Exhibit 99.4
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SEPARATION AGREEMENT
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This Separation Agreement (this "Agreement") by and between SGN LLC, a
Delaware limited liability company ("SGN"), and Dex Holdings LLC, a Delaware
limited liability company ("Buyer"), on the one hand, and Qwest Dex, Inc., a
Colorado corporation ("Dex"), and Qwest Communications International Inc., a
Delaware corporation ("Qwest"), on the other hand, is effective as of
November 8, 2002 (the "Effective Date"). Each of the signatories hereto is
individually a "Party" and collectively the "Parties". Capitalized terms not
defined in the text of this Agreement have the meanings set forth in Annex 1.
RECITALS
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A. Qwest, Qwest Services Corporation, a Colorado corporation
("QSC"), Dex and Buyer have entered into that certain Purchase
Agreement (the "LLC Purchase Agreement") dated as of August 19,
2002 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 SGN; and (ii) sell all of the
outstanding limited liability company interests of SGN to Buyer
following such contribution (the "Closing").
B. In connection with the LLC Purchase Agreement, Qwest, QSC, Dex
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 GPP LLC; and (ii) sell all of the outstanding
limited liability company interests of GPP LLC to Buyer following
such contribution (the "Second Closing").
C. The Parties have agreed to enter into certain additional
agreements, including the Transition Services Agreement, the
Professional Services Agreement, the Joint Management Agreement,
the Contribution Agreement, the IP Contribution Agreement and the
Trademark License Agreement (collectively, the "Transition
Documents").
D. The Parties desire to set forth certain covenants and obligations
to be performed following the Closing Date in order to: (i)
effectuate the transactions contemplated by the Transition
Documents; and (ii) in the event that the Second Closing does not
occur, separate the operations and management of Dex and SGN
during a transition period such that they function as completely
independent companies.
AGREEMENT
In consideration of the foregoing recitals and the mutual covenants and
conditions contained herein, the Parties agree, intending to be legally
bound, as follows:
ARTICLE I
PURPOSE OF AGREEMENT; PROJECT MANAGEMENT; DISPUTE RESOLUTION
1.1 Purpose. The Parties have agreed, during the period from the
Closing Date until the earlier of the Second Closing or the Final Separation
Date, to utilize shared assets, systems and facilities and to provide services
to each other, on the terms and conditions set forth herein and in the
Transition Documents, in order to more efficiently and cost effectively operate
the Business. In furtherance of the foregoing, and as a contingency plan in the
event that the Separation Trigger Date occurs, the Parties agree to perform
certain additional respective obligations and covenants set forth herein
following the Closing Date.
1.2 Project Management.
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(a) Each of the Parties agrees to designate an individual with
sufficient knowledge and background to act as the primary liaison with the other
Party and to assume overall responsibility for the performance of its
obligations under this Agreement (the "Dex Project Manager" and "SGN Project
Manager", respectively, and together the "Project Managers"). The Project
Managers will each have direct access to the officers and other key
decision-makers within their respective organizations and to the Management
Team, and will call upon the experience, expertise, and resources of their
respective organizations to ensure proper performance of the Parties'
obligations under this Agreement. Each Party may treat any official act of the
other Party's Project Manager in performing its duties hereunder as being
authorized by such other Party without inquiring behind such act or ascertaining
whether such Project Manager had authority to so act.
(b) The initial Dex Project Manager will be Patrick Halbach or such
other individual as he may designate from time to time. The initial SGN Project
Manager will be the chief operating officer of SGN or such other individual as
he or she may designate from time to time. Either Party may change its Project
Manager by delivering notice of such change to the other Party pursuant to
Section 7.11. A Party changing its Project Manager will use commercially
reasonable efforts to give at least thirty (30) days' notice prior to the
effective date of the change. The Project Managers will meet at least bi-weekly
to coordinate the administration of the Parties' obligations under this
Agreement and address those matters relevant to both Parties. In addition, the
Project Managers will jointly meet for a formal quarterly review with respect to
the Parties' performance of their obligations under this Agreement under the
direction of and in accordance with the requirements of the Management Team.
1.3 Resolution of Disputes.
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(a) All disputes between the Parties arising from or relating to this
Agreement, including disputes with respect to whether this Agreement has been
breached by any Party (in each case, a "Dispute") will initially be submitted to
the Project Managers for resolution. The Project Managers will notify and
consult with the Management Team in attempting to resolve such Disputes. If the
Project Managers are unable to resolve a Dispute within ten (10) days after
submission of the Dispute to them, each Party will refer the Dispute as follows:
(i) in the case of Dex, to a designated senior executive officer of Qwest; and
(ii) in the case of SGN, to a designated senior executive officer of Buyer
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(collectively, the "Designated Representatives"), for attempted resolution
through good faith discussions within twenty (20) days after submission of the
Dispute to them.
