
SEC
Documents, there are no transactions or Contracts of the type that would
be
required to be disclosed by Spinco under Item 404 of Regulation S-K
if
Spinco were a company subject to such Item between or among (a) AT
Co.,
Spinco or any Spinco Subsidiary, on the one hand, and (b) Xxxxxxx
X.
Xxxxxxx or Xxxxxxx X. Xxxxxx, on the other hand.
ARTICLE
VII
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except
as disclosed in the
corresponding section of the Disclosure Letter delivered by the Company to
AT
Co. and Spinco immediately prior to the execution of this Agreement and signed
by an authorized officer of the Company (the “Company Disclosure Letter”)
(it being agreed that disclosure of any item in any section of the Company
Disclosure Letter shall be deemed disclosure with respect to any other section
of this Agreement to which the relevance of such item is reasonably apparent
on
its face), the Company represents and warrants to AT Co. and Spinco as follows:
42
7.1
Organization, Qualification.
(a) The
Company is a corporation duly organized, validly existing and in good standing
under the Laws of Delaware, has all requisite power and authority to own,
lease
and operate its properties and assets and to carry on its business as presently
conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority would not reasonably be expected
to
have, individually or in the aggregate, a Material Adverse Effect on the
Company, and is duly qualified and licensed to do business and is in good
standing in each jurisdiction in which the ownership or leasing of its property
or the conduct of its business requires such qualification, except for
jurisdictions in which the failure to be so qualified or to be in good standing
would not reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect on the Company. The copies of the Company’s Certificate
of Incorporation and Bylaws and the Certificate of Incorporation and Bylaws
(or
analogous governing documents) of any Company Subsidiary that is a Significant
Subsidiary of the Company, previously made available to AT Co. and Spinco
are
complete and correct copies of such documents as in full force and effect
on the
date hereof.
(b) Section 7.1(b)
of the Company Disclosure Letter sets forth a list of the Company Subsidiaries
and their respective jurisdictions of incorporation or organization, together
with a designation of those Company Subsidiaries constituting Significant
Subsidiaries of the Company.
7.2
Capital Stock and Other Matters.
(a) The
authorized capital stock of the Company consists of 200,000,000 shares of
Company Common Stock and 20,000,000 shares of preferred stock of the Company.
At
the close of business on December 6, 2005, (i) 71,130,634 shares
of
Company Common Stock were issued and outstanding, 342,469 shares of Company
Common Stock were reserved for issuance pursuant to the Company Stock Plans;
(ii) 3,400 shares of Company Common Stock were held by the Company
in its
treasury or by its Subsidiaries; and (iii) no shares of preferred
stock of
the Company were issued and outstanding. All of the issued and outstanding
shares of Company Common Stock are validly issued, fully paid and nonassessable
and free of preemptive rights.
(b) No
bonds, debentures, notes or other indebtedness of the Company or any of the
Company Subsidiaries having the right to vote (or convertible into or
exercisable for securities having the right to vote) on any matters on which
holders of shares of capital stock of the Company (including Company Common
Stock) may vote (“Company Voting Debt”) are, or at the Distribution Date
will be, issued or outstanding.
(c) Except
as set forth in Section 7.2(a) above or as set forth in Section 7.2(c)
of the Company Disclosure Letter, there are no outstanding securities, options,
warrants, convertible securities, calls, rights, commitments, agreements,
arrangements, undertakings or Contracts of any kind to which the Company
or any
of the Company Subsidiaries is a party or by which any of them is bound
obligating the Company or any of the Company Subsidiaries to issue, deliver
or
sell, or cause to be issued, delivered or sold, additional shares of Company
Common Stock, Company Voting Debt or other voting securities of the Company
or
any of the Company
43
Subsidiaries or
obligating the Company or any of the Company Subsidiaries to issue, grant,
extend, redeem, acquire or enter into any such security, option, warrant,
convertible security, call, right, commitment, agreement, arrangement,
undertaking or Contract.
(d) Except
for that certain Securityholders Agreement, dated February 14, 2005,
by and
among the Company and certain of its stockholders, there are no stockholder
agreements, voting trusts or other Contracts to which the Company is a party
or
by which it is bound relating to voting or transfer of any shares of capital
stock of the Company.
7.3
Corporate Authority; No Violation.
(a) The
Company has the corporate power and authority to enter into this Agreement,
and
subject to obtaining the Requisite Approval, to carry out its obligations
hereunder. The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby have
been
duly authorized by all requisite corporate action on the part of the Company,
subject to obtaining the Requisite Approval. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by AT Co., and Spinco, constitutes a legal, valid
and
binding agreement of the Company, enforceable against the Company in accordance
with its terms (except insofar as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws
affecting creditors’ rights generally, or by principles governing the
availability of equitable remedies).
(b) Neither
the execution and delivery by the Company of this Agreement nor the consummation
by the Company of the transactions contemplated hereby or compliance by the
Company with any of the provisions hereof will (i) violate or conflict
with
any provisions of the Company’s Certificate of Incorporation or Bylaws;
(ii) result in a default (or an event that, with notice or lapse of
time or
both, would become a default) or give rise to any right of termination by
any
third party, cancellation, amendment or acceleration of any obligation or
the
loss of any benefit under, any Contract to which the Company or any of the
Company Subsidiaries is a party or by which the Company or any of the Company
Subsidiaries is bound or affected; (iii) result in the creation of
a Lien,
pledge, security interest, claim or other encumbrance on any of the issued
and
outstanding shares of Company Common Stock or on any of the assets of the
Company or any of the Company Subsidiaries pursuant to any Contract to which
the
Company or any of the Company Subsidiaries is a party or by which the Company
or
the Company Subsidiaries is bound or affected; or (iv) assuming the
consents and approvals contemplated by Section 7.3(c) below are obtained,
violate or conflict with any order, writ, injunction, decree, Law, ordinance,
rule or regulation applicable to the Company or any of the Company Subsidiaries,
or any of the properties, business or assets of any of the foregoing, other
than, in the case of each of clauses (i) through (iv), any such violation,
conflict, default, right, loss or Lien which would not reasonably be expected
to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
(c) Other
than in connection with or in compliance with (i) the provisions of
the
DGCL, (ii) the Securities Act, (iii) the Exchange Act, (iv) the
HSR
Act, (v) the Communications Act and applicable rules and regulations
thereunder, (vi) the approvals set forth on Section 7.3(c)
of the
Company Disclosure Letter; (vii) the rules and regulations of the
NYSE,
44
and (viii) the
Requisite Approval (collectively, the “Company Approvals”), no
authorization, consent or approval of, or filing with any Governmental Authority
is necessary for the consummation by the Company of the transactions
contemplated by this Agreement, except for such authorizations, consents,
approvals or filings that, if not obtained or made, would not reasonably
be
expected to have, individually or in the aggregate, a Material Adverse Effect
on
the Company.
7.4
Company Reports and Financial Statements.
(a) The
Company has previously made available to Spinco complete and correct copies
of:
(i)
Company’s Annual Reports on Form 10-K filed with the SEC under the Exchange Act
for the years ended December 31, 2004, and the Company’s audited
consolidated balance sheet at December 31, 2003 and 2002, and the
related
audited consolidated statements of operations, cash flows and stockholder’s
equity for the fiscal years ended December 31, 2003 and 2002 (the
“Company Pre-IPO Financial Statements”);
(ii)
Company’s Quarterly Reports on Form 10-Q filed with the SEC under the Exchange
Act for the quarters ended March 31, 2005, June 30, 2005 and
September 30, 2005;
(iii)
each definitive proxy statement filed by the Company with the SEC under the
Exchange Act prior to the date hereof;
(iv)
all current reports on Form 8-K filed by the Company with the SEC under the
Exchange Act prior to the date hereof; and
(v)
each other form, report, schedule, registration statement and definitive
proxy
statement filed by the Company or any of its Subsidiaries with the SEC prior
to
the date hereof (collectively, and together with the items specified in clauses
(i) through (iv) above, the “Company SEC Documents”).
(b) As
of their respective dates, the Company SEC Documents complied in all material
respects, and each other form, report, schedule, registration statement and
definitive proxy statement filed by the Company or any of its Subsidiaries
after
the date hereof and prior to the Effective Time (the “Additional Company SEC
Documents”) will comply in all material respects, with the requirements of
the Securities Act or the Exchange Act, as the case may be, and none of such
Company SEC Documents when filed contained, or will contain, an untrue statement
of a material fact or omitted, or will omit, to state a 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 audited
consolidated financial statements and unaudited consolidated interim financial
statements included in the Company SEC Documents and the Additional Company
SEC
Documents and the Company Pre-IPO Financial Statements fairly present in
all
material respects, or will fairly present in all material respects, the
financial position of the Company and its consolidated Subsidiaries as of
the
respective dates thereof and the results of operations and changes in cash
flows, changes in stockholder’s equity or other
45
information included
therein for the periods or as of the respective dates then ended, subject,
where
appropriate, to normal year-end audit adjustments (none of which Company
management expects to be material), in each case in accordance with past
practice and GAAP, consistently applied, during the periods involved (except
as
otherwise stated therein). Since its initial public offering in
February 2005, the Company has timely filed all reports, registration
statements and other filings required to be filed with the SEC under the
rules
and regulations of the SEC. Except as set forth in the Company SEC Documents
filed prior to the date hereof or as set forth in Section 7.4 of the
Company Disclosure Letter or liabilities incurred in the ordinary course
of
business, consistent with past practice, since the Interim Balance Sheet
Date,
the Company and its Subsidiaries have not incurred any liability or obligation
that is of a nature that would be required to be disclosed on a consolidated
balance sheet of the Company and its Subsidiaries or in the footnotes thereto
prepared in conformity with GAAP, other than liabilities or obligations that
would not reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect on the Company.
(c) The
Company and the Company Subsidiaries have designed and maintain a system
of
internal controls over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurances
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP. The Company
(A) has designed and maintains disclosure controls and procedures
(as
defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure
that material information required to be disclosed by the Company in the
reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and
forms and is accumulated and communicated to the Company’s management as
appropriate to allow timely decisions regarding required disclosure and to
make
the certifications of the principal executive officer and principal financial
officer of the Company required pursuant to Sections 302 and 906 of
the
Xxxxxxxx-Xxxxx Act and (B) has disclosed, based on its most recent
evaluation of such disclosure controls and procedures prior to the date hereof
to the Company’s auditors and the audit committee of the Company’s Board of
Directors, (x) any significant deficiencies and material weaknesses
in the
design or operation of internal controls over financial reporting that are
reasonably likely to adversely affect in any material respect the Company’s
ability to record, process, summarize and report financial information with
respect to the Company and (y) 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. The Company has made
available to AT Co. and Spinco any such disclosure made by management to
the
Company’s auditors and the audit committee of the Company’s Board of Directors.
7.5
Absence of Certain Changes or Events. Except as specifically contemplated
by this Agreement, since the Interim Balance Sheet Date, each of the Company
and
the Company Subsidiaries has conducted its business in the ordinary course,
consistent with past practice, and there has not been any event, occurrence,
development or state of circumstances or facts that has had, or would reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect
on the Company. From the Interim Balance Sheet Date to the date hereof, none
of
the Company or any of the Company Subsidiaries has taken any action or failed
to
take any action, which action or failure, as the case may be, would constitute
a
breach of Section 8.1 if taken without the consent of AT Co. and Spinco
after the date hereof.
46
7.6
Investigations; Litigation. Except as described in the Company SEC
Documents:
(a) There
is no investigation or review pending (or, to the knowledge of the Company,
threatened) by any Governmental Authority with respect to the Company or
any of
the Company Subsidiaries.
(b) There
are no actions, suits, inquiries, grievances, arbitrations, investigations
or
proceedings pending (or, to the knowledge of the Company, threatened) against
or
affecting the Company or any of the Company Subsidiaries or any of their
respective properties at law or in equity before and there are no orders,
judgments or decrees of or before any Governmental Authority, in each case
which
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
7.7
Compliance with Laws; Permits.
(a) The
Company and the Company Subsidiaries are, and since January 1, 2003
have
been, in compliance with all, and have received no notice of any violation
(as
yet unremedied) of any, Laws, applicable to the Company, such Company
Subsidiaries or any of their respective properties or assets, except where
such
non-compliance, default or violation has not had, and would not reasonably
be
expected to have, individually or in the aggregate, a Material Adverse Effect
on
the Company. Notwithstanding anything contained in this Section 7.7(a),
no
representation or warranty shall be deemed to be made in this
Section 7.7(a) in respect of environmental, tax, employee benefits,
labor
or communications Laws matters, which are the subject of the representations
and
warranties made in Sections 7.10, 7.11, 7.12, 7.13 and 7.15 of this
Agreement, respectively.
(b) The
Company and the Company Subsidiaries are in possession of all franchises,
grants, authorizations, licenses, permits, easements, variances, exceptions,
consents, certificates, approvals and orders of any Governmental Authority
necessary for the Company and the Company Subsidiaries to own, lease and
operate
their properties and assets or to carry on their businesses as they are now
being conducted (the “Company Permits”), except where the failure to have
any of the Company Permits has not had, and would not reasonably be expected
to
have, individually or in the aggregate, a Material Adverse Effect on the
Company. All Company Permits are in full force and effect, except where the
failure to be in full force and effect has not had, and would not reasonably
be
expected to have, individually or in the aggregate, a Material Adverse Effect
on
the Company.
7.8
Proxy Statement/Prospectus; Registration Statement. None of the
information regarding the Company or the Company Subsidiaries or the
transactions contemplated by this Agreement provided by the Company specifically
for inclusion in, or incorporation by reference into, the Proxy
Statement/Prospectus or the Registration Statement will, in the case of the
definitive Proxy Statement/Prospectus or any amendment or supplement thereto,
at
the time of the mailing of the definitive Proxy Statement/Prospectus and
any
amendment or supplement thereto, and at the time of the Company Stockholders
Meeting, or, in the case of the Registration Statement, at the time it becomes
effective, at the time of the Company Stockholders Meeting and at the Effective
Time, contain an untrue statement of a
47
material fact or
omit
to state any material fact required to be stated therein or necessary in
order
to make the statements therein, in the light of the circumstances under which
they are made, not misleading. The Registration Statement will comply in
all
material respects with the provisions of the Securities Act and the Exchange
Act, as the case may be, and the rules and regulations promulgated thereunder,
except that no representation is made by the Company with respect to information
provided by AT Co. or Spinco specifically for inclusion in, or incorporation
by
reference into, the Registration Statement.
7.9
Information Supplied. All documents that the Company is responsible for
filing with any Governmental Authority in connection with the transactions
contemplated hereby or by any other Transaction Agreement will comply in
all
material respects with the provisions of applicable Law. All information
supplied or to be supplied by the Company in any document, other than the
Proxy
Statements/Prospectus and Registration Statement, which are addressed in
Section 7.8, filed with any Governmental Authority in connection with
the
transactions contemplated hereby and by the other Transaction Agreements
will
be, at the time of filing, at the Distribution Date and at the Effective
Time,
true and correct in all material respects.
7.10
Environmental Matters. Except as would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company:
(a) The
Company and each of the Company Subsidiaries is and since January 1,
2003
has been in compliance with all applicable Environmental Laws and the Company
and the Company Subsidiaries possess all Company Permits that are required
under
applicable Environmental Laws, and are in compliance with the terms and
conditions thereof;
(b) neither
the Company nor any of the Company Subsidiaries has received written notice
of,
or, is the subject of, any Environmental Claims;
(c) neither
the Company nor any of the Company Subsidiaries is subject to any
indemnification obligation with respect to Environmental Laws or Hazardous
materials, including such obligations regarding businesses currently or formerly
owned or operated by the Company or any of the Company Subsidiaries or regarding
properties formerly owned or leased by the Company or any of the Company
Subsidiaries;
(d) there
is no condition on, at, under or related to any property (including any release
of a Hazardous Material into the air, soil, surface water, sediment or ground
water at, under or migrating to or from such property), including related
to
property currently owned, leased or used by the Company or any of the Company
Subsidiaries or created by the Company’s or any Company Subsidiary’s operations
that, would give rise to liability for the Company or any of the Company
Subsidiaries under applicable Environmental Laws, and, to the Company’s
knowledge, the foregoing representation is true and correct with regard to
property formerly owned, leased or used by the Company or any of the Company
Subsidiaries; and
(e) neither
the Company nor any Company Subsidiary has any liability with respect to
asbestos in any product or within any building or structure;
48
(f) The
Company has made available to AT Co. and Spinco all material site assessments,
environmental compliance audits, and other documents relating to environmental
matters, and relating to the Company or its current or former properties
or
facilities to the extent such documents are in the possession, custody or
control of the Company or any of the Company Subsidiaries, including without
limitation such documents relating to (i) the environmental conditions
on,
under or about the properties or assets currently or formerly owned, leased,
operated or used by the Company, any of the Company Subsidiaries or any
predecessor in interest thereto and (ii) any Hazardous Materials used,
managed, handled, transported, treated, generated, stored, discharged, emitted,
or otherwise released by the Company, any of the Company Subsidiaries or
any
other Person on, under, about or from any of the properties currently or
formerly owned or leased by, or otherwise in connection with the use or
operation of any of the properties owned or leased, or otherwise in connection
with the use or operation of any of the properties and assets of the Company
or
any of the Company Subsidiaries, or its businesses and operations.
(g) This
Section 7.10 contains the sole and exclusive representations and warranties
of AT Co. and Spinco with respect to environmental matters, including matters
relating to Environmental Laws and Hazardous Materials.
7.11
Tax Matters.
(a) Except
as would not, individually or in the aggregate, reasonably be expected to
have a
Material Adverse Effect on the Company, (i) all Tax Returns relating
to the
Company and the Company Subsidiaries required to be filed have been filed,
(ii) all such Tax Returns are true and correct in all respects,
(iii) all Taxes shown as due and payable on such Tax Returns, and
all Taxes
(whether or not reflected on such Tax Returns) relating to the Company or
any
the Company Subsidiary required to be paid, have been paid, (iv) all
Taxes
relating to the Company and the Company Subsidiaries for any taxable period
(or
a portion thereof) beginning on or prior to the Closing Date (which are not
yet
due and payable) have been properly reserved for in the books and records
of the
Company, and (v) the Company and the Company Subsidiaries have duly
and
timely withheld all Taxes required to be withheld and such withheld Taxes
have
been either duly and timely paid to the proper Taxing Authority or properly
set
aside in accounts for such purpose and will be duly and timely paid to the
proper Taxing Authority.
(b) No
written agreement or other written document waiving or extending, or having
the
effect of waiving or extending, the statute of limitations or the period
of
assessment or collection of any Taxes relating to the Company or any Company
Subsidiary and no power of attorney with respect to any such Taxes has been
filed or entered into with any Taxing Authority.
(c) No
audits or other administrative proceedings or proceedings before any Taxing
Authority are presently pending with regard to any Taxes or Tax Return of
the
Company or any Company Subsidiary, as to which any Taxing Authority has asserted
in writing any claim which, if adversely determined, would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
on
the Company, and no Taxing Authority is now asserting in writing any deficiency
or claim for Taxes or any adjustment to Taxes with respect to
49
which the Company
or
any Company Subsidiary may be liable with respect to income or other material
Taxes which has not been fully paid or finally settled.
(d) Neither
the Company nor any Company Subsidiary (i) is a party to or bound
by or has
any obligation under any Tax separation, sharing or similar agreement or
arrangement, (ii) is or has been a member of any consolidated, combined
or
unitary group for purposes of filing Tax Returns or paying Taxes (other than
a
group of which the Company is the common parent corporation) or (iii) has
entered into a closing agreement pursuant to Section 7121 of the Code,
or
any predecessor provision or any similar provision of state or local law.
(e) None
of the assets of the Company or any of the Company Subsidiaries is subject
to
any Tax lien (other than liens for Taxes that are not yet due and payable).
(f) Section 7.11
of the Company Disclosure Letter lists all foreign jurisdictions in which
the
Company or any Company Subsidiary files a material Tax Return.
(g) Neither
the Company nor any Company Subsidiary has agreed to make or is required
to make
any adjustment for a taxable period ending after the Effective Time under
Section 481(a) of the Code by reason of a change in accounting method or
otherwise, except where such adjustments have not had, and could not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect
on the Company.
(h) Neither
the Company nor any Company Subsidiary has constituted either a “distributing
corporation’’ or a “controlled corporation’’ (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying
for
tax-free treatment under Section 355 of the Code (I) in the
two years
prior to the date of this Agreement or (II) in a distribution that
could
otherwise constitute part of a “plan’’ or “series of related transactions’’
(within the meaning of Section 355(e) of the Code) in connection with the
Merger.
(i) Neither
the Company nor any of the Company Subsidiaries has taken or agreed to take
any
action that is reasonably likely to (nor are any of them aware of any agreement,
plan or other circumstance that would) prevent the Tax-Free Status of the
Transactions.
