PURCHASE AGREEMENT
This Purchase Agreement is entered into as of August 19, 2002
by and between Qwest Dex, Inc., a Colorado corporation ("SELLER"), Qwest
Services Corporation, a Colorado corporation ("QSC"), and Qwest Communications
International Inc., a Delaware corporation ("QWEST" and, collectively with
Seller and QSC, the "QWEST PARTIES"), on the one hand, and Dex Holdings LLC, a
Delaware limited liability company ("BUYER"), on the other hand.
RECITALS
A. Qwest owns all of the outstanding capital stock of
QSC;
B. QSC owns all the outstanding capital stock of Qwest
Dex Holdings, Inc., a Delaware corporation ("HOLDING");
C. Holding owns all of the outstanding capital stock of
Seller;
D. Seller owns all of the outstanding limited liability
company interests (the "LLC INTERESTS") of GPP LLC, a Delaware limited liability
company ("COMPANY"), and immediately prior to the Closing (as defined herein),
Seller will contribute certain of the assets relating to the Rodney Transferred
Business (as defined herein) to Company, and Company shall assume certain of the
liabilities relating to the Rodney Transferred Business, pursuant to the terms
of the Contribution (as defined herein);
E. Concurrently herewith, the Qwest Parties and Buyer
are entering into that certain Purchase Agreement (the "DEXTER PURCHASE
AGREEMENT") pursuant to which the Qwest Parties have agreed to contribute assets
and liabilities relating to the Transferred Business (as defined in the Dexter
Purchase Agreement) to a newly formed Delaware limited liability company ("SGN
LLC"), and sell all of the interests in SGN LLC to Buyer on the terms and
conditions set forth therein;
F. After entertaining offers for all or a portion of
Seller's assets from multiple prospective purchasers and without waiving any
rights, conditions, benefits or obligations contained herein or in the Dexter
Purchase Agreement, Seller believes that the Transactions (as defined herein)
contemplated under this Agreement (as defined herein), as well as the
transactions contemplated under the Dexter Purchase Agreement, represent the
best available offer to purchase the assets subject to this Agreement and the
Dexter Purchase Agreement and constitute reasonably equivalent value for the LLC
Interests, and accordingly Seller is willing to enter into this Agreement and
the Dexter Purchase Agreement and to consummate the Transactions contemplated
hereunder and the transactions contemplated by the Dexter Purchase Agreement;
G. Seller desires to sell, and Buyer desires to buy, the
LLC Interests for the consideration and on the terms and conditions described
herein; and
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H. As an inducement to Buyer to enter into this
Agreement and to consummate the Transactions, Qwest and QSC have become parties
to this Agreement solely with respect to the matters expressly identified
herein.
AGREEMENT
In consideration of the mutual promises contained in this
Agreement and intending to be legally bound, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 GENERAL RULES OF CONSTRUCTION. For all purposes of
this Agreement and the Exhibits, Schedules and Disclosure Schedules delivered
pursuant to this Agreement, except as otherwise expressly provided or unless the
context otherwise requires:
(a) terms include the plural as well as the singular;
(b) all accounting terms not otherwise defined have the
meanings assigned under GAAP, as in effect from time to time;
(c) all references in this Agreement to designated
"Articles," "Sections" and other subdivisions are to the designated Articles,
Sections and other subdivisions of the body of this Agreement;
(d) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Section or other subdivision;
(e) "or" is not exclusive; and
(f) "including" and "includes" will be deemed to be
followed by "but not limited to" and "but is not limited to," respectively.
1.2 DEFINITIONS. As used in this Agreement and the
Exhibits and Schedules delivered pursuant to this Agreement, the following
definitions will apply:
"ACCRUED LIABILITY" is defined in Section 6.5(c)(iv).
"ACTION" means any action, complaint, petition, investigation,
suit or other proceeding, whether administrative, civil or criminal, in law or
in equity, or before any arbitrator or Governmental Entity.
"ADDITIONAL EQUITY" is defined in Section 5.10(e).
"ADJUSTED BASE PURCHASE PRICE" means the Base Purchase Price,
as adjusted (if applicable) pursuant to Section 2.7.
"ADJUSTMENT FRACTION" means, with respect to any month, the
number of days elapsed in that month divided by the total number of days in that
month.
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"ADVERTISING AND TELECOMMUNICATIONS COMMITMENTS SIDE LETTER"
means the Advertising and Telecommunications Commitments Side Letter by and
between Qwest and Qwest Corporation, on the one hand, and Buyer, Company and SGN
LLC, on the other hand, to be effective with respect to Company at the Closing,
substantially in the form of Exhibit A to this Agreement.
"AFFILIATE" means a Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, a specified Person. The term "control" (including, with
correlative meanings, the terms "controlled by" and "under common control with")
means the possession of the power to direct the management and policies of the
referenced Person, whether through ownership interests, by contract or
otherwise.
"AGREEMENT" means this Purchase Agreement by and between the
Qwest Parties, on the one hand, and Buyer, on the other hand, as amended,
supplemented, restated or otherwise modified from time to time, together with
all Exhibits and Schedules delivered pursuant to this Agreement.
"AGREEMENT ACCOUNTING PRINCIPLES" means GAAP, together with
the principles and adjustments set forth in Section 1.2AAP of Seller's
Disclosure Schedule.
"APPROVAL" means any approval, authorization, consent,
qualification, Order, registration, or any waiver of any of the foregoing,
required by Law or by assertion of any Governmental Entity to be obtained from,
or any notice, statement or other communication required to be filed with or
delivered to, any Governmental Entity.
"APPROVAL FILINGS" is defined in Section 5.4(a).
"ASSUMED AFFILIATE PAYABLES" means (i) all accounts payable to
Qwest with respect to third party invoices to the extent such amounts have not
actually been paid by Qwest, payroll liabilities of Qwest to the extent such
amounts have not already been paid by Qwest, and (ii) other payables to Qwest
with respect to "Headquarters Allocations," "Qwest Services Corp.," "Qwest
BRI-Facilities Expense," "Qwest IT" and "Qwest Communications Services," in each
case determined consistent with the December 31, 2001 Holding Audited Balance
Sheet.
"B & S SYSTEMS TRANSITION PLAN" is defined in Section 5.19.
"BANKRUPTCY CODE" means the United States Bankruptcy Code (11
U.S.C. Section 101 et seq.), as amendeD from time to time, and any successor
statute.
"BASE PURCHASE PRICE" means $4,300,000,000.
"BILLING AND COLLECTION AGREEMENT" means the Agreement for the
Provision of Billing and Collection Services for Directory Publishers by and
between Qwest Corporation and Company to be entered into at the Closing,
substantially in the form of Exhibit G to this Agreement.
"BUSINESS" means the business of publishing of telephone
directory products and services consisting principally of searchable (e.g., by
alphabet letter or category) multiple
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telephone listings and classified advertisements that are delivered or otherwise
made available to end users in tangible media (e.g., paper directories, CD-ROM)
or electronic media (e.g., Internet), as presently conducted by Seller.
"BUSINESS DAY" means any day other than a Saturday, a Sunday
or a day on which banks in New York, New York or Denver, Colorado are authorized
or obligated by Law or executive order to close.
"BUYER" is defined in this Agreement's opening paragraph.
"BUYER INDEMNIFIED PERSONS" is defined in Section 9.1.
"BUYER JOINDER" means the Joinder, by and between Buyer, the
Qwest Parties and Qwest Corporation, to be entered into at the Closing,
substantially in the form of Exhibit T to this Agreement.
"BUYER MATERIAL ADVERSE EFFECT" means any change in or effect
on Buyer or the business of Buyer or any part thereof that would materially
impair the validity or enforceability of the Transaction Documents or materially
adversely affect or delay Buyer's ability to consummate the Closing or perform
its obligations under the Transaction Documents; provided that neither of the
following will constitute a Buyer Material Adverse Effect: (a) any change
resulting from or relating to general economic conditions or (b) any change
generally affecting the industries in which Seller operates.
"BUYER ORGANIZATIONAL DOCUMENTS" is defined in Section 4.1.
"BUYER PENSION PLAN" is defined in Section 6.5(c)(i).
"BUYER SECURITIES" means the subordinated notes or preferred
stock issued, if at all, by Buyer or its Affiliate and having the terms set
forth in Schedule 1.2BS.
"BUYER'S NOTICE" is defined in Section 5.10(e).
"BUYER'S SEPARATION COST LIMIT" is defined in Section 5.16.
"CBAs" is defined in Section 3.16.
"CLOSING" means the consummation of the purchase and sale of
the LLC Interests under this Agreement.
"CLOSING DATE" means the date of the Closing.
"CLOSING DATE WORKING CAPITAL" is defined in Section 2.9(a).
"CLOSING PURCHASE PRICE" is defined in Section 2.8.
"COBRA" is defined in Section 6.5(e).
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"CODE" means the Internal Revenue Code of 1986, as amended,
and the related regulations and published interpretations.
"COMMERCIAL AGREEMENT JOINDER" means the Joinder, by and
between the Qwest Parties, Qwest Corporation, Company and Buyer, to be effective
with respect to Company at the Closing, substantially in the form of Exhibit S
to this Agreement.
"COMMERCIAL AGREEMENTS" means the Buyer Joinder, the Directory
List License Agreement, the Expanded Use List License Agreement, the Billing and
Collection Agreement, the Master Sales Agent Agreement (to the extent that the
parties agree on the terms for such an agreement between the date hereof and the
Closing Date pursuant to Section 5.13).
"COMPANY" is defined in this Agreement's Recitals.
"COMPANY INBOUND LICENSE AGREEMENTS" is defined in Section
3.14(e).
"CONFIDENTIALITY AGREEMENT" is defined in Section 10.9.
"CONTENT" is defined in the Dexter Purchase Agreement.
"CONTRACT" means any legally binding agreement, arrangement,
bond, commitment, franchise, indemnity, indenture, instrument, lease or license,
whether or not written.
"CONTRIBUTED ASSETS" is defined in Section 2.1 of the
Contribution Agreement.
"CONTRIBUTION" is defined in Section 2.6(a).
"CONTRIBUTION AGREEMENT" is defined in Section 2.6(a).
"CONTROLLED GROUP" is defined in Section 3.17(c).
"COPYRIGHTS" is defined in Section 3.14(a).
"CURRENT ASSETS" means the sum of (a) Local Billed Accounts
Receivable, (b) National Billed Accounts Receivable and (c) affiliate
receivables as set forth in "Accounts receivable net" line item of the Audited
Holding Financial Statements.
"CURRENT LIABILITIES" means (i) accounts payable to
third-party vendors, plus (ii) Assumed Affiliate Payables, plus (iii) all other
current liabilities determined, in each case, in a manner consistent with the
line items included in "Total current liabilities" in the Holding Audited
Financial Statements and calculated in accordance with the Agreement Accounting
Principles, except (x) Excluded Current Liabilities, and (y) liabilities
relating to accrued pension and OPEB liabilities and deferred revenue and
customer deposits.
"DEBT FINANCING" is defined in Section 4.6.
"DEBT FINANCING COMMITMENT LETTER" is defined in Section 4.6.
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"DEX PENSION PARTICIPANT" is defined in Section 6.5(c)(i).
"DEXTER CLOSING" means the Closing as such term is defined in
the Dexter Purchase Agreement.
"DEXTER CLOSING DATE" means the Closing Date as such term is
defined in the Dexter Purchase Agreement.
"DEXTER PURCHASE AGREEMENT" is defined in this Agreement's
Recitals.
"DIRECTORY LIST LICENSE AGREEMENT" means the License Agreement
for the Use of Directory Publisher Lists and Directory Delivery Lists by and
between Qwest Corporation and Company to be entered into at the Closing,
substantially in the form of Exhibit E to this Agreement.
"DISCLOSURE SCHEDULE" means Seller's Disclosure Schedule and
Buyer's Disclosure Schedule attached to this Agreement. The sections of each of
Seller's and Buyer's Disclosure Schedule are numbered to correspond to the
applicable Sections of this Agreement and, together with all matters under such
heading, are deemed to qualify only that section; provided, however, that
information included in any section of either Disclosure Schedule will be deemed
to be included in another section of such Disclosure Schedule, but only to the
extent the applicability of such information to that section of such Disclosure
Schedule is reasonably apparent.
"DOMAIN NAMES" is defined in Section 3.14(a).
"EBITDA" means, with respect to any Person for any period,
earnings before interest, income taxes, depreciation and amortization as each
such item is calculated in accordance with GAAP for such Person during such
period.
"EMPLOYEE" is defined in Section 3.17(a).
"ENCUMBRANCE" means any claim, charge, easement, encumbrance,
lease, covenant, security interest, lien, option, pledge, rights of others, or
restriction (whether on voting, sale, transfer, disposition or otherwise),
whether imposed by agreement, understanding, Law, equity or otherwise, except
for any restrictions on transfer generally arising under any applicable federal
or state securities law.
