1 IN THE DISTRICT COURT OF JOHNSON COUNTY, KANSAS CIVIL COURT DEPARTMENT RICHARD TYNER, III, on Behalf of Himself and All Others Similarly Situated, vs. Plaintiff, EMBARQ CORPORATION, THOMAS A. GERKE, WILLIAM A. OWENS, PETER C. BROWN, STEVEN A. DAVIS, RICHARD A. GEPHARDT, JOHN P. MULLEN, DINESH C. PALIWAL, STEPHANIE M. SHERN, LAURIE A. SIEGEL and CENTURYTEL, INC., Defendants. Proceeding Pursuant to K.S.A. Ch. 60 Case No. 08-CV Division No. 14 NOTICE OF PENDENCY AND PROPOSED SETTLEMENT OF CLASS ACTION AND SETTLEMENT HEARING TO ALL PERSONS WHO HELD SHARES OF EMBARQ CORPORATION COMMON STOCK AT ANY TIME FROM OCTOBER 26, 2008 THROUGH AND INCLUDING JULY 1, 2009, THE DATE ON WHICH THE MERGER BETWEEN EMBARQ CORPORATION AND CENTURYTEL, INC. BECAME EFFECTIVE. PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOU MAY BE AFFECTED BY A PROPOSED SETTLEMENT OF CLASS ACTION LITIGATION. This Notice was authorized and approved by the District Court of Johnson County, Kansas (the "Court"). This Notice, however, is not an expression of opinion by the Court as to the merits of any claims or defenses asserted by any party in this class action litigation (the "Action"). This Notice is sent for the sole purpose of informing you of the proposed Settlement 1, which is contingent on final approval by the Court. If approved, the Settlement will end litigation of the Action. This is not a solicitation from a lawyer. On September 18, 2009, the Court in this Action preliminarily approved a Settlement between Plaintiff and Defendants. The Settlement provides, in part, for certain supplemental disclosures filed by Embarq with the United States Securities and Exchange Commission on a Form 8-K dated January 16, 2009, a release of claims and the payment of attorneys' fees and for the reimbursement of expenses. The Form 8-K is available at http// Plaintiff and Defendants vigorously disagree on both whether Plaintiff could have prevailed at trial and the recovery, if any, that could have been achieved for the Settlement Class if Plaintiff had prevailed at trial. Plaintiff believes the claims asserted in the Action have merit. Defendants deny all of Plaintiff's allegations of wrongdoing and deny they have any liability whatsoever. Continued litigation of the Action could have resulted in either dismissal or loss at trial. In reaching this Settlement, however, Plaintiff and Defendants have avoided the costs, time, expense, distraction, and risks associated with continued litigation, including the danger of no recovery. Your rights and options and the deadlines by which to exercise them are explained in this Notice. A summary of your rights and the applicable deadlines are set forth below. Please note that the date of the Settlement Hearing is subject to change without further notice. The Court in charge of this case must decide whether to approve the Settlement. Subject to the Order of the Court, pending final determination of whether the Settlement should be approved, Plaintiff and all Members of the Settlement Class, or any of them, are barred and enjoined from commencing, prosecuting, instigating, or in any way participating in the commencement, prosecution, or instigation of any action asserting any Released Claims, either directly, representatively, derivatively, or in any other capacity, against any Released Person. 1 Except as expressly provided herein, all capitalized terms shall have the same meanings and/or definitions as set forth in the Stipulation and Agreement of Settlement dated September 1, 2009 (the "Stipulation").
