Exhibit (10)(i)(2)
EXECUTION COPY
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ASSET PURCHASE AGREEMENT
by and among
BROADWING INC.,
CINCINNATI ▇▇▇▇
DIRECTORY INC.
and
CBD MEDIA, INC.
Dated as of February 4, 2002
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TABLE OF CONTENTS
Page
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ARTICLE I
PURCHASE AND SALE OF ACQUIRED ASSETS
SECTION 1.01. Purchase and Sale....................................................................................2
SECTION 1.02. Acquired Assets and Excluded Assets..................................................................2
SECTION 1.03. Assumption of Certain Liabilities....................................................................5
SECTION 1.04. Consents of Third Parties............................................................................8
SECTION 1.05. Purchase Price Adjustment............................................................................8
ARTICLE II
THE CLOSING
SECTION 2.01. Closing Date........................................................................................11
SECTION 2.02. Transactions To Be Effected at the Closing..........................................................11
SECTION 2.03. Risk of Loss........................................................................................12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND SELLER SUB
SECTION 3.01. Organization, Standing and Power....................................................................12
SECTION 3.02. Authority; Execution and Delivery; Enforceability...................................................13
SECTION 3.03. No Conflicts; Consents..............................................................................13
SECTION 3.04. Financial Statements................................................................................14
SECTION 3.05. Assets Other than Real Property Interests...........................................................14
SECTION 3.06. Leased Property.....................................................................................15
SECTION 3.07 Intellectual Property................................................................................15
SECTION 3.08. Contracts...........................................................................................19
SECTION 3.09. Permits.............................................................................................22
SECTION 3.10. Insurance...........................................................................................22
SECTION 3.11. Sufficiency of Acquired Assets......................................................................22
SECTION 3.12. Taxes...............................................................................................23
SECTION 3.13. Proceedings.........................................................................................24
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SECTION 3.14. Benefit Plans.......................................................................................24
SECTION 3.15. Absence of Changes or Events........................................................................25
SECTION 3.16. Compliance with Applicable Laws.....................................................................25
SECTION 3.17. Environmental Matters...............................................................................25
SECTION 3.18. Transactions with Affiliates........................................................................25
SECTION 3.19. Investments.........................................................................................26
SECTION 3.20. Receivables.........................................................................................26
SECTION 3.21. No Other Agreements.................................................................................26
SECTION 3.22. Employees...........................................................................................26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
SECTION 4.02. Authority; Execution and Delivery; and Enforceability...............................................27
SECTION 4.03. No Conflicts; Consents..............................................................................28
SECTION 4.04. Litigation..........................................................................................28
SECTION 4.05. Availability of Funds...............................................................................28
ARTICLE V
COVENANTS
SECTION 5.01. Covenants of Seller and Seller Sub Relating to Conduct of Business..................................29
SECTION 5.02. No Solicitation.....................................................................................31
SECTION 5.03. Access to Information...............................................................................32
SECTION 5.04. Confidentiality.....................................................................................32
SECTION 5.06. Expenses; Transfer Taxes............................................................................34
SECTION 5.07. Brokers or Finders..................................................................................34
SECTION 5.08. Collection of Receivables...........................................................................35
SECTION 5.09. Employee Matters....................................................................................35
SECTION 5.10. Post-Closing Cooperation............................................................................38
SECTION 5.11. Publicity...........................................................................................39
SECTION 5.12. No Solicitation; Exclusive Agency...................................................................39
SECTION 5.13. Monthly Financial Information.......................................................................40
SECTION 5.14. Records.............................................................................................40
SECTION 5.15. Bulk Transfer Laws..................................................................................40
SECTION 5.16. Further Assurances..................................................................................40
SECTION 5.17. Purchase Price Allocation...........................................................................40
SECTION 5.18. Cooperation; Allocation of Taxes Among Acquired Assets..............................................41
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SECTION 5.19. Refunds.............................................................................................41
SECTION 5.20. Seller and Seller Sub Transfers.....................................................................42
SECTION 5.21 Withholding Exemption...............................................................................42
SECTION 5.22. Name Change.........................................................................................42
SECTION 5.23. Advertising Services................................................................................42
SECTION 5.24. Website Content.....................................................................................42
SECTION 5.25. Transition Services.................................................................................43
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation...............................................................44
SECTION 6.02. Conditions to Obligation of Purchaser...............................................................44
SECTION 6.03. Conditions to Obligation of Seller and Seller Sub...................................................45
SECTION 6.04. Frustration of Closing Conditions...................................................................45
SECTION 6.05. Effect of Certain Waivers of Closing Conditions.....................................................46
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination.........................................................................................46
SECTION 7.02. Effect of Termination...............................................................................47
SECTION 7.03. Amendments and Waivers..............................................................................47
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Indemnification by Seller...........................................................................47
SECTION 8.02. Indemnification by Purchaser........................................................................49
SECTION 8.03. Calculation of Losses...............................................................................49
SECTION 8.04. Termination of Indemnification......................................................................50
SECTION 8.05. Procedures..........................................................................................50
SECTION 8.06. Survival of Representations.........................................................................52
SECTION 8.07. No Additional Representations.......................................................................52
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ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Assignment..........................................................................................53
SECTION 9.02. No Third-Party Beneficiaries........................................................................53
SECTION 9.03. Notices.............................................................................................53
SECTION 9.04. Interpretation; Exhibits and Schedules; Certain Definitions.........................................54
SECTION 9.05. Counterparts........................................................................................55
SECTION 9.06. Entire Agreement....................................................................................55
SECTION 9.07. Severability........................................................................................56
SECTION 9.08. Consent to Jurisdiction.............................................................................56
SECTION 9.09. Governing Law.......................................................................................56
SECTION 9.10. Waiver of Jury Trial................................................................................56
SECTION 9.11. Specific Performance................................................................................57
ARTICLE X
DEFINITIONS AND TERMS.................................................57
Exhibit A - Service Agreements
Exhibit B - Financing Commitment
Exhibit C - Directory Business Agreement
ASSET PURCHASE AGREEMENT dated as of
January 30, 2002, among
BROADWING INC., an Ohio corporation
("SELLER"), CINCINNATI ▇▇▇▇ DIRECTORY INC., an Ohio corporation
and a wholly owned subsidiary of Seller ("SELLER SUB"), and CBD MEDIA,
INC., a Delaware corporation ("PURCHASER").
WHEREAS Seller and Seller Sub desire to sell to Purchaser, and
Purchaser desires to purchase from Seller and Seller Sub, substantially all of
the assets related to Seller's and Seller Sub's (i) telephone directory
businesses, including all primary, metro and suburban, business to business and
underlay, whether in written or electronic form, or displayed on the internet or
other dissemination device; (ii) all products and services relating to the
products and services included in clause (i); (iii) all internet initiatives and
websites relating primarily to any of the foregoing; and (iv) all web hosting,
website design and similar activities currently engaged in by Seller or Seller
Sub primarily related to the products and services described in clauses (i) and
(ii) (it being understood that in each case this shall not include any business
related to White Pages directories or operator-assisted "411" or similar
telephone services) (collectively, the "BUSINESS"), upon the terms and subject
to the conditions of this Agreement;
WHEREAS in order to induce Purchaser, Seller and Seller Sub to
consummate the transactions contemplated by this Agreement, Purchaser, Seller
and Seller Sub have entered into a trademark license agreement (the "LICENSE
AGREEMENT") dated as of the date of this Agreement and certain other service
agreements (the "SERVICE AGREEMENTS"), each dated as of the date of this
Agreement attached hereto as Exhibits A-1 through A- 4; Purchaser and Seller
have also entered into a Directory Business Agreement (the "DIRECTORY BUSINESS
AGREEMENT") dated as of the date of this Agreement attached hereto as Exhibit C
..
WHEREAS the Boards of Directors of Seller and Seller Sub, by
resolutions duly adopted, have determined the sale of the Business to Purchaser
to be in the best interests of Seller and Seller Sub, and the Board of Directors
of Purchaser, by resolutions duly adopted, have determined the purchase of the
Business to be in the best interests of Purchaser, and in each case have
approved this Agreement, the License Agreement, the Service Agreements and the
transactions contemplated hereby and thereby upon the terms and subject to the
conditions set forth herein and therein.
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NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ACQUIRED ASSETS
SECTION 1.01. PURCHASE AND SALE. On the terms and subject to
the conditions of this Agreement, at the Closing, Seller and Seller Sub shall
sell, assign, transfer, convey and deliver to Purchaser, and Purchaser shall
purchase from Seller and Seller Sub, all the right, title and interest as of the
Closing of Seller and Seller Sub in, to and under the Acquired Assets, for (a)
an aggregate purchase price of $353,846,000 (the "PURCHASE PRICE"), payable as
set forth in Section 2.02 and subject to adjustment as set forth in Section 1.05
and taking into account, if necessary, any credit against the Purchase Price
pursuant to Section 2.02(a)(i), and (b) the assumption of the Assumed
Liabilities. The purchase and sale of the Acquired Assets and the assumption of
the Assumed Liabilities is referred to in this Agreement as the "ACQUISITION".
SECTION 1.02. ACQUIRED ASSETS AND EXCLUDED ASSETS. (a) The
term "ACQUIRED ASSETS" means all the right, title and interest of Seller and
Seller Sub in all the business, properties, assets, goodwill and rights of
Seller and Seller Sub of whatever kind and nature, real or personal, tangible or
intangible, that are owned, controlled, leased or licensed by Seller or Seller
Sub on the Closing Date and used, held for use or intended to be used primarily
in the operation or conduct of the Business, other than the Excluded Assets,
including:
(i) all Leased Property and the improvements and fixtures
thereon, furniture and other appurtenances thereto (the "LEASEHOLD
IMPROVEMENTS");
(ii) all raw materials, work in process, supplies, packaging
and other inventories of Seller or Seller Sub (including those located
on the Leased Property, in transit, on consignment or in the possession
of any third party) on the Closing Date that are used, held for use or
intended to be used primarily in the operation or conduct of the
Business (collectively, the "INVENTORY");
(iii) all other tangible personal property and interests
therein, including all machinery, equipment, furniture, furnishings and
vehicles, of Seller or Seller Sub that are used, held for use or
intended to be used primarily in the operation or conduct of the
Business (the "PERSONAL PROPERTY");
(iv) all accounts receivable of Seller or Seller Sub on the
Closing Date to the extent arising out of the operation or conduct of
the Business (the "RECEIVABLES");
(v) all Trademarks (except the Licensed Trademarks), Patents,
Copyrights, Domain Names and Trade Secrets (collectively, "INTELLECTUAL
PROPERTY") of Seller or Seller
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Sub that are used, held for use or intended to be used primarily in the
operation of the Business (the "ASSIGNED INTELLECTUAL PROPERTY");
(vi) subject to Section 1.04, all Permits of Seller or
Seller Sub that are used, held for use or intended to be used primarily
in the operation or conduct of the Business (the "ASSIGNED PERMITS");
(vii) subject to Section 1.04, all contracts, leases,
subleases, licenses, indentures, agreements, commitments and all other
legally binding arrangements, whether oral or written ("CONTRACTS"), to
which Seller or Seller Sub is a party or by which Seller or Seller Sub
is bound that are denoted on Schedule 3.06(a) or 3.08 as "Assigned
Contracts," and all other Contracts (including purchase orders and
sales orders) that are not required to be listed on Schedule 3.06(a) or
3.08 to which Seller or Seller Sub is a party or by which Seller or
Seller Sub is bound that are used, held for use or intended to be used
primarily in, or that arise primarily out of, the operation or conduct
of the Business or to which the Acquired Assets are subject (the
"ASSIGNED CONTRACTS"), including any rights thereunder arising after
the Closing;
(viii) all rights in and to products sold or leased (including
products returned after the Closing and rights of rescission, replevin
and reclamation) in the operation or conduct of the Business;
(ix) all credits, prepaid expenses, deferred charges,
advance payments, security deposits and prepaid items that are used,
held for use or intended to be used primarily in, or that arise
primarily out of, the operation or conduct of the Business;
(x) all rights, claims, causes of action, rights of
set-off, rights to payment or to enforce payment and credits to the
extent relating to any other Acquired Asset or any Assumed Liability,
including any such items arising under insurance policies and all
guarantees, warranties, indemnities and similar rights in favor of
Seller or Seller Sub in respect of any other Acquired Asset, any
product or service to the extent provided or purchased in connection
with the Business or any Assumed Liability;
(xi) all information technology systems that are used, held
for use or intended to be used primarily in the operation or conduct of
the Business;
(xii) all hardware lines, software, communications lines and
infrastructure items, telephone numbers, websites, domain names,
internet addresses, art work and office and other supplies of Seller or
Seller Sub that are used, held for use or intended to be used primarily
in the operation or conduct of the Business;
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(xiii) all books of account, ledgers, general, financial,
accounting and personnel records, files, invoices, customers' and
suppliers' lists, other distribution lists, billing records, sales and
promotional literature, manuals, customer and supplier correspondence
(in all cases, in any form or medium), of Seller or Seller Sub that are
used, held for use or intended to be used primarily in, or that arise
primarily out of, the operation or conduct of the Business (the
"RECORDS");
(xiv) any assets to be transferred pursuant to Section 5.09;
(xv) all other assets reflected on the Balance Sheet; and
(xvi) all goodwill generated by or associated with the
Business;
(b) The term "EXCLUDED ASSETS" means:
(i) all assets identified on Schedule 1.02(b)(i);
(ii) all cash and cash equivalents of Seller or Seller Sub;
(iii) all Contracts to which Seller or Seller Sub is a party
or by which Seller or Seller Sub is bound that are listed on Schedule
3.06(a) or 3.08, but which are not "ASSIGNED CONTRACTS" and all other
Contracts that are not required to be listed on Schedule 3.06(a) or
3.08 to which Seller or Seller Sub is a party or by which Seller or
Seller Sub is bound that are not used, held for use or intended to be
used primarily in, or that do not arise primarily out of, the operation
or conduct of the Business or to which the Acquired Assets are not
subject;
(iv) all rights, claims, causes of action, rights of
set-off, rights to payment or to enforce payment and credits of Seller
or Seller Sub to the extent relating to any other Excluded Asset or
any Excluded Liability, including any such items arising under
insurance policies and all guarantees, warranties, indemnities and
similar rights in favor of Seller or Seller Sub in respect of any other
Excluded Asset or any Excluded Liability;
(v) except as specifically provided in Section 5.09, all
the assets of the Seller Benefit Plans;
(vi) all rights of Seller or Seller Sub under this
Agreement, the Service Agreements, the License Agreement and the other
agreements and instruments executed and delivered in connection with
this Agreement (the "ANCILLARY AGREEMENTS");
(vii) all Trademarks identified on Schedule 1.02(b)(vii) (the
"LICENSED TRADEMARKS");
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(viii) all goodwill generated by or associated with the
Licensed Trademarks;
(ix) all records prepared in connection with the sale of the
Business to Purchaser; and
(x) all financial and tax records relating to the Business
that form part of Seller's general ledger, except that Purchaser shall
receive a copy of the portion of any such records that relate to the
Business in any respect.
SECTION 1.03. ASSUMPTION OF CERTAIN LIABILITIES. (a) Upon the
terms and subject to the conditions of this Agreement, Purchaser shall assume,
effective as of the Closing, and from and after the Closing Purchaser shall pay,
perform and discharge when due, all the following liabilities, obligations and
commitments of Seller and Seller Sub (the "ASSUMED LIABILITIES"):
(i) any liability, obligation or commitment relating to or
arising out of the Business or any Acquired Asset, whether express or
implied, liquidated, absolute, accrued, contingent or otherwise, or
known or unknown, and based upon, arising out of or resulting from any
fact, circumstance, occurrence, condition, act or omission occurring
after the Closing Date , but not based on, arising out of or resulting
from any fact, circumstance, occurrence, condition, act or omission
existing on or occurring on or prior to the Closing Date;
(ii) all liabilities, obligations and commitments of Seller
or Seller Sub under the Assigned Contracts arising after the Closing
Date, except obligations, liabilities or obligations arising out of any
actual or alleged breach on or prior to the Closing Date by Seller or
Seller Sub of, or nonperformance on or prior to the Closing Date by
Seller or Seller Sub under, any Assigned Contract; and
(iii) all accounts payable and accrued expenses of Seller or
Seller Sub arising out of the operation or conduct of the Business on
or prior to the Closing Date, but only to the extent included in
Closing Working Capital.
(b) Except as set forth in Section 1.03(a), and
notwithstanding any other provision of this Agreement or any Ancillary
Agreement, Purchaser shall not assume any liabilities, obligations and
commitments of Seller and Seller Sub (the "EXCLUDED LIABILITIES"), all of which
shall be retained and paid, performed and discharged when due by Seller and
Seller Sub, including:
(i) any liability, obligation or commitment of Seller or
Seller Sub not specifically listed in Section 1.03(a);
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(ii) any liability, obligation or commitment of Seller or
Seller Sub, except as specifically set forth in Section 1.03(a),
relating to or arising out of the Business or any Acquired Asset,
whether express or implied, liquidated, absolute, accrued, contingent
or otherwise, or known or unknown, and based upon, arising out of or
resulting from any fact, circumstance, occurrence, condition, act or
omission existing on or occurring on or prior to the Closing Date;
(iii) any liability, obligation or commitment of Seller or
Seller Sub, whether express or implied, liquidated, absolute, accrued,
contingent or otherwise, or known or unknown, arising primarily out of
the operation or conduct by Seller or any of its affiliates of any
business other than the Business;
(iv) any liability, obligation or commitment of Seller or
Seller Sub arising primarily out of any actual or alleged breach by
Seller or Seller Sub of, or nonperformance by Seller or Seller Sub
under, any Contract (including any Assigned Contract) on or prior to
the Closing;
(v) any liability, obligation or commitment of Seller or
Seller Sub arising primarily out of (A) any claim, suit, action or
proceeding ("PROCEEDING") pending or, to the knowledge of Seller or
Seller Sub, threatened as of the Closing Date or (B) any actual or
alleged violation by Seller or any of its affiliates of any Applicable
Law on or prior to the Closing;
(vi) any account payable or accrued expense of Seller or
Seller Sub to the extent not included in Closing Working Capital and
any indebtedness for borrowed money or guarantees thereof;
(vii) any liability, obligation or commitment of Seller or
Seller Sub to the extent it relates to, or that arises out of, any
Excluded Asset, or that arises out of the distribution to, or ownership
by, Seller or Seller Sub of the Excluded Assets or associated with the
realization of the benefits of any Excluded Asset;
(viii) any liability, obligation or commitment for Taxes,
whether or not accrued, assessed or currently due and payable, (A) of
Seller or Seller Sub (including any and all income Taxes of each of
Seller and Seller Sub), or for which either of Seller and Seller Sub is
liable, under Treasury Regulation section 1.1502-6, as a transferee, by
contract, or otherwise, or (B) levied with respect to the Acquired
Assets for the Pre-Closing Tax Period as provided in Section 5.18(b)
and in any case which have not been explicitly assumed by Purchaser
pursuant to this Agreement;
(ix) except as expressly provided in Section 5.09, any
liability, obligation or commitment of Seller or Seller Sub arising
under any Seller Benefit Plan;
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(x) any liability, obligation or commitment arising under
any Environmental Law in respect of the Acquired Assets or Business,
to the extent arising out of conditions existing or events occurring
on or prior to the Closing Date;
(xi) any liability, obligation or commitment of Seller or
Seller Sub that relates to, or that arises out of, services performed
or products manufactured, shipped or sold by or on behalf of Seller or
Seller Sub on or prior to the Closing Date (including claims of
negligence, personal injury, product damage, product liability, product
warranties, promotional obligations, strict liability, product recall
or any other claims (including workers' compensation, employer's
liability or otherwise)), whether such liability, obligation or
commitment relates to or arises out of accidents, injuries or losses
occurring on or prior to the Closing Date;
(xii) any liability, obligation or commitment of Seller or
Seller Sub that relates to, or that arises out of, the termination of
the employment with Seller or Seller Sub of any Business Employee,
former Business Employee or service provider of the Business (including
as a result of the transactions contemplated by this Agreement) or the
service of any employee or consultant with Seller or Seller Sub on or
prior to the Closing Date, including any salary, severance, bonuses,
vacation, stock options or other employee benefits, rights or
obligations under any Seller Benefit Plan, except to the extent
expressly provided otherwise in Section 5.09; and
(xiii) any liability, obligation or commitment of Seller or
Seller Sub to any of their respective affiliates.
(c) Purchaser shall acquire the Acquired Assets free and clear
of all liabilities, obligations and commitments of Seller or Seller Sub, other
than the Assumed Liabilities, and free and clear of all Liens, other than
Permitted Liens.
(d) Seller and Purchaser acknowledge that certain expenses of
the Business are paid on a periodic basis. Accordingly, the items listed below,
to the extent not included in Closing Working Capital, shall be apportioned
between Seller and Seller Sub and Purchaser, with Seller and Seller Sub being
responsible for all such expenses attributable to periods on or prior to the
Closing Date, and Purchaser being responsible for all expenses attributable to
periods after the Closing Date:
(i) prepaid rent, tenant utility payments and all other
percentage or additional rent, common area maintenance and sundry
charges (including any HVAC charges) and commissions paid by tenants;
(ii) utility company charges, including electricity, gas,
fuel, water and sewer charges;
(iii) general and special assessments and other public or
private charges affecting the Leased Property; and
(iv) other items typically apportioned in sale of assets
transactions of the type contemplated by this Agreement.
SECTION 1.04. CONSENTS OF THIRD PARTIES. (a) Notwithstanding
anything in this Agreement to the contrary, this Agreement shall not constitute
an agreement to assign any asset or any claim or right or any benefit arising
under or resulting from such asset if an attempted assignment thereof, without
the consent of a third party, would constitute a breach or other contravention
of the rights of such third party, would be ineffective with respect to any
party to an agreement concerning such asset, or would in any way adversely
affect the rights of Seller or Seller Sub or, upon transfer, Purchaser under
such asset. If any transfer or assignment by Seller or Seller Sub to, or any
assumption by Purchaser of, any interest in, or liability, obligation or
commitment under, any asset requires the consent of a third party, then such
assignment or assumption shall be made subject to such consent being obtained.
(b) If any such consent is not obtained prior to the Closing,
Seller, Seller Sub and Purchaser shall cooperate (at their own expense) in any
lawful and reasonable arrangement reasonably proposed by Purchaser under which
Purchaser shall obtain the economic claims, rights and benefits under the asset,
claim or right with respect to which the consent has not been obtained in
accordance with this Agreement. Such reasonable arrangement may include (i) the
subcontracting, sublicensing or subleasing to Purchaser of any and all rights of
Seller and Seller Sub against the other party to such third-party agreement
arising out of a breach or cancelation thereof by the other party and (ii) the
enforcement by Seller or Seller Sub of such rights.
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SECTION 1.05. PURCHASE PRICE ADJUSTMENT. (a) Within 60 days
after the Closing Date, Purchaser shall prepare and deliver to Seller a
statement (the "STATEMENT"), certified by Purchaser's independent auditors,
setting forth Working Capital as of the close of business on the Closing Date
("CLOSING WORKING CAPITAL") and a certificate of Purchaser that the Statement
has been prepared in compliance with the requirements of this Section 1.05.
Seller's independent auditors may participate in the preparation of the
Statement and review working papers of Purchaser's accountants; provided,
however, that Seller acknowledges that Purchaser shall have the primary
responsibility and authority for preparing the Statement and Purchaser's
independent auditors shall have the primary responsibility and authority for
certifying the Statement.
(b) During the 30-day period following Seller's receipt of the
Statement, Seller and its independent auditors shall be permitted to review the
working papers relating to the Statement and Purchaser shall cooperate with
Seller and its independent auditors to provide them with any other information
used in preparing the Statement reasonably requested by Seller and their
independent auditors. The Statement shall become final and binding upon the
parties on the 30th day following delivery thereof, unless Seller gives written
notice of its disagreement with the Statement (a "NOTICE OF DISAGREEMENT") to
Purchaser prior to such date. Any Notice of Disagreement shall (i) specify in
reasonable detail the nature of any disagreement so asserted and (ii) only
include disagreements based on errors of fact or mathematical errors in the
Balance Sheet and/or the Statement or based on Closing Working Capital not being
calculated in accordance with this Section 1.05. If a Notice of Disagreement is
received by Purchaser in a timely manner, then the Statement (as revised in
accordance with this sentence) shall become final and binding upon Seller and
Purchaser on the earlier of (A) the date Seller and Purchaser resolve in writing
any differences they have with respect to the matters specified in the Notice of
Disagreement or (B) the date any disputed matters are finally resolved in
writing by the Accounting Firm. During the 30-day period following the delivery
of a Notice of Disagreement, Seller and Purchaser shall seek in good faith to
resolve in writing any differences that they may have with respect to the
matters specified in the Notice of Disagreement. During such period Purchaser
and its auditors shall have access to the working papers of Seller's auditors
prepared in connection with their certification of the Notice of Disagreement.
At the end of such 30-day period, Seller and Purchaser shall submit to an
independent accounting firm (the "ACCOUNTING FIRM") for arbitration any and all
matters that remain in dispute and were properly included in the Notice of
Disagreement, in the form of a written brief. The Accounting Firm shall be
Deloitte & Touche LLP or, if such firm is unable or unwilling to act, such other
nationally recognized independent public accounting firm as shall be agreed upon
by the parties hereto in writing. Seller and Purchaser agree to use reasonable
efforts to cause the Accounting Firm to render a decision resolving any matters
submitted to the Accounting Firm within 30 days following submission. Judgment
may be entered upon the determination of the Accounting Firm in any court having
jurisdiction over the party against which such determination is to be enforced.
The cost of any arbitration (including the fees and expenses of the Accounting
Firm and reasonable attorney fees and expenses of the parties) pursuant to this
Section
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1.05 shall be borne by Purchaser and Seller in inverse proportion as they may
prevail on matters resolved by the Accounting Firm, which proportionate
allocations shall also be determined by the Accounting Firm at the time the
determination of the Accounting Firm is rendered on the merits of the matters
submitted. The fees and disbursements of Purchaser's independent auditors
incurred in connection with their certification of the Statement and review of
any Notice of Disagreement shall be borne by Purchaser, and the fees and
disbursements of Seller's independent auditors incurred in connection with their
review of the Statement and any Notice of Disagreement shall be borne by Seller.
(c) The Purchase Price shall be increased by the amount by
which Closing Working Capital exceeds $16,657,500 (the "WC AMOUNT"), and the
Purchase Price shall be decreased by the amount by which Closing Working Capital
is less than the WC Amount (the Purchase Price as so increased or decreased
shall hereinafter be referred to as the "ADJUSTED PURCHASE PRICE"). If the
Purchase Price is less than the Adjusted Purchase Price, Purchaser shall, and if
the Purchase Price is more than the Adjusted Purchase Price, Seller shall,
within 5 business days after the Statement becomes final and binding on the
parties, make payment by wire transfer in immediately available funds of the
amount of such difference, together with interest thereon at a rate equal to the
rate of interest from time to time announced publicly by Citibank, N.A., as its
prime rate, calculated on the basis of the actual number of days elapsed divided
by 365, from the Closing Date to the date of payment.
(d) The term "WORKING CAPITAL" means Current Assets minus
Current Liabilities. The terms "CURRENT ASSETS" and "CURRENT LIABILITIES" mean
the current assets and current liabilities, respectively, of the Business,
calculated in the same way, using the same accounting methods, as the line items
on the Balance Sheet (which in each case for purposes of this Section 1.05 shall
exclude any Excluded Assets and Excluded Liabilities). Attached hereto as
Schedule 1.05 is a form of the Working Capital Statement that identifies the
specific line items and adjustments that will be included in Working Capital.
Without limiting the generality of the foregoing, Closing Working Capital is to
be calculated in the same way, using the same accounting methods, as the line
items comprising Working Capital on the Balance Sheet, whether or not doing so
is in accordance with United States generally accepted accounting principles
("GAAP"). The foregoing principles are referred to in this Agreement as the
"BALANCE SHEET PRINCIPLES". The adjustment contemplated by this Section 1.05 is
intended to show the change in Working Capital from the date of the Balance
Sheet to the Closing Date, and such change can only be measured if the
calculation is done in the same way using the same accounting methods, for both
dates. The scope of the disputes to be resolved by the Accounting Firm shall be
limited to disputes concerning whether such calculation was done in accordance
with the Balance Sheet Principles, and whether there were errors of fact or
mathematical errors in the Statement or the Balance Sheet, and the Accounting
Firm is not to make any other determination, including any determination as to
whether GAAP was followed for the Balance Sheet or the Statement or as to
whether the WC Amount is correct. Any items on or omissions from the Balance
Sheet that are not in accordance with
11
GAAP, but which are in accordance with the Balance Sheet Principles, shall be
retained for purposes of calculating Closing Working Capital.
(e) To the extent such actions could affect the Statement,
from the Closing through the full and complete resolution of any adjustment to
the Purchase Price contemplated by this Section 1.05, Purchaser shall not take
any actions with respect to the accounting books and records of the Business on
which the Statement is to be based that are not consistent with the past
practice of the Business. Without limiting the generality of the foregoing,
during such period, no changes shall be made in any reserve or other account
existing as of the date of the Balance Sheet except as a result of events
occurring after the date of the Balance Sheet and, in such event, only in a
manner consistent with the Balance Sheet Principles. Seller shall assist
Purchaser in the preparation of the Statement, including providing customary
certifications to Purchaser's auditors. During the period of time from and after
the Closing Date through the full and complete resolution of any adjustment to
the Purchase Price contemplated by this Section 1.05, Seller shall afford to
Purchaser and any accountants, counsel or financial advisors retained by
Purchaser in connection with any adjustment to the Purchase Price contemplated
by this Section 1.05 reasonable access during normal business hours to all the
properties, books, contracts, personnel and records of the Business retained or
controlled by Seller relevant to the adjustment contemplated by this Section
1.05. During the period of time from and after the Closing Date through the full
and complete resolution of any adjustment to the Purchase Price contemplated by
this Section 1.05, Purchaser shall afford to Seller and any accountants, counsel
or financial advisors retained by Seller in connection with any adjustment to
the Purchase Price contemplated by this Section 1.05 reasonable access during
normal business hours to all the properties, books, contracts, personnel and
records of the Business retained or controlled by Purchaser relevant to the
adjustment contemplated by this Section 1.05.
(f) Notwithstanding the foregoing provisions of this Section
1.05, no adjustment to the Purchase Price pursuant to this Section 1.05 shall be
made unless such adjustment would exceed $100,000, and if the adjustment would
exceed $100,000, then the full amount of the adjustment shall be made.
ARTICLE II
THE CLOSING
SECTION 2.01. CLOSING DATE. The closing of the Acquisition
(the "CLOSING") shall take place at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. on the second business day
following the satisfaction (or, to the extent permitted, the waiver) of the
conditions set forth in Section 6.01, or, if on such day any condition set forth
in Section 6.02 or 6.03 has not been satisfied (or, to the extent permitted,
waived by the party entitled to the
12
benefit thereof), as soon as practicable after all the conditions set forth in
Article VI have been satisfied (or, to the extent permitted, waived by the
parties entitled to the benefits thereof), or at such other place, time and date
as shall be agreed between Seller and Purchaser. The date on which the Closing
occurs is referred to in this Agreement as the "CLOSING DATE".
SECTION 2.02. TRANSACTIONS TO BE EFFECTED AT THE CLOSING. At
the Closing:
(a) Seller and Seller Sub shall deliver to Purchaser (i)
payment, by wire transfer to a bank account designated in writing by
Purchaser (such designation to be made at least two business days prior
to the Closing Date), immediately available funds, or otherwise credit
Purchaser such amount against the Purchase Price, in an amount equal to
$8,846,000, (ii) such appropriately executed deeds (in recordable
form), bills of sale, assignments and other instruments of transfer
relating to the Acquired Assets in form and substance reasonably
satisfactory to Purchaser and its counsel and (iii) such other
documents as Purchaser or its counsel may reasonably request to
demonstrate satisfaction of the conditions and compliance with the
covenants set forth in this Agreement; PROVIDED, HOWEVER that the terms
of such deeds, bills of sale, assignments and other instruments and
documents shall not result in an increase in the obligations of Seller
or Seller Sub beyond those contemplated by this Agreement.
(b) Purchaser shall deliver to Seller and Seller Sub (i)
payment, by wire transfer to a bank account designated in writing by
Seller (such designation to be made at least two business days prior to
the Closing Date), immediately available funds in an amount equal to
the Purchase Price, subject to any credit pursuant to Section
2.02(a)(i), (ii) duly authorized and issued certificates representing
an amount of common stock of CBD Media Holdings, Inc., a Delaware
corporation and the sole shareholder of Purchaser ("HOLDCO"), equal to
2.5% of the outstanding shares of common stock of Holdco (the "HOLDCO
SHARES") (after giving effect to such issuance), (iii) such
appropriately executed assumption agreements and other instruments of
assumption providing for the assumption of the Assumed Liabilities in
form and substance reasonably satisfactory to Seller and its counsel
and (iv) such other documents as Seller or its counsel may reasonably
request to demonstrate satisfaction of the conditions and compliance
with the covenants set forth in this Agreement; PROVIDED, HOWEVER that
the terms of such assumption agreements and other instruments and
documents shall not result in an increase in the obligations of
Purchaser beyond those contemplated by this Agreement.
SECTION 2.03. RISK OF LOSS. Until the Closing, any loss of or
damage to the Acquired Assets from fire, casualty or any other occurrence not
covered by insurance payable to Purchaser shall be the sole responsibility of
Seller or Seller Sub, as applicable.
ARTICLE III
13
REPRESENTATIONS AND WARRANTIES OF SELLER AND SELLER SUB
Subject to the second sentence of Section 9.04(a), Seller and
Seller Sub hereby jointly and severally represent and warrant to Purchaser, as
of the date of this Agreement and as of the Closing Date, as follows:
SECTION 3.01. ORGANIZATION, STANDING AND POWER. Each of Seller
and Seller Sub is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and has full corporate
power and authority and possesses all governmental franchises, licenses,
permits, authorizations and approvals necessary to enable it to own, lease or
otherwise hold its properties and assets and to conduct the Business and its
other businesses as presently conducted, other than such franchises, licenses,
permits, authorizations and approvals the lack of which, individually or in the
aggregate, could not reasonably be expected to have a Business Material Adverse
Effect. A "BUSINESS MATERIAL ADVERSE EFFECT" shall mean any change or effect
that is reasonably likely to (i) have a material adverse effect on the assets,
liabilities, business, financial condition or results of operations of the
Business or (ii) prevent or materially impede, interfere with, hinder or delay
the consummation by Seller or Seller Sub of the Acquisition or the transactions
contemplated by this Agreement and each Ancillary Agreement, in each case other
than changes relating to United States or foreign economies or securities
markets or the industries in which the Business operates and not specifically
relating to the Business. Purchaser acknowledges that there may have been or may
be disruption to the Business as a result of Seller's intention to sell the
Business or as a result of the execution of this Agreement and the consummation
of the transactions contemplated hereby or announcement thereof, and Purchaser
acknowledges that such disruptions do not and shall not constitute a Business
Material Adverse Effect. Each of Seller and Seller Sub is duly qualified to do
business as a foreign corporation in (A) each jurisdiction where the character
of the Acquired Assets held by it or the nature of the Business make such
qualification necessary for it to conduct the Business as currently conducted by
it or the failure to so qualify could reasonably be expected to have a Business
Material Adverse Effect and (B), in the case of Seller Sub, Ohio and Kentucky.
Seller has delivered to Purchaser true and complete copies of the respective
certificates of incorporation and by-laws of Seller and Seller Sub, in each case
as amended through the date of this Agreement.
SECTION 3.02. AUTHORITY; EXECUTION AND DELIVERY;
ENFORCEABILITY. Each of Seller and Seller Sub has full power and authority to
execute this Agreement and the Ancillary Agreements to which it is, or is
specified to be, a party and to consummate the Acquisition and the other
transactions contemplated hereby and thereby. The execution and delivery by each
of Seller and Seller Sub of this Agreement and the Ancillary Agreements to which
it is, or is specified to be, a party and the consummation by each of Seller and
Seller Sub of the Acquisition and the other transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action. Seller, as
the sole stockholder of Seller Sub, has authorized the Acquisition and the other
transactions
14
contemplated hereby. No other corporate proceedings on the part of Seller or
Seller Sub are necessary to authorize this Agreement and the Ancillary
Agreements and the transactions contemplated hereby and thereby. Each of Seller
and Seller Sub has duly executed and delivered this Agreement and prior to the
Closing will have duly executed and delivered each Ancillary Agreement to which
it is, or is specified to be, a party, and this Agreement constitutes, and each
Ancillary Agreement to which it is, or is specified to be, a party will after
the Closing constitute, its legal, valid and binding obligation, enforceable
against it in accordance with its terms.
SECTION 3.03. NO CONFLICTS; CONSENTS. Except as set forth on
Schedule 3.03, the execution and delivery by Seller and Seller Sub of this
Agreement do not, the execution and delivery by Seller and Seller Sub of each
Ancillary Agreement to which it is, or is specified to be, a party will not, and
the consummation of the Acquisition and the other transactions contemplated
hereby and thereby and compliance by Seller and Seller Sub with the terms hereof
and thereof will not conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancelation or acceleration of any obligation or loss of a
benefit under, or result in the creation of any Lien upon any of the properties
or assets of Seller or any of its subsidiaries, under any provision of (a) the
certificate of incorporation or by-laws of Seller or any of its subsidiaries,
(b) any Contract to which Seller or Seller Sub is a party or by which any of
their respective properties or assets is bound or (c) any judgment, order or
decree ("JUDGMENT") or statute, law, ordinance, rule or regulation ("APPLICABLE
LAW") applicable to Seller or any of its subsidiaries or their respective
properties or assets, other than, in the case of clauses (b) and (c) above, any
such items that, individually or in the aggregate, could not reasonably be
expected to have a Business Material Adverse Effect. No material consent,
approval, license, permit, order or authorization ("CONSENT") of, or material
registration, declaration or filing with, any Federal, state, local or foreign
government or any court of competent jurisdiction, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (a "GOVERNMENTAL ENTITY"), is required to be obtained or made by or with
respect to Seller or any of its subsidiaries in connection with the execution,
delivery and performance of this Agreement or any Ancillary Agreement or the
consummation of the Acquisition or the other transactions contemplated hereby
and thereby, other than (i) compliance with and filings under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), or (ii)
other filings or approvals that individually or in the aggregate could not
reasonably be expected to prevent the consummation of the transactions
contemplated hereby.
SECTION 3.04. FINANCIAL STATEMENTS. (a) Schedule 3.04(a) sets
forth for the Business (i) audited balance sheets as of December 31, 2000 and
2001 (such December 31, 2001 balance sheet being referred to herein as the
"BALANCE SHEET") and (ii) audited statements of income and cash flows for each
of the years ended December 31, 1999, 2000 and 2001 (the "FINANCIAL
STATEMENTS"). The Financial Statements have been examined by
PricewaterhouseCoopers LLP, independent certified public accountants, whose
report thereon is included with such Financial
15
Statements. The Financial Statements have been prepared in accordance with GAAP
(except as specifically described in Schedule 3.04) consistently applied and
fairly and accurately present in all material respects the financial condition
and results of operations of the Business as of the respective dates thereof and
for the respective periods indicated.
