EXHIBIT 2.3
AMENDMENT NO. 1 TO
PURCHASE AGREEMENT
This Amendment No. 1 to Purchase Agreement (this "AMENDMENT")
is entered into as of November 8, 2002 by and between Qwest Dex, Inc., a
Colorado corporation ("SELLER"), Qwest Services Corporation, a Colorado
corporation ("QSC"), and Qwest Communications International Inc., a Delaware
corporation ("QWEST" and, collectively with Seller and QSC, the "QWEST
PARTIES"), on the one hand, and Dex Holdings LLC, a Delaware limited liability
company ("BUYER"), on the other hand.
RECITALS
A. On August 19, 2002, the Qwest Parties and the Buyer entered
into a purchase agreement (the "DEXTER PURCHASE AGREEMENT") providing for the
sale by Seller of all of the outstanding limited liability company membership
interests of SGN LLC, a Delaware limited liability company, to Buyer, on the
terms and conditions set forth therein; and
B. The Qwest Parties and Buyer desire to amend the Dexter
Purchase Agreement as set forth herein.
AGREEMENT
In consideration of the mutual promises contained in this
Amendment and intending to be legally bound, the parties agree as follows:
1. AMENDMENTS TO THE DEXTER PURCHASE AGREEMENT. Effective as
of the date hereof, the Dexter Purchase Agreement is amended as follows:
(a) Section 2.6(a) of the Dexter Purchase Agreement is amended
to read in its entirety as follows:
"Prior to the Closing and pursuant to the
Contribution Agreement attached hereto as Exhibit B (the "CONTRIBUTION
AGREEMENT") and the Intellectual Property Contribution Agreement
attached hereto as Exhibit C (the "IP CONTRIBUTION AGREEMENT"), Seller
will contribute to Company or Dex Media, Inc. (the "CONTRIBUTION") all
of its right, title and interest in and to certain assets relating to
the Transferred Business, and shall cause Company to assume certain
liabilities of the Transferred Business, all on the terms and
conditions set forth in the Contribution Agreement and the IP
Contribution Agreement."
(b) The first sentence of Section 2.7(a) of the Dexter
Purchase Agreement is amended to read in its entirety as follows: "No later than
15 Business Days prior to the Closing Date, Seller shall deliver the Transferred
Business Audited Financial Statements to Buyer pursuant to Section 5.6 hereof."
(c) Section 2.9(d) of the Dexter Purchase Agreement is amended
to read in its entirety as follows:
"If the Base Purchase Price or Adjusted Base Purchase
Price plus or minus the Working Capital Adjustment is greater than the
Closing Purchase Price, Buyer shall pay to Seller the difference. If
the Base Purchase Price or Adjusted Base Purchase Price plus or minus
the Working Capital Adjustment is less than the Closing Purchase Price,
Seller shall pay to Buyer the difference. Payments made pursuant to
this Section 2.9(d) shall be made by wire transfer in immediately
available funds within five (5) Business Days after the Final Statement
becomes binding on Buyer and Seller pursuant to Section 2.9(c) above."
(d) The last sentence of Section 3.14(b) of the Dexter
Purchase Agreement is amended to read as follows: "The "TRANSFERABLE TRADEMARKS"
shall mean the Trademarks to be transferred to Dex Media, Inc. pursuant to the
IP Contribution Agreement."
(e) The last sentence of Section 3.14(c) of the Dexter
Purchase Agreement is amended to read as follows: "The "TRANSFERABLE PATENTS"
shall mean the applicable ownership interests in the Patents to be transferred
to Dex Media, Inc. pursuant to the IP Contribution Agreement."
(f) The last sentence of Section 3.14(d) of the Dexter
Purchase Agreement is amended to read as follows: "The "TRANSFERABLE COPYRIGHTS"
shall mean the Copyrights to be transferred to Dex Media, Inc. pursuant to the
IP Contribution Agreement."
(g) The last sentence of Section 3.14(g) of the Dexter
Purchase Agreement is amended to read as follows: "The term "TRANSFERABLE DOMAIN
NAMES" shall mean the Domain Names to be transferred to Dex Media, Inc. pursuant
to the IP Contribution Agreement."
