SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use
of the Commission Only
(as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
LIN Broadcasting Corporation
--------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than
the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
Common Stock, par value $.01 per share
--------------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
25,613,644
--------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):<PAGE>
<PAGE>
Calculation of Filing Fee
Transaction Valuation Amount of Filing Fee
$3,323,370,309* $664,674.06
* For purposes of calculation of fee only. This amount
assumes the purchase of 25,613,644 shares of Common
Stock, par value $.01 per share, of LIN Broadcasting
Corporation at $129.75 net in cash per shares. The
amount of the filing fee calculated in accordance with
Regulation 240.0-11 of the Securities Exchange Act of
1934 equals 1/50 of 1% of the value of the shares to be
purchased.
--------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
$ 3,323,370,309
--------------------------------------------------------------
(5) Total fee paid:
$664,674.06
--------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
--------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
--------------------------------------------------------------
(1) Amount Previously Paid:
--------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------
(3) Filing Party:
--------------------------------------------------------------
(4) Date Filed:
--------------------------------------------------------------<PAGE>
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 10, 1995
PRELIMINARY COPY
[LIN Broadcasting Letterhead]
July , 1995
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of LIN Broadcasting Corporation, which will be held
on _____________, August __, 1995 at 10:00 a.m., local time, at
________________________.
At the Annual Meeting you will be asked to consider and vote
upon a proposal to approve and adopt an Agreement and Plan of
Merger among LIN, McCaw Cellular Communications, Inc., a wholly
owned subsidiary of AT&T Corp., and two subsidiaries of McCaw.
If the Merger is consummated, each publicly held share of LIN
Common Stock (other than Dissenting Shares (as defined in the
accompanying Proxy Statement)) will be converted into the right
to receive $129.50 in cash, plus, under certain circumstances as
set forth in the accompanying Proxy Statement, up to an
additional $0.25, plus an amount, if any, equal to interest
thereon at an annual rate of 5.5% from September 15, 1995 until
closing if the Merger does not close on or before that date. The
economic terms of the Merger were determined in connection with
the proposed settlement of litigation relating to the original
merger agreement among LIN, McCaw and two subsidiaries of McCaw,
in which McCaw would have acquired the publicly held shares of
LIN Common Stock for $127.50 in cash, without interest, and in
connection with discussions with the LIN Independent Directors
(as defined in the accompanying Proxy Statement). The original
price of $127.50 per share had been determined as the private
market value of the LIN Common Stock pursuant to the Private
Market Value Guarantee ("PMVG") entered into by McCaw and LIN in
1989 in connection with McCaw's acquisition of control of LIN.
At the Annual Meeting, you will also be asked to elect ten
directors to serve until the next Annual Meeting or earlier
consummation of the Merger.
The Board of Directors of LIN, consisting of eight designees
of McCaw and three LIN Independent Directors, has unanimously
approved the Merger Agreement and the Merger and determined that
the Merger is fair to the public stockholders of LIN, and
unanimously recommends that LIN stockholders vote in favor of the
Merger Agreement and the Merger.
The affirmative vote of the holders of shares of LIN Common
Stock representing at least a majority of the shares not held by
McCaw and its affiliates (or any Group Members as defined in the
accompanying Proxy Statement) present and entitled to vote at the
Annual Meeting is necessary to approve the Merger Agreement and
the Merger. Pursuant to the PMVG, a majority of the publicly
held shares of LIN Common Stock must be present (or represented
by proxy) at the Annual Meeting for purposes of such vote. In
addition, McCaw's obligation to complete the Merger is
conditioned on, among other things, final court approval of the
proposed settlement of litigation, as described in the
accompanying Proxy Statement.
You should read carefully the accompanying Notice of Annual
Meeting of Stockholders and the Proxy Statement for further
details of the Merger and additional related information.
Whether or not you plan to attend the Annual Meeting, please
complete, sign and date the enclosed proxy card and return it
promptly in the enclosed postage prepaid envelope. If you attend
the Annual Meeting, you may vote in person if you wish, even
though you previously have returned your proxy card. Your prompt
cooperation will be greatly appreciated.
Please do not send your share certificates with your proxy
card. If the Merger Agreement and the Merger are approved by the
LIN stockholders and all other conditions to the Merger are
satisfied or waived, you will receive a transmittal form and
instructions for the surrender of your shares and payment with
respect thereto.
Sincerely,
Lewis M. Chakrin
Chairman
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD.<PAGE>
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 10, 1995
PRELIMINARY COPY
LIN BROADCASTING CORPORATION
5295 Carillon Point
Kirkland, Washington 98033
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST __, 1995
TO THE STOCKHOLDERS OF LIN BROADCASTING CORPORATION:
Notice is hereby given that the Annual Meeting of the
Stockholders (the "Annual Meeting") of LIN Broadcasting
Corporation, a Delaware corporation ("LIN"), will be held on
________, August __, 1995 at 10:00 a.m., local time, at
_________________________________, for the following purposes:
1. To consider and vote upon a proposal to approve
and adopt an Agreement and Plan of Merger, dated April 28,
1995, as amended and restated June 30, 1995 (the "Merger
Agreement"), among LIN, McCaw Cellular Communications, Inc.,
a Delaware corporation ("McCaw") and a wholly owned
subsidiary of AT&T Corp., MMM Holdings, Inc., a Delaware
corporation ("Holdings") and a wholly owned subsidiary of
McCaw, and MMM Acquisition Corp., a Delaware corporation
("Merger Sub") and a wholly owned subsidiary of Holdings,
and the merger of Merger Sub into LIN upon the terms and
subject to the conditions set forth in the Merger Agreement
(the "Merger"). Pursuant to the Merger Agreement, LIN will
become a wholly owned subsidiary of Holdings, and each share
of Common Stock, par value $.01 per share (the "LIN Common
Shares"), of LIN issued and outstanding immediately prior to
the Merger (other than LIN Common Shares held by McCaw or
any of its wholly owned subsidiaries, in the treasury of LIN
or by any wholly owned subsidiary of LIN, which LIN Common
Shares, by virtue of the Merger and without any action on
the part of the holders thereof, will automatically be
cancelled and retired and will cease to exist with no
payment being made with respect thereto, and other than any
Dissenting Shares (as defined in the accompanying Proxy
Statement)) will be converted into the right to receive
$129.50 in cash, plus up to an additional $0.25 under
certain circumstances as set forth in the accompanying Proxy
Statement, plus an amount, if any, equal to interest thereon
at an annual rate of 5.5% from September 15, 1995 until
closing if the Merger does not close on or before September
15, 1995. THE MERGER IS MORE COMPLETELY DESCRIBED IN THE
ACCOMPANYING PROXY STATEMENT, AND A COPY OF THE MERGER
AGREEMENT IS ATTACHED AS APPENDIX A THERETO.
2. To elect ten directors to serve until the next
Annual Meeting or earlier consummation of the Merger or
until their successors are duly elected and qualified.
3. To transact such other business as may properly be
brought before the Annual Meeting or any adjournments or
postponements thereof.
Only holders of record of LIN Common Shares at the close of
business on July 28, 1995, the record date for the Annual Meeting
(the "Record Date"), are entitled to notice of and to vote at the
Annual Meeting and any adjournments or postponements thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE. PLEASE DO NOT
SEND ANY SHARE CERTIFICATES AT THIS TIME. YOUR PROXY MAY BE
REVOKED AT ANY TIME BEFORE IT IS VOTED BY SIGNING AND RETURNING A
LATER-DATED PROXY WITH RESPECT TO THE SAME LIN COMMON SHARES, BY
FILING WITH THE SECRETARY OF LIN A WRITTEN REVOCATION BEARING A
LATER DATE, OR BY ATTENDING AND VOTING AT THE ANNUAL MEETING.
LIN BROADCASTING CORPORATION
By: ______________________________
Secretary
Kirkland, Washington
July __, 1995<PAGE>
<PAGE> i
SUBJECT TO COMPLETION, DATED JULY 10, 1995
PRELIMINARY COPY
LIN BROADCASTING CORPORATION
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST __, 1995
LIN Broadcasting Corporation, a Delaware corporation
("LIN"), is furnishing this Proxy Statement to its stockholders
in connection with the solicitation of proxies by the Board of
Directors of LIN (the "LIN Board") for use at the Annual Meeting
of Stockholders of LIN to be held on _____________, August __,
1995 and at any adjournments or postponements thereof (the
"Annual Meeting").
At the Annual Meeting, LIN stockholders will consider and
vote upon a proposal to approve and adopt an Agreement and Plan
of Merger, dated April 28, 1995, as amended and restated June 30,
1995 (the "Merger Agreement"), among LIN, McCaw Cellular
Communications, Inc., a Delaware corporation ("McCaw") and a
wholly owned subsidiary of AT&T Corp., a New York corporation
("AT&T"), MMM Holdings, Inc., a Delaware corporation ("Holdings")
and a wholly owned subsidiary of McCaw, and MMM Acquisition
Corp., a Delaware corporation ("Merger Sub") and a wholly owned
subsidiary of Holdings, and the merger of Merger Sub into LIN
upon the terms and subject to the conditions set forth in the
Merger Agreement (the "Merger"). In the Merger, LIN will become
a wholly owned subsidiary of Holdings (and an indirect wholly
owned subsidiary of AT&T and McCaw), and each share of Common
Stock, par value $.01 per share (the "LIN Common Shares," which
term shall include, unless the context requires otherwise, the
associated LIN Rights, as defined herein), of LIN issued and
outstanding immediately prior to the Merger (other than LIN
Common Shares held by McCaw or any of its wholly owned
subsidiaries, in the treasury of LIN or by any wholly owned
subsidiary of LIN, which LIN Common Shares, by virtue of the
Merger and without any action on the part of the holders thereof,
will be automatically cancelled and retired and will cease to
exist with no payment being made with respect thereto, and other
than any Dissenting Shares (as defined herein)), will be
converted into the right to receive (i) $129.50 in cash, plus
(ii) the Additional Amount (as defined below), if any, plus (iii)
the Accretion Amount (as defined below), if any (collectively,
the "Merger Consideration"). The term "Additional Amount" means
$0.25 less an amount equal to (x) the excess over $4 million of
the total fee awarded by a final and nonappealable order of the
Delaware Chancery Court to the plaintiffs' attorneys in <PAGE>
<PAGE> ii
connection with the settlement of certain lawsuits (the
"Stockholders Litigation") described under "SPECIAL FACTORS--Litigation"
divided by (y) the number of LIN Common Shares issued
and outstanding immediately prior to the Effective Time, other
than LIN Common Shares owned by McCaw or any of its wholly owned
subsidiaries and LIN Common Shares held in the treasury of LIN or
by any wholly owned subsidiary of LIN. The term "Accretion
Amount" means an amount, if any, equal to the amount of simple
interest that would accrue on $129.50 plus the Additional Amount
(if any) at a rate of five and one-half percent (5.5%) per annum
from, but not including, September 15, 1995 through, and
including, the date upon which the Closing (as defined herein)
occurs. See "THE MERGER -- Terms of the Merger." At the Annual
Meeting, stockholders will also be asked to elect ten directors
to serve until the next Annual Meeting or earlier consummation of
the Merger or until their successors are duly elected and
qualified.
The economic terms of the Merger were determined in
connection with the proposed settlement of the Stockholders
Litigation and discussions with the LIN Independent Directors (as
defined below). The original merger agreement among McCaw,
Holdings, Merger Sub and LIN, prior to its amendment and
restatement (the "Original Merger Agreement"), provided for the
acquisition by McCaw of the publicly held LIN Common Shares at a
price of $127.50 per share, without interest. The price of
$127.50 per LIN Common Share had been determined as the private
market value per LIN Common Share under the Private Market Value
Guarantee, dated December 11, 1989, as amended (the "PMVG"),
between McCaw and LIN. See "SPECIAL FACTORS--Background of the
Merger" and "--Terms of the PMVG."
The LIN Board, consisting of eight designees of McCaw and
three directors designated as "Independent Directors" pursuant to
the terms of the PMVG (the "LIN Independent Directors"), has
unanimously approved the Merger Agreement and the Merger and
determined that the Merger is fair to the public stockholders of
LIN, and unanimously recommends that LIN stockholders vote in
favor of the Merger Agreement and the Merger. See "SPECIAL
FACTORS -- Fairness of the Transaction; Recommendations" and "--
Interests of Certain Persons in the Merger; Conflicts of
Interest."
In the event the Merger Agreement and the Merger are not
approved by the requisite vote of the LIN stockholders at the
Annual Meeting (assuming the Annual Meeting and such vote occur
by December 31, 1995), the PMVG will remain in effect in
accordance with its terms, except that McCaw's obligation either
to acquire the LIN Public Shares (as defined herein) or to put
all of LIN up for sale will terminate. In the event the Merger <PAGE>
<PAGE> iii
Agreement and the Merger are approved by the requisite vote of
the LIN stockholders by December 31, 1995, the PMVG provides that
McCaw will have until August 31, 1996 to complete the Merger, so
long as the Merger is being pursued in good faith by McCaw and
the failure to complete the Merger is due to regulatory delays or
litigation. Otherwise, under the PMVG, McCaw will have until
December 31, 1995 to complete the Merger. In either case, if the
Merger is not completed by the applicable date, the PMVG provides
that McCaw will put LIN in its entirety up for sale under the
direction of the LIN Independent Directors in a manner intended
by the LIN Independent Directors to maximize value for all LIN
Common Shares. See "SPECIAL FACTORS -- Terms of the PMVG."
This Proxy Statement and the accompanying form of proxy are
first being mailed to LIN stockholders on or about July __, 1995.
THE MERGER HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
The date of this Proxy Statement is July __, 1995.<PAGE>
<PAGE> iv
ADDITIONAL INFORMATION
Pursuant to the requirements of Section 13(e) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and Rule 13e-3 promulgated thereunder, LIN, as issuer of the
class of equity securities which is the subject of the Rule 13e-3
transaction, and AT&T, McCaw, Holdings and Merger Sub, as its
affiliates, have filed with the Securities and Exchange
Commission (the "Commission") a Transaction Statement on Schedule
13E-3 (the "Schedule 13E-3") relating to the transactions
contemplated by the Merger Agreement. As permitted by the rules
and regulations of the Commission, this Proxy Statement omits
certain information, exhibits and undertakings contained in the
Schedule 13E-3. Such additional information can be inspected at
and obtained from the Commission in the manner set forth below
under "AVAILABLE INFORMATION."
Statements contained herein concerning any documents are not
necessarily complete and, in each instance, reference is made to
the copy of such document filed as an exhibit to the Schedule
13E-3. Each such statement is qualified in its entirety by such
reference.
AVAILABLE INFORMATION
LIN is subject to the information and reporting requirements
of the Exchange Act and, in accordance therewith, files reports,
proxy statements and other information with the Commission. Such
reports, proxy statements and other information may be inspected
and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549 and at certain regional offices of the Commission located
at Suite 1400, Northwestern Atrium Center, 500 West Madison
Street, Chicago, Illinois 60661; and 7 World Trade Center, 13th
Floor, New York, New York 10048. Copies of such information can
be obtained at prescribed rates from the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549.
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF
ANY SUCH DOCUMENTS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH
ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE THEREIN, ARE
AVAILABLE WITHOUT CHARGE TO ANY PERSON, INCLUDING ANY BENEFICIAL
OWNER, TO WHOM THIS PROXY STATEMENT IS DELIVERED UPON WRITTEN OR
ORAL REQUEST TO SECRETARY, LIN BROADCASTING CORPORATION, 5295
CARILLON POINT, KIRKLAND, WASHINGTON 98033, TELEPHONE NUMBER
(206) 828-1902. TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS
PRIOR TO THE ANNUAL MEETING, ANY REQUEST SHOULD BE MADE BEFORE
AUGUST __, 1995.<PAGE>
<PAGE> v
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by LIN with the
Commission pursuant to the Exchange Act are incorporated herein
by this reference:
1. LIN's Annual Report on Form 10-K for the year ended
December 31, 1994, as amended by Amendment No. 1
thereto on Form 10-K/A;
2. LIN's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1995; and
3. LIN's Current Reports on Form 8-K dated December 28,
1994, March 7, 1995, April 28, 1995 and June 30, 1995.
4. The description of the LIN Rights contained in LIN's
Registration Statement on Form 8-A dated as of May 2,
1988, as amended by amendments on Form 8 dated as of
January 13, 1989, June 19, 1989, September 10, 1989 and
March 2, 1990 and on Form 8-A/A dated as of November
12, 1993.
All documents filed by LIN pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date hereof and
prior to the date of the Annual Meeting shall be deemed to be
incorporated by reference herein and to be a part hereof from the
date any such document is filed.
Any statements contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes hereof to the extent that
a statement contained herein (or in any other subsequently filed
document which also is incorporated by reference herein) modifies
or supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part hereof except
as so modified or superseded. All information appearing in this
Proxy Statement is qualified in its entirety by the information
and financial statements (including notes thereto) appearing in
the documents incorporated herein by reference, except to the
extent set forth in the immediately preceding statement.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS WITH RESPECT TO THE MATTERS DESCRIBED IN THIS
PROXY STATEMENT OTHER THAN THOSE CONTAINED HEREIN OR IN THE
DOCUMENTS INCORPORATED BY REFERENCE HEREIN. ANY INFORMATION OR
REPRESENTATIONS WITH RESPECT TO SUCH MATTERS NOT CONTAINED HEREIN
OR THEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
LIN. THE DELIVERY OF THIS PROXY STATEMENT SHALL NOT, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
<PAGE>
<PAGE> vi
CHANGE IN THE AFFAIRS OF LIN SINCE THE DATE HEREOF OR THAT THE
INFORMATION IN THIS PROXY STATEMENT OR IN THE DOCUMENTS
INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THEREOF.
<PAGE>
<PAGE> vii
TABLE OF CONTENTS
Page
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . iv
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . iv
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. . .. . . . v
INDEX OF DEFINED TERMS . .. . . . . . . . . . . . . . . . . x
SUMMARY. . .. . . . . . . . . . . . . . . . . . . . . . . . 1
THE ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . 20
Annual Meeting . . . . . . . . . . . . . . . . . . . . . 20
Record Date; Shares Entitled to Vote; Vote Required. .. . 21
Proxies; Proxy Solicitation. .. . . . . . . . . . . . . . 23
SPECIAL FACTORS. . .. . . . . . . . . . . . . . . . . . . . 24
Background of the Merger . . . . . . . . . . . . . . . . 24
Purpose, Structure and Reasons for the Merger. .. . . . . 34
Fairness of the Transaction; Recommendations . .. . . . . 35
Fairness Opinion of Wasserstein Perella. . . . .. . . . . 39
Private Market Value View of Morgan Stanley. . .. . . . . 48
Private Market Value View of Bear Stearns and
Lehman Brothers. . . . . . . . . . . . . . .. . . . . . 60
Private Market Value Determination of Wasserstein
Perella. . . . . . . . . . . . . . . . . . .. . . . . . 75
Certain Projections. . . . . . . . . . . . . .. . . . . . 82
Accounting Treatment . . . . . . . . . . . . .. . . . . . 97
Interests of Certain Persons in the Merger,
Conflicts of Interest. . . . . . . . . . .. . . . . . . 97
Certain Effects of the Merger; Operations of LIN
After the Merger . . . . . . . . . . . . .. . . . . . . 99
Certain Federal Income Tax Consequences. . .. . . . . . . 100
Terms of the PMVG. . . . . . . . . . . . . .. . . . . . . 101
Litigation . . . . . . . . . . . . . . . . .. . . . . . . 106
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . 109
Terms of the Merger. . .. . . . . . . . . . . . . . . . . 109
Effective Time of the Merger .. . . . . . . . . . . . . . 111
Payment for Shares . . . . . .. . . . . . . . . . . . . . 111
Representations and Warranties. . . . . . . . . . . . . . 113
Certain Covenants of McCaw . . . . . . . . . . . . . . . 114
Business of LIN Pending the Merger . .. . . . . . . . . . 114
Reasonable Efforts . . . . . . . . . .. . . . . . . . . . 115
Conditions; Waivers. . . . . . . . . .. . . . . . . . . . 115
Termination, Amendment and Waiver. . .. . . . . . . . . . 116
Regulatory Approvals . . . . . . . . .. . . . . . . . . . 118
Expenses and Fees. . . . . . . . . . .. . . . . . . . . . 118
<PAGE>
<PAGE> viii
Page
FINANCING OF THE MERGER. . . . . . . . . . . . . . . . . . 119
RIGHTS OF DISSENTING STOCKHOLDERS. . . . . . . . . . . . . 119
ELECTION OF DIRECTORS. .. . . . . . . . . . . . . . . . . . 120
Nominees for Director.. . . . . . . . . . . . . . . . . . 120
Arrangements for the Election of Directors . . . . . . . 123
LIN Board Committees and Meetings. . . . . . . . . . . . 123
Director Compensation. . . . . . . . . . . . . . . . . . 124
EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . 125
EXECUTIVE COMPENSATION . .. . . . . . . . . . . . . . . . . 126
Summary Compensation Table . . . . . . . . . . . . . . . 127
Option Grants in Fiscal Year 1994. . . . . . . . . . . . 130
Aggregated Option Exercises in Fiscal Year 1994 and
Fiscal Year-End Option Values. . . . . . . . . . . . . 131
Pension Plan . . . . . . . . . . . . . . . . . . . . . . 132
Pension Plan Table . . . . . . . . . . . . . . . . . . . 133
Employment Contracts and Termination of Employment
and Change-in-Control Arrangements . . . . . . . . . . 133
Board Committee Report on Executive Compensation . . . . 136
Stock Price Performance. . . . . . . . . . . . . . . . . 139
Compliance with Section 16(a) of the Exchange Act . . . . 140
CERTAIN INFORMATION REGARDING AT&T, McCAW, HOLDINGS,
MERGER SUB AND LIN .. . . . . . . . . . . . . . . . . . . 140
AT&T . . . . . . . .. . . . . . . . . . . . . . . . . . . 140
McCaw. . . . . . . .. . . . . . . . . . . . . . . . . . . 140
Holdings . . . . . .. . . . . . . . . . . . . . . . . . . 140
Merger Sub . . . . .. . . . . . . . . . . . . . . . . . . 141
LIN. . . . . . . . .. . . . . . . . . . . . . . . . . . . 141
Certain Transactions Among LIN, AT&T and McCaw . .. . . . 141
Relationship with LIN Television . . . . . . . . .. . . . 143
MARKET PRICES OF LIN COMMON SHARES; DIVIDEND HISTORY. . . . 146
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT . .. . . . . . . . . . . . . . . . . . . . 148
Principal Stockholders .. . . . . . . . . . . . . . . . . 148
Security Ownership of Management .. . . . . . . . . . . . 149
Beneficial Ownership of AT&T Common Shares . . .. . . . . 150
CURRENT INFORMATION: DELISTING AND DEREGISTRATION . . . . 152
<PAGE>
<PAGE> ix
Page
INDEPENDENT AUDITORS . . . . . .. . . . . . . . . . . . . . 152
PROPOSALS BY LIN STOCKHOLDERS. . . . . . . . . . . . . . . 152
APPENDIX A Agreement and Plan of Merger, dated April 28,
1995, as amended and restated June 30, 1995,
among McCaw, Holdings, Merger Sub and LIN.
APPENDIX B Fairness Opinion of Wasserstein Perella.
APPENDIX C Summary of Appraisal Rights.
APPENDIX D Private Market Value Guarantee, dated
December 11, 1989, between McCaw and LIN, as
amended.
APPENDIX E Certain Information Regarding Directors and
Executive Officers of AT&T, McCaw, Holdings and
Merger Sub. <PAGE>
<PAGE> x
INDEX OF DEFINED TERMS
Term Page
1969 Plan. . . . . . . . . . . . . . . . . . . . . . . . . . 134
Accretion Amount . . . . . . . . . . . . . . . . . . . . . . ii
Additional Amount. . . .. . . . . . . . . . . . . . . . . . . i
AirTouch . . . . . . . .. . . . . . . . . . . . . . . . . . . 44
Annual Meeting . . . . .. . . . . . . . . . . . . . . . . . . i
ARPU . . . . . . . . . .. . . . . . . . . . . . . . . . . . . 64
Associated . . . . . . .. . . . . . . . . . . . . . . . . . . 56
Assumption Ratio . . . .. . . . . . . . . . . . . . . . . . . 110
AT&T . . . . . . . . . .. . . . . . . . . . . . . . . . . . . i
AT&T Common Shares . . .. . . . . . . . . . . . . . . . . . . 27
Audit Committee. . . . .. . . . . . . . . . . . . . . . . . . 123
Base Case. . . . . . . .. . . . . . . . . . . . . . . . . . . 41
Bear Stearns . . . . . .. . . . . . . . . . . . . . . . . . . 5
Bell Atlantic. . . . . .. . . . . . . . . . . . . . . . . . . 45
BellSouth. . . . . . . .. . . . . . . . . . . . . . . . . . . 24
BellSouth Merger Agreement .. . . . . . . . . . . . . . . . . 24
CDPD . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 83
Cellular Communications. . .. . . . . . . . . . . . . . . . . 44
Centennial . . . . . . . . .. . . . . . . . . . . . . . . . . 44
Certificates . . . . . . . .. . . . . . . . . . . . . . . . . 111
churn. . . . . . . . . . . .. . . . . . . . . . . . . . . . . 83
CICC . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 144
Closing. . . . . . . . . . .. . . . . . . . . . . . . . . . . 115
Code . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 105
Commission . . . . . . . . .. . . . . . . . . . . . . . . . . iv
CommNet. . . . . . . . . . .. . . . . . . . . . . . . . . . . 44
Compensation Committee . . .. . . . . . . . . . . . . . . . . 124
Contel . . . . . . . . . . .. . . . . . . . . . . . . . . . . 56
CRSP . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 139
Definition . . . . . . . . .. . . . . . . . . . . . . . . . . 60
Delaware Chancery Court. . .. . . . . . . . . . . . . . . . . C-2
DGCL . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 6
Dissenting Shares. . . . . .. . . . . . . . . . . . . . . . . 7
EBITDA . . . . . . . . . . .. . . . . . . . . . . . . . . . . 43
Effective Time . . . . . . .. . . . . . . . . . . . . . . . . 6
ERISA. . . . . . . . . . . .. . . . . . . . . . . . . . . . . 132
Escrow Account . . . . . . .. . . . . . . . . . . . . . . . . 112
Escrow Amount. . . . . . . .. . . . . . . . . . . . . . . . . 113
ESMR . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 64
ESPP . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 147
Exchange Act . . . . . . . .. . . . . . . . . . . . . . . . . iv
Executive Plan . . . . . . .. . . . . . . . . . . . . . . . . 135
Fairness Opinion . . . . . .. . . . . . . . . . . . . . . . . 4
Group Members. . . . . . . .. . . . . . . . . . . . . . . . . 26
GTE. . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 56
Holdings . . . . . . . . . .. . . . . . . . . . . . . . . . . i
Indemnified Parties. . . . .. . . . . . . . . . . . . . . . . 11
<PAGE>
<PAGE> xi
Term Page
initial public trading view. . . . . . . . . . . . . . . . . 72
LCH Preferred Stock. . .. . . . . . . . . . . . . . . . . . . 17
Lehman Brothers. . . . .. . . . . . . . . . . . . . . . . . . 5
LIN . . . . . . . . . .. . . . . . . . . . . . . . . . . . . i
LIN Board. . . . . . . .. . . . . . . . . . . . . . . . . . . i
LIN Closing. . . . . . .. . . . . . . . . . . . . . . . . . . 135
LIN Common Shares. . . .. . . . . . . . . . . . . . . . . . . i
LIN Independent Directors . . . . . . . . . . . . . . . . . . ii
LIN Public Shares. . . . . . . . . . . . . . . . . . . . . . 2
LIN Rights . . . . . . . . . . . . . . . . . . . . . . . . . 113
LIN Television . . . . . . . . . . . . . . . . . . . . . . . 17
LIN Television Common Stock. . .. . . . . . . . . . . . . . . 143
Majority Vote of the LIN Public Stockholders . . . . . . . . 2
McCaw. . . . . . . . . . . . . . . . . . . . . . . . . . . . i
McCaw Offer. . . . . . . . . . . . . . . . . . . . . . . . . 24
McCaw/AT&T Closing . . . . . . . . . . . . . . . . . . . . . 135
McCaw/AT&T Merger. . . . . . . . . . . . . . . . . . . . . . 128
Memorandum of Understanding. . . . . . . . . . . . . . . . . 12
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . i
Merger Agreement . . . . . . . . . . . . . . . . . . . . . . i
Merger Consideration . . . . . . . . . . . . . . . . . . . . i
Merger Date. . . . . . . . . . . . . . . . . . . . . . . . . C-2
Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . i
Minimum Merger Consideration . . . . . . . . . . . . . . . . 4
Morgan Stanley . . . . . . . . . . . . . . . . . . . . . . . 5
named executive officers . . . . . . . . . . . . . . . . . . 126
NYNEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Option . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Option Plan. . . . . . . . . . . . . . . . . . . . . . . . . 110
Original Merger. . . . . . . . . . . . . . . . . . . . . . . 30
Original Merger Agreement. . . . . . . . . . . . .. . . . . . ii
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . 111
PCS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . 132
PMVG . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
pops . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Private Market Price . . . . . . . . . . . . . . . . . . . . 27
qualified stock options. . . . . . . . . . . . . . . . . . . 110
Record Date. . . . . . . . . . . . . . . . . . . . . . . . . 1
Rights Agreement . . . . . . . . . . . . . . . . . . . . . . 26
RSA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SBC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Schedule 13E-3 . . . . . . . . . . . . . . . . . . . . . . . iv
Section 262. . . . . . . . . . . . . . . . . . . . . . . . . C-1
SFAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Spin-off Date. . . . . . . . . . . . . . . . . . . . . . . . 143
Spin-off Record Date . . . . . . . . . . . . . . . . . . . . 143
<PAGE>
<PAGE> xii
Term Page
Stockholders Litigation. . . . . . . . . . . . . . . . . . . ii
Stock Purchase Plan. . . . . . . . . . . . . . . . . . . . . 114
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . 109
Surviving Corporation. . . . . . . . . . . . . . . . . . . . 17
Television Spin-off. . . . . . . . . . . . . . . . . . . . . 105
Transaction. . . . . . . . . . . . . . . . . . . . . . . . . 144
U S Cellular . . . . . . . . . . . . . . . . . . . . . . . . 45
U S WEST . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Vanguard . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Wasserstein Perella. . . . . . . . . . . . . . . . . . . . . 4<PAGE>
<PAGE> 1
SUMMARY
Certain significant matters discussed in this Proxy
Statement are summarized below. This summary is not intended to
be complete and is qualified in all respects by reference to the
more detailed information appearing or incorporated by reference
in this Proxy Statement (including the Appendices hereto).
Annual Meeting of LIN Stockholders
Date, Time and Place of the
Annual Meeting. . . . . . . . . The Annual Meeting is to be held on
________, August __, 1995 at 10:00
a.m., local time, at _____
____________________.
Purpose of the Annual
Meeting . . . . . . . . . . . . The purpose of the Annual Meeting is
(i) to consider and vote upon a
proposal to approve and adopt the
Merger Agreement and the Merger and
(ii) to elect ten directors to serve
until the next Annual Meeting or
earlier consummation of the Merger.
Record Date. . . . . . . . . . . Only holders of record of LIN Common
Shares at the close of business on
July 28, 1995 (the "Record Date") are
entitled to notice of and to vote at
the Annual Meeting. On that date,
_________ LIN Common Shares were
outstanding and entitled to vote, held
by approximately ___ holders of
record. Holders of LIN Common Shares
are entitled to one vote per share on
all matters to be voted on by the
holders of LIN Common Shares.
Vote Required. . . . . . . . . . The affirmative vote of (i) the
holders of at least a majority of the
LIN Common Shares outstanding as of
the Record Date and (ii) the holders
of at least a majority of the LIN
Common Shares not owned by McCaw or
any of its affiliates or any member of
a "group", as such term is used for
purposes of Schedule 13D under the
Exchange Act, of which McCaw or its
<PAGE>
<PAGE> 2
affiliates are members with respect to
securities of LIN (the "LIN Public
Shares"), present (or represented by
proxy) and entitled to vote at the
Annual Meeting at which a majority of
the LIN Public Shares is present in
person or by proxy (a "Majority Vote
of the LIN Public Stockholders"), is
required for approval and adoption of
the Merger Agreement and the Merger.
Under the Merger Agreement, McCaw has
agreed to cause the LIN Common Shares
beneficially owned by it, its
affiliates or any of its subsidiaries
to be voted in favor of the Merger
Agreement and the Merger if the Merger
Agreement and the Merger are approved
by a Majority Vote of the LIN Public
Stockholders.
To the best knowledge of McCaw and
LIN, each of the directors and
executive officers of AT&T, McCaw,
Holdings, Merger Sub and LIN who
beneficially owns LIN Common Shares
intends to vote in favor of the Merger
Agreement and the Merger for the
reasons set forth herein with respect
to the recommendations of the LIN
Board. See "SPECIAL FACTORS
-- Fairness of the Transaction;
Recommendations."
With respect to the election of
directors, the ten nominees who
receive the greatest number of votes
cast for the election of directors at
the Annual Meeting will be elected as
directors. In addition, pursuant to
the terms of the PMVG, the LIN
Independent Directors nominated for
election at the Annual Meeting were
nominated by the existing LIN
Independent Directors and are required
to be elected by a Majority Vote of
the LIN Public Stockholders. McCaw
will vote its and its subsidiaries'
LIN Common Shares for the election of
the LIN Independent Director nominees
receiving such a Majority Vote of the
<PAGE>
<PAGE> 3
LIN Public Stockholders. McCaw also
intends to cause the LIN Common Shares
beneficially owned by it to be voted
in favor of the seven nominees set
forth herein under "ELECTION OF
DIRECTORS" as designees of McCaw.
See "THE ANNUAL MEETING -- Record
Date; Shares Entitled to Vote; Vote
Required."
The Merger
General. . . . . . . . . . . . . Upon consummation of the Merger,
Merger Sub will merge into LIN, LIN
will become a wholly owned subsidiary
of Holdings (and an indirect wholly
owned subsidiary of AT&T and McCaw)
and each LIN Common Share issued and
outstanding immediately prior to the
Merger (other than LIN Common Shares
owned by McCaw or any of its wholly
owned subsidiaries or held in the
treasury of LIN or by any wholly owned
subsidiary of LIN, and other than any
Dissenting Shares) will be converted
into the right to receive the Merger
Consideration. See "SPECIAL FACTORS
-- Background of the Merger" and "--
Terms of the PMVG."
Recommendation of the LIN
Board of Directors. . . . . . . The LIN Board, consisting of eight
designees of McCaw and three LIN
Independent Directors, has unanimously
approved the Merger Agreement and the
Merger and determined that the Merger
is fair to the public stockholders of
LIN, and unanimously recommends that
LIN stockholders vote in favor of the
Merger Agreement and the Merger. See
"SPECIAL FACTORS -- Fairness of the
Transaction; Recommendations" and "--
Interests of Certain Persons in the
Merger; Conflicts of Interest." To
the best knowledge of McCaw and LIN,
except for the recommendation of the
LIN Board as described herein, none of
the directors and executive officers
<PAGE>
<PAGE> 4
of AT&T, McCaw, Holdings, Merger Sub
and LIN has made a recommendation in
support of or opposed to the Merger
Agreement and the Merger.
Fairness Opinion . . . . . . . . On June 23, 1995, Wasserstein Perella
& Co., Inc. ("Wasserstein Perella")
was engaged by the LIN Board to render
a fairness opinion concerning the
consideration to be received by the
LIN public stockholders in the Merger.
Wasserstein Perella was selected
because it is a nationally recognized
investment banking firm, because of
its experience in the valuation of
companies, including companies in the
cellular industry, and because of its
familiarity with LIN acquired while
serving as the "Mutually Designated
Appraiser" under the PMVG to determine
the private market value of the LIN
Common Shares thereunder. See
"SPECIAL FACTORS" -- "Private Market
Value Determination of Wasserstein
Perella." On June 30, 1995,
Wasserstein Perella delivered its
fairness opinion (the "Fairness
Opinion") and financial presentation
to the LIN Board to the effect that
the $129.50 per LIN Common Share
representing the minimum consideration
to be received by the LIN public
stockholders in the Merger (the
"Minimum Merger Consideration") is
fair from a financial point of view to
such stockholders. A copy of the
Fairness Opinion, setting forth the
assumptions made, matters considered
and limits of the review by
Wasserstein Perella in rendering such
opinion, is attached as Appendix B.
The Fairness Opinion is directed only
to the fairness from a financial point
of view to the LIN public stockholders
of the Minimum Merger Consideration of
$129.50 per LIN Common Share to be
received pursuant to the Merger, and
it does not address any other aspect
of the Merger. The Fairness Opinion
does not constitute a recommendation
<PAGE>
<PAGE> 5
to any stockholder with respect to
whether to vote in favor of the Merger
and should not be relied upon by any
stockholder as such. See "SPECIAL
FACTORS -- Fairness Opinion of
Wasserstein Perella."
Other Reports
and Appraisals . . . . . . . . As required by the process set forth
in the PMVG, in January 1995, McCaw
and the LIN Independent Directors each
designated nationally recognized
investment banking firms to determine
such firms' views of the private
market value per LIN Common Share as
defined in the PMVG. McCaw designated
Morgan Stanley & Co. Incorporated
("Morgan Stanley") for this purpose.
The LIN Independent Directors
designated Bear, Stearns & Co. Inc.
("Bear Stearns") and Lehman Brothers
Inc. ("Lehman Brothers"), acting
jointly. On February 15, 1995, Morgan
Stanley delivered its final view that
the private market value per LIN
Common Share was $105, assuming a
closing date for an acquisition of LIN
of no earlier than June 30, 1995. On
the same date, Bear Stearns and Lehman
Brothers delivered their final view
that the private market value per LIN
Common Share was $155, assuming a
closing date for an acquisition of LIN
of June 30, 1995. Under the PMVG,
because the final view of Bear Stearns
and Lehman Brothers was more than 110%
of the final view of Morgan Stanley,
Morgan Stanley, on the one hand, and
Bear Stearns and Lehman Brothers, on
the other hand, were required to
designate jointly another investment
banking firm to determine the private
market value per LIN Common Share.
Pursuant to these provisions,
Wasserstein Perella was engaged for
this purpose. On March 7, 1995,
Wasserstein Perella determined, based
on the assumptions and other factors
set forth in its determination letter,
that the private market value per LIN
<PAGE>
<PAGE> 6
Common Share is $127.50. See "SPECIAL
FACTORS -- Background of the Merger,"
"-- Private Market Value View of
Morgan Stanley," "-- Private Market
Value View of Bear Stearns and Lehman
Brothers," "-- Private Market Value
Determination of Wasserstein Perella"
and "-- Terms of the PMVG."
Effective Time of the
Merger. . . . . . . . . . . . . Following receipt of the required
stockholder approval and satisfaction
or waiver (where permissible) of the
other conditions to the Merger, the
Merger will be consummated and become
effective on the date and at the time
(the "Effective Time") at which the
certificate of merger to be filed
pursuant to the General Corporation
Law of the State of Delaware (the
"DGCL") is accepted for filing by the
Secretary of State of the State of
Delaware or such later date and time
as may be specified, with the approval
of LIN and McCaw, in such certificate
of merger. The LIN public
stockholders will continue to be
stockholders of LIN until the
Effective Time. See "THE MERGER --
Effective Time of the Merger" and "--
Conditions; Waivers."
Surrender of Certificates in
the Merger. . . . . . . . . . . Promptly after the Effective Time, the
Paying Agent (as defined herein) will
mail to each record holder of
certificates that immediately prior to
the Effective Time represented LIN
Common Shares a form of letter of
transmittal which will specify
instructions for use in surrendering
such certificates and receiving the
Merger Consideration therefor. See
"THE MERGER -- Payment for Shares" and
"RIGHTS OF DISSENTING STOCKHOLDERS."
LIN STOCKHOLDERS ARE REQUESTED NOT TO
SURRENDER THEIR CERTIFICATES FOR
EXCHANGE UNTIL SUCH TRANSMITTAL FORM
AND INSTRUCTIONS ARE RECEIVED.
<PAGE>
<PAGE> 7
Rights of Dissenting
Stockholders. . . . . . . . . . Under Section 262 of the DGCL, any
holder of record of LIN Common Shares
who neither votes in favor of the
Merger nor consents thereto in
writing, who delivers a demand for
appraisal prior to the vote of the LIN
stockholders on the Merger, and who
has otherwise complied with the
applicable requirements of Section 262
of the DGCL, has the right to an
appraisal of, and to receive cash
payment for, the "fair value" of such
shares at the Effective Time
(excluding any element of value
arising from the accomplishment or
expectation of the Merger). In order
to exercise such right, a stockholder
must comply with each of the
procedural requirements of Section 262
of the DGCL, a summary of and the text
of which is set forth in Appendix C
hereto. Holders of LIN Common Shares
should read Section 262 of the DGCL in
its entirety. The "fair value" of
each LIN Common Share would be
determined in judicial proceedings,
the results of which cannot be
predicted. The failure to take any of
the steps required under Section 262
of the DGCL in a timely manner will
result in a loss of appraisal rights.
LIN Common Shares outstanding
immediately prior to the Effective
Time and held by a holder who has not
voted in favor of the Merger or
consented thereto in writing and who
has demanded appraisal for such LIN
Common Shares in accordance with the
DGCL ("Dissenting Shares") will not be
converted into the right to receive
the Merger Consideration, unless and
until the holder thereof fails to
perfect or withdraws or otherwise
loses such holder's right to appraisal
and payment under the DGCL. See
"RIGHTS OF DISSENTING STOCKHOLDERS"
and Appendix C hereto.
<PAGE>
<PAGE> 8
Business of LIN Pending the
Merger. . . . . . . . . . . . . LIN has agreed that, prior to the
Effective Time or earlier termination
of the Merger Agreement, except as
contemplated by the Merger Agreement,
LIN and its subsidiaries will each
conduct its operations according to
its ordinary course of business
consistent with past practice.
Pending the Effective Time, LIN and
its subsidiaries may convert their
cellular systems (to the extent they
are not already so converted) to
provide equal access for long-distance
carriers in connection with long-distance
communications using LIN's or
its subsidiaries' services and,
following such conversion, may market
their services under the AT&T service
mark, in each case on such schedule as
may be determined by McCaw. AT&T has
agreed to make use of the AT&T service
mark available to LIN and its
subsidiaries, for purposes of so
marketing their services, on a non-
exclusive, royalty-free basis.
Following the commencement of the
marketing of any service of LIN or any
of its subsidiaries under the AT&T
service mark, AT&T has agreed that it
will continue to make the use of the
AT&T service mark available on such
basis with respect to such service,
and such service will continue to be
so marketed under the AT&T service
mark, for so long as AT&T directly or
indirectly owns at least a majority of
the voting power of LIN's capital
stock entitled to vote generally in
the election of directors, unless a
majority of the LIN Independent
Directors otherwise consents. See
"THE MERGER -- Business of LIN Pending
the Merger."
<PAGE>
<PAGE> 9
Certain Effects of the
Merger. . . . . . . . . . . . . If the proposed Merger is consummated,
the present holders of LIN Public
Shares will not share in LIN's future
earnings and growth. Instead, each
holder of a LIN Public Share (other
than a holder of Dissenting Shares,
unless such holder fails to perfect or
withdraws or otherwise loses such
holder's appraisal rights) will have
the right to receive the Merger
Consideration for each such LIN
Public Share held. See "SPECIAL
FACTORS -- Certain Effects of the
Merger; Operations of LIN After the
Merger."
Conditions to the
Merger. . . . . . . . . . . . The consummation of the Merger is
conditioned upon requisite stockholder
approval, including approval by a
Majority Vote of the LIN Public
Stockholders, and upon the fulfillment
or waiver (where permissible) of
certain other conditions set forth in
the Merger Agreement. See "THE MERGER
-- Conditions; Waivers." McCaw's
obligation to consummate the Merger is
conditioned on, among other things,
final court approval of the proposed
settlement of the Stockholders
Litigation. See "SPECIAL FACTORS --
Litigation."
Termination. . . . . . . . . . . The Merger Agreement may be terminated
(i) by mutual consent of McCaw and
LIN, (ii) by LIN if the Merger has
not been consummated by December 31,
1995 (or if the Merger and the Merger
Agreement have been approved by the
requisite vote of the LIN stockholders
by December 31, 1995 and the Merger is
being pursued in good faith by McCaw
but has not been completed due to
regulatory delays or litigation,
August 31, 1996), (iii) by McCaw if
the Merger has not been consummated by
November 30, 1995 and (iv) under
certain other circumstances, including
<PAGE>
<PAGE> 10
by either McCaw or LIN if, at the
Annual Meeting, the Merger and the
Merger Agreement are not approved by a
Majority Vote of the LIN Public
Stockholders. See "THE MERGER --
Termination, Amendment and Waiver."
Certain Federal Income
Tax Consequences . . . . . . . The exchange of LIN Common Shares for
the Merger Consideration in the Merger
will result in the recognition of gain
or loss to the holder in an amount by
which the proceeds received in
exchange for such LIN Common Shares
exceed or are less than the holder's
tax basis in the LIN Common Shares.
The gain or loss may be capital or
ordinary in nature, depending upon the
holder's circumstances. HOLDERS OF
LIN COMMON SHARES SHOULD CONSULT THEIR
OWN TAX ADVISORS AS TO ANY FEDERAL,
STATE, LOCAL, FOREIGN OR OTHER TAX
CONSIDERATIONS RELEVANT TO THEM. See
"SPECIAL FACTORS -- Certain Federal
Income Tax Consequences."
Regulatory Approvals . . . . . . No regulatory approvals are
anticipated to be required for
consummation of the Merger. See "THE
MERGER -- Regulatory Approvals."
Expenses and Fees. . . . . . . . Subject to certain exceptions, each
party will pay its own expenses in
connection with the Merger. See "THE
MERGER -- Expenses and Fees."
Interests of Certain
Persons in the
Merger; Conflicts
of Interest. . . . . . . . . . Eight of the eleven members of the LIN
Board are designees and/or employees
of AT&T or McCaw and, therefore, have
a conflict with respect to the Merger
and the Merger Agreement, given that
McCaw is the other party to the Merger
Agreement and would acquire all the
LIN Public Shares if the Merger is
consummated. In addition, once McCaw
determined to proceed with an
acquisition of all the LIN Public
<PAGE>
<PAGE> 11
Shares, the PMVG provided that McCaw
was required to enter into an
agreement with LIN (containing
customary terms and conditions
applicable in a situation in which the
acquiror has an ownership position
comparable to McCaw's ownership
interest in LIN) providing for such
acquisition and to cause a meeting of
stockholders of LIN to be held as soon
as practicable to consider and vote
thereon. If McCaw were not to have
done so, it might be deemed to have
breached the PMVG. Holdings owns
directly approximately 52.2% of the
total number of LIN Common Shares
outstanding and, because they control
Holdings, AT&T and McCaw exercise
indirectly the power to vote and
dispose of those LIN Common Shares.
Under the Merger Agreement, McCaw and
Holdings have agreed to cause LIN as
the surviving corporation in the
Merger to honor all existing rights to
indemnification in favor of any of the
present or former directors, officers
or employees of LIN or any of its
Subsidiaries (as defined herein) (the
"Indemnified Parties") as provided in
LIN's Certificate of Incorporation or
By-Laws or otherwise in effect on the
date of the Merger Agreement
(including, without limitation, as
provided in the PMVG). In addition,
certain executive officers and
directors of LIN have entered into
employment agreements or are subject
to other bonus or severance
arrangements that will be triggered by
consummation of the Merger or by
severance of employment following
consummation of the Merger. Further,
in the Merger Agreement, McCaw agreed
that AT&T would assume all outstanding
options granted under LIN's option
plans. In the event the Merger is
consummated, vesting of some or, under
certain circumstances, all options to
<PAGE>
<PAGE> 12
purchase LIN Common Shares held by
certain LIN executive officers will
accelerate.
See "SPECIAL FACTORS -- Interests of
Certain Persons in the Merger;
Conflicts of Interest" and "EXECUTIVE
COMPENSATION -- Employment Contracts
and Termination of Employment and
Change-in-Control Arrangements."
Litigation . . . . . . . . . . . Certain lawsuits were filed in
connection with the Original Merger
Agreement, alleging, among other
things, breach of fiduciary duties by
AT&T, McCaw and others in connection
with the determination of the private
market value per LIN Common Share
under the PMVG. A Memorandum of
Understanding dated June 22, 1995 (the
"Memorandum of Understanding") has
been executed providing for the
settlement of these lawsuits. See
"SPECIAL FACTORS -- Litigation." The
entry of a final and nonappealable
order of the Delaware Chancery Court
approving the settlement is a
condition to McCaw's obligation to
consummate the Merger. See "THE
MERGER -- Conditions; Waivers --
Conditions to the Obligations of
McCaw, Holdings and Merger Sub."
Financing of
the Merger . . . . . . . . . . The funds necessary for payment of the
Merger Consideration are expected to
be obtained by McCaw and Holdings from
the proceeds of capital contributions
and/or loans from AT&T, which expects
to obtain such funds from cash on hand
and short-term borrowings. However,
AT&T has not guaranteed the payment of
the Merger Consideration and has no
legal obligation to provide such
funds. McCaw's obligation to
consummate the Merger is not
conditioned on financing.
Accordingly, if all conditions to
McCaw's obligation to consummate the
<PAGE>
<PAGE> 13
Merger were satisfied but such funds
were not available, McCaw would be in
breach of the Merger Agreement. See
"FINANCING OF THE MERGER."
Failure to Approve or
Complete the Merger. . . . . . In the event the Merger Agreement and
the Merger are not approved by the
requisite vote of the LIN stockholders
(assuming the vote thereon occurs by
December 31, 1995), the PMVG will
remain in effect in accordance with
its terms, except that McCaw's
obligation either to acquire the LIN
Public Shares or to put all of LIN up
for sale will terminate. In the event
the Merger Agreement and the Merger
are approved by the requisite vote of
the LIN stockholders by December 31,
1995, the PMVG provides that McCaw
will have until August 31, 1996 to
complete the Merger, so long as the
Merger is being pursued in good faith
by McCaw and the failure to complete
the Merger is due to regulatory delays
or litigation. Otherwise, under the
PMVG, McCaw will have until December
31, 1995 to complete the Merger. In
either case, if the Merger is not
completed by the applicable date, the
PMVG provides that McCaw will put LIN
in its entirety up for sale under the
direction of the LIN Independent
Directors in a manner intended by the
LIN Independent Directors to maximize
value for all LIN Common Shares. See
"SPECIAL FACTORS -- Terms of the
PMVG."
Election of Directors
Nominees for Election. . . . . . Ten persons have been nominated for
reelection to the LIN Board. Three of
the nominees are the three LIN
Independent Directors and the
remaining seven nominees have been
designated by AT&T and McCaw. See
"ELECTION OF DIRECTORS."
<PAGE>
<PAGE> 14
AT&T, McCaw, Holdings, Merger Sub and LIN
AT&T Corp. . . . . . . . . . . . AT&T is principally engaged in global
information movement and management,
financial services and leasing. The
mailing address of AT&T's principal
executive offices is 32 Avenue of the
Americas, New York, New York 10013-2412,
and its telephone number is
(212) 387-5400. See "CERTAIN
INFORMATION REGARDING AT&T, McCAW,
HOLDINGS, MERGER SUB AND LIN -- AT&T."
McCaw Cellular
Communications, Inc.. . . . . . McCaw, a wholly owned subsidiary of
AT&T, is principally engaged in the
business of providing cellular
communication services. The mailing
address of McCaw's principal executive
offices is 5400 Carillon Point,
Kirkland, Washington 98033, and its
telephone number is (206) 827-4500.
See "CERTAIN INFORMATION REGARDING
AT&T, McCAW, HOLDINGS, MERGER SUB AND
LIN -- McCaw."
MMM Holdings, Inc. . . . . . . . Holdings, a wholly owned subsidiary of
McCaw, was formed for the purpose of
holding investment securities and
conducts no other business. The
mailing address of Holdings' principal
executive offices is c/o McCaw
Cellular Communications, Inc., 5400
Carillon Point, Kirkland, Washington
98033, and its telephone number is
(206) 827-4500. See "CERTAIN
INFORMATION REGARDING AT&T, McCAW,
HOLDINGS, MERGER SUB AND LIN --
Holdings."
MMM Acquisition Corp.. . . . . . Merger Sub, a wholly owned subsidiary
of Holdings, was formed for the
purpose of effecting the Merger and
has not conducted any other business.
The mailing address of Merger Sub's
principal executive offices is c/o
McCaw Cellular Communications, Inc.,
5400 Carillon Point, Kirkland,
Washington 98033, and its telephone
<PAGE>
<PAGE> 15
number is (206) 827-4500. See
"CERTAIN INFORMATION REGARDING AT&T,
McCAW, HOLDINGS, MERGER SUB AND LIN
-- Merger Sub."
LIN Broadcasting
Corporation . . . . . . . . . . LIN is engaged primarily in the
business of providing cellular voice
telephone and data services. McCaw
owns an approximate 52.2% interest in
LIN through McCaw's wholly owned
subsidiary, Holdings. The mailing
address of LIN's principal executive
offices is 5295 Carillon Point,
Kirkland, Washington 98033, and its
telephone number is (206) 828-1902.
See "CERTAIN INFORMATION REGARDING
AT&T, McCAW, HOLDINGS, MERGER SUB AND
LIN -- LIN."
<PAGE>
<PAGE> 16
<TABLE>
LIN Broadcasting Corporation
Summary Consolidated Financial Data
(in thousands, except per share data)
The following summary historical financial data of LIN have been extracted from financial statements filed with the
Commission and should be read in conjunction with such financial statements and the notes thereto. See "INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE." Results for the interim three-month periods are not necessarily indicative of
results to be expected for the full fiscal year.
<CAPTION>
Three Months
Ended March 31, Year Ended December 31
-------------------- -----------------------------------------------------------
1995(1) 1994 1994(1) 1993 1992 1991 1990
------ ----- ------- ---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net revenues $199,227 $191,627 $876,469 $688,557 $572,521 $468,137 $378,089
Operating Income 28,033 27,716 206,110 128,305 130,015 81,430 134,912
Equity in income of
unconsolidated
affiliates 30,191 31,848 115,010 103,125 96,977 82,338 70,607
Cumulative effect of the
change in accounting for
income taxes -- -- -- -- -- (693,835)(2) --
Net income (loss) $12,701 $(15,095) $564,150(3) $(60,727) $(68,952) $(838,131) $(222,844)(4)
Per Share Amounts:
Income (loss) before
cumulative effect of
the change in account-
ing for income taxes $0.24 $(0.29) $10.84 $(1.18) $(1.34) $(2.81) $(4.33)
Cumulative effect of
the change in accounting
for income taxes -- -- -- -- -- $(13.50) --
------ -------- ------- -------- -------- --------- --------
Net income (loss) $0.24 $(0.29) $10.84 $(1.18) $(1.34) $(16.31) $(4.33)
====== ========= ======= ======== ======== ========= ========
Net income (loss) on
a fully diluted basis $0.24 $(0.29) $10.84 $(1.18) $(1.34) $(16.31) $(4.33)
Average common and common
equivalent shares
outstanding (5) 52,231 51,511 52,040 51,445 51,417 51,395 51,455
Ratio of earnings to
fixed charges 0.91 1.25 4.66 1.34 1.22 0.87 (0.49)
Balance Sheet Data:
Cash, cash equivalents and
marketable securities $ 35,183 $94,283 $47,467 $102,831 $122,495 $108,924 $63,809
Working capital (158,407) (74,308) (171,948) (69,269) (6,580) 27,698 63,234
Total assets 2,924,685 2,915,065 2,923,873 2,909,523 2,862,910 2,798,944 2,693,117
Total assets less
deferred research and
development charges and
excess of costs
of assets over book
value 1,001,223 1,040,410 983,179 1,013,316 924,985 782,397 596,956
Long-term debt 1,453,688 1,509,040 1,443,125 1,551,447 1,694,338 1,769,682 1,716,250
Redeemable preferred
stock of a subsidiary -- 1,338,823 -- 1,305,248 1,170,948 1,036,648 902,348
Stockholders' equity
(deficit) $ 313,116 $(1,116,578) $297,738 $(1,102,365) $(1,046,736) $(978,573) $(142,334)
Book value per share $6.17 $(21.67) $5.76 $(21.40) $(20.35) $(19.04) $(2.77)<PAGE>
</TABLE>
<PAGE> 17
________________________
(1) On June 24, 1994, LIN disposed of its equity interest in its
Philadelphia cellular operations and its GuestInformant
specialty publishing business in connection with the
redemption of the preferred stock of LCH Communications,
Inc., a wholly owned subsidiary of LIN (the "LCH Preferred
Stock"). On December 28, 1994, LIN completed the
distribution (the "Television Spin-off") to the holders of
the LIN Common Shares of all of the outstanding common stock
of LIN's wholly owned subsidiary, LIN Television Corporation
("LIN Television"). As a result of these transactions,
LIN's financial position and results of operations as of and
for the year ended December 31, 1994, and as of and for the
quarter ended March 31, 1995, are not directly comparable to
prior periods.
(2) The Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting for Income Taxes,"
effective January 1, 1991. The effect of the adoption was
the $693.8 million charge for the cumulative effect of the
change in accounting and an increase in deferred taxes.
(3) Includes a gain of $468.7 million related to the redemption
of the LCH Preferred Stock.
(4) Includes nonrecurring charges associated with the completion
of the tender offer by McCaw of $292.9 million on a pretax
basis and $245.6 million on an after-tax basis.
(5) Common equivalent shares are included only in the periods
ended March 31, 1995 and December 31, 1994, since they would
be antidilutive in any other period.<PAGE>
<PAGE> 18
Recent Market Prices and Dividend History
The LIN Common Shares are traded principally on the Nasdaq
National Market. The following table sets forth, for the periods
indicated, the high and low sales prices per LIN Common Share on
the Nasdaq National Market:
High Low
1993:
First Quarter . . . . . . . . . . . $ 90.00 $ 75.50
Second Quarter. . . . . . . . . . . 101.00 80.25
Third Quarter . . . . . . . . . . . 121.75 98.50
Fourth Quarter. . . . . . . . . . . 116.50 108.25
1994:
First Quarter . . . . . . . . . . . 117.25 106.50
Second Quarter. . . . . . . . . . . 122.25 102.75
Third Quarter . . . . . . . . . . . 140.75 119.25
Fourth Quarter. . . . . . . . . . . 146.25 133.00
1995:
First Quarter . . . . . . . . . . . 141.50 120.25
Second Quarter. . . . . . . . . . . 126.75 121.38
Third Quarter (through July __) . .
