Exhibit 99.3
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NON-COMPETITION AND NON-SOLICITATION AGREEMENT
This Non-Competition and Non-Solicitation Agreement (this "Agreement")
is entered into as of November 8, 2002 (the "Effective Date") by and between
SGN LLC, a Delaware limited liability company ("Dexter Publisher"), GPP LLC,
a Delaware limited liability company ("Rodney Publisher"), and Dex Holdings
LLC, a Delaware limited liability company ("Buyer" and together with Dexter
Publisher and Rodney Publisher, the "Buyer Parties"), on the one hand, and
Qwest Corporation, a Colorado corporation ("QC"), Qwest Communications
International Inc., a Delaware corporation ("QCII"), and Qwest Dex, Inc., a
Colorado corporation ("Dex" and, collectively with QC and QCII, the "Qwest
Parties"), on the other hand. Capitalized terms not otherwise defined herein
will have the meanings assigned to such terms in Article 1.
RECITALS
A. Dex, QCII, Qwest Services Corporation ("QSC") and Buyer have
entered into that certain Purchase Agreement dated as of August 19, 2002 (the
"LLC Purchase Agreement"), pursuant to which Dex has agreed, subject to the
terms and conditions set forth therein, to: (i) contribute certain of its
assets and liabilities to Dexter Publisher; and (ii) sell all of the
outstanding limited liability company interests of Dexter Publisher to Buyer
following such contribution.
B. In connection with the LLC Purchase Agreement, Dex, QCII, QSC and
Buyer entered into that certain Purchase Agreement, dated of even date
therewith (the "LLC II Purchase Agreement"), pursuant to which Dex has
agreed, subject to the terms and conditions set forth therein, to:
(i) contribute certain of its assets and liabilities to Rodney Publisher; and
(ii) sell all of the outstanding limited liability company interests of
Rodney Publisher to Buyer following such contribution.
C. Sections 7.2(g) and 7.3(f) of the LLC Purchase Agreement provide
that the obligations of Dex, QSC, QCII and Buyer to consummate the First
Closing are subject, among other things, to the execution and delivery of
this Agreement.
D. Concurrently with executing this Agreement, Publisher and QC are
executing the Publishing Agreement, pursuant to which QC is, among other
things, designating Publisher as its exclusive official publisher of
Directory Products within certain of its Service Areas, subject to the terms
and conditions set forth therein.
E. The parties have agreed to establish certain non-competition and
non-solicitation covenants, as more fully described in this Agreement.
AGREEMENT
In consideration of the foregoing recitals and the mutual promises and
covenants contained herein, the sufficiency of which is hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 General Rules of Construction. For all purposes of this Agreement:
(i) the terms defined in this Agreement include the plural as well as the
singular; (ii) all references in this Agreement to designated "Articles,"
"Sections" and other subdivisions are to the designated Articles, Sections
and other subdivisions of the body of this Agreement; (iii) pronouns of
either gender or neuter include, as appropriate, the other pronoun forms;
(iv) the words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision; (v) "or" is not exclusive; (vi) "including" and
"includes" will be deemed to be followed by "but not limited to" and "but is
not limited to," respectively; (vii) any definition of or reference to any
law, agreement, instrument or other document herein will be construed as
referring to such law, agreement, instrument or other document as from time
to time amended, supplemented or otherwise modified; and (viii) any
definition of or reference to any statute will be construed as referring also
to any rules and regulations promulgated thereunder.
1.2 Definitions. The following definitions will apply within this
Agreement.
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common
control with, a specified Person. The term "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with") means the possession of the power to direct the management and
policies of the referenced Person through ownership of 50% or more of the
voting power or economic interests in the referenced Person.
"Agreement" has the meaning set forth in the introductory paragraph of
this Agreement.
"Applicable Buyer Successors" has the meaning set forth in Section 3.2.
"Applicable Qwest Successors" has the meaning set forth in Section 2.2
(a).
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banks in New York, New York or Denver, Colorado are authorized or
obligated by law or executive order to close.
"Buyer" has the meaning set forth in the introductory paragraph of this
Agreement.
"Buyer Parties" has the meaning set forth in the introductory paragraph
of this Agreement.
"Buyer Restricted Activities" has the meaning set forth in Section 3.1.
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"Change of Control" means: (i) an acquisition by any Person or group
of Persons of the voting stock of the referenced Person in a transaction or
series of transactions, if immediately thereafter such acquiring Person or
group has, or would have, beneficial ownership of more than 50% of the
combined voting power of the referenced Person's then outstanding voting
stock, including any such acquisition by way of a merger, consolidation or
reorganization (including under the Bankruptcy Code), or series of such
related transactions, involving the referenced Person; or (ii) a sale,
assignment or other transfer of all or substantially all of the referenced
Person's; or (iii) a confirmation of any plan of reorganization or
liquidation under, or sale of assets pursuant to, the Bankruptcy Code, any
out-of-court recapitalization or reorganization transaction or exchange
offer, in any case in which more than fifty-one percent (51%) of such
Person's outstanding equity securities are issued in exchange for all or a
significant portion of such Person's outstanding debt or other securities, or
a deed in lieu of foreclosure or any other remedy or right at law or contract
by which substantially all of such Person's equity securities or assets are
surrendered, assigned or otherwise transferred to another Person.
"Confidentiality Agreement" means that certain Confidentiality
Agreement between Welsh, Carson, Anderson & Stowe IX, L.P. and QSC, dated as
of April 22, 2002.
"Covenant Cure Period" has the meaning set forth in Section 5.1(b).
"Dex" has the meaning set forth in the introductory paragraph of this
Agreement.
"Dex Region" means the territory comprised of the seven states of
Arizona, Idaho, Montana, Oregon, Utah, Washington, and Wyoming subject to
additions thereto and deletions therefrom pursuant to the terms of the
Publishing Agreement.
"Dexter Publisher" has the meaning set forth in the introductory
paragraph of this Agreement.
"Directory Product" means a telephone directory product or service
consisting principally of searchable (e.g., by alphabet letter or category of
products or services) multiple telephone listings and classified
advertisements that is delivered or otherwise made available to end users in
tangible media (e.g., paper directories, CD-ROM), electronic media (e.g.,
Internet) or digital media (e.g., PDA download).
"Effective Date" has the meaning set forth in the introductory
paragraph of this Agreement.
"First Closing" means the Closing as defined in and pursuant to the LLC
Purchase Agreement; "First Closing Date" means the date of the First Closing.
"Governmental Entity" means any government or any agency, bureau,
board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether federal, state
or local, domestic or foreign.
"IP Contribution Agreement" means that certain Intellectual Property
Contribution Agreement of even date herewith by and between Publisher, QCII
and Dex, as the same may be amended, modified or supplemented from time to
time.
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"LLC Purchase Agreement" has the meaning set forth in the Recitals of
this Agreement, as the same may be amended, modified or supplemented from
time to time.
"LLC II Purchase Agreement" has the meaning set forth in the Recitals
of this Agreement, as the same may be amended, modified or supplemented from
time to time.
"Material Default" means, with respect to either party, a breach of any
material term, condition, covenant or obligation of this Agreement that is so
material and continuing that it has the effect of abrogating such party's
performance and the other party's enjoyment of the benefits under this
Agreement taken as a whole, including an uncured breach by a Qwest Party of
Section 2.2(a).
"Pay Stations Agreement" means that certain Public Pay Stations
Agreement of even date herewith by and between QC and Publisher, as the same
may be amended, modified or supplemented from time to time.
"Person" means an association, a corporation, an individual, a
partnership, a limited liability company, a trust or any other entity or
organization, including a Governmental Entity.
"Primary Directories" has the meaning set forth in the Publishing
Agreement.
"Publisher" means (i) from and after the First Closing Date and until
the Second Closing Date (if such date occurs), Dexter Publisher only, and
(ii) from and after the Second Closing Date (if such date occurs), Dexter
Publisher together with Rodney Publisher.
"Publisher Liquidated Damages" has the meaning set forth in Section
6.2(a).
"Publisher Region" means: (i) from and after the First Closing Date,
the territory comprised of the seven states of Colorado, Iowa, Minnesota,
Nebraska, New Mexico, North Dakota and South Dakota and the city of El Paso,
Texas; and (ii) from and after the Second Closing Date, the foregoing
territory together with the territory comprising the Dex Region, both subject
to additions thereto and deletions therefrom pursuant to the terms of the
Publishing Agreement.
"Publishing Agreement" means that certain Publishing Agreement for
Official Listings/Directories of even date herewith by and between the Qwest
Parties and Publisher, as the same may be amended, modified or supplemented
from time to time.
"QC" has the meaning set forth in the introductory paragraph of this
Agreement.
"QCII" has the meaning set forth in the introductory paragraph of this
Agreement.
"QSC" has the meaning set forth in the Recitals of this Agreement.
"Qwest Parties" has the meaning set forth in the introductory paragraph
of this Agreement.
"Qwest Restricted Activities" has the meaning set forth in Section 2.1.
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"Remediable Breach" has the meaning set forth in Section 5.1(b).
"Restricted Activity Notice" has the meaning set forth in Section
5.1(a).
"Rodney Publisher" has the meaning set forth in the introductory
paragraph of this Agreement.
"Second Closing" means the Closing as defined in and pursuant to the
LLC II Purchase Agreement; "Second Closing Date" means the date of the Second
Closing.
"Separation Agreement" means that certain Separation Agreement dated as
of even date herewith by and among the Buyer Parties, Dex and QCII, as the
same may be amended, modified or supplemented from time to time.
"Service Area(s)" means those geographic areas in which QC provides
local telephone service, as described in the Publishing Agreement.
"Service Area Default" has the meaning set forth in Section 6.2(b).
"Service Area Default Liquidated Damages" has the meaning set forth in
Section 6.2(b).
"Trademark License Agreement" means that certain Trademark License
Agreement of even date herewith by and between QCII and Publisher, as the
same may be amended, modified or supplemented from time to time.
"Voice Portal Directory" means a telephone directory product or service
that the user accesses through an interactive voice portal.
ARTICLE II
QWEST NON-COMPETITION COVENANTS
2.1 Restrictions. Subject to the exclusions, exceptions and limitations
expressly set forth in this Agreement, and without limiting any restriction
with respect to the Qwest Parties' use of trademarks and trade names as set
forth in the IP Contribution Agreement, the Qwest Parties agree that they
will not, will not act as a sales agent on behalf of, or enter into a joint
venture, strategic alliance, product bundling, revenue sharing or similar
arrangement with, a third Person in order to, and will cause their Affiliates
not to, publish, market, sell or distribute any Directory Products, in each
case to the extent both: (i) consisting principally of listings and
classified advertisements for subscribers in the Publisher Region; and (ii)
directed primarily at end users in the Publisher Region ("Qwest Restricted
Activities"); provided, however, that if the Publishing Agreement terminates
with respect to any Service Area(s) (thereby causing the definition of
Publisher Region to exclude such Service Area(s)), or the Pay Stations
Agreement terminates with respect to any Pay Stations (as defined in the Pay
Stations Agreement), the obligations and restrictions of this Section 2.1
will no longer apply with respect to such Service Area(s) and will no longer
apply with respect to such Pay Stations (i.e., will not apply to publishing
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or acquiring from a third party an alternative Directory Product for
placement in such Pay Station), as applicable, without limiting the continued
application of such obligations and restrictions with respect to the
remaining Service Areas and Pay Station.
2.2 Successor Restrictions.
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(a) Subject to the exclusions, exceptions and limitations expressly set
forth in this Agreement, following a Change of Control of any Qwest Party
whereby such Qwest Party is no longer directly bound as a party to this
Agreement (e.g., because the Change of Control is a sale or transfer of assets
or is the result of a transaction pursuant to which the successor, surviving or
acquiring entity (the "Applicable Qwest Successor(s)") does not automatically
succeed to the obligations of such party by operation of law) the Applicable
Qwest Successor(s) will, and such Qwest Party agrees to cause such entity to,
agree in writing (whether as part of the acquisition agreement that provides for
Publisher to be a third party beneficiary or in a separate agreement) to assume
this Agreement on substantially similar terms as are then in effect hereunder.
(b) Subject to the exclusions, exceptions and limitations expressly set
forth in this Agreement, if QC exits Service Area(s) in the Publisher Region as
a result of (i) a sale, assignment or other transfer of access lines, (ii) a
merger or other business combination transaction with a Person in respect of
access lines, or (iii) any other agreement with any third Person pursuant to
which such Person will provide local telephone service in lieu of QC in such
Service Area(s), and, in any of the foregoing cases, such event does not
constitute a Change of Control: (A) QC will require the acquiring Person to
agree in writing (whether as part of the acquisition agreement with QC that
provides for Publisher to be a third party beneficiary or in a separate
agreement) to assume this Agreement to the extent of the relevant Service
Area(s) (i.e., that all references to the Publisher Region will mean the
relevant Service Area(s)) on substantially similar terms as are then in effect
hereunder (except that Publisher will be required to comply with such Person's
reasonable branding requirements as in effect from time to time with respect to
such Person's trademarks and other relevant intellectual property); and (B)
Publisher will not be released from its obligations under this Agreement.
2.3 Exceptions and Limitations.
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(a) The Qwest Parties and any Applicable Qwest Successors and its
Affiliates will be deemed not to have engaged in Qwest Restricted Activities
with respect to marketing and sales by non-employee sales agents if the Qwest
Parties or any Applicable Qwest Successors or its Affiliates use their
respective commercially reasonable efforts, including establishing reasonable
procedures, to restrict the activities of their respective agents and other
distribution parties from engaging in Qwest Restricted Activities.
(b) The Buyer Parties acknowledge and agree that the Qwest Parties and
any Applicable Qwest Successors and its Affiliates will have no restrictions on
the publication, marketing, sale or distribution of Directory Products directed
principally at end-users outside the Publisher Region using any brand, other
than the brands "Dex" or any combination mark of "Dex" including "QwestDex",
each of which may only be used prior to the Second Closing Date (or if the
Second Closing does not occur) in the Dex Region under a license from Publisher.
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(c) Nothing contained in this Agreement will prohibit the Qwest Parties
or any Applicable Qwest Successors or its Affiliates from publishing or
distributing White Pages (as defined in the Publishing Agreement) to the extent
permitted or required in the event of a Publishing Order (as defined in the
Publishing Agreement), subject and pursuant to the terms and conditions of
Section 3.14 of the Publishing Agreement.
(d) Nothing contained in this Agreement will restrict any Applicable
Qwest Successor from continuing to publish, market, sell or distribute (on its
own behalf or on behalf of any third Person) Directory Products in those Service
Area(s) in the Publisher Region in which it was conducting any such business at
the date of execution of the agreement(s) pursuant to which such Change of
Control or disposition transaction occurs; provided, however, that such
Applicable Qwest Successor: (i) may not materially expand the geographic scope
of such Directory Products within such Service Area(s); and (ii) beginning with
the publication of any Directory Product that is printed or otherwise
distributed more than fifteen (15) months after the Change of Control or
disposition transaction is consummated, the Applicable Qwest Successor may not
brand any such Directory Product with the brand used by QC or any successor of
QC that is an incumbent local exchange carrier in the Publisher Region in its
capacity as the incumbent local exchange carrier in the Service Area(s) covered
by such Directory Product.
(e) The restrictions in Section 2.1 will cease to apply to any Qwest
Party (and its Affiliates) other than QC at such time as such Qwest Party is no
longer an Affiliate of QC or any successor of QC.
(f) Nothing contained in this Agreement will prohibit the Qwest Parties
and any Applicable Qwest Successors (in each case together with their respective
Affiliates) from holding and making passive investments in securities of any
Person whose securities are publicly traded in a generally recognized market,
provided that the Qwest Parties' and any Applicable Qwest Successors' respective
equity interest therein does not exceed five percent (5%) of the outstanding
shares or interests in such Person and the Qwest Parties or the Applicable Qwest
Successors (and their respective Affiliates) have no effective control of
management or policies of such Person.
(g) Without limiting any restriction with respect to the Qwest Parties'
use of trademarks and trade names as set fort0h in the IP Contribution
Agreement, the Buyer Parties acknowledge and agree that the Qwest Parties and
any Applicable Qwest Successors and its Affiliates will have no restrictions
with respect to any Voice Portal Directory.
(h) The Buyer Parties acknowledge and agree that the Qwest Parties and
any Applicable Qwest Successors and their Affiliates will have no restrictions
on the publication, marketing, sale or distribution of Directory Products
directed principally at end-users in those geographic areas within the Publisher
Region in which Publisher is not QC's exclusive official publisher pursuant to
clause (ii) of the third sentence of Section 3.10(a) of the Publishing Agreement
because after the Effective Date QC becomes the incumbent local exchange carrier
in such geographic area as a result of an acquisition of the stock or assets of,
or via a merger or other business combination transaction with, the Person
previously providing local phone service in that geographic area as the
incumbent local exchange carrier.
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ARTICLE III
BUYER NON-COMPETITION COVENANTS
3.1 Restrictions. Subject to the exclusions, exceptions and limitations
expressly set forth in this Agreement, and without limiting any restriction
with respect to the Buyer Parties' use of trademarks and trade names as set
forth in the Trademark License Agreement or Exhibit C to the Publishing
Agreement, until the Second Closing Date or, if the Second Closing Date does
not occur, until the termination of this Agreement pursuant to Section 6.3,
the Buyer Parties agree that they will not, will not act as an agent on
behalf of, or enter into a joint venture or strategic alliance with, a third
Person in order to, and will cause their Affiliates not to, publish, market,
sell or distribute any Directory Products, in each case to the extent both:
(i) consisting principally of listings and classified advertisements for
subscribers in the Dex Region; and (ii) directed primarily at end users in
the Dex Region using any of the brands "Qwest", "QwestDex" or "Dex" ("Buyer
Restricted Activities"); provided, however, that if the Publishing Agreement
terminates with respect to any Service Area(s) (thereby causing the
definition of Dex Region to include such Service Area(s)), or the Pay
Stations Agreement terminates with respect to any Pay Stations (as defined in
the Pay Stations Agreement), the obligations and restrictions of this Section
3.1 will then apply with respect to such Service Area(s) or Pay Stations, as
applicable.
3.2 Successor Obligations. Subject to the exclusions, exceptions and
limitations expressly set forth in this Agreement, following a Change of
Control of any Buyer Party, the acquiring, surviving or successor entity (the
"Applicable Buyer Successors") will, and such Buyer Party agrees to cause
such entity to agree in writing (whether as part of the acquisition agreement
with the Buyer Party that provides for QC to be a third party beneficiary or
in a separate agreement) to assume this Agreement and be bound, with respect
to itself and its Affiliates, by the restrictions contained herein to the
same extent as the applicable Buyer Party.
3.3 Exceptions and Limitations.
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(a) The Buyer Parties and any Applicable Buyer Successors will be deemed
not to have engaged in Buyer Restricted Activities with respect to marketing
and sales by non-employee sales agents if the Buyer Parties or any Applicable
Buyer Successors use their respective commercially reasonable efforts,
including establishing reasonable procedures, to restrict the activities of
their respective agents and other distribution parties from engaging in Buyer
Restricted Activities.
(b) Nothing contained in this Agreement will restrict any Affiliate of a
Buyer Party or of an Applicable Buyer Successor to the extent that such
Affiliate: (i) is not operated jointly with, under common management with or
does not share facilities, sales personnel or other key employees with
Publisher; (ii) is not consolidated financially with Publisher; (iii) does
not have a product bundling or similar joint venture or strategic alliances
agreement, arrangement or product offering with Publisher with respect to
Buyer Restricted Activities; or (iv) does not have a revenue-sharing or
similar agreement arrangement with Publisher with respect to Buyer Restricted
Activities.
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(c) Nothing contained in this Agreement will prohibit the Buyer Parties
or any Applicable Buyer Successors (in each case together with their respective
Affiliates) from holding and making passive investments in securities of any
Person whose securities are publicly traded in a generally recognized market,
provided that the Buyer Parties' and any Applicable Buyer Successors respective
equity interest therein does not exceed five percent (5%) of the outstanding
shares or interests in such Person and the Buyer Parties and any Applicable
Buyer Successors (and their respective Affiliates) have no effective control
over management or policies of such Person.
(d) Without limiting any restriction with respect to the Buyer Parties'
use of trademarks and trade names as set forth in the Trademark License
Agreement or Exhibit C to the Publishing Agreement, the Qwest Parties
acknowledge and agree that the Buyer Parties and any Applicable Buyer Successors
and its Affiliates will have no restrictions with respect to any Voice Portal
Directory.
ARTICLE IV
NON-SOLICITATION COVENANTS
For a period of two (2) years from the Effective Date and except as
expressly contemplated in the Separation Agreement, none of the Qwest Parties
or the Buyer Parties will, without the prior written approval of the
applicable other party, directly or indirectly: (i) solicit for hire any
employees of such other party; (ii) induce any such employee of such other
party to terminate their relationship with such other party; or (iii) in the
case of the Qwest Parties, solicit for hire or hire any of Dex's senior
management team from their employment with Publisher. The foregoing will not
apply to individuals hired as a result of the use of an independent
employment agency (so long as the agency was not directed to solicit a
particular individual) or as a result of the use of a general solicitation
(such as a newspaper advertisement or on radio or television) not
specifically directed to employees of any other party.
ARTICLE V
DISPUTE RESOLUTION
5.1 Notice, Cure and Escalation.
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(a) Notice. Each party will promptly notify the other of any activities
it believes violates any of its rights under Article 2, Article 3 or Article 4,
as applicable (a "Restricted Activity Notice"), which Restricted Activity Notice
must indicate whether such party reasonably believes the alleged or threatened
breach is capable of remedy. The party receiving the Restricted Activity Notice
will respond in writing within five (5) Business Days, describing any objection
to the matters described in the Restricted Activity Notice (including any
disagreement as to whether or not any such restricted activities exist) or, if
such matters are not objected to, describing its intentions regarding remedy and
the termination of the restricted activities.
(b) Cure. If a breach or threatened breach of a party's obligations
pursuant to Article 2, Article 3 or Article 4, as applicable, is capable of
remedy (a "Remediable Breach"), and if such matters are not objected to in a
timely written response, the party receiving the Restricted Activity Notice
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will have ninety (90) days after receipt of such Restricted Activity Notice
to cure such Remediable Breach ("Covenant Cure Period"); provided, however,
that such Covenant Cure Period will be extended for such additional period of
time as will be reasonably necessary if such Remediable Breach is incapable
of remedy within the initial Covenant Cure Period, so long as during the
initial Covenant Cure Period the party receiving the Restricted Activity
Notice diligently endeavors to remedy such Remediable Breach, and if such
extension would not reasonably be expected to have a material adverse effect
on the non-breaching party. If the existence of a Remediable Breach is
disputed in good faith and a timely manner, but it is then determined
pursuant to Section 5.1(c) or Section 5.2 that such Remediable Breach exists,
the party receiving the Restricted Activity Notice will then have thirty (30)
days from the date of such determination to cure such Remediable Breach;
provided, however, that this will not prevent any extension of the Covenant
Cure Period as set forth above, if applicable.
(c) Escalation. If there is any continuing objection or dispute in
connection with a Restricted Activity Notice following the Covenant Cure
Period, if applicable, the parties will attempt in good faith to resolve such
dispute and determine the appropriate remedial action, as follows: (i) the
dispute will first be referred to a senior executive officer of QCII or QC
and Publisher, as applicable, for ten (10) Business Days of the submission of
the dispute to them; and (ii) if such senior executive officers are unable to
resolve any such dispute within ten (10) Business Days, then the parties will
submit the dispute to binding arbitration pursuant to Section 5.2 below and
pursue such other remedies as may be permitted pursuant to Article 6.
5.2 Alternative Dispute Resolution. Any dispute, controversy or claim
arising under or related to this Agreement, regardless of the legal theory
upon which it is based, will be settled by final, binding arbitration
pursuant to the Federal Arbitration Act, 9 U.S.C. ss.. 1 et seq., in accordance
with the American Arbitration Association Commercial Arbitration Rules.
Nothing herein will, however, prohibit a party from seeking temporary or
preliminary injunctive relief in a court of competent jurisdiction. In any
arbitration, the number of arbitrators will be three, the Qwest Parties, on
the one hand, and the Buyer Parties, on the other hand, each having the right
to appoint one arbitrator, who will together appoint a third neutral
arbitrator within thirty (30) days after the appointment of the last
party-designated arbitrator. All arbitration proceedings will take place in
Denver, Colorado. The arbitrators will be entitled to award monetary and
equitable relief, including specific performance and other injunctive relief;
provided, however, that only damages allowed pursuant to this Agreement may
be awarded (including Publisher Liquidated Damages and Service Area Default
Liquidated Damages, but otherwise excluding consequential, punitive or other
special damages). Except as otherwise expressly provided in this Section
5.2, each party will bear the expenses of its own counsel and will jointly
bear the expenses of the arbitrators. The arbitrators will allocate the
remaining costs of the arbitration proceeding. The parties agree that the
arbitrators will include, as an item of damages, the costs of arbitration,
including reasonable legal fees and expenses, incurred by the prevailing
party if the arbitrators determine that either (i) the non-prevailing party
did not act in good faith when disputing its liability hereunder to the
prevailing party or when initiating a claim against the prevailing party, or
(ii) the prevailing party has had to resort to arbitration with respect to a
substantially similar claim (whether or not with respect to the same Service
Area) more than twice in any thirty-six (36) month period. Should it become
necessary to resort or respond to court proceedings to enforce a party's
compliance with this Section 5.2, such proceedings will be brought only in
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the federal or state courts located in the State and County of New York,
which will have exclusive jurisdiction to resolve any disputes with respect
to this Agreement, with each party irrevocably consenting to the jurisdiction
thereof. If the court directs or otherwise requires compliance herewith,
then all costs and expenses, including reasonable attorneys' fees incurred by
the party requesting such compliance, will be reimbursed by the non-complying
party to the requesting party.
ARTICLE VI
REMEDIES AND ENFORCEMENT
6.1 Remedies. If any breaching party fails to cure any breach or
threatened breach after notice thereof and, if applicable, expiration of the
Covenant Cure Period, the non-breaching party will have the following rights
and remedies, each of which will be independent of the other and severally
enforceable, and all of which will be in addition to and not in lieu of any
other rights and remedies available to such party under law or in equity
(except as provided in Section 6.2):
(a) Injunctive Relief. Each party recognizes and agrees that a breach or
threatened breach of any of such party's obligations pursuant to Article 2,
Article 3 or Article 4, as applicable, would cause irreparable harm to the
other party and its Affiliates, that such party's remedies at law in the
event of such breach or threatened breach would be inadequate, and that,
accordingly in the event of such breach, a restraining order or injunction or
both may be issued against the breaching party, in addition to, and not in
lieu of, any other right or remedy that may be available to the other party,
without posting any bond or other form of security and without the necessity
of proving actual damages. In connection with any such action or proceeding
for injunctive relief, each party hereby waives the claim or defense that a
remedy at law alone is adequate and agrees, to the maximum extent permitted
by law, to have each provision of this Section 6.1 specifically enforced
against if it is the breaching party, and consents to the entry of injunctive
relief against if it is the breaching party, enforcing or restraining any
breach or threatened breach of its obligations under this Agreement.
(b) Accounting. The right and remedy to require the breaching party to
account for and pay over to the non-breaching direct damages caused by the
breaching party as a result of the actions constituting a breach, as
determined pursuant to Section 5.2, of such party's obligations pursuant to
Article 2, Article 3 or Article 4, as applicable.
6.2 Liquidated Damages.
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(a) Publisher's Liquidated Damages. The parties acknowledge and agree
that:
(i) Publisher would not have entered into the LLC Purchase
Agreement and the LLC II Purchase Agreement, if QC had not simultaneously
agreed to be bound by this Agreement and the Publishing Agreement and that
QC's performance of this Agreement and the Publishing Agreement form a
significant part of the benefit that Publisher intends to realize in
entering into the LLC Purchase Agreement and the LLC II Purchase Agreement;
(ii) the amount of damages (including direct, indirect and
consequential) that Publisher would incur as a result of a Material Default
11
would be substantial and significant, and would likely include, among other
things, significant lost profits and opportunity costs; and
(iii) because there are many variables that could affect the amount
of such damages, quantifying the amount of such damages would be impossible
at this time.
Therefore, in order to reasonably approximate the probable damages to
Publisher stemming from a Material Default that remains uncured after the
applicable dispute resolution and cure period as provided for in Article 5,
and to provide certainty to the parties with respect to such damages, each of
the Parties agrees that, in the event of (i) a Material Default or (ii) any
formal repudiation or rejection of this Agreement by QC (except in such cases
where a Qwest Party is entitled to terminate this Agreement pursuant to the
terms and conditions hereof), Publisher will be entitled to receive a payment
from QC (the "Publisher Liquidated Damages") equal to the following amount:
(A) prior to the Second Closing or following the termination of the LLC II
Purchase Agreement, thirty percent (30%) of the Closing Purchase Price set
forth in the LLC Purchase Agreement (as adjusted by any agreed post-closing
adjustment) less the amounts, if any, paid to Publisher by or on behalf of QC
pursuant to Section 6.2(b); or (B) following the Second Closing, thirty
percent (30%) of the sum of the Closing Purchase Price set forth in each of
the LLC Purchase Agreement and the LLC II Purchase Agreement (each as
adjusted by any agreed post-closing adjustment) less the aggregate amount, if
any, paid to Publisher by or on behalf of QC pursuant to Section 6.2(b).
(b) Service Area Default Liquidated Damages. In order to reasonably
approximate the probable damages to Publisher stemming from a breach of
Section 2.2(b) or a Material Default by one or more of the Qwest Parties with
respect to a particular Service Area (a "Service Area Default"), each of the
parties agree that, in the event of a Service Area Default that remains
uncured after the applicable dispute resolution and cure period as provided
for in Article 5, the Buyer Parties will be entitled to receive a payment
from the Qwest Parties (each of whom will be jointly and severally liable for
such payment) (the "Service Area Default Liquidated Damages") equal to the
following amount: the product of (i) a fraction, the numerator of which is
the population in the Service Area(s) reflected in the most recently
completed United States Census, and the denominator of which is the
population in the Publisher Region as so reflected, times (ii) thirty percent
(30%) of (A) the Closing Purchase Price set forth in the LLC Purchase
Agreement (as adjusted by any post-closing adjustment pursuant thereto) if
the Service Area Default occurs prior to the Second Closing or following the
termination of the LLC II Purchase Agreement or (B) the sum of the Closing
Purchase Price set forth in each of the LLC Purchase Agreement and the LLC II
Purchase Agreement (each as adjusted by any post-closing adjustment pursuant
thereto) if the Service Area Default occurs following the Second Closing.
(c) Additional Acknowledgements. Each party acknowledges and agrees
that:
(i) as set forth in subsections (a) and (b) above, the Publisher
Liquidated Damages and the Service Area Default Liquidated Damages are
intended to be a reasonable measure of the anticipated probable harm
resulting from, respectively, a Material Default and a Service Area Default;
12
(ii) the parties acknowledge that the damages actually incurred by
Publisher (including actual, direct, indirect, consequential, special and
other damages) might exceed or be less than the amount of the Publisher
Liquidated Damages or the Service Area Default Liquidated Damages, as
applicable;
(iii) neither the Publisher Liquidated Damages nor the Service Area
Default Liquidated Damages is a penalty of any kind; and
(iv) the Publisher Liquidated Damages and the Service Area Default
Liquidated Damages were negotiated at arms-length between parties of equal
bargaining power, both of which were represented by competent counsel.
(d) Waiver. QC hereby waives, to the extent permitted by applicable law,
any defense as to the validity of, respectively, the Publisher Liquidated
Damages and the Service Area Default Liquidated Damages in this Agreement and
the Publishing Agreement on the grounds that such Publisher Liquidated
Damages or Service Area Default Liquidated Damages are void as penalties.
(e) In Lieu of Actual Damages. Each party agrees that the Publisher
Liquidated Damages and the Service Area Default Liquidated Damages will be in
lieu of actual, direct, indirect, consequential, special or other damages
for, respectively, a Material Default and a Service Area Default and the
collection of such Publisher Liquidated Damages or Service Area Default
Liquidated Damages, as applicable, is the sole remedy of Publisher in the
event of a Material Default or Service Area Default and, upon exercise,
constitutes an election to terminate this Agreement as a whole (in connection
with Publisher Liquidated Damages) or with respect to the applicable Service
Area(s) (in connection with Service Area Default Liquidated Damages).
(f) In Lieu of Liquidated Damages Under Publishing Agreement. The parties
agree that the Publisher Liquidated Damages and Service Area Default Liquidated
Damages provided in this Agreement may only be exercised by Publisher in lieu
of, and not in addition to, the liquidated damages provisions contained in the
Publishing Agreement and that such remedies are exclusive of and not cumulative
with one another. Under no circumstances will Publisher be entitled to receive
Publisher Liquidated Damages or Service Area Default Liquidated Damages, as
applicable, under both this Agreement and the Publishing Agreement no will
Publisher be entitled to receive Publisher Liquidated Damages on more than one
occasion.
(g) Enforceability. Notwithstanding (d) above, if any portion of this
Section 6.2 is held to be unenforceable for any reason, it will be adjusted
rather than voided, if possible, to achieve the intent of the parties. All
other provisions of this Section 6.2 will be deemed valid and enforceable to
the extent possible. Moreover, if this Section is deemed unenforceable, QC
acknowledges that Publisher has in no way waived a right or claim to receive
damages resulting from a Material Default or a Service Area Default, as
applicable; provided, however. that Publisher will not be entitled to receive
damages in the aggregate in excess of the Publisher Liquidated Damages or
Service Area Default Liquidated Damages, as applicable, to which Publisher
would have been entitled had the provisions of this Section 6.2 been fully
enforced.
13
6.3 Term and Termination.
--------------------
(a) This Agreement will remain in effect until the forty (40) year
anniversary of the Effective Date, unless earlier terminated in whole or in
part as provided herein.
(b) If the Publishing Agreement terminates in accordance with its terms,
either party may terminate this Agreement immediately.
(c) If there is a Restricted Activity Default (as defined in the
Publishing Agreement), or if there is an assignment or transfer of this
Agreement as contemplated by Section 7.6 which, if the terms of Section 6.2(d)
of the Publishing Agreement had been applied thereto (at the time of transfer or
any time thereafter, and excluding the last sentence thereof), would have been a
Restricted Activity Default, within any Service Area(s) that remains uncured
after the applicable dispute resolution and cure period as provided for in
Article 5, any Qwest Party may terminate the Qwest Parties' restrictions in
Article 2 and Article 4 with respect to all or a portion of such affected
Service Area(s). Notwithstanding the foregoing, if the Person providing
Telecommunications Services (as defined in the Publishing Agreement) with
respect to which the Restricted Activity Default is triggered is not a
Substantial Competitor of QC (which for this purpose a Substantial Competitor
will mean that such Person has a market share for business Telecommunications
Services of twenty percent (20%) or more in the Region or applicable Service
Area(s)), the restrictions in Article 2 and Article 4 will continue to apply
with respect to Directory Products prominently identified with the brand "Qwest"
(or any brand associated with the LEC).
6.4 Acknowledgments. The parties expressly agree that the duration, scope
and geographic area of the restrictions set forth in Article 2, Article 3 and
Article 4 are reasonable. Each of the parties acknowledges and agrees that the
covenants and restrictions above are necessary, fundamental and required for the
protection of their respective businesses, that such covenants and restrictions
relate to matters that are of a special, unique and extraordinary value and that
the parties would not enter into the LLC Purchase Agreement, the LLC II Purchase
Agreement or the transactions contemplated thereby without the protection
provided by this Agreement.
6.5 Enforcement. The covenants set forth in Article 2, Article 3 and
Article 4 will be construed as divided in separate and distinct covenants
with respect to each jurisdiction. If any provision or covenant in this
Agreement is more restrictive than permitted by the laws of any jurisdiction
in which either party seeks enforcement hereof, such provision will be
limited to the extent required to permit enforcement under such laws. If, in
any proceeding, a court or arbitral panel refuses to enforce any of the
separate covenants contained herein, then such unenforceable covenant will be
deemed eliminated from this Agreement for the purpose of those proceedings to
the extent necessary to permit the remaining separate covenants to be
enforced. If the provisions of this Agreement are ever deemed to exceed the
duration, geographical limitations or scope permitted by applicable law, then
such provisions will be reformed to the maximum time or geographic
limitations in scope, as the case may be, permitted by applicable law.
14
ARTICLE VII
MISCELLANEOUS
7.1 Confidentiality. Each of the Qwest Parties and the Buyer Parties
agrees that all non-public, confidential information received from the other
party is deemed received pursuant to the Confidentiality Agreement, and each
party will, and will cause its representatives (as defined in the
Confidentiality Agreement) to, comply with the provisions of the
Confidentiality Agreement with respect to such information, and the
provisions of the Confidentiality Agreement are hereby incorporated by
reference with the same effect as if fully set forth herein. The obligations
contained in this Section 7.1 will survive the termination or expiration of
this Agreement for a period of one (1) year.
7.2 Further Assurances. Each party will take such other actions as any
other party may reasonably request or as may be necessary or appropriate to
consummate or implement the transactions contemplated by this Agreement or to
evidence such events or matters.
7.3 No Agency. Nothing in this Agreement, and no action of or inaction by
any of the parties, will be deemed or construed to constitute an agency
relationship between the parties. Each party is acting independently of the
other and neither party has the authority to act on behalf of or bind the other
party.
7.4 Governing Laws; Compliance with Law. This Agreement and the legal
relations between the parties will be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and
performed in such State and without regard to conflicts of law doctrines
unless certain matters are preempted by federal law.
7.5 Amendments; Waivers. Except as expressly provided herein, this
Agreement and any attached Exhibit may be amended only by agreement in
writing of all parties. No waiver of any provision nor consent to any
exception to the terms of this Agreement will be effective unless in writing
and signed by all parties and then only to the specific purpose, extent and
instance so provided. No failure on the part of any party to exercise or
delay in exercising any right hereunder will be deemed a waiver thereof, nor
will any single or partial exercise preclude any further or other exercise of
such or any other right.
7.6 No Assignment. Neither this Agreement nor any rights or obligations
hereunder are assignable by one party without the express prior written
consent of the other party; provided, however, that: (i) either party may
assign this Agreement upon written notice to the other party to any of its
Affiliates without the consent of the other party if the assigning party
requires such Affiliate to agree in writing to assume this Agreement and the
assigning party remains liable for its obligations hereunder; (ii) a Change
of Control of either party will not be deemed to be an assignment of this
Agreement, provided that if the relevant party is no longer directly bound as
a party to this Agreement (e.g., because the Change of Control is a sale or
transfer of assets or is the result of a transaction pursuant to which the
successor, surviving or acquiring entity does not automatically succeed to
the obligations of such party by operation of law), the successor, surviving
or acquiring entity is required to agree in writing (whether as part of the
acquisition agreement that provides for the other party to be a third party
beneficiary or in a separate agreement) to assume this Agreement on
15
substantially similar terms as are then in effect hereunder; and
(iii) Publisher may assign this Agreement as to the Primary Directories with
respect to a particular Service Area(s) to any person (other than an
Affiliate of Publisher) upon written notice to QC so long as Publisher will
require the acquiring Person to agree in writing (whether as part of the
acquisition agreement with Publisher that provides for QC to be a third party
beneficiary or in a separate agreement) to assume this Agreement to the
extent of the relevant Service Area(s) (i.e., that all references to the
Publisher Region will mean the relevant Service Area(s)), and Publisher will
have no rights or obligations under this Agreement with respect to such
Service Area(s).
7.7 Notices. All notices, demands and other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given: (i) immediately when personally
delivered; (ii) when received by first class mail, return receipt requested;
(iii) one day after being sent by Federal Express or other overnight delivery
service; or (iv) when receipt is acknowledged, either electronically or
otherwise, if sent by facsimile, telecopy or other electronic transmission
device. Notices, demands and communications to the other party will, unless
another address is specified by such party in writing, be sent to the address
indicated below:
If to the Buyer Parties, addressed to:
Dex Media East LLC
198 Inverness Drive West, Eighth Floor
Englewood, Colorado
Attention: Chief Executive Officer
Fax: (303) 784-1964
AND
Dex Holdings LLC
c/o The Carlyle Group
520 Madison Avenue
41st Floor
New York, New York 10022
Attention: James A. Attwood, Jr.
Fax: (212) 381-4901
With a copy to (which will not constitute notice):
Welsh, Carson, Anderson & Stowe
320 Park Avenue
Suite 2500
New York, New York 10022
Attention: Anthony J. de Nicola
Fax: (212) 893-9548
AND
16
Latham & Watkins
885 Third Avenue
Suite 1000
New York, New York 10022
Attention: R. Ronald Hopkinson, Esq.
Fax: (212) 751-4864
If to the Qwest Parties, addressed to:
Qwest Corporation
1801 California Street
Denver, Colorado 80202
Attention: General Counsel
Fax: (303) 296-5974
AND
Qwest Communications International Inc.
1801 California Street
Denver, Colorado 80202
Attention: General Counsel
Fax: (303) 296-5974
With a copy to (which will not constitute notice):
O'Melveny & Myers LLP
1999 Avenue of the Stars, Suite 700
Los Angeles, California 90067
Attention: Steven L. Grossman, Esq.
Fax: (310) 246-6779
7.8 Entire Agreement. This Agreement, including any Exhibits attached
hereto and the Commercial Agreements (as defined in the LLC Purchase
Agreement), constitutes the entire agreement among the parties pertaining to
the subject matter hereof and supersedes all prior agreements and
understandings of the parties in connection therewith.
7.9 Severability. If any provision of this Agreement is held to be
unenforceable for any reason, it will be adjusted rather than voided, if
possible, to achieve the intent of the parties. All other provisions of this
Agreement will be deemed valid and enforceable to the extent possible.
7.10 Headings. The descriptive headings of the Articles, Sections and
subsections of this Agreement are for convenience only and do not constitute
a part of this Agreement.
17
7.11 Counterparts. This Agreement and any amendment hereto or any other
agreement delivered pursuant hereto may be executed in one or more
counterparts and by different parties in separate counterparts. All
counterparts will constitute one and the same agreement and will become
effective when one or more counterparts have been signed by each party and
delivered to the other party.
7.12 Successors and Assigns; No Third Party Beneficiaries. This Agreement
is binding upon and will inure to the benefit of each party and their
respective successors or assigns, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person or Governmental Entity
any rights or remedies of any nature whatsoever under or by reason of this
Agreement.
7.13 Representation by Counsel; Interpretation. The parties each
acknowledge that it has been represented by counsel in connection with this
Agreement. Accordingly, any rule of law or any legal decision that would
require interpretation of any claimed ambiguities in this Agreement against
the party that drafted it has no application and is expressly waived. The
provisions of this Agreement will be interpreted in a reasonable manner to
effect the intent of the parties.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officers as of the day and
year first above written.
QWEST CORPORATION
By: /s/ Yash A. Rana
------------------------------------
Name: Yash A. Rana
Title: Vice President
QWEST COMMUNICATIONS INTERNATIONAL INC
By: /s/ Yash A. Rana
------------------------------------
Name: Yash A. Rana
Title: Vice President
QWEST DEX, INC.
By: /s/ George Burnett
------------------------------------
Name: George Burnett
Title: President
SGN LLC
By: QWEST DEX, INC., its sole member
By: /s/ George Burnett
------------------------------------
Name: George Burnett
Title: President
GPP LLC
By: QWEST DEX, INC., its sole member
By: /s/ George Burnett
------------------------------------
Name: George Burnett
Title: President
DEX HOLDINGS LLC
By: /s/ James A. Attwood, Jr.
------------------------------------
Name: James A. Attwood, Jr.
Title: Managing Director
S-1