(h) Section 3.14(h) of the Dexter Purchase Agreement is
amended to read in its entirety as follows:
"Intellectual Property Sufficiency. To Seller's
Knowledge, except as otherwise provided in Section 3.14 of Seller's
Disclosure Schedule, the assignments, licenses and other rights granted
by Qwest and its current Affiliates to Dex Media, Inc. and Company
under this Agreement, the other Transaction Documents and the
Commercial Agreements and other actions taken in accordance with
Section 5.18 of Exhibit P to this Agreement accord to Dex Media, Inc.
and Company the rights with respect to the intellectual property assets
owned or licensed by Qwest and such Affiliates that are necessary for
continued operation of the Transferred Business by Company after the
Closing in substantially the same manner as such business has been
operated by Seller during the six months prior to the Closing."
(i) The first sentence of Section 5.6(a) of the Dexter
Purchase Agreement is amended to read in its entirety as follows:
"Seller will deliver to Buyer, as soon as practicable
following the completion of an audit of the Transferred Business but in
no event later than 15 Business
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Days prior to the Closing Date, (i) the audited balance sheets of the
Transferred Business as at December 31, 2000 and December 31, 2001, and
audited statements of income and cash flows of the Transferred Business
for the twelve months ended December 31, 1999, December 31, 2000 and
December 31, 2001, together with an opinion of Seller's independent
accounting firm, KPMG, containing no exceptions or qualifications
(collectively, such financial statements of the Transferred Business,
together with the notes thereto, the "TRANSFERRED BUSINESS AUDITED
FINANCIAL STATEMENTS") and (ii) an unaudited balance sheet of the
Transferred Business as at June 30, 2002 and an unaudited statement of
income for the six months ended June 30, 2002 (the "TRANSFERRED
BUSINESS UNAUDITED FINANCIAL STATEMENTS" and, together with the
Transferred Business Audited Financial Statements, the "TRANSFERRED
BUSINESS FINANCIAL STATEMENTS")."
(j) Section 5.10(b) of the Dexter Purchase Agreement is
amended to read in its entirety as follows:
"Buyer shall, and shall cause its Affiliates to, use
all commercially reasonable efforts to (1) maintain the effectiveness
of the Debt Financing Commitment Letter, (2) enter into definitive
documentation with respect to the Debt Financing on the terms contained
in the Debt Financing Commitment Letter, (3) satisfy all funding
conditions to the Debt Financing set forth in the definitive
documentation with respect to the Debt Financing, (4) cause to be made
available to Buyer, on or prior to December 15, 2002, the Debt
Financing in an aggregate principal amount equal to the principal
amount of the Debt Financing, and (5) perform its obligations under the
Financing Commitments, including its obligations to agree to changes in
the structure, terms and pricing contained in the Financing Commitments
(it being understood that such obligations shall not include any
obligation to cause any of its Affiliates to increase the amount of
their Equity Financing)."
(k) Section 7.2(m) of the Dexter Purchase Agreement is amended
to read in its entirety as follows:
"Buyer shall have received from one or more counsels
to the Qwest Parties, as specified in Section 7.2(m) of Seller's
Disclosure Schedule, legal opinions with respect to the matters set
forth in Section 7.2(m) of Seller's Disclosure Schedule, addressed to
Buyer and dated as of the Closing Date; and"
(l) Section 7.2(n) of the Dexter Purchase Agreement is amended
to read in its entirety as follows:
"Both (i) sufficient Third Party Consents shall have
been obtained and/or Company shall be able to replace such Contracts on
commercially reasonable terms such that Company can conduct the
Transferred Business in the same manner and substantially on the same
terms and conditions as currently conducted by Seller and (ii) the
Dexter IP Products Condition shall have been satisfied unless the
failure to consummate the transactions that would satisfy such
condition was a result of action or inaction by Buyer inconsistent with
the goals or undertakings contemplated in Section 5.18 of Exhibit P."