(j) Neither
the Company nor any Company Subsidiary has engaged in any listed transaction,
or
any reportable transaction the principal purpose of which was tax avoidance,
within the meaning of Sections 6011, 6111 and 6112 of the Code.
7.12
Benefit Plans.
(a) Section 7.12(a)
of the Company Disclosure Letter lists each “employee benefit plan” (as defined
in Section 3(3) of ERISA), and all other benefit, bonus, incentive,
deferred compensation, stock option (or other equity-based), severance, change
in control, welfare (including post-retirement medical and life insurance)
and
fringe benefit plans, whether or not subject to ERISA and whether written
or
oral, sponsored, maintained or contributed to or required to be contributed
to
by the Company or any of the Company Subsidiaries, to which the Company or
any
of the Company Subsidiaries is a party or in which
50
any Person who
is
currently, has been or, prior to the Effective Time, is expected to become
an
employee of the Company or any of the Company Subsidiaries (a “Company
Employee”) is a participant (the “Company Benefit Plans”), or with
respect to which the Company or any of the Company Subsidiaries has or could
have any material liability.
(b) No
material liability under Title IV (including Sections 4069 and 4212(c)
of
ERISA) or Section 302 of ERISA has been incurred by the Company, any
of the
Company Subsidiaries or any ERISA Affiliate of any of them, and no condition
exists that would reasonably be expected to result in the Company, any of
the
Company Subsidiaries or any ERISA Affiliate of any of them of incurring any
such
liability, other than liability for premiums due the PBGC. The present value
of
accrued benefits under each Company Benefit Plan that is subject to Title
IV of
ERISA, determined based upon the actuarial assumptions used for funding purposes
in the most recent actuarial report prepared by such plan’s actuary with respect
to such plan, did not exceed, as of its latest valuation date, the then current
value of the assets of such plan allocable to such accrued benefits.
(c) (i) No
Company Benefit Plan is a “multiemployer pension plan,” as defined in
Section 3(37) of ERISA and (ii) none of the Company, any of
the
Company Subsidiaries or any ERISA Affiliate of any of them has made or suffered
a “complete withdrawal” or a “partial withdrawal,” as such terms are
respectively defined in Sections 4203 and 4205 of ERISA, which has
not been
satisfied in full.
(d) Each
Company Benefit Plan has been operated and administered in all material respects
in accordance with its terms and applicable Law, including, ERISA and the
Code.
All contributions required to be made with respect to any Company Benefit
Plan
have been timely made, except for outstanding contributions in the ordinary
course. There are no pending or, to the knowledge of the Company, threatened
claims by, on behalf of or against any of the Company Benefit Plans or any
assets thereof, other than routine benefit claim matters, that, if adversely
determined would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company and no matter is pending
(other than routine qualification determination filings, copies of which
have
been furnished to the AT Co. and Spinco or will be promptly furnished to
the AT
Co. and Spinco when made) with respect to any of the Company Benefit Plans
before the IRS, the United States Department of Labor or the PBGC.
(e) Each
Company Benefit Plan intended to be “qualified” within the meaning of Section
401(a) of the Code is so qualified and the trusts maintained thereunder are
exempt from taxation under Section 501(a) of the Code, each trust maintained
under any Company Benefit Plan intended to satisfy the requirements of
Section 501(c)(9) of the Code has satisfied such requirements and,
in
either such case, no event has occurred or condition is known to exist that
would reasonably be expected to have a material adverse effect on such
tax-qualified status for any such Company Benefit Plan or any such trust.
(f) No
Company Benefit Plan provides medical, surgical, hospitalization, death or
similar benefits (whether or not insured) for employees or former employees
of
Company or any Company Subsidiary for periods extending beyond their retirement
or other termination of service, other than (i) coverage mandated
by
applicable Law,
51
(ii) death
benefits under any “pension plan,” or (iii) benefits the full cost of which
is borne by the current or former employee (or his beneficiary). The Company
has
the right, and will have the right after the Effective Time to terminate
any
Company Benefit Plan or to amend any such Company Benefit Plan to reduce
future
benefits, (including any Company Benefit Plan that provides post-retirement
medical and life insurance benefits) without incurring or otherwise being
responsible for any material liability with respect thereto.
(g) No
Company Benefit Plan or employment arrangement, and no contractual arrangements
between the Company and any third party, exists that could result in the
payment
to any current, former or future director, officer, stockholder or employee
of
the Company or any of the Company Subsidiaries, or of any entity the assets
or
capital stock of which have been acquired by the Company or a Company
Subsidiary, of any money or other property or rights or accelerate or provide
any other rights or benefits to any such individual as a result of the
consummation of the transactions contemplated by the Transaction Agreements
whether or not (a) such payment, acceleration or provision would constitute
a “parachute payment” (within the meaning of Section 280G of the Code) or
(b) some other subsequent action or event would be required to cause
such
payment, acceleration or provision to be triggered.
7.13
Labor Matters. Except to the extent listed in Section 7.13 of the
Company Disclosure Letter, neither the Company nor any of the Company
Subsidiaries is a party to, or bound by, any collective bargaining agreement
or
other Contract with employees, a labor union or labor organization. Except
for
such matters which have not had, and would not reasonably be expected to
have,
individually or in the aggregate, a Material Adverse Effect on the Company,
(a) as of the date hereof, (i) there are no strikes or lockouts
with
respect to Company Employees, and (ii) there are not now and, to the
knowledge of the Company, since January 1, 2003 there has not been,
any
union organizing effort pending or threatened against the Company or any
of the
Company Subsidiaries; (b) there is no unfair labor practice, charges
or
complaint, labor dispute (other than routine individual grievances) or labor
arbitration proceeding pending or, to the knowledge of the Company, threatened
against the Company or any of the Company Subsidiaries; (c) there
is no
slowdown, or work stoppage in effect or, to the knowledge of Company, threatened
with respect to Company Employees; and (d) the Company and the Company
Subsidiaries are in compliance with all applicable Laws respecting
(i) employment and employment practices, (ii) terms and conditions
of
employment and wages and hours, (iii) collective bargaining and labor
relations practices, (iv) layoffs, (v) immigration, and (vi) the
payments of taxes and other withholdings. As of the date hereof, neither
the
Company nor any of the Company Subsidiaries has any liabilities under the
WARN
Act as a result of any action taken by the Company and that would reasonably
be
expected to have, individually or in the aggregate, a Material Adverse Effect
on
the Company.
7.14
Intellectual Property Matters. Section 7.14 of the Company
Disclosure Letter contains a complete and accurate list of (i) all
patented
or registered Intellectual Property Rights (and pending applications therefor)
owned by the Company or any of the Company Subsidiaries, and (ii) all
other
patented or registered Intellectual Property Rights (and pending applications
therefor) used by the Company or any of the Company Subsidiaries and material
to
the business of the Company and the Company Subsidiaries in each case, to
the
extent material to the business of the Company as a whole. The Company and
the
Company Subsidiaries own and possess free and clear of any Liens except
Permitted Encumbrances, all right, title and
52
interest in and
to, or
have adequate licenses or other valid and enforceable rights to use all material
Intellectual Property Rights used or held for use in connection with the
business of the Company and the Company Subsidiaries taken as a whole as
currently conducted and as proposed to be conducted immediately prior to
Effective Time (including in connection with services provided by the Company
and the Company Subsidiaries to third parties) (the “Company IP Rights”),
except where the failure to own or possess such items would not reasonably
be
expected to have, individually or in the aggregate, a Material Adverse Effect
on
the Company. To the best of the Company’s knowledge, there is no assertion or
claim challenging the validity, enforceability, ownership or use of any of
the
foregoing that would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. The conduct of the business
of the Company and the Company Subsidiaries taken as a whole as currently
conducted and as proposed to be conducted immediately after the Effective
Time
does not infringe, misappropriate or otherwise conflict in any way with any
Intellectual Property Rights of any third party that would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
on
the Company. To the best of the Company’s knowledge, there are no infringements
or misappropriations of or other conflicts with, any Intellectual Property
Rights owned by or licensed by or to the Company or any Company Subsidiary
that
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company. The transactions contemplated by
this
Agreement shall not impair the right, title or interest of the Company or
any
Company Subsidiary in and to the Company IP Rights, and all of the Company
IP
Rights shall be owned or available for use by the Surviving Corporation
immediately after the Effective Time on terms and conditions identical in
all
material respects to those under which the Company and the Company Subsidiaries
owned or used the Company IP Rights immediately prior to the Effective Time,
except where such impairment or failure to be owned or available for use
would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
7.15
Communications Regulatory Matters.
(a) The
Company and the Company Subsidiaries hold all approvals, authorizations,
certificates and licenses issued by the FCC and State Regulators set forth
in
Section 7.15(e) of the Company Disclosure Letter, and all other material
regulatory permits, approvals, licenses, and other authorizations, including
but
not limited to franchises, ordinances and other agreements granting access
to
public rights of way, issued or granted to the Company or any Company Subsidiary
by a state or federal agency or commission or other federal, state or local
or
foreign regulatory bodies regulating competition and telecommunications
businesses (the “Company Licenses”) that are required for the Company and
the Company Subsidiaries to conduct its business, as presently conducted
and as
proposed to be conducted, except such Company Licenses the failure of which
to
so hold would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
(b) Each
Company License is valid and in full force and effect and has not been
suspended, revoked, cancelled or adversely modified, except where the failure
to
be in full force and effect, or the suspension, revocation, cancellation
or
modification of which has not had or would not reasonably be expected to
have,
individually or in the aggregate, a Material Adverse Effect on the Company.
No
Company License is subject to (i) any conditions or requirements that
have
not been imposed generally upon licenses in the same service, unless
53
such conditions
or
requirements would not reasonably be expected to have, individually or in
the
aggregate, a Material Adverse Effect on the Company, or (ii) any pending
regulatory proceeding (other than those affecting the wireless industry
generally) or judicial review before a Governmental Authority, unless such
pending regulatory proceedings or judicial review would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
on
the Company. The Company and the Company Subsidiaries have no knowledge of
any
event, condition or circumstance that would preclude any Company License
from
being renewed in the ordinary course (to the extent that such Company License
is
renewable by its terms), except where the failure to be renewed has not had
or
would not reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect on the Company.
(c) The
licensee of each Company License is in compliance with each Company License
and
has fulfilled and performed all of its material obligations with respect
thereto, including all reports, notifications and applications required by
the
Communications Act or the FCC Rules or similar rules, regulations, policies,
instructions and orders of State Regulators, and the payment of all regulatory
fees, except (i) for exemptions, waivers or similar concessions or
allowances and (ii) where such failure to be in compliance, fulfill
or
perform its obligations or pay such fees or contributions has not had, or
would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
(d) The
Company or a Company Subsidiary owns one hundred percent (100%) of the equity
and controls one hundred percent (100%) of the voting power and decision-making
authority of each licensee of the Company Licenses, except where the failure
to
own such equity or control such voting power and decision-making authority
of
such licensees would not reasonably be expected to have, individually or
in the
aggregate, a Material Adverse Effect on the Company.
7.16
Material Contracts.
(a) Except
for this Agreement, each other Transaction Agreement, the Company Benefit
Plans
and except as filed as an exhibit to any Company SEC Document or as disclosed
in
Section 7.16 of the Company Disclosure Letter, as of the date hereof,
neither the Company nor any of the Company Subsidiaries is a party to or
bound
by any “material contract” (as such term is defined in item 601(b)(10) of
Regulation S-K of the SEC) (all contracts of the type described in
this
Section 7.16 being referred to herein as “Company Material
Contracts”).
(b) Neither
the Company nor any Company Subsidiary is in breach of or default under the
terms of any Company Material Contract where such breach or default has had,
or
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company. To the knowledge of the Company,
no
other party to any Company Material Contract is in breach of or in default
under
the terms of any Company Material Contract where such breach or default has
had,
or would reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect on the Company. Each Company Material Contract is
a
valid and binding obligation of the Company or any Company Subsidiary which
is a
party thereto and, to the knowledge of the Company, of each other party thereto,
and is in full force and effect, except that (i) such enforcement
may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium
or
other similar Laws, now or hereafter in
54
effect, relating
to
creditors’ rights generally and (ii) equitable remedies of specific
performance and injunctive and other forms of equitable relief may be subject
to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
7.17
Company Real Property.
(a) Section 7.17(a)
of the Company Disclosure Letter sets forth the address and description of
all
Company Owned Real Property, the loss of which would be material and adverse
to
the business of the Company as a whole. With respect to such Company Owned
Real
Property: (A) except as set forth in Section 7.17(a) of the
Company
Disclosure Letter or as would not reasonably be expected to have a Material
Adverse Effect on the Company, the Company or Company Subsidiaries have not
leased or otherwise granted to any Person the right to use or occupy such
Company Owned Real Property or any material portion thereof; and (B) other
than the right of the Company pursuant to this Agreement, there are no
outstanding options, rights of first offer or rights of first refusal to
purchase such Company Owned Real Property or any material portion thereof
or
interest therein.
(b) Section 7.17(b)
of the Company Disclosure Letter sets forth the address of all Company Leased
Real Property, the loss of which would be material and adverse to the business
of the Company as a whole, and a true and complete list of all Company Leases
for such property (including all amendments, extensions, renewals, guaranties
and other agreements with respect thereto) for each such Company Leased Real
Property. The Company has made available to AT Co. a true and complete copy
of
each such Company Lease document, and in the case of any such Lease that
is an
oral Lease, a written summary of the material terms of such Lease. Except
as set
forth in Section 7.17(b) of the Company Disclosure Letter or as would not
reasonably be expected to have a Material Adverse Effect on the Company,
with
respect to each such Spinco Lease: (i) the Company’s or Company
Subsidiaries’ possession and quiet enjoyment of the Company Leased Real Property
under such Company Lease has not been disturbed, and to Company’s knowledge,
there are no disputes with respect to such Company Lease; (ii) Company
or
Company Subsidiaries have not subleased, licensed or otherwise granted any
Person the right to use or occupy such Company Leased Real Property or any
portion thereof; (iii) the Company or Company Subsidiaries have not
collaterally assigned or granted any other security interest in such Company
Lease or any interest therein; and (iv) there are no Liens on the
estate or
interest created by such Company Lease other than Permitted Encumbrances.
(c) Except
as would not reasonably be expected to have a Material Adverse Effect on
the
Company, the Company Leasehold Improvements and all buildings, structures,
improvements, fixtures, building systems and equipment, and all components
thereof, included in the Company Owned Real Property are in good condition
and
repair and sufficient for the operation of the Company Business.
7.18
Opinion of Company Financial Advisors. The Company has received the
written opinions of Wachovia Capital Markets, LLC and Bear Xxxxxxx & Co.,
Inc., to the effect that, as of the date hereof, the financial effects of
the
Merger are fair, from a financial point of view, to the Company and its
stockholders. The Company has previously delivered a copy of such opinion
to AT
Co.
55
7.19
Brokers or Finders. Except for Wachovia Capital Markets, LLC and Bear
Xxxxxxx & Co., Inc., a copy of whose engagement agreement has been provided
to AT Co., no agent, broker, investment banker, financial advisor or other
similar Person is or will be entitled, by reason of any agreement, act or
statement by the Company, or any of the Company Subsidiaries, directors,
officers or employees, to any financial advisory, broker’s, finder’s or similar
fee or commission, to reimbursement of expenses or to indemnification or
contribution in connection with any of the transactions contemplated by this
Agreement or any other Transaction Agreement.
7.20
Takeover Statutes. Other than Section 203 of the DGCL, no “fair
price,”“moratorium,”“control share acquisition,”“business
combination,”“stockholder protection” or other similar antitakeover statute or
regulation enacted under Delaware law, or, to the knowledge of the Company,
under the law of any other jurisdiction, will apply to this Agreement, the
Voting Agreement, the Merger or the transactions contemplated hereby or thereby.
Assuming the accuracy of the representation and warranty set forth in
Section 7.3, the action of the Board of Directors of the Company in
approving this Agreement and the transactions provided for herein is sufficient
to render inapplicable to this Agreement, the Voting Agreement, the Merger
and
the transactions contemplated hereby or thereby and the transactions provided
for herein, the restrictions on “business combinations” (as defined in
Section 203 of the DGCL) as set forth in Section 203 of the
DGCL.
7.21
Certain Board Findings. The Board of Directors of the Company, at a
meeting duly called and held, (i) has determined that this Agreement
and
the transactions contemplated hereby, including the Merger, and the issuance
of
shares of Company Common Stock pursuant to the Merger, are advisable, fair
to
and in the best interests of the Company and the stockholders of the Company,
(ii) approved this Agreement and the transactions contemplated hereby,
including the Merger and (iii) has resolved to recommend that the
stockholders of the Company entitled to vote thereon adopt this Agreement
at the
Company Stockholders Meeting.
7.22
Vote Required. The only vote of the stockholders of the Company required
under any of the DGCL, the NYSE rules or the Company’s Certificate of
Incorporation for adoption of this Agreement, is the affirmative vote of
the
holders of a majority in voting power of all outstanding shares of Company
Common Stock at the Company Stockholders Meeting (sometimes referred to herein
as the “Requisite Approval”).
7.23
Affiliate Transactions. Except as specifically provided in this Agreement
or any of the other Transaction Agreements or as disclosed in the Company
SEC
Reports, there are no transactions or Contracts of the type required to be
disclosed by the Company under Item 404 of Regulation S-K between
or
among (a) the Company or any Company Subsidiary, on the one hand,
and (b)
any individual who is a “named executive officer” of the Company (as such term
is defined in Section 402 of Regulation S-K), on the other
hand.
56
ARTICLE
VIII
COVENANTS AND AGREEMENTS
COVENANTS AND AGREEMENTS
8.1
Conduct of Business by the Company Pending the Merger. Following the date
of this Agreement and prior to the earlier of the Effective Time and the
Termination Date, except as may be consented to in writing by AT Co. and
Spinco
(which consent shall not be unreasonably withheld, conditioned or delayed)
or as
set forth in Section 8.1 of the Company Disclosure Letter, the Company
covenants and agrees that each of the Company and the Company Subsidiaries
shall
conduct its operations in accordance with its ordinary course of business,
consistent with past practice and in compliance with all Laws applicable
to it
or to the conduct of its business, and use all reasonable best efforts to
preserve intact its present business organization, maintain rights and
franchises, keep available the services of its current officers and key
employees and preserve its relationships with customers, suppliers and others
having business dealings with it in such a manner that its goodwill and ongoing
businesses are not impaired in any material respect. Following the date of
this
Agreement and prior to the earlier of the Effective Time and the Termination
Date except (i) as may be required by Law (provided that any party
availing
itself of such exception must first consult with the other party), (ii) as
may be consented to in writing by AT Co. and Spinco (which consent shall
not be
unreasonably withheld, conditioned or delayed), (iii) as may be expressly
permitted by this Agreement or the other Transaction Agreements, or (iv) as
set forth in Section 8.1 of the Company Disclosure Letter, the Company
shall not, nor shall it permit any of the Company Subsidiaries to:
(a) (i) declare
or pay any dividends on or make other distributions in respect of any shares
of
its capital stock or partnership interests (whether in cash, securities or
property), except for the declaration and payment of cash dividends or
distributions paid on or with respect to a class of capital stock all of
which
shares of capital stock, as the case may be, of the applicable corporation
are
owned directly or indirectly by the Company and the payment of regular quarterly
dividends each in an amount not to exceed $0.36 per share at times consistent
with the past dividend payment practices of the Company (including a final
partial regular quarterly dividend to be declared and paid to pre-Closing
Company stockholders, pro rated for the number of days elapsed between
(x) the beginning of the quarterly period in which the Effective Time
occurs and (y) the day immediately preceding the Effective Time);
(ii) split, combine or reclassify any of its capital stock or issue
or
authorize or propose the issuance of any other securities in respect of,
in lieu
of, or in substitution for, shares of its capital stock; or (iii) redeem,
repurchase or otherwise acquire, or permit any Subsidiary to redeem, repurchase
or otherwise acquire, any shares of its capital stock (including any securities
convertible or exchangeable into such capital stock), except as required
by the
terms of the securities outstanding on the date hereof or as required by
the
terms of a Company Benefit Plan;
(b) issue,
deliver or sell, or authorize any shares of its capital stock of any class,
any
Company Voting Debt or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, Company Voting Debt or convertible
securities, other than (i) the issuance of shares of Company Common
Stock
upon the exercise of stock options that are outstanding on the date hereof
pursuant to the Company Benefit Plans; and (ii) issuances by a wholly
owned
Subsidiary of the Company of its capital stock to such Subsidiary’s parent or
another wholly owned Subsidiary of the Company;
57
(c) amend
its Certificate of Incorporation or Bylaws (or other similar organizational
documents) in any manner that would prevent or materially impair or delay
the
consummation of the transactions contemplated by this Agreement;
(d) acquire
or agree to acquire by merger or consolidation, or by purchasing a substantial
equity interest in or a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, limited liability entity,
joint venture, association or other business organization or division thereof
or
otherwise acquire or agree to acquire any material assets, (excluding the
acquisition of assets used in the operations of the business of the Company
and
its Subsidiaries in the ordinary course consistent with past practice, which
assets do not constitute a business unit, division or all or substantially
all
of the assets of the transferor);
(e) except
in the ordinary course of business, consistent with past practice, sell,
lease,
license or otherwise encumber or subject to any Lien or otherwise dispose
of, or
agree to sell, lease, license or otherwise encumber or subject to any Lien
or
otherwise dispose of, any of its assets (including capital stock of Subsidiaries
of the Company but excluding inventory and obsolete equipment, in each case,
in
the ordinary course of business consistent with past practice).