(b) If the Designated Representatives are unable to resolve a Dispute
within such twenty (20) day period, then either Party may, at any time
thereafter, submit the Dispute to binding arbitration as set forth in Section
7.16 below.
(c) Notwithstanding anything in this Agreement to the contrary, any
Party that is obligated to comply with a regulatory requirement will have the
right to determine, in its sole and absolute discretion, the nature and extent
of the action required to be taken by such Party in reasonable response to such
regulatory requirement and to take such action, which will not be deemed an
excuse of performance by such Party. If a Party takes an action or omits to act
in breach of its obligations under this Agreement because such Party reasonably
believes that it is necessary to take such action or omit to act to comply with
laws, rules or regulations, then the non-breaching Party may seek damages in
accordance with this Agreement, but may not seek equitable or injunctive relief
to compel the breaching Party to take or cease to take such actions as the
breaching Party reasonably believes to be necessary.
1.4 Response to Regulatory Challenge.
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(a) If any Person initiates any investigation, proceeding,
litigation, inquiry, hearing, information or data request, or information
gathering process relating to this Agreement whether before or after the Closing
(each, an "Inquiry"), then the Parties will jointly evaluate and respond to such
Inquiry in accordance with the terms and conditions set forth in Sections 5.4(c)
and (d) of the LLC Purchase Agreement, as applicable.
(b) If this Agreement is found unlawful with respect to one or more
but not all of the fourteen (14) states consisting of Arizona, Colorado, Idaho,
Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South
Dakota, Utah, Washington and Wyoming, the metropolitan statistical area of El
Paso, Texas or any other area in which Dex operates the Dex Business or SGN
operates the Transferred Business as contemplated by the Business Plan
(collectively, the "Region"), this Agreement will not be terminated with respect
to any other states or areas in the Region. Under such circumstances, a Party
may suspend, rather than terminate, this Agreement with respect to the states or
areas in the Region in which this Agreement is found unlawful, but may not
suspend with respect to all states or areas of the Region; provided, however,
that such Party will use commercially reasonable efforts to: (i) give the other
Party as much notice as possible prior to such suspension; and (ii) establish
with such Governmental Entity a reasonable alternative method of performance of
its obligations under this Agreement (with any incremental increase in costs of
such performance to be borne by such Party); provided, further, that such
suspension will not affect the other Party's right to seek damages in accordance
with this Agreement with respect to such suspension or alternative method of
performance, and such suspension will not be deemed an excuse of performance by
such Party. In either case, the Parties will agree to appropriate transition
measures in the suspended state(s) or area(s), with consideration given to the
then-existing regulatory environment in such state(s) or area(s).
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ARTICLE II
POST-CLOSING COVENANTS
2.1 Contingency Separation Plan. The Parties have agreed to certain
fundamental principles, preliminary costs and proposed timelines upon which the
IT Assets (as defined below) will be allocated among the Parties, the jointly
maintained data will be migrated to the applicable owner, and the transition
services provided by the Parties to each other will be eliminated such that Dex
and SGN will operate as completely independent companies (the "Separation") as
more fully set forth in Article III and the accompanying Schedules and Exhibits,
to be effected if the LLC II Purchase Agreement is terminated prior to the
consummation of the Second Closing (such date of termination, the "Separation
Trigger Date"). Dex and SGN will use their commercially reasonable efforts to
amend, update and/or complete, as necessary, any provisions in Article III and
the accompanying Schedules and Exhibits within sixty (60) days following the
Closing Date to include such additional detail as may be necessary to accomplish
the Separation as soon as reasonably practicable following the Separation
Trigger Date (collectively, the "Final Separation Plan"). The Parties agree that
time is of the essence in completing the Final Separation Plan following the
Closing Date. Consequently, each Party will make the Project Managers and
additional management contacts with decision-making authority and technical
support available as is necessary to meet the required time frame to update and
complete the Final Separation Plan. Failure to reach agreement on the Final
Separation Plan within ninety (90) days following the Closing Date will
constitute a dispute to be resolved in accordance with Section 1.3.
2.2 Data Back-Up Plan.
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(a) SGN may obtain, at its cost and expense, contracts with hot site
vendors and with third party providers of data back-up, storage, and recovery
services with respect to their customer data and other proprietary data and
information (each Party's "Proprietary Data") and other system software. Dex
will reasonably cooperate in facilitating such data back-up, storage and
recovery services during the Term. If Dex desires to use such third party
provider (in addition to the services provided by Qwest and its Affiliates) to
back up, store or recover its Proprietary Data and other system software, SGN
will use commercially reasonable efforts to make available to Dex the rights to
such services under the applicable vendor contracts and SGN and Dex will bear
the costs of such services on a pro rata basis.