2 YOUR LEGAL RIGHTS AND OPTIONS IN THIS SETTLEMENT EXCLUDE YOURSELF You may exclude yourself from the Settlement as to certain Released Claims relating solely to a claim for damages. This is the only option that allows you to participate in another lawsuit against the Defendants and the other Released Persons and it applies only to claims for damages. OBJECT You may write to the Court if you do not like this Settlement. GO TO THE SETTLEMENT If you make a written objection, you may ask to speak to the Court about your HEARING concerns relating to the Settlement. DO NOTHING You may do nothing. If you do nothing, you will give up any rights that you had to sue Defendants and the other Released Parties relating to the legal claims in the case. You will remain a member of the Settlement Class and be bound by the Judgment of the Court. DEADLINES The deadline to File Objections, Request Exclusion from the Class (With Respect to Money Damages Claims Only), and/or File an Intent to Appear at the Settlement Hearing November 10, 2009, Settlement Hearing November 20, 2009 at 1000 a.m. C.S.T. MORE INFORMATION More information concerning the Settlement can be obtained by writing to Benjamin Rozwood, Esq., Robbins Umeda LLP, 600 B Street, Suite 1900, San Diego, California WHAT DOES THIS NOTICE CONTAIN 1. Why Did I Get This Notice Package? What Is This Lawsuit About? Why Is This a Class Action? Why Is There a Settlement? How Do I Know if I Am Part of the Settlement? What Are the Exceptions to Being Included? I Am Still Not Sure if I Am Included What Benefits Were Obtained as Part of the Settlement?... 4 THE LAWYERS REPRESENTING YOU Do I Have a Lawyer in This Case? How Will the Lawyers Be Paid?... 4 THE SETTLMENT HEARING When and Where Will the Court Decide Whether to Approve the Settlement? How Do I Get Out of the Settlement Class? If I Do Not Exclude Myself, Can I Sue the Released Persons for the Same Thing Later? Do I Have to Come to the Hearing? May I Speak at the Hearing?... 5 IF YOU DO NOTHING What Happens if I Do Nothing at All?... 5 OBJECTING TO OR REQUESTING EXCLUSION FROM THE SETTLEMENT What Is the Difference Between Objecting and Excluding? How Do I Tell the Court that I Do Not Like the Settlement?... 6 GETTING MORE INFORMATION Are There More Details About the Settlement? How Do I Get More Information?... 6 SPECIAL NOTICE TO NOMINEES Why Did I Get This Notice Package? BASIC INFORMATION You or someone in your family may have held Embarq Corporation common stock during the period beginning on October 26, 2008 up to and including July 1, 2009, the date on which the merger between Embarq and CenturyTel became effective. The Court directed that you be sent this Notice because, if you are a member of the Settlement Class, you have a right to know about a proposed Settlement of a class action lawsuit and about all of your options before the Court decides whether to approve the Settlement. This package describes the lawsuit, the Settlement, and your legal rights. This case is known as Tyner v. Embarq Corp., et al., Case No. 08-CV (the "Action"). The Court in charge of the Action is the District Court for Johnson County, Kansas, the Honorable Kevin P. Moriarty presiding. The individual that sued is called the Plaintiff. Embarq Corporation, CenturyTel, Inc., and the individuals that Plaintiff sued are called the Defendants. 2
3 2. What Is This Lawsuit About? This is a class action alleging claims that arose in connection with the merger agreement (the "Merger Agreement") between Embarq and CenturyTel pursuant to which Embarq merged subsequently with a subsidiary of CenturyTel and each share of Embarq common stock was converted into the right to receive 1.37 shares of CenturyTel common stock (the "Merger"). Plaintiff alleges that Embarq's directors breached their fiduciary duties by entering into the Merger Agreement, including by allegedly failing to disclose material information in the proxy materials distributed to Embarq stockholders in connection with the Merger and by allegedly failing to obtain the highest price available for Embarq's stockholders. Plaintiff also alleges that Embarq and CenturyTel aided and abetted the directors' breaches of their fiduciary duties. Plaintiff sought, among other things, class action status, court orders declaring the Merger Agreement unenforceable, and enjoining the defendants from consummating the Merger, and