"ENVIRONMENTAL LAWS" means any and all Laws applicable to the
Rodney Transferred Business relating to pollution or protection of human health,
the environment or natural resources.
"EQUITY SECURITIES" means any capital stock or other equity
interest or any securities convertible into or exchangeable for capital stock or
any other rights, warrants or options to acquire any of the foregoing
securities.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the related regulations and published interpretations.
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"ESTIMATED EXCESS WORKING CAPITAL" is defined in Section
2.9(e).
"ESTIMATED WORKING CAPITAL" is defined in Section 2.8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCLUDED AFFILIATE PAYABLES" means all payables to Qwest and
its Affiliates except the Assumed Affiliate Payables.
"EXCLUDED CURRENT LIABILITIES" means (i) Excluded Affiliate
Payables, (ii) short term borrowings from Affiliates, (iii) current income taxes
payable by Qwest, (iv) dividends payable to Qwest, (v) merger related reserves,
(vi) general reserves, (vii) errors and omissions reserves (included within the
"Other accrued liabilities" line item in the Holding Audited Financial
Statements), (viii) accrued taxes, (ix) "Capital Funding - Dex Holdings," and
(x) bank overdrafts, in each case, such item determined consistent with the
Holding Audited Financial Statements.
"EXCLUDED LIABILITIES" has the meaning set forth in Section
2.4 of the Contribution Agreement.
"EXISTING QWEST GROUP" is defined in Section 3.14.
"EXPANDED USE LIST LICENSE AGREEMENT" means the License
Agreement for the Expanded Use of Subscribed List Database Load and Updates by
and between Qwest Corporation and Company to be entered into at the Closing,
substantially in the form of Exhibit F to this Agreement.
"FILING PARTY" is defined in Section 6.1(f).
"FINAL ADDITIONAL EQUITY COMMITMENT" is defined in Section
5.10(e).
"FINAL STATEMENT" is defined in Section 2.9(a).
"FINANCING" is defined in Section 4.6.
"FINANCING FEES" means (i) investment banking fees, (ii) fees
of financing institutions with respect to the Debt Financing required for the
Closing that are incurred and paid by Buyer, such as commitment fees and ticking
fees, in each case, not to exceed the amount of such fees as set forth in
engagement letters and fee letters, complete copies of which have been delivered
to Seller prior to the date hereof and (iii) legal fees, consulting fees,
accounting fees and other professional fees of such financial institutions.
"FISCAL MEASUREMENT PERIOD" is defined in Section
5.4(b)(iii)(C).
"FUTURE PERIODS" is defined in Section 5.4(b)(iii)(A).
"GAAP" means generally accepted accounting principles in the
United States of America as consistently applied.
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"GOVERNMENTAL ENTITY" means any government or any agency,
bureau, board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether Federal, state or
local, domestic or foreign.
"HAZARDOUS MATERIALS" means all substances, wastes and
materials, including petroleum, petroleum products, asbestos and polychlorinated
biphenyls, that are regulated pursuant to Environmental Laws.
"HOLDING" is defined in this Agreement's Recitals.
"HOLDING AUDITED FINANCIAL STATEMENTS" means the audited
balance sheets of Holding as at December 31, 2000 and December 31, 2001, and
audited statements of income and cash flows of Holding for the twelve months
ended December 31, 1999, December 31, 2000 and December 31, 2001 together with
an opinion of Seller's independent accounting firm containing no exceptions or
qualifications.
"HOLDING FINANCIAL STATEMENTS" means the Holding Audited
Financial Statements and the Holding Unaudited Financial Statements.
"HOLDING UNAUDITED FINANCIAL STATEMENTS" means the unaudited
balance sheet of Holding as of June 30, 2002 and the unaudited statement of
income of Holding for the six months ended June 30, 2002.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the related regulations and published
interpretations.
"INCLUDED CLAIMS" is defined in Section 9.4(a).
"INDEBTEDNESS" of any Person shall mean, without duplication,
(a) all indebtedness for borrowed money or issued in exchange or substitution
for borrowed money (including amounts drawn against overdraft lines of credit),
(b) all liabilities of such Person evidenced by any note, bond, debenture or
other debt security, (c) all liabilities of such Person for the deferred
purchase price of property with respect to which such Person is liable,
contingently or otherwise, (d) all liabilities under capitalized or synthetic
leases with respect to which such Person is liable, contingently or otherwise,
as obligor, guarantor or otherwise, or with respect to which obligations another
Person ensures a creditor against loss, and (e) liabilities described in clauses
(a) through (d) that are guaranteed in any manner by such Person (including
guarantees in the form of an agreement to repurchase or reimburse) and any fees,
penalties or accrued and unpaid interest on the foregoing.
"INDEMNIFIABLE CLAIM" is defined in Section 9.3(d).
"INDEMNIFIED PARTY" is defined in Section 9.3(a).
"INDEMNIFYING PARTY" is defined in Section 9.3(a).
"INDEPENDENT ACCOUNTANTS" is defined in Section 2.9(c).
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"INQUIRY" is defined in Section 5.4(d).
"INSOLVENT" means, as to any Person, that: (i) (A) the present
fair salable value of its assets is less than the amount that will be required
to pay its probable liability on its existing debts as they become absolute and
matured or (B) the sum of such Person's debts (as such term is defined in
Section 101 of the Bankruptcy Code) is greater than all of its property, at a
fair valuation, exclusive of property transferred, concealed, or removed with
intent to hinder, delay or defraud its creditors; (ii) such Person is a
defendant in an action for money damages and is reasonably likely to be unable
to satisfy any judgment which has been rendered against it in such action; (iii)
such Person is engaged or about to engage in a business or transaction for which
the property remaining in its hands after the conveyance is an unreasonably
small capital; (iv) such Person intends or believes that it will incur debts
beyond its ability to pay as they mature; (v) such Person is entering into the
Transactions or incurring any obligation in connection with the Transaction
Documents with the intent to hinder, delay or defraud any of its creditors to
which such Person is indebted on the Closing Date or any creditor to which it
might become indebted after the Closing Date; (vi) such Person admits in writing
that it will be unable to pay its debts as they come due or is generally not
paying its debts as they come due; (vii) such Person has an involuntary case or
other proceeding commenced against it which seeks liquidation, reorganization or
other relief with respect to its debts or other liabilities under the Bankruptcy
Code or any other bankruptcy, insolvency or similar law then in effect; (viii)
such Person has had a receiver, liquidator, custodian or other similar official
appointed for it or any material part of its property or seeks the appointment
of such an official for it or any material part of its property; (ix) such
Person commences a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts or other
liabilities under the Bankruptcy Code or any other bankruptcy, insolvency or
similar law; (x) such Person has made a general assignment for the benefit of
creditors; or (xi) such Person has been adjudged or admitted that it is an
insolvent or bankrupt.
"INTELLECTUAL PROPERTY" means, collectively, the Trademarks,
Patents, Copyrights, Domain Names and Trade Secrets.
"INTERCOMPANY AGREEMENT" is defined in Section 3.11.
"INTER-PARTY CLAIM" is defined in Section 9.3(d).
"IRS" means the Internal Revenue Service.
"JOINT DEFENSE AND COMMON INTEREST AGREEMENT" means the Joint
Defense and Common Interest Agreement dated as of the date hereof between Buyer
and Qwest relating to the control and disposition of any Action or Inquiry that
may arise in connection with the Transactions.
"JOINT MANAGEMENT AGREEMENT" means the Joint Management
Agreement by and between Seller and Company to be effective with respect to
Company at the Closing, substantially in the form of Exhibit Q to this
Agreement.
"KNOWLEDGE" means (i) (A) with respect to Seller on the date
of this Agreement, the actual knowledge of Afshin Mohebbi, Oren Shaffer, Drake
S. Tempest, George Burnett,
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Kelly Carter, Robert Houston, Peter Hutchinson, Maggie Le Beau, Brad Richards,
Kristine Shaw and Kelly Yaksich and (B) with respect to Seller on the Closing
Date, the actual knowledge of Afshin Mohebbi (including after reasonable inquiry
of George Burnett, Robert Houston, Maggie Le Beau, Brad Richards and Kristine
Shaw), Oren Shaffer, Drake S. Tempest, Kelly Carter and Peter Hutchinson, and
(ii) with respect to Buyer, John Almeida, James Attwood, Jacques Galante, Larry
Sorrel and Anthony deNicola.
"LAW" means any constitutional provision, statute, ordinance
or other law, rule or regulation of any Governmental Entity and any Order.
"LLC INTERESTS" is defined in this Agreement's Recitals.
"LOCAL BILLED ACCOUNTS RECEIVABLE" means accounts receivable
for local third-party advertisers, determined in a manner consistent with the
"Accounts receivable net" line item in the Holding Audited Financial Statements.
Local Billed Accounts Receivable will be calculated net of related reserves and
otherwise in accordance with the Agreement Accounting Principles.
"LOSS" means any cost, damage, disbursement, expense,
liability, loss, obligation, penalty or settlement, including interest or other
carrying costs, legal, accounting and other professional fees and expenses
incurred in the investigation, collection, prosecution and defense of claims and
amounts paid in settlement, that may be imposed on or otherwise incurred or
suffered by the referenced Person.
"MASTER SALES AGENT AGREEMENT" means the Master Sales Agent
Agreement by and between Qwest Corporation and Company to be entered into at the
Closing pursuant to Section 5.13 of this Agreement.
"MATERIAL ADVERSE EFFECT" means (a) any change in or effect on
Company or the Rodney Transferred Business as conducted on the date hereof that
would be materially adverse to the business, assets, properties, results of
operations or financial condition of Company or the Rodney Transferred Business,
taken as a whole, or (b) any change in or effect on Qwest or any of its
Subsidiaries that is a party to a Commercial Agreement that materially and
adversely affects such party's material ability to perform its obligations under
any Commercial Agreement; provided that Material Adverse Effect shall not
include any change (i) generally affecting the industries in which Seller or
Company operates, or (ii) to the extent resulting from or relating to general
economic conditions.
"MATERIAL CONTRACT" means each Contract to which Seller or,
following the Contribution, Company is a party or to which Seller or, following
the Contribution, Company or any of its properties is subject or by which any
thereof is bound and, in each case, that relates to the Rodney Transferred
Business that (a) is for the purchase of materials, supplies, goods, services,
equipment or other assets that (i)(A) has a remaining term, as of the date of
this Agreement, of over 180 days in length of obligation on the part of Seller
or Company or which is not terminable by Seller or Company within 180 days
without penalty, and (B) provides for a payment by Seller or Company in any year
of $2 million or more, or (ii) provides for aggregate payments by Seller or
Company of $4 million or more; (b) is a sales, distribution, services or
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other similar agreement providing for the sale by Seller or Company of
materials, supplies, goods, services, equipment or other assets that (i) has a
remaining term, as of the date of this Agreement, of over 180 days in length of
obligation on the part of Seller or Company or which is not terminable by Seller
or Company within 180 days without penalty, and (ii) provides for a payment to
Seller or Company in any year of $2 million or more; (c) is a lease that (i) has
a remaining term, as of the date of this Agreement, of over 180 days in length
of obligation on the part of Seller or Company or which is not terminable by
Seller or Company within 180 days without penalty, and (ii) provides for annual
rentals of $4 million or more; (d) limits or restricts the ability of Seller or
Company to compete or otherwise to conduct the Rodney Transferred Business in
any material manner or place; (e) is a contract relating to Indebtedness; (f)
provides for a guaranty for borrowed money by Seller or Company or in respect of
any Person other than Seller or Company; or (g) creates a partnership or joint
venture.
"MATERIAL REGULATORY IMPACT" is defined in Section 5.4(b)(ii).
"NATIONAL BILLED ACCOUNTS RECEIVABLE" means accounts
receivable from national advertisers, determined in a manner consistent with the
"Accounts receivables, net" line item in the Holding Financial Statements.
National Billed Accounts Receivable will be calculated net of related reserves
and in accordance with the Agreement Accounting Principles.
"NET BILLED RECEIVABLES" means Local Billed Accounts
Receivable and National Billed Accounts Receivable.
"NONCOMPETITION AGREEMENT" means the Non-Competition and
Non-Solicitation Agreement by and between the Qwest Parties and Qwest
Corporation, on the one hand, and Buyer and Company, on the other hand, to be
effective with respect to Company at the Closing, substantially in the form of
Exhibit M to this Agreement.
"ORDER" means any decree, injunction, judgment, order, ruling,
assessment or writ.
"PATENTS" is defined in Section 3.14(a).
"PBGC" means the Pension Benefit Guaranty Corporation.
"PENSION PLAN" is defined in Section 3.17(a).
"PERIODIC TAXES" is defined in Section 6.1(d).
"PERMIT" means any license, permit, franchise, certificate of
authority, or any waiver of the foregoing, required to be issued by any
Governmental Entity.
"PERMITTED ENCUMBRANCES" means: (a) statutory Encumbrances not
yet delinquent or the validity of which are being contested in good faith by
appropriate actions; (b) Encumbrances, with respect to the properties or assets
of Seller relating to the Rodney Transferred Business or Company, that do not
individually or in the aggregate, materially impair or materially interfere with
the present use of the properties or assets or otherwise materially impair
present business operations at such properties; (c) Encumbrances for Taxes,
assessments
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and other governmental charges not yet delinquent or the validity of which are
being contested in good faith by appropriate actions; (d) as to real property,
(i) leases and subleases to third party tenants, (ii) the terms and conditions
of the leases pursuant to which Seller or Company is a tenant, (iii) matters
shown on a survey, (iv) zoning laws and other governmental land use
restrictions, and (v) existing utility, access and other easements and rights of
way of record and imperfections of title; and (e) Encumbrances identified in
Section 1.2PE of Seller's Disclosure Schedule (provided that Seller shall cause,
prior to the Closing, any material Encumbrance identified in Section 1.2PE
(other than security interests relating to operating leases of office equipment)
to have been released).
"PERSON" means an association, a corporation, an individual, a
partnership, a limited liability company, a trust or any other entity or
organization, including a Governmental Entity.
"POST-CLOSING COVENANTS" is defined in Section 8.3.
"PPD ACCOUNTS PAYABLE" means accounts payable to third party
paper, printing and distribution vendors.
"PRE-CLOSING TAX PERIOD" is defined in Section 6.1(a)(ii).
"PRELIMINARY CLOSING DATE STATEMENT" is defined in Section
2.8.
"PREVAILING PARTY" is defined in Section 2.9(c).
"PROCEEDS" shall have the meaning ascribed to it in the
revised Article 9 of the Uniform Commercial Code as enacted in the State of New
York and in effect on the date hereof.
"PROFESSIONAL SERVICES AGREEMENT" means the Professional
Services Agreement by and between Seller and Company to be effective with
respect to Company at the Closing, substantially in the form of Exhibit H to
this Agreement.
"PRORATION PERIODS" is defined in Section 6.1(d).
"PROSPECTIVE TRANSFERRED EMPLOYEES" is defined in Section
6.5(a).
"PROSPECTIVE TRANSFERRED EMPLOYEES LIST" is defined in Section
6.5(a).
"PUBLIC PAY STATIONS AGREEMENT" means the Public Pay Stations
Agreement by and between Qwest Corporation and Company to be effective with
respect to Company at the Closing, substantially in the form of Exhibit I to
this Agreement.
"PUBLISHING AGREEMENT" means the Publishing Agreement for
Official Listings/Directories by and between Qwest Corporation and Company to be
entered into at the Closing, substantially in the form of Exhibit D to this
Agreement.
"PURCHASE PRICE" is defined in Section 2.2.
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"PURCHASE PRICE ALLOCATION" is defined in Section 6.2(b).
"QSC" is defined in this Agreement's opening paragraph.
"QWEST" is defined in this Agreement's opening paragraph.
"QWEST AUTHORIZATIONS" is defined in Section 3.22.
"QWEST CORPORATION" means Qwest Corporation, a Colorado
corporation.
"QWEST PARTIES" is defined in this Agreement's opening
paragraph.
"QWEST STATES" is defined in Section 3.22.
"QWEST TRANSACTION PARTIES" means the Qwest Parties and Qwest
Corporation.
"REGION" means the seven state territory comprised of Arizona,
Idaho, Montana, Wyoming, Oregon, Utah and Washington.
"REGULATORY RESTRICTION" is defined in Section 5.4(b)(ii).
"REIMBURSABLE EXPENSES" means the reasonable out-of-pocket
fees and expenses (including financial advisory, legal, accounting and
consulting fees and expenses of Buyer, but excluding Financing Fees) incurred
and paid by Buyer after the Dexter Closing Date in connection with this
Agreement and the Transactions through the date on which this Agreement
terminates; provided that in no event shall Reimbursable Expenses exceed
$2,500,000.
"REPRESENTATIVES" is defined in Section 5.1.
"RESIGNING OFFICERS" is defined in Section 7.2(e).
"RODNEY EQUITY FINANCING" is defined in Section 4.6.
"RODNEY EQUITY FINANCING COMMITMENT LETTER" is defined in
Section 4.6.
"RODNEY IP PRODUCTS CONDITION" is defined in Section 5.18(d)
of Exhibit P to the Dexter Purchase Agreement.
"RODNEY TRANSFERRED BUSINESS" means the Business as presently
conducted of Seller as it relates to the Region.
"RODNEY TRANSFERRED BUSINESS AUDITED FINANCIAL STATEMENTS" is
defined in Section 5.6(a).
"RODNEY TRANSFERRED BUSINESS FINANCIAL STATEMENTS" is defined
in Section 5.6(a).
"RODNEY TRANSFERRED BUSINESS UNAUDITED FINANCIAL STATEMENTS"
is defined in Section 5.6(a).
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"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" is defined in this Agreement's opening paragraph.
"SELLER ADDITIONAL EQUITY" is defined in Section 5.10(e).
"SELLER BENEFIT PLAN" is defined in Section 3.17(a).
"SELLER COMMON EQUITY LIMITATION" is defined in Section
5.10(e).
"SELLER INDEMNIFIED PERSONS" is defined in Section 9.2.
"SEPARATION AGREEMENT" means the Separation Agreement by and
between Qwest and Seller, on the one hand, and Buyer and Dexter LLC, on the
other hand, to be effective with respect to Company at the Dexter Closing.
"SEPARATION COSTS" means costs incurred pursuant to Sections
3.1 through 3.4 of the Separation Agreement.
"SEPARATION IP COVENANT" is defined in Section 5.18(d) of
Exhibit P to the Dexter Purchase Agreement.
"SGN LLC" is defined in this Agreement's Recitals.
"STATE PUCs" means the public utility commissions or similar
state regulatory agencies or bodies that regulate the business of Qwest
Corporation in each of the states.
"SUBSIDIARY" means, with respect to any Person, any Person in
which such Person has a direct or indirect equity ownership interest in excess
of 50%.
"TAX" means any United States federal, state or local or any
non-United States net or gross income, gross receipts, net proceeds,
corporation, capital gains, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental (including taxes
under Section 59A of the Code), customs, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, inheritance, use, transfer, registration,
value added, alternative or add-on minimum, or other taxes, assessments, duties,
fees, levies or other governmental charges of any kind whatever, whether
disputed or not, including any interest, penalty or addition thereto.
"TAX RETURN" means a report, return, or other information
required to be supplied to a Governmental Entity with respect to Taxes
including, where permitted or required, combined, consolidated or other similar
returns for any group of entities that includes Company.
"TERMINATION DATE" is defined in Section 8.1(g).
"THIRD PARTY ACQUISITION" means the occurrence of any of the
following events: (a) the acquisition of Company by merger or similar business
combination by any Person other
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than Buyer or any Affiliate thereof or any Qwest Party or any Affiliate (a
"THIRD PARTY"); (ii) the acquisition by a Third Party of 50% or more of the
assets of Company; or (iii) the acquisition by a Third Party of 50% or more of
the LLC Interests; provided, however, that any transaction involving the
acquisition of Qwest, QSC or Company and other businesses of Qwest shall not
constitute a Third Party Acquisition.
"THIRD-PARTY CLAIM" is defined in Section 9.3(b).
"THIRD PARTY CONSENT" means any approval, consent or waiver
required to be obtained from or any notice required to be delivered to any
Person other than any Governmental Entity.
"THIRD PARTY IP AGREEMENTS" is defined in the IP Contribution
Agreement.
"TRADE SECRETS" is defined in Section 3.14(d).
"TRADEMARK LICENSE AGREEMENT" means the Trademark License
Agreement by and between Qwest and Company to be effective with respect to
Company at the Closing, substantially in the form of Exhibit J to this
Agreement.
"TRADEMARKS" is defined in Section 3.14(a).
"TRANSACTION DOCUMENTS" means this Agreement, the Contribution
Agreement, and the IP Contribution Agreement.
"TRANSACTIONS" means the contribution of assets and
liabilities of the Rodney Transferred Business to Company pursuant to the
Contribution Agreement and the IP Contribution Agreement, the sale of the LLC
Interests and the other transactions contemplated by the Transaction Documents.
"TRANSFERABLE COPYRIGHTS" is defined in Section 3.14(c).
"TRANSFERABLE PATENTS" is defined in Section 3.14(b).
"TRANSFERRED EMPLOYEE" is defined in Section 6.5(a).
"TRANSFERRED NET BILLED RECEIVABLES" is defined in Section
2.9(e).
"TRANSITION SERVICES AGREEMENT" means the Transition Services
Agreement by and between Qwest and Seller, on the one hand, and Buyer and
Company, on the other hand, to be effective with respect to Company at the
Closing, substantially in the form of Exhibit K to this Agreement.
"VOLUME METRIC" is defined in Section 5.4(b)(iii)(D).
"WARN ACT" is defined in Section 5.8(a).
"WELFARE PLAN" is defined in Section 3.17(a).
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"WORKING CAPITAL" means, as of any date, the difference
between (i) Current Assets and (ii) Current Liabilities of the Transferred
Business Closing Date. Working Capital and Working Capital Target shall be
determined in a consistent manner except with respect to the sentence in Working
Capital Target addressing Taxes.
"WORKING CAPITAL ADJUSTMENT" is defined in Section 2.9(a).
"WORKING CAPITAL ADJUSTMENT FACTOR" means 1.03.
"WORKING CAPITAL TARGET" means, for the month in which the
Closing Date occurs, (i) the sum of (A) the monthly average of Local Billed
Accounts Receivable for the prior 12 months plus (B) the National Billed
Accounts Receivable balance as the end of such month in the prior year, as
adjusted by the Timing Adjustment, plus (C) the monthly average of Affiliate
receivables as set forth in "Accounts receivable, net" line item of the Audited
Holding Financial Statements for the prior 12 months, minus (ii) the sum of (A)
the monthly average of Current Liabilities (other than PPD Accounts Payable) for
the prior 12 months plus (B) the PPD Accounts Payable balance as the end of such
month in the prior year, as adjusted by the Timing Adjustment, multiplied by
(iii) the Working Capital Adjustment Factor. In determining the Working Capital
Target, the value of any accounts receivable will be determined by subtracting
out of such accounts receivable the amount of any sales Tax, gross receipts Tax
or like Taxes that are borne by the customer and that are attributable to
Pre-Closing Tax Periods. The "TIMING ADJUSTMENT" means (i) to the extent that a
specific directory has not been shipped prior to the Closing Date but there
exists an entry in the prior year's corresponding month end National Billed
Accounts Receivable and PPD Accounts Payables balances with respect to such
directory the Working Capital Target will be reduced to reflect that such
directory has not yet been shipped, and (ii) to the extent that the shipment of
a specific directory prior to the Closing Date results in an entry in National
Billed Accounts Receivable and PPD Accounts Payables but entries for such
directory were not included in the prior year corresponding month end National
Billed Accounts Receivable and PPD Accounts Payables balances, the Working
Capital Target will be increased by such amount.
ARTICLE II
SALE AND PURCHASE OF LLC INTERESTS; CLOSING; CONTRIBUTION
2.1 SALE OF LLC INTERESTS BY SELLER. Subject to the terms
and conditions of this Agreement, Seller agrees to sell the LLC Interests free
and clear of all Encumbrances to Buyer at the Closing. The transfer of the LLC
Interest from Seller to Buyer shall be in a form acceptable for transfer on the
books of Company.
2.2 PURCHASE OF THE LLC INTERESTS BY BUYER.
Subject to the terms and conditions of this Agreement, Buyer
agrees to purchase the LLC Interests from Seller for the Base Purchase Price.
The Base Purchase Price is subject to adjustment prior to and after the Closing
pursuant to Sections 2.7, 2.8 and 2.9 below (as finally adjusted, the "PURCHASE
PRICE").
2.3 THE CLOSING. The Closing will take place at the
offices of O'Melveny & Myers LLP, 153 East 53rd Street, New York, NY 10022 on
the third Business Day following the
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satisfaction or waiver of the conditions in Article VII (other than conditions
that, by their nature, are to be satisfied on the Closing Date), or at such
other time and place as Seller and Buyer may agree. Subject to the provisions of
Article VIII, failure to consummate the purchase and sale provided for in this
Agreement on the date and time and at the place determined pursuant to this
Section 2.3 will not result in the termination of this Agreement and will not
relieve any party of any obligation under this Agreement.
2.4 DELIVERIES BY SELLER. In addition to the documents
necessary to transfer the LLC Interests on the books of Company, at the Closing,
the Qwest Parties will deliver or cause to be delivered to Buyer (unless
delivered previously) the following: (a) all Third Party Consents listed in
Section 3.4 of the Seller's Disclosure Schedule that have been obtained prior to
Closing; (b) the resignations of the Resigning Officers; (c) the certificates
required by Sections 7.2(f) and 7.2(h); (d) duly executed copies of the
Transaction Documents and the Commercial Agreements; (e) the fairness opinion(s)
required pursuant to Section 7.2(k); (f) the opinions of counsel required
pursuant to Section 7.2(l); and (g) all other documents, instruments and
writings required to be delivered by Seller on or prior to the Closing Date
pursuant to this Agreement.
2.5 DELIVERIES BY BUYER. At the Closing, Buyer will pay
the Closing Purchase Price (as defined in Section 2.8 below) to Seller in cash
by wire transfer in immediately available funds; provided, however, that if
required to consummate the Closing as contemplated by the Debt Financing
Commitment Letter, a portion of the Closing Purchase Price may be paid by Buyer
tendering Buyer Securities to Seller with an original principal amount of not
greater than $300 million in satisfaction of Buyer's obligation to pay an
equivalent portion of the Closing Purchase Price on the Closing Date by wire
transfer of immediately available funds. In addition, at the Closing, Buyer will
deliver or cause to be delivered to Seller (unless delivered previously) the
following: (a) the certificates of Buyer required by Sections 7.3(d) and 7.3(g);
(b) duly executed copies of the Transaction Documents and the Commercial
Agreements; (c) all Third Party Consents listed in Section 4.5 of the Buyer's
Disclosure Schedule that have been obtained prior to Closing; (d) the opinion of
counsel required pursuant to Section 7.3(h); (e) duly executed originals of the
Buyer Securities, if any; and (f) all other documents, instruments and writings
required to be delivered by Buyer on or prior to the Closing Date pursuant to
this Agreement.
2.6 THE CONTRIBUTION.
(a) Prior to the Closing and pursuant to the Contribution
Agreement attached hereto as Exhibit B (the "CONTRIBUTION AGREEMENT"), Seller
will contribute to Company (the "CONTRIBUTION") all of its right, title and
interest in and to certain assets relating to the Rodney Transferred Business,
and shall cause Company to assume certain liabilities of the Rodney Transferred
Business, all on the terms and conditions set forth in the Contribution
Agreement.
(b) The parties hereto acknowledge and agree that nothing
in this Agreement shall be deemed to prohibit the consummation of the
Contribution and that the consummation of the Contribution shall not constitute
a breach of any provision of this Agreement, including Section 5.2.
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2.7 POST-SIGNING PURCHASE PRICE ADJUSTMENT. The Adjusted
Base Purchase Price shall equal the Base Purchase Price (i) plus, if the "Base
Purchase Price" was greater than the "Adjusted Base Purchase Price" in the
Dexter Purchase Agreement, an amount equal to the "Base Purchase Price" less the
"Adjusted Base Purchase Price" in the Dexter Purchase Agreement, or (ii) minus,
if the "Adjusted Base Purchase Price" was greater than the "Base Purchase Price"
in the Dexter Purchase Agreement, an amount equal to the "Adjusted Base Purchase
Price" less the "Base Purchase Price" in the Dexter Purchase Agreement (it being
the intent of the parties that the sum of the Adjusted Base Purchase Price under
this Agreement and the "Adjusted Base Purchase Price" under the Dexter Purchase
Agreement shall equal $7,050,000,000).
2.8 PRE-CLOSING WORKING CAPITAL PURCHASE PRICE
ADJUSTMENT. At least three Business Days prior to the Closing Date, Seller will
prepare and present to Buyer a statement (the "PRELIMINARY CLOSING DATE
STATEMENT") setting forth Seller's good faith estimate of Company's Working
Capital as of the close of business on the Closing Date ("ESTIMATED WORKING
CAPITAL"). The Base Purchase Price or Adjusted Base Purchase Price, as the case
may be, will be either (x) increased by an amount equal to the excess, if any,
of (i) Estimated Working Capital over (ii) the Working Capital Target as of the
Closing Date, or (y) decreased by an amount equal to the excess, if any, of (i)
the Working Capital Target, as of the Closing Date, over (ii) Estimated Working
Capital. The Base Purchase Price or Adjusted Base Purchase Price, as the case
may be, as increased or decreased pursuant to this Section 2.8, is referred to
as the "CLOSING PURCHASE PRICE."
2.9 POST-CLOSING WORKING CAPITAL PURCHASE PRICE
ADJUSTMENT. The Closing Purchase Price is subject to further adjustment after
the Closing Date in accordance with the following procedure:
(a) Within 90 days after the Closing Date, Seller will
prepare and present to Buyer a statement (the "FINAL STATEMENT") setting forth
(x) Seller's calculation of Working Capital as of the close of business on the
Closing Date (the "CLOSING DATE WORKING CAPITAL") and (y) Seller' determination
of the aggregate increase or decrease to the Base Purchase Price or the Adjusted
Purchase Price, as the case may be, without taking into account any payment made
pursuant to Section 2.8 (the "WORKING CAPITAL ADJUSTMENT"). Seller will prepare
the Final Statement on a consistent basis with the Preliminary Closing Date
Statement and in accordance with the Agreement Accounting Principles. Buyer
shall, and shall cause Company to, assist Seller and its Representatives in the
preparation of the Final Statement and shall provide Seller and its
Representatives access at reasonable times and upon reasonable notice to the
personnel, properties, books and records of Company and Buyer for such purpose.
(b) Buyer and its accountants will have the right to
review all work papers and calculations of Seller and its accountants utilized
in preparing the Final Statement. The Final Statement will be binding on Buyer
unless Buyer presents to Seller, within 30 days after its receipt of the Final
Statement from Seller, written notice of disagreement specifying in reasonable
detail the nature and extent of the disagreement. Buyer agrees that it shall not
propose adjustments to or dispute portions of the Final Statement if such
adjustments or disputes involve changes in or question the accounting
principles, methodology or practices of Seller that
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are in conformity with the Agreement Accounting Principles used in determining
Closing Date Working Capital.
(c) If Seller and Buyer are unable to resolve any
disagreement with respect to the Final Statement within 30 days after Seller
receives a timely notice of disagreement, the items of disagreement alone will
be promptly referred for final determination to Ernst & Young LLP or, if such
firm is unable or unwilling to make such final determination, to such other
independent accounting firm as the parties mutually designate. The accounting
firm making such determination is referred to as the "INDEPENDENT ACCOUNTANTS".
The Final Statement will be deemed to be binding on Buyer and Seller upon: (i)
Buyer's failure to deliver to Seller a notice of disagreement within 30 days
after it receives the Final Statement; (ii) resolution of any disagreement by
mutual agreement of Seller and Buyer after a timely notice of disagreement has
been delivered to Seller; or (iii) notification by the Independent Accountants
of their final determination of the items of disagreement submitted to them. The
fees and disbursements of the Independent Accountants will be borne by the party
that is not the "PREVAILING PARTY." The prevailing party will mean the party
whose final submission to the Independent Accountants is closest to the final
determination made by the Independent Accountants, regardless of whether such
final determination requires the submitting party to make a payment to the other
party pursuant to Section 2.9(d) below.
(d) If the Base Purchase Price or Adjusted Purchase Price
plus or minus the Working Capital Adjustment is greater than the Closing
Purchase Price, Buyer shall pay to Seller the difference. If the Base Purchase
Price or Adjusted Purchase Price plus or minus the Working Capital Adjustment is
less than the Closing Purchase Price, Seller shall pay to Buyer the difference.
Payments made pursuant to this Section 2.9(d) shall be made by wire transfer in
immediately available funds within five (5) Business Days after the Final
Statement becomes binding on Buyer and Seller pursuant to Section 2.9(c) above.
(e) Notwithstanding the foregoing, if Estimated Working
Capital exceeds the Working Capital Target as of the Closing Date by more than
$20,000,000 (the amount of such excess, "ESTIMATED EXCESS WORKING CAPITAL"), at
Buyer's election, in lieu of paying Seller an amount of cash equal to such
Estimated Excess Working Capital, Buyer may pay such amount in kind by
transferring to Seller Net Billed Receivables in an amount (the "TRANSFERRED NET
BILLED RECEIVABLES") sufficient to yield cash to Seller equal to such Estimated
Excess Working Capital. Such Transferred Net Billed Receivables constitute the
property of Seller, provided that Buyer will collect such Transferred Net Billed
Receivables in the same manner and with the same care as its own receivables.
Specific receivables constituting Transferred Net Billed Receivables shall be a
representative cross selection of the Net Billed Receivables and shall be
selected by Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE QWEST PARTIES
Except as otherwise indicated on Seller's Disclosure Schedule,
the Qwest Parties represent and warrant as of the date hereof as follows:
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3.1 ORGANIZATION AND RELATED MATTERS. Each of the Qwest
Transaction Parties is a corporation duly incorporated, validly existing and in
good standing under the laws of the state of its incorporation. Company is a
limited liability company duly organized, validly existing and in good standing
under the laws of the state of its organization. Each of the Qwest Transaction
Parties has all necessary corporate power and authority to execute, deliver and
perform the Transaction Documents and Commercial Agreements to which it is a
party. Each of the Qwest Transaction Parties and Company has all necessary
corporate power and authority to own license or lease its properties and to
carry on its business as now being conducted and, except as otherwise indicated
on Section 3.1 of Seller's Disclosure Schedule, is duly qualified or licensed to
do business as a foreign corporation in good standing in all jurisdictions in
which the nature of its business requires licensing or qualification, except
where the failure to be so qualified or licensed would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.
3.2 AUTHORIZATION; NO CONFLICTS.
(a) The execution, delivery and performance of each of
the Transaction Documents and Commercial Agreements to which any of the Qwest
Transaction Parties is a party have been duly and validly authorized by all
necessary corporate action on the part of such Qwest Transaction Party. The
Transaction Documents and Commercial Agreements to which any Qwest Transaction
Party is a party constitute (or will upon execution constitute) the legally
valid and binding obligations of such Qwest Transaction Party, enforceable
against such Qwest Transaction Party in accordance with their respective terms
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally. The Transaction Documents
and Commercial Agreements to which Company is a party constitute (or will upon
execution constitute) the legally valid and binding obligations of Company,
enforceable against Company in accordance with their respective terms except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles relating to or
limiting creditors' rights generally.
(b) The Qwest Transaction Parties' respective execution,
delivery and performance of the Transaction Documents and Commercial Agreements
to which any of them is a party will not (i) violate, or constitute a breach or
default under, (A) such parties' respective certificates of incorporation or
bylaws or (B) except as set forth on Section 3.2(b) of Seller's Disclosure
Schedule, any Material Contract to which any of them is a party or under which
any of their material assets are bound, except for any violations of or breaches
or defaults under any Material Contract that would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect, or
(ii) result in the imposition of any material Encumbrance, other than Permitted
Encumbrances, against all or any portion of the Rodney Transferred Business.
Subject to obtaining the Approvals and Permits listed in Section 3.4 of Seller's
Disclosure Schedule, the Qwest Transaction Parties' respective execution,
delivery and performance of the Transaction Documents and Commercial Agreements
to which any of them is a party will not violate any Law in any material
respect.
3.3 LEGAL PROCEEDINGS. Section 3.3 of Seller's Disclosure
Schedule lists each Order or Action pending or, to Seller's Knowledge,
threatened against Seller that individually or
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when aggregated with one or more other Orders or Actions has or if determined
adversely would reasonably be expected to have a Material Adverse Effect or
materially impair or delay either Seller's ability to consummate the Closing or
Seller's ability to perform its obligations under this Agreement.
3.4 APPROVALS AND THIRD PARTY CONSENTS. Section 3.4 of
Seller's Disclosure Schedule lists any Approvals or Permits and any material
Third Party Consents by any Person not a party to this Agreement required in
connection with the execution or performance of this Agreement and the other
Transaction Documents by the Qwest Parties and the consummation of the
Transactions, except for any applicable requirements of the Securities Act, the
Exchange Act, the HSR Act and any applicable filings under state securities
laws.
3.5 CAPITALIZATION. Section 3.5 of Seller's Disclosure
Schedule sets forth the capitalization of Company. Seller owns all of the LLC
Interests, beneficially and of record and free and clear of any Encumbrance.
Other than the LLC Interests, there are no issued and outstanding Equity
Securities of Company. There are no outstanding Contracts or other rights to
subscribe for or purchase, or Contracts or other obligations to issue or grant
any rights to acquire, any Equity Securities of Company. There are no
outstanding Contracts of Company to repurchase, redeem or otherwise acquire any
Equity Securities of Company. The LLC Interests are duly authorized, validly
issued, fully paid and nonassessable and are not subject to and have not been
issued in violation of any preemptive rights or in violation of any federal or
state securities laws.
3.6 FINANCIAL INFORMATION.
(a) Financial Statements. The Holding Financial
Statements have been, and the Rodney Transferred Business Financial Statements
when delivered pursuant to Section 5.6 below will have been, prepared from the
books and records of Holding and Seller in accordance with GAAP (except, in the
case of the Holding Unaudited Financial Statements and the Rodney Transferred
Business Unaudited Financial Statements, subject to normal year-end adjustments
and the absence of notes) applied on a consistent basis throughout the periods
involved and present and will present fairly, in all material respects, the
information set forth therein.
(b) Certain Changes. Except as set forth in Section
3.6(b) of Seller's Disclosure Schedule, since December 31, 2001 to the date
hereof, (i) Seller has conducted the Rodney Transferred Business in the ordinary
course consistent with past practice, (ii) Seller has not sold any material
assets necessary to the conduct of the Rodney Transferred Business, other than
in the ordinary course of business, and (iii) Seller has not entered into any
agreement, arrangement or undertaking to do any of the foregoing. Except as set
forth in Section 3.6(b) of Seller's Disclosure Schedule, since December 31,
2001, (x) there has not been, occurred or arisen any change or event that would
reasonably be expected to constitute a Material Adverse Effect and (y) there
have not been any material changes in the accounting methods, principles,
practices or policies of Seller (other than changes required by changes in
GAAP).
(c) No Other Liabilities or Contingencies. Seller has not
incurred any liabilities with respect to the Rodney Transferred Business that
would be required in accordance with GAAP to be disclosed in a balance sheet of
the Rodney Transferred Business except
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liabilities (i) that are disclosed in the balance sheet attached as Section
3.6(c)(1) of Seller's Disclosure Schedule, (ii) that are disclosed in Section
3.6(c)(2) of Seller's Disclosure Schedule, (iii) that were incurred after
December 31, 2001 in the ordinary course of business, (iv) that are Excluded
Liabilities or (v) that would not reasonably be expected to have a Material
Adverse Effect.
3.7 REAL AND PERSONAL PROPERTY; TITLE TO PROPERTY;
LEASES. Seller has (and, at Closing, Company will have) good, and in the case of
real property, marketable, title to or other right to use pursuant to leases,
free of Encumbrances other than Permitted Encumbrances, (a) all items of real
property necessary to the conduct of the Rodney Transferred Business as
conducted on the date hereof, including fees, leaseholds and other interests in
such real property, and (b) such other tangible assets and properties that are
necessary to the conduct of the Rodney Transferred Business as conducted on the
date hereof, except (i) assets and properties that may be necessary to the
conduct of the Transferred Business and that will be provided or otherwise made
available to Company or Buyer pursuant to the Commercial Agreements and (ii) in
the case of tangible assets and properties only, where the failure to have such
title or right to use would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. Section 3.7 of Seller's
Disclosure Schedule lists all parcels of real property leased to Seller and used
in the conduct of the Rodney Transferred Business as conducted on the date
hereof and each such lease is valid and enforceable except where the failure to
be valid and enforceable would not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.
3.8 MATERIAL CONTRACTS. Section 3.8 of the Seller's
Disclosure Schedule lists, as of the date hereof, each Material Contract. True
copies of the agreements identified in Section 3.8 of the Seller's Disclosure
Schedule, including all amendments and supplements, have been made available to
Buyer. As of the date hereof, each Material Contract is valid and in full force
and effect according to its terms, and Seller has performed its obligations
thereunder in all material respects (to the extent such obligations have
accrued) and is not in default or breach under any such Material Contract,
except where such failure to be in full force and effect or default or breach
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect. Except as set forth in Section 3.8 of the Seller's
Disclosure Schedule, consummation of the Transactions will not (and will not
give any Person a right to) terminate or modify any material rights of, or
accelerate or augment any material obligation of, Seller under any Material
Contract, or cause or give the right to claim any payment for the assignment or
any qualification of any Material Contract, except for any of the foregoing that
would not reasonably be expected to result in a Material Adverse Effect.
3.9 TAX RETURNS AND REPORTS.
(a) Each of Seller and Company and their respective
Subsidiaries has timely filed (or, where applicable, have had timely filed on
their behalf) all material Tax Returns required to be filed thereby on or before
the date hereof and has paid all Taxes for which they are liable (whether or not
shown to be due thereon). All such Tax Returns, including amendments to date,
have been prepared in good faith without negligence or willful misrepresentation
and are complete and accurate in all material respects. Company has not made any
election to be taxed as a corporation for any United States federal, state or
local income tax purposes, and where
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necessary, each of Seller and its Affiliates has consented to include the income
of Company in their respective taxable income for state or local income tax
purposes.
(b) There are no material Encumbrances for Taxes upon the
Contributed Assets (other than Permitted Encumbrances). No Governmental Entity
has, in writing, proposed (tentatively or definitely), asserted or assessed or,
to Seller's Knowledge, threatened to propose or assert any deficiency,
assessment or claim for Taxes against any of Seller, Company, or their
respective Subsidiaries that has not been fully paid or settled. Each of Seller,
Company, and their respective Subsidiaries has withheld and paid all material
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any Employee, former Employee, creditor, independent contractor,
shareholder, customer, supplier or other third party. Except as set forth on
Section 3.9 of Seller's Disclosure Schedule, none of Company or its Subsidiaries
is a party to any agreement extending the time within which to file any Tax
Return due on or before the Closing Date that has not been filed, or extending
the time for assessment of any Tax. None of Seller or Company or their
respective Subsidiaries has received written notice from any Governmental Entity
in a jurisdiction in which such entity does not file a Tax Return stating that
such entity is or may be subject to taxation by that jurisdiction.
(c) None of the Contributed Assets is property that is
required to be treated as being owned by any other Person pursuant to the
so-called safe harbor lease provisions of former Section 168(f)(8) of the Code.
None of the Contributed Assets is "tax-exempt use property" within the meaning
of Section 168(h) of the Code. None of the Contributed Assets directly or
indirectly secures any debt the interest on which is tax-exempt under Section
103(a) of the Code.
3.10 PERMITS. Except as set forth on Section 3.10 of
Seller's Disclosure Schedule, Seller holds and, as of the Closing, Company will
hold, all Permits that are required by any Governmental Entity to permit it to
conduct the Rodney Transferred Business and possess the Contributed Assets
immediately after the Closing, except where the failure to have such Permits
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. As of the Closing, Company will be in compliance in all
material respects with its material Permits. To Seller's Knowledge, no
suspension, cancellation or termination of any material Permit is threatened or
imminent.
3.11 INTERCOMPANY TRANSACTIONS. Section 3.11(a) of
Seller's Disclosure Schedule lists, as of the date hereof, all Contracts between
QSC or any of its Affiliates (other than Holding or Seller), on the one hand,
and Holding or Seller, on the other hand (each, an "INTERCOMPANY AGREEMENT").
Except for the Intercompany Agreements constituting part of the Transaction
Documents or Commercial Agreements, Seller has not engaged in any material
transaction with Qwest or any other Affiliate of Qwest for which any liabilities
or obligations relating to Company or the Rodney Transferred Business will
remain to be satisfied after the Closing. Section 3.11(b) of Seller's Disclosure
Schedule lists, as of July 31, 2002: (a) any material liabilities or obligations
of Seller to Qwest or any other Affiliate of Qwest and (b) any material
liabilities or obligations of Qwest or such Affiliates of Qwest to Seller, in
each case except for those liabilities or obligations arising as a result of the
Transaction Documents. Except as provided in the Transaction Documents or the
Commercial Agreements, the consummation of the Transactions will not result in
any payment arising or becoming due from Company to Seller or any Affiliate of
Seller.
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3.12 COMPLIANCE WITH LAW. Except as set forth on Section
3.12 of Seller's Disclosure Schedule, neither Seller nor Company is in violation
of any Law (other than any Law the subject matter of which is addressed by the
representations and warranties set forth in Sections 3.16, 3.17 or 3.19 below)
except to the extent any such violation, individually or in the aggregate, has
not had and would not reasonably be expected to have a Material Adverse Effect.
3.13 NO BROKERS OR FINDERS. Except for the fees and
commissions payable to Lehman Brothers Inc. and Merrill Lynch & Co., Inc., which
will be the sole responsibility of Seller, no agent, broker, finder, or
investment or commercial banker, or other Person or firm engaged by or acting on
behalf of Seller or any of its Affiliates in connection with the negotiation,
execution or performance of this Agreement or the Transactions, is or will be
entitled to any broker's, finder's or similar fee or other commission as a
result of this Agreement or the Transactions.
3.14 INTELLECTUAL PROPERTY. For purposes of this Section
3.14, "EXISTING QWEST GROUP" shall mean the Qwest Parties and Holding. Except as
set forth in Section 3.14 of Seller's Disclosure Schedule (and, as of the
Closing Date, except to the extent that the Intellectual Property described in
this Section 3.14 is conveyed to Buyer at the Dexter Closing):
(a) Generally. Section 3.14(a) of Seller's Disclosure
Schedule sets forth a complete list of, or references to, all United States: (i)
trademarks and service marks (whether registered or unregistered) and trade
names of the Existing Qwest Group that are material to the Rodney Transferred
Business (collectively, the "TRADEMARKS"); (ii) patents and patent applications
of Existing Qwest Group that are material to the Rodney Transferred Business
(collectively, the "PATENTS"); (iii) registered copyrights of Existing Qwest
Group that are material to the Rodney Transferred Business (collectively,
together with unregistered copyrights of Existing Qwest Group that are material
to the Rodney Transferred Business, "COPYRIGHTS"); and (iv) domain names of
Existing Qwest Group that are material to the Rodney Transferred Business,
including top-level Internet domain names (the "DOMAIN NAMES").
(b) Patents. Existing Qwest Group has not, to Seller's
Knowledge, received any written notice or claim challenging Existing Qwest
Group's ownership of the material Transferable Patents or suggesting that any
other Person has any claim of legal or beneficial ownership with respect
thereto. The "TRANSFERABLE PATENTS" shall mean the applicable ownership
interests in the Patents to be transferred to the Company pursuant to the IP
Contribution Agreement and shall not, in any event, include the ownership
interests transferred to Company.
(c) Copyrights. Existing Qwest Group is the owner of all
right, title and interest in and to each of the Transferable Copyrights, free
and clear of any and all Encumbrances (other than Permitted Encumbrances),
covenants, conditions and restrictions or other adverse claims or interests of
any kind or nature that would reasonably be expected to have a Material Adverse
Effect, and Existing Qwest Group has not received any written notice or claim
challenging Existing Qwest Group's ownership of the material Transferable
Copyrights or suggesting that any other Person has any claim of legal or
beneficial ownership with respect thereto. Existing Qwest Group has not received
any written notice or claim challenging or questioning the validity or
enforceability of any of the material Transferable Copyrights or
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indicating an intention on the part of any Person to bring a claim that any
material Transferable Copyright is invalid or unenforceable. The "TRANSFERABLE
COPYRIGHTS" shall mean the Copyrights to be transferred to Company pursuant to
the IP Contribution Agreement.
(d) Trade Secrets. Seller and Company have taken
reasonable steps in accordance with normal industry practice to protect their
respective rights in material confidential information and material proprietary
information of the Rodney Transferred Business, including any formula, pattern,
compilation, program, device, method, technique, or process, that derives
independent economic value from not being generally known to the public or to
other Persons who can obtain economic value from its disclosure or use
(collectively, "TRADE SECRETS"). Seller and Company each has a policy of
requiring each relevant employee, consultant and contractor engaged to perform
information technology development services for Seller or Company to execute
proprietary information, confidentiality and assignment agreements substantially
in Seller's standard forms that assign to Existing Qwest Group all rights to any
Intellectual Property of the Rodney Transferred Business that are developed for
Seller or Company by the employees, consultants or contractors, as applicable.
(e) License Agreements. To Seller's Knowledge, Section
3.14(f) of Seller's Disclosure Schedule sets forth a complete and accurate list
of all material license agreements granting (directly or through an Affiliate of
Seller) to Seller any right to use any material software, databases, Content (as
defined below) or similar materials of a third party that are used in and
material to the Rodney Transferred Business (other than "off-the-shelf" shrink
wrap software commercially available on reasonable terms to the public
generally) (collectively, the "COMPANY INBOUND LICENSE AGREEMENTS"), indicating
for each the title and the parties thereto. There is no outstanding or, to
Seller's Knowledge, threatened dispute or disagreement with respect to any
Company Inbound License Agreement. Correct and complete executed copies of all
Company Inbound License Agreements have been made available to Purchaser.
(f) Intellectual Property Sufficiency. To Seller's
Knowledge, except as otherwise provided in Section 3.14 of Seller's Disclosure
Schedule, the assignments, licenses and other rights granted by Qwest and its
current Affiliates to Company under this Agreement, the other Transaction
Documents and the Commercial Agreements and other actions taken in accordance
with Section 5.18 of Exhibit P to the Dexter Purchase Agreement accord to
Company the rights with respect to the intellectual property assets owned or
licensed by Qwest and such Affiliates that are necessary for continued operation
of the Rodney Transferred Business after the Closing in substantially the same
manner as such business has been operated by Seller during the six months prior
to the Closing.
3.15 [RESERVED].
3.16 LABOR MATTERS. Except as set forth in Section 3.16(a)
of the Seller's Disclosure Schedule, (i) there is no, and in the past three
years there has been no, material organized strike, labor dispute, slowdown or
stoppage, or material unfair labor practice claim or charge pending or, to
Seller's Knowledge, threatened against or affecting Company or the Rodney
Transferred Business, (ii) no material claim is pending or, to Seller's
Knowledge, threatened by employees or former employees against Seller respecting
Seller's employment practices, and (iii) no material claim is pending or, to
Seller's knowledge, threatened asserting
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noncompliance by Seller with any applicable Law respecting employment practices,
employee documentation, and terms and conditions of employment and wages and
hours and Seller is not currently engaged in any material unfair labor practice.
Section 3.16(b) of the Seller's Disclosure Schedule lists, as of the date
hereof, each collective bargaining agreement between Seller or Company, on the
one hand, and any labor union or labor organization, on the other hand that is
applicable to any portion of the Rodney Transferred Business (the "CBAs"). True
copies of the CBAs, including all amendments and supplements, have been made
available to Buyer.
3.17 EMPLOYEE BENEFITS.
(a) Section 3.17(a) of the Seller's Disclosure Schedule
lists and identifies the sponsor of, as of the date hereof, each material
"employee pension benefit plan" (as defined in Section 3(2) of ERISA) (a
"PENSION PLAN"), each material "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA) (a "WELFARE PLAN"), and each other material plan,
arrangement, policy or procedure relating to deferred compensation, incentive
compensation, stock options, stock purchases, severance pay, fringe benefits or
other employee benefits, in each case maintained, administered or contributed to
or required to be maintained, administered or contributed to by Seller, Holding
or Company or any of their Affiliates for the benefit of any employee of
Holding, Seller or Company who is engaged in the Rodney Transferred Business (an
"EMPLOYEE") or any former Employee (all of the foregoing, the "SELLER BENEFIT
PLANS"). True copies of (i) each Seller Benefit Plan, (ii) the most recent
summary plan description, and any summary of material modifications, for each
Seller Benefit Plan for which a summary plan description is required, and (iii)
each trust agreement and insurance or group annuity contract with respect to a
Seller Benefit Plan, including all amendments and supplements, have been made
available to Buyer.
(b) Each Seller Benefit Plan has been administered in
accordance with its terms and in compliance with applicable Law, including the
applicable provisions of ERISA and the Code, except for such failures or
noncompliance as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
(c) Since the effective date of ERISA, no liability under
Title IV of ERISA has been incurred by Seller or any member of its Controlled
Group (defined as any entity that is a member of a controlled group of
organizations within the meaning of Sections 414(b), 414(c), 414(m) or 414(o) of
the Code of which Seller is a member) (other than liability for premiums due to
the PBGC) unless such liability has been, or prior to the Closing Date will be,
satisfied in full. The PBGC has not instituted, or to Seller's knowledge
threatened to institute, proceedings to terminate any Pension Plan that is
subject to Title IV of ERISA, and, except as set forth in Section 3.17(c) of
Seller's Disclosure Schedule, no such Pension Plan has been the subject of a
"reportable event," as that term is defined in Section 4043 of ERISA, as to
which notices would be required to be filed with the PBGC. No Pension Plan has
an "accumulated funding deficiency," as that term is defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived, as of the last day of
the most recent fiscal year of each Pension Plan ended prior to the date hereof.
(d) No Seller Benefit Plan is a "multiemployer plan," as
that term is defined in Section 3(37) of ERISA. Neither Seller nor any member of
its Controlled Group has at any time
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in the past six years sponsored, contributed to or had an obligation to
contribute to any multiemployer plan. Neither Seller nor any member of its
Controlled Group has any outstanding "withdrawal liability" (whether or not
contingent), as that term is defined in Section 4201 of ERISA.
(e) Seller, Company and their respective Affiliates have
not made or granted or committed to make or grant any benefit improvements under
any Seller Benefit Plan with respect to any Employee or former Employee, except
as provided in the CBAs or in the plan documents provided to Buyer or as set
forth in Section 3.17(e) of Seller's Disclosure Schedule.
3.18 INSURANCE. All material insurance policies covering
Seller are identified in Section 3.18 of the Seller's Disclosure Schedule, all
premiums due thereon have been paid (other than retroactive or retrospective
premium adjustments that are not yet, but may be, required to be paid with
respect to any period ending on or prior to the Closing Date), and Seller has
complied in all material respects with the provisions of such policies and have
not received written notice from any of their insurance brokers or carriers that
such brokers or carriers will not be willing or able to renew their existing
coverage. All material properties of Seller relating to the Rodney Transferred
Business are covered by insurance in customary scope and amount of coverage.
3.19 ENVIRONMENTAL MATTERS. Except either as set forth on
or as identified in any written materials listed in Seller's Disclosure
Schedule, to Seller's Knowledge:
(a) Seller has not received any written notice (i) from
any Governmental Entity that the Company or the Rodney Transferred Business is
not in compliance in any material respect with Environmental Laws, or (ii) of
any pending or threatened Action or Order or claim by any third party with
respect to Hazardous Materials or Environmental Laws in connection with any of
the properties currently or formerly owned or occupied by Seller in connection
with the Rodney Transferred Business or in connection with any other properties
to which waste may have been sent by Seller, Company or their respective
Affiliates in connection with the Rodney Transferred Business from properties
owned or occupied by Seller in connection with the Rodney Transferred Business.
(b) Seller has not disposed, released, generated or
transported in violation of Environmental Laws any Hazardous Materials at, from,
on or under any properties currently or formerly owned or occupied by Seller in
connection with the Rodney Transferred Business.
(c) Seller has not assumed, contractually or by operation
of Law, any liabilities or obligations of third parties under any Environmental
Laws with respect to any of the properties currently or formerly owned or
occupied by Seller in connection with the Rodney Transferred Business.
(d) Seller has operated and is operating the Rodney
Transferred Business in compliance in all material respects with Environmental
Laws.
3.20 DIRECTORY PUBLICATION SCHEDULES.
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(a) Section 3.20(a) of Seller's Disclosure Schedule lists
all directories published by Seller in the Region for which, during the past
three years, either (i) the month of publication changed or (ii) the length of
service of such directory changed. Section 3.20(a) of Seller's Disclosure
Schedule sets forth the revenue and EBITDA impact of such changes under Seller's
prior revenue recognition methodology (point of publication) in the year that
each such directory was published.
(b) Section 3.20(b) of Seller's Disclosure Schedule lists
the proposed date of publication of all directories by Seller from the date
hereof until August 31, 2003.
3.21 RECEIVABLES. All receivables that are included in the
Contributed Assets (i) represent actual indebtedness or other obligations
incurred by the applicable account debtors, and (ii) have arisen from bona fide
transactions in the ordinary course of the Business.
3.22 QWEST CORPORATION. Qwest Corporation holds the state
and federal authorizations (collectively, the "QWEST AUTHORIZATIONS") necessary
to provide telephone exchange and exchange access services in Washington,
Oregon, Idaho, Montana, Wyoming, North Dakota, South Dakota, Nebraska,
Minnesota, Iowa, Utah, Colorado, New Mexico, and Arizona (collectively, the
"QWEST STATES"). Qwest Corporation provides these services within the Qwest
States as an incumbent local exchange carrier, as that term is defined in
Section 251(h)(1) of the Communications Act of 1934, as amended, 47 U.S.C.
Section 251(h)(1).
3.23 CERTAIN ACCOUNTING ISSUES. To Seller's Knowledge, as
of the date hereof, the SEC has not objected to any of Seller's accounting
policies, procedures or practices, or any of the accounting policies, procedures
or practices of Qwest which relate to or impact the Holding Financial Statements
or otherwise indicated that any of such policies, procedures or practices are
not in accordance with GAAP and the applicable requirements of the SEC, other
than with respect to matters that have been conformed to the SEC's requests
addressed or reflected in Holding Audited Financial Statements (it being
understood that, to Seller's Knowledge, the Rodney Transferred Business
Financial Statements will address or reflect such matters to the same extent).
3.24 CONTRIBUTION AGREEMENT. As of the Closing Date, the
transactions contemplated by the Contribution Agreement and the IP Contribution
Agreement shall have been consummated in all material respects in accordance
with their terms (including any required transfer of Contributed Assets (as such
term is defined in the Contribution Agreement) owned or deemed to be owned by an
Affiliate of Seller).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as otherwise indicated on Buyer's Disclosure Schedule,
Buyer represents and warrants and agrees, as of the date hereof, as follows:
4.1 ORGANIZATION AND RELATED MATTERS. Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of the state of its organization. Buyer has all necessary power and
authority under the Delaware LLC Act and its certificate of formation and
limited liability company operating agreement (together, the "BUYER
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ORGANIZATIONAL DOCUMENTS") to execute, deliver and perform the Transaction
Documents and Commercial Agreements to which it is a party. Buyer has all
necessary power and authority under the Delaware LLC Act and the Buyer
Organizational Documents to own, license or lease its properties and to carry on
its business as now being conducted and is duly qualified or licensed to do
business as a foreign limited liability company in good standing in all
jurisdictions in which the nature of its business requires licensing or
qualification, except where the failure to be so qualified or licensed would
not, individually or in the aggregate, reasonably be expected to result in a
Buyer Material Adverse Effect.
4.2 AUTHORIZATION; NO CONFLICTS.
(a) The execution, delivery and performance of the
Transaction Documents to which Buyer is a party have been duly and validly
authorized by all necessary limited liability company and member action on
Buyer's part. The Transaction Documents and Commercial Agreements to which Buyer
is a party constitute (or will upon execution constitute) Buyer's legally valid
and binding obligations, enforceable against Buyer in accordance with their
respective terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors' rights generally.
(b) Buyer's execution, delivery and performance of this
Agreement will not violate, or constitute a breach or default under, any of the
Buyer Organizational Documents. Subject to obtaining the Approvals and Permits
contemplated in Section 4.5, Buyer's execution, delivery and performance of this
Agreement will not violate any Law in any material respect.
4.3 LEGAL PROCEEDINGS. There is no Order or Action
pending or, to Buyer's Knowledge, threatened in writing against Buyer that,
individually or when aggregated with one or more other Orders or Actions, has
had or if determined adversely would reasonably be expected to have a Buyer
Material Adverse Effect.
4.4 INVESTMENT INTENT. Buyer is an "accredited investor"
as defined under the Securities Act and possesses such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of its investment hereunder. Buyer is acquiring the LLC Interests for
investment for its own account, not as a nominee or agent, and not with a view
to, or for resale in connection with, any distribution thereof. Buyer will not
sell or otherwise dispose of the LLC Interests except in compliance with the
registration requirements or exemption provisions under the Securities Act or
any other applicable securities law. Buyer understands that the LLC Interests
have not been registered under the Securities Act or any state securities laws
by reason of specific exemptions from the registration requirements thereof that
depend upon, among other things, the bona fide nature of the investment intent
and the accuracy of Buyer's representations and warranties contained herein.
4.5 APPROVALS, PERMITS AND THIRD PARTY CONSENTS. Section
4.5 of Buyer's Disclosure Schedule lists any Approvals and Permits and any
material Third Party Consents by any Person not a party to this Agreement
required in connection with the execution or performance by Buyer of the
Transaction Documents to which Buyer is a party, except for any such Approvals,
Permits and Third Party Consents the failure of which to receive would not,
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individually or in the aggregate, reasonably be expected to result in a Buyer
Material Adverse Effect.
4.6 FINANCING. Buyer has received, accepted and agreed
to, all applicable commitment fees for (a) a valid and binding commitment letter
from certain lenders (the "DEBT FINANCING COMMITMENT LETTER"), committing them
to provide to the Buyer debt financing for the Transactions in an aggregate
amount of $3,535,000,000, subject to the terms and conditions set forth therein
(such debt financing, the "DEBT FINANCING") and (b) a valid, binding and
irrevocable commitment letter from certain equity investors (the "EQUITY
FINANCING COMMITMENT LETTER"), committing them to provide equity financing to
Buyer in the amount of $1,500,000,000, minus the actual amount of the equity
contributions made by affiliates or assignees of The Carlyle Group and Welsh,
Carson, Anderson & Stowe to Buyer pursuant to the "Equity Financing Commitment
Letter" under the Dexter Purchase Agreement, subject to the terms and conditions
set forth therein (such equity financing, the "RODNEY EQUITY FINANCING" and
together with the Debt Financing, the "FINANCING"). True and complete copies of
the Debt Financing Commitment Letter and the Rodney Equity Financing Commitment
Letter and the Dexter "Equity Funding Commitment Letter" are attached as Exhibit
N, Exhibit O and Exhibit P to this Agreement, respectively. As of the date
hereof, the Debt Financing Commitment Letter and the Equity Financing Commitment
Letter are in full force and effect. True and complete copies of any agreements
or understandings relating to Financing Fees have been delivered to the Qwest
Parties prior to the date hereof.
4.7 NO BROKERS OR FINDERS. Except for the fees and
commissions payable to J.P. Morgan in its capacity as financial adviser, which
will be the sole responsibility of Buyer, no agent, broker, finder, investment
or commercial banker or other Person or firm engaged by or acting on behalf of
Buyer or any of its Affiliates in connection with the negotiation, execution or
performance of this Agreement or the Transactions, is or will be entitled to any
broker's, finder's or similar fees or other commissions as a result of this
Agreement or the Transactions, except (i) to the extent that such fees or
expenses constitute Reimburseable Expenses and (ii) Buyer is entitled under the
terms of this Agreement to have Seller pay such amounts.
4.8 NO OTHER REPRESENTATIONS OR WARRANTIES. Buyer
acknowledges and agrees that it has made its own inquiry and investigation into,
and based thereon has formed an independent judgment concerning, the LLC
Interests, Company and the Rodney Transferred Business, and that it has been
afforded adequate access to Seller's management, properties, books and records
for purposes of such inquiry and investigation. Except for the representations
and warranties contained in this Agreement, Buyer acknowledges that none of the
Qwest Transaction Parties, Company or any of their respective Affiliates or any
other Person makes any other express or implied representation or warranty with
respect to the Business or the Rodney Transferred Business, the LLC Interests,
the Qwest Transaction Parties or Company or otherwise or with respect to any
other information provided to Buyer or any of its Affiliates or Representatives,
whether on behalf of Seller or such other Persons, including as to: (a)
merchantability or fitness for any particular use or purpose; (b) the use of the
assets of Company and the operation of the Rodney Transferred Business by Buyer
after the Closing; or (c) the probable success or profitability of the
ownership, use or operation of the Rodney Transferred Business, the LLC
Interests, or Company by Buyer after the Closing. Neither any Qwest Transaction
Party nor any other Person will have or be subject to any liability or
indemnification
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obligation to Buyer or any other Person with respect to the sale of the Rodney
Transferred Business in accordance with this Agreement resulting from the
distribution to Buyer or its Affiliates' or Representatives' use of, any
information related to the Business, the Rodney Transferred Business, the Qwest
Transaction Parties or Company, including the Confidential Descriptive
Memorandum dated April 2002 and any information, document, or material made
available to Buyer in any form in connection with the Transactions.
ARTICLE V
PRE-CLOSING COVENANTS
5.1 ACCESS. Subject to Section 10.9, applicable Laws,
doctrines of attorney-client privilege and fiduciary and privacy obligations,
Seller will, and will cause Company to, authorize and permit Buyer and its
counsel, financial advisors, auditors and other authorized representatives
(collectively, "REPRESENTATIVES") to have reasonable access during normal
business hours, upon reasonable notice and in such manner as will not
unreasonably interfere with the conduct of the Business, to Qwest's, Seller's,
and, after the Contribution, Company's properties, books, records and other
information with respect to the Rodney Transferred Business and its management
personnel as Buyer may from time to time reasonably request for the purpose of
(a) familiarizing itself with the Rodney Transferred Business and (b) obtaining
any necessary Approvals of, or Permits for, the Transactions.
5.2 CONDUCT OF BUSINESS. During the period from the date
of this Agreement through the Closing Date unless Qwest shall have received
Buyer's consent not to take such action, which consent may not be unreasonably
conditioned, delayed or withheld, Qwest shall, and shall cause Seller and
Company to, conduct the Rodney Transferred Business in the ordinary course of
business and consistent with past practice (except in connection with the
Transactions and as otherwise set forth in Section 5.2 of Seller's Disclosure
Schedule), and to use their commercially reasonable efforts to maintain all
material assets in good repair and condition (except for ordinary wear and
tear), maintain all insurance necessary to the conduct of their business as
currently conducted, and maintain satisfactory relationships with suppliers and
customers. Additionally, except as set forth in Section 5.2 of Seller's
Disclosure Schedule, without Buyer's prior written consent, which may not be
unreasonably conditioned, delayed or withheld, Qwest agrees that, before
Closing, it will cause Seller and Company not to:
(a) except in the ordinary course of business consistent
with past practice, amend, terminate or renegotiate any Material Contract or
enter into any agreement that would constitute a Material Contract; or
(b) terminate or fail to use commercially reasonable
efforts to renew or preserve any material Permit; or
(c) incur or agree to incur any Indebtedness or other
obligations or liabilities (absolute or contingent) except for Indebtedness,
obligations or liabilities incurred in the ordinary course of business
consistent with past practice; or
(d) make any loan, guaranty or other extension of credit,
or enter into any commitment to make any loan, guaranty or other extension of
credit, to or for the benefit of any
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director, officer, employee, stockholder or any of their respective Affiliates,
except for loans, guarantees, extensions of credit or commitments therefor made
to officers or employees for moving, relocation and travel expenses consistent
with past practice; or
(e) except (i) as set forth in Section 5.2 of Seller's
Disclosure Schedule, (ii) in the ordinary course of business consistent with
past practice or (iii) as required by Law or the terms of this Agreement or any
Contract set forth in Section 3.8 of Seller's Disclosure Schedule, (A) grant any
general or uniform change in the rates of pay or benefits to officers, directors
or Employees (or a class thereof), (B) grant any increase in salary or benefits
of any officer or director or pay any special bonus to any person or (C) enter
into any new or change any existing material employment or severance agreement
or any collective bargaining agreement (other than renegotiation of existing
CBAs in connection with the expiration thereof) relating to the Rodney
Transferred Business; or
(f) issue, pledge, sell, redeem or acquire for value, or
agree to issue, sell, pledge, redeem or acquire for value, any Equity Securities
of the Company; provided that the foregoing shall not limit the ability of
Company or Seller to make cash dividends and distributions; or
(g) effect any recapitalization, reclassification,
combination, stock split or like change in the capitalization of Company; or
(h) amend its certificate of incorporation or bylaws or
other organizational documents; or
(i) sell, transfer, license or otherwise dispose of, in
whole or in part, or subject to any Encumbrance, any material asset or right
used in the Rodney Transferred Business as conducted on the date hereof outside
of the ordinary course of business, or declare or pay any dividend (other than
cash) or make any other distribution of property (other than cash); or
(j) settle or compromise any material federal, state,
local or foreign income tax liability for which Buyer could reasonably be
expected to be adversely affected; or
(k) in any instance where Company or Buyer would be bound
by such action, make any material Tax election, adopt or change any accounting
method for Tax purposes, file any amended material Tax Return, consent to or
enter into any closing agreement or similar agreement with any Tax authority or
take any position with respect to any material item that is inconsistent with
past practice on any Tax Return, except in each case, as contemplated by the
Transaction Documents; or
(l) cause Company to be treated as other than a
disregarded entity for federal or state income tax purposes (other than in
Texas) for any Pre-Closing Tax Period; or
(m) enter into any agreement that substantially limits
the ability of Seller or Company to engage in any business activity; or
(n) change the scheduled publication date of any of its
recurring directories by more than two weeks from such directory's publication
date in 2002; or
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(o) acquire, lease or dispose of any interest in real
property used in the Rodney Transferred Business; or
(p) fail to maintain their books and records in
accordance with past practice; or
(q) agree to make or make (or permit any Subsidiary of
Seller or Company to agree to make or make) any commitment to take any actions
prohibited by this Section 5.2;
provided, however, except as expressly provided in Section 5.2 above, nothing in
this Section 5.2 will prohibit Seller and its Affiliates from conducting their
businesses in their reasonable discretion. Nothing in this Section 5.2 will
prohibit Company from distributing cash to Seller or prohibit Seller from
distributing cash to Holding. Nothing contained in this Agreement shall give
Buyer, directly or indirectly, the right to control or direct Company's
operations prior to Closing.
5.3 NOTIFICATION OF CERTAIN MATTERS. Seller will give
prompt notice to Buyer, and Buyer will give prompt notice to Seller, of any
failure of Buyer or Seller and Company, as the case may be, to comply with or
satisfy, in any material respect, any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement.
5.4 APPROVALS, PERMITS AND THIRD PARTY CONSENTS.
(a) Seller and Buyer shall cooperate and use commercially
reasonable efforts to obtain all Approvals and Permits (including taking actions
to promptly prepare, file and deliver all registrations, filings and
applications, requests and notices (collectively, the "APPROVAL FILINGS") that
may be necessary to consummate the Transactions) and to participate in any
related proceedings. Seller and Buyer shall furnish each other such necessary
information and reasonable assistance as the other may reasonably request in
connection with the Approval Filings and related proceedings; provided, however,
that Buyer shall not be required to make any material concession in order to
obtain any Approval or Permit.
(b) Without limiting the generality of the foregoing
paragraph (a):
(i) Buyer and Seller will file with the Federal
Trade Commission and the Department of Justice pursuant to the HSR Act (A) the
notification and report form required for the Transactions as promptly as
practicable, but not later than ten Business Days after the execution of this
Agreement, and (B) with respect to any supplemental information request in
connection with the Transactions, as soon as reasonably practicable. Any such
notification and report form and supplemental information will be in substantial
compliance with the requirements of the HSR Act. The parties will thereafter
prosecute the application with all reasonable diligence and will otherwise use
commercially reasonable efforts to obtain the termination of the HSR Act review
as expeditiously as possible. Buyer and Seller shall each be responsible for
one-half of all HSR Act filing fees.
(ii) As promptly as practicable, but not later
than 15 days after the execution of this Agreement, Buyer and Seller will file
with the respective State PUCs all applications for Approvals and Permits
identified on Section 3.4(a) of Seller's Disclosure
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Schedule. The parties will thereafter prosecute the applications with all
reasonable diligence and will otherwise use commercially reasonable efforts to
obtain the grant of such Approvals and Permits as expeditiously as practicable.
Notwithstanding the foregoing, it is understood that nothing contained in this
Agreement shall require the Qwest Parties or any of their respective Affiliates
to consent to, accept or otherwise proceed to close the Transactions in the
event that such Approvals and Permits, or any other Approvals or Permits that
any State PUC requires or purports to require in connection with or as a
condition to the Transactions, collectively or individually, are reasonably
likely to result in (directly or indirectly) a Material Regulatory Impact on
Qwest or its Affiliates. For purposes of this Agreement, a "MATERIAL REGULATORY
IMPACT" is defined as an impact in excess of the amount set forth in the
confidential letter of understanding dated August 19, 2002, where such amount
reflects the total net economic loss on Qwest or its Affiliates of any or all of
the following events insofar as they are required by or otherwise result from
the Transactions: (a) any reduction in aggregate net revenues (calculated
pursuant to subsection (iii)(A) below) of Qwest Corporation or any of its
Affiliates during the Fiscal Measurement Period (as defined below), whether such
reductions arise from rate reductions, rate refunds, rebates, credits, one-time
payments, restrictions on the ability of Qwest to charge rates it could have
charged but for the Transactions, or any other reason (each, a "REGULATORY
RESTRICTION"); (b) any additional capital investment (as calculated pursuant to
subsection (iii)(B) below); and (c) any additional regulatory charges or costs
to or financial impacts on Qwest or any of its Affiliates relating to matters
under the jurisdiction of the State PUCs.
(iii) For purposes of subsection (ii) above:
(A) Any reductions in aggregate net
revenues that are reasonably expected to result from a
Regulatory Restriction shall be calculated (1) on a pro forma
basis as if such Regulatory Restriction had been imposed as of
the beginning of the Fiscal Measurement Period and (2) in the
case of recurring or repeated reductions in aggregate net
revenues that can reasonably be expected to continue after the
Fiscal Measurement Period ("FUTURE PERIODS"), by present
valuing such revenues to the last day of the Fiscal
Measurement Period (x) using an annual discount rate of 5.0%,
(y) assuming a mid-year discounting convention and (z)
applying the relevant Volume Metric (as defined below) used in
the Fiscal Measurement Period to all Future Periods;
(B) Additional capital investments
occurring in Future Periods shall be calculated by present
valuing such additional capital investments to the last day of
the Fiscal Measurement Period (1) using an annual discount
rate of 5.0%, (2) assuming a mid-year discounting convention
and (3) utilizing Qwest's reasonable determination as to the
time that such additional capital investments will be
incurred;
(C) "FISCAL MEASUREMENT PERIOD" means
the four fiscal quarter period ending on the last fiscal
quarter end date occurring at least 45 days prior to the
Closing Date; and
(D) "VOLUME METRIC" means a volume
metric, such as number
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of access lines or similar concepts corresponding to numbers
of customers or otherwise approximating volumes of services
provided to customers, that is multiplied by a dollar amount
in order to calculate revenue reduction during any relevant
fiscal period.
(c) The parties acknowledge that they may be required or
desire to communicate with Governmental Entities regarding the Transactions both
before and after the Closing. Each party agrees to use commercially reasonable
efforts to consult with the other party in advance of any material
communications, whether written or oral, with any Governmental Entity regarding
the Transactions and to cooperate with the other party in connection with any
Inquiry arising therefrom. Except for documents filed pursuant to Item 4(c) of
the Hart-Scott-Rodino Notification and Report Form or communications regarding
the same or documents or information submitted in response to any request for
additional information or documents pursuant to the HSR Act that reveal Seller's
or Buyer's negotiating objectives or strategies or purchase price expectations,
(a) each party agrees to submit all Approval Filings made by such party to the
other party for review and approval (which approval shall not be unreasonably
withheld) prior to their submission to any Governmental Entity, and (b) each
party further agrees to forward to the other copies of any material (written or
electronic, including electronic mail) communications sent by it or its
Representatives or received by it from, any Governmental Entity regarding the
Transactions and to use commercially reasonable efforts to advise the other
party of any material oral communications with any Governmental Entity regarding
the Transactions. All such communications will be disclosed to the other party
promptly after they are sent or received in the case of written communications
or promptly following any oral communication with a Governmental Entity. Seller
and Buyer will use commercially reasonable efforts to coordinate and promptly
respond to any Inquiry.
(d) If there is initiated by any State PUC, state
attorney general or other Person any investigation, proceeding, litigation,
inquiry, hearing, information or data request, or information gathering process
relating to the Transactions whether before or after the Closing (each, an
"INQUIRY"), then the parties will jointly evaluate such Inquiry. If such Inquiry
is a joint defense endeavor pursuant to the terms of the Joint Defense and
Common Interest Agreement, then Seller's or Qwest's counsel will be the lead
counsel, at Seller's or Qwest's expense and reasonable direction, to undertake
such joint defense unless the Inquiry relates solely to Buyer, in which case
Buyer's counsel will be the lead counsel at Buyer's expense and reasonable
direction. In any such joint defense endeavor, Seller, Qwest or Buyer, as the
case may be, will each use commercially reasonable efforts to cause to be
resisted, resolved or lifted any Order, decree, ruling or other action
restraining, enjoining or otherwise prohibiting the performance of any
obligations under the Transaction Documents with the result or likelihood that
the fundamental business purpose of the Transactions is or will be frustrated.
In so doing, Seller or Qwest will not take any position or agree to any
settlement that will or would reasonably be expected to result in a Buyer
Material Adverse Effect or otherwise prejudice Buyer's interests with respect to
the Transactions. Buyer may elect to retain at its own expense its own counsel
with respect to any Inquiry that is a joint defense endeavor. With respect to
any Inquiry, the party whose counsel is lead counsel shall submit to the other
party for review and approval all information, documents or pleadings to be
provided to or filed with any State PUC, state attorney general or other Person
prior to their submission to such State PUC, state attorney general or other
Person,
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as the case may be. The respective rights and obligations of the parties with
respect to the joint defense of any Inquiry shall be governed by the Joint
Defense and Common Interest Agreement.
(e) Seller and Buyer shall cooperate and use commercially
reasonable efforts to obtain all material Third Party Consents that may be
necessary to consummate the Transactions; provided that (i) except with respect
to the Third Party Consents necessary to satisfy the condition set forth in
Section 7.2(n), Seller shall not be obligated to pay any consent fees to any
third party and (ii) Buyer shall not be required to agree to material
concessions in connection with Third Party Consents. Seller and Buyer shall
furnish each other such necessary information and reasonable assistance as the
other may reasonably request in connection with obtaining such Third Party
Consents.
5.5 SUPPLEMENTS TO SELLER'S DISCLOSURE SCHEDULE. From
time to time prior to the Closing, Seller may supplement or amend any Section of
the Seller's Disclosure Schedule with respect to any matter, condition or
occurrence that is required or permitted to be set forth or described in the
Seller's Disclosure Schedule by delivering to Buyer in accordance with Section
10.11 below a copy of such supplement or amendment. A supplement or amendment
not objected to in writing by Buyer within 10 Business Days after receipt will
be deemed to cure any applicable breach of any representation, warranty or
covenant made in this Agreement. A supplement or amendment objected to in
writing by Buyer within 10 Business Days after receipt will not be taken into
account for purposes of such representations, warranties and covenants.
5.6 FINANCIAL STATEMENTS.
(a) Seller will deliver to Buyer, as soon as practicable
following the completion of an audit of the Rodney Transferred Business but in
no event later than 30 Business Days prior to the Closing Date, (i) the audited
balance sheets of the Rodney Transferred Business as at December 31, 2000 and
December 31, 2001 and December 31, 2002 if the Closing occurs subsequent to
March 31, 2003, and audited statements of income and cash flows of the Rodney
Transferred Business for the twelve months ended December 31, 1999, December 31,
2000 and December 31, 2001 and December 31, 2002 if the Closing occurs
subsequent to March 31, 2003, together with an opinion of Seller's independent
accounting firm, KPMG, containing no exceptions or qualifications (collectively,
such financial statements of the Rodney Transferred Business, together with the
notes thereto, the "RODNEY TRANSFERRED BUSINESS AUDITED FINANCIAL STATEMENTS")
and (ii) an unaudited balance sheet of the Rodney Transferred Business and of
Holding as at June 30, 2002 and an unaudited statement of income for the six
months ended June 30, 2002 (the "RODNEY TRANSFERRED BUSINESS UNAUDITED FINANCIAL
STATEMENTS" and, together with the Rodney Transferred Business Audited Financial
Statements, the "RODNEY TRANSFERRED BUSINESS FINANCIAL STATEMENTS"). The Rodney
Transferred Business Financial Statements will be prepared in accordance with
GAAP and Regulation S-X under the Securities Act.
(b) Seller will deliver to Buyer, promptly upon their
being prepared (and in any event no later than 45 days after the end of each
calendar quarter), true and complete copies of the unaudited balance sheets and
statements of income and cash flow of the Rodney Transferred Business and of
Holding as of each calendar quarter beginning with the calendar quarter ending
June 30, 2002 and unaudited balance sheets and statements of income for the
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year-to-date period then ended along with comparative historical information for
the preceding year (which shall have been reviewed by KPMG as provided in
statement of accounting standards No. 71 without exception or qualification,
which review shall be at Buyer's expense).
(c) Following the Closing, Seller will, and will cause
all Qwest Parties to, cooperate with Buyer if Buyer, at its expense, desires to
obtain, (i) the audited balance sheet of the Rodney Transferred Business at the
Closing and (ii) audited statements of income and cash flows for the period from
January 1, 2002 through the Closing Date if the Closing occurs during calendar
year 2002, or the period from January 1, 2003 through the Closing Date if the
Closing occurs during calendar year 2003.
5.7 COLLECTIVE BARGAINING AGREEMENTS. Upon consummation
of the Closing, Buyer shall assume and be bound by the CBAs with respect to the
Transferred Employees represented by the Communications Workers of America and
the International Brotherhood of Electrical Workers. Prior to the Closing Date,
Seller shall use commercially reasonable efforts to extend by one year, on
commercially reasonable terms, the term of the CBAs.
5.8 WARN.
(a) The Qwest Parties agree that, from the later of (i)
the date of this Agreement, and (ii) the date that is 90 days prior to Closing,
none of them will effectuate a "plant closing" or "mass layoff" as those terms
are defined in the Worker Adjustment and Retraining Notification Act of 1988
(the "WARN ACT") or any similar state or local statute, rule or regulation, with
respect to the Rodney Transferred Business, without notifying Buyer in advance
and without complying with the notice requirements and all other provisions of
the WARN Act and any similar state or local statute, rule or regulation.
(b) Buyer agrees that upon Closing and within a period of
90 days thereafter, it will not effectuate a "plant closing" or "mass layoff" as
those terms are defined in the WARN Act or any similar state or local statute,
rule or regulation, with respect to the Rodney Transferred Business, without
notifying the Qwest Parties in advance and without complying with the notice
requirements and all other provisions of the WARN Act and any similar state or
local statute, rule or regulation.
5.9 CONFIDENTIALITY AGREEMENTS. On the Closing Date, the
Qwest Parties shall assign and delegate to Buyer or Company all of their
respective rights and obligations under all confidentiality and nondisclosure
agreements between any of the Qwest Parties and any other Person to the extent
entered into in connection with the Transactions or the evaluation of the
Transactions, but only to the extent such agreements (a) relate to the Rodney
Transferred Business or the Transferred Employees and (b) do not by their terms
prohibit such assignment and delegation.
5.10 FINANCING.
(a) Buyer will promptly notify Seller of any proposal by
any of the financial institutions party to the Debt Financing Commitment Letter
to withdraw, terminate or make a material change in the amount or terms of the
Debt Financing Commitment Letter. In addition, upon Seller's reasonable request,
Buyer shall advise and update Seller, in a level of detail
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reasonably satisfactory to Seller, with respect to the status, proposed closing
date and material terms of the proposed Debt Financing. Buyer shall not consent
to any amendment, modification or early termination of any Equity Financing
Commitment Letter or the Debt Financing Commitment Letter that is reasonably
likely to impair materially the Equity Financing or the Debt Financing.
(b) Buyer shall, and shall cause its Affiliates to, use
all commercially reasonable efforts to (1) maintain the effectiveness of the
Debt Financing Commitment Letter, (2) enter into definitive documentation with
respect to the Debt Financing on the terms contained in the Debt Financing
Commitment Letter, (3) satisfy all funding conditions to the Debt Financing set
forth in the definitive documentation with respect to the Debt Financing, (4)
cause to be made available to Buyer, on or prior to the first anniversary of the
Dexter Closing, the Debt Financing in an aggregate principal amount equal to the
principal amount of the Debt Financing, and (5) perform its obligations under
the Financing Commitments, including its obligations to agree to changes in the
structure, terms and pricing contained in the Financing Commitments (it being
understood that such obligations shall not include any obligation to cause any
of its Affiliates to increase the amount of their Equity Financing).
(c) At Seller's request, 60 Business Days following the
satisfaction or waiver of Buyer's conditions in Article VII (other than
conditions that, by their nature, are to be satisfied on the Closing Date),
Buyer shall be required to fund the Closing Purchase Price by drawing on the
"Senior Subordinated Facility" and the "Senior Unsecured Credit Facility"(as
such terms are defined in the Debt Financing Commitment Letter).
(d) The Qwest Parties shall provide and shall cause their
Affiliates to provide, reasonable assistance to Buyer's efforts to obtain the
Debt Financing (including, subject to Section 5.10(c), efforts to obtain high
yield bond financing as part of the Debt Financing), including facilitating
customary due diligence and arranging for senior officers of Seller to meet with
prospective lenders in customary presentations or to participate in customary
road shows, in each case upon Buyer's request with reasonable prior notice and
at Buyer's cost and expense. At Buyer's cost and expense, the Qwest Parties
shall, and shall cause their Affiliates to, use commercially reasonable efforts
to cause their respective accountants and attorneys to provide customary
assistance in such financing. In the event of a registered public offering or an
offering in accordance with Rule 144A under the Securities Act of the debt or
equity securities of Company or its Affiliates, the Qwest Parties will, upon
Buyer's request with reasonable prior notice and at Buyer's cost and expense,
use their commercially reasonable efforts to cause KPMG LLP to deliver to
Company and its Affiliates and the underwriters in any such offering a letter
covering such matters as are reasonably requested by Company or its Affiliates
or such underwriters, as the case may be, and as are customarily addressed in
accountants' "comfort letters," and to provide their consent to the references
to them as experts and the inclusion in any applicable filings of their
auditor's reports. Buyer acknowledges that (i) the assistance provided by the
Qwest Parties and their Affiliates, officers, employees and representatives are
being provided at the request of Buyer, and (ii) none of the Qwest Parties shall
have any liability to lenders or prospective lenders in connection with the
activities contemplated by this Section 5.10(d). Buyer shall indemnify and hold
harmless the Qwest Parties from and against any Losses resulting from any
assistance or activities provided pursuant to this Section 5.10. The
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provisions of this Section 5.10(d) (including the indemnity provisions) shall
not affect any rights of Buyer under Section 9.1.
(e) The Parties agree and acknowledge that up to
$217,000,000 of additional equity of Buyer in excess of the amounts committed in
the Rodney Equity Financing Commitment Letter may be required under the terms
and conditions of the Debt Financing Commitment Letter to consummate the
Transactions (such amount as is required, the "ADDITIONAL EQUITY"). Buyer agrees
to use commercially reasonable efforts to obtain equity commitments for the
Additional Equity (provided that nothing herein shall (i) obligate Buyer or its
Affiliates to sell securities on terms less favorable than those terms received
by the Persons that have provided the Rodney Equity Financing Commitment Letter,
(ii) obligate Buyer or its Affiliates to conduct a public o