Exhibit 2.1
EXECUTION COPY
PURCHASE AGREEMENT
BY AND AMONG
AMERITECH CORPORATION,
AMERITECH PUBLISHING, INC.
AND
X. X. XXXXXXXXX CORPORATION
AS OF JULY 28, 2004
TABLE OF CONTENTS
Page
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ARTICLE I PURCHASE AND SALE OF THE INTERESTS
Section 1.1 Purchase and Sale.......................................... 2
Section 1.2 Payment of Purchase Price.................................. 2
Section 1.3 Liquidation Preference..................................... 2
Section 1.4 Closing.................................................... 2
Section 1.5 Deliveries by Sellers...................................... 3
Section 1.6 Deliveries by Buyer........................................ 3
ARTICLE II RELATED MATTERS
Section 2.1 Use of SBC's Name and Logos................................ 4
Section 2.2 No Ongoing or Transition Services.......................... 4
Section 2.3 Certain Pre-Closing Matters................................ 4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS
Section 3.1 Organization............................................... 5
Section 3.2 Authorization.............................................. 5
Section 3.3 Capital Stock.............................................. 6
Section 3.4 Ownership of the Capital Stock............................. 6
Section 3.5 Consents and Approvals; No Violations...................... 6
Section 3.6 Financial Statements and Undisclosed Liabilities........... 7
Section 3.7 Absence of Certain Events.................................. 8
Section 3.8 Title, Ownership and Related Matters....................... 9
Section 3.9 Intellectual Property...................................... 9
Section 3.10 Computer Software.......................................... 11
Section 3.11 Litigation................................................. 11
Section 3.12 Compliance with Applicable Law............................. 12
Section 3.13 Certain Contracts and Arrangements......................... 12
Section 3.14 Employee Benefit Plans; ERISA.............................. 12
Section 3.15 Labor Matters.............................................. 13
Section 3.16 Taxes...................................................... 13
Section 3.17 Environmental.............................................. 14
Section 3.18 Officers................................................... 14
Section 3.19 Certain Fees............................................... 14
Section 3.20 Sufficiency of Assets...................................... 14
Section 3.21 Permits.................................................... 15
Section 3.22 Seller Entities Engaged in Telecom Services................ 15
Section 3.23 Affiliate Transactions..................................... 15
Section 3.24 No Other Representations and Warranties.................... 15
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.1 Organization And Authority Of Buyer........................ 16
Section 4.2 Consents And Approvals; No Violations...................... 16
Section 4.3 Litigation................................................. 17
Section 4.4 Certain Fees............................................... 17
Section 4.5 Investment Representations................................. 17
Section 4.6 Sufficient Funds........................................... 17
Section 4.7 Solvency................................................... 17
Section 4.8 Ownership; Experience...................................... 18
Section 4.9 No Other Representations and Warranties.................... 18
ARTICLE V COVENANTS
Section 5.1 Conduct of the Wholly Owned Company's Business............. 18
Section 5.2 Access To Information...................................... 19
Section 5.3 Consents................................................... 21
Section 5.4 Commercially Reasonable Efforts............................ 22
Section 5.5 Regulatory Proposals....................................... 22
Section 5.6 Public Announcements....................................... 23
Section 5.7 Covenant to Satisfy Conditions............................. 24
Section 5.8 Certain Tax Matters........................................ 24
Section 5.9 No Solicitation............................................ 29
Section 5.10 Ancillary Agreements....................................... 29
Section 5.11 Investigation By Buyer..................................... 29
Section 5.12 Employees and Employee Benefit Plans....................... 30
Section 5.13 Mutual Release............................................. 30
Section 5.14 Transition of Certain Information.......................... 30
Section 5.15 Interim Changes in the Territory........................... 31
Section 5.16 Intercompany Accounts...................................... 31
Section 5.17 Collection Proceedings..................................... 32
ARTICLE VI CONDITIONS TO OBLIGATIONS OF THE PARTIES
Section 6.1 Conditions to Each Party's Obligation...................... 32
Section 6.2 Conditions To Obligations Of Sellers....................... 32
Section 6.3 Conditions To Obligations Of Buyer......................... 33
ARTICLE VII TERMINATION
Section 7.1 Termination................................................ 34
Section 7.2 Procedure and Effect Of Termination........................ 34
ARTICLE VIII SURVIVAL OF REPRESENTATIONS
Section 8.1 Survival of Representations, Warranties and Agreements..... 35
ARTICLE IX INDEMNIFICATION
Section 9.1 Indemnification Obligations Of Sellers..................... 36
Section 9.2 Indemnification Obligations Of Buyer....................... 36
Section 9.3 Indemnification Procedure.................................. 37
Section 9.4 Claims Period.............................................. 38
Section 9.5 Liability Limits........................................... 38
Section 9.6 Netting of Losses.......................................... 38
Section 9.7 Exclusive Remedies......................................... 39
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ARTICLE X MISCELLANEOUS
Section 10.1 Fees and Expenses.......................................... 39
Section 10.2 Further Assurances......................................... 39
Section 10.3 Notices.................................................... 39
Section 10.4 Severability............................................... 40
Section 10.5 Binding Effect; Assignment................................. 41
Section 10.6 No Third Party Beneficiaries............................... 41
Section 10.7 Interpretation............................................. 41
Section 10.8 Jurisdiction and Consent to Service........................ 41
Section 10.9 Entire Agreement........................................... 42
Section 10.10 Governing Law.............................................. 42
Section 10.11 Specific Performance....................................... 42
Section 10.12 Counterparts............................................... 42
Section 10.13 Amendment, Modification and Waiver......................... 42
Section 10.14 Knowledge.................................................. 42
Section 10.15 Schedules and Exhibits..................................... 43
Section 10.16 Waiver of Jury Trial....................................... 43
Section 10.17 Fulfillment of Obligations................................. 43
Section 10.18 Headings................................................... 43
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DEFINED TERMS
Term Section
---- -------
Affiliate............................................10.7(b)
Agreement...........................................Preamble
Agreements............................................1.5(c)
Allocation............................................5.8(b)
Ameritech...........................................Preamble
Ancillary Agreements..................................1.5(c)
API.................................................Preamble
APIL................................................Recitals
APIL Partners.......................................Recitals
Assignment and Assumption Agreement...................1.5(a)
Audited Financial Statements..........................3.6(a)
Buyer...............................................Preamble
Buyer Deductible.........................................9.5
Buyer Disclosure Letter...........................Article IV
Buyer Entities...........................................4.2
Buyer Indemnified Parties................................9.1
Buyer Losses.............................................9.1
Buyer Material Adverse Effect............................4.2
Buyer Parties.........................................1.8(c)
Claims Period............................................9.4
Closing Date.............................................1.4
Closing..................................................1.1
Code..................................................5.8(a)
Collection Proceedings..................................3.20
Companies...........................................Recitals
Companies AR............................................5.16
Company Disclosure Letter........................Article III
Company Intellectual Property.........................3.9(a)
Company Licensed Intellectual Property................3.9(a)
Company Licensed Software............................3.10(a)
Company Material Adverse Change.......................3.1(c)
Company Material Adverse Effect.......................3.1(b)
Company Owned Intellectual Property...................3.9(a)
Company Proprietary Software.........................3.10(a)
Company Software.....................................3.10(a)
Confidentiality Agreement.............................5.2(b)
Contracts................................................3.5
DonTech Act or Omission...............................3.1(b)
DonTech I...........................................Recitals
DonTech II..........................................Recitals
DonTech Business....................................Recitals
DonTech Interests...................................Recitals
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DonTech Marks............................................1.1
Directory Services License Agreement.................5.10(c)
DOJ...................................................5.3(d)
Enforceability Limitations...............................3.2
ERISA................................................3.14(a)
Financial Statements..................................3.6(a)
FTC...................................................5.3(d)
GAAP..................................................3.6(a)
Gross AR................................................5.16
HSR Act..................................................3.5
Indemnified Party.....................................9.3(a)
Indemnifying Party....................................9.3(a)
Integrated Records......................................5.14
Intellectual Property.................................3.9(a)
IYP Reseller Agreement...............................5.10(f)
Liens.................................................3.8(b)
Material Contracts......................................3.13
Mutual Release..........................................5.13
Non-Competition Agreement............................5.10(d)
Order.................................................6.1(b)
Ordinary Course of Business...........................3.7(a)
Outstanding AR..........................................5.16
Permits..............................................3.21(a)
Person...............................................10.7(a)
Post-Closing Period...................................5.8(e)
Pre-Closing Period.................................5.8(d)(i)
Publisher Transition Services Agreement..............5.10(b)
Purchase Price........................................1.2(a)
Regulatory Proposal...................................5.5(a)
Xxxxxxxx-Xxxxx Act....................................5.2(a)
SBC.................................................Preamble
SBC Directory Operations............................Recitals
Seller Entities..........................................3.5
Seller Indemnified Parties...............................9.2
Seller Intellectual Property.............................2.1
Seller Losses............................................9.2
Seller Parties........................................1.5(c)
Sellers.............................................Preamble
Solvent..................................................4.7
Straddle Period....................................5.8(d)(i)
Subcontract...........................................5.3(c)
Subscriber Listings Agreement........................5.10(e)
Suit....................................................3.11
Tax Package...........................................5.8(l)
Tax Return.......................................3.16(c)(ii)
Taxes.............................................3.16(c)(i)
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Termination Date......................................7.1(e)
Third Party Approval Contracts........................5.3(b)
To the Knowledge of Buyer..............................10.14
To the Knowledge of Sellers............................10.14
Transfer Tax Limit...............................5.7(c)(vii)
Transition Period.......................................5.16
Transition Records......................................5.14
Transition Services Agreement........................5.10(a)
Unaudited Financial Statements........................5.2(c)
Unrelated Accounting Firm........................5.8(b)(iii)
Vendor................................................5.3(b)
Vendor Contracts......................................5.3(b)
Wholly Owned Company................................Recitals
Wholly Owned Company Benefit Plan....................3.14(a)
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, dated as of July 28, 2004 (this "Agreement"), is
made and entered into by and between Ameritech Corporation ("Ameritech"), a
Delaware corporation and a direct wholly owned subsidiary of SBC Communications,
Inc., a Delaware corporation ("SBC"), Ameritech Publishing Inc., a Delaware
corporation and a direct wholly owned subsidiary of Ameritech ("API", and
together with Ameritech, "Sellers"), and X. X. Xxxxxxxxx Corporation, a Delaware
corporation ("Buyer").
RECITALS
1. API owns (a) all of the outstanding shares of capital stock of
Ameritech Publishing of Illinois, Inc., an Illinois corporation ("APIL"), which
owns (i) a 47% partnership interest in the AM-DON Partnership, an Illinois
general partnership ("DonTech I"), (ii) a 50% partnership interest in DonTech
II, an Illinois general partnership ("DonTech II"), and (iii) a 99% partnership
interest in APIL Partners Partnership, an Illinois general partnership ("APIL
Partners" or the "Wholly Owned Company" and, together with DonTech I and DonTech
II, the "Companies"), and (b) a 1% partnership interest in APIL Partners.
2. Buyer owns all of the partnership interests in each of DonTech I and
DonTech II not owned by APIL.
3. The Companies and SBC Directory Operations, Inc., a Delaware
corporation and a direct wholly owned subsidiary of SBC ("SBC Directory
Operations"), currently conduct a print directory publishing business for yellow
pages and street address directories and perform the agency role on behalf of
SBC Directory Operations for publishing white pages directories in the Territory
(as defined in the Directory Services License Agreement) (such business, the
"DonTech Business").
4. Pursuant to the terms and conditions of this Agreement, API desires to
sell, or cause APIL to sell, to Buyer, and Buyer desires to purchase (i) from
APIL, (a) the 47% partnership interest in DonTech I, (b) the 50% partnership
interests in DonTech II, (c) the 99% partnership interest in APIL Partners, and
(ii) from API, the 1% partnership interest in APIL Partners (collectively, the
"DonTech Interests").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions set forth in
this Agreement, and intending to be legally bound by this Agreement, the parties
agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE INTERESTS
Section 1.1. PURCHASE AND SALE. Subject to the terms and conditions set
forth in this Agreement, at the closing provided for in Section 1.4 of this
Agreement (the "Closing"), Sellers agree to sell, transfer and deliver, or cause
one or more of their Affiliates to sell, transfer and deliver, to Buyer (or to
such of its wholly owned Subsidiaries as Buyer may designate in writing), and
Buyer agrees to purchase, acquire and accept from Sellers, or one or more of
their Affiliates, as the case may be, the DonTech Interests. In addition, at the
Closing, Sellers agree to sell, transfer and deliver, or cause one or more of
their Affiliates to sell, transfer and deliver, to Buyer (or to such of its
wholly owned Subsidiaries as Buyer may designate in writing), and Buyer agrees
to purchase, acquire and accept from Sellers or one or more of their Affiliates,
as the case may be, all right, title and interest in the trademark "DonTech" and
the domain name "xxxxxxxxx.xxx" (but not any related links, rights or
technologies that may be associated with such domain name) (collectively, the
"DonTech Marks").
Section 1.2. PAYMENT OF PURCHASE PRICE.
(a) In consideration for the sale, transfer and delivery of the DonTech
Interests and the DonTech Marks and the execution and delivery of the Ancillary
Agreements by the Seller Parties (as each such term is hereinafter defined), at
the Closing Buyer shall deliver or cause to be delivered to Sellers (or to such
other party as may be designated in writing by Sellers) the Purchase Price in
accordance with Section 1.2(b) of this Agreement. The "Purchase Price" payable
at Closing shall equal (i) $1,450,000,000 minus (ii) a working capital
adjustment of $14,000,000.
(b) Buyer shall pay the Purchase Price to Sellers in cash by wire transfer
of immediately available federal funds to such bank account(s) as shall be
designated in writing by Sellers at least three business days prior to the
Closing Date.
Section 1.3. LIQUIDATION PREFERENCE. The Purchase Price payable at Closing
shall be reduced by $29,898,000. From and after the Closing, none of Buyer, any
Affiliate of Buyer or any successor to any of the foregoing shall be entitled to
any payment from APIL or any Affiliate of APIL under Amendment No. 1 to the
DonTech II Partnership Agreement dated as of January 28, 2000.
Section 1.4. CLOSING. The Closing of the transactions contemplated by this
Agreement shall take place on the later of (i) the third business day following
the first date on which all of the conditions to Closing set forth in Article VI
of this Agreement are satisfied or waived (other than those conditions which by
their nature are to be satisfied at Closing but subject to the satisfaction or
waiver of those conditions), and (ii) the earlier of (x) the date on which Buyer
shall have received net proceeds of at least $1,420,000,000 from borrowings it
incurred to fund all or part of the Purchase Price and (y) January 3, 2005, at
10:00 a.m., local time, at the offices of Xxxxx Day, 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx,
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XX 00000, or on such other date and at such other time or place as the parties
may agree. The time and date of the Closing is sometimes referred to in this
Agreement as the "Closing Date."
Section 1.5. DELIVERIES BY SELLERS. At the Closing, Sellers will deliver
or cause to be delivered to Buyer (unless delivered previously) the following:
(a) The assignment and assumption agreement substantially in the form
attached as Exhibit 1.5(a) hereto (the "Assignment and Assumption Agreement")
providing for the transfer by API and APIL of the DonTech Interests duly
executed by API and APIL;
(b) The resignations of all officers, managers and members of the Boards
of Directors of the Companies other than those who are representatives of Buyer,
in each case from their position as such, in a form reasonably satisfactory to
Buyer;
(c) The Transition Services Agreement, the Publisher Transition Services
Agreement, the Directory Services License Agreement, the Mutual Release, the
Non-Competition Agreement, the Subscriber Listings Agreement and the IYP
Reseller Agreement (as each such agreement is hereinafter defined)
(collectively, with each other, the "Ancillary Agreements" and collectively with
this Agreement, the "Agreements") each duly executed by the Affiliate(s) of
Ameritech party thereto (the "Seller Parties"); and
(d) All other documents, instruments and writings required by this
Agreement to be delivered to Buyer at or prior to the Closing.
Section 1.6. DELIVERIES BY BUYER. At the Closing, Buyer will deliver or
cause to be delivered to Sellers (unless previously delivered) the following:
(a) The Purchase Price (after the deduction provided for in Section 1.3)
in accordance with Section 1.2 of this Agreement;
(b) The Assignment and Assumption Agreement duly executed by Buyer;
(c) The Ancillary Agreements, each duly executed by Buyer or the
Affiliates of Buyer party thereto (collectively with Buyer, but excluding
DonTech I and DonTech II, the "Buyer Parties"); and
(d) All other documents, instruments and writings required by this
Agreement to be delivered to Sellers at or prior to the Closing.
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ARTICLE II
RELATED MATTERS
SECTION 2.1 USE OF SBC'S NAME AND LOGOS. Except as expressly provided in
the Directory Services License Agreement, and other than the DonTech Marks
purchased hereunder, it is expressly agreed that neither Buyer nor any of its
Affiliates is purchasing, acquiring or otherwise obtaining any right, title or
interest in the name "SBC", "Ameritech" or any "SBC" or "Ameritech" tradenames,
trademarks, identifying logos or service marks related thereto or employing any
part or variation of any of the foregoing or any confusingly similar tradename,
trademark or logo (collectively, the "Seller Intellectual Property"). Buyer
agrees that neither it nor any of its Affiliates shall make any use of any
Seller Intellectual Property from and after the Closing Date except as provided
in the Directory Services License Agreement.
SECTION 2.2 NO ONGOING OR TRANSITION SERVICES. Except as provided in the
Transition Services Agreement and the Directory Services License Agreement, all
data processing, accounting, insurance, banking, personnel, legal,
communications and other services provided to the Companies by Sellers or any
Affiliate of Sellers (other than the Companies), including any agreements or
understandings (written or oral) with respect thereto, will terminate as of the
Closing Date.
SECTION 2.3 CERTAIN PRE-CLOSING MATTERS.
(a) The parties agree that Sellers shall have the right to (i) cause the
Wholly Owned Company to distribute all of the cash held by the Wholly Owned
Company to Sellers or their Affiliates at or prior to the Closing Date on a
basis consistent with Sellers' current practice of periodically sweeping all
cash from the Wholly Owned Company and (ii) receive distributions from DonTech I
and DonTech II as authorized by their respective boards of directors and made in
the Ordinary Course of Business. No adjustment shall be made to the Purchase
Price as a result of any such distributions.
(b) Prior to or effective with the Closing, each Company shall assign to
SBC or its Affiliates, and SBC or its Affiliates shall assume all liabilities of
the Wholly Owned Company which have accrued on or before, or which are
attributable to the Wholly Owned Company's acts or omissions on or before, the
Closing under each Wholly Owned Company Employee Benefit Plan as defined in
Section 3.14(a) and each other plan, contract, agreement, program, fund or
arrangement that would be a Wholly Owned Company Employee Benefit Plan but for
the fact that the Wholly Owned Company does not have any material liability for
the payment of benefits under, or makes material contributions to, such plan,
contract, agreement, program, fund or arrangement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Except as set forth in the disclosure letter delivered to Buyer by
Sellers immediately prior to entering into this Agreement and attached as Annex
A hereto (the "Company Disclosure Letter"), Sellers hereby jointly and severally
represent and warrant to Buyer, as of the date of this Agreement as follows:
SECTION 3.1 ORGANIZATION.
(a) APIL Partners is a general partnership duly formed, validly existing
and in good standing under the laws of the State of Illinois. The Wholly Owned
Company has all requisite power and authority to own, lease and operate its
properties and assets and to carry on its business and operations as now being
conducted. The Wholly Owned Company is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property or assets
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so duly
qualified or licensed and in good standing, individually or in the aggregate,
would not reasonably be expected to have a Company Material Adverse Effect (as
hereinafter defined). Sellers have heretofore made available to Buyer complete
and correct copies of the partnership agreement of APIL Partners, as currently
in effect.
(b) "Company Material Adverse Effect" shall mean a material adverse effect
upon the financial condition, results of operations, business, assets or
liabilities of the DonTech Business, taken as a whole; provided, however, that a
Company Material Adverse Effect shall not include any such material adverse
effect which directly or indirectly arises out of, or is attributable to or a
consequence of, (i) conditions, events or circumstances generally affecting the
directory publishing industry, the securities markets or the overall economy
(either generally in the U.S. or in the Territory (as defined in the Directory
Services License Agreement)), (ii) the public announcement of the Agreements or
any of the transactions contemplated hereby and thereby or (iii) any act or
omission by DonTech I or DonTech II other than any such act or omission caused
solely by one or more Seller Entities acting other than in their capacities as a
partner in accordance with the applicable partnership agreements or through
their representatives on the board of directors of DonTech I or DonTech II
(collectively, a "DonTech Act or Omission").
(c) "Company Material Adverse Change" shall mean any event, occurrence,
development, state of circumstances or facts or changes which has had, or could
reasonably be expected to have, a Company Material Adverse Effect.
SECTION 3.2 AUTHORIZATION. Each Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
Each Seller has the power and authority to execute and deliver the Agreements to
which it is a party and perform its respective obligations hereunder or
thereunder, as applicable, and its execution, delivery and performance of all of
its covenants and agreements under such
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Agreements has been duly and validly authorized by its board of directors and no
other corporate proceedings by it or its stockholders is necessary to authorize
such execution, delivery and performance of this Agreement or the consummation
of the transactions contemplated by the Agreements. This Agreement has been duly
executed and delivered by each Seller and constitutes a valid and binding
agreement of each Seller, enforceable against it, in accordance with its terms,
except that (a) such enforcement may be subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws, now or hereafter
in effect, relating to or limiting creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought (collectively, the
"Enforceability Limitations"). As of the Closing Date, each Seller Party will
have duly executed and delivered each Ancillary Agreement to which it is a party
and each Ancillary Agreement will constitute a valid and binding agreement of
each Seller Party which is a party thereto enforceable against it in accordance
with its terms, subject to the Enforceability Limitations.
SECTION 3.3 CAPITAL STOCK. API owns 1% of the outstanding partnership
interests in the Wholly Owned Company and APIL owns 99% of such outstanding
partnership interests. The partnership interests in the Wholly Owned Company
have been validly issued and are free of preemptive rights of any kind. There
are not any outstanding securities convertible into, exchangeable for, or
carrying the right to acquire any partnership interests in, the Wholly Owned
Company, nor are there any subscriptions, warrants, options, rights or other
arrangements or commitments which could obligate the Wholly Owned Company to
issue any partnership or other equity interests in it. Except for the membership
interests in DonTech I Publishing Company LLC owned directly by the Wholly Owned
Company, the Wholly Owned Company does not own, directly or indirectly, any
capital stock, partnership interest or any other equity or debt securities of
any corporation, firm, partnership, limited liability company, joint venture,
association or other entity.
SECTION 3.4 OWNERSHIP OF THE CAPITAL STOCK. API is the sole record owner
of all of the outstanding capital stock of APIL and has a 1% partnership
interest in APIL Partners and has good title to such partnership interest, free
and clear of all Liens (as hereinafter defined). APIL has a 47% partnership
interest in DonTech I, a 50% partnership interest in DonTech II and a 99%
partnership interest in APIL Partners and has good title to each such
partnership interest, free and clear of all Liens. Ameritech owns, directly or
indirectly though one or more wholly owned subsidiaries, all of the outstanding
capital stock of API.
SECTION 3.5 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and
delivery of this Agreement by Sellers does not, and the execution and delivery
of the Ancillary Agreements by the Seller Parties will not, and the consummation
of the transactions contemplated by this Agreement and the Ancillary Agreements
will not (a) conflict with, or result in any breach of any provision of, the
governing instruments of Sellers or the Wholly Owned Company, (b) except for
applicable requirements of the
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Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), require any filing by SBC or any of its Affiliates (collectively, but
excluding DonTech I and DonTech II, the "Seller Entities") with, or any Seller
Entity to obtain any permit, authorization, consent or approval of, or license,
qualification or order of, any governmental or regulatory authority, (c)
violate, conflict with or result in a default (or any event which, with notice
or lapse of time or both, would constitute a default) under, or give rise to any
right of termination, cancellation or acceleration under, any of the terms,
conditions or provisions of any note, mortgage, other evidence of indebtedness,
guarantee, license, agreement, lease or other contract, instrument or obligation
(collectively, "Contracts") to which any Seller Entity is a party or by which
any Seller Entity or any of its assets may be bound or under which any Seller
Entity receives any benefit, whether or not it is a party thereto, excluding in
each case any Contract to which DonTech I, DonTech II or any Buyer Entity (as
hereinafter defined) is a party, or (d) violate any order, injunction, decree,
statute, rule or regulation applicable to any Seller Entity, excluding from the
foregoing clauses (b), (c) and (d) any such requirements, violations, conflicts,
defaults or rights (i) which, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect or materially
adversely affect the ability of Sellers to consummate the transactions
contemplated by this Agreement, or (ii) which become applicable as a result of
the business or activities in which Buyer is or proposes to be engaged or as a
result of any acts or omissions by, or the status of or any facts pertaining to,
Buyer.
SECTION 3.6 FINANCIAL STATEMENTS AND UNDISCLOSED LIABILITIES.
(a) Sellers have made available to Buyer true and correct copies of the
audited combined consolidated balance sheets of the DonTech Business as of
December 31, 2002 and December 31, 2003, and the audited combined consolidated
statements of income and cash flows of the DonTech Business for each of the
fiscal years in the three-year period ended December 31, 2003, including the
notes thereto (the "Audited Financial Statements" and, collectively with the
Unaudited Financial Statements (as hereinafter defined), the "Financial
Statements"). Except as disclosed therein, the Financial Statements previously
delivered to Buyer have been prepared from, and are consistent with, the books
and records of the Seller Entities which relate to the DonTech Business and
present fairly and accurately, in all material respects, the financial position,
results of operations and cash flows of the DonTech Business on a combined
consolidated basis as of the dates and for the applicable periods indicated
(subject, in the case of unaudited Financial Statements, to normal year-end
audit adjustments), in each case in conformity with generally accepted
accounting principles in the United States ("GAAP") consistently applied except
as noted therein.
(b) The Seller Entities maintain books and records relating to the DonTech
Business which are accurate in all material respects. While they have not been
investigated or tested other than as part of SBC's consolidated internal
accounting controls, to the Knowledge of Sellers, there is no reason to believe
that the system of internal accounting controls which applies to the financial
and accounting records from which the Financial
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Statements were prepared is not sufficient to provide reasonable assurances
regarding the reliability of financial reporting and the preparation of
financial statements in accordance with GAAP, in each case with respect to the
DonTech Business.
(c) The Wholly Owned Company does not have any liabilities or obligations
of any nature (whether accrued, absolute, contingent, unasserted or otherwise)
required by GAAP to be reflected on the Financial Statements that would
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect, except for liabilities or obligations (i) disclosed,
reflected or reserved against in the Financial Statements or the notes thereto
and (ii) incurred in the Ordinary Course of Business (as hereinafter defined)
since December 31, 2003. This representation shall not be deemed breached as a
result of a change in law after the date of this Agreement. The Wholly Owned
Company does not have any off-balance sheet financing.
SECTION 3.7 ABSENCE OF CERTAIN EVENTS. Except for matters attributable to
any DonTech Act or Omission, since December 31, 2003, there has not been any
Company Material Adverse Change and each of the Sellers, SBC Directory
Operations and the Wholly Owned Company has:
(a) conducted the portion of the DonTech Business for which it is
responsible only in the ordinary course of business substantially consistent
with past practice ("Ordinary Course of Business");
(b) not acquired, sold, disposed of, licensed, assigned, transferred or
permitted to lapse any material asset used or held for use primarily in the
DonTech Business other than sales of products and services in the Ordinary
Course of Business;
(c) maintained accounts receivable, inventory, accounts payable and other
working capital accounts in each case relating to the DonTech Business in a
manner consistent with the Ordinary Course of Business;
(d) not pledged or permitted the imposition of any Lien on any of the
assets used or held for use primarily in the DonTech Business except Liens that
are not material to the DonTech Business taken as a whole;
(e) not suffered any damage, destruction or loss of tangible assets used
or held for use primarily in the DonTech Business, whether or not covered by
insurance, with a book value in excess of $1,000,000 in the aggregate;
(f) not paid, discharged or satisfied any material claims, liabilities or
obligations in each case relating to the DonTech Business (absolute, accrued,
contingent or otherwise), except in each case in the Ordinary Course of
Business;
(g) not cancelled any indebtedness for borrowed money or material claim or
waived any material claims or rights of substantial value, in each case relating
to the DonTech Business, except in the Ordinary Course of Business;
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(h) as of the date of this Agreement, not granted any material increase in
the salaries, wages, fringe benefits or other compensation payable or to become
payable to the officers, directors, consultants or employees of the Companies
(including any such increase pursuant to any bonus, severance, termination,
pension, profit-sharing or other plan or commitment) or any special increase in
the compensation payable or to become payable to any such officer, director,
consultant or employee, except for normal merit and cost of living increases in
the Ordinary Course of Business;
(i) not effected a material write down of any of the material assets used
or held for use primarily in the DonTech Business except in the Ordinary Course
of Business;
(j) not made any change to the accounting policies used in connection with
the DonTech Business except as required by GAAP;
(k) except in the Ordinary Course of Business, not (i) acquired any
material assets used or held for use primarily in the DonTech Business from any
Person, (ii) consummated any transaction that is material to the DonTech
Business, taken as a whole, or (iii) made any material capital expenditure, or
commitment for a material capital expenditure, for additions or improvements to
property, plant and equipment used or held for use primarily in the DonTech
Business; and
(l) to the Knowledge of Sellers, there has not been (i) any material labor
dispute involving employees of the Companies other than routine individual
grievances, (ii) any material activity or proceeding by a labor union or
representative thereof to organize any employees of the Companies, or (iii) any
material lockouts, strikes, slowdowns, work stoppages or threats thereof by or
with respect to any employees of the Companies.