the payment of reasonable attorneys' fees and expenses incurred in litigating the Action. The Settlement is the product of Plaintiff's Counsel's (who has extensive experience in class action litigation) (1) independent investigation; (2) review of the various documents that have been produced in discovery and the depositions that have been taken; and (3) Plaintiff's Counsel's determination that a Settlement of the Action is in the best interests of the Settlement Class Members. If the Court approves the Settlement, all Settlement Class Members will release claims, including any claims relating to the Merger or to matters alleged in the Action, against the Defendants and certain others who are related to Defendants ("Released Persons"). The exact terms of the release are contained in the Stipulation and Agreement of Settlement which is available via the internet at or which may be inspected during business hours at the office of the Clerk of the Court, District Court of Johnson County, 100 North Kansas Avenue, Olathe, Kansas Why Is This a Class Action? In a class action, one or more persons sue on behalf of people who have similar claims. These people are collectively referred to herein as the Settlement Class or Settlement Class Member(s). The Court has appointed Plaintiff Richard Tyner, III to act as the representative of the Settlement Class. The Court will resolve the issues for all Settlement Class Members, except for those who exclude themselves from the Settlement Class. Johnson County, Kansas District Court Judge Kevin P. Moriarty is presiding over the Action. 4. Why Is There a Settlement? THE FOLLOWING RECITATION DOES NOT CONSTITUE FINDINGS OF THE COURT. IT IS BASED ON STATEMENTS OF THE PARTIES AND SHOULD NOT BE UNDERSTOOD AS AN EXPRESSION OF ANY OPINION OF THE COURT AS TO THE MERITS OF ANY OF THE CLAIMS OR DEFENSES RAISED BY ANY OF THE PARTIES. On November 20, 2008, Embarq and CenturyTel filed with the United States Securities and Exchange Commission (the "SEC") a preliminary joint proxy statement-prospectus and Registration Statement on Form S-4 concerning the Merger and including certain disclosures related to the Merger. On December 1, 2008, Plaintiff filed the class action petition. On December 22, 2008, Embarq and CenturyTel filed with the SEC a definitive joint proxy statement-prospectus and amended Registration Statement on Form S-4/A. Thereafter, Plaintiff's Counsel conducted a detailed review and analysis of both the preliminary and definitive joint proxy statement-prospectuses. Thereafter, Plaintiff demanded and the Settling Parties engaged in arm's-length negotiations concerning certain additional information to Embarq's and CenturyTel's stockholders, (the "Supplemental Disclosures"). The Supplemental Disclosures were publicly disseminated and made available to all Embarq stockholders through a Form 8-K that was filed by Embarq with the SEC on January 16, The Form 8-K is available at http// On January 27, 2009, the special shareholder meetings of CenturyTel and Embarq were held to consider and vote upon the Merger, and at those meetings the respective shareholders of CenturyTel and Embarq approved the Merger. On July 1, 2009, the Merger closed. Prior to the Merger closing, Plaintiffs and Defendants engaged in a period of discovery in which Defendants and certain of their advisors produced thousands of pages of documents, Plaintiff's Counsel reviewed and analyzed these documents, and Plaintiff's Counsel conducted depositions of a member of Embarq's board of directors and a representative of Embarq's financial advisor. The Settling Parties to the Action then concluded that the Action should be settled. This conclusion is based upon, among other things (1) Plaintiff's Counsel's independent investigation, review of the various documents that have been produced, and the depositions that have been taken; (2) Defendants' denial that they committed any acts or omissions giving rise to any liability; (3) Defendants' acknowledgement that the pendency and prosecution of the Action and the efforts of Plaintiff's Counsel were the sole reason and cause for the decision of Defendants to file the 3
