-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CJ1VTJ62SIP5DMJSe/AcMnXNktVHkB7NrTH8Djf85kLpCZ1ULG2W5K07xJdZJzO5 cQNnFUCMYO072nWNnNkbZw== 0001019056-02-000828.txt : 20021119 0001019056-02-000828.hdr.sgml : 20021119 20021119121754 ACCESSION NUMBER: 0001019056-02-000828 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20021108 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20021119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QWEST COMMUNICATIONS INTERNATIONAL INC CENTRAL INDEX KEY: 0001037949 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 841339282 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-15577 FILM NUMBER: 02832485 BUSINESS ADDRESS: STREET 1: 1801 CALIFORNIA ST CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3039921400 MAIL ADDRESS: STREET 1: 1801 CALIFORNIA ST CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: QUEST COMMUNICATIONS INTERNATIONAL INC DATE OF NAME CHANGE: 19970416 8-K/A 1 qwest_8ka.htm FORM 8-K/A Form 8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 8, 2002

QWEST COMMUNICATIONS INTERNATIONAL INC.

(Exact name of registrant as specified in its charter)

Delaware


(State or other jurisdiction of incorporation)
     
000-22609   84-1339282

 
(Commission File Number)   (IRS Employer Identification No.)
     
1801 California Street, Denver, Colorado   80202

 
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: 303-992-1400

                                         Not applicable                                         
(Former name or former address, if changed since last report)

 


This Current Report on Form 8-K/A is being filed to amend and restate in its entirety the Current Report on Form 8-K filed on November 15, 2002.

Item 2.  Acquisition or Disposition of Assets.

On November 8, 2002, Qwest Communications International Inc. (“Qwest”) announced the completion of the first phase (“Stage 1”) of the sale of the directory publishing business of its subsidiary, Qwest Dex, Inc. (“QwestDex”), to a new entity (“Buyer”) formed by the private equity firms of The Carlyle Group and Welsh, Carson, Anderson & Stowe for a cash purchase price of $2.75 billion. A copy of the press release announcing the same is attached as Exhibit 99.1 to this Current Report on Form 8-K/A. A description of Stage 1 and the second phase (“Stage 2”) of the sale of the directory publishing business, including the purchase agreements relating thereto, was included in Qwest’s Current Report on Form 8-K filed on August 22, 2002.

On November 8, 2002, Qwest also announced that a portion of the sale proceeds were made available to Qwest’s subsidiary Qwest Services Corporation (“QSC”) to pay $1.35 billion in outstanding loans under its Amended and Restated Credit Agreement dated as of August 30, 2002, reducing the lending commitments under such revolving credit facility to $2.0 billion. The funds were made available to QSC by repayment of outstanding borrowings under a line of credit between QwestDex’s parent and an affiliate, Qwest Capital Funding, Inc. (“QCF”), followed by a payment by QCF to QSC.

As contemplated by the Stage 1 purchase agreement, at the closing of Stage 1 Qwest entered into continuing commercial arrangements with Buyer and its affiliates relating to the directory publishing business, including the following:

 

Pursuant to a publishing agreement, Buyer is Qwest Corporation’s exclusive official publisher of telephone directories in the Stage 1 region and will perform Qwest’s directory publishing obligations in the Stage 1 region for a period of 50 years.


 

Pursuant to the non-competition and non-solicitation agreement, Qwest and its affiliates have agreed not to compete on a branded or unbranded basis in the telephone directory business in the Stage 1 region for a period of 40 years.


 

Pursuant to a separation agreement, Qwest and its affiliates have agreed with Buyer on the terms and procedures under which the Stage 1 business will be permanently separated from the Stage 2 business in the event that Stage 2 is not consummated.


A copy of the publishing agreement is attached as Exhibit 99.2 to this Current Report on Form 8-K/A, a copy of the non-competition and non-solicitation agreement is attached as Exhibit 99.3 to this Current Report of Form 8-K/A, and a copy of the separation agreement is attached as Exhibit 99.4 to this Current Report on Form 8-K/A. Each of these agreements is described below.Such descriptions are qualified in their entirety by reference to each of the agreements.

