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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Otelco Inc | NASDAQ:OTEL | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 11.739 | 11.74 | 11.76 | 0 | 01:00:00 |
Filed by the Registrant ☒
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Filed by a party other than the Registrant ☐
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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 under §240.14a-12
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Sincerely,
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Stephen P. McCall
Chairman of the Board
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1.
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To consider and vote on the proposal to adopt the Agreement and Plan of Merger, dated as of July 26, 2020 (the “Merger Agreement”), by and among Otelco, Future Fiber FinCo, Inc., a Delaware corporation (“Parent”) and Olympus Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”). Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into Otelco, with Otelco continuing as the surviving corporation and a wholly owned subsidiary of Parent (the “Merger”);
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2.
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To consider and vote on the proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to the Company’s named executive officers that is based on or otherwise relates to the Merger Agreement and the transactions contemplated by the Merger Agreement (the “Compensation Proposal”); and
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3.
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To consider and vote on any proposal to adjourn the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement at the Special Meeting (the “Adjournment Proposal”).
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VIA THE INTERNET
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BY TELEPHONE
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BY MAIL
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Visit the website
listed on the proxy
card/voting
instruction form to vote
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Call the telephone
number on the proxy
card/voting
instruction form to vote
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Complete, sign, and
date, and then return
the proxy card/
voting instruction
form in the enclosed
envelope to vote
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By Order of the Board,
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Stephen P. McCall
Chairman of the Board
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•
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the receipt of the Requisite Stockholder Approval;
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•
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the receipt of certain consents from the FCC and certain state public service or public utility commissions, as specified in the Merger Agreement;
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the absence of any Legal Restraint (as defined in the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Termination of the Merger Agreement”);
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the accuracy of the representations and warranties of Otelco in the Merger Agreement, other than representations and warranties relating to the absence of any Company Material Adverse Effect (as defined in the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Representations and Warranties”), subject to certain materiality qualifiers, as of the date of the Merger Agreement (or as of an earlier date, if made as of such earlier date) and as of the date of completion of the Merger as if made at and as of the date of completion of the Merger;
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•
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the receipt, by Parent and Merger Sub, of (i) certain pay-off letters and other documentation required in connection with the repayment of Otelco’s credit facility with CoBank, ACB and the release and termination of any and all related liens, and (ii) the written consent of Regions Bank to the transactions contemplated by the Merger Agreement to the extent required under Otelco’s outstanding loan from Regions Bank under the Paycheck Protection Program established under the Coronavirus Aid, Relief, and Economic Security Act;
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•
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the accuracy of the representations and warranties of Otelco in the Merger Agreement relating to the absence of any Company Material Adverse Effect as of the date of the Merger Agreement and as of the date of completion of the Merger as if made at and as of the date of completion of the Merger;
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•
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the accuracy of the representations and warranties of Parent and Merger Sub in the Merger Agreement, subject to certain materiality qualifiers, as of the date of the Merger Agreement and as of the date of completion of the Merger (or as of an earlier date, if made as of such earlier date) as if made at and as of the date of completion of the Merger;
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•
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the absence of any Company Material Adverse Effect having occurred after the date of the Merger Agreement;
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the performance and compliance in all material respects by Otelco, Parent and Merger Sub of their respective covenants, obligations and conditions required to be performed and complied with by them under the Merger Agreement at or prior to the Effective Time; and
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the delivery of an officer’s certificate by each of Otelco, Parent and Merger Sub certifying that the conditions as described in certain of the preceding bullets have been satisfied.
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the payment by Parent of the $3,450,288 termination fee payable to us in certain circumstances; and
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the reimbursement and indemnification obligations of Parent in connection with the costs and expenses incurred by us in connection with the arrangement of the financing of the Merger, and the out-of-pocket costs and expenses (including attorneys’ fees) reasonably incurred by us in connection with our successful attempt to enforce the Guarantee and/or the Equity Commitment Letter (collectively, the “Reimbursement and Collection Obligations”).
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(i)
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the stockholders will not be entitled to, nor will they receive, any payment for their respective shares of common stock pursuant to the Merger Agreement;
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(ii)
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(A) Otelco will remain an independent public company, (B) the common stock will continue to be listed and traded on the Nasdaq and registered under the Exchange Act and (C) Otelco will continue to file periodic and current reports with the SEC; and
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(iii)
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under certain specified circumstances, Otelco or Parent may be required to pay the other party a termination fee in connection with the termination of the Merger Agreement. For more information, please see the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Termination Fees.”
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•
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The adoption of the Merger Agreement pursuant to which Merger Sub will merge with and into Otelco, and Otelco will become a wholly owned subsidiary of Parent;
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The approval of, on an advisory (non-binding) basis, the Compensation Proposal; and
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The approval of the Adjournment Proposal.
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Vote by Mail: by signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope;
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Vote by Internet: by visiting http://www.proxyvote.com, 24 hours a day, seven days a week, until 11:59 p.m. EDT on October 8, 2020 (have your proxy card in hand when you visit the website);
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Vote by Phone: by calling toll-free (within the U.S. or Canada) 1-800-690-6903 (have your proxy card in hand when you call); or
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Vote at the Special Meeting: by casting your vote at the Special Meeting via the Special Meeting website. There will not be a physical meeting location. Any stockholder of record as of the Record Date can attend the Special Meeting by visiting www.virtualshareholdermeeting.com/OTEL2020, where such stockholders may vote during the Special Meeting. The Special Meeting starts at 10 a.m. Eastern Time. We encourage you to allow ample time for online check-in, which will open at 9:45 a.m. Eastern Time. Please have your 16-digit control number to join the Special Meeting. Instructions on who can attend and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at www.proxyvote.com.
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•
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the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, including a termination under circumstances that could require us to pay a termination fee;
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Parent’s failure to obtain the necessary equity and debt financing or the failure of that financing to be sufficient to complete the Merger and the other transactions contemplated by the Merger Agreement;
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the inability to complete the Merger due to the failure to obtain the adoption and approval of the Merger Agreement by the stockholders or the failure to satisfy other conditions to completion of the Merger, including the receipt of required regulatory approvals, or for any other reason;
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•
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the possibility that alternative acquisition proposals will or will not be made;
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risks that the proposed Merger disrupts current plans and operations, including diversion of management’s attention, and the potential difficulties in employee retention as a result of the Merger;
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the outcome of any legal proceedings, regulatory proceedings or enforcement matters that have been or may be instituted against us or others relating to the Merger Agreement;
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the Merger Agreement’s contractual restrictions on the conduct of our business prior to the completion of the Merger;
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the possible adverse effect on our business and the price of the common stock if the Merger is not consummated in a timely manner or at all;
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the effect of the announcement of the Merger on our business relationships, operating results and business generally, including our ability to retain key employees; and
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the amount of the costs, fees, expenses and charges related to the Merger.
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potential adverse effects of the ongoing global COVID-19 pandemic;
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the strength of the economy;
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continuous competition in the telecommunications industry;
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changes in the regulation of the telecommunications industry;
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the possibility that we fail to meet our broadband deployment obligations and lose part of our A-CAM support;
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our ability to operate subject to the restrictive covenants under our credit facility, which limits our ability to take certain actions;
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implementation of our strategy;
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our ability to integrate new technologies and provide new services in a cost-efficient manner;
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disruptions to our networks and infrastructure;
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our ability to retain key personnel;
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risks associated with our operating activities that are subject to misappropriation, misuse, leakage, falsification and accidental release or loss of information maintained in our information technology systems;
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changes in tax policy;
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the geographic concentration of our business and dependency on regional economic conditions;
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failure to receive approved levels of FCC support; and
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the regulatory environment and other specific factors discussed herein and in other SEC filings by the Company.
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Vote by Mail: by signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope;
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Vote by Internet: by visiting http://www.proxyvote.com, 24 hours a day, seven days a week, until 11:59 p.m. EDT on October 8, 2020 (have your proxy card in hand when you visit the website);
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Vote by Phone: by calling toll-free (within the U.S. or Canada) 1-800-690-6903 (have your proxy card in hand when you call); or
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Vote at the Special Meeting: by casting your vote at the Special Meeting via the Special Meeting website. There will not be a physical meeting location. Any stockholder of record as of the Record Date can attend the Special Meeting by visiting www.virtualshareholdermeeting.com/OTEL2020, where such stockholders may vote during the Special Meeting. The Special Meeting starts at 10 a.m. Eastern Time. We encourage you to allow ample time for online check-in, which will open at 9:45 a.m. Eastern Time. Please have your 16-digit control number to join the Special Meeting. Instructions on who can attend and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at www.proxyvote.com.
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written notice of revocation to our Corporate Secretary at Otelco, Inc., 505 Third Avenue East, Oneonta, Alabama 35121;
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timely submission of a valid, later-dated proxy via mail, the internet or the telephone; or
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attending the Special Meeting and voting at the Special Meeting (your attendance at the Special Meeting will not, by itself, revoke your proxy, so you must vote at the Special Meeting via the Special Meeting website to revoke your proxy).
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1.
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the stockholders will not be entitled to, nor will they receive, any payment for their respective shares of common stock pursuant to the Merger Agreement;
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2.
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(i) Otelco will remain an independent public company, (ii) the common stock will continue to be listed and traded on the Nasdaq and registered under the Exchange Act and (iii) Otelco will continue to file periodic and current reports with the SEC;
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3.
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we anticipate that stockholders will be subject to similar types of risks and uncertainties as those to which they are currently subject, including risks and uncertainties with respect to the Company’s business, prospects and results of operations, as such may be affected by, among other things, the highly competitive industry in which Otelco operates and economic conditions;
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4.
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the price of our common stock may decline significantly, and if that were to occur, it is uncertain when, if ever, the price of our common stock would return to the price at which it trades as of the date of this proxy statement;
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5.
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the Board will continue to evaluate other strategic alternatives but does not currently believe that such alternatives are as beneficial to Otelco and its stockholders as the proposed transaction with Parent; and
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6.
