Exhibit 2.3

 

 

 

AMENDED AND RESTATED

SHARE EXCHANGE AGREEMENT

BY AND AMONG

WINDSTREAM CORPORATION,

WELSH, CARSON, ANDERSON & STOWE VIII, L.P.,

WELSH, CARSON, ANDERSON & STOWE IX, L.P.,

WCAS CAPITAL PARTNERS III, L.P.,

REGATTA HOLDING I, L.P.,

REGATTA HOLDING II, L.P.

AND

REGATTA HOLDING III, L.P.

 

 

 

 

 

DATED AS OF AUGUST 16, 2007

 

 

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TABLE OF CONTENTS

 

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ARTICLE I EXCHANGE				2
1.1		Transfer of Holdings Shares		2
1.2		Transfer of Exchanged WIN Shares		2
1.3		Closing		3
1.4		Deliveries by WIN		3
1.5		Deliveries by the WCAS Subs		4
1.6		Net Working Capital Calculation and Adjustment		4
ARTICLE II RELATED MATTERS				7
2.1		Ancillary Agreements		7
2.2		Intercompany Obligations; Affiliate Agreements; Certain Other Intercompany Matters		8
2.3		Resignations		9
2.4		Guaranties		9
2.5		Related Transactions		9
2.6		Coordination of Holdings Financing and Debt Exchange		10
2.7		Private Letter Rulings		11
2.8		Termination of Forward Underwriting Commitment		12
2.9		Repayment of Division Indebtedness		12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF WIN				12
3.1		Authority		13
3.2		Title to Holdings Shares		13
3.3		Organization and Qualification		13
3.4		Capitalization of Holdings		14
3.5		Capitalization of the Division Subsidiaries		14
3.6		No Violation; Consents and Approvals		14
3.7		Financial Statements; Undisclosed Liabilities		15
3.8		Absence of Certain Changes or Events		16
3.9		Title to Personal Property		16
3.10		Title to Real Property		16
3.11		Intellectual Property		17
3.12		Litigation		18
3.13		Employee Benefit Plans		18
3.14		Taxes		20
3.15		Material Contracts and Commitments		21
3.16		Compliance with Laws		23
3.17		Labor Matters		24
3.18		Environmental		24

 

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3.19		Transactions with Affiliates		25
3.20		Insurance		25
3.21		Assets of the Division		25
3.22		Newly Formed Entity		26
3.23		Brokers		26
3.24		NO OTHER REPRESENTATIONS		26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENTS AND WCAS SUBS				26
4.1		Organization; Authority		26
4.2		No Violation; Consents and Approvals		27
4.3		Title to Exchanged WIN Shares		27
4.4		Litigation		28
4.5		Capitalization of Division		28
4.6		Acquisition of the Holdings Shares for Investment		29
4.7		Investigation by the WCAS Subs		29
4.8		Brokers		29
ARTICLE V COVENANTS OF THE PARTIES				29
5.1		Conduct of the Division		29
5.2		Access to Information Prior to the Closing; Confidentiality; Cooperation		32
5.3		Commercially Reasonable Efforts		33
5.4		Consents		33
5.5		Antitrust Notification		34
5.6		Public Announcements		34
5.7		Supplemental Disclosure; Notice		35
5.8		Records		35
5.9		Financial Statements		36
ARTICLE VI ADDITIONAL AGREEMENTS				36
6.1		Continuing Division Employees; Employee Benefits		36
6.2		Certain Agreements		39
6.3		Workers’ Compensation		39
6.4		Use of WIN’s Name and Logo		39
6.5		ALLTEL Non-Solicitation		40
6.6		Termination of WCAS Securityholders Agreement		40
ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF THE PARTIES				41
7.1		Mutual Conditions		41
7.2		Conditions to the Obligations of WIN		42
7.3		Conditions to the Obligations of the WCAS Subs		43

 

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ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER				44
8.1		Termination		44
8.2		Procedure and Effect of Termination		45
8.3		Amendment and Modification		45
ARTICLE IX SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION				46
9.1		Survival of Representations		46
9.2		WIN’s Agreement to Indemnify		46
9.3		WIN’s Limitation of Liability		47
9.4		WCAS Subs’ Agreement to Indemnify		47
9.5		WCAS Subs’ Limitation of Liability		47
9.6		Procedures for Indemnification With Respect to Third-Party Claims		48
9.7		Other Claims		49
9.8		Sole Remedy.		49
9.9		Exclusivity of Tax Sharing Agreement		50
ARTICLE X MISCELLANEOUS				50
10.1		Fees and Expenses		50
10.2		Further Assurances		51
10.3		Notices		51
10.4		Entire Agreement		52
10.5		Severability		52
10.6		Binding Effect; Assignment		52
10.7		No Third-Party Beneficiaries		52
10.8		Counterparts		52
10.9		Interpretation		52
10.10		Jurisdiction; Waiver of Jury Trial		53
10.11		Governing Law		53
10.12		Specific Performance		54
10.13		Waivers		54
10.14		The Parents’ Guaranty		54
10.15		Defined Terms		55
SCHEDULE I RESTRUCTURING TRANSACTIONS				I-1
SCHEDULE II EXCHANGED WIN SHARES				II-1
EXHIBIT A PUBLISHING AGREEMENT
EXHIBIT B WIN TRANSITION SERVICES AGREEMENT
EXHIBIT C BILLING AGREEMENT
EXHIBIT D1 LEASE AGREEMENT (MATTHEWS, NORTH CAROLINA)
EXHIBIT D2 LEASE AGREEMENT (LINCOLN, NEBRASKA)
EXHIBIT E TAX SHARING AGREEMENT
EXHIBIT F HOLDINGS EXCHANGE DEBT

 

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SHARE EXCHANGE AGREEMENT

AMENDED AND RESTATED SHARE EXCHANGE AGREEMENT, dated as of August 16, 2006 (the “Agreement”), by and among WINDSTREAM CORPORATION, a Delaware corporation (“WIN”), WELSH, CARSON, ANDERSON & STOWE VIII, L.P., a Delaware limited partnership, WELSH, CARSON, ANDERSON & STOWE IX, L.P., a Delaware limited partnership, WCAS CAPITAL PARTNERS III, L.P., a Delaware limited partnership (each a “Parent” and collectively, the “Parents”), REGATTA HOLDING I, L.P., a Delaware limited partnership, REGATTA HOLDING II, L.P., a Delaware limited partnership, REGATTA HOLDING III, L.P., a Delaware limited partnership (each a “WCAS Sub” and together the “WCAS Subs”).