On February 15, 1995, the last trading day prior to public
announcement of the views of Morgan Stanley and of Bear Stearns
and Lehman Brothers as to the private market value per LIN Common
Share, the high and low sales prices per LIN Common Share on the
Nasdaq National Market were $141.50 and $138.50, respectively.
On March 7, 1995, the last trading day prior to public
announcement of the determination of Wasserstein Perella as to
the private market value per LIN Common Share, the high and low
sales prices per LIN Common Share on the Nasdaq National Market
were $130.25 and $128.25, respectively. On April 6, 1995, the
last trading day prior to the public announcement that McCaw
determined to proceed with an acquisition of the LIN Public
Shares at the Private Market Price (as defined herein) of $127.50
per LIN Common Share, the high and low sales prices per LIN
Common Share on the Nasdaq National Market were $122.25 and
$121.50, respectively. On June 22, 1995, the last trading day
prior to the public announcement by McCaw that it had agreed in
principle with the plaintiffs to settle the Stockholders
Litigation, the high and low sales prices per LIN Common Share on
the Nasdaq National Market were $125.25 and $124, respectively.
On July __, 1995, the latest practicable date prior to printing
this Proxy Statement, the high and low sales prices per LIN
Common Share on the Nasdaq National Market were $____ and $____,
respectively. <PAGE>
<PAGE> 19
LIN has paid no cash dividends with respect to the LIN
Common Shares for the periods set forth above. LIN's two bank
credit facilities, a senior secured facility and a senior
unsecured facility, restrict LIN's ability to pay dividends to
its stockholders. There are also restrictions on the ability of
LIN's operating subsidiaries to pay dividends to LIN. It is not
anticipated that any cash dividends will be paid on LIN Common
Shares in the foreseeable future. On December 28, 1994, LIN paid
a special dividend of one share of common stock of LIN Television
for every two LIN Common Shares to holders of record of LIN
Common Shares on December 9, 1994. None of the prices above has
been adjusted for that event, but prices for the period including
and following December 28, 1994 reflect its effect. See
"SUMMARY -- LIN Broadcasting Corporation Summary Consolidated
Financial Data."
<PAGE>
<PAGE> 20
THE ANNUAL MEETING
Annual Meeting
This Proxy Statement is being furnished to LIN stockholders
in connection with the solicitation by the LIN Board of proxies
for use at the Annual Meeting to be held on ________, August __,
1995 at 10:00 a.m., local time, at
_____________________________________.
At the Annual Meeting, LIN stockholders will consider and
vote upon a proposal to approve and adopt the Merger Agreement
and the Merger. The Merger Agreement provides that, upon the
terms and subject to the conditions thereof, Merger Sub will
merge into LIN, LIN will become a wholly owned subsidiary of
Holdings (and an indirect wholly owned subsidiary of AT&T and
McCaw) and each LIN Common Share issued and outstanding
immediately prior to the Merger (other than LIN Common Shares
held by McCaw or any of its wholly owned subsidiaries, in the
treasury of LIN or by any wholly owned subsidiary of LIN, which
LIN Common Shares, by virtue of the Merger and without any action
on the part of the holders thereof, will be automatically
cancelled and retired and will cease to exist with no payment
being made with respect thereto, and other than any Dissenting
Shares) will be converted into the right to receive the Merger
Consideration, consisting of (i) $129.50 in cash, plus (ii) the
Additional Amount, if any, of up to $0.25 plus (iii) the
Accretion Amount, if any, at an annual rate of 5.5% from, but not
including, September 15, 1995 through, and including, the date
upon which the Closing occurs, if the Closing does not occur by
September 15, 1995. The economic terms of the Merger were
determined in connection with the proposed settlement of the
Stockholders Litigation and discussions with the LIN Independent
Directors. The Original Merger Agreement provided for the
acquisition by McCaw of the publicly held LIN Common Shares at a
price of $127.50 per share, without interest. The price of
$127.50 per LIN Common Share had been determined as the private
market value per LIN Common Share under the PMVG. At the Annual
Meeting, stockholders will also be asked to elect ten directors
to serve until the next Annual Meeting or earlier consummation of
the Merger or until their successors are duly elected and
qualified.
The LIN Board, consisting of eight designees of McCaw and
three LIN Independent Directors, has unanimously approved the
Merger Agreement and the Merger and determined that the Merger is
fair to the public stockholders of LIN, and unanimously
recommends that LIN stockholders vote in favor of the Merger
Agreement and the Merger. See "SPECIAL FACTORS -- Fairness of
the Transaction; Recommendations" and "-- Interests of Certain<PAGE>
<PAGE> 21
Persons in the Merger; Conflicts of Interest." To the best
knowledge of McCaw and LIN, except for the recommendation of the
LIN Board as described herein, none of the directors and
executive officers of AT&T, McCaw, Holdings, Merger Sub and LIN
has made a recommendation in support of or opposed to the Merger
Agreement and the Merger. The Merger Agreement and the Merger
have been approved by the respective Boards of Directors of
McCaw, Holdings and Merger Sub and by Holdings as the sole
stockholder of Merger Sub. Approval of the Merger Agreement and
the Merger by McCaw as the sole stockholder of Holdings, or by
AT&T as the sole stockholder of McCaw, is not required.
In the event the Merger Agreement and the Merger are not
approved by the requisite vote of the LIN stockholders (assuming
the vote thereon occurs by December 31, 1995), the PMVG will
remain in effect in accordance with its terms, except that
McCaw's obligation either to acquire the LIN Public Shares or to
put all of LIN up for sale will terminate. In the event the
Merger Agreement and the Merger are approved by the requisite
vote of the LIN stockholders by December 31, 1995, the PMVG
provides that McCaw will have until August 31, 1996 to complete
the Merger, so long as the Merger is being pursued in good faith
by McCaw and the failure to complete the Merger is due to
regulatory delays or litigation. Otherwise, under the PMVG,
McCaw will have until December 31, 1995 to complete the Merger.
In either case, if the Merger is not completed by the applicable
date, the PMVG provides that McCaw will put LIN in its entirety
up for sale under the direction of the LIN Independent Directors
in a manner intended by the LIN Independent Directors to maximize
value for all LIN Common Shares. See "SPECIAL FACTORS -- Terms
of the PMVG."
Record Date; Shares Entitled to Vote; Vote Required
The close of business on July 28, 1995 has been fixed as the
Record Date for determining the holders of LIN Common Shares who
are entitled to notice of and to vote at the Annual Meeting. As
of the Record Date, there were _________ LIN Common Shares
outstanding and entitled to vote, held by approximately ____
holders of record. Holders of LIN Common Shares are entitled to
one vote per share on all matters to be voted on by the holders
of LIN Common Shares.
The presence in person or by proxy of the holders of a
majority of the LIN Common Shares entitled to vote at the Annual
Meeting is necessary to constitute a quorum for the transaction
of business at the Annual Meeting. The LIN Common Shares owned
by McCaw through its wholly owned subsidiary, Holdings,
constitute approximately 52.2% of the LIN Common Shares. McCaw
intends for such LIN Common Shares to be represented at the<PAGE>
<PAGE> 22
Annual Meeting. Accordingly, a quorum for the transaction of
business at the Annual Meeting is assured. Pursuant to the PMVG,
a majority of the LIN Public Shares is also required to be
present (or represented by proxy) at the Annual Meeting.
Approval and adoption of the Merger Agreement and the Merger
require (i) the affirmative vote of the holders of at least a
majority of the LIN Common Shares outstanding as of the Record
Date and (ii) a Majority Vote of the LIN Public Stockholders.
Under the terms of the Merger Agreement, McCaw has agreed that if
the Merger Agreement and the Merger are approved by a Majority
Vote of the LIN Public Stockholders, it will vote, or cause to be
voted, all of the LIN Common Shares beneficially owned by it, its
affiliates or any of its subsidiaries in favor of the approval of
the Merger, the adoption of the Merger Agreement and such other
matters as may be necessary to consummate the transactions
contemplated therein. Accordingly, the stockholder approval
requirement described in clause (i) above will be satisfied if
the stockholder approval requirement described in clause (ii)
above is satisfied. To the best knowledge of McCaw and LIN, each
of the directors and executive officers of AT&T, McCaw, Holdings,
Merger Sub and LIN who beneficially owns LIN Common Shares
intends to vote in favor of the Merger Agreement and the Merger
for the reasons set forth herein with respect to the
recommendation of the LIN Board. See "SPECIAL FACTORS
- -- Fairness of the Transaction; Recommendations."
The ten nominees for election as directors who receive the
greatest number of votes cast for the election of directors at
the Annual Meeting will be elected as directors. Pursuant to the
terms of the PMVG, the LIN Independent Directors nominated for
election at the Annual Meeting were nominated by the existing LIN
Independent Directors and are required to be elected by a
Majority Vote of the LIN Public Stockholders. McCaw will vote
its and its subsidiaries' LIN Common Shares for the election of
the LIN Independent Director nominees receiving such a Majority
Vote of the LIN Public Stockholders. LIN Independent Directors
are subject to removal only (a) for cause, (b) if a majority of
the LIN Independent Directors approve such removal or (c) if such
removal is approved by a Majority Vote of the LIN Public
Stockholders. McCaw also intends to cause the LIN Common Shares
beneficially owned by it to be voted in favor of the seven
nominees set forth herein under "ELECTION OF DIRECTORS" as
designees of McCaw.
Abstention from voting will have the practical effect of
voting against approval and adoption of the Merger Agreement and
the Merger, and against election of the LIN Independent Director
nominees, because abstentions will be included in the total LIN
Common Shares voting and an abstention represents one fewer vote<PAGE>
<PAGE> 23
for such approval and adoption, or election, among the holders of
LIN Public Shares present and entitled to vote on the matter at
the Annual Meeting. In instances where brokers are prohibited
from exercising discretionary authority for beneficial holders
who have not returned a proxy (so-called "broker nonvotes"), such
broker nonvotes will have no effect with respect to the approval
and adoption of the Merger Agreement and the Merger or the
election of directors, because they will not be considered LIN
Common Shares voting on such matters. Abstention from voting
will have no effect on the election of the McCaw designees
nominated for election as directors.
Proxies; Proxy Solicitation
LIN Common Shares represented by properly executed proxies
received at or prior to the Annual Meeting which have not been
revoked will be voted at the Annual Meeting in accordance with
the instructions contained therein. LIN Common Shares
represented by properly executed proxies for which no instruction
is given will be voted "FOR" approval and adoption of the Merger
Agreement and the Merger and "FOR" the election of each of the
nominees for director set forth in this Proxy Statement. LIN
stockholders are requested to complete, sign, date and return
promptly the enclosed proxy card in the postage prepaid envelope
provided for this purpose to ensure that their LIN Common Shares
are voted. A stockholder may revoke a proxy at any time before
it is voted by signing and returning a later-dated proxy with
respect to the same LIN Common Shares, by filing with the
Secretary of LIN a written revocation bearing a later date or by
attending and voting at the Annual Meeting. Mere attendance at
the Annual Meeting will not in and of itself revoke a proxy.
If the Annual Meeting is postponed or adjourned for any
reason, at any subsequent reconvening of the Annual Meeting all
proxies will be voted in the same manner as such proxies would
have been voted at the original convening of the Annual Meeting
(except for any proxies which have theretofore effectively been
revoked or withdrawn), notwithstanding that they may have been
effectively voted on the same or any other matter at a previous
meeting.
LIN will bear the cost of soliciting proxies from its
stockholders, except that expenses incurred in connection with
printing and mailing this Proxy Statement will be shared equally
by McCaw, Holdings and Merger Sub, on the one hand, and LIN, on
the other. In addition to solicitation by mail, directors,
officers and employees of LIN, AT&T, McCaw and Holdings may
solicit proxies by telephone, telegram or otherwise. Such
directors, officers and employees of LIN, AT&T, McCaw and
Holdings will not be additionally compensated for such<PAGE>
<PAGE> 24
solicitation but may be reimbursed for out-of-pocket expenses
incurred in connection therewith. Brokerage firms, fiduciaries
and other custodians who forward soliciting material to the
beneficial owners of LIN Common Shares held of record by them
will be reimbursed for their reasonable expenses incurred in
forwarding such material. LIN has retained ____________ to aid
in soliciting proxies from its stockholders. The fees of such
firm are estimated to be _______ plus reimbursement of out-of-pocket expenses.
SPECIAL FACTORS
Background of the Merger
In April 1988, McCaw and certain of its affiliates filed a
Statement on Schedule 13D with the Commission reporting their
aggregate beneficial ownership of 2,820,400 LIN Common Shares.
Over the course of the next 14 months, McCaw and its affiliates
increased their ownership to 5,089,500 LIN Common Shares.
On June 8, 1989, McCaw commenced a tender offer (the "McCaw
Offer") pursuant to which it offered to purchase for cash all of
the LIN Common Shares it did not then own for $120 per LIN Common
Share. Negotiations between the managements of LIN and McCaw
concerning a possible transaction between the two companies
followed, but did not result in any agreement between the two
companies. On July 28, 1989, McCaw revised the price at which it
was offering to purchase LIN Common Shares to $110 per LIN Common
Share following the conclusion of certain litigation in which LIN
was involved.
On September 11, 1989, LIN entered into a merger agreement
(the "BellSouth Merger Agreement") with BellSouth Corporation
("BellSouth"). Pursuant to the BellSouth Merger Agreement, the
cellular operations of LIN and BellSouth would be combined into
LIN, with BellSouth holding a 50% equity interest in LIN, the
stockholders of LIN would receive a cash payment of $20 per LIN
Common Share and LIN's television operations would be spun off to
LIN's stockholders.
On October 10, 1989, McCaw revised the McCaw Offer to offer
to purchase 22,000,000 LIN Common Shares for cash for $125 per
LIN Common Share. When added to the LIN Common Shares already
owned by McCaw and its affiliates, this number of LIN Common
Shares would have provided McCaw with a majority of LIN's voting
stock. In addition, McCaw indicated its intention to enter into
a mutually satisfactory PMVG-type agreement, as promptly as
practicable following completion of the McCaw Offer.
<PAGE>
<PAGE> 25
In response to the revised McCaw Offer, LIN and BellSouth
agreed on October 27, 1989 to revise the terms of the BellSouth
Merger Agreement. In response, on November 20, 1989, McCaw again
revised the McCaw Offer, to offer to purchase 22,500,000 LIN
Common Shares for cash for $150 per LIN Common Share, to enter
into a proposed PMVG agreement (in revised form), and to cause
LIN, following successful completion of the McCaw Offer, to
purchase and distribute to LIN's stockholders, other than McCaw
and its affiliates, shares of Class A Common Stock of McCaw with
an aggregate market value of $425 million.
Discussions between LIN and McCaw followed, which ultimately
resulted in the final revision of the McCaw Offer. McCaw agreed
to a restructured transaction that reduced the number of LIN
Common Shares that it would offer to purchase to 21,900,000,
increased the purchase price to $154.11 per LIN Common Share,
dropped certain conditions to its tender offer and made certain
changes to the PMVG that resulted in its final form, subject to
the LIN Board publicly announcing its recommendation that LIN's
stockholders accept the revised McCaw Offer. Following
discussion and based on advice from LIN's investment advisors and
legal counsel, the LIN Board, by unanimous vote and in accordance
with the BellSouth Merger Agreement, withdrew its earlier
recommendation of the transactions contemplated by that agreement
and recommended that LIN's stockholders accept the McCaw Offer
and tender the LIN Common Shares pursuant to the McCaw Offer once
the conditions to the McCaw Offer were satisfied. Among the
factors cited for the LIN Board's decision to recommend the McCaw
Offer were the increased purchase price and McCaw's willingness
to make certain changes to the PMVG.
Thereafter, LIN requested that BellSouth terminate the
BellSouth Merger Agreement. McCaw subsequently entered into a
settlement agreement with BellSouth pursuant to which the
BellSouth Merger Agreement was terminated and McCaw paid $66.5
million to BellSouth in respect of certain termination fees and
expenses contemplated by the BellSouth Merger Agreement. McCaw
also paid approximately $26.5 million to a partnership providing
cellular services in Los Angeles in which BellSouth and McCaw had
85% and 15% beneficial equity interests, respectively.
On December 11, 1989, LIN and McCaw entered into an
agreement pursuant to which McCaw undertook to proceed with the
McCaw Offer on the terms described above and established other
terms, including the execution by McCaw and LIN, on the same day,
of the PMVG. On March 5, 1990, McCaw acquired 21,900,000 LIN
Common Shares pursuant to the McCaw Offer, bringing McCaw's
aggregate ownership to 26,989,500 LIN Common Shares, or
approximately 52% of the outstanding LIN Common Shares. McCaw
<PAGE>
<PAGE> 26
has not increased its beneficial ownership of LIN Common Shares
since the completion of the McCaw Offer.
As set forth above, McCaw and LIN entered into the PMVG on
December 11, 1989, as part of the agreement under which McCaw and
LIN agreed to McCaw's acquisition of control of LIN. The PMVG
provides that, for as long as McCaw and its affiliates or any
member of a "group", as such term is used for purposes of
Schedule 13D under the Exchange Act, of which McCaw or its
affiliates are members with respect to securities of LIN
(collectively "Group Members") beneficially own in the aggregate
at least 25% of the outstanding LIN Common Shares on a fully
diluted basis or McCaw's designees constitute a majority of the
LIN Board, and any LIN Common Shares are held by other persons, a
number of provisions apply. See "SPECIAL FACTORS -- Terms of the
PMVG." These provisions include a requirement that three members
of the LIN Board will be LIN Independent Directors. The current
LIN Independent Directors are persons who have served as the LIN
Independent Directors since completion of McCaw's tender offer
and were members of the LIN Board prior to completion of such
tender offer.
On November 4, 1992, AT&T and McCaw announced publicly that
they were discussing a proposed strategic alliance, including a
significant investment by AT&T in McCaw, the purchase by AT&T
from McCaw's controlling stockholders of an option to obtain
voting control of McCaw and the grant by AT&T to McCaw of a 99-year
license to use the AT&T service mark on McCaw's wireless
services. Discussions with respect to the proposed alliance
continued through 1992 and the first half of 1993. From time to
time during this period, officers of McCaw periodically reported
to the LIN Board on the status of the negotiations with respect
to the proposed alliance.
In July 1993, representatives of AT&T informed
representatives of McCaw that AT&T wished to explore the
desirability and feasibility of a merger as a possible
alternative to the proposed strategic alliance. On August 14,
1993, AT&T made a merger proposal to McCaw, and the terms thereof
were negotiated on August 14 and 15, 1993.
On August 15, 1993, the LIN Board approved: (i) certain
matters related to the LIN employees (including the establishment
of certain employee benefit plans described under "EXECUTIVE
COMPENSATION"), (ii) an amendment to the Rights Agreement, dated
as of May 2, 1988, as amended and restated as of January 13, 1989
and June 19, 1989 and as subsequently further amended, between
LIN and Manufacturers Hanover Trust Company, as Rights Agent (the
"Rights Agreement"), to provide that execution of the merger
agreement relating to the proposed AT&T/McCaw merger, and
<PAGE>
<PAGE> 27
consummation of that merger, would not constitute a "Triggering
Event" or result in AT&T's becoming an "Acquiring Person," as
such terms are defined in the Rights Agreement, and (iii) the
proposed AT&T/McCaw merger for purposes of Section 203 of the
DGCL.
On August 15, 1993, the proposed AT&T/McCaw merger was
approved by the Boards of Directors of AT&T and McCaw. On August
16, 1993, AT&T and McCaw executed a merger agreement providing
for the merger of McCaw and a subsidiary of AT&T. On September
19, 1994, the merger was consummated, and AT&T acquired all of
the outstanding shares of McCaw in exchange for shares of common
stock, par value $1.00 per share (the "AT&T Common Shares"), of
AT&T. Neither AT&T nor any of its subsidiaries has acquired any
LIN Common Shares except indirectly through its acquisition of
McCaw in such merger. At the time of AT&T's acquisition of
McCaw, there were five McCaw designees, in addition to the three
LIN Independent Directors, on the LIN Board. Subsequent to that
acquisition, two of the five McCaw designees resigned from the
LIN Board, the size of the LIN Board was increased by two and
five persons employed by AT&T were elected to the LIN Board.
On December 28, 1994, LIN divested itself of substantially
all of its television broadcasting operations through the
Television Spin-off. The number of network-affiliated stations
owned by LIN was reduced from seven to one due to the Television
Spin-off, with the remaining station also providing programming
and marketing services to another network-affiliated station
pursuant to a local marketing agreement. See "CERTAIN
INFORMATION REGARDING AT&T, McCAW, HOLDINGS, MERGER SUB AND LIN --
Relationship with LIN Television."
As required by the PMVG, a process commenced on January 1,
1995 to determine the private market value per LIN Common Share
(the "Private Market Price"). The PMVG defines private market
value per LIN Common Share as "the private market price per [LIN
Common] Share (including control premium) that an unrelated third
party would pay if it were to acquire all outstanding [LIN
Common] Shares (including the [LIN Common] Shares held by [McCaw]
and its affiliates) in an arm's-length transaction, assuming that
[LIN] was being sold in a manner designed to attract all possible
participants (including the Regional Bell Operating Companies)
and to maximize stockholder value, including if necessary through
the sale or other disposition (including tax-free spin-offs, if
possible) of businesses prohibited by legal restrictions to be
owned by any particular buyer or class of buyers (e.g., the
Regional Bell Operating Companies)."
As required by the PMVG, McCaw and the LIN Independent
Directors each designated nationally recognized investment
<PAGE>
<PAGE> 28
banking firms to determine such firms' views of the private
market value per LIN Common Share as so defined. McCaw
designated Morgan Stanley. The LIN Independent Directors
designated Bear Stearns and Lehman Brothers, acting jointly.
Morgan Stanley and Bear Stearns and Lehman Brothers conducted due
diligence with respect to LIN, including reviewing varying sets
of projections for LIN from LIN management and from McCaw
management. See "SPECIAL FACTORS -- Certain Projections." Each
of the investment banking firms also conducted various analyses
with respect to determining their views of the private market
value of LIN (which are described below under "SPECIAL FACTORS --
Private Market Value View of Morgan Stanley" and "-- Private
Market Value View of Bear Stearns and Lehman Brothers").
Pursuant to the PMVG, on January 31, 1995, Morgan Stanley
and Bear Stearns and Lehman Brothers exchanged their initial
views as to the private market value per LIN Common Share. The
initial view of Morgan Stanley was that the private market value
per LIN Common Share was $100. The initial view of Bear Stearns
and Lehman Brothers was that the private market value per LIN
Common Share was $162, assuming a closing date for an acquisition
of LIN of June 30, 1995. As contemplated by the PMVG, at their
January 31, 1995 meeting and during the period from January 31,
1995 to February 15, 1995, Morgan Stanley and Bear Stearns and
Lehman Brothers consulted with one another with respect to these
views. This consultation included discussion of the
methodologies used by each of the investment banking firms in
reaching their initial views.
On February 15, 1995, Morgan Stanley and Bear Stearns and
Lehman Brothers delivered their final views as to the private
market value per LIN Common Share. The final view of Morgan
Stanley was that the private market value per LIN Common Share
was $105, assuming a closing date for an acquisition of LIN of no
earlier than June 30, 1995. The final view of Bear Stearns and
Lehman Brothers was that the private market value per LIN Common
Share was $155, assuming a closing date for an acquisition of LIN
of June 30, 1995. The analyses used to arrive at these final
views are described below under "SPECIAL FACTORS -- Private
Market Value View of Morgan Stanley" and "-- Private Market Value
View of Bear Stearns and Lehman Brothers." Under the PMVG,
because the final view of Bear Stearns and Lehman Brothers was
more than 110% of the final view of Morgan Stanley, Morgan
Stanley, on the one hand, and Bear Stearns and Lehman Brothers,
on the other hand, were required to agree upon and jointly
designate another investment banking firm of recognized national
standing to determine the private market value per LIN Common
Share. Pursuant to these provisions, on February 17, 1995,
Wasserstein Perella was engaged for this purpose.
<PAGE>
<PAGE> 29
Wasserstein Perella was provided with written presentations
from Morgan Stanley and Bear Stearns and Lehman Brothers,
conducted due diligence with respect to LIN, including reviewing
varying projections from LIN management and McCaw management and
other written materials and conducting interviews with LIN
management and McCaw management, conducted two lengthy meetings
with representatives of Morgan Stanley, Bear Stearns and Lehman
Brothers and counsel for McCaw and the LIN Independent Directors,
at which extensive presentations were made, received legal advice
with respect to the proper interpretation of the PMVG and other
related issues, and conducted its own analyses of the private
market value per LIN Common Share. The legal advice provided to
Wasserstein Perella by its counsel included advice as to whether,
in determining the private market value in accordance with the
definition of private market value contained in the PMVG, AT&T
and McCaw should be considered as potential buyers, an issue as
to which McCaw and the LIN Independent Directors had a difference
of views. Counsel to Wasserstein Perella provided such advice
following a meeting at which counsel for McCaw and counsel for
the LIN Independent Directors made presentations to Wasserstein
Perella's counsel on this and other issues. Wasserstein
Perella's counsel concluded that under this definition (i.e., the
price that "an unrelated third party would pay if it were to
acquire all outstanding [LIN Common] Shares (including the [LIN
Common] Shares held by [McCaw] and its affiliates) in an arm's-length
transaction, assuming that [LIN] was being sold in a
manner designed to attract all possible participants (including
the Regional Bell Operating Companies) and to maximize
stockholder value"), AT&T and McCaw should not be considered
potential buyers.
On March 7, 1995, Wasserstein Perella determined that the
private market value per LIN Common Share, as defined under the
PMVG, is $127.50. The full text of Wasserstein Perella's
determination letter is set forth below under "SPECIAL FACTORS --
Private Market Value Determination of Wasserstein Perella."
Under the formula set forth in the PMVG, $127.50 per LIN
Common Share is the Private Market Price as defined under the
PMVG, because this amount is more than one-third and less than
two-thirds of the way between the $105 per LIN Common Share and
$155 per LIN Common Share determined by Morgan Stanley and Bear
Stearns and Lehman Brothers, respectively, as the private market
value per LIN Common Share. If Wasserstein Perella's
determination were not in this middle range, the Private Market
Price would have been the average of Wasserstein Perella's
determination and the closer of the other two appraisals, except
that the Private Market Price could not have been higher than
$155 nor lower than $105. See "SPECIAL FACTORS --Terms of the
PMVG."
<PAGE>
<PAGE> 30
Pursuant to the PMVG, McCaw was given 45 days to determine
whether it desired to proceed with an acquisition of all the LIN
Public Shares at the Private Market Price. Under the PMVG, if
McCaw desired to proceed, it was required to enter into an
agreement with LIN for such acquisition (containing customary
terms and conditions applicable in a situation in which the
acquiror has an ownership interest in the company comparable to
McCaw's ownership interest in LIN) and to cause a meeting of
stockholders of LIN to be held as soon as practicable to consider
and vote thereon. If McCaw determined not to proceed, the PMVG
would require McCaw to put LIN up for sale in its entirety under
the direction of the LIN Independent Directors in a manner
intended by the LIN Independent Directors to maximize value for
all LIN Common Shares. See "SPECIAL FACTORS -- Terms of the
PMVG."
On April 7, 1995, McCaw determined that it desired to
proceed with an acquisition of the LIN Public Shares at the
Private Market Price of $127.50 per LIN Common Share. Subsequent
to that determination, representatives of the LIN Independent
Directors had discussions with representatives of McCaw with
respect to the terms on which the LIN Independent Directors would
be willing to vote in favor of, or abstain with respect to, the
acquisition of the LIN Public Shares by McCaw pursuant to the
PMVG. These discussions focused on (i) the possibility of McCaw
increasing the price at which it would acquire the LIN Public
Shares and/or adding an accretion to the purchase price in the
event the transaction closed after June 30, 1995, (ii) certain
requested changes in the text of a draft of the Original Merger
Agreement circulated by counsel to McCaw (including adding a
guarantee from AT&T and a representation that the funds for the
purchase of the LIN Public Shares would be provided by AT&T in
the form of a capital contribution, narrowing or eliminating the
condition to McCaw's obligation to consummate the merger
contemplated by the Original Merger Agreement (the "Original
Merger") that there be no pending litigation challenging the
Original Merger or the PMVG, and certain changes in the Original
Merger Agreement's provisions providing for indemnification of
officers, directors and employees of LIN) and (iii) the
possibility of seeking a fairness opinion from Wasserstein
Perella or another investment banking firm.
The LIN Independent Directors initially requested that the
Original Merger price be increased by $6 per LIN Common Share and
that the LIN public stockholders be given the option to receive
the Original Merger price in cash or in the form of AT&T Common
Shares. These proposals were rejected by McCaw. The LIN
Independent Directors then requested that the value of the
Original Merger price be protected against a delay of
consummation of the Original Merger beyond June 30, 1995. The
<PAGE>
<PAGE> 31
LIN Independent Directors, after consulting with Bear Stearns and
Lehman Brothers, initially requested that the Original Merger
price accrete at the rate of 15% per annum from June 30, 1995
through consummation of the Original Merger. The representatives
of McCaw responded that McCaw would be willing to agree to an
accretion of the Original Merger price at the rate of 3-1/4% per
annum commencing 75 days following the filing of preliminary
proxy material through consummation of the Original Merger, if
such accretion would also result in a satisfactory settlement of
the Stockholders Litigation. In addition, the representatives of
McCaw proposed that McCaw's obligation to consummate the Original
Merger under such circumstances would be conditioned on, among
other things, court approval of such settlement. Various
adjustments to these proposals were discussed. The LIN
Independent Directors requested that there be no litigation-related
condition to McCaw's obligation to consummate the
Original Merger, other than the condition to both LIN's and
McCaw's obligations that the transaction not be enjoined. See
"THE MERGER -- Conditions; Waivers."
At the end of these discussions, the representatives of the
LIN Independent Directors indicated that two of the LIN
Independent Directors would be willing to vote in favor of the
Original Merger Agreement if McCaw were willing to increase the
Original Merger price to $128.50 per LIN Common Share, to
increase that price further at an annual rate of 5% (compounded)
from June 30, 1995 through September 30, 1995 (or until
consummation of the Original Merger, if earlier) and, if
applicable, 3-1/4% thereafter until consummation of the Original
Merger, and agree to satisfactory resolution of the requested
changes in the Original Merger Agreement, and if Wasserstein
Perella were willing to deliver a fairness opinion on the terms
as so adjusted. At the end of these discussions, the
representatives of McCaw indicated that McCaw would be willing to
increase the Original Merger price to $128 per LIN Common Share
or to increase the $127.50 per LIN Common Share price at an
annual rate of 5% from June 30, 1995 through September 30, 1995
(or until consummation of the Original Merger, if earlier) and,
if applicable, 3-1/4% thereafter until consummation of the Original
Merger, but only if these modifications also resulted in a
satisfactory settlement of the Stockholders Litigation. See
"SPECIAL FACTORS -- Litigation." No settlement of the
Stockholders Litigation was reached at that time. The
representatives of McCaw also indicated that they would be
willing, as part of such modifications, to attempt to reach a
satisfactory resolution of the requested changes in the Original
Merger Agreement and to join in a request to Wasserstein Perella
for its opinion as to the fairness of the Original Merger, as so
modified. In this regard, representatives of McCaw and
representatives of the LIN Independent Directors had discussions
<PAGE>
<PAGE> 32
with representatives of Wasserstein Perella about whether
Wasserstein Perella would be willing to accept an engagement with
respect to its opinion as to the fairness, from a financial point
of view, of the transaction. Because the discussions between the
representatives of McCaw and the representatives of the LIN
Independent Directors did not result in any agreement at that
time, however, Wasserstein Perella was not then requested to
provide its opinion as to the fairness of the transaction.
On April 28, 1995, the LIN Board met to consider the
Original Merger Agreement. At this meeting, the LIN Board heard
presentations from and asked questions of representatives of
Morgan Stanley, Bear Stearns, Lehman Brothers and Wasserstein
Perella. These presentations set forth the work performed by
each firm, as described under "SPECIAL FACTORS -- Private Market
Value View of Morgan Stanley," "-- Private Market Value View of
Bear Stearns and Lehman Brothers" and "--Private Market Value
Determination of Wasserstein Perella." The LIN Board also heard
presentations on the background of the PMVG, the terms of the
proposed Original Merger Agreement and the status of pending
litigation, and were advised by counsel with respect to their
duties under Delaware law. The LIN Board then approved the
Original Merger Agreement and the Original Merger by a vote of
six to three, with two directors abstaining. The three LIN
Independent Directors each voted no on the proposal to approve
the Original Merger Agreement presented to the LIN Board, and Tom
A. Alberg and Harold S. Eastman abstained. Following the meeting
of the LIN Board, McCaw, Holdings, Merger Sub and LIN entered
into the Original Merger Agreement.
In early June 1995, counsel for McCaw contacted counsel for
certain of the plaintiffs in the Stockholders Litigation with
respect to the possibility of a settlement of the Stockholders
Litigation. Settlement discussions ensued, which focused on the
possibility of an increase in the consideration to be offered to
the LIN public stockholders and the possibility of further
accretion of the consideration at a specified rate of interest in
the event the transaction were not to be completed by a specified
date. Counsel for the plaintiffs also stated that they would
require, as part of the settlement, the delivery of an opinion
from a mutually acceptable investment banking firm as to the
fairness, from a financial point of view, of the consideration to
be offered to the LIN public stockholders, and that Wasserstein
Perella would be an acceptable investment banking firm for this
purpose. Counsel for McCaw also stated that McCaw's willingness
to consider an increase in the consideration to be offered to the
LIN public stockholders was contingent on gaining the support of
the LIN Independent Directors for the Merger and the settlement
of the Stockholders Litigation, including (i) the assent of the
LIN Independent Directors to the conversion of certain LIN
<PAGE>
<PAGE> 33
systems to equal access and the marketing of certain LIN services
under the AT&T service mark and (ii) the agreement of the LIN
Independent Directors to amend the PMVG in order to move the
December 31, 1995 deadline for a stockholder vote on an
acquisition under the PMVG to March 31, 1996 (which would give
McCaw enough time to solicit a stockholder vote on an acquisition
at the Private Market Price of $127.50 in the event the Merger
Agreement at the higher price were terminated because the
settlement of the Stockholders Litigation was not finally
approved by November 30, 1995). Counsel for McCaw also stated
that McCaw would require final court approval of settlement of
the Stockholders Litigation as a condition to McCaw's obligation
to consummate the transaction.
By mid-June 1995, the discussions between counsel for McCaw
and counsel for the plaintiffs in the Stockholders Litigation had
focused on an increase in the consideration to be offered to the
LIN public stockholders from $127.50 to $129.50 per LIN Common
Share, with up to an additional $0.25 per LIN Common Share
depending on the amount of the attorneys' fee to be awarded to
plaintiffs' counsel, plus an amount, if any, equal to interest on
the increased consideration at an annual rate of 5.5% from
September 15, 1995 until closing if the transaction did not close
by September 15, 1995. The discussions also contemplated that
Wasserstein Perella would be requested to render an opinion as to
the fairness of such terms to the LIN public stockholders.
Counsel for McCaw contacted counsel for the LIN Independent
Directors to discuss the potential settlement and revision of the
transaction terms. The LIN Independent Directors objected to the
proposed amendment to the PMVG to move the December 31, 1995
deadline for a stockholder vote to March 31, 1996, and objected
to the condition to McCaw's obligation to consummate the
transaction that the settlement of the Stockholders Litigation
receive final court approval. The LIN Independent Directors also
requested further information with respect to the conversion of
LIN systems to equal access and the marketing of LIN services
under the AT&T service mark. Following further discussions
between representatives of AT&T and McCaw, and the LIN
Independent Directors and their representatives, McCaw agreed to
withdraw its requirement that the PMVG be amended and the LIN
Independent Directors agreed that McCaw's obligation to
consummate the transaction would be conditioned on final court
approval of the settlement.
Following these discussions, the Memorandum of Understanding
with respect to the settlement of the Stockholders Litigation was
executed by counsel for AT&T and McCaw and by lead counsel for
the plaintiffs on June 22, 1995. On June 23, 1995,
representatives of AT&T and McCaw agreed with the LIN Independent
Directors that the marketing of LIN services under the AT&T
<PAGE>
<PAGE> 34
service mark would be on a non-exclusive, royalty-free basis and,
following the commencement of the marketing of any service of LIN
or any of its subsidiaries under the AT&T service mark, such
service would continue to be so marketed under the AT&T service
mark for so long as AT&T directly or indirectly owns at least a
majority of the voting power of LIN's capital stock entitled to
vote generally in the election of directors, unless a majority of
the LIN Independent Directors otherwise consents.
On June 30, 1995, the LIN Board met to consider the revised
Merger Agreement. At this meeting, the LIN Board heard a
presentation on the Memorandum of Understanding and the revised
terms reflected in the proposed Merger Agreement. The LIN Board
then heard the financial presentation of Wasserstein Perella, as
described under "SPECIAL FACTORS -- Fairness Opinion of
Wasserstein Perella," asked questions of the representatives of
Wasserstein Perella, and received Wasserstein Perella's opinion
to the effect that the Minimum Merger Consideration of $129.50
per LIN Common Share to be received by the LIN public
stockholders in the Merger is fair from a financial point of view
to such stockholders. Following these presentations and
discussion, the LIN Board unanimously approved the Merger
Agreement and the Merger. After the meeting of the LIN Board,
McCaw, Holdings, Merger Sub and LIN entered into the Merger
Agreement, and AT&T executed the Merger Agreement with respect to
the provisions thereof relating to the use by LIN and its
Subsidiaries of the AT&T service mark.
Purpose, Structure and Reasons for the Merger
The purpose of the Merger is to effect the acquisition of
all the LIN Public Shares by McCaw, as contemplated by the PMVG.
AT&T, McCaw, Holdings and LIN did not consider any other means to
accomplish that purpose because the PMVG provides that McCaw will
enter into an agreement with LIN for the acquisition of all the
LIN Public Shares should it determine to proceed with an
acquisition, and the Merger is the most direct means of effecting
the acquisition of all the LIN Public Shares. The transactions
contemplated by the Merger Agreement and the Merger are being
submitted to a vote of the holders of the LIN Public Shares at
the Annual Meeting pursuant to the procedures set forth in the
PMVG. <PAGE>
<PAGE> 35
Fairness of the Transaction; Recommendations
LIN. The LIN Board has unanimously approved the Merger
Agreement and determined that the Merger is fair to the public
stockholders of LIN, and unanimously recommends that LIN
stockholders vote in favor of the Merger Agreement and the
Merger. In reaching this determination and recommendation, the
LIN Board considered the following:
(i) the Fairness Opinion and financial presentation of
Wasserstein Perella, as described under "SPECIAL FACTORS --
Fairness Opinion of Wasserstein Perella," which the LIN
Board believed supported its determination that the Merger
is fair to the public stockholders of LIN;
(ii) the knowledge of the LIN Board as to the business,
financial results and prospects of LIN, as well as the
cellular industry generally, which the LIN Board believed
was consistent with its determination that the Merger is
fair to the public stockholders of LIN;
(iii) the determination of the Private Market Price
under the PMVG of $127.50 per LIN Common Share, and the
facts that (A) the procedure for determining the Private
Market Price set by the PMVG was negotiated at arm's length
by McCaw and LIN in 1989 prior to McCaw's acquisition of
control of LIN and was approved by the LIN Board prior to
the time that any of the members of the LIN Board were
designated by or otherwise affiliated with McCaw and (B) the
PMVG specifically contemplates an acquisition by McCaw of
the LIN Public Shares at the Private Market Price, if McCaw
so desires, as the second step of an acquisition transaction
negotiated at arm's length between McCaw and LIN in 1989;
the LIN Board believed that these facts supported its
determination that the Merger is fair to the public
stockholders of LIN in light of the fact that the Merger
Consideration is greater than the Private Market Price
determined pursuant to the PMVG and the proposed settlement
of the Stockholders Litigation will resolve challenges to
the procedural fairness of the PMVG process;
(iv) the fact that the increase in the Merger
Consideration above the Private Market Price contemplated as
the merger consideration in the Original Merger Agreement,
the condition that the LIN Board obtain a fairness opinion,
and the amendment of the litigation condition to require
only receipt of a final and nonappealable order of the
Delaware Chancery Court approving the settlement of the
Stockholders Litigation, were negotiated at arm's length<PAGE>
<PAGE> 36
between counsel for McCaw and counsel for the plaintiffs in
the Stockholders Litigation as the basis for the proposed
settlement of the Stockholders Litigation, and that the
settlement of the Stockholders Litigation avoided the
expense of such litigation and the risk that it would result
in substantial delay or possible nonconsummation of the
Merger, which the LIN Board believed supported its
determination that the Merger is fair to the public
stockholders of LIN;
(v) the Merger Consideration is substantially above
the prices at which Morgan Stanley estimated the LIN Common
Shares would trade in the public trading market in the
absence of the PMVG (see "SPECIAL FACTORS -- Private Market
Value View of Morgan Stanley"); and, in connection with the
Original Merger Agreement, the LIN Independent Directors
were advised by Bear Stearns and Lehman Brothers (in
separate letters dated April 28, 1995, which are attached as
exhibits to the Schedule 13E-3 (see "ADDITIONAL
INFORMATION")) that if the Original Merger were abandoned
because it was not approved by a Majority Vote of the LIN
Public Stockholders, following such abandonment there was a
substantial likelihood that the LIN Common Shares would
initially trade below $127.50 per LIN Common Share; the LIN
Board believed these facts were consistent with its
determination that the Merger is fair to the LIN public
stockholders; and
(vi) as required by the PMVG, the Merger is
conditioned on the Majority Vote of the LIN Public
Stockholders , which the LIN Board believed supported its
view that the Merger is fair procedurally to the LIN public
stockholders.
The members of the LIN Board believe that these factors
operate both individually and in combination to support their
determination that the Merger is fair to the LIN public
stockholders and did not assign relative weights to particular
factors. Eight of the eleven members of the LIN Board are
designees and/or employees of AT&T or McCaw and, therefore, have
a conflict with respect to the Merger and the Merger Agreement.
See "SPECIAL FACTORS -- Interests of Certain Persons in the
Merger; Conflicts of Interest."
LIN Independent Directors. Each of the LIN Independent
Directors (Ms. Jordan and Messrs. Herbster and Kislik) voted in
favor of the proposal to approve the Merger Agreement presented
to the LIN Board on June 30, 1995. The LIN Independent Directors
are joining in the recommendation to the LIN public stockholders
<PAGE>
<PAGE> 37
by the full LIN Board that they vote their LIN Common Shares in
favor of the proposal to approve the Merger Agreement. The three
LIN Independent Directors have provided the following additional
statement relating to their vote in favor of the Merger Agreement
and their vote against the Original Merger Agreement presented to
the LIN Board on April 28, 1995.
The Original Merger Agreement provided for the Original
Merger between LIN and a subsidiary of McCaw pursuant to which
the LIN public stockholders would have received $127.50 per LIN
Common Share. The LIN Independent Directors voted against
approving the Original Merger Agreement. The LIN Independent
Directors were disappointed that the Original Merger
consideration was not higher. In addition, the LIN Independent
Directors believed that the Original Merger Agreement did not
adequately provide for the protection of the LIN public
stockholders. This belief was based on various factors,
including the omission of a price adjustment mechanism in the
event that the closing of the Original Merger was delayed, and
the inclusion of a closing condition which would have relieved
McCaw of the obligation to close the transaction merely because
of the pendency of certain types of litigation. The litigation
condition was particularly troubling in that at the time that the
Original Merger Agreement was approved by the LIN Board, there
was litigation pending which, if not withdrawn, settled or
concluded in a manner acceptable to McCaw, would have permitted
McCaw not to close the transaction even if all other conditions
precedent had been satisfied or waived. Therefore, McCaw would
have had the option to defer the effective time of the Original
Merger and the payment of the Original Merger consideration, or
perhaps not to proceed with the transaction at all, if the
pending litigation condition was not satisfied.
Following the execution of the Original Merger Agreement,
the LIN Independent Directors were requested by McCaw to grant
their approval to LIN's conversion to equal access for long
distance carriers and the marketing of LIN wireless services
under the AT&T brand name. This request was refused by the LIN
Independent Directors.
Thereafter, the LIN Independent Directors were advised that
a proposed settlement of the pending litigation relating to the
transaction was being discussed by counsel to McCaw and counsel
to the plaintiffs in such pending litigation. Pursuant to the
proposed settlement, the Original Merger Agreement would be
amended and restated to provide that the LIN public stockholders
would receive a minimum of $129.50 per LIN Common Share and a
maximum of $129.75 per LIN Common Share (depending upon the
amount of attorneys' fees set by the Delaware Chancery Court in
connection with the settlement of the pending stockholder
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litigation). In addition, if the Merger is not completed by
September 15, 1995, McCaw would pay an additional amount equal to
interest on the revised Merger Consideration from that date until
closing at an annual rate of 5.5%. The proposed settlement also
required the assent of the LIN Independent Directors to LIN's
scheduled conversion to equal access for long distance carriers
and the marketing of LIN wireless services under the AT&T brand
name.
At a meeting on June 23, 1995, the LIN Independent Directors
were presented with information by officers of LIN, McCaw and
AT&T on the business benefits to LIN and all of its stockholders
which are expected to result from LIN's conversion to equal
access for long distance carriers and the commencement of
marketing of LIN wireless services under the AT&T brand name at
an early date, rather than waiting for the closing of the Merger.
In addition, it was agreed that the Merger Agreement would
contain an AT&T covenant that would survive any termination of
the Merger Agreement providing that LIN would have a royalty-free
right to utilize the AT&T brand name in its marketing efforts so
long as AT&T continued to own directly or indirectly at least a
majority of the LIN voting stock. The LIN Independent Directors
concluded that this provision should protect the interests of the
LIN public stockholders in the event that the Merger was not
consummated.
At its meeting on June 30, 1995, the LIN Board of Directors
received the Fairness Opinion and financial presentation of
Wasserstein Perella to the effect that the Minimum Merger
Consideration of $129.50 per LIN Common Share as provided in the
Merger Agreement is fair from a financial point of view to the
LIN public stockholders. (See Appendix B for the full text of
the Fairness Opinion.) The LIN Independent Directors joined in
the unanimous approval by the LIN Board of Directors of the
Merger Agreement, and also indicated their acceptance of the
Memorandum of Understanding setting forth the terms of the
proposed litigation settlement. The LIN Independent Directors
believed that the Merger Agreement provided a significant
improvement from the Original Merger Agreement. In addition to
the increase in the Merger Consideration, the agreement to pay an
amount equal to interest on the Merger Consideration after
September 15, 1995 provided price protection and the Memorandum
of Understanding providing for settlement of the litigation makes
it more likely, though not certain, that the Merger will close
before November 30, 1995. See "THE MERGER -- Conditions; Waivers
- -- Conditions to the Obligations of McCaw, Holdings and Merger
Sub."
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<PAGE> 39
In addition, the LIN Independent Directors noted that if the
Merger is not approved by a Majority Vote of the LIN public
stockholders, and the Merger is abandoned, certain provisions of
the PMVG would survive (e.g., provisions relating to approvals of
a merger and certain other transactions between LIN and its
affiliates, certain acquisitions and dispositions of businesses
by LIN, allocation of corporate opportunities between LIN and
McCaw, restrictions on purchases by McCaw and its affiliates of
additional LIN Common Shares and restrictions on transfer of LIN
Common Shares by McCaw and its affiliates); however, McCaw would
not be obligated to acquire the 48% of LIN it does not own and
would not be obligated to put 100% of LIN up for sale.
If the Merger is abandoned because it is not approved by a
Majority Vote of the LIN Public Stockholders, the LIN Independent
Directors have been advised by Bear Stearns and Lehman Brothers
(in separate letters dated April 28, 1995, which are attached as
exhibits to the Schedule 13E-3 (see "ADDITIONAL INFORMATION"))
that, following such abandonment, there is a substantial
likelihood that the LIN Common Shares would initially trade below
$127.50 per LIN Common Share.
Based on all of the foregoing, the LIN Independent Directors
determined that the Merger is fair to the LIN public stockholders
and recommend that such stockholders vote in favor of the Merger.
AT&T and McCaw. AT&T and McCaw believe the Merger is fair
to the LIN public stockholders for the same reasons as are set
forth above with respect to the LIN Board. However, AT&T and
McCaw have a conflict with respect to the Merger Agreement and
the Merger, given that McCaw is the other party to the Merger
Agreement and would acquire all the LIN Public Shares if the
Merger is consummated. In addition, once McCaw determined to
proceed with an acquisition of all the LIN Public Shares, the
PMVG provided that McCaw was required to enter into an agreement
with LIN providing for such acquisition and to cause a meeting of
stockholders of LIN to be held as soon as practicable to consider
and vote thereon. If McCaw were not to have done so, it might be
deemed to have breached the PMVG.
Fairness Opinion of Wasserstein Perella
On June 30, 1995, Wasserstein Perella delivered the Fairness
Opinion and financial presentation to the LIN Board to the effect
that the Minimum Merger Consideration of $129.50 per LIN Common
Share to be received by the LIN public stockholders in the Merger
is fair from a financial point of view to such stockholders. A
copy of the Fairness Opinion is attached hereto as Appendix B.
Stockholders are urged to read the Fairness Opinion in its
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<PAGE> 40
entirety for information with respect to the procedures followed,
assumptions made, matters considered and limits of the review by
Wasserstein Perella in rendering the Fairness Opinion.
References to the Fairness Opinion herein and the summary of the
Fairness Opinion set forth below are qualified by Appendix B,
which is incorporated herein by reference. The Fairness Opinion
is directed only to the fairness from a financial point of view
to the LIN public stockholders of the Minimum Merger
Consideration of $129.50 per LIN Common Share to be received
pursuant to the Merger, and it does not address any other aspect
of the Merger. The Fairness Opinion does not constitute a
recommendation to any stockholder with respect to whether to vote
in favor of the Merger and should not be relied upon by any
stockholder as such.
Prior to undertaking the engagement to render the Fairness
Opinion, Wasserstein Perella was retained to act as the "Mutually
Designated Appraiser" to determine the private market value per
LIN Common Share pursuant to the PMVG (see "SPECIAL FACTORS --
Background of the Merger"). On March 7, 1995, Wasserstein
Perella delivered to McCaw and the LIN Independent Directors its
written determination of the private market value of the LIN
Common Shares (see "SPECIAL FACTORS -- Private Market Value
Determination of Wasserstein Perella").
In its capacity as the "Mutually Designated Appraiser"
pursuant to the PMVG, Wasserstein Perella was required to
determine the private market value of the LIN Common Shares in
accordance with, and based upon the contractual requirements of,
the PMVG. The Fairness Opinion, however, was prepared based on
criteria and judgments customarily applied in rendering fairness
opinions in circumstances similar to those of the Merger.
In connection with arriving at its determination of the
private market value of the LIN Common Shares and its opinion set
forth in the Fairness Opinion, Wasserstein Perella reviewed,
among other things (i) the PMVG; (ii) the reports and materials
prepared and delivered by Morgan Stanley on behalf of McCaw and
by Lehman Brothers and Bear Stearns on behalf of the LIN
Independent Directors relating to their determinations of the
private market value of the LIN Common Shares pursuant to the
PMVG; (iii) certain publicly available information with respect
to LIN, including publicly available consolidated financial
statements of LIN for recent years and interim periods that were
available at the relevant times; (iv) certain financial and
operating information, including certain projections of financial
performance, relating to LIN, its principal operating
subsidiaries and certain entities in which LIN or its
subsidiaries hold partnership interests prepared by each of the
management of LIN and the management of McCaw (the projections
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<PAGE> 41
prepared by the management of LIN, which are referred to in
Wasserstein Perella's report as the "LIN Management Case," are
referred to herein as the "LIN Management Base Case" or the "Base
Case," and the projections prepared by the management of McCaw
are referred to in Wasserstein Perella's report and herein as the
"McCaw Management Case"); (v) a draft of this Proxy Statement
dated June 26, 1995, including financial information and
projections contained therein; and (vi) certain publicly
available information concerning the public trading prices of LIN
Common Shares, certain market indices and the stock of certain
other companies in businesses similar to that of LIN.
Wasserstein Perella had discussions with the management of
LIN and its representatives concerning the businesses,
operations, assets, financial condition and future prospects of
LIN and its subsidiaries. Wasserstein Perella also performed
such studies and analyses as it considered appropriate for
purposes of arriving at and preparing the Fairness Opinion.
Other than certain information referred to in clause (iv)
above, Wasserstein Perella was not provided with any internal
non-public information prepared by McCaw or AT&T relating to the
operations or assets of McCaw, AT&T or LIN. Wasserstein Perella
was not provided with any valuations of LIN prepared by McCaw,
AT&T or LIN or their financial advisors, except for the reports
delivered pursuant to the PMVG referred to in clause (ii) above.
No special instructions were given to Wasserstein Perella related
to its review and, other than with respect to such limitations on
access to non-public information of AT&T and McCaw and, if any,
such valuations of LIN, no limitations were imposed with respect
to investigations made or procedures followed by Wasserstein
Perella in rendering the Fairness Opinion.
In conducting its analysis and arriving at its opinion,
Wasserstein Perella assumed and relied upon the accuracy and
completeness of all financial and other information provided or
that was publicly available, without independent verification,
and assumed, with LIN's consent, that the financial forecasts and
projections provided by LIN and by McCaw were prepared in good
faith and on bases reflecting the best currently available
judgments and estimates of the party preparing such forecasts and
projections, and that the reports prepared by Morgan Stanley and
by Lehman Brothers and Bear Stearns in connection with the PMVG
process were prepared in good faith and on bases reflecting the
best currently available judgments and estimates of the parties
preparing such reports. Wasserstein Perella also assumed that
LIN does not have contingent liabilities exceeding the reserves
therefor established in LIN's financial statements. Wasserstein
Perella consulted with and relied on the advice of counsel for
LIN and its own counsel with respect to certain legal and tax
matters.<PAGE>
<PAGE> 42
Wasserstein Perella was not asked to and did not solicit any
third parties regarding their possible interest in acquiring LIN
or any of its business or assets or investigate alternative
transactions which may be available to LIN apart from those
considered in connection with its analysis of private market
value of the LIN Common Shares under the PMVG.
The Fairness Opinion was prepared and delivered based upon
conditions as they existed and could be evaluated by Wasserstein
Perella as of the date thereof and based upon the draft of this
Proxy Statement and the Merger Agreement in the forms provided to
Wasserstein Perella prior to rendering the Fairness Opinion.
At the June 30, 1995 meeting of the LIN Board, Wasserstein
Perella reviewed with the members of the LIN Board certain
financial, industry and market information with respect to LIN
and the procedures used and the analyses underlying the Fairness
Opinion. In connection with its presentation to the LIN Board,
Wasserstein Perella provided the directors with a written report
summarizing such information, procedures and analyses. The full
text of the report presented to the LIN Board on June 30, 1995 is
attached as an exhibit to the Schedule 13E-3 (see "ADDITIONAL
INFORMATION"), and is also available for inspection and copying
at the principal offices of LIN during LIN's regular business
hours by any interested holder of LIN Common Shares or such
holder's representative who has been so designated in writing.
The summary set forth below does not purport to be a complete
description of the Fairness Opinion or Wasserstein Perella's
analysis as set forth in the exhibit to Schedule 13E-3. The
preparation of a fairness opinion is a complex process that is
not purely mathematical and is not necessarily susceptible to
partial analyses or summary description. It involves complex
considerations and judgments. Interested stockholders are
encouraged to review the Fairness Opinion in its entirety and to
obtain a copy of the Wasserstein Perella report for a more
complete description of the procedures used and the analysis
underlying the Fairness Opinion.
In performing its analysis for the Fairness Opinion,
Wasserstein Perella relied on numerous assumptions made by the
managements of LIN and McCaw, as reflected in the LIN Management
Base Case and the McCaw Management Case, and made numerous
judgments of its own with regard to the performance of LIN,
industry performance, general business and economic conditions
and other matters, many of which are beyond LIN's ability to
control. Any estimates contained in such analysis are not
necessarily indicative of actual values or actual future results,
which may be significantly more or less favorable than suggested
in the Wasserstein Perella report. In addition, analyses
relating to values of companies do not purport to be appraisals
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<PAGE> 43
or to reflect the prices at which companies may actually be sold.
Since such estimates are inherently subject to uncertainty, none
of LIN, Wasserstein Perella or any other person assumes
responsibility for their accuracy.
In delivering the Fairness Opinion and making its
presentation to the LIN Board, representatives of Wasserstein
Perella considered and discussed various financial and other
matters that it deemed relevant. General valuation
considerations deemed to be relevant by Wasserstein Perella
include, without limitation, those outlined in the Wasserstein
Perella report, such as: (i) wireless communication and
demographic trends as a whole and in LIN's markets; (ii) LIN's
historical financial and operating performance and future
prospects in the context of its business strategy, market
position and current and prospective competition; (iii) LIN's
technological, marketing and product strategy; (iv) the LIN
Management Base Case and the McCaw Management Case; (v) LIN's
size and asset mix; (vi) LIN's shared control of the Los Angeles
and Houston cellular markets; (vii) the breadth and depth of the
potential acquisition universe for LIN; (viii) the potential
public market trading value of LIN as a stand-alone entity;
(ix) publicly available commentary, research and valuation
estimates of industry analysts; (x) McCaw's ownership of a
majority of the voting and economic interests in LIN;
(xi) McCaw's ability to act as a buyer of the publicly held LIN
Common Shares, and an assumption that McCaw would not necessarily
be a willing seller of the LIN Common Shares it owns; (xii)
regulatory restrictions applicable to AT&T with respect to its
ability to receive equity as consideration from certain potential
purchasers of LIN if AT&T and McCaw were to consider selling the
LIN Common Shares owned by McCaw; and (xiii) the feasibility of
various possible value-maximizing transaction structures if AT&T
and McCaw were to consider selling the LIN Common Shares owned by
McCaw, including certain legal, tax, antitrust and regulatory
considerations and issues arising from potential multiparty
transactions.
The financial analyses underlying the Fairness Opinion are
outlined in the Wasserstein Perella report and are summarized
below. The report contains reference ranges of implied prices
per LIN Common Share based on Wasserstein Perella's judgment of
the data analyzed. These reference ranges include reference
points, implicit in the Minimum Merger Consideration of $129.50
in cash to be paid per LIN Common Share in the Merger, including
a multiple of earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the latest twelve months ("LTM") of
20.8x, an estimated 1995 EBITDA multiple of 15.4x, an estimated
1996 EBITDA multiple of 12.2x and a price of $320 per "pop".
("Pops" refer to the population of a market multiplied by a
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<PAGE> 44
percentage ownership interest in an entity licensed or designated
to receive a license by the Federal Communications Commission to
construct or operate a cellular telephone system in such market.
Pops do not represent actual subscribers in a cellular system.)
These reference points were all considered in the context of the
analyses described below.
1. Public Company Trading Analysis. Wasserstein Perella
reviewed, analyzed and compared certain operating, financial, and
trading information of LIN and eight other publicly traded
cellular companies (AirTouch Communications, Inc. ("AirTouch"),
Cellular Communications, Inc. ("Cellular Communications"),
CommNet Cellular, Inc. ("CommNet"), Vanguard Cellular Systems,
Inc. ("Vanguard"), Centennial Cellular Corp. ("Centennial"),
PriCellular Corporation, United States Cellular Corporation ("US
Cellular") and Palmer Wireless, Inc.), including market values,
adjusted market values (defined as market value plus debt,
preferred stock and minority interests less cash and cash
equivalents), estimated adjusted market values of non-U.S. and
non-cellular operations, estimated adjusted market values of
domestic cellular operations, numbers of domestic pops, estimated
implied enterprise values per pop, and multiples derived by
dividing estimated adjusted market values of cellular operations
by each of LTM cellular revenues, LTM cellular EBITDA and
estimated 1995 cellular EBITDA. Wasserstein Perella noted, among
other things, that the trading pattern of the LIN Common Shares
has been affected by the existence of the PMVG and that LIN lacks
a precise analogue among publicly traded cellular companies due
to its predominant major-market presence and its lack of
international assets. Wasserstein Perella noted that while the
per pop approach to analyzing the cellular industry has become
less influential among analysts than cash-flow multiples as the
cellular business matures, many companies continue to express
valuations on a per pop basis. In addition, Wasserstein Perella
compared the recent public trading history of LIN with a cellular
company composite index comprised of AirTouch, Cellular
Communications, Centennial, CommNet, US Cellular and Vanguard and
with the Standard and Poors industrial index.
Based on the above values and multiples and in Wasserstein
Perella's judgment, the appropriate reference ranges derived from
its public company trading analysis were a reference range of
implied public trading prices of $95-$110 per LIN Common Share,
implied reference ranges of multiples for LIN of 16.2x-18.2x LTM
EBITDA, 12.0x-13.5x estimated 1995 EBITDA, and 9.5x-10.7x
estimated 1996 EBITDA, and an implied per pop range for LIN of
$249-$280.
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2. Precedent Merger and Acquisition Transactions.
Wasserstein Perella reviewed and analyzed selected going private
transactions and merger and acquisition transactions involving
other companies in the cellular industry that it deemed relevant.
Wasserstein Perella noted that, while there have been a number of
recent transactions in the cellular industry, with the exception
of the AirTouch/U S WEST, Inc. ("U S WEST") and Bell Atlantic
Corporation ("Bell Atlantic")/NYNEX Corporation ("NYNEX") joint
venture transactions, only the acquisition of McCaw by AT&T has
been of comparable scale. Wasserstein Perella also noted that
the amounts paid to stockholders in going private transactions
have historically been affected by the existence of a controlling
shareholder. Among other factors, Wasserstein Perella indicated
that the merger and acquisition transaction environment has a
degree of volatility over time because of macroeconomic factors
such as interest rate and equity market fluctuations and
microeconomic factors such as industry results and growth
expectations. Wasserstein Perella pointed out that the wireless
communication industry in particular has undergone dramatic
changes in recent years and faces continued dynamic evolution.
Wasserstein Perella performed an analysis of the AT&T
acquisition of McCaw because of its size and scope and its
relevance to the parties, including the fact that it involved the
acquisition of an indirect majority interest in LIN. Wasserstein
Perella indicated that, based on the transaction value at the
time of announcement, the per pop price paid for McCaw was $283.
Wasserstein Perella's analysis also yielded for LIN an implied
price of $162.79 per LIN Common Share based on LTM EBITDA, an
implied price of $198.21 per LIN Common Share based on estimated
EBITDA for the twelve month period ending March 31, 1996, an
implied price of $174.43 per LIN Common Share based on estimated
EBITDA for the twelve month period ending March 31, 1997, and a
price of $111.32 per LIN Common Share based on price per pop.
In its analysis for the Fairness Opinion, Wasserstein
Perella recognized that the AT&T acquisition of McCaw involved a
change of control transaction in which a change of control
premium was paid. Since the AT&T acquisition of McCaw was not a
going private transaction analogous to McCaw's proposal to
acquire the LIN Common Shares held by the LIN public
stockholders, Wasserstein Perella made appropriate and necessary
qualitative judgments regarding its precedential value.
In addition to reviewing AT&T's acquisition of McCaw,
Wasserstein Perella reviewed and analyzed selected transactions
involving other companies in the cellular industry since October
of 1989 that it deemed relevant, including selected going private
transactions. Wasserstein Perella's analysis of the selected
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going private transactions yielded per pop values in the range of
$148.20-$191.00. The analysis also yielded for LIN implied
prices of $163.54-$344.19 per LIN Common Share based on LTM
EBITDA, implied prices of $125.59-$229.22 per LIN Common Share
based on estimated EBITDA for the twelve month period ending
March 31, 1996, implied prices of $105.65-$167.20 per LIN Common
Share based on estimated EBITDA for the twelve month period
ending March 31, 1997, and implied prices of $46.31-$67.08 per
LIN Common Share based on per pop prices. Wasserstein Perella
also analyzed selected recent merger and acquisition
transactions, that it deemed relevant, other than the AT&T/McCaw
merger and the going private transactions referred to above.
This analysis yielded per pop values in the range of $79-$321 and
implied prices of $12.87-$129.77 per LIN Common Share based on
these per pop values.
Based on the above values and multiples and in Wasserstein
Perella's judgment, the appropriate reference ranges derived from
its comparable transaction analysis were a reference range of
implied prices of $120-$145 per LIN Common Share, implied
reference ranges of multiples for LIN of 19.5x-22.9x LTM EBITDA,
14.5x-17.0x estimated 1995 EBITDA and 11.5x-13.5x estimated 1996
EBITDA, and an implied per pop range for LIN of $301-$353.
3. Discounted Cash Flow Analysis. Wasserstein Perella
performed discounted cash flow analyses based on two different
sets of financial projections for LIN: the LIN Management Base
Case and the McCaw Management Case. Solely for comparative
purposes, Wasserstein Perella also prepared a sensitivity case
using different assumptions (the "Sensitivity Case"). The
Sensitivity Case does not purport to be projections for LIN;
instead, it is a sensitivity analysis using different assumptions
for comparative purposes. Wasserstein Perella noted in its
report that, given the nature of the cellular and wireless data
industries, discounted cash flow valuation ranges are extremely
sensitive to changes in both operating assumptions and valuation
parameters. In performing its discounted cash flow analysis,
Wasserstein Perella considered various different assumptions that
it deemed appropriate. It noted that there is a high variability
regarding appropriate valuations of the wireless data segment,
which is not unusual in industries that are in a relatively early
stage of development. Wasserstein Perella applied valuation
parameters that it deemed appropriate to the LIN Management Base
Case and the McCaw Management Case.
In its report, Wasserstein Perella highlighted certain
assumptions that were common to both the LIN Management Base Case
and the McCaw Management Case. Wasserstein Perella also noted
that there were several major areas of difference between these
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two sets of projections: the McCaw Management Case attempted to
strip out AT&T synergies from the LIN Management Base Case (LIN
management stated that it did not incorporate meaningful AT&T
synergies in the LIN Management Base Case); the McCaw Management
Case assumed lower penetration by LIN (14.5% vs. 16.9% in year
2004); the McCaw Management Case assumed lower revenue per
subscriber per month (approximately $49 vs. approximately $54 in
the LIN Management Base Case in the year 2004); the McCaw
Management Case assumed higher marketing costs throughout the
period to 2004, especially in the last five years of the period;
and the McCaw Management Case projections regarding wireless data
transmission were significantly more modest (approximately one-half
the cash flow of the LIN Management Base Case in the year
2004).
Wasserstein Perella believed it appropriate to, and did,
utilize different discount rates for each of the major industry
segments of LIN's business: 11%-13% for cellular, 19%-21% for
wireless data and 11%-13% for television assets. Wasserstein
Perella felt it appropriate to use terminal valuations based on
perpetuity growth rates of 5% to 6% for cellular, 6% to 10% for
wireless data and 4% to 6% for television assets. These were
deemed appropriate with respect to the respective industry
segments of LIN's business.
As determined by Wasserstein Perella, the values per LIN
Common Share based on a discounted cash flow analysis were as
follows: $102.99-$180.69 based on the LIN Management Base Case;
$66.09-$118.73 based on the McCaw Management Case and $95.52-$168.71
based on the Sensitivity Case.
Taking the foregoing into account, in Wasserstein Perella's
judgment, its discounted cash flow analysis yielded a summary
reference range of implied prices of $110-$150 per LIN Common
Share, implied reference ranges of multiples for LIN of
18.2x-23.6x LTM EBITDA, 13.5-17.5x estimated 1995 EBITDA, and
10.7x-14.6x estimated 1996 EBITDA and an implied per pop range
for LIN of $280-$363.
In addition to the above outlined analyses, Wasserstein
Perella performed such other valuation analyses as it deemed
appropriate in determining the fairness to the LIN public
stockholders of the Minimum Merger Consideration of $129.50 per
LIN Common Share to be received in the Merger. Wasserstein
Perella concluded, based on the full range of its analyses, that
the Minimum Merger Consideration of $129.50 per LIN Common Share
to be paid in the Merger was fair from a financial point of view
to the LIN public stockholders.
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Wasserstein Perella is an investment banking firm engaged,
among other things, in the valuation of businesses and their
securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, and secondary
distributions of listed and unlisted securities and private
placements. Wasserstein Perella was selected to render its
opinion regarding the fairness of the consideration to be
received by the LIN public stockholders in the Merger because it
is a nationally recognized investment banking firm and because of
its experience in the valuation of companies, including companies
in the cellular industry. In addition to acting as the "Mutually
Designated Appraiser" pursuant to the PMVG and its service in
providing the Fairness Opinion, Wasserstein Perella acted as
LIN's financial advisor in connection with the acquisition of
control of LIN by McCaw in 1990.
Terms of Wasserstein Perella's Engagement: Pursuant to the
terms of an engagement letter dated June 23, 1995, LIN agreed to
pay Wasserstein Perella a fee of $1.5 million to render an
opinion as to the fairness of the consideration to be received by
the LIN public stockholders in the Merger. LIN also agreed to
reimburse Wasserstein Perella for its out-of-pocket expenses,
including reasonable fees and disbursements of its counsel. LIN
agreed to indemnify Wasserstein Perella and its affiliates, their
respective directors, officers, partners, agents and employees
and each person, if any, controlling Wasserstein Perella or any
of its affiliates against certain liabilities and expenses,
including certain liabilities under the federal securities laws,
relating to or arising out of such engagement. The fees, expense
reimbursement and indemnification described above are additional
to those provided to Wasserstein Perella for its service as the
"Mutually Designated Appraiser" (see "SPECIAL FACTORS -- Private
Market Value Determination of Wasserstein Perella").
Private Market Value View of Morgan Stanley
Morgan Stanley was engaged by McCaw, in accordance with the
terms of the PMVG, to determine the private market value per LIN
Common Share, as defined in the PMVG. McCaw selected Morgan
Stanley because, as required by the PMVG, Morgan Stanley is a
nationally recognized investment banking firm and because Morgan
Stanley has substantial experience in the valuation of companies
generally and in the cellular industry. McCaw imposed no
limitations on Morgan Stanley in connection with Morgan Stanley's
arriving at its view of the private market value per LIN Common
Share, except that, in accordance with the view of both McCaw and
the LIN Independent Directors, Morgan Stanley did not solicit
third-party interest with respect to the acquisition of all the
LIN Common Shares.
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As required by the PMVG, on January 31, 1995, Morgan Stanley
stated its initial view that the private market value per LIN
Common Share, as defined in the PMVG, was $100. Between January
31, 1995 and February 15, 1995, Morgan Stanley met and consulted
with Bear Stearns and Lehman Brothers with respect to Morgan
Stanley's initial view and Bear Stearns' and Lehman Brothers'
initial view of the private market value per LIN Common Share.
In addition, during this period, Morgan Stanley met with McCaw
and AT&T to discuss such initial views and the wide disparity
between the initial view of Morgan Stanley, on the one hand, and
the initial view of Bear Stearns and Lehman Brothers, on the
other hand. As required by the PMVG, on February 15, 1995,
Morgan Stanley delivered its final view that the private market
value per LIN Common Share, as defined in the PMVG, was $105,
assuming a closing date for an acquisition of LIN no earlier than
June 30, 1995. The full text of the report by Morgan Stanley
relating to such view is attached as an exhibit to the Schedule
13E-3 (see "ADDITIONAL INFORMATION"), and is also available for
inspection and copying at the principal executive offices of
McCaw (see "CERTAIN INFORMATION REGARDING AT&T, McCAW, HOLDINGS,
MERGER SUB AND LIN -- McCaw") during McCaw's regular business
hours by any interested holder of LIN Common Shares or such
holder's representative who has been so designated in writing.
Morgan Stanley considered a wide variety of factors in
arriving at its view of the private market value per LIN Common
Share (as defined in the PMVG), including, but not limited to,
its view of the following: (i) LIN's intrinsic value implied by
LIN management projections, as well as by equity research analyst
projections, using a discounted cash flow analysis; (ii) values
implied by precedent transactions; (iii) an evaluation of
potential unrelated third party acquirors of LIN; (iv) the price
that could be attributed to LIN in the context of AT&T's
acquisition of McCaw and LIN; (v) the private market value price
for LIN projected by McCaw in 1992 in the context of its
financial planning process; (vi) an evaluation of the 1989
contested takeover battle for LIN; and (vii) the likely public
market trading value for LIN absent the PMVG agreement.
In arriving at its view of the private market value per LIN
Common Share (as defined in the PMVG), Morgan Stanley (i)
reviewed the PMVG and participated in discussions with its legal
counsel, AT&T and the LIN Independent Directors' financial
advisors with respect to Morgan Stanley's role as "Offeror's
Appraiser" under the PMVG, including with respect to the
interpretation of the definition of "private market value"
contained therein (concluding that, under the definition, AT&T
and McCaw should be considered as sellers, not as buyers, of LIN
Common Shares), (ii) analyzed certain publicly available
financial statements of LIN, (iii) reviewed certain internal
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financial statements and other financial and operating data
concerning LIN prepared by the management of LIN, (iv) reviewed
certain financial projections of LIN prepared by the managements
of McCaw and of LIN, (v) met with senior officers of McCaw and
LIN to discuss the projections of LIN prepared by the managements
of McCaw and LIN and past and current operations of LIN and LIN's
financial condition and prospects, (vi) visited LIN's facilities
in Kirkland, Washington, Los Angeles, California, New York, New
York and Dallas, Texas, (vii) reviewed the reported prices and
trading activity of the LIN Common Shares, (viii) compared the
financial performance of LIN and the prices and trading activity
of the LIN Common Shares with that of certain other comparable
publicly traded companies, (ix) reviewed the terms of the
acquisition by AT&T of McCaw and the financial terms, to the
extent publicly available, of certain comparable acquisition
transactions , (x) performed discounted cash flow analyses using
the LIN Management Base Case, adjusted as described below, (xi)
reviewed potential third party interest in an acquisition of LIN,
including the possibility of tax efficient transaction structures
(although, as instructed by McCaw, Morgan Stanley did not contact
any third parties to determine their potential interest in
acquiring LIN), (xii) reviewed historical operating and financial
results of the wireless industry, (xiii) reviewed equity research
analysts' and cellular industry experts' analyses and estimates
of the private market value of LIN, and (xiv) reviewed such other
information and performed such other analyses (including the
information and analyses described below and in the report of
Morgan Stanley filed as an exhibit to the Schedule 13E-3) and
took into account such other matters as Morgan Stanley deemed
appropriate.
The following is a summary of the analyses performed by
Morgan Stanley in arriving at its final view of the private
market value per LIN Common Share, as defined in the PMVG.
Discounted Cash Flow Analysis. Morgan Stanley's discounted
cash flow analysis yielded values of $93 to $110 per LIN Common
Share. This analysis was based on (i) LIN management's Base Case
projections, but excluding that portion of the Base Case
attributable to LIN management's projections with respect to
revenue streams from LIN's wireless data, new features and long
distance services, (ii) discount rates of 13% to 14% and (iii)
exit multiples of 9.5x to 10.5x EBITDA projected for the year
2004. Using the Base Case projections, Morgan Stanley derived a
range of discounted cash flow values by calculating the present
value as of February 15, 1995 of (i) LIN's projected free cash
flow for the ten and one-half months ended December 31, 1995 and
the calendar years 1996 through 2004 and (ii) a terminal value
based on a multiple of EBITDA projected for the year 2004. In
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reviewing this range for purposes of determining the private
market value per LIN Common Share, Morgan Stanley stated its view
that discounted cash flow analysis has its limitations for this
specific purpose. Morgan Stanley expressed its view that while
discounted cash flow analysis is a useful benchmark for intrinsic
valuation, it does not in and of itself necessarily equate to
what an unrelated third party would pay for all of LIN. (Morgan
Stanley also noted its view that the PMVG provides for a
determination of what an unrelated third party would pay for all
the LIN Common Shares, as opposed to a determination of the
intrinsic value of LIN.)
While Morgan Stanley's discounted cash flow analysis
utilized LIN management's Base Case projections, adjusted as
described above, Morgan Stanley also noted certain factors that
caused it to view such projections as aggressive for a potential
buyer of LIN. In particular, Morgan Stanley viewed the Base Case
projections as more aggressive with respect to revenue (both
before and after Morgan Stanley's adjustments), and more
aggressive in the later years with respect to cash flows (before
Morgan Stanley's adjustments), than the LIN base case projections
that were prepared on behalf of McCaw management and presented to
the McCaw Board of Directors in the fall of 1992. In Morgan
Stanley's view, the 1992 projections, in turn, while
underestimating certain measures such as penetration,
overestimated LIN's actual performance with respect to revenue
and cash flow in 1993 and with respect to cash flow in 1994.
Further, the Base Case projections were created by LIN management
solely for purposes of the PMVG process and not in the ordinary
course planning process.
In addition, Morgan Stanley found various aspects of the
Base Case projections to be either internally inconsistent or
overly optimistic in Morgan Stanley's view. For example, Morgan
Stanley noted that projected capital expenditures appeared to
Morgan Stanley to be inconsistent with the operating assumptions
projected by LIN management in the Base Case, in that annual
capital expenditures per net customer addition were projected to
decline despite projected increases in minutes of usage per
subscriber. Moreover, in Morgan Stanley's view, annual capital
expenditures did not seem to factor in replacement cost, given
that Morgan Stanley's analysis of the Base Case projections found
that net plant, property and equipment was projected to decline
from $1,055 million in 1998 to $461 million in 2004.
Morgan Stanley separately analyzed LIN management's Base
Case projections with respect to revenue streams from wireless
data, new features and long distance. This analysis suggested to
Morgan Stanley that potential purchasers of LIN would be unlikely
to assign significant value to those services. In particular,
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Morgan Stanley indicated its view that LIN management's Base Case
projections for wireless data were aggressive and inconsistent
with McCaw's Wireless Data Division projections for LIN. In
Morgan Stanley's view, wireless data opportunities, appropriately
valued, represent only a potential $5 to $6 of value per LIN
Common Share and, given potential purchasers' experience with
wireless data, Morgan Stanley thought it unlikely that such
purchasers would pay any meaningful value for such opportunities.
In addition, Morgan Stanley expressed its view that buyers would
assign little value to projections related to new features which
included features "yet to be identified." With respect to long
distance services, Morgan Stanley noted its view that strategic
buyers might be unable to capitalize on the revenue stream from
these services due to regulatory constraints relating to equal
access for customers. Morgan Stanley also noted that, in its
view, the LIN Base Case projections excluding wireless data, long
distance and new features were consistent with the LIN
projections prepared by industry analysts which, in its view,
included AT&T synergies.
Morgan Stanley separately performed a discounted cash flow
analysis based on a variety of long-term projections created by
certain equity research analysts, which yielded values of $101 to
$120 per LIN Common Share. Morgan Stanley's analysis used
discount rates of 13% to 14%, and exit multiples of 9.5x to 10.5x
EBITDA in the year 2004. In certain cases, Morgan Stanley
adjusted these exit multiples upward for analysts whose
projections did not extend through the year 2004. Morgan Stanley
stated, however, that certain of the equity research analysts'
projections for LIN reflected certain benefits attributable to
being owned by AT&T that would not be available to LIN if it were
acquired by an unrelated third party buyer, such as access to the
AT&T brand name; these benefits, however, were not detailed
separately in the projections. Morgan Stanley also stated that
certain equity research analysts had increased their estimates of
the 1995 private market value per LIN Common Share following the
announcement of AT&T's acquisition of McCaw and its majority
stake in LIN. Morgan Stanley believed that one component of the
increased private market value estimates was the inclusion by
equity research analysts of synergies attributable exclusively to
the benefits of being owned by AT&T. Morgan Stanley observed
that the average increase in such private market value estimates
after the announcement of AT&T's acquisition of McCaw was $12 per
LIN Common Share. Morgan Stanley's discounted cash flow analysis
based on projections created by equity research analysts,
adjusted by Morgan Stanley to exclude $12 per LIN Common Share,
yielded values of $89 to $108 per LIN Common Share.
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In arriving at its view of the appropriate discount rate to
apply to the various sets of projections, Morgan Stanley reviewed
and analyzed, among other things, its views of the following
items: (i) the current and historic yield on U.S. Treasury bonds,
(ii) estimates of LIN's predicted asset beta since January 1993,
(iii) the existing capital structure and credit ratings of
various potential purchasers of LIN, (iv) the likely
capitalization a hypothetical purchaser of LIN would require in
order to avoid a negative impact on its existing credit rating,
(v) potential credit rating impacts on various potential
purchasers of various capital structures for LIN if it were to be
acquired, (vi) the range of discount rates employed by selected
equity research analysts to value cellular properties, and (vii)
the range of discount rates employed by other financial advisors
to value cellular properties in other transactions. Based on
such analysis, Morgan Stanley indicated its view that 13% to 14%
was the appropriate range of discount rates to use in its
discounted cash flow analysis of the Base Case projections as
adjusted as described above for LIN. Morgan Stanley also stated
its view that its determination of the appropriate weighted
average cost of capital was consistent with the views of
financial advisors employed to value cellular properties in other
transactions, adjusted by Morgan Stanley to reflect changes in
interest rates since the date of such transactions.
In arriving at its view of the appropriate exit multiples to
apply to EBITDA in the year 2004, Morgan Stanley reviewed and
analyzed, among other things, the following items: (i) the range
of exit multiples implied by a range of perpetual free cash flow
growth rates of 4% to 8% and a range of weighted average costs of
capital of 13% to 14%, (ii) the range of exit multiples utilized
by selected equity research analysts in their discounted cash
flow analysis (which projections extended to the years 1999 and
2000), and (iii) the range of exit multiples employed by selected
financial advisors to value cellular properties in other
transactions. Based on such analysis, Morgan Stanley indicated
its view that 9.5x to 10.5x was the appropriate range of exit
multiples to utilize in its discounted cash flow valuation of the
projections for LIN. Morgan Stanley also stated its view that
its determination of the appropriate exit multiples was
consistent with the views of financial advisors employed to value
cellular properties in other transactions, adjusted by Morgan
Stanley to reflect differences in the length of the projections
utilized (i.e., exit multiples in the year 2000 compared to exit
multiples in the year 2004).
Precedent Transactions. Morgan Stanley reviewed and
analyzed selected precedent transactions in the cellular
industry, including an analysis of the prices paid per pop
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(cellular asset value divided by potential customers) and prices
paid as a multiple of actual historical and projected future
EBITDA (proportionate cellular asset value divided by
proportionate cellular EBITDA). In Morgan Stanley's view, an
examination of precedent cellular transactions was the most
relevant method of determining the private market value per LIN
Common Share because this method provided empirical evidence as
to what an acquiror would actually pay for a company similar to
LIN.
Although Morgan Stanley examined all the prior cellular
transactions it deemed relevant, in its view, AT&T's acquisition
of McCaw was the most relevant precedent transaction in
determining the private market value per LIN Common Share because
of similarities in the size and financial operating
characteristics of LIN and McCaw and because of the relevance of
LIN itself in AT&T's acquisition of McCaw. Morgan Stanley's
analysis of the consideration received by McCaw shareholders
indicated valuation multiples, based on the price of AT&T stock
at the consummation of the acquisition of McCaw on September 19,
1994, of approximately $247 per pop, 16.1x and 11.3x estimated
1994 and 1995 cellular EBITDA, respectively, and 6.9x and 5.3x
estimated 1994 and 1995 revenues, respectively. Such analysis
was based on publicly available equity research analyst
projections for McCaw and LIN prior to the closing, and
represented consideration on a blended basis for both McCaw and
its approximately 52% stake in LIN. Morgan Stanley also compared
the amount of proportionate pops, revenue, and EBITDA represented
by the LIN properties and by the McCaw properties (excluding
LIN), and analyzed the valuation multiples at both announcement
and closing of AT&T's acquisition of McCaw as calculated by
dividing the transaction value by the proportionate number of
combined pops, and by estimates of cellular revenue and cellular
EBITDA for 1994 and 1995 of various equity research analysts.
Morgan Stanley stated its conclusion that applying these
valuation benchmarks to LIN implied prices per LIN Common Share
in the range of $98-$112 based on estimates at the time of
announcement of the transaction, and in the range of $93-$97 at
the time of the closing of the transaction. Morgan Stanley
concluded that its estimate of the private market value for LIN
of $105 per LIN Common Share implied valuation multiples of $267
per pop and 17.7x and 12.8x 1994 actual and 1995 estimated
EBITDA, respectively, which Morgan Stanley stated were consistent
with, and assigned a premium to LIN over, those observed in
AT&T's acquisition of McCaw.
Morgan Stanley also compared certain financial and operating
information for LIN and for McCaw (excluding LIN) for the twelve-month
period ending June 30, 1994, adjusted to reflect full-year
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ownership of the various properties owned by LIN as of June 30,
1994. Morgan Stanley stated that (i) LIN had market penetration
of 3.57% versus penetration of 3.66% for McCaw (excluding LIN),
(ii) LIN had generated revenue per subscriber per month of $85
versus $82 for McCaw (excluding LIN), (iii) LIN had generated
EBITDA margins of 44% versus 42% for McCaw (excluding LIN), (iv)
LIN had generated revenue per pop of $30.91, versus $30.00 for
McCaw (excluding LIN), and (v) LIN had generated EBITDA of $13.64
per pop, versus EBITDA of $12.62 for McCaw (excluding LIN).
Morgan Stanley expressed its view that because many cellular
properties now have substantial operating histories, the true
measure of a cellular property's value is best reflected by that
company's operating performance, rather than by its demographic
characteristics. Morgan Stanley stated its view that LIN had not
demonstrated significantly superior operating performance
compared to McCaw (excluding LIN), and that the operating
characteristics noted above represented a range of premium
performance of -2% to 8% for LIN markets versus McCaw markets
only.
In addition, Morgan Stanley believed that the price paid in
AT&T's acquisition of McCaw, including McCaw's 52% stake in LIN,
incorporated a "strategic premium" to reflect the benefits to
AT&T of the cellular footprint acquired (which cellular footprint
was, at the time of the acquisition, the largest in the United
States). Morgan Stanley believed, however, that this "strategic
premium" was equally allocable to all of the assets acquired,
rather than partially to McCaw and partially to LIN, because of
Morgan Stanley's views that (i) McCaw, without LIN, was of lesser
strategic value to AT&T, (ii) LIN, without McCaw, was of lesser
strategic value to AT&T, and (iii) McCaw, combined with its 52%
stake in LIN, was of significant strategic value to AT&T. In
particular, Morgan Stanley stated its view that the strategic
value of LIN, without McCaw, would have been lower due to, among
other things, LIN's limited geographic coverage and co-control
positions in certain markets. Moreover, Morgan Stanley noted
that it did not believe that AT&T had assigned higher valuation
multiples to LIN properties than to the McCaw properties
(excluding LIN) in the context of its acquisition of McCaw.
Morgan Stanley stated, however, that in its view AT&T's
acquisition of McCaw has limitations as a precedent transaction
as the result of certain significant differences between the
circumstances of that transaction and a hypothetical third party
acquisition of LIN taking place at the present time, including
the following: (i) AT&T was prepared to pay for synergies in its
acquisition of McCaw for which an unrelated third party might not
pay in an acquisition of LIN; (ii) AT&T was able to account for
its acquisition of McCaw as a pooling of interests, whereas a
third party would be required to account for an acquisition of
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LIN using purchase accounting treatment; (iii) interest rates had
risen significantly since the original announcement of AT&T's
acquisition of McCaw; and (iv) in the period since the
announcement of the AT&T/McCaw transaction, LIN might be viewed
as less attractive to third parties as a result of the formation
of strategic alliances whose partners are operators in LIN's
markets, which alliances both increased competition in LIN's
markets and lessened third party interest due to conflicts.
As set forth above, in addition to reviewing AT&T's
acquisition of McCaw and LIN, Morgan Stanley reviewed and
analyzed selected transactions involving other companies in the
cellular industry that Morgan Stanley deemed relevant. Morgan
Stanley observed that transactions had historically been analyzed
utilizing per pop multiples as the most relevant valuation
benchmark (due largely to the lack of significant positive EBITDA
or operating history) and that, in its view, recently
transactions have been increasingly analyzed utilizing multiples
of EBITDA as the most relevant valuation benchmark given the
maturing of the operations of cellular properties and the
corresponding existence of EBITDA. In addition, Morgan Stanley
stated that few if any cellular properties were ever sold for
more than $300 per pop. Morgan Stanley observed that recent
transaction valuation benchmarks, as calculated by Morgan
Stanley, were in a range of 10x - 13x projected 1995 EBITDA for
the selected cellular transactions that Morgan Stanley deemed to
be the most relevant. The transactions reviewed included
(acquiror/target) GTE Corporation ("GTE")/Contel Cellular Inc.
("Contel") (10% stake), SBC Communications Inc.
("SBC")/Associated Communications Corporation ("Associated"),
AT&T/McCaw and SBC/GTE (10% stake in Dallas). Morgan Stanley
stated its view that the multiple of 1995 estimated EBITDA of
12.8x implied by its estimate of the private market value per LIN
Common Share of $105 was consistent with multiples of EBITDA in
these selected recent transactions.
Review of Potential Purchasers. Morgan Stanley explained
its view that a necessary element of the determination of the
private market value per LIN Common Share (as defined in the
PMVG) is an assessment of the universe of potential purchasers
for LIN. Morgan Stanley stated that at a price of $105 per
share, a purchase of all of LIN would be by far the largest U.S.
telecommunications purchase transaction ever. Morgan Stanley
identified and reviewed a broad group of companies in order to
assess the universe of potential purchasers of LIN, including
cellular operators with over 10 million pops, entities bidding on
personal communications services ("PCS") spectrum with over $5
billion of market equity value and telecommunications service
companies with over $5 billion of market equity value.
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Morgan Stanley indicated its view that a potential unrelated
third party acquiror of LIN would consider, among other things,
the likely projected cash flows that it would expect to realize,
and that such projections might be lower than those projected in
the LIN Base Case, because an unrelated third party (i) would not
have access to any potential benefits of being owned by AT&T, and
(ii) would most likely expect to compete against AT&T as a
potential provider of wireless communication services through,
for example, AT&T's acquisition of PCS spectrum in LIN's markets.
In reviewing the universe of potential purchasers other than AT&T
that could acquire all the LIN Common Shares in a hypothetical
auction process, as contemplated by the PMVG, Morgan Stanley
indicated its view that many potential purchasers could be
limited due to regulatory conflicts, strategic interests and
financial constraints.
Morgan Stanley utilized a variety of methodologies in its
assessment of the limitations of each company in the universe of
potential purchasers identified by Morgan Stanley, including (i)
analyzing the strategic interests and initiatives of each
potential purchaser as observed by Morgan Stanley, (ii)
performing individual pro forma financial analyses and examining
potential earnings dilution and capital financing impacts of a
purchase of LIN at a range of purchase prices, and (iii)
reviewing regulations governing the ownership of cellular
properties and existing contractual arrangements among potential
purchasers pertaining to ownership of cellular properties. For
example, Morgan Stanley noted its understanding that Bell
Atlantic, NYNEX, AirTouch and U S WEST would each be prohibited
from purchasing LIN's New York and Los Angeles properties
(aggregating 81% of LIN's pops) either because of existing market
ownership or due to conflicts created by their strategic
alliances and related contractual obligations. Morgan Stanley
stated its conclusion that the most feasible bidders for LIN
would be MCI Communications Corp., SBC and BellSouth, although
Morgan Stanley questioned whether any of those three entities
would be willing to pay $105 or more for each LIN Common Share
given certain strategic concerns that those purchasers might
have, and that the size of the LIN transaction would raise
significant financing and dilution issues for those purchasers.
Morgan Stanley also examined the possibility of consortium bids,
or a breakup of LIN and the sale of pieces of LIN, but Morgan
Stanley believed that, in light of tax and regulatory
constraints, greater value would not be obtained for LIN through
these methods.
Reconciliation to Public Market Value. Morgan Stanley
reviewed the historical trading prices for the LIN Common Shares
and noted that LIN's public market trading value had increased to
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approximately 30% above an index of certain other publicly traded
cellular companies including AirTouch, Cellular Communications,
Vanguard, CommNet, US Cellular, and Centennial, since year-end
1993. Morgan Stanley suggested that such increase was driven in
part by the continually increasing equity research analyst
estimates of the private market value per LIN Common Share.
Morgan Stanley noted that these increases in the LIN stock price
and private market value estimates occurred in spite of the fact
that LIN's 1994 EBITDA was below analyst operating projections
and LIN's 1994 revenues did not surpass projections. As
discussed above under "Discounted Cash Flow Analysis," Morgan
Stanley believed that one component of the increased private
market value estimates was the inclusion by certain equity
research analysts of synergies attributable exclusively to the
benefits of being owned by AT&T, such as access to the AT&T brand
name, in their projections for LIN. In addition, Morgan Stanley
observed that the research analysts appeared to have considered
AT&T as the only possible purchaser of LIN and, accordingly, did
not analyze the financial, strategic or regulatory implications
of such a purchase by any other entity. Morgan Stanley also
questioned whether certain equity research analysts had used
appropriate discount rates and exit multiples, and identified
what it viewed as logical and arithmetic errors in certain
analysts' calculations. Morgan Stanley observed that equity
research analyst estimates of private market value in certain
recent precedent cellular transactions had exceeded actual
transaction prices by an average of approximately 35%.
Implied Public Trading Value. Morgan Stanley reviewed,
analyzed and compared certain operating, financial, and trading
information of LIN and eight other publicly traded cellular
companies (AirTouch, Cellular Communications, Centennial,
CommNet, Contel, Intercel Inc., US Cellular and Vanguard). Among
other things, Morgan Stanley presented data comparing LIN's
penetration, revenue per subscriber per month, revenue per pop,
EBITDA per pop, subscriber growth, revenue growth, EBITDA growth,
EBITDA margin, pops in top markets and pops under majority
control to that of these public cellular companies. Morgan
Stanley noted that, among all of these public cellular companies,
it considered AirTouch to be the most comparable to LIN with
respect to financial characteristics, growth and market
demographics. Based on a range of assumptions used by equity
research analysts for AirTouch's non-U.S. cellular assets, Morgan
Stanley indicated its conclusion that the public market price for
AirTouch implied valuation benchmarks in a range of $196 to $219
per pop and 14.3x - 16.0x and 10.4x - 11.7x 1994 actual and 1995
estimated EBITDA, respectively. Morgan Stanley noted that
applying these valuation benchmarks to LIN would yield a public
market trading price for LIN of approximately $80 to $95 per
share.<PAGE>
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The summary set forth above does not purport to be a
complete description of the analyses considered by Morgan Stanley
in reaching its view under the PMVG as to the private market
value of the LIN Common Shares, as defined in the PMVG. Morgan
Stanley believes that its analyses must be considered as a whole
and that selecting portions of its analyses and the factors
considered by it, without considering all analyses and factors,
could create an incomplete view of the process underlying its
determination. In addition, the PMVG provided only for a
determination by Morgan Stanley of the private market value of
the LIN Common Shares as defined in the PMVG. Accordingly, the
view reached by Morgan Stanley as described above does not
purport to be an appraisal of the LIN Common Shares. Moreover,
Morgan Stanley is not rendering, and was not requested to render,
an opinion as to the fairness to LIN or the LIN stockholders,
from a financial point of view, of the consideration to be paid
pursuant to the Merger. Morgan Stanley assumed and relied upon
without independent verification the accuracy and completeness of
the information supplied to it in connection with reaching its
view of the private market value of the LIN Common Shares under
the PMVG, and in arriving at such view, Morgan Stanley did not
make an independent valuation or appraisal of the assets or
liabilities of LIN, nor has it been furnished with any such
appraisal. In addition, Morgan Stanley's view was necessarily
based on economic, market and other conditions as in effect on,
and the information made available to it as of, the date of its
determination except that, as discussed with McCaw, Morgan
Stanley assumed a closing date for an acquisition of LIN of no
earlier than June 30, 1995.
Morgan Stanley's Engagement. Morgan Stanley has provided
investment banking services to AT&T from time to time in the
past, for which it has received customary fees. Among other
things, Morgan Stanley represented AT&T in connection with AT&T's
1994 acquisition of McCaw, for which Morgan Stanley received an
aggregate fee of $20 million.
In consideration for Morgan Stanley's services under the
PMVG, McCaw has agreed to pay Morgan Stanley an additional fee of
$3 million, which is not contingent on completion of the Merger
or any other transaction. McCaw has also agreed to reimburse
Morgan Stanley for its out-of-pocket expenses, including
reasonable fees and disbursements of counsel. McCaw has agreed
to indemnify Morgan Stanley and its affiliates, their respective
directors, officers, partners, agents and employees and each
person, if any, controlling Morgan Stanley or any of its
affiliates against certain liabilities and expenses, including
certain liabilities under the federal securities laws, relating
to or arising out of its engagement.
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In the ordinary course of its business, Morgan Stanley may
actively trade in securities of AT&T for its own account and the
account of its customers and, accordingly, may at any time hold a
long or short position in any such security.
Private Market Value View of Bear Stearns and Lehman Brothers
Determination of Private Market Value Per LIN Common Share.
Pursuant to the terms of the PMVG, Bear Stearns and Lehman
Brothers were engaged by the LIN Independent Directors to
determine the private market value per LIN Common Share, as
defined in the PMVG. Bear Stearns and Lehman Brothers were
selected by the LIN Independent Directors because, as is required
by the PMVG, both firms are nationally recognized investment
banking firms and both have substantial experience valuing
companies in the cellular industry. In connection with Bear
Stearns' and Lehman Brothers' determining the private market
value per LIN Common Share, the LIN Independent Directors placed
no limitations on Bear Stearns and Lehman Brothers, except that
Bear Stearns and Lehman Brothers were directed not to solicit
third party interest with respect to an acquisition of all or any
part of LIN.
The definition of private market value per LIN Common Share
set forth in the PMVG (the "Definition") is as follows:
the private market price per [LIN Common] Share (including
control premium) that an unrelated third party would pay if
it were to acquire all outstanding [LIN Common] Shares
(including the [LIN Common] Shares held by [McCaw] and its
affiliates) in an arm's length transaction, assuming that
[LIN] was being sold in a manner designed to attract all
possible participants (including the Regional Bell Operating
Companies) and to maximize stockholder value, including, if
necessary, through the sale or other disposition (including
tax-free spin-offs, if possible) of businesses prohibited by
legal restrictions to be owned by any particular buyer or
class of buyers (e.g., the Regional Bell Operating
Companies).
Based on the advice of their legal counsel, Fried, Frank, Harris,
Shriver & Jacobson, and on the advice rendered to the LIN
Independent Directors by their legal counsel, Simpson Thacher &
Bartlett, Bear Stearns and Lehman Brothers interpreted the
Definition to require a determination of the private market value
per LIN Common Share based on a hypothetical auction to a broad
spectrum of buyers, including AT&T.
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Bear Stearns' and Lehman Brothers' views of the private
market value per LIN Common Share described herein in each case
were stated as of the date of determination thereof but, with the
permission of the LIN Independent Directors, assumed a closing
date for an acquisition of LIN of June 30, 1995.
On January 19, 1995, Bear Stearns and Lehman Brothers
reported to the LIN Independent Directors their preliminary view
that the private market value per LIN Common Share was in a range
of $140 to $170, and they reviewed with the LIN Independent
Directors their rationale therefor.
As required by the PMVG, on January 31, 1995, Bear Stearns
and Lehman Brothers stated their initial view that the private
market value per LIN Common Share was $162. Between January 31,
1995 and February 15, 1995, as required by the PMVG, Bear Stearns
and Lehman Brothers met and consulted with Morgan Stanley with
respect to Bear Stearns' and Lehman Brothers' initial view and
Morgan Stanley's initial view of the private market value per LIN
Common Share. In addition, during that period, Bear Stearns and
Lehman Brothers met and consulted with the LIN Independent
Directors to discuss Morgan Stanley's initial view and the wide
disparity between the initial view of Morgan Stanley and the
initial view of Bear Stearns and Lehman Brothers.
As required by the PMVG, on February 15, 1995, Bear Stearns
and Lehman Brothers delivered to the LIN Independent Directors
their final view that the private market value per LIN Common
Share was $155.
In arriving at their final view of the private market value
per LIN Common Share, Bear Stearns and Lehman Brothers, (i)
reviewed the PMVG; (ii) reviewed LIN's Annual Reports to
Shareholders and Annual Reports on Form 10-K for the years ended
December 1990 through 1993, and its Quarterly Reports on Form 10-Q
for the periods ended March 31, 1994, June 30, 1994 and
September 30, 1994; (iii) reviewed certain operating and
financial information, including projections provided to them by
LIN management relating to LIN's business, operations and
prospects; (iv) met with certain members of LIN's and McCaw's
senior managements to discuss LIN's business, operations,
historical financial results, financial condition and prospects;
(v) visited LIN's facilities in Kirkland, WA, Los Angeles, CA,
New York, NY, and Dallas, TX; (vi) reviewed various business,
financial and legal information and documents relating to LIN and
its subsidiaries and partnerships, including a review of the
organizational structure, partnership agreements, tax basis and
loan documentation provided to them by LIN; (vii) reviewed the
historical prices and trading volume of the LIN Common Shares;
(viii) performed discounted cash flow analyses, including
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discounted cash flow analyses based on the projections provided
by LIN management; (ix) reviewed publicly available financial
data, stock market performance data and valuation parameters of
certain other companies which they deemed relevant; (x) reviewed
the terms of the AT&T/McCaw merger and the terms of certain other
precedent acquisitions of cellular companies which they deemed
relevant; (xi) reviewed potential third-party interest in an
acquisition of or an investment in all or part of LIN, including
the possibility of tax-efficient transaction structures
(although, at the direction of the LIN Independent Directors,
they did not contact any third parties to determine their
potential interest); (xii) reviewed historical operating and
financial results of the wireless industry and equity research
analysts' and cellular industry experts' analyses of the
prospects and projected trends of the wireless industry; (xiii)
reviewed equity research analysts' and cellular industry experts'
analyses and estimates of the private market value per LIN Common
Share; (xiv) reviewed the projections for LIN prepared by AT&T
and McCaw furnished to them on January 18, 1995 (and additional
backup to such projections furnished to them on February 9,
1995), LIN management's comments on such projections, and Bear
Stearns' and Lehman Brothers' due diligence inquiries on January
25, 1995 of AT&T and McCaw regarding such projections; and (xv)
conducted such other studies, analyses, inquiries and
investigations as they deemed appropriate.
In performing their financial and valuation analyses, Bear
Stearns and Lehman Brothers considered a wide variety of factors,
including their views as to (i) trends in the wireless
communications industry, (ii) LIN's preeminent position in the
cellular industry, (iii) LIN's business strategy, market
position, historical financial and operating performance and
future prospects, (iv) the ownership and control characteristics
of LIN's markets, (v) potential third-party interest in all or
part of LIN and the potential for tax-efficient sale
transactions, and (vi) equity research analysts' estimates of
operating statistics and valuation parameters relating to LIN and
to the cellular industry.
The following is a summary of the analyses performed by Bear
Stearns and Lehman Brothers in connection with providing their
final view of the private market value per LIN Common Share to
the LIN Independent Directors pursuant to the PMVG.
1. Discounted Cash Flow Analysis. Bear Stearns and Lehman
Brothers performed discounted cash flow analyses based on three
different sets of financial projections for LIN: (a) a Base Case
provided by LIN management, (b) an Upside Case provided by LIN
management and (c) a Sensitivity Case derived by Bear Stearns and
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Lehman Brothers from the Base Case (each described below).
Applying discount rates and terminal value multiples of EBITDA
for the year 2004 (as discussed below), Bear Stearns and Lehman
Brothers calculated a range of discounted cash flow values per
LIN Common Share on a fully diluted basis of $141 to $194
utilizing the Base Case projections, $172 to $235 utilizing the
Upside Case projections and $104 to $144 utilizing the
Sensitivity Case projections. In reviewing these ranges for
purposes of determining the private market value per LIN Common
Share, Bear Stearns and Lehman Brothers considered the impact on
valuation of (i) their view of the aggressiveness or
conservatism, as applicable, of the various sets of projections,
(ii) applying higher discount rates and higher terminal multiples
to LIN's wireless data business projections and (iii) LIN's
shared control of the Los Angeles and Houston markets. Bear
Stearns and Lehman Brothers considered the results of their
discounted cash flow analyses as one of the primary factors for
determining their view of the private market value per LIN Common
Share.
For each set of projections, Bear Stearns and Lehman
Brothers derived a range of discounted cash flow values by
calculating the present value as of June 30, 1995 of (i) LIN's
projected free cash flow on an unleveraged basis for the six
months ended December 31, 1995 and the calendar years 1996
through 2004 and (ii) a terminal value based on a multiple of
EBITDA projected for the year 2004.
Bear Stearns and Lehman Brothers utilized discount rates,
reflecting their determination of LIN's weighted average cost of
capital, ranging from 11% to 13%. In arriving at their view of
the appropriate discount rate to apply to the various sets of
projections, Bear Stearns and Lehman Brothers reviewed and
analyzed, among other things, their views of the following items:
(i) LIN's business strategy, market position, future prospects
and financial projections, (ii) general wireless industry trends
and projections, (iii) a derived cellular industry asset beta
based on the average of unleveraged equity betas for certain
publicly traded cellular companies, (iv) a long term target
capitalization ratio which was based on a leverage analysis of
companies in other communications industries which were viewed as
proxies for cellular companies at a more mature stage of
development, (v) the historical and current yields on U.S.
Treasury Bonds, (vi) the historical and current trading levels of
various cellular companies' high yield debt, (vii) an estimate of
LIN's current cost of bank debt based on its most recent bank
credit agreement, and (viii) an estimate of the stock market's
long-term risk premium. To calculate LIN's terminal value, Bear
Stearns and Lehman Brothers applied multiples of EBITDA for the
year 2004 ranging from 10.5x to 12.5x. The range of multiples of
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terminal year EBITDA were calculated using assumed perpetual
nominal growth rates, taking into account Bear Stearns' and
Lehman Brothers' views of (i) LIN's business strategy, market
position, future prospects and financial projections; (ii)
general wireless industry trends and projections; and (iii) the
perpetual growth rates implied by certain expectations for the
U.S. economy in terms of real gross domestic product growth and
inflation. Bear Stearns and Lehman Brothers compared these
discount rates and terminal value multiples to, and viewed them
to be consistent with, the discount rates and terminal value
multiples used by (i) selected equity research analysts in
estimating the potential private market value per LIN Common
Share, (ii) selected equity research analysts in estimating the
private market values of other cellular companies, and (iii)
selected financial advisors in performing discounted cash flow
analyses in connection with certain precedent merger and
acquisition transactions in the cellular industry.
The Base Case projections utilized by Bear Stearns and
Lehman Brothers in their discounted cash flow analysis were
provided by LIN management. These projections assume that LIN's
revenue, subscriber and cash flow growth will be highest in 1995
and that the rate of growth will decline in each year thereafter,
with more rapid declines in the first several years as the
wireless communications industry matures and becomes more
competitive. Although McCaw informed Bear Stearns and Lehman
Brothers that in its view the Base Case projections were
unreasonably optimistic, Bear Stearns and Lehman Brothers
determined to utilize the Base Case projections because of their
view that the Base Case projections had been prepared by LIN
management in good faith based on reasonable assumptions. Bear
Stearns and Lehman Brothers noted that, in their view, the Base
Case projections were materially similar to the consensus of
equity research analysts' projections for LIN specifically and
for the cellular industry generally.
The Upside Case projections utilized by Bear Stearns and
Lehman Brothers also were provided by LIN management. These
projections are similar to the Base Case projections, except that
they assume (i) greater market penetration for the cellular
industry (based on wireless telephones replacing a portion of
landline telephones) than is assumed in the Base Case; (ii) new
PCS and enhanced specialized mobile radio ("ESMR") entrants
gaining less market share than is anticipated under the Base
Case; (iii) average revenue per subscriber per month ("ARPU") of
LIN decreasing at a slower rate than is assumed in the Base Case,
as a result of a greater use of advanced services (such as
wireless data transfer, two-way alphanumeric messaging, voice
mail, call waiting, call forwarding, caller identification and
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other services); and (iv) LIN's providing more long distance
services than is anticipated under the Base Case.
The Sensitivity Case projections utilized by Bear Stearns
and Lehman Brothers were derived by them in order to take into
consideration the impact on LIN that would result if LIN were not
to meet its projections in certain respects. The Sensitivity
Case projections are based on the Base Case projections but
assume growth in the wireless industry at a rate less than is
assumed by the Base Case such that (i) the wireless industry in
general and LIN in particular will achieve a lower degree of
market penetration; (ii) ARPU of the wireless industry will be
reduced due to price reductions and reduced use of wireless data
transfer; and (iii) profit margins in the wireless industry will
be squeezed due to increased competition and wireless carriers'
increased pursuit of low usage customers.
Bear Stearns and Lehman Brothers also received and took into
consideration projections for LIN prepared by McCaw. Bear
Stearns and Lehman Brothers requested that AT&T provide any
projections and valuations for LIN which had been prepared by
AT&T at any time, including in connection with the AT&T/McCaw
merger consummated in 1994. AT&T responded that, although it
understood that McCaw had prepared certain projections for LIN
that had been provided to Bear Stearns and Lehman Brothers, AT&T
had not independently prepared any projections for LIN and that,
although AT&T had prepared various analyses of McCaw and LIN,
AT&T believed that such analyses constituted proprietary material
and did not believe that it would be appropriate to share them
with Bear Stearns and Lehman Brothers.
2. Analysis of Precedent Merger and Acquisition
Transactions. Bear Stearns and Lehman Brothers reviewed and
analyzed selected merger and acquisition transactions involving
other companies in the wireless industry that Bear Stearns and
Lehman Brothers deemed relevant. Bear Stearns and Lehman
Brothers considered the valuation benchmarks reflected in such
precedent transactions, including per pop values (i.e.,
enterprise values per potential customer) and EBITDA multiples
(i.e., enterprise values divided by EBITDA). Bear Stearns and
Lehman Brothers noted that valuations of cellular companies have
historically been expressed primarily on the basis of per pop
values, but that, in their view, valuations of more mature
companies in the cellular industry (i.e., those which have
already started to generate material EBITDA) are currently
expressed primarily on the basis of EBITDA multiples.
Bear Stearns and Lehman Brothers concluded that, because of
their view as to LIN's preeminent position in the wireless
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sector, the strategic importance and high quality of its
portfolio of properties and its large size and significant cash
flow, EBITDA multiples were the most relevant benchmarks for
valuing LIN Common Shares, and that the number of relevant
precedent merger and acquisition transactions was limited.
In Bear Stearns' and Lehman Brothers' view, the most
relevant precedent merger and acquisition transaction for
determining the private market value per LIN Common Share was the
AT&T/McCaw merger which was announced in August 1993 and
completed in September 1994 (at which time McCaw owned
approximately 52% of the LIN Common Shares). In addition to the
fact that the AT&T/McCaw merger included an indirect acquisition
of approximately 52% of the LIN Common Shares, Bear Stearns and
Lehman Brothers concluded that the AT&T/McCaw merger was
generally the most comparable transaction for determining the
private market value per LIN Common Share because of (i) McCaw's
large size, with approximately 60 million proportionate pops
(including LIN's proportionate pops) and in excess of $1 billion
in proportionate EBITDA (including LIN's proportionate EBITDA);
(ii) the purchase being of McCaw in its entirety; and (iii) the
transaction having been recently completed.
Bear Stearns and Lehman Brothers analyzed the AT&T/McCaw
merger and concluded that, based on the transaction value at the
time of announcement and based on McCaw's estimated 1993
proportionate EBITDA and estimated 1994 (acquisition year)
proportionate EBITDA (based on a consensus of equity research
analysts' estimates at the time the AT&T/McCaw merger was
announced), the implied proportionate EBITDA multiples for McCaw
were 21.1x (using McCaw's estimated 1993 proportionate EBITDA)
and 15.9x (using McCaw's estimated 1994 (acquisition year)
proportionate EBITDA). They also concluded that the implied
value per pop for McCaw was $280.
Bear Stearns and Lehman Brothers further stated their view
that the valuation benchmarks for LIN on a stand-alone basis
should be at a premium to those derived from the AT&T/McCaw
merger, which represented a valuation of all of McCaw's markets
including LIN's markets and a significant number of markets which
were smaller than those of LIN, because (a) LIN's four principal
markets (New York, Los Angeles, Dallas and Houston) are four of
the five largest markets controlled by or under the shared
control of McCaw; (b) LIN controls or shares control of two of
the top five cellular markets compared with McCaw's (excluding
LIN) control or shared control of none of such markets; (c) LIN
controls or shares control of four of the top ten cellular
markets compared to McCaw's (excluding LIN) control or shared
control of one such market; (d) LIN controls or shares control of
100% of its pops compared to the 96% controlled or shared
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controlled pops of McCaw (excluding LIN); and (e) in Bear
Stearns' and Lehman Brothers' view: (i) LIN's four principal
markets would be a vital component to any prospective acquiror's
national wireless strategy; (ii) each of LIN's properties would
be very attractive to a number of potential acquirors; (iii) most
of LIN's operating statistics were superior to those of McCaw
(excluding LIN); and (iv) the demographic profile of LIN's
markets was superior to those of McCaw (excluding LIN).
Bear Stearns and Lehman Brothers derived a range of imputed
private market values per LIN Common Share by applying to LIN (i)
an acquisition year EBITDA multiple at a premium to the
acquisition year EBITDA multiple calculated for the AT&T/McCaw
merger and (ii) a value per pop at a premium to the value per pop
in the AT&T/McCaw merger. Specifically, Bear Stearns and Lehman
Brothers, based on their views as to the relative values of the
LIN markets and those of McCaw (excluding LIN), (i) calculated
the 1994 (acquisition year) EBITDA multiple range for LIN's
markets in the AT&T/McCaw merger to be 17.2x to 19.5x
(representing a 10% to 30% premium over such EBITDA multiple
range for the McCaw properties not affiliated with LIN which was
15.6x to 15.0x) and (ii) imputed the private market value per LIN
Common Share based on the aforementioned EBITDA multiples to be
in a range of $148 to $171. Bear Stearns and Lehman Brothers,
based on such views, also (i) calculated the enterprise value per
pop range for LIN's markets in the AT&T/McCaw merger to be $335
to $447 (and such enterprise value per pop range for the McCaw
properties which were not affiliated with LIN to be $265 to $235)
and (ii) imputed the private market value per LIN Common Share
based on the aforementioned per pop values to be in a range of
$135 to $188. Bear Stearns and Lehman Brothers considered the
imputed value per LIN Common Share based on the AT&T/McCaw
merger, calculated as set forth above, as one of the primary
factors for determining their view of the private market value
per LIN Common Share.
The qualitative demographic profile of LIN and McCaw
(excluding LIN) compared by Bear Stearns and Lehman Brothers
included (i) the 1.6% Rural Statistical Area ("RSA") pops of LIN
compared to the 5.6% RSA pops of McCaw (excluding LIN); (ii) the
38.7% of households with an income of greater than $50,000 in
areas controlled by or under the shared control of LIN compared
to the 27.2% of households with such an income in the areas
controlled by or under the shared control of McCaw (excluding
LIN); (iii) the 46.1% of the population in the areas controlled
by or under the shared control of LIN with a daily commute
greater than thirty minutes compared to the 28.1% of the
population with such a commute in the areas controlled by or
under the shared control of McCaw (excluding LIN); and (iv) the
2,453 pops per square mile in areas in which LIN had a
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proportionate interest compared to the 496 pops per square mile
in areas in which McCaw (excluding LIN) had a proportionate
interest.
Bear Stearns and Lehman Brothers also compared certain
quantitative operating statistics of LIN and McCaw (excluding
LIN) for the twelve months ending June 30, 1994 (the last period
for which McCaw financial information was publicly reported),
including (i) the 3.7% market penetration achieved by LIN
compared to the 3.8% market penetration achieved by McCaw
(excluding LIN); (ii) LIN's proportionate revenue of
approximately $427 million compared to McCaw's (excluding LIN)
proportionate revenue of approximately $791 million; (iii) LIN's
revenue per subscriber per month of $85.45 compared to McCaw's
(excluding LIN) revenue per subscriber per month of $80.69; (iv)
LIN's proportionate EBITDA of approximately $351 million compared
to McCaw's (excluding LIN) proportionate EBITDA of approximately
$615 million; (v) LIN's proportionate EBITDA margin of 44.3%
compared to McCaw's (excluding LIN) proportionate EBITDA margin
of 42.1%; and (vi) LIN's proportionate EBITDA per pop of $14.17
compared to McCaw's (excluding LIN) proportionate EBITDA per pop
of $12.96.