Publishing Agreement

Under the publishing agreement, Buyer will be Qwest’s exclusive official publisher of telephone directories in the Stage 1 region (including changes in Qwest’s service areas). The publishing

 


agreement terminates on the 50th anniversary of the consummation of the Stage 1 purchase agreement, subject to automatic one year renewal periods until terminated by either Qwest or Buyer on 12 months’ prior notice. The publisher will perform Qwest’s publishing obligations under applicable regulations, tariffs and interconnection agreements, as they exist from time to time. Subject to compliance with such requirements, the publisher will have control over the content and delivery medium of the telephone directories. The performance of these obligations will be at publisher’s sole cost, except where material cost increases are caused by changes in regulatory requirements, in which case Qwest and the publisher will share such cost increases for a period of seven years from consummation of the Stage 1 purchase agreement. The publisher will have the exclusive right to use the Qwest name and logo on telephone directories, subject to compliance with Qwest’s usage requirements. The rights and obligations under the publishing agreement are binding on successors of Qwest and publisher and Qwest is required to cause any successor to all or a portion of its ILEC business to assume the publishing agreement and the non-competition and non-solicitation agreement.

The publishing agreement may be terminated early in whole or in part for certain material uncured breaches. In addition, if the publishing agreement terminates due to material continuing uncured breach by Qwest that amounts to an abrogation of the contract as a whole or a formal repudiation or rejection thereof, Buyer is entitled to liquidated damages equal to 30% of the aggregate purchase price under the Stage 1 purchase agreement, or a pro rata portion thereof for any breach with respect to a portion of the purchased region. Such amount is Buyer’s and the publisher’s total cumulative damages remedy under both the publishing agreement and the non-competition and non-solicitation agreement.

Upon closing of the Stage 2 transaction, the publishing agreement will apply to the Stage 2 region as well, and the liquidated damages referenced above will equal 30% of the aggregate purchase price under the Stage 1 and Stage 2 purchase agreements.

Non-Competition and Non-Solicitation Agreement

For a period of up to 40 years, Qwest and its affiliates are restricted from directly or indirectly publishing, marketing, selling, or distributing any directory products either consisting principally of listings in the Stage 1 region or directed primarily at end users in such region under any brand. Buyer is bound by similar restrictions in the Stage 2 region prior to consummation of the Stage 2 purchase agreement using the brands “Qwest”, “QwestDex” or “Dex”.

Qwest’s non-compete restrictions apply to any successor entity of Qwest, but cease to apply to any affiliate when no longer affiliated with Qwest Corporation. If Qwest Corporation exits a service area in the Stage 1 region (by sale of access lines, merger, etc.), it will require the acquiring entity to agree in writing to assume Qwest’s non-competition obligations to the extent of the relevant service area.

Subject to the cumulative remedy described above, if the non-competition and non-solicitation agreement terminates due to material continuing uncured breach by Qwest that amounts to an abrogation of the contract as a whole or a formal repudiation or rejection thereof, Buyer is entitled to liquidated damages equal to 30% of the aggregate purchase price under the Stage 1 purchase agreement, or a pro rata portion thereof for any breach with respect to a portion of the purchased region.

2


Upon closing of the Stage 2 transaction, the non-competition and non-solicitation agreement will apply to the Stage 2 region as well, and the liquidated damages referenced above will equal 30% of the aggregate purchase price under the Stage 1 and Stage 2 purchase agreements.

Separation Agreement

Under the separation agreement, Buyer and QwestDex will share certain assets, information technology systems and facilities for a limited period following the closing under the Stage 1 purchase agreement. Pursuant to the separation agreement, if the closing under the Stage 2 purchase agreement fails to occur for any reason, the parties will separate such jointly maintained assets and eliminate their dependence on transition services provided by the other party. The separation agreement terminates on the closing under the Stage 2 purchase agreement or, if such closing does not occur, when Qwest and Buyer have completed the separation of Buyer and QwestDex (but not later than one year after the Stage 2 purchase agreement is terminated).

If the Stage 2 purchase agreement is terminated, QwestDex and Buyer will implement a separation plan, including the following: (i) replication of the shared hardware and software, (ii) migration and extraction of their respective data maintained in shared systems, (iii) cloning of the qwestdex.com website such that QwestDex and Buyer each have stand-alone websites, and (iv) hiring and training of additional personnel to eliminate dependence on shared services.

Forward Looking Statements Warning

This Current Report on Form 8-K/A contains projections and other forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to the documents filed by us with the Securities and Exchange Commission, specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including but not limited to: the duration and extent of the current economic downturn in our 14-state local service area, including its effect on our customers and suppliers; the effects of our anticipated restatement of historical financial statements including delays in or restrictions on our ability to access the capital markets or other adverse effect to our business or financial position; our substantial indebtedness, and our inability to complete any efforts to de-lever our balance sheet through asset sales or other transactions; any adverse outcome of the SEC’s current investigation into our accounting policies, practices and procedures; any adverse outcome of the current investigation by the U.S. Attorney’s Office in Denver into certain matters relating to us; adverse results of increased review and scrutiny by Congress, regulatory authorities, media and others (including any internal analyses) of financial reporting issues and practices or otherwise; the failure of our chief executive and chief financial officers to provide certain certifications relating to certain public filings; rapid and significant changes in technology and markets; any adverse developments in commercial disputes or legal proceedings, including any adverse outcome of current or future legal proceedings related to matters that are the subject of governmental investigations, and, to the extent not covered by insurance, if any, our inability to satisfy any resulting obligations from funds available to us, if any; our future ability to provide interLATA

3


services within our 14-state local service area; potential fluctuations in quarterly results; volatility of our stock price; intense competition in the markets in which we compete; changes in demand for our products and services; dependence on new product development and acceleration of the deployment of advanced new services, such as broadband data, wireless and video services, which could require substantial expenditure of financial and other resources in excess of contemplated levels; higher than anticipated employee levels, capital expenditures and operating expenses; adverse changes in the regulatory or legislative environment affecting our business; and changes in the outcome of future events from the assumed outcome included in our significant accounting policies.

The information contained in this Current Report on Form 8-K/A is a statement of Qwest’s present intention, belief or expectation and is based upon, among other things, the existing regulatory environment, industry conditions, market conditions and prices, the economy in general and Qwest’s assumptions. Qwest may change its intention, belief or expectation, at any time and without notice, based upon any changes in such factors, in Qwest’s assumptions or otherwise. The cautionary statements contained or referred to in this Current Report on Form 8-K/A should be considered in connection with any subsequent written or oral forward-looking statements that Qwest or persons acting on its behalf may issue. This Current Report on Form 8-K/A may include analysts’ estimates and other information prepared by third parties for which Qwest assumes no responsibility. Qwest undertakes no obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

By including any information in this Current Report on Form 8-K/A, Qwest does not necessarily acknowledge that disclosure of such information is required by applicable law or that the information is material.

Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits.

Exhibit 99.1 Press Release dated November 8, 2002.
 
Exhibit 99.2 Publishing Agreement dated as of November 8, 2002 by and among Dex Holdings LLC, SGN LLC, GPP LLC and Qwest Corporation.
 
Exhibit 99.3 Non-Competition and Non-Solicitation Agreement dated as of November 8, 2002 by and between SGN LLC, GPP LLC and Dex Holdings LLC, on the one hand, and Qwest Corporation, Qwest Communications International Inc. and Qwest Dex, Inc., on the other hand.
 
Exhibit 99.4 Separation Agreement dated as of November 8, 2002 by and between SGN LLC and Dex Holdings LLC, on the one hand, and Qwest Dex, Inc. and Qwest Communications International Inc., on the other hand.

4


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Qwest has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

  QWEST COMMUNICATIONS INTERNATIONAL INC.


DATE: November 18, 2002 By:  /s/ YASH A. RANA  
         Yash A. Rana
         Vice President



S-1


EXHIBIT INDEX


Exhibit No. Description
 
Exhibit 99.1 Press Release dated November 8, 2002.
 
Exhibit 99.2 Publishing Agreement dated as of November 8, 2002 by and among Dex Holdings LLC, SGN LLC, GPP LLC and Qwest Corporation.
 
Exhibit 99.3 Non-Competition and Non-Solicitation Agreement dated as of November 8, 2002 by and between SGN LLC, GPP LLC and Dex Holdings LLC, on the one hand, and Qwest Corporation, Qwest Communications International Inc. and Qwest Dex, Inc., on the other hand.
 
