EXHIBIT 2.2
EXECUTION COPY
SUPPLEMENTAL AGREEMENT TO STOCK PURCHASE AGREEMENT
THIS SUPPLEMENTAL AGREEMENT TO STOCK PURCHASE AGREEMENT, dated as of
December 31, 2002 (this "Supplemental Agreement"), is made and entered into by
and between Sprint Corporation, a Kansas corporation ("Sprint"), Centel
Directories LLC, a Delaware limited liability company ("Centel LLC") ( Sprint
and Centel LLC are collectively referred to in this Supplemental Agreement as
"Sellers"), and X.X. Xxxxxxxxx Corporation, a Delaware corporation ("Buyer").
RECITALS
A. Sprint, Centel LLC and Buyer entered into a Stock Purchase
Agreement, dated September 21, 2002 (the "Stock Purchase Agreement"), under
which (i) Sprint will sell to Buyer all of the issued and outstanding shares of
capital stock of DirectoriesAmerica, Inc., a Kansas corporation, which owns all
of the issued and outstanding shares of capital stock of Sprint Publishing &
Advertising, Inc., a Kansas corporation, and (ii) Centel LLC will sell to Buyer
all of the issued and outstanding shares of capital stock of Centel Directory
Company, a Delaware corporation, which owns a membership interest in CenDon,
L.L.C., a Delaware limited liability company.
B. Sprint, Centel LLC and Buyer desire to supplement and amend
certain obligations of the Parties in connection with the transactions
contemplated by the Stock Purchase Agreement pursuant to this Supplemental
Agreement. Capitalized terms set forth in this Supplemental Agreement but not
defined in this Supplemental Agreement have the meanings ascribed to the terms
in the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and conditions set
forth in this Supplemental Agreement, and intending to be legally bound by this
Supplemental Agreement, the Parties agree as follows:
1. POST-CLOSING PURCHASE PRICE ADJUSTMENT AND CLOSING. Sections 1.2,
1.3, 1.4 and 1.5 of the Stock Purchase Agreement are hereby replaced in their
entirety by the revised Sections 1.2, 1.3, 1.4 and 1.5 below. Schedule 1.3 of
the Stock Purchase Agreement is hereby replaced by the revised Schedule 1.3
attached hereto as Exhibit A. However, if the Closing does not occur on or
before 5 p.m. New York City time, on January 3, 2003, this Section 1 of this
Supplemental Agreement shall be of no effect whatsoever and the original
Sections 1.2, 1.3, 1.4 and 1.5 of the Stock Purchase Agreement and the original
Schedule 1.3 of the Stock Purchase Agreement shall remain in effect.
"SECTION 1.2 PAYMENT OF PURCHASE PRICE.
(a) In consideration for the sale, transfer and delivery of the
Shares, at the Closing Buyer shall deliver or cause to be delivered to Sellers
(or to such third parties as may be designated in writing by Sellers) the
Estimated Purchase Price in accordance with Section 1.2(d). The "Estimated
Purchase Price" payable at Closing shall equal (i) Two Billion Two Hundred
Thirty Million Dollars ($2,230,000,000) minus (ii) Sixteen Million Five Hundred
Twenty Five Thousand Dollars ($16,525,000), which is the excess of the Target
Working Capital over the Estimated Working Capital (as such terms are defined
below).
(b) Sellers have delivered to Buyer an estimated combined
consolidated balance sheet of the Companies as of the close of business on
December 31, 2002, prepared in accordance with the Accounting Principles (as
hereinafter defined) and a certificate setting forth the Estimated Working
Capital based on such balance sheet. For the purposes of this Agreement,
"Estimated Working Capital" equals $243,023,000, which represents the good
faith, best estimate of Sellers of the book value of the Current Assets (as
defined in Section 1.3) of the Companies less the book value of the Current
Liabilities (as defined in Section 1.3) of the Companies as of the close of
business on December 31, 2002, as reflected on such balance sheet, except that
for the purposes of calculating the Estimated Working Capital the estimated
amount of the payment by Sellers to the Company Employees described in Section
1.4(d)(ii)(A) below ($2,390,000) is treated as if it had occurred on December
31, 2002.
(c) Within five business days after the determination of the Final
Balance Sheet (as hereinafter defined) in accordance with Section 1.4 of this
Agreement, (i) if the amount of the December 31 Working Capital calculated in
accordance with Section 1.4 is less than the Estimated Working Capital, then
Sellers shall pay to Buyer an amount equal to the difference
between the Estimated Working Capital and the December 31 Working Capital plus
interest or (ii) if the amount of the December 31 Working Capital calculated in
accordance with Section 1.4 is greater than the Estimated Working Capital, Buyer
shall pay to Sellers an amount equal to the difference between the December 31
Working Capital and the Estimated Working Capital, plus interest. Any interest
on such payments shall be calculated using the prime rate of interest (as
published in the "Money Rates" table of the Eastern U.S. Edition of The Wall
Street Journal on the Closing Date) and shall begin on the Closing Date (as
hereinafter defined) and end on the date of any such payment.
(d) All payments required under this Section 1.2 shall be made in
cash by wire transfer of immediately available federal funds to such bank
account(s) as shall be designated in writing by the recipient at least three
business days prior to the Closing or promptly upon the determination of the
Final Balance Sheet, as the case may be. The net amount of all payments received
by Sellers under this Section 1.2 is referred to in this Agreement as the
"Purchase Price."
SECTION 1.3 TARGET WORKING CAPITAL. "Target Working Capital"
shall equal $259,548,000, which represents the book value of those categories of
current assets of the Companies listed on Schedule 1.3 (the "Current Assets")
less the book value of those categories of current liabilities of the Companies
listed on Schedule 1.3 (the "Current Liabilities"), in each case as reflected on
the audited combined consolidated balance sheet of the Companies as of December
31, 2001 (the "Year-End Balance Sheet").
SECTION 1.4 ADJUSTMENT OF PURCHASE PRICE.
(a) For purposes of this Agreement, the "December 31 Working
Capital" shall mean the book value of the Current Assets less the book value of
the Current Liabilities as reflected on
the Final Balance Sheet, except that for the purposes of calculating the
December 31 Working Capital the payment by Sellers to the Company Employees
described in Section 1.4(d)(ii)(A) below shall be treated as if it had occurred
on December 31, 2002. December 31 Working Capital shall not include deferred
directory costs, deferred revenue, any asset or liability related to Taxes, the
payroll liabilities described in Section 1.4(d)(ii)(A) or any intercompany
accounts settled pursuant to Section 5.22.
(b) Promptly following the Closing, Sellers shall prepare a
combined consolidated balance sheet of the Companies as of the close of business
on December 31, 2002 (the "Preliminary Balance Sheet"), in accordance with the
Accounting Principles. "Accounting Principles" means generally accepted
accounting principles ("GAAP") on a basis consistent with the Year-End Balance
Sheet and using the same policies and procedures as were used to prepare the
Year-End Balance Sheet. Sellers shall engage Ernst & Young (the "Sellers'
Auditor") to conduct an audit of the Preliminary Balance Sheet. Sellers and
Buyer shall use all commercially reasonable efforts, including Buyer making
available all necessary Company Employees to sign customary representation
letters required by Sellers' Auditor, to enable Sellers to deliver to Buyer an
audited Preliminary Balance Sheet on or prior to February 3, 2003, together with
the opinion of the Sellers' Auditor thereon stating that the audit has been
conducted in accordance with the Accounting Principles. Representatives of Buyer
shall have the opportunity (i) to receive, prior to delivery of the Preliminary
Balance Sheet, reasonably frequent updates from Sellers and Sellers' Auditor
concerning the audit process and results and any adjustments to the December 31,
2002 financial statements of the Companies proposed by the Sellers' Auditor
prior to such adjustments being made, (ii) to examine the work papers, schedules
and other documents prepared by Sellers in connection with the preparation of
the Preliminary Balance Sheet, and (iii)
to otherwise participate in the audit process. Sellers shall use all
commercially reasonable efforts to cause the Sellers' Auditor to permit Buyer
and its accounting firm (the "Buyer's Auditor") to examine the Sellers'
Auditor's work papers used in connection with its audit of the Preliminary
Balance Sheet. Buyer shall be responsible for the fees and expenses of the Buyer
Auditor, and Sellers shall be responsible for the fees and expenses of the
Sellers' Auditor.
(c) If Buyer objects to the Preliminary Balance Sheet, Buyer shall
deliver to Sellers a written notice of objection (an "Objection Notice") within
thirty (30) days following the delivery thereof. If Buyer has no objection to
the Preliminary Balance Sheet, Buyer shall promptly deliver to Sellers a written
notice of acceptance (an "Acceptance Notice"). The Preliminary Balance Sheet
shall be final and binding on the parties if an Acceptance Notice is delivered
or if no Objection Notice is delivered to Sellers within such 30-day period. Any
payment or portion of any payment required under Section 1.2 not subject to the
Objection Notice shall be paid within five business days following the delivery
of the Objection Notice. Any Objection Notice shall specify in reasonable detail
the disputed items on the Preliminary Balance Sheet and shall describe in
reasonable detail the basis for the objection and all information in the
possession of Buyer which forms the basis of the objection, as well as the
amount in dispute. If an Objection Notice is given, the parties shall consult
with each other with respect to the objection. If the parties are unable to
reach agreement within thirty (30) days after an Objection Notice has been
given, any unresolved disputed items shall be promptly referred to KPMG;
provided, however, that if KPMG declines to accept such appointment then the
parties shall mutually agree upon another nationally recognized independent
accounting firm that has not provided material services to either party during
the previous two years (the "Unrelated Accounting Firm"). The Unrelated
Accounting Firm shall be directed to resolve disputed issues in accordance with
the
terms of this Agreement and render a written report on the unresolved disputed
issues with respect to the Preliminary Balance Sheet as promptly as practicable
and to resolve only those issues of dispute set forth in the Objection Notice.
The resolution of the dispute by the Unrelated Accounting Firm shall be final
and binding on the parties. The fees and expenses of the Unrelated Accounting
Firm shall be borne equally by Sellers, on the one hand, and Buyer, on the other
hand. The Preliminary Balance Sheet as finally determined pursuant to this
Section 1.4(c) is referred to in this Agreement as the "Final Balance Sheet".
(d) Notwithstanding any other Section of this Agreement (including
Sections 2.3(a) and 5.1), Buyer and Sellers agree that after (but not including)
December 31, 2002 (i) Sellers and their Affiliates will not distribute or
transfer (by cash sweep or otherwise) any cash out of the Companies and (ii)
none of Sellers, the Companies or their respective Affiliates will pay any
accounts payable of the Companies, except that Sellers will pay the Company
Employees (A) on or about January 3, 2003, for payroll, vacation, salesperson
commissions and related withholdings accrued through the last payroll date prior
to December 31, 2002 (the "Cut-off Date") and (B) on or about January 10, 2003,
for payroll, vacation, salesperson commissions and related withholdings accrued
from the Cut-off Date through January 3, 2003 (any portion attributable to the
period from and including January 1, 2003 through January 3, 2003, excluding
amounts paid with respect to floating holidays under Sellers' vacation plans,
being herein referred to as the "2003 Employee Payment"). Buyer shall reimburse
Sellers in full for the amount of the 2003 Employee Payment, which payment shall
be due within five (5) days of the delivery to Buyer by Sellers of a notice of
the amount of the 2003 Employee Payment accompanied by wire transfer
instructions. The cash and accounts payable accrued by the Companies during the
period from January 1, 2003, through the Closing will be transferred to
Buyer with the Companies at Closing and will not be taken into account in
calculating the post-closing Purchase Price adjustment contemplated by Section
1.2.
SECTION 1.5 CLOSING. The Closing of the transactions contemplated
by this Agreement shall take place on the latter to occur of (a) January 3, 2003
and (b) the fifth business day following the satisfaction or waiver of all of
the conditions to Closing set forth in Article VI of this Agreement that are
capable of being satisfied prior to the Closing Date, at 10:00 a.m., local time,
at the offices of Xxxxx, Day, Xxxxxx & Xxxxx, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX
00000, or on such other date and at such other time or place as the parties may
agree. However, if the prior sentence would require the Closing to occur prior
to January 30, 2003, Buyer may elect to defer the Closing to a date on or prior
to January 30, 2003. The date of the Closing is sometimes referred to in this
Agreement as the "Closing Date." The Closing will be effective as of the close
of business on the Closing Date."
2. TRADENAMES AND TRADEMARKS. It is expressly agreed that Buyer is not
purchasing, acquiring or otherwise obtaining any right, title or interest in the
name "Centel" or any "Centel" tradenames, trademarks, identifying logos or
service marks related thereto or employing any part or variation of any of the
foregoing or any confusingly similar tradename, trademark or logo (collectively,
the "Centel Tradenames and Logos") pursuant to the Stock Purchase Agreement.
Buyer agrees that neither it nor any of its Affiliates shall make any use of the
Centel Tradenames and Logos from and after the Closing Date; provided, however;
that the name "CenDon" shall not be deemed to be one of the Centel Tradenames
and Logos. Prior to the Closing, Sellers will cause the corporate names of CDC
and SPA to be amended to remove any reference to the name "Centel" or "Sprint"
respectively, or any other name that suggests CDC or SPA is a subsidiary of or
affiliated with Sprint. As soon as practicable following the Closing, Buyer will
cause each of SPA and CDC to amend their certificates of authority to conduct
business in every foreign jurisdiction where they are currently qualified (as
listed on Schedule 3.1 of the Stock Purchase Agreement) to remove any reference
to the name "Sprint" or "Centel" or any other name that suggests SPA or CDC is a
subsidiary of or affiliated with Sprint. Buyer's and Seller's obligations under
Section 3 of this Supplemental Agreement are in addition to their respective
obligations under the first two sentences of Section 2.1 of the Stock Purchase
Agreement.
3. LOAN TERMINATION. Sellers represent and warrant to Buyer that the
letter dated December 9, 2002 from SPA and CDC addressed to Deutsche Bank AG,
New York Branch, as Administrative Agent (the "Loan Termination Letter") has (a)
caused the Companies to be released
as guarantor of all financing of Sellers and their Affiliates (other than the
Companies) and (b) has caused the termination of the agreements listed on
Schedule 3.7 of the Stock Purchase Agreement (except for any provisions thereof
which expressly survive such termination). Sellers also represent and warrant to
Buyer that the two commitments referenced in the Loan Termination Letter are the
only two credit facilities under which any of the Companies are guarantors or
parties and that no amounts have been drawn or are outstanding under either such
commitment.
4. TELECOMMUNICATIONS SERVICE AGREEMENTS. Sprint, Centel LLC and Buyer
acknowledge that the telecommunications service agreements contemplated by
Section 16.2 of the Directory Services License Agreement will not be executed
simultaneously with or prior to the effectiveness of the Directory Services
License Agreement. Sprint, Centel LLC and Buyer will use their reasonable best
efforts to cause Publisher and the applicable Sprint Entities (each as defined
in the Directory Services License Agreement) to execute telecommunications
services agreements (on the terms set forth in Section 16.2 of the Directory
Services License Agreement and otherwise in forms mutually agreed to between the
Parties) as soon as practicable following the effectiveness of the Directory
Services License Agreement
5. MISCELLANEOUS.
5.1. Other Provisions. The provisions of Sections 10.3,
10.4, 10.5, 10.6, 10.8, 10.9, 10.10, 10.11, 10.12, 10.13 and 10.16 of the Stock
Purchase Agreement are incorporated herein by this reference.
5.2. No Other Amendment. Except as expressly provided in
this Supplemental Agreement, the Stock Purchase Agreement is and shall continue
to be in full force and effect.
IN WITNESS WHEREOF, the parties to this Supplemental Agreement have
caused this Supplemental Agreement to be executed as of the date first above
written.
SPRINT CORPORATION
By: /s/ XXXXXXX XXXXXX
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Name: Xxxxxxx Xxxxxx
Title: Assistant Vice President
CENTEL DIRECTORIES LLC
By: /s/ XXXXXXX XXXXXX
-----------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
X.X. XXXXXXXXX CORPORATION
By: /s/ XXXXXX X. XXXX
-----------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President, General Counsel and
Corporate Secretary