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(m) Section 9.4(b) of the Dexter Purchase Agreement is amended
to read in its entirety as follows:
"Except with respect to Losses arising from or
related to Seller's breach of Sections 3.1 (Organization and Related
Matters), 3.2(a) (Authorization), 3.2(b) (No Conflicts, but only with
respect to the last sentence and only as it relates to State PUC Laws),
3.5 (Capitalization), 3.9 (Taxes), 3.13 (No Brokers or Finders), 3.15
(LCI) and 3.24 (Contribution Agreement), the Qwest Parties will have no
liability for Losses incurred by Buyer Indemnified Persons under
Section 9.1(a), whether resulting from an action for indemnification or
otherwise, to the extent the aggregate Losses incurred thereunder,
including any Losses previously recovered, exceed $550,000,000."
(n) The second sentence of Section 9.7 of the Dexter Purchase
Agreement is amended to read in its entirety as follows: "The foregoing shall
not limit the right of either party to indemnification in accordance with the
provisions of this Article IX with respect to all components of any claim,
settlement, award or judgment against such party by any unaffiliated third
party."
(o) The second sentence of Section 5.18(b) of Exhibit P to the
Dexter Purchase Agreement shall be amended to read in its entirety as follows:
"Seller shall be responsible for one hundred percent (100%) of such costs in
excess of forty million dollars ($40,000,000.00), and for the cost for
satisfying the Dexter IP Products Condition."
(p) Section 5.19 of Exhibit P to the Dexter Purchase Agreement
shall be amended to read in its entirety as follows:
"IT ASSETS SALE AND RIGHT TO USE. Prior to the
Closing Date, Seller and Buyer will enter into an asset sale and right
to use agreement with a reputable third party financing vendor (e.g.
Sun Microsystems, Hewlett-Packard, GE Capital, etc.) (the "IT ASSETS
FINANCER") pursuant to which Qwest will sell the centralized
information technology assets owned and used by Seller in the
operations of the Transferred Business (consisting primarily of
servers) and the desktop computers used by the centralized operations
personnel being transferred to Company as described in Section 5.22
(collectively, the "IT ASSETS") for the benefit of Seller and Company,
with the proceeds from such sale to be shared by Seller and Company on
a Pro Rata basis. IT Assets Financer will grant to each of Qwest and
Buyer an undivided right to use of and access to all of the IT Assets
for the term of the Separation Agreement, such sale and right to use
agreement to be effective only upon consummation of the Closing. Each
party will bear its own costs with respect to the agreement entered
into pursuant to this Section 5.19. For avoidance of doubt: (i) Seller
will not sell to the IT Assets Financer, and (subject to the terms of
the IP Contribution Agreement) will retain ownership of and control
over, the licensed software and third party intellectual property
housed on the IT Assets; and (ii) Seller will retain, and Company will
acquire pursuant to the Contribution Agreement, ownership of and
control over their respective customer information and other
proprietary data and information (each Party's "PROPRIETARY DATA")
housed on the IT Assets relating to their respective portions of the
Transferred Business."
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(q) The last sentence of Section 5.20 of Exhibit P to the
Dexter Purchase Agreement is amended to read in its entirety as follows: "Qwest
will cause its applicable Affiliates, subject to regulatory requirements, to
enter into such collocation agreement on commercially reasonable terms
(including with respect to space, power and access requirements) for the term of
the right to use agreement for the IT Assets or such longer period as the
parties may agree."
(r) The first sentence of Section 5.21 of Exhibit P to the
Dexter Purchase Agreement is amended to read in its entirety as follows: "The
parties acknowledge that Seller and/or Buyer may desire to undertake a migration
of the systems, software and platforms utilized in operating the Transferred
Business to a new platform licensed and supported by Amdocs, Inc. (the "AMDOCS
PROJECT")."
(s) Section 5.22(a) of Exhibit P to the Dexter Purchase
Agreement is amended to read in its entirety as follows: "The parties have
agreed, on the terms and conditions set forth in the Joint Management Agreement,
that Seller and Company will each employ the members of the Management Team (as
such term is defined in the Joint Management Agreement) following the Closing
Date."