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under certain specified circumstances, Otelco or Parent may be required to pay the other party a termination fee in connection with the termination of the Merger Agreement. For more information, please see the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Termination Fees.”
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the Board’s understanding of the Company’s business, operations, financial condition, earnings, prospects, competitive position and the nature of the industry in which the Company competes;
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the belief that the Merger is more favorable to the stockholders than alternatives to the Merger, which belief was formed based upon a review by the Board, with the assistance of our senior management, our outside legal counsel and Lazard, of potential strategic alternatives available to us, including continuing to operate as a public company;
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the fact that eight potential investors had been sent a process letter asking them to submit a non-binding, final offer regarding the Proposed Capital Raise and that no parties expressed an interest in making an offer related to the Proposed Capital Raise;
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of the parties identified in the immediately preceding bullet point, only one party other than Parent made a proposal to the Company;
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the Board’s belief that the Company’s stand-alone plan involved significant risks in light of the industry and competitive pressures the Company was facing and the Board’s concerns with respect to the risks relating to the Company’s ability to execute on this plan, including the possibility that this plan may not produce the intended results on the targeted timing or at all;
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the Board’s belief that other alternatives to a sale of the entire company, including the Proposed Capital Raise, which alternatives the Board evaluated with the assistance of Lazard and the Company’s outside legal counsel, did not represent a more attractive alternative to a sale in light of, among other factors, the potential risks, rewards and uncertainties associated with those alternatives;
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the fact that the financial, management, and other resources made available to the Company through the Merger will enhance the Company’s services to the benefit of its customers;
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during the “go-shop” period, the Company would be permitted to solicit, initiate, propose or induce the making, submission or announcement of, or encourage, facilitate or assist, any proposal or offer that constituted, or that could constitute, an Acquisition Proposal from a person other than Parent, and that the Company could terminate the Merger Agreement to accept a Superior Proposal from such person as long as the Company complied with certain procedures in the Merger Agreement, as more fully described under the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement”;
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the belief that we could not reasonably expect to obtain more than the Merger Consideration by conducting a wider sale process prior to execution of the Merger Agreement;
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the belief that $11.75 per share merger consideration was the highest price Parent was willing to offer, taking into account the extensive negotiations between the parties;
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the fact that the Merger Consideration is to be paid in cash, which provides immediate value and liquidity to stockholders and allows them to monetize their investment in us in the near future, while avoiding long-term stock market and business risk, including the risks and uncertainties relating to the Company’s prospects (including the prospects described in the management’s forecasts summarized in the section below entitled “—Certain Unaudited Prospective Financial Information”), immediately upon the closing of the Merger;
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the fact that the Merger Consideration represents a premium of approximately 43.3% to the unaffected share price of the Company’s common stock on June 23, 2020;
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the fact that the Merger Consideration represents a premium of approximately 53.2%% to the 20-day volume weighted average price per share of the Company’s common stock as of June 23, 2020, and a premium of approximately 58.1% to our average daily closing stock price during the second quarter of 2020;
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the possibility that the trading price of our common stock would not reach and sustain at least the $11.75 per share to be paid in cash pursuant to the Merger Agreement;
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the fact that, as a public company, we face continuing pressures from investors that may conflict with our long-term strategic plan, creating the risk of disruption and distraction that may reduce value for the stockholders;
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the financial analysis reviewed by Houlihan Lokey with the Board as well as the opinion of Houlihan Lokey verbally rendered to the Board on July 26, 2020 (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion addressed to the Board dated July 26, 2020), as to, as of such date, the fairness, from a financial point of view, to the holders of common stock of the Merger Consideration to be received by such holders in the Merger pursuant to the Merger Agreement, as more fully described in the section of this proxy statement captioned “—Opinion of Houlihan Lokey Capital, Inc.”;
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Oak Hill’s track record in successfully acquiring other companies, consolidated financial strength, industry expertise and track record of investment in critical data service and infrastructure;
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the fact that resolutions approving the Merger Agreement were unanimously approved by the Board, which is comprised of a majority of independent directors who are not affiliated with the Company and are not employees of the Company or any of its subsidiaries;
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•
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the fact that the Merger is not conditioned upon any member of the Company’s management or Board entering into any employment, equity contribution or other agreement or arrangement with the Company or Parent, and that no such agreement or arrangement existed as of the date of the Merger Agreement;
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the risk that pursuing other potential alternatives, including continuing to operate on a stand-alone basis, could have resulted in the loss of an opportunity to consummate a transaction;
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the likelihood that the Merger would be completed, based on, among other things:
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Parent and Merger Sub had obtained the Equity Financing and the Debt Financing for the transactions contemplated by the Merger Agreement, the amount of the Equity Financing, the limited number and nature of conditions to the Equity Financing and the Debt Financing;
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Parent’s interest in and knowledge of our business;
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the fact that the Sochet Stockholders have entered into the Voting Agreement which, unless terminated, obligates them to vote in favor of the Merger Agreement, and at the time of the execution of the Voting Agreement, Sochet had held approximately 49.3% of the outstanding shares of common stock;
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the absence of financing or due diligence conditions to the completion of the Merger;
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the Company’s right to enforce the Guarantee from the Guarantors, which will guarantee the $3,450,288 termination fee payable to the Company in certain circumstances and the Reimbursement and Collection Obligations;
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the fact that Parent would be required to pay the Company the Parent Termination Fee of $3,450,288 if the Merger Agreement is terminated under certain circumstances;
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the Company’s right to specific performance to prevent breaches of the Merger Agreement;
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the Company’s right to specific performance to cause the Equity Financing contemplated by the Equity Commitment Letter to be funded, subject to certain conditions;
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the Company’s right during the “go-shop” period to solicit, initiate, propose or induce the making, submission or announcement of, or encourage, facilitate or assist, any proposal or offer that constituted, or that could constitute, an Acquisition Proposal from a person other than Parent, and that the Company could terminate the Merger Agreement to accept a Superior Proposal from such person or change its recommendation in response to a Superior Proposal as long as the Company complied with certain procedures in the Merger Agreement;
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the right of the Board to change its recommendation in response to an Intervening Event (as defined herein) if the Board determines in good faith (after consultation with its financial advisor and outside legal counsel) that the failure to do so would be inconsistent with its fiduciary duties pursuant to applicable law, subject to certain conditions;
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the negotiations with Parent, which, among other things, resulted in certain better contractual terms than those initially proposed by Parent, including a significantly larger termination fee payable by Parent to us under certain circumstances;
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the availability of appraisal rights under the DGCL to stockholders who comply with all of the required procedures under the DGCL, which allows stockholders to seek appraisal of the “fair value” of their common stock as determined by the Delaware Court of Chancery; and
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the covenants contained in the Merger Agreement obligating each of the parties to use reasonable best efforts to cause the Merger to be consummated.
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the risks and costs to the Company if the Merger does not close in a timely manner or at all, including the potential negative impact on the Company’s ability to retain key employees, the diversion of management and employee attention and the potential disruptive effect on the Company’s day-to-day operations and the Company’s relationships with customers, suppliers and other third parties;
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the risk that the Merger will not occur if the Debt Financing or the Equity Financing, described under “—Financing of the Merger” is not obtained, even though the Merger is not conditioned on the receipt of that financing;
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the restrictions on the conduct of our business prior to the completion of the Merger, which may delay or prevent us from undertaking business opportunities that may arise or any other action we would otherwise take with respect to our operations pending completion of the Merger;
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although we currently expect that the Merger will be consummated, there can be no assurance that all conditions to the parties’ obligations to effect the Merger will be satisfied, and, as a result, the Merger may not be consummated;
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the Debt Commitment Letter expires on the earlier to occur of (i) the date that is the last business day of the thirteenth month after the date of its acceptance by Parent, and (ii) 11:59 p.m. on the date that is five business days after the Termination Date, and either the Company or Parent may, in certain circumstances, terminate the Merger Agreement if the Merger has not been consummated by the Termination Date;
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the significant costs involved in connection with entering into the Merger Agreement and completing the Merger, and the substantial time and effort of management required to complete the Merger;
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the fact that, under the terms of the Merger Agreement, the Company is unable to solicit other Acquisition Proposals after the No-Shop Period Start Date;
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that the current stockholders would not have the opportunity to participate in any of our possible growth and profits following the Merger;
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the Company’s obligation to pay Parent the Company Termination Fee of $1,826,623, if payable in connection with a definitive Alternative Acquisition Agreement entered into with an Excluded Party on or after the date of the Merger Agreement and on or prior to the Cut-Off Date, subject to certain exceptions, or $2,232,539 if payable in all other circumstances;
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the fact that as an all-cash transaction the Merger generally would be taxable to stockholders that were U.S. Holders for U.S. federal income tax purposes, although the Board believed that this was mitigated by the fact that the entire consideration payable in the Merger would be cash, providing a cash amount for the payment of any taxes due;
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the fact that the completion of the Merger would require regulatory clearances and approvals and the satisfaction of certain other closing conditions that are not entirely within the Company’s control, including that no Company Material Adverse Effect has occurred and that there is no Legal Restraint preventing the consummation of the Merger; and
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the risk of litigation in connection with the Merger, and the fact that litigation in connection with transactions such as the Merger is common and potentially costly and distracting to the Company’s directors, management and employees.
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2020E
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2021E
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2022E
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2023E
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2024E
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2025E
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2026E
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2027E
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2028E
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2029E
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($ in millions)
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Revenue
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$60.7
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$58.8
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$57.7
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$57.1
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$56.5
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$56.0
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$55.6
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$55.6
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$55.6
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$55.6
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Gross Profit
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29.2
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27.0
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25.6
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24.6
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23.7
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22.9
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22.1
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21.8
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21.4
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21.1
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Adjusted EBITDA(1)
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19.8
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17.2
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15.7
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14.7
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13.7
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12.8
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11.9
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11.4
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11.0
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10.6
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Capital Expenditures
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8.5
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7.0
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7.1
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8.2
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7.8
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7.7
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7.8
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7.3
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6.0
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3.9
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(1)
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Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items, including legal expenses incurred by the Board and miscellaneous other adjustments.
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1.
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reviewed the execution version of the Merger Agreement dated as of July 26, 2020;
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2.
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reviewed certain publicly available business and financial information relating to the Company that Houlihan Lokey deemed to be relevant;
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3.
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reviewed certain information relating to the historical, current and future operations, financial condition and prospects of the Company made available to Houlihan Lokey by the Company, including financial projections prepared by the management of the Company relating to the Company for the years 2020 through 2029 (see the section of this proxy statement captioned “—Certain Unaudited Prospective Financial Information” regarding the Management Projections);
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4.
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spoken with certain members of the management of the Company and certain representatives and advisors of the Company regarding the business, operations, financial condition and prospects of the Company, the Merger and related matters;
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5.
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compared the financial and operating performance of the Company with that of other public companies that Houlihan Lokey deemed to be relevant;
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6.
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considered publicly available financial terms of certain transactions that Houlihan Lokey deemed to be relevant;
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7.
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reviewed the current and historical market prices and trading volume for the common stock, and the current and historical market prices and trading volume of the publicly traded securities of certain other companies that Houlihan Lokey deemed to be relevant;
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8.
|
considered the results of the third-party solicitation process conducted by the Company; and
|
9.
|
conducted such other financial studies, analyses and inquiries and considered such other information and factors as Houlihan Lokey deemed appropriate.
|
•
|
Enterprise Value — generally, the value as of a specified date of the relevant company’s outstanding equity securities (taking into account outstanding options and other securities convertible, exercisable or exchangeable into or for equity securities of the company) plus the amount of its net debt (the amount of its outstanding indebtedness, capital lease obligations and non-controlling interests less the amount of cash and cash equivalents on its balance sheet).
|
•
|
Adjusted EBITDA — generally, the amount of the relevant company’s earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items, for a specified time period.
|
•
|
Enterprise value as a multiple of estimated Adjusted EBITDA for the most recently completed 12-month period for which financial information has been made public (“LTM”);
|
•
|
Enterprise value as a multiple of estimated Adjusted EBITDA for the next fiscal year for which financial information has not been made public (“NFY”); and
|
•
|
Enterprise value as a multiple of estimated Adjusted EBITDA for the fiscal year following NFY (“NFY+1”).
|
•
|
Alaska Communications Systems Group, Inc.
|
•
|
CenturyLink, Inc.
|
•
|
Consolidated Communications Holdings, Inc.
|
•
|
Shenandoah Telecommunications Company
|
•
|
Telephone and Data Systems, Inc.
|
•
|
WideOpenWest, Inc.
|
|
| |
Enterprise Value/
LTM Adjusted
EBITDA
|
| |
Enterprise Value/
Estimated NFY
Adjusted EBITDA
|
| |
Enterprise Value/
Estimated NFY+1
Adjusted EBITDA
|
Low
|
| |
3.8x
|
| |
3.8x
|
| |
3.8x
|
High
|
| |
7.3x
|
| |
6.6x
|
| |
6.5x
|
Median
|
| |
5.0x
|
| |
5.1x
|
| |
5.2x
|
Mean
|
| |
5.2x
|
| |
5.2x
|
| |
5.2x
|
Date Announced
|
| |
Target
|
| |
Acquiror
|
1/24/2020
|
| |
Cincinnati Bell Inc.
|
| |
Macquarie Infrastructure and Real Assets; MIP V (FCC) AIV, L.P.
|
5/29/2019
|
| |
Western Region Operations of Frontier Communications Corporation
|
| |
Multiple Financial Sponsors
|
4/1/2019
|
| |
Data, Video and Voice Business and Related Assets of Fidelity Communications Co., Inc.
|
| |
Cable One, Inc.
|
7/10/2017
|
| |
Hawaiian Telcom Holdco, Inc.
|
| |
Cincinnati Bell Inc.
|
7/10/2017
|
| |
Metrocast Cablevision of New Hampshire, LLC
|
| |
Atlantic Broadband Finance, LLC
|
5/22/2017
|
| |
WaveDivision Holdings, LLC
|
| |
RCN Telecom Services, LLC
|
4/13/2017
|
| |
Broadview Networks Holdings, Inc.
|
| |
Windstream Holdings, Inc.
|
1/18/2017
|
| |
Rural Broadband Investments, LLC
|
| |
Cable One, Inc.
|
12/5/2016
|
| |
Fairpoint Communications, Inc.
|
| |
Consolidated Communications Holdings, Inc.
|
11/7/2016
|
| |
EarthLink Holdings Corp.
|
| |
Windstream Holdings, Inc.
|
11/2/2016
|
| |
Inteliquent, Inc.
|
| |
Onvoy, LLC
|
10/31/2016
|
| |
Level 3 Communications, Inc.
|
| |
CenturyLink, Inc.
|
Date Announced
|
| |
Target
|
| |
Acquiror
|
8/15/2016
|
| |
RCN Corporation
|
| |
TPG Capital, L.P.
|
2/5/2015
|
| |
Verizon Florida LLC, GTE Southwest Incorporated, and Verizon California Inc. and Related Assets
|
| |
Frontier Communications Corporation
|
11/23/2015
|
| |
Allstream Inc.
|
| |
Zayo Group, LLC
|
|
| |
Transaction Value/
LTM Adjusted EBITDA
|
Low
|
| |
4.3x
|
High
|
| |
13.1x
|
Median
|
| |
6.2x
|
Mean
|
| |
7.8x
|
•
|
the cancelation of outstanding Options at the Effective Time in exchange for a cash payment equal to the product of (i) the Merger Consideration minus the exercise price per share of such Option and (ii) the total number of shares of common stock issuable upon exercise in full of such Options (and Options with an exercise price equal to or greater than the Merger Consideration cancelled for no consideration);
|
•
|
the cancelation of each outstanding RSU at the Effective Time in exchange for a cash payment equal to the product of (i) the Merger Consideration and (ii) the total number of shares of common stock subject to such RSUs; and
|
•
|
the entitlement to the indemnification and insurance benefits in favor of Otelco directors and executive officers, as described in more detail in the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Indemnification and Insurance.”
|
Name
|
| |
Options
(#)
|
| |
RSUs
(#)
|
| |
Amount
($)
|
Named Executive Officers
|
| |
|
| |
|
| |
|
Richard A. Clark
|
| |
100,000
|
| |
N/A
|
| |
126,500.00
|
Curtis L. Garner, Jr.
|
| |
3,500
|
| |
5,607
|
| |
74,737.25
|
Name(1)
|
| |
Cash
($)
|
| |
Equity
($)(3)
|
| |
Perquisites/
Benefits
($)
|
| |
Total
($)
|
Robert J. Souza(2)
|
| |
$0
|
| |
$0
|
| |
$0
|
| |
$0
|
Richard A. Clark
|
| |
$0
|
| |
$126,500.00
|
| |
$0
|
| |
$126,500.00
|
Curtis L. Garner, Jr.
|
| |
$0
|
| |
$74,737.25
|
| |
$0
|
| |
$74,737.25
|
(1)
|
Except for any cash consideration payable to the named executive officers, with respect to outstanding Options and RSUs, as reflected in the table, no additional amounts or benefits are payable to the named executive officers based on or related to the Merger, whether as single trigger benefits or double trigger benefits. Any severance payments payable to Messrs. Clark and Garner pursuant to the terms of their employment agreements are solely conditioned on a qualifying termination of employment without the requirement that there also have occurred a change in control. For a summary of such severance payments payable to Messrs. Clark and Garner, please refer to the section of our most recent annual proxy statement captioned “Executive Compensation—Management Employment and Severance Agreements”.
|
(2)
|
Mr. Souza retired as Chief Executive Officer and resigned as a director effective December 31, 2019. No amounts are payable to Mr. Souza based on or related to the Merger.
|
(3)
|
This column sets forth the total cash consideration payable to Messrs. Clark and Garner in respect of cancellation of their outstanding Options and outstanding RSUs, which for Mr. Clark are 100,000 Options and no RSUs and for Mr. Garner are 3,500 Options and 5,607 RSUs. The amounts in this column are single trigger benefits and are payable to the named executive officers upon consummation of the Merger, whether or not their employment is terminated, and shall be paid as described below under the caption, “Proposal 1: Adoption of the Merger Agreement—Exchange and Payment Procedures”). The total cash consideration in this column payable to Mr. Clark is determined after cancelling 50,000 of his outstanding Options for which the per share exercise price is greater than the Merger Consideration, and multiplying the remaining 50,000 outstanding Options by the excess of the Merger Consideration over the per share exercise price. The total cash consideration in this column payable to Mr. Garner is determined by (i) multiplying his outstanding Options by the excess of the Merger Consideration over the per share exercise price, and (ii) multiplying the total number of his outstanding RSUs by the Merger Consideration.
|
•
|
the payment by Parent of the $3,450,288 termination fee payable to us in certain circumstances; and
|
•
|
the “Reimbursement and Collection Obligations”.
|
•
|
the stockholder must not vote in favor of the proposal to adopt the Merger Agreement;
|
•
|
the stockholder must deliver to Otelco a written demand for appraisal before the vote on the Merger Agreement at the Special Meeting;
|
•
|
the stockholder must continuously hold the shares from the date of making the demand through the Effective Time (a stockholder will lose appraisal rights if the stockholder transfers the shares before the Effective Time); and
|
•
|
the stockholder (or any person who is the beneficial owner of shares of common stock held either in a voting trust or by a nominee on behalf of such person) or the Surviving Corporation must file a petition in the Delaware Court of Chancery requesting a determination of the fair value of the shares within 120 days after the Effective Time. The Surviving Corporation is under no obligation to file any petition and has no present intention of doing so.
|
•
|
stockholders who may be subject to special treatment under U.S. federal income tax laws, such as banks or other financial institutions; tax-exempt organizations; retirement or other tax deferred accounts; S corporations, partnerships or any other entities or arrangements treated as partnerships or pass-through entities for U.S. federal income tax purposes (or an investor in a partnership, S corporation or other pass-through entity); insurance companies; mutual funds; dealers in stocks and securities; traders in securities that elect to use the mark-to-market method of accounting for their securities; regulated investment companies; real estate investment trusts; entities subject to the U.S. anti-inversion rules; controlled foreign corporations; passive foreign investment companies; holders that own or have owned (directly, indirectly or constructively) five percent or more of Otelco’s common stock (by vote or value); or former citizens or residents of the United States;
|
•
|
stockholders holding the shares as part of a hedging, constructive sale or conversion, straddle or other risk reduction transaction;
|
•
|
stockholders that received their shares of common stock in a compensatory transaction, through a tax qualified retirement plan or pursuant to the exercise of options or warrants;
|
•
|
U.S. Holders whose functional currency is not the U.S. dollar;
|
•
|
stockholders who hold their common stock through a bank, financial institution or other entity, or a branch thereof, located, organized or resident outside the United States;
|
•
|
stockholders subject to special tax accounting rules as a result of any item of gross income with respect to the shares of common stock being taken into account in an “applicable financial statement” (as defined in the Code); or
|
•
|
tax consequences to stockholders that do not vote in favor of the Merger and properly and validly demand appraisal of their shares under the DGCL.
|
•
|
an individual who is a citizen or resident of the United States;
|
•
|
a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any state thereof or the District of Columbia;
|
•
|
an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
|
•
|
a trust (1) that is subject to the primary supervision of a court within the United States and the control of one or more United States persons as defined in Section 7701(a)(30) of the Code; or (2) that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.
|
•
|
the gain is effectively connected with a trade or business of such Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base
|
•
|
such Non-U.S. Holder is a nonresident alien individual who is present in the United States for 183 days or more in the taxable year of that disposition and certain other conditions are met, in which case such gain will be subject to U.S. federal income tax at a rate of 30% (or a lower rate under an applicable income tax treaty), which gain may be offset by certain U.S. source capital losses of such Non-U.S. Holder.
|
•
|
changes in general economic conditions, or changes in conditions in the global, international or regional economy generally;
|
•
|
changes in conditions in the financial markets, credit markets or capital markets in the United States or any other country or region of the world, including (1) changes in interest rates or credit ratings, (2) changes in exchange rates for the currencies of any country, or (3) any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities exchange or over-the-counter market;
|
•
|
general changes in conditions in the industries in which the Company and its subsidiaries conduct business;
|
•
|
any geopolitical conditions, outbreak of hostilities, acts of war (whether or not declared), sabotage, cyberterrorism (including by means of cyber-attack by or sponsored by a Governmental Authority), terrorism or military actions (including any escalation or general worsening of any such hostilities, acts of war, sabotage, cyberterrorism, terrorism or military actions);
|
•
|
earthquakes, volcanic activity, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other natural disasters, force majeure events, weather conditions, epidemics, plagues, pandemics (including COVID-19) or other outbreaks of illness or public health events and other similar events in the United States, or any other country or region of the world;
|
•
|
changes in regulatory, legislative or political conditions in the United States or any other country or region of the world;
|
•
|
the announcement of the Merger Agreement or the pendency of the Merger (provided, however, that this clause will not apply to the Company’s representation and warranty with respect to the absence of conflicts with the Company’s organizational documents and the Company’s contracts);
|
•
|
any action taken or refrained from being taken by the Company or its subsidiaries that is expressly required by the Merger Agreement;
|
•
|
any action taken or refrained from being taken, in each case to which Parent has expressly approved, consented to or requested in writing following the date of the Merger Agreement;
|
•
|
changes or proposed changes in GAAP or other accounting standards or in any applicable laws (or the enforcement or interpretation of any of the foregoing) after the date of the Merger Agreement;
|
•
|
changes in the price or trading volume of shares of common stock, in and of itself (it being understood that any cause of such change may be deemed to constitute, in and of itself, a Company Material Adverse Effect and may be taken into consideration when determining whether a Company Material Adverse Effect has occurred); and
|
•
|
any failure, in and of itself, by the Company and its subsidiaries to meet (1) any public estimates or expectations of the Company’s revenue, earnings or other financial performance or results of operations for
|
•
|
due organization, valid existence, good standing and authority and qualification to conduct business with respect to the Company and its subsidiaries;
|
•
|
the Company’s power and authority to enter into and perform the Merger Agreement and to consummate the Merger;
|
•
|
the organizational documents of the Company and its subsidiaries;
|
•
|
the necessary approval of the Company’s Board;
|
•
|
the delivery of Houlihan Lokey’s opinion to the Board prior to the execution of the Merger Agreement;
|
•
|
the inapplicability of anti-takeover statutes to the Merger;
|
•
|
the necessary vote of stockholders of the Company in connection with the Merger Agreement;
|
•
|
the absence of any conflict or violation of organizational documents of the Company, or existing material contracts of, or laws applicable to, the Company or its subsidiaries, or the resulting creation of any lien upon the Company’s properties or assets (or any properties or assets of any of the Company’s subsidiaries) due to the Merger Agreement and the performance thereof;
|
•
|
required consent, approval, order or authorization of, filing or registration with, or notification to any governmental authority in connection with the Merger Agreement and performance thereof, including the Nasdaq, the FCC, the State PSCs and the Local Consents;
|
•
|
the capital structure and outstanding equity awards of the Company;
|
•
|
the absence of any undisclosed security, option, warrant or other right exchangeable for or convertible into shares of common stock;
|
•
|
the absence of any contract relating to the voting of, requiring registration of, or granting any preemptive rights, anti-dilutive rights or rights of first refusal or other similar rights with respect to any of the Company’s securities;
|
•
|
the accuracy, compliance with law and required filings of certain of the Company’s SEC filings and financial statements;
|
•
|
the Company’s disclosure controls and procedures;
|
•
|
the Company’s internal accounting controls and procedures;
|
•
|
the absence of certain undisclosed liabilities;
|
•
|
the conduct of the business of the Company and its subsidiaries in the ordinary course of business since December 31, 2019 and the absence of a Company Material Adverse Effect since December 31, 2019;
|
•
|
the existence and validity of specified categories of the Company’s and certain of its subsidiaries’ material contracts, and absence of breach or default pursuant to any such material contracts;
|
•
|
relationships with suppliers and customers;
|
•
|
real property leased or subleased by the Company and its subsidiaries;
|
•
|
environmental matters;
|
•
|
trademarks, patents, copyrights and other intellectual property matters;
|
•
|
tax matters;
|
•
|
employee benefit plans;
|
•
|
labor matters;
|
•
|
the Company’s and its subsidiaries’ compliance with laws and possession of necessary licenses;
|
•
|
litigation matters;
|
•
|
insurance matters;
|
•
|
absence of certain contracts, transactions, arrangements or understandings between the Company or any of its subsidiaries and any Affiliate (as defined in the Merger Agreement) or related person;
|
•
|
payment of fees to brokers in connection with the Merger Agreement;
|
•
|
anti-corruption matters and compliance with various applicable laws including the Foreign Corrupt Practices Act of 1977;
|
•
|
certain regulatory matters related to the telecommunications business of the Company and compliance with certain telecommunications laws, including the Communications Act of 1934 and state statutes governing intrastate telecommunications services;
|
•
|
the quality of the Company’s network facilities and its title to certain network cables;
|
•
|
accuracy of information supplied by the Company for inclusion in this proxy statement or other required Company filings and the compliance as to form of this proxy statement with the Exchange Act; and
|
•
|
the exclusivity and terms of the representations and warranties made by the Company.
|
•
|
due organization, good standing and authority and power to conduct business with respect to Parent and Merger Sub, and availability of the organizational documents of Parent and Merger Sub;
|
•
|
Parent and Merger Sub’s power and authority to enter into and perform the Merger Agreement and the enforceability of the Merger Agreement;
|
•
|
the absence of any conflict or violation of any organizational documents, existing contracts, applicable laws or the resulting creation of any lien upon Parent’s or Merger Sub’s properties or assets due to the Merger Agreement and the performance thereof;
|
•
|
required governmental consents and regulatory filings in connection with the Merger Agreement;
|
•
|
the absence of certain litigation, orders and investigations;
|
•
|
ownership of common stock;
|
•
|
payment of fees to brokers in connection with the Merger;
|
•
|
operations of Parent and Merger Sub;
|
•
|
the absence of any required consent of holders of any capital stock of, or other equity or voting interests in, Parent and the approval of Parent as the only approval of the membership interests of Merger Sub necessary to approve the adoption of the Merger Agreement;
|
•
|
matters with respect to the Guarantee and the delivery and validity thereof;
|
•
|
matters with respect to Parent and Merger Sub’s financing and sufficiency of funds;
|
•
|
the absence of any contract, arrangement or understanding prohibiting any potential provider of debt or equity financing from providing debt or equity financing or financial advisory services in connection with a transaction relating to the Company or any of its subsidiaries;
|
•
|
the absence of any arrangements with any stockholder, director, officer, employee or other Affiliate of the Company related to the Merger;
|
•
|
the solvency of the Surviving Corporation and its subsidiaries following the consummation of the Merger and the transactions contemplated by the Merger Agreement;
|
•
|
the exclusivity and terms of the representations and warranties made by Parent, Merger Sub and the Company; and
|
•
|
accuracy of information supplied by Parent or Merger Sub for inclusion in this proxy statement or other required Company filings.
|
•
|
subject to the restrictions and exceptions in the Merger Agreement, conduct its business and operations in all material respects in the ordinary course of business consistent with past practice;
|
•
|
comply in all material respects with applicable law;
|
•
|
preserve intact, in all material respects, its business organization, and existing relationships with customers, suppliers, governmental authorities, and others having material business relationships or regulator relationships with the Company or its subsidiaries.