RECITALS

WHEREAS, WIN is engaged through its indirect wholly-owned subsidiary, Windstream Yellow Pages, Inc., an Ohio corporation (the “Company”), and the Company’s wholly-owned subsidiary, Windstream Listing Management, Inc., a Pennsylvania corporation (“WLM” and, together with the Company, the “Division Subsidiaries”) in the business of designing, publishing, marketing, distributing and selling advertising in print, Internet and other directories in the United States (the “Division”);

WHEREAS, WIN is the record and beneficial owner of all of the shares of common stock, par value $0.01 per share (the “Holdings Shares”), of Windstream Regatta Holdings, Inc., a Delaware corporation newly formed by WIN for the purpose of engaging in the transactions contemplated hereby (“Holdings”);

WHEREAS, at or prior to the Closing (as defined herein) of the transactions contemplated hereby, (i) pursuant to certain restructuring transactions, as more fully described in Schedule I attached hereto, including one or more distributions and/or contributions of assets and/or equity securities, WIN will contribute, or cause to be contributed, to the Division Subsidiaries certain assets and liabilities related to the business of the Division and will cause the stock of the Company to be held directly by WIN (collectively, the “Restructuring Transactions”), and (ii) WIN will contribute, or cause to be contributed, to Holdings all of the issued and outstanding capital stock of the Company and certain other assets such that, from and after consummation of such restructuring transactions and contributions, all of the right, title and interest in and to all of the (1) assets, properties and rights primarily used by or primarily held for use in and (2) liabilities primarily associated with, in each case, the operation of the business of the Division, will be held, directly or indirectly, by Holdings, and in exchange for the contribution to Holdings, directly or indirectly, of all of the issued and outstanding capital stock of the Company, Holdings will issue to WIN the Holdings Shares, distribute to WIN the Holdings Exchange Debt (as defined herein) and pay to WIN the Special Dividend (as defined herein) (which WIN intends to distribute to stockholders and/or transfer to creditors in pursuance of the plan of reorganization that includes the Contribution) all upon the terms and subject to the conditions set forth herein (the transactions described in this clause (ii) are collectively referred to herein as the “Contribution”);

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WHEREAS, following the consummation of the Restructuring Transactions and the Contribution, upon the terms and subject to the conditions set forth in this Agreement, at the Closing each WCAS Sub will transfer to WIN the number of shares of common stock, par value $0.0001 per share, of WIN (“WIN Common Stock”) set forth opposite such WCAS Sub’s name on Schedule II attached hereto in exchange for the number of Holdings Shares set forth opposite such WCAS Sub’s name on Schedule II attached hereto;

WHEREAS, the parties to this Agreement intend that the Contribution, together with the Debt Exchange (as defined herein), will qualify as a tax-free reorganization under Section 368 of the Internal Revenue Code of 1986, as amended (the “Code”), that the exchange of the shares of WIN Common Stock held by each WCAS Sub for the Holdings Shares at the Closing will constitute a tax–free distribution of securities pursuant to Section 355 of the Code, and that this Agreement, together with all Ancillary Agreements, will constitute a “plan of reorganization” within the meaning of Sections 361 and 368 of the Code;

WHEREAS, the respective boards of directors or comparable authorized Person or body of WIN and each WCAS Sub have approved this Agreement and the respective boards of directors of WIN, Holdings and each WCAS Sub have approved the transactions contemplated hereby, and all necessary approvals of WIN, as the sole stockholder of Holdings have been obtained;

WHEREAS, on December 12, 2006, the parties hereto entered into a Share Exchange Agreement providing for the transactions contemplated hereby (the “Initial Agreement”) and such parties wish to enter into this Agreement, as of the date hereof, to amend and restate, and supersede in its entirety, the Initial Agreement; and

WHEREAS, capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed to such terms in Section 10.15 hereof.

TERMS

ARTICLE I

EXCHANGE

1.1 Transfer of Holdings Shares. Upon the terms and subject to the conditions of this Agreement, at the closing provided for in Section 1.3 hereof (the “Closing”), WIN shall convey, assign, transfer and deliver to each WCAS Sub, and each such WCAS Sub shall receive and accept from WIN, all of WIN’s right, title and interest in and to the Holdings Shares set forth opposite such WCAS Sub’s name on Schedule II attached hereto, free and clear of all liens, encumbrances, security interests, mortgages, pledges, claims and options (collectively, “Liens”).

1.2 Transfer of Exchanged WIN Shares. Upon the terms and subject to the conditions of this Agreement, in consideration of the aforesaid conveyance, assignment, transfer and delivery of the Holdings Shares at the Closing, each WCAS Sub shall convey, assign, transfer and deliver to WIN all of such WCAS Sub’s right, title and interest in and to the number of shares of WIN Common Stock set forth opposite such WCAS Sub’s name on Schedule II

 

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attached hereto, free and clear of all Liens (such shares of WIN Common Stock being collectively referred to herein as the “Exchanged WIN Shares”).

