YPTEL AGREEMENT
This YPTEL AGREEMENT (THE "AGREEMENT") is made and entered into as
of June 3, 1999 by and among Advanced Communications Group, Inc., a
Delaware corporation ("PARENT"), YPtel Corporation, a corporation
incorporated under the laws of Canada (THE "COMPANY"), the shareholders
of the Company listed on the attached Exhibit "A", The J.L.R. Family
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Trust, The Paisley Family Trust, Xxxxxx Xxxxxx, and Xxxxxxx X. XxXxxxxx
(COLLECTIVELY, THE "ICL PRINCIPALS"), Cold Trust, Global Investment
Trust, Freezer Trust, Storage Trust, Directory Trust and Publisher Trust
("BARBADIAN TRUSTS") (the shareholders listed on Exhibit "A", the ICL
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Principals and the Barbadian Trusts are collectively referred to herein
as the "SHAREHOLDERS") and Imperial Capital Limited, a corporation
incorporated under the laws of the Province of Ontario ("ICL"). The ICL
Principals are executing this Agreement solely for the purpose of making
the representations and warranties of the ICL Principals set forth in
Article II and for agreeing to the indemnification obligations of the
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ICL Principals set forth in Article IX, and for agreeing to the
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obligations of the ICL Principals set forth in Section 4.1 and the
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other provisions of this Agreement. ICL is the attorney-in-fact
pursuant to certain powers of attorney (THE "POWERS OF ATTORNEY"),
pursuant to which all Shareholders other than the ICL Principals, and
the Barbadian Trusts have granted to ICL the right to vote and to
dispose of all of the Company Common Stock. ICL is executing this
Agreement as attorney-in-fact for the Shareholders other than the ICL
Principals and the Barbadian Trusts to bind such Shareholders to their
obligations set forth in this Agreement.
RECITALS
A. The Company is the beneficial owner, directly and
indirectly, and holder of record of all of the issued and outstanding
shares of the capital stock of YPtel, Inc. ("YPTI") and Pacific Coast
Publishing, Ltd. ("PCP") (COLLECTIVELY, THE "SUBSIDIARIES") and desires
to have itself and, indirectly, all of its assets, including the capital
stock of each of the Subsidiaries, acquired directly or indirectly by
Parent on the terms and subject to the conditions set forth in this
Agreement.
B. Parent desires to cause Newco II, an indirect subsidiary of
Parent, to be formed prior to the Closing, to acquire all of the issued
and outstanding capital stock of the Company and Parent desires to
acquire all of the outstanding common stock of YPTI, all on the terms
and subject to the conditions set forth in this Agreement.
C. The Boards of Directors of each of the Company and Parent
believe it is in the best interests of each company and their respective
stockholders and the Board of Directors of Parent has directed or will
direct that the Agreement be submitted to the shareholders of Parent
with the recommendation that the Agreement, including but not limited to
the issuance of shares of Parent Common Stock pursuant to the Exchange
and Voting Trust Agreement be approved by the Parent's stockholders.
D. The Shareholders own all of the issued and outstanding
Company capital stock and will at the time of Closing own all of the
outstanding Company Common Stock other than the shares of Company Common
Stock issued to the Subordinated Lenders upon exercise of the warrants
issued pursuant to the Subordinated Loan Agreement.
E. The parties intend that the Closing will occur concurrently
with or after (i) the closing of the acquisition by Parent or a direct
or indirect subsidiary of Parent of all of the outstanding capital stock
of Web YP, Inc. ("WEB") and Big Stuff, Inc. ("BIG STUFF") on terms
reasonably acceptable to the Company (WEB AND BIG STUFF ARE SOMETIMES
COLLECTIVELY REFERRED TO AS "WORLDPAGES") whether by merger, exchange or
otherwise (THE "WORLDPAGES ACQUISITION"); (ii) the pay-off of the
promissory notes
(COLLECTIVELY, THE "GREAT WESTERN NOTES") in the aggregate original
principal amount of Fifteen Million Dollars (U.S. $15,000,000) (plus
accrued but unpaid interest at the time of pay-off) from the Company to
Xxxxxxx X'Xxxx and certain other former shareholders of Great Western
Directories, Inc. (COLLECTIVELY, THE "GREAT WESTERN SHAREHOLDERS") by
the issuance of Parent Common Stock to the Great Western Shareholders;
(iii) the execution and delivery by Parent and the Shareholders of the
Exchange and Voting Trust Agreement and the Support Agreement; (iv) the
Company Recapitalization; (v) the YPTI Recapitalization and purchase by
Parent from YPTI of all of the outstanding common stock of YPTI; and
(vi) the satisfaction of the other conditions to Closing set forth in
this Agreement.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I - THE TRANSACTIONS
1.1 Transactions Prior to Closing. Immediately prior to
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Closing and subject to and upon the terms and conditions of the
Agreement:
(a) Recapitalization of the Parent. (i) The Parent
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shall be recapitalized (THE "PARENT RECAPITALIZATION") so that
immediately after the Parent Recapitalization, the authorized capital
stock of the Parent shall consist of (A) the Parent Common Stock, (B)
the existing class of preferred shares of Parent (the "PARENT SERIES A
STOCK"), and (C) voting preferred shares having the rights, preferences
and designations set forth at a later date (THE "PARENT PREFERRED
STOCK"); and (ii) thereafter, Parent shall declare and pay a dividend of
the Contingent Rights I to the holders of record of shares of Parent
Common Stock on the Record Date ("CONTINGENT RIGHTS I DIVIDEND").
(b) Formation of Newco I and Newco II. Parent shall (i)
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form an unlimited liability company under the laws of Nova Scotia which
will be owned by Parent ("NEWCO I"); the authorized capital stock of
which shall consist of common stock ("NEWCO I COMMON STOCK") and
preferred shares ("NEWCO I PREFERRED STOCK") and (ii) form a limited
liability company under the laws of Nova Scotia ("NEWCO II"), the
authorized capital stock of which shall consist of (a) common stock
("NEWCO II COMMON STOCK"); (b) non-voting special shares having the
rights, preferences and designations set forth at a later date, the
holders of which shall have the right to exchange such shares on a one-
for-one basis into shares of Parent Common Stock (THE "CLASS A SPECIAL
SHARES") pursuant to the Exchange and Voting Trust Agreement and (c)
non-voting special shares having the rights, preferences and
designations set forth at a later date, the holders of which shall have
the right to receive Parent Common Stock pursuant to Section 5.10(c)
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(THE "CLASS B SPECIAL SHARES") and the Exchange and Voting Trust
Agreement and (d) non-voting preferred shares (representing at least two
percent (2%) of the fair market value of Newco II) having the rights,
preferences and designations set forth at a later date (THE "CLASS C
PREFERRED SHARES"). Newco I Common Stock shall be issued to Parent, and
Newco II Common Stock shall be issued to Newco I, each in consideration
for the transfer of Parent Common Stock and Contingent Rights I
contemplated by Section 1.2(a) hereof, such that at all times all of
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the issued and outstanding Newco I Common Stock shall be held by Parent
and all of the issued and outstanding Newco II Common Stock shall be
held by Newco I.
(c) Recapitalization of the Company. The Shareholders
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and the Company shall cause (i) the Company to be recapitalized (THE
"COMPANY RECAPITALIZATION") so that immediately after the Company
Recapitalization, the authorized capital stock of the Company shall
consist only of common stock (THE "COMPANY COMMON STOCK") and (ii)
thereafter, the exchange into Company Common stock of all outstanding
shares of Class A Preferred stock, Class B Stock, Class C stock and
Class D stock of the Company.
(d) Sale of Class C Preferred Shares. The Class C
---------------------------------
Preferred Shares shall be sold to Bank of America or another unrelated
third party for fair market value consideration in cash.
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(e) The YPTI Recapitalization. (a) The Company shall
-------------------------
cause YPTI to be recapitalized (THE "YPTI RECAPITALIZATION") by amending
YPTI's articles of incorporation to create a class of non-voting
cumulative preferred stock (THE "YPTI PREFERRED STOCK") (with an
aggregate redemption amount equal to the fair market value of YPTI less
the adjusted cost base of Company in YPTI and such the rights,
preferences and designations which will be set forth at a later date in
a certificate of designation (THE "YPTI CERTIFICATE OF PREFERRED STOCK
DESIGNATION") to be filed with the Secretary of State of the State of
Washington) and (b) thereafter, YPTI shall declare and pay to the
Company a dividend of the YPTI Preferred Stock.
1.2 Transactions at Closing. At the Closing, and subject to
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and upon the terms and conditions of this Agreement:
(a) Transfer of Parent Stock. In consideration for the
------------------------
issuance of Newco I Common Stock to Parent and Newco II Common Stock to
Newco I (each as contemplated by Section 1.1(b) hereof). Parent shall
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transfer and deliver to Newco I and Newco I shall transfer and deliver
to Newco II, respectively, that number of shares of Parent Common Stock
necessary to accomplish the exchange with certain Shareholders described
in Section 1.2(b).
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(b) Exchange of Company Common Stock. (i) The
--------------------------------
Shareholders shall transfer and deliver to Newco II the Company Common
Stock free and clear of any and all liens, claims and encumbrances,
together with stock powers duly executed in blank by the Shareholders
that are executing this Agreement and by ICL on behalf of the
Shareholders (other than those that are executing this Agreement) with
signatures of ICL and the Shareholders who are executing this Agreement
guaranteed; (ii) Newco II shall transfer and deliver, at the election of
each Shareholder, either (A) one (1) share of Class A Special Shares and
one (1) share of Class B Special Shares or (B) one (1) share of Parent
Common Stock and one (1) Contingent Right II for each share of Company
Common stock exchanged under (i) above. The procedure for the exchange
of shares of Company Common Stock by each Shareholder and the number of
Class A Special Shares, Class B Special Shares, Parent Common Stock and
Contingent Rights II to be received by each Shareholder at the Closing
will be determined at a later date.
(c) Sale of Parent Preferred Stock. In exchange for
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nominal cash consideration, Parent shall issue to the trustee (THE
"TRUSTEE") under the Voting and Exchange Trust Agreement (THE "TRUST
AGREEMENT"), one or more shares of Parent Preferred Stock that have the
rights, preferences and designations to be described at a later date.
(d) Sale of YPTI Common Stock. Parent shall purchase
--------------------------
from the Company, free and clear of any and all liens, claims and
encumbrances, all shares of YPTI Common Stock owned by the Company,
which shall constitute all of the outstanding shares of YPTI Common
Stock, for an aggregate purchase price equal to the adjusted cost base
of the shares of YPTI, which the parties hereto agree shall be equal to
the fair market value thereof (approximately $21,000,000 Canadian) (THE
"YPTI CONSIDERATION"), payable in cash or in exchange for a promissory
note, with terms as the parties may agree.
1.3 Closing. Unless this Agreement is earlier
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terminated pursuant to Article VIII, the closing of the transactions
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contemplated by this Agreement (THE "CLOSING") will take place as soon
as the conditions set forth in Article VII are satisfied or waived, at
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the offices of Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP, 000 Xxxxx Xxxxxx,
Xxxxx 0000, Xx. Xxxxx, Xxxxxxxx 00000 anticipated to be August 3, 1999
and if such conditions are not satisfied by such date, the Closing shall
be postponed for seven (7) days and will continue to be postponed for
continuous seven (7) day periods until October 31, 1999, unless another
place or time is agreed to in writing by Parent and the Company. The
date upon which the Closing actually occurs is herein referred to as the
"CLOSING DATE." At the Closing: (a) the Company shall deliver to Parent
the various certificates, instruments and documents required to be
delivered by the Company pursuant to this Agreement; (b) Parent shall
deliver to the Company the various certificates, instruments and
documents required to be delivered by Parent pursuant to this Agreement;
(c) the Company shall
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provide to Parent evidence reasonably satisfactory to Parent that the
Company Recapitalization has been completed; (d) the Company shall
provide to Parent evidence reasonably satisfactory to Parent that the
YPTI Recapitalization has been completed and as a part thereof, YPTI has
distributed the YPTI Preferred Stock as a dividend to Company in
accordance with Section 1.1 (e); (e) the Shareholders shall transfer
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their shares of Company Common Stock to Newco II in accordance with
Section 1.2(b)(i); (f) Newco II shall issue and deliver to the
------------------
Shareholders the Class A Special Shares and Class B Special Shares or
Parent Common Stock and Contingent Rights II in accordance with Section
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1.2(b)(ii); (g) Parent shall sell to the Trustee the Parent Preferred
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Stock in accordance with Section 1.2(c); (h) the Trustee shall pay to
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Parent the consideration for the Parent Preferred Stock; (i) the Company
shall to sell to the Parent the YPTI Common Stock in accordance with
Section 1.2(d); (j) Parent shall pay to the Company the YPTI
--------------
Consideration; and (k) an election statement, in a form agreed to, shall
be signed by the appropriate parties in accordance with the provisions
set forth in section 338 of the Code.
1.4 Parent Name Change and Directors.
--------------------------------
(a) Parent Name Change. Parent shall recommend, and
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submit to its shareholders entitled to vote thereon, a resolution for
their approval to amend the Certificate of Incorporation of Parent. Such
resolution shall require Parent to change its name to "XxxxxXxxxx.xxx,
Inc." or a variation thereof and take all reasonable measures to have
such name change become effective on the Closing Date.
(b) Directors. Immediately following the Closing Date,
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the Board of Directors of the Parent shall be restructured to be
composed of eight (8) members as follows: (i) one director chosen by
Parent and one director chosen by ICL to serve three year terms, (ii)
one director chosen by Parent and one director chosen by ICL and one
director to be agreed to by Parent, ICL and World Pages to serve two
year terms, and (iii) one director chosen by Parent and one director
chosen by ICL and one director to be agreed to by Parent, ICL and
WorldPages to serve one year terms. The directors to be nominated by
the Parent are currently anticipated to be Xxxxxxx X'Xxxx, Xxxxxx Xxxxxx
and Xxxxxx Xxxxx. The directors to be nominated by ICL are currently
anticipated to be Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxxxx and Xxxxxx Xxxxx.
The parties hereto expressly acknowledge and agree that this Section
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1.4(b) is not intended to, and does not, except with regard to the
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initial Board of Directors of Parent referenced in this Section
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1.4(b), impose any requirement that the Board of Directors of Parent be
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comprised of the individuals listed in this Section 1.4(b) or that any
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Person has a right to designate a certain individual or a certain number
of individuals as nominees to the Board of Directors of Parent.
1.5 Tax Deferred Exchange. From the date hereof through and
---------------------
including the Closing Date, neither the Company, nor the Subsidiaries,
nor any of the Shareholders nor any of their respective affiliates, nor
Parent, or any of Parent's subsidiaries or any of their respective
affiliates, shall (i) knowingly take any action, or knowingly fail to
take any action, that would jeopardize qualification of the transactions
contemplated by Section 1.2(b) of this Agreement (with respect to the
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issuance of Class A Special Shares and Class B Special Shares to
residents of Canada holding such shares as capital property) as a tax
deferred transfer pursuant to Subsection 85[1] of Income Tax Act
[Canada] RSC 1985 [5th Supp.] c.1, as amended ("INCOME TAX ACT
[CANADA]"); provided a joint election is filed on a timely basis in
prescribed form; or (ii) enter into any contract, agreement, commitment
or arrangement with any such effect. ICL, on behalf of each
Shareholder, and Newco II agree to jointly elect that the proceeds of
the disposition of the Company Common Stock pursuant to this Agreement
shall be the Canadian dollar adjusted cost base of the transferred
shares of Company Common Stock, unless otherwise agreed to by the
transferring Shareholders. Class A Special Shares and Class B Special
Shares will be issued only to transferring Shareholders who are either
(a) resident in Canada for purposes of the Income Tax Act [Canada], or
(b) not resident in Canada for such purposes and not protected by any
applicable tax treaty from taxation under such Act in respect of any
gain realized on such exchange.
1.6 Taking of Necessary Action; Further Action. If, at any
------------------------------------------
time after the Closing Date, any further action is necessary or
desirable to carry out the purposes of this Agreement; including but not
limited to vesting Newco II with full right and title to and possession
of the Company Common Stock; vesting the Shareholders with full right
and title to and possession of the Class A Special Shares, Class B
4
Special Shares or Parent Common Stock and Contingent Rights II, vesting
the Trustee with full right and title to and possession of the Parent
Preferred Stock; vesting Parent with full right and title to and
possession of the YPTI Common Stock; and vesting the Company with full
right and title to the YPTI Preferred Stock, subject to the requirements
of Section 6.11, the parties hereto will take, all such lawful and
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necessary and/or desirable action so long as such action is not
inconsistent with this Agreement.
1.7 Due Diligence Review.
--------------------
(a) At the time of execution of this Agreement, neither
Parent nor the Company has completed its due diligence investigation of
the other. Upon execution hereof, each of Parent and the Company shall
be entitled forthwith to complete its due diligence review of the books,
records and operations of the other (including the Parent Securities
Filings), provided, however, that any review conducted by Parent or
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the Company pursuant to the provisions of this Section 1.7 shall be
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completed within seven (7) business days after the date of this
Agreement (THE "DUE DILIGENCE PERIOD"). If as a result of such review,
either Parent or the Company finds in good faith that it is not in its
economic best interest to proceed with the Closing as contemplated
herein, it may, at or prior to the expiration of the Due Diligence
Period, terminate this Agreement by giving the other party written
notice of such termination in the manner provided in Section 11.1.
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Nothing in this Section 1.7 shall be construed to limit the right of
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any party to continue its due diligence review through the Closing Date.
(b) If either party decides to terminate the Agreement
pursuant to the provisions of Section 1.7(a) hereof, neither party
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shall have any further obligation to the other under this Agreement;
provided, however, that the terminating party shall be liable to the
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other party for the fee set forth in Section 8.2(b) or 8.2(c), as
------------------------
applicable, if either such terminating party subsequently enters into a
Parent Triggering Transaction or a Company Triggering Transaction, as
the case may be, that would otherwise require the payment of the fee
required by Section 8.2.
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1.8 Aggregate Issuable Parent Common Stock. Exclusive of any
---------------------------------------
Parent Common Stock which the Shareholders may receive pursuant to
Section 5.10(c) hereof, the Shareholders, collectively, shall not have
---------------
the right to receive more than, nor shall the Parent be obligated to
issue more than, 7,545,454 shares of Parent Common Stock, in the
aggregate, whether directly or pursuant to conversion of Contingent
Rights II or Class B Special Shares.
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE ICL PRINCIPALS
The Company and the ICL Principals [unless otherwise noted]
severally and not jointly and severally as between the Company and the
ICL Principals and severally and not jointly and severely as between the
ICL Principals, represent and warrant to Parent as follows:
2.1 Organization and Good Standing. Company and each of the
------------------------------
Subsidiaries is a corporation duly organized and validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. Company and each of the Subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction in which
the character of the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and
in good standing would not have a Company Material Adverse Effect.
Schedule 2.1 sets forth a complete and accurate list of the jurisdictions
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of incorporation or organization and qualification or license of Company
and the Subsidiaries. Company has heretofore delivered to Parent accurate
and complete copies of the Certificates or Articles of Incorporation and
Bylaws, or equivalent governing instruments, as currently in effect, of
Company and each of the Subsidiaries.
2.2 Capitalization. As of the date hereof, the authorized
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capital stock of Company (THE "COMPANY STOCK") consists of an unlimited
number of Common Shares, an unlimited number of Class B
5
Shares, 1,841,000 Class C Shares, and an unlimited number of Class D
Shares. As of the date hereof, 13,500,000 shares of Common Stock, 100
Class B Shares, 100 Class D Shares, and no Class C Shares of Company Stock
are issued and outstanding. No other capital stock of Company is issued or
outstanding. All issued and outstanding shares of the Company Stock are
duly authorized, validly issued, fully paid and non-assessable and are
issued free of preemptive rights and in compliance with applicable
corporate and securities Laws. Except as set forth on Schedule 2.2
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attached hereto, as of the date of this Agreement there are no outstanding
rights, reservations of shares, subscriptions, warrants, puts, calls,
unsatisfied preemptive rights, options or other agreements of any kind
relating to any of the capital stock or any other security of Company, and
there is no authorized or outstanding security of any kind convertible into
or exchangeable for any such capital stock or other security. There are no
restrictions upon the transfer of or otherwise pertaining to the securities
(including, but not limited to, the ability to pay dividends thereon) or
retained earnings of Company and the Subsidiaries or the ownership thereof
other than those, if any, described on Schedule 2.2 attached hereto or
------------
those imposed generally by the Securities Act, the Securities Exchange Act,
applicable state or foreign securities Laws or applicable corporate Law.
2.3 Subsidiaries. Schedule 2.3(a) attached hereto sets forth
------------ ---------------
the name and percentages of any outstanding capital stock or other interest
held, directly or indirectly, by Company. Except as set forth on Schedule
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2.3(b) attached hereto, all of the capital stock and other interests so
------
held by Company are owned by it or a Subsidiary as indicated on said
Schedule 2.3(a), free and clear of any claim, lien, encumbrance, security
---------------
interest or agreement with respect thereto. All of the outstanding shares
of capital stock in each of the Subsidiaries are duly authorized, validly
issued, fully paid and non-assessable and were issued free of preemptive
rights and in compliance with applicable corporate and securities Laws.
Except as set forth on Schedule 2.3(c) attached hereto, there are no
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irrevocable proxies, voting agreements or similar obligations with respect
to such capital stock of the Subsidiaries and no equity securities or other
interests of any of the Subsidiaries are or may become required to be
issued or purchased by reason of any options, warrants, rights to subscribe
to, puts, calls, reservation of shares or commitments of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of any capital stock of any Subsidiary, and there
are no contracts, commitments, understandings or arrangements by which any
Subsidiary is bound to issue additional shares of its capital stock, or
options, warrants or rights to purchase or acquire any additional shares of
its capital stock or securities convertible into or exchangeable for such
shares.
2.4 Authorization; Binding Agreement. Company, the ICL
--------------------------------
Principals, the Barbadian Trusts and ICL, as attorney-in-fact for the
Shareholders not signing this Agreement, have all requisite power and
authority to execute and deliver this Agreement and the Company Transaction
Agreements and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the other
agreements and documents referred to herein and to be executed in
connection herewith to which Company, the ICL Principals, the Barbadian
Trusts, ICL or any Shareholder is or will be a party or a signatory (THE
"COMPANY TRANSACTION AGREEMENTS") and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by
Company's Board of Directors, ICL's Board of Directors, and the trustees of
The J.L.R. Family Trust, The Paisley Family Trust and the Barbadian
Trusts and no other corporate or other proceedings on the part of Company,
any Subsidiary, the ICL Principals, ICL or any Shareholder are necessary to
authorize the execution and delivery of this Agreement and the Company
Transaction Agreements or to consummate the transactions contemplated
hereby or thereby, except for the concurrence of the Subordinated Lenders.
This Agreement has been duly and validly executed and delivered by Company,
the ICL Principals, the Barbadian Trusts and ICL, as attorney-in-fact for
the Shareholders not signing this Agreement, and constitutes, and upon
execution and delivery thereof as contemplated by this Agreement, the
Company Transaction Agreements will constitute, the legal, valid and
binding agreements of Company, the ICL Principals and the Shareholders,
enforceable against Company, the ICL Principals and the Shareholders in
accordance with its and their respective terms, except to the extent that
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by principles of equity regarding the
availability of remedies (COLLECTIVELY, THE "ENFORCEABILITY EXCEPTIONS").
The Powers of Attorney are in full force and effect and ICL has full
authority under the Powers of Attorney to execute this Agreement and the
Company Transaction Agreements as attorney-in-fact for the Shareholders not
signing this Agreement, to bind such Shareholders to the obligations of the
Shareholders set forth in this
6
Agreement and the Company Transaction Agreements, and to transfer the
Company Common Shares to Newco II as contemplated by this Agreement.
2.5 Governmental Approvals. No consent, approval, waiver or
----------------------
authorization of, notice to or declaration or filing with ("CONSENT") any
nation or government, any state, province, or other political subdivision
thereof, any Person, authority or body exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government including, without limitation, any governmental or regulatory
authority, agency, department, board, commission or instrumentality, any
court, tribunal or arbitrator and any self-regulatory organization
("GOVERNMENTAL AUTHORITY") on the part of the Shareholders, ICL, the ICL
Principals, the Company or any of the Subsidiaries is required in
connection with the execution or delivery by the ICL Principals, ICL, as
attorney-in-fact for the Shareholders, or the Company of this Agreement and
the Company Transaction Agreements or the consummation by Company or the
Shareholders of the transactions contemplated hereby or thereby other than
(i) filings with the SEC and state and provincial securities laws
administrators and other filings required under the Canada Business
Corporations Act, (ii) those Consents from or with Governmental Authorities
set forth on Schedule 2.5 attached hereto, (iii) filings under the HSR
------------
Act, (iv) filings with the Committee on Foreign Investment in the United
States for a determination as to whether the transaction contemplated by
this Agreement is permitted under the Exon-Xxxxxx Amendment (Section 721)
to the Defense Production Act of 1950 (THE "EXON-XXXXXX FILING"), (v)
filings under Investment Canada Act and the Competition Act, (vi) any
filings required by the U.S. Department of Commerce's reporting
requirements for foreign investment in the United States, and (vii) those
Consents that, if they were not obtained or made, do not or would not have
a Company Material Adverse Effect.
2.6 No Violations. The execution and delivery of this Agreement
-------------
and the Company Transaction Agreements, the consummation of the
transactions contemplated hereby and thereby and compliance by Company,
ICL, the ICL Principals and Shareholders with any of the provisions hereof
or thereof will not (i) conflict with or result in any breach of any
provision of the Certificate and/or Articles of Incorporation or Bylaws or
other governing instruments of Company or any of the Subsidiaries or of any
provision of the trust agreements of the Shareholders that are trusts, (ii)
except as set forth on Schedule 2.6 attached hereto, require any Consent
------------
under or result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right
of termination, cancellation or acceleration or augment the performance
required) under any of the terms, conditions or provisions of any Company
Material Contract or other obligation to which Shareholders, ICL, Company
or any Subsidiary is a party or by which any of them or any of their
properties or assets may be bound, (iii) result in the creation or
imposition of any lien or encumbrance of any kind upon any of the assets of
Company or any Subsidiary, or (iv) subject to obtaining the Consents from
Governmental Authorities referred to in Section 2.5 above contravene any
-----------
applicable provision of any constitution, treaty, statute, law, code, rule,
regulation, ordinance, policy or order of any Governmental Authority,
including without limitation those Governmental Authorities in the United
States and Canada, or other matters having the force of law including, but
not limited to, any orders, decisions, injunctions, judgments, awards and
decrees of or agreements with any court or other Governmental Authority
("LAW") currently in effect to which any Shareholder, ICL, Company or any
Subsidiary or its or any of their respective assets or properties are
subject, except in the case of clauses (ii), (iii) and (iv), above, for any
deviations from the foregoing which do not or would not have a Company
Material Adverse Effect.
2.7 Litigation. Except as set forth in Schedule 2.7 attached
---------- ------------
hereto, (i) the Company represents and warrants to Parent that there is no
action, cause of action, claim, demand, suit, proceeding, citation,
summons, subpoena, inquiry or investigation of any nature, civil, criminal,
regulatory or otherwise, in law or in equity, by or before any court,
tribunal, arbitrator, mediator or other Governmental Authority
("LITIGATION") pending or, to the knowledge of Company, threatened against
Company, any Subsidiary, or any officer, director, employee or agent
thereof, in his or her capacity as such, or as a fiduciary with respect to
any Benefit Plan of Company, or otherwise relating, in a manner that could
have a Company Material Adverse Effect, to Company, any Subsidiary, or the
securities of any of them, or any properties or rights of Company or any of
the Subsidiaries or that could prevent or delay the consummation of the
transactions contemplated by this Agreement; and (ii) the ICL Principals
represent and warrant to Parent that to the knowledge of the ICL Principals
there is no Litigation pending or threatened against Company, any
7
Subsidiary, or any officer, director, employee or agent thereof, in his or
her capacity as such, or as a fiduciary with respect to any Benefit Plan of
Company, or otherwise relating, in a manner that could have a Company
Material Adverse Effect, to Company, any Subsidiary, or the securities of
any of them, or any properties or rights of Company or any of the
Subsidiaries or that could prevent or delay the consummation of the
transactions contemplated by this Agreement.
2.8 Absence of Certain Changes or Events. Except as set forth
------------------------------------
in Schedule 2.8 attached hereto, since November 1, 1998, through the date
------------
of this Agreement, to the knowledge of the ICL Principals, there has not
been any event, occurrence, fact, condition, change, development or effect
("EVENT") that could reasonably be expected to have a Company Material
Adverse Effect.
2.9 Finders and Investment Bankers. Neither Company nor any
------------------------------
Subsidiary nor any of its respective officers or directors has employed any
broker or finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated hereby other than a fee of U.S. $265,000 payable to ICL by
Parent or any direct or indirect subsidiary of Parent immediately following
Closing. There are no other fees due from the Company or any Subsidiary to
ICL and upon Closing neither the Company nor any Subsidiary will have any
further obligations to ICL pursuant to any management agreement or other
similar agreement.
2.10 Contracts. Except as set forth in the PCP Acquisition
---------
Agreement or Schedule 2.10 attached hereto, the Company represents and
-------------
warrants to Parent, and the ICL Principals represent and warrant to the
Parent that to their knowledge, neither Company nor any Subsidiary is a
party or is subject to any Company Material Contract. Company has made
available to Parent true and accurate copies of the Company Material
Contracts.
2.11 Liabilities. From November 1, 1998, through the date of
-----------
this Agreement, except as expressly disclosed in Schedule 2.11 or
-------------
elsewhere is this Agreement or the Schedules attached hereto, to the
knowledge of ICL Principals, Company does not have any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, fixed or unfixed, xxxxxx or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent or
otherwise, whether or not of a kind required by Canadian generally accepted
accounting principles to be set forth in a financial statement other than
those incurred in the ordinary course of business or in an amount not in
excess of U.S. $50,000 individually or U.S. $100,000 in the aggregate.
Except as set forth on Schedule 2.11 attached hereto or elsewhere in this
-------------
Agreement or the Schedules, as of the date of this Agreement, Company does
not have any (i) obligations in respect of borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
to the knowledge of ICL Principals, obligations which would be required by
generally accepted accounting principles to be classified as "capital
leases," (iv) to the knowledge of ICL Principals, obligations to pay the
deferred purchase price of property or services, except trade accounts
payable arising in the ordinary course of business and payable not more
than twelve (12) months from the date of incurrence, and (v) to the
knowledge of the ICL Principals any guaranties of any obligations of any
other Person.
2.12 Real Estate.
-----------
(a) Neither the Company nor any of the Subsidiaries owns any
real property.
(b) Schedule 2.12(b) attached hereto sets forth a true,
----------------
correct and complete schedule as of the date of this Agreement of all
leases, subleases, easements, rights-of-way, licenses or other agreements
entered into after the PCP Closing Date under which Company or any of the
Subsidiaries uses or occupies, or has the right to use or occupy, now or in
the future, any real property or improvements thereon (THE "COMPANY REAL
PROPERTY LEASES"). Except for the matters listed on said Schedule
--------
2.12(b), Company or a Subsidiary, as indicated thereon, to the knowledge
-------
of the ICL Principals, holds the leasehold estate under or other interest
in each Company Real Property Lease and each lease for real property that
existed on the PCP Closing Date free and clear of all liens, encumbrances
and other rights of occupancy other than statutory landlords, or mechanics'
liens which have not been executed upon. All of the real property and
8
improvements occupied by the Company or any Subsidiary under the Company
Real Property Leases and each lease for real property that existed on the
PCP Closing Date are used by the Company as office and graphic design space
only.
2.13 Corporate Records. The corporate record books of or
-----------------
relating to Company made available to Parent by Company contain accurate
and complete records of (i) all corporate actions of the stockholders and
directors (and committees thereof) of Company, (ii) the Certificate and/or
Articles of Incorporation, Bylaws and/or other governing instruments, as
amended, of Company, and (iii) the issuance and transfer of stock of
Company. Except as set forth on Schedule 2.13 attached hereto, Company
-------------
does not have any of its material records or information recorded, stored,
maintained or held off the premises of Company or at other than its
solicitors' offices.
2.14 Labor Matters. The Company has only two employees.
-------------
2.15 Tax. Neither the Company nor the ICL Principals know of
---
any fact or have knowingly taken any action that could be reasonably
expected to prevent the transfer of shares contemplated by Section
--------
1.2(b) of this Agreement (with respect to the issuance of Class A
------
Special Shares and Class B Special Shares to residents of Canada holding
such shares as capital property) from qualifying as a tax deferred
transfer pursuant to Subsection 85(1) of Income Tax Act [Canada];
provided a joint election is filed on a timely basis in prescribed form.
2.16 PCP Acquisition Agreement. Neither Company nor any of the
---------------------------
ICL Principals had any knowledge on the date of the closing (THE "PCP
CLOSING DATE") under the Asset Purchase Agreement by and among the
Company, Pacific Coast Publishing, Inc., a Washington corporation,
Xxxxxxx Xxxxxxx ("XXXXXXX") and Xxxx Xxxxxxx ("XXXXXXX") and Pacific
Coast Publishing, Ltd. (formerly PCP Acquisition Inc.), a Washington
corporation (THE "PCP ACQUISITION AGREEMENT") or has had at any time
after the PCP Closing Date or currently has any knowledge (i) that any
of the representations and warranties made by Pacific Coast Publishing,
Inc., Xxxxxxx and Xxxxxxx (COLLECTIVELY, THE "PCP SELLERS") to the
Company and PCP were untrue, inaccurate or incomplete; (ii) that the PCP
Sellers, or any of them, would be unable to fully satisfy any of their
indemnification or other obligations set forth in the PCP Acquisition
Agreement; or (iii) of any Event that would result in a violation or
breach of, or constitute (with or without due notice of lapse of time or
both) a default by Company or any Subsidiary of any of their respective
obligations under the PCP Acquisition Agreement or any of the other
agreements entered into in connection with the acquisition of PCP ("THE
PCP TRANSACTION DOCUMENTS") or any other Event that would allow the PCP
Sellers, or any of them, to offset against or otherwise reduce their
respective indemnification obligations under the PCP Acquisition
Agreement. Company and the ICL Principals agree that they will give
prompt written notice to Parent if between the date of this Agreement
and the Closing Date they obtain knowledge of any fact that would make
the representations and warranties set forth in this Section 2.16
------------
untrue if they were made at that time. Neither the Company nor any of
the Subsidiaries have assigned, transferred or otherwise conveyed any of
their respective rights or entitlements under the PCP Acquisition
Agreement or the PCP Transaction Documents.
2.17 Knowledge. When a representation or warranty of the ICL
---------
Principals contained in Article II hereof is qualified (i) by the
----------
"knowledge" of such ICL Principals, or (ii) by a statement that the ICL
Principals "have no knowledge" of factual matters comprising the
representation or warranty, or (iii) by a statement that the ICL
Principals are "unaware" of factual matters comprising the
representation or warranty, or (iv) by words of similar import, such
"knowledge qualifiers" mean that each of the ICL Principals or their
respective representatives have affirmatively and actively made due
inquiry of Xxxxxxx X. XxXxxxxx, Xxxx Xxxxxxx and Xxx Xxxxxx or any of
their respective replacements and that none of the ICL Principals have
learned of any information, fact or event that would make the
representation or warranty of the ICL Principal untrue, inaccurate,
incorrect or incomplete. Knowledge possessed by or otherwise obtained
by any one ICL Principal after due inquiry as provided herein with
respect to a representation or warranty qualified by "knowledge" shall
be deemed to be known by, or learned of by all of the ICL Principals.
9
ARTICLE III - REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent represents and warrants to the Company and the Shareholders
as follows:
3.1 Organization and Good Standing. Parent is a corporation
------------------------------
duly organized and validly existing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Each of the Active Parent Subsidiaries is a corporation, duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation or organization and has all requisite corporate, power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to be so duly
organized, validly existing and in good standing or to have such power and
authority would not have a Parent Material Adverse Effect. Parent and each
of the Active Parent Subsidiaries is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the character of the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except
where the failure to be so duly qualified or licensed and in good standing
would not have a Parent Material Adverse Effect. Parent has heretofore
made available to Company accurate and complete copies of the Certificates
or Articles of Incorporation and Bylaws, or equivalent governing
instruments, as currently in effect, of Parent and each of the Active
Parent Subsidiaries.
3.2 Capitalization. As of the date hereof, the authorized
--------------
capital stock of Parent consists of 180,000,000 shares of common stock of
Parent, par value $0.0001 per share ("PARENT COMMON STOCK") and 20,000,000
shares of preferred stock, par value $0.0001 per share as to which 142,857
shares have been designated as Series A Redeemable Convertible Preferred
Stock. As of the opening of business on the date of this Agreement, (a)
19,917,262 shares of Parent Common Stock were issued and outstanding, (b)
142,857 shares of the Parent Series A Stock were issued and outstanding and
(c) 234,141 shares of Parent Common Stock held as treasury shares. No
other capital stock of Parent is issued or outstanding. All issued and
outstanding shares of the Parent Common Stock and Parent Preferred Stock
are duly authorized, validly issued, fully paid and non-assessable and were
issued free of preemptive rights and in compliance with applicable
corporate and securities Laws. Except as set forth on Schedule 3.2
------------
attached hereto, as of the date of this Agreement there are no outstanding
rights, reservations of shares, subscriptions, warrants, puts, calls,
unsatisfied preemptive rights, options or other agreements of any kind
relating to any of the capital stock or any other security of Parent, and
there is no authorized or outstanding security of any kind convertible into
or exchangeable for any such capital stock or other security. There are no
restrictions upon the transfer of or otherwise pertaining to the securities
(including, but not limited to, the ability to pay dividends thereon) or
retained earnings of Parent and the Active Parent Subsidiaries or the
ownership thereof other than those pursuant to the Parent Guaranty or the
Great Western Credit Agreement, or those imposed generally by the
Securities Act, the Securities Exchange Act, applicable state or foreign
securities Laws or applicable corporate Law.
3.3. Subsidiaries. Except as set forth on Schedule 3.3, all of
------------ ------------
the capital stock and other interests of the Active Parent Subsidiaries
held by Parent are owned by it or a Parent subsidiary, free and clear of
any claim, lien, encumbrance, security interest or agreement with respect
thereto. All of the outstanding shares of capital stock in each of the
Active Parent Subsidiaries held directly or indirectly by Parent are duly
authorized, validly issued, fully paid and non-assessable and were issued
free of preemptive rights and in compliance with applicable corporate and
securities Laws. Except as set forth on Schedule 3.3 attached hereto,
------------
there are no irrevocable proxies, voting agreements or similar
obligations with respect to such capital stock of the Active Parent
Subsidiaries and no equity securities or other interests of any of the
Active Parent Subsidiaries are or may become required to be issued or
purchased by reason of any obligations, options, warrants, rights to
subscribe to puts, calls, reservation of shares or commitments of any
character whatsoever relating to, or securities or rights convertible
into or exchangeable for, shares of any capital stock of any Active
Parent Subsidiary, and there are no contracts, commitments,
understandings or arrangements by which any Active Parent Subsidiary is
bound to issue additional shares of its capital stock, or options,
warrants or rights to purchase or acquire any additional shares of its
capital stock or securities convertible into or exchangeable for such
shares.
10
3.4 Authorization; Binding Agreement. Parent has all requisite
--------------------------------
corporate power and authority to execute and deliver this Agreement and the
Parent Transaction Agreements and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
other agreements and documents referred to herein and to be executed in
connection herewith to which Parent is or will be a party or a signatory
(THE "PARENT TRANSACTION AGREEMENTS") and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by the Board of Directors of Parent and except for the approval
of the holders of the Parent Common Stock, no other corporate proceedings
on the part of Parent are necessary to consummate the transactions
contemplated hereby or thereby except for the concurrence of Bank of
America National Trust and Savings Association under the Great Western
Credit Agreement. This Agreement has been duly and validly executed and
delivered by Parent and constitutes, and upon execution and delivery
thereof as contemplated by this Agreement, the Parent Transaction
Agreements will constitute, the legal, valid and binding agreements of
Parent, enforceable against Parent in accordance with its and their
respective terms, subject to the Enforceability Exceptions.
3.5 Governmental Approvals. No Consent from or with any
----------------------
Governmental Authority on the part of Parent or any of the Active Parent
Subsidiaries, is required in connection with the execution or delivery by
Parent of this Agreement and the Parent Transaction Agreements or the
consummation by Parent of the transactions contemplated hereby or thereby
other than (i) filings with the SEC, state securities laws administrators
and the NYSE, (ii) those Consents from or with Governmental Authorities set
forth on Schedule 3.5 hereto, (iii) the Exon-Xxxxxx Filings, filings
------------
under the HSR Act, filings with the Ontario Securities Commission and those
required under the Canada Business Corporations Act, the Investment Canada
Act and the Competition Act, (iv) any filings required by the U.S.
Department of Commerce's reporting requirements for foreign investment in
the United States; and (v) those Consents that, if they were not obtained
or made, do not or would not have a Parent Material Adverse Effect.
3.6 No Violations. The execution and delivery of this Agreement
-------------
and the Parent Transaction Agreements, the consummation of the transactions
contemplated hereby and thereby and compliance by Parent with any of the
provisions hereof or thereof will not (i) conflict with or result in any
breach of any provision of the Certificate and/or Articles of Incorporation
or Bylaws or other governing instruments of Parent or any of the Active
Parent Subsidiaries, except as set forth on Schedule 3.6, (ii) require
------------
any Consent under or result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give
rise to any right of termination, cancellation or acceleration or augment
the performance required) under any of the terms, conditions or provisions
of any Parent Material Contract or other obligation to which Parent or any
Parent subsidiary, is a party or by which any of them or any of their
properties or assets may be bound, except for compliance with the
requirements under that certain Guaranty of Parent (THE "PARENT GUARANTY")
given pursuant to the Loan Agreement dated as of May 14, 1999 by and among
Great Western Directories, Inc., the Lenders signatories thereto, and Bank
of America National Trust and Savings Association as Administrative Agent
(THE "GREAT WESTERN CREDIT AGREEMENT"), (iii) result in the creation or
imposition of any lien or encumbrance of any kind upon any of the assets of
Parent or any Parent Subsidiary, or (iv) subject to obtaining the Consents
from Governmental Authorities referred to in Section 3.5 above,
-----------
contravene any Law currently in effect to which Parent or any Parent
subsidiary or its or any of their respective assets or properties are
subject, except in the case of clauses (ii), (iii) and (iv) above, for any
deviations from the foregoing which do not or would not have a Parent
Material Adverse Effect.
3.7 Securities Filings and Litigation. Parent has made
---------------------------------
available to Company true and complete copies of (i) its Annual Reports on
Form 10-K, as amended, for the years ended December 31, 1997 and 1998, as
filed with the SEC, (ii) its proxy statement relating to the meeting of
shareholders held on July 29, 1998, as filed with the SEC, and (iii) all
other reports, statements and registration statements and amendments
thereto (including, without limitation, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K, as amended) filed by Parent with the SEC since
February 18, 1998. The reports and statements set forth in clauses (i)
through (iii), above, and those subsequently provided or required to be
provided pursuant to this section, are referred to collectively as the
"PARENT SECURITIES FILINGS." As of their respective dates, or as of the
date of the last amendment thereof, if amended after filing, none of the
Parent Securities Filings (including all schedules thereto and disclosure
documents incorporated by reference therein), contained or, as
11
to Parent Securities Filings subsequent to the date hereof, will contain
any untrue statement of a material fact or omitted or, as to Parent
Securities Filings subsequent to the date hereof, will omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Each of the Parent Securities Filings at the time of
filing or as of the date of the last amendment thereof, if amended after
filing, complied or, as to Parent Securities Filings subsequent to the date
hereof, will comply in all material respects with the Securities Exchange
Act or the Securities Act, as applicable. Except as set forth in Schedule
--------
3.7, there is no Litigation pending or, to the knowledge of Parent,
---
threatened against Parent or any Parent subsidiary, any officer, director,
employee or agent thereof, in his or her capacity as such, or as a
fiduciary with respect to any Benefit Plan of Parent, or otherwise
relating, in a manner that could have a Parent Material Adverse Effect, to
Parent, any Parent subsidiary or the securities of any of them, or any
properties or rights of Parent or any of the Parent subsidiaries that could
prevent or delay the consummation of the transactions contemplated by this
Agreement. No event has occurred as a consequence of which Parent would be
required to file a Current Report on Form 8-K pursuant to the requirements
of the Securities Exchange Act as to which such a report has not been
timely filed with the SEC. Any reports, statements and registration
statements and amendments thereof (including, without limitation, Reports
on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-
K, as amended) filed by Parent with the SEC after the date hereof shall be
provided to Company upon such filing.
3.8 Parent Financial Statements. The audited consolidated and
---------------------------
unaudited interim financial statements of Parent and the Parent
subsidiaries included in the Parent Securities Filings (THE "PARENT
FINANCIAL STATEMENTS") have been made available to Company. Except as
noted thereon, the Parent Financial Statements were prepared in accordance
with generally accepted accounting principles applicable to the business of
Parent and the Parent subsidiaries consistently applied in accordance with
past accounting practices and fairly present (including, but not limited
to, the inclusion of all adjustments with respect to interim periods which
are necessary to present fairly the financial condition and assets and
liabilities or the results of operations of Parent and the Parent
subsidiaries, subject to normal year-end adjustments in the ordinary course
with respect to certain items immaterial in amount or effect and the
exclusion of footnote disclosure in interim Parent Financial Statements)
the financial condition and assets and liabilities or the results of
operations of Parent and the Parent subsidiaries as of the dates and for
the periods indicated. Except as set forth in Schedule 3.8 or as
------------
reflected in the Parent Financial Statements, as of their respective dates,
neither Parent nor any Parent subsidiary had any debts, obligations,
guaranties of obligations of others or liabilities (contingent or
otherwise) that would be required in accordance with generally accepted
accounting principles to be disclosed in the Parent Financial Statements.
3.9 Absence of Certain Changes or Events. Except as set forth
------------------------------------
in the Parent Securities Filings made available by Parent to Company prior
to the date of this Agreement or in Schedule 3.9 attached hereto, since
------------
March 31, 1999, through the date of this Agreement, there has not been:
(i) any Event that could reasonably be expected to have a Parent Material
Adverse Effect; or (ii) any agreement by Parent to take any action that
would result in a breach of Section 6.7 below.
-----------
3.10 Compliance with Laws. The business of Parent and the Parent
--------------------
subsidiaries, has been operated in compliance with all Laws applicable
thereto, except for any instances of non-compliance which do not and would
not have a Parent Material Adverse Effect.
3.11 Permits. (i) Parent and the Parent subsidiaries have all
-------
permits, certificates, licenses, approvals, tariffs and other
authorizations required in connection with the operation of their business
(COLLECTIVELY, "PARENT PERMITS"), (ii) neither Parent nor any Parent
Subsidiary is in violation of any Parent Permit, and (iii) no proceedings
are pending or, to the knowledge of Parent, threatened, to revoke or limit
any Parent Permit, except, in the case of clause (i) or (ii) above, those
the absence or violation of which do not and would not have a Parent
Material Adverse Effect.
3.12 Finders and Investment Bankers. Neither Parent nor any of
------------------------------
its officers or directors has employed any broker or finder or otherwise
incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated hereby, except that
PaineWebber Incorporated
12
has been engaged to deliver the fairness opinion required to be delivered
pursuant to Section 7.1(m) and NationsBanc Xxxxxxxxxx Securities, L.L.C.
--------------
has been engaged to assist in the sale(s) of the CLEC Operations and a copy
of the engagement letters and other related documents have been furnished
to the Company.
3.13 Contracts. Except as set forth in Schedule 3.13, neither
--------- -------------
Parent nor any Parent subsidiary is a party to any material note, bond,
mortgage, indenture, contract, lease, license, agreement, understanding,
instrument, bid or proposal ("PARENT MATERIAL CONTRACT"). Parent has made
available to Company true and accurate copies of the Parent Material
Contracts. All such Parent Material Contracts are valid and binding and
are in full force and effect and enforceable in accordance with their
respective terms, subject to the Enforceability Exceptions.
3.14 Corporate Records. The respective corporate record books of
-----------------
or relating to Parent and each of the Active Parent Subsidiaries made
available to Company by Parent contain accurate and complete records of (i)
all corporate actions of the respective shareholders and directors (and
committees thereof) of Parent and the Active Parent Subsidiaries, (ii) the
Certificate and/or Articles of Incorporation, Bylaws and/or other governing
instruments, as amended, of Parent and the Active Parent Subsidiaries, and
(iii) the issuance and transfer of stock of Parent and the Active Parent
Subsidiaries.
ARTICLE IV - ADDITIONAL COVENANTS OF THE COMPANY AND THE ICL PRINCIPALS
The Company and the ICL Principals severally and not jointly and
severally and not jointly and severally as between the Company and the
ICL Principals and severally as between the ICL Principals covenant and
agree as follows:
4.1 Notification of Certain Matters. The Company and the ICL
-------------------------------
Principals shall give prompt notice to Parent if any of the following occur
from the date of this Agreement through the Closing Date: (i) receipt of
any notice of, or other communication relating to, a default or Event
which, with notice or lapse of time or both, would become a default under
any Company Material Contract; (ii) receipt of any notice or other
communication from any third party alleging that the Consent of such third
party is or may be required in connection with the transactions
contemplated by this Agreement; (iii) receipt of any material notice or
other communication from any Governmental Authority in connection with the
transactions contemplated by this Agreement; (iv) receipt of any notice of
or other communication regarding or otherwise obtaining knowledge of an
Event which would have a Company Material Adverse Effect; (v) receipt of
any notice of or other communication regarding or otherwise obtaining
knowledge of the commencement or threat of any Litigation involving or
affecting any Shareholder that might adversely impact the transactions
contemplated by this Agreement, the Company or any Subsidiary, or any of
their respective properties or assets, or, to its knowledge, any employee,
agent, director or officer of the Company or any Subsidiary, in his or her
capacity as such or as a fiduciary under a Benefit Plan of the Company,
which, if pending on the date hereof, would have been required to have been
disclosed pursuant to Section 2.7, and (vi) receipt of any notice of or
-----------
other communication regarding or otherwise obtaining knowledge of any Event
that would cause a breach by the Company, a Subsidiary, or any Shareholder
of any provision of this Agreement or a Company Transaction Agreement,
including such a breach that would occur if such event had taken place on
or prior to the date of this Agreement.
4.2 Access and Information. Between the date of this Agreement
----------------------
and the Closing Date, the Company and the Subsidiaries, upon reasonable
notice, will give, and shall direct its accountants and legal counsel to
give, Parent, its lenders and their respective authorized representatives
(including, without limitation, financial advisors, accountants and legal
counsel) at all reasonable times access to all offices and other facilities
and to all contracts, agreements, commitments, books and records
(including, but not limited to, Tax returns) of or pertaining to the
Company and the Subsidiaries, will permit the foregoing to make such
inspections as they may require and will cause its officers promptly to
furnish Parent with (a) such financial and operating data and other
information with respect to the business and properties of the Company and
Subsidiaries as Parent may from time to time reasonably request including,
but not limited to, data and
13
information required for inclusion in Parent's pending registration
statements and/or other Parent Securities Filings, and (b) a copy of each
material report, schedule and other document filed or received by the
Company or any Subsidiary pursuant to the requirements of applicable
securities Laws. The Company further agrees to permit an independent
accounting firm selected by Parent to either prepare or review the separate
company and consolidated corporate income tax returns and supporting
schedules for U.S., Canadian and state income tax purposes of the Company
and the Subsidiaries for fiscal year beginning November 1, 1998 and ending
on the earlier of October 31, 1999 or the date the Company is acquired,
provided that all of the costs and expenses of such services are paid by
the Parent. The foregoing access will be subject to government security
restrictions and restrictions contained in confidentiality agreements to
which the Company is subject and of which Parent has been advised prior to
the date of this Agreement; provided that the Company shall use its
reasonable best efforts to obtain waivers of such restrictions.
4.3 [Reserved.]
-----------
4.4 Reasonable Best Efforts. Subject to the terms and
-----------------------
conditions herein provided, the Company and ICL on behalf of the
Shareholders agree to use their reasonable best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly
as practicable, but in any event, prior to the Closing, the transactions
contemplated by this Agreement and the Company Transaction Agreements
including, but not limited to (i) obtaining the Consent of others to this
Agreement, the Company Transaction Agreements and the transactions
contemplated hereby and thereby, (ii) the defending of any Litigation
against the Company, ICL, any Subsidiary, or any Shareholder challenging
this Agreement, the Transaction Agreements or the consummation of the
transactions contemplated hereby or thereby, (iii) obtaining all Consents
from Governmental Authorities required for the consummation of the
transactions contemplated hereby, (iv) timely making all necessary filings
under the HSR Act, and (v) timely making the Exon-Xxxxxx Filings and any
filings required under the Canada Business Corporations Act, and the
Investment Canada Act and by the U.S. Department of Commerce's reporting
requirements for foreign investments in the United States. Upon the terms
and subject to the conditions hereof, the Company and ICL on behalf of the
Shareholders agree to use their reasonable best efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things
necessary to satisfy the other conditions of the Closing set forth herein.
The Company and ICL on behalf of the Shareholders will consult with counsel
for Parent as to, and will permit such counsel to participate in, at
Parent's expense, any Litigation referred to in clause (ii) above brought
against or involving the Company, any Subsidiary or any Shareholder.
4.5 Compliance. In consummating the transactions contemplated
----------
hereby, the Company and ICL on behalf of the Shareholders shall comply in
all material respects with the provisions of the Securities Exchange Act
and the Securities Act and shall comply, and/or cause the Subsidiaries to
comply or to be in compliance, in all material respects, with all other
applicable Laws.
4.6 Benefit Plans. Between the date of this Agreement and through
-------------
the Closing Date, no discretionary award or grant under any Benefit Plan of
the Company or a Subsidiary shall be made without the consent of Parent;
nor shall the Company or a Subsidiary take any action or permit any action
to be taken to accelerate the vesting of any warrants or options previously
granted pursuant to any such Benefit Plan. Neither the Company nor any
Subsidiary shall make any amendment to any Benefit Plan, any awards
thereunder or the terms of any security convertible into or exchangeable
for capital stock without the consent of Parent. Parent acknowledges the
granting of the options referred to in Section 6.1(v).
--------------
4.7 Tax Opinion Certification. Prior to the Closing Date, the
-------------------------
Company and the Shareholders shall provide tax counsel rendering an opinion
under Section 7.1(n) with a certificate concerning such factual matters
--------------
as such counsel identifies are relevant to its opinion.
4.8 [Reserved].
----------
4.9 Shareholders Agreement and Voting Trust Agreements. The
--------------------------------------------------
Company and ICL on behalf of the Shareholders shall cause all voting
trust agreements between the Shareholders, ICL and the
14
Company and any powers of attorney or other agreements relating to the
voting or disposition of the capital stock of the Company (COLLECTIVELY,
"THE VOTING TRUST AGREEMENTS") and the Unanimous Shareholders Agreement
to be cancelled as of the Closing Date.
4.10 Transfer Restrictions. In addition to any other
---------------------
restrictions imposed by Law on the Shareholders' ability to transfer any
Parent Preferred Stock or Parent Common Stock received by the
Shareholders pursuant to this Agreement and the Exchange and Voting
Trust Agreement, each Shareholder agrees that such Shareholder will not
sell, transfer or otherwise dispose of any of the Class A Special
Shares, Class B Special Shares or Contingent Rights II received by such
Shareholder pursuant to this Agreement except pursuant to the laws of
descent and distribution or distributions from a trust to the
beneficiaries of such trust (provided that the distributee of such
shares by descent and distribution or from a trust shall remain subject
to the transfer restrictions set forth in this Section 4.10) and will
------------
not sell, transfer or otherwise dispose of the Parent Common Stock
received by such Shareholder pursuant to this Agreement or the Exchange
and Voting Trust Agreement for a period of six (6) months after the
Closing Date. For greater certainty, any Parent Common Stock received
pursuant to any of the exchanges contemplated in Article I and Parent
---------
Common Stock received on a conversion contemplated in Article I shall
---------
be freely transferable subject to the resale restrictions set forth in
this Section 4.10 and the Escrow Agreement and Rules 144 and 145 under
------------
the Securities Act. For purposes of this Section 4.10, a pledge of
------------
any shares subject to this Section 4.10 by a Shareholder to a
------------
financial institution as collateral security for loans arranged by such
Shareholder or for margining purposes shall not constitute a sale,
transfer, or other disposition of such shares so long as the financial
institution agrees not to foreclose thereon for a period of six (6)
months from the Closing Date and to be bound to the restrictions imposed
by this Section 4.10. Notwithstanding anything in this Section 4.10
------------ ------------
to the contrary, the restrictions on transfer imposed by this Section
-------
4.10 shall terminate, except with regard to the Contingent Rights II,
----
on the first to occur of any of the following events: (a) a take-over
bid (as such term is used in the Securities Exchange Act) is completed
for Parent; (b) Parent sells all, or substantially all, of its assets
either directly by the sale of shares of its subsidiaries or indirectly
by the sale of assets of its direct and indirect subsidiaries, or a
combination thereof (other than the CLEC Operations); or (c) Parent
ceases to have at least fifty-one percent (51%) of the aggregate votes
attaching to all of the issued and outstanding security of all classes
in the capital stock of its subsidiaries (except for the capital stock
of such subsidiaries comprising the CLEC Operations), including the
Company, WorldPages, or Great Western Directories, Inc., directly or
indirectly. The Shareholders acknowledge and agree that the following
legend will appear on all certificates representing Class A Special
Shares or Class B Special Shares received by the Shareholders pursuant
to this Agreement or the Exchange and Voting Trust Agreement:
EXCEPT AS PROVIDED IN SECTION 4.10 OF THE YPTEL AGREEMENT MADE AND
ENTERED INTO AS OF JUNE 3, 1999 BY AND AMONG THE CORPORATION, YPTEL
CORPORATION, THE SHAREHOLDERS OF YPTEL CORPORATION AND IMPERIAL CAPITAL
LIMITED (THE "YPTEL AGREEMENT"), THESE SECURITIES MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED, DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED OF
AND MAY ONLY BE ENCUMBERED OR PLEDGED IN ACCORDANCE WITH SECTION 4.10 OF
THE YPTEL AGREEMENT UPON THE WRITTEN REQUEST OF THE HOLDER OF THIS
CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS RESTRICTIVE LEGEND AFTER
_________, 2000.
The Shareholders acknowledge and agree that the following legend
will appear on all certificates representing Parent Common Stock
received by the Shareholders pursuant to this Agreement or the Exchange
and Voting Trust Agreement:
EXCEPT AS PROVIDED IN SECTION 4.10 OF THE YPTEL AGREEMENT MADE AND
ENTERED INTO AS OF JUNE 3, 1999 BY AND AMONG THE CORPORATION, YPTEL
CORPORATION, THE SHAREHOLDERS OF YPTEL CORPORATION AND IMPERIAL CAPITAL
LIMITED (THE "YPTEL AGREEMENT"), THESE SECURITIES MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED, DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED OF
AND MAY ONLY BE ENCUMBERED OR PLEDGED IN ACCORDANCE WITH SECTION 4.10 OF
THE YPTEL AGREEMENT PRIOR TO __________, 2000, AND THE ISSUER SHALL NOT
BE REQUIRED TO
15
GIVE EFFECT TO ANY ATTEMPTED SALE, ASSIGNMENT, TRANSFER, ENCUMBRANCE,
PLEDGE, DISTRIBUTION, APPOINTMENT OR OTHER DISPOSITION PRIOR TO
___________, 2000 PURSUANT TO THE YPTEL AGREEMENT. UPON THE WRITTEN
REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE ISSUER AGREES TO REMOVE
THIS RESTRICTIVE LEGEND AFTER THE DATE SPECIFIED ABOVE.
The Shareholders who are "affiliates" of the Company within the
meaning of Rule 145 promulgated under the Securities Act acknowledge and
agree that the following additional legend will appear on all certificates
representing the Parent Common Stock received by such "affiliates" of the
Company pursuant to this Agreement or the Exchange and Voting Trust
Agreement:
IN ADDITION, THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE
ARE HELD SUBJECT TO ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THE RULES AND REGULATIONS
PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION ("SEC")
THEREUNDER. NO SALES, TRANSFERS OR OTHER DISPOSITION OF THESE SHARES
MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR UPON THE PRIOR DELIVERY TO ADVANCED COMMUNICATIONS
GROUP, INC ("ACG") OF AN OPINION FROM LEGAL COUNSEL SATISFACTORY TO ACG
AND IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO ACG AND ITS LEGAL
COUNSEL, STATING THAT SUCH SALE OR OTHER DISPOSITION IS BEING MADE
PURSUANT TO AND IN ACCORDANCE WITH THE REQUIREMENTS OF SEC RULES 144 AND
145 OR IS OTHERWISE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT.
Anything to the contrary herein notwithstanding (but subject to the
restriction imposed on them pursuant to Rules 144 and 145 under the
Securities Act), Messrs. Xxx Xxxxxx and Xxxx Xxxxxxx are permitted to sell
that number of shares of Parent Common Stock received by them pursuant to
the transactions contemplated by this Agreement prior to the expiration of
the aforementioned six month period, to obtain the funds necessary to pay
taxes due as a result of the transactions contemplated by this Agreement,
but only to the extent that such taxes are required to be paid during the
six month period and such shares may not be sold earlier than one week
before the taxes are due and payable.
4.11 Subordinated Loan Agreement. The Company shall cause PCP
---------------------------
to satisfy all of its obligations under the Subordinated Loan Agreement
dated as of November 1, 1998 (THE "SUBORDINATED LOAN AGREEMENT") by and
among PCP (f/k/a PCP Acquisition, Inc.), the lenders which are parties
thereto (the "SUBORDINATED LENDERS") and Canterbury Mezzanine Capital,
L.P., as agent, including, without limitation, the repayment in full of
the Loans (as defined in the Subordinated Loan Agreement) and all
interest accrued thereon.
The Company shall use its reasonable best efforts to cause the
Subordinated Lenders to exercise the warrants evidenced by the Warrant
Certificates (as defined in the Subordinated Loan Agreement) and to
convert the Class B Shares issued to the Subordinated Lenders thereunder
into Company Common Stock.
4.12 Conduct of Business of Company and the Subsidiaries. The
---------------------------------------------------
Company covenants, represents and warrants that from the date of this
Agreement through the Closing Date, unless the Parent shall otherwise
expressly consent in writing, the Company shall, and the Company shall
cause each Subsidiary to, use its or their reasonable best efforts to
comply in all material respects with all Laws applicable to it or any of
its properties, assets or business and maintain in full force and effect
all authorizations and permits necessary for, or otherwise material to,
such business.
4.13 Affiliate Agreements. The Company and the ICL Principals
--------------------
shall use reasonable best efforts to ensure that each Person who is or may
be an "affiliate" of the Company within the meaning of Rule 145 promulgated
under the Securities Act shall enter into an affiliate agreement in a form
reasonably acceptable to Parent (THE "AFFILIATE AGREEMENTS").
16
ARTICLE V - ADDITIONAL COVENANTS OF PARENT
Parent covenants and agrees as follows:
5.1 Conduct of Business of Parent and the Active Parent
----------------------------------------------------
Subsidiaries. Parent covenants, represents and warrants that from the
------------
date of this Agreement through the Closing Date, unless the Company shall
otherwise expressly consent in writing, Parent shall, and Parent shall
cause each Active Parent Subsidiary to, use its or their reasonable best
efforts to comply in all material respects with all Laws applicable to it
or any of its properties, assets or business and maintain in full force and
effect all the Parent Authorizations necessary for, or otherwise material
to, such business.
5.2 Notification of Certain Matters. Parent shall give prompt
-------------------------------
notice to the Company if any of the following occur from the date of this
Agreement through the Closing Date: (i) any notice of, or other
communication relating to, a default or Event which, with notice or lapse
of time or both, would become a default under any Parent Material Contract
which could have a Parent Material Adverse Effect; (ii) receipt of any
notice or other communication from any third party alleging that the
Consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement; (iii) receipt of any material
notice or other communication from any regulatory authority (including, but
not limited to, the NYSE or any other securities exchange) in connection
with the transactions contemplated by this Agreement; (iv) receipt of any
notice of or other communication regarding or otherwise obtaining knowledge
of an Event which would have a Parent Material Adverse Effect; (v) receipt
of any notice of or other communication regarding or otherwise obtaining
knowledge of the commencement or threat of which Parent has knowledge of
any Litigation involving or affecting Parent or any Parent subsidiary or
any of their respective properties or assets, or, to its knowledge, any
employee, agent, director or officer, in his or her capacity as such, of
Parent or any Parent subsidiary which, if pending on the date hereof, would
have been required to have been disclosed pursuant to Section 3.7; and
-----------
(vi) receipt of any notice of or other communication regarding or otherwise
obtaining knowledge of any Event that could cause a breach by Parent of any
provision of this Agreement or a Parent Transaction Agreement, including
such a breach that could occur if such Event had taken place on or prior to
the date of this Agreement.
5.3 Access and Information. Between the date of this Agreement
----------------------
and the Closing Date, Parent will, upon reasonable notice, give the Company
and its authorized representatives (including, without limitation, its
financial advisors, accountants and legal counsel) at all reasonable times
access as reasonably requested to the offices and other facilities and to
all material contracts, agreements, commitments, books and records
(including, but not limited to, Tax returns) of or pertaining to Parent and
the Active Parent Subsidiaries, will permit the Company to make such
reasonable inspections as it may require and will cause its officers
promptly to furnish the Company with (a) such financial and operating data
and other information with respect to the business and properties of Parent
and the Active Parent Subsidiaries as the Company may from time to time
reasonably request, and (b) a copy of each material report, schedule and
other document filed or received by Parent or any Active Parent Subsidiary
pursuant to the requirements of applicable securities Laws, the NYSE or
other securities exchange, in each case as necessary in connection with the
transactions contemplated hereby. The foregoing access will be subject to
restrictions contained in Section 6.10 hereof.
------------
5.4 Compliance. In consummating the transactions contemplated
----------
hereby, Parent shall comply in all material respects with the provisions of
the Securities Exchange Act and the Securities Act and shall comply, and/or
cause the Active Parent Subsidiaries to comply or to be in compliance, in
all material respects, with all other applicable Laws.
5.5 SEC and Shareholder Filings. Parent shall send to the
---------------------------
Company a copy of all material public reports and materials as and when it
sends the same to its shareholders, the SEC, the NYSE or any other
securities commission or exchange.
17
5.6 Tax Treatment. Prior to the Closing Date, Parent shall
-------------
provide tax counsel rendering an opinion under Subsection 7.1(n) with a
-----------------
certificate concerning such factual matters as such counsel identifies are
relevant to its opinion.
5.7 Reasonable Best Efforts. Subject to the terms and
-----------------------
conditions herein provided, Parent agrees to use its reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper or advisable to consummate and make
effective as promptly as practicable, but in any event, prior to the
Closing, the transactions contemplated by this Agreement and the Parent
Transaction Agreements including, but not limited to (i) obtaining the
Consent of others to this Agreement, the Parent Transaction Agreements and
the transactions contemplated hereby and thereby, (ii) the defending of any
Litigation against the Parent or any Parent subsidiary, or any Shareholder
challenging this Agreement, the Parent Transaction Agreements or the
consummation of the transactions contemplated hereby or thereby, (iii)
obtaining all Consents from Governmental Authorities required for the
consummation of the transactions contemplated hereby, (iv) timely making
all necessary filings under the HSR Act, and (v) timely making the Exon-
Xxxxxx Filings and any filings required under the Canada Business
Corporations Act, the Investment Canada Act and by the U.S. Department of
Commerce's reporting requirements for foreign investments in the United
States. Upon the terms and subject to the conditions hereof, Parent agrees
to use its reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary to satisfy the
other conditions of the Closing set forth herein. Parent will consult with
counsel for Company as to, and will permit such counsel to participate in,
at the Company's expense, any Litigation referred to in clause (ii) above
brought against or involving Parent or any Parent subsidiary.
5.8 Employee Benefit Plans. After the Closing Date, Parent
-----------------------
shall arrange for each employee participating in the Benefit Plan of the
Company and the Subsidiaries at such time to participate in any counterpart
Benefit Plans of Parent in accordance with the eligibility criteria
thereof, provided that (i) such participants shall receive full credit for
years of service with the Company or any of the Subsidiaries prior to the
transactions contemplated by this Agreement for all purposes for which such
service was recognized under the Benefit Plan of the Company and the
Subsidiaries including, but not limited to, recognition of service for
eligibility, vesting, and, to the extent not duplicative of benefits
received under such Benefit Plan of the Company and the Subsidiaries, the
amount of benefits, and (ii) such participants shall participate in the
Benefit Plans of Parent on terms no less favorable than those offered by
Parent to similarly situated employees of Parent. Notwithstanding the
foregoing, Parent may continue one or more of the Benefit Plans of the
Company and the Subsidiaries, in which case Parent shall have satisfied its
obligations hereunder with respect to the benefits so provided.
5.9 Expenses. If the transactions contemplated by this
--------
Agreement are consummated, all fees and expenses incurred in connection
with the transactions contemplated by this Agreement including, without
limitation, all legal, accounting, financial advisory, consulting fees,
a fee of U.S. $265,000 payable to ICL at Closing and the warrants
referred to in Section 7.1(g), and expenses relating to the
--------------
renegotiation of the Company's and the Subsidiaries' outstanding debt
and all other transaction fees and expenses (COLLECTIVELY, "TRANSACTION
EXPENSES") incurred by a party or its stockholders in connection with
the negotiation and effectuation of the terms and conditions of this
Agreement and the transactions contemplated hereby, shall be paid by
Parent or any direct or indirect subsidiary of Parent immediately after
Closing. If the transactions contemplated by this Agreement are not
consummated, all Transaction Expenses shall be the obligation of the
respective parties which incurred them.
5.10 Sale of CLEC Operations.
-----------------------
(a) Parent shall attempt to sell by the Anniversary Date
all of the shares of or otherwise dispose of the CLEC Operations. Any
such sale shall be for cash, assignment of indebtedness, or other
acceptable consideration as determined by (i) the Board of Directors of
Parent if before Closing or (ii) a committee of the Board of Directors
of Parent if after Closing. If acceptable non-cash consideration is
received, the Board of Directors or a committee of the Board of
Directors, as the case may be, in conjunction with the independent
certified public accountants of Parent, shall determine the fair market
value of the consideration received for the sale of the shares of or
other disposal of the CLEC Operations.
18
(b) If the CLEC Sales Price received by Parent from the
sale(s) by Parent of CLEC Operations (i) prior to the Anniversary Date,
or (ii) within sixty (60) days after the Anniversary Date if, prior to
the Anniversary Date, Parent has entered into a definitive agreement for
the sale of a portion or all of the CLEC Operations (the applicable date
is hereinafter referred to as the "FINAL SALE DATE"), is greater than
Sixty Million Dollars (U.S. $60,000,000.00) (the amount by which the
CLEC Sales Price exceeds U.S. $60,000,000 is referred to hereinafter as
the "CLEC SALES PRICE INCREASE"), then each Eligible Parent Shareholder
shall have the right to receive, in the manner provided in the
certificate representing the Contingent Rights I, that number of shares
of Parent Common Stock determined by multiplying the total number of
Parent CLEC Shares by the Eligible Parent Shareholder's Proportionate
Share.
(c) If the CLEC Sales Price received by Parent from the
sale(s) by Parent of CLEC Operations prior to the Final Sale Date is
less than Forty Million Dollars (U.S. $40,000,000.00) (the amount by
which the CLEC Sales Price is less than U.S. $40,000,000 is referred to
hereinafter as the "CLEC SALES PRICE DECREASE"), then, the Eligible
Acquisition Shareholders, excluding, for purposes of this Section
5.10(c), Xxxxxxx X'Xxxx, shall have the right to receive, in the manner
provided in the certificate of designation for the Class B Special
Shares and certificate representing the Contingent Rights II and in the
Exchange and Voting Trust Agreement, that number of shares of Parent
Common Stock determined by multiplying the total number of Acquisition
CLEC Shares by the Eligible Acquisition Shareholder's Proportionate
Share.
(d) For greater certainty any CLEC Operations that have
not been sold prior to the Final Sale Date shall be deemed to have no
value for purposes of determining the CLEC Sales Price Increase or CLEC
Sales Price Decrease.
(e) It is acknowledged and agreed that the number of
shares of Parent Common Stock which may be issued (i) to the Eligible
Parent Shareholders pursuant to Section 5.10(b) hereof, or (ii) to the
---------------
Eligible Acquisition Shareholders pursuant to Section 5.10(c) hereof
---------------
is to be calculated in conjunction with the number of shares of Parent
Common Stock which may be issued to Eligible Parent Shareholders as that
term is defined in the Big Stuff Agreement and the Web YP Agreement, or
which may be issued to Eligible Acquisition Shareholders, as that term
is defined in the Big Stuff Agreement and the Web YP Agreement. It is
the intent of the parties to this Agreement, the Web YP Agreement and
the Big Stuff Agreement that, if the closing of all such agreements
shall occur: (i) the number of shares of Parent Common Stock issuable
to the Eligible Parent Shareholders pursuant to Section 5.10(b) hereof
---------------
and the corresponding sections of the Web YP Agreement and the Big Stuff
Agreement (such sections, the "CLEC INCREASE SECTIONS") shall equal the
number of shares of Parent Common Stock calculated by reference to the
CLEC Increase Section of one such agreement only, not the number of
shares of Parent Common Stock calculated by reference to the CLEC
Increase Sections of all three such agreements; and (ii) the aggregate
number of shares (such aggregate number, the "SELLER SHARE NUMBER") of
Parent Common Stock issuable to the Eligible Acquisition Shareholders
pursuant to Section 5.10(c) hereof, to the Eligible Acquisition
---------------
Shareholders (as that term is defined in the Web YP Agreement) pursuant
to Section 5.11(c) of the Web YP Agreement, and to the Eligible
Acquisition Shareholders (as that term is defined in the Big Stuff
Agreement) pursuant to Section 5.11(c) of the Big Stuff Agreement (such
sections, the "CLEC DECREASE SECTIONS") shall be calculated as follows:
62.406014% of the Seller Share Number of shares of Parent Common Stock
are issuable pursuant to this Agreement; 25.56391% of the Seller Share
Number of shares of Parent Common Stock are issuable pursuant to the Web
YP Agreement; and 12.030075% of the Seller Share Number of shares of
Parent Common Stock are issuable pursuant to the Big Stuff Agreement.
5.11 Indemnification and Insurance.
-----------------------------
(a) Subject to Section 9.1(c), Parent shall cause the
--------------
Company, to the full extent required under the Company's Articles of
Incorporation or Bylaws in effect on the date of this Agreement, to
indemnify and hold harmless each present and former director, officer,
employee or agent
19
of the Company and the Subsidiaries (COLLECTIVELY, THE "INDEMNIFIED
PARTIES") with respect to matters occurring through the Closing Date,
for a period of three (3) years after the Closing Date.
(b) For a period of three (3) years after the Closing Date
and to the extent available, Parent shall cause the Company to maintain
in effect directors' and officers' liability insurance covering those
Persons who are currently covered by the Company's directors and
officers' liability insurance policy on terms (including the amounts of
coverage and the amounts of deductibles, if any) that are no less
favorable to them in any material respect than the terms now applicable
to them under the Company's current insurance policies.
ARTICLE VI - ADDITIONAL COVENANTS OF THE PARENT, THE COMPANY
AND THE SHAREHOLDERS
6.1 Registration Rights and Stock Restriction Agreement.
---------------------------------------------------
(a) On or before the Closing Date, the Parent shall use its
reasonable best efforts to cause the following securities to be
registered with the SEC under the Securities Act:
(i) Parent Common Stock issuable upon exchange of the
Contingent Rights I;
(ii) Parent Common Stock issuable upon exchange of the
Contingent Rights II;
(iii) Parent Common Stock issuable upon exchange of the
Class A Special Shares; and
(iv) Parent Common stock issuable upon exchange of the
Class B Special Shares.
(b) The Parent shall use its reasonable best efforts to cause to
be registered with the appropriate Governmental Authorities under state
blue sky Laws and the Canadian and provincial securities laws and the
rules and regulations thereunder:
(i) Parent Common Stock issuable upon exchange of the
Class A Special Shares; and
(ii) Parent Common Stock issuable upon exchange of the
Class B Special Shares.
(c) The Parent shall cause Newco II to use its reasonable best
efforts to cause to be registered with the SEC:
(i) Class A Special Shares; and
(ii) Class B Special Shares.
(d) The Parent shall cause Newco II to use its reasonable best
efforts to cause to be registered with the appropriate Governmental
Authorities under state blue sky Laws and the Canadian and provincial
securities laws and the rules and regulations thereunder:
(i) Class A Special Shares; and
(ii) Class B Special Shares.
(e) Such Registration Statements shall state, if permitted on
the applicable Registration Statement form, that such Registration
Statement, also registers such indeterminate number of additional shares
of Parent Common Stock as may become issuable upon the exercise or
exchange, as the case may
20
be, of the Contingent Rights I, the Contingent Rights II, the Class A
Special Shares and the Class B Special Shares to prevent dilution
resulting from stock splits, stock dividends or similar transactions.
(f) The Parent shall promptly prepare and file, and cause Newco
II to prepare and file with the appropriated Governmental Authorities,
such amendments (including post-effective amendments) and supplements to
the Registration Statements and the prospectus(es) used in connection
with the Registration Statement, as may be necessary to keep the
Registration Statements effective at all times during the periods the
Contingent Rights I, the Contingent Rights II, the Class A Special
Shares and the Class B Special Shares are exchangeable or convertible,
as the case may be. The Parent shall use its reasonable best efforts
and shall cause Newco II to use its reasonable best efforts, to cause
such amendment and/or new Registration Statements to become effective as
soon as practicable following the filing thereof.
(g) The Parent shall cause all Parent Common Stock issuable upon
the exchange and/or conversion of (i) the Contingent Rights I, (ii)
Contingent Rights II, (iii) Class A Special Shares, and (iv) Class B
Special Share to be listed on each securities exchange on which similar
securities issued by the Parent are then listed.
6.2 [Reserved].
----------
6.3 [Reserved].
----------
6.4 Legal Requirements. Subject to the terms and conditions
------------------
provided in this Agreement, each of the parties hereto shall use its
reasonable best efforts to take promptly, or cause to be taken, all
reasonable actions, and to do promptly, or cause to be done, all things
necessary, proper or advisable under applicable Laws to consummate and
make effective the transactions contemplated hereby to obtain all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings and to remove any injunctions or other
impediments or delays, legal or otherwise, in order to consummate and
make effective the transactions contemplated by this Agreement for the
purpose of securing to the parties hereto the benefits contemplated by
this Agreement.
6.5 Exchange and Voting Trust Agreement. At the Closing,
-----------------------------------
Parent, the Company, Newco II, the ICL Principals, a trustee mutually
satisfactory to Parent and Company and ICL as attorney-in-fact for the
Shareholders (other than the ICL Principals and the Barbadian Trusts and
Xxx Xxxxxx and Xxxx Xxxxxxx) shall enter into a Exchange and Voting
Trust Agreement that is mutually agreeable to the Company and Parent as
to form and content and that sets forth the agreement of the parties
thereto with respect to the procedures for voting the Parent Preferred
Stock and the exchange of the Class A Special Shares and Class B Special
Shares and for Parent Common Stock (THE "EXCHANGE AND VOTING TRUST
AGREEMENT").
6.6 Public Announcements. All press releases and other
--------------------
disseminations of information to employees, customers or suppliers
relating to the transactions contemplated by this Agreement by any party
hereto shall require the prior approval of Parent and the Company,
provided Parent shall have the right to make such public announcements
without the approval of the other parties hereto should such disclosure
be required by Law or the policies or requirements of Canadian or United
States securities regulators, stock exchanges, or other relevant
entities in the opinion of Parent's legal counsel. Should such
disclosure be required, Parent agrees to provide the others with
reasonable advance notice of and a copy of the proposed disclosure.
6.7 Conduct of Business Prior to Closing Date. Except as
-----------------------------------------
expressly contemplated by this Agreement, during the period from the date
of this Agreement to the Closing Date, the Company shall conduct, and it
shall cause the Subsidiaries to conduct, its or their businesses in the
ordinary course and consistent with past practice, subject to the
limitations contained in this Agreement, and the Company shall, and it
shall cause the Subsidiaries to, use its or their reasonable best efforts
to preserve intact its business organization, to keep available the
services of its officers, agents and employees and to maintain satisfactory
21
relationships with all Persons with whom it does business. Except as
expressly contemplated by this Agreement, and it being acknowledged and
agreed by each of the parties to this Agreement that Parent is in the
process of a substantial reduction in workforce, and, subject to Section
--------
5.10, Parent shall, and it shall cause the Active Parent Subsidiaries to,
----
use its or their reasonable best efforts to preserve intact its business
organization, consistent with the budget adopted by the Executive Committee
of the Board of Directors of Parent, to keep available the services of only
those officers, agents and employees whom Parent believes are required to
maintain satisfactory relationships with all Persons with whom it does
business. Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement, after the date of this
Agreement and prior to the Closing Date, (i) neither the Company nor any
Subsidiary will, without the prior written consent of Parent; and (ii)
subject to Section 5.10, neither Parent nor any Active Parent Subsidiary
------------
will, without the prior written consent of the Company:
(a) except as provided for in this Agreement, amend or
propose to amend its Certificate or Articles of Incorporation or Bylaws (or
comparable governing instruments) in any material respect;
(b) except as set forth on Schedule 6.7(b)(i), with regard
------------------
to the Company or the Subsidiaries, or on Schedule 6.7(b)(ii), with
-------------------
regard to Parent or the Parent subsidiaries, authorize for issuance, issue,
grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or
dispose of any shares of, or any options, warrants, commitments,
subscriptions or rights of any kind to acquire or sell any shares of, the
capital stock or other securities of the Company or any Subsidiary, or of
Parent or any Parent subsidiary, including, but not limited to, any
securities convertible into or exchangeable for shares of stock of any
class of the Company or any Subsidiary, or of Parent or any Parent
subsidiary, as the case may be;
(c) except as provided for in this Agreement, split, combine
or reclassify any shares of its capital stock or declare, pay or set aside
any dividend or other distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock, other than
dividends or distributions to the Company or a Subsidiary, or to Parent or
a Parent subsidiary, as the case may be, or redeem, purchase or otherwise
acquire or offer to acquire any shares of its capital stock or other
securities;
(d) (i) except for debt (including, but not limited to,
obligations in respect of capital leases) disclosed on the financial
statements of the Company delivered to Parent prior to the date of this
Agreement and changes thereto occurring in the ordinary course of business,
create, incur or assume any short-term debt, long-term debt or obligations
in respect of capital leases; (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, indirectly, contingently or
otherwise) for the obligations of any Person, except for obligations
permitted by this Agreement of any subsidiary or Parent subsidiary, as the
case may be, in the ordinary course of business consistent with past
practice; (iii) make any capital expenditures or make any loans, advances
or capital contributions to, or investments in, any other Person (other
than customary advances to employees made in the ordinary course of
business consistent with past practice), provided the Company will continue
to make capital expenditures in accordance with its budget, maintain,
upgrade or expand its facilities and those of the Subsidiaries, as the case
may be, and otherwise operate in the ordinary course and consistent with
past practice; (iv) acquire the stock or assets of, or merge or consolidate
with, any other Person except the contemplated WorldPages Acquisition; or
(v) voluntarily incur any material liability or obligation (absolute,
accrued, contingent or otherwise), except in the ordinary course of
business;
(e) except in the ordinary course of business or as set
forth in Schedule 6.7(e) or as otherwise permitted by this Agreement,
---------------
sell, transfer, mortgage, pledge or otherwise dispose of, or encumber, or
agree to sell, transfer, mortgage, pledge or otherwise dispose of or
encumber, any material assets or properties, real, personal or mixed,
subject to Section 5.10, in the case of Parent and the Active Parent
------------
Subsidiaries;
(f) increase in any manner the compensation of any of its
officers, agents or employees other than any increases required pursuant to
their employment agreements in accordance with their terms in effect on the
date of this Agreement and increases in the ordinary course of business
consistent with past
22
practice not in excess on an individual basis of the lesser of 10% of the
current compensation of such individual or U.S. $10,000 per annum;
(g) enter into, establish, amend, make non-routine or
material interpretations or determinations with respect to, or terminate
any employment, consulting, retention, change in control, collective
bargaining, bonus or other incentive compensation, profit sharing, health
or other welfare, stock option, stock purchase, restricted stock, or other
equity, pension, retirement, vacation, severance, deferred compensation or
other compensation or benefit plan, policy, agreement, trust, fund or
arrangement with, for or in respect of, any shareholder, officer, director,
other employee, agent, consultant or affiliate, other than actions
contemplated by this Agreement or in the ordinary course of business or
those agreements in connection with the WorldPages Acquisition.
(h) compromise, settle, grant any waiver or release relating
to or otherwise adjust any Litigation, except routine Litigation in the
ordinary course of business consistent with past practice, involving only a
payment not in excess of U.S. $50,000 individually or U.S. $100,000 when
aggregated with all such payments by the Company and the Subsidiaries
combined or Parent and the Active Parent Subsidiaries combined, as the case
may be;
(i) (i) with respect to the Company or the Shareholders,
take any action or omit to take any action, which action or omission would
result in a breach of any of the covenants, representations and warranties
of the Company or Shareholders set forth in this Agreement or which would
have a Company Material Adverse Effect and (ii) with respect to Parent,
take any action or omit to take any action, which action or omission
would result in a breach of any of the covenants, representations and
warranties of the Parent set forth in this Agreement or which would have
a Parent Adverse Effect;
(j) except in the ordinary course of business, enter into
any lease or other agreement, or amend any lease or other agreement, with
respect to real property;
(k) except in the ordinary course of business, enter into or
amend any agreement or transaction (i) pursuant to which the aggregate
financial obligation of the Company or a Subsidiary, or of Parent or a
Parent Subsidiary as the case may be, or the value of the services to be
provided could exceed U.S. $50,000, (ii) having a term of more than 12
months and pursuant to which the aggregate financial obligation of the
Company or a Subsidiary, or of Parent or a Parent Subsidiary as the case
may be, or the value of the services to be provided could exceed U.S.
$100,000 per year, or (iii) which is not terminable upon no more than 30
days' notice without penalty in excess of U.S. $50,000 individually or U.S.
$100,000 when aggregated with the penalties under all such agreements or
transactions;
(l) take any action with respect to the indemnification of
any Person;
(m) change any accounting practices or policies, except as
required by generally accepted accounting principles or Laws as agreed to
or requested by the Company's or Parent's auditors after consultation with
Parent's or the Company's auditors, as the case may be;
(n) except in the ordinary course of business, enter into,
amend, modify, terminate or waive any rights under any Company Material
Contract or Parent Material Contract;
(o) adopt a plan of liquidation, dissolution, exchange,
consolidation, share exchange, restructuring, recapitalization, or other
reorganization; provided, however, that Parent may adopt such a plan
-------- -------
and may cause the liquidation or dissolution of any Parent subsidiary if
Parent is unable to sell such Parent subsidiary (i) at a price which Parent
determines to be reasonable, and (ii) during a time period which Parent
determines to be reasonable; or
(p) resolve, agree, commit or arrange to do any of the
foregoing.
23
Furthermore, the Company covenants, represents and warrants that
from and after the date hereof, unless Parent shall otherwise expressly
consent in writing, the Company shall, and the Company shall cause each
Subsidiary to, use its or their reasonable best efforts to:
(A) keep in full force and effect insurance comparable in
amount and scope of coverage to insurance now carried by it;
(B) pay all accounts payable and other obligations in the
ordinary course of business consistent with past practice and with
the provisions of this Agreement, except if the same are contested
in good faith, and, in the case of the failure to pay any material
accounts payable or other obligations which are contested in good
faith, only after consultation with Parent; and
(C) comply in all material respects with all Laws applicable
to it or any of its properties, assets or business and maintain in
full force and effect all Company Permits necessary for, or
otherwise material to, such business.
Furthermore, Parent covenants, represents and warrants that from and
after the date hereof, unless Company shall otherwise expressly consent in
writing, Parent shall, and Parent shall cause each Active Parent Subsidiary
to, use its or their reasonable best efforts to:
(1) keep in full force and effect insurance comparable in
amount and scope of coverage to insurance now carried by it;
(2) pay all accounts payable and other obligations
consistent with prudent cash management principles, except if the
same are contested in good faith, and, in the case of the failure to
pay any material accounts payable or other obligations which are
contested in good faith, only after consultation with Company; and
(3) comply in all material respects with all Laws applicable
to it or any of its properties, assets or business and maintain in
full force and effect all Parent Permits necessary for, or otherwise
material to, such business; provided, however, that the Company
-------- -------
and the Shareholders acknowledge and agree that Parent is attempting
to sell the CLEC Operations, and to the extent such CLEC Operations
are sold and, as a result, certain Laws or Parent Permits to which
Parent is subject as of the date hereof become unnecessary,
irrelevant or immaterial, Parent shall not be required to comply
with such Laws or maintain such Parent Permits.
6.8 No Solicitation of Acquisition Proposal. Neither the
---------------------------------------
Shareholders, the Company, Parent nor any of their respective affiliates
(including, without limitation, directors, officers, employees, agents,
representatives and shareholders or any affiliates or associates thereof)
("ASSOCIATES") shall, directly or indirectly, make, encourage, facilitate,
solicit, assist or initiate any inquiry or proposal, or provide any
information to or participate in any negotiations with, any Person (other
than the parties to this Agreement and their Associates) relating to any of
the following transactions ("EXTRAORDINARY TRANSACTIONS"): (i)
liquidation, dissolution, recapitalization, share exchange, business
combination, exchange or consolidation of the Company or a Subsidiary or
Parent or a Parent subsidiary, (ii) sale of a significant amount of assets
of the Company or a Subsidiary or Parent or a Parent subsidiary, (iii)
purchase or sale of shares of capital stock of the Company or a Subsidiary
or Parent or a Parent subsidiary, or (iv) any similar actions or
transactions involving the Company or a Subsidiary or Parent or a Parent
subsidiary (other than the transactions contemplated by this Agreement), or
agree to or consummate any Extraordinary Transaction. The parties hereto
shall immediately inform Parent and the Company of any inquiry, proposal,
or request for information or offer (including the terms thereof and the
Person making such inquiry, proposal, request or offer) which it may
receive in respect of an Extraordinary Transaction and provide Parent and
Company with a copy of any such written inquiries, proposals, requests for
information and offers, and thereafter keep Parent and Company fully
informed of the status and details thereof. The provisions of this
Section 6.8 shall not apply to the sale of the CLEC Operations by Parent
-----------
or any Parent subsidiary as contemplated by Section 5.10 or to the
------------
WorldPages Acquisition.
24
6.9 [Reserved].
----------
6.10 Confidentiality. Unless (i) otherwise expressly provided
---------------
in this Agreement, (ii) required by Applicable Law or any listing agreement
with, or the rules and regulations of, any applicable securities exchange,
(iii) necessary to secure any required Consents as to which the other party
has been advised, or (iv) consented to in writing by Parent and the
Company, this Agreement and any information or documents furnished in
connection herewith shall be kept strictly confidential by the Company,
Parent and their respective officers, directors, employees and agents.
Prior to any disclosure pursuant to the preceding sentence, the party
intending to make such disclosure shall consult with the other party
regarding the nature and extent of the disclosure. Nothing contained
herein shall preclude disclosures to the extent necessary to comply with
accounting, SEC and other disclosure obligations imposed by applicable Law.
To the extent required by such disclosure obligations, Parent, after
consultation with the Company, may file with the SEC a Report on Form 8-K
pursuant to the Securities Exchange Act with respect to the Transactions
contemplated by this Agreement, which report may include, among other
things, financial statements and pro forma financial information with
respect to the other party. In connection with any filing with the SEC of
a registration statement or amendment thereto under the Securities Act,
Parent, after consultation with the Company, may include a prospectus
containing any information required to be included therein with respect to
the Transactions contemplated by this Agreement, including, but not limited
to, financial statements and pro forma financial information with respect
to the other party, and thereafter distribute said prospectus. Parent and
the Company shall cooperate with the other and provide such information and
documents as may be required in connection with any such filings. In the
event the Transactions contemplated by this Agreement are not consummated,
Parent and the Company shall return to the other all documents furnished by
the other and will hold in absolute confidence any information obtained
from the other party except to the extent (i) such party is required to
disclose such information by Law or such disclosure is necessary or
desirable in connection with the pursuit or defense of a claim, (ii) such
information was known by such party prior to such disclosure or was
thereafter developed or obtained by such party independent of such
disclosure, (iii) such party received such information on a non-
confidential basis from a source, other than the other party, which is not
known by such party to be bound by a confidentiality obligation with
respect thereto or (iv) such information becomes generally available to the
public or is otherwise no longer confidential. Prior to any disclosure of
information pursuant to the exception in clause (i) of the preceding
sentence, the party intending to disclose the same shall so notify the
party which provided the same in order that such party may seek a
protective order or other appropriate remedy should it choose to do so.
6.11 Tax Goals.
---------
(a) The Parent and the Company acknowledge and agree that
the ability of the transactions contemplated in Section 1.2(b), with
--------------
the exception of transactions referred to in Section 1.5 regarding
-----------
former Company shareholders protected from taxation by an applicable tax
treaty from taxation under the Income Tax Act [Canada] in respect of any
gain realized on such transactions hereof to constitute a tax deferred
exchange under Subsection 85[1] of Income Tax Act [Canada] (THE "COMPANY
TAX GOAL"), was essential to the Company's decision to execute the
Agreement.
(b) The Parent and the Company further acknowledge and
agree that the following was essential to the Parent's and the Company's
decision to execute the Agreement: (a) the reorganization of YPTI as a
first tier subsidiary of the Parent to allow Parent to meet the
requirements of Code section 1502 to file a consolidated US corporate
income tax return which shall include YPTI and its wholly owned
subsidiary, PCP; (b) the ability to prevent the various transactions
from being characterized as a "change of control" relating to Parent, as
that term is defined in Code section 382(g); (c) the transaction
described in Section 1.2(b) meeting the definition of a "qualified
--------------
stock purchase" under Code section 338(d)(3); and (d) the ability to
transfer the YPTI Common Stock to Parent, along with any proceeds from
the disposition of such YPTI Common Stock and the proceeds from the
issuance of Newco II Class C Preferred Shares in the US with no adverse
Canadian tax consequences. (COLLECTIVELY THE "PARENT TAX GOALS" AND
TOGETHER WITH THE COMPANY TAX GOALS, THE "TAX GOALS").
25
(c) If between signing the Agreement and the expiration of
the Due Diligence Period, either party determines that the structure of
the transaction as set forth in Article I hereof will result in the
---------
failure to realize any one or more of the Tax Goals, the Parent and the
Company agree to negotiate in good faith any changes to such structure
that may be required to realize all of the Tax Goals, provided, however,
that if no such structure can be devised that would not materially
adversely change the economics of the transaction, then either party may
terminate the Agreement by notice given pursuant to Section 11.1.
-------------
6.12 Capital Stock and Derivative Securities. In addition to
---------------------------------------
the capital stock of Parent to be issued pursuant to Article I of this
---------
Agreement, the Board of Directors of Parent shall have the right to grant
or issue (i) the options to acquire shares of Parent Common Stock pursuant
to the Parent's 1997 Stock Awards Plan which are listed on the attached
Schedule 6.7(b)(ii); (ii) restricted stock valued at, or warrants to
-------------------
purchase up to 90,000 shares of Parent Common Stock at an exercise price
of, U.S. $6.96 per share to be issued to certain non-employee directors of
Parent who are responsible for negotiating this Agreement and the
WorldPages Acquisition; (iii) the shares of Parent Common Stock issuable
upon conversion at Closing of the Great Western Notes at a conversion price
of U.S. $5.50 per share; (iv) up to 1,818,182 shares of Parent Common Stock
issuable at U.S. $5.50 per share upon conversion of one or more notes which
may be issued to the current shareholders of Web and Big Stuff who may lend
up to Ten Million Dollars (U.S. $10,000,000.00) to Web or Big Stuff as
provided in the agreements by which Parent may acquire Web and Big Stuff;
and (v) the shares of Parent Common Stock to be issued upon exercise of
options or warrants to be granted at Closing to those persons and at such
exercise prices as listed in Schedule 6.7(b)(i).
------------------
ARTICLE VII - CONDITIONS TO CLOSING
7.1 Conditions to Obligations of Each Party to Closing. The
--------------------------------------------------
respective obligations of each party to this Agreement to consummate and
effect this Agreement and the transactions contemplated hereby shall be
subject to the satisfaction or waiver at or prior to the Closing Date of
the following conditions:
(a) No Injunctions or Restraints; Illegality. No
----------------------------------------
temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the transactions
contemplated by this Agreement shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking
any of the foregoing be pending; nor shall there be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the transactions contemplated by this Agreement,
which makes the consummation of the transactions contemplated by this
Agreement illegal.
(b) Exchange and Voting Trust Agreement. The Exchange
-----------------------------------
and Voting Trust Agreement shall have been duly executed and delivered
by all parties thereto and shall be in full force and effect.
(c) [Reserved].
----------
(d) Government Approvals. All consents, other than
--------------------
consents the failure of which to be obtained, in the judgment of Parent,
would not have a Company Material Adverse Effect, of any domestic or
foreign Governmental Authority required for the consummation of the
transactions contemplated by this Agreement shall have been obtained by
Final Order.
(e) Related Transactions. The acquisition by Parent, or
--------------------
a direct or indirect Subsidiary of Parent, of Web and Big Stuff in a tax
free reorganization shall have been consummated and any registration
statement(s) required for the registration of Parent Common Stock issued
to Web and Big Stuff as consideration in connection with the acquisition
by Parent shall have been declared effective and no stop order
suspending the effectiveness of such registration statement(s) shall
have been issued and no proceeding for that purpose shall have been
initiated or threatened by the SEC; the Great Western Notes
26
shall have been satisfied by the issuance of Parent Common Stock to the
Great Western Shareholders; and the sale of the Class C Preferred
Shares, representing at least two percent (2%) of the fair market value
of Newco II after the transactions contemplated by this Agreement, to an
unrelated third party shall have been completed.
(f) Financing. Parent and the Active Parent
---------
Subsidiaries and the Company and the Subsidiaries shall have received
from their lenders (both in Canada and in the United States) an
extension of all of their and their subsidiaries' debt owing by them on
terms and conditions satisfactory to Parent and the Company or all such
debts shall be refinanced on terms satisfactory to Parent and the
Company or any consents and approvals required from such lenders is
received.
(g) Warrant Agreement. A warrant agreement for the
-----------------
purchase of 150,000 shares of Parent Common Stock at an exercise price
of U.S. $6.96 for a period of ten (10) years from the Closing Date in a
form satisfactory to the parties thereto shall have been executed and
delivered by Parent to the ICL Principals (other than Xxxxxxx X.
XxXxxxxx) listed in such warrant agreement.
(h) Shareholder Approval. All necessary approvals of the
--------------------
Shareholders and the shareholders of Parent in connection with the
transactions contemplated by this Agreement shall have been obtained.
(i) Required Consents. Any required Consents of any
-----------------
Person to the transactions contemplated by this Agreement shall have been
obtained on terms and conditions reasonably acceptable to Parent and the
Company and be in full force and effect, except for those the failure of
which to obtain, in the reasonable judgment of Parent and Company, would
not have a Company Material Adverse Effect or Parent Material Adverse
Effect.
(j) HSR Act, Exon-Xxxxxx Filings and Investment Canada
--------------------------------------------------
Act. A determination that the transactions contemplated by this Agreement
---
are permitted shall have been received from the Committee on Foreign
Investment in connection with the Exon-Xxxxxx Filings and any waiting
period applicable to the transactions contemplated by this Agreement
under the HSR Act and the Investment Canada Act shall have expired or
earlier termination thereof shall have been granted and no action shall
have been instituted by either the United States Department of Justice or
the United States Federal Trade Commission or appropriate Canadian
Governmental Authorities to prevent the consummation of the transactions
contemplated by this Agreement or to modify or amend such transactions in
any material manner, or if any such action shall have been instituted, it
shall have been withdrawn or a final judgment shall have been entered
against such Department or Commission or Canadian Governmental Authority,
as the case may be.
(k) Registration Statement. The Registration Statement(s)
----------------------
shall have been declared effective and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
SEC.
(l) Blue Sky. Parent shall have received all state
--------
securities Law authorizations necessary to consummate the transactions
contemplated hereby.
(m) Fairness Opinion. Parent's Board of Directors shall
----------------
have received from its financial advisors, PaineWebber Incorporated, a
written opinion addressed to it for inclusion in the Prospectus/Proxy
Statement to the effect that the consideration to be paid, in the
aggregate, by the Parent in the transactions contemplated by this
Agreement, the Web YP Agreement, the Big Stuff Agreement and the agreement
relating to the redemption of the Great Western Notes is fair to Parent
from a financial point of view. The opinion is being given as of this
date.
(n) Tax Opinion. Parent and the Company shall have received
an opinion from Xxxxxxx Xxxxx & Xxxxxxxxx based on customary
representations contained in certificates of Parent, and the Company, to
the effect that, if the transactions contemplated by Section 1.2(b) of
--------------
this Agreement are consummated in accordance with the provisions of this
Agreement, the Shareholders who do not immediately exchange the
27
Company Common Stock owned by them for Parent Common Stock pursuant to this
Agreement and who are residents of Canada and hold shares as capital
property will be able to treat the transactions contemplated by this
Agreement as a tax deferred transfer pursuant to Subsection 85.1 utilizing
the provisions of Subsection 85[1] of the Income Tax Act [Canada] provided
that such Shareholders and Newco II timely make all joint elections.
(o) Contingent Rights I Dividend. Parent shall have
----------------------------
declared and paid the Contingent Rights I Dividend.
(p) NYSE Listing Approval. Parent shall have received
---------------------
from the NYSE approval for listing with the NYSE of the Parent Common
Stock to be issued pursuant to this Agreement, the Web YP Agreement and
the Big Stuff Agreement.
(q) Escrow Agreement. The Escrow Agreement described in
----------------
Section 9.1(b) shall have been duly executed and delivered by all
--------------
parties thereto and shall be in full force and effect.
(r) ICL Fee. ICL shall have received assurances that
-------
they will receive the fee of U.S. $265,000 described in Section 2.9.
-----------
(s) Support Agreement. The Support Agreement shall have
been duly executed and delivered by all parties thereto and shall be in
full force and effect.
7.2 Additional Conditions to Obligations of Shareholders and
---------------------------------------------------------
Company. The obligations of the Company to consummate and effect this
-------
Agreement and the transactions contemplated hereby shall be subject to
the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing,
exclusively by the Company:
(a) Representations, Warranties and Covenants.
-----------------------------------------
(i) The representations and warranties of Parent in
this Agreement that are modified by materiality or Parent Material
Adverse Effect ("PARENT MODIFIED REPRESENTATION") shall be true
and correct in all respects and those that are not so modified
("PARENT NONMODIFIED REPRESENTATION") shall be true and correct in
all material respects on the date hereof and, except for changes
not prohibited by this Agreement, as of the Closing Date as if
made at the Closing Date. Furthermore, none of the
representations or warranties of Parent contained in this
agreement, disregarding any qualifications therein or in this
Section 7.2(a) regarding Materiality or Parent Material Adverse
--------------
Effect, shall be untrue or incorrect to the extent that such
untrue or incorrect representations or warranties, when taken
together as a whole, have had or would have a Parent Material
Adverse Effect; and
(ii) Parent shall have performed and complied with
all of the covenants and agreements in all material respects and
satisfied in all material respects all of the conditions required
by this Agreement to be performed or complied with or satisfied by
Parent at or prior to the Closing Date. Notwithstanding anything
in this Agreement to the contrary, the parties hereto acknowledge
and agree that the consummation of the transactions contemplated
by this Agreement and subsequent disposition of the CLEC
Operations constitutes a significant change from the plans and
strategies described in the 1998 10-K such that the
representations and warranties of Parent that reference the 1998
10-K will not be true and correct as of the Closing Date as they
relate to the plans and strategies of the business of Parent at
Closing.
(b) Certificate of Parent and Other Deliveries. The
------------------------------------------
Company shall have been provided, with (i) a certificate executed on
behalf of Parent by an Officer to the effect that, as of the Closing
Date, all representations and warranties made by Parent under this
Agreement are true and complete except as set forth in Section 7.2(a);
--------------
and all covenants, obligations and conditions of this Agreement to be
performed by Parent on or before such date have been so performed; (ii)
a certificate of
28
good standing from the Secretary of State of the State of Delaware that
Parent is a validly existing corporation; (iii) duly adopted resolutions
of the Board of Directors of Parent approving the execution, delivery
and performance of this Agreement and the Company Transaction Agreements
to which it is a party and the instruments contemplated hereby and
thereby, certified by its Secretary or Assistant Secretary; and (iv)
such other documents and instruments as the Company may reasonably
request.
(c) Legal Opinion. The Company and the Shareholders
-------------
shall have received a legal opinion as to U.S. law issues from Xxxxxxxxx
Xxxxxxx Xxxxx Xxxxxx LLP, legal counsel to Parent (and if requested by
the Company from Canadian legal counsel for Parent as to Canadian law
issues), in a form reasonably acceptable to the Company and its legal
counsel that addresses matters typically covered in legal opinions in
transactions similar to the transactions contemplated by this Agreement,
including without limitation, the authority of Parent to enter into this
Agreement and the Parent Transaction Agreements and consummate the
transactions contemplated hereby and thereby and that the Parent Common
Stock issued to the Shareholders pursuant to this Agreement or upon
exchange of the Class A Special Shares, Class B Special Shares, or
Contingent Rights II shall, subject to the satisfaction of the
restrictions contained in Securities Act Rules 144 and 145 or any
successor regulations thereto, be freely tradable.
(d) [Reserved]
(e) Outstanding Parent Stock. Not more than the number
------------------------
of shares of Parent as reflected in the 1998 10-K shall be outstanding
on a fully diluted basis, except as permitted by Section 6.12.
------------
(f) No Material Adverse Change. There shall not have
--------------------------
occurred after the date hereof any Event that has or reasonably could be
expected to have a Parent Material Adverse Effect.
(g) Litigation. There shall be no action, suit, claim
----------
or proceeding of any nature pending, or overtly threatened, against
Parent or the Company, their respective properties or any of their
officers or directors, arising out of, or in any way connected with, the
Transactions contemplated by this Agreement or the other transactions
contemplated by the terms of this Agreement which individually or in the
aggregate may cause a Material Adverse Effect.
(h) Stock Options. The stock options referred to in
-------------
Section 6.12(v) shall have been granted by the Parent.
---------------
7.3 Additional Conditions to the Obligations of Parent. The
--------------------------------------------------
obligations of Parent to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at
or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Parent:
(a) Representations, Warranties and Covenants.
-----------------------------------------
(i) The Company Modified Representations shall be true
and correct in all respects, and the Company Nonmodified
Representations shall be true and correct in all material respects,
on the date hereof and, except for changes not prohibited by this
Agreement, as of the Closing Date as if made at the Closing Date.
Furthermore, none of the representations or warranties of the
Company or Shareholders contained in this Agreement, disregarding
any qualifications therein or in this Section 7.3(a) regarding
--------------
materiality or Company Material Adverse Effect, shall be untrue or
incorrect to the extent that such untrue or incorrect
representations or warranties, when taken together as a whole, have
had or would have a Company Material Adverse Effect; and
(ii) The Company and Shareholders shall have performed
and complied with all the covenants and agreements in all material
respects and satisfied in all material respects all the
29
conditions required by this Agreement to be performed or complied
with or satisfied by the Company and Shareholders at or prior to the
Closing Date.
(b) Certificate of the Company and Other Deliveries.
-----------------------------------------------
Parent shall have been provided with (i) a certificate executed on
behalf of the Company by its Chief Executive Officer to the effect that,
as of the Closing Date all representations and warranties made by the
Company in this Agreement are true and correct; and all covenants,
obligations and conditions of this Agreement to be performed by the
Company and ICL on behalf of the Shareholders on or before such date
have been so performed; (ii) a certificate of good standing from the
proper authority in the jurisdictions in which the Company and the
Subsidiaries are incorporated or qualified to do business stating that
each is a validly existing corporation in good standing; (iii) duly
adopted resolutions of the Board of Directors of the Company approving
the execution, delivery and performance of this Agreement and the Parent
Transaction Agreements to which the Company is a party and the
instruments contemplated hereby and thereby, certified by the Secretary
or Assistant Secretary of the Company; (iv) a true and complete copy of
the Articles or Certificate of Incorporation or comparable governing
instruments, as amended, of the Company and each of the Subsidiaries
certified by the Secretary of State of the state of incorporation or
comparable authority in other jurisdictions, and a true and complete
copy of the Bylaws or comparable governing instruments, as amended, of
Parent and each of the Subsidiaries certified by the Secretary thereof;
(v) the duly executed Resignations on terms and conditions reasonably
acceptable to Parent; and (vi) such other documents and instruments as
Parent reasonably may request.
(c) Legal Opinion. Parent shall have received (i) a
-------------
legal opinion as to Canadian law issues from Xxxxxxx Xxxxx & Xxxxxxxxx,
legal counsel to the Company, (and if requested by Parent from U.S.
legal counsel for the Company as to U.S. law issues) in a form
reasonably acceptable to Parent and its legal counsel that addresses
matters typically covered in legal opinions in transactions similar to
the transactions contemplated by this Agreement, including without
limitation, the authority of all of the Shareholders, the Company and
ICL to enter into this Agreement and consummate the transactions
contemplated hereby and, if required by Parent, that the shares of
Company Common Stock to be transferred to Newco II are subject to the
Powers of Attorney; and (ii) an opinion from Barbadian legal counsel
that the trustees of the Barbadian Trusts have the authority to execute
this Agreement on behalf of the Barbadian Trusts and that the Barbadian
Trusts have the authority to enter into this Agreement and the Company
Transaction Agreements and consummate the transactions contemplated
hereby and thereby and to hold the Parent Common Stock that will be
issued to the Barbadian Trusts pursuant to this Agreement.
(d) KPMG Opinion. Parent shall have received an opinion
------------
from KPMG LLP, its independent certified public accountants, that upon
completion of the reorganization described in Sections 1.1(a), 1.2(c)
------------------------
and 1.2(d) hereof, Parent can properly file a consolidated income Tax
----------
return on behalf of a consolidated group which would include Parent,
YPTI and the Subsidiaries and that the YPTI transactions can be
accomplished as a tax free reorganization under the Code.
(e) Litigation. There shall be no action, suit, claim
----------
or proceeding of any nature pending, or overtly threatened, against
Parent or the Company, their respective properties or any of their
officers or directors, arising out of, or in any way connected with, the
transactions contemplated by this Agreement or the other transactions
contemplated by the terms of this Agreement which individually or in the
aggregate may cause a Parent Material Adverse Effect or a Company
Material Adverse Effect.
(f) No Material Adverse Change. There shall have not
--------------------------
occurred after the date hereof any Event that has or reasonably could be
expected to have a Company Material Adverse Effect.
(g) YPTI Transactions. Parent shall have received
-----------------
evidence from the Company reasonably satisfactory to Parent that the YPTI
Reclassification has been completed and Parent shall have completed the
purchase of the YPTI Common Stock in accordance with Section 1.2(d).
--------------
30
(h) Subordinated Loan Agreement and Unanimous Shareholders
------------------------------------------------------
Agreement. PCP shall have satisfied all of its obligations under the
---------
Subordinated Loan Agreement including, without limitation, the repayment
in full of the Loans (as defined in the Subordinated Loan Agreement) and
all interest accrued thereon. The Subordinated Lenders shall have
exercised the warrants evidenced by the Warrant Certificates (as defined
in the Subordinated Loan Agreement) and the Class B Shares issued to the
Subordinated Lenders thereunder shall have been converted into Company
Common Stock. The Subordinated Loan Agreement shall be terminated, no
party thereto shall have any remaining or continuing rights or
obligations thereunder, and all Liens (as defined in the Subordinated
Loan Agreement) granted thereunder shall have been released. The
Unanimous Shareholders Agreement shall be terminated and no party
thereto shall have any continuing rights or obligations thereunder.
(i) ICL Agreements. All management and other agreements
--------------
between ICL and the Company shall have been terminated and no party
thereto shall have any continuing rights or obligations thereunder.
(j) Affiliate Agreements. Prior to the Closing Date,
--------------------
Parent shall have received the duly executed Affiliate Agreements.
ARTICLE VIII - TERMINATION AND ABANDONMENT
8.1 Termination. This Agreement may be terminated and the
-----------
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date only as follows:
(a) by mutual written consent of Company and Parent, duly
authorized by the Board of Directors of each;
(b) by the Company or Parent if the Closing shall not have
occurred on or before October 31, 1999 (or such other date as may be agreed
to by Company and Parent); provided, that, no party may terminate this
-------- ----
Agreement under this Section 8.1(b) if such party's breach of this
--------------
Agreement has caused or resulted in the failure of the Closing to occur on
or before such date;
(c) by the Company if (i) there are any breaches of any
Parent Modified Representation or any material breaches of any Parent
Nonmodified Representation, or (ii) Parent has breached or failed to
perform, notwithstanding satisfaction or due waiver of all conditions
thereto, any of its material covenants or agreements contained herein as to
which notice specifying such breach or failure has been given to Parent
promptly after the discovery thereof and Parent has failed to cure or
otherwise resolve the same to the reasonable satisfaction of the Company
within thirty (30) days after receipt of such notice;
(d) by Parent if (i) there are any breaches of any Company
Modified Representations or any material breaches of any Company
Nonmodified Representations, or (ii) Company has breached or failed to
perform, notwithstanding satisfaction or due waiver of all conditions
thereto, any of its material covenants or agreements contained herein as to
which notice specifying such breach or failure has been given to Company
promptly after the discovery thereof and Company has failed to cure or
otherwise resolve the same to the reasonable satisfaction of the Parent
within thirty (30) days after receipt of such notice;
(e) by Company or Parent if a court of competent
jurisdiction or other Governmental Authority shall have issued an order,
decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting this Agreement or any of the
transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have become final and nonappealable;
(f)(i) by the Company if the stockholders of Parent fail to
approve the issuance of the Parent Common Stock pursuant to this Agreement
or the other transactions contemplated or otherwise referenced herein, as
applicable, at the meeting duly convened therefor;
31
(f)(ii) by Parent if the stockholders of Parent fail to
approve the issuance of the Parent Common Stock pursuant to this Agreement
or the other transactions contemplated or otherwise referenced herein, as
applicable, at the meeting duly convened therefor;
(g) by Parent, if Company or its Board of Directors breaches
any provision of Section 6.8;
-----------
(h) by the Company, if Parent or its Board of Directors
breaches any provision of Section 6.8;
-----------
(i) by the Parent or the Company upon the occurrence of the
events described in Sections 1.7 or 6.11; or
--------------------
(j) Anything to the contrary herein notwithstanding, the
termination fee set forth in Section 8.2 shall not be payable in the
-----------
following circumstances: (a) by the Company or any Subsidiary upon the
completion of an initial public offering of securities, or (b) the
acquisition of other yellow pages publishers (directly or indirectly) or
(c) the sale by the Parent of the shares of the CLEC Operations or the
assets thereof.
The party desiring to terminate this Agreement pursuant to the
preceding clauses (b), (c), (d), (e), (f)(i), (f)(ii), (g), (h) or (i)
shall give written notice of such termination to the other party in
accordance with Section 11.1, below.
------------
8.2 Termination Fees and Rights. In recognition of the
---------------------------
considerable time and expense that the parties have expended and will
expend in entering into this Agreement, and pursuing the other transactions
contemplated hereby, the following fees shall be payable and right to
terminate shall accrue in the event of termination of this Agreement:
(a) To the extent that this Agreement is terminated solely
pursuant to Section 8.1(a), 8.1(b) or 8.1(e) and neither a Company
--------------------------------
Triggering Transaction nor Parent Triggering Transaction has occurred prior
to the date of such termination , no termination fees are payable to any
party and this Agreement shall become void and of no effect with no
liability on the part of any party hereto (or any of its directors,
officers, employees, agents, or representatives); provided, that no such
termination shall relieve any party hereto from any liability under
Section 8.3, 9.1 or 9.7 or for any breach of this Agreement.
-----------------------
(b) If this Agreement is terminated by the Company pursuant
to Section 8.1(c), 8.1(f)(i), 8.1(h) or 8.1(i), Parent shall promptly pay
-------------------------------------------
a termination fee to Company in an amount equal to U.S. $1,560,150 and to
WorldPages in an amount equal to U.S. $939,850, inclusive of expenses by
wire transfer of immediately available funds if Parent consummates a Parent
Triggering Transaction within six (6) months of the date of such
termination, provided that if WorldPages is a party to the Parent
--------
Triggering Transaction, then all of the $2,500,000 payable as a termination
fee hereunder shall be paid to the Company and no fee shall be paid to
WorldPages.
(c) If this Agreement is terminated by Parent pursuant to
Section 8.1(d) or 8.1(g) or 8.1(i), Company shall promptly pay a
-----------------------------------
termination fee to Parent in an amount equal to U.S. $2,025,000 and to
WorldPages in an amount equal to U.S. $475,000 by wire transfer of
immediately available funds if Company consummates a Company Triggering
Transaction within six (6) months of the date of such termination,
provided that if WorldPages is a party to the Company Triggering
--------
Transaction, then all of the $2,500,000 payable as a termination fee
hereunder shall be paid to Parent and no fee shall be paid to WorldPages.
(d) If this Agreement is terminated by the Company or by
Parent pursuant to Section 8.1(f)(i) or 8.1(f)(ii), respectively, no
-------------------------------
termination fee shall be payable by Company even if Company consummates a
Company Triggering Transaction.
32
(e) If a termination fee is payable by a party pursuant to
this Agreement and a termination fee is payable by the same party pursuant
to the Web YP Agreement and the Big Stuff Agreement, then the parties agree
that notwithstanding anything herein or therein to the contrary, there
shall be no "doubling" of such termination fee and that a maximum of
$2,500,000 shall be paid by any party required to pay a termination fee,
whether payable hereunder or pursuant to the Web YP Agreement or the Big
Stuff Agreement.
8.3 Procedure Upon Termination. In the event of termination
--------------------------
pursuant to this Article VIII, the transactions contemplated by this
------------
Agreement shall be abandoned without further action by the Company or
Parent, provided that the agreements contained in Sections 8.2, 8.3, 9.1
----------------------
and 9.7 hereof shall remain in full force and effect. If this Agreement
-------
is terminated as provided herein, each party shall use its reasonable best
efforts to redeliver all documents, work papers and other material
(including any copies thereof) of any other party relating to the
transactions contemplated hereby, whether obtained before or after the
execution hereof, to the party furnishing the same.
ARTICLE IX - SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION
9.1 Indemnification by the ICL Principals.
-------------------------------------
(a) Subject to the limitation contained in the last
sentence of this Section 9.1(a), if the Closing has occurred, subject
--------------
to the terms and conditions of this Article IX, the ICL Principals
----------
shall indemnify Parent, and its officers, directors, agents and
representatives (THE "INDEMNITEES"), from and in respect of, and hold
the Indemnitees harmless against, any and all damages, fines, penalties,
losses, liabilities, judgments, and deficiencies (including without
limitation amounts paid in settlement and interest and reasonable legal
and accounting fees), but which amount shall be offset or reduced by the
amount of any insurance proceeds received by Parent in respect of any of
the foregoing, incurred or suffered by any of the Indemnitees
("DAMAGES") resulting from, relating to or in connection with any
misrepresentation or breach of warranty of the ICL Principals or for
any other matters referred to elsewhere in this Agreement.
Notwithstanding anything to the contrary contained in this Agreement,
the sole remedy under this indemnity provided by the ICL Principals or
for any other matters referred to elsewhere in this Agreement is
recourse to the shares escrowed under the Escrow Agreement whatever
their value, while in escrow, and no other liability whatsoever shall
accrue to any of the ICL Principals or Shareholders.
(b) At Closing, (i) the ICL Principals and the Parent
shall execute an escrow agreement (THE "ESCROW AGREEMENT") with an
escrow agent (THE "ESCROW AGENT") both of which as shall be reasonably
acceptable to the Parent and the Representative and (ii) the ICL
Principals shall deposit all of their Class A Special Shares and the
Class B Special Shares, except as set forth on Schedule 9.1(b) hereto,
---------------
with the Escrow Agent to be used as payment for any of the
indemnification obligation of the ICL Principals pursuant hereto.
(c) The ICL Principals acknowledge that their
indemnification obligations hereunder are solely in their capacity as
former shareholders of the Company, and, accordingly, the
indemnification obligations in this Article IX shall not entitle any
----------
ICL Principal who was or is a current or former officer, director or
employee of the Company to any indemnification from the Company or the
Parent pursuant to the organizational or governing documents of the
Company or the Parent.
9.2 Method of Asserting Claims.
--------------------------
(a) Prior to the expiration of six (6) months from the
Closing Date, each Indemnitee shall give written notice (THE "CLAIM
NOTICE") to the Representative, as agent for the ICL Principals, of any
and all claims or events known to it which gives rise or may give rise
to a claim for indemnification hereunder by the Indemnitee against the
ICL Principals (AN "INDEMNIFIABLE CLAIM"). The Claim Notice shall
specify the nature and estimated amount of such Damages (THE "CLAIMED
AMOUNT"). In the case of
33
any claim for indemnification hereunder arising out of a claim, action,
suit or proceeding brought by any Person who is not a party to this
Agreement (A "THIRD-PARTY CLAIM"), prior to expiration of six (6) months
from the Closing Date, the Indemnitee also shall give the
Representative, as agent for the ICL Principals, copies of any written
claims, process or legal pleadings with respect to such Third-Party
Claim.
(b) Within forty-five (45) days after delivery of a Claim
Notice, the Representative shall notify the Parent and the Escrow Agent
in writing of his objections, if any, to the Claim. Payments from the
Escrow Account shall be made, and disputes shall be resolved, as set
forth in the Escrow Agreement.
9.3 Third Party Claims.
------------------
(a) Except as otherwise provided in paragraph (c) below,
the Representative, as agent for the ICL Principals, may elect to
compromise or defend, subject to the limitations contained in the last
sentence of Section 9.1(a), at the ICL Principals' own expense and by
--------------
the ICL Principals' own counsel reasonably satisfactory to the
Indemnitee, any Third-Party Claim; provided that (i) the Representative
provides the Indemnitee with reasonable evidence that the ICL Principals
will have the financial resources to defend against such claim and
fulfill their indemnification obligations hereunder; and (ii) the giving
of a Defense Notice (as defined below) by the Representative shall
constitute an acknowledgment by the ICL Principals of their obligation
to indemnify the Indemnitee with respect to such Third-Party Claim in
accordance with the terms of this Article IX. If the Representative,
----------
as agent for the ICL Principals, elects to compromise or defend a Third-
Party Claim, the Representative shall, within thirty (30) days of its
receipt of the notice provided pursuant to Section 9.2(a) hereof (or
--------------
sooner, if the nature of such Third-Party Claim so requires), notify the
related Indemnitee of its intent to do so (A "DEFENSE NOTICE"), and such
Indemnitee shall reasonably cooperate in the compromise of, or defense
against, such Third-Party Claim. Subject to the limitations contained
in the last sentence of Section 9.1(a), the ICL Principals shall be
-----------------
responsible for the payment of such Indemnitee's actual reasonable out-
of-pocket expenses (including reasonable legal and accounting fees)
incurred in connection with such cooperation, and such expenses shall
constitute Damages incurred or suffered by Parent within the meaning of
Section 9.1(a) hereof. After notice from the Representative, as agent
--------------
for the ICL Principals, to an Indemnitee of its election to assume the
defense of a Third-Party Claim, the ICL Principals shall not be liable
to such Indemnitee under this Article IX for any legal expenses
----------
subsequently incurred by such Indemnitee in connection with the defense
thereof. If the Representative, as agent for the ICL Principals, elects
not to compromise or defend against a Third-Party Claim, or fails to
notify an Indemnitee of its election as provided in this Section 9.3,
-----------
such Indemnitee may pay, compromise or defend such Third-Party Claim on
behalf of and for the account and risk of the ICL Principals (and any
amount paid or expenses incurred in connection therewith shall
constitute Damages (within the meaning of Section 9.1(a) hereof)
--------------
incurred or suffered by Parent, subject to the limitations contained in
the last sentence of Section 9.1(a)). The Representative may not
---------------
consent to entry of any judgment or enter into any settlement without
the written consent of each related Indemnitee (which consent shall not
be unreasonably withheld), unless such judgment or settlement provides
solely for money damages or other money payments for which such
Indemnitee is entitled to indemnification hereunder and includes as an
unconditional term thereof the giving by the claimant or plaintiff to
such Indemnitee of a release from all liability in respect of such
Third-Party Claim.
(b) [Reserved].
(c) If there is a reasonable likelihood that a Third-Party
Claim may have a material adverse effect on an Indemnitee, other than as
a result of money damages or other money payments for which such
Indemnitee is entitled to indemnification hereunder, such Indemnitee
will have the right, after consultation with the Representative, and at
the cost and expense of the ICL Principals (which costs and expenses,
other than legal and accounting fees, shall constitute Damages (within
the meaning of Section 9.1(a) hereof) to the extent provided therein,
--------------
subject to the limitations contained in the last sentence of Section
-------
9.1(a), to defend such Third-Party Claim.
------
34
9.4 Survival. The representations and warranties of the
--------
Company set forth in this Agreement shall survive the Closing and shall
continue for six (6) months following the Closing Date. The
representation and warranties shall not be affected by any examination
made for or on behalf of Parent or the knowledge of any of Parent's
officers, directors, stockholders, employees or agents, except that the
representations and warranties are qualified by the matters disclosed in
the schedules to the representations and warranties of the Company and
the ICL Principals and Parent agrees that Parent has knowledge of such
matters. Notwithstanding anything to the contrary herein, if a claim
for indemnification is made before the expiration of the periods of
survival set forth above in this Section 9.4, then (notwithstanding
-----------
the expiration of such time period) the representation or warranty
applicable to such claim shall survive until, but only for purposes of,
the resolution of such claim and the Escrow Agreement shall provide that
the number of shares of stock in the escrow having a value equal to
three times the Claimed Amount shall remain in escrow until such claim
is resolved and the balance of such shares shall be released from escrow
six (6) months from the Closing Date.
9.5 Limitations.
-----------
(a) Subject to the limitations contained in the last
sentence of Section 9.1(a), the ICL Principals shall not be liable
--------------
under this Article IX unless and until the aggregate amount of Damages
----------
incurred or suffered by Indemnitees exceeds U.S. $100,000. For purposes
of the preceding sentence, no independent claims of less than U.S.
$10,000 may be made; provided however, that all claims arising out of a
common set of facts shall be aggregated for purposes of determining
whether the U.S. $10,000 threshold has been met.
(b) No claim for indemnification pursuant to Section 9.1
-----------
shall be made unless asserted by a written notice given to the
Representative on or before six (6) months from the Closing Date. For
greater certainty, no Claim Notice may be given after six (6) months
from the Closing Date.
9.6 The Representative.
------------------
(a) The Company and the ICL Principals hereby authorize,
direct and appoint any two of the three of Xxxxxxx X. Xxxxxx, Xxxxxxx X.
Xxxxxxxxx and Xxxxxx Xxxxxx to act as the sole and exclusive agents,
attorneys-in-fact and representatives of the ICL Principals
(COLLECTIVELY, THE "REPRESENTATIVE"), and authorizes and directs the
Representative to (i) take any and all actions (including without
limitation executing and delivering any documents, subject to the
limitations contained in the last sentence of Section 9.1(a),
--------------
incurring any costs and expenses for the account of the ICL Principals
(which will constitute Damages incurred or suffered by Parent within the
meaning of Section 9.1(a) hereof) and making any and all
--------------
determinations) which may be required or permitted by this Agreement to
be taken by the ICL Principals or the Representative, (ii) exercise such
other rights, power and authority as are authorized, delegated and
granted to the Representative hereunder in connection with the
transactions contemplated hereby and (iii) exercise such rights, power
and authority as are incidental to the foregoing. Any such actions
taken, exercises of rights, power or authority, and any decision or
determination made by the Representative consistent therewith, shall be
absolutely and irrevocably binding on each Indemnitor as if such
Indemnitor personally had taken such action, exercised such rights,
power or authority or made such decision or determination in such
Indemnitor's individual capacity. Notwithstanding any other provision
of this Agreement, if the Closing occurs, then with respect to the
matters covered by Article IX, (i) each of the ICL Principals
----------
irrevocably relinquishes such ICL Principal's right to act independently
and other than through the Representative, except with respect to the
removal of the Representative or appointment of a successor
Representative as provided in Section 9.6(b) below, and (ii) no ICL
--------------
Principals shall have any right under this Agreement or otherwise to
institute any suit, action or proceeding against the Company or Parent
with respect to any such matter, any such right being irrevocably and
exclusively delegated to the Representative. The Representative hereby
acknowledges and accepts the foregoing authorization and appointment and
agrees to serve as the Representative in accordance with this Agreement.
35
(b) The Representative shall serve as Representative until
his resignation, removal from office, incapacity or death; provided,
however, that the Representative shall not have the right to resign (A)
without prior written notice to the ICL Principals and (B) until a
successor thereto is elected by the ICL Principals and notification is
given to Parent. The Representative may be removed at any time, and a
successor representative may be appointed, pursuant to written action by
ICL Principals. Any successor to the Representative shall, for purposes
of this Agreement, be deemed to be, from the time of the appointment
thereof in accordance with the terms hereof, the Representative, and
from and after such time, the term "REPRESENTATIVE" as used herein and
therein shall be deemed to refer to such successor. No appointment of a
successor shall be effective unless such successor agrees in writing to
be bound by the terms of this Agreement.
(c) The Representative shall be permitted to retain
counsel, consultants and other advisors.
(d) The provisions of this Section 9.6 shall in no way
-----------
impose any obligations on Parent. In particular, notwithstanding any
notice received by Parent to the contrary (except any notice of the
appointment of a successor Representative approved by Parent in
accordance with paragraph (b) of this Section 9.6), Parent (i) shall
-----------
be fully protected in relying upon and shall be entitled to rely upon,
shall have no liability to the ICL Principals with respect to, and shall
be indemnified by the ICL Principals subject to the limitations
contained in the last sentence of Section 9.1(a) from and against all
--------------
liability arising out of (any such indemnifiable amounts constituting
Damages within the meaning of Section 9.1(a) hereof) actions,
--------------
decisions and determinations of the Representative and (ii) shall be
entitled to assume that all actions, decisions and determinations of the
Representative are fully authorized by the ICL Principals.
(e) The Representative shall not be liable to the ICL
Principals for the performance of any act or the failure to act so long
as he acted or failed to act in good faith in what he reasonably
believed to be the scope of his authority and for a purpose which he
reasonably believed to be in the best interests of the ICL Principals.
9.7 Indemnification by the Parent.
-----------------------------
(a) Indemnity. If the Closing has occurred, subject to
---------
the terms and conditions of this Section 9.7, Parent shall indemnify
-----------
the ICL Principals from and in respect of all, and hold the ICL
Principals harmless against, any and all damages, fines, penalties,
losses, liabilities, judgments and deficiencies (including without
limitation amounts paid in settlement and interest and reasonable legal
and accounting fees ) ("ICL PRINCIPAL DAMAGES") resulting from, relating
to or in connection with any misrepresentation or breach of warranty of
the Parent contained in this Agreement or for any other matters referred
to elsewhere in this Agreement.
(b) Survival. The representations and warranties of
--------
Parent set forth in this Agreement shall survive the Closing and shall
continue until six (6) months after Closing Date. The representations
and warranties shall not be affected by any examination made for or on
behalf of the Company or ICL Principals or the knowledge of any of the
Company's officers, directors, stockholders, employees or agents, except
that the representations and warranties are qualified by the matters
disclosed in the schedules to the representations and warranties of the
Parent, and the Company agrees that the Company has knowledge of such
matters. Notwithstanding anything to the contrary herein, if a claim
for indemnification is made before the expiration of the periods of
survival set forth above in this Section 9.7, then (notwithstanding
-----------
the expiration of such time period) the representation or warranty
applicable to such claim shall survive until, but only for purposes of,
the resolution of such claim.
(c) Limitations. Parent shall not be liable under this
-----------
Section 9.7 unless and until the aggregate amount of ICL Principal
-----------
Damages incurred or suffered by the ICL Principals exceeds U.S.
$100,000. Furthermore, the liability of Parent under this Section 9.7
-----------
shall not exceed the fair market value of all of the Class A Special
Shares and Class B Special Shares originally placed in escrow by the
36
ICL Principals determined as of the date the claim for indemnification
is fully resolved either by agreement of the parties or the entry by a
court of competent jurisdiction of a final nonappealable judgment or
order. No claim for indemnification pursuant to Section 9.7 shall be
-----------
made unless asserted by a written notice given to Parent on or before
six (6) months from the Closing Date. For greater certainty, no notice
of a claim for indemnification may be given after six (6) months from
the Closing Date.
ARTICLE X - AMENDMENT AND WAIVER
10.1 Amendment. Except as is otherwise required by Applicable
---------
Law, this Agreement may be amended by the parties hereto at any time by
execution of an instrument in writing signed on behalf of each of the
parties hereto.
10.2 Extension; Waiver. At any time prior to the Closing Date,
-----------------
Parent, on the one hand, and the Company, ICL on behalf of the
Shareholders and ICL Principals, on the other, may, to the extent
legally allowed, (i) extend the time for the performance of any of the
obligations of the other party hereto, (ii) waive any inaccuracies in
the representations and warranties made by such other party contained
herein or in any document delivered pursuant hereto, and (iii) waive
compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party.
ARTICLE XI - GENERAL PROVISIONS
11.1 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if delivered personally or
by commercial delivery service, or mailed by registered or certified
mail (return receipt requested) or sent via facsimile (with
acknowledgment of complete transmission) to the parties at the following
addresses (or at such other address for a party as shall be specified by
like notice):
(a) if to Parent, to:
Advanced Communications Group, Inc.
000 Xxxxx Xxxxx Xxxx Xxxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx
XXX 63017
Attn: Xx. Xxxxxxx X'Xxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP
000 Xxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx
XXX 00000-0000
Attn: Xx. Xxxxx Xxxxx
Facsimile: (000) 000-0000
(b) if to the Company and Shareholders, to:
Imperial Capital Ltd.
0 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Attn: Managing Partner
Facsimile: (000) 000-0000
37
with a copy to:
Xxxxxxx Xxxxx & Xxxxxxxxx
Scotia Plaza - Suite 2100
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Attn: Xx. Xxxxxxx Xxxxxxx
Facsimile: (000) 000-0000
11.2 Interpretation. The words "include," "includes" and
--------------
"including" when used herein shall be deemed in each case to be followed
by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
All Exhibits and Schedules to this Agreement are hereby incorporated in
and made a part of this Agreement as if set forth in full herein.
References herein to "dollars", "Dollars", "U.S. $" and "$" shall be
deemed, in each case, to mean U.S. dollars, unless expressly stated
otherwise herein.
11.3 Counterparts. This Agreement may be executed in one or
------------
more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other party, it
being understood that all parties need not sign the same counterpart.
One or more of the parties hereto may sign this Agreement and deliver
this Agreement by facsimile transmission. The parties hereto agree that
a facsimile of a signature shall be deemed an original signature.
11.4 Entire Agreement; Assignment. This Agreement including,
----------------------------
but not limited to, the Recitals hereto, the Schedules and Exhibits
hereto, and the documents and instruments and other agreements among the
parties hereto referenced herein: (i) constitute the entire agreement
among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof
including, but not limited to, the Letter of Intent dated April 11, 1999
by and among Parent, the Company, Web, Big Stuff and X'Xxxx and the
Confidentiality Agreement dated April 11, 1999 by and among Parent, the
Company, Web, Big Stuff and X'Xxxx; (ii) are not intended to confer upon
any other Person any rights or remedies hereunder except that the
Representative shall have the express rights articulated in Article
-------
IX; and (iii) shall not be assigned by operation of law or otherwise
--
except as otherwise specifically provided, except that Parent may assign
its rights and delegate its obligations hereunder to its affiliates,
provided Parent shall remain liable hereunder.
11.5 Severability. In the event that any provision of this
------------
Agreement or the application thereof, becomes or is declared by a court
of competent jurisdiction to be illegal, void or unenforceable, the
remainder of this Agreement will continue in full force and effect and
the application of such provision to other Persons or circumstances will
be interpreted so as reasonably to effect the intent of the parties
hereto so long as consideration of the Agreement is not materially
affected for any party hereof. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable
provision.
11.6 Other Remedies. Subject to the limitations contained in
--------------
this Agreement, including without limitation those contained in the last
sentence of Section 9.1(a), any and all remedies herein expressly
---------------
conferred upon a party will be deemed cumulative with and not exclusive
of any other remedy conferred hereby, or by law or equity upon such
party, and the exercise by a party of any one remedy will not preclude
the exercise of any other remedy.
38
11.7 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof. Each of the parties hereto
irrevocably consents to the exclusive jurisdiction and venue of any
court within the State of Delaware, in connection with any matter based
upon or arising out of this Agreement or the matters contemplated
herein, agrees that process may be served upon them in any manner
authorized by the laws of the State of Delaware for such Persons and
waives and covenants not to assert or plead any objection which they
might otherwise have to such jurisdiction, venue and such process.
11.8 Rules of Construction. The parties hereto agree that they
---------------------
have been represented by counsel during the negotiation and execution of
this Agreement and, therefore, waive the application of any law,
regulation, holding or rule of construction providing that ambiguities
in an agreement or other document will be construed against the party
drafting such agreement or document.
11.9 Limitation of Liability of Trustee. The parties hereto
----------------------------------
agree that none of the trustees of any trust referred to in this
Agreement has any personal liability or obligations in respect of the
obligations of the trust under this Agreement and that the sole recourse
against the trust and the trustees pursuant to this Agreement shall be
solely against the shares of the ICL Principals held pursuant to the
Escrow Agreement. For greater certainty, the term trust includes the
trustees and where any reference is made herein to an act to be
performed by or on behalf of the trust, such reference shall be
construed and applied for all purposes as if it referred to an act to be
performed by or on behalf of the trustees, each in his representative
capacity as trustee of the trust, and where any reference is made hereto
to an act to be performed by or for or on behalf of any of the trustees,
such reference shall be construed and applied for all purposes as if it
referred to an act to be performed by or for or on behalf of each of the
trustees in his capacity as a trustee.
ARTICLE XII - DEFINITIONS
12.1 Definitions.
-----------
"Acquisition CLEC Shares" means the quotient of the CLEC Sales
Price Decrease divided by U.S. $5.50.
"Active Parent Subsidiaries" means Xxxxx; Firstel; Value; Great
Western Directories, Inc.; Telecom Resources, Inc.; the Switchboard of
Oklahoma City, Inc.; Long Distance Management of Kansas, Inc.; Long
Distance Management II, Inc.; and National Telecom, a proprietorship.
"Affiliate Agreements" shall have the meaning set forth in
Section 4.13.
------------
"Agreement" shall have the meaning set forth in the preamble
hereto.
"Aggregate Acquisition Shares" means the sum of the aggregate
number of Class B Special Shares and Contingent Rights II outstanding as
of the Closing Date.
"Anniversary Date" shall mean the first anniversary of the Closing
Date.
"Associates" shall have the meaning set forth in Section 6.8.
-----------
"Barbadian Trusts" means collectively, Cold Trust, Global
Investment Trust, Freezer Trust, Storage Trust, Directory Trust and
Publisher Trust.
"Benefit Plan" shall mean (i) an employee benefit plan as defined
in Section 3(3) of ERISA, even if, because of some other provision of
ERISA, such plan is not subject to any other provision of ERISA, such
plan is not subject to any or all of ERISA's provisions, and (ii)
whether or not described in the preceding clause, (a) any pension,
profit sharing, stock bonus, deferred or supplemental compensation,
39
retirement, thrift, stock purchase or stock purchase or stock option
plan, or any other compensation, welfare, insurance, medical,
hospitalization, fringe benefit or retirement plan, program, policy,
course of conduct, understanding or arrangement of any kind whatsoever,
whether formal or informal, oral or written, providing for benefits for
or the welfare of any or all of the current or former employees or
agents of the employer or their beneficiaries or dependents, (b) Multi-
employer Plan, or (c) a multiple employer plan as defined in Section 413
of the Code or in any other applicable Law.
"Big Stuff" shall have the meaning set forth in Recital E hereto.
"Big Stuff Agreement" shall mean that certain Acquisition
Agreement dated as of June 3, 1999 by and among Parent, ACG Acquisition
VII Corp., Big Stuff, Xxxxxxx X'Xxxx and Xxxx Xxxx.
"Claim Notice" shall have the meaning set forth in Section
-------
9.2(a).
------
"Claimed Amount" shall have the meaning set forth in Section
-------
9.2(a).
------
"Class A Special Shares" shall have the meaning set forth in
Section 1.1(b).
--------------
"Class B Special Shares" shall have the meaning set forth in
Section 1.1(b).
--------------
"CLEC Operations" shall mean Xxxxx, Firstel, Valu, and such other
non-yellow pages operating subsidiaries or operations of Parent as shall
be determined by the Board of Directors of Parent.
"CLEC Sales Price" shall mean the aggregate consideration received
by Parent from the sale(s) of the CLEC Operations, reduced by warranty
claims and paying or reserving against the taxes payable by Parent or a
subsidiary of Parent directly attributable to the sale(s) of the CLEC
Operations. For greater certainty and explanation, but not limitation,
the consideration received by Parent shall not be reduced by any fee
paid to NationsBanc Xxxxxxxxxx Securities, L.L.C. in connection with the
sale(s) of the CLEC Operations or to PaineWebber Incorporated.
"CLEC Sales Price Decrease" shall have the meaning set forth in
Section 5.10(c) hereof.
---------------
"CLEC Sales Price Increase" shall have the meaning set forth in
Section 5.10(b) hereof.
---------------
"Closing" shall mean the closing of the transactions contemplated
by this Agreement.
"Closing Date" shall mean the date upon which the Closing actually
occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended
and the Treasury regulations thereunder.
"Company" shall have the meaning set forth in the preamble hereto.
"Company Common Stock" shall have the meaning set forth in
Section 1.1(c).
--------------
"Company Material Adverse Effect" shall mean a material adverse
effect on (i) the business, assets, condition (financial or otherwise),
properties, liabilities or the results of operations of Company and the
Subsidiaries taken as a whole, (ii) the ability of Company to perform its
obligations set forth in this Agreement and the Company Transaction
Agreements (as herein defined), or (iii) the ability to timely consummate
the transactions contemplated by this Agreement and the Company Transaction
Agreements.
"Company Material Contract" shall mean a material note, bond,
mortgage, indenture, contract, lease, license, agreement, understanding,
instrument, bid or proposal to which Company or any Subsidiary is a party
and which is with an affiliate of Company or of a Subsidiary, if the
financial obligation of Company or a Subsidiary thereunder or applicable to
the assets or properties of Company or a Subsidiary could exceed
40
U.S. $50,000 after the Closing Date or if it provides for recurring monthly
revenues to Company or a Subsidiary in excess of U.S. $100,000 or includes
any exclusivity or non-competition restrictions applicable to Company or a
Subsidiary.
"Company Modified Representations" shall mean the representations
and warranties of the Company and the ICL Principals contained in this
Agreement that are modified by materiality or Company Material Adverse
Effect.
"Company Nonmodified Representations" shall mean the
representations and warranties of the Company and Shareholders contained
in this Agreement that are not modified by materiality or Company
Material Adverse Effect.
"Company Permits" shall mean all permits, certificates, licenses,
approvals, and other authorization required in connection with the
operation of the business of the Company and the Subsidiaries.
"Company Real Property Leases" shall have the meaning set forth in
Section 2.12(b).
---------------
"Company Tax Goal" shall have the meaning set forth in Section
-------
6.11(a).
-------
"Company Transaction Agreements" shall have the meaning set forth
in Section 2.4.
-----------
"Company Triggering Transaction" means any transaction by way of a
purchase or sale of shares or assets, a merger a reverse take-over or other
business combination involving the Company or any Subsidiary or any
subsidiary of the Company formed, organized or acquired directly or
indirectly by the Company on or after the date hereof, (i) with Web or Big
Stuff, or (ii) which results in the sale of the yellow pages publishing
business of the Company or any Subsidiary, or (iii) with another Person or
entity which derives the majority of their revenues from a business other
than the yellow pages publishing business.
"Consent" shall have the meaning set forth in Section 2.5.
-----------
"Contingent Rights I" shall mean, collectively, the rights to
receive Parent Common Stock pursuant to Section 5.10(b) hereof, which
---------------
rights shall be represented by certificates, the form of which shall be
designated at a later date, and which shall be non-transferable, except
by operation of law.
"Contingent Rights II" shall mean, collectively, the rights to
receive Parent Common Stock pursuant to Section 5.10(c) hereof, which
---------------
rights shall be represented by certificates, the form of which shall be
designated at a later date, and which shall be non-transferable, except
by operation of law.
"Damages" shall have the meaning set forth in Section 9.1(a).
--------------
"Defense Notice" shall have the meaning set forth in Section
-------
9.3(a).
------
"Due Diligence Period" shall have the meaning set forth in
Section 1.7(a).
--------------
"Eligible Acquisition Shareholders" shall mean the holders of
Class B Special Shares and the holders of the Contingent Rights II on
the Closing Date, immediately after giving effect to the Closing.
"Eligible Acquisition Shareholder's Proportionate Share" means,
for any Eligible Acquisition Shareholder, the quotient of the number of
Class B Special Shares and Contingent Rights II owned by such Eligible
Acquisition Shareholder on the Closing Date, immediately after giving
effect to the Closing, divided by the Aggregate Acquisition Shares.
"Eligible Parent Shareholders" shall mean the holders of
Contingent Rights I on the Closing Date, immediately after giving effect
to the Closing.
41
"Eligible Parent Shareholder's Proportionate Share" means, for any
Eligible Parent Shareholder, the quotient of (i) the number of
Contingent Rights I owned by such Eligible Parent Shareholder on the
Closing Date, immediately after giving effect to the Closing, divided by
(ii) the aggregate number of outstanding Contingent Rights I.
"Enforceability Exceptions" shall have the meaning set forth in
Section 2.4.
-----------
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, together with all regulations thereunder.
"Escrow Agent" shall have the meaning set forth in Section
-------
9.1(b).
------
"Escrow Agreement" shall have the meaning set forth in Section
-------
9.1(b).
------
"Event" shall have the meaning set forth in Section 2.8.
-----------
"Exchange and Voting Trust Agreement" shall have the meaning set
forth in Section 6.5.
-----------
"Exon-Xxxxxx Filing" shall have the meaning set forth in Section 2.5.
-----------
"Extraordinary Transactions" shall have the meaning set forth in
Section 6.8.
-----------
"Xxxxx" shall mean Xxxxx Long Distance Service, Inc.
"Final Order," with respect to any Consent of a Governmental
Authority, shall mean an action by the appropriate Governmental Authority
as to which: (i) no request for stay by such Governmental Authority of the
action is pending, no such stay is in effect, and, if any deadline for
filing any such request is designated by statute or regulation, it has
passed; (ii) no petition for rehearing or reconsideration of the action is
pending before such Governmental Authority, and no appeal or comparable
administrative remedy is pending before such Governmental Authority, and
the time for filing any such petition, appeal or administrative remedy has
passed; (iii) such Governmental Authority does not have the action under
reconsideration on its own motion and the time for such reconsideration has
passed; and (iv) no appeal to a court, or request for stay by a court, of
the Governmental Authority action is pending or in effect, and if any
deadline for filing any such appeal or request is designated by statute or
rule, it has passed.
"Final Sale Date" shall have the meaning set forth in Section 5.10(b).
---------------
"Firstel" shall mean Firstel, Inc.
"Governmental Authority" shall have the meaning set forth in
Section 2.5.
-----------
"Great Western Credit Agreement" shall have the meaning set forth
in Section 3.6.
-----------
"Great Western Shareholders" shall have the meaning set forth in
Recital E.
---------
"Great Western Notes" shall have the meaning set forth in Recital E.
---------
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"ICL" shall have the meaning set forth in the preamble hereto.
"ICL Principal Damages" shall have the meaning set forth in
Section 9.7(a).
--------------
42
"Income Tax Act [Canada]" shall have the meaning set forth in
Section 1.5.
-----------
"Indemnifiable Claim" shall have the meaning set forth in Section
-------
9.2(a).
------
"Indemnitees" shall have the meaning set forth in Section 9.2(a).
--------------
"Law" shall have the meaning set forth in Section 2.6.
-----------
"Litigation" shall have the meaning set forth in Section 2.7.
-----------
"Multi-employer Plan" shall mean a multi-employer plan as defined
in Section 3(37) of ERISA or in any other applicable Law.
"Newco I Common Stock" shall have the meaning set forth in
Section 1.1(b).
--------------
"Newco I Preferred Stock" shall have the meaning set forth in
Section 1.1(b).
--------------
"Newco II Common Stock" shall have the meaning set forth in
Section 1.1(b).
--------------
"NYSE" shall mean the New York Stock Exchange, Inc.
"Parent CLEC Shares" means the quotient of the CLEC Sales Price
Increase divided by U.S. $5.50.
"Parent Common Stock" shall have the meaning set forth in Section
-------
3.2.
---
"Parent Financial Statements" shall have the meaning set forth in
Section 3.8.
-----------
"Parent Guaranty" shall have the meaning set forth in Section 3.6.
-----------
"Parent Material Adverse Effect" shall mean a material adverse
effect on (i) the business, assets, condition (financial or otherwise),
properties, liabilities or the results of operations of Parent and the
Active Parent Subsidiaries taken as a whole, (ii) the ability of Parent
to perform its obligations set forth in this Agreement and the Parent
Transaction Agreements, or (iii) the ability of Parent to timely
consummate the transactions contemplated by this Agreement and the
Parent Transaction Agreements.
"Parent Material Contract" shall have the meaning set forth in
Section 3.13.
------------
"Parent Modified Representation" shall have the meaning set forth
in Section 7.2(a)(i).
-----------------
"Parent Nonmodified Representation" shall have the meaning set
forth in Section 7.2(a)(i).
-----------------
"Parent Permits" shall have the meaning set forth in Section 3.11.
------------
"Parent Preferred Stock" shall have the meaning set forth in
Section 1.1(a).
--------------
"Parent Recapitalization" shall have the meaning set forth in
Section 1.1(a).
--------------
"Parent Securities Filings" shall have the meaning set forth in
Section 3.7.
-----------
"Parent Series A Stock" shall have the meaning set forth in
Section 3.2.
-----------
"Parent Tax Goals" shall have the meaning set forth in Section
--------
6.11(b).
-------
"Parent Transaction Agreements" shall have the meaning set forth
in Section 3.4.
-----------
43
"Parent Triggering Transaction" means any transaction by way of a
purchase or sale of shares or assets, a merger, a reverse take-over or
other business combination involving the Parent or any Parent Subsidiary or
any subsidiary of the Parent formed, organized or acquired directly or
indirectly by the Parent on or after the date hereof with (i) Web or Big
Stuff, or (ii) which results in the sale of the yellow pages publishing
business of the Parent or Great Western Directories, Inc., or (iii) with
another Person or entity which derives the majority of their revenues from
a business other than the yellow pages publishing business.
"PCP Acquisition Agreement" shall have the meaning set forth in
Section 2.16.
------------
"PCP Closing Date" shall have the meaning set forth in Section 2.16.
------------
"Person" shall mean and include an individual, corporation,
partnership, association, trust or other entity or organization,
including a Governmental Authority.
"Record Date" shall mean the date set by Parent as the record date.
"Registration Statements" shall have the meaning set forth in
Section 6.1(b).
--------------
"Representative" shall have the meaning set forth in Section 9.6(a).
--------------
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Securities Exchange Act" shall mean the United States Securities
Exchange Act of 1934, as amended, and all rules and regulations
promulgated thereunder.
"Securities Act" shall mean the United States Securities Act of
1933, as amended, and all rules and regulations promulgated thereunder.
"Subordinated Lenders" shall have the meaning set forth in
Section 4.11.
------------
"Subordinated Loan Agreement" shall have the meaning set forth in
Section 4.11.
------------
"Support Agreement" means the Support Agreement to be entered into
at the Closing between Parent, Newco II and the Shareholders who are
holders of Class A Special Shares.
"Tax Goals" shall have the meaning set forth in Section 6.11(b).
---------------
"Third-Party Claim" shall have the meaning set forth in Section 9.2(a).
--------------
"Transaction Expenses" shall have the meaning set forth in
Section 5.9.
-----------
"Unanimous Shareholders Agreement" shall mean the Unanimous
Shareholders Agreement dated as of the 1st day of November, 1998 among
Imperial Capital Limited, a corporation incorporated under the laws of
Ontario, the J.L.R. Family Trust, an inter vivos trust duly formed and
organized the laws of Ontario, the Paisley Family Trust, an inter vivos
trust duly formed and organized under the laws of Ontario, Cold Trust,
Global Investment Trust, Freezer Trust, Storage Trust, Directory Trust
and Publisher Trust, inter vivos trusts duly formed and organized under
the laws of Barbados, Canterbury Mezzanine Capital, L.P. and Canterbury
Detroit Partners, L.P., limited partnerships formed under the laws of
Delaware, and YPtel Corporation, a corporation incorporated under the
laws of Canada, as amended to date.
"Valu" shall mean, collectively, Valu-line of Louisiana, Inc. and
Valu-line of Longview, Inc.
"Web" shall have the meaning set forth in Recital E hereof.
44
"Web YP Agreement" shall mean that certain Acquisition Agreement
dated as of June 3, 1999 by and among Parent, ACG Acquisition VI Corp.,
Web, Xxxxxxx X'Xxxx and Xxxx Xxxx.
"Worldpages" shall have the meaning set forth in Recital E hereof.
"YPTI Certificate of Preferred Stock Designation" shall have the
meaning set forth in Section 1.1(e).
--------------
"YPTI Consideration" shall have the meaning set forth in Section
-------
1.2(d).
------
"YPTI Preferred Stock" shall have the meaning set forth in
Section 1.1(e).
--------------
"YPTI Recapitalization" shall have the meaning set forth in
Section 1.1(e).
--------------
[SIGNATURES ON FOLLOWING PAGES]
45
[Signature pages to the YPTel Agreement]
IN WITNESS WHEREOF, Parent,, the Company, the Shareholders, the
ICL Principals and ICL have caused this Agreement to be signed by their
duly authorized respective officers, if appropriate, all as of the date
first written above.
ADVANCED COMMUNICATIONS GROUP, INC.
By:
---------------------------------------------
Xxxxx X. Xxxxx
Title: President and Chief Operations Officer
YPTEL CORPORATION
By:
---------------------------------------------
Xxxxxxx X. XxXxxxxx
Title: President and Chief Executive Officer
SHAREHOLDERS OF YPTEL CORPORATION
By: Imperial Capital Limited as attorney-in-fact
By:
---------------------------------------------
Title:
------------------------------------------
THE J.L.R. FAMILY TRUST, by its trustees
By:
---------------------------------------------
Xxxxxxx X. Xxxxxxxxx, as trustee and with no
personal liability
---------------------------------------------
Xxxxxxx Xxxxxxx, as trustee and with no
personal liability
THE PAISLEY FAMILY TRUST
By:
---------------------------------------------
Xxxxxxx X. Xxxxxx, as trustee and with no
personal liability
---------------------------------------------
Xxxxxxx Xxxxxxx, as trustee and with no
personal liability
------------------------------------------------
Xxxxxx Xxxxxx
------------------------------------------------
Xxxxxxx X. XxXxxxxx
COLD TRUST
By:
---------------------------------------------
, as trustee and with
no personal liability
---------------------------------------------
, as trustee and with
no personal liability
GLOBAL INVESTMENT TRUST
By:
---------------------------------------------
, as trustee and with
no personal liability
---------------------------------------------
, as trustee and with
no personal liability
FREEZER TRUST
By:
---------------------------------------------
, as trustee and with
no personal liability
---------------------------------------------
, as trustee and with
no personal liability
STORAGE TRUST
By:
---------------------------------------------
, as trustee and with
no personal liability
---------------------------------------------
, as trustee and with
no personal liability
DIRECTORY TRUST
By:
---------------------------------------------
, as trustee and with
no personal liability
---------------------------------------------
, as trustee and with
no personal liability
PUBLISHER TRUST
By:
---------------------------------------------
, as trustee and with
no personal liability
---------------------------------------------
, as trustee and with
no personal liability
IMPERIAL CAPITAL LIMITED, a corporation
incorporated under the law of the Providence of
Ontario
By:
---------------------------------------------
Title:
------------------------------------------
[YPtel Acquisition Agreement]
The terms and provisions of Sections 5.11 and 8.2 of this
---------------------
Agreement are hereby acknowledged and agreed to by each of Web YP, Inc.,
Xxxxxxx X. Xxxx (as a Web shareholder), Xxxxxxx X'Xxxx (as a Web
shareholder), Big Stuff, Inc., Xxxxxxx X. Xxxx (as a Big Stuff
shareholder) and Xxxxxxx X'Xxxx (as a Big Stuff shareholder).
WEB YP, INC.
By:
---------------------------------------------
Title:
------------------------------------------------
XXXXXXX X. XXXX (as a Web shareholder)
------------------------------------------------
XXXXXXX X'XXXX (as a Web shareholder)
BIG STUFF, INC.
By:
---------------------------------------------
Title:
------------------------------------------------
XXXXXXX X. XXXX (as a Big Stuff shareholder)
------------------------------------------------
XXXXXXX X'XXXX (as a Big Stuff shareholder)
EXHIBIT "A"
LIST OF SHAREHOLDERS
--------------------
ARTICLE I - THE TRANSACTIONS 2
1.1 Transactions Prior to Closing: Corporate 2
----------------------------------------
1.2 Transactions Simultaneous with Closing 3
--------------------------------------
1.3 Closing 3
-------
1.4 Parent Name Change and Directors 4
--------------------------------
1.5 Tax Deferred Exchange 4
---------------------
1.6 Taking of Necessary Action; Further Action 4
------------------------------------------
1.7 Due Diligence Review 5
--------------------
1.8 Aggregate Issuable Parent Common Stock. 5
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE ICL PRINCIPALS 5
2.1 Organization and Good Standing 5
------------------------------
2.2 Capitalization 5
--------------
2.3 Subsidiaries 6
------------
2.4 Authorization; Binding Agreement 6
--------------------------------
2.5 Governmental Approvals 7
----------------------
2.6 No Violations 7
-------------
2.7 Litigation 7
----------
2.8 Absence of Certain Changes or Events 8
------------------------------------
2.9 Finders and Investment Bankers 8
------------------------------
2.10 Contracts 8
---------
2.11 Liabilities 8
-----------
2.12 Real Estate 8
-----------
2.13 Corporate Records 9
-----------------
2.14 Labor Matters 9
-------------
2.15 Tax 9
---
2.16 PCP Acquisition Agreement 9
-------------------------
2.17 Knowledge 9
---------
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF PARENT 10
3.1 Organization and Good Standing 10
------------------------------
3.2 Capitalization 10
--------------
3.3. Subsidiaries 10
------------
3.4 Authorization; Binding Agreement 11
--------------------------------
3.5 Governmental Approvals 11
----------------------
3.6 No Violations 11
-------------
3.7 Securities Filings and Litigation 11
---------------------------------
3.8 Parent Financial Statements 12
---------------------------
3.9 Absence of Certain Changes or Events 12
------------------------------------
3.10 Compliance with Laws 12
--------------------
3.11 Permits 12
-------
3.12 Finders and Investment Bankers 12
------------------------------
3.13 Contracts 13
---------
3.14 Corporate Records 13
-----------------
ARTICLE IV - ADDITIONAL COVENANTS OF THE COMPANY AND
THE ICL PRINCIPALS 13
4.1 Notification of Certain Matters 13
-------------------------------
4.2 Access and Information 13
----------------------
4.3 [Reserved] 14
----------
4.4 Reasonable Best Efforts 14
-----------------------
4.5 Compliance 14
----------
4.6 Benefit Plans 14
-------------
4.7 Tax Opinion Certification 14
-------------------------
4.8 Reserved 14
--------
4.9 Shareholders Agreement and Voting Trust Agreements 14
--------------------------------------------------
4.10 Transfer Restrictions 15
---------------------
4.11 Subordinated Loan Agreement 16
---------------------------
4.12 Conduct of Business of Parent and the Parent
--------------------------------------------
Subsidiaries 16
------------
4.13 Affiliate Agreements 16
--------------------
ARTICLE V - ADDITIONAL COVENANTS OF PARENT 17
5.1 Conduct of Business of Parent and the Parent
--------------------------------------------
Subsidiaries 17
------------
5.2 Notification of Certain Matters 17
-------------------------------
5.3 Access and Information 17
----------------------
5.4 Compliance 17
----------
5.5 SEC and Shareholder Filings 17
---------------------------
5.6 Tax Treatment 18
-------------
5.7 Reasonable Best Efforts 18
-----------------------
5.8 Employee Benefit Plans 18
----------------------
5.9 Expenses 18
--------
5.10 Sale of CLEC Operations 18
-----------------------
5.11 Indemnification and Insurance 19
-----------------------------
ARTICLE VI - ADDITIONAL COVENANTS OF THE PARENT, THE
COMPANY AND THE SHAREHOLDERS 20
6.1 Registration Rights and Stock Restriction
-----------------------------------------
Agreement 20
---------
6.2 [Reserved] 21
----------
6.3 [Reserved] 21
----------
6.4 Legal Requirements 21
------------------
6.5 Exchange and Voting Trust Agreement 21
6.6 Public Announcements 21
--------------------
6.7 Conduct of Business Prior to Closing Date 21
-----------------------------------------
6.8 No Solicitation of Acquisition Proposal 24
---------------------------------------
6.9 [Reserved] 25
----------
6.10 Confidentiality 25
---------------
6.11 Tax Goals 25
---------
6.12 Capital Stock and Derivative Securities 26
---------------------------------------
ARTICLE VII - CONDITIONS TO CLOSING 26
7.1 Conditions to Obligations of Each Party to Closing 26
--------------------------------------------------
7.2 Additional Conditions to Obligations of
---------------------------------------
Shareholders and Company 28
------------------------
7.3 Additional Conditions to the Obligations of Parent 29
--------------------------------------------------
ARTICLE VIII- TERMINATION AND ABANDONMENT 31
8.1 Termination 31
-----------
8.2 Termination Fees and Rights 32
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8.3 Procedure Upon Termination 33
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ARTICLE IX - SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION 33
9.1 Indemnification by the ICL Principals 33
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9.2 Method of Asserting Claims 33
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9.3 Third Party Claims 34
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9.4 Survival 35
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9.5 Limitations 35
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9.6 The Representative 35
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9.7 Indemnification by the Parent 36
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ARTICLE X - AMENDMENT AND WAIVER 37
10.1 Amendment 37
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10.2 Extension; Waiver 37
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ARTICLE XI - GENERAL PROVISIONS 37
11.1 Notices 37
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11.2 Interpretation 38
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11.3 Counterparts 38
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11.4 Entire Agreement; Assignment 38
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11.5 Severability 38
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11.6 Other Remedies 38
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11.7 Governing Law 39
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11.8 Rules of Construction 39
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11.9 Limitation on Liability of Trustee 39
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ARTICLE XII - DEFINITIONS 39
12.1 Definitions 39
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EXHIBIT LIST
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Exhibit A List of Shareholders
SCHEDULE LIST
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Schedule 2.1 List of the jurisdictions of incorporation or
organization and qualification or license of Company
and the Subsidiaries
Schedule 2.2 Transfer restrictions
Schedule 2.3(a) Outstanding capital stock or other interest held by
Company
Schedule 2.3(b) Restrictions on outstanding capital stock
Schedule 2.3(c) List of irrevocable proxies, voting agreements or
similar obligations with respect to capital stock
Schedule 2.5 Governmental Authorities
Schedule 2.6 Required consents
Schedule 2.7 Litigation
Schedule 2.8 List of changes or events
Schedule 2.10 Contracts
Schedule 2.11 Liabilities
Schedule 2.12(b) Company Real Property Leases
Schedule 2.13 Corporate Records
Schedule 3.2 Capitalization
Schedule 3.3 Subsidiaries
Schedule 3.5 Governmental Approvals
Schedule 3.7 Parent Litigation
Schedule 3.8 Parent Financial Statements
Schedule 3.9 Changes or Events
Schedule 3.13 Contracts
Schedule 6.7(b)(i) Company Options
Schedule 6.7(b)(ii) Parent Options
Schedule 6.7(e) Sale or Encumbrances
Schedule 9.1(b) Shares Not Included as Payment for Indemnification
Obligation of IPL Principals
