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Kansas | 4813 | 48-0457967 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
E. William Bates, II, Esq. Adam M. Freiman, Esq. King & Spalding LLP 1185 Avenue of the Americas New York, NY10036-4003 (212) 556-2100 | Peter Lurie General Counsel and Corporate Secretary Virgin Mobile USA, Inc. 10 Independence Boulevard Warren, NJ 07059 (908) 607-4000 | Alan M. Klein, Esq. Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017 (212) 455-2000 |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
Exchange ActRule 13e-4(i) (Cross-Border Issuer Tender Offer) | o | |||
Exchange ActRule 14d-1(d) (Cross-Border Third-Party Tender Offer) | o |
Proposed Maximum | Proposed Maximum | Amount | ||||||||||||||||||
Title of Each Class of | Amount | Offering | Aggregate | of Registration | ||||||||||||||||
Securities to be Registered | to be Registered | Price per Share | Offering Price | Fee | ||||||||||||||||
Series 1 common stock, par value $2.00 per share | 174,824,913 | (1) | N/A | $ | 656,169,494 | (2) | $ | 36,614(3 | ) | |||||||||||
(1) | Represents the maximum number of shares of Sprint Nextel common stock estimated to be issuable in connection with the merger described herein. | |
(2) | The proposed maximum aggregate offering price of the registrant’s common stock was calculated based upon (i) the market value of shares of Virgin Mobile USA Class A common stock and securities convertible therefor (the securities to be canceled in the merger) in accordance with Rule 457(f)(1) under the Securities Act as follows: the product of (A) $4.87, the average of the high and low prices per share of Virgin Mobile USA Class A common stock on the New York Stock Exchange on August 28, 2009, and (B) 83,237,850, the maximum possible number of shares of Virgin Mobile USA Class A common stock (including securities convertible therefor) which may be canceled and exchanged in the merger; and (ii) the market value of shares of Sprint Nextel Series 1 common stock in accordance with Rule 457(c) under the Securities Act as follows: the product of (A) $3.83, the average of the high and low prices per share of Sprint Nextel Series 1 common stock on the New York Stock Exchange on August 28, 2009, and (B) 65,483,333, the maximum possible number of shares of Sprint Nextel Series 1 common stock which may be issued in connection with the merger with respect to payments under subordinated credit, tax receivable and trademark license agreements. | |
(3) | Determined in accordance with Section 6(b) of the Securities Act at a rate equal to $55.80 per $1,000,000 of the proposed maximum aggregate offering price. |
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The information in this proxy statement/prospectus is not complete and may be changed. These securities may not be sold nor may offers to buy be accepted until the registration statement filed with the Securities and Exchange Commission, of which this proxy statement/prospectus is a part, is declared effective. This proxy statement/prospectus is not an offer to sell and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
• | all stockholders of Virgin Mobile USA, excluding Sprint Nextel and the other stockholders identified in the following two paragraphs, will be entitled to receive a number of shares of Series 1 common stock of Sprint Nextel, which we refer to as Sprint Nextel common stock, for each outstanding share of Virgin Mobile USA’s Class A common stock that they own, and cash in lieu of fractional shares, based on the exchange ratio described below; | |
• | Corvina Holdings Limited and Cortaire Limited and any of their respective affiliates to which any Virgin Mobile USA shares are transferred, which we refer to collectively as the Virgin Group, will be entitled to receive a number of shares of Sprint Nextel common stock for each outstanding share of Class A common stock and Virgin Mobile USA’s Class C common stock that they own, and cash in lieu of fractional shares, based on the exchange ratio multiplied by 93.09%; | |
• | SK Telecom Co., Ltd. and any of its affiliates to which any Virgin Mobile USA shares are transferred, which we refer to collectively as SK Telecom, will be entitled to receive a number of shares of Sprint Nextel common stock for each outstanding share of Class A common stock that they own, and cash in lieu of fractional shares, based on the exchange ratio multiplied by 89.84%; | |
• | the Virgin Group and SK Telecom will be entitled to receive a number of shares of Sprint Nextel common stock for each outstanding share of Virgin Mobile USA’s preferred stock that they own, and cash in lieu of fractional shares, equal to the number of shares of Class A common stock into which each share of preferred stock is convertible, multiplied by (1) in the case of the Virgin Group, the exchange ratio multiplied by 93.09%, and (2) in the case of SK Telecom, the exchange ratio multiplied by 89.84%; and | |
• | the Virgin Group and SK Telecom will be entitled to receive consideration in connection with certain contractual obligations of Virgin Mobile USA, which consideration will be payable in cash or Sprint Nextel common stock, at Sprint Nextel’s election, as described in the accompanying proxy statement/prospectus. |
Daniel H. Schulman
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• | To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of July 27, 2009 (as it may be amended from time to time, the “merger agreement”), among Sprint Nextel Corporation, Sprint Mozart, Inc., a wholly-owned subsidiary of Sprint Nextel, and Virgin Mobile USA, a copy of which is attached asAnnex A to the proxy statement/prospectus accompanying this notice; and | |
• | To approve the adjournment of the meeting, if necessary or appropriate, to solicit additional proxies if there is an insufficient number of votes at the meeting to approve the proposal described above. |
Peter Lurie
501 Madison Avenue, 20th Floor
New York, NY 10022
Telephone:(888) 750-5833
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Sprint Nextel Corporation 6200 Sprint Parkway Overland Park, KS 66251 Attn: Investor Relations Telephone:(800) 259-3755 | Virgin Mobile USA, Inc. 10 Independence Boulevard Warren, NJ 07059 Attn: General Counsel and Corporate Secretary Telephone: (908) 607-4000 |
501 Madison Avenue, 20th Floor
New York, NY 10022
Telephone:(888) 750-5833
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Q: | Why am I receiving this document? | |
A: | Sprint Nextel and Virgin Mobile USA have agreed to a merger, pursuant to which Virgin Mobile USA will become a wholly-owned subsidiary of Sprint Nextel and will no longer be a publicly held corporation. In the merger, Sprint Nextel will issue shares of Sprint Nextel common stock as the consideration to be paid to holders of Class A common stock, Class C common stock and preferred stock. In order to complete the merger, Virgin Mobile USA stockholders must vote to adopt the merger agreement, which is attached to this proxy statement/prospectus asAnnex A. | |
We are delivering this document to you as both a proxy statement of Virgin Mobile USA and a prospectus of Sprint Nextel. It is a proxy statement because the Virgin Mobile USA board of directors is soliciting proxies from its stockholders to vote on the adoption of the merger agreement at Virgin Mobile USA’s special meeting of stockholders, and your proxy will be used at the meeting as scheduled or following any adjournment or postponement of the meeting. It is a prospectus because Sprint Nextel will issue shares of Sprint Nextel common stock to Virgin Mobile USA stockholders in connection with the merger. | ||
Q: | What am I being asked to vote on? | |
A: | Virgin Mobile USA stockholders are being asked to vote on the following proposals: | |
• to adopt the merger agreement among Virgin Mobile USA, Sprint Nextel and Sprint Mozart, Inc., a wholly-owned subsidiary of Sprint Nextel; and | ||
• to approve the adjournment of the meeting, if necessary or appropriate, to solicit additional proxies if there is an insufficient number of votes to adopt the merger agreement at the time of the meeting. |
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Q: | Are there any other matters to be addressed at the meeting? | |
A: | We know of no other matters to be brought before the meeting, but if other matters are brought before the meeting or at any adjournment or postponement of the meeting, the officers named in your proxy intend to take any action as in their judgment is in the best interest of Virgin Mobile USA and its stockholders. | |
Q: | What is a proxy and how do I vote? | |
A: | A proxy is a legal designation of another person to vote your shares on your behalf. If you hold Virgin Mobile USA shares in your own name, you may submit a proxy for your shares by using the toll-free number or the Internet web site if your proxy card includes instructions for using these quick, cost-effective and easy methods for submitting proxies. You also may submit a proxy in writing by simply filling out, signing and dating your proxy card and mailing it in the prepaid envelope included with these proxy materials. If you submit a proxy by telephone or the Internet web site, please do not return your proxy card by mail. You will need to follow the instructions when you submit a proxy using any of these methods to make sure your shares will be voted at the meeting. You also may vote by submitting a ballot in person if you attend the meeting. However, we encourage you to submit a proxy by mail by completing your proxy card, by telephone or via the Internet even if you plan to attend the meeting. | |
If you hold Virgin Mobile USA shares through a broker or other nominee, you may instruct your broker or other nominee to vote your shares by following the instructions that the broker or nominee provides to you with these materials. Most brokers offer the ability for stockholders to submit voting instructions by mail by completing a voting instruction card, by telephone and via the Internet. If you hold shares through a broker or other nominee and wish to vote your shares at the meeting, you must obtain a legal proxy from your broker or nominee and present it to the inspector of election with your ballot when you vote at the meeting. | ||
Q: | When and where will the meeting be held? | |
A: | The meeting will be held on [ • ], 2009 at [ • ] a.m., local time, at [ • ]. | |
Q. | Who is entitled to vote at the meeting? | |
A: | All holders of Virgin Mobile USA’s outstanding shares (which includes all shares of Class A common stock, Class B common stock, Class C common stock and preferred stock) who hold shares at the close of business on the record date ([ • ], 2009) are entitled to receive notice of, and to vote at, the meeting, provided that the shares remain outstanding on the date of the meeting. | |
Q: | How will abstentions be counted? | |
A: | For the proposal to adopt the merger agreement, abstentions have the same effect as a vote against the merger.For the proposal to adjourn the meeting to solicit additional proxies, abstentions are treated as present and entitled to vote at the meeting and therefore have the same effect as a vote against the matter. | |
Q: | Why is my vote important? | |
A: | If you do not submit a proxy or vote in person at the meeting, it will be more difficult for us to obtain the necessary quorum to hold the meeting. In addition, your failure to submit a proxy or to vote in person will have the same effect as a vote against the adoption of the merger agreement. If you hold your shares through a broker, your broker will not be able to cast a vote on the adoption of the merger agreement without instructions from you. | |
The Virgin Mobile USA board of directors recommends that you vote “FOR” the adoption of the merger agreement. |
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Q: | Are votes confidential? | |
A: | The votes of all stockholders will be held in confidence from directors, officers and employees of Virgin Mobile USA except: | |
• as necessary to meet applicable legal requirements and to assert or defend claims for or against Virgin Mobile USA; | ||
• in the case of a contested proxy solicitation; | ||
• if a stockholder submits a written comment or otherwise communicates his or her vote to management; or | ||
• to allow the independent inspectors of election to certify the results of the vote. | ||
Q: | How will my shares be represented at the meeting? | |
A: | At the meeting, the officers named in your proxy card will vote your shares in the manner you requested if you correctly submitted your proxy. If you sign your proxy card and return it without indicating how you would like to vote your shares, your proxy will be voted as the Virgin Mobile USA board of directors recommends, which is: | |
• FOR the adoption of the merger agreement; and | ||
• FOR the approval of the adjournment of the meeting, if necessary or appropriate, to solicit additional proxies if there is an insufficient number of votes to adopt the merger agreement at the time of the meeting. | ||
Q: | What happens if I sell my shares after the record date but before the meeting? | |
A: | The record date of the meeting is earlier than the date of the meeting and the date that the merger is expected to be completed. If you transfer your Virgin Mobile USA shares after the record date but before the date of the meeting, you will retain your right to vote at the meeting (provided that the shares remain outstanding on the date of the meeting), but you will not have the right to receive the merger consideration to be received by Virgin Mobile USA stockholders in the merger. In order to receive the merger consideration, you must hold your shares through the completion of the merger. | |
Q: | What do I do if I receive more than one proxy statement/prospectus or set of voting instructions? | |
A: | If you hold shares directly as a record holder and also in “street name,” or otherwise through a nominee, you may receive more than one proxy statement/prospectus and/or set of voting instructions relating to the meeting. These should each be voted and/or returned separately in order to ensure that all of your shares are voted. | |
Q: | If my shares of Virgin Mobile USA common stock are held in street name by my broker, will my broker automatically vote my shares for me? | |
A: | No. If your shares are held in an account at a broker, you must instruct the broker on how to vote your shares. If you do not provide voting instructions to your broker, your shares will not be voted on any proposal on which your broker does not have discretionary authority to vote. This is called a broker non-vote. In these cases, the broker can register your shares as being present at the meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required. Under the current rules of the New York Stock Exchange, which we refer to as the NYSE, brokers do not have discretionary authority to vote on the proposal to adopt the merger |
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agreement. A broker non-vote will have the same effect as a vote against adoption of the merger agreement. | ||
Q: | Can I change my vote after I have delivered my proxy? | |
A: | Yes. You may revoke your proxy and change your vote at any time before the meeting. If you are a stockholder of record, you can revoke your proxy before it is exercised by written notice to the Corporate Secretary of Virgin Mobile USA, by timely delivery of a valid, later-dated proxy card or a later-dated proxy submitted by telephone or via the Internet, or by voting by ballot in person if you attend the meeting. Simply attending the meeting will not revoke your proxy. If you hold shares through a broker or other nominee, you may submit new voting instructions by contacting your broker or other nominee. | |
Q: | Who may attend the meeting? | |
A: | Virgin Mobile USA stockholders (or their authorized representatives) and Virgin Mobile USA’s invited guests may attend the meeting. Verification of stock ownership will be required at the meeting. If you hold your Virgin Mobile USA shares in your own name or hold them through a broker (and can provide documentation showing ownership such as a letter from your broker or a recent account statement) at the close of business on the record date, you will be permitted to attend the meeting. Stockholders may call Virgin Mobile USA’s Corporate Secretary at(908) 607-4100 to obtain directions to the meeting. | |
Q: | Will cameras and recording devices be permitted at the meeting? | |
A: | No. Stockholders are not permitted to bring cameras or recording equipment into the meeting room. | |
Q: | Will a proxy solicitor be used? | |
A: | Yes. Virgin Mobile USA has engaged Innisfree M&A Incorporated, which we refer to as Innisfree, to assist in the solicitation of proxies for the meeting and Virgin Mobile USA estimates that it will pay Innisfree a fee of approximately $20,000. Virgin Mobile USA has also agreed to reimburse Innisfree for reasonableout-of-pocket expenses and disbursements incurred in connection with the proxy solicitation and to indemnify Innisfree against certain losses, costs and expenses. In addition, our officers and employees may request the return of proxies by telephone or in person, but no additional compensation will be paid to them. | |
Q: | Whom should I call with questions? | |
A: | Virgin Mobile USA stockholders should call Innisfree, Virgin Mobile USA’s proxy solicitor, toll-free at(888) 750-5834 or collect at(212) 750-5833 with any questions about the merger, or to obtain additional copies of this proxy statement/prospectus or additional proxy cards. |
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• | all stockholders of Virgin Mobile USA, excluding the Virgin Group, SK Telecom and Sprint Nextel, will be entitled to receive a number of shares of Sprint Nextel common stock for each outstanding share of Class A common stock that they own, and cash in lieu of fractional shares, based on the exchange ratio described below; | |
• | the Virgin Group will be entitled to receive a number of shares of Sprint Nextel common stock for each outstanding share of Class A common stock and Class C common stock that it owns, and cash in lieu of fractional shares, based on the exchange ratio multiplied by 93.09%; | |
• | SK Telecom will be entitled to receive a number of shares of Sprint Nextel common stock for each outstanding share of Class A common stock that it owns, and cash in lieu of fractional shares, based on the exchange ratio multiplied by 89.84%; | |
• | the Virgin Group and SK Telecom will be entitled to receive a number of shares of Sprint Nextel common stock for each outstanding share of preferred stock that they own, and cash in lieu of fractional shares, equal to the number of shares of Class A common stock into which each share of preferred stock is convertible, multiplied by (1) in the case of the Virgin Group, the exchange ratio multiplied by 93.09%, and (2) in the case of SK Telecom, the exchange ratio multiplied by 89.84%; and | |
• | the Virgin Group and SK Telecom will be entitled to receive consideration in connection with certain contractual obligations of Virgin Mobile USA, which consideration will be payable in cash or Sprint Nextel common stock, at Sprint Nextel’s election, as described in this proxy statement/prospectus. |
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• | solicit any inquiries or make any proposal or offer with respect to a tender offer or exchange offer, merger, consolidation or other business combination involving Virgin Mobile USAand/or its subsidiaries; | |
• | solicit any inquiries or make any proposal or offer with respect to any acquisition proposal; or | |
• | participate in or knowingly encourage any negotiations or discussions concerning, or provide information or data to, any person relating to an acquisition proposal. |
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• | adoption of the merger agreement by Virgin Mobile USA stockholders; | |
• | the registration statement onForm S-4, of which this proxy statement/prospectus forms a part, having been declared effective by the Securities and Exchange Commission, which we refer to as the SEC, and the absence of a stop order suspending the effectiveness of theForm S-4 or proceedings pending before, or threatened by, the SEC for that purpose; | |
• | approval for listing on the NYSE of the shares of Sprint Nextel common stock to be issued to Virgin Mobile USA’s stockholders in connection with the merger, subject to official notice of issuance; | |
• | the representations and warranties of Virgin Mobile USA, Sprint Nextel and Merger Sub being true and correct, subject to various materiality thresholds, and Virgin Mobile USA, Sprint Nextel and Merger Sub having performed or complied with, in all material respects, all of its obligations, agreements and covenants under the merger agreement; | |
• | absence of any instituted or pending action, investigation or proceeding by any governmental entity, or by any other person before any governmental entity, that would adversely affect the merger, Sprint Nextel or Virgin Mobile USA; | |
• | the other transaction agreements entered into in connection with the merger agreement being in force and effect at the effective time of the merger and Daniel H. Schulman, Virgin Mobile USA’s Chief Executive Officer, not having rescinded his employment agreement with Sprint Nextel entered into at the time of the merger agreement or advised Sprint Nextel that he is unwilling to continue employment following the effective time of the merger; | |
• | receipt by Sprint Nextel of documentation evidencing that all outstanding indebtedness and all other obligations under Virgin Mobile USA’s senior and subordinated credit agreements have been paid, discharged or otherwise terminated; and | |
• | receipt by Virgin Mobile USA of an opinion of its counsel relating to the U.S. federal income tax treatment of the merger. |
• | the mutual written consent of Sprint Nextel, Merger Sub and Virgin Mobile USA; | |
• | Sprint Nextel or Virgin Mobile USA, provided that the party terminating is not in breach of its obligations under the merger agreement, if the effective time of the merger has not occurred on or before March 31, 2010; |
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• | Virgin Mobile USA if, prior to the merger agreement being adopted by its stockholders, Virgin Mobile USA receives an acquisition proposal that its board of directors determines constitutes a superior proposal, in which case Virgin Mobile USA would be obligated to pay the termination fee described below; | |
• | Sprint Nextel if, prior to the merger agreement being adopted by the Virgin Mobile USA stockholders, the Virgin Mobile USA board of directors has withdrawn, modified or qualified its recommendation to the Virgin Mobile USA stockholders to adopt the merger agreement, which we refer to as a change of recommendation, or has publicly proposed to recommend, adopt or approve another acquisition proposal; | |
• | Sprint Nextel or Virgin Mobile USA if the other party has breached its representations, warranties, covenants or agreements under the merger agreement such that the applicable closing conditions would not be satisfied (and the breach is incapable of being cured prior to March 31, 2010); or | |
• | Sprint Nextel or Virgin Mobile USA if the merger agreement is not adopted by the Virgin Mobile USA stockholders at the Virgin Mobile USA special meeting. |
• | Virgin Mobile USA exercises its right to terminate the merger agreement upon the receipt of a superior proposal; | |
• | Sprint Nextel exercises its right to terminate the merger agreement upon the Virgin Mobile USA board of directors effecting a change of recommendation or having recommended, adopted or approved another acquisition proposal; or | |
• | Sprint Nextel or Virgin Mobile USA exercises its right to terminate the merger agreement (1) due to a failure of the merger to be consummated on or before March 31, 2010 or the failure of Virgin Mobile USA stockholders to adopt the merger agreement (other than following a change of recommendation or the recommendation by the Virgin Mobile USA board of directors of another acquisition proposal, as described above), (2) prior to the termination an acquisition proposal is made public or known to the Virgin Mobile USA board of directors and is not withdrawn, and (3) within twelve months after the termination, Virgin Mobile USA enters into a definitive agreement with respect to, or consummates, the acquisition proposal. |
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• | to adopt the merger agreement; and | |
• | to approve the adjournment of the meeting, if necessary or appropriate, to solicit additional proxies if there is an insufficient number of votes to adopt the merger agreement at the time of the meeting. |
• | in favor of the adoption of the merger agreement, approval of the merger or any other action of the stockholders of Virgin Mobile USA reasonably requested by Sprint Nextel in furtherance thereof; | |
• | against any action or agreement that is in opposition to, or competitive or inconsistent with, the merger or that would result in a breach of any covenant, representation or warranty of the Virgin Group or SK Telecom contained in its respective voting agreement; |
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• | against any other acquisition proposal; and | |
• | against any other action, agreement or transaction that would otherwise materially interfere with, delay, postpone, discourage, frustrate the purposes of or adversely affect the merger or the other transactions contemplated by the merger agreement or each respective voting agreement or the performance by the Virgin Group or SK Telecom of its obligations under its respective voting agreement. |
• | Sprint Nextel and its direct or indirect wholly-owned subsidiaries had the right to vote one share of Class B common stock entitled to an equivalent of 12,058,626 votes (and no shares of Class A common stock, Class C common stock or preferred stock), or [ • ]% of the combined voting power of the outstanding shares of Virgin Mobile USA entitled to be voted at the meeting; | |
• | the Virgin Group had the right to vote 22,901,389 shares of Class A common stock, 115,062 shares of Class C common stock and [ • ] shares of preferred stock, or [ • ]% of the combined voting power of the outstanding shares of Virgin Mobile USA entitled to be voted at the meeting; | |
• | SK Telecom had the right to vote 11,192,741 shares of Class A common stock and [ • ] shares of preferred stock (and no shares of Class C common stock), or [ • ]% of the combined voting power of the outstanding shares of Virgin Mobile USA entitled to be voted at the meeting; and | |
• | directors and executive officers of Virgin Mobile USA and their affiliates had the right to vote [ • ] shares of Class A common stock (and no shares of Class C common stock or preferred stock), or [ • ]% of the combined voting power of the outstanding shares of Virgin Mobile USA entitled to be voted at the meeting. |
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Historical | Pro Forma | |||||||||||||||
Virgin Mobile | ||||||||||||||||
Virgin | Sprint Nextel | USA Equivalent | ||||||||||||||
As of and for the Six Months Ended June 30, 2009 | Sprint | Mobile | Unaudited | Unaudited | ||||||||||||
Nextel | USA | Pro Forma | Pro Forma(1) | |||||||||||||
Income (loss) from continuing operations per common share: | ||||||||||||||||
Basic | $ | (0.34 | ) | $ | 0.47 | $ | (0.33 | ) | $ | (0.45 | ) | |||||
Diluted | $ | (0.34 | ) | $ | 0.42 | $ | (0.33 | ) | $ | (0.45 | ) | |||||
Cash dividends per common share | $ | — | $ | — | $ | — | $ | — | ||||||||
Book value per common share(2) | $ | 6.52 | $ | (3.98 | ) | $ | 6.46 | $ | 8.83 | |||||||
As of and for the Year Ended December 31, 2008 | ||||||||||||||||
Income (loss) from continuing operations per common share: | ||||||||||||||||
Basic | $ | (0.98 | ) | $ | 0.13 | $ | (0.98 | ) | $ | (1.34 | ) | |||||
Diluted | $ | (0.98 | ) | $ | 0.13 | $ | (0.98 | ) | $ | (1.34 | ) | |||||
Cash dividends per common share | $ | — | $ | — | $ | — | $ | — | ||||||||
Book value per common share(2) | $ | 6.86 | $ | (5.49 | ) | $ | 6.79 | $ | 9.28 |
(1) | Virgin Mobile USA Equivalent Unaudited Pro Forma amounts are calculated by multiplying the Sprint Nextel per share amounts set forth under the column heading “Sprint Nextel Unaudited Pro Forma” by an assumed exchange ratio of 1.3668, which exchange ratio may vary as described under “The Merger Agreement — Merger Consideration.” | |
(2) | The Sprint Nextel unaudited pro forma book value per common share amounts set forth under the column heading “Sprint Nextel Unaudited Pro Forma” were calculated by dividing the total combined pro forma equity by the pro forma equivalent shares outstanding, which does not assume Sprint Nextel equity issuances for items that Sprint Nextel can elect to pay in cash or shares, as of the relevant balance sheet date. The number of pro forma shares to be issued as part of the proposed merger was calculated by using an assumed exchange ratio of 1.3668 and the closing price on the NYSE of a share of Sprint Nextel common stock of $3.66 as of August 31, 2009. |
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Closing Sale Price | Implied per Share | Implied per Share | Implied per Share | |||||||||||||||||
Closing Sale Price | of Virgin Mobile | Value of Merger | Value of Merger | Value of Merger | ||||||||||||||||
of Sprint Nextel | USA Class A | Consideration to | Consideration to | Consideration to | ||||||||||||||||
Common Stock | Common Stock | Public Stockholders(1) | the Virgin Group | SK Telecom | ||||||||||||||||
July 27, 2009 | $ | 4.55 | $ | 4.21 | $ | 5.50 | $ | 5.12 | $ | 4.94 | ||||||||||
[ • ], 2009 | $ | [ • ] | $ | [ • ] | $ | [ • ] | $ | [ • ] | $ | [ • ] |
(1) | Excludes the Virgin Group, SK Telecom and Sprint Nextel. |
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As of and for the | ||||||||||||||||||||||||||||
Six Months | ||||||||||||||||||||||||||||
Ended June 30, | As of and for the Year Ended December 31, | |||||||||||||||||||||||||||
2009 | 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
(In millions, except per share amounts) | ||||||||||||||||||||||||||||
Results of Operations Data: | ||||||||||||||||||||||||||||
Net operating revenues | $ | 16,350 | $ | 18,389 | $ | 35,635 | $ | 40,146 | $ | 41,003 | $ | 28,771 | $ 21,647 | |||||||||||||||
(Loss) income from continuing operations(1) | (978 | ) | (849 | ) | (2,796 | ) | (29,444 | ) | 995 | 821 | (2,006 | ) | ||||||||||||||||
Discontinued operations, net | — | — | — | — | 334 | 980 | 994 | |||||||||||||||||||||
Cumulative effect of change in accounting principle, net | — | — | — | — | — | (16 | ) | — | ||||||||||||||||||||
(Loss) Earnings per Share and Dividends: | ||||||||||||||||||||||||||||
Basic and diluted (loss) earnings per common share from continuing operations(1) | $ | (0.34 | ) | $ | (0.30 | ) | $ | (0.98 | ) | $ | (10.27 | ) | $ | 0.34 | $ | 0.40 | $ (1.40) | |||||||||||
Discontinued operations | — | — | — | — | 0.11 | 0.48 | 0.69 | |||||||||||||||||||||
Cumulative effect of change in accounting principle | — | — | — | — | — | (0.01 | ) | — | ||||||||||||||||||||
Dividends per common share(2) | — | — | — | 0.10 | 0.10 | 0.30 | See (2) below | |||||||||||||||||||||
Financial Position Data: | ||||||||||||||||||||||||||||
Total assets(3) | $ | 55,885 | $ | 62,805 | $ | 58,252 | $ | 64,295 | $ | 97,161 | $ | 102,760 | $ 41,321 | |||||||||||||||
Total debt and capital lease obligations (including equity unit notes) | 19,618 | 22,358 | 21,610 | 22,130 | 22,154 | 25,014 | 16,425 | |||||||||||||||||||||
Seventh series redeemable preferred shares | — | — | — | — | — | 247 | 247 |
(1) | For the six months ended June 30, 2009, Sprint Nextel recorded net charges of $729 million primarily related to severance and exit costs and equity in losses of unconsolidated investments. For the six months ended June 30, 2008, Sprint Nextel recorded net charges of $455 million related to severance and exit costs and merger and integration costs. In 2008, Sprint Nextel recorded net charges of $1.910 billion primarily related to asset and goodwill impairments, severance and exit costs, and merger and integration costs. In 2007, Sprint Nextel recorded net charges of $30.605 billion primarily related to merger and integration costs, asset and goodwill impairments, and severance and exit costs. In 2006, Sprint Nextel recorded net charges of $620 million primarily related to merger and integration costs, asset impairments, and severance and exit costs. In 2005, Sprint Nextel recorded net charges of $723 million primarily related to merger and integration costs, asset impairments, and severance and hurricane-related costs. In 2004, Sprint Nextel recorded net charges of $3.7 billion primarily related to severance and the wireline network impairment, partially offset by recoveries of fully reserved receivables. |
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(2) | Sprint Nextel did not declare any dividends on its shares in 2008 or, as of June 30, 2009, in 2009. In the first and second quarter of 2005, a dividend of $0.125 per share was paid. In the third and fourth quarter of 2005 and for each quarter of 2006 and 2007, the dividend was $0.025 per share. Before the recombination of its two tracking stocks, shares of PCS common stock did not receive dividends. For the year ended December 31, 2004, Sprint Nextel shares (before the conversion of shares of PCS common stock) received dividends of $0.50 per share. In the first quarter of 2004, Sprint Nextel shares received a dividend of $0.125 per share. In the second, third and fourth quarter of 2004, Sprint Nextel shares, which included shares resulting from the conversion of shares of PCS common stock, received quarterly dividends of $0.125 per share. | |
(3) | During 2008 and 2007, Sprint Nextel performed its annual assessment of goodwill for impairment and recorded non-cash impairment charges of $963 million and $29.649 billion, respectively. |
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As of and for the | ||||||||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||||||
June 30, | As of and for the Year Ended December 31, | |||||||||||||||||||||||||||
2009 | 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||||||
Results of Operations Data: | ||||||||||||||||||||||||||||
Operating revenue: | ||||||||||||||||||||||||||||
Net service revenue | $ | 608,064 | $ | 600,814 | $ | 1,235,870 | $ | 1,239,533 | $ | 1,022,927 | $ | 884,116 | $ | 567,006 | ||||||||||||||
Net equipment and other revenue | 36,789 | 49,067 | 87,623 | 85,890 | 90,524 | 106,116 | 123,632 | |||||||||||||||||||||
Total operating revenue | 644,853 | 649,881 | 1,323,493 | 1,325,423 | 1,113,451 | 990,232 | 690,638 | |||||||||||||||||||||
Net income(1)(2) | 40,885 | 10,255 | 10,309 | 4,218 | (36,941 | ) | (108,665 | ) | (176,236 | ) | ||||||||||||||||||
Earnings (loss) per weighted average common share — basic(2) | $ | 0.47 | $ | 0.16 | $ | 0.13 | $ | 0.13 | $ | (1.45 | ) | $ | (4.49 | ) | $ | (7.36 | ) | |||||||||||
Earnings (loss) per weighted average common share — diluted(2) | $ | 0.42 | $ | 0.16 | $ | 0.13 | $ | 0.08 | $ | (1.45 | ) | $ | (4.49 | ) | $ | (7.36 | ) | |||||||||||
Financial Position Data: | ||||||||||||||||||||||||||||
Total assets | $ | 320,687 | $ | 255,159 | $ | 367,068 | $ | 282,039 | $ | 276,947 | $ | 221,232 | $ | 165,394 | ||||||||||||||
Total debt and capital lease obligations | 257,094 | 300,372 | 267,174 | 323,751 | 553,298 | 497,527 | 98,965 | |||||||||||||||||||||
Redeemable preferred stock(3) | — | — | 50,000 | — | — | — | — |
(1) | Net income for the year ended December 31, 2008 has been recast to reflect the adoption of Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements on January 1, 2009, which removed the impact of net income attributable to the noncontrolling interest from the calculation of net income. | |
(2) | Virgin Mobile USA recorded charges of $1 million and $9 million for the six months ended June 30, 2009 and the year ended December 31, 2008, respectively, for restructuring activities related to outsourcing of information technology services to IBM, employee reductions associated with the acquisition of Helio LLC, and a reduction in force to reduce operating costs. For the year ended December 31, 2005, Virgin Mobile USA recorded charges for an estimated loss of $30 million related to patent infringement litigation. During the year ended December 31, 2006, Virgin Mobile USA entered into a settlement agreement with the patent holder that resulted in a release from all prior claims related to those patents in exchange for cash payments. Also during 2006, Virgin Mobile USA reached a settlement agreement with a provider of a billing solution regarding that vendor’s obligation to indemnify Virgin Mobile USA for certain claims arising from the use of its products and services. As a result of these settlements and agreements, in 2006 Virgin Mobile USA reversed $15 million of the estimated loss that had been accrued in 2005. | |
(3) | On August 22, 2008, in connection with the acquisition of Helio LLC, Virgin Mobile USA issued 50,000 shares of preferred stock with a stated value of $1,000 per share. As of February 23, 2009, each share of the preferred stock became mandatorily convertible into 117.64706 shares of Class A common stock, at the earlier of (1) August 22, 2012 and (2) such time as the market price of Class A common stock exceeds $8.50 per share for a specified period. The preferred stock is also convertible at the option of the holder on or after February 22, 2010. Following the approval of the conversion feature by Virgin Mobile USA stockholders on February 23, 2009, the preferred stock is no longer potentially redeemable for cash and is reflected as stockholders’ equity in Virgin Mobile USA’s balance sheet. |
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• | managing diverse product and service offerings, subscriber plans, and sales and marketing approaches; | |
• | preserving subscriber, supplier and other important relationships and resolving potential conflicts that may arise as a result of the merger; | |
• | consolidating and integrating duplicative operations, including back-office systems; and | |
• | addressing differences in business cultures, preserving employee morale and retaining key employees, while maintaining focus on providing consistent, high quality customer service and meeting the operational and financial goals of Sprint Nextel after the merger. |
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• | the current market price of each company’s common stock may reflect a market assumption that the merger will occur and a failure to complete the merger could result in a negative perception of either or both companies by equity investors and result in a decline in the market price of the common stock of that company; | |
• | Virgin Mobile USA may be required to pay Sprint Nextel a termination fee of $14.2 million if the merger is terminated under circumstances as described in the merger agreement and summarized in this proxy statement/prospectus; | |
• | Sprint Nextel and Virgin Mobile USA will be required to pay transaction costs relating to the merger, whether or not the merger is completed; | |
• | under the merger agreement, Virgin Mobile USA is subject to restrictions on the conduct of its business prior to completing the merger which may affect its ability to execute some of its business strategies; and | |
• | matters relating to the merger (including integration planning) may require substantial commitments of time and resources by Sprint Nextel and Virgin Mobile USA management, which could otherwise have been devoted to other opportunities that may have been beneficial to Sprint Nextel and Virgin Mobile USA as separate companies. |
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• | statements relating to the benefits of the merger, including anticipated synergies and cost savings estimated to result from the merger; | |
• | statements relating to future business prospects, revenue, income and financial condition; and | |
• | statements preceded by, followed by or that include the words “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions. |
• | the failure to realize synergies from the merger in the timeframe expected or at all; | |
• | unexpected costs or liabilities; | |
• | the result of the review of the proposed merger by various regulatory agencies and any conditions imposed in connection with the consummation of the merger; | |
• | approval of the merger agreement by the stockholders of Virgin Mobile USA and satisfaction of various other conditions to the closing of the merger; | |
• | Sprint Nextel’s ability to attract and retain subscribers; | |
• | the effects of vigorous competition in a highly penetrated market; | |
• | the effect of limiting capital and operating expenditures on Sprint Nextel’s ability to improve and enhance its networks and service offerings, implement its business strategies and provide competitive new technologies; | |
• | volatility in the trading price of Sprint Nextel common stock, current economic conditions and Sprint Nextel’s ability to access capital; | |
• | the impact of third parties, such as suppliers and vendors, not meeting Sprint Nextel’s contractual requirements with Sprint Nextel due to disruptions in their business; |
• | the costs and business risks associated with providing new services and entering new geographic markets; |
• | the financial performance of Clearwire Corporation and its deployment of a WiMAX network; | |
• | unexpected results of litigation filed against Sprint Nextel or its suppliers or vendors; |
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• | the costsand/or potential customer impacts of compliance with regulatory mandates; | |
• | equipment failure, natural disasters, terrorist acts, or other breaches of network or information technology security; | |
• | changes in political, economic or other factors such as monetary policy, legal and regulatory changes or other external factors over which Sprint Nextel has no control; and |
• | other risks referenced from time to time in filings by Sprint Nextel and Virgin Mobile USA with the SEC and those factors listed in this proxy statement/prospectus under “Risk Factors” beginning on page 21. |
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• | to adopt the merger agreement; and | |
• | to approve the adjournment of the meeting, if necessary or appropriate, to solicit additional proxies if there is an insufficient number of votes to adopt the merger agreement at the time of the meeting. |
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• | in favor of the adoption of the merger agreement, approval of the merger or any other action of the stockholders of Virgin Mobile USA reasonably requested by Sprint Nextel in furtherance thereof; | |
• | against any action or agreement that is in opposition to, or competitive to or inconsistent with, the merger or that would result in a breach of any covenant, representation or warranty of the Virgin Group or SK Telecom contained in its respective voting agreement; | |
• | against any other acquisition proposal; and | |
• | against any other action, agreement or transaction that would otherwise materially interfere with, delay, postpone, discourage, frustrate the purposes of or adversely affect the merger or the other transactions contemplated by the merger agreement or each respective voting agreement or the performance by the Virgin Group or SK Telecom of its obligations under its respective voting agreement. |
• | Sprint Nextel and its direct or indirect wholly-owned subsidiaries had the right to vote one share of Class B common stock entitled to 12,058,626 votes (and no shares of Class A common stock, Class C common stock or preferred stock), or [ • ]% of the combined voting power of the outstanding shares of Virgin Mobile USA entitled to be voted at the meeting; | |
• | the Virgin Group had the right to vote 22,901,389 shares of Class A common stock, 115,062 shares of Class C common stock and [ • ] shares of preferred stock (and no shares of Class B common stock), or [ • ]% of the combined voting power of the outstanding shares of Virgin Mobile USA entitled to be voted at the meeting; | |
• | SK Telecom had the right to vote 11,192,741 shares of Class A common stock and [ • ] shares of preferred stock (and no shares of Class B common stock or Class C common stock), or [ • ]% of the combined voting power of the outstanding shares of Virgin Mobile USA entitled to be voted at the meeting; and | |
• | directors and executive officers of Virgin Mobile USA and their affiliates had the right to vote [ • ] shares of Class A common stock (and no shares of Class B common stock, Class C common stock or preferred stock), or [ • ]% of the combined voting power of the outstanding shares of Virgin Mobile USA entitled to be voted at the meeting. |
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• | all stockholders of Virgin Mobile USA, excluding the Virgin Group, SK Telecom and Sprint Nextel, will be entitled to receive a number of shares of Sprint Nextel common stock for each outstanding share of Class A common stock that they own, and cash in lieu of fractional shares, based on the exchange ratio described below; | |
• | the Virgin Group will be entitled to receive a number of shares of Sprint Nextel common stock for each outstanding share of Class A common stock and Class C common stock that it owns, and cash in lieu of fractional shares, based on the exchange ratio multiplied by 93.09%; | |
• | SK Telecom will be entitled to receive a number of shares of Sprint Nextel common stock for each outstanding share of Class A common stock that it owns, and cash in lieu of fractional shares, based on the exchange ratio multiplied by 89.84%; | |
• | the Virgin Group and SK Telecom will be entitled to receive a number of shares of Sprint Nextel common stock for each outstanding share of preferred stock that they own, and cash in lieu of fractional shares, equal to the number of shares of Class A common stock into which each share of preferred stock is convertible, multiplied by (1) in the case of the Virgin Group, the exchange ratio multiplied by 93.09%, and (2) in the case of SK Telecom, the exchange ratio multiplied by 89.84%; | |
• | the Virgin Group and SK Telecom will be entitled to receive consideration in connection with certain contractual obligations of Virgin Mobile USA, which consideration will be payable in cash or Sprint Nextel common stock, at Sprint Nextel’s election, as described in “— Voting Agreements and Other Transaction Agreements;” and | |
• | all shares of Class B common stock and shares held in the treasury of Virgin Mobile USA will be canceled at the effective time of the merger, without any consideration paid to the holders of these shares. |
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• | Challenges facing stand-alone growth prospects for Virgin Mobile USA: |
– | the overall U.S. wireless market has matured rapidly and the future growth of Virgin Mobile USA would primarily need to come from attracting consumers from other wireless providers. While there is still growth opportunity in the prepaid segment, partly due to the recession spurring consumers to re-evaluate prepaid services, it is a highly competitive segment in which margins were likely to face continued pressure; | |
– | Virgin Mobile USA faced challenges in developing and implementing growth opportunities, seeking external growth at a time of increased market competition and achieving its future projections and revenue growth; and | |
– | many of Virgin Mobile USA’s challengers have substantially greater financial, technical, personnel and marketing resources, as well as a larger market share. |
• | Strong strategic rationale based on increased growth opportunities and reduced integration risks: |
– | the alignment of Virgin Mobile USA with Sprint Nextel’s network and marketing resources would enable Virgin Mobile USA to increase its growth rate and take advantage of increasing consumer interest in prepaid wireless service; | |
– | the integration of Virgin Mobile USA’s strong brand recognition and marketing strategy with Sprint Nextel’s portfolio, including Boost Mobile and postpaid services, would enable Virgin Mobile USA to target segments of the wireless market more effectively and create new opportunities in distribution and life cycle management; | |
– | the combination of Virgin Mobile USA’s operations with Boost Mobile and Sprint Nextel would create significant efficiencies and synergies; | |
– | the possibility that Virgin Mobile USA may realize additional strategic business relationships with, and benefit from the resources of, Sprint Nextel; | |
– | the minimization of integration risks given Virgin Mobile USA’s current use of Sprint Nextel’s network platform and technology; and | |
– | the fact that Sprint Nextel’s management has deep knowledge of Virgin Mobile USA’s business and organization since Virgin Mobile USA’s inception, which further minimizes integration risks and enhances the ability of Sprint Nextel and Virgin Mobile USA to achieve efficiencies and synergies that have the potential to increase stockholder value. |
• | Superior value to strategic alternatives: |
– | the Transaction Committee, in consultation with its financial advisors, considered a range of strategic alternatives, including continuing Virgin Mobile USA’s existing business plan or pursuing an alternative business plan to maximize returns to Virgin Mobile USA’s stockholders by limiting growth, with its attendant expenses, thereby increasing earnings and cash flow, in addition to aggressively seeking other offers for Virgin Mobile USA; | |
– | none of the available alternative strategies would have provided a premium to the trading range of Class A common stock after Virgin Mobile USA’s results for the quarter ended March 31, 2009 had been announced in May 2009; | |
– | the Transaction Committee believed that it was unlikely that another purchaser would make a higher offer for Virgin Mobile USA. In this regard, the Transaction Committee noted that, although Company X had approached Virgin Mobile USA prior to the signing of the merger agreement, Company X ultimately suggested a possible transaction value below the implied offer price made by |
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Sprint Nextel, the proposal may have created a taxable event for Virgin Mobile USA stockholders and there were substantial risks regarding the ability of Company X to complete the merger, including that (1) Sprint Nextel had specifically stated that it had no obligation to consent to any other transaction with respect to its contractual consent right under Virgin Mobile USA’s bylaws and stockholders’ agreement and that it would have to seriously consider whether or not to refrain from giving its consent with respect to any transaction that would create or strengthen a competitor; (2) the Virgin Group had specifically stated that it had a contractual consent right under Virgin Mobile USA’s bylaws and stockholders’ agreement to an alternative transaction and that it would have to evaluate its consent right with respect to terms regarding its tax receivable agreement, trademark license agreement and subordinated credit agreement; and (3) based on the statements made by Sprint Nextel and the Virgin Group, the Transaction Committee believed that (i) Sprint Nextel would likely withhold its consent to the possible transaction with Company X and (ii) the Virgin Group would likely withhold its consent to the possible transaction with Company X because the terms regarding its tax receivable agreement, trademark license agreement and subordinated credit agreement offered by Company X were neither as certain nor as favorable as the terms offered by Sprint Nextel. See “— Background of the Merger” above for more details; |
– | the all stock merger consideration from Sprint Nextel represented a per share value for holders of Class A common stock (other than the Virgin Group, SK Telecom and Sprint Nextel) of $5.50 based on the merger agreement, a premium of approximately: |
§ | 41.8% over $3.88 per share, which was the closing price of Class A common stock as of July 24, 2009, the last business day prior to the day of the meeting of the Virgin Mobile USA board of directors to approve the merger agreement; | |
§ | 10.0 - 188.0% over $1.91 - $5.00 per share, which was the closing trading price range of Class A common stock for the three months prior to July 24, 2009; | |
§ | 45.5% over $3.78 per share, which was the two-week volume-weighted average price of Class A common stock for the two weeks prior to July 24, 2009; and | |
§ | 42.5% over $3.86 per share, which was the one-week volume-weighted average price of Class A common stock for the one week prior to July 24, 2009. |
– | the business diversification and larger market capitalization and public float of Sprint Nextel compared to Virgin Mobile USA would provide Virgin Mobile USA stockholders with greater liquidity and the opportunity to hold liquid stock allowing them to elect to continue to participate in the growth and development of the combined company or dispose of their shares; | |
– | the expectation that the merger would qualify as a reorganization within the meaning of Section 368(a) of the Code, in which case the receipt of the merger consideration, except in connection with any cash received in lieu of fractional shares of Sprint Nextel common stock, generally would be tax-free to Virgin Mobile USA stockholders; | |
– | the written opinion of Deutsche Bank that, as of July 27, 2009, based upon and subject to the procedures followed, assumptions made, matters considered, and limitations, qualifications and conditions set forth in its opinion, the merger consideration to be received in the merger was fair from a financial point of view to the holders of Class A common stock, excluding Sprint Nextel, the Virgin Group, SK Telecom and their affiliates; and | |
– | the fact that Sprint Nextel was able to reach agreement with Virgin Mobile USA’s other strategic stockholders, the Virgin Group and SK Telecom, relating to the repayment amounts under the tax receivable and trademark license agreements with the Virgin Group and the subordinated credit agreement. |
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• | Fair terms of the merger agreement: |
– | the conditions to effect the merger as described in “The Merger Agreement — Conditions to Completion of the Merger” are limited and can be satisfied; | |
– | the merger agreement is not subject to approval by Sprint Nextel stockholders, thus increasing the likelihood that the merger will be consummated; | |
– | no external financing is required for the transaction, which increases the likelihood that the merger will be consummated; | |
– | the provisions of the merger agreement allow Virgin Mobile USA to engage in negotiations with, and provide information to, third parties in response to credible inquiries from third parties regarding alternative acquisition proposals; and | |
– | the ability of Virgin Mobile USA to specifically enforce the terms of the merger agreement. |
• | the precise value of the merger consideration that would be delivered to Virgin Mobile USA stockholders upon closing is not certain because the merger consideration is based on an exchange ratio determined by reference to the Average Parent Stock Price. Based on a review of Sprint Nextel’s trading history and analysts’ forecasts for the Sprint Nextel common stock, the Transaction Committee negotiated a collar mechanism to provide some protection against a significant decline of Sprint Nextel’s stock price prior to the effective time of the merger; | |
• | the number of shares of Sprint Nextel common stock to be received by the public holders of Class A common stock in connection with the merger is limited by the ceiling of the exchange ratio of 1.3668 if the Average Parent Stock Price were to be lower than $4.02; | |
• | the loss of control over the future operations of Virgin Mobile USA following the merger; | |
• | the risk that the voting agreements with the Virgin Group and SK Telecom, the non-solicitation provision in the merger agreement, the termination fee and related provisions in the merger agreement could discourage third parties from seeking to negotiate a superior proposal for a business combination with Virgin Mobile USA, although they would not preclude bona fide alternative proposals; | |
• | the requirement under the merger agreement that Virgin Mobile USA obtain Sprint Nextel’s consent before it can take specified actions as described in “The Merger Agreement — Conduct of Business Prior to Closing” and that Virgin Mobile USA is otherwise restricted in the conduct of its business, so that, among other things, Virgin Mobile USA’s ability to enter into financing arrangements during this pre-closing period is limited; | |
• | the possible disruptions to Virgin Mobile USA’s business that could result from the announcement of the merger and the completion of the transactions required to effect the merger, including the diversion of management and employee attention, employee attrition, the potential inability of Virgin Mobile USA to retain, recruit and motivate its key personnel and the potential negative effect on business and customer relationships; | |
• | the risks and costs to Virgin Mobile USA if the merger does not close, and the potential effect of the resulting public announcement of termination of the merger agreement on, among other things, the market price for Class A common stock, which may reflect a market assumption that the merger will |
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occur, and the perception of Virgin Mobile USA by equity investors, Virgin Mobile USA’s operating results and Virgin Mobile USA’s ability to complete an alternative transaction; and |
• | other matters described in “Risk Factors.” |
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• | a premium of 41.8% based upon the closing price of $3.88 per share as of July 24, 2009; | |
• | a premium of 10.0 - 188.0% based upon the closing trading price range of $1.91 - $5.00 per share for three months prior to July 24, 2009; | |
�� | • | a premium of 45.5% based upon the two-week volume-weighted average price of $3.78 per share prior to July 24, 2009; and |
• | a premium of 42.5% based upon the one-week volume-weighted average price of $3.86 per share prior to July 24, 2009. |
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• | a premium of 39.3% based upon the initial exchange ratio, and 23.9% premium based on the minimum exchange ratio, to the exchange ratio implied by the closing prices of Sprint Nextel and Virgin Mobile USA as of July 24, 2009; | |
• | a premium of 46.9% based upon the initial exchange ratio, and 30.6% premium based on the minimum exchange ratio, to the exchange ratios implied by the one-month average share prices of Sprint Nextel and Virgin Mobile USA as of July 24, 2009; | |
• | a premium of 58.3% based upon the initial exchange ratio, and 40.8% premium based on the minimum exchange ratio, to the exchange ratios implied by the three-month average share prices of Sprint Nextel and Virgin Mobile USA as of July 24, 2009; | |
• | a premium of 111.0% based upon the initial exchange ratio, and 87.5% premium based on the minimum exchange ratio, to the exchange ratios implied by the six-month average share prices of Sprint Nextel and Virgin Mobile USA as of July 24, 2009; and | |
• | a premium of 142.5% based upon the initial exchange ratio, and 115.6% premium based on the minimum exchange ratio, to the exchange ratios implied by average share prices of Sprint Nextel and Virgin Mobile USA since the Virgin Mobile USA initial public offering, as of July 24, 2009. |
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• | Sprint Nextel’s belief that the transaction will enhance its ability to compete in the growing prepaid business. Customer usage of prepaid wireless services is growing with consumers keenly focused on value. Sprint Nextel believes that this transaction will strengthen its position in the growing prepaid business by bringing together under one umbrella the “Virgin Mobile” brand with Sprint Nextel’s “Boost Mobile” business. These complementary prepaid brands, each with a distinctive offer, style and appeal to different customer demographics, will continue to serve existing and prospective customers following the completion of the transaction. |
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• | Sprint Nextel’s expectation of obtaining financial benefits as a result of the transaction. The merger is expected to be free cash flow accretive for Sprint Nextel before synergies and is expected to reduce Sprint Nextel’s debt to EBITDA ratio. Furthermore, significant synergies are expected to be derived from general and administrative reductions, operational efficiencies, and streamlined distribution. In addition, thestock-for-stock structure assists in Sprint Nextel’s goal of preserving cash. | |
• | Sprint Nextel would gain deeper managerial talent with additional expertise in the prepaid business. Daniel H. Schulman, Virgin Mobile USA’s current Chief Executive Officer, would be responsible for the strategy, growth and operations of Sprint Nextel’s prepaid business after the completion of the merger. Sprint Nextel believes Mr. Schulman would bring exceptional telecom leadership credentials to Sprint Nextel. In addition to Mr. Schulman, the transaction would bring to Sprint Nextel a talented group of executives with deep experience in the prepaid business. | |
• | The transaction would enhance Sprint Nextel’s ability to cross-sell its full suite of products and services across a larger target audience. As a part of Sprint Nextel, Virgin Mobile USA would get voice and data capacity at more favorable economics, have better access to handsets and wireless devices, each of which should position Virgin Mobile USA for growth in the prepaid segment. In addition, as customers choose to move from prepaid to post-paid (or vice versa), Sprint Nextel believes it would have a greater opportunity to move customers between the Sprint brand and the Virgin Mobile USA brand. | |
• | The transaction enabled Sprint Nextel and Virgin Mobile USA to negotiate an extension of the term and scope of the trademark license agreement with the Virgin Group. Under an amended agreement which would become effective upon the completion of the merger, the term and scope of the trademark license agreement with the Virgin Group will be expanded, with the potential overall term extending (with renewal options) through 2046. |
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For the Year Ending December 31, | ||||||||||||
2009 | 2010 | 2011 | ||||||||||
(in millions) | ||||||||||||
Net service revenue(1) | $ | 1,146.7 | $ | 1,214.3 | $ | 1,297.5 | ||||||
Adjusted EBITDA(2) | 126.9 | 136.1 | 154.1 | |||||||||
Free cash flow(3) | 58.4 | 71.4 | 89.5 |
(1) | Net service revenue consists primarily of voice and mobile data services, reduced primarily by sales and E911 taxes. | |
(2) | Adjusted EBITDA is calculated as net income (loss) plus interest expense - net, income tax expense, tax receivable agreements expense, depreciation and amortization (including the amortization of intangibles associated with the acquisition of Helio LLC), write-offs of property and equipment, non-cash compensation expense, equity issued to a member and debt extinguishment costs. | |
(3) | Free cash flow is calculated as net cash provided by operating activities less capital expenditures. Free cash flow is a non-GAAP indicator of cash generated by the business after operating expenses, capital expenditures and interest expense. |
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• | no legislative changes affecting the wireless industry; | |
• | no significant economic or regulatory changes; | |
• | no significant impact from pending litigation; | |
• | no significant increase in total gross adds and churn as compared to Virgin Mobile USA’s latest results; | |
• | continuation of Virgin Mobile USA’s recent trends of an increased mix shift of gross adds and resulting customer base from prepaid to hybrid customers; | |
• | no significant increase in average revenue per user, which we refer to as ARPU, for each type of prepaid, hybrid and postpaid customer; | |
• | total ARPU and resulting net service revenue would increase marginally on a year-on-year basis due to a mix shift in customer base; | |
• | equipment margin would increase with the shift in customer base; | |
• | no significant change in cost of service as a percentage of revenue; and | |
• | no significant change in operating expenses. |
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Value of Other | ||||||||
Value of Accelerated | Severance Payments | |||||||
Equity-Based Awards | and Benefits | |||||||
Executive Officers: | ||||||||
Daniel H. Schulman | $ | 11,546,195 | $ | 4,516,667 | ||||
John D. Feehan Jr. | 3,045,945 | 1,550,000 | ||||||
Jonathan H. Marchbank | 2,525,610 | 1,650,000 | ||||||
David R.J. Messenger | 2,909,410 | 1,550,000 | ||||||
Peter Lurie | 2,800,110 | 1,275,000 | ||||||
Marie Gihuley | 504,475 | 380,000 |
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• | a lump sum payment equal to two times the sum of (1) his annual base salary in effect on the closing date of the merger and (2) his short-term target bonus amount for 2009; | |
• | a pro rata portion (based on actual performance) of the actual bonuses for any uncompleted measuring period that he would have been entitled to receive; and | |
• | full vesting of any unvested restricted stock units and a pro rata payment of his performance-based awards (based on actual performance), if any. |
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• | a lump sum payment equal to the sum of (1) his annual base salary in effect on the date of termination and (2) his target bonus amount for the year in which the termination occurs; | |
• | a pro rata portion of the actual bonuses for any uncompleted measuring period that he would have been entitled to receive; and | |
• | full vesting of any unvested restricted stock units and a pro rata payment of his performance-based awards, if any. |
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• | payment of either (1) base salary in effect on the closing date of the merger and continued health, death and disability benefits, each for 12 months following the date of termination or (2) in the event the termination occurs within 12 months of the effective time of the merger or a subsequent change in control of Sprint Nextel, a lump sum amount equal to the executive’s annual base salary in effect on the closing date of the merger; | |
• | an amount equal to the executive’s target short-term bonus for 2009; |
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• | a pro rata portion (based upon actual performance) of the actual bonuses for any uncompleted measuring period (or, in the case of an executive’s mid-term bonus for 2009, full payment of the amounts payable pursuant to Virgin Mobile USA’s 2009 Mid-Term Incentive Plan); | |
• | full vesting of any outstanding equity awards held by the executive as of the effective time of the merger; and | |
• | full vesting of any unvested restricted stock units and a pro rata payment of performance-based awards (based upon actual performance), if any. |
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• | in favor of the adoption of the merger agreement, approval of the merger or any other action of the stockholders of Virgin Mobile USA reasonably requested by Sprint Nextel in furtherance thereof; | |
• | against any action or agreement that is in opposition to, or competitive or inconsistent with, the merger or that would result in a breach of any covenant, representation or warranty of the Virgin Group or SK Telecom contained in the voting agreements; | |
• | against any other acquisition proposal; and | |
• | against any other action, agreement or transaction that would otherwise materially interfere with, delay, postpone, discourage, frustrate the purposes of or adversely affect the merger or the other transactions contemplated by the merger agreement or the voting agreements or the performance by the Virgin Group or SK Telecom of its respective obligations under the voting agreements. |
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• | all principal of and interest on all revolving loans and any fees thereon will be paid and satisfied in full and discharged, terminated and released; | |
• | any commitments to make loans to the Operating Partnership under the subordinated credit agreement will be terminated; | |
• | all security interests and other liens granted to or held by Virgin Entertainment and SK Telecom will be automatically satisfied, released and discharged; | |
• | all other obligations of the Operating Partnership contained in the subordinated credit agreement will be satisfied in full and automatically released and discharged; and | |
• | the subordinated credit agreement and all other related loan documents will be terminated and will be null and void and have no further force or effect. |
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• | the Operating Partnership, at its discretion, provides notice of non-renewal before the end of 2024; or | |
• | (1) Virgin Enterprises, at its discretion, provides notice of non-renewal on or before April 1, 2025, and (2) the Operating Partnership has less than 2,000,000 wireless customers and gross sales of less than $800 million for the calendar year 2024. |
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• | the Operating Partnership, at its discretion, provides notice of non-renewal before the end of the third year of the then-current five-year period; or | |
• | (1) Virgin Enterprises at its discretion, provides notice of non-renewal before the end of the third year of the then-current five-year period, and (2) the Operating Partnership has less than 2,000,000 wireless customers and gross sales of less than $800 million for the second year of the then-current five-year period. |
• | fails to cure a non-payment after 30 days (or other material breach after 60 days); | |
• | ceases to do business as a going concern; | |
• | is unable to pay its debts; or | |
• | enters into bankruptcy. |
• | for the first term through 2021, $12.7 million at the effective time of the merger, in cash or, at the election of Sprint Nextel at least five business days prior to the effective time of the merger, Sprint Nextel common stock (if Sprint Nextel elects to pay the amounts due in Sprint Nextel common stock, the number of shares will be determined by dividing the amount to be paid by the Average Parent Stock Price, rounded down to the nearest whole share); | |
• | for the second term through 2026, $10 million (to be adjusted for inflation) in 2022, in cash; and | |
• | for each five-year term after 2026, a scheduled prepaid royalty based on the Operating Partnership’s gross sales under the “Virgin Mobile” brand in the calendar year immediately preceding the term. |
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• | a bank or other financial institution; | |
• | a tax-exempt organization; | |
• | an S corporation or other pass-through entity for U.S. federal income tax purposes; | |
• | an insurance company; | |
• | a mutual fund; | |
• | a dealer or broker in stocks and securities, or currencies; | |
• | a trader in securities that elects themark-to-market method of accounting; | |
• | a holder of Virgin Mobile USA shares subject to the alternative minimum tax provisions of the Code; | |
• | a holder of Virgin Mobile USA shares that received Virgin Mobile USA shares through the exercise of an employee stock option, pursuant to a tax qualified retirement plan or otherwise as compensation; | |
• | a person that has a functional currency other than the U.S. dollar; | |
• | a holder of Virgin Mobile USA shares that holds Virgin Mobile USA shares as part of a hedge, straddle, constructive sale, conversion or other integrated transaction; | |
• | a U.S. expatriate; or | |
• | a holder of more than 5% of the outstanding stock of Virgin Mobile USA. |
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• | the merger will qualify for U.S. federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code; | |
• | you will not recognize gain or loss when you exchange your Virgin Mobile USA shares for Sprint Nextel common stock, except with respect to any cash received in lieu of a fractional share of Sprint Nextel common stock (as discussed below); | |
• | your aggregate tax basis in the Sprint Nextel common stock that you receive in the merger (including any fractional share interest you are deemed to receive and exchange for cash) will equal your aggregate tax basis in the Virgin Mobile USA shares you surrender; and | |
• | your holding period for the Sprint Nextel common stock that you receive in the merger will include your holding period for the shares of Virgin Mobile USA shares that you surrender in the exchange. |
• | furnish a correct taxpayer identification number and certify that you are not subject to backup |
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withholding on the substituteForm W-9 or successor form included in the letter of transmittal to be delivered to you following the completion of the merger; or |
• | otherwise establish an exemption from backup withholding. |
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• | the number of shares of Virgin Mobile USA Class A common stock into which each share of preferred stock is convertible; and | |
• | the exchange ratio multiplied by, in the case of the Virgin Group, 93.09% and, in the case of SK Telecom, 89.84%. |
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• | 2009 Performance Requirements— For converted Virgin Mobile USA stock-based awards with performance-based vesting requirements linked to calendar year 2009 performance, the determination of whether the applicable performance requirements have been met will be made based on Virgin Mobile USA’s actual performance through the end of the calendar month that ends on, or immediately precedes, the closing date of the merger and comparing this performance to the pro rata portion of the applicable annual performance target for the Virgin Mobile USA stock-based award based on the number of months in 2009 completed on or prior to the closing date of the merger. This performance will be adjusted in a manner reasonably acceptable to Sprint Nextel to eliminate the impact of costs relating to the negotiation, closing, transition and integration of the transactions contemplated by the merger agreement. | |
• | 2010 Performance Requirements— For converted Virgin Mobile USA stock-based awards with performance-based vesting linked to calendar year 2010 performance, the performance requirements will be deemed satisfied in full as of December 31, 2010 without regard to the actual performance by either Virgin Mobile USA or Sprint Nextel. |
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• | the organization, valid existence, good standing and qualification to do business of Virgin Mobile USA and its subsidiaries; | |
• | the certificates of incorporation and bylaws (or equivalent organizational documents) of Virgin Mobile USA and its subsidiaries; | |
• | the capitalization of Virgin Mobile USA; | |
• | the corporate authority of Virgin Mobile USA and the Operating Partnership, to enter into and perform the obligations contemplated by the merger agreement and each of the other transaction agreements, enforceability of the merger agreement and the other transaction agreements, approval of the merger agreement and other transaction agreements by the Virgin Mobile USA board of directors and voting requirements to consummate the merger and the other transactions contemplated by the merger agreement; | |
• | the absence of conflicts with, or violations of, organizational documents, other contracts and applicable laws, in each case, as a result of the merger; | |
• | required governmental filings and consents; | |
• | compliance with applicable laws; | |
• | the timely filing and accuracy of filings with the SEC since January 1, 2007, conformance with GAAP, compliance with the applicable provisions of the Sarbanes-Oxley Act of 2002 and the applicable listing and corporate governance rules and regulations of the NYSE, establishment of internal controls over financial reporting and disclosure controls, proper disclosure to the auditor and the audit committee and the absence of certain undisclosed liabilities; | |
• | the absence of certain changes or events since December 31, 2008, including any change, event or occurrence which has had, or would, individually or in the aggregate, reasonably be expected to have, a material adverse effect (as described below); | |
• | the absence of certain legal proceedings (pending or threatened) and orders; | |
• | employment and labor matters affecting Virgin Mobile USA and its subsidiaries, including matters relating to their employee benefit plans; |
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• | matters with respect to insurance policies; | |
• | title to, or leasehold interest in, properties and assets; | |
• | tax matters; | |
• | accuracy of information supplied by Virgin Mobile USA for inclusion in this proxy statement/prospectus and the registration statement of which it forms a part; | |
• | the delivery of a fairness opinion from Deutsche Bank to the Virgin Mobile USA board of directors and fees payable to the financial advisors in connection with the merger; | |
• | brokers’ fees payable in connection with the merger; | |
• | compliance with takeover and anti-takeover statutes and regulations; | |
• | intellectual property matters; | |
• | environmental matters; | |
• | matters with respect to material contracts, including contracts that contain covenants binding upon Virgin Mobile USA and its subsidiaries, contracts that would prevent, materially delay or materially impede Virgin Mobile USA’s ability to consummate the merger, contracts in excess of $1 million related to the borrowing of money or any guarantee, and contracts that restrict pricing; and | |
• | the absence of certain related party transactions. |
• | the organization, valid existence, good standing and qualification to do business of Sprint Nextel and Merger Sub; | |
• | the capitalization of Sprint Nextel; | |
• | the corporate authority of Sprint Nextel and Merger Sub to enter into and perform the obligations contemplated by the merger agreement and each of the other transaction agreements, as well as the enforceability of the merger agreement and the other transaction agreements; | |
• | the absence of conflicts with, or violations of, organizational documents, other contracts and applicable laws, in each case, as a result of the merger; | |
• | required governmental filings and consents; | |
• | the timely filing and accuracy of filings with the SEC since January 1, 2007, conformance with GAAP, compliance with the applicable provisions of the Sarbanes-Oxley Act of 2002 and the applicable listing and corporate governance rules and regulations of the NYSE, establishment of disclosure controls, proper disclosure to the auditor and the audit committee and the absence of certain undisclosed liabilities; |
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• | the absence of certain changes or events since December 31, 2008, including any change, event or occurrence which has had, or would, individually or in the aggregate, reasonably be expected to have, a material adverse effect (as described below); | |
• | the absence of certain legal proceedings (pending or threatened) and orders; | |
• | the absence of certain liabilities under the Employee Retirement Income Security Act of 1974, as amended; | |
• | the accuracy of information supplied by Sprint Nextel or Merger Sub for inclusion in this proxy statement/prospectus and the registration statement of which it forms a part; | |
• | brokers’ fees payable in connection with the merger; | |
• | the activities of Merger Sub; | |
• | the ownership of Virgin Mobile USA capital stock and limited partnership interests in the Operating Partnership by Sprint Nextel; and | |
• | that no vote of the stockholders of Sprint Nextel is required in connection with the merger agreement or the transactions contemplated thereby. |
• | changes in general economic, financial market or geopolitical conditions (excluding changes, effects or circumstances that do not affect that party or its subsidiaries disproportionately relative to other companies operating in the same industry); | |
• | general changes or developments in any of the industries in which that party or its subsidiaries operate (excluding changes, effects or circumstances that do not affect that party or its subsidiaries disproportionately relative to other companies operating in the same industry); | |
• | the announcement of the merger agreement and the transactions contemplated thereby, including any termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with any customers, suppliers, partners or employees of that party and its subsidiaries, or any adverse impact on that party’s credit rating from credit rating agencies, to the extent due to the announcement and performance of the merger agreement or the identity of the parties to the merger agreement, or the performance of the merger agreement and the transactions contemplated thereby, including compliance with the covenants set forth in the merger agreement; | |
• | changes in any applicable laws or regulations or applicable accounting regulations or principles or interpretations thereof, including changes in GAAP (excluding changes, effects or circumstances that do not affect that party or its subsidiaries disproportionately relative to other companies operating in the same industry); |
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• | any attack on, or by, outbreak or escalation of hostilities or war or any act of terrorism (excluding changes, effects or circumstances that do not affect that party or its subsidiaries disproportionately relative to other companies operating in the same industry); or | |
• | any failure by that party to meet any published analyst estimates or expectations of that party’s revenue, earnings or other financial performance or results of operations for any period, in and of itself, or any failure by that party to meet its internal or published projections, budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations or any change in the price of that party’s common stock, in and of itself. |
• | conduct their business in the ordinary course of business; | |
• | use their reasonable best efforts to preserve substantially intact their business organizations, to keep available the services of their current officers and employees and to preserve their present relationships with customers, suppliers and other persons with which they have material business relations; and | |
• | comply in all material respects with all applicable laws wherever their business is conducted, including the timely filing of all reports, forms or other documents with the SEC under the Securities Act of 1933, as amended, which we refer to as the Securities Act, or the Exchange Act. |
• | amend or otherwise change the organizational documents of Virgin Mobile USA or its subsidiaries; | |
• | issue, deliver, sell, pledge, dispose of or encumber any shares of capital stock, ownership interests or voting securities, or any options, warrants, convertible securities or other rights of any kind to acquire or receive any shares of capital stock, any other ownership interests or any voting securities (including stock appreciation rights, phantom stock or similar instruments) of Virgin Mobile USA or any of its subsidiaries, except for: |
– | the issuance of Virgin Mobile USA shares upon the exercise of Virgin Mobile USA stock options outstanding as of the date of the merger agreement or in connection with Virgin Mobile USA stock-based awards outstanding as of the date of the merger agreement, in each case in accordance with the terms of any Virgin Mobile USA benefit plan; or | |
– | dividends on shares of preferred stock payable on September 30, 2009; |
• | declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock; | |
• | reclassify, combine, split, subdivide, redeem, purchase or otherwise acquire any shares of capital stock of Virgin Mobile USA (other than the acquisition of Virgin Mobile USA shares tendered by employees or former employees in connection with a cashless exercise of Virgin Mobile USA stock options or in |
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order to pay taxes in connection with the exercise of Virgin Mobile USA options or the lapse of restrictions in respect of restricted stock or Virgin Mobile USA stock-based awards), or reclassify, combine, split or subdivide any capital stock or other ownership interests of any of Virgin Mobile USA’s subsidiaries; |
• | (1) acquire (whether by merger, consolidation or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any assets, in each case, which is or are, individually or in the aggregate, material to Virgin Mobile USA and its subsidiaries taken as a whole; (2) sell or otherwise dispose of (whether by merger, consolidation or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any assets, other than sales or dispositions of assets in the ordinary course of business or pursuant to existing contracts; (3) authorize or make any new capital expenditures which are, in the aggregate, in excess of the Virgin Mobile USA’s capital expenditure budget; (4) enter into any new line of business; (5) other than in the ordinary course of business consistent with past practice, enter into, amend in any material respect or waive any of its material rights under any material contract; or (6) mortgage or pledge any of its assets; | |
• | incur or modify in any material respect the terms of any indebtedness for borrowed money, or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person, or make any loans, advances or capital contributions to, or investments in, any other person (other than a subsidiary of Virgin Mobile USA) in each case, other than: |
– | borrowings under existing lines of credit in the ordinary course of business consistent with past practice; or | |
– | any letter of credit entered into in the ordinary course of business consistent with past practice; |
• | other than as required under any Virgin Mobile USA benefit plan or as required by applicable law or regulation or existing contract: |
– | increase the compensation, bonus or fringe benefits of, or make any other change in employment terms for, any of its directors, officers or employees; | |
– | grant or provide any severance or termination pay not provided for, or otherwise increase any severance or termination pay, under any Virgin Mobile USA benefit plan or existing contract; | |
– | enter into any employment, consulting, change of control or severance agreement or arrangement with any of its present or former directors, officers or other employees; or | |
– | establish, adopt, enter into or amend or terminate any Virgin Mobile USA benefit plan; |
• | make any material change in any accounting principles, except as may be required to conform to changes in statutory or regulatory accounting rules or GAAP; | |
• | other than in the ordinary course of business or as required by applicable law: |
– | make or change any material tax election or change any method of tax accounting; | |
– | enter into any settlement or compromise of any material tax liability; | |
– | file any claim for refund or amended tax return with respect to any material tax; or |
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– | take any action that could reasonably be expected to prevent the merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code; |
• | settle, compromise or discharge any litigation or claim, other than settlements, compromises or discharges of litigation or claims which (1) do not exceed, individually or in the aggregate, $2,500,000 (after taking into account the amount reserved for these matters by Virgin Mobile USA or amounts covered by insurance) and (2) do not include any obligations to be performed by Virgin Mobile USA or any of its subsidiaries following the effective time of the merger; | |
• | release or permit the release of any person from, waive or permit the waiver of any right under, fail to enforce any provision of, or grant any consent or make any election under, any confidentiality, “standstill” or similar agreement to which Virgin Mobile USA or any subsidiary thereof is a party, except, in each case, to the extent the Virgin Mobile USA board of directors determines in good faith, after consultation with its outside legal counsel, that failure to take the action would be inconsistent with its fiduciary duties under applicable law, but in such case only after providing Sprint Nextel with prior written notice of the determination; | |
• | fail to renew or maintain existing insurance policies or comparable replacement policies, other than in the ordinary course of business consistent with past practice; | |
• | agree to take any of the actions described above; or | |
• | take any action that would, or would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impede the consummation of the merger or the other transactions contemplated by the merger agreement and the other transaction agreements (except that the Virgin Mobile USA board of directors will not be restricted from taking any action in connection with the exercise of its fiduciary duties under applicable law). |
• | conduct their business in order to maintain the primary nature of Sprint Nextel’s business; and | |
• | comply in all material respects with all applicable laws wherever their business is conducted, including the timely filing of all reports, forms or other documents with the SEC under the Securities Act or the Exchange Act. |
• | amend or otherwise change Sprint Nextel’s articles of incorporation or bylaws or any similar governing instruments, in each case, that would reasonably be expected to prevent or materially delay the ability of Virgin Mobile USA to consummate the merger; | |
• | reclassify, combine, split or subdivide any shares of capital stock of Sprint Nextel or Merger Sub; | |
• | take any action that could reasonably be expected to prevent the merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code; |
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• | sell, transfer or convey all or substantially all of its properties and assets to any person; or | |
• | agree to take any of the actions described above. |
• | take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate the merger as soon as practicable; | |
• | cooperate in all respects with each other in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private party; | |
• | keep the other party reasonably informed of any communication received from, or given by such party to, the FTC, the DOJ or any other governmental entity and of any communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated by the merger agreement; | |
• | permit the other party to review any communication given by it to, and consult with each other in advance of any meeting or conference with, the FTC, the DOJ or any other governmental entity or, in connection with any proceeding by a private party, with any other person, and to the extent permitted by the FTC, the DOJ or any other applicable governmental entity or other person, give the other party the opportunity to attend and participate in the meetings and conferences; | |
• | if any objections are asserted under any antitrust law or if any suit is brought or threatened by the FTC, the DOJ or any other party challenging any of the transactions contemplated by the merger agreement as violative of any antitrust law or which would otherwise prevent, materially impede or materially delay the consummation of the merger, resolve any objections or suits so as to permit the merger to be consummated, including: |
– | resolving suits that if not so resolved could reasonably be expected to prevent, materially impede or materially delay the consummation of the merger or the other transactions contemplated by the merger agreement; | |
– | selling, holding separate or otherwise disposing of or conducting its business; or | |
– | agreeing or permitting to doing any of the above in a manner which would resolve the objections or suits; and |
• | in the event that any administrative or judicial action or proceeding is instituted (or threatened to be instituted) by a governmental entity or private party challenging the merger or any other transaction contemplated by the merger agreement, or any other agreement contemplated hereby, contest and resist the action or proceeding and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the merger. |
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• | solicit, initiate, knowingly encourage or knowingly facilitate any inquiries or the making of any proposal or offer with respect to: |
– | a tender offer or exchange offer, proposal for a merger, consolidation or other business combination involving Virgin Mobile USAand/or its subsidiaries; or | |
– | any acquisition proposal (as described below); or |
• | participate in or knowingly encourage any negotiations or discussions concerning, or provide access to its properties, books and records or any confidential information or data to, any person relating to or take any other action to knowingly facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, an acquisition proposal. |
• | take and disclose to its stockholders a position contemplated byRule 14d-9 andRule 14e-2(a) promulgated under the Exchange Act or make any disclosure to Virgin Mobile USA stockholders as, in the good faith judgment of the board of directors of Virgin Mobile USA, after receiving advice from outside counsel, is consistent with its obligations under the merger agreement and required by applicable law; | |
• | provide access to its properties, books and records and provide information or data to a person in response to an unsolicited bona fide acquisition proposal if the Virgin Mobile USA board of directors receives an executed confidentiality agreement from the person requesting the information, which agreement must be on terms substantially similar to those contained in the confidentiality agreement between Virgin Mobile USA and Sprint Nextel, if and only to the extent that (1) the Virgin Mobile USA board of directors determines in good faith, after consultation with its outside legal counsel and its financial advisor, that the acquisition proposal constitutes, or is reasonably likely to lead to, a superior proposal (as described below), and that the failure to take action would be inconsistent with its fiduciary duties under applicable law, and (2) prior to taking action, Virgin Mobile USA provides written notice of the matter to Sprint Nextel; | |
• | contact and engage in discussions with any person who has made an unsolicited bona fide acquisition proposal solely for the purpose of clarifying the acquisition proposal and any material terms and the conditions to consummation so as to determine whether the acquisition proposal is, or may reasonably be expected to lead to, a superior proposal; and/or | |
• | contact and engage in any negotiations or discussions with any person who has made an unsolicited bona fide acquisition proposal (which negotiations or discussions are not solely for clarification purposes), if and only to the extent that (1) the Virgin Mobile USA board of directors determines in good faith, after consultation with its outside legal counsel and its financial advisor, that the acquisition proposal constitutes, or is reasonably likely to lead to, a superior proposal, and that the failure to take action would be inconsistent with its fiduciary duties under applicable law, and (2) prior to taking action, Virgin Mobile USA provides written notice of the matter to Sprint Nextel. |
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• | to immediately cease and cause to be terminated any existing activities, discussions or negotiations with any persons conducted prior to the execution of the merger agreement with respect to any acquisition proposal or any potential acquisition proposal; | |
• | to promptly (and in any event within one business day after receipt) notify Sprint Nextel in writing of the receipt of any acquisition proposal (or any request for information or other inquiry that may reasonably be expected to lead to an acquisition proposal) after the date of the execution of the merger agreement and to keep Sprint Nextel reasonably informed of the status and details (including any material developments with respect to the acquisition proposal); | |
• | that neither its board of directors nor any committee thereof will recommend, adopt or approve, or propose publicly to recommend, adopt or approve, any acquisition proposal or acquisition proposal documentation; and | |
• | that its board of directors or any committee thereof will not, and neither it nor any of its subsidiaries will, execute any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement, option agreement, joint venture agreement, partnership agreement or other similar agreement constituting an acquisition proposal. |
• | Virgin Mobile USA or its board of directors may terminate the merger agreement; | |
• | the Virgin Mobile USA board of directors may approve or recommend the superior proposal to Virgin Mobile USA stockholders; and/or | |
• | concurrently with the termination of the merger agreement, Virgin Mobile USA may enter into or execute any acquisition proposal documentation with respect to the superior proposal. |
• | 10% or more of the equity interests (measured by economic or voting power) in Virgin Mobile USA on a consolidated basis; or | |
• | 10% or more of the assets of Virgin Mobile USA on a consolidated basis. |
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•�� | on terms that the Virgin Mobile USA board of directors determines in good faith, after consultation with Virgin Mobile USA’s outside legal and financial advisors, and after considering any factors the Virgin Mobile USA board of directors considers to be appropriate (including the conditionality and the timing and likelihood of consummation of the proposal), are more favorable to Virgin Mobile USA’s stockholders from a financial point of view than the transactions contemplated by the merger agreement; and | |
• | reasonably capable of being consummated, including the receipt of the approvals of the Virgin Group, SK Telecom and Sprint Nextel or their respective affiliates pursuant to contractual approval or consent rights, such as those contained in Virgin Mobile USA’s bylaws and the stockholders’ agreement to which Virgin Mobile USA and each of those stockholders is a party. |
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• | compensate Virgin Mobile USA employees who continue to be employed in good standing at substantially the same base salaries or base hourly wages as are in effect immediately prior to the effective time of the merger; | |
• | either (1) continue to provide benefits substantially comparable in the aggregate to the benefits provided under the Virgin Mobile USA employee benefit plans at the effective time of the merger, or (2) provide benefits substantially comparable in the aggregate to the benefits provided by Sprint Nextel to its similarly situated employees; and | |
• | provide for the bonuses, if any, earned by Virgin Mobile USA employees through December 31, 2009 pursuant to the terms of the Virgin Mobile USA annual and mid-term incentive plans, except that the determination of whether the applicable performance requirements have been met will be made based on Virgin Mobile USA’s actual performance through the end of the calendar month which ends on, or immediately precedes, the closing date of the merger and comparing that performance to theyear-to-date performance target through the end of the calendar month. Performance will be adjusted in a manner reasonably acceptable to Sprint Nextel to eliminate the impact of costs relating to the negotiation, closing, transition and integration of the transactions contemplated by the merger agreement. |
• | give Virgin Mobile USA employees who continue to be employed in good standing, full service credit for purposes of eligibility, vesting and, under limited circumstances, benefit accruals under any employee benefit plans provided by Sprint Nextel for the benefit of these employees, to the same extent service was recognized by Virgin Mobile USA immediately prior to the effective time of the merger; | |
• | honor the terms of the Virgin Mobile USA benefit plans, as these plans may be amended; and | |
• | make the matching contribution for 2009, which is called for under the terms of the Virgin Mobile USA 401(k) Plan. |
• | include in this proxy statement/prospectus that its board of directors has approved the merger agreement and declared it advisable, determined that the terms of the merger agreement are fair to, and in the best interests of, Virgin Mobile USA and its stockholders and recommends to its stockholders the adoption of the merger agreement and the approval of the merger; and | |
• | use its reasonable best efforts to obtain the adoption of the merger agreement by a majority of the combined voting power of outstanding Virgin Mobile USA shares entitled to vote at the stockholders’ meeting. Except as otherwise permitted in the merger agreement and set forth above under “— Agreement Not to Solicit Other Offers,” Virgin Mobile USA’s board of directors will not withdraw, |
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modify or qualify, or publicly propose to withdraw, modify or qualify, in any manner adverse to Sprint Nextel its recommendation to Virgin Mobile USA’s stockholders that they adopt the merger agreement. |
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• | $217,000,000 if the effective time of the merger occurs on or after August 31, 2009 but before September 30, 2009; | |
• | $205,000,000 if the effective time of the merger occurs on or after September 30, 2009 but before November 30, 2009; | |
• | $204,000,000 if the effective time of the merger occurs on or after November 30, 2009 but before December 31, 2009; | |
• | $197,000,000 if the effective time of the merger occurs on or after December 31, 2009 but prior to January 31, 2010; and | |
• | $192,000,000 if the effective time of the merger occurs on or after January 31, 2010. |
• | adoption of the merger agreement by Virgin Mobile USA’s stockholders; | |
• | the absence of any statute, law, rule, regulation, judgment, executive order, decree, ruling, injunction or other order (whether temporary, preliminary or permanent), enacted, entered, promulgated or enforced by any court or other governmental entity that prohibits, restrains or the consummation of the merger; | |
• | the applicable waiting period (and any extension thereof) under the HSR Act having expired or been terminated; | |
• | the registration statement onForm S-4, of which this proxy statement/prospectus forms a part, having been declared effective by the SEC and the absence of a stop order suspending the effectiveness of the registration statement or proceedings pending before, or threatened by, the SEC for such purpose; and | |
• | approval for listing on the NYSE of the shares of Sprint Nextel common stock to be issued to Virgin Mobile USA’s stockholders in the merger, subject to official notice of issuance. |
• | (1) the representations and warranties of Virgin Mobile USA regarding capitalization, authority and compliance with takeover statutes being true and correct in all respects; (2) the representations and warranties of Virgin Mobile USA qualified as to materiality or material adverse effect, other than those described in clause (1) of this paragraph, being true and correct; and (3) the representations and warranties of Virgin Mobile USA, other than those described in clauses (1) and (2) of this paragraph, that are not qualified by materiality or by material adverse effect, being true in all material respects, in each case as of the date of the merger agreement and as of the effective time of the merger as if the |
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representations and warranties were made on and as of the effective time of the merger (unless any representation or warranty is made only as of a specific date, in which case it will be true and correct in all material respects as of that specified date), except in the case of representations and warranties described in clause (3) above, where the failure to be true and correct, in the aggregate, has not had and would not reasonably be expected to have a material adverse effect on Virgin Mobile USA; |
• | Virgin Mobile USA having performed or complied with, in all material respects, all of its obligations, agreements and covenants under the merger agreement at or prior to the effective time of the merger; | |
• | absence of any instituted or pending action, investigation or proceeding by any governmental entity, or by any other person before any governmental entity, which is reasonably likely to be determined adversely to Sprint Nextel, (1) challenging or seeking to make illegal, to delay materially or otherwise, directly or indirectly, to restrain or prohibit the merger or seeking to obtain material damages relating to the transactions contemplated by the merger; (2) seeking to restrain, prohibit or materially delay the exercise of full rights of ownership or operation by Sprint Nextel or its subsidiaries of all or any material portion of the business or assets of Virgin Mobile USA and its subsidiaries, taken as a whole, or of Sprint Nextel or any of its subsidiaries; (3) seeking to impose a condition on Sprint Nextel or any of its subsidiaries that would materially deprive Sprint Nextel of the benefits of the transactions contemplated by the merger agreement and the other transaction agreements; or (4) that otherwise would reasonably be expected to have a material adverse effect on Virgin Mobile USA; | |
• | receipt by Sprint Nextel of a certificate executed by an executive officer or chief financial officer of Virgin Mobile USA as to the satisfaction of the conditions described in the preceding two paragraphs; | |
• | each of the payoff agreement, the amended trademark license agreement, the tax receivable termination agreement and Mr. Schulman’s employment agreement entered into in connection with the merger being in force and effect at the effective time of the merger, and Mr. Schulman not having rescinded the employment agreement entered into at the time of the merger agreement or advised Sprint Nextel that he is unwilling to continue employment following the effective time of the merger; | |
• | receipt by Sprint Nextel of documentation evidencing that all outstanding indebtedness and all other obligations under the senior credit agreement and the subordinated credit agreement having been paid, discharged or otherwise terminated so that each of the senior credit agreement and the subordinated credit agreement will have been effectively terminated in accordance with their terms, and that all related liens and security interests have been released; and | |
• | receipt by Sprint Nextel of releases and acknowledgements from each party to the senior credit agreement and the subordinated credit agreement that all liens and security interests have been released upon payment to such party of the amount of the indebtedness allocable to that party. |
• | the representations and warranties of Sprint Nextel and Merger Sub being true and correct in all material respects as of the date of the merger agreement and as of the effective time of the merger as if the representations and warranties were made on and as of the effective time of the merger (unless any representation or warranty is made only as of a specific date, in which case it will be true and correct in all material respects as of that specified date); | |
• | Sprint Nextel and Merger Sub having performed or complied with, in all material respects, all of its obligations, agreements and covenants under the merger agreement at or prior to the effective time of the merger; |
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• | receipt by Virgin Mobile USA of certificates of an executive officer of each of Parent and Merger Sub, certifying that the conditions set forth in the preceding two paragraphs have been satisfied; | |
• | receipt by Virgin Mobile USA of the opinion of Simpson Thacher & Bartlett LLP, dated the closing date of the merger, to the effect that the merger will be treated for U.S. federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code; and | |
• | Sprint Nextel having performed, at or prior to the effective time of the merger, all of its obligations under the payoff agreement and tax receivable termination agreement, including the payment of all amounts due by Sprint Nextel to the relevant parties to these agreements pursuant to the terms of these agreements. |
• | mutual written consent of Sprint Nextel, Merger Sub and Virgin Mobile USA; | |
• | Sprint Nextel or Virgin Mobile USA if any court or other governmental entity having jurisdiction within the United States has issued a final order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the merger and the order, decree, ruling or other action is or will have become final and non-appealable, as long as the party seeking to terminate the merger agreement pursuant to this paragraph used its reasonable best efforts to prevent, oppose and remove the order, decree or ruling or other action and the issuance of the final, non-appealable order, decree or ruling or other action is not primarily due to the failure of the party to perform any of its obligations under the merger agreement; or | |
• | Sprint Nextel or Virgin Mobile USA if the effective time of the merger has not occurred on or before March 31, 2010, but neither party may terminate the merger agreement pursuant to this paragraph if its action (or, in the case of Sprint Nextel, the action of Merger Sub) or failure (or, in the case of Sprint Nextel, the failure of Merger Sub) to timely perform any of its obligations under the merger agreement is the cause of, or resulted in, the failure of the effective time of the merger to occur on or before March 31, 2010. |
• | there has been a breach of any representation, warranty, covenant or agreement by Sprint Nextel or Merger Sub under the merger agreement such that the applicable closing conditions will not have been satisfied and the breach is incapable of being cured by March 31, 2010, as long as Virgin Mobile USA is not then in material breach of any its covenants or agreements under the merger agreement and has provided Sprint Nextel with at least 20 days’ prior written notice of its intention to terminate the merger agreement; | |
• | all of the closing conditions under the merger agreement have been satisfied, other than those conditions that by their terms are not to be satisfied until the closing, and Sprint Nextel or Merger Sub has failed to consummate the merger promptly following satisfaction of the conditions; or |
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• | prior to its stockholders adopting the merger agreement, Virgin Mobile USA receives an acquisition proposal that its board of directors determines constitutes a superior proposal, in which case Virgin Mobile USA or its board of directors may terminate the agreement in accordance with the applicable terms of the merger agreement, as described above in “— Agreement Not to Solicit Other Offers,” including payment of the required termination fee, as described below in “— Termination Fee Payable by Virgin Mobile USA.” |
• | there has been a breach of any representation, warranty, covenant or agreement by Virgin Mobile USA under the merger agreement such that the applicable closing conditions will not have been satisfied and the breach is incapable of being cured by March 31, 2010, as long as Sprint Nextel is not then in material breach of any its covenants or agreements under the merger agreement; or | |
• | prior to obtaining the Virgin Mobile USA’s stockholders adopting the merger agreement, the Virgin Mobile USA’s board of directors or any committee thereof (1) has made a “change of recommendation,” as described above in “— Recommendation of the Virgin Mobile USA Board of Directors,” or (2) has recommended, adopted or approved, or publicly proposed to recommend, adopt or approve, any acquisition proposal or acquisition proposal documentation. |
• | Virgin Mobile USA exercises its right to terminate the merger agreement upon the receipt of a superior proposal; | |
• | Sprint Nextel exercises its right to terminate the merger agreement upon the Virgin Mobile USA board of directors effecting a change of recommendation or having recommended, adopted or approved an acquisition proposal or acquisition proposal documentation; |
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• | Sprint Nextel or Virgin Mobile USA exercises its right to terminate the merger agreement upon the failure of Virgin Mobile USA’s stockholders to adopt the merger agreement at the special meeting if, prior to the vote, the Virgin Mobile USA board of directors effected a change of recommendation or recommended, adopted or approved an acquisition proposal or acquisition proposal documentation; | |
• | Sprint Nextel or Virgin Mobile USA exercises its right to terminate the merger agreement (1) due to a failure of the merger to be consummated on or before March 31, 2010 or the failure of Virgin Mobile USA’s stockholders to adopt the merger agreement, other than following a change of recommendation or the recommendation by the Virgin Mobile USA board of directors of an acquisition proposal, as described in the preceding paragraph; (2) prior to termination an acquisition proposal is made public or known to the Virgin Mobile USA board of directors and is not withdrawn; and (3) within twelve months after termination, Virgin Mobile USA enters into a definitive agreement with respect to, or consummates, the acquisition proposal; or | |
• | Sprint Nextel exercises its right to terminate the merger agreement (1) due to a breach by Virgin Mobile USA of any of its representations, warranties, covenants or agreements under the merger agreement; (2) prior to termination or breach giving rise to Sprint Nextel’s right to terminate an acquisition proposal is made public or known to the Virgin Mobile USA board of directors and is not withdrawn; and (3) within twelve months after termination, Virgin Mobile USA enters into a definitive agreement with respect to, or consummates, the acquisition proposal. |
• | extend the time for the performance of any of the obligations or other acts of the other parties; | |
• | waive any inaccuracies in the representations and warranties of the other parties; and | |
• | waive compliance by the other party with any of the other agreements or conditions contained in the merger agreement, subject to the requirements of any applicable law. |
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Number of | ||||||||
Designation | Class | Series | Shares | Par Value | ||||
Series 1 common stock | Common Stock | Series 1 | 6,000,000,000 | $2.00 per share | ||||
Series 2 common stock | Common Stock | Series 2 | 500,000,000 | $2.00 per share | ||||
Non-voting common stock | Non-Voting Common Stock | 100,000,000 | $0.01 per share | |||||
Preferred stock | Preferred Stock | Sixth Series | 3,000,000 | No par value | ||||
Seventh Series | 300,000 | No par value | ||||||
Ninth Series | 232,745 | No par value |
• | increase or decrease the number of authorized shares of Sprint Nextel common stock or Series 2 common stock; | |
• | increase or decrease the par value of the shares of Sprint Nextel common stock or Series 2 common stock; or | |
• | alter or change the powers, preferences or special rights of the shares of Sprint Nextel common stock or Series 2 common stock so as to affect them adversely. |
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• | each outstanding share of Sprint Nextel common stock will be entitled to one vote per share; and | |
• | each outstanding share of Series 2 common stock will be entitled to1/10 of a vote per share. |
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• | dividends or distributions of shares of Sprint Nextel common stock (or securities convertible into or exchangeable or exercisable for shares of Sprint Nextel common stock) on shares of Sprint Nextel common stock, as well as on preferred stock; | |
• | dividends or distributions of shares of Series 2 common stock (or securities convertible into or exchangeable or exercisable for shares of Series 2 common stock) on shares of Series 2 common stock, as well as on preferred stock; and | |
• | dividends or distributions of shares of non-voting common stock (or securities convertible into or exchangeable or exercisable for shares of non-voting common stock) on shares of non-voting common stock, as well as on preferred stock. |
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• | are entitled, in the aggregate, to the same percentage of the voting power as they had immediately before the reclassification, subdivision or combination; and | |
• | maintain all of the rights associated with that series or class of common stock set forth in Sprint Nextel’s articles of incorporation, subject to the limitations, restrictions and conditions on those rights contained in Sprint Nextel’s articles of incorporation. |
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• | the tender offer provides for the participation of the holders of Series 2 common stock on an equal basis with the Sprint Nextel common stock; and | |
• | Sprint Nextel accepts for repurchase the number of shares tendered by the holders of Sprint Nextel common stock and Series 2 common stock in proportion to the number of shares of each series tendered. |
• | any public offering or public sale of securities of Sprint Nextel, including a public offering registered under the Securities Act and a public sale under Rule 144 under the Securities Act; | |
• | any sale of securities of Sprint Nextel to a person or group if, after the sale, that person or group would own or control securities which possess in the aggregate the voting power to elect a majority of the board of directors, if the sale has been approved by the Sprint Nextel board of directors or a committee of the board; | |
• | any sale of securities of Sprint Nextel to a person or group if, after the sale, that person or group would own or control securities (excluding any non-voting common stock being converted and disposed of in |
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connection with the Voting Conversion Event) which possess in the aggregate the voting power to elect a majority of the board of directors; |
• | any sale of securities of Sprint Nextel to a person or group if, after the sale, that person or group would not, in the aggregate, own, control or have the right to acquire more than 2% of the outstanding securities of any class of voting securities; and | |
• | any distribution, disposition or sale of any securities of Sprint Nextel to a person or group in connection with a merger, consolidation or similar transaction if, after the transaction, that person or group would own or control securities which constitute in the aggregate the voting power to elect a majority of the surviving corporation’s directors, if the transaction has been approved by the Sprint Nextel board of directors or a committee of the board. |
• | the merger agreement does not amend the constituent corporation’s articles of incorporation; | |
• | each share of stock of the constituent corporation outstanding before the merger is an identical outstanding or treasury share of the surviving corporation after the merger; and | |
• | either no shares of common stock of the surviving corporation are to be issued or delivered by way of the merger or, if common stock will be issued or delivered, it will not increase the number of outstanding shares of common stock immediately before the merger by more than 20%. |
• | a merger or consolidation of Sprint Nextel or any of its subsidiaries with an interested shareholder or its affiliate; | |
• | a sale, lease, exchange, pledge, transfer or other disposition (in one transaction or a series of transactions) of assets with a fair market value of $1 million or more to or with an interested shareholder or its affiliate; | |
• | the issuance or transfer by Sprint Nextel or any of its subsidiaries (in one transaction or a series of transactions) of Sprint Nextel’s securities or securities of any of its subsidiaries in exchange for cash, securities or other property having an aggregate fair market value of $1 million or more to an interested shareholder or its affiliate; |
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• | the adoption of a plan or proposal for Sprint Nextel’s liquidation or dissolution proposed by an interested shareholder or its affiliate; or | |
• | any reclassification of securities or recapitalization of Sprint Nextel or other transaction that has the effect of increasing the proportionate share of its equity securities or equity securities of any subsidiary owned directly or indirectly by the interested shareholder or its affiliate. |
• | any purchase or other acquisition of securities made as part of a tender or exchange offer to purchase securities of the same class on the same terms to all holders of those equity securities; | |
• | any purchase, redemption, conversion or other acquisition by Sprint Nextel of Series 2 common stock from a holder of that stock pursuant to the provisions of Sprint Nextel’s articles of incorporation; or | |
• | any purchase, redemption, conversion or other acquisition by Sprint Nextel of non-voting common stock from a holder of that stock. |
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• | the number of shares and the distinctive designation of the series; | |
• | the dividend rights; | |
• | any redemption rights, terms and prices; | |
• | the terms of any retirement or sinking funds; | |
• | the rights, terms and prices, if any, by which the shares may be convertible into, or exchangeable for, other shares; | |
• | the voting power, if any; and | |
• | any other terms, conditions, special rights and protective provisions. |
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AND VIRGIN MOBILE USA STOCKHOLDERS
• | 6,000,000,000 shares of Sprint Nextel common stock, par value $2.00 per share; | |
• | 500,000,000 shares of Series 2 common stock, par value $2.00 per share; | |
• | 100,000,000 shares of non-voting common stock, par value $0.01 per share; | |
• | 3,000,000 shares of sixth series preferred stock, no par value; | |
• | 300,000 shares of seventh series preferred stock, no par value; and | |
• | 232,745 shares of ninth series zero coupon convertible preferred stock due 2013, no par value. |
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• | 25,000,000 shares of preferred stock, par value $0.01 per share, including 51,500 shares of Series A convertible preferred stock, par value $0.01 per share; | |
• | 200,000,000 shares of Class A common stock, par value $0.01 per share; | |
• | two shares of Class B common stock, par value $0.01 per share; and | |
• | 999,999 shares of Class C common stock, par value $0.01 per share. |
• | transfers between the Virgin Group and Sprint Nextel; and | |
• | transfers to trusts, corporations and partnerships controlled by a holder of Class C common stock. |
• | Sprint Nextel common stock is entitled to one vote; and | |
• | Series 2 common stock is entitled to1/10 of one vote. |
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• | Class A common stock is entitled to one vote; | |
• | Class B common stock is entitled to a number of votes that is equal to the number of shares of Class A common stock for which the partnership units of the Operating Partnership held of record by the holder are then exchangeable pursuant to the partnership agreement and Virgin Mobile USA’s certificate of incorporation on all matters on which stockholders are generally entitled to vote; | |
• | Class C common stock is entitled to one vote; and | |
• | preferred stock is entitled to one vote for each share of Class A common stock into which the preferred stock would be convertible and, with respect to the vote, the holder will have full voting rights and powers equal to the voting rights and powers of the holders of Class A common stock and is entitled to notice of any stockholders meeting or written consent in lieu thereof in accordance with Virgin Mobile USA’s certificate of incorporation and Virgin Mobile USA’s bylaws, and is entitled to vote together as a single class with holders of Class A common stock with respect to any question upon which holders of Class A common stock have the right to vote. |
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• | dividends on each outstanding share of preferred stock that will accrue at a rate per annum of 6.00%, which we refer to as the annual dividend rate; and | |
• | participating dividends of the same type as any dividends or other distribution, whether cash, in kind or other property, payable or to be made on outstanding shares of Class A common stock equal to the amount of the dividends or other distribution as would be made on the number of shares of Class A |
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common stock into which the share of preferred stock could be converted on the date of payment of dividends or other distribution on Class A common stock. |
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• | two will be designees of SK Telecom; | |
• | two will be designees of Sprint Nextel; | |
• | three will be designees of the Virgin Group; | |
• | three will be “independent directors” (as the term is used in the listing requirements of the NYSE or any other stock exchange or securities market on which Class A common stock of Virgin Mobile USA is at any time listed or quoted); and | |
• | one will be the Chief Executive Officer of Virgin Mobile USA in office at the time of designation, unless otherwise determined by the affirmative vote of a majority of all directors then serving on the board of directors at the time of the designation. |
• | if at any time the Percentage Interest, as described below, held by SK Telecom: |
– | is less than 10% but more than or equal to 5%, then SK Telecom will have the right to designate one director to the board of directors; and | |
– | is less than 5%, then SK Telecom will not have the right to designate any directors to the board of directors pursuant to Virgin Mobile USA’s bylaws; |
• | if at any time the Percentage Interest held by Sprint Nextel: |
– | is less than 10% but more than or equal to 5%, then Sprint Nextel will have the right to designate one director to the board of directors; and | |
– | is less than 5%, then Sprint Nextel will not have the right to designate any directors to the board of directors pursuant to Virgin Mobile USA’s bylaws, except that so long as the PCS services agreement remains in effect, Sprint Nextel will have the right to designate one director to the board of directors, irrespective of Sprint Nextel’s Percentage Interest; and |
• | if at any time the Percentage Interest held by the Virgin Group: |
– | is less than 25% but more than or equal to 10%, then the Virgin Group will have the right to designate two directors to the board of directors; | |
– | is less than 10% but more than or equal to 5%, then the Virgin Group will have the right to designate one director to the board of directors; and | |
– | is less than 5%, then the Virgin Group will not have the right to designate any directors to the board of directors pursuant to Virgin Mobile USA’s bylaws, except that so long as the trademark license agreement between Virgin Mobile USA and the Virgin Group remains in effect, the Virgin Group will have the right to designate one director to the board of directors, irrespective of the Virgin Group’s Percentage Interest. |
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• | the merger, consolidation, reorganization or sale of all or substantially all of the assets of Virgin Mobile USA; | |
• | the change of control of Virgin Mobile USA to a direct strategic competitor of Sprint Nextel, the Virgin Group, SK Telecom or Virgin Mobile USA; | |
• | the dissolution or liquidation of Virgin Mobile USA; | |
• | the issuance of equity securities, subject to exceptions; | |
• | the sale of assets representing 50% of Virgin Mobile USA’s assets based on the most recently available audited balance sheet; | |
• | changing the size of the board of directors; and | |
• | amending provisions of Virgin Mobile USA’s bylaws that relate to the election of directors and the consent rights of Sprint Nextel, the Virgin Group and SK Telecom. |
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• | dissolution, liquidation or bankruptcy; | |
• | the creation or issuance of any debt or the creation or issuance of any equity securities; | |
• | an amendment to Virgin Mobile USA’s bylaws; | |
• | the incurrence of indebtedness in an amount in excess of $50 million; and | |
• | the adoption of a material change to Virgin Mobile USA’s strategy or business. |
• | engaging directly or indirectly in a corporate opportunity in the same or similar lines of business as Virgin Mobile USA now engages or proposes to engage; or | |
• | doing business with any of Virgin Mobile USA’s clients, customers or vendors. |
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• | no amendment or repeal of Virgin Mobile USA’s certificate of incorporation may adversely affect the rights of the holders of Class A common stock, Class B common stock or Class C common stock, respectively, unless the holders of Class A common stock, Class B common stock or Class C common stock, as the case may be, voting separately as a class, by majority vote approve the amendment; |
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• | no provision of Virgin Mobile USA’s certificate of incorporation may be amended, altered or repealed without the affirmative vote of the holders of at least 662/3% of the then outstanding stock of Virgin Mobile USA entitled to vote generally in the election of directors; | |
• | the provisions providing for the exchange of partnership units of the Operating Partnership may be amended, altered or repealed only with the affirmative vote of the holders of at least a majority in voting power of the Class B common stock; and | |
• | the provisions pertaining to corporate opportunities and duties of the Virgin Group, SK Telecom and Sprint Nextel may be amended, altered or repealed with the affirmative vote of the holders of at least 80% of the voting power of all the then outstanding shares of stock of Virgin Mobile USA entitled to vote generally in the election of directors, voting together as a single class. |
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• | the merger agreement does not amend the constituent corporation’s articles or certificate of incorporation; | |
• | each share of stock of the constituent corporation outstanding before the merger is an identical outstanding or treasury share of the surviving corporation after the merger; and | |
• | either no shares of common stock of the surviving corporation are to be issued or delivered by way of the merger or, if common stock will be issued or delivered, it will not increase the number of outstanding shares of common stock immediately before the merger by more than 20%. |
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• | merger or consolidation with an interested stockholder or its affiliate; | |
• | a sale or other disposition of assets with a fair market value of $1 million or more to or with an interested stockholder or its affiliate; | |
• | the issuance or transfer of securities of Sprint Nextel with an aggregate fair market value of $1 million or more to an interested stockholder or its affiliate; | |
• | the adoption of a plan or proposal for the liquidation or dissolution of Sprint Nextel proposed by an interested stockholder or its affiliate; or | |
• | a reclassification or recapitalization of Sprint Nextel or other transaction which has the effect of increasing the proportionate share of the equity securities of Sprint Nextel owned directly or indirectly by the interested stockholder or its affiliate. |
• | the merger agreement does not amend the constituent corporation’s articles or certificate of incorporation; | |
• | each share of stock of the constituent corporation outstanding before the merger is an identical outstanding or treasury share of the surviving corporation after the merger; and | |
• | either no shares of common stock of the surviving corporation are to be issued or delivered by way of the merger or, if common stock will be issued or delivered, it will not increase the number of outstanding shares of common stock immediately before the merger by more than 20%. |
• | the merger, consolidation, reorganization or sale of all or substantially all of the assets of Virgin Mobile USA; and | |
• | the change of control of Virgin Mobile USA to a direct strategic competitor of Sprint Nextel, the Virgin Group, Virgin Mobile USA or SK Telecom. |
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• | before that time the corporation’s board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; | |
• | upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owns at least 85% of the corporation’s voting stock outstanding at the time the transaction commenced, excluding shares owned by persons who are directors and also officers and shares held by specified employee stock ownership plans; or | |
• | at or after that time the business combination is approved by the board of directors and authorized at a stockholders’ meeting by the affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder. |
• | the holders of a majority of the corporation’s voting stock approve an amendment to its articles of incorporation or bylaws expressly electing not to be governed by the anti-takeover provisions, which election will be effective 12 months after the adoption of the amendment and would not apply to any business combination with a person who was an interested stockholder at or before the time the amendment was approved; or | |
• | a stockholder becomes an interested stockholder “inadvertently” and as soon as possible thereafter divests itself of a sufficient number of shares so that the stockholder ceases to be an interested stockholder and would not, at any time within the three-year period immediately before a business combination between the corporation and the interested stockholder, have been an interested stockholder, but for the inadvertent acquisition. |
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• | before that time the corporation’s board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; | |
• | upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owns at least 85% of the corporation’s voting stock outstanding at the time the transaction commenced, excluding shares owned by persons who are directors and also officers and shares held by specified employee stock ownership plans; or | |
• | at or after that time the business combination is approved by the board of directors and authorized at a stockholders’ meeting by the affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder. |
• | the holders of a majority of the corporation’s voting stock approve an amendment to its articles of incorporation or bylaws expressly electing not to be governed by the anti-takeover provisions, which election will be effective 12 months after the adoption of the amendment and would not apply to any business combination with a person who was an interested stockholder at or before the time the amendment was approved; or | |
• | a stockholder becomes an interested stockholder “inadvertently” and as soon as possible thereafter divests itself of a sufficient number of shares so that the stockholder ceases to be an interested stockholder and would not, at any time within the three-year period immediately before a business combination between the corporation and the interested stockholder, have been an interested stockholder, but for the inadvertent acquisition. |
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• | listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc., which we refer to as the NASD; or | |
• | held of record by not less than 2,000 holders. |
• | stock, or stock and cash in lieu of fractional shares, of the corporation surviving or resulting from the merger or consolidation; | |
• | stock, or stock and cash in lieu of fractional shares of any other corporation which, at the effective time of the merger or consolidation, will be listed on a national securities exchange, or designated as a national market system security on an interdealer quotation system by the NASD, or held of record by at least 2,000 holders; or | |
• | a combination of the above, or in the case of any reference to stock above, depository receipts in respect of the stock, or in the case of any reference to fractional shares above, fractional depository receipts in respect of the fractional shares. |
• | listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the NASD; or | |
• | held of record by not less than 2,000 holders. |
• | stock, or stock and cash in lieu of fractional shares, of the corporation surviving or resulting from the merger or consolidation; | |
• | stock, or stock and cash in lieu of fractional shares of any other corporation which, at the effective time of the merger or consolidation, will be listed on a national securities exchange or held of record by at least 2,000 holders; or |
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• | a combination of the above, or in the case of any reference to stock above, depository receipts in respect of the stock, or in the case of any reference to fractional shares above, fractional depository receipts in respect of the fractional shares. |
• | any purchase or other acquisition of securities made as part of a tender or exchange offer to purchase securities of the same class on the same terms to all holders of those equity securities; | |
• | any purchase, redemption, conversion or other acquisition by the company of Series 2 common stock from a holder of that stock pursuant to the provisions of Sprint Nextel’s articles of incorporation; or | |
• | any purchase, redemption, conversion or other acquisition by Sprint Nextel of non-voting common stock from a holder thereof. |
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• | Annual Report onForm 10-K for the fiscal year ended December 31, 2008, filed on February 27, 2009; | |
• | Quarterly Reports onForm 10-Q for the quarters ended March 31, 2009 and June 30, 2009, filed on May 8, 2009 and August 4, 2009, respectively; | |
• | Current Reports onForm 8-K filed on January 26, 2009, as amended by Forms8-K/A filed on January 27, 2009 and August 5, 2009, March 3, 2009, March 27, 2009, July 9, 2009, July 28, 2009 and August 11, 2009; and |
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• | Amendment No. 8 toForm 8-A, filed on August 12, 2005, including any amendments or reports filed with the SEC for the purpose of updating such description. |
• | Annual Report onForm 10-K for the fiscal year ended December 31, 2008, filed on March 9, 2009; | |
• | Quarterly Reports onForm 10-Q for the quarters ended March 31, 2009 and June 30, 2009, filed on May 11, 2009 and August 10, 2009, respectively; and | |
• | Current Reports onForm 8-K and8-K/A filed on January 16, 2009, February 27, 2009, March 13, 2009, April 9, 2009, July 13, 2009, July 28, 2009 and July 31, 2009. |
Sprint Nextel Corporation 6200 Sprint Parkway Overland Park, Kansas 66251 Attention: Investor Relations Telephone:(800) 259-3755 | Virgin Mobile USA, Inc. 10 Independence Boulevard Warren, New Jersey 07059 Attention: General Counsel and Corporate Secretary Telephone: (908) 607-4000 |
501 Madison Avenue, 20th Floor
New York, NY 10022
Telephone:(888) 750-5833
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among
SPRINT NEXTEL CORPORATION,
SPRINT MOZART, INC.
and
VIRGIN MOBILE USA, INC.
Dated as of July 27, 2009
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ARTICLE I THE MERGER | A-2 | |||||
Section 1.1 | The Merger | A-2 | ||||
Section 1.2 | Closing; Effective Time | A-2 | ||||
Section 1.3 | Effects of the Merger | A-2 | ||||
Section 1.4 | Certificate of Incorporation; Bylaws | A-2 | ||||
Section 1.5 | Directors and Officers | A-2 | ||||
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS | A-2 | |||||
Section 2.1 | Conversion of Securities | A-2 | ||||
Section 2.2 | Treatment of Company Options and other Company Stock-Based Awards | A-4 | ||||
Section 2.3 | Surrender of Company Shares | A-5 | ||||
Section 2.4 | Withholding Rights | A-6 | ||||
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY | A-7 | |||||
Section 3.1 | Organization and Qualification; Subsidiaries | A-7 | ||||
Section 3.2 | Certificate of Incorporation and Bylaws | A-8 | ||||
Section 3.3 | Capitalization | A-8 | ||||
Section 3.4 | Authority | A-9 | ||||
Section 3.5 | No Conflict; Required Filings and Consents | A-9 | ||||
Section 3.6 | Compliance with Law | A-10 | ||||
Section 3.7 | SEC Filings; Financial Statements; No Undisclosed Liability | A-10 | ||||
Section 3.8 | Absence of Certain Changes or Events | A-12 | ||||
Section 3.9 | Absence of Litigation | A-12 | ||||
Section 3.10 | Employee Benefit Plans | A-12 | ||||
Section 3.11 | Labor and Employment Matters | A-13 | ||||
Section 3.12 | Insurance | A-14 | ||||
Section 3.13 | Properties and Assets | A-14 | ||||
Section 3.14 | Tax Matters | A-14 | ||||
Section 3.15 | Proxy Statement | A-15 | ||||
Section 3.16 | Opinion of Financial Advisor | A-15 | ||||
Section 3.17 | Brokers | A-15 | ||||
Section 3.18 | Takeover Statutes | A-15 | ||||
Section 3.19 | Intellectual Property | A-16 | ||||
Section 3.20 | Environmental Matters | A-17 | ||||
Section 3.21 | Contracts | A-17 | ||||
Section 3.22 | Related Party Transactions | A-18 | ||||
Section 3.23 | No Other Representations or Warranties | A-18 | ||||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB | A-19 | |||||
Section 4.1 | Organization and Qualification | A-19 | ||||
Section 4.2 | Capitalization | A-20 | ||||
Section 4.3 | Authority | A-20 | ||||
Section 4.4 | No Conflict; Required Filings and Consents | A-20 | ||||
Section 4.5 | SEC Filings; Financial Statements | A-21 |
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Section 4.6 | Absence of Certain Changes or Events | A-22 | ||||
Section 4.7 | Absence of Litigation | A-22 | ||||
Section 4.8 | ERISA | A-22 | ||||
Section 4.9 | Proxy Statement | A-22 | ||||
Section 4.10 | Brokers | A-23 | ||||
Section 4.11 | Operations of Merger Sub | A-23 | ||||
Section 4.12 | Ownership of Company Shares | A-23 | ||||
Section 4.13 | Vote/Approval Required | A-23 | ||||
Section 4.14 | No Other Representations or Warranties | A-23 | ||||
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER | A-23 | |||||
Section 5.1 | Conduct of Business of the Company Pending the Merger | A-23 | ||||
Section 5.2 | Conduct of Business of Parent and Merger Sub Pending the Merger | A-25 | ||||
Section 5.3 | No Control of Other Party’s Business | A-26 | ||||
ARTICLE VI ADDITIONAL AGREEMENTS | A-26 | |||||
Section 6.1 | Stockholders Meeting | A-26 | ||||
Section 6.2 | Certain Filings | A-27 | ||||
Section 6.3 | Resignation of Directors | A-27 | ||||
Section 6.4 | Access to Information; Confidentiality | A-27 | ||||
Section 6.5 | Acquisition Proposals | A-28 | ||||
Section 6.6 | Employment and Employee Benefits Matters | A-29 | ||||
Section 6.7 | Indemnification; Directors’ and Officers’ Insurance | A-31 | ||||
Section 6.8 | Stockholder Litigation | A-32 | ||||
Section 6.9 | Notification of Certain Matters | A-32 | ||||
Section 6.10 | Further Action; Efforts | A-32 | ||||
Section 6.11 | Public Announcements | A-34 | ||||
Section 6.12 | Section 16 Matters | A-34 | ||||
Section 6.13 | Listing | A-34 | ||||
Section 6.14 | Waiver | A-34 | ||||
Section 6.15 | Net Debt | A-34 | ||||
ARTICLE VII CONDITIONS OF MERGER | A-35 | |||||
Section 7.1 | Conditions to Obligation of Each Party to Effect the Merger | A-35 | ||||
Section 7.2 | Conditions to Obligations of Parent and Merger Sub | A-35 | ||||
Section 7.3 | Conditions to Obligations of the Company | A-36 | ||||
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER | A-37 | |||||
Section 8.1 | Termination | A-37 | ||||
Section 8.2 | Effect of Termination | A-38 | ||||
Section 8.3 | Expenses | A-39 | ||||
Section 8.4 | Procedure for Termination or Amendment | A-39 | ||||
Section 8.5 | Waiver | A-39 | ||||
ARTICLE IX GENERAL PROVISIONS | A-39 | |||||
Section 9.1 | Non-Survival of Representations, Warranties, Covenants and Agreements | A-39 | ||||
Section 9.2 | Notices | A-39 |
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Section 9.3 | Certain Definitions | A-40 | ||||
Section 9.4 | Severability | A-41 | ||||
Section 9.5 | Entire Agreement; Assignment | A-41 | ||||
Section 9.6 | Parties in Interest | A-41 | ||||
Section 9.7 | Governing Law | A-41 | ||||
Section 9.8 | Headings | A-41 | ||||
Section 9.9 | Counterparts | A-41 | ||||
Section 9.10 | Specific Performance | A-42 | ||||
Section 9.11 | Jurisdiction | A-42 | ||||
Section 9.12 | Interpretation | A-42 | ||||
Exhibits | ||||||
Exhibit A – Daniel H. Schulman Employment Agreement | ||||||
Exhibit B – Certificate of Incorporation of the Surviving Corporation | ||||||
Exhibit C – Bylaws of the Surviving Corporation |
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Acquisition Proposal | A-28 | |||
Acquisition Proposal Documentation | A-29 | |||
affiliate | A-40 | |||
Agreement | A-1 | |||
Antitrust Law | A-33 | |||
associate | A-40 | |||
Average Parent Stock Price | A-3 | |||
Book-Entry Shares | A-5 | |||
Burdensome Condition | A-34 | |||
business day | A-40 | |||
Certificate of Merger | A-2 | |||
Change of Recommendation | A-26 | |||
Class A Common Stock | A-2 | |||
Class B Common Stock | A-8 | |||
Class C Common Stock | A-2 | |||
Closing | A-2 | |||
Closing Date | A-2 | |||
Code | A-1 | |||
Company | A-1 | |||
Company Bylaws | A-8 | |||
Company Certificate of Incorporation | A-8 | |||
Company Common Stock | A-2 | |||
Company Disclosure Schedule | A-7 | |||
Company Employees | A-12 | |||
Company Option | A-4 | |||
Company Plans | A-12 | |||
Company Preferred Stock | A-3 | |||
Company Requisite Vote | A-9 | |||
Company SEC Reports | A-7 | |||
Company Securities | A-8 | |||
Company Shares | A-3 | |||
Company Stock Plan | A-8 | |||
Company Stock-Based Award | A-5 | |||
Company Termination Fee | A-38 | |||
Compensation Protection Period | A-30 | |||
Confidentiality Agreement | A-28 | |||
Contract | A-10 | |||
control | A-40 | |||
controlled | A-40 | |||
controlled by | A-40 | |||
Converted Award | A-5 | |||
Converted Option | A-4 | |||
D&O Insurance | A-31 | |||
DGCL | A-1 |
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DOJ | A-33 | |||
Effective Time | A-2 | |||
employee benefit plan | A-12 | |||
Employment Agreement | A-1 | |||
Environmental Laws | A-17 | |||
Environmental Permits | A-17 | |||
ERISA | A-12 | |||
Exchange Act | A-7 | |||
Exchange Agent | A-5 | |||
Exchange Ratio | A-3 | |||
executive officer | A-40 | |||
Financial Advisor | A-15 | |||
FTC | A-33 | |||
Governmental Entity | A-10 | |||
HSR Act | A-10 | |||
Indemnified Parties | A-31 | |||
Intellectual Property Rights | A-16 | |||
Intervening Event | A-26 | |||
IRS | A-12 | |||
knowledge | A-40 | |||
Law | A-40 | |||
Licensed Rights | A-16 | |||
Licenses | A-10 | |||
Litigation | A-12 | |||
Material Adverse Effect | A-7 | |||
Material Contract | A-18 | |||
Materials of Environmental Concern | A-17 | |||
Merger | A-1 | |||
Merger Consideration | A-3 | |||
Merger Sub | A-1 | |||
NYSE | A-10 | |||
officer | A-41 | |||
Operating Partnership | A-1 | |||
Parent | A-1 | |||
Parent Common Shares | A-20 | |||
Parent Material Adverse Effect | A-19 | |||
Parent Options | A-20 | |||
Parent Plan | A-30 | |||
Parent SEC Reports | A-19 | |||
Parent Securities | A-20 | |||
Parent Shares | A-3 | |||
person | A-41 | |||
Proxy Statement | A-15 | |||
Registered Intellectual Property Rights | A-16 | |||
Report | A-10 |
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Representatives | A-28 | |||
S-4 | A-15 | |||
Sarbanes-Oxley Act | A-10 | |||
SEC | A-7 | |||
Securities Act | A-10 | |||
Senior Debt Agreement | A-36 | |||
Series 2 Shares | A-20 | |||
SK Exchange Ratio | A-3 | |||
SK Stockholders | A-3 | |||
Stockholders Meeting | A-26 | |||
Stockholders’ Agreement | A-23 | |||
Subordinated Debt Agreement | A-1 | |||
Subordinated Debt Termination Agreement | A-1 | |||
subsidiaries | A-41 | |||
subsidiary | A-41 | |||
Superior Proposal | A-29 | |||
Surviving Corporation | A-2 | |||
Tax | A-15 | |||
Tax Receivable Termination Agreement | A-1 | |||
Tax Return | A-15 | |||
Taxes | A-15 | |||
Termination Date | A-37 | |||
Trademark License Agreement | A-1 | |||
Transaction Documents | A-1 | |||
U.S. GAAP | A-7 | |||
under common control with | A-40 | |||
Under Water Option | A-4 | |||
Virgin Group Exchange Ratio | A-3 | |||
Virgin Group Stockholders | A-3 | |||
Voting Agreements | A-1 | |||
willful and material breach | A-38 |
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6200 Sprint Parkway
Overland Park, Kansas 66251
Attention: General Counsel
Facsimile:(913) 523-9802
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6200 Sprint Parkway
Overland Park, Kansas 66251
Attention: President — Strategic Planning and Corporate Initiatives
Facsimile:(913) 523-8888
1185 Avenue of the Americas
New York, NY 10036
Attention: E. William Bates, II
Adam M. Freiman
Facsimile:(212) 556-2222
10 Independence Blvd.
Warren, NJ 07059
Attention: Peter Lurie, General Counsel
Facsimile:(908) 607-4078
425 Lexington Avenue
New York, NY 10017
Attention: Alan Klein, Esq.
Facsimile:(212) 455-2502
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By: | /s/ Daniel H. Schulman |
Title: | CEO |
By: | /s/ Keith O. Cowan |
Title: | President — Strategic Planning and Corporate Initiatives |
By: | /s/ Keith O. Cowan |
Title: | Vice President |
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Deutsche Bank Securities Inc. Mergers & Acquisitions 60 Wall Street New York, NY 10005 |
Virgin Mobile USA, Inc.
10 Independence Boulevard
Warren, NJ 07059
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Item 20. | Indemnification of Directors and Officers. |
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Item 21. | Exhibits and Financial Statement Schedules. |
Exhibit | ||||
No. | Description | |||
2 | .1 | Agreement and Plan of Merger, dated as of July 27, 2009, by and among Sprint Nextel Corporation, Sprint Mozart, Inc. and Virgin Mobile USA, Inc. (attached as Annex A to the proxy statement/prospectus)* | ||
3 | .1 | Amended and Restated Articles of Incorporation (incorporated herein by reference to Exhibit 3.1 to Sprint Nextel Corporation’s Current Report onForm 8-K filed August 18, 2005) | ||
3 | .2 | Amended and Restated Bylaws (incorporated herein by reference to Exhibit 3.2 to Sprint Nextel Corporation’s Current Report onForm 8-K filed August 18, 2005) | ||
5 | .1 | Opinion of Polsinelli Shughart PC | ||
8 | .1 | Opinion of King & Spalding LLP as to tax matters** | ||
8 | .2 | Opinion of Simpson Thacher & Bartlett LLP as to tax matters** | ||
23 | .1 | Consent of KPMG LLP | ||
23 | .2 | Consent of PricewaterhouseCoopers LLP | ||
23 | .3 | Consent of Polsinelli Shughart PC (included in Exhibit 5.1 hereto) | ||
23 | .4 | Consent of King & Spalding LLP (included in Exhibit 8.1 hereto)** | ||
23 | .5 | Consent of Simpson Thacher & Bartlett LLP (included in Exhibit 8.2 hereto)** | ||
24 | .1 | Powers of Attorney for Officers of Sprint Nextel Corporation (included in signature pages to this registration statement) | ||
24 | .2 | Powers of Attorney for Directors of Sprint Nextel Corporation | ||
99 | .1 | Voting Agreement, dated as of July 27, 2009, by and among Sprint Nextel Corporation, Corvina Holdings Limited and Cortaire Limited (incorporated herein by reference to Exhibit 10.1 of Sprint Nextel Corporation’s Current Report onForm 8-K filed July 28, 2009) | ||
99 | .2 | Voting Agreement, dated as of July 27, 2009, by and among Sprint Nextel Corporation and SK Telecom Co., Ltd. (incorporated herein by reference to Exhibit 10.2 of Sprint Nextel Corporation’s Current Report onForm 8-K filed July 28, 2009) | ||
99 | .3 | Payoff and Termination Agreement, dated as of July 27, 2009, by and among Sprint Nextel Corporation, Virgin Mobile USA, L.P., Virgin Entertainment Holdings, Inc. and SK Telecom Co., Ltd. | ||
99 | .4 | Termination and Mutual Release Agreement, dated as of July 27, 2009, by and among Sprint Nextel Corporation, Virgin Mobile USA, Inc. and Corvina Holdings Limited | ||
99 | .5 | Second Amended and Restated Trademark License Agreement, dated as of July 27, 2009, by and between Virgin Enterprises Limited and Virgin Mobile USA, L.P.*** | ||
99 | .6 | Form of Virgin Mobile USA, Inc. Proxy Card | ||
99 | .7 | Consent of Deutsche Bank Securities Inc. |
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* | Pursuant to Item 601(b)(2) ofRegulation S-K, certain schedules and similar attachments to the Agreement and Plan of Merger have been omitted. The registrant hereby agrees to furnish supplementally a copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request. | |
** | To be filed by amendment. | |
*** | Application has been made to the Securities and Exchange Commission for confidential treatment of certain provisions of this exhibit. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. |
Item 22. | Undertakings. |
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By: | /s/ Daniel R. Hesse |
Title: | Chief Executive Officer and President |
Signature | Title | Date | ||||
/s/ Daniel R. Hesse Daniel R. Hesse | Chief Executive Officer, President and Director (Principal Executive Officer) | September 3, 2009 | ||||
/s/ Robert H. Brust Robert H. Brust | Chief Financial Officer (Principal Financial Officer) | September 3, 2009 | ||||
/s/ Charles L. Hall Charles L. Hall | Senior Vice President and Controller (Principal Accounting Officer) | September 1, 2009 | ||||
* James H. Hance, Jr. | Chairman | September 3, 2009 | ||||
* Robert R. Bennett | Director | September 3, 2009 | ||||
* Gordon M. Bethune | Director | September 3, 2009 | ||||
* Larry C. Glasscock | Director | September 3, 2009 |
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Signature | Title | Date | ||||
* V. Janet Hill | Director | September 3, 2009 | ||||
* Frank Ianna | Director | September 3, 2009 | ||||
* Sven-Christer Nilsson | Director | September 3, 2009 | ||||
* William R. Nuti | Director | September 3, 2009 | ||||
* Rodney O’Neal | Director | September 3, 2009 | ||||
*By: | /s/ Charles R. Wunsch Attorney-in-fact |
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Exhibit | ||||
No. | Description | |||
2 | .1 | Agreement and Plan of Merger, dated as of July 27, 2009, by and among Sprint Nextel Corporation, Sprint Mozart, Inc. and Virgin Mobile USA, Inc. (attached as Annex A to the proxy statement/prospectus)* | ||
3 | .1 | Amended and Restated Articles of Incorporation (incorporated herein by reference to Exhibit 3.1 to Sprint Nextel Corporation’s Current Report onForm 8-K filed August 18, 2005) | ||
3 | .2 | Amended and Restated Bylaws (incorporated herein by reference to Exhibit 3.2 to Sprint Nextel Corporation’s Current Report onForm 8-K filed August 18, 2005) | ||
5 | .1 | Opinion of Polsinelli Shughart PC | ||
8 | .1 | Opinion of King & Spalding LLP as to tax matters** | ||
8 | .2 | Opinion of Simpson Thacher & Bartlett LLP as to tax matters** | ||
23 | .1 | Consent of KPMG LLP | ||
23 | .2 | Consent of PricewaterhouseCoopers LLP | ||
23 | .3 | Consent of Polsinelli Shughart PC (included in Exhibit 5.1 hereto) | ||
23 | .4 | Consent of King & Spalding LLP (included in Exhibit 8.1 hereto)** | ||
23 | .5 | Consent of Simpson Thacher & Bartlett LLP (included in Exhibit 8.2 hereto)** | ||
24 | .1 | Powers of Attorney for Officers of Sprint Nextel Corporation (included in signature pages to this registration statement) | ||
24 | .2 | Powers of Attorney for Directors of Sprint Nextel Corporation | ||
99 | .1 | Voting Agreement, dated as of July 27, 2009, by and among Sprint Nextel Corporation, Corvina Holdings Limited and Cortaire Limited (incorporated herein by reference to Exhibit 10.1 of Sprint Nextel Corporation’s Current Report onForm 8-K filed July 28, 2009) | ||
99 | .2 | Voting Agreement, dated as of July 27, 2009, by and among Sprint Nextel Corporation and SK Telecom Co., Ltd. (incorporated herein by reference to Exhibit 10.2 of Sprint Nextel Corporation’s Current Report onForm 8-K filed July 28, 2009) | ||
99 | .3 | Payoff and Termination Agreement, dated as of July 27, 2009, by and among Sprint Nextel Corporation, Virgin Mobile USA, L.P., Virgin Entertainment Holdings, Inc. and SK Telecom Co., Ltd. | ||
99 | .4 | Termination and Mutual Release Agreement, dated as of July 27, 2009, by and among Sprint Nextel Corporation, Virgin Mobile USA, Inc. and Corvina Holdings Limited | ||
99 | .5 | Second Amended and Restated Trademark License Agreement, dated as of July 27, 2009, by and between Virgin Enterprises Limited and Virgin Mobile USA, L.P.*** | ||
99 | .6 | Form of Virgin Mobile USA, Inc. Proxy Card | ||
99 | .7 | Consent of Deutsche Bank Securities Inc. |
* | Pursuant to Item 601(b)(2) ofRegulation S-K, certain schedules and similar attachments to the Agreement and Plan of Merger have been omitted. The registrant hereby agrees to furnish supplementally a copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request. | |
** | To be filed by amendment. | |
*** | Application has been made to the Securities and Exchange Commission for confidential treatment of certain provisions of this exhibit. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. |