SECTION 3.8 TITLE, OWNERSHIP AND RELATED MATTERS.
(a) Real Property. The Wholly Owned Company does not own or lease any
parcels of real property.
(b) Except for any such matters that, individually or in the aggregate,
would not reasonably be expected to have a Company Material Adverse Effect, the
Wholly Owned Company has good and marketable title to its assets, free and clear
of all liens, mortgages, deeds of trust, pledges, security interests, options to
acquire, charges, claims, leasehold interests, tenancies, restrictions and
encumbrances of any nature whatsoever, including any lien under Section 402 of
the Code or Section 312 of ERISA in favor of any Title IV Plans, the Internal
Revenue Service or the Pension Benefit Guaranty Corporation (collectively,
"Liens").
SECTION 3.9 INTELLECTUAL PROPERTY.
(a) As used in this Agreement, (i) "Intellectual Property" means any
trademarks, trade names, service marks, service names, trade dress (including
but not limited to colors and combinations thereof, design graphics, cover
graphics, "look and
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feel" or directory design and package graphics), Internet domain names, logos,
assumed names, trade secrets, copyrights, patents or any registrations and
applications therefor; Company Software (as hereinafter defined) does not
constitute Intellectual Property; (ii) "Company Owned Intellectual Property"
means any Intellectual Property owned by the Wholly Owned Company used or held
for use primarily in the operation of the DonTech Business as currently
conducted; (iii) "Company Licensed Intellectual Property" means any Intellectual
Property licensed to the Wholly Owned Company that is used or held for use
primarily in the DonTech Business as currently conducted; and (iv) "Company
Intellectual Property" means the Company Owned Intellectual Property and the
Company Licensed Intellectual Property.
(b) To the Knowledge of Sellers, the conduct of the DonTech Business as
currently conducted does not infringe upon any Intellectual Property of any
third party except for any such matters that, individually or in the aggregate,
would not reasonably be expected to have a Company Material Adverse Effect.
There are no pending, or to the Knowledge of Sellers threatened, proceedings,
administrative claims or litigation or other adverse claims by any Person (as
hereinafter defined) against the use by the Wholly Owned Company of any material
Company Owned Intellectual Property, except for any such matters that,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect. To the Knowledge of Sellers there are no
pending or threatened, proceedings, administrative claims or litigation or other
adverse claims by any Person against the use by the Wholly Owned Company of any
material Company Licensed Intellectual Property, except for any such matters
that, individually or in the aggregate, would not reasonably be expected to have
a Company Material Adverse Effect. To the Knowledge of Sellers, there is no
material Intellectual Property necessary for, or used by the Wholly Owned
Company in, the operation of the DonTech Business as currently conducted that is
not Company Intellectual Property.
(c) The Wholly Owned Company owns or has all valid licenses and other
rights to use the Company Intellectual Property, except where the failure to
have such ownership, licenses or rights, individually or in the aggregate, would
not reasonably be expected to have a Company Material Adverse Effect. To the
Knowledge of the Sellers, there is no material unauthorized use, disclosure,
infringement or misappropriation of any material Company Intellectual Property
by any third party, including any employee or former employee of the Wholly
Owned Company, except for any such matters that, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect.
(d) No Seller Entity is in default in any material respect regarding any
obligations required to protect or maintain any material Company Intellectual
Property and no Person has asserted any claim in writing delivered to Sellers or
their Affiliates to the contrary.
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SECTION 3.10 COMPUTER SOFTWARE.
(a) "Company Proprietary Software" means all computer software owned by
the Wholly Owned Company that is used or held for use primarily in the operation
of the DonTech Business as currently conducted. "Company Licensed Software"
means all computer software (other than off-the-shelf software) licensed through
agreements by the Wholly Owned Company that is used or held for use primarily in
the DonTech Business as currently conducted. Company Proprietary Software and
Company Licensed Software are referred to collectively as the "Company
Software".
(b) Except for any such matters that, individually or in the aggregate,
would not reasonably be expected to have a Company Material Adverse Effect, (i)
the Wholly Owned Company has all right, title and interest in and to all
intellectual property rights in the Company Proprietary Software, (ii) the use
of the Company Software does not breach in any material respect any terms of any
license or other contract between the Wholly Owned Company and any third party,
and (iii) the Wholly Owned Company is in compliance in all material respects
with the terms and conditions of all license agreements in favor of the Wholly
Owned Company relating to the Company Licensed Software.
(c) To the Knowledge of Sellers, the Company Proprietary Software does not
infringe any patent, copyright, trademark or trade secret or any other
intellectual property right of any third party, except for any such matters
that, individually or in the aggregate, would not reasonably be expected to have
a Company Material Adverse Effect.
(d) The Wholly Owned Company has not granted rights in the Company
Software to any third party, except for any such matters that, individually or
in the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect.
SECTION 3.11 LITIGATION. Section 3.11 of the Company Disclosure Letter
identifies (a) all material actions, suits and proceedings (each, a "Suit")
pending or, to the Knowledge of Sellers, threatened against the Wholly Owned
Company by or before any court or governmental or regulatory authority other
than workers' compensation claims occurring in the Ordinary Course of Business,
and (b) all material investigations of the Wholly Owned Company by any
governmental entity of which the Wholly Owned Company has received written
notice that are pending or threatened against it. None of such Suits or
investigations, individually or in the aggregate, would reasonably be expected
to have a Company Material Adverse Effect. There is (x) no action, suit or
proceeding pending by or before any court, governmental or regulatory authority
or, to the Knowledge of Sellers, threatened against the Sellers or the Wholly
Owned Company, and (y) no investigation by any governmental entity of which the
Wholly Owned Company has received notice that is pending or, to the Knowledge of
Sellers, threatened against the Sellers or the Wholly Owned Company, which
challenges the validity of this Agreement or any Ancillary Agreement or which
would be reasonably likely to adversely affect or restrict Sellers' ability to
consummate the transactions contemplated by this Agreement or any Ancillary
Agreement or that would reasonably be expected to result in a failure of the
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condition set forth in Sections 6.1(d) or 6.2(d) of this Agreement. The Wholly
Owned Company is not in default with respect to or subject to any order,
judgment, decision, decree, injunction or ruling of any federal, state, or local
court or governmental agency, department or authority, except for such defaults
that, individually or in the aggregate, would not reasonably be expected to have
a Company Material Adverse Effect. To the Knowledge of Sellers, there are no
Suits pending or threatened against DonTech I or DonTech II or any Suits pending
or threatened against any Seller Entity relating to the DonTech Business which,
individually or in the aggregate, would reasonably be expected to result in
liability of more than $1 million or that would reasonably be expected to result
in a failure of the condition set forth in Sections 6.1(d) or 6.2(d) of this
Agreement.
SECTION 3.12 COMPLIANCE WITH APPLICABLE LAW. Other than with respect to
the matters which are covered by Sections 3.16 (Taxes) and 3.17 (Environmental)
of this Agreement, the Wholly Owned Company has been in compliance in all
material respects with all applicable laws, ordinances, rules and regulations of
any federal, state, local or foreign governmental authority applicable to it or
its operations, except for instances of noncompliance that, individually or in
the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect. Neither any Seller nor the Wholly Owned Company has received any
written communication from any governmental entity that alleges the Wholly Owned
Company is not currently in compliance in any material respect with any such
laws, ordinances, rules or regulations.
SECTION 3.13 CERTAIN CONTRACTS AND ARRANGEMENTS. Section 3.13 of the
Company Disclosure Letter contains summaries of all Contracts to which any
Seller Entity is a party that are material to the DonTech Business (any such
Contracts to which the Wholly Owned Company is a party or by which it or its
assets are bound are referred to herein collectively as the "Material
Contracts"). All Material Contracts are in full force and effect and are valid,
binding and enforceable in accordance with their terms, subject to the
Enforcement Limitations and concepts of materiality, reasonableness, good faith
and fair dealing regardless of whether considered in a proceeding in equity or
at law, and neither the Wholly Owned Company nor, to the Knowledge of Sellers,
any other party thereto is in material default or breach under any of such
Material Contracts. Neither any Seller nor the Wholly Owned Company has
exercised any right to terminate, or has received any notice that any party to a
Material Contract has exercised any right to terminate, such Material Contract
(other than the Material Contracts set forth in Section 3.13 of the Company
Disclosure Letter as being terminated at Closing). To the Knowledge of Sellers,
no event or circumstance has occurred that, with notice or lapse of time or
both, would constitute an event of default or breach in any material respect
under any Material Contract, except for such events or defaults that,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect.
SECTION 3.14 EMPLOYEE BENEFIT PLANS; ERISA.
(a) The Wholly Owned Company does not have any material liability for the
payment of benefits or makes (or is obligated to make) any material
contributions pursuant
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to any (i) "employee benefit plan" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (each, a "Wholly
Owned Company Employee Benefit Plan") which provides benefits to any current or
former employees or directors of the Wholly Owned Company (in their capacity as
current or former employees or directors of the Wholly Owned Company), (ii)
other employment, severance, retention, salary continuation, bonus, incentive,
stock option, stock based, retirement, pension, welfare, profit sharing or
deferred compensation plan, contract, agreement, program, fund or arrangement
(whether or not subject to ERISA, tax-qualified or non-tax-qualified, funded or
unfunded, foreign or domestic, active or frozen or terminated) which provides
benefits to current or former employees or directors of, or individual
independent contractors who have provided or who currently provide services to,
the Wholly Owned Company (in their capacity as current or former employees,
directors or independent contractors of the Wholly Owned Company), or (iii)
related trust (whether or not tax-qualified), insurance contracts, escrow
accounts or similar funding arrangements.
(b) Neither the execution of this Agreement nor the Closing of the
transactions contemplated by this Agreement shall cause the Wholly Owned Company
to be obliged to (i) make any payments under any retention, stay-put, change in
control or similar purpose agreement to any officer, employee or director of the
Wholly Owned Company or to any individual independent contractor who has
provided or who currently provides services to the Wholly Owned Company or (ii)
vest or otherwise make nonforfeitable any otherwise unvested or forfeitable
benefits under any such agreement.
SECTION 3.15 LABOR MATTERS. The Wholly Owned Company is in compliance with
all federal and state laws respecting employment and employment practices, terms
and conditions of employment, wages and hours, and is not engaged in any unfair
labor or unlawful employment practice, except for any such failures to be in
compliance or the engagement in which, individually or in the aggregate, would
reasonably be expected to have a Company Material Adverse Effect. There are no
controversies pending or, to the Knowledge of Sellers, threatened, between the
Wholly Owned Company and any of its employees which, individually or in the
aggregate, would reasonably be expected to have a Company Material Adverse
Effect. The Wholly Owned Company is not a party to any collective bargaining
agreement or other labor union contract applicable to Persons employed by it.
There are no unfair labor practice complaints pending against the Wholly Owned
Company before the National Labor Relations Board. There are no strikes,
slowdowns, work stoppages, lockouts or, to the Knowledge of Sellers, threats
thereof, by or with respect to any employees of the Wholly Owned Company.
SECTION 3.16 TAXES.
(a) All material Tax Returns (as hereinafter defined) with respect to each
Company have been or will be timely filed with the appropriate taxing
authorities. All material Taxes (as hereinafter defined) shown to be due by each
Company on such Tax Returns with respect to each Company have been paid or
adequate provision has been made for the payment of such Taxes shown to be due
on such Tax Returns. Such Tax
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Returns are true, correct and complete in all respects. For the avoidance of
doubt, "material" for purposes of this Section 3.16(a) means material in respect
of the Companies.
(b) (i) There are no liens for Taxes with respect to the assets of any
Company (except for statutory liens for current Taxes not yet delinquent); (ii)
there is no claim or dispute concerning Taxes in respect of any Company that has
been asserted by any taxing authority in writing; and (iii) none of the Tax
Returns filed by any Company are currently being audited or examined by any
taxing authority.
(c) As used in this Agreement:
(i) "Taxes" shall mean all taxes, levies, charges, fees, duties or
other assessments, including, but not limited to, income, corporation,
advance corporation, gross receipts, transfer, excise, property, sales,
use, value-added, license, payroll, employment, pay-as-you-earn,
withholding, social security and franchise or other governmental taxes or
charges, imposed by the United States or any state, county, local or
foreign government, and such term shall include any interest, penalties,
fines or additions attributable to such taxes; and
(ii) "Tax Return" shall mean any report, return, declaration, claim
for refund, information return or statement in connection with Taxes,
including, but not limited to, any schedule or attachment thereto and
including any amendment thereof.
SECTION 3.17 ENVIRONMENTAL. None of the Wholly Owned Company or any Seller
Entity have received any written notice that the Wholly Owned Company is subject
to any pending or, to the Knowledge of Sellers, threatened claim incurred or
imposed or based upon any provision of any law, regulation, permit, license or
government authorization relating to protection of the environment, pollution
control and hazardous materials applicable to it except for any such matters
that, individually or in the aggregate, would not reasonably be expected to have
a Company Material Adverse Effect.
SECTION 3.18 OFFICERS. Section 3.18 of the Company Disclosure Letter lists
each of the directors and officers (or equivalent positions) of the Wholly Owned
Company and all of the accounts (and signatories thereto) of the Wholly Owned
Company with any bank, brokerage firm or other financial institution or
depository.
SECTION 3.19 CERTAIN FEES. Except for the engagement of Citigroup (the
fees and expenses of which will be borne solely by Ameritech or its Affiliates),
neither the Wholly Owned Company nor any of its Affiliates has employed any
financial advisor or finder or incurred any liability for any financial advisory
or finders' fees in connection with this Agreement or the transactions
contemplated by this Agreement.
SECTION 3.20 SUFFICIENCY OF ASSETS. Except for the assets or services
contemplated to be used or provided under the Ancillary Agreements, the
Companies and their respective subsidiaries collectively own all of the tangible
and intangible assets of
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Ameritech and its Affiliates which are used or held for use in the DonTech
Business and no other assets or services are necessary to conduct the DonTech
Business immediately after the Closing in substantially the same manner as
currently conducted. APIL has no tangible or intangible assets used or held for
use primarily in, or otherwise material to, the DonTech Business other than
proceedings to collect amounts due to the DonTech Business (collectively, the
"Collection Proceedings") and its partnership interests in DonTech I, DonTech II
and APIL Partners.
SECTION 3.21 PERMITS.
(a) All material certificates, licenses, permits, authorizations and
approvals ("Permits") issued or granted to the Wholly Owned Company by
governmental entities that are necessary for the operation or conduct of the
DonTech Business as currently conducted are valid and in full force and effect,
and the Wholly Owned Company has complied in all material respects with all
terms and conditions thereof. During the past 12 months, the Wholly Owned
Company has not received notice of any proceedings relating to the revocation,
default or modification of any such Permits. This Section 3.21 does not apply to
environmental matters.
(b) The Wholly Owned Company possesses all Permits to own or hold under
lease and operate the assets owned by it and to conduct its business as
currently conducted, other than such Permits the absence of which, individually
or in the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect.
SECTION 3.22 SELLER ENTITIES ENGAGED IN TELECOM SERVICES. A Seller Entity
is currently engaged in the provision of Telecom Services (as defined in the
Directory Services License Agreement) described in each of clauses (i) through
(vii) of the definition of such term in the Directory Services License
Agreement.
SECTION 3.23 AFFILIATE TRANSACTIONS. No Seller Entity, or to the Knowledge
of Sellers, no officer or director of a Seller Entity or Affiliate of any such
officer or director (a) is, or has been since December 31, 2002, a party to any
agreement, contract, commitment or transaction involving payments or other items
with a value of more than $150,000 individually by or to the Wholly Owned
Company, other than any such agreement, contract, commitment or transaction
entered into on an arms-length basis, or (b) has any interest in any assets or
property owned or held for use primarily in the DonTech Business with a book
value in excess of $150,000, other than any such assets or property acquired by
the DonTech Business on an arms-length basis.
SECTION 3.24 NO OTHER REPRESENTATIONS AND WARRANTIES. Except for the
representations and warranties of the Sellers expressly set forth in this
Article III or of a Seller Party expressly set forth in any Ancillary Agreement,
no Seller Entity is making or has made any express or implied representation or
warranty in connection with the Agreements or the transactions contemplated
hereby and thereby and no other Person is authorized to make any such
representations and warranties on behalf of any Seller Entity.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as set forth in the disclosure letter delivered to Sellers by
Buyer immediately prior to entering into this Agreement and attached as Annex B
hereto (the "Buyer Disclosure Letter"), Buyer hereby represents and warrants to
Sellers as of the date of this Agreement as follows:
SECTION 4.1 ORGANIZATION AND AUTHORITY OF BUYER. Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. Each of the Buyer Parties has the corporate power and
authority to execute and deliver the Agreements to which it is a party and to
perform its obligations hereunder and thereunder. The execution and delivery of
the Agreements by the relevant Buyer Parties and the performance by them of
their covenants and agreements hereunder and thereunder has been duly and
validly authorized by the Board of Directors of Buyer and who are parties
thereto, and no other corporate proceedings on the part of any Buyer Party or
any of their shareholders are necessary to authorize such execution, delivery
and performance or the consummation of the transactions contemplated by the
Agreements. This Agreement has been duly executed and delivered by Buyer and
this Agreement constitutes a valid and binding agreement of Buyer, enforceable
against it in accordance with its respective terms, subject to the
Enforceability Limitations. As of the Closing Date, each Buyer Party will have
duly executed and delivered each Ancillary Agreement to which it is a party and
each Ancillary Agreement will constitute a valid and binding agreement of each
Buyer Party which is a party thereto enforceable against it in accordance with
its terms, subject to the Enforceability Limitations.
SECTION 4.2 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and
delivery of this Agreement by Buyer does not, and the execution and delivery of
the Ancillary Agreements by the Buyer Parties will not, and the consummation of
the transactions contemplated by this Agreement and the Ancillary Agreements
will not (a) conflict with, or result in any breach of any provision of, the
organizational documents of any Buyer Party, (b) except for applicable
requirements of the HSR Act, require any filing by Buyer or any of its
subsidiaries (collectively, the "Buyer Entities") to obtain any permit,
authorization, consent or approval of, or license, qualification or order of,
any governmental or regulatory authority, (c) violate, conflict with or result
in a default (or any event which, with notice or lapse of time or both, would
constitute a default) under, or give rise to any right of termination,
cancellation or acceleration under, any of the terms, conditions or provisions
of any Contract to which any Buyer Entity is a party or by which any Buyer
Entity or any of its assets may be bound or under which any Buyer Entity
receives any benefit, whether or not it is a party thereto, excluding in each
case any Contract to which any Seller Entity is a party or (d) violate any
order, injunction, decree, statute, rule or regulation applicable to any Buyer
Entity, excluding from the foregoing clauses (b), (c) and (d) any such
requirements, violations, conflicts, defaults or rights which, individually or
in the aggregate, would not reasonably be expected to (i) adversely
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affect the ability of any Buyer Party to consummate the transactions
contemplated by this Agreement or any Ancillary Agreement or (ii) cause the
failure of any condition in Article VI of this Agreement ((i) and (ii)
collectively, a "Buyer Material Adverse Effect").
SECTION 4.3 LITIGATION. There is (a) no action, suit or proceeding pending
by or before any court or governmental or regulatory authority or threatened
against any Buyer Entity, and (b) no investigation by any governmental entity of
which any Buyer Entity has received written notice that is pending or threatened
against any Buyer Entity, in either case which challenges the validity of this
Agreement or any Ancillary Agreement or which, individually or in the aggregate,
would reasonably be expected to have a Buyer Material Adverse Effect. No Buyer
Entity is in default with respect to or subject to any order, judgment,
decision, decree, injunction or ruling of any federal, state, or local court or
governmental agency, department or authority which challenges the validity of
this Agreement or any Ancillary Agreement or which, individually or in the
aggregate, would reasonably be expected to have a Buyer Material Adverse Effect.
SECTION 4.4 CERTAIN FEES. Except for the engagement of Bear Xxxxxxx & Co.,
Inc. and JPMorgan Securities Inc. (the fees and expenses of which will be borne
solely by Buyer), neither Buyer nor any of its respective Affiliates has
employed any financial advisor or finder or incurred any liability for any
financial advisory or finders' fees in connection with this Agreement or the
transactions contemplated by this Agreement.
SECTION 4.5 INVESTMENT REPRESENTATIONS. Buyer is acquiring the DonTech
Interests solely for the purpose of investment and not with a view to, or for
offer or sale in connection with, any distribution thereof in violation of
applicable securities laws.
SECTION 4.6 SUFFICIENT FUNDS. Buyer has or will have available to it all
funds necessary to satisfy all of its obligations hereunder in connection with
the purchase and sale of the DonTech Interests and the other transactions
contemplated by the Agreements.
SECTION 4.7 SOLVENCY. Buyer and its Subsidiaries, taken as a whole, are,
and after giving effect to the transaction contemplated by this Agreement and
the incurrence of all indebtedness and obligations being incurred in connection
therewith will be, and will continue to be, Solvent. "Solvent" when used with
respect to any Person, means that, as of any date of determination, (a) the
amount of the "present fair saleable value" of the assets of such Person will,
as of such date, exceed the amount of all "liabilities of such Person,
contingent or otherwise", as of such date, as such quoted terms are determined
in accordance with applicable federal and state laws governing determinations of
the insolvency of debtors, (b) the present fair saleable value of the assets of
such Person will, as of such date, be greater than the amount that will be
required to pay the liability of such Person on its debts as such debts become
absolute and matured, (c) such Person will not have, as of such date, an
unreasonably small amount of capital with which to conduct its business, and (d)
such Person will be able to pay its debts as they mature. For purposes of this
definition, (i) "debt" means liability on a "claim", and (ii) "claim" means any
(x) right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated,
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fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or not such
right to an equitable remedy is reduced to judgment, fixed, contingent, matured
or unmatured, disputed, undisputed, secured or unsecured.
SECTION 4.8 OWNERSHIP; EXPERIENCE. Buyer has a 53% partnership interest in
DonTech I and a 50% partnership interest in DonTech II and has good title to
each such partnership interest, free and clear of all Liens. Buyer has such
knowledge and experience as to be capable of managing and operating a business
of publishing print directories similar to the DonTech Business and has certain
knowledge of and experience in the day-to-day operations of DonTech I and
DonTech II. Buyer acknowledges and agrees that no Seller Entity is making or has
made any express or implied representation or warranty with respect to DonTech I
or DonTech II other than those expressly set forth in this Agreement.
SECTION 4.9 NO OTHER REPRESENTATIONS AND WARRANTIES. Except for the
representations and warranties of the Buyer expressly set forth in this Article
IV or of a Buyer Party expressly set forth in any Ancillary Agreement, no Buyer
Entity is making or has made any express or implied representation or warranty
in connection with the Agreements or the transactions contemplated hereby and
thereby and no other Person is authorized to make any such representations and
warranties on behalf of any Buyer Entity.
ARTICLE V
COVENANTS
SECTION 5.1 CONDUCT OF THE WHOLLY OWNED COMPANY'S BUSINESS. Sellers agree
that, during the period from the date of this Agreement to the Closing, except
as otherwise expressly permitted or required by this Agreement or consented to
by Buyer in writing, they will cause each of SBC Directory Operations and the
Wholly Owned Company:
(a) to conduct the portion of the DonTech Business for which it is
responsible only in the Ordinary Course of Business;
(b) to use commercially reasonable efforts to (i) maintain and preserve
the DonTech Business, (ii) retain the services of the employees of the Wholly
Owned Company; provided, however, that the foregoing shall not be deemed to
require any SBC Entity to increase or change any compensation, benefit or other
consideration payable to such employees; and (iii) maintain, preserve and retain
relationships with suppliers and customers of the DonTech Business;
(c) not to acquire, sell, dispose of, license, assign or transfer or
permit to lapse any material assets or property used or held for use primarily
in the DonTech Business, except in the Ordinary Course of Business;
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(d) not to amend the governing instruments of the Wholly Owned Company;
(e) not to permit the Wholly Owned Company to incur any indebtedness for
borrowed money except in the Ordinary Course of Business, or guarantee any
indebtedness for borrowed money of another Person;
(f) not to change any accounting policies used in connection with the
DonTech Business, except as required by GAAP;
(g) not to terminate or make any material change in any Material Contract
or Permit, except in the Ordinary Course of Business;
(h) not to permit the Wholly Owned Company to enter into any Material
Contract except in the Ordinary Course of Business;
(i) to maintain accounts receivable, inventory, accounts payable and other
working capital accounts of the DonTech Business in a manner consistent with the
Ordinary Course of Business;
(j) not to pay, discharge or satisfy any material claims, liabilities or
obligations of the DonTech Business (absolute, accrued, contingent or
otherwise), except in each case in the Ordinary Course of Business;
(k) not to cancel any indebtedness owed to the Wholly Owned Company for
borrowed money or material claim owed to the Wholly Owned Company or, waive any
material claims or rights owed to the Wholly Owned Company of substantial value,
except in the Ordinary Course of Business;
(l) not to permit the Wholly Owned Company to merge or consolidate with
any other Person; and
(m) not to enter into any written agreement to do any of the foregoing.
SECTION 5.2 ACCESS TO INFORMATION.
(a) Between the date of this Agreement and the Closing, Sellers shall use
their, and shall cause the Wholly Owned Company to use its, commercially
reasonable efforts to cause DonTech I and DonTech II to (i) give Buyer and its
authorized representatives reasonable access to all books, records, offices and
other facilities and properties of (x) the Companies or (y) other SBC Entities
to the extent they relate to the DonTech Business, (ii) permit Buyer to make
such inspections thereof as Buyer may reasonably request, (iii) furnish Buyer
with such financial and operating data and other information with respect to the
DonTech Business and properties of the Companies as Buyer may from time to time
reasonably request subject to Section 5.2(b) of this Agreement, and (iv) subject
to applicable law, cooperate in good faith with Buyer and provide Buyer with
reasonable access to Sellers' employees and books and records to (A) assist
Buyer with the
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post-Closing transition of the DonTech Business and (B) comply with the
Xxxxxxxx-Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx Act") following the Closing with
respect to the DonTech Business, including without limitation any requirement to
document and test internal controls of the DonTech Business for purposes of
Section 404 of the Xxxxxxxx-Xxxxx Act, provided, that Buyer shall indemnify,
defend and hold harmless any Seller Indemnified Parties (as hereinafter defined)
from, against and in respect of any Seller Losses (as hereinafter defined)
arising out of or relating to any act or omission of any Seller Entity
attributable to Sellers' compliance with this clause (iv); and provided,
further, that any such access or inspection shall be provided during normal
business hours under the supervision of Sellers' personnel and in such a manner
as to maintain the confidentiality of this Agreement and the transactions
contemplated by this Agreement and not interfere unreasonably with the business
operations of Sellers or the Companies.
(b) All information concerning Sellers or the Companies furnished or
provided by Sellers or their Affiliates to Buyer or its representatives (whether
furnished before or after the date of this Agreement) shall be held subject to
the Non-Disclosure Agreement, by and between SBC (or its representatives) and
Buyer, dated as of December 18, 2003 (the "Confidentiality Agreement").
(c) Prior to the Closing, Sellers shall deliver to Buyer unaudited
combined consolidated financial statements of the DonTech Business as of and for
the six-month periods ended June 30, 2003 and June 30, 2004, in each case
prepared on a basis consistent with the Audited Financial Statements and in form
and substance substantially similar to the unaudited periodic financial
statements and notes which would be required to be included in a Form 10-Q for
such period if the DonTech Business were a reporting issuer under the Securities
Exchange Act of 1934; provided, however, that if RHD reasonably requires such
unaudited financial statements in connection with any borrowings it proposes to
make to fund all or part of the Purchase Price and provides reasonable advance
written notice of that requirement to Sellers, Sellers shall deliver such
unaudited financial statements to Buyer no later than September 1, 2004. If the
Closing occurs after September 30, 2004, Sellers shall deliver to Buyer, no
later than October 31, 2004, unaudited combined consolidated financial
statements of the DonTech Business for the nine-month periods ended September
30, 2003 and September 30, 2004 prepared on the same basis as described in the
immediately preceding sentence. If the Closing occurs after December 31, 2004,
Sellers shall deliver to Buyer, no later than March 15, 2005, audited combined
consolidated balance sheets of the DonTech Business as of December 31, 2004 and
the audited combined consolidated statements of income and cash flows of the
DonTech Business for the fiscal year ended December 31, 2004, including the
notes thereto (the "2004 Audited Financial Statements"). The unaudited financial
statements described in this Section 5.2(c) (the "Unaudited Financial
Statements") and the 2004 Audited Financial Statements shall be deemed to be
included in the definition of Financial Statements for all purposes of Section
3.6 of this Agreement when delivered to Buyer. Sellers will provide Buyer all
data available to them and assistance as is reasonably required by Buyer in
order for Buyer to prepare any management discussion and analysis of financial
condition and results of operations with respect to any period commencing after
December 31, 2000
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during which Sellers owned the Wholly Owned Company. No later than 30 days after
Sellers deliver any Unaudited Financial Statements to Buyer, Sellers shall cause
their auditors to perform the agreed upon procedures set forth in Schedule
5.2(c) with respect to such Unaudited Financial Statements and provide a written
report thereon. If Buyer elects to finance all or part of the Purchase Price in
the bond markets, then Sellers will use their commercially reasonable efforts to
cause its auditors to deliver a comfort letter on any Financial Statements used
in connection therewith or will permit Buyer's auditors sufficient access to
their employees and books and records to enable them to deliver such a comfort
letter. Buyer shall reimburse Sellers for all reasonable out-of-pocket
third-party costs and expenses incurred by Sellers in connection with the
fulfillment of its obligations under this Section 5.2.
(d) Notwithstanding the above, nothing contained in this Section 5.2 or
the Confidentiality Agreement will preclude any party from making any
disclosures it determines in good faith to be required by law, regulation or
listing agreement with or rules of any national securities exchange or national
trading system or necessary and proper in conjunction with the filing of any tax
return or other document required to be filed with any federal, state or local
governmental body, authority or agency or sent to potential investors in
connection with any financing used by Buyer to fund its payment obligations
hereunder; provided, however, that the party required to make the release or
statement shall, to the extent legally permissible, seek to limit such
disclosure, including taking all reasonable steps to resist or avoid any such
disclosure or allowing the other party reasonable time to comment on such
release or statement in advance of such issuance.
SECTION 5.3 CONSENTS.
(a) Each of Sellers and Buyer shall cooperate, and use its reasonable best
efforts, to make all filings (including without limitation all filings required
under the HSR Act) and obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and other
third parties necessary to consummate the transactions contemplated by this
Agreement and the Ancillary Agreements, including the foregoing required with
respect to the items identified in Section 3.5 of the Company Disclosure Letter;
provided, however, that the foregoing shall not apply to the matters covered by
Section 5.5 or require either party to accept or agree to any conditions, terms
or restrictions which, individually or in the aggregate, would be reasonably
likely to have a material adverse effect on the financial condition, results of
operations, business, assets or liabilities of (i) any material Seller Entity
(in the case of Sellers) or (ii) Buyer and its subsidiaries taken as a whole (in
the case of Buyer), in each case after giving effect to the transactions
contemplated by this Agreement.
(b) With respect to each of the agreements set forth under Section 5.3(b)
of the Company Disclosure Letter (the "Vendor Contracts"), prior to the Closing
each of Sellers and Buyer shall cooperate and use its commercially reasonable
efforts to obtain (i) the consent of each party to such Vendor Contract that is
not SBC or any of its Affiliates (each, a "Vendor") to permit Sellers to provide
a complete copy of such Vendor Contract to Buyer
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and (ii) unless the Vendor refuses to disclose such Vendor Contract to Buyer or
Buyer rejects such Vendor Contract as provided in the following sentence, such
Vendor's agreement to enter into a new Contract with Buyer at the Closing which
will terminate on the earlier of (x) the termination date specified in the
existing Vendor Contract and (y) December 31, 2005 (each, a "Vendor Termination
Date") and which otherwise has substantially similar terms and conditions as
such Vendor Contract, including Vendor's agreement to aggregate any amounts
payable under the new Contract with any amounts payable under such Vendor
Contract for purposes of any volume discounts thereunder (each, a "New
Contract"); provided, however, that the foregoing shall not require any party or
any of its Affiliates to pay for or otherwise provide consideration for any such
consent or New Contract. Buyer may only reject a New Contract if Buyer's
agreement to the terms and conditions thereof would have a material adverse
effect upon RHD's print directory business and operations, taken as a whole.
(c) If any Vendor refuses to disclose its Vendor Contract to Buyer or to
enter into a New Contract or Buyer rejects a New Contract as permitted above,
then Sellers will enter into a separate agreement with Buyer at Closing (each, a
"Subcontract") which will provide to Buyer the products or services provided
under such Vendor's Vendor Contract with respect to the DonTech Business on
substantially the same terms and conditions as currently provided under such
Vendor Contract; provided, however, Sellers will not be obligated to enter into
any Subcontract with a term that extends beyond the applicable Vendor
Termination Date.
(d) Without limiting any other provision hereof, each of the Sellers and
Buyer shall, as promptly as practicable, but in no event later than twenty
business days following the execution and delivery of this Agreement, file with
the United States Federal Trade Commission (the "FTC") and the United States
Department of Justice (the "DOJ") the notification and report form, if any,
required for the transactions described herein and any supplemental information
requested in connection therewith pursuant to the HSR Act. Any such notification
and report form and supplemental information shall be in substantial compliance
with the requirements of the HSR Act. Each of Sellers and Buyer shall furnish to
the other such necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing or submission that is
necessary under the HSR Act. Sellers and Buyer shall keep each other apprised of
the status of any communications with, and any inquiries or requests for
additional information from, the FTC and the DOJ and shall comply promptly with
any such inquiry or request.
SECTION 5.4 COMMERCIALLY REASONABLE EFFORTS. Subject to Sections 5.3(a)
and 5.5(b) and the limitations contained therein, each of Sellers and Buyer
shall cooperate and use commercially reasonable efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations or otherwise to consummate
the transactions contemplated by this Agreement.
SECTION 5.5 REGULATORY PROPOSALS.
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(a) Subject to applicable law and the instructions of any applicable
governmental agency, Sellers will promptly notify Buyer of any proposal, whether
formal or informal, by any state or federal governmental agency with
jurisdiction over local telecommunications services or local telecommunications
companies to assert jurisdiction over all or any part of the transactions that
are the subject matter of this Agreement, including but not limited to, (i) any
proposal to require approval, consent or permission of such governmental agency
to any part of the transactions which are the subject matter of this Agreement
and (ii) any proposal that, individually or in the aggregate, may have an
adverse effect on the financial condition, results of operations, business,
assets or liabilities of the SBC Telcos (as defined in the Directory Services
License Agreement) or SBC Directory Operations (each, a "Regulatory Proposal").
In addition, subject to applicable law and the instructions of any
applicable governmental agency, Sellers shall advise and update Buyer in a
commercially reasonable level of detail with respect to the status of any such
Regulatory Proposal, including any formal or informal proceedings before such
governmental agency with respect to the Regulatory Proposal. Sellers will
promptly notify Buyer if Sellers consent to (i) the jurisdiction of any such
governmental agency with respect to the transactions that are the subject of
this Agreement or (ii) any order, decree, judgment or finding of such
governmental agency with respect to the transactions that are the subject matter
of this Agreement.
(b) Upon Buyer's reasonable request, Sellers shall, and shall cause their
Affiliates to, use reasonable best efforts to defeat any assertion of
jurisdiction and any Regulatory Proposal and to obtain any necessary approvals,
consents or permissions in response to any Regulatory Proposal, including but
not limited to the timely initiation and prosecution of proceedings for
injunctive relief, mandamus or other appropriate remedies in a court of
competent jurisdiction, the initiation and prosecution of any available
proceedings for appellate review of any order, decree, judgment or finding of
such governmental agency or, if applicable, the prompt filing of any necessary
applications with respect to such Regulatory Proposal; provided, however, the
foregoing shall not require any Seller Entity to (i) take any action, or accept
or agree to any conditions, terms or restrictions, which, individually or in the
aggregate, would reasonably be expected to have an adverse effect on the
financial condition, results of operations, business, assets or liabilities of
the SBC Telcos or SBC Directory Operations, (ii) proffer to, or agree to, sell
or hold separate and agree to sell, before or after the Closing Date, any of its
assets, businesses, or interests in any assets or businesses (or consent to any
such sale or agreement to sell) or (iii) agree to any changes or restrictions in
the operations of any of its assets, businesses, or interests in any assets or
businesses. Sellers will forward to Buyer all copies of any material
correspondence sent by it or its representatives or received by it from any
governmental authority regarding the transactions contemplated by this
Agreement.
SECTION 5.6 PUBLIC ANNOUNCEMENTS. Except as otherwise agreed to by the
Parties, the Parties will agree with each other with respect to their initial
press releases
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concerning the execution of this Agreement and the transactions contemplated by
this Agreement, except as otherwise required by law or any listing agreement
with, or the rules of, any national securities exchange or national trading
system.
SECTION 5.7 COVENANT TO SATISFY CONDITIONS. Subject to Sections 5.3(a) and
5.5(b) and the limitations contained therein, Sellers will use their reasonable
best efforts to ensure that the conditions set forth in Article VI of this
Agreement are satisfied, to the extent such matters are within the control of
Sellers, and Buyer will use its reasonable best efforts to ensure that the
conditions set forth in Article VI of this Agreement are satisfied to the extent
such matters are within the control of Buyer. Notwithstanding anything to the
contrary in this Agreement, Sellers agree to waive any failures of any
conditions to their obligations set forth in Article VI, which conditions are
beyond the reasonable control of the Buyer Entities, if the aggregate Losses
that the Seller Entities have incurred in an attempt to avoid such failures
and/or could reasonably be expected to incur as a result of such waivers if the
Closing occurs would be less than $15 million in the aggregate. Subject to
Sections 5.3(a) and 5.5(b) and the limitations contained therein, Sellers and
Buyer further covenant and agree, with respect to a threatened or pending
preliminary or permanent injunction or other order, decree or ruling or statute,
rule, regulation or executive order that would adversely affect the ability of
the parties to consummate the transactions contemplated by this Agreement, to
use their reasonable best efforts to prevent or lift the entry, enactment or
promulgation thereof, as the case may be.
SECTION 5.8 CERTAIN TAX MATTERS.
(a) Section 754 Elections. Sellers shall cause an election to be timely
made under Section 754 of the Internal Revenue Code of 1986, as amended (the
"Code"), with respect to each of DonTech I, DonTech II and APIL Partners.
(b) Buyer shall determine an allocation of the Purchase Price among the
assets of the Companies and the Ancillary Agreements pursuant to the applicable
Treasury Regulations and the Code (or, if applicable, any similar provision
under state, local or foreign law or regulation); provided, that Buyer and
Seller agree that at least $180,000,000 of the Purchase Price shall be allocated
to the license granted pursuant to Article 3 of the Directory Services License
Agreement. Such allocation shall include an allocation of Purchase Price to any
amount receivable by any of the Companies without regard to whether such
receivables have been recognized or realized by any of the Sellers or any of the
Companies for income tax or financial accounting purposes on or prior to the
Closing Date (as determined finally in accordance with this Section 5.8(b), the
"Allocation").
(i) Promptly following such determination of the Allocation, Buyer
shall deliver a proposed Allocation to Sellers. Sellers may object to
Buyer's proposed Allocation, provided that the Sellers deliver written
notice stating its objections to Buyer within 30 days from the Buyer's
delivery of the proposed Allocation to Sellers.
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(ii) If no such timely written notice of objection is delivered,
then Buyer's proposed Allocation shall be the final Allocation.
(iii) If Sellers deliver timely written notice of objection as set
forth above, then Buyer and Sellers will use their reasonable best
efforts, with the assistance of their respective advisors, to negotiate in
good faith to agree upon the Allocation. If the parties are unable to
agree upon the Allocation within 90 days before the filing due date
(without regard to any extension) in respect of any Tax Return for which
the Allocation is relevant, then the determination of the Allocation shall
be referred to Deloitte & Touche LLP; provided, however, that if Deloitte
& Touche LLP declines to accept such appointment then the parties shall
mutually agree upon another nationally recognized independent accounting
firm that has not provided material services to either party during the
previous two years (the "Unrelated Accounting Firm"). The Unrelated
Accounting Firm shall be directed to determine the Allocation, acting as
an expert in accounting and not as an arbitrator, in accordance with the
terms of this Agreement and render a written report on its determination
of the Allocation as promptly as practicable. The determination of the
Allocation shall be final and binding on the parties. The fees and
expenses of the Unrelated Accounting Firm shall be borne equally by
Ameritech and Buyer. Following the final determination of the Allocation,
Buyer, Sellers and the Companies shall use the asset values determined
from the Allocation for all purposes in respect of all Tax Returns.
(c) Tax Forbearance. Sellers have not either (i) in respect of the taxable
period of any Company ending December 31, 2003 or (ii) otherwise, since June 22,
2004, and will not take any action or cause any Company to take any action
outside of the Ordinary Course of Business that could require any Company to
include any item of income in, or exclude any item of deduction from, taxable
income for any Post-Closing Period.
(d) Tax Indemnity and Refund; Pre-Closing Period.
(i) Sellers shall be jointly and severally liable for and shall
indemnify Buyer from (A) all Taxes imposed on a Company or for which such
Company may otherwise be liable for any taxable year or period that ends
on or before the Closing Date and, with respect to any taxable year or
period beginning on or before and ending after the Closing Date (each, a
"Straddle Period"), the portion of any such Straddle Period ending on and
including the Closing Date (all such pre-Closing Date taxable years and
periods and the Closing Date and prior portion of Straddle Periods, a
"Pre-Closing Period"), provided that Sellers shall only be liable for and
shall indemnify Buyer for 47% of such Taxes with respect to DonTech I and
50% of such Taxes with respect to DonTech II; and (B) any losses, costs or
expenses suffered by Buyer or any Company arising from (1) any failure by
Sellers to cause any Section 754 election to be timely made that is
required under Section 5.8(a), or (2) any Seller taking any action
precluded under Section 5.8(c).
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(ii) API or its designee shall be entitled to any refund of Taxes
imposed on or with respect to the income of any Company, API or APIL, Inc.
shown on a Tax Return filed by any Company, or for which any Company may
otherwise be liable in respect of any Pre-Closing Period, provided that
API or its designee shall only be entitled to 47% of any refunds of Tax in
respect of DonTech I and 50% of any refunds of Tax in respect of DonTech
II.
(e) Tax Indemnity and Refund; Post-Closing Period. Buyer shall be liable
for and shall indemnify API or its designee from the Taxes of the Companies paid
by API or its designee or a Seller for any taxable year or period that begins
after the Closing Date and the post-Closing Date portion of any Straddle Period
(all such post-Closing Date taxable years and periods and the post-Closing Date
portion of Straddle Periods, a "Post-Closing Period"). Buyer shall be entitled
to (i) any refund of Taxes in respect of any Company for any Post-Closing
Period, (ii) 53% of any refund of Taxes in respect of DonTech I for any
Pre-Closing Period, and (iii) 50% of any refund of Taxes in respect of DonTech
II for any Pre-Closing Period.
(f) Taxes for Short Taxable Year. For purposes of paragraphs (d) and (e)
of this Section 5.8, whenever it is necessary to determine the liability for
Taxes of any of the Companies for a portion of a taxable year or period that
begins before and ends after the Closing Date, the determination of the Taxes of
the relevant Company for the portion of the year or period ending on, and the
portion of the year or period beginning after, the Closing Date shall be
determined by assuming that the relevant Company had a taxable year or period
which ended at the close of the Closing Date, except that exemptions, allowances
or deductions that are calculated on an annual basis, such as the deduction for
depreciation, shall be apportioned on a time basis.
(g) Adjustment to Purchase Price. Any payment by Buyer or Sellers under
this Section 5.8 will be an adjustment to the Purchase Price.
(h) Tax Returns. Sellers or their affiliates shall file or cause to be
filed when due all Tax Returns that are required to be filed by the Companies
for taxable years or periods ending on or before the Closing Date, subject to
Buyer's consent, which consent shall not be unreasonably withheld or delayed.
Buyer shall file or cause the Companies to file an amended Tax Return for such
periods if requested by Sellers subject to Buyer's consent, which consent shall
not be unreasonably withheld or delayed, provided that the filing of any such
amended return will not cause any adverse effect to either Buyer or any Company.
Sellers shall bear any costs or expenses relating to the filing or preparation
of such Tax Returns and shall pay any Taxes due in respect of such Tax Returns
and, in respect of any Taxes payable by any Company with respect to any amended
Tax Returns to be filed by Buyer pursuant to the previous sentence, such Taxes
shall be paid within 10 days prior to the requested filing date by Sellers of
such amended return. Buyer shall file or cause to be filed when due all Tax
Returns that are required to be filed by or with respect to the Companies for
taxable years or periods ending after the Closing Date and shall remit any Taxes
due in respect of such Tax Returns. API or its designee shall pay Buyer the
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Taxes for which Sellers are liable pursuant to Section 5.8(d) of this Agreement,
but which are payable with Tax Returns to be filed by Buyer pursuant to the
previous sentence, within 10 days prior to the due date for the filing of such
Tax Returns.
(i) Contest Provisions.
(i) Buyer shall promptly notify API in writing upon receipt by
Buyer, any of its affiliates or any of the Companies of notice of any
pending or threatened federal, state, local or foreign income or franchise
tax audits or assessments which may materially affect the tax liabilities
of the Companies for any taxable year or period that ends on or before the
Closing Date or for which Sellers would be required to indemnify Buyer
pursuant to Section 5.8(d) of this Agreement, provided that the failure to
comply with this provision shall not affect Buyer's right to
indemnification hereunder.
(ii) API or its designee shall have the sole right to represent the
Companies' interests in any tax audit or administrative or court
proceeding relating to taxable periods ending on or before the Closing
Date and to employ counsel of its choice at its sole expense, unless there
is a reasonable probability that the outcome of such audit or proceeding
may have a material effect on Buyer or any Company in respect of Taxes
relating to any Post-Closing Period. In such case, Buyer shall be shall be
entitled to participate at its own expense in the defense of any such
claim for Taxes. Neither API nor its designee may agree to settle any Tax
claim in respect of any Pre-Closing Period if such settlement would have a
material effect on Buyer or any Company in respect of Taxes relating to
any Post-Closing Period without the prior written consent of Buyer, which
consent shall not be unreasonably withheld.
(iii) Buyer or its designee shall have the sole right to represent
the Companies' interests in any tax audit or administrative or court
proceeding relating to taxable periods ending after the Closing Date and
to employ counsel of its choice at its sole expense. API or its designee
shall be entitled to participate at its own expense in the defense of any
claim for Taxes in respect of a taxable year or period ending after the
Closing Date which may be the subject of indemnification by Sellers
pursuant to Section 5.8(d). Neither Buyer nor the Companies may agree to
settle any Tax claim which may be the subject of indemnification by
Sellers under Section 5.8(d) of this Agreement without the prior written
consent of API, which consent shall not be unreasonably withheld.
(j) Termination of Tax Allocation Agreements. Any tax allocation or tax
sharing agreement or other similar arrangement (excluding, for the avoidance of
doubt, the DonTech I, Dontech II and APIL Partners partnership agreements),
whether or not written, that may have been entered into between any of the
Companies and any of the Sellers or their Affiliates (other than any other
Company) shall be terminated as to any such Company (or Sellers shall cause such
agreement or arrangement to be terminated) on or
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before the Closing Date. No payments that are owed by any of the Companies
pursuant thereto shall be made thereunder.
(k) Transfer Taxes. Buyer shall be liable for all transfer taxes imposed
on the sale of the DonTech Interests. Notwithstanding any other provisions of
this Agreement, except for the prior sentence, Buyer and Sellers shall each bear
responsibility for the payment of 50% of all sales, use, transfer, stamp,
duties, recording and similar Taxes incurred in connection with the transactions
contemplated by this Agreement, except for any Taxes on or measured by income,
gains or profits. The Buyer and Sellers will execute any applicable Tax Return,
to the extent required by law or regulation, and will cooperate in good faith
and exchange any necessary information and documents in respect of such Taxes
and Tax Returns.
(l) Information to be Provided by Buyer. With respect to the taxable year
of any Company ending in 2004 prior to the Closing Date, Buyer shall promptly
cause each Company to prepare and provide to Sellers a package of tax
information materials (the "Tax Package"), which shall be completed in
accordance with past practice including past practice as to providing the
information, schedules and work papers and as to the method of computation of
separate taxable income or other relevant measure of income of the Companies.
Buyer shall cause the Tax Package for the portion of the taxable period ending
on the Closing Date to be delivered to Sellers within 120 days after the Closing
Date. Sellers shall reimburse Buyer for any reasonable out-of-pocket costs and
expenses incurred by Buyer or the Companies in connection with providing such
Tax Package to Sellers.
(m) Assistance and Cooperation. After the Closing Date, each of Sellers
and Buyer shall:
(i) assist (and cause their respective Affiliates to assist) the
other party (and their respective Affiliates) in preparing or filing any
Tax Returns or reports which such other party is responsible for preparing
or filing in accordance with this Section 5.8;
(ii) cooperate fully in preparing for any audits of, or disputes
with taxing authorities regarding, any Tax Returns of the Companies, Buyer
or SBC;
(iii) make available to the other and to any taxing authority as
reasonably requested all information, records, and documents relating to
Taxes of the Companies;
(iv) provide timely notice to the other in writing of any pending or
threatened tax audits or assessments of the Companies for taxable periods
for which the other may have a liability under this Section 5.8; and
(v) furnish the other with copies of all correspondence received
from any taxing authority in connection with any tax audit or information
request with respect to any of the Companies for any such taxable period.
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(n) Section 1445. At the Closing, Sellers shall deliver to Buyer an
affidavit of each Seller that is in a form reasonably satisfactory to Buyer,
complies with the appropriate Treasury Regulations and states under penalties of
perjury such Seller's U.S. taxpayer identification number and that such Seller
is not a foreign person within the meaning of Section 1445(b)(2) of the Code.
(o) Survival of Obligations. The obligations of the parties set forth in
this Section 5.8 shall be unconditional and absolute and shall remain in effect
without limitation as to time.
SECTION 5.9 NO SOLICITATION. If this Agreement is terminated for any
reason pursuant to Article VII, for a period of two years following the
effective date of such termination, no Buyer Entity will, directly or
indirectly, through one or more of its Affiliates, on behalf of itself or any
other Person, recruit or otherwise solicit or induce any employee of the Seller
Entities or any of their successors to terminate his or her employment
relationship with the Seller Entities or any of their successors. The foregoing
will not, however, prohibit any Buyer Entity from publishing any general public
solicitation of employment opportunities or employing anyone who responds to
such solicitation. If this Agreement is terminated pursuant to Article VII, this
Section 5.9 supersedes the employee nonsolicitation provisions of the
Confidentiality Agreements.
SECTION 5.10 ANCILLARY AGREEMENTS. At the Closing, each Seller Party and
Buyer Party that is a party thereto shall enter into the following Ancillary
Agreements:
(a) the Transition Services Agreement in the form attached as Exhibit
5.10(a) (the "Transition Services Agreement");
(b) the Publisher Transition Services Agreement in the form attached as
Exhibit 5.10(b) (the "Publisher Transition Services Agreement");
(c) the Directory Services License Agreement in the form attached as
Exhibit 5.10(c) (the "Directory Services License Agreement");
(d) the Non-Competition Agreement in the form attached as Exhibit 5.10)(d)
(the "Non-Competition Agreement");
(e) the Subscriber Listings Agreement in the form attached as Exhibit
5.10(e) (the "Subscriber Listings Agreement"); and
(f) the IYP Reseller Agreement in the form attached as Exhibit 5.10(f)
(the "IYP Reseller Agreement").
SECTION 5.11 INVESTIGATION BY BUYER. Buyer has conducted its own
independent review and analysis of the business, operations, technology, assets,
liabilities, results of operations, financial condition and prospects of the
Companies and acknowledges that Sellers have provided Buyer with the access
requested by Buyer to the personnel,
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properties, premises and records of the Companies for this purpose. In entering
into this Agreement, Buyer has relied upon its own investigation and analysis as
well as the representations and warranties of Sellers contained in this
Agreement and the Ancillary Agreements, and Buyer (a) acknowledges that none of
Sellers, the Companies or any of their respective directors, officers,
employees, Affiliates, controlling Persons, agents or representatives makes or
has made any representation or warranty, either express or implied, as to the
accuracy or completeness of any of the information provided or made available to
Buyer or its directors, officers, employees, Affiliates, controlling Persons,
agents or representatives, and (b) agrees, to the fullest extent permitted by
law, that neither Sellers, the Companies nor any of their respective directors,
officers, employees, Affiliates, controlling Persons, agents or representatives
shall have any liability or responsibility whatsoever to Buyer or its directors,
officers, employees, Affiliates, controlling Persons, agents or representatives
on any basis (including, without limitation, in contract or tort, under federal
or state securities laws or otherwise) based upon any information provided or
made available, or statements made, to Buyer or its directors, officers,
employees, Affiliates, controlling Persons, agents or representatives (or any
omissions therefrom), except in the case of clauses (a) and (b) as and only to
the extent expressly set forth in this Agreement with respect to the
representations and warranties of Sellers in Article III of this Agreement and
subject to the limitations and restrictions contained in this Agreement.
SECTION 5.12 EMPLOYEES AND EMPLOYEE BENEFIT PLANS. Seller shall retain
responsibility for, and on and after the Closing Date shall indemnify and hold
Buyer and the Companies harmless from, any and all obligations of the Wholly
Owned Company, SBC or Sellers arising under any "employee benefit plan" (within
the meaning of Section 3(3) of ERISA) or other plan, contract, agreement,
program, fund or arrangement sponsored or maintained by any of the Wholly Owned
Company, SBC or Sellers or in which any current or former employees of any of
the Wholly Owned Company, SBC or Sellers participate or are eligible to
participate. On or prior to the Closing Date, Sellers shall transfer any
employees of the Wholly Owned Company to an Affiliate of Sellers which is not a
Company.
SECTION 5.13 MUTUAL RELEASE. Immediately prior to the Closing, each Seller
Party and Buyer Party that is a party thereto shall enter into the Mutual
Release in the form attached as Exhibit 5.13 (the "Mutual Release").
SECTION 5.14 TRANSITION OF CERTAIN INFORMATION. On, or as reasonably
practicable after, the Closing Date, Sellers will transfer, or cause to be
transferred, to the Companies all books and records primarily relating to the
DonTech Business, including without limitation, the books of account, tax,
financial, accounting and personnel records, files, invoices, client (current
and prospective) and supplier lists, business plans, marketing studies and other
written material, including without limitation real estate and litigation files
and both paper and electronic copies of all the financial data and human
resource information system data which primarily relate to the DonTech Business
and are maintained on any of Sellers' or their Affiliates' computer systems that
are not already owned by and in the possession of the Companies, but excluding
in each case books and
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records (i) which are specified in Section 5.14 of the Company Disclosure
Letter, (ii) which are integrated into the books and records of any Seller
Entity other than the Wholly Owned Company (the "Integrated Records"), unless
RHD agrees to reimburse Sellers for all reasonable internal and out-of-pocket
costs and expenses incurred by Sellers in connection with segregating any such
Integrated Records or (iii) which relate to any aspect of the DonTech Business
for which services are, or will be, provided under the Transition Services
Agreement (the "Transition Records") in which case, such Transition Records will
be transferred to the Companies at such time, or from time to time, as
reasonably practicable after the termination of the applicable services. Sellers
will provide Buyer and the Companies with access to (a) the Transition Records
after Closing until such information is transferred to the Companies and (b) the
Integrated Records for a period of 9 months following the Closing.
SECTION 5.15 INTERIM CHANGES IN THE TERRITORY. Sellers and Buyer agree
that the terms and conditions of Section 10.1 of the Directory Services License
Agreement shall apply to any sale of a Sold Territory (as defined in the
Directory Services License Agreement) by Sellers between the date hereof and the
Closing Date such that the requirements of such Section 10.1 shall become
effective on the Closing Date with respect to the SBC Telco in the Sold
Territory and the purchaser of such Sold Territory with retroactive effect from
the date of such sale.
SECTION 5.16 INTERCOMPANY ACCOUNTS. All intercompany accounts, agreements
or arrangements (other than the Ancillary Agreements and the existing billing
and collection accounts, agreements and arrangements between the Companies, on
the one hand, and the SBC Telcos, on the other, and the financial rights and
obligations arising out of those accounts, agreements and arrangements) between
any Seller Entity (other than APIL Partners) and any of the Companies shall be
terminated as of the Closing without any settlement, offset or payment of any
consideration and shall be deemed without further action to be fully discharged
as of the Closing Date. From and after the Closing, the SBC Telcos shall
continue to xxxx and collect from customers of the Companies with respect to the
amounts listed in Account Nos. 1104.410 and 1199.999 of APIL Partners' general
ledger as of the Closing Date (the "Gross AR"), all in accordance with the
billing and collection practices that the SBC Telcos currently utilize on behalf
of the Companies and in accordance with the Transition Services Agreement. In
addition, the SBC Telcos shall perform similar billing and collection services
with respect to all new accounts receivable (collectively, with the Gross AR,
the "Companies AR") generated by the Companies during the period from the
Closing Date until 30 days after the date on which the SBC Telcos cease to
provide billing and collection services under the Transition Services Agreement
(the "Transition Period"). During the Transition Period, the SBC Telcos shall
remit to Buyer monthly any amounts collected from the Companies AR. Within 30
days following the end of the Transition Period, the SBC Telcos shall transfer
all Companies AR which remain outstanding to Buyer (the "Outstanding AR"), and
within 30 days after such transfer Buyer shall pay to the SBC Telcos the face
amount of the Outstanding AR. Sellers agree that, as of the Closing, the
Companies will own all of the accounts receivable, whether billed or unbilled,
of the DonTech Business, whether or not such receivables are
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reflected in the financial statements of the DonTech Business, other than any
such accounts receivable which have been transferred to the SBC Telcos in
accordance with the billing and collection agreements and arrangements with the
SBC Telcos that the Companies currently utilize.
SECTION 5.17 COLLECTION PROCEEDINGS. At or prior to the Closing, Ameritech
shall cause APIL to assign all rights, claims, title and interest in and to all
pending Collection Proceedings to APIL Partners or, if it is not possible to
assign any such Collection Proceeding using commercially reasonable efforts,
will hold such Collection Proceeding in trust and enforce it for the benefit of,
and as reasonably directed by, Buyer.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PARTIES
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION. The respective
obligation of each party to consummate the transactions contemplated by this
Agreement is subject to the satisfaction at or prior to the Closing of the
following conditions:
(a) No statute, rule or regulation shall have been enacted, promulgated or
enforced by any court or governmental authority or regulatory body which
prohibits or restricts the consummation of the transactions contemplated by this
Agreement;
(b) There shall not be in effect any judgment, order, injunction or decree
(each, an "Order") of any court of competent jurisdiction enjoining the
consummation of the transactions contemplated by this Agreement;
(c) Any waiting periods applicable to the transactions contemplated by
this Agreement under the HSR Act shall have expired or early termination shall
have been granted; and
(d) All consents, authorizations, waivers and approvals of any
governmental authority or other regulatory body as may be required to be
obtained in connection with the performance of this Agreement, the failure to
obtain which would prevent the consummation of the transactions contemplated by
this Agreement or have a Company Material Adverse Effect, shall have been
obtained.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF SELLERS. The obligations of
Sellers to consummate the transactions contemplated by this Agreement are
further subject to the satisfaction (or waiver) at or prior to the Closing of
the following conditions:
(a) The representations and warranties of Buyer contained in Article IV of
this Agreement that are (i) qualified as to Buyer Material Adverse Effect shall
be true and correct and (ii) not so qualified shall be true and correct in all
material respects (except for breaches as to matters that, individually or in
the aggregate, could not reasonably be expected to have a Buyer Material Adverse
Effect), in each case as of the date of this
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Agreement and as of the Closing Date as if made at and as of such time (except
that any representations and warranties given as of a specific date need only be
so true and correct as of such date). Sellers shall have received a certificate
dated as of the Closing Date executed by an officer of Buyer to such effect.
(b) Buyer shall have performed in all material respects its obligations
under this Agreement required to be performed by it at or prior to the Closing
pursuant to the terms of this Agreement, and Sellers shall have received a
certificate dated as of the Closing Date executed by an officer of Buyer to such
effect;
(c) Buyer shall have delivered to Sellers or their Affiliates those items
set forth in Section 1.6 of this Agreement; and
(d) Except for any applicable Taxes, no state governmental authority or
other state regulatory body shall have initiated a formal legal or
administrative proceeding with respect to the transactions contemplated by this
Agreement that, individually or in the aggregate, has had or would reasonably be
expected to have an adverse effect on the financial condition, results of
operations or business assets or liabilities of the SBC Telcos or SBC Directory
Operations.
SECTION 6.3 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer
to consummate the transactions contemplated by this Agreement are further
subject to the satisfaction (or waiver) at or prior to the Closing of the
following conditions:
(a) The representations and warranties of Sellers contained in Article III
of this Agreement that are (i) qualified as to Company Material Adverse Effect
shall be true and correct and (ii) not so qualified shall be true and correct in
all material respects (except for breaches as to matters that would not
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect), in each case as of the date of this Agreement and as
of the Closing Date as if made at and as of such time (except that any
representations and warranties given as of a specific date need only be so true
and correct as of such date) and the representation and warranty of Sellers in
Section 3.4 of this Agreement shall be true and correct as of the Closing. Buyer
shall have received a certificate dated as of the Closing Date executed by
authorized representatives of each Seller to such effect;
(b) Each Seller and the Wholly Owned Company shall have performed in all
material respects its obligations under this Agreement required to be performed
by it at or prior to the Closing pursuant to the terms of this Agreement, and
Buyer shall have received a certificate dated as of the Closing Date executed by
authorized representatives of each Seller to such effect; and
(c) Sellers shall have delivered to Buyer those items set forth in Section
1.5 of this Agreement.
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ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned:
(a) at any time, by mutual written consent of Sellers and Buyer;
(b) by either party if the transactions contemplated by this Agreement
shall have been permanently enjoined by a court of competent jurisdiction;
provided, however, that no party who brought or is affiliated with a party who
brought the action seeking the permanent enjoinment of the transactions
contemplated by this Agreement may seek termination of this Agreement pursuant
to this Section 7.1(b);
(c) by Buyer if any of the conditions set forth in Sections 6.1 and 6.3 of
this Agreement shall have become incapable of fulfillment prior to the
Termination Date and shall not have been waived by Buyer;
(d) by Sellers if any of the conditions set forth in Sections 6.1 or 6.2
of this Agreement shall have become incapable of fulfillment prior to the
Termination Date and shall not have been waived by Sellers;
(e) by Buyer or Sellers, at any time on or after January 5, 2005 (the
"Termination Date"), if the Closing shall not have occurred on or prior to such
date; provided, however, that the right to terminate this Agreement under this
Section 7.1(e) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has substantially contributed to or caused the
failure of the Closing to have occurred on or before such date; provided,
further, that if on the Termination Date the only condition to Closing not
satisfied or waived prior to the Closing Date are Sections 6.1(d) or 6.2(d) of
this Agreement and it is still capable of being fulfilled, then the Termination
Date shall be extended to the earlier to occur of (i) April 5, 2005 and (ii) the
10th business day following the fulfillment of the closing condition in Sections
6.1(d) or 6.2(d) of this Agreement, as applicable; or
(f) by Buyer, on January 6, 2005 or February 21, 2005 if the Termination
Date has been extended pursuant to the second proviso to clause (e) of this
Section 7.1 because the condition in Section 6.2(d) was not satisfied or waived.
SECTION 7.2 PROCEDURE AND EFFECT OF TERMINATION. Any party or parties who
have the right to terminate this agreement and abandon the transactions
contemplated by this Agreement may do so by delivering written notice of such
termination and abandonment to the other parties and such termination and
abandonment shall occur upon such delivery without any further action by any
Person. If this Agreement is terminated pursuant to Section 7.1 of this
Agreement:
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(a) each party shall redeliver all documents, work papers and other
materials of the other parties relating to the transactions contemplated by this
Agreement, whether so obtained before or after the execution of this Agreement,
to the party furnishing the same or, upon prior written notice to such party,
shall destroy all such documents, work papers and other materials and deliver
notice to the parties seeking destruction of such documents that such
destruction has been completed, and all confidential information received by any
party to this Agreement with respect to the other party shall be treated in
accordance with the Confidentiality Agreement and Section 5.2(b) of this
Agreement;
(b) all filings, applications and other submissions made pursuant to this
Agreement shall, at the option of Sellers, and to the extent practicable, be
withdrawn from the agency or other Person to which made;
(c) except as otherwise provided in Section 7.2(d) below, there shall be
no liability or obligation under this Agreement on the part of Sellers, the
Companies or Buyer or any of their respective directors, officers, employees,
Affiliates, controlling Persons, agents or representatives, except that a party
shall continue to have liability to the other parties if the basis of
termination is fraud or a willful, material breach by such party of one or more
of the provisions of this Agreement, and except that the obligations provided
for in this Section and Sections 5.6, 5.9 and 10.1 of this Agreement and in the
Confidentiality Agreement shall survive any such termination; and
(d) if after any extension of the Termination Date pursuant to the second
proviso to clause (e) of Section 7.1 of this Agreement either party terminates
this Agreement on the Termination Date and on such date the only condition to
Closing not satisfied or waived is Section 6.2(d), then Sellers shall pay Buyer
a termination fee of $15.0 million in cash by wire transfer of immediately
available funds promptly following the termination of this Agreement.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS
SECTION 8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation by or on behalf of Buyer or the results of any
such investigation and notwithstanding the participation of Buyer in the
Closing, except for those representations and warranties in Section 3.16 (Taxes)
of this Agreement (which shall survive the applicable statute of limitations,
including any extensions with respect thereto) and those representations and
warranties in Sections 3.1 (Organization), 3.2 (Authorization), 3.3 (Capital
Stock), 3.4 (Ownership of the Capital Stock), 3.19 (Certain Fees), 4.1 (Buyer
Organization) and 4.4 (Certain Fees) (which shall survive indefinitely), the
representations and warranties of Sellers and Buyer in Articles III and IV of
this Agreement, respectively, shall survive the Closing for a period of eighteen
months following the Closing Date.
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ARTICLE IX
INDEMNIFICATION
SECTION 9.1 INDEMNIFICATION OBLIGATIONS OF SELLERS. Subject to the
limitations set forth in Sections 9.4 and 9.5, from and after the date of this
Agreement, Sellers shall jointly and severally indemnify, defend and hold
harmless Buyer and its Affiliates and each of their respective officers,
directors, employees, agents and representatives and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"Buyer Indemnified Parties") from, against and in respect of any and all claims,
liabilities (whether asserted or unasserted, absolute or contingent),
obligations, losses, costs, expenses, penalties, fines and judgments (at equity
or at law) and damages (including, without limitation, amounts paid in
settlements permitted hereunder, costs and expenses of investigation and
reasonable attorneys' fees and expenses) (collectively, "Losses"), whenever
arising or incurred, arising out of or relating to (a) any breach of any
representation or warranty made by Sellers in Article III of this Agreement
(other than Section 3.16) or, if the Closing occurs, any failure of any such
representations and warranties which are not given as of a specified date to be
true and correct as of and as if made on the Closing Date, in each case without
giving effect to any "Company Material Adverse Effect", "in all material
respects" or other similar materiality qualification contained in Article III of
this Agreement; provided, however, that notwithstanding the foregoing (i) such
materiality qualifications shall continue to be given effect for purposes of
Section 3.6, (ii) the "Company Material Adverse Change" qualification shall
continue to be given effect for purposes of Section 3.7 and (iii) any matters
that would have been a Company Material Adverse Effect or a Company Material
Adverse Change but for clause (i) or (ii) of the proviso to the definition of
Company Material Adverse Effect shall be disregarded for all purposes of this
Article IX, and (b) any breach or nonperformance of any covenant, agreement or
undertaking of Sellers in this Agreement. Notwithstanding the preceding
sentence, the indemnification or indemnification procedures provided for under
this Section 9.1 shall not apply to Tax matters, which shall be governed
exclusively by Section 5.8.
The Losses of the Buyer Indemnified Parties described in this Section 9.1
as to which the Buyer Indemnified Parties are entitled to indemnification are
hereinafter collectively referred to as "Buyer Losses."
SECTION 9.2 INDEMNIFICATION OBLIGATIONS OF BUYER. Subject to the
limitations set forth in Section 9.4, from and after the date of this Agreement,
Buyer shall indemnify, defend and hold harmless Sellers and their Affiliates
(excluding the Companies), each of their respective officers, directors,
employees, agents and representatives and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the "Seller
Indemnified Parties") from, against and in respect of any and all Losses,
whenever arising or incurred, arising out of or relating to (a) any breach or
inaccuracy of any representation or warranty made by Buyer in Article IV of this
Agreement or, if the Closing occurs, any failure of any such representations and
warranties which are not given as of a specific date
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to be true and correct as of and as if made on the Closing Date, in each case
without giving effect to any "Buyer Material Adverse Effect", "in all material
respects" or other similar materiality qualifications contained in Article IV of
this Agreement or (b) any breach or nonperformance of any covenant, agreement or
undertaking of Buyer in this Agreement. Notwithstanding the preceding sentence,
the indemnification or indemnification procedures provided for in this Section
9.2 shall not apply to Tax matters, which shall be governed exclusively by
Section 5.8.
The Losses of the Seller Indemnified Parties described in this
Section 9.2 as to which the Seller Indemnified Parties are entitled to
indemnification are hereinafter collectively referred to as "Seller Losses."
SECTION 9.3 INDEMNIFICATION PROCEDURE.
(a) Promptly after receipt by a Buyer Indemnified Party or a Seller
Indemnified Party (hereinafter collectively referred to as an "Indemnified
Party") of written notice by a third party of a threatened or filed claim or of
the threatened or actual commencement of any action or proceeding with respect
to which such Indemnified Party may be entitled to receive payment from the
other party or parties (the "Indemnifying Party") for any Buyer Losses or Seller
Losses (as the case may be), such Indemnified Party shall notify the
Indemnifying Party within 30 days after the date on which it received such
written notice; provided, however, that the failure to so notify the
Indemnifying Party shall relieve the Indemnifying Party from liability under
this Agreement with respect to such claim only if, and only to the extent that,
such failure to notify the Indemnifying Party actually prejudices the
Indemnifying Party with respect to such claim. The Indemnifying Party shall have
the right, upon written notice delivered to the Indemnified Party within 30 days
thereafter, to assume the defense of such action or proceeding, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of the fees and disbursements of such counsel. In any action or
proceeding with respect to which indemnification is being sought hereunder, the
Indemnified Party or the Indemnifying Party, whichever is not controlling the
defense of such action, shall have the right to participate in such litigation
and to retain its own counsel at such party's own expense. The Indemnifying
Party or the Indemnified Party, whichever is controlling the defense of any
action, shall at all times use reasonable efforts to keep the other party or
parties (as applicable) reasonably apprised of the status of the defense of such
action and to cooperate in good faith with the other party or parties (as
applicable) with respect to the defense of any such action.
(b) No Indemnified Party may settle or compromise any claim or consent to
the entry of any judgment with respect to which indemnification may be sought
hereunder without the prior written consent of the Indemnifying Party. An
Indemnifying Party may not, without the prior written consent of the Indemnified
Party, settle or compromise any claim or consent to the entry of any judgment
with respect to which indemnification is being sought hereunder unless (i)
simultaneously with the effectiveness of such settlement, compromise or consent,
the Indemnifying Party pays in full any obligation imposed on the
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Indemnified Party by such settlement, compromise or consent, which releases the
Indemnified Party completely in connection with such settlement, compromise or
consent and (ii) such settlement, compromise or consent does not contain any
equitable order, judgment or term which in any manner affects, restrains or
interferes with the business of the Indemnified Party or any of the Indemnified
Party's Affiliates.
(c) In the event an Indemnified Party shall claim a right to payment
pursuant to this Agreement not involving a third party claim covered by Section
9.3(a) of this Agreement, such Indemnified Party shall send written notice of
such claim to the appropriate Indemnifying Party. Such notice shall specify the
basis for such claim.
SECTION 9.4 CLAIMS PERIOD. For purposes of this Agreement, a "Claims
Period" shall be the period after the Closing Date during which any claim for
indemnification may be asserted under this Agreement by an Indemnified Party.
The Claims Periods under this Agreement shall commence on the Closing Date and
shall terminate with respect to Buyer Losses or Seller Losses arising with
respect to (a) any breach or inaccuracy of any representation or warranty on the
date of which the survival period for such representation and warranty expires
as set forth in Section 8.1 of this Agreement and (b) with respect to any breach
or nonperformance of any covenant or agreement in this Agreement, six months
after the date Buyer (with respect to any Buyer Losses) or Sellers (with respect
to any Seller Losses), as the case may be, obtains Knowledge of such breach or
nonperformance. Notwithstanding the foregoing, if an Indemnifying Party shall
have been properly notified of a claim for indemnity hereunder prior to the
close of business on the last day of the applicable Claims Period, such claim
shall continue to survive and shall remain a basis for indemnity hereunder until
such claim is finally resolved or disposed of in accordance with the terms of
this Agreement.
SECTION 9.5 LIABILITY LIMITS. Notwithstanding anything to the contrary set
forth in this Agreement, except for fraud, the Buyer Indemnified Parties shall
not be entitled to make a claim against Sellers for indemnification under
Section 9.1(a) (a) for any single Buyer Loss less than $200,000 and (b) unless
and until the aggregate amount of all Buyer Losses under Section 9.1(a) exceeds
$15,000,000 (the "Buyer Deductible"), and then only to the extent such Buyer
Losses exceed the Buyer Deductible. Notwithstanding anything to the contrary set
forth in this Agreement, in no event shall the Sellers have to make
indemnification payments under this Agreement in excess of $400,000,000 in the
aggregate.
SECTION 9.6 NETTING OF LOSSES. The amount of any Seller Losses or Buyer
Losses for which indemnification is provided under this Article IX shall take
into account (a) in the case of Sellers' indemnification obligations under
Section 9.1 of this Agreement, any specific reserves included in the Final
Balance Sheet and included in the determination of Closing Date Net Working
Capital, (b) in the case of Sellers' indemnification obligations under Section
9.1 of this Agreement or Buyer's indemnification obligations under Section 9.2
of this Agreement, (i) any amounts recovered by the Indemnified Party pursuant
to any indemnification by, or indemnification agreement with, any third party,
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and (ii) any insurance proceeds or other cash receipts or sources of
reimbursement received in connection with any such Seller Losses or Buyer Losses
and (c) any Tax consequences associated with such Losses and the recovery
thereof. If the amount to be netted hereunder from any payment required under
Section 9.1 or Section 9.2 of this Agreement is determined after payment by the
Indemnifying Party pursuant to this Article IX, the Indemnified Party shall
repay to the Indemnifying Party, promptly after such determination, any amount
that the Indemnifying Party would not have had to pay pursuant to this Article
IX had such determination been made at the time of such payment.
SECTION 9.7 EXCLUSIVE REMEDIES. Except for fraud, the provisions of this
Article IX and Sections 5.8 and 10.11 set forth the exclusive rights and
remedies of Buyer and Sellers to seek or obtain damages or any other remedy or
relief whatsoever from any party with respect to matters arising under or in
connection with this Agreement and the transactions contemplated by this
Agreement (other than any remedy or relief arising from the failure of any party
to perform its obligations under the Ancillary Agreements). All payments made
between Buyer and Sellers pursuant to Article VII, this Article IX and Section
5.8 shall constitute adjustments to the Purchase Price for all Tax and other
purposes.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 FEES AND EXPENSES. Whether or not the transactions
contemplated by this Agreement are consummated, Sellers and Buyer shall pay all
fees and expenses incurred by, or on behalf of, Sellers or Buyer, respectively,
in connection with, or in anticipation of, this Agreement and the consummation
of the transactions contemplated by this Agreement.
SECTION 10.2 FURTHER ASSURANCES. From time to time after the Closing Date,
at the reasonable request of the other party to this Agreement and at the
expense of the party so requesting, each of the parties to this Agreement shall
execute and deliver to such requesting party such documents and take such other
action as such requesting party may reasonably request in order to consummate
more effectively the transactions contemplated by this Agreement.
SECTION 10.3 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and may be given by any of the following methods: (a) personal
delivery; (b) facsimile transmission; (c) registered or certified mail, postage
prepaid, return receipt requested; or (d) overnight courier. Notices shall be
sent to the appropriate party at its address or facsimile number given below (or
at such other address or facsimile number for such party as shall be specified
by notice given under this Section 10.3):
If to Buyer, to:
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X. X. Xxxxxxxxx Corporation
0000 Xxxxxxxx Xxxxx
Xxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
with a copy to:
Xxxxx Day
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to Sellers, to:
Ameritech Corporation
c/o SBC Communications Inc.
000 Xxxx Xxxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. XxXxxxxxx
Facsimile: (000) 000-0000
All such notices, requests, demands, waivers and communications shall be deemed
received upon (i) actual receipt thereof by the addressee, (ii) actual delivery
thereof to the appropriate address or (iii) in the case of a facsimile
transmissions, upon transmission thereof by the sender and issuance by the
transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error. In the case of
notices sent by facsimile transmission, the sender shall contemporaneously mail
a copy of the notice to the addressee at the address provided for above.
However, such mailing shall in no way alter the time at which the facsimile
notice is deemed received.
SECTION 10.4 SEVERABILITY. Should any provision of this Agreement for any
reason be declared invalid or unenforceable, such decision shall not affect the
validity or enforceability of any of the other provisions of this Agreement,
which remaining provisions shall remain in full force and effect and the
application of such invalid or unenforceable provision to Persons or
circumstances other than those as to which it is held invalid or unenforceable
shall be valid and enforced to the fullest extent permitted by law;
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provided, that the economic or legal substance of the transactions contemplated
hereby is not affected in any materially adverse manner to any party.
Should Section 5.9 of this Agreement or any word, phrase, clause, sentence
or other portion thereof for any reason be declared illegal or unenforceable,
such Section or portions thereof shall be modified or deleted in such a manner
so as to make Section 5.9 of this Agreement as modified legal and enforceable to
the fullest extent permitted under applicable laws.
SECTION 10.5 BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions of this Agreement shall be binding upon and shall inure to the
benefit of the parties to this Agreement and their respective successors and
permitted assigns. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, directly or indirectly,
including, without limitation, by operation of law, by any party to this
Agreement without the prior written consent of the other parties to this
Agreement, except that Buyer may, without such consent assign all such rights
and obligations to (a) an Affiliate of Buyer or (b) on or after the Closing
Date, to any lender or other party as collateral in connection with any
financing; provided, however, that no such assignment shall release Buyer of any
of its obligations under this Agreement.
SECTION 10.6 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for
the benefit of Sellers, and their successors and permitted assigns, with respect
to the obligations of Buyer under this Agreement, and for the benefit of Buyer,
and its respective successors and permitted assigns, with respect to the
obligations of Sellers, under this Agreement, and this Agreement shall not be
deemed to confer upon or give to any other third party any remedy, claim,
liability, reimbursement, cause of action or other right.
SECTION 10.7 INTERPRETATION.
(a) As used in this Agreement, the term "Person" shall mean and include an
individual, a partnership, limited liability company, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof or other entity.
(b) As used in this Agreement, the term "Affiliate" shall mean a person
that directly or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with the person specified.
(c) The parties have participated jointly in negotiating and drafting this
Agreement. In the event that an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement.
SECTION 10.8 JURISDICTION AND CONSENT TO SERVICE. Without limiting the
jurisdiction or venue of any other court, each of Sellers and Buyer (a) agrees
that any suit,
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action or proceeding arising out of or relating to this Agreement shall be
brought solely in the state or federal courts located in the Borough of
Manhattan and The City of New York, (b) consents to the exclusive jurisdiction
of each such court in any suit, action or proceeding relating to or arising out
of this Agreement, (c) waives any objection which it may have to the laying of
venue in any such suit, action or proceeding in any such court, and (d) agrees
that service of any court paper may be made in such manner as may be provided
under applicable laws or court rules governing service of process.
SECTION 10.9 ENTIRE AGREEMENT. This Agreement, the Confidentiality
Agreement, the Schedules and Annexes and other documents referred to in this
Agreement or delivered pursuant to this Agreement which form a part of this
Agreement constitute the entire agreement among the parties with respect to the
subject matter of this Agreement and supersede all other prior agreements and
understandings, both written and oral, between the parties or any of them with
respect to the subject matter of this Agreement.
SECTION 10.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF
LAWS THEREOF) AS TO ALL MATTERS, INCLUDING BUT NOT LIMITED TO MATTERS OF
VALIDITY, CONSTRUCTION, EFFECT, PERFORMANCE AND REMEDIES.
SECTION 10.11 SPECIFIC PERFORMANCE. The parties acknowledge and agree that
any breach of the terms of this Agreement would give rise to irreparable harm
for which money damages would not be an adequate remedy and accordingly the
parties agree that, in addition to any other remedies, each shall be entitled to
enforce the terms of this Agreement by a decree of specific performance without
the necessity of proving the inadequacy of money damages as a remedy and without
the necessity of posting bond.
SECTION 10.12 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 10.13 AMENDMENT, MODIFICATION AND WAIVER. This Agreement may be
amended, modified or supplemented at any time by written agreement of Sellers
and Buyer. Any failure of Sellers or Buyer to comply with any term or provision
of this Agreement may be waived, with respect to Buyer, by Sellers and, with
respect to Sellers, by Buyer, by an instrument in writing signed by or on behalf
of the appropriate party, but such waiver or failure to insist upon strict
compliance with such term or provision shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure to comply.
SECTION 10.14 KNOWLEDGE. "To the Knowledge of Sellers" or any similar
phrase contained in this Agreement shall mean the actual knowledge of Xxxxx
Xxxxx, the president and chief executive officer of SBC Directory Operations, or
Xxxxx Xxxx, vice president, secretary and general counsel of SBC Directory
Operations.
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SECTION 10.15 SCHEDULES AND EXHIBITS. The Schedules, including all
supplements and amendments thereto, and all exhibits to this Agreement are
hereby incorporated into this Agreement and are hereby made a part of this
Agreement as if set out in full in this Agreement.
SECTION 10.16 WAIVER OF JURY TRIAL. EACH PARTY WAIVES ITS RIGHT TO A JURY
TRIAL IN ANY COURT ACTION ARISING AMONG ANY OF THE PARTIES, WHETHER UNDER OR
RELATING TO THIS AGREEMENT, AND WHETHER MADE BY CLAIM, COUNTER-CLAIM, THIRD
PARTY CLAIM OR OTHERWISE.
The agreement of each party to waive its right to a jury trial will be
binding on its successors and assigns and will survive the termination of this
Agreement.
SECTION 10.17 FULFILLMENT OF OBLIGATIONS. Any obligation of any party to
any other party or parties under this Agreement, or any of the Ancillary
Agreements, which obligation is performed, satisfied or fulfilled completely by
an Affiliate of such party, shall be deemed to have been performed, satisfied or
fulfilled by such party.
SECTION 10.18 HEADINGS. The heading references herein and the table of
contents hereof are for convenience purposes only, and shall not be deemed to
limit or affect any of the provisions hereof.
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IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed as of the date first above written.
AMERITECH CORPORATION
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
Title: Sr. Exec. VP - Corp. Dev.
AMERITECH PUBLISHING, INC.
By: /s/ Xxxxxx Xxxxx
------------------------------------
Name: Xxxxxx Xxxxx
Title: President & CEO
X. X. XXXXXXXXX CORPORATION
By: /s/ Xxxxxx Blondy
------------------------------------
Name: Xxxxxx Blondy
Title: CFO