(b) The Business does not have any liabilities or obligations
of any nature (whether accrued, absolute, contingent, unasserted or otherwise)
of a nature required by GAAP to be reflected on a consolidated balance sheet of
the Business that could reasonably be expected to have a Business Material
Adverse Effect, except (i) as disclosed, reflected or reserved against in the
Balance Sheet and the notes thereto, (ii) for liabilities and obligations
incurred in the ordinary course of the Business consistent with past practice
since the date of the Balance Sheet and not in violation of this Agreement,
(iii) for Taxes and (iv) as set forth on Schedule 3.04(b). This representation
shall not be deemed breached as a result of a change in law after the Closing
Date.
SECTION 3.05. ASSETS OTHER THAN REAL PROPERTY INTERESTS. (a)
Seller or Seller Sub has and will transfer to Purchaser good and marketable
title to all the Acquired Assets, in each case free and clear of all mortgages,
liens, security interests, charges, easements, leases, subleases, covenants,
rights of way, options, claims, restrictions or encumbrances of any kind
(collectively, "LIENS"), except (i) such Liens as are set forth in Schedule
3.05, (ii) (A) mechanics', carriers', workmen's, repairmen's or other like Liens
arising or incurred in the ordinary course of business and not material in
amount, (B) Liens arising under original purchase price conditional sales
contracts and equipment leases with third parties entered into in the ordinary
course of business and (C) Liens for current Taxes that are not yet due and
payable and (iii) other imperfections of title or encumbrances, if any, that
individually or in the aggregate, do not impair in any material respect the
continued use and operation of the assets to which they relate in the conduct of
the Business as presently conducted (the Liens described above, together with
the Liens referred to in clauses (b) through (e) of Section 3.06, are referred
to collectively as "PERMITTED LIENS").
(b) This Section 3.05 does not relate to Leased Property,
which is addressed in Section 3.06, or to Intellectual Property, which is
addressed in Section 3.07.
SECTION 3.06. LEASED PROPERTY. Schedule 3.06(a) sets forth a
complete list of all real property and interests in real property leased by
Seller or Seller Sub and used, held for use or intended to be used primarily in
the operation or conduct of the Business (individually, a "LEASED PROPERTY").
Each lease on Schedule 3.06(a) that is an "Assigned Contract" is clearly denoted
as such. Seller or Seller Sub has good and valid title to the leasehold estates
in all Leased Property free and clear of all Liens, except (a) Liens described
in clause (ii) or (iii) of Section 3.05(a), (b) such Liens as are set forth in
Schedule 3.06(b), (c) subleases and similar agreements set forth in Schedule
3.08, (d) easements, covenants, rights-of-way and other similar restrictions of
record, and (e) (i) zoning, building
16
and other similar restrictions, and (ii) Liens that have been placed by any
developer, landlord or other third party on property over which Seller or Seller
Sub has easement rights or on any Leased Property and subordination or similar
agreements relating thereto. None of the items set forth in clause (e) above,
individually or in the aggregate, impairs in any material respect the continued
use and operation of the Leased Property to which they relate in the conduct of
the Business as presently conducted.
SECTION 3.07 INTELLECTUAL PROPERTY.
(a) GENERALLY. Schedule 3.07(a) sets forth, with respect to
the (i) trademarks and service marks (whether registered or unregistered), trade
names, designs and general intangibles of like nature, together with all
goodwill related to the foregoing (collectively, "TRADEMARKS"); (ii) patents and
patent applications (including any continuations, continuations-in-part,
divisionals, reissues, renewals and applications for any of the foregoing)
(collectively "PATENTS"); (iii) copyrights and mask works (including any
registrations and applications therefore and whether registered or unregistered)
(collectively "COPYRIGHTS"); and (iv) domain names, including the top-level
Internet domain names and all lower-level Internet domain names for which such
top-level domains are a root or parent, whether in the form of an address for
use in electronic mail transfer, a Universal Resource Locator, a File Transfer
Protocol location, or other form suitable for specifying the location of an
electronic data file over a distributed computer network (collectively, "DOMAIN
NAMES"), in each case owned by or licensed to Seller or Seller Sub and used
primarily in the Business, including jointly with others (such schedule
specifying if such Intellectual Property is owned jointly), a complete and
accurate list of all United States and foreign (a) Patents, Patent applications
and Patent applications currently in process, (b) Trademark registrations and
applications currently in progress, and (c) Copyright registrations and
applications, indicating for each, the applicable jurisdiction, registration
number (or application number) and date issued (or date filed). Notwithstanding
the foregoing, it is understood and agreed that neither Seller nor Seller Sub
represent that Schedule 3.07(a) constitutes a comprehensive list of all
unregistered Trademarks in which Seller or Seller Sub might claim common law
trademark or service ▇▇▇▇ rights that nevertheless constitute Acquired Assets.
(b) TRADEMARKS. (i) All Trademarks of Seller or Seller Sub
used primarily in the Business for which an application for trademark
registration has been filed are currently in compliance with all legal
requirements (including the timely post-registration filing of affidavits of use
and incontestability and renewal applications) other than any requirement that,
if not satisfied, would not result in a cancelation of any such registration or
otherwise affect the use, priority or enforceability of the Trademark in
question. Except as set forth in Schedule 3.07(b)(i), no registered Trademark of
Seller or Seller Sub used primarily in the Business is involved in any
opposition or cancelation proceeding in the United States Patent and Trademark
Office. To Seller's knowledge, no such action has been threatened in writing,
which threatened action remains unresolved or outstanding. Except as set forth
in Schedule 3.07(b)(i), there has been, to the knowledge of Seller or Seller
Sub, no prior use
17
of any Trademark of Seller or Seller Sub by any third party that confers upon
said third party superior rights in any such Trademark.
(ii) Except as set forth in Schedule 3.07(b)(ii),
Seller or Seller Sub is the owner of all right, title and interest in and to all
of the Trademarks used primarily in the Business, in each case free and clear of
any and all encumbrances, covenants, conditions and restrictions or other
adverse claims or interests of any kind or nature, and neither Seller nor Seller
Sub has received any written notice or claim or to its knowledge, any oral
notice or claim, which claim remains unresolved or outstanding, challenging its
complete and exclusive ownership of the Trademarks or suggesting that any other
person has any claim of legal or beneficial ownership with respect thereto.
There is no agreement, decree, arbitral award or other provision or contingency
which obligates Seller or Seller Sub to grant licenses in future Trademarks used
primarily in the Business.
(c) PATENTS. No Patents owned by Seller or Seller Sub have
been or are currently used in the Business and, to the knowledge of Seller and
Seller Sub, no such Patents are required to conduct the Business after the
Closing.
(d) COPYRIGHTS. Except as set forth in Schedule 3.07(d):
(i) Seller or Seller Sub is the owner of all right, title and
interest in and to each of the Copyrights used primarily in the
Business other than those as to which the rights being exercised by
Seller or Seller Sub have been licensed from another person
(collectively, "SELLER OWNED COPYRIGHTS"), free and clear of any and
all encumbrances, covenants, conditions and restrictions or other
adverse claims or interests of any kind or nature, and neither Seller
nor Seller Sub has received any written or, to its knowledge, oral
notice or claim, which claim remains unresolved or outstanding,
challenging its complete and exclusive ownership of the Copyrights or
suggesting that any other person has any claim of legal or beneficial
ownership with respect thereto.
(ii) Neither Seller nor Seller Sub has received any written
or, to its knowledge, oral notice or claim, which claim remains
unresolved or outstanding, challenging or questioning the validity or
enforceability of any of the Seller Owned Copyrights or indicating an
intention on the part of any person to bring a claim that any Seller
Owned Copyright is invalid, is unenforceable or has been misused.
(iii) Neither Seller nor Seller Sub has taken any action or
used or enforced (or failed to enforce) any of the Seller Owned
Copyrights, in each case in a manner that would result in the
unenforceability of any of the Seller Owned Copyrights. Seller and
Seller Sub have taken all steps reasonably necessary to protect their
rights in and to the Seller Owned Copyrights, in each case in
accordance with standard industry practice. To the knowledge of Seller
and
18
Seller Sub, no other person has infringed or is infringing in any
material respect any of the Seller Owned Copyrights.
(iv) Neither Seller nor Seller Sub has granted to any person
any right, license or permission to exercise any rights under any of
the Seller Owned Copyrights other than non-exclusive licenses granted
in the ordinary course of business to customers.
(e) TRADE SECRETS. Seller Sub has a written policy regarding
trade secrets in accordance with normal industry practice and has taken
commercially reasonable steps to enforce such policy and to protect its rights
in confidential information and proprietary information, including any formula,
pattern, compilation, program, device, method, technique, or process, that: (1)
derives independent economic value, actual or potential, from not being
generally known to the public or to other persons who can obtain economic value
from its disclosure or use; and (2) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy (collectively, "TRADE
SECRETS").
(f) LICENSE AGREEMENTS. (i) Schedule 3.07(f)(i) sets forth a
complete and accurate list of all license agreements granting to Seller or
Seller Sub any right to use or practice any rights under any Intellectual
Property used primarily in the Business (other than software commercially
available on reasonable terms to any person for a license fee of no more than
$10,000, but including all such agreements that are otherwise material to Seller
or Seller Sub) (collectively, the "SELLER INBOUND LICENSE AGREEMENTS"),
indicating for each the title and the parties thereto.
(ii) Schedule 3.07(f)(ii) sets forth a complete and accurate
list of all license agreements under which Seller or Seller Sub grants
any rights in or to use or practice any rights under any Intellectual
Property used primarily in the Business (collectively, the "SELLER
OUTBOUND LICENSE AGREEMENTS"), indicating for each the title and the
parties thereto.
(iii) There is no outstanding or, to Seller's and Seller Sub's
knowledge, threatened dispute or disagreement with respect to any
Seller Inbound License Agreement or any Seller Outbound License
Agreement. Correct and complete executed copies of all Seller Inbound
License Agreements and Seller Outbound License Agreements have been
delivered to Purchaser.
(g) OWNERSHIP; SUFFICIENCY OF INTELLECTUAL PROPERTY ASSETS.
Except as set forth in Schedule 3.07(g), Seller and Seller Sub each owns or
possesses adequate licenses or other rights to use, free and clear of
encumbrances (except in the case of licenses, the interests of the licensing
party), orders, arbitration awards and contingent licenses arising from
termination provisions (or other causes) in agreements between them and any
other person, all of the Intellectual Property assets necessary to conduct the
Business as currently conducted. Except as set forth in Schedule 3.07(g), the
Intellectual
19
Property identified in Section 1.02(a)(v) and in Schedule 3.07(a), together with
Trade Secrets, Licensed Trademarks, Seller Owned Copyrights and Seller's and
Seller Sub's unregistered Copyrights and Seller's and Seller Sub's rights
granted to them under the Seller Inbound License Agreements, constitute all the
Intellectual Property rights and Seller Inbound License Agreements used
primarily in the operation of the Business as currently conducted and are all
such Intellectual Property rights and Seller Inbound License Agreements
necessary to operate such business after the Closing in substantially the same
manner as such businesses have been operated by Seller and Seller Sub during the
12 months prior to the Closing.
(h) NO INFRINGEMENT BY SELLER. No litigation is pending and
neither Seller nor Seller Sub has received any written or, to its knowledge,
oral notice or claim (A) alleging that Seller or Seller Sub has engaged in any
activity or conduct related primarily to the Business that infringes upon,
violates or constitutes the unauthorized use of the Intellectual Property rights
of any third party, or (B) challenging the ownership, use, validity or
enforceability of any Intellectual Property used primarily in the Business which
are owned or exclusively licensed by or to Seller or Seller Sub. No Intellectual
Property that is owned or licensed by Seller or Seller Sub for use primarily in
the Business is subject to any outstanding order, judgment, decree, stipulation
or agreement restricting the use thereof by Seller or Seller Sub.
(i) NO INFRINGEMENT BY THIRD PARTIES. To the knowledge of
Seller and Seller Sub, no third party is misappropriating, infringing, diluting
or violating any Intellectual Property owned or exclusively licensed by Seller
or Seller Sub for use primarily in the Business, and no claims for any of the
foregoing have been brought against any third party by Seller or Seller Sub.
(j) ASSIGNMENT; CHANGE OF CONTROL. Except as set forth in
Schedule 3.07(j), the execution, delivery and performance by Seller and Seller
Sub of this Agreement and each of the other documents contemplated hereby to
which either is a party, and the consummation of the transactions contemplated
hereby and thereby, will not result in the loss or impairment of, or give rise
to any right of any third party to terminate, any of Seller's or Seller Sub's
rights to own any of its Intellectual Property used primarily in the Business or
rights under any Seller Inbound License Agreement or Seller Outbound License
Agreement, nor require the consent of any Governmental Entity or third party in
respect of any such Intellectual Property.
(k) WEBSITES. Seller Sub is the sole owner of the Domain
Names, and all such Domain Names are currently registered by Seller Sub, as sole
owner, with an ICANN accredited registrar, and the registration fees are paid
through the dates listed on Schedule 5.24. Except as set forth on Schedule 3.07
(k), Seller Sub is the owner or authorized licensee of all Content and no
consent, license, approval or authorization of, registration or declaration
with, or notice to, any governmental authority, agency, bureau or commission is
required to be obtained or made by Seller Sub in
20
connection with the execution, delivery, performance, validity, or
enforceability of this Agreement or the sale or transfer of the ownership of the
Domain Names and continued use of the Content by Purchaser. Neither Seller nor
Seller Sub is aware of any facts or circumstances that could reasonably form the
basis of a challenge relating to Purchaser's unencumbered use of the Websites,
Content, or any part thereof.
SECTION 3.08. CONTRACTS. (a) Except for Contracts relating
primarily to Excluded Assets and except as set forth on Schedule 3.08, neither
Seller nor Seller Sub is a party to or bound by any Contract, including any
supplement, amendment or revision thereto, that is used, held for use or
intended for use primarily in, or that arises primarily out of, the operation or
conduct of the Business and that is:
(i) a written employment agreement or employment contract that
has an aggregate future liability in excess of $85,000 and is not
terminable by Seller or Seller Sub by notice of not more than 60 days
for a cost of less than $25,000;
(ii) a collective bargaining agreement or other Contract with
any labor organization, union or association;
(iii) a Contract pursuant to which following the Closing would
(A) materially limit the ability of Purchaser to compete with any
person or to engage in any activity or business, or pursuant to which
any benefit is required to be given or lost as a result of so competing
or engaging; or (B) limit the ability of Purchaser to solicit or hire
any employee, consultant or other entity for the purpose of providing
services to Purchaser in connection with the Business;
(iv) a Contract with (A) any shareholder or affiliate of
Seller or (B) any officer, director or employee of Seller or any of its
affiliates (other than employment agreements covered by clause (i)
above);
(v) a sublease or similar Contract with any person under which
Seller or Seller Sub is a sublessor of, or makes available for use to
any person, any Leased Property;
(vi) a lease, sublease or similar Contract with any person
under which Seller or Seller Sub is a lessee of, or holds or uses, any
machinery, equipment, vehicle or other tangible personal property owned
by any person and which has an aggregate future liability in excess of
$100,000 and is not terminable by Seller or Seller Sub by notice of not
more than 60 days for a cost of less than $25,000;
21
(vii) (A) a continuing Contract for the future purchase of
materials, supplies or equipment (other than purchase orders for
inventory in the ordinary course of business consistent with past
practice) or (B) a management, service, market research, consulting or
other similar Contract, in any such case that has an aggregate future
liability to any person in excess of $100,000 and is not terminable by
Seller or Seller Sub by notice of not more than 60 days for a cost of
less than $25,000;
(viii) a Contract under which Seller or Seller Sub receives
printing, plating or presswork services involving the payment over the
life of such Contract in excess of $100,000 by Seller or Seller Sub and
is not terminable by Seller or Seller Sub by notice of not more than 60
days for a cost of less than $25,000;
(ix) a Contract providing for the services of any dealer,
distributor or sales representative involving the payment or receipt
over the life of such Contract in excess of $100,000 by Seller or
Seller Sub;
(x) a material license, sublicense, royalty, option or other
Contract relating in whole or in part to the Assigned Intellectual
Property (including any license or other Contract under which Seller or
Seller Sub is licensee or licensor of any Assigned Intellectual
Property);
(xi) (A) a Contract under which Seller or Seller Sub has
borrowed any money from, or issued any note, bond, debenture or other
evidence of indebtedness to, any person or (B) any other note, bond,
debenture or other evidence of indebtedness issued to any person, in
any such case that, individually, is in excess of $100,000;
(xii) a Contract (including any so-called take-or-pay or
keepwell agreement) under which (A) any person has directly or
indirectly guaranteed indebtedness, liabilities or obligations of
Seller or Seller Sub or (B) Seller or Seller Sub has directly or
indirectly guaranteed indebtedness, liabilities or obligations of any
other person (in each case other than endorsements for the purpose of
collection in the ordinary course of business), in any such case that,
individually, is in excess of $100,000;
(xiii) a Contract under which Seller or Seller Sub has,
directly or indirectly, made any advance, loan, extension of credit or
capital contribution to, or other investment in, any person (other than
Seller or Seller Sub), in any such case that, individually, is in
excess of $100,000;
22
(xiv) a Contract for the sale of any Acquired Asset (other
than inventory sales in the ordinary course of business) or the grant
of any preferential rights to purchase any Acquired Asset or requiring
the consent of any party to the transfer thereof;
(xv) a material Contract providing for confidential treatment
by Seller or Seller Sub of third party information other than
non-disclosure agreements entered into by Seller or Seller Sub in the
ordinary course of business consistent with past practice; and
(xvi) a Contract for any joint venture, partnership, limited
liability company or similar arrangement and any shareholders,
partnership or operating agreement with respect to any Investment.
(b) Schedule 3.08 also sets forth a list of all Contracts
relating to the Business between Seller or Seller Sub and the top ten customers
(in terms of revenue) of the Business, as of the date of this Agreement (the
"TOP CUSTOMERS"). As of the date of this Agreement and except as set forth on
Schedule 3.08, neither Seller nor Seller Sub has received any notice of the
decision of any of the Top Customers not to continue such Top Customer's
relationship with the Business following the expiration of such Contract or to
materially reduce its purchases from the Business. The form agreement used by
the Business relating to the sale of advertising to customers is attached to
Schedule 3.08.
(c) Each Contract listed on Schedule 3.08 that is an "Assigned
Contract" is clearly denoted as such. All Contracts listed in the Schedules are
valid, binding and in full force and effect and are enforceable by Seller or
Seller Sub, as applicable, in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
other similar laws affecting creditors' rights generally from time to time in
effect and to general principles of equity, including concepts of materiality,
reasonableness, good faith and fair dealing regardless of whether considered in
a proceeding in equity or at law. Seller and Seller Sub have performed all
obligations required to be performed by them to date under the Assigned
Contracts, and they are not (with or without the lapse of time or the giving of
notice, or both) in breach or default in any material respect thereunder,
neither Seller nor Seller Sub has liability for any material delinquent fees
under the Assigned Contracts and, to the knowledge of Seller, no other party to
any Assigned Contract is (with or without the lapse of time or the giving of
notice, or both) in breach or default in any material respect thereunder. As of
the date of this Agreement, neither Seller nor Seller Sub has, except as
disclosed in the applicable Schedule, received any notice of the intention of
any party to terminate any Assigned Contract listed in any Schedule. Seller Sub
has delivered to Purchaser true and correct copies of (i) the letter dated
January 29, 2002 from Seller Sub to ▇.▇. ▇▇▇▇▇ & Co. ("▇▇▇▇▇") and countersigned
by ▇▇▇▇▇, pursuant to which ▇▇▇▇▇ has consented to the assignment to Purchaser
of a certain contract between Seller Sub and ▇▇▇▇▇ and (ii) each Consent to
Assignment in favor of the Bank signed by ▇▇▇▇▇ or Seller.