(f) except
in the ordinary course of business, consistent with past practice, incur
any
indebtedness for borrowed money or guarantee or otherwise become contingently
liable for any such indebtedness or issue or sell any debt securities or
warrants or rights to acquire any debt securities of the Company or any of
its
Subsidiaries or guarantee any debt securities of others or enter into any
material lease (whether such lease is an operating or capital lease) or
otherwise incur any material obligation or liability (absolute or contingent)
other than (i) the incurrence of additional indebtedness under the
Company
Credit Agreement in an amount not to exceed $5,000,000, (ii) pursuant
to
any customer Contract or vendor Contract entered into in the ordinary course
of
business consistent with past practice, and (iii) in connection with
equipment leasing in the ordinary course of business consistent with past
practice;
(g) except
in the ordinary course of business, consistent with past practice, incur
or
commit to any individual capital expenditure or any obligation or liability
in
connection with any capital expenditure in excess of $2,000,000 or incur
or
commit to aggregate capital expenditures or obligations or liabilities in
connection with any capital expenditure in excess of $5,000,000, in each
case,
other than capital expenditures or obligations or liabilities in connection
therewith to repair or replace facilities destroyed or damaged due to casualty
or accident (whether or not covered by insurance), or as contemplated by
the
Company’s 2005 or 2006 capital expenditure budget, copies of which have been
previously provided to AT Co. and Spinco;
(h) except
to the extent provided in subsection (h) of Section 8.1 of
the Company
Disclosure Letter, (i) other than in the ordinary course of business,
consistent with past practice, grant any material increases in the compensation
of any of its directors, officers or employees, except in the ordinary course
of
business consistent with past practice; (ii) pay or agree to pay to
any
director, officer or employee, whether past or present, any pension,
58
retirement allowance
or
other employee benefit not required or contemplated by any of the existing
benefit, severance, termination, pension or employment plans, Contracts or
arrangements as in effect on the date hereof; (iii) other than in
the
ordinary course of business consistent with past practice, enter into any
new,
or materially amend any existing, employment or severance or termination,
Contract with any director, officer or employee; (iv) accelerate the
vesting of, or the lapsing of restrictions with respect to, any stock options
or
other stock-based compensation; or (v) become obligated under any
new
pension plan, welfare plan, multiemployer plan, employee benefit plan, severance
plan, benefit arrangement or similar plan or arrangement that was not in
existence on the date hereof, or amend any such plan or arrangement in existence
on the date hereof if such amendment would have the effect of materially
enhancing any benefits thereunder;
(i) establish,
adopt, enter into, terminate or amend any collective bargaining agreement,
plan,
trust, fund, policy or arrangement for the benefit of any current or former
directors, officers, employees or any of their beneficiaries, except, in
each
case, as would not result in a material increase in the cost of maintaining
such
collective bargaining agreement, plan, trust, fund, policy or arrangement;
(j) authorize,
recommend, propose or announce an intention to adopt a plan of complete or
partial liquidation or dissolution of the Company or any of the Company
Subsidiaries;
(k) make
any material change in its methods of accounting in effect at the Interim
Balance Sheet Date or change its fiscal year;
(l) enter
into or amend any agreement or arrangement with any Affiliate of the Company
or
any such Company Subsidiary, other than with wholly owned Company Subsidiaries,
on terms less favorable to the Company or such Company Subsidiary, as the
case
may be, than could be reasonably expected to have been obtained with an
unaffiliated third party on an arm’s-length basis;
(m) except
in the ordinary course of business, consistent with past practice, modify,
amend, terminate, renew or fail to use reasonable best efforts to renew any
Material Contract to which the Company or any of the Company Subsidiaries
is a
party or waive, release or assign any material rights or claims thereunder
or
enter into any Material Contract not in the ordinary course of business
consistent with past practice and not terminable by the Company or the Company
Subsidiary party thereto without penalty on ninety (90) days’ or less
notice;
(n) except
as would not be expected to materially and adversely affect the Company or
any
of its Affiliates or the Surviving Corporation on a going-forward basis after
the Effective Time, (i) make or rescind any material express or deemed election
relating to Taxes, including elections for any and all joint ventures,
partnerships, limited liability companies or other investments where the
Company
has the capacity to make such binding election, (ii) settle or compromise
any material claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes, (iii) amend
any
material Tax Returns or (iv) change in any material respect any of
its
methods of reporting income or deductions for federal income tax
59
purposes from those
expected to be employed in the preparation of its federal income tax return
for
the taxable year ending December 31, 2005 (unless such change is required
by Law); provided, however, that the Company may make or rescind any such
election, settle or compromise any such claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy, change any
such
method of reporting or amend any such Tax Return without AT Co.’s and Spinco’s
prior written consent if the amount of Tax liabilities relating to such action
does not exceed $2,000,000; and further provided that the Company may make
elections under Section 754 of the Code and under IRS Notice 2003-65
in
respect of its Subsidiaries;
(o) except
in the ordinary course of business, consistent with past practice, pay,
discharge or satisfy any material claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction (which includes the payment of final and
unappealable judgments) or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the most recent
consolidated financial statements (or the notes thereto) of the Company included
in the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2004, or incurred in the ordinary course of business
since the
date of such financial statements;
(p) subject
to the terms and conditions of this Agreement, intentionally take or agree
or
commit to take any action that would result in any of its representations
and
warranties set forth in this Agreement being or becoming untrue in any material
respect, or in any of the conditions set forth in Article IX not being
satisfied at the Effective Time; or
(q) agree
or commit to do any of the foregoing actions.
8.2
Conduct of Business by Spinco and AT Co. Pending the Merger. Following
the date of this Agreement and prior to the earlier of the Effective Time
and
the Termination Date, except as may be consented to in writing by the Company
(which consent shall not be unreasonably withheld, conditioned or delayed)
or as
set forth in Section 8.2 of the Spinco Disclosure Letter, AT Co. and
Spinco
jointly and severally covenant and agree that AT Co. and the AT Co. Subsidiaries
(in regard to the Spinco Business only) and each of Spinco and the Spinco
Subsidiaries shall conduct its operations in accordance with its ordinary
course
of business, consistent with past practice and in compliance with all Laws
applicable to it or to the conduct of its business, and use all reasonable
best
efforts to preserve intact its present business organization, maintain rights
and franchises, keep available the services of its current officers and key
employees and preserve its relationships with customers, suppliers and others
having business dealings with it in such a manner that its goodwill and ongoing
businesses are not impaired in any material respect. Following the date of
this
Agreement and prior to the earlier of the Effective Time and the Termination
Date except (i) as may be required by Law (provided that any party
availing
itself of such exception must first consult with the other party), (ii) as
may be consented to in writing by the Company (which consent shall not be
unreasonably withheld, conditioned or delayed), (iii) as may be expressly
permitted by this Agreement or the other Transaction Agreements, (iv) as
required to permit the ordinary course operation of AT Co.’s cash management
system prior to the Effective Time, including any distributions of cash in
connection therewith, or (v) as set forth in Section 8.2 of
the Spinco
Disclosure Letter, Spinco shall not, nor shall AT Co. and Spinco permit any
of
the Spinco Subsidiaries to:
60
(a) (i) declare
or pay any dividends on or make other distributions in respect of any shares
of
its capital stock or partnership interests (whether in cash, securities or
property), except for the declaration and payment of cash dividends or
distributions paid on or with respect to a class of capital stock or partnership
interests all of which shares of capital stock or partnership interests,
as the
case may be, of the applicable corporation or partnership are owned directly
or
indirectly by AT Co. or Spinco or as contemplated by the Distribution Agreement
or required in connection with the Contribution; (ii) split, combine
or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of, or in substitution
for, shares of its capital stock, except as contemplated by the Distribution
Agreement; or (iii) redeem, repurchase or otherwise acquire, or permit
any
Subsidiary to redeem, repurchase or otherwise acquire, any shares of its
capital
stock (including any securities convertible or exchangeable into such capital
stock), except as required by the terms of the securities of AT Co. outstanding
on the date hereof or as required by any Spinco Benefit Plan.
(b) issue,
deliver or sell, or authorize any shares of Spinco’s capital stock or capital
stock of any Spinco Subsidiary of any class, any Spinco Voting Debt or any
securities convertible into, or any rights, warrants or options to acquire,
any
such shares, Spinco Voting Debt or convertible securities including additional
options or other equity-based awards that could be converted into any option
to
acquire Spinco Common Stock pursuant to the Employee Benefits Agreement,
other
than (i) pursuant to this Agreement, pursuant to the Distribution
Agreement
and (ii) issuances by a wholly owned Subsidiary of Spinco of its capital
stock to such Subsidiary’s parent or another wholly owned Subsidiary of Spinco;
(c) acquire
or agree to acquire by merger or consolidation, or by purchasing a substantial
equity interest in or a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, limited liability entity,
joint venture, association or other business organization or division thereof
or
otherwise acquire or agree to acquire any material assets (excluding the
acquisition of assets used in the operations of the business of Spinco and
its
Subsidiaries in the ordinary course consistent with past practice, which
assets
do not constitute a business unit, division or all or substantially all of
the
assets of the transferor);
(d) except
in the ordinary course of business, consistent with past practice, sell,
lease,
license or otherwise encumber or subject to any Lien or otherwise dispose
of, or
agree to sell, lease, license or otherwise encumber or subject to any Lien
or
otherwise dispose of, any of its assets (including capital stock of Spinco
Subsidiaries but excluding inventory and obsolete equipment, in each case,
in
the ordinary course of business consistent with past practice);
(e) incur
any indebtedness for borrowed money or guarantee or otherwise become
contingently liable for any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire any debt securities of Spinco
or any
of its Subsidiaries or guarantee any debt securities of others or enter into
any
material lease (whether such lease is an operating or capital lease) or
otherwise incur any material obligation or liability (absolute or contingent),
other than (i) the incurrence of additional indebtedness under the
Spinco
Credit Agreement or other sources to fund ordinary course capital requirements
of Spinco and the Spinco Subsidiaries, (ii) pursuant to any customer
Contract or vendor Contract entered into in the
61
ordinary course
of
business consistent with past practice, and (iii) in connection with
equipment leasing in the ordinary course of business, consistent with past
practice;
(f) except
in the ordinary course of business, consistent with past practice, incur
or
commit to any individual capital expenditure or any obligation or liability
in
connection with any capital expenditure, or incur or commit to aggregate
capital
expenditures or obligations or liabilities in connection with any capital
expenditure, in each case, other than capital expenditures or obligations
or
liabilities in connection therewith to repair or replace facilities destroyed
or
damaged due to casualty or accident (whether or not covered by insurance),
or as
contemplated by the 2005 or 2006 capital expenditure budget of AT Co. or
Spinco,
copies of which have been previously provided to the Company;
(g) authorize,
recommend, propose or announce an intention to adopt a plan of complete or
partial liquidation or dissolution of Spinco or any of its Subsidiaries;
(h) make
any material change in AT Co.’s methods of accounting with respect to the Spinco
Business in effect at the Interim Balance Sheet Date;
(i) except
as would not be expected to materially and adversely affect Spinco or any
of its
Subsidiaries or the Spinco Business, or the Surviving Corporation on a
going-forward basis after the Effective Time, (i) make or rescind
any
material express or deemed election relating to Taxes of Spinco or any of
its
Subsidiaries or the Spinco Business, including elections for any and all
joint
ventures, partnerships, limited liability companies or other investments
where
AT Co. or Spinco has the capacity to make such binding election (other than
any
election necessary in order to obtain the IRS Contribution Ruling, the IRS
Distribution Ruling, the IRS Debt Exchange Ruling, the IRS Special Dividend
Ruling and/or the Distribution Tax Opinion), (ii) settle or compromise
any
material claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes of Spinco or any of
its
Subsidiaries or the Spinco Business, (iii) amend any material Tax
Returns
of Spinco or any of its Subsidiaries or relating to the Spinco Business or
(iv) change in any material respect any method of reporting income
or
deductions of Spinco or any of its Subsidiaries or the Spinco Business for
federal income tax purposes from those expected to be employed in the
preparation of its federal income tax return for the taxable year ending
December 31, 2005 (unless such change is required by Law), provided,
however, that Spinco may make or rescind any such election, settle or compromise
any such claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy, change any such method of reporting
or
amend any such Tax Return without the Company’s prior written consent if the
amount of Tax liabilities relating to such action does not exceed $2,000,000;
(j) except
in the ordinary course of business, consistent with past practice, pay,
discharge or satisfy any material claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction, in the ordinary course of business,
consistent with past practice (which includes the payment of final and
unappealable judgments) or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the Interim Financial
Statements (or the notes thereto) of Spinco included in the Spinco Financial
Statements, or incurred in the ordinary course of business since the date
of
such financial statements;
62
(k) subject
to the terms and conditions of this Agreement, intentionally take or agree
or
commit to take any action that would result in any of its representations
and
warranties set forth in this Agreement or the other Transaction Agreements
being
or becoming untrue in any material respect, or in any of the conditions set
forth in Article IX not being satisfied at the Effective Time; or
(l) agree
to commit to take any of the foregoing actions.
8.3
Tax Matters. Prior to the Effective Time, each of AT Co., Spinco and the
Company agrees to use its reasonable best efforts to cause the Tax-Free Status
of the Transactions.
8.4
Proxy Statement/Prospectus.
(a) As
promptly as practicable following the date hereof, the Company, AT Co. and
Spinco shall prepare, and the Company shall file with the SEC, the Proxy
Statement/Prospectus and the Registration Statement (the Proxy
Statement/Prospectus will be included as a prospectus in the Registration
Statement) with respect to the transactions contemplated by this Agreement,
and
each of the Company and Spinco shall use its reasonable best efforts to have
such Proxy Statement/Prospectus cleared by the SEC under the Exchange Act
and
the Registration Statement declared effective by the SEC under the Securities
Act, as promptly as practicable after such filings.
(b) As
promptly as practicable after the Registration Statement shall have become
effective, the Company shall mail, or cause to be mailed, the Proxy
Statement/Prospectus to its stockholders.
(c) The
Company shall, as promptly as practicable after receipt thereof, provide
to AT
Co. and Spinco copies of any written comments and advise AT Co. and Spinco
of
any oral comments with respect to the Proxy Statement/Prospectus and the
Registration Statement received from the SEC.
(d) The
Company shall provide AT Co. and Spinco with a reasonable opportunity to
review
and comment on any amendment or supplement to the Proxy Statement/Prospectus
or
Registration Statement prior to filing the same with the SEC, and with a
copy of
all such filings made with the SEC. No amendment or supplement to the Proxy
Statement/Prospectus or the Registration Statement will be made by the Company
without the approval of AT Co. and Spinco (such approval not to be unreasonably
withheld, conditioned or delayed). The Company will advise AT Co. and Spinco
promptly after it receives notice thereof, of the time when the Registration
Statement has become effective or any supplement or amendment has been filed,
of
the issuance of any stop order, of the suspension of the qualification of
the
Company Common Stock issuable in connection with the Merger for offering
or sale
in any jurisdiction, or of any request by the SEC for amendment of the Proxy
Statement/Prospectus or the Registration Statement or comments thereon and
responses thereto or requests by the SEC for additional information.
(e) If,
at any time prior to the Effective Time, any event or circumstance should
occur
that results in the Proxy Statement/Prospectus or the Registration
63
Statement containing
an
untrue statement of a material fact or omitting to state any material fact
required to be stated therein or necessary to make the statements therein,
in
light of the circumstances under which they are made, not misleading, or
that
otherwise should be described in an amendment or supplement to the Proxy
Statement/Prospectus or the Registration Statement, AT Co., Spinco and the
Company shall promptly notify each other of the occurrence of such event
and
then promptly prepare, file and clear with the SEC and mail, or cause to
be
mailed, to the Company’s stockholders each such amendment or supplement.
(f) AT
Co. and Spinco agree to promptly provide the Company with the information
concerning AT Co. and Spinco and their respective Affiliates required to
be
included in the Proxy Statement/Prospectus and the Registration Statement.
In
furtherance of the foregoing, AT Co. and Spinco shall use all reasonable
best
efforts to, or shall use all reasonable best efforts to cause their respective
representatives to, furnish promptly to the Company such additional financial
and operating data and other information, as to their and their respective
Subsidiaries’ businesses as the Company may require in connection with the
preparation of the Proxy Statement/Prospectus and the Registration Statement.
8.5
Listing(a) . As promptly as practicable following the date hereof, the
Company shall make application to the NYSE for the listing of the shares
of
Company Common Stock to be issued pursuant to the transactions contemplated
by
this Agreement and use all reasonable best efforts to cause such shares to
be
Approved for Listing.
8.6
Reasonable Best Efforts; Regulatory Matters.
(a) Subject
to the terms and conditions set forth in this Agreement, each of AT Co.,
Spinco
and the Company shall use all reasonable best efforts (subject to, and in
accordance with, applicable Law) to take promptly, or cause to be taken,
all
actions, and to do promptly, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable
under
applicable Laws and regulations to consummate and make effective the Merger
and
the other transactions contemplated by this Agreement, including (i) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals, including the Company Approvals and the Spinco Approvals, from
any
Governmental Authority and the making of all necessary registrations and
filings
and the taking of all steps as may be necessary to obtain an approval or
waiver
from, or to avoid an action or proceeding by, any Governmental Authority,
(ii) the obtaining of all necessary consents, approvals or waivers
from
third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement
or
the consummation of the transactions contemplated by this Agreement and
(iv) the execution and delivery of any additional instruments necessary
to
consummate the transactions contemplated by this Agreement.
(b) Subject
to the terms and conditions herein provided and without limiting the foregoing,
each of AT Co., Spinco and the Company shall (i) promptly but in no
event
later than fifteen (15) days after the date hereof make their respective
filings
and thereafter make any other required submissions under the HSR Act,
(ii) promptly (but in no event later than fifteen (15) days
after the
date hereof) file all applications (required to be filed with the FCC (the
“FCC Applications”), and any State Regulators (the “PSC
Applications”), each as set forth on Schedule 8.6(a), to effect the
transfer of control of the Spinco Licenses (collectively, the
64
“Telecommunications
Regulatory Consents”) and respond as promptly as practicable to any
additional requests for information received from the FCC or any State Regulator
by any party to a FCC Application or PSC Application, (iii) use all
reasonable best efforts to cure not later than the Effective Time any violations
or defaults under any FCC Rules or rules of any State Regulator, (iv) use
all reasonable best efforts to cooperate with each other in (x) determining
whether any filings are required to be made with, or consents, permits,
authorizations or approvals are required to be obtained from, any third parties
or other Governmental Authorities in connection with the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
and (y) timely making all such filings and timely seeking all such
consents, permits, authorizations or approvals, (v) use all reasonable
best
efforts to take, or cause to be taken, all other actions and do, or cause
to be
done, all other things necessary, proper or advisable to consummate and make
effective the transactions contemplated hereby all such further action as
reasonably may be necessary to resolve such objections, if any, as the HSR
Agencies, state antitrust enforcement authorities or competition authorities
of
any other nation or other jurisdiction or any other Person may assert under
relevant antitrust or competition laws with respect to the transactions
contemplated hereby; and (vi) subject to applicable legal limitations
and
the instructions of any Governmental Authority, keep each other apprised
of the
status of matters relating to the completion of the transactions contemplated
thereby, including promptly furnishing the other with copies of notices or
other
communications received by the Company, AT Co. or Spinco, as the case may
be, or
any of their respective Subsidiaries, from any third party and/or any
Governmental Authority with respect to such transactions.
(c) In
furtherance and not in limitation of the covenants of the parties contained
in
this Section 8.6, if any administrative or judicial action or proceeding,
including any proceeding by a private party, is instituted (or threatened
to be
instituted) challenging any transaction contemplated by this Agreement as
violative of any Regulatory Law, each of the Company, AT Co. and Spinco shall
cooperate in all respects with each other and use all 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 transactions contemplated by this
Agreement. Notwithstanding the foregoing or any other provision of this
Agreement, nothing in this Section 8.6 shall limit a party’s right to
terminate this Agreement pursuant to Section 11.1(b) or 11.1(c) so
long as
such party has, prior to such termination, complied with its obligations
under
this Section 8.6.