(b) The Parties acknowledge that certain of their respective
Proprietary Data residing in the centralized information technology assets used
by Dex to operate the Dex Business or SGN to operate the Transferred Business
(consisting primarily of data servers, web servers and storage devices) and the
desktop computers used by the centralized operations personnel (collectively,
the "IT Assets") will be included among the data converted as part of the Amdocs
Project, if implemented. The Parties agree that any or all of their respective
Proprietary Data may be converted into a new format as a result of the
implementation of the Amdocs Project. Prior to the implementation of the Amdocs
Project, the Parties will jointly agree: (i) whether to maintain a separate
database containing their respective Proprietary Data outside of the Amdocs
Project environment; and (ii) the appropriate cost allocation between the
Parties for such additional data storage.
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2.3 Data Segregation and Systems Access. As soon as reasonably
practicable following the Closing Date, the Parties will jointly determine
whether, and to what extent, it is necessary to implement additional security
mechanisms in order to maintain the confidentiality of the Parties' respective
Proprietary Data housed in the IT Assets or any other shared systems
(collectively, the "Shared Systems") and to maintain the security of such Shared
Systems (the "Data Security Plan"). The Data Security Plan will address, at a
minimum, the process of segregating the Parties' Proprietary Data and the types
of personnel from each Party that will have access to the other Party's
Proprietary Data. If the Parties agree to implement a Data Security Plan, the
Parties will bear the costs and expenses of the Data Security Plan on a pro rata
basis. For avoidance of doubt, the Parties will not be required to implement a
Data Security Plan if they determine that the costs of such security measures
would be reasonably expected to outweigh the anticipated benefits of protecting
their respective Proprietary Data.
2.4 Publishing Schedule. During the term of this Agreement, Dex and
SGN will not alter the publication schedule for any of their respective
directories, except in accordance with Section 10.2 of the Professional Services
Agreement.
2.5 Post-Closing Personnel Reconciliation. SGN will deliver to Dex
within thirty (30) days following the Closing Date the list of transferred
employees who have accepted employment with SGN (the "Transferred Employees" and
the "Transferred Employees List"). To the extent the Transferred Employees List
differs materially from the prospective list of Transferred Employees developed
by the Parties prior to the Closing Date, either in terms of the aggregate
number of individuals that accept employment with SGN or in an individual
functional capacity or skill set within the Business, the Parties agree to work
together in good faith to achieve an equitable balance between the number and
type of Transferred Employees and the number and type of employees retained by
Dex (the "Retained Employees"), in conformity with the allocation methodologies
set forth on Schedule 2.5 and Section 5.22 of the LLC Purchase Agreement.
2.6 Implementation of Employee Policies and Procedures. With respect
to the employees of Dex and SGN, Dex and SGN will work together in good faith to
adopt and implement substantially consistent employee policies, procedures and
other terms and conditions of employment. Notwithstanding any of the foregoing,
Dex and SGN may, in their respective absolute and sole discretion, adopt and
implement any employee policies, procedures and other terms and conditions of
employment consistent with applicable law and collective bargaining agreements.
2.7 Responsibility for Personnel. All personnel employed, engaged or
otherwise furnished by a Party in connection with performing their respective
obligations hereunder will be such Party's employees, agents or subcontractors,
as the case may be (collectively, such Party's "Personnel"). Each Party will
have the sole and exclusive responsibility for its Personnel, will supervise its
Personnel and will cause its Personnel to cooperate with the other Party in
performing their respective obligations hereunder. Each Party will pay and be
responsible for the payment of any and all premiums, contributions and taxes for
workers' compensation insurance, unemployment compensation and disability
insurance and all similar provisions now or hereafter imposed by any
Governmental Entity that are imposed with respect to or measured by wages,
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salaries or other compensation paid or to be paid by such Party to its
Personnel.
2.8 Employee Identification and Access Cards; Ongoing Facility Access
and Security.
(a) In contemplation of the reciprocal on-going access to each
Party's premises, facilities, equipment and Personnel by the other Party's
Personnel as contemplated in this Section 2.8, and in contemplation of the need
for certain related security measures with respect to such access, the Parties
will use commercially reasonable efforts to coordinate and to provide their
respective employees with identification and access cards sufficient to
differentiate between Dex and SGN employees. Each Party will bear its own costs
for providing such identification and access cards to its Personnel.
(b) Subject to Section 2.8(c) below, each Party's Personnel will have
such access to the other Party's premises, facilities, equipment (including
access to telephones, photocopying equipment and the like) and Personnel, during
normal business hours and in a manner that does not interfere with the other
Party's ability to operate its business, as is reasonably necessary to
effectuate the Parties' obligations in accordance with the terms of this
Agreement. Except for access on an emergency basis, each Party will use
commercially reasonable efforts to give the other Party at least twenty-four
(24) hours' prior notice for physical access to such Party's premises for any
purpose, excluding regular and ongoing access.
(c) All Personnel of a Party will comply with the other Party's
reasonable security requirements when on the other party's premises.
Notwithstanding any other provision of this Agreement to the contrary, a Party
will have the right to refuse access to, or immediately to terminate the right
of access to its premises of, a particular individual employed, engaged or
furnished by the other Party should such Party determine in its reasonable
discretion for any lawful reason that such termination is in the best interests
of such Party, provided that all other Personnel of the other party will
continue to have access and at no time will an unreasonable number of Personnel
of the other Party be refused such access.
2.9 Customer Service Centers. Dex will maintain ownership of the
top-level toll-free number (800-422-1234) for the customer services call
centers, and all calls made to this toll-free number will be routed by the
toll-free vendor to the applicable lower-level ring-to number. As soon as
reasonably practicable following the Closing Date, the Parties will cooperate to
segregate the lower-level ring-to telephone numbers for the customer services
call centers, and to the extent such segregation is not possible, the Parties
will implement a process to redirect all customer service calls received by one
Party that are intended for the other Party, in either case such that each Party
handles only customer service and customer care calls with respect to its own
region and customers.
2.10 Vendor Notification. As soon as reasonably practicable following
the Closing Date (but in no event later than thirty (30) days thereafter), the
Parties will jointly notify the applicable third party vendors for services
being provided to SGN that SGN has become the customer of record as of the
Closing Date, and will jointly request that such third party vendor make all
necessary and appropriate changes to its billing and other record systems to
indicate SGN as the customer of record. SGN will use commercially reasonable
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efforts to follow up with all such third party vendors to ensure that the
billing and other record keeping changes are effected by such third party vendor
as soon as reasonably practicable following the Closing Date. Dex will forward
to SGN any invoices for SGN services that Dex receives (and vice versa), as soon
as reasonably practicable following receipt of the same (but in no event later
than three (3) business days), until the third party vendors make the necessary
corrections to their billing systems. If such invoice is an invoice containing
charges for both Dex and SGN, each Party will be responsible for payment of its
own charges and for disputing such charges with the applicable vendor.
2.11 Changes to Business Plan. Until the Second Closing, and except
as they may otherwise agree in writing, Qwest and Buyer agree not to amend or
modify the Business Plan as it pertains to Dex.
ARTICLE III
POST-SEPARATION COVENANTS
3.1 Systems Replication. As soon as reasonably practicable following
the Separation Trigger Date, the Parties will cooperate to effectuate the
replication and/or separation of the Shared Systems in such a manner that each
of Dex and SGN have fully functioning and independently operating hardware and
software systems. In furtherance of the foregoing, the Parties agree as follows:
(a) Amdocs. If the Parties have agreed to implement the Amdocs
Project, the Parties will cooperate to replicate the necessary hardware and
clone the software systems contained in the Amdocs environment such that each of
Dex and SGN will own a duplicate set of systems and contractual support and
maintenance rights following the Final Separation Date. The costs of such
replication and cloning will be borne by the Parties in accordance with the
terms of Section 5.16 of the LLC II Purchase Agreement. Each Party will
thereafter bear its pro rata share of the ongoing support and maintenance costs
for the Amdocs license.
(b) No Amdocs. If the Parties have not agreed to implement the Amdocs
Project, the Parties will cooperate to replicate the hardware and software
systems used by both Dex and SGN at such time in operating the Business such
that each of Dex and SGN have fully functioning independent operating systems
following the Final Separation Date. The costs of such replication will be borne
by the Parties in accordance with the terms of Section 5.16 of the LLC II
Purchase Agreement.
3.2 Data Migration and Extraction. Concurrent with completing the
Shared Systems cloning and replication as set forth in Section 3.1, the Parties
will cooperate to ensure that their respective Proprietary Data maintained in
the Shared Systems is migrated to the appropriate Party and that the other Party
does not retain in its systems following the Final Separation Date any of the
other Party's Proprietary Data. The data migration and extraction will performed
under Dex's direction and the costs will be borne by the Parties in accordance
with the terms of Section 5.16 of the LLC II Purchase Agreement.
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3.3 Website Replication. The Parties' respective obligations with
respect to the operation, maintenance and management of the world wide web site
located at www.qwestdex.com (the "QDC Site") following the Separation Trigger
Date will be as set forth in Exhibit B to the Professional Services Agreement.
The cost for cloning the QDC Site and separating and/or replicating the
databases and content and other infrastructure used to run the QDC Site from
that used to run the Linked Site (as defined in the Professional Services
Agreement) will be borne by the Parties in accordance with the terms of Section
5.16 of the LLC II Purchase Agreement.
3.4 Management Team Resignations. Notwithstanding anything to the
contrary in the Non-Competition and Non-Solicitation Agreement, and except as
Dex and SGN may otherwise agree in writing, on the one hundred twentieth (120th)
day following the Separation Trigger Date, each member of the Management Team
will be deemed to have automatically resigned as an employee of Dex (if such
individual has not already resigned), such that following the date of such
resignation each member of the Management Team will be solely employed by SGN.
Following the resignation of each member of the Management Team, Dex (and its
Affiliates) will comply with the non-solicitation covenants of Article 4 of the
Non-Competition and Non-Solicitation Agreement with respect to such individuals.
3.5 Employee Training. From and after the Separation Trigger Date
until the Final Separation Date, and as reasonably requested by Dex or Qwest,
SGN will use commercially reasonable efforts to cause the Transferred Employees
and other of its employees to assist in the training of the personnel hired by
Qwest or Dex to replace such Transferred Employees and/or other employees. The
scope of such training will cover the functional areas, and be in as much
detail, as reasonably requested by Qwest or Dex.
3.6 Return of Property and Equipment. Upon expiration or termination
of this Agreement, each Party will be obligated to return to each other Party,
as soon as is reasonably practicable (but in no event later than fifteen (15)
days after such termination), any equipment or other property or materials of
such other Party that is in such Party's control or possession.
3.7 SGN Access to Certain Data. As soon as reasonably practicable
following the Closing Date, but in no event later than nine (9) months following
the Closing, Qwest will make available to SGN (for purposes of this Section 3.7,
"SGN" will include GPP LLC following the Second Closing), during the term of the
Billing and Collection Agreement and any renewal thereof or term of a
replacement agreement thereto (not to exceed ten (10) years from the Closing
Date), the data fields described on Exhibit B to the Professional Services
Agreement (with respect to SGN's customers only) through a "read-only"
interface, such that SGN will have access to such customer data. The development
and implementation costs for such "read-only" interface, and all recurring
access, support and maintenance charges, will be borne by SGN; provided,
however, that the costs to be borne by SGN will not exceed one million five
hundred thousand dollars ($1,500,000) for one-time implementation and
development charges and two hundred twenty-five thousand dollars ($225,000) for
annual recurring charges; provided, further, that during any renewal term of the
Billing and Collection Agreement or the term of a replacement agreement thereto,
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the terms and conditions of this Section 3.7 may be adjusted to ensure that
Qwest receives full reimbursement of its costs and charges incurred for making
available the applicable data fields based on then-current systems
configurations. The covenants contained in this Section 3.7 will survive the
termination of this Agreement in accordance with their respective terms.
3.8 Separation Costs. The Parties agree that in performing their
respective covenants set forth in Section 3.1, Section 3.2 and Section 3.3, they
will use their respective commercially reasonable efforts to minimize the costs
of completing the Separation while maximizing the benefits and functionality for
both Parties of their respective systems following the completion of such
covenants.
3.9 Customer Service Centers. In the event the Separation Trigger
Date occurs, SGN and Buyer will have an irrevocable, royalty free, transferable
and exclusive (except as to Dex) right to continue to use and receive the
benefit of the top-level toll-free number (800-422-1234) in accordance with the
provisions of Section 2.9 for two (2) years following the Separation Trigger
Date, following which SGN and Buyer will migrate to their own top-level
toll-free number. SGN's and Buyer's right under this Section 3.9 will survive
the expiration or termination of this Agreement.
ARTICLE IV
TERM AND TERMINATION
4.1 Term. The term of this Agreement will commence as of the
Effective Date and, except to the extent expressly set forth herein, will
continue in full force and effect until the earlier of the Second Closing or the
Final Separation Date (the "Term").
4.2 Early Termination. The Parties will have the right to terminate
this Agreement, in whole or in part, prior to the expiration of the Term only in
accordance with Section 1.3(c).
ARTICLE V
LIMITATION ON LIABILITY; INDEMNIFICATION
5.1 Performance and Tangible Property Indemnification. Subject to the
limitations of liability set forth in Section 5.3, SGN and Dex will indemnify
and hold each other harmless against all Losses resulting from: (i) such Party's
performance or failure to perform, in any material manner, any of its
obligations under this Agreement; (ii) the breach by such Party, in any material
manner, of any representation, warranty, covenant or agreement contained herein;
or (iii) loss of or damage to tangible real or tangible personal property
(including damage to their property), in any material manner, in each case to
the extent that such Loss was proximately caused by any negligent or willful act
or omission by the Party from whom indemnity is sought, its agents, employees or
subcontractors, in connection with the fulfillment of such Party's obligations
hereunder. Any claim for indemnity under this Section 5.1 must be brought within
one (1) year after the event giving rise to the claim or will be deemed forever
waived; provided, however, that claims by a Party arising as a result of third
party claims against such Party may be brought at any time within the applicable
statute of limitations.
5.2 Notice and Procedures. A Party seeking indemnification pursuant
to Section 5.1 (the "Indemnified Party") will give prompt written notice in
reasonable detail (the "Notice of Claim") to the indemnifying Party (the
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"Indemnifying Party") stating the basis of any claim for which indemnification
is being sought hereunder within thirty (30) days after its knowledge thereof;
provided, however, that the Indemnified Party's failure to provide any such
notice to the Indemnifying Party will not relieve the Indemnifying Party of or
from any of its obligations hereunder, except to the extent that the
Indemnifying Party suffers prejudice as a result of such failure. If the facts
giving rise to such indemnification involve an actual or threatened claim by or
against a third party:
(a) the Parties hereto will cooperate in the prosecution or defense
of such claim and will furnish such records, information and testimony and
attend to such proceedings as may be reasonably requested in connection
therewith; and
(b) the Indemnified Party will make no settlement of any claim that
would give rise to liability on the part of the Indemnifying Party without the
latter's prior written consent which will not be unreasonably withheld or
delayed, and the Indemnifying Party will not be liable for the amount of any
settlement affected without its prior written consent.
5.3 Consequential Damages. Except with respect to a Party's fraud or
willful misconduct, neither Party, nor its Affiliates, will be liable to the
other Party, or its Affiliates, for any damages other than direct damages. Each
Party agrees that it is not entitled to recover and agrees to waive any claim
with respect to, and will not seek, consequential, punitive or any other special
damages as to any matter under, relating to or arising out of the transactions
contemplated by this Agreement, except with respect to such claims and damages
arising directly out of a Party's fraud or willful misconduct.
5.4 Management Liability. Each Party acknowledges and agrees that the
obligations of the other Party hereunder are exclusively the obligations of such
other Party and are not guaranteed directly or indirectly by such other Party's
shareholders, officers, directors, agents or any other Person. Except as
otherwise specifically set forth in a separate agreement, each Party will look
only to the other Party and not to any director, officer, employee or agent
(including any member of the Management Team) for satisfaction of any claims,
demands or causes of action for damages, injuries or losses sustained by any
Party as a result of the other Party's action or inaction.
ARTICLE VI
FORCE MAJEURE
6.1 Force Majeure Conditions. Except with respect to a Party's
obligations to pay or bear certain costs as provided herein, in no event will
either Party be liable to the other for any delay or other failure to perform
hereunder that is due to: (i) the other Party's unreasonable delay in supplying
or failure to supply approvals, information, materials, or services called for
or reasonably required under the terms of this Agreement; provided, however,
that the Party has previously requested such approvals, information, materials
or services with reasonable prior notice; or (ii) occurrences or circumstances
beyond such Party's reasonable control (including epidemic, riot, unavailability
of resources due to national defense priorities, war, armed hostilities, strike,
walkouts, civil disobedience, embargo, fire, flood, drought, storm, pestilence,
lightning, explosion, power blackout, earthquake, volcanic eruption or any
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foreseeable or unforeseeable act of God, act of a public enemy, act of
terrorism, act of sabotage, act or omission of carriers, or other natural
catastrophe or civil disturbance), in each case during the period and to the
extent that such extraordinary condition delays, impairs or prevents such
Party's performance (collectively, "Force Majeure Conditions"). If any Party
does not perform any of its obligations hereunder as a result of a Force Majeure
Condition, and any other Party's performance of its obligations hereunder are
conditioned upon the first Party's performance, then notwithstanding anything in
this Agreement to the contrary, the other Party's performance will be excused
(including payment obligations) until such time as the first Party has performed
those obligations prevented by the Force Majeure Condition.
6.2 Performance Times. Performance times under this Agreement will be
considered extended for a period of time equivalent to the time lost because of
any delay or failure to perform excusable under this Article VI. The Party
claiming excusable delay will use commercially reasonable efforts to notify the
other Party of the Force Majeure Condition and to mitigate the effects of the
Force Majeure Condition giving rise to the delay so as to continue performing as
required hereunder as expeditiously as reasonably possible.
ARTICLE VII
MISCELLANEOUS
7.1 No Partnership or Joint Venture; Independent Contractor. Nothing
contained in this Agreement will constitute or be construed to be or create a
partnership or joint venture between the Parties or their respective successors
or assigns. The Parties understand and agree that this Agreement does not make
either of them an agent or legal representative of the other for any purpose
whatsoever. No Party is granted, by this Agreement or otherwise, any right or
authority to assume or create any obligation or responsibilities, express or
implied, on behalf of or in the name of any other Party, or to bind any other
Party in any manner whatsoever. The Parties expressly acknowledge that each
Party is an independent contractor with respect to the other Parties in all
respects.
7.2 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 or any agreement contemplated hereby will be effective
unless in writing and signed by each Party 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.
7.3 Schedules and Exhibits; Integration. Each Schedule and Exhibit
delivered pursuant to the terms of this Agreement must be in writing and will
constitute a part of this Agreement, although schedules need not be attached to
each copy of this Agreement. This Agreement, together with such Schedules and
Exhibits, and the other 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.
11
7.4 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.
7.5 Governing 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.
7.6 Assignment. Neither this Agreement nor any rights or obligations
hereunder are assignable by one Party without the express prior written consent
of the other Parties; provided, however, that any Party may assign this
Agreement, upon written notice to the other Parties, to any of such Party's
Affiliates without the consent of the other Parties if such Affiliate agrees in
writing to be bound by the terms of this Agreement and the assigning Party
remains liable for its obligations hereunder. A Change of Control of any Party
hereto 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 Parties to be a third party beneficiary or in a separate agreement) to
assume this Agreement on substantially similar terms and in all material
respects.
7.7 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.
7.8 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
Parties.
7.9 Confidentiality. Each of the 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 7.9 will survive the termination or
expiration of this Agreement for a period of one (1) year.
7.10 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
12
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.
7.11 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 SGN, addressed to:
Dex Media East LLC
198 Inverness Drive West, Eighth Floor
Englewood, Colorado 80112
Attention: Chief Executive Officer
Fax: (303) 784-1964
With a copy to (which will not constitute notice):
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022
Attention: R. Ronald Hopkinson, Esq.
Fax: (212) 751-4864
If to Dex, addressed to:
Qwest Dex, Inc.
198 Inverness Drive West
Englewood, CO 80112
Attention: Dex Project Manager
Fax: (303) 784-1964
With a copy to:
Qwest Communications International Inc.
1801 California Street
Denver, CO 80202
Attention: Patrick Halbach
Fax: (303) 896-1107
13
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
7.12 Expenses. Except as otherwise set forth herein, the Parties will
each pay their own expenses incident to the negotiation, preparation and
performance of this Agreement, including the fees, expenses and disbursements of
their respective investment bankers, accountants and counsel.
7.13 Waiver. 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.
7.14 Representation by Counsel; Interpretation. Each of the Parties
acknowledges 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.
7.15 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.
7.16 Arbitration; Jurisdiction. Subject to Section 1.3, 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, Dex, on the one hand, and
SGN, 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. Except as otherwise expressly
provided in this Section 7.16, 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 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 7.16, such
14
proceedings will be brought only in 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.
7.17 General Rules of Construction. For all purposes of this
Agreement and the Exhibits and Schedules delivered pursuant to this Agreement:
(i) the terms defined in Annex 1 have the meanings assigned to them in Annex 1
and include the plural as well as the singular; (ii) all accounting terms not
otherwise defined herein have the meanings assigned under GAAP; (iii) 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; (iv) pronouns of either gender or neuter will
include, as appropriate, the other pronoun forms; (v) 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; (vi) "or" is not exclusive; (vii) "including" and "includes" will
be deemed to be followed by "but not limited to" and "but is not limited to,"
respectively; (viii) 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 (ix) any definition of or reference to
any statute will be construed as referring also to any rules and regulations
promulgated thereunder.
15
IN WITNESS HEREOF, 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 DEX, INC.
By: /s/ George Burnett
---------------------------------
Name: George Burnett
Title: President
QWEST COMMUNICATIONS INTERNATIONAL INC.
By: /s/ Yash A. Rana
---------------------------------
Name: Yash A. Rana
Its: Vice President
SGN 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
ANNEX 1: DEFINITIONS
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common
control with, a specified Person. The term "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with") means the possession of the power to direct the management and
policies of the referenced Person, whether through ownership interests, by
contract or otherwise.
"Agreement" has the meaning set forth in the introductory paragraph.
"Amdocs Project" has the meaning ascribed to such term in the
Professional Services Agreement.
"Billing and Collection Agreement" has the meaning ascribed to such
term in the Purchase Agreement.
"Business" has the meaning ascribed to such term in the LLC Purchase
Agreement.
"Buyer" has the meaning set forth in the recitals.
"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; (ii) a sale,
assignment or other transfer of all or substantially all of the referenced
Person's assets; 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.
"Closing" has the meaning set forth in the recitals.
"Closing Date" has the meaning ascribed to such term in the LLC
Purchase Agreement.
"Confidentiality Agreement" means that certain Confidentiality
Agreement between Welsh, Carson, Anderson & Stowe IX, L.P. and Qwest Services
Corporation, dated as of April 22, 2002.
"Contribution Agreement" has the meaning ascribed to such term in the
Purchase Agreement.
"Data Security Plan" has the meaning set forth in Section 2.3.
Annex 1-1
"Designated Representatives" has the meaning set forth in Section
1.3(a).
"Dex" has the meaning set forth in the introductory paragraph.
"Dex Business" means the "Rodney Transferred Business" as such term is
defined in the LLC II Purchase Agreement.
"Dex Project Manager" has the meaning set forth in Section 1.2.
"Dispute" has the meaning set forth in Section 1.3(a).
"Effective Date" has the meaning set forth in the introductory
paragraph.
"Final Separation Date" means the date upon which the Parties have
completed the respective tasks and obligations set forth in Section 3.1,
Section 3.2, Section 3.3 and Section 3.5, but in no event later than one (1)
year following the Separation Trigger Date.
"Final Separation Plan" has the meaning set forth in Section 2.1.
"Force Majeure Conditions" has the meaning set forth in Section 6.1.
"Governmental Entity" means any government or any regulatory agency,
bureau, board, commission, court, department, official, political
subdivision, tribunal or other instrumentality of any government, whether
federal, state or local, domestic or foreign.
"Indemnified Party" has the meaning set forth in Section 5.2.
"Indemnifying Party" has the meaning set forth in Section 5.2.
"Inquiry" has the meaning set forth in Section 1.4(a).
"IT Assets" has the meaning set forth in Section 2.2(b).
"Joint Management Agreement" means that certain Joint Management
Agreement between Qwest, Dex, Buyer and SGN, to be entered into at the
Closing.
"LLC Purchase Agreement" has the meaning set forth in the recitals.
"LLC II Purchase Agreement" has the meaning set forth in the recitals.
"Loss" means any cost, damage, disbursement, expense, liability, loss,
obligation, penalty or settlement, including interest or other carrying
costs, legal, accounting and other professional fees and expenses incurred in
the investigation, collection, prosecution and defense of claims and amounts
paid in settlement, that may be imposed on or otherwise incurred or suffered
by the referenced Person; provided, however, that the term "Loss" will not be
deemed to include any special, exemplary or punitive damages, except to the
extent such damages are incurred as a result of third party claims.
Annex 1-2
"Management Team" has the meaning ascribed to such term in the Joint
Management Agreement.
"Non-Competition and Non-Solicitation Agreement" means that certain
Non-Competition and Non-Solicitation Agreement by and among Qwest, Dex, SGN
and the other parties thereto, to be entered into at the Closing.
"Notice of Claim" has the meaning set forth in Section 5.2.
"Party" or "Parties" has the meaning set forth in the introductory
paragraph.
"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.
"Personnel" has the meaning set forth in Section 2.7.
"Project Managers" has the meaning set forth in Section 1.2.
"Proprietary Data" has the meaning set forth in Section 2.2(a).
"QDC Site" has the meaning set forth in Section 3.3.
"QSC" has the meaning set forth in the recitals.
"Qwest" has the meaning set forth in the introductory paragraph.
"Region" has the meaning set forth in Section 1.4(b).
"Retained Employees" has the meaning set forth in Section 2.5.
"Second Closing" has the meaning set forth in the recitals.
"Separation" has the meaning set forth in Section 2.1.
"Separation Trigger Date" has the meaning set forth in Section 2.1.
"SGN" has the meaning set forth in the introductory paragraph.
"SGN Project Manager" has the meaning set forth in Section 1.2(a).
"Shared Systems" has the meaning set forth in Section 2.3.
"Term" has the meaning set forth in Section 4.1.
"Trademark License Agreement" means that certain Trademark License
Agreement between Qwest, Buyer, SGN and GPP LLC, to be entered into at
Closing.
"Transferred Business" has the meaning ascribed to such term in the LLC
Purchase Agreement.
Annex 1-3
"Transferred Employees" has the meaning set forth in Section 2.5.
"Transferred Employees List" has the meaning set forth in Section 2.5.
"Transition Documents" has the meaning set forth in the recitals.
Annex 1-4