Bear Stearns and Lehman Brothers also reviewed the 1989
transaction in which McCaw acquired 21.9 million LIN Common
Shares for $154.11 in cash per share (at which time LIN owned a
subsidiary, LIN Television, which was subsequently spun off by
LIN), thereby increasing its ownership to approximately 52% of
LIN Common Shares. Bear Stearns and Lehman Brothers noted that,
based on the price paid per share in McCaw's 1989 acquisition of
LIN Common Shares, Bear Stearns and Lehman Brothers estimated a
per pop value for LIN of $385 in that transaction.
Bear Stearns and Lehman Brothers also reviewed and analyzed
certain other precedent merger and acquisition transactions
involving cellular companies. Bear Stearns and Lehman Brothers
viewed such transactions as having only limited relevance for
assessing the private market value per LIN Common Share because
of Bear Stearns' and Lehman Brothers' views as to LIN's
preeminent position in the wireless sector, the strategic
importance and high quality of its portfolio of properties and
its large size and significant cash flow. In addition to the
view of Bear Stearns and Lehman Brothers that those other
transactions involved the acquisition of less attractive cellular
properties than those owned or controlled by LIN, some involved
joint ventures rather than outright acquisitions, and several
involved minority buyouts, which in Bear Stearns' and Lehman
Brothers' view may not include full control premiums. The
acquisitions reviewed included (acquiror/target) GTE /Contel,
Southern New England Telecommunications Corporation/Bell
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Atlantic-NYNEX (Rhode Island and Connecticut markets), Compagnie
Generale des Eaux SA/SBC (Washington/Baltimore market),
LIN/Cellular Systems, Inc. and SBC/Associated. The joint
ventures reviewed included U S WEST/AirTouch and Bell
Atlantic/NYNEX.
3. Analysis of Selected Publicly Traded Cellular Companies.
Bear Stearns and Lehman Brothers reviewed, analyzed and compared
certain operating, financial, trading and valuation information
of LIN and seven other publicly traded cellular companies
(AirTouch, Cellular Communications, Contel, US Cellular,
Vanguard, Centennial and CommNet). Bear Stearns and Lehman
Brothers noted that they considered AirTouch to be most
comparable to LIN for a variety of business, operational and
financial reasons, although not completely comparable because of
AirTouch's international cellular properties and because AirTouch
had a smaller percentage of domestic pops in the top ten U.S.
markets than did LIN. No other cellular company was deemed by
Bear Stearns and Lehman Brothers to be comparable to LIN due to
LIN's domestic large-market focus. Among other things, Bear
Stearns and Lehman Brothers compared LIN's revenue and EBITDA
growth, EBITDA per pop ratio and EBITDA margins to, and reviewed
the trading and valuation parameters of, these other publicly
traded cellular companies. Bear Stearns and Lehman Brothers
stated their view that, if LIN were to trade in the public equity
market on a fully distributed basis, without a control
shareholder such as AT&T and absent any control premium, LIN's
public market trading value would be approximately $116 per LIN
Common Share on a fully distributed basis. Bear Stearns and
Lehman Brothers stated their view that this implied public market
trading value was consistent with their final view of the private
market value per LIN Common Share of $155, which reflected a 34%
premium over such implied public market trading value.
4. Review of Potential Third-Party Interest in LIN. At the
direction of the LIN Independent Directors, Bear Stearns and
Lehman Brothers did not contact any third parties to determine
whether they had an interest in an acquisition of all or any part
of LIN. However, based on their respective experiences
representing various buyers and sellers in the cellular industry,
Bear Stearns and Lehman Brothers noted that, in their view, a
broad universe of potential buyers would exist if LIN were to be
sold in an auction. Bear Stearns and Lehman Brothers stated that
they expected such demand to come from strategic buyers and
consortia because, in Bear Stearns' and Lehman Brothers' view:
(i) LIN has a premier collection of cellular assets and markets;
(ii) LIN's cellular assets, which include control or shared
control of New York, Los Angeles, Dallas and Houston, could form
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the cornerstone of a potential acquiror's nationwide wireless
strategy; (iii) a potential acquiror's strategic considerations
could offset the financial impact on a potential acquiror from an
acquisition of LIN; (iv) a number of acquisition structures would
be available to potential acquirors; (v) potential tax-efficient
structures could likely be implemented to allow for different
combinations of LIN's properties to be sold separately; and (vi)
an acquisition of LIN by a party other than AT&T would impair
AT&T's nationwide wireless strategy. Based on the foregoing and
an analysis of the interest that they expected potential
acquirors could have in LIN as a whole and in each of LIN's
individual markets, Bear Stearns and Lehman Brothers identified a
broad pool of potential domestic acquirors (in addition to AT&T)
for all or part of LIN. Additionally, Bear Stearns and Lehman
Brothers noted their view that certain foreign buyers could have
an interest in participating as partners of a U.S. buyer in a
transaction involving one or more properties owned by LIN. In
their review and assessment of potential acquirors, Bear Stearns
and Lehman Brothers considered factors that they viewed as
potentially affecting the degree of interest of potential
acquirors, including (i) regulatory ownership restrictions; (ii)
financial impacts (i.e., earnings dilution, credit rating, etc.)
on the potential acquirors of LIN; (iii) LIN's shared control in
the Los Angeles and Houston markets; and (iv) sources of
financing available to potential acquirors.
5. Other Analyses and Considerations. Bear Stearns and
Lehman Brothers performed such other financial and valuation
analyses, and considered such other factors, as they deemed
appropriate in determining the private market value per LIN
Common Share. Among other things, Bear Stearns and Lehman
Brothers considered the available estimates of equity research
analysts with respect to the private market value per LIN Common
Share. These estimates, which were made between December 1994
and January 1995, placed the private market value per LIN Common
Share within a range from $138 to $159, with the average estimate
of the private market value per LIN Common Share at $148. In
making their judgments generally regarding the private market
value per LIN Common Share, Bear Stearns and Lehman Brothers
assigned significant weight to their views as to LIN's unique
position in the cellular industry, including (i) LIN's control or
shared control of New York, Los Angeles, Dallas and Houston, four
of the country's largest cellular markets; (ii) LIN's 1.1 million
proportionate subscribers; (iii) LIN's almost $1 billion in
proportionate revenues; (iv) LIN's having the highest EBITDA/pop
ratio and revenue per subscriber per month of any publicly traded
cellular company; and (v) their view that LIN has operations well
positioned to capitalize on new revenue sources such as wireless
data and other services.
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After Bear Stearns' and Lehman Brothers' determination of
their final view, Bear Stearns and Lehman Brothers were informed
of the advice of counsel to Wasserstein Perella that, in
determining the private market value per LIN Common Share as
defined under the PMVG, AT&T and McCaw should not be considered
to be potential buyers. In response to an inquiry by Wasserstein
Perella regarding how the exclusion of AT&T from the possible
buyer universe would have changed the final view of Bear Stearns
and Lehman Brothers, Bear Stearns and Lehman Brothers responded
that the exclusion of AT&T from the buyer pool would not have
changed their final view since, in their judgment, there remained
other potential third-party acquirors with an interest in
acquiring LIN in a transaction or series of transactions which
could provide $155 per LIN Common Share.
The determination of Bear Stearns' and Lehman Brothers'
views of the private market value per LIN Common Share pursuant
to the PMVG involved complex processes not necessarily
susceptible to summary description. Selecting portions of the
analyses or of the summaries set forth herein, without
considering all of the analyses together, could create an
incomplete view of the processes underlying Bear Stearns' and
Lehman Brothers' views. The analyses relating to private market
value were prepared solely for the purpose of Bear Stearns and
Lehman Brothers providing their final view of the private market
value per LIN Common Share to the LIN Independent Directors in
connection with the PMVG, and do not reflect the price at which
LIN Common Shares would trade if the Merger were not approved.
In arriving at their views, Bear Stearns and Lehman Brothers did
not perform or obtain any independent evaluation or appraisal of
the assets or liabilities of LIN. The views of Bear Stearns and
Lehman Brothers delivered to the LIN Independent Directors do not
purport to be an appraisal of LIN, and Bear Stearns and Lehman
Brothers are not rendering any opinion as to the fairness to LIN
or any of the holders of LIN Common Shares, from a financial
point of view, of the consideration to be paid pursuant to the
Merger.
Certain of the analyses performed by Bear Stearns and Lehman
Brothers assumed and relied upon the accuracy and completeness of
the financial and other information provided by LIN management.
Bear Stearns and Lehman Brothers assumed that the Base Case and
Upside Case projections (described below) provided by LIN were
reasonably prepared on a basis reflecting the best currently
available estimates and assumptions of LIN management as to LIN's
expected future financial performance. Bear Stearns and Lehman
Brothers also reviewed and considered Sensitivity Case
projections, which Bear Stearns and Lehman Brothers derived based
on the Base Case, and reviewed and considered financial
projections for LIN prepared and provided to them by McCaw. Bear
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Stearns and Lehman Brothers did not assume any responsibility for
independent verification of the information or projections
provided to them and relied upon the assurances of LIN management
that it was unaware of any facts that would make such information
or projections inaccurate, incomplete or misleading.
The views of Bear Stearns and Lehman Brothers were
necessarily based on economic, market and other conditions and
information as they existed on, and could be evaluated as of, the
dates of determination thereof. The summary herein does not
purport to be a complete description of the analyses performed by
Bear Stearns and Lehman Brothers and is qualified in its entirety
by reference to their separate letters, dated February 15, 1995,
and their reports relating thereto, all of which are attached as
exhibits to the Schedule 13E-3 (see "ADDITIONAL INFORMATION") and
are available for inspection and copying at the principal
executive offices of LIN (see "CERTAIN INFORMATION REGARDING
AT&T, MCCAW, HOLDINGS, MERGER SUB AND LIN -- LIN") during LIN's
regular business hours by any interested holder of LIN Common
Shares or such holder's designated representative.
View as to LIN's Trading Price if the Merger Is Not
Approved. Although not required by the PMVG, at the request of
the LIN Independent Directors, on April 28, 1995, Bear Stearns
and Lehman Brothers delivered to the LIN Independent Directors
the view of Bear Stearns and Lehman Brothers that, as of such
date, there was a substantial likelihood that, assuming the vote
of the holders of LIN Public Shares regarding the Original Merger
had been held and the Original Merger had not been approved by a
Majority Vote of the LIN Public Stockholders, the price at which
LIN Public Shares would initially trade would be less than
$127.50 per share. This "initial public trading view" was based
on the additional stated assumptions that (i) the LIN Public
Shares held by arbitrageurs and others holding such shares in
anticipation of consummation of the Original Merger or an
alternative transaction were fully redistributed, (ii) there were
no change in market, economic, financial and other conditions
(including, without limitation, conditions affecting the cellular
industry generally or LIN specifically) as they existed on and
could be evaluated as of April 28, 1995 and (iii) AT&T had no
intention to acquire LIN Public Shares in the event that the
Original Merger were not consummated.
In arriving at their initial public trading view, Bear
Stearns and Lehman Brothers considered the factors set forth in
their letters dated February 15, 1995 in connection with arriving
at their view of the private market value per LIN Common Share,
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as well as additional considerations, including a review of (i)
LIN's Annual Report to Shareholders and Annual Report on Form 10-K
for the year ended December 31, 1994, (ii) other publicly
available financial data, stock market performance data,
ownership profiles and valuation parameters of LIN and of certain
other companies that were made available after February 15, 1995
and that Bear Stearns and Lehman Brothers deemed relevant, (iii)
equity research analysts' views of the public market trading
value of LIN Common Shares in the event the Original Merger were
not consummated by reason of its not being approved by a Majority
Vote of the LIN Public Stockholders, (iv) the ongoing protections
afforded to the holders of Public Shares under the PMVG in the
event the Original Merger were not consummated by reason of its
not being approved by a Majority Vote of the LIN Public
Stockholders and (v) such other analyses as Bear Stearns and
Lehman Brothers deemed relevant. Bear Stearns' and Lehman
Brothers' initial public trading view was based on market,
economic, financial and other conditions as they existed on, and
could be evaluated as of, April 28, 1995.
The determination by Bear Stearns and Lehman Brothers of the
likely initial public trading price of LIN Common Shares in the
event the Original Merger were not approved by a Majority Vote of
the LIN Public Stockholders was delivered solely for the use of
the LIN Independent Directors. There can be no assurance that
Bear Stearns' and Lehman Brothers' initial public trading view
will conform with the actual public market trading price of LIN
Common Shares. The estimation of public trading prices of
securities is subject to uncertainties and contingencies, all of
which are difficult to predict and beyond the control of the firm
making such estimates. The market prices of securities will
fluctuate with changes in market conditions, the conditions and
prospects of the industry and the particular company involved,
and other factors which generally influence the prices of
securities.
In arriving at their initial public trading view, Bear
Stearns and Lehman Brothers did not perform or obtain any
independent evaluation or appraisal of the assets or liabilities
of LIN. Their initial public trading view, which was delivered
by Bear Stearns and Lehman Brothers to the Independent Directors,
does not purport to be an appraisal of LIN, and Bear Stearns and
Lehman Brothers are not rendering any opinion as to the fairness
to LIN or any of the holders of LIN Common Shares, from a
financial point of view, of the consideration to be paid pursuant
to the Original Merger.
The summary herein of Bear Stearns' and Lehman Brothers'
view of the likely initial public trading price of LIN Common
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Shares in the event the Original Merger were not approved by a
Majority Vote of the LIN Public Shareholders does not purport to
be a complete description of such view and is qualified in its
entirety by reference to the separate letters of Bear Stearns and
Lehman Brothers, dated April 28, 1995, which are attached as
exhibits to the Schedule 13E-3 (see "AVAILABLE INFORMATION") and
are available for inspection and copying at the principal
executive offices of LIN (see "CERTAIN INFORMATION REGARDING
AT&T, McCAW, HOLDINGS, MERGER SUB AND LIN -- LIN") during LIN's
regular business hours by any interested holder of LIN Common
Shares or such holder's designated representative.
Terms of Engagement. The terms of LIN's engagement of Bear
Stearns and Lehman Brothers acting jointly as the Independent
Directors' Appraiser (as defined in the PMVG) are set forth in
letter agreements, dated December 18, 1994, between LIN and each
of Bear Stearns and Lehman Brothers. Beginning in May of 1994,
Bear Stearns and Lehman Brothers were retained to provide general
services to the LIN Independent Directors in connection with the
PMVG. LIN has paid each of Bear Stearns and Lehman Brothers fees
of approximately $1.5 million for its prior background work and
for the preparation and delivery of their letters, dated February
15, 1995, to the LIN Independent Directors and will pay each of
them an additional fee of approximately $3.6 million upon the
consummation of the acquisition of LIN Public Shares by McCaw in
the Merger. The amount of such additional fee for each is based
on 0.15% of the aggregate acquisition price for the LIN Public
Shares to be paid by McCaw in the Merger less the fee already
paid. Accordingly, the amount of the additional fee would be
higher if the Merger Consideration were higher. If the Merger is
not completed, such additional fee will not be payable.
If despite McCaw's good faith efforts the Merger has not
been completed by December 31, 1995 (or, if the Merger is
approved by a Majority Vote of the LIN Public Stockholders and is
being pursued in good faith by McCaw but has not been completed
due to regulatory delays or litigation, August 31, 1996), the
PMVG provides that McCaw will put LIN in its entirety up for sale
under the direction of the LIN Independent Directors in a manner
intended by the LIN Independent Directors to maximize value for
all LIN Common Shares. In the event of a sale of LIN to a third
party or to McCaw pursuant to these provisions, Bear Stearns and
Lehman Brothers would each receive (i) upon delivery to the LIN
Independent Directors of a formal written opinion or opinions
with respect to the fairness, from a financial point of view, to
the holders of the LIN Public Shares of the consideration to be
received by the holders of the LIN Public Shares in the
transaction, a fee in an amount equal to 33% of 0.15% of the
consideration to be received by the holders of all the LIN Common
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Shares (including those beneficially owned by McCaw) less $1.25
million in fees already paid and (ii) upon the closing of such
transaction, 0.15% of the consideration received by the holders
of all the LIN Common Shares (including those beneficially owned
by McCaw) less the sum of (x) the fee paid pursuant to clause (i)
above and (y) the $1.5 million in fees previously paid.
Accordingly, the fee payable to each of Bear Stearns and Lehman
Brothers in the event of such a sale would likely be
substantially greater than the fee payable in connection with the
Merger, even if the consideration to be received by the holders
of LIN Common Shares in such a sale were substantially lower than
the Merger Consideration.
LIN also has agreed to reimburse each of Bear Stearns and
Lehman Brothers for its reasonable out-of-pocket expenses,
including fees and disbursements of its counsel arising in
connection with its engagement, and to indemnify each of Bear
Stearns and Lehman Brothers (and their respective controlling
persons, affiliates, directors, officers, employees and agents)
against certain liabilities arising out of or relating to its
engagement.
Lehman Brothers has in the past performed various investment
banking services for the LIN Independent Directors, including the
evaluation of the fairness of LIN's purchase of WTNH-TV New
Haven-Hartford and concurrent Television Spin-off, for which
Lehman Brothers received customary fees.
Each of Bear Stearns and Lehman Brothers has performed
various investment banking services for AT&T in the past
(including the underwriting of debt and equity securities) and
has received customary compensation for such services. Each of
Bear Stearns and Lehman Brothers also trades the debt and equity
securities of LIN and AT&T for its own account and for the
accounts of its customers and, accordingly, may at any time hold
a long or short position in such securities.
Private Market Value Determination of Wasserstein Perella
Set forth below is the full text of the determination letter
from Wasserstein Perella delivered to McCaw and the LIN
Independent Directors on March 7, 1995 in connection with
Wasserstein Perella's final determination under the PMVG of the
private market value per LIN Common Share. Wasserstein Perella
was jointly designated by Morgan Stanley, Bear Stearns and Lehman
Brothers as the "Mutually Designated Appraiser" under the PMVG
to determine the private market value per LIN Common Share.
Wasserstein Perella was selected for this purpose because it is a
nationally recognized investment banking firm (as specified by
the PMVG) and because of its experience in the valuation of
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companies, including companies in the cellular industry.
Wasserstein Perella was also engaged to render a fairness opinion
on the consideration to be paid in the Merger (see "SPECIAL
FACTORS -- Background of the Merger" and "-- Fairness Opinion of
Wasserstein Perella") and served as financial advisor to LIN in
connection with the acquisition of control of LIN by McCaw in
1990. No limitations were imposed on Wasserstein Perella in
connection with its determination of the private market value
per LIN Common Share, other than the following: (i) Wasserstein
Perella was not allowed access to internal AT&T and McCaw
analyses (other than those projections referenced herein), and
(ii) in accordance with the view of both McCaw and the LIN
Independent Directors, Wasserstein Perella was not permitted to
solicit third party interest with respect to the acquisition of
all the LIN Common Shares. The full text of the materials
delivered by Wasserstein Perella in connection with its
determination letter is attached as an exhibit to the Schedule
13E-3 (see "ADDITIONAL INFORMATION"), and is also available for
inspection and copying at the principal executive offices of
McCaw and of LIN (see "CERTAIN INFORMATION REGARDING AT&T, McCAW,
HOLDINGS, MERGER SUB AND LIN -- McCaw" and "-- LIN") during
McCaw's and LIN's respective regular business hours by any
interested holder of LIN Common Shares or such holder's
representative who has been so designated in writing.
McCaw Cellular Communications, Inc.
5400 Carillon Point
Kirkland, Washington 98033
Independent Directors
LIN Broadcasting Corporation
5295 Carillon Point
Kirkland, Washington 98033
Dear Ladies and Gentlemen:
We have been designated by you as the "Mutually
Designated Appraiser" to resolve the dispute concerning, and
determine, the private market value per share of the Common
Stock, par value $0.01 per share (the "Shares"), of LIN
Broadcasting Corporation ("LIN"), pursuant to Section 2(C)
of the Private Market Value Guarantee dated December 11,
1989 (the "PMVG"), between McCaw Cellular Communications,
Inc. ("McCaw") and LIN.
As detailed below, in arriving at our determination of
private market value per Share, we have applied the
definition of private market value per Share contained in
Section 2(B) of the PMVG, consistent with the
interpretations of our counsel, Paul, Weiss, Rifkind,
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<PAGE> 77
Wharton & Garrison ("Paul, Weiss"), and have, upon the
advice of Paul, Weiss, among other things, not considered
McCaw and its parent AT&T Corp. ("AT&T") to be potential
buyers of the outstanding Shares under such definition but
rather have considered them to be sellers of their Shares
and also have considered the tax, accounting and regulatory
consequences thereof.
In our analysis of various legal, regulatory,
accounting and tax issues related to possible transaction
structures or potential acquirers or forms of consideration,
we took account of regulatory restrictions applicable to
AT&T and the effect of LIN's status as a majority owned
subsidiary of another corporation on the feasibility of tax
free transactions and the method of accounting for an
acquisition of LIN.
Section 2(B) of the PMVG defines "private market value
per Share" as:
"the private market price per Share (including control
premium) that an unrelated third party would pay if it
were to acquire all outstanding Shares (including the
Shares held by [McCaw] and its affiliates) in an arm's-length
transaction, assuming [LIN] was being sold in a
manner designed to attract all possible participants
(including the Regional Bell Operating Companies) and
to maximize stockholder value, including if necessary
through the sale or other disposition (including tax-free
spin-offs, if possible) of businesses prohibited
by legal restrictions to be owned by any particular
buyer or class of buyers (e.g., the Regional Bell
Operating Companies)."
We understand that Morgan Stanley & Co. Incorporated
(the "Offeror's Appraiser") was designated by McCaw as the
appraiser to determine the private market value per Share
pursuant to Section 2(C) of the PMVG and that the Offeror's
Appraiser determined the private market value per Share to
be $105. We understand that Lehman Brothers and Bear
Stearns & Co. (the "Independent Directors' Appraisers") were
designated by the Independent Directors of LIN as the
appraisers to determine the private market value per Share
pursuant to Section 2(C) of the PMVG and that the
Independent Directors' Appraisers determined the private
market value per Share to be $155.
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<PAGE> 78
We have been advised that counsel for McCaw and counsel
for the Independent Directors of LIN disagree as to whether,
in determining the private market value per Share as defined
in Section 2(B) of the PMVG, McCaw and AT&T should be
considered as potential buyers of the outstanding Shares.
We have also been advised that counsel for McCaw and counsel
for the Independent Directors of LIN disagree as to the
conditions under which, in determining the private market
value per Share as defined in Section 2(B) of the PMVG, it
should be assumed that McCaw and the public stockholders of
LIN must receive and be entitled to retain the same form of
consideration from any potential buyer or buyers of LIN or
any portion of its business or assets.
At the request of counsel for McCaw and counsel for the
Independent Directors of LIN, we have consulted with Paul,
Weiss concerning the requirements of Section 2(B) of the
PMVG and have applied their interpretations in arriving at
our determination of private market value per Share set
forth below. With respect to the matters described in the
preceding paragraph, such counsel have advised us that, in
their opinion, (i) in determining the private market value
per Share under the PMVG, we should not consider McCaw or
AT&T to be potential buyers of all of the outstanding
Shares, and should consider them to be sellers of the Shares
owned by McCaw and consider the tax, accounting and
regulatory consequences thereof; (ii) although we should not
include McCaw or AT&T in the analysis of what an unrelated
third party would pay, we may consider other transactions
involving McCaw and AT&T, such as AT&T's acquisition of
McCaw, in a comparable acquisition analysis, and give such
other transactions whatever weight we deem appropriate in
our judgment; (iii) we may take into account potential
transactions in which McCaw or AT&T would receive
consideration equal in value but different in kind from that
to be received by the holders of the Public Shares (as the
term "Public Shares" is defined in the PMVG); and (iv) the
PMVG should be construed as requiring consideration of
transactions designed to overcome the legal barriers
resulting from AT&T's indirect ownership of the Shares,
provided that the kinds of transactions to be so considered
are those in which such legal barriers can reasonably be
overcome, and in which AT&T receives value per Share equal
to the value received by the holders of the Public Shares.
We have been advised by counsel for McCaw and counsel
for the Independent Directors of LIN that the Modification
of Final Judgment entered by the United States District
Court for the District of Columbia in United States v.
American Telephone & Telegraph Co., 552 F. Supp. 131
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<PAGE> 79
(D.D.C., 1982), relating to the divestiture by AT&T of the
Regional Bell Operating Companies prohibits AT&T and its
affiliates, including McCaw, from holding stock issued by a
Regional Bell Operating Company and that any waiver of this
prohibition would require the divestiture by McCaw of any
such stock within a relatively short period of time and, in
any event, within one year. As described above, in
determining the private market value per Share we have
taken into account, among other matters, these restrictions
on AT&T's ownership of certain securities. We also took
into account, among other matters, the unavailability of
pooling of interests accounting for a disposition by a
parent of its subsidiary.
In arriving at our determination of the private market
value per Share, we have reviewed, among other things:
(i) the PMVG;
(ii) the reports and other materials (the "Other
Appraisers' Reports") prepared and delivered to us by
the Offeror's Appraiser and the Independent Directors'
Appraisers relating to their determinations of the
private market value per Share pursuant to Section 2(C)
of the PMVG;
(iii) certain publicly available information
with respect to LIN, including the publicly available
consolidated financial statements of LIN for recent
years and interim periods to date;
(iv) certain internal financial and operating
information, including certain projections of financial
performance, relating to LIN, its principal operating
subsidiaries and certain entities in which LIN or its
subsidiaries hold partnership interests prepared by
each of the management of LIN and the management of
McCaw;
(v) certain publicly available information
concerning the public trading prices of the Shares and
the stock of certain other companies in businesses
similar to LIN; and
(vi) certain publicly available information
concerning merger and acquisition transactions
involving McCaw, LIN and certain other companies in
businesses similar to LIN.
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<PAGE> 80
In addition, we have had discussions with the
managements of LIN and McCaw and representatives of the
Offeror's Appraiser and the Independent Directors'
Appraisers concerning (i) the businesses, operations,
assets, financial condition and future prospects of LIN and
its subsidiaries and (ii) the Other Appraisers' Reports.
In accordance with the terms of our letter agreement
dated February 17, 1995, with you (the "Engagement Letter"),
we have not been provided with any internal nonpublic
information prepared by McCaw or AT&T relating to the
operations or assets of McCaw or AT&T or (except for the
projections prepared by the management of McCaw referred to
above) LIN, or any valuations of LIN prepared by LIN, McCaw
or AT&T or their financial advisors other than those
contained in the Other Appraisers' Reports. As instructed
by you, we have not solicited any third parties regarding
their interest in acquiring LIN or any of its business or
assets, and you have advised us that, except for certain
general inquiries that did not include any indication of
price, none of LIN, McCaw and AT&T and their respective
advisors have solicited or received any proposals or
expressions of interest from third parties in any such
acquisition.
In preparing this letter, we have assumed and relied
upon the accuracy and completeness of all factual or
historical information supplied or otherwise made available
to us by or on behalf of LIN, McCaw, the Offeror's Appraiser
or the Independent Directors' Appraisers and have assumed
that all financial projections provided to us (including
those included in the Other Appraisers' Reports) were
prepared in good faith, reflecting the best estimates of the
party which prepared such projections. We also have assumed
that LIN does not have any contingent liabilities exceeding
the reserves therefor established in LIN's financial
statements. We have not independently verified the accuracy
or completeness of, and we do not assume responsibility for,
any of such information or undertaken an independent
appraisal of any of the assets of LIN and its subsidiaries.
We have relied on the advice of counsel for McCaw,
counsel for the Independent Directors of LIN and our other
counsel on this matter, Cravath, Swaine & Moore, with
respect to legal and tax matters other than the issues
relating to the interpretation of the PMVG described above.
In arriving at our determination of the private market
value per Share, we have performed such analyses and studies
as we considered appropriate, including those set forth in
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<PAGE> 81
the report which accompanies this letter. In arriving at
such determination, we have assumed that the closing of any
acquisition by one or more parties of outstanding Shares or
any of LIN's business or assets would occur on June 30,
1995, and have not taken into account any possible
impediments to such a closing by a particular buyer
regarding the need for regulatory approval.
Our determination of the private market value per
Share, is necessarily based on market and other conditions
as they exist on the date of this letter.
Based upon and subject to the foregoing, and such other
matters as we consider relevant, we have determined that the
private market value per Share as defined under Section 2(B)
of the PMVG, interpreted as described above, is $127.50.
We are not expressing any views on the value of the
Shares determined by any method, or on any basis, other than
pursuant to the standards of the PMVG, interpreted as
described herein. Values determined by other methods or on
other bases could differ materially from the amount set
forth above.
We understand that Section 2(F) of the PMVG provides
that under certain circumstances McCaw will put LIN up for
sale under the direction of the Independent Directors of LIN
and pursuant to sale procedures to be set by them, and that
McCaw may or may not be requested by the Independent
Directors of LIN to bid in such sale process. Our
determination of private market value per Share set forth
above is not necessarily indicative of the value per Share
that may be received by LIN stockholders pursuant to any
such sale process.
It is understood that this letter is for the
information of McCaw and LIN and is not a recommendation to
any LIN stockholder to accept or vote for a transaction
proposed pursuant to the PMVG. This letter is not to be
circulated, quoted or referred to, in whole or in part,
orally or in any registration statement, proxy statement or
any other document or any press release or public statement
without our written consent, except that it may be disclosed
in its entirety.
Very truly yours,
/s/ Wasserstein Perella & Co.
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<PAGE> 82
Terms of Wasserstein Perella's Engagement. McCaw and LIN
have paid Wasserstein Perella aggregate fees of $2.5 million in
consideration for Wasserstein Perella's services in connection
with its determination of the private market value per LIN Common
Share under the PMVG. McCaw and LIN have also agreed to
reimburse Wasserstein Perella for its out-of-pocket expenses,
including reasonable fees and disbursements of counsel. McCaw
and LIN have agreed to indemnify Wasserstein Perella and its
affiliates, their respective directors, officers, partners,
agents and employees and each person, if any, controlling
Wasserstein Perella or any of its affiliates against certain
liabilities and expenses, including certain liabilities under the
federal securities laws, relating to or arising out of its
engagement. The fees, expense reimbursement and indemnification
described above are additional to those provided to Wasserstein
Perella for rendering the Fairness Opinion in connection with the
Merger. See "SPECIAL FACTORS -- Fairness Opinion of Wasserstein
Perella."
Certain Projections
LIN and McCaw do not as a matter of course make public
forecasts or projections as to future sales or earnings.
However, in connection with the PMVG process, Morgan Stanley,
Bear Stearns, Lehman Brothers and Wasserstein Perella were
provided with certain projections of the cellular operations of
LIN (on a proportionate basis based on LIN's proportionate
interests in each of its markets). See "SPECIAL FACTORS --
Background of the Merger," "-- Fairness Opinion of Wasserstein
Perella," "-- Private Market Value View of Morgan Stanley," "--
Private Market Value View of Bear Stearns and Lehman Brothers"
and "-- Private Market Value Determination of Wasserstein
Perella." Separate projections were prepared by certain members
of the management of LIN in November 1994 and, in response
thereto, by certain members of the management of McCaw in January
1995, in each case in connection with the PMVG process. In
addition, Morgan Stanley, Bear Stearns, Lehman Brothers and
Wasserstein Perella were provided with LIN projections that were
prepared on behalf of McCaw management and presented to the McCaw
Board of Directors in October 1992. None of the three sets of
projections was prepared with a view towards complying with
published guidelines of the Commission regarding projections and
forecasts.
Because the estimates and assumptions underlying the
accompanying projections are inherently subject to significant
economic and competitive uncertainties beyond the control of LIN
and McCaw, no assurances are made or implied as to their
reliability. Moreover, the projections prepared by McCaw
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management, and McCaw management's underlying assumptions, differ
in substantial respects from the projections prepared by LIN
management and LIN management's underlying assumptions. Actual
results are likely to vary, and may vary significantly, from
those reflected in any of the projections. In addition, the
projections do not necessarily conform with generally accepted
accounting principles. The fact that these projections were
furnished to Morgan Stanley, Bear Stearns, Lehman Brothers and
Wasserstein Perella or reprinted in this Proxy Statement should
not be regarded as an indication that McCaw, LIN or any persons
who received such information consider it an accurate prediction
of future events. These projections are included in this Proxy
Statement only because such information was provided to Morgan
Stanley, Bear Stearns, Lehman Brothers and Wasserstein Perella in
connection with the PMVG process. Neither LIN nor McCaw intends
to update any of the following projections.
The following subsections summarize the projected
proportionate results for the cellular operations of LIN taken as
a whole, and underlying assumptions, as set forth in each of the
three sets of projections provided to Morgan Stanley, Bear
Stearns, Lehman Brothers and Wasserstein Perella.
LIN Management Projections for LIN's Cellular Operations.
LIN management prepared Base Case projections and Upside Case
projections for LIN's cellular operations in connection with the
PMVG process. The LIN management projections solely reflect LIN
management's beliefs and assumptions, which are not necessarily
shared or considered reasonable by any other parties.
The Base Case projections were intended by LIN management
to be a moderate and attainable view of the future expected
business of LIN. In LIN management's view, the Base Case does
not include any adjustments for synergies assuming a hypothetical
sale of LIN to any particular buyer. The Upside Case projections
represent LIN management's more aggressive view of the business
of LIN and assume (i) new revenues from offering PCS services (a
new form of wireless communication) in LIN's markets using LIN's
existing infrastructure with the new PCS frequencies, (ii) a more
rapid growth in revenues compared to the LIN management Base Case
projections from long distance, a form of wireless data
transmission termed Cellular Digital Packet Data ("CDPD") and
other new services, (iii) increased penetration and (iv)
decreased marketing costs and customer turnover (or "churn")
because of new programs and changes in the business. The LIN
management Base Case and the Upside Case projections are based on
the following programs and assumptions:
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<PAGE> 84
1. Each of the four major markets (New York, Los Angeles,
Dallas and Houston) as well as the adjacent smaller markets owned
by LIN was modeled by LIN management. LIN management assumed
that the relatively small size of these other markets will cause
them to be run as "satellites" with the same overall economics as
their adjacent larger markets. As of the year 2000, the smaller
markets are projected to represent about 1% of the total revenue
from LIN's cellular business.
2. The LIN management Base Case is intended to reflect LIN
management's belief that increasing competition will have a
significant impact on operating results as additional wireless
operators enter the market. (The primary effects are increased
marketing costs, reduced price per minute and a slowing of the
penetration rate.) The LIN management Base Case assumes that the
competitive position of the cellular operators in individual
markets will equalize between them over time. In the LIN
management Upside Case, it is assumed that competition from PCS
and ESMR services is not as strong as in the LIN management Base
Case, resulting in increased penetration for cellular services
and contributing to reduced marketing costs and churn. LIN
management assumed that the winning bidders for the 30 MHZ
licenses in the PCS auctions will make every effort to enter
operation as quickly as possible, but that it is unlikely they
could be fully deployed in any of LIN's four major markets before
late 1996, and that mid-to-late 1997 is more likely.
3. In the LIN management Base Case, the existing market
penetration for LIN of approximately 4.3% of its population base
in 1994 is projected to reach 12% by the end of 1999 and nearly
17% by the end of 2004. These estimates are intended by LIN
management to take into account total penetration expected by LIN
management for all wireless voice services and competition from
ESMR and PCS services. The estimates assume that the two
cellular competitors in each market will have approximately the
same number of customers. Because LIN management believes that
LIN's markets cover large urban areas that are major centers of
corporate headquarters, business and trade, characterized by
higher than average incomes, economic activity, commuting times
and other factors likely to increase cellular penetration, the
LIN management Base Case projections for LIN's markets assume
higher penetration rates than are projected in national averages
for all cellular markets. In the LIN management Upside Case, the
annual penetration rate is projected to increase in 1995 and
1996, based on the rapid growth in 1994, and to decline each year
thereafter.
4. In the view of LIN management, LIN and McCaw have
instituted aggressive programs to reduce churn which appear to be
having considerable success. LIN management believes that LIN's
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<PAGE> 85
markets will be able to make substantial reductions in churn
during each of the next several years. The LIN management Upside
Case assumes that churn can be reduced to 12% per year by 2004.
5. The LIN management projections assume that LIN's
subscriber base will become substantially more consumer-oriented
with lower monthly charges. The LIN management projections also
assume that a significant portion of the growth in revenues will
come from business users because LIN management believes that the
business market is still relatively lightly penetrated and that
significant opportunities exist with services which are not yet
offered to customers.
6. Overall, the average rate per minute is expected by LIN
management to decline because of competition and declining costs
per minute. At the same time, average minutes of use are
expected by LIN management to increase because of lower rates per
minute, more user friendly phones, improved quality, longer
battery lives and new features and services on the network. The
actual number of average minutes will depend significantly on the
use of various pricing plans, such as low per minute or flat
rates from residences and for off-peak periods and flat rates for
in-office use, which LIN management expects will substantially
increase minutes of use.
7. The LIN management Base Case assumes that long distance
revenues generated by customers in markets in which LIN has an
interest will equal about 2.5% of local service revenues compared
to about 4% or 5% in most LIN and McCaw markets at the present
time. The LIN management Base Case also assumes that in New York
and Dallas, LIN will continue to provide essentially all the long
distance service to its customers and will receive 100% of the
long distance revenues generated by those customers. In Los
Angeles and Houston, the LIN management Base Case assumes that
BellSouth, LIN's partner in these markets, will not receive a
waiver from the equal access requirements for wireless and that
LIN's share of the market as an equal access carrier will decline
over the next five years from 20% to 10% of the long distance
revenues. Cash flow margin is assumed by LIN management to be
40% based on LIN's current margins in its long distance business
and LIN management's view that LIN will continue to be able to
purchase long distance services from competing long distance
carriers on a commodity basis at a substantial discount, which
rate is likely in LIN management's view to decline further in the
future. The LIN management Upside Case makes the following
changes in the LIN management Base Case assumptions: (i) long
distance revenues are assumed to be approximately 4% rather than
2.5% of revenues, reflecting existing percentages and assuming
continued growth in long distance usage from cellular phones;
(ii) in New York and Dallas, the proportion of customers
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purchasing long distance from LIN has been reduced to 90% on LIN
management's assumption that even without equal access, some
large customers will insist on direct connection to other
carriers but that in most such cases LIN may be able still to
resell such services; (iii) in Los Angeles and Houston it is
assumed that by 1997, whether or not these markets are freed from
equal access, LIN will continue to be able to capture about 20%
of the business.
8. Although LIN management expects that significant
additional revenues will come from new features and services, LIN
management believes that it is difficult to determine fully the
size of these additional revenues. Included in the basic
revenues for each market in the LIN management projections are
revenues from existing services such as voice mail, call
forwarding and call waiting packages, detailed billing, Voice
Touch and other miscellaneous features and services. Also
included in the LIN management projections is some growth in
these revenues for basic features, including some of the
identified new features such as Caller ID and Universal Number.
The LIN management Base Case includes assumptions considered by
LIN management to be moderate for additional revenue growth from
such new features and services as sophisticated call screening,
routing and storing, text messaging to cellular phones,
information services and other services described above, as well
as features and services that have not yet been identified, by
assuming an additional revenue stream beginning in 2000 of $10
million and growing at an annual rate of 20% with an additional
new revenue source of $10 million being added each year. As
incremental products go on the network, operating costs are
projected by LIN management at 10% of revenue and marketing costs
at 20% of revenue. The LIN management Upside Case assumes that
this revenue stream begins in 1998 rather than 2000.
9. CDPD networks were installed by cellular carriers for
the transmission of wireless data and became operational in many
major markets across the United States by the end of 1994,
including LIN's markets in New York and Dallas. Full coverage in
most major cellular markets, including LIN's markets in Los
Angeles and Houston is expected by LIN management to be completed
by the end of 1995. In the LIN management Base Case, LIN
management assumes average revenues of approximately $42 per
month from mobile users (portable computers, personal intelligent
communicators, etc.) and $5 per month from remote monitoring and
control devices, and projects CDPD revenues to be $213 million,
$360 million and $608 million in 2000, 2002 and 2004,
respectively. Capital expenditures are projected at between $5
million and $10 million per year between 1996 and 2004. The LIN
management Upside Case further increases projected CDPD revenues
beginning in 1998 to reflect further penetration in the portable
<PAGE>
<PAGE> 87
computer market, wireless delivery of information services,
remote monitoring and servicing and increased speeds for CDPD.
In the LIN management Upside Case, assuming the same average
monthly revenues, the CDPD revenues are projected by LIN
management to be $284 million, $597 million and $970 million in
2000, 2002 and 2004, respectively.
10. The LIN management Upside Case also includes an
additional revenue stream from PCS-type services in LIN's
existing markets, assuming that LIN enters into some type of
"resale" or operating arrangement or partnership or acquires or
"leases" 10 MHZ spectrum licenses that will be auctioned by the
FCC later in 1995. The LIN management Upside Case assumes that
beginning in 1998, a residential service is introduced that
produces initial revenues of $10 million in 1998, growing by 50%
per year.
11. The costs of serving a customer are projected by LIN
management to decline because of economies of scale, automation
of back room processes and functions and a re-definition of
services. With certain fixed costs and declining average revenue
per customer, cash flow margins before marketing expenses are
projected to be reduced. Nonetheless, LIN management projects
considerably greater operating efficiencies from streamlined
operating systems, improved information systems and greater use
of outsourcing.
12. Total marketing costs are expected by LIN management to
continue to be driven by gross subscriber additions over the next
several years. LIN management believes that cash flow margins
after marketing costs in 1994 and 1995 have been or will be
significantly reduced compared to recent years because of
increased subscriber growth. In addition, the development of
competition from ESMR and 30 MHZ PCS providers are assumed in the
LIN management Base Case to increase marketing expenditures per
gross subscriber addition in 1997, 1998 and 1999. In the longer
term, LIN management expects growth rates in the subscriber base
and revenue stream to slow, and marketing costs (including
advertising) are projected to become approximately 10-15% of
total costs. The LIN management Upside Case assumes that new
programs will be successful in reducing retail sales commissions,
but that this reduction will be offset somewhat by increased
advertising and that an average marketing and sales cost of $360
per gross subscriber addition can be achieved by 1997.
13. LIN management expects capital expenditures per net
customer addition to increase in the next few years with the full
deployment of digital service, the creation of the CDPD network,
the addition of micro-cells for PCS-type cellular services and
other enhancements. LIN management expects that as the customer
<PAGE>
<PAGE> 88
base becomes mostly digital, capital costs per net subscriber
addition will decline. The LIN management Upside Case includes
higher capital costs for CDPD beginning in 1999 because of higher
growth rates for CDPD, including technical improvements.
<PAGE>
<PAGE> 89
<TABLE>
LIN Broadcasting Corporation Cellular Operations
Condensed Proportionate Consolidated Financial Projections -- LIN Management
Fiscal Years Ending December 31, 1995-2004
(In millions)
<CAPTION>
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Base Case:
Revenue............. $1,180 $1,485 $1,756 $2,026 $2,268 $2,542 $2,823 $3,121 $3,413 $3,666
Direct Operating
Expenses 348 480 591 716 812 935 1,075 1,226 1,362 1,480
------ ------- ------- ------- ------- ------- ------- ------- ------- -----
Cash Flow Before
Marketing 832 1,005 1,165 1,310 1,456 1,607 1,748 1,895 2,051 2,186
Marketing Expense..... 297 331 363 382 394 391 375 349 337 338
Operating Cash Flow:
Total (with
Wireless Data) $535 $674 $802 $928 $1,062 $1,216 $1,373 $1,546 $1,714 $1,848
Wireless Data....... $(9) $(6) $7 $24 $63 $104 $136 $176 $229 $298
Capital Expenditures:
Total (with
Wireless Data) $301 $294 $280 $202 $187 $170 $142 $130 $102 $76
Wireless Data $19 $5 $5 $10 $10 $5 $5 $5 $5 $5
Upside Case:
Revenue.............. $1,188 $1,520 $1,827 $2,176 $2,458 $2,793 $3,187 $3,619 $4,049 $4,450
Direct Operating
Expenses.. 353 491 624 776 901 1,040 1,232 1,451 1,642 1,833
------ ------- ------- ------- ------- ------- ------- ------- ------- ----
Cash Flow Before
Marketing 835 1,029 1,203 1,400 1,557 1,753 1,955 2,168 2,407 2,617
Marketing Expense..... 297 311 327 321 325 342 348 354 361 372
------ ------- ------- ------- ------- ------- ------- ------- ------- ----
Operating Cash Flow:
Total (with
Wireless Data) $538 $718 $876 $1,079 $1,232 $1,411 $1,607 $1,814 $2,046 $2,245
Wireless Data $(9) $(6) $7 $28 $76 $139 $209 $292 $380 $475
Capital Expenditures:
Total (with Wireless
Data) $301 $300 $348 $224 $207 $189 $164 $155 $138 $120
Wireless Data $19 $5 $5 $10 $20 $11 $11 $11 $11 $11
</TABLE>
<PAGE>
<PAGE> 90
1995 McCaw Management Projections for LIN Cellular
Operations. McCaw management prepared projections for LIN's
cellular operations in connection with the PMVG process. The
McCaw management projections solely reflect McCaw management's
beliefs and assumptions, which are not necessarily shared or
considered reasonable by any other parties.
In McCaw management's view, the McCaw management projections
are based on an operational view of each of the seven markets in
which LIN has interests. The McCaw management's market level
projections were consolidated into proportionate projections for
LIN's cellular operations as a whole based on LIN's economic
ownership in each market as follows: New York 98.3%; Los Angeles
40.0%; Dallas 60.4%; Houston 56.3%; Galveston, TX 34.6%; Newton,
TX 100%; and Litchfield, CT 100%.
In McCaw management's view, the McCaw management projections
include certain benefits relating to McCaw capabilities,
including sales to national accounts and technical and research
and development programs supporting wireless data services.
While McCaw management did not believe that an independent third
party acquiror of LIN would likely be able to provide McCaw's
level of synergies, these synergies were included because of the
difficulty, in McCaw management's view, of separating the
contribution McCaw makes to LIN's business. McCaw management's
projections were not intended to reflect the potential of AT&T to
add value to LIN or the potential impact on LIN of facing AT&T as
a competitor were LIN to be purchased by an entity other than
AT&T.
In McCaw management's view, the McCaw management projections
include a number of aggressive, but achievable, programs and
assumptions which have a significant impact on the value of LIN,
as set forth below:
1. McCaw management expects that lower priced mass market
cellular phones to be introduced in late 1995 and early 1996 will
attract new users and result in growing penetration rates prior
to the introduction of competition from PCS providers. McCaw
management believes that similar innovations, not yet defined,
will be needed in the future to meet the penetration and revenue
projections.
2. McCaw management believes that revenues per subscriber
will stabilize beyond 2000 (declining 1% per annum) despite
maturing of the market and likely competitive pressure from PCS
and ESMR providers. The McCaw management projections also assume
that new digital features will provide additional value and
support price levels.
<PAGE>
<PAGE> 91
3. The McCaw management projections assume that the
wireless data market, and the technical capability to satisfy it,
will develop and result in LIN incremental revenues and EBITDA of
$300,000,000 and $150,000,000, respectively, in 2004.
4. Capital expenditures per net subscriber addition
projected by McCaw management assume only incremental growth of
the existing cellular network. Neither wholesale "change-out"
nor technological obsolescence is reflected in the projections.
5. The McCaw management projections assume that market
shares of LIN and its cellular competitors equalize over time.
6. McCaw management seeks to manage its cellular businesses
by closely monitoring and targeting penetration growth and
revenue per subscriber per month. The McCaw management
projections assume efficiencies in such areas as direct expense
per subscriber per month, monthly churn, monthly cost per gross
new subscriber, and capital expenditures per net subscriber
addition.
7. LIN's aggregate penetration (proportionally weighted) is
projected in the McCaw management projections to grow from 4.3%
in 1994 to 14.5% in 2004. As the McCaw management projections
assume that LIN will reach an aggregate 50% market share, this
implies the "A-block" and "B-block" cellular providers will
collectively reach a 29% penetration rate (excluding penetration
by potential PCS and ESMR competitors).
8. The monthly churn rate is projected in the McCaw
management projections to decline from 2.1% in 1994 to 1.2% in
2002 and remain constant thereafter. McCaw management believes
that this decline could be adversely affected if competition from
new entrants or fraud rates are higher than expected by McCaw
management. McCaw management also believes that churn rates will
be adversely affected when number portability (i.e., the ability
to change service providers while retaining the same telephone
number) is available.
9. Revenue per subscriber (excluding potential wireless
data revenue) is projected by McCaw management to decrease from
$83 per month to $49 per month within 10 years. The most
significant declines are projected by McCaw management in 1995,
1996 and 1997 (to $61 per subscriber per month) due to: (i) the
relatively large projected increase in subscribers joining in
response to lower rate plans and mass market offerings and, less
significantly, (ii) the projected 1995/1996 phase-out of long
distance revenues in New York and Dallas in response to equal
access requirements (collectively projected by McCaw management
to account for a decrease of $4 to $5 in revenues per
subscriber).<PAGE>
<PAGE> 92
10. The McCaw management projections assume a decline in
direct expense per subscriber from $26 per month in 1994 to $20
to $21 per month in 1995 and beyond. The improvement in direct
expenses in 1995 in the McCaw management projections results
largely from: (i) economies of scale, (ii) the development of
lower cost delivery and support systems for the low-end mass
market customer, and (iii) reduction of costs associated with
long distance revenues.
11. The McCaw management projections assume that marketing
expenses continue to rise through 1999 as cellular providers seek
to expand their customer base in advance of the entry of PCS
providers, and in 1998 and 1999 as cellular providers are assumed
to compete directly with these new entrants. In 2000 and beyond,
marketing expense declines are assumed in the McCaw projections
as the rate of growth of the subscriber base falls (and the cost
of cellular phones continues to fall as well).
12. Capital expenditures per net subscriber addition are
assumed in the McCaw management projections to decline as
conversion to digital networks is completed by 1998.
Additionally, economies of scale are assumed in the McCaw
management projections to allow capital cost per net subscriber
addition to fall to $396 by 2001 and remain level thereafter.
This projection assumes no major technological obsolescence.
<PAGE>
<PAGE> 93
<TABLE>
LIN Broadcasting Corporation Cellular Operations
Condensed Proportionate Consolidated Financial Projections -- McCaw Management
Fiscal Years Ending December 31, 1995-2004
(In millions)
<CAPTION>
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue............. $1,162 $1,393 $1,579 $1,734 $1,887 $2,043 $2,205 $2,365 $2,531 $2,680
Direct Operating
Expenses..... 351 438 524 607 680 755 842 933 1,030 1,101
---- ---- ---- ---- ---- ---- ----- ---- ---- ----
Operating Cash Flow
Before Marketing...... 811 955 1,055 1,127 1,207 1,288 1,363 1,432 1,501 1,579
Marketing Expense.... 297 320 330 343 350 353 354 352 351 352
---- ---- ---- ---- ---- ---- ----- ---- ---- ----
Operating Cash Flow:
Total (with
Wireless Data).. $514 $635 $725 $784 $857 $935 $1,009 $1,080 $1,150 $1,227
Wireless Data $(5) $(3) $3 $12 $32 $52 $67 $87 $114 $148
Capital Expenditures:
Total (with
Wireless Data).... $254 $259 $221 $160 $148 $134 $112 $103 $81 $60
Wireless Data........ $19 $5 $5 $10 $10 $5 $5 $5 $5 $5
</TABLE>
<PAGE>
<PAGE> 94
1992 Projections of LIN Cellular Operations. Morgan
Stanley, Bear Stearns, Lehman Brothers and Wasserstein Perella
were also provided with projections of LIN's cellular operations
that had been prepared on behalf of McCaw management and
presented to the Board of Directors of McCaw in the fall of 1992
in the context of AT&T's then-proposed equity investment in and
strategic alliance with McCaw. See "SPECIAL FACTORS --
Background of the Merger." The 1992 projections consisted of a
base case, an upside case and a downside case and, for each case,
a version intended to reflect AT&T synergies and a version
intended to reflect no AT&T synergies. The 1992 projections
solely reflect the beliefs and assumptions in 1992 of the persons
preparing such projections, which are not necessarily shared or
considered reasonable by any other parties or by any parties in
1995.
The 1992 projections were provided to Morgan Stanley, Bear
Stearns, Lehman Brothers and Wasserstein Perella without any
description of underlying assumptions, except for the following
introductory note that was provided to the McCaw Board of
Directors in 1992:
Subject to the limitations in the scope of the business
described above [i.e., that LIN's business was limited to a
single service, namely, cellular voice service], the
financial models summarized here are based on assumptions
which management believes are reasonable. These assumptions
may not prove to be appropriate or accurate and the actual
results of operations are subject to numerous contingencies.
Moreover, because the cellular industry has only a limited
operating history, these assumptions necessarily include
unverifiable expectations about the market for personal
communications services. Consequently, [LIN's] actual
results of operations may vary materially from the financial
models.
<PAGE>
<PAGE> 95
<TABLE>
LIN Broadcasting Corporation Cellular Operations
Condensed Proportionate Consolidated Financial Projections -- 1992 Projections Presented to McCaw Board
Fiscal Years Ending December 31, 1992-2002
(In millions)
<CAPTION>
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Base Case without AT&T:
Revenue................. $562 $707 $865 $1,031 $1,190 $1,341 $1,490 $1,640 $1,795 $1,957 $2,128
Direct Operating Expenses 153 198 250 301 348 394 439 486 536 588 643
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Operating Cash Flow
Before Marketing.... 408 509 615 730 842 948 1,051 1,154 1,260 1,370 1,485
Marketing Expenses...... 127 135 147 144 140 137 134 131 128 125 122
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Operating Cash Flow... $281 $374 $468 $586 $702 $811 $917 $1,023 $1,132 $1,245 $1,363
Capital Expenditures.... $116 $164 $176 $154 $131 $114 $105 $97 $89 $81 $72
Base Case with AT&T:
Revenue................ $562 $675 $890 $1,100 $1,325 $1,520 $1,688 $1,858 $2,034 $2,218 $2,411
Direct Operating Expenses 153 198 255 315 376 433 483 535 589 647 708
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Operating Cash Flow
Before Marketing..... 408 477 635 785 949 1,087 1,205 1,323 1,445 1,571 1,703
Marketing Expenses....... 127 123 134 138 144 132 129 126 123 119 97
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Operating Cash Flow.... $281 $354 $501 $647 $805 $955 $1,076 $1,197 $1,322 $1,452 $1,607
Capital Expenditures.... $116 $164 $181 $167 $146 $119 $109 $101 $93 $85 $76
Upside Case without AT&T:
Revenue.................. $562 $728 $922 $1,133 $1,352 $1,553 $1,731 $1,911 $2,096 $2,292 $2,500
Direct Operating Expenses 153 198 255 315 376 433 483 535 589 646 707
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Operating Cash Flow
Before Marketing .... 408 530 667 818 976 1,120 1,247 1,376 1,507 1,646 1,792
Marketing Expense........ 127 121 130 133 137 123 121 119 117 114 112
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Operating Cash Flow.... $281 $409 $537 $685 $839 $997 $1,126 $1,257 $1,390 $1,531 $1,680
Capital Expenditures .... $116 $164 $181 $167 $146 $119 $109 $101 $93 $85 $76
<PAGE>
<PAGE> 96
LIN Broadcasting Corporation Cellular Operations
Condensed Proportionate Consolidated Financial Projections -- 1992 Projections Presented to McCaw Board (Con't.)
Fiscal Years Ending December 31, 1992-2002
(In millions)
<CAPTION>
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Upside Case with AT&T:
Revenue................. $562 $728 $931 $1,156 $1,393 $1,600 $1,781 $1,966 $2,159 $2,361 $2,575
Direct Operating Expenses 153 198 255 315 376 433 483 535 589 647 708
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Operating Cash Flow
Before Marketing...... 408 530 676 841 1,017 1,167 1,298 1,431 1,569 1,715 1,868
Marketing Expense......... 127 110 112 116 121 109 107 106 103 100 81
Operating Cash Flow..... $281 $419 $564 $725 $896 $1,058 $1,190 $1,326 $1,466 $1,615 $1,786
Capital Expenditures...... $116 $164 $181 $167 $146 $119 $109 $101 $93 $85 $76
Downside Case without AT&T:
Revenue................. $562 $685 $810 $935 $1,039 $1,145 $1,269 $1,393 $1,521 $1,653 $1,791
Direct Operating Expenses 153 197 245 287 320 354 395 438 482 529 579
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Operating Cash Flow
Before Marketing...... 408 488 565 648 719 791 874 955 1,039 1,124 1,212
Marketing Expense......... 127 153 160 150 136 145 141 138 134 132 128
Operating Cash Flow..... $281 $335 $405 $498 $583 $647 $733 $818 $904 $992 $1,083
Capital Expenditures...... $116 $184 $176 $136 $93 $118 $108 $100 $92 $84 $75
Downside Case with AT&T:
Revenue................. $562 $681 $815 $977 $1,148 $1,299 $1,443 $1,588 $1,736 $1,888 $2,047
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Direct Operating Expenses 153 196 244 294 343 390 437 484 534 587 643
Operating Cash Flow
Before Marketing...... 408 485 570 683 805 909 1,007 1,104 1,201 1,301 1,404
Marketing Expense......... 127 135 138 144 142 140 138 135 131 127 103
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Operating Cash Flow..... $281 $350 $432 $539 $663 $769 $869 $969 $1,071 $1,175 $1,302
Capital Expenditures...... $116 $176 $187 $185 $155 $134 $123 $113 $103 $94 $83
</TABLE>
<PAGE>
<PAGE> 97
Accounting Treatment
It is expected that the Merger will be accounted for as a
purchase for accounting and financial purposes.
Interests of Certain Persons in the Merger; Conflicts of Interest
Affiliation of LIN Directors with AT&T and McCaw. Eight of
the eleven members of the LIN Board are designees and/or
employees of AT&T or McCaw and, therefore, have a conflict with
respect to the Merger and the Merger Agreement, given that McCaw
is the other party to the Merger Agreement and would acquire all
the LIN Public Shares if the Merger is consummated. In addition,
once McCaw determined to proceed with an acquisition of all the
LIN Public Shares, the PMVG provided that McCaw was required to
enter into an agreement with LIN providing for such acquisition
and to cause a meeting of stockholders of LIN to be held as soon
as practicable to consider and vote thereon. If McCaw were not
to have done so, it might be deemed to have breached the PMVG.
Holdings, a wholly owned subsidiary of AT&T and McCaw, owns
directly 26,989,500 LIN Common Shares, representing approximately
52.2% of the total number of LIN Common Shares outstanding. None
of AT&T, McCaw or Merger Sub owns any LIN Common Shares directly.
To the best knowledge of AT&T, McCaw, Holdings and Merger Sub, no
director or executive officer of any of AT&T, McCaw, Holdings or
Merger Sub beneficially owns any LIN Common Shares, except as set
forth in Appendix E hereto. Holdings has the sole power to vote,
or to direct the vote, and the sole power to dispose of, or to
direct the disposition of, the LIN Common Shares owned by it.
Because they control Holdings, AT&T and McCaw exercise the
indirect power to vote and dispose of such LIN Common Shares. No
person other than Holdings has the right to receive or the power
to direct the receipt of dividends from, or the proceeds from the
sale of, the LIN Common Shares beneficially owned by Holdings.
Indemnification of Directors and Officers Pursuant to the
Merger Agreement. Under the Merger Agreement, McCaw and Holdings
have agreed that all rights to indemnification now existing in
favor of any of the Indemnified Parties as provided in its
Certificate of Incorporation or By-Laws, or otherwise in effect
on the date of the Merger Agreement (including, without
limitation, as provided in the PMVG), will survive the Merger and
continue in full force and effect and McCaw and Holdings will
cause LIN as the Surviving Corporation (as defined herein) to
honor all such rights to indemnification.
In the event of any claim, action, suit, proceeding or
investigation (whether arising before or after the Effective
Time) subject to the rights to indemnification provided by the
<PAGE>
<PAGE> 98
Merger Agreement, (i) the Surviving Corporation will have the
right, from and after the Effective Time, to assume the defense
thereof with counsel reasonably satisfactory to such Indemnified
Parties and McCaw and Holdings will not be liable to such
Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified
Parties in connection with the defense thereof (provided that
such Indemnified Parties will have the right to be represented by
up to one separate counsel for the LIN Independent Directors and
one separate counsel for the other Indemnified Parties as a group
in connection with the defense thereof, in each case selected by
such Indemnified Parties and reasonably satisfactory to the
Surviving Corporation, if such Indemnified Parties are advised by
such counsel that there may be one or more substantial legal
defenses available to them which are different from or additional
to those available to the Surviving Corporation and in the
reasonable judgment of such counsel it is advisable for such
Indemnified Parties to be represented by such separate counsel,
in which case, if such Indemnified Parties notify McCaw and
Holdings in writing that they elect to be represented by such
separate counsel at the expense of the Surviving Corporation in
accordance with the terms of this proviso, the Surviving
Corporation will not have the right to assume the defense of such
action on behalf of such Indemnified Parties), (ii) the
Indemnified Parties will cooperate in the defense of any such
matter and (iii) McCaw and Holdings will not be liable for any
settlement effected without their prior written consent; provided
that McCaw and Holdings will not have any obligation under the
Merger Agreement to any Indemnified Party when and if a court of
competent jurisdiction ultimately determines, and such
determination has become final, that the indemnification of such
Indemnified Party in the manner contemplated by the Merger
Agreement is prohibited by applicable law; and provided, further,
that nothing in the Merger Agreement will prevent the Surviving
Corporation from settling any such claim, action, suit,
proceeding or investigation as to any Indemnified Party subject
to the rights to indemnification provided by the Merger
Agreement, so long as such settlement is based on the payment of
money and the Surviving Corporation agrees to make all such
payments due in connection with such settlement on behalf of such
Indemnified Party.
McCaw and Holdings will cause to be maintained in effect for
not less than six years after the Effective Time the current
policies of directors' and officers' liability insurance
maintained by LIN with respect to matters occurring prior to and
including the Effective Time for all present and past directors
and officers of LIN or any of its subsidiaries; provided,
however, that (i) McCaw and Holdings may substitute therefor
policies of at least the same coverage containing terms and
<PAGE>
<PAGE> 99
conditions which are no less advantageous to the directors and
officers covered thereby and (ii) McCaw and Holdings will not be
required to pay in the aggregate an annual premium for such
insurance in excess of two times the last annual premium paid
prior to the date of the Merger Agreement, but in such case will
purchase as much coverage as possible for such amount.
Employment Arrangements. Certain executive officers and
directors of LIN have entered into employment agreements or other
bonus or severance arrangements that will be triggered by
consummation of the Merger or by severance of employment
following consummation of the Merger. In addition, in the Merger
Agreement, McCaw agreed that AT&T would assume all outstanding
options granted under LIN's option plans. In the event the
Merger is consummated, vesting of some or, under certain
circumstances, all options to purchase LIN Common Shares held by
certain LIN executive officers will accelerate. See "THE MERGER
- -- Terms of the Merger -- LIN Option Plans; Stock Purchase Plan"
and "EXECUTIVE COMPENSATION."
Certain Effects of the Merger; Operations of LIN After the Merger
If the proposed Merger is consummated, the present holders
of the LIN Public Shares will no longer have an equity interest
in LIN and, therefore, will not share in its future earnings and
growth. Instead, each holder of a LIN Public Share will have the
right to receive the Merger Consideration for each such LIN
Public Share held.
LIN would, as a result of the Merger, become a wholly owned
subsidiary of AT&T and McCaw. LIN Common Shares would be
delisted from the Nasdaq National Market, the registration of LIN
Common Shares under the Exchange Act would terminate and LIN
would cease filing reports with the Commission. Moreover, LIN
would be relieved of the obligation to comply with the proxy
rules of Regulation 14A under Section 14 of the Exchange Act and
its officers, directors and 10% shareholders would be relieved of
the reporting requirements and restrictions on insider trading
under Section 16 of the Exchange Act. Accordingly, less
information will be required to be made publicly available than
presently is the case.
Immediately after the Merger, all of the then outstanding
LIN Common Shares would be beneficially owned by AT&T, McCaw and
Holdings. The directors of Merger Sub immediately prior to the
Effective Time (who will be designees of AT&T or McCaw and will
not include any LIN Independent Directors) will be the directors
of LIN from and after the Effective Time (until their successors
are duly elected or appointed and qualified). LIN's net book
value at December 31, 1994 was $297.7 million and its net income
<PAGE>
<PAGE> 100
for 1994 was $564.2 million. Through its 52.2% current
beneficial ownership of the outstanding LIN Common Shares,
McCaw's current proportionate interest in such net book value and
net income is $155.4 million and $294.5 million, respectively.
McCaw's proportionate interest will increase, as a result of the
Merger, to 100%.
Except as otherwise described in this Proxy Statement, AT&T,
McCaw and Holdings currently expect that LIN will initially be
operated after the Merger in a manner similar to that of its
current operations.
Certain Federal Income Tax Consequences
The following is a brief description of the material federal
income tax consequences of the Merger. This summary is for
general information only. It does not address tax consequences
that may be relevant to certain types of investors subject to
special treatment under the federal income tax laws (such as
dealers in securities, banks, insurance companies and foreign
individuals and entities). HOLDERS OF LIN COMMON SHARES SHOULD
CONSULT THEIR OWN TAX ADVISORS AS TO ANY FEDERAL, STATE, LOCAL,
FOREIGN OR OTHER TAX CONSIDERATIONS RELEVANT TO THEM.
The exchange of LIN Common Shares for the Merger
Consideration in the Merger will be a taxable transaction to
holders of LIN Common Shares. A holder of LIN Common Shares will
recognize gain or loss under federal income tax laws in an amount
by which the proceeds received in exchange for such shares exceed
or are less than the holder's tax basis in the shares. If the
shares were a capital asset in the hands of the holder of LIN
Common Shares, such gain or loss will be capital rather than
ordinary and, in such instances, will be long term if the shares
are considered to have been held more than one year and short
term if they are considered to have been held one year or less on
the date of the Merger.
The consummation of the Merger will not result in the
recognition by LIN of taxable gain.
Under the backup withholding rules, unless an exemption
applies under the applicable law and regulations, the Paying
Agent will be required to withhold, and will withhold, 31% of all
cash payments made in exchange for LIN Common Shares unless the
holder or other payee provides his tax identification number
(social security number, in the case of an individual, or
employer identification number) and certifies that such number is
correct. Each holder of LIN Common Shares and, if applicable,
each other payee should complete and sign the substitute Form W-9
to be included in the transmittal materials and instructions
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(relating to stock certificates) to be mailed to stockholders as
soon as practicable after the Effective Time, so as to provide
the information and certification necessary to avoid backup
withholding, unless an applicable exemption exists and is proved
in a manner satisfactory to LIN and the Paying Agent.
Terms of the PMVG
The PMVG provides, among other things, that for as long as
McCaw and its affiliates and Group Members beneficially own in
the aggregate at least 25% of the outstanding shares of the LIN
Common Shares on a fully diluted basis or McCaw's designees
constitute a majority of the LIN Board, and McCaw and its
affiliates and Group Members do not beneficially own in the
aggregate 100% of the outstanding LIN Common Shares, the
following provisions will apply:
LIN Independent Directors. Three members of the LIN Board,
the LIN Independent Directors, will be independent directors as
determined under the New York Stock Exchange Rules (i.e.,
independent of management of McCaw and its affiliates and free of
any relationship that, in the opinion of LIN's Board of
Directors, would interfere with the exercise of independent
judgment). The current LIN Independent Directors are persons who
served on LIN's Board of Directors prior to the completion by
McCaw of its tender offer for LIN. At each annual meeting of
LIN's stockholders, LIN Independent Directors are nominated by
the then current LIN Independent Directors and elected by a
Majority Vote of the LIN Public Stockholders. LIN Independent
Directors are subject to removal only (a) for cause, (b) if a
majority of the LIN Independent Directors approve such removal or
(c) if such removal is approved by a Majority Vote of the LIN
Public Stockholders. For these purposes and purposes of the
other provisions of the PMVG, a "Majority Vote of the LIN Public
Stockholders" includes not only (a) the affirmative vote of the
holders of at least a majority of the LIN Public Shares present
and entitled to vote at any meeting at which the holders of a
majority of the LIN Public Shares are present, but also (b) the
action by written consent (in accordance with applicable
provisions of Delaware law and LIN's Certificate of Incorporation
and By-Laws) of the holders of a majority of the LIN Public
Shares.
Sale of LIN. The PMVG provided that on or about January 1,
1995, the LIN Independent Directors would designate an investment
banking firm of recognized national standing and McCaw would
designate an investment banking firm of recognized national
standing, in each case to determine the private market value per
LIN Common Share. Pursuant to that provision, the LIN
Independent Directors designated Bear Stearns and Lehman Brothers
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and McCaw designated Morgan Stanley. As a result of the
disparity in the respective views of the private market value per
LIN Common Share by Bear Stearns and Lehman Brothers and by
Morgan Stanley, in accordance with the terms of the PMVG,
Wasserstein Perella was mutually designated to determine the
private market value per LIN Common Share, as defined in the
PMVG.
Wasserstein Perella arrived at a final determination that
the private market value per LIN Common Share, as defined under
the PMVG, is $127.50. Under the formula set forth in the PMVG,
$127.50 per LIN Common Share is the Private Market Price, because
this amount is more than one-third and less than two-thirds of
the way between the $105 per LIN Common Share and $155 per LIN
Common Share determined by Morgan Stanley and Bear Stearns and
Lehman Brothers, respectively, as the private market value per
LIN Common Share. If Wasserstein Perella's determination were
not in this middle range, the Private Market Price would have
been the average of Wasserstein Perella's determination and the
closer of the other two appraisals, but not more than the higher
appraisal ($155) nor less than the lower appraisal ($105).
Once the Private Market Price was determined pursuant to the
procedures provided for in the PMVG, McCaw had 45 days to decide
whether it desired to proceed with an acquisition of all the LIN
Public Shares at that price. Within such 45 days, McCaw
determined to proceed with the merger contemplated by the
Original Merger Agreement as set forth above and to pay the
Private Market Price in cash, and the Original Merger Agreement
was presented to and approved by the LIN Board by a vote of six
to three, with two directors abstaining. The three LIN
Independent Directors each voted no on the proposal to approve
the Original Merger Agreement presented to the LIN Board, and Tom
A. Alberg and Harold S. Eastman abstained. Subsequently, McCaw
agreed to increase the consideration to be received by the LIN
public stockholders in the Merger in connection with the
settlement of the Stockholders Litigation and discussions with
the LIN Independent Directors. On June 22, 1995, McCaw entered
into the Memorandum of Understanding. The Merger Agreement (as
amended and restated) was then presented to and approved by the
LIN Board. See "SPECIAL FACTORS -- Background of the Merger."
Following such approval, McCaw entered into the Merger Agreement
and the Annual Meeting was called, as required by the PMVG. The
Merger may only be completed if it is approved by a Majority Vote
of the LIN Public Stockholders.
Except as set forth in the next paragraph, if despite
McCaw's good faith efforts the Merger has not been completed by
December 31, 1995 (or, if the Merger has been approved by a
Majority Vote of the LIN Public Stockholders and is being pursued
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in good faith by McCaw but has not been completed due to
regulatory delays or litigation by August 31, 1996), the PMVG
provides that McCaw will put LIN in its entirety up for sale
under the direction of the LIN Independent Directors in a manner
intended by the LIN Independent Directors to maximize value for
all LIN Common Shares. The sale will be conducted by the LIN
Independent Directors, whose fees shall be reimbursed by LIN, and
McCaw will not bid unless requested to do so by the LIN
Independent Directors. The sale procedures will be set by the
LIN Independent Directors and may include, if necessary in order
to maximize stockholder value, provision for the sale or other
disposition (including tax-free spin-offs, if possible) of
businesses prohibited by legal restrictions to be owned by any
particular buyer or class of buyers (e.g., the Regional Bell
Operating Companies). The LIN Independent Directors will select
from among the proposed transactions the one or more transactions
determined by them as being most likely to maximize value for all
LIN Common Shares and will cause a meeting of the holders of LIN
Common Shares to be held as soon as practicable to consider and
vote thereon. McCaw will fully cooperate in this process and, if
one or more of the transactions so selected by the LIN
Independent Directors are approved by a Majority Vote of the LIN
Public Stockholders, will cause all LIN Common Shares owned by it
or its affiliates to be voted in favor thereof. Any sale of LIN
would be subject to receipt of FCC and other necessary regulatory
approvals.
Survival of PMVG. If a transaction is presented for
approval at a meeting of holders of LIN Common Shares as
contemplated above and fails to receive the requisite Majority
Vote of the LIN Public Stockholders, McCaw will have no further
rights or obligations to purchase the remaining interest in LIN
or to put all of LIN up for sale, but the remainder of the PMVG
will continue to apply to the extent described therein.
Continuing Stockholder Protections. Except as described
above, neither McCaw nor any of its non-LIN affiliates may engage
in any material transaction (including, without limitation,
agreements, such as roaming agreements, which are standard in the
industry) with LIN or any of its subsidiaries (other than pro
rata as a stockholder of LIN) unless such transaction has been
approved by a majority of the LIN Independent Directors.
Except as described above, neither McCaw nor any of its non-LIN
affiliates may engage in a merger or consolidation with LIN,
or purchase all or substantially all of LIN's assets, unless the
transaction is approved not only by a majority of the LIN
Independent Directors but also by a Majority Vote of the LIN
Public Stockholders. In deciding whether to approve such a
transaction, the LIN Independent Directors will be instructed to
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consider as a fair price per LIN Common Share the private market
price per LIN Common Share (including control premium) that an
unrelated third party would pay if it were to acquire all
outstanding LIN Common Shares (including the LIN Common Shares
held by McCaw and its affiliates) in an arm's-length transaction,
assuming that LIN was being sold in a manner designed to attract
all possible participants (including the Regional Bell Operating
Companies) and to maximize stockholder value, including if
necessary through the sale or other disposition (including tax-free
spin-offs, if possible) of businesses prohibited by legal
restrictions to be owned by any particular buyer or class of
buyers (e.g., the Regional Bell Operating Companies). The LIN
Independent Directors will retain independent financial advisors
and counsel to advise them with respect to any such transaction,
whose reasonable costs, expenses and indemnities will be paid for
and provided by LIN.
The PMVG provided that no transaction would be undertaken,
and LIN would not take any action, whether or not approved by a
majority of the LIN Board, if the LIN Independent Directors
determine in their good faith judgment by unanimous vote that
such transaction or action would likely depress the value of LIN
on January 1, 1995. In addition, LIN will not acquire or dispose
of any business (other than acquisitions of additional cellular
interests in markets in which LIN has an interest), whether or
not approved by a majority of the LIN Board, if the LIN
Independent Directors determine in their good faith judgment by
unanimous vote that such acquisition or disposition is not in the
best interests of LIN.
Additional Share Purchases. Except as permitted above,
neither McCaw nor any of its non-LIN affiliates may purchase
additional LIN Common Shares if, after giving effect thereto,
they would beneficially own in the aggregate more than 75% of the
outstanding LIN Common Shares on a fully diluted basis.
Corporate Opportunities. McCaw will direct to LIN, and LIN
will have a priority right to pursue, all corporate opportunities
to acquire interests in U.S. cellular telephone systems other
than those in markets in which McCaw has an interest or
contiguous to markets in which McCaw has such an interest (in the
latter instance, however, only if such market is not a market in
which LIN has such an interest or contiguous to such a market).
For purposes of the foregoing, a party will not be deemed to have
an interest in a cellular telephone system solely by reason of
such party's ownership of less than a majority equity interest in
a public company having such an interest. The LIN Independent
Directors will be afforded an amount of time reasonably necessary
to consider any such transaction, consistent with any time
constraints imposed by the other party to such transaction, and
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if and for as long as a majority of the LIN Independent Directors
desire to pursue such transaction, McCaw will not separately
pursue that transaction.
Certain Transferees Bound. Except pursuant to a sale of LIN
as described above, neither McCaw nor any of its non-LIN
affiliates may sell more than 25% of the outstanding LIN Common
Shares on a fully diluted basis to a third party or group unless
that third party or group agrees in writing to be bound by the
provisions set forth in the PMVG to the same extent as McCaw is
so bound.
Amendments. The provisions of the PMVG may be amended in
any respect not materially adverse to the holders of the LIN
Public Shares, but only if the amendment is approved by a
majority of the LIN Independent Directors. Any such amendment
will promptly be disclosed in a filing with the Commission. The
determination of the LIN Independent Directors as to whether an
amendment is materially adverse to the holders of the LIN Public
Shares will be final and will bind all holders of the LIN Public
Shares. The provisions of the PMVG may also be amended in any
other respect if the amendment is approved by a Majority Vote of
the LIN Public Stockholders.
Television Spin-off. On June 7, 1994, the PMVG was amended
to provide that, notwithstanding the LIN Independent Directors'
ability to veto any transaction or other action if they should
determine in their good faith judgment, by unanimous vote, that
such transaction or action would likely depress the value of the
LIN Public Shares on January 1, 1995, a transaction (the
"Transaction") consisting of (a) the acquisition by LIN
Television, a former indirect wholly owned subsidiary of LIN, of
WTNH-TV from Cook Inlet Communications Corp. and (b) the tax-free
distribution pursuant to Section 355 of the Internal Revenue Code
of 1986, as amended (the "Code"), of the remaining shares of LIN
Television could be undertaken if the LIN Independent Directors
determined in their good faith judgment that (i) the Transaction
was fair, from a financial point of view, to the holders of the
LIN Public Shares, and (ii) the consideration to be paid in the
proposed acquisition of WTNH-TV was fair, from a financial point
of view, to the holders of the LIN Public Shares.
Termination. The PMVG will cease to be in effect if at any
time (i) McCaw, its affiliates and Group Members beneficially own
in the aggregate less than 25% of the outstanding LIN Common
Shares on a fully diluted basis and McCaw's designees no longer
constitute a majority of the LIN Board (provided that in such
event the PMVG will come back into effect if, at any time within
two years thereafter, (A) McCaw, its affiliates and Group Members
should beneficially own in the aggregate 25% or more (but less
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than 100%) of the outstanding LIN Common Shares on a fully
diluted basis or (B) McCaw's designees shall again constitute a
majority of the LIN Board) or (ii) McCaw, its affiliates and
Group Members beneficially own in the aggregate 100% of the
outstanding LIN Common Shares.
The foregoing description of the PMVG is qualified in its
entirety by reference to the full text of the PMVG, which is
attached hereto as Appendix D.
Litigation
A number of putative class action lawsuits involving the
Original Merger and the PMVG process have been filed in several
jurisdictions. In re LIN Broadcasting Corporation Shareholders
Litigation, Delaware Court of Chancery, New Castle County,
Consolidated C.A. No. 14039, is a consolidated action alleging
that AT&T, McCaw and Holdings have, by their conduct in
connection with the determination of the private market value of
the LIN Common Shares pursuant to the PMVG, breached the PMVG and
certain fiduciary duties. The relief sought includes an
injunction prohibiting AT&T, McCaw and Holdings from acquiring
LIN Common Shares owned by the class members, an order directing
AT&T, McCaw and Holdings to fulfill their contractual and
fiduciary obligations, rescission if a sale pursuant to the terms
of the PMVG to AT&T, McCaw or Holdings is consummated and
monetary damages. LIN was named as a defendant in this action
because plaintiffs are seeking injunctive relief and LIN may be
an indispensable party if a court determines that such relief is
appropriate. Plaintiffs have not alleged any claims against LIN
and do not seek damages against LIN. In Unger v. MMM Holdings,
Inc., et al., Delaware Court of Chancery, New Castle County, C.A.
No. 14123, the plaintiff alleges that AT&T, McCaw and Holdings
have breached and are continuing to breach fiduciary obligations,
contractual obligations and implied covenants of good faith and
fair dealing in connection with the determination of the private
market value of the LIN Common Shares pursuant to the PMVG. The
complaint seeks injunctive relief and damages. In Katz v. Robert
E. Allen, et al., New York State Supreme Court, New York County,
Index No. 95-104259, plaintiffs allege that AT&T and its
directors violated fiduciary duties by virtue of, among other
things, Morgan Stanley's determination of the private market
value per LIN Common Share under the PMVG. Plaintiff seeks,
among other things, injunctive relief and damages. In Luke v.
Wasserstein Perella & Co., AT&T Corp., McCaw Cellular
Communications, Inc., LIN Broadcasting Corporation, William G.
Herbster, Wilma H. Jordan and Richard W. Kislik, New York
Supreme Court, New York County, Index No. 95-105973, plaintiffs
allege: (i) that Wasserstein Perella was negligent and breached
its duty of care; (ii) that AT&T, McCaw and Holdings will be
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unjustly enriched by such negligence; and (iii) that the
individual defendants may breach their fiduciary duties as LIN
Independent Directors. In addition to seeking injunctive relief
against an acquisition of LIN Common Shares by AT&T, McCaw or
Holdings at the value derived by Wasserstein Perella, declaratory
relief and monetary damages against all defendants other than the
LIN Independent Directors and LIN, the plaintiffs have requested
an injunction prohibiting the LIN Independent Directors from
approving any sale of LIN that would result in the LIN public
stockholders receiving a price per LIN Common Share less than a
properly computed private market value per LIN Common Share, as
defined in the PMVG, and an order directing the LIN Independent
Directors to take all action necessary to determine the Private
Market Price and to maximize shareholder value. LIN was named as
a defendant in this action because plaintiff is seeking
injunctive relief and LIN may be an indispensable party if a
court determines that such relief is appropriate. Plaintiff has
not alleged any claims against LIN and does not seek damages
against LIN. In Frank v. Alberg, et al., New York Supreme Court,
New York County, Index No. 95-108949, plaintiff alleges that
McCaw and certain present and former LIN directors (not including
the LIN Independent Directors) violated fiduciary obligations to
LIN stockholders in connection with the acquisition of McCaw by
AT&T in that such defendants failed to protect the LIN
stockholders from an interpretation of the PMVG that would
exclude McCaw and AT&T from consideration as an "unrelated third
party" in the valuation process. The complaint further alleges
that such defendants are "exacerbating their initial breach of
fiduciary duties" by advancing an interpretation of the PMVG that
excludes AT&T from the term "unrelated third party," which
interpretation plaintiff contends is incorrect. The complaint
seeks monetary damages and rescission. In all of these cases,
none of the defendants have yet filed an answer or otherwise
responded to the complaints. All of these cases have been
brought as class actions, but no action has yet been taken with
respect to the consideration of certifying a class.
Counsel for the plaintiffs in the foregoing actions and
counsel for AT&T, McCaw and Holdings have agreed in principle to
a settlement of these actions. The Memorandum of Understanding
with respect to the settlement provides for an increase in the
consideration to be offered to the LIN public stockholders from
$127.50 to $129.50 per LIN Common Share in cash plus the
Additional Amount, if any, plus the Accretion Amount, if any.
The Memorandum of Understanding further provides that the
settlement is conditioned on, among other things, (i) approval of
the terms of the settlement by the LIN Independent Directors,
(ii) the assent of the LIN Independent Directors to the scheduled
conversion of certain cellular systems of LIN and its
Subsidiaries to provide equal access for long-distance carriers
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and the use by LIN and its Subsidiaries of the AT&T service mark
in the marketing of certain services pending the Merger, (iii)
receipt by the LIN Board of an opinion from a mutually acceptable
investing banking firm (Wasserstein Perella having been agreed to
by the parties as such a firm) as to the fairness of the Merger
Consideration contemplated by the settlement, (iv) drafting and
execution of an appropriate Stipulation of Settlement and other
necessary documentation, (v) completion by plaintiffs of
appropriate confirmatory discovery in the Stockholders
Litigation, (vi) approval of the settlement by a final and
nonappealable order of the Delaware Chancery Court and dismissal
of all the shareholder actions pending in the New York Supreme
Court, with prejudice, by final nonappealable order, and (vii)
consummation of the Merger. The conditions set forth in (i),
(ii) and (iii) above have been satisfied (in the case of the
condition set forth in (iii), by virtue of the opinion of
Wasserstein Perella described under "SPECIAL FACTORS -- Fairness
Opinion of Wasserstein Perella").
Another action, Newman v. McCaw Cellular Communications and
AT&T Corp., United States District Court for the Southern
District of New York, C.A. No. 95 Civ. 1583, was brought alleging
that defendants failed to disclose that the private market value
per LIN Common Share would be determined in violation of the
method set forth in the PMVG and that this conduct, together with
public statements and other actions taken by the defendants,
constituted a violation of federal securities law. This action
was voluntarily dismissed without prejudice on June 22, 1995
pursuant to the filing of plaintiff's Notice of Voluntary
Dismissal dated June 21, 1995, in which plaintiff stated that
based on facts learned from defendant's counsel subsequent to the
commencement of the action, plaintiff no longer believed it could
prevail on its claims.
The entry of a final and nonappealable order of the Delaware
Chancery Court approving the settlement is a condition to McCaw's
obligation to consummate the Merger. See "THE MERGER --
Conditions; Waivers -- Condition to the Obligations of McCaw,
Holdings and Merger Sub." Unless the Merger is not approved by a
Majority Vote of the LIN Public Stockholders at the Annual
Meeting, in which event McCaw's obligation either to acquire the
LIN Public Shares or to put all of LIN up for sale will terminate
and the PMVG will remain in effect in accordance with its terms,
if the Merger is not completed by December 31, 1995 (or by August
31, 1996, if the Merger has been approved by the requisite vote
of the LIN stockholders by December 31, 1995 and is being pursued
in good faith by McCaw but has not been completed due to
regulatory delays or litigation), the PMVG provides that McCaw
will put LIN in its entirety up for sale under the direction of
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the LIN Independent Directors in a manner intended by the LIN
Independent Directors to maximize value for all LIN Common
Shares. See "SPECIAL FACTORS -- Terms of the PMVG."
THE MERGER
The description of the Merger Agreement set forth below does
not purport to be complete and is qualified in its entirety by
reference to the Merger Agreement, a copy of which is attached as
Appendix A to this Proxy Statement and incorporated by reference
herein.
Terms of the Merger
The Merger. Subject to the terms and conditions of the
Merger Agreement, Merger Sub will merge with and into LIN at the
Effective Time. The separate corporate existence of Merger Sub
will then cease, and LIN will be the surviving corporation in the
Merger (the "Surviving Corporation").
Certificate of Incorporation and By-Laws. The Merger
Agreement provides that the Certificate of Incorporation of
Merger Sub as in effect immediately prior to the Effective Time
will become the Certificate of Incorporation of the Surviving
Corporation. The By-Laws of Merger Sub in effect at the
Effective Time will become the By-Laws of the Surviving
Corporation.
Directors and Officers. The directors of Merger Sub at the
Effective Time will become the directors of the Surviving
Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation
or removal. The officers of LIN at the Effective Time will
become the officers of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal. See "SPECIAL
FACTORS -- Certain Effects of the Merger; Operations of LIN After
the Merger."
Conversion of LIN Common Shares in the Merger. At the
Effective Time, (a) each issued and outstanding LIN Common Share
(other than LIN Common Shares owned by McCaw or any of its wholly
owned subsidiaries and LIN Common Shares held in the treasury of
LIN or by any wholly owned subsidiary of LIN, which LIN Common
Shares will be automatically cancelled and retired and will cease
to exist with no payment being made with respect thereto, and
other than any Dissenting Shares) will be converted into the
right to receive the Merger Consideration, consisting of (i)
$129.50 in cash, plus (ii) the Additional Amount, if any, plus
(iii) the Accretion Amount, if any, and (b) each share of capital
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stock of Merger Sub issued and outstanding immediately prior to
the Effective Time will be converted into and become one validly
issued, fully paid and nonassessable share of Common Stock, par
value $0.01 per share, of LIN as the Surviving Corporation of the
Merger.
LIN Option Plans; Stock Purchase Plan. Pursuant to the
terms of the Amended and Restated 1969 Stock Option Plan of LIN
(the "Option Plan"), each option to purchase LIN Common Shares
outstanding at the Effective Time (each, an "Option") issued
pursuant to the Option Plan will be assumed by AT&T and will
constitute an option to acquire, on the same terms and conditions
as were applicable under such assumed Option, a number of AT&T
Common Shares equal to the product of the Assumption Ratio (as
defined below) and the number of LIN Common Shares remaining
subject to such Option as of the Effective Time, at a price per
AT&T Common Share equal to the aggregate exercise price for the
LIN Common Shares remaining subject to such Option divided by the
number of full AT&T Common Shares deemed to be purchasable
pursuant to such Option; provided, however, that (i) subject to
the provisions of clause (ii) below, the number of AT&T Common
Shares that may be purchased upon exercise of such Option will
not include any fractional shares and, upon the last such
exercise of such Option, a cash payment will be made for any
fractional share based upon the per share closing price of AT&T
Common Shares as reported in the New York Stock Exchange
Composite Transactions on the date of such exercise, and (ii) in
the case of any Option to which Section 421 of the Code, applies
by reason of its qualification under Section 422 or Section 423
of the Code ("qualified stock options"), the option price, the
number of shares purchasable pursuant to such Option and the
terms and conditions of exercise of such Option will be
determined in order to comply with Section 424 of the Code. For
purposes of the foregoing, the "Assumption Ratio" means the per
share closing price of the LIN Common Shares on the date of
approval of the Merger by the LIN stockholders, as reported on
the Nasdaq National Market System, divided by the per share
closing price of AT&T Common Shares on the date of approval of
the Merger by the LIN stockholders, as reported in the New York
Stock Exchange Composite Transactions (or if such date is not a
trading day, on the immediately preceding trading day). The
Assumption Ratio will be adjusted appropriately, if necessary, to
reflect any stock split, reverse stock split or similar change in
the AT&T Common Shares or the LIN Common Shares that is not
reflected in their respective per share closing prices on the
date of approval of the Merger; provided that in no event will
any such adjustment be made in respect of quarterly cash
dividends payable on the AT&T Common Shares or the LIN Common
Shares.
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In addition, LIN will take such action as may be necessary
so that, from and after the Effective Time, no employee of LIN
will be eligible to purchase LIN Common Shares pursuant to the
LIN Broadcasting Corporation Employee Stock Purchase Plan (the
"Stock Purchase Plan"). In lieu thereof, LIN employees who meet
the eligibility requirements thereof will be eligible to purchase
AT&T Common Shares pursuant to the McCaw Cellular Communications,
Inc. Employee Stock Purchase Plan.
Effective Time of the Merger
Promptly following satisfaction or waiver (where
permissible) of the conditions to the Merger, the Merger will be
consummated and become effective on the date and at the time at
which the certificate of merger to be filed pursuant to the DGCL
is accepted for filing by the Secretary of the State of Delaware
or such later date and time as may be specified, with the
approval of LIN and McCaw, in such certificate of merger. See
"THE MERGER -- Conditions; Waivers."
Payment for Shares
Payment for Shares. From and after the Effective Time, a
bank or trust company to be designated by McCaw will act as
paying agent (the "Paying Agent") in effecting the payment of the
Merger Consideration for certificates formerly representing LIN
Common Shares and entitled to payment of the Merger Consideration
pursuant to the Merger Agreement (the "Certificates"). At the
Effective Time, and from time to time thereafter, McCaw or Merger
Sub will deposit, or cause to be deposited, in trust with the
Paying Agent for the benefit of the holders of LIN Common Shares
such amounts as may be necessary to permit the Paying Agent to
make the payments to which holders of Certificates are entitled.
Promptly after the Effective Time, but in no event later than two
business days after the date of the Effective Time, the Paying
Agent will mail to each record holder of Certificates a form of
letter of transmittal which will specify that delivery will be
effected, and risk of loss and title to the Certificates will
pass, only upon proper delivery of the Certificates to the Paying
Agent and instructions for use in surrendering such Certificates
and receiving the Merger Consideration therefor. Upon the
surrender of each such Certificate, together with such letter of
transmittal duly executed and any other required documents, the
Paying Agent will pay the holder of such Certificate, in
consideration therefor, the Merger Consideration multiplied by
the number of LIN Common Shares formerly represented by such
Certificate (and, if applicable, the Escrow Amount (as defined
herein)), and such Certificate will forthwith be cancelled.
Until so surrendered, each such Certificate (other than
Certificates representing Dissenting Shares and Certificates
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representing LIN Common Shares owned by McCaw or any of its
wholly owned subsidiaries and LIN Common Shares held in the
treasury of LIN or by any wholly owned subsidiary of LIN) will
represent solely the right to receive the aggregate Merger
Consideration relating thereto (and, if applicable, payment of
the Escrow Amount). No interest will be paid or accrued on the
Merger Consideration.
The Merger Consideration (and, if applicable, payment of the
Escrow Amount) will be net to each holder of Certificates in
cash, subject to reduction only for any applicable federal back-up
withholding or stock transfer taxes payable by such holder.
If payment of cash in respect of any Certificate is to be made to
a person other than the person in whose name such Certificate is
registered, it will be a condition to such payment that the
Certificate so surrendered will be properly endorsed or will be
otherwise in proper form for transfer and that the person
requesting such payment will have paid any transfer and other
taxes required by reason of such payment in a name other than
that of the registered holder of the Certificate surrendered or
will have established to the satisfaction of McCaw or the Paying
Agent that such tax either has been paid or is not payable.
After the Effective Time, there will be no transfers on the stock
transfer books of the Surviving Corporation of any LIN Common
Shares which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented
to LIN or the Paying Agent, they will be surrendered and
cancelled in return for the payment of the aggregate Merger
Consideration relating thereto (and, if applicable, payment of
the Escrow Amount), subject to applicable law and the provisions
of the Merger Agreement in the case of Dissenting Shares. See
"RIGHTS OF DISSENTING STOCKHOLDERS."
Payment for Shares If Additional Amount Is Not Determined As
of the Effective Time. In the event the Effective Time occurs
prior to the determination of the Additional Amount, the Merger
Consideration will be determined and paid in accordance with the
terms of the Merger Agreement, and all references in the Merger
Agreement to the Merger Consideration will be construed, as if
the Additional Amount were equal to zero. In such case, McCaw or
Merger Sub will deposit or cause to be deposited with the Paying
Agent, in an interest bearing account (the "Escrow Account"), an
amount equal to (i) $0.25 plus the Accretion Amount, if any,
applicable to $0.25, multiplied by (ii) the number of LIN Common
Shares issued and outstanding immediately prior to the Effective
Time, other than LIN Common Shares owned by McCaw or any of its
wholly owned subsidiaries and LIN Common Shares held in the
treasury of LIN or by any wholly owned subsidiary of LIN. Such
amount and any interest thereon will be retained in the Escrow
Account pending the payments described below. If the total fee
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awarded by a final and nonappealable order of the Delaware Court
of Chancery to the plaintiff's attorneys in connection with the
settlement of the Stockholders Litigation is greater than $4
million, the excess of such fee over $4 million will be paid to
the plaintiffs' attorneys from the Escrow Account (together with
any interest accrued on such excess amount in the Escrow
Account). If any amount remains in the Escrow Account following
such payment, an additional payment will be made to former
holders of Certificates who have previously received payment of
the Merger Consideration, in an amount per LIN Common Share
formerly represented by such Certificates equal to (i) the
aggregate amount remaining in the Escrow Account immediately
following such payment to the plaintiffs' attorneys divided by
(ii) the total number of LIN Common Shares issued and outstanding
immediately prior to the Effective Time, other than LIN Common
Shares owned by McCaw or any of its wholly owned subsidiaries and
LIN Common Shares held in the treasury of LIN or by any wholly
owned subsidiary of LIN (the "Escrow Amount"). Holders of
Certificates who have not received payment of the Merger
Consideration as of the time of determination of the Escrow
Amount, if any, will be entitled to receive, at such time as they
receive payment of the Merger Consideration in accordance with
the relevant provisions of the Merger Agreement, an additional
payment, if any, equal to the Escrow Amount, without interest
thereon, with respect to each LIN Common Share in respect of
which such holder receives payment of the Merger Consideration.
Representations and Warranties
The Merger Agreement contains various representations and
warranties of the parties thereto. The Merger Agreement includes
representations and warranties by LIN as to (i) the corporate
organization, standing and power of LIN and its significant
subsidiaries, (ii) approvals by the LIN Board, (iii) its
capitalization, (iv) brokers and finders employed by LIN, (v) the
accuracy of information to be supplied by LIN for inclusion in
this Proxy Statement and in the Schedule 13E-3, (vi) the
inapplicability of certain provisions of the DGCL to the Merger
and (vii) the fact that the Merger Agreement and the transactions
contemplated thereby do not constitute a "Triggering Event," as
such term is defined under the Rights Agreement. The preferred
share purchase rights issued pursuant to the Rights Agreement are
referred to herein as the "LIN Rights."
The Merger Agreement also includes representations and
warranties by McCaw, Holdings and Merger Sub as to (i) the
corporate organization, standing and power of each of McCaw,
Holdings and Merger Sub, (ii) approval by the respective Boards
of Directors of McCaw, Holdings and Merger Sub, (iii) brokers and
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finders employed by AT&T, McCaw, Holdings and Merger Sub, (iv)
the accuracy of information to be supplied by McCaw, Holdings and
Merger Sub for inclusion in this Proxy Statement and in the
Schedule 13E-3, (v) certain activities and obligations of Merger
Sub, and (vi) the solvency of LIN as the Surviving Corporation of
the Merger.
Certain Covenants of McCaw
Under the Merger Agreement, McCaw has agreed to cause the
LIN Common Shares beneficially owned by it, its affiliates or any
of its subsidiaries to be voted in favor of the Merger Agreement
and the Merger if the Merger Agreement and the Merger are
approved by a Majority Vote of the LIN Public Stockholders.
McCaw has also agreed to guarantee the obligations of Holdings,
Merger Sub and the Surviving Corporation under the Merger
Agreement.
Business of LIN Pending the Merger
Except as contemplated by the Merger Agreement, during the
period from the date of the Merger Agreement to the Effective
Time, LIN will, and will cause each of its Subsidiaries to,
conduct its operations according to, and not enter into any
transaction other than in accordance with, its ordinary course of
business consistent with past practice. As used herein,
"Subsidiary" means, as to a corporation, any entity of any kind
of which at least 50% of the equity or voting interest is owned,
directly or indirectly, by such corporation. Notwithstanding the
foregoing, pending the Effective Time, LIN and its Subsidiaries
may convert their cellular systems (to the extent they are not
already so converted) to provide equal access for long-distance
carriers in connection with long-distance communications using
LIN's or its Subsidiaries' services and, following such
conversion, may market their services under the AT&T service
mark, in each case on such schedule as may be determined by
McCaw. AT&T has agreed to make the use of the AT&T service mark
available to LIN and its Subsidiaries, for purposes of so
marketing their services pursuant to the immediately preceding
sentence, on a non-exclusive, royalty-free basis. Following the
commencement of the marketing of any service of LIN or any of its
Subsidiaries under the AT&T service mark pursuant to the
immediately preceding two sentences, AT&T has agreed that it will
continue to make the use of the AT&T service mark available on
such basis with respect to such service, and such service will
continue to be so marketed under the AT&T service mark, for so
long as AT&T directly or indirectly owns at least a majority of
the voting power of LIN's capital stock entitled to vote
generally in the election of directors, unless a majority of the
LIN Independent Directors otherwise consents.
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Reasonable Efforts
Under the Merger Agreement, LIN, McCaw, Holdings and Merger
Sub agree to: (i) use all reasonable efforts to promptly take
all actions and do all things necessary to satisfy the conditions
to the Merger and to consummate and make effective the
transactions contemplated by the Merger Agreement as soon as
practicable and (ii) not take any action which might reasonably
be expected to impair the ability of the parties to consummate
the Merger at the earliest possible time.
Conditions; Waivers
Conditions to Each Party's Obligations to Effect the Merger.
The respective obligations of each party to effect the Merger are
subject to the satisfaction of the following conditions, any or
all of which may be waived (other than the condition set forth in
clause (a)(ii) below): (a) the Merger Agreement and the Merger
will have been duly approved by (i) the requisite vote of the
holders of LIN Common Shares in accordance with applicable law
and the Certificate of Incorporation and By-Laws of LIN and (ii)
the affirmative vote of the holders of at least a majority of the
LIN Public Shares present and entitled to vote at the Annual
Meeting at which a majority of the LIN Public Shares is present
and (b) there will not be in effect any judgment, writ, order,
injunction or decree of any court or governmental body of
competent jurisdiction, restraining, enjoining or otherwise
preventing consummation of the transactions contemplated by the
Merger Agreement or permitting such consummation only subject to
any condition or restriction unacceptable to McCaw in its
reasonable judgment; provided, however, that any party invoking
this condition will use reasonable efforts to have any such order
or injunction vacated or any such other restriction eliminated.
Conditions to the Obligations of McCaw, Holdings and Merger
Sub. The respective obligations of McCaw, Holdings and Merger
Sub to effect the Merger are subject to the satisfaction or
waiver of the following additional conditions: (a) each of the
representations and warranties of LIN contained in the Merger
Agreement or otherwise expressly required by the Merger Agreement
to be made after the execution thereof (i) will have been true in
all material respects when made and (ii) except for certain
specific exceptions, will be true in all material respects at the
time of the closing of the Merger (the "Closing") with the same
effect as though such representations and warranties had been
made at such time, (b) at or prior to the Closing, LIN will have
performed or complied in all material respects with all
agreements and conditions required of it pursuant to the Merger
Agreement, (c) all authorizations, if any, required in connection
with the execution and delivery of the Merger Agreement and the
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consummation of the transactions contemplated thereby will have
been made or obtained, in each case without limitation or
restriction unacceptable to McCaw in its reasonable judgment,
except where the failure to have obtained such authorizations
would not be reasonably expected (so far as can be foreseen at
the time) to have a material adverse effect on the business,
properties, operations, condition (financial or other) or
prospects of (i) LIN and its Subsidiaries taken as a whole or
(ii) McCaw and its Subsidiaries taken as a whole, (d) a
stipulation of settlement, as contemplated by the Memorandum of
Understanding, will have been entered into providing for the
settlement of the Stockholders Litigation on the terms set forth
in the Memorandum of Understanding and such stipulation will have
been approved by a final and nonappealable order of the Delaware
Court of Chancery (provided that such condition will be deemed
satisfied if the only aspect of the settlement not approved by
such a final and nonappealable order is the award of the
plaintiffs' attorneys' fee), and (e) all required authorizations,
consents or approvals in connection with the Merger of any third
party (other than a governmental body), if any, the failure to
obtain which would have a material adverse effect on (i) LIN and
its Subsidiaries taken as a whole or (ii) McCaw and its
Subsidiaries taken as a whole, will have been obtained.
Conditions to the Obligations of LIN. The obligations of
LIN to effect the Merger are subject to the satisfaction or
waiver of the following additional conditions: (a) each of the
representations and warranties of McCaw, Holdings and Merger Sub
contained in the Merger Agreement or otherwise expressly required
by the Merger Agreement to be made after the execution thereof
(i) will have been true in all material respects when made and
(ii) except for certain specific exceptions, will be true in all
material respects at the time of the Closing with the same effect
as though such representations and warranties had been made at
such time and (b) at or prior to the Closing, each of McCaw,
Holdings and Merger Sub will have performed or complied in all
material respects with all agreements and conditions required of
it pursuant to the Merger Agreement.
Termination, Amendment and Waiver
The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, before or
after the approval by holders of LIN Common Shares, either by the
mutual written consent of McCaw and LIN, or by mutual action of
their respective Boards of Directors.
The Merger Agreement may also be terminated (upon notice
from the terminating party to the other parties) and the Merger
may be abandoned (a) by action of the Board of Directors of McCaw
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if the Merger has not been consummated by November 30, 1995, (b)
by action of the Board of Directors of LIN if the Merger has not
been consummated by December 31, 1995 or, if the Merger Agreement
and the Merger have been duly approved by December 31, 1995 by
(i) the requisite holders of LIN Common Shares in accordance with
applicable law and the Certificate of Incorporation and By-Laws
of LIN and (ii) the affirmative vote of the holders of at least a
majority of the LIN Public Shares present and entitled to vote at
the Annual Meeting at which a majority of the LIN Public Shares
is present, and the Merger is being pursued in good faith by
McCaw but has not been completed due to regulatory delays or
litigation, August 31, 1996, or (c) by action of the Board of
Directors of either McCaw or LIN if (i) any court of competent
jurisdiction in the United States or governmental body in the
United States has issued an order, decree or ruling or taken any
other action permanently restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other
action has become final and nonappealable, or (ii) at the Annual
Meeting, the Merger Agreement and the Merger do not receive the
affirmative vote of the holders of at least a majority of the LIN
Public Shares present and entitled to vote at the Annual Meeting
at which a majority of the LIN Public Shares is present.
Subject to the applicable provisions of the DGCL, at any
time prior to the Effective Time, the parties to the Merger
Agreement may modify, amend or supplement the Merger Agreement,
by written agreement executed and delivered by duly authorized
officers of the respective parties with respect to any of the
terms contained in the Merger Agreement; provided, however, that
after approval of the Merger by the stockholders of LIN, no such
amendment or modification will be made which reduces the form or
amount of consideration payable in the Merger or adversely
affects the rights of LIN's stockholders under the Merger
Agreement without the approval of such stockholders. The Merger
Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties.
At any time prior to the Effective Time, the parties may (a)
extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in the Merger
Agreement or in any document delivered pursuant to the Merger
Agreement or (c) to the extent permitted, waive compliance with
certain of the agreements or conditions contained in the Merger
Agreement. Any agreement on the part of a party to any such
extension or waiver will be valid only if set forth in an
instrument in writing signed on behalf of such party. The
failure of any party to the Merger Agreement to assert any of its
rights under the Merger Agreement or otherwise will not
constitute a waiver of such rights.
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A termination of the Merger Agreement, an amendment of the
Merger Agreement or an extension or waiver pursuant to the
provisions of the Merger Agreement by any of the parties will, in
order to be effective, require, in the case of McCaw, Holdings or
Merger Sub, approval by its Board of Directors or the duly
authorized designee of its Board of Directors and, in the case of
LIN, approval by its Board of Directors or the duly authorized
designee of its Board of Directors and approval by a majority of
the LIN Independent Directors.
In the event of termination of the Merger Agreement and
abandonment of the Merger pursuant to the Merger Agreement, no
party to the Merger Agreement (or any of its directors or
officers) will have any liability or further obligation to any
other party under the Merger Agreement, except that nothing
therein will relieve any party from liability for any breach of
the Merger Agreement and except that the provisions of the Merger
Agreement governing the use by LIN or its Subsidiaries of the
AT&T service mark in marketing its services will survive any
termination of the Merger Agreement and/or abandonment of the
Merger. Except as and to the extent provided in the PMVG, the
termination of the Merger Agreement and abandonment of the Merger
pursuant to the Merger Agreement will not affect in any way the
PMVG, which will continue to be in full force and effect to the
extent of and in accordance with its terms.
Regulatory Approvals
No regulatory approvals are anticipated to be required for
consummation of the Merger. In September, 1994, AT&T received
the last of the regulatory approvals required in connection with
its acquisition of control of McCaw. Accordingly, no further
regulatory approvals are expected to be required in connection
with the acquisition of the remaining 48% interest in LIN not
already beneficially owned by AT&T and McCaw, as contemplated by
the Merger Agreement and the Merger.
Expenses and Fees
Except in connection with certain liabilities which may
arise in respect of New York State and/or New York City Real
Property Gains and Transfer Taxes, which will be borne by LIN,
each party will pay its own expenses in connection with the
Merger. Expenses incurred in connection with printing and
mailing this Proxy Statement will be shared equally by McCaw,
Holdings and Merger Sub, on the one hand, and LIN on the other.
LIN will bear the cost of soliciting proxies from its
stockholders.
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FINANCING OF THE MERGER
The total amount of funds necessary for payment of the
Merger Consideration and expenses related to the Merger is
approximately $3.3 billion. Those funds are expected to be
obtained by McCaw and Holdings from the proceeds of capital
contributions and/or loans from AT&T. However, AT&T has not
guaranteed the payment of the Merger Consideration and has no
legal obligation to provide such funds. McCaw's obligation to
consummate the Merger is not conditioned on financing.
Accordingly, if all conditions to McCaw's obligation to
consummate the Merger were satisfied but such funds were not
available, McCaw would be in breach of the Merger Agreement.
AT&T meets its cash needs through cash from operations and a
combination of equity and long- and short-term debt financing.
AT&T expects to obtain its current cash requirements (including
capital contributions to fund payment of the Merger Consideration
and related expenses) from cash on hand and commercial paper
funding of accounts receivable and with permanent financing as
advantageous opportunities arise.
Estimated costs and fees in connection with the Merger,
assuming completion of the Merger, are as follows:
Legal Fees. . . . . . . . . . . . . . . . . . .
Investment Banking Fees . . . . . . . . . . . .
Accounting Fees . . . . . . . . . . . . . . . .
SEC Filing Fees . . . . . . . . . . . . . . . .
Printing Costs. . . . . . . . . . . . . . . . .
Solicitation Fees . . . . . . . . . . . . . . .
Miscellaneous . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . .$
Subject to certain exceptions, each party will pay its own
expenses in connection with the Merger. See "THE MERGER --
Expenses and Fees." It is expected that, of the costs and fees
set forth above, approximately $15.5 million will be payable by
LIN.
RIGHTS OF DISSENTING STOCKHOLDERS
Under Section 262 of the DGCL, any holder of LIN Common
Shares who neither votes in favor of the Merger nor consents
thereto in writing, who delivers a demand for appraisal prior to
the vote of the LIN stockholders on the Merger, and who has
otherwise complied with the applicable requirements of Section
262 of the DGCL, has the right to an appraisal of, and to receive
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cash payment for, the "fair value" of such shares at the
Effective Time (excluding any element of value arising from the
accomplishment or expectation of the Merger). In order to
exercise such right, a stockholder must comply with each of the
procedural requirements of Section 262 of the DGCL, a summary of
and the text of which is set forth in Appendix C hereto. Holders
of LIN Common Shares should read Section 262 of the DGCL in its
entirety. The "fair value" of each LIN Common Share would be
determined in judicial proceedings, the results of which cannot
be predicted. The failure to take any of the steps required
under Section 262 of the DGCL in a timely manner will result in a
loss of appraisal rights.
The Merger Agreement provides that, notwithstanding anything
in the Merger Agreement to the contrary, LIN Common Shares
outstanding immediately prior to the Effective Time and held by a
holder (if any) who has not voted in favor of the Merger or
consented thereto in writing, and who has demanded appraisal for
such LIN Common Shares in accordance with Section 262 of the
DGCL, will not be converted into the right to receive the Merger
Consideration, as provided in the applicable provisions of the
Merger Agreement, unless and until the holder thereof fails to
perfect or withdraws or otherwise loses his right to appraisal
and payment under the DGCL. If, after the Effective Time, any
such holder fails to perfect or withdraws or loses his right to
appraisal, such Dissenting Shares will thereupon be treated as if
they had been converted as of the Effective Time into the right
to receive the Merger Consideration to which such holder is
entitled, without interest thereon. LIN will give McCaw prompt
notice of any demands received by LIN for appraisal of LIN Common
Shares and McCaw will have the right to participate in all
negotiations and proceedings with respect to such demands. LIN
will not, except with the prior written consent of McCaw, make
any payment with respect to, or settle or offer to settle, any
such demands. See Appendix C hereto.
ELECTION OF DIRECTORS
Nominees for Director
The LIN Board proposes the election of the ten nominees
listed below to serve until the next Annual Meeting or until
their successors are elected and qualified, or until the earlier
consummation of the Merger. Unless contrary instructions are
received, it is intended that the LIN Common Shares represented
by proxies solicited on behalf of the LIN Board will be voted in
favor of the election as directors of all such nominees. If, for
any reason, any such nominee is not available for election (which
is not currently known or expected), the persons named in the
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proxy card have advised that they will vote for such substitute
nominees as the LIN Board may propose. The names and certain
information relating to the ten nominees are set forth below.
Messrs. Herbster and Kislik and Ms. Jordan are nominated as LIN
Independent Directors and the remaining seven nominees have been
designated by McCaw.
Nominee Age Position With LIN
Tom A. Alberg 55 President, Chief Operating
Officer and Director
Dennis J. Carey 48 Director
Lewis M. Chakrin 47 Chairman of the Board
W. Preston Granbery 51 Director
William G. Herbster 62 Director
Rolla G. Huff 38 Director
Wilma H. Jordan 46 Director
Richard W. Kislik 67 Director
Wayne M. Perry 45 Vice Chairman of the Board
Florence L. Walsh 34 Director
Tom A. Alberg became a director of LIN in 1991. Mr. Alberg
has been the President and Chief Operating Officer of LIN since
April 1991 and has been Executive Vice President of McCaw since
July 1990. Prior to July 1990, Mr. Alberg was the Chairman of
the Executive Committee and a partner in the Perkins Coie law
firm, 1201 Third Ave., 40th Floor, Seattle, WA 98101-3099. He
has been a director of Digital Systems International, Inc., 6464
185th Avenue NE, Redmond, WA 98052, a manufacturer of call
management software systems, since January 1994. He has been a
director of Active Voice Corporation, 2901 Third Ave., Seattle,
WA 98121, a manufacturer of PC-based voice processing systems,
since April 1993. He has been a director of LIN Television
since March 1993.
Dennis J. Carey became a director of LIN in 1994. Mr. Carey
has been the Vice President, Finance and Audit of AT&T since
February 1994. Prior to that he served as Vice President,
Business Development and International of General Electric
Corporation, Appliance Park, Louisville, KY 40223, a manufacturer
of appliances, from February 1992 to February 1994 and as Senior
Vice President and General Manager Corporate Finance Group of
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General Electric Capital Corporation, a financing company located
in Stamford, Connecticut, from August 1987 to February 1992. He
has been a director of LIN Television since November 1994.
Lewis M. Chakrin became a director of LIN in 1994. Mr.
Chakrin has been Vice President, Business Development --
Communications Services Group of AT&T since March 1994. Prior to
that he served with AT&T as Vice President, Personal
Communications Services from July 1991 to March 1994, Director,
Strategic Planning -- International Communication Services from
May 1990 to July 1991, and Sales Vice President, Business Sales
Division from September 1987 to May 1990. He has been a director
of LIN Television since November 1994.
W. Preston Granbery became a director of LIN in 1994. Mr.
Granbery has been a General Attorney with the Corporate and
Securities Group of AT&T since 1988.
William G. Herbster became a director of LIN in 1976. Mr.
Herbster is a financial consultant. His business address is 2700
Calvert Street, N.W., #716, Washington, DC 20008. He has been a
director of LIN Television since November, 1994. He is Senior
Advisor to the Investment Fund for Foundations.
Rolla G. Huff became a director of LIN in 1994. Mr. Huff
has been the Chief Financial Officer of McCaw since April 1995.
Prior to that he served as Financial Vice President and Chief
Financial Officer, Mergers and Acquisitions of AT&T from October
1993, to April 1995 and with NCR Corp., 1700 South Patterson
Blvd., Dayton, OH 45479-0001, as Controller, US from January 1992
to September 1993, Director, Service Marketing Europe from April
1991 to December 1991 and Director, Operations from August 1989
to March 1991.
Wilma H. Jordan became a director of LIN in 1987. Ms.
Jordan is Co-Chairman of The Jordan, Edmiston Group, Inc., 885
Third Ave., 25th Floor, New York, NY 10022, an investment banking
and management consulting firm for publishing companies. She has
been a director of Ringier America Printing Co., One Pierce
Place, Itasca, IL 60143, since 1989. She has been a director of
Guideposts Associates, Inc., 39 Seminary Hill Road, Carmel, New
York 10512, a publishing company, since 1990. She has been a
director of Clayton Homes, Inc., P.O. Box 15169, Alcoa Highway,
Knoxville, TN 37901, a retailer of manufactured homes, since
August, 1994. She has been a director of LIN Television since
November 1994.
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Richard W. Kislik became a director of LIN in 1969. Mr.
Kislik has been a publishing consultant since 1985. His business
address is M. Evans and Company, Inc., 216 East 49th St., New
York, NY 10017. He has been a director of LIN Television since
November 1994.
Wayne M. Perry became a director of LIN in 1990. Mr. Perry
has been Vice Chairman of the Board of LIN since March 1990 and
Vice Chairman of the Board of McCaw since June 1989 and Secretary
of McCaw since October 1994. From December 1985 to June 1989,
Mr. Perry served as President of McCaw.
Florence L. Walsh became a director of LIN in 1995. Ms.
Walsh has been the Assistant Treasurer -- Corporate Finance of
AT&T since November 1994. Prior to that she served as the
Director, Domestic Finance of General Motors Corporation from
January 1989 to October 1994.
Harold S. Eastman decided not to stand for reelection and
will no longer serve on the Board of Directors effective as of
the date of the Annual Meeting, at which time the size of the LIN
Board will be reduced to ten. Mr. Eastman became a director of
LIN in 1990. He was Vice Chairman of the Board of LIN from March
1990 to April 1992. Mr. Eastman has been the President of
Peregrine Capital Co., 101 South Capitol Blvd., Boise, ID 83702,
a private investment company, since December, 1991. He served as
President of McCaw from June 1989 to December 1991 and thereafter
as Vice Chairman of the Board of McCaw until April 1992.
Arrangements for the Election of Directors
In accordance with the PMVG, Ms. Jordan and Messrs. Herbster
and Kislik have been elected and serve as the LIN Independent
Directors. See "SPECIAL FACTORS -- Terms of the PMVG" and "--
Background of the Merger." Each of the remaining nominees is an
officer or employee of AT&T or McCaw.
LIN Board Committees and Meetings
During 1994, the LIN Board held eight meetings. No
director attended fewer than 75% of the aggregate of the number
of meetings of the LIN Board held during the period for which he
or she was a director and the number of meetings of committees of
the LIN Board on which the director served during the period that
he or she served.
The LIN Board has an audit committee (the "Audit
Committee"), presently consisting of Ms. Jordan and Mr. Kislik,
which held two meetings in 1994. The functions of the Audit
Committee include evaluating the services of LIN's independent
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auditors and reviewing with management and the independent
auditors LIN's system of internal controls. The LIN Board also
has a compensation committee (the "Compensation Committee"),
presently consisting of Ms. Jordan and Messrs. Herbster and
Kislik, which held one meeting and acted by written consent three
times in 1994. The functions of the Compensation Committee are
to determine compensation polices and act on remuneration
arrangements with respect to all employees, including executive
officers. The LIN Board does not have a nominating committee.
Director Compensation
Directors who are not also officers of LIN or its affiliates
are compensated at the rate of $30,000 per annum. In addition,
directors who are not also officers of LIN or its affiliates
receive $1,500 for each LIN Board meeting attended and $1,500 for
each committee meeting attended, as long as that meeting is not
held in conjunction with a board meeting. Directors are also
reimbursed for any travel expenses incurred in connection with
such meetings.
In addition, each LIN Independent Director receives $1,500
for each meeting attended by him or her exclusive of full board
or committee meetings. Ms. Jordan and Messrs. Herbster and
Kislik each receive $250 per hour, or $2,000 per eight-hour day,
for additional services performed in their capacities as LIN
Independent Directors, including time spent attending and
preparing for meetings of the LIN Independent Directors and
otherwise devoting attention to those matters requiring
consideration by the LIN Independent Directors. Ms. Jordan and
Messrs. Herbster and Kislik received $38,688, $37,790 and
$57,625, respectively, for such services rendered in 1994, which
consisted primarily of time spent reviewing materials and
attending meetings of the LIN Independent Directors and meetings
with their financial and legal advisors concerning the Television
Spin-off and the PMVG process.
All directors of LIN have the option of deferring their
compensation under LIN's Deferred Compensation Plan.
<PAGE>
<PAGE> 125
EXECUTIVE OFFICERS
The executive officers of LIN are:
Name Age Office
Steven W. Hooper 42 Chief Executive Officer
Tom A. Alberg 55 President, Chief Operating
Officer and Director
Wayne M. Perry 45 Vice Chairman of the Board
Donald Guthrie 40 Senior Vice President-Finance
The following information describes the executive officers
of LIN who are not also directors.
Steven W. Hooper has been Chief Executive Officer of LIN
since March 1995 and Chief Executive Officer of McCaw since
January 1995. From 1993 to January 1995, he was Executive Vice
President and Chief Financial Officer of McCaw. From 1988 until
1993, he was Senior Vice President-Cellular Operations of McCaw.
Prior to 1988, Mr. Hooper served with McCaw as Executive Vice
President and Chief Operating Officer of its Cable Division and
in various financial positions.
Donald Guthrie became Vice President-Finance of LIN in March
1990 and was promoted to Senior Vice President-Finance in June
1992. Since February 1986, Mr. Guthrie has been a Senior Vice
President and the Treasurer of McCaw.
The business address of the directors and executive officers
of LIN is LIN Broadcasting Corporation, 5295 Carillon Point,
Kirkland, Washington 98033, except for Messrs. Hooper and Perry,
whose business address is McCaw Cellular Communications, Inc.,
5400 Carillon Point, Kirkland, Washington 98033.
<PAGE>
<PAGE> 126
EXECUTIVE COMPENSATION
The three tables set forth below provide information with
respect to the annual and long-term compensation for services in
all capacities to LIN for fiscal years 1994, 1993 and 1992 and
the option grants, exercises and values in and at the end of
fiscal year 1994 of those persons who (i) served, at any time
during 1994, as LIN's Chief Executive Officer or (ii) were,
during 1994, the four other most highly compensated executive
officers of LIN (collectively, the "named executive officers").
<PAGE>
<PAGE> 127
<TABLE>
Summary Compensation Table
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
----------------------------------- -------------
All
Name and Other Securities Other
Principal Annual Underlying Compensation
Position (1) Year Salary($) Bonus($) Compensation($) Options (#) ($)(2)
- ------------ ---- --------- -------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Craig O. McCaw (3) 1994 $100,122 0 0 0 $2,469
Chairman of the 1993 100,000 0 0 0 2,308
Board and Chief 1992 100,200 0 0 0 2,225
Executive Officer
Tom A. Alberg (4) 1994 250,487 $250,000 0 50,000 15,977
President and Chief 1993 235,000 200,000 0 50,000 12,517
Operating Officer 1992 225,000 150,200 0 50,000 10,912
James L. Barksdale(5) 1994 525,487 467,000 0 0 14,967
Chairman of the 1993 525,000 400,000 0 0 14,506
Board and Chief 1992 500,200 300,000 $70,293(6) 0 4,167
Executive Officer
Gary R. Chapman (7) 1994 475,000 150,000 0 0 15,481(8)
President-LIN 1993 404,600 150,000 0 20,000 163,014(8)
Television Group 1992 385,000 125,000 0 20,000 160,839(8)
Donald Guthrie (9) 1994 200,487 100,000 0 35,000 3,813
Senior Vice 1993 190,000 75,200 0 35,000 2,919
President-Finance 1992 180,000 60,200 0 30,000 2,650
Wayne M. Perry (10) 1994 100,487 250,000 0 0 5,139
Vice Chairman 1993 100,000 0 0 0 4,975
of the Board 1992 100,000 0 0 0 4,885
- --------------------------------------
</TABLE>
<PAGE>
<PAGE> 128
(1) All amounts shown for Messrs. Alberg, Chapman and Guthrie
were paid by LIN, and all amounts shown for Messrs. McCaw,
Barksdale and Perry were paid by McCaw. Upon approval by
the LIN Independent Directors of the proposed intercompany
reimbursement program for 1994, each of LIN and McCaw will
reimburse the other for a portion of such executives'
compensation (other than Mr. Chapman, who rendered services
solely to LIN prior to the completion of the Television
Spin-off). See "CERTAIN INFORMATION REGARDING AT&T, McCAW,
HOLDINGS, MERGER SUB AND LIN -- Certain Transactions Among
LIN, AT&T and McCaw."
(2) Represents amounts paid for life and disability insurance
premiums unless otherwise indicated.
(3) Mr. McCaw resigned from his positions as Chairman of the
Board and an executive officer of LIN effective October 25,
1994. Mr. McCaw also received options to purchase 210,000
shares of McCaw's Class A Common Stock in 1993. All such
options that were outstanding at the time of the acquisition
of McCaw by AT&T (the "McCaw/AT&T Merger") were converted
into options to purchase AT&T Common Shares. Mr. McCaw also
received from McCaw additional compensation related solely
to his employment with and services rendered to McCaw.
(4) Mr. Alberg also received from McCaw additional compensation
related solely to his employment with and services rendered
to McCaw.
(5) Mr. Barksdale was elected Chairman of the Board and Chief
Executive Officer of LIN on November 2, 1994. Mr. Barksdale
resigned from all positions with LIN effective January 13,
1995. Mr. Barksdale also received options to purchase
200,000 and 340,000 shares of McCaw's Class A Common Stock
in 1993 and 1992, respectively. All such options that were
outstanding at the time of the McCaw/AT&T Merger were
converted into options to purchase AT&T Common Shares. Mr.
Barksdale also received from McCaw and AT&T additional
compensation related solely to his employment with and
services rendered to McCaw.
(6) Represents a tax-equalization payment.
(7) Mr. Chapman resigned as an executive officer of LIN
effective December 28, 1994 following the Television Spin-off.
Amounts reported are those paid to Mr. Chapman for
services rendered in 1994 for the entire year, although a
portion of such amounts was paid by LIN Television following
completion of the Television Spin-off. See "CERTAIN
INFORMATION REGARDING AT&T, McCAW, HOLDINGS, MERGER SUB AND
LIN -- Relationship With LIN Television."<PAGE>
<PAGE> 129
(8) Amount for 1994 represents life and disability insurance
premiums. Amounts for 1993 and 1992 represent $13,014 and
$10,839, respectively, paid for life and disability
insurance premiums and a $150,000 payment in each year in
consideration of Mr. Chapman's agreeing in 1990 to forego
certain benefits under a severance agreement.
(9) Mr. Guthrie also received from McCaw additional compensation
related solely to his employment with and services rendered
to McCaw.
(10) Mr. Perry also received from McCaw additional compensation
related solely to his employment with and services rendered
to McCaw.
<PAGE>
<PAGE> 130
<TABLE>
Option Grants in Fiscal Year 1994
<CAPTION>
Percent Potential Realizable
Number of of Total Value at Assumed
Securities Options Annual Rates of Stock
Underlying Granted to Price Appreciation
Options Employees Exercise for Option Term(2)
Granted in Fiscal Price Expiration ----------------------
Name (#)(1) Year ($/Sh) Date 5% 10%
- ---- ----------- ---------- ---------- ---------- ------ ------
<S> <C> <C> <C> <S> <C> <C> <C>
Craig O. McCaw 0 0 N/A N/A 0 0
Tom A. Alberg 50,000 16.581% $133.50 12/31/04 $4,197,872 $10,638,231
James L. Barksdale 0 0 N/A N/A 0 0
Gary R. Chapman 0 0 N/A N/A 0 0
Donald Guthrie 35,000 11.607% 133.50 12/31/04 $2,938,510 $7,446,762
Wayne M. Perry 0 0 N/A N/A 0 0
All stockholders(3) N/A N/A N/A N/A $4,330,439,664 $10,974,184,339
Named executive N/A N/A N/A N/A 0.16 0.16
officers' gain as %
of all stockholders'
gain
_________________________
(1) All options granted to the named executive officers become exercisable in three annual installments of 33%, 33% and
34% beginning one year after the grant date. The per share option exercise prices represent the fair market value
of the LIN Common Shares on the date of grant. The option term is 10 years. In the event of a change in control
of LIN, other than certain transactions with McCaw and certain transactions pursuant to the PMVG, officers of LIN
who are subject to Section 16 of the Exchange Act may surrender vested options in exchange for a cash payment by
LIN. As a result of the closing of the McCaw/AT&T Merger, the options to purchase LIN Common Shares held by the
named executive officers will vest (if not otherwise vested prior thereto pursuant to their terms) if the
optionee's employment with LIN is terminated under certain circumstances. See "EXECUTIVE COMPENSATION --
Employment Contracts and Termination of Employment and Change-in-Control Arrangements."
(2) The dollar amounts under these columns are the result of calculations at the 5% and 10% assumed appreciation rates
set by the Commission and therefore are not intended to forecast possible future appreciation, if any, of the price
of the LIN Common Shares. At the 5% and 10% assumed appreciation rates, the price per LIN Common Share would be
$217.46 and $346.26, respectively.
(3) Based on number of LIN Common Shares outstanding on December 31, 1994.
<PAGE>
<PAGE> 131
Aggregated Option Exercises in Fiscal Year 1994
and Fiscal Year-End Option Values
<CAPTION>
Number of Shares
Shares Underlying Unexercised Value of Unexercised
Acquired Options at Fiscal In-the-Money Option
on Value Year-End (# at Fiscal Year-End($)(2)
Exercise Realized ---------------------------- --------------------------
Name (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- -------- ---------- ---------- ----------- ------------- ----------- -------------
<S> <C> <S> <C> <C> <C> <C> <C>
Craig O. McCaw N/A N/A 67,500 22,500 $4,662,137 $1,540,712
Tom A. Alberg 30,000 $1,967,500 20,000 130,000 1,123,978 3,768,369
James L. Barksdale N/A N/A 0 0 N/A N/A
Gary R. Chapman N/A N/A 59,220 33,000 4,599,207 1,575,824
Donald Guthrie N/A N/A 26,000 85,250 1,588,036 2,255,488
Wayne M. Perry 900 55,800 44,100 15,000 3,019,796 1,027,142
(1) This amount represents the aggregate of the number of LIN Common Shares acquired on exercise multiplied by the
difference between the closing price of the LIN Common Shares on the Nasdaq National Market on the respective
option exercise date (or, if not exercised on a trading day, the nearest trading day) minus the exercise price for
the relevant option.
(2) This amount represents the aggregate of the number of in-the-money options multiplied by the difference between the
closing price of the LIN Common Shares on the Nasdaq National Market on December 30, 1994 (the final trading day in
1994) and the exercise prices for the relevant options.
</TABLE>
<PAGE>
<PAGE> 132
Pension Plan
Until December 28, 1994, LIN maintained a defined benefit
retirement plan (the "Pension Plan") that covered certain
employees of LIN and its subsidiaries. On December 28, 1994,
pursuant to the Employee Benefits Allocation Agreement between
LIN and LIN Television, LIN Television assumed sponsorship of the
Pension Plan. See "CERTAIN INFORMATION REGARDING AT&T, McCAW,
HOLDINGS, MERGER SUB AND LIN -- Relationship with LIN
Television." LIN Television now is solely responsible for all
liabilities and obligations under the Pension Plan. Mr. Chapman
continues to participate in the Pension Plan as an employee of
LIN Television.
Effective January 1, 1993, the Pension Plan was amended to
provide that any employees treated by LIN as employed by a
component of LIN that maintains a Code Section 401(k) plan
providing for employer-matching contributions are not eligible to
participate in, or accrue benefits under, the Pension Plan.
After retirement from or other termination with LIN, however, any
employee who was participating in the Pension Plan as of December
31, 1992, is entitled to receive monthly payments under the
Pension Plan based on his or her average compensation and years
of credited service as of December 31, 1992, provided that he or
she completes five years of vesting service with LIN after
attaining age 17. Such payments begin at age 65, subject to the
employee's election to terminate from employment and receive
reduced monthly payments beginning at any time between ages 55
and 65. Due to this amendment, Messrs. Alberg and Guthrie no
longer accrue additional benefits under the Pension Plan, but are
entitled to receive monthly payments of $459 and $329,
respectively, under the Pension Plan at age 65, provided they
each become vested. Messrs. McCaw, Barksdale and Perry did not
participate in the Pension Plan.
The following table shows the estimated annual retirement
benefits payable under the Pension Plan and LIN's Supplemental
Benefit Retirement Plan as an annuity for life upon normal
retirement for specified compensation and years of credited
service classifications, assuming retirement at age 65 on
December 31, 1993. Benefits are computed by multiplying (i)
1.25% of the employee's average annual compensation for the three
consecutive years producing the highest average (excluding
benefits or payments received under any other benefit plan) times
(ii) the employee's number of years of credited service, up to a
maximum of 32 years. Sections 401(a)(17) and 415 of the Code
limit the annual benefits that may be paid from a tax-qualified
retirement plan such as the Pension Plan. As permitted by the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), LIN's Supplemental Benefit Retirement Plan authorizes
<PAGE>
<PAGE> 133
the payment out of LIN's general funds of any benefits
calculated under the provisions of the Pension Plan that may be
above the limits of Sections 401(a)(17) and 415 of the Code.
<TABLE>
Pension Plan Table
<CAPTION>
Three-Year
Average Years of Credited Service
Annual ----------------------------------------------------------------------
Compensation 10 15 20 25 30 32
------------- ------- ------- ------- ------- ------- -------
<C> <C> <C> <C> <C> <C> <C>
$100,000 12,500 18,750 25,000 31,250 37,500 40,000
$200,000 25,000 37,500 50,000 62,500 75,000 80,000
$300,000 37,500 56,250 75,000 93,750 112,500 120,000
$400,000 50,000 75,000 100,000 125,000 150,000 160,000
$500,000 62,500 93,750 125,000 156,250 187,500 200,000
$750,000 93,750 140,625 187,500 234,375 281,500 300,000
</TABLE>
As of December 31, 1994, Mr. Chapman had six years of
credited service under the Pension Plan and his three-year
average annual compensation was $613,200. Benefit amounts under
the Pension Plan are not subject to any deduction for Social
Security benefits or other offset amounts.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
Employment Agreements. In 1990, Mr. Chapman entered into an
employment agreement with LIN, which replaced an already existing
severance compensation agreement. Mr. Chapman's employment
agreement provides for: (i) a term that currently ends on
December 31, 1995, subject to subsequent renewals; (ii) a minimum
base salary of $375,000, commencing on January 1, 1991; (iii) a
target annual bonus award at least equal to $125,000 per year
beginning after December 31, 1991, the actual amount payable
being determined by LIN based on performance guidelines; and (iv)
a retention bonus of $600,000, payable in four equal annual
installments beginning December 31, 1990. The agreement also
provides for options, participation in certain of LIN's incentive
compensation programs, and additional severance benefits upon
termination without cause, including the right to require LIN to
purchase certain of the LIN Common Shares and vested options
owned by Mr. Chapman as of the date of the employment agreement
based on the value of the greater of $112 per LIN Common Share
and the Private Market Price of the LIN Common Shares as
determined in accordance with the PMVG. The agreement also
requires LIN to purchase on January 1, 1995, certain of the LIN
Common Shares and vested options owned by Mr. Chapman as of the
<PAGE>
<PAGE> 134
date of the employment agreement based on a value of the greater
of $112 per share and the Private Market Price. This agreement
was assigned to and assumed by LIN Television in connection with
the Television Spin-off. Performance of certain provisions of
this agreement has been deferred pending the completion of
discussions currently underway concerning a new employment
agreement between LIN Television and Mr. Chapman.
In 1991, Mr. Guthrie entered into an employment agreement
with LIN. Mr. Guthrie's employment agreement provides for (i) a
term that currently ends on April 30, 1996, subject, unless
terminated, to subsequent automatic annual renewals; (ii) a base
salary that currently is $210,000; (iii) options and bonuses as
determined by the LIN Board; and (iv) such other benefits and
perquisites as are provided to LIN employees or senior executives
generally. In the event that Mr. Guthrie is terminated without
"cause," as defined in the agreement, or his employment with LIN
terminates as a result of the expiration of the term of the
agreement, he will receive an amount equal to twelve months'
salary and bonus and all long-term compensation that would have
vested during the remaining term of the agreement will be
immediately vested.
Amended and Restated 1969 Stock Option Plan. Pursuant to
LIN's Amended and Restated 1969 Stock Option Plan (the "1969
Plan"), in the event of a change in control of LIN (as defined in
the 1969 Plan), other than certain transactions with McCaw and
certain transactions pursuant to the PMVG, officers of LIN who
are subject to Section 16 of the Exchange Act may surrender
vested options in exchange for a cash payment by LIN. The amount
of the cash payment per LIN Common Share is determined by taking
the difference between the exercise price of the LIN Common
Shares covered by the options so surrendered and the greater of
(i) the highest market price of the LIN Common Shares during the
90-day period prior to the day of surrender and (ii) the highest
price paid to any stockholder of LIN in the transaction or group
of transactions resulting in the change in control. Such options
may be surrendered during the 60-day period following the change
in control.
As a result of the closing of the McCaw/AT&T Merger, options
to purchase LIN Common Shares outstanding on August 14, 1993 held
by the named executive officers will vest (if not otherwise
vested prior thereto pursuant to their terms) at the time McCaw
or any affiliate consummates any acquisition of all or
substantially all the remaining LIN Common Shares or LIN is
otherwise sold, whether pursuant to the PMVG or otherwise. In
addition, as a result of the closing of the McCaw/AT&T Merger,
all outstanding options to purchase LIN Common Shares held by the
<PAGE>
<PAGE> 135
named executive officers will vest (if not otherwise vested prior
thereto pursuant to their terms) if the optionee's employment
with LIN is terminated under certain circumstances.
Bonus and Severance Arrangements in Connection With the
McCaw/AT&T Merger. In connection with the McCaw/AT&T Merger, LIN
established an aggregate $7.75 million bonus pool for certain
persons employed by LIN and its subsidiaries as of August 15,
1993, conditioned upon both consummation of the McCaw/AT&T Merger
(the "McCaw/AT&T Closing"), which occurred on September 19, 1994,
and the closing of any acquisition of all or substantially all
the remaining LIN Common Shares by McCaw or of a sale of LIN
(pursuant to the PMVG or otherwise) (the "LIN Closing"). Except
as provided under the Executive Plan, as hereinafter defined, all
bonuses payable to executive officers are payable in three
installments (50% at the LIN Closing, 25% on the first
anniversary of the McCaw/AT&T Closing and 25% of the second
anniversary of the McCaw/AT&T Closing), in each case to persons
who remain employed by LIN, its ultimate parent or any of their
subsidiaries at such times, provided, that if the LIN Closing has
not occurred by such anniversary dates of the McCaw/AT&T Closing,
such payments will not be made until the date of the LIN Closing.
The amounts of the bonuses allocated to Messrs. Alberg and
Guthrie are $700,000 and $509,000, respectively. Messrs. McCaw,
Alberg, Barksdale, Guthrie and Perry received bonuses under a
similar bonus program implemented by McCaw.
Also in connection with the McCaw/AT&T Merger, LIN
established an Executive Separation Plan (the "Executive Plan").
The Executive Plan provides benefits to certain executives,
including Messrs. Alberg and Guthrie, in the event that they are
terminated (other than for cause, as defined in the Executive
Plan) on or after the McCaw/AT&T Closing or in the event that
they terminate their employment within six months following an
adverse change in working conditions (including a reduction in
salary or bonus opportunities in the absence of overall poor
performance, a material reduction in scope of responsibility,
authority or other conditions of employment, a notice that an
executive's employment location will be moved more than 40 miles
or certain decreases in executive perquisites or other employee
benefits) on or after the McCaw/AT&T Closing. Under the
Executive Plan, executives are entitled to a benefit payment
equal to any unpaid installments under the bonus pool, unless
terminated for consistently poor performance documented by
substantially contemporaneous notices. Mr. Perry is entitled to
receive severance benefits, and Messrs. Alberg and Guthrie are
entitled to additional severance benefits, in certain
<PAGE>
<PAGE> 136
circumstances under a severance program established by McCaw in
connection with the McCaw/AT&T Merger.
Bonus and Severance Arrangements in Connection with the
Merger. In addition, LIN has established an arrangement for the
payment of other benefits to certain of LIN's officers, including
Messrs. Alberg and Guthrie. In order to receive this benefit,
the individual must be an officer or employee of LIN at the time
of the LIN Closing. Such payments will be made if the officer's
employment with LIN is terminated within 120 days of a LIN
Closing under the same circumstances as are described above with
respect to the Executive Plan. The amount of such benefits
payable to Messrs. Alberg and Guthrie would be $380,000 and
$213,333, respectively.
The Compensation Committee has approved the payment to
certain officers and employees of LIN, including Messrs. Alberg
and Guthrie, at the time of the LIN Closing, of a bonus of at
least 50% of the bonus paid to such individual in 1994. The
amount of the bonus may be increased, in the discretion of the
Compensation Committee, based on performance, timing and such
other factors as are approved by the Compensation Committee. The
minimum amount of such bonuses payable to Messrs. Alberg and
Guthrie are $125,000 and $50,000, respectively.
In the event that all or any portion of any severance
payment, bonus, stock option or other compensation or benefit
payable to certain executives, including Messrs. Alberg and
Guthrie, as a result of the LIN Closing would subject any
executive to an excise tax under Section 4999 of the Code, such
executive would be entitled to receive a tax gross-up payment to
cover such excise tax and related penalties and interest
(including any taxes payable in connection with the gross-up
payment).
Board Committee Report on Executive Compensation
The Compensation Committee consists of the three directors
who are not employed by any of LIN, McCaw and AT&T (Ms. Jordan
and Messrs. Herbster and Kislik). The Compensation Committee
determines compensation policies and remuneration arrangements
with respect to all LIN employees.
Compensation Policies. The foundation of LIN's compensation
policies is the view that LIN's success is attributable to the
efforts of its employees, including its executive officers.
Development of LIN's business has required its employees to excel
in the face of complicated and rapidly evolving technologies and
strong and increasingly diverse competition. Accordingly, LIN
<PAGE>
<PAGE> 137
believes that the compensation levels of its executive officers,
who provide leadership and strategic direction to LIN, must be
sufficiently high to attract to LIN the best qualified people in
the cellular industry. It also believes that its compensation
packages must include sufficient long-term incentives to motivate
its executive officers to remain with LIN and to align the
interests of its executive officers with those of the
stockholders.
During 1994, LIN compensated its executive officers through
a combination of base salaries, year-end cash bonuses, and year-end
stock option grants. In setting base salaries at the
beginning of the fiscal year, the Compensation Committee made
subjective determinations that were not subject to specific
criteria. The Compensation Committee considered such variables
as the officer's relative responsibilities, expertise, past
year's compensation, and past year's performance as reflected in
periodic performance reviews conducted by LIN. These individual
criteria were then considered in the context of LIN's overall
salary structure as applicable to its cellular and television
businesses. In addition, LIN's commitments under its employment
agreements with Messrs. Chapman and Guthrie were reflected in the
base salaries of each such officer.
In setting year-end bonuses for 1994, the Compensation
Committee focused on LIN's performance during the year in a
number of specific areas. The Compensation Committee focused on
such factors as cash flow, subscriber and revenue growth and
subscriber churn, without assigning a specific weight to any one
of these factors, and then evaluated each officer's relative
contribution to LIN's results. In each case, the Compensation
Committee did not measure the individual's performance against
any previously set bonus target; rather it made a subjective
determination on the basis of the Compensation Committee's views
of LIN's 1994 performance and the respective contributions of the
officers to that performance.
LIN traditionally makes annual grants of stock options to
its executive officers. Although the Compensation Committee's
decision with respect to stock options is subjective, the factors
described above were considered in awarding the year-end stock
option grants. LIN believes that stock option grants provide a
key incentive for executive officers not only to remain with LIN
over time but to manage LIN for long-term growth, thereby
aligning their interests with those of its stockholders.
Although LIN does not have a target equity-ownership level for
its officers, it encourages such ownership for its employees in
general (for example, through the LIN Employee Stock Purchase
Plan), and therefore continues to view the year-end stock option
<PAGE>
<PAGE> 138
grants as a very important component of its compensation package
for executive officers.
Compensation payments in excess of $1 million to the Chief
Executive Officer or four other most highly compensated executive
officers are subject to a limitation on deductibility for LIN
under Section 162(m) of the Code. Certain performance-based
compensation is not subject to the limitation on deductibility.
LIN has not made a determination regarding whether it will
qualify cash compensation awards for the performance-based
exception to the $1 million limitation on deductibility of
compensation payments. LIN has amended the 1969 Plan to qualify
stock option awards for the performance-based exception to the $1
million limitation on deductibility of payments.
Chief Executive Officer Compensation. Messrs. McCaw and
Barksdale, each of whom served as LIN's Chief Executive Officer
during a portion of 1994, also were executives of McCaw. LIN
reimbursed McCaw for a portion of their compensation and certain
benefits. See "CERTAIN INFORMATION REGARDING AT&T, McCAW,
HOLDINGS, MERGER SUB AND LIN -- Certain Transactions Among LIN,
AT&T and McCaw."
The Committee believes that Mr. McCaw's compensation was
considerably less than would have been warranted by LIN's
performance during 1994, and by Mr. McCaw's very significant
contribution to that performance as LIN's Chief Executive
Officer. The Committee believes that Mr. Barksdale's
compensation during 1994 was reasonable in light of the factors
listed above based on Mr. Barksdale's strong performance during
the year and his contributions as LIN's Chief Executive Officer
during the last two months of the year.
Compensation Committee
William G. Herbster
Wilma H. Jordan
Richard W. Kislik
<PAGE>
<PAGE> 139
Stock Price Performance
The following graph compares the cumulative total
stockholder return on the LIN Common Shares with the cumulative
total return of the Nasdaq Stock Market (US) Index and the Center
for Research in Securities Prices ("CRSP") Index of Nasdaq
Telecommunications Stocks for the five-year period beginning
January 1, 1990.
Comparison of Five-Year Cumulative Total Return
Among the LIN Common Shares, Nasdaq Stock Market (US)
Index and CRSP Index of Nasdaq Telecommunications Stocks
(Fiscal Year Ending December 31)
LINB Nasdaq Telecom
1989 $100.00 $100.00 $100.00
1990 $88.02 $84.92 $67.41
1991 $102.33 $136.28 $92.97
1992 $109.49 $158.57 $114.19
1993 $158.15 $182.03 $175.19
1994 $207.08 $177.99 $145.70
Assumes $100 invested January 1, 1990 in the LIN Common Shares,
Nasdaq Stock Market (US) Index, and CRSP Index of Nasdaq
Telecommunications Stocks, with all dividends reinvested.
Assumes all LIN Common Shares were tendered immediately before
the closing of the McCaw Offer, with the proceeds for LIN Common
Shares accepted in the McCaw Offer immediately reinvested. If
LIN Common Shares had not been tendered in the McCaw Offer, the
cumulative total return on the LIN Common Shares as of December
31, 1990, 1991, 1992, 1993 and 1994 would have been $51, $59,
$64, $92 and $120, respectively. On December 28, 1994, in the
Television Spin-off LIN paid a special dividend of one share of
common stock of LIN Television for every two shares of LIN Common
Shares to holders of record of LIN Common Shares on December 9,
1994. Assumes that all shares of LIN Television paid as a
special dividend in the Television Spin-off were sold at the
closing price for a share of common stock of LIN Television on
December 29, 1994 and immediately reinvested. As of May 31,
1995, the CRSP Index of Nasdaq Telecommunications Stocks included
a total of 220 issuers. LIN will provide a list of the issuers
that are included in the CRSP Index of Nasdaq Telecommunications
<PAGE>
<PAGE> 140
Stocks to a LIN stockholder upon such stockholder's written
request.
Note: Stock price performance shown above for the LIN Common
Shares is historical and not necessarily indicative of future
price performance.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires LIN's directors,
certain of its officers and the beneficial owners of more than
ten percent of LIN Common Shares to file reports related to their
ownership of the LIN Common Shares and of changes in such
ownership with the Commission and the National Association of
Securities Dealers. Commission regulations also require LIN to
identify in this Proxy Statement any person subject to this
requirement who failed to file any such report on a timely basis.
AT&T and Messrs. Carey and Chakrin inadvertently filed late the
initial report required at the time each of them became a ten
percent stockholder or director of LIN.
CERTAIN INFORMATION REGARDING AT&T,
McCAW, HOLDINGS, MERGER SUB AND LIN
AT&T
AT&T is principally engaged in global information movement
and management, financial services and leasing. The mailing
address of AT&T's principal executive offices is 32 Avenue of the
Americas, New York, New York 10013-2412, and its telephone number
is (212) 387-5400.
McCaw
McCaw, a wholly owned subsidiary of AT&T, is principally
engaged in the business of providing cellular communication
services. The mailing address of McCaw's principal executive
offices is 5400 Carillon Point, Kirkland, Washington 98033, and
its telephone number is (206) 827-4500.
Holdings
Holdings, a wholly owned subsidiary of McCaw, was formed for
the purpose of holding investment securities and conducts no
other business. The mailing address of Holdings' principal
executive offices is c/o McCaw Cellular Communications, Inc.,
5400 Carillon Point, Kirkland, Washington 98033, and its
telephone number is (206) 827-4500.
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Merger Sub
Merger Sub, a wholly owned subsidiary of McCaw, was formed
for the purpose of effecting the Merger and has not conducted any
other business. The mailing address of Merger Sub's principal
executive offices is c/o McCaw Cellular Communications, Inc.,
5400 Carillon Point, Kirkland, Washington 98033, and its
telephone number is (206) 827-4500.
LIN
LIN is engaged primarily in the business of providing
cellular voice telephone and data services. McCaw owns an
approximate 52% interest in LIN through McCaw's wholly owned
subsidiary, Holdings. The mailing address of LIN's principal
executive offices in 5295 Carillon Point, Kirkland, Washington
98033, and its telephone number is (206) 828-1902.
Certain Transactions Among LIN, AT&T and McCaw
After McCaw acquired its interest in LIN in March 1990,
McCaw made available the services of its employees, some of whom
are elected to management positions with LIN, with the
understanding that LIN would reimburse McCaw for these services.
Under the PMVG, the approval of a majority of the LIN Independent
Directors is required before LIN enters into any material
transaction with McCaw or its affiliates. Pursuant to a proposal
that has been approved by the management of each of LIN and
McCaw, and subject only to the approval of the LIN Independent
Directors, McCaw will receive reimbursement from LIN in the
amount of $8.5 million for services rendered in 1994 in
connection with various engineering, research and development,
marketing and other general management activities and for
payments to third parties, and LIN will receive reimbursement
from McCaw in the amount of $2.2 million for services rendered in
1994 in connection with various operations, marketing and legal
activities and for payments to third parties. The respective
reimbursement amounts include actual amounts paid to third
parties. Also included within this reimbursement program is an
allocation of the time devoted to the affairs of each company by
those employees who were involved in the operation of both McCaw
and LIN. The costs associated with such employees, including
salary, bonus, stock options awarded during the year and other
benefits, are then allocated between the companies in the same
proportion. As determined for purposes of this allocation for
1994, Messrs. McCaw, Alberg, Barksdale, Guthrie and Perry devoted
40% (through the closing of the AT&T/McCaw merger), 80%, 40%,80%
and 30%, respectively, of their time to the affairs of LIN; the
balance of each executive's time was allocated to McCaw. All of
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the time of Mr. Chapman, the President of LIN Television, through
the date of the Television Spin-off was devoted to the affairs of
LIN.
For so long as LIN remains a majority-owned subsidiary of
McCaw, LIN and McCaw expect to annually negotiate payments for
the reimbursement of expenses incurred on behalf of LIN by McCaw
and on behalf of McCaw by LIN for management assistance and other
intercompany services. LIN does not anticipate that the net
amount of its payments to McCaw will be material to LIN's
business operations or financial performance. The payments will
continue to be negotiated on an arm's-length basis, and will be
subject to the approval of the LIN Independent Directors.
In addition to the transactions described above, LIN
(including its subsidiaries and other entities it controls or
manages) routinely enters into transactions with McCaw and AT&T
(including their respective subsidiaries and other entities they
control or manage, other than LIN) in the ordinary course of
business. LIN pays McCaw for providing cellular service to LIN's
subscribers under roaming agreements, and McCaw pays LIN for
similar services provided by LIN to McCaw's subscribers. For
roaming services provided during 1994, LIN paid McCaw
approximately $18.3 million and McCaw paid LIN approximately
$13.0 million. In addition, LIN's Dallas cellular operation
provided switching, billing, and certain other services to an
affiliate of McCaw. Under this agreement, LIN's Dallas cellular
operation collects the revenues generated by the subscribers of
McCaw's affiliate and receives a contractually determined fee.
Such revenues amounted to approximately $1.2 million during 1994,
and the payments to McCaw's affiliate amounted to approximately
$1.0 million. LIN also reimburses McCaw for the cost of
programs, such as the North American Cellular Network, national
advertising campaigns and the National Account Services Program
(a sales force and support group that coordinates the sale of
cellular services to large companies), which McCaw manages for
all of its markets, as well as certain of LIN's markets, and for
the cost of goods and services purchased by LIN from third
parties through McCaw. LIN paid McCaw approximately $1.3 million
for expenses in connection with such programs during 1994. The
costs of such programs are shared by all markets benefited
(including, in certain cases, markets owned by third parties),
with the allocation based on actual per market costs incurred or
such factors as relative market population or numbers of
subscribers. LIN also maintains a regional office that oversees
and provides certain centralized services for LIN's Dallas
cellular operation as well as a cluster of McCaw cellular markets
located in Texas and adjacent states. The costs of this office
are allocated to all such markets, based on their relative shares
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of the factors considered most relevant to each particular cost.
For example, the allocation of general and administrative costs
is based on population, while engineering and operations costs
are allocated based largely on the relative number of cell sites
in each market. McCaw's share of such costs during 1994 was
approximately $3.9 million.
During 1994, LIN purchased equipment, consisting primarily
of telephones and accessories, from AT&T for an aggregate
purchase price of approximately $13.4 million. LIN also paid
AT&T approximately $3.3 million to provide customer support
services in situations in which the volume of such requests
exceeded LIN's handling capacity. Finally, LIN paid AT&T
approximately $176,000 for various services provided by AT&T,
including engineering and design services and cell site rentals.
All such agreements and arrangements between LIN and McCaw
or AT&T are on terms that LIN believes are as or more favorable
to it as or than would have been obtained with an unrelated third
party.
On June 19, 1992, LIN, McCaw and certain other parties
received court approval of a Stipulation of Settlement setting
forth terms by which shareholder litigation in the United States
District Court for the Southern District of New York would be
settled and shareholder litigation in the Delaware Court of
Chancery for New Castle County would be dismissed. Such
litigation arose out of the transactions related to the
acquisition by McCaw in 1990 of a majority of the LIN Common
Shares. Under the terms of the settlement, LIN received from
McCaw a payment of $1.35 million in July 1992, and received from
McCaw further payments of $2 million on each of June 30, 1993,
June 30, 1994 and June 30, 1995. McCaw was also required to
transfer to LIN approximately a 2% interest in the Galveston,
Texas cellular market.
Relationship with LIN Television
On December 28, 1994 (the "Spin-off Date"), LIN distributed
to the holders of LIN Common Shares of record on December 9, 1994
(the "Spin-off Record Date"), all of the outstanding common
stock, $.01 par value (the "LIN Television Common Stock"), of
LIN's subsidiary, LIN Television. The Television Spin-off was
made in the form of a stock dividend of one share of LIN
Television Common Stock for every two LIN Common Shares held on
the Spin-off Record Date. LIN did not receive any shares of LIN
Television Common Stock in respect of LIN Common Shares held by
LIN as treasury shares. The "ex-distribution" date for the
Television Spin-off, as established by the Nasdaq National
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<PAGE> 144
Market, was December 29, 1994. Fractional shares of LIN
Television Common Stock to which holders of LIN Common Shares
would have been entitled as a result of the Television Spin-off
have been aggregated and sold, and the cash proceeds distributed
to the record holders entitled thereto. The Internal Revenue
Service has ruled that receipt of shares of LIN Television Common
Stock in the Television Spin-off will not result in the
recognition of income, gain or loss for federal income tax
purposes (except with respect to any cash received in lieu of a
fractional share interest in LIN Television Common Stock).
Also on December 28, 1994, pursuant to the Asset Purchase
Agreement, dated June 7, 1994, as amended, among LIN, LIN
Television, Cook Inlet Communications, Inc., an Alaska
corporation, and Cook Inlet Communications Corp., a Delaware
corporation ("CICC"), LIN Television acquired substantially all
the assets and assumed certain liabilities of WTNH-TV, New Haven-Hartford,
Connecticut, from CICC in exchange for $120,170,000 in
cash and approximately 11.5% of the LIN Television Common Stock
outstanding after giving effect to such issuance (together with
the Television Spin-off, the "Transaction"). The cash portion of
the purchase price is subject to post-closing adjustment.
Following the Transaction, approximately 42.3% of the LIN
Television Common Stock was publicly owned; approximately 11.5%
was held by CICC; and approximately 46.3% was held indirectly by
McCaw. LIN Television Common Stock is quoted on the Nasdaq
National Market. Six of the ten initial directors of LIN
Television were designated by McCaw, and three of them currently
are officers of one or more of AT&T, McCaw and LIN. In addition,
all of the LIN Independent Directors also serve as directors of
LIN Television.
In connection with the Television Spin-off, LIN and LIN
Television entered into a number of agreements, including: a
Distribution Agreement, which provides for, among other things,
the principal corporate transactions required to effect the
Television Spin-off and certain other agreements governing the
relationship between LIN and LIN Television; a Tax Allocation
Agreement, which provides for the allocation between LIN and LIN
Television of responsibilities, liabilities and benefits relating
to or affecting taxes paid or payable by either of them or their
respective subsidiaries for all taxable periods before and after
the Television Spin-off; a Management Services Agreement,
pursuant to which LIN and LIN Television will each provide to the
other, upon request and for up to one year after the Television
Spin-off, certain corporate administrative services, such as tax,
treasury and legal services; and an Employee Benefits Allocation
Agreement, which provides for the treatment of outstanding
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<PAGE> 145
options to purchase LIN Common Shares granted under the 1969 Plan
and certain other matters, including the allocation of
retirement, medical, disability and other employee welfare and
benefit plans between LIN and LIN Television.
LIN Television and certain subsidiaries of LIN also entered
into a Consulting Agreement, pursuant to which LIN Television
will provide management and operational consulting for the
television broadcasting operations retained by LIN after the
Television Spin-off, and a Right of First Refusal Agreement,
pursuant to which, in the event that LIN receives and wishes to
accept an offer to purchase assets associated with LIN's
television broadcasting operations, LIN Television has the right
to purchase such assets at the offered price.
Prior to the Television Spin-off, LIN and McCaw allocated to
LIN Television each year a portion of the expenses relating to
certain corporate-level services, such as tax, treasury and legal
services, provided to LIN Television by LIN and McCaw. LIN
Television's portion of such expenses was determined based on its
revenues, wages and properties relative to those of LIN and
McCaw. The amount allocated to LIN Television for the portion of
1994 preceding the Television Spin-off was approximately $1.8
million. Due to limitations imposed under LIN Television's
credit facility on payments by LIN Television to its affiliates,
LIN Television paid approximately $578,000 of such amount in
cash, with the forgiveness of the balance of this expense being
treated for accounting purposes as a contribution to capital by
LIN. As a result of the separation of LIN and LIN Television
pursuant to the Television Spin-off, these allocations ceased on
December 28, 1994.
Similarly, LIN Television provided certain corporate-level
services, consisting primarily of general and administrative and
accounting services, to LIN with respect to the television
broadcasting operations conducted by LIN other than through LIN
Television. The amount charged to LIN and its subsidiaries for
these services in 1994 was approximately $494,000. Any such
services provided in the future will be provided only through the
Consulting Agreement described above or through such other
agreements or arrangements as may be established by the parties.
During the portion of 1994 ending on the Spin-off Date, LIN
was a party to a tax-sharing agreement with LIN Television and
its subsidiaries pursuant to which LIN Television was included in
the consolidated federal income tax return filed by LIN.
Pursuant to this agreement, LIN Television's allocated share of
LIN's current consolidated federal income tax expense in 1994 is
estimated to be approximately $22.7 million. This agreement
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<PAGE> 146
further provided that LIN Television was treated as if it had
certain net operating loss carryforwards, as a result of which
LIN Television's share of the federal tax expense has been
forgiven. The forgiveness of this expense has been treated for
accounting purposes as a contribution to capital by LIN.
During 1994, LIN Television provided to AT&T and its
subsidiaries, including McCaw, advertising time worth
approximately $1.5 million. LIN believes that the terms of all
such transactions were at least as favorable as those that would
result from arm's-length negotiations.
MARKET PRICES OF
LIN COMMON SHARES; DIVIDEND HISTORY
The LIN Common Shares are traded principally on the Nasdaq
National Market. The following table sets forth, for the fiscal
periods indicated, the high and low sales prices per LIN Common
Share on the Nasdaq National Market:
High Low
1993:
First Quarter . . . . . . . . . . . . . . . $ 90.00 $ 75.50
Second Quarter. . . . . . . . . . . . . . . .101.00 80.25
Third Quarter . . . . . . . . . . . . . . . .121.75 98.50
Fourth Quarter. . . . . . . . . . . . . . . .116.50 108.25
1994:
First Quarter . . . . . . . . . . . . . . . .117.25 106.50
Second Quarter. . . . . . . . . . . . . . . .122.25 102.75
Third Quarter . . . . . . . . . . . . . . . .140.75 119.25
Fourth Quarter. . . . . . . . . . . . . . . .146.25 133.00
1995:
First Quarter . . . . . . . . . . . . . . . .141.50 120.25
Second Quarter. . . . . . . . . . . . . . . .126.75 121.38
Third Quarter (through July __) . . . . . . .
On February 15, 1995, the last trading day prior to public
announcement of the views of Morgan Stanley and of Bear Stearns
and Lehman Brothers as to the private market value per LIN Common
Share, the high and low sales prices per LIN Common Share on the
Nasdaq National Market were $141.50 and $138.50, respectively.
On March 7, 1995, the last trading day prior to public
announcement of the determination of Wasserstein Perella as to
the private market value per LIN Common Share, the high and low
sales prices per LIN Common Share on the Nasdaq National Market
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<PAGE> 147
were $130.25 and $128.25, respectively. On April 6, 1995, the
last trading day prior to the public announcement that AT&T and
McCaw determined that McCaw would proceed with an acquisition of
the LIN Public Shares at the Private Market Price of $127.50 per
LIN Common Share, the high and low sales prices per LIN Common
Share on the Nasdaq National Market were $122.25 and 121.50,
respectively. On June 22, 1995, the last trading day prior to
the public announcement by McCaw that it had agreed in principle
with the plaintiffs to settle the Stockholders Litigation, the
high and low sales prices per LIN Common Share on the Nasdaq
National Market were $125.25 and $124, respectively. On July __,
1995, the latest practicable date prior to printing this Proxy
Statement, the high and low sales prices per LIN Common Share on
the Nasdaq National Market were $____ and $____, respectively.
LIN has paid no cash dividends with respect to the LIN
Common Shares for the periods set forth above. LIN's two bank
credit facilities, a senior secured facility and a senior
unsecured facility, restrict LIN's ability to pay dividends to
its stockholders. There are also restrictions on the ability of
LIN's operating subsidiaries to pay dividends to LIN. It is not
anticipated that any cash dividends will be paid on LIN Common
Shares in the foreseeable future. On December 28, 1994, LIN paid
a special dividend of one share of LIN Television Common Stock
for every two LIN Common Shares to holders of record of LIN
Common Shares on December 9, 1994. None of the prices above has
been adjusted for that event, but prices for the period including
and following December 28, 1994 reflect its effect. See "SUMMARY
- -- LIN Broadcasting Corporation Summary Consolidated Financial
Data."
From January 1993 through October 1994, 23,500 LIN Common
Shares were purchased by LIN through open market transactions,
for prices ranging from approximately $77.13 to $140.00 per
share, primarily for distribution to employees in connection with
LIN's Employee Stock Purchase Plan (the "ESPP"). The average
purchase price per LIN Common Share paid by LIN during the
quarterly periods ending on the following dates is as follows:
March 31, 1993, $80.73; June 30, 1993, $88.82; September 30,
1993, $107.25; December 31, 1993, $113.45; March 31, 1994,
$113.55; June 30, 1994, $107.30; September 30, 1994, $134.75; and
December 31, 1994, $140.00.
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Principal Stockholders
The following table sets forth the beneficial ownership of
LIN Common Shares, as of June 15, 1995, by persons known by LIN
to be beneficial owners of 5% or more of the LIN Common Shares.
Name and Address LIN Common Shares
of Beneficial Owner Beneficially Owned Percent
AT&T Corp. 26,989,500(1) 52.2%
32 Avenue of the Americas
New York, New York 10013
The Capital Group Companies, Inc. 3,362,500(2) 6.5%
333 South Hope Street
Los Angeles, California 90071
(1) AT&T holds its LIN Common Shares through its wholly owned
subsidiary McCaw, which in turn holds its LIN Common Shares
through its wholly owned subsidiary Holdings. McCaw has
determined to proceed with an acquisition, pursuant to and
subject to the terms of the PMVG, of all of the LIN Common
Shares that it does not beneficially own at this time. See
"SPECIAL FACTORS -- Background of the Merger" and "--Terms
of the PMVG" and "THE MERGER."
(2) Based on publicly available information reported as of
December 31, 1994. Capital Guardian Trust Company and
Capital Research and Management Company, operating
subsidiaries of The Capital Group Companies, Inc.,
exercised, as publicly reported as of December 31, 1994,
investment discretion with respect to 141,400 and 3,221,100
LIN Common Shares, respectively, which were owned by various
institutional investors.
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<PAGE> 149
Security Ownership of Management
The following table shows the beneficial ownership of LIN
Common Shares as of June 15, 1995 by LIN's (i) directors, (ii)
the named executive officers, and (iii) directors and executive
officers as a group.
LIN Common Shares
Name Beneficially Owned (1) Percent
Tom A. Alberg 21,450 (2) *
Dennis J. Carey 0 *
Lewis M. Chakrin 0 *
Harold S. Eastman 0 *
W. Preston Granbery 0 *
William G. Herbster 3,480 (3) *
Rolla G. Huff 0 *
Wilma H. Jordan 578 *
Richard W. Kislik 8,410 *
Wayne M. Perry 45,000 (4) *
Florence L. Walsh 0 *
Craig O. McCaw 0 *
James L. Barksdale 0 *
Gary R. Chapman 60,536 (5) *
Donald Guthrie 26,594 (6) *
All directors, named executive officers and
other executive officers as a group
(16 persons) 166,048 (7) *
* Less than 1%
(1) Certain directors of LIN are directors and/or officers
of one or more of AT&T and McCaw, each of which
beneficially owns 26,989,500 LIN Common Shares. Such
individuals disclaim beneficial ownership of such LIN
Common Shares.
(2) Includes options exercisable within 60 days to purchase
20,000 LIN Common Shares.
(3) Represents LIN Common Shares held of record by Mr.
Herbster's wife.
(4) Includes options exercisable within 60 days to purchase
44,100 LIN Common Shares.
(5) Includes options exercisable within 60 days to purchase
59,220 LIN Common Shares.
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(6) Includes options exercisable within 60 days to purchase
26,000 LIN Common Shares.
(7) Includes options exercisable within 60 days to purchase
216,820 LIN Common Shares.
Beneficial Ownership of AT&T Common Shares
The following table shows the beneficial ownership of all
equity securities of AT&T as of June 15, 1995 by LIN's (i)
directors, (ii) the named executive officers, and (iii) directors
and executive officers as a group.
AT&T Common Shares Percent
Name Beneficially Owned of Class
Tom A. Alberg 105,453 (1) *
Dennis J. Carey 29,527 (2) *
Lewis M. Chakrin 22,624 (3) *
Harold S. Eastman 100 *
W. Preston Granbery 10,370 (4) *
William G. Herbster 0 *
Rolla G. Huff 5,756 (5) *
Wilma H. Jordan 275 (6) *
Richard W. Kislik 200 *
Wayne M. Perry 2,251,244 (7) *
Florence L. Walsh 0 *
Craig O. McCaw 15,913,730 (8) 1.0
James L. Barksdale 50,000 *
Gary R. Chapman 28 *
Donald Guthrie 45,600 (9) *
All directors, named executive
officers and other executive
officers as a group
(16 persons) 19,022,541 (10) 1.2
* Less than 1%
(1) Includes options exercisable within 60 days to purchase
105,000 AT&T Common Shares.
(2) Includes options exercisable within 60 days to purchase
12,587 AT&T Common Shares.
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(3) Includes options exercisable within 60 days to purchase
18,972 AT&T Common Shares, and five AT&T Common Shares owned
by Mr. Chakrin's son as to which Mr. Chakrin disclaims
beneficial ownership.
(4) Includes options exercisable within 60 days to purchase
10,365 AT&T Common Shares, and five AT&T Common Shares owned
by Mr. Granbery's wife as to which Mr. Granbery disclaims
beneficial ownership.
(5) Includes options exercisable within 60 days to purchase
5,580 AT&T Common Shares.
(6) Includes 175 AT&T Common Shares owned by Ms. Jordan's
husband and as to which she disclaims beneficial ownership.
(7) Includes 47,500 AT&T Common Shares held by a trust of which
Steven W. Hooper is trustee and as to which Mr. Perry
disclaims beneficial ownership. Also includes options
exercisable within 60 days to purchase 1,006,109 AT&T Common
Shares.
(8) Includes options exercisable within 60 days to purchase
1,540,289 AT&T Common Shares.
(9) Includes options exercisable within 60 days to purchase
45,500 AT&T Common Shares.
(10) Includes options exercisable within 60 days to purchase
3,125,035 AT&T Common Shares.
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CURRENT INFORMATION: DELISTING AND DEREGISTRATION
LIN is subject to the informational requirements of the
Exchange Act, and in accordance therewith, files reports, proxy
statements and other documents and information with the
Commission. LIN officers, directors and principal shareholders
are also presently subject to certain filing requirements, as
well as certain trading restrictions, imposed under the Exchange
Act. Such reports, proxy statements and other documents and
information, as well as the aforementioned Schedule 13E-3, are
available for inspection and copying at the public reference
facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Regional Offices of the Commission located at Room 3190,
Kluczynsky Federal Building, 230 South Dearborn Street, Chicago,
Illinois 60604, and Seven World Trade Center, New York, New York
10048. Copies of such material may be obtained at prescribed
rates by mail addressed to the Commission's Public Reference
Section, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549.
After the Effective Time, the LIN Common Shares will be
delisted from the Nasdaq National Market, and registration of LIN
Common Shares under the Exchange Act will terminate and LIN will
cease filing reports with the Commission. Moreover, LIN will be
relieved of the obligation to comply with the proxy rules of
Regulation 14A under Section 14 of the Exchange Act, and its
officers, directors and 10% shareholders will be relieved of the
reporting requirements and "short-swing" trading liability under
Section 16 of the Exchange Act.
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP, 999 Third Avenue, Seattle,
Washington 98104, which has been the independent auditor of LIN
since 1969, has been selected to continue as LIN's independent
auditor for the current year. Representatives of Ernst & Young
LLP will be present at the Annual Meeting to respond to questions
and to make a statement if they so desire.
PROPOSALS BY LIN STOCKHOLDERS
Proposals that stockholders wish to include in LIN's proxy
statement and form of proxy for presentation at the 1996 Annual
Meeting of Stockholders (assuming the Merger is not consummated
prior to the 1996 Annual Meeting, which will not be held if the
Merger is consummated prior thereto) must be received by LIN no
later than ____________, 1996.
<PAGE>
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MCCAW CELLULAR COMMUNICATIONS, INC.,
MMM HOLDINGS, INC.,
MMM ACQUISITION CORP.
AND
LIN BROADCASTING CORPORATION
Dated April 28, 1995,
As Amended and Restated June 30, 1995
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<PAGE> i
TABLE OF CONTENTS
ARTICLE I
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
2. The Merger; Terms of the Merger . . . . . . . . . . . . . . . . . 5
2.1. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2. Effective Time . . . . . . . . . . . . . . . . . . . . . . . 5
2.3. Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4. Certificate of Incorporation . . . . . . . . . . . . . . . . 6
2.5. The By-Laws. . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6. Directors. . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.7. Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
3. Conversion of Shares; Option Plan; Stockholders
Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1. Merger Consideration; Conversion or
Cancellation of Shares in the Merger . . . . . . . . . . . . 6
3.2. Option Plan; Stock Purchase Plan . . . . . . . . . . . . . . 7
3.3. Stockholders' Meeting. . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
4. Dissenting Shares; Payment for Shares . . . . . . . . . . . . . .10
4.1. Dissenting Shares . . . . . . . . . . . . . . . . . . .10
4.2. Payment for Shares. . . . . . . . . . . . . . . . . . .10
4.3. Payment for Shares If Additional Amount Is
Not Determined As of the Effective Time . . . . . . . .12
ARTICLE V
5. Representations and Warranties of LIN . . . . . . . . . . . . . .13
5.1. Organization, Etc. of LIN . . . . . . . . . . . . . . .13
5.2. Operations of Subsidiaries. . . . . . . . . . . . . . .13
5.3. Agreement . . . . . . . . . . . . . . . . . . . . . . .14
5.4. Capital Stock . . . . . . . . . . . . . . . . . . . . .14
5.5. Brokers and Finders . . . . . . . . . . . . . . . . . .15
5.6. Proxy Statement . . . . . . . . . . . . . . . . . . . .15
5.7. Delaware Section 203. . . . . . . . . . . . . . . . . .15
5.8. Rights Agreement. . . . . . . . . . . . . . . . . . . .16
ARTICLE VI
6. Representations and Warranties of McCaw, Holdings
and Merger Sub. . . . . . . . . . . . . . . . . . . . . . . . . .16
6.1. Organization, Etc. of McCaw, Holdings and
Merger Sub. . . . . . . . . . . . . . . . . . . . . . .16
6.2. Agreement . . . . . . . . . . . . . . . . . . . . . . .16
6.3. Brokers and Finders . . . . . . . . . . . . . . . . . .17
6.4. Proxy Statement . . . . . . . . . . . . . . . . . . . .17
6.5. No Prior Activities . . . . . . . . . . . . . . . . . .17
6.6. Solvency. . . . . . . . . . . . . . . . . . . . . . . .17
ARTICLE VII
7. Additional Covenants and Agreements . . . . . . . . . . . . . . .18
7.1. Conduct of Business of LIN. . . . . . . . . . . . . . .18
7.2. Reasonable Efforts. . . . . . . . . . . . . . . . . . .18
7.3. Indemnification; Insurance. . . . . . . . . . . . . . .19
7.4. New York Real Property Gains and
Transfer Tax. . . . . . . . . . . . . . . . . . . . . .20
ARTICLE VIII
8. Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . .21
8.1. Conditions to Each Party's Obligations. . . . . . . . .21
8.2. Conditions to Obligations of McCaw,
Holdings and Merger Sub . . . . . . . . . . . . . . . .21
8.3. Conditions to Obligations of LIN. . . . . . . . . . . .22
ARTICLE IX
9. Termination, Amendment and Waiver . . . . . . . . . . . . . . . .23
9.1. Termination by Mutual Consent . . . . . . . . . . . . .23
9.2. Termination by Either McCaw or LIN. . . . . . . . . . .23
9.3. Amendment . . . . . . . . . . . . . . . . . . . . . . .23
9.4. Extension; Waiver . . . . . . . . . . . . . . . . . . .24
9.5. Effect of Termination and Abandonment . . . . . . . . .24
9.6. Procedure for Termination, Amendment,
Extension or Waiver . . . . . . . . . . . . . . . . . .24
ARTICLE X
10. Miscellaneous and General . . . . . . . . . . . . . . . . . . . .25
10.1. Expenses. . . . . . . . . . . . . . . . . . . . . . .25
10.2. Notices, Etc. . . . . . . . . . . . . . . . . . . . .25
10.3. Nonsurvival of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . .26
10.4. No Assignment . . . . . . . . . . . . . . . . . . . .26
10.5. Entire Agreement. . . . . . . . . . . . . . . . . . .26
10.6. Specific Performance. . . . . . . . . . . . . . . . .27
10.7. Remedies Cumulative . . . . . . . . . . . . . . . . .27
10.8. No Waiver . . . . . . . . . . . . . . . . . . . . . .27
10.9. No Third Party Beneficiaries. . . . . . . . . . . . .27
10.10. Public Announcements. . . . . . . . . . . . . . . . .27
10.11. Certain Actions by LIN. . . . . . . . . . . . . . . .28
10.12. Governing Law . . . . . . . . . . . . . . . . . . . .28
10.13. Name, Captions, Etc.. . . . . . . . . . . . . . . . .28
10.14. Counterparts. . . . . . . . . . . . . . . . . . . . .28
10.15. McCaw Guarantee . . . . . . . . . . . . . . . . . . .28
Exhibit A -- Private Market Value Guarantee, as amended
<PAGE>
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this
"Agreement"), dated April 28, 1995, as amended and restated June
30, 1995, by and among McCaw Cellular Communications, Inc., a
Delaware corporation ("McCaw"), MMM Holdings, Inc., a Delaware
corporation and a direct Wholly Owned Subsidiary of McCaw
("Holdings"), MMM Acquisition Corp., a Delaware corporation and a
direct Wholly Owned Subsidiary of Holdings ("Merger Sub"), and
LIN Broadcasting Corporation, a Delaware corporation ("LIN").
RECITALS
WHEREAS, McCaw and Holdings are the beneficial owners
of approximately 52% of the outstanding LIN Common Shares;
WHEREAS, pursuant to and in accordance with the terms
of the PMVG, the Private Market Price was set at $127.50 per LIN
Common Share;
WHEREAS, on April 28, 1995, McCaw, Holdings, Merger Sub
and LIN entered into the Original Merger Agreement, providing for
the merger of Merger Sub with and into LIN in which the public
stockholders of LIN would receive $127.50 per LIN Common Share;
WHEREAS, in connection with (i) the settlement of the
Stockholders Litigation and (ii) discussions with the LIN
Independent Directors, McCaw subsequently determined that it was
willing to increase the Merger Consideration above the Private
Market Price, as set forth herein, and to agree to other
revisions to the Original Merger Agreement;
WHEREAS, the Boards of Directors of McCaw, Holdings,
Merger Sub and LIN (in the case of LIN, with the approval of the
LIN Independent Directors) each have determined that it is in the
best interests of their respective stockholders for Merger Sub to
merge with and into LIN, upon the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, McCaw, Holdings, Merger Sub and LIN desire to
make certain representations, warranties, covenants and
agreements in connection with the Merger and also to prescribe
various conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements set forth
herein, McCaw, Holdings, Merger Sub and LIN hereby agree as
follows:
<PAGE>
<PAGE> 2
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall
have the respective meanings set forth below:
"Accretion Amount": As defined in Section 3.1(a).
"Additional Amount": As defined in Section 3.1(a).
"Affiliate": As defined in Rule 12b-2 under the
Exchange Act.
"Agreement": As defined in the preamble hereto.
"Assumption Ratio": As defined in Section 3.2(a).
"AT&T": AT&T Corp., a New York corporation.
"AT&T Common Shares": Shares of common stock, $1.00
par value per share, of AT&T.
"Authorization": Any consent, approval or
authorization of, or any expiration or termination of any waiting
period requirement (including pursuant to the HSR Act) of, or any
filing, registration, qualification, declaration or designation
with or by, any Governmental Body.
"Certificate of Merger": The certificate of merger
with respect to the Merger, containing the provisions required
by, and executed in accordance with, Section 251 of the DGCL.
"Certificates": As defined in Section 4.2.
"Closing": The closing of the Merger.
"Closing Date": The date on which the Closing occurs.
"Code": The Internal Revenue Code of 1986, as amended,
and all regulations promulgated thereunder, as in effect from
time to time.
"DGCL": The Delaware General Corporation Law.
"Dissenting Shares": As defined in Section 4.1.
"Effective Time": As defined in Section 2.2.
"Escrow Account": As defined in Section 4.3(b).<PAGE>
<PAGE> 3
"Exchange Act": The Securities Exchange Act of 1934,
as amended.
"FCC": The Federal Communications Commission.
"Governmental Body": Any Federal, state, municipal,
political subdivision or other governmental department,
authority, commission, board, bureau, agency or instrumentality,
domestic or foreign.
"HSR Act": The Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Holdings": As defined in the preamble to this
Agreement.
"Indemnified Parties": As defined in Section 7.3(a).
"LIN": As defined in the preamble to this Agreement.
"LIN Board": The board of directors of LIN.
"LIN Common Shares": Shares of common stock, par value
$0.01 per share, of LIN;
"LIN Independent Directors": The three members of the
LIN Board designated as Independent Directors pursuant to and in
accordance with Section 1 of the PMVG.
"LIN Merger Shares": LIN Common Shares issued and
outstanding immediately prior to the Effective Time, other than
LIN Common Shares owned by McCaw or any of its Wholly Owned
Subsidiaries and LIN Common Shares held in the treasury of LIN or
by any Wholly Owned Subsidiary of LIN.
"LIN Public Shares": LIN Common Shares not owned by
McCaw or any of its affiliates or any member of a "group", as
such term is used for purposes of Schedule 13D under the Exchange
Act, of which McCaw or its affiliates are members with respect to
securities of LIN.
"McCaw": As defined in the preamble to this Agreement.
"Memorandum of Understanding": The Memorandum of
Understanding dated June 22, 1995, setting forth the proposed
terms for the settlement of the Stockholders Litigation.
"Merger": The merger of Merger Sub with and into LIN
as contemplated by Section 2.1.
"Merger Consideration": As defined in Section 3.1(a).<PAGE>
<PAGE> 4
"Merger Sub": As defined in the preamble to this
Agreement.
"NASDAQ": The National Association of Securities
Dealers Automated Quotations System.
"NYSE": The New York Stock Exchange, Inc.
"Options": As defined in Section 3.2.
"Option Plan": As defined in Section 3.2.
"Original Merger Agreement": The Merger Agreement,
dated April 28, 1995, by and among McCaw, Holdings, Merger Sub
and LIN, prior to the amendment and restatement thereof reflected
in this Agreement.
"PMVG": The Private Market Value Guarantee, dated
December 11, 1989, as amended, between McCaw and LIN, attached
hereto as Exhibit A.
"Paying Agent": As defined in Section 4.2.
"Person": Any individual or corporation, company,
partnership, trust, incorporated or unincorporated association,
joint venture or other entity of any kind.
"Private Market Price": The private market price per
LIN Common Share determined pursuant to Section 2(C) of the PMVG.
"Proxy Statement": As defined in Section 3.3.
"Rights": The Preferred Share Purchase Rights issued
pursuant to the Rights Agreement.
"Rights Agreement": The Rights Agreement, dated as of
May 2, 1988, as amended and restated as of January 13, 1989 and
June 19, 1989 and as subsequently further amended, between LIN
and Manufacturers Hanover Trust Company, as Rights Agent.
"Schedule 13E-3": The Transaction Statement on
Schedule 13E-3 to be filed under the Exchange Act by AT&T, McCaw,
Holdings, Merger Sub and LIN with respect to the Merger.
"SEC": The Securities and Exchange Commission.
"Significant Subsidiary": As defined under Rule 12b-1
of the Exchange Act.
"Solvent": As defined in Section 6.6.
"Stock Purchase Plan": As defined in Section 3.2(c).<PAGE>
<PAGE> 5
"Stockholders Litigation": The litigations brought by
stockholder plaintiffs in connection with the Merger and the PMVG
and certain related matters, as set forth in the Memorandum of
Understanding.
"Stockholders Meeting": As defined in Section 3.3.
"Subsidiary": As to any Person, any other Person of
which at least 50% of the equity or voting interest is owned,
directly or indirectly, by such first Person.
"Surviving Corporation": The surviving corporation in
the Merger.
"Wholly Owned Subsidiary": A Subsidiary of which 100%
of the equity interest is owned, directly or indirectly, by the
parent company.
ARTICLE II
THE MERGER; TERMS OF THE MERGER
2.1. The Merger. Subject to the terms and conditions
of this Agreement, at the Effective Time, Merger Sub shall be
merged with and into LIN in accordance with the provisions of
Section 251 of the DGCL and with the effect provided in Sections
259 and 261 of the DGCL. The separate corporate existence of
Merger Sub shall thereupon cease and LIN shall be the Surviving
Corporation and shall continue to be governed by the laws of the
State of Delaware. At the election of McCaw, any Wholly Owned
Subsidiary of McCaw may be substituted for Merger Sub as a
constituent corporation in the Merger, provided that the parties
shall have executed an appropriate amendment to this Agreement in
accordance with Section 9.3 in form and substance reasonably
satisfactory to LIN and McCaw in order to reflect such
substitution.
2.2. Effective Time. The Merger shall become
effective on the date and at the time (the "Effective Time") that
the Certificate of Merger shall have been accepted for filing by
the Secretary of State of the State of Delaware (or such later
date and time as may be specified, with the approval of LIN and
McCaw, in the Certificate of Merger).
2.3. Closing. Unless this Agreement shall have been
terminated and the transactions contemplated shall have been
abandoned pursuant to Section 9.1 or 9.2 and subject to the
fulfillment or waiver of the conditions set forth in Article
VIII, the Closing shall take place (i) at the offices of
Wachtell, Lipton, Rosen & Katz, New York, New York, as promptly<PAGE>
<PAGE> 6
as practicable (but in any event within three business days)
following satisfaction of the condition set forth in Section
8.1(a) or (ii) at such other place and/or time and/or on such
other date as McCaw and LIN may agree or as may be necessary to
permit the fulfillment or waiver of the other conditions set
forth in Article VIII. The parties hereto shall use all
reasonable efforts to cause the Certificate of Merger to be filed
with the Secretary of State of the State of Delaware on the
Closing Date or as soon as practicable thereafter.
2.4. Certificate of Incorporation. The Certificate of
Incorporation of Merger Sub as in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation, until duly amended in accordance with the
terms thereof and of the DGCL, except that Article SECOND thereof
shall be amended to read as follows:
"The name of the Corporation (which is hereinafter
called the "Corporation") is LIN Broadcasting
Corporation."
2.5. The By-Laws. The By-Laws of Merger Sub in effect
at the Effective Time shall be the By-Laws of the Surviving
Corporation, until duly amended in accordance with the terms
thereof, of the Certificate of Incorporation of the Surviving
Corporation and of the DGCL.
2.6. Directors. The directors of Merger Sub at the
Effective Time shall, from and after the Effective Time, be the
directors of the Surviving Corporation until their successors
have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and By-Laws.
2.7. Officers. The officers of LIN at the Effective
Time shall, from and after the Effective Time, be the officers of
the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and By-Laws.
ARTICLE III
CONVERSION OF SHARES; OPTION
PLAN; STOCKHOLDERS MEETING
3.1. Merger Consideration; Conversion or Cancellation
of Shares in the Merger. Subject to the provisions of this
Article III, at the Effective Time, by virtue of the Merger and
without any action on the part of the holders thereof, the shares
of the constituent corporations shall be converted as follows:<PAGE>
<PAGE> 7
(a) Each LIN Common Share issued and outstanding
immediately prior to the Effective Time (other than LIN
Common Shares owned by McCaw or any of its Wholly Owned
Subsidiaries and LIN Common Shares held in the treasury of
LIN or by any Wholly Owned Subsidiary of LIN, which LIN
Common Shares, by virtue of the Merger and without any
action on the part of the holders thereof, shall be
automatically cancelled and retired and shall cease to exist
with no payment being made with respect thereto, and other
than any Dissenting Shares) shall be converted into the
right to receive (i) $129.50 in cash, plus (ii) the
Additional Amount, if any, plus (iii) the Accretion Amount,
if any (collectively, the "Merger Consideration"), as set
forth in Section 4.2. The term "Additional Amount" shall
mean $0.25 less an amount equal to (x) the excess over $4
million of the total fee awarded by a final and
nonappealable order of the Delware Chancery Court to the
plaintiffs' attorneys in connection with the settlement of
the Stockholders Litigation divided by (y) the number of LIN
Merger Shares. The term "Accretion Amount" shall mean an
amount, if any, equal to the amount of simple interest that
would accrue on $129.50 plus the Additional Amount (if any)
at a rate of five and one-half percent (5-1/2%) per annum from,
but not including, September 15, 1995 through, and
including, the Closing Date.
(b) Each share of capital stock of Merger Sub issued
and outstanding immediately prior to the Effective Time
shall be converted into and become one validly issued, fully
paid and nonassessable share of Common Stock, par value
$0.01 per share, of the Surviving Corporation.
3.2. Option Plan; Stock Purchase Plan. (a) Pursuant
to the terms of the Amended and Restated 1969 Stock Option Plan
of LIN (the "Option Plan"), each option to purchase LIN Common
Shares outstanding at the Effective Time (each, an "Option")
issued pursuant to the Option Plan shall be assumed by AT&T and
shall constitute an option to acquire, on the same terms and
conditions as were applicable under such assumed Option, a number
of AT&T Common Shares equal to the product of the Assumption
Ratio and the number of LIN Common Shares remaining subject to
such Option as of the Effective Time, at a price per AT&T Common
Share equal to the aggregate exercise price for the LIN Common
Shares remaining subject to such Option divided by the number of
full AT&T Common Shares deemed to be purchasable pursuant to such
Option; provided, however, that (i) subject to the provisions of
clause (ii) below, the number of AT&T Common Shares that may be
purchased upon exercise of such Option shall not include any
fractional shares and, upon the last such exercise of such
Option, a cash payment shall be made for any fractional share
based upon the per share closing price of AT&T Common Shares as<PAGE>
<PAGE> 8
reported in the NYSE Composite Transactions on the date of such
exercise, and (ii) in the case of any Option to which Section
421 of the Code applies by reason of its qualification under
Section 422 or Section 423 of the Code ("qualified stock
options"), the option price, the number of shares purchasable
pursuant to such Option and the terms and conditions of exercise
of such Option shall be determined in order to comply with
Section 424 of the Code. For purposes of the foregoing, the
"Assumption Ratio" shall mean the per share closing price of the
LIN Common Shares on the date of approval of the Merger by the
LIN stockholders, as reported on NASDAQ, divided by the per share
closing price of AT&T Common Shares on the date of approval of
the Merger by the LIN stockholders, as reported in the NYSE
Composite Transactions (or if such date is not a trading day, on
the immediately preceding trading day). The Assumption Ratio
will be adjusted appropriately, if necessary, to reflect any
stock split, reverse stock split or similar change in the AT&T
Common Shares or the LIN Common Shares that is not reflected in
their respective per share closing prices on the date of approval
of the Merger; provided that in no event will any such adjustment
be made in respect of quarterly cash dividends payable on the
AT&T Common Shares or the LIN Common Shares.
(b) McCaw shall cause AT&T to take all corporate
action necessary to reserve for issuance a sufficient number of
AT&T Common Shares for delivery upon exercise of the Options
assumed in accordance with Section 3.2(a). AT&T shall file a
registration statement on Form S-8 (or any successor form) or
another appropriate form, effective as of the Effective Time,
with respect to AT&T Common Shares subject to such Options and
shall use all reasonable efforts to maintain the effectiveness of
such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses
contained therein) for so long as such Options remain
outstanding.
(c) LIN shall take such action as may be necessary so
that, from and after the Effective Time, no employee of LIN shall
be eligible to purchase LIN Common Shares pursuant to the LIN
Broadcasting Corporation Employee Stock Purchase Plan (the "Stock
Purchase Plan"). In lieu thereof, LIN employees who meet the
eligibility requirements thereof will be eligible to purchase
AT&T Common Shares pursuant to the McCaw Cellular Communications,
Inc. Employee Stock Purchase Plan.
(d) LIN shall take such action as may be necessary to
ensure that, following the Effective Time, no holder of Options
or any participant in the Option Plan, the Stock Purchase Plan or
any other plans, programs or arrangements of LIN or any of its
Subsidiaries shall have any right thereunder to acquire any
equity securities of LIN, the Surviving Corporation or any
Subsidiary thereof.<PAGE>
<PAGE> 9
3.3. Stockholders' Meeting. (a) As promptly as
practicable following the date hereof, LIN shall, in accordance
with applicable law and its Certificate of Incorporation and By-Laws:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Stockholders
Meeting") for the purpose of considering and taking action
upon the Merger and this Agreement and such other matters as
may be necessary to consummate the transactions contemplated
herein;
(ii) prepare and file with the SEC a preliminary proxy
statement relating to the matters to be considered at the
Stockholders Meeting pursuant to this Agreement and use its
reasonable best efforts to obtain and furnish
the information required to be included by the SEC in the
Proxy Statement and, after consultation with McCaw, to
respond promptly to any comments made by the SEC with
respect to the preliminary proxy statement and to cause a
definitive proxy statement (the "Proxy Statement") to be
mailed to its stockholders; and
(iii) subject to the fiduciary obligations of the LIN
Board under applicable law as advised in writing by outside
counsel selected by the LIN Board, include in the Proxy
Statement the recommendation of the LIN Board that
stockholders of LIN vote in favor of the approval of the
Merger, the adoption of this Agreement and such other
matters as may be necessary to consummate the transactions
contemplated hereby.
(b) McCaw agrees that, if the Merger is approved by
the affirmative vote of at least a majority of the LIN Public
Shares present and entitled to vote at the Stockholders Meeting
pursuant to clause (ii) of Section 8.1(a), McCaw will vote, or
cause to be voted, all of the LIN Common Shares beneficially
owned by it, its affiliates or any of its Subsidiaries in favor
of the approval of the Merger, the adoption of this Agreement and
such other matters as may be necessary to consummate the
transactions contemplated hereby. In addition, each of LIN,
McCaw, Holdings and Merger Sub agrees that it will fully
cooperate in the preparation of the Proxy Statement and the
Schedule 13E-3.
<PAGE>
<PAGE> 10
ARTICLE IV
DISSENTING SHARES; PAYMENT FOR SHARES
4.1. Dissenting Shares. Notwithstanding anything in
this Agreement to the contrary, LIN Common Shares outstanding
immediately prior to the Effective Time and held by a holder (if
any) who has not voted in favor of the Merger or consented
thereto in writing and who has demanded appraisal for such LIN
Common Shares in accordance with Section 262 of the DGCL
("Dissenting Shares") shall not be converted into the right to
receive the Merger Consideration, as provided in Section 3.1,
unless and until such holder fails to perfect or withdraws or
otherwise loses his right to appraisal and payment under the
DGCL. If, after the Effective Time, any such holder fails to
perfect or withdraws or loses his right to appraisal, such
Dissenting Shares shall thereupon be treated as if they had been
converted as of the Effective Time into the right to receive the
Merger Consideration to which such holder is entitled, without
interest thereon. LIN shall give McCaw prompt notice of any
demands received by LIN for appraisal of LIN Common Shares and
McCaw shall have the right to participate in all negotiations and
proceedings with respect to such demands. LIN shall not, except
with the prior written consent of McCaw, make any payment with
respect to, or settle or offer to settle, any such demands.
4.2. Payment for Shares. (a) From and after the
Effective Time, a bank or trust company to be designated by McCaw
shall act as paying agent (the "Paying Agent") in effecting the
payment of the Merger Consideration for certificates (the
"Certificates") formerly representing LIN Common Shares and
entitled to payment of the Merger Consideration pursuant to
Section 3.1. At the Effective Time, and from time to time
thereafter, McCaw or Merger Sub shall deposit, or cause to be
deposited, in trust with the Paying Agent for the benefit of the
holders of LIN Common Shares such amounts as may be necessary to
permit the Paying Agent to make the payments contemplated by
paragraph (b) of this Section 4.2 and, if applicable, paragraph
(d) of Section 4.3.
(b) Promptly after the Effective Time, but in no event
later than two business days after the date of the Effective
Time, the Paying Agent shall mail to each record holder of
Certificates that immediately prior to the Effective Time
represented LIN Common Shares (other than Certificates
representing LIN Common Shares owned by McCaw or any of its
Wholly Owned Subsidiaries and LIN Common Shares held in the
treasury of LIN or by any Wholly Owned Subsidiary of LIN) a form
of letter of transmittal which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Paying<PAGE>
<PAGE> 11
Agent and instructions for use in surrendering such Certificates
and receiving the Merger Consideration therefor. Upon the
surrender of each such Certificate, together with such letter of
transmittal duly executed and any other required documents, the
Paying Agent shall pay the holder of such Certificate, in
consideration therefor, the Merger Consideration multiplied by
the number of LIN Common Shares formerly represented by such
Certificate and, if applicable, the payment contemplated by
Section 4.3(d), and such Certificate shall forthwith be
cancelled. Until so surrendered, each such Certificate (other
than Certificates representing Dissenting Shares and Certificates
representing LIN Common Shares owned by McCaw or any of its
Wholly Owned Subsidiaries and LIN Common Shares held in the
treasury of LIN or by any Wholly Owned Subsidiary of LIN) shall
represent solely the right to receive the aggregate Merger
Consideration relating thereto and, if applicable, the payment
contemplated by Section 4.3(d). No interest shall be paid or
accrued on the Merger Consideration.
(c) Promptly following the date which is one year
after the Effective Time, the Paying Agent shall deliver to McCaw
all cash, Certificates and other documents in its possession
relating to the transactions described in this Agreement, and the
Paying Agent's duties shall terminate. Thereafter, each holder
of a Certificate formerly representing a LIN Common Share (other
than Certificates representing Dissenting Shares and Certificates
representing LIN Common Shares owned by McCaw or any of its
Wholly Owned Subsidiaries and LIN Common Shares held in the
treasury of LIN or by any Wholly Owned Subsidiary of LIN) may
surrender such Certificate to McCaw and (subject to applicable
abandoned property, escheat and similar laws) receive, in
consideration therefor, the aggregate Merger Consideration
relating thereto and, if applicable, the payment contemplated by
Section 4.3(d), without any interest or dividends thereon.
(d) The Merger Consideration and, if applicable, any
additional payment as contemplated by Section 4.3(c) or 4.3(d)
shall be net to each holder of Certificates in cash, subject to
reduction only for any applicable federal back-up withholding or
stock transfer taxes payable by such holder.
(e) If payment of cash in respect of any Certificate
is to be made to a Person other than the Person in whose name
such Certificate is registered, it shall be a condition to such
payment that the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and
that the Person requesting such payment shall have paid any
transfer and other taxes required by reason of such payment in a
name other than that of the registered holder of the Certificate
surrendered or shall have established to the satisfaction of
McCaw or the Paying Agent that such tax either has been paid or
is not payable.<PAGE>
<PAGE> 12
(f) After the Effective Time, there shall be no
transfers on the stock transfer books of the Surviving
Corporation of any LIN Common Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective
Time, Certificates formerly representing LIN Common Shares (other
than Certificates representing LIN Common Shares owned by McCaw
or any of its Wholly Owned Subsidiaries and LIN Common Shares
held in the treasury of LIN or by any Wholly Owned Subsidiary of
LIN) are presented to the Surviving Corporation or the Paying
Agent, they shall be surrendered and cancelled in return for the
payment of the aggregate Merger Consideration relating thereto
and, if applicable, the payment contemplated by Section 4.3(d),
as provided in this Article IV, subject to applicable law and the
other provisions of this Agreement in the case of Dissenting
Shares.
4.3. Payment for Shares If Additional Amount Is Not
Determined As of the Effective Time. Notwithstanding anything to
the contrary in this Agreement, in the event the Effective Time
occurs prior to the determination of the Additional Amount, if
any, the following provisions shall apply:
(a) The Merger Consideration will be determined and
paid in accordance with the terms hereof, and all references
herein to the Merger Consideration shall be construed, as if
the Additional Amount were equal to zero.
(b) McCaw or Merger Sub shall deposit or cause to be
deposited with the Paying Agent, in an interest bearing
account (the "Escrow Account"), an amount equal to (i) $0.25
plus the Accretion Amount, if any, applicable to $0.25,
multiplied by (ii) the number of LIN Merger Shares. Such
amount and any interest thereon will be retained in the
Escrow Account pending the payments contemplated by
paragraph (c) of this Section 4.3.
(c) If the total fee awarded by a final and
nonappealable order of the Delaware Chancery Court to the
plaintiffs' attorneys in connection with the settlement of
the Stockholders Litigation is greater than $4 million, the
excess of such fee over $4 million will be paid to the
plaintiffs' attorneys from the Escrow Account (together with
any interest accrued on such excess amount in the Escrow
Account). If any amount remains in the Escrow Account
following such payment, an additional payment will be made
to former holders of Certificates who have previously
received payment of the Merger Consideration, in an amount
per LIN Common Share formerly represented by such
Certificates equal to (i) the aggregate amount remaining in
the Escrow Account immediately following such<PAGE>
<PAGE> 13
payment to the plaintiffs' attorneys divided by (ii) the
total number of LIN Merger Shares (the "Escrow Amount"). If
any amount remains in the Escrow Account following all the
foregoing payments, such remaining amount shall be governed
by the provisions of Section 4.2(c) with respect to the
deposit and retention of funds held by the Paying Agent.
(d) Holders of Certificates who have not received
payment of the Merger Consideration as of the time of
determination of the Escrow Amount, if any, pursuant to
paragraph (c) of this Section 4.3 will be entitled to
receive, at such time as they receive payment of the Merger
Consideration in accordance with Section 4.2, an additional
payment, if any, equal to the Escrow Amount, without
interest thereon, with respect to each LIN Common Share in
respect of which such holder receives payment of the Merger
Consideration.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF LIN
LIN hereby represents and warrants to McCaw, Holdings
and Merger Sub as follows:
5.1. Organization, Etc. of LIN. LIN is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate
power and authority to own and operate its properties, to carry
on its business as now conducted and proposed by LIN to be
conducted, to enter into this Agreement and (subject to the
approval of the LIN stockholders) to carry out the provisions of
this Agreement and consummate the transactions contemplated
hereby. LIN has obtained from the appropriate Governmental
Bodies (including, without limitation, the FCC) all approvals and
licenses necessary for the conduct of its business and operations
as currently conducted, which approvals and licenses are valid
and remain in full force and effect, except where the failure to
have obtained such approvals or licenses or the failure of such
licenses and approvals to be valid and in full force and effect
does not have and would not be reasonably expected (so far as can
be foreseen at the time) to have a material adverse effect on the
business, properties, operations, condition (financial or other)
or prospects of LIN and its Subsidiaries taken as a whole.
5.2. Operations of Subsidiaries. Each Significant
Subsidiary of LIN (a) is a corporation or other legal entity duly
organized, validly existing and (if applicable) in good standing
under the laws of the jurisdiction of its organization and has<PAGE>
<PAGE> 14
the full power and authority to own its properties and conduct
its business and operations as currently conducted, except where
the failure to be duly organized, validly existing and in good
standing does not have, and would not be reasonably expected (so
far as can be foreseen at the time) to have, a material adverse
effect on the business, properties, operations, condition
(financial or other) or prospects of LIN and its Subsidiaries
taken as a whole and (b) has obtained from the appropriate
Governmental Bodies (including, without limitation, the FCC) all
approvals and licenses necessary for the conduct of its business
and operations as currently conducted, which licenses and
approvals are valid and remain in full force and effect, except
where the failure to have obtained such approvals and licenses or
the failure of such licenses and approvals to be valid and in
full force and effect does not have and would not be reasonably
expected (so far as can be foreseen at the time) to have a
material adverse effect on the business, properties, operations,
condition (financial or other) or prospects of LIN and its
Subsidiaries taken as a whole.
5.3. Agreement. This Agreement and the consummation
of the transactions contemplated hereby have been duly approved
by the LIN Board and have been duly authorized by all other
necessary corporate action on the part of LIN (except for the
approval of LIN's stockholders contemplated by Section 8.1(a)).
This Agreement has been duly executed and delivered by a duly
authorized officer of LIN and constitutes a valid and binding
agreement of LIN, enforceable against LIN in accordance with its
terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
5.4. Capital Stock. The authorized capital stock of
LIN consists of (a) 150,000,000 LIN Common Shares, of which
51,714,366 shares were outstanding as of April 28, 1995, and (b)
2,000,000 shares of preferred stock, no par value, none of which
were outstanding as of April 28, 1995. All outstanding LIN
Common Shares are duly authorized, validly issued, fully paid and
nonassessable, and no class of capital stock of LIN is entitled
to preemptive rights. There were outstanding on April 28, 1995
no options, warrants or other rights to acquire capital stock
from LIN, except (i) Options representing in the aggregate the
right to purchase up to 1,610,931 LIN Common Shares pursuant to
the Option Plan and (ii) the Rights. Since April 28, 1995, LIN
has not issued any capital stock or any options, warrants or
other rights to acquire capital stock from LIN, except for LIN
Common Shares issued upon due exercise of Options outstanding on
April 28, 1995 and except for LIN Common Shares issued pursuant
<PAGE>
<PAGE> 15
to the Stock Purchase Plan in accordance with its terms. Except
as disclosed in LIN's public filings under the Exchange Act filed
since January 1, 1995, all outstanding shares of capital stock of
the Significant Subsidiaries of LIN are owned by LIN or a direct
or indirect Wholly Owned Subsidiary of LIN, free and clear of all
liens, charges, encumbrances, claims and options of any nature.
5.5. Brokers and Finders. Except for the fees and
expenses payable to Lehman Brothers Inc. and Bear Stearns & Co.,
Inc., which fees and expenses are reflected in their agreements
with LIN, copies of which have been furnished to McCaw, and
except for Wasserstein Perella & Co., Inc., whose fees and
expenses are reflected in their agreement with LIN and their
agreement with LIN and McCaw, neither LIN nor the LIN Independent
Directors has employed any investment banker, broker, finder,
consultant or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's or similar fee or
commission in connection with this Agreement or the transactions
contemplated hereby.
5.6. Proxy Statement. The Proxy Statement will comply
in all material respects with the requirements of the Exchange
Act. The Proxy Statement will not, at the time filed with the
SEC, at the date it or any amendment or supplement is mailed to
stockholders and at the time of the Stockholders Meeting, contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the
circumstances under which they were made, not misleading;
provided that the foregoing shall not apply to information
supplied by McCaw, Holdings or Merger Sub with respect to any
thereof or to AT&T specifically for inclusion or incorporation by
reference in the Proxy Statement. If at any time prior to the
Effective Time any event with respect to LIN, its officers and
directors or any of its Subsidiaries should occur which is
required to be described in an amendment of, or a supplement to,
the Proxy Statement, LIN shall notify McCaw thereof by reference
to this Section 5.6 and such event shall be so described, and
such amendment or supplement shall be promptly filed with the SEC
and, as required by law, disseminated to the stockholders of LIN
and such amendment or supplement shall comply with all provisions
of applicable law. The Proxy Statement will also form a part of
the Schedule 13E-3, which Schedule 13E-3 will comply in all
material respects with the requirements of the Exchange Act.
5.7. Delaware Section 203. The Board of Directors of
LIN has taken all appropriate and necessary action such that the
provisions of Section 203 of the DGCL will not apply to any of
the transactions contemplated by this Agreement.<PAGE>
<PAGE> 16
5.8. Rights Agreement. The Rights Agreement has been
amended to provide that (i) none of AT&T, McCaw, Holdings or
Merger Sub will become an "Acquiring Person," (ii) no "Triggering
Event," "Share Acquisition Date" or "Distribution Date" (as such
terms are defined in the Rights Agreement) will occur and (iii)
Section 13 of the Rights Agreement will not be triggered, in each
case as a result of the execution or delivery of this Agreement
or any amendment hereto or the consummation of the transactions
contemplated hereby (including, without limitation, the Merger),
with the effect that (x) none of such events will trigger the
exercisability of the Rights, the separation of the Rights from
the stock certificates to which they are attached or any other
provision of the Rights Agreement and (y) the Rights will no
longer be outstanding upon the consummation of the Merger.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF
MCCAW, HOLDINGS AND MERGER SUB
McCaw, Holdings and Merger Sub each represents and
warrants to LIN as follows:
6.1. Organization, Etc. of McCaw, Holdings and Merger
Sub. Each of McCaw, Holdings and Merger Sub is a corporation
duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of incorporation, and each
has all requisite corporate power and authority to own and
operate its properties, to carry on its business as now conducted
and proposed by it to be conducted, to enter into this Agreement
and to carry out the provisions of this Agreement and consummate
the transactions contemplated hereby.
6.2. Agreement. This Agreement and the consummation
of the transactions contemplated hereby have been duly approved
by the respective Boards of Directors of McCaw, Holdings and
Merger Sub, by the unanimous vote of those directors present, and
by Holdings as the sole stockholder of Merger Sub (no other
corporate action on the part of McCaw, Holdings or Merger Sub
being necessary). This Agreement has been duly executed and
delivered by a duly authorized officer of each of McCaw, Holdings
and Merger Sub and constitutes a valid and binding agreement of
each of McCaw, Holdings and Merger Sub, enforceable against each
in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
<PAGE>
<PAGE> 17
6.3. Brokers and Finders. Except for the fees and
expenses payable to Morgan Stanley & Co., Incorporated, which
fees and expenses will be paid by AT&T and McCaw, and except for
Wasserstein Perella & Co., Inc., whose fees and expenses are
reflected in their agreement with LIN and McCaw, none of AT&T,
McCaw, Holdings or Merger Sub has employed any investment banker,
broker, finder, consultant or intermediary in connection with the
transactions contemplated by this Agreement which would be
entitled to any investment banking, brokerage, finder's or
similar fee or commission in connection with this Agreement or
the transactions contemplated hereby.
6.4. Proxy Statement. None of the information to be
supplied by McCaw, Holdings or Merger Sub with respect to any
thereof or to AT&T for inclusion or incorporation by reference in
the Proxy Statement will, at the time of the mailing of the Proxy
Statement or at the time of the Stockholder Meeting, contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order
to make the statements therein not misleading. If at any time
prior to the Effective Time any event with respect to McCaw,
Holdings or Merger Sub, or their officers and directors or any of
their Subsidiaries shall occur which is required to be described
in the Proxy Statement, McCaw shall notify LIN thereof by
reference to this Section 6.4 and such event shall be so
described, and an amendment or supplement shall be promptly filed
with the SEC and, as required by law, disseminated to the
stockholders of LIN. The Proxy Statement will also form a part
of the Schedule 13E-3, which Schedule 13E-3 will comply in all
material respects with the requirements of the Exchange Act.
6.5. No Prior Activities. Merger Sub has not
incurred, and will not incur, directly or through any Subsidiary,
any liabilities or obligations for borrowed money or otherwise,
except incidental liabilities or obligations not for borrowed
money incurred in connection with its organization. Except as
contemplated by this Agreement, Merger Sub (i) has not engaged,
directly or through any Subsidiary, in any business activities of
any type or kind whatsoever, (ii) has not entered into any
agreements or arrangements with any person or entity and (iii) is
not subject to or bound by any obligation or undertaking.
6.6. Solvency. Assuming that LIN is Solvent
immediately prior to the Effective Time, the Surviving
Corporation will be Solvent at and immediately after the
Effective Time, after giving effect to the transactions
contemplated hereby. For purposes of this Agreement, "Solvent"
shall mean, with respect to LIN or the Surviving Corporation, (i)
that the fair valuation of such corporation's property (on a
consolidated basis) is, on the date of determination, greater
than the total amount of consolidated liabilities of such
<PAGE>
<PAGE> 18
corporation as of such date and (ii) that the present fair
saleable value of such corporation's assets is, on the date of
determination, greater than the amount that will be required to
pay such corporation's probable liability on its existing debts
as they become absolute and matured.
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS
7.1. Conduct of Business of LIN. Except as
contemplated by this Agreement, during the period from the date
of this Agreement to the Effective Time, LIN will, and will cause
each of its Subsidiaries to, conduct its operations according to,
and not enter into any transaction other than in accordance with,
its ordinary course of business consistent with past practice.
Notwithstanding the foregoing, pending the Effective Time, LIN
and its Subsidiaries may convert their cellular systems (to the
extent they are not already so converted) to provide equal access
for long-distance carriers in connection with long-distance
communications using LIN's or its Subsidiaries' services and,
following such conversion, may market their services under the
AT&T service mark, in each case on such schedule as may be
determined by McCaw. AT&T hereby covenants and agrees to make
the use of the AT&T service mark available to LIN and its
Subsidiaries, for purposes of marketing their services pursuant
to the immediately preceding sentence, on a non-exclusive,
royalty free basis. Following the commencement of the marketing
of any service of LIN or any of its Subsidiaries pursuant to the
immediately preceding two sentences, AT&T shall continue to make
the use of the AT&T service mark available on such basis with
respect to such service, and such service shall continue to be so
marketed under the AT&T service mark, for so long as AT&T
directly or indirectly owns at least a majority of the voting
power of LIN's capital stock entitled to vote generally in the
election of directors, unless a majority of the LIN Independent
Directors otherwise consents.
7.2. Reasonable Efforts. LIN, McCaw, Holdings and
Merger Sub shall, and shall use all reasonable efforts to cause
their respective Subsidiaries to: (i) use all reasonable efforts
to promptly take, or cause to be taken, all other actions and do,
or cause to be done, all things necessary, proper or appropriate
to satisfy the conditions set forth in Article VIII and to
consummate and make effective the transactions contemplated by
this Agreement on the terms and conditions set forth herein as
soon as practicable (including seeking to remove promptly any
injunction or other legal barrier that may prevent such
consummation); and (ii) not take any action (including, without
limitation, effecting or agreeing to effect or announcing an<PAGE>
<PAGE> 19
intention or proposal to effect, any acquisition, business
combination or other transaction) which might reasonably be
expected to impair the ability of the parties to consummate the
Merger at the earliest possible time (regardless of whether such
action would otherwise be permitted or not prohibited hereunder).
7.3. Indemnification; Insurance. (a) McCaw and
Holdings agree that all rights to indemnification now existing in
favor of any of the present or former directors, officers or
employees of LIN or any of its Subsidiaries (the "Indemnified
Parties") as provided in its Certificate of Incorporation or
Bylaws, or otherwise in effect on the date of this Agreement
(including, without limitation, as provided in the PMVG), will
survive the Merger and continue in full force and effect and
McCaw and Holdings will cause the Surviving Corporation to honor
all such rights to indemnification.
(b) In the event of any claim, action, suit,
proceeding or investigation (whether arising before or after the
Effective Time) subject to the rights to indemnification provided
by paragraph (a) of this Section 7.3, (i) the Surviving
Corporation shall have the right, from and after the Effective
Time, to assume the defense thereof with counsel reasonably
satisfactory to such Indemnified Parties and McCaw and Holdings
shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently
incurred by such Indemnified Parties in connection with the
defense thereof (provided that such Indemnified Parties shall
have the right to be represented by up to one separate counsel
for the LIN Independent Directors and one separate counsel for
the other Indemnified Parties as a group in connection with the
defense thereof, in each case selected by such Indemnified
Parties and reasonably satisfactory to the Surviving Corporation,
if such Indemnified Parties shall have been advised by such
counsel that there may be one or more substantial legal defenses
available to them which are different from or additional to those
available to the Surviving Corporation and in the reasonable
judgment of such counsel it is advisable for such Indemnified
Parties to be represented by such separate counsel, in which
case, if such Indemnified Parties notify McCaw and Holdings in
writing that they elect to be represented by such separate
counsel at the expense of the Surviving Corporation in accordance
with the terms of this proviso, the Surviving Corporation shall
not have the right to assume the defense of such action on behalf
of such Indemnified Parties), (ii) the Indemnified Parties will
cooperate in the defense of any such matter and (iii) McCaw and
Holdings will not be liable for any settlement effected without
their prior written consent; provided that McCaw and Holdings
will not have any obligation hereunder to any Indemnified Party
when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final, that
<PAGE>
<PAGE> 20
the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law; and
provided, further, that nothing herein shall prevent the
Surviving Corporation from settling any such claim, action, suit,
proceeding or investigation as to any Indemnified Party subject
to the rights to indemnification provided by paragraph (a) of
this Section 7.3, so long as such settlement is based on the
payment of money and the Surviving Corporation agrees to make all
such payments due in connection with such settlement on behalf of
such Indemnified Party.
(c) McCaw and Holdings shall cause to be maintained in
effect for not less than six years after the Effective Time the
current policies of directors' and officers' liability insurance
maintained by LIN with respect to matters occurring prior to and
including the Effective Time for all present and past directors
and officers of LIN or any of its Subsidiaries; provided,
however, that (i) McCaw and Holdings may substitute therefor
policies of at least the same coverage containing terms and
conditions which are no less advantageous to the directors and
officers covered thereby and (ii) McCaw and Holdings shall not be
required to pay in the aggregate an annual premium for such
insurance in excess of two times the last annual premium paid
prior to the date hereof, but in such case shall purchase as much
coverage as possible for such amount.
(d) In the event that any action, suit, proceeding or
investigation relating hereto or to the transactions contemplated
by this Agreement is commenced, whether before or after the
Closing, the parties hereto agree to cooperate and use their
respective reasonable efforts to vigorously defend against and
respond thereto.
(e) This Section 7.3 is intended to benefit the
persons covered by the indemnification rights and/or insurance
policies referred to in this Section 7.3 and shall be binding on
all successors and assigns of McCaw, Holdings, Merger Sub, LIN
and the Surviving Corporation.
7.4. New York Real Property Gains and Transfer Tax.
Any liability arising out of New York State and/or New York City
Real Property Gains and Transfer Taxes, with respect to interests
in real property owned directly or indirectly by LIN immediately
prior to the Merger, if applicable and due with respect to the
Merger, shall be borne by LIN and expressly shall not be a
liability of the stockholders of LIN.
<PAGE>
<PAGE> 21
ARTICLE VIII
CONDITIONS
8.1. Conditions to Each Party's Obligations. The
respective obligations of each party to consummate the
transactions contemplated by this Agreement are subject to the
fulfillment at or prior to the Effective Time of each of the
following conditions, any or all of which may be waived (other
than the condition set forth in clause (ii) of Section 8.1(a)) in
whole or in part by the party being benefitted thereby, to the
extent permitted by applicable law and the PMVG:
(a) Stockholder Approval. This Agreement and the
transactions contemplated hereby shall have been duly
approved at the Stockholders Meeting by (i) the requisite
holders of LIN Common Shares in accordance with applicable
law and the Certificate of Incorporation and By-Laws of LIN
and (ii) the affirmative vote of the holders of at least a
majority of the LIN Public Shares present and entitled to
vote at the Stockholders Meeting at which a majority of the
LIN Public Shares shall have been present.
(b) No Injunction. There shall not be in effect any
judgment, writ, order, injunction or decree of any court or
Governmental Body of competent jurisdiction, restraining,
enjoining or otherwise preventing consummation of the
transactions contemplated by this Agreement or permitting
such consummation only subject to any condition or
restriction unacceptable to McCaw in its reasonable
judgment; provided, however, that any party invoking this
condition shall use reasonable efforts to have any such
order or injunction vacated or any such other restriction
eliminated.
8.2. Conditions to Obligations of McCaw, Holdings and
Merger Sub. The respective obligations of McCaw, Holdings and
Merger Sub to consummate the transactions contemplated by this
Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following conditions, any or all of
which may be waived in whole or part by McCaw, Holdings and
Merger Sub, as the case may be, to the extent permitted by
applicable law:
(a) Representations and Warranties True. The
representations and warranties of LIN contained in Section
Article V shall have been true in all material respects when
made and at the time of the Closing with the same effect as
though such representations and warranties had been made at
such time, except for changes resulting from the
consummation of the transactions contemplated by this
Agreement.
<PAGE>
<PAGE> 22
(b) Performance. LIN shall have performed or complied
in all material respects with all agreements and conditions
contained herein required to be performed or complied with
by it prior to or at the time of the Closing.
(c) Government Consents, Etc. All Authorizations, if
any, required in connection with the execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby shall have been made or obtained, in
each case without limitation or restriction unacceptable to
McCaw in its reasonable judgment, except where the failure
to have obtained such Authorizations would not be reasonably
expected (so far as can be foreseen at the time) to have a
material adverse effect on the business, properties,
operations, condition (financial or other) or prospects of
(i) LIN and its Subsidiaries taken as a whole or (ii) McCaw
and its Subsidiaries taken as a whole.
(d) Approval of Settlement of Stockholders Litigation.
A stipulation of settlement, as contemplated by the
Memorandum of Understanding, shall have been entered into
providing for the settlement of the Stockholders Litigation
on the terms set forth in the Memorandum of Understanding
and such stipulation shall have been approved by a final and
nonappealable order of the Delaware Chancery Court; provided
that such condition shall be deemed satisfied if the only
aspect of the settlement not approved by such a final and
nonappealable order is the award of the plaintiffs'
attorneys' fee.
(e) Third Party Consents. All required
authorizations, consents or approvals in connection with the
Merger of any third party (other than a Governmental Body),
if any, the failure to obtain which would have a material
adverse effect on (i) LIN and its Subsidiaries taken as a
whole or (ii) McCaw and its Subsidiaries taken as a whole,
shall have been obtained.
8.3. Conditions to Obligations of LIN. The
obligations of LIN to consummate the transactions contemplated by
this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following conditions, any or all of
which may be waived in whole or in part by LIN to the extent
permitted by applicable law:
<PAGE>
<PAGE> 23
(a) Representations and Warranties True. The
representations and warranties of McCaw, Holdings and Merger
Sub contained in Article VI shall have been true in all
material respects when made and at the time of the Closing
with the same effect as though such representations and
warranties had been made at such time, except for changes
resulting from the consummation of the transactions
contemplated by this Agreement.
(b) Performance. Each of McCaw, Holdings and Merger
Sub shall have performed or complied in all material
respects with all agreements and conditions contained herein
required to be performed or complied with by it prior to or
at the time of the Closing.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1. Termination by Mutual Consent. This Agreement
may be terminated and the Merger may be abandoned at any time
prior to the Effective Time, before or after the approval by
holders of LIN Common Shares, either by the mutual written
consent of McCaw and LIN, or by mutual action of their respective
Boards of Directors.
9.2. Termination by Either McCaw or LIN. This
Agreement may be terminated (upon notice from the terminating
party to the other parties) and the Merger may be abandoned (a)
by action of the Board of Directors of McCaw if the Merger shall
not have been consummated by November 30, 1995, (b) by action of
the Board of Directors of LIN if the Merger shall not have been
consummated by December 31, 1995 or, if the condition set forth
in Section 8.1(a) shall have been satisfied and the Merger is
being pursued in good faith by McCaw but has not been completed
due to regulatory delays or litigation, August 31, 1996, or (c)
by action of the Board of Directors of either McCaw or LIN if (i)
any court of competent jurisdiction in the United States or
Governmental Body in the United States shall have issued an
order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the Merger and
such order, decree, ruling or other action shall have become
final and nonappealable or (ii) at the Stockholders Meeting, this
Agreement and the Merger shall not receive the affirmative vote
of the holders of at least a majority of the LIN Public Shares
present and entitled to vote at the Stockholders Meeting at which
a majority of the LIN Public Shares shall be present.
<PAGE>
<PAGE> 24
9.3. Amendment. Subject to the applicable provisions
of the DGCL, at any time prior to the Effective Time, the parties
hereto may modify, amend or supplement this Agreement, by written
agreement executed and delivered by duly authorized officers of
the respective parties with respect to any of the terms contained
herein; provided, however, that after approval of the Merger by
the stockholders of LIN, no such amendment or modification shall
be made which reduces the form or amount of consideration payable
in the Merger or adversely affects the rights of LIN's
stockholders hereunder without the approval of such stockholders.
This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
9.4. Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to Section
9.3, waive compliance with any of the agreements or conditions
(other than the condition set forth in clause (ii) of Section
8.1(a)) contained in this Agreement. Any agreement on the part
of a party to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not
constitute a waiver of such rights.
9.5. Procedure for Termination, Amendment, Extension
or Waiver. A termination of this Agreement pursuant to Section
9.1 or 9.2, an amendment of this Agreement pursuant to Section
9.3 or an extension or waiver pursuant to Section 9.4 by any of
the parties shall, in order to be effective, require, in the case
of McCaw, Holdings or Merger Sub, approval by its Board of
Directors or the duly authorized designee of its Board of
Directors and, in the case of LIN, approval by its Board of
Directors or the duly authorized designee of its Board of
Directors and approval by a majority of the LIN Independent
Directors.
9.6. Effect of Termination and Abandonment. In the
event of termination of this Agreement and abandonment of the
Merger pursuant to this Article IX, no party hereto (or any of
its directors or officers) shall have any liability or further
obligation to any other party under this Agreement, except that
nothing herein will relieve any party from liability for any
breach of this Agreement and except that the last two sentences
of Section 7.1 will survive any termination of this Agreement
and/or abandonment of the Merger. Except as and to the extent
provided in the PMVG, the termination of this Agreement and
abandonment of the Merger pursuant to this Article IX shall not
<PAGE>
<PAGE> 25
affect in any way the PMVG, which shall continue to be in full
force and effect to the extent of and in accordance with its
terms.
ARTICLE X
MISCELLANEOUS AND GENERAL
10.1. Expenses. Each party shall bear its own
expenses, including the fees and expenses of any attorneys,
accountants, investment bankers, brokers, finders or other
intermediaries or other Persons engaged by it, incurred in
connection with this Agreement and the transactions contemplated
hereby, except as set forth in Section 7.4 and except that
expenses incurred in connection with printing and mailing the
Proxy Statement will be shared equally by McCaw, Holdings and
Merger Sub, on the one hand, and LIN, on the other.
10.2. Notices, Etc. All notices, requests, demands or
other communications required by or otherwise with respect to
this Agreement shall be in writing and shall be deemed to have
been duly given to any party when delivered personally (by
courier service or otherwise), when delivered by telecopy and
confirmed by return telecopy, or seven days after being mailed by
first-class mail, postage prepaid and return receipt requested in
each case to the applicable addresses set forth below:
If to LIN:
LIN Broadcasting Corporation
5400 Carillon Point
Kirkland, Washington 98033
Attn: Mr. Tom A. Alberg
Telecopy: (206) 828-1835
with copies to:
David B. Chapnick, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Telecopy: (212) 455-2502
and
Jeffrey Weinberg, Esq.
Weil, Gotshal & Manges
767 Fifth Avenue
New York, NY 10153
Telecopy: (212) 310-8007<PAGE>
<PAGE> 26
If to McCaw, Holdings or Merger Sub:
McCaw Cellular Communications, Inc.
1150 Connecticut Avenue, N.W.
Suite 400
Washington, DC 20036
Attn: Andrew A. Quartner, Esq.
Telecopy: (202) 223-9095
with copies to:
AT&T Corp.
131 Morristown Rd., C64-A2029
Basking Ridge, New Jersey 07920
Attn: Marilyn J. Wasser, Esq.
Telecopy: (908) 953-4657
and
Steven A. Rosenblum, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy: (212) 403-2000
or to such other address as such party shall have designated by
notice so given to each other party.
10.3. Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement
(other than the representations and warranties set forth in
Sections 6.5 and 6.6) or in any instrument delivered pursuant to
this Agreement shall survive the Effective Time. This Section
10.3 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective
Time.
10.4. No Assignment. This Agreement shall be binding
upon and shall inure to the benefit of and be enforceable by the
parties and their respective successors and assigns; provided
that, except as otherwise expressly set forth in this Agreement,
neither the rights nor the obligations of any party may be
assigned or delegated without the prior written consent of the
other party.
10.5. Entire Agreement. This Agreement embodies the
entire agreement and understanding between the parties relating
to the subject matter hereof and supersedes all prior agreements
and understandings relating to such subject matter; provided,
however, that the parties hereto acknowledge and agree that this
Agreement shall not supersede or in any way modify the PMVG which
<PAGE>
<PAGE> 27
shall continue to be in full force and effect in accordance with
its terms. The parties further acknowledge and agree that the
Merger contemplated by this Agreement shall be considered an
Acquisition as defined in the PMVG.
10.6. Specific Performance. The parties acknowledge
that money damages are not an adequate remedy for violations of
this Agreement and that any party may, in its sole discretion,
apply to a court of competent jurisdiction for specific
performance or injunctive or such other relief as such court may
deem just and proper in order to enforce this Agreement or
prevent any violation hereof and, to the extent permitted by
applicable law, each party waives any objection to the imposition
of such relief.
10.7. Remedies Cumulative. All rights, powers and
remedies provided under this Agreement or otherwise available in
respect hereof at law or in equity shall be cumulative and not
alternative, and the exercise or beginning of the exercise of any
thereof by any party shall not preclude the simultaneous or later
exercise of any other such right, power or remedy by such party.
10.8. No Waiver. The failure of any party hereto to
exercise any right, power or remedy provided under this Agreement
or otherwise available in respect hereof at law or in equity, or
to insist upon compliance by any other party hereto with its
obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver
by such party of its right to exercise any such or other right,
power or remedy or to demand such compliance.
10.9. No Third Party Beneficiaries. This Agreement is
not intended to be for the benefit of and shall not be
enforceable by any Person or entity who or which is not a party
hereto, except for the indemnification provisions contained in
Section 7.3, which provisions may be enforced by the parties
referred to therein.
10.10. Public Announcements. McCaw and LIN will agree
upon the timing and content of the initial press release to be
issued describing the transactions contemplated by this
Agreement, and will not make any public announcement thereof
prior to reaching such agreement unless required to do so by
applicable law or regulation. To the extent reasonably requested
by either party, each party will thereafter consult with and
provide reasonable cooperation to the other in connection with
the issuance of further press releases or other public documents
describing the transactions contemplated by this Agreement.
<PAGE>
<PAGE> 28
10.11. Certain Actions by LIN. Subject to Section
9.5, LIN shall not be deemed to have breached this Agreement by
virtue of any action taken by LIN that is expressly approved by a
majority of the members of the LIN Board who are employees of
McCaw or its affiliates other than LIN and its Subsidiaries.
10.12. Governing Law. This Agreement and all disputes
hereunder shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware,
without regard to principles of conflict of laws.
10.13. Name, Captions, Etc. The name assigned this
Agreement and the section captions used herein are for
convenience of reference only and shall not affect the
interpretation or construction hereof. Unless otherwise
specified, (a) the terms "hereof", "herein" and similar terms
refer to this Agreement as a whole and (b) references herein to
Articles or Sections refer to articles or sections of this
Agreement.
10.14. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to
be an original, but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies
each signed by less than all, but together signed by all, the
parties hereto.
10.15. McCaw Guarantee. McCaw absolutely, irrevocably
and unconditionally guarantees the performance and satisfaction
of the obligations of each of Holdings, Merger Sub and the
Surviving Corporation under this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed
and delivered by the parties set forth below.
Date: June 30, 1995 MCCAW CELLULAR COMMUNICATIONS, INC.
By:/s/
-------------------------------
Steven W. Hooper
President
Date: June 30, 1995 MMM HOLDINGS, INC.
By:/s/
-------------------------------
Steven W. Hooper
President
Date: June 30, 1995 MMM ACQUISITION CORP.
By:/s/
-------------------------------
H. John Hokenson
Vice President
Date: June 30, 1995 LIN BROADCASTING CORPORATION
By:/s/
-------------------------------
Lewis M. Chakrin
Chairman
Agreed to for purposes of the last
two sentences of Section 7.1:
AT&T CORP.
By:/s/
-------------------------------
Dennis J. Carey
Vice President<PAGE>
<PAGE>
APPENDIX B
[Letterhead of Wasserstein Perella & Co., Inc.]
June 30, 1995
Board of Directors
LIN Broadcasting Corporation
5295 Carillon Point
Kirkland, Washington 98033
Members of the Board:
You have asked us to advise you with respect to the
fairness from a financial point of view to the stockholders of
LIN Broadcasting Corporation (the "Company") (other than McCaw
Cellular Communications, Inc. ("McCaw"), a wholly owned
subsidiary of AT&T Corp. ("AT&T")) of the consideration to be
received by such stockholders pursuant to the terms of the
Agreement and Plan of Merger among the Company, McCaw, MMM
Holdings, Inc., a wholly owned subsidiary of McCaw ("Holdings")
and MMM Acquisition Corp., a wholly owned subsidiary of Holdings
("Merger Sub"), dated April 28, 1995, as amended and restated as
of June 30, 1995 (the "Merger Agreement"). The Merger Agreement
provides for the merger of Merger Sub with and into the Company
(the "Merger"), resulting in the Company becoming a wholly owned
subsidiary of Holdings, and each share of Common Stock, par value
$0.01 per share (the "LIN Common Shares") of the Company issued
and outstanding immediately prior to the Merger (other than LIN
Common Shares held by McCaw or any of its wholly owned
subsidiaries) being converted into the right to receive $129.50
in cash, plus the Additional Amount (as defined below), if any,
and the Accretion Amount (as defined below), if any. The
"Additional Amount" means $0.25 per LIN Common Share less an
amount (which could be some portion of the $0.25 per LIN Common
Share or the entire amount thereof) determined with respect to
the settlement of certain stockholder litigation involving the
Company, among others, as described in the draft LIN Broadcasting
Corporation Proxy statement, dated 6/26/95 (the "Draft Proxy
Statement"), previously provided to us. The "Accretion Amount"
means an amount equal to the amount of interest, if any, that
would accrue on the $129.50 per LIN Common Share, plus the
Additional Amount, if any, at a rate of 5.5% per annum from, but
not including, September 15, 19995 to, and including, the date
upon which the closing of the Merger occurs. The terms and<PAGE>
<PAGE> B-2
conditions of the Merger are set forth in more detail the Draft
Proxy statement and in the Merger Agreement. Since it is not
known on the date hereof whether all, any portion or none of
either the Additional Amount or the Accretion Amount will become
payable to shareholders of the Company as a result of the Merger,
the Additional Amount and the Accretion Amount are disregarded
for purposes of this opinion. The $129.50 per LIN Common Share
is referred to as the "Merger Consideration".
Pursuant to an engagement letter dated February 17,
1995 (the "February Engagement"), we served as the "Mutually
Designated Appraiser" under (and as defined in) the Private
Market Value Guarantee (the "PMVG") dated December 11, 1989
between McCaw and the Company. On March 7, 1995 we delivered our
opinion determining the private market value of the LIN Common
Shares pursuant to the PMVG. Our determination of such private
market value pursuant thereto was $127.50 per LIN Common Share.
As contemplated by the PMVG, on April 28, 1995, McCaw and the
Company entered into an Agreement and Plan of Merger (the
"Original Merger Agreement"), providing for the merger of Merger
Sub with and into the Company and the payment to shareholders of
the Company other than McCaw of $127.50 per LIN Common Share.
Subsequent to the date of the Original Merger Agreement,
settlement discussions were held with plaintiffs in certain
stockholder litigations and certain other parties as described in
the Draft Proxy Statement. The result of those discussions is a
proposed settlement which calls for the amendment and restatement
of the Original Merger Agreement in the form of the Merger
Agreement and the payment of the Merger Consideration pursuant
thereto.
The February Engagement required us to determine the
price an unrelated third party would pay for the Company in an
arm's-length transaction assuming the Company were being sold in
a manner designed to maximize value, all in accordance with, and
based on the contractual requirements of, the PMVG. Our opinion
below on the fairness of the Merger Consideration from a
financial point of view is based on criteria and judgments
customarily applied in rendering fairness opinions in
circumstances similar to the circumstances of the Merger.
In connection with the February Engagement and in
arriving at our opinion set forth below, we familiarized
ourselves with the business of the Company, reviewing, among
other things, the following:
(i) the PMVG;
<PAGE>
<PAGE> B-3
(ii) the reports and materials (the "Other
Appraisers' Reports") prepared and delivered to us by Morgan
Stanley & Co. Incorporated on behalf of McCaw and by Lehman
Brothers and Bear Stearns & Co. on behalf of the Company's
Independent Directors relating to their determinations of the
private market value of the LIN common shares pursuant to section
2(C) of the PMVG;
(iii) certain publicly available information with
respect to the Company, including the publicly available
consolidated financial statements of the Company for recent years
and interim periods available to the date hereof;
(iv) certain financial and operating information,
including certain projections of financial performance, relating
to the Company, its principal operating subsidiaries and certain
entities in which the Company or its subsidiaries hold
partnership interests prepared by each of the management of the
Company and the management of McCaw;
(v) the Draft Proxy Statement;
(vi) certain publicly available information
concerning the public trading prices of the LIN Common Shares,
certain market indices and the stock of certain other companies
in businesses similar to that of the Company; and
(vii) certain publicly available information
concerning merger and acquisition transactions involving McCaw,
the Company and certain other companies in businesses similar to
the Company.
In addition, we have had discussions with the
management of the Company and its representatives concerning the
businesses, operations, assets, financial condition and future
prospects of the Company and its subsidiaries. We have also
performed such studies and analyses as we considered appropriate
for purposes of this opinion.
We have not been provided with any internal nonpublic
information prepared by McCaw or AT&T relating to the operations
or assets of McCaw or AT&T or the Company, other than the
information referred to in clause (iv) above, or any valuations
of the Company prepared by the Company, McCaw or AT&T or their
financial advisers, other than those contained in the other
Appraisers' Reports. We have not been asked to and have not
solicited any third parties regarding their possible interest in
acquiring the Company or any of its business or assets or
investigated alternative transactions which may be available to
the Company apart from those considered at the time of the
February Engagement.
<PAGE>
<PAGE> B-4
In our review and analysis and in formulating our
opinion, we have assumed and relied upon the accuracy and
completeness of all the factual, historical, financial and other
information provided to us and on publicly available information.
We have assumed, with your consent, that the financial forecasts
and projections provided to us by the Company and the other
Appraisers' Reports were prepared in good faith and on bases
reflecting the best currently available judgments and estimates
of the party preparing such forecasts and projections. We also
have assumed that the Company does not have contingent
liabilities exceeding the reserves therefor established in the
Company's financial statements. We have not independently
verified the accuracy or completeness of, and we do not assume
responsibility for, any of such information. In addition, we
have not assumed any responsibility for conducting a physical
inspection of the properties or facilities of the Company or for
making or obtaining an independent valuation or appraisal of the
assets or liabilities of the Company. Our opinion is necessarily
based on economic and market conditions and other circumstances
as they exist and can be evaluated by us as of the date hereof
and on the Draft Proxy Statement and the Merger Agreement in the
forms provided to us.
We have relied on the advice of counsel for LIN and our
own counsel on this matter with respect to legal and tax matters.
In addition to acting for the Company and McCaw as the
Mutually Designated Appraiser under the February Engagement, we
acted as financial adviser to the Company in connection with the
agreement dated as of December 11, 1989 among McCaw, the Company
and Holdings, pursuant to which the parties thereto agreed, among
other things, that McCaw would acquire a majority of the
outstanding shares of the Company and certain other proposed
transactions and activities prior to the Company's entering into
such agreement.
It is understood that this letter is solely for the
benefit and use of the Board of Directors of the Company in its
consideration of the Merger Agreement and may not be relied upon
by any other person, used for any other purpose or reproduced,
disseminated, quoted or referred to, in whole or in part, orally
or in any registration statement, proxy statement or in any other
document or any press release or public statement without our
prior written consent, except that it may be disclosed in its
entirety in any proxy statement to be filed by the Company with
the Securities and Exchange Commission and circulated to
stockholders in connection with the Merger. This letter does not
constitute a recommendation to any shareholder with respect to
whether to vote in favor of the Merger, and should not be relied
upon by any shareholder as such.
<PAGE>
<PAGE> B-5
Based upon and subject to the foregoing, including the
various assumptions and limitations set forth herein, it is our
opinion that as of the date hereof the Merger Consideration per
LIN Common Share, payable in cash, to be received by the
stockholders of the Company, other than McCaw, pursuant to the
Merger is fair from a financial point of view to such
stockholders.
Very truly yours,
WASSERSTEIN PERELLA & CO., INC.
<PAGE>
<PAGE>
APPENDIX C
SUMMARY OF APPRAISAL RIGHTS
Holders of LIN Common Shares are entitled to appraisal
rights under Section 262 of the DGCL ("Section 262"). Section
262 is reprinted in its entirety herewith. All references in
Section 262 and in this summary to a "stockholder" are to the
record holder of LIN Common Shares as to which appraisal rights
are asserted. A person having a beneficial interest in LIN
Common Shares that are held of record in the name of another
person, such as a broker or nominee, must act promptly to cause
the record holder to follow the steps summarized below properly
and in a timely manner to perfect whatever appraisal rights the
beneficial owner may have.
The following discussion is not a complete statement of the
law relating to appraisal rights and is qualified in its entirety
by reference to Section 262. This discussion and Section 262
should be reviewed carefully by any holder who wishes to exercise
statutory appraisal rights or who wishes to preserve the right to
do so, since failure to comply with the procedures set forth
herein or therein will result in the loss of appraisal rights.
Stockholders of record who desire to exercise their
appraisal rights must satisfy all of the following conditions. A
written demand for appraisal of LIN Common Shares must be
delivered to LIN at the address set forth below prior to the vote
of the LIN stockholders on the Merger. Voting against,
abstaining from voting or failing to vote on the Merger Agreement
and the Merger will not constitute a demand for appraisal within
the meaning of Section 262.
Stockholders electing to exercise their appraisal rights
under Section 262 must not vote for approval and adoption of the
Merger Agreement and of the Merger. If a stockholder returns a
signed proxy but does not specify a vote against approval of the
Merger or a direction to abstain, the proxy will be voted for
approval and adoption of the Merger Agreement and of the Merger,
which will have the effect of waiving that stockholder's
appraisal rights.
The demand for appraisal must be executed by or for the
stockholder of record, fully and correctly, as such stockholder's
name appears on the Certificate or Certificates representing his
or her LIN Common Shares. If the LIN Common Shares are owned of
record in a fiduciary capacity, such as by a trustee, guardian,
or custodian, such demand must be executed by the fiduciary. If
the LIN Common Shares are owned of record by more than one
person, as in a joint tenancy or tenancy in common, such demand
must be executed by or for all record owners. An authorized
agent, including an agent for two or more record owners, may<PAGE>
<PAGE> C-2
execute the demand for appraisal for a stockholder of record;
however, the agent must identify the record owner and expressly
disclose the fact that, in exercising the demand, such person is
acting as agent for the record owner.
A record owner, such as a broker, who holds LIN Common
Shares as a nominee for others, may exercise appraisal rights
with respect to the LIN Common Shares held for all or less than
all beneficial owners of LIN Common Shares as to which such
person is the record owner. In such cases the written demand for
appraisal must set forth the number of LIN Common Shares covered
by such demand. Where the number of LIN Common Shares is not
expressly stated, the demand will be presumed to cover all LIN
Common Shares outstanding in the name of such record owner.
Beneficial owners who are not record owners and who intend to
exercise appraisal rights should instruct their record owners to
comply strictly with the statutory requirements with respect to
the exercise of appraisal rights.
A stockholder who elects to exercise appraisal rights must
mail or deliver his or her written demand to:
LIN Broadcasting Corporation
5295 Carillon Point
Kirkland, Washington 98033
Attn: Secretary
The written demand for appraisal must specify the
stockholder's name and mailing address, the number of LIN Common
Shares owned, and that the stockholder is thereby demanding
appraisal of his or her LIN Common Shares.
Within 120 days after the date on which the Merger becomes
effective (the "Merger Date") any stockholder who has complied
with the required conditions of Section 262 may file a petition
in the Delaware Court of Chancery (the "Delaware Chancery Court")
demanding a determination of the fair value of the LIN Common
Shares of all holders of LIN Common Shares who have so complied
with such conditions. If a petition for an appraisal is timely
filed, after a hearing on such petition, the Delaware Chancery
Court will determine which stockholders are entitled to appraisal
rights and will appraise the LIN Common Shares owned by such
stockholders, determining the fair value of such LIN Common
Shares, exclusive of any element of value arising from the
accomplishment or expectation of the Merger, together with a fair
rate of interest, if any, to be paid upon the amount determined
to be the fair value. In determining fair value, the Delaware
Chancery Court is to take into account all relevant factors. In
Weinberger v. UOP, Inc., et al., decided February 1, 1983, the
<PAGE>
<PAGE> C-3
Delaware Supreme Court, in discussing the considerations that
could be taken into account in determining fair value in an
appraisal proceeding, stated that "proof of value by any
techniques or methods which are generally considered acceptable
in the financial community and otherwise admissible in court"
should be considered and that "fair price obviously requires
consideration of all relevant factors involving the value of a
company." The Delaware Supreme Court stated that in making this
determination of fair value the court must consider market value,
asset value, dividends, earnings prospects, the nature of the
enterprise and any other facts which could be ascertained as of
the date of the merger which throw any light on future prospects
of the merged corporation. Section 262 provides that fair value
is to be "exclusive of any element of value arising from the
accomplishment or expectation of the merger." In Weinberger, the
Delaware Supreme Court construed Section 262 to mean that
"elements of future value, including the nature of the
enterprise, which are known or susceptible of proof as of the
date of the merger and not the product of speculation may be
considered."
Within 120 days after the Merger Date, any holder of LIN
Common Shares who has complied with the requirements for exercise
of appraisal rights as discussed above and stated in Section 262
is entitled, upon written request, to receive from LIN a
statement setting forth the aggregate number of LIN Common Shares
not voted in favor of the Merger and with respect to which
demands for appraisal have been received and the aggregate number
of holders of such LIN Common Shares. Such statement must be
mailed within 10 days after the written request therefor has been
received by LIN or, if later, within 10 days after the expiration
of the period for delivery to LIN of appraisal demands.
Stockholders considering seeking appraisal should have in
mind that the fair value of their LIN Common Shares determined
under Section 262 could be more than, the same as or less than
the consideration they are to receive pursuant to the Merger if
they do not seek appraisal of their LIN Common Shares. The cost
of the appraisal proceeding may be determined by the Delaware
Chancery Court and assessed against such parties as the Delaware
Chancery Court deems equitable in the circumstances. Upon
application of a dissenting stockholder, the Delaware Chancery
Court may order that all or a portion of the expenses incurred by
any dissenting stockholder in connection with the appraisal
proceeding, including without limitation reasonable attorneys'
fees and the fees and expenses of experts, be charged pro rata
against the value of all LIN Common Shares entitled to appraisal.
<PAGE>
<PAGE> C-4
Any stockholder who has duly demanded appraisal in
compliance with Section 262 will not, after the Merger Date, be
entitled to vote for any purpose the LIN Common Shares subject to
such demand or to receive any dividends or other distributions on
such LIN Common Shares, except for any dividends or distributions
payable to stockholders of record at a date prior to the Merger
Date.
At any time within 60 days after the Merger Date, any
stockholder will have the right to withdraw his or her demand for
appraisal and to accept the terms offered pursuant to the Merger;
after this period, the stockholder may withdraw his or her demand
for appraisal only with the consent of LIN as the Surviving
Corporation. If no petition for appraisal is filed with the
Delaware Chancery Court within 120 days after the Merger Date by
any stockholder who has demanded appraisal, such stockholder's
rights to appraisal will cease, and such stockholder will be
entitled to receive the Merger Consideration. Inasmuch as LIN
has no obligation to file such a petition, and has no present
intention to do so, any stockholder who desires such a petition
to be filed is advised to file it on a timely basis. No petition
timely filed in the Delaware Chancery Court demanding appraisal
shall be dismissed as to any stockholder without the approval of
the Delaware Chancery Court, and such approval may be conditioned
upon such terms as the Delaware Chancery Court deems just.
Section 262 of the General Corporation
Law of the State of Delaware
Section 262. Appraisal Rights.
(a) Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand
pursuant to subsection (d) of this section with respect to such
shares, who continuously holds such shares through the effective
date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in
favor of the merger or consolidation nor consented thereto in
writing pursuant to Section 228 of this title shall be entitled
to an appraisal by the Court of Chancery of the fair value of his
shares of stock under the circumstances described in subsections
(b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock
corporation and also a member of record of a nonstock
corporation; the words "stock" and "share" mean and include what
is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and
<PAGE>
<PAGE> C-5
the words "depository receipt" mean a receipt or other instrument
issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation,
which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of
any class or series of stock of a constituent corporation in a
merger or consolidation to be effected pursuant to Section 251,
252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under
this section shall be available for the shares of any class
or series of stock, which stock, or depository receipts in
respect thereof, at the record date fixed to determine the
stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of
merger or consolidation, were either (i) 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. or (ii)
held of record by more than 2,000 holders; and further
provided that no appraisal rights shall be available for any
shares of stock of the constituent corporation surviving a
merger if the merger did not require for its approval the
vote of the holders of the surviving corporation as provided
in subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for
the shares of any class or series of stock of a constituent
corporation if the holders thereof are required by the terms
of an agreement of merger or consolidation pursuant to
Sections 251, 252, 254, 257, 258, 263 and 264 of this title
to accept for such stock anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository
receipts in respect thereof;
b. Shares of stock of any other corporation, or
depository receipts in respect thereof, which shares of
stock or depository receipts at the effective date of the
merger or consolidation will be either 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. or held of
record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs
a. and b. of this paragraph; or<PAGE>
<PAGE> C-6
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs
a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary
Delaware corporation party to a merger effected under
Section 253 of this title is not owned by the parent
corporation immediately prior to the merger, appraisal
rights shall be available for the shares of the subsidiary
Delaware corporation.
(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be
available for the shares of any class or series of its stock as a
result of an amendment to its certificate of incorporation, any
merger or consolidation in which the corporation is a constituent
corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains
such a provision, the procedures of this section, including those
set forth in subsections (d) and (e) of this section, shall apply
as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be
submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for
which appraisal rights are available pursuant to subsections
(b) or (c) hereof that appraisal rights are available for
any or all of the shares of the constituent corporations,
and shall include in such notice a copy of this section.
Each stockholder electing to demand the appraisal of his
shares shall deliver to the corporation, before the taking
of the vote on the merger or consolidation, a written demand
for appraisal of his shares. Such demand will be sufficient
if it reasonably informs the corporation of the identity of
the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against
the merger or consolidation shall not constitute such a
demand. A stockholder electing to take such action must do
so by a separate written demand as herein provided. Within
10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall
notify each stockholder of each constituent corporation who
has complied with this subsection and has not voted in favor
of or consented to the merger or consolidation of the date
that the merger or consolidation has become effective; or<PAGE>
<PAGE> C-7
(2) If the merger or consolidation was approved
pursuant to Section 228 or 253 of this title, the surviving
or resulting corporation, either before the effective date
of the merger or consolidation or within 10 days thereafter,
shall notify each of the stockholders entitled to appraisal
rights of the effective date of the merger or consolidation
and that appraisal rights are available for any or all of
the shares of the constituent corporation, and shall include
in such notice a copy of this section. The notice shall be
sent by certified or registered mail, return receipt
requested, addressed to the stockholder at his address as it
appears on the records of the corporation. Any stockholder
entitled to appraisal rights may, within 20 days after the
date of mailing of the notice, demand in writing from the
surviving or resulting corporation the appraisal of his
shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder
and that the stockholder intends thereby to demand the
appraisal of his shares.
(e) Within 120 days after the effective date of the merger
or consolidation, the surviving or resulting corporation or any
stockholder who has complied with subsections (a) and (d) hereof
and who is otherwise entitled to appraisal rights, may file a
petition in the Court of Chancery demanding a determination of
the value of the stock of all such stockholders. Notwithstanding
the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have
the right to withdraw his demand for appraisal and to accept the
terms offered upon the merger or consolidation. Within 120 days
after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections
(a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting
from the consolidation, a statement setting forth the aggregate
number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal
have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the
stockholder within 10 days after his written request for such a
statement is received by the surviving or resulting corporation
or within 10 days after expiration of the period for delivery of
demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder,
service of a copy thereof shall be made upon the surviving or
resulting corporation, which shall within 20 days after such
service file in the office of the Register in Chancery in which
<PAGE>
<PAGE> C-8
the petition was filed a duly verified list containing the names
and addresses of all stockholders who have demanded payment for
their shares and with whom agreements as to the value of their
shares have not been reached by the surviving or resulting
corporation. If the petition shall be filed by the surviving or
resulting corporation, the petition shall be accompanied by such
a duly verified list. The Register in Chancery, if so ordered by
the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the
surviving or resulting corporation and to the stockholders shown
on the list at the addresses therein stated. Such notice shall
also be given by 1 or more publications at least 1 week before
the day of the hearing, in a newspaper of general circulation
published in the City of Wilmington, Delaware or such publication
as the Court deems advisable. The forms of the notices by mail
and by publication shall be approved by the Court, and the costs
thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall
determine the stockholders who have complied with this section
and who have become entitled to appraisal rights. The Court may
require the stockholders who have demanded an appraisal for
their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply with such
direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After determining the stockholders entitled to an
appraisal, the Court shall appraise the shares, determining their
fair value exclusive of any element of value arising from the
accomplishment or expectation of the merger or consolidation,
together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such
fair value, the Court shall take into account all relevant
factors. In determining the fair rate of interest, the Court may
consider all relevant factors, including the rate of interest
which the surviving or resulting corporation would have had to
pay to borrow money during the pendency of the proceeding. Upon
application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding,
the Court may, in its discretion, permit discovery or other
pretrial proceedings and may proceed to trial upon the appraisal
prior to the final determination of the stockholder entitled to
an appraisal. Any stockholder whose name appears on the list
filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is
<PAGE>
<PAGE> C-9
required, may participate fully in all proceedings until it is
finally determined that he is not entitled to appraisal rights
under this section.
(i) The Court shall direct the payment of the fair value of
the shares, together with interest, if any, by the surviving or
resulting corporation to the stockholders entitled thereto.
Interest may be simple or compound, as the Court may direct.
Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of
holders of shares represented by certificates upon the surrender
to the corporation of the certificates representing such stock.
The Court's decree may be enforced as other decrees in the Court
of Chancery may be enforced, whether such surviving or resulting
corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the
Court and taxed upon the parties as the Court deems equitable in
the circumstances. Upon application of a stockholder, the Court
may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorney's fees and
the fees and expenses of experts, to be charged pro rata against
the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded his appraisal
rights as provided in subsection (d) of this section shall be
entitled to vote such stock for any purpose or to receive payment
of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of
record at a date which is prior to the effective date of the
merger or consolidation); provided, however, that if no petition
for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall
deliver to the surviving or resulting corporation a written
withdrawal of his demand for an appraisal and an acceptance of
the merger or consolidation, either within 60 days after the
effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder
to an appraisal shall cease. Notwithstanding the foregoing, no
appraisal proceeding in the Court of Chancery shall be dismissed
as to any stockholder without the approval of the Court, and such
approval may be conditioned upon such terms as the Court deems
just.
<PAGE>
<PAGE> C-10
(l) The shares of the surviving or resulting corporation to
which the shares of such objecting stockholders would have been
converted had they assented to the merger or consolidation shall
have the status of authorized and unissued shares of the
surviving or resulting corporation.
<PAGE>
<PAGE>
APPENDIX D
PRIVATE MARKET VALUE GUARANTEE
PRIVATE MARKET VALUE GUARANTEE, dated December 11, 1989
(this "Guarantee"), between McCaw Cellular Communications, Inc.,
a Delaware corporation (the "Offeror"), and LIN Broadcasting
Corporation, a Delaware corporation (the "Company").
WHEREAS, the Offeror is conducting a tender offer for shares
of common stock, par value $0.01 per share ("Shares"), of the
Company (as amended or supplemented from time to time in
accordance with the Agreement dated the date hereof between the
Offeror and the Company, the "Offer");
WHEREAS, in connection with the Offer the Offeror undertook
to enter into this Guarantee for the benefit of the Company's
stockholders (other than the Offeror and its affiliates).
NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth herein, the parties agree as follows:
1. Independent Directors.
Three members of the Company's board of directors (the
"Independent Directors") will be designated by the present board
of directors of the Company, from such board as comprised on this
date; provided, however, in the event that fewer than three such
persons are willing to be so designated, the present board of
directors of the Company shall designate as the remaining
Independent Directors persons who would be independent directors
as determined under the New York Stock Exchange Rules (i.e.,
independent of management of the Offeror and its affiliates and
free of any relationship that, in the opinion of the Company's
board of directors, would interfere with the exercise of
independent judgment). Independent Directors will be subject to
removal only (x) for cause, (y) if a majority of the Independent
Directors approve such removal or (z) if such removal is approved
by a Majority Vote of the Public Stockholders without any
solicitation of votes by the Offeror, its affiliates or Group
Members (as defined below).
Vacancies among the Independent Directors occurring prior to
the expiration of their respective terms of office will be filled
in accordance with the vote of a majority of the remaining
Independent Directors (or, if there are none, a majority of the
directors then in office) or a Majority Vote of the Public
Stockholders. Independent Directors to be selected at each
annual meeting will be nominated by the then current Independent
Directors and elected in accordance with a Majority Vote of the
Public Stockholders. The Offeror will not, directly or
<PAGE>
<PAGE> D-2
indirectly, solicit votes or otherwise take any action to oppose
the election of any nominee for Independent Director or support
any attempt to remove any Independent Director and in each
election of directors will vote its Shares and the Shares of its
subsidiaries for the Independent Director nominees receiving the
Majority Vote of the Public Stockholders.
As used herein, "Majority Vote of the Public Stockholders"
means (a) the affirmative vote of the holders of at least a
majority of the Public Shares present and entitled to vote at any
meeting at which the holders of a majority of such Shares are
present or (b) the action by written consent (in accordance with
applicable provisions of Delaware law and the Company's
certificate of incorporation and by-laws) of the holders of a
majority of the Public Shares. "Public Shares," as used herein,
means Shares not owned by the Offeror or any of its affiliates or
any member of a "group", as such term is used for purposes of
Schedule 13D under the Securities Exchange Act of 1934, of which
Offeror or its affiliates are members with respect to securities
of the Company (collectively, "Group Members").
The Company will treat the Independent Directors in a manner
comparable to the treatment of outside directors of comparable
public companies, including by providing indemnification,
compensation and expense reimbursement arrangements at least as
favorable as the indemnification, compensation and expense
reimbursement arrangements provided to outside directors of the
Company as of November 30, 1989, and provide notice of board
meetings and agendas there for and generally maintain the
frequency thereof consistent with past practice of the Company.
2. Sale of the Company.
(A) Appraisers. On or about January 1, 1995 (the
"Initiation Date"), the Independent Directors will designate an
investment banking firm of recognized national standing (the
"Independent Directors' Appraiser") and the Offeror will
designate an investment banking firm of recognized national
standing (the "Offeror's Appraiser"), in each case to determine
the private market value per Share.
(B) Definition of Private Market Value. The Offeror
acknowledges that the consideration that would constitute private
market value per Share is the private market price per Share
(including control premium) that an unrelated third party would
pay if it were to acquire all outstanding Shares (including the
Shares held by the Offeror and its affiliates) in an arm's-length
transaction, assuming that the Company was being sold in a manner
<PAGE>
<PAGE> D-3
designed to attract all possible participants (including the
Regional Bell Operating Companies) and to maximize stockholder
value, including if necessary through the sale or other
disposition (including tax-free spin-offs, if possible) of
businesses prohibited by legal restrictions to be owned by any
particular buyer or class of buyers (e.g., the Regional Bell
Operating Companies). Each of the investment banking firms
referred to in this Section 2 will be instructed to determine
private market value per Share in this manner.
(C) Determination of Private Market Price. Within 30
days after the Initiation Date, the Independent Directors'
Appraiser and the Offeror's Appraiser will each determine its
initial view as to the private market value per Share and consult
with one another with respect thereto. By the 45th day after the
Initiation Date, the Independent Directors' Appraiser and the
Offeror's Appraiser will each have determined its final view as
to the private market value per Share. At that point, if the
Higher Appraised Amount (as defined below) is not more than 110%
of the Lower Appraised Amount (as defined below), the private
market price per Share (the "Private Market Price") will be the
average of those two views. Otherwise, the Independent
Directors' Appraiser and the Offeror's Appraiser will agree upon
and jointly designate a third investment banking firm of
recognized national standing (the "Mutually Designated
Appraiser") to determine such private market value. The Mutually
Designated Appraiser will, no later than the 65th day after the
Initiation Date, determine such private market value (the
"Mutually Appraised Amount"), and the Private Market Price will
be (x) the Mutually Appraised Amount, if such amount falls within
the range of values that is greater than one-third and less than
two-thirds of the way between the Lower Appraised Amount and the
Higher Appraised Amount, and (y) the average of the Mutually
Appraised Amount and the other Appraised Amount (Lower or Higher)
that is closest to the Mutually Appraised Amount, if the Mutually
Appraised Amount does not fall within that range; provided,
however, that the Private Market Price may not be less than the
Lower Appraised Amount nor more than the Higher Appraised Amount.
As used herein, "Lower Appraised Amount" means the
lower of the respective final views of the Independent Directors'
Appraiser and the Offeror's Appraiser as to private market value
per Share and "Higher Appraised Amount" means the higher of such
respective final views.
(D) Acquisition Proposal. Once the Private Market
Price is determined as provided above, the Offeror will have 45
days to decide whether it desires to proceed with an acquisition
of all of the Public Shares (an "Acquisition") at that price. If
<PAGE>
<PAGE> D-4
the Offeror decides to proceed with an Acquisition, it may pay
the Private Market Price in cash or any combination of cash,
common equity securities and/or non-convertible senior or
subordinated "current cash pay" debt securities that the
Independent Directors, after consultation with their investment
banking firm, believe in good faith will have an aggregate market
value, on a fully distributed basis, of not less than the Private
Market Price.
(E) Meeting of Stockholders. If the Offeror
determines to proceed with an Acquisition as set forth above, it
will enter into an agreement with the Company therefor
(containing customary terms and conditions applicable in a
situation in which the acquiror has an ownership position
comparable to Offeror's ownership interest in the Company) and
will cause a meeting of stockholders of the Company to be held as
soon as practicable to consider and vote thereon. The
Acquisition may only be completed if it is approved by a Majority
Vote of the Public Stockholders.
(F) Sale of the Company. Subject to subparagraph (G)
below, if the Offeror determines not to proceed with an
Acquisition, or if despite Offeror's good faith efforts an
Acquisition has not been completed within 12 months following the
Initiation Date (or, if an Acquisition has been approved by a
Majority Vote of the Public Stockholders and is being pursued in
good faith by the Offeror but has not been completed due to
regulatory delays or litigation, 20 months following the
Initiation Date), the Offeror will put the entire Company up for
sale under direction of the Independent Directors in a manner
intended by the Independent Directors to maximize value for all
Shares. The sale will be conducted by the Independent Directors,
with the advice of independent financial advisors and counsel
selected by the Independent Directors, whose fees shall be
reimbursed by the Company, and the Offeror will not bid unless
requested to do so by the Independent Directors. The sale
procedures will be set by the Independent Directors and may
include, if necessary in order to maximize stockholder value,
provision for the sale or other disposition (including tax-free
spin-offs, if possible) of businesses prohibited by legal
restrictions to be owned by any particular buyer or class of
buyers (e.g., the Regional Bell Operating Companies). The
Independent Directors will select from among the proposed
transactions the one or more transactions determined by them as
being most likely to maximize value for all Shares and will cause
a meeting of the Company's stockholders to be held as soon as
practicable to consider and vote thereon. The Offeror will fully
cooperate in this process and, if the one or more transactions so
selected by the Independent Directors are approved by a Majority
<PAGE>
<PAGE> D-5
Vote of the Public Stockholders, will cause all Shares owned by
it or its affiliates to be voted in favor thereof. Any sale of
the Company pursuant to this subsection would be subject to
receipt of FCC and other necessary regulatory approvals. Offeror
will not take any action, including any action involving any
judicial, regulatory or legislative body, that is intended to, or
will have the effect of, delaying or preventing consummation of
any transaction so selected and approved.
(G) Survival of Guarantee. If a transaction is
presented for approval at a meeting of stockholders as
contemplated by either subsection (E) or (F) above and fails to
receive the requisite Majority Vote of the Public Stockholders,
there will be no further rights or obligations under this Section
2, but the remainder of this Guarantee shall continue to apply to
the extent described herein.
3. Continuing Stockholder Protections.
(A) Approvals Required for Transactions with Affiliates.
Except as permitted by Section 2 above, neither the Offeror nor
any of its non-Company affiliates may engage in any material
transaction (including, without limitation, agreements, such as
roaming agreements, which are standard in the industry) with the
Company or any of its subsidiaries (other than pro rata as a
stockholder of the Company) unless such transaction has been
approved by a majority of the Independent Directors.
(B) Approvals Required for Mergers. Except as permitted by
Section 2 above, neither the Offeror nor any of its non-Company
affiliates may engage in a merger or consolidation with the
Company, or purchase all or substantially all of the Company's
assets, unless the transaction is approved not only by a majority
of the Independent Directors but also by a Majority Vote of the
Public Stockholders. In deciding whether to approve such a
transaction, the Independent Directors will be instructed to
consider as a fair price per Share the private market price per
share (including control premium) that an unrelated third party
would pay if it were to acquire all outstanding Shares (including
the Shares held by the Offeror and its affiliates) in an arm's-length
transaction, assuming that the Company was being sold in a
manner designed to attract all possible participants (including
the Regional Bell Operating Companies) and to maximize
stockholder value, including if necessary through the sale or
other disposition (including tax-free spin-offs, if possible) of
businesses prohibited by legal restrictions to be owned by any
particular buyer or class of buyers (e.g., the Regional Bell
Operating Companies). The Independent Directors will retain
independent financial advisors and counsel to advise them with
<PAGE>
<PAGE> D-6
respect to any such transaction, whose reasonable costs, expenses
and indemnities will be paid for and provided by the Company.
(C) Independent Director Veto. No transaction will be
undertaken, and the Company will not take any action, whether or
not approved by a majority of the board of directors of the
Company, if the Independent Directors determine in their good
faith judgment by unanimous vote that such transaction or action
would likely depress the value of the Company on the Initiation
Date. In addition, the Company will not acquire or dispose of
any business (other than acquisitions of additional cellular
interests in markets in which the Company has an interest),
whether or not approved by a majority of the board of directors
of the Company, if the Independent Directors determine in their
good faith judgment by unanimous vote that such acquisition or
disposition is not in the best interests of the Company.
4. Additional Share Purchases. Except as permitted by
Sections 2 and 3 above, neither the Offeror nor any of its non-Company
affiliates may purchase additional Shares if, after
giving effect thereto, they would beneficially own in the
aggregate more than 75% of the outstanding Shares on a fully
diluted basis.
5. Corporate Opportunities. The Offeror will direct to
the Company, and the Company will have a priority right to
pursue, all corporate opportunities to acquire interests in U.S.
cellular mobile telephone systems other than those in markets in
which the Offeror has such an interest or contiguous to markets
in which the Offeror has such an interest (in the latter
instance, however, only if such market is not a market in which
the Company has such an interest or contiguous to such a market).
For purposes of the foregoing, a party will not be deemed to have
an interest in a cellular mobile telephone system solely by
reason of such party's ownership of less than a majority equity
interest in a public Company having such an interest. The
Independent Directors shall be afforded an amount of time
reasonably necessary to consider any such transaction, consistent
with any time constraints imposed by the other party to such
transaction, and if and for so long as a majority of the
Independent Directors desire to pursue such transaction, the
Offeror will not Separately pursue that transaction.
6. Certain Transferees Bound. Except pursuant to Section
2(F) above, neither the Offerer nor any of its non-Company
affiliates may sell more than 25% of the outstanding Shares on a
fully diluted basis to a third party or group unless that third
party or group agrees in writing to be bound by the provisions
set forth in this Guarantee as they would apply if the term
<PAGE>
<PAGE> D-7
"Offeror" as used herein were defined to mean such third party or
group.
7. Amendments. The provisions of this Guarantee may be
amended in any respect not materially adverse to the holders of
Public Shares, but only if the amendment is approved by a
majority of the Independent Directors. Any such amendment will
promptly be disclosed in a filing with the Securities and
Exchange Commission. The determination of the Independent
Directors as to whether an amendment is materially adverse to the
holders of Public Shares shall be final and shall bind all
holders of Public Shares.
The provisions of this Guarantee may also be amended in
any other respect if the amendment is approved by a Majority Vote
of the Public Stockholders.
8. Effectiveness and Termination. The obligations of the
Offeror under this Guarantee shall become effective upon the
acceptance by the Offerer of Shares for purchase pursuant to the
Offer. This Guarantee shall cease to be in effect if at any time
(I) the Offeror, its affiliates and Group Members beneficially
own in the aggregate less than 25% of the outstanding Shares on a
fully diluted basis and the Offeror's designees no longer
constitute a majority of the Board of Directors of the Company
(provided that in such event this Guarantee shall come back into
effect if, at any time within two years thereafter, (A) the
Offeror, its affiliates and Group Members shall beneficially own
in the aggregate 25% or more (but less than 100%) of the
Outstanding Shares on a fully diluted basis or (B) the Offeror's
designees shall again constitute a majority of the Board of
Directors of the Company) or (ii) the Offeror, its affiliates and
Group Members beneficially own in the aggregate 100% of the
outstanding Shares.
9. Further Assurances. Each party shall execute and
deliver such additional instruments and other documents and shall
take such further actions as may be necessary or appropriate to
effectuate, carry out and comply with all of the terms of this
Guarantee and the transactions contemplated hereby.
10. Remedies. The parties acknowledge that money damages
may not be an adequate remedy for violations of this Agreement
and that any party may, in its sole discretion, apply to any
court of competent jurisdiction for specific performance or
injunctive or such other relief as such court may deem just and
proper in order to enforce this Agreement or prevent any
violation hereof and, to the extent permitted by applicable law,
each party waives any objection to the imposition of such relief.
<PAGE>
<PAGE> D-8
11. Notices. etc. All notices, requests, demands or other
communications required by or otherwise with respect to this
Guarantee shall be in writing and shall be deemed to have been
duly given to any party when delivered personally (by courier
service or otherwise), when delivered by fax and confirmed, or to
any party five days after being mailed by certified mail, return
receipt requested, in each case to the applicable addresses set
forth below:
If to Offeror:
McCaw Cellular Communications, Inc.
5400 Carillon Point
Kirkland, Washington 94033
Attn: Wayne Perry, Vice Chairman
Fax no.: 206-828-8450
with a copy to:
McCaw Cellular Communications, Inc.
1250 Connecticut Avenue, NW, Suite 401
Washington, D.C. 20036
Attn: Andrew A. Quartner, Esq.
Fax no.: 202-223-9095
If to the Company:
LIN Broadcasting Corporation
1370 Avenue of the Americas
New York, New York 10019
Attn: President
Fax no.: 212-582-0479
with a copy to:
Cravath, Swains & Moore
Worldwide Plaza
828 8th Avenue
New York, New York 10019
Attn: Robert Rosenman, Esq.
Fax no.: 212-474-3700
<PAGE>
<PAGE> D-9
and a copy to:
The designated representative of the
Independent Directors and their
counsel, if any
or to such other address as such party shall have designated
by notice so given to each other party.
12. Entire Agreement. This Guarantee embodies the entire
agreement and understanding between the parties relating to the
subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter.
13. Successors and Assigns. This Guarantee shall be
binding upon and shall inure to the benefit of and be enforceable
by the Offeror and the Independent Directors of the Company and
their respective successors and assigns, provided that neither
the rights nor the obligations of any party may be assigned or
delegated without the prior written consent of the other parties.
14. Governing Law. This Guarantee and all disputes
hereunder shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to
contracts made and performed in that State.
15. Name. Captions. The section captions used herein are
for convenience of reference only and shall not affect the
interpretation or construction hereof.
16. Counterparts. This Guarantee may be executed in any
number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies
each signed by less than all, but together signed by all the
parties hereto.
<PAGE>
<PAGE> D-10
IN WITNESS WHEREOF, the parties have duly executed this
Guarantee as of the date first above written.
McCAW CELLULAR COMMUNICATIONS,
INC.
by /s/ Wayne M. Perry
--------------------------
Title:
LIN BROADCASTING CORPORATION
by /s/ Donald Pels
--------------------------
Title:
<PAGE>
<PAGE> D-11
FIRST AMENDMENT TO PRIVATE MARKET VALUE GUARANTEE
This FIRST AMENDMENT TO PRIVATE MARKET VALUE GUARANTEE (this
"Amendment"), dated June 7, 1994, is between McCaw Cellular
Communications, Inc., a Delaware corporation ("McCaw"), and LIN
Broadcasting Corporation, a Delaware corporation (the "Company").
Capitalized terms used but not defined in this Amendment shall
have the meanings ascribed thereto in the Guarantee.
WHEREAS, McCaw and the Company have previously entered into
a Private Market Value Guarantee, dated December 11, 1989 (the
"Guarantee"), for the benefit of the Company's stockholders
(other than McCaw and its affiliates) in connection with McCaw's
tender offer for the shares of common stock of the Company;
WHEREAS, the Company is proposing the Transaction (as
hereinafter defined);
WHEREAS, McCaw and the Company have agreed to amend the
Guarantee in connection with the Transaction; and
WHEREAS, the Independent Directors have approved this
Amendment in accordance with the requirements of the Guarantee;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth herein, the parties agree as follows:
1. Continuing Stockholder Protections
Section 3(C) of the Guarantee is hereby amended to add the
following sentence at the end thereof:
"Notwithstanding the foregoing, the
Transaction will not be undertaken, and the
Company will not take any action whether or
not approved by a majority of the board of
directors of the Company, if the Independent
Directors determine in their good faith
judgment, by unanimous vote, that such
Transaction or action would likely depress
the value of the Public Shares on January 1,
1995, after giving effect to the Transaction;
provided the Transaction may be undertaken if
the Independent Directors determine in their
good faith judgment that (i) the Transaction
is fair, from a financial point of view, to
the holders of the Public Shares and (ii) the
consideration to be paid in the proposed<PAGE>
<PAGE> D-12
acquisition of WTNH - Hartford - New Haven is fair,
from a financial point of view, to the holders of the
Public Shares. The "Transaction" involves the
(y) acquisition by LIN Television Corporation ("LIN
TV") of WTNH - Hartford - New Haven from Cook Inlet
Communications Corp. and (z) the tax-free distribution
pursuant to Section 355 of the Internal Revenue Code of
the remaining shares of LIN TV to stockholders of the
Company."
2. Counterparts
This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one instrument.
3. Effectiveness
Except as expressly modified herein, the rights and
obligations of the parties hereto under the Guarantee are hereby
ratified and confirmed.
IN WITNESS WHEREOF, the parties have duly executed this
Amendment as of the date first above written.
McCAW CELLULAR COMMUNICATIONS, INC.
by /s/ Wayne M. Perry
---------------------------
Title: Vice Chairman
LIN BROADCASTING CORPORATION
by /s/ Donald Guthrie
---------------------------
Title:
<PAGE>
<PAGE>
APPENDIX E
CERTAIN INFORMATION REGARDING DIRECTORS
AND EXECUTIVE OFFICERS OF AT&T,
McCAW, HOLDINGS AND MERGER SUB
Directors and Executive Officers of AT&T
Each of the persons named below is a citizen of the United
States of America. For each person whose principal employment is
with AT&T, the principal business of such person's employer is
described in "CERTAIN INFORMATION REGARDING AT&T, McCAW,
HOLDINGS, MERGER SUB AND LIN -- AT&T." Except as noted, each of
the persons named below whose principal employment is with AT&T
has held high level managerial positions with AT&T or its
affiliates for more than the past five years. None of the
persons named below is the beneficial owner of any LIN Common
Shares. Members of the Board of Directors of AT&T are indicated
with an asterisk.
Principal Occupation; Business
Address; Principal Business
of Employer and Five-Year
Name Employment History
- ------------------ --------------------------------
*Robert E. Allen Chairman and Chief Executive
Officer,
AT&T Corp.
32 Avenue of the Americas
New York, NY 10013-2412
Richard S. Bodman Senior Vice President, Corporate
Strategy & Development,
AT&T Corp.
295 North Maple Avenue
Basking Ridge, NJ 07920
Mr. Bodman joined AT&T on
August 23, 1990. Prior thereto,
Mr. Bodman was President of
Washington National Investment
Corporation, an investment company,
for more than five years.
Harold W. Burlingame Senior Vice President - Human
Resources,
AT&T Corp.
295 North Maple Avenue
Basking Ridge, NJ 07920<PAGE>
<PAGE> E-2
Principal Occupation; Business
Address; Principal Business
of Employer and Five-Year
Name Employment History
- ------------------ --------------------------------
*M. Kathryn Eickhoff President of Eickhoff Economics,
Incorporated
(Economic Consultants)
510 LaGuardia Place, Suite 400
New York, NY 10012
Ms. Eickhoff has been President of
Eickhoff Economics Incorporated
since 1987.
*Walter Y. Elisha Chairman & Chief Executive Officer
of Springs Industries,
Inc. (Textiles Manufacturing)
205 North White Street P.O. Box 70
Fort Mill, SC 29715
Mr. Elisha has been the Chairman
and Chief Executive Officer of
Springs Industries, Inc. for more
than the past five years.
*Philip M. Hawley Retired Chairman & Chief Executive
Officer of
Broadway Stores, Inc. (formerly
Carter Hawley Hale
Stores, Inc.) (Department Stores)
444 South Flower Street Suite 2280
Los Angeles, CA 90071-2900
Mr. Hawley retired as Chairman and
Chief Executive Officer of Broadway
Stores, Inc. in 1993, which
position he held since 1983.
<PAGE>
<PAGE> E-3
Principal Occupation; Business
Address; Principal Business
of Employer and Five-Year
Name Employment History
- ------------------ --------------------------------
*Carla A. Hills Chairman & Chief Executive Officer
of Hills & Company
(International Consultants)
1200 19th Street, NW
5th Floor
Washington, D.C. 20036
Ms. Hills has been the Chairman and
Chief Executive Officer of Hills &
Company since 1993. Prior thereto,
Ms. Hills was the United States
Trade Representative, Executive
Office of the President (1989-1993).
*Belton K. Johnson Former Owner of Chaparrosa Ranch
100 West Houston Street
Suite 1100
San Antonio, TX 78205
Mr. Johnson has been the Chairman
of Belton K. Johnson Interests, a
private investment company, for
more than the past five years.
Marilyn Laurie Senior Vice President - Public
Relations,
AT&T Corp.
295 North Maple Avenue
Basking Ridge, NJ 07920
*Drew Lewis Chairman & Chief Executive Officer
of Union Pacific
Corporation (Rail Transportation
Natural Resources,
and Trucking)
Martin Tower
Eighth and Eaton Avenues
Bethlehem, PA 18018
Mr. Lewis has been the Chairman and
Chief Executive Officer of Union
Pacific Corporation for more than
the past five years.
<PAGE>
<PAGE> E-4
Principal Occupation; Business
Address; Principal Business
of Employer and Five-Year
Name Employment History
- ------------------ --------------------------------
Alex J. Mandl Executive Vice President, AT&T
Corp. & Chief Executive Officer of
Communications Services Group
295 North Maple Avenue
Basking Ridge, NJ 07920
Mr. Mandl joined AT&T on August 1,
1991. Prior thereto, Mr. Mandl was
Chairman and Chief Executive
Officer of Sea-Land Service, Inc.,
150 Allen Road, Liberty Corner, NJ
07938, an ocean transportation and
distribution services company, for
four years and prior thereto held
executive positions at CSX
Corporation, 901 East Carey Street,
Box C-2222, Richmond, VA 23219, a
transportation holding company.
William B. Marx, Jr. Executive Vice President, AT&T
Corp. & Chief Executive Officer of
Multimedia Products Group
295 North Maple Avenue
Basking Ridge, NJ 07920
Richard A. McGinn Executive Vice President, AT&T
Corp. & Chief Executive Officer of
Network Systems Group
475 South Street
Morristown, NJ 07962
*Donald F. McHenry President of IRC Group, Inc.
(Consultants)
Georgetown University
School of Foreign Service
ICC301
Washington, D.C. 20057
Mr. McHenry has been the President
of IRC Group and the University
Research Professor of Diplomacy and
International Relations, Georgetown
University for more than the past
five years.<PAGE>
<PAGE> E-5
Principal Occupation; Business
Address; Principal Business
of Employer and Five-Year
Name Employment History
- ------------------ --------------------------------
Richard W. Miller Executive Vice President & Chief
Financial Officer,
AT&T Corp.
295 North Maple Avenue
Basking Ridge, NJ 07920
Mr. Miller joined AT&T on August 3,
1993. Prior thereto, Mr. Miller
was with Wang Laboratories, Inc., 1
Industrial Avenue, Lowell, MA
01851, an international computer
company, from 1989 through 1993,
serving as President and Chief
Operating Officer and later
Chairman, President and Chief
Executive Officer.
*Victor A. Pelson Executive Vice President, AT&T
Corp. &
Chairman of Global Operations Team
295 North Maple Avenue
Basking Ridge, NJ 07920
*Donald S. Perkins Chairman of Kmart Corp. (Mass
Merchandise Retailer);
Retired Chairman of the Board of
Jewel Companies, Inc.
(Diversified Retailer)
One First National Plaza
Suite 2530
21 South Clark Street
Chicago, IL 60603-2006
Mr. Perkins has been the Chairman
of Kmart Corp. since January 1995.
Prior thereto, Mr. Perkins was
Chairman and Chief Executive
Officer of Jewel Companies, Inc.
for more than five years.
S. Lawrence Prendergrast Vice President & Treasurer,
AT&T Corp.
One Oak Way
Berkeley Heights, NJ 07922-2724<PAGE>
<PAGE> E-6
Principal Occupation; Business
Address; Principal Business
of Employer and Five-Year
Name Employment History
- ------------------ --------------------------------
*Henry B. Schacht Chairman of the Executive Committee
and Former Chairman
and Chief Executive Officer of
Cummins Engine Company, Inc.
(Diesel Engine Manufacturer)
500 Jackson St.
Box Number 3005
Columbus, IN 47202-3005
Mr. Schacht has been Chairman of
the Executive Committee of Cummins
Engine Company, Inc. since 1994,
and prior thereto was Chairman and
Chief Executive Officer for more
than five years.
*Michael I. Sovern President Emeritus & Chancellor
Kent Professor of Law at
Columbia University
435 W. 116th Street, Box B20
New York, NY 10027
Mr. Sovern has been President
Emeritus & Chancellor Kent
Professor of Law at Columbia
University since 1993. Prior
thereto Mr. Sovern was the
President of Columbia University
for more than five years.
Daniel C. Stanzione President, Bell Laboratories
Division,
AT&T Corp.
600 Mountain Avenue
Murray Hill, NJ 07974
Maureen H. Tart Vice President and Controller,
AT&T Corp.
340 Mt. Kemble Avenue
Morristown, NJ 07962
<PAGE>
<PAGE> E-7
Principal Occupation; Business
Address; Principal Business
of Employer and Five-Year
Name Employment History
- ------------------ --------------------------------
*Franklin A. Thomas President of the Ford Foundation
(Charitable Organization)
320 East 43rd Street
New York, NY 10017
Mr. Thomas has been the President
of The Ford Foundation for more
than the past five years.
Marilyn J. Wasser Vice President-Law and Secretary,
AT&T Corp.
131 Morristown Road
Basking Ridge, NJ 07920
*Joseph D. Williams Chairman of the Executive Committee
and Retired Chairman
and Chief Executive Officer
Warner-Lambert Co.
(Pharmaceuticals, Health Care and
Consumer Products)
182 Tabor Road
Morris Plains, NJ 07950
Mr. Williams has been Chairman of
the Executive Committee of Warner-Lambert
Co. since 1991. Prior
thereto Mr. Williams was Chairman
and Chief Executive Officer from
1985 to 1991.
*Thomas H. Wyman Chairman, S.G. Warburg & Co., Inc.
(Investment Banking)
277 Park Avenue
New York, NY 10172
Mr. Wyman has been the Chairman of
S.G. Warburg & Co. Inc. since 1992
and Vice Chairman of S.G. Warburg
Group PLC (U.K.) since 1993. Prior
thereto Mr. Wyman was the Chairman
of United Biscuits (Holdings) U.S.
Ltd., 677 Larch Avenue, Elmhurst,
IL 60126, a bakery products
manufacturer.<PAGE>
<PAGE> E-8
Principal Occupation; Business
Address; Principal Business
of Employer and Five-Year
Name Employment History
- ------------------ --------------------------------
John D. Zeglis Senior Vice President-General
Counsel and Government Affairs,
AT&T Corp.
295 North Maple Avenue
Basking Ridge, NJ 07920
<PAGE>
<PAGE> E-9
Directors and Executive Officers of McCaw
Each of the persons named below is a citizen of the
United States of America, except for Mr. Kauser, who is a citizen
of Canada. For each person whose principal employment is with
McCaw, the principal business of such person's employer is
described in "CERTAIN INFORMATION REGARDING AT&T, McCAW,
HOLDINGS, MERGER SUB AND LIN -- McCaw." The business address of
each person whose principal employment is with McCaw is McCaw
Cellular Communications, Inc., 5400 Carillon Point, Kirkland, WA
98033. None of the persons named below is the beneficial owner
of any LIN Common Shares, except Messrs. Perry, Alberg and
Guthrie, whose beneficial ownership of LIN Common Shares is
described in "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT -- Security Ownership of Management." Members of the
Board of Directors of McCaw are indicated with an asterisk.
Principal Occupation; Business
Address; Principal Business
of Employer and Five-Year
Name Employment History
- ------------------ --------------------------------
*Harold W. Burlingame See "Directors and Executive
Officers of AT&T" in this
Appendix D.
*Alex J. Mandl See "Directors and Executive
Officer of AT&T" in this
Appendix D.
*Richard W. Miller See "Directors and Executive
Officer of AT&T" in this
Appendix D.
*Wayne M. Perry Vice Chairman of the Board and
Secretary
McCaw Cellular Communications, Inc.
See "ELECTION OF DIRECTORS --
Nominees for Director" for a
description of Mr. Perry's five-year
employment history.
Tom A. Alberg Executive Vice President
McCaw Cellular Communications, Inc.
See "ELECTION OF DIRECTORS --
Nominees for Director" for a
description of Mr. Alberg's five-year
employment history. <PAGE>
<PAGE> E-10
Principal Occupation; Business
Address; Principal Business
of Employer and Five-Year
Name Employment History
- ------------------ --------------------------------
Donald Guthrie Senior Vice President and Treasurer
McCaw Cellular Communications, Inc.
See "EXECUTIVE OFFICERS" for a
description of Mr. Guthrie's five-year
employment history.
Steven W. Hooper President, Chief Operating Officer
and Director
McCaw Cellular Communications, Inc.
See "EXECUTIVE OFFICERS" for a
description of Mr. Hooper's five-year
employment history.
Rolla G. Huff Senior Vice President and Chief
Financial Officer
McCaw Cellular Communications, Inc.
See "ELECTION OF DIRECTORS --
Nominees for Director" for a
description of Mr. Huff's five-year
employment history.
Nicolas Kauser Executive Vice President-Chief
Technology Officer
McCaw Cellular Communications, Inc.
Mr. Kauser has been an Executive
Vice President of McCaw and
Holdings since May 1992 and
Senior Vice President-Technology of
McCaw and Holdings since July 1990.
Prior to July 1990 Mr. Kauser was
Senior Vice President-Operations of
Cantel, Inc., based in Toronto,
Canada. Mr. Kauser was responsible
for the planning, design,
implementation and operation of
Cantel National Cellular Network.
<PAGE>
<PAGE> E-11
Directors and Executive Officers of Holdings
Each of the persons named below is a citizen of the United
States. The principal business of McCaw, the employer of each of
the persons named below, is described in "CERTAIN INFORMATION
REGARDING AT&T, McCAW, HOLDINGS, MERGER SUB AND LIN -- McCAW."
None of the persons named below is the beneficial owner of any
LIN Common Shares, except Mr. Quartner, who owns 500 LIN Common
Shares, and Messrs. Perry, Alberg and Guthrie, whose beneficial
ownership of LIN Common Shares is described in "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -- Security
Ownership of Management." Except as otherwise set forth below,
the principal occupation, business address and five-year
employment history for each of the persons named below is set
forth in this Appendix D under "Directors and Executive Officers
of McCaw."
Principal Occupation; Business
Address; Principal Business
of Employer and Five-Year
Name Employment History
- ------------------ --------------------------------
Tom A. Alberg
Donald Guthrie
Steven W. Hooper
Rolla P. Huff
Wayne M. Perry
Andrew A. Quartner Senior Vice President, Law and
Assistant Secretary
McCaw Cellular Communications, Inc.
1150 Connecticut Avenue, N.W.
Suite 400
Washington, DC 20036
Mr. Quartner has been a Director of
Holdings since January 1995 and has
been a Senior Vice President and
Assistant Secretary of both McCaw
and Holdings since February 1988
and December 1988 respectively.
<PAGE>
<PAGE> E-12
Directors and Executive Officers of Merger Sub
Each of the persons named below is a citizen of the United
States of America. Each person has held managerial positions
with AT&T or its affiliates for more than the past five years.
The principal business of AT&T is described in "CERTAIN
INFORMATION REGARDING AT&T, McCAW, HOLDINGS, MERGER SUB AND LIN -- AT&T."
The business address of each such person is AT&T, 131
Morristown Road, Basking Road, NJ 07920. None of the persons
named below is the beneficial owner of any LIN Common Shares.
Principal Occupation; Business
Address; Principal Business
of Employer and Five-Year
Name Employment History
- ------------------ --------------------------------
W. Preston Granbery General Attorney, Corporate and
Securities Group, AT&T Corp.
H. John Hokenson General Attorney, AT&T Corp.
Marilyn J. Wasser Vice President - Law and Secretary,
AT&T Corp.
<PAGE>
<PAGE>
PRELIMINARY COPY
LIN BROADCASTING CORPORATION
5295 Carillon Point
Kirkland, Washington 98033
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF LIN BROADCASTING CORPORATION FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD AUGUST __, 1995
The undersigned hereby appoints _______________ and
________________, and each of them, as Proxies, with full power
of substitution, and hereby authorizes them to represent and to
vote, as designated on the reverse side, all the shares of Common
Stock of LIN Broadcasting Corporation held of record by the
undersigned on July 28, 1995, at the Annual Meeting of
Stockholders to be held on August __, 1995, or any adjournment or
postponement thereof.
SEE REVERSE SIDE
<PAGE>
<PAGE>
LIN BROADCASTING CORPORATION
PROXY CARD
1995 ANNUAL MEETING OF STOCKHOLDERS
The Board of Directors recommends a vote "FOR" all nominees in
Item 1. The Board of Directors recommends a vote "FOR" Item 2.
1. Election of Directors.
FOR all nominees WITHHOLD AUTHORITY
(except as indicated) [ ] to vote for all nominees [ ]
Election of the following ten nominees to serve as directors
for the ensuing year:
TOM A. ALBERG DENNIS J. CAREY LEWIS M. CHAKRIN
W. PRESTON GRANBERY WILLIAM G. HERBSTER ROLLA G. HUFF
WILMA H. JORDAN RICHARD W. KISLIK WAYNE M. PERRY
FLORENCE L. WALSH
INSTRUCTION: To withhold authority to vote for any indi-
vidual nominee, write that nominee's name in the space
provided below:
______________________________
______________________________
2. Approval and adoption of an Agreement and Plan of Merger,
dated April 28, 1995, as amended and restated June 30, 1995,
among LIN Broadcasting Corporation ("LIN"), McCaw Cellular
Communications, Inc. ("McCaw") and two subsidiaries of
McCaw, and the merger of one of such subsidiaries of McCaw
with and into LIN, all as more fully described in the
accompanying Proxy Statement:
For [ ] Against [ ] Abstain [ ]
In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting. This
Proxy, when properly executed and delivered, will be voted in the
manner directed herein by the undersigned. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED "FOR ALL NOMINEES" IN ITEM 1 AND
"FOR" ITEM 2.
Please sign below exactly as your name appears on your stock
certificate. When shares are held jointly, each person
should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title
as such. An authorized person should sign on behalf of
corporations, partnerships and associations and give his or
her title.
Dated: ____________________, 1995
_________________________________
Signature
_________________________________
Signature if held jointly
YOUR VOTE IS IMPORTANT. PROMPT RETURN OF THIS PROXY WILL HELP
SAVE THE EXPENSE OF ADDITIONAL SOLICITATION EFFORTS.