23
(d) Schedule 3.08 sets forth each Assigned Contract listed on
Schedule 3.08 with respect to which the Consent of the other party or parties
thereto must be obtained by virtue of the execution and delivery of this
Agreement or the consummation of the Acquisition to avoid the invalidity of the
transfer of such Contract, the termination thereof, a breach, violation or
default thereunder or any other change or modification to the terms thereof. In
addition, Schedule 3.08 sets forth each Assigned Contract not listed on Schedule
3.08 with respect to which the Consent of the other party or parties thereto
must be obtained by virtue of the execution and delivery of this Agreement or
the consummation of the Acquisition to avoid the invalidity of the transfer of
such Contract, the termination thereof, a breach, violation or default
thereunder or any other change or modification to the terms thereof, other than
such Assigned Contracts the termination of which by any party thereto,
individually or in the aggregate, could not reasonably be expected to have a
Business Material Adverse Effect.
SECTION 3.09. PERMITS. (a) Schedule 3.09 sets forth all
material certificates, licenses, permits, authorizations and approvals
("PERMITS") issued or granted to Seller or Seller Sub by Governmental Entities
that are necessary or desirable for the operation or conduct of the Business.
All such Permits are validly held by Seller or Seller Sub, and Seller or Seller
Sub has complied in all material respects with all terms and conditions thereof.
During the past 12 months, neither Seller nor Seller Sub has received notice of
any Proceedings relating to the revocation, default or modification of any such
Permits. None of such Permits will be subject to suspension, modification,
revocation or nonrenewal as a result of the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby and no
Consent or approvals must by obtained by virtue of the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby to
avoid the invalidity of the transfer of such Permit. This Section 3.09 does not
relate to environmental matters, which are the subject of Section 3.17.
(b) Seller or Seller Sub possesses all Permits to own or hold
under lease and operate the Acquired Assets and to conduct the Business as
currently conducted, other than such Permits the absence of which, individually
or in the aggregate, could not reasonably be expected to have a Business
Material Adverse Effect.
SECTION 3.10. INSURANCE. The material insurance policies
maintained by Seller and Seller Sub with respect to the Business are listed in
Schedule 3.10. All such policies are in full force and effect in all material
respects, all premiums due and payable thereon have been paid (other than
retroactive or retrospective premium adjustments that are not yet, but may be,
required to be paid with respect to any period ending on or prior to the Closing
Date), and no notice of cancelation or termination has been received with
respect to any such policy which has not been replaced on substantially similar
terms prior to the date of such cancelation.
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SECTION 3.11. SUFFICIENCY OF ACQUIRED ASSETS. The Acquired
Assets, together with the Excluded Assets, comprise all the assets employed by
Seller or Seller Sub in connection with the Business. The Acquired Assets,
together with the services to be provided pursuant to the Ancillary Agreements,
are sufficient for the conduct of Business immediately following the Closing in
substantially the same manner as currently conducted and there are no assets
that are material to the conduct of the Business as currently conducted other
than the Acquired Assets, the Assigned Contracts and the services to be provided
pursuant to the Ancillary Agreements.
SECTION 3.12. TAXES. (a) For purposes of this Agreement:
------
"CODE" means the Internal Revenue Code of 1986, as amended.
"POST-CLOSING TAX PERIOD" means any taxable period beginning
after the Closing Date and that portion of a Straddle Period beginning after the
Closing Date.
"PRE-CLOSING TAX PERIOD" means any taxable period ending on or
before the Closing Date and the portion of any Straddle Period ending on the
Closing Date.
"STRADDLE PERIOD" means any taxable period beginning before
and ending after the Closing Date.
"TAX" means any tax, governmental fee or other like assessment
or charge of any kind whatsoever (including any tax imposed under Subtitle A of
the Code and any net income, alternative or add-on minimum tax, gross income,
gross receipts, sales, use, ad valorem, value added, transfer, franchise,
profits, license, withholding tax on amounts paid, payroll, employment, excise,
severance, stamp, capital stock, occupation, property, environmental or windfall
profit tax, premium, custom, duty or other tax), together with any interest,
penalty, addition to tax or additional amount due, imposed by any Governmental
Entity (domestic or foreign) responsible for the imposition of any such tax (a
"TAXING AUTHORITY").
"TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
(b) LIENS. There are no material Liens for Taxes (other than
for current Taxes not yet due and payable) on any of the Acquired Assets.
(c) CLAIMS. No material deficiencies for Taxes have been
claimed in writing by any Taxing Authority against Seller.
25
(d) INTERESTS IN ENTITIES. None of the Acquired Assets
constitutes (i) an interest in any joint venture, partnership, or other
arrangement or contract which is treated as a partnership for Tax purposes, (ii)
an interest in a single member limited liability company which is treated as a
disregarded entity for Tax purposes, or (iii) stock in an entity which is
treated as a corporation (or any other entity taxable as a corporation) for Tax
purposes.
(e) WITHHOLDING. Neither Seller nor Seller Sub is a "foreign
person" within the meaning of Section 1445 of the Code.
(f) MISCELLANEOUS. No Acquired Asset is "tax-exempt bond
financed property" or "tax-exempt use property" within the meaning of Section
168(g) or Section 168(h), respectively, of the Code or any equivalent provision
of state or local Tax law. Seller or Seller Sub is the owner for Tax purposes of
each Acquired Asset.
SECTION 3.13. PROCEEDINGS. Schedule 3.13 sets forth a list as
of the date of this Agreement of each pending or, to the knowledge of Seller,
threatened Proceeding arising out of the conduct of the Business or against any
Acquired Asset and that could reasonably be expected to (a) result in aggregate
future liability in excess of $500,000, or (b) prevent the consummation of the
transactions contemplated by this Agreement. Neither Seller nor Seller Sub is a
party or subject to or in default under any Judgment applicable to the conduct
of the Business or any Acquired Asset or Assumed Liability, other than for such
Judgments that, individually and in the aggregate, could not reasonably be
expected to have a Business Material Adverse Effect.
SECTION 3.14. BENEFIT PLANS. (a) Schedule 3.14 contains a list
of all "employee pension benefit plans" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
maintained or contributed to by Seller or any of its affiliates for the benefit
of any Business Employee ("SELLER PENSION PLANS") and all "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA), bonus, stock option, stock
purchase, deferred compensation plans or arrangements and other employee fringe
benefit plans maintained, or contributed to, by Seller or any of its affiliates
for the benefit of any Business Employee (all the foregoing, including Seller
Pension Plans, being herein called "SELLER BENEFIT PLANS"). Seller has made
available to Purchaser true, complete and correct copies of (i) each Seller
Benefit Plan, (ii) the most recent annual report on Form 5500 filed with the
Internal Revenue Service with respect to each Seller Benefit Plan (if any such
report was required), (iii) the most recent summary plan description for each
Seller Benefit Plan for which such a summary plan description is required and
(iv) each trust agreement, group annuity contract or other funding and financing
arrangement relating to any Seller Benefit Plan.
(b) Each Seller Benefit Plan has been administered in
accordance with its terms, other than as could not reasonably be expected to
have, individually or in the aggregate, a Business Material
26
Adverse Effect. Seller and all the Seller Benefit Plans are in compliance with
the applicable provisions of ERISA and the Code and all applicable collective
bargaining agreements, other than as could not reasonably be expected to have,
individually or in the aggregate, a Business Material Adverse Effect.
(c) No Business Employee is covered by a "multiemployer plan"
(as defined in Section 3(37) of ERISA).
(d) Seller has not incurred any cost, fee, expense, liability,
claim, suit, obligation or other damage under Title IV of ERISA that could give
rise to the imposition of any liability, cost, fee, expense or obligation which
would reasonably be expected to become a liability of Purchaser and, to Seller's
and Seller Sub's knowledge, no facts or circumstances exist that could give rise
to any such cost, fee, expense, liability, claim, suit, obligation or other
damage, which would be reasonably expected to become a liability of Purchaser.
SECTION 3.15. ABSENCE OF CHANGES OR EVENTS. Since the date of
the Balance Sheet, there has not been any change that individually or in the
aggregate, could reasonably be expected to have a Business Material Adverse
Effect. From the date of the Balance Sheet to the date of this Agreement, Seller
and Seller Sub have caused the Business to be conducted in the ordinary course
and in substantially the same manner as previously conducted, other than as
could not reasonably be expected to have, individually or in the aggregate, a
Business Material Adverse Effect. Since the date of the Balance Sheet to the
date of this Agreement, neither Seller nor Seller Sub has, in each case insofar
as the Business is concerned:
(i) sold, leased, licensed or otherwise disposed of any of the
assets of the Business (or entered into any contract to do any of the
foregoing), except Inventory and obsolete or worn out equipment sold in
the ordinary course of business consistent with past practice which was
not otherwise material (individually or in the aggregate) to the
Business or canceled any material indebtedness or waived any material
claims or rights of material value; or
(ii) changed the employee compensation and benefits structure
of the Business in a manner that materially adversely affects the cost
structure of the Business, taken as a whole.
SECTION 3.16. COMPLIANCE WITH APPLICABLE LAWS. Since January
1, 2000, Seller, Seller Sub and their affiliates have been, with respect to the
Business, in compliance with all Applicable Laws, except for instances of
noncompliance that, individually or in the aggregate, could not reasonably be
expected to have a Business Material Adverse Effect. None of Seller and Seller
Sub has received any written communication from a Governmental Entity that
alleges that the Business is not in compliance in any material respect with any
Applicable Law. This Section 3.16 does not relate to
27
matters with respect to Taxes, which are the subject of Section 3.12, or to
environmental matters, which are the subject of Section 3.17.
SECTION 3.17. ENVIRONMENTAL MATTERS. Except for any matters
that, individually or in the aggregate, could not reasonably be expected to have
a Business Material Adverse Effect, (i) Seller, Seller Sub and their affiliates
have been, with respect to the Business, in compliance with all laws, rules and
regulations relating to protection of the environment ("ENVIRONMENTAL LAWS"),
(ii) Seller possesses and is in compliance with all permits, licenses and
authorizations necessary under Environmental Laws for the operation of the
Business and (iii) there are no pending, or to the knowledge of Seller or Seller
Sub, threatened, claims, proceedings or investigations against Seller or Seller
Sub alleging that the Business is not in compliance with any Environmental Laws.
SECTION 3.18. TRANSACTIONS WITH AFFILIATES. Except for the
Ancillary Agreements, none of the Contracts between the Business, on the one
hand, and Seller or any of its affiliates, on the other hand, will continue in
effect subsequent to the Closing, and all such Contracts shall have been
terminated with no liability to Purchaser on or prior to the Closing Date.
SECTION 3.19. INVESTMENTS. Other than shares of capital stock
of Seller Sub, there are no partnership interests or any other equity interests
in any corporation, company, limited liability company, partnership, joint
venture, trust or other business association ("INVESTMENTS") owned by Seller or
Seller Sub on the date of this Agreement that are used, held for use or intended
to be used in, or arise out of, the operation or conduct of the Business.
SECTION 3.20. RECEIVABLES. As of the date of this Agreement,
all the Receivables that are included in the Acquired Assets (a) represent
actual indebtedness or other obligations incurred by the applicable account
debtors and (b) have arisen from bona fide transactions in the ordinary course
of the Business. As of the date of this Agreement, all the Receivables that are
included in the Acquired Assets, to the knowledge of Seller and Seller Sub, are
good and collectible at the aggregate recorded amounts thereof, net of any
applicable reserves for doubtful accounts reflected on the face of the Balance
Sheet or as will be set forth on the face of the Closing Statement.
SECTION 3.21. NO OTHER AGREEMENTS. Neither Seller nor Seller
Sub has any legal obligation, absolute or contingent, to any other Person to
sell, directly or indirectly, the Acquired Assets or to sell the Business or to
effect any merger, share exchange, consolidation, business combination,
recapitalization, liquidation or other reorganization of Seller Sub or to enter
into any agreement with respect thereto.
SECTION 3.22. EMPLOYEES. Schedule 3.22 sets forth each
employee of Seller or Seller Sub whose employment is primarily related to the
operation of the Business on the date of this
28
Agreement (each a "BUSINESS EMPLOYEE"). There are no employee unions (nor any
other similar labor or employee organizations) under local statutes, custom or
practice with respect to any Continued Employee. Neither Seller nor Seller Sub
has experienced any attempt by organized labor or its representatives to make
Seller or Seller Sub conform to demands of organized labor relating to a
Continued Employee or to enter into a binding agreement with organized labor
that would cover any such employee. With respect to the Business, there is no
labor strike or labor disturbance pending or, to the best of Seller's or Seller
Sub's knowledge, threatened against Seller or Seller Sub nor is any grievance
currently being asserted, and neither Seller nor Seller Sub has experienced a
work stoppage or other labor difficulty, and is not and has not engaged in any
unfair labor practice.
SECTION 3.23. INVESTMENT REPRESENTATIONS. Seller acknowledges
that the Holdco Shares issued pursuant to Section 2.02(b) have not been
registered under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
and may not be resold absent registration under the Securities Act or an
applicable exemption from the registration and prospectus delivery requirements
of the Securities Act and that the certificates representing the Holdco Shares
will bear a restrictive legend to the foregoing effect. Seller further
acknowledges that neither Holdco nor Purchaser is under any obligation, nor
assumes any obligation pursuant to the terms hereof, or the terms of any other
certificate, instrument or other document executed and delivered by it in
connection with the transactions contemplated hereby. Seller is acquiring the
Holdco Shares for its own account, for investment purposes only and not with a
view toward any resale or other distribution thereof (within the meaning of the
Securities Act). Seller qualifies as an "accredited investor" as that term is
defined in Rule 501 of Regulation D promulgated under the Securities Act. Seller
has had an opportunity to discuss the business, management, operations and
finances of Holdco and Purchaser with its officers, directors, employees,
agents, representatives and affiliates. Seller has conducted its own independent
investigation of Holdco and Purchaser and has been furnished by Holdco and
Purchaser with all information, documents and other material relating to Holdco
and Purchaser and their business, management, operations and finances, that
Seller has requested.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller and Seller
Sub, as of the date of this Agreement and as of the Closing Date, as follows:
SECTION 4.01. ORGANIZATION, STANDING AND POWER. Purchaser is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has full corporate power and authority
and possesses all governmental franchises, licenses, permits,
29
authorizations and approvals necessary to enable it to own, lease or otherwise
hold its properties and assets and to carry on its business as presently
conducted, other than such franchises, licenses, permits, authorizations and
approvals the lack of which, individually or in the aggregate, have not had and
could not reasonably be expected to have a material adverse effect on the
ability of Purchaser to perform its obligations under this Agreement and the
Ancillary Agreements or prevent or materially impede, interfere with, hinder or
delay the consummation by Purchaser of the Acquisition and the other
transactions contemplated hereby (a "PURCHASER MATERIAL ADVERSE EFFECT").
Purchaser has delivered to Seller true and complete copies of the certificate of
incorporation and by-laws of Purchaser, in each case as amended through the date
of this Agreement.
SECTION 4.02. AUTHORITY; EXECUTION AND DELIVERY; AND
ENFORCEABILITY. Purchaser has full power and authority to execute this Agreement
and the Ancillary Agreements to which it is, or is specified to be, a party and
to consummate the Acquisition and the other transactions contemplated hereby and
thereby. The execution and delivery by Purchaser of this Agreement and the
Ancillary Agreements to which it is, or is specified to be, a party and the
consummation by Purchaser of the Acquisition and the other transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action. No other corporate proceedings on the part of Purchaser are
necessary to authorize this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby. Purchaser has duly executed and
delivered this Agreement and prior to the Closing will have duly executed and
delivered each Ancillary Agreement to which it is, or is specified to be, a
party, and this Agreement constitutes, and each Ancillary Agreement to which it
is, or is specified to be, a party will after the Closing constitute, its legal,
valid and binding obligation, enforceable against it in accordance with its
terms.
SECTION 4.03. NO CONFLICTS; CONSENTS. The execution and
delivery by Purchaser of this Agreement do not, the execution and delivery by
Purchaser of each Ancillary Agreement to which it is, or is specified to be, a
party will not, and the consummation of the Acquisition and the other
transactions contemplated hereby and thereby and compliance by Purchaser with
the terms hereof and thereof will not conflict with, or result in any violation
of or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancelation or acceleration of any obligation or
loss of a benefit under, or result in the creation of any Lien upon any of the
properties or assets of Purchaser or any of its subsidiaries under, any
provision of (a) the certificate of incorporation or by-laws of the Purchaser or
any of its subsidiaries, (b) any Contract to which Purchaser or any of its
subsidiaries is a party or by which any of their respective properties or assets
is bound or (c) any Judgment or Applicable Law applicable to Purchaser or any of
its subsidiaries or their respective properties or assets, other than, in the
case of clauses (b) and (c) above, any such items that, individually or in the
aggregate, have not had and could not reasonably be expected to have a Purchaser
Material Adverse Effect. No material Consent of or material registration,
declaration or filing with any Governmental Entity is required to be obtained or
made by or with respect to Purchaser or
30
any of its subsidiaries in connection with the execution, delivery and
performance of this Agreement or any Ancillary Agreement or the consummation of
the Acquisition or the other transactions contemplated hereby and thereby, other
than (i) compliance with and filings under the HSR Act or (ii) other filings or
approvals that, individually or in the aggregate, could not reasonably be
expected to prevent the consummation of the transactions contemplated hereby.
SECTION 4.04. LITIGATION. There are not any (a) outstanding
Judgments against Purchaser or any of its subsidiaries, (b) Proceedings pending
or, to the knowledge of Purchaser, threatened against Purchaser or any of its
subsidiaries or (c) investigations by any Governmental Entity that are pending
or, to the knowledge of Purchaser, threatened against Purchaser or any of its
subsidiaries that, in any case, individually or in the aggregate, have had or
could reasonably be expected to have a Purchaser Material Adverse Effect.
SECTION 4.05. AVAILABILITY OF FUNDS. Exhibit B attached hereto
sets forth complete and correct copies of a commitment letter from Toronto
Dominion (Texas), Inc. and TD Securities (USA) (collectively, the "BANK") for
the aggregate amount of $220 million in debt financing (the "FINANCING
COMMITMENT"). As of the date of this Agreement, the Financing Commitment has not
been withdrawn or terminated and Purchaser has no reason to believe that the
Financing Commitment will not lead to the financing as contemplated by the
Financing Commitment. The Financing Commitment, together with equity funds that
Purchaser can obtain without the prior consent, approval or other discretionary
action of any third party, constitute all of the financing required to be
provided by Purchaser for the consummation of the transactions contemplated by
this Agreement and the payments of all fees and expenses incurred by Purchaser
in connection therewith.
SECTION 4.06. REPRESENTATIONS AND WARRANTIES OF HOLDCO. Holdco
hereby makes the representations and warranties of Purchaser contained in the
first three sentences of Section 4.02 and the first sentence of Section 4.03 as
to itself (with each reference to Purchaser therein being deemed to be a
reference to Holdco). Holdco, as the sole stockholder of Purchaser, has duly
authorized the issuance of the shares of Holdco common stock for delivery by
Purchaser to Seller pursuant to Section 2.06(b)(ii) and such shares, when
issued, will be fully paid, nonassessable and free of all Liens.
31
ARTICLE V
COVENANTS
SECTION 5.01. COVENANTS OF SELLER AND SELLER SUB RELATING TO
CONDUCT OF BUSINESS. (a) Except for matters set forth in Schedule 5.01, as
otherwise expressly permitted or required by the terms of this Agreement or with
the prior written consent of Purchaser, from the date of this Agreement to the
Closing Seller and Seller Sub shall conduct the Business in the usual, regular
and ordinary course in substantially the same manner as previously conducted and
use reasonable efforts to keep intact the Business, keep available the services
of the current employees of the Business, preserve the relationships of the
Business with customers, suppliers, licensors, licensees, distributors and
others with whom the Business deals to the end that the Business shall be
unimpaired at the Closing, and to continue to provide Seller Sub and the
Business with intercompany services in the ordinary course of business on terms
consistent with past practice. Prior to the Closing, Seller and Seller Sub shall
not take any action that could reasonably be expected to result in any of the
conditions to the purchase and sale of the Acquired Assets set forth in Article
VI not being satisfied. In addition (and without limiting the generality of the
foregoing), except as set forth in Schedule 5.01 or otherwise expressly
permitted or required by the terms of this Agreement, Seller and Seller Sub
shall not do any of the following in connection with the Business or the
Acquired Assets without the prior written consent of Purchaser:
(i) (A) adopt or amend in any material respect any Seller
Benefit Plan (it being understood that nothing in this clause (A) shall
prevent Seller or Seller Sub from making changes to any Seller Benefit
Plan in the ordinary course of business to the extent such changes do
not materially increase the liabilities assumed by Purchaser in respect
of Continued Employees, (B) enter into or adopt any collective
bargaining agreement or other Contract with any labor organization,
union or association, or (C) enter into, amend, renew, extend (beyond
the Closing Date) any employment agreement with any Business Employee;
(ii) grant to any Business Employee any increase in
compensation or benefits, except for increases in salary in the
ordinary course of business and consistent with past practice or as may
be required under existing agreements and except for any increases for
which Seller shall be solely obligated or grant any severance or
termination pay (otherwise than pursuant to the policies of Seller and
Seller Sub in effect on the date of this Agreement that are disclosed
on the Disclosure Schedule) with respect to any Business Employee;
(iii) incur or assume any liabilities, obligations or
indebtedness for borrowed money or guarantee any such liabilities,
obligations or indebtedness, other than (x) in the ordinary course of
business and consistent with past practice; PROVIDED, HOWEVER, that in
no event shall the Business incur or assume, pursuant to this clause
(x), any long-term indebtedness for
32
borrowed money or (y) with respect to liabilities, obligations or
indebtedness for borrowed money, or guarantees of any such liabilities,
obligations or indebtedness, of Seller or any subsidiary of Seller
(none of which shall be Assumed Liabilities);
(iv) cancel any material indebtedness (individually or in the
aggregate) or waive any claims or rights of substantial value;
(v) except for continuing to provide Seller Sub and the
Business with intercompany services in the ordinary course of business
on terms consistent with past practice, sell, transfer or lease any of
its assets to, or enter into any agreement or arrangement with, any of
its affiliates (other than Seller or any subsidiary of Seller);
(vi) make any change in any method of accounting or accounting
practice or policy other than those required by GAAP;
(vii) acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire
any assets (other than inventory) that are material, individually or in
the aggregate, to the Business;
(viii) make or incur any capital expenditure (i) that, in the
aggregate, is in excess of $50,000 or (ii) that (A) commits the
Business to make further capital expenditures more than six months
after the date of such commitment and (B) is not terminable by notice
of not more than 60 days for a cost of less than $25,000;
(ix) sell, lease, license or otherwise dispose of any of its
assets that have a book or market value in excess of $25,000
individually, or $100,000 in the aggregate, or that are material,
individually or in the aggregate, to the Business, except (A) inventory
and obsolete or worn out equipment sold in the ordinary course of
business and consistent with past practice which is not otherwise
material to the Business, (B) any Excluded Asset described in Section
1.02(b) and (C) any such sale, lease, license or disposition of assets
by Seller Sub to Seller or any subsidiary of Seller;
(x) take any action to change or amend the organizational
documents of any entity in which there is an Investment that is
included in the Acquired Assets;
(xi) not make any new Investment or make any loan, advance or
capital contribution to any entity, other than any such Investment,
loan, advance or capital contribution to Seller or any subsidiary of
Seller;
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(xii) enter into, extend, materially modify, terminate or
renew any Contract or Lease that is, or would be required to be
disclosed, pursuant to Section 3.06(a) or 3.08;
(xiii) fail to pay accounts payable related to the Business in
the ordinary course of business or collect accounts receivable related
to the Business in the ordinary course of business; or
(xiv) authorize any of, or commit or agree to take, whether in
writing or otherwise, to do any of, the foregoing actions;
(b) ADVISE OF CHANGES. Seller shall promptly advise Purchaser
in writing of the occurrence of any matter or event that could reasonably be
expected to have a Business Material Adverse Effect or that would constitute a
breach of any representation or warranty resulting in the failure of a condition
contained in this Agreement.
SECTION 5.02. NO SOLICITATION. Seller and Seller Sub shall
not, nor shall either of them authorize or permit any officer, director or
employee of or any investment banker, attorney, accountant or other
representative retained by either of them to, (a) solicit, initiate or encourage
any "other bid", (b) enter into any agreement with respect to any other bid or
(c) participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any other bid. Seller promptly shall advise Purchaser
orally and in writing of any other bid or any inquiry with respect to or which
could lead to any other bid and the identity of the person making, and the
proposed terms of, any such other bid or inquiry. As used in this Section 5.02,
"other bid" shall mean any proposal to acquire in any manner, or acquisition of,
direct or indirect, any Acquired Asset, other than (A) the transactions
contemplated by this Agreement, (B) the acquisition of Inventory in the ordinary
course of Business and (C) any Excluded Asset described in Section 1.02(b).
SECTION 5.03. ACCESS TO INFORMATION. (a) Seller and Seller Sub
shall afford to Purchaser and its employees, accountants, counsel and other
representatives and advisors reasonable access, upon reasonable notice during
normal business hours during the period prior to the Closing, to all the
personnel, properties, books, contracts, commitments, data, files, Tax returns
and Records of, and relating to, the Business (other than the Excluded Assets,
other than books and records that are themselves Excluded Assets), and during
such period shall furnish promptly to Purchaser any information concerning the
Business, in the possession or control of Seller and/or Seller Sub as Purchaser
may reasonably request; provided, however, that such access does not
unreasonably disrupt the normal operations of Seller. Subject to Section 6.05,
no investigation or receipt of information by
34
Purchaser shall operate as a waiver or otherwise affect any representation or
warranty of Seller or Sub or any covenant (including indemnifications) under
this Agreement.
(b) After the Closing, Seller and Seller Sub will give
Purchaser and its employees, counsel, accountants and other representatives and
advisors (collectively, "REPRESENTATIVES") reasonable access, during normal
business hours and upon reasonable notice, to all books, documents, information,
data, files and other records in the possession or control of Seller relating to
(i) the operation of the Business prior to the Closing, (ii) the Acquired Assets
or (iii) the Assumed Liabilities, and to furnish copies thereof, which Purchaser
or its Representatives reasonably request, including in connection with claims,
proceedings, actions, investigations, audits and other regulatory or legal
proceedings involving (x) the operation of the Business after the Closing, (y)
the Acquired Assets or (z) the Assumed Liabilities, and Seller and Seller Sub
shall furnish reasonable assistance (at Seller's expense other than for
out-of-pocket costs and expenses, which shall be reimbursed by Purchaser)
(including access to personnel) to Purchaser and its Representatives in
connection with such claims and other proceedings. Seller and Seller Sub shall
not destroy any such records prior to the fifth anniversary of the Closing, and
in any event will not destroy or permit the destruction of any such records
without providing Purchaser with notice detailing the contents of such records,
and providing Purchaser with the opportunity to obtain such records, at least 60
days prior to the destruction thereof.
SECTION 5.04. CONFIDENTIALITY. (a) Purchaser acknowledges that
the information being provided to it in connection with the Acquisition and the
consummation of the other transactions contemplated hereby is subject to the
terms of a confidentiality agreement between Purchaser and Seller (the
"CONFIDENTIALITY AGREEMENT"), the terms of which are incorporated herein by
reference. Effective upon, and only upon, the Closing, the Confidentiality
Agreement shall terminate with respect to information relating solely to the
Business and the Acquired Assets; PROVIDED, HOWEVER, that Purchaser acknowledges
that any and all other information provided to it by Seller or Seller's
representatives concerning Seller shall remain subject to the terms and
conditions of the Confidentiality Agreement after the Closing Date.
(b) Seller shall keep confidential, and cause its affiliates
and instruct its and their officers, directors, employees and advisors to keep
confidential, all information relating to the Business, except as required by
law or administrative process and except for information that is available to
the public on the Closing Date, or thereafter becomes available to the public
other than as a result of a breach of this Section 5.04(b); PROVIDED, HOWEVER,
that after the issuance of a press release regarding the Acquisition Seller may
discuss with analysts and investors the actual or anticipated effect of the
Acquisition on the performance of Seller's businesses. The covenant set forth in
this Section 5.04(b) shall terminate simultaneously with the Directory Business
Agreement.
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(c) At the Closing, Seller and Seller Sub shall assign, or
cause their financial advisor to assign, to Purchaser all rights with respect to
the Business or the Acquired Assets under any confidentiality agreements
executed by or on behalf of Seller or Seller Sub in connection with the
potential sale of the Business.
SECTION 5.05. REASONABLE BEST EFFORTS. (a) On the terms and
subject to the conditions of this Agreement, each party shall use its reasonable
best efforts to cause the Closing to occur, including taking all actions
reasonably necessary to comply promptly with all legal requirements that may be
imposed on it or any of its affiliates with respect to the Closing.
(b) Each of Seller and Purchaser shall as promptly as
practicable, but in no event later than ten business days following the
execution and delivery of this Agreement, file with the United States Federal
Trade Commission (the "FTC") and the United States Department of Justice (the
"DOJ") the notification and report form, if any, required for the transactions
contemplated hereby and any supplemental information requested in connection
therewith pursuant to the HSR Act. Any such notification and report form and
supplemental information shall be in substantial compliance with the
requirements of the HSR Act. Each of Purchaser and Seller shall furnish to the
other such necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing or submission that is
necessary under the HSR Act. Seller and Purchaser shall keep each other apprised
of the status of any communications with, and any inquiries or requests for
additional information from, the FTC and the DOJ and shall comply promptly with
any such inquiry or request. Each of Seller and Purchaser shall use its
reasonable best efforts to obtain any clearance required under the HSR Act for
the consummation of the transactions contemplated by this Agreement.
(c) Prior to the Closing, each party shall, and shall cause
its affiliates to, use its reasonable best efforts to obtain, and to cooperate
in obtaining, all consents, approvals and waivers from third parties necessary
or appropriate to permit the transfer of the Acquired Assets to, and the
assumption of the Assumed Liabilities by, Purchaser, and in connection with the
debt financing contemplated by the Financing Commitment, including to provide
the Bank a perfected security interest in certain Contracts; PROVIDED, HOWEVER,
that the parties shall not be required to pay or commit to pay any amount to (or
incur any obligation in favor of) any person from whom any such consent,
approval or waiver may be required (other than nominal filing or application
fees). Seller hereby consents to the assignment to Purchaser pursuant to this
Agreement of any Assigned Contract to which Seller or any Subsidiary of Seller
is the other party (as opposed to the party representing the Business),
including those Assigned Contracts set forth on Schedule 3.08.
(d) Prior to the Closing, Seller and Seller Sub agree to
provide, and will cause their respective officers and employees to provide, all
reasonably necessary cooperation in connection with the arrangement of any
financing to be consummated contemporaneous with or at or after the Closing,
36
including participation in meetings, due diligence sessions, the preparation of
offering memoranda, private placement memoranda, prospectuses and similar
documents or other requested certificates, documents or opinions customarily
delivered by a seller in connection with comparable financings, in each case as
may be reasonably requested by Purchaser.
(e) Prior to and at Closing, Purchaser shall take whatever
actions are reasonably necessary to cause the debt financing contemplated by the
Financing Commitments to be funded at the Closing and shall cause its affiliates
to provide the guarantees contemplated by the Financing Commitment subject to
all conditions to the consummation of the transactions contemplated by this
Agreement being satisfied.
(f) Each of Seller and Seller Sub shall use its reasonable
best efforts to obtain the consents required by Section 6.01(c) within 45 days
of the date of this Agreement; PROVIDED, HOWEVER, that Seller and Seller Sub
shall not be required to pay or commit to pay any amount to (or incur any
obligation in favor of) any person from whom any such consent, approval or
waiver may be required (other than nominal filing or application fees).
SECTION 5.06. EXPENSES; TRANSFER TAXES. (a) Whether or not the
Closing takes place, and except as set forth in Section 5.10 and Article VIII,
all costs and expenses incurred in connection with this Agreement and the
Ancillary Agreements and the transactions contemplated hereby and thereby shall
be paid by the party incurring such expense, including all costs and expenses
incurred pursuant to Sections 1.04 and 5.05.
(b) The responsibility for paying all transfer, documentary,
sales, use, registration, value-added and other similar Taxes (including all
applicable real estate transfer Taxes) and related fees (including any
penalties, interest and additions to Taxes) incurred in connection with this
Agreement and the transactions contemplated hereby will be borne by Seller. Each
party shall use reasonable efforts to avail itself of any available exemptions
from any such Taxes or fees, and to cooperate with the other parties in
providing any information and documentation that may be necessary to obtain such
exemptions.
SECTION 5.07. BROKERS OR FINDERS. Each of Purchaser and Seller
represents, as to itself and its affiliates, that no agent, broker, investment
banker or other firm or person is or will be entitled to any broker's or
finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement, except, as to Seller and its
affiliates, ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., whose fees and expenses will be paid by Seller.
SECTION 5.08. COLLECTION OF RECEIVABLES. From and after the
Closing, subject to the terms of any Ancillary Agreement, Purchaser shall have
the right and authority to collect (including to
37
prosecute any claims or proceedings) for its own account all Receivables and
other related items that are included in the Acquired Assets and to endorse with
the name of Seller or Seller Sub, as applicable, any checks or drafts received
with respect to any Receivables or such other related items. Subject to the
terms of any Ancillary Agreement, Seller and Seller Sub shall promptly deliver
to Purchaser any cash or other property received directly or indirectly by it
with respect to the Receivables and such other related items, including any
amounts payable as interest.
SECTION 5.09. EMPLOYEE MATTERS. (a) CONTINUATION OF
EMPLOYMENT; CREDITED SERVICE. Effective as of the Closing, except with respect
to those Business Employees listed in Schedule 5.09(a), each of whom shall
remain in the employ of the Seller, Seller Sub or an affiliate of Seller or
Seller Sub after the Closing (the "EXCLUDED EMPLOYEES"), Purchaser shall make
offers of employment to each other Business Employee, in a substantially similar
and suitable position with the same salary and hourly wage rate and incentive
bonus opportunities as that provided to the Business Employees immediately prior
to Closing (subject to the provisions of Section 5.09(b)). For purposes of this
Section 5.09, "Business Employees" shall include those employees who are not
actively at work as of the Closing due to disability or approved leave of
absence (including, without limitation, vacation, jury duty, medical leave,
maternity or paternity leave, and military leave) (in each case referred to as
an "INACTIVE EMPLOYEE"); PROVIDED, that Purchaser's obligation to employ any
Inactive Employee upon such Inactive Employee's return from disability or other
approved leave of absence shall be subject to Applicable Law. Purchaser shall
assume all liabilities relating to its failure to employ any such employees in
the same positions upon such employees' ability to return to work in accordance
with Applicable Law. Business Employees who accept Purchaser's offer of
employment shall be referred to as "CONTINUED EMPLOYEES". Continued Employees
shall receive credit for all service with Seller, Seller Sub and their
affiliates (and their predecessors) for all purposes under Purchaser's employee
benefit plans to the same extent recognized by Seller, Seller Sub and their
affiliates immediately prior to the Closing Date; PROVIDED, HOWEVER, that such
service shall not result in any duplication of benefits or be credited for
benefit accrual purposes under any Purchaser defined benefit pension plan.
(b) CONTINUATION OF BENEFITS. Notwithstanding Section 5.09(a),
nothing contained herein shall be construed or interpreted to impose on
Purchaser any obligation for the continuation of employment of any Continued
Employee for any period of time following the Closing or limitation on its
ability to modify any compensation or benefits provided to any Continued
Employee; PROVIDED, that for not less than one year following the Closing Date,
Purchaser shall maintain, or shall cause to be maintained, salary and hourly
wage rate and incentive bonus opportunities, and severance benefit plans and
arrangements (other than any plans and arrangements based on equity securities
or any equivalent thereof) and perquisites for Continued Employees that, in the
aggregate, are no less favorable than those provided to Continued Employees by
Seller prior to Closing.
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(c) 401(K) PLAN; ROLLOVERS. Effective as of the Closing,
Purchaser shall have in effect a profit-sharing plan that includes a qualified
cash or deferred arrangement within the meaning of Section 401(k) of the Code
("PURCHASER'S 401(K) PLAN") that will provide benefits to Continued Employees as
of the Closing. Each Continued Employee participating in Seller's Retirement
Savings Plan ("SELLER'S 401(K) PLAN") as of the Closing shall become a
participant in Purchaser's 401(k) Plan as of the Closing. At such time as Seller
is reasonably satisfied that Purchaser's 401(k) Plan meets the requirements for
qualification under Section 401(a) of the Code, Seller shall permit, subject to
its reasonable interpretation of the provisions of Section 401(k) of the Code,
each Continued Employee to effect a "direct rollover" (within the meaning of
Section 401(a)(31) of the Code and the regulations thereunder) to Purchaser's
401(k) Plan of his or her account balances (including all outstanding loans) in
Seller's 401(k) Plan if such rollover is elected in accordance with Applicable
Law by such Continued Employee. Without limiting the generality of the
foregoing, each Continued Employee may elect to effect a "direct rollover" to
Purchaser's 401(k) Plan of his or her account balances (including all
outstanding loans) in Seller's 401(k) Plan, and Purchaser agrees to cause
Purchaser's 401(k) Plan to accept such rollover provided that Seller provides
evidence reasonably satisfactory to Purchaser under Applicable Law that Seller's
401(k) Plan meets the requirements for qualification under Section 401(a) of the
Code. Purchaser also agrees to cause Purchaser's 401(k) Plan to accept any
"direct rollover" of benefits distributed to a Continued Employee under Seller's
Pension Plan, if elected in accordance with Applicable Law by such Continued
Employee; PROVIDED, that Seller provides evidence reasonably satisfactory to
Purchaser under Applicable Law that Seller's Pension Plan meets the requirements
for qualification under Section 401(a) of the Code.
(d) STOCK-BASED COMPENSATION. Seller shall retain liability
for all grants of rights to purchase Seller's common stock as well as grants of
restricted stock, restricted units and any other equity or equity-based awards
under the equity-based plans and programs of Seller, Seller Sub and their
affiliates that were granted prior to the Closing to employees of the Business
in accordance with the terms of the plans and programs under which such grants
were made.
(e) WELFARE BENEFIT PLANS. (i) At or prior to the Closing
Date, Purchaser shall establish or designate welfare benefit plans and
arrangements (including, without limitation, plans and arrangements providing
medical, dental, life, and disability insurance coverages) to provide benefits
to Continued Employees and their dependents ("PURCHASER WELFARE PLANS"). As of
the Closing Date, Continued Employees and their dependents shall commence
participation (without any waiting time) in Purchaser Welfare Plans and shall
cease participating in any corresponding welfare benefit plan maintained by
Seller or its affiliates. Seller shall retain sole liability for all claims
incurred under the Seller Benefit Plans that are welfare benefit plans within
the meaning of Section 3(1) of ERISA ("SELLER WELFARE PLANS") incurred at or
prior to the Closing. Reimbursement of expenses associated with such claims
shall be determined in accordance with the terms of Seller Welfare Plans as in
effect immediately prior to the Closing. Claims under any medical, dental,
vision, or prescription drug plan generally will
39
be deemed to be incurred on the date that the service giving rise to such claim
is performed and not when such claim is made; PROVIDED, HOWEVER, that with
respect to claims relating to a hospital stay that commences prior to the
Closing and ends following the Closing, the cost thereof shall be apportioned
between Seller and Purchaser, with Seller responsible for that portion of the
cost incurred prior to the Closing and Purchaser responsible for the balance of
such cost. Claims for disability under any long or short term disability plan
will be deemed to be incurred on the date the illness or injury is certified to
have occurred.
(ii) Seller shall provide any continuation coverage required
under Section 4980B of the Code, Part 6 of Title 1 of ERISA or
applicable state law ("COBRA") to each "qualified beneficiary" as that
term is defined in COBRA whose first "qualifying event" (as defined in
COBRA) occurs on or prior to the Closing Date.
(iii) For purposes of determining the number of vacation days
to which each Continued Employee shall be entitled, Purchaser shall
assume and honor all vacation days accrued but not yet taken by
Continued Employees as of the Closing. To the extent that a Continued
Employee is entitled to be paid for any vacation days, Purchaser shall
discharge the liability for such vacation days.
(iv) Seller and Purchaser intend that the transactions
contemplated by this Agreement shall not constitute a severance of
employment of any Continued Employee prior to or upon the consummation
of the transactions contemplated hereby, and that such employees will
have continuous and uninterrupted employment immediately before and
immediately after the Closing. Purchaser shall indemnify and hold
harmless Seller and its affiliates, and each of their respective
officers, directors and employees, from all costs, expenses or other
damages that may result in respect of claims made by any Continued
Employee for severance or other separation benefits arising out of or
in connection with Purchaser's employment of, Purchaser's failure to
offer employment to, or Purchaser's termination of employment of, any
Continued Employee not in accordance with the terms of this Agreement.
(v) Seller and/or one or more of its affiliates currently
sponsor a program that provides workers compensation benefits for
eligible Continued Employees. Seller shall be responsible for any
claims made with respect to Business Employees or former Business
Employee for workers' compensation or similar claims whether or not
insured or self-insured or mandated by applicable Law ("COMPENSATION
CLAIMS") filed with an appropriate agency by a Business Employee,
former Business Employee or a spouse or dependent of a Business
Employee or former Business Employee ("CLAIMING EMPLOYEE") if the
injury or alleged injury occurred, or was alleged to have occurred, in
its entirety prior to the Closing Date, irrespective of when such
injury is manifested. Purchaser shall be responsible for any
Compensation Claim filed on or
40
after the Closing Date if the injury or alleged injury occurred, or was
alleged to have occurred in its entirety after the Closing Date. In the
event a Compensation Claim is filed after the Closing Date by or on
behalf of a Claiming Employee and the injury occurred or is alleged to
have occurred prior to and subsequent to the Closing Date, the
liability for such Compensation Claim, if any, as between Seller and
Purchaser shall be equitably apportioned between them based upon the
length of exposure of the Claiming Employee to the product, material,
practice, condition or other circumstances claimed to have caused the
alleged injury, preceding and following the Closing.
(f) CAFETERIA PLAN. Purchaser shall have in effect as of the
Closing flexible spending reimbursement accounts under a cafeteria plan
qualifying under Section 125 of the Code which provide benefits to Continued
Employees and former employees of the Business (other than Excluded Employees)
substantially comparable in all material respects to those provided by the
flexible spending reimbursement accounts under the cafeteria plan portion of the
Seller's Flexible Benefit Plan, Flex Medical Plan and Flex Dental Plan
(collectively, the "SELLER'S CAFETERIA PLANS") and Purchaser agrees to cause
such plan to accept a spin-off of the accounts from Seller's Cafeteria Plans and
to honor and continue through the end of the calendar year in which the Closing
occurs the elections made by Continued Employees under such plan which are in
effect immediately prior to the Closing. Purchaser shall assume sole liability
for reimbursements under such flexible spending accounts in respect of all
claims incurred during the year in which the Closing occurs by Continued
Employees and former employees of the Business (other than Excluded Employees),
whether incurred prior to, on or after the Closing Date, that have not been paid
in full as of the Closing Date. Promptly following the Closing Date, Seller
shall transfer to Purchaser the excess, as of the Closing Date, of the
accumulated payroll deductions for such calendar year allocated to such accounts
by the Continued Employees and former employees of the Business (other than
Excluded Employees) over the payouts made for such calendar year from such
accounts to such employees.
(g) ADMINISTRATION. Following the date of this Agreement
through the first anniversary of the Closing Date, Seller and Purchaser shall
cooperate fully in all matters reasonably necessary to effect the transactions
contemplated by this Section 5.09, including exchanging information and data
relating to workers compensation, employee benefits and employee benefit plan
coverages, and in obtaining any governmental approvals required hereunder.
SECTION 5.10. POST-CLOSING COOPERATION. (a) Purchaser and
Seller shall cooperate with each other, and shall cause their officers,
employees, agents, auditors and representatives to cooperate with each other,
for a period of 120 days (or such longer period as required by Section 5.09)
after the Closing to ensure the orderly transition of the Business from Seller
to Purchaser and to minimize any disruption to the Business and the other
respective businesses of Seller and Purchaser that might result from the
transactions contemplated hereby. After the Closing, upon reasonable written
41
notice, Purchaser and Seller shall furnish or cause to be furnished to each
other and their employees, counsel, auditors and representatives access, during
normal business hours, to such information and assistance relating to the
Business (to the extent within the control of such party) as is reasonably
necessary for financial reporting and accounting matters. Seller and Seller Sub
shall permit Purchaser to continue to use leased personal property primarily
related to the Business that is currently leased by Seller pursuant to a lease
agreement, which lease is not being assigned to Purchaser pursuant to this
Agreement.
(b) Each party shall reimburse the other for reasonable
out-of-pocket costs and expenses incurred in assisting the other pursuant to
this Section 5.10 and Section 5.24 (which costs and expenses shall not include
the salaries or benefits of employees). Neither party shall be required by this
Section 5.10 or Section 5.24 to take any action that would unreasonably
interfere with the conduct of its business or unreasonably disrupt its normal
operations (or, in the case of Purchaser, the Business).
SECTION 5.11. PUBLICITY. From the date of this Agreement
through the Closing Date, no public release or announcement concerning the
transactions contemplated hereby shall be issued by any party without the prior
consent of the other parties (which consent shall not be unreasonably withheld),
except as such release or announcement may be required by law or the rules or
regulations of any United States or foreign securities exchange, in which case
the party required to make the release or announcement shall allow the other
party reasonable time to comment on such release or announcement in advance of
such issuance; PROVIDED, HOWEVER, that each of Seller, Seller Sub and Purchaser
may make internal announcements to their respective employees that are
consistent with the parties' prior public disclosures regarding the transactions
contemplated hereby after reasonable prior notice to and consultation with the
other. Seller and Purchaser shall have agreed prior to the date of this
Agreement on a form of initial press announcement to be used in announcing the
execution of this Agreement.
SECTION 5.12. NO SOLICITATION; EXCLUSIVE AGENCY. (a) Seller
and Seller Sub, on the one hand, and Purchaser, on the other hand, agree that
from the date hereof until the third anniversary of the Closing, neither of them
nor any of their respective affiliates shall solicit the employment of, in the
case of Seller and Seller Sub, any Continued Employee or, in the case of
Purchaser, any employee of Seller or Seller Sub on the date of this Agreement
(other than the Continued Employees). This Section 5.12 shall not be interpreted
to prohibit solicitations of employment through general advertising not
specifically directed at the employees of the other party.
(b) From and after the termination of the Directory Business
Agreement through the 20th anniversary of the Closing Date, in the event that
Seller or any of its subsidiaries or affiliates engages to any extent in
activities which constitute all or a portion of the Business as conducted by
Seller and Seller Sub immediately prior to Closing, such entity will do so only
for the sole benefit of
42
Purchaser. All revenue received by such entity from the operation of such
Business will be collected by such entity for the account of Purchaser and such
entity will retain 15% of such revenue and Seller will (and will cause its
parent, subsidiary and affiliates to) pay to Purchaser 85% of such revenue. Such
payment shall be made within 10 days after receipt of such revenue. Purchaser
shall be required, subject to Aplicable Law, to accept for publication any
advertising sold by such entity in the operation of such Business. The
obligations and commitments set forth in this Section 5.12(b) shall terminate
upon the termination of the License Agreement pursuant to Section 4.3 thereof.
SECTION 5.13. MONTHLY FINANCIAL INFORMATION. Prior to the
Closing, promptly after each month-end occurring after the date hereof, Seller
shall deliver to Purchaser such financial reports or other summary information
with respect to the Business for the month ended on such month-end as Seller has
generated for its own internal financial and accounting purposes the ordinary
course of its business consistent with past practice.
SECTION 5.14. RECORDS. Purchaser recognizes that certain
Records may contain incidental information relating primarily to subsidiaries or
divisions of Seller other than the Business and that Seller may retain copies of
the relevant portions thereof.
SECTION 5.15. BULK TRANSFER LAWS. Purchaser hereby waives
compliance by Seller and Seller Sub with the provisions of any so-called "bulk
transfer law" of any jurisdiction in connection with the sale of the Acquired
Assets to Purchaser.
SECTION 5.16. FURTHER ASSURANCES. From time to time, as and
when requested by any party, each party shall execute and deliver, or cause to
be executed and delivered, all such documents and instruments and shall take, or
cause to be taken, all such further or other actions, as such other party may
reasonably deem necessary or desirable to consummate the transactions
contemplated by this Agreement, including, in the case of Seller and Seller Sub,
executing and delivering to Purchaser such assignments, deeds, bills of sale,
consents and other instruments as Purchaser or its counsel may reasonably
request as necessary or desirable for such purpose.
SECTION 5.17. PURCHASE PRICE ALLOCATION. Seller, Seller Sub
and Purchaser mutually agree to allocate the Purchase Price (plus Assumed
Liabilities to the extent properly taken into account under the Code and the
Treasury Regulations promulgated thereunder) among the Acquired Assets according
to the relative fair market values of such assets as of the Closing Date in
accordance with the provisions of Section 1060 of the Code (and the Treasury
Regulations promulgated thereunder). Purchaser shall provide Seller with a draft
of such allocation on the Closing Date. Seller shall notify Purchaser of any
objection Seller may have to such allocation within fifteen (15) days of its
receipt of such allocation. Seller and Purchaser shall resolve any disagreement
with respect to such allocation in good faith consistent herewith; provided,
however, that if Seller and Purchaser are unable to agree on
43
such allocation within thirty (30) days after Purchaser notifies Seller of any
objections to the draft allocation, Seller and Purchaser shall promptly elect an
independent appraisal firm to determine such allocation. The conclusions of such
appraisal firm shall be conclusive and binding. The fees and expenses of such
appraisal firm shall be shared equally by Seller and Purchaser. Seller, Seller
Sub and Purchaser agree to (i) be bound by the allocation of the Purchase Price
(as agreed upon or, if applicable, as determined by appraisal), (ii) act in
accordance with such allocation in the filing of all Tax Returns (including,
without limitation, filing Form 8594 with their United States federal income Tax
Return for the taxable year that includes the date of the Closing (and any
amendments to such form)) and in the course of any Tax audit, Tax review or Tax
litigation relating thereto and (iii) take no position and cause their
affiliates to take no position inconsistent with such allocation for income Tax
purposes, including United States federal and state income Tax, unless, in each
case, otherwise required by a "DETERMINATION" as defined in Section 1313 of the
Code or by similar applicable state Tax law. Seller, Seller Sub and Purchaser
shall cooperate in the filing of their respective Forms 8594 (and any amendments
thereto) relating to this transaction, and not later than 30 days prior to the
filing of such Forms 8594 relating to this transaction (and any amendments
thereto), each party shall deliver to the other party a copy of its Form 8594
(or amendment, as applicable).
SECTION 5.18. COOPERATION; ALLOCATION OF TAXES AMONG ACQUIRED
ASSETS.
(a) Purchaser and each of Seller and Seller Sub agree to
furnish or cause to be furnished to the other, upon request, as promptly as
reasonably practicable, reasonable information and assistance relating to the
Acquired Assets or the Business, including, without limitation, access to books
and records, in connection with the filing of all Tax Returns by Purchaser or
Seller or Seller Sub, the making of any election relating to Taxes, the
preparation for any audit by any Taxing Authority, the obtaining of clearance
certificates or similar documents from state Taxing Authorities relating to
relief from Taxes that might otherwise be imposed in respect of the Acquisition,
and the prosecution or defense of any claim, suit or proceeding relating to any
Tax. Purchaser and each of Seller and Seller Sub shall reasonably cooperate with
each other in the conduct of any audit, litigation or other proceeding relating
to Taxes involving the Acquired Assets.
(b) Seller shall be responsible for and shall promptly pay
when due all Taxes levied with respect to the Acquired Assets attributable to
the Pre-Closing Tax Period. Purchaser shall be responsible for and shall
promptly pay when due all Taxes levied with respect to the Acquired Assets
attributable to the Post-Closing Tax Period. Such Taxes for any Straddle Period
shall be apportioned between Purchaser and Seller based on the number of days of
such taxable period included in the Pre-Closing Period and the number of days of
such taxable period included in the Post-Closing Tax Period. Seller shall be
liable for the proportionate amount of such Taxes that is attributable to the
Pre-Closing Tax Period, and Purchaser shall be liable for the proportionate
amount of such Taxes that is attributable to the Post-Closing Tax Period. Upon
receipt of any ▇▇▇▇ for such Taxes, Purchaser or
44
Seller shall present a statement to the other setting forth the amount of
reimbursement, if any, to which each is entitled under this Section 5.18(b)
together with such supporting evidence as is reasonably necessary to calculate
the proration amount. The proration amount shall be paid by the party owing it
to the other within ten (10) days after delivery of such statement.
SECTION 5.19. REFUNDS. Seller shall be entitled to any refunds
or credits of Taxes levied with respect to the Acquired Assets allocable to any
Pre-Closing Tax Period. Purchaser shall be entitled to any refunds or credits of
Taxes levied with respect to the Acquired Assets allocable to any Post-Closing
Tax Period. Refunds or credits of any such Taxes for any Straddle Period shall
be apportioned between the Pre-Closing Tax Period and Post-Closing Tax Period
within such Straddle Period in the same manner as such Tax with respect to such
Straddle Period was apportioned pursuant to Section 5.18(b). Upon Purchaser's or
Seller's receipt of any refund or credit of such Taxes, if the other party is
entitled to any part of such refund or credit hereunder, the party receiving
such refund or credit shall present a statement to the other setting forth the
amount of the refund or credit to which each is entitled under this Section 5.19
together with such supporting evidence as is reasonably necessary to calculate
the proration amount. The proration amount shall be paid by the party owing it
to the other within ten (10) days after delivery of such statement.
SECTION 5.20. SELLER AND SELLER SUB TRANSFERS. Seller and
Seller Sub shall cause to be transferred to Seller or Seller Sub all right,
title and interest in all assets, if any, held by an affiliate of Seller (other
than Seller Sub) that would otherwise have been an Acquired Asset pursuant to
Section 1.02 if owned by Seller for inclusion in the Acquired Assets prior to
the Closing.
SECTION 5.21. WITHHOLDING EXEMPTION. Seller and Seller Sub
shall deliver to Purchaser at the Closing all necessary forms and certificates
complying with applicable law, duly executed and acknowledged, certifying that
the transactions contemplated hereby are exempt from withholding under Section
1445 of the Code.
SECTION 5.22. NAME CHANGE. On the Closing Date, Seller and
Seller Sub shall take all action necessary, including filing an amendment to the
Articles of Incorporation of Seller Sub, to change the name of Seller Sub and,
if applicable, any other subsidiary of Seller so as not to include any of the
words "Cincinnati ▇▇▇▇ Directories" or any other word(s) related to directories,
yellow, white, pink, blue or any color pages, lists or any other name or ▇▇▇▇
that has such a near resemblance to Seller Sub's current name or that is
descriptive of the Business as may be likely to cause confusion or mistake to
the public with respect to the ownership and operation of the Business. Such
amendment shall be in a form acceptable for filing with the Secretary of State
of Ohio.
SECTION 5.23. ADVERTISING SERVICES. From the Closing Date
through the fifth anniversary of the Closing Date, Seller shall (i) purchase
from Purchaser telephone directory advertising
45
services at then effective rates aggregating at least $350,000 for each full
calendar year and (ii) refrain from purchasing telephone directory advertising
from any competitor of the Business within the geographic scope set forth in the
Directory Business Agreement. In connection with such purchase, Purchaser will
provide to Seller advertising having a value of $1,050,000 at then effective
rates at no additional cost for each full calendar year. The scope and type of
advertising purchased shall be similar to that which Seller and its affiliates
placed in the directories prior to the Closing.
SECTION 5.24. WEBSITE CONTENT. After the Closing, Seller
and/or Seller Sub, on the one hand, and Purchaser, on the other hand, will
provide the text, pictures, sound, graphics, video, links and other data
(collectively "CONTENT") necessary for the maintenance of the internet web sites
set forth on Schedule 5.24 (the "WEBSITES"); PROVIDED, HOWEVER, nothing
contained in this Section 5.24 shall alter the prices paid by Purchaser in the
Ancillary Agreements. None of Seller, Seller Sub, or Purchaser shall take any
action which would result in the disruption of the Content on the Websites.
Seller, Seller Sub and Purchaser will work with each other in good faith on any
necessary updates, revisions or upgrades of the Websites.
SECTION 5.25. TRANSITION SERVICES. (a) In addition to the
specific covenants set forth elsewhere in this Agreement, from the date of this
Agreement through the Closing Date, Seller and Seller Sub agree to provide
assistance to Purchaser with the goal of enabling Purchaser to operate
independently of Seller and Seller Sub following the Closing, subject to the
Service Agreements, including with respect to cash management, personnel and
employee benefits, information systems and internet access. Seller and Seller
Sub acknowledge that there may be additional services which have not been
identified in this Agreement or in the Ancillary Agreements but which have been
used by the Business prior to the Closing Date and which shall continue to be
required or desired by Purchaser after the Closing in connection with the
operation of the Business. If any such additional services are identified and
requested by Purchaser, Seller and Seller Sub agree to negotiate in good faith
with Purchaser to provide such services.
(b) Subject to such terms and conditions to be mutually agreed
between the parties as soon as practicable following the date of this Agreement,
Seller agrees to cause each Excluded Employee, while employed by Seller or
Seller Sub, to be made available following the Closing Date, for a reasonable
period of time, to perform for the benefit of Purchaser the usual and customary
functions and services that were performed by such Excluded Employee with
respect to the Business as of the Closing Date, and Purchaser shall pay a fee to
Seller in consideration thereof to reimburse Seller and Seller Sub for any
direct payroll costs and out-of-pocket expenses to the extent such costs and
expenses are incurred during such period. For purposes of this Section 5.25,
"direct payroll costs and out-of-pocket expenses" shall mean (i) the gross
amount of all salaries and wages, benefit costs and other compensation with
respect to any Excluded Employee, and all applicable fees, taxes, and other
amounts owed to third parties as a result of the employment of such Excluded
Employee, including
46
federal, state and local income tax withholding, contributions pursuant to the
Federal Insurance Contributions Act and Federal Unemployment Tax Act, workers'
compensation, unemployment insurance, other withholding or payments required by
federal, state or local law or regulations, and all payments to applicable
pension and welfare plans and employee fringe benefit outlays, and (ii) any
actual and necessary out-of-pocket expenses that are incurred by an Excluded
Employee or by Seller or Seller Sub, including but not limited to business or
travel expenses, in the course of such Excluded Employee's performance of his or
her duties for the Purchaser and paid or reimbursed by Seller or Seller Sub, as
reasonably determined by Seller or Seller Sub in the ordinary course of business
and using its usual methods of cost accounting.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. CONDITIONS TO EACH PARTY'S OBLIGATION. The
obligation of Purchaser to purchase and pay for the Acquired Assets and the
obligation of Seller and Seller Sub to sell the Acquired Assets to Purchaser is
subject to the satisfaction or waiver on or prior to the Closing of the
following conditions:
(a) GOVERNMENTAL APPROVALS. The waiting period under the HSR
Act, if applicable to the consummation of the Acquisition, shall have
expired or been terminated.
(b) NO INJUNCTIONS OR RESTRAINTS. No action shall have been
taken, or any Applicable Law shall have been enacted or entered or
deemed applicable to the transactions contemplated by this Agreement or
the Ancillary Agreements, and no temporary restraining order or
preliminary or permanent injunction or other order (each, an
"INJUNCTION") shall have been issued by any Governmental Entity which
(A) restrains or prohibits the acquisition by Purchaser of the Acquired
Assets or the Business or any other material transaction contemplated
by the Agreement or any Ancillary Agreement, (B) prohibits or limits
the ownership or operation by Purchaser of any material portion of the
Business, or compels Purchaser to dispose of or hold separate any
material portion of the business or assets of the Business, in each
case as a result of any of the transactions contemplated by this
Agreement or the Ancillary Agreements, (C) imposes limitations on the
ability of Purchaser to acquire or hold, or exercise full rights of
ownership of, the Acquired Assets or (D) prohibits Purchaser from
effectively controlling in any material respect the Business.
(c) CONSENTS OF CERTAIN THIRD PARTIES. Seller shall have
obtained, subject to the terms of Section 5.05(c), all consents from
third parties necessary or appropriate to permit the
47
transfer of the Acquired Assets to, and the assumption of the Assumed
Liabilities by, Purchaser, to the extent such consents are required by
the terms of the Contracts listed on Schedule 6.01(c).
SECTION 6.02. CONDITIONS TO OBLIGATION OF PURCHASER. The
obligation of Purchaser to purchase and pay for the Acquired Assets is subject
to the satisfaction (or waiver by Purchaser) on or prior to the Closing Date of
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller and Seller Sub in this Agreement and the Ancillary
Agreements (i) that are qualified as to Business Material Adverse
Effect shall be true and correct and (ii) those not so qualified shall
be true and correct in all material respects (except for breaches as to
matters that, individually or in the aggregate, could not reasonably be
expected to have a Business Material Adverse Effect), in each case as
of the date of this Agreement and as of the Closing Date as though made
on the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case on and as
of such earlier date). Purchaser shall have received a certificate
signed by an authorized officer of Seller to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF SELLER AND SELLER SUB. Each
of Seller and Seller Sub shall have performed or complied in all
material respects with all material obligations and covenants required
by this Agreement to be performed or complied with by Seller by the
time of the Closing, and Purchaser shall have received a certificate
signed by an authorized officer of Seller to such effect.
(c) FINANCING. Purchaser shall have received the proceeds of
financing pursuant to the Financing Commitment in the amount, on the
terms and subject to the conditions set forth therein.
(d) RETENTION OF KEY EMPLOYEE. The Continued Employee listed
on Schedule 6.02(d) shall have confirmed his intention to continue his
employment with the Business as of the Closing on the terms set forth
on Schedule 6.02(d).
SECTION 6.03. CONDITIONS TO OBLIGATION OF SELLER AND SELLER
SUB. The obligation of Seller and Seller Sub to sell, assign, convey, and
deliver the Acquired Assets is subject to the satisfaction (or waiver by Seller)
on or prior to the Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser made in this Agreement and the Ancillary
Agreement (i) that are qualified as to Purchaser Material Adverse
Effect shall be true and correct and (ii) those not so qualified shall
be true and
48
correct in all material respects (except for breaches as to matters
that, individually or in the aggregate, could not reasonably be
expected to have a Purchaser Material Adverse Effect), in each case as
of the date of this Agreement and as of the Closing Date as though made
on the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case, on and
as of such earlier date). Seller shall have received a certificate
signed by an authorized officer of Purchaser to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PURCHASER. Purchaser shall
have performed or complied in all material respects with all material
obligations and covenants required by this Agreement to be performed or
complied with by Purchaser by the time of the Closing, and Seller shall
have received a certificate signed by an authorized officer of
Purchaser to such effect.
SECTION 6.04. FRUSTRATION OF CLOSING CONDITIONS. Neither
Purchaser nor Seller may rely on the failure of any condition set forth in this
Article VI to be satisfied if such failure was caused by such party's failure to
act in good faith or to use its reasonable best efforts to cause the Closing to
occur, as required by Section 5.05.
SECTION 6.05. EFFECT OF CERTAIN WAIVERS OF CLOSING CONDITIONS.
If prior to the Closing any party (the "WAIVING PARTY") has knowledge of any
breach by any other party of any representation, warranty or covenant contained
in this Agreement or any Ancillary Agreement, and such other party acknowledges
in writing that the effect of such breach is a failure of any condition to the
waiving party's obligations set forth in this Article VI and the waiving party
proceeds with the Closing, the waiving party shall be deemed to have waived such
breach and the waiving party and its successors, assigns and affiliates shall
not be entitled to be indemnified pursuant to Article VIII, to ▇▇▇ for damages
or to assert any other right or remedy for any losses arising from any matters
relating to such condition or breach, notwithstanding anything to the contrary
contained herein or in any certificate delivered pursuant hereto.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. TERMINATION. (a) Notwithstanding anything to the
contrary in this Agreement, this Agreement may be terminated and the Acquisition
and the other transactions contemplated by this Agreement abandoned at any time
prior to the Closing:
(i) by mutual written consent of Seller and Purchaser;
49
(ii) by Seller if any of the conditions set forth in Section
6.01 or 6.03 shall have become incapable of fulfillment, and shall not
have been waived by Seller;
(iii) by Purchaser if any of the conditions set forth in
Section 6.01 or 6.02 shall have become incapable of fulfillment, and
shall not have been waived by Purchaser; or
(iv) by Seller or Purchaser, if the Closing does not occur on
or prior to May 6, 2002.
PROVIDED, HOWEVER, that the party seeking termination pursuant to clause (ii),
(iii) or (iv) is not then in material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement, including
Section 5.05.
(b) In the event of termination by Seller or Purchaser
pursuant to this Section 7.01, written notice thereof shall forthwith be given
to the other and the transactions contemplated by this Agreement shall be
terminated, without further action by any party. If the transactions
contemplated by this Agreement are terminated as provided herein:
(i) Purchaser shall return all documents and other material
received from Seller or Seller Sub relating to the transactions
contemplated hereby, whether so obtained before or after the execution
hereof, to Seller or destroy such documents or other material; and
(ii) all confidential information received by Purchaser with
respect to the businesses of Seller or Seller Sub shall be treated in
accordance with the Confidentiality Agreement, which shall remain in
full force and effect notwithstanding the termination of this
Agreement.
SECTION 7.02. EFFECT OF TERMINATION. If this Agreement is
terminated and the transactions contemplated hereby are abandoned as described
in Section 7.01, this Agreement shall become null and void and of no further
force and effect, except for the provisions of (a) Section 5.04 relating to the
obligation of Purchaser to keep confidential certain information and data
obtained by it from Seller or Seller Sub, (b) Section 5.06 relating to certain
expenses, (c) Section 5.07 relating to finder's fees and broker's fees, (d)
Section 7.01 and this Section 7.02 and (e) Section 5.11 relating to publicity.
Nothing in this Section 7.02 shall be deemed to release any party from any
liability for any willful material breach by such party of the terms and
provisions of this Agreement or to impair the right of any party to compel
specific performance by any other party of its obligations under this Agreement.
SECTION 7.03. AMENDMENTS AND WAIVERS. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto. By an instrument in writing Purchaser, on the one hand, or
Seller and Seller Sub, on the other hand, may waive compliance
50
by the other party with any term or provision of this Agreement that such other
party was or is obligated to comply with or perform.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. INDEMNIFICATION BY SELLER. (a) From and after
the Closing, Seller and Seller Sub, jointly and severally, shall indemnify
Purchaser and its affiliates and each of their respective officers, directors,
employees, stockholders, agents and representatives against, and hold them
harmless from, any loss, liability (whether asserted or unasserted, absolute or
contingent), claim, damage or expense (including reasonable legal fees and
expenses) ("LOSSES"), as incurred (payable promptly upon written request),
resulting from or arising out of:
(i) any breach of any representation or warranty of Seller or
Seller Sub that survives the Closing and is contained in this Agreement
or in any Ancillary Agreement or the certificate delivered at Closing
by Seller or Seller Sub in connection therewith;
(ii) any breach of any covenant of Seller or Seller Sub
contained in this Agreement or in any Ancillary Agreement;
(iii) any Excluded Liability;
(iv) the failure to comply with statutory provisions relating
to bulk sales and transfers, if applicable; and
(v) any fees, expenses or other payments incurred or owed by
Seller or Seller Sub to any brokers, financial advisors or comparable
other persons retained or employed by it in connection with the
transactions contemplated by this Agreement.
(b) Seller and Seller Sub shall not be required to indemnify
any person, and shall not have any liability:
(i) under clause (i) of Section 8.01(a) unless the
aggregate of all Losses for which Seller and Seller Sub would,
but for this clause (i), be liable exceeds on a cumulative
basis an amount equal to $1,500,000, and then only to the
extent of any such excess;
51
(ii) under clause (i) of Section 8.01(a) for any
individual items where the Loss relating thereto is less than
$25,000 and such items (other than a series of related items)
shall not be aggregated for purposes of clause (i) of this
Section 8.01(b);
(iii) under clause (i) of Section 8.01(a) in excess
of 35% of the Purchase Price; and
(iv) under Section 8.01(a) to the extent the
liability or obligation arises primarily as a result of any
action taken or omitted to be taken by Purchaser or any of its
affiliates (including any officers or employees of the
Business that are intended to have an equity interest or
rights or options to obtain an equity interest in Purchaser or
its affiliates).
(c) Except as otherwise specifically provided in this
Agreement or in any Ancillary Agreement, Purchaser acknowledges that its sole
and exclusive remedy after the Closing with respect to any and all claims
relating to this Agreement and the Ancillary Agreements, the Acquisition and the
other transactions contemplated hereby and thereby, the Business and its assets
and liabilities (other than claims of, or causes of action arising from, fraud)
shall be pursuant to the indemnification provisions set forth in this Article
VIII. In furtherance of the foregoing, Purchaser hereby waives, from and after
the Closing, to the fullest extent permitted under applicable law, any and all
rights, claims and causes of action (other than claims of, or causes of action
arising from, fraud) it may have against Seller or Seller Sub arising under or
based upon this Agreement, any Ancillary Agreement, any document or certificate
delivered in connection herewith, any Applicable Law (including any relating to
environmental matters), common law or otherwise (except pursuant to the
indemnification provisions set forth in this Section 8.01).
SECTION 8.02. INDEMNIFICATION BY PURCHASER. (a) From and after
the Closing, Purchaser shall indemnify Seller, Seller Sub, their affiliates and
each of their respective officers, directors, employees, stockholders, agents
and representatives against, and agrees to hold them harmless from, any Loss, as
incurred (payable promptly upon written request), for or on account of or
arising from or in connection with or otherwise with respect to (i) any breach
of any representation or warranty of Purchaser contained in this Agreement or in
any Ancillary Agreement or the certificate delivered at Closing by Purchaser in
connection therewith, (ii) any breach of any covenant of Purchaser contained in
this Agreement or in any Ancillary Agreement, (iii) any Assumed Liability, (iv)
any fees, expenses or other payments incurred or owed by Purchaser to any
brokers, financial advisors or other comparable persons retained or employed by
it in connection with the transactions contemplated by this Agreement or by any
Ancillary Agreement or (v) any claims made by any Continued Employee for
severance or other separation benefits arising out of or in connection with
Purchaser's employment of, Purchaser's failure to offer employment to, or
Purchaser's termination of employment of, any Continued Employee not in
accordance with this Agreement.
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(b) Except as otherwise specifically provided in this
Agreement or in any Ancillary Agreement, Seller and Seller Sub acknowledge that
their sole and exclusive remedy after the Closing with respect to any and all
claims relating to this Agreement and the Ancillary Agreements, the Acquisition
and the other transactions contemplated hereby and thereby, the Business and its
assets and liabilities (other than claims of, or causes of action arising from,
fraud) shall be pursuant to the indemnification provisions set forth in this
Article VIII. In furtherance of the foregoing, Seller and Seller Sub hereby
waive, from and after the Closing, to the fullest extent permitted under
applicable law, any and all rights, claims and causes of action (other than
claims of, or causes of action arising from, fraud) it may have against
Purchaser arising under or based upon this Agreement, any Ancillary Agreement,
any document or certificate delivered in connection herewith, any Applicable Law
(including any relating to environmental matters), common law or otherwise
(except pursuant to the indemnification provisions set forth in this Section
8.02).
SECTION 8.03. CALCULATION OF LOSSES. The amount of any Loss
for which indemnification is provided under this Article VIII shall be net of
any amounts actually recovered by the indemnified party under insurance policies
with respect to such Loss and shall be (a) increased to take account of any net
Tax cost incurred by the indemnified party arising from the receipt of indemnity
payments hereunder (grossed up for such increase) and (b) reduced to take
account of any net Tax benefit realized by the indemnified party arising from
the incurrence or payment of any such Loss. In computing the amount of any such
Tax cost or Tax benefit, the indemnified party shall be deemed to recognize all
other items of income, gain, loss deduction or credit before recognizing any
item arising from the receipt of any indemnity payment hereunder or the
incurrence or payment of any indemnified Loss. The amount of the Loss arising
out of any item included as a liability in calculating Closing Working Capital
shall be calculated net of the amount so included. The amount of the Loss
arising out of any reduction in value of any Current Asset acquired at the
Closing shall be calculated net of the reported value of such Current Asset used
in calculating Closing Working Capital. Losses shall not be limited to matters
asserted by third parties, but includes Losses incurred or sustained by an
indemnified party (as defined below) in the absence of third party claims.
Payments by an indemnified party of amounts for which such indemnified party is
indemnified hereunder shall not be a condition precedent for recovery under this
Article VIII; PROVIDED, HOWEVER, that if an indemnified party subsequently is
paid any portion of such amounts by a third party, that any such portion (net of
reasonable costs incurred by the indemnified party in connection with obtaining
such amount) shall be paid to the indemnifying party.
SECTION 8.04. TERMINATION OF INDEMNIFICATION. The obligations
to indemnify and hold harmless any party (a) pursuant to Section 8.01(a)(i) or
8.02(a), shall terminate when the applicable representation or warranty
terminates pursuant to Section 8.06 and (b) pursuant to the other clauses of
Sections 8.01 and 8.02 shall not terminate; PROVIDED, HOWEVER, that such
obligations to indemnify and hold harmless shall not terminate with respect to
any item as to which the person to be
53
indemnified shall have, before the expiration of the applicable period,
previously made a claim by delivering a notice of such claim (stating in
reasonable detail the basis of such claim) pursuant to Section 8.05 to the party
to be providing the indemnification.
SECTION 8.05. PROCEDURES. (a) THIRD-PARTY CLAIM. In order for
a person (the "indemnified party"), to be entitled to any indemnification
provided for under this Agreement or the Ancillary Agreements in respect of,
arising out of or involving a claim made by any person other than a party hereto
against the indemnified party (a "THIRD-PARTY CLAIM"), such indemnified party
must notify the party against which indemnity is being sought (the "indemnifying
party") in writing (and in reasonable detail) of the Third-Party Claim within 20
business days after receipt by such indemnified party of notice of the
Third-Party Claim; provided, however, that failure to give such notification
shall not affect the indemnification provided hereunder except to the extent the
indemnifying party shall have been actually and materially prejudiced as a
result of such failure. Thereafter, the indemnified party shall deliver to the
indemnifying party, within five business days after the indemnified party's
receipt thereof, copies of all notices and documents (including court papers)
received by the indemnified party relating to the Third-Party Claim; provided,
however, that failure to give such notification shall not affect the
indemnification provided hereunder except to the extent the indemnifying party
shall have been actually and materially prejudiced as a result of such failure.
(b) ASSUMPTION. If a Third-Party Claim is made against an
indemnified party, the indemnifying party shall be entitled to participate in
the defense thereof and, if it so chooses and acknowledges its obligation to
fully indemnify, to assume the defense thereof with counsel selected by the
indemnifying party; PROVIDED, HOWEVER, that such counsel is not reasonably
objected to by the indemnified party. Should the indemnifying party so elect to
assume the defense of a Third-Party Claim, the indemnifying party shall not be
liable to the indemnified party for any legal expenses subsequently incurred by
the indemnified party in connection with the defense thereof. If the
indemnifying party assumes such defense, the indemnified party shall have the
right to participate in the defense thereof and to employ counsel, at its own
expense, separate from the counsel employed by the indemnifying party, it being
understood that the indemnifying party shall control such defense. The
indemnifying party shall be liable for the fees and expenses of counsel employed
by the indemnified party for any period during which the indemnifying party has
not assumed the defense thereof. If the named parties to a Third-Party Claim
include both the indemnifying party and the indemnified party and the
indemnified party have been advised by counsel that there is a conflict of
interest requiring the indemnified party to have separate counsel, the
indemnifying party shall be liable for all reasonable fees and expenses of one
such separate counsel for all indemnified parties in connection with that
Third-Party Claim. The indemnifying party shall be liable for the reasonable
fees and expenses of one local counsel, if required. If the indemnifying party
chooses to defend or prosecute a Third-Party Claim, all the indemnified parties
shall cooperate in the defense or prosecution thereof. Such cooperation shall
include the retention and (upon the indemnifying party's request) the provision
to the
54
indemnifying party of records and information that are reasonably relevant to
such Third-Party Claim, and making employees available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder. Whether or not the indemnifying party assumes the defense of a
Third-Party Claim, the indemnified party shall not admit any liability with
respect to, or settle, compromise or discharge, such Third-Party Claim without
the indemnifying party's prior written consent (which consent shall not be
unreasonably withheld or delayed). If the indemnifying party assumes the defense
of a Third-Party Claim, the indemnified party shall agree to any settlement,
compromise or discharge of a Third-Party Claim that the indemnifying party may
recommend and that by its terms obligates the indemnifying party to pay the full
amount of the liability in connection with such Third-Party Claim, which
releases the indemnified party completely in connection with such Third-Party
Claim. If any Third-Party Claim seeks injunctive relief against an indemnified
party and such relief would reasonably be likely to have an adverse effect on
such indemnified party's business operations, then notwithstanding the
foregoing, the indemnified party shall be entitled to control the defense of
such Third-Party Claim, including to retain counsel, at the indemnifying party's
cost and expense, so long as the indemnifying party has the right to consult and
participate in such defense.
53
(c) OTHER CLAIMS. In the event any indemnified party should
have a claim against any indemnifying party under this Agreement or the
Ancillary Agreements that does not involve a Third-Party Claim being asserted
against or sought to be collected from such indemnified party, the indemnified
party shall deliver notice of such claim with reasonable promptness to the
indemnifying party. Subject to Sections 8.04 and 8.06, the failure by any
indemnified party so to notify the indemnifying party shall not relieve the
indemnifying party from any liability that it may have to such indemnified party
under this Agreement or the Ancillary Agreements, except to the extent that the
indemnifying party demonstrates that it has been actually and materially
prejudiced by such failure. If the indemnifying party does not notify the
indemnified party within 30 calendar days following its receipt of such notice
that the indemnifying party disputes its liability to the indemnified party
under Section 8.01 or 8.02, such claim specified by the indemnified party in
such notice shall be conclusively deemed a liability of the indemnifying party
under Section 8.01 or 8.02 and the indemnifying party shall pay the amount of
such liability to the indemnified party on demand or, in the case of any notice
in which the amount of the claim (or any portion thereof) is estimated, on such
later date when the amount of such claim (or such portion thereof) becomes
finally determined.
(d) MITIGATION. Purchaser and Seller shall cooperate with each
other with respect to resolving any claim or liability with respect to which one
party is obligated to indemnify the other party hereunder, including by making
reasonable efforts to mitigate or resolve any such claim or liability.
SECTION 8.06. SURVIVAL OF REPRESENTATIONS. The
representations, warranties contained in this Agreement and in any document
delivered in connection herewith (except for the representations and warranties
set forth in Sections 3.02, 3.05(a), 3.12, 3.17 and 4.02) shall survive the
Closing solely for purposes of Article VIII and shall terminate at the close
of business two years following the Closing Date. The representations and
warranties set forth in Sections 3.02, 3.05(a) and 4.02 shall remain in full
force and effect without regard to time. The representations and warranties set
forth in Section 3.12 shall remain in full force and effect until the expiration
of the applicable statute of limitations plus ninety (90) days with respect to
the matters addressed in such sections. The representations and warranties set
forth in Section 3.17 shall remain in full-force and effect for five years
following the Closing Date with respect to the matters addressed in such
section. Each party hereto shall be entitled to rely upon the representations
and warranties of the other party set forth in this Agreement or any Ancillary
Agreement. The termination of the representations and warranties provided herein
shall not affect the rights of a party in respect of a claim made by such party
in a writing received by the other party prior to the expiration of the
applicable survival period provided herein.
SECTION 8.07. NO ADDITIONAL REPRESENTATIONS. Purchaser
acknowledges that it and its representatives have been permitted full and
complete access to the books and records, facilities, equipment, tax returns,
contracts, insurance policies (or summaries thereof) and other properties and
assets of the Business that it and its representatives have desired or requested
to
54
see or review, and that it and its representatives have had a full
opportunity to meet with the officers and employees of Seller and Seller Sub
to discuss the Business. Purchaser acknowledges that none of Seller, Seller
Sub or any other person has made any representation or warranty, expressed or
implied, as to the accuracy or completeness of any information regarding the
Business or the Acquired Assets furnished or made available to Purchaser and
its representatives, except as expressly set forth in this Agreement, the
Ancillary Agreements or the Schedules or certificates, instruments or other
documents delivered pursuant to this Agreement or the Ancillary Agreements,
and, except from fraud or willful misconduct, none of Seller, Seller Sub or
any other person shall have or be subject to any liability to Purchaser or
any other person resulting from the distribution to Purchaser, or Purchaser's
use of, any such information, including the Confidential Descriptive
Memorandum prepared by ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. dated August 2000, and any
information, documents or material made available to Purchaser in any "data
rooms", management presentations or in any other form in expectation of the
transactions contemplated hereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. ASSIGNMENT. This Agreement and the rights and
obligations hereunder shall not be assignable or transferable by Purchaser,
Seller or Seller Sub (including by operation of law in connection with a merger
or consolidation of Purchaser, Seller or Seller Sub) without the prior written
consent of the other parties hereto; PROVIDED that Purchaser may, without such
consent, assign all such rights and obligations to a wholly owned subsidiary of,
or a partnership controlled by, Purchaser. Any attempted assignment in violation
of this Section 9.01 shall be void.
SECTION 9.02. NO THIRD-PARTY BENEFICIARIES. Except as provided
in Article VIII, this Agreement is for the sole benefit of the parties hereto
and their permitted assigns and nothing herein expressed or implied shall give
or be construed to give to any person, other than the parties hereto and such
assigns, any legal or equitable rights hereunder.
SECTION 9.03. NOTICES. All notices or other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given when received if delivered by hand; when
transmitted if sent by facsimile, telecopy, electronic or digital transmission
method; upon receipt if sent postage prepaid, by registered, certified or
express mail; or the day after it is sent, if sent by reputable overnight
courier service. In each case notice shall be sent to:
55
(i) if to Purchaser,
CBD Media, Inc.
c/o Spectrum Equity Investors IV, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention of ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Seller or Seller Sub,
Broadwing Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention of ▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Cravath, Swaine & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.04. INTERPRETATION; EXHIBITS AND SCHEDULES; CERTAIN
DEFINITIONS. (a) The headings contained in this Agreement, in any Exhibit or
Schedule hereto and in the table of contents to this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Any matter set forth in any provision,
56
subprovision, section or subsection of any Schedule shall be deemed set forth
for all purposes of the Schedules and all of the representations and
warranties in Article III to the extent that it is reasonably apparent on the
face of the Schedule that such matter is relevant to another Schedule or
representation or warranty. All Exhibits and Schedules annexed hereto or
referred to herein are hereby incorporated in and made a part of this
Agreement as if set forth in full herein. Any capitalized terms used in any
Schedule or Exhibit but not otherwise defined therein, shall have the meaning
as defined in this Agreement. When a reference is made in this Agreement to a
Section, Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated. Whenever
the words "include", "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation". The
words "hereof", "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of
such term. Any agreement, instrument or statute defined or referred to herein
or in any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver
or consent and (in the case of statutes) by succession of comparable
successor statutes and references to all attachments thereto and instruments
incorporated therein. References to a person are also to its permitted
successors and assigns. References to a statute are also to the rules and
regulations promulgated thereunder.
(b) For all purposes hereof:
"AFFILIATE" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person.
"ORDINARY COURSE OF BUSINESS" or similar phrase means the
ordinary course of business consistent with past practice.
"PERSON" means any individual, firm, corporation, partnership,
limited liability company, trust, joint venture, Governmental Entity or other
entity.
"SUBSIDIARY" of any person means any other person (i) more
than 50% of whose outstanding shares or securities representing the right to
vote for the election of directors or other managing authority of such other
person are, now or hereafter, owned or controlled, directly or indirectly, by
such first person, but such other person shall be deemed to be a subsidiary only
so long as such ownership or control exists, or (ii) which does not have
outstanding shares or securities with such right to vote, as may be the case in
a partnership, joint venture or unincorporated association, but more than 50% of
whose ownership interest representing the right to make the decisions for such
other person is, now or hereafter, owned or controlled,
57
directly or indirectly, by such first person, but such other person shall be
deemed to be a subsidiary only so long as such ownership or control exists
SECTION 9.05. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been signed by each of the parties and delivered to the other party.
SECTION 9.06. ENTIRE AGREEMENT. This Agreement, the Ancillary
Agreements and the Confidentiality Agreement, along with the Schedules and
Exhibits thereto and certificates delivered pursuant thereto, contain the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings
relating to such subject matter. Neither party shall be liable or bound to any
other party in any manner by any representations, warranties or covenants
relating to such subject matter except as specifically set forth herein or in
the Ancillary Agreements, the Confidentiality Agreement or the Schedules or
Exhibits hereto or thereto.
SECTION 9.07. SEVERABILITY. If any provision of this Agreement
(or any portion thereof) or the application of any such provision (or any
portion thereof) to any person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof (or the remaining portion thereof) or the application of such provision
to any other persons or circumstances, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party.
SECTION 9.08. CONSENT TO JURISDICTION. Each party irrevocably
submits to the exclusive jurisdiction of (a) the Supreme Court of the State of
New York,
New York County, and (b) the United States District Court for the
Southern District of
New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement, any Ancillary Agreement or any
transaction contemplated hereby or thereby. Each of Purchaser and Seller agrees
to commence any such action, suit or proceeding either in the United States
District Court for the Southern District of
New York or if such suit, action or
other proceeding may not be brought in such court for jurisdictional reasons, in
the Supreme Court of the State of
New York,
New York County. Each of Purchaser
and Seller and Seller Sub further agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's respective address
set forth above shall be effective service of process for any action, suit or
proceeding in
New York with respect to any matters to which it has submitted to
jurisdiction in this Section 9.08. Each of Purchaser and Seller and Seller Sub
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement, any Ancillary
Agreement or the transactions contemplated hereby and thereby in (i) the Supreme
Court of the State of
New York,
New York County, or (ii) the United States
District Court for the Southern District of
New York, and hereby and thereby
further irrevocably and unconditionally waives and
58
agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
SECTION 9.09. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
SECTION 9.10. WAIVER OF JURY TRIAL. Each party hereby waives
to the fullest extent permitted by applicable law, any right it may have to a
trial by jury in respect to any litigation directly or indirectly arising out
of, under or in connection with this Agreement, any Ancillary Agreement or any
transaction contemplated hereby or thereby. Each party (a) certifies that no
representative, agent or attorney of any other party has represented, expressly
or otherwise, that such other party would not, in the event of litigation, seek
to enforce that foregoing waiver and (b) acknowledges that it and the other
parties hereto have been induced to enter into this Agreement and the Ancillary
Agreements, as applicable, by, among other things, the mutual waivers and
certifications in this Section 9.10.
SECTION 9.11. SPECIFIC PERFORMANCE. Each of the Purchaser,
Seller and Seller Sub acknowledges and agrees that the other parties hereto
would be damaged irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each party hereto agrees that the other
parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically
(without posting bond) this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the parties and the matter (subject to Section 9.08), in
addition to any other remedy to which they may be entitled, at law or in equity.
ARTICLE X
DEFINITIONS AND TERMS
As used in this Agreement, the following terms shall have the
meanings provided below:
"ACCOUNTING FIRM" shall have the meaning set forth in Section
1.05(b).
"ACQUIRED ASSETS" shall have the meaning set forth in Section
1.02(a).
"ACQUISITION" shall have the meaning set forth in Section
1.01.
"ADJUSTED PURCHASE PRICE" shall have the meaning set forth in
Section 1.05(c).
59
"AFFILIATE" shall have the meaning set forth in Section
9.04(b).
"ANCILLARY AGREEMENTS" shall have the meaning set forth in
Section 1.02(b)(vi).
"APPLICABLE LAW" shall have the meaning set forth in Section
3.03.
"ASSIGNED CONTRACTS" shall have the meaning set forth in
Section 1.02(a)(vii).
"ASSIGNED INTELLECTUAL PROPERTY" shall have the meaning set
forth in Section 1.02(a)(v).
"AUDITED FINANCIAL STATEMENTS" shall have the meaning set
forth in Section 5.13.
"ASSUMED LIABILITIES" shall have the meaning set forth in
Section 1.03(a).
"BALANCE SHEET" shall have the meaning set forth in Section
3.04.
"BALANCE SHEET PRINCIPLES" shall have the meaning set forth in
Section 1.05(d).
"BANK" shall have the meaning set forth in Section 4.05.
"▇▇▇▇▇" shall have the meaning set forth in Section 3.08(c).
"BUSINESS" shall have the meaning set forth in the Recitals.
"BUSINESS EMPLOYEE" shall have the meaning set forth in
Section 3.22.
"BUSINESS MATERIAL ADVERSE EFFECT" shall have the meaning set
forth in Section 3.01.
"CLAIMING EMPLOYEE" shall have the meaning set forth in
Section 5.09 (c) (v).
"CLOSING" shall have the meaning set forth in Section 2.01.
"CLOSING DATE" shall have the meaning set forth in Section
2.01.
"CLOSING WORKING CAPITAL" shall have the meaning set forth in
Section 1.05(a).
"COBRA" shall have the meaning set forth in Section
5.09(e)(ii).
"CODE" shall have the meaning set forth in Section 3.12(a).
60
"COMPENSATION CLAIMS" shall have the meaning set forth in
Section 5.12(a).
"CONFIDENTIALITY AGREEMENT" shall have the meaning set forth
in Section 5.09 (e)(v).
"CONSENT" shall have the meaning set forth in Section 3.03.
"CONTENT" shall have the meaning set forth in Section 5.24.
"CONTINUED EMPLOYEES" shall have the meaning set forth in
Section 5.09(a).
"CONTRACTS" shall have the meaning set forth in Section
1.02(a)(vii).
"COPYRIGHTS" shall have the meaning set forth in Section
3.07(a).
"CURRENT ASSETS" shall have the meaning set forth in Section
1.05(d).
"CURRENT LIABILITIES" shall have the meaning set forth in
Section 1.05(d).
"DIRECTORY BUSINESS AGREEMENT" shall have the meaning set
forth in the Recitals.
"DOMAIN NAMES" shall have the meaning set forth in Section
3.07(a).
"DOJ" shall have the meaning set forth in Section 5.05(b).
"ENVIRONMENTAL LAWS" shall have the meaning set forth in
Section 3.17.
"ERISA" shall have the meaning set forth in Section 3.14(a).
"EXCLUDED ASSETS" shall have the meaning set forth in Section
1.02(b).
"EXCLUDED LIABILITIES" shall have the meaning set forth in
Section 1.03(b).
"EXCLUDED EMPLOYEES" shall have the meaning set forth in
Section 5.09(a).
"FTC" shall have the meaning set forth in Section 5.05(b).
"FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 3.04.
"FINANCING COMMITMENT" shall have the meaning set forth in
Section 4.05.
"GAAP" shall have the meaning set forth in Section 1.05(d).
61
"GOVERNMENTAL ENTITY" shall have the meaning set forth in
Section 3.03.
"HIPAA" shall have the meaning set forth in Section
5.09(e)(ii).
"HOLDCO" shall have the meaning set forth in Section 2.02(b).
"HSR ACT" shall have the meaning set forth in Section 3.03.
"INACTIVE EMPLOYEE" shall have the meaning set forth in
Section 5.09(a).
"INCLUDING" shall have the meaning set forth in Section
9.04(b).
"INDEMNIFIED PARTY" shall have the meaning set forth in
Section 8.05(a).
"INJUNCTION" shall have the meaning set forth in Section
6.01(b).
"INTELLECTUAL PROPERTY" shall have the meaning set forth in
Section 1.02(a)(v).
"INVENTORY" shall have the meaning set forth in Section
1.02(a)(ii).
"INVESTMENTS" shall have the meaning set forth in Section
3.19.
"JUDGMENT" shall have the meaning set forth in Section 3.03.
"LEASED PROPERTY" shall have the meaning set forth in Section
3.06.
"LEASEHOLD IMPROVEMENTS" shall have the meaning set forth in
Section 1.02(a)(i).
"LIENS" shall have the meaning set forth in Section 3.05.
"LICENSE AGREEMENT" in Recitals.
"LICENSED TRADEMARKS" shall have the meaning set forth in
Section 1.02 (b)(vii).
"LOSSES" shall have the meaning set forth in Section 8.01.
"NOTICE OF DISAGREEMENT" shall have the meaning set forth in
Section 1.05(b).
"ORDINARY COURSE OF BUSINESS" shall have the meaning set forth
in Section 9.04(b)
"PATENTS" shall have the meaning set forth in Section 3.07(a).
62
"PERMITS" shall have the meaning set forth in Section 3.09.
"PERMITTED LIENS" shall have the meaning set forth in Section
3.05(a).
"PERSON" shall have the meaning set forth in Section 9.04(b).
------
"PERSONAL PROPERTY" shall have the meaning set forth in
Section 1.02(a)(iii).
"POST-CLOSING TAX PERIOD" shall have the meaning set forth in
Section 3.12(a).
"PRE-CLOSING TAX PERIOD" shall have the meaning set forth in
Section 3.12(a).
"PROCEEDING" shall have the meaning set forth in Section
1.03(b)(v).
"PURCHASE PRICE" shall have the meaning set forth in Section
1.01.
"PURCHASER" shall have the meaning set forth in the Preamble.
"PURCHASER MATERIAL ADVERSE EFFECT" shall have the meaning set
forth in Section 4.01.
"HOLDCO SHARES" shall have the meaning set forth in Section
2.02(b).
"PURCHASER WELFARE PLANS" shall have the meaning set forth in
Section 5.09(e)(i).
"PURCHASER'S 401(K) PLAN" shall have the meaning set forth in
Section 5.09(c).
"RECEIVABLES" shall have the meaning set forth in Section
1.02(a)(iv).
"RECORDS" shall have the meaning set forth in Section
1.02(a)(xiii).
"REPRESENTATIVES" shall have the meaning set forth in Section
5.03(b).
"SECURITIES ACT" shall have the meaning set forth in Section
3.23.
"SELLER" shall have the meaning set forth in the Preamble.
"SELLER BENEFIT PLANS" shall have the meaning set forth in
Section 3.14(a).
"SELLER INBOUND LICENSE AGREEMENTS" shall have the meaning set
forth in Section 3.07(f)(i).
63
"SELLER OUTBOUND LICENSE AGREEMENTS" shall have the meaning
set forth in Section 3.07(f)(ii).
"SELLER OWNED COPYRIGHTS" shall have the meaning set forth in
Section 3.07(d)(i).
"SELLER PENSION PLANS" shall have the meaning set forth in
Section 3.14(a).
"SELLER SUB" shall have the meaning set forth in the Preamble.
"SELLER WELFARE PLANS" shall have the meaning set forth in
Section 5.09(e)(i).
"SELLER'S 401(k) PLAN" shall have the meaning set forth in
Section 5.09(c).
"SELLER'S CAFETERIA PLANS" shall have the meaning set forth in
Section 5.09(f).
"STATEMENT" shall have the meaning set forth in Section
1.05(a).
"STRADDLE PERIOD" shall have the meaning set forth in Section
3.12(a).
"SERVICE AGREEMENTS" shall have the meaning set forth in the
Recitals.
"SUBSIDIARY" shall have the meaning set forth in Section
9.04(b).
"TAX" shall have the meaning set forth in Section 3.12(a).
"TAX RETURN" shall have the meaning set forth in Section
3.12(a).
"TAXING AUTHORITY" shall have the meaning set forth in Section
3.12(a).
"THIRD PARTY CLAIM" shall have the meaning set forth in
Section 8.05(a).
"TOP CUSTOMERS" shall have the meaning set forth in Section
3.08(b).
"TRADEMARKS" shall have the meaning set forth in Section
3.07(a).
"TRADE SECRETS" shall have the meaning set forth in Section
3.07(e).
"WAIVING PARTY" shall have the meaning set forth in Section
6.05.
"WC AMOUNT" shall have the meaning set forth in Section
1.05(c).
"WEBSITE" shall have the meaning set forth in Section 5.24.
64
"WORKING CAPITAL" shall have the meaning set forth in Section
1.05(d).
IN WITNESS WHEREOF, Seller, Seller Sub and Purchaser have duly
executed this Agreement as of the date first written above.
BROADWING INC.,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: President and CEO
CINCINNATI ▇▇▇▇ DIRECTORY INC.,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
CBD MEDIA, INC.,
by /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
Accepted and agreed to as of the
date first written above as to
Sections 2.02 and 4.06:
CBD MEDIA HOLDINGS, INC.,
by /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President