(t) Section 5.26(a) of Exhibit P to the Dexter Purchase
Agreement is amended to read in its entirety as follows:
"Buyer acknowledges that the Billing and Collection
Agreement contemplates the purchase by Qwest Corporation of Company's
accounts receivable in a manner which differs from Qwest Corporation's
current and historical practices with respect to the purchase of
Seller's accounts receivable. Accordingly, Buyer shall bear all
reasonable costs and expenses to be incurred by Qwest Corporation in
order to establish, enhance, expand, improve or otherwise alter the
systems necessary to provide such services on the terms and conditions
set forth in the Billing and Collection Agreement. The parties
currently estimate these costs and expenses to be approximately $2.1
million. Seller shall endeavor to keep Buyer apprised of any material
deviations from such estimate. At least two Business Days prior to the
Closing Date, Seller shall use commercially reasonable efforts to cause
Qwest Corporation to provide written notice to Buyer of the actual
amount of costs and expenses so incurred (to the extent that such
amounts are available) and a good faith estimate of other amounts
incurred and to be incurred between such date and completion of such
work to the systems (the sum of such actual and estimates amount being
the "ESTIMATED PAR SYSTEMS AMOUNT"). Buyer shall pay such Estimated
Systems Amount, subject only to an opportunity to discuss and consult
with Qwest Corporation about such amount, to Qwest Corporation by the
close of business on Tuesday, November 12. On or before January 17,
2003, Qwest Corporation will provide written notice to Buyer
documenting the costs and expenses incurred pursuant to this Section
5.26(a) (the "ACTUAL PAR SYSTEMS AMOUNT"). If the Estimated PAR Systems
Amount paid by Buyer to Qwest Corporation at Closing is greater than
the
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Actual PAR Systems Amount, Qwest Corporation shall pay such excess
amount to Buyer or its designee within five Business Days, by wire
transfer of immediately available funds to an account designated in
writing by Buyer. If the Estimated PAR Systems Amount paid by Buyer to
Qwest Corporation at Closing is less than the Actual PAR Systems
Amount, Buyer shall pay such shortfall amount to Qwest Corporation
within five Business Days, by wire transfer of immediately available
funds to an account designated in writing by Qwest Corporation. In the
event of the termination of this Agreement prior to Closing, Qwest
Corporation will provide written notice to Buyer documenting the costs
and expenses incurred pursuant to this Section 5.26 and Buyer shall pay
such amount to Qwest Corporation within five Business Days, by wire
transfer of immediately available funds to an account designated in
writing by Qwest Corporation."
(u) Section 5.26(b) of Exhibit P to the Dexter Purchase
Agreement is amended to read in its entirety as follows:
"Each of the Qwest Parties agrees to use their
respective commercially reasonable efforts to: (i) promptly following
the date hereof, establish, in consultation with Buyer and its
representatives, a detailed systems implementation plan based on the
outline plan attached as Annex 1 (as such outline plan may be changed,
updated and supplemented, the "B&C SYSTEMS TRANSITION PLAN") that
provides for the accelerated transition of Company's billing and
collection services which are performed by Qwest Corporation under the
Billing and Collection Agreement to be migrated to Company, which plan
shall (x) set forth, in reasonable detail, the reasonable system
milestones to be completed by Qwest Corporation and Company in respect
of such transitioning, (y) establish the budget for the implementation
of such plan and (z) provide for full completion of such transitioning
by no later than December 12, 2002; (ii) in accordance with the B&C
Systems Transition Plan, cause Qwest Corporation and (prior to Closing)
Company to carry out and perform the various systems implementation
actions contemplated by such plan; and (iii) following implementation
of the systems modifications contemplated by the B&C Systems Transition
Plan, cause Qwest Corporation and (prior to Closing) Company to
properly maintain such modified systems so as to permit the accelerated
transitioning of Company's billing and collection services at any time
upon Company's directions in accordance with the Billing and
Collections Agreement. Each of the Qwest Parties shall, and Seller
shall cause Qwest Corporation and/or (prior to Closing) Company to,
permit Buyer and its representatives (including financing sources and
consultants) to have reasonable access to the appropriate systems
personnel of, and such systems documentation and other material of,
Qwest Corporation and/or (prior to Closing) Company to enable Buyer and
its representatives (including financing sources and consultants) to
review and establish, to their reasonable satisfaction, the adequacy
and proper maintenance of the B&C Systems Transition Plan. For