|
•
|
amend, waive, or otherwise modify any organizational document of the Company or any of its subsidiaries;
|
•
|
liquidate, dissolve, merge, consolidate, restructure, recapitalize or otherwise reorganize;
|
•
|
issue, sell, deliver, pledge, encumber, dispose of or agree or commit to issue, sell, deliver, pledge, encumber, or dispose of any Company Securities (as defined in the Merger Agreement);
|
•
|
directly or indirectly acquire, repurchase or redeem any securities of the Company;
|
•
|
adjust, split, combine or reclassify any shares of capital stock, or issue or authorize or propose the issuance of any other Company Securities in respect of, in lieu of or in substitution for, shares of its capital stock or other equity or voting interest;
|
•
|
declare, set aside or pay any dividend or other distribution;
|
•
|
pledge or encumber any shares of capital stock or other equity or voting interest, or modify the terms of any shares of capital stock or other equity or voting interest;
|
•
|
incur, assume or suffer certain indebtedness or issue any debt securities;
|
•
|
assume, guarantee, endorse or otherwise become liable or responsible for the obligations of any other person, except with respect to obligations of direct or indirect wholly owned subsidiaries of the Company;
|
•
|
make any material loans, advances or capital contributions to, or investments in, any other person;
|
•
|
mortgage or pledge any assets, tangible or intangible, or create or suffer to exist any lien thereupon;
|
•
|
enter into, adopt, amend, modify, or terminate any Employee Plan or plan, agreement or arrangement that would constitute an Employee Plan if in effect as of the date of the Merger Agreement;
|
•
|
increase the compensation or benefits of any director, officer or employee whose total annual base salary exceeds or would exceed $150,000, or hire as an employee, director or independent contractor or terminate (other than for cause) any current officer, director, independent contractor or employee of the Company whose total base salary exceeds or would exceed $150,000;
|
•
|
waive or materially amend any restrictive covenant entered into by any current or former officer, director, independent contractor or employee of the Company or any of its subsidiaries;
|
•
|
adopt, enter into, amend, modify or terminate any collective bargaining agreement;
|
•
|
settle any pending or threatened material legal proceeding;
|
•
|
make, change or revoke any material tax election, change any tax accounting period, change any tax accounting method, settle or compromise any material tax claim, audit, examination or proceeding or assessment, surrender any right to claim a refund of a material amount of taxes, consent to any extension or waiver of the limitation period applicable to any material tax claim audit, examination, proceeding or assessment, or initiate any voluntary tax disclosure with any governmental authority;
|
•
|
incur or commit to incur any capital expenditures;
|
•
|
enter into, modify in any material respect, amend in any material respect, waive any rights or obligations under or terminate any material contract (other than the termination of any material contract that has expired in accordance with its terms) or any contract that, if entered into prior to the date of the Merger Agreement would have been a material contract;
|
•
|
engage in any transaction with, or enter into any agreement, arrangement or understanding with, any affiliate of the Company or other person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to Item 404;
|
•
|
acquire, transfer, dispose, abandon, cancel, waive, lease or license any rights in a material asset (including intellectual property) or business (including by merger, consolidation or acquisition of stock or assets);
|
•
|
make any material change in financial accounting policies, practices, principles, methods or procedures, other than as required by GAAP or Regulation S-X promulgated under the Exchange Act or other applicable rules and regulations of the SEC or applicable law;
|
•
|
adopt or implement any stockholder rights agreement, “poison pill” or similar antitakeover agreement or plan;
|
•
|
enter into any new line of business (other than any line of business that is reasonably related to and a reasonably foreseeable extension of any line of business existing as of the date of the Merger Agreement) or terminate any material line of business existing as of the date of the Merger Agreement;
|
•
|
enter into any contract that includes a change of control or similar provision that would require a material payment to or would give rise to any material rights (including termination rights) of the other party or parties thereto in connection with the consummation of the Merger or the other transactions contemplated by the Merger Agreement or any future change of control;
|
•
|
cancel, terminate or allow to lapse without a commercially reasonable substitute policy therefor, or amend in any material respect or enter into, any insurance policy, other than the renewal of an existing insurance policy or a commercially reasonable substitute therefor;
|
•
|
agree, resolve, authorize or commit in writing or otherwise to do any of the foregoing.
|
(i)
|
any direct or indirect purchase or other acquisition by any person or Group (as defined in the Merger Agreement), whether from the Company or any other person(s), of shares of common stock representing more than 20% of the Company’s Securities (as defined in the Merger Agreement) outstanding after giving effect to the consummation of such purchase or other acquisition, including pursuant to a tender offer or exchange offer by any person or Group that, if consummated in accordance with its terms, would result in such person or Group beneficially owning more than 20% of the Company’s Securities outstanding after giving effect to the consummation of such tender or exchange offer;
|
(ii)
|
any direct or indirect purchase or other acquisition or license of the assets or business of the Company and its subsidiaries by any person or Group constituting more than 20% of the consolidated net revenues, consolidated net income or consolidated assets of the Company and its subsidiaries taken as a whole (measured by the fair market value thereof as of the date of such purchase or acquisition);
|
(iii)
|
any direct or indirect merger, consolidation, business combination, recapitalization, reorganization, liquidation, dissolution, spin-off, spit-off or other transaction involving the Company or any of its subsidiaries pursuant to which any person or Group would, directly or indirectly, hold shares of common stock representing more than 20% of the common stock outstanding after giving effect to the consummation of such transaction; or
|
(iv)
|
any other transaction having a similar effect to those described in the foregoing clauses (i) through (iii).
|
•
|
solicit, initiate, propose or induce the making, submission or announcement of, or knowingly encourage, facilitate or assist, any proposal or offer that would reasonably be expected to lead to, or that constitutes, an Acquisition Proposal;
|
•
|
engage in, continue or otherwise participate in any discussions concerning, or provide access or otherwise furnish to any person (other than Parent, Merger Sub or any of their respective designees) any non-public information relating to the Company or any of its subsidiaries or any of their respective properties, books, records or personnel or afford to any person access to the business, properties, assets, books, records or other non-public information, or to any personnel, of the Company or any of its subsidiaries (other than to Parent, Merger Sub or any designees of Parent or Merger Sub), in any such case with the intent to induce the making, submission or announcement of, or to knowingly encourage, facilitate or assist, or otherwise relating to or in connection with, an Acquisition Proposal or any inquiries or the making of any proposal that would reasonably be expected to lead to an Acquisition Proposal;
|
•
|
participate or engage in discussions or negotiations with any person with respect to an Acquisition Proposal or any proposal or offer that would reasonably be expected to lead to an Acquisition Proposal (subject to certain exceptions);
|
•
|
approve, endorse or recommend an Acquisition Proposal;
|
•
|
enter into any letter of intent, memorandum of understanding, merger agreement, acquisition agreement or other contract or agreement in principle, understanding or arrangement, in each case, relating to an Acquisition Proposal, other than an Acceptable Confidentiality Agreement or any contract requiring the Company to abandon, terminate or fail to consummate the Merger or the other transactions contemplated by the Merger Agreement; or
|
•
|
resolve or agree to take any of the foregoing actions.
|
•
|
withhold, withdraw, amend, qualify or modify, or publicly propose to withhold, withdraw, amend, qualify or modify, the Company Board Recommendation in a manner adverse to Parent in any material respect;
|
•
|
publicly adopt, approve or recommend to the stockholders an Acquisition Proposal;
|
•
|
take or fail to take any formal action or make or fail to make any recommendation or public statement in connection with a tender or exchange offer, other than a recommendation against such offer or a “stop, look and listen” communication by the Board to the stockholders pursuant to Rule 14d-9(f) promulgated under the Exchange Act (or any substantially similar communication) (it being understood that the Board may refrain from taking a position with respect to an Acquisition Proposal until the close of business on the fifth business day after the commencement of a tender or exchange offer in connection with such Acquisition Proposal without such action being considered a violation of the Merger Agreement);
|
•
|
fail to publicly reaffirm the Company Board Recommendation within five business days after its receipt of a written request by Parent to provide such affirmation (provided, that such reaffirmation may include such additional disclosures as would reasonably be necessary to satisfy the fiduciary duties of the Board and comply with applicable law so long as such disclosure does not have the substantive effect of withdrawing or modifying in a manner adverse to Parent the Company Board Recommendation);
|
•
|
fail to include the Company Board Recommendation in this proxy statement;
|
•
|
authorize, resolve to allow, cause or permit, or publicly announce an intention to approve or recommend that, the Company or any of its Subsidiaries to enter into an Alternative Acquisition Agreement (as defined the Merger Agreement).
|
•
|
the Board determines in good faith (after consultation with its financial advisor and outside legal counsel) that the failure to do so would be inconsistent with its fiduciary duties pursuant to applicable law;
|
•
|
the Company has complied in all material respects with its obligations pursuant to the Merger Agreement with respect to such Acquisition Proposal;
|
•
|
(i) the Company has provided prior written notice to Parent at least four business days in advance (the “Notice Period”) to the effect that the Board has (A) received a Superior Proposal and (B) intends to effect a Company Board Recommendation Change with respect to such Acquisition Proposal and authorize the Company to terminate the Merger Agreement to enter into such Alternative Acquisition Agreement, which notice will specify the basis for such actions, including the identity of the person or group making such Acquisition Proposal, the terms (other than immaterial terms) thereof and copies of all relevant documents (other than immaterial documents) relating to such Acquisition Proposal including any proposed definitive transaction agreements with the person making such Superior Proposal and; and (ii) prior to effecting a Company Board Recommendation Change with respect to such Acquisition Proposal and authorizing the Company to terminate the Merger Agreement to enter into such Alternative Acquisition Agreement, the Company and its Representatives, during the Notice Period, must have negotiated with Parent and its Representatives in good faith (to the extent that Parent desires to so negotiate) to make such adjustments to the terms and conditions of the Merger Agreement so that the Board would no longer determine that the failure to make a Company Board Recommendation Change in response to such Acquisition Proposal would be inconsistent with its fiduciary duties pursuant to applicable law (and would cause such Superior Proposal to no longer constitute a Superior Proposal), and must have kept Parent reasonably informed in all material respects of any material developments with respect to any such Acquisition Proposal (and any subsequent amendments or modifications thereto) and delivered copies of revised or newly received documents to Parent, in each case, as soon as is reasonably practicable and in any event within 24 hours of receipt, provision or occurrence thereof; provided, however, that in the event of any material revisions to such Acquisition Proposal, the Company shall be required to deliver a new written notice to Parent and to comply with the requirements of the Merger Agreement with respect to such new written notice (it being understood that the “Notice Period” in respect of such new written notice will be three business days); and
|
•
|
in the event of any termination of the Merger Agreement in order to cause or permit the Company or any of its subsidiaries to enter into an Alternative Acquisition Agreement with respect to such Acquisition Proposal, the Company shall have validly terminated the Merger Agreement in accordance with its terms, including paying (or causing to be paid) the applicable Company Termination Fee.
|
•
|
the Board determines in good faith (after consultation with its financial advisor and outside legal counsel) that the failure to do so would be inconsistent with its fiduciary duties pursuant to applicable law;
|
•
|
the Company has provided prior written notice to Parent at least four business days in advance to the effect that the Board has (1) so determined and (2) resolved to effect a Company Board Recommendation Change pursuant to the applicable terms of the Merger Agreement, which notice will specify the applicable Intervening Event in reasonable detail; and
|
•
|
prior to effecting such Company Board Recommendation Change, the Company and its Representatives, during such three business day period, must have negotiated with Parent and its Representatives in good faith (to the extent that Parent desires to so negotiate) to make such adjustments to the terms and conditions of the Merger Agreement so that the Board would no longer determine that the failure to make a Company Board Recommendation Change in response to such Intervening Event would be inconsistent with its fiduciary duties pursuant to applicable law, and must have kept Parent reasonably informed in all material
|
•
|
the receipt of the Requisite Stockholder Approval;
|
•
|
receipt of the applicable consents from the FCC, State PSCs and local jurisdictions set forth in the confidential disclosure letter; and
|
•
|
the absence of any Legal Restraint (as defined below).
|
•
|
the representations and warranties of the Company relating to organization, good standing, corporate power, enforceability, Board approval, requisite stockholder approval, certain aspects of the Company’s capitalization, brokers, and related person transactions to the extent qualified by materiality or Company Material Adverse Effect will be true and correct in all respects as of the date of the Merger Agreement and as of the Closing Date as if made at and as of the Closing Date and to the extent not qualified by materiality or Company Material Adverse Effect will be true and correct in all material respects as of the date of the Merger Agreement and as of the Closing Date as if made at and as of the Closing Date (except, in each case, to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty will be so true and correct as of such earlier date);
|
•
|
the representations and warranties of the Company relating to the absence of any Company Material Adverse Effect being true and correct in all respects as of the date of the Merger Agreement and as of the Closing Date as if made at and as of the Closing Date;
|
•
|
the representations and warranties of the Company related to the capital stock and the stock reservation of the Company will be true and correct in all material respects (except for any de minimis inaccuracy) as of the date of the Merger Agreement and as of the Closing Date as if made at and as of the Closing Date, except for such inaccuracies that are not material in the aggregate to the Company and its subsidiaries taken as a whole;
|
•
|
the other representations and warranties of the Company set forth elsewhere in the Merger Agreement being true and correct (in each case, disregarding all materiality and Company Material Adverse Effect qualifications) as of the date of the Merger Agreement and as of the Closing Date as if made at and as of the Closing Date, except for such failures to be true and correct that would not have a Company Material Adverse Effect (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty will be so true and correct as of such earlier date);
|
•
|
the Company having performed and complied in all material respects with all covenants, obligations and conditions of the Merger Agreement required to be performed and complied with by it at or prior to the closing of the Merger;
|
•
|
the receipt by Parent and Merger Sub of a certificate of the Company, validly executed for and on behalf of the Company and in its name by a duly authorized executive officer thereof, certifying that the conditions as described in the preceding five bullets have been satisfied;
|
•
|
the absence of any Company Material Adverse Effect having occurred after the date of Merger Agreement; and
|
•
|
the receipt by Parent and Merger Sub of (i) a pay-off letter and any other documentation required in connection with the repayment of the Company’s credit agreement with CoBank, ACB and the release and termination of any and all related liens and (ii) the written consent of Regions Bank to the consummation of the transactions contemplated by the Merger Agreement, to the extent required under the PPP Loan (as defined in the Merger Agreement), each of which will be in form and substance reasonably acceptable to Parent and Merger Sub.
|
•
|
the representations and warranties of Parent and Merger Sub relating to organization and good standing, power and enforceability and brokers to the extent qualified by materiality being true and correct in all
|
•
|
the representations and warranties of Parent and Merger Sub not relating to the preceding bullet point being true and correct as of the date of the Merger Agreement and as of the Closing Date as if made at and as of the Closing Date, except for failures to be so true and correct that would not, individually or in the aggregate, reasonably be expected to prevent or materially delay the consummation of the transactions contemplated by the Merger Agreement or have a material adverse effect on the ability of Parent and Merger Sub to fully perform their respective covenants and obligations pursuant to this Agreement (in each case, except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty will be so true and correct as of such earlier date);
|
•
|
Parent and Merger Sub having performed and complied in all material respects with all covenants, obligations and conditions of the Merger Agreement required to be performed and complied with by Parent and Merger Sub at or prior to the closing of the Merger; and
|
•
|
the receipt by the Company of a certificate of Parent and Merger Sub, validly executed for and on behalf of Parent and Merger Sub and in their respective names by a duly authorized officer thereof, certifying that the conditions described in the preceding three bullets have been satisfied.
|
•
|
by mutual written agreement of the Company and Parent;
|
•
|
by either the Company or Parent if:
|
•
|
a law or injunction (whether temporary, preliminary or permanent) enacted or issued by any governmental authority of competent jurisdiction prohibiting or otherwise making illegal the consummation of the Merger has been enacted, entered, promulgated or enforced and be continuing in effect (any such law or injunction, a “Legal Restraint”) and has become final and nonappealable, except that the right to terminate the Merger Agreement pursuant to this bullet point will not be available to any party (i) that has failed to use its reasonable best efforts to resist, appeal, obtain consent pursuant to, resolve or lift, as applicable, such Legal Restraint or (ii) if such Legal Restraint was primarily caused by, or primarily resulted from, such party’s breach of, or failure to perform or comply with, any of its covenants or agreements under the Merger Agreement;
|
•
|
the Merger has not been consummated by 11:59 p.m., New York City time, on April 26, 2021 (as such date may be extended pursuant to the terms of the Merger Agreement, the “Termination Date”), except that (x) if, on such date, any of the conditions to Closing set forth in Section 7.1(b) or Section 7.1(c) of the Merger Agreement shall not have been satisfied or waived and all other conditions to Closing shall have been satisfied or waived (or in the case of conditions that by their nature are to be satisfied at the Closing, shall be capable of being satisfied on such date), the Termination Date may be extended on one occasion by the Company or Parent by 90 days upon written notice to Parent or the Company, respectively (and in such case, such date, as so extended, shall be the Termination Date) and (y) the right to terminate the Merger Agreement pursuant to this bullet point will not be available to any party whose action or failure to act (which action or failure to act constitutes a breach by such party of the Merger Agreement) has been the primary cause of, or primarily resulted in, either the failure to satisfy the conditions to the obligations of the terminating party to consummate the Merger prior to the Termination Date or the failure of the Effective Time to have occurred prior to the Termination Date; or
|
•
|
the Company fails to obtain the Requisite Stockholder Approval at the Special Meeting (unless the Special Meeting has been postponed or adjourned pursuant to and subject to the limitations of the Merger Agreement, in which case at the final postponement or adjournment hereof) at which a vote is taken on the Merger, except that the right to terminate the Merger Agreement pursuant to this bullet
|
•
|
by the Company if:
|
•
|
Parent or Merger Sub has breached or failed to perform in any material respect any of its respective representations, warranties, covenants or other agreements set forth in the Merger Agreement such that certain conditions set forth in the Merger Agreement are not satisfied, except that if such breach is capable of being cured by the Termination Date, the Company will not be entitled to terminate the Merger Agreement prior to the delivery by the Company to Parent of written notice of such breach, delivered at least 30 days prior to such termination, stating the Company’s intention to terminate the Merger Agreement pursuant to the terms thereunder and the basis for such termination, it being understood that the Company will not be entitled to terminate the Merger Agreement if such breach has been cured prior to termination, except that the Company will not have the right to terminate the Merger Agreement pursuant to this bullet point if the Company is then in material breach of the Merger Agreement so as to cause any of the conditions set forth in the Merger Agreement relating to the breach or failure to perform the Company’s representations, warranties, covenants or other agreements set forth in the Merger Agreement not to be capable of being satisfied;
|
•
|
prior to receipt of the Requisite Stockholder Approval, (1) the Company has received a Superior Proposal; and (2) the Board has authorized the Company to enter into an Alternative Acquisition Agreement with respect to such Superior Proposal;
|
•
|
(1) all of the conditions to Parent’s obligation to consummate the Merger have been satisfied (other than those conditions that by their terms are to be satisfied at the closing of the Merger, each of which is capable of being satisfied at the closing of the Merger) or waived, (2) the Company has irrevocably notified Parent in writing that (A) the Company is ready, willing and able to consummate the Merger, and (B) all conditions to the Company’s obligation to consummate the Merger have been satisfied (other than those conditions that by their terms are to be satisfied at the closing of the Merger, each of which is capable of being satisfied at the closing of the Merger) or that the Company is willing to waive, (3) the Company has given Parent written notice at least one business day prior to such termination stating the Company’s intention to terminate the Merger Agreement pursuant to its terms if Parent and Merger Sub fail to consummate the Merger on the date required pursuant to the Merger Agreement, and (4) Parent and Merger Sub fail to consummate the closing of the Merger on or prior to the date that is two business days after the date that Parent and Merger Sub are required to consummate the closing of the Merger pursuant to the Merger Agreement;
|
•
|
by Parent if:
|
•
|
the Company has breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements set forth in the Merger Agreement such that certain conditions set forth in the Merger Agreement are not satisfied, except that if such breach is capable of being cured by the Termination Date, Parent will not be entitled to terminate the Merger Agreement prior to the delivery by Parent to the Company of written notice of such breach, delivered at least 30 days prior to such termination, stating Parent’s intention to terminate the Merger Agreement pursuant to the terms thereunder and the basis for such termination, it being understood that Parent will not be entitled to terminate the Merger Agreement if such breach has been cured prior to termination; provided, however, that Parent is not then in material breach of the Merger Agreement so as to cause any of the conditions set forth in the Merger Agreement relating to the breach or failure to perform Parent’s representations, warranties, covenants or other agreements set forth in the Merger Agreement not to be capable of being satisfied; or
|
•
|
the Board has effected a Company Board Recommendation Change.
|
•
|
by either Parent or the Company (as applicable) because the Effective Time has not occurred by the Termination Date, or by Parent because the Company has breached or failed to perform in any material respect any of its representations, warranties, covenants or agreements contained in the Merger Agreement, which breach or failure to perform would result in a failure of a condition to Parent’s obligation to consummate the Merger, subject to other terms and conditions discussed above, if (1) prior to such termination, an Acquisition Proposal for an Acquisition Transaction has been publicly announced and not publicly withdrawn or otherwise abandoned; and (2) within nine months following such termination of the Merger Agreement, either an Acquisition Transaction is consummated or the Company enters into a definitive agreement providing for the consummation of an Acquisition Transaction and such Acquisition Transaction is subsequently consummated, in which case the Company shall promptly (and in any event within three business days after such consummation) pay, or cause to be paid, to Parent the Company Termination Fee by wire transfer of immediately available funds to an account or accounts designated in writing by Parent (provided, that, for purposes of the termination fee discussed in this bullet point, all references to “20%” in the definition of “Acquisition Transaction” will be deemed to be references to “50%”);
|
•
|
by Parent because the Board has effected a Company Board Recommendation Change, in which case the Company will promptly (and in any event within three business days after such termination) pay, or cause to be paid, to Parent the Company Termination Fee; or
|
•
|
by the Company because prior to receipt of the Requisite Stockholder Approval, (1) the Company has received a Superior Proposal and (2) the Board has authorized the Company to enter into an Alternative Acquisition Agreement with respect to such Superior Proposal, in which case the Company will (and as a condition to the effectiveness of such termination) concurrently with such termination pay, or cause to be paid, to Parent the Company Termination Fee.
|
•
|
by the Company, if Parent or Merger Sub has breached or failed to perform any of its respective representations, warranties, covenants or other agreements contained in the Merger Agreement, which breach or failure to perform would result in a failure of a condition to the Company’s obligation to consummate the Merger, subject to other terms and conditions discussed above;
|
•
|
by the Company, at any time prior to the Effective Time (whether prior to or after the receipt of the Requisite Stockholder Approval), if (1) all of the conditions to Parent’s obligation to consummate the Merger have been and continue to be satisfied (other than those conditions that by their terms are to be satisfied at the closing of the Merger, each of which is capable of being satisfied at the closing of the Merger) or waived; (2) the Company has irrevocably notified Parent in writing five business days prior to such termination that (A) the Company is ready, willing and able to consummate the Merger, and (B) all conditions to the Company’s obligation to consummate the Merger have been satisfied (other than those conditions that by their terms are to be satisfied at the closing of the Merger, each of which is capable of being satisfied at the closing of the Merger) or waived; (3) the Company has given Parent written notice at least one Business Day prior to such termination stating the Company’s intention to terminate the Agreement pursuant to the terms thereof if Parent and Merger Sub fail to consummate the Merger on the date required pursuant to the Merger Agreement; and (4) Parent and Merger Sub fail to consummate the Merger on or prior to the date that is two business days after the date that Parent and Merger Sub are required to consummate the Merger pursuant to the Merger Agreement; or
|
•
|
by either Parent or the Company (as applicable) because the Effective Time has not occurred by the Termination Date and at the time of such termination the Company could have terminated the Merger Agreement pursuant to the first or third bullet point under the third bullet point of the section of this proxy statement captioned “Termination of the Merger Agreement.”
|
•
|
all of the conditions set forth in Section 7.1 and Section 7.2 of the Merger Agreement have been satisfied (other than those conditions that by their terms are to be satisfied at the closing of the Merger, each of which is capable of being satisfied at the closing of the Merger);
|
•
|
Parent and Merger Sub have failed to complete the closing of the Merger by the date that the Merger is required to have occurred pursuant to the Merger Agreement; and
|
•
|
the Company has irrevocably confirmed in a written notice to Parent that if specific performance is granted and the Equity Financing is funded, then the Company would take such actions that are required by of it by the Merger Agreement to cause the closing of the Merger to occur.
|
•
|
each person or group of affiliated persons, who we know to beneficially own more than 5% of our common stock;
|
•
|
each member of our Board;
|
•
|
our Chief Executive Officer;
|
•
|
each of our two other most highly compensated executive officers for the year ended December 31, 2019; and
|
•
|
all of our current named executive officers and directors as a group.
|
Name of Beneficial Owner
|
| |
Shares of Common
Stock Beneficially
Owned**
|
| |
Percent of
Common Stock
Outstanding
|
Greater than 5% Stockholders:
|
| |
|
| |
|
Ira Sochet(1)
|
| |
1,687,376
|
| |
49.3%
|
Named Executive Officers and Directors:
|
| |
|
| |
|
Richard A. Clark(2)
|
| |
10,000
|
| |
*
|
Barbara M. Dondiego Stewart
|
| |
851
|
| |
*
|
Curtis L. Garner Jr.(3)
|
| |
37,151
|
| |
1.1%
|
Howard J. Haug(4)
|
| |
8,140
|
| |
*
|
Dayton R. Judd(5)
|
| |
90,361
|
| |
2.6%
|
Stephen P. McCall
|
| |
9,893
|
| |
*
|
Brian A. Ross
|
| |
11,559
|
| |
*
|
Robert J. Souza(6)
|
| |
64,820
|
| |
1.9%
|
All directors and executive officers as a group (10 persons)(7)
|
| |
251,137
|
| |
7.3%
|
*
|
Represents less than 1%.
|
**
|
For purposes of this table, “beneficial ownership” is determined in accordance with Rule 13d-3 under the Exchange Act, pursuant to which a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock with respect to which such person has (or has the right to acquire within 60 days) sole or shared voting power or investment power.
|
(1)
|
Based on representations made by the Sochet Stockholders in the Voting Agreement. As represented in the Voting Agreement, these shares include shares held in an IRA account and shares held by Ira Sochet Trust, over which Mr. Sochet has voting and dispositive control, and shares held by Sochet & Company, Inc., an entity owned and controlled by Mr. Sochet. Mr. Sochet’s address is 121 14 Street, Belleair Beach, Florida 33786.
|
(2)
|
Includes 10,000 shares issuable upon the exercise of options, which vested on October 15, 2019, but does not include the remainder of the option to purchase up to 50,000 shares, which options vest in five equal annual installments beginning on October 15, 2019. Does not include an option to purchase up to 50,000 shares, which option vests in five equal annual installments beginning on January 2, 2021.
|
(3)
|
Includes 328 shares held by Uniform Gifts to Minors Act accounts for the benefit of Mr. Garner’s grandchildren. Mr. Garner is the custodian of such accounts. Mr. Garner disclaims beneficial ownership of these shares. In addition, also includes 2,719 shares which Mr. Garner owns jointly with his spouse.
|
(4)
|
Includes 10 shares held by Mr. Haug’s wife.
|
(5)
|
Includes 87,501 shares held by Sudbury Capital Management, of which Mr. Judd is a managing partner and founder.
|
(6)
|
Based on information provided to us by Mr. Souza on August 6, 2020. Mr. Souza retired as Chief Executive Officer and resigned as a director effective December 31, 2019.
|
(7)
|
The percentage of class ownership was determined by dividing the number of shares shown in the table by 3,431,794, which is the number of outstanding shares on September 8, 2020, plus any shares that our directors, executive officers and 10% holders have a right to acquire within 60 days. As of September 8, 2020, (a) there was a total of 3,421,794 shares outstanding, (b) Mr. Sochet beneficially owned 49.3% of those outstanding shares, (c) Mr. Judd beneficially owned 2.6% of those outstanding shares, (d) Mr. Souza beneficially owned 1.9% of those outstanding shares, (e) Mr. Garner beneficially owned 1.1% of those outstanding shares, (f) each of the other members of our Board beneficially owned less than 1.0% of those outstanding shares and (g) all members of our Board and our executive officers, as a group, beneficially owned 7.3% of those outstanding shares.
|
•
|
Otelco’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed on March 9, 2020, and the amendment to the Annual Report on Form 10-K/A, filed on March 10, 2020;
|
•
|
Otelco’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2020, filed on May 4, 2020, and its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2020, filed on August 4, 2020; and
|
•
|
Otelco’s Current Reports on Form 8-K, filed on March 3, 2020, April 7, 2020, May 15, 2020 and July 27, 2020.
|
|
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| | | |
Term
|
| |
Section
Reference
|
A-CAM
|
| |
3.28(f)
|
Agreement
|
| |
Preamble
|
Alternate Debt Financing
|
| |
6.5(d)
|
Alternative Acquisition Agreement
|
| |
5.3(b)
|
Burdensome Condition
|
| |
6.2(d)
|
Bylaws
|
| |
3.1
|
Capitalization Date
|
| |
3.7(a)
|
Certificate of Merger
|
| |
2.2
|
Certificates
|
| |
2.9(c)
|
Charter
|
| |
2.5(a)
|
Chosen Courts
|
| |
9.10(a)
|
Closing
|
| |
2.3
|
Closing Date
|
| |
2.3
|
Collective Bargaining Agreement
|
| |
3.20(a)
|
Company
|
| |
Preamble
|
Company Board
|
| |
Recitals
|
Company Board Recommendation
|
| |
3.3(a)
|
Company Board Recommendation Change
|
| |
5.3(d)(i)
|
Company Disclosure Letter
|
| |
III
|
Company Related Parties
|
| |
8.3(f)(ii)
|
Company RSU Consideration
|
| |
2.8(a)
|
Company SEC Reports
|
| |
3.9(a)
|
Company Securities
|
| |
3.7(c)
|
Company Stockholder Meeting
|
| |
6.4(a)
|
Company Subsidiaries
|
| |
3.8(a)
|
Comparable Plans
|
| |
6.11(c)
|
Confidentiality Agreement
|
| |
9.4
|
Consent
|
| |
3.6
|
Continuation Period
|
| |
6.11(c)
|
Copyrights
|
| |
1.1(oo)
|
Cut-Off Date
|
| |
5.3(b)
|
D&O Insurance
|
| |
6.10(c)
|
Debt Commitment Letters
|
| |
4.11(a)
|
Debt Financing
|
| |
4.11(a)
|
DGCL
|
| |
Recitals
|
Dissenting Company Shares
|
| |
2.7(c)(i)
|
DTC
|
| |
2.9(d)
|
Effect
|
| |
1.1(p)
|
Effective Time
|
| |
2.2
|
Electronic Delivery
|
| |
9.14
|
Employee Plans
|
| |
3.19(a)
|
Equity Commitment Letter
|
| |
4.11(a)
|
Equity Financing
|
| |
4.11(a)
|
ERISA Affiliate
|
| |
3.19(b)
|
Existing Indemnification Agreements
|
| |
6.10(a)
|
FCC Consents
|
| |
3.6
|
FCC Submissions
|
| |
6.2(a)
|
Fee Letter
|
| |
4.11(a)
|
Financing
|
| |
4.11(a)
|
Term
|
| |
Section
Reference
|
Financing Letters
|
| |
4.11(a)
|
Guarantee
|
| |
Recitals
|
Guarantors
|
| |
Recitals
|
Indemnified Person
|
| |
6.10(a)
|
Insurance Policies
|
| |
3.24
|
Lease
|
| |
3.15(b)
|
Leased Real Property
|
| |
3.15(b)
|
Legal Restraint
|
| |
7.1(c)
|
Licenses
|
| |
3.21
|
Local Consents
|
| |
3.6
|
Localities
|
| |
3.6
|
Marks
|
| |
1.1(oo)
|
Material Customers
|
| |
3.14
|
Material Suppliers
|
| |
3.14
|
Maximum Annual Premium
|
| |
6.10(c)
|
Merger
|
| |
Recitals
|
Merger Sub
|
| |
Preamble
|
Network Facilities Maps
|
| |
3.30(a)
|
New Debt Commitment Letters
|
| |
6.5(d)
|
New Plans
|
| |
6.11(d)
|
No-Shop Period Start Date
|
| |
5.3(a)
|
Notice Period
|
| |
5.3(e)(i)(3)
|
Old Plans
|
| |
6.11(d)
|
Opinion Provider
|
| |
3.3(b)
|
Option Consideration
|
| |
2.8(b)
|
Other Required Company Filing
|
| |
6.3(b)
|
Owned Company Shares
|
| |
2.7(a)(iii)
|
Owned Real Property
|
| |
3.15(a)
|
Parent
|
| |
Preamble
|
Parent Related Parties
|
| |
8.3(f)(i)
|
Party
|
| |
Preamble
|
Patents
|
| |
1.1(oo)
|
Paying Agent
|
| |
2.9(a)
|
Payment Fund
|
| |
2.9(b)
|
Per Share Price
|
| |
2.7(a)(ii)
|
Proxy Statement
|
| |
6.3(a)
|
PSC Consents
|
| |
3.6
|
PSC Submissions
|
| |
6.2(a)
|
Recent SEC Reports
|
| |
III
|
Reimbursement Obligations
|
| |
6.6(f)
|
Related Person Contract
|
| |
3.25
|
Remedy Actions
|
| |
6.2(d)
|
Required Amount
|
| |
4.11(c)
|
Required Financial Information
|
| |
6.6(a)(ix)
|
Requisite Stockholder Approval
|
| |
3.4
|
Sublease
|
| |
3.15(b)
|
Surviving Corporation
|
| |
2.1
|
Termination Date
|
| |
8.1(c)
|
Uncertificated Shares
|
| |
2.9(c)
|
USF HCL
|
| |
3.28(f)
|
Voting Agreement
|
| |
Recitals
|
WARN Act
|
| |
3.20(f)
|
|
| |
FUTURE FIBER FINCO, INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ John Monsky
|
|
| |
|
| |
Name: John Monsky
|
|
| |
|
| |
Title: Vice President and Secretary
|
|
| |
OLYMPUS MERGER SUB, INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ John Monsky
|
|
| |
|
| |
Name: John Monsky
|
|
| |
|
| |
Title: Vice President and Secretary
|
|
| |
OTELCO INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Richard A. Clark
|
|
| |
|
| |
Name: Richard A. Clark
|
|
| |
|
| |
Title: Chief Executive Officer
|
1.
|
reviewed the execution version of the Agreement and Plan of Merger, dated as of July 26, 2020, to be entered into by the Company, Acquiror and Merger Sub (the “Agreement”);
|
2.
|
reviewed certain publicly available business and financial information relating to the Company that we deemed to be relevant;
|
3.
|
reviewed certain information relating to the historical, current and future operations, financial condition and prospects of the Company made available to us by the Company, including financial projections (and adjustments thereto) prepared by the management of the Company relating to the Company for the years 2020 through 2029;
|
4.
|
spoken with certain members of the management of the Company and certain representatives and advisors of the Company regarding the business, operations, financial condition and prospects of the Company, the Transaction and related matters;
|
5.
|
compared the financial and operating performance of the Company with that of other public companies that we deemed to be relevant;
|
6.
|
considered publicly available financial terms of certain transactions that we deemed to be relevant;
|
7.
|
reviewed the current and historical market prices and trading volume for Company Common Stock, and the current and historical market prices and trading volume of the publicly traded securities of certain other companies that we deemed to be relevant;
|
8.
|
considered the results of the third-party solicitation process conducted by the Company; and
|
9.
|
conducted such other financial studies, analyses and inquiries and considered such other information and factors as we deemed appropriate.
|
|
| |||||
|
| |
(a)
|
| |
if to any Stockholder, to:
|
|
| |
|
| |
|
|
| |
|
| |
Mr. Ira Sochet
|
|
| |
|
| |
24 North Pine Circle
|
|
| |
|
| |
Belleair Beach, Florida 33756
|
|
| |
|
| |
Email: socheti@aol.com
|
|
| |||||
|
| |
|
| |
With a copy (which shall not constitute actual or constructive notice) to:
|
|
| |
|
| |
|
|
| |
|
| |
Arent Fox LLP
|
|
| |
|
| |
1717 K Street NW
|
|
| |
|
| |
Washington, DC 20006
|
|
| |
|
| |
Attention: Jeffrey E. Jordan
|
|
| |
|
| |
Email: Jeffrey.Jordan@arentfox.com
|
|
| |
|
| |
|
|
| |
(b)
|
| |
if to Parent or Merger Sub, to:
|
|
| |
|
| |
|
|
| |
|
| |
Oak Hill Capital Management, LLC
|
|
| |
|
| |
65 East 55th Street, 32nd Floor
|
|
| |
|
| |
New York, NY 10022
|
|
| |
|
| |
Attention: John Monskey
|
|
| |
|
| |
Email: jmonsky@oakhill.com
|
|
| |
|
| |
|
|
| |
|
| |
With a copy (which shall not constitute actual or constructive notice) to:
|
|
| |
|
| |
|
|
| |
|
| |
Paul, Weiss, Rifkind, Wharton & Garrison LLP
|
|
| |
|
| |
1285 Avenue of the Americas
|
|
| |
|
| |
New York, New York 10019
|
|
| |
|
| |
Attention: Angelo Bonvino
|
|
| |
|
| |
Brian C. Lavin
|
|
| |
|
| |
Email: abonvino@paulweiss.com
|
|
| |
|
| |
blavin@paulweiss.com
|
|
| |
FUTURE FIBER FINCO, INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ John Monsky
|
|
| |
|
| |
Name: John Monsky
|
|
| |
|
| |
Title: Vice President and Secretary
|
|
| |
STOCKHOLDERS:
|
|||
|
| |
|
| |
|
|
| |
/s/ Ira Sochet
|
|||
|
| |
Ira Sochet
|
|||
|
| |
|
| |
|
|
| |
Ira Sochet IRA Account
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Ira Sochet
|
|
| |
Ira Sochet
|
|||
|
| |
|
| |
|
|
| |
Ira Sochet Trust
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Ira Sochet
|
|
| |
Ira Sochet, Trustee
|
|||
|
| |
|
| |
|
|
| |
Sochet & Company, Inc.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Ira Sochet
|
|
| |
Ira Sochet, President
|
Stockholder
|
| |
Number of Subject Shares
|
|
| |
|
Ira Sochet
|
| |
1,687,376*
|
|
| |
|
Ira Sochet IRA Account
|
| |
196,866
|
|
| |
|
Ira Sochet Trust
|
| |
1,431,341
|
|
| |
|
Sochet & Company, Inc.
|
| |
59,169
|
*
|
Composed entirely of shares held by Ira Sochet IRA Account, Ira Sochet Trust and Sochet & Company, Inc.
|
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