Exhibit 99.4 Separation Agreement dated as of November 8, 2002 by and between SGN LLC and Dex Holdings LLC, on the one hand, and Qwest Dex, Inc. and Qwest Communications International Inc., on the other hand.
EX-99.1 3 ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 ------------ [QWEST LOGO] QWEST COMMUNICATIONS CLOSES FIRST PHASE OF THE QWESTDEX SALE FOR $2.75 BILLION DENVER, NOVEMBER 8, 2002 -- Qwest Communications International Inc. (NYSE: Q) today announced that it has closed the first phase of the sale of its directory services, known as QwestDex, to an entity owned by the private equity firms of The Carlyle Group and Welsh, Carson, Anderson & Stowe. The company received approximately $2.75 billion in cash at the closing. The first phase includes the directories operations and approximately 1,380 QwestDex employees supporting the states of Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South Dakota. Qwest plans to use a portion of the proceeds from this first stage of the sale to pay down its existing credit facility to $2.0 billion. The purchaser of the business, known as Dex Media, Inc., will continue to run the operations of the directories in the seven related states. The current management team of QwestDex will become employees of Qwest and Dex Media so they can manage the remaining Western operations of QwestDex as well as those of Dex Media. Both companies will use the Dex brand name in their communications. "We are pleased with the closing of the first phase of the QwestDex sale," said Richard C. Notebaert, Qwest chairman and CEO. "We look forward to working with our new partners at The Carlyle Group and Welsh, Carson, Anderson & Stowe. As we've said before, this is an important step to improve our balance sheet. I'd like to extend my personal thanks to our employees, partners and regulators who worked overtime to make this effort a success." Qwest remains on track to complete the second phase of the QwestDex sale, which is subject to customary closing conditions including applicable regulatory approvals, in 2003. The second phase, which includes the states of Arizona, Idaho, Montana, Oregon, Utah, Washington and Wyoming, is for $4.30 billion. Upon completion of the second stage of the QwestDex sale, Dex Media will manage all of the QwestDex directories and continue to provide world-class services to consumers and businesses. "We're pleased that our successful bank and bond financings enabled us to move forward with this first phase of the agreement," said James A. Attwood, Jr., managing director, The Carlyle Group. "We believe Dex Media will continue to operate successfully during this transition period and will continue to provide valuable services to advertisers and consumers." "We're grateful to the many people who worked diligently to allow us to close this first stage of our transaction in a timely manner," said Anthony J. deNicola, managing director, Welsh, Carson, Anderson & Stowe. "We're confident that we'll have the same success in 2003 for the second phase closing and that Dex Media will continue to provide outstanding service to advertisers and consumers in the 14 states in which it operates." 1 O'Melveny & Myers LLP acted as legal advisor to Qwest and Lehman Brothers acted as financial advisor and delivered a fairness opinion to Qwest. In addition, Merrill Lynch delivered a fairness opinion to Qwest. About Qwest Qwest Communications International Inc. (NYSE: Q) is a leading provider of voice, video and data services to more than 25 million customers. The company's 53,000-plus employees are committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. For more information, please visit the Qwest Web site at www.qwest.com. # # # This release may contain projections and other forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to the documents filed by us with the Securities and Exchange Commission, specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including but not limited to: the duration and extent of the current economic downturn in our 14-state local service area, including its effect on our customers and suppliers; the effects of our anticipated restatement of historical financial statements including delays in or restrictions on our ability to access the capital markets or other adverse effects to our business and financial position; our substantial indebtedness, and our inability to complete any efforts to de-lever our balance sheet through asset sales or other transactions; any adverse outcome of the SEC's current investigation into our accounting policies, practices and procedures; any adverse outcome of the current investigation by the U.S. Attorney's office in Denver into certain matters relating to us; adverse results of increased review and scrutiny by Congress, regulatory authorities, media and others (including any internal analyses) of financial reporting issues and practices or otherwise; the failure of our chief executive and chief financial officers to provide certain certifications relating to certain public filings; rapid and significant changes in technology and markets; any adverse developments in commercial disputes or legal proceedings, including any adverse outcome of current or future legal proceedings related to matters that are the subject of governmental investigations, and, to the extent not covered by insurance, if any, our inability to satisfy any resulting obligations from funds available to us, if any; our future ability to provide interLATA services within our 14-state local service area; potential fluctuations in quarterly results; volatility of our stock price; intense competition in the markets in which we compete; changes in demand for our products and services; dependence on new product development and acceleration of the deployment of advanced new services, such as broadband data, wireless and video services, which could require substantial expenditure of financial and other resources in excess of contemplated levels; higher than anticipated employee levels, capital expenditures and operating expenses; adverse changes in the regulatory or legislative environment affecting our business; and changes in the outcome of future events from the assumed outcome included in our significant accounting policies. The information contained in this release is a statement of Qwest's present intention, belief or expectation and is based upon, among other things, the existing regulatory environment, industry conditions, market conditions and prices, the economy in general and Qwest's assumptions. Qwest may change its intention, belief or expectation, at any time and without notice, based upon any changes in such factors, in Qwest's assumptions or otherwise. The cautionary statements contained or referred to in this release should be considered in connection with any subsequent written or oral forward-looking statements that Qwest or persons acting on its behalf may issue. This release may include analysts' estimates and other information prepared by third parties for which Qwest assumes no responsibility. Qwest undertakes no obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. By including any information in this release, Qwest does not necessarily acknowledge that disclosure of such information is required by applicable law or that the information is material. The Qwest logo is a registered trademark of, and CyberCenter is a service mark of, Qwest Communications International Inc. in the U.S. and certain other countries. 2 Contacts: Media Contact: Investor Contact: -------------- ----------------- Claire Maledon Stephanie Comfort (303) 965-2689 800-567-7296 Claire.maledon@qwest.com IR@qwest.com 3 EX-99 4 ex99_2.txt EXHIBIT 99.2 Exhibit 99.2 ------------ PUBLISHING AGREEMENT FOR OFFICIAL LISTINGS/DIRECTