UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.
)
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2)
)
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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AIRVANA, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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Common stock, par value $0.001 per share, of Airvana, Inc. (the
Airvana common stock).
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(2)
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Aggregate number of securities to which transaction applies:
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63,073,600 shares of Airvana common stock and options to purchase 13,343,199 shares of Airvana common stock
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined):
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The maximum aggregate value was determined based on the sum of: (a) 63,073,600 shares of Airvana common stock multiplied by $7.65 per share; and (b) 13,343,199 shares of Airvana common stock underlying outstanding stock options with exercise prices less than $7.65 per share multiplied by $4.041 (which is the difference between $7.65 per share and the weighted average exercise price per share). The filing fee was determined by multiplying $0.00007130 by
the maximum aggregate value of the transaction as determined in accordance with the preceding sentence.
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(4)
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Proposed maximum aggregate value of transaction:
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$536,432,907
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(5)
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Total fee paid:
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$38,248
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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AIRVANA, INC.
19 Alpha Road
Chelmsford, Massachusetts 01824
[
], 2010
Dear Fellow Stockholder:
Airvana, Inc., a Delaware corporation (Airvana or the Company), entered into an Agreement
and Plan of Merger dated as of December 17, 2009 (the merger agreement) with 72 Mobile Holdings,
LLC, a Delaware limited liability company (Parent), and 72 Mobile Acquisition Corp. (Merger
Sub), a wholly-owned subsidiary of Parent. Parent is a newly formed entity to be owned, directly
and indirectly, by affiliates of S.A.C. Private Capital Group, LLC, GSO Capital Partners LP,
Sankaty Advisors LLC and Zelnick Media. In addition, Randall Battat, President and Chief Executive
Officer of the Company, and Vedat Eyuboglu and Sanjeev Verma, Vice Presidents and co-founders of
the Company (together, with certain of their affiliates, the Rollover Stockholders) will exchange
a portion of their Airvana shares for an equity interest in Parent.
Under the terms of the merger agreement, Merger Sub will be merged with and into the Company,
with the Company continuing as the surviving corporation (the merger). If the merger is
completed, you will be entitled to receive $7.65 in cash for each share of Airvana common stock
that you own.
A special meeting of our stockholders will be held on [
], 2010, at 10:00 a.m., local
time, to vote on a proposal to adopt the merger agreement so that the merger can occur. The special
meeting will be held at the offices of Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street,
Boston, Massachusetts 02109. Notice of the special meeting and the related proxy statement is
enclosed.
The accompanying proxy statement gives you detailed information about the special meeting and
the merger and includes the merger agreement as Annex A. The receipt of cash in exchange for shares
of Airvana common stock in the merger will constitute a taxable transaction for
U.S. federal income tax purposes. We encourage you to read the proxy statement and the merger
agreement carefully.
Our board of directors has determined that the merger is advisable and that the terms of the
merger are fair to and in the best interests of Airvana and its stockholders (other than the
Rollover Stockholders as to which it has made no determination), and approved the merger agreement and the transactions contemplated
thereby, including the merger. This recommendation is based, in part, upon the unanimous
recommendation of a special committee of the board of directors consisting of four independent and
disinterested directors.
Your vote is very important
. We cannot complete the merger unless holders of a majority of
all outstanding shares of Airvana common stock entitled to vote on the matter vote to adopt the
merger agreement.
Our board of directors recommends that you vote FOR the proposal to adopt the
merger agreement. The failure of any stockholder to vote on the proposal to adopt the merger
agreement will have the same effect as a vote against the adoption of the merger agreement
.
Whether or not you plan to attend the special meeting, please complete, date, sign and return,
as promptly as possible, the enclosed proxy in the accompanying reply envelope, or submit your
proxy by telephone or the Internet. Stockholders who attend the meeting may revoke their proxies
and vote in person.
Our board of directors and management appreciate your continuing support of the Company, and
we urge you to support this transaction.
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Sincerely,
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Anthony S. Thornley
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Chair of the Special Committee and
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Lead Director of the Board
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Neither the Securities and Exchange Commission nor any state securities regulatory agency has
approved or disapproved the merger, passed upon the merits or fairness of the merger or passed upon
the
adequacy or accuracy of the disclosure in this document. Any representation to the contrary is
a criminal offense.
The proxy statement is dated [
], 2010, and is first being mailed to stockholders on
or about [
], 2010.
AIRVANA, INC.
19 Alpha Road
Chelmsford, Massachusetts 01824
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On [
], 2010
Dear Airvana Stockholder:
Airvana, Inc., a Delaware corporation (the Company), will hold a special meeting of
stockholders at the offices of Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts 02109, at 10:00 a.m., local time, on [_____], [_____], 2010, for the
following purposes:
1. To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated
as of December 17, 2009 (the merger agreement), by and among the Company, 72 Mobile
Holdings, LLC, a Delaware limited liability company (Parent), and 72 Mobile Acquisition
Corp. (Merger Sub), a wholly-owned subsidiary of Parent, as such agreement may be amended
from time to time.
2. To consider and vote upon the adjournment of the special meeting, if necessary, to
solicit additional proxies in the event there are not sufficient votes in favor of adoption
of the merger agreement at the time of the special meeting.
3. To act upon other business as may properly come before the special meeting and any
and all adjourned or postponed sessions thereof.
Only record holders of Airvana common stock at the close of business on [_____], 2010
are entitled to receive notice of, and will be entitled to vote at, the special meeting, including
any adjournments or postponements of the special meeting.
We urge you to read the accompanying proxy statement carefully as it sets forth details of the
proposed merger and other important information related to the merger.
Under Delaware law, if the merger is completed, holders of Airvana common stock who do not
vote in favor of adoption of the merger agreement will have the right to seek appraisal of the fair
value of their shares as determined by the Delaware Court of Chancery. In order to exercise your
appraisal rights, you must submit a written demand for an appraisal prior to the stockholder vote
on the merger agreement, not vote in favor of adoption of the merger agreement and comply with
other Delaware law procedures explained in the accompanying proxy statement.
Your vote is important and we urge you to complete, sign, date and return your proxy card as
promptly as possible by mail or by faxing the card to the attention of Peter C. Anastos at
978-250-3911, whether or not you expect to attend the special meeting. If you are unable to attend
in person and you return your proxy card, your shares will be voted at the special meeting in
accordance with your proxy. You may also submit a proxy by telephone by calling 1-800-662-7232 in
the United States and 781-575-2300 from foreign countries or through the Internet at
www.investorvote.com/AIRV using the control number on your proxy card. If your shares are held in
street name by your broker or other nominee, only that holder can vote your shares unless you
obtain a valid legal proxy from such broker or nominee. You should follow the directions provided
by your broker or nominee regarding how to instruct such broker or nominee to vote your shares.
The merger is described in the accompanying proxy statement, which we urge you to read
carefully. A copy of the merger agreement is attached as Annex A to the proxy statement.
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By Order of the Board of Directors,
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Peter C. Anastos
Vice President, General Counsel and Secretary
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Chelmsford, Massachusetts
[
], 2010
TABLE OF CONTENTS
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1
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1
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5
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5
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9
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14
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15
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15
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15
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15
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16
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16
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16
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16
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16
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16
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17
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17
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18
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18
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18
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18
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18
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19
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19
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33
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38
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39
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49
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49
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49
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52
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55
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55
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57
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57
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57
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58
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58
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61
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62
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65
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68
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69
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69
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i
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71
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70
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70
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70
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71
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71
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72
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72
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74
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75
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76
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76
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78
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81
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82
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83
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85
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85
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87
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88
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89
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89
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90
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90
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91
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95
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95
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97
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97
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98
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98
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101
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102
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104
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106
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106
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106
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106
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107
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107
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A-1
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B-1
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C-1
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D-1
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ii
References to Airvana, the Company, we, our or us in this proxy statement refer to
Airvana, Inc., and its subsidiaries unless otherwise indicated by context.
SUMMARY TERM SHEET
This Summary Term Sheet, together with the Questions and Answers About the Special Meeting
and the Merger, summarizes the material information in the proxy statement. You should carefully
read this entire proxy statement and the other documents to which this proxy statement refers you
for a more complete understanding of the matters being considered at the special meeting. In
addition, this proxy statement incorporates by reference important business and financial
information about Airvana. You may obtain the information incorporated by reference into this proxy
statement without charge by following the instructions in Where You Can Find More Information
beginning on page 107.
The Merger and the Merger Agreement
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The Parties to the Merger (see page 15)
. Airvana, Inc., a Delaware corporation,
helps operators transform the mobile experience for users worldwide. Airvanas
high-performance technology and products, from core mobile network infrastructure to
comprehensive femtocell solutions, enable operators to deliver compelling and
consistent broadband services to mobile subscribers, wherever they are. Airvanas
products are deployed in over 70 commercial networks on six continents. 72 Mobile
Holdings, LLC, which we refer to as Parent, is a newly formed Delaware limited
liability company that was formed solely for the purpose of entering into the merger agreement and
consummating the transactions contemplated by the merger agreement. Parent has not
engaged in any business except for activities incident to its formation and in
connection with the transactions contemplated by the merger agreement. 72 Mobile
Acquisition Corp, which we refer to as Merger Sub, is a Delaware corporation and a
wholly owned subsidiary of Parent. Merger Sub was formed solely for the purpose of
entering into the merger agreement and consummating the transactions contemplated by
the merger agreement. Merger Sub has not engaged in any business except for activities
incident to its incorporation and in connection with the transactions contemplated by
the merger agreement.
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The Merger (see page 70).
You are being asked to vote to adopt an agreement and
plan of merger dated as of December 17, 2009 by and among Airvana, Parent and Merger
Sub, which agreement we refer to as the merger agreement. Pursuant to the merger
agreement, Merger Sub will merge with and into Airvana, which we refer to as the
merger. Airvana will be the surviving corporation in the merger, which we refer to
as the surviving corporation, and will continue to do business as Airvana following
the merger. As a result of the merger, Airvana will cease to be an independent,
publicly traded company.
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Merger Consideration (see page 70)
. If the merger is completed, each share of our
common stock, other than as provided below, will be converted into the right to receive
$7.65 in cash, without interest and less any applicable withholding taxes. We refer to
this consideration per share of common stock to be paid in the merger as the merger
consideration. The following shares of our common stock will not be converted into the
right to receive the merger consideration in connection with the merger: (a) shares
held by any of our stockholders who are entitled to and who properly
exercise, and do not withdraw or lose, appraisal
rights under Delaware law, (b) shares held by any of our wholly owned subsidiaries and
(c) shares held by Parent or any of its wholly owned subsidiaries, including shares
that each of Randall Battat, Vedat Eyuboglu and Sanjeev Verma, and certain of their
affiliates, either personally or as trustees of certain trusts, whom we collectively
refer to in such capacities as the Rollover Stockholders, have agreed to contribute
to Parent immediately prior to the completion of the merger in exchange for equity
interests in Parent. Mr. Battat is the Companys President and CEO. Mr. Eyuboglu is
our Chief Technology Officer and a founder of the Company. Mr. Verma is our Vice
President, Femtocell Business and Corporate Development and a founder of the Company.
The Rollover Stockholders and their respective affiliates
collectively owned approximately [ ]% of the Airvana common stock outstanding as of
the record date for the special meeting.
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Treatment of Options (see page 72)
. Upon consummation of the merger, each
outstanding option to purchase shares of Airvana common stock will be fully vested, to
the extent not already fully vested, and cancelled, and thereafter will solely
represent the right to receive from the surviving corporation in exchange, at the
effective time of the merger or as soon as practicable thereafter, a cash payment equal
to the product of (i) the number of shares of Airvana common stock subject to such
option immediately prior to the effective time of the merger, multiplied by (ii) the
excess, if any, of the merger consideration of $7.65 per share of Airvana common stock
over the exercise price per share of Airvana common stock subject to such option.
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Conditions to Closing the Merger (see page 81)
. The obligations of the parties to
consummate the merger is subject to the satisfaction or waiver of a number of
conditions, including the following:
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the adoption of the merger agreement by the affirmative vote of the holders
of a majority of the outstanding shares of Airvana common stock;
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the expiration or termination of the waiting period applicable to the merger
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which we refer
to as the HSR Act;
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other than the filing of the certificate of merger, all authorizations of,
filings with, or expirations of waiting periods imposed by, any governmental
entity in connection with the merger having been obtained, filed or occurred
except for failures not reasonably like to have a Buyer Material Adverse
Effect or a Company Material Adverse Effect (each as defined in the merger
agreement);
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the absence of an order suspending the use of this proxy statement or a
proceeding for that purpose initiated or threatened in writing by the
Securities and Exchange Commission, which we refer to as the
SEC, or
its staff;
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the absence of any governmental orders that have the effect of making the
merger illegal or otherwise preventing the consummation of the merger;
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each partys respective representations and warranties in the merger
agreement being true and correct as of the closing date of the merger in the
manner described in
The Merger AgreementConditions to Closing the Merger
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each partys performance in all material respects of its obligations
required to be performed under the merger agreement on or prior to the closing
date of the merger;
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the absence of a Company Material Adverse Effect since the date of the
merger agreement;
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our Adjusted EBITDA (as defined in
The
Merger AgreementDefinition of
Adjusted EBITDA
) for the twelve month period ended at least 30 days prior to
the closing date of the merger being not less than $95 million; and
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Parents delivery to us of a solvency certificate substantially similar in
form and substance to the solvency certificate to be delivered by Parent to its
lenders that are financing, in part, this transaction.
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- 2 -
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Restrictions on Solicitation of Other Offers (see page 83)
or Restrictions on Change of Recommendation to Stockholders (see page
85)
. We generally have agreed not to:
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solicit, initiate or knowingly encourage any inquiries or the making of any
proposal or offer that constitutes, or could reasonably be expected to lead to,
any acquisition proposal; or
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enter into, continue or otherwise participate in any discussions or
negotiations regarding, or furnish to any person any non-public information in
response to, or otherwise for the purpose of encouraging or facilitating, any
acquisition proposal.
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We have also agreed not to grant any waiver, amendment or release under any
standstill agreement without the prior written consent of Parent.
If an unsolicited acquisition proposal is made that our board of directors
determines constitutes or is reasonably likely to lead to a superior proposal,
then we generally may, prior to the adoption of the merger agreement by the
affirmative vote of the holders of a majority of the outstanding shares of our
common stock:
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furnish information with respect to the Company to the person making such
acquisition proposal; and
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engage in discussions or negotiations with such person.
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We have agreed that our board of directors will not (a) withdraw its recommendation
that our stockholders adopt the merger agreement, (b) cause or permit us to enter
into an agreement concerning another acquisition proposal or (c) adopt, approve or
recommend another acquisition proposal, except that our board of directors may take
such an action in certain circumstances if it determines in good faith, after
consultation with independent financial advisors and outside legal counsel, that
another acquisition proposal would constitute a superior proposal if no changes were
made to the merger agreement and the failure to take such action would be
inconsistent with its fiduciary obligations under applicable law. In addition, our
board of directors may withdraw its recommendation that our stockholders adopt the
merger agreement, other than in response to another acquisition proposal, if it
determines in good faith, after consultation with outside legal counsel, that a
failure to take such action would be inconsistent with its fiduciary obligations
under applicable law.
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Termination (see page 85)
. Airvana, Parent and Merger Sub may agree to terminate
the merger agreement at any time prior to the effective time of the merger, even after
our stockholders have adopted the merger agreement. The merger agreement may also be
terminated in certain other circumstances, including:
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by either Airvana or Parent, if:
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the merger has not been consummated by June 15, 2010, except that
this termination right will not be available to any party whose failure
to fulfill any obligation under the merger agreement has been a
principal cause of or resulted in the failure of the merger to occur on
or before such date;
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a governmental entity of competent jurisdiction has issued a
nonappealable final order, decree or ruling or taken any other
nonappealable final action, in each case having the effect of
permanently restraining, enjoining or otherwise prohibiting the merger,
except that this termination right will not be available to any party
whose failure to fulfill any obligation under the merger agreement has
been a principal cause of or resulted in such order, decree, ruling or
other action;
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- 3 -
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our stockholders do not vote to adopt the merger agreement at the
special meeting;
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(a) our board of directors fails to recommend the approval of the
merger in the proxy statement distributed to our stockholders or
withholds, withdraws, amends or modifies its recommendation of the
merger to our stockholders in a manner adverse to Parent, (b) our board
of directors adopts, approves, endorses or recommends to our
stockholders another acquisition proposal, (c) a tender offer or
exchange offer for our outstanding common stock is commenced and our
board of directors recommends that our stockholders tender their shares
in such tender or exchange offer or, within ten business days after the
public announcement of such tender or exchange offer, fails to
recommend that our stockholders reject such offer and reaffirm its
recommendation that our stockholders adopt the merger agreement, (d) we
enter into an agreement concerning another acquisition proposal or (e)
we or our board of directors publicly announces an intention to do any
of the foregoing; or
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we breach or fail to perform any of our representations, warranties,
covenants or agreements in the merger agreement and such breach or
failure to perform would cause the conditions to the obligations of
Parent and Merger Sub to consummate the closing not to be satisfied and
such breach or failure to perform is not timely cured or is not capable
of being cured, except that Parent does not have the right to terminate
the merger agreement if it or Merger Sub is then in material breach of
any of its representations, warranties, covenants or agreements and
such breach would cause the conditions to our obligation to consummate
the closing not to be satisfied.
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our board of directors pursuant to and in compliance with our
non-solicitation obligations under the merger agreement, adopts,
approves, endorses or recommends to our stockholders another
acquisition proposal (or publicly proposes to do so) and prior to or
simultaneously with such termination we pay to Parent in cash a $15
million termination fee;
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Parent or Merger Sub breach or fail to perform any of their
representations, warranties, covenants or agreements in the merger
agreement and such breach or failure to perform would cause the
conditions to our obligation to consummate the closing not to be
satisfied and such breach or failure to perform is not timely cured or
is not capable of being cured, except that the we do not have the right
to terminate the merger agreement if we are then in material breach of
any of our representations, warranties, covenants or agreements and
such breach would cause the conditions to the obligations of Parent and
Merger Sub to consummate the closing not to be satisfied; or
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all of the conditions to the obligations of Parent and Merger Sub to
consummate the merger have been satisfied and Parent and Merger Sub
fail to consummate the merger within ten (10) business days following
the date the closing should have otherwise occurred.
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- 4 -
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Termination Fees (see page 87) and Expense Reimbursement
(see page 88)
. If the merger agreement
is terminated, depending upon the certain circumstances under which such termination
occurs:
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we may be obligated to pay Parent a termination fee of $15 million (less any
expenses of Parent reimbursed by us in connection with such termination);
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we may be obligated to reimburse Parent for expenses actually incurred
related to the transactions contemplated by the merger agreement, up to a total
cap of $3 million; or
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Parent may be obligated to pay us a reverse termination fee of $25 million.
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Limitations on Remedies and Liability Cap (see page 89).
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Each of Parent and Merger Sub is entitled to enforce specifically the terms
of the merger agreement against us, in addition to any other remedy to which it
may be entitled. However, we are not entitled to enforce specifically the terms
of the merger agreement against either of Parent or Merger Sub.
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Parents liability relating to the merger agreement is limited to the $25
million reverse termination fee plus interest (at the prime rate) and
reimbursement of reasonable costs and expenses we may incur in enforcing our
right to payment of such reverse termination fee.
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Our liability relating to the merger agreement is limited to the $15 million
termination fee plus interest (at the prime rate) and reimbursement of
reasonable costs and expenses Parent may incur in enforcing its right to
payment of such termination fee. However, such liability limitation will in no
way limit the rights of each of Parent and Merger Sub to seek an injunction to
prevent breaches of the merger agreement by us and to enforce specifically the
terms of the merger agreement against us.
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The Special Meeting
See
Questions and Answers About the Merger and the
Special Meeting
beginning on page 9 and
The Special Meeting
beginning on page 16.
Other Important Considerations
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Recommendation of the Special Committee (see page 33)
. The special committee is a
committee of our board of directors that was formed on July 9, 2009. The special
committee has authority to establish, monitor and direct the process and procedures
related to the review and evaluation of one or more proposals made to the Company by
S.A.C. Private Capital Group, LLC, which we refer to as SAC PCG, and any alternative transaction. The special committee had the authority to
solicit other proposals, to determine not to proceed with any such proposal or
transaction, to reject or approve any such proposal or transaction, or recommend such
rejection or approval to the board of directors, and to recommend to the board of
directors whether any such proposal or transaction is advisable and is fair to, and in
the best interests of, the Company and its stockholders. The special committee
unanimously determined that the merger, the consideration to be paid in the merger, and
the other terms and provisions of the merger agreement are fair to, advisable and in
the best interests of the Company and the holders of Airvana common stock (other than
the Rollover Stockholders). The special committee recommended that the board of
directors accept the merger agreement and the terms and conditions of the merger and
the merger agreement as being fair to, advisable and in the best interests of the
Company and its stockholders (other than the Rollover Stockholders), approve and adopt
the merger agreement, and recommend adoption of the merger agreement by the holders of
Airvana common stock.
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Recommendation of the Board of Directors (see page 38)
. The Companys board of
directors, acting upon the unanimous recommendation of the special committee and
without the participation of Messrs. Battat and Verma, recommends that Airvanas
stockholders vote FOR the adoption of the merger agreement, and FOR the adjournment
of the special meeting, if
necessary, to solicit additional proxies in the event there are not sufficient votes
in favor of adoption of the merger agreement at the time of the special meeting.
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- 5 -
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Voting by Airvanas Directors and Executive Officers (see
page 16)
. As of
[
], 2010, the record date, the directors and executive officers of Airvana
and their affiliates held and are entitled to vote, in the aggregate, shares of Airvana
common stock representing approximately [_____]% of the outstanding shares of Airvana
common stock. The directors and executive officers have informed Airvana that they
currently intend to vote all of their shares of Airvana common stock FOR the adoption
of the merger agreement and FOR any adjournment proposal.
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Interests of the Companys Directors and Executive
Officers in the Merger (see page 62)
. Upon the consummation of the merger, all stock options held by our directors and
executive officers will vest, and each vested and unexercised stock option will be
cashed out in an amount equal to the excess of $7.65 over the option exercise price. As
of January 3, 2010, our directors and executive officers and their affiliates, as a
group, beneficially owned, excluding all shares of common stock to be rolled over by
the Rollover Stockholders, 27,174,700 shares of Airvana common stock and vested and
unvested options to purchase 4,798,645 shares of Airvana common stock. Together, these
securities represent 41.8% of the total Airvana securities that are subject to purchase
as part of the merger. The maximum total amount of all cash payments our directors and
executive officers may receive in respect of their beneficially owned Airvana
securities upon the consummation of the merger is approximately
$230 million, as more
fully described on page 63. In considering the recommendation of our board
of directors, you should be aware that some of our directors and executive officers
have interests in the merger that are different from, or in addition to, your interests
as a stockholder and that may present actual or potential conflicts of interest. These
interests include, among others:
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accelerated vesting of stock options with exercise prices of less than $7.65
per share;
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the expected ownership of equity interests in Parent or its affiliates by
the Rollover Stockholders after completion of the merger in exchange for
certain shares of Airvana common stock which they currently own;
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the anticipated entry into new employment arrangements by certain of our
executive officers, including Messrs. Battat and Verma, and Dr. Eyuboglu in connection
with the completion of the merger;
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the anticipated establishment of an equity-based compensation plan and
grants of equity awards to our executive officers and other key employees after
completion of the merger; and
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continued indemnification and directors and officers liability insurance
applicable to the period prior to completion of the merger.
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Our special committee and board of directors were aware of these interests and
considered them, among other matters, prior to making their determinations to
recommend the adoption of the merger agreement by the Companys stockholders. These
and other interests of our directors and executive officers, some of which may be
different than those of our stockholders generally, are more fully described,
together with a more detailed description of the total cash payments our directors
and executive officers will receive in connection with the merger, under
Special
FactorsInterests of the Companys Directors and Executive Officers in the Merger
beginning on page 62.
- 6 -
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Opinion of the Special Committees Financial Advisor
(see page 39)
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Goldman, Sachs & Co., which we refer to as Goldman Sachs, delivered its
opinion to the special committee that, as of December 17, 2009 and based upon
and subject to the factors and assumptions set forth therein, the $7.65 per
share in cash to be paid to the holders (other than the Rollover Stockholders)
of the outstanding shares of the Company common stock pursuant to the merger
agreement was fair from a financial point of view to such holders.
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The full text of the written opinion of Goldman Sachs, dated December 17,
2009, which sets forth assumptions made, procedures followed, matters
considered and limitations on the review undertaken in connection with the
opinion, is attached as Annex B to this proxy statement. Goldman Sachs
provided its opinion for the information and assistance of the special
committee in connection with its consideration of the merger agreement. The
Goldman Sachs opinion is not a recommendation as to how any holder of the
Company common stock should vote with respect to the merger or any other
matter. Pursuant to an engagement letter among the special committee, the
Company and Goldman Sachs, the Company has agreed to pay Goldman Sachs a
transaction fee equal to approximately $6.3 million, $5.8 million of which
is contingent upon consummation of the merger.
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Financing of the Merger (see page 58)
. The merger agreement does not contain any
condition relating to the receipt of financing by Parent or Merger Sub. Parent
estimates that the aggregate amount of financing necessary to complete the merger and
the payment of related fees and expenses will be approximately $530 million. This
amount is expected to be funded by Parent and Merger Sub with a combination of the
equity financing contemplated by the commitment letters described below, debt financing
contemplated by the commitment letter described below and cash of the Company. The
equity and debt financings are subject to the satisfaction of the conditions set forth
in the commitment letters pursuant to which such financings will be provided.
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Equity Financing.
Parent has received an equity commitment letter from
S.A.C. Capital Management, LLC to purchase, or cause to be purchased, up to
$103.1 million of equity of Parent. Approximately $92.5 million of that
commitment has been assigned to 72 Mobile Investors, LLC, which we refer to as
Investment Vehicle. Parent has also received an equity commitment letter
from GSO Capital Partners LP, which we refer to as GSO, to purchase, or cause
to be purchased, up to $10 million of equity of Parent. In addition, the
Rollover Stockholders have agreed to contribute to Parent an aggregate of
3,738,562 shares of our common stock (with an aggregate value of approximately
$28.6 million, based on the merger consideration).
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Investment Vehicle has received an equity commitment letter from Sankaty
Credit Opportunities II, L.P., Sankaty Credit Opportunities III, L.P.,
Sankaty Credit Opportunities IV, L.P. and Sankaty Credit Opportunities
(Offshore Master) IV, L.P., which we refer to collectively as Sankaty, to
purchase, or cause to be purchased, up to $25 million of equity of
Investment Vehicle. Investment Vehicle has also received an equity
commitment letter from ZM Capital, L.P., which we refer to as ZM Capital,
to purchase, or cause to be purchased, up to $17.5 million of equity of
Investment Vehicle. We refer to Sankaty and ZM Capital collectively as the
Co-Investors. Additionally, Investment Vehicle has received an equity
commitment letter from 72 Private Investments, L.P. to purchase, or cause to
be purchased, up to approximately $50 million of equity of Investment
Vehicle. Such commitments may be assigned to affiliates of the investors
under circumstances set forth in these commitment letters.
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Debt Financing
. Parent has received a debt financing commitment letter that
provides for up to $170.0 million of debt financing from GSO, on behalf of
certain funds managed by GSO. On January 13, 2010, the debt financing
commitment letter was amended.
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- 7 -
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Regulatory Approvals (see page 57)
. Under the HSR Act and the rules promulgated
thereunder by the Federal Trade Commission, which we refer to as the FTC, the merger
may not be completed until notification and report forms have been filed with the FTC
and the Antitrust Division of the Department of Justice, which we refer to as the
DOJ, and the applicable waiting period has expired or been terminated. Airvana and
Parent filed notification and report forms under the HSR Act with the FTC
and the Antitrust Division of the DOJ on
[
], 2010.
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Material U.S. Federal Income Tax Consequences of the Merger to Our Stockholders (see
page 65)
. The conversion of shares of our common stock into the right to receive
$7.65 per share cash merger consideration will be a taxable transaction to our
stockholders for U.S. federal income tax purposes.
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Appraisal Rights (see page 91)
. Holders of our common stock who object to the
merger may elect to pursue their appraisal rights to receive the judicially determined
fair value of their shares, which could be more or less than, or the same as, the per
share merger consideration for the common stock, but only if they comply with the
procedures required under Delaware law. In order to qualify for these rights, you must
(1) not vote in favor of adoption of the merger agreement, nor consent thereto in
writing, (2) make a written demand for appraisal prior to the taking of the vote on the
adoption of the merger agreement at the special meeting and (3) otherwise comply with
the Delaware law procedures for exercising appraisal rights. For a summary of these
Delaware law procedures, see
Appraisal Rights.
An executed proxy that is not marked
AGAINST or ABSTAIN will be voted for adoption of the merger agreement and will
disqualify the stockholder submitting that proxy from demanding appraisal rights. A
copy of Section 262 of the General Corporation Law of the State of Delaware, or DGCL,
is also included as Annex C to this proxy statement. Failure to follow the procedures
set forth in Section 262 of the DGCL will result in the loss of appraisal rights.
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Market Price of Airvana Common Stock (see page 101)
. The closing sale price of
Airvana common stock on The NASDAQ Stock Market, which we refer to as NASDAQ, on
December 17, 2009, the last trading day prior to the announcement of the merger, was
$6.24 per share. The $7.65 per share to be paid for each share of Airvana common stock
in the merger represents a premium of approximately 23% to the closing price on
December 17, 2009. On [
], 2010, which is the most recent practicable trading
date prior to the date of the proxy statement, the closing trading price of our common
stock was $[_____] per share.
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- 8 -
QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING
The following questions and answers are intended to address briefly some commonly asked
questions regarding the merger, the merger agreement and the special meeting. These questions and
answers do not address all questions that may be important to you as
an Airvana stockholder. Please
refer to the Summary Term Sheet and the more detailed information contained elsewhere in this
proxy statement, the annexes to this proxy statement and the documents referred to or incorporated
by reference in this proxy statement, which you should read carefully.
The Proposed Merger
Q:
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What will I receive for my shares of Airvana common stock in the merger?
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A:
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Upon completion of the merger, you will receive $7.65 in cash, without interest and less any applicable withholding
taxes, for each share of our common stock that you own. This does not apply to (a) shares held by any of our
stockholders who are entitled to and who properly exercise, and do
not withdraw or lose, appraisal
rights under Delaware law, (b) shares held by any of our wholly owned
subsidiaries and (c) shares held
by Parent or any of its subsidiaries, including shares to be contributed to Parent immediately prior to the
completion of the merger by the Rollover Stockholders,
who are comprised of Mr. Randall Battat and certain
related trusts, Dr. Vedat Eyuboglu, his spouse and related trusts and
Mr. Sanjeev Verma, his spouse and related trusts. Mr.
Battat is the Companys President and CEO. Dr. Eyuboglu is our Chief Technology Officer and a founder of the
Company. Mr. Verma is our Vice President, Femtocell Business and Corporate Development and a founder of the
Company. These Rollover Stockholders owned in the aggregate approximately [ ]% of the Airvana common stock
outstanding as of the record date for the special meeting. Upon consummation of the merger, you will not own shares
in Airvana or Parent.
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See
Special Factors
Material U.S. Federal Income Tax Consequences of the Merger to
Our Stockholders
beginning on page 65 for a more detailed description of the U.S. tax
consequences of the merger. You should consult your own tax advisor for a full
understanding of how the merger will affect your federal, state, local and foreign taxes.
Q:
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How will the Companys stock options be treated in the merger?
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A:
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All outstanding options exercisable for shares of Airvana common stock
that are unvested will vest and become exercisable upon the effective
time of the merger. Each option outstanding immediately prior to the
effective time of the merger that represents the right to acquire
shares of Airvana common stock, at the effective time of the merger,
will be cancelled, terminated and converted into the right to receive
a cash payment equal to the number of shares of Airvana common stock
underlying the option multiplied by the amount by which $7.65 exceeds
the exercise price of the option.
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Q:
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What effects will the proposed merger have on the Company?
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A:
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Upon completion of the proposed merger, Airvana will cease to be a
publicly traded company and will be wholly owned by Parent. As a
result, you will no longer have any interest in our future earnings or
growth, if any. Following completion of the merger, the registration
of our common stock and our reporting obligations with respect to our
common stock under the Securities Exchange Act of 1934, as amended,
which we refer to as the Exchange Act, are expected to be
terminated. In addition, upon completion of the proposed merger,
shares of Airvana common stock will no longer be listed on the NASDAQ.
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- 9 -
Q.
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What happens if the merger is not completed?
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A.
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If the merger agreement is not adopted by our stockholders, or if the merger is not completed
for any other reason, our stockholders will not receive any payment for their shares pursuant
to the merger agreement.
Instead, Airvana will remain as a public company and our common stock will continue to be
registered under the Exchange Act and listed and traded on the NASDAQ. Under specified
circumstances, Airvana may be required to pay Parent a termination fee or reimburse Parent
for up to $3 million of its out of pocket expenses or Parent may be required to pay Airvana a termination fee,
in each case, as described in
The Merger
Agreement
Termination Fees
beginning on page 87.
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Q.
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When is the merger expected to be completed?
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A.
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We are working toward completing the merger as quickly as possible, and we anticipate that it
will be completed in the first quarter of 2010 or as soon as practicable thereafter. In order
to complete the merger, we must obtain stockholder approval and the other closing conditions
under the merger agreement must be satisfied or waived (as permitted by law). See
The Merger
AgreementConditions to Closing the Merger
beginning
on page 81.
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The Special Meeting
Q.
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When and where is the special meeting?
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A.
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The special meeting of stockholders of Airvana will be held on [
], 2010, at 10:00
a.m. local time, at the offices of Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street,
Boston, Massachusetts 02109.
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Q.
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What matters will be voted on at the special meeting?
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A.
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You will be asked to consider and vote on the following proposals:
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to adopt the merger agreement;
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to approve the adjournment of the special meeting, if necessary, to solicit
additional proxies in the event there are not sufficient votes in favor of adoption of
the merger agreement at the time of the special meeting; and
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to act upon other business that may properly come before the special meeting or any
adjournment or postponement thereof.
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Q.
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How does Airvanas board of directors recommend that I vote on the proposals?
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A.
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The board of directors (without the participation of Messrs. Battat and Verma) recommends
that you vote:
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FOR the proposal to adopt the merger agreement; and
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FOR the adjournment proposal.
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Q.
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Who is entitled to vote at the special meeting?
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A.
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Stockholders of record holding Airvana common stock as of the close of business on
[
], 2010, the record date for the special meeting, are entitled to vote at the
special meeting. As of the record date, there were approximately [
] shares of
Airvana common stock outstanding. Every holder of Airvana common stock is entitled to one vote
for each such share the stockholder held as of the record date.
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- 10 -
Q.
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What vote is required for Airvanas stockholders to adopt the merger agreement? How do
Airvanas directors and officers intend to vote?
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A.
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An affirmative vote of the holders of a majority of all outstanding shares of Airvana common
stock entitled to vote on the matter is required to adopt the merger agreement. Our directors
and executive officers have informed us that they currently intend to vote all of their shares
of Airvana common stock for the adoption of the merger agreement.
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Q.
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What vote is required for Airvanas stockholders to approve a proposal to adjourn the special
meeting, if necessary, to solicit additional proxies?
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A.
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The proposal to adjourn the special meeting, if necessary, to solicit additional proxies
requires the affirmative vote of the holders of a majority of the shares of Airvana common
stock present or represented by proxy at the meeting and entitled to vote on the matter.
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Q.
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Who is soliciting my vote?
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A.
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This proxy solicitation is being made and paid for by Airvana. In addition, we have retained
Georgeson Inc., which we refer to as Georgeson, to assist in the solicitation. We will pay Georgeson approximately $8,500 plus
out-of-pocket expenses for its assistance. Our directors, officers and employees may also
solicit proxies by personal interview, mail, e-mail, telephone, facsimile or by other means of
communication. These persons will not be paid additional remuneration for their efforts. We
will also request brokers and other fiduciaries to forward proxy solicitation material to the
beneficial owners of shares of Airvana common stock that the brokers and fiduciaries hold of
record. We will reimburse them for their reasonable out-of-pocket expenses.
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Q.
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What do I need to do now?
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A.
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Even if you plan to attend the special meeting, after carefully reading and considering the
information contained in this proxy statement, if you hold your shares in your own name as the
stockholder of record, please vote your shares by completing, signing, dating and returning
the enclosed proxy card; using the telephone number printed on the enclosed proxy card; or
using the Internet voting instructions printed on the enclosed proxy card. You can also attend
the special meeting and vote, or change your prior vote, in person.
Do NOT enclose or return
your stock certificate(s) with your proxy
. If you hold your shares in street name through a
broker, bank or other nominee, then you received this proxy statement from the nominee, along
with the nominees proxy card which includes voting instructions and instructions on how to
change your vote.
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Q.
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How do I vote? How can I revoke my vote?
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A.
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You may vote by signing and dating each proxy card you receive and returning it in the
enclosed prepaid envelope or as described below if you hold your shares in street name. If
you return your signed proxy card, but do not mark the boxes showing how you wish to vote,
your shares will be voted FOR the proposal to adopt the merger agreement and FOR the
adjournment proposal. You have the right to revoke your proxy at any time before the vote
taken at the special meeting:
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if you hold your shares in your name as a stockholder of record, by notifying our
Secretary at 19 Alpha Road, Chelmsford, Massachusetts 01824;
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by attending the special meeting and voting in person (your attendance at the
meeting will not, by itself, revoke your proxy; you must vote in person at the
meeting);
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by submitting a later-dated proxy card; or
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if you have instructed a broker, bank or other nominee to vote your shares, by
following the directions received from your broker, bank or other nominee to change
those instructions.
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- 11 -
Q.
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Can I vote by telephone or electronically?
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A.
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If you hold your shares in your name as a stockholder of record, you may vote by telephone or
electronically through the Internet by following the instructions included with your proxy
card.
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If your shares are held by your broker, bank or other nominee, often referred to as held in
street name, please check your proxy card or contact your broker, bank or nominee to
determine whether you will be able to vote by telephone or electronically.
Q.
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If my shares are held in street name by my broker, bank or other nominee, will my broker,
bank or other nominee vote my shares for me?
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A.
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Your broker, bank or other nominee will only be permitted to vote your shares if you instruct
your broker, bank or other nominee how to vote. You should follow the procedures provided by
your broker, bank or other nominee regarding the voting of your shares. If you do not instruct
your broker, bank or other nominee to vote your shares, your shares will not be voted and the
effect will be the same as a vote against the adoption of the merger agreement and will not
have an effect on the proposal to adjourn the special meeting.
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Q.
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What do I do if I receive more than one proxy or set of voting instructions?
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A.
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If you hold shares in street name and also directly as a record holder, you may receive more
than one proxy and/or set of voting instructions relating to the special meeting.
These should
each be voted and/or returned separately as described elsewhere in this proxy statement in
order to ensure that all of your shares are voted
.
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Q.
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How are votes counted?
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A.
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For the proposal to adopt the merger agreement, you may vote FOR, AGAINST or ABSTAIN.
Abstentions will not be counted as votes cast or shares voting on the proposal to adopt the
merger agreement, but will count for the purpose of determining whether a quorum is present.
If you abstain, it will have the same effect as if you vote against the adoption of the merger
agreement. In addition, if your shares are held in the name of a broker, bank or other
nominee, your broker, bank or other nominee will not be entitled to vote your shares in the
absence of specific instructions. These non-voted shares, or broker non-votes, if any, will
not be counted as shares present, but will have the same effect as if you vote against the adoption of the merger agreement.
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For a proposal to adjourn the special meeting, if necessary, to solicit additional proxies,
you may vote FOR, AGAINST or ABSTAIN. Abstentions and broker non-votes will count for the
purpose of determining whether a quorum is present, but abstentions and broker non-votes
will not count as shares present and entitled to vote on the proposal to adjourn the
meeting. As a result, abstentions and broker non-votes will have no effect on the vote to
adjourn the meeting, which requires the vote of the holders of a majority of the shares of
Airvana common stock present or represented by proxy at the meeting and entitled to vote on
the matter.
If you sign your proxy card without indicating your vote, your shares will be voted FOR
the adoption of the merger agreement and FOR the adjournment of the special meeting, if
necessary, to solicit additional proxies, and in accordance with the recommendations of our
board of directors on any other matters properly brought before the special meeting for a
vote.
Q.
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Who will count the votes?
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A.
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A representative of our transfer agent, Computershare Investor Services, will count the votes
and act as an inspector of election. Questions concerning stock certificates or other matters
pertaining to your shares may be directed to Computershare Investor Services at 800-662-7232.
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- 12 -
Q.
|
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Should I send in my stock certificates now?
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A.
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No. After the merger is completed, you will be sent a letter of transmittal with detailed
written instructions for exchanging your Airvana common stock certificates for the merger
consideration. If your shares are held in street name by your broker, bank or other nominee
you will receive instructions from your broker, bank or other nominee as to how to effect the
surrender of your street name shares in exchange for the merger consideration. Please do not
send your certificates in now.
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Q.
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How can I obtain additional information about Airvana?
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A.
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We will provide a copy of our Annual Report to Stockholders and/or our Annual Report on Form
10-K for the year ended December 28, 2008, as filed on February 24, 2009, excluding certain of its
exhibits, and other filings, with the SEC, without charge to any stockholder who makes a written or oral request to the
Secretary, Airvana, Inc., 19 Alpha Road, Chelmsford, Massachusetts 01824; telephone (978)
250-3000. Our Annual Report on Form 10-K and other SEC filings also may be accessed on the
world wide web at http://www.sec.gov or on the Investor Relations page of the Companys
website at http://www.airvana.com. Our website address is provided as an inactive textual
reference only. The information provided on our website is not part of this proxy statement,
and therefore is not incorporated by reference. For a more detailed description of the
information available, please refer to
Where You Can Find More Information
beginning on page
107.
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Q.
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Who can help answer my questions?
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A.
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If you have additional questions about the merger after reading this proxy statement or need
assistance voting your shares, please call our proxy solicitor, Georgeson, toll-free at
800-960-7546. Banks and brokers should contact Georgeson at 212-440-9800.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement contains forward-looking statements, as defined in Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, that are based on our current expectations, assumptions, beliefs, estimates and
projections about our company and our industry. The forward-looking statements are subject to
various risks and uncertainties that could cause actual results to differ materially from those
described in the forward-looking statements. Generally, these forward-looking statements can be
identified by the use of forward-looking terminology such as anticipate, believe, estimate,
expect, intend, project, should and similar expressions. Factors that may affect those
forward-looking statements include, among other things:
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the risk that the merger may not be consummated in a timely manner, if at all;
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the risk that the merger agreement may be terminated in circumstances that require
us to pay Parent a termination fee of $15 million or reimburse Parent for up to $3
million of certain expenses incurred by Parent in connection with the merger;
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risks regarding a loss of or a substantial decrease in purchases by our major
customers;
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risks related to diverting managements attention from our ongoing business
operations;
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risks regarding employee retention;
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legal and regulatory proceedings, including but not limited to litigation arising
out of the proposed merger, or other matters that affect the timing or ability to
complete the transactions as contemplated; and
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other risks detailed in our current filings with the SEC, including our most recent filings on Form 10-K or Form 10-Q, which
discuss these and other important risk factors concerning our operations.
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We caution you that reliance on any forward-looking statement involves risks and
uncertainties, and that although we believe that the assumptions on which our forward-looking
statements are based are reasonable, any of those assumptions could prove to be inaccurate, and, as
a result, the forward-looking statements based on those assumptions could be incorrect. In light of
these and other uncertainties, you should not conclude that we will necessarily achieve any plans
and objectives or projected financial results referred to in any of the forward-looking statements.
We do not undertake to release the results of any revisions of these forward-looking statements to
reflect future events or circumstances.
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THE PARTIES TO THE MERGER
Airvana
Airvana is a Delaware corporation with its headquarters in Chelmsford, Massachusetts. Airvana
is a leading provider of network infrastructure products used by wireless operators to provide
mobile broadband services. Airvana specializes in helping operators transform the mobile experience
of users worldwide. Its high performance technology and products, from core mobile network
infrastructure to comprehensive femtocell solutions, enable operators to deliver broadband services
to mobile subscribers, wherever they are.
Airvana was incorporated in March 2000 and its principal executive offices are located at 19
Alpha Road, Chelmsford, Massachusetts 01824. Airvanas website is located at
http://www.airvana.com and its telephone number is (978) 250-3000. Additional information
regarding Airvana is contained in our filings with the SEC. See
Where You Can Find More
Information
beginning on page 107.
Parent
72 Mobile Holdings, LLC, which we refer to as Parent, is a newly formed Delaware limited
liability company that was formed solely for the purpose of entering into the merger
agreement and consummating the transactions contemplated by the merger agreement. Parent has not
engaged in any business except for activities incident to its formation and in connection with the
transactions contemplated by the merger agreement. The principal office address of 72 Mobile
Holdings, LLC is 72 Cummings Point Rd., Stamford, Connecticut
06902. Its telephone number is 203-890-2000.
Merger Sub
72
Mobile Acquisition Corp, which we refer to as Merger Sub,
is a newly formed Delaware corporation and a
wholly owned subsidiary of Parent. Merger Sub was formed solely for
the purpose of entering into
the merger agreement and consummating the transactions contemplated by the merger agreement. Merger
Sub has not engaged in any business except for activities incident to its incorporation and in
connection with the transactions contemplated by the merger agreement. Upon the consummation of the
proposed merger, Merger Sub will cease to exist and Airvana will continue as the surviving
corporation and a wholly owned subsidiary of Parent. The principal office address of 72 Mobile
Acquisition Corp. is 72 Cummings Point Rd., Stamford,
Connecticut 06902. Its telephone number is 203-890-2000.
Additional information concerning these transaction participants is set forth in Annex D to
this proxy statement.
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THE SPECIAL MEETING
This proxy statement is furnished in connection with the solicitation of proxies by our board
of directors in connection with the special meeting of our stockholders relating to the merger.
Date, Time and Place of the Special Meeting
We will hold the special meeting at the offices of Wilmer Cutler Pickering Hale and Dorr LLP,
60 State Street, Boston, Massachusetts 02109, at 10:00 a.m., local time, on
[
], 2010.
Purpose of the Special Meeting
At the special meeting, we will ask the holders of our common stock to adopt the merger
agreement, and, if there are not sufficient votes in favor of adoption of the merger agreement, to
adjourn the special meeting to a later date to solicit additional proxies.
Record Date; Shares Entitled to Vote; Quorum
Only holders of record of our common stock at the close of business on [
], 2010,
the record date, are entitled to notice of, and to vote at, the special meeting. On the record
date, [
] shares of our common stock were issued and outstanding and held by approximately
[
] holders of record. Holders of record of our common stock on the record date are entitled to
one vote per share at the special meeting on the proposal to adopt the merger agreement and the
proposal to adjourn the special meeting, if necessary, to solicit additional proxies.
A quorum of stockholders is necessary to hold a valid special meeting. Under our by-laws, a
quorum is present at the special meeting if a majority of the shares of our common stock entitled
to vote on the record date are present, in person or represented by proxy. In the event that a
quorum is not present at the special meeting, it is expected that the meeting will be adjourned to
solicit additional proxies. For purposes of determining the presence of a quorum, abstentions will
be counted as shares present, however, broker non-votes (where a broker or nominee does not
exercise discretionary authority to vote on a matter), if any, will not be counted as shares
present.
Vote Required
The adoption of the merger agreement requires the affirmative vote of the holders of a
majority of the shares of our common stock entitled to vote at the special meeting. Adoption of the
merger agreement is a condition to the closing of the merger.
Approval of any proposal to adjourn the special meeting, if necessary, to solicit additional
proxies requires the affirmative vote of a majority of the votes cast on the matter by holders of
our common stock present, in person or represented by proxy, at the special meeting, provided that
a quorum is present, in person or represented by proxy, at the special meeting.
Voting by Airvanas Directors and Executive Officers
As of [
], 2010, the record date, the directors and executive officers of Airvana
held and are entitled to vote, in the aggregate, [
] shares of Airvana common stock,
representing approximately [
]% of the outstanding Airvana common stock. The directors and
executive officers have informed Airvana that they currently intend to vote all of their shares of
Airvana common stock FOR the adoption of the merger agreement and FOR the adjournment proposal.
If our directors and executive officers vote their shares in favor of adopting the merger
agreement, [
]% of the outstanding shares of Airvana common stock will have voted for the proposal
to adopt the merger agreement. This means that additional holders of approximately [
]% of all
shares entitled to vote at the special meeting would need to vote for the proposal to adopt the
merger agreement in order for it to be adopted.
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Voting and Revocation of Proxies
If your shares are registered in your name, you may cause your shares to be voted by returning
a signed proxy card or voting in person at the meeting. Additionally, you may submit a proxy
authorizing the voting of your shares via the Internet at www.investorvote.com/AIRV or by telephone
by calling 1-800-662-7232. You must have the enclosed proxy card available, and follow the
instructions on the proxy card, in order to submit a proxy via the Internet or telephone.
If your shares are registered in your name and you plan to attend the special meeting and wish
to vote in person, you will be given a ballot at the meeting. If your shares are registered in your
name, you are encouraged to submit a proxy even if you plan to attend the special meeting in
person.
Voting instructions are included on your proxy card. All shares represented by properly
executed proxies received in time for the special meeting will be voted at the special meeting in
accordance with the instructions of the stockholder. Properly executed proxies that do not contain
voting instructions will be voted FOR the adoption of the merger agreement and FOR the proposal
to adjourn the special meeting, if necessary, to solicit additional proxies.
If your shares are held in street name through a broker or other nominee, you may provide
voting instructions by completing and returning the voting form provided by your broker or nominee
or via the Internet or by telephone through your broker or nominee if such a service is provided.
To provide voting instructions via the Internet or telephone, you should follow the instructions on
the voting form provided by your broker or nominee. If you plan to attend the special meeting, you
will need a proxy from your broker or nominee in order to be given a ballot to vote the shares. If
you do not return your brokers or nominees voting form, provide voting instructions via the
Internet or telephone through your broker or nominee, if possible, or attend the special meeting
and vote in person with a proxy from your broker or nominee, it will have the same effect as if you
voted AGAINST adoption of the merger agreement.
Revocability of Proxies
Any proxy you give pursuant to this solicitation may be revoked by you at any time before it
is voted. Proxies may be revoked as follows:
If you have sent a proxy directly to Airvana
, you may revoke it by:
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delivering to our corporate secretary at our corporate offices at 19 Alpha Road,
Chelmsford, Massachusetts 01824, or by fax to the attention of Peter C. Anastos,
Secretary, at 978-250-3911, on or before the business day prior to the special meeting,
a written revocation of the proxy or a later dated, signed proxy card;
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delivering a new, later dated proxy by telephone or via the Internet until
immediately prior to the special meeting;
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delivering a written revocation or a later dated, signed proxy card to us at the
special meeting prior to the taking of the vote on the matters to be considered at the
special meeting; or
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attending the special meeting and voting in person.
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If you have instructed a broker or nominee to vote your shares
, you may revoke your proxy only
by following the directions received from your broker or nominee to change those instructions.
Revocation of the proxy will not affect any vote previously taken. Attendance at the special
meeting will not in itself constitute the revocation of a proxy; you must vote in person at the
special meeting to revoke a previously delivered proxy.
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Rights of Stockholders Who Object to the Merger
Stockholders of Airvana are entitled to appraisal rights under Delaware law in connection with
the merger. This means that you are entitled to have the value of your shares determined by the
Delaware Court of Chancery and to receive payment based on that valuation. The ultimate amount you
receive as a dissenting stockholder in an appraisal proceeding may be more than, the same as or
less than the amount you would have received under the merger agreement.
To exercise your appraisal rights, you must submit a written demand for appraisal to Airvana
before the vote is taken on the merger agreement and you must not vote in favor of the adoption of
the merger agreement. Your failure to follow exactly the procedures specified under Delaware law
will result in the loss of your appraisal rights. See
Appraisal Rights
beginning on page 91 and
the text of the Delaware appraisal rights statute reproduced in its entirety as Annex C.
Solicitation of Proxies
This proxy solicitation is being made and paid for by Airvana on behalf of its board of
directors. In addition, we have retained Georgeson Inc. to assist in the solicitation. We will pay
Georgeson approximately $8,500 plus out-of-pocket expenses for their assistance. Our directors,
executive officers and employees may also solicit proxies by personal interview, mail, e-mail,
telephone, facsimile or other means of communication. These persons will not be paid additional
remuneration for their efforts. We will also request brokers and other fiduciaries to forward proxy
solicitation material to the beneficial owners of shares of Airvana common stock that the brokers
and fiduciaries hold of record. We will reimburse them for their reasonable out-of-pocket expenses.
In addition, we will indemnify Georgeson against any losses arising out of that firms proxy
soliciting services on our behalf.
Other Business
We are not currently aware of any business to be acted upon at the special meeting other than
the matters discussed in this proxy statement. Under our by-laws, business transacted at the
special meeting is limited to the purposes stated in the notice of the special meeting, which is
provided at the beginning of this proxy statement. If other matters do properly come before the
special meeting, or at any adjournment or postponement of the special meeting, we intend that
shares of Airvana common stock represented by properly submitted proxies will be voted in
accordance with the recommendations of our board of directors.
Questions and Additional Information
If you have more questions about the merger or how to submit your proxy, or if you need
additional copies of this proxy statement or the enclosed proxy card or voting instructions, please
call our proxy solicitor, Georgeson, toll-free at 888-666-2572 (banks and brokers should contact
Georgeson at 212-440-9800), or contact Airvana in writing at our principal executive offices at 19
Alpha Road, Chelmsford, Massachusetts 01824, Attention: Secretary, or by telephone at (978)
250-3000.
Availability of Documents
The reports, opinions or appraisals referenced in this proxy statement and filed as exhibits
to the Schedule 13E-3 filed by the Company concurrently with this proxy statement will be made
available for inspection and copying at the principal executive offices of the Company during its
regular business hours by any interested holder of Airvana common stock.
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SPECIAL FACTORS
This discussion of the merger is qualified by reference to the merger agreement, which is
attached to this proxy statement as Annex A. You should read the entire merger agreement carefully
as it is the legal document that governs the merger.
Background of the Merger
The board of directors (the board) of the Company regularly reviews and evaluates the
Companys business strategy and strategic alternatives with the goal of enhancing stockholder
value.
In December 2007, after considering the risks and uncertainties of the Companys current
business model, including the uncertainties relating to the continued market for the Companys
principal EV-DO products and the risks relating to the Companys efforts to develop its femtocell
business, the board engaged a financial advisor to explore strategic alternatives available to the
Company, including a possible sale of the Company. Over the next several months, the Companys
financial advisor contacted a number of potential strategic and financial buyers to assess their
interest in a business combination with the Company. In the course of this process, the Company
entered into a non disclosure agreement with one potential strategic buyer, which expressed
interest in acquiring the Company for between $5.80 and $6.20 per share. This process did not lead
to any transaction and, on May 1, 2008, Airvana terminated the engagement of its financial advisor.
From September 2008 to January 2009, Airvana had exploratory discussions with two potential
strategic buyers with respect to a possible business combination. One of the parties (Bidder B)
initially expressed interest in acquiring the Company for $5.75 per share and subsequently orally
indicated a willingness to consider a higher price, but discussions ended without any agreement.
The other party declined to make any acquisition proposal.
On March 6, 2009, Merle Gilmore, a consultant to SAC PCG, contacted Randall S. Battat, President
and Chief Executive Officer of the Company, to discuss SAC PCGs possible interest in investing in
certain technologies being offered for sale by one of the Companys customers. During the discussion, Mr. Battat related to Mr. Gilmore that there might
be an opportunity for SAC PCG to engage in a strategic transaction with the Company.
On March 10, 2009, at a meeting of the board, the directors discussed the possible interest of
SAC PCG in a strategic transaction, and the board authorized management to explore possible
acquisition alternatives, including an approach to
Bidder B.
In mid-March 2009, Bidder B declined to pursue acquisition discussions with the Company.
On March 27, 2009, SAC PCG and the Company entered into a non-disclosure agreement.
On
March 30, 2009, Messrs. Randall S. Battat, President and
Chief Executive Officer of the Company, Sanjeev Verma, Vice President, Femto Business and Corporate
Development, Vedat M. Eyuboglu, Vice President, Chief Technical Officer and Jeffrey D. Glidden,
Chief Financial Officer of the Company met with Messrs. Gilmore,
Frank Baker, managing director,
Philip Lo, an associate of SAC PCG, and Michael Seedman, a consultant to SAC PCG, to review the business of the
Company.
On April 22, 2009, Messrs.
Battat, Verma and Glidden and Dr. Eyuboglu held a telephone call with
Messrs. Baker, Gilmore and Lo to discuss the Companys EV-DO business.
On April 27, 2009, at a meeting of the board, Mr. Battat reviewed the status of SAC PCGs
review of the business of the Company. It was the consensus of the board that management should
continue to allow SAC PCG to engage in a diligence review of the Company.
In May 2009, representatives of SAC PCG met on several occasions with Messrs. Battat, Verma
and Glidden and Dr. Eyuboglu to continue their diligence review of the business of the Company. During one
of these meetings, SAC PCG discussed hypothetical structures for a potential acquisition by SAC PCG
of all or a majority of the Companys
outstanding shares at a price of $6.50 per share. Management indicated to SAC PCG that the
board would likely not be receptive to considering a transaction at that valuation.
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On May 19, 2009, at a meeting of the board, Mr. Battat reviewed the status of the diligence
review by SAC PCG. It was the consensus of the board that such review should continue.
On June 1, 2009, Messrs. Baker, Gilmore, Seedman and Lo met with Messrs. Battat,
Verma and Glidden and Dr. Eyuboglu to continue SAC PCGs diligence review.
On June 2, 2009, Messrs. Battat, Verma and Eyuboglu met with Mr. Paul J. Ferri, a member of
the board and a founding partner of one of the Companys principal stockholders, to discuss
generally the status of SAC PCGs review of the Company and various possible strategic
alternatives, including a potential sale of the Company.
On June 10, 2009, at a meeting of the board, Mr. Battat reviewed the status of the discussions
with SAC PCG and, specifically, SAC PCGs request that it be permitted to share non-public
information with third parties that might be interested in providing financing to SAC PCG for a
possible transaction with the Company. As it was likely that any proposal from SAC PCG would
assume that certain members of the Companys management would agree to maintain some equity
ownership in the Company and continue to be employed by the Company, the board determined that
Messrs. Battat and Verma should be excluded from the boards consideration of the request by SAC
PCG or any potential transaction with SAC PCG.
On June 12, 2009, a meeting of a majority of the non-employee members of the board (consisting
of Messrs. Hassan Ahmed, Gururaj Deshpande, Ferri and Anthony Thornley) was convened to discuss an
appropriate response to the approach by SAC PCG. Representatives from
Wilmer Cutler Pickering Hale and Dorr LLP (Wilmer Hale), the Companys
regular outside counsel, described to the directors their fiduciary responsibilities in considering
a potential transaction with SAC PCG. The directors determined they did not have sufficient
information to assess the level of interest of SAC PCG or the likelihood that it would be able to
obtain financing for a transaction. It was therefore the consensus of the directors that the next
step should be for Mr. Ferri or Mr. Thornley to call representatives of SAC PCG and try to gain
more information that would enable the non-employee directors to assess any acquisition proposal
that SAC PCG might make. The directors also determined that, in the event SAC PCG submitted an
indication of interest to acquire the Company on terms that merited consideration by the board, the
board would form a special committee of the board (the special committee) to evaluate such
proposal. As the board recognized that any such proposal would likely assume that management would
maintain some equity ownership in the Company and continue to be employed by the Company, it was
determined that employee board members should not serve on any such committee. Also, it was
determined that Mr. Deshpande would not serve on any such committee because a company with which he
is affiliated could be a potentially interested party in a strategic transaction involving the
Company. The board determined that it would be appropriate to form such a special committee, and
have such committee engage its own legal and financial advisors, only after it had obtained
additional information sufficient for it to evaluate the level of SAC PCGs interest in an
acquisition and the likelihood of its ability to finance such an acquisition.
On June 15, 2009, at a meeting of a majority of the non-employee directors (consisting of
Messrs. Ferri, Thornley, Ahmed and Deshpande), the directors discussed SAC PCGs request that it be
permitted to approach potential financing sources for an acquisition of the
Company in order to determine whether a transaction with the Company could be financed. The
non-employee directors discussed this request and determined that SAC PCG should be given consent
to approach a limited number of potential financing sources. The non-employee directors also
determined to invite SAC PCG to submit a written preliminary indication of interest with respect to
a possible transaction involving the Company so that the non-employee directors could better
understand and evaluate the terms of any proposed transaction and SAC PCGs level of interest.
Following the June 15th meeting, Mr. Ferri called Mr. Baker of SAC PCG to relay the special
committees invitation to submit a written expression of
interest. A written invitation was sent on June 25, 2009.
On June 29, 2009, SAC PCG sent to Messrs. Ferri and Thornley a letter containing a preliminary
indication of interest to acquire the Company for $7.00 per share in cash. SAC PCGs preliminary
indication of interest assumed that certain unspecified members of management would retain a
significant equity interest in the Company and was subject to various conditions, including a
financing condition and the Companys collection of
approximately $35 million in accounts receivable from its primary customer (Nortel) or its
successor through bankruptcy. The letter contemplated that the Company would negotiate exclusively
with SAC PCG and not seek or negotiate with any other prospective acquirers.
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On June 30, 2009, at a meeting of a majority of the non-employee members of the board
(consisting of Messrs. Ferri, Thornley and Robert P. Badavas), the terms of SAC PCGs June 29
letter were reviewed. It was determined that Messrs. Ferri and Thornley should continue to have
discussions with SAC PCG to assess further SAC PCGs expression of interest and the financing risks
before convening a meeting of the full board to determine whether to establish a special committee
of the board to consider whether to explore further SAC PCGs preliminary indication of interest or
other strategic alternatives that might be available to the Company.
On July 7, 2009, Messrs. Gilmore and Baker and Peter Berger, a managing director
of SAC PCG, met with Messrs. Thornley and Ferri to discuss SAC PCGs interest in
acquiring the Company. At the meeting, the parties discussed generally SAC PCGs interest in
acquiring the Company, its transactional experience and its financing plans.
On July 9, 2009, at a meeting of the board, the board discussed SAC PCGs indication of
interest, as well as the advisability of examining other strategic alternatives that might be
available to the Company. Representatives from WilmerHale advised the board regarding its
fiduciary duties in considering strategic alternatives. Recognizing that one possible alternative
was a sale of the Company to a financial buyer such as SAC PCG that could involve certain employee
directors and management being asked to participate in such a transaction by becoming equity
participants and retaining their managerial positions, the board determined that there could be a
conflict of interest between certain members of management and the Companys stockholders.
Additionally, the board discussed the potential conflict arising from Mr. Deshpandes affiliation
with a company that had previously expressed interest in an acquisition of the Company, and that
might express renewed interest in the future. In view of these possible conflicts, the board
determined that it should establish a special committee comprised of independent, non-employee
directors to review, evaluate, consider and negotiate potential strategic alternatives involving
the Company, including the alternative of remaining independent and pursuing the Companys existing
strategy. Mr. Ferri then discussed the significant position in the Company held by Matrix
Partners, an investment firm with which he was affiliated (Matrix). Mr. Ferri disclosed to the
board that the initial term of a Matrix partnership that held some of Matrixs equity interest in
the Company was scheduled to expire near the end of 2009 but that the expiration date could be
extended. Mr. Ferri advised the board that Matrix had made no decision about whether to extend the
term of the partnership, that the initial expiration date of the partnership did not require Matrix
to distribute or sell its shares at any particular time and that, accordingly, the expiration date
of the partnership should not be considered by the board or a special committee in deciding to
pursue or reject any strategic alternatives. The board determined that Mr. Ferri should continue
to participate in discussions concerning strategic alternatives for the Company. They noted, among
other things, that Matrixs significant share position could operate as an effective veto over any
prospective transaction, and that, in the event the board determined that a sale of the Company was
in the best interest of stockholders, the interests of Matrix in obtaining the highest value
available was aligned with the interests of other stockholders. After discussion, the board
established a special committee, comprised of the independent, disinterested directors of the board, Messrs.
Thornley (as Chair), Ferri, Ahmed and Badavas. The board delegated to the special committee the
full power and authority to review and evaluate all strategic alternatives, including to determine
whether pursuing a possible sale of the Company would be advisable and fair to, and in the best
interests of, the Company and its stockholders, and, as it deemed appropriate, to reject or to
recommend to the board any strategic alternative considered by it. The board also resolved that it
would not approve a strategic transaction that did not have the approval of the special committee.
In the afternoon following the board meeting on July 9, 2009, the special committee met to
discuss the process by which it would begin to examine potential strategic alternatives. The
special committee determined to engage Ropes & Gray LLP (Ropes & Gray) as its legal advisor and
Ropes & Gray joined such meeting. The special committee chose Ropes & Gray because of its
experience in this area and because Ropes & Gray was independent from the Company and its
management, because the firm had never represented the Company or its management. Representatives
of Ropes & Gray advised the special committee regarding its fiduciary duties in engaging in a
review of strategic alternatives, including a possible sale of the Company, and discussed with the
special committee the engagement of a financial advisor to assist it in the discharge of its
responsibilities. The special committee resolved to contact certain investment banking firms to
assist the special committee in
- 21 -
fulfilling
its fiduciary obligations. The special committee also directed Ropes & Gray to confirm with
the Companys management (specifically Messrs. Battat, Verma, Eyuboglu and Glidden) that, because
of the possibility of personal interests of management, management should not contact potential
parties regarding strategic alternatives and should not discuss with any interested buyer any
participation (equity, employment arrangements or otherwise) unless and only to the extent
authorized by the special committee. The special committee and Ropes & Gray discussed the
preliminary indication of interest presented by SAC PCG to acquire the Company, including SAC PCGs
request for exclusivity in negotiating a potential transaction with the Company. The special
committee believed that exclusivity should not be granted to SAC PCG until the special committee
further explored the strategic alternatives available to the Company and the special committee
instructed Ropes & Gray to contact Simpson Thacher & Bartlett LLP (Simpson Thacher), legal
counsel to SAC PCG, and inform Simpson Thacher that the special committee was not willing to accept
SAC PCGs request for exclusivity. Simpson Thacher responded to Ropes & Gray that the special
committee should consider instead negotiating exclusively with SAC PCG but including in the merger
agreement a provision that would permit the board to actively solicit
other offers after signing.
From July 9, 2009 through July 27, 2009, the special committee identified potential financial
advisors and interviewed multiple candidates, including
representatives of Goldman, Sachs & Co. (Goldman
Sachs). On July 14, 2009, Goldman Sachs made a presentation on potential strategic
alternatives available to the Company. On July 27, 2009, Goldman Sachs was engaged as financial advisor to the special committee. Goldman Sachs was chosen as the
result of its industry experience and expertise and the special committees determination of its
independence from the Company and the Companys management. In light of the importance to the
special committee of Goldman Sachs assisting the special committee in its determination of what,
if any, strategic alternatives could benefit the Companys stockholders at such time, Goldman
Sachs compensation was specifically negotiated by the special committee to provide for payment of
both a study fee upon the presentation to the special committee of Goldman Sachs initial study on
the feasibility of strategic alternatives for the Company, irrespective of whether the Company
pursues a strategic transaction, and a transaction fee that would be paid, if at all, upon the
consummation of a strategic transaction involving the Company.
On July 28, 2009, at a meeting of the special committee, the special committee instructed
representatives of Goldman Sachs to prepare a presentation for the special committee that included
a preliminary financial analysis of the Company and the strategic alternatives available to the
Company. The special committee discussed with its advisors SAC PCGs preliminary indication of
interest and subsequent oral requests that the special committee work exclusively with SAC PCG in
connection with a sale of the Company. Because the special committee believed that granting such
exclusivity would potentially impede an evaluation of other strategic alternatives available to the
Company and that a pre-signing market check would be more effective than a post-signing go-shop, the
special committee instructed representatives of Goldman Sachs to inform SAC PCG that the special
committee was unwilling to grant SAC PCG exclusivity to pursue a transaction with the Company, but
had not yet decided what process to undertake in connection with its evaluation of strategic
alternatives.
On August 11, 2009, at a meeting of the special committee, the special committee discussed SAC
PCGs request to approach additional possible sources of financing. These sources of financing
were non-institutional bank lenders, and the special committee determined to allow SAC PCG to
approach two additional possible sources of financing, given the challenges that SAC PCG reported having with its other potential sources of financing, so that the Company could evaluate SAC PCGs ability
to finance an acquisition of the Company and because it believed that providing SAC PCG access to
these financing sources would not restrict the ability of other potential purchasers of the Company
to seek financing for an acquisition of the Company. Representatives of Goldman Sachs then made a presentation to the special
committee regarding Goldman Sachs preliminary financial analyses of the Company and potential
strategic alternatives involving the Company. The special committee discussed Base Case and
Downside Case projections prepared by management. The special committee discussed concerns about
how expected changes to the EV-DO market, including the shift to next generation LTE technology and
the financial position of some of the Companys customers for EV-DO technology, could negatively
affect the Companys results in future periods and create risk and uncertainty about attaining
managements projections. The special committee also discussed the challenges in the Companys
femtocell business, including that the femtocell market was new, the size of the femtocell market
was uncertain and the Company had no meaningful experience in developing and selling products for
use by consumers. The special committee also discussed the strategic alternatives reviewed by
representatives of Goldman Sachs, including the potential for a dividend recapitalization or sale
of a portion of the business.
- 22 -
On August 13, 2009, at a meeting of the special committee, the special committee concluded
that alternatives such as a dividend recapitalization or sale of the Companys femtocell or EV-DO
businesses were not likely to be achieved or to generate total value to shareholders in excess of
what might be realized upon a sale of the Company, and that the special committee should
accordingly proceed to evaluate SAC PCGs proposal and the availability of other acquisition
alternatives. The special committee determined that while it was in the interest of the Companys
stockholders to preserve and continue to evaluate SAC PCGs proposal, exclusivity should not be
granted to SAC PCG at that time. The special committee then discussed the possibility that the
publicity associated with a public auction of the Company could be damaging to the Company and
concluded that the Company should instead attempt to solicit the interest of a focused group of
potential acquirers most likely to be interested. The special committee requested the assistance
of Goldman Sachs in indentifying such potentially interested parties. The special committee
instructed the Companys management to set up a dataroom with legal and business due diligence materials
involving the Company so that potential purchasers could conduct due diligence. Representatives of
Goldman Sachs communicated the proposed approach to representatives of SAC PCG later that day.
On August 14, 2009, at a meeting of the special committee, the special committee discussed
that SAC PCG had earlier that day communicated its intent to withdraw from any process in which it
was not granted exclusive rights to negotiate a potential transaction with the Company.
Notwithstanding its interest in having SAC PCG continue to pursue a possible strategic transaction
with the Company, the special committee determined that, in order to assess whether SAC PCGs
preliminary indication of interest was the best value reasonably attainable for stockholders in
connection with a sale of the Company, it would need to solicit the interest of other likely
strategic and financial buyers of the Company. At the request of the special committee, over the
next few days, representatives of Goldman Sachs discussed with representatives of SAC PCG the
continued participation of SAC PCG in the process and SAC PCG indicated to representatives of
Goldman Sachs that it would consider participating in a non-exclusive process of evaluating a
potential transaction with the Company so long as the Company agreed to reimburse SAC PCGs costs of
conducting continued diligence.
On August 17, 2009, at a meeting of the special committee, the special committee discussed SAC
PCGs request for expense reimbursement. The special committee determined that providing some form
of expense reimbursement to SAC PCG was desirable to prevent SAC PCG from withdrawing its
preliminary indication of interest, but that such reimbursement should be subject to limitations,
including a cap, and should be payable only if another entity acquired the Company within a limited
period of time. Representatives of Goldman Sachs then proposed a list of additional strategic and
financial buyers that representatives of Goldman Sachs believed would potentially be interested in
a transaction with the Company, and the special committee authorized representatives of Goldman Sachs to contact 9 strategic buyers and 7 financial buyers.
Between August 17, 2009 and August 25, 2009, the Company negotiated an expense reimbursement
agreement with SAC PCG on the terms further discussed and approved by the special committee at meetings held on August 21 and August 24, 2009 and, on August 25, 2009, the Company
and SAC PCG
entered into such agreement. See
Certain Relationships Between Parent and Airvana
for a
summary of such agreement.
Following the August 17, 2009 meeting, representatives of Goldman Sachs began to contact the
potential purchasers that it was authorized by the special committee to contact at such meeting.
On September 4, 2009, at a meeting of the special committee, representatives of Goldman Sachs
updated the special committee as to the status of discussions with potential purchasers, a proposed timeline for a potential transaction and managements projections updated
based upon the Companys results of operations to date.
On
September 10, 2009, Messrs. Battat, Verma and Glidden and
Dr. Eyuboglu presented information
regarding the business of the Company to representatives of GSO and SAC PCG to facilitate a
possible debt financing by GSO of a potential acquisition by SAC PCG.
On September 16, 2009, Messrs.
Battat, Verma and Glidden and Dr. Eyuboglu presented information
regarding the business of the Company to representatives of an alternative financing source and SAC
PCG to facilitate a possible debt financing by such entity of a potential acquisition by SAC PCG.
- 23 -
On September 16, 2009, at a meeting of the special committee, the special committee discussed
with representatives of Goldman Sachs the status of discussions with potential purchasers. The
special committees legal advisors gave a presentation on the terms and provisions of a draft
merger agreement prepared by WilmerHale and Ropes & Gray that was distributed to the special
committee, including the importance of limited closing conditions
and either obtaining specific performance or a meaningful reverse break-up fee as a remedy for
a potential purchaser failing to abide by its obligations under the merger agreement. The special
committee determined that, in evaluating a potential sale of the Company, it would evaluate
potential purchasers based principally on the proposed purchase price, but would also consider key
terms such as the closing conditions and strength of financing commitments, as well as appropriate
measures to enable the Company to pursue a superior proposal. The special committee authorized its
legal advisors to distribute the draft merger agreement to Simpson Thacher for comment.
On September 22, 2009, at a meeting of the special committee, the special committee discussed
with representatives of Goldman Sachs the status of discussions with potential purchasers.
Representatives of Goldman Sachs informed the special committee that three additional financial
purchasers and two strategic purchasers, including Bidder B, had expressed preliminary interest in
evaluating a potential transaction involving the Company and executed non-disclosure agreements
with the Company. All such interested purchasers were invited to review legal and business due
diligence materials posted to the Companys online dataroom. As the process progressed, only one
of the three potential financial purchasers (Bidder A) continued to show interest in the Company
at a competitive valuation and requested permission to speak with potential debt financing sources
and only one of the two potential strategic purchasers, Bidder B, continued to move forward with
its diligence investigation of the Company.
On October 2, 2009, at a meeting of the special committee, the special committee discussed
with representatives of Goldman Sachs the status of discussions with
potential purchasers.
Representatives of Goldman Sachs informed the special committee that Bidder B had sought feedback
from the special committee on whether it would be competitive in pursuing a potential transaction
with the Company at a price per share in the low $6 range. After discussion, the special committee
instructed representatives of Goldman Sachs to inform Bidder B that such valuation was not
competitive with other valuations that the Company had received and that Bidder B would need to
increase its valuation in order for the special committee to consider pursuing a potential
transaction with Bidder B. Representatives of Goldman Sachs informed Bidder B of the special
committees feedback and Bidder B indicated that it was not interested in pursuing a strategic
transaction at a higher valuation than it had previously indicated.
On October 2, 2009, SAC PCG provided to the special committees advisors a draft of the debt
financing commitment that GSO eventually provided to SAC PCG
on December 17, 2009 (the debt commitment letter).
On October 5, 2009, at a meeting of the special committee, the special committee discussed
with representatives of Goldman Sachs discussions that representatives of Goldman Sachs had had
with SAC PCG and Bidder A. WilmerHale and Ropes & Gray also discussed with the special committee
the draft debt commitment letter, focusing on aspects of the draft debt commitment letter that they believed
the financing source could use as a basis for refusing to fund the transaction.
On October 6, 2009, the special committees legal advisors discussed with Simpson Thacher SAC
PCGs comments on the draft merger agreement. SAC PCG made material concessions, including the
elimination of SAC PCGs receipt of financing as a closing condition, but the parties disagreed on
other significant business issues in the merger agreement, including allocation of the risks
associated with Nortels bankruptcy (including, the collection of the account receivable owed to
the Company by Nortel and the assumption of the Companys contract with Nortel by Telefon AB L.M.
Ericsson (Ericsson)), closing conditions relating to a minimum cash level, exercise of appraisal
rights, the scope of the reverse break-up fee and whether specific performance would be available
as a remedy to the Company. Counsel also discussed the draft debt commitment letter.
On October 9, 2009, Bidder A orally indicated to representatives of Goldman Sachs that, based
on its preliminary assessment of valuation and subject to further legal and business diligence and
the availability of financing on terms satisfactory to Bidder A, it might be interested in pursuing
a transaction with the Company at an initial valuation of $8.50 to $9.00 per share and requested
that it be granted additional time and exclusivity to conduct further due diligence to determine
whether it could in fact make an offer to acquire the Company at that valuation. Representatives
of Goldman Sachs informed members of the special committee of Bidder As communication.
- 24 -
On October 11, 2009, at a meeting of the special committee, representatives of Goldman Sachs
updated the special committee on discussions with Bidder A. The special committee concluded that
it was not in the best
interests of the stockholders of the Company to grant exclusivity to Bidder A because Bidder A
had not demonstrated that its indication of interest was credible or financeable and because
granting exclusivity at that time could inhibit the Companys evaluation of other strategic alternatives,
including continued exploration of SAC PCGs indication of interest. The special committee
authorized Ropes & Gray and WilmerHale to deliver a draft merger agreement and related documents to
Bidder A and instructed its advisors to cooperate fully with Bidder A to allow it to quickly pursue
its indication of interest.
On October 11, 2009, the special committees advisors communicated to Bidder A that the
special committee had not accepted Bidder As request for exclusivity and also that Bidder A must
progress discussions with potential financing sources in order for the special committee to better
assess Bidder As preliminary indication of interest. Bidder A stated to representatives of
Goldman Sachs that it intended to be in a position to make a more credible indication of interest
that included a debt financing commitment by early November.
On October 23, 2009, after representatives of Goldman Sachs, at the direction of the special
committee, informed SAC PCG that the special committee was actively involved in discussing possible
transactions with other parties, SAC PCG expressed a willingness to assume certain risks relating
to Nortels bankruptcy (including, the collection of the account receivable owed to the Company by
Nortel and the assumption of the Companys contract with Nortel by Ericsson) and drop other
conditions in order to promptly move forward with a transaction involving the Company.
On October 25, 2009, at a meeting of the special committee, representatives of Goldman Sachs
reported to the special committee that SAC PCG stated that it wanted to move forward with
finalizing a proposed transaction rapidly and had concluded substantially all of its legal and
business due diligence, but would need to conduct confirmatory calls with at least some of the
Companys significant customers. The special committee discussed this request, the status of
discussions with Bidder A and the status of the Nortel bankruptcy (in which Ericsson was expected
to assume the Companys contract with Nortel and settle an approximately $35 million account
payable with the Company) and determined that it did not want to authorize customer diligence calls
at such time in light of timing sensitivities around the Nortel/Ericsson transaction and that it
also preferred to allow Bidder A to complete its diligence and work with potential financing
sources.
On October 30, 2009, SAC PCG sent a letter to the special committee threatening to terminate
its pursuit of a potential acquisition of the Company should the special committee not provide SAC
PCG with a rapid timeline for entering into definitive documentation with SAC PCG.
On November 2, 2009, at a meeting of the special committee, the special committee discussed
the letter that it received from SAC PCG on October 30, 2009, the importance of the closing of the
Ericsson/Nortel transaction with respect to any transaction involving the Company, and the need to
approve a timeline that allowed the Company to assess potential transactions with both SAC PCG and
Bidder A. After discussion, the special committee determined that proceeding in evaluating a
potential transaction involving the Company on a rapid timeline was not in the best interests of
the Company and that the special committee would need several more weeks to enable Bidder A to have
an opportunity to solidify its indication of interest and to enable the Ericsson/Nortel transaction
to close.
On November 4, 2009, the special committee sent a letter to SAC PCG setting forth a process
for progressing a transaction during the next several weeks.
On
November 5, 2009, SAC PCG provided a detailed mark-up of the
draft merger agreement to
the special committees legal advisors.
On November 10, 2009, the special committee authorized Bidder As preferred source of debt
financing to talk to potential candidates in respect of syndicating the debt financing for Bidder
As proposed acquisition of the Company. Additionally, the special committees legal advisors
received a revised draft debt commitment letter, draft equity commitment and draft limited
guarantee from SAC PCGs legal counsel.
- 25 -
On November 10, 2009, at a meeting of the special committee, WilmerHale and Ropes & Gray made
a presentation to the special committee outlining the material business issues presented in SAC
PCGs recent mark-up of the draft merger agreement and other ancillary agreements. The special
committee discussed such mark-ups, focusing specifically on those changes that added conditionality
to closing. In response to the Companys proposal for a specific performance provision, SAC PCG
proposed a customary reverse break-up fee that would be equal to the Companys termination fee,
guaranteed by a creditworthy entity and the Companys sole
remedy for Parents breach of the
merger agreement. The special committee requested that its advisors obtain additional information
about the entity being proposed to provide the limited guarantee.
The special committee then discussed recent discussions between representatives of Goldman
Sachs and each of SAC PCG and Bidder A. The special committee discussed that Bidder A was not yet
in a position to submit a fully developed acquisition proposal. Representatives of Goldman Sachs
reported that Bidder A indicated that it would be able to present a more developed proposal later
in the week and that such proposal would include a preliminary debt financing commitment.
On
November 11, 2009, the special committees legal advisors
distributed a revised draft of the merger
agreement to Simpson Thacher. On Friday, November 13, 2009, Simpson Thacher distributed a redraft
back to the special committees legal advisors and requested that the agreement continue to be
negotiated over the weekend. The draft merger agreement was substantially complete, but open business
issues included SAC PCGs insistence that the Companys
remedies for Parents breach of the merger
agreement not include specific performance and be limited to a more customary reverse break-up fee
equivalent to the Companys termination fee and the additional closing condition that statutory appraisal
rights be exercised by holders of less than 10% of the Companys shares.
As of November 13, 2009, Bidder A had still not yet delivered financing commitments to the
special committee. Also on November 13, 2009, Ericsson assumed Nortels contract with Airvana and
the Company was informed that it would be paid the approximately $35 million receivable it was owed
within the next week.
On November 15, 2009, the special committee granted Bidder As request to seek additional
potential financing sources.
On November 16, 2009, at a meeting of the special committee, representatives of Goldman Sachs
reported that Bidder A had still not yet obtained financing commitments and was now seeking to
provide such commitments by November 18, 2009. The special committee also discussed the fact that
Bidder As $8.50-$9 price per share valuation had been produced on the basis of limited diligence.
The special committee also discussed the principal open issues in the draft merger agreement that
it had most recently received from SAC PCG.
On November 18, 2009, Bidder A communicated orally to representatives of Goldman Sachs a
proposal to acquire the Company at a $7.50 price per share in cash and provided a draft of the debt
financing commitment from its financing source. It also provided a short list of general issues
with the draft merger agreement, rather than providing the full mark-up of the merger agreement as
requested by the special committee. Bidder A communicated that it would not proceed further with
evaluating a potential transaction with the Company unless it received the ability to negotiate a
sale of the Company with the special committee on an exclusive basis.
On November 19, 2009, at a meeting of the special committee, representatives of Goldman Sachs
provided an update on discussions with Bidder A regarding a potential transaction involving the
Company. Representatives of Goldman Sachs discussed the draft debt commitment received from Bidder As
financing source and the merger agreement issues list that Bidder A had provided. The special
committee discussed that Bidder As most recent indication of interest was significantly lower than
the range initially indicated by Bidder A. Representatives of Goldman Sachs informed the special
committee that Bidder As stated reason for such decrease was its third-party consultants forecast
of a shorter revenue tail on the Companys EV-DO business. The special committee also discussed
that Bidder As indication of interest was not responsive to the special committees request for
detailed mark-ups of transaction documents so that the special committee could identify outstanding business
issues. Furthermore, the special committee discussed that Bidder
As draft debt commitment letter had
significant aspects of conditionality, including diligence conditions (some of which were not
conditions or were more limited in scope in SAC PCGs draft debt commitment letter). The special committee
instructed its legal advisors to work with Bidder A to reduce the conditionality contained in Bidder As
draft debt commitment
- 26 -
letter and to express the need for Bidder As proposal to be
more complete for the special committee to be in a position to more thoroughly consider a
potential transaction with Bidder A. Given the incompleteness of Bidder As proposal and the
adverse effect that granting exclusivity at that time could have on the sale process, the special committee instructed
representatives of Goldman Sachs to communicate to Bidder A that the special committee would not
grant Bidder As request for exclusivity. The special committee and its advisors discussed the
special committees desire to continue negotiations with both Bidder A and SAC PCG in order to
ensure that, should the Company decide to engage in a transaction with either potential purchaser,
the Company would be able to negotiate the highest price and best available terms (including those
relating to transaction certainty) and the special committee instructed it advisors to negotiate
with both parties in such a manner.
On November 19, 2009, in an effort to expedite Bidder As completion of the necessary
transaction documentation, the special committees legal advisors distributed to Bidder A a revised
draft merger agreement and related agreements, mark-up of the debt commitment from Bidder As
financing source, draft equity commitment and draft limited guarantee.
On November 22, 2009, the special committees legal advisors provided a revised merger
agreement and related documents, revised limited guarantee and revised equity commitment to SAC
PCGs legal counsel.
On November 24, 2009, Bidder A provided a mark-up of the merger agreement to the Companys
legal advisors.
On November 24, 2009, at a meeting of the special committee, representatives of Goldman Sachs
provided an update on discussions with Bidder A and with SAC PCG. The special committee discussed
the progress that both potential purchasers were making towards terms of a transaction with the
Company, but that Bidder As proposal remained less complete than the SAC PCG proposal and still
subject to diligence. The special committee and its advisors discussed a strategy for continuing
negotiations with both potential purchasers. In order to keep the bidders operating on a
consistent timeframe, and to provide each with equivalent diligence access, the special committee
determined that it would allow diligence calls with customers, although the calls would be
moderated by representatives of Goldman Sachs so that both parties could participate.
Additionally, the special committee instructed its advisors to continue to negotiate for improved
deal terms (including price) from both potential purchasers. The special committee also recognized
that management equity rollover would be a significant component of each bidders acquisition
proposal. While each bidder had previously requested the ability to negotiate equity rollover and
compensation terms with management, the special committee had not authorized such negotiations in
light of the open business issues with each party and a desire to maintain a level playing field
among the bidders. However, in an effort to continue to move the process forward, the special
committee determined to ask each bidder to answer basic diligence questions regarding post-closing
operations of the Company, the answers to which, following review by the special committees
advisors, would be shared with Company management. Additionally, at the request of the special
committee, its advisors discussed market terms with respect to the size of reverse break-up fees
and break-up fees. Finally, the special committee discussed recent communications that Bidder B
had with certain members of the special committee and representatives of Goldman Sachs regarding a
potential transaction involving the Company and that, when informed at the valuation range that
Bidder B would need to be in for the special committee to evaluate a potential transaction with
Bidder B, Bidder B indicated that it would not be willing to pursue a transaction involving the
Company at a valuation in the range of that currently being contemplated with SAC PCG and Bidder A.
On November 25, 2009, Bidder A provided the special committees legal advisors with a revised
draft of the debt commitment from Bidder As preferred financing source. The terms of such debt
commitment were not materially improved from the last draft presented to the special committee and
continued to include terms that created significant conditionality. The special committee
discussed Bidder As recent demand for exclusivity in order to continue to pursue its consideration
of a transaction. As the special committee determined that Bidder As withdrawal from the process
could limit competition to acquire the Company and negatively affect the transaction terms that the
special committee could obtain, the special committee decided that, in lieu of accepting Bidder As
request for exclusivity, it would offer to provide up to $500,000 of expense reimbursement to
Bidder A on the conditions that Bidder A at all times maintain an offer to acquire the Company at a
price greater or equal to $7.50 per share and that the Company be acquired by a third party other
than Bidder A.
- 27 -
On November 28, 2009, the special committees legal advisors negotiated with Bidder A and
Bidder As financing source to reduce the conditionality of the debt commitment received from
Bidder A. On November 30, 2009, the special committees legal advisors received a revised debt
commitment from Bidder As financing source that continued to reflect significant aspects of
conditionality.
On December 1, 2009, SAC PCG and Bidder A both participated in a customer diligence call with
Ericsson (the successor to Nortel under the Companys contract with Nortel), moderated by
representatives of Goldman Sachs, where both potential purchasers were invited to submit questions
to be asked of Ericsson in advance of the call.
On December 1, 2009, at a meeting of the special committee, representatives of Goldman Sachs
provided an update on discussions with SAC PCG and Bidder A. The special committee instructed
WilmerHale and Ropes & Gray to prepare revised drafts of the merger agreement and related documents
and circulate them to SAC PCG and Bidder A. The special committee then instructed its advisors to
communicate that each of SAC PCG and Bidder A should provide the special committee with such
partys final proposal, including complete versions of the merger agreement and related documents
that such potential purchaser would be prepared to execute by Friday, December 4th, and after
evaluating such offers and discussing it with its advisors, the special committee would endeavor to
decide whether it would continue to pursue a transaction at that time and, if so, which partys
proposal would be in the best interests of the stockholders of the Company.
On December 3, 2009, representatives of Goldman Sachs communicated the special committees
request for final proposals to both SAC PCG and Bidder A.
On December 4, 2009, the special committee received responses from SAC PCG and Bidder A
containing their final proposals. The SAC PCG proposal contained a full and complete proposal that
included a mark-up of the merger agreement and related documents in a form that SAC PCG was
prepared to execute. At a meeting that day, the special committee discussed SAC PCGs final proposal package, which
included an increase in its proposed purchase price to $7.50 per share, subject to SAC PCG
performing confirmatory diligence calls with two or three of the Companys principal customers. In
order to propose such a price increase, SAC PCG proposed to require that management rollover its
equity into equity of the acquiring entity on substantially different terms than previously
anticipated. Because SAC PCGs proposal was contingent on a minimum level of management
rollover, the special committee determined that it would be appropriate to permit certain members
of management, together with their own legal counsel, to view SAC PCGs proposed rollover terms, so
that the special committee could assess the feasibility of SAC PCGs proposal. The special
committee instructed representatives of Goldman Sachs to discuss SAC PCGs revised proposal with
SAC PCG and Messrs. Battat, Verma and Eyuboglu. The Bidder A proposal also contained a $7.50 per
share offer, but did not include full transaction documentation sufficient to allow the special
committee to assess other key issues, such as conditionality to closing. Representatives of
Goldman Sachs informed the special committee that Bidder A had stated that it would not provide
such documentation until it received exclusivity to complete its diligence and negotiate a sale
transaction with the Company. The special committee instructed representatives of Goldman Sachs to
inform Bidder A that the special committee could not assess Bidder As proposal without receiving
complete copies of all agreements relating to its proposal, that such documents should be received
by the special committee by December 7, 2009, and that the special committee would not grant its
request for exclusivity.
On December 6, 2009, at a meeting of the special committee, representatives of Goldman Sachs
reported that SAC PCG (through Goldman Sachs as an intermediary) and Messrs. Battat, Verma and
Eyuboglu were making progress working on the terms of the management rollover equity proposal.
Representatives of Goldman Sachs informed the special committee that while members of management
had expressed a preference for receiving the cash merger consideration for at least half of their
shares of common stock of the Company, SAC PCGs proposal was sufficiently viable in managements
view that, if authorized by the special committee to negotiate equity rollover terms, management
believed it could reach satisfactory arrangements on equity rollover terms to facilitate a
transaction. Accordingly, the special committee determined that permitting direct negotiations
between management and SAC PCG with respect to SAC PCGs rollover proposal would be in the best
interests of the Company since a transaction with SAC PCG would not be feasible unless certain
members of management could come to an agreement with SAC PCG on equity rollover terms.
Representatives of Goldman Sachs also reported to the special committee that Bidder A had still not
provided a complete final package so that the special committee
could fully assess Bidder As offer. The special committee instructed Ropes & Gray to prepare
and send a letter to Bidder A reiterating the special committees request for a complete final
package that included mark-ups of the draft merger agreement and related documents in a form that
Bidder A was willing to execute.
- 28 -
On December 7, 2009, Mr. Gilmore, Mr. Baker and
representatives of Simpson Thacher met with Messrs.
Battat and Verma and Dr. Eyuboglu and their legal advisors to discuss the terms of the rollover
equity arrangements with management proposed by SAC PCG.
On December 9, 2009, at a meeting of the special committee, the special committees advisors
informed the special committee that, given SAC PCGs near completion of diligence and substantial
agreement on proposed transaction documentation, they believed that the execution of definitive
documentation in respect of a transaction with SAC PCG could be completed within a relatively short
period of time should the special committee decide to do so. The special committee discussed
Bidder As proposal and the continued absence of full documentation. Representatives of Goldman
Sachs also informed the special committee that Bidder A was continuing to request exclusivity
before it would proceed further. The special committee determined such request was still not in
the best interest of the Company.
At the meeting of the special committee, representatives of Goldman Sachs presented to the
special committee its preliminary financial analyses of a potential transaction and the Companys
strategic alternatives. The special committee discussed the presentation, as well as the Downside
Case, the Base Case, and the Upside Case projections prepared by Companys management and
provided to Goldman Sachs in connection with the financial analyses performed by Goldman Sachs.
These projections had been prepared by the Companys management in November 2009 to update its
previously presented forecasts to reflect actual results for the first three quarters of 2009. See
Important Information About AirvanaProjected Financial Information
. The special committee
discussed that the Downside Case did not take into account the risk that the Companys future
femtocell sales would be less favorable than projected in the Base Case, and expressed concerns
about the likelihood of growth in the femtocell business over the long-term. It was the consensus
of the special committee that the risks and uncertainties in the business (both in the continuing
EV-DO sales and in the prospects for femtocell sales) made it unlikely that the Company would
achieve the Upside Case. The special committee also discussed the strategic alternatives reviewed
by representatives of Goldman Sachs, including the potential for a dividend recapitalization or a
stock repurchase, and the special committees view of the limited feasibility of these
alternatives. After considering each of the alternatives, and considering the risks and
uncertainties facing the Companys business, the special committee determined that a sale of the
Company was in the best interests of the stockholders of the Company at this time.
Subsequent to the December 9, 2009 meeting, the special committees legal advisors sent a
revised merger agreement and related documents, equity commitment and limited guarantee to SAC PCG
for its review. Additionally, Bidder A sent the special committees legal advisors full mark-ups
of the merger agreement and related documents.
On December 11, 2009, representatives of SAC PCG and its legal advisors met with Messrs.
Battat, Eyuboglu and Verma and their legal advisors to negotiate management terms acceptable to SAC
PCG and management. Mr. Battat subsequently reported that significant progress had been made to
address management concerns.
Later on December 11, 2009, Bidder A provided a revised indication of interest at a $7.65 per
share price, conditioned upon receiving exclusivity through December 23, 2009 and satisfactory
completion of confirmatory due diligence, management rollover equity negotiations and customer due
diligence (including in-person meetings with three principal customers).
On December 11, 2009, at a meeting of the special committee, the special committee discussed
Bidder As latest proposal. The special committee discussed the risk of giving Bidder A
exclusivity, including that SAC PCG would likely terminate its consideration of a transaction with
the Company and that Bidder A could reduce its proposed price at the end of the exclusivity period.
The special committee determined to reject Bidder As request for exclusivity. The special
committee then discussed the proposal received from SAC PCG that included a proposed price of $7.50
per share. The special committee discussed with its advisors the potential risks in choosing
the Bidder A proposal due to the lower degree of certainty of the execution of definitive
documentation and the potential effect that granting exclusivity may have on any transaction involving the
Company. The special committee instructed its advisors to continue to negotiate with both
potential purchasers for superior deal terms, including price.
- 29 -
On December 12, 2009, Bidder A reported to the special committees legal advisors the extent
of due diligence it still expected to complete. Additionally, at the direction of the special
committee, representatives of Goldman Sachs informed SAC PCG that the special committee would not
pursue a potential transaction with SAC PCG at a $7.50 per share price at this time, but would
consider pursuing a potential transaction with SAC PCG at a higher price. SAC PCG indicated it
might be willing to increase its proposal to $7.65 per share.
On December 12, 2009, at a meeting of the special committee, the special committee discussed
with its legal and financial advisors the status of discussions with both potential purchasers.
The special committees legal advisors reported that they had had discussions with Bidder A
regarding the legal issues in the draft merger agreement and Bidder As request for exclusivity
through December 23, 2009 as a condition to moving forward with the proposal. The legal advisors
also reported that Bidder A requested in-person meetings with certain of the Companys customers
and that Bidder A had significant other remaining diligence items, including a review of the
Companys business by outside consultants. The special committee discussed the potential business
risk presented by Bidder As request to engage in in-person meetings with the Companys customers,
as well as its concerns about Bidder As remaining other diligence work. Representatives of
Goldman Sachs then updated the special committee on discussions with SAC PCG, and informed the
special committee that SAC PCG was working to increase the price in
its proposal to $7.65 per share.
Representatives of Goldman Sachs also informed the special committee that SAC PCG indicated that it
was willing to move forward to signing definitive documentation on an expedited basis, eliminating
the need for most remaining confirmatory diligence (other than customer calls).
On December 13, 2009, Bidder A provided an oral indication of interest at a $7.75 per share
price, conditioned upon it receiving exclusive rights to negotiate a potential sale of the Company
through December 23, 2009, completing its due diligence, engaging in satisfactory meetings with
customers of the Company and negotiating satisfactory terms of rollover equity arrangements with
certain members of the Companys management.
On December 13, 2009, at a meeting of the special committee, the special committee discussed
Bidder As December 13th proposal. The special committee then discussed the communications SAC PCG
had with representatives of Goldman Sachs regarding its proposed
price increase to $7.65 per share and authorized representatives of
Goldman Sachs to communicate to SAC PCG the need to increase its
price proposal further. The
special committee discussed the risks that could arise if it granted
Bidder As request for exclusivity at that time, including the
likelihood that SAC PCG would withdraw its offer if the Company ceased negotiations with SAC PCG at
a time that SAC PCG was ready to execute a transaction and the risk that Bidder As proposed price
could decrease as a result of its remaining diligence. The special committee determined to deny
Bidder As request for exclusivity and inform Bidder A that it would continue to negotiate with
Bidder A, and requested that Bidder A provide clear information about what items of diligence
remained outstanding and a timeline. The special committee also determined to make management
available to Bidder A on December 14, 2009 to negotiate equity rollover and compensation
arrangements on a non-exclusive basis.
On December 14, 2009, the special committees advisors updated the special committee on
discussions with both potential purchasers. The special committees legal advisors reported to the
special committee that documentation with SAC PCG was in substantially final form and that SAC PCG
confirmed that it would be ready to execute definitive documentation, subject only to confirmatory
diligence calls with two of the Companys principal customers, but that it was not prepared to increase the purchase price above $7.65 per share. On the same day, Bidder A reported
to representatives of Goldman Sachs that it was reducing its proposal to $7.50 per share.
Representatives of Goldman Sachs reported that Bidder A was in the process of negotiating the
proposed terms relating to the rollover of equity by certain members of the Companys management.
Representatives of Goldman Sachs also reported that Bidder A was continuing to request in-person
customer meetings with each of the three principal customers of the Company.
On December 15, 2009, the special committees advisors updated the special committee on
discussions with both potential purchasers. Representatives of Goldman Sachs reported to the
special committee that Bidder A confirmed to representatives of Goldman Sachs that it was reducing
its proposed price to $7.50 and would lower its price to $7.40 if it were required to forego its
customer diligence requests. Representatives of Goldman Sachs then
reported to the special committee that SAC PCG expressed that it was prepared to raise its
offer to $7.65 and would be prepared to execute definitive documentation upon satisfactory
completion of its remaining customer diligence calls. The special committee then discussed with
its advisors the remedies provisions in SAC PCGs proposed form
of the merger agreement, which limited the Companys
remedies to a reverse break-up fee in the event of a failure by SAC PCG to close the transaction if
all conditions to closing had been satisfied. The special committee discussed that the reverse
break-up fee, which SAC PCG had agreed to increase to
$25 million, would be guaranteed by an SAC PCG affiliate (S.A.C. Capital Management, LLC) and the
special committee discussed with its advisors the financial strength
of the entity that would be providing the limited guarantee.
- 30 -
Later on December 15, 2009, representatives of Goldman Sachs reported to the special committee
that SAC PCG was finalizing the terms of the rollover equity arrangements with the Companys
management to reflect the increased purchase price. Representatives of Goldman Sachs also reported
that Bidder A stated that it would increase its offer back to $7.75 per share, without a request
for exclusivity, and, assuming satisfactory customer diligence calls, expected to be in a position
to execute definitive documentation by the end of the week or over the weekend. Additionally,
Bidder A represented that it would make significant progress on finalizing transaction
documentation early in the day on December 16, 2009.
On December 16, 2009, the special committee held two meetings. At the first meeting, the
special committee discussed Bidder As oral indication that it would raise its price to $7.75 per
share and move quickly to finalize documentation, conditioned upon its satisfactory completion of
customer calls and satisfactory completion of negotiations with certain members of management
regarding the terms of a rollover equity proposal. The special committee discussed the issues that
remained outstanding with Bidder A, including the fact that it had not provided revised transaction
documentation, the fact that Bidder A reported to advisors to the special committee that Bidder A
was not prepared to provide a revised third party debt commitment and that Bidder A still needed to
complete customer due diligence. The special committee discussed the risk that Bidder As price
would decline after completing its diligence. The special committee then discussed a process for
allowing Bidder A to satisfactorily complete its customer calls as soon as possible, while
recognizing the risks to the Companys customer relationships
that could arise from multiple calls with
multiple bidders.
Mr. Battat joined the special committee meeting at the request of the special committee to
discuss how to organize additional customer calls for SAC PCG and Bidder A. The special committee
asked Mr. Battat to report on the status of managements rollover equity negotiations with each of
Bidder A and SAC PCG. Mr. Battat confirmed that he,
Mr. Verma and Dr. Eyuboglu had reached a
satisfactory understanding with each bidder and stood ready to enter into the rollover equity and
compensation arrangements proposed by either Bidder A or SAC PCG. Mr. Battat then left the
meeting.
The special committee then discussed the proposal received from SAC PCG that included a $7.65
price per share and that was conditioned on obtaining exclusivity from the completion of its
customer diligence call until a definitive transaction agreement was signed.
SAC PCG and Bidder A participated in a customer diligence call on December 16, 2009. After
the calls, SAC PCG reported to representatives of Goldman Sachs that it needed only to complete one
additional customer diligence call in order to sign the definitive agreements.
At a special committee meeting late on December 16, 2009, the special committee discussed the
proposal communicated by SAC PCG earlier in the day and determined that it would not grant SAC
PCGs demand for exclusivity. The special committees advisors also reported to the special
committee that, at the committees request, SAC PCG had agreed to a number of other contractual
concessions. The special committee also discussed the risks and uncertainties surrounding Bidder
As proposal, including lack of certainty regarding its timing given the lack of advancement in
documentation and the nature and scope of the remaining diligence. The special committee discussed the fact
that Bidder A had communicated to representatives of Goldman Sachs that it would need supplemental
diligence calls with certain customers that were not moderated by the Companys management or
representatives of Goldman Sachs. To better assess the risks and uncertainties associated with
Bidder As proposal, the special committee determined that Mr. Ferri should contact Bidder A to
discuss a mutually satisfactory process for finalizing Bidder As transaction documentation and
customer diligence on a timetable and in a manner acceptable to the special committee.
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On the morning of December 17, 2009, at the direction of the special committee, Mr. Ferri and
representatives of Goldman Sachs called a principal of Bidder A to indicate that, in light of the
competitive nature of the process, Bidder A needed to move forward promptly, and to discuss both
the remaining customer call and Bidder As request for supplemental calls. The principal at Bidder
A responded that Bidder A would not withdraw its requests for supplemental customer calls and
concluded that it was terminating its consideration of a purchase of the Company.
Later in the day on December 17, 2009, SAC PCG participated in a diligence call with the final
customer, which it reported to representatives of Goldman Sachs was satisfactory.
On the evening of December 17, 2009, the special committee and its legal and financial
advisors met. The special committee discussed the call between Mr. Ferri and the principal of
Bidder A, including Bidder As decision to withdraw from the process of evaluating a transaction
with the Company at its most recently communicated valuation. It was also reported that Bidder A
had subsequently sent correspondence to Goldman Sachs indicating that Bidder A would need some
combination of lower price, more diligence, additional time or potential structural changes to move
forward with a transaction involving the Company. The special committee concluded that Bidder As
proposals involved too much uncertainty to continue to pursue and delay consideration of the
transaction proposed by SAC PCG.
The special committee then discussed with its advisors the proposal received from SAC PCG that
included a $7.65 price per share. The special committee discussed that SAC PCG had completed its
requested due diligence and reached complete agreement on proposed transaction documentation. At
the request of the special committee, representatives of Goldman Sachs then presented its financial
analyses of the proposed transaction with SAC PCG and a discussion of potential alternatives to a sale of the
Company. The special committee asked questions of Goldman Sachs throughout the presentation. The
special committee discussed the presentation and the Downside Case, the Base Case, and the
Upside Case projections prepared by Companys management and provided to Goldman Sachs in
connection with the financial analyses performed by Goldman Sachs. See
Important Information
About AirvanaProjected Financial Information.
At the
request of the special committee, representatives of Goldman Sachs then delivered
to the special committee its opinion that, as of December 17, 2009 and based upon and subject to
the factors and assumptions set forth in such opinion, the $7.65 per share in cash to be received
by the holders of outstanding shares of Airvana common stock (other than the Rollover Stockholders)
pursuant to the merger agreement was fair from a financial point of view to such holders. The full
text of the written opinion of Goldman Sachs, dated December 17, 2009, which sets forth the
assumptions made, procedures followed, matters considered and limitations on the review undertaken
in connection with the opinion, is attached as Annex B to this proxy statement.
The special committee then requested that its legal advisors provide a presentation to the
special committee on its fiduciary duties when engaging in the sale
of the Company and a presentation
on the merger agreement and related transaction documents negotiated with SAC PCG, and the special
committees legal advisors provided such presentation. The special committee then discussed with
its legal advisors the various considerations that the special committee had taken in reaching a
proposed transaction with SAC PCG, including, among others, (i) the possible strategic alternatives
for the Company, (ii) the terms of the merger agreement and related transaction documents, (iii)
the Goldman Sachs financial analyses and opinion, (iv) the arms length nature of the agreements to
be entered into as a part of the proposed transaction, (v) the ability of the Company to pursue a
superior proposal and the amount of the termination fee payable in that event, (vi) the liquidated
damages provision in the merger agreement (so the Company would not have to prove damages upon the
occurrence of a breach of the merger agreement by Parent) and (vii) the oversight the special
committee had over the negotiations between SAC PCG and management regarding the rollover equity
agreements. The special committee then discussed with its advisors the management rollover equity
terms and compensation terms agreed to in the proposed transaction and that management had
indicated it would be willing to agree to the rollover equity and other compensation terms proposed
by either SAC PCG or Bidder A. After discussion, the special committee unanimously resolved to
recommend to the board that the merger agreement and the merger be approved and declared advisable
and that the board resolve to recommend that the Companys stockholders adopt the merger agreement.
- 32 -
Immediately following the meeting of the special committee, a meeting of the board was
convened, with the Companys legal advisors and the special committees legal and financial
advisors being present. At the request of the special committee, representatives of Goldman Sachs
confirmed to the board that it had delivered to the
special committee its opinion that, as of December 17, 2009 and based upon and subject to the
factors and assumptions set forth in such opinion, the $7.65 per share in cash to be received by
holders of outstanding shares of Airvana common stock (other than the Rollover Stockholders)
pursuant to the merger agreement was fair from a financial point of view to such holders.
Following a discussion among and questions by the board to the special committees legal and
financial advisors and the Companys legal advisors, the Companys board, by unanimous action (with
Messrs. Battat and Verma abstaining), approved and declared advisable the merger agreement and the
merger and resolved to recommend that the Companys stockholders adopt the merger agreement.
After the meeting of the board on December 17, 2009, the Company, Parent and Merger Sub
executed the merger agreement and related agreements and issued a press release announcing the
execution of such agreements on the morning of December 18, 2009.
Reasons for the Merger; Recommendation of the Special Committee and of Our Board of Directors;
Fairness of the Merger
The Special Committee
The special committee is a committee of our board of directors that was formed on July 9, 2009
to establish, monitor and direct the process and procedures related to the review and evaluation of
a proposal made to the Company by SAC PCG and any alternative transaction, and was granted the
authority to solicit other proposals, to determine not to proceed with any such proposal or
transaction, to reject or approve any such proposal or transaction, or recommend such rejection or
approval to the board of directors, and to recommend to the board of directors whether any such
proposal or transaction is advisable and is fair to, and in the best interests of, the Company and
its stockholders. Our board of directors also resolved that it would not approve a strategic
transaction that did not have the approval of the special committee. Between July 9, 2009 and
December 17, 2009, the special committee met over 30 times to consider the merger proposal and
alternatives to the merger proposal, as described more fully above. See
Background of the
Merger
beginning on page 19.
The special committee, acting with the advice and assistance of its independent legal and
financial advisors, evaluated and negotiated the merger proposal from SAC PCG, including the terms
and conditions of the merger agreement. At a meeting held on December 17, 2009, the special
committee unanimously determined that the merger, the consideration to be paid in the merger, and
the other terms and provisions of the merger agreement were fair to, advisable and in the best
interests of the Company and the holders of Airvana common stock (other than the Rollover
Stockholders), and recommended that the board of directors accept the merger agreement and the
terms and conditions of the merger and the merger agreement as being fair to, advisable and in the
best interests of the Company and its stockholders (other than the Rollover Stockholders), approve
and adopt the merger agreement and recommend adoption of the merger agreement by the holders of
Airvana common stock.
In the course of reaching its determination, the special committee considered the following
substantive factors and potential benefits of the merger, each of which the special committee
believed supported its decision:
Merger Consideration
The special committee considered the following with respect to the merger consideration to be
received by the Airvana stockholders:
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the fact that the merger consideration is all cash, allowing
stockholders to immediately realize a certain and fair value for all shares of their
Airvana common stock upon the closing of the merger as compared to the uncertain future
long-term value that might be realized if we stayed independent;
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the fact that the $7.65 per share merger consideration represented a premium of
approximately 23% over the Companys closing stock price of $6.24 on December 17, 2009,
the last trading day prior to our public announcement that we had entered into the
merger agreement; and
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- 33 -
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the then current financial market conditions and the recent and historical market
prices of Airvana common stock, including the market price performance of Airvana
common stock relative to those of other companies in the communications technology
industry since our initial public offering on July 20, 2007 and over the last 12
months. See
Important Information About Airvana
Market Prices and Dividend Data
beginning on page 101 for information about our common stock prices since January 1,
2008.
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Prospects in Remaining Independent
The special committee considered the possibility of continuing to operate Airvana as an
independent public company. In considering the alternative of pursuing growth as an independent
company, the special committee considered the following factors:
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sales of EV-DO products have accounted for almost all of our revenue and billings to
date and are expected to remain the major contributor to billings for the next several
years;
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we have generated substantially all of our EV-DO revenues and billings through one
customer, Nortel, that recently disposed of its CDMA business, including our contract,
to Telefon AB L.M. Ericsson and, as a result, we face greater uncertainty as to future
revenues and billings as Ericsson has product offerings that compete with EV-DO
technologies;
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prospects for new EV-DO operators are limited and existing operators that have
deployed EV-DO networks are expected to migrate to alternative technologies over time
for example fourth generation, or 4G, standards for mobile broadband solutions such as
LTE and WiMAX which we do not have plans to develop; thus the market for our existing
EV-DO products is likely to decline as operators begin to deploy 4G-based products and
there is uncertainty as to the rate of that decline;
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our future growth will depend primarily on sales of our femtocell products that
permit operators to enhance their third-generation, or 3G, mobile broadband services
inside homes and businesses using existing broadband Internet connections, and there
are significant risks and uncertainties associated both with the development of, and
market for, such products, including those relating to operators femtocell deployment
plans, the possible adoption by consumers of competing technologies such as the use of
Wi-Fi connections, and the Companys ability to effectively compete in a high-volume,
low-cost, consumer-oriented product market in which it has limited prior experience;
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the historical inability of the Company to accurately forecast the level of its
femtocell billings in 2008 or 2009, as evidenced by actual femtocell billings
significantly below the levels set forth in the Companys initial forecasts for 2008
and 2009;
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we are required to defer revenue from the sale of most products and services and
only recognize such revenue after we deliver specified upgrades that were committed at
the time of sale, resulting in most of our revenue in any quarter typically reflecting
license fees for products and services delivered and invoiced several quarters earlier
and causing quarters in which we recognize a significant amount of deferred revenue as
a result of our delivery of a previously committed upgrade to be followed by one or
more quarters of insignificant revenue as we defer revenue while we develop additional
upgrades, which makes it difficult for investors to track the performance of our
business;
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the possible alternatives to a sale, including conducting a stock repurchase or
distributing a special dividend, which alternatives the special committee determined
were less favorable to our stockholders than the merger given the potential risks,
rewards and uncertainties associated with those alternatives; and
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the possibility that it could take a considerable period of time, if ever, before
the trading price of our shares would reach and sustain at least the merger
consideration of $7.65 per share, as adjusted for present value.
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Process Followed
The special committee considered the process it followed, including the solicitation of
interest from a total of 16 potential financial and strategic buyers regarding a potential
acquisition.
Opinion of Goldman, Sachs & Co.
The special committee considered the following with respect to advice received from Goldman
Sachs:
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the financial analyses of Goldman Sachs presented to the special committee and the
opinion of Goldman Sachs, dated December 17, 2009, to the special committee that, as of
that date and based upon and subject to the factors and assumptions set forth therein,
the $7.65 per share in cash to be paid to the holders of the outstanding shares of
Airvana common stock (other than the Rollover Stockholders) pursuant to the merger
agreement was fair from a financial point of view to such holders, as more fully
described in
Opinion of the Special Committees Financial Advisor
beginning on page
39; and
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the fact that, although the opinion received by the special committee from Goldman
Sachs spoke to the fairness of the merger consideration to be paid to the holders of
shares of Airvana common stock other than the Rollover Stockholders, and not to the
fairness of the merger consideration to be paid to the unaffiliated stockholders, the
consideration to be paid to stockholders of the Company who are affiliates but not
Rollover Stockholders is the same as the consideration to be paid to unaffiliated
stockholders.
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Terms of the Merger Agreement
The special committee considered the terms and conditions of the merger agreement and the
course of negotiations thereof, including:
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our ability, under certain circumstances, to provide information to, and participate
in discussions or negotiations with, third parties regarding other acquisition
proposals;
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our ability, under certain circumstances, to terminate the merger agreement in order
to adopt, approve, endorse or recommend a superior proposal, subject to paying
a termination fee of $15 million (equal to approximately 2.8% of the equity value of
the transaction);
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the view of the special committee, after consulting with its legal and
financial advisors, that the termination fee of $15 million to be paid by the Company
if the merger agreement is terminated under certain circumstances is within the range
provided in similar transactions and should not impede other takeover proposals;
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the ability of the board of directors, under certain circumstances not involving a
superior proposal, to change its recommendation that our stockholders vote in favor of
the adoption of the merger agreement and the absence of any voting agreements
committing Airvana stockholders to vote in favor of the merger, thus leaving them free
to follow any such changed recommendation of the board of directors;
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the fact that Parent and Merger Sub had obtained committed debt and equity financing
for the transaction, the limited number and nature of the conditions to the debt and
equity financing, the absence of a financing condition in the merger agreement, and the
obligation of Parent to use its
reasonable best efforts to obtain the debt financing and, if it fails to complete
the merger under certain circumstances, to pay us a $25 million reverse termination
fee;
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the $25 million limited guarantee of S.A.C. Capital Management, LLC in our favor
with respect to the performance by Parent of certain of its payment obligations under
the merger agreement; and
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the availability of appraisal rights to the unaffiliated stockholders who comply
with all of the required procedures under Delaware law for exercising appraisal rights,
which allow such holders to seek appraisal of the fair value of their stock as
determined by the Court of Chancery of the State of Delaware in lieu of receiving the
merger consideration.
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The special committee also considered a number of factors that are discussed below relating to
the procedural safeguards that the special committee believes were and are present to ensure the
fairness of the merger. The special committee believes these factors support its decision and
provide assurance of the procedural fairness of the merger to the unaffiliated stockholders:
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the merger agreement requires that it be adopted by the holders of a majority of the
outstanding shares of Airvana common stock, none of whom is obligated to vote in favor
of such adoption;
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the Companys ability to terminate the merger agreement if stockholders do not adopt
it, subject to paying an expense reimbursement of up to $3 million (equal to
approximately 0.6% of the equity value of the transaction);
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no member of the special committee is employed by the Company or any subsidiary or
has a financial interest in the merger that is different from that of the unaffiliated
stockholders (other than the acceleration of options to acquire shares of Airvana
common stock previously granted to them in consideration for their service as directors
and the payment of customary fees for their services on the special committee);
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the special committee met regularly, without the participation of the Rollover
Stockholders, and retained and received advice and assistance from its own independent
legal and financial advisors in evaluating, negotiating and recommending the terms of
the merger agreement;
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the special committee directed all negotiations and made all material decisions
relating to our strategic alternatives beginning on July 9, 2009, including
recommending to our board of directors that the Company enter into the merger
agreement;
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the financial and other terms and conditions of the merger agreement were the
product of arms-length negotiations between the special committee and its advisors, on
the one hand, and Parent and its advisors, on the other hand, without the participation
of the Rollover Stockholders;
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our ability, under certain circumstances, to provide information to, and participate
in discussions or negotiations with, third parties regarding other acquisition
proposals;
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our ability, under certain circumstances, to terminate the merger agreement in order
to adopt, approve, endorse or recommend a superior proposal, subject to paying
a termination fee of $15 million (equal to approximately 2.8% of the equity value of
the transaction);
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the ability of the board of directors, under certain circumstances not involving a
superior proposal, to change its recommendation that our stockholders vote in favor of
the adoption of the merger agreement and the absence of any voting agreements
committing Airvana stockholders to vote in favor of the merger, thus leaving them free
to follow any such changed recommendation of the board of directors;
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the opinion of Goldman Sachs, dated December 17, 2009, delivered to the special
committee that, as of that date and based upon and subject to the factors and
assumptions set forth therein, the $7.65 per share in cash to be paid to the holders of
the outstanding shares of Airvana common stock (other than the Rollover Stockholders)
pursuant to the merger agreement was fair from a financial point of view to such
holders, as more fully described in
Opinion of the Special Committees Financial
Advisor
beginning on page 39; and
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the availability of appraisal rights to the unaffiliated stockholders who comply
with all of the required procedures under Delaware law for exercising appraisal rights,
which allow such holders to seek appraisal of the fair value of their stock as
determined by the Court of Chancery of the State of Delaware in lieu of receiving the
merger consideration.
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The special committee also considered the following risks and other potentially negative
factors concerning the merger agreement and the merger:
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the unaffiliated stockholders, unlike the Rollover Stockholders, will not
participate in any future earnings or growth of our business and will not benefit from
any appreciation in our value, including any appreciation in value that could be
realized as a result of improvements to our operations;
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the possibility that we or Parent might not satisfy the closing conditions to the
debt financing contemplated by the commitment letter obtained by Parent from GSO (as
described in
Financing of the MergerDebt Financing
) and that, in such event,
Parent might be unable to obtain financing for the merger and related transactions;
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the risks and costs to us if the merger does not close, including the diversion of
management and employee attention, potential employee attrition and the potential
effect on our business and our relationships with customers;
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the requirement that we pay a termination fee of $15 million if we enter into a
definitive agreement related to a superior proposal or the merger agreement is
terminated under certain other circumstances;
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the requirement that we reimburse Parent for its out-of-pocket expenses, subject to
a cap of $3 million, incurred in connection with the proposed merger if the merger
agreement is terminated as a result of the failure to obtain stockholder approval;
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the fact that an all cash transaction would be taxable to the unaffiliated
stockholders that are U.S. persons for U.S. federal income tax purposes;
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the restrictions on the conduct of our business prior to the completion of the
merger, requiring us to conduct our business only in the ordinary course, subject to
specific limitations, which may delay or prevent us from undertaking business
opportunities that may arise pending completion of the merger;
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our inability to seek specific performance to require Parent or Merger Sub to
complete the merger and the fact that our sole remedy in connection with the merger
agreement, even for a breach by Parent or Merger Sub that is deliberate or willful or
for fraud, would be limited to $25 million that is payable in certain circumstances,
which payment is guaranteed by S.A.C. Capital Management, LLC;
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the possibility that we might be unable to satisfy the minimum Adjusted EBITDA
condition contained in both the merger agreement and the debt commitment letter, as
described in
The Merger AgreementConditions to Closing the Merger
beginning on page
81 and
Financing of the Merger
beginning on
page 58; and
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the risk that, while the merger is expected to be completed, there can be no
assurance that all conditions to the parties obligations to complete the merger, or
all conditions to the debt commitment letter, will be satisfied, and as a result, it is
possible that the merger may not be completed even if approved by our stockholders.
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In addition, the special committee was aware of and considered the interests that certain of
our directors and executive officers have with respect to the merger that differ from, or are in
addition to, their interests as stockholders of the Company, as described in
Interests of the
Companys Directors and Executive Officers in the Merger
beginning on page 62.
In the course of reaching its conclusion regarding the fairness of the merger to the
unaffiliated stockholders and its decision to approve the merger, the special committee considered
financial analyses presented by Goldman Sachs related to the going concern value of Airvana. These
analyses included, among others, a premium paid analysis, an implied transaction multiples
analysis, a selected companies analysis, a present value of future share price analysis, a
discounted cash flow analysis, a leveraged buyout analysis, a special
dividend analysis and a share buyback
analysis. Some of these analyses as presented to the special committee on December 17, 2009 are
summarized below under
Opinion of the Special Committees Financial Advisor
beginning on page
[
]. The special committee expressly adopted these analyses and the opinion of Goldman Sachs,
among other factors considered, in reaching its determination as to the fairness of the
transactions contemplated by the merger agreement. In the course of reaching its decision, the
special committee did not consider the liquidation value of the Companys assets because it
considers the Company to be a viable going concern business where value is derived from cash flows
generated from its continuing operations. In addition, the special committee believed that the
value of the Companys assets that might be realized in a liquidation would be significantly less
than its going concern value. Further, the special committee did not consider the Companys net
book value, which is an accounting concept, as a factor because it believed that net book value is
not a material indicator of the value of the Company as a going concern but rather is indicative of
historical costs. The Companys net book value per share as of September 27, 2009 was $1.81, which
is substantially below the merger consideration, $7.65 per share in cash. There are no material
U.S. federal tax consequences to the Company in connection with the merger.
The foregoing discussion summarizes the material factors considered by the special committee
in its consideration of the merger. In view of the wide variety of factors considered by the
special committee, and the complexity of these matters, the special committee did not find it
practicable to quantify or otherwise assign relative weights to the foregoing factors. In
addition, individual members of the special committee may have assigned different weights to
various factors. The special committee unanimously approved the merger agreement and the
transactions contemplated thereby and recommended the adoption of the merger agreement based upon
the totality of the information presented to, and considered by, it.
Recommendation of the Board of Directors
Our board of directors (without the participation of Messrs. Battat and Verma), acting upon
the unanimous recommendation of the special committee, at a meeting described above on December 17,
2009, (i) determined that the merger agreement and the transactions contemplated thereby, including
the merger, are advisable, fair to and in the best interests of the Company and our unaffiliated
stockholders, (ii) approved the merger agreement and the transactions contemplated thereby,
including the merger and (iii) recommended the adoption by our stockholders of the merger
agreement. In reaching these determinations, our board of directors considered (x) the financial
presentations of Goldman Sachs that were prepared for the special committee and that were delivered
to the board of directors at the request of the special committee, as well as the fact that the
special committee received an opinion of Goldman Sachs, dated December 17, 2009, that as of such
date and based upon and subject to the factors and assumptions set forth therein, the $7.65 per
share in cash to be paid to holders of the outstanding shares of Airvana common stock (other than
the Rollover Stockholders) pursuant to the merger agreement was fair from a financial point of view
to such holders (the full text of the written opinion of Goldman Sachs, dated December 17, 2009,
which sets forth assumptions made, procedures followed, matters considered and limitations on the
review undertaken in connection with the opinion, is attached as Annex B to this proxy statement),
and (y) the unanimous recommendation and analysis of the special committee, as described above, and
adopted such recommendation and analysis in reaching its determinations.
- 38 -
The foregoing discussion summarizes the material factors considered by our board of directors
in its consideration of the merger. In view of the wide variety of factors considered by our board
of directors, and the complexity of these matters, our board of directors did not find it
practicable to quantify or otherwise assign relative weights to the foregoing factors. In addition,
individual members of our board of directors may have assigned different weights to various
factors. The board of directors approved and recommended the merger agreement and the merger based
upon the totality of the information presented to and considered by it.
Messrs. Battat and Verma abstained from voting on the foregoing actions due to the fact that
they are exchanging certain of their shares of Airvana common stock for an interest in Parent.
Our board of directors (without the participation of Messrs. Battat and Verma) recommends that
you vote FOR the adoption of the merger agreement and FOR the adjournment of the special
meeting, if necessary, to solicit additional proxies.
Opinion of the Special Committees Financial Advisor
Goldman Sachs delivered its opinion to the special committee that, as of December 17, 2009 and
based upon and subject to the factors and assumptions set forth therein, the $7.65 per share in
cash to be paid to the holders (other than the Rollover Stockholders) of the outstanding shares of
the Company common stock pursuant to the merger agreement was fair from a financial point of view
to such holders.
The full text of the written opinion of Goldman Sachs, dated December 17, 2009, which sets
forth assumptions made, procedures followed, matters considered and limitations on the review
undertaken in connection with the opinion, is attached as Annex B to this proxy statement. Goldman
Sachs provided its opinion for the information and assistance of the special committee in
connection with its consideration of the merger. The Goldman Sachs opinion is not a recommendation
as to how any holder of the Company common stock should vote with respect to the merger or any
other matter.
In connection with rendering the opinion described above and performing its related financial
analyses, Goldman Sachs reviewed, among other things:
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the merger agreement;
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annual reports to stockholders and Annual Reports on Form 10 K of the Company for
the two fiscal years ended December 31, 2008;
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Registration Statement of the Company on Form S-1, including the prospectus
contained therein dated April 19, 2007;
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certain interim reports to stockholders and Quarterly Reports on Form 10-Q of the
Company;
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certain other communications from the Company to its stockholders;
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certain publicly available research analyst reports for the Company; and
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certain internal financial analyses and forecasts for the Company prepared by its
management, as approved for Goldman Sachs use by the Company, including Company
managements Base Case, Upside Case and Downside Case Management Projections.
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Goldman Sachs also held discussions with members of the senior management of the Company
regarding their assessment of the past and current business operations, financial condition and
future prospects of the Company. In addition, Goldman Sachs reviewed the reported price and
trading activity for the shares of the Company common stock, compared certain financial and stock
market information for the Company with similar information for certain other companies the
securities of which are publicly traded, and reviewed the financial terms of certain recent
business combinations in the communications technology industry specifically and in other
industries generally and performed such other studies and analyses, and considered such other
factors, as Goldman Sachs considered appropriate.
- 39 -
For purposes of rendering the opinion described above, Goldman Sachs relied upon and assumed,
without assuming any responsibility for independent verification, the accuracy and completeness of
all of the financial, legal, regulatory, tax, accounting and other information provided to,
discussed with or reviewed by Goldman Sachs, and Goldman Sachs did not assume any liability for any
such information. In that regard, Goldman Sachs assumed with the consent of the special committee
that the Base Case Management Projections were reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the management of the Company. In addition, Goldman
Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including
any contingent, derivative or off-balance-sheet assets and liabilities) of the Company or any of
its subsidiaries, nor was any such evaluation or appraisal furnished to Goldman Sachs. Goldman
Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the
consummation of the merger will be obtained without any adverse effect on the expected benefits of
the merger in any way meaningful to Goldman Sachs analysis. Goldman Sachs also assumed that the
merger will be consummated on the terms set forth in the merger agreement without the waiver or
modification of any term or condition the effect of which would be in any way meaningful to Goldman
Sachs analysis. Goldman Sachs did not express any opinion as to the impact of the merger on the
solvency or viability of the Company or Parent or the ability of the Company or Parent to pay its
obligations when they come due. In addition, Goldman Sachs opinion did not address any legal,
regulatory, tax or accounting matters nor did it address the underlying business decision of the
Company to engage in the merger or the relative merits of the merger as compared to any strategic
alternatives that may be available to the Company. Goldman Sachs opinion addresses only the
fairness from a financial point of view, as of the date of the opinion, of the $7.65 per share in
cash to be paid to the holders (other than the Rollover Stockholders) of the outstanding shares of
the Company common stock pursuant to the merger agreement. Goldman Sachs did not express any view
on, and Goldman Sachs opinion did not address, any other term or aspect of the merger agreement or
the merger or any term or aspect of any other agreement or instrument contemplated by the merger
agreement or entered into or amended in connection with the merger, including, without limitation,
the fairness of the merger to, or any consideration received in connection therewith by, the
holders of any other class of securities, creditors, or other constituencies of the Company; nor as
to the fairness of the amount or nature of any compensation to be paid or payable to any of the
officers, directors or employees of the Company, or class of such persons in connection with the
merger, whether relative to the $7.65 per share in cash to be paid to the holders of shares of the
Company common stock (other than the Rollover Stockholders) pursuant to the merger agreement or
otherwise. Goldman Sachs opinion was necessarily based on economic, monetary, market and other
conditions as in effect on, and the information made available to Goldman Sachs as of, the date of
the opinion, and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its
opinion based on circumstances, developments or events occurring after the date of its opinion.
Goldman Sachs opinion was approved by a fairness committee of Goldman Sachs.
The following is a summary of the material financial analyses delivered by Goldman Sachs to
the special committee in connection with rendering the opinion described above. The following
summary, however, does not purport to be a complete description of the financial analyses performed
by Goldman Sachs, nor does the order of analyses described represent relative importance or weight
given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include
information presented in tabular format. The tables must be read together with the full text of
each summary and are alone not a complete description of Goldman Sachs financial analyses. Except
as otherwise noted, the following quantitative information, to the extent that it is based on
market data, is based on market data as it existed on or before December 16, 2009, and is not
necessarily indicative of current market conditions.
- 40 -
Premium Paid Analysis
. Goldman Sachs reviewed the historical trading prices for the Company
common stock for the period beginning July 20, 2007 (the date of the initial public offering of the
Company common stock) and ended December 16, 2009 (the last trading day prior to the execution of
the merger agreement) and for the latest one-month, three-month, six-month and twelve-month trading
periods ended December 16, 2009. In addition, Goldman Sachs analyzed the consideration of $7.65
per share to be paid to the holders of shares of the Company common stock pursuant to the merger
agreement in relation to the closing price of the Company common stock on December 16, 2009, the
average closing prices of the Company common stock during the one-month, three-month, six-month and
twelve-month trading periods ended December 16, 2009, the average closing price of the Company
common stock during the period from July 20, 2007 to December 16, 2009, the low and high
closing prices of the Company common stock for the 52-week period ended December 16, 2009, the
all-time high closing price of the Company common stock since July 20, 2007, and the initial
offering price of the Company common stock on July 20, 2007. Goldman Sachs also calculated the pro
forma $7.65 per share merger consideration (excluding cash) and the pro forma closing price per
share (excluding cash) of the Company common stock on December 16, 2009. Goldman Sachs performed
these calculations by subtracting net cash per share (based on the total cash listed on the
Companys balance sheet of September 30, 2009, as adjusted to include the Companys collection of
approximately $35 million (plus interest) in accounts receivable from Nortel or its successor
through bankruptcy) from the $7.65 per share merger consideration and closing price per share of
the Company common stock on December 16, 2009. Goldman Sachs then analyzed the pro forma $7.65 per
share merger consideration (excluding cash) in relation to the pro forma closing price per share
(excluding cash) of the Company common stock on December 16, 2009.
This analysis indicated that the price per share to be paid to the Company stockholders
pursuant to the merger agreement represented:
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a premium of 23.2% based on the closing price of $6.21 per share on December 16,
2009;
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a premium of 22.4% based on the latest one-month average closing price of $6.25 per
share for the one-month period ended December 16, 2009;
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a premium of 18.2% based on the average closing price of $6.47 per share for the
three-month period ended December 16, 2009;
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a premium of 20.5% based on the average closing price of $6.35 per share for the
six-month period ended December 16, 2009;
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a premium of 28.1% based on the average closing price of $5.97 per share for the
twelve-month period ended December 16, 2009;
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a premium of 31.4% based on the average closing price of $5.82 per share since the
initial public offering on July 20, 2007;
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a premium of 57.1% based on the latest 52-week low closing price of $4.87 per share
on May 23, 2008;
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a premium of 9.3% based on the latest 52-week high closing price of $7.00 per share
on October 20, 2009;
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a discount of 3.0% based on the all-time high closing price of $7.89 per share on
July 24, 2007;
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a premium of 9.3% based on the initial offering price of $7.00 per share on July 20,
2007; and
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a premium of 57.5% based on the pro forma closing price per share (excluding cash)
of $2.64 of the Company common stock on December 16, 2009 in relation to the pro forma
$7.65 per share merger consideration (excluding cash) of $4.16.
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- 41 -
Implied Transaction Multiples
. Goldman Sachs calculated various financial multiples and
ratios for the Company based on the closing price of $6.21 per share of the Company common stock on
December 16, 2009 and the $7.65 per share merger consideration using the Base Case Management
Projections provided by Company management and market data as of December 16, 2009. With respect
to the Company, Goldman Sachs calculated the following multiples:
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enterprise value, which is the market value of common equity plus the book value of
debt, less cash, as a multiple of actual 2008 billings, estimated 2009 billings and
estimated 2010 billings. Billings represents amounts invoiced for products and
services delivered and services to be
delivered to the Companys customers for which payment is expected to be made in
accordance with normal payment terms;
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enterprise value as a multiple of actual 2008 earnings before interest, taxes,
depreciation and amortization, or EBITDA (based on billings), estimated 2009 EBITDA
(based on billings) and estimated 2010 EBITDA (based on billings);
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price as a multiple of actual 2008 earnings per share, or EPS (based on billings),
estimated 2009 EPS (based on billings) and estimated 2010 EPS (based on billings); and
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pro forma price (excluding cash) (based on billings) as a multiple of actual 2008
pro forma EPS (excluding cash) (based on billings), estimated 2009 pro forma EPS
(excluding cash) (based on billings) and estimated 2010 pro forma EPS (excluding cash)
(based on billings). The pro forma price (excluding cash) was calculated by
subtracting the net cash per share based on the total cash listed on the Companys
balance sheet as of September 30, 2009 (as adjusted to include the Companys collection
of approximately $35 million (plus interest) in accounts receivable from Nortel or its
successor through bankruptcy) from the closing price per share of the Company common
stock on December 16, 2009. The EPS (excluding cash) (based on billings) was
calculated by subtracting after-tax interest income on net cash from forecasted net
income (based on billings) provided by Company management and assuming a tax rate of
35%.
|
The results of these analyses are summarized in the table below:
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Multiples Based on $6.21
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Multiples Based on $7.65
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Year
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per Share
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per Share
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EV / Billings
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2008A
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1.2x
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2.0x
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2009E
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1.2x
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1.9x
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2010E
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0.9x
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1.5x
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EV / EBITDA*
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2008A
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4.7x
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7.5x
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2009E
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4.6x
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7.4x
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2010E
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3.1x
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5.0x
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P / E*
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2008A
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15.4x
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19.4x
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2009E
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13.3x
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16.7x
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2010E
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12.5x
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15.8x
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P / E (ex-cash)*
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2008A
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7.0x
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11.2x
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2009E
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5.9x
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9.5x
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2010E
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5.6x
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9.0x
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*
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EBITDA, EPS and pro forma EPS (excluding cash) were calculated based on billings.
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- 42 -
Selected Companies Analysis
. Goldman Sachs reviewed and compared certain financial
information, financial ratios and multiples for the Company to corresponding financial information,
financial ratios and multiples for the following publicly traded companies in the communications
technology industry:
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Alcatel-Lucent
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Cisco Systems, Inc.
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LM Ericsson Telephone Co.
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Motorola Inc.
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Nokia Corporation
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Acme Packet, Inc.
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Infinera Corporation
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Research in Motion Limited
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Sonus Networks, Inc.
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Starent Networks, Corp.
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ADC Telecommunications Inc.
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Powerwave Technologies Inc.
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CommScope Inc.
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Although none of the selected companies is directly comparable to the Company, the companies
included were chosen because they are publicly traded companies with operations and financial
profiles that for purposes of analysis may be considered similar to certain operations and
financial profiles of the Company.
Goldman Sachs calculated and compared the financial multiples and ratios for the selected
companies based on publicly available financial information, estimates from Institutional Brokers
Estimate System, or IBES, and common stock closing prices on December 16, 2009. Goldman Sachs
calculated the financial multiples and ratios for the Company based on publicly available financial
information, Wall Street research, the Base Case Management Projections provided by Company
management and the closing price of the Company common stock on December 16, 2009 of $6.21 per
share. With respect to each of the Company and the selected companies, Goldman Sachs calculated:
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enterprise value as a multiple of estimated 2009 revenues and estimated 2010
revenues for each of the selected companies;
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enterprise value as a multiple of estimated 2009 billings and estimated 2010
billings for the Company;
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enterprise value as a multiple of estimated 2009 EBITDA and estimated 2010 EBITDA
for each of the selected companies;
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enterprise value as a multiple of estimated 2009 EBITDA (based on billings) and
estimated 2010 EBITDA (based on billings) for the Company;
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price as a multiple of estimated 2009 EPS and estimated 2010 EPS for each of the
selected companies;
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price as a multiple of estimated 2009 EPS (based on billings) and estimated 2010 EPS
(based on billings) for the Company;
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price as a multiple of estimated 2009 EPS (excluding cash) for each of the selected
companies; and
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price as a multiple of estimated 2009 EPS (excluding cash) (based on billings) for
the Company.
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- 43 -
Goldman Sachs also compared the estimated rate of growth in revenues and EBITDA for the
selected companies with the estimated rate of growth in billings and EBITDA (based on billings) for
the Company for the
calendar years 2008, 2009 and 2010 and compared the estimated 2009 and 2010 EBITDA margin for
the selected companies with the estimated 2009 and 2010 EBITDA margin (based on billings) for the
Company. The following table presents the results of these analyses:
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The Company*
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Base Case
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Management
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Wall Street Research
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Selected Companies
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Projection
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Estimates
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Range
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EV / 2009E Revenue
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1.2x
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1.2x
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0.3x 7.2x
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EV / 2010E Revenue
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0.9x
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1.1x
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0.3x 5.8x
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EV / 2009E EBITDA
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4.6x
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4.5x
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6.2x 20.9x
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EV / 2010E EBITDA
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3.1x
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3.4x
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4.1x 17.9x
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P / 2009E EPS
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13.3x
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16.0x
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13.4x 38.0x
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P / 2009E EPS (excluding cash)
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5.9x
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7.2x
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14.8x 36.1x
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P / 2010E EPS
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12.5x
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12.1x
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11.0x 36.8x
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2008A to 2010E Revenue Growth
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16.8%
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4.6%
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(17.9%) 33.9%
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2008A to 2010E EBITDA Growth
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22.4%
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28.5%
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(23.5%) 44.2%
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2009E EBITDA Margin
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25.7%
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26.8%
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(15.0%) 34.5%
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2010E EBITDA Margin
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29.0%
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33.1%
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0.5% 32.7%
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*
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For the Company, EBITDA, EPS and EPS (excluding cash) were calculated based on billings. Also for
the Company, billings were used instead of revenue for purpose of calculating the EV / estimated
revenue multiples and the rate of revenue growth.
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Goldman Sachs then compared the enterprise value to EBITDA (based on billings) multiples for
the Company based on Wall Street research to the enterprise value to EBITDA multiples for the
selected companies based on IBES EBITDA estimates over the last 52-week period ended December 16,
2009. Goldman Sachs also compared price to one-year forward earnings (based on billings) multiples
for the Company based on Wall Street research to the one-year forward earnings multiples for a
composite of the selected companies for the same periods based on IBES price to one-year forward
earnings estimates over such period. This analysis indicated that the Company common stock and the
common stock of the selected companies traded at the following enterprise value to one-year forward
EBITDA (based on billings) multiples and one-year forward EBITDA multiples, respectively, and price
to one-year forward earnings (based on billings) multiples and one-year forward earnings multiples,
respectively, for the following periods:
1-Year Forward EV / EBITDA
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The Company*
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|
Selected Companies
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52-Week High
|
|
|
5.2x
|
|
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12.7x
|
|
52-Week Low
|
|
|
2.6x
|
|
|
|
5.0x
|
|
1-Month Average
|
|
|
3.4x
|
|
|
|
9.4x
|
|
6-Month Average
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|
|
4.0x
|
|
|
|
10.4x
|
|
1-Year Average
|
|
|
3.9x
|
|
|
|
9.1x
|
|
|
|
|
*
|
|
For the Company, EBITDA was calculated based on billings.
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1-Year Forward P / E
|
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|
|
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The Company*
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|
Selected Companies
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|
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52-Week High
|
|
|
14.9x
|
|
|
|
19.8x
|
|
52-Week Low
|
|
|
10.2x
|
|
|
|
11.5x
|
|
1-Month Average
|
|
|
12.2x
|
|
|
|
17.0x
|
|
6-Month Average
|
|
|
13.0x
|
|
|
|
17.8x
|
|
1-Year Average
|
|
|
12.4x
|
|
|
|
16.5x
|
|
|
|
|
*
|
|
For the Company, EPS was calculated based on billings.
|
- 44 -
Illustrative Present Value of Future Share Price Analysis
. Goldman Sachs performed
illustrative analyses of the implied present values of the future price of a share of the Company
common stock, using Company managements Base Case, Downside Case and Upside Case Management
Projections of the Companys one-year forward EBITDA (based on billings), one-year forward net
income (based on billings) and one-year forward adjusted net income (based on billings and adjusted
by adding after-tax interest income to one-year forward net income, excluding cash) for each of the
fiscal years 2010, 2011 and 2012.
Goldman Sachs calculated the implied enterprise value of the Company for each of the fiscal
years 2010, 2011 and 2012 by applying a one-year forward EBITDA (based on billings) multiple of
3.1x for each of the fiscal years 2010, 2011 and 2012 to the one-year forward EBITDA (based on
billings) estimates provided by Company management for each such year. Goldman Sachs then
calculated the implied equity value of the Company for each of the fiscal years 2010, 2011 and 2012
by adding the Companys net cash forecast provided by Company management for each of 2010, 2011 and
2012 to the implied enterprise value of Company for each such year and discounted those values for
the Company back to December 31, 2009, using a range of discount rates from 10.0% to 15.0%,
reflecting estimates of the Companys cost of equity. Goldman Sachs then divided the implied
equity value of the Company for each such year by the number of shares of the Company common stock
outstanding (as determined on a fully diluted basis using implied price and treasury method for
options) as of October 30, 2009. The following table presents the results of these analyses:
Based on EV / EBITDA* Multiples
|
|
|
|
|
|
|
|
|
|
|
|
|
Management Projections
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
Base Case
|
|
|
$6.75 $7.06
|
|
|
|
$7.10 $7.76
|
|
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|
$7.27 $8.30
|
|
Downside Case
|
|
|
$5.72 $5.98
|
|
|
|
$5.71 $6.24
|
|
|
|
$5.35 $6.11
|
|
Upside Case
|
|
|
$9.20 $9.62
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|
|
|
$9.37 $10.25
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|
$9.60 $10.97
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|
*
|
|
EBITDA was calculated based on billings.
|
Goldman Sachs also performed the foregoing analysis to calculate the implied equity value of
the Company for each of the fiscal years 2010, 2011 and 2012 by applying a price to one-year
forward earnings (based on billings) multiple of 12.5x to the one-year forward earnings (based on
billings) estimates provided by Company management for each such year. Goldman Sachs then
discounted those values back to December 31, 2009 using a range of discount rates from 10.0% to
15.0%, reflecting estimates of the Companys cost of equity. Goldman Sachs then divided the
implied equity value of the Company for each such year by the number of shares of the Company
common stock outstanding (as determined on a fully diluted basis using implied price and treasury
method for options) as of October 30, 2009. The following table presents the results of these
analyses:
Based on P / E* Multiples
|
|
|
|
|
|
|
|
|
|
|
|
|
Management Projections
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
Base Case
|
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|
$7.73 $8.08
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|
|
$9.21 $10.06
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|
$9.52 $10.87
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|
Downside Case
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|
$5.30 $5.54
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|
$6.06 $6.62
|
|
|
|
$5.41 $6.18
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|
Upside Case
|
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|
$13.74 $14.37
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|
$14.22 $15.54
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$14.15 $16.16
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|
*
|
|
Earnings were calculated based on billings.
|
- 45 -
In addition, Goldman Sachs performed the foregoing analysis to calculate the implied equity
value of the Company for each of the fiscal years 2010, 2011 and 2012 by applying a price to
one-year forward earnings (based on billings and excluding cash) multiple of 5.6x to the one-year
forward adjusted net income (based on billings and adjusted by adding after-tax interest income to
one-year forward net income) estimates provided by Company management for each such year. Goldman
Sachs then calculated the implied equity values (including cash) of the Company for each of the
fiscal years 2010, 2011 and 2012 by adding the Companys total cash estimates provided by Company
management for each of 2010, 2011 and 2012 to the implied equity value (excluding cash) of the
Company for each such year. Goldman Sachs then discounted those values back to December 31, 2009,
using a
range of discount rates from 10.0% to 15.0%, reflecting estimates of the Companys cost of
equity. Goldman Sachs then divided the implied equity value of the Company for each such year by
the number of shares of the Company common stock outstanding (as determined on a fully diluted
basis using implied price and treasury method for options) as of October 30, 2009. The following
table presents the results of these analyses:
Based on P / E (Excluding Cash)* Multiples
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|
|
|
|
|
|
|
|
|
|
|
|
Management Projections
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
Base Case
|
|
|
$7.05 $7.37
|
|
|
|
$7.53 $8.23
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|
|
$7.73 $8.84
|
|
Downside Case
|
|
|
$5.84 $6.11
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|
|
|
$5.89 $6.44
|
|
|
|
$5.49 $6.27
|
|
Upside Case
|
|
|
$9.95 $10.41
|
|
|
|
$10.21 $11.15
|
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|
|
$10.44 $11.93
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|
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*
|
|
Earnings (excluding cash) were calculated based on billings.
|
Illustrative Discounted Cash Flow Analysis
. Goldman Sachs performed an illustrative
discounted cash flow analysis on the Company to determine a range of implied present values per
share of the Company common stock using Company managements Base Case, Downside Case and Upside
Case Management Projections. First, Goldman Sachs calculated the net present value of the
unlevered free cash flows (based on billings) for the EV-DO business for the fiscal years 2010
through 2018, using discount rates ranging from 16.5% to 18.5%, reflecting estimates of the EV-DO
business weighted average cost of capital, to derive the implied present value of the EV-DO
business. In this analysis, Goldman Sachs assumed that the EV-DO business has no value at
perpetuity based on Company managements assumption that the EV-DO business would not yield any
revenue after the fiscal year 2018. Goldman Sachs then calculated indications of net present value
of the unlevered free cash flows (based on billings) for the femtocell business for the fiscal
years 2010 through 2013, excluding the losses forecast by Company management and assuming any such
losses would be funded with available cash, using discount rates ranging from 25% to 30%,
reflecting estimates of femtocell business weighted average cost of capital. Goldman Sachs also
calculated the net present value of the illustrative terminal value of the femtocell business in
the fiscal year 2013 by applying a range of enterprise value to EBITDA (based on billings)
multiples of 10.3x to 12.3x to the estimated EBITDA (based on billings) in the fiscal year 2013 for
the femtocell business and using discount rates ranging from 25% to 30%, reflecting estimates of
femtocell business weighted average cost of capital. Goldman Sachs then calculated the implied
present value of the femtocell business by adding the present value of the projected cash flows
from the femtocell business for the fiscal years 2010 through 2013 to the present value of the
terminal value for the femtocell business in the fiscal year 2013.
Goldman Sachs then calculated the implied present value of the Company by adding (i) the
implied present value of the EV-DO business, (ii) the implied present value of the femtocell
business, and (iii) the amount of Companys estimated total cash as of December 31, 2009 after
pre-funding $77 million of losses forecast by Company management from the femtocell business and
then dividing by the number of shares of the Company common stock outstanding (as determined on a
fully diluted basis using implied price and treasury method for options) as of October 30, 2009.
- 46 -
Goldman Sachs also performed an analysis similar to that described above but assuming the
shutdown of the femtocell business in January 2010 and no pre-funding of losses forecast by Company
management from the femtocell business. The following table presents the results of these analyses
in a range of implied present values:
|
|
|
|
|
|
|
Implied Present Value
|
|
Management Projections
|
|
(per share)
|
|
Base Case
|
|
|
$7.11 $7.80
|
|
Ex-Femto*
|
|
|
$6.65 $6.84
|
|
Downside Case
|
|
|
$6.53 $7.18
|
|
Ex-Femto*
|
|
|
$6.06 $6.21
|
|
Upside Case
|
|
|
$12.01 $13.83
|
|
Ex-Femto*
|
|
|
$6.62 $6.82
|
|
|
|
|
*
|
|
Ex-Femto means excluding the femtocell business, which assumes the shutdown of the femtocell
business in January 2010 without pre-funding losses from the femtocell business.
|
The preparation of a fairness opinion is a complex process and is not necessarily susceptible
to partial analysis or summary description. Selecting portions of the analyses or of the summary
set forth above, without considering the analyses as a whole, could create an incomplete view of
the processes underlying Goldman Sachs opinion. In arriving at its fairness determination, Goldman
Sachs considered the results of all of its analyses and did not attribute any particular weight to
any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to
fairness on the basis of its experience and professional judgment after considering the results of
all of its analyses. No company or transaction used in the above analyses as a comparison is
directly comparable to the Company or Parent or the merger.
Goldman Sachs prepared these analyses for purposes of Goldman Sachs providing its opinion to
the special committee as to the fairness from a financial point of view to the holders of shares of
the Company common stock (other than the Rollover Stockholders) of the $7.65 per share in cash to
be paid to such holders pursuant to the merger agreement. These analyses do not purport to be
appraisals nor do they necessarily reflect the prices at which businesses or securities actually
may be sold. Analyses based upon forecasts of future results are not necessarily indicative of
actual future results, which may be significantly more or less favorable than suggested by these
analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous
factors or events beyond the control of the parties or their respective advisors, none of the
Company, Parent, Goldman Sachs or any other person assumes responsibility if future results are
materially different from those forecast.
The $7.65 per share merger consideration was determined through arms-length negotiations
between the special committee and Parent and was approved by the Companys board of directors.
Goldman Sachs provided advice to the special committee during these negotiations. Goldman Sachs
did not, however, recommend any specific amount of consideration to the special committee or its
board of directors or that any specific amount of consideration constituted the only appropriate
consideration for the merger.
As described above, Goldman Sachs opinion to the special committee was one of many factors
taken into consideration by the special committee in making its determination to approve the merger
agreement. The foregoing summary does not purport to be a complete description of the analyses
performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety
by reference to the written opinion of Goldman Sachs attached as Annex B to this proxy statement.
Goldman Sachs and its affiliates are engaged in investment banking and financial advisory
services, commercial banking, securities trading, investment management, principal investment,
financial planning, benefits counseling, risk management, hedging, financing, brokerage activities
and other financial and non-financial activities and services for various persons and entities. In
the ordinary course of these activities and services, Goldman, Sachs & Co. and its affiliates may
at any time make or hold long or short positions and investments, as well as actively trade or
effect transactions, in the equity, debt and other securities (or related derivative securities)
and financial instruments (including bank loans and other obligations) of third parties, the
Company and its affiliates, and SAC PCG and its affiliates and portfolio companies or any currency
or commodity that may be involved in the merger for their own account and for the accounts of their
customers. Goldman Sachs acted as financial advisor to the special committee in connection with,
and participated in certain of the negotiations leading to, the merger. Goldman Sachs also has
provided certain investment banking and other financial services to SAC PCG and its affiliates and
portfolio companies from time to time, including having acted as financial advisor to a consortium
of financial sponsors, including SAC PCG, in its acquisition of Laureate Education Inc. in August
2007. Goldman Sachs also may provide investment banking and other financial services to the
Company and its affiliates and SAC PCG and its affiliates and portfolio companies in the future.
In connection with the above-described services, Goldman Sachs has received, and may receive in the
future, compensation. Affiliates of Goldman Sachs may co-invest with SAC PCG and its affiliates
and may invest in limited partnership units of affiliates of SAC PCG in the future.
- 47 -
The special committee selected Goldman Sachs as its financial advisor because it is an
internationally recognized investment banking firm that has substantial experience in transactions
similar to the merger. Pursuant to a letter agreement dated July 27, 2009, the special committee
engaged Goldman Sachs to act as its financial advisor in connection with the consideration of
strategic alternatives. Pursuant to the terms of this engagement letter, the Company has agreed to
pay Goldman Sachs a transaction fee equal to approximately
$6.3 million, $5.8 million of which
is contingent upon consummation of the merger. In addition, the Company has agreed to
reimburse Goldman Sachs for its reasonable expenses, including attorneys fees and
disbursements, and to indemnify Goldman Sachs and related persons against various liabilities,
including certain liabilities under the federal securities laws.
Other Written Presentations by Goldman Sachs
In addition to the presentation made to the special committee on December 17, 2009, Goldman
Sachs also made written presentations to the special committee on July 14, 2009, August 11, 2009,
September 4, 2009 and December 9, 2009. Each of these presentations and Goldman Sachs fairness
opinion to the special committee has been filed as an exhibit to the Schedule 13E-3 filed with the
SEC in connection with the merger. See
Where You Can Find Additional Information
. None of these
other written presentations by Goldman Sachs, alone or together, constitute an opinion of Goldman
Sachs with respect to the consideration to be paid in the merger. Information contained in these
other written presentations is substantially similar to the information provided in Goldman Sachs
written presentation to the special committee on December 17, 2009, except the August 11, 2009 and
the December 9, 2009 materials also contained analyses of selected alternatives for the Company,
including leveraged buyout, special dividend and share buyback analyses. These other written
presentations made by Goldman Sachs contained, among other things, the following types of financial
analyses:
|
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market performance;
|
|
|
|
|
analysis at various prices;
|
|
|
|
|
illustrative present value of future stock price analysis;
|
|
|
|
|
discounted cash flow analysis; and
|
|
|
|
|
selected company analysis.
|
These financial analyses were not necessarily included in all of the other written
presentations listed above. The financial analyses in the other written presentations were based
on market, economic and other conditions as they existed as of the dates of the respective
presentations as well as other information that was available at those times. Accordingly, the
results of the financial analyses differed due to changes in those conditions. Among other things,
multiples attributable to comparable companies changed as those companies stock prices changed,
and implied transaction multiples, discounted cash flows analyses and leveraged buyout analyses
changed as the Companys financial results (as well as forecasts updated by Company management to
reflect actual results) changed. Finally, Goldman Sachs continued to refine various aspects of its
financial analyses with respect to the Company over time.
- 48 -
Purpose
and Reasons of Parent, Merger Sub and the other Buyer Filing Person for the Merger
Parent,
Merger Sub, and 72 Mobile Investors, LLC, which we refer to as the
other Buyer Filing Person, are making the statements included in this
section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules
under the Exchange Act. The other Buyer Filing Person is the managing member of Parent. We refer to
Parent, Merger Sub and the other Buyer Filing Person collectively, as
the Buyer Filing Persons.
If the merger is completed, Airvana will become a subsidiary of Parent. For Parent and Merger
Sub, the purpose of the merger is to effectuate the transactions contemplated by the merger
agreement. For the other Buyer Filing Person, the purpose of the merger is to indirectly own equity
interests in Airvana and to bear the rewards and risks of such ownership after shares of Airvana
common stock cease to be publicly traded.
The
Buyer Filing Persons believe that it is best for Airvana to operate as a privately held entity
in order to allow Airvana greater operational flexibility and to focus on its
business without the constraints and distractions caused by the
public equity markets valuation of its common stock. Moreover,
the Buyer Filing Persons believe that
Airvanas business prospects can be improved through the active participation of Parent in
the strategic direction of Airvana. Although the Buyer Filing Persons believe that there will
be significant opportunities associated with their investment in Airvana, they realize that
there are also substantial risks (including the risks and uncertainties relating to the prospects
of Airvana and its femtocell business) and that such opportunities may not ever be fully realized.
The
Buyer Filing Persons believe that structuring the transaction as a merger transaction is
preferable to other transaction structures because (a) it will enable Parent to acquire all of the
outstanding shares of Airvana at the same time, (b) it represents an opportunity for Airvanas
unaffiliated stockholders to receive fair value for their shares of common stock in the form of the
merger consideration or, at the election of the unaffiliated stockholder, by pursuing appraisal
rights and (c) it allows the Rollover Stockholders to maintain a portion of their investment in
Airvana.
Purpose and Reasons of the Rollover Stockholders for the Merger
The Rollover Stockholders are making the statements included in this section solely for the
purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act.
Concurrently with Airvana entering into the merger agreement, the Rollover Stockholders
entered into a rollover commitment letter with Parent pursuant to which approximately 60% percent
of the shares of Airvana common stock held by each of the Rollover Stockholders will be exchanged
for equity interests of Parent, valuing the exchanged shares at an amount per share equal to the
merger consideration. The Rollover Stockholders expect the exchange of their shares to be tax
deferred for U.S. federal income tax purposes. In addition, each of
Messrs. Battat and Verma and Dr. Eyuboglu
expects to enter into employment agreements with Parent. See
Interests of the Companys
Directors and Executive Officers in the Merger
beginning on
page 62. For the Rollover
Stockholders, the purpose of the merger is to enable the Rollover Stockholders to receive cash for
their stock options and for a significant portion of their holdings of Airvana common stock at a
premium over recent and historical market prices and to benefit from any future earnings and growth
of Airvana, to the extent of their equity interest in Parent after the Airvana common stock ceases
to be publicly traded. The Rollover Stockholders believe that Airvanas business profile is better
suited for a privately held entity than a public company because of the uncertainties associated
with the reliance of Airvanas EV-DO business on a single customer and the transition to next
generation 4G technology, its complex financial statements and the absence of a proven track record
of business performance for Airvanas femtocell products.
Position
of Parent, Merger Sub and the other Buyer Filing Person as to the Fairness of the Merger
Parent,
Merger Sub and the other Buyer Filing Person are making the statements included in this
section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules
under the Exchange Act. The views of Parent, Merger Sub and the other Buyer Filing Person should not be
construed as a recommendation to any stockholder as to how that stockholder should vote on the
proposal to adopt the merger agreement.
Parent and Merger Sub attempted to negotiate the terms of a transaction that would be most
favorable to them, and not to the stockholders of Airvana, and, accordingly, did not negotiate the
merger agreement with a goal of obtaining terms that were fair to such stockholders. None of
Parent, Merger Sub or the other Buyer Filing Person believes that it has or had any fiduciary duty to
Airvana or its stockholders, including with respect to the merger and its terms.
- 49 -
None
of Parent, Merger Sub or the other Buyer Filing Person participated in the deliberation process
of the special committee or our board of directors, or in the conclusions of the special committee
or our board of directors, with respect to the substantive and procedural fairness of the merger to
the unaffiliated stockholders of Airvana, nor did they undertake any independent evaluation of the
fairness of the merger or engage a financial advisor for such purpose. Nevertheless, they believe
that the proposed merger is substantively and procedurally fair to the unaffiliated stockholders on
the basis of the factors discussed below.
Parent,
Merger Sub and the other Buyer Filing Person believe that the proposed merger is
substantively fair to the unaffiliated stockholders based on the following factors:
|
|
|
the current and historical market prices of the Companys common stock, including the
fact that the $7.65
per share merger consideration represented a premium of approximately 23% over the Companys
closing stock price of $6.24 on December 17, 2009, the last trading day prior to the
Companys public announcement that it entered into the merger agreement;
|
|
|
|
|
the fact that the Company had solicited interest from multiple private equity sponsors
and strategic parties regarding a potential acquisition;
|
|
|
|
|
the fact that the merger consideration is all cash, allowing the unaffiliated
stockholders to immediately realize a certain and fair value for all shares of their
Company common stock;
|
|
|
|
|
notwithstanding the fact that the Goldman Sachs opinion was not delivered to any of the
Buyer Filing Persons and they are not entitled to rely on such opinion, the fact that the
Companys board of directors received an opinion from Goldman Sachs, dated December 17,
2009, that, as of that date and based upon and subject to the factors and
assumptions set forth therein, the $7.65 per share in cash to be paid to the holders of the
outstanding shares of Company common stock (other than the Rollover Stockholders) pursuant
to the merger agreement was fair from a financial point of view to such holders;
|
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|
|
the Companys ability, under certain circumstances, to provide information to, and
participate in discussions or negotiations, with third parties regarding other proposals;
|
|
|
|
|
the Companys ability, under certain circumstances, to terminate the merger agreement in
order adopt, approve, endorse or recommend a superior proposal, subject to paying a
termination fee of $15 million (equal to approximately 2.8% of the equity value of the
transaction);
|
|
|
|
|
the fact that Parent and Merger Sub had obtained committed debt and equity financing for
the transaction, the limited number and nature of the conditions to the debt and equity
financing, the absence of a financing condition in the merger agreement, and the obligation
of Parent to use its reasonable best efforts to obtain the debt financing and, if it fails
to complete the merger under certain circumstances, to pay the Company a $25 million
reverse termination fee;
|
|
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|
|
the fact that S.A.C. Capital Management, LLC issued a $25 million limited guarantee in
the Companys favor with respect to performance by Parent of certain of its payment
obligations under the merger agreement;
|
|
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|
|
the ability of the Companys board of directors, under certain circumstances not
involving a superior proposal, to change its recommendation that stockholders vote in favor
of the adoption of the merger agreement and the absence of any voting agreements committing
Airvana stockholders to vote in favor of the merger, thus leaving them free to follow any
such changed recommendation of the board of directors; and
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|
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|
|
the availability of appraisal rights to the unaffiliated stockholders who comply with
all of the required procedures under Delaware law for exercising appraisal rights, which
allow such holders to seek appraisal of the fair value of their stock as determined by the
Court of Chancery of the State of Delaware in lieu of receiving the merger consideration.
|
- 50 -
Parent,
Merger Sub and the other Buyer Filing Person believe that the proposed merger is
procedurally fair to the unaffiliated stockholders based on the following factors:
|
|
|
the merger agreement requires the merger agreement to be adopted by the holders of a
majority of the outstanding shares of the Companys common stock, none of whom is obligated
to vote in favor of such adoption;
|
|
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|
|
the Companys ability to terminate the merger agreement if stockholders do not adopt it,
subject to paying an expense reimbursement of up to $3 million (equal to approximately 0.6%
of the equity value of the transaction);
|
|
|
|
|
the members of the special committee are not employees of the Company or any of its
subsidiaries and have no financial interest in the merger that is different from that of
the unaffiliated stockholders (other than the acceleration of options to acquire shares of
Airvana common stock previously granted to them in consideration for their services as
directors and payment of customary fees for their services as members of the special
committee);
|
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|
|
the special committee met regularly, without the participation of the Rollover
Stockholders, to discuss the Companys strategic alternatives and was advised by Ropes &
Gray and Goldman Sachs;
|
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|
|
the special committee directed all negotiations and made all material decisions relating
to the Companys strategic alternatives beginning in July 2009, including recommending to
the Companys board of directors that the Company enter into the merger agreement;
|
|
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|
|
the financial and other terms and conditions of the merger agreement were the product of
arms-length negotiations between the special committee and its advisors, on the one hand,
and Parent and its advisors, on the other hand, (without the participation of the Rollover
Stockholders);
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the Companys ability, under certain circumstances, to terminate the merger agreement in
order to adopt, approve, endorse or recommend a superior proposal, subject to paying a
termination fee of $15 million (equal to approximately 2.8% of the equity value of the
transaction);
|
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|
|
notwithstanding the fact that the Goldman Sachs opinion was not delivered to any of the
Buyer Filing Persons and they are not entitled to rely on such opinion, the fact that the
Companys special committee received an opinion from Goldman Sachs, dated December 17,
2009, that, as of that date and based upon and subject to the factors and
assumptions set forth therein, the $7.65 per share in cash to be paid to the holders of the
outstanding shares of Company common stock (other than the Rollover Stockholders) pursuant
to the merger agreement was fair from a financial point of view to such holders;
|
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|
|
notwithstanding the fact that the Goldman Sachs opinion was not delivered to any of the
Buyer Filing Persons and they are not entitled to rely on such opinion, and although the opinion
received by the special committee from Goldman Sachs spoke to the fairness of the merger
consideration to be paid to the holders of shares of Company common stock (other than the
Rollover Stockholders), and not to the fairness of the merger consideration to be paid to
the unaffiliated stockholders, the consideration to be paid to stockholders of the Company
who are affiliates but not Rollover Stockholders is the same as the consideration to be
paid to unaffiliated stockholders; and
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|
the availability of appraisal rights to the unaffiliated stockholders who comply with
all of the required procedures under Delaware law for exercising appraisal rights, which
allow such holders to seek appraisal of the fair value of their stock as determined by the
Court of Chancery of the State of Delaware.
|
- 51 -
Parent,
Merger Sub and the other Buyer Filing Person did not consider the liquidation value of the
Companys assets to be a factor in determining the substantive fairness of the transaction to the
unaffiliated stockholders because they consider the Company to be a viable going concern business
where value is derived from cash flows generated from its continuing operations. In addition,
Parent, Merger Sub and the other Buyer Filing Person believe that the value of the Companys assets that
might be realized in a liquidation would be significantly less than its going concern value.
Further, Parent, Merger Sub and the other Buyer Filing Person did not consider the Companys net book
value, which is an accounting concept, as a factor because they believed that net book value is not
a material indicator of the value of the Company as a going concern but rather is indicative of
historical costs. In making their determination as to the substantive fairness of the merger to
the unaffiliated stockholders, Parent, Merger Sub and the other Buyer Filing Person were not aware of any
firm offers during the prior two years by any person for the merger or consolidation of Airvana
with another company, the sale or transfer of all or substantially all of Airvanas assets or a
purchase of Airvanas assets that would enable the holder to exercise control of Airvana, although
there were proposals as described in
Background of the Merger
.
The foregoing discussion of the information and factors considered and given weight by Parent,
Merger Sub and the other Buyer Filing Person in connection with the fairness of the merger is not
intended to be exhaustive but is believed to include all material factors considered by Parent,
Merger Sub and the other Buyer Filing Person. Parent, Merger Sub and
the other Buyer Filing Person did not find
it practicable to assign, and did not, assign or otherwise attach, relative weights to the
individual factors in reaching their position as to the fairness of the merger. Rather, their
fairness determinations were made after consideration of all of the foregoing factors as a whole.
Parent, Merger Sub and the other Buyer Filing Person believe the foregoing factors provide a reasonable
basis for their belief that the merger is substantively and procedurally fair to the unaffiliated
stockholders.
Position of the Rollover Stockholders as to the Fairness of the Merger
The Rollover Stockholders are making the statements included in this section solely for the
purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act.
The views of the Rollover Stockholders as to the fairness of the merger should not be
construed as a recommendation to any stockholder as to how that stockholder should vote on the
proposal to adopt the merger agreement. The Rollover Stockholders have interests in the merger
different from, and in addition to, those of the other stockholders of Airvana. These interests are
described under
Interests of the Companys Directors and Executive Officers in the Merger
.
The Rollover Stockholders are not a party to and did not participate in the negotiation of the
merger agreement with the Company, Parent or Merger Sub or their respective representatives or
advisors. None of the Rollover Stockholders participated in the deliberations of the Companys
board of directors with respect to the substantive or procedural fairness of the merger to the
unaffiliated stockholders, nor did they undertake any independent evaluation of the fairness of the
merger or engage a financial advisor for such purpose. Nevertheless, the Rollover Stockholders
believe that the proposed merger is substantively and procedurally fair to the unaffiliated
stockholders on the basis of the factors discussed below.
The Rollover Stockholders believe that the proposed merger is substantively fair to the
unaffiliated stockholders based on the following factors:
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the current and historical market prices of the Companys common stock, including
the fact that the $7.65 per share merger consideration represented a premium of
approximately 23% over the Companys closing stock price of $6.24 on December 17, 2009,
the last trading day prior to the Companys public announcement that it entered into
the merger agreement;
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the fact that the Company had solicited interest from multiple private equity
sponsors and strategic parties regarding a potential acquisition;
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the fact that the merger consideration is all cash, allowing the unaffiliated
stockholders to immediately realize a certain and fair value for all shares of their
Company common stock;
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- 52 -
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notwithstanding the fact that the Goldman Sachs opinion was not delivered to the
Rollover Stockholders and they are not entitled to rely on such opinion, the fact that
the Companys special committee received an opinion from Goldman Sachs, dated December
17, 2009, that, as of that date and based upon and subject to the factors
and assumptions set forth therein, the $7.65 per share in cash to be paid to the
holders of the outstanding shares of Company common stock (other than the Rollover
Stockholders) pursuant to the merger agreement was fair from a financial point of view
to such holders;
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the Companys ability, under certain circumstances, to provide information to, and
participate in discussions or negotiations with, third parties regarding other
acquisition proposals;
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the Companys ability, under certain circumstances, to terminate the merger
agreement in order to adopt, approve, endorse or recommend a superior proposal, subject
to paying a termination fee of $15 million (equal to approximately 2.8% of the equity
value of the transaction);
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the fact that Parent and Merger Sub had obtained committed debt and equity financing
for the transaction, the limited number and nature of the conditions to the debt and
equity financing, the absence of a financing condition in the merger agreement, and the
obligation of Parent to use its reasonable best efforts to obtain the debt financing
and, if it fails to complete the merger under certain circumstances, to pay the Company
a $25 million reverse termination fee;
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the fact that S.A.C. Capital Management, LLC issued a $25 million limited guarantee
in the Companys favor with respect to performance by Parent of certain of its payment
obligations under the merger agreement;
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the ability of the Companys board of directors, under certain circumstances not
involving a superior proposal, to change its recommendation that stockholders vote in
favor of the adoption of the merger agreement and the absence of any voting agreements
committing Airvana stockholders to vote in favor of the merger, thus leaving them free
to follow any such changed recommendation of the board of directors; and
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the availability of appraisal rights to the unaffiliated stockholders who comply
with all of the required procedures under Delaware law for exercising appraisal rights,
which allow such holders to seek appraisal of the fair value of their stock as
determined by the Court of Chancery of the State of Delaware in lieu of receiving the
merger consideration.
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The Rollover Stockholders believe that the proposed merger is procedurally fair to the
unaffiliated stockholders based on the following factors:
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the merger agreement requires the merger agreement to be adopted by the holders of a
majority of the outstanding shares of the Companys common stock, none of whom is
obligated to vote in favor of such adoption;
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the Companys ability to terminate the merger agreement if stockholders do not adopt
it, subject to paying an expense reimbursement of up to $3 million (equal to
approximately 0.6% of the equity value of the transaction);
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the members of the special committee are not employees of the Company or any of its
subsidiaries and have no financial interest in the merger that is different from that
of the unaffiliated stockholders (other than the acceleration of options to acquire
shares of Airvana common stock previously granted to them in consideration for their
services as directors and payment of customary fees for their services as members of
the special committee);
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- 53 -
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the special committee met regularly, without the participation of the Rollover
Stockholders, to discuss the Companys strategic alternatives and was advised by Ropes
& Gray and Goldman Sachs;
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the special committee directed all negotiations and made all material decisions
relating to the Companys strategic alternatives beginning in July 2009, including
recommending to the Companys board of directors that the Company enter into the merger
agreement;
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the financial and other terms and conditions of the merger agreement were the
product of arms-length negotiations between the special committee and its advisors, on
the one hand, and Parent and its advisors, on the other hand, without the participation
of the Rollover Stockholders;
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the Companys ability, under certain circumstances, to terminate the merger
agreement in order to adopt, approve, endorse or recommend a superior proposal, subject
to paying a termination fee of $15 million (equal to approximately 2.8% of the equity
value of the transaction);
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notwithstanding the fact that the Goldman Sachs opinion was not delivered to the
Rollover Stockholders and they are not entitled to rely on such opinion, the fact that
the Companys special committee received an opinion from Goldman Sachs, dated December
17, 2009, that, as of that date and based upon and subject to the factors
and assumptions set forth therein, the $7.65 per share in cash to be paid to the
holders of the outstanding shares of Company common stock (other than the Rollover
Stockholders) pursuant to the merger agreement was fair from a financial point of view
to such holders;
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notwithstanding the fact that the Goldman Sachs opinion was not delivered to the
Rollover Stockholders and they are not entitled to rely on such opinion, and although
the opinion received by the special committee from Goldman Sachs spoke to the fairness
of the merger consideration to be paid to the holders of shares of Company common stock
(other than the Rollover Stockholders), and not to the fairness of the merger
consideration to be paid to the unaffiliated stockholders, the consideration to be paid
to stockholders of the Company who are affiliates but not Rollover Stockholders is the
same as the consideration to be paid to unaffiliated stockholders; and
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the availability of appraisal rights to the unaffiliated stockholders who comply
with all of the required procedures under Delaware law for exercising appraisal rights,
which allow such holders to seek appraisal of the fair value of their stock as
determined by the Court of Chancery of the State of Delaware.
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The Rollover Stockholders did not consider the liquidation value of the Companys assets to be
a factor in determining the substantive fairness of the transaction to the unaffiliated
stockholders because they consider the Company to be a viable going concern business where value is
derived from cash flows generated from its continuing operations. In addition, the Rollover
Stockholders believe that the value of the Companys assets that might be realized in a liquidation
would be significantly less than its going concern value. Further, the Rollover Stockholders did
not consider the Companys net book value, which is an accounting concept, as a factor because they
believed that net book value is not a material indicator of the value of the Company as a going
concern but rather is indicative of historical costs.
The foregoing discussion of the information and factors considered and given weight by the
Rollover Stockholders in connection with the fairness of the merger is not intended to be
exhaustive but is believed to include all material factors considered by the Rollover Stockholders.
The Rollover Stockholders did not find it practicable to assign, and did not assign or otherwise
attach, relative weights to the individual factors in reaching their position as to the fairness of
the merger. Rather, their fairness determinations were made after consideration of all of the
foregoing factors as a whole. The Rollover Stockholders believe the foregoing factors provide a
reasonable basis for their belief that the merger is substantively and procedurally fair to the
unaffiliated stockholders.
- 54 -
Plans for Airvana After the Merger
It is expected that, upon consummation of the merger, the operations of Airvana will be
conducted substantially as they currently are being conducted, except that we will cease to have
publicly traded equity securities and will instead be a wholly owned subsidiary of Parent. Parent
has advised Airvana that it does not have any current intentions, plans or proposals to cause us to
engage in any of the following:
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an extraordinary corporate transaction following consummation of the merger
involving Airvanas corporate structure, business or management, such as a merger,
reorganization or liquidation;
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the relocation of any material operations or sale or transfer of a material amount
of assets; or
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any other material changes in our business.
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We expect, however, that both before and following consummation of the merger, Airvana and the
surviving corporation will act to form new direct or indirect subsidiaries of Airvana referred to
as Femto Holdings, to which Airvana and its other subsidiaries will transfer substantially all of
the assets and liabilities that primarily relate to the femtocell business (subject to certain
exceptions). The senior secured facility is expected to require Femto Holdings to be capitalized
with approximately $15.0 million as of the closing of the merger
and, thereafter, to permit Airvana to fund Femto Holdings with excess
cash flows from the EV-DO business. The senior secured facility is also expected
to require, no later than 180 days after the closing of the merger:
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Femto Holdings to have separate books and records, separate assets and liabilities,
separate contracts, facilities, intellectual property and financial statements and to
observe customary corporate formalities;
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to the extent that some facilities must be shared or that some assets or
intellectual property used in the femtocell business cannot be transferred to Femto
Holdings, Femto Holdings and Airvana to make arms length arrangements with respect to
such shared facilities, assets and intellectual property; and
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Femto Holdings to establish a separate board of directors (or similar governing
body), officers and personnel and to conduct its business in its own name or in names
that could not reasonably be confused with Airvana.
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We additionally expect the management and/or board of directors of the surviving corporation
will continue to assess our assets, corporate and capital structure, capitalization, operations,
business, properties and personnel to determine what changes, if any, would be desirable following
the merger to enhance the business and operations of the surviving corporation and may cause the
surviving corporation to engage in additional transactions if the management and/or board of
directors of the surviving corporation decides that such transactions are in the best interests of
the surviving corporation upon such review. The surviving corporation expressly reserves the right
to make any changes it deems appropriate in light of such evaluation and review or in light of
future developments.
Certain Effects of the Merger
If the merger agreement is adopted by the Companys stockholders and certain other conditions
to the closing of the merger are either satisfied or waived, Merger Sub will be merged with and
into Airvana, with Airvana being the surviving corporation.
Upon the consummation of the merger, each share of Airvana common stock issued and outstanding
immediately prior to the effective time of the merger (other than shares held in the treasury of
the Company, shares owned by any of our wholly owned subsidiaries, shares owned by Parent immediately prior to the effective time of the merger or shares
held by stockholders who are entitled to and who properly exercise appraisal rights under Delaware
law) will be converted into the right to receive $7.65 in cash, without interest and less any
applicable withholding taxes. We expect that such shares owned by
Parent will include certain shares held by the Rollover Stockholders
that will
be exchanged for equity interests in Parent rather than for cash in the
merger. Upon the consummation of the merger, all outstanding options to acquire Airvana
common stock will become fully vested and immediately exercisable and all such options not
exercised prior to the merger will be cancelled and converted into a right to receive a cash
payment equal to the number of shares of Airvana common stock underlying the options multiplied by
the amount by which $7.65 exceeds the option exercise price, without interest and less any
applicable withholding taxes.
- 55 -
Following
the merger, the entire equity in the surviving corporation will
directly and indirectly be owned
through Parent by the other Buyer Filing Person, GSO, the Co-Investors, the Rollover Stockholders and
any additional investors that the other Buyer Filing Person, GSO and the Co-Investors permit to invest in
Parent. As of the date hereof, the other Buyer Filing Person, GSO and the Co-Investors do not have an
agreement with any such additional investors to permit investment in Parent. If the merger is
completed, the other Buyer Filing Person, GSO, the Co-Investors, the Rollover Stockholders and any
additional investors that the other Buyer Filing Person, GSO and the Co-Investors permit to invest in
Parent will be the sole beneficiaries of our future earnings and growth, if any, and will be
entitled to vote on corporate matters affecting Airvana following the
merger. Similarly, the other Buyer
Filing Person, GSO, the Co-Investors, the Rollover Stockholders
and any additional investors that the other Buyer
Filing Person, GSO and the Co-Investors permit to invest in Parent will also bear the risks of
their investment in Parent, including the risks of any decrease in our value after the merger and
the operational and other risks related to the incurrence by the surviving corporation of
significant additional debt as described below under
Financing of the Merger
.
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Ownership Prior to the Merger
1
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Ownership After the Merger
2
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Net Book Value
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Earnings (Loss)
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Net Book Value
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Earnings (Loss)
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$ in
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$ in
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$ in
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$ in
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Name
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Thousands
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%
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Thousands
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%
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Thousands
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%
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Thousands
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%
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Randall J. Battat
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3,974
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3.5
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(590
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)
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3.5
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7,834
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6.9
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(1,163
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)
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6.9
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Vedat Eyuboglu
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3,406
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3.0
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(506
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)
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3.0
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7,153
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6.3
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(1,062
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)
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6.3
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Sanjeev Verma
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4,087
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3.6
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(607
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)
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3.6
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7,947
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7.0
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(1,180
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)
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7.0
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Buyer Filing Persons
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70,624
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62.2
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(10,484
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)
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62.2
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1
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Based upon beneficial ownership as of January 3, 2010, excluding any options to
acquire our common stock (whether or not exercisable), and our net book value at September 27,
2009 and net income for the quarter ended September 27, 2009.
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2
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Based upon the agreed upon and anticipated equity investments and the Companys net
book value at September 27, 2009 and net income for the quarter ended September 27, 2009, and
without giving effect to any indebtedness to be incurred in connection with the merger.
Excludes any options (whether or not exercisable) and any other equity incentives issued in
connection with or after the merger as described in
Interests of the Companys Directors
and Officers in the Merger
.
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The Rollover Stockholders will receive benefits and be subject
to obligations in connection with the merger that are different from, or in addition to, the
benefits and obligations of Airvana stockholders generally, as described in more detail under
Interests of the Companys Directors and Executive Officers in the Merger
. The incremental
benefits will include the right and commitment of the Rollover Stockholders to make an agreed upon
equity investment in the Parent by exchanging a portion of their shares of Airvana common stock for
equity interests in the Parent, and the ability for Messrs. Battat and Verma and Dr. Eyuboglu to participate in an equity incentive plan of Femto
Holdings or one of its subsidiaries. Additional incremental benefits to Messrs. Battat and Verma and Dr. Eyuboglu
include higher base salaries and cash incentive bonuses than currently paid by Airvana. A
potential detriment to the Rollover Stockholders may be that their new options, if any, may not be
exercisable for shares registered under the federal securities laws and their new interests, if
any, in the Parent will not initially be and may not be registered under the federal securities
laws and such shares, if any, will be relatively illiquid without an active public trading market
for such securities. The equity interests, if any, received upon exercise of these options and the
equity interests received in exchange for such shares of Airvana common stock will also be subject
to a stockholders agreement or other agreement restricting the ability of the Rollover Stockholders to sell such
equity. A potential detriment to the Rollover Stockholders is that the other
Buyer Filing Person and the
Co-Investors
will own a majority of Parents shares, will control the respective boards of directors of Parent and the
surviving corporation and will be able to exert substantial influence over the governance and
operations of Parent and the surviving corporation following the merger.
- 56 -
Airvana common stock is currently registered under the Exchange Act and is quoted on the
NASDAQ under the symbol AIRV. As a result of the merger, Airvana will be a privately held
corporation, and there will be no public market for its common stock. After the merger, the Airvana
common stock will cease to be quoted on the NASDAQ, and price quotations with respect to sales of
shares of common stock in the public market will no longer be available. In addition, registration
of the Airvana common stock under the Exchange Act will be terminated.
At the effective time of the merger, the directors of Merger Sub will become the directors of
the surviving corporation and the current officers of Airvana will become the officers of the
surviving corporation. The certificate of incorporation of Airvana will be amended to be the same
as the certificate of incorporation of Merger Sub as in effect immediately prior to the effective
time of the merger, except that the name of the surviving corporation shall continue to be
Airvana, Inc. The bylaws of the Company in effect immediately prior to the effective time of the
merger will become the bylaws of the surviving corporation. Each of Messrs. Battat and
Verma and Dr. Eyuboglu will be members of the board of directors of Parent and the surviving corporation.
Effects on the Company if the Merger is Not Completed
If the merger agreement is not adopted by Airvanas stockholders or if the merger is not
completed for any other reason, stockholders will not receive any payment for their shares in
connection with the merger. Instead, Airvana will remain an independent public company and the
Airvana common stock will continue to be listed and traded on the NASDAQ. In addition, if the
merger is not completed, we expect that management will operate the business in a manner similar to
that in which it is being operated today and that Airvana stockholders will continue to be subject
to the same risks and opportunities as they currently are. Accordingly, if the merger is not
consummated, there can be no assurance as to the effect of these risks and opportunities on the
future value of your Airvana shares. Under specified circumstances, Airvana may be required to pay
Parent a termination fee of $15 million or reimburse Parent for its out of pocket expenses up to $3
million or Parent may be required to pay Airvana a reverse termination fee of $25 million, in each
case, as described in
The Merger AgreementTermination
Fees
beginning on page 87. From time
to time, Airvanas board of directors will evaluate and review, among other things, the business,
operations, properties, dividend policy and capitalization of Airvana and make such changes as are
deemed appropriate and continue to seek to identify strategic alternatives to enhance stockholder
value. If the merger agreement is not adopted by Airvanas stockholders or if the merger is not
consummated for any other reason, there can be no assurance that any other transaction acceptable
to Airvana will be offered, or that the business, prospects or results of operations of Airvana
will not be adversely impacted.
Delisting and Deregistration of Airvana Common Stock
If the merger is completed, the Airvana common stock will be delisted from the NASDAQ and
deregistered under the Exchange Act.
Regulatory Approvals
Under the HSR Act and the rules promulgated thereunder by the FTC, the merger cannot be
completed until Airvana and Parent file a notification and report form under the HSR Act and the
applicable waiting period has expired or been terminated. Airvana and Parent filed
notification and report forms under the HSR Act with the FTC and the
Antitrust Division of the DOJ on [
], 2010. Unless extended or earlier terminated by the FTC or the Antitrust Division of the DOJ, the
applicable waiting period will expire thirty days after the notification and report forms are
filed.
Although Airvana expects that the merger can be effected in compliance with federal and state
antitrust laws, it cannot be certain that the merger will not be challenged by a governmental
authority or private party on antitrust grounds. At any time before or after consummation of the
merger, the DOJ or the FTC could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin
the consummation of the merger or seeking divestiture of substantial assets of Airvana or
Parent. At any time before or after the consummation of the merger any state could take such action
under the antitrust laws as it deems necessary or desirable in the public interest. Such action
could include seeking to enjoin the consummation of the merger or seeking divestiture of
substantial assets of Airvana or Parent. Private parties may also seek to take legal action under
the antitrust laws under certain circumstances.
- 57 -
The term antitrust laws means the Sherman Act, as amended, the Clayton Act, as amended, the
HSR Act, the Federal Trade Commission Act, as amended, and all other Federal and state statutes,
rules, regulations, orders, decrees, administrative and judicial doctrines, and other laws that are
designed or intended to prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade.
Provisions for Unaffiliated Security Holders
No provision has been made (i) to grant Airvanas unaffiliated stockholders access to the
corporate files of Airvana, any other party to the proposed merger or any of their respective
affiliates or (ii) to obtain counsel or appraisal services at the expense of Airvana or any other
such party or affiliate.
Financing of the Merger
Equity Financing
Parent has received an equity commitment letter from S.A.C. Capital Management, LLC. Pursuant
to this equity commitment letter, S.A.C. Capital Management, LLC has committed to purchase, or
cause to be purchased, up to $103.1 million of equity of Parent in connection with the merger. The
obligation to fund the commitments under the equity commitment letter is subject to the following
conditions:
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satisfaction or waiver by Parent of the conditions precedent to Parents and Merger
Subs obligation to complete the merger;
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the substantially simultaneous closing of the financing under the debt commitment
letter described below or on the terms and conditions of any alternative debt financing
that Parent and Merger Sub are required to procure under the merger agreement;
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the substantially simultaneous contribution to Parent by the Rollover Stockholders
of shares of Airvana common stock pursuant to the rollover commitment letter described
below; and
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the substantially simultaneous consummation of the merger in accordance with the
terms of the merger agreement.
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Pursuant to the interim investors agreement described in greater detail below in
Parent
Interim Investors Agreement
, S.A.C. Capital Management, LLC has assigned approximately $92.5
million of its commitment to 72 Mobile Investors, LLC, referred to as Investment Vehicle.
Investment Vehicle has received equity commitment letters in substantially similar form from 72
Private Investments, L.P., referred to as 72 Private Investments, and the Co-Investors. Pursuant to
these equity commitment letters, 72 Private Investments has committed to purchase, or cause to be purchased,
up to $50 million, Sankaty has committed to purchase, or cause to be purchased, up to $25 million
and ZM Capital has committed to purchase, or cause to be purchased, up to $17.5 million of equity
of Investment Vehicle in connection with the merger. The obligation to fund the commitments under
each of the equity commitment letters is subject to the following conditions:
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satisfaction or waiver by Parent of the conditions precedent to Parents and Merger
Subs obligation to complete the merger;
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the substantially simultaneous closing of the financing under the debt commitment
letter described below;
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- 58 -
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the substantially simultaneous funding by each of the other Co-Investors of the
amount of cash equity contemplated by such other equity commitment letters;
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the substantially simultaneous consummation of the merger in accordance with the
terms of the merger agreement; and
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the entry into definitive agreements, (including a limited liability company
agreement).
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Parent has also received an equity commitment letter from GSO pursuant to which letter GSO
committed to purchase, or cause to be purchased $10 million of equity securities of Parent in
connection with the merger. The obligation to fund the commitments under the equity commitment
letter is subject to the following conditions:
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satisfaction or waiver of the conditions precedent to closing of the financing under
the debt commitment letter described below;
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the substantially simultaneous contribution to Parent by Investment Vehicle; and
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the substantially simultaneous consummation of the merger in accordance with the
terms of the merger agreement.
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The Rollover Stockholders have committed to contribute an aggregate of 3,738,562 shares of
Airvanas common stock (with an aggregate value of approximately $28.6 million based on the merger
consideration) to Parent immediately prior to the consummation of the merger in exchange for equity
interests in Parent. The shares contributed will be cancelled in connection with the merger and
will not be entitled to receive any merger consideration upon completion of the merger. The
Rollover Stockholders, Parent, SAC PCG and GSO have agreed to cooperate to structure the
contribution of Airvana common stock held by the Rollover Stockholders to Parent as a tax-free
exchange to the extent permitted by law. The obligations to contribute the shares pursuant to the
rollover commitment letters are subject to the following conditions:
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satisfaction or waiver by Parent of the conditions precedent to Parents and Merger
Subs obligation to complete the merger;
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the substantially simultaneous closing of the financing under the debt commitment
letter described below;
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the substantially simultaneous funding by Investment Vehicle and the Co-Investors of
the amount of equity contemplated by the equity commitment letter from S.A.C. Capital
Management, LLC described above; and
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the substantially simultaneous consummation of the merger in accordance with the
terms of the merger agreement.
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Parent Interim Investors Agreement
In connection with the execution and delivery of the merger agreement, Parent, Merger Sub,
S.A.C. Capital Management, LLC, Investment Vehicle and the Rollover Stockholders have entered into
an interim investors agreement setting forth certain terms and conditions governing the
relationship among the parties until the consummation of the merger. In addition to certain
representations and warranties of the parties, the interim investors agreement provides for, among
other things, (i) control by Investment Vehicle over the actions or omissions of Parent and Merger
Sub, (ii) the entrance into, concurrent with the consummation of the merger, of a new limited
liability company agreement of Parent, (iii) the assignment by S.A.C. Capital Management, LLC to
Investment Vehicle of approximately $92.5 million of its equity commitment, (iv) the right of
Parent to enforce (including by specific performance) the provisions of each equity commitment
letter, (v) a prohibition on the transfer of obligations and/or rights under any equity commitment
letter without the written approval of Investment Vehicle, (vi) the payment or reimbursement by
Investment Vehicle of certain expenses incurred by Parent and
Merger Sub in connection with the merger agreement and transactions contemplated thereby, (vii)
the termination of certain agreements between the Rollover Stockholders and the Company, (viii) the
waiver of appraisal rights under Delaware law by the Rollover Stockholders, (ix) the good faith
pursuit of all necessary antitrust approvals by the Rollover Stockholders and (x) the entrance into
by Parent, at or prior to the consummation of the merger, of a management agreement with an
affiliate of Investment Vehicle.
- 59 -
Debt Financing
In connection with the execution and delivery of the merger agreement, Parent has received a
debt commitment letter for up to $170.0 million of debt financing from GSO, on behalf of certain
funds managed by GSO, consisting of a senior secured term loan
facility with a term of seven years. The debt commitment letter was
amended on January 13, 2010.
Either Merger Sub or Airvana will be the borrower under the senior secured facility (the
Borrower). The proceeds of borrowings under the senior secured facility will be used to finance,
in part, the payment of the amounts payable under the merger agreement and the payment of fees and
expenses incurred in connection with the merger.
The debt financing commitments are conditioned on the consummation of the merger on the terms
set forth in the merger agreement, as well as other customary conditions, including, but not
limited to:
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the negotiation, execution and delivery of definitive documentation;
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the investment by SAC PCG and/or its affiliates and other investors of cash equity in
Parent representing (inclusive of management equity rolled over in connection with the
merger) not less than 42.5% of the total pro forma capitalization of Parent, the
Borrower, Airvana, and each of their respective subsidiaries (after giving effect to
the merger and the related incurrence of indebtedness), plus the amount, if any, by
which the costs and expenses related to the merger exceed $25.0 million;
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no financing other than the senior secured facility and the equity financing
described above will be required in connection with the merger;
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the absence of (x) any amendments, supplements or modifications to or waivers of the
merger agreement and (y) the exercise by Parent and its affiliates of any consent
rights under section 5.1 of the merger agreement, in each case in a manner in any
material respect adverse to the interests of the lenders, without the consent of GSO;
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no increase of the purchase price initially set forth in the merger agreement
without the consent of GSO;
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the absence of a Company Material Adverse Effect (as defined in
The Merger
AgreementDefinition of Company Material Adverse
Effect
beginning on page 74.);
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Airvana achieving Adjusted EBITDA (as defined in the debt
commitment letter and described below in
The Merger AgreementDefinition of Adjusted EBITDA
) for the
latest twelve months ended at least 30 days prior to the closing of the merger of not
less than $95.0 million;
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the Borrower paying all fees and expenses then owing to GSO, the administrative
agent and the lenders;
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after giving effect to the merger and the payment of fees and expenses on the
closing date of the merger, the Borrower having a cash balance equal to or greater than
$7.5 million (not including the $15.0 million to be held on the closing date by Parent
or the Borrower to fund Femto Holdings);
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GSO receiving a sources and uses and funds flow for the merger consistent with the
conditions precedent set forth in the debt commitment letter;
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- 60 -
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concurrently with the funding of the senior secured facility, the lenders having
been issued, on a pro rata basis, equity constituting 5% of the membership interests of
Parent (which may be diluted by management options representing up to 3.5% of the
membership interests of Parent);
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as of and immediately after the closing of the merger, Parent, Airvana and its
subsidiaries having no indebtedness except for the senior secured facility, trade
payables, capital leases, equipment financings and other non-material indebtedness
expressly permitted to remain outstanding on the closing date pursuant to the merger
agreement or otherwise agreed to by GSO; and
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delivery of customary legal opinions, closing certificates (including a solvency
certificate) and insurance certificates.
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Under
the merger agreement, Parent and Merger Sub may replace or amend the
debt financing commitment to add lenders, arrangers or similar
entities or otherwise so long as the terms would not adversely impact
the ability of Parent and the Merger Sub to timely consummate the
merger or the likelihood of the consummation of the merger and related
transaction. As of the date of this proxy statement, no alternative financing arrangements or alternative
financing plans have been made in the event the debt financing described above is not available as
anticipated or otherwise. The documentation governing the senior secured facility has not been finalized and,
accordingly, its actual terms may differ from those described in this
proxy statement. There is no plan or arrangement regarding the
refinancing or repayment of the debt financing except as described
herein.
The
loans under the senior secured facilities are expected to bear
interest at a rate of 14.00% per annum if the principal amount
outstanding is less than $85 million and 14.75% per annum in all
other cases.
All obligations of the Borrower under the senior secured facility are expected to be
guaranteed on a senior secured basis by Parent and by each of Parents existing and subsequently
acquired or organized direct or indirect U.S. subsidiaries (subject to certain exceptions, the
Guarantors).
The obligations of the Borrower and the Guarantors under the senior secured facility are
expected to be secured, subject to permitted liens and other agreed upon exceptions, by a perfected
first-priority security interest in substantially all of the present and after acquired assets of
the Borrower and each Guarantor and by a first-priority lien on all of the capital stock of the
Borrower and each direct subsidiary of the Borrower and each subsidiary Guarantor (limited, in the
case of foreign subsidiaries, to 100% of the non-voting capital stock and 65% of the voting capital
stock of such subsidiaries).
The senior secured facility is expected to contain customary representations and warranties
and customary affirmative and negative covenants, including, among other things, restrictions on
indebtedness, investments, sales of assets, mergers and consolidations, liens, transactions with
affiliates and dividends and other distributions. The senior secured facility will require the
Borrower, Parent and the other Guarantors to cause Femto Holdings and its subsidiaries to separate
their legal, business and financial affairs from those of the Borrower, the Guarantors and their
respective subsidiaries (other than Femto Holdings and its subsidiaries). The financial
maintenance covenant will consist of a maximum total leverage ratio to be agreed upon. The senior
secured facility is expected to also include customary events of default, including with respect to
a change of control to be defined.
Limited
Guarantee; Remedies
In connection with the merger agreement, S.A.C. Capital Management, LLC has agreed to
guarantee the due and punctual payment of certain of the payment obligations of Parent under
the merger agreement, up to a maximum amount of the reverse termination fee of $25 million (plus
interest and enforcement costs incurred by the Company should the reverse termination fee not be
paid by Parent when due). This limited guarantee will remain in full force and effect until the earlier
of (i) closing of the transactions contemplated by the merger agreement, (ii) the termination
of the merger agreement under circumstances in which Parent would not
be obligated to pay the reverse
termination fee and (iii) the payment in full by Parent or the guarantor of all of the
obligations of Parent to the Company under the limited guarantee.
The Company cannot seek specific performance to require Parent and Merger Sub to complete
the merger, and the Companys exclusive remedy for the failure of Parent and Merger Sub to
complete the merger is the reverse termination fee in the circumstances described under
The Merger
Agreement Termination Fees
beginning on page 87.
- 61 -
Interests of the Companys Directors and Executive Officers in the Merger
In considering the recommendations of the board of directors, Airvanas stockholders should be
aware that certain of Airvanas directors and executive officers have interests in the transaction
that are different from, and/or in addition to, the interests of Airvanas stockholders generally.
The Rollover Stockholders will exchange approximately 60% of their shares of Airvana common stock
for interests in Parent and Messrs. Battat and Verma and Dr. Eyuboglu will serve as officers and directors of the surviving corporation and
as directors of Parent. The special committee and our board of directors were aware of these
potential conflicts of interest and considered them, among other matters, in reaching their
decisions to approve the merger agreement and to recommend that our stockholders vote in favor of
adopting the merger agreement.
Exchange of Shares by Rollover Stockholders
Concurrently with Airvana entering into the merger agreement, the Rollover Stockholders
entered into a rollover commitment letter agreement with Parent pursuant to which 1,278,026 of the
2,189,208 shares of Airvana common stock held by Mr. Battat and related trusts, 1,159,144 of the
1,901,089 shares held by Dr. Eyuboglu, his spouse and related trusts and 1,301,392 of the 2,245,838
shares held by Mr. Verma, his spouse and related trusts will be exchanged for equity interests of
Parent, valuing the exchanged shares at an amount per share equal to the merger consideration. As
a result, the Rollover Stockholders will be paid merger consideration for approximately 40% of the
shares of Airvana common stock that they hold. In addition, Mr. Battat and related trusts will
receive approximately 4,044,000 A Units, 508,000 D Units and 5,733,000 E Units in Parent, Dr. Eyuboglu, his
spouse and related trusts will receive approximately 3,134,000 A Units, 441,000 D Units and 5,733,000 E Units in
Parent, and Mr. Verma, his spouse and related trusts will receive approximately 4,222,000 A Units, 521,000 D
Units and 5,733,000 E Units in Parent, in each case in exchange for
their exchanged shares of Airvana common stock. The Rollover Stockholders expect the exchange of their
shares to be tax deferred for U.S. federal income tax purposes.
The Class E Units received by the Rollover Stockholders in exchange for their shares of
Airvana common stock will have a priority in receipt of distributions from the Parent following the
merger. Each Rollover Stockholder will be entitled to receive distributions in respect of the
Class E Units in the aggregate amount of $2,866,667 prior to distributions to any of the holders of
other equity interests in Parent, and upon payment of these distributions, all rights of the
Rollover Stockholders in the Class E Units will terminate.
Airvana Equity Compensation Plans
Upon the consummation of the merger, all unvested stock
options will vest and all stock options will be cancelled and converted into the right to receive a
cash payment equal to the number of outstanding options multiplied by the amount by which $7.65
exceeds the option exercise price, without interest and subject to applicable withholding taxes.
See
The Merger AgreementTreatment of Options
beginning on page 72 and
The Merger
AgreementEmployee Benefits
beginning on page 90 for a more complete discussion of the treatment of
these plans and awards.
- 62 -
The table below sets forth, as of January 3, 2010 (for each of our executive officers and
directors, and our executive officers and directors together as a group): (a) the number of stock
options held by such person, including unvested stock options that will vest upon the consummation
of the merger, (b) the cash payment that may be made in respect of the foregoing employee stock
options upon the consummation of the merger, (c) the cash payment that will be made in respect of
all other shares owned by such person (as such shares are reflected in the table on page 102 of
this proxy statement, but excluding stock options) upon consummation of the merger, and (d) the
total cash payment such person will receive in respect of all payments described in this table if
the merger is consummated (in all cases before applicable withholding taxes).
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Total Number
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Cash Payment for
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Cash Payment for
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of Vested and
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Vested and Unvested
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Other Beneficially
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Unvested Stock
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Stock Options at
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Owned Shares at
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Total Cash
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Name
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Options
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Closing
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Closing (1)
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Payment (1)
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Directors:
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Hassan Ahmed
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37,508
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$
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81,954
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$
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961,260
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$
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1,043,214
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Robert P. Badavas
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111,222
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$
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222,925
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$
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$
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222,925
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Randall S. Battat
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764,807
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$
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4,017,511
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$
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6,970,542
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$
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10,988,053
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Gururaj Deshpande
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75,017
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$
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106,335
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$
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65,775,227
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$
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65,881,562
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Paul J. Ferri
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75,017
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$
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106,335
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$
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117,228,745
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$
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117,335,080
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Anthony S. Thornley
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75,017
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$
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89,906
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$
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153,000
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$
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242,906
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Sanjeev Verma
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318,053
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$
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1,564,791
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$
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7,225,011
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$
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8,789,802
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Other Executive
Officers:
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Peter Anastos
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181,208
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$
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821,697
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$
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$
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821,697
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Michael Clark
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200,000
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$
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332,000
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$
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$
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332,000
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Laura Cranmer
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75,000
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$
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214,500
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$
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$
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214,500
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Vedat Eyuboglu
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387,404
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$
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2,020,358
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$
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5,675,879
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$
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7,696,237
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David Gamache
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204,325
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$
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1,048,637
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$
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2,015,690
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$
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3,064,327
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Jeffrey D. Glidden
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695,276
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$
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3,534,749
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$
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1,715,665
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$
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5,250,414
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David J. Nowicki
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331,169
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$
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578,974
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$
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$
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578,974
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Luis J. Pajares
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594,051
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$
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3,907,478
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$
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165,431
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$
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4,072,909
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Mark W. Rau
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673,571
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$
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3,472,904
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$
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$
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3,472,904
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Total of all
directors and
executive officers
as a group
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4,798,645
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$
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22,121,054
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$
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207,886,450
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$
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230,007,504
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(1)
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Amounts reflect the payments that would be received if such officers and directors were to
receive the merger consideration for all equity held by such officers and directors and, with
respect to the Rollover Stockholders, exclude the shares of Airvana common stock that the
Rollover Stockholders will exchange for equity interests in Parent, as described above in
Exchange of Shares by Rollover Stockholders
, as follows: Mr. Battat and related trusts,
1,278,026 shares; Dr. Eyuboglu, his spouse and related trusts, 1,159,144 shares; and Mr.
Verma, his spouse and related trusts, 1,301,392 shares.
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New Arrangements with the Surviving Corporation After Closing New Management
Arrangements
Effective
as of the closing, Messrs. Battat and Verma and Dr. Eyuboglu have each agreed to enter into
an employment agreement with the Company. The principal terms of the employment agreements are set
forth below:
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Title:
Mr. Battat will serve as the Companys President and
Chief Executive Officer, Mr. Verma will serve as the Companys Executive Vice President,
Corporate Development and Dr. Eyuboglu will serve as the Companys Chief Technology Officer. For as long as each executive is employed by the
Company and is entitled to serve on the board of directors of Parent in accordance with
the terms of the limited liability company agreement of Parent, the executive will also
serve as a member of the Companys board of directors for no additional compensation.
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- 63 -
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Term
: The term of employment for each executive will be three years from the
closing, subject to automatic renewal for additional one-year periods thereafter unless
either the Company or the executive provides a notice of non-renewal more than 90 days
before the expiration of the initial three-year term or any subsequent one-year renewal
term. Termination of an executives employment as a result of the Companys delivery
of a notice of non-renewal will be treated as a termination by the Company without
cause.
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Base Salary:
Mr. Battats annual base salary
will be $540,000. Each of Dr.
Eyuboglus and Mr. Vermas annual base salary will be $455,000.
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Annual Cash Bonus:
The annual cash bonus for each executive will be targeted at one
hundred percent (100%) of base salary, with the actual amount of bonus paid to the
executive determined based upon the level of achievement of performance goals
established by the Companys board of directors in consultation with the executive.
Notwithstanding the foregoing, each executive is guaranteed to receive a bonus equal to
fifty percent (50%) of his base salary in respect of each year during the initial
three-year term.
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Severance:
In the event of a termination of an executives employment prior to the
end of the executives initial three-year term for any reason other than by the Company
for cause, the terminated executive will receive continued payments of his base salary
for a period equal to the remainder of the initial three-year term. In addition, in
the event of a termination of an executives employment by the Company without cause or
by the executive for good reason (each as defined in the employment agreement), the
executive will receive:
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severance pay in an amount equal to the sum of the executives (A) then
current base salary and (B) target bonus, which amount will be paid in
substantially equal installments over the 12-month period following the date of
termination; and
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if the executive timely elects COBRA coverage, the Company will pay the cost
of the executives medical coverage under COBRA for the 12-month period
following the date of termination.
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Equity:
After the closing, the femtocell business will be separated into a separate
subsidiary, Femto Holdings, and Femto Holdings will adopt a new option plan that will
provide for the grant of options to acquire shares of Femto Holdings common stock.
Each executive will be eligible to receive option grants under the Femto Holdings plan
if he provides significant services to Femto Holdings. If an executive is selected to
receive a grant of Femto Holdings options, 25% of the options so granted will vest upon
the first anniversary of the grant date, with the remaining options then vesting
ratably at the end of each three-month period thereafter, in each case subject to the
executives continued employment on the applicable vesting dates.
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Restrictive Covenants:
Each executive will be subject to standard non-disclosure of
confidential information and ownership of intellectual property covenants, as well as
covenants not to compete or to solicit employees or customers for an 18-month period
following termination of employment for any reason. If an executive materially violates
any of these covenants, any outstanding Femto Holdings options held by the executive
will be forfeited.
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- 64 -
Airvana Director Compensation Arrangements and Other Interests
As of January 3, 2010, our non-employee directors held options to purchase an aggregate of
373,781 shares of Airvana common stock at a weighted average exercise price of $6.025 per share. As
with our other employees generally, the vesting of these options will be accelerated in connection
with the merger and these options will be cancelled and converted into the right to receive the
merger consideration or otherwise be cashed out as described elsewhere in this proxy statement. The
aggregate cash payment that will be made to these directors in respect of options upon the
consummation of the merger is anticipated to be approximately $607,455, based on a cash merger
consideration of $7.65 per share. Additionally, these directors will receive an aggregate cash
payment in respect of their other beneficially owned shares of Airvana common stock in the amount
of $184,118,232. The Chair of the special committee received remuneration in the amount of $15,000
per month between July 9, 2009 and December 17, 2009, and will receive $7,500 per month from December 18, 2009
to the Effective Time, plus expenses, in consideration of his acting in such capacity, and each
other member of the special committee received remuneration in the amount of $10,000 per month
between July 9, 2009 and December 17, 2009, and will receive $5,000 per month from December 18, 2009 to the
Effective Time, plus expenses, in consideration of his acting in such capacity. The members of the
board of directors (excluding Messrs. Battat and Verma) are independent of and have no economic
interest or expectancy of an economic interest in Parent or its affiliates, and will not retain an
economic interest in the surviving corporation or Parent following the merger.
Indemnification and Insurance
The surviving corporation has agreed to indemnify, to the greatest extent permitted by law,
each of our present and former directors and executive officers against all expenses, losses and
liabilities (and to comply with all of our obligations to advance funds for expenses) incurred in
connection with any claim, proceeding or investigation arising out of any act or omission in their
capacity as an officer or director occurring on or before the closing date of the merger.
The merger agreement requires that we maintain, and that following the closing date of the
merger the surviving corporation maintain, directors and officers liability insurance policies in
an amount and scope at least as favorable as the Companys existing policies and with a claims
period of at least six years from the closing date of the merger for claims arising from facts or
events that occurred on or prior to the closing date, or a six-year prepaid tail policy in lieu
of such continued coverage. If the annual premiums of insurance coverage exceed 300% of our current
annual premium, the surviving corporation must obtain a policy with the greatest coverage available
for a cost not exceeding 300% of the current annual premium paid by us.
Retention Bonus and Severance Arrangements
The special committee has approved retention bonus arrangements pursuant to which bonuses for
up to 10 employees at an aggregate cost not to exceed $250,000 would be paid if (a) the merger is
consummated and (b) the affected employee remains employed as of the effective time of the merger
(or is terminated without cause before the effective time of the merger). The special committee
has also approved severance arrangements, pursuant to which payments for up to 10 employees at an
aggregate cost not to exceed $1,000,000 and in lieu of any other severance arrangements for them,
would be made if the merger is consummated and (i) such employee is terminated without cause before
the effective time or (ii) at or within 12 months after the effective time such employee is
terminated without cause or resigns her/his employment for good reason (defined as a relocation
more than 40 miles from the current location of employment, a material reduction in job
responsibility, or a reduction in salary or bonus opportunity). Airvana will pay the employer side of medical
insurance premiums (COBRA coverage) for a period equal to the lesser of the months with
respect to which severance is paid or the period for which the former employee is eligible for continued
coverage. Receipt of the severance benefits
is contingent on the individuals executing a release of claims against the Company that becomes
binding. In connection with these arrangements, the compensation committee of our board of
directors approved retention bonuses for Peter Anastos in the amount of $51,250 and David Gamache in the amount of $50,000 and severance arrangements for such executive officers of one year of
salary continuation and benefits. The Rollover Stockholders are not eligible to participate in the
retention bonus or severance arrangements described above.
Material U.S. Federal Income Tax Consequences of the Merger to Our Stockholders
The following discussion summarizes the material U.S. federal income tax consequences of the
merger to holders of Airvana common stock whose shares will be converted to cash in the merger. It does not address any tax consequences to the Rollover Stockholders or other holders who will own (actually or constructively after the application of ownership attribution rules) any shares of Airvana common stock after the merger. This discussion is based upon the provisions of the
Internal Revenue Code of 1986, as amended, which we refer to as the Code, the U.S. Treasury
Regulations promulgated thereunder and judicial and administrative rulings, all as in effect as of
the date of this proxy statement and all of which are subject to change or varying interpretation,
possibly with retroactive effect. Any such changes could affect the accuracy of the statements and
conclusions set forth herein.
- 65 -
This discussion assumes that holders of Airvana common stock hold their shares as capital
assets within the meaning of Section 1221 of the Code (generally, property held for investment).
This discussion does not address all aspects of U.S. federal income taxation that may be relevant
to a holder of Airvana common stock in light of such holders particular circumstances, nor does it
discuss the special considerations applicable to holders of our common stock subject to special
treatment under the U.S. federal income tax laws, such as, for example, financial institutions or
broker-dealers, mutual funds, partnerships or other pass-through entities and their partners or
members, tax-exempt organizations, insurance companies, dealers in securities or foreign
currencies, traders in securities who elect mark-to-market method of accounting, controlled foreign
corporations, passive foreign investment companies, U.S. expatriates, holders who acquired their
Airvana common stock through the exercise of options or otherwise as compensation, holders who hold
their Airvana common stock as part of a hedge, straddle, constructive sale or conversion
transaction, U.S. holders whose functional currency is not the U.S. dollar, and holders who
exercise appraisal rights. This discussion does not address any aspect of foreign, state, local,
alternative minimum, estate, gift or other tax law that may be applicable to a U.S. holder.
We intend this discussion to provide only a general summary of the material U.S. federal
income tax consequences of the merger to holders of Airvana common stock. We do not intend it to be
a complete analysis or description of all potential U.S. federal income tax consequences of the
merger. The U.S. federal income tax laws are complex and subject to varying interpretation.
Accordingly, the Internal Revenue Service may not agree with the tax consequences described in this
proxy statement.
If an entity or arrangement treated as a partnership for U.S. federal income tax purposes
holds Airvana common stock, the tax treatment of a partner in such partnership generally will
depend on the status of the partner and activities of the partnership. If you are a partner of a
partnership holding Airvana common stock, you should consult your own tax advisor.
All holders should consult their own tax advisor to determine the particular tax consequences
to them (including the application and effect of any state, local or foreign income and other tax
laws) of the receipt of cash in exchange for shares of Airvana common stock pursuant to the merger.
For purposes of this discussion, the term U.S. holder means a beneficial owner of Airvana
common stock that is, for U.S. federal income tax purposes:
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an individual citizen or resident of the United States;
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a corporation (including any entity treated as a corporation for U.S. federal income
tax purposes) created or organized in or under the laws of the United States, any state
thereof or the District of Columbia;
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a trust if (1) its administration is subject to the primary supervision of a court
within the United States and one or more U.S. persons have the authority to control all
substantial decisions of the trust or (2) it has a valid election in effect under
applicable U.S. Treasury Regulations to be treated as a U.S. person; or
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an estate the income of which is subject to U.S. federal income tax regardless of
its source.
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A non-U.S. holder is a beneficial owner (other than a partnership) of Airvana common stock
that is not a U.S. holder.
Treatment of the Merger
The conversion of shares of Airvana common stock into cash pursuant to the merger will be in
part a taxable redemption and in part a taxable sale for U.S. federal income tax purposes.
- 66 -
A U.S.
holder generally will recognize gain or loss for U.S. federal income tax purposes equal to the
difference, if any, between the amount of cash received pursuant to the merger and such U.S.
holders adjusted tax basis in the shares converted into cash pursuant to the merger. Such gain or
loss generally will be capital gain or loss, and will be long-term capital gain or loss if the
holders holding period for such shares exceeds one year as of the date of the merger. Long-term
capital gains for certain non-corporate U.S. holders, including individuals, are generally eligible
for a reduced rate of federal income taxation. The deductibility of capital losses is subject to
limitations. If a U.S. holder acquired different blocks of Airvana common stock at different times
or different prices, such U.S. holder must determine its tax basis, holding period, and gain or
loss separately with respect to each block of Airvana common stock.
Any gain realized by a non-U.S. holder upon the conversion of shares in the merger generally
will not be subject to United States federal income tax unless: (i) the gain is effectively
connected with a trade or business of the non-U.S. holder in the United States (and, if required by
an applicable income tax treaty, is attributable to a United States permanent establishment or
fixed base of the non-U.S. holder), (ii) the non-U.S. holder is an individual who is present in the
United States for 183 days or more in the taxable year of the
merger, and certain other
conditions are met, or (iii) we are or have been a United States real property holding
corporation for United States federal income tax purposes at any time during the shorter of the
five-year period ending on the date of the merger or the period that the non-U.S. holder held the
shares, and the non-U.S. holder owns, or is treated as owning, more than five percent of our
shares.
Net gain realized by a non-U.S. holder described in clause (i) of the preceding sentence will
be subject to tax at generally applicable United States federal income tax rates. Any gains of a
foreign corporation non-U.S. holder described in clause (i) of the preceding sentence may also be
subject to an additional branch profits tax at a 30% rate, or such lower rate as may be specified
by an applicable income tax treaty. Gain realized by an individual non-U.S. holder described in
clause (ii) of such sentence will be subject to a flat 30% tax, which may be offset by
United States source capital losses, even though the individual is not considered a resident of the
United States. We currently are not a United States real property holding corporation.
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Information Reporting and Backup Withholding
A U.S. holder may, under certain circumstances, be subject to information reporting and backup
withholding at the applicable rate (currently 28%) with respect to the cash received pursuant to
the merger, unless such holder properly establishes an exemption or provides its correct tax
identification number and otherwise complies with the applicable requirements of the backup
withholding rules.
A non-U.S. holder is required to certify its foreign status under penalties of perjury or
otherwise establish an exemption in order to avoid information reporting and backup withholding on
disposition proceeds where the transaction is effected by or through a United States office of a
broker. United States information reporting and backup withholding generally will not apply to a
payment of proceeds from a disposition of common stock where the transaction is effected outside the
United States through a foreign office of a foreign broker. However, information reporting
requirements, but not backup withholding, generally will apply to such a payment if the broker is
(i) a U.S. person, (ii) a foreign person that derives 50% or more of its gross income for certain
periods from the conduct of a trade or business in the United States, (iii) a controlled foreign
corporation as defined in the Code or (iv) a foreign partnership with certain United States
connections, unless the broker has documentary evidence in its records that the holder is a
non-U.S. holder and certain conditions are met or the holder otherwise establishes an exemption.
Backup
withholding is not an additional tax. Amounts withheld under the backup
withholding rules may be refunded or credited against the holders United States federal income tax
liability, if any, provided that certain required information is furnished to the IRS in a timely
manner. Holders should consult their own tax advisors regarding application of backup withholding
in their particular circumstances and the availability of and procedure for obtaining an exemption
from backup withholding under current United States Treasury Regulations.
Certain Relationships Between Parent and Airvana
There are no material relationships between Parent and Merger Sub or any of their respective
affiliates, on the one hand, and Airvana or any of its affiliates, on the other hand, other than in
respect of the merger agreement and those arrangements described above under
Background of the
Merger
beginning on page 19 and
Interests of the Companys Directors and Executive Officers in
the Merger
beginning on page 62.
On August 25, 2009, we entered into a letter agreement obligating us, subject to the terms and
conditions set forth therein, to reimburse SAC PCG for up to $1,000,000 of its out-of-pocket costs
and expenses (including the fees and expenses of legal and accounting advisors and the out of
pocket costs of its financial advisors and financing sources) incurred in connection with its due
diligence investigation of us during the period from August 17, 2009 until our termination of such
investigation. The letter agreement only obligated us to reimburse such expenses if (i) we entered
into a definitive agreement by February 25, 2010 to sell Airvana to a third party and (ii) SAC PCG
pursued in good faith through the date we terminated such due diligence investigation its offer to
acquire us in a transaction in which holders of our common stock would receive at least $7 per
share. The merger agreement expressly supersedes the letter agreement.
- 68 -
Litigation Related to the Merger
On
December 18, 2009, we, our directors, SAC PCG, Parent, GSO, Sankaty and
ZelnickMedia, LLC were named as
defendants in a putative class action complaint, captioned
Israni v. Airvana, Inc, et al.
, C.A. No.
5153-CC, filed in the Court of Chancery of the State of Delaware. That action, purportedly brought
on behalf of a class of
stockholders, alleges that our directors breached their fiduciary duties in connection with
the proposed merger by, among other things, failing to fully inform themselves of Airvanas market
value, maximize stockholder value, obtain the best financial and other terms, and act in the best
interests of public stockholders, and seeking to benefit themselves improperly. The Complaint
further alleges that the non-Airvana defendants aided and abetted the directors purported
breaches. The plaintiff seeks injunctive and other equitable relief, including to enjoin us and
Parent from consummating the merger, in addition to fees and costs.
On December 31, 2009, the plaintiff served document requests on us.
On December 31, 2009, a second
putative class action complaint was filed against us, our directors,
SAC PCG,
Parent, GSO, Sankaty Advisors, LLC and ZelnickMedia, LLC in the Court of Chancery of the State of Delaware in an action captioned
Gittleson v.
Airvana, Inc., et al.
, C.A. No. 5179-CC. That action, purportedly brought on behalf of a class
of stockholders, also alleges that our directors breached their fiduciary duties in connection with
the proposed merger by, among other things, failing to fully inform themselves of Airvanas market
value, maximize shareholder value, obtain the best financial and other terms, and act in the best
interest of public stockholders, and seeking to benefit themselves improperly. The Complaint
further alleges that the non-Airvana defendants aided and abetted the directors purported
breaches. The plaintiff seeks injunctive and other equitable relief, including to enjoin us and
Parent from consummating the merger, in addition to fees and costs. The plaintiffs in the
Israni
and
Gittleson
suits have requested the Chancery Court to consolidate the actions. On January 8,
2010, the Chancery Court consolidated the actions under the caption In re Airvana Stockholders
Litigation.
On
December 28, 2009, we, our directors S.A.C. Private Capital
Partners LP (a non-existant entity), Parent, GSO, Sankaty Advisors,
LLC and
ZelnickMedia, LLC were named as
defendants in a third putative class action complaint, captioned
Moutney v. Airvana, Inc., et al.
,
C.A. No. 09-5470, filed in the Superior Court, Business Litigation Session, of Suffolk County of
the Commonwealth of Massachusetts. That action, purportedly brought on behalf of a class of
stockholders, alleges that our directors breached their fiduciary duties in connection with the
proposed merger by, among other things, failing to fully inform themselves of Airvanas market
value, maximize shareholder value, obtain the best financial and other terms, and act in the best
interest of public stockholders, and seeking to benefit themselves improperly. The Complaint
further alleges that we and the non-Airvana defendants aided and abetted the directors purported
breaches. The plaintiff seeks declaratory, injunctive and other equitable relief, including to
enjoin us and Parent from consummating the merger, in addition to fees and costs.
On January 6, 2010,
we, our directors, Parent and Merger Sub were named as defendants in a fourth putative class action complaint, captioned
Short v. Airvana,
Inc., et al.,
C.A. No. 10-0042, filed in the Superior Court, Business Litigation Session, of
Suffolk County of the Commonwealth of Massachusetts. That action, purportedly brought on behalf
of a class of stockholders, alleges that our directors breached their fiduciary duties in
connection with the proposed merger by, among other things, failing to fully inform themselves
of our market value, maximize shareholder value, obtain the best financial and other terms,
and act in the best interest of public stockholders, and seeking to benefit themselves improperly.
The Complaint further alleges that we, Parent and Merger Sub aided and abetted the directors
purported breaches. The plaintiff seeks declaratory, injunctive and other equitable relief,
including to enjoin us and affiliates of Parent from consummating the merger, in addition to fees
and costs.
On January 12, 2009,
we, our directors, Merger Sub, 72 Mobile Investors, LLC, SAC PCG, GSO, Sankaty Advisors, LLC and ZelnickMedia LLC
were named as defendants in a fifth putative class action complaint, captioned
Willis v. Airvana,
Inc. et al.,
C.A. No. 5200, filed in the Court of Chancery of the State of Delaware. That action,
purportedly brought on
behalf of a class of stockholders, alleges that our directors breached their fiduciary duties
in connection with the proposed merger by, among other things, failing to fully inform themselves
of our market value, maximize shareholder value, obtain the best financial and other terms, and
act in the best interest of public stockholders, and seeking to benefit themselves improperly.
The Complaint further alleges that the non-Airvana defendants aided and abetted the directors
purported breaches. The plaintiff seeks declaratory, injunctive and other equitable relief,
including to enjoin us and affiliates of Parent from consummating the merger, in addition to
unspecified damages, fees and costs.
We
believe that the claims asserted in these five suits are without merit.
Fees and Expenses of the Merger
We estimate that we will incur, and will be responsible for paying, transaction-related fees
and expenses, consisting primarily of financial, legal, accounting and tax advisory fees, SEC
filing fees and other related charges, totaling approximately
$17 million. This amount includes
the following estimated fees and expenses:
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Description
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Amount to be Paid
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SEC filing fee
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$
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38,248
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Printing, proxy solicitation and mailing expenses
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$
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40,000
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Financial, legal, accounting and tax advisory fees
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$
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10,000,000
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Miscellaneous expenses
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$
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7,000,000
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Total
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$
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17,078,248
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- 69 -
THE MERGER AGREEMENT (PROPOSAL NO. 1)
The description below describes the material provisions of the merger agreement. The
description is qualified in its entirety by reference to the merger agreement, which is attached as
Annex A and is incorporated herein by reference. You should read the merger agreement carefully in
its entirety, as it is the legal document governing the transaction.
The merger agreement and the following description are intended to provide information
regarding the terms of the merger. It is not intended to provide any other factual information
about Airvana, Parent or Merger Sub. Although the merger agreement contains representations and
warranties made by each of Airvana, Parent or Merger Sub, the assertions embodied in those
representations and warranties were made for purposes of the merger agreement and the closing
conditions under the merger agreement, were made for the benefit of the other parties to the merger
agreement, were made as of specific dates and have been used for purposes of allocating risk
between the respective parties, rather than establishing matters of fact. The representations and
warranties are qualified in a number of important respects, including through the use of negotiated
exceptions for certain matters disclosed by the party that made the representations and warranties
to the other parties. Although the representations and warranties in the merger agreement may not
constitute the actual state of facts about the parties to the merger agreement as of a specific
date, any specific material facts of which Airvana is currently aware that materially qualify the
representations and warranties in the merger agreement have been disclosed in this proxy statement
or in the information contained in Airvanas public reports filed with the SEC, as applicable. You
should read the merger agreement together with the other information regarding Airvana included in
this proxy statement and the information that Airvana publicly files in reports and statements with
the SEC. See Where You Can Find More Information beginning on page 107.
The Merger
Under the terms of the merger agreement, Merger Sub, a wholly owned subsidiary of Parent, will
merge with and into Airvana, with Airvana continuing as the surviving corporation of the merger. As
a result of the merger, the separate corporate existence of Merger Sub will cease, and Airvana will
become a wholly owned subsidiary of Parent. We sometimes refer to Airvana after the consummation of
the merger as the surviving corporation. The by-laws of Airvana will also be amended and restated
in their entirety so that, as soon as practicable following the effective time of the merger (as
explained below) they are identical to the by-laws of Merger Sub as in effect immediately prior to
the effective time of the merger, except that all references to the name of Merger Sub shall be
changed to refer to Airvana. The directors of Merger Sub immediately prior to the effective time
of the merger shall be the directors of Airvana. The officers of Airvana shall continue in their
respective positions after the merger.
Effective Time of the Merger Agreement
The closing of the merger will occur no later than the second business day following the
satisfaction or waiver of all of the closing conditions set forth in the merger agreement or at
such other date as the parties may agree in writing. The merger will become effective upon the
filing of a certificate of merger with the Delaware Secretary of State (or such later time as may
be agreed in writing by Airvana and Parent and specified in the certificate of merger). We intend
to complete the merger as promptly as practicable, subject to receipt of stockholder approval and
all requisite regulatory approvals. Although we expect to complete the merger by the end of the
first quarter of 2010, we cannot specify when, or assure you that, all conditions to the merger
will be satisfied or waived.
Merger Consideration
At the effective time of the merger, each issued and outstanding share of Airvana common
stock, other than treasury shares, any shares owned by one of our wholly owned subsidiaries, any
shares held by Parent, Merger Sub or any other wholly owned subsidiary of Parent, and shares held
by stockholders who have demanded and not effectively withdrawn or lost appraisal rights, will be
cancelled and automatically converted into the right to receive $7.65 in cash, without interest and
less applicable withholding taxes. The per share merger consideration will be equitably adjusted in
the event of any reclassification, stock split, reverse split, stock dividend, reorganization,
recapitalization or other like change with respect to Airvana common stock that occurs prior to the
effective time of the merger. Treasury shares and any shares of our
capital stock held by Parent,
Merger Sub or any other wholly
owned subsidiary of Parent, will be automatically cancelled and extinguished without any
conversion of such shares and no consideration will be paid for such shares. We expect such shares
held by Parent to include certain shares that the Rollover
Stockholders have agreed to contribute to Parent immediately prior to completion of the merger in exchange
for equity interests in Parent. Any shares of our common stock held by any of our wholly owned
subsidiaries will remain outstanding. Shares held by our stockholders who perfect their appraisal
rights will be converted into the right to receive such consideration as may be determined by the
Delaware Court of Chancery under Section 262 of the DGCL.
- 70 -
Payment Procedures
At or prior to the effective time of the merger, Parent will deposit, or cause to be
deposited, cash with an exchange agent in order to permit the payment of the merger consideration.
Promptly (and in any event within three business days) after the effective time, the exchange agent
will mail to each holder of record of Airvana common stock that was issued and outstanding
immediately prior to the effective time of the merger a letter of transmittal and instructions for
use in effecting the surrender of the certificates that represent shares of Airvana common stock in
exchange for the merger consideration. If any of your certificates representing Airvana common
stock have been lost, stolen or destroyed, you will be entitled to obtain the merger consideration
after you make an affidavit of that fact and, if required by the exchange agent, in its discretion,
deliver a bond, in such sum as the exchange agent may reasonably direct, as indemnity against any
claim made that may be made against Parent, the exchange agent and the surviving corporation with
respect to such certificates. In the event of a transfer of ownership of Airvana common stock which
is not registered in the transfer records of Airvana, the merger consideration may be paid to a
person other than the person in whose name the certificate so surrendered is registered, if such
certificate is presented to the exchange agent, accompanied by all documents required to evidence
and effect such transfer and by evidence that any applicable stock transfer taxes have been paid.
No interest will be paid or will accrue on the cash payable upon the surrender of any certificate.
Parent is entitled to cause the exchange agent to deliver to it any funds that have not been
distributed within one year after the effective time of the merger. After that date, holders of
certificates who have not complied with the instructions to exchange their certificates will be
entitled to look only to Parent for payment of the merger consideration.
None
of Parent, Merger Sub, Airvana, the surviving corporation, or the exchange agent will have any liability to holders
of shares of Airvana common stock for any amount delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
You should not send your Airvana stock certificates (if any) to the exchange agent until you
have received transmittal materials from the exchange agent. Do not return your Airvana stock
certificates (if any) with the enclosed proxy.
Appraisal Rights
Shares of Airvana common stock issued and outstanding immediately prior to the effective time
of the merger that are held by any holder who has demanded and not lost appraisal rights to such
shares will not be converted into the right to receive the merger consideration. Instead such
stockholder will only be entitled to payment of the appraised value of such shares in accordance
with the DGCL. At the effective time of the merger, all such shares will automatically be cancelled
and will cease to exist or be outstanding, and each holder will cease to have any rights with
respect to the shares, except for rights granted under Section 262 of the DGCL. In the event a
stockholder loses (through failure to perfect or otherwise) the right to appraisal under the DGCL,
then the rights of such holder will be deemed to have been converted at the effective time of the
merger into the right to receive the merger consideration described above. We are required to serve
prompt notice to Parent of any demands for appraisal that we receive, and Parent has the right to
participate in all negotiations and proceedings with respect to demands for appraisal under the
DGCL. We may not, without Parents prior written consent, make any payment with respect to, or
settle or offer to settle, any demands for appraisal.
These rights in general are discussed more fully under the section of this proxy statement
entitled
Appraisal Rights
beginning on page 91.
- 71 -
Treatment of Options
In connection with the merger, each option to purchase shares of Airvana common stock will be
fully vested, to the extent not already fully vested, and cancelled at the effective time of the
merger and will solely represent the right to receive in exchange and
in consideration of each such option,
at the effective time of the merger or as soon as practicable thereafter (but in any event not
later than three business days following the effective time of the merger), a cash payment equal to
the product of (i) the number of shares of Airvana common stock subject to such option immediately
prior to the effective time of the merger, multiplied by (ii) the excess, if any, of the merger
consideration of $7.65 per share of Airvana common stock over the exercise price per share of
Airvana common stock subject to such option.
Representations and Warranties
In the merger agreement, we made representations and warranties to Parent and Merger Sub,
including those relating to the following:
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our corporate organization, standing and power;
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our authorization (including board of directors approval and
direction to submit the merger agreement to a stockholder
vote and recommendation of its approval), execution, delivery, performance and the enforceability of the merger agreement;
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the absence of conflicts with, or violations of, our organizational documents,
applicable laws or other obligations as a result of our execution of the merger
agreement or consummation of the merger and the identification of government filings
and consents required in connection therewith;
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documents filed by us with the SEC, the accuracy and completeness of the financial
statements and other information contained in such documents;
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the absence of undisclosed liabilities;
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the absence of a Company Material Adverse Effect on Airvana since December 28,
2008 and the absence of certain other changes or events involving Airvana since June
28, 2009;
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our filing of tax returns, payment of taxes and other tax matters;
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our lease arrangements;
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our intellectual property;
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our material contracts;
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the absence of pending or threatened litigation involving us;
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environmental matters with respect to our operations;
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our employee benefit plans, matters relating to the Employee Retirement Income
Security Act and other matters concerning employee benefits and employment agreements;
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our compliance with laws;
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our possession of and compliance with permits, licenses and approvals to conduct our
business;
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our employees and other labor matters;
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our insurance policies;
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the receipt by the special committee of our board of directors of an opinion of its
financial advisor;
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that we have taken all action to ensure that the anti-takeover provisions of the
DGCL do not apply to the execution, delivery or performance of the merger agreement
and certain ancillary agreements entered into, or expected to be entered into, in
connection with the merger agreement or the consummation of the merger or the
transactions contemplated by such ancillary agreements; and that no
other state anti-takeover statute applies to Airvana as a result of
the transactions contemplated by the merger agreement or certain
ancillary agreements, including the merger;
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the absence of undisclosed obligations to brokers and investment bankers; and
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the absence of any representations or warranties by Parent and Merger Sub to us
other than those contained in the merger agreement.
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In the merger agreement, Parent and Merger Sub made representations and warranties to us,
including those relating to the following:
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their respective organization, standing and power;
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their respective authorization, execution, delivery, performance and the
enforceability of the merger agreement;
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the absence of conflicts with, or violations of, their organizational documents,
applicable laws or other obligations as a result of their execution of the merger
agreement or consummation of the merger and the identification of government filings
and consents required in connection therewith;
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the accuracy of the material to be provided by Parent and Merger Sub for inclusion
in this proxy statement and the Schedule 13E-3;
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the lack of application of the reporting requirements of the Securities Exchange Act
of 1934, as amended, to Parent and Merger Sub;
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the lack of any business operations of Merger Sub;
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the validity and enforceability of the equity commitment letter from S.A.C. Capital
Management, LLC (referred to herein as the equity commitment letter) and the debt
commitment letter from GSO Capital Partners LP (referred to herein as the debt
commitment letter);
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the absence of any default under the equity commitment letter and the debt
commitment letter;
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the absence of contingencies related to the funding of the financing contemplated by
the equity commitment letter and the debt commitment letter other than as set forth in
the equity commitment letter or the debt commitment letter;
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payment of fees under the equity commitment letter and the debt commitment letter;
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assuming the accuracy of certain representations and warranties, the sufficiency of
the funds contemplated to be provided by the equity commitment letter and the debt
commitment letter, together with Airvanas cash and cash equivalents, to make all
payments required to be made by Parent, the surviving corporation and Merger Sub in
connection with the merger;
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the solvency of the surviving corporation immediately following the merger;
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the due execution, effectiveness and validity of the guaranty of the obligations of
Parent under the merger agreement issued to Airvana by S.A.C. Capital
Management, LLC;
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the absence of any contracts related to the merger between Parent or Merger Sub and
our management, directors or stockholders;
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the absence of any representations or warranties by Airvana to Parent and Merger Sub
other than those contained in the merger agreement; and
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their investigation of us and access to information in connection with such
investigation.
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Definition of Company Material Adverse Effect
Several of the representations and warranties made by us in the merger agreement and certain
conditions to performance by Parent and Merger Sub of their obligations under the merger agreement
are qualified by reference to whether the item in question would have a Company Material Adverse
Effect on us. The merger agreement provides that a Company Material Adverse Effect means any
effect, change, event, circumstance or development that is, or would be reasonably likely to be,
individually or in the aggregate, materially adverse to the business, financial condition or
results of operations of Airvana and our subsidiaries, taken as a whole.
However, none of the following, or any effect, change, event, circumstance or development
arising or resulting from any of the following shall constitute, or shall be considered in
determining whether there has occurred, or may, would or could occur, a Company Material Adverse
Effect:
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general economic conditions (or changes in such conditions) in the United States or
any other country or region in the world, or conditions in the global economy generally
(except effects, changes, events, circumstances or developments arising or resulting
from such conditions (or changes in such conditions) may be considered if, and only to
the extent that, they adversely affect Airvana and our subsidiaries, taken as a whole,
in a materially disproportionate manner relative to other participants operating in
industries and the affected geography in which Airvana and our subsidiaries operate);
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conditions (or changes in such conditions) in the securities markets, credit
markets, currency markets or other financial markets in the United States or any other
country or region in the world, including (i) changes in interest rates in the United
States or any other country or region in the world and changes in exchange rates for
the currencies of any countries and (ii) any suspension of trading in securities
(whether equity, debt, derivative or hybrid securities) generally on any securities
exchange or over-the-counter market operating in the United States or any other country
or region in the world (except effects, changes, events, circumstances or developments
arising or resulting from such conditions (or changes in such conditions) may be
considered if, and only to the extent that, they adversely affect Airvana and our
subsidiaries, taken as a whole, in a materially disproportionate manner relative to
other participants operating in industries and the affected geography in which Airvana
and our subsidiaries operate);
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conditions (or changes in conditions) in the industries or markets in which Airvana
operates (except effects, changes, events, circumstances or developments arising or
resulting from such conditions (or changes in such conditions) may be considered if,
and only to the extent that, they adversely affect Airvana and our subsidiaries, taken
as a whole, in a materially disproportionate manner relative to other participants
operating in industries in which Airvana and our subsidiaries operate);
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political conditions (or changes in such conditions) in the United States or any
other country or region in the world or acts of war, sabotage or terrorism (including
any escalation or general
worsening of any such acts of war, sabotage or terrorism) in the United States or
any other country or region in the world occurring after the date of the merger
agreement (except effects, changes, events, circumstances or developments arising or
resulting from such conditions (or changes in such conditions) may be considered if,
and only to the extent that, they adversely affect Airvana and our subsidiaries,
taken as a whole, in a materially disproportionate manner relative to other
participants operating in industries and the affected geography in which the Airvana
and our subsidiaries operate);
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earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other
natural disasters, weather conditions and other force majeure events in the United
States or any other country or region in the world occurring after the date of the
merger agreement (except effects, changes, events, circumstances or developments
arising or resulting from such conditions may be considered if, and only to the extent
that, they adversely affect Airvana and our subsidiaries, taken as a whole, in a
materially disproportionate manner relative to other participants operating in
industries and the affected geography in which Airvana and our subsidiaries operate);
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the announcement of the merger agreement or the pendency or consummation of the
transactions contemplated thereby, including the identity of Parent or the termination
or potential termination of (or the failure or potential failure to renew or enter
into) any contracts with customers, suppliers, distributors or other business partners,
to the extent caused by the pendency or the announcement of the transactions
contemplated by the merger agreement;
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changes after the date of the merger agreement in law or other legal or regulatory
conditions (or the interpretation thereof) or changes after the date of the merger
agreement in GAAP or other accounting standards (or the interpretation thereof) or that
result from any action taken for the purpose of complying with any such changes;
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any actions taken or failure to take action, in each case, to which Parent has
approved, consented to or requested in writing; or compliance with the terms of, or the
taking of any action required by, the merger agreement (including actions taken in
order consummate the merger but excluding actions taken in order to comply with our
obligations to operate our business in the ordinary course of business consistent in
all material respects with past practice and to use our commercially reasonable efforts
to preserve our and each of our subsidiaries business
organization and good standings and assets, rights and properties and relationships and contracts with
customers, suppliers, distributors, strategic partners and others we
do business with and keep available the services of our
officers, employees and consultants);
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any fees or expenses incurred in connection with the transactions contemplated by
the merger agreement;
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changes in our stock price or the trading volume of our stock, or any failure by us
to meet any public estimates or expectations of our revenue, earnings or other
financial performance or results of operations for any period, or any failure by us to
meet any internal budgets, plans or forecasts of our revenues, earnings or other
financial performance or results of operations (except that no such change or failure
will
prevent or otherwise affect a determination that any effect, change,
event, circumstance or development underlying such change or failure has resulted in,
or contributed to, a Company Material Adverse Effect); and
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any legal proceedings made or brought by any of our current or former stockholders
(on their own behalf or on our behalf) against us arising out of or related to the
merger agreement or the merger.
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Definition of Buyer Material Adverse Effect
Certain of the representations and warranties made by Parent and Merger Sub in the merger
agreement and certain conditions to our performance of our obligations under the merger agreement
are qualified by reference to whether the item in question would have a Buyer Material Adverse
Effect. The merger agreement provides that a
Buyer Material Adverse Effect means any effect, change, event, circumstance or development
that would, individually or in the aggregate, prevent or materially delay or materially impair the
ability of Parent or Merger Sub to consummate the transactions contemplated by the merger
agreement.
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Equity Financing
Parent
and Merger Sub have committed to provide, subject to the equity
commitment letter, the financing contemplated by the equity
commitment letter, including by:
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maintaining in effect the equity commitment letter;
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ensuring the accuracy of all representations or warranties made by them in the
equity commitment letter;
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complying with all of their covenants in the equity
commitment letter and timely
satisfying all conditions applicable to them set forth in the equity commitment letter
that are within their control;
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upon the satisfaction of all applicable conditions, consummating the financing
contemplated by the equity commitment letter at or prior to the closing; and
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fully enforcing the obligations of S.A.C. Capital Management, LLC under the equity commitment letter.
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Parent and Merger Sub have also agreed not to amend, alter or waive any term of the equity
commitment letter without our written consent and to notify us promptly if (1) the equity
commitment letter expires or is terminated, (2) the equity investor refuses to provide the
financing contemplated by the equity commitment letter on the terms set forth therein (or expresses
in writing an intent to do so), or (3) Parent or Merger Sub no longer believes in good faith that
it will be able to obtain the financing contemplated by the equity commitment letter on the terms
set forth therein.
Debt Financing
Parent and Merger Sub have agreed to use their reasonable best efforts to obtain the financing
contemplated by the debt commitment letter on the terms set forth therein or terms not materially
less favorable, in the aggregate, to Parent and Merger Sub taken as a whole, including with respect
to the conditionality thereof (subject to their right to add lenders, lead arrangers, bookrunners,
syndication agents or similar entities so long as the terms would not adversely affect their
ability to consummate the merger or the likelihood of consummation of the merger), including by
using their reasonable best efforts to:
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maintain the debt commitment letter in effect and negotiate a definitive agreement
with respect thereto on the terms set forth therein or terms not materially less
favorable, in the aggregate, to Parent and Merger Sub, taken as a whole, including with
respect to the conditionality thereof, than those set forth therein;
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ensuring the accuracy of all representations or warranties made by them in the debt
commitment letter or any definitive agreement executed with respect thereto;
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complying with all of their covenants in the debt commitment letter or any
definitive agreement executed with respect thereto;
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satisfying on a timely basis all conditions applicable to
them and within their control set forth in the debt commitment letter
or any definitive agreement executed with respect thereto; and
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upon the satisfaction of all applicable conditions, consummating the financing
contemplated by the debt commitment letter or any definitive agreement executed with
respect thereto at or prior to the closing.
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Assuming the satisfaction of all applicable conditions, Parent and Merger Sub are obligated to
use their reasonable best efforts to cause their lender to consummate the required debt financing
and enforce their rights under the debt commitment letter.
Parent has agreed to keep us reasonably informed with respect to all material activity
concerning the status of the financing contemplated by the debt commitment letter and give us
prompt notice of any material adverse change with respect to such debt financing, including
providing notice within one business days if (1) the debt commitment letter expires or is
terminated, (2) the lender refuses to provide the financing contemplated by the debt commitment
letter on the terms set forth therein or (3) Parent or Merger Sub no longer believes in good faith
that it will be able to obtain all or any portion of the financing contemplated by the debt
commitment letter on substantially the terms described therein.
Parent and Merger Sub have agreed that, without our prior written consent, they will not, and
will not permit any of their affiliates to, take any action or enter into any transaction,
including any merger, acquisition, joint venture, disposition, lease, contract or debt or equity
financing, that could reasonably be expected to impair, delay or prevent consummation of the
financing contemplated by the debt commitment letter and will not amend or alter, or agree to amend
or alter, the debt commitment letter in any manner that would materially impair, delay or prevent
the transactions contemplated by the merger agreement.
If the financing contemplated by the debt commitment letter becomes unavailable on the terms
and conditions contemplated therein, Parent and Merger Sub will use their reasonable best efforts
to promptly obtain substitute debt financing from alternative sources in an amount sufficient,
together with the debt and equity financing that is available, to pay all amounts required to be
paid by Parent, Merger Sub or the surviving corporation in connection with the merger and to obtain
a new financing commitment letter with respect thereto that provides for such financing on terms
not materially less favorable in the aggregate to Parent and Merger Sub than those set forth in the
debt commitment letter.
Subject to certain limitations, we are obligated to, to cause our subsidiaries to, and to use
our commercially reasonable efforts to cause our and their respective representatives to, provide
Parent such cooperation as it may reasonably request in connection with the arrangement of the
financing contemplated by the debt commitment letter, including by:
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assisting in the preparation for, and participating in, a reasonable number of
meetings, presentations, due diligence sessions and similar presentations to and with
rating agencies and the parties acting as lead arrangers or agents for, and prospective
purchasers and lenders of, the financing contemplated by the debt
commitment letter;
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assisting with the preparation of materials for rating agency presentations,
offering documents, information memoranda (including the delivery of one or more
customary representation letters), and similar documents required in connection with
the financing contemplated by the debt commitment letter and equity commitment letter;
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executing and delivering any pledge and security documents, other definitive
financing documents, or other certificates, opinions or documents as may be reasonably
requested by Parent and otherwise reasonably facilitating the pledging of collateral
(including a certificate of the chief financial officer of Airvana or any of our
subsidiaries with respect to solvency matters);
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using commercially reasonable efforts to obtain consents of accountants for use of
their reports in any materials relating to the financing contemplated by the debt
commitment letter;
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furnishing Parent and its financing sources with certain financial statements and
financial data required by the debt commitment letter;
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using commercially reasonable efforts to obtain surveys and title insurance as
reasonably requested by Parent in order to facilitate the financing contemplated by the
debt commitment letter; and
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taking all corporate actions necessary to permit the consummation of the financing
contemplated by the debt commitment letter and to permit the proceeds thereof to be
made available to the surviving corporation, including the entering into of one or more
credit agreements or other instruments on terms satisfactory to Parent in connection
with such financing immediately prior to, and conditioned upon the occurrence of, the
effective time of the merger to the extent our direct borrowing or debt incurrence is
contemplated in the debt commitment letter.
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Parent has agreed to promptly, upon our request, reimburse us for all reasonable and
documented out-of-pocket costs we and our subsidiaries incur in connection with such cooperation in
the event that the merger is not consummated by June 15, 2010. Parent has agreed to indemnify and
hold harmless us and our subsidiaries from and against any and all liabilities, losses, damages,
claims, costs, expenses, interest, awards, judgments and penalties suffered or incurred by us or
our subsidiaries in connection with the arrangement of the financing contemplated by the debt
commitment letter (other than to the extent that such losses arise
from our or our subsidiaries (or their respective
representatives) gross negligence or willful misconduct) and any information used in connection therewith
(other than information that we
or our subsidiaries provide).
Covenants Relating to the Conduct of Our Business
During the period between the date of the merger agreement and the effective time of the
merger, we have agreed with Parent, except as expressly provided or permitted by the merger
agreement or the disclosure schedule attached to the merger agreement or as Parent may otherwise
consent in writing (which will not be unreasonably withheld), that we will, and cause each of our
subsidiaries to:
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act and carry on our and each of our subsidiaries businesses in the ordinary course
of business consistent in all material respects with past practice; and
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use, and cause each of our subsidiaries to use, commercially reasonable efforts to
maintain and preserve our and each of our subsidiaries business
organizations and good
standings under applicable law, assets, rights and properties, and preserve intact
business relationships and contracts with customers, strategic partners, suppliers,
distributors and others having business dealings with us and our subsidiaries, and keep
available the services of our and our subsidiaries current officers, employees and
consultants.
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In addition, we have agreed with Parent that, except as expressly provided or permitted in the
merger agreement or the disclosure schedule attached to the merger agreement, we will not, and will
not permit our subsidiaries to, directly or indirectly, do any of the following without the prior
written consent of Parent (which will not be unreasonably withheld):
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(i) declare, set aside or pay any dividends on, or
make any other distributions (whether in cash, securities or other property) in respect
of, any shares of Airvanas or our subsidiaries capital
stock (other than dividends and distributions made in the ordinary
course of business consistent in all material respects with past
practice by a direct or indirect wholly owned subsidiary of Airvana
to its parent), (ii) split, combine,
subdivide, pledge, modify or reclassify any shares of Airvanas or our subsidiaries
capital stock or any of Airvanas or our subsidiaries other securities or rights, or
make any change in the number of shares of Airvanas or our subsidiaries authorized
capital stock, (iii) subject to customary exceptions, issue, authorize for issuance,
sell, grant or subject to any lien any shares of Airvanas or our subsidiaries capital
stock or any of Airvanas or our subsidiaries other securities or rights convertible
into, exchangeable or exercisable for or evidencing the right to subscribe for or
purchase shares of Airvanas or our subsidiaries capital stock or any of Airvanas or
our subsidiaries other securities or ownership interests, or (iv) subject to customary
exceptions, purchase, redeem or otherwise acquire any shares of Airvanas or our subsidiaries capital stock or any other of Airvanas or
our subsidiaries securities or any rights, warrants or options to acquire any such shares or other securities;
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issue, deliver, sell, grant, pledge or otherwise dispose of or encumber any shares
of Airvanas or our subsidiaries capital stock, any other voting securities or any
securities convertible into or exchangeable for, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible or exchangeable securities
(other than the issuance of shares of our common stock upon the exercise of stock
options outstanding on the date of the merger agreement);
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amend Airvanas or our subsidiaries certificate of incorporation, by-laws or other
comparable charter or organizational documents;
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acquire or license (as licensee) (i) by merging or consolidating with, or by
purchasing all or a substantial portion of the assets or any stock or other equity
interest of, or by any other manner, any business or any corporation, partnership,
joint venture, limited liability company, association or other business organization or
division thereof, (ii) any assets that are material, in the aggregate, to us and our
subsidiaries, taken as a whole, except purchases of inventory and raw materials in the
ordinary course of business consistent in all material respects with
past practice, or (iii) any real property material to us and our
subsidiaries, taken as a whole;
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enter into any transaction, including any merger, acquisition, joint venture,
disposition, lease, contract or debt or equity financing that would reasonably be
expected to impair, delay or prevent Parents obtaining the financing contemplated by
the equity commitment letter and the debt commitment letter;
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enter into any new line of business material to us and our subsidiaries, taken as a
whole;
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sell, lease, license, pledge, or otherwise dispose of or encumber any material
properties, material rights or material assets of Airvana or any of our subsidiaries
other than in the ordinary course of business consistent in all material respects with
past practice, so long as the value or purchase price,
in any single instance, for such properties, rights or assets does not exceed $250,000;
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adopt or implement any stockholder rights plan;
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adopt a plan or agreement of complete or partial liquidation or dissolution,
consolidation, restructuring, recapitalization or other reorganization of Airvana or
any of our subsidiaries;
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amend any term of any outstanding equity security or equity interest of Airvana or
any of our subsidiaries;
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(i) subject to customary exceptions, incur, assume or otherwise become liable for
any indebtedness for borrowed money or guarantee or endorse any such indebtedness of
another person, (ii) issue or sell any debt securities
or warrants or other rights to acquire any debt securities of Airvana or any of our
subsidiaries, guarantee any debt securities of another person, enter into any keep
well or other agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any of the
foregoing (provided that Airvana may, in the ordinary course of
business consistent in all material respects with past practice,
invest in debt securities maturing not more than ninety days after
the date of investment), (iii) enter into or make any loans,
advances (other than routine non-material advances to employees of
Airvana and its subsidiaries in the ordinary course of business
consistent in all material respects with past practice), or capital contributions to, or investment in, any other
person other than Airvana or any of its direct or indirect subsidiaries, or (iv) other
than in the ordinary course of business consistent in all material respects with
past practice enter into any hedging agreement or other
financial agreement or arrangement designed to protect Airvana or our subsidiaries
against fluctuations in commodities prices or exchange rates;
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pay, discharge, settle or compromise any pending or threatened suit, action or claim
which (i) requires payment to or by Airvana or our subsidiaries (exclusive of
attorneys fees) in excess of $100,000 in any single instance or in excess of $250,000
in the aggregate, (ii) involves injunctive or equitable relief or restrictions on the
business activities of Airvana or our subsidiaries, (iii) would involve the issuance of Airvana securities or (iv) relates to the transactions
contemplated by the merger agreement, except that Airvana or our subsidiaries may
pay, discharge, settle or compromise any pending or threatened suit, action or claim
not relating to taxes if the amount required to be paid by Airvana and our
subsidiaries pursuant thereto (net of the retention amount) is covered by insurance;
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make (i) any expenditures with respect to our femtocell business during any period
beginning on December 1, 2009 and ending on December 31, 2009 or the last day of any
month thereafter, in excess of the cumulative monthly budgeted expenditures for such
period as set forth in the disclosure schedule attached to the merger agreement or (ii)
any capital expenditures or other expenditures with respect to our property, plant or
equipment in any fiscal quarter in excess of the aggregate amount for Airvana and our
subsidiaries, taken as a whole, disclosed in the disclosure schedule attached to the
merger agreement;
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make any material changes in accounting methods, principles or practices (or change
an annual accounting period), except insofar as is required by a change in GAAP;
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(i) other than in the ordinary course of
business consistent in all material respects with past practice, modify, amend, terminate or waive
any material rights under any material contract or enter into any material contract or
(ii) enter into any (x) new contract that contains a change in control provision in
favor of the other party or parties thereto or would otherwise require a material
payment to or give rise to any material rights to such other party or parties in
connection with the transactions contemplated by the merger agreement or (y)
non-competition or other agreement that prohibits or otherwise restricts in any
material respect, Airvana or any of our subsidiaries or affiliates from freely engaging
in business anywhere in the world (including any agreement restricting Airvana or any
of our subsidiaries or affiliates from competing in any line of business or in any
geographic area);
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make or change any material tax election, file any material amendment to any tax
return with respect to any material amount of taxes, settle or compromise any material
tax liability, agree to any extension or waiver of the statute of limitations with
respect to the assessment or determination of a material amount of taxes, enter into
any material closing agreement with respect to any tax or take any action to surrender
any right to claim a material tax refund;
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except as required to comply with applicable law or agreements, plans or
arrangements existing on the date of the merger agreement, (i)
adopt, enter into, terminate or materially amend any employment, severance
or similar agreement or material benefit plan for the benefit or welfare of any current
or former director, officer or employee or any collective bargaining
agreement (except in the ordinary course of business consistent in all material respects with past practice and only if such
agreement is terminable on sixty days or less notice without either
a penalty or a termination payment), (ii)
increase in any material respect the compensation or fringe benefits of, or pay any
bonus to, any director, officer or employee, except for semi-annual increases of
salaries for non-officer employees in the ordinary course of
business consistent in all material respects with past practice,
which in no
event shall be greater than four percent (4%) per annum, or the payment of annual
bonuses and commissions in the ordinary course of business consistent in all material respects with past practice
under any Airvana employee
benefit plan to non-officer employees for our 2009 fiscal year, (iii) accelerate the
payment, right to payment or vesting of any material compensation or benefits,
including any outstanding options or restricted stock awards, other than as
contemplated by the merger agreement, (iv) grant any equity compensation, (v) grant any
severance or termination pay to any present or former director, officer, employee or
consultant of Airvana or our subsidiaries, other than as required pursuant to the terms
of an Airvana employee benefit plan in effect on the date of the merger agreement or
(vi) take any action other than in the ordinary course of
business consistent in all material respects with past practice to fund or in any
other way secure the payment of compensation or benefits under any Airvana employee
benefit plan;
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effectuate or permit a plant closing or mass layoff, affecting in whole or in
part any site of employment, facility, operating unit or employee of Airvana or any of
our subsidiaries;
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grant any material refunds, credits, rebates or other allowances by Airvana or any
of our subsidiaries to any end user, customer, reseller or distributor, in each case,
other than in the ordinary course of business consistent in all
material respects with past practice;
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open any facility or office greater than 5,000 square feet; or
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authorize any of, or commit or agree, in writing or otherwise, to take any of, the
foregoing actions.
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Conditions to Closing the Merger
The obligations of Airvana, Parent and Merger Sub to consummate the merger are subject to the
satisfaction or waiver of each of the following conditions:
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the adoption of the merger agreement by the affirmative vote of the holders of a
majority of the outstanding shares of our common stock;
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the expiration or termination of the waiting period applicable to the merger under
the HSR Act;
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other than the filing of the certificate of merger, all authorizations, consents,
orders or approvals of, or declarations or filings with, or expirations of waiting
periods imposed by, any governmental entity in connection with the merger and the
consummation of the other transactions contemplated by the merger agreement, the
failure of which to file, obtain or occur is reasonably likely to have a Buyer
Material Adverse Effect or a Company Material Adverse Effect, shall have been filed,
been obtained or occurred on terms and conditions which would not reasonably be likely
to have a Buyer Material Adverse Effect or a Company Material Adverse Effect;
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no order suspending the use of this proxy statement shall have been issued and no
proceeding for that purpose shall have been initiated or threatened in writing by the
SEC or its staff; and
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no governmental entity of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay, decree, judgment or
injunction (preliminary or permanent) or statute, rule or regulation which is in effect
and which has the effect of making the merger illegal or otherwise prohibiting
consummation of the merger or the other transactions contemplated by the merger
agreement, except that a party may not assert that this condition has not been
satisfied unless such party shall have used its reasonable best efforts to prevent the
enforcement or entry of such order, executive order, stay, decree, judgment or
injunction or statute, rule or regulation, including taking such action as is required
to comply with certain of its obligations under the merger agreement.
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In addition, the obligations of Parent and Merger Sub to consummate the merger are subject to
the satisfaction of each of the following additional conditions (except that Parent and Merger Sub
may not rely on the failure of any of the following conditions to the extent such failure results
from their failure to use the standard of efforts to consummate the merger required from them under
the terms of the merger agreement):
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our representation and warranty that there has not been a Company Material Adverse
Effect since December 28, 2008 must be true and correct in all respects; certain of
our representations and warranties must be true and correct in all material respects;
and certain of our representations and warranties must be true and correct, except
where the failure to be true and correct has not had, and would not reasonably be
expected to have had, a Company Material Adverse Effect;
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we must have performed in all material respects all obligations required to be
performed by us on or prior to the closing date;
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since the date of the merger agreement, there shall not have occurred any Company
Material Adverse Effect;
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our adjusted EBITDA (as defined in
Definition of Adjusted EBITDA
)
for the twelve (12) month period ended at
least 30 days prior to the closing date of the merger shall not be less than $95
million; and
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we shall have delivered to the Parent a certificate, dated as of the closing date of
the merger, signed by our chief executive officer or chief financial officer,
certifying to the satisfaction of the above described conditions.
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In addition, our obligations to consummate the merger are subject to the satisfaction of each
of the following additional conditions (except that we may not rely on the failure of any of the
following conditions to the extent such failure results from our failure to use the standard of
efforts to consummate the merger required from us under the terms of the merger agreement):
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Parent and Merger Subs representations and warranties in the merger agreement must
be true and correct except for changes contemplated by the merger agreement and where
the failure to be true and correct has not had a Buyer Material Adverse Effect;
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Parent and Merger Sub shall have performed in all material respects all obligations
required to be performed by them under the merger agreement on or prior to the closing
date;
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Parent shall have delivered to us a certificate, dated as of the closing date of the
merger, signed by its chief executive officer, chief financial officer or other duly
authorized officer, certifying to the satisfaction of the above described conditions;
and
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Parent shall have delivered to us a solvency certificate substantially similar in
form and substance to the solvency certificate to be delivered to the lenders pursuant
to the debt commitment letter or any agreements entered into in connection with the
financing contemplated by the debt commitment letter.
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Definition of Adjusted EBITDA
For purposes of the closing condition requiring our adjusted EBITDA to be not less than $95
million for the twelve (12) month period ended at least 30 days prior to the closing date of the
merger, which we refer to as the last twelve month period, a schedule to the merger agreement
defines adjusted EBITDA for a fiscal month as earnings (based on billings) for the EV-DO business
of Airvana and our subsidiaries for such fiscal month,
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plus, to the extent deducted in the calculation of earnings (based on billings) for
the EV-DO business of Airvana and our subsidiaries for such fiscal month:
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total interest expense (net of interest income and gains) and bank and
letter of credit fees;
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provision for taxes based on income or profits, paid or accrued;
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depreciation and amortization (including amortization of capitalized
software expenditures and amortization of deferred financing fees or costs),
excluding amortization of a prepaid cash item that was paid in any prior month;
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non-cash charges or expenses (excluding any non-cash charges or expenses
that represent amortization of a prepaid cash item that was paid in any prior
month), including any impairment charge or asset
write-off or write-down related to intangible assets (including goodwill) and
long-lived assets in accordance with GAAP;
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extraordinary losses in accordance with GAAP, not to exceed $5,000,000 in
the aggregate for the last twelve month period;
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operating expenses directly attributable to the implementation of cost
savings initiatives, non-recurring or unusual charges or the pro rata annual
salary and benefits of terminated employees, not to exceed $10,000,000 in the
aggregate for the last twelve month period; and
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tax penalties, fees and interest associated with the Companys tax position paid or accrued,
to the extent reimbursed or covered by insurance, or such amounts not so reimbursed or covered not to exceed $5,000,000
in the aggregate for the last twelve month period, and costs to
defend (and insurance premiums) associated with the Companys tax position paid or accrued not to exceed $5,000,000 in the aggregate for the last twelve month
period.
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less, to the extent added in the calculation of earnings (based on billings) for the
EV-DO business of Airvana and our subsidiaries for such fiscal month:
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extraordinary gains and unusual or non-recurring gains;
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non-cash gains (excluding any non-cash gain that represents the reversal of
an accrual or reserve for a potential cash item in any prior month (unless such
accrual or reserve was added back in the calculation of adjusted EBITDA for any
prior month)); and
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the aggregate amount of cash payments made during such period in respect of
any non-cash accrual, reserve or other non-cash charges or expenses accounted
for in any prior month which were added to adjusted EBITDA in any prior month.
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The adjusted EBITDA for the last twelve month period ended November 22, 2009 was approximately $102.4 million.
Restrictions on Solicitation of Other Offers
We have agreed that neither we nor any of our subsidiaries will, and we will use our
reasonable best efforts to cause our and our subsidiaries respective directors, officers,
employees, investment bankers, attorneys, accountants and other advisors or representatives not to,
directly or indirectly:
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solicit, initiate or knowingly encourage any inquiries or the making of any proposal
or offer that constitutes, or could reasonably be expected to lead to, any acquisition
proposal; or
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enter into, continue or otherwise participate in any discussions or negotiations
regarding, or furnish to any person any non-public information in response to, or
otherwise for the purpose of encouraging or facilitating, any acquisition proposal.
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However, prior to the adoption of the merger agreement by our stockholders, we may furnish
information with respect to Airvana to, or engage in discussions or negotiations with, a person who
has made an acquisition proposal only if:
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such acquisition proposal did not result from a breach of our non-solicitation
obligations under the merger agreement;
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we comply with our obligations under the merger agreement concerning changes in our
board of directors recommendation to our stockholders in favor of the merger, the
entry into agreements with respect to alternative acquisition proposals and providing
notices to Parent concerning alternative acquisition proposals; and
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our board of directors determines in good faith, after consultation with outside
counsel and its financial advisors, that such acquisition proposal constitutes or is
reasonably likely to lead to a superior proposal.
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We may furnish such information only pursuant to a confidentiality agreement not materially
less restrictive in any respect of the person making such acquisition proposal than the
confidentiality agreement we previously entered into with SAC PCG and are required to promptly make
available to Parent any material non-public information concerning Airvana or our subsidiaries
furnished to any such person that was not previously delivered to Parent.
We are required to promptly (and in any event within one business day) advise Parent orally,
with written confirmation to follow (together with a written copy of such acquisition proposal), of
our receipt of any written acquisition proposal and the material terms and conditions of any such
acquisition proposal (including material amendments or modifications thereto). We also agreed not
to grant any waiver, amendment or release under any standstill agreement without Parents prior
written consent.
An acquisition proposal means any proposal or offer for, whether in a single transaction or
series of related transactions, alone or in combination (other than the merger)
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a merger, consolidation, tender offer, recapitalization, reorganization, share
exchange, business combination or similar transaction involving Airvana (other than any
such transaction involving solely Airvana and one or more of its subsidiaries or that,
if consummated, would not result in any person or group owning 20% or more of any class
or series of capital stock or voting securities of Airvana),
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the issuance by Airvana of our equity securities that, if consummated, would result
in any person or group owning 20% or more of any class or series of capital stock or
voting securities of Airvana,
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the acquisition in any manner (including by virtue of the transfer of equity
interests in one or more of our subsidiaries) of, directly or indirectly, 20% or more
of the consolidated total assets or consolidated revenue or consolidated earnings of
Airvana and our subsidiaries, in each case other than the transactions contemplated by
the merger agreement (including any proposed amendments of the merger agreement
proposed by Parent) or
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a dissolution or liquidation of Airvana or similar transaction involving Airvana.
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A superior proposal means any bona fide written acquisition proposal which was not obtained
in violation of our non-solicitation obligations under the merger agreement (except that references
in the definition of acquisition proposal to 20% shall be replaced by 50%) on terms which our
board of directors determines in its good faith judgment (after consultation with its financial
advisor and outside legal counsel) to be (i) more favorable from a financial point of view to the
holders of Airvana common stock (in their capacity as such) than the merger, taking into account
all the terms and conditions of such proposal and the merger agreement (including any written
proposal by Parent to amend the terms of the merger agreement) and (ii) reasonably capable of being
completed on the terms proposed, taking into account all financial, regulatory, legal and other
aspects of such proposal.
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Restrictions on Change of Recommendation to Stockholders
Our board of directors has agreed not to: (i) withhold, withdraw or modify its recommendation
to our stockholders in favor of the merger, (ii) cause or permit us to enter into any letter of
intent, memorandum of understanding, agreement in principle, acquisition agreement,
merger agreement or similar agreement providing for the consummation of a transaction
contemplated by another acquisition proposal (other than a confidentiality agreement entered into
in compliance with our non-solicitation obligations) or (iii) adopt, approve or recommend another
acquisition proposal.
However, our board of directors may withhold, withdraw or modify its recommendation to our
stockholders in favor of the merger if it determines in good faith, after consultation with outside
legal counsel that failure to do so would be inconsistent with its fiduciary obligations under
applicable law. Nonetheless, we cannot approve or recommend another acquisition proposal unless:
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we have complied in all material respects with our non-solicitation obligations
under the merger agreement;
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our board of directors, or a subcommittee of the board of directors, has concluded
in good faith (after consultation with independent financial advisors and outside legal
counsel) that such acquisition proposal would constitute a superior proposal if no
changes were made to the merger agreement;
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prior to any such approval or recommendation of another acquisition proposal, we
have provided written notice to Parent that we intend to take such action and
describing the identity and material terms and conditions of the superior proposal that
is the basis of such action, and include with such notice a copy of the relevant
proposed transaction agreements;
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during the four business day period following our delivery of such notice, we are
required to, and are required to cause our financial and legal advisors to, negotiate
with Parent and Merger Sub in good faith (to the extent Parent and Merger Sub desire to
negotiate) to make such modification or adjustments in the terms and conditions of the
merger agreement so that such superior proposal ceases to constitute a superior
proposal; and
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following the end of such four business day period (with any change to the financial
terms or any other material terms of such superior proposal requiring a new notice to
Parent but only a 48 hour period instead of a four business day period), our board of
directors determines in good faith, taking into account any changes to the terms of the
merger agreement proposed in writing by Parent, that the superior proposal continues to
constitute a superior proposal.
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Furthermore, we are required to provide written notice to Parent at least four business days
in advance of our board of directors intention to withhold, withdraw or modify its recommendation
to our stockholders in favor of the merger for any reason other than a superior proposal and during
such four business day period following the delivery of such notice, we are required to, and are
required to cause our financial and legal advisors to, negotiate with Parent and Merger Sub in good
faith (to the extent Parent and Merger Sub desire to negotiate) to make such modification or
adjustments in the terms and conditions of the merger agreement such that our board of directors,
after consultation with outside legal counsel, does not continue to believe that the failure to
withhold, withdraw or modify such recommendation would be inconsistent with its fiduciary
obligations under applicable law.
Termination
Airvana, Parent and Merger Sub may agree to terminate the merger agreement at any time prior
to the effective time of the merger, even after our stockholders have adopted the merger agreement
at the special meeting.
In addition, we and Parent each have separate rights to terminate the merger agreement without
the agreement of the other party if, among other things:
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the merger has not been consummated by June 15, 2010, except that this termination
right will not be available to any party whose failure to fulfill any obligation under
the merger agreement has been a principal cause of or resulted in the failure of the
merger to occur on or before such date;
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a governmental entity of competent jurisdiction has issued a nonappealable final
order, decree or ruling or taken any other nonappealable final action, in each case
having the effect of permanently restraining, enjoining or otherwise prohibiting the
merger, except that this termination right will not be available to any party whose
failure to fulfill any obligation under the merger agreement has been a principal cause
of or resulted in such order, decree, ruling or other action; or
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our stockholders do not vote to adopt the merger agreement at the special meeting.
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Parent may also terminate the merger agreement if:
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our board of directors fails to recommend the approval of the merger in the proxy
statement distributed to the Companys stockholders or withholds, withdraws, amends or
modifies its recommendation of the merger to our stockholders in a manner adverse to
Parent;
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our board of directors adopts, approves, endorses or recommends to our stockholders
another acquisition proposal;
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a tender offer or exchange offer for our outstanding common stock is commenced and
our board of directors recommends that our stockholders tender their shares in such
tender or exchange offer or, within ten business days after the public announcement of
such tender or exchange offer or, if earlier, prior to date of the special meeting,
our board of directors fails to recommend that our stockholders reject such offer and reaffirm its
recommendation that our stockholders adopt the merger agreement;
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we enter into an agreement concerning another acquisition proposal;
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we or our board of directors publicly announces its intention to do any of the
foregoing; or
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we breach or fail to perform any of our representations, warranties, covenants or
agreements in the merger agreement and such breach or failure to perform would cause
certain conditions to the obligations of Parent and Merger Sub to consummate the
closing not to be satisfied and such breach or failure to perform is not timely cured
or is not capable of being cured, except that Parent does not have the right to
terminate the merger agreement if it or Merger Sub is then in material breach of any of
its representations, warranties, covenants or agreements and such breach would cause
certain conditions to our obligation to consummate the closing not to be satisfied.
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Additionally, we may terminate the merger agreement if:
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our board of directors pursuant to and in compliance our non-solicitation
obligations under the merger agreement, adopts, approves, endorses or recommends to our
stockholders another acquisition proposal (or publicly proposes to do so) and prior to
or simultaneously with such termination we pay to Parent in cash a $15 million
termination fee;
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Parent or Merger Sub breach or fail to perform any of their representations,
warranties, covenants or agreements in the merger agreement and such breach or failure
to perform would cause certain conditions to our obligation to consummate the closing
not to be satisfied and such breach or failure to perform is not timely cured or is not
capable of being cured, except that the we do not have the right to terminate the
merger agreement if we are then in material breach of any of our representations,
warranties, covenants or agreements and such breach would cause certain conditions to
the obligations of Parent and Merger Sub to consummate the closing not to be satisfied;
or
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all of the conditions to the obligations of Parent and Merger Sub to consummate the
merger have been satisfied (other than those conditions that by their nature are to be
satisfied by actions taken at the closing) and we have indicated in writing that we are
ready and willing to consummate the merger (subject to the satisfaction of all of the
conditions to our obligation to consummate the merger), and Parent and Merger Sub fail
to consummate the merger within ten (10) business days following the date the closing
should have otherwise occurred.
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Termination does not relieve any party of liability for any willful breach of the merger
agreement.
Termination Fees
Except as provided below, under the merger agreement, each of the parties will bear all fees
and expenses it incurs in connection with the merger and the merger agreement.
Payable by Airvana
We must pay to Parent a termination fee of $15 million if:
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our board of directors pursuant to and in compliance our non-solicitation
obligations under the merger agreement, adopts, approves, endorses or recommends to our
stockholders another acquisition proposal (or publicly proposes to do so) and we
terminate the merger agreement pursuant to its terms;
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our board of directors fails to recommend the approval of the merger in the proxy
statement distributed to the Companys stockholders or withholds, withdraws, amends or
modifies its recommendation of the merger to our stockholders in a manner adverse to
Parent and Parent terminates the merger agreement pursuant to its terms;
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our board of directors adopts, approves, endorses or recommends to our stockholders
an acquisition proposal and Parent terminates the merger agreement pursuant to its
terms;
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a tender offer or exchange offer for our outstanding common stock is commenced and
our board of directors recommends that our stockholders tender their shares in such
tender or exchange offer or, within ten business days after the public announcement of
such tender or exchange offer or, if earlier, prior to date of the special meeting,
fails to recommend that our stockholders reject such offer and reaffirm its
recommendation that our stockholders adopt the merger agreement and Parent terminates
the merger agreement pursuant to its terms;
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we enter into an agreement concerning another acquisition proposal and Parent
terminates the merger agreement pursuant to its terms;
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Airvana or our board of directors publicly announces its intention to do any of the
foregoing and Parent terminates the merger agreement pursuant to its terms; or
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we breach our non-solicitation obligations under the merger agreement or our
obligations to timely call and hold the special meeting and Parent terminates the
merger agreement pursuant to its terms.
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We must also pay to Parent the termination fee of $15 million if:
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the merger agreement is terminated (A) by Parent or Airvana because the merger is
not consummated by June 15, 2010, (B) by Parent or Airvana, if our stockholders
approval to adopt the merger agreement is not obtained at the special meeting or (C) by
Parent because we breach or fail to perform any of our representations, warranties,
covenants or agreements in the merger agreement (other than our non-solicitation
obligations or our obligations to timely call and hold the special meeting) and such breach or failure to perform would cause certain
conditions to the obligations of Parent and Merger Sub to consummate the closing not
to be satisfied and such breach or failure to perform is not timely cured or is not
capable of being cured, except that the Parent does not have the right to terminate
the merger agreement if it or Merger Sub is then in material breach of any of its
representations, warranties, covenants or agreements and such breach would cause
certain conditions to our obligation to consummate the closing not to be satisfied;
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an acquisition proposal (provided that references to 20% are deemed to refer to 50%
in the definition of such term) is communicated to us or a member of our board of
directors and not withdrawn prior to termination of the merger agreement; and
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within twelve months after termination, we enter into an agreement regarding or
consummate any acquisition proposal (whether or not such acquisition proposal was the
same acquisition proposal communicated to us or a member of our board of directors
prior to termination of the merger agreement).
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Payable by Parent
Parent must pay to us a reverse termination fee of $25 million if we terminate the merger
agreement pursuant to its terms because:
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Parent or Merger Sub breach or fail to perform any of their representations,
warranties, covenants or agreements in the merger agreement and such breach or failure
to perform would cause certain conditions to our obligation to consummate the closing
not to be satisfied and such breach or failure to perform is not timely cured or is not
capable of being cured, except that the we do not have the right to terminate the
merger agreement if we are then in material breach of any of our representations,
warranties, covenants or agreements and such breach would cause certain conditions to
the obligations of Parent and Merger Sub to consummate the closing not to be satisfied;
or
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all of the conditions to the obligations of Parent and Merger Sub to consummate the
merger have been satisfied (other than those conditions that by their nature are to be
satisfied by actions taken at the closing) and we have indicated in writing that we are
ready and willing to consummate the merger (subject to the satisfaction of all of the
conditions to our obligation to consummate the merger), and Parent and Merger Sub fail
to consummate the merger within ten (10) business days following the date the closing
should have otherwise occurred.
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Expense Reimbursement
If we have not paid the $15 million termination fee to Parent, we must pay to Parent up to $3
million as reimbursement for expenses incurred in relation to the transactions contemplated by the
merger agreement, if the merger agreement is terminated:
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by Parent or us because our stockholders do not vote to adopt
the merger agreement at the special meeting; or
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by Parent because we breach or fail to perform any of our representations,
warranties, covenants or agreements in the merger agreement (other than our
non-solicitation obligations or our obligations to timely call and hold the special
meeting) and such breach or failure to perform would cause certain conditions to the
obligations of Parent and Merger Sub to consummate the closing not to be satisfied and
such breach or failure to perform is not timely cured or is not capable of being cured
(except that the Parent does not have the right to terminate the merger agreement if it
or Merger Sub is then in material breach of any of its representations, warranties,
covenants or agreements and such breach would cause certain conditions to our
obligation to consummate the closing not to be satisfied).
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If we owe the $15 million termination fee to Parent, we are entitled credit against such
termination fee for any expense reimbursement we have paid to Parent.
Limitation on Remedies and Liability Cap
Each of Parent and Merger Sub is entitled to an injunction to prevent breaches of the merger
agreement by us and to enforce specifically the terms of the merger agreement against us, in
addition to any other remedy to which it may be entitled at law or in equity. However, we are not
entitled to an injunction to prevent breaches of the merger agreement by Parent or Merger Sub or to
enforce specifically the terms of the merger agreement against either of them.
Parents liability relating to the merger agreement is limited to the $25 million reverse
termination fee plus interest (at the prime rate) and reimbursement of reasonable costs and
expenses we may in incur in enforcing our right to payment of such termination fee. Our liability
relating to the merger agreement is limited to the $15 million termination fee plus interest (at
the prime rate) and reimbursement of reasonable costs and expenses Parent may in incur in enforcing
its right to payment of such termination fee. However, such liability limitation will in no way
limit the rights of each of Parent and Merger Sub to an injunction to prevent breaches of the
merger agreement by us and to enforce specifically the terms of the merger agreement against us.
Further Actions and Agreements
Company Stockholders Meeting
. We have agreed to call and hold a stockholders meeting as
promptly as practicable after the execution of the merger agreement for the purpose of voting upon
the adoption of the merger agreement. We have agreed to take all reasonable and lawful action to
solicit from our stockholders proxies, and to take all other action necessary or advisable to
secure the vote of our stockholders, in favor of the adoption of the merger agreement.
Access to Information
. We have agreed to afford Parent and its representatives with
reasonable access to our properties, books, personnel, records and other information as Parent may
reasonably request prior to the closing of the merger.
Directors and Officers Indemnification and Insurance
. For a period of six years following
the effective time of the merger, the surviving corporation shall indemnify and hold harmless
directors and officers of Airvana or any of our subsidiaries, against all claims, losses,
liabilities, damages, judgments, fines and reasonable fees, costs and expenses, including
attorneys fees and disbursements, incurred in connection with any claim, action, suit, proceeding
or investigation, whether civil, criminal, administrative or investigative, arising out of or
pertaining to the fact that such officer or director is or was an officer or director of Airvana or
any of our subsidiaries, whether asserted or claimed prior to, at or after the effective time of
the merger agreement, to the fullest extent permitted under the DGCL for officers and directors of
Delaware corporations. Each such person will also be entitled advancement of expenses incurred in
defending such claims, subject to such persons execution of an undertaking to repay any expenses
so advanced if it is ultimately be determined that such person is not entitled to indemnification
from the surviving corporation with respect to such claim. The surviving corporation has an
obligation to maintain our directors and officers liability insurance or substitute policies of
at least the same coverage (including a tail policy) after the effective time of the merger for a
period of six years; provided that Parent shall not be required to pay premiums for such insurance
in excess of 300% of the current annual premiums paid by us for such insurance. With Parents
consent (not to be unreasonably withheld), we may purchase a six-year prepaid tail policy on
terms and conditions providing substantially equivalent benefits as the policies of directors and
officers liability insurance we currently maintain with respect to matters arising at or before
the effective time of the merger.
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Further Action, Consents and Filings
. The merger agreement obligates Parent and us to use
reasonable best efforts to (i) take, or cause to be taken, all action and do, or cause to be done,
all things necessary, proper or advisable to consummate and make effective the merger, (ii) obtain
from governmental entities or third parties any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by Parent or us or any respective
subsidiaries in connection with the consummation of the merger, (iii) make all necessary filings,
and thereafter make any other submissions, with respect to the merger agreement, the merger and the
other transactions contemplated by the merger agreement that are required under securities,
antitrust or other applicable laws and (iv) execute and deliver any additional instruments
necessary to consummate the merger.
Public Announcements
. We and Parent have agreed to use commercially reasonable efforts to
consult with the other before issuing any press release or otherwise making any public statements
with respect to the merger agreement or the merger.
Sale of Investments
. We have agree to use all commercially reasonable efforts to take all
actions reasonably requested by Parent to liquidate and convert to cash available at the effective
time of the merger to pay the merger consideration all of our unrestricted cash, cash equivalents
and marketable securities. Parent has agreed to reimburse us for all reasonable and documented
out-of-pocket costs incurred by us or our subsidiaries in complying with such requirement if the
merger agreement is terminated under certain circumstances.
Internal Reorganization
. We have agreed to initiate an internal reorganization with respect
to our femtocell business and to reasonably cooperate with Parent to effectuate such internal
reorganization as promptly as practicable following the closing. Parent has agreed to reimburse us
for all reasonable and documented out-of-pocket costs incurred by us or our subsidiaries in
complying with such requirement if the merger agreement is terminated without the merger occurring.
Employee Benefits
Parent has agreed to continue to provide our employees with full credit for prior service with
us for purposes of eligibility, vesting and other determinations under Parent benefit plans in
which our employees may become eligible to participate, except where such credit would result in a
duplication of benefits. In addition, Parent has generally agreed to waive pre-existing condition
limits to the extent such limits are waived under the Parent benefit plans, and to recognize
deductible and out-of-pocket expenses paid by our employees during the calendar year in which the
merger closes.
Amendment and Waiver
Amendment
. The merger agreement may be amended by the parties to the merger agreement by
action taken by or on behalf of our or their respective boards of directors at any time prior to
the effective time. However, after adoption by our stockholders of the merger agreement is
obtained, no amendment will be made which would require further approval by our stockholders unless
so approved by our stockholders.
Waiver
. At any time prior to the effective time, any party to the merger agreement may (a)
extend the time for the performance of any obligation or other act of any other party to the merger
agreement, (b) waive any inaccuracy in the representations and warranties contained in the merger
agreement or in any document delivered pursuant to the merger agreement and (c) waive compliance
with any agreement or condition contained in the merger agreement. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or parties to be bound
thereby.
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APPRAISAL RIGHTS
If you do not vote for the adoption of the merger agreement at the special meeting and
otherwise comply with the applicable statutory procedures of Section 262 of the General Corporation
Law of the State of Delaware, or the DGCL, summarized herein, you may be entitled to appraisal
rights under Section 262 of the DGCL. In order to exercise and perfect appraisal rights, a record
holder of our common stock must follow the steps summarized below properly and in a timely manner.
Section 262 of the DGCL is reprinted in its entirety as Annex C to this proxy statement. Set
forth below is a summary description of Section 262 of the DGCL. The following summary describes
the material aspects of Section 262 of the DGCL, and the law relating to appraisal rights and is
qualified in its entirety by reference to Annex C. All references in Section 262 and this summary
to stockholder are to the record holder of the shares of our common stock immediately prior to
the effective time of the merger as to which appraisal rights are asserted. Failure to comply
strictly with the procedures set forth in Section 262 of the DGCL will result in the loss of
appraisal rights.
Under the DGCL, holders of our common stock who follow the procedures set forth in Section 262
of the DGCL will be entitled to have their shares appraised by the Delaware Court of Chancery, or
the Delaware Court, and to receive payment in cash of the fair value of those shares, exclusive
of any element of value arising from the accomplishment or expectation of the merger.
Under Section 262 of the DGCL, where a merger agreement relating to a proposed merger is to be
submitted for adoption at a meeting of stockholders, as in the case of the special meeting, the
corporation, not less than 20 days prior to such meeting, must notify each of its stockholders who
was a stockholder on the record date with respect to such shares for which appraisal rights are
available, that appraisal rights are so available, and must include in each such notice a copy of
Section 262 of the DGCL. This proxy statement constitutes such notice to the holders of our common
stock and Section 262 of the DGCL is attached to this proxy statement as Annex C. Any stockholder
who wishes to exercise such appraisal rights or who wishes to preserve his right to do so should
review the following discussion and Annex C carefully, because failure to timely and properly
comply with the procedures specified will result in the loss of appraisal rights under the DGCL.
If you wish to exercise appraisal rights you must not vote for the adoption of the merger
agreement and must deliver to Airvana, before the vote on the proposal to adopt the merger
agreement, a written demand for appraisal of your shares of our common stock. If you
sign and return a proxy card or vote by submitting a proxy by telephone, through the Internet or by
fax, without expressly directing that your shares of our common stock be voted against the adoption
of the merger agreement, you will effectively waive your appraisal rights because such shares
represented by the proxy will be voted for the adoption of the merger agreement. Accordingly, if
you desire to exercise and perfect appraisal rights with respect to any of your shares of common
stock, you must either refrain from executing and returning the enclosed proxy card and from voting
in person or by submitting a proxy by telephone, through the Internet or by fax, in favor of the
proposal to adopt the merger agreement or check either the against or the abstain box next to
the proposal on such card or vote in person or by submitting a proxy by telephone, through the
Internet or by fax, against the proposal or register in person an abstention with respect thereto.
A vote or proxy against the adoption of the merger agreement will not, in and of itself, constitute
a demand for appraisal.
A demand for appraisal will be sufficient if it reasonably informs Airvana of the identity of
the stockholder and that such stockholder intends thereby to demand appraisal of such stockholders
shares of common stock. This written demand for appraisal must be separate from any proxy or vote
abstaining from or voting against the adoption of the merger agreement. If you wish to exercise
your appraisal rights you must be the record holder of such shares of our common stock on the date
the written demand for appraisal is made and you must continue to hold such shares through the
effective time of the merger. Accordingly, a stockholder who is the record holder of shares of
common stock on the date the written demand for appraisal is made, but who thereafter transfers
such shares prior to the effective time of the merger, will lose any right to appraisal in respect
of such shares.
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Only a holder of record of shares of our common stock is entitled to assert appraisal rights
for such shares of our common stock registered in that holders name. A demand for appraisal should
be executed by or on behalf of the holder of record, fully and correctly, as the holders name appears on the stock
certificates and must state that such person intends thereby to demand appraisal of his, her or its
shares. If the shares are owned of record in a fiduciary capacity, such as by a trustee, guardian
or custodian, execution of the demand for appraisal should be made in that capacity, and if the
shares are owned of record by more than one person, as in a joint tenancy or tenancy in common, the
demand should be executed by or on behalf of all joint owners. An authorized agent, including one
for two or more joint owners, may execute the demand for appraisal on behalf of a holder of record;
however, the agent must identify the record owner or owners and expressly disclose the fact that,
in executing the demand, he or she is acting as agent for such owner or owners.
A record holder such as a broker who holds shares as nominee for several beneficial owners may
exercise appraisal rights with respect to the shares of our common stock held for one or more
beneficial owners while not exercising such rights with respect to the shares held for other
beneficial owners; in such case, the written demand should set forth the number of shares as to
which appraisal is sought. Where the number of shares of our common stock is not expressly stated,
the demand will be presumed to cover all shares held in the name of the record owner. If you hold
your shares in brokerage accounts or other nominee forms and wish to exercise your appraisal
rights, you are urged to consult with your broker to determine the appropriate procedures for the
making of a demand for appraisal.
All written demands for appraisal of shares must be mailed or delivered to: Airvana, Inc., 19
Alpha Road, Chelmsford, Massachusetts 01824, Attention: Secretary, or should be delivered to the
Secretary at the special meeting, prior to the vote on the adoption of the merger agreement.
Within ten days after
the effective time of the merger, we will notify each stockholder who properly asserted appraisal rights under Section 262 and has not
voted for the adoption of the merger agreement of the effective time of the merger. Within 120 days after the effective time of the
merger, but not thereafter, we or any stockholder who has complied with the statutory requirements
summarized above may commence an appraisal proceeding by filing a petition in the Delaware Court
demanding a determination of the fair value of the shares held by such stockholder. If no such
petition is filed, appraisal rights will be lost for all stockholders who had previously demanded
appraisal of their shares. We are not under any obligation, and we have no present intention, to
file a petition with respect to appraisal of the value of the shares. Accordingly, if you wish to
exercise your appraisal rights, you should regard it as your obligation to take all steps necessary
to perfect your appraisal rights in the manner prescribed in Section 262 of the DGCL.
Within 120 days after the effective time of the merger, any stockholder who has complied with
the provisions of Section 262 of the DGCL will be entitled, upon written request, to receive from
us a statement setting forth the aggregate number of shares of our common stock not voted in favor
of adoption of the merger agreement and with respect to which demands for appraisal were received
by us, and the number of holders of such shares. Such statement must be mailed within ten days
after the written request therefor has been received by us or within ten days after expiration of
the period for delivery of appraisal demands, whichever is later. A person who is the beneficial
owner of shares of such stock held either in a voting trust or by a nominee on behalf of such
person may, in such persons own name, file an appraisal petition or request from us the statement
described in this paragraph.
If a petition for an appraisal is timely filed and a copy thereof served upon us, we will then
be obligated, within 20 days, to file with the Delaware Register in Chancery a duly verified list
containing the names and addresses of the stockholders who have demanded appraisal of their shares
and with whom agreements as to the value of their shares have not been reached. After notice to the
stockholders as required by the Delaware Court, the Delaware Court is empowered to conduct a
hearing on such petition to determine those stockholders who have complied with Section 262 and who
have become entitled to appraisal rights thereunder. The Delaware Court may require the
stockholders who demanded appraisal rights of our shares of common stock to submit their stock
certificates to the Register in Chancery for notation thereon of the pendency of the appraisal
proceeding; and if any stockholder fails to comply with such direction, the Delaware Court may
dismiss the proceedings as to such stockholder.
- 92 -
After the Delaware Court determines which stockholders are entitled to appraisal, the
appraisal proceeding shall be conducted in accordance with the rules of the Delaware Court,
including any rules specifically governing appraisal proceedings. Through such proceeding the
Delaware Court shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the
merger, together with interest, if any, to be paid upon the amount determined to be the fair value.
In determining such fair value, the Delaware Court shall take into account all relevant factors.
Unless the Delaware Court in its discretion determines otherwise for good cause shown, interest
from the effective date of the merger through the date of payment of the judgment shall be
compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any
surcharge) as established from time to time during the period between the effective date of the
merger and the date of payment of the judgment. If you are considering seeking appraisal, you
should be aware that the fair value of your shares as determined under Section 262 of the DGCL
could be more than, the same as or less than the consideration you are entitled to receive pursuant
to the merger agreement if you did not seek appraisal of your shares and that investment banking
opinions as to the fairness from a financial point of view of the consideration payable in a merger
are not necessarily opinions as to fair value under Section 262 of the DGCL. In determining fair
value of shares, the Delaware Court will take into account all relevant factors. In Weinberger v.
UOP, Inc., the Delaware Supreme Court has stated that such factors include market value, asset
value, dividends, earnings prospects, the nature of the enterprise and any other facts which were
known or which could be ascertained as of the date of the merger which throw any light on future
prospects of the merged corporation. In Weinberger, the Delaware Supreme Court stated, among other
things, that proof of value by any techniques or methods generally considered acceptable in the
financial community and otherwise admissible in court should be considered in an appraisal
proceeding. In addition, the Delaware Court has decided that the statutory appraisal remedy,
depending on factual circumstances, may or may not be a dissenters exclusive remedy.
The Delaware Court will direct the payment of the fair value of the shares of our common stock
who have perfected appraisal rights, together with interest, if any. The Delaware Court will
determine the amount of interest, if any, to be paid on the amounts to be received by persons whose
shares of our common stock have been appraised. The costs of the action (which do not include
attorneys or expert fees or expenses) may be determined by the Delaware Court and taxed upon the
parties as the Delaware Court deems equitable. The Delaware Court may also order that all or a
portion of the expenses incurred by any stockholder in connection with an appraisal, including
without limitation reasonable attorneys fees and the fees and expenses of experts utilized in the
appraisal proceeding, be charged
pro rata
against the value of all of the shares entitled to
appraisal. In the absence of such determination or assessment, each party bears its own expenses.
Any stockholder who has duly demanded and perfected an appraisal in compliance with Section
262 of the DGCL will not, after the effective time of the merger, be entitled to vote his or her
shares for any purpose or be entitled to the payment of dividends or other distributions thereon,
except dividends or other distributions payable to holders of record of shares of our common stock
as of a date prior to the effective time of the merger.
At any time within 60 days after the effective time of the merger, any stockholder will have
the right to withdraw his or her demand for appraisal and to accept the cash payment for his or her
shares pursuant to the merger agreement. After this period, a stockholder may withdraw his or her
demand for appraisal only with our written consent. If no petition for appraisal is filed with the
Delaware Court within 120 days after the effective time of the merger, a stockholders right to
appraisal will cease and he or she will be entitled to receive the cash payment for his or her
shares pursuant to the merger agreement, as if he or she had not demanded appraisal of his or her
shares. No petition timely filed in the Delaware Court demanding appraisal will be dismissed as to
any stockholder without the approval of the Delaware Court, and such approval may be conditioned on
such terms as the Delaware Court deems just; provided, however, that any stockholder who has not
commenced an appraisal proceeding or joined that proceeding as a named party may withdraw his, her
or its demand for appraisal and accept the merger consideration offered pursuant to the merger
agreement within 60 days after the effective date of the merger.
- 93 -
If you properly demand appraisal of your shares of our common stock under Section 262 and you
fail to perfect, or effectively withdraw or lose, your right to appraisal, as provided in the DGCL,
your shares will be converted into the right to receive the consideration receivable with respect
to such shares in accordance with the merger agreement. You will fail to perfect, or effectively
lose or withdraw, your right to appraisal if, among other things, no petition for appraisal is
filed within 120 days after the effective time of the merger, or if you deliver to us a written
withdrawal of your demand for appraisal. Any such attempt to withdraw an appraisal demand more than
60 days after the effective time of the merger will require our written approval.
If you desire to exercise your appraisal rights, you must not vote for the adoption of the
merger agreement and must strictly comply with the procedures set forth in Section 262 of the DGCL.
Failure to take any required step in connection with the exercise of appraisal rights will
result in the termination or waiver of such rights.
- 94 -
IMPORTANT INFORMATION ABOUT AIRVANA
Airvana is a Delaware corporation and is headquartered in Chelmsford, Massachusetts. Airvana
helps operators transform the mobile experience for users worldwide. Airvana, Inc.s
high-performance technology and products, from comprehensive femtocell solutions to core mobile
network infrastructure, enable operators to deliver compelling and consistent broadband services to
mobile subscribers, wherever they are. Airvana, Inc.s products are deployed in over 70 commercial
networks on six continents. Airvana, Inc. is headquartered in Chelmsford, Mass., USA, with offices
worldwide.
For more information about Airvana, please visit our website at www.airvana.com. Airvanas
website is provided as an inactive textual reference only. Information contained on our website is
not incorporated by reference into, and does not constitute any part of, this proxy statement.
Airvana is publicly traded on the NASDAQ under the symbol AIRV.
Directors and Executive Officers of Airvana
Set forth below for each of the directors and executive officers of Airvana is his respective
present principal occupation or employment, the name and principal business of the corporation or
other organization in which such occupation or employment is conducted and the five-year employment
history of each such director and executive officer. Except as otherwise noted, each person
identified below is a citizen of the United States of America and can be reached c/o Airvana, Inc.,
19 Alpha Road, Chelmsford, MA 01824.
During the last five years, none of Airvana, our directors or our executive officers has been
(a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or
(b) a party to any judicial or administrative proceeding (except for matters that were dismissed
without sanction or settlement) that resulted in a judgment or decree or final order enjoining the
person from future violations of, or prohibiting activities subject to, federal or state securities
laws, or a finding of any violation of federal or state securities laws.
|
|
|
|
|
|
|
|
|
Age
|
|
|
Directors:
|
|
|
|
|
|
|
Hassan Ahmed
|
|
|
52
|
|
|
Dr. Ahmed has served as a member of our
board of directors since January 2004.
Dr. Ahmed served as Chief Executive Officer
and a member of the board of directors of
Sonus Networks, Inc., a provider of
voice-over-IP infrastructure solutions, from
November 1998 to December 2008, and Chairman
of Sonus Networks board of directors from
April 2004 to December 2008. He was also
President of Sonus Networks from November
1998 to April 2004. Dr. Ahmed is a citizen
of Canada.
|
Robert P. Badavas
|
|
|
56
|
|
|
Mr. Badavas has served as a member of our
board of directors since March 2007.
Mr. Badavas is a private investor and, since his retirement from
TAC Worldwide, a technical workforce management company, has been
serving as President of Petros Ventures, Inc., a venture management
and advising company. Mr. Badavas served as President and Chief
Executive Officer of TAC Worldwide from December
2005 until his retirement in October 2009, and was Executive Vice President and
Chief Financial Officer of TAC Worldwide
from November 2003 to December 2005. Prior
to joining TAC Worldwide, Mr. Badavas was
Senior Principal and Chief Operating Officer
of Atlas Venture, a venture capital firm,
from September 2001 to September 2003.
Mr. Badavas also serves on the board of
directors of Hercules Technology Growth
Capital, Inc. and Constant Contact, Inc.
|
Randall S. Battat
|
|
|
50
|
|
|
Mr. Battat has served as our President and
Chief Executive Officer and a member of our
board of directors since June 2000. Prior to
joining Airvana, Mr. Battat was employed by
Motorola, Inc., most recently as Senior Vice
President and General Manager, Internet and
Networking Group. Prior to joining Motorola,
Mr. Battat held senior management positions
at Apple Inc.
|
Gururaj Deshpande
|
|
|
59
|
|
|
Dr. Deshpande has served as a member of our
board of directors since May 2000.
Dr. Deshpande has served as Chairman of the
board of directors of Sycamore Networks,
Inc., a telecommunications equipment
manufacturer, since 1998.
|
Paul J. Ferri
|
|
|
71
|
|
|
Mr. Ferri has served as a member of our
board of directors since May 2000. Mr. Ferri
is a founding partner of Matrix Partners, a
venture capital firm, where he has been a
General Partner since February 1982.
Mr. Ferri also serves on the board of
directors of Netezza Corporation.
|
Anthony S. Thornley
|
|
|
63
|
|
|
Mr. Thornley has served as a member of our
board of directors since June 2007.
Mr. Thornley has been Chief Financial
Officer of KMF Audio, Inc., a microphone
company, since January 2007. From February
2002 to July 2005, Mr. Thornley served as
President and Chief Operating Officer of
Qualcomm Incorporated, a wireless
communication technology company.
Mr. Thornley serves on the board of
directors of Callaway Golf Company, Cavium
Networks, KMF Audio, Inc. and Transdel
Pharmaceuticals, Inc. Mr. Thornley is a
citizen of both Great Britain and the United
States.
|
Sanjeev Verma
|
|
|
46
|
|
|
Mr. Verma has served as our Vice President,
Femto Business and Corporate Development
since April 2008, as our Vice President of
Marketing and Business Development from
March 2000 until April 2008 and as a member
of our board of directors since March 2000.
Prior to co-founding Airvana, Mr. Verma held
several management and product development
positions at Motorola, Inc., including most
recently Director of Marketing and Business
Development for Home Networking Products.
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- 95 -
|
|
|
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Age
|
|
|
Executive Officers:
|
|
|
|
|
|
|
Peter C. Anastos
|
|
|
47
|
|
|
Mr. Anastos has served as our Vice
President, General Counsel since July 2005
and as our Secretary since May 2007. Prior
to joining Airvana, Mr. Anastos was Vice
President, General Counsel and Secretary at
Avici Systems, Inc., a high speed wireline
IP routing equipment and software provider,
from July 2000 to July 2005.
|
Michael Clark
|
|
|
44
|
|
|
Mr. Clark has served as our Vice President
of Worldwide Sales and Technical Services
since July 2009. Prior to joining Airvana,
Mr. Clark served as Senior Vice President of
Global Sales and Customer Service for the
Consumer Optical Products Division of JDS
Uniphase Commercial, an optical technology
company, from 2005 to 2009. Mr. Clark also
served as Vice President of Sales, Americas
Region for Acterna, a global network test
and measurement solution provider that was
acquired by JDS Uniphase in 2005.
|
Laura L. Cranmer
|
|
|
46
|
|
|
Ms. Cranmer has served as our Vice President
of Operations since September 2008. Prior to
joining Airvana, Ms. Cranmer served as Vice
President of Manufacturing- Inkjet Division
at EFI, Inc., a printer technology company,
from June 2006 to September 2008. From 2001
to June 2006, Ms. Cranmer was employed by
Celestica, Inc., a manufacturing services
operation, where she served as General
Manager, Operations Director, Business
Office Director and Senior Program Manager.
|
Vedat M. Eyuboglu
|
|
|
54
|
|
|
Dr. Eyuboglu has served as our Vice
President, Chief Technical Officer since
March 2000 and as a member of our board of
directors from March 2000 until May 2008.
Prior to co-founding Airvana, Dr. Eyuboglu
held several senior management and
technology positions at Motorola, Inc.,
including most recently Vice President and
General Manager of Home Networking Product
Operation and Vice President of Technical
Staff in Research and Advanced Development
in the Internet and Networking Group.
|
David P. Gamache
|
|
|
52
|
|
|
Mr. Gamache has served as our Vice President
of Finance since December 2005 and our
Treasurer since May 2007. He served as our
Chief Financial Officer from December 2000
to December 2005 and as our Vice President
of Operations from December 2005 to
September 2008.
|
Jeffrey D. Glidden
|
|
|
59
|
|
|
Mr. Glidden has served as our Vice
President, Chief Financial Officer since
December 2005. Prior to joining Airvana,
Mr. Glidden was employed by RSA Security
Inc., an e-security company specializing in
user authentication systems and encryption
technology, where he was Senior Vice
President, Finance and Operations from July
2002 to December 2005, Chief Financial
Officer from September 2002 to December
2005, and Treasurer from October 2002 to
December 2005.
|
David J. Nowicki
|
|
|
44
|
|
|
Mr. Nowicki has served as our Vice President
of Marketing and Product Management since
November 2006. Prior to joining Airvana,
Mr. Nowicki served as Vice President,
Marketing & Product Management at
Bytemobile, Inc., a mobile data services
infrastructure provider, from January 2002
to November 2006.
|
Mark W. Rau
|
|
|
51
|
|
|
Mr. Rau has served as our Vice President,
Engineering since September 2004. Prior to
joining Airvana, Mr. Rau served as the Vice
President of Engineering for Carrius
Technologies, Inc., a communications
infrastructure company, from June 2003 to
September 2004, and he served as Senior Vice
President of Engineering at SOMA Networks,
Inc., a broadband wireless access company,
from June 2000 to June 2003.
|
- 96 -
Historical Selected Financial Data
The following table includes selected consolidated financial data for the last five years and
the first three quarters of 2009. This financial data has been derived from, and should be read in
conjunction with, our audited consolidated financial statements and the related notes filed as part
of our Annual Report on Form 10-K for the year ended December 28, 2008 and our Quarterly Report on
Form 10-Q for the quarter ended September 27, 2009, which are incorporated herein by reference.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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Three
|
|
|
|
Year
|
|
|
Year
|
|
|
Year
|
|
|
Year
|
|
|
Year
|
|
|
Quarters
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
(In thousands, except per share
|
|
January 2,
|
|
|
January 1,
|
|
|
December 31,
|
|
|
December 30,
|
|
|
December 28,
|
|
|
September 27,
|
|
amounts and ratios)
|
|
2005
|
|
|
2006
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
Consolidated Statement of Income Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
3,617
|
|
|
$
|
2,347
|
|
|
$
|
170,270
|
|
|
$
|
305,785
|
|
|
$
|
138,173
|
|
|
$
|
16,869
|
|
Net (loss) income before income taxes and
cumulative effect of change in
accounting principle
|
|
$
|
(29,124
|
)
|
|
$
|
(52,139
|
)
|
|
$
|
63,707
|
|
|
$
|
175,241
|
|
|
$
|
35,216
|
|
|
$
|
(63,746
|
)
|
Net (loss) income
|
|
$
|
(29,129
|
)
|
|
$
|
(63,014
|
)
|
|
$
|
74,119
|
|
|
$
|
153,343
|
|
|
$
|
21,293
|
|
|
$
|
(38,091
|
)
|
Net (loss) income per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(3.20
|
)
|
|
$
|
(5.42
|
)
|
|
$
|
1.21
|
|
|
$
|
2.63
|
|
|
$
|
0.33
|
|
|
$
|
(0.61
|
)
|
Diluted
|
|
$
|
(3.20
|
)
|
|
$
|
(5.42
|
)
|
|
$
|
1.12
|
|
|
$
|
2.19
|
|
|
$
|
0.30
|
|
|
$
|
(0.61
|
)
|
Shares used in computing net
(loss) Income per share per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
11,409
|
|
|
|
12,959
|
|
|
|
13,542
|
|
|
|
36,238
|
|
|
|
64,278
|
|
|
|
64,417
|
|
Diluted
|
|
|
11,409
|
|
|
|
12,959
|
|
|
|
18,947
|
|
|
|
43,496
|
|
|
|
70,091
|
|
|
|
64,417
|
|
|
Non-GAAP Billings Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Billings
|
|
|
106,149
|
|
|
|
157,420
|
|
|
|
140,564
|
|
|
|
142,174
|
|
|
|
125,055
|
1
|
|
|
88,716
|
2
|
Operating profit on Billings
|
|
|
48,676
|
|
|
|
60,705
|
|
|
|
60,151
|
|
|
|
34,948
|
|
|
|
12,695
|
1
|
|
|
340
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Operating Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of earnings to fixed charges
|
|
|
*
|
|
|
|
*
|
|
|
|
230
|
|
|
|
375
|
|
|
|
71
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
117,436
|
|
|
$
|
219,547
|
|
|
$
|
264,207
|
|
|
$
|
261,566
|
|
|
$
|
257,336
|
|
|
$
|
285,530
|
|
Indebtedness
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
*
|
|
Earnings for fiscal years 2004 and 2005 and the three months ended September 27, 2009 were
insufficient to cover fixed charges.
|
|
(1)
|
|
Billings and Operating profit on Billings for fiscal year 2008 exclude
$21.8 million of outstanding invoices to Nortel Networks that was subject to
Nortel Networks bankruptcy proceedings. This amount was fully
collected and recognized in the fourth quarter of 2009.
|
|
(2)
|
|
Billings and Operating profit on Billings for the three quarters ended
September 27, 2009 exclude $14.6 million of outstanding invoices to Nortel
Networks that was subject to Nortel Networks bankruptcy proceedings. This
amount was fully collected and recognized in the fourth quarter of 2009.
|
Ratio of Earnings to Fixed Charges
The following table presents our ratio of earnings to fixed charges for the fiscal periods
indicated. Ratio of earnings to fixed charges means the ratio of income before
income taxes, cumulative effect of change in accounting principle and fixed charges to fixed charges, where fixed charges are the aggregate of interest expense, including
amortization of debt issuance costs, and an allocation of rental charges to approximate equivalent
interest.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
|
|
Year
|
|
|
Year
|
|
|
Year
|
|
|
Year
|
|
|
Year
|
|
|
Quarters
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
January 2,
|
|
|
January 1,
|
|
|
December 31,
|
|
|
December 30,
|
|
|
December 28,
|
|
|
September 27,
|
|
(In thousands, except ratios)
|
|
2005
|
|
|
2006
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
Net (loss) income before income taxes and
cumulative effect of change in
accounting principle
|
|
$
|
(29,124
|
)
|
|
$
|
(52,139
|
)
|
|
$
|
63,707
|
|
|
$
|
175,241
|
|
|
$
|
35,216
|
|
|
$
|
(63,746
|
)
|
Add fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
$
|
286
|
|
|
$
|
|
|
|
$
|
40
|
|
|
$
|
35
|
|
|
$
|
|
|
|
$
|
|
|
Interest portion of rent expense
|
|
$
|
179
|
|
|
$
|
284
|
|
|
$
|
237
|
|
|
$
|
432
|
|
|
$
|
498
|
|
|
$
|
393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income before income taxes,
cumulative effect of change in
accounting principle and fixed charges
|
|
$
|
(28,659
|
)
|
|
$
|
(51,855
|
)
|
|
$
|
63,984
|
|
|
$
|
175,708
|
|
|
$
|
35,714
|
|
|
$
|
(63,353
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
$
|
286
|
|
|
$
|
|
|
|
$
|
40
|
|
|
$
|
35
|
|
|
$
|
|
|
|
$
|
|
|
Interest portion of rent expense
|
|
$
|
179
|
|
|
$
|
284
|
|
|
$
|
237
|
|
|
$
|
432
|
|
|
$
|
498
|
|
|
$
|
393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fixed charges
|
|
$
|
465
|
|
|
$
|
284
|
|
|
$
|
277
|
|
|
$
|
467
|
|
|
$
|
498
|
|
|
$
|
393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of earnings to fixed charges
|
|
|
*
|
|
|
|
*
|
|
|
|
230
|
|
|
|
375
|
|
|
|
71
|
|
|
|
*
|
|
|
|
|
*
|
|
Earnings for fiscal years 2004 and 2005 and the three months ended September 27, 2009 were
insufficient to cover fixed charges.
|
- 97 -
Book Value Per Share
Our net book value per share as of September 27, 2009 was $1.81.
Projected Financial Information
During our consideration of strategic alternatives, as described in
Special
FactorsBackground of the Merger
, Airvana management provided Goldman Sachs with financial forecasts of
Airvanas operating performance for fiscal years 2009 through 2013 prepared by the management of
Airvana. Set forth below are the financial forecasts prepared by Airvana management in November
2009, which we refer to as the Management Projections. In connection with SAC PCGs due
diligence review of Airvana, Airvana provided to SAC PCG and its financing sources portions of the
Management Projections.
The
Base Case Management Projections represented
managements then best estimate of the Companys future
results. The Upside Case Management Projections assumed greater EV-DO shipments and billings
than assumed in the Base Case Management Projections resulting from broader and stronger demand for the Companys 3G EV-DO infrastructure products and
services. The Upside Case Management Projections also assumed that femtocell shipments and
billings would grow at a greater rate than assumed in the Base Case
Management Projections based upon a more rapid adoption of the Companys current and
planned femtocell products by wireless operators and more rapid market acceptance by consumers.
The Downside Case Management Projections show the effects of a faster decline in EV-DO shipments
and billings than assumed in the Base Case Management Projections, reflecting a more rapid
transition by wireless operators to 4G technologies and a greater decline in shipments of the
Companys 3G EV-DO infrastructure products. The Downside Case Management Projections assumed no
change in femtocell shipments and billings from the Base Case. In
each case, EBITDA, EBIT, Net
Income and Free Cash Flow in the tables below were calculated based on billings.
Management Projections Base Case
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Billings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EV-DO
|
|
$
|
146
|
|
|
$
|
149
|
|
|
$
|
144
|
|
|
$
|
150
|
|
|
$
|
148
|
|
Femtocell
|
|
|
7
|
|
|
|
51
|
|
|
|
136
|
|
|
|
225
|
|
|
|
332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
153
|
|
|
|
200
|
|
|
|
280
|
|
|
|
375
|
|
|
|
480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EV-DO
|
|
|
95
|
|
|
|
103
|
|
|
|
101
|
|
|
|
108
|
|
|
|
106
|
|
Femtocell
|
|
|
(56
|
)
|
|
|
(45
|
)
|
|
|
(23
|
)
|
|
|
0
|
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39
|
|
|
|
58
|
|
|
|
78
|
|
|
|
108
|
|
|
|
129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EV-DO
|
|
|
93
|
|
|
|
99
|
|
|
|
98
|
|
|
|
103
|
|
|
|
101
|
|
Femtocell
|
|
|
(60
|
)
|
|
|
(47
|
)
|
|
|
(26
|
)
|
|
|
(3
|
)
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33
|
|
|
|
52
|
|
|
|
72
|
|
|
|
100
|
|
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income:
|
|
|
32
|
|
|
|
34
|
|
|
|
50
|
|
|
|
71
|
|
|
|
85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow:
|
|
|
36
|
|
|
|
43
|
|
|
|
32
|
|
|
|
62
|
|
|
|
72
|
|
- 98 -
Management Projections Upside Case
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Billings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EV-DO
|
|
$
|
146
|
|
|
$
|
152
|
|
|
$
|
152
|
|
|
$
|
155
|
|
|
$
|
150
|
|
Femtocell
|
|
|
7
|
|
|
|
73
|
|
|
|
206
|
|
|
|
272
|
|
|
|
357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
153
|
|
|
|
225
|
|
|
|
358
|
|
|
|
427
|
|
|
|
508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EV-DO
|
|
|
95
|
|
|
|
109
|
|
|
|
111
|
|
|
|
117
|
|
|
|
116
|
|
Femtocell
|
|
|
(56
|
)
|
|
|
(25
|
)
|
|
|
30
|
|
|
|
50
|
|
|
|
76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39
|
|
|
|
84
|
|
|
|
141
|
|
|
|
167
|
|
|
|
192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EV-DO
|
|
|
93
|
|
|
|
105
|
|
|
|
107
|
|
|
|
112
|
|
|
|
110
|
|
Femtocell
|
|
|
(60
|
)
|
|
|
(27
|
)
|
|
|
28
|
|
|
|
47
|
|
|
|
72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33
|
|
|
|
78
|
|
|
|
135
|
|
|
|
159
|
|
|
|
182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income:
|
|
|
32
|
|
|
|
50
|
|
|
|
93
|
|
|
|
111
|
|
|
|
128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow:
|
|
|
36
|
|
|
|
64
|
|
|
|
57
|
|
|
|
93
|
|
|
|
106
|
|
Management Projections Downside Case
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Billings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EV-DO
|
|
$
|
146
|
|
|
$
|
132
|
|
|
$
|
112
|
|
|
$
|
105
|
|
|
$
|
77
|
|
Femtocell
|
|
|
7
|
|
|
|
51
|
|
|
|
136
|
|
|
|
225
|
|
|
|
332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
153
|
|
|
|
183
|
|
|
|
248
|
|
|
|
330
|
|
|
|
410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EV-DO
|
|
|
95
|
|
|
|
88
|
|
|
|
76
|
|
|
|
71
|
|
|
|
51
|
|
Femtocell
|
|
|
(56
|
)
|
|
|
(44
|
)
|
|
|
(23
|
)
|
|
|
0
|
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39
|
|
|
|
44
|
|
|
|
53
|
|
|
|
71
|
|
|
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EV-DO
|
|
|
93
|
|
|
|
85
|
|
|
|
72
|
|
|
|
66
|
|
|
|
45
|
|
Femtocell
|
|
|
(60
|
)
|
|
|
(47
|
)
|
|
|
(26
|
)
|
|
|
(3
|
)
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33
|
|
|
|
38
|
|
|
|
47
|
|
|
|
63
|
|
|
|
65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income:
|
|
|
32
|
|
|
|
25
|
|
|
|
33
|
|
|
|
45
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow:
|
|
|
36
|
|
|
|
31
|
|
|
|
17
|
|
|
|
37
|
|
|
|
36
|
|
- 99 -
Billings, EBITDA, EBIT and free cash flow are non-GAAP measures that are used by management as
supplemental financial measures to evaluate Airvanas operational trends. Billings represent
amounts invoiced for products and services delivered and services to be delivered to Airvanas
customers for which payment is expected to be made in accordance with normal payment terms.
Airvana believes billings is a consistent measure of its sales activities from period to period,
but should not be relied upon as an alternative to revenue. EBITDA is earnings before interest,
provision for taxes, depreciation and amortization (as calculated
based on billings), and EBIT is
earnings before interest and provision for taxes (as calculated based
on billings); neither metric
should be relied upon as an alternative to net income. Free cash flow is calculated by adding to
EBITDA stock-based compensation and subtracting capital expenditures, net cash interest, increases
in net working capital and taxes (as calculated based on billings); free cash flow should not be
considered as an alternative to cash flows or net income. None of billings, EBITDA, EBIT or free
cash flow is defined under GAAP and, accordingly, they may not be comparable measurements to those
used by other companies.
The financial forecasts shown above are included in this proxy statement to provide our
stockholders access to certain nonpublic information considered by our special committee and our
board of directors in connection with their evaluation of the merger and provided to Goldman Sachs
in connection with its opinion to our special committee that, as of December 17, 2009 and based
upon and subject to the factors and assumptions set forth therein, the $7.65 per share in cash to
be paid to the holders of shares of Airvana common stock (other than Rollover Stockholders)
pursuant to the merger agreement was fair from a financial point of view to such holders. The
inclusion of this information should not be regarded as an indication to any stockholder that our
special committee, board of directors or any other recipient of this information considered, or now
considers, it to be predictive of actual future results, and they should not be relied on as such.
The forecasts reflect numerous estimates and assumptions with respect to industry performance,
general business, economic, regulatory, market and financial conditions, as well as matters
specific to Airvanas business, all of which are difficult to predict and many of which are beyond
Airvanas control. As a result, there can be no assurance that the forecasted results will be
realized or that actual results will not be significantly higher or lower than such forecasts. As
the forecasts cover multiple years, such information by its nature becomes less predictive with
each successive year. Also, the economic and business environments can and do change quickly,
which adds a significant level of unpredictability, unreliability and execution risk. These
factors create significant doubt as to whether the forecasts for fiscal years 2010 and beyond are
likely to be achieved. As a result, the forecasts are not necessarily indicative of future
results. In addition, Airvana management prepared the forecasts prior to the execution of the
merger agreement and, accordingly, the forecasts do not reflect the effects of the merger, which
may cause results to differ materially. Accordingly, readers of this proxy statement are cautioned
not to place undue reliance on the financial forecasts.
The financial forecasts stated above were prepared for internal use and not with a view toward
public disclosure or toward complying with generally accepted accounting principles in the United
States, or GAAP, the
published guidelines of the SEC regarding forecasts or the guidelines established by the
American Institute of Certified Public Accountants for preparation and presentation of prospective
financial information. The forecasts included in this proxy statement were prepared by, and are
the responsibility of, our management. We do not assume any responsibility to update these
forecasts. Neither our independent registered public accounting firm, nor any other independent
accountants, have compiled, examined, or performed any procedures with respect to the financial
forecasts contained herein, nor have they expressed any opinion or any other form of assurance on
such forecasts or their achievability, and assume no responsibility for, and disclaim any
association with, the financial forecasts. Furthermore, the financial forecasts do not take into
account any circumstances or events occurring after the date the forecasts were prepared that were
unforeseen by our management at the time of preparation. We have made publicly available our
actual results of operations for the quarter ended September 30, 2009. Airvana stockholders should
review our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 to obtain this
information. See
Where You Can Find More Information
beginning on page 107.
None of Airvana or our affiliates, advisors, officers, directors or representatives has made
or makes any representation to any stockholder or other person regarding the ultimate performance
of Airvana compared to the information contained in the forecasts or that forecasted results will
be achieved.
- 100 -
BY INCLUDING IN THIS PROXY STATEMENT A SUMMARY OF ITS INTERNAL FINANCIAL FORECASTS, AIRVANA
UNDERTAKES NO OBLIGATIONS TO UPDATE, OR PUBLICLY DISCLOSE ANY UPDATE TO, THESE FINANCIAL FORECASTS
TO REFLECT CIRCUMSTANCES OR EVENTS, INCLUDING UNANTICIPATED EVENTS, THAT MAY HAVE OCCURRED OR THAT
MAY OCCUR AFTER THE PREPARATION OF THESE FORECASTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE
ASSUMPTIONS UNDERLYING THE FINANCIAL FORECASTS ARE SHOWN TO BE IN ERROR OR CHANGE.
Market Price and Dividend Data
Airvana common stock is listed for trading on the NASDAQ under the symbol AIRV. The
following table sets forth, for the fiscal quarters indicated, the high and low sales prices per
share as reported on the NASDAQ composite tape.
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High
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Low
|
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Fiscal Year Ending January 2, 2011
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|
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|
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First Quarter (through January 11, 2010)
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$
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7.67
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$
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7.50
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|
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Fiscal Year Ended January 3, 2010
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Fourth Quarter
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$
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7.65
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$
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5.80
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Third Quarter
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|
$
|
7.06
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|
|
$
|
5.92
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Second Quarter
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$
|
6.44
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|
|
$
|
4.84
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First Quarter
|
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$
|
6.15
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|
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$
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4.34
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Fiscal Year Ended December 28, 2008
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Fourth Quarter
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$
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6.00
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|
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$
|
3.36
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Third Quarter
|
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$
|
6.70
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|
|
$
|
4.85
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Second Quarter
|
|
$
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6.95
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|
|
$
|
4.82
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First Quarter
|
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$
|
6.19
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|
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$
|
4.00
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|
The closing sale price of Airvana common stock on the NASDAQ on December 17, 2009, the last
trading day prior to the announcement of the merger, was $6.24 per share. The $7.65 per share to be
paid for each share of Airvana common stock in the merger represents a premium of approximately
22.6% to the closing price on December 17, 2009, a premium of approximately 22.4% to the average
closing price for the month ended December 17, 2009, a premium of approximately 18.2% to the
average closing price for the three months ended December 17, 2009, a premium of approximately
20.5% to the average closing price for the six-month period ended December 17, 2009 and a premium
of approximately 28.1% to the average closing price for the twelve-month period ended December 17,
2009. On [
], 2010, the most recent practicable date before this proxy statement was
printed, the closing price for the Airvana common stock on the NASDAQ was
$[___] per share. You are
encouraged to obtain current market
quotations for Airvana common stock in
connection with voting
your shares.
In April 2007, prior to our initial public offering, we paid a special cash dividend of $1.333
per share on shares of our capital stock, totaling an aggregate of $72.7 million. We have not
declared any cash dividends since this date. Based on our current financial plans and expected cash
balances, we do not expect to declare any cash dividends for the foreseeable future.
- 101 -
Security
Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial ownership of our Airvana
common stock as of January 3, 2010 (unless otherwise noted), for:
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each person who is known by us to own beneficially more than 5% of the outstanding
shares of our common stock;
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our principal executive officer, our principal financial officer and our three other
most highly compensated executive officers who served during the year ended December
28, 2008; we refer to these officers collectively as our named executive officers, and
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all of our directors and executive officers as a group; and
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the Buyer Filing Persons,
together with each associate and majority-owned subsidiary thereof, in each case who
beneficially owns outstanding shares of Airvana common stock.
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The percentages of shares outstanding provided in the tables are based on 62,909,609 voting
shares outstanding as of January 3, 2010. Beneficial ownership is determined in accordance with the
rules of the SEC and generally includes voting or investment power with respect to securities.
Unless otherwise indicated, each person or entity named in the table has sole voting and investment
power, or shares voting and investment power with his or her spouse, with respect to all shares of
stock listed as owned by that person. The number of shares shown does not include the interest of
certain persons in shares held by family members in their own right. Shares issuable upon the
exercise of options that are exercisable within 60 days of January 3, 2010 are considered
outstanding for the purpose of calculating the percentage of outstanding shares of Airvana common
stock held by the individual, but not for the purpose of calculating the percentage of outstanding
shares held by any other individual.
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|
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|
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|
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Common Stock
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Percentage of
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|
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Underlying
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|
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Common
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Number of
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|
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Options
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Total
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Stock
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Name and Address of
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Shares
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Exercisable
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Beneficial
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Beneficially
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Beneficial Owner (1)
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Owned (2)
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+
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Within 60 Days
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=
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Ownership (3)
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Owned (4)
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5% Holders
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|
|
|
|
|
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Entities affiliated with Matrix Partners (5)
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15,322,369
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15,322,369
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24.4
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Bay Colony Corporate Center
1000 Winter Street, Suite 4500
Waltham, MA 02451
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|
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|
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Gururaj Deshpande (6)
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8,598,069
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39,852
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8,637,921
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13.7
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Directors and Named Executive Officers
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|
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|
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Hassan Ahmed
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125,655
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|
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16,409
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|
|
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142,064
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*
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Robert P. Badavas
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50,857
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50,857
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*
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Randall S. Battat
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2,189,208
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602,067
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2,791,275
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4.4
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Paul J. Ferri
(7)
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15,324,019
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39,852
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15,363,871
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24.4
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Jeffrey D.
Glidden (8)
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224,270
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508,320
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732,590
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1.2
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David Nowicki
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|
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|
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187,759
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187,759
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*
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Luis J. Pajares
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21,625
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|
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594,051
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615,676
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*
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Mark W. Rau
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|
|
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560,952
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560,952
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*
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Anthony S. Thornley
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20,000
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39,852
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59,852
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*
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Sanjeev Verma
(9)
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2,245,838
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232,932
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2,478,770
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3.9
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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All current directors and executive
officers as a group (16 persons)
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30,913,262
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3,479,765
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|
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34,393,027
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|
|
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51.8
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Buyer Filing Persons
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
*
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Less than 1%
|
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(1)
|
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Unless otherwise noted below, the address of each beneficial owner listed in the table is c/o
Airvana, Inc., 19 Alpha Road, Chelmsford, Massachusetts 01824.
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- 102 -
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(2)
|
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Each person has sole investment and voting power with respect to the shares indicated as
beneficially owned, except as otherwise noted. The inclusion herein of any shares as
beneficially owned does not constitute an admission of beneficial ownership.
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|
(3)
|
|
In accordance with Securities and Exchange Commission rules, each person listed is deemed to
beneficially own any shares issuable upon the exercise of stock options held by him or her
that were exercisable on March 4, 2010 or within 60 days after January 3, 2010.
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(4)
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|
Percentage ownership calculations are based on 62,909,609 shares of common stock outstanding
as of January 3, 2010. Any shares that may be acquired upon the exercise of stock options on
or prior to March 4, 2010 are deemed to be outstanding for the purpose of calculating the
percentage of the outstanding common stock owned by a given person or entity. These shares,
however, are not considered outstanding when computing the percentage ownership of any other
person or entity.
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(5)
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Consists of shares reported as beneficially owned by entities affiliated with Matrix Partners
as follows: (i) Matrix VII, L.P. (Matrix VII) is the record holder of 5,059,609 shares of
common stock (the Matrix VII Shares); (ii) Matrix VI, L.P. (Matrix VI) is the record
holder of 7,100,218 shares of common stock (the Matrix VI Shares); (iii) Matrix VI Parallel
Partnership-A, L.P. (Parallel A) is the record holder of 2,368,728 shares of common stock
(the Parallel A Shares); and (iv) Matrix VI Parallel Partnership-B, L.P. (Parallel B) is
the record holder of 793,814 shares of common stock (the Parallel B Shares). Matrix VII
Management Co., L.L.C. (Matrix VII MC) is the general partner of Matrix VII. Matrix VI
Management Co., L.L.C. (Matrix VI MC) is the general partner of Matrix VI, Parallel A and
Parallel B. Mr. Ferri, as a managing member of Matrix VII MC and Matrix VI MC, has sole voting
and dispositive power of the Matrix VII Shares, Matrix VI Shares, Parallel A Shares and
Parallel B Shares. We obtained information regarding beneficial ownership of these shares from
the Schedule 13G filed by Matrix VII MC, Matrix VII, Matrix VI, Parallel A, Parallel B, Matrix
VI MC and Mr. Ferri with the Securities and Exchange Commission on February 11, 2009 and from
stockholder questionnaire responses, dated February 11, 2009, provided to us by Matrix
Partners.
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(6)
|
|
Consists of shares held by Sparta Group MA LLC Series 5, of which Dr. Deshpande and his
spouse are co-managers. Dr. Deshpande disclaims beneficial ownership of such shares, except
to the extent of his pecuniary interest.
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(7)
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Includes 7,100,218 shares held by Matrix VI, 5,059,609 shares held by Matrix VII, 2,368,728
shares held by Parallel A, and 793,814 shares held by Parallel B. As described in footnote 5,
Mr. Ferri has sole voting and dispositive power with respect to the shares held by these
entities. Mr. Ferri disclaims beneficial ownership of such shares, except to the extent of his
pecuniary interest. We obtained information regarding beneficial ownership of these shares
from the Schedule 13G filed by Matrix VII MC, Matrix VII, Matrix VI, Parallel A, Parallel B,
Matrix VI MC, and Mr. Ferri with the Securities and Exchange Commission on February 11, 2009
and from a director questionnaire, dated February 25, 2009, provided to us by Mr. Ferri.
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(8)
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|
Includes 224,270 shares held in the Jeffrey D. Glidden Nominee Trust, over which Mr. Glidden
has sole voting and dispositive power.
|
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(9)
|
|
Includes 375,093 shares held by Mr. Verma as trustee of the C.H. Trust, a qualified annuity
trust, 115,903 shares held by Mr. Vermas spouse, Girija Verma, and 337,584 shares held by Ms.
Verma as trustee of the Cape Himalaya Trust. Mr. Verma has sole voting and dispositive power
with respect to the shares held in
the C.H. Trust. Ms. Verma has sole voting and dispositive power with respect to the shares
held in the Cape Himalaya Trust.
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- 103 -
Transactions in Shares of Common Stock
Purchases by Airvana
In July 2008, our board of directors authorized the repurchase of up to $20 million of
Airvanas common stock over the following 12 months. This program was implemented through a Rule
10b5-1 plan and the first purchases thereunder were made in the third quarter of 2008. In February
2009, our board of directors authorized a second stock repurchase program authorizing the
repurchase of up to an additional $20 million of Airvanas common stock following the completion of
the initial stock repurchase program. This program was implemented through a Rule 10b5-1 plan and
was terminated on August 20, 2009. The first purchases thereunder were made in the second quarter
of 2009.
The following tables summarize repurchases of Airvana common stock by us under the two
repurchase programs during the past two years:
Repurchases Under the Initial Stock Repurchase Program
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of Shares
|
|
|
Range of Prices Paid per
|
|
|
Average Price Paid per
|
|
Period
|
|
Purchased
|
|
|
Share
|
|
|
Share
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
670,948
|
|
|
$
|
5.00-5.71
|
|
|
$
|
5.29
|
|
Fourth Quarter
|
|
|
2,037,252
|
|
|
$
|
3.97-5.76
|
|
|
$
|
4.80
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
947,530
|
|
|
$
|
4.55-6.00
|
|
|
$
|
5.47
|
|
Second Quarter
|
|
|
257,979
|
|
|
$
|
5.49-5.94
|
|
|
$
|
5.78
|
|
|
Total
|
|
|
3,913,709
|
|
|
$
|
3.97-6.00
|
|
|
$
|
5.11
|
|
Repurchases Under the Second Stock Repurchase Program
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of Shares
|
|
|
Range of Prices Paid per
|
|
|
Average Price Paid per
|
|
Period
|
|
Purchased
|
|
|
Share
|
|
|
Share
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
|
|
|
403,748
|
|
|
$
|
4.99-5.92
|
|
|
$
|
5.56
|
|
Third Quarter
|
|
|
61,267
|
|
|
$
|
5.96-6.00
|
|
|
$
|
6.03
|
|
|
Total
|
|
|
465,015
|
|
|
$
|
4.99-6.00
|
|
|
$
|
5.63
|
|
Purchases by the Rollover Stockholders
None of the Rollover Stockholders has purchased shares of our common stock at any time within
the past two years.
Purchases
by Parent, Merger Sub and the other Buyer Filing Person
None
of Parent, Merger Sub or the other Buyer Filing Person has purchased
shares of our common stock at any time within the past two years.
- 104 -
Prior Public Offerings
On July 25, 2007, we sold an aggregate of 8,300,000 shares of our common stock pursuant to an
underwritten public offering at a price of $7.00 per share. We raised a total of $58.1 million in
gross proceeds from this offering, or approximately $50.8 million in net proceeds after deducting
underwriting discounts and commissions of approximately $4.1 million and other estimated offering
costs of approximately $3.2 million.
Transactions in Prior 60 Days
There have been no transactions in shares of Airvana common stock during the past sixty days
by us, any of our officers or directors, any of the other Rollover Stockholders or any of their
trustees, Parent, Merger Sub, any of Merger Subs officers or
directors, the other Buyer Filing Person or any associate or majority-owned subsidiary of the foregoing, except the
following:
On November 16, 2009, Sanjeev Verma sold 12,500 shares pursuant to a Rule 10b5-1 trading plan
adopted by Mr. Verma on June 5, 2008. The range of prices at which these shares were sold was
$6.25 to $6.48 and the average price was $6.401 per share.
On November 30, 2009, Vedat Eyuboglu and his affiliates sold 12,500 shares at $6.00 per share,
pursuant to a Rule 10b5-1 trading plan adopted by Dr. Eyuboglu on September 5, 2007.
On
January 4, 2010, Gururaj Deshpande transferred 1,563,772 shares he
held directly, and 7,034,297 shares he held indirectly in Unicorn
Trust III, Unicorn Trust V, the Deshpande Irrevocable Trust and the
Gururaj Deshpande Grantor Retained Annuity Trust to Sparta Group LLC
Series 5, of which Dr. Deshpande and his spouse are co-managers.
- 105 -
ADJOURNMENT OF THE SPECIAL MEETING
(PROPOSAL NO. 2)
Airvana may ask its stockholders to vote on a proposal to adjourn the special meeting, if
necessary, to solicit additional proxies if there are insufficient votes at the time of the meeting
to adopt the merger agreement. We currently do not intend to propose adjournment of our special
meeting if there are sufficient votes to adopt the merger agreement. If the proposal to adjourn our
special meeting for the purpose of soliciting additional proxies is submitted to our stockholders
for approval, such approval requires the affirmative vote of the holders of a majority of the
shares of Airvana common stock present or represented by proxy and entitled to vote on the matter.
The board of directors recommends that you vote FOR the adjournment of the special meeting,
if necessary, to solicit additional proxies.
OTHER MATTERS
Other Matters for Action at the Special Meeting
As of the date of this proxy statement, our board of directors knows of no matters that will
be presented for consideration at the special meeting other than as described in this proxy
statement.
Future Stockholder Proposals
If the merger is consummated, we will not have public stockholders and there will be no public
participation in any future meeting of stockholders. However, if the merger is not completed, we
expect to hold a 2010 annual meeting of stockholders later in the year.
We must receive stockholder proposals (including director nominations) intended to be
presented at our annual meeting of stockholders to be held in 2010 at our principal executive
offices as follows: in the case of an election of directors, no earlier than January 19, 2010 and
no later than February 18, 2010, which is not less than 90 days nor more than 120 days,
respectively, prior to the first anniversary of the preceding years annual meeting; provided,
however, that in the event that the date of our annual meeting is advanced by more than 20 days, or
delayed by more than 60 days, from the first anniversary of the preceding years annual meeting, a
stockholders notice must be so received not earlier than the 120th day prior to such annual
meeting and not later than the close of business on the later of (A) the 90th day prior to such
annual meeting and (B) the tenth day following the day on which notice of the date of such annual
meeting was mailed or public disclosure of the date of such annual meeting was made, whichever
first occurs; in no event shall the adjournment or postponement of an annual meeting (or the public
announcement thereof) commence a new time period (or extend any time period) for the giving of a
stockholders notice.
Each stockholders notice for a proposal must be timely given to our Corporate Secretary at
the address of our principal executive offices. Each notice generally is required to set forth as
to each matter proposed to be brought before an annual meeting certain information and must meet
other requirements specified in our by-laws, as determined by us, including: (A) as to each
proposed nominee (1) such persons name, age, business address and, if known, residence address,
(2) such persons principal occupation or employment, (3) the class and number of our shares which
are beneficially owned by such person and (4) any other information concerning such person that
must be disclosed as to nominees in proxy solicitations pursuant to Regulation 14A under the
Exchange Act; (B) as to the stockholder giving the notice (1) such stockholders name and address,
(2) the class and number of our shares that are owned, beneficially and of record, by such
stockholder, (3) a description of all arrangements or understandings between such stockholder and
each proposed nominee and any other person or persons (including their names) pursuant to which the
nomination(s) are to be made by such stockholder, (4) a representation that such stockholder
intends to appear in person or by proxy at the meeting to nominate the person(s) named in its
notice and (5) a representation whether the stockholder intends or is part of a group which intends
(x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the
corporations outstanding capital stock reasonably believed by such stockholder to be sufficient to
elect the nominee (and such representation shall be included in any
such proxy statement and form of proxy) and/or (y) otherwise to solicit proxies from
stockholders in support of such nomination (and such representation shall be included in any such
solicitation materials).
- 106 -
The foregoing time limits also apply to determining whether notice is timely for purposes of
rules adopted by the SEC relating to the exercise of discretionary voting authority. These rules
are separate from and in addition to the requirements a stockholder must meet to have a proposal
included in our proxy statement. In addition, stockholders are required to comply with any
applicable requirements of the Exchange Act and the rules and regulations thereunder.
Householding of Special Meeting Materials
Some banks, brokers and other nominee record holders may be participating in the practice of
householding proxy statements and annual reports. This means that only one copy of our proxy
statement and annual report to stockholders may have been sent to multiple stockholders in your
household. We will promptly deliver a separate copy of either document to you upon written or oral
request to Airvana, Inc., 19 Alpha Road, Chelmsford, Massachusetts 01824, Attention: Investor
Relations, telephone: (978) 250-3000. If you want to receive separate copies of the proxy statement
or annual report to stockholders in the future, or if you are receiving multiple copies and would
like to receive only one copy per household, you should contact your bank, broker or other nominee
record holder, or you may contact us at the above address and telephone number.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange Act, and file
annual, quarterly and current reports, proxy statements and other information with the SEC. You can
read our SEC filings, including the registration statement, through the Internet at the SECs
website at www.sec.gov. You may also read and copy any document we file with the SEC at its public
reference facility at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information about the public reference room.
You may obtain any of the documents we file with the SEC, without charge, by requesting them
in writing or by telephone from us at the following address:
Airvana, Inc.
19 Alpha Road
Chelmsford, Massachusetts 01824
Attention: Investor Relations
Telephone: (978) 250-3000
If you would like to request documents from us, please do so by [
], 2010, to
receive them before the special meeting. If you request any documents from us, we will mail them to
you by first class mail, or another equally prompt method, within one business day after we receive
your request.
- 107 -
ANNEX A
Agreement and Plan of Merger
AGREEMENT
AND PLAN OF MERGER
by and
among
72 MOBILE
HOLDINGS, LLC,
72 MOBILE
ACQUISITION CORP.
and
AIRVANA,
INC.
Dated as
of December 17, 2009
TABLE OF
CONTENTS
|
|
|
|
|
ARTICLE I THE MERGER
|
|
1
|
1.1
|
|
Effective Time of the Merger
|
|
1
|
1.2
|
|
Closing
|
|
1
|
1.3
|
|
Effects of the Merger
|
|
1
|
1.4
|
|
Directors and Officers of the Surviving Corporation
|
|
2
|
|
|
|
ARTICLE II CONVERSION OF SECURITIES
|
|
2
|
2.1
|
|
Conversion of Capital Stock
|
|
2
|
2.2
|
|
Exchange of Certificates
|
|
2
|
2.3
|
|
Company Stock Plans
|
|
4
|
2.4
|
|
Dissenting Shares
|
|
4
|
|
|
|
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
|
5
|
3.1
|
|
Organization, Standing and Power
|
|
5
|
3.2
|
|
Capitalization
|
|
6
|
3.3
|
|
Subsidiaries
|
|
7
|
3.4
|
|
Authority; No Conflict; Required Filings and Consents
|
|
8
|
3.5
|
|
SEC Filings; Financial Statements; Information Provided
|
|
10
|
3.6
|
|
No Undisclosed Liabilities
|
|
11
|
3.7
|
|
Absence of Certain Changes or Events
|
|
11
|
3.8
|
|
Taxes
|
|
11
|
3.9
|
|
Owned and Leased Real Properties
|
|
12
|
3.10
|
|
Intellectual Property
|
|
13
|
3.11
|
|
Contracts
|
|
14
|
3.12
|
|
Litigation
|
|
15
|
3.13
|
|
Environmental Matters
|
|
15
|
3.14
|
|
Employee Benefit Plans
|
|
16
|
3.15
|
|
Compliance With Laws
|
|
17
|
3.16
|
|
Permits
|
|
17
|
3.17
|
|
Labor Matters
|
|
17
|
3.18
|
|
Insurance
|
|
17
|
3.19
|
|
Opinion of Financial Advisor
|
|
17
|
3.20
|
|
Section 203 of the DGCL
|
|
18
|
3.21
|
|
Brokers
|
|
18
|
3.22
|
|
No Other Information
|
|
18
|
|
|
|
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER AND
THE TRANSITORY SUBSIDIARY
|
|
18
|
4.1
|
|
Organization, Standing and Power
|
|
18
|
4.2
|
|
Authority; No Conflict; Required Filings and Consents
|
|
18
|
4.3
|
|
SEC Filings; Information Provided
|
|
19
|
4.4
|
|
Operations of the Transitory Subsidiary
|
|
20
|
4.5
|
|
Financing
|
|
20
|
4.6
|
|
Solvency
|
|
21
|
4.7
|
|
Guarantee
|
|
21
|
4.8
|
|
Agreements with Company Stockholders, Directors or Management
|
|
21
|
-i-
|
|
|
|
|
4.9
|
|
No Other Information
|
|
21
|
4.10
|
|
Access to Information; Disclaimer
|
|
21
|
|
|
|
ARTICLE V CONDUCT OF BUSINESS
|
|
22
|
5.1
|
|
Covenants of the Company
|
|
24
|
5.2
|
|
Confidentiality
|
|
24
|
5.3
|
|
Equity Financing Commitments
|
|
24
|
5.4
|
|
Debt Financing Commitments
|
|
25
|
|
|
|
ARTICLE VI ADDITIONAL AGREEMENTS
|
|
27
|
6.1
|
|
No Solicitation
|
|
29
|
6.2
|
|
Proxy Statement
|
|
30
|
6.3
|
|
Nasdaq Quotation
|
|
30
|
6.4
|
|
Access to Information
|
|
30
|
6.5
|
|
Stockholders Meeting
|
|
30
|
6.6
|
|
Legal Conditions to the Merger
|
|
31
|
6.7
|
|
Public Disclosure
|
|
31
|
6.8
|
|
Indemnification
|
|
32
|
6.9
|
|
Notification of Certain Matters
|
|
33
|
6.10
|
|
Exemption from Liability Under Section 16(b)
|
|
33
|
6.11
|
|
Service Credit
|
|
33
|
6.12
|
|
Company Employee Arrangements
|
|
34
|
6.13
|
|
Sale of Investments
|
|
34
|
6.14
|
|
Director Resignations
|
|
34
|
6.15
|
|
Termination of Agreements
|
|
34
|
6.16
|
|
Internal Reorganization
|
|
34
|
|
|
|
ARTICLE VII CONDITIONS TO MERGER
|
|
34
|
7.1
|
|
Conditions to Each Partys Obligation To Effect the Merger
|
|
34
|
7.2
|
|
Additional Conditions to Obligations of the Buyer and the
Transitory Subsidiary
|
|
35
|
7.3
|
|
Additional Conditions to Obligations of the Company
|
|
35
|
7.4
|
|
Frustration of Closing Conditions
|
|
36
|
|
|
|
ARTICLE VIII TERMINATION AND AMENDMENT
|
|
36
|
8.1
|
|
Termination
|
|
36
|
8.2
|
|
Effect of Termination
|
|
37
|
8.3
|
|
Fees and Expenses
|
|
37
|
8.4
|
|
Amendment
|
|
39
|
8.5
|
|
Extension; Waiver
|
|
39
|
|
|
|
ARTICLE IX MISCELLANEOUS
|
|
39
|
9.1
|
|
Nonsurvival of Representations, Warranties and Agreements
|
|
39
|
9.2
|
|
Notices
|
|
39
|
9.3
|
|
Entire Agreement
|
|
40
|
9.4
|
|
No Third Party Beneficiaries
|
|
41
|
9.5
|
|
Assignment
|
|
41
|
9.6
|
|
Severability
|
|
41
|
9.7
|
|
Counterparts and Signature
|
|
41
|
-ii-
|
|
|
|
|
9.8
|
|
Interpretation
|
|
41
|
9.9
|
|
Governing Law
|
|
42
|
9.10
|
|
Remedies
|
|
42
|
9.11
|
|
Submission to Jurisdiction
|
|
43
|
9.12
|
|
Disclosure Schedules
|
|
43
|
9.13
|
|
Knowledge
|
|
43
|
|
|
|
Exhibit A
|
|
Form of Certificate of Incorporation
|
Exhibit B
|
|
Form of Guarantee
|
Exhibit C
|
|
Form of Termination Agreement
|
-iii-
TABLE OF
DEFINED TERMS
|
|
|
|
|
Reference in
|
Terms
|
|
Agreement
|
|
Acceptable Confidentiality Agreement
|
|
Section 6.1(a)
|
Acquisition Proposal
|
|
Section 6.1(f)
|
Actions
|
|
Section 3.12
|
Affiliate
|
|
Section 3.2(c)
|
Agreement
|
|
Preamble
|
Alternative Acquisition Agreement
|
|
Section 6.1(b)
|
Alternative Debt Commitment Letter
|
|
Section 5.4(c)
|
Alternative Debt Financing
|
|
Section 5.4(c)
|
Alternative Debt Financing Agreement
|
|
Section 5.4(c)
|
Ancillary Agreements
|
|
Section 9.10(b)
|
Antitrust Laws
|
|
Section 6.6(b)
|
Antitrust Order
|
|
Section 6.6(b)
|
Bankruptcy and Equity Exception
|
|
Section 3.4(a)
|
Business Day
|
|
Section 1.2
|
Buyer
|
|
Preamble
|
Buyer Damages
|
|
Section 9.10(b)
|
Buyer Disclosure Schedule
|
|
Article IV
|
Buyer Employee Plan
|
|
Section 6.11
|
Buyer Liability Limitation
|
|
Section 9.10(b)
|
Buyer Material Adverse Effect
|
|
Section 4.1
|
Buyer Parties
|
|
Section 9.10(c)
|
Buyer Termination Fee
|
|
Section 8.3(d)
|
Buyers Knowledge
|
|
Section 9.13
|
Certificate
|
|
Section 2.2(b)
|
Certificate of Merger
|
|
Section 1.1
|
Claims
|
|
Section 6.8(a)
|
Closing
|
|
Section 1.2
|
Closing Date
|
|
Section 1.2
|
Code
|
|
Section 2.2(f)
|
Commitment Letters
|
|
Section 4.5(a)
|
Company
|
|
Preamble
|
Company Balance Sheet
|
|
Section 3.5(b)
|
Company Board
|
|
Section 3.4(a)
|
Company Common Stock
|
|
Section 2.1(b)
|
Company Damages
|
|
Section 9.10(b)
|
Company Disclosure Schedule
|
|
Article III
|
Company Employee Plans
|
|
Section 3.14(a)
|
Company Intellectual Property
|
|
Section 3.10(b)
|
Company Leases
|
|
Section 3.9(b)
|
Company Liability Limitation
|
|
Section 9.10(b)
|
Company Material Adverse Effect
|
|
Section 3.1
|
Company Material Contracts
|
|
Section 3.11(a)
|
Company Meeting
|
|
Section 3.4(d)
|
-iv-
|
|
|
|
|
Reference in
|
Terms
|
|
Agreement
|
|
Company Parties
|
|
Section 9.10(c)
|
Company Preferred Stock
|
|
Section 3.2(a)
|
Company SEC Reports
|
|
Section 3.5(a)
|
Company Stock Options
|
|
Section 2.3(a)
|
Company Stock Plans
|
|
Section 2.3(a)
|
Company Stockholder Approval
|
|
Section 3.4(a)
|
Company Voting Proposal
|
|
Section 3.4(a)
|
Companys Knowledge
|
|
Section 9.13
|
Confidentiality Agreement
|
|
Section 5.2
|
Continuing Employees
|
|
Section 6.11
|
Debt Commitment Letter
|
|
Section 4.5(a)
|
Debt Financing
|
|
Section 4.5(a)
|
Debt Financing Agreements
|
|
Section 5.4(a)
|
Debt Financing Sources
|
|
Section 4.5(a)
|
Dissenting Shares
|
|
Section 2.4(a)
|
DGCL
|
|
Preamble
|
Effect
|
|
Section 3.1
|
Effective Time
|
|
Section 1.1
|
Employee Benefit Plan
|
|
Section 3.14(a)
|
Environmental Law
|
|
Section 3.13(b)
|
Equity Commitment Letter
|
|
Section 4.5(a)
|
Equity Financing
|
|
Section 4.5(a)
|
ERISA
|
|
Section 3.14(a)
|
ERISA Affiliate
|
|
Section 3.14(a)
|
Exchange Act
|
|
Section 3.2(f)
|
Exchange Agent
|
|
Section 2.2(a)
|
Exchange Fund
|
|
Section 2.2(a)
|
Expense Reimbursement
|
|
Section 8.3(b)
|
Filed Company SEC Reports
|
|
Article III
|
Financing
|
|
Section 4.5(a)
|
Financial Statements
|
|
Section 3.5(b)
|
GAAP
|
|
Section 3.5(b)
|
Governmental Entity
|
|
Section 3.4(c)
|
GSO
|
|
Section 4.5(a)
|
Guarantee
|
|
Section 4.7
|
Hazardous Substance
|
|
Section 3.13(c)
|
HSR Act
|
|
Section 3.4(c)
|
Indemnified Parties
|
|
Section 6.8(a)
|
Intellectual Property
|
|
Section 3.10(a)
|
Interim Investment Agreement
|
|
Section 4.8
|
Internal Reorganization
|
|
Section 6.16
|
Investor
|
|
Section 4.5(a)
|
IRS
|
|
Section 3.8(c)
|
Lien
|
|
Section 3.4(b)
|
-v-
|
|
|
|
|
Reference in
|
Terms
|
|
Agreement
|
|
Maximum Premium
|
|
Section 6.8(c)
|
Merger
|
|
Preamble
|
Merger Consideration
|
|
Section 2.1(c)
|
Notice of Superior Proposal
|
|
Section 6.1(b)
|
Option Consideration
|
|
Section 2.3(b)
|
Ordinary Course of Business
|
|
Section 3.6
|
Outside Date
|
|
Section 8.1(b)
|
Permits
|
|
Section 3.16
|
Pre-Closing Period
|
|
Section 5.1
|
Proxy Statement
|
|
Section 3.5(c)
|
Required Company Stockholder Vote
|
|
Section 3.4(d)
|
Representatives
|
|
Section 6.1(a)
|
Rollover Commitment Letters
|
|
Section 4.8
|
Schedule 13E-3
|
|
Section 3.5(c)
|
SEC
|
|
Section 3.5(a)
|
Securities Act
|
|
Section 3.2(c)
|
Specified Time
|
|
Section 6.1(a)
|
Subsidiary
|
|
Section 3.3(a)
|
Superior Proposal
|
|
Section 6.1(f)
|
Surviving Corporation
|
|
Section 1.1
|
Tax Returns
|
|
Section 3.8(b)
|
Taxes
|
|
Section 3.8(b)
|
Termination Agreement
|
|
Section 6.15
|
Termination Fee
|
|
Section 8.3(c)
|
Third Party Intellectual Property
|
|
Section 3.10(b)
|
Transitory Subsidiary
|
|
Preamble
|
UK Stock Option
|
|
Section 2.3(a)
|
WARN
|
|
Section 3.17
|
-vi-
AGREEMENT
AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this Agreement)
is entered into as of December 17, 2009, by and among 72
Mobile Holdings, LLC, a Delaware limited liability company (the
Buyer), 72 Mobile Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of the Buyer (the
Transitory Subsidiary), and Airvana, Inc., a
Delaware corporation (the Company).
WHEREAS, the Boards of Directors of the Transitory Subsidiary
and the Company have each determined that this Agreement and the
Merger are advisable and in the best interests of each
corporation and their respective stockholders and recommended
that their respective stockholders adopt this Agreement; and
WHEREAS, the acquisition of the Company shall be effected
through a merger (the Merger) of the Transitory
Subsidiary with and into the Company in accordance with the
terms of this Agreement and the Delaware General Corporation Law
(the DGCL), as a result of which the Company shall
become a wholly owned subsidiary of the Buyer;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements
set forth below, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
the Buyer, the Transitory Subsidiary and the Company agree as
follows:
ARTICLE I
THE MERGER
1.1
Effective Time of the
Merger
. Subject to the provisions of this
Agreement, prior to the Closing, the Buyer and the Company shall
jointly prepare, and immediately following the Closing the
Company, as the surviving corporation in the Merger (the Company
following the Merger is sometimes referred to herein as the
Surviving Corporation
), shall cause to be
filed with the Secretary of State of the State of Delaware, a
certificate of merger (the
Certificate of
Merger
) in such form as is required by, and executed
by the Company in accordance with, the relevant provisions of
the DGCL and shall make all other filings or recordings required
under the DGCL. The Merger shall become effective upon the
filing of the Certificate of Merger with the Secretary of State
of the State of Delaware or at such later time as is established
by the Buyer and the Company and set forth in the Certificate of
Merger (the
Effective Time
).
1.2
Closing
. The closing of the
Merger (the
Closing
) shall take place at
10:00 a.m., Eastern time, on a date to be specified by the
Buyer and the Company (the
Closing Date
),
which shall be no later than the second Business Day after
satisfaction or waiver of the conditions set forth in
Article VII (other than delivery of items to be delivered
at the Closing and other than satisfaction of those conditions
that by their nature are to be satisfied at the Closing, it
being understood that the occurrence of the Closing shall remain
subject to the delivery of such items and the satisfaction or
waiver of such conditions at the Closing), at the offices of
Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street,
Boston, Massachusetts, unless another date, place or time is
agreed to in writing by the Buyer and the Company. For purposes
of this Agreement, a
Business Day
shall be
any day other than (a) a Saturday or Sunday or (b) a
day on which banking institutions located in Boston,
Massachusetts or New York, New York are permitted or required by
law, executive order or governmental decree to remain closed.
1.3
Effects of the Merger
. At the
Effective Time (a) the Transitory Subsidiary shall be
merged with and into the Company and, as a result of the Merger,
the separate corporate existence of Transitory Subsidiary shall
cease and the Company shall continue as the Surviving
Corporation of the Merger and (b) the Certificate of
Incorporation of the Company as in effect on the date of this
Agreement shall be amended in its entirety as set forth on
Exhibit A
hereto, and, as so amended, such
Certificate of Incorporation shall be the Certificate of
Incorporation of the Surviving Corporation, until further
amended in accordance with the DGCL. In addition, subject to
Section 6.8(b) hereof, after the Effective Time the Buyer
shall cause the By-laws of the Surviving Corporation to be
amended and restated in their entirety so that, as soon as
practicable following the Effective Time, they are identical to
the By-laws of the Transitory Subsidiary as in effect
immediately prior to the Effective Time, except that all
references to the name of the Transitory Subsidiary therein
shall be changed to refer to the name of the Company, and, as so
-1-
amended and restated, such By-laws shall be the By-laws of the
Surviving Corporation, until further amended in accordance with
the DGCL. The Merger shall have the effects set forth in
Section 259 of the DGCL.
1.4
Directors and Officers of the Surviving
Corporation
.
(a) The directors of the Transitory Subsidiary immediately
prior to the Effective Time shall be the directors of the
Surviving Corporation, each to hold office until their
respective successors are duly elected or appointed and
qualified or their earlier death, resignation or removal in
accordance with the Certificate of Incorporation and By-laws of
the Surviving Corporation.
(b) The officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving
Corporation, each to hold office until their respective
successors are duly elected or appointed and qualified or their
earlier death, resignation or removal in accordance with the
Certificate of Incorporation and By-laws of the Surviving
Corporation.
ARTICLE II
CONVERSION
OF SECURITIES
2.1
Conversion of Capital Stock
. As
of the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any shares of the capital
stock of the Company or capital stock of the Transitory
Subsidiary:
(a)
Capital Stock of the Transitory
Subsidiary
. Each share of the common stock, par
value $0.001 per share, of the Transitory Subsidiary issued and
outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share
of common stock, $0.001 par value per share, of the
Surviving Corporation.
(b)
Cancellation of Treasury Stock and Buyer-Owned
Stock
. All shares of common stock,
$0.001 par value per share, of the Company
(
Company Common Stock
) that are owned by the
Company as treasury stock and any shares of Company Common Stock
owned by the Buyer, the Transitory Subsidiary or any other
wholly owned Subsidiary of the Buyer immediately prior to the
Effective Time shall be cancelled and shall cease to exist and
no stock of the Buyer or other consideration shall be delivered
in exchange therefor. Shares of Company Common Stock owned by
any wholly owned Subsidiary of the Company shall remain
outstanding.
(c)
Merger Consideration for Company Common
Stock
. Subject to Section 2.2, each share of
Company Common Stock (other than shares to be cancelled in
accordance with Section 2.1(b), Dissenting Shares (as
defined in Section 2.4(a) below) and Company Common Stock
owned by any wholly owned Subsidiary of the Company) issued and
outstanding immediately prior to the Effective Time shall be
automatically converted into the right to receive $7.65 in cash
per share (the
Merger Consideration
). As of
the Effective Time, all such shares of Company Common Stock
shall no longer be outstanding and shall automatically be
cancelled and shall cease to exist, and each holder of a
certificate representing any such shares of Company Common Stock
shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration pursuant to this
Section 2.1(c) upon the surrender of such certificate in
accordance with Section 2.2, without interest.
(d)
Adjustments to Merger
Consideration
. The Merger Consideration shall be
adjusted, without duplication, to reflect fully the effect of
any reclassification, stock split, reverse split, stock dividend
(including any dividend or distribution of securities
convertible into Company Common Stock), reorganization,
recapitalization or other like change with respect to Company
Common Stock occurring after the date hereof and prior to the
Effective Time.
2.2
Exchange of Certificates
. The
procedures for exchanging outstanding shares of Company Common
Stock for the Merger Consideration pursuant to the Merger are as
follows:
(a)
Exchange Agent
. At or prior to the
Effective Time, the Buyer shall deposit or cause to be deposited
with Computershare Trust Company, N.A. or another bank or
trust company mutually acceptable to the Buyer and the Company
(the Exchange Agent), for the benefit of the holders
of shares of Company Common Stock outstanding immediately prior
to the Effective Time, for payment through the Exchange Agent in
accordance with this
-2-
Section 2.2, cash in an amount sufficient to make payment
of the Merger Consideration pursuant to Section 2.1(c) in
exchange for all of the outstanding shares of Company Common
Stock (the Exchange Fund).
(b)
Exchange Procedures
. Promptly (and in
any event within three (3) Business Days) after the
Effective Time, the Buyer shall cause the Exchange Agent to mail
to each holder of record of a certificate which immediately
prior to the Effective Time represented outstanding shares of
Company Common Stock (each, a Certificate)
(i) a letter of transmittal in customary form and
(ii) instructions for effecting the surrender of the
Certificates in exchange for the Merger Consideration payable
with respect thereto. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, the holder of such Certificate shall
be paid promptly in exchange therefor cash in an amount equal to
the Merger Consideration that such holder has the right to
receive pursuant to the provisions of this Article II, and
the Certificate so surrendered shall immediately be cancelled.
In the event of a transfer of ownership of Company Common Stock
which is not registered in the transfer records of the Company,
the Merger Consideration may be paid to a person other than the
person in whose name the Certificate so surrendered is
registered, if such Certificate is presented to the Exchange
Agent, accompanied by all documents required to evidence and
effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated
by this Section 2.2, each Certificate shall be deemed at
any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration as
contemplated by this Section 2.2.
(c)
No Further Ownership Rights in Company Common
Stock
. All Merger Consideration paid upon the
surrender for exchange of Certificates evidencing shares of
Company Common Stock in accordance with the terms hereof shall
be deemed to have been paid in satisfaction of all rights
pertaining to such shares of Company Common Stock, and from and
after the Effective Time there shall be no further registration
of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving
Corporation or the Exchange Agent for any reason, they shall be
cancelled and exchanged as provided in this Article II.
(d)
Termination of Exchange Fund
. Any
portion of the Exchange Fund which remains undistributed to the
holders of Company Common Stock for one year after the Effective
Time shall be delivered to the Buyer, upon demand, and any
holder of Company Common Stock who has not previously complied
with this Section 2.2 shall be entitled to receive only
from the Buyer payment of its claim for Merger Consideration.
(e)
No Liability
. Notwithstanding
anything herein to the contrary, none of the Buyer, the
Transitory Subsidiary, the Company, the Surviving Corporation or
the Exchange Agent shall be liable to any holder of shares of
Company Common Stock for any amount delivered to a public
official pursuant to any applicable abandoned property, escheat
or similar law.
(f)
Withholding Rights
. Each of the
Buyer, the Exchange Agent and the Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of
Company Common Stock such amounts as it is required to deduct
and withhold with respect to the making of such payment under
the Internal Revenue Code of 1986, as amended (the
Code
), or any other applicable state, local
or foreign tax law. To the extent that amounts are so withheld
by the Surviving Corporation, the Exchange Agent or the Buyer,
as the case may be, such withheld amounts (i) shall be
remitted by the Buyer, the Exchange Agent or the Surviving
Corporation, as the case may be, to the applicable Governmental
Entity, and (ii) shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of
Company Common Stock in respect of which such deduction and
withholding was made by the Surviving Corporation, the Exchange
Agent or the Buyer, as the case may be.
(g)
Lost Certificates
. If any Certificate
shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate
to be lost, stolen or destroyed, the Exchange Agent shall issue
in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration deliverable in respect thereof pursuant to
this Agreement;
provided
,
however
, that the
Exchange Agent may, in its discretion and as a condition
precedent to the payment of the Merger Consideration, require
the owners of such lost, stolen or destroyed Certificates to
deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Buyer, the
Exchange Agent and the Surviving Corporation with respect to the
Certificates alleged to have been lost, stolen or destroyed.
-3-
2.3
Company Stock Plans
.
(a) The Company shall take such action as shall be required:
(i) to cause the vesting of any unvested options to
purchase Company Common Stock (Company Stock
Options) granted under any stock option plans or other
equity-related plans of the Company (the Company Stock
Plans) to be accelerated in full effective immediately
prior to the Effective Time;
(ii) to effectuate the cancellation, as of the Effective
Time, of all Company Stock Options outstanding immediately prior
to the Effective Time (without regard to the exercise price of
such Company Stock Options); and
(iii) to cause, pursuant to the Company Stock Plans, each
outstanding Company Stock Option to represent as of the
Effective Time solely the right to receive, in accordance with
this Section 2.3, a lump sum cash payment in the amount of
the Option Consideration (as defined below), if any, with
respect to such Company Stock Option and to no longer represent
the right to purchase Company Common Stock or any other equity
security of the Company, the Buyer, the Surviving Corporation or
any other person or any other consideration;
provided
that with respect to each Company Stock Option granted under the
Companys 2007 Stock Incentive Plan to employees resident
in the United Kingdom (a
UK Stock Option
),
the Company shall provide the holder thereof with
(A) notice that the Company Stock Option will terminate
immediately prior to the Effective Time and represent as of the
Effective Time solely the right to receive, in accordance with
this Section 2.3, a lump sum cash payment in the amount of
the Option Consideration (as defined below), if any, with
respect to such Company Stock Option, and (B) the
opportunity to exercise the Company Stock Option prior to the
Effective Time.
(b) Each holder of a Company Stock Option so cancelled
shall receive from the Buyer, in respect and in consideration of
each such Company Stock Option, as soon as practicable following
the Effective Time (but in any event not later than three
Business Days), an amount (net of applicable taxes) equal to the
product of (i) the excess, if any, of (A) the Merger
Consideration per share of Company Common Stock over
(B) the exercise price per share of Company Common Stock
subject to such Company Stock Option, multiplied by
(ii) the total number of shares of Company Common Stock
subject to such Company Stock Option (whether or not then vested
or exercisable), without any interest thereon (the Option
Consideration). In the event that the exercise price of
any Company Stock Option is equal to or greater than the Merger
Consideration, such Company Stock Option shall be cancelled and
have no further force or effect.
(c) As soon as practicable following the execution of this
Agreement, the Company shall mail to each person who is a holder
of Company Stock Options a letter describing the treatment of
and, if applicable, payment for such Company Stock Options
pursuant to this Section 2.3 and providing instructions for
use in obtaining payment for such Company Stock Options. The
Buyer shall at all times from and after the Effective Time
maintain sufficient liquid funds to satisfy its obligations to
holders of Company Stock Options pursuant to this
Section 2.3.
2.4
Dissenting Shares
.
(a) Notwithstanding anything to the contrary contained in
this Agreement, shares of Company Common Stock held by a holder
who has made a demand for appraisal of such shares of Company
Common Stock in accordance with the DGCL (any such shares being
referred to as Dissenting Shares until such time as
such holder fails to perfect or otherwise loses such
holders appraisal rights under the DGCL with respect to
such shares) shall, subject to Section 2.4(b), not be
converted into or represent the right to receive Merger
Consideration in accordance with Section 2.1, but shall be
entitled only to such rights as are granted by the DGCL to a
holder of Dissenting Shares.
(b) If any Dissenting Shares shall lose their status as
such (through failure to perfect or otherwise), then, as of the
later of the Effective Time or the date of loss of such status,
such shares shall automatically be converted into and shall
represent only the right to receive Merger Consideration in
accordance with Section 2.1, without interest thereon, upon
surrender of the Certificate formerly representing such shares.
(c) The Company shall give the Buyer: (i) prompt
notice and a copy of any written demand for appraisal received
by the Company prior to the Effective Time pursuant to the DGCL,
any withdrawal of any such demand and any other demand, notice
or instrument delivered to the Company prior to the Effective
Time pursuant to the
-4-
DGCL that relate to such demand; and (ii) the opportunity
to participate in all negotiations and proceedings with respect
to any such demand, notice or instrument. The Company shall not
make any payment or settlement offer or agree to do either of
the foregoing prior to the Effective Time with respect to any
such demand, notice or instrument unless the Buyer shall have
given its written consent to such payment or settlement offer or
agreement.
ARTICLE III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyer and the
Transitory Subsidiary that the statements contained in this
Article III are true and correct, except as set forth in
(x) the corresponding section of the disclosure schedule
delivered by the Company to the Buyer and the Transitory
Subsidiary and dated as of the date of this Agreement (the
Company Disclosure Schedule
), (y) any
other section of the Company Disclosure Schedule to the extent
it is readily apparent from a reading of such disclosure that
such disclosure is applicable to such statement in this
Article III or (z) as disclosed in any Company SEC
Report filed on or after December 31, 2008 and prior to the
date hereof (the
Filed Company SEC Reports
),
other than disclosure in such Company SEC Reports referred to in
the Risk Factors and Forward Looking
Statements sections thereof or any other disclosures in
the Filed Company SEC Reports which are forward-looking in
nature.
3.1
Organization, Standing and
Power
. The Company is a corporation duly
organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate its
properties and assets and to carry on its business as now being
conducted. Where applicable as a legal concept, the Company is
duly qualified to do business and in good standing as a foreign
corporation in each jurisdiction in which the character of the
properties it owns, operates or leases or the nature of its
activities makes such qualification necessary, except for such
failures to be so qualified or in good standing that,
individually or in the aggregate, have not had and would not
reasonably be likely to have a Company Material Adverse Effect.
The Company has made available to the Buyer complete and correct
copies of the certificate of incorporation and bylaws of the
Company, as amended to the date of this Agreement, and is not in
violation in any material respect of any of the provisions
contained in such documents. For purposes of this Agreement, the
term
Company Material Adverse Effect
means
any effect, change, event, circumstance or development (each, an
Effect
) that is, or would be reasonably
likely to be, individually or in the aggregate, materially
adverse to the business, financial condition or results of
operations of the Company and its Subsidiaries, taken as a
whole;
provided
,
however
, that none of the
following, or any Effect arising or resulting from any of the
following, shall constitute, or shall be considered in
determining whether there has occurred, or may, would or could
occur, a Company Material Adverse Effect:
(a) general economic conditions (or changes in such
conditions) in the United States or any other country or region
in the world, or conditions in the global economy generally;
(b) conditions (or changes in such conditions) in the
securities markets, credit markets, currency markets or other
financial markets in the United States or any other country or
region in the world, including (i) changes in interest
rates in the United States or any other country or region in the
world and changes in exchange rates for the currencies of any
countries and (ii) any suspension of trading in securities
(whether equity, debt, derivative or hybrid securities)
generally on any securities exchange or over-the-counter market
operating in the United States or any other country or region in
the world;
(c) conditions (or changes in conditions) in the industries
or markets in which the Company operates;
(d) political conditions (or changes in such conditions) in
the United States or any other country or region in the world or
acts of war, sabotage or terrorism (including any escalation or
general worsening of any such acts of war, sabotage or
terrorism) in the United States or any other country or region
in the world occurring after the date hereof;
(e) earthquakes, hurricanes, tsunamis, tornadoes, floods,
mudslides, wild fires or other natural disasters, weather
conditions and other force majeure events in the United States
or any other country or region in the world occurring after the
date hereof;
-5-
(f) the announcement of this Agreement or the pendency or
consummation of the transactions contemplated hereby, including
the identity of the Buyer or the termination or potential
termination of (or the failure or potential failure to renew or
enter into) any contracts with customers, suppliers,
distributors or other business partners, to the extent caused by
the pendency or the announcement of the transactions
contemplated by this Agreement;
(g) changes after the date hereof in law or other legal or
regulatory conditions (or the interpretation thereof) or changes
after the date hereof in GAAP or other accounting standards (or
the interpretation thereof) or that result from any action taken
for the purpose of complying with any such changes;
(h) any actions taken or failure to take action, in each
case, to which the Buyer has approved, consented to or requested
in writing; or compliance with the terms of, or the taking of
any action required by, this Agreement (including
Section 6.6 but excluding the first sentence of
Section 5.1);
(i) any fees or expenses incurred in connection with the
transactions contemplated by this Agreement;
(j) changes in the Companys stock price or the
trading volume of the Companys stock, or any failure by
the Company to meet any public estimates or expectations of the
Companys revenue, earnings or other financial performance
or results of operations for any period, or any failure by the
Company to meet any internal budgets, plans or forecasts of its
revenues, earnings or other financial performance or results of
operations (
provided
that the exception in this clause
shall not prevent or otherwise affect a determination that any
Effect underlying such change or failure has resulted in, or
contributed to, a Company Material Adverse Effect); and
(k) any legal proceedings made or brought by any of the
current or former stockholders of the Company (on their own
behalf or on behalf of the Company) against the Company arising
out of or related to this Agreement or the Merger;
provided
, further, however, that any Effect referred to
in clauses (a) through (e) may be taken into account
for purposes of each such respective clause if, and only to the
extent that, such Effect adversely affects the Company and its
Subsidiaries, taken as a whole, in a materially disproportionate
manner relative to (x) other participants operating in
industries in which the Company and its Subsidiaries operate in
the case of clause (c) or (y) other participants
operating in industries and the affected geography in which the
Company and its Subsidiaries operate in the case of clauses (a),
(b), (d) and (e). With respect to references to
Company Material Adverse Effect in the
representations and warranties set forth in Section 3.4(b)
and Section 3.4(c) the exception set forth in
clause (f) shall not apply.
3.2
Capitalization
.
(a) The authorized capital stock of the Company as of the
date of this Agreement consists of 350,000,000 shares of
Company Common Stock and 10,000,000 shares of preferred
stock, $0.001 par value per share (
Company
Preferred Stock
). The rights and privileges of each
class of the Companys capital stock are as set forth in
the Companys Certificate of Incorporation. As of the close
of business on December 11, 2009,
(i) 62,879,603 shares of Company Common Stock were
issued and outstanding, (ii) 13,724,285 shares of
Company Common Stock were reserved for issuance pursuant to
outstanding Company Stock Options and (iii) no shares of
Company Preferred Stock were issued or outstanding. There are no
unvested restricted stock awards of Company Common Stock
outstanding.
(b) Section 3.2(b) of the Company Disclosure Schedule
sets forth a complete and accurate list, as of the close of
business on December 11, 2009, of: (i) all Company
Stock Plans, indicating for each Company Stock Plan, as of such
date, the number of shares of Company Common Stock issued under
such Plan, the number of shares of Company Common Stock subject
to outstanding options under such Plan and the number of shares
of Company Common Stock reserved for future issuance under such
Plan; and (ii) all outstanding Company Stock Options,
indicating with respect to each such Company Stock Option the
name of the holder thereof, the Company Stock Plan under which
it was granted, the number of shares of Company Common Stock
subject to such Company Stock Option, the exercise price, the
date of grant, and the vesting schedule. The Company has made
available to the Buyer complete and accurate copies of all
Company Stock Plans and the forms of all stock option agreements
evidencing Company Stock Options.
-6-
(c) Except (i) as set forth in this Section 3.2
and (ii) as reserved for future grants under Company Stock
Plans, as of the date of this Agreement, (A) there are no
equity securities of, or other equity or voting interest in, the
Company, or any security exchangeable or convertible into or
exercisable for such equity securities, issued, reserved for
issuance or outstanding and (B) there are no options,
warrants, equity securities, calls, rights, commitments or other
rights or agreements of any character to which the Company or
any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries is bound obligating the Company or any
of its Subsidiaries to issue, exchange, transfer, deliver or
sell, or cause to be issued, exchanged, transferred, delivered
or sold, any capital stock or other equity or voting interests
of the Company or any security or rights convertible into or
exchangeable or exercisable for any such shares or other equity
interests, or obligating the Company or any of its Subsidiaries
to grant, extend, accelerate the vesting of, otherwise modify or
amend or enter into any such option, warrant, equity security,
call, right, commitment, agreement or other similar contract
relating to any capital stock of, or other equity or voting
interest (including any voting debt) including any agreements
granting any preemptive rights, subscription rights,
anti-dilutive rights, rights of first refusal or similar rights
with respect to any securities of the Company. The Company does
not have any outstanding equity compensation relating to the
capital stock of the Company. Neither the Company nor any of its
Subsidiaries has any obligation to make any payments based on
the price or value of Company Common Stock or any other
securities of the Company or dividends paid thereon. No direct
or indirect Subsidiary of the Company owns any Company Common
Stock. Neither the Company nor any of its Affiliates is a party
to or is bound by any agreements or understandings with respect
to the voting (including voting trusts and proxies) or sale or
transfer (including agreements imposing transfer restrictions)
of any shares of capital stock or other equity interests of the
Company or with respect to the election or appointment of
directors of the Company or its Subsidiaries. For purposes of
this Agreement, the term
Affiliate
when used
with respect to any party shall mean any person who is an
affiliate of that party within the meaning of
Rule 405 promulgated under the Securities Act of 1933, as
amended (the
Securities Act
). There are no
registration rights, rights agreement, poison pill
anti-takeover plan or other similar agreement or understanding
to which the Company or any of its Subsidiaries is a party or by
which it or they are bound with respect to any equity security
of any class of the Company.
(d) All outstanding shares of Company Common Stock are, and
all shares of Company Common Stock subject to issuance as
specified in Section 3.2(b) above, upon issuance on the
terms and conditions specified in the instruments pursuant to
which they are issuable, will be, duly authorized, validly
issued, fully paid and nonassessable and not subject to or
issued in violation of any purchase option, call option, right
of first refusal, preemptive right, subscription right or any
similar right under any provision of the DGCL, the
Companys Certificate of Incorporation or By-laws or any
agreement to which the Company is a party or is otherwise bound.
(e) There are no obligations, contingent or otherwise, of
the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of Company Common Stock or the
capital stock of the Company or any of its Subsidiaries or to
provide funds to the Company or any Subsidiary of the Company
(other than as provided in award agreements relating to Company
Stock Options as they relate to using shares of Company Common
Stock to pay income Taxes) or any obligations binding on the
Company to grant or extend such rights.
(f) The Company Common Stock constitutes the only
outstanding class of securities of the Company registered under
the Securities Act or the Securities Exchange Act of 1934, as
amended (the Exchange Act).
(g) As of the date hereof, there is no outstanding
indebtedness for borrowed money of the Company and its
Subsidiaries other than indebtedness identified in
Section 3.2(g) of the Company Disclosure Schedule.
3.3
Subsidiaries
.
(a) Section 3.3 of the Company Disclosure Schedule
sets forth, as of the date of this Agreement, the name and
jurisdiction of organization of each Subsidiary of the Company
and sets forth a complete and accurate list of all outstanding
securities of each Subsidiary and the registered and beneficial
owner thereof. For purposes of this Agreement, the term
Subsidiary
means, with respect to any party,
any corporation, partnership, trust, limited liability company
or other non-corporate business enterprise in which such party
(or another Subsidiary of such party) holds stock or other
ownership interests representing (A) more that 50% of the
voting power of all outstanding stock or ownership interests of
such entity or (B) the right to receive more than 50% of
the net assets of such entity available for distribution to the
holders of outstanding stock or ownership interests upon a
liquidation or dissolution of such entity.
-7-
(b) Each Subsidiary of the Company is duly organized,
validly existing and in good standing (to the extent such
concepts are applicable) under the laws of the jurisdiction of
its organization, has all requisite company power and authority
to own, lease and operate its properties and assets and to carry
on its business as now being conducted. Where applicable as a
legal concept, each Subsidiary of the Company is duly qualified
to do business and in good standing as a foreign company in each
jurisdiction in which the character of the properties it owns,
operates or leases or the nature of its activities makes such
qualification necessary, except for such failures to be so
qualified or in good standing that, individually or in the
aggregate, have not had and would not reasonably be likely to
have a Company Material Adverse Effect. All of the outstanding
shares of capital stock and other equity securities or interests
of each Subsidiary of the Company are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights
and all such shares are owned, of record and beneficially, by
the Company or another of its wholly-owned Subsidiaries free and
clear of all security interests, liens, claims, pledges,
agreements, limitations in the Companys voting rights,
charges or other encumbrances (including any restriction on the
right to vote, sell or otherwise dispose of such capital stock
or other equity or voting interests).
(c) Except as set forth in this Section 3.3,
(A) there are no equity securities of, or other equity or
voting interest in, any of the Subsidiaries of the Company, or
any security exchangeable or convertible into or exercisable for
such equity securities, issued, reserved for issuance or
outstanding and (B) there are no options, warrants, equity
securities, calls, rights, commitments or other rights or
agreements of any character to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound obligating the Company or any of its
Subsidiaries to issue, exchange, transfer, deliver or sell, or
cause to be issued, exchanged, transferred, delivered or sold,
any capital stock or other equity or voting interests of any of
the Companys Subsidiaries or any security or rights
convertible into or exchangeable or exercisable for any such
shares or other equity interests, or obligating the Company or
any of its Subsidiaries to grant, extend, accelerate the vesting
of, otherwise modify or amend or enter into any such option,
warrant, equity security, call, right, commitment, agreement or
other similar contract relating to any capital stock of, or
other equity or voting interest (including any voting debt)
including any agreements granting any preemptive rights,
subscription rights, anti-dilutive rights, rights of first
refusal or similar rights with respect to any securities of the
Companys Subsidiaries. None of the Companys
Subsidiaries has any outstanding equity compensation relating to
the capital stock of any of the Companys Subsidiaries.
Neither the Company nor any of its Subsidiaries has any
obligation to make any payments based on the price or value of
any securities of the Companys Subsidiaries or dividends
paid thereon. Neither the Company nor any of its Affiliates is a
party to or is bound by any agreements or understandings with
respect to the voting (including voting trusts and proxies) or
sale or transfer (including agreements imposing transfer
restrictions) of any shares of capital stock or other equity
interests of any of the Subsidiaries of the Company.
(d) The Company does not control directly or indirectly or
have any direct or indirect equity participation or similar
interest in (and neither the Company nor any of its Subsidiaries
has any obligation to make an investment in or capital
contribution to) any corporation, partnership, limited liability
company, joint venture, trust or other business association or
entity which is not a Subsidiary of the Company.
3.4
Authority; No Conflict; Required Filings and
Consents
.
(a) The Company has all requisite corporate power and
authority to enter into, execute and deliver this Agreement and
each Ancillary Agreement to which it is a party and, subject, in
the case of this Agreement, to the adoption of this Agreement
(the
Company Voting Proposal
) by the
Companys stockholders under the DGCL (the
Company
Stockholder Approval
), to perform its obligations
hereunder and thereunder and to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements to
which it is a party. Without limiting the generality of the
foregoing, the Board of Directors of the Company (the
Company Board
), at a meeting duly called and
held, by the unanimous vote of all directors (i) determined
that the Merger is fair and in the best interests of the Company
and its stockholders, (ii) approved this Agreement, the
performance of the Company of its covenants and obligations
hereunder, and declared its advisability in accordance with the
provisions of the DGCL, (iii) directed that this Agreement
be submitted to the stockholders of the Company for their
adoption and recommended that the stockholders of the Company
vote in favor of the adoption of this Agreement,
(iv) approved each of the Ancillary Agreements to which the
Company is a party, and (v) to the extent necessary,
adopted a resolution having the effect of causing the Company
not to be subject to any state takeover law or similar law that
might otherwise apply to the Merger and any other transactions
contemplated by this Agreement or any Ancillary
-8-
Agreement to which the Company is a party. The execution and
delivery of this Agreement and the Ancillary Agreements to which
the Company is a party, the performance of the Company of its
covenants and obligations hereunder and thereunder, and the
consummation of the transactions contemplated by this Agreement
and such Ancillary Agreements by the Company have been duly
authorized by all necessary corporate action on the part of the
Company, with the consummation of such transactions contemplated
by this Agreement subject only to the required receipt of the
Company Stockholder Approval. This Agreement and each Ancillary
Agreement to which the Company is a party have been duly
executed and delivered by the Company and constitute the valid
and binding obligation of the Company, enforceable against the
Company in accordance with its and their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to
or affecting creditors rights and to general equity
principles (the
Bankruptcy and Equity
Exception
).
(b) The execution and delivery of this Agreement and the
Ancillary Agreements to which the Company is a party by the
Company do not, and the performance by the Company of its
obligations hereunder and under such Ancillary Agreements and
the consummation by the Company of the transactions contemplated
by this Agreement and the Ancillary Agreements to which the
Company is a party shall not, (i) conflict with, or result
in any violation or breach of, any provision of the Certificate
of Incorporation or By-laws of the Company or of the charter,
by-laws, or other organizational document of any Subsidiary of
the Company, (ii) conflict with, or result in any violation
or breach of, or constitute (with or without notice or lapse of
time, or both) a default (or give rise to a right of
termination, modification, cancellation or acceleration of any
obligation or loss of any material benefit) under, require a
consent or waiver under, constitute a change in control under,
require the payment of a penalty under or result in the
imposition of any mortgage, pledge, lien, charge, encumbrance,
option to purchase, lease or otherwise acquire any interest or
security interest (
Lien
) on the
Companys or any of its Subsidiarys properties,
rights or assets under, any of the terms, conditions or
provisions of any lease, license, contract or other agreement,
instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their
properties, rights or assets may be bound, or
(iii) subject, in the case of this Agreement, to obtaining
the Company Stockholder Approval and compliance with the
requirements specified in clauses (i) through (v) of
Section 3.4(c), conflict with or violate any permit,
concession, franchise, license, judgment, injunction, order,
decree, statute, law, ordinance, rule or regulation applicable
to the Company or any of its Subsidiaries or any of its or their
respective properties, rights or assets, except in the case of
clauses (ii) and (iii) of this Section 3.4(b) for
any such conflicts, violations, breaches, defaults,
terminations, modifications, cancellations, accelerations,
losses, penalties or Liens, and for any consents or waivers not
obtained, that, individually or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect.
(c) No consent, approval, license, permit, order or
authorization of, or registration, declaration, notice or filing
with, any court, arbitrational tribunal, administrative agency
or commission or other governmental or regulatory authority,
agency or instrumentality (a
Governmental
Entity
) or any stock market or stock exchange on which
shares of Company Common Stock are listed for trading is
required by or with respect to the Company or any of its
Subsidiaries in connection with the execution and delivery by
the Company of this Agreement or any Ancillary Agreement to
which the Company is a party, the performance by the Company of
its obligations hereunder or thereunder or the consummation by
the Company of the transactions contemplated by this Agreement
or such Ancillary Agreements, except for (i) the pre-merger
notification requirements under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the
HSR
Act
) and any other applicable foreign antitrust law,
(ii) the filing of the Certificate of Merger with the
Delaware Secretary of State and appropriate corresponding
documents with the appropriate authorities of other states in
which the Company is qualified as a foreign corporation to
transact business, (iii) filings required under, and
compliance with the requirements of, the Securities Act and
Exchange Act, (iv) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may
be required under applicable state securities laws, and
(v) such other consents, approvals, licenses, permits,
orders, authorizations, registrations, declarations, notices and
filings which, if not obtained or made, would not be reasonably
likely to have a Company Material Adverse Effect.
(d) The affirmative vote for adoption of the Company Voting
Proposal by the holders of at least a majority of the
outstanding shares of Company Common Stock on the record date
for the meeting of the Companys stockholders (the
Company Meeting) to consider the Company Voting
Proposal (the Required Company Stockholder Vote) is
the only vote of the holders of any class or series of the
Companys capital stock or other
-9-
securities necessary for the adoption of this Agreement and for
the consummation by the Company of the other transactions
contemplated by this Agreement. There are no bonds, debentures,
notes or other indebtedness of the Company having the right to
vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which stockholders
of the Company may vote.
3.5
SEC Filings; Financial Statements; Information
Provided
.
(a) The Company has filed all registration statements,
certifications, forms, reports and other documents required to
be filed by the Company with the Securities and Exchange
Commission (the SEC) since January 1, 2007. All
such registration statements, certifications, forms, reports and
other documents (including those that the Company may file after
the date hereof until the Closing) are referred to herein as the
Company SEC Reports. The Company SEC Reports
(i) were or will be filed on a timely basis, (ii) at
the time filed, complied, or will comply when filed, as to form
in all material respects with the applicable requirements of the
Securities Act, the Exchange Act and the Sarbanes-Oxley Act of
2002, as the case may be, and the rules and regulations of the
SEC thereunder applicable to such Company SEC Reports, and
(iii) did not or will not at the time they were or are
filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated or incorporated in
such Company SEC Reports or necessary in order to make the
statements in such Company SEC Reports, in the light of the
circumstances under which made, not misleading. As of the date
of this Agreement, there are no outstanding or unresolved
comments in comment letters received from the SEC. As of the
date of this Agreement, the Company has not received written
notice that any of the Company SEC Reports is the subject of
ongoing SEC review that is still pending. No Subsidiary of the
Company is subject to the reporting requirements of
Section 13(a) or Section 15(d) of the Exchange Act. No
executive officer of the Company has failed to make the
certifications required of him or her under section 302 or
906 of the Sarbanes-Oxley Act. Neither the Company nor any of
its executive officers has received written notice from any
Governmental Entity challenging or questioning the accuracy of
such certifications.
(b) Each of the consolidated financial statements
(including, in each case, any related notes and schedules)
contained (or incorporated by reference) or to be contained (or
to be incorporated by reference) in the Company SEC Reports (the
Financial Statements) at the time filed
(i) complied or will comply as to form in all material
respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto,
(ii) were or will be prepared in accordance with United
States generally accepted accounting principles
(GAAP) applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to
such Financial Statements or, in the case of unaudited interim
financial statements, as permitted by the SEC on
Form 10-Q
under the Exchange Act), and (iii) fairly presented or will
fairly present in all material respects the consolidated
financial position of the Company and its Subsidiaries as of the
dates indicated and the consolidated results of their operations
and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments. Since January 1,
2008, there has been no material change in the Companys
accounting methods or principles that would be required to be
disclosed in the Companys Financial Statements in
accordance with GAAP, except as described in the notes to such
Company Financial Statements. There are no unconsolidated
Subsidiaries of the Company or any off-balance sheet
arrangements of any type (including any off-balance sheet
arrangement required to be disclosed pursuant to
Item 303(a)(4) of
Regulation S-K
promulgated under the Securities Act) that have not been so
described in the Company SEC Reports nor any obligations to
enter into any such arrangements. The consolidated, unaudited
balance sheet of the Company as of June 28, 2009 is
referred to herein as the Company Balance Sheet.
(c) The proxy statement to be sent to the stockholders of
the Company in connection with the Company Meeting (as amended
or supplemented from time to time, the Proxy
Statement) and the
Rule 13E-3
transaction statement on
Schedule 13E-3
relating to the adoption of this Agreement by the stockholders
of the Company (as amended or supplemented from time to time,
the
Schedule 13E-3)
shall not, on the date the Proxy Statement (including any
amendment or supplement) is first mailed to stockholders of the
Company or at the time of the Company Meeting, or, in the case
of the
Schedule 13E-3
(including any amendment or supplement or document to be
incorporated by reference), on the date it is filed with the
SEC, contain any statement which, at such time and in light of
the circumstances under which made, is false or misleading with
respect to any material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the
statements made therein not false or misleading in light of the
circumstances under which made; or, with respect to the Proxy
Statement, omit to state
-10-
any material fact required to be stated therein or necessary to
correct any statement in any earlier communication with respect
to the solicitation of proxies for the Company Meeting which has
become false or misleading. The Proxy Statement and the
Schedule 13E-3
will comply as to form in all material respects with the
requirements of the Exchange Act. Notwithstanding the foregoing,
the Company makes no representation or warranty with respect to
information supplied by or on behalf of the Buyer or the
Transitory Subsidiary for inclusion or incorporation by
reference in the Proxy Statement or the
Schedule 13E-3.
If at any time prior to the Company Meeting any fact or event
relating to the Company or any of its Affiliates which should be
set forth in an amendment or supplement to the Proxy Statement
or the
Schedule 13E-3
should be discovered by the Company or should occur, the Company
shall, promptly after becoming aware thereof, inform the Buyer
of such fact or event.
(d) The Company has implemented disclosure controls and
procedures (as defined in
Rule 13a-15(e)
of the Exchange Act) that are reasonably designed to ensure that
material information relating to the Company, including its
Subsidiaries, required to be included in reports filed under the
Exchange Act is made known to the chief executive officer and
chief financial officer of the Company by others within those
entities. Neither the Company nor, to the Companys
Knowledge, the Companys independent registered public
accounting firm, has identified or been made aware of
significant deficiencies or material
weaknesses (as defined by the Public Company Accounting
Oversight Board) in the design or operation of the
Companys internal controls and procedures which could
reasonably adversely affect the Companys ability to
record, process, summarize and report financial data, in each
case which has not been subsequently remediated. To the
Companys Knowledge, there is no fraud, whether or not
material, that involves the Companys management or other
employees who have a significant role in the preparation of
financial statements or the internal control over financial
reporting utilized by the Company and its Subsidiaries. As of
the date hereof, neither the Company nor any of its Subsidiaries
has outstanding, extensions of credit to directors
or executive officers of the Company within the meaning of
Section 402 of the Sarbanes-Oxley Act of 2002. The Company
is in compliance with the applicable listing and other rules and
regulations of The Nasdaq Global Market.
3.6
No Undisclosed
Liabilities
. Except (i) as disclosed in the
Company Balance Sheet, (ii) for contractual liabilities or
liabilities, in each case incurred in the ordinary course of
business consistent in all material respects with past practice
(the Ordinary Course of Business) after the date of
the Company Balance Sheet and (iii) for liabilities
incurred in accordance with this Agreement, the Company and its
Subsidiaries do not have any liabilities (whether accrued,
absolute, contingent or otherwise) of any nature, either matured
or unmatured that, individually or in the aggregate, are
reasonably likely to have a Company Material Adverse Effect.
3.7
Absence of Certain Changes or
Events
. Since December 28, 2008, there has
not been a Company Material Adverse Effect. Since the date of
the Company Balance Sheet, (a) the Company and its
Subsidiaries have conducted their respective businesses only in
the Ordinary Course of Business and (b) there has not been
any other action or event that would have required the consent
of the Buyer or be prohibited under Section 5.1 of this
Agreement (other than paragraphs (b), (k) and (l) of
Section 5.1) had such action or event occurred after the
date of this Agreement.
3.8
Taxes
.
(a) Each of the Company and its Subsidiaries has filed all
material Tax Returns that it was required to file, and all such
Tax Returns were correct and complete in all material respects.
(b) Each of the Company and its Subsidiaries has paid on a
timely basis all Taxes due and payable, whether or not shown to
be due on any such Tax Return or, where payment is not yet due,
has made adequate provision for all Taxes in the Financial
Statements of the Company in accordance with GAAP. For purposes
of this Agreement, (i)
Taxes
means all
taxes, charges, fees, levies or other similar assessments or
liabilities, including income, gross receipts, ad valorem,
premium, value-added, excise, real property, personal property,
sales, use, services, transfer, withholding, employment, payroll
and franchise taxes imposed by the United States of America or
any state, local or foreign government, or any agency thereof,
or other political subdivision of the United States or any such
government, and any interest, fines, penalties, assessments or
additions to tax resulting from, attributable to or incurred in
connection with any tax or any contest or dispute thereof and
(ii)
Tax Returns
means all reports,
returns, declarations, statements or other information required
to be supplied to a taxing authority in connection with Taxes.
-11-
(c) The Company has made available to the Buyer correct and
complete copies of all federal income and other material Tax
Returns, examination reports and statements of deficiencies
assessed against or agreed to by the Company or any of its
Subsidiaries since January 1, 2005. The federal income Tax
Returns of the Company and each of its Subsidiaries have been
audited by the Internal Revenue Service (the
IRS
) or are closed by the applicable statute
of limitations for all taxable years through the taxable year
specified in Section 3.8(c) of the Company Disclosure
Schedule. No material examination or audit of any Tax Return of
the Company or any of its Subsidiaries by any Governmental
Entity is currently in progress or, to the Companys
Knowledge, threatened or contemplated and there is no
outstanding assessment, dispute or claim concerning any material
Tax liability of the Company or any of its Subsidiaries.
(d) Neither the Company nor any of its Subsidiaries will be
required to include any item of income in, or exclude any item
of deduction from, taxable income for any taxable period or
portion thereof ending after the Closing Date as a result of any
change in the method of accounting for a taxable period or
portion thereof ending on or prior to the Closing Date,
closing agreement as described in Section 7121
of the Code (or any corresponding or similar provision of state,
local or foreign income Tax law) executed on or prior to the
Closing Date, or material prepaid amount received on or prior to
the Closing Date.
(e) Neither the Company nor any of its Subsidiaries:
(i) has made any payments, is obligated to make any
payments, or is a party to any agreement that could obligate it
to make any payments that will be treated as an excess
parachute payment under Section 280G of the Code; or
(ii) has any actual or potential liability for any Taxes of
any person (other than the Company and its Subsidiaries) under
Treasury
Regulation Section 1.1502-6
(or any similar provision of law in any jurisdiction), or as a
transferee or successor, by contract or otherwise.
(f) Neither the Company nor any of its Subsidiaries
(i) is or has ever been a member of a group of corporations
with which it has filed (or been required to file) consolidated,
combined or unitary Tax Returns, other than a group of which
only the Company and its Subsidiaries are or were members or
(ii) is a party to or bound by or has any continuing
obligation under any Tax indemnity, Tax sharing or Tax
allocation agreement.
(g) All Taxes required to be withheld, collected or
deposited by or with respect to the Company and each of its
Subsidiaries have been timely withheld, collected or deposited
as the case may be, and, to the extent required, have been paid
to the relevant taxing authority.
(h) Neither the Company nor any of its Subsidiaries has
been either a distributing corporation or a
controlled corporation in a distribution occurring
during the last two (2) years in which the parties to such
distribution treated the distribution as one to which
Section 355 of the Code is applicable.
(i) Neither the Company nor any of its Subsidiaries has
entered into a listed transaction that has given
rise to a disclosure obligation under Section 6011 of the
Code and the Treasury Regulations promulgated thereunder, and
there are no Tax Liens upon any of the assets or properties of
the Company or any of its Subsidiaries.
3.9
Owned and Leased Real Properties
.
(a) Neither the Company nor any of its Subsidiaries owns
any real property.
(b) Section 3.9(b) of the Company Disclosure Schedule
sets forth a complete and accurate list as of the date of this
Agreement of all material real property leased, subleased or
licensed to or by the Company or any of its Subsidiaries,
whether as sublandlord, tenant or subtenant, (collectively
Company Leases) and the location of the premises.
Each of the Company Leases is a valid and binding obligation of
the Company or one of its Subsidiaries, enforceable in
accordance with its terms. Neither the Company nor any of its
Subsidiaries nor, to the Companys Knowledge, any other
party to any Company Lease is in default under any of the
Company Leases, except where the existence of such defaults,
individually or in the aggregate, has not had and is not
reasonably likely to have a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries leases,
subleases or licenses any real property to any person other than
the Company and its Subsidiaries. The Company has made available
to the Buyer complete and accurate copies of all Company Leases.
-12-
3.10
Intellectual Property
.
(a) The Company and its Subsidiaries own, license,
sublicense or otherwise possess legally enforceable rights to
use, free and clear of all Liens, all Intellectual Property
necessary to conduct the business of the Company and its
Subsidiaries as currently conducted, the absence of which,
individually or in the aggregate, is not reasonably likely to
have a Company Material Adverse Effect. For purposes of this
Agreement, the term
Intellectual Property
means all intellectual and industrial property rights, including
(i) patents, trademarks, service marks, trade names, domain
names, other source indicators, copyrights, designs and trade
secrets, (ii) applications for and registrations of such
patents, trademarks, service marks, trade names, domain names,
other source indicators, copyrights and designs,
(iii) processes, formulae, methods, schematics, technology,
know-how, computer software programs and applications (including
source and object code) and systems and (iv) other tangible
or intangible proprietary or confidential information and
materials.
(b) The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby will not result in the breach of, or create
on behalf of any third party the right to terminate, accelerate
or modify, (i) any license, sublicense or other agreement
relating to any Intellectual Property owned by the Company that
is material to the business of the Company and its Subsidiaries,
taken as a whole (the
Company Intellectual
Property
), or (ii) any license, sublicense and
other agreement as to which the Company or any of its
Subsidiaries is a party and pursuant to which the Company or any
of its Subsidiaries is authorized to use any third party
Intellectual Property that is material to the business of the
Company and its Subsidiaries, taken as a whole, excluding
generally commercially available, off-the-shelf software
licenses with less than $100,000 in annual license fees (the
Third Party Intellectual Property
).
Section 3.10(b)(i) of the Company Disclosure Schedule sets
forth a complete and accurate list of all patents and patent
applications and trademark registrations and applications,
copyright registrations and domain names owned by the Company or
its Subsidiaries and Section 3.10(b)(ii) of the Company
Disclosure Schedule sets forth a complete and accurate list of
all licenses for Third Party Intellectual Property.
(c) All patents and applications and registrations for
patents, trademarks, service marks and copyrights which are held
by the Company or any of its Subsidiaries and which are material
to the business of the Company and its Subsidiaries, taken as a
whole, as currently conducted, are subsisting. No patent or
applications and registrations for patents, trademarks, service
marks or copyrights have unintentionally expired or been
abandoned or cancelled and, to the Companys Knowledge,
there are no claims challenging the validity or enforceability
of the Company Intellectual Property. To the Companys
Knowledge, no third party is infringing, violating or
misappropriating any of the Company Intellectual Property,
except for infringements, violations or misappropriations that,
individually or in the aggregate, are not reasonably likely to
have a Company Material Adverse Effect.
(d) The conduct of the business of the Company and its
Subsidiaries as currently conducted does not infringe, violate
or constitute a misappropriation of any Intellectual Property of
any third party, except for such infringements, violations and
misappropriations that, individually or in the aggregate, are
not reasonably likely to have a Company Material Adverse Effect.
Since January 1, 2005, neither the Company nor any of its
Subsidiaries has received any written claim or notice (including
cease and desist letters or invitations to take a patent
license) alleging any infringement, violation or
misappropriation of any Intellectual Property.
(e) None of the software that is distributed or made
available to others by the Company incorporates or is derived
from any software subject to an open source or
similar license that requires the licensing or distribution of
its source code to others. No source code for the Companys
software has been deposited in escrow, and none of the
Companys source code has been made available to any third
party except for such disclosures that, individually or in the
aggregate, are not reasonably likely to have a Company Material
Adverse Effect.
(f) Except as would not, individually or in the aggregate,
be reasonably likely to have a Company Material Adverse Effect:
(i) the Company and its Subsidiaries have taken
commercially reasonable steps to protect and maintain
(x) their confidential information and trade secrets,
(y) their sole ownership of material proprietary
Intellectual Property (including by entering into Intellectual
Property assignment agreements with all persons who have created
or contributed to material proprietary Intellectual Property)
and (z) the security and integrity of their material
systems and software; and (ii) to the Companys
Knowledge, all software and systems owned or used by the
-13-
Company or its Subsidiaries are (x) free from any material
defect, bug, virus, error or corruptant, and (y) fully
functional and operate and run in a reasonable and efficient
business manner.
3.11
Contracts
.
(a) Section 3.11(a) of the Company Disclosure Schedule
sets forth a complete and accurate list of all contracts and
agreements to which the Company or any of its Subsidiaries is a
party as of the date of this Agreement that are material to the
business, financial condition or results of operations of the
Company and its Subsidiaries, taken as a whole, including
without limitation (collectively, the
Company Material
Contracts
):
(i) any agreement, contract or commitment in connection
with which or pursuant to which the Company and its Subsidiaries
will spend or receive (or are expected to spend or receive), in
the aggregate, more than $100,000 during the current fiscal year
or during the next fiscal year;
(ii) any non-competition or other agreement that prohibits
or otherwise restricts in any material respect, the Company or
any of its Subsidiaries or Affiliates from freely engaging in
business anywhere in the world (including any agreement
restricting the Company or any of its Subsidiaries or Affiliates
from competing in any line of business or in any geographic area
or that grants to any party most-favored-nation or similar
rights);
(iii) any material contract (as such term is
defined in Item 601(b)(10) of
Regulation S-K
of the SEC) with respect to the Company and its Subsidiaries;
(iv) any agreement relating to Intellectual Property that
is material to the business of the Company and its Subsidiaries,
taken as a whole, (excluding generally commercially available,
off-the-shelf software licenses with less than $100,000 in
annual license fees);
(v) any contract (A) relating to the disposition or
acquisition by the Company or any of its Subsidiaries after the
date of this Agreement of a material amount of assets other than
in the Ordinary Course of Business, or (B) pursuant to
which the Company or any of its Subsidiaries will acquire after
the date of this Agreement any material ownership interest in
any other Person or other business enterprise other than the
Companys Subsidiaries;
(vi) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other contracts relating to
the borrowing of money, extension of credit, surety bonds or
guarantees of indebtedness in each case in excess of $100,000
other than (A) accounts receivables and payables, and
(B) loans to direct or indirect wholly-owned Subsidiaries,
in each case in the Ordinary Course of Business;
(vii) any contract that involves any material joint
venture, partnership or similar arrangement;
(viii) any contract or agreement that would obligate the
Company or any of its Subsidiaries to file a registration
statement under the Securities Act, which filing has not yet
been made;
(ix) any agreement that involves, other than sales or
repurchases of inventory in the Ordinary Course of Business,
acquisitions or dispositions, directly or indirectly (by merger
or otherwise), of assets or capital stock or other voting
securities or equity interests of another person or the Company
or any of its Subsidiaries (A) for aggregate consideration
in excess of $200,000 or (B) that involves continuing or
contingent obligations of the Company or any of its Subsidiaries
that are material to the Company and its Subsidiaries taken as a
whole or is not yet consummated; and
(x) any agreement that relates to any material settlement,
other than (A) releases immaterial in nature or amount
entered into with former employees or independent contractors of
the Company in the Ordinary Course of Business in connection
with the routine cessation of such employees or
independent contractors employment with the Company,
(B) settlement agreements for cash only (which has been
paid) and does not exceed $200,000 as to such settlement or
(C) settlement agreements entered into more than one year
prior to the date of this Agreement under which neither the
Company nor any of its Subsidiaries has any continuing material
obligations, liabilities or rights (excluding releases).
(b) Each Company Material Contract is valid and binding on
the Company (and/or each such Subsidiary of the Company party
thereto) and, to the Companys Knowledge, each other party
thereto, and is in full force and effect
-14-
except to the extent it has previously expired in accordance
with its terms or where the failure to be in full force and
effect, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect. Neither the
Company nor any of its Subsidiaries nor, to the Companys
Knowledge, any other party to any Company Material Contract is
or is alleged in writing to be in violation or breach of or in
default under any Company Material Contract (nor does there
exist any condition which, upon the passage of time or the
giving of notice or both, would cause such a violation or breach
of or default under any Company Material Contract), except for
violations, breaches or defaults that, individually or in the
aggregate, are not reasonably likely to have a Company Material
Adverse Effect. Neither the Company nor any of its Subsidiaries
has received notice in writing that any party which is currently
doing business with the Company or any of its Subsidiaries
intends to terminate, limit or restrict its relationship with
the Company or any of its Subsidiaries. The Company has made
available to the Buyer a complete and accurate copy of each
Company Material Contract.
(c) Neither the Company nor any of its Subsidiaries has
entered into any transaction, agreement, arrangement or
understanding with any Affiliate (including any director or
officer) of the Company or any of its Subsidiaries or any
transaction that would be subject to disclosure pursuant to
Item 404 of
Regulation S-K.
3.12
Litigation
. There is no
action, suit, proceeding, claim, demand, arbitration, charge or
investigation (collectively
Actions
) pending
or, to the Companys Knowledge, threatened against the
Company or any of its Subsidiaries or any of their securities,
rights, assets or properties that, individually or in the
aggregate, if adversely determined, would reasonably be expected
to have a Company Material Adverse Effect. There are no material
judgments, rulings, orders, decrees, writs or injunctions
outstanding against the Company or any of its Subsidiaries or to
which the Company or any of its Subsidiaries are subject.
3.13
Environmental Matters
.
(a) Except for matters that, individually or in the
aggregate, would not reasonably be expected to have a Company
Material Adverse Effect: (i) the Company and each of its
Subsidiaries is in compliance with all, and has not violated
any, applicable Environment Laws; (ii) neither the Company
nor any of its Subsidiaries is subject to any Action relating to
any Environmental Law, and to the Companys Knowledge, no
such Action against the Company or any of its Subsidiaries is
threatened; (iii) neither the Company nor any of its
Subsidiaries has, since January 1, 2005, received any
written notice alleging any of them is not in compliance with
applicable Environmental Laws or is subject to liability
relating to any Environmental Law; (iv) Hazardous
Substances are not present at and have not been disposed of,
arranged to be disposed of, transported, released or threatened
to be released at or from any of the properties or facilities
currently or formerly owned, leased or operated by the Company
or any of its Subsidiaries in violation of, or in a condition or
a manner or to a location that would reasonably be expected to
give rise to liability to the Company or any of its Subsidiaries
under or relating to, any Environmental Law; and
(v) neither the Company nor any of its Subsidiaries has
contractually assumed or provided indemnity against any
liability of any other person or entity relating to any
Environmental Laws.
(b) For purposes of this Agreement, the term
Environmental Law means any law, regulation, rule,
common law, order, decree or permit requirement of any
governmental jurisdiction relating to: (i) the protection,
investigation or restoration of the environment, human health
and safety, or natural resources, (ii) the handling, use,
storage, treatment, transport, disposal, release or threatened
release of any Hazardous Substance or (iii) noise, odor or
wetlands protection.
(c) For purposes of this Agreement, the term
Hazardous Substance
means: (i) any
substance that is regulated or which falls within the definition
of a pollutant, contaminant,
waste, hazardous substance,
hazardous waste or hazardous material
pursuant to any Environmental Law, (ii) any petroleum,
petroleum product or by-product, asbestos-containing material,
polychlorinated biphenyls, radioactive materials or radon, or
(iii) any substance or material that would otherwise
reasonably be expected to result in liability under any
applicable Environmental Law.
(d) The parties agree that the only representations and
warranties of the Company in this Agreement as to any
Environmental Law or Hazardous Substance or any obligations or
liabilities related to any Environmental Law or Hazardous
Substance are those contained in this Section 3.13 and
Sections 3.4, 3.6, 3.11 and 3.16 hereof. Without
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limiting the generality of the foregoing, the Buyer specifically
acknowledges that the representations and warranties contained
in Section 3.15 do not relate to Environmental Laws or
Hazardous Substances.
3.14
Employee Benefit Plans
.
(a) Section 3.14(a) of the Company Disclosure Schedule
sets forth a complete and accurate list as of the date of this
Agreement of all Employee Benefit Plans maintained, or
contributed to, by the Company, any of the Companys
Subsidiaries or any of their ERISA Affiliates (together, the
Company Employee Plans
). For purposes of this
Agreement, the following terms shall have the following
meanings: (i)
Employee Benefit Plan
means any employee pension benefit plan (as defined
in Section 3(2) of ERISA), any employee welfare
benefit plan (as defined in Section 3(1) of ERISA),
and any other written or oral plan, agreement or arrangement
involving direct or indirect compensation, insurance coverage,
severance benefits, disability benefits, fringe benefits,
employee loan, employment, change in control, deferred
compensation, bonuses, stock options, stock purchase, restricted
stock unit, stock appreciation or other forms of incentive
compensation or post-retirement compensation and all unexpired
severance agreements, for the benefit of, or relating to, any
current or former employee, director or consultant of the
Company or any of its Subsidiaries or an ERISA Affiliate;
(ii)
ERISA
means the Employee Retirement
Income Security Act of 1974, as amended; and
(iii)
ERISA Affiliate
means any entity
which is a member of (A) a controlled group of corporations
(as defined in Section 414(b) of the Code), (B) a
group of trades or businesses under common control (as defined
in Section 414(c) of the Code), or (C) an affiliated
service group (as defined under Section 414(m) of the Code
or the regulations under Section 414(o) of the Code), any
of which includes or included the Company or a Subsidiary of the
Company.
(b) With respect to each Company Employee Plan, the Company
has made available to the Buyer a complete and accurate copy of
(i) such Company Employee Plan, (ii) the most recent
annual report (Form 5500) filed with the IRS and
(iii) each trust agreement, group annuity contract and
summary plan description, if any, relating to such Company
Employee Plan.
(c) Each Company Employee Plan is being administered in
accordance with ERISA, the Code and all other applicable laws
and the regulations thereunder and in accordance with its terms
except for failures to comply or violations that, individually
or in the aggregate, are not reasonably likely to have a Company
Material Adverse Effect.
(d) All the Company Employee Plans that are intended to be
qualified under Section 401(a) of the Code have received
determination letters from the IRS to the effect that such
Company Employee Plans are qualified and the plans and trusts
related thereto are exempt from federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code, no
such determination letter has been revoked and revocation has
not been threatened.
(e) Neither the Company, any of the Companys
Subsidiaries nor any of their ERISA Affiliates has (i) ever
maintained an employee pension benefit plan (as
defined in Section 3(2) of ERISA) which was ever subject to
Section 412 of the Code or Title IV of ERISA or
(ii) ever been obligated to contribute to a
multiemployer plan (as defined in
Section 4001(a)(3) of ERISA).
(f) Neither the Company nor any of its Subsidiaries is a
party to any (i) agreement with any current or former
stockholder, director, executive officer or other employee or
consultant of the Company or any of its Subsidiaries
(A) the benefits of which are contingent, or the terms of
which are materially altered, upon the occurrence of a
transaction involving the Company or any of its Subsidiaries of
the nature of any of the transactions contemplated by this
Agreement, (B) providing any term of employment or
compensation guarantee or (C) providing severance benefits
or other benefits after the termination of employment of such
director, executive officer, consultant or key employee; or
(ii) agreement or plan binding the Company or any of its
Subsidiaries, including any stock option plan, stock
appreciation right plan, restricted stock plan, stock purchase
plan or severance benefit plan, any of the benefits of which
shall be increased, or the vesting of the benefits of which
shall be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any
of the benefits of which shall be calculated on the basis of any
of the transactions contemplated by this Agreement. No Company
Employee Plan exists and there are no other contracts, plans or
arrangements (written or otherwise) covering any current or
former stockholder, director, executive officer or other
employee or consultant of the Company or any of its Subsidiaries
that, individually or collectively, as a result of the execution
of this Agreement or the transactions contemplated
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hereunder (whether alone or in connection with any other
events), would reasonably be expected to result in any payments
which would result in the loss of a deduction under
Section 280G of the Code or which would be subject to an
excise tax under Section 4999 of the Code.
(g) Neither the Company nor any of its Subsidiaries has any
direct or indirect liability, whether absolute or contingent,
with respect to any misclassification of any person as an
independent contractor rather than as an employee, or with
respect to any employee leased from another employer.
(h) None of the Company Employee Plans promises or provides
retiree medical or other retiree welfare benefits to any person,
except as required by applicable law.
3.15
Compliance With Laws
. The
Company and each of its Subsidiaries is in compliance with, is
not in violation of, and, since January 1, 2008, has not
received any written notice alleging any violation with respect
to, any applicable statute, law, order or regulation with
respect to the conduct of its business, or the ownership or
operation of its properties, rights or assets, except for
failures to comply or violations that, individually or in the
aggregate, are not reasonably likely to have a Company Material
Adverse Effect.
3.16
Permits
. The Company and each
of its Subsidiaries have all permits, licenses, franchises,
governmental consents, registrations, orders, grants or other
authorizations of Governmental Entities (collectively,
Permits
) required to conduct their businesses
as now being conducted, except for such Permits the absence of
which, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect. The Company
and each of its Subsidiaries are in compliance with the terms of
the Permits, except for such failures to comply that,
individually or in the aggregate, are not reasonably likely to
have a Company Material Adverse Effect.
3.17
Labor
Matters
. Section 3.17 of the Company
Disclosure Schedule contains a list as of the date of this
Agreement of all employees of the Company and each of its
Subsidiaries whose annual rate of base compensation exceeds
$75,000 per year, along with the position and the annual rate of
base compensation of each such person. The Company is not a
party to or subject to, and is not currently negotiating in
connection with entering into, any collective bargaining
agreement or other contract or understanding with a labor union
or organization. Neither the Company nor any of its Subsidiaries
is the subject of any proceeding asserting that the Company or
any of its Subsidiaries has committed an unfair labor practice
or is seeking to compel the Company or any of its Subsidiaries
to bargain with any labor union or labor organization that,
individually or in the aggregate, is reasonably likely to have a
Company Material Adverse Effect. There are no pending or, to the
Companys Knowledge, threatened labor strikes, disputes,
walkouts, work stoppages, slow-downs or lockouts involving the
Company or any of its Subsidiaries that, individually or in the
aggregate, are reasonably likely to have a Company Material
Adverse Effect. The Company and each of its Subsidiaries is in
compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and
wages and hours except for any noncompliance that, individually
or in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has incurred any liability
or obligation under the Worker Adjustment and Retraining
Notification Act (
WARN
) or similar laws or
regulations of any jurisdiction within the last six months which
remains unsatisfied.
3.18
Insurance
. Each of the Company
and its Subsidiaries maintains insurance policies with reputable
insurance carriers against all risks of a character and in such
amounts as are usually insured against by similarly situated
companies in the same or similar businesses and sufficient to
comply with applicable law. All such insurance policies are in
full force and effect, no notice of cancellation or modification
has been received, and there is no existing default or event
which, with the giving of notice or lapse of time or both, would
constitute a default, by any insured thereunder, except for such
defaults that would not be reasonably expected to have,
individually or in the aggregate, a Company Material Adverse
Effect. There is no material claim pending under any of such
policies as to which coverage has been questioned, denied or
disputed by the underwriters of such policies and there has been
no threatened termination of, or material premium increase with
respect to, any such policies.
3.19
Opinion of Financial
Advisor
. The financial advisor to the Special
Committee of the Board of Directors of the Company, Goldman,
Sachs & Co., has delivered to the Special Committee an
opinion, dated the date of this Agreement, to the effect that,
as of such date and based upon and subject to the limitations
and assumptions set forth therein, the $7.65 in cash per share
of Company Common Stock to be paid to the holders
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(other than such holders party to the Rollover Commitment
Letters) of shares of Company Common Stock pursuant to this
Agreement is fair to such holders from a financial point of
view. The Company shall deliver an executed copy of such opinion
to the Buyer promptly following receipt of such opinion in
written form.
3.20
Section 203 of the
DGCL
. The Company Board has taken all actions
necessary so that the restrictions contained in Section 203
of the DGCL applicable to a business combination (as
defined in Section 203) shall not apply to the
execution, delivery or performance of this Agreement, any of the
Ancillary Agreements or the consummation of the Merger or the
other transactions contemplated by this Agreement or any of the
Ancillary Agreements. No other state anti-takeover statute
applies to the Company as a result of the transactions
contemplated hereby or any of the Ancillary Agreements,
including the Merger.
3.21
Brokers
. No agent, broker,
investment banker, financial advisor or other firm or person is
or shall be entitled, as a result of any action, agreement or
commitment of the Company or any of its Affiliates, to any
brokers, finders, investment banking, financial
advisors or other similar fee or commission in connection
with any of the transactions contemplated by this Agreement,
except for those persons identified on Section 3.21 of the
Company Disclosure Schedule whose fees and expenses shall be
paid by the Company. The Company has made available to the Buyer
a complete and accurate copy of all agreements pursuant to which
any person identified on Section 3.21 of the Company
Disclosure Schedule is entitled to any fees and expenses in
connection with any of the transactions contemplated by this
Agreement.
3.22
No Other Information
. The
Company acknowledges that neither the Buyer, the Transitory
Subsidiary nor any of their Affiliates or Representatives make
any representations or warranties as to any matter whatsoever
except as expressly set forth in Article IV of this
Agreement. The representations and warranties set forth in
Article IV of this Agreement are made solely by the Buyer
and the Transitory Subsidiary, and the Company will have no
recourse against any Representative of the Buyer or the
Transitory Subsidiary including any former, current or future
general or limited partner, member, officer, employee or
stockholder of the Buyer or any of its Affiliates in connection
with or arising out of the transactions contemplated by this
Agreement, except as may be expressly set forth in this
Agreement.
ARTICLE IV
REPRESENTATIONS
AND WARRANTIES OF THE BUYER AND THE
TRANSITORY
SUBSIDIARY
The Buyer and the Transitory Subsidiary represent and warrant to
the Company that the statements contained in this
Article IV are true and correct, except as set forth in the
corresponding section of the disclosure schedule delivered by
the Buyer and the Transitory Subsidiary to the Company and dated
as of the date of this Agreement (the Buyer Disclosure
Schedule).
4.1
Organization, Standing and
Power
. Each of the Buyer and the Transitory
Subsidiary is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization,
has all requisite organizational power and authority to own,
lease and operate its properties and assets and to carry on its
business as now being conducted, and is duly qualified to do
business and, where applicable as a legal concept, is in good
standing as a foreign entity in each jurisdiction in which the
character of the properties it owns, operates or leases or the
nature of its activities makes such qualification necessary,
except for such failures to be so organized, qualified or in
good standing, individually or in the aggregate, that are not
reasonably likely to have a Buyer Material Adverse Effect. For
purposes of this Agreement, the term Buyer Material
Adverse Effect means any Effect that would individually or
in the aggregate, prevent or materially delay or materially
impair the ability of the Buyer or the Transitory Subsidiary to
consummate the transactions contemplated by this Agreement.
4.2
Authority; No Conflict; Required Filings and
Consents
.
(a) Each of the Buyer and the Transitory Subsidiary has all
requisite organizational power and authority to enter into,
execute and deliver this Agreement and each Ancillary Agreement
to which it is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated by
this Agreement and such Ancillary Agreements. The execution and
delivery of this Agreement and the Ancillary Agreements to which
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the Buyer or the Transitory Subsidiary is a party, the
performance of each of the Buyer and the Transitory Subsidiary
of its covenants and obligations hereunder and thereunder and
the consummation of the transactions contemplated by this
Agreement and such Ancillary Agreements by the Buyer and the
Transitory Subsidiary have been duly authorized by all necessary
organizational action on the part of each of the Buyer and the
Transitory Subsidiary other than adoption of this Agreement by
the Buyer in its capacity as sole stockholder of Transitory
Subsidiary (the Buyer hereby agreeing to adopt this Agreement in
its capacity as sole stockholder of Transitory Subsidiary as
soon as practicable after the execution hereof). This Agreement
and each Ancillary Agreement to which the Buyer or Transitory
Subsidiary is a party have been duly executed and delivered by
each of the Buyer and the Transitory Subsidiary and constitute
the valid and binding obligation of each of the Buyer and the
Transitory Subsidiary, enforceable against each of them in
accordance with its and their terms, subject to the Bankruptcy
and Equity Exception.
(b) The execution and delivery of this Agreement and the
Ancillary Agreements to which the Buyer or the Transitory
Subsidiary is a party by each of the Buyer and the Transitory
Subsidiary do not, and the performance of each the Buyer and the
Transitory Subsidiary of its obligations hereunder and under
such Ancillary Agreements and the consummation by the Buyer and
the Transitory Subsidiary of the transactions contemplated by
this Agreement and such Ancillary Agreements shall not,
(i) conflict with, or result in any violation or breach of,
any provision of the Certificate of Incorporation or By-laws of
the Transitory Subsidiary or similar charter documents of the
Buyer, (ii) conflict with, or result in any violation or
breach of, or constitute (with or without notice or lapse of
time, or both) a default (or give rise to a right of
termination, modification, cancellation or acceleration of any
obligation or loss of any material benefit) under, require a
consent or waiver under, constitute a change in control under,
require the payment of a penalty under or result in the
imposition of any Lien on the Buyers or the Transitory
Subsidiarys properties, rights or assets under, any of the
terms, conditions or provisions of any lease, license, contract
or other agreement, instrument or obligation to which the Buyer
or the Transitory Subsidiary is a party or by which any of them
or any of their properties, rights or assets may be bound, or
(iii) subject to compliance with the requirements specified
in clauses (i) and (ii) of Section 4.2(c),
conflict with or violate any permit, concession, franchise,
license, judgment, injunction, order, decree, statute, law,
ordinance, rule or regulation applicable to the Buyer or the
Transitory Subsidiary or any of its or their respective
properties, rights or assets, except in the case of
clauses (ii) and (iii) of this Section 4.2(b) for
any such conflicts, violations, breaches, defaults,
terminations, modifications, cancellations, accelerations,
losses, penalties or Liens, and for any consents or waivers not
obtained, that, individually or in the aggregate, are not
reasonably likely to have a Buyer Material Adverse Effect.
(c) No consent, approval, license, permit, order or
authorization of, or registration, declaration, notice or filing
with, any Governmental Entity or any stock market or stock
exchange on which shares of its capital stock are listed for
trading is required by or with respect to the Buyer or the
Transitory Subsidiary in connection with the execution and
delivery by the Buyer and the Transitory Subsidiary of this
Agreement or any Ancillary Agreement to which the Buyer or the
Transitory Subsidiary is a party or the consummation by the
Buyer or the Transitory Subsidiary of the transactions
contemplated by this Agreement or such Ancillary Agreements,
except for (i) the pre-merger notification requirements
under the HSR Act and any other applicable foreign antitrust
law, (ii) the filing of the Certificate of Merger with the
Delaware Secretary of State and appropriate corresponding
documents with the appropriate authorities of other states in
which the Company is qualified as a foreign corporation to
transact business and (iii) filings required under, and
compliance with the requirements of, the Securities Act and
Exchange Act.
(d) No vote of the holders of any class or series of the
Buyers equity securities or other securities is necessary
for the consummation by the Buyer of the transactions
contemplated by this Agreement.
4.3
SEC Filings; Information Provided
.
(a) Neither the Buyer nor any subsidiary or parent of the
Buyer (other than portfolio companies of the Buyer or parent of
the Buyer not participating in the Merger) is subject to the
reporting requirements of Section 13(a) or
Section 15(d) of the Exchange Act.
(b) The information to be supplied by or on behalf of the
Buyer for inclusion in the Proxy Statement (including any
amendment or supplement) to be sent to the stockholders of the
Company in connection with the Company Meeting or in the
Schedule 13E-3
(including any amendment or supplement) shall not, on the date
the Proxy
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Statement (including any amendment or supplement) is first
mailed to stockholders of the Company or at the time of the
Company Meeting, or, in the case of the
Schedule 13E-3
(including any amendment or supplement), on the date it is filed
with the SEC, contain any statement which, at such time and in
light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or omit
to state any material fact required to be stated therein or
necessary in order to make the statements made therein not false
or misleading in light of the circumstances under which made;
or, with respect to the Proxy Statement, omit to state any
material fact required to be stated therein or necessary to
correct any statement in any earlier communication with respect
to the solicitation of proxies for the Company Meeting which has
become false or misleading. If at any time prior to the Company
Meeting any fact or event relating to the Buyer or any of its
Affiliates which should be set forth in an amendment or
supplement to the Proxy Statement or the
Schedule 13E-3
should be discovered by the Buyer or should occur, the Buyer
shall, promptly after becoming aware thereof, inform the Company
of such fact or event.
4.4
Operations of the Transitory
Subsidiary
. The Transitory Subsidiary was formed
solely for the purpose of engaging in the transactions
contemplated by this Agreement, has engaged in no other business
activities and has conducted its operations only as contemplated
by this Agreement.
4.5
Financing
.
(a) The Buyer has delivered to the Company complete and
correct copies of (i) a fully executed commitment letter
from GSO Capital Partners LP (
GSO
) including
the term sheets attached thereto (the
Debt Commitment
Letter
), pursuant to which such financial institution
has committed (on behalf of certain funds managed by GSO), upon
the terms and subject to the conditions set forth therein, to
provide debt financing in an amount up to $170 million in
connection with the transactions contemplated by this Agreement;
and (ii) a fully executed commitment letter from S.A.C.
Capital Management, LLC (the
Investor
) (the
Equity Commitment Letter
), pursuant to which
the Investor has committed that it
and/or
its
affiliates or designated co-investors will, upon the terms and
subject only to the conditions set forth therein, provide equity
financing in the aggregate amount of $103.1 million in
connection with the transactions contemplated by this Agreement.
The Debt Commitment Letter and the Equity Commitment Letter are
hereinafter referred to collectively as the
Commitment
Letters
. The financing contemplated pursuant to the
Debt Commitment Letter is hereinafter referred to as the
Debt Financing
and the financing contemplated
pursuant to the Equity Commitment Letter is hereinafter referred
to as the
Equity Financing
. The financing
contemplated pursuant to the Debt Commitment Letter and the
Equity Commitment Letter, respectively, is hereinafter referred
to collectively as the
Financing
. The persons
providing the Financing pursuant to the Debt Commitment Letter
(or any Alternative Debt Financing) are hereinafter referred to
as the
Debt Financing Sources
.
(b) The Debt Commitment Letter is in full force and effect
and is a legal, valid and binding obligation of the Buyer and,
to the Buyers Knowledge, the other party thereto; the
Equity Commitment Letter is in full force and effect and is a
legal, valid and binding obligation of the Buyer and the other
party thereto; all commitment fees and other fees required to be
paid pursuant to either Commitment Letter have been paid in full
or will be duly paid in full when due; as of the date of this
Agreement, the Commitment Letters have not been amended or
terminated; and, as of the date of this Agreement, no event has
occurred which, with or without notice, lapse of time or both,
would constitute a breach or default thereunder. The
consummation of the Financing is subject to no contingency or
contingencies other than those set forth in the copies of the
Commitment Letters delivered to the Company. As of the date of
this Agreement, neither the Buyer nor the Transitory Subsidiary
has any reason to believe that any of the conditions to the
Financing will not be satisfied or the Financing will not be
available on the Closing Date as contemplated in the Commitment
Letters. Assuming the accuracy of the representations and
warranties set forth in Sections 3.2(a), 3.2(b), 3.2(c),
3.2(g) and 3.5(b) to the standards set forth in
Section 7.2(a), the aggregate proceeds of the Financing,
together with any cash or cash equivalents (including upon the
sale of the Companys investments pursuant to
Section 6.13) held by the Company as of the Effective Time,
if funded, will be sufficient to enable the Buyer to pay in cash
all amounts required to be paid by it, the Surviving Corporation
and the Transitory Subsidiary in connection with the
transactions contemplated by this Agreement, including the
Merger Consideration, the Option Consideration and all payments,
fees and expenses related to or arising out of the transactions
contemplated by this Agreement.
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(c) Neither the Buyer nor the Transitory Subsidiary is, as
of the date hereof, aware of any fact, occurrence or condition
that makes any of the assumptions or statements set forth in any
Commitment Letter inaccurate in any material respect or that
would cause the commitments provided in any Commitment Letter to
be terminated or ineffective or any of the conditions contained
therein not to be met.
(d) The equity investment by the Investor under the Equity
Commitment Letter is not subject to any condition other than the
fulfillment in accordance with the terms hereof of the
conditions to the Buyers and the Transitory
Subsidiarys obligations to consummate the Merger set forth
in Section 7.1 and Section 7.2
4.6
Solvency
. Assuming,
(a) satisfaction of the conditions to the Buyers
obligations to consummate the Merger as set forth herein and
(b) the accuracy of the representations and warranties of
the Company set forth in Article III hereof (for such
purposes, such representations and warranties shall be true and
correct in all material respects without giving effect to any
Companys Knowledge, materiality or Company Material
Adverse Effect qualification or exception), (i) immediately
after giving effect to the transactions contemplated by this
Agreement and the closing of any financing to be obtained by the
Buyer or any of its Affiliates in order to effect the
transactions contemplated by this Agreement, the Surviving
Corporation shall, as of such date, be able to pay its debts as
they become due and shall own property having a fair saleable
value greater than the amounts required to pay its debts
(including a reasonable estimate of the amount of all contingent
liabilities) as they become absolute and mature; and
(ii) immediately after giving effect to the transactions
contemplated by this Agreement and the closing of any financing
to be obtained by the Buyer or any of its Affiliates in order to
effect the transactions contemplated by this Agreement, the
Surviving Corporation shall not have, as of such date,
unreasonably small capital to carry on its business. Neither the
Buyer nor the Transitory Subsidiary is entering into the
transactions contemplated by this Agreement with the intent to
hinder, delay or defraud either present or future creditors of
the Buyer or the Surviving Corporation.
4.7
Guarantee
. Concurrently with
the execution of this Agreement, the Buyer has delivered to the
Company the duly executed guarantee of Investor in the form
attached as
Exhibit B
to this Agreement (the
Guarantee). The Guarantee is valid and in full force
and effect, and no event has occurred which, with or without
notice, lapse of time or both, would constitute a default on the
part of the Investor under the Guarantee.
4.8
Agreements with Company Stockholders,
Directors or Management
. As of the date hereof,
except for that certain Holdings Interim Investors Agreement,
dated as of the date hereof, among the Buyer, the Transitory
Subsidiary and the other parties appearing on the signature
pages thereto (the
Interim Investors
Agreement
) and those certain Rollover Commitment
Letters, dated as of the date hereof among the Buyer and the
other parties appearing on the signature pages thereto (the
Rollover Commitment Letters
), neither the
Buyer, the Transitory Subsidiary nor any of their respective
Affiliates is a party to any contract or agreement with any
member of the Companys management, directors or
stockholders that relate in any way to this Agreement or the
transactions contemplated by this Agreement.
4.9
No Other Information
. Each of
the Buyer and the Transitory Subsidiary acknowledges that
neither the Company nor any of its Affiliates or Representatives
make any representations or warranties as to any matter
whatsoever except as expressly set forth in Article III of
this Agreement. The representations and warranties set forth in
Article III of this Agreement are made solely by the
Company, and neither the Buyer nor the Transitory Subsidiary
will have any recourse against any Representative of the Company
including any former, current or future general or limited
partner, member, officer, employee or stockholder of the Company
or any of its Affiliates in connection with or arising out of
the transactions contemplated by this Agreement, except as may
be expressly set forth in this Agreement or as provided in any
Ancillary Agreement.
4.10
Access to Information;
Disclaimer
. The Buyer and the Transitory
Subsidiary each acknowledges and agrees that it (a) has had
an opportunity to discuss the business and affairs of the
Company and its Subsidiaries with the management of the Company,
(b) has had reasonable access to (i) the books and
records of the Company and its Subsidiaries and (ii) the
electronic dataroom maintained by the Company for purposes of
the transactions contemplated by this Agreement, (c) has
been afforded the opportunity to ask questions of and receive
answers from officers of the Company and (d) has conducted
its own independent investigation of the Company and its
Subsidiaries, their respective businesses and the transactions
contemplated hereby, and has not relied on any representation,
warranty or other statement by any person on behalf of the
Company or any of its Subsidiaries, other
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than the representations and warranties of the Company expressly
contained in Article III of this Agreement and that all
other representations and warranties are specifically disclaimed.
ARTICLE V
CONDUCT OF
BUSINESS
5.1
Covenants of the
Company
. Except as expressly provided or
permitted herein, set forth in Section 5.1 of the Company
Disclosure Schedule or as consented to in writing by the Buyer
(which consent shall not be unreasonably withheld, conditioned
or delayed), during the period commencing on the date of this
Agreement and ending at the Effective Time or such earlier date
as this Agreement may be terminated in accordance with its terms
(the
Pre-Closing Period
), the Company shall,
and shall cause each of its Subsidiaries to, act and carry on
its business in the Ordinary Course of Business, and use
commercially reasonable efforts to maintain and preserve its and
each of its Subsidiarys business organization and good
standing under applicable law, assets, rights and properties,
preserve its and each of its Subsidiarys business
relationships and contracts with customers, strategic partners,
suppliers, distributors and others having business dealings with
it and keep available the services of its current officers,
employees and consultants. Without limiting the generality of
the foregoing, except as expressly provided or permitted herein
or as set forth in Section 5.1 of the Company Disclosure
Schedule, during the Pre-Closing Period the Company shall not,
and shall not permit any of its Subsidiaries to, directly or
indirectly, do any of the following without the prior written
consent of the Buyer (which consent shall not be unreasonably
withheld, conditioned or delayed):
(a) (i) declare, set aside or pay any dividends on, or
make any other distributions (whether in cash, securities or
other property) in respect of, any shares of its capital stock
(other than dividends and distributions made in the Ordinary
Course of Business by a direct or indirect wholly owned
Subsidiary of the Company to its parent), (ii) split,
combine, subdivide, pledge, modify or reclassify any shares of
its capital stock or any of its other securities or rights, or
make any change in the number of shares of its authorized
capital stock, (iii) issue, authorize for issuance, sell,
grant or subject to any Lien any shares of its capital stock or
any of its other securities or rights convertible into,
exchangeable or exercisable for or evidencing the right to
subscribe for or purchase shares of its capital stock or any of
its other securities or ownership interests (provided the
Company may issue shares of Company Common Stock as required to
be issued upon the exercise of Company Stock Options outstanding
on the date hereof in accordance with their terms), or
(iv) purchase, redeem or otherwise acquire any shares of
its capital stock or any other of its securities or any rights,
warrants or options to acquire any such shares or other
securities, except, in the case of this clause (iv), for the
acquisition of shares of Company Common Stock (A) from
holders of Company Stock Options in full or partial payment of
the exercise price payable by such holder upon exercise of
Company Stock Options to the extent required or permitted under
the terms of such Company Stock Options, (B) pursuant to
the forfeiture of Company Stock Options or (C) from former
employees, directors and consultants in accordance with
agreements in effect on the date hereof providing for the
repurchase of shares in connection with any termination of
services to the Company or any of its Subsidiaries, in the case
of each of the foregoing clauses (A), (B) and (C),
outstanding on the date hereof in accordance with the terms of
the applicable Company Stock Plan in effect on the date hereof;
(b) except as permitted by Section 5.1(q), issue,
deliver, sell, grant, pledge or otherwise dispose of or encumber
any shares of its capital stock, any other voting securities or
any securities convertible into or exchangeable for, or any
rights, warrants or options to acquire, any such shares, voting
securities or convertible or exchangeable securities (other than
the issuance of shares of Company Common Stock upon the exercise
of Company Stock Options outstanding on the date of this
Agreement);
(c) amend its certificate of incorporation, by-laws or
other comparable charter or organizational documents;
(d) acquire or license (as licensee) (i) by merging or
consolidating with, or by purchasing all or a substantial
portion of the assets or any stock or other equity interest of,
or by any other manner, any business or any corporation,
partnership, joint venture, limited liability company,
association or other business organization or division thereof,
(ii) any assets that are material, in the aggregate, to the
Company and its Subsidiaries, taken as a whole, except purchases
of inventory and raw materials in the Ordinary Course of
Business, or (iii) any real property material to the
Company and its Subsidiaries taken as a whole;
-22-
(e) enter into any transaction, including any merger,
acquisition, joint venture, disposition, lease, contract or debt
or equity financing that would reasonably be expected to impair,
delay or prevent Buyers obtaining the financing
contemplated by the Commitment Letters;
(f) enter into any new line of business material to it and
its Subsidiaries, taken as a whole;
(g) sell, lease, license, pledge, or otherwise dispose of
or encumber any material properties, material rights or material
assets of the Company or of any of its Subsidiaries other than
in the Ordinary Course of Business, so long as the value or
purchase price, in any single instance, for such properties,
rights or assets does not exceed $250,000;
(h) adopt or implement any stockholder rights plan;
(i) adopt a plan or agreement of complete or partial
liquidation or dissolution, consolidation, restructuring,
recapitalization or other reorganization of the Company or any
of the Companys Subsidiaries;
(j) amend any term of any outstanding equity security or
equity interest of the Company or any of its Subsidiaries;
(k) (i) incur, assume or otherwise become liable for
any indebtedness for borrowed money or guarantee or endorse any
such indebtedness of another person (other than (A) in
connection with the financing of trade receivables in the
Ordinary Course of Business, (B) letters of credit or
similar arrangements issued to or for the benefit of suppliers
and manufacturers in the Ordinary Course of Business and
(C) pursuant to existing credit facilities in the Ordinary
Course of Business), (ii) issue or sell any debt securities
or warrants or other rights to acquire any debt securities of
the Company or any of its Subsidiaries, guarantee any debt
securities of another person, enter into any keep
well or other agreement to maintain any financial
statement condition of another person (other than the Company or
any of its Subsidiaries) or enter into any arrangement having
the economic effect of any of the foregoing, provided, however,
that the Company may, in the Ordinary Course of Business, invest
in debt securities maturing not more than ninety (90) days
after the date of investment, (iii) enter into or make any
loans, advances (other than routine non-material advances to
employees of the Company and its Subsidiaries in the Ordinary
Course of Business) or capital contributions to, or investment
in, any other person, other than the Company or any of its
direct or indirect Subsidiaries, provided, however, that the
Company may, in the Ordinary Course of Business, invest in debt
securities maturing not more than ninety (90) days after
the date of investment, or (iv) other than in the Ordinary
Course of Business, enter into any hedging agreement or other
financial agreement or arrangement designed to protect the
Company or its Subsidiaries against fluctuations in commodities
prices or exchange rates;
(l) pay, discharge, settle or compromise any pending or
threatened suit, action or claim which (i) requires payment
to or by the Company or any Subsidiary (exclusive of
attorneys fees) in excess of $100,000 in any single
instance or in excess of $250,000 in the aggregate,
(ii) involves injunctive or equitable relief or
restrictions on the business activities of the Company or any of
its Subsidiaries, (iii) would involve the issuance of
Company securities or (iv) relates to the transactions
contemplated hereby; provided, however, notwithstanding anything
in this Agreement to the contrary, the Company or any of its
Subsidiaries may pay, discharge, settle or compromise any
pending or threatened suit, action or claim (other than any
suit, action or claim relating to Taxes) if the amount required
to be paid by the Company and its Subsidiaries pursuant thereto
(net of the retention amount) is covered by insurance;
(m) make (i) any expenditures with respect to its
femtocell business during any period beginning on
December 1, 2009 and ending on December 31, 2009 or
the last day of any month thereafter, in excess of the
cumulative monthly budgeted expenditures for such period as set
forth in Section 5.1(m) of the Company Disclosure Schedule
or (ii) any capital expenditures or other expenditures with
respect to its property, plant or equipment in any fiscal
quarter in excess of the aggregate amount for the Company and
its Subsidiaries, taken as a whole, disclosed in
Section 3.7(b) of the Company Disclosure Schedule;
(n) make any material changes in accounting methods,
principles or practices (or change an annual accounting period),
except insofar as is required by a change in GAAP;
(o) (i) other than in the Ordinary Course of Business,
(A) modify, amend, terminate or waive any material rights
under any Company Material Contract or (B) enter into any
contract, which if entered into prior to the date
-23-
hereof would have been a Company Material Contract or
(ii) enter into any (x) new contract that contains a
change in control provision in favor of the other party or
parties thereto or would otherwise require a material payment to
or give rise to any material rights to such other party or
parties in connection with the transactions contemplated hereby
or (y) non-competition or other agreement that prohibits or
otherwise restricts in any material respect, the Company or any
of its Subsidiaries or Affiliates from freely engaging in
business anywhere in the world (including any agreement
restricting the Company or any of its Subsidiaries or Affiliates
from competing in any line of business or in any geographic
area);
(p) make or change any material Tax election, file any
material amendment to any Tax Return with respect to any
material amount of Taxes, settle or compromise any material Tax
liability, agree to any extension or waiver of the statute of
limitations with respect to the assessment or determination of a
material amount of Taxes, enter into any material closing
agreement with respect to any Tax or take any action to
surrender any right to claim a material Tax refund;
(q) except as required to comply with applicable law or
agreements, plans or arrangements existing on the date hereof,
(i) adopt, enter into, terminate or materially amend any
employment, severance or similar agreement or material benefit
plan for the benefit or welfare of any current or former
director, officer or employee or any collective bargaining
agreement (except in the Ordinary Course of Business and only if
such arrangement is terminable on sixty (60) days or
less notice without either a penalty or a termination payment),
(ii) increase in any material respect the compensation or
fringe benefits of, or pay any bonus to, any director, officer
or employee (except for semi-annual increases of salaries for
non-officer employees in the Ordinary Course of Business, which
in no event shall be greater than four percent (4%) per annum,
or the payment of annual bonuses and commissions in the Ordinary
Course of Business under any Company Employee Plan to
non-officer employees for the Companys 2009 fiscal year),
(iii) accelerate the payment, right to payment or vesting
of any material compensation or benefits, including any
outstanding options or restricted stock awards, other than as
contemplated by this Agreement, (iv) grant any equity
compensation, (v) grant any severance or termination pay to
any present or former director, officer, employee or consultant
of the Company or its Subsidiaries, other than as required
pursuant to the terms of a Company Employee Plan in effect on
the date of the Agreement or (vi) take any action other
than in the Ordinary Course of Business to fund or in any other
way secure the payment of compensation or benefits under any
Company Employee Plan;
(r) effectuate or permit a plant closing or
mass layoff, as those terms are defined in WARN,
affecting in whole or in part any site of employment, facility,
operating unit or employee of the Company or any of its
Subsidiaries;
(s) grant any material refunds, credits, rebates or other
allowances by the Company or its Subsidiaries to any end user,
customer, reseller or distributor, in each case, other than in
the Ordinary Course of Business;
(t) open any facility or office greater than
5,000 square feet; or
(u) authorize any of, or commit or agree, in writing or
otherwise, to take any of, the foregoing actions.
5.2
Confidentiality
. The parties
acknowledge that S.A.C. Private Capital Group, LLC and the
Company have previously executed a confidentiality agreement,
dated as of March 27, 2009 (as amended, supplemented or
otherwise modified, the
Confidentiality
Agreement
), which Confidentiality Agreement shall
continue in full force and effect in accordance with its terms,
except as expressly modified herein.
5.3
Equity Financing Commitments
.
(a) The Buyer and the Transitory Subsidiary acknowledge
that they have committed to provide, subject to the Equity
Commitment Letter, the Equity Financing, including
(i) maintaining in effect the Equity Commitment Letter,
(ii) ensuring the accuracy of all representations and
warranties of the Buyer or the Transitory Subsidiary set forth
in the Equity Commitment Letter, (iii) complying with all
covenants and agreements of the Buyer or the Transitory
Subsidiary set forth in the Equity Commitment Letter,
(iv) satisfying on a timely basis all conditions applicable
to the Buyer or the Transitory Subsidiary set forth in the
Equity Commitment Letter that are within their control,
(v) upon satisfaction of such conditions and other
conditions set forth in Section 7.1 and Section 7.2
(other than those conditions that by their nature are to be
satisfied at the Closing, subject to the fulfillment or waiver
of
-24-
those conditions), consummating the financing contemplated by
the Equity Commitment Letter at or prior to the Closing (and in
any event prior to the Outside Date) and (vi) fully
enforcing the obligations of the Investor and its investment
affiliates (and the rights of the Buyer and the Transitory
Subsidiary) under the Equity Commitment Letter.
(b) Neither the Buyer nor the Transitory Subsidiary shall
amend, alter, or waive, or agree to amend, alter or waive (in
any case whether by action or inaction), any term of the Equity
Commitment Letter without the prior written consent of the
Company. Each of the Buyer and the Transitory Subsidiary agrees
to notify the Company promptly if at any time prior to the
Closing Date (i) the Equity Commitment Letter expires or is
terminated for any reason (or if any person attempts or purports
to terminate the Equity Commitment Letter, whether or not such
attempted or purported termination is valid), (ii) the
Investor refuses to provide or expresses an intent in writing to
refuse to provide the full Equity Financing on the terms set
forth in the Equity Commitment Letter or (iii) for any
reason the Buyer or the Transitory Subsidiary no longer believes
in good faith that it will be able to obtain all or any portion
of the Equity Financing on the terms set forth in the Equity
Commitment Letter.
5.4
Debt Financing Commitments
.
(a) The Buyer and the Transitory Subsidiary shall use their
respective reasonable best efforts to obtain the Debt Financing
on the terms and conditions set forth in the Debt Commitment
Letter (or terms not materially less favorable, in the
aggregate, to the Buyer and the Transitory Subsidiary taken as a
whole (including with respect to the conditionality thereof))
(provided, that, Buyer and the Transitory Subsidiary may replace
or amend the Debt Financing Commitment Letters to add lenders,
lead arrangers, bookrunners, syndication agents or similar
entities which had not executed the Debt Financing Commitment
Letters as of the date hereof, or otherwise so long as the terms
would not adversely impact the ability of the Buyer and
Transitory Subsidiary to timely consummate the transactions
contemplated hereby or the likelihood of the consummation of the
transactions contemplated hereby), including by using reasonable
best efforts to (i) maintain in effect the Debt Commitment
Letter and negotiate a definitive agreement (collectively, the
Debt Financing Agreements
) with respect to
the Debt Commitment Letter on the terms and conditions set forth
in the Debt Commitment Letter (or on terms not materially less
favorable, in the aggregate, to the Buyer and the Transitory
Subsidiary, taken as a whole, (including with respect to the
conditionality thereof) than the terms and conditions in the
Debt Commitment Letter), (ii) ensure the accuracy of all
representations and warranties of the Buyer or the Transitory
Subsidiary set forth in the Debt Commitment Letter or Debt
Financing Agreement, (iii) comply with all covenants and
agreements of the Buyer or the Transitory Subsidiary set forth
in the Debt Commitment Letter or Debt Financing Agreement,
(iv) satisfy on a timely basis all conditions applicable to
the Buyer or the Transitory Subsidiary set forth in the Debt
Commitment Letter or Debt Financing Agreement that are within
their control and (v) upon satisfaction of such conditions
and the other conditions set forth in Section 7.1 and
Section 7.2 (other than those conditions that by their
nature are to be satisfied at the Closing, subject to the
fulfillment or waiver of those conditions), to consummate the
Debt Financing at or prior to the Closing (and in any event
prior to the Outside Date). In the event that all conditions in
the Debt Commitment Letter (other than the availability of
funding of any of the financing contemplated under the Equity
Commitment Letter) have been satisfied or, upon funding will be
satisfied, each of the Buyer and the Transitory Subsidiary shall
use its reasonable best efforts to cause the lender party to the
Debt Commitment Letter to fund on the Closing Date the Debt
Financing required to consummate the transactions contemplated
by this Agreement and otherwise enforce its rights under the
Debt Commitment Letter. The Buyer will furnish to the Company
correct and complete copies of any Debt Financing Agreement or
any Alternative Debt Commitment Letter and, in each case,
ancillary documents thereto (redacted to the extent necessary to
comply with confidentiality agreements, provided that such
redacted information does not relate to the amounts or
conditionality of, or contain any conditions precedent to, the
funding of the Debt Financing).
(b) The Buyer shall keep the Company reasonably informed
with respect to all material activity concerning the Debt
Financing and shall give the Company prompt notice of any
material adverse change with respect to the Debt Financing.
Without limiting the foregoing, each of the Buyer and the
Transitory Subsidiary agrees to notify the Company promptly, and
in any event within one (1) Business Day, if at any time
prior to the Closing Date (i) a Debt Commitment Letter
expires or is terminated for any reason (or if any person
attempts or purports to terminate a Debt Commitment Letter,
whether or not such attempted or purported termination is
valid), (ii) the lender refuses to provide all or any
portion of the Debt Financing contemplated by a Debt Commitment
Letter on the terms set forth
-25-
therein, or (iii) for any reason the Buyer or the
Transitory Subsidiary no longer believes in good faith that it
will be able to obtain all or any portion of the Debt Financing
on substantially the terms described in the Debt Commitment
Letters. Neither the Buyer nor the Transitory Subsidiary shall,
nor shall it permit any of its Affiliates to, without the prior
written consent of the Company, take any action or enter into
any transaction, including any merger, acquisition, joint
venture, disposition, lease, contract or debt or equity
financing, that could reasonably be expected to impair, delay or
prevent consummation of all or any portion of the Debt
Financing. Neither the Buyer nor the Transitory Subsidiary shall
amend or alter, or agree to amend or alter, a Debt Commitment
Letter in any manner that would materially impair, delay or
prevent the transactions contemplated by this Agreement without
the prior written consent of the Company.
(c) If all or any portion of the Debt Financing becomes
unavailable on the terms and conditions contemplated in a Debt
Commitment Letter or Debt Financing Agreement, each of the Buyer
and the Transitory Subsidiary shall use its reasonable best
efforts to arrange to promptly obtain such Debt Financing from
alternative sources in an amount sufficient, when added to the
portion of the Financing that is available, to pay in cash all
amounts required to be paid by the Buyer, the Surviving
Corporation and the Transitory Subsidiary in connection with the
transactions contemplated by this Agreement, including the
Merger Consideration, the Option Consideration and all payments,
fees and expenses related to or arising out of the transactions
contemplated by this Agreement (Alternative Debt
Financing) and to obtain a new financing commitment letter
(the Alternative Debt Commitment Letter) and a new
definitive agreement with respect thereto (the Alternative
Debt Financing Agreement) that provides for financing on
terms not materially less favorable, in the aggregate, to the
Buyer and the Transitory Subsidiary taken as a whole and in an
amount that is sufficient, when added to the portion of the
Financing that is available together with any cash or cash
equivalents held by the Company as of the Effective Time, to pay
in cash all amounts required to be paid by the Buyer, the
Surviving Corporation and the Transitory Subsidiary in
connection with the transactions contemplated by this Agreement,
including the Merger Consideration, the Option Consideration and
all payments, fees and expenses related to or arising out of the
transactions contemplated by this Agreement. In such event, the
term Debt Financing as used in this Agreement shall
be deemed to include any Alternative Debt Financing, the term
Debt Commitment Letter as used in this Agreement
shall be deemed to include any Alternative Debt Commitment
Letter, and the term Debt Financing Agreement as
used in this Agreement shall be deemed to include any
Alternative Debt Financing Agreement.
(d) The Company agrees to, and shall cause the Company
Subsidiaries to, and shall use its commercially reasonable
efforts to cause their respective representatives, including
legal and accounting advisors to, provide the Buyer with such
cooperation in connection with the arrangement of the financings
contemplated by the Debt Commitment Letters as may be reasonably
requested by the Buyer, including (i) assisting in the
preparation for, and participating in, a reasonable number of
meetings, presentations, due diligence sessions and similar
presentations to and with rating agencies and the parties acting
as lead arrangers or agents for, and prospective purchasers and
lenders of, the Debt Financing, (ii) assisting with the
preparation of materials for rating agency presentations,
offering documents, information memoranda (including the
delivery of one or more customary representation letters), and
similar documents required in connection with the Financing,
(iii) executing and delivering any pledge and security
documents, other definitive financing documents, or other
certificates, opinions or documents as may be reasonably
requested by the Buyer and otherwise reasonably facilitating the
pledging of collateral (including a certificate of the chief
financial officer of the Company or any Subsidiary with respect
to solvency matters), using commercially reasonable efforts to
obtain consents of accountants for use of their reports in any
materials relating to the Debt Financing, (iv) furnishing
the Buyer and its Financing sources with the financial
statements and financial data of the Company required by
paragraph (ii) under the heading Conditions to
Close in Exhibit A to the Debt Commitment Letter,
(v) using commercially reasonable efforts to obtain surveys
and title insurance as reasonably requested by the Buyer in
order to facilitate the Debt Financing and (vi) taking all
corporate actions necessary to permit the consummation of the
Debt Financing and to permit the proceeds thereof to be made
available to the Surviving Corporation, including the entering
into of one or more credit agreements or other instruments on
terms satisfactory to the Buyer in connection with the Debt
Financing immediately prior to, and conditioned upon the
occurrence of, the Effective Time to the extent the direct
borrowing or debt incurrence by the Company is contemplated in
the Debt Commitment Letters; provided that (i) such
requested cooperation does not unreasonably interfere with the
ongoing operations of the Company and its Subsidiaries,
(ii) neither the Company nor any of its Subsidiaries shall
be required to pay any commitment or other similar fee or incur
any other liability in connection
-26-
with the financings contemplated by the Debt Commitment Letter
prior to the Effective Time, (iii) such cooperation shall
not require preparation of any pro forma financial information
by the Company, and (iv) no participation in any road shows
shall be required. If the Closing should not occur by the
Outside Date, the Buyer shall, promptly upon request by the
Company, reimburse the Company for all reasonable and documented
out-of-pocket costs incurred by the Company or any of its
Subsidiaries in connection with such cooperation. All non-public
or otherwise confidential information regarding the Company
obtained by the Buyer or the Transitory Subsidiary or any of
their respective Representatives pursuant to this
Section 5.4(d) shall be kept confidential in accordance
with the Confidentiality Agreement. The Buyer shall indemnify
and hold harmless the Company and its Subsidiaries from and
against any and all liabilities, losses, damages, claims, costs,
expenses, interest, awards, judgments and penalties suffered or
incurred by them in connection with the arrangement of the Debt
Financing (other than to the extent that such losses arise from
the gross negligence or willful misconduct of the Company, any
of its Subsidiaries or any of their respective Representatives)
and any information utilized in connection therewith (other than
information provided by the Company or the Company
Subsidiaries). The Company hereby consents to the reasonable use
of its and the Company Subsidiaries logos in connection
with the Debt Financing, provided that such logos are used
solely in a manner that is not intended to nor reasonably likely
to harm or disparage the Company or any of the Company
Subsidiaries or the reputation or goodwill of the Company or any
of the Company Subsidiaries and its or their marks.
(e) The Buyer and the Transitory Subsidiary each
acknowledge and agree that the obtaining of the Debt Financing
is not a condition to the Closing.
(f) The Company shall deliver to the Buyer a certificate
executed by the Chief Financial Officer of the Company setting
forth Adjusted EBITDA (as defined in Section 5.4(f) of the
Company Disclosure Schedule) for the month ended
December 31, 2009 and each month thereafter, together with
supporting calculations in reasonable detail, by twenty
(20) days following the end of each such month.
ARTICLE VI
ADDITIONAL
AGREEMENTS
6.1
No Solicitation
.
(a)
No Solicitation or
Negotiation
. Except as set forth in this
Section 6.1, from and after the date hereof until the
termination of this Agreement in accordance with the terms
hereof (the
Specified Time
), neither the
Company nor any of its Subsidiaries shall, and the Company shall
use reasonable best efforts to cause the Companys and its
Subsidiaries respective directors, officers, employees,
investment bankers, attorneys, accountants and other advisors or
representatives (such directors, officers, employees, investment
bankers, attorneys, accountants, other advisors and
representatives, collectively,
Representatives
) not to, directly or
indirectly:
(i) solicit, initiate or knowingly encourage any inquiries
or the making of any proposal or offer that constitutes, or
could reasonably be expected to lead to, any Acquisition
Proposal; or
(ii) enter into, continue or otherwise participate in any
discussions or negotiations regarding, or furnish to any person
any non-public information in response to, or otherwise for the
purpose of encouraging or facilitating, any Acquisition Proposal.
Notwithstanding anything to the contrary set forth in this
Agreement, the Company may, prior to obtaining the Company
Stockholder Approval, (A) furnish information with respect
to the Company to and (B) engage in discussions or
negotiations (including solicitation of a revised Acquisition
Proposal) with a person (and the Representatives of such person)
that has made an Acquisition Proposal that did not result from a
breach of this Section 6.1, and subject to compliance with
Section 6.1(b) and Section 6.1(c), that the Company
Board determines in good faith (after consultation with outside
counsel and its financial advisors) either constitutes a
Superior Proposal or is reasonably likely to lead to a Superior
Proposal. Any such furnishing of information regarding the
Company shall be pursuant to a confidentiality agreement not
materially less restrictive of such Person in any respect than
the Confidentiality Agreement (an
Acceptable
Confidentiality Agreement
); provided that the Company
shall promptly make available to the Buyer any material
non-public information concerning the Company or its
Subsidiaries that is furnished to such Person which was not
previously delivered to the Buyer
-27-
or its Representatives. From and after the date hereof, the
Company shall not grant any waiver, amendment or release under
any standstill agreement without the prior written consent of
the Buyer.
(b)
No Change in Recommendation or Alternative
Acquisition Agreement
. Prior to the Specified
Time, neither the Company Board nor any committee thereof shall:
(i) except as set forth in this Section 6.1(b) ,
withhold, withdraw or modify, in a manner adverse to the Buyer,
the approval or recommendation by the Company Board or any
committee thereof with respect to the Company Voting Proposal;
(ii) cause or permit the Company to enter into any letter
of intent, memorandum of understanding, agreement in principle,
acquisition agreement, merger agreement or similar agreement (an
Alternative Acquisition Agreement
) providing
for the consummation of a transaction contemplated by any
Acquisition Proposal (other than an Acceptable Confidentiality
Agreement entered into in compliance with
Section 6.1(a)); or
(iii) except as set forth in this Section 6.1(b),
adopt, approve or recommend any Acquisition Proposal.
Notwithstanding anything to the contrary set forth in this
Agreement (but subject to the immediately following paragraph),
the Company Board may withhold, withdraw or modify its
recommendation with respect to the Company Voting Proposal if
the Company Board or an authorized committee thereof determines
in good faith, after consultation with outside legal counsel
that failure to do so would be inconsistent with its fiduciary
obligations under applicable law;
provided
,
however
, that the Company shall not be entitled to
approve or recommend another Acquisition Proposal unless
(i) it has complied in all material respects with the
provisions of this Section 6.1, (ii) the Company Board
or an authorized committee thereof has concluded in good faith
(after consultation with independent financial advisors and
outside legal counsel) that such Acquisition Proposal would
constitute a Superior Proposal if no changes were made to this
Agreement, (iii) prior to any such approval or
recommendation of another Acquisition Proposal, the Company has
provided written notice (a
Notice of Superior
Proposal
) to the Buyer that the Company intends to
take such action and describing the identity and material terms
and conditions of the Superior Proposal that is the basis of
such action, including with such Notice of Superior Proposal a
copy of the relevant proposed transaction agreements with the
Person making such Superior Proposal, (iv) during the four
(4) Business Day period following the Companys
delivery of the Notice of Superior Proposal, the Company shall,
and shall cause its financial and legal advisors to, negotiate
with the Buyer and the Transitory Subsidiary in good faith (to
the extent the Buyer and the Transitory Subsidiary desire to
negotiate) to make such modification or adjustments in the terms
and conditions of this Agreement so that such Superior Proposal
ceases to constitute a Superior Proposal, and (v) following
the end of such four (4) Business Day period, the Company
Board or an authorized committee thereof shall have determined
in good faith, taking into account any changes to the terms of
this Agreement proposed in writing by the Buyer to the Company
in response to the Notice of Superior Proposal or otherwise,
that the Superior Proposal giving rise to the Notice of Superior
Proposal continues to constitute a Superior Proposal. Any
amendment to the financial terms or any other material amendment
of such Superior Proposal shall require a new Notice of Superior
Proposal and the Company shall be required to comply again with
the requirements of this Section 6.1(b) (provided that
references to the four (4) Business Day period above shall
be deemed to be references to a forty-eight (48) hour
period).
Notwithstanding anything to the contrary set forth in this
Agreement, the Company shall provide written notice to the Buyer
at least four (4) Business Days in advance of the Company
Board or an authorized committees intention to withhold,
withdraw or modify its recommendation with respect to the
Company Voting Proposal for any reason other than a Superior
Proposal and during such four (4) Business Day period
following the Companys delivery of such notice, the
Company shall, and shall cause its financial and legal advisors
to, negotiate with the Buyer and the Transitory Subsidiary in
good faith (to the extent the Buyer and the Transitory
Subsidiary desire to negotiate) to make such modification or
adjustments in the terms and conditions of this Agreement such
that the Company Board or authorized committee, after
consultation with outside legal counsel, does not continue to
believe that the failure to withhold, withdraw or modify such
recommendation would be inconsistent with its fiduciary
obligations under applicable law.
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(c)
Notices to the Buyer
. From and after
the date hereof, the Company shall promptly (and in any event
within one (1) Business Day) advise the Buyer orally, with
written confirmation to follow (together with a written copy of
such Acquisition Proposal), of the Companys receipt of any
written Acquisition Proposal and the material terms and
conditions of any such Acquisition Proposal (including material
amendments or modifications thereto).
(d)
Certain Permitted Disclosure
. Nothing
contained in this Section 6.1 or in Section 6.5 (or
elsewhere in this Agreement) shall be deemed to prohibit the
Company from taking and disclosing to its stockholders a
position with respect to a tender offer contemplated by
Rule 14d-9
or
Rule 14e-2
promulgated under the Exchange Act or from making any disclosure
to the Companys stockholders if, in the good faith
judgment of the Company Board, after consultation with outside
counsel, failure to so disclose would be inconsistent with its
obligations under applicable law;
provided
,
however
, that the Company Board and the Company shall not
recommend that the stockholders of the Company tender their
shares in connection with any tender offer or exchange offer (or
otherwise approve or recommend any Acquisition Proposal) unless
the requirements of Section 6.1(b) have been satisfied.
(e)
Cessation of Ongoing Discussions
. The
Company shall, and shall cause its Subsidiaries to and direct
their respective Representatives to, cease immediately all
discussions or negotiations commenced prior to the date hereof
with any person (other than the parties hereto) regarding any
proposal that constitutes, or could reasonably be expected to
lead to, an Acquisition Proposal and shall request that all
confidential information previously furnished to any such
persons be promptly returned or destroyed.
(f)
Definitions
. For purposes of this
Agreement:
Acquisition Proposal
means any proposal or
offer for, whether in a single transaction or series of related
transactions, alone or in combination (other than the Merger),
(i) a merger, consolidation, tender offer,
recapitalization, reorganization, share exchange, business
combination or similar transaction involving the Company (other
than any such transaction (x) involving solely the Company
and one or more of its Subsidiaries or (y) that, if
consummated, would not result in any person or group
within the meaning of Section 13(d) of the Exchange Act,
owning 20% or more of any class or series of capital stock or
voting securities of the Company), (ii) the issuance by the
Company of its equity securities that, if consummated, would
result in any person or group, within the meaning of
Section 13(d) of the Exchange Act, owning 20% or more of
any class or series of capital stock or voting securities of the
Company, (iii) the acquisition in any manner (including by
virtue of the transfer of equity interests in one or more
Subsidiaries of the Company) of, directly or indirectly, 20% or
more of the consolidated total assets or consolidated revenue or
consolidated earnings of the Company and its Subsidiaries, in
each case other than the transactions contemplated by this
Agreement (including any proposed amendments of this Agreement
proposed by the Buyer) or (iv) a dissolution or liquidation
of the Company or similar transaction involving the Company.
Superior Proposal
means any bona fide written
Acquisition Proposal which was not obtained in violation of
Section 6.1 (except that, for purposes of this definition,
references in the definition of Acquisition Proposal
to 20% shall be 50%) on terms which the
Company Board or any authorized committee thereof determines in
its good faith judgment (after consultation with its financial
advisor and outside legal counsel) to be (i) more favorable
from a financial point of view to the holders of Company Common
Stock (in their capacity as such) than the Merger, taking into
account all the terms and conditions of such proposal and this
Agreement (including any written proposal by the Buyer to amend
the terms of this Agreement) and (ii) reasonably capable of
being completed on the terms proposed, taking into account all
financial, regulatory, legal and other aspects of such proposal.
6.2
Proxy Statement
. As promptly as
practicable after the execution of this Agreement, the Company
shall prepare the Proxy Statement and file it with the SEC and
the Company and Buyer shall jointly prepare and file the
Schedule 13E-3
with the SEC and the Company and the Buyer shall cooperate with
each other in connection with the preparation of the foregoing.
The Company shall use commercially reasonable efforts to respond
as promptly as practicable to any comments of the SEC or its
staff concerning the Proxy Statement or the
Schedule 13E-3
and shall cause the Proxy Statement to be mailed to its
stockholders at the earliest practicable time after the
resolution of any such comments. The Company shall notify the
Buyer promptly upon the receipt of any comments from the SEC or
its staff or any other government officials and of any request
by the SEC or its staff or any other government officials for
amendments or supplements to the Proxy Statement or the
Schedule 13E-3
and shall supply the Buyer with
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copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC, or its staff or
any other government officials, on the other hand, with respect
to the Proxy Statement or the
Schedule 13E-3.
Notwithstanding anything to the contrary stated above, prior to
filing or mailing the Proxy Statement or the
Schedule 13E-3
(including any amendment or supplement to the Proxy Statement or
Schedule 13E-3)
or responding to any comments of the SEC with respect thereto,
(i) the Company shall cooperate and provide the Buyer with
a reasonable opportunity to review and comment on the Proxy
Statement and responses relating thereto and shall consider in
good faith and include in such documents and responses comments
reasonably proposed by the Buyer and (ii) the Company and
the Buyer shall cooperate and provide each other with a
reasonable opportunity to review and comment on the
Schedule 13E-3
and responses relating thereto and shall consider in good faith
comments reasonably proposed by the other party. The Company
shall use commercially reasonable efforts to cause all documents
that it is responsible for filing with the SEC or other
regulatory authorities under this Section 6.2 to comply in
all material respects with all applicable requirements of law
and the rules and regulations promulgated thereunder. Whenever
any event occurs which is required to be set forth in an
amendment or supplement to the Proxy Statement or the
Schedule 13E-3,
the Buyer or the Company, as the case may be, shall promptly
inform the other of such occurrence and cooperate in filing with
the SEC or its staff or any other government officials,
and/or
mailing to stockholders of the Company, such amendment or
supplement.
6.3
Nasdaq Quotation
. The Company
agrees to use commercially reasonable efforts to continue the
quotation of the Company Common Stock on The Nasdaq Stock Market
during the term of this Agreement. Prior to the Closing Date,
the Company shall cooperate with the Buyer and use commercially
reasonable efforts to take, or cause to be taken, all actions,
and do or cause to be done all things, reasonably necessary,
proper or advisable on its part under applicable Laws and rules
and policies of The Nasdaq Global Market to cause the delisting
of the Company of the Company Common Stock from The Nasdaq
Global Market and the deregistration of the Company Common Stock
under the Exchange Act as promptly as practicable after the
Effective Time.
6.4
Access to Information
. During
the Pre-Closing Period, the Company shall (and shall cause each
of its Subsidiaries to) afford to the Buyer and its Affiliates
and their respective Representatives, reasonable access, upon
reasonable notice, during normal business hours and in a manner
that does not materially disrupt or interfere with business
operations, to all of its properties, books, contracts,
commitments, personnel and records as the Buyer shall reasonably
request,
provided
,
however
, that the Company shall
not be required to afford access, or to disclose any
information, that in the good faith judgment of the Company
would (i) result in the disclosure of any trade secrets of
third parties, (ii) violate any obligation of the Company
or any of its Subsidiaries with respect to confidentiality,
(iii) jeopardize protections afforded the Company or any of
its Subsidiaries under the attorney-client privilege or the
attorney work product doctrine, or (iv) violate any
applicable law, regulation, rule, judgment or order. The Buyer
will hold any such information which is nonpublic in confidence
in accordance with the Confidentiality Agreement.
6.5
Stockholders Meeting
. The
Company, acting through the Company Board or an authorized
committee thereof, shall take all actions in accordance with
applicable law, its Certificate of Incorporation and By-laws and
the rules of The Nasdaq Stock Market to promptly and duly call,
give notice of, convene and hold as promptly as practicable the
Company Meeting for the purpose of considering and voting upon
the Company Voting Proposal. Subject to Section 6.1,
(a) the Company Board and any authorized committee thereof
shall recommend adoption of the Company Voting Proposal by the
stockholders of the Company and include such recommendation in
the Proxy Statement and (b) the Company Board and any
committee thereof shall not withhold, withdraw or modify, or
publicly propose or resolve to withhold, withdraw or modify in a
manner adverse to the Buyer, the recommendation of the Company
Board that the Companys stockholders vote in favor of the
Company Voting Proposal. Subject to Section 6.1, the
Company shall take all action that is both reasonable and lawful
to solicit from its stockholders proxies in favor of the Company
Voting Proposal and shall take all other action reasonably
necessary or advisable to secure the vote or consent of the
stockholders of the Company required by the rules of The Nasdaq
Stock Market or the DGCL to obtain such approvals.
Notwithstanding anything to the contrary contained in this
Agreement, the Company, after consultation with the Buyer, may
adjourn or postpone the Company Meeting to the extent necessary
to ensure that any required supplement or amendment to the Proxy
Statement is provided to the Companys stockholders or, if
as of the time for which the Company Meeting is originally
scheduled (as set forth in the Proxy Statement) there are
insufficient shares of Company Common Stock represented (either
in person or by proxy) to constitute a quorum necessary to
conduct the business of the Company Meeting.
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6.6
Legal Conditions to the Merger
.
(a) Subject to the terms hereof, including Section 6.1
and Section 6.6(b), the Company and the Buyer shall each
use their respective reasonable best efforts to:
(i) take, or cause to be taken, all actions, and do, or
cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated
hereby as promptly as practicable;
(ii) as promptly as practicable, obtain from any
Governmental Entity or any other third party any consents,
licenses, permits, waivers, approvals, authorizations, or orders
required to be obtained or made by the Company or the Buyer or
any of their Subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby;
(iii) as promptly as practicable, make all necessary
filings, and thereafter make any other required submissions,
with respect to this Agreement and the Merger required under
(A) the Exchange Act, and any other applicable federal or
state securities laws, (B) the HSR Act and any related
governmental request thereunder, and (C) any other
applicable law; and
(iv) execute or deliver any additional instruments
necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement.
The Company and the Buyer shall cooperate with each other in
connection with the making of all such filings, including
providing copies of all such documents to the non-filing party
and its advisors prior to filing and, if requested, accepting
reasonable additions, deletions or changes suggested in
connection therewith. The Company and the Buyer shall use their
respective reasonable best efforts to furnish to each other all
information required for any application or other filing to be
made pursuant to the rules and regulations of any applicable law
(including all information required to be included in the Proxy
Statement) in connection with the transactions contemplated by
this Agreement. For the avoidance of doubt, the Buyer and the
Company agree that nothing contained in this Section 6.6(a)
shall modify or affect their respective rights and
responsibilities under Section 6.6(b).
(b) Subject to the terms hereof, the Buyer and the Company
agree, and shall cause each of their respective Subsidiaries, to
cooperate and to use their respective reasonable best efforts to
obtain any government clearances or approvals required for
Closing under the HSR Act, the Sherman Act, as amended, the
Clayton Act, as amended, the Federal Trade Commission Act, as
amended, and any other federal, state or foreign law, regulation
or decree designed to prohibit, restrict or regulate actions for
the purpose or effect of monopolization or restraint of trade
(collectively Antitrust Laws), to respond to any
government requests for information under any Antitrust Law, and
to contest and resist any action, including any legislative,
administrative or judicial action, and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other
order (whether temporary, preliminary or permanent) (an
Antitrust Order) that restricts, prevents or
prohibits the consummation of the Merger or any other
transactions contemplated by this Agreement under any Antitrust
Law. The parties hereto will consult and cooperate with one
another, and consider in good faith the views of one another, in
connection with, and provide to the other parties in advance,
any analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or on
behalf of any party hereto in connection with proceedings under
or relating to any Antitrust Law.
(c) The Company shall give (or shall cause its Subsidiaries
to give) any notices to third parties, and use, and cause its
Subsidiaries to use, its reasonable best efforts to obtain any
third party consents required in connection with the Merger that
are (i) necessary to consummate the transactions
contemplated hereby (including any notices and consents) or
(ii) disclosed or required to be disclosed in the Company
Disclosure Schedule, it being understood that the Company shall
not make any payment or incur any liability in connection with
the fulfillment of its obligations under this Section 6.6
without the prior written consent of the Buyer (such consent not
to be unreasonably withheld, conditioned or delayed).
6.7
Public Disclosure
. Except as
may be required by law or stock market regulations, (a) the
press release announcing the execution of this Agreement shall
be issued only in such form as shall be mutually agreed upon by
the Company and the Buyer and (b) the Buyer and the Company
shall each use its commercially reasonable efforts
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to consult with the other party before issuing any other press
release or otherwise making any public statement with respect to
the Merger or this Agreement.
6.8
Indemnification
.
(a) From the Effective Time through the sixth anniversary
of the date on which the Effective Time occurs, the Surviving
Corporation shall indemnify and hold harmless each person who is
now, or has been at any time prior to the date hereof, or who
becomes prior to the Effective Time, a director or officer of
the Company or any of its Subsidiaries (the Indemnified
Parties), against all claims, losses, liabilities,
damages, judgments, fines and reasonable fees, costs and
expenses, including attorneys fees and disbursements,
incurred in connection with any claim, action, suit, proceeding
or investigation, whether civil, criminal, administrative or
investigative (collectively, Claims), arising out of
or pertaining to the fact that the Indemnified Party is or was
an officer or director of the Company or any of its
Subsidiaries, whether asserted or claimed prior to, at or after
the Effective Time, to the fullest extent permitted under the
DGCL for officers and directors of Delaware corporations. The
Surviving Corporation shall have the right to control the
defense of any Claim covered under this Section 6.8(a).
Each Indemnified Party will be entitled to advancement of
expenses incurred in the defense of any such Claim, from the
Surviving Corporation within ten (10) business days of
receipt by the Surviving Corporation from the Indemnified Party
of a request therefor and upon the receipt by the Surviving
Corporation of an undertaking by such Indemnified Party to repay
such advanced expenses if it shall ultimately be determined that
such person is not entitled to be indemnified pursuant to this
Section 6.8(a).
(b) From the Effective Time through the sixth anniversary
of the date on which the Effective Time occurs, the Certificate
of Incorporation and By-laws of the Surviving Corporation shall
contain, and the Buyer shall cause the Certificate of
Incorporation and By-laws of the Surviving Corporation to so
contain, provisions no less favorable with respect to
indemnification, advancement of expenses and exculpation of
present and former directors and officers of the Company and its
Subsidiaries than are presently set forth in the Certificate of
Incorporation and By-laws of the Company.
(c) The Surviving Corporation shall maintain, and the Buyer
shall cause the Surviving Corporation to maintain, at no expense
to the beneficiaries, in effect for six (6) years from the
Effective Time the current policies of the directors and
officers liability insurance maintained by the Company
(provided that the Buyer may substitute therefor policies of at
least the same coverage with respect to matters existing or
occurring at or prior to the Effective Time, including a
tail policy) with respect to matters existing or
occurring at or prior to the Effective Time (including the
transactions contemplated by this Agreement), so long as the
annual premium therefor would not be in excess of 300% of the
last annual premium paid prior to the Effective Time (such 300%,
the
Maximum Premium
);
provided
,
however
, that if the aggregate annual premiums for such
insurance shall exceed the Maximum Premium, then the Surviving
Corporation shall provide or cause to be provided a policy for
the Indemnified Parties with the best coverage as shall then be
available at an annual premium not in excess of the Maximum
Premium. The Company may, prior to the Effective Time, with the
Buyers prior written consent (such consent not to be
unreasonably withheld, conditioned or delayed), purchase a
six-year prepaid tail policy on terms and conditions
providing at least substantially equivalent benefits as the
current policies of directors and officers liability
insurance maintained by the Company and its Subsidiaries with
respect to matters existing or occurring at or prior to the
Effective Time, covering without limitation the transactions
contemplated hereby. If such prepaid tail policy has
been obtained by the Company, it shall be deemed to satisfy all
obligations to obtain insurance pursuant to this
Section 6.8(c) and the Surviving Corporation shall cause
such policy to be maintained in full force and effect, for its
full term, and to honor all of its obligations thereunder.
(d) To the fullest extent permitted by law, the Surviving
Corporation shall, and the Buyer shall cause the Surviving
Corporation to, pay all expenses, including reasonable
attorneys fees, that may be incurred by the persons
referred to in this Section 6.8 in connection with their
successful enforcement of their rights provided in this
Section 6.8.
(e) The Buyer and the Transitory Subsidiary agree that all
rights to exculpation, indemnification and advancement of
expenses for acts or omissions occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, now existing in favor of the current
or former directors or officers, as the case may be, of the
Company or any of its Subsidiaries as provided in their
respective certificates of
-32-
incorporation or by-laws or other organization documents or in
any agreement shall survive the Merger and shall continue in
full force and effect, subject to the terms thereof. The
provisions of this Section 6.8 are intended to be in
addition to the rights otherwise available to the current
officers and directors of the Company by law, charter, statute,
by-law or agreement, and shall operate for the benefit of, and
shall be enforceable by, each of the Indemnified Parties, their
heirs and their representatives. Following the Effective Time,
the obligations set forth in this Section 6.8 shall not be
terminated, amended or otherwise modified in any manner that
adversely affects any Indemnified Party and their heirs and
representatives, without the prior written consent of such
affected Indemnified Person or other person.
(f) If the Surviving Corporation or any of its successors
or assigns shall (i) consolidate with or merge into any
other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger, or
(ii) transfer all or substantially all of its properties
and assets to any person, then, and in each such case, proper
provisions shall be made so that the successors and assigns of
the Surviving Corporation shall assume all of the obligations of
the Surviving Corporation set forth in this Section 6.8.
(g) Nothing in this Agreement is intended to, shall be
construed to or shall release, waive or impair any rights to
directors and officers insurance claims under any
policy that is or has been in existence with respect to the
Company or any of its Subsidiaries for any of their respective
directors, officers or other employees, it being understood and
agreed that the indemnification provided for in this
Section 6.8 is not prior to or in substitution for any such
claims under such policies.
6.9
Notification of Certain
Matters
. During the Pre-Closing Period, the Buyer
shall give prompt notice to the Company, and the Company shall
give prompt notice to the Buyer, of (a) the occurrence, or
failure to occur, of any event, which occurrence or failure to
occur is reasonably likely to cause any representation or
warranty of such party contained in this Agreement to be untrue
or inaccurate in any material respect, in each case at any time
from and after the date of this Agreement until the Effective
Time, or (b) any material failure of the Buyer and the
Transitory Subsidiary or the Company, as the case may be, or of
any officer, director, employee or agent thereof, to comply with
or satisfy any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement. Notwithstanding
the above, the delivery of any notice pursuant to this
Section 6.9 will not limit or otherwise affect the remedies
available hereunder to the party receiving such notice or the
conditions to such partys obligation to consummate the
Merger.
6.10
Exemption from Liability Under
Section 16(b)
. Prior to the Effective Time,
the Company shall take steps as may be reasonably requested by
any party hereto to cause dispositions of Company equity
securities (including derivative securities) pursuant to the
transactions contemplated hereby by each individual who is a
director or officer of the Company to be exempt under
Rule 16b-3
promulgated under the Exchange Act to the extent permitted by
applicable law.
6.11
Service Credit
. Following the
Effective Time, the Buyer will give each employee of the Buyer
or the Surviving Corporation or their respective Subsidiaries
who shall have been an employee of the Company or any of its
Subsidiaries immediately prior to the Effective Time
(Continuing Employees) full credit for prior service
with the Company or its Subsidiaries for purposes of
(a) eligibility and vesting under any Buyer Employee Plans
(as defined below), (b) determination of benefit levels
under any Buyer Employee Plan or policy relating to vacation or
severance and (c) determination of retiree
status under any Buyer Employee Plan, in each case for which the
Continuing Employee is otherwise eligible and in which the
Continuing Employee is offered participation, but except where
such credit would result in a duplication of benefits. In
addition, the Buyer shall waive, or cause to be waived, any
limitations on benefits relating to pre-existing conditions to
the same extent such limitations are waived under any comparable
plan of the Buyer and recognize for purposes of annual
deductible and out-of-pocket limits under its medical and dental
plans, deductible and out-of-pocket expenses paid by Continuing
Employees in the calendar year in which the Effective Time
occurs. For purposes of this Agreement, the term Buyer
Employee Plan means any employee pension benefit
plan (as defined in Section 3(2) of ERISA), any
employee welfare benefit plan (as defined in
Section 3(1) of ERISA), and any other written or oral plan,
agreement or arrangement, including insurance coverage,
severance benefits, disability benefits, deferred compensation,
bonuses, stock options, stock purchase, restricted stock unit,
stock appreciation or other forms of incentive compensation or
post-retirement compensation and all unexpired severance
agreements, for the benefit of, or relating to, any current or
former
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employee of the Buyer or any of its Subsidiaries or any entity
which is a member of (A) a controlled group of corporations
(as defined in Section 414(b) of the Code), (B) a
group of trades or businesses under common control (as defined
in Section 414(c) of the Code) or (C) an affiliated
service group (as defined in Section 414(m) of the Code or
the regulations under Section 414(o) of the Code), any of
which includes or included the Buyer or a Subsidiary of the
Buyer.
6.12
Company Employee
Arrangements
. Prior to the Effective Time, if the
Buyer, the Transitory Subsidiary or any of their respective
Affiliates provides a compensatory contract or agreement to any
employee of the Company or any of its Subsidiaries for
consideration in connection with the Merger, the Buyer or
Transitory Subsidiary shall promptly thereafter provide the
final execution version of such Contract, if any, to the Company.
6.13
Sale of Investments
. The
Company shall use commercially reasonable efforts to take all
actions reasonably requested by the Buyer in order to cause all,
or such portion as the Buyer shall request, of the Company and
its Subsidiaries unrestricted cash, cash equivalents and
marketable securities to be liquidated and converted at, or
close to, the then current market rates into cash of the Company
that is available to the Company at the Effective Time to be
used to pay the Merger Consideration. If this Agreement is
terminated by the Company pursuant to Section 8.1(h) or
Section 8.1(i), the Buyer shall, subject to
Section 9.10(b), promptly upon request by the Company,
reimburse the Company for all reasonable and documented
out-of-pocket costs incurred by the Company or any of its
Subsidiaries in complying with this Section 6.13.
6.14
Director Resignations
. Prior
to the Closing, the Company shall deliver to the Buyer
resignations executed by each director of the Company in office
immediately prior to the Effective Time, which resignations
shall be effective at the Effective Time and which resignations
shall not have been revoked.
6.15
Termination of Agreements
. At
or prior to the Closing, the Company shall, at the request of
Buyer, execute an agreement provided by Buyer in the form
attached as
Exhibit C
hereto (the
Termination Agreement
) terminating the Third
Amended and Restated Investor Rights Agreement among the Company
and certain of its stockholders.
6.16
Internal Reorganization
. The
Company shall initiate the internal reorganization transactions
described in Section 6.16 of the Company Disclosure
Schedule (the Internal Reorganization) in accordance
therewith and take reasonable steps to allow the Internal
Reorganization to be consummated as promptly as practicable
following the Closing. The Company agrees to reasonably
cooperate with the Buyer with respect to effectuating the
Internal Reorganization as promptly as practicable following the
Closing; provided that (i) such requested cooperation does
not unreasonably interfere with the ongoing operations of the
Company and its Subsidiaries and (ii) neither the Company
nor any of its Subsidiaries shall be required to pay any fees or
incur any liability in connection with the Internal
Reorganization prior to the Effective Time. If this Agreement is
terminated in accordance with Article VIII, the Buyer
shall, subject to Section 9.10(b), promptly upon request by
the Company, reimburse the Company for all reasonable and
documented out-of-pocket costs incurred by the Company or any of
its Subsidiaries in connection with such cooperation.
ARTICLE VII
CONDITIONS
TO MERGER
7.1
Conditions to Each Partys Obligation To
Effect the Merger
. The respective obligations of
each party to this Agreement to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of
the following conditions:
(a)
Stockholder Approval
. The Company
Voting Proposal shall have been adopted at the Company Meeting,
at which a quorum is present, by the Required Company
Stockholder Vote.
(b)
HSR Act
. The waiting period
applicable to the consummation of the Merger under the HSR Act
shall have expired or been terminated.
(c)
Governmental Approvals
. Other than
the filing of the Certificate of Merger, all authorizations,
consents, orders or approvals of, or declarations or filings
with, or expirations of waiting periods imposed by, any
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Governmental Entity in connection with the Merger and the
consummation of the other transactions contemplated by this
Agreement, the failure of which to file, obtain or occur is
reasonably likely to have a Buyer Material Adverse Effect or a
Company Material Adverse Effect, shall have been filed, been
obtained or occurred on terms and conditions which would not
reasonably be likely to have a Buyer Material Adverse Effect or
a Company Material Adverse Effect.
(d)
Proxy Statement
. No order suspending
the use of the Proxy Statement shall have been issued and no
proceeding for that purpose shall have been initiated or
threatened in writing by the SEC or its staff.
(e)
No Injunctions
. No Governmental
Entity of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any order, executive order,
stay, decree, judgment or injunction (preliminary or permanent)
or statute, rule or regulation which is in effect and which has
the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger or the other transactions
contemplated by this Agreement;
provided
,
however
,
that a party may not assert that this condition has not been
satisfied unless such party shall have used its reasonable best
efforts to prevent the enforcement or entry of such order,
executive order, stay, decree, judgment or injunction or
statute, rule or regulation, including taking such action as is
required to comply with Section 6.6, and to appeal as
promptly as possible any order, executive order, stay, decree,
judgment or injunction that may be issued.
7.2
Additional Conditions to Obligations of the
Buyer and the Transitory Subsidiary
. The
obligations of the Buyer and the Transitory Subsidiary to effect
the Merger shall be subject to the satisfaction on or prior to
the Closing Date of each of the following additional conditions,
any of which may be waived, in writing, exclusively by the Buyer
and the Transitory Subsidiary:
(a)
Representations and Warranties
. The
representations and warranties of the Company (i) set forth
in the first sentence of Section 3.7 shall be true and
correct in all respects as of the Closing Date as if made on and
as of the Closing Date, (ii) set forth in Section 3.2,
Section 3.4(a) and Section 3.20, disregarding all
qualifications contained therein relating to materiality or
Company Material Adverse Effect, shall be true and correct in
all material respects as of the Closing Date as if made on and
as of the Closing Date (or, if given as of a specific date, at
and as of such date) and (iii) set forth in
Article III hereof (other than the Sections of
Article III described in clauses (i) and
(ii) above), disregarding all qualifications contained
therein relating to materiality or Company Material Adverse
Effect, shall be true and correct as of the Closing Date as if
made on and as of the Closing Date (or, if given as of a
specific date, at and as of such date), except in the case of
this clause (iii) where the failure to be so true and
correct has not resulted in or would not reasonably be likely to
result in, individually or in the aggregate, a Company Material
Adverse Effect.
(b)
Performance of Obligations of the
Company
. The Company shall have performed in all
material respects all obligations required to be performed by it
under this Agreement on or prior to the Closing Date.
(c)
No Material Adverse Effect
. Since the
date of this Agreement, there shall not have occurred any
Company Material Adverse Effect.
(d)
Adjusted EBITDA
. Adjusted EBITDA (as
defined in Section 5.4(f) of the Company Disclosure
Schedule) for the twelve (12) month period ended at least
30 days prior to the Closing Date shall not be less than
$95 million.
(e)
Officers Certificate
. The
Company shall have delivered to the Buyer a certificate, dated
as of the Closing Date, signed by the chief executive officer or
the chief financial officer of the Company, certifying to the
satisfaction of the conditions specified in Sections 7.2(a)
through 7.2(d).
7.3
Additional Conditions to Obligations of the
Company
. The obligation of the Company to effect
the Merger shall be subject to the satisfaction on or prior to
the Closing Date of each of the following additional conditions,
any of which may be waived, in writing, exclusively by the
Company:
(a)
Representations and Warranties
. The
representations and warranties of the Buyer and the Transitory
Subsidiary set forth in this Agreement shall be true and correct
as of the Closing Date as though made on and as of the Closing
Date (except (i) to the extent such representations and
warranties are specifically made as of a particular date, in
which case such representations and warranties shall be true and
correct as of such date, (ii) for changes
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contemplated by this Agreement, and (iii) where the failure
to be true and correct (without regard to any materiality or
Buyer Material Adverse Effect qualifications contained therein),
individually or in the aggregate, has not had a Buyer Material
Adverse Effect.
(b)
Performance of Obligations of the Buyer and the
Transitory Subsidiary
. The Buyer and the
Transitory Subsidiary shall have performed in all material
respects all obligations required to be performed by them under
this Agreement on or prior to the Closing Date.
(c)
Officers Certificate
. The Buyer
shall have delivered to the Company a certificate, dated as of
the Closing Date, signed by the chief executive officer, chief
financial officer or other duly authorized officer of the Buyer,
certifying to the satisfaction of the conditions specified in
Sections 7.3(a) and 7.3(b).
(d)
Solvency Certificate
. The Buyer shall
have delivered to the Company a solvency certificate
substantially similar in form and substance to the solvency
certificate to be delivered to the lenders pursuant to the Debt
Commitment Letter or any agreements entered into in connection
with the Debt Financing.
7.4
Frustration of Closing
Conditions
. None of the Company, the Buyer or the
Transitory Subsidiary may rely on the failure of any condition
set forth in Section 7.2 or 7.3, as the case may be, to be
satisfied if such failure was caused by such partys
failure to use the standard of efforts required from such party
to consummate the Merger and the other transactions contemplated
by this Agreement, including as required by and subject to
Sections 5.3, 5.4 and 6.6.
ARTICLE VIII
TERMINATION
AND AMENDMENT
8.1
Termination
. This Agreement may
be terminated at any time prior to the Effective Time (with
respect to Sections 8.1(b) through 8.1(i), by written
notice by the terminating party to the other party), whether
before or, subject to the terms hereof, after adoption of this
Agreement by the stockholders of the Company:
(a) by mutual written consent of the Buyer, the Transitory
Subsidiary and the Company; or
(b) by either the Buyer or the Company if the Merger shall
not have been consummated by June 15, 2010 (the
Outside Date) (provided that the right to terminate
this Agreement under this Section 8.1(b) shall not be
available to any party whose failure to fulfill any obligation
under this Agreement has been a principal cause of or resulted
in the failure of the Merger to occur on or before the Outside
Date); or
(c) by either the Buyer or the Company if a Governmental
Entity of competent jurisdiction shall have issued a
nonappealable final order, decree or ruling or taken any other
nonappealable final action, in each case having the effect of
permanently restraining, enjoining or otherwise prohibiting the
Merger (provided that the right to terminate this Agreement
under this Section 8.1(c) shall not be available to any
party whose failure to fulfill any obligation under this
Agreement has been a principal cause of or resulted in such
order, decree, ruling or other action); or
(d) by either the Buyer or the Company if at the Company
Meeting at which a vote on the Company Voting Proposal is taken,
the Required Company Stockholder Vote in favor of the Company
Voting Proposal shall not have been obtained; or
(e) by the Buyer, if: (i) the Company Board or any
committee thereof shall have failed to recommend approval of the
Company Voting Proposal in the Proxy Statement or shall have
withheld, withdrawn, amended or modified its recommendation of
the Company Voting Proposal in a manner adverse to the Buyer;
(ii) the Company Board or any committee thereof shall have
adopted, approved, endorsed or recommended to the stockholders
of the Company an Acquisition Proposal (other than the Merger);
(iii) a tender offer or exchange offer for outstanding
shares of Company Common Stock shall have been commenced (other
than by the Buyer or an Affiliate of the Buyer) and the Company
Board or any committee thereof recommends that the stockholders
of the Company tender their shares in such tender or exchange
offer or, within ten (10) Business Days after the public
announcement of such tender or exchange offer or, if earlier,
prior to the date of the Company Meeting, the Company Board or a
committee thereof fails to recommend against acceptance of such
offer and reaffirm the recommendation of the Company Voting
-36-
Proposal; (iv) the Company enters into an Alternative
Acquisition Agreement or (v) the Company or the Company
Board or any committee thereof shall have publicly announced its
intention to do any of the foregoing; or
(f) by the Company, if the Company Board or an authorized
committee thereof, pursuant to and in compliance with
Section 6.1, shall have adopted, approved, endorsed or
recommended, or publicly proposed to adopt, approve, endorse or
recommend, to the stockholders of the Company any Acquisition
Proposal;
provided
,
however
, that the Company
shall prior to or simultaneously with a termination pursuant to
this Section 8.1(f) pay the Termination Fee to the Buyer or
another Person designated by the Buyer; or
(g) by the Buyer, if there has been a breach of or failure
to perform any representation, warranty, covenant or agreement
on the part of the Company set forth in this Agreement, which
breach or failure to perform (i) would cause the conditions
set forth in Section 7.2 not to be satisfied, and
(ii) shall not have been cured, or is not capable of being
cured, within 20 days following receipt by the Company of
written notice of such breach or failure to perform from the
Buyer (or, if earlier, the Outside Date);
provided
,
however
, that the Buyer shall not have the right to
terminate this Agreement pursuant to this Section 8.1(g) if
it or the Transitory Subsidiary is then in material breach of
any of its representations, warranties, covenants or other
agreements hereunder that would result in the conditions to
Closing set forth in Sections 7.3(a) or 7.3(b) not being
satisfied; or
(h) by the Company, if there has been a breach of or
failure to perform any representation, warranty, covenant or
agreement on the part of the Buyer or the Transitory Subsidiary
set forth in this Agreement, which breach or failure to perform
(i) would cause the conditions set forth in
Sections 7.3(a) or 7.3(b) not to be satisfied, and
(ii) shall not have been cured, or is not capable of being
cured, within 20 days following receipt by the Buyer of
written notice of such breach or failure to perform from the
Company (or, if earlier, the Outside Date);
provided
,
however
, that the Company shall not have the right to
terminate this Agreement pursuant to this Section 8.1(h) if
it is then in material breach of any of its representations,
warranties, covenants or other agreements hereunder that would
result in the conditions to Closing set forth in
Sections 7.2(a) or 7.2(b) not being satisfied; or
(i) by the Company, if all of the conditions set forth in
Sections 7.1 and 7.2 have been satisfied (other than those
conditions that by their nature are to be satisfied by actions
taken at the Closing) and the Company has indicated in writing
that the Company is ready and willing to consummate the
transactions contemplated by this Agreement (subject to the
satisfaction of all of the conditions set forth in
Sections 7.1 and 7.3), and the Buyer and the Transitory
Subsidiary fail to consummate the transactions contemplated by
this Agreement within ten (10) Business Days following the
date the Closing should have occurred pursuant to
Section 1.2 (for the avoidance of doubt, it being
understood that in accordance with the proviso to
Section 8.1(b), during such period of ten
(10) Business Days following the date the Closing should
have occurred pursuant to Section 1.2, the Buyer shall not
be entitled to terminate this Agreement pursuant to
Section 8.1(b)).
8.2
Effect of Termination
. In the
event of termination of this Agreement as provided in
Section 8.1 this Agreement shall immediately become void
and there shall be no liability or obligation on the part of the
Buyer, the Company, the Transitory Subsidiary or their
respective officers, directors, stockholders or Affiliates;
provided that (a) subject to Section 9.10,
Section 8.3(c) and Section 8.3(d), any such
termination shall not relieve any party from liability for any
willful breach of this Agreement and (b) the
Confidentiality Agreement (subject to its terms), the provisions
of Sections 5.2 (Confidentiality) and 8.3 (Fees and
Expenses), Section 8.4 (Amendment), Section 8.5
(Extension; Waiver), this Section 8.2 (Effect of
Termination) and Article IX (Miscellaneous) of this
Agreement, the Guarantee (subject to its terms) and the
indemnification and reimbursement provisions of
Sections 5.4(d), 6.13 and 6.16 of this Agreement shall
remain in full force and effect and survive any termination of
this Agreement. Nothing shall limit or prevent any party from
exercising any rights or remedies it may have under
Section 9.10 hereof in lieu of terminating this Agreement
pursuant to Section 8.1.
8.3
Fees and Expenses
.
(a) Except as set forth in this Section 8.3, all fees
and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party
incurring such fees and expenses, whether or not the Merger is
consummated.
(b) Provided that the Buyer has not received payment of a
Termination Fee pursuant to Section 8.3(c), the Company
shall pay the Buyer up to $3.0 million as reimbursement for
expenses actually incurred by or on behalf of
-37-
the Buyer or its Affiliates relating to the transactions
contemplated by this Agreement (including, but not limited to,
reasonable fees and expenses of the Buyers counsel,
accountants, financial advisors and financing sources, but
excluding any discretionary fees paid to such financial
advisors), in the event of the termination of this Agreement by
the Buyer or the Company pursuant to Section 8.1(d) or
Section 8.1(g) (other than terminations due to breaches of
Section 6.1 or Section 6.5). The expenses payable
pursuant to this Section 8.3(b) shall be paid by wire
transfer of
same-day
funds within 10 Business Days after demand therefor following
the occurrence of the event giving rise to the payment
obligation described in this Section 8.3(b). The expense
reimbursement pursuant to this Section 8.3(b) is referred
to herein as the Expense Reimbursement. The payment
of the Expense Reimbursement pursuant to this
Section 8.3(b) shall not relieve the Company of any
subsequent obligation to pay the Termination Fee pursuant to
Section 8.3(c).
(c) The Company shall pay the Buyer a termination fee of
$15.0 million (the
Termination Fee
)
(i) in the event of the termination of this Agreement
pursuant to Section 8.1(e), Section 8.1(f) or
Section 8.1(g) (due to breaches of Section 6.1 or
Section 6.5), or (ii) if (A) an Acquisition
Proposal shall have been communicated to the Company or a member
of the Company Board (whether or not publicly disclosed) and not
withdrawn (and, if publicly disclosed, not publicly withdrawn)
prior to a termination referred to in the succeeding clause (B),
(B) following the occurrence of an event described in the
preceding clause (A), this Agreement is terminated by the
Company or the Buyer pursuant to Section 8.1(b) or
Section 8.1(d) or by the Buyer pursuant to
Section 8.1(g) (other than terminations due to breaches of
Section 6.1 or Section 6.5) and (C) prior to or
within twelve (12) months following the date this Agreement
is terminated, the Company enters into a definitive acquisition
agreement with respect to or consummates any Acquisition
Proposal (in each case whether or not the Acquisition Proposal
was the same Acquisition Proposal referred to in clause (A));
provided
,
however
, that for purposes of
clause (C) of this Section 8.3(c), the references to
20% in the definition of Acquisition Proposal shall
be deemed to be references to 50%. The Company shall
be entitled to credit against payment of the Termination Fee in
respect of any Expense Reimbursement previously paid under
Section 8.3(b).
In the event that the Buyer shall receive full payment pursuant
to this Section 8.3(c), the receipt of the Termination Fee
shall be deemed to be liquidated damages for any and all losses
or damages suffered or incurred by the Buyer, the Transitory
Subsidiary, any of their respective Affiliates or any other
person in connection with this Agreement (and the termination
hereof), the transactions contemplated hereby (and the
abandonment thereof) or any matter forming the basis for such
termination, and none of the Buyer, the Transitory Subsidiary,
any of their respective Affiliates or any other person shall be
entitled to bring or maintain any other claim, action or
proceeding against the Company or any of its Affiliates arising
out of this Agreement, any of the transactions contemplated
hereby or any matters forming the basis for such termination;
provided
,
however
, that nothing in this
Section 8.3(c) shall limit the rights of Buyer and
Transitory Sub under Section 9.10(a) or the rights of the
Buyer or its Affiliates under and to the extent provided in the
Ancillary Agreements. Any fee due under clause (i) of this
Section 8.3(c) shall be paid to the Buyer or its designee
by wire transfer of
same-day
funds within two Business Days after the date of termination of
this Agreement if such termination is pursuant to
Section 8.1(e) but shall be due simultaneously with such
termination if pursuant to Section 8.1(f). Any fee due
under clause (ii) of this Section 8.3(c) shall be paid
to the Buyer or its designee by wire transfer of
same-day
funds within two Business Days after the earlier of the entry
into a definitive agreement with respect to any Acquisition
Proposal or the consummation of an Acquisition Proposal.
Notwithstanding anything to the contrary, the Company shall not
owe any obligation to pay the Termination Fee if this Agreement
is terminated pursuant to Section 8.1(b) after the Company
has provided the written indication referred to in
Section 8.1(i) unless the Company refuses to consummate the
Closing during the time period contemplated by
Section 8.1(i).
(d) The Buyer shall pay, or cause to be paid, the Company a
termination fee of $25.0 million (the Buyer
Termination Fee) if this Agreement is terminated by the
Company pursuant to Section 8.1(h) or Section 8.1(i).
Any fee due under this Section 8.3(d) shall be paid to the
Company or its designee by wire transfer of
same-day
funds within two (2) Business Days after the date of
termination of this Agreement pursuant to Section 8.1(h) or
Section 8.1(i).
In the event that the Company shall receive full payment
pursuant to this Section 8.3(d), the receipt of the Buyer
Termination Fee shall be deemed to be liquidated damages for any
and all losses or damages suffered or incurred by the Company or
any other person in connection with this Agreement or the
Guarantee (and the
-38-
termination hereof), the transactions contemplated hereby (and
the abandonment thereof) or any matter forming the basis for
such termination, and neither the Company nor any other person
shall be entitled to bring or maintain any other claim, action
or proceeding against the Buyer, the Transitory Subsidiary or
any other Buyer Party arising out of this Agreement or the
Guarantee, any of the transactions contemplated hereby or any
matters forming the basis for such termination. Notwithstanding
anything to the contrary, if a court of competent jurisdiction
has ordered the Buyer or the Transitory Subsidiary to pay the
Buyer Termination Fee pursuant to this Section 8.3(d), the
Company shall not be entitled to enforce such order if
(x) the Buyer delivers to the Company, within five
(5) Business Days following the issuance of such order, a
notice electing to consummate the Closing in accordance with
Article II of this Agreement and (y) the Closing
occurs within three (3) Business Days following the
delivery of such notice.
(e) If the Company or the Buyer, as the case may be, fails
to timely pay any amount due pursuant to this Section 8.3,
and, in order to obtain the payment, the Buyer or the Company,
as the case may be, commences a suit which results in a judgment
against the other party for the payment set forth in this
Section 8.3, such paying party shall pay the other party
its reasonable and documented costs and expenses (including
reasonable and documented attorneys fees) in connection
with such suit, together with interest on such amount at the
prime rate of JPMorgan Chase & Co. in effect on the
date such payment was required to be made through the date such
payment was actually received.
(f) The parties acknowledge that the agreements contained
in this Section 8.3 are an integral part of the
transactions contemplated by this Agreement, and that, without
these agreements, the parties would not enter into this
Agreement. Except as provided in Section 8.3(c) and
Section 8.3(d), respectively, payment of the fees and
expenses described in this Section 8.3 shall not be in lieu
of liability for damages incurred in the event of a breach of
this Agreement described in Section 8.2(a), but otherwise
shall constitute the sole and exclusive remedy of the parties in
connection with any termination of this Agreement.
8.4
Amendment
. This Agreement may
be amended by the parties hereto, by action taken or authorized
by their respective Boards of Directors, at any time before or
after approval of the matters presented in connection with the
Merger by the stockholders of any party, but, after any such
approval, no amendment shall be made which by law requires
further approval by such stockholders without such further
approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties
hereto.
8.5
Extension; Waiver
. At any time
prior to the Effective Time, the parties hereto, by action taken
or authorized by their respective Boards of Directors, may, to
the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party. Such
extension or waiver shall not be deemed to apply to any time for
performance, inaccuracy in any representation or warranty, or
noncompliance with any agreement or condition, as the case may
be, other than that which is specified in the extension or
waiver. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not
constitute a waiver of such rights.
ARTICLE IX
MISCELLANEOUS
9.1
Nonsurvival of Representations, Warranties and
Agreements
. None of the representations,
warranties and agreements in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective
Time, except for any covenant or agreement of the parties that
by its terms contemplates performance after the Effective Time.
9.2
Notices
. All notices and other
communications hereunder shall be in writing and shall be deemed
duly delivered (i) four Business Days after being sent by
registered or certified mail, return receipt requested, postage
prepaid, (ii) one Business Day after being sent for next
Business Day delivery, fees prepaid, via a reputable nationwide
overnight courier service, or (iii) on the date of
confirmation of receipt (or, the first Business Day
-39-
following such receipt if the date of such receipt is not a
Business Day) of transmission by facsimile, in each case to the
intended recipient as set forth below:
(a) if to the Buyer or the Transitory Subsidiary, to
c/o S.A.C.
Capital Advisors, L.P.
72 Cummings Point Rd
Stamford, CT 06902
Attn: General Counsel
Telecopy:
(203) 823-4209
with a copy to:
Simpson Thacher & Bartlett LLP
1999 Avenue of the Stars
29th Floor
Los Angeles, CA 90067
Attn: Daniel Clivner
Telecopy:
(310) 407-7502
(b) if to the Company, to
Airvana, Inc.
19 Alpha Road
Chelmsford, MA 01824
Attn: Peter C. Anastos
Telecopy:
(978) 250-3910
with copies to:
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attn: Mark G. Borden and Jay E. Bothwick
Telecopy:
(617) 526-5000
and
Ropes & Gray LLP
One International Place
Boston, MA
02110-2624
Attn: John D. Donovan and Julie H. Jones
Telecopy:
(617) 951-7050
Any party to this Agreement may give any notice or other
communication hereunder using any other means (including
personal delivery, messenger service, telex, ordinary mail or
electronic mail), but no such notice or other communication
shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any
party to this Agreement may change the address to which notices
and other communications hereunder are to be delivered by giving
the other parties to this Agreement notice in the manner herein
set forth.
9.3
Entire Agreement
. This
Agreement (including the Schedules and Exhibits hereto and the
documents and instruments referred to herein that are to be
delivered at the Closing) constitutes the entire agreement among
the parties to this Agreement and supersedes any prior
understandings, agreements or representations by or among the
parties hereto, or any of them, written or oral, with respect to
the subject matter hereof (including that certain letter
agreement between the Company and S.A.C. Private Capital Group,
LLC, dated August 25, 2009, regarding reimbursement of
expenses), and the parties hereto specifically disclaim reliance
on any such prior understandings, agreements or representations
to the extent not embodied in this Agreement. Notwithstanding
the foregoing, the
-40-
Confidentiality Agreement shall remain in effect in accordance
with its terms;
provided
,
however
, that, if the
Effective Time occurs, the Confidentiality Agreement shall
terminate as of the Effective Time.
9.4
No Third Party
Beneficiaries
. Except (a) for the right of
holders of Common Stock to receive the Merger Consideration
pursuant to and in accordance with Section 2.1 (with
respect to which holders of Company Common Stock shall be third
party beneficiaries following the Effective Time if the
Effective Time occurs), (b) as provided in Section 6.8
(with respect to which the Indemnified Parties shall be third
party beneficiaries) and (c) as set forth in the last
sentence of this Section 9.4, this Agreement is not
intended, and shall not be deemed, to confer any rights or
remedies upon any person other than the parties hereto and their
respective successors and permitted assigns, to create any
agreement of employment with any person or to otherwise create
any third-party beneficiary hereto. The representations and
warranties in this Agreement are the product of negotiations
among the parties hereto and are for the sole benefit of the
parties hereto. Any inaccuracies in such representations and
warranties are subject to waiver by the parties hereto in
accordance with Section 8.5 without notice or liability to
any other person. In some instances, the representations and
warranties in this Agreement may represent an allocation among
the parties hereto of risks associated with particular matters
regardless of the knowledge of any of the parties hereto.
Consequently, persons other than the parties hereto may not rely
upon the representations and warranties in this Agreement as
characterizations of actual facts or circumstances as of the
date of this Agreement or as of any other date. The Buyer
Parties shall be express third party beneficiaries with respect
to Sections 8.2 (but solely to the extent Section 8.2
provides for the survival following the termination of this
Agreement of Sections 8.3(d), 9.10(b) and 9.11), 8.3(d),
9.10(b) and 9.11 of this Agreement.
9.5
Assignment
. Neither this
Agreement nor any of the rights, interests or obligations under
this Agreement may be assigned or delegated, in whole or in
part, by operation of law or otherwise by any of the parties
hereto without the prior written consent of the other parties,
and any such assignment without such prior written consent shall
be null and void;
provided
,
however
, that the
Buyer or the Transitory Subsidiary may assign its rights,
interests or obligations under this Agreement to any Subsidiary
of the Buyer without the consent of the other parties hereto,
but no such assignment shall relieve the assigning party of its
obligations hereunder. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective
successors and permitted assigns.
9.6
Severability
. Any term or
provision of this Agreement that is invalid or unenforceable in
any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof
or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.
If the final judgment of a court of competent jurisdiction
declares that any term or provision hereof is invalid or
unenforceable, the parties hereto agree that the court making
such determination shall have the power to limit the term or
provision, to delete specific words or phrases, or to replace
any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest
to expressing the intention of the invalid or unenforceable term
or provision, and this Agreement shall be enforceable as so
modified. In the event such court does not exercise the power
granted to it in the prior sentence, the parties hereto agree to
replace such invalid or unenforceable term or provision with a
valid and enforceable term or provision that will achieve, to
the extent possible, the economic, business and other purposes
of such invalid or unenforceable term.
9.7
Counterparts and
Signature
. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original
but all of which together shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each of the parties hereto and delivered to the other
parties, it being understood that all parties need not sign the
same counterpart. This Agreement may be executed and delivered
by facsimile transmission.
9.8
Interpretation
. When reference
is made in this Agreement to an Article or a Section, such
reference shall be to an Article or Section of this Agreement,
unless otherwise indicated. The table of contents, table of
defined terms and headings contained in this Agreement are for
convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement. The language
used in this Agreement shall be deemed to be the language chosen
by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against, nor shall
there be a presumption that any ambiguities in this Agreement
shall be resolved against, any party. Whenever the context may
require, any pronouns used in this Agreement shall include the
corresponding
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masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural, and vice versa. Any
reference to any federal, state, local or foreign statute or law
shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise.
Whenever the words include, includes or
including are used in this Agreement, they shall be
deemed to be followed by the words without
limitation. The words in writing include
electronic correspondence and
e-mail.
No
summary of this Agreement prepared by any party shall affect the
meaning or interpretation of this Agreement.
9.9
Governing Law
. This Agreement
shall be governed by and construed in accordance with the
internal laws of the State of Delaware without giving effect to
any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause
the application of laws of any jurisdictions other than those of
the State of Delaware.
9.10
Remedies
.
(a) Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by
a party of any one remedy will not preclude the exercise of any
other remedy. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this
Agreement were not performed by the Company in accordance with
their specific terms or were otherwise breached by the Company.
It is accordingly agreed that, subject to Section 8.3, the
Buyer and the Transitory Subsidiary shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this
Agreement, in each case without posting a bond or undertaking,
this being in addition to any other remedy to which they are
entitled at law or in equity. The parties further acknowledge
that the Company shall not be entitled to an injunction or
injunctions to prevent breaches of this Agreement against the
Buyer or the Transitory Subsidiary or to enforce specifically
the terms and provisions of this Agreement or otherwise obtain
any equitable relief or remedy against the Buyer or the
Transitory Subsidiary.
(b) Notwithstanding anything herein to the contrary, the
maximum aggregate liability of the Company under or relating to
this Agreement to any person shall be limited to the Termination
Fee (inclusive of the Expense Reimbursement) plus any amounts
that may be payable by the Company under Section 8.3(e)
(the Company Liability Limitation) and the maximum
aggregate liability of the Buyer and the Transitory Subsidiary
under or relating to this Agreement to any person shall be
limited to the Buyer Termination Fee (inclusive of any amounts
owed pursuant to the indemnification and reimbursement
provisions of Sections 5.4(d), 6.13 and 6.16) plus any
amounts that may be payable by the Buyer under
Section 8.3(e) (the
Buyer Liability
Limitation
) and in no event shall (i) the Company
or any of its Affiliates seek any recovery, judgment or damages
of any kind, including consequential, indirect or punitive
damages, against the Buyer, the Transitory Subsidiary, the
Investor or any other Buyer Parties (as defined below) in excess
of the Buyer Liability Limitation in connection with this
Agreement or the transactions contemplated hereby and
(ii) the Buyer or Transitory Subsidiary seek any other
recovery, judgment or damages of any kind, including
consequential, indirect or punitive damages, against the
Company, its Subsidiaries or any other Company Parties in excess
of the Company Liability Limitation in connection with this
Agreement or the transactions contemplated hereby;
provided
,
however
, that nothing in this
Section 9.10(b) shall limit the rights of the Buyer and the
Transitory Subsidiary under Section 9.10(a) or the rights
of the parties hereto under and to the extent provided in the
Ancillary Agreements.
Ancillary Agreements
shall mean the Interim Investors Agreement, the Rollover
Commitment Letters and the Termination Agreement. Without
limiting the rights of the Buyer or its Affiliates under and to
the extent provided in Section 9.10(a) and the Ancillary
Agreements, the Buyer and the Transitory Subsidiary acknowledge
and agree that each of them has no right of recovery against,
and no personal liability shall attach to, in each case with
respect to damages of the Buyer or its Affiliates
(
Buyer Damages
), any of the Company Parties
(other than the Company to the extent provided in this
Agreement), through the Company or otherwise, whether by or
through attempted piercing of the corporate veil, by or through
a claim by or on behalf of the Company against any Company
Party, by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute, regulation or
applicable Law, or otherwise. Without limiting the rights of the
Company under and to the extent provided in the Ancillary
Agreements, the Company acknowledges and agrees that it has no
right of recovery against, and no personal liability shall
attach to, in each case with respect to damages of the Company
and its Affiliates (
Company Damages
), any of
the Buyer Parties (as defined below) (other than the Buyer and
the Transitory Subsidiary to the
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extent provided in this Agreement and the Investor to the extent
provided in the Guarantee), through the Buyer or otherwise,
whether by or through attempted piercing of the corporate,
limited partnership or limited liability company veil, by or
through a claim by or on behalf of the Buyer against the
Investor or any other Buyer Party, by the enforcement of any
assessment or by any legal or equitable proceeding, by virtue of
any statute, regulation or applicable Law, or otherwise, except
for its rights to recover from the Investor (but not any other
Buyer Party (including any general partner or managing member))
under and to the extent provided in the Guarantee and subject to
the Buyer Liability Limitation and the other limitations
described therein. Recourse against the Investor under the
Guarantee shall be the sole and exclusive remedy of the Company
and its Affiliates against the Investor and any other Buyer
Party (other than the Buyer and the Transitory Subsidiary to the
extent provided in this Agreement) in respect of any liabilities
or obligations arising under, or in connection with, this
Agreement or the transactions contemplated hereby.
(c) For purposes hereof: (i)
Buyer
Parties
shall mean, collectively, the Buyer, the
Transitory Subsidiary, the Investor, the Debt Financing Sources
and any of their respective former, current or future directors,
officers, employees, agents, general or limited partners,
managers, members, stockholders, Affiliates or assignees or any
former, current or future director, officer, employee, agent,
general or limited partner, manager, member, stockholder,
Affiliate or assignee of any of the foregoing, and (ii)
Company Parties
shall mean, collectively, the
Company and its Subsidiaries and any of their respective former,
current or future directors, officers, employees, agents,
general or limited partners, managers, members, stockholders,
Affiliates or assignees or any former, current or future
director, officer, employee, agent, general or limited partner,
manager, member, stockholder, Affiliate or assignee of any of
the foregoing.
9.11
Submission to
Jurisdiction
. Each of the parties to this
Agreement (a) consents to submit itself to the personal
jurisdiction of the Court of Chancery of the State of Delaware
in any action or proceeding arising out of or relating to this
Agreement or any of the transactions contemplated by this
Agreement, (b) agrees that all claims in respect of such
action or proceeding may be heard and determined only in such
court, (c) agrees that it shall not attempt to deny or
defeat such personal jurisdiction by motion or other request for
leave from such court, and (d) agrees not to bring any
action or proceeding arising out of or relating to this
Agreement or any of the transactions contemplated by this
Agreement in any other court. Each of the parties hereto waives
any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety or
other security that might be required of any other party with
respect thereto. To the fullest extent permitted by law, any
party hereto may make service on another party by sending or
delivering a copy of the process to the party to be served at
the address and in the manner provided for the giving of notices
in Section 9.2. Nothing in this Section 9.11, however,
shall affect the right of any party to serve legal process in
any other manner permitted by law.
9.12
Disclosure Schedules
. The
Company Disclosure Schedule and the Buyer Disclosure Schedule
shall each be arranged in Sections corresponding to the numbered
Sections contained in Article III, in the case of the
Company Disclosure Schedule, or Article IV, in the case of
the Buyer Disclosure Schedule, and the disclosure in any Section
shall qualify (a) the corresponding Section in
Article III or Article IV, as the case may be, and
(b) the other Sections in Article III or
Article IV, as the case may be, to the extent that it is
readily apparent from a reading of such disclosure that it also
qualifies or applies to such other Sections. The inclusion of
any information in the Company Disclosure Schedule or the Buyer
Disclosure Schedule shall not be deemed to be an admission or
acknowledgment, in and of itself, that such information is
required by the terms hereof to be disclosed, is material, has
resulted in or would result in a Company Material Adverse Effect
or a Buyer Material Adverse Effect, or is outside the Ordinary
Course of Business.
9.13
Knowledge
. For purposes of
this Agreement, the term
Companys
Knowledge
means the actual knowledge of the
individuals identified in Section 9.13 of the Company
Disclosure Schedule, and the term
Buyers
Knowledge
means the actual knowledge of the
individuals identified in Section 9.13 of the Buyer
Disclosure Schedule.
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IN WITNESS WHEREOF, the Buyer, the Transitory Subsidiary and the
Company have caused this Agreement to be signed by their
respective officers thereunto duly authorized as of the date
first written above.
72 MOBILE HOLDINGS, LLC
Name: Peter Berger
72 MOBILE ACQUISITION CORP.
Name: Peter Berger
AIRVANA, INC.
Name: Randall Battat
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EXHIBIT A
FORM OF
RESTATED
CERTIFICATE OF INCORPORATION
OF
AIRVANA, INC.
FIRST. The name of the corporation is Airvana, Inc.
(the Corporation).
SECOND. The address of the Corporations
registered office in the State of Delaware is Corporation
Trust Center, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801. The name of its registered agent at such
address is The Corporation Trust Company.
THIRD. The purpose of the Corporation is to engage in
any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of
Delaware (the DGCL).
FOURTH. The total number of shares of stock which the
Corporation shall have authority to issue is one thousand
(1,000) shares of common stock, par value $0.001 per share.
FIFTH. The board of directors of the Corporation,
acting by the vote of any member or members of the board of
directors representing a majority of the votes entitled to be
cast at a meeting of the board of directors, is expressly
authorized to adopt, amend or repeal the bylaws of the
Corporation.
SIXTH. Except to the extent that the DGCL prohibits
the elimination or limitation of liability of directors for
breaches of fiduciary duty, no director of the Corporation shall
be personally liable to the Corporation or its stockholders for
monetary damages for any breach of fiduciary duty as a director,
notwithstanding any provision of law imposing such liability. No
amendment to or repeal of this provision shall apply to or have
any effect on the liability or alleged liability of any director
of the Corporation for or with respect to any acts or omissions
of such director occurring prior to such amendment or repeal. If
the DGCL is amended to permit further elimination or limitation
of the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the DGCL as so amended.
SEVENTH. The Corporation shall provide
indemnification as follows:
1.
Actions, Suits and Proceedings Other than by or in
the Right of the Corporation.
The Corporation shall
indemnify each person who was or is a party or threatened to be
made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
Corporation) by reason of the fact that he or she is or was, or
has agreed to become, a director or officer of the Corporation,
or is or was serving, or has agreed to serve, at the request of
the Corporation, as a director, officer, partner, employee or
trustee of, or in a similar capacity with, another corporation,
partnership, joint venture, trust or other enterprise (including
any employee benefit plan) (all such persons being referred to
hereafter as an Indemnitee), or by reason of any
action alleged to have been taken or omitted in such capacity,
against all expenses (including attorneys fees),
liabilities, losses, judgments, fines, excise taxes and
penalties arising under the Employee Retirement Income Security
Act of 1974, and amounts paid in settlement actually and
reasonably incurred by or on behalf of such Indemnitee in
connection with such action, suit or proceeding and any appeal
therefrom, if such Indemnitee acted in good faith and in a
manner which such Indemnitee reasonably believed to be in, or
not opposed to, the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe his or her conduct was unlawful. The
termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption
that such Indemnitee did not act in good faith and in a manner
which such Indemnitee reasonably believed to be in, or not
opposed to, the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had reasonable
cause to believe that his or her conduct was unlawful.
2.
Actions or Suits by or in the Right of the
Corporation.
The Corporation shall indemnify any Indemnitee
who was or is a party to or threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by
reason of the fact that such Indemnitee is or was, or has agreed
to become, a director or officer of the Corporation, or is or
was serving, or has agreed to serve, at the
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request of the Corporation, as a director, officer, partner,
employee or trustee of, or in a similar capacity with, another
corporation, partnership, joint venture, trust or other
enterprise (including any employee benefit plan), or by reason
of any action alleged to have been taken or omitted in such
capacity, against all expenses (including attorneys fees)
and, to the extent permitted by law, amounts paid in settlement
actually and reasonably incurred by or on behalf of Indemnitee
in connection with such action, suit or proceeding and any
appeal therefrom, if such Indemnitee acted in good faith and in
a manner which such Indemnitee reasonably believed to be in, or
not opposed to, the best interests of the Corporation, except
that no indemnification shall be made under this Section 2
of this Article SEVENTH in respect of any claim, issue or
matter as to which such Indemnitee shall have been adjudged to
be liable to the Corporation, unless, and only to the extent,
that the Court of Chancery of the State of Delaware or the court
in which such action or suit was brought shall determine upon
application that, despite the adjudication of such liability but
in view of all the circumstances of the case, such Indemnitee is
fairly and reasonably entitled to indemnity for such expenses
(including attorneys fees) which the Court of Chancery of
the State of Delaware or such other court shall deem proper.
3.
Indemnification for Expenses of Successful Party.
Notwithstanding any other provisions of this
Article SEVENTH, to the extent that an Indemnitee has been
successful, on the merits or otherwise, in defense of any
action, suit or proceeding referred to in Sections 1 and 2
of this Article SEVENTH, or in defense of any claim, issue
or matter therein, or on appeal from any such action, suit or
proceeding, such Indemnitee shall be indemnified against all
expenses (including attorneys fees) actually and
reasonably incurred by or on behalf of Indemnitee in connection
therewith. Without limiting the foregoing, if any action, suit
or proceeding is disposed of, on the merits or otherwise
(including a disposition without prejudice), without
(i) the disposition being adverse to such Indemnitee,
(ii) an adjudication that such Indemnitee was liable to the
Corporation, (iii) a plea of guilty or nolo contendere by
such Indemnitee, (iv) an adjudication that such Indemnitee
did not act in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the
Corporation, and (v) with respect to any criminal
proceeding, an adjudication that such Indemnitee had reasonable
cause to believe his or her conduct was unlawful, then such
Indemnitee shall be considered for the purposes hereof to have
been wholly successful with respect thereto.
4.
Notification and Defense of Claim.
As a condition
precedent to an Indemnitees right to be indemnified, such
Indemnitee must notify the Corporation in writing as soon as
practicable of any action, suit, proceeding or investigation
involving such Indemnitee for which indemnity will or could be
sought. With respect to any action, suit, proceeding or
investigation of which the Corporation is so notified, the
Corporation will be entitled to participate therein at its own
expense
and/or
to
assume the defense thereof at its own expense, with legal
counsel reasonably acceptable to Indemnitee. After notice from
the Corporation to such Indemnitee of its election so to assume
such defense, the Corporation shall not be liable to such
Indemnitee for any legal or other expenses subsequently incurred
by such Indemnitee in connection with such action, suit,
proceeding or investigation, other than as provided below in
this Section 4 of this Article SEVENTH. Such
Indemnitee shall have the right to employ his or her own counsel
in connection with such action, suit, proceeding or
investigation, but the fees and expenses of such counsel
incurred after notice from the Corporation of its assumption of
the defense thereof shall be at the expense of such Indemnitee
unless (i) the employment of counsel by such Indemnitee has
been authorized by the Corporation, (ii) counsel to such
Indemnitee shall have reasonably concluded that there may be a
conflict of interest or position on any significant issue
between the Corporation and such Indemnitee in the conduct of
the defense of such action, suit, proceeding or investigation or
(iii) the Corporation shall not in fact have employed
counsel to assume the defense of such action, suit, proceeding
or investigation, in each of which cases the fees and expenses
of counsel for such Indemnitee shall be at the expense of the
Corporation, except as otherwise expressly provided by this
Article SEVENTH. The Corporation shall not be entitled,
without the consent of such Indemnitee, to assume the defense of
any claim brought by or in the right of the Corporation or as to
which counsel for such Indemnitee shall have reasonably made the
conclusion provided for in clause (ii) above. The
Corporation shall not be required to indemnify such Indemnitee
under this Article SEVENTH for any amounts paid in
settlement of any action, suit, proceeding or investigation
effected without its written consent. The Corporation shall not
settle any action, suit, proceeding or investigation in any
manner which would impose any penalty or limitation on such
Indemnitee without such Indemnitees written consent.
Neither the Corporation nor Indemnitee will unreasonably
withhold or delay its consent to any proposed settlement.
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5.
Advance of Expenses.
Subject to the provisions of
Section 6 of this Article SEVENTH, in the event of any
threatened or pending action, suit, proceeding or investigation
of which the Corporation receives notice under this
Article SEVENTH, any expenses (including attorneys
fees) incurred by or on behalf of an Indemnitee in defending an
action, suit, proceeding or investigation or any appeal
therefrom shall be paid by the Corporation in advance of the
final disposition of such matter; provided, however, that the
payment of such expenses incurred by or on behalf of such
Indemnitee in advance of the final disposition of such matter
shall be made only upon receipt of an undertaking by or on
behalf of such Indemnitee to repay all amounts so advanced in
the event that it shall ultimately be determined that such
Indemnitee is not entitled to be indemnified by the Corporation
as authorized in this Article SEVENTH; and provided further
that no such advancement of expenses shall be made under this
Article SEVENTH if it is determined (in the manner
described in Section 6 of this Article SEVENTH) that
(i) such Indemnitee did not act in good faith and in a
manner he or she reasonably believed to be in, or not opposed
to, the best interests of the Corporation, or (ii) with
respect to any criminal action or proceeding, such Indemnitee
had reasonable cause to believe his or her conduct was unlawful.
Such undertaking shall be accepted without reference to the
financial ability of such Indemnitee to make such repayment.
6.
Procedure for Indemnification and Advancement of
Expenses.
In order to obtain indemnification or advancement
of expenses pursuant to Section 1, 2, 3 or 5 of this
Article SEVENTH, an Indemnitee shall submit to the
Corporation a written request. Any such advancement of expenses
shall be made promptly, and in any event within 60 days
after receipt by the Corporation of the written request of such
Indemnitee, unless (i) the Corporation has assumed the
defense pursuant to Section 4 of this Article SEVENTH
(and none of the circumstances described in Section 4 of
this Article SEVENTH that would nonetheless entitle the
Indemnitee to indemnification for the fees and expenses of
separate counsel have occurred) or (ii) the Corporation
determines within such
60-day
period that such Indemnitee did not meet the applicable standard
of conduct set forth in Section 1, 2 or 5 of this
Article SEVENTH, as the case may be. Any such
indemnification, unless ordered by a court, shall be made with
respect to requests under Section 1 or 2 of this
Article SEVENTH only as authorized in the specific case
upon a determination by the Corporation that the indemnification
of Indemnitee is proper because Indemnitee has met the
applicable standard of conduct set forth in Section 1 or 2,
as the case may be. Such determination shall be made in each
instance (a) by a majority vote of the directors of the
Corporation consisting of persons who are not at that time
parties to the action, suit or proceeding in question
(disinterested directors), whether or not a quorum,
(b) by a committee of disinterested directors designated by
majority vote of disinterested directors, whether or not a
quorum, (c) if there are no disinterested directors, or if
the disinterested directors so direct, by independent legal
counsel (who may, to the extent permitted by law, be regular
legal counsel to the Corporation) in a written opinion, or
(d) by the stockholders of the Corporation.
7.
Remedies.
The right to indemnification or
advancement of expenses as granted by this Article SEVENTH
shall be enforceable by Indemnitee in any court of competent
jurisdiction. Neither the failure of the Corporation to have
made a determination prior to the commencement of such action
that indemnification is proper in the circumstances because an
Indemnitee has met the applicable standard of conduct, nor an
actual determination by the Corporation pursuant to
Section 6 of this Article SEVENTH that an Indemnitee
has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that an Indemnitee
has not met the applicable standard of conduct. An
Indemnitees expenses (including attorneys fees)
reasonably incurred in connection with successfully establishing
such Indemnitees right to indemnification, in whole or in
part, in any such proceeding shall also be indemnified by the
Corporation. Notwithstanding the foregoing, in any suit brought
by an Indemnitee to enforce a right to indemnification hereunder
it shall be a defense that the Indemnitee has not met any
applicable standard for indemnification set forth in the DGCL.
8.
Limitations.
Notwithstanding anything to the
contrary in this Article SEVENTH, except as set forth in
Section 7 of this Article SEVENTH, the Corporation
shall not indemnify an Indemnitee pursuant to this
Article SEVENTH in connection with a proceeding (or part
thereof) initiated by such Indemnitee unless the initiation
thereof was approved by the Board of Directors of the
Corporation. Notwithstanding anything to the contrary in this
Article SEVENTH, the Corporation shall not indemnify an
Indemnitee to the extent such Indemnitee is reimbursed from the
proceeds of insurance, and in the event the Corporation makes
any indemnification payments to an Indemnitee and such
Indemnitee is subsequently reimbursed from the proceeds of
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insurance, such Indemnitee shall promptly refund indemnification
payments to the Corporation to the extent of such insurance
reimbursement.
9.
Subsequent Amendment.
No amendment, termination
or repeal of this Article SEVENTH or of the relevant
provisions of the DGCL or any other applicable laws shall
adversely affect or diminish in any way the rights of any
Indemnitee to indemnification under the provisions hereof with
respect to any action, suit, proceeding or investigation arising
out of or relating to any actions, transactions or facts
occurring prior to the final adoption of such amendment,
termination or repeal.
10.
Other Rights.
The indemnification and
advancement of expenses provided by this Article SEVENTH
shall not be deemed exclusive of any other rights to which an
Indemnitee seeking indemnification or advancement of expenses
may be entitled under any law (common or statutory), agreement
or vote of stockholders or disinterested directors or otherwise,
both as to action in such Indemnitees official capacity
and as to action in any other capacity while holding office for
the Corporation, and shall continue as to an Indemnitee who has
ceased to be a director or officer, and shall inure to the
benefit of the estate, heirs, executors and administrators of
such Indemnitee. Nothing contained in this Article SEVENTH
shall be deemed to prohibit, and the Corporation is specifically
authorized to enter into, agreements with officers and directors
providing indemnification rights and procedures different from
those set forth in this Article SEVENTH. In addition, the
Corporation may, to the extent authorized from time to time by
its Board of Directors, grant indemnification rights to other
employees or agents of the Corporation or other persons serving
the Corporation and such rights may be equivalent to, or greater
or less than, those set forth in this Article SEVENTH.
11.
Partial Indemnification.
If an Indemnitee is
entitled under any provision of this Article SEVENTH to
indemnification by the Corporation for some or a portion of the
expenses (including attorneys fees), judgments, fines or
amounts paid in settlement actually and reasonably incurred by
or on behalf of such Indemnitee in connection with any action,
suit, proceeding or investigation and any appeal therefrom but
not, however, for the total amount thereof, the Corporation
shall nevertheless indemnify such Indemnitee for the portion of
such expenses (including attorneys fees), judgments, fines
or amounts paid in settlement to which such Indemnitee is
entitled.
12.
Primacy of Indemnification.
The Corporation
hereby acknowledges that an Indemnitee may have certain rights
to indemnification, advancement of expenses
and/or
insurance provided by S.A.C. Private Capital Group, LLC
and/or
certain of its affiliates (collectively, the
Fund Indemnitors). The Corporation hereby
agrees (i) that as between the Corporation and the
Fund Indemnitors, the Corporation is the indemnitor of
first resort with respect to matters which are the subject of
indemnification or advancement of expenses under this
Article SEVENTH (i.e., its obligations to the Indemnitees
are primary and any obligation of the Fund Indemnitors to
advance expenses or to provide indemnification for the same
expenses or liabilities incurred by the Indemnitees are
secondary), (ii) that it shall be required to advance the
full amount of expenses incurred by the Indemnitees and shall be
liable for the full amount of all expenses, judgments,
penalties, fines and amounts paid in settlement to the extent
legally permitted and as required by these Articles (or any
agreement between the Corporation and the Indemnitee), without
regard to any rights the Indemnitee may have against the
Fund Indemnitors, and, (iii) that it irrevocably
waives, relinquishes and releases the Fund Indemnitors from
any and all claims against the Fund Indemnitors for
contribution, subrogation or any other recovery of any kind in
respect thereof. The Corporation further agrees that no
advancement or payment by the Fund Indemnitors on behalf of
any Indemnitee with respect to any claim for which the
Indemnitee has sought indemnification from the Corporation shall
affect the foregoing and the Fund Indemnitors shall have a
right of contribution
and/or
be
subrogated to the extent of such advancement or payment to all
of the rights of recovery of an Indemnitee against the
Corporation.
13.
Insurance.
The Corporation may purchase and
maintain insurance, at its expense, to protect itself and any
director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other
enterprise (including any employee benefit plan) against any
expense, liability or loss incurred by him or her in any such
capacity, or arising out of his or her status as such, whether
or not the Corporation would have the power to indemnify such
person against such expense, liability or loss under the DGCL.
14.
Savings Clause.
If this Article SEVENTH or
any portion hereof shall be invalidated on any ground by any
court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each Indemnitee as to any expenses
(including attorneys fees), judgments, fines and amounts
paid in settlement in connection with any action,
A-4
suit, proceeding or investigation, whether civil, criminal or
administrative, including an action by or in the right of the
Corporation, to the fullest extent permitted by any applicable
portion of this Article SEVENTH that shall not have been
invalidated and to the fullest extent permitted by applicable
law.
15.
Definitions.
Terms used herein and defined in
Section 145(h) and Section 145(i) of the DGCL shall
have the respective meanings assigned to such terms in such
Section 145(h) and Section 145(i).
EIGHTH.
1. To the fullest extent permitted by law, the Corporation
acknowledges that: (i) S.A.C. Private Capital Group, LLC,
its affiliates (other than the Corporation), and its and their
respective partners, members, officers, directors and employees,
and each Paragraph (2) Person (as defined below)
(collectively, the Exempt Persons) shall have no
duty (fiduciary, contractual or otherwise) not to, directly or
indirectly (a) engage in the same or similar business
activities or lines of business as the Corporation or any of its
subsidiaries, including those deemed to be competing with the
Corporation or any of its subsidiaries, (b) do business
with any client, customer or vendor of the Corporation or any of
its subsidiaries or (c) enter into and perform one or more
agreements (or modifications or supplements to pre-existing
agreements) with the Corporation or any of its subsidiaries,
including, in the cases of clauses (a), (b) or (c), any
such matters as may be corporate opportunities; and (ii) no
Exempt Person nor any officer, director or employee thereof
shall be deemed to have breached any duties (fiduciary,
contractual or otherwise), if any, to the Corporation, any of
its subsidiaries or its stockholders solely by reason of any
Exempt Person engaging in any such activity or entering into
such transactions, including any corporate opportunities.
2. The Corporation and its subsidiaries shall have no
interest or expectation in, nor right to be informed of, any
corporate opportunity, and in the event that any Exempt Person
acquires knowledge of a potential transaction or matter which
may be a corporate opportunity, such Exempt Person, to the
fullest extent permitted by law, has no duty (fiduciary,
contractual or otherwise) or obligation to communicate or offer
such corporate opportunity to the Corporation or any of its
subsidiaries, stockholders or to any other person and shall not,
to the fullest extent permitted by law, be liable to the
Corporation or any of its subsidiaries, stockholders or any
other person for breach of any fiduciary duty as a director,
officer or stockholder of the Corporation or any of its
subsidiaries by reason of the fact that any Exempt Person
acquires or seeks such corporate opportunity for itself, directs
such corporate opportunity to another person or entity, or
otherwise does not communicate information regarding such
corporate opportunity to the Corporation or its subsidiaries,
stockholders or any other person, and the Corporation and its
subsidiaries, to the fullest extent permitted by law, waive and
renounce any claim that such business opportunity constituted a
corporate opportunity that should have been presented to the
Corporation or any of its affiliates; provided, that if an
opportunity is expressly communicated to a Paragraph
(2) Person in his or her capacity as a director or officer
of the Corporation or subsidiary of the Corporation for the
express purpose of causing such opportunity to be communicated
to the Corporation or such subsidiary, then such Paragraph
(2) Person shall satisfy his or her fiduciary obligation,
if any, by communicating the opportunity, or, in lieu thereof,
the identity of the party initiating the communication, to the
board of directors. For the purposes of this Certificate of
Incorporation, (a) corporate opportunity shall
include, without limitation, any potential transaction,
investment or business opportunity or prospective economic or
competitive advantage in which the Corporation or any of its
subsidiaries could have any expectancy or interest; and
(b) Paragraph (2) Person shall mean any
director or officer of the Corporation or any of its
subsidiaries who is also a director, officer or employee of any
of S.A.C. Private Capital Group, LLC, its affiliates (other than
the Corporation), and its and their respective partners and
members.
A-5
EXHIBIT B
EXECUTION
VERSION
LIMITED
GUARANTEE
LIMITED GUARANTEE,
dated as of December 17, 2009
(this
Limited Guarantee
), by S.A.C. Capital
Management, LLC (the
Guarantor
) in favor of
Airvana, Inc. (the
Guaranteed Party
).
1.
LIMITED GUARANTEE.
To induce the
Guaranteed Party to enter into that certain Agreement and Plan
of Merger, dated as of December 17, 2009 (as amended,
restated, supplemented or otherwise modified from time to time
pursuant to the terms thereof, the
Merger
Agreement
), by and among the Guaranteed Party, 72
Mobile Acquisition Corp. and 72 Mobile Holdings, LLC (the
Buyer
), pursuant to which and subject to the
terms and conditions of which the Guaranteed Party will become a
wholly owned subsidiary of the Buyer (the
Merger
), the Guarantor, intending to be
legally bound, hereby absolutely, irrevocably and
unconditionally guarantees to the Guaranteed Party, on the terms
and conditions set forth herein the due and punctual payment as
and when due of the payment obligations of Buyer with respect to
(a) the Buyer Termination Fee, subject to the limitations
of the Merger Agreement, (b) any amounts payable by Buyer
pursuant to Section 8.3(e) of the Merger Agreement in
respect of the Buyer Termination Fee, subject to the limitations
of the Merger Agreement, (c) any amounts payable by Buyer
pursuant to Section 5.4(d) of the Merger Agreement;
(d) any amounts payable by Buyer pursuant to
Section 6.13 of the Merger Agreement and (e) any
amounts payable by Buyer pursuant to Section 6.16 of the
Merger Agreement ((a) through (e) collectively, the
Obligations
), provided that notwithstanding
anything to the contrary contained in this Limited Guarantee, in
no event shall the Guarantors aggregate liability under
this Limited Guarantee exceed $25,000,000.00, plus any amounts
payable by Buyer pursuant to Section 8.3(e) of the Merger
Agreement in respect of the Buyer Termination Fee, plus any
Reimbursement Obligations, less the portion of the foregoing
amounts, if any, indefeasibly paid to the Guaranteed Party by
the Buyer that is not rescinded or otherwise returned, the
Transitory Subsidiary or any other Person (the
Cap
), it being understood that this Limited
Guarantee may not be enforced without giving effect to the Cap.
The Guaranteed Party hereby agrees that in no event shall the
Guarantor be required to pay any amount to the Guaranteed Party
under, in respect of, or in connection with this Limited
Guarantee, the Equity Commitment Letter, the Merger Agreement or
the transactions contemplated hereby and thereby other than as
expressly set forth herein. All payments hereunder shall be made
in lawful money of the United States, in immediately available
funds. Each capitalized term used but not defined herein shall
have the meaning ascribed to it in the Merger Agreement, except
as otherwise provided.
If the Buyer fails to pay the Obligations when due, then all of
the Guarantors liabilities to the Guaranteed Party
hereunder in respect of such Obligations shall, at the
Guaranteed Partys option, become immediately due and
payable and the Guaranteed Party may at any time and from time
to time, at the Guaranteed Partys option, take any and all
actions available hereunder or under applicable law to collect
the Obligations from the Guarantor. In furtherance of the
foregoing, the Guarantor acknowledges that the Guaranteed Party
may, in its sole discretion, bring and prosecute a separate
action or actions against the Guarantor for the full amount of
the Obligations (subject to the Cap) regardless of whether any
action is brought against the Buyer.
The Guarantor agrees to pay on demand all reasonable and
documented out-of-pocket expenses (including reasonable fees and
expenses of counsel) incurred by the Guaranteed Party in
connection with the enforcement of its rights hereunder if the
Guarantor fails or refuses to make any payment to the Guaranteed
Party hereunder when due and payable and it is judicially
determined that the Guarantor is required to make such payment
hereunder. Amounts payable to the Guaranteed Party pursuant to
the previous sentence shall be referred to herein as the
Reimbursement Obligations
.
2.
NATURE OF GUARANTEE.
The
Guarantors liability hereunder is absolute, unconditional,
irrevocable and continuing irrespective of any modification,
amendment or waiver of or any consent to departure from the
Merger Agreement that may be agreed to by the Buyer or the
Transitory Subsidiary. In the event that any payment to the
Guaranteed Party in respect of the Obligations is rescinded or
must otherwise be returned for any reason whatsoever, the
Guarantor shall remain liable hereunder with respect to the
Obligations (subject to the Cap) as if such payment had not been
made. This Limited Guarantee is an unconditional and continuing
guarantee of payment
B-1
and not of collection, and the Guaranteed Party shall not be
required to proceed against the Buyer or the Transitory
Subsidiary before proceeding against the Guarantor hereunder.
3.
CHANGES IN OBLIGATION, CERTAIN
WAIVERS.
The Guarantor agrees that the Guaranteed
Party may, in its sole discretion, at any time and from time to
time, without notice to or further consent of the Guarantor,
extend the time of payment of the Obligations, and may also make
any agreement with the Buyer or the Transitory Subsidiary for
the extension or renewal thereof, in whole or in part, without
in any way impairing or affecting the Guarantors
obligations under this Limited Guarantee or affecting the
validity or enforceability of this Limited Guarantee. The
Guarantor agrees that the obligations of the Guarantor hereunder
shall not be released or discharged, in whole or in part, or
otherwise affected by (a) the failure or delay on the part
of the Guaranteed Party to assert any claim or demand or to
enforce any right or remedy against the Buyer or the Transitory
Subsidiary; (b) any change in the time, place or manner of
payment of any of the Obligations, or any rescission, waiver,
compromise, consolidation, or other amendment or modification of
any of the terms or provisions of the Merger Agreement made in
accordance with the terms thereof; (c) the addition or
substitution of any entity or other Person now or hereafter
liable with respect to the Obligations or otherwise interested
in the transactions contemplated by the Merger Agreement;
(d) any change in the corporate existence, structure or
ownership of the Buyer, the Transitory Subsidiary or any Person
now or hereafter liable with respect to the Obligations or
otherwise interested in the transactions contemplated by the
Merger Agreement; (e) the existence of any claim, set-off
or other right which the Guarantor may have at any time against
the Buyer, the Transitory Subsidiary or the Guaranteed Party or
any of their respective Affiliates, whether in connection with
the Obligations or otherwise except as provided herein;
(f) the adequacy of any other means the Guaranteed Party
may have of obtaining payment related to the Obligations;
(g) any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Buyer, the Transitory
Subsidiary or any other Person now or hereafter liable with
respect to the Obligations or otherwise interested in the
transactions contemplated by the Merger Agreement; and
(h) any discharge of the Guarantor as a matter of
applicable law (other than as a result of, and to the extent of,
payment of the Obligations in accordance with the terms of the
Merger Agreement). To the fullest extent permitted by applicable
law, the Guarantor hereby expressly waives any and all rights or
defenses arising by reason of any applicable law which would
otherwise require any election of remedies by the Guaranteed
Party. The Guarantor waives promptness, diligence, notice of the
acceptance of this Limited Guarantee and of the Obligations,
presentment, demand for payment, notice of non-performance,
default, dishonor and protest, notice of the Obligations
incurred and all other notices of any kind, all defenses which
may be available by virtue of any valuation, stay, moratorium or
other similar applicable law now or hereafter in effect, and all
suretyship defenses generally (other than fraud by the
Guaranteed Party or any of its Affiliates or defenses to the
payment of the Obligations that are available to Buyer under the
Merger Agreement or breach by the Guaranteed Party of this
Limited Guarantee). The Guarantor acknowledges that it will
receive substantial direct and indirect benefits from the
transactions contemplated by the Merger Agreement and that the
waivers, agreements, covenants, obligations and other terms in
this Limited Guarantee are knowingly made and agreed to in
contemplation of such benefits. The Guaranteed Party hereby
covenants and agrees that it shall not institute, directly or
indirectly, and shall cause its Affiliates not to institute,
directly or indirectly, any proceeding or bring any other claim
arising under, in respect of or in connection with the Equity
Commitment Letter, the Merger Agreement or the transactions
contemplated thereby, against the Guarantor or any Non-Recourse
Party (as defined in Section 9 herein), except for claims
against the Guarantor under this Limited Guarantee (subject to
the limitations described herein) and claims under the
Confidentiality Agreement. The Guarantor hereby covenants and
agrees that it shall not assert, directly or indirectly, in any
proceeding that this Limited Guarantee is illegal, invalid or
unenforceable in accordance with its terms.
4.
NO WAIVER; CUMULATIVE RIGHTS.
For so
long as this Limited Guarantee shall remain in effect in
accordance with Section 8 hereof, no failure to exercise,
and no delay in exercising, any right, remedy or power hereunder
shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy or power hereunder
preclude any other or future exercise of any right, remedy or
power hereunder. Each and every right, remedy and power hereby
granted to the Guaranteed Party shall be cumulative and not
exclusive of any other, and may be exercised by the Guaranteed
Party at any time or from time to time. The Guaranteed Party
shall not have any obligation to proceed at any time or in any
manner against, or exhaust any or all of the Guaranteed
Partys rights against, the Buyer, the Transitory
Subsidiary or any other Person now or hereafter liable for any
Obligation or interested in the transactions contemplated by the
Merger Agreement prior to proceeding against the Guarantor.
B-2
5.
REPRESENTATIONS AND WARRANTIES.
The
Guarantor hereby represents and warrants that:
(a) It has all requisite limited liability company power
and authority to execute, deliver and perform this Limited
Guarantee; the execution, delivery and performance of this
Limited Guarantee have been duly and validly authorized by all
necessary action, and do not contravene any provision of the
Guarantors charter, partnership agreement, operating
agreement or similar organizational documents, or any applicable
law or contractual restriction binding on the Guarantor or its
assets; and the Person executing and delivering this Limited
Guarantee on behalf of the Guarantor is duly authorized to do so;
(b) all consents, approvals, authorizations, permits of,
filings with and notifications to, any governmental entity
necessary for the due execution, delivery and performance of
this Limited Guarantee by the Guarantor have been obtained or
made and all conditions thereof have been duly complied with,
and no other action by, and no notice to or filing with, any
governmental entity is required in connection with the
execution, delivery or performance of this Limited Guarantee;
(c) this Limited Guarantee constitutes a legal, valid and
binding obligation of the Guarantor enforceable against the
Guarantor in accordance with its terms, subject to (i) the
effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar applicable laws
affecting creditors rights generally, and
(ii) general equitable principles (whether considered in a
proceeding in equity or at law); and
(d) the Guarantor has the financial capacity to pay and
perform its obligations under this Limited Guarantee, and all
funds necessary for the Guarantor to fulfill its obligations
under this Limited Guarantee shall be available to the Guarantor
(or its permitted assignee pursuant to Section 6 hereof)
for so long as this Limited Guarantee shall remain in effect in
accordance with Section 8 hereof.
6.
NO ASSIGNMENT.
Neither this Limited
Guarantee nor any right or obligation hereunder may be assigned
by any party (by operation of law or otherwise) without the
prior written consent of the other party, except that, without
the prior written consent of the Guaranteed Party, this Limited
Guarantee may be assigned, in whole or in part, by the Guarantor
to one or more of its Affiliates or to one or more investment
funds sponsored or managed by the Guarantor or one or more of
its Affiliates;
provided
, that any such assignment will
not release the Guarantor from its obligations hereunder. Any
attempted assignment in violation of this section shall be null
and void.
7.
NOTICES.
All notices, requests,
claims, demands and other communications hereunder shall be
given by the means specified in the Merger Agreement (and shall
be deemed given as specified therein), as follows:
if to the Guarantor:
c/o S.A.C.
Capital Advisors, L.P.
72 Cummings Point Road
Stamford, Connecticut 06902
Attention: General Counsel
Facsimile:
(203) 823-4209
with a copy to (which alone shall not constitute notice):
Simpson Thacher & Bartlett LLP
1999 Avenue of the Stars 29th Floor
Los Angeles, CA 90067
Attention: Daniel Clivner
Facsimile:
(310) 407-7502
If to the Guaranteed Party, as provided in the Merger Agreement.
8.
CONTINUING GUARANTEE.
This Limited
Guarantee may not be revoked or terminated and shall remain in
full force and effect and shall be binding on the Guarantor, its
successors and permitted assigns until the Obligations have been
paid in full. Notwithstanding the foregoing, this Limited
Guarantee shall terminate and the Guarantor shall have no
further obligations under this Limited Guarantee as of the
earliest of (i) the Closing in accordance with the terms of
the Merger Agreement, including payment of the Merger
Consideration, (ii) the valid termination of the Merger
Agreement in accordance with its terms under circumstances set
forth in the Merger
B-3
Agreement in which Buyer would not be obligated to pay the Buyer
Termination Fee and (iii) the payment to the Guaranteed
Party by any combination of Buyer
and/or
the
Guarantor of the full amount of the Obligations. Notwithstanding
any other term or provision of this Limited Guarantee, in the
event that the Guaranteed Party or any of its Affiliates asserts
in any litigation or other proceeding that the provisions of
Section 1 hereof limiting the Guarantors liability to
the Cap or any other provisions of this Limited Guarantee are
illegal, invalid or unenforceable in whole or in part, or
asserting any theory of liability against the Guarantor or any
Non-Recourse Party with respect to the transactions contemplated
by the Merger Agreement other than liability of the Guarantor
under this Limited Guarantee (as limited by the provisions of
Section 1) or under the Confidentiality Agreement,
then (x) the obligations of the Guarantor under this
Limited Guarantee shall terminate
ab initio
and shall
thereupon be null and void, (y) if the Guarantor has
previously made any payments under this Limited Guarantee, it
shall be entitled to recover such payments from the Guaranteed
Party, and (z) neither the Guarantor, nor any Non-Recourse
Parties shall have any liability to the Guaranteed Party or any
of its Affiliates with respect to the Equity Commitment Letter,
the Merger Agreement or the transactions contemplated by the
Merger Agreement or under this Limited Guarantee.
9.
NO RECOURSE.
Notwithstanding anything
that may be expressed or implied in this Limited Guarantee or
any document or instrument delivered in connection herewith, by
its acceptance of the benefits of this Limited Guarantee, the
Guaranteed Party covenants, agrees and acknowledges that no
Person other than the Guarantor has any obligation hereunder and
that, notwithstanding that the Guarantor
and/or
certain investment managers, managers or general partners of it
or its Affiliates may be partnerships or limited liability
companies, the Guaranteed Party has no right of recovery under
this Limited Guarantee, or any claim based on such obligations
against, and no personal liability shall attach to, the former,
current or future equity holders, controlling persons,
directors, officers, employees, agents, Affiliates (other than
the Guarantor or any assignee under
Section 6) including, for the avoidance of doubt,
S.A.C. Private Capital Group, LLC, members, managers or general
or limited partners of the Guarantor or Buyer, or any former,
current or future equity holder, controlling person, director,
officer, employee, general or limited partner, member, manager,
Affiliate (other than the Guarantor or any assignee under
Section 6) or agent of any of the foregoing
(collectively, each of the foregoing but not including the
Buyer, the Transitory Subsidiary or their respective assignees
themselves, a
Non-Recourse Party
), through
Buyer or otherwise, whether by or through attempted piercing of
the corporate veil, by or through a claim by or on behalf of
Buyer against any Non-Recourse Party (including a claim to
enforce the Equity Commitment Letter), by the enforcement of any
assessment or by any legal or equitable proceeding, by virtue of
any statute, regulation or applicable law, or otherwise, and the
Guaranteed Party further covenants, agrees and acknowledges that
the only rights of recovery that the Guaranteed Party has in
respect of the Equity Commitment Letter, the Merger Agreement or
the transactions contemplated thereby against any Non-Recourse
Party are its rights (i) to recover from the Guarantor (but
not any Non-Recourse Party) under and to the extent expressly
provided in this Limited Guarantee and subject to the Cap and
the other limitations described herein and (ii) under the
Confidentiality Agreement. The Guaranteed Party acknowledges and
agrees that Buyer has no assets other than certain contract
rights and cash in a
de minimis
amount and that no
additional funds are expected to be contributed to Buyer unless
and until the Closing occurs. Other than with respect to a claim
brought under the Confidentiality Agreement, recourse against
the Guarantor under and pursuant to the terms of this Limited
Guarantee shall be the sole and exclusive remedy of the
Guaranteed Party and all of its Affiliates against the Guarantor
and the Non-Recourse Parties in respect of any liabilities or
obligations arising under, or in connection with, the Equity
Commitment Letter, the Merger Agreement or the transactions
contemplated thereby, including by piercing of the corporate
veil or a claim by or on behalf of Buyer. The Guaranteed Party
hereby covenants and agrees that it shall not institute, and it
shall cause its Affiliates not to institute, any proceeding or
bring any other claim arising under, or in connection with, the
Equity Commitment Letter, the Merger Agreement or the
transactions contemplated thereby against the Guarantor or any
Non-Recourse Party except for claims against the Guarantor under
this Limited Guarantee and claims under the Confidentiality
Agreement. Nothing set forth in this Limited Guarantee shall
confer or give or shall be construed to confer or give to any
Person other than the Guaranteed Party (including any Person
acting in a representative capacity) any rights or remedies
against any Person including the Guarantor, except as expressly
set forth herein.
10.
GOVERNING LAW; JURISDICTION.
This
Limited Guarantee shall be governed by and construed in
accordance with the internal laws of the State of Delaware
without giving effect to any choice or conflict of law provision
or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of
B-4
laws of any jurisdictions other than those of the State of
Delaware. Each of the parties to this Limited Guarantee
(a) consents to submit itself to the personal jurisdiction
of the Court of Chancery of the State of Delaware in any action
or proceeding arising out of or relating to this Limited
Guarantee, (b) agrees that all claims in respect of such
action or proceeding may be heard and determined only in such
court, (c) agrees that it shall not attempt to deny or
defeat such personal jurisdiction by motion or other request for
leave from such court, (d) agrees not to bring any action
or proceeding arising out of or relating to this Limited
Guarantee in any other court, and (e) agrees that service
of process upon such party in any action or proceeding shall be
effective under any manner permitted under the laws of the State
of Delaware. Each of the parties hereto waives any defense of
inconvenient forum to the maintenance of any such action or
proceeding so brought and waives any bond, surety or other
security that might be required of any other party with respect
thereto.
11.
WAIVER OF JURY TRIAL.
EACH PARTY
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS LIMITED GUARANTEE IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS LIMITED GUARANTEE.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS
WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS LIMITED GUARANTEE BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS EXPRESSED ABOVE.
12.
COUNTERPARTS.
This Limited Guarantee
may be executed in any number of counterparts (including by
facsimile and via email by .pdf delivery), each such counterpart
when executed being deemed to be an original instrument, and all
such counterparts shall together constitute one and the same
agreement.
13.
NO THIRD PARTY BENEFICIARIES.
Except
as provided in Section 9, the parties hereby agree that
their respective representations, warranties and covenants set
forth herein are solely for the benefit of the other party
hereto and its successors and permitted assigns, in accordance
with and subject to the terms of this Limited Guarantee, and
this Limited Guarantee is not intended to, and does not, confer
upon any Person other than the parties hereto and their
respective successors and permitted assigns any rights or
remedies hereunder, including the right to rely upon the
representations and warranties set forth herein.
14.
CONFIDENTIALITY.
This Limited
Guarantee shall be treated as confidential and is being provided
to the Guaranteed Party solely in connection with the Merger.
This Limited Guarantee may not be used, circulated, quoted or
otherwise referred to in any document by the Guaranteed Party or
its Affiliates except with the prior written consent of the
Guarantor in each instance;
provided
that no such written
consent is required for any disclosure of the existence of this
Limited Guarantee to the legal, financial and accounting
advisors to the Guaranteed Party, or to the extent required by
applicable law, by the applicable rules of any national
securities exchange, in connection with any SEC filing relating
to the Merger or in connection with any litigation relating to
the Merger, the Merger Agreement and the transactions
contemplated thereby and hereby.
15.
MISCELLANEOUS.
(a) This Limited Guarantee contains the entire agreement
between the parties relative to the subject matter hereof and
supersedes all prior agreements and undertakings between the
parties with respect to the subject matter hereof. No amendment,
modification or waiver of any provision hereof shall be
enforceable unless approved by the Guaranteed Party and the
Guarantor in writing.
(b) Any term or provision hereof that is prohibited or
unenforceable in any situation in the
agreed-upon
jurisdiction shall be ineffective solely to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof;
provided
,
however
,
that this Limited Guarantee may not be enforced without giving
effect to the limitation of the amount payable hereunder to the
Cap provided in Section 1 hereof and the provisions of
Sections 8 and 9 and this Section 15(b).
B-5
(c) When a reference is made in this Limited Guarantee to a
Section, such reference shall be to a Section of this Limited
Guarantee unless otherwise indicated. The headings contained in
this Limited Guarantee are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Limited Guarantee. Whenever the words include,
includes or including are used in this
Limited Guarantee, they shall be deemed to be followed by the
words without limitation. The words
hereof, herein and hereunder
and words of similar import when used in this Limited Guarantee
shall refer to this Limited Guarantee as a whole and not to any
particular provision of this Limited Guarantee. The definitions
contained in this Limited Guarantee are applicable to the
singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such
term. References to a person will be interpreted
broadly to include, without limitation, any individual,
corporation, company, group, partnership, limited liability
company, other entity or any governmental representative or
authority, as well as such persons permitted successors
and assigns.
(d) All parties acknowledge that each party and its counsel
have reviewed this Limited Guarantee and that any rule of
construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the
interpretation of this Limited Guarantee.
[Remainder
of page intentionally left blank]
B-6
IN WITNESS WHEREOF, the Guarantor has caused this Limited
Guarantee to be duly executed and delivered as of the date first
written above.
GUARANTOR:
S.A.C. CAPITAL MANAGEMENT, LLC
Name:
[Signature
Page to Limited Guarantee]
IN WITNESS WHEREOF, the Guaranteed Party has caused this Limited
Guarantee to be duly executed and delivered as of the date first
written above.
GUARANTEED PARTY:
AIRVANA, INC.
Name:
[Signature
Page to Limited Guarantee]
EXHIBIT C
TERMINATION
AGREEMENT
This
TERMINATION AGREEMENT
(this
Termination
Agreement
) is entered into as of
[ ]
[ ],
[ ],
by and among Airvana, Inc., a Delaware corporation (the
Company
), and the undersigned parties
(each, a
Releasor
).
WHEREAS
, the Company, 72 Mobile Holdings, LLC, a Delaware
limited liability company (
Buyer
), and
72 Mobile Acquisition Corp., a Delaware corporation and wholly
owned subsidiary of Buyer (
Transitory
Subsidiary
), are parties to that certain Agreement
and Plan of Merger, dated as of December 17, 2009 (the
Merger Agreement
);
WHEREAS
, each Releasor and the stockholders of the
Company will receive a significant financial benefit in
connection with the consummation of the transactions
contemplated by the Merger Agreement;
WHEREAS
, each Releasor is a party to the Third Amended
and Restated Investor Rights Agreement, dated June 6, 2007
(the
Investor Rights Agreement
),
between or among such Releasor, on the one hand, and the
Company, on the other hand; and
WHEREAS
, Section 2.7(b)(9) of the Interim Investors
Agreement, dated as of December 17, 2009, the (the
Interim Investors Agreement
) by and
among the Buyer and Transitory Subsidiary, and the other parties
thereto, and Section 6.15 of the Merger Agreement,
contemplate that each Releasor and the Company shall execute and
deliver this Termination Agreement.
NOW, THEREFORE
, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements
herein contained and for other good and valuable consideration,
the adequacy, receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, the parties
hereto hereby agree as follows:
1.
Definitions
. Capitalized terms used
but not defined in this Termination Agreement shall have the
meanings ascribed thereto in the Merger Agreement.
2.
Termination of the Investor Rights
Agreement
. Each of the Company and the Releasors
hereby agrees that the Investor Rights Agreement is hereby
amended such that it shall automatically terminate and be of no
further force or effect and that no rights thereunder shall
survive, effective as of immediately prior to the Effective Time.
3.
Release
. For good and valuable
consideration, the receipt and legal sufficiency of which is
acknowledged by each Releasor, each Releasor (on its own behalf
and on behalf of its Affiliates, successors, assigns, heirs,
executors, attorneys and agents), effective as of the Effective
Time, releases, waives and discharges each of the Company and
its Affiliates and their respective officers, directors,
stockholders, partners, members, agents, successors and assigns
(collectively, the
Released Persons
)
from any and all causes of action, debts, sums of money,
covenants, agreements, promises, damages, judgments, claims and
demands whatsoever (including those sounding in contract or
tort, in each case, whether current or prospective), fees, costs
and losses of any kind whatsoever (whether direct, indirect,
consequential, incidental or otherwise), known or unknown, in
its own right or derivatively, in law or equity (collectively,
the
Claims
), that in any way arise
from or out of, are based upon, or relate to the Investor Rights
Agreement, and any Claims that may have been brought thereunder.
This Section 3 is for the benefit of the Released Persons
and shall be enforceable by any of them directly against each
Releasor. With respect to such Claims, each Releasor hereby
expressly waives any and all rights conferred upon him, her or
it by any statute or rule of law which provides that a release
does not extend to claims which the claimant does not know or
suspect to exist in his, her or its favor at the time of
executing the release, which if known by him, her or it would
have materially affected his, her or its settlement with the
released party.
4.
Representations and Warranties.
Each
party hereto represents and warrants to the other parties hereto
that: (i) it has the requisite entity power and authority,
or if an individual, legal capacity, to enter into and perform
its obligations under this Termination Agreement; (ii) the
execution, delivery and performance of this Termination
Agreement have been duly and validly authorized; and
(iii) this Termination Agreement has been duly and validly
executed and delivered by each party hereto and constitutes a
valid and binding agreement of such party, enforceable in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance,
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reorganization, moratorium and other similar laws relating to or
affecting creditors rights generally, general equitable
principles (whether considered in a proceeding in equity or at
law) and any implied covenant of good faith and fair dealing.
The Releasors hereby represent to the Company that such
Releasors hold a majority of the shares of Common Stock (as
defined in the Investor Rights Agreement) issued or issuable
upon conversion of the Registrable Shares (as defined in the
Investor Rights Agreement) by Preferred Investors (as defined in
the Investor Rights Agreement) and that the consent of no other
person other than the Company is required to amend the Investor
Rights Agreement even though all parties to the Investor Rights
Agreement will be affected by the execution of this Termination
Agreement.
5.
Termination.
Notwithstanding any
provision in this Termination Agreement to the contrary, in the
event that the Merger Agreement is terminated pursuant to the
terms thereof, this Termination Agreement shall automatically
terminate and shall be null and void.
6.
Amendment; Waiver.
This Termination
Agreement may not be amended other than in an instrument in
writing signed by all of the parties hereto and Buyer and may
not be waived other than in an instrument in writing signed by
the party granting such waiver and Buyer.
7.
Successors.
This Termination Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors.
8.
Counterparts.
This Termination
Agreement may be executed in one or more counterparts, which
when taken together shall constitute one and the same agreement.
9.
Severability.
Any term or provision of
this Termination Agreement which is invalid or unenforceable in
any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
provisions of this Termination Agreement in any other
jurisdiction. If any provision of this Termination Agreement is
so broad as to be unenforceable, such provision shall be
interpreted to be only as broad as is enforceable.
10.
Third Party Beneficiary.
Buyer is a
third party beneficiary to this Agreement and has the right to
enforce this Agreement directly.
11.
Governing Law; Submission to
Jurisdiction.
This Termination Agreement shall be
governed by and construed in accordance with the internal laws
of the State of Delaware without giving effect to any choice or
conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the
application of laws of any jurisdictions other than those of the
State of Delaware. Each of the parties to this Termination
Agreement (a) consents to submit itself to the personal
jurisdiction of the Court of Chancery of the State of Delaware
in any action or proceeding arising out of or relating to this
Termination Agreement, (b) agrees that all claims in
respect of such action or proceeding may be heard and determined
only in such court, (c) agrees that it shall not attempt to
deny or defeat such personal jurisdiction by motion or other
request for leave from such court, and (d) agrees not to
bring any action or proceeding arising out of or relating to
this Termination Agreement in any other court. Each of the
parties hereto waives any defense of inconvenient forum to the
maintenance of any such action or proceeding so brought and
waives any bond, surety or other security that might be required
of any other party with respect thereto.
12.
Waiver of Jury Trial.
EACH PARTY
HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS TERMINATION AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
TERMINATION AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY.
13.
Specific Performance.
The parties
hereto agree that irreparable damage would occur in the event
any provision of this Termination Agreement was not performed in
accordance with the terms hereof and that the parties hereto,
including Buyer as a third party beneficiary, shall be entitled
to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
[
Remainder of Page Left Blank Intentionally
]
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IN WITNESS WHEREOF, the undersigned have caused this Termination
Agreement to be executed as of the date first written above.
COMPANY:
[ ]
RELEASORS:
[ ]
[ ]
[ ]
[
Signature Page to Termination Agreement
]
ANNEX B
Opinion of Goldman, Sachs & Co.
PERSONAL AND CONFIDENTIAL
December 17, 2009
Special Committee of the Board of Directors
Board of Directors
Airvana, Inc.
19 Alpha Road
Chelmsford, MA 01824
Gentlemen:
You have requested our opinion as to the fairness from a financial point of view to the holders
(other than holders who are parties to the Interim Investors Agreement and Rollover Commitment
Letters (each as defined in the Agreement (as defined below)) (such holders, the Excluded
Holders)) of the outstanding shares of common stock, par value $0.001 per share (the Shares), of
Airvana, Inc. (the Company) of the $7.65 per Share in cash to be paid to such holders pursuant to
the Agreement and Plan of Merger, dated as of December 17, 2009 (the Agreement), by and among 72
Mobile Holdings, LLC (Parent), an affiliate of SAC Capital Advisors, L.P. (SAC), 72 Mobile
Acquisition Corp., a wholly owned subsidiary of Parent, and the Company.
Goldman, Sachs & Co. and its affiliates are engaged in investment banking and financial advisory
services, commercial banking, securities trading, investment management, principal investment,
financial planning, benefits counseling, risk management, hedging, financing, brokerage activities
and other financial and non-financial activities and services for various persons and entities. In
the ordinary course of these activities and services, Goldman, Sachs & Co. and its affiliates may
at any time make or hold long or short positions and investments, as well as actively trade or
effect transactions, in the equity, debt and other securities (or related derivative securities)
and financial instruments (including bank loans and other obligations) of third parties, the
Company and its affiliates, and SAC and its affiliates and portfolio companies or any currency or
commodity that may be involved in the transaction contemplated by the Agreement (the Transaction)
for their own account and for the accounts of their customers. We have acted as financial advisor
to the Special Committee of the Board of Directors of the Company (the Special Committee) in
connection with, and have participated in certain of the negotiations leading to, the Transaction.
We expect to receive fees for our services in connection with the Transaction, the principal
portion of which is contingent upon consummation of the Transaction, and the Company has agreed to
reimburse our expenses arising, and indemnify us against certain liabilities that may arise, out of
our engagement. We also have provided certain investment banking and other financial services to
SAC and its affiliates and portfolio companies from time to time, including having acted as
financial advisor to a consortium of financial sponsors, including SAC, in its acquisition of
Laureate Education Inc. in August 2007. We also may provide investment banking and other financial
services to the Company and its affiliates and SAC and its affiliates and portfolio companies in
the future. In connection with the above-described services we have received, and may receive,
compensation. Affiliates of Goldman, Sachs & Co. may co-invest with SAC and its affiliates, and may
invest in limited partnership units of affiliates of SAC in the future.
In connection with this opinion, we have reviewed, among other things, the Agreement; annual
reports to stockholders and Annual Reports on Form 10-K of the Company for the two fiscal years
ended December 31, 2008; the Companys Registration Statement on Form S-1, including the prospectus
contained therein dated April 19, 2007; certain interim reports to stockholders and Quarterly
Reports on Form 10-Q of the Company; certain other communications from the Company to its
stockholders; certain publicly available research analyst reports for the Company; and certain
internal financial analyses and forecasts for the Company prepared by its management, as approved
for our use by the Company, including the Company managements Base Case Forecast (Base Case
Forecast). We also have held discussions with members of the senior management of the Company
regarding their assessment of the past and current business operations, financial condition and
future prospects of the Company. In addition, we have reviewed the reported price and trading
activity for the Shares, compared certain financial and stock market information for the Company
with similar information for certain other companies the securities of which are publicly traded,
reviewed the financial terms of certain recent business combinations in the communications
technology industry specifically and in other industries generally and performed such other studies
and analyses, and considered such other factors, as we considered appropriate.
B-1
For purposes of rendering this opinion, we have relied upon and assumed, without assuming any
responsibility for independent verification, the accuracy and completeness of all of the financial,
legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by
us, and we do not assume any liability for any such information. In that regard, we have assumed
with your consent that the Base Case Forecast has been reasonably prepared on a basis reflecting
the best currently available estimates and judgments of the management of the Company. In
addition, we have not made an independent evaluation or appraisal of the assets and liabilities
(including any contingent, derivative or off-balance-sheet assets and liabilities) of the Company
or any of its subsidiaries and we have not been furnished with any such evaluation or appraisal.
We have assumed that all governmental, regulatory or other consents and approvals necessary for the
consummation of the Transaction will be obtained without any adverse effect on the expected
benefits of the Transaction in any way meaningful to our analysis. We also have assumed that the
Transaction will be consummated on the terms set forth in the Agreement, without the waiver or
modification of any term or condition the effect of which would be in any way meaningful to our
analysis. We are not expressing any opinion as to the impact of the Transaction on the solvency or
viability of the Company or Parent or the ability of the Company or Parent to pay its obligations
when they come due. Our opinion does not address any legal, regulatory, tax or accounting matters.
Our opinion does not address the underlying business decision of the Company to engage in the
Transaction, or the relative merits of the Transaction as compared to any strategic alternatives
that may be available to the Company. This opinion addresses only the fairness from a financial
point of view, as of the date hereof, of the $7.65 per Share in cash to be paid to the holders
(other than the Excluded Holders) of Shares pursuant to the Agreement. We do not express any view
on, and our opinion does not address, any other term or aspect of the Agreement or Transaction or
any term or aspect of any other agreement or instrument contemplated by the Agreement or entered
into or amended in connection with the Transaction, including, without limitation, the fairness of
the Transaction to, or any consideration received in connection therewith by, the holders of any
other class of securities, creditors, or other constituencies of the Company; nor as to the
fairness of the amount or nature of any compensation to be paid or payable to any of the officers,
directors or employees of the Company, or class of such persons in connection with the Transaction,
whether relative to the $7.65 per Share in cash to be paid to the holders (other than the Excluded
Holders) of Shares pursuant to the Agreement or otherwise. Our opinion is necessarily based on
economic, monetary, market and other conditions as in effect on, and the information made available
to us as of, the date hereof and we assume no responsibility for updating, revising or reaffirming
this opinion based on circumstances, developments or events occurring after the date hereof. Our
advisory services and the opinion expressed herein are provided for the information and assistance
of the Special Committee in connection with its consideration of the Transaction and such opinion
does not constitute a recommendation as to how any holder of Shares should vote with respect to
such Transaction or any other matter. This opinion has been approved by a fairness committee of
Goldman, Sachs & Co.
Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the $7.65
per Share in cash to be paid to the holders (other than the Excluded Holders) of Shares pursuant to
the Agreement is fair from a financial point of view to such holders.
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Very truly yours,
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/s/ GOLDMAN, SACHS & CO.
(GOLDMAN, SACHS & CO.)
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B-2
ANNEX C
Section 262 of the General Corporation Law of the State of Delaware
§ 262. Appraisal rights.
(a) Any stockholder of a corporation of this State who holds shares of stock on the date of
the making of a demand pursuant to subsection (d) of this section with respect to such shares, who
continuously holds such shares through the effective date of the merger or consolidation, who has
otherwise complied with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be
entitled to an appraisal by the Court of Chancery of the fair value of the stockholders shares of
stock under the circumstances described in subsections (b) and (c) of this section. As used in this
section, the word stockholder means a holder of record of stock in a stock corporation and also a
member of record of a nonstock corporation; the words stock and share mean and include what is
ordinarily meant by those words and also membership or membership interest of a member of a
nonstock corporation; and the words depository receipt mean a receipt or other instrument issued
by a depository representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series of stock of a
constituent corporation in a merger or consolidation to be effected pursuant to § 251 (other than a
merger effected pursuant to § 251(g) of this title), § 252, § 254, § 257, § 258, § 263 or § 264 of
this title:
(1) Provided, however, that no appraisal rights under this section shall be available for the
shares of any class or series of stock, which stock, or depository receipts in respect thereof, at
the record date fixed to determine the stockholders entitled to receive notice of the meeting of
stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a
national securities exchange or (ii) held of record by more than 2,000 holders; and further
provided that no appraisal rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its approval the vote of the
stockholders of the surviving corporation as provided in § 251(f) of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section
shall be available for the shares of any class or series of stock of a constituent corporation if
the holders thereof are required by the terms of an agreement of merger or consolidation pursuant
to §§ 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from such merger or
consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in respect thereof, which
shares of stock (or depository receipts in respect thereof) or depository receipts at the effective
date of the merger or consolidation will be either listed on a national securities exchange or held
of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts described in the
foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional
shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of
this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger
effected under § 253 of this title is not owned by the parent corporation immediately prior to the
merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
C-1
(c) Any corporation may provide in its certificate of incorporation that appraisal rights
under this section shall be available for the shares of any class or series of its stock as a
result of an amendment to its certificate of incorporation, any merger or consolidation in which
the corporation is a constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a provision, the procedures
of this section, including those set forth in subsections (d) and (e) of this section, shall apply
as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are provided under this
section is to be submitted for approval at a meeting of stockholders, the corporation, not less
than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record
date for notice of such meeting with respect to shares for which appraisal rights are available
pursuant to subsection (b) or (c) hereof of this section that appraisal rights are available for
any or all of the shares of the constituent corporations, and shall include in such notice a copy
of this section. Each stockholder electing to demand the appraisal of such stockholders shares
shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a
written demand for appraisal of such stockholders shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such stockholders shares. A proxy or vote against the
merger or consolidation shall not constitute such a demand. A stockholder electing to take such
action must do so by a separate written demand as herein provided. Within 10 days after the
effective date of such merger or consolidation, the surviving or resulting corporation shall notify
each stockholder of each constituent corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of the date that the merger or
consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to § 228 or § 253 of this title, then
either a constituent corporation before the effective date of the merger or consolidation or the
surviving or resulting corporation within 10 days thereafter shall notify each of the holders of
any class or series of stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights are available for any or
all shares of such class or series of stock of such constituent corporation, and shall include in
such notice a copy of this section. Such notice may, and, if given on or after the effective date
of the merger or consolidation, shall, also notify such stockholders of the effective date of the
merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the
date of mailing of such notice, demand in writing from the surviving or resulting corporation the
appraisal of such holders shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder intends thereby to demand
the appraisal of such holders shares. If such notice did not notify stockholders of the effective
date of the merger or consolidation, either (i) each such constituent corporation shall send a
second notice before the effective date of the merger or consolidation notifying each of the
holders of any class or series of stock of such constituent corporation that are entitled to
appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or
resulting corporation shall send such a second notice to all such holders on or within 10 days
after such effective date; provided, however, that if such second notice is sent more than 20 days
following the sending of the first notice, such second notice need only be sent to each stockholder
who is entitled to appraisal rights and who has demanded appraisal of such holders shares in
accordance with this subsection. An affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that is required to give either notice that such notice has been
given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For
purposes of determining the stockholders entitled to receive either notice, each constituent
corporation may fix, in advance, a record date that shall be not more than 10 days prior to the
date the notice is given, provided, that if the notice is given on or after the effective date of
the merger or consolidation, the record date shall be such effective date. If no record date is
fixed and the notice is given prior to the effective date, the record date shall be the close of
business on the day next preceding the day on which the notice is given.
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(e) Within 120 days after the effective date of the merger or consolidation, the surviving or
resulting corporation or any stockholder who has complied with subsections (a) and (d) of this
section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal
proceeding by filing a petition in the Court of Chancery demanding a determination of the value of
the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after
the effective date of the merger or consolidation, any stockholder who has not commenced an
appraisal proceeding or joined that proceeding as a named party shall have the right to
withdraw such stockholders demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger or consolidation,
any stockholder who has complied with the requirements of subsections (a) and (d) of this section
hereof, upon written request, shall be entitled to receive from the corporation surviving the
merger or resulting from the consolidation a statement setting forth the aggregate number of shares
not voted in favor of the merger or consolidation and with respect to which demands for appraisal
have been received and the aggregate number of holders of such shares. Such written statement shall
be mailed to the stockholder within 10 days after such stockholders written request for such a
statement is received by the surviving or resulting corporation or within 10 days after expiration
of the period for delivery of demands for appraisal under subsection (d) of this section hereof,
whichever is later. Notwithstanding subsection (a) of this section, a person who is the beneficial
owner of shares of such stock held either in a voting trust or by a nominee on behalf of such
person may, in such persons own name, file a petition or request from the corporation the
statement described in this subsection.
(f) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be
made upon the surviving or resulting corporation, which shall within 20 days after such service
file in the office of the Register in Chancery in which the petition was filed a duly verified list
containing the names and addresses of all stockholders who have demanded payment for their shares
and with whom agreements as to the value of their shares have not been reached by the surviving or
resulting corporation. If the petition shall be filed by the surviving or resulting corporation,
the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the hearing of such
petition by registered or certified mail to the surviving or resulting corporation and to the
stockholders shown on the list at the addresses therein stated. Such notice shall also be given by
1 or more publications at least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as the Court deems
advisable. The forms of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the stockholders who have
complied with this section and who have become entitled to appraisal rights. The Court may require
the stockholders who have demanded an appraisal for their shares and who hold stock represented by
certificates to submit their certificates of stock to the Register in Chancery for notation thereon
of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such
direction, the Court may dismiss the proceedings as to such stockholder.
(h) After the Court determines the stockholders entitled to an appraisal, the appraisal
proceeding shall be conducted in accordance with the rules of the Court of Chancery, including any
rules specifically governing appraisal proceedings. Through such proceeding the Court shall
determine the fair value of the shares exclusive of any element of value arising from the
accomplishment or expectation of the merger or consolidation, together with interest, if any, to be
paid upon the amount determined to be the fair value. In determining such fair value, the Court
shall take into account all relevant factors. Unless the Court in its discretion determines
otherwise for good cause shown, interest from the effective date of the merger through the date of
payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal
Reserve discount rate (including any surcharge) as established from time to time during the period
between the effective date of the merger and the date of payment of the judgment. Upon application
by the surviving or resulting corporation or by any stockholder entitled to participate in the
appraisal proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior
to the final determination of the stockholders entitled to an appraisal. Any stockholder whose name
appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of
this section and who has submitted such stockholders certificates of stock to the Register in
Chancery, if such is required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares, together with
interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto.
Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock
forthwith, and the case of holders of shares represented by certificates upon the surrender to the
corporation of the certificates representing such stock. The Courts decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving or resulting
corporation be a corporation of this State or of any state.
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(j) The costs of the proceeding may be determined by the Court and taxed upon the parties as
the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may
order all or a portion of the expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorneys fees and the fees and expenses of
experts, to be charged pro rata against the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no stockholder who has
demanded appraisal rights as provided in subsection (d) of this section shall be entitled to vote
such stock for any purpose or to receive payment of dividends or other distributions on the stock
(except dividends or other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that if no petition for
an appraisal shall be filed within the time provided in subsection (e) of this section, or if such
stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such
stockholders demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as provided in subsection
(e) of this section or thereafter with the written approval of the corporation, then the right of
such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval
of the Court, and such approval may be conditioned upon such terms as the Court deems just;
provided, however that this provision shall not affect the right of any stockholder who has not
commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such
stockholders demand for appraisal and to accept the terms offered upon the merger or consolidation
within 60 days after the effective date of the merger or consolidation, as set forth in subsection
(e) of this section.
(l) The shares of the surviving or resulting corporation to which the shares of such objecting
stockholders would have been converted had they assented to the merger or consolidation shall have
the status of authorized and unissued shares of the surviving or resulting corporation.
C-4
ANNEX D
Information
Regarding Parent, Merger Sub, other Buyer Filing Person and Rollover Stockholders
Important Information Regarding Parent and Merger Sub
72 Mobile Holdings, LLC
72 Mobile Holdings, LLC, which we refer to as Parent, is a newly formed Delaware limited
liability company and its managing member is 72 Mobile Investors, LLC. Information with respect to
72 Mobile Investors, LLC is set forth below. Parent has not engaged
in any business except for activities incident to its formation and
in connection with the transactions contemplated by the merger
agreement. The principal office address of Parent is 72 Cummings
Point Rd., Stamford, Connecticut 06902. Its telephone number is
203-890-2000.
72 Mobile Acquisition Corp.
72 Mobile Acquisition Corp., which we refer to as Merger Sub, is a newly formed Delaware
corporation and a wholly owned subsidiary of Parent. Merger Sub has
not engaged in any business except for activities incident to its
formation and in connection with the transactions contemplated by the
merger agreement. The principal office address of Merger Sub is 72 Cummings
Point Rd., Stamford, Connecticut 06902. Its telephone number is
203-890-2000.
Set forth below for each of the directors and executive officers of 72 Mobile Acquisition
Corp. is his or her title and the five-year employment history of such director and executive
officer. Each person identified below is a citizen of the United States of America.
Peter
Berger
Director, President and Treasurer. Mr. Berger
has been a Managing Director of SAC PCG since 2006. From 1995-1998 and 2000-2006, Mr. Berger, a founding member of Ripplewood,
served as both a Managing Director of Ripplewood and as a Special Senior Advisor to the board of
directors of RHJ International. Prior to joining Ripplewood, Mr. Berger was a senior partner and
global head of the Corporate Finance Group at Arthur Andersen & Co., where he began his career in
1974. From 1989-1991, he served as a Managing Director in investment banking at Bear Stearns
Companies. From 1999-2000, Mr. Berger was Managing Director and Chief Executive Officer of Mediacom
Ventures LLC, a boutique investment advisory firm. He also served as non-executive Chairman of the
Board of Kepner-Tregoe, Inc., a management consulting company. Mr. Berger has a B.Sc. from Boston
University and an M.B.A. from Columbia University Graduate School of Business. Mr. Bergers
business address is c/o SAC PCG, 540 Madison Ave.,
9
th
Floor, New York, NY 10022. Mr. Berger serves on the board of
directors of MedQuist Inc. and CBay Systems Holdings Ltd.
Peter
Nussbaum
Director, Vice President and Secretary.
Mr. Nussbaum is the General Counsel of S.A.C. Capital Advisors,
L.P. (Advisors LP), a Delaware limited partnership
engaged in the business of private investment management. Mr.
Nussbaum has served in this capacity since January 1, 2009 for
Advisors LP and, prior to January 1, 2009, for its predecessor,
S.A.C. Capital Advisors, LLC. Mr.
Nussbaums business address is c/o Advisors LP, 72 Cummings Point Rd., Stamford,
Connecticut 06902.
Important
Information Regarding the other Buyer Filing Person
72 Mobile Investors, LLC
72 Mobile Investors, LLC is a newly formed Delaware limited liability company formed in
connection with the transactions contemplated by the merger
agreement. 72 Mobile Investors, LLC has not engaged in any business
except for activities incident to its formation and in connection
with the transactions contemplated by the merger agreement.
The principal business address and telephone number for 72 Mobile Investors, LLC
is 72 Cummings Point Rd., Stamford, Connecticut 06902, (203) 890-2000.
During the last five years, none of Parent, Merger Sub, 72 Mobile Investors, LLC or any of the
executive officers or directors of Merger Sub described above have been (i) convicted in a criminal
proceeding (excluding traffic violations and similar misdemeanors) or (ii) a party to any judicial
or administrative proceeding (except for matters that were dismissed without sanction or
settlement) that resulted in a judgment, decree or final order enjoining such person from future
violations of, or prohibiting activities subject to, federal or state securities laws, or a finding
of any violation of federal or state securities laws.
Important Information Regarding the Rollover Stockholders
Randall S. Battat, 50 President and Chief Executive Officer and director since June 2000.
Prior to joining Airvana, Mr. Battat was employed by Motorola, Inc., most recently as Senior Vice
President and General Manager, Internet and Networking Group. Prior to joining Motorola, Mr.
Battat held senior management positions at Apple,
Inc. Mr. Battats principal business address is c/o Airvana, Inc., 19 Alpha Road, Chelmsford,
Massachusetts 01824, telephone number 978-250-3000. Mr. Battat is a citizen of the United States.
D-1
Vedat Eyuboglu, 54 Vice President, Chief Technical Officer since March 2000 and director from
March 2000 until May 2008. Prior to co-founding Airvana, Dr. Eyuboglu held several senior
management and technology positions at Motorola, Inc. Dr. Eyuboglus principal business address is
c/o Airvana, Inc., 19 Alpha Road, Chelmsford, Massachusetts 01824, telephone number 978-250-3000.
Dr. Eyuboglu is a citizen of the United States.
Sanjeev Verma, 46 Vice President, Femto Business and Corporate Development since April 2008,
Vice President of Marketing and Business Development from March 2000 until April 2008 and director
since March 2000. Prior to co-founding Airvana, Mr. Verma held several management and product
development positions at Motorola, Inc. Mr. Vermas principal business address is c/o Airvana,
Inc., 19 Alpha Road, Chelmsford, Massachusetts 01824, telephone number 978-250-3000. Mr. Verma is
a citizen of the United States.
During
the last five years, none of the Rollover Stockholders described above has been a party to
any judicial or administrative proceeding (except for matters that were dismissed without sanction
or settlement) that resulted in a judgment or decree or final order enjoining the person from
future violations of, or prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws. During the last five years, Dr.
Eyuboglu has not been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). During the last ten years, neither of Messrs. Battat or Verma has been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors).
D-2
AIRVANA, INC.
FORM OF PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF
STOCKHOLDERS
TO BE HELD ON
[
], 2010
The undersigned hereby appoints Randall S. Battat, Jeffrey D. Glidden and Peter C. Anastos, and
each of them, with full power of substitution, proxies of the undersigned, to represent the
undersigned and to vote the Common Stock as specified below at the Special Meeting of Stockholders
of Airvana, Inc. to be held on
[
], [
], 2010 at 10:00 a.m., local time, at
the offices of Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston, Massachusetts
02109, and at any postponement or adjournment thereof, upon the following matters, all as more
fully described in the Proxy Statement for said Special Meeting (receipt of which is hereby
acknowledged).
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
THE PROPOSAL TO ADOPT THE MERGER AGREEMENT AND FOR THE PROPOSAL TO ADJOURN THE SPECIAL MEETING,
IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE NOT SUFFICIENT VOTES IN FAVOR OF THE
ADOPTION OF THE MERGER AGREEMENT.
AIRVANA, INC.
(Continued and to be dated and signed on the reverse side.)
Address Change (Mark the corresponding box on the reverse side)
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AIRVANA, INC.
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Two Additional Ways to Submit Your Proxy
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SUBMIT YOUR PROXY BY TELEPHONE OR
INTERNET
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24 Hours a Day 7 Days a Week
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Save your Company money Its Fast and Convenient
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TELEPHONE
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INTERNET
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MAIL
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1-800-662-7232 toll free
1-781-575-2300 outside the
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www.investorvote.com/AIRV
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Mark, sign and date
your proxy card.
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U.S. and Canada (regular fees apply)
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Go to the website address listed above.
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Detach your proxy card.
Return your proxy card
in the postage-paid
envelope provided.
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Use any touch-tone telephone.
Have your proxy card ready.
Follow the simple recorded
instructions.
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Have your proxy card ready.
Follow the simple
instructions that appear
on your computer screen.
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Your telephone or Internet proxy authorizes the named proxies to vote your
shares in the same manner as if you marked, signed and returned your
proxy card. If you have submitted your proxy by telephone or the Internet,
there is no need for you to mail back your proxy.
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1-800-662-7232
CALL TOLL-FREE TO
SUBMIT YOUR PROXY
DETACH PROXY CARD HERE IF YOU ARE NOT SUBMITTING A PROXY BY TELEPHONE OR
INTERNET
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Sign, Date and Return this Proxy Card Promptly Using the
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Enclosed Envelope.
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x
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Votes must be indicated
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(x) in Black or Blue ink.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
1.
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To adopt the Agreement and Plan of
Merger, dated as of December 17, 2009, by and among Airvana, Inc., 72
Mobile Holdings, LLC, a Delaware limited liability company, and 72
Mobile Acquisition Corp., a wholly-owned subsidiary of 72 Mobile
Holdings, LLC, as such agreement may be amended from time to time.
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FOR
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AGAINST
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ABSTAIN
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2.
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To adjourn the special meeting, if
necessary, to solicit additional proxies in the event there are not
sufficient votes in favor of adoption of the merger agreement at the
time of the special meeting.
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FOR
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AGAINST
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ABSTAIN
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To act upon other business as may properly come before the special
meeting and any and all adjourned or postponed sessions thereof.
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FOR
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AGAINST
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ABSTAIN
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Change of Address Mark Here
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Note: Please date and sign this Proxy exactly as name appears. When signing as attorney, trustee,
administrator, executor or guardian, please give your title as such. In the case of joint tenants,
each joint owner should sign.
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Dated:
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Share Owner sign here:
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Co-Owner sign here:
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