(d) If
any objections are asserted with respect to the transactions contemplated
hereby
under any Regulatory Law or if any suit is instituted by any Governmental
Authority or any private party challenging any of the transactions contemplated
hereby as violative of any Regulatory Law, each of the Company, AT Co. and
Spinco, shall use all reasonable best efforts to resolve any such objections
or
challenge as such Governmental Authority or private party may have to such
transactions under such Regulatory Law so as to permit consummation of the
transactions contemplated hereby. For purposes of this Agreement, “Regulatory
Law” means the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the
HSR
Act, the Federal Trade Commission Act, as amended, the Communications Act
and
all other federal, state or foreign, if any, statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines and other laws that
are
designed or intended to prohibit, restrict or regulate
65
actions having
the
purpose or effect of monopolization or restraint of trade or lessening
competition, whether in the communications industry or otherwise through
merger
or acquisition.
8.7
IRS Distribution Ruling; Other IRS Rulings; Tax Opinions.
(a) IRS
Rulings.
(i)
As soon as reasonably practicable after the date of this Agreement, AT Co.
and
the Company, as to matters germane to the Merger, shall submit to the IRS
a
request (the “Ruling Request”) for (A) the IRS Contribution Ruling,
(B) the IRS Distribution Ruling, (C) the IRS Debt Exchange
Ruling,
(D) the IRS Special Dividend Ruling, (E) the IRS 357(c) Ruling
and
(F) any other ruling in connection with the Contribution, the Distribution
or the Merger that AT Co., in consultation with the Company, deems to be
appropriate. The initial Ruling Request and any supplemental materials submitted
to the IRS relating thereto (each, an “IRS Submission”) shall be prepared
by AT Co. AT Co. shall provide the Company with a reasonable opportunity
to
review and comment on each IRS Submission prior to the filing of such IRS
Submission with the IRS; provided that AT Co. may redact from any IRS Submission
any information (“Redactable Information”) that (A) AT Co., in its
good faith judgment, considers to be confidential and not germane to the
Company’s or Spinco’s obligations under this Agreement or any of the other
Transaction Agreements, and (B) is not a part of any other publicly
available information, including any non-confidential filing.
(ii)
No IRS Submission shall be filed with the IRS unless, prior to such filing,
the
Company shall have agreed as to the contents of such IRS Submission, to the
extent that such contents (A) include statements or representations
relating to facts that are or will be under the control of the Company or
any of
its Affiliates (including Spinco or the Spinco Subsidiaries for periods after
the Effective Time) or (B) are relevant to, or create, any actual
or
potential obligations of, or limitations on, the Company or any of its
Affiliates (including Spinco or the Spinco Subsidiaries for periods after
the
Effective Time), including any such obligations of, or limitations on, the
Company or its Affiliates (including Spinco or the Spinco Subsidiaries for
periods after the Effective Time) under this Agreement or any of the other
Transaction Agreements. AT Co. shall provide the Company with copies of each
IRS
Submission as filed with the IRS promptly following the filing thereof;
provided that AT Co. may redact any Redactable Information from the IRS
Submission. Neither AT Co. nor AT Co.’s representatives shall conduct any
substantive communications with the IRS regarding any material issue arising
with respect to the Ruling Request, including meetings or conferences with
IRS
personnel, whether telephonically, in person or otherwise, without first
notifying the Company or the Company’s representatives and giving the Company
(or the Company’s representatives) a reasonable opportunity to participate, and
a reasonable number of the Company’s representatives shall have an opportunity
to participate in all conferences or meetings with IRS personnel that take
place
in person, regardless of the nature of the issues expected to be discussed.
Solely for the avoidance of doubt, nothing in this Section 8.7(a)(ii)
shall
provide grounds for Spinco or the Company to alter any obligation or limitation
imposed upon it under this Agreement.
66
(iii)
Each of AT Co., Spinco and the Company agrees to use its reasonable best
efforts
to obtain the IRS Contribution Ruling, the IRS Distribution Ruling, the IRS
Debt
Exchange Ruling, the IRS Special Dividend Ruling, the IRS 357(c) Ruling and
the
other rulings set forth in the Ruling Request, including providing such
appropriate information and representations as the IRS shall require in
connection with the Ruling Request and any IRS Submissions..
(b) Distribution
Tax Opinion. Each of AT Co., Spinco and the Company agrees to use its
reasonable best efforts to obtain the Distribution Tax Opinion. The Distribution
Tax Opinion shall be based upon the IRS Contribution Ruling, the IRS
Distribution Ruling, the IRS Debt Exchange Ruling, the IRS Special Dividend
Ruling and customary representations and covenants, including those contained
in
certificates of AT Co., Spinco, the Company and others, reasonably satisfactory
in form and substance to AT Co. Tax Counsel (such representations and covenants,
the “Distribution Tax Representations”). Each of AT Co., Spinco and the
Company shall deliver to AT Co. Tax Counsel for purposes of the Distribution
Tax
Opinion customary Distribution Tax Representations, reasonably satisfactory
in
form and substance to AT Co. Tax Counsel.
(c) Merger
Tax Opinions. AT Co. and Spinco, on the one hand, and the Company, on the
other hand, shall cooperate with each other in obtaining, and shall use their
respective reasonable best efforts to obtain, a written opinion of their
respective tax counsel, Xxxxxxxx & Xxxxx LLP, in the case of the Company
(“Company Tax Counsel”), and AT Co. Tax Counsel, in the case of AT Co.
and Spinco, in form and substance reasonably satisfactory to the Company
and AT
Co., respectively (each such opinion, a “Merger Tax Opinion”), dated as
of the Effective Time, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, the Merger will
be
treated as a tax-free reorganization within the meaning of Section 368(a)
of the
Code. Each of the Company, AT Co. and Spinco shall deliver to Company Tax
Counsel and AT Co. Tax Counsel for purposes of the Merger Tax Opinions customary
representations and covenants, including those contained in certificates
of the
Company, AT Co., Spinco and others, reasonably satisfactory in form and
substance to Company Tax Counsel and AT Co. Tax Counsel.
8.8
Letter of Spinco’s Accountants. In connection with the information
regarding Spinco or the Spinco Subsidiaries or the transactions contemplated
by
this Agreement provided by Spinco specifically for inclusion in, or
incorporation by reference into, the Proxy Statement/Prospectus and the
Registration Statement, Spinco shall use all reasonable best efforts to cause
to
be delivered to the Company two letters of PricewaterhouseCoopers LLP, one
dated
the date on which the Registration Statement shall become effective and one
dated the Closing Date, and addressed to the Company, in form and substance
reasonably satisfactory to the Company and customary in scope and substance
for
letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement.
8.9
Letter of the Company’s Accountants. In connection with the information
regarding the Company or its Subsidiaries or the transactions contemplated
by
this Agreement provided by the Company specifically for inclusion in, or
incorporation by reference into, the Proxy Statement/Prospectus and the
Registration Statement, the Company shall use all reasonable best efforts
to
cause to be delivered to Spinco two letters of Deloitte & Touche LLP,
67
one dated the date
on
which the Registration Statement shall become effective and one dated the
Closing Date, and addressed to AT Co. and Spinco, in form and substance
reasonably satisfactory to AT Co. and Spinco and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement.
8.10
Employee Matters.
(a) As
of the Closing Date, the Surviving Corporation shall, or shall cause one
of its
Subsidiaries to, continue to employ as a successor employer all of the Spinco
Employees (as of immediately prior to the Effective Time, including all such
employees who have the rights of employment in accordance with the established
practices or policies of Spinco on return from any vacation, leave or other
authorized absence) (collectively, the “Transferred Employees”), provided
that nothing in this Agreement shall require the Surviving Corporation to
retain
or employ such employees for any specific length of time.
(b) Subject
to the terms of the Employee Benefits Agreement and the other provisions
of this
Section 8.10, the Surviving Corporation shall cause the Transferred
Employees to receive substantially the same level of benefits, in the aggregate,
as provided under the Spinco Benefit Plans as of the Distribution Date for
a
period of one (1) year after the Effective Time.
(c) To
the extent that service is relevant for all purposes, including eligibility
to
participate, vesting credit, eligibility to commence benefits, benefit accrual,
early retirement subsidies, and severance benefits, under a Company Benefit
Plan
maintained for the benefit of the Transferred Employees, the Company or one
of
its Subsidiaries shall, effective as of the Closing, cause each Transferred
Employee to be credited with service under the applicable Company Benefit
Plans
for all service earned by such Transferred Employee with Spinco or AT Co.
(including their respective predecessors) prior to or on the Closing Date;
provided, however, that such service shall not be required to be recognized
to
the extent that such recognition would result in a duplication of benefits.
(d) With
respect to any Company Benefit Plans in which any Transferred Employees become
eligible to participate on or after the Effective Time, the Company shall
(i) waive all pre-existing conditions, exclusions and waiting periods
with
respect to participation and coverage requirements applicable to the Transferred
Employees and their eligible dependents, and (ii) for purposes of
satisfying any deductible or out-of-pocket requirements, provide each
Transferred Employee and their eligible dependents with credit for any
co-payments and deductibles paid prior to the Effective Time under the analogous
Spinco Benefit Plan. With respect to any former employees of Spinco (the
“Former Employees”) who are receiving “continuation coverage” under a
Spinco Benefit Plan, as of the Effective Time, in accordance with the
requirements of COBRA, the Company shall (i) provide, or cause to
be
provided, as of the Effective Time, continued coverage under a group health
plan
sponsored by the Company or one of its Subsidiaries, and (ii) waive all
pre-existing conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Former Employees
and
their eligible dependents.
68
(e) At
the Effective Time, the Surviving Corporation shall assume, honor and discharge
when due all Spinco Liabilities associated with the Transferred Employees.
In
furtherance and not in limitation of the foregoing, the Surviving Corporation
shall issue to the Transferred Employees restricted shares of common stock
of
the Surviving Corporation in such amounts, and on such terms and conditions,
as
shall be set forth in the Employee Benefits Agreement and Section 8.10(e)
of the Spinco Disclosure Letter with respect to such Transferred Employees
and
shall use its reasonable best efforts to cause such grants to be made at
or as
soon as practicable after the Effective Time.
8.11
Access to Information.
(a) Upon
reasonable notice, each of AT Co., Spinco and the Company shall afford to
each
other and to its respective officers, employees, accountants, counsel and
other
authorized representatives, reasonable access during normal business hours,
throughout the period prior to the earlier of the Effective Time or the
Termination Date, to its and its Subsidiaries’ officers, employees, accountants,
consultants, representatives, plants, properties, Contracts, commitments,
books,
records (including Tax Returns) and any report, schedule or other document
filed
or received by it pursuant to the requirements of the federal or state
securities laws, and shall use all reasonable best efforts to cause its
respective representatives to furnish promptly to the others such additional
financial and operating data and other information, including environmental
information, as to its and its Subsidiaries’ respective businesses and
properties as the others or their respective duly authorized representatives,
as
the case may be, may reasonably request. The parties hereby agree that the
provisions of the Confidentiality Agreement shall apply to all information
and
material furnished by any party or its representatives thereunder and hereunder.
(b) Between
the date hereof and the Closing Date, (i) Spinco shall furnish to
the
Company and its authorized representatives monthly unaudited summary financial
information prepared for AT Co. management with respect to Spinco’s ILEC, CLEC
and Internet Divisions for each monthly period ending after the date hereof
and
before the Closing and such financial information shall be prepared on a
consistent basis with past periods, and (ii) the Company shall furnish
to
AT Co., Spinco and their respective authorized representatives unaudited
interim
combined statements of operations of the Company and its Subsidiaries prepared
on a consistent basis with past periods, in each case, as soon as practicable
following the end of each fiscal month, but in any event no later than thirty
(30) days following the end of such fiscal month.
8.12
No Solicitation by the Company.
(a) The
Company agrees that, following the date of this Agreement and prior to the
earlier of the Effective Time or the Termination Date, neither it nor any
Company Subsidiary shall, and that it shall use reasonable best efforts to
cause
its and the Company’s and each Company Subsidiary’s officers, directors,
employees, advisors and agents not to, directly or indirectly,
(i) knowingly solicit, initiate or encourage any inquiry or proposal
that
constitutes or could reasonably be expected to lead to a Company Acquisition
Proposal, (ii) provide any non-public information or data to any Person
relating to or in connection with a Company Acquisition Proposal, engage
in any
discussions or negotiations concerning a
69
Company Acquisition
Proposal, or otherwise knowingly facilitate any effort or attempt to make
or
implement a Company Acquisition Proposal, (iii) approve, recommend, agree
to or
accept, or propose publicly to approve, recommend, agree to or accept, any
Company Acquisition Proposal, or (iv) approve, recommend, agree to
or
accept, or propose to approve, recommend, agree to or accept, or execute
or
enter into, any letter of intent, agreement in principle, merger agreement,
acquisition agreement, option agreement or other similar agreement related
to
any Company Acquisition Proposal. Without limiting the foregoing, any violation
of the restrictions set forth in the preceding sentence by any of the Company’s
Subsidiaries or any of the Company’s or the Company Subsidiaries’ officers,
directors, employees, agents or representatives (including any investment
banker, attorney or accountant retained by the Company or the Company
Subsidiaries) shall be a breach of this Section 8.12(a) by the Company.
The
Company agrees that it will immediately cease and cause to be terminated
any
existing activities, discussions or negotiations with any Persons conducted
heretofore with respect to any Company Acquisition Proposal (except with
respect
to the transactions contemplated by this Agreement).
(b) Notwithstanding
the foregoing, nothing contained in this Agreement shall prevent the Company
or
the Company’s Board of Directors from, prior to the adoption of this Agreement
by the holders of Company Common Stock, engaging in any discussions or
negotiations with, or providing any non-public information to, any Person,
if
and only to the extent that (i) the Company receives from such Person
an
unsolicited bona fide Company Superior Proposal or a Company Acquisition
Proposal that the Company’s Board of Directors determines in good faith could
lead to a Company Superior Proposal, (ii) the Company’s Board of Directors
determines in good faith (after consultation with its legal advisors) that
its
failure to do so would be inconsistent with the Company’s Board of Directors’
fiduciary duties under applicable Law, (iii) prior to providing any
information or data to any Person in connection with a proposal by any such
Person, the Company’s Board of Directors receives from such Person an executed
confidentiality agreement substantially similar to the Confidentiality Agreement
and (iv) prior to providing any non-public information or data to
any
Person or entering into discussions or negotiations with any Person, the
Company’s Board of Directors notifies AT Co. promptly of any such inquiry,
proposal or offer received by, any such information requested from, or any
such
discussions or negotiations sought to be initiated or continued with, the
Company, any Company Subsidiary or any of their officers, directors, employees,
advisors and agents indicating, in connection with such notice, the material
terms and conditions of the Company Acquisition Proposal and the identity
of the
Person making such Company Acquisition Proposal. The Company agrees that
it
shall keep AT Co. reasonably informed, on a reasonably prompt basis, of the
status and material terms of any such proposals or offers and the status
of any
such discussions or negotiations and will notify AT Co. promptly of any
determination by the Company’s Board of Directors that a Company Superior
Proposal (as hereinafter defined) has been made. For purposes of this Agreement,
a “Company Superior Proposal” means any proposal or offer made by a third
party to acquire, directly or indirectly, by merger, consolidation or otherwise,
for consideration consisting of cash and/or securities, at least a majority
of
the shares of the Company Common Stock then outstanding or all or substantially
all of the assets of the Company and the Company Subsidiaries and otherwise
on
terms which the Board of Directors of the Company (after consultation with
its
legal and financial advisors) determines in its good faith judgment to be
more
favorable to the Company’s stockholders than the Merger.
70
(c) Prior
to the adoption of this Agreement by the holders of Company Common Stock,
the
Board of Directors of the Company may, if it concludes in good faith (after
consultation with its legal advisors) that failure to do so would be
inconsistent with its obligations to comply with its fiduciary duties under
applicable Law, withdraw its recommendation of the Merger, but only at a
time
that is after the third business day following AT Co.’s receipt of written
notice from the Company advising AT Co. of its intention to do so.
(d) Nothing
in this Agreement shall prohibit the Company from taking and disclosing to
its
stockholders a position contemplated by Rule 14e-2(a) promulgated
under the
Exchange Act or from making any disclosure to the Company stockholders if,
in
the good faith judgment of the Board of Directors of the Company (after
consultation with its legal advisors), it is required to do so in order to
comply with its fiduciary duties to the Company’s stockholders under applicable
Law; provided, however, that neither the Company nor its Board of Directors
nor
any committee thereof shall approve or recommend, or propose publicly to
approve
or recommend, a Company Acquisition Proposal unless the Company has first
terminated this Agreement pursuant to Section 11.1(h) hereof and has
otherwise complied with the provisions thereof.
8.13
Director and Officer Indemnification; Insurance.
(a) From
and after the Effective Time, the Surviving Corporation shall, for a period
of
six years after the Effective Time, indemnify, defend and hold harmless to
the
fullest extent permitted by applicable Law each person who is, or has been
at
any time prior to the Effective Time, an officer or director of the Company
or
Spinco and each person who served at the request of the Company or Spinco
as a
director, officer, trustee or fiduciary of another corporation, partnership,
joint venture, trust, pension or other employee benefit plan or enterprise,
including any person serving in such capacity at the request of AT Co. with
respect to Spinco or a Spinco Subsidiary (individually, an “Indemnified
Party” and, collectively, the “Indemnified Parties”) against all
losses, claims, damages, liabilities, costs and expenses (including attorneys’
fees), judgments, fines, penalties and amounts paid in settlement with approval
of the indemnifying party (which approval shall not be unreasonably withheld,
conditioned or delayed) in connection with any claim, action, suit, proceeding
or investigation arising out of or pertaining to acts or omissions, or alleged
acts or omissions, by them in their capacities as such, whether commenced,
asserted or claimed before or after the Effective Time. In the event of any
such
claim, action, suit, arbitration, proceeding or investigation (“Action”):
(i) the Surviving Corporation shall pay, as incurred, the reasonable
fees
and expenses of counsel selected by the Indemnified Party, which counsel
shall
be reasonably acceptable to the Surviving Corporation, in advance of the
final
disposition of any such Action to the fullest extent permitted under applicable
Law upon receipt of an undertaking to repay such amounts in the event it
is
determined that such person is not entitled to be indemnified under applicable
Law, and (ii) the Surviving Corporation will provide reasonable cooperation
in the defense of any such Action; provided, however, the Surviving Corporation
shall not be liable for any settlement effected without its written consent
(which consent shall not be unreasonably withheld, conditioned or delayed),
and
provided further, that the Surviving Corporation shall not be obligated pursuant
to this Section 8.12(a) to pay the fees and disbursements of more
than one
counsel for all Indemnified Parties in a single Action, unless, in the good
faith judgment of any of the Indemnified Parties, there is or may be a conflict
of interests between two or more of such
71
Indemnified Parties,
in
which case there may be separate counsel for each similarly situated group
(which counsel shall be reasonably acceptable to the Surviving Corporation).
In
the event of any Action, any Indemnified Party wishing to claim indemnification
will promptly notify the Surviving Corporation thereof (provided, that failure
to so notify the Surviving Corporation will not affect the obligations of
the
Surviving Corporation except to the extent that the Surviving Corporation
shall
have been prejudiced as a result of such failure). Notwithstanding the
foregoing, nothing contained in this Section 8.12 shall be deemed
to grant
any right to any Indemnified Party which is not permitted to be granted to
an
officer or director of the Surviving Corporation under Delaware law, assuming
for such purposes that the Surviving Corporation’s Amended and Restated
Certificate of Incorporation and Amended and Restated Bylaws provide for
the
maximum indemnification permitted by Law.
(b) Without
limiting the rights that any Indemnified Party may have under applicable
Law,
the parties agree that all rights of indemnification existing as of the date
hereof as provided in the respective certificate of incorporation and bylaws
of
the Company and Spinco shall survive the Merger and shall continue in full
force
and effect in accordance with their terms for a period of six years following
the Effective Time.
(c) For
a period of six years following the Effective Time, the Surviving Corporation
shall cause to be maintained directors’ and officers’ liability insurance
policies covering the Indemnified Parties; provided that with respect to
any
Indemnified Party who is or at any time prior to the Effective Time was covered
by AT Co.’s existing directors’ and officers’ liability insurance policies, such
coverage shall be on terms substantially no less advantageous to the Indemnified
Parties than such insurance with respect to claims arising from facts or
events
that occurred up to and including the Effective Time to the extent available;
provided, however, that the Surviving Corporation may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions that are no less advantageous to the covered persons; provided
further, that the Surviving Corporation shall not be required to pay an annual
premium for such insurance in excess of $2,000,000.
(d) This
Section 8.12 is intended to be for the benefit of, and shall be enforceable
by, the persons for whom indemnification is provided pursuant to this
Section 8.12, their heirs and personal representatives, and shall
be
binding on Spinco and the Company and their respective successors and assigns.
8.14
Rule 145 Affiliates. Spinco shall, at least 10 days prior to
the Effective Time, cause to be delivered to the Company a list, reviewed
by its
counsel, identifying all persons who will be, in its reasonable judgment,
at the
Effective Time, “affiliates” of Spinco for purposes of Rule 145 promulgated
by the SEC under the Securities Act (each, a “Rule 145 Affiliate”).
Spinco shall furnish such information and documents as the Company may
reasonably request for the purpose of reviewing such list. Spinco shall use
all
reasonable best efforts to cause each person who is identified as a
Rule 145 Affiliate in the list furnished pursuant to this Section 8.14
to execute a written agreement (each, a “Rule 145 Affiliate
Agreement”), substantially in the form of Exhibit F to this
Agreement, at or prior to the Effective Time.
72
8.15
Public Announcements. AT Co., Spinco and the Company shall consult with
each other and shall mutually agree upon any press release or public
announcement relating to the transactions contemplated by this Agreement
and
neither of them shall issue any such press release or make any such public
announcement prior to such consultation and agreement, except as may be required
by applicable Law or by obligations pursuant to any listing agreement with
any
national securities exchange or automated inter-dealer quotation system,
in
which case the party proposing to issue such press release or make such public
announcement shall use all reasonable best efforts to consult in good faith
with
the other party before issuing any such press release or making any such
public
announcement.
8.16
Defense of Litigation. Each of AT Co., Spinco and the Company shall use
all reasonable best efforts to defend against all actions, suits or proceedings
in which such party is named as a defendant that challenge or otherwise seek
to
enjoin, restrain or prohibit the transactions contemplated by this Agreement
or
seek damages with respect to such transactions. None of AT Co., Spinco or
the
Company shall settle any such action, suit or proceeding or fail to perfect
on a
timely basis any right to appeal any judgment rendered or order entered against
such party therein without having previously consulted with the other parties.
Each of AT Co., Spinco and the Company shall use all reasonable best efforts
to
cause each of its Affiliates, directors and officers to use all reasonable
best
efforts to defend any such action, suit or proceeding in which such Affiliate,
director or officer is named as a defendant and which seeks any such relief
to
comply with this Section 8.16 to the same extent as if such Person
was a
party.
8.17
Notification.
(a) From
time to time prior to the Effective Time, each of AT Co., Spinco and the
Company
shall supplement or amend its respective Disclosure Letter with respect to
any
matter hereafter arising that, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in such
Disclosure Letter or that is necessary to complete or correct (i) any
information in such Disclosure Letter that is or has been rendered untrue,
inaccurate, incomplete or misleading, (ii) any representation or warranty
of such party in this Agreement that contains a qualification as to materiality
or Material Adverse Effect that has been rendered untrue or inaccurate, in
any
respect, thereby or (iii) any representation or warranty of such party
in
this Agreement that is not so qualified and that has been rendered untrue
or
inaccurate, in any material respect, thereby. Delivery of such supplements
shall
be for informational purposes only and shall not expand or limit the rights
or
affect the obligations of any party hereunder, including any party’s obligation
to consummate the Merger. Such supplements shall not constitute a part of
the AT
Co. Disclosure Letter, the Spinco Disclosure Letter or the Company Disclosure
Letter, as the case may be, for purposes of this Agreement.
(b) Each
of AT Co., Spinco and the Company shall give prompt notice to the other of
the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence
of
which has caused or is reasonably likely to cause (i) any covenant
or
agreement of such party contained in this Agreement not to be performed or
complied with, in any material respect or (ii) any condition contained
in
Article IX to become incapable of being fulfilled at or prior to the
Effective Time; provided, however, that the delivery of any notice pursuant
to
this Section 8.17(b) shall not cure such breach or noncompliance or
limit
or otherwise affect the remedies available hereunder to the party receiving
such
notice.
73
(c) Each
of the parties hereto shall keep the others informed on a timely basis as
to the
status of the transactions contemplated by the Transaction Agreements and
the
obtaining of all necessary and appropriate exemptions, rulings, consents,
authorizations and waivers related thereto.
8.18
SEC Reports. Each of AT Co. and the Company shall file all reports
required to be filed by each of them with the SEC between the date of this
Agreement and the Effective Time and shall notify the other parties of all
such
reports promptly after the same are filed.
8.19
Section 16 Matters. Prior to the Effective Time, the Company and
Spinco shall take all such steps as may be required to cause any dispositions
of
Spinco Common Stock (including derivative securities with respect to Spinco
Common Stock) or acquisitions of Company Common Stock (including derivative
securities with respect to Company Common Stock) resulting from the transactions
contemplated by this Agreement by each individual who is subject to the
reporting requirements of Section 16(a) of the Exchange Act with respect
to the
Company or Spinco to be exempt under Rule 16b-3 promulgated under
the
Exchange Act, such steps to be taken in accordance with applicable SEC rules
and
regulations and interpretations of the SEC staff.
8.20
Control of Other Party’s Business. Nothing contained in this Agreement
shall give AT Co. or Spinco, directly or indirectly, the right to control
or
direct the Company’s operations prior to the Effective Time. Nothing contained
in this Agreement shall give the Company, directly or indirectly, the right
to
control or direct the operations of the business of Spinco and the Spinco
Subsidiaries prior to the Effective Time. Prior to the Effective Time, each
of
AT Co., Spinco and the Company shall exercise, consistent with the terms
and
conditions of this Agreement, complete control and supervision over its
respective operations.
8.21
Dividend Policy of the Surviving Corporation. After the Effective Time,
the initial dividend policy of the Surviving Corporation (which may be changed
at any time by the Surviving Corporation’s Board of Directors) shall provide for
the payment, subject to applicable Law, of regular quarterly dividends on
each
issued and outstanding share of Common Stock of the Surviving Corporation
of
$0.25 per share.
8.22
Amendment of Company Securityholders Agreement. The Company shall use its
reasonable best efforts to cause the Securityholders Agreement, dated as
of
February 14, 2005, by and among the Company, the WCAS Persons, the
Vestar
Persons and certain of its other stockholders (the “Company Securityholders
Agreement”) to be amended effective as of the Effective Time, without any
requirement that the Company pay any additional consideration to any party,
such
that from and after the Effective Time, the Company Securityholders Agreement
shall have substantially the terms set forth on Exhibit G hereto.
8.23
Disclosure Controls. Each of AT Co., Spinco and the Company shall use its
reasonable best efforts to implement such programs and take such steps as
are
reasonably necessary to (i) develop a system of internal controls over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act)
intended to ensure that after the Effective Time material information relating
to the Surviving Corporation is timely made known to the
74
management of the
Surviving Corporation by others within those entities, (ii) cooperate
reasonably with each other in preparing for the transition and integration
of
the financial reporting systems of Spinco and the Spinco Subsidiaries with
the
Company’s financial reporting systems following the Effective Time and
(iii) otherwise enable the Surviving Corporation to maintain compliance
with the provisions of Section 404 of the Xxxxxxxx-Xxxxx Act.
8.24
Corporate Name; Branding. Prior to the Effective Time, Spinco, AT Co. and
the Company shall cooperate to develop one or more mutually agreed upon
trademarks, service marks, brand names, or trade or business names for use
by
the Surviving Corporation in connection with the sale, promotion and marketing
of its products and services and to develop a mutually acceptable re-branding
strategy for the Surviving Corporation. Spinco, AT Co. and the Company shall
use
their respective reasonable best efforts to cause the Surviving Corporation
to
implement such re-branding strategy as promptly as practicable after the
Effective Time and shall take, and shall cause the Surviving Corporation
to
take, all such steps as are reasonably necessary to have removed and otherwise
discontinue the use of all trademarks, service marks, brand names or trade,
corporate or business names consisting of, derived from, including or
incorporating the name “ALLTEL” that are contained in or on any of the Spinco
Assets and shall have taken all necessary action, corporate or otherwise,
to
amend the corporate name of each of the Spinco Subsidiaries to remove the
names
“ALLTEL” therefrom.
ARTICLE
IX
CONDITIONS TO THE MERGER
CONDITIONS TO THE MERGER
9.1
Conditions to the Obligations of Spinco, AT Co. and the Company to Effect
the
Merger. The respective obligations of each party to consummate the Merger
shall be subject to the fulfillment (or, to the extent permitted by applicable
Law, written waiver by AT Co. and the Company) at or prior to the Effective
Time
of the following conditions:
(a) Each
of the Contribution, the Distribution and the Debt Exchange shall have been
consummated, in each case, in accordance with the Distribution Agreement,
the
IRS Contribution Ruling, the IRS Distribution Ruling, the IRS Debt Exchange
Ruling, the IRS Special Dividend Ruling and the Distribution Tax Opinion;
provided that this Section 9.1(a) shall not be a condition to the
consummation of the Merger by any party whose failure to comply with its
obligations and/or covenants set forth in this Agreement or the Distribution
Agreement gives rise to the failure of the Contribution, the Distribution
or the
Debt Exchange to have been consummated.
(b) Any
applicable waiting period under the HSR Act shall have expired or been
terminated; and the other Company Approvals, AT Co. Approvals and Spinco
Approvals set forth on Schedule 9.1(b) hereto shall have been obtained.
(c) Unless
waived in writing by the Company, AT Co., and Spinco, all Telecommunications
Regulatory Consents other than any Telecommunications Regulatory Consents,
the
failure of which to be obtained would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company,
AT
Co. or Spinco (i) shall have been granted without the imposition of
any
condition that Spinco or the Company
75
would not be required
to agree to pursuant to Section 8.6, and (ii) all such Telecommunications
Regulatory Consents shall be in full force and effect.
(d) The
Registration Statement shall have become effective in accordance with the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order; all necessary permits and authorizations under state
securities or “blue sky” laws, the Securities Act and the Exchange Act relating
to the issuance and trading of shares of Company Common Stock to be issued
pursuant to the Merger shall have been obtained and shall be in effect; and
such
shares of Company Common Stock and such other shares required to be reserved
for
issuance pursuant to the Merger shall have been Approved for Listing.
(e) The
Requisite Approval shall have been obtained, in accordance with applicable
Law
and the rules and regulations of the NYSE.
(f) No
court of competent jurisdiction or other Governmental Authority shall have
issued an Order that is still in effect restraining, enjoining or prohibiting
the Contribution, the Distribution or the Merger.
(g) No
action shall have been taken, and no statute, rule, regulation or executive
order shall have been enacted, entered, promulgated or enforced by any
Governmental Authority with respect to the Contribution, the Distribution
and
the Merger or the other transactions contemplated hereby or by the Distribution
Agreement that, individually or in the aggregate, would (i) restrain,
enjoin or prohibit the consummation of the Contribution, the Distribution
or the
Merger or the other transactions contemplated hereby or by the Distribution
Agreement or (ii) impose any restrictions or requirements thereon
or on AT
Co., Spinco or the Company with respect thereto that would reasonably be
expected to have a Material Adverse Effect on AT Co. or the Surviving
Corporation following the Merger (collectively, a “Restraint”), and no
Governmental Authority shall have instituted any proceeding seeking any such
Restraint.
(h) Spinco
shall have consummated the Spinco Financing (with respect to the Spinco Credit
Agreement and, if applicable, the bridge financing for the Spinco Notes,
substantially on the terms set forth in the Senior Debt Commitment Letter
or
such other terms as are more favorable in the aggregate or not less favorable
in
the aggregate) and Spinco shall have received the proceeds therefrom in an
amount sufficient to pay the Special Dividend and consummate the other
transactions contemplated hereby and by the Distribution Agreement.
(i) AT
Co. and Spinco (and, to the extent applicable, the Company) shall have received
the IRS Contribution Ruling, the IRS Distribution Ruling, the IRS Debt Exchange
Ruling, the IRS Special Dividend Ruling, the IRS 357(c) Ruling and the
Distribution Tax Opinion, each in form and substance reasonably satisfactory
to
AT Co., Spinco and the Company, and such rulings shall continue to be valid
and
in full force and effect.
(j) The
Company shall have received a Merger Tax Opinion from Company Tax Counsel,
in
form and substance reasonably satisfactory to the Company, and AT Co. and
Spinco
shall have received a Merger Tax Opinion from AT Co. Tax Counsel, in form
and
substance reasonably satisfactory to AT Co. and Spinco.
76
(k) The
Boards of Directors of AT Co. and Spinco shall have received customary
“solvency” and “surplus” opinions of a nationally recognized investment banking
or appraisal firm in form and substance reasonably satisfactory to such Boards
and, to the extent relating to Spinco, reasonably satisfactory to the Company
(such opinions to be dated as of the date the Board of Directors of AT Co.
declares the Distribution and the Distribution Date, the date on which the
Board
of Directors of Spinco declares the Special Dividend, the distribution of
the
Spinco Exchange Notes to AT Co. for purposes of effecting the Debt Exchange
and,
if applicable, a dividend payable to AT Co. in shares of Spinco Common Stock
pursuant to Section 3.2 of the Distribution Agreement, and the date
on
which each such dividend or distribution is paid).
9.2
Additional Conditions to the Obligations of AT Co. and Spinco. The
obligation of AT Co. and Spinco to consummate the Merger shall be subject
to the
fulfillment (or, to the extent permitted by applicable Law, waiver by AT
Co.) at
or prior to the Effective Time of the following additional conditions:
(a) The
Company shall have performed in all material respects all obligations and
complied in all material respects with all covenants required by this Agreement
to be performed or complied with by it prior to the Effective Time.
(b) Each
of the representations and warranties of the Company (i) set forth
in
Article VII (other than Sections 7.2(a), 7.3(a) and 7.5) of
this
Agreement shall be true and correct as of the date of this Agreement and
as of
the Closing Date as though such representations and warranties were made
on and
as of such date, except for representations and warranties that speak as
of an
earlier date or period which shall be true and correct as of such date or
period; provided, however, that for purposes of this clause, such
representations and warranties shall be deemed to be true and correct unless
the
failure or failures of all such representations and warranties to be so true
and
correct, without giving effect to any qualification as to materiality or
Material Adverse Effect set forth in such representations or warranties,
would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company and (ii) set forth in Sections 7.2(a),
7.3(a) and 7.5 of this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date, except for representations and warranties
that speak as of an earlier date or period which shall be true and correct
as of
such date or period.
(c) The
Company shall have delivered to AT Co. a certificate, dated as of the Effective
Time, of a senior officer of the Company certifying the satisfaction by the
Company of the conditions set forth in subsection (a) and (b) of
this
Section 9.2.
(d) Except
as disclosed in the Company Disclosure Letter or as expressly contemplated
by
this Agreement, since the Interim Balance Sheet Date, there shall have been
no
event, occurrence, development or state of circumstances or facts that has
had,
individually or in the aggregate, a Material Adverse Effect on the Company.
(e) The
Company, each of the WCAS Persons, the Vestar Persons and, if required, each
of
the other stockholders party thereto shall have delivered evidence, in form
and
substance reasonably satisfactory to AT Co. and Spinco, demonstrating that
the
Company
77
Securityholders
Agreement has been amended, effective as of the Effective Time, without any
cost
or liability to the Company, such that from and after the Effective Time,
the
Company Securityholders Agreement shall have substantially the terms set
forth
on Exhibit G hereto.
9.3
Additional Conditions to the Obligations of the Company. The obligation
of the Company to consummate the Merger shall be subject to the fulfillment
(or,
to the extent permitted by applicable Law waiver by the Company) at or prior
to
the Effective Time of the following additional conditions:
(a) Spinco
and AT Co. shall have performed in all material respects and complied in
all
material respects with all covenants required by this Agreement to be performed
or complied with at or prior to the Effective Time.
(b) Each
of the representations and warranties of AT Co. and Spinco (i) set
forth in
Article V and VI (other than Sections 5.2(a), 6.3(a), 6.3(a)
and 6.5)
of this Agreement shall be true and correct as of the date of this Agreement
and
as of the Closing Date as though such representations and warranties were
made
on and as of such date, except for representations and warranties that speak
as
of an earlier date or period which shall be true and correct as of such date
or
period; provided, however, that for purposes of this clause, such
representations and warranties shall be deemed to be true and correct unless
the
failure or failures of all such representations and warranties to be so true
and
correct, without giving effect to any qualification as to materiality or
Material Adverse Effect set forth in such representations or warranties,
would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on AT Co. or Spinco and (ii) set forth in
Sections 5.2(a), 6.2(a), 6.3(a) and 6.5 of this Agreement shall be
true and
correct in all material respects as of the date of this Agreement and as
of the
Closing Date as though made on and as of the Closing Date, except for
representations and warranties that speak as of an earlier date or period
which
shall be true and correct as of such date or period.
(c) AT
Co. and Spinco shall have delivered to the Company a certificate, dated as
of
the Effective Time, of a senior officer of each of AT Co. and Spinco certifying
the satisfaction of the conditions set forth in subsection (a) and
(b) of this Section 9.3.
(d) Spinco
and AT Co. shall have entered into the Tax Sharing Agreement, the Employee
Benefits Agreement, the Shared Assets Agreement, the Shared Contracts Agreement
and the Transition Services Agreement and each such agreement shall be in
full
force and effect.
(e) Except
as disclosed in the Spinco Disclosure Letter or as expressly contemplated
by
this Agreement, since the Interim Balance Sheet Date, there shall have been
no
event, occurrence, development or state of circumstances or facts that has
or
would have, individually or in the aggregate, a Material Adverse Effect on
Spinco.
(f) Spinco
shall have delivered to the Company an affidavit, dated as of the Closing
Date,
in form and substance required under the Treasury Regulations issued pursuant
to
Section 1445(b) of the Code.
78
ARTICLE
X
TAX MATTERS
TAX MATTERS
10.1
Representations.
(a) Spinco.
Spinco hereby represents and warrants that (i) it has examined (or
upon
receipt will examine) (A) the IRS Contribution Ruling, the IRS Distribution
Ruling, the IRS Debt Exchange Ruling, the IRS Special Dividend Ruling and
any
other rulings issued by the IRS in connection with the Distribution,
(B) the Distribution Tax Opinion, (C) each IRS Submission,
(D) the
Distribution Tax Representations and (E) any other materials delivered
or
deliverable by Spinco and others in connection with the rendering by AT Co.
Tax
Counsel of the Distribution Tax Opinion and the issuance by the IRS of the
IRS
Distribution Ruling and such other rulings (all of the foregoing, collectively,
the “Tax Materials”) and (ii) the facts presented and the
representations made therein, to the extent descriptive of or otherwise relating
to Spinco, are or will be from the time presented or made through and including
the Distribution Date true, correct and complete in all material respects.
(b) AT
Co. AT Co. hereby represents and warrants that (i) it has examined
(or
upon receipt will examine) the Tax Materials and (ii) the facts presented
and the representations made therein, to the extent descriptive of or otherwise
relating to AT Co., are or will be from the time presented or made through
and
including the Distribution Date true, correct and complete in all material
respects.
(c) The
Company. The Company hereby represents and warrants that (i) upon
receipt, it will examine the Tax Materials and (ii) following such
examination, to the extent that the Company approves the facts presented
and the
representations made therein which are descriptive of or otherwise relating
to
the Company, such facts and representations will be true, correct and complete
in all material respects. The Company further represents and warrants that,
except as set out on Schedule 10.1(c) of the Company Disclosure Letter,
neither the Company nor any Subsidiary of the Company owns any shares of
AT Co.
Common Stock or any rights, warrants or options to acquire, or securities
convertible into or exchangeable for, AT Co. Common Stock. The representations
and warranties set forth in this Section 10.1(c) shall be true and
correct
as of the date of this Agreement or, with respect to the Tax Materials, as
of
the date approved, and at all times through and including the Distribution
Date.
To the actual knowledge of each of the Chief Executive Officer, the Chief
Financial Officer and the General Counsel of the Company, none of Welsh Xxxxxx
Xxxxxxxx & Xxxxx IX, L.P., WCAS Capital Partners III, L.P., Welsh Xxxxxx
Xxxxxxxx & Xxxxx VIII, L.P., WCAS Management Corporation, Vestar Capital
Partners III, L.P., Vestar Capital Partners IV, L.P. or Vestar/Valor, LLC
(“Specified Fund Shareholders”) owns any shares of AT Co. Common Stock
(or any rights, warrants or options to acquire, or securities convertible
into
or exchangeable for, AT Co. Common Stock) that were acquired as part of a
plan
or series of related transactions that includes the Distribution within the
meaning of Section 355(e)(2)(A) of the Code. No representation is made as
to any
person other than a Specified Fund Shareholder, including any direct or indirect
partner of a Specified Fund Shareholder.
79
10.2
Restrictions Relating to the Distribution.
(a) Neither
the Company, nor the Surviving Corporation shall, nor shall the Company or
the
Surviving Corporation permit any of its Subsidiaries to, take any action,
including entering into any agreement, understanding or arrangement or any
substantial negotiations with respect to any transaction or series of
transactions that would cause a Distribution Disqualification to occur (any
such
action, a “Disqualifying Action”); provided, however, that
the term “Disqualifying Action” shall not include (i) any action that is
taken pursuant to the terms of the Transaction Agreements, (ii) any
action
that would not have caused a Distribution Disqualification to occur but for
an
AT Co. Action, (iii) for the avoidance of doubt, any action taken
by Spinco
or any of its Subsidiaries prior to the Distribution, (v) any action
taken
solely to mitigate the adverse effects on the Tax-Free Status of the
Transactions of a breach by Spinco, occurring prior to the Distribution,
of a
representation, warranty or covenant contained in the Transaction Agreements,
regardless of whether such breach or its effects continue after the
Distribution.
(b) Except
as otherwise provided in subsection (c) or (g) of this
Section 10.2, until the first day after the second anniversary of
the
Distribution Date, the Surviving Corporation shall not, nor shall the Surviving
Corporation permit any of its Subsidiaries to, take any action (including
entering into any agreement, understanding or arrangement or any substantial
negotiations with respect to any transaction or series of transactions) that
might cause a Distribution Disqualification to occur (any such action or
failure
to act, a “Potential Disqualifying Action”), including any action or
failure to act that might be inconsistent with any representation made in
the
Tax Materials, unless, prior to the taking of the Potential Disqualifying
Action, AT Co. has delivered to the Surviving Corporation a written
determination, in its reasonable discretion, which discretion shall be exercised
in good faith solely to preserve the Tax-Free Status of the Transactions,
that
the Potential Disqualifying Action would not jeopardize the Tax-Free Status
of
the Transactions.
(c) Until
the first day after the second anniversary of the Distribution Date, the
Surviving Corporation shall not enter into any agreement, understanding or
arrangement or any substantial negotiations with respect to any transaction
(including a merger to which the Surviving Corporation is a party) involving
the
acquisition (including by the Surviving Corporation or any of its Subsidiaries)
of common stock of the Surviving Corporation and shall not issue any additional
shares of capital stock or transfer or modify any options, warrants, convertible
obligations or other instrument that provides for the right or possibility
to
issue, redeem or transfer any shares of capital stock of the Surviving
Corporation (or enter into any agreement, understanding, arrangement or any
substantial negotiations with respect to any such issuance, transfer or
modification), except to the extent that all such agreements, understandings,
arrangements, substantial negotiations and other issuances, taken together,
do
not involve a direct or indirect acquisition by any Person or Persons of
more
than 71,130,989 shares of the stock of the Surviving Corporation (as adjusted
to
take into account any stock split, stock dividend, recapitalization,
reclassification or similar transaction with respect to the stock of the
Surviving Corporation). Notwithstanding the foregoing,
(i)
the Surviving Corporation may issue additional shares of common stock of
the
Surviving Corporation to a person in a transaction to which Section
80
83
or
Section 421(a) or (b) of the Code applies (or options to acquire stock
in
such a transaction) in connection with the person’s performance of services as
an employee, director or independent contractor of AT Co., the Company, the
Surviving Corporation, any of their respective Subsidiaries, or any other
person
that is related to AT Co., the Company or the Surviving Corporation under
Section 355(d)(7)(A) of the Code or a corporation the assets of which
the
Surviving Corporation or Subsidiary acquires in a reorganization under
Section 368 of the Code (including Spinco or any of its Subsidiaries),
provided that such stock is not excessive by reference to the services performed
by such person and such person or a coordinating group of which the person
is a
member will not be a controlling shareholder or a ten-percent shareholder
of the
Surviving Corporation (within the meaning of Treasury Regulations Section
1.355-7(h)(3) and (8)) immediately after the issuance of such common stock;
and
(ii)
the Surviving Corporation may issue additional shares of common stock of
the
Surviving Corporation to a retirement plan of the Surviving Corporation or
any
other person that is treated as the same employer as the Surviving Corporation
under Section 414(b), (c), (m), or (o) of the Code that qualifies
under Section 401(a) or 403(a) of the Code, provided that the stock acquired
by
all of the qualified plans of the Surviving Corporation and such other persons
during the four-year period beginning two years before the Distribution Date
does not, in the aggregate, represent more than ten percent of the total
combined voting power of all classes of stock of the Surviving Corporation
entitled to vote or more than ten percent of the total value of shares of
all
classes of stock of the Surviving Corporation.
(d) Until
the first day after the second anniversary of the Distribution Date, the
Surviving Corporation shall not, and shall not permit any of its Subsidiaries
to, repurchase any shares of common stock of the Surviving Corporation except
to
the extent consistent with the requirements of Revenue Procedure 96-30.
(e) Until
the first day after the second anniversary of the Distribution Date, the
Surviving Corporation shall cause its wholly-owned Subsidiaries that were
wholly-owned Subsidiaries of Spinco at the time of the Distribution (other
than
those set forth on Spinco Schedule 10.2(e)) to continue the active
conduct
of the Spinco Business to the extent so conducted by those Subsidiaries
immediately prior to the Distribution. The Surviving Corporation shall cause
those Subsidiaries to continue the active conduct of the Spinco Business
primarily through officers and employees of the Surviving Corporation or
any of
its Subsidiaries (and not primarily through independent contractors).
(f) Until
the first day after the second anniversary of the Distribution Date, the
Surviving Corporation shall not voluntarily dissolve, liquidate, merge or
consolidate with any other person, unless (i) in the case of a merger
or
consolidation, the Surviving Corporation is the survivor of the merger or
consolidation or (ii) prior to undertaking such action, AT Co. has
delivered to the Surviving Corporation a written determination, in its
reasonable discretion, which discretion shall be exercised in good faith
solely
to preserve the Tax-Free Status of the Transactions, that such action would
not
jeopardize the Tax-Free Status of the Transactions.
81
(g) Permitted
Actions and Transactions. Notwithstanding the foregoing, the provisions of
this Section 10.2 shall not prohibit the Surviving Corporation from
implementing any Potential Disqualifying Action upon which the IRS has granted
a
favorable ruling to AT Co. or the Surviving Corporation. Any such ruling
will be
treated as favorable for purposes of this Section 10.2(f) only if
the
Potentially Disqualifying Action is described in reasonable detail in such
ruling and it is clear on the face of such ruling that such Potentially
Disqualifying Action may be implemented without jeopardizing the Tax-Free
Status
of the Transactions.
10.3
Cooperation and Other Covenants.
(a) Notice
of Subsequent Actions. From and after the Effective Time, each of Spinco and
the Company, on the one hand, and AT Co., on the other hand, shall furnish
the
other with a copy of any ruling requests or other documents delivered to
the IRS
that relate to the Distribution or that otherwise reasonably could be expected
to have an impact on the Tax-Free Status of the Transactions; provided, that
each party may redact from any IRS Submission or other documents any Redactable
Information.
(b) Certain
Post-Closing Actions Requested by AT Co. After the Distribution Date, if
reasonably requested by AT Co., the Surviving Corporation will take an action
(or fail to take an action) to mitigate the effects of a breach by Spinco
prior
to the Distribution Date of a representation or covenant in this Article X;
provided that (i) the Surviving Corporation ‘s obligations under this
Section 10.3(b) are subject to AT Co.’s agreement to pay and indemnify the
Surviving Corporation against all reasonable costs and expenses of taking
or
refraining from taking such action and (ii) any such action (or failure
to
take such action), even if reasonably requested, does not and will not adversely
impact in any material respect the business, operations or financial condition
of the Surviving Corporation or any of its Subsidiaries or divisions. No
action
taken pursuant to this Section 10.3(b) shall be treated as a Disqualifying
Action or a Potential Disqualifying Action. Except as provided in this
Section 10.3(b), the Surviving Corporation and its Subsidiaries shall
have
no duty to take any action to mitigate the effects of a breach by Spinco
or its
Subsidiaries prior to the Distribution of a representation or covenant contained
in this Article X.
10.4
Indemnification for Disqualifying Actions.
(a) General.
Notwithstanding any other provision of this Agreement or any provision of
any of
the Tax Sharing Agreement to the contrary, if there is a Final Determination
that a Distribution Disqualification has occurred, then the Surviving
Corporation shall indemnify, defend and hold harmless AT Co. and the AT Co.
Subsidiaries (or any successor to any of them) from and against any and all
(A) Taxes imposed pursuant to a Final Determination and
(B) accounting, legal and other professional fees and court costs
incurred
in connection with such Taxes (other than such costs incurred in the joint
defense of a Third-Party Claim, which costs are subject to Section 10.5(e)
below), (C) costs and expenses that result from adverse tax consequences
to
AT Co. or AT Co.’s stockholders (including all costs, expenses and damages
associated with stockholders litigation or controversies) and (D) all
Taxes
resulting from indemnification payments hereunder (collectively, “Tax-Related
Losses”), incurred by AT
82
Co. to the extent
that
the Distribution Disqualification is caused by any Disqualifying Action taken
by
the Surviving Corporation or any of its Subsidiaries after the Distribution
Date.
(b) Exceptions
to Indemnification.
(i)
If AT Co. delivers to the Surviving Corporation a written determination,
pursuant to any clause of Section 10.2, that a Potential
Disqualifying Action or other action described in Section 10.2 would
not jeopardize the Tax-Free Status of the Transactions, then the Surviving
Corporation shall have no obligation to indemnify AT Co. in respect of such
Potentially Disqualifying Action or other action pursuant to Section
10.4(a), except to the extent that a Disqualifying Action results from the
inaccuracy, incorrectness or incompleteness of any representation provided
by
the Surviving Corporation to AT Co. in respect of that determination.
(ii)
The Surviving Corporation shall have no obligation to indemnify AT Co. pursuant
to Section 10.4(a) in respect of any action or transaction that is
permitted to be taken without the consent of AT Co. under Section 10.2,
except to the extent that, in the case of an action permitted pursuant to
a
ruling described in Section 10.2(g), a Disqualifying Action results
from
the inaccuracy, incorrectness or incompleteness of any representation provided
by the Surviving Corporation to the IRS in connection with such ruling.
(iii)
The Surviving Corporation shall have no obligation to indemnify AT Co. pursuant
to Section 10.4(a) in respect of any item of income, gain, deduction
or
loss arising in respect of or as a result of the Preliminary Restructuring,
including an intercompany transaction pursuant to Section 1.1502-13
of the
Treasury Regulations, an excess loss account pursuant to Section 1.1502-19
of the Treasury Regulations or any similar item, in each case, resulting
from
such Preliminary Restructuring, or any item that is includable in income
without
regard to the Tax-Free Status of the Transactions because such item is
attributable to a predecessor of AT Co. or Spinco, within the meaning of
Section
355(e)(4)(D) of the Code.
(iv)
Nothing contained in this Article X shall be interpreted as
requiring the Surviving Corporation to indemnify AT Co. against any Tax-Related
Loss to the extent that such Tax-Related Loss arises from the recognition
of
taxable income or gain by AT Co. or any AT Co. Affiliate on the Distribution
as
a result of (A) any deemed sale of Spinco stock attributable to such
stock
being treated for federal income tax purposes as not having been distributed
to
AT Co. stockholders or (B) any failure by AT Co. to distribute an
amount of
Spinco stock constituting control of Spinco within the meaning of Section
368(c)
of the Code as a result of any deemed sale described in clause (A).
(c) Timing
and Method of Tax Indemnification Payments. The Surviving Corporation shall
pay any amount that is due and payable to AT Co. pursuant to this
Section 10.4 on or before the ninetieth (90th) day following the earlier
of
the date of an agreement of the parties or the date of a Final Determination
that such amount is due and payable to AT Co. All payments pursuant to this
Section 10.4 shall be made by wire transfer to the bank
83
account designated
by
AT Co. for such purpose, and, on the date of such wire transfer, the Surviving
Corporation shall give AT Co. notice of the transfer.
(d) Prior
Period Agreements. Except for the Tax Sharing Agreement, any and all
existing Tax Sharing agreements and practices regarding Taxes and their payment,
allocation or sharing between (i) AT Co. or any Subsidiary of AT Co.
other
than Spinco or a Subsidiary of Spinco, on the one hand, and (ii) Spinco
or
any Subsidiary of Spinco, on the other hand, shall be terminated with respect
to
Spinco and all Subsidiaries of Spinco as of the Distribution Date, and no
remaining liabilities thereunder shall exist thereafter.
10.5
Procedure for Indemnification for Tax Liabilities.
(a) If
AT Co. receives notice of the assertion of any Third-Party Claim with respect
to
which the Surviving Corporation may be obligated under Section 10.4(a)
to
provide indemnification, AT Co. shall give the Surviving Corporation notice
thereof (together with a copy of such Third-Party Claim, process or other
legal
pleading) promptly after becoming aware of such Third-Party Claim; provided,
however, that the failure of AT Co. to give notice as provided in this Section
shall not relieve the Surviving Corporation of its obligations under
Section 10.4, except to the extent that the Surviving Corporation
is
actually prejudiced by such failure to give notice. Such notice shall describe
such Third-Party Claim in reasonable detail.
(b) AT
Co. and the Surviving Corporation shall jointly control the defense of, and
cooperate with each other with respect to defending, any Third-Party Claim
with
respect to which the Surviving Corporation may be obligated under
Section 10.4 to provide indemnification; provided that the Surviving
Corporation shall forfeit such joint control right with respect to a particular
Third-Party Claim if the Surviving Corporation or any Affiliate of the Surviving
Corporation makes any public statement or filing, or takes any action (including
the filing of any submission or pleading, or the giving of a deposition or
production of documents, in any administrative or court proceeding) in
connection with such Third-Party Claim that is inconsistent in a material
respect with any representation or warranty made by Spinco in this Agreement
or
the Tax Materials and provided, further that AT Co. shall forfeit such joint
control right with respect to a particular Third-Party Claim if the AT Co.
or
any Affiliate of AT Co. makes any public statement or filing, or takes any
action (including the filing of any submission or pleading, or the giving
of a
deposition or production of documents, in any administrative or court
proceeding) in connection with such Third-Party Claim that is inconsistent
in a
material respect with any representation or warranty made by AT Co. or Spinco
in
this Agreement or the Tax Materials.
(c) The
Surviving Corporation and AT Co. shall exercise their rights to jointly control
the defense of any such Third-Party Claim solely for the purpose of defeating
such Third-Party Claim and, unless required by Applicable Law, neither the
Surviving Corporation nor AT Co. shall make any statements or take any actions
that would reasonably be expected to result in the shifting of liability
for
Losses or Tax-Related Losses arising out of such Third-Party Claim from the
party making such statement or taking such action (or any of its Affiliates)
to
the other party (or any of its Affiliates).
84
(d) Statements
made or actions taken by either the Surviving Corporation or AT Co. in
connection with the defense of any such Third-Party Claim shall not prejudice
the rights of such party in any subsequent action or proceeding between the
parties.
(e) If
either AT Co. or the Surviving Corporation fails to jointly defend any such
Third-Party Claim, then the other party shall solely defend such Third-Party
Claim and the party failing to jointly defend shall use reasonable best efforts
to cooperate with the other party in its defense of such Third-Party Claim;
provided, however, that AT Co. may not compromise or settle any such Third-Party
Claim without the prior written consent of the Surviving Corporation, which
consent shall not be unreasonably withheld, conditioned or delayed. All costs
and expenses of either party in connection with, and during the course of,
the
joint control of the defense of any such Third-Party Claim shall be paid
by the
party that incurs such costs and expenses.
10.6
Exclusivity of Article X. This Article X constitutes the
complete and exclusive agreement of the parties with respect to the
indemnification of AT Co. for Tax-Related Losses contained in Section 10.4.
Any conflict between the terms of this Section 10.6 and any other
provision
of this Agreement, or any provision of any other agreement, shall be resolved
in
favor of this Section 10.6, unless such other provision expressly
provides
that it shall be given priority over this specific Section.
ARTICLE
XI
TERMINATION, AMENDMENT AND WAIVERS
TERMINATION, AMENDMENT AND WAIVERS
11.1
Termination. Notwithstanding anything contained in this Agreement to the
contrary, this Agreement may be terminated and the transactions contemplated
hereby may be abandoned prior to the Effective Time, whether before or after
the
Requisite Approval:
(a) by
the mutual written consent of each party hereto, which consent shall be effected
by action of the Board of Directors of each such party;
(b) by
any party hereto if the Effective Time shall not have occurred on or before
the
one year anniversary of the date of this Agreement, provided that the right
to
terminate this Agreement pursuant to this clause 11.1(b) shall not be available
to any party whose failure to perform any of its obligations under this
Agreement required to be performed by it at or prior to such date has been
a
substantial cause of, or substantially contributed to, the failure of the
Merger
to have become effective on or before such date;
(c) by
any party hereto if, (i) a statute, rule, regulation or executive
order
shall have been enacted, entered or promulgated prohibiting the consummation
of
the Merger or (ii) an Order, decree, ruling or injunction shall have
been
entered permanently restraining, enjoining or otherwise prohibiting the
consummation of the Merger and such Order, decree, ruling or injunction shall
have become final and non-appealable and the party seeking to terminate this
Agreement pursuant to this clause 11.1(c)(ii) shall have used all reasonable
best efforts to remove such injunction, order, decree or ruling;
(d) by
the Company, if either AT Co. or Spinco shall have breached or failed to
perform
in any material respect any of its respective representations, warranties,
85
covenants or other
agreements contained in this Agreement, which breach or failure to perform
(i) would result in a failure of a condition set forth in Section 9.1
or 9.3 and (ii) cannot be cured by the Termination Date, provided
that the
Company shall have given AT Co. and Spinco 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 11.1(d) and the
basis
for such termination;
(e) by
AT Co. and Spinco, if the Company shall have breached or failed to perform
in
any material respect any of its representations, warranties, covenants or
other
agreements contained in this Agreement, which breach or failure to perform
(i) would result in a failure of a condition set forth in Section 9.1
or 9.2 and (ii) cannot be cured by the Termination Date, provided
that AT
Co. and Spinco shall have given the Company written notice, delivered at
least
thirty (30) days prior to such termination, stating AT Co. and Spinco’s
intention to terminate the Agreement pursuant to this Section 11.1(e)
and
the basis for such termination;
(f) by
AT Co. and Spinco or the Company if, at the Company Stockholders’ Meeting
(including any adjournment, continuation or postponement thereof), the Requisite
Approval shall not be obtained; except that the right to terminate this
Agreement under this Section 11.1(f) shall not be available to the
Company
where the failure to obtain the Requisite Approval shall have been caused
by the
action or failure to act of the Company and such action or failure to act
constitutes a material breach by the Company of this Agreement or a material
breach of the Voting Agreement by any party thereto other than Spinco.
(g) by
AT Co. and Spinco, if (i) the Board of Directors of the Company (or
any
committee thereof), shall have withdrawn or modified its approval or
recommendation of the Merger or this Agreement, approved or recommended to
the
Company stockholders a Company Acquisition Proposal or resolved to do any
of the
foregoing, or (ii) the Company fails to call and hold the Company
Stockholders Meeting within sixty (60) days after the effectiveness
of the
Registration Statement.
(h) by
the Company if the Board of Directors of the Company determines in good faith
that a Company Acquisition Proposal constitutes a Company Superior Proposal,
except that the Company may not terminate this Agreement pursuant to this
Section 11.1(h) unless and until (i) three business days have
elapsed
following delivery to AT Co. of a written notice of such determination by
the
Board of Directors of the Company and during such three business day period
the
Company (x) informs AT Co. of the terms and conditions of the Company
Acquisition Proposal and identity of the person making the Company Acquisition
Proposal and (y) otherwise cooperates with AT Co. with respect thereto
with
the intent of enabling AT Co. and Spinco to agree to a modification of the
terms
and conditions of this Agreement so that the transactions contemplated hereby
may be effected, (ii) at the end of such three business day period
the
Board of Directors of the Company continues to determine in good faith that
the
Company Acquisition Proposal constitutes a Company Superior Proposal,
(iii) simultaneously with such termination the Company enters into
a
definitive acquisition, merger or similar agreement to effect the Company
Superior Proposal and (iv) the Company pays to AT Co. the amount specified
and within the time period specified in Section 11.3.
86
11.2
Effect of Termination. In the event of termination of this Agreement
pursuant to Section 11.1, this Agreement shall terminate (except for
the
Confidentiality Agreement referred to in Section 12.1 and the provisions
of
Section 11.3, and Sections 12.2 through 12.13), without any
liability
on the part of any party or its directors, officers or stockholders except
as
set forth in Section 11.3; provided, that nothing in this Agreement
shall
relieve any party of liability for breach of this Agreement or prejudice
the
ability of the non-breaching party to seek damages, including any damages
based
on the value that would otherwise have been available to the stockholders
of the
non-breaching party by virtue of this Agreement, from any other party for
any
breach of this Agreement, including attorneys’ fees and the right to pursue any
remedy at law or in equity.
11.3
Termination Fee Payable in Certain Circumstances.
(a) In
the event that (i) the Company terminates this Agreement pursuant
to
Section 11.1(h), (ii) AT Co. and Spinco terminate this Agreement
pursuant to clause (i) of Section 11.1(g) or (iii) (A) any
Person
shall have made a Company Acquisition Proposal after the date hereof and
thereafter this Agreement is terminated by any party pursuant to
Section 11.1(b) or by AT Co. or Spinco pursuant to clause (ii) of
Section 11.1(g) (and a Company Acquisition Proposal is outstanding
at such
time) or by any party pursuant to Section 11.1(f) and (B) within
twelve (12) months after the termination of this Agreement, any Company
Acquisition shall have been consummated or any definitive agreement with
respect
to such Company Acquisition shall have been entered into, then the Company
shall
pay AT Co. a fee, in immediately available funds, in the amount of $35,000,000
at the time of such termination, in the case of a termination described in
clause (i) or (ii) above, or upon the occurrence of the earliest
event
described in clause (iii)(B), in the event of a termination described in
clause
(iii), and in each case the Company shall be fully released and discharged
from
any other liability or obligation resulting from or under this Agreement,
except
with respect to any fraud or intentional breach of this Agreement.
(b) In
the event (i) that AT Co. and Spinco or the Company terminate this
Agreement pursuant to Section 11.1(b) and at the time of such termination,
all of the conditions to the transactions contemplated hereby set forth in
Sections 9.1 and 9.2 (other than those which by their terms are intended
to
be satisfied contemporaneously with the Closing) have been satisfied other
than
the conditions set forth in Sections 9.1(h), 9.1(i) and/or 9.1(j),
or
(ii) the Company terminates this Agreement pursuant to Section 11.1(d)
and the breach or breaches by AT Co. or Spinco that gave rise to such
termination shall have caused, the conditions set forth in Sections 9.1(h),
9.1(i) and/or 9.1(j) to have become incapable of being satisfied, AT Co.
shall
pay the Company a fee, in immediately available funds, equal to $35,000,000,
in
the case of a termination described in clause (i) or (ii) above
under
circumstances where the condition set forth in Section 9.1(h) has
not been
satisfied, or in the amount of $20,000,000, in the case of a termination
described in clause (i) or (ii) above under circumstances where
the
conditions set forth in either Section 9.1(i) or 9.1(j) have not been
satisfied, and AT Co. and Spinco shall be fully released and discharged from
any
other liability or obligation resulting from or under this Agreement, except
with respect to any fraud or in each case intentional breach of this Agreement.
11.4
Amendment. This Agreement may be amended by AT Co., Spinco and the
Company at any time before or after adoption of this Agreement by the
stockholders of the
87
Company; provided,
however, that after such adoption, no amendment shall be made that by Law
or in
accordance with the rules of any relevant stock exchange or automated
inter-dealer quotation system requires further approval by such stockholders
without such further approval. This Agreement may not be amended except by
an
instrument in writing signed by AT Co., Spinco and the Company.
11.5
Waivers. At any time prior to the Effective Time, AT Co., Spinco and the
Company may, to the extent legally allowed, (i) extend the time for
the
performance of any of the obligations or acts of the other party;
(ii) waive any inaccuracies in the representations and warranties
of the
other party contained herein or in any document delivered pursuant to this
Agreement; and (iii) waive compliance with any of the agreements or conditions
of the other party contained herein; provided, however, that no failure or
delay
by AT Co., Spinco or the Company 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 thereof or the exercise of any other right
hereunder. Any agreement on the part of AT Co., Spinco or the Company to
any
such extension or waiver shall be valid only if set forth in an instrument
in
writing signed on behalf of such party.
ARTICLE
XII
MISCELLANEOUS
MISCELLANEOUS
12.1
Survival of Representations, Warranties and Agreements; Indemnification.
(a) The
covenants and agreements in this Agreement or in any certificate or instrument
delivered pursuant to this Agreement shall survive the Effective Time in
accordance with their respective terms. None of the representations or
warranties in this Agreement or in any certificate or instrument delivered
pursuant to this Agreement shall survive the Effective Time, except with
respect
to the representations and warranties contained in Article X and the
Tax
Materials, which shall survive in perpetuity. The Confidentiality Agreement
shall survive the execution and delivery of this Agreement and any termination
of this Agreement, and the provisions of the Confidentiality Agreement shall
apply to all information and material furnished by any party or its
representatives thereunder or hereunder.
(b) Following
the Effective Time, the Surviving Corporation will indemnify, defend and
hold
harmless AT Co. and each Person, if any, who controls, within the meaning
of
Section 15 of the Securities Act or Section 20 of the Exchange
Act
(any such person being hereinafter referred to as a “Controlling
Person”), AT Co. from and against, and pay or reimburse each of the
foregoing for, all losses, claims, damages, liabilities, actions, costs and
expenses, joint or several, including reasonable attorneys’ fees (collectively,
“Losses”), arising out of or resulting from, directly or indirectly, or
in connection with any untrue statement or alleged untrue statement of a
material fact contained in or incorporated by reference into the Registration
Statement or in the Proxy Statement/Prospectus (or any amendment or supplement
thereto) or any omission or alleged omission to state therein a material
fact
required to be stated therein or necessary to make the statements therein,
in
light of the circumstances under which they were made, not misleading; provided,
however, that the Surviving Corporation shall not be responsible for information
provided by AT Co. as to itself and its Subsidiaries, including Spinco,
88
specifically for
inclusion in, or incorporation by reference into, any such Proxy
Statement/Prospectus or Registration Statement.
(c) Following
the Effective Time, AT Co. will indemnify, defend and hold harmless the
Surviving Corporation and each Controlling Person of the Surviving Corporation
from and against, and pay or reimburse each of the foregoing for, all Losses
arising out of or resulting from, directly or indirectly, or in connection
with
any untrue statement or alleged untrue statement of a material fact contained
in
or incorporated by reference into the Registration Statement or in the Proxy
Statement/Prospectus (or any amendment or supplement thereto) or any omission
or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under
which they were made, not misleading, but only with respect to information
provided by AT Co. as to itself and its Subsidiaries, including Spinco,
specifically for inclusion in, or incorporation by reference into, any such
Proxy Statement/Prospectus or Registration Statement.
12.2
Expenses. Each party shall bear its own fees and expenses in connection
with the transactions contemplated hereby; provided, however, that if the
Merger
is consummated, all costs and expenses incurred in connection with this
Agreement, the Merger and the transactions contemplated by this Agreement
relating to the Merger (including (i) all underwriter’s or placement
agent’s discounts, fees and expenses associated with the Spinco Financing and
the Debt Exchange; and (ii) all broker, finder and similar advisory
fees
incurred by AT Co. or Spinco in connection with the transactions contemplated
by
this Agreement and the Distribution Agreement), shall be paid by the Surviving
Corporation. Notwithstanding the foregoing, AT Co. shall pay any AT Excess
Expenses (as defined in the Distribution Agreement).
12.3
Notices. Any notice required to be given hereunder shall be sufficient if
in writing, and sent by facsimile transmission (provided that any notice
received by facsimile transmission or otherwise at the addressee’s location on
any business day after 5:00 p.m. (addressee’s local time) shall be deemed to
have been received at 9:00 a.m. (addressee’s local time) on the next business
day), 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:
If
to:
Spinco (prior to the Effective Time) or AT Co., to:
ALLTEL
Holding Corp.
Xxx Xxxxxx Xxxxx
Xxxxxx xxxx, Xxxxxxxx 00000
Attn: Chief Executive Officer
(With a copy to the Chairman)
Telecopy: (000) 000-0000
Xxx Xxxxxx Xxxxx
Xxxxxx xxxx, Xxxxxxxx 00000
Attn: Chief Executive Officer
(With a copy to the Chairman)
Telecopy: (000) 000-0000
89
If
to
the Company, to:
Valor
Communications Group, Inc.
000 X. Xxxx Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Chief Executive Officer
(With a copy to the Corporate Secretary)
Telecopy: (000) 000-0000
000 X. Xxxx Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Chief Executive Officer
(With a copy to the Corporate Secretary)
Telecopy: (000) 000-0000
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,
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 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 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.
12.4
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. 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. 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.
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.
References to a person are also to its permitted successors and assigns.
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. For avoidance of doubt,
“consistent with past practice” when used with respect to Spinco or any of its
Subsidiaries shall mean the past practice of AT Co. with respect to the Spinco
Business.
Any
matter disclosed in any particular
Section or Subsection of the Spinco Disclosure Letter, the AT Co. Disclosure
Letter or the Company Disclosure Letter shall be deemed to have
90
been disclosed
in any
other Section or Subsection of this Agreement, with respect to which such
matter
is relevant so long as the applicability of such matter to such Section or
Subsection is reasonably apparent on its face.
12.5
Severability. If any provision of this Agreement or the application of
any such provision to any Person or circumstance, shall be declared judicially
to be invalid, unenforceable or void, such decision shall not have the effect
of
invalidating or voiding the remainder of this Agreement, it being the intent
and
agreement of the parties hereto that this Agreement shall be deemed amended
by
modifying such provision to the extent necessary to render it valid, legal
and
enforceable while preserving its intent or, if such modification is not
possible, by substituting therefor another provision that is legal and
enforceable and that achieves the same objective.
12.6
Assignment; Binding Effect. Neither this Agreement nor any of the rights,
benefits or obligations hereunder may be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior written consent
of
all of the other parties. Subject to the preceding sentence, this Agreement
will
be binding upon, inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns.
12.7
No Third Party Beneficiaries. Except as provided in Section 8.12,
nothing in this Agreement, express or implied, is intended to or shall confer
upon any Person (other than AT Co., Spinco and the Company and their respective
successors and permitted assigns) any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement, and
no
Person (other than as so specified) shall be deemed a third party beneficiary
under or by reason of this Agreement.
12.8
Limited Liability. Notwithstanding any other provision of this Agreement,
no stockholder, director, officer, Affiliate, agent or representative of
any of
the parties hereto, in its capacity as such, shall have any liability in
respect
of or relating to the covenants, obligations, representations or warranties
of
such party under this Agreement or in respect of any certificate delivered
with
respect hereto or thereto and, to the fullest extent legally permissible,
each
of the parties hereto, for itself and its stockholders, directors, officers
and
Affiliates, waives and agrees not to seek to assert or enforce any such
liability that any such Person otherwise might have pursuant to applicable
Law.
12.9
Entire Agreement. This Agreement (together with the other Transaction
Agreements, the Voting Agreement, the Confidentiality Agreement, the exhibits
and the Disclosure Letters and the other documents delivered pursuant hereto)
constitutes the entire agreement of all the parties hereto and supersedes
all
prior and contemporaneous agreements and understandings, both written and
oral,
between the parties, or any of them, with respect to the subject matter hereof.
All exhibits attached to this Agreement and the Disclosure Letters are expressly
made a part of, and incorporated by reference into, this Agreement.
12.10
Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware without giving effect
to the
conflicts of law principles thereof.
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12.11
Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which together
shall
constitute one agreement binding on the parties hereto, notwithstanding that
not
all parties are signatories to the original or the same counterpart.
12.12
Waiver of Jury Trial. Each of the parties hereto irrevocably waives all
right to trial by jury in any action, suit, proceeding or counterclaim (whether
based on contract, tort or otherwise) arising out of or relating to this
Agreement or the actions of the parties hereto in the negotiation,
administration, performance and enforcement hereof.
12.13
Jurisdiction; Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were
not
performed in accordance with their specific terms or were otherwise breached.
It
is accordingly agreed that the parties 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 in any court of the United States
located in the State of Delaware or the Delaware Court of Chancery, this
being
in addition to any other remedy to which they are entitled at law or in equity.
In addition, each of the parties hereto (a) consents to submit itself to
the
personal jurisdiction of any federal court located in the State of Delaware
or
the Delaware Court of Chancery in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement,
(b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and
(c) 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 a
federal court sitting in the State of Delaware.
92
IN
WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the date first above written.
ALLTEL CORPORATION | ||||||
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By: | /s/ Xxxxx X. Xxxx | ||||
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Name: | Xxxxx X. Xxxx | ||||
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||||||
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Title: | CEO & President | ||||
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ALLTEL HOLDING CORP. | ||||||
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By: | /s/ Xxxxxxx X. Xxxxxxx | ||||
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Name: | Xxxxxxx X. Xxxxxxx | ||||
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Title: | President | ||||
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VALOR COMMUNICATIONS GROUP, INC. | ||||||
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By: | /s/ Xxxxxxx X. Xxxxx, Xx. | ||||
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Name: | Xxxxxxx X. Xxxxx, Xx. | ||||
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Title: | Senior Vice President, Chief Legal Officer and Secretary | ||||
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93
TAX
SHARING AGREEMENT
This
Tax
Sharing Agreement (this "Agreement") is entered into as of ___________, 2006,
by
and between ALLTEL Corporation, a Delaware corporation ("AT Co."), ALLTEL
Holding Corp., a newly formed Delaware corporation and a wholly owned subsidiary
of AT Co. ("Spinco"), and Valor Communications Group, Inc., a Delaware
corporation ("Valor"). Capitalized terms used in this Agreement and not
otherwise defined herein shall have the meanings ascribed to such terms in
the
Distribution Agreement, dated as of December 8, 2005, by and between AT Co.
and
Spinco (the " Distribution Agreement").
RECITALS
Whereas,
AT Co. is the common parent corporation of an affiliated group of corporations
within the meaning of Section 1504(a) of the Internal Revenue Code of 1986,
as
amended (the "Code"), that has filed consolidated federal income tax returns.
Whereas
Spinco is a newly-formed, wholly owned subsidiary of AT Co.
Whereas,
pursuant to the Distribution Agreement, among other things, AT Co. will transfer
or cause to be transferred to Spinco or one or more subsidiaries of Spinco
(pursuant to certain preliminary restructuring transactions) all of the Spinco
Assets, Spinco will assume or cause to be assumed all of the Spinco Liabilities,
and Spinco will issue to AT Co. Spinco Common Stock and Spinco Exchange Notes
and will pay the Special Dividend
(the
"Contribution").
Whereas,
on the Distribution Date, AT Co. will distribute all of the issued and
outstanding shares of Spinco Common Stock on a pro rata basis to holders
of the
AT Co. Common Stock (the "Distribution").
Whereas,
pursuant to the Merger Agreement, dated as of December 8, 2005, by and among
AT
Co., Spinco and Valor (the " Merger Agreement"), following the Distribution,
Spinco will merge with and into Valor pursuant to the Merger.
Whereas,
the parties to this Agreement intend that the Contribution,
together with the Debt Exchange, qualify as a tax-free reorganization under
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"),
that
the Distribution
qualify as a distribution of Spinco stock to AT Co. stockholders pursuant
to
Section 355
of
the Code,
that the
Merger qualify as a tax-free reorganization pursuant
to
Section
368 of the Code,
and
that no gain or loss be recognized as a result of such transactions for federal
income tax purposes by any of AT Co., Spinco, and their respective stockholders
(except to the extent of cash received in lieu of fractional shares).
Whereas,
AT Co., Spinco and Valor desire to set forth their rights and obligations
with
respect to Taxes (as defined herein) due for periods before and after the
Distribution Date.
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE
I.
DEFINITIONS
"Affiliate"
shall mean any Person that directly or indirectly through one or more
intermediaries Controls, is Controlled by, or is under common Control with
a
specified Person.
"Agreement"
shall have the meaning set forth in the recitals.
"Applicable
Federal Rate" shall have the meaning set forth in Section 1274(d) of the
Code,
compounded quarterly.
"AT
Co."
shall have the meaning set forth in the preamble to this Agreement.
"AT
Co.
Group" shall mean AT Co. and all Subsidiaries of AT Co. at any time preceding,
at or following the Contribution, but shall not include any member of the
Spinco
Group.
"AT
Consolidated Group" shall mean any consolidated, combined or unitary group
(i)
of which AT Co. is the common parent corporation at any time or (ii) that
otherwise included Spinco or any Spinco Subsidiary for any Pre-Distribution
Period.
"Code"
shall have the meaning set forth in the recitals.
"Combined
Return" shall have the meaning set forth in Section 2.01.
"Contribution"
shall have the meaning set forth in the Recitals.
"Control"
or "Controlled" shall mean, with respect to any Person, the presence of one
of
the following: (i) the legal, beneficial or equitable ownership, directly
or
indirectly, of more than 50% (by vote or value) of the capital or voting
stock
(or other ownership or voting interest, if not a corporation) of such Person
or
(ii) the ability, directly or indirectly, to direct the voting of a majority
of
the directors of such Person's board of directors or, if the Person does
not
have a board of directors, a majority of the positions on any similar body,
whether through appointment, voting agreement or otherwise.
"Controlling
Party" shall have the meaning set forth in Section 5.01.
"Disqualifying
Action" shall have the meaning set forth in Section 10.2 of the Merger
Agreement.
"Distribution"
shall have the meaning set forth in the Recitals.
"Distribution
Agreement" shall have the meaning set forth in the preamble to this
Agreement.
"Distribution
Date" shall have the meaning set forth in the Distribution
Agreement.
"Final
Determination" shall have the meaning set forth in the Merger
Agreement.
"Income
Taxes" shall mean any and all Taxes based upon or measured by net or gross
income (including alternative minimum tax under Section 55 of the Code and
including any liability described in clauses (ii) or (iii) of the definition
of
"Taxes" that relates to any Income Tax).
"Other
Taxes" shall mean any and all Taxes other than Income Taxes, including any
liability described in clauses (ii) or (iii) of the definition of "Taxes"
that
relates to any Other Tax.
"Person"
shall mean any individual, partnership, joint venture, corporation, limited
liability company, trust, unincorporated organization, government or department
or agency of a government.
"Post-Distribution
Period" shall mean any taxable year or other taxable period beginning after
the
Distribution Date and, in the case of any taxable year or other taxable period
that begins before and ends after the Distribution Date, that part of the
taxable year or other taxable period that begins at the beginning of the
day
after the Distribution Date.
"Pre-Distribution
Period" shall mean any taxable year or other taxable period that ends on
or
before the Distribution Date and, in the case of any taxable year or other
taxable period that begins before and ends after the Distribution Date, that
part of the taxable year or other taxable period through the close of the
Distribution Date.
"Separate
Return" shall have the meaning set forth in Section 2.01(b).
"Short
Period Return" shall have the meaning set forth in Section 2.01(b).
"Spinco"
shall have the meaning set forth in the Recitals.
"Spinco
Group" shall mean Spinco and all entities that are Subsidiaries of Spinco
immediately following the Contribution.
"Straddle
Return" shall have the meaning set forth in Section 2.01.
"Straddle
Period" shall mean any taxable period that includes but does not end on the
Distribution Date.
"Subsidiary"
shall mean a corporation, limited liability company, partnership, joint venture
or other business entity if 50% or more of the outstanding equity or voting
power of such entity is owned directly or indirectly by the corporation with
respect to which such term is used.
"Tax"
or
"Taxes" shall have the meaning set forth in the Merger Agreement.
"Tax
Attribute" shall mean any net operating loss carryover, net capital loss
carryover, investment tax credit carryover, foreign tax credit carryover,
charitable deduction carryover or other similar item that could reduce Income
Tax for a past or future taxable period.
"Tax
Benefit" shall means, in the case of separate state, local or other Income
Tax
Return, the sum of the amount by which the Tax liability (after giving effect
to
any alternative minimum or similar Tax) of a corporation to the appropriate
Taxing Authority is reduced (including by deduction, entitlement to refund,
credit or otherwise, whether available in the current taxable year, as an
adjustment to taxable income in any other taxable year or as a carryforward
or
carryback, as applicable) plus any interest from such government or jurisdiction
relating to such Tax liability, and in the case of a consolidated federal
Income
Tax Return or combined, unitary or other similar state, local or other Income
Tax Return, the sum of the amount by which the Tax liability of the affiliated
group (within the meaning of Section 1504(a) of the Code) or other relevant
group of corporations to the appropriate government or jurisdiction is reduced
(including by deduction, entitlement to refund, credit or otherwise, whether
available in the current taxable year, as an adjustment to taxable income
in any
other taxable year or as a carryforward or carryback, as applicable) plus
any
interest from such government or jurisdiction relating to such Tax liability.
"Tax
Contest" shall have the meaning set forth in Section 5.01.
"Tax
Return" shall have the meaning set forth in the Merger Agreement.
"Taxing
Authority" shall have the meaning set forth in the Merger
Agreement.
"USF
Payments" shall have the meaning set forth in Section 2.04(a).
"USF
Tax
Amount" shall have the meaning set forth in Section 2.04(a).
"Valor"
shall have the meaning set forth in the recitals
"Valor
Group" shall mean Valor and all entities that are Subsidiaries of Valor
immediately following the Merger.
ARTICLE
II.
TAX RETURNS AND TAX PAYMENTS
2.01
OBLIGATIONS TO FILE TAX RETURNS.
(a)
AT
Co. shall file or cause to be filed any Income Tax Return that is required
to be
filed after the Distribution Date by or with respect to any member of the
Spinco
Group that (i) is filed on a consolidated, combined or unitary basis, (ii)
includes both one or more members of the AT Co. Group and one or more members
of
the Spinco Group, and (iii) is for a taxable period that includes a
Pre-Distribution Period (a "Combined Return"). Each member of the Spinco
Group
hereby irrevocably authorizes and designates AT Co. as its agent, coordinator
and administrator for the purpose of taking any and all actions necessary
or
incidental to the filing of any such Combined Tax Return and, except as
otherwise provided herein, for the purpose of making payments to, or collecting
refunds from, any Taxing Authority in respect of a Combined Return. Except
as
otherwise provided herein, AT Co. shall have the exclusive right to file,
prosecute, compromise or settle any claim for refund for Income Taxes in
respect
of a Combined Return for which AT Co. bears responsibility hereunder and
to
determine whether any refunds of such Income Taxes to which the AT Consolidated
Group may be entitled shall be received by way of refund or credit against
the
Tax liability of the AT Consolidated Group.
(b)
Valor
shall file or cause to be filed any other Income Tax Return required to be
filed
after the Distribution Date by or with respect to one or more members of
the
Spinco Group, including any such Tax Return (i) with respect to any taxable
period that includes but does not end on the Distribution Date (a "Straddle
Return"), (ii) with respect to a taxable period ending on the Distribution
Date
(a "Short Period Return"), and (iii) with respect to a taxable period beginning
after the Distribution Date (a "Separate Return"). AT Co. shall remit to
Valor
in immediately available funds the amount of any Income Taxes (including
estimated Income Taxes) related to a Straddle Return or Short Period Return
for
which AT Co. is responsible hereunder, at least two Business Days before
payment
of the relevant amount is due to a Taxing Authority. Valor shall file or
cause
to be filed any Other Tax Return required to be filed after the Distribution
Date by one or more members of the Spinco Group.
2.02
APPROVAL OF STRADDLE RETURNS AND SHORT PERIOD RETURNS. No later than thirty
(30)
days prior to the date on which any Straddle Return or Short Period Return
is
required to be filed (taking
into account any valid extensions)
(the
"Due Date"), Valor shall submit or cause to be submitted to AT Co. the Straddle
Return or Short Period Return and
shall
make or cause to be made any and all changes to such return reasonably requested
by AT Co., to the extent that such changes relate to items for which AT Co.
has
responsibility hereunder (and for which at least substantial authority exists
within the meaning of Section 6662 of the Code and the Treasury Regulations
thereunder). Valor shall not file or allow to be filed any such Straddle
Return
or Short Period Return prior to receiving written approval of the return
from AT
Co., which approval shall not be unreasonably withheld, delayed or
conditioned.
2.03
OBLIGATION TO REMIT TAXES. Subject to Section 2.01 and subject always to
the
ultimate division of responsibility for Taxes set out in Section 2.04, AT
Co.
and Valor shall each remit or cause to be remitted to the applicable Taxing
Authority any Taxes due in respect of any Tax Return that such party is required
to file (or, in the case of a Tax for which no Tax Return is required to
be
filed, which is otherwise payable by such party or a member of such party's
group (the AT Co. Group or the Spinco Group) to any Taxing Authority) and
shall
be entitled to reimbursement for such payments to the extent provided herein
or
in the Merger Agreement.
2.04
TAX
SHARING OBLIGATIONS AND PRIOR AGREEMENTS.
(a)
From
and after the Merger, Valor shall be liable for and shall indemnify and hold
the
AT Co. Group harmless against (i) any net liability for Income Taxes of a
member
of the Spinco Group (and Valor and the Spinco Group shall be entitled to
receive
and retain any net refund of Income Taxes or other net Tax Benefit) attributable
to the treatment of payments received from a federal or state universal services
fund ("USF Payments") in respect of the Spinco Business for the period from
January 1, 1997, to the Distribution Date, taking into account (x) any refund
of
Income Taxes with respect to USF Payments previously not treated as
contributions to capital within the meaning of Section 118(a) of the Code,
(y)
cost recovery deductions arising from property acquired with USF Payments
and
(z) Income Taxes payable as a result of a failure of a USF Payment to be
treated
as a contribution to capital within the meaning of Section 118(a) of the
Code,
in each case with respect to such period (a "USF Tax Amount"), (ii) any Other
Taxes arising in the Pre-Distribution Period and attributable to a member
of the
Spinco Group or to the employees, assets or transactions of the Spinco Business,
except for Other Taxes arising in respect of the Contribution (including
the
Preliminary Restructuring) or the Distribution and (iii) any liability for
Taxes
arising in the Post-Distribution Period and attributable to a member of the
Spinco Group or to the assets, employees, or transactions of the Spinco
Business. Except with respect to indemnification pursuant to clause (i),
all
indemnification pursuant to this Section 2.04(a) shall be on a net after-Tax
basis.
(b)
Except for Taxes specifically allocated to Valor under this Agreement or
for
which Valor has indemnified AT Co. pursuant to the Merger Agreement, AT Co.
shall be liable for and shall indemnify and hold Valor and its Subsidiaries
and
the Spinco Group harmless against, on a net after-Tax basis, any Tax liability
(i) of the AT Co. Group or any AT Consolidated Group or any member thereof
or
attributable to the employees, assets or transactions of the AT Co. Business
or
(ii) of the Spinco Group or any member thereof, including Taxes arising from
any
Distribution Disqualification other than Taxes for which Valor is responsible
pursuant to Article X of the Merger Agreement.
(c)
Except as set forth in this Agreement and in consideration of the mutual
indemnities and other obligations of this Agreement, any and all prior Tax
sharing or allocation agreements or practices between any member of the AT
Co.
Group and any member of the Spinco Group (including the ALLTEL Corporation
and
Subsidiaries Tax Sharing Policy in effect for taxable years ending on or
after
December 31, 1991) shall be terminated with respect to the Spinco Group as
of
the Distribution Date, and no member of the Spinco Group shall have any
continuing rights or obligations thereunder.
(d)
Valor
shall be entitled to any refund of or credit for Taxes for which Valor is
responsible under this Agreement, and AT Co. shall be entitled to any refund
of
or credit for Taxes for which AT Co. is responsible under this Agreement.
Refunds for any Straddle Period shall be equitably apportioned between the
AT
Co. Group and the Spinco Group in accordance with the provisions of this
Agreement governing such periods. A party receiving a refund to which another
party is entitled pursuant to this Agreement shall pay the amount to which
such
other party is entitled within five days after the receipt of the
refund.
2.06
PERIOD THAT INCLUDES THE DISTRIBUTION DATE.
(a)
To
the extent permitted by law or administrative practice, the taxable year
of each
member of the Spinco Group with respect to any Tax shall be treated as closing
at the close of the Distribution Date.
(b)
If it
is necessary for purposes of this Agreement to determine the Tax liability
of
any member of the Spinco Group for a taxable year or period that begins on
or
before and ends after the Distribution Date and that is not treated under
Section 2.05(a) as closing at the close of the Distribution Date, the
determination shall be made, in the case of Taxes that are based upon income
or
receipts, by assuming that the relevant taxable period ended at the close
of the
Distribution Date, except that any exemptions, allowances or deductions that
are
calculated on an annual basis shall be apportioned on a time basis. In the
case
of Taxes that are imposed on a periodic basis, are payable for a taxable
period
that includes (but does not end on) the Distribution Date, and are not based
upon or related to income or receipts, the portion of such Tax that relates
to
the Pre-Distribution Period shall be deemed to be the amount of such Tax
for the
entire taxable period multiplied by a fraction the numerator of which is
the
number of days in the taxable period ending on the Distribution Date and
the
denominator of which is the number of days in the entire taxable period.
(c)
For
the avoidance of doubt, Taxes allocated to the Pre-Distribution Period shall
include (i) any Tax resulting from the departure of any corporation from
any AT
Consolidated Group (resulting from the triggering into income of deferred
intercompany transactions under Section 1.1502-13 of the Treasury Regulations
or
excess loss accounts under Section 1.1502-19 of the Treasury Regulations
or
otherwise) other than any such Tax that would not have arisen in the absence
of
a Disqualifying Action, and (ii) any Tax related to items of income or gain
arising with respect to any interest in an entity treated as a partnership
for
United States federal income tax purposes, held by a member of the Spinco
Group
in the Pre-Distribution Period, in accordance with the principles of Section
1.1502-76(b)(2)(vi) of the Treasury Regulations.
ARTICLE
III.
CARRYBACKS;
AMENDED RETURNS; TIMING ADJUSTMENTS
3.01
CARRYBACKS. Without the consent of AT Co., no member of the Spinco Group
shall
carry back any Tax Attribute (unless required to carry back such Tax Attribute
by law) from a Post-Distribution Period to a Pre-Distribution Period. Provided
that AT Co. consents to the carryback or if the carryback is required by
law, AT
Co. (or any other member of the AT Co. Group receiving such refund) shall
promptly remit to Valor any Tax Benefit it realizes with respect to any such
carryback.
3.02
AMENDED RETURNS. Valor shall not, and shall not permit any member of the
Spinco
Group to, file any amended Income Tax Return of a member of the Spinco Group
or
a Tax Return with respect to Other Taxes of a member of the Spinco Group
that is
filed on a combined basis with a member of the AT Co. Group, in each case
with
respect to a Pre-Distribution Period, without first obtaining the consent
of AT
Co., which shall not be unreasonably withheld, delayed or
conditioned.
3.03
TIMING
ADJUSTMENTS.
(a)
If an
audit or other examination by any Taxing Authority with respect to any Income
Tax Return shall result (by settlement or otherwise) in any adjustment that
(A)
decreases deductions, losses or Tax credits or increases income, gains or
recapture of Tax credits of a member of the AT Consolidated Group for a
Pre-Distribution Period in respect of an item for which AT Co. is responsible
hereunder and (B) will permit the Spinco Group to increase deductions, losses
or
tax credits or decrease income, gains or recapture of tax credits that would
otherwise (but for such adjustment) have been taken or reported with respect
to
the Spinco Group for one or more Post-Distribution Periods, Valor shall,
and
shall cause the Spinco Group to, pay to AT Co. the amounts of any Tax Benefits
that result therefrom within ten (10) days of the date on which such Tax
Benefits are realized, provided, however, that this Section 3.02(a) shall
not
apply to any such adjustment relating to the subject matter of 2.04(a)(i)
and
the last sentence of Section 4.01.
(b)
If an
audit or other examination by any Taxing Authority with respect to any Income
Tax Return shall result (by settlement or otherwise) in any adjustment that
(A)
decreases deductions, losses or Tax credits or increases income, gains or
recapture of Tax credits of a member of the Valor Group for a Post-Distribution
Period and (B) will permit any member of the AT Co. Group or any AT Consolidated
Group to increase deductions, losses or tax credits or decrease income, gains
or
recapture of tax credits in respect of an item for which AT Co. would be
responsible hereunder, AT Co. shall, and shall cause the AT Co. Group to,
pay to
Valor the amounts of any Tax Benefits that result therefrom within ten (10)
days
of the date on which such Tax Benefits are realized.
(c)
The
party in control of the audit or other examination to which any such adjustment
described in 3.02(a) or (b) above relates shall notify the other party and
provide it with adequate information so that it may reflect such adjustment
on
its applicable Tax Returns.
3.04
TAX
BENEFIT REALIZED. For purposes of this Agreement, a Tax Benefit shall be
deemed
to have been realized at the time any refund of Taxes is received or applied
against other Taxes due, or at the time of filing of a Tax Return (including
any
relating to estimated Taxes) on which a loss, deduction or credit is applied
in
reduction of Taxes which would otherwise be payable; provided,
however,
that,
where a party has other losses, deductions, credits or similar items available
to it, deductions, credits or items for which the other party would be entitled
to a payment under this Agreement shall be treated as the last items utilized
to
produce a Tax Benefit.
ARTICLE
IV.
PAYMENTS
4.01
PAYMENTS. Except as provided in Section 2.01 and Section 3.03, payments due
under this Agreement shall be made no later than thirty (30) days after the
receipt or crediting of a refund, the realization of a Tax Benefit for which
the
other party is entitled to reimbursement, the delivery of notice of payment
of a
Tax for which the other party is responsible under this Agreement, or the
delivery of notice of a Final Determination which results in such other party
becoming obligated to make a payment hereunder to the other party hereto.
Payments due hereunder, but not made within such 30-day period, shall be
accompanied with interest at a rate equal to the Applicable Federal Rate
from
the due date of such payment. Notwithstanding the foregoing, in the case
of any
payment required to be made to AT Co. by Valor as the result of a Final
Determination with respect to a USF Amount, such USF Amount may be paid in
ten
(10) equal, annual installments, commencing on a date which is not less than
thirty (30) days after the date of such Final Determination, and on each
of the
nine succeeding anniversaries of such date.
4.02
NOTICE. AT Co. and Valor shall give each other prompt written notice of any
payment that may be due to the provider of such notice under this Agreement.
ARTICLE
V.
TAX
CONTESTS
5.01
NOTICE. Valor shall promptly notify AT Co. in writing upon receipt by Valor
or
any member of the Valor Group of a written communication from any Taxing
Authority with respect to any pending or threatened audit, dispute, suit,
action, proposed assessment or other proceeding (a "Tax Contest") concerning
any
Combined Return, Straddle Return or Short Period Return or otherwise concerning
Taxes for which AT Co. may be liable under this Agreement. AT Co. shall promptly
notify Valor in writing upon receipt by AT Co. or any member of the AT Co.
Group
of a written communication from any Taxing Authority with respect to any
Tax
Contest concerning any Separate Return or otherwise concerning Taxes for
which
Valor may be liable under this Agreement.
5.02
CONTROL OF CONTESTS BY AT. CO. Except as provided in Section 5.03, AT Co.
shall
have sole control of any Tax Contest of a member of the Spinco Group related
to
any Combined Return, Straddle Return or Short Period Return, including the
exclusive right to communicate with agents of the Taxing Authority and to
control, resolve, settle or agree to any deficiency, claim or adjustment
proposed, asserted or assessed in connection with or as a result of any such
Tax
Contest, provided, however, that (i) AT Co. shall provide Valor an opportunity
to review and comment upon AT Co.'s communications with such Taxing Authorities
to the extent such communications relate to Spinco or any member of the Spinco
Group, (ii) AT Co. shall act in good faith in connection with its control
of
such Tax Contest and (iii) in the case of any such Tax Contest that relates
to
Income Taxes for which Valor has responsibility hereunder, Valor may participate
in the Tax Contest at its own expense, and AT Co. shall not settle or concede
any such Tax Contest without the prior written consent of Valor, which consent
shall not be unreasonably withheld, delayed or conditioned.
5.03
CONTROL OF CONTESTS BY VALOR. Valor shall have sole control of any Tax Contest
related to any Separate Return and any Tax Contest relating to Other Taxes
for
which Valor is responsible hereunder, including the exclusive right to control,
resolve, settle or agree to any deficiency, claim or adjustment proposed,
asserted or assessed in connection with or as a result of any such Tax
Contest.
ARTICLE
VI.
COOPERATION
6.01
GENERAL. AT Co. and Valor shall cooperate with each other in the filing of
any
Tax Returns and the conduct of any audit or other proceeding and each shall
execute and deliver such powers of attorney and make available such other
documents as are reasonably necessary to carry out the intent of this Agreement.
Each party agrees to notify the other party in writing of any audit adjustments
which do not result in Tax liability but can be reasonably expected to affect
Tax Returns of the other party, or any of its Subsidiaries, for a
Post-Distribution Period.
6.02
CONSISTENT TREATMENT.
(a)
Unless and until there has been a Final Determination to the contrary, each
party agrees to treat the Contribution, together with the Debt Exchange,
as a
reorganization qualifying under Section 368(a)(1)(D) of the Code, the
Distribution as a transaction qualifying under Sections 355 and 361 of the
Code
and the Merger as a reorganization qualifying under Section 368(a) of the
Code,
pursuant to which no gain or loss is recognized by any of AT Co., Spinco,
Valor
and their respective shareholders (except to the extent of cash received
in lieu
of fractional shares).
(b)
Unless and until there has been a Final Determination to the contrary or
unless
there is not at
least
substantial authority for a particular position within the meaning of Section
6662 of the Code and the Treasury Regulations thereunder,
Valor
shall file or cause to be filed all Tax Returns of a member of the Spinco
Group
or relating to the Spinco Business and shall conduct any Tax Contests in
respect
of a member of the Spinco Group or the Spinco Business in a manner consistent
with AT Co.'s determination of the adjusted Tax basis of any asset and the
amount of any Tax Attribute or any similar item held by the Spinco Group
at the
time of the Distribution, and, without the consent of AT Co., in the case
of a
past practice of the AT Co. Consolidated Group that is subject to a Tax Contest
at the time of the Distribution, Valor shall not permit any of the Spinco
Subsidiaries to take any position on any Tax Return, in any Tax Contest or
otherwise that is inconsistent with such past practice. For the avoidance
of
doubt, this Section shall not apply to reporting under GAAP.
ARTICLE
VII.
RETENTION
OF RECORDS; ACCESS
The
AT
Co. Group and the Valor Group shall (a) in accordance with their then current
record retention policy, retain records, documents, accounting data and other
information (including computer data) necessary for the preparation and filing
of all Tax Returns in respect of Taxes of any member of either the AT Co.
Group
or the Spinco Group for any Pre-Distribution Period or any Post-Distribution
Period or for the audit of such Tax Returns; and (b) give to the other
reasonable access to such records, documents, accounting data and other
information (including computer data) and to its personnel (insuring their
cooperation) and premises, for the purpose of the review or audit of such
Tax
Returns to the extent relevant to an obligation or liability of a party under
this Agreement or for purposes of the preparation or filing of any such Tax
Return, the conduct of any Tax Contest or any other matter reasonably and
in
good faith related to the Tax affairs of the requesting party. At any time
after
the Distribution Date that the Valor Group proposes to destroy such material
or
information, it shall first notify the AT Co. Group in writing and the AT
Co.
Group shall be entitled to receive such materials or information proposed
to be
destroyed. At any time after the Distribution Date that the AT Co. Group
proposes to destroy such material or information, it shall first notify the
Valor Group in writing and the Valor Group shall be entitled to receive such
materials or information proposed to be destroyed.
ARTICLE
VIII.
TERMINATION
OF LIABILITIES
Notwithstanding
any other provision in this Agreement, any liabilities determined under this
Agreement shall not terminate any earlier than the expiration of the applicable
statute of limitation for such liability. All other covenants under this
Agreement shall survive indefinitely.
ARTICLE
IX.
DISPUTE
RESOLUTION
AT
Co.
and Valor shall attempt in good faith to resolve any disagreement arising
with
respect to this Agreement, including, but not limited to, any dispute in
connection with a claim by a third party (a "Dispute"). Either party may
give
the other party written notice of any Dispute not resolved in the normal
course
of business. If the parties cannot agree by the tenth Business Day following
the
date on which one party gives such notice (the "Dispute Date"), then the
Dispute
shall be determined as follows: Within 20 days of the Dispute Date, AT Co.
and
Valor shall each appoint one arbitrator. The two arbitrators so appointed
shall
appoint a third arbitrator within 30 days of the Dispute Date. If either
party
shall fail to appoint an arbitrator within such 20-day period, the arbitration
shall be conducted by the sole arbitrator appointed by the other party. Whether
selected by AT Co., Valor or otherwise, each arbitrator selected to resolve
such
dispute shall be a tax lawyer who is generally recognized in the tax community
as a qualified and competent tax practitioner with experience in the tax
area
involved. Such arbitrators shall be empowered to resolve the Dispute, including
by engaging nationally recognized accounting and other experts. Each of AT
Co.
and Valor shall bear 50% of the aggregate expenses of the arbitrators (or
the
sole arbitrator). The decision of the arbitrators shall be rendered no later
than 90 days from the Dispute Date and shall be final.
ARTICLE
X.
MERGER
AGREEMENT CONTROLS
None
of
the provisions of this Agreement are intended to supersede any provision
in
Article X of the Merger Agreement. In the event of any conflict between this
Agreement and Article X of the Merger Agreement, Article X of the Merger
Agreement shall control.
ARTICLE
XI.
MISCELLANEOUS
PROVISIONS
To
the
extent not inconsistent with any specific term of this Agreement, the following
sections of the Distribution Agreement shall apply in relevant part to this
Agreement: 12.3 (Governing Law), 12.4 (Notice), 12.5 (Amendment and
Modification), 12.6 (Successors and Assigns; No Third-Party Beneficiaries),
12.7
(Counterparts), 12.8 (Interpretation), 12.9 (Severability), 12.10 (References;
Construction), and 12.11 (Terminability).
IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the
day and year first above written.
ALLTEL
CORPORATION
By:
____________________
Name:
Title:
ALLTEL
HOLDING CORP.
By:
____________________
Name:
Title:
VALOR
COMMUNICATIONS GROUP, INC.
By:
Name:
Title: