Exhibit 99.2
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STOCK PURCHASE AGREEMENT
By and Among
McLEODUSA HOLDINGS, INC.,
YELL GROUP LIMITED,
and
McLEODUSA INCORPORATED,
Dated as of January 19, 2002
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TABLE OF CONTENTS
Page
ARTICLE I SALE OF STOCK
1.1. The Sale.................................................................1
1.2. Time and Place of Closing................................................1
1.3. Deliveries by the Seller.................................................2
1.4. Deliveries by the Buyer..................................................2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLER
2.1. Organization; Etc........................................................2
2.2. Capitalization...........................................................3
2.3. Authority Relative to this Agreement.....................................4
2.4. Consents and Approvals; No Violations....................................4
2.5. Financial Statements.....................................................5
2.6. No Undisclosed Liabilities...............................................5
2.7. Absence of Certain Changes...............................................6
2.8. No Default...............................................................6
2.9. Litigation...............................................................6
2.10. Compliance with Law......................................................6
2.11. Employee Benefit Plans...................................................7
2.12. Intellectual Property....................................................8
2.13. Material Contracts.......................................................9
2.14. Transactions with Affiliates............................................11
2.15. Business and Properties.................................................11
2.16. Environmental Matters...................................................11
2.17. Labor Relations.........................................................12
2.18. Title to Assets.........................................................12
2.19. Brokers and Finders.....................................................12
2.20. Insurance...............................................................12
2.21. Taxes...................................................................12
2.22. List of Publications....................................................13
2.23. Solvency................................................................13
2.24. Price Lists.............................................................14
2.25. AMDOCS Agreement........................................................14
2.26. CCD.....................................................................14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BUYER
3.1. Corporate Organization; Etc.............................................14
3.2. Authority Relative to this Agreement....................................14
3.3. Consents and Approvals; No Violations...................................15
3.4. Acquisition of Shares for Investment....................................15
3.5. Sufficient Funds........................................................15
3.6. Brokers and Finders.....................................................16
ARTICLE IV COVENANTS OF THE PARTIES
4.1. Conduct of Business of the Company......................................16
4.2. Access to Information...................................................18
4.3. Reasonable Efforts......................................................19
4.4. Public Announcements....................................................19
4.5. Employee Matters........................................................19
4.6. Tax Matters.............................................................21
4.7. Pre-Closing Insurance...................................................26
4.8. Related Agreements......................................................26
4.9. Right of First Negotiation..............................................26
4.10. Cedar Rapids Facility...................................................27
4.11. Intercompany Indebtedness; Net Working Capital..........................27
4.12. Bankruptcy Matters......................................................29
4.13. Leases and Other Obligations............................................29
4.14. Real Property...........................................................29
4.15. HSR Act.................................................................30
4.16. Approval of Termination Amount..........................................30
4.17. No Solicitation.........................................................30
4.18. Assumption of Contracts.................................................31
4.19. Solvency................................................................32
ARTICLE V CONDITIONS TO CONSUMMATION OF THE STOCK
PURCHASE
5.1. Conditions to Each Party's Obligations to
Consummate the Stock Purchase...........................................32
5.2. Further Conditions to the Seller's Obligations..........................32
5.3. Further Conditions to the Buyer's Obligations...........................33
ARTICLE VI TERMINATION AND ABANDONMENT
6.1. Termination.............................................................34
6.2. Payments on Termination.................................................35
6.3. Effect of Termination...................................................36
ARTICLE VII SURVIVAL AND INDEMNIFICATION
7.1. Survival Periods........................................................36
7.2. Indemnification.........................................................36
7.3. Indemnification Amounts.................................................37
7.4. Claims..................................................................38
7.5. Exclusive Remedy........................................................38
7.6. Insurance...............................................................38
7.7. Duplication.............................................................39
ARTICLE VIII MISCELLANEOUS PROVISIONS
8.1. Amendment and Modification..............................................39
8.2. Extension; Waiver.......................................................39
8.3. Entire Agreement; Assignment............................................39
8.4. Validity................................................................39
8.5. Notices.................................................................40
8.6. Governing Law and Jurisdiction..........................................40
8.7. Descriptive Headings....................................................41
8.8. Counterparts............................................................41
8.9. Expenses................................................................41
8.10. Parties in Interest.....................................................41
8.11. No Waivers..............................................................42
8.12. Specific Performance....................................................42
8.13. Construction............................................................42
8.14. Guaranty................................................................42
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of January 19, 2002
(this "Agreement"), by and among McLeodUSA Holdings, Inc., a Delaware
corporation (the "Seller"), Yell Group Limited, a corporation organized
under the laws of England and Wales (the "Buyer"), and McLeodUSA
Incorporated, a Delaware corporation ("Parent") (solely for purposes of
Section 8.14).
WHEREAS, the Seller owns all of the outstanding shares of
capital stock (the "Shares") of McLeodUSA Media Group, Inc., an Iowa
corporation (the "Company"), and the Seller is a wholly-owned subsidiary of
Parent;
WHEREAS, Parent is taking steps to implement a capital
restructuring substantially on the terms described in Exhibit A (the
"Restructuring"); and
WHEREAS, the Seller desires to sell to the Buyer, and the
Buyer desires to purchase from the Seller, the Shares, upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements contained
herein, the parties hereto agree as follows:
ARTICLE I
SALE OF STOCK
1.1. The Sale. Upon the terms and subject to the
conditions of this Agreement, at the Closing (as hereinafter defined), the
Seller will sell, convey, assign, transfer and deliver to the Buyer, and
the Buyer will purchase, acquire and accept from the Seller the Shares, in
consideration for which, at the Closing, the Buyer will pay to the Seller
for the Shares an amount equal to the Purchase Price by wire transfer of
immediately available funds to an account or accounts designated by the
Seller prior to the Closing. The "Purchase Price" shall be $600 million;
provided that the Closing takes place on or before April 30, 2002. If the
Closing takes place after April 30, 2002, the Purchase Price shall be
reduced by $200,000 for every complete day after April 30, 2002 on which
the Condition Fulfillment Date (as defined below) has not occurred until
August 1, 2002 (e.g. if the Condition Fulfillment Date occurs on June 1,
2002 the Purchase Price would be reduced by $6.2 million to $593.8
million). The transactions contemplated by this Section 1.1 are sometimes
herein referred to as the "Stock Purchase."
1.2. Time and Place of Closing. Upon the terms and
subject to the conditions of this Agreement, the closing of the
transactions contemplated by this Agreement (the "Closing") will take place
at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP, Xxxx Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 9:30 a.m. on the business day following
the date on which all of the conditions to each party's obligations
hereunder have been satisfied or waived (the "Condition Fulfillment
Date"). The date on which the Closing occurs and the transactions contemplated
hereby become effective is referred to herein as the "Closing Date."
1.3. Deliveries by the Seller. Subject to the terms and
conditions hereof, at the Closing, the Seller will deliver or cause to be
delivered the following to the Buyer:
(a) certificates representing the Shares, accompanied by
stock powers duly endorsed in blank or accompanied by duly executed
instruments of transfer and with any and all required documentary stamps
attached;
(b) a non-foreign Person Affidavit as provided by Section
1445 of the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated thereunder;
(c) the Operating Agreement, the Transition Services
Agreement and the Telecom Agreement (in each case as defined in Section
4.8); and
(d) all other documents, instruments and writings
required to be delivered by the Seller at or prior to the Closing Date
pursuant to this Agreement.
1.4. Deliveries by the Buyer. Subject to the terms and
conditions hereof, at the Closing, the Buyer will deliver or cause to be
delivered the following to the Seller:
(a) the Purchase Price, in immediately available funds,
as set forth in Section 1.1 hereof;
(b) the Operating Agreement, the Transition Services
Agreement and the Telecom Agreement; and
(c) all other documents, instruments and writings
required to be delivered by the Buyer at or prior to the Closing Date
pursuant to this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Buyer as
follows:
2.1. Organization; Etc. Each of the Company and its
Subsidiaries is duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization, and has all
requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted or currently proposed to be
conducted. Except as set forth in Section 2.1 of a disclosure schedule
document being delivered by the Seller to the Buyer concurrently herewith
(the "Disclosure Schedule"), the Company and each of its Subsidiaries is
duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or
licensing necessary, except in such jurisdictions where the failure to be
so duly qualified or licensed and in good standing would not in the
aggregate have a material adverse effect on the business, operations,
results of operations, assets, or condition (financial or otherwise) of the
Company and its Subsidiaries, taken as whole (a "Company Material Adverse
Effect"); provided, however, that any adverse effects on or changes in the
Company or any of its Subsidiaries resulting from or relating to (i) the
execution of this Agreement and the announcement of this Agreement and the
transactions contemplated hereby or (ii) the announcement of the
Restructuring or the commencement or pendency of proceedings under Title 11
of the United States Code (the "Bankruptcy Code") by or against Parent
and/or its Subsidiaries (including the Company and its Subsidiaries) and
subsequent disclosures related to the terms or status of the Restructuring
or such proceedings, shall be excluded from the determination of a Company
Material Adverse Effect. The Seller has heretofore delivered to the Buyer
an accurate and complete copy of the certificate of incorporation of the
Company, as amended to the date of this Agreement. As used in this
Agreement, the word "Subsidiary" means, with respect to any party, any
corporation, partnership or other entity or organization, whether
incorporated or unincorporated, of which (i) such party or any other
Subsidiary of such party is a general partner (excluding such partnerships
where such party or any Subsidiary of such party does not have a majority
of the voting interest in such partnership) or (ii) at least a majority of
the securities or other shares having by their terms ordinary voting power
to elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one or
more of its Subsidiaries, or by such party and one or more of its
Subsidiaries.
2.2. Capitalization. (a) Section 2.2 of the Disclosure
Schedule sets forth the number of issued and outstanding shares of capital
stock of the Company and each of its Subsidiaries. Except as set forth in
Section 2.2 of the Disclosure Schedule, there are not, and at the Closing
there will not be, any capital stock or other equity interests in the
Company or any of its Subsidiaries issued or outstanding or any
subscriptions, options, warrants, calls, rights, convertible securities or
other agreements or commitments of any character obligating the Company or
any of its Subsidiaries to offer, issue, transfer or sell, or to acquire or
retire any of its own capital stock or other equity interests or the
capital stock or other equity interests of any of its Subsidiaries, or any
agreements, arrangements, or understandings granting any Person any rights
in the Company or any of its Subsidiaries similar to capital stock or other
equity interests. Except as set forth in Section 2.2 of the Disclosure
Schedule, all of the Shares are owned by the Seller, and all of the
outstanding shares of capital stock of the Company's Subsidiaries are owned
by the Company or the wholly owned direct or indirect Subsidiary of the
Company specified in Section 2.2. of the Disclosure Schedule, in each case,
free and clear of all liens, pledges, charges, claims, security interests
or other encumbrances, whether consensual, statutory or otherwise
(collectively, "Liens"). There are not now, and at the Closing there will
not be, any voting trusts or other agreements or understandings to which
the Seller or the Company is a party or is bound with respect to the voting
of the Shares. All of the Shares were issued by the Company in compliance
with all applicable securities laws. Other than the Subsidiaries listed on
Section 2.2 of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries owns any equity or other ownership interest in any Person and
neither the Company nor any of its Subsidiaries is a party to any Contract
(as defined in Section 2.13) to purchase or provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in
any Person. As used in this Agreement, the word "Person" means any natural
person, firm, partnership, joint-venture, association, corporation,
company, trust, entity or organization, including a governmental authority.
(b) The consummation of the Stock Purchase will convey to
the Buyer good title to the Shares, free and clear of all Liens, except for
those created by the Buyer.
2.3. Authority Relative to this Agreement. The Seller has
full power and authority to execute and deliver this Agreement and each of
the agreements, documents and instruments to be executed and delivered in
connection with the transactions contemplated hereby (the "Ancillary
Agreements") to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and the applicable Ancillary Agreements and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by all requisite action and no other proceedings on the part of
the Seller are necessary to authorize this Agreement or the applicable
Ancillary Agreements or to consummate the transactions contemplated hereby
or thereby. This Agreement has been, and the applicable Ancillary
Agreements will be as of the Closing, duly and validly executed and
delivered by the Seller and, assuming such agreements have been duly
authorized, executed and delivered by the other parties thereto, constitute
a valid and binding agreement of the Seller, enforceable against the Seller
in accordance with its terms, except as such enforcement is limited by
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights generally and for limitations imposed by general
principles of equity.
2.4. Consents and Approvals; No Violations. Except for
applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended (the "HSR Act") or as required under the Bankruptcy
Code in connection with the Restructuring, no filing with, and no permit,
authorization, consent or approval of, any public body or governmental
authority, domestic or foreign, is necessary for the consummation by the
Seller of the transactions contemplated by this Agreement or the Ancillary
Agreements to which the Seller is a party; provided, that no representation
or warranty is made as to any such approval that may be required by reason
of the effect of the transactions contemplated hereby on any permit,
authorization, consent or approval presently held by the Buyer. Neither the
execution and delivery of this Agreement or the Ancillary Agreements by the
Seller nor the consummation by the Seller of the transactions contemplated
hereby or thereby nor compliance by the Seller with any of the provisions
hereof or thereof will (a) conflict with or result in any breach of any
provision of the certificate of incorporation of the Company, any of its
Subsidiaries or the Seller, (b) except as set forth in Section 2.4 of the
Disclosure Schedule, result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give
rise to any right of termination, cancellation or acceleration) under, or
require any consent under, any of the terms, conditions or provisions of
any indenture, license, contract, agreement or other instrument or
obligation to which the Company, any of its Subsidiaries or the Seller is a
party or by which any of them or any of their respective properties or
assets may be bound or (c) assuming that the filings under the HSR Act
referred to in the first sentence of this Section 2.4 are duly and timely
made, violate any order, writ, injunction or decree, or any provision of
any federal, state, local or foreign law, statute, treaty, rule, regulation
or ordinance (collectively, "Laws", and individually, a "Law") applicable
to the Company, any of its Subsidiaries or the Seller or any of their
respective properties or assets, except in the case of (b) or (c) for
violations, breaches or defaults which, in the aggregate, would not have a
Company Material Adverse Effect or prevent or materially delay the
consummation of the transactions contemplated hereby.
2.5. Financial Statements. Section 2.5 of the Disclosure
Schedule contains (a) the audited consolidated balance sheet of the Company
as of December 31, 1999 and 2000 (the "December Balance Sheets") and the
related audited consolidated statements of income and cash flows for the
years then ended and (b) the unaudited consolidated balance sheet of the
Company as of September 30, 2001 (the "September 30 Balance Sheet" with
September 30, 2001 being hereinafter referred to as the "Balance Sheet
Date") and the related unaudited consolidated statements of income and cash
flows for the nine months then ended (individually and collectively, the
"Financial Statements"). Except as disclosed in Section 2.5 of the
Disclosure Schedule, the Financial Statements were prepared in accordance
with United States generally accepted accounting principles ("GAAP"),
consistently applied (except that the financial statements as of the
Balance Sheet Date are subject to normal year-end adjustments, which would
not, individually and in the aggregate, be material except as disclosed in
Section 2.5 of the Disclosure Schedule), and present fairly in all material
respects the financial position, results of operations, and cash flows of
the Company and its Subsidiaries as of the respective dates and for the
respective periods indicated therein. Except as disclosed in Section 2.5 of
the Disclosure Schedule, all related party transactions have been accounted
for by use of consistent accounting policies and methodologies during the
periods involved except as otherwise disclosed in the notes to the
Financial Statements and except for changes in such accounting policies and
methodologies which would not affect the comparability of such financial
information in any material way. The Financial Statements have been derived
from the books and records of the Company, which have been maintained in
accordance with good business practice and all applicable Laws. Neither the
December Balance Sheets nor the September Balance Sheet reflects any
material amounts of barter or trade transactions or arrangements.
2.6. No Undisclosed Liabilities. (a) Except as set forth
in Section 2.6 of the Disclosure Schedule, neither the Company nor any of
its Subsidiaries has any liabilities or obligations of any nature (whether
absolute, accrued, contingent, unasserted, determined, determinable or
otherwise) except (i) liabilities and obligations in the respective amounts
reflected or reserved against in the September 30 Balance Sheet, (ii)
liabilities or obligations which were incurred since the Balance Sheet Date
in the ordinary course of business of the Company and its Subsidiaries
consistent with past practice, (iii) performance obligations under any
Contract which is listed in Section 2.13 of the Disclosure Schedule or
which is not required by the terms of Section 2.13 of this Agreement to be
scheduled, (iv) liabilities with respect to Taxes or Tax Returns (which
liabilities are the subject matter of the representations and warranties
set forth in Section 2.21) and (v) liabilities and obligations that would
not, individually and in the aggregate, have a Company Material Adverse
Effect.
(b) Except as set forth in Section 2.6(b) of the
Disclosure Schedule, neither the Company nor any of its Subsidiaries is the
borrower, obligor or guarantor under any notes, bonds, mortgages or other
debt obligations or obligations for borrowed money.
2.7. Absence of Certain Changes. Except as set forth in
Section 2.7 of the Disclosure Schedule, since the Balance Sheet Date, (a)
neither the Company nor any of its Subsidiaries has suffered any adverse
change in its business, operations, results of operations, assets, or
condition (financial or otherwise), except such changes which, in the
aggregate, would not have a Company Material Adverse Effect and (b) neither
the Company nor any of its Subsidiaries has taken any actions which would,
if taken after the date hereof, violate Section 4.1 hereof.
2.8. No Default. Except as set forth in Section 2.8 of
the Disclosure Schedule, the Company is not in default, violation or breach
(and no event has occurred which with notice or the lapse of time or both
would constitute a default, violation or breach by the Company or any of
its Subsidiaries or give rise to any right of termination, cancellation or
acceleration) of any term, condition or provision of (a) its certificate of
incorporation, (b) any Contract or other instrument or obligation to which
the Company or any of its Subsidiaries is a party or by which it or any of
its properties or assets may be bound, or (c) any order, writ, injunction
or decree, or any Laws, applicable to the Company or any of its
Subsidiaries or any of their properties or assets, which defaults,
violations, breaches or rights would, in the aggregate, have a Company
Material Adverse Effect or prevent or materially delay the consummation of
the transactions contemplated hereby.
2.9. Litigation. Except as set forth in Section 2.9 of
the Disclosure Schedule, there is no action, suit, proceeding or, to the
knowledge of the Seller, investigation pending or, to the knowledge of the
Seller, threatened involving the Company or any of its Subsidiaries or
their assets, at law or in equity, or by or before any governmental entity,
which in the aggregate would have a Company Material Adverse Effect or
involves the transactions contemplated by this Agreement.
2.10. Compliance with Law. (a) Except as set forth in
Section 2.10 of the Disclosure Schedule, the business of the Company and
its Subsidiaries is not being and has not been conducted in violation of
any applicable Law or any order, writ, injunction or decree of any domestic
or foreign court or governmental entity, except for violations which in the
aggregate would not have a Company Material Adverse Effect.
(b) Each of the Company and its Subsidiaries has and has
had at all relevant times, all governmental permits, licenses and
authorizations (collectively, "Permits") which are necessary to own its
assets and to operate its business as conducted under all applicable Laws,
except for Permits the failure to have, in the aggregate, would not have a
Company Material Adverse Effect. Each of the Company and its Subsidiaries
has complied with and is in compliance with the terms of its Permits,
except where the failure to comply, in the aggregate, would not have a
Company Material Adverse Effect.
2.11. Employee Benefit Plans. (a) Section 2.11(a) of the
Disclosure Schedule sets forth (i) each material written and unwritten
plan, program, policy or other arrangement (other than Affected Employee
Agreements as defined in (ii) below) providing for severance, termination
pay, equity-based awards, bonus or other incentive compensation (including
stay bonuses but excluding sales commission plans), fringe benefits or
other employee benefits whether formal or informal, and whether funded or
unfunded, including without limitation, each "employee benefit plan" within
the meaning of Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), sponsored, maintained, contributed to, or
required to be contributed to, for the benefit of, or with respect to any
current or former employee, consultant, independent contractor, agent or
principal of the Company or any of its Subsidiaries (each an "Affected
Employee" and each such plan, program, policy or arrangement other than any
multiemployer plan an "Affected Employee Plan") (including, but not limited
to, any agreement or arrangement that obligates the Parent or any of its
Subsidiaries to make any payment to any Affected Employee) and (ii) each
material employment, severance, termination, consulting or similar
agreement (except consulting agreements which can be terminated with 60
days or less notice without liability) between the Company or any of its
Subsidiaries and any Affected Employee or with respect to which the Company
or any of its Subsidiaries has any liabilities or obligations (each an
"Affected Employee Agreement"). The Seller has delivered to the Buyer
current, accurate and complete copies of all documents embodying each
material Affected Employee Plan and each Affected Employee Agreement.
(b) Except as set forth in Section 2.11(b) of the
Disclosure Schedule, at no time has the Company or any member of the
Controlled Group (as hereinafter defined) contributed to or been required
to contribute to, or incurred any withdrawal liability (within the meaning
of Section 4201 of ERISA) to any "multiemployer plan" (within the meaning
of Section 3(37) of ERISA) and neither the Company nor any of its
Subsidiaries has any liability, contingent or otherwise, with respect to
any multiemployer plan. Except as set forth in Section 2.11(b) of the
Disclosure Schedule, neither the Company nor any member of the Controlled
Group presently sponsors, maintains, contributes to or is required to
contribute to, or has since January 1, 1996, sponsored, maintained,
contributed to or been required to contribute to, a "defined benefit plan"
(within the meaning of Section 3(35) of ERISA), whether domestic or foreign
(other than a plan mandated by the law of a foreign jurisdiction) (each
such plan (other than any multiemployer plan) a "Controlled Group Plan").
There is no accumulated funding deficiency, whether or not waived, within
the meaning of Section 302 of ERISA and Section 412 of the Code, with
respect to any Controlled Group Plan, and the present value of all accrued
benefits under each Controlled Group Plan, determined on a plan termination
basis using the actuarial assumptions established by the Pension Benefit
Guaranty Corporation (the "PBGC") as in effect on the date of
determination, does not exceed the fair market value of the assets (which
shall not include any accrued but unpaid contributions) of such Controlled
Group Plan. Each Affected Employee Plan is and has been operated in
material compliance with the terms of such plan and with all applicable
Laws, including, without limitation, ERISA and the Code, and the Company
and its Subsidiaries have performed all obligations required to be
performed by them under each Affected Employee Plan. Neither the Company
nor any member of its Controlled Group has incurred any liability under
Title IV of ERISA to the PBGC in connection with any Controlled Group Plan
which liability has not been fully paid prior to the date hereof, other
than liability for premiums due the PBGC, which premiums have been or will
be paid when due, and no steps have been taken by the plan sponsor or by
the PBGC to terminate any Controlled Group Plan and no reportable event
(within the meaning of Section 4043 of ERISA) and no event described in
Section 4062 or 4063 of ERISA has occurred with respect to any Controlled
Group Plan. Each Affected Employee Plan intended to be tax qualified under
Sections 401(a) and 501(a) of the Code is so qualified. Except as disclosed
in Section 2.11(a) of the Disclosure Schedule, the Company does not have
any plan or commitment, whether legally binding or not, to establish any
material new employee benefit or compensation plan, program, policy,
practice or arrangement or to modify or terminate any existing Affected
Employee Plan (and has not communicated to any Affected Employee any
intention to do so). Neither the Company nor any member of the Controlled
Group nor any "party-in-interest" or "disqualified person" with respect to
any Affected Employee Plan has engaged in any transaction with respect to
any Affected Employee Plan which has resulted or could result in the
imposition of any tax under Section 4971, 4972, 4975, 4976, 4977, 4979,
4980 or 4980B of the Code that is or could be liabilities of the Company.
There are no actions, proceedings, arbitrations, suits or claims pending,
or to the knowledge of the Seller threatened, against any Affected Employee
Plan, the Company or any plan official with respect to any Affected
Employee Plan (other than routine benefit claims) and no Affected Employee
Plan is under audit or investigation by the Internal Revenue Service, the
Department of Labor or the PBGC and to the knowledge of the Seller no such
audit or investigation is pending. Except as disclosed in Section 2.11(b)
of the Disclosure Schedule, the retiree life insurance, medical and dental
benefits described therein may be modified or terminated by the Company,
subject only to the payment of claims incurred (whether or not reported)
prior to such modification or termination. Except as disclosed in Section
2.11(b) of the Disclosure Schedule, neither the Company nor any member of
the Controlled Group maintains or contributes to any Affected Employee Plan
which provides, or has any liability to provide, life insurance, medical or
dental benefits to any Affected Employee upon his retirement or termination
of employment (except as may be required under Section 601 of ERISA and
Section 4980B of the Code). Except as disclosed in Section 2.11(a) of the
Disclosure Schedule, the execution of, and the performance of transactions
contemplated by, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
under any Affected Employee Plan, Affected Employee Agreement, trust or
loan that will or may result in any payment (whether of incentive pay,
severance pay or otherwise), acceleration, vesting, distribution or
increase in benefits or obligation to fund benefits or the forgiveness of
indebtedness with respect to any Affected Employee. For purposes of this
Section 2.11, "Controlled Group" shall include, collectively, each
business, entity or other organization which is a member of a "controlled
group," or an "affiliated service group" or under "common control" with the
Company (within the meaning of Sections 414(b), (c), (m) or (o) of the Code
or Section 4001(a)(14) of ERISA).
2.12. Intellectual Property. (a) Section 2.12(a) of the
Disclosure Schedule sets forth a list of all registered trademarks,
servicemarks and tradenames used in or necessary for the conduct of the
business of the Company and its Subsidiaries as currently conducted (other
than the trademarks, servicemarks and tradenames of advertisers included in
the directories). "Intellectual Property" means (i) all inventions (whether
or not patentable) and all patents and patent applications, (ii) all
trademarks, service marks, trade dress, logos, trade names, business names
and domain names, together with all translations, adaptations, derivations,
and combinations thereof, including the goodwill associated therewith, and
all applications, registrations, and renewals in connection therewith,
(iii) all copyrightable works, all copyrights, and all applications,
registrations, and renewals therewith, (iv) all trade secrets and
confidential business information (including, without limitation, ideas,
research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, customer/subscriber lists, supplier lists, pricing and cost
information, and business and marketing plans and proposals), (v) all
computer software (including data and related documentation), (vi) all
other proprietary rights and (vii) all copies and tangible embodiments
thereof (in whatever form or medium).
(b) Each of the Company and its Subsidiaries has valid
and enforceable rights to use, whether through ownership thereof or by
license, all Intellectual Property used in or necessary for the conduct of
their businesses as now conducted and as presently planned to be conducted,
except where the failure to have such rights would not, in the aggregate,
have a Company Material Adverse Effect. Each of the Company and its
Subsidiaries has taken all reasonable steps necessary to maintain and
protect each item of its Intellectual Property except where the failure to
do so in the aggregate would not have a Company Material Adverse Effect.
Except as set forth in Section 2.12(b) of the Disclosure Schedule, no claim
is pending or, to the knowledge of the Seller, threatened against the
Company or any of its Subsidiaries to the effect that the rights of the
Company or any of its Subsidiaries in or to any Intellectual Property owned
by it are invalid or unenforceable or that the use by the Company or any of
its Subsidiaries of any Intellectual Property infringes on the rights of
any third party, or which challenges the ownership by the Company or any of
its Subsidiaries of the Intellectual Property which each purports to own or
the validity or effectiveness of any license relating to any Intellectual
Property which each purports to license, except for such claims as would
not, in the aggregate, have a Company Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has misappropriated, infringed upon, or
violated any Intellectual Property right of any third party and, to the
knowledge of the Seller, no third party has misappropriated, infringed
upon, or violated any Intellectual Property rights of the Company or any of
its Subsidiaries, except for such misappropriations, infringements or
violations as would not in the aggregate have a Company Material Adverse
Effect.
2.13. Material Contracts. (a) Section 2.13(a) of the
Disclosure Schedule sets forth a complete list, as of the date hereof, of
the following agreements, contracts, arrangements or understandings,
whether written or oral (collectively, "Contracts") to which the Company or
any of its Subsidiaries is a party or by which any of their properties or
assets may be bound:
(i) each employment, severance, management,
consulting and other Contract involving compensation for services rendered
or to be rendered, in each case involving payments of more than $150,000
per year or extending beyond December 31, 2002 (Seller hereby represents
that the Company and its Subsidiaries are not party to more than an
aggregate of $1 million per year of Contracts involving such matters not
terminable by the Company or any of its Subsidiaries on 30 days' or less
notice without liability to the Company or any of its Subsidiaries and not
set forth in Section 2.13 of the Disclosure Schedule) (except for severance
payments to employees pursuant to the severance policy set forth in Section
2.11(a) of the Disclosure Schedule) ;
(ii) each lease relating to real property with a
term of one year or longer;
(iii) each other Contract involving annual
payments in excess of $250,000 per year, unless cancelable on 60 days or
less notice for a nominal payment;
(iv) each Contract that contains a covenant not
to compete or similar covenants for which the Company or its Subsidiaries
is the obligor thereunder;
(v) each Contract concerning a partnership or
joint venture;
(vi) each Contract containing an earnout or other
provision which has as its purpose the sharing of revenue or profits for
which the aggregate payment thereunder would exceed $25,000, the aggregate
earnout payments for such Contracts not to exceed the amount set forth in
Section 2.13(a)(vi) of the Disclosure Schedule (subject to the assumptions
contained therein);
(vii) each Contract creating a Lien securing
payment of an amount in excess of $100,000 per year in any one case or
$500,000 in the aggregate for all such Contracts;
(viii) each Contract relating to the printing,
binding or distribution of any publication that involves annual payments in
excess of $250,000; and
(ix) each other Contract which is material to the
operations of the Company and its Subsidiaries.
(b) The Seller has made available to the Buyer true and
complete copies of such written Contracts and summaries of such oral
Contracts, or standard forms thereof. Except as set forth in Section
2.13(b) of the Disclosure Schedule, (i) all of such Contracts are valid and
binding obligations of the Company and/or its Subsidiaries and, to the
Seller's knowledge, the other party thereto and neither the Company nor any
of its Subsidiaries nor, to the Seller's knowledge, the other party thereto
is in breach of any such Contract, except for such failures to be valid and
binding and for such breaches as, in the aggregate, would not have a
Company Material Adverse Effect and (ii) except as would not, in the
aggregate, have a Company Material Adverse Effect (without regard to clause
(ii) of the proviso contained in the definition thereof), the commencement
of proceedings under the Bankruptcy Code by or against Parent, Seller or
any of its Subsidiaries (other than the Company and its Subsidiaries) will
not result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, or require any consent
under, any of the terms, conditions or provisions of any Contract to which
the Company or any of its Subsidiaries is a party or by which any of them
or any of their respective properties or assets may be bound.
2.14. Transactions with Affiliates. Except as set forth
in Section 2.14 of the Disclosure Schedule, (i) since December 31, 2000,
there have not been any transactions, and (ii) there are no Contracts,
between the Company or any of its Subsidiaries, on the one hand, and Parent
or any of its affiliates (other than the Company or its Subsidiaries), on
the other hand, in each case other than transactions and Contracts which
are not, in the aggregate, material. This Section 2.14 does not contain any
material misstatement of fact or omit to state any material fact necessary
to make the statements herein, in light of the circumstances under which
they are made, not misleading. For all purposes of this Agreement,
including Article VII hereof, when considering the accuracy of the
representation and warranty set forth in this Section 2.14, benefits from
matters not disclosed in Section 2.14 shall be aggregated and netted
against the aggregate detriments from such matters.
2.15. Business and Properties. Except as set forth in
Section 2.15 of the Disclosure Schedule, the business, properties, assets
(tangible or intangible), and rights held, owned or used by the Company or
any of its Subsidiaries and which the Buyer is acquiring indirectly at the
Closing by its purchase of the Shares, constitute all of the business,
properties, assets (tangible or intangible) and rights used in or necessary
for the conduct of the business of the Company and its Subsidiaries as
currently conducted. Except as set forth in Section 2.15 of the Disclosure
Schedule, the interest which the Buyer is acquiring in each of the assets
upon the consummation of the transactions contemplated by this Agreement
will either be an ownership interest in the asset or an interest pursuant
to a legally binding Contract.
2.16. Environmental Matters. Except as set forth in
Section 2.16 of the Disclosure Schedule: (a) each of the Company and its
Subsidiaries is in compliance with all applicable federal, state, local and
foreign laws and regulations relating to pollution, protection of human
health or the environment or health and safety of employees (including,
without limitation, ambient air, surface water, ground water, land surface
or subsurface strata) (collectively, "Environmental Laws"), except for any
failure to comply that would not in the aggregate have a Company Material
Adverse Effect, (b) neither the Company nor any of its Subsidiaries has
received written notice of, or, to the knowledge of the Seller, is the
subject of, any action, cause of action, claim, investigation, demand or
notice by any Person or entity alleging liability under or non-compliance
with any Environmental Law which would in the aggregate have a Company
Material Adverse Effect, (c) neither the Company nor any of its
Subsidiaries has entered into or agreed to any consent decree or order, or
is subject to any judgment, decree or judicial order relating to compliance
with, or the cleanup of regulated substances under, any applicable
Environmental Law, and (d) all the real property owned or leased or
otherwise occupied by the Company or any of its Subsidiaries is free from
any Hazardous Substances (except those authorized pursuant to and in
accordance with Environmental Laws) and free of all contamination arising
from, relating to, or resulting from any such Hazardous Substances except
for such Hazardous Substances and contamination that would not in the
aggregate have a Company Material Adverse Effect. For purposes of this
Section 2.16, "Hazardous Substances" shall mean any hazardous substances
within the meaning of Section 101(14) of CERCLA, or any pollutant,
including petroleum or any fractions thereof.
2.17. Labor Relations. Except as set forth in Section
2.17 of the Disclosure Schedule, there is no unfair labor practice
complaint or other proceeding against the Company or any of its
Subsidiaries pending before the National Labor Relations Board which, if
adversely decided, in the aggregate would have a Company Material Adverse
Effect. Except as set forth in Section 2.17 of the Disclosure Schedule,
there is no (and since December 31, 1999 has been no) labor strike, work
stoppage or arbitration proceeding pending or involving or, to the
knowledge of the Seller, threatened against the Company or any of its
Subsidiaries which in the aggregate would have a Company Material Adverse
Effect. Except as set forth in Section 2.17 of the Disclosure Schedule, to
the Seller's knowledge, there are no (and since December 31, 1999 have been
no) organizing efforts by any union or other group seeking to represent any
employees of the Company or any of its Subsidiaries. Neither the Company
nor any of its Subsidiaries is a party to any collective bargaining
agreement.
2.18. Title to Assets. Except as set forth in Section
2.18 of the Disclosure Schedule, each of the Company and its Subsidiaries
has good, and, in the case of real property, marketable, title to the
assets it purports to own, free and clear of any Liens, except for (i)
Liens for current taxes not yet due and payable, (ii) Liens which would
not, in the aggregate, have a Company Material Adverse Effect and (iii)
mechanics', carriers', workers' and other similar Liens arising or incurred
in the ordinary course of business consistent with past practice, none of
which Liens in the case of clauses (i)-(iii), in the aggregate, would
materially interfere with the utilization of such properties or assets for
their intended purposes. A list of all real property owned by the Company
or any of its Subsidiaries is set forth on Section 2.18 of the Disclosure
Schedule.
2.19. Brokers and Finders. Neither the Seller nor the
Company nor any of its Subsidiaries has employed any broker or finder or
incurred any liability for any investment banking fees, brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated by this Agreement, except for fees and expenses payable to
Credit Suisse First Boston, which will be paid by Parent.
2.20. Insurance. Section 2.20 of the Disclosure Schedule
sets forth a list of all material insurance policies presently in effect
(including policies obtained in the past which continue to provide
insurance coverage at present) with respect to the Company or any of its
Subsidiaries. The Seller has heretofore delivered to, or made available for
review by, the Buyer accurate and complete copies of each such policy. All
such policies are valid, outstanding and enforceable; there are no material
claims pending as to which the insurers have denied liability or are
reserving their rights; and all material claims have been timely and
properly filed. Neither the Company nor any of its Subsidiaries (nor Parent
with respect to the Company or its Subsidiaries) has been refused any
insurance with respect to any aspect of the operations of the Company or
any of its Subsidiaries nor has its coverage been limited by any insurance
carrier to which it has applied for insurance or with which it has carried
insurance during the last three years. No notice of cancellation or
termination has been received by the Company or any of its Subsidiaries
with respect to any such policy.
2.21. Taxes. Except as set forth in Section 2.21 of the
Disclosure Schedule:
(a) With respect to each of the Company and its
Subsidiaries, (i) all material returns, statements, reports, estimates,
declarations and forms with respect to Taxes (as defined in Section 4.6)
(collectively, "Tax Returns") required to be filed on or before the Closing
Date have been or will have been, timely filed in accordance with any
applicable Laws, (ii) all Taxes due and payable pursuant to such Tax
Returns (whether or not shown on such returns) have been or will be timely
paid, and (iii) all Taxes for which a notice of, or assessment or demand
for, payment has been received or which are otherwise due and payable have
been paid or accrued on the financial books and records of the Company or
any of its Subsidiaries. All such Tax Returns are true, correct and
complete in all material respects. As of the Balance Sheet Date the Company
and its Subsidiaries had no material liability for Taxes in excess of the
accruals for Taxes reflected on the September 30 Balance Sheet.
(b) With respect to each of the Company and its
Subsidiaries, (i) there is no action, suit, proceeding, audit, written
claim, Lien (other than Liens for Taxes not yet due and payable or which
are being contested in good faith), or assessment pending or proposed with
respect to Taxes or with respect to any Tax Return, (ii) all material
amounts required to be collected or withheld with respect to Taxes have
been duly collected or withheld and any such amounts that are required to
be remitted to any taxing authority have been duly and timely remitted,
(iii) no extension of time within which to file any Tax Return has been
requested which Tax Return has not since been filed, (iv) there are no
material waivers or extensions of any applicable statute of limitations for
the assessment or collection of Taxes with respect to any Tax Return which
remain in effect, (v) there are no tax rulings, requests for rulings,
applications for change in accounting methods or closing agreements
relating to the Company or any of its Subsidiaries which could reasonably
be expected to affect its liability for Taxes for any period after the
Closing Date, and (vi) none of the Seller, the Company or any of its
Subsidiaries has agreed to, or is required to include in income, any
adjustment pursuant to Section 481(a) or 482 of the Code (or similar
provisions of other Law) (nor has any taxing authority proposed any such
adjustment or change of accounting method).
(c) The Company and each of its Subsidiaries is a member
of a U.S. consolidated return filing group of which Parent is the common
parent. Since 1990, neither the Company nor any of its Subsidiaries has
been a member of any other consolidated return group. Neither the Company
nor any of its Subsidiaries is a party to any tax sharing or similar
agreement which will be in effect with respect to the Company or any of its
Subsidiaries after the Closing Date.
2.22. List of Publications. Section 2.22 of the
Disclosure Schedule contains a true and complete list of each telephone
directory to be published by the Company or any of its Subsidiaries at any
time from the date hereof to December 31, 2002 and the respective dates of
delivery.
2.23. Solvency. Upon the consummation of the transactions
contemplated under this Agreement, (i) the Seller will not be insolvent or
become insolvent as a result of the transactions contemplated under this
Agreement, (ii) the Seller will not be left with an unreasonably small
capital, (iii) the Seller will not have incurred debts beyond its ability
to pay such debts as they mature and (iv) the capital of the Seller will
not be impaired, in each case as a result of the transactions contemplated
under this Agreement or the financial condition of the Seller as of the
Closing. For purposes of this Section 2.23, "insolvent" shall be defined as
set forth in Section 101 of the Bankruptcy Code, and as defined under
applicable State fraudulent conveyance and fraudulent transfer laws.
2.24. Price Lists. Seller has delivered to Buyer true and
complete lists of current standard prices (the "Price Lists") charged for
advertisements by new advertisers in the Directories, as well as the date
and amount of the last price increase for the Directories. Section 2.24 of
the Disclosure Schedule sets forth a true and complete list of the
Company's standard pricing and discount plans with respect to the business
(excluding directory specific and temporary discount programs).
2.25. AMDOCS Agreement. Except as set forth in Section
2.25 of the Disclosure Schedules, neither the Company nor any of its
Subsidiaries owes any payment obligation or other obligation to AMDOCS,
Inc. or any of its affiliates, other than those obligations expressly
provided for pursuant to the License and Services Agreement dated as of
December 1, 1997 by and between McLeodUSA Publishing Company and AMDOCS,
Inc. (the "AMDOCS Agreement") and order number one thereunder (true and
complete copies of each of which have been provided to the Buyer). Except
as set forth in Section 2.25 of the Disclosure Schedules and order number
one under the AMDOCS Agreement, there is no purchase order or other order
that remains in effect under the AMDOCS Agreement.
2.26. CCD. The costs allocated to Consolidated
Communications Directories, Inc. ("CCD") in the planned 2001 and 2002
operating budgets for the Company and its Subsidiaries that could not be
eliminated if CCD were not operating (subject to the assumptions contained
in such budgets) would not exceed $1.2 million for each such year.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller as
follows:
3.1. Corporate Organization; Etc. The Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to have such
power or authority is not, in the aggregate, reasonably likely to have a
material adverse effect on the business, operations, results of operations,
assets, condition (financial or otherwise) of the Buyer (a "Buyer Material
Adverse Effect").
3.2. Authority Relative to this Agreement. The Buyer has
all requisite corporate authority and power to execute and deliver this
Agreement and the Ancillary Agreements to which it is a party and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby by the
Buyer have been duly and validly authorized by all required corporate
action on the part of the Buyer and no other corporate proceedings on the
part of the Buyer are necessary to authorize this Agreement or the
Ancillary Agreements or to consummate the transactions contemplated hereby
or thereby. This Agreement has been, and the Ancillary Agreements will be
as of the Closing, duly and validly executed and delivered by the Buyer
and, assuming such agreements have been duly authorized, executed and
delivered by the other parties thereto, constitutes a valid and binding
agreement of the Buyer, enforceable against the Buyer in accordance with
its terms, except as such enforcement is limited by bankruptcy, insolvency
and other similar laws affecting the enforcement of creditors' rights
generally and for limitations imposed by general principles of equity.
3.3. Consents and Approvals; No Violations. Except for
applicable requirements of the HSR Act, no filing with, and no permit,
authorization, consent or approval of any public body or governmental
authority is necessary for the consummation by the Buyer of the
transactions contemplated by this Agreement or the Ancillary Agreements;
provided that no representation or warranty is made as to any such approval
that may be required by reason of the effect of the transactions
contemplated hereby on any permit, authorization, consent or approval held
by the Company or any of its Subsidiaries. Neither the execution and
delivery of this Agreement or the Ancillary Agreements by the Buyer nor the
consummation by the Buyer of the transactions contemplated hereby or
thereby nor compliance by the Buyer with any of the provisions hereof or
thereof will (a) conflict with or result in any breach of any provision of
the charter or bylaws of the Buyer, (b) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, contract, agreement or other
instrument or obligation to which the Buyer or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may be
bound or (c) assuming that the filings referred to in the first sentence of
this Section 3.3 are duly and timely made, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Buyer,
any of its Subsidiaries or any of their properties or assets, except in the
case of (b) and (c) for violations, breaches or defaults which are not in
the aggregate reasonably likely to have a Buyer Material Adverse Effect or
prevent or materially delay the consummation of the transactions
contemplated hereby.
3.4. Acquisition of Shares for Investment. The Buyer is
acquiring the Shares for investment and not with a view toward, or for sale
in connection with, any distribution thereof, nor with any present
intention of distributing or selling such Shares. The Buyer agrees that the
Shares may not be sold, transferred, offered for sale, pledged,
hypothecated or otherwise disposed of without registration under the
Securities Act of 1933, as amended (the "Act"), and any applicable state
securities laws, except pursuant to an exemption from such registration
under such Act and such laws.
3.5. Sufficient Funds. As of the date hereof, Buyer has
the financing commitments listed on Section 3.5 of the Disclosure Schedule,
and on the Closing Date, Buyer will have sufficient funds on hand or
committed lines of credit to consummate the transactions contemplated by
this Agreement. Upon the consummation of the Stock Purchase, (i) the Buyer
will not be insolvent, (ii) the Buyer will not be left with an unreasonably
small capital, (iii) the Buyer will not have incurred debts beyond its
ability to pay such debts as they mature and (iv) the capital of the Buyer
will not be impaired, in each case as a result of the financing of the
Stock Purchase or the financial condition of the Buyer as of the Closing.