1.3 Closing. The Closing of the transactions contemplated by this Agreement shall take place at the offices of WIN at 4001 Rodney Parham Road, Little Rock, AR 72212, at 10:00 a.m., local time, on the date designated in writing by the Parents and the WCAS Subs pursuant to Section 2.6(a) hereof, which date shall not be prior to April 15, 2007 and shall be no later than sixty (60) days after the latest to occur of (i) the receipt by Holdings, WIN and the WCAS Subs of the Private Letter Rulings and the satisfaction of the conditions set forth in Sections 7.1(g), 7.1(h), 7.1(i), and 7.1(j) and (ii) the date on which WIN delivers to the WCAS Subs Audited Financial Statements for fiscal year 2006, as contemplated by Sections 1.4(f) and 5.9 hereof; provided that all other conditions set forth in Article VII are already satisfied or are capable of being satisfied at the Closing (subject to the satisfaction or waiver of all such conditions at the Closing), or at such other place, date and time as shall be agreed upon in writing by the parties hereto (the date on which the Closing is so scheduled to occur, the “Closing Date”). Notwithstanding the foregoing, the parties hereto intend that such Closing shall be deemed to be effective, and the transactions contemplated by this Agreement shall be deemed to occur simultaneously, at 11:59 p.m. on the Business Day immediately prior to the date on which the Closing actually occurs (the “Effective Time”).

1.4 Deliveries by WIN. Prior to or at the Closing, WIN shall deliver or cause to be delivered to each WCAS Sub the following:

(a) stock certificate(s) representing the Holdings Shares, duly endorsed or accompanied by stock powers duly executed in blank;

(b) any cash payment required to be made by WIN pursuant to Section 1.6(a) hereof, by wire transfer of immediately available funds to an account designated by the WCAS Subs at least two (2) Business Days prior to the Closing Date;

(c) each of the Ancillary Agreements, duly executed by WIN or an Affiliate of WIN;

(d) the resignations of the officers and directors of Holdings and the Division Subsidiaries specified by the WCAS Subs in the notice delivered by the WCAS Subs pursuant to Section 2.3 hereof;

(e) evidence that all Liens (other than Permitted Liens) on all properties and assets of the Division Subsidiaries have been terminated;

(f) audited consolidated balance sheets of the Division as of December 31, 2006, December 31, 2005 and December 31, 2004, and related audited consolidated statements of income and cash flows of the Division for the twelve-month periods then ended (collectively, the “Audited Financial Statements”);

(g) the officer’s certificate referred to in Section 7.3(c) hereof; and

 

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(h) all other documents, certificates, instruments or writings required to be delivered by WIN at or prior to the Closing pursuant to this Agreement.

1.5 Deliveries by the WCAS Subs. Prior to or at the Closing, the WCAS Subs shall deliver or cause to be delivered to WIN the following:

(a) stock certificate(s) representing the Exchanged WIN Shares, duly endorsed or accompanied by stock powers duly executed in blank;

(b) any cash payment required to be made by Holdings pursuant to Section 1.6(a) hereof, by wire transfer of immediately available funds to an account designated by WIN at least two (2) Business Days prior to the Closing Date;

(c) each of the Ancillary Agreements to which each WCAS Sub is a party, duly executed by each WCAS Sub;

(d) the officer’s certificate referred to in Section 7.2(c) hereof; and

(e) all other documents, certificates, instruments or other writings required to be delivered by the WCAS Subs at or prior to the Closing pursuant to this Agreement.

1.6 Net Working Capital Calculation and Adjustment.

(a) WIN shall, at least two (2) Business Days prior to the Closing Date, cause to be prepared and delivered to Holdings, with a copy to the WCAS Subs, a statement setting forth WIN’s good faith estimate as of the Effective Time of (i) the Net Working Capital of the Division (the “Estimated Net Working Capital”) and the components and calculation thereof; and (ii) the Division Indebtedness (the “Estimated Division Indebtedness”). As used herein, “Net Working Capital” shall mean (A) the sum of all current assets (other than (i) unbilled receivables, (ii) intercompany accounts receivable and (iii) directories in process) of the Division, as well as any Holdings Financing Expenses that have been incurred or paid by or on behalf of WIN or any of its Subsidiaries or Affiliates prior to the Effective Time, other than any such Holdings Financing Expenses that will remain liabilities or obligations of Holdings or the Division Subsidiaries after the Effective Time, less (B) the sum of all current liabilities (other than (i) all affiliates payable, including dividends accrued, (ii) publishing rights, and (iii) other deferred revenue), including any WIN Transaction Expenses that will remain liabilities or obligations of Holdings or the Division Subsidiaries after the Effective Time, but excluding any Holdings Financing Expenses that will remain liabilities or obligations of Holdings or the Division Subsidiaries after the Effective Time), of the Division, in each case determined in all respects in accordance with GAAP and in a manner consistent with all accounting principles, practices, methodologies and policies used in the preparation of the Financial Statements. For the avoidance of doubt, Net Working Capital shall be calculated prior to the application of any purchase accounting adjustments. If the Estimated Net Working Capital is greater than the Target Net Working Capital, then Holdings shall pay to WIN an amount in cash at the Closing equal to such excess; or (B) if the Estimated Net Working Capital is less than the Target Net Working Capital, then WIN shall pay to Holdings an amount in cash at the Closing equal to such

 

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deficit. WIN shall also pay to Holdings an amount in cash at the Closing equal to the Estimated Division Indebtedness.

(b) Within sixty (60) days after the Closing Date, Holdings shall cause to be prepared and delivered to WIN, with a copy to the WCAS Subs, a statement (the “Statement”) setting forth (i) the Net Working Capital, as of the Effective Time (the “Actual Net Working Capital”) and the amount by which the Actual Net Working Capital (A) exceeds the Estimated Net Working Capital (any such excess amount, the “Working Capital Excess Amount”) or (B) is less than the Estimated Net Working Capital (any such deficiency amount, the “Working Capital Deficiency Amount”); and (ii) the Division Indebtedness, as of the Effective Time (the “Actual Division Indebtedness”) and the amount by which the Actual Division Indebtedness (A) exceeds the Estimated Division Indebtedness (any such excess amount, the “WIN Division Indebtedness Excess Amount”) or (B) are less than the Estimated Division Indebtedness (any such deficiency amount, the “WIN Division Indebtedness Deficiency Amount”). Subject to Sections 1.6(c), (d) and (e) hereof, (i) Holdings shall, and the WCAS Subs shall cause Holdings to, pay to WIN the amount of any Working Capital Excess Amount and/or WIN Division Indebtedness Deficiency Amount and (ii) WIN shall pay to Holdings the amount of any Working Capital Deficiency Amount or any WIN Division Indebtedness Excess Amount, in each case, as finally determined pursuant to this Section 1.6. To the extent that netting the payments referenced in the preceding sentence results in a net payment by Holdings to WIN, the amount of such net payment shall be referred to herein as the “Excess Amount” and, to the extent that netting the payments referenced in the preceding sentence results in a net payment by WIN to Holdings, the amount of such net payment shall be referred to herein as the “Deficiency Amount.” The Statement shall be prepared in accordance with GAAP utilizing the accounting principles, practices, methodologies and policies used in the preparation of the Financial Statements.

(c) After receipt of the Statement, WIN shall have twenty (20) Business Days to review the Statement together with the workpapers used in its preparation. The Statement shall become final, conclusive and binding upon the parties on the twentieth Business Day following receipt thereof by WIN unless WIN gives written notice of its disagreement (a “Notice of Disagreement”) to Holdings prior to such date. Holdings shall, and the WCAS Subs shall cause Holdings to, give WIN and its representatives reasonable access, during normal business hours of Holdings, to all personnel, books and records of the Division as reasonably requested by WIN to assist it in its preparation of the Notice of Disagreement. Any Notice of Disagreement shall (i) specify in reasonable detail the nature and amount of any disagreement so asserted, (ii) WIN’s calculation of the Net Working Capital as of the Effective Time, and (iii) WIN’s calculation of the amount of Division Indebtedness as of the Effective Time. In the event that WIN delivers a Notice of Disagreement to Holdings within the foregoing twenty (20) Business Day period, then the Statement shall become final, conclusive and binding upon the parties hereto on the date such parties resolve in writing any differences they have with respect to any matter properly included in the Notice of Disagreement pursuant to the dispute resolution procedures set forth herein or by mutual agreement of the parties. During the twenty (20) Business Days immediately following the receipt by Holdings of a Notice of Disagreement, the respective Chief Financial Officers of Holdings and WIN shall negotiate in good faith to resolve any issues properly included in a Notice of Disagreement. During such period, Holdings shall have full access to the work papers of WIN prepared in connection with WIN’s preparation of

 

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the Notice of Disagreement. At the end of such 20-Business Day period, at the request of WIN or Holdings, any and all matters which remain in dispute and which were included in the Notice of Disagreement shall be submitted to KPMG LLP (the “Accounting Firm”) for a binding resolution. The fees and expenses of the Accounting Firm shall be paid one-half by WIN and one-half by Holdings and the WCAS Subs.

(d) The Accounting Firm shall determine and report in writing to WIN and Holdings, with a copy to the WCAS Subs, as to the resolution of all disputed matters submitted to the Accounting Firm and the effect of such determinations on the Statement within ten (10) Business Days after such submission or such longer period as the Accounting Firm may reasonably require, and such determinations shall be final, conclusive and binding as to WIN, Holdings and their respective Affiliates, including the WCAS Subs. In resolving any disputed item, the Accounting Firm, acting in the capacity of an expert and not as an arbitrator: (i) shall limit its review to matters specifically set forth in such Notice of Disagreement delivered pursuant to Section 1.6(c) as a disputed item (other than matters thereafter resolved by mutual written agreement of WIN and Holdings), (ii) shall further limit its review to whether the calculation of any such disputed item is mathematically accurate and has been prepared in accordance with GAAP utilizing the accounting principles, practices, methodologies and policies used in preparation of the Financial Statements, and (iii) shall not assign a value to any item greater than the greatest value for such item claimed by any party or less than the smallest value for such item claimed by any other party in the Statement or the Notice of Disagreement delivered pursuant to Section 1.6(c). WIN and Holdings shall, and the WCAS Subs shall cause Holdings to, each furnish to the Accounting Firm such workpapers and other documents and information relating to the disputed issues, and shall provide interviews and answer questions, as the Accounting Firm may reasonably request.

(e) At such time as the Statement becomes final, conclusive and binding upon WIN, Holdings and their respective Affiliates, including the WCAS Subs, in accordance with this Section 1.6, the Statement shall become the “Conclusive Statement”. If the Conclusive Statement contains a Deficiency Amount, then WIN shall pay to Holdings an amount in cash equal to such Deficiency Amount. If the Conclusive Statement contains an Excess Amount, then Holdings shall, and the WCAS Subs shall cause Holdings to, pay to WIN an amount in cash equal to such Excess Amount. All payments to be made pursuant to this Section 1.6 shall be made on the second Business Day following the date on which the Statement becomes the Conclusive Statement pursuant to this Section 1.6. Any payment required to be made by WIN or Holdings pursuant to this Section 1.6 shall bear interest from the date such payment is finally determined pursuant to Section 1.6(c) or (e), as applicable, through the date of payment at the Interest Rate, and shall be payable by wire transfer of immediately available funds to an account or accounts designated by the party entitled to receive such funds prior to the date when such payment is due.

(f) For purposes of this Agreement, Taxes (including deferred Tax assets and liabilities) shall not be included as assets or liabilities for purposes of determining Estimated Net Working Capital or Actual Net Working Capital. Liabilities, assets, pre-payments, refunds and credits with respect to Taxes shall be governed by and allocated solely in accordance with the Tax Sharing Agreement.

 

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ARTICLE II

RELATED MATTERS

2.1 Ancillary Agreements. Prior to or at the Closing, WIN and the WCAS Subs (or the respective Subsidiaries or Affiliates of WIN and the WCAS Subs identified in the clauses below) shall enter into the following ancillary agreements, substantially in the form of the agreements set forth in Exhibit A, Exhibit B, Exhibit C, Exhibits D1 and D2 and Exhibit E, respectively[, it being acknowledged and agreed that certain exhibits and schedules to, and terms and provisions of (including the list of transition services to be provided under the WIN Transition Services Agreement), the forms of Ancillary Agreements attached to this Agreement, as and to the extent noted in such Exhibits, are preliminary in nature and the Parties shall use their respective reasonable best efforts to develop and agree upon definitive versions of such exhibits, schedules, terms and provisions prior to the Closing:

(a) Publishing Agreement among WIN, the WCAS Subs and the Company, substantially in the form of the agreement set forth in Exhibit A attached hereto, pursuant to which, among other things, WIN will name the Company as its exclusive official print directory publisher of print listings and classified advertisements of its wireline telephone customers in the geographic areas in which WIN or its Affiliates are the incumbent telecom provider as of the date of this Agreement for a period of 50 years, all upon the terms and subject to the conditions set forth therein (the “Publishing Agreement”);

(b) Transition Services Agreement between WIN (or one or more of its designated Affiliates) and one or more of the Division Subsidiaries, substantially in the form of the agreement set forth in Exhibit B attached hereto, pursuant to which, among other things, WIN will provide, or cause to be provided, to the Division certain transition services, as set forth therein, for the time periods set forth therein, upon the terms and subject to the conditions set forth therein (the “WIN Transition Services Agreement”);

(c) Billing and Collection Agreement between Windstream Communications, Inc. and one or more of the Division Subsidiaries, substantially in the form of the agreement set forth in Exhibit C attached hereto, pursuant to which, among other things, WIN will provide, or cause to be provided, to the Division certain billing services (including certain limited pre-delinquency collection services), as set forth therein, for the time periods set forth therein, upon the terms and subject to the conditions set forth therein (the “Billing Agreement”);

(d) Lease Agreements between WIN (or one or more of its designated Affiliates) and one or more of the Division Subsidiaries, substantially in the form of the agreements set forth in Exhibits D1 and D2 attached hereto, pursuant to which, among other things, WIN will lease to the Division certain Real Property (the “Lease Agreements”); and

(e) Tax Sharing Agreement among WIN, Holdings and the WCAS Subs, substantially in the form of the agreement set forth in Exhibit E attached hereto, pursuant to which, among other things, WIN, Holdings and the WCAS Subs will agree upon the allocation of responsibility for certain Taxes arising before and after the Effective Time, agree to indemnify

 

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each other for certain related liabilities and provide for certain covenants and agreements relating to Taxes (the “Tax Sharing Agreement” and, collectively with the Publishing Agreement, the WIN Transition Services Agreement, the Billing Agreement and the Lease Agreements, the “Ancillary Agreements”).

2.2 Intercompany Obligations; Affiliate Agreements; Certain Other Intercompany Matters.

(a) Except as set forth on Section 2.2(a) of the disclosure letter delivered by WIN to the WCAS Subs contemporaneously with the execution of this Agreement and attached hereto and made a part hereof (the “Disclosure Letter”), as of the Closing Date, WIN, Holdings and any Division Subsidiaries shall cause all Intercompany Agreements to be terminated in all respects such that there is no cost or liability thereunder on the part of Holdings or any Division Subsidiary.

(b) In furtherance and not in limitation of subsection (a) of this Section 2.2 or any other provision of this Agreement, all Intercompany Indebtedness outstanding on the date hereof and not repaid at or prior to the Closing or incurred after the date hereof and not repaid at or prior to Closing shall be cancelled, or, at WIN’s election, contributed to Holdings or one of the Division Subsidiaries, immediately prior to the Closing such that, at the Effective Time, no such Intercompany Indebtedness shall be outstanding. As used herein, the term “Intercompany Indebtedness” shall mean, without duplication, (a) the aggregate principal amount of all indebtedness for borrowed money, including all indebtedness evidenced by a note, bond, debenture or similar instrument, together with accrued and unpaid interest thereon, and (b) all accounts payable, in each case, between Holdings or any Division Subsidiary, on the one hand, and WIN or any of its Subsidiaries or Affiliates (other than Holdings or any Division Subsidiary), on the other hand.

(c) Except as provided in the Ancillary Agreements or as set forth on Section 2.2(c) of the Disclosure Letter, on or prior to the Closing Date, all data processing, accounting, insurance, banking, personnel, legal, tax, communications and other products or services provided to Holdings or any Division Subsidiary (i) by WIN or any of its Subsidiaries or Affiliates (other than Holdings or any Division Subsidiary), (ii) pursuant to any contract between WIN or any of its Subsidiaries or Affiliates (other than Holdings or any Division Subsidiary) and any third party under which goods or services are provided to any Division Subsidiary and which would constitute a Material Contract if any Division Subsidiary were a party to or bound by such contract as of the date hereof, or (iii) by Holdings or either Division Subsidiary to WIN or any of its Subsidiaries or Affiliates (other than Holdings or any other Division Subsidiary), including any agreements or understandings (written or oral) with respect thereto, will terminate or (in the case of clause (ii) above), subject to receiving any required consents, be assigned in whole (in the case of contracts relating solely to the business of the Division Subsidiaries) or in part (in the case of contracts not relating solely to the business of the Division Subsidiaries) to one or more of the Division Subsidiaries. On and after the Closing Date, the WCAS Subs shall be solely responsible for the operation of the Division, except as otherwise specifically provided in the WIN Transition Services Agreement or any of the other Ancillary Agreements.

 

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2.3 Resignations. At the Closing, to the extent requested in writing by the WCAS Subs at least five (5) Business Days prior to the Closing Date, WIN shall cause to be delivered to the WCAS Subs and the Company duly executed resignations from the officers and directors of Holdings and each Division Subsidiary specified by the WCAS Subs, effective as of the Closing, and shall take such other action as is necessary to accomplish the foregoing.

2.4 Guaranties. WIN shall use its commercially reasonable efforts to cause the release in respect of all obligations of Holdings or the Division Subsidiaries under each of the guaranties, letters of credit and similar obligations of Holdings or the Division Subsidiaries (including leases of real and personal property) for the benefit of WIN or any of its Subsidiaries or Affiliates (other than Holdings or the Division Subsidiaries) or any supplements, amendments or modifications thereto in accordance with this Agreement (collectively, the “Guaranties”), all of which Guaranties are set forth in Section 2.4 of the Disclosure Letter. WIN shall take all actions that are necessary to comply with this Section 2.4 as promptly as practicable after the date hereof and shall keep the WCAS Subs reasonably informed of any developments associated therewith. Section 2.4 of the Disclosure Letter sets forth a list of all Guaranties of Holdings or the Division Subsidiaries.

2.5 Related Transactions.

(a) At or prior to the Effective Time, WIN shall, or shall cause its Subsidiaries to, consummate the following related transactions:

(i) WIN shall consummate the Restructuring Transactions and the Contribution;

(ii) In consideration of the Contribution, WIN shall cause Holdings to issue to WIN certain debt obligations of Holdings, having substantially the terms set forth in Exhibit F attached hereto (the “Holdings Exchange Debt”), in an aggregate principal amount equal to Two-Hundred Fifty Million Five Hundred Thousand Dollars ($250,500,000) less the amount of the Special Dividend paid by Holdings to WIN pursuant to Section 2.5(a)(iii) hereof; and

(iii) WIN shall cause Holdings to distribute to WIN, as a special dividend (the “Special Dividend”), cash in an amount not in excess of WIN’s tax basis in the Division Subsidiaries as of the date of such Special Dividend (which WIN intends to distribute to its stockholders and/or transfer to creditors in pursuance of the plan of reorganization that includes the Contribution), as set forth in a written notice to be delivered by WIN to Holdings and the WCAS Subs not less than 40 days prior to the Closing.

(b) At or prior to the Effective Time, but after completion of the actions contemplated in Section 2.5(a) hereof, WIN shall use its reasonable best efforts to: (i) enter into all necessary or appropriate arrangements regarding the exchange of, and, provided an exchange agreement is entered into among WIN and holders of outstanding WIN Debt, effect the exchange of, the Holdings Exchange Debt for outstanding WIN debt obligations (the “WIN Debt”) held by one or more creditors of WIN (the “Debt Exchange”); (ii) enter into all necessary

 

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or appropriate arrangements regarding the sale of, and effect the sale of, the WIN Debt expected to be received by WIN in the Debt Exchange for cash in an amount equal to the aggregate Fair Market Value of the WIN Debt as of the date of such sale; and (iii) immediately thereafter use the cash proceeds expected to be received by WIN pursuant to clause (ii) immediately above to retire such WIN Debt.

2.6 Coordination of Holdings Financing and Debt Exchange.

(a) WIN and the WCAS Subs shall, and the Parents shall cause the WCAS Subs to, cooperate with respect to and use their respective reasonable best efforts to effect the issuance and expected subsequent sale by creditors of WIN of the Holdings Exchange Debt, the implementation of a new senior credit agreement for Holdings pursuant to which the Holdings Exchange Debt may be incurred (the “Holdings Credit Agreement”) and/or the issuance and sale of certain Senior Subordinated Notes of Holdings, in each case, substantially on the terms set forth in Exhibit F attached hereto, and the issuance and sale of such Indebtedness of Holdings as may be necessary or desirable in order to enable Holdings to pay the Special Dividend and WIN to consummate the Debt Exchange (collectively, the “Holdings Financing”). The WCAS Subs shall be responsible for the selection of the lenders under the Holdings Credit Agreement, the syndication and placement of the Holdings Exchange Debt or, if applicable, the selection of the initial purchasers for the offering and placement of the Holdings Exchange Debt and the negotiation of all related documentation, including the preparation of all offering memoranda, private placement memoranda, prospectuses and similar documents deemed reasonably necessary by the WCAS Subs to be used in connection with consummating the Holdings Financing and the expected sale of the Holdings Exchange Debt. WIN shall be responsible, in coordination with the WCAS Subs, for the identification and selection of the WIN creditors with which any Debt Exchange shall be effected and the preparation of all related documentation; provided, however, that the terms of the Debt Exchange, including all related documentation, the aggregate principal amount of WIN Indebtedness to be received by WIN in exchange for the Holdings Exchange Debt and all other material terms and conditions of the Debt Exchange shall be negotiated solely by WIN; and provided further, that the Debt Exchange shall be effected in all respects in a manner consistent with the terms of the Private Letter Rulings; and provided further that the WCAS Subs shall not be deemed to act as agents of WIN in connection with the Debt Exchange. WIN, each of the Parents and each of the WCAS Subs hereby acknowledge and agree that (i) Holdings shall incur the Holdings Exchange Debt, in consideration of the Contribution, on such date as the WCAS Subs shall designate following the latest to occur of (A) receipt by WIN, Holdings and the WCAS Subs of the Private Letter Rulings and the satisfaction of the conditions set forth in Sections 7.1(g), 7.1(h), 7.1(i), and 7.1(j) hereof and (B) the date on which WIN delivers to the WCAS Subs Audited Financial Statements for fiscal year 2006, as contemplated by Sections 1.4(f) and 5.9 hereof, but in any event within sixty (60) days thereafter (with the Parents and the WCAS Subs to notify WIN in writing of the projected Closing Date not less than five (5) Business Days prior thereto, provided, however, that, notwithstanding the foregoing, the Closing shall not take place prior to April 15, 2007), and (ii) the Holdings Exchange Debt shall be issued on such terms as will enable WIN, upon receipt of the Holdings Exchange Debt, to exchange such Holdings Exchange Debt for an equivalent Fair Market Value of WIN Indebtedness held by WIN’s creditors. Without limiting the generality of this Section 2.6(a), WIN shall, and WIN shall cause Holdings to, issue the Holdings Exchange Debt in accordance with the immediately preceding sentence, subject to the

 

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responsibilities of the WCAS Subs set forth in the second sentence of this Section 2.6(a). The parties hereto further acknowledge and agree that Holdings shall issue the Holdings Exchange Debt on such prevailing terms, including with respect to applicable interest rate and covenants, as are then available, and adverse changes in such prevailing terms shall not excuse any of the parties from proceeding with the issuance of the Holdings Exchange Debt in accordance with this Section 2.6(a).

(b) WIN shall, and shall cause Holdings and each of the Division Subsidiaries to, use its reasonable best efforts to cause the respective employees, accountants, counsel and other representatives of WIN and Holdings to reasonably cooperate with the WCAS Subs and their representatives in carrying out the transactions contemplated by the Holdings Financing and in delivering all documents and instruments deemed reasonably necessary by the WCAS Subs (including providing standard accountants’ “comfort” letters and legal opinions and otherwise cooperating and assisting in satisfying the conditions to the Holdings Financing and assisting with the consummation of the Holdings Financing, including by (i) participating in meetings, drafting sessions, due diligence sessions, management presentation sessions, “road shows” and sessions with rating agencies in connection with the syndication or marketing of the Holdings Credit Agreement and the expected consummation of the placement and sale of the Holdings Exchange Debt received by the exchanging creditors in the Debt Exchange and any other debt securities of Holdings that may be issued or sold to finance the payment of the Special Dividend (collectively, the “Holdings Debt Offering”), (ii) providing direct contact between prospective lenders and the officers and directors of each of WIN and Holdings, (iii) preparing business projections and financial statements, (iv) assisting in the preparation by the WCAS Subs of offering memoranda, private placement memoranda, prospectuses and similar documents deemed reasonably necessary by the WCAS Subs to be used in connection with consummating the Holdings Financing, (v) executing and delivering all documents and instruments deemed reasonably necessary by the WCAS Subs, including any underwriting or placement agreements, pledge and security documents, other definitive financing documents, including any indemnity agreements, or other requested certificates or documents, legal opinions, engineering reports, environmental assessment reports, surveys and title insurance as may be reasonably requested by the WCAS Subs, providing that Holdings and the Division Subsidiaries, and not WIN, shall enter into the agreements and instruments contemplated by this clause (v), (vi) disclosing the Holdings Financing, as required under the Securities Act and the Exchange Act, in any registration statement and any other filings to be made with the Securities and Exchange Commission, and (vii) taking all other actions reasonably necessary in connection with the Holdings Financing). Notwithstanding anything to the contrary contained herein, the expected sale by WIN creditors of the Holdings Exchange Notes shall be in a transaction exempt from the registration requirements of the Securities Act and, prior to the Effective Time, Holdings shall not be required to, and WIN shall have no obligation to cause Holdings to, register the WIN Exchange Notes or any other Holdings Debt Securities under the Securities Act.

2.7 Private Letter Rulings. WIN shall, and WIN shall cause Holdings and the Division Subsidiaries to, and the WCAS Subs shall, use their respective reasonable best efforts to obtain the Private Letter Rulings, substantially on the terms set forth in, and otherwise in accordance with, the Tax Sharing Agreement, as soon as practicable after the date of this Agreement. WIN and Holdings shall be responsible in the first instance for the preparation of all memoranda, ruling requests, correspondence and other submissions to the IRS in connection

 

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with obtaining the Private Letter Rulings; provided that the WCAS Subs shall be responsible in the first instance for the preparation of all memoranda, ruling requests, correspondence and other submissions to the IRS that relate principally to those portions of the Private Letter Rulings that pertain principally to the WCAS Subs. Each party shall have the right to be provided a reasonable period in advance of submission, to review, and to approve, materials prepared by the other party, such approval not to be unreasonably withheld, delayed or conditioned. Each party shall provide the other party with copies of all memoranda, ruling requests, correspondence or other submissions as filed with the IRS promptly following the filing thereof. Each of WIN and the WCAS Subs shall have the right to participate fully in the process of obtaining the Private Letter Rulings, including attending meetings and participating in conference calls with the IRS. Each of WIN, on the one hand, and the WCAS Subs, on the other hand, shall use its reasonable best efforts to cause its respective employees, accountants, counsel and other representatives reasonably to cooperate with the other party and its representatives in obtaining the Private Letter Rulings, including by (i) participating in meetings and conference calls with the IRS, (ii) assisting in the preparation of all memoranda, ruling requests, correspondence and other submissions that are deemed reasonably necessary or desirable by either party in connection with obtaining the Private Letter Rulings, (iii) executing and delivering customary documents and instruments (such as penalties of perjury statements) that are deemed reasonably necessary by either party in connection with obtaining the Private Letter Rulings, and (iv) taking other actions reasonably necessary in connection with obtaining the Private Letter Rulings.

2.8 Termination of Forward Underwriting Commitment. In the event that the IRS determines pursuant to, or in connection with its consideration of, one or more of the Private Letter Rulings requested from the IRS pursuant to Section 2.7 that the Forward Underwriting Commitment contemplated under the Commitment Letter is inconsistent with such Private Letter Ruling(s) or that the IRS will not be able to issue any or all of the Private Letter Rulings to the extent that the Forward Underwriting Commitment is in effect, then the WCAS Subs shall terminate, and the Parents shall cause the WCAS Subs to terminate, the Commitment Letter effective immediately, such that the Parties will proceed with the transactions contemplated by this Agreement without the benefit of the Forward Underwriting Commitment.

2.9 Repayment of Division Indebtedness. Prior to or at the Effective Time, WIN shall repay, or cause to be repaid, or assume, or cause to be assumed, all Indebtedness of Holdings and the Division Subsidiaries other than the Holdings Exchange Debt and any other Indebtedness incurred by Holdings in order to enable Holdings to pay the Special Dividend.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF WIN

Except as set forth in the Disclosure Letter (as updated pursuant to Section 5.7 hereof) (with specific reference to the particular Section or subsection of this Agreement to which the information set forth in such disclosure letter relates; provided, that any information set forth in one section of the Disclosure Letter shall be deemed to apply to each other Section or subsection thereof or hereof to which its relevance is readily apparent on its face), WIN hereby represents and warrants to the WCAS Subs and the Parents as of the date of the Initial Agreement (except to the extent any such representation or warranty is made as of an earlier

 

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date, in which case, as of such earlier date) and as of the Closing Date (as though then made and as though the Closing Date were substituted for the date of this Agreement throughout this Article III, except to the extent any such representation or warranty is made as of an earlier date, in which case, as of such earlier date) as follows:

3.1 Authority. WIN has all requisite corporate power and corporate authority to enter into this Agreement, and WIN, Holdings and each of the Division Subsidiaries have all requisite corporate power and authority to enter into such of the Ancillary Agreements to which they are respectively party and to perform their obligations hereunder and thereunder and WIN, Holdings and each of the Division Subsidiaries have all requisite corporate power and authority to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by WIN of this Agreement and by WIN, Holdings and each of the Division Subsidiaries of such Ancillary Agreements to which they are respectively a party, and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of WIN, Holdings and each such Division Subsidiary, as applicable. This Agreement has been (and each such Ancillary Agreement upon execution and delivery will be) duly executed and delivered by each such party thereto and constitutes (and each such Ancillary Agreement, upon execution and delivery, will constitute) a valid and binding obligation of WIN, Holdings and the Division Subsidiary party thereto, as applicable, enforceable against WIN, Holdings or such Division Subsidiary, as applicable, in accordance with its and their respective terms, except that (i) such enforcement may be subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other Laws, now or hereafter in effect, relating to or limiting creditors’ rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

3.2 Title to Holdings Shares. WIN has good and valid title to the Holdings Shares, free and clear of all Liens, and upon delivery to the WCAS Subs at the Closing of certificates representing the Holdings Shares, duly endorsed by WIN for transfer to the WCAS Subs or accompanied by stock powers duly executed in blank, and upon receipt by WIN of the Exchanged WIN Shares and any cash payment required to be made by the WCAS Subs pursuant to Section 1.6(a) hereof, good and valid title to the Holdings Shares will pass to each WCAS Sub, respectively, free and clear of any Liens. Other than this Agreement, the Holdings Shares are not subject to any voting trust agreement or other contract, agreement, arrangement, commitment or understanding, including any such contract, agreement, arrangement, commitment or understanding restricting or otherwise relating to the voting, dividend rights or disposition of the Holdings Shares.

3.3 Organization and Qualification. WIN, Holdings and each of the Division Subsidiaries are, in all material respects, duly organized, validly existing and in good standing under the Laws of the jurisdiction listed as its jurisdiction of incorporation in Section 3.3 of the Disclosure Letter and has all requisite corporate power and authority to own, lease and operate the properties it owns, leases or operates and to conduct its business as conducted on the date hereof. WIN, Holdings and each of the Division Subsidiaries is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such

 

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qualification necessary, except in those jurisdictions where the failure to be so duly qualified or licensed and in good standing would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect.

3.4 Capitalization of Holdings. The authorized capital stock of Holdings consists of 10,000 shares of common stock, par value $0.01 per share, of which 1,000 shares, constituting the Holdings Shares, are validly issued and outstanding, fully paid and nonassessable. The Holdings Shares are owned of record and beneficially by WIN. Such Holdings Shares have not been issued in violation of, and are not subject to, any preemptive, subscription or similar rights. Except for the Holdings Shares, there are no shares of capital stock or other equity securities of Holdings outstanding. There are no outstanding warrants, options, “phantom” stock rights, agreements, convertible or exchangeable securities or other commitments pursuant to which WIN or any of its Affiliates (including Holdings) is or may become obligated to issue, sell, purchase, return or redeem any shares of capital stock or other securities of Holdings, or which give any Person the right to receive any benefits or rights similar to any rights enjoyed by or accruing to the holders of shares of capital stock of Holdings. There are no outstanding bonds, debentures, notes or other indebtedness having the right to vote on any matters which stockholders of Holdings may vote upon.

3.5 Capitalization of the Division Subsidiaries. The authorized capital stock of the Company consists of 750 shares of common stock,