DISTRIBUTION AGREEMENT BY AND BETWEEN ALLTEL CORPORATION AND ALLTEL HOLDING CORP. DATED AS OF DECEMBER 8, 2005
Exhibit
2.1
BY
AND
BETWEEN
ALLTEL
CORPORATION
AND
ALLTEL
HOLDING CORP.
DATED
AS
OF DECEMBER 8, 2005
TABLE
OF CONTENTS
PRELIMINARY
TRANSACTIONS
i
·
This
DISTRIBUTION AGREEMENT (this "Agreement"),
dated
as of December 8, 2005, by and between ALLTEL Corporation, a Delaware
corporation ("AT
Co."),
and
ALLTEL Holding Corp., a newly formed Delaware corporation and a wholly owned
subsidiary of AT Co. ("Spinco").
RECITALS
WHEREAS,
AT Co., Spinco and Valor Communications Group, Inc., a Delaware corporation
(the
"Company"),
have
entered into an Agreement and Plan of Merger, of even date herewith (the
"Merger
Agreement"),
pursuant to which, at the Effective Time (as defined in the Merger Agreement),
Spinco will merge with and into the Company, with the Company continuing as
the
surviving corporation (the "Merger");
WHEREAS,
this Agreement and the other Transaction Agreements (as defined herein) set
forth certain transactions that are conditions to consummation of the
Merger;
WHEREAS,
prior to the Distribution Date (as defined herein), (i) pursuant to certain
preliminary restructuring transactions, including one or more distributions
and/or contributions of assets and equity securities, (A) AT Co. will transfer
or cause to be transferred to one or more of the Spinco Subsidiaries (as defined
herein) all of the Spinco Assets (as defined herein) not held by Spinco or
the
Spinco Subsidiaries as of the date hereof, (B) AT Co. will transfer or cause
to
be transferred to one or more of the AT Co. Subsidiaries (as defined herein)
all
of the AT Co. Assets (as defined herein) not held by AT Co. or the AT Co.
Subsidiaries as of the date hereof, (C) AT Co. will transfer or cause to be
transferred to one or more of the Spinco Subsidiaries all of the Spinco
Liabilities (as defined herein) not held by Spinco or the Spinco Subsidiaries
as
of the date hereof (and one or more of the Spinco Subsidiaries will assume
or
cause to be assumed such Spinco Liabilities), and (D) AT Co. will transfer
or
cause to be transferred to one or more of the AT Co. Subsidiaries all of the
AT
Co. Liabilities (as defined herein) not held by AT Co. or the AT Co.
Subsidiaries as of the date hereof (and one or more of the AT Co. Subsidiaries
will assume or cause to be assumed such AT Co. Liabilities) (collectively,
the
"Preliminary
Restructuring"),
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 herein), distribute to AT Co. the Spinco Exchange Notes (as defined
herein) and pay to AT Co. the Special Dividend (as defined herein), all upon
the
terms and subject to the conditions set forth herein (the transactions described
in this clause (ii), collectively, the "Contribution");
WHEREAS,
upon the terms and subject to the conditions set forth in this Agreement, AT
Co.
will distribute (the "Distribution")
all of
the issued and outstanding shares of common stock, par value $.01 per share,
of
Spinco ("Spinco
Common Stock")
to the
holders as of the Record Date (as defined herein) of the outstanding shares
of
common stock, par value $1.00 per share, of AT Co. ("AT
Co.
Common Stock");
and
WHEREAS,
the parties to this Agreement intend that the Contribution, together with the
Debt Exchange (as defined herein), 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, and that the Merger qualify
as
a tax-free reorganization under 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, the Company and their respective stockholders
(except to the extent of cash received in lieu of fractional
shares.).
NOW,
THEREFORE, in consideration of the promises, and of the representations,
warranties, covenants and agreements set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
DEFINITIONS
Section
1.1 General.
As used
in this Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of
the
terms defined):
Additional
Spinco Indebtedness:
as
defined in Section 4.1(d) of this Agreement.
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.
Agent:
the
distribution agent to be appointed by AT Co. to distribute the shares of Spinco
Common Stock pursuant to the Distribution.
Agreement:
as
defined in the preamble to this Agreement.
Asset:
any and
all assets, properties and rights, wherever located, whether real, personal
or
mixed, tangible or intangible, including the following (in each case, whether
or
not recorded or reflected or required to be recorded or reflected on the books
and records or financial statements of any Person): (i) notes and accounts
and
notes receivable (whether current or non-current); (ii) certificates of deposit,
banker's acceptances, stock (including the capital stock or other equity
securities in any Subsidiary), debentures, bonds, notes, evidences of
indebtedness, certificates of interest or participation in profit-sharing
agreements, collateral-trust certificates, preorganization certificates or
subscriptions, transferable shares, investment contracts, letters of credit
and
performance and surety bonds, voting-trust certificates, puts, calls, straddles,
options and other securities of any kind, and all loans, advances or other
extensions of credit or capital contributions to any other Person; (iii)
intangible property rights, inventions, discoveries, know-how, United States
and
foreign patents and patent applications, trade secrets, confidential
information, registered and unregistered trademarks, service marks, service
names, trade styles and trade names and associated goodwill; statutory, common
law and registered copyrights; applications for any of the foregoing, rights
to
use the foregoing and other rights in, to and under the foregoing; (iv) rights
under leases (including Real Property Leases), contracts, licenses, permits,
distribution arrangements, sales and purchase agreements, joint operating
agreements, other agreements and business arrangements; (v) Owned Real Property;
(vi) Leased Real Property, fixtures, trade fixtures, machinery, equipment
(including oil and gas, transportation and office equipment), tools, dies and
furniture; (vii) office supplies, production supplies, spare parts, other
miscellaneous supplies and other tangible property of any kind,
including all antennas, apparatus, cables, electrical devices, fixtures,
equipment, furniture, office equipment, broadcast towers, motor vehicles and
other transportation equipment, special and general tools, test devices,
transmitters and other tangible personal property;
(viii)
computers and other data processing equipment and software; (ix) raw
materials, work-in-process, finished goods, consigned goods and other
inventories; (x) prepayments or prepaid expenses; (xi) claims, causes of action,
rights under express or implied warranties, rights of recovery and rights of
setoff of any kind; (xii) the right to receive mail, payments on accounts
receivable and other communications; (xiii) lists of customers, records
pertaining to customers and accounts, personnel records, lists and records
pertaining to customers, suppliers and agents, and all accounting and other
books, records, ledgers, files and business records of every kind (whether
in
paper, microfilm, computer tape or disc, magnetic tape or any other form);
(xiv)
advertising materials and other printed or written materials; (xv) goodwill
as a
going concern and other intangible properties; (xvi) employee contracts,
including any rights thereunder to restrict an employee from competing in
certain respects; and (xvii) licenses and authorizations issued by any
governmental authority. "Assets"
shall
not include any asset relating to Taxes, which shall be governed exclusively
by
Article VI of this Agreement, the Tax Sharing Agreement, and, to the extent
applicable, the Merger Agreement or any asset relating to benefit plans,
programs, agreements, and arrangements, which shall be governed exclusively
by
Article V of this Agreement, the Employee Benefits Agreement and, to the extent
applicable, the Merger Agreement.
Asset
Separation Process:
as
defined in Section 2.8 of this Agreement.
AT
Co.:
as
defined in the preamble to this Agreement.
AT
Co.
Assets:
collectively: (i) all of the right, title and interest of AT Co. and its
Subsidiaries in all Assets held by them other than the Spinco Assets, (ii)
the
rights to use shared Assets as provided in Article II hereof, (iii) all other
Assets of AT Co. and AT Co. Subsidiaries to the extent specifically assigned
to
or retained by any member of the AT Co. Group pursuant to this Agreement or
any
other Transaction Agreement, (iv) the capital stock of each AT Co. Subsidiary,
(v) all rights of AT Co. under the Transaction Agreements and (vi) any
additional Assets set forth on Section 1.1(a) of the Disclosure
Letter.
AT
Co.
Business:
all of
the businesses and operations conducted by AT Co. and the AT Co. Subsidiaries
(other than the Spinco Business) at any time, whether prior to, on or after
the
Distribution Date.
AT
Co.
Common Stock:
as
defined in the Recitals to this Agreement.
AT
Co.
Designees:
as
defined in Section 2.8 of this Agreement.
AT
Co.
Financial Instruments:
all
credit facilities, guaranties, commercial paper, interest rate swap agreements,
foreign currency forward exchange contracts, comfort letters, letters of credit
and similar instruments related to the AT Co. Business under which any member
of
the Spinco Group has any primary, secondary, contingent, joint, several or
other
Liability after the Distribution Date.
AT
Co.
Group:
AT Co.
and the AT Co. Subsidiaries.
AT
Co.
Indemnitees:
AT Co.,
each Affiliate of AT Co. immediately after the Contribution and each of their
respective present and former Representatives and each of the heirs, executors,
successors and assigns of any of the foregoing.
AT
Co.
Liabilities:
collectively, (i) all Liabilities of AT Co. or any of the AT Co. Subsidiaries,
including the Liabilities of AT Co. under the Transaction Agreements, in each
case, other than the Spinco Liabilities, (ii) all Liabilities set forth on
Section 1.1(b) of the Disclosure Letter and (iii) all expenses allocated to
AT
Co. on Section 12.2 of the Disclosure Letter.
AT
Co.
Subsidiaries:
all
direct and indirect Subsidiaries of AT Co. immediately after the Distribution
Date.
AT
Co.
Trademarks:
as
defined in Section 8.7(c) of this Agreement.
AT
Co./Spinco Designees:
as
defined in Section 2.8 of this Agreement.
AT
Excess Expenses:
as
defined in Section 12.2 of this Agreement.
Business:
the
Spinco Business or the AT Co. Business, as the case may be.
Business
Day:
any day
other than a Saturday, Sunday or a day on which banking institutions in the
City
of Little Rock, Arkansas or the City of New York, New York are authorized or
obligated by law or executive order to close.
Cash
and Cash Equivalents:
as
defined in Section 4.1(f) of this Agreement.
Claims
Administration:
the
processing of claims made under the Policies, including the reporting of claims
to the insurance carrier, management and defense of claims, and providing for
appropriate releases upon settlement of claims.
Claims
Made Policies:
as
defined in Section 8.6(a) of this Agreement.
Closing
Date:
as
defined in the Merger Agreement.
Closing
Net Spinco Indebtedness:
as
defined in Section 4.1(a) of this Agreement.
Closing
Spinco Balance Sheet:
as
defined in Section 4.1(a) of this Agreement.
Closing
Statement:
as
defined in Section 4.1(a) of this Agreement.
Code:
as
defined in the Recitals to this Agreement.
Company:
as
defined in the Recitals to this Agreement.
Company
Consent:
the
written consent of the Company, which consent shall not be unreasonably
withheld, conditioned or delayed.
Company
Designees:
as
defined in Section 2.8 of this Agreement.
Contribution:
as
defined in the Recitals to this Agreement.
Debt
Exchange:
as
defined in Section 2.6(b) of this Agreement.
Delayed
Transfer Assets:
as
defined in Section 2.5 of this Agreement.
Delayed
Transfer Liabilities:
as
defined in Section 2.5 of this Agreement.
Disclosure
Letter:
the
schedule prepared and delivered by AT Co. to Spinco as of the date of this
Agreement.
Distribution:
as
defined in the Recitals to this Agreement.
Distribution
Date:
the
date and time that the Distribution shall become effective.
Effective
Time:
as
defined in the Merger Agreement.
Employee
Benefits Agreement:
the
Employee Benefits Agreement to be entered into between AT Co. and Spinco,
substantially in the form of Exhibit
A
hereto.
Final
Adjustment Amount:
as
defined in Section 4.1(d) of this Agreement.
Final
Closing Statement:
as
defined in Section 4.1(b) or 4.1(c) of this Agreement.
Final
Net Spinco Indebtedness:
as
defined in Section 4.1(d) of this Agreement.
GAAP:
as
defined in Section 4.1(f) of this Agreement.
Governmental
Authority:
as
defined in the Merger Agreement.
Group:
the AT
Co. Group or the Spinco Group, as the case may be.
Indebtedness:
as
defined in Section 4.1(f) of this Agreement.
Indemnifiable
Losses:
all
Losses, Liabilities, damages, claims, demands, judgments or settlements of
any
nature or kind, including all costs and expenses (legal, accounting or
otherwise) that are reasonably incurred relating thereto, suffered by an
Indemnitee, including any costs or expenses of enforcing any indemnity hereunder
that are reasonably incurred and all Taxes resulting from indemnification
payments hereunder.
Indemnifying
Party:
a
Person that is obligated under this Agreement to provide
indemnification.
Indemnitee:
a
Person that may seek indemnification under this Agreement.
Independent
Accounting Firm:
as
defined in Section 4.1(f) of this Agreement.
Information:
all
records, books, contracts, instruments, computer data and other data and
information.
Leased
Real Property:
all
leasehold or subleasehold estates and other rights to use or occupy any land,
buildings, structures, improvements, fixtures or other interest in real
property.
Liability
or Liabilities:
all
debts, liabilities and obligations whether absolute or contingent, matured
or
unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown,
whenever arising, and whether or not the same would properly be reflected on
a
balance sheet. "Liabilities"
shall
not include any liabilities for or in respect of Taxes, which shall be governed
solely by Article VI of this Agreement, the Tax Sharing Agreement, and, to
the
extent applicable, the Merger Agreement, or any liabilities for or in respect
of
any benefit plans, programs, agreements, and arrangements, which shall be
governed exclusively by Article V of this Agreement, the Employee Benefits
Agreement and, to the extent applicable, the Merger Agreement.
Litigation
Matters:
all
pending or threatened litigation, investigations, claims or other legal matters
that have been or may be asserted against, or otherwise adversely affect, AT
Co.
and/or Spinco (or members of either Group).
Losses:
as
defined in the Merger Agreement.
Merger:
as
defined in the Recitals to this Agreement.
Merger
Agreement:
as
defined in the Recitals to this Agreement.
Net
Spinco Indebtedness:
as
defined in Section 4.1(f) of this Agreement.
Occurrence
Basis Policies:
as
defined in Section 8.6(a) of this Agreement.
Owned
Real Property:
all
land, together with all buildings, structures, improvements and fixtures located
thereon, and all easements and other rights and interests appurtenant thereto
that is owned.
Person
or person:
a
natural person, corporation, company, partnership, limited partnership, limited
liability company, or any other entity, including a Governmental
Authority.
Policies:
all
insurance policies, insurance contracts and claim administration contracts
of
any kind of AT Co. and its Subsidiaries (including members of the Spinco Group)
and their predecessors which were or are in effect at any time at or prior
to
the Distribution Date, including primary, excess and umbrella, commercial
general liability, fiduciary liability, product liability, automobile, aircraft,
property and casualty, business interruption, directors and officers liability,
employment practices liability, workers’ compensation, crime, errors and
omissions, special accident, cargo and employee dishonesty insurance policies
and captive insurance company arrangements, together with all rights, benefits
and privileges thereunder, but not including any insurance policies, insurance
contracts or claim administration contracts subject to the provisions of the
Employee Benefits Agreement.
Preliminary
Restructuring:
as
defined in the Recitals to this Agreement.
Prime
Rate:
as
defined in Section 4.1(e) of this Agreement.
Privileged
Information:
with
respect to either Group, Information regarding a member of such Group, or any
of
its operations, Assets or Liabilities (whether in documents or stored in any
other form or known to its employees or agents) that is or may be protected
from
disclosure pursuant to the attorney-client privilege, the work product doctrine
or another applicable privilege, that a member of the other Group may come
into
possession of or obtain access to pursuant to this Agreement or
otherwise.
Real
Property Leases:
all
leases, subleases, concessions and other agreements (written or oral) pursuant
to which any Leased Real Property is held, including the right to all security
deposits and other amounts and instruments deposited thereunder.
Reclassification:
as
defined in Section 3.4 of this Agreement.
Record
Date:
the
close of business on the date to be determined by the Board of Directors of
AT
Co. as the record date for determining stockholders of AT Co. entitled to
receive the Distribution, which date shall be a business day preceding the
day
of the Effective Time.
Registration
Statement:
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 (as defined in the Merger Agreement) into which shares
of Spinco Common Stock will be converted pursuant to the Merger.
Representative:
with
respect to any Person, any of such Person's directors, managers or persons
acting in a similar capacity, officers, employees, agents, consultants,
financial and other advisors, accountants, attorneys and other
representatives.
SEC:
the
U.S. Securities and Exchange Commission.
Securities
Act:
the
Securities Act of 1933, as amended, together with the rules and regulations
of
the SEC promulgated thereunder.
Sell-off
Period:
as
defined in Section 8.7(c) of this Agreement.
Senior
Debt Commitment Letter:
means
the commitment letter attached hereto as Exhibit B.
Shared
Assets Agreement:
has the
meaning set forth in Section 2.1(b) of this Agreement.
Shared
Contracts Agreement:
has the
meaning set forth in Section 2.1(c) of this Agreement.
Special
Dividend:
a
dividend in an amount to be set forth in a certificate delivered by AT Co.
to
Spinco, with a copy to the Company, no later than thirty (30) days prior to
the
Distribution Date, which amount shall not exceed AT Co.'s tax basis in Spinco,
and which will be declared and paid by Spinco to AT Co. in cash prior to the
Distribution.
Special
Dividend Record Date:
as
defined in Section 2.6(a) of this Agreement.
Spinco:
as
defined in the preamble to this Agreement; provided that with respect to any
period following the Effective Time, all references to Spinco herein shall
be
deemed to be references to the Surviving Corporation.
Spinco
Assets:
collectively, (i) all of the right, title and interest of AT Co. and its
Subsidiaries in all Assets that are primarily used or held for use in, or
primarily relating to or arising from, the Spinco Business, including those
set
forth on the Spinco Audited Balance Sheet and those acquired by Spinco, any
Spinco Subsidiary, AT Co. or any AT Co. Subsidiary after the
date of
the Spinco Audited Balance Sheet, (ii) the rights to use shared Assets as
provided in Article II hereof, (iii) all other Assets of Spinco and the Spinco
Subsidiaries to the extent specifically assigned to or retained by any member
of
the Spinco Group pursuant to this Agreement or any other Transaction Agreement,
(iv) the capital stock of each Spinco Subsidiary, (v) all rights of Spinco
under
the Transaction Agreements, and (vi) any additional Assets set forth on Section
1.1(c) of the Disclosure Letter.
Spinco
Audited Balance Sheet:
as
defined in Section 4.1(f) of this Agreement.
Spinco
Business:
the
business conducted by AT Co. and its Subsidiaries engaged in the operation
of AT
Co.'s wireline telecommunications business, including AT Co.'s ILEC, CLEC and
internet access operations, related marketing and sales operations, and other
operations comprising what is referred to in AT Co.'s Annual Report on Form
10-K
for the fiscal year ended December 31, 2004 as the Wireline Segment of AT Co.,
as well as all of AT Co.'s directory publishing operations, telecommunication
information services operations, product distribution operations (other than
any
such operations supporting AT Co.'s wireless telecommunications business, as
set
forth on Schedule 1.1
hereof),
network management services operations, and wireline long-distance services
operations (other than the fiber backbone supporting those operations and the
revenues attributable to AT Co.'s wireless telecommunications business as a
result of its use of the fiber backbone), but excluding, for the avoidance
of
doubt, all other businesses conducted by AT Co. and its
Subsidiaries.
Spinco
Credit Agreement:
means
the definitive loan agreement with respect to the senior credit facility of
Spinco containing substantially the terms contemplated by the Senior Debt
Commitment Letter.
Spinco
Common Stock:
as
defined in the Recitals to this Agreement.
Spinco
Designees:
as
defined in Section 2.8 of this Agreement.
Spinco
Exchange Notes and Spinco Notes:
means
the notes to be issued by Spinco, as detailed in Section 2.6
hereof.
Spinco
Financial Instruments:
all
credit facilities, guaranties, commercial paper, interest rate swap agreements,
foreign currency forward exchange contracts, comfort letters, letters of credit
and similar instruments related to the Spinco Business under which any member
of
the AT Co. Group has any primary, secondary, contingent, joint, several or
other
Liability after the Distribution Date.
Spinco
Financing:
as
defined in Section 2.6(c) of this Agreement.
Spinco
Group:
Spinco
and the Spinco Subsidiaries.
Spinco
Indemnitees:
Spinco,
the Company, each Affiliate of Spinco and the Company immediately after the
Contribution and each of their respective present and former Representatives
and
each of the heirs, executors, successors and assigns of any of the
foregoing.
Spinco
Liabilities:
collectively: (i) all Liabilities of AT Co. or any of its Subsidiaries
(including Spinco and the Spinco Subsidiaries) primarily relating to or arising
from the Spinco Business, including the Liabilities set forth on the Spinco
Audited Balance Sheet or arising after the date thereof and the Liabilities
of
Spinco under the Transaction Agreements and (ii) all Liabilities set forth
on
Section 1.1(d) of the Disclosure Letter.
Spinco
Notes Offering:
means
the sale of Spinco Notes as part of the Spinco Financing, if applicable, and
the
distribution of Spinco Exchange Notes to AT Co. for purposes of effecting the
Debt Exchange.
Spinco
Subsidiaries:
all
direct and indirect Subsidiaries of Spinco immediately after the
Contribution.
Steering
Committee:
as
defined in Section 2.8 of this Agreement.
Subsidiary:
as
defined in the Merger Agreement.
Surviving
Corporation:
as
defined in the Merger Agreement.
Target
Net Spinco Indebtedness:
as
defined in Section 4.1(d) of this Agreement.
Taxes:
as
defined in the Merger Agreement.
Tax
Sharing Agreement:
the Tax
Sharing Agreement to be entered into between AT Co. and its Affiliates and
Spinco and its Affiliates, substantially in the form of Exhibit
C
hereto.
Third-Party
Claim:
any
claim, suit, derivative suit, arbitration, inquiry, proceeding or investigation
by or before any court, any governmental or other regulatory or administrative
agency or commission or any arbitration tribunal asserted by a Person who or
which is neither a party hereto nor an Affiliate of a party hereto.
Transaction
Agreements:
this
Agreement, the Employee Benefits Agreement, the Merger Agreement, the Tax
Sharing Agreement, the Shared Assets Agreement, the Shared Contracts Agreement,
and the Transition Services Agreement.
Transition
Services Agreement:
the
Transition Services Agreement to be entered into by and between AT Co. and
Spinco, substantially on the terms set forth in Exhibit
D
hereto.
Wireline
Subsidiaries:
as
defined in Section 2.1(a) of this Agreement.
Section
1.2 References
to Time.
All
references in this Agreement to times of the day shall be to New York City
time.
PRELIMINARY
TRANSACTIONS
(a) On
or
prior to the Distribution Date, AT Co. shall take or cause to be taken all
actions necessary to cause the transfer, assignment, delivery and conveyance
to
Spinco or one or more Spinco Subsidiaries designated by Spinco of (i) all of
the
stock of Subsidiaries of AT Co. that hold primarily Spinco Assets (the
"Wireline
Subsidiaries")
(which
such Subsidiaries are set forth on Schedule 2.1(a) hereof); provided
that
any AT Co. Assets or AT Co. Liabilities held by any such Wireline Subsidiary
shall be transferred from such Wireline Subsidiary to AT Co. or an AT Co.
Subsidiary prior to the Distribution Date, (ii) all of the Spinco Assets held
by
AT Co. or a subsidiary of AT Co. that are not transferred as a result of the
transfer of a Wireline Subsidiary to Spinco and (iii) all Spinco Liabilities
held by AT Co. or a subsidiary of AT Co. that are not transferred as a result
of
the transfer of a Wireline Subsidiary to Spinco. Spinco shall assume or cause
to
be assumed, and thereafter timely pay, perform and discharge, or cause to be
paid, performed and discharged, all of the Spinco Liabilities.
(b) The
separation of the AT Co. Assets and the Spinco Assets, as contemplated by this
Agreement shall be effected in a manner that does not unreasonably disrupt
either the AT Co. Business or the Spinco Business. Notwithstanding the
foregoing, AT Co. and Spinco agree, and agree to cause their respective
Subsidiaries, to use their reasonable best efforts to obtain, before the
Distribution Date, any consent, approval or waiver from, and to satisfy any
notification requirements to, any Governmental Authority or other third party.
Prior to the Distribution Date, AT Co. and Spinco shall use their
reasonable best efforts to identify all Assets that cannot be separated in
a
commercially reasonable manner, and Spinco and AT Co. will enter into
appropriate arrangements regarding such shared Assets (the "Shared
Assets Agreement"),
including the costs related to the use of such shared Assets.
(c) Prior
to
the Contribution, AT Co. and Spinco will use their respective reasonable best
efforts to amend, in form and substance reasonably satisfactory to the Company,
all contractual arrangements between or among AT Co., Spinco, their respective
Affiliates and any other Person (other than the contractual arrangements
relating to the Contribution, the Distribution and the Merger) that either
(i)
relate to the AT Co. Business but relate primarily to the Spinco Business or
(ii) relate solely to the Spinco Business, but, by their terms, contain
provisions relating to a member of the AT Co. Group, so that, after the
Contribution, such contractual arrangements (x) will relate solely to the Spinco
Business and (y) will eliminate any provisions relating to a member of the
AT
Co. Group and, in either event, will inure to the benefit of the Spinco Group
on
substantially the same economic terms as such arrangements exist as of the
date
hereof. Prior to the Contribution, AT Co. and Spinco will use their respective
reasonable best efforts to amend, in form and substance reasonably satisfactory
to the Company, all contractual arrangements between or among AT Co., Spinco,
their respective Affiliates and any other Person (other than the contractual
arrangements relating to the Contribution, the Distribution and the Merger)
that
either (i) relate to the Spinco Business but relate primarily to the AT Co.
Business or (ii) relate solely to the AT Co. Business, but, by their terms,
contain provisions relating to a member of the Spinco Group, so that, after
the
Contribution, such contractual arrangements (x) will relate solely to the AT
Co.
Business and (y) will eliminate any provisions relating to a member of the
Spinco Group and, in either event, will inure to the benefit of the AT Co.
Group
on substantially the same economic terms as such arrangements exist as of the
date hereof. If, in any case, such amendment cannot be obtained, or if an
attempted amendment thereof would be ineffective or would adversely affect
the
rights of AT Co. or Spinco thereunder, AT Co. and Spinco will cooperate in
negotiating a mutually agreeable arrangement with respect to such contractual
arrangements (the "Shared
Contracts Agreement"),
in
form and substance reasonably satisfactory to the Company, under which AT Co.
or
Spinco, as applicable, will obtain the benefits and assume the obligations
thereunder. Notwithstanding the foregoing, no action will be required of
AT Co. or Spinco that would cause the representation contained in
Section 2.1(d)
below to
be breached.
(d) AT
Co.
hereby represents and warrants to Spinco that immediately following the
Contribution, the Assets of Spinco and the Spinco Subsidiaries, taken together
with the services available from AT Co. pursuant to the Transition Services
Agreement, the Shared Assets Agreement and the Shared Contracts Agreement,
will
constitute all of the Assets primarily used in or necessary for, and will be
sufficient for the operation of, the Spinco Business in all material respects
as
currently conducted and as proposed to be conducted on the date the Contribution
is consummated. The representations and warranties of AT Co. set forth in this
Section 2.1(d) will survive the execution and delivery of this Agreement and
the
Distribution Date and will continue in full force and effect for two years
following the Distribution Date.
(e) From
the
date hereof until the Effective Time, AT Co. shall be entitled to use, retain
or
otherwise dispose of all cash generated by the Spinco Business and the
Spinco Assets in accordance with the ordinary course operation of AT Co.'s
cash
management system.
(f) Except
as
otherwise specifically set forth herein, the rights and obligations of the
parties with respect to Taxes shall be governed exclusively by Article VI of
this Agreement, the Tax Sharing Agreement and to the extent applicable, the
Merger Agreement. Accordingly, Taxes shall not be treated as Assets or
Liabilities for purposes of, or otherwise be governed by, this Section 2.1.
In
addition, except as otherwise specifically set forth herein, the rights and
obligations of the parties with respect to benefit plans, programs, agreements
and arrangements shall be governed exclusively by Article V of this Agreement,
the Employee Benefits Agreement and to the extent applicable, the Merger
Agreement. Accordingly, assets and liabilities relating to any benefit plans,
programs, agreements and arrangements shall not be treated as Assets or
Liabilities for purposes of, or otherwise be governed by, this Section
2.1.
Section
2.2 Conveyancing
and Assumption Agreements.
In
connection with the transfer of the Spinco Assets and the assumption of the
Spinco Liabilities contemplated by this Article II, AT Co. and Spinco
shall
execute, or cause to be executed by the appropriate entities, conveyancing
and
assumption instruments in such forms as shall be reasonably acceptable to AT
Co., Spinco and the Company.
Section
2.3 Certain
Resignations.
At
or
prior to the Distribution Date, AT Co. shall cause each employee and director
of
AT Co. and its Subsidiaries who will not be employed by Spinco or a Spinco
Subsidiary after the Distribution Date to resign, effective not later than
the
Distribution Date, from all boards of directors or similar governing bodies
of
Spinco or any Spinco Subsidiary on which they serve, and from all positions
as
officers of Spinco or any Spinco Subsidiary in which they serve. Spinco will
cause each employee and director of Spinco and its Subsidiaries who will not
be
employed by AT Co. or an AT Co. Subsidiary after the Distribution Date to
resign, effective not later than the Distribution Date, from all boards of
directors or similar governing bodies of AT Co. or any AT Co. Subsidiary on
which they serve, and from all positions as officers of AT Co. or any AT Co.
Subsidiary in which they serve.
Section
2.4 Other
Agreements.
Each of
AT Co. and Spinco shall, prior to the Distribution Date, enter into, or cause
the appropriate members of the Group of which it is a member to enter into,
the
other Transaction Agreements.
Section
2.5 Transfers
Not Effected Prior to the Distribution; Transfers Deemed Effective as of the
Distribution Date.
Subject
to Section 2.1(d), to the extent that any transfers of Assets or Liabilities
contemplated by this Article II shall not have been consummated on or prior
to
the Distribution Date, the parties shall cooperate and use reasonable best
efforts to effect the transfer of such Assets ("Delayed
Transfer Assets")
and
such Liabilities ("Delayed
Transfer Liabilities")
as
promptly following the Distribution Date as shall be practicable. On
the
Closing Date, AT Co. shall use its reasonable best efforts to deliver to Spinco
a schedule setting forth all material Delayed Transfer Assets and Delayed
Transfer Liabilities existing as of the Closing Date. Nothing
herein shall be deemed to require the transfer of any Assets or the assumption
of any Liabilities which by their terms or operation of law cannot be
transferred or assumed until such time as all legal impediments to such transfer
or assumption have been removed; provided, however, that AT Co. and Spinco
shall, and shall cause their respective Subsidiaries to, use its reasonable
best
efforts to obtain any necessary consents or approvals for the transfer of all
Assets and the assumption of all Liabilities contemplated to be transferred
or
assumed pursuant to this Article II. In the event that any such transfer of
Assets or assumption of Liabilities has not been consummated, effective on
or
before the Distribution Date, the party retaining such Asset or Liability shall
thereafter hold such Asset in trust for the use and benefit of the party
entitled thereto (at the expense of the party entitled thereto) and retain
such
Liability for the account of the party by whom such Liability is to be assumed
pursuant hereto, and take such other action as may be reasonably requested
by
the party to which such Asset is to be transferred, or by whom such Liability
is
to be assumed, as the case may be, in order to place such party, insofar as
reasonably practicable, in substantially the same position as would have existed
had such Asset or Liability been transferred or assumed as contemplated hereby.
As and when any such Asset becomes transferable or such Liability can be
assumed, such transfer or assumption automatically and without any further
action shall be effected forthwith. Subject to the foregoing, the parties agree
that, as of the Distribution Date (or such earlier time as any such Asset may
have been assigned or Liability assumed), each party hereto shall be deemed
to
have acquired complete and sole beneficial ownership over all of the Assets,
together with all rights, powers and privileges incident thereto, and shall
be
deemed to have assumed in accordance with the terms of this Agreement all of
the
Liabilities, and all duties, obligations and responsibilities incident thereto,
which such party is entitled to acquire or required to assume pursuant to the
terms of this Agreement.
(a) The
Spinco Board will establish a special dividend record date (the "Special
Dividend Record Date")
and
will authorize Spinco to pay out of funds legally available therefor the Special
Dividend immediately prior to the Distribution Date to AT Co., as the holder
of
record of Spinco Common Stock as of the Special Dividend Record
Date.
(b) Prior
to
the Distribution Date, AT Co. shall enter into all necessary or appropriate
arrangements regarding (i) the exchange of outstanding AT Co. short-term debt
obligations (the "AT
Co.
Notes")
having
an aggregate fair market value as of the date of the Debt Exchange equal to
the
net proceeds of the Spinco Exchange Notes or (ii) other transfer of the Spinco
Exchange Notes to the creditors of AT Co. (the "Debt
Exchange").
The
principal amount of the Spinco Exchange Notes will be an amount equal to (x)
$3.965 billion less (y) the amount of the Special Dividend, with the precise
aggregate principal amount of the Spinco Exchange Notes to be exchanged or
transferred in the Debt Exchange to be set forth on a certificate to be
delivered by AT Co. to Spinco, with a copy to the Company, no later than thirty
(30) days prior to the Distribution Date.
(c) At
or
prior to the Distribution Date, Spinco will (i) enter into the Spinco Credit
Agreement and consummate the Spinco Notes Offering, pursuant to which Spinco
will borrow up to $3.965 billion in the aggregate (the "Spinco
Financing"),
and
use such proceeds to pay the Special Dividend and (ii) distribute Spinco
Exchange Notes to AT Co., which AT Co. intends to exchange for outstanding
AT
Co. Notes or otherwise transfer in the Debt Exchange.
(d) Notwithstanding
the provisions of Sections 2.6(b) and 2.6(c), the amounts of indebtedness set
forth in this Section 2.6 are approximations based on facts and circumstances
existing on the date hereof and are subject to change prior to the Distribution
Date, it being understood that such amounts will at all times remain subject
to
the provisions of Section 4.1 hereof.
(e) AT
Co.
and Spinco shall use their respective reasonable best efforts to cause the
Spinco Financing and the Debt Exchange to be consummated. Without limiting
the
generality of the foregoing, each of AT Co. and Spinco shall use its reasonable
best efforts to cause their respective employees, accountants, counsel and
other
representatives to reasonably cooperate with each other in carrying out the
transactions contemplated by the Spinco Financing and the Debt Exchange and
in
delivering all documents and instruments deemed reasonably necessary by AT
Co.
or Spinco (including providing standard accountants’ "comfort" letters and legal
opinions and otherwise cooperating and assisting in satisfying the conditions
to
the Spinco Financing and the Debt Exchange and assisting with the syndication
or
marketing of the Spinco Credit Agreement and the consummation of the Spinco
Notes Offering including, by (i) providing direct contact between prospective
lenders and the officers and directors of each of AT Co. and Spinco, (ii)
providing assistance in preparation of confidential information memoranda and
other materials to be used in connection with consummating the Spinco Financing
and the Debt Exchange, (iii) disclosing the Debt Exchange and Spinco Financing,
as required under the Securities Act, in the Registration Statement and any
other filings to be made with the SEC, and (iv) entering into such agreements
and other arrangements as are reasonably required to effectuate any arrangements
made by AT Co. with respect to the exchange of Spinco Notes for AT Co. Notes
in
connection with the Debt Exchange, and (v) taking all other actions reasonably
necessary in connection with the Spinco Financing and the Debt Exchange). Each
of AT Co. and Spinco shall cooperate in connection with the preparation of
all
documents and the making of all filings required in connection with the Spinco
Financing and the Debt Exchange 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 transactions contemplated
hereby.
(a) Spinco
will, at its expense, take or cause to be taken all actions, and enter into
(or
cause the Spinco Subsidiaries to enter into) such agreements and arrangements,
as shall be reasonably necessary to effect the
(b) release
of and substitution for each member of the AT Co. Group, as of the Distribution
Date, from all primary, secondary, contingent, joint, several and other
Liabilities in respect of Spinco Financial Instruments to the extent related
to
the Spinco Group or the Spinco Business (it being understood that all such
Liabilities in respect of Spinco Financial Instruments are Spinco
Liabilities).
(c) AT
Co.
will, at its expense, take or cause to be taken all actions, and enter into
(or
cause its Subsidiaries to enter into) such agreements and arrangements, as
shall
be necessary to effect the release of and substitution for each member of the
Spinco Group, as of the Distribution Date, from all primary, secondary,
contingent, joint, several and other Liabilities, if any, in respect of AT
Co.
Financial Instruments to the extent related to the AT Co. Group or the AT Co.
Business (it being understood that all such Liabilities in respect of AT Co.
Financial Instruments are AT Co. Liabilities).
(d) The
parties' obligations under this Section 2.7 will continue to be applicable
to all Spinco Financial Instruments and AT Co. Financial Instruments identified
at any time by AT Co. or Spinco, whether before, at or after the Distribution
Date.
Section
2.8 Coordination
of Asset Separation Transactions.
As
promptly as practicable after the date hereof, AT Co. and Spinco shall establish
a steering committee (the "Steering
Committee")
for
the purpose of (i) overseeing the process of separating Spinco Assets from
AT
Co. Assets, (ii) reviewing the form, terms and provisions of each agreement
necessary for the Preliminary Restructuring and the Contribution to the extent
not finalized at or prior to the date hereof, (iii) reviewing any proposed
amendments to any such document that has previously been finalized, (iv)
implementing the specific terms of each of the Transaction Agreements, including
the Employee Benefits Agreement and (v) overseeing the implementation of the
Spinco Financing (collectively, the "Asset
Separation Process").
The
Steering Committee shall be comprised of up to two (2) designees selected by
AT
Co. (the "AT
Co.
Designees"),
up to
two (2) designees selected by Spinco (the "Spinco
Designees"
and,
collectively with the AT Co. Designees, the "AT
Co./Spinco Designees")
and up
to two (2) designees selected by the Company, who shall be reasonably acceptable
to AT Co. and Spinco (the "Company
Designees").
All
material decisions with respect to the Asset Separation Process, including
the
terms of any breakage or termination fees payable by AT Co. or Spinco, any
consent payments or similar arrangements required in connection with the Asset
Separation Process and the terms of any material contract, agreement,
arrangement or understanding to be entered into with any third party in
connection therewith, shall be subject to the review of the Steering Committee.
In the event either Company Designee in good faith asserts that any contract,
agreement, arrangement or understanding to be entered into between AT Co. and
Spinco, which by its terms will continue after the Distribution Date, would,
individually or in the aggregate, materially and adversely affect the economic
benefits as a whole to be derived by the Company from the Merger, the execution
of such contract, agreement, arrangement or understanding shall require a
Company Consent.
THE
DISTRIBUTION
Section
3.1 Record
Date and Distribution Date.
Subject
to the satisfaction, or to the extent permitted by applicable Law, waiver,
of
the conditions set forth in Section 11.1, the Board of Directors of AT Co.,
consistent with the Merger Agreement and Delaware law, shall establish the
Record Date and the Distribution Date and any necessary or appropriate
procedures in connection with the Distribution.
Section
3.2 Spinco
Reclassification.
Immediately prior to the Distribution Date, AT Co. and Spinco shall take all
actions necessary to issue to AT Co. such number of shares of Spinco
Common
Stock, including, if applicable, by reclassifying the outstanding shares of
Spinco Common Stock or by declaring a dividend payable to AT Co. in shares
of
Spinco Common Stock (the "Reclassification"),
for
the purpose of increasing the outstanding shares of Spinco Common Stock such
that, immediately prior to the Distribution Date, Spinco will have an aggregate
number of shares of Spinco Common Stock to be determined by AT Co. and Spinco
prior to the Distribution Date, all of which will be held by AT Co.
Section
3.3 Net
Spinco Indebtedness.
Immediately prior to the Effective Time, after giving effect to the Contribution
and the other transactions contemplated hereby other than the Merger and the
refinancing of the Company indebtedness, Spinco shall have Net Spinco
Indebtedness (as defined below) of not more than the Target Net Spinco
Indebtedness (as defined below).
Section
3.4 The
Agent.
Prior
to the Distribution Date, AT Co. shall enter into an agreement with the Agent
on
terms reasonably satisfactory to Spinco providing for, among other things,
the
distribution to the holders of AT Co. Common Stock in accordance with this
Article III of the shares of Company Common Stock into which the shares of
Spinco Common Stock that would otherwise be distributed in the Distribution
will
be converted pursuant to the Merger.
Section
3.5 Delivery
of Shares to the Agent.
At or
prior to the Distribution Date, AT Co. shall authorize the book-entry transfer
by the Agent of all of the outstanding shares of Spinco Common Stock to be
distributed in connection with the Distribution. After the Distribution Date,
upon the request of the Agent, Spinco shall provide all book-entry transfer
authorizations that the Agent shall require in order to effect the distribution
of the shares of Company Common Stock into which the shares of Spinco Common
Stock that would otherwise be distributed in the Distribution will be converted
pursuant to the Merger.
Section
3.6 The
Distribution.
Upon the
terms and subject to the conditions of this Agreement, following consummation
of
the Reclassification, AT Co. shall declare and pay the Distribution of all
of
the shares of Spinco Common Stock held by AT Co. At the Effective Time (as
defined in the Merger Agreement), all such shares of Spinco Common Stock shall
be converted into the right to receive shares of Company Common Stock pursuant
to, and in accordance with the terms of, the Merger Agreement, immediately
following which the Agent shall distribute by book-entry transfer 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 would otherwise be distributed
in the Distribution have been converted pursuant to the Merger. The
Agent
shall make cash payments in lieu of any fractional shares resulting from the
conversion of Spinco Common Stock into Company Common Stock in the Merger
pursuant to the terms of the Merger Agreement.
NET
DEBT ADJUSTMENT
(a) Within
ninety
(90) days after the Closing Date (as defined in the Merger Agreement), the
Surviving Corporation (as defined in the Merger Agreement) shall cause to be
prepared and delivered to AT Co. (i) a combined balance sheet of Spinco and
the
Spinco Subsidiaries as of 12:01 a.m. on the Distribution Date (the "Closing
Spinco Balance Sheet")
and
(ii) a statement derived from the Closing Spinco Balance Sheet and prepared
in
accordance with this Section 4.1 (the "Closing
Statement"),
setting forth the Net Spinco Indebtedness (as defined below) as of 12:01 a.m.
on
the Distribution Date (the "Closing
Net Spinco Indebtedness"),
including reasonable detail regarding the calculation thereof. The Closing
Spinco Balance Sheet shall be prepared in accordance with GAAP, consistently
applied, utilizing the same methodology and adjustments as were utilized in
preparing the Spinco Audited Balance Sheet, and the Closing Statement shall
be
derived from the Closing Spinco Balance Sheet.
(b) Following
the Distribution Date, each of AT Co. and Spinco shall give the other party
and
any representatives of such other party access at all reasonable times to the
properties, books, records, working papers and personnel of the Spinco Business
to the extent required to prepare and review the Closing Spinco Balance Sheet
and the Closing Statement. AT Co. shall have thirty (30) days following delivery
of the Closing Spinco Balance Sheet and the Closing Statement during which
to
notify the Surviving Corporation of any dispute of any item contained in the
Closing Statement, which notice shall (i) set forth in reasonable detail the
nature and amount of any such dispute and (ii) include only disputes based
on
mathematical errors or the calculation of amounts not in accordance with the
procedures set forth in this Section 4.1. If AT Co. fails to notify
the
Surviving Corporation of any such dispute within such thirty (30) day period,
or
if the dispute involves amounts less than $5 million in the aggregate, the
Closing Statement delivered to AT Co. shall be deemed to be the "Final
Closing Statement,"
final,
conclusive and binding on the parties hereto. In the event that AT Co. shall
so
notify the Surviving Corporation of a dispute, AT Co. and the Surviving
Corporation shall cooperate in good faith to resolve such dispute as promptly
as
possible.
(c) If
AT Co.
and the Surviving Corporation do not resolve any such disputed item within
thirty (30) days of the delivery of such notice, such disputed item shall be
resolved by the Independent Accounting Firm (as defined below). In connection
therewith, the Independent Accounting Firm shall address only items disputed
by
the parties and may not assign an amount to any disputed item greater than
the
greatest amount for such item that is claimed by a party or less than the
smallest amount for such item that is claimed by a party. The Independent
Accounting Firm shall make its determination with respect to any such disputed
item as promptly as practicable and such determination shall be final,
conclusive and binding on the parties and shall be enforceable in any court
of
competent jurisdiction and may be entered as a judgment in any such court.
Any
expenses relating to the engagement of the Independent Accounting Firm shall
be
shared equally between AT Co. and the Surviving Corporation. The Closing
Statement, as modified by resolution of any disputed items between AT Co. and
Spinco or by the Independent Accounting Firm, shall be the "Final
Closing Statement,"
final,
conclusive and binding on the parties hereto.
(d) Provided
that the Spinco Financing has been consummated, if the amount of the Net Spinco
Indebtedness, as set forth in the Final Closing Statement (the "Final
Net Spinco Indebtedness"),
exceeds the sum of (x) $4.2 billion plus (y) the principal amount of any
additional Indebtedness (the "Additional
Spinco Indebtedness")
incurred in respect of the fees and expenses related to the Spinco Notes (the
sum of clause (x) plus clause (y) being referred to herein as "Target
Net Spinco Indebtedness"),
AT
Co. shall pay to Spinco an amount equal to such excess and if the amount of
the
Final Net Spinco Indebtedness is less than the amount of the Target Net Spinco
Indebtedness, Spinco shall pay to AT Co. an amount equal to such deficit (such
payment amount being referred to herein as the "Final
Adjustment Amount").
(e) Any
payment to be made by AT Co. or the Surviving Corporation, as the case may
be,
in respect of the Final Adjustment Amount pursuant to Section 4.1(d) hereof
shall be made by wire transfer of immediately available funds within five (5)
Business Days after the date upon which the Closing Statement becomes the Final
Closing Statement (either upon mutual agreement pursuant to Section 4.1(a)
or by
resolution of any dispute with respect to the Statement in accordance with
Sections 4.1(b) and/or 4.1(c)) in an amount determined pursuant to Section
4.1(d) hereof, together with interest thereon from the Distribution Date through
the date such payment is made, at the prime lending rate as reported as of
the
date of such payment by The
Wall Street Journal (the
"Prime
Rate").
Notwithstanding the foregoing, in the event that the aggregate amount required
to be paid by the Surviving Corporation to AT Co. pursuant to Section 4.1(d)
exceeds $50 million, then the Surviving Corporation (i) shall pay $50 million
of
such amount to AT Co. in cash as provided in the immediately preceding sentence
and (ii) shall pay the remaining amount due through the issuance of a promissory
note having a maturity of not more than ninety (90) days and bearing interest
at
the Prime Rate, or through any combination of the foregoing.
(f) As
used
herein, the following terms shall have the following meanings: (i) "Net
Spinco Indebtedness"
shall
mean (A) the aggregate amount of Indebtedness (as defined below) of Spinco
and
its Subsidiaries immediately prior to the Distribution Date which shall remain
an obligation of Spinco or any of the Spinco Subsidiaries following the
Distribution Date minus (B) the aggregate amount of Cash and Cash Equivalents
(as defined below) of Spinco and the Spinco Subsidiaries as of the Distribution
Date. The Net Spinco Indebtedness shall be calculated in good faith in
accordance with GAAP, consistently applied, utilizing the same methodology
and
adjustments as were used in preparing the Spinco Audited Balance Sheet; (ii)
"Indebtedness"
of any
Person (as defined in the Merger Agreement) at any date shall mean (x) any
obligation of such Person (A) with respect to indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services,
including all accrued and unpaid interest, premiums, penalties and fees thereon
(other than accounts payable, accrued expenses (including book overdrafts)
and
other current liabilities arising in the ordinary course of business),
(B) evidenced by a note, bond, debenture or similar instrument (including
a purchase money obligation) or (iii) under any lease or similar arrangement
that would be required to be accounted for by the lessee as a capital lease
in
accordance with GAAP; (y) any guarantee (or keepwell agreement) by such Person
of any indebtedness of others described in the preceding clause (x); and (z)
all
obligations to reimburse any bank or other Person for amounts paid under a
letter of credit or similar instrument;
(iii)
"Cash
and Cash Equivalents"
shall
mean all cash, cash equivalents, including certificates of deposit or bankers'
acceptances maturing within one year from the date of acquisition thereof,
marketable direct obligations issued by, or unconditionally guaranteed by,
the
United States government or an agency thereof, and investments in money market
funds with assets of $5,000,000 or greater, and other liquid investments,
including all deposited but uncleared bank deposits; (iv) "Spinco
Audited Balance Sheet"
shall
mean the audited combined balance sheet of Spinco and the Spinco Subsidiaries
as
of December 31, 2004; (v) "GAAP"
shall
mean United States generally accepted accounting principles; and (vi)
"Independent
Accounting Firm"
shall
mean an internationally recognized accounting firm mutually selected and agreed
upon by AT Co. and Spinco.
EMPLOYEE
BENEFIT MATTERS
Section
5.1 Employee
Benefit Matters.
Subject
to the terms and conditions set forth herein at or prior to the Distribution
Date, AT Co. and Spinco shall each execute and deliver the Employee
Benefits Agreement, substantially in the form of Exhibit A
hereto.
TAX
SHARING
Section
6.1 Tax
Sharing.
Subject
to the terms and conditions set forth herein at or prior to the Distribution
Date, AT Co. and Spinco shall each execute and deliver the Tax Sharing
Agreement, substantially in the form of Exhibit
C
hereto.
SURVIVAL
AND INDEMNIFICATION
Section
7.1 Survival
of Agreements.
Except
as otherwise provided herein with respect to any specific representation,
warranty or covenant, all representations, warranties, covenants and agreements
of the parties hereto contained in this Agreement shall survive the Distribution
Date for a period of two (2) years.
For the
avoidance of doubt, this Section 7.1 shall in no event alter or otherwise affect
the operation of Section 12.1 of the Merger Agreement.
Section
7.2 Mutual
Release.
Effective as of the Distribution Date and except as otherwise specifically
set
forth in the Transaction Agreements, each of AT Co., on behalf of itself and
each of the AT Co. Subsidiaries, on the one hand, and Spinco, on behalf of
itself and each of the Spinco Subsidiaries, on the other hand, hereby releases
and forever discharges the other party and its Subsidiaries, and its and their
respective officers, directors, managers or other persons acting in a similar
capacity, agents, record and beneficial security holders (including trustees
and
beneficiaries of trusts holding such securities), advisors and Representatives
(in each case, in their respective capacities as such) and their respective
heirs, executors, administrators, successors and assigns, of and from all debts,
demands, actions, causes of action, suits, accounts, covenants, contracts,
agreements, damages, claims and other Liabilities whatsoever of every name
and
nature, both in law and in equity, which the releasing party has or ever had
or
ever will have, which exist or arise out of or relate to events, circumstances
or actions taken by such other party occurring or failing to occur or any
conditions existing at or prior to the Distribution Date whether or not known
on
the Distribution Date, including in connection with the transactions and all
other activities to implement the Contribution and the Distribution;
provided,
however,
that
the foregoing general release shall not apply to (i) any Liabilities
or
other obligations (including Liabilities with respect to payment, reimbursement,
indemnification or contribution) under the Merger Agreement or the other
Transaction Agreements or any Contracts (as defined therein) contemplated
thereby, or assumed, transferred, assigned, allocated or arising under any
of
the Merger Agreement or the other Transaction Agreements or any Contract
contemplated thereby (including any Liability that the parties may have with
respect to payment, performance, reimbursement, indemnification or contribution
pursuant to the Merger Agreement or any other Transaction Agreement or any
Contract contemplated thereby for claims brought against the parties by third
Persons or any Indemnitee), and the foregoing release will not affect any
party's right to enforce the Merger Agreement or the other Transaction
Agreements or the Contracts contemplated thereby in accordance with their terms
or (ii) any Liability the release of which would result in the release of any
Person other than a Person released pursuant to this Section 7.2 (provided,
that
the parties agree not to bring suit or permit any of their Subsidiaries to
bring
suit against any such Person with respect to any Liability to the extent such
Person would be released with respect to such Liability by this Section 7.2
but
for this clause (ii)).
Each
party to this Agreement agrees, for itself and each member of its Group, not
to
make any claim or demand or commence any action or assert any claim against
any
member of the other Party's Group with respect to the Liabilities released
pursuant to this Section 7.2.
(a) Except
as
specifically otherwise provided in the other Transaction Agreements, Spinco
shall indemnify, defend and hold harmless the AT Co. Indemnitees from and
against all Indemnifiable Losses arising out of or due to the failure of any
member of the Spinco Group (i) to pay or satisfy any Spinco Liabilities
(including the Spinco Group's Delayed Liabilities), or (ii) to perform any
of
its obligations under this Agreement.
(b) Except
as
specifically otherwise provided in the other Transaction Agreements, AT Co.
shall indemnify, defend and hold harmless the Spinco Indemnitees from and
against all Indemnifiable Losses arising out of or due to the failure of any
member of the AT Co. Group (i) to pay or satisfy any AT Co. Liabilities
(including the AT Co. Group's Delayed Liabilities), (ii) to transfer
to
Spinco or any member of the Spinco Group all of the Spinco Assets transferred
or
to be transferred to Spinco or the Spinco Group pursuant to Article II hereof,
or (iii) to perform any of its obligations under this Agreement.
(c) Notwithstanding
anything to the contrary set forth herein, indemnification relating to any
arrangements between any member of the AT Co. Group and any member of the Spinco
Group for the provision after the Distribution Date of goods and services in
the
ordinary course shall be governed by the terms of such arrangements and not
by
this Section or as otherwise set forth in this Agreement and the other
Transaction Agreements.
(d) Indemnification
for matters subject to the Tax Sharing Agreement is governed by the terms,
provisions and procedures of the Tax Sharing Agreement and not by this Article
VII and indemnification for matters subject to the Merger Agreement is governed
by the terms, provisions and procedures of the Merger Agreement and not by
this
Article VII.
(a) AT
Co.
shall, and shall cause the other AT Co. Indemnitees to, notify Spinco in writing
promptly after learning of any Third-Party Claim for which any AT Co. Indemnitee
intends to seek indemnification from Spinco under this Agreement. Spinco shall,
and shall cause the other Spinco Indemnitees to, notify AT Co. in writing
promptly after learning of any Third-Party Claim for which any Spinco Indemnitee
intends to seek indemnification from AT Co. under this Agreement. The failure
of
any Indemnitee to give such notice shall not relieve any Indemnifying Party
of
its obligations under this Article VII except to the extent that such
Indemnifying Party is actually prejudiced by such failure to give notice. Such
notice shall describe such Third-Party Claim in reasonable detail considering
the Information provided to the Indemnitee and shall indicate the amount
(estimated if necessary) of the Indemnifiable Loss that has been claimed against
or may be sustained by such Indemnitee.
(b) Except
as
otherwise provided in paragraph (c) of this Section 7.3, an Indemnifying Party
may, by notice to the Indemnitee and to AT Co., if Spinco is the Indemnifying
Party, or to the Indemnitee and Spinco, if AT Co. is the Indemnifying Party,
within 30 days after receipt by such Indemnifying Party of such
Indemnitee's notice of a Third-Party Claim, undertake (itself or through another
member of the Group of which the Indemnifying Party is a member) the defense
or
settlement of such Third-Party Claim, at such Indemnifying Party's own expense
and by counsel reasonably satisfactory to the Indemnitee. If an Indemnifying
Party undertakes the defense of any Third-Party Claim, such Indemnifying Party
shall control the investigation and defense or settlement thereof, and the
Indemnitee may not settle or compromise such Third-Party Claim without the
prior
written consent of the Indemnifying Party, except that such Indemnifying Party
shall not (i) require any Indemnitee, without its prior written consent, to
take
or refrain from taking any action in connection with such Third-Party Claim,
or
make any public statement, which such Indemnitee reasonably considers to be
against its interests, or (ii) without the prior written consent of the
Indemnitee and of AT Co., if the Indemnitee is an AT Co. Indemnitee, or the
Indemnitee and of Spinco, if the Indemnitee is a Spinco Indemnitee, consent
to
any settlement that does not include as a part thereof an unconditional release
of the relevant Indemnitees from liability with respect to such Third-Party
Claim or that requires the Indemnitee or any of its Representatives or
Affiliates to make any payment that is not fully indemnified under this
Agreement or to be subject to any non-monetary remedy. Subject to the
Indemnifying Party's control rights, as specified herein, the Indemnitees may
participate in such investigation and defense, at their own expense. Following
the provision of notices to the Indemnifying Party, until such time as an
Indemnifying Party has undertaken the defense of any Third-Party Claim as
provided herein, such Indemnitee shall control the investigation and defense
or
settlement thereof, without prejudice to its right to seek indemnification
hereunder.
(c) If
an
Indemnitee reasonably determines that there may be legal defenses available
to
it that are different from or in addition to those available to its Indemnifying
Party which make it inappropriate for the Indemnifying Party to undertake the
defense or settlement thereof, then such Indemnifying Party shall not be
entitled to undertake the defense or settlement of such Third-Party Claim;
and
counsel for the Indemnifying Party shall be entitled to conduct the defense
of
such Indemnifying Party and counsel for the Indemnitee (selected by the
Indemnitee) shall be entitled to conduct the defense of such Indemnitee, in
which case the reasonable fees, costs and expenses of such counsel for the
Indemnitee (but not more than one counsel (in addition to local counsel, if
any)
reasonably satisfactory to the Indemnifying Party) shall be paid by such
Indemnifying Party, it being understood that both such counsel shall cooperate
with each other to conduct the defense or settlement of such action as
efficiently as possible.
(d) In
no
event shall an Indemnifying Party be liable for the fees and expenses of more
than one counsel for all Indemnitees (in addition to local counsel and its
own
counsel, if any) in connection with any one action, or separate but similar
or
related actions, in the same jurisdiction arising out of the same general
allegations or circumstances.
(e) If
the
Indemnifying Party undertakes the defense or settlement of a Third-Party Claim,
the Indemnitee shall make available to the Indemnifying Party and its counsel
all information and documents reasonably available to it which relate to any
Third-Party Claim, and otherwise cooperate as may reasonably be required in
connection with the investigation, defense and settlement thereof, subject
to
the terms and conditions of a mutually acceptable joint defense
agreement.
Section
7.5 Reductions
for Insurance Proceeds,
Tax
Benefits and Other Recoveries.
The
amount that any Indemnifying Party is or may be required to pay to any
Indemnitee pursuant to this Article VII shall be reduced (retroactively or
prospectively) by (i) any insurance proceeds or other amounts actually recovered
from third parties by or on behalf of such Indemnitee in respect of the related
Indemnifiable Losses (net of all costs of recovery, including deductibles,
co-payments or other payment obligations) and (ii) any tax benefit actually
realized by the Indemnitee in respect of the related Indemnifiable Losses.
The
existence of a claim by an Indemnitee for insurance or against a third party
in
respect of any Indemnifiable Loss or the availability of potential tax benefits
shall not, however, delay or reduce any payment pursuant to the indemnification
provisions contained herein and otherwise determined to be due and owing by
an
Indemnifying Party. The Indemnifying Party shall make payment in full of such
amount so determined to be due and owing by it and, if, and to the extent that,
there exists a claim against any third party (other than an insurer) in respect
of such Indemnifiable Loss, the Indemnitee shall assign such claim against
such
third party to the Indemnifying Party. Any tax benefit actually received by
an
Indemnified Party shall be paid over to the Indemnifying Party to the extent
such tax benefit relates to an Indemnifiable Loss for which indemnification
has
already been received. Notwithstanding any other provisions of this Agreement,
it is the intention of the parties hereto that no insurer or any other third
party shall be (i) entitled to a benefit it would not be entitled to receive
in
the absence of the foregoing indemnification provisions or (ii) relieved of
the
responsibility to pay any claims for which it is obligated. If an Indemnitee
shall have received the payment required by this Agreement from an Indemnifying
Party in respect of any Indemnifiable Losses and shall subsequently actually
receive insurance proceeds, tax benefits or other amounts in respect of such
Indemnifiable Losses, then such Indemnitee shall hold such insurance proceeds
in
trust for the benefit of such Indemnifying Party and shall pay to such
Indemnifying Party a sum equal to the amount of such insurance proceeds, tax
benefits or other amounts actually received, up to the aggregate amount of
any
payments received from such Indemnifying Party pursuant to this Agreement in
respect of such Indemnifiable Losses.
Section
7.6 Consequential
Damages.
In
no
event shall an Indemnifying Party be liable for special, punitive, exemplary,
incidental, consequential or indirect damages, or lost profits, whether based
on
contract, tort, strict liability, other law or otherwise.
Section
7.7 Survival
of Indemnities.
Except
as otherwise provided herein with respect to any specific covenant or
obligation, for a period of two (2) years from and after the Distribution Date,
the obligations of each of AT Co. and Spinco under this Article VII shall
survive the sale or other transfer by it of any of its Assets or Business or
the
assignment by it of any of its Liabilities, with respect to any Indemnifiable
Loss of the other related to such Assets, Business or Liabilities.
CERTAIN
ADDITIONAL COVENANTS
Section
8.1 Notices
to Third Parties.
In
addition to the actions described in Section 8.2, the members of the AT Co.
Group and the members of the Spinco Group shall use reasonable best efforts
to
make all other filings and give notice to and obtain consents from all third
parties that may be required to consummate the transactions contemplated by
this
Agreement and the other Transaction Agreements.
Section
8.2 Licenses
and Permits.
Each
party hereto shall cause the appropriate members of its Group to prepare and
file with the appropriate licensing and permitting authorities applications
for
the transfer or issuance, as may be necessary or advisable in connection with
the transactions contemplated by this Agreement and the other Transaction
Agreements, to its Group of all material governmental licenses and permits
required for the members of its Group to operate its Business after the
Distribution Date. The members of the Spinco Group and the members of the AT
Co.
Group shall cooperate and use all commercially reasonable efforts to secure
the
transfer or issuance of such licenses and permits.
(a) Except
as
set forth on Section 8.3 of the Disclosure Letter or specifically provided
herein or in the other Transaction Agreements, all material contracts, licenses,
agreements, commitments and other arrangements, formal and informal, between
any
member of the AT Co. Group, on the one hand, and any member of the Spinco Group,
on the other hand, in existence as of the Distribution Date, shall terminate
as
of the close of business on the day prior to the Distribution Date. No such
terminated contract, license, agreement, commitment or other arrangement
(including any provision thereof that purports to survive termination) shall
be
of any further force or effect after the Distribution Date and all parties
shall
be released from all obligations thereunder. From and after the Distribution
Date, no member of either Group shall have any rights under any such contract,
license, agreement, commitment or arrangement with any member of the other
Group, except as specifically provided herein or in the other Transaction
Agreements or as may be agreed to at arms' length after the Distribution
Date.
(b) Effective
immediately prior to the Distribution Date, all intercompany cash management
loan balances between AT Co. and the AT Co. Subsidiaries, on one hand, and
Spinco and the Spinco Subsidiaries, on the other hand, shall be canceled.
Section
8.4 Further
Assurances.
In
addition to the actions specifically provided for elsewhere in this Agreement,
each of the parties hereto shall use its reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
reasonably necessary, proper or advisable under applicable laws, regulations
and
agreements to consummate and make effective the transactions contemplated by
this Agreement and the other Transaction Agreements. Without limiting the
foregoing, each party hereto shall cooperate with the other party, and execute
and deliver, or use its reasonable best efforts to cause to be executed and
delivered, all instruments, and to make all filings with, and to obtain all
consents, approvals or authorizations of, any Governmental Authority or any
other Person under any permit, license, agreement, indenture or other
instrument, and take all such other actions as such party may reasonably be
requested to take by any other party hereto from time to time, consistent with
the terms of this Agreement and the other Transaction Agreements, in order
to
effectuate the provisions and purposes of this Agreement.
(a) AT
Co.
and Spinco shall cooperate, and shall cause their respective Groups to cooperate
and use their respective reasonable best efforts to: (x) terminate,
or to
cause a member of the Spinco Group to be substituted in all respects for any
member of the AT Co. Group in respect of, all obligations of any member of
the
AT Co. Group under any Spinco Liabilities for which such member of the AT Co.
Group may be liable, as guarantor, original tenant, primary obligor or
otherwise, and (y) terminate, or to cause Spinco Assets to be substituted in
all
respects for any AT Co. Assets in respect of, any liens or encumbrances on
AT
Co. Assets which are securing any Spinco Liabilities. If such a termination
or
substitution is not effected by the Distribution Date: (i) Spinco shall
indemnify and hold harmless the AT Co. Indemnitees for any Indemnifiable Loss
arising from or relating thereto, and (ii) without the prior written consent
of
AT Co., from and after the Distribution Date, Spinco shall not, and shall not
permit any member of the Spinco Group to, renew or extend the term of, increase
its obligations under, or transfer to a third party, any loan, lease, contract
or other obligation for which a member of the AT Co. Group is or may be liable
or for which any AT Co. Asset is or may be encumbered unless all obligations
of
the AT Co. Group and all liens and encumbrances on any AT Co. Asset with respect
thereto are thereupon terminated by documentation reasonably satisfactory in
form and substance to AT Co.
(b) AT
Co.
and Spinco shall cooperate, and shall cause their respective Groups to cooperate
and use their respective reasonable best efforts to: (x) terminate,
or to
cause a member of the AT Co. Group to be substituted in all respects for any
member of Spinco Group in respect of, all obligations of any member of the
Spinco Group under any AT Co. Liabilities for which such member of the Spinco
Group may be liable, as guarantor, original tenant, primary obligor or
otherwise, and (y) terminate, or to cause AT Co. Assets to be substituted
in all respects for any Spinco Assets in respect of, any liens or encumbrances
on Spinco Assets which are securing any AT Co. Liabilities. If such a
termination or substitution is not effected by the Distribution Date: (i) AT
Co.
shall indemnify and hold harmless the Spinco Indemnitees for any Indemnifiable
Loss arising from or relating thereto, and (ii) without the prior written
consent of Spinco, from and after the Distribution Date, AT Co. shall not,
and
shall not permit any member of the AT Co. Group to, renew or extend the term
of,
increase its obligations under, or transfer to a third party, any loan, lease,
contract or other obligation for which a member of the Spinco Group is or may
be
liable or for which any Spinco Asset is or may be encumbered unless all
obligations of the Spinco Group and all liens and encumbrances on any Spinco
Asset with respect thereto are thereupon terminated by documentation reasonably
satisfactory in form and substance to Spinco.
(a) Rights
Under Policies.
Notwithstanding any other provision of this Agreement, from and after the
Distribution Date, Spinco and the Spinco Subsidiaries will have no rights with
respect to any Policies, except that (i) Spinco may assert claims, and AT Co.
will use its reasonable best efforts to assist Spinco in asserting claims,
for
any loss, liability or damage with respect to the Spinco Assets or Spinco
Liabilities under Policies with third-party insurers which are “occurrence
basis” insurance policies (“Occurrence
Basis Policies”)
arising out of insured incidents occurring from the date coverage thereunder
first commenced until the Distribution Date to the extent that the terms and
conditions of any such Occurrence Basis Policies and agreements relating thereto
so allow and (ii) Spinco may continue to prosecute, and AT Co. will use
reasonable best efforts to assist Spinco to continue to prosecute, claims with
respect to Spinco Assets or Spinco Liabilities properly asserted with an insurer
prior to the Distribution Date under Policies with third-party insurers which
are insurance policies written on a “claims made” basis (“Claims
Made Policies”)
arising out of insured incidents occurring from the date coverage thereunder
first commenced until the Distribution Date to the extent that the terms and
conditions of any such Claims Made Policies and agreements relating thereto
so
allow; provided,
that in
the case of both clauses (i) and (ii) above, (A) all of AT Co.’s and each AT Co.
Subsidiary’s reasonable out-of-pocket costs and expenses incurred in connection
with the foregoing are promptly paid by Spinco, (B) AT Co. and the AT Co.
Subsidiaries may, at any time, without liability or obligation to Spinco or
any
Spinco Subsidiary (other than as set forth in Section 8.6(c)), amend, commute,
terminate, buy-out, extinguish liability under or otherwise modify any
Occurrence Basis Policies or Claims Made Policies (and such claims shall be
subject to any such amendments, commutations, terminations, buy-outs,
extinguishments and modifications), and (C) any such claim will be subject
to
all of the terms and conditions of the applicable Policy. AT Co.’s obligation to
use its reasonable best efforts to assist Spinco in asserting claims under
applicable Policies will include using reasonable best efforts in assisting
Spinco to establish its right to coverage under such Policies (so long as all
of
AT Co.’s reasonable out-of-pocket costs and expenses in connection therewith are
promptly paid by Spinco). In the event that the terms and conditions of any
Policy do not allow Spinco the right to assert or prosecute a claim as set
forth
in clause (i) or (ii) above, then in such case, AT Co. shall use its reasonable
best efforts to pursue such claim under such Policy and Spinco shall promptly
pay all of AT Co.’s and each AT Co. Subsidiary’s reasonable costs and expenses
incurred in connection therewith.
(b) Assistance
by AT Co.
AT Co.
will use reasonable best efforts to assist Spinco in connection with any efforts
by Spinco to recover damages under any Policy with respect to the Spinco
Business for incidents occurring prior to the Distribution Date; provided,
that
all of AT Co.’s reasonable out-of-pocket costs and expenses incurred in
connection with the foregoing are promptly paid by Spinco.
(c) AT
Co. Actions.
In the
event that after the Distribution Date, AT Co. or any AT Co. Subsidiary proposes
to amend, commute, terminate, buy-out, extinguish liability under or otherwise
modify any Policies under which Spinco has rights to assert claims pursuant
to
Section 8.6(a) in a manner that would adversely affect any such rights of Spinco
(i) AT Co. will give Spinco prior written notice thereof (it being
understood that the decision to take any such action will be in the sole
discretion of AT Co.) and (ii) AT Co. will pay to Spinco its equitable share
(which shall be determined by AT Co. in good faith based on the amount of
premiums paid or allocated to the Spinco business in respect of the applicable
Policy) of any net proceeds actually received by AT Co. from the insurer under
the applicable Policy as a result of such action by AT Co. (after deducting
AT
Co.’s reasonable costs and expenses incurred in connection with such
action).
(d) Administration.
From
and after the Distribution Date:
(i) AT
Co. or
an AT Co. Subsidiary, as appropriate, will be responsible for the Claims
Administration with respect to claims of AT Co. and the AT Co. Subsidiaries
under the Policies; and
(ii) Spinco
or
a Spinco Subsidiary, as appropriate, will be responsible for the Claims
Administration with respect to claims of Spinco and the Spinco Subsidiaries
under the Policies.
(e) Insurance
Premiums.
Subject
to clause (B) of the proviso to Section 8.6(a), from and after the Distribution
Date, AT Co. will pay all premiums (retrospectively-rated or otherwise) as
required under the terms and conditions of the respective Policies in respect
of
periods prior to the Distribution Date, whereupon Spinco will upon the request
of AT Co., forthwith reimburse AT Co. for that portion of such premiums paid
by
AT Co. as are reasonably determined by AT Co. to be attributable to the Spinco
Business.
(f) Agreement
for Waiver of Conflict and Shared Defense.
In the
event that a Policy provides coverage for both AT Co. and/or an AT Co.
Subsidiary, on the one hand, and Spinco and/or a Spinco Subsidiary, on the
other
hand, relating to the same occurrence, AT Co. and Spinco agree to defend jointly
and to waive any conflict of interest necessary to the conduct of that joint
defense.
(g) Nothing
in this Section 8.6 will be construed to limit or otherwise alter in any way
the
indemnity obligations of the parties to this Agreement, including those created
by this Agreement, by operation of law or otherwise.
(a) Any
material showing any affiliation or connection of AT Co. or any member of the
AT
Co. Group with Spinco or any member of the Spinco Group shall not be used by
AT
Co. or any member of the AT Co. Group after the Distribution Date, except that
the restrictions contained in this Section 8.7(a) shall not apply to filings,
reports and other documents required by applicable law or regulations of
securities exchanges to be filed and/or made publicly available. On and after
the Distribution Date, neither AT Co. nor any AT Co. Subsidiary shall represent
to third parties that any of them is affiliated or connected with Spinco or
any
member of the Spinco Group.
(b) Subject
to Section 8.7(c) below, any material showing any affiliation of Spinco or
any
member of the Spinco Group with AT Co. or any member of the AT Co. Group shall
not be used by Spinco or any member of the Spinco Group after the Distribution
Date, except that the restrictions contained in this Section 8.7(b) shall not
apply to filings, reports and other documents required by applicable law or
regulations of securities exchanges to be filed and/or made publicly available.
On and after the Distribution Date, neither Spinco nor any Subsidiary of Spinco
shall represent to third parties that any of them is affiliated with AT Co.
or
any member of the AT Co. Group.
(c) The
parties agree that, for a period of 120 days from and after the Distribution
Date (the "Sell-off
Period"),
Spinco and its Subsidiaries shall be entitled to continue to use all trademarks
or other source identifiers owned by AT Co. (the "AT
Co.
Trademarks")
to the
extent that such AT Co. Trademarks are contained as of the Distribution Date
on
any business cards, schedules, stationery, displays, signs, promotional
materials, manuals, forms, computer software and other material used in the
Spinco Business, without any obligation on the part of Spinco or its
Subsidiaries to pay royalties or similar fees to AT Co. during the Sell-off
Period. Spinco agrees that, upon termination of the Sell-off Period, Spinco
and
its Subsidiaries shall cease and desist from all further use of the AT Co.
Trademarks except to the extent that such use is a "fair use" as a matter of
law
or as otherwise agreed by the parties.
(a) AT
Co.
agrees not to (and to cause the other members of the AT Co. Group not to)
solicit or recruit for hire any employee of Spinco or any other member of the
Spinco Group for a period of one year following the Distribution Date or until
three months after such employee's employment with Spinco or any other member
of
the Spinco Group terminates, whichever occurs first.
(b) Spinco
agrees not to (and to cause the other members of the Spinco Group not to)
solicit or recruit for hire any employee of AT Co. or any other member of the
AT
Co. Group for a period of one year following the Distribution Date or until
three months after such employee's employment with AT Co. or any other member
of
the AT Co. Group terminates, whichever occurs first.
(c) Notwithstanding
the foregoing, such prohibitions on solicitation shall not restrict general
recruitment efforts carried out through a public or general
solicitation.
Section
8.9 Subsequent
Transfers.
In the
event that following the Distribution Date a member of the AT Co. Group becomes
aware that it possesses any Spinco Assets (except (i) for assets, rights and
properties provided by members of the AT Co. Group pursuant to the Transition
Services Agreement or (ii) as otherwise contemplated by the Transaction
Agreements), AT Co. shall cause the prompt transfer of such assets, rights
or
properties to Spinco.
Prior to
any such transfer, AT Co. shall hold such Spinco Asset in trust for
Spinco.
ACCESS
TO INFORMATION
Section
9.1 Provision
of Corporate Records.
Prior
to or as promptly as practicable after the Distribution Date, AT Co. shall
deliver or make available to Spinco all corporate books and records of the
Spinco Group in its possession and complete and accurate copies of all relevant
portions of all corporate books and records of the AT Co. Group relating
directly and primarily to the Spinco Assets, the Spinco Business, or the Spinco
Liabilities, including, in each case, all active agreements, active litigation
files, government filings and returns or reports relating to Taxes for all
open
periods. Subject to Section 9.5, AT Co. may retain complete and accurate
copies of such books and records. From and after the Distribution Date, all
such
books, records and copies shall be the property of Spinco. Prior to or as
promptly as practicable after the Distribution Date, Spinco shall deliver or
make available to AT Co., all corporate books and records of the AT Co. Group
in
its possession and complete and accurate copies of all relevant portions of
all
corporate books and records of the Spinco Group relating directly and primarily
to the AT Co. Assets, the AT Co. Business, or the AT Co. Liabilities, including,
in each case, all active agreements, active litigation files, government filings
and returns or reports relating to Taxes for all open periods. Subject to
Section 9.5, Spinco may retain complete and accurate copies of such
books
and records. From and after the Distribution Date, all such books, records
and
copies shall be the property of AT Co. The costs and expenses incurred in the
provision of records or other information to a party shall be paid for by the
delivering party.
Section
9.2 Access
to Information.
From
and after the Distribution Date, each of AT Co. and Spinco shall afford to
the
other and to the other's Representatives reasonable access and duplicating
rights during normal business hours to all Information within the possession
or
control of such party's Group relating to the other party's Group's
pre-Distribution business, Assets or Liabilities or relating to or arising
in
connection with the relationship between the Groups on or prior to the
Distribution Date, insofar as such access is reasonably required for a
reasonable purpose, subject to the provisions below regarding Privileged
Information. Without limiting the foregoing, Information may be requested under
this Section 9.2 for audit, accounting, regulatory, claims, litigation and
tax
purposes, as well as for purposes of fulfilling disclosure and reporting
obligations.
In
furtherance of the foregoing:
(a) Each
party hereto acknowledges that: (i) each of AT Co. and Spinco (and the members
of the AT Co. Group and the Spinco Group, respectively) has or may obtain
Privileged Information; (ii) there are and/or may be a number of Litigation
Matters affecting each or both of AT Co. and Spinco; (iii) both AT Co. and
Spinco have a common legal interest in Litigation Matters, in the Privileged
Information and in the preservation of the confidential status of the Privileged
Information, in each case relating to the pre-Distribution business of the
AT
Co. Group or the Spinco Group or relating to or arising in connection with
the
relationship between the Groups on or prior to the Distribution Date; and (iv)
both AT Co. and Spinco intend that the transactions contemplated hereby and
by
the Merger Agreement and the other Transaction Agreements and any transfer
of
Privileged Information in connection therewith shall not operate as a waiver
of
any potentially applicable privilege.
(b) Each
of
AT Co. and Spinco agrees, on behalf of itself and each member of the Group
of
which it is a member, not to disclose or otherwise waive any privilege attaching
to any Privileged Information relating to the pre-Distribution business of
the
other Group or relating to or arising in connection with the relationship
between the Groups on or prior to the Distribution Date, without providing
prompt written notice to and obtaining the prior written consent of the other,
which consent shall not be unreasonably withheld, conditioned or delayed and
shall not be withheld, conditioned or delayed if the other party certifies
that
such disclosure is to be made in response to a likely threat of suspension
or
debarment or similar action; provided, however, that AT Co. and Spinco shall
not
be required to give any such notice or obtain any such consent and may make
such
disclosure or waiver with respect to Privileged Information if such Privileged
Information relates solely to the pre-Distribution business of the AT Co. Group
in the case of AT Co. or the Spinco Group in the case of Spinco. In the event
of
a disagreement between any member of the AT Co. Group and any member of the
Spinco Group concerning the reasonableness of withholding such consent, no
disclosure shall be made prior to a resolution of such disagreement by a court
of competent jurisdiction, provided that the limitations in this sentence shall
not apply in the case of disclosure required by law and so certified as provided
in the first sentence of this paragraph.
(c) Upon
any
member of the AT Co. Group or any member of the Spinco Group receiving any
subpoena or other compulsory disclosure notice from a court, other governmental
agency or otherwise which requests disclosure of Privileged Information, in
each
case relating to pre-Distribution business of the Spinco Group or the AT Co.
Group, respectively, or relating to or arising in connection with the
relationship between the Groups on or prior to the Distribution Date, the
recipient of the notice shall as promptly as practicable provide to the other
Group (following the notice provisions set forth herein) a copy of such notice,
the intended response, and all materials or information relating to the other
Group that might be disclosed. In the event of a disagreement as to the intended
response or disclosure, unless and until the disagreement is resolved as
provided in paragraph (b) of this Section, the parties shall cooperate to assert
all defenses to disclosure claimed by either party's Group, and shall not
disclose any disputed documents or information until all legal defenses and
claims of privilege have been finally determined, except as otherwise required
by a court order requiring such disclosure.
Section
9.3 Production
of Witnesses.
Subject
to Section 9.2, after the Distribution Date, each of AT Co. and Spinco shall,
and shall cause each member of its respective Group to make available to Spinco
or AT Co. or any member of the Spinco Group or of the AT Co. Group, as the
case
may be, upon reasonable prior written request, such Group's directors, managers
or other persons acting in a similar capacity, officers, employees and agents
as
witnesses to the extent that any such Person may reasonably be required in
connection with any Litigation Matters, administrative or other proceedings
in
which the requesting party may from time to time be involved and relating to
the
pre-Distribution business of the AT Co. Group or the Spinco Group or relating
to
or in connection with the relationship between the Groups on or prior to the
Distribution Date. The costs and expenses incurred in the provision of such
witnesses shall be paid by the party requesting the availability of such
persons.
Section
9.4 Retention
of Records.
Except
as otherwise agreed in writing, or as otherwise provided in the other
Transaction Agreements, each of AT Co. and Spinco shall, and shall cause the
members of the Group of which it is a member to, retain all Information in
such
party's Group's possession or under its control, relating directly and primarily
to the pre-Distribution business, Assets or Liabilities of the other party's
Group until such Information is at least seven years old or until such later
date as may be required by law, except that if, prior to the expiration of
such
period, any member of either party's Group wishes to destroy or dispose of
any
such Information that is at least three years old, prior to destroying or
disposing of any of such Information, (a) the party whose Group is proposing
to
dispose of or destroy any such Information shall provide no less than 30 days'
prior written notice to the other party, specifying the Information proposed
to
be destroyed or disposed of, and (b) if, prior to the scheduled date for such
destruction or disposal, the other party requests in writing that any of the
Information proposed to be destroyed or disposed of be delivered to such other
party, the party whose Group is proposing to dispose of or destroy such
Information promptly shall arrange for the delivery of the requested Information
to a location specified by, and at the expense of, the requesting
party.
Section
9.5 Confidentiality.
Subject
to Section 9.2, which shall govern Privileged Information, from and after the
Distribution Date, each of AT Co. and Spinco shall hold, and shall use
commercially reasonable efforts to cause its Affiliates and Representatives
to
hold, in strict confidence all Information concerning the other party's Group
obtained by it or furnished to it by such other party's Group pursuant to this
Agreement or the other Transaction Agreements and shall not release or disclose
such Information to any other Person, except its Affiliates and Representatives,
who shall be advised of the provisions of this Section 9.5, and each party
shall
be responsible for a breach by any of its Affiliates or Representatives;
provided, however, that any member of the AT Co. Group or the Spinco Group
may
disclose such Information to the extent that (a) disclosure is compelled by
judicial or administrative process or, based on advice of such Person's counsel,
by other requirements of law or regulation, or (b) such party can show that
such
Information was (i) in the public domain through no fault of such Person or
(ii)
lawfully acquired by such Person from another source after the time that it
was
furnished to such Person by the other party's Group, and not acquired from
such
source subject to any confidentiality obligation on the part of such source
known to the acquiror. Notwithstanding the foregoing, each of AT Co. and Spinco
shall be deemed to have satisfied its obligations under this Section 9.5 with
respect to any Information (other than Privileged Information) if it exercises
the same care with regard to such Information as it takes to preserve
confidentiality for its own similar Information.
Section
9.6 Cooperation
with Respect to Government Reports and Filings.
AT Co.,
on behalf of itself and each member of the AT Co. Group, agrees to provide
any
member of the Spinco Group, and Spinco, on behalf of itself and each member
of
the Spinco Group, agrees to provide any member of the AT Co. Group, with such
cooperation and Information as may be reasonably requested by the other in
connection with the preparation or filing of any government report or other
government filing contemplated by this Agreement or in conducting any other
government proceeding relating to the pre-Distribution business of the AT Co.
Group or the Spinco Group, Assets or Liabilities of either Group or relating
to
or in connection with the relationship between the Groups on or prior to the
Distribution Date. Such cooperation and Information shall include promptly
forwarding copies of appropriate notices, forms and other communications
received from or sent to any government authority which relate to the AT Co.
Group, in the case of the Spinco Group, or the Spinco Group, in the case of
the
AT Co. Group. Each party shall make its employees and facilities available
during normal business hours and on reasonable prior notice to provide
explanation of any documents or Information provided hereunder.
Section
9.7 Tax
Sharing Agreement.
None of
the provisions of this Article IX are intended to supersede any provision in
the
Tax Sharing Agreement or the Merger Agreement with respect to matters related
to
Taxes.
In the
event of any conflict between this Agreement and the Tax Sharing Agreement
or
the Merger Agreement, the Tax Sharing Agreement or the Merger Agreement, as
the
case may be, shall control with respect to matters related to
Taxes.
NO
REPRESENTATIONS OR WARRANTIES
Section
10.1 No
Representations or Warranties.
Except
as expressly set forth herein or in any other Transaction Agreement, Spinco
and
AT Co. understand and agree that no member of the AT Co. Group is representing
or warranting to Spinco or any member of the Spinco Group in any way as to
the
Spinco Assets, the Spinco Business or the Spinco Liabilities. Except as
expressly set forth herein or in any other Transaction Agreement, AT Co. and
Spinco understand and agree that no member of the Spinco Group is representing
or warranting to AT Co. or any member of the AT Co. Group in any way as to
the
AT Co. Assets, the AT Co. Business or the AT Co. Liabilities.
CONDITIONS
Section
11.1 Conditions
to the Distribution.
The
obligations of AT Co. pursuant to this Agreement to effect the Distribution
shall be subject to the fulfillment (or waiver by AT Co.) on or prior to the
Distribution Date (provided that certain of such conditions will occur
substantially contemporaneous with the Distribution) of each of the conditions
set
forth
in Sections 9.1 and 9.2 of the Merger Agreement having been satisfied
or to
the extent permitted by applicable Law, waived in writing, except the
consummation of the Contribution and the Distribution and the other transactions
contemplated hereby.
Section
11.2 Waiver
of Conditions.
To the
extent permitted by applicable Law, the condition set forth in Section 11.1
hereof may be waived in the sole discretion of the AT Co. Board. The condition
set forth in Section 11.1 is for the sole benefit of AT Co. and shall not give
rise to or create any duty on the part of AT Co. or the AT Co. Board to waive
or
not waive any such conditions.
Section
11.3 Disclosure.
If at
any time after the date hereof either of the parties shall become aware of
any
circumstances that will or could reasonably be expected to prevent any or all
of
the conditions contained in Section 11.1 from being satisfied, it will
promptly give to the other party written notice of those
circumstances.
MISCELLANEOUS
Section
12.1 Complete
Agreement.
This
Agreement, the Exhibits and the Disclosure Letter hereto, the other Transaction
Agreements and other documents referred to herein shall constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and shall supersede all previous negotiations, commitments and writings with
respect to such subject matter. The Disclosure Letter delivered pursuant hereto
is expressly made a part of, and incorporated by reference into, this Agreement.
In the case of any conflict between the terms of this Agreement and the terms
of
any other Transaction Agreement, the terms of such other Transaction Agreement
shall be applicable.
Section
12.2 Expenses.
Except
as set forth in Section 12.2 of the Disclosure Letter, whether or not the
Distribution is consummated, the costs and expenses incurred by AT Co. or Spinco
or their respective Subsidiaries in connection with this Agreement, the
Preliminary Restructuring contemplated hereby, the Contribution, the Special
Dividend, the Debt Exchange, the Spinco Financing and the Merger (including
(i)
all underwriter'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 Merger Agreement ) shall be paid by
Spinco; provided,
however,
that in
the event that the aggregate amount of all such expenses exceeds $115 million
less the principal amount of any Additional Spinco Indebtedness, AT Co. shall
pay such excess expenses (the "AT
Excess Expenses").
For
the avoidance of doubt, the expenses of AT Co. and Spinco shall not include
any
expenses of the Company's legal, accounting, financial and other advisors or
any
costs of refinancing the Company's outstanding Indebtedness or any other costs
incurred by the Company in connection with the transactions contemplated hereby
or by the Merger Agreement.
Section
12.3 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware, without reference to its conflicts of laws
principles.
Section
12.4 Notices.
All
notices and other communications required or permitted to be given hereunder
shall be in writing and shall be deemed given upon (a) a transmitter's
confirmation of a receipt of a facsimile transmission (but only if followed
by
confirmed delivery of a standard overnight courier the following business day
or
if delivered by hand the following business day), (b) confirmed delivery of
a
standard overnight courier or when delivered by hand or (c) the expiration
of
five business days after the date mailed by certified or registered mail (return
receipt requested), postage prepaid, to the parties at the following addresses
(or at such other addresses for a party as shall be specified by like
notice):
If
to AT
Co. or any member of the AT Co. Group, to:
ALLTEL
Corporation
Xxx
Xxxxxx Xxxxx
Xxxxxx
Xxxx, Xxxxxxxx 00000
Attention:
Chief Executive Officer
(with
a
copy to the Corporate Secretary)
Facsimile:
(000) 000-0000
If
to
Spinco or any member of the Spinco Group prior to the Distribution Date,
to:
ALLTEL
Holding Corp.
Xxx
Xxxxxx Xxxxx
Xxxxxx
Xxxx, Xxxxxxxx 00000
Attention:
Chief Executive Officer
(with
a
copy to the Chairman)
Facsimile:
(000) 000-0000
or
to
such other address as any party hereto may have furnished to the other parties
by
a
notice in writing in accordance with this Section.
Section
12.5 Amendment
and Modification.
This
Agreement may be amended, modified or supplemented, and any provision hereunder
may be waived, only by a written agreement signed by all of the parties hereto,
together with (i) prior to the Effective Time, in the case of any material
amendment, modification or supplement, a Company Consent and (ii) following
the Effective Time, in the case of any material amendment, modification or
supplement, the consent of a majority of the Surviving Corporation’s
“independent” directors
(as such
term is defined in the regulations of the securities exchange in which the
Surviving Corporation’s securities then are listed.
Section
12.6 Successors
and Assigns; No Third-Party Beneficiaries.
This
Agreement and all of the provisions hereof shall be binding upon and inure
to
the benefit of the parties hereto and their successors and permitted assigns,
but neither this Agreement nor any of the rights, interests and obligations
hereunder shall be assigned by any party hereto without the prior written
consent of the other parties and a Company Consent. Except for the provisions
of
Sections 7.3 and 7.4 relating to indemnities, which are also for the benefit
of
the Indemnitees, this Agreement is solely for the benefit of AT Co., Spinco
and
the Company and their respective Subsidiaries and Affiliates and is not intended
to confer upon any other Persons any rights or remedies hereunder; provided,
however, that the Company is and shall be a stated and intended third party
beneficiary hereof.
Section
12.7 Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Section
12.8 Interpretation.
The
Article and Section headings contained in this Agreement are solely for the
purpose of reference, are not part of the agreement of the parties hereto and
shall not in any way affect the meaning or interpretation of this
Agreement.
Section
12.9 Severability.
If any
provision of this Agreement or the application thereof to any person or
circumstance is determined by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions hereof, or the application
of
such provision to persons or circumstances other than those as to which it
has
been held invalid or unenforceable, shall remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party.
Section
12.10
References; Construction.
References to any "Article," "Exhibit," "Schedule" or "Section," without more,
are to Articles, Exhibits, Schedules and Sections to or of this Agreement.
Unless otherwise expressly stated, clauses beginning with the term "including"
or similar words set forth examples only and in no way limit the generality
of
the matters thus exemplified.
Section
12.11 Termination.
Notwithstanding any provision hereof, following termination of the Merger
Agreement, this Agreement may be terminated and the Distribution abandoned
at
any time prior to the Distribution Date by and in the sole discretion of the
Board of Directors of AT Co. In the event of such termination, no party hereto
or to any other Transaction Agreement (other than the Merger Agreement) shall
have any Liability to any Person by reason of this Agreement or any other
Transaction Agreement (other than the Merger Agreement).
Section
12.12 Consent
to Jurisdiction and Service of Process.
Each of
the parties to this Agreement hereby irrevocably and unconditionally (i) agrees
to be subject to, and hereby consent and submits to, the jurisdiction of the
courts of the State of Delaware and of the federal courts sitting in the State
of Delaware, (ii) to the extent such party is not otherwise subject to service
of process in the State of Delaware, hereby appoints the Corporation Service
Company as such party's agent in the State of Delaware for acceptance of legal
process and (iii) agrees that service made on any such agent set forth in (ii)
above shall have the same legal force and effect as if served upon such party
personally within the State of Delaware.
Section
12.13 Waivers.
Except
as provided in this Agreement, no action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained in this Agreement. The waiver by any party hereto of a breach of
any
provision hereunder shall not operate or be construed as a waiver of any prior
or subsequent breach of the same or any other provision hereunder.
Section
12.14 Specific
Performance.
The
parties hereto agree that irreparable damage would occur in the event any
provision of this Agreement was not performed in accordance with the terms
hereof and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or in equity.
Section
12.15 Waiver
of Jury Trial.
Each of
the parties hereto irrevocably and unconditionally waives all right to trial
by
jury in any litigation, claim, action, suit, arbitration, inquiry, proceeding,
investigation or counterclaim (whether based in 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
thereof.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
ALLTEL
CORPORATION
By:
/s/ Xxxxx X. Xxxx
Name:
Xxxxx X. Xxxx
Title:
CEO & President
ALLTEL
HOLDING CORP.
By:
/s/ Xxxxxxx X. Xxxxxxx
Name:
Xxxxxxx X. Xxxxxxx
Title:
President