3.6. Brokers and Finders. Neither the Buyer nor any of
its Subsidiaries has employed any investment banker, broker or finder or
incurred any liability for any investment banking fees, brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated by this Agreement.
ARTICLE IV
COVENANTS OF THE PARTIES
4.1. Conduct of Business of the Company. Except as set
forth in Section 4.1 of the Disclosure Schedule or as expressly
contemplated by this Agreement (including, without limitation, the terms of
the Restructuring and, if applicable, commencement and presentation of case
filed under Chapter 11 of the Bankruptcy Code, whether voluntary or
involuntary, by or against the Parent and/or its Subsidiaries (including
the Company and its Subsidiaries)) or with the prior consent of the Buyer,
during the period from the date of this Agreement to the Closing, the
Seller will cause the Company and its Subsidiaries (i) to conduct their
business and operations in the ordinary course of business consistent with
past practice except in connection with the transactions contemplated
hereby and (ii) to use all reasonable efforts to preserve intact its
properties, assets and business organization and relationships with third
parties, in each case in the ordinary course of business consistent with
past practice. Without limiting the generality of the foregoing, (and
except as set forth in Section 4.1 of the Disclosure Schedule or as
expressly contemplated by this Agreement (including, without limitation,
the terms of the Restructuring and, if applicable, commencement and
presentation of case filed under Chapter 11 of the Bankruptcy Code, whether
voluntary or involuntary, by or against the Parent and/or its Subsidiaries
(including the Company and its Subsidiaries)), the Seller will cause the
Company and its Subsidiaries not to, prior to the Closing, without the
prior written consent of the Buyer, such consent not to be unreasonably
withheld:
(a) declare, set aside or make any non-cash distribution
with respect to any of the Shares or shares of capital stock of the
Subsidiaries;
(b) transfer any asset included in the calculation of Net
Working Capital pursuant to Section 4.11 (x) as a distribution with respect
to any of the Shares or (y) in payment of any intercompany account;
(c) redeem, purchase or otherwise acquire any outstanding
Shares;
(d) amend its certificate of incorporation or bylaws;
(e) whether or not in the ordinary course of business
consistent with past practice, acquire or dispose of any property or assets
that are in the aggregate material;
(f) enter into any Contracts or transactions, except
Contracts or transactions made in the ordinary course of business
consistent with past practice;
(g) change in any respect any of the accounting
principles or practices used by it (except as required by GAAP);
(h) engage in any transactions with, or enter into any
binding Contracts with, the Seller or any of its affiliates (other than
among the Company and its Subsidiaries) other than transactions in the
ordinary course of business consistent with past practice;
(i) enter into, adopt, amend or terminate any agreement
relating to the compensation or severance of any officer or director of the
Company or any of its Subsidiaries, except to the extent required by law or
any agreements set forth in the Disclosure Schedule;
(j) enter into, adopt, amend or terminate any agreement
relating to the compensation or severance of any non-officer or director
employees of the Company or any of its Subsidiaries, other than in the
ordinary course of business, except to the extent required by law or any
agreements set forth in the Disclosure Schedule;
(k) grant any increase in compensation or benefits to any
particular employee other than in the ordinary course in connection with a
periodic performance review, or grant any general increase in compensation
or benefits to any group of employees;
(l) make any material Tax election (unless required by
applicable Law or consistent with past practice) or settle any material Tax
liability which is the subject of dispute between Parent, the Seller, the
Company or one of its Subsidiaries, on the one hand, and a governmental
entity, on the other hand;
(m) fail to maintain in full force and effect its
insurance policies (or comparable insurance policies);
(n) establish or adopt any new benefit plan or amend or
terminate any existing benefit plan other than as required by law;
(o) modify, amend or terminate, or waive, release or
assign any material rights or claims with respect to, any Contract other
than in the ordinary course of business consistent with past practices;
(p) enter into any non-compete Contracts under which the
Company is obligor, or modify or waive any of the Company's rights under
any existing material confidentiality or non-compete Contract under which
it is the beneficiary;
(q) change the payment terms available to its customers
(including with respect to discounts and timing) from those currently in
effect, or change the delivery schedule of any of its directories;
(r) take any action that would cause any of the
representations and warranties of the Seller to be untrue; or
(s) agree to take any of the foregoing actions.
Except as set forth in Section 4.1 of the Disclosure
Schedule, prior to the Closing Date, neither the Company nor any of its
Subsidiaries will (x) incur any indebtedness for borrowed money or issue or
sell any debt securities or assume, guarantee or endorse the obligations of
any other Persons or (y) mortgage, encumber or subject to any Lien any of
its material property or assets.
4.2. Access to Information.
(a) From the date of this Agreement to the Closing, the
Seller will cause each of the Company and its Subsidiaries to (i) give the
Buyer and its authorized representatives reasonable access to their books,
records, personnel, offices and other facilities and properties and their
accountants and their accountants' work papers, (ii) permit the Buyer to
make such copies and inspections thereof as the Buyer may reasonably
request and (iii) cause the Company's officers to furnish the Buyer with
such financial and operating data and other information with respect to the
business and properties of each of the Company and its Subsidiaries as the
Buyer may from time to time reasonably request; provided, however, that any
such access shall be conducted at a reasonable time and in such a manner as
not to interfere unreasonably with the operation of the business of the
Company or any or its Subsidiaries.
(b) All such information and access will be treated in
accordance with the provisions of the Confidentiality Agreement between
Parent and Purchaser, dated as of December 10, 2001 (the "Confidentiality
Agreement").
(c) From and after the Closing Date, for the purpose of
allowing Buyer to prepare historical financial statements of the Company
and its Subsidiaries, the Seller will, at Buyer's sole cost and expenses,
(i) give the Buyer and its authorized representatives reasonable access to
its books, records and personnel and its accountants and their work papers,
(ii) permit the Buyer to make such copies and inspections thereof as the
Buyer may reasonably request and (iii) cause the Seller's officers to
furnish the Buyer with such historical financial and operating data and
other historical information with respect to the business of each of the
Company and its Subsidiaries as the Buyer may reasonably request; provided,
however, that any such access shall be conducted at a reasonable time and
in such a manner as not to interfere unreasonably with the operation of the
business of the Seller or any of its affiliates; provided, further, that
neither the Seller nor any of its affiliates shall be deemed to make any
representation or warranty as to such financial statements or other
information so provided.
(d) Seller shall, as promptly as practicable after the
end of each calendar month prior to the Closing, provide to Buyer the
Company's monthly management accounting package which shall include
consolidated balance sheets of the Company and related consolidated
statements of income and cash flows for such month, which shall be prepared
consistently with past practices.
(e) Seller shall use all reasonable efforts to deliver to
Buyer by March 31, 2002 (at Buyer's sole cost and expense) the audited
consolidated balance sheet of the Company as of December 31, 2001 and the
related audited consolidated statements of income and cash flows for the
year then ended; provided that in no event will the failure to deliver such
audited statements to Buyer be deemed to be a breach of this Agreement for
purposes of Section 5.3(b).
4.3. Reasonable Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable to fulfill the
conditions to the parties' obligations hereunder and to consummate and make
effective the transactions contemplated by this Agreement, including,
without limitation, making all required filings and applications and
complying with or responding to any requests by governmental agencies and
obtaining all consents, approvals, orders, waivers, licenses, permits and
authorizations required in connection with the transactions contemplated
hereby. If at any time after the Closing Date any further action is
necessary or desirable to carry out the purposes of this Agreement, the
parties hereto shall take or cause to be taken all such necessary action,
including, without limitation, the execution and delivery of such further
instruments and documents as may be reasonably requested by the other party
for such purposes or otherwise to consummate and make effective the
transactions contemplated hereby.
4.4. Public Announcements. The Seller and the Buyer will
consult with each other before issuing any press release or otherwise
making any public statements with respect to the transactions contemplated
by this Agreement, and shall not issue any such press release or make any
such public statement without the prior approval of the other party, except
as may be required by law or by obligations pursuant to any listing
agreement with any national securities exchange or automated quotation
system.
4.5. Employee Matters. (a) From and after the Closing
Date, the active employees of the Company and its Subsidiaries as of the
Closing Date (the "Employees") shall, for the two year period commencing on
the Closing Date, be provided with benefit plans or arrangements which, in
the aggregate, provide substantially comparable benefits (other than the
benefit plans and arrangements set forth in Section 4.5(a) of the
Disclosure Schedule) as were provided to the Employees immediately prior to
the Closing Date. For purposes of this Section 4.5, "active employees"
include, without limitation, employees of the Company who are on short-term
disability and on authorized leave of absence, and exclude employees who
are on long-term disability, terminated or retired. Such Employees shall
receive credit for past service with the Company and its predecessors or
affiliates for purposes of eligibility, vesting and vacation accrual under
any such benefit plans and arrangements, including, but not limited to,
satisfaction of any preexisting condition exclusion under any such plan
providing health care coverage, and shall also be given credit for amounts
expended prior to the Closing Date for purposes of deductibles or out of
pocket limitations applicable under such plans. Nothing in this Section
4.5(a) will require the Buyer or the Company or any of its Subsidiaries to
maintain any particular plan or arrangement in effect or to maintain the
employment of any Employee after the Closing.
(b) The Seller will take all actions necessary to provide
for the full vesting of all Employees' accounts as of the Closing Date
under the McLeodUSA Incorporated 401(k) Profit Sharing Plan. The Buyer
shall cause its 401(k) plan to accept a transfer of the existing plan loans
to Employees who elect to undertake a direct rollover of their account
balances under the Seller's 401(k) plan, and Seller shall reasonably
cooperate in effecting such transfers. The Seller will take all actions
necessary (i) to provide for the full vesting of the accrued benefits of
all Employees who are participants in the Illinois Consolidated Telephone
Company Retirement Income Plan for Hourly Employees (the "ICTC Plan") and
(ii) to treat service with Buyer or the Company or any Subsidiary after the
Closing as service with Seller or one of its Affiliates for purposes of
determining an Employee's date of retirement and eligibility for early
retirement benefits (including any subsidized early retirement benefits)
but not for purposes of accruing additional normal retirement benefits.
(c) The Buyer presently intends to adopt an equity-based
plan pursuant to which Buyer in its sole discretion may make grants of
equity based compensation to select senior executives of the Company and
its Subsidiaries.
(d) The Seller and the Buyer acknowledge that the Closing
of the Stock Purchase will constitute a termination of the employment of
each current Employee for purposes of Parent's equity-based plans and
arrangements and that, in accordance with the provisions of Parent's equity
plans and arrangements, such employees will have a maximum of 30 days
following the Closing in which to exercise any outstanding, vested Seller
stock options.
(e) The Seller shall indemnify and hold harmless the
Buyer and its affiliates, and their successors and assigns, from and
against any liability arising out of the Company or any of its Subsidiaries
being jointly and/or severally liable, on, before or after the Closing,
under Code Sections 412, 4971 or 4980, or ERISA Section 302 or Sections 601
through 609, or Title IV of ERISA, by reason of any of them being
considered to have been a member of a Controlled Group with the Seller or
any other member of Seller's Controlled Group.
(f) The Seller shall retain responsibility for and
continue to pay all medical, life insurance, disability and other welfare
plan expenses and benefits for all Employees and former employees of the
Company with respect to claims incurred by such employees or former
employees or their covered dependents on or prior to the Closing Date.
Expenses and benefits with respect to claims incurred by Employees and
their covered dependents after the Closing Date shall be the responsibility
of the Buyer. The Seller shall be responsible for all legally mandated
continuation of health care coverage for all former employees and their
covered dependents who participated in a plan maintained by Parent, the
Seller or any of their affiliates and who had or have a loss of health care
coverage due to a qualifying event (as defined under applicable law)
occurring as of or prior to the Closing Date.
(g) Seller agrees that (1) neither Buyer nor any of its
affiliates shall have any liability (A) with respect to that letter
agreement between Parent and Xxxxxx X. Xxxxxxxxxxxxxx dated September 20,
1996 providing for severance benefits under certain circumstances following
a change in control, (B) with respect to that employment agreement between
McLeodUSA Publishing Company and Xxxxx X. Xxxxxx dated January 1, 1991, as
amended, providing for severance benefits under certain circumstances
following a change in control, (C) arising out of or relating to the ICTC
Plan, the Illinois Consolidated Retirement Income Plan for Salaried and
Affiliated Employees, Parent's equity-based plans, the termination of any
of such plans or the termination or waiver of the participation of any
employees or former employees of the Company or any of its affiliates in
either such plans, or (D) with respect to the McLeodUSA Incorporated
Deferred Compensation Plan for Certain Employees and (2) Seller shall
indemnify and hold harmless Buyer and its affiliates against all Damages
(as defined in Section 7.2) that relate to, arise out of, or are the result
of any of the foregoing.
4.6. Tax Matters.
(a) (i) For all Pre-Closing Periods for which the Company
or any of its Subsidiaries is required or eligible to do so, the Company or
any such Subsidiary shall join in all consolidated, combined or unitary
federal, state or local income Tax or franchise Tax Returns of Parent (or
any Tax Affiliate) ("Parent Tax Returns"), and, in each jurisdiction where
this is required or permissible under applicable law, the taxable year of
the Company and each of its Subsidiaries shall be terminated as of the
Closing Date. Parent and the Seller shall prepare or cause to be prepared
and timely filed all such Parent Tax Returns. Without duplication of
Section 4.6(b), Parent or Seller shall timely pay all Taxes shown to be due
on such Tax Returns.
(ii) The Seller shall prepare or cause to be
prepared and the Buyer shall timely file all income Tax Returns of the
Company and its Subsidiaries for all Pre-Closing Periods (other than those
Tax Returns referred to in Section 4.6(a)(i)), which Tax Returns have not
been filed as of the Closing Date. Without duplication of Section 4.6(b),
Parent or Seller shall pay all Taxes due with respect to such Tax Returns.
(iii) The Buyer shall prepare or cause to be
prepared and file all Tax Returns (including Tax Returns with respect to
all Straddle Periods) with respect to the Company and the Subsidiaries for
which the Seller or Parent does not have filing responsibility pursuant to
Section 4.6(a)(i) or (ii). Upon timely written notice from the Buyer, no
later than ten days prior to the due date for the filing of each Tax Return
for a Straddle Period, the Seller shall pay to the Company the amount of
Taxes shown as due thereon that is attributable to the pre-closing portion
of such Straddle Period determined in accordance with Section 4.6(a)(vi)
minus any amount accrued or reserved for such Taxes in Net Working Capital.
(iv) In connection with the preparation of all
Tax Returns referred to in this Section 4.6(a), Parent and the Seller, on
the one hand, and the Buyer and the Company, on the other hand, shall each
fully cooperate with the other and provide such timely assistance to the
other as may be reasonably requested.
(v) The Tax Returns referred to in Section
4.6(a)(i), (ii) and the Straddle Period Tax Returns referred to in Section
4.6(a)(iii) shall be prepared in a manner consistent with past practice,
unless a contrary treatment is required by applicable law. The Seller shall
cause any Tax Return that is required to be filed under Section 4.6(a)(i)
or (ii), and the Buyer shall cause any Tax Returns for a Straddle Period
that is required to be filed by the Buyer under Section 4.6(a)(iii), to be
made available to the other party for its review and approval no later than
20 days prior to the due date for the filing of such Tax Return (taking
into account proper extensions); such approval shall not be unreasonably
withheld or delayed and shall not be required where such Tax Returns have
been prepared in accordance with past practice (including without
limitation, as to accounting methods and methods of measuring sales,
income, property values or other relevant items), or a contrary treatment
is required by applicable law.
(vi) For purposes of this Agreement, (A) the
amount of Taxes attributable to the pre-closing portion of a Straddle
Period shall be determined based on an interim closing of the books as of
the close of the Closing Date, except that the amount of any such Taxes
that are imposed on a periodic basis shall be determined by reference to
the relative number of days in the pre-closing and post-closing portions of
such Straddle Period; and (B) the taxable year of any partnership or other
pass- through entity in which the Company is partner or other beneficial
interest holder shall be deemed to terminate on the Closing Date.
(b) (i) Without duplication, Parent and the
Seller shall, jointly and severally, be responsible for and indemnify,
defend and hold the Buyer, the Company and its Subsidiaries harmless from
and against any and all Taxes and other Damages, as incurred, to the extent
they consist of, relate to, arise out of or are the result of (A) Taxes of
or attributable to the Company or any of its Subsidiaries with respect to
all Pre-Closing Periods; (B) Taxes of or attributable to the Company or any
of its Subsidiaries with respect to the pre-closing portion of any Straddle
Period; (C) Taxes payable by the Company or any of its Subsidiaries with
respect to any Pre-Closing Period or any Straddle Period by reason of the
Company or one of its Subsidiaries being severally liable for the Tax of
any Tax Affiliate pursuant to Treasury Regulation Section 1.1502-6 or any
analogous state or local Tax law; (D) any amount required to be paid by the
Company or any of its Subsidiaries under an indemnification agreement
(other than this Agreement) or on a transferee liability theory, in respect
of any Taxes of any Person, which indemnification agreement or application
of transferee liability theory relates to an acquisition, disposition or
similar transaction occurring on or prior to the Closing Date; (E) to the
extent not included in the other clauses of this Section 4.6(b)(i), by
reason of the breach by Seller or Parent or any of their affiliates of any
representation, warranty, covenant or agreement contained in Section 2.21
or Section 4.6 of this Agreement (without duplication); (F) any Taxes of
the Company or any Subsidiary with respect to Post-Closing Periods or the
post- closing portion of a Straddle Period resulting from (i.e., that would
not have been incurred in that period but for) any adjustments pursuant to
Section 481(a) of the Code with respect to Pre-Closing Periods or the
pre-closing portion of a Straddle Period; and (G) receipt of any payments
pursuant to this Section 4.6(b)(i); provided, however, that Seller or
Parent shall be required to indemnify the Buyer pursuant to this Section
4.6(b)(i) only if and to the extent that the amount of such Tax or such
other Damages exceeds the sum of (y) the aggregate amount previously
reimbursed to the Buyer, the Company and its Subsidiaries by the Seller for
such Tax pursuant to Section 4.6(a) and (z) in the case of a Tax other than
an income Tax, the amounts accrued for or reserved for Taxes in computing
Net Working Capital.
(ii) Without duplication, the Buyer shall be
responsible for and indemnify, defend and hold Parent and the Seller
harmless from and against any and all Taxes and other Damages, as incurred,
to the extent they consist of, relate to, arise out of or are the result of
(A) Taxes of or attributable to the Company or any of its Subsidiaries with
respect to all Post-Closing Periods; (B) Taxes of or attributable to the
Company or any of its Subsidiaries with respect to the post-closing portion
of any Straddle Period; (C) any liability for Taxes attributable to breach
by the Buyer or any of its affiliates (other than the Company or any of its
Subsidiaries in the Pre-Closing Period or the pre-closing portion of the
Straddle Period) of any warranty, covenant or agreement relating to Taxes
under Section 4.6 of this Agreement; (D) any liability for Taxes of or
attributable to the Company or any of its Subsidiaries resulting from an
action (other than an action taken by Parent or Seller or any of their
affiliates) of or with respect to the Company or any of its Subsidiaries
after the Closing on the Closing Date which is not (y) in the ordinary
course of business or (z) an action contemplated by this Agreement or in
connection with the Restructuring; and (E) receipt of any payments pursuant
to this Section 4.6(b)(ii); provided, however, that in the case of clause
(A) or (B), Buyer shall not be responsible for Taxes or other Damages
pursuant to this Section 4.6(b)(ii) to the extent that Parent or the Seller
is responsible for such Taxes pursuant to Section 4.6(b)(i).
(iii) Any payment required to be made pursuant to
this Section 4.6(b) shall be made promptly, but in no event later than 10
days, after written request therefor, which request shall set forth in
reasonable detail the basis for calculating the amount requested.
(iv) In the event that any Person has been
indemnified for any Tax pursuant to this Section 4.6(b) and the payment or
accrual of such Tax results in a deduction which in turn results in an
actual reduction in the Tax liability of the indemnified Person or any
affiliate thereof for any Tax period, then (without duplication for any
such reduction otherwise taken into account) the indemnified Person will
pay to the indemnifying party the amount of such reduction in Tax liability
at the time such Person actually realizes such reduction in Tax liability
through receipt of a refund of Tax or a credit against Tax liability then
due and payable. For purposes of this paragraph, a payment or accrual of a
Tax liability results in an actual reduction in Person's Tax liability with
respect to a Tax period, only to the extent that the amount of such
Person's Tax liability with respect to such period, taking into account
such accrual or payment, is less than the amount of such liability
determined without regard to such payment or accrual. To the extent
permitted by applicable law, the parties agree to treat all indemnity
payments made pursuant to this Agreement, and all other payments under this
Section 4.6, as adjustments to the Purchase Price or as capital
contributions to the Company, as appropriate, for all income Tax purposes.
(c) (i) Each of Parent and the Seller, on the one hand,
and the Buyer and the Company and its Subsidiaries, on the other hand,
shall notify the other party in writing within 15 days of receipt of
written notice of any pending or threatened examination, audit or other
administrative or judicial proceeding relating to any Tax (a "Tax Audit")
that could reasonably be expected to result in an indemnification
obligation under this Agreement of such other party pursuant to this
Agreement. If the recipient of such notice of a Tax Audit fails to provide
such notice to the other party it shall not be entitled to indemnification
for any Taxes arising in connection with such Tax Audit, but only to the
extent, if any, that such failure shall have adversely affected the
indemnifying party's ability to defend against, settle, or satisfy any
action, suit, or proceeding against it, or any damage, loss, claim, or
demand for which the indemnified party is entitled to indemnification
hereunder.
(ii) If a Tax Audit relates to any Pre-Closing
Period or to any Taxes for which the Seller is or may be liable hereunder,
the Seller shall at its expense control the proceeding, defense and
settlement of such Tax Audit to the extent it relates to such Taxes. If
such Tax Audit relates to any Post-Closing Period or to any Taxes for which
the Buyer is or may be liable hereunder, the Buyer shall at its expense
control the defense and settlement of such Tax Audit to the extent that it
relates to such Taxes. The party not in control of the defense shall have
the right to observe the conduct of any Tax Audit at its own expense,
including through its own counsel and other professional experts. The Buyer
and the Seller (or Parent) shall jointly represent the Company or any
relevant Subsidiary in any Tax Audit relating to a Straddle Period, and
fees and expenses related to such representation shall be paid equally by
the Buyer and the Seller.
(iii) Notwithstanding Section 4.6(c)(ii), to the
extent that an issue raised in any Tax Audit controlled by one party or
jointly controlled could materially affect the liability for Taxes of the
other party, the controlling party shall not, and neither party in the case
of joint control shall, enter into a settlement without the consent of the
other, which consent shall not be unreasonably withheld or delayed. Where a
party withholds its consent to any final settlement, that party may
continue or initiate further proceedings, at its own expense, and the
liability of the party that wished to settle (as between the consenting and
the non-consenting party) shall not exceed the liability that would have
resulted from the proposed final settlement (including interest, additions
to tax and penalties that have accrued at that time), and the
non-consenting party shall indemnify the consenting party for any such
excess.
(d) Any refunds or credits of Taxes (i) of the Company or
any of its Subsidiaries plus any interest received with respect thereto for
any Pre-Closing Period (to the extent not included in the calculation of
Net Working Capital) or (ii) for which Parent or the Seller is otherwise
liable pursuant to Section 4.6(b), shall, in each such case, be for the
account of the Seller and shall be paid by the Buyer or the Company to the
Seller within ten days after such refund is received or after the relevant
Tax Return is filed in which the credit is applied against the Buyer's, the
Company's or the relevant Subsidiary's liability for Taxes for the
Post-Closing Period, net of any Taxes the Buyer, the Company or the
relevant Subsidiary is required to pay on account of the receipt of such
refund or credit, taking into account the deductibility of such payments to
the Seller or Parent. The Seller shall not apply for any refund that will
have an adverse effect on any Post-Closing Period Tax Return or the
post-closing portion of a Straddle Period Tax Return without the consent of
the Buyer, which consent will not be unreasonably withheld or delayed (it
being understood that it would be unreasonable for the Buyer to withhold
consent if Seller or Parent agrees to fully indemnify Buyer for such
adverse effect). Any refunds or credits of Taxes of the Company and its
Subsidiaries for any Straddle Period shall be apportioned between the
Seller and the Buyer in the same manner as the liability for such Taxes is
apportioned pursuant to Section 4.6(a)(vi).
(e) Parent and the Seller, on the one hand, and the
Buyer, on the other hand, shall and shall cause their respective affiliates
to provide the other party with such assistance and documents as may be
reasonably requested by such party in connection with (i) the preparation
of any Tax Returns of the Company or its Subsidiaries, (ii) the conduct of
any Tax Audit relating to liability for or refunds or adjustments with
respect to Taxes, and (iii) any other matter related to Taxes that is a
subject of this Agreement. Such cooperation shall be provided to the
requesting party promptly upon its request. Such cooperation and assistance
shall include, without limitation, providing all information, records and
other documents relating to Taxes with respect to the Pre-Closing Periods
and Straddle Periods, preserving all such information until after the
expiration of any applicable statute of limitations (including extensions),
executing and delivering powers of attorney and making employees available
to provide additional information or explanation of any material provided
hereunder or to testify at proceedings relating to any Tax Audit.
(f) Any Tax sharing Contract between the Company or any
of its Subsidiaries and any other Person for any period that ends on or
prior to the Closing Date shall be terminated as to the Company or such
Subsidiary on, and effective as of, the Closing Date, and no Person shall
have any rights or obligations with respect to the Company or such
Subsidiary under such Tax sharing Contract after such termination, and no
such rights or obligations shall be included in computing Net Working
Capital.
(g) At the Parent's or the Seller's request, the Buyer
will, and will cause the Company and any of the Buyer's other Subsidiaries
to, timely make and/or join with Parent in making an election under
Treasury Regulations Section 1.1502-20(g) after the Closing to reattribute
the operating loss carryovers and net capital loss carryovers of the
Company and its Subsidiaries to the Parent. The Buyer will, and will cause
the Company and its Subsidiaries to, take all actions required of the
Buyer, the Company and any of its Subsidiaries by Treasury Regulations
Section 1.1502-20(g) so that such election may be properly made and
preserved.
(h) Notwithstanding anything to the contrary in this
Agreement, (i) the representations and warranties contained in Section 2.21
and the covenants of the parties contained in this Section 4.6 shall
survive the Closing until the date 90 days after the expiration of the
applicable statute of limitations (including extensions) and (ii) the
provisions of this Section 4.6 shall be the sole and exclusive remedy for
any dispute between the parties with respect to Taxes and Damages that may
be suffered or incurred by them in respect of, or relating to, directly or
indirectly thereto. The provisions of Article VII, other than Section 7.7,
shall not apply to matters relating to Taxes.
(i) For purposes of this Agreement:
"Pre-Closing Period" means any taxable period ending on
or prior to the Closing Date.
"Post-Closing Period" means any taxable period beginning
on or after the day following the Closing Date.
"Straddle Period" means any taxable period that begins
before and ends after the Closing Date.
"Tax Affiliate" means any entity that is a member of an
affiliated group of corporations (within the meaning of Section 1504(a) of
the Code) filing a consolidated U.S. federal income Tax Return, or a group
of corporations filing or required to file a consolidated or combined Tax
Return for state, local or foreign Tax purposes (each, a "Consolidated
Group"), if the Company or any of its Subsidiaries could be held liable for
the Taxes of such entity or of such Consolidated Group.
"Tax" or "Taxes" means any and all taxes, charges, fees,
levies or other assessments, including, without limitation, income, gross
receipts, excise, real or personal property, sales, withholding, social
security, retirement, unemployment, occupation, use, service, net worth,
payroll, franchise, license, gains, customs, transfer and recording taxes,
imposed by any taxing authority, and shall include any interest, penalties
or additions to tax.
4.7. Pre-Closing Insurance. With respect to any insurance
policy outstanding prior to the Closing insuring the Company or any of its
Subsidiaries or any aspect thereof, under the terms of which policy an
affiliate of the Company, rather than the Company, is required to file
claims, the Seller shall cause such affiliate to file promptly and
prosecute diligently such claims. To the extent, if any, that any of the
Seller or any of its affiliates receive payment in respect of any such
claim, the Seller shall pay over (or cause such affiliate to pay over) such
amounts to the Company at or after the Closing. The Seller shall procure at
the Buyer's expense (i) directors and officer insurance covering directors
and officers of the Company and its Subsidiaries for pre-closing matters
and (ii) professional liability coverage and employment practices liability
coverage for pre-closing matters.
4.8. Related Agreements. At the Closing, the parties
hereto shall, and shall cause each of their affiliates to, execute and
deliver the Publishing, Branding and Operating Agreement substantially in
the form of Exhibit B (the "Operating Agreement"), the Telecom Agreement
substantially in the form of Exhibit C attached hereto (the "Telecom
Agreement") and the Transition Services Agreement substantially in the form
of Exhibit D attached hereto (the "Transition Services Agreement").
4.9. Right of First Negotiation.
(a) If, at any time within 24 months following
the Closing Date, (i) Buyer determines that it desires to engage in a Sale
Transaction (other than a result of or in response to an unsolicited bona
fide offer to engage in a Sale Transaction) and (ii) at the time of such
determination, all or substantially all of the assets and business of the
Company continue to be held and operated by the Buyer as a stand-alone
operation and not integrated with the businesses or assets owned or
operated prior to the Closing by Yell Group Ltd. or any of its
Subsidiaries, then prior to engaging in any negotiations with any third
party for a Sale Transaction with such third party, the Buyer will deliver
written notice (the "Sale Transaction Determination Notice") to the Seller
of such determination. If, within five business days following the date of
delivery of the Sale Transaction Determination Notice, the Seller delivers
written notice to the Buyer that the Seller desires to negotiate with the
Buyer regarding a possible Sale Transaction, then the Buyer and the Seller
agree to promptly make available their appropriate representatives to
engage in such negotiations. In such event, the Buyer will not, for a
period of ten business days following the date of delivery of the notice
from Seller described in the immediately preceding sentence (the "Exclusive
Negotiation Period"), engage in any negotiations with any third party for a
Sale Transaction.
(b) Notwithstanding the provisions of Section
4.9(a), (i) neither the Buyer nor the Seller is obligated to agree to or
enter into any Sale Transaction with the other party and (ii) the Buyer
will not be prohibited from agreeing to or entering into a Sale Transaction
with a third party following the expiration of the Exclusive Negotiation
Period, regardless of whether the terms of such Sale Transaction with such
third party are more favorable to the Buyer, less favorable to the Buyer or
the same as any terms offered by the Seller or discussed by the Buyer and
the Seller during the Exclusive Negotiation Period.
(c) For purposes of this Section 4.9, a "Sale
Transaction" is (i) any sale (whether in one or a series of related
transactions) of all or substantially all of the assets of the Company and
its Subsidiaries, taken as a whole, other than any such sale to an Excluded
Purchaser (as defined below), (ii) any sale of 50% or more of the capital
stock of the Company, other than any such sale to an Excluded Purchaser or
(iii) any merger, consolidation or similar transaction (other than a
transaction that also involves other businesses owned or operated by Yell
Group Ltd. or any of its Subsidiaries) that results in any Person or group
of affiliated persons (other than any Excluded Purchaser) owning a majority
of the capital stock of the Company or substantially all of the assets of
the Company and its Subsidiaries, taken as a whole; provided, however, that
neither a public offering of capital stock of the Company nor any
transaction occurring at any time following any such public offering shall
constitute a Sale Transaction. For purposes of this Section 4.9, an
"Excluded Purchaser" means (A) Yell Group Ltd., (B) any Subsidiary of Yell
Group Ltd., or (C) any direct or indirect holder of more than 25% of the
equity interest of Yell Group Ltd. (or any entity under the direct or
indirect control of any such holder).
4.10. Cedar Rapids Facility. The Buyer agrees that it
will, for a period of at least two years after the Closing Date, maintain a
major employment center in Cedar Rapids, Iowa.
4.11. Intercompany Indebtedness; Net Working Capital. (a)
Immediately prior to the Closing, Seller shall cause to be contributed to
the Company as a capital contribution in respect of capital stock, all
indebtedness owed by the Company or its Subsidiaries to Seller or any
affiliate of Seller (other than the Company and its Subsidiaries).
(b) Except as set forth in Section 4.11 of the Disclosure
Schedule, the Seller shall cause the Net Working Capital of the Company and
its Subsidiaries as of the Closing Date to be an amount not less than the
amount set forth in Section 4.11 of the Disclosure Schedule.
"Net Working Capital" shall mean the amount obtained by
subtracting the Current Liabilities from the Current Assets, in each case
as of the close of business on the day immediately preceding the Closing.
"Current Assets" shall mean the sum of (v) deferred
expenses, (w) cash and cash equivalents (but not including any proceeds
from the sale of the property located at 1200 Network Centre Drive,
Effingham, IL 62401), (x) accounts receivable, billed and unbilled, of the
Company and its Subsidiaries, net of allowance for bad debts and other
adjustments, (y) other receivables, and (z) prepaid expenses, in each case
determined in accordance with GAAP on a consistent basis with the December
Balance Sheets and using consistent classifications; but excluding (i) any
intercompany accounts and (ii) any income tax asset.
"Current Liabilities" shall mean the sum of (w) accounts
payable of the Company and its Subsidiaries (including any outstanding
checks), (x) accrued expenses, (y) an amount for Earn-Out Obligations (as
defined below) equal to the aggregate amount of the Earn-Out Obligations
reflected on the September 30 Balance Sheet, and (z) deposits, determined,
except in the case of the Earn-Out Obligations, in accordance with GAAP on
a consistent basis with the December Balance Sheets and using consistent
classifications, but excluding (i) any intercompany accounts, (ii) any
income tax liability or (iii) the current maturities of other long term
debt.
"Earn-Out Obligations" mean any reserves, liabilities or
similar items recorded in connection with purchase accounting under APB
Opinion No. 16, including, without limitation, contingent payment amounts.
In determining the amount of accounts receivable, billed
and unbilled, accounts receivable recorded in the month which includes the
Closing Date (the "Closing Date Month") shall be equal to the amount
determined by multiplying the revenue from such sales recorded in the
Closing Date Month which give rise to accounts receivable by a fraction the
numerator of which is the number of calendar days from the beginning of the
Closing Date Month until the Closing Date and the denominator of which is
the number of calendar days in the Closing Date Month; appropriate
adjustment shall be made for the collection prior to the Closing Date of
accounts receivable that originated in the Closing Date Month and for the
related allowance for bad debts and adjustments. Net Working Capital shall
be determined as if the day preceding the Closing Date were a normal year
end. For purposes of determining Net Working Capital, the amount of Taxes
accrued or reserved for shall be equal to (i) the amount accrued as a
current liability on the September 30 Balance Sheet for Taxes (other than
income Taxes) payable in respect of periods ended on or prior to September
30, 2001, less any amount paid in respect of such Taxes after September 30,
2001 and prior to the Closing Date, plus (ii) the amount that would be
accrued as a current liability on a balance sheet prepared as of the day
immediately prior to the Closing Date in accordance with GAAP consistent
with past practices to reflect Taxes (other than income Taxes) payable in
respect of ordinary course of business operations conducted during the
period commencing October 1, 2001 and ending on the day immediately prior
to the Closing. For avoidance of doubt, under no circumstances shall the
amount described in clause (ii) above include any accrual for Taxes that
are attributable to any period prior to October 1, 2001.
The parties agree that the sole and exclusive remedy for
disputes arising under this Section 4.11 shall be to submit such disputes
for resolution to an independent accounting firm to which the parties may
mutually agree, or failing such agreement, to a firm or a partner at a firm
appointed at the request of any party by the American Arbitration
Association (the "Arbiter"). All proceedings conducted by the Arbiter shall
take place in New York, New York. The Arbiter shall act as an arbitrator to
determine, based solely on the presentations by the Seller and the Buyer,
and not by independent review, whether the Net Working Capital as of the
Closing Date was calculated in the manner provided in this Section 4.11.
The fees, costs and expenses of the Arbiter shall be borne equally by the
Seller and the Buyer. The determination of the Arbiter shall be final and
binding upon the parties.
4.12. Bankruptcy Matters. The Buyer hereby agrees that if
proceedings are commenced under the Bankruptcy Code by or against Parent
and/or its Subsidiaries (including the Company and its Subsidiaries) and
the Closing of the transactions contemplated hereby is subject to approval
under Section 363 or 1129, as the case my be, of the Bankruptcy Code,
neither the requirement for such approval process nor the actions required
to be taken by such process shall constitute a breach of this Agreement and
Buyer shall not be released from its obligations hereunder as a result
thereof. Buyer agrees that if proceedings are commenced under the
Bankruptcy Code by or against the Company or any of its Subsidiaries, the
transactions contemplated hereunder shall be effected under Section 363 of
the Bankruptcy Code.
4.13. Leases and Other Obligations. From and after the
date hereof, Buyer shall cooperate with Seller and use all reasonable
efforts to cause the leasing arrangements and other obligations set forth
on Section 4.13(a) of the Disclosure Schedule to be assigned or otherwise
transferred to the Company and to cause Seller and any of its affiliates
(other than the Company and its Subsidiaries) to be released from any and
all obligations thereunder prior to the Closing Date. In the event such
transfer and release do not occur prior to the Closing, Buyer shall
indemnify Seller and its affiliates and hold Seller and its affiliates
harmless from and against any and all Damages that Seller or any of its
affiliates may incur with respect to such leasing arrangements and other
obligations from and after the Closing, provided, however, that such
damages shall not include any damages to the extent they relate to, arise
out of or are the result of any breach by Seller or any of its affiliates
of, or any other wrongful act or failure to act by, any of them with
respect to any of the foregoing leasing arrangements and other obligations.
Seller shall assign or cause to be assigned to the Company the rights or
assets listed on Section 4.13(b) of the Disclosure Schedule at Seller's
sole cost and expense. To the extent that any of the rights or assets
listed on Sections 4.13(b) or 4.13(c) of the Disclosure Schedule cannot be
assigned or otherwise transferred to the Company, Seller shall use
reasonable efforts to provide the Company with the benefits of such rights
or assets as if such rights or assets had been assigned to the Company,
and, to the extent to such benefits are provided, Buyer shall perform any
obligations required to be performed by Seller or any of its affiliates in
connection with such rights or assets to the same extent that would
otherwise be required of Seller or any or its affiliates.
4.14. Real Property. The Seller and the Buyer agree to
enter into a real estate transfer agreement providing for the transfer of
the fee interest in the buildings and real estate (including parking
spaces) specified in Section 4.14 of the Disclosure Schedule. Such
agreement will provide for appropriate easements and right-of-ways in favor
of the Seller and the Buyer, as the case may be, to allow for the continued
use of such buildings and real estate in a manner consistent with current
practice. In addition, the parties will enter into a maintenance and care
agreement providing for the equitable allocation of grounds keeping, snow
removal and other costs.
The Seller and the Buyer shall share equally the costs of
(a) real estate transfer Taxes required by the State of Iowa or the County
of Linn, (b) document recording fees, (c) formal subdivision (excluding any
survey) of such buildings and real estate, if and to the extent required by
applicable law, and (d) if title insurance is requested by the Buyer, an
ALTA standard form of owner's title insurance. If the Buyer desires (a)
extended title coverage (insuring over the five standard exceptions to
title), (b) title endorsements, or (c) a survey, the Buyer shall promptly
obtain the same at its sole cost and expense.
4.15. HSR Act. Each party will make an appropriate filing
of a notification and report form pursuant to the HSR Act with respect to
the transactions contemplated hereby on the next business day after the
date hereof and shall supply promptly any additional information and
documentary material that may be requested pursuant to the HSR Act. In
addition, each party shall promptly make any other filing that may be
required under any other antitrust law or by any antitrust authority. All
such filings shall comply in all material respects with the requirements of
the respective laws or regulations pursuant to which they are filed. Each
party hereto shall promptly inform the other of any communication from any
antitrust authorities regarding any of the transactions contemplated by
this Agreement. If any party or affiliate thereof receives a request for
additional information or documentary material from any such authority with
respect to the transactions contemplated by this Agreement, then such party
will use its reasonable efforts to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other party, an
appropriate response in compliance with such request. Each party shall bear
its respective filing fees associated with the HSR Act filings.
Notwithstanding anything else contained herein, neither Buyer nor its
affiliates shall be required to (i) divest any assets or discontinue or
modify any of its operations or (ii) accept or become subject to any
condition or requirement unacceptable to Buyer in its sole discretion. No
party shall withdraw any such filing or submission prior to the termination
of this Agreement without the written consent of the other party.
4.16. Approval of Termination Amount. If proceedings
under the Bankruptcy Code are commenced by or against the Seller, the
Company and/or any of its Subsidiaries, then Seller shall file or cause to
be filed a motion with the United States bankruptcy court having
jurisdiction over such case for approval of the termination amounts set
forth in Sections 6.2(b) and 6.2(c) within 7 business days after the
commencement of such case (or if such case is an involuntary bankruptcy
case, then within 7 business days after entry of a Chapter 11 order for
relief).
4.17. No Solicitation. Except to the extent required in
connection with the proceedings under the Bankruptcy Code by or against the
Parent and its Subsidiaries (including the Company and its Subsidiaries),
if commenced:
The Seller will immediately cease any and all existing
activities, discussions or negotiations with any parties with respect to an
Acquisition Proposal. From and after the date of this Agreement until the
Closing Date or the earlier termination of this Agreement in accordance
with its terms, the Seller will not, and will not permit any of its
Subsidiaries or its or their respective directors, officers, investment
bankers, affiliates, representatives and agents to, (i) solicit, initiate,
or knowingly encourage (including by way of furnishing unsolicited
information), any inquiries or proposals that constitute, or could
reasonably be expected to lead to, an Acquisition Proposal or (ii) engage
in, or enter into, any negotiations or discussions concerning, or provide
any confidential information to facilitate any Acquisition Proposal.
Notwithstanding the foregoing, nothing in this agreement shall prohibit the
Seller from (i) furnishing information concerning the Company and its
Subsidiaries to any Person submitting an Acquisition Proposal and (ii)
negotiating and participating in discussions and negotiations with such
Person concerning an Acquisition Proposal, if Seller concludes in good
faith that such Acquisition Proposal is or may reasonably be expected to
lead to a Superior Proposal; provided however, that the Seller may take any
action described in clause (i) or (ii) of this sentence only if prior to
taking such action, the Seller (x) provides two business days' prior notice
to the Buyer to the effect that it is taking such action and (y) receives
from the Person making such Acquisition Proposal an executed
confidentiality agreement in reasonably customary form. To the extent that
the Seller, under the provisions hereof, is permitted to engage and does
engage in negotiations or discussions with any Person concerning any
Acquisition Proposal, the Seller shall inform the Buyer on a prompt basis
of the status of any such negotiations or discussions (including without
limitation, informing Buyer of the material terms and conditions of such
Acquisition Proposal and the identity of the Person making such Acquisition
Proposal and providing Buyer with a copy of any written Acquisition
Proposal or amendments or supplements thereto) and shall promptly give to
the Buyer a copy of any information delivered to such Person which has not
previously been delivered to the Buyer. For purposes of this Agreement, the
term "Acquisition Proposal" shall mean any unsolicited bona fide proposal
or offer from a third Person or Persons relating to any sale of all or
substantially all or the assets of the Company and its Subsidiaries, taken
as a whole, or 50% or more of the capital stock of the Company, in a single
transaction or series of related transactions; provided, however, that the
term "Acquisition Proposal" shall not include the Stock Purchase and the
transactions contemplated thereby. For purposes of this Agreement,
"Superior Proposal" means an Acquisition Proposal (A) not solicited in
violation of the first sentence of this Section 4.17, (B) that does not
include any financing condition, (C) that includes definitive documentation
with substantially similar terms to this Agreement and the agreements
executed in connection herewith and (D) which the Board of Directors of the
Seller determines in good faith (after consulting with its outside
financial advisor and taking into account all the terms and conditions of
the Acquisition Proposal, which terms and conditions shall include all
legal, financial, regulatory and other aspects of the proposal) is more
favorable from a financial point of view.
4.18. Assumption of Contracts. If the Company and/or its
Subsidiaries have commenced proceedings under the Bankruptcy Code prior to
the Closing, then, at Closing and pursuant to Section 365 of the Bankruptcy
Code, the Company or its Subsidiaries, as applicable, shall assume (to the
extent assumable under Section 365) all Contracts of the Company and its
Subsidiaries.
4.19. Solvency. If a proceedings under the Bankruptcy
Code by or against the Seller and/or the Company are not pending, then
Seller shall deliver to Buyer, at the Closing, either (i) an opinion of a
financial advisor that the consideration that Seller is entitled to receive
pursuant to this Agreement is within a reasonable fair value of the Company
and its Subsidiaries or (ii) an opinion of a financial advisor that after
consummating the transactions contemplated by this Agreement, Seller will
not be insolvent in accordance with Seller's representation contained in
Section 2.23.
ARTICLE V
CONDITIONS TO CONSUMMATION OF THE STOCK PURCHASE
5.1. Conditions to Each Party's Obligations to Consummate
the Stock Purchase. The respective obligations of each party to consummate
the Stock Purchase is subject to the satisfaction of the following
conditions:
(a) no statute, rule, regulation, executive order,
decree, or injunction shall have been enacted, entered, promulgated or
enforced by any court or governmental entity which prohibits or restricts
the consummation of the Stock Purchase;
(b) all consents, approvals, orders and Permits of, and
registrations, declarations and filings with, any governmental authority
that shall be legally required in order to enable the Seller and the Buyer
to consummate the transactions contemplated hereby shall have been made or
obtained, and any waiting period applicable to the Stock Purchase under the
HSR Act shall have terminated or expired;
(c) if proceedings under the Bankruptcy Code have been
commenced by or against Parent and are pending, the bankruptcy court having
jurisdiction over such proceedings shall have entered an order confirming a
plan of reorganization that contemplates (i) the consummation of the
transactions contemplated by this Agreement and (ii) the assumption by
Parent of this Agreement or otherwise approves such transactions, and such
order shall not have been stayed prior to 11 days after the entry of such
order on the docket; and
(d) if proceedings under the Bankruptcy Code have been
commenced by or against the Seller, the Company and/or its Subsidiaries and
are pending, the bankruptcy court having jurisdiction over such proceedings
shall have entered an order approving this Agreement and the transactions
contemplated hereunder under Section 363 or 1129 of the Bankruptcy Code and
confirming the good faith purchaser status of Buyer, and such order shall
not have been stayed prior to 11 days after the entry of such order on the
docket.
5.2. Further Conditions to the Seller's Obligations. The
obligations of the Seller to consummate the Stock Purchase are further
subject to satisfaction or waiver of the following conditions:
(a) the representations and warranties of the Buyer
contained herein shall be true and correct as of the Closing Date as if
made at and as of such date (other than those representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and accurate
as of such date or with respect to such period), except where the failure
of such representations and warranties to be so true and accurate (without
giving effect to any limitation as to "materiality" or "Buyer Material
Adverse Effect" set forth therein) would not, individually or in the
aggregate, have a Buyer Material Adverse Effect;
(b) the Buyer shall have performed and complied in all
material respects with all agreements, obligations, covenants and
conditions required by this Agreement to be performed or complied with by
it on or prior to the Closing;
(c) the Seller shall have received a certificate of an
authorized officer of the Buyer to the effect that the conditions in
paragraphs (a) and (b) of this Section 5.2 have been satisfied;
(d) all conditions precedent to the consummation of the
Restructuring shall have been satisfied and the Restructuring shall be
occurring simultaneously with the Closing with such modifications in the
terms of the Restructuring that do not materially deviate from the terms
set forth on Exhibit A; and
(e) all corporate actions, proceedings, instruments and
documents of the Buyer required to carry out the transactions contemplated
by this Agreement or incidental thereto and all other related legal matters
shall be reasonably satisfactory to counsel for the Seller, and such
counsel shall have been furnished with such certified copies of such
corporate actions and proceedings and such other instruments and documents
as it shall have reasonably requested.
5.3. Further Conditions to the Buyer's Obligations. The
obligation of the Buyer to consummate the Stock Purchase are further
subject to the satisfaction or waiver of the following conditions:
(a) the representations and warranties of the Seller
contained herein shall be true and correct as of the Closing Date as if
made at and as of such date (other than those representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and accurate
as of such date or with respect to such period), except where the failure
of such representations and warranties to be so true and accurate (without
giving effect to any limitation as to "materiality" or "Company Material
Adverse Effect" set forth therein) would not, individually or in the
aggregate, have a Company Material Adverse Effect (with the effects of any
inaccuracy of the representation and warranty contained in Section
2.13(b)(ii) being determined without regard to clause (ii) of the proviso
contained in the definition of "Company Material Adverse Effect");
(b) the Seller shall have performed and complied in all
material respects with all agreements, obligations, covenants and
conditions required by this Agreement to be performed or complied with by
it on or prior to the Closing;
(c) the Buyer shall have received a certificate of an
authorized officer of the Seller to the effect that the conditions in
paragraphs (a) and (b) of this Section 5.3 have been satisfied;
(d) no Company Material Adverse Effect shall have
occurred since the date hereof; and
(e) all actions, proceedings, instruments and documents
of the Seller required to carry out the transactions contemplated by this
Agreement or incidental thereto and all other related legal matters shall
be reasonably satisfactory to counsel for the Buyer, and such counsel shall
have been furnished with such certified copies of such actions and
proceedings and such other instruments and documents as it shall have
reasonably requested.
ARTICLE VI
TERMINATION AND ABANDONMENT
6.1. Termination. This Agreement may be terminated at any
time prior to the Closing Date:
(a) by mutual written consent of the Seller and the
Buyer;
(b) by the Seller or the Buyer at any time after August
1, 2002 if the Closing shall not have occurred by such date; provided,
however, that the failure of the transactions contemplated hereby to occur
on or before such date is not the result of the breach of any covenants or
agreements contained herein by the party seeking to terminate this
Agreement;
(c) by the Seller or by the Buyer, if any governmental
entity of competent jurisdiction shall have issued an order, decree or
ruling or taken other action restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby and such order, decree,
ruling or other action shall have become final and nonappealable;
(d) if proceedings under the Bankruptcy Code are not
pending by or against the Seller, the Company and/or its Subsidiaries, by
Seller upon five business days' prior written notice to Buyer, in order to
accept an Superior Proposal; provided, however, that (A) such notice shall
include a copy of any proposed documentation relating to such Superior
Proposal, (B) prior to any such termination, the Seller shall, if requested
in writing by Buyer negotiate in good faith for such five business day
period with Buyer regarding any revised proposal made by Buyer during such
five business day period, and (C) if Buyer shall have made any revised
proposal as described in clause (B) of this sentence, the Board of
Directors of the Seller shall have determined in good faith (after taking
into account Buyer's revised proposal and after consulting with its outside
financial advisor) that the relevant Acquisition Proposal continues to
constitute a Superior Proposal;
(e) by Buyer, immediately, upon
(i) the voluntary filing of a petition under
chapter 7 of the Bankruptcy Code by the Parent, the Seller or the Company
and/or its Subsidiaries (or in the case of an involuntary petition under
chapter 7 of the Bankruptcy Code being filed against any such parties, upon
entry of an order of relief under chapter 7 of the Bankruptcy Code or such
party's consent to the entry of such an order of relief, whichever is
earlier);
(ii) the conversion of any proceedings under the
Bankruptcy Code by or against the Parent, the Seller or the Company and/or
its Subsidiaries to a case under chapter 7 of the Bankruptcy Code; or
(iii) the appointment of a trustee or receiver in
any proceedings under the Bankruptcy Code by or against the Parent, the
Seller or the Company and/or its Subsidiaries; or
(iv) if both (A) voluntary proceedings under the
Bankruptcy Code are filed by the Company and/or its Subsidiaries (or
involuntary proceedings under the Bankruptcy Code are commenced against any
such parties and an order for relief is entered )and (B) proceedings under
the Bankruptcy Code are not then pending or simultaneously filed by the
Seller and the Parent; or
(f) by the Seller or by the Buyer, if the bankruptcy
court having jurisdiction over proceedings under the Bankruptcy Code by or
against the Seller, the Company and/or its Subsidiaries approves a sale of
the Company or all or substantially all of the assets of the Company (in a
single transaction or series of related transactions) to a Person (or group
of Persons) other than Buyer or an affiliate of Buyer.
6.2. Payments on Termination.
(a) In the event this Agreement is terminated pursuant to
Section 6.1(d) of this Agreement, then Seller shall be obligated to pay
Buyer, in cash, the sum of $18 million (such sum, the "Termination Amount")
immediately upon execution by the parties thereto of the definitive
acquisition agreement related to the Superior Proposal.
(b) In the event this Agreement is terminated pursuant to
Section 6.1(f) , then Seller shall be obligated to pay Buyer, in cash, the
sum of $12 million plus Buyer's reasonable, documented out-of-pocket
expenses in connection with this Agreement and the transactions
contemplated hereby (which expenses in the aggregate shall not exceed
$3,000,000).
(c) In the event this Agreement is terminated by Seller
pursuant to Section 6.1(b), then (i) unless such termination resulted from
the expiration or termination of Parent's senior lenders' consent to the
consummation of the transactions contemplated by this Agreement, Seller
shall be obligated to pay Buyer, in cash, on the date of such termination,
Buyer's reasonable, documented out-of-pocket expenses in connection with
this Agreement and the transactions contemplated hereby (which expenses in
the aggregate shall not exceed $1,500,000) and (ii) if, within six months
following such termination of this Agreement, a definitive agreement(s) is
executed providing for the sale of a majority of the capital stock of the
Company or substantially all of the assets of the Company and its
Subsidiaries, taken as a whole, to any Person or Persons, in a single
transaction or series of related transactions, then Seller shall be
obligated to pay Buyer, in cash, upon the closing of the transactions
contemplated by such definitive agreement(s), the sum equal to the
Termination Amount minus the amount previously paid to Buyer pursuant to
Section 6.2(c)(i).
6.3. Effect of Termination. Seller's obligations under
this Agreement shall in no event terminate unless and until Seller pays to
Buyer any amount owed on the date of termination pursuant to Section 6.2,
if applicable. In the event of termination of this Agreement and
abandonment of the transactions contemplated hereby by the parties hereto
pursuant to Section 6.1 hereof, this Agreement shall forthwith become null
and void and of no further effect, without any liability on the part of any
party or its directors, officers, partners, affiliates, employees, agents
or securityholders, other than the provisions of Section 4.2(b). Nothing in
this Section 6.3 shall relieve any party from any liability for any willful
breach of this Agreement.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
7.1. Survival Periods. All representations and warranties
of the parties contained in this Agreement shall survive the Closing until
the date which is 18 months after the Closing Date, except for the
representations and warranties in Sections 2.2, 2.3, 2.19 and 3.2, which
shall survive the Closing without limitation as to time, the
representations and warranties in Section 2.11, which shall survive the
Closing until 90 days after the expiration of the applicable statute of
limitations and the representations and warranties in Sections 2.16 and
2.18, which shall survive the Closing until the date which is 3 years after
the Closing Date. The covenants and agreements of the parties hereto shall
survive the Closing in accordance with their terms without limitation as to
time. From and after the Closing, the Seller shall indemnify and hold
harmless the Buyer, the Company and its Subsidiaries and the Buyer shall
indemnify and hold harmless the Seller, against certain liabilities, in
accordance with the terms of this Article VII. No party providing
indemnification pursuant to this Article VII (an "Indemnifying Party")
shall be obligated to provide such indemnification with respect to
representations and warranties to the party seeking indemnification (the
"Indemnified Party") unless the Indemnifying Party shall have received
written notice thereof within the applicable time period for survival of
such representation or warranty, as set forth above.
7.2. Indemnification. Subject to the other provisions of
this Article VII, from and after the Closing, the Indemnifying Party shall
indemnify and hold harmless the Indemnified Party from and against any
costs or expenses (including without limitation reasonable attorneys' fees,
and the reasonable out-of- pocket expenses of testifying and preparing for
testimony and responding to document and other information requests,
whether or not a party to such litigation), judgments, fines, losses,
claims (whether or not meritorious) and damages (collectively, "Damages"),
as incurred, to the extent they relate to, arise out of or are the result
of (i) any breach of any representation or warranty or any failure of any
representation or warranty to be true as of the Closing (other than those
representations and warranties that address matters only as of a particular
date or only with respect to a specific period of time, in which case such
indemnity will apply only if such representations or warranties were untrue
as of such date or with respect to such period of time) or (ii) failure to
perform any covenant or agreement made by the Indemnifying Party under this
Agreement; provided, however, that any effects on or changes in the Company
or its Subsidiaries resulting from or relating to (A) the execution of this
Agreement and the announcement of this Agreement and the transactions
contemplated hereby or (B) the announcement of the Restructuring or the
commencement or pendency of proceedings under the Bankruptcy Code by or
against Parent and/or its Subsidiaries (including the Company and its
Subsidiaries) and subsequent disclosures related to the terms or status of
the Restructuring or such proceedings shall be excluded from the
determination of the amount of any Damages hereunder; provided that the
exclusion in (B) above shall not apply to the determination of the amount
of Damages for breach of the representation and warranty contained in
Section 2.13(b)(ii). In addition, the Buyer agrees to use all commercially
reasonable efforts to settle or otherwise resolve the items set forth on
Section 2.9 of the Disclosure Schedule, in the ordinary course of business
consistent with the Company's and its Subsidiaries past practice (including
by providing advertising at no-cost). Subject to the preceding sentence,
Seller shall indemnify and hold harmless the Buyer, the Company and its
Subsidiaries against any and all out-of- pocket, cash Damages paid to third
parties, as incurred, to the extent they relate to, arise out of or are the
result of the items set forth on Section 2.9 of the Disclosure Schedule net
of any insurance proceeds ("Litigation Damages") to the extent such
Litigation Damages exceed, in the aggregate, $1,000,000 (the "Litigation
Deductible"), but only to the extent of such excess. To the extent the
Buyer, the Company or any of its Subsidiaries incur any Litigation Damages
for which they are not entitled to indemnification by reason of the
Litigation Deductible, the Deductible (as herein defined) shall be reduced
on a dollar for dollar basis. Notwithstanding the 30-day time limit to
assume third party claims in Section 7.4, Seller shall have the right to
assume control of (consistent with Section 7.4) the litigation set forth in
Section 2.9 of the Disclosure Schedule at any time. Buyers will keep Seller
informed, on a monthly basis or as otherwise reasonably requested, on the
status of such litigation.
7.3. Indemnification Amounts. (a) Notwithstanding any
provision to the contrary contained in this Agreement, the Indemnifying
Party shall not be obligated to indemnify the Indemnified Party for any
Damages with respect to breaches of representations and warranties (i)
unless and until the amount of Damages arising from or relating to any
single circumstance or related circumstances exceeds $25,000 ("Covered
Damages"), (ii) unless and until the amount of all such Covered Damages
shall in the aggregate equal $12 million (the "Deductible"), and then only
to the extent of such amount in excess of the Deductible, and (iii) to the
extent that the amount of all such payments by the Indemnifying Party would
exceed $150 million; provided, that this Section 7.3 shall not apply to any
indemnification by the Seller for Damages relating to, arising out of or
resulting from any breach of the representations and warranties contained
in Sections 2.2, 2.3, 2.15, 2.19 and 3.2, which indemnification shall not
be limited in any respect or by or to any amount. For the sake of clarity,
the parties expressly agree that the indemnification rights in Section 4.6
and Section 7.2 with respect to Litigation Damages shall not be subject to
the limits set forth in this Section 7.3.
(b) The Company Material Adverse Effect, Buyer Material
Adverse Effect and materiality (or correlative meaning) qualifications
included in the representations and warranties set forth in Article II or
Article III shall have no effect on any provision in Section 7.2 concerning
the indemnification of the Indemnified Parties with respect to such
representations and warranties, each of which is given as though there were
no Company Material Adverse Effect, Buyer Material Adverse Effect or
materiality qualifications for purposes of such indemnification.
7.4. Claims. (a) If an Indemnified Party intends to seek
indemnification pursuant to this Article VII, such Indemnified Party shall
promptly notify the Indemnifying Party, in writing, of such claim
describing such claim in reasonable detail, provided, that the failure to
provide such notice shall not affect the obligations of the Indemnifying
Party unless and only to the extent it is actually prejudiced thereby,
subject, however, to the time periods specified in Section 7.1 hereof. In
the event that such claim involves a claim by a third party against the
Indemnified Party, the Indemnifying Party shall have 30 days after receipt
of such notice to decide whether it will undertake, conduct and control,
through counsel of its own choosing and at its own expense, the settlement
or defense thereof, and if it so decides, the Indemnified Party shall
cooperate with it in connection therewith, provided, that the Indemnified
Party may participate in such settlement or defense through counsel chosen
by it, and provided, further, that the fees and expenses of such counsel
shall be borne by the Indemnified Party. The Indemnifying Party shall not,
without the written consent of the Indemnified Party (which consent shall
not be unreasonably withheld), settle or compromise any action. If the
Indemnifying Party does not notify the Indemnified Party within 30 days
after the receipt of the Indemnified Party's notice of a claim of indemnity
hereunder that it elects to undertake the defense thereof, the Indemnified
Party shall have the right to contest, settle or compromise the claim but
shall not thereby waive any right to indemnity therefor pursuant to this
Agreement. As long as the Indemnifying Party is contesting any such claim
in good faith, the Indemnified Party shall not pay or settle any such claim
without the consent of the Indemnifying Party (which consent shall not be
unreasonably withheld).
(b) The Indemnifying Party and the Indemnified Party
shall cooperate fully in all aspects of any investigation, defense,
pre-trial activities, trial, compromise, settlement or discharge of any
claim in respect of which indemnity is sought pursuant to this Article VII,
including, but not limited to, by providing the other party with reasonable
access to employees and officers (including as witnesses) and other
information.
7.5. Exclusive Remedy. Absent fraud, the indemnification
provisions of this Article VII and of Section 4.6 shall be the exclusive
remedy following the Closing for any breaches or alleged breaches of any
representation or warranty contained in this Agreement. Each of the parties
hereto agrees not to bring any actions or proceedings, at law, equity or
otherwise, against any other party or its direct or indirect partners or
securityholders in respect of any breaches or alleged breaches of any
representation or warranty except pursuant to the express provisions of
this Article VII or Section 4.6. The parties hereby agree that no party has
made any representations or warranties, express or implied, with respect to
this Agreement or the matters contemplated hereby, except as explicitly set
forth in this Agreement.
7.6. Insurance. The Indemnifying Party shall be
subrogated to the rights of the Indemnified Party in respect of any
insurance relating to Damages to the extent of any indemnification payments
made (provided that the Indemnifying Party shall not be entitled to
subrogation to the extent the deductible under Section 7.3(a)(i) hereof or
the cap under Section 7.3(a)(ii) hereof was applied to the indemnification
claim).
7.7. Duplication. Any liability for indemnification
hereunder shall be determined without duplication of recovery by reason of
the state of facts giving rise to such liability constituting a breach of
more than one representation, warranty, covenant or agreement; provided,
however, that subject to there being no duplication of recovery, the
Indemnified Party shall be entitled to recover to the maximum extent
provided in this Agreement (e.g., if any Indemnified Party's entitlement to
indemnification is both by reason of a breach of a representation and
warranty to which the limitations of Section 7.3(a) apply and by reason of
a breach of a representation and warranty to which such limitations do not
apply, the Indemnified Party shall be entitled to indemnification without
such limitations being applied).
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1. Amendment and Modification. This Agreement may be
amended or modified at any time by the parties hereto, pursuant to an
instrument in writing signed by all parties.
8.2. Extension; Waiver. At any time prior to the Closing
Date, the party entitled to the benefit of any respective term or provision
hereof may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in
any document, certificate or writing delivered pursuant hereto or (c) waive
compliance with any obligation, covenant, agreement or condition contained
herein. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed
by the party entitled to the benefits of such extended or waived term or
provision. The representations, warranties and agreements of any of the
parties provided for in this Agreement, and the parties' obligations
hereunder, shall continue in effect notwithstanding any investigation made
by the other party hereto.
8.3. Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, between the parties hereto with
respect to the subject matter hereof (other than the Ancillary Agreements)
and (b) shall not be assigned, by operation of law or otherwise by a party
hereto, without the prior written consent of the other parties, except that
the Buyer may assign its rights under this Agreement to one or more of its
affiliates, but such assignment shall not relieve the Buyer of its
obligations hereunder.
8.4. Validity. The invalidity or unenforceability of any
term or provision of this Agreement in any situation or jurisdiction shall
not affect the validity or enforceability of the other terms or provisions
hereof or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction.
8.5. Notices. Unless otherwise provided herein, all
notices and other communications hereunder shall be in writing and shall be
deemed given upon receipt by the other parties at the following addresses
or telecopy numbers:
(a) if to the Seller and/or Parent, to
McLeodUSA Incorporated
McLeodUSA Technology Park
0000 X Xxxxxx XX
XX Xxx 0000
Xxxxx Xxxxxx, Xxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Rings, Esq.
Group Vice President and
Chief Legal Officer
with a copy to
Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois)
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
(b) if to the Buyer, to
Yell Group Limited
Xxxxxx Xxxx
Xxxxxx Xxxx
Xxxxxxx
Xxxxxxxxx
XX0 0XX
Telecopy: 011 44 118 959 7954
Attention: Xxxx Xxxxxxx
with a copy to
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Simeon Gold, Esq.
8.6. Governing Law and Jurisdiction. This Agreement shall
be governed by, enforced under and construed in accordance with the laws of
the State of Delaware, without giving effect to any choice or conflict of
law provision or rule thereof. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of Delaware and of the United
States of America in each case located in the County of Delaware for any
litigation arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any litigation
relating thereto except in such courts), and further agrees that service of
any process, summons, notice or document by U.S. registered mail to its
respective address set forth in Section 8.5 shall be effective service of
process for any litigation brought against it in any such court. Each of
the parties hereto hereby irrevocably and unconditionally waives any
objection to the laying of venue of any litigation arising out of this
Agreement or the transactions contemplated hereby in the courts of the
State of Delaware or of the United States of America in each case located
in the County of Delaware and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court
that any such litigation brought in any such court has been brought in an
inconvenient forum. Notwithstanding the foregoing, in the event that Parent
and/or any of its Subsidiaries commence proceedings under the Bankruptcy
Code, the Buyer and the Seller irrevocably and unconditionally consent to
submit to the jurisdiction of the bankruptcy court in which such proceeding
is commenced for any litigation arising out of or relating to this
Agreement and the transactions contemplated thereby (and agree not to
commence any litigation relating thereto except in such bankruptcy court).
8.7. Descriptive Headings. The descriptive headings
herein are inserted for convenience of reference only and shall in no way
be construed to define, limit, describe, explain, modify, amplify, or add
to the interpretation, construction or meaning of any provision of, or
scope or intent of, this Agreement nor in any way affect this Agreement.
8.8. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
8.9. Expenses. Whether or not this Agreement and the
transactions contemplated hereby are consummated, and except as otherwise
expressly set forth herein, all costs and expenses (including legal fees
and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses. Any transfer, sales, use or any similar taxes payable in
connection with the Stock Purchase shall be borne 50% by the Seller and 50%
by the Buyer. Any Tax Returns relating to such taxes shall be prepared and
filed when due by the party primarily or customarily responsible under
applicable local law for the filing of such Tax Returns. To the extent that
such Tax Returns require an allocation of the purchase price hereunder the
parties shall use their best efforts to agree on such allocation. The
filing party shall provide drafts of such Tax Returns to the other party
for their review and comment at least two days prior to the due date of the
return.
8.10. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and its
affiliates and nothing in this Agreement, express or implied, is intended
by or shall confer upon any other Person any rights, benefits or remedies
of any nature whatsoever under or by reason of this Agreement. Without
limiting the foregoing, no direct or indirect holder of any equity
interests or securities of either Seller or Buyer (whether such holder is a
limited or general partner, member, stockholder or otherwise), nor any
affiliate of either Seller or Buyer, nor any director, officer, employee,
representative, agent or other controlling person of each of the parties
hereto and their respective affiliates shall have any liability or
obligation arising under this Agreement or the transactions contemplated
thereby.
8.11. No Waivers. Except as otherwise expressly provided
herein, no failure to exercise, delay in exercising, or single or partial
exercise of any right, power or remedy by any party, and no course of
dealing between the parties, shall constitute a waiver of any such right,
power or remedy. No waiver by a party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation,
or breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence. No waiver
shall be valid unless in writing and signed by the party against whom such
waiver is sought to be enforced.
8.12. Specific Performance. The parties hereto agree that
if any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached, irreparable damage
would occur, no adequate remedy at law would exist and damages would be
difficult to determine, and that the parties shall be entitled to specific
performance of the terms hereof and immediate injunctive relief, in
addition to any other remedy at law or equity.
8.13. Construction. All references herein to the
knowledge of the Seller shall mean the actual knowledge of the executive
officers and General Counsel of Parent, the elected officers of Seller, the
Company and each of its Subsidiaries, and the Corporate Counsel and
Controller of the Company.
8.14. Guaranty. Parent unconditionally guarantees the
performance of the obligations of the Seller under this Agreement.
IN WITNESS WHEREOF, each of the undersigned has caused
this Agreement to be duly signed as of the date first above written.
McLEODUSA HOLDINGS, INC.
By: /s/Xxxxx X. Xxxxx
--------------------------------------
Name:
Title:
YELL GROUP LIMITED
By: /s/Xxxx Xxxxxxx
--------------------------------------
Name:
Title:
Solely for purposes of being bound by
the terms of Section 8.14:
McLEODUSA INCORPORATED
By: /s/Xxxxx X. Xxxxx
--------------------------------------
Name:
Title:
Exhibit A
PRINCIPAL TERMS OF RESTRUCTURING
The following is a description of the principal terms for the restructuring
of the Company:
1. The Company will (A) sell its directory publishing business to
either (i) Forstmann Little & Co. or its affiliates for a cash
purchase price of at least $535,000,000 or (ii) such other person
that submits a higher and better all cash offer and (B) use (i)
the first $535,000,000 of the gross cash proceeds of such sale and
(ii) at the Company's option, use the gross cash proceeds in
excess of $560,000,000 to redeem the outstanding Indenture Debt;
2. The FL Standby Purchase Agreement shall not provide for any
break-up fee or any expense reimbursement in favor of the
purchaser;
3. In the event that the Restructuring is consummated through the
Out-of-Court Alternative, the Indentures governing the Indenture
Debt will be amended to remove all lien, indebtedness and
restrictive subsidiary agreements restrictions;
4. The outstanding shares of Series A Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock and existing common
stock of the Borrower will be converted to common stock (the "New
Common Stock").
5. Forstmann Little & Co. ("Forstmann Little") and its affiliates
will make a $100,000,000 all cash investment in a new series of
preferred stock of the restructured Company, $25,000,000 of such
investment will be used to pay the Borrower's Indenture Debt,
$35,000,000 of such investment will be used to prepay the Term
Borrowings and $40,000,000 of such investment will be retained by
the Borrower and used for general corporate purposes, including
capital expenditures. Such preferred stock shall be mandatorily
convertible into common stock of the Company within 60 days of the
issuance thereof;
6. The Borrower may implement the Restructuring either out-of-court
through an exchange offer for the Indenture Debt and the
Borrower's Series A, D and E Preferred Stock or in-court through a
proceeding under Chapter 11 of the United States Bankruptcy Code,
which in either case shall be consummated on or prior to August 1,
2002;
7. If the Restructuring is accomplished through the In-Court
Alternative, the plan of reorganization for the Restructuring
shall be confirmed on or prior to August 1, 2002 and shall provide
that the liens and claims of the Lenders under the Credit
Agreement will be unimpaired within the meaning of Section 1124 of
the Bankruptcy Code;
8. The Company will redeem at least 95% of its outstanding Indenture
Debt for (i) cash in the amount of $560,000,000; (ii) common
equity of the restructured Borrower in an amount acceptable to the
Arrangers; and (iii) at the Borrower's discretion, the excess, if
any, of the gross sales proceeds received by the Borrower in the
sale of its directory publishing business over $560,000,000; and
9. Upon consummation of the Restructuring, (i) Forstmann Little and
its affiliates will be entitled to at least two representatives on
the restructured Borrower's Board of Directors; (ii) Forstmann
Little and its affiliates will own common stock and warrants of
the restructured Borrower in an amount representing approximately
40% of the equity ownership of the restructured Borrower; and
(iii) Xxxxxxxx X. Xxxxxxxxx will be chairman of the Executive
Committee of the restructured Borrower.
The Company shall be entitled to amend the terms of this Exhibit A without
the consent of Forstmann Little provided that the terms of the amended
Exhibit A do not materially deviate from the terms set forth above.
ANNEX
DEFINITIONS
"Arrangers" means JPMorgan Chase Bank, Bank of America, N.A. and
Citicorp USA, Inc.
"FL Standby Purchase Agreement" means the standby purchase
agreement entered into among Forstmann Little, certain of its affiliates
and the Borrower on or about the Third Amendment Effective Date and each
other agreement, document, certificate or instrument delivered or to be
delivered in connection therewith, pursuant to which Forstmann Little or
any of such affiliates will, in the event that the Borrower has not
received and accepted a higher and better all cash offer for the sale of
the Publishing Assets on or prior to the Restructuring Date, purchase the
Publishing Assets for cash consideration of $535,000,000 on or prior to the
Restructuring Date.
"FL New Preferred Stock Purchase Agreement" means the stock
purchase agreement entered into among Forstmann Little, certain of its
affiliates and the Borrower on or about the Third Amendment Effective Date
and each other agreement, document, certificate or instrument delivered or
to be delivered in connection therewith, pursuant to which Forstmann Little
and such affiliates will make an investment in a new series of preferred
stock (the "New Preferred Stock") of the restructured Borrower as described
in Exhibit A.
"Forstmann Little" is defined in Exhibit A.
"Indenture Debt" means the outstanding Indebtedness of the
Borrower under the Indentures.
"New Common Stock" is defined in Exhibit A.