clarification purposes, following Closing, the Qwest Parties will no
longer be responsible for Company's actions, and Buyer will cause
Company to cooperate and perform in accordance with the B&C Systems
Transition Plan. Buyer agrees that it shall be obligated to pay all of
Qwest Corporation's and Company's reasonable costs and expenses
incurred in connection with the implementation and maintenance of the
B&C Systems Transition Plan (provided that it is agreed and understood
by the Parties that
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such amount is estimated to equal no more than $6.5 million). At least
two Business Days prior to the Closing Date, Seller shall use
commercially reasonable efforts to cause Qwest Corporation and Company
to provide written notice to Buyer of the actual amount of costs and
expenses so incurred (to the extent that such amounts are available)
and a good faith estimate of other amounts incurred and to be incurred
between such date and completion of such work to the systems (the sum
of such actual and estimates amount being the "ESTIMATED MIGRATION
AMOUNT"). Buyer shall pay such Estimated Migration Amount, subject only
to an opportunity to discuss and consult with Qwest Corporation about
such amount, to Qwest Corporation by the close of business on Tuesday,
November 12. On or before January 17, 2003, Qwest Corporation will
provide written notice to Buyer documenting the costs and expenses
incurred pursuant to this Section 5.26(b) (the "ACTUAL MIGRATION
AMOUNT"). If the Estimated Migration Amount paid by Buyer to Qwest
Corporation at Closing is greater than the Actual Migration Amount,
Qwest Corporation shall pay such excess amount to Buyer or its designee
within five Business Days, by wire transfer of immediately available
funds to an account designated in writing by Buyer. If the Estimated
Migration Amount paid by Buyer to Qwest Corporation at Closing is less
than the Actual Migration Amount, Buyer shall pay such shortfall amount
to Qwest Corporation within five Business Days, by wire transfer of
immediately available funds to an account designated in writing by
Qwest Corporation."
(v) Item 1 of Section 3.4(b) of Seller's Disclosure Schedule
is amended to read in its entirety as follows:
"The consent of the lenders under the Amended and
Restated Credit Agreement entered into by Qwest and certain of its
Affiliates as of March 12, 2002 (the "LENDERS") will be required in
connection with (i) the transactions contemplated by Section 8.2(b) of
this Agreement, and (ii) the Interim Financings (as defined in Section
5.2 of this Disclosure Schedule."
(w) The table captioned "UCC FILINGS" in Section 1.2PE of
Seller's Disclosure Schedule is amended so that, in each entry under the column
captioned "ASSETS ENCUMBERED," the word "Office" is inserted before the word
"Equipment."
(x) Section 7.2(d) of Seller's Disclosure Schedule is amended
to read in its entirety as follows: "The consent of the Lenders to the
transactions contemplated by Section 8.2(b) of this Agreement."
2. EFFECT OF AMENDMENT. Except as specifically provided
herein, this Amendment does not in any way affect or impair the terms,
conditions and other provisions of the Dexter Purchase Agreement, and all terms,
conditions and other provisions of the Dexter Purchase Agreement shall remain in
full force and effect, except to the extent expressly amended hereby.
3. CAPITALIZED TERMS. Capitalized terms used but independently
defined in this Amendment shall have the meanings ascribed to them in the Dexter
Purchase Agreement.
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4. GOVERNING LAW. This Amendment and the legal relations
between the parties will be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and performed in such
State and without regard to conflicts of law doctrines unless certain matters
are preempted by federal law.
5. HEADINGS. The descriptive headings of the Sections of this
Amendment are for convenience only and do not constitute a part of this
Amendment.
6. COUNTERPARTS. This Amendment may be executed in one or more
counterparts and by different parties in separate counterparts. All counterparts
will constitute one and the same instrument and will become effective when one
or more counterparts have been signed by each party and delivered to the other
party.
* * * * *
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed by its duly authorized officers as of the day and year
first above written.
DEX HOLDINGS LLC
By: /s/ Xxxxx X. Xxxxxxx, Xx.
---------------------------------------
Name: Xxxxx X. Xxxxxxx, Xx.
Title: Managing Director
"QWEST"
QWEST COMMUNICATIONS
INTERNATIONAL INC.
By: /s/ Xxxx X. Xxxx
---------------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
"QSC"
QWEST SERVICES CORPORATION
By: /s/ Xxxx X. Xxxx
---------------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
"SELLER"
QWEST DEX, INC.
By: /s/ Xxxx X. Xxxx
---------------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
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