4 Supplemental Disclosures; (4) the risk to Settlement Class Members that continuing with the Action could have resulted in dismissal or loss at trial and the recognition that, by settling the Action, the parties avoid the additional costs, time, expense, disruption, distraction, and risks associated with continued litigation; (5) the benefits that the Settlement Class received in connection with the disclosures made after the Complaint was filed, including the Supplemental Disclosures; (6) the benefits that the Settling Parties and the Settlement Class will receive by reason of this Settlement; (7) Defendants' belief that the Settlement of the Action is in the best interests of Embarq's and CenturyTel's stockholders; and (8) Plaintiff's Counsel's belief that the Settlement of this Action is fair, reasonable, and adequate, and in the best interests of all Settlement Class Members. 5. How Do I Know if I Am Part of the Settlement? For purposes of this Settlement, the Court has preliminarily certified a Settlement Class that includes, with limited exceptions, all Embarq stockholders and their successors in interest and transferees, immediate and remote, and any person or entity acting for or on behalf of, or claiming under, any of them, and each of them, from October 26, 2008 up to and including July 1, 2009, the date on which the Merger between Embarq and CenturyTel became effective. 6. What Are the Exceptions to Being Included? You are not a Settlement Class Member if you are (1) a Defendant; (2) a member of an Individual Defendant's immediate family; or (3) any person over whom any Defendant exercises sole or exclusive control. 7. I Am Still Not Sure if I Am Included. If you are still not sure whether you are included as a member of the Settlement Class, you can ask for free help. You can call or write to Plaintiff's Counsel at the following address for more information Benjamin Rozwood, Esq. at Robbins Umeda LLP, 600 B Street, Suite 1900, San Diego, California 92101, Telephone (619) , Facsimile (619) What Benefits Were Obtained as Part of the Settlement? In consideration for the Settlement and dismissal with prejudice of the Action, Defendants have made and have caused to be publicly disseminated the Supplemental Disclosures contained in a Form 8-K filed with the SEC dated January 16, The Settlement will result in the dismissal of the Action on the merits with prejudice and a release of all claims by all Settlement Class Members against the Released Persons. You may exclude yourself from the Settlement Class solely with respect to a claim for money damages. If you want to keep any right to sue or continue to sue the Released Persons on your own about the same issues raised in the Action and solely with respect to a claim for money damages, then you must take the steps discussed in Questions 12 and 13 to get out of the Settlement Class. Even if you exclude yourself, you will be precluded by the Settlement from bringing any claim other than a claim solely for money damages against any of the Released Persons. 9. Do I Have a Lawyer in This Case? THE LAWYERS REPRESENTING YOU The Court appointed the following law firm to represent the named Plaintiff and all Settlement Class Members ROBBINS UMEDA LLP 600 B Street, Suite 1900 San Diego, CA Telephone (619) The Court also appointed the following lawyers as local counsel for the Settlement Class BEAM-WARD, KRUSE, WILSON, WRIGHT & FLETES, LLC 8695 College Blvd., Suite 200 Overland Park, Kansas Telephone (913) If you want to be represented by your own lawyer, you may hire one at your own expense. 10. How Will the Lawyers Be Paid? Plaintiff's Counsel have neither received any payment for their services in conducting the Action on behalf of Plaintiff and the Settlement Class, nor have Plaintiff's Counsel been reimbursed for their out-of-pocket expenses incurred to date. After resolving the substantive terms of the Settlement, Plaintiff's Counsel and Defendants' Counsel negotiated an amount of attorneys' fees and reimbursement of expenses to compensate Plaintiff's Counsel for their work in achieving the benefits of this Settlement. Subject to Court approval, Defendants shall pay to Plaintiff's Counsel an amount not to exceed one million dollars for their attorneys' fees and reimbursement of expenses. Neither you nor any other Settlement Class Member is personally liable for any of these fees and expenses if the Settlement is approved. The attorneys' fees 4
5 and reimbursement of expenses requested will be the only payment to Plaintiff's Counsel for their efforts in achieving this Settlement and for their risk in undertaking this representation on a wholly contingent basis. THE SETTLEMENT HEARING The Court will hold a hearing to decide whether to approve the Settlement. 11. When and Where Will the Court Decide Whether to Approve the Settlement? The Court will hold a Settlement Hearing at 1000 a.m., on November 20, 2009, before the Honorable Kevin P. Moriarty, Johnson County Courthouse, Courtroom 113, 100 North Kansas, 7th Floor, Olathe, Kansas At this hearing, the Court will consider whether the Settlement is fair, reasonable, and adequate. If there are objections, the Court will consider them. The Court will listen to people who have submitted timely written objections. Assuming the Settlement is approved, the Court will also consider how much attorney's fees and expenses Plaintiff's Counsel are to receive. The Court may decide these issues at the Settlement Hearing or take them under consideration. We do not know how long these decisions will take. 12. How Do I Get Out of the Settlement Class? To exclude yourself from the Settlement Class with respect to a claim for money damages, you must send a letter by mail stating that you want to be excluded from the Settlement Class. You must include your name, address, telephone number, your signature, the number of shares of Embarq Corporation common stock you held beginning on October 26, 2008 up to and including July 1, 2009, the date on which the merger between Embarq and CenturyTel became effective, and a specific statement that you "request exclusion from the Settlement Class in Tyner v. Embarq Corp., et al., Case No. 08-CV (Kan. Dist. Ct. Johnson County)." You must mail your exclusion request postmarked no later than November 10, 2009 to Benjamin Rozwood, Esq., Robbins Umeda LLP, 600 B Street, Suite 1900, San Diego, California 92101; to Mark D. Hinderks, Esq., Stinson Morrison Hecker LLP, Benson, Suite 550, 12 Corporate Woods, Overland Park, Kansas 66210; and to William Savitt, Esq., Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York You cannot exclude yourself on the phone or by If I Do Not Exclude Myself, Can I Sue the Released Persons for the Same Thing Later? No. Unless you exclude yourself, you give up any right to sue the Released Persons for the claims resolved by this Settlement, including any claims for money damages. If you have a pending lawsuit against any of the Released Persons, speak to your lawyer in that case immediately. You must exclude yourself from the Settlement Class to continue your own lawsuit or arbitration against any of the Defendants solely with respect to a claim for damages. Remember, the exclusion deadline is November 10, Do I Have to Come to the Hearing? No. Plaintiff's Counsel will answer questions the Court may have. But you are welcome to come at your own expense. If you send an objection, you do not have to come to Court to talk about it. As long as you mailed your written objection on time, the Court will consider it. You may also pay your own lawyer to attend, but it is not necessary. 15. May I Speak at the Hearing? If you are a Settlement Class Member who has submitted a written objection and has not requested to be excluded from the Settlement Class, you may ask the Court for permission to speak at the Settlement Hearing. To do so, you must send a letter called a "Notice of Intention to Appear at Settlement Hearing in Tyner v. Embarq Corp., et al., Case No. 08-CV " Be sure to include your name, address, telephone number, your signature, and the number of shares of Embarq Corporation common stock you held beginning on October 26, 2008 up to and including July 1, 2009, the date on which the Merger between Embarq and CenturyTel became effective. Your Notice of Intention to Appear must be received no later than November 10, 2009, by the Clerk of the Court, Plaintiff's Counsel, and Defendants' Counsel, at the addresses listed in Question 18. You cannot speak at the Settlement Hearing if you exclude yourself from the Settlement Class. IF YOU DO NOTHING 16. What Happens if I Do Nothing at All? If you do nothing, you will still be bound by the judgment of the Court. That means even if you have not excluded yourself, you will not be able to start a lawsuit, continue with a lawsuit, or be part of any other lawsuit against the Released Persons about the same claims and issues in the Action if the Settlement is approved by the Court. OBJECTING TO OR REQUESTING EXCLUSION FROM THE SETTLEMENT You can tell the Court that you do not agree with the Settlement or some part of it. 17. What Is the Difference Between Objecting and Excluding? Objecting is simply telling the Court that you do not like something about the Settlement. You can object only if you stay in the Settlement Class. Persons may exclude themselves from the Settlement Class solely with respect to a 5
6 claim for money damages. Excluding yourself is telling the Court that you do not want to be part of the Settlement Class solely with respect to your right to pursue a claim for damages. 18. How Do I Tell the Court that I Do Not Like the Settlement? If you are a Settlement Class Member, you can object to the Settlement if you do not like any part of it. You must give reasons why you think the Court should not approve it. The Court will consider your views. Any objection must be in writing and include your name, address, telephone number, your signature, and the number of shares of Embarq Corporation common stock you held beginning on October 26, 2008 up to and including July 1, 2009, the date on which the Merger between Embarq and CenturyTel became effective. If you are represented by counsel, your objection must also include the name, address, and telephone number of your counsel. Any objection to the Settlement must be mailed or delivered no later than November 10, 2009, to The Court District Court for the Johnson County, Kansas Civil Department The Johnson County Courthouse 100 North Kansas Olathe, KS Counsel for Defendants STINSON MORRISON HECKER LLP Attn Mark D. Hinderks Benson, Suite Corporate Woods Overland Park, KS Telephone (913) POLSINELLI SHUGHART, PC Attn Greg L. Musil 6201 College Blvd, Suite 500 Overland Park, KS Telephone (913) Are There More Details About the Settlement? Counsel for Plaintiff BEAM-WARD, KRUSE, WILSON, WRIGHT & FLETES, LLC Attn Charles T. Schimmel 8695 College Blvd., Suite 200 Overland Park, Kansas Telephone (913) MORRIS, NICHOLS, ARSHT & TUNNELL LLP Attn Kenneth J. Nachbar 1201 N. Market Street P.O. Box 1347 Wilmington, Delaware Telephone (302) GETTING MORE INFORMATION ROBBINS UMEDA LLP Attn Benjamin Rozwood 600 B Street, Suite 1900 San Diego, CA Telephone (619) WACHTELL, LIPTON, ROSEN & KATZ Attn William Savitt 51 West 52nd Street New York, NY Telephone (212) This Notice summarizes the proposed Settlement. This summary is qualified by, and subject to, the detailed terms of the Stipulation and Agreement of Settlement together with its exhibits dated September 1, You can get a copy of the Stipulation via the internet at or you may inspect the Stipulation during business hours at the office of the Clerk of the Court, District Court of Johnson County, 100 North Kansas Avenue, Olathe, Kansas How Do I Get More Information? There is additional information concerning the Settlement available via the internet at Or you can call Benjamin Rozwood Esq. at Robbins Umeda LLP, 600 B Street, Suite 1900, San Diego, California 92101, Telephone (619) , for additional information concerning the Settlement. DO NOT TELEPHONE THE COURT REGARDING THIS NOTICE SPECIAL NOTICE TO NOMINEES If you held any shares of Embarq Corporation common stock beginning on October 26, 2008 up to and including July 1, 2009, the date on which the Merger between Embarq and CenturyTel became effective, as nominee for a beneficial owner, then, within ten (10) days after you receive this Notice, please either send a copy of this Notice by first class mail to all such Persons, or provide a list of the names and addresses of such Persons to Embarq Merger Litigation, c/o The Garden City Group, Inc., PO Box 9539, Dublin OH ; (the Notice Administrator ). If you choose to mail the Notice yourself, you may obtain from the Notice Administrator (without cost to you) as many additional copies of these documents as you will need to complete the mailing. Regardless of whether you choose to complete the mailing yourself or elect to have the mailing performed for you, you may obtain reimbursement for or advancement of reasonable administrative costs actually incurred or expected to be incurred in connection with forwarding the Notice and which would not have been incurred but for the obligation to forward the Notice, upon submission of appropriate documentation to the Notice Administrator. DATED September 18, 2009 BY ORDER OF THE COURT DISTRICT COURT FOR JOHNSON COUNTY, KANSAS 6