Exhibit 2.1
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
SPRINT CORPORATION,
CENTEL DIRECTORIES LLC
AND
X.X. XXXXXXXXX CORPORATION
AS OF SEPTEMBER 21, 2002
TABLE OF CONTENTS
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PAGE
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ARTICLE I PURCHASE AND SALE OF THE SHARES.............................2
Section 1.1 Purchase and Sale.............................................2
Section 1.2 Payment of Purchase Price.....................................2
Section 1.3 Target Working Capital........................................4
Section 1.4 Adjustment of Purchase Price..................................4
Section 1.5 Closing.......................................................6
Section 1.6 Deliveries by Sellers.........................................6
Section 1.7 Deliveries by Buyer...........................................7
Section 1.8 Initial and Second Closing...................................8
ARTICLE II RELATED MATTERS............................................14
Section 2.1 Use of Sprint's Name and Logos...............................14
Section 2.2 No Ongoing or Transition Services............................14
Section 2.3 Certain Pre-Closing Matters..................................14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS..................16
Section 3.1 Organization.................................................16
Section 3.2 Authorization................................................17
Section 3.3 Capital Stock................................................18
Section 3.4 Ownership of the Capital Stock...............................19
Section 3.5 Consents and Approvals; No Violations........................19
Section 3.6 Financial Statements and Undisclosed Liabilities.............20
Section 3.7 Absence of Material Adverse Effect...........................21
Section 3.8 Title, Ownership and Related Matters.........................23
Section 3.9 Intellectual Property........................................25
Section 3.10 Computer Software............................................27
Section 3.11 Litigation...................................................28
Section 3.12 Compliance with Applicable Law...............................29
Section 3.13 Certain Contracts and Arrangements...........................29
Section 3.14 Employee Benefit Plans; ERISA................................31
Section 3.15 Labor Matters................................................34
Section 3.16 Taxes........................................................35
Section 3.17 Environmental................................................37
Section 3.18 Officers.....................................................37
Section 3.19 Certain Fees.................................................37
Section 3.20 Sufficiency of Assets........................................38
Section 3.21 Permits......................................................38
Section 3.22 Affiliates Engaged in the Business...........................38
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER....................39
Section 4.1 Organization and Authority of Buyer..........................39
Section 4.2 Consents and Approvals; No Violations........................40
Section 4.3 Litigation...................................................40
Section 4.4 Certain Fees.................................................41
Section 4.5 Investment Representations...................................41
Section 4.6 Sufficient Funds.............................................41
ARTICLE V COVENANTS..................................................42
Section 5.1 Conduct of the Companies' Business...........................42
Section 5.2 Access to Information........................................44
Section 5.3 Consents.....................................................47
Section 5.4 Reasonable Best Efforts......................................49
Section 5.5 Public Announcements.........................................52
Section 5.6 Covenant to Satisfy Conditions...............................52
Section 5.7 Certain Tax Matters..........................................53
Section 5.8 No Solicitation..............................................61
Section 5.9 Transition Services Agreement................................62
Section 5.10 Directory Services License Agreement.........................62
Section 5.11 Guarantees...................................................62
Section 5.12 Investigation by Buyer.......................................62
Section 5.13 Mutual Release...............................................63
Section 5.14 Employees and Employee Benefit Plans.........................64
Section 5.15 No Solicitation of Transactions..............................69
Section 5.16 Non-Competition Agreement....................................70
Section 5.17 Subscriber Listings Agreement................................70
Section 5.18 Trademark License Agreement..................................70
Section 5.19 Publisher Trademark License Agreement........................70
Section 5.20 Transition of Certain Information............................70
Section 5.21 Interim Changes in Service Areas.............................71
Section 5.22 Intercompany Accounts; CenDon Payments.......................71
Section 5.23 Special Purpose Vehicle......................................72
Section 5.24 Co-Branding..................................................72
ARTICLE VI CONDITIONS TO OBLIGATIONS OF THE PARTIES...................73
Section 6.1 Conditions to Each Party's Obligation........................73
Section 6.2 Conditions to Obligations of Sellers.........................74
Section 6.3 Conditions to Obligations of Buyer...........................75
ARTICLE VII TERMINATION................................................76
Section 7.1 Termination..................................................76
Section 7.2 Procedure and Effect of Termination..........................78
ARTICLE VIII SURVIVAL OF REPRESENTATIONS................................79
Section 8.1 Survival of Representations, Warranties and Agreements.......79
ARTICLE IX INDEMNIFICATION............................................80
Section 9.1 Indemnification Obligations of Sellers.......................80
Section 9.2 Indemnification Obligations of Buyer.........................81
Section 9.3 Indemnification Procedure....................................81
Section 9.4 Claims Period................................................83
Section 9.5 Liability Limits.............................................84
Section 9.6 Netting of Losses............................................85
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Section 9.7 Exclusive Remedies...........................................85
ARTICLE X MISCELLANEOUS..............................................86
Section 10.1 Fees and Expenses............................................86
Section 10.2 Further Assurances...........................................86
Section 10.3 Notices......................................................86
Section 10.4 Severability.................................................88
Section 10.5 Binding Effect; Assignment...................................88
Section 10.6 No Third Party Beneficiaries.................................89
Section 10.7 Interpretation...............................................89
Section 10.8 Jurisdiction and Consent to Service..........................90
Section 10.9 Entire Agreement.............................................90
Section 10.10 Governing Law................................................90
Section 10.11 Specific Performance.........................................90
Section 10.12 Counterparts.................................................91
Section 10.13 Amendment, Modification and Waiver...........................91
Section 10.14 Knowledge....................................................91
Section 10.15 Schedules and Exhibits.......................................91
Section 10.16 Waiver of Jury Trial.........................................91
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DEFINED TERMS
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TERM SECTION
2001 Income Statement..................................................1.8(a)
Acceptance Notice......................................................1.4(c)
Accounting Principles..................................................1.4(b)
ADSP................................................................5.7(b)(i)
Affiliate.............................................................10.7(b)
Agreement............................................................Preamble
Allocation..........................................................5.7(b)(i)
Ancillary Agreements...................................................1.6(c)
Buyer 401(k) Plan.................................................5.14(b)(ii)
Buyer Deductible..........................................................9.5
Buyer Indemnified Parties.................................................9.1
Buyer Losses..............................................................9.1
Buyer Material Adverse Effect.............................................4.2
Buyer Pension Plan................................................5.14(c)(ii)
Buyer................................................................Preamble
Buyer's Auditor........................................................1.4(b)
Cap Amount................................................................9.5
CDC Shares...........................................................Recitals
CDC..................................................................Recitals
Cendon...............................................................Recitals
Centel LLC...........................................................Preamble
Claims Period.............................................................9.4
Closing Date Working Capital...........................................1.4(a)
Closing Date..............................................................1.5
Closing...................................................................1.1
Companies............................................................Recitals
Company Employee......................................................5.14(a)
Company Employees.....................................................5.14(a)
Company Intellectual Property..........................................3.9(a)
Company Licensed Intellectual Property.................................3.9(a)
Company Licensed Software.............................................3.10(a)
Company Material Adverse Effect........................................3.1(b)
Company Owned Intellectual Property....................................3.9(a)
Company Proprietary Software..........................................3.10(a)
Company Software......................................................3.10(a)
Company..............................................................Recitals
Competing Transaction....................................................5.15
Confidentiality Agreement .............................................5.2(b)
Contracts................................................................3.13
Current Assets............................................................1.3
Current Liabilities.......................................................1.3
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DAI Shares...........................................................Recitals
DAI..................................................................Recitals
Debt Financing Commitments................................................4.6
Directory Services License Agreement.....................................5.10
DOJ....................................................................5.3(d)
Environmental Laws....................................................3.17(a)
Equity Commitments........................................................4.6
ERISA Affiliate.......................................................3.14(b)
ERISA.................................................................3.14(a)
Estimated Purchase Price...............................................1.2(a)
Estimated Working Capital..............................................1.2(b)
Excluded Business......................................................1.8(b)
Excluded States........................................................1.8(a)
Final Balance Sheet....................................................1.4(c)
Financial Statements...................................................3.6(a)
Financing Commitments.....................................................4.6
FTC....................................................................5.3(d)
GAAP...................................................................1.4(b)
Group Contracts........................................................5.3(a)
HSR Act...................................................................3.5
Indemnification Statement.........................................5.7(c)(iii)
Indemnified Party .....................................................9.3(a)
Indemnifying Party.....................................................9.3(a)
Initial Closing........................................................1.8(a)
Intellectual Property..................................................3.9(a)
Interim Balance Sheet..................................................3.6(a)
Leased Real Property................................................3.8(a)(i)
Liens..............................................................3.8(a)(ii)
Mutual Release...........................................................5.13
New Contracts..........................................................5.3(a)
Non-Competition Agreement................................................5.16
Objection Notice.......................................................1.4(c)
Ordinary Course of Business............................................3.7(a)
Owned Real Property.................................................3.8(a)(i)
Permits...............................................................3.21(a)
Permitted Liens....................................................3.8(a)(ii)
Person................................................................10.7(a)
Pre-Closing Period Returns..........................................5.7(c)(i)
Pre-Closing Period..................................................5.7(a)(i)
Preliminary Balance Sheet..............................................1.4(b)
Publisher Trademark License Agreement....................................5.19
Purchase Price.........................................................1.2(d)
Real Property.......................................................3.8(a)(i)
Regulatory Proposal................................................5.4(d)(iv)
Second Closing.........................................................1.8(c)
Second Closing Termination Date........................................1.8(c)
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Section 338(h)(10) Election........................................5.7(a)(ii)
Section 754 Election..............................................5.7(a)(iii)
Seller Benefit Plan...................................................3.14(a)
Seller Benefit Plans..................................................3.14(a)
Seller ERISA Plan.....................................................3.14(a)
Seller ERISA Plans....................................................3.14(a)
Seller Indemnified Parties................................................9.2
Seller Losses.............................................................9.2
Seller Tradenames and Logos...............................................2.1
Sellers..............................................................Preamble
Sellers' Auditor.......................................................1.4(b)
Services Agreement.....................................................1.8(f)
Shares...............................................................Recitals
SPA..................................................................Recitals
Sprint...............................................................Preamble
SPV......................................................................5.22
SPV Agreement............................................................5.23
State Subsidiary.......................................................1.8(b)
Straddle Period Returns............................................5.7(c)(ii)
Straddle Period....................................................5.7(a)(iv)
Subscriber Listings Agreement............................................5.17
Target Assets..........................................................1.8(g)
Target Working Capital....................................................1.3
Tax Claim..........................................................5.7(e)(iv)
Tax Indemnified Party..............................................5.7(e)(iv)
Tax Indemnifying Party.............................................5.7(e)(iv)
Tax Return........................................................3.16(c)(ii)
Taxes..............................................................3.16(c)(i)
Termination Date.......................................................7.1(e)
Third Party Approval Contracts.........................................5.3(b)
To the Knowledge of Buyer...............................................10.14
To the Knowledge of Sellers.............................................10.14
Trademark License Agreement..............................................5.18
Transfer Tax Limit................................................5.7(c)(vii)
Transition Services Agreement............................................5.10
Unrelated Accounting Firm..............................................1.4(c)
Wholly Owned Companies...............................................Recitals
Wholly Owned Company.................................................Recitals
Year-End Balance Sheet....................................................1.3
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SCHEDULES
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Schedule 1.3........................................Current Assets and Current Liabilities
Schedule 1.8(a)..............................................................2001 Revenues
Schedule 1.8(b)................................................Assets of Excluded Business
Schedule 3.1........................................................Foreign Qualifications
Schedule 3.3.................................................................Capital Stock
Schedule 3.4....................................................Ownership of Capital Stock
Schedule 3.5..............................................................Sellers Consents
Schedule 3.6(b)........................................................Company Liabilities
Schedule 3.7.............................................................Absence of Change
Schedule 3.8(a)(i)...........................................................Real Property
Schedule 3.8(a)(ii).................................................Title to Real Property
Schedule 3.8(a)(iv).............................................Owned Real Property Access
Schedule 3.8(a)(vi)...............................Notice of Condemnation or Eminent Domain
Schedule 3.8(a)(vii).............................................Real Property Obligations
Schedule 3.8(a)(viii)...........................................Use of Owned Real Property
Schedule 3.8(b)............................................................Title to Assets
Schedule 3.9(b)(i).......Adverse Claims Against Use of Company Owned Intellectual Property
Schedule 3.9(b)(ii)....................................Company Owned Intellectual Property
Schedule 3.9(b)(iii)................................Company Licensed Intellectual Property
Schedule 3.9(c)..................Third Party Infringement of Company Intellectual Property
Schedule 3.10(a).........................................................Computer Software
Schedule 3.11...................................................................Litigation
Schedule 3.12...............................................Compliance with Applicable Law
Schedule 3.13....................................................................Contracts
Schedule 3.14............................................................Employee Benefits
Schedule 3.15................................................................Labor Matters
Schedule 3.16........................................................................Taxes
Schedule 3.17................................................................Environmental
Schedule 3.18......................................................Officers; Bank Accounts
Schedule 3.20........................................................Sufficiency of Assets
Schedule 3.21......................................................................Permits
Schedule 4.2................................................................Buyer Consents
Schedule 5.1............................................Conduct of the Companies' Business
Schedule 5.3(a)............................................................Group Contracts
Schedule 5.14.............................................................Employee Matters
Schedule 6.3(d).............................................................Sellers' Liens
Schedule 6.3(f)..........................................................Required Consents
Schedule 10.14.................................Officers and Affiliates of Sprint and Buyer
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EXHIBITS
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EXHIBIT NUMBER
Transition Services Agreement..............................................5.9
Directory Services License Agreement......................................5.10
Mutual Release............................................................5.14
Non-Competition Agreement.................................................5.16
Subscriber Listings Agreement.............................................5.17
Trademark License Agreement...............................................5.18
Publisher Trademark License Agreement.....................................5.19
Terms of SPV Operating Agreement and SPV Agreement........................5.23
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of September 21, 2002
(this "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 Agreement as "SELLERS"), and X.X. Xxxxxxxxx Corporation, a
Delaware corporation ("BUYER").
RECITALS
1. Sprint owns all of the issued and outstanding shares of capital stock
(the "DAI SHARES") of DirectoriesAmerica, Inc., a Kansas corporation ("DAI"),
which owns all of the issued and outstanding capital stock of Sprint Publishing
& Advertising, Inc., a Kansas corporation ("SPA").
2. Centel LLC owns all of the issued and outstanding shares of capital
stock (the "CDC SHARES" and, collectively with the DAI Shares, the "SHARES") of
Centel Directory Company, a Delaware corporation ("CDC"), which owns a
membership interest in Cendon, L.L.C., a Delaware limited liability company
("CENDON") (DAI, SPA and CDC are hereinafter each referred to as a "WHOLLY OWNED
COMPANY" and collectively referred to as the "WHOLLY OWNED Companies", and DAI,
SPA, CDC and Cendon are hereinafter each referred to as a "COMPANY" and
collectively referred to as the "COMPANIES").
3. Pursuant to the terms and conditions of this Agreement, Sellers desire
to sell to Buyer, and Buyer desires to purchase from Sellers, the Shares.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and conditions set
forth in this Agreement, and intending to be legally bound by this Agreement,
the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES
SECTION 1.1 PURCHASE AND SALE. Subject to the terms and conditions set
forth in this Agreement, at the closing provided for in Section 1.5 of this
Agreement (the "CLOSING"), Sellers agree to sell, transfer and deliver to Buyer,
and Buyer agrees to purchase, acquire and accept from Sellers, the Shares.
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) and (ii) (A) plus an amount equal to the difference
between the Estimated Working Capital and the Target Working Capital if the
amount of Estimated Working Capital is greater than the Target Working Capital,
or (B) less an amount equal to the difference between the Target Working Capital
and the Estimated Working Capital if the amount of Estimated Working Capital is
less than the Target Working Capital.
(b) At least five business days prior to the Closing, Sellers shall
deliver to Buyer an estimated combined consolidated balance sheet of the
Companies as of the close of business on the Closing Date 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" shall mean 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
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Section 1.3) of the Companies as of the close of business on the Closing Date as
reflected on such balance sheet.
(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 Closing Date 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 Closing Date Working Capital plus interest or
(ii) if the amount of the Closing Date 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 Closing Date 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."
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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 "CLOSING DATE 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. Closing Date
Working Capital shall not include deferred directory costs, deferred revenue,
any asset or liability related to Taxes or any intercompany accounts settled
pursuant to Section 5.22.
(b) Promptly following the Closing, Buyer shall prepare a combined
consolidated balance sheet of the Companies as of the close of business on the
Closing Date (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. Buyer shall engage PricewaterhouseCoopers LLP (the
"BUYER'S AUDITOR") to conduct an audit of the Preliminary Balance Sheet. Buyer
shall use all commercially reasonable efforts to deliver to Sellers a final
draft of the Preliminary Balance Sheet within 90 days after the Closing Date,
together with the opinion of the Buyer's Auditor thereon stating that the audit
has been conducted in accordance with the Accounting Principles. Representatives
of Sellers shall have the opportunity to examine the work papers, schedules and
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other documents prepared by Buyer in connection with the preparation of the
Preliminary Balance Sheet. Buyer shall use all commercially reasonable efforts
to cause the Buyer's Auditor to permit Sellers and their accounting firm (the
"SELLERS' AUDITOR") to examine the Buyer's 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 Sellers object to the Preliminary Balance Sheet, Sellers
shall deliver to Buyer a written notice of objection (an "OBJECTION NOTICE")
within thirty (30) days following the delivery thereof. If Sellers have no
objection to the Preliminary Balance Sheet, Sellers shall promptly deliver to
Buyer 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 Buyer 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 Sellers 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
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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".
SECTION 1.5 CLOSING. The Closing of the transactions contemplated by
this Agreement shall take place on the later 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 King & Spalding, 0000 Xxxxxx xx xxx Xxxxxxxx, 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."
SECTION 1.6 DELIVERIES BY SELLERS. At the Closing, Sellers will deliver
or cause to be delivered to Buyer (unless delivered previously) the following:
(a) The stock certificates representing all of the Shares, duly
endorsed in blank or accompanied by stock powers duly executed in blank;
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(b) The resignations of all officers and members of the Boards of
Directors of the Wholly Owned Companies and the managers of Cendon, in each case
from their position as such, in a form reasonably satisfactory to Buyer;
(c) The Transition Services Agreement (as hereinafter defined),
the Directory Services License Agreement (as hereinafter defined), the Mutual
Release (as hereinafter defined), the Non-Competition Agreement (as hereinafter
defined), the Subscriber Listings Agreement (as hereinafter defined), the
Trademark License Agreement (as hereinafter defined), the Publisher Trademark
License Agreement (as hereinafter defined) and the SPV Agreement (as hereinafter
defined), each executed by Sprint and/or the applicable subsidiary of Sprint
(the "ANCILLARY AGREEMENTS"); and
(d) All other documents, instruments and writings reasonably
required by Buyer to be delivered by Sellers at or prior to the Closing pursuant
to this Agreement or otherwise reasonably required in connection with the
transactions contemplated by this Agreement.
SECTION 1.7 DELIVERIES BY BUYER. At the Closing, Buyer will deliver or
cause to be delivered to Sellers (unless previously delivered) the following:
(a) The Estimated Purchase Price in accordance with Section 1.2(a)
of this Agreement;
(b) The Ancillary Agreements, each executed by Buyer or the
Companies, as applicable; and
(c) All other documents, instruments and writings reasonably
required by Sellers to be delivered by the Buyer at or prior to the Closing
pursuant to this Agreement or
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otherwise reasonably required in connection with the transactions contemplated
by this Agreement.
SECTION 1.8 INITIAL AND SECOND CLOSING.
(a) In the event that (i) at any time after the date hereof the
only conditions to Closing capable of being satisfied prior to the Closing Date
that have not been satisfied are Section 6.1(d) and/or Section 6.2(d) as a
result of an action or, with respect to Section 6.1(d), failure to act by one or
more state public utilities commissions or other state governmental or
regulatory authorities and (ii) the directories published by the Companies in
the state or states with respect to which such regulatory action has occurred
or, with respect to Section 6.1(d), has failed to occur (the "EXCLUDED STATES")
represent less than eight percent (8%) of the 2001 revenues of the Companies, as
set forth on SCHEDULE 1.8(a) (the inclusion in this Section 1.8 of this
percentage is not deemed to be an admission or representation by any party that
this percentage of revenues is or is not "material" or would or could have a
"material adverse effect" as contemplated by this Agreement), the parties will
complete an initial Closing (the "INITIAL CLOSING") in accordance with this
Agreement (including this Section 1.8) on the later to occur of (i) January 3,
2003, and (ii) the fifth business day following the satisfaction or waiver of
all conditions to Closing set forth in Article VI of this Agreement that are
capable of being satisfied prior to the Closing Date (other than Sections 6.1(d)
and 6.2(d)). However, if the prior sentence would require the Initial Closing to
occur prior to January 30, 2003, Buyer may elect to defer the Initial Closing to
a date on or prior to January 30, 2003.
(b) Immediately prior to the Initial Closing, (i) the Companies
will contribute to one or more newly formed corporate or limited liability
company subsidiaries (each, a "STATE SUBSIDIARY") those assets listed on
SCHEDULE 1.8(b) relating to the directories
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publishing business conducted by the Companies in each Excluded State as of the
date of the Initial Closing (the "EXCLUDED BUSINESS"), (ii) each State
Subsidiary will assume the liabilities listed on SCHEDULE 1.8(b) relating to the
Excluded Business in its respective Excluded State, and (iii) all of the common
stock or membership interests of the State Subsidiary will be distributed to DAI
or Centel LLC, as applicable, pursuant to Sections 332 and 337 of the Code and
thereafter, prior to the Second Closing Termination Date, Sellers will not take
any action that would cause Centel LLC or DAI to no longer be part of their
consolidated group for federal tax purposes. The respective assets and
liabilities relating to the Excluded Business conducted in each Excluded State
will be contributed to and assumed by a separate State Subsidiary. If required,
the Parties will cause CenDon to make a non-cash, non-liquidating distribution
of the common stock or membership interest of the State Subsidiary to CDC.
(c) In the event that following the Initial Closing and prior to
the termination of this Agreement, the conditions to closing set forth in
Section 6.1(d) and Section 6.2(d) become satisfied (or waived) as to one or more
Excluded States, the parties will complete a subsequent Closing (the "SECOND
Closing") at which Sellers will sell to Buyer the shares or membership interests
(as applicable) of the applicable State Subsidiary(ies) as to which the
conditions in Section 6.1(d) and Section 6.2(d) have been satisfied (or waived).
The Second Closing will take place on such date as is agreed to by the parties
but in no event later than the business day prior to the one year anniversary of
the date of this Agreement (the "SECOND CLOSING TERMINATION DATE"), assuming
that all conditions to Closing have been satisfied as of such date (other than
Section 6.1(d) or 6.2(d) with respect to any states that are not included in the
Initial Closing). Notwithstanding the foregoing, if the conditions to the
Closing in Section 6.1(d) or Section 6.2(d) have not been satisfied at the
Initial Closing as to more than one
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Excluded State, the Second Closing will occur within five business days of the
satisfaction or waiver of all conditions to Closing set forth in Article VI of
this Agreement that are capable of being satisfied prior to the Closing Date,
including without limitation Sections 6.1(d) and 6.2(d), as to each of the
Excluded States; PROVIDED, HOWEVER, that if, on the Second Closing Termination
Date, the conditions in Sections 6.1(d) and 6.2(d) have not been satisfied as to
any Excluded State, such Excluded State will not be the subject of a Second
Closing.
(d) For the purposes of the Initial Closing and the Second
Closing, (i) the dollar amount indicated in the second sentence of Section
1.2(a) shall equal $2,230,000,000 TIMES the Applicable Fraction (as defined
below) and (ii) the Target Working Capital shall equal $259,548,000 TIMES the
Applicable Fraction. The "Applicable Fraction" means a fraction, the numerator
of which is the revenues reflected on SCHEDULE 1.8(a) for the states with
respect to which the business is being transferred at the Initial Closing or
Second Closing (as applicable) and the denominator of which is the total
revenues reflected on SCHEDULE 1.8(a).
(e) At the Initial Closing, the DAI Shares will be retained by
Sprint, and Buyer will purchase the CDC Shares and all of the issued and
outstanding capital stock of SPA (which, together with the CDC Shares, will
constitute the "Shares" for purposes of the Initial Closing). Prior to the
Initial Closing, the parties will enter into an amendment to this Agreement that
reflects the provisions of this Section 1.8 and otherwise causes the economic
and legal substance of this Agreement to be retained and implemented with
respect to the Initial Closing and the Second Closing, including without
limitation to (i) remove DAI from the definition of "Companies" and include DAI
in the definition of "Sellers", (ii) deem the State Subsidiaries to be
"Companies" and "Wholly Owned Companies" for purposes of this Agreement and
(iii) deem the word "Closing" to include the Second Closing. Notwithstanding
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the foregoing, at the Initial Closing, the provisions of Section 5.14 and
Section 5.7 will apply without amendment except as set forth in clauses (i) and
(ii) above. Following the Initial Closing, this Agreement as so amended will
remain in full force and effect in accordance with its terms.
(f) After the Initial Closing, the Companies will manage and
operate the Excluded Business on behalf of Sellers pursuant to the Services
Agreement (as defined below), including (without limitation) by performing
national and local sales, billing, credit and collection, customer service,
pre-press, printing and distribution. All gross revenues of the Excluded
Business will be collected by the Companies on behalf of Sellers and promptly
transferred to Sellers. For each Excluded State (for so long as such Excluded
State is subject to the Services Agreement), Sellers will pay the Companies a
fee for the performance of such services for each fiscal year equal to 39% of
the net billed revenue of the Excluded Business in the Excluded State for such
fiscal year PLUS 110% of direct costs for printing, paper procurement and
distribution for such Excluded Business for such fiscal year. The fee shall be
prorated on a daily basis for any partial year during which the Services
Agreement is in effect with respect to the Excluded Business in the applicable
Excluded State. In connection with the Initial Closing, Sellers and the
Companies will enter into a 50-year services agreement (the "SERVICES
AGREEMENT") with respect to the Excluded Businesses to implement and reflect the
provision of services and payment of fees for performance described in this
Section 1.8(f) and otherwise containing substantially the same terms and
conditions as are contained in the Directory Services License Agreement. The
Services Agreement will terminate upon the Second Closing as to any Excluded
Business acquired by Buyer in the Second Closing.
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(g) If, at any time following the Second Closing Termination Date
or the termination of this Agreement in accordance with its terms following the
Initial Closing, Sellers determine to sell any of the State Subsidiary(ies) or
all or any portion of the Excluded Business that has not been the subject of a
Second Closing, Sellers will give notice to the Companies of such intent and
request the Companies to submit a written proposal to Sellers outlining the
specific terms and conditions under which the Companies are willing to purchase
such State Subsidiary(ies) or the applicable portion of the Excluded Business
(the "TARGET ASSETS"), which the Companies will submit within thirty (30) days
following Sellers' request if the Company desires to pursue such opportunity. If
the Companies do not submit a proposal within such 30-day period, Sellers may
contract with a third party in Sellers' discretion to purchase the Target
Assets. If the Companies submit a proposal during such 30-day period, Sellers
will negotiate in good faith with the Companies for a period of thirty (30) days
following the receipt by Sellers of such proposal to agree on terms and
conditions under which the Companies would acquire the Target Assets. If no
agreement has been reached by the end of the 30-day period, Sellers will submit
a final written proposal to the Companies, who will have five business days to
accept such proposal. If Sellers and the Companies are unable to agree on terms
for the Companies to acquire the Target Assets within the time frame specified
in this Section, Sellers may contract with a third party to acquire the Target
Assets on terms which in the aggregate are no more favorable to the purchaser
than last offered in writing to the Companies. If Sellers contract with a third
party to acquire the Target Assets, the Services Agreement will terminate with
respect to the Target Assets upon 60 days prior written notice to the Companies,
in which event Sellers will be required to pay the unpaid fees accrued under the
Services Agreement with respect to the Target Assets and reimburse the Companies
for any amounts
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payable under the Buyer's generally applicable severance plans with respect to
employees that the Companies decide to terminate as a result of the termination
of the Services Agreement with respect to the Target Assets; provided that the
Companies will cooperate in good faith to permit the purchaser of the Target
Assets to employ any of such employees.
(h) In connection with the Initial Closing and the Second Closing,
the definition of "Service Areas" in the Directory Services License Agreement
will be revised to exclude the Services Areas in which the Excluded Business
that has not been included in a Second Closing is conducted.
(i) It is the intent of the parties that this Section 1.8
constitute a binding and enforceable agreement to proceed with the Initial
Closing and the Second Closing in the circumstances described in Sections 1.8(a)
and 1.8(c). The parties agree to use their good faith, reasonable best efforts
to reach agreement on forms of amendments to this Agreement as contemplated by
this Section 1.8 and each of the Ancillary Agreements and to enter into the
Services Agreement, in each case as may be necessary to effect the Initial
Closing and the Second Closing on the terms described in this Section 1.8.
However, if the parties are unable to agree on any of the terms of such
agreements, all issue(s) will be submitted at the request of either party to
binding arbitration in accordance with the Expedited Procedures of the American
Arbitration Association's Commercial Dispute Resolution Procedures, as amended
and effective on July 1, 2002. If arbitration is requested, the Termination Date
will be extended if necessary to a date that is thirty (30) days following the
issuance of the arbitrator's ruling.
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ARTICLE II
RELATED MATTERS
SECTION 2.1 USE OF SPRINT'S NAME AND LOGOS. Except as expressly
provided in the Trademark License Agreement, it is expressly agreed that Buyer
is not purchasing, acquiring or otherwise obtaining any right, title or interest
in the name "Sprint" or any "Sprint" tradenames, trademarks, identifying logos
or service marks related thereto or employing any part or variation of any of
the foregoing or any confusingly similar tradename, trademark or logo
(collectively, the "SELLER TRADENAMES AND LOGOS"). Buyer agrees that neither it
nor any of its Affiliates (as hereinafter defined) shall make any use of the
Seller Tradenames and Logos from and after the Closing Date except as provided
in the Directory Services License Agreement and the Trademark License Agreement.
Simultaneously with the Closing, Buyer will cause the corporate name of SPA to
be amended to remove any reference to the name "Sprint" or any other name that
suggests SPA is a subsidiary of or affiliated with Sprint.
SECTION 2.2 NO ONGOING OR TRANSITION SERVICES. Except as provided in
the Transition Services Agreement and the Directory Services License Agreement
at the Closing, all data processing, accounting, insurance, banking, personnel,
legal, communications and other services provided to the Companies by Sellers or
any Affiliate of Sellers, including any agreements or understandings (written or
oral) with respect thereto, will terminate.
SECTION 2.3 CERTAIN PRE-CLOSING MATTERS.
(a) The parties agree that Sellers shall have the right, at or
prior to the Closing, to cause the Companies to distribute all of the cash held
by the Companies to Sellers or their Affiliates on a basis consistent with
Sprint's current practice of sweeping all cash on a daily
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basis. Except as provided in Section 1.4 of this Agreement, no adjustment shall
be made to the Purchase Price as a result of any such distributions.
(b) Prior to or effective with the Closing, each Company shall
assign to Sprint or its Affiliates, and Sprint or its Affiliates shall assume
(i) all liabilities of each Company which have accrued on or before, or which
are attributable to a Company's acts or omissions on or before, the Closing
under each Seller Benefit Plan described in Section 3.14(a) and each other plan,
contract, agreement, program, fund or arrangement which would be a Seller
Benefit Plan described in Section 3.14(a) but for the fact that no Company has
any material liability for the payment of benefits under, or makes material
contributions to, such other plan, contract, agreement, program, fund or
arrangement, and (ii) retention commitments set forth on SCHEDULE 3.13(d) that
are (and shall remain after Closing) the sole responsibility of Sellers and
their Affiliates (other than the Companies).
(c) Except as expressly provided elsewhere in this Agreement, if,
at any time following the Closing, Sellers or their Affiliates receive any cash
or other assets belonging to any Company or Buyer, Sellers will, and will cause
their Affiliates to, as promptly as practicable, deliver such cash or assets to
such Company or Buyer, as applicable.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby jointly and severally represent and warrant to Buyer, as
of the date of this Agreement and as of the Closing Date, as follows:
SECTION 3.1 ORGANIZATION.
(a) Each of DAI, CDC and SPA is a corporation duly incorporated,
validly existing and in good standing under the laws of the States of Kansas,
Delaware and Kansas, respectively. Cendon is a limited liability company duly
formed, validly existing and in good standing under the laws of the State of
Delaware. Each Company has all requisite power and authority to own, lease and
operate its properties and assets and to carry on its business and operations as
now being conducted. Each Company is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property or assets
owned, leased or operated by such Company or the nature of the business
conducted by such Company makes such qualification necessary, except where the
failure to be so duly qualified or licensed and in good standing would not
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect (as hereinafter defined). SCHEDULE 3.1 sets forth a list
of all jurisdictions where each of the Companies is qualified to do business.
Sellers have heretofore made available to Buyer complete and correct copies of
the certificate of incorporation or articles of incorporation, as the case may
be, and by-laws of the Wholly Owned Companies, as currently in effect, and the
certificate of formation and limited liability company agreement of Cendon, as
currently in effect.
(b) As used in this Agreement, a "COMPANY MATERIAL ADVERSE EFFECt"
shall mean any event, occurrence, development, state of circumstances or facts,
change or effect
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that has had, or would reasonably be expected to, individually or in the
aggregate, have a material adverse effect upon the financial condition,
operating results, business, assets or liabilities of the Companies on a
consolidated basis; PROVIDED, HOWEVER, that a Company Material Adverse Effect
shall not include any event, occurrence, development, state of circumstances or
facts, change in or effect upon the financial condition, operating results,
business, assets or liabilities of the Companies directly or indirectly arising
out of, attributable to or as a consequence of conditions, events or
circumstances generally affecting the telephone directory publishing industry,
the securities markets or the overall economy (either generally in the U.S. or
in one or more of the jurisdictions in which the Companies conduct business).
SECTION 3.2 AUTHORIZATION. Sprint is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Kansas.
Centel LLC is a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware. Each Seller and each of
its Affiliates has the power and authority to execute and deliver this Agreement
and the Ancillary Agreements to which it is a party and perform its respective
obligations under this Agreement and the Ancillary Agreements to which it is a
party. The execution and delivery of this Agreement and the Ancillary Agreements
and the performance by Sellers and its Affiliates of their respective covenants
and agreements under this Agreement and the Ancillary Agreements have been duly
and validly authorized by the Board of Directors of Sprint and the manager of
Centel LLC, and no other proceeding on the part of Sellers, the Wholly Owned
Companies, or their shareholders, members or Affiliates is necessary to
authorize the execution, delivery and performance of this Agreement and the
Ancillary Agreements or the consummation of the transactions contemplated by
this Agreement and the Ancillary Agreements. This Agreement has been, and at the
Closing the Ancillary Agreements
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shall be, duly executed and delivered by Sellers and its Affiliates, and this
Agreement constitutes, and upon execution and delivery of the Ancillary
Agreements, the Ancillary Agreements will constitute, a valid and binding
agreement of Sellers and its Affiliates, enforceable against Sellers and its
Affiliates, in accordance with their respective terms, except that (a) such
enforcement may be subject to any bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other laws, now or hereafter in effect,
relating to or limiting creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
SECTION 3.3 CAPITAL STOCK. SCHEDULE 3.3 sets forth (a) the authorized,
issued and outstanding capital stock of each of the Wholly Owned Companies, (b)
the outstanding membership interests of Cendon and (c) the owners of the
outstanding capital stock and membership interests of the Companies. The Shares
and the outstanding capital stock of SPA have been validly issued, are fully
paid and non-assessable and are free of preemptive rights of any kind. The
membership interests in Cendon have been validly issued and are free of
preemptive rights of any kind. There are no shares of capital stock of any
Wholly Owned Company held as treasury shares. There are not any outstanding
securities convertible into, exchangeable for, or carrying the right to acquire,
equity securities of any Company, nor are there any subscriptions, warrants,
options, rights or other arrangements or commitments which could obligate any
Company to issue any shares of its capital stock or membership or other equity
interests. Except for (i) the membership interest in Cendon owned by CDC and
(ii) the issued and outstanding shares of capital stock of SPA owned by DAI,
none of the Companies owns, directly or indirectly, any capital stock,
membership interest or any other equity or debt
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securities of any corporation, firm, partnership, limited liability company,
joint venture, association or other entity. DAI owns no tangible or intangible
assets (including properties or rights) other than the capital stock of SPA.
SECTION 3.4 OWNERSHIP OF THE CAPITAL STOCK. Sellers and their
respective wholly owned subsidiaries shown on SCHEDULE 3.4 as the owners of the
outstanding capital stock or membership interests in the Companies have good
title to such stock or membership interests, free and clear of all Liens (as
hereinafter defined).
SECTION 3.5 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and
delivery of this Agreement does not, and the execution and delivery of the
Ancillary Agreements will not, and the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements will not (a)
conflict with or result in any breach of any provision of the governing
instruments of Sellers or any of the Companies, (b) except as set forth in
SCHEDULE 3.5 and for applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), require any filing with,
or the obtaining of any permit, authorization, consent or approval of, or
license, qualification or order of, any governmental or regulatory authority,
(c) except as set forth in SCHEDULE 3.5, violate, conflict with or result in a
default (or any event which, with notice or lapse of time or both, would
constitute a default) under, or give rise to any right of termination,
cancellation or acceleration under, any of the terms, conditions or provisions
of any note, mortgage, other evidence of indebtedness, guarantee, license,
agreement, lease or other contract, instrument or obligation to which any
Company or Sellers are a party or by which any Company or Sellers or any of
their respective assets may be bound or under which any Company receives any
benefit, whether or not such Company is a party thereto, including, but not
limited to, the Contracts (as hereinafter defined), or (d) violate
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any order, injunction, decree, statute, rule or regulation applicable to any
Company or Sellers, excluding from the foregoing clauses (b), (c) and (d) such
requirements, violations, conflicts, defaults or rights (i) which would not
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect and would not adversely affect the ability of Sellers to
consummate the transactions contemplated by this Agreement, or (ii) which become
applicable as a result of the business or activities in which Buyer is or
proposes to be engaged or as a result of any acts or omissions by, or the status
of or any facts pertaining to, Buyer.
SECTION 3.6 FINANCIAL STATEMENTS AND UNDISCLOSED LIABILITIES.
(a) Sellers have made available to Buyer true and correct copies
of the audited combined consolidated balance sheets of the Companies as of
December 31, 1999, December 31, 2000, and December 31, 2001, the audited
combined consolidated statements of income and cash flows of the Companies for
each of the fiscal years then ended, including the notes thereto, and the
unaudited combined consolidated balance sheet of the Companies, dated June 30,
2002 (the "INTERIM BALANCE SHEET"), and unaudited combined consolidated
statements of income and cash flows of the Companies for the six (6) month
period then ended presented on a basis consistent with the year-end audited
financial statements. All of the foregoing financial statements are hereinafter
collectively referred to as the "FINANCIAL STATEMENTS". Except as disclosed in
the Financial Statements, the Financial Statements have been prepared from, and
are in accordance with, the books and records of the Companies and present
fairly and accurately, in all material respects, the financial position, results
of operations and cash flows of the Companies on a combined consolidated basis
as of the dates and for the applicable periods indicated, in each case in
conformity with GAAP consistently applied except as noted therein.
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(b) The Companies do not have any liabilities or obligations of
any nature (whether accrued, absolute, contingent, unasserted or otherwise)
required by GAAP to be reflected on the Financial Statements that would
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect, except (i) as disclosed, reflected or reserved against
in the Financial Statements and the notes thereto, (ii) for liabilities and
obligations incurred in the Ordinary Course of Business (as hereinafter defined)
since December 31, 2001, and (iii) as set forth on SCHEDULE 3.6(b). This
representation shall not be deemed breached as a result of a change in law after
the Closing Date. The Companies do not have any off-balance sheet financing.
SECTION 3.7 ABSENCE OF MATERIAL ADVERSE EFFECT. Except as set forth on
SCHEDULE 3.7, since December 31, 2001, each Company has:
(a) conducted such Company's business in the Company's ordinary
course of business substantially consistent with past practice ("ORDINARY COURSE
OF BUSINESS");
(b) not acquired, sold, disposed of, licensed, assigned,
transferred or permitted to lapse any material asset other than sales of
products and services in the Ordinary Course of Business;
(c) maintained accounts receivable, inventory, accounts payable
and other working capital accounts in a manner consistent with the Ordinary
Course of Business;
(d) not pledged or permitted the imposition of any Lien on any of
its assets (except, with respect to real property, Permitted Liens);
(e) not suffered a Company Material Adverse Effect;
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(f) not suffered any damage, destruction or loss of tangible
assets, whether or not covered by insurance, with a book value in excess of
$500,000, in the aggregate with the other Companies;
(g) not paid, discharged or satisfied any material claims,
liabilities or obligations (absolute, accrued, contingent or otherwise), except
in each case in the Ordinary Course of Business;
(h) not cancelled any indebtedness for borrowed money or material
claim or, except in the Ordinary Course of Business, waived any material claims
or rights of substantial value;
(i) not granted any material increase in the salaries, wages,
fringe benefits or other compensation payable or to become payable to its
officers, directors, consultants or employees (including any such increase
pursuant to any bonus, severance, termination, pension, profit-sharing or other
plan or commitment) or any special increase in the compensation payable or to
become payable to any officer, director, consultant or employee, except for (i)
normal merit and cost of living increases in the Ordinary Course of Business and
(ii) retention commitments that are (and shall remain after Closing) the sole
responsibility of Sellers and their Affiliates (other than the Companies);
(j) not effected a material write down of any of its material
assets;
(k) not made any change to its accounting policies except as
required by GAAP;
(l) except in the Ordinary Course of Business, no Company has (i)
acquired any material assets from any Person, (ii) consummated any transaction
that is material to the Companies, taken as a whole, or (iii) made any material
capital expenditure, or
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commitment for a material capital expenditure, for additions or improvements to
property, plan and equipment; and
(m) there has not been any material labor dispute, other than
routine individual grievances or, to the Knowledge of Sellers, any material
activity or proceeding by a labor union or representative thereof to organize
any employees of the Companies or any material lockouts, strikes, slowdowns,
work stoppages or, to the Knowledge of Sellers, threats thereof by or with
respect to any employees of the Companies.
SECTION 3.8 TITLE, OWNERSHIP AND RELATED MATTERS.
(a) Real Property.
(i) SCHEDULE 3.8(a)(i) sets forth a list of the parcels of
real property owned by any Company (together with the fixtures and improvements
thereon, the "OWNED REAL PROPERTY"). SCHEDULE 3.8(a)(i) also sets forth a list
of the parcels of real property currently leased by any Company (together with
all fixtures and improvements thereon, the "LEASED REAL PROPERTY") and
collectively with the Owned Real Property, the "REAL PROPERTY"). All properties
occupied or used by any Company are owned or leased by such Company and are
described on SCHEDULE 3.8(a)(i) or SCHEDULE 3.13.
(ii) Except as set forth on SCHEDULE 3.8(a)(ii), each
Company has good and marketable, indefeasible fee simple title to its Owned Real
Property, free and clear of all liens, mortgages, deeds of trust, pledges,
security interests, options to acquire, charges, claims, leasehold interests,
tenancies, restrictions and encumbrances of any nature whatsoever (collectively,
"LIENS") other than (A) Liens for Taxes not yet due and payable, (B) statutory
Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen
and repairmen incurred in the Ordinary Course of Business and not yet
delinquent, (C) matters of record set
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forth on the title insurance policy issued by Lawyer's Title Insurance, dated
January 5, 1995 (excluding items 2, 3 and 5 of Schedule B thereto) and (D)
zoning, building or other restrictions, variances, covenants, rights of way,
encumbrances, easements and other minor irregularities in title, none of such
items in (A)-(D) which, individually or in the aggregate, materially and
adversely detract from the value of such Owned Real Property based on its
current use or interfere in any material respect with the current use or
occupancy of such Owned Real Property (collectively, "PERMITTED LIENS").
(iii) Each Company has a valid leasehold interest in the
Leased Real Property, free and clear of any Liens except for Permitted Liens.
(iv) Except as set forth in SCHEDULE 3.8(a)(iv), the Owned
Real Property currently has access to (a) public roads or valid easements over
private streets or private property for such ingress to and egress from all such
plants, buildings and structures, and (b) water supply, storm and sanitary sewer
facilities, telephone, gas and electrical connections, fire protection, drainage
and other public utilities, in each case as necessary for the operation or
conduct of the business of the Companies as currently conducted. None of the
structures on any such property substantially encroaches upon real property of
another Person, and no structure of any other Person substantially encroaches
upon the Owned Real Property.
(v) Such Owned Real Property, and its continued use,
occupancy and operation as currently used, occupied and operated, does not
constitute a nonconforming use in any material respect under applicable
building, zoning, subdivision and other land use and similar laws, regulations
and ordinances. Valid certificates of occupancy permitting such uses are in
effect with respect to the Owned Real Property.
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(vi) Except as set forth on SCHEDULE 3.8(a)(vi), no Company
has, in the last three years, received written notice of any pending or, to the
Knowledge of Sellers, threatened condemnation or eminent domain proceeding with
respect to the Owned Real Property or any part thereof. (vii) Except as set
forth on SCHEDULE 3.8(a)(vii), there are no material options, rights of first
refusal, contracts or other binding obligations granted by any Company for the
sale, exchange, leasing, transfer, financing or refinancing of any of the Owned
Real Property.
(viii) Except as set forth on SCHEDULE 3.8(a)(viii), there
are no matters that an accurate and complete survey of the Owned Real Property
would disclose that would materially and adversely affect the ability of Buyer
or the Companies to use the Owned Real Property as is currently being used or
that would materially and adversely affect the value of the Owned Real Property.
(ix) No party other than a Company is in possession, or has
any possession of, all or any material portion of any of the Real Property.
(b) TITLE TO ASSETS. Except as set forth in SCHEDULE 3.8(b), each
Company has good and marketable title to its material assets, free and clear of
all Liens (except, with respect to the Real Property, Permitted Liens).
SECTION 3.9 INTELLECTUAL PROPERTY.
(a) As used in this Agreement, (i) "INTELLECTUAL PROPERTY" means
any trademarks, trade names, service marks, service names, trade dress
(including but not limited to colors and combinations thereof, design graphics,
cover graphics, "look and feel" or directory
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design and package graphics), internet domain names, logos, assumed names, trade
secrets, copyrights, patents or any registrations and applications therefor;
Computer Software does not constitute Intellectual Property; (ii) "COMPANY OWNED
INTELLECTUAL PROPERTY" means any Intellectual Property owned by Sellers or their
Affiliates (including the Companies) and necessary for, or used by the Companies
in, the operation of the Companies' businesses as currently conducted; (iii)
"COMPANY LICENSED INTELLECTUAL PROPERTY" means any Intellectual Property
licensed to the Companies and used by the Companies in the operation of the
Companies' businesses as currently conducted; and (iv) "COMPANY INTELLECTUAL
PROPERTY" means the Company Owned Intellectual Property and the Company Licensed
Intellectual Property.
(b) To the Knowledge of Sellers, the conduct of the business of
the Companies does not infringe upon any Intellectual Property of any third
party. Except as disclosed on SCHEDULE 3.9(b)(i), there are no pending, or to
the Knowledge of Sellers threatened, proceedings, administrative claims or
litigation or other adverse claims by any Person (as hereinafter defined)
against the use by the Companies of any material Company Owned Intellectual
Property. To the Knowledge of Sellers, there are no pending or threatened,
proceedings, administrative claims or litigation or other adverse claims by any
Person against the use by the Companies of any material Company Licensed
Intellectual Property. SCHEDULE 3.9(b)(ii) sets forth a list of all material
Company Owned Intellectual Property other than trade secrets, and SCHEDULE
3.9(b)(iii) sets forth a list of all material Company Licensed Intellectual
Property, including a description of the license agreement with respect thereto.
There is no material Intellectual Property necessary for, or used by the
Companies in, the operation of the Companies' businesses as currently conducted
that is not Company Intellectual Property.
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(c) Each Company owns or has all valid licenses and other rights
to use the Company Intellectual Property, except where the failure to have such
ownership, licenses or rights would not reasonably be expected to, individually
or in the aggregate, have a Company Material Adverse Effect. Except as disclosed
on SCHEDULE 3.9(c), to the Knowledge of the Sellers, there is no material
unauthorized use, disclosure, infringement or misappropriation of any material
Company Intellectual Property by any third party, including any employee or
former employee of the Company.
(d) None of Sellers or any of their Affiliates, including the
Companies, is in default in any material respect regarding any of its
obligations in respect of protecting or maintaining any material Company
Intellectual Property and no Person has asserted any claim in writing delivered
to Sellers or their Affiliates to the contrary.
SECTION 3.10 COMPUTER SOFTWARE.
(a) SCHEDULE 3.10(a) sets forth a true and complete list of: (i)
all computer software owned by each of the Companies (the "COMPANY PROPRIETARY
Software"), and (ii) all agreements by which the Company licenses computer
software (other than off-the-shelf software) (the "COMPANY LICENSED SOFTWARE"
and collectively with the Company Proprietary Software the "COMPANY SOFTWARE").
(b) Each Company has all right, title and interest in and to all
intellectual property rights in the Company Proprietary Software. The use of the
Company Software does not breach in any material respect any terms of any
license or other contract between any Company and any third party. Each Company
is in compliance in all material respects with the terms and conditions of all
license agreements in favor of each Company relating to the Company Licensed
Software.
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(c) To the Knowledge of Sellers, the Company Proprietary Software
does not infringe any patent, copyright, trademark or trade secret or any other
intellectual property right of any third party.
(d) No Company has granted rights in the Company Software to any
third party.
SECTION 3.11 LITIGATION. SCHEDULE 3.11 identifies (a) all material
actions, suits and proceedings pending or, to the Knowledge of Sellers,
threatened against any Company by or before any court or governmental or
regulatory authority other than workers' compensation claims occurring in the
Ordinary Course of Business, and (b) all material investigations by any
governmental entity of which a Company has received written notice that are
pending or threatened against any Company. None of such actions, suits,
proceedings or investigations would reasonably be expected to, individually or
in the aggregate, have a Company Material Adverse Effect. There is (x) no
action, suit or proceeding pending by or before any court, governmental or
regulatory authority or, to the Knowledge of Sellers, threatened against the
Sellers or the Companies, and (y) no investigation by any governmental entity of
which a Company has received notice that is pending or, to the Knowledge of
Sellers, threatened against the Sellers or the Companies, which challenges the
validity of this Agreement or any Ancillary Agreement or which would be
reasonably likely to adversely affect or restrict Sellers' ability to consummate
the transactions contemplated by this Agreement or any Ancillary Agreement or
that would reasonably be expected to result in a failure of the condition set
forth in Sections 6.1(d) or 6.2(d). None of the Companies are in default with
respect to or subject to any order, judgment, decision, decree, injunction or
ruling of any federal, state, or local court or governmental agency, department
or authority, except for such defaults that would not
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reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect.
SECTION 3.12 COMPLIANCE WITH APPLICABLE LAW. Except as disclosed on
SCHEDULE 3.12, each Company has been in compliance in all material respects with
all applicable laws, ordinances, rules and regulations of any federal, state,
local or foreign governmental authority applicable to such Company or its
operations, including without limitation any Environmental Law, except for
instances of noncompliance that would not reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect. None
of Sellers or the Companies has received any written communication from any
governmental entity that alleges a Company is not currently in compliance in any
material respect with any such laws, ordinances, rules or regulations.
SECTION 3.13 CERTAIN CONTRACTS AND ARRANGEMENTS. SCHEDULE 3.13 sets
forth a list of the following contracts, agreements or binding arrangements
(whether written or oral) to which any Company is a party or by which it or any
of its material properties or assets are bound: (a) all bonds, debentures,
notes, loans, credit or loan agreements or loan commitments, mortgages, security
agreements, pledges, indentures, guarantees or other contracts relating to the
borrowing of money or binding upon any properties or assets (real, personal or
mixed, tangible or intangible) of each Company; (b) all leases relating to the
Leased Real Property or other leases or licenses involving any properties or
assets (whether real, personal or mixed, tangible or intangible) involving an
annual commitment or payment of more than $250,000 individually by a Company or
in the aggregate with other Companies; (c) all contracts or agreements which
limit or restrict a Company or any officers or key employees of a Company from
engaging in any business in any jurisdiction; (d) any contract that provides for
an increased or changed payment
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or benefit, or accelerated vesting, upon the execution of this Agreement or the
Closing or in connection with the transactions contemplated by this Agreement
(including any severance, retention or golden parachute agreement); (e) any
contract or agreement granting any third party a Lien on all or any part of the
assets of the Companies; (f) any contract or agreement with any agent,
distributor or representative which is not terminable without penalty on thirty
(30) calendar days' or less notice; (g) any joint venture or partnership
contract or other contract providing for the sharing of any profits; (h) any
deferred compensation, retirement incentive bonus, severance retention or
written employment agreement; (i) any contract or agreement with Sellers or any
Affiliates of Sellers; and (j) each existing contract and commitment (other than
those described in subsections (a) through (i) of this Section 3.13) to which
any Company is a party or by which its assets are bound (A) involving an annual
commitment or annual payment to or from a Company of more than $250,000
individually or in the aggregate with other Companies or (B) that is material to
the business of the Companies as presently conducted (together with those
contracts, agreements and understandings described in clauses (a) through (j),
the "CONTRACTS"). Except as set forth on SCHEDULE 3.13, Sellers have made
available to Buyer true and correct copies of all Contracts. All such Contracts
are in full force and effect and are valid, binding and enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity, including concepts of materiality, reasonableness, good
faith and fair dealing regardless of whether considered in a proceeding in
equity or at law, and neither the applicable Company nor, to the Knowledge of
Sellers, any other party thereto is in material default or breach under any of
such Contracts. None of Sellers or any Company has exercised any right to
terminate, or has
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received any notice that any party to a Contract has exercised any right to
terminate, such Contract (other than Contracts listed on SCHEDULE 3.13 which
will be terminated at Closing). To the Knowledge of Sellers, no event or
circumstance has occurred that, with notice or lapse of time or both, would
constitute an event of default or breach in any material respect under any
Contract, except for such events or defaults that would not reasonably be
expected to, individually or in the aggregate, have a Company Material Adverse
Effect.
SECTION 3.14 EMPLOYEE BENEFIT PLANS; ERISA.
(a) IDENTIFICATION. Each "employee benefit plan" (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended,
("ERISA")) which provides benefits to current or former employees of any Company
in their status as such (individually a "SELLER ERISA PLAN" and collectively the
"SELLER ERISA PLANS") and each other employment, severance, golden parachute,
retention, salary continuation, bonus, incentive, stock option, retirement,
pension, profit sharing or deferred compensation plan, contract, agreement,
program, fund or arrangement of any kind (whether written or oral, tax-qualified
or non-tax qualified, funded or unfunded, foreign or domestic, active or frozen
or terminated) and any related trust, insurance contract, escrow account or
similar funding arrangement which provides benefits to any current or former
officer, employee or director of, or any individual independent contractor who
has provided or who currently provides services to, any Company to which, or
with respect to which, such Company has a material liability for the payment of
benefits or makes material contributions is shown on Schedule 3.14 (individually
a "SELLER BENEFIT PLAN" and, together with the Seller ERISA Plans, collectively
the "SELLER BENEFIT PLANS"), and there are no "employee benefit plans" (as
defined in Section 3(3) of ERISA) which provide benefits to any current or
former employees of any Company (in their status as such) and no other
employment,
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severance, golden parachute, retention, salary continuation, bonus, incentive,
stock option, retirement, pension, profit sharing or deferred compensation
plans, contracts, agreements, programs, funds or arrangements of any kind
(whether written or oral, tax-qualified or non-tax qualified, funded or
unfunded, foreign or domestic, active or frozen or terminated) or any related
trusts, insurance contracts, escrow accounts or similar funding arrangements
which provide benefits to current or former officers, employees or directors of,
or individual independent contractors who have provided or who currently provide
services to, any Company to which, or with respect to which, any Company has a
material liability for the payment of benefits or makes material contributions
except for the Seller Benefit Plans.
(b) COMPLIANCE AND SPONSORSHIP. (i) Sprint is responsible for the
administration of each of the Seller ERISA Plans and, except as set forth on
SCHEDULE 3.14, each of the Seller ERISA Plans has been administered by Sprint in
compliance in all material respects with ERISA, the Code and all other
applicable laws, (ii) each Seller ERISA Plan is sponsored and maintained by
Sprint for the benefit of eligible employees of each Company, Sprint and each
other employer (other than a Company) which together with Sprint is treated
under Section 414(b), Section 414(c) or Section 414(m) of the Code or Section
4001(b)(1) of ERISA as a "single employer" of such eligible employees (an "ERISA
AFFILIATE"), (iii) there are two Seller ERISA Plans and two other defined
contribution plans (as defined in Section 414(i) of the Code) maintained by
Sprint that are intended to be "qualified" plans within the meaning of Section
401(a) of the Code, and each such plan has a favorable determination letter from
the Internal Revenue Service to the effect that it is so qualified and, if the
letter for such a plan is not current, such plan is the subject of a timely
request for a current favorable determination letter, (iv) there is one Seller
ERISA Plan which is subject to Title IV of ERISA, and no ERISA Affiliate has any
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obligations or liabilities with respect to any other plan which is subject to
Title IV of ERISA, (v) no Seller ERISA Plan is a multiemployer plan (as defined
in Section 4001(a)(3) of ERISA), and neither Sprint nor any Company or ERISA
Affiliate has any obligations or liabilities with respect to any multiemployer
plan, and (vi) there are no pending or, to the Knowledge of Sellers, threatened
material claims (other than routine claims for benefits) by, on behalf of or
against any of the Seller Benefit Plans or any trusts, insurance contracts,
escrow accounts or similar funding arrangements which are a part of such plans
except as set forth on SCHEDULE 3.14.
(c) COPIES. Sellers have (i) furnished or made available to Buyer
a true, complete and correct copy of each Seller Benefit Plan which is set forth
in writing and the current summary plan description of each Seller Benefit Plan
that is subject to ERISA, (ii) furnished or made available a copy of the
description of each other Seller Benefit Plan which is currently provided to
participants in such plan and (iii) set forth in Schedule 3.14 a summary of the
material terms of each Seller Benefit Plan that is not set forth in writing.
(d) ADEQUATE FUNDING. With respect to each Seller Benefit Plan
that is subject to Section 302 of ERISA or Section 412 of the Code, (i) no
"accumulated funding deficiency" (within the meaning of Section 302 of ERISA or
Section 412 of the Code) exists with respect to such plan, (ii) no waiver of the
minimum funding standards of Section 302 of ERISA or Section 412 of the Code is
in effect with respect to such plan and (iii) there is no lien in favor of such
plan under Section 302(f) of ERISA or Section 412(n) of the Code.
(e) NO PROHIBITED TRANSACTIONS OR FIDUCIARY BREACHES. With respect
to each Seller Benefit Plan that is subject to Section 406 of ERISA or Section
4975 of the Code, there have been no non-exempt "prohibited transactions"
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) or
breaches of any of the duties imposed by ERISA on
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Sprint, a Company or an ERISA Affiliate or, to the Knowledge of Sellers, any
other fiduciary (within the meaning of Section 3(21) of ERISA) at any time that
could result in any material liability or excise tax under ERISA or the Code
being imposed on any Company.
(f) NO CHANGE IN CONTROL LIABILITIES. No Company has any
obligation under any retention, stay-put, change in control or similar purpose
agreement to make any payments to any officer, employee or director of such
Company or to any individual independent contractor who has provided or who
currently provides services to such Company or to make nonforfeitable any
otherwise forfeitable benefits (except as provided in Section 5.14) as a result
of the execution of this Agreement or the Closing of the transaction
contemplated by this Agreement.
SECTION 3.15 LABOR MATTERS. Each Company is in compliance with all
federal and state laws respecting employment and employment practices, terms and
conditions of employment, wages and hours, and is not engaged in any unfair
labor or unlawful employment practice, the violation of or engagement in which
would reasonably be expected to, individually or in the aggregate, have a
Company Material Adverse Effect. Except as set forth on SCHEDULE 3.15, there are
no controversies pending or, to the Knowledge of the Sellers, threatened,
between either Company and any of its employees, which controversies have had or
would reasonably be expected to, individually or in the aggregate, have a
Company Material Adverse Effect. Except as set forth on SCHEDULE 3.15, none of
the Companies is a party to any collective bargaining agreement or other labor
union contract applicable to Persons employed by such Company. There are no
unfair labor practice complaints pending against any Company before the National
Labor Relations Board. There are no strikes, slowdowns, work stoppages, lockouts
or, to the Knowledge of Sellers, threats thereof, by or with respect to any
employees of
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any Company. To the Knowledge of Sellers (which for this purpose only will
exclude the knowledge of any officer of the Companies), except as set forth on
SCHEDULE 3.15 or as required by Section 1.6(b), no officer of any Company has
indicated as of the date hereof that he or she intends to resign from his or her
capacity as an employee or retire as a result of the transactions contemplated
by this Agreement. To the Knowledge of Sellers, except as set forth on SCHEDULE
3.15 or as required by Section 1.6(b), no director-level employee of any Company
has indicated as of the date hereof that he or she intends to resign from his or
her capacity as an employee or retire as a result of the transactions
contemplated by this Agreement.
SECTION 3.16 TAXES.
(a) Either Sellers or the applicable Company (i) has timely filed
or caused to be filed on a timely basis with the appropriate taxing authorities
all material Tax Returns (as hereinafter defined) required to be filed by, with
respect to or which are required to include the income or other information from
the Companies, and (ii) has paid or made adequate provision for the payment of
all Taxes (as hereinafter defined) shown to be due on such Tax Returns. Such Tax
Returns are true, correct and complete in all material respects.
(b) Except as set forth on SCHEDULE 3.16, (i) there are no liens
for Taxes with respect to the assets of any Company (except for statutory liens
for current taxes not yet delinquent) and no material claims with respect to
Taxes have been asserted by any taxing authority in writing, (ii) none of the
Tax Returns applicable to any Company are currently being audited or examined by
any taxing authority, (iii) there is no material unpaid tax deficiency,
determination or assessment currently outstanding against any Company, (iv)
there are no outstanding agreements or waivers extending the statute of
limitations relating to the assessment of Taxes applicable to any Company, (v)
neither the applicable Company nor Sellers on behalf of
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such Company have filed a consent pursuant to Section 341(f) of the Code, (vi)
no taxing authority has claimed (A) since January 1, 1996 that any Wholly Owned
Company should have filed any Tax Return that has not been filed or (B) since
July 1, 2000 that CenDon should have filed any Tax Return that has not been
filed, (vii) no closing agreement pursuant to Section 7121 of the Code (or any
predecessor provision) or any similar provision of any state, provincial, local
or foreign law has been entered into (A) since January 1, 1996 by or with
respect to any Wholly Owned Company or any assets thereof or (B) since July 1,
2000 by or with respect to CenDon or any assets thereof, and (viii) no Company
is currently required to include in income any adjustment pursuant to Section
481(a) of the Code (or similar provisions of other laws or regulations) in its
current or in any future taxable period by reason of a change in accounting
method.
(c) As used in this Agreement:
(i) "TAXES" shall mean all taxes, levies, charges, fees,
duties or other assessments including income, corporation, advance corporation,
gross receipts, transfer, excise, property, sales, use, value-added, license,
payroll, pay-as-you-earn, withholding, social security and franchise or other
governmental taxes or charges, imposed by the United States or any state,
county, local or foreign government, and such term shall include any interest,
penalties or additions attributable to such taxes; and
(ii) "TAX RETURN" shall mean any report, return,
declaration, claim for refund, information return or statement in connection
with Taxes, including any schedule or attachment thereto, and including any
amendment thereof.
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SECTION 3.17 ENVIRONMENTAL. Except as set forth on SCHEDULE 3.17:
(a) Each Company possesses, and is in compliance with, all
material permits, licenses and government authorizations relating to protection
of the environment, pollution control and hazardous materials ("ENVIRONMENTAL
LAWS") applicable to such Company.
(b) None of the Companies, Sellers or any Affiliates of Sellers
have received notice that any Company is subject to any pending or, to the
Knowledge of Sellers, threatened claim incurred or imposed or based upon any
provision of any Environmental Law which claims, if adversely resolved, would
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect.
(c) Prior to the date of this Agreement, Sellers have delivered to
Buyer all environmental investigations, studies, audits, tests, reviews or
analyses conducted during the five years prior to the date of this Agreement by
or on behalf of any Company, any Seller or any Affiliate of any of them (or, to
the Knowledge of Sellers, by a third party) in relation to the business
conducted by the Companies or any property or facility currently owned or leased
by the Companies, which is in the possession of any Company, any Seller or any
Affiliate of any of them.
SECTION 3.18 OFFICERS. SCHEDULE 3.18 lists each of the directors and
officers (or equivalent positions) of the Companies and all of the accounts (and
signatories thereto) of the Companies with any bank, brokerage firm or other
financial institution or depository.
SECTION 3.19 CERTAIN FEES. None of the Companies will have any
liability for any financial advisory or finders' fees in connection with this
Agreement or the transactions contemplated hereby.
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SECTION 3.20 SUFFICIENCY OF ASSETS. Except as set forth on SCHEDULE
3.20, the tangible and intangible assets (including properties and rights) of
the Companies, together with the rights to be granted and the services to be
provided pursuant to the Ancillary Agreements, are sufficient for the conduct of
the business of the Companies immediately following the Closing in substantially
the same manner as currently conducted.
SECTION 3.21 PERMITS.
(a) SCHEDULE 3.21 sets forth all material certificates, licenses,
permits, authorizations and approvals ("PERMITS") issued or granted to the
Companies by governmental entities that are necessary or desirable for the
operation or conduct of the business of the Companies. All such Permits are
valid and in full force and effect, and the Companies have complied in all
material respects with all terms and conditions thereof. During the past 12
months, no Company has received notice of any proceedings relating to the
revocation, default or modification of any such Permits. This Section 3.21 does
not apply to environmental matters, which are the subject of Section 3.17.
(b) The Companies possess all Permits to own or hold under lease
and operate the assets owned by the Companies and to conduct the business of the
Companies as currently conducted, other than such Permits the absence of which
would not reasonably be expected to, individually or in the aggregate, have a
Company Material Adverse Effect.
SECTION 3.22 AFFILIATES ENGAGED IN THE BUSINESS. The parties identified
collectively as "Sprint LTD" in the Directory Services License Agreement
constitute all of the Affiliates of Sprint that, as of the date hereof and as of
the Closing, provide wireline local telephone service.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers, as of the date of this
Agreement and as of the Closing, as follows:
SECTION 4.1 ORGANIZATION AND AUTHORITY OF BUYER. Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. Buyer has the corporate power and authority to execute and
deliver this Agreement and the Ancillary Agreements to which it is a party and
perform its obligations under this Agreement and the Ancillary Agreements to
which it is a party. The execution and delivery of this Agreement and the
Ancillary Agreements and the performance by Buyer of its covenants and
agreements under this Agreement and the Ancillary Agreements to which it is a
party have been duly and validly authorized by the Board of Directors of Buyer,
and no other corporate proceedings on the part of Buyer are necessary to
authorize the execution, delivery and performance of this Agreement or any of
the Ancillary Agreements or the consummation of the transactions contemplated by
this Agreement and the Ancillary Agreements. This Agreement has been and at the
Closing the Ancillary Agreements will be duly executed and delivered by Buyer
and this Agreement constitutes, and upon execution and delivery of the Ancillary
Agreements, the Ancillary Agreements will constitute a valid and binding
agreement of Buyer, enforceable against such party in accordance with their
respective terms, except that (a) such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
other similar laws affecting creditors' rights generally from time to time in
effect and to general principles of equity, including concepts of materiality,
reasonableness, good faith and fair dealing regardless of whether considered in
a proceeding in equity or at law, and (b) the
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remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
SECTION 4.2 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and
delivery of this Agreement does not, and the execution and delivery of the
Ancillary Agreements will not, and the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements will not (a)
conflict with or result in any breach of any provision of the organizational
documents of Buyer, (b) except as set forth in SCHEDULE 4.2 and for applicable
requirements of the HSR Act, require any filing with, or the obtaining of any
permit, authorization, consent or approval of, any governmental or regulatory
authority or third party, (c) violate, conflict with or result in a default (or
any event which, with notice or lapse of time or both, would constitute a
default) under, or give rise to any right of termination, cancellation or
acceleration under, any of the terms, conditions or provisions of any note,
mortgage, other evidence of indebtedness, guarantee, license, agreement, lease
or other contract, instrument or obligation to which Buyer is a party or by
which Buyer or any of its assets may be bound or under which Buyer receives any
benefit, whether or not Buyer is a party thereto, or (d) violate any order,
injunction, decree, statute, rule or regulation applicable to any Buyer,
excluding from the foregoing clause (c) such requirements, violations,
conflicts, defaults or rights which would not reasonably be expected to
adversely affect or restrict the ability Buyer to consummate the transactions
contemplated by this Agreement or any Ancillary Agreement (a "BUYER MATERIAL
ADVERSE EFFECT").
SECTION 4.3 LITIGATION. There is (a) no action, suit or proceeding
pending by or before any court or governmental or regulatory authority or, to
the Knowledge of Buyer,
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threatened against Buyer, and (b) no investigation by any governmental entity of
which Buyer has received written notice that is pending or, to the Knowledge of
Buyer, threatened against Buyer, in either case which challenges the validity of
this Agreement or any Ancillary Agreement or which would reasonably be expected
to, individually or in the aggregate, have a Buyer Material Adverse Effect.
Buyer is not in default with respect to or subject to any order, judgment,
decision, decree, injunction or ruling of any federal, state, or local court or
governmental agency, department or authority which challenges the validity of
this Agreement or any Ancillary Agreement or which would reasonably be expected
to, individually or in the aggregate, have a Buyer Material Adverse Effect.
SECTION 4.4 CERTAIN FEES. Except for the engagement of Bear Xxxxxxx &
Co., Inc. and Xxxxxx Xxxxxxx & Co., Inc. (the fees and expenses of each which
will be borne solely by Buyer), neither Buyer nor any of its Affiliates has
employed any financial advisor or finder or incurred any liability for any
financial advisory or finders' fees in connection with this Agreement or the
transactions contemplated by this Agreement.
SECTION 4.5 INVESTMENT REPRESENTATIONS. Buyer is acquiring the Shares
solely for the purpose of investment and not with a view to, or for offer or
sale in connection with, any distribution thereof in violation of applicable
securities laws.
SECTION 4.6 SUFFICIENT FUNDS. Buyer has prior to the date hereof
delivered to Sellers true, complete and correct copies of executed commitment
letters from certain lenders (the "DEBT FINANCING COMMITMENTS") committing such
lenders to provide to Buyer debt financing for, among other things, the
transactions contemplated by this Agreement in an aggregate amount of
$2,425,000,000, subject to the terms and conditions set forth therein and (b)
true, complete and correct copies of definitive agreements from certain equity
investors,
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committing them to provide to Buyer equity financing in an aggregate amount of
$200,000,000, subject to the terms and conditions set forth therein (the "EQUITY
COMMITMENTS" and, together with the Debt Financing Commitments, the "FINANCING
COMMITMENTS"). As of the date hereof, the Financing Commitments are in full
force and effect, have not been withdrawn or terminated, and Buyer has no reason
to believe that any Financing Commitment will not lead to the financing
contemplated by such Financing Commitment. The financing contemplated by the
Financing Commitments constitute all of the financing required to be provided by
Buyer for the consummation of the transactions contemplated by this Agreement
and the payments of all fees and expenses incurred by Buyer in connection
therewith.
ARTICLE V
COVENANTS
SECTION 5.1 CONDUCT OF THE COMPANIES' BUSINESS. Sellers agree that,
during the period from the date of this Agreement to the Closing, except as
otherwise expressly permitted or required by this Agreement, SCHEDULE 5.1 or
consented to by Buyer in writing, each Company shall and Sellers shall cause
each Company:
(a) to conduct its business operations in the Ordinary Course of
Business;
(b) to use reasonable efforts to (i) maintain and preserve its
business operations, (ii) retain the services of its employees, except for
attrition of such employees in the Ordinary Course of Business, and (iii)
maintain, preserve and retain relationships with its suppliers and customers;
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(c) not to acquire, sell, dispose of, license, assign or transfer
or permit to lapse any material business, assets or property, except in the
Ordinary Course of Business;
(d) not to amend its governing instruments;
(e) not to incur any indebtedness for borrowed money except in the
Ordinary Course of Business, or guarantee any indebtedness for borrowed money of
another Person;
(f) not to change its accounting policies, except as required by
GAAP;
(g) not to grant any material increase in the salaries, wages,
fringe benefits or other compensation payable or to become payable to its
officers, directors, consultants or employees (including any such increase
pursuant to any bonus, severance, termination, pension, profit-sharing or other
plan or commitment) or any special increase in the compensation payable or to
become payable to any officer, director, consultant or employee, except for (i)
normal merit and cost of living increases in the Ordinary Course of Business or
as may be required under existing agreements and (ii) retention commitments that
are (and shall remain after Closing) the sole responsibility of Sellers and
their Affiliates (other than the Companies);
(h) not to terminate or make any material change in any Contract
or Permit, except in the Ordinary Course of Business;
(i) not to enter into any material contract except in the Ordinary
Course of Business;
(j) maintain accounts receivable, inventory, accounts payable and
other working capital accounts in a manner consistent with the Ordinary Course
of Business;
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(k) not pay, discharge or satisfy any material claims, liabilities
or obligations (absolute, accrued, contingent or otherwise), except in each case
in the Ordinary Course of Business;
(l) not cancel any indebtedness for borrowed money or material
claim or, waive any material claims or rights of substantial value, except in
the Ordinary Course of Business;
(m) not to merge or consolidate with any other Person;
(n) with respect to any sales campaign begun more than 14 days
after the date hereof, not to implement the "value summit" business plan;
(o) not to make any material change to the Current Practices (as
defined in the Directory Services License Agreement); and
(p) not to enter into any written agreement to do any of the
foregoing.
SECTION 5.2 ACCESS TO INFORMATION.
(a) Between the date of this Agreement and the Closing, Sellers
shall (i) give, and shall cause the Companies to give, Buyer and its authorized
representatives reasonable access to all books, records, offices and other
facilities and properties of, and relating to, the Companies and to the
Companies' management, (ii) permit Buyer to make such inspections thereof as
Buyer may reasonably request, (iii) cause the officers of the Companies to
furnish Buyer with such financial and operating data and other information with
respect to the business and properties of the Companies as Buyer may from time
to time reasonably request subject to Section 5.2(b), and (iv) cooperate in good
faith with Buyer's efforts to plan for the post-Closing integration of its
business with the business of the Companies; PROVIDED, HOWEVER, that any such
access or inspection shall be provided during normal business hours under the
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supervision of Sellers' personnel and in such a manner as to maintain the
confidentiality of this Agreement and the transactions contemplated by this
Agreement and not interfere unreasonably with the business operations of Sellers
or the Companies.
(b) All information concerning Sellers or the Companies furnished
or provided by Sellers or their Affiliates to Buyer or its representatives
(whether furnished before or after the date of this Agreement) shall be held
subject to the confidentiality agreements by and between Sprint (or its
representatives) and Buyer dated as of May 15, 2002 (the "CONFIDENTIALITY
AGREEMENT").
(c) Prior to Closing, Sellers shall provide to Buyer access to the
Owned Real Property, and shall use commercially reasonable efforts to provide
access to the Leased Real Property, for the performance of non-invasive Phase I
environmental site assessments or transaction screens as part of Buyer's
environmental assessment of the Real Property.
(d) Sellers shall cooperate with Buyer with respect to obtaining
title insurance relating to the Owned Real Property, including delivering, prior
to Closing, such affidavits of title and possession, gap undertakings,
non-imputation affidavits or similar documents in form or substance as may be
reasonably required by a reputable title company licensed to do business in
Tennessee selected by Buyer.
(e) Promptly following the end of each fiscal quarter or year that
ends prior to Closing, Sellers shall provide Buyer with quarter-end or audited
year-end combined consolidated balance sheets of the Companies as of such
quarter-end or year-end and combined consolidated statements of income and cash
flows of the Companies for the year to date period then ended, presented on a
basis consistent with the 2001 year-end audited financial statements
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together with a SAS 71 report thereon from Sellers' independent accountants (for
quarterly statements) and an opinion of Sellers' independent accountants (for
year-end statements). In addition, on or prior to October 11, 2002, Sellers
shall provide Buyer with a SAS 71 report from Sellers' independent accountants
with respect to the June 30, 2002 financial statements referenced in Section
3.6, provided that Sellers will use their commercially reasonable efforts to
provide such report to Buyer on or prior to October 4, 2002. Sellers will
cooperate with Buyer in preparing, and will provide all information reasonably
requested by Buyer for inclusion in, any offering document, Form 8-K or other
Exchange Act filing to be incorporated by reference into a registration
statement in connection therewith prepared in connection with the financings
contemplated by the Commitment Letters. Buyer shall reimburse Sellers for all
reasonable third party costs and expenses incurred by Sellers in connection with
the fulfillment of its obligations under this Section 5.2. Any financial
statements provided to Buyer pursuant to this Section 5.2 will be deemed to be
included in the definition of "Financial Statements" for all purposes of Section
3.6.
(f) Notwithstanding the above, nothing contained in this Section
5.2 or the Confidentiality Agreement will preclude any party from making any
disclosures it determines in good faith to be required by law, regulation or
listing agreement with or rules of any national securities exchange or national
trading system or necessary and proper in conjunction with the filing of any tax
return or other document required to be filed with any federal, state or local
governmental body, authority or agency or sent to potential investors in
connection with the financings contemplated by the Financing Commitments;
PROVIDED, HOWEVER, that the party required to make the release or statement
shall, if practicable under the
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circumstances, allow the other party reasonable time to comment on such release
or statement in advance of such issuance.
(g) Between the date of this Agreement and the Closing Date,
Sellers shall permit Buyer's senior officers to meet with the Assistant
Controller of Sprint and officers of the Companies responsible for the Financial
Statements, the internal controls of the Companies and the disclosure controls
and procedures of the Companies to discuss such matters as Buyer may deem
reasonably necessary or appropriate for Buyer to satisfy its obligations under
Sections 302 and 906 the Xxxxxxxx-Xxxxx Act of 2002 and any rules and
regulations relating thereto.
SECTION 5.3 CONSENTS.
(a) Each of Sellers and Buyer shall cooperate, and use its
reasonable best efforts, to (i) make all filings (including without limitation
all filings required under the HSR Act) and obtain all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and other third parties necessary to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements, including the
foregoing required with respect to the items identified in SCHEDULE 3.5 and (ii)
obtain new written contracts between the third parties to the Group Contracts
and the Companies ("NEW CONTRACTS") that will provide for substantially the same
continued benefits to the Companies as are currently provided to the Companies
pursuant to the Group Contracts; PROVIDED, HOWEVER, that neither Seller nor
Buyer shall be required to pay or agree to pay any compensation to the third
parties to New Contracts or other contracts requiring consent or approval in
exchange for such third parties' agreement to enter into a New Contract or
provide such consent or approval. "GROUP CONTRACTS" means the contracts listed
on SCHEDULE 5.3(a). In addition to the foregoing, Buyer
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agrees to provide such security and assurances as to financial capability,
resources and creditworthiness as may be reasonably requested by any
governmental authority or other third party whose consent, approval or New
Contract is sought in connection with the transactions contemplated hereby.
(b) With respect to any Contracts for which any required consent
or approval is not obtained, or New Contract that is not entered into, prior to
the Closing (collectively, "THIRD PARTY APPROVAL CONTRACTS"), Sellers and Buyer
shall each use their reasonable best efforts to obtain any such consent or
approval or New Contract after the Closing Date until such consent or approval
or New Contract has been obtained; PROVIDED, HOWEVER, that neither Seller nor
Buyer shall be required to pay or agree to pay any compensation to the third
parties to New Contracts or other contracts requiring consent or approval in
exchange for such third parties' agreement to enter into a New Contract or
provide such consent or approval.
(c) To the extent that the consents or approvals or New Contracts
referred to in clause (a) above are not obtained prior to the Closing, Sellers
will use commercially reasonable efforts to (i) provide to the Companies, at its
request, the benefits of any such Third Party Approval Contracts, (ii) cooperate
in any reasonable and lawful arrangement designed to provide the benefits of
such Third Party Approval Contracts to the Companies, and (iii) enforce, at the
request and for the account of the Companies, any rights of the Seller
Affiliates that are parties to such Third Party Approvals Contract against the
other party or parties thereto arising under such Third Party Approvals
Contract. Buyer will comply with all reasonable requests of the Sellers for
cooperation in connection with the performance of Sellers' obligations under
this Section 5.3(c).
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(d) Without limiting any other provision hereof, each of the
Sellers and Buyer shall, as promptly as practicable, but in no event later than
twenty business days following the execution and delivery of this Agreement,
file with the United States Federal Trade Commission (the "FTC") and the United
States Department of Justice (the "DOJ") the notification and report form, if
any, required for the transactions described herein and any supplemental
information requested in connection therewith pursuant to the HSR Act. Any such
notification and report form and supplemental information shall be in
substantial compliance with the requirements of the HSR Act. Each of Sellers and
Buyer shall furnish to the other such necessary information and reasonable
assistance as the other may request in connection with its preparation of any
filing or submission that is necessary under the HSR Act. Sellers and Buyer
shall keep each other apprised of the status of any communications with, and any
inquiries or requests for additional information from, the FTC and the DOJ and
shall comply promptly with any such inquiry or request.
SECTION 5.4 REASONABLE BEST EFFORTS.
(a) Each of Sellers and Buyer shall cooperate and use its
reasonable best efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations or otherwise to consummate the transactions contemplated by
this Agreement.
(b) Buyer will promptly notify Sellers of any proposal by any of
the institutions party to a Financing Commitment to withdraw, terminate or make
a material change in the amount or terms of such Financing Commitment that could
reasonably be expected to adversely affect the ability of Buyer to consummate
the financing contemplated by such Financing Commitment in accordance with its
terms. In addition, upon Sellers' reasonable
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request, Buyer shall advise and update Sellers, in a level of detail reasonably
satisfactory to Sellers, with respect to the status, proposed closing date, and
material terms of the Financing Commitments. Buyer shall not consent to any
amendment, modification or early termination of any Financing Commitment that
could reasonably be expected to adversely affect the ability of Buyer to
consummate the transactions contemplated by this Agreement.
(c) Buyer shall, and shall cause its Affiliates to, use reasonable
best efforts to (i) maintain the effectiveness of the Financing Commitments in
accordance with their terms, (ii) enter into definitive documentation with
respect to the Debt Financing Commitments on the terms contained in the Debt
Financing Commitments, (iii) satisfy all funding conditions to the Financing
Commitments set forth in the definitive documentation with respect to the
financing contemplated by the Financing Commitments, (iv) consummate the
financing contemplated by the Financing Commitments (including by extension of
the Financing Commitments on substantially equivalent or better terms or, if the
Financing Commitments expire, obtaining alternative financing in an aggregate
principal amount equal to the amounts set forth in, and on terms substantially
equivalent to or better than the terms of, the Financing Commitments), including
by drawing on the "Senior Subordinated Facility" and the "Senior Secured Credit
Facility" (as such terms are defined in the Debt Financing Commitment Letters)
prior to the expiration of the Debt Financing Commitments if the other
conditions to Buyer's obligations to close set forth in Sections 6.1 and 6.3
have been satisfied or waived and (v) perform its obligations under the
Financing Commitments.
(d) Sellers will promptly notify Buyer of any proposal, whether
formal or informal, by any state or federal governmental agency with
jurisdiction over local telecommunications services or local telecommunications
companies to assert jurisdiction over
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all or any part of the transactions that are the subject matter of this
Agreement, including but not limited to, (i) any proposal to require approval,
consent or permission of such governmental agency to any part of the
transactions which are the subject matter of this Agreement, (ii) any proposal
that, individually or in the aggregate, may have a material adverse effect on
the business of Sprint's Local Telecommunications Division, and (iii) any
proposal that, individually or in the aggregate, may have a material adverse
effect on the proceeds Sprint expects to receive from the transactions
contemplated by this Agreement (each, a "REGULATORY PROPOSAL").
In addition, Sellers shall advise and update Buyer, in a level of
detail reasonably satisfactory to Buyer, with respect to the status of any such
Regulatory Proposal, including any formal or informal proceedings before such
governmental agency with respect to the Regulatory Proposal. Sellers will
promptly notify Buyer if Sellers consent to (i) the jurisdiction of any such
governmental agency with respect to the transactions that are the subject of
this Agreement or (ii) any order, decree, judgment or finding of such
governmental agency with respect to the transactions that are the subject matter
of this Agreement.
(e) Sellers shall, and shall cause their Affiliates to, use
reasonable best efforts to defeat any assertion of jurisdiction and any
Regulatory Proposal and to obtain any necessary approvals, consents or
permissions in response to any Regulatory Proposal, including but not limited to
the timely initiation and prosecution of proceedings for injunctive relief,
mandamus or other appropriate remedies in a court of competent jurisdiction, the
initiation and prosecution of any available proceedings for appellate review of
any order, decree, judgment or finding of such governmental agency or, if
applicable, the prompt filing of any necessary applications with respect to such
Regulatory Proposals. Sellers will forward to Buyer all copies of any material
correspondence sent by it or its representatives or received by it from any
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governmental authority regarding the transactions contemplated by this Agreement
or a Regulatory Proposal.
(f) Each of Sellers and Buyer shall negotiate in good faith to
identify the MIS Services (as defined in the Transition Services Agreement) to
be provided to Buyer under the Transition Services Agreement and the pricing
therefor under the Transition Services Agreement.
SECTION 5.5 PUBLIC ANNOUNCEMENTS. Except as otherwise agreed to by the
parties, the parties shall not issue any report, statement or press release or
otherwise make any public statements with respect to this Agreement and the
transactions contemplated by this Agreement, except as in the reasonable
judgment of the party may be required by law or any listing agreement with, or
the rules of, any national securities exchange or national trading system. Upon
the execution of this Agreement and the Closing, Sellers and Buyer will consult
with each other with respect to the issuance of a joint report, statement or
press release with respect to this Agreement and the transactions contemplated
by this Agreement.
SECTION 5.6 COVENANT TO SATISFY CONDITIONS. Sellers will use their
reasonable best efforts to ensure that the conditions set forth in Article VI of
this Agreement are satisfied, to the extent such matters are within the control
of Sellers, and Buyer will use its reasonable best efforts to ensure that the
conditions set forth in Article VI of this Agreement are satisfied to the extent
such matters are within the control of Buyer. Sellers and Buyer further covenant
and agree, with respect to a threatened or pending preliminary or permanent
injunction or other order, decree or ruling or statute, rule, regulation or
executive order that would adversely affect the ability of the parties to
consummate the transactions contemplated by this Agreement, to use
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their reasonable best efforts to prevent or lift the entry, enactment or
promulgation thereof, as the case may be.
SECTION 5.7 CERTAIN TAX MATTERS.
(a) CERTAIN DEFINITIONS. As used in this Agreement:
(i) "PRE-CLOSING PERIOD" means any taxable period, including
that portion of any Straddle Period, which ends on or before the Closing Date;
(ii) "SECTION 338(h)(10) ELECTION" means the election to be
made by Buyer and Sprint pursuant to Section 338(h)(10) of the Code, as
described in Section 5.7(b) of this Agreement;
(iii) "SECTION 754 ELECTION" means the election to be made
by Cendon pursuant to Section 754 of the Code, as described in Section
5.7(b)(ii) of this Agreement; and
(iv) "STRADDLE PERIOD" means any taxable period that
includes (but does not end on) the Closing Date.
(b) SECTION 338(h)(10) AND SECTION 754 ELECTIONS.
(i) Sprint will join with Buyer in making the Section
338(h)(10) Election to treat the transaction hereunder as the deemed sale of the
assets of the Wholly Owned Companies for federal and, to the extent applicable,
state and local income tax purposes. Buyer will determine an allocation of the
"ADSP" (as defined in Treasury Regulation secs. 1.338-4 and 1.338(h)(10)-1)
among the assets of the Companies pursuant to the applicable Treasury
Regulations under Section 338 of the Code; PROVIDED, HOWEVER, that the
Allocation will include an allocation of ADSP to any amounts receivable by any
of the
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Companies without regard to whether such receivables have been recognized or
realized by the Sellers or any of the Companies for income tax or financial
accounting purposes prior to Closing (as determined finally in accordance with
this Section 5.7(b)(i), the "ALLOCATION"). Promptly following Buyer's
determination of the Allocation, Buyer will deliver a proposed Allocation to
Sprint. If Sprint objects to Buyer's Allocation, Sprint will deliver a notice of
objection to Buyer no later than the later to occur of (A) thirty (30) days from
the delivery of the proposed Allocation to Sprint and (B) one hundred and twenty
(120) days before the due date of filing any Tax Returns for which the
Allocation is relevant. If no such notice of objection is delivered, the Buyer's
proposed Allocation shall be final, and if such notice of objection is delivered
as set forth above, Buyer and Sellers will use their reasonable best efforts to
agree upon the Allocation. If the parties are unable to agree upon the
Allocation within ninety (90) days before the due date of filing any Tax Return
for which the Allocation is relevant, the Allocation shall be made by the
Unrelated Accounting Firm. Following final determination of the Allocation,
Buyer and Sellers will use the Allocation in reporting the deemed purchase and
sale of the assets of the Companies for federal and, to the extent applicable,
state and local income tax purposes.
(ii) The Sellers agree that the Sellers will cause Cendon to
make the Section 754 Election for the taxable year including the Closing Date to
adjust the basis of all properties and assets of Cendon to account for the
transfer of CDC's membership interest in Cendon to Buyer for federal and, to the
extent applicable, state and local income tax purposes. Sprint and Buyer agree
that Buyer's basis in CenDon will be made based on and consistent with the
Allocation made pursuant to Section 5.7(b)(i) of this Agreement.
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(c) RETURN FILING, REFUNDS, CREDITS AND TRANSFER TAXES.
(i) Except with regard to Tax Returns for Straddle Periods,
Sellers shall prepare, or cause to be prepared, and file, or cause to be filed,
on a timely basis all Tax Returns of or including the Companies for all
Pre-Closing Periods (the "PRE-CLOSING PERIOD RETURNS"). Sellers shall pay, or
cause to be paid, all Taxes with respect to the Companies shown to be due on the
Pre-Closing Period Returns.
(ii) Buyer shall prepare, or cause to be prepared, and shall
file, or cause to be filed, on a timely basis all Tax Returns other than the
Pre-Closing Period Returns with respect to the Companies, including Tax Returns,
if any, for the Straddle Period (the "STRADDLE PERIOD RETURNS"). Buyer shall
pay, or cause to be paid, all Taxes shown to be due on such Tax Returns.
(iii) Buyer shall provide Sellers with copies of any
Straddle Period Returns at least sixty (60) business days prior to the due date
thereof (giving effect to any extensions thereto), accompanied by a statement
calculating in reasonable detail Sellers' indemnification obligation pursuant to
Section 5.7(e) of this Agreement (the "INDEMNIFICATION STATEMENT"). Sellers
shall have the right to review such Straddle Period Returns and Indemnification
Statement prior to the filing of such Straddle Period Returns. If Sellers
dispute any amounts shown to be due on such Tax Returns or the amount calculated
in the Indemnification Statement, Sellers and Buyer shall consult and resolve in
good faith any issues arising as a result of the review of such Straddle Period
Return and Indemnification Statement. If Sellers agree to the Indemnification
Statement amount, Sellers shall pay to Buyer an amount equal to the Taxes shown
on the Indemnification Statement less any amounts paid by Sellers or the
Companies on or before the Closing Date with respect to estimated taxes not
later than three
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business days before the due date (including any extensions thereof) for payment
of Taxes with respect to such Straddle Period Return. If the parties are unable
to resolve any dispute within thirty (30) business days after Sellers' receipt
of such Straddle Period Return and Indemnification Statement, such dispute shall
be resolved by the Unrelated Accounting Firm, which shall resolve any issue in
dispute as promptly as practicable. If the Unrelated Accounting Firm is unable
to make a determination with respect to any disputed issue prior to the due date
(including any extensions) for the filing of the Straddle Period Return in
question, (A) Buyer shall file, or shall cause to be filed, such Straddle Period
Return without such determination having been made and (B) Sellers shall pay to
Buyer, not later than three days before the due date (including any extensions
thereof) for the payment of Taxes with respect to such Straddle Period Return,
an amount determined by Sellers as the proper amount chargeable to Sellers
pursuant to this Section 5.7. Upon delivery to Sellers and Buyer by the
Unrelated Accounting Firm of its determination, appropriate adjustments shall be
made to the amount paid by Sellers in accordance with the immediately preceding
sentence in order to reflect the decision of the Unrelated Accounting Firm. The
determination by the Unrelated Accounting Firm shall be final, conclusive and
binding on the parties.
(iv) Sellers and Buyer shall reasonably cooperate, and shall
cause their respective Affiliates, officers, employees, agents, auditors and
representatives reasonably to cooperate, in preparing and filing all Tax Returns
(including amended returns and claims for refund), including maintaining and
making available to each other all necessary records in connection with
determining Taxes and in resolving all disputes and audits with respect to all
taxable periods relating to Taxes. Buyer recognizes that Sellers will need
access, from time to time, after the Closing Date, to certain accounting and tax
records and information
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held by the Companies to the extent such records and information pertain to
events occurring prior to the Closing Date; therefore, Buyer agrees that from
and after the Closing Date Buyer shall, and shall cause the Companies to, (A)
retain and maintain such records until such time as Sellers determine that such
retention and maintenance is no longer necessary and (B) allow Sellers and their
agents and representatives (and agents and representatives of their Affiliates)
reasonable access to inspect, review and make copies of such records as Sellers
may deem necessary or appropriate from time to time. Buyer shall indemnify
Sellers from and against any penalties, additions to tax or interest imposed on
Sellers as a direct result of any failure of Buyer to provide tax records or
other information to Sellers in a reasonable timely manner.
(v) Buyer shall not, and shall cause the Companies not to, dispose
of or destroy any of the business records and files of the Companies relating to
Taxes in existence on the Closing Date without first offering to turn over
possession thereof to Sellers by written notice to Sellers at least 30 days
prior to the proposed date of such disposition or destruction.
(vi) Notwithstanding any other provision of this Agreement to the
contrary, any refunds and credits of Taxes of the Companies (including any
interest or similar benefit) received from or credited thereon by the applicable
tax authority with respect to (A) any taxable period ending on or before the
Closing Date or (B) Taxes for which Sellers have indemnified the Buyer under the
Agreement, shall be for the account of Sellers, and if received or utilized by
Buyer or the Companies, shall be paid to Sellers within five business days after
Buyer or a Company receives such refund or utilizes such credit. Except as
provided in the next sentence, any refunds or credits of the Companies with
respect to any Straddle Period shall be apportioned between Sellers, on the one
hand, and Buyer, on the other hand, on the basis of an
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interim closing of the books. In the case of a refund or credit attributable to
any Taxes that are imposed on a periodic basis and are attributable to the
Straddle Period, other than Taxes based upon or related to gross or net income
or receipts, the refund or credit of such Taxes of the Company for the
Pre-Closing Period shall be deemed to be the amount of such refund or credit for
the Straddle Period multiplied by a fraction the numerator of which is the
number of days in the Straddle Period ending on the Closing Date and the
denominator of which is the number of days in the Straddle Period.
(vii) Notwithstanding any other provisions of this Agreement
to the contrary, all sales, use, transfer, stamp, duties, recording and similar
Taxes, but not including any Taxes on or measured by income, gains or profits,
incurred in connection with and solely as a result of the transactions
contemplated by this Agreement shall be paid by Buyer, and Buyer shall, at its
own expense, accurately file or cause to be filed all necessary Tax Returns and
other documentation with respect to such Taxes and timely pay all such Taxes;
PROVIDED, HOWEVER, that in the event the amount of such Taxes exceeds $5,000
(the "TRANSFER TAX LIMIT"), Buyer and Sellers shall each be responsible for
paying one-half of the amount by which such Taxes exceed the Transfer Tax Limit.
If required by applicable law, Sellers will join in the execution of any such
Tax Returns or such other documentation.
(d) ELECTIONS. Except with respect to the Section 338(h)(10)
Election and the Section 754 Election, Buyer shall not, and shall cause the
Companies not to, make, amend, or revoke any Tax election if such action would
adversely affect Sellers, or any Person (other than the Companies) as to whom or
with whom Sellers have filed a consolidated return, with respect to any taxable
period ending on or before the Closing Date or for the Pre-Closing
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Period or any Tax refund with respect thereto and Seller shall not make any Tax
election if such action would adversely affect Buyer or any Company.
(e) TAX INDEMNIFICATION.
(i) Buyer shall indemnify, defend and hold harmless Sellers
and their Affiliates, at any time after the Closing, from and against any
liability for Taxes of the Companies for any taxable period ending after the
Closing Date except for Straddle Periods, in which case Buyer's indemnity will
cover only that portion of any such Taxes that is not attributable to the
Pre-Closing Period and, except to the extent any such Taxes arose out of or
related to any breach of any representation made by Sellers pursuant to Section
3.16 of the Agreement.
(ii) Sellers shall jointly and severally indemnify, defend
and hold harmless Buyer and its Affiliates, at any time after the Closing, (A)
from and against any liability for Taxes of the Companies, except as provided in
Section 5.7(c)(vii) of the Agreement, for the Pre-Closing Period (including
Taxes attributable to the portion of any Straddle Period ending on the Closing
Date); and (B) any liability for income Taxes of any member of an affiliated
group with which any Company files or has filed a consolidated or combined Tax
Return with respect to any taxable period which ends before or includes the
Closing Date by reason of any Company being severally liable for such Tax
pursuant to Treasury Regulation sec. 1.1502-6 or any analogous provision of
foreign, state or local law.
(iii) In determining the responsibility of Sellers and Buyer
for Taxes attributable to any Straddle Period, Taxes based upon or related to
gross or net income or receipts shall be apportioned on the basis of an interim
closing of the books as of the Closing Date (and for such purpose, the taxable
period of any partnership or other pass-through entity
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which is a Company or in which a Company holds an interest, shall be deemed to
terminate at such time), and all other Taxes attributable to any Straddle Period
shall be prorated on a daily basis.
(iv) If a claim for Taxes shall be made by any taxing
authority in writing, which, if successful, might result in an indemnity payment
pursuant to this Section 5.7, the party seeking indemnification (the "TAX
INDEMNIFIED PARTY") shall promptly notify the other party (the "TAX INDEMNIFYING
PARTY") in writing of such claim (a "TAX CLAIM") within a reasonably sufficient
period of time to allow the Tax Indemnifying Party effectively to contest such
Tax Claim, and in reasonable detail to apprise the Tax Indemnifying Party of the
nature of the Tax Claim, and provide copies of all correspondence and documents
received by it from the relevant taxing authority. Failure to give prompt notice
of a Tax Claim hereunder shall affect the Tax Indemnifying Party's obligation
under this Section to the extent that the Tax Indemnifying Party is prejudiced
by such failure to give prompt notice.
(v) With respect to any Tax Claim which might result in an
indemnity payment to Buyer pursuant to this Section 5.7(e) (including, without
limitation, Taxes of a Company for a Straddle Period), Sellers shall, upon
confirming in writing their obligation to indemnify Buyer in respect of such Tax
Claim, control all proceedings taken in connection with such Tax Claim and,
without limiting the foregoing, may in their sole discretion and at their sole
expense pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with any taxing authority with respect thereto, and
may, in their sole discretion, either pay the Tax claimed and xxx for a refund
where applicable law permits such refund suits or contest such Tax Claim. Buyer,
without waiving its right to be indemnified in respect of such Tax Claim, shall
not under any circumstances settle or otherwise compromise any Tax Claim
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referred to in the preceding sentence without Sellers' prior written consent;
PROVIDED, HOWEVER, that Sellers have confirmed in writing their obligation to
indemnify Buyer in respect of such Tax Claim and are in material compliance with
Sellers' indemnification obligation hereunder. In connection with any proceeding
taken in connection with such Tax Claim, (A) Sellers shall keep Buyer informed
of all material developments and events relating to such Tax Claim and (B) Buyer
shall have the right, at its sole expense, to participate in any such
proceedings. Buyer shall cooperate with Sellers in contesting such Tax Claim
(without charge to Sellers), which cooperation shall include, without
limitation, the retention and the provision to Sellers of records and
information which are reasonably relevant to such Tax Claim, and making
employees available to Sellers to provide additional information or explanation
of any material provided hereunder or to testify at proceedings relating to such
Tax Claim; PROVIDED, HOWEVER, that no charges shall be incurred by Sellers for
the services of such employees.
(vi) With respect to any Tax Claim not described in Section
5.7(e)(v) of this Agreement which might result in an indemnity payment to
Sellers pursuant hereto, Buyer shall control all proceedings in accordance with
provisions that are parallel to those in Section 5.7(e)(v) of this Agreement.
(vii) All matters relating in any manner to Tax
indemnification obligations and payment of Taxes shall be governed exclusively
by this Section
SECTION 5.8 NO SOLICITATION. If this Agreement is terminated for
any reason pursuant to Article VII, for a period of two years following the
effective date of such termination, neither Buyer nor any of its Affiliates
shall, directly or indirectly, solicit or induce any employee, agent or
contractor of any Company to leave such employment and become an employee, agent
or contractor of Buyer or any of its Affiliates if Buyer was apprised of or had
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contact with such employee, agent or contractor in connection with the
transactions contemplated by this Agreement; PROVIDED, HOWEVER, that nothing in
this Section 5.8 shall prohibit Buyer or any of its Affiliates from employing
any person who contacts them on his or her own initiative and without any direct
or indirect solicitation by Buyer or any of its Affiliates, as the case may be.
This Section 5.8 shall not be interpreted to prohibit solicitations of
employment through general advertising not specifically directed at the
employees, agents or contractors of the Companies. If this Agreement is
terminated pursuant to Article VII, this Section 5.8 supersedes the employee
nonsolicitation provisions of the Confidentiality Agreements.
SECTION 5.9 TRANSITION SERVICES AGREEMENT. At the Closing, Sprint and/or
certain of its Affiliates and the Companies shall enter into a Transition
Services Agreement substantially in the form attached as EXHIBIT 5.9 (the
"TRANSITION SERVICES AGREEMENT").
SECTION 5.10 DIRECTORY SERVICES LICENSE AGREEMENT. At the Closing, the
Companies and certain Affiliates of Sprint shall enter into a Directory Services
License Agreement, substantially in the form attached as EXHIBIT 5.10 (the
"DIRECTORY SERVICES LICENSE AGREEMENT").
SECTION 5.11 GUARANTEES. Prior to the Closing, Sellers shall (a) cause
the Companies to be released as guarantor of any financing of Sellers and their
Affiliates (other than the Companies), (b) cause the Companies to no longer be
parties to the agreements listed on SCHEDULE 3.7 and (c) use commercially
reasonable efforts to cause the Companies to be released from all past, present
and future obligations under the agreements listed on SCHEDULE 3.7.
SECTION 5.12 INVESTIGATION BY BUYER. Buyer has conducted its own
independent review and analysis of the business, operations, technology, assets,
liabilities, results
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of operations, financial condition and prospects of the Companies and
acknowledges that Sellers have provided Buyer with the access requested by Buyer
to the personnel, properties, premises and records of the Companies for this
purpose. In entering into this Agreement, Buyer has relied upon its own
investigation and analysis as well as the representations and warranties of
Sellers contained in this Agreement and the Ancillary Agreements, and Buyer
(a) acknowledges that none of Sellers, the Companies or any of their
respective directors, officers, employees, Affiliates, controlling Persons,
agents or representatives makes or has made any representation or warranty,
either express or implied, as to the accuracy or completeness of any of the
information provided or made available to Buyer or its directors, officers,
employees, Affiliates, controlling Persons, agents or representatives, and (b)
agrees, to the fullest extent permitted by law, that neither Sellers, the
Companies nor any of their respective directors, officers, employees,
Affiliates, controlling Persons, agents or representatives shall have any
liability or responsibility whatsoever to Buyer or its directors, officers,
employees, Affiliates, controlling Persons, agents or representatives on any
basis (including, without limitation, in contract or tort, under federal or
state securities laws or otherwise) based upon any information provided or made
available, or statements made, to Buyer or its directors, officers, employees,
Affiliates, controlling Persons, agents or representatives (or any omissions
therefrom), except in the case of clauses (a) and (b) as and only to the extent
expressly set forth in this Agreement with respect to the representations and
warranties of Sellers in Article III and subject to the limitations and
restrictions contained in this Agreement.
SECTION 5.13 MUTUAL RELEASE. Immediately prior to the Closing, Sellers
and the Companies shall enter into a Mutual Release substantially in the form
attached as EXHIBIT 5.13 (the "MUTUAL RELEASE").
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SECTION 5.14 EMPLOYEES AND EMPLOYEE BENEFIT PLANS.
(a) EMPLOYMENT. Buyer shall cause each Company to continue to
employ immediately after the Closing each of the individuals who were employed
by such Company immediately before the Closing (individually a "COMPANY
EMPLOYEE" and collectively the "COMPANY EMPLOYEES") at (1) substantially the
same base salary or base hourly rate of compensation as in effect for each such
individual immediately before the Closing and with (2)(A) benefits under a Buyer
401(k) Plan (as defined in Section 5.14(b)) and benefit accruals for service
after the Closing under a Buyer Pension Plan (as defined in Section 5.14(c))
which are the same as the benefits Buyer provides for Buyer's employees who work
in the same line of business as the Company Employees and (B) welfare benefits,
including severance benefits (except for severance benefits during the one year
period which begins on the Closing Date which shall be paid in accordance with
Section 5.14(a)(3)), under Buyer's welfare plans (as defined in Section 3(1) of
ERISA) which are the same to the maximum extent practicable as the welfare plan
benefits Buyer provides for Buyer's employees who work in the same line of
business as the Company Employees; provided, however, (3) Buyer shall provide
severance benefits to any such individual whose employment is terminated by
Buyer or, if Buyer transfers such individual to another employer as part of an
outsourcing arrangement, is terminated by such other employer at any time during
the one year period which starts on the Closing which are no less than the
severance benefits provided under the Sprint Corporation Separation Plan which
would have been payable under such plan if such individual's employment had been
terminated by a Company under similar circumstances immediately before the
Closing and (4) Buyer shall not have any obligation to employ immediately after
the Closing (A) any individual named on SCHEDULE 5.14 or (B) any individual who
has met all the requirements for short-term or long-term
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disability benefits under one of the Seller Benefit Plans on or before the
Closing until such individual is able to return to work, at which point Buyer's
obligation to employ such individual shall be subject to such terms and
conditions as permissible under applicable law with respect to any employee who
had been on a short-term or long-term disability leave, and any such individual
then employed by Buyer shall be eligible for the same benefits upon his or her
employment as then provided to Company Employees. Each Company Employee shall
receive credit for all service completed with Sellers, each Company and each
ERISA Affiliate (and their predecessors) immediately prior to the Closing for
all purposes under Buyer's employee benefit plans as if such service had been
completed with Buyer; PROVIDED, HOWEVER that Buyer shall have no obligation to
provide such service credit for purposes of computing any such employee's
accrued benefit under any defined benefit plan (as defined in Section 414(j) of
the Code) or determining any such employee's eligibility to receive
post-retirement welfare benefits.
(b) 401(K) PLANS.
(i) SPRINT 401(K) PLAN. Sprint shall make contributions on
behalf of the Company Employees to the Seller ERISA Plan which is the Sprint
Retirement Savings Plan through the Closing, but Sprint shall take such action
as necessary or appropriate to assure that no Company Employee shall be eligible
to make or receive contributions under such plan for any period ending after the
Closing and that no Company Employee will be eligible to otherwise actively
participate in such plan after the Closing. Sprint shall take whatever action is
necessary or appropriate with respect to each Company Employee who is employed
by Buyer immediately after the Closing to (1) make his or her account under the
Sprint Retirement Savings Plan nonforfeitable as of the Closing and (2) provide
the same opportunity to each such Company Employee to repay his or her loan or
loans, if any, from such plan as currently
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provided under the terms of the Sprint Retirement Savings Plan to the only class
of employees who currently have such opportunity under the terms of such plan
upon a termination of employment.
(ii) BUYER 401(k) PLAN. The Company Employees shall be
eligible as of the Closing to participate in a plan established, maintained or
adopted by Buyer which is described in Section 401(k) of the Code (individually
a "BUYER 401(k) PLAN") and which shall provide for elective deferrals (as such
deferrals are described in Section 402(g)(3)(A) of the Code) by participants
under Section 401(k) of the Code and for matching contributions (as described in
Section 401(m)(4)(A)(ii) of the Code) by Buyer with respect to such elective
deferrals, all consistent with the requirements of Section 5.14(a)(2)(A). The
Buyer 401(k) Plan shall provide that the Company Employees shall have the right
to make direct rollovers to such plan of their vested accounts in the Sprint
Retirement Savings Plan to the extent such rollovers constitute "eligible
rollover distributions" within the meaning of Section 402(c)(4) of the Code. The
Company Employees shall receive credit under the Buyer 401(k) Plan for all
service with Sellers, each Company and each ERISA Affiliate (and their
predecessors) for purposes of satisfying any service requirement to participate
in such plan and any service requirement to earn a nonforfeitable benefit under
such plan.
(c) PENSION PLANS.
(i) SPRINT PENSION PLAN. Sprint shall take such action as
necessary or appropriate to assure that no Company Employees shall be eligible
to accrue any benefits for service completed or compensation paid for periods
after the Closing under the
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Seller Benefit Plan which is the Sprint Retirement Pension Plan and that no
Company Employees will be eligible to otherwise actively participate in such
plan after the Closing.
(ii) BUYER PENSION PLAN. If any employees of Buyer (as
determined in accordance with the rules under Section 414(b) and Section 414(c)
of the Code) participate in any defined benefit plan (as defined in Section
414(j) of the Code) other than a multiemployer plan (as defined in Section
414(f) of the Code) (individually a "BUYER PENSION PLAN"), the Company Employees
shall be eligible to participate in such plan as of the Closing. If there is
more than one Buyer Pension Plan, the Company Employees shall be eligible to
participate in the Buyer Pension Plan which in Buyer's reasonable judgment
provides benefits which in the aggregate are more like the benefits provided
under the Sprint Retirement Pension Plan than the benefits provided under any
other Buyer Pension Plan. The Company Employees shall receive credit under the
Buyer Pension Plan in which such employees participate for all service with
Sellers, each Company, and each ERISA Affiliate (and their predecessors) for
purposes of satisfying any service requirement to participate in such plan and
any service requirement to earn a nonforfeitable benefit under such plan, but
Buyer shall have no obligation to provide such service credit for purposes of
computing any such employee's accrued benefit under such plan.
(d) MEDICAL AND RELATED HEALTHCARE BENEFITS AND LIFE INSURANCE.
(i) SELLER WELFARE PLANS. Sellers shall continue after the
Closing to make available to each Company Employee coverage under the Seller
Benefit Plans which are welfare plans (as defined in Section 3(1) of ERISA),
including post-retirement health and dental benefit coverage, to the same
extent, and subject to the same terms and conditions,
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that such coverage would be continued under the terms of such plans for any
other former employee, and each such Company Employee who satisfies the age and
service requirements for post-retirement health and dental benefit coverage
immediately prior to the Closing shall have the same opportunity to receive such
coverage after the Closing as if such Company Employee had terminated employment
immediately prior to the Closing.
(ii) BUYER WELFARE PLANS. Buyer on the Closing shall make
available to the Company Employees Buyer's welfare plans (as defined in Section
3(1) of ERISA) consistent with the requirements of Section 5.14(a)(2)(B), and
each Company Employee shall receive full credit under Buyer's welfare plans for
all service completed with Sellers, each Company and each ERISA Affiliate (and
their predecessors) and for all payments made by such employee under any similar
Seller Benefit Plan to satisfy any deductible or co-pay requirements under such
plan; PROVIDED, HOWEVER that Buyer shall have no obligation to provide such
service credit for purposes of determining any such employee's eligibility to
receive post-retirement welfare benefits.
(e) 2002 MANAGEMENT INCENTIVE PLAN. In the event the Closing
occurs prior to Sprint making the payments called for under the Companies' 2002
Management Incentive Plan for Company Employees based on their performance for
the year 2002, Sprint shall compute the payments due such employees and shall
instruct Buyer as to the amount of such payments due such employees. Buyer then
shall make the payments due such Company Employees pursuant to such
instructions. Sprint will reimburse Buyer for any payments made to such Company
Employees pursuant to this Section 5.14(e) and for the tax paid by Buyer on such
payments in accordance with Section 3111(b) of the Code within ten (10) business
days of the
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date Buyer certifies to Sprint that such payments have been made and such taxes
have been paid. Sprint will be responsible for computing the payments due under
this Section 5.14(e), for answering any questions from Company Employees
regarding such payments and for resolving any disputes with any Company Employee
regarding Sprint's computations.
(f) NON-QUALIFIED DEFERRED COMPENSATION PLAN. The interest
of each Company Employee in the Sprint Executive Deferred Compensation Plan
shall remain nonforfeitable and shall be paid (subject to the terms and
conditions of such plan) in accordance with the deferral elections made under
such plan by such Company Employee.
(g) SELLER BENEFIT PLANS. Buyer shall not have any
liabilities with respect to any Seller Benefit Plans except to the extent (i)
Buyer agrees to make any payments to Company Employees eligible for the
Companies' 2002 Management Incentive Plan pursuant to Section 5.14(e), and (ii)
any contribution required with respect to any Seller Benefit Plans for periods
ending on or before the Closing remains unpaid after the Closing to the extent
reflected on the Current Assets and the Current Liabilities of the Companies on
the Final Balance Sheet.
SECTION 5.15 NO SOLICITATION OF TRANSACTIONS. Until the valid termination
of this Agreement pursuant to Article VII, none of Sellers or their Affiliates
will directly or indirectly, through any officer, director, agent or otherwise,
initiate, solicit or knowingly encourage (including by way of furnishing
non-public information or assistance) any offer or proposal for, or enter into
negotiations of any type, or any letter of intent or purchase agreement, merger
agreement or other similar agreement with any person, firm or corporation other
than Buyer with respect to, a sale of any assets (other than in the Ordinary
Course of Business and not in violation of Section 5.1) of a Company, or a
merger, consolidation or business combination in
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which a Company is a constituent entity, any sale of all or any portion of a
Company's capital stock or membership interests, or any liquidation or similar
extraordinary transaction with respect to a Company (a "COMPETING TRANSACTION").
From and after the date hereof, Sellers will immediately cease all discussions
and negotiations with respect to any Competing Transaction, and will promptly
request the return or destruction of all confidential information previously
distributed to all parties interested in a Competing Transaction (other than
Buyer) pursuant to the terms of any confidentiality agreement or otherwise.
SECTION 5.16 NON-COMPETITION AGREEMENT. At the Closing, Buyer, the
Companies, Sprint and certain Affiliates of Sprint shall enter into a
Non-Competition Agreement substantially in the form attached as EXHIBIT 5.16
(the "NON-COMPETITION AGREEMENT").
SECTION 5.17 SUBSCRIBER LISTINGS AGREEMENT. At the Closing, the
Companies, Sprint and certain Affiliates of Sprint shall enter into a Subscriber
Listings Agreement substantially in the form attached as EXHIBIT 5.17 (the
"SUBSCRIBER LISTINGS AGREEMENT").
SECTION 5.18 TRADEMARK LICENSE AGREEMENT. At the Closing, the Companies
and the SPV shall enter into a Trademark License Agreement substantially in the
form attached as EXHIBIT 5.18 (the "TRADEMARK LICENSE AGREEMENT").
SECTION 5.19 PUBLISHER TRADEMARK LICENSE AGREEMENT. At the Closing, the
Companies and Sprint shall enter into a Publisher Trademark License Agreement
substantially in the form attached as EXHIBIT 5.19 (the "PUBLISHER TRADEMARK
LICENSE AGREEMENT").
SECTION 5.20 TRANSITION OF CERTAIN INFORMATION. Prior to or on the
Closing Date, or as reasonably practicable thereafter, Sellers will transfer, or
cause to be transferred, to the Companies all books and records relating to the
business of the Companies, including without limitation, the books of account,
tax, financial, accounting and personnel records, files,
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invoices, client (current and prospective) and supplier lists, business plans,
marketing studies and other written material, including without limitation real
estate and litigation files and both paper and electronic copies of all the
financial data and human resource information system data which relate to the
business of the Companies and are maintained on any of Sellers' or their
Affiliates' computer systems that are not already owned by and in the possession
of the Companies. Sellers will provide Buyer and the Companies with access to
such information after Closing until such information is transferred to the
Companies.
SECTION 5.21 INTERIM CHANGES IN SERVICE AREAS.
(a) Sellers and Buyer agree that the terms and conditions of
Section 9.1 of the Directory Services License Agreement shall apply to any sale
of a Service Area (as defined in the Directory Services License Agreement) by
Sellers between the date hereof and the Closing Date such that the requirements
of such Section 9.1 shall become effective on the Closing Date with respect to
the local telephone division of Sprint and the purchaser of such Service Area
with retroactive effect from the date of such sale.
(b) Sellers and Buyer agree that the terms and conditions of
Section 9.2 of the Directory Services License Agreement shall apply to any
acquisition of a Service Area by Sellers or their Affiliates between the date
hereof and the Closing Date such that the requirements of such Section 9.2 shall
become effective on the Closing Date with respect to the local telephone
division of Sprint and the purchaser of such Service Area on the Closing Date
with retroactive effect from the date of such sale.
SECTION 5.22 INTERCOMPANY ACCOUNTS; CENDON PAYMENTS. All intercompany
accounts between Sellers or their respective Affiliates, on the one hand, and
the Companies, on the other hand, as of the Closing shall be settled
(irrespective of the terms of
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payment and deemed without further action of such intercompany accounts) in full
at or prior to the Closing by netting such balances against each other, and the
resultant balance contributed to capital or paid by cash or dividend, as the
case may be, and deemed without further action to be fully discharged as of the
Closing Date. Buyer shall pay to Sellers (or to such third parties as may be
designated in writing by Sellers) by wire transfer of available funds at Closing
$14,000,000 in full settlement and satisfaction of Buyer's obligations set forth
in Clause 12(i) of the CenDon Virginia Directory Agreement, dated May 5, 1988,
as amended, Clause 12(i) of the CenDon Florida Directory Agreement, dated May 5,
1988, as amended, Clause 12(i) of the CenDon Nevada Directory Agreement, dated
May 5, 1988, as amended, and Clause 12(i) of the CenDon North Carolina Directory
Agreement, dated May 5, 1988, as amended.
SECTION 5.23 SPECIAL PURPOSE VEHICLE. On or prior to the Closing, Sellers
will (a) form a limited liability company (the "SPV") whose sole member is
Sprint Communications Company L.P., (b) include in the operating agreement of
the SPV the policies set forth on EXHIBIT 5.23, (c) cause Sprint Communications
Company, L.P. to irrevocably contribute and assign all of its right, title and
interest (including the associated goodwill) in the Licensed Marks (as defined
in the Trademark License Agreement) to the SPV as an irrevocable contribution to
the capital of the SPV (and not as security for a financing), and (d) make a
capital contribution (and not as security for a financing) to the SPV of an
amount estimated to cover the reasonably foreseeable expenses of the SPV. In
addition, at the Closing, Sprint and Buyer will enter into an agreement (the
"SPV AGREEMENT") that contains the representations and warranties, covenants and
other provisions contemplated by EXHIBIT 5.23.
SECTION 5.24 CO-BRANDING. The parties will use their respective good
faith commercially reasonable efforts prior to Closing to agree upon (a) general
standards and
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guidelines with respect to the relative prominence and positioning of the
Publisher Co-Brand Marks (as defined in the Directory Services License
Agreement) and the Licensed Marks, provided that the parties agree that such
general standards and guidelines will provide that the Publisher Co-Brand Marks
will not be more than 80% of the size of the Licensed Marks in any usage, and
(b) the specific graphic uses of the Publisher Co-Brand Marks relative to the
Licensed Marks.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PARTIES
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION. The respective
obligation of each party to consummate the transactions contemplated by this
Agreement is subject to the satisfaction at or prior to the Closing of the
following conditions:
(a) No statute, rule or regulation shall have been enacted,
promulgated or enforced by any court or governmental authority which prohibits
or restricts the consummation of the transactions contemplated by this
Agreement;
(b) There shall not be in effect any judgment, order, injunction
or decree of any court of competent jurisdiction enjoining the consummation of
the transactions contemplated by this Agreement;
(c) Any waiting periods applicable to the transactions
contemplated by this Agreement under the HSR Act shall have expired or early
termination shall have been granted;
(d) All consents, authorizations, waivers and approvals of any
governmental authority or other regulatory body as may be required to be
obtained in connection
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with the performance of this Agreement, the failure to obtain which would
prevent the consummation of the transactions contemplated by this Agreement or
have a Company Material Adverse Effect, shall have been obtained; and
(e) Buyer shall have received the proceeds of the financing
contemplated by the Financing Commitments, on substantially the terms and
subject to the conditions set forth therein.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF SELLERS. The obligations of
Sellers to consummate the transactions contemplated by this Agreement are
further subject to the satisfaction (or waiver) at or prior to the Closing of
the following conditions:
(a) The representations and warranties of Buyer contained in
Article IV of this Agreement that are (i) qualified as to Buyer Material Adverse
Effect shall be true and correct and (ii) not so qualified shall be true and
correct in all material respects (except for breaches as to matters that,
individually or in the aggregate, could not reasonably be expected to have a
Buyer Material Adverse Effect), in each case, as of the date of this Agreement
and as of the Closing as if made at and as of such time (PROVIDED, HOWEVER, that
representations and warranties which are as of a specific date shall speak only
as of such date). Sellers shall have received a certificate dated as of the
Closing Date executed by an officer of Buyer to such effect.
(b) Buyer shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Closing pursuant to the terms of this Agreement, and Sellers shall have
received a certificate dated as of the Closing Date executed by an officer of
Buyer to such effect;
(c) Buyer shall have delivered to Sellers or their Affiliates
those items set forth in Section 1.7 of this Agreement; and
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(d) Except for any applicable Taxes, no state governmental
authority or other state regulatory body shall have initiated a formal legal or
administrative proceeding with respect to the transactions contemplated by this
Agreement that would reasonably be expected to, individually or in aggregate,
have a material adverse effect on the business of Sprint Local
Telecommunications Division or on the proceeds Sprint expects to receive from
the transactions contemplated by this Agreement.
SECTION 6.3 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer
to consummate the transactions contemplated by this Agreement are further
subject to the satisfaction (or waiver) at or prior to the Closing of the
following conditions:
(a) The representations and warranties of Sellers contained in
Article III of this Agreement that are (i) qualified as to Company Material
Adverse Effect shall be true and correct and (ii) not so qualified shall be true
and correct in all material respects (except for breaches as to matters that
would not reasonably be expected to, individually or in the aggregate, have a
Company Material Adverse Effect), in each case as of the date of this Agreement
and as of the Closing as if made at and as of such time (PROVIDED, HOWEVER, that
representations and warranties which are as of a specific date shall speak only
as of such date) and the representation and warranty of Sellers in Section 3.4
shall be true and correct as of the Closing. Buyer shall have received a
certificate dated as of the Closing Date executed by authorized representatives
of each Seller to such effect;
(b) Each Seller and each Wholly Owned Company shall have performed
in all material respects its obligations under this Agreement required to be
performed by it at or prior to the Closing pursuant to the terms of this
Agreement, and Buyer shall have
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received a certificate dated as of the Closing Date executed by authorized
representatives of each Seller to such effect;
(c) Sellers shall have delivered to Buyer those items set forth in
Section 1.6 of this Agreement;
(d) Buyer shall have received evidence reasonably satisfactory to
it that (i) all Liens listed on SCHEDULE 6.3(d) have been released and fully
discharged and (ii) all guarantees by the Companies of indebtedness for borrowed
money of another Person shall be cancelled;
(e) No Company shall have, or shall have guaranteed, any
indebtedness for borrowed money and capitalized lease obligations that in
accordance with GAAP are required to be reflected as indebtedness on a
consolidated balance sheet of the Companies; and
(f) All consents as are required from parties to those contracts
of the Companies listed on SCHEDULE 6.3(f) in order to prevent any breach or
violation of the terms of such contracts as a result of the consummation of the
transactions contemplated by this Agreement shall have been obtained.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned:
(a) at any time, by mutual written consent of Sellers and Buyer;
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(b) by either party if the transactions contemplated by this
Agreement shall have been permanently enjoined by a court of competent
jurisdiction; PROVIDED, HOWEVER, that no party who brought or is affiliated with
the party who brought the action seeking the permanent enjoinment of the
transactions contemplated by this Agreement may seek termination of this
Agreement pursuant to this Section 7.1(b);
(c) by Buyer if any of the conditions set forth in Sections 6.1
and 6.3 shall have become incapable of fulfillment prior to the Termination Date
(as hereinafter defined) and shall not have been waived by Buyer;
(d) by Sellers if any of the conditions set forth in Sections 6.1
or 6.2 shall have become incapable of fulfillment prior to the Termination Date
and shall not have been waived by Sellers;
(e) by Buyer or Sellers, at any time on or after the six month
anniversary of the date of this Agreement (the "TERMINATION DATE"), if the
Closing shall not have occurred on or prior to such date; PROVIDED, HOWEVER,
that the right to terminate this Agreement under this Section 7.1(e) shall not
be available to any party whose failure to fulfill any obligation under this
Agreement has substantially contributed to, or resulted in, the failure of the
Closing to have occurred on or before such date; PROVIDED, FURTHER, that if on
the Termination Date the only conditions to Closing capable of being satisfied
prior to the Closing Date that have not been fulfilled are Section 6.1(d) or
6.2(d), then the Termination Date shall be extended to the earlier to occur of
(i) the first anniversary of the date of this Agreement and (ii) the tenth
(10th) business day following the fulfillment of the closing conditions in
Sections 6.1(d) or 6.2(d), as applicable; or
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(f) by Sellers if any Financing Commitment ceases to remain in
effect on substantially the terms and subject to the conditions set forth
therein for a period of 10 or more business days and Buyer has not obtained
within such 10 day period replacement financing commitments with terms and
conditions regarding certainty of closing no less favorable to Buyer and
Sellers.
SECTION 7.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of the
termination of this Agreement and the abandonment of the transactions
contemplated by this Agreement pursuant to Section 7.1 of this Agreement,
written notice thereof shall be given by Sellers, on the one hand, or Buyer, on
the other hand, so terminating to the other party and this Agreement shall
terminate and the transactions contemplated by this Agreement shall be
abandoned, without further action by Sellers, or Buyer. If this Agreement is
terminated pursuant to Section 7.1 of this Agreement:
(a) unless the basis of a termination is as set forth in Section
7.2(c) for failure of a condition set forth in Sections 6.2(a) or (b), each
party shall redeliver all documents, work papers and other materials of the
other parties relating to the transactions contemplated by this Agreement,
whether so obtained before or after the execution of this Agreement, to the
party furnishing the same or, upon prior written notice to such party, shall
destroy all such documents, work papers and other materials and deliver notice
to the parties seeking destruction of such documents that such destruction has
been completed, and all confidential information received by any party to this
Agreement with respect to the other party shall be treated in accordance with
the Confidentiality Agreement and Section 5.2(b) of this Agreement;
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(b) all filings, applications and other submissions made pursuant
to this Agreement shall, at the option of Sellers, and to the extent
practicable, be withdrawn from the agency or other Person to which made; and
(c) there shall be no liability or obligation under this Agreement
on the part of Sellers, the Companies or Buyer or any of their respective
directors, officers, employees, Affiliates, controlling Persons, agents or
representatives, except that Sellers or Buyer, as the case may be, shall have
liability to the other party if the basis of termination is fraud or a willful,
material breach by Sellers or Buyer, as the case may be, of one or more of the
provisions of this Agreement, and except that the obligations provided for in
this Section and Sections 5.5, 5.8 and 10.1 of this Agreement and in the
Confidentiality Agreement shall survive any such termination.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS
SECTION 8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. Notwithstanding any investigation by or on behalf of Buyer or the
results of any such investigation and notwithstanding the participation of Buyer
in the Closing, except for those representations and warranties in Sections 3.16
(Taxes) and 3.17 (Environmental) of this Agreement (which shall survive the
applicable statute of limitations, including any extensions with respect
thereto) and those representations and warranties in Sections 3.1
(Organization), 3.2 (Authorization), 3.3 (Capital Stock), 3.4 (Ownership of the
Capital Stock), 3.19 (Certain Fees) and 4.1 (Buyer Organization) (which shall
survive indefinitely), the representations and warranties of Sellers and Buyer
in Articles III and IV of this Agreement, respectively, shall survive the
Closing for a period of eighteen months following the Closing Date.
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ARTICLE IX
INDEMNIFICATION
SECTION 9.1 INDEMNIFICATION OBLIGATIONS OF SELLERS. Sellers
jointly and severally shall indemnify, defend and hold harmless Buyer and its
Affiliates, and, effective as of the Closing, without duplication, the
Companies, each of their respective officers, directors, employees, agents and
representatives and each of the heirs, executors, successors and assigns of any
of the foregoing (collectively, the "BUYER INDEMNIFIED PARTIES") from, against
and in respect of any and all claims, liabilities (whether asserted or
unasserted, absolute or contingent), obligations, losses, costs, expenses,
penalties, fines and judgments (at equity or at law) and damages whenever
arising or incurred (including, without limitation, amounts paid in settlement,
costs and expenses of investigation and reasonable attorneys' fees and expenses)
arising out of or relating to (a) any breach or inaccuracy of any representation
or warranty made by Sellers in Article III of this Agreement (without giving
effect to "Material Adverse Effect" or "in all material respects" qualifications
contained in Article III of this Agreement other than those contained in Section
3.6) (other than a breach or inaccuracy of any representation or warranty under
Section 3.16), (b) any breach or nonperformance of any covenant, agreement or
undertaking of Sellers in this Agreement other than Seller's obligations under
Section 5.6 to use its reasonable best efforts to satisfy the closing condition
in Section 6.3(f) and (c) the agreements listed on SCHEDULE 3.7. Notwithstanding
the preceding sentence, the indemnification or indemnification procedures
provided for under this Section 9.1 shall not apply to Tax matters, which shall
be governed exclusively by Section 5.7.
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The claims, liabilities, obligations, losses, costs, expenses, penalties,
fines and damages of the Buyer Indemnified Parties described in this Section 9.1
as to which the Buyer Indemnified Parties are entitled to indemnification are
hereinafter collectively referred to as "BUYER LOSSES."
SECTION 9.2 INDEMNIFICATION OBLIGATIONS OF BUYER. Buyer shall indemnify,
defend and hold harmless Sellers and their Affiliates (excluding the Companies),
each of their respective officers, directors, employees, agents and
representatives and each of the heirs, executors, successors and assigns of any
of the foregoing (collectively, the "SELLER INDEMNIFIED PARTIES") from, against
and in respect of any and all claims, liabilities, obligations, losses, costs,
expenses, penalties, fines and judgments (at equity or at law) and damages
whenever arising or incurred (including, without limitation, amounts paid in
settlement, costs and expenses of investigation and reasonable attorneys' fees
and expenses) arising out of or relating to (a) any breach or inaccuracy of any
representation or warranty made by Buyer in Article IV of this Agreement
(without giving effect to "Material Adverse Effect" or "in all material
respects" qualifications contained in Article IV of this Agreement) or (b) any
breach or nonperformance of any covenant, agreement or undertaking of Buyer in
this Agreement. Notwithstanding the preceding sentence, the indemnification or
indemnification procedures provided for in this Section 9.2 shall not apply to
Tax matters, which shall be governed exclusively by Section 5.7.
The claims, liabilities, obligations, losses, costs, expenses,
penalties, fines and damages of the Seller Indemnified Parties described in this
Section 9.2 as to which the Seller Indemnified Parties are entitled to
indemnification are hereinafter collectively referred to as "SELLER LOSSES."
SECTION 9.3 INDEMNIFICATION PROCEDURE.
(a) Promptly after receipt by a Buyer Indemnified Party or a
Seller Indemnified Party (hereinafter collectively referred to as an
"INDEMNIFIED PARTY") of written
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notice by a third party of a threatened or filed claim or of the threatened or
actual commencement of any action or proceeding with respect to which such
Indemnified Party may be entitled to receive payment from the other party for
any Buyer Losses or Seller Losses (as the case may be), such Indemnified Party
shall notify Buyer (on the one hand) or Sellers (on the other hand), whoever is
the appropriate indemnifying party hereunder (the "INDEMNIFYING PARTY"), within
thirty (30) days of the written notice of threatening or filing of such claim or
of the threatened or actual commencement of such action or proceeding; PROVIDED,
HOWEVER, that the failure to so notify the Indemnifying Party shall relieve the
Indemnifying Party from liability under this Agreement with respect to such
claim only if, and only to the extent that, such failure to notify the
Indemnifying Party actually and materially prejudices the Indemnifying Party
with respect to such claim. The Indemnifying Party shall have the right, upon
written notice delivered to the Indemnified Party within thirty (30) days
thereafter, to assume the defense of such action or proceeding, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of the fees and disbursements of such counsel. In any action or
proceeding with respect to which indemnification is being sought hereunder, the
Indemnified Party or the Indemnifying Party, whichever is not assuming the
defense of such action, shall have the right to participate in such litigation
and to retain its own counsel at such party's own expense. The Indemnifying
Party or the Indemnified Party, as the case may be, shall at all times use
reasonable efforts to keep the Indemnifying Party or the Indemnified Party, as
the case may be, reasonably apprised of the status of the defense of any action
the defense of which they are maintaining and to cooperate in good faith with
each other with respect to the defense of any such action.
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(b) No Indemnified Party may settle or compromise any claim or
consent to the entry of any judgment with respect to which indemnification is
being sought hereunder without the prior written consent of the Indemnifying
Party. An Indemnifying Party may not, without the prior written consent of the
Indemnified Party, settle or compromise any claim or consent to the entry of any
judgment with respect to which indemnification is being sought hereunder unless
(i) simultaneously with the effectiveness of such settlement, compromise or
consent, the Indemnifying Party pays in full any obligation imposed on the
Indemnified Party by such settlement, compromise or consent, which releases the
Indemnified Party completely in connection with such settlement, compromise or
consent and (ii) such settlement, compromise or consent does not contain any
equitable order, judgment or term which in any manner affects, restrains or
interferes with the business of the Indemnified Party or any of the Indemnified
Party's Affiliates.
(c) In the event an Indemnified Party shall claim a right to
payment pursuant to this Agreement not involving a third party claim covered by
Section 9.3(a), such Indemnified Party shall send written notice of such claim
to the appropriate Indemnifying Party. Such notice shall specify the basis for
such claim. As promptly as possible after the Indemnified Party has given such
notice, such Indemnified Party and the appropriate Indemnifying Party shall
establish the merits and amount of such claim (by mutual agreement, litigation,
arbitration or otherwise) and, within five business days of the final
determination of the merits and amount of such claim, the Indemnifying Party
shall pay to the Indemnified Party immediately available funds in an amount
equal to such claim as determined hereunder.
SECTION 9.4 CLAIMS PERIOD. For purposes of this Agreement, a "CLAIMS
PERIOD" shall be the period after the Closing Date which a claim for
indemnification may be
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asserted under this Agreement by an Indemnified Party. The Claims Periods under
this Agreement shall commence on the Closing Date and shall terminate with
respect to Buyer Losses or Seller Losses arising with respect to (a) any breach
or inaccuracy of any representation or warranty on the expiration of the
applicable survival period set forth in Section 8.1 and (b) with respect to any
breach or nonperformance of any covenant or agreement in this Agreement, six
months after the date Buyer (with respect to any Buyer Indemnified Party) or
Sellers (with respect to any Seller Indemnified Party), as the case may be,
obtains Knowledge of such breach or nonperformance. Notwithstanding the
foregoing, if prior to the close of business on the last day of the applicable
Claims Period, an Indemnifying Party shall have been properly notified of a
claim for indemnity hereunder and such claim shall not have been finally
resolved or disposed of at such date, such claim shall continue to survive and
shall remain a basis for indemnity hereunder until such claim is finally
resolved or disposed of in accordance with the terms of this Agreement.
SECTION 9.5 LIABILITY LIMITS. Notwithstanding anything to the contrary
set forth in this Agreement, except for fraud, the Buyer Indemnified Parties
shall not make a claim against Sellers for indemnification under Section 9.1(a)
for Buyer Losses (a) for any single Buyer Loss less than $250,000 and (b) unless
and until the aggregate amount of Buyer Losses under Section 9.1(a) exceeds
$25,000,000 (the "BUYER DEDUCTIBLE"), and then only to the extent such Buyer
Losses exceed the Buyer Deductible. Further, the sum of Sellers' indemnification
obligations hereunder and any amounts payable by Sprint for consequential
damages resulting from a breach by Sprint or its Affiliates under the Trademark
License Agreement, shall not exceed in the aggregate $660,000,000 (the "CAP
AMOUNT").
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SECTION 9.6 NETTING OF LOSSES. The amount of any Seller Losses or Buyer
Losses for which indemnification is provided under this Article IX shall take
into account (a) in the case of Sellers' indemnification obligations under
Section 9.1 of this Agreement, any specific reserves included in the Final
Balance Sheet and included in the determination of Closing Date Net Working
Capital, (b) in the case of Sellers' indemnification obligations under Section
9.1 of this Agreement or Buyer's indemnification obligations under Section 9.2
of this Agreement, (i) any amounts recovered by the Indemnified Party pursuant
to any indemnification by, or indemnification agreement with, any third party,
and (ii) any insurance proceeds or other cash receipts or sources of
reimbursement received in connection with any such Seller Losses or Buyer Losses
and (c) any Tax consequences associated with such Losses and the recovery
thereof. If the amount to be netted hereunder from any payment required under
Section 9.1 or Section 9.2 of this Agreement is determined after payment by the
Indemnifying Party pursuant to this Article IX, the Indemnified Party shall
repay to the Indemnifying Party, promptly after such determination, any amount
that the Indemnifying Party would not have had to pay pursuant to this Article
IX had such determination been made at the time of such payment.
SECTION 9.7 EXCLUSIVE REMEDIES. Except for fraud, the provisions of this
Article IX and Sections 5.7 and 10.11 set forth the exclusive rights and
remedies of Buyer and Sellers to seek or obtain damages or any other remedy or
relief whatsoever from any party with respect to matters arising under or in
connection with this Agreement and the transactions contemplated by this
Agreement (other than any remedy or relief arising from the failure of any party
to perform its obligations under the Ancillary Agreements). All payments made
between Buyer and Sellers pursuant to Article VII, this Article IX and Sections
5.7 and 10.11 shall constitute adjustments to the Purchase Price for all Tax and
other purposes.
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ARTICLE X
MISCELLANEOUS
SECTION 10.1 FEES AND EXPENSES. Whether or not the transactions
contemplated by this Agreement are consummated, Sellers and Buyer shall pay all
fees and expenses incurred by, or on behalf of, Sellers or Buyer, respectively,
in connection with, or in anticipation of, this Agreement and the consummation
of the transactions contemplated by this Agreement.
SECTION 10.2 FURTHER ASSURANCES. From time to time after the Closing
Date, at the reasonable request of the other party to this Agreement and at the
expense of the party so requesting, each of the parties to this Agreement shall
execute and deliver to such requesting party such documents and take such other
action as such requesting party may reasonably request in order to consummate
more effectively the transactions contemplated by this Agreement.
SECTION 10.3 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and may be given by any of the following methods: (a) personal
delivery; (b) facsimile transmission; (c) registered or certified mail, postage
prepaid, return receipt requested; or (d) overnight courier. Notices shall be
sent to the appropriate party at its address or facsimile number given below (or
at such other address or facsimile number for such party as shall be specified
by notice given under this Section 10.3):
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If to Buyer, to:
X.X. Xxxxxxxxx Corporation
Xxx Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Fax No. (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No. (000) 000-0000
Attention: Xxxx X. Xxxxxx
If to Sellers, to:
Sprint Corporation
0000 Xxxxxx Xxxxxxx
Xxxxxxxx Xxxx, XX 00000
KSOPHF 0302 - 3B679
Fax No. (000) 000-0000
Attention: Legal - Corporate Secretary
with a copy to:
Sprint Corporation
0000 Xxxxxx Xxxxxxx
Xxxxxxxx Xxxx, XX 00000
KSOPHF 0302 - 3B626
Fax No. (000) 000-0000
Attention: Legal - Assistant Vice President,
Law - Corporate Transactions
and a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Fax No. (000) 000-0000
Attention: Xxxxxxx X. Xxxx III
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All such notices, requests, demands, waivers and communications shall be deemed
received upon (i) actual receipt thereof by the addressee, (ii) actual delivery
thereof to the appropriate address or (iii) in the case of a facsimile
transmissions, upon transmission thereof by the sender and issuance by the
transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error. In the case of
notices sent by facsimile transmission, the sender shall contemporaneously mail
a copy of the notice to the addressee at the address provided for above.
However, such mailing shall in no way alter the time at which the facsimile
notice is deemed received.
SECTION 10.4 SEVERABILITY. Should any provision of this Agreement for any
reason be declared invalid or unenforceable, such decision shall not affect the
validity or enforceability of any of the other provisions of this Agreement,
which remaining provisions shall remain in full force and effect and the
application of such invalid or unenforceable provision to Persons or
circumstances other than those as to which it is held invalid or unenforceable
shall be valid and enforced to the fullest extent permitted by law; PROVIDED,
that the economic or legal substance of the transactions contemplated hereby is
not affected in any materially adverse manner to any party.
Should Section 5.8 of this Agreement or any word, phrase, clause,
sentence or other portion thereof for any reason be declared illegal or
unenforceable, such Section or portions thereof shall be modified or deleted in
such a manner so as to make Section 5.8 of this Agreement as modified legal and
enforceable to the fullest extent permitted under applicable laws.
SECTION 10.5 BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions of this Agreement shall be binding upon and shall inure to the
benefit of the parties to
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this Agreement and their respective successors and permitted assigns. Neither
this Agreement nor any of the rights, interests or obligations under this
Agreement shall be assigned, directly or indirectly, including, without
limitation, by operation of law, by any party to this Agreement without the
prior written consent of the other parties to this Agreement, except that Buyer
may, without such consent assign all such rights and obligations to (a) an
Affiliate of Buyer or (b) on or after the Closing Date, to any lender or other
party as collateral in connection with any financing; PROVIDED, HOWEVER, that no
such assignment shall release Buyer of any of its obligations under this
Agreement.
SECTION 10.6 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for
the benefit of Sellers, and their successors and permitted assigns, with respect
to the obligations of Buyer under this Agreement, and for the benefit of Buyer,
and its respective successors and permitted assigns, with respect to the
obligations of Sellers, under this Agreement, and this Agreement shall not be
deemed to confer upon or give to any other third party any remedy, claim,
liability, reimbursement, cause of action or other right.
SECTION 10.7 INTERPRETATION.
(a) As used in this Agreement, the term "PERSON" shall mean and
include an individual, a partnership, limited liability company, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof or other entity.
(b) As used in this Agreement, the term "AFFILIATE" shall mean a
person that directly or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with the person specified.
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SECTION 10.8 JURISDICTION AND CONSENT TO SERVICE. Without limiting the
jurisdiction or venue of any other court, each of Sprint, Centel LLC and Buyer
(a) agrees that any suit, action or proceeding arising out of or relating to
this Agreement shall be brought solely in the state or federal courts of the
State of Delaware, (b) consents to the exclusive jurisdiction of each such court
in any suit, action or proceeding relating to or arising out of this Agreement,
(c) waives any objection which it may have to the laying of venue in any such
suit, action or proceeding in any such court, and (d) agrees that service of any
court paper may be made in such manner as may be provided under applicable laws
or court rules governing service of process.
SECTION 10.9 ENTIRE AGREEMENT. This Agreement, the Confidentiality
Agreement, the Schedules and other documents referred to in this Agreement or
delivered pursuant to this Agreement which form a part of this Agreement
constitute the entire agreement among the parties with respect to the subject
matter of this Agreement and supersede all other prior agreements and
understandings, both written and oral, between the parties or any of them with
respect to the subject matter of this Agreement.
SECTION 10.10 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof) as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies.
SECTION 10.11 SPECIFIC PERFORMANCE. The parties acknowledge and agree
that any breach of the terms of this Agreement would give rise to irreparable
harm for which money damages would not be an adequate remedy and accordingly the
parties agree that, in addition to any other remedies, each shall be entitled to
enforce the terms of this Agreement by a
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decree of specific performance without the necessity of proving the inadequacy
of money damages as a remedy and without the necessity of posting bond.
SECTION 10.12 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 10.13 AMENDMENT, MODIFICATION AND WAIVER. This Agreement may be
amended, modified or supplemented at any time by written agreement of Sellers
and Buyer. Any failure of Sellers or Buyer to comply with any term or provision
of this Agreement may be waived, with respect to Buyer, by Sellers and, with
respect to Sellers, by Buyer, by an instrument in writing signed by or on behalf
of the appropriate party, but such waiver or failure to insist upon strict
compliance with such term or provision shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure to comply.
SECTION 10.14 KNOWLEDGE. "TO THE KNOWLEDGE OF SELLERS" or any similar
phrase contained in this Agreement shall mean the actual knowledge of the
officers of Sprint and its Affiliates as set forth on SCHEDULE 10.14. "TO THE
KNOWLEDGE OF BUYER" or any similar phrase contained in this Agreement shall mean
the actual knowledge of the officers of Buyer and its Affiliates as set forth on
SCHEDULE 10.14.
SECTION 10.15 SCHEDULES AND EXHIBITS. The Schedules, including all
supplements and amendments thereto, and all exhibits to this Agreement are
hereby incorporated into this Agreement and are hereby made a part of this
Agreement as if set out in full in this Agreement.
SECTION 10.16 WAIVER OF JURY TRIAL. EACH PARTY WAIVES ITS RIGHT TO A JURY
TRIAL IN ANY COURT ACTION ARISING AMONG ANY OF THE PARTIES,
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WHETHER UNDER OR RELATING TO THIS AGREEMENT, AND WHETHER MADE BY CLAIM,
COUNTER-CLAIM, THIRD PARTY CLAIM OR OTHERWISE.
If for any reason the jury waiver is held to be unenforceable, the
parties agree to binding arbitration for any dispute arising out of this
Agreement or any claim arising under any federal, state or local statutes, laws
or regulations, under the applicable commercial rules of the American
Arbitration Association and 9 U.S.C. sec. 1, ET. SEQ. Any arbitration will be
held in the Wilmington, Delaware metropolitan area and be subject to the
Governing Law provision of this Agreement. Discovery in the arbitration will be
governed by the Local Rules applicable in the United States District Court for
the District of Delaware.
The agreement of each party to waive its right to a jury trial will be
binding on its successors and assigns and will survive the termination of this
Agreement.
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IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed as of the date first above written.
SPRINT CORPORATION
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Operating Officer - LTD
CENTEL DIRECTORIES LLC
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------------
Xxxxxxx X. Xxxxxx
Vice President
X.X. XXXXXXXXX CORPORATION
By: /s/ XXXXX X. XXXXXXX
-----------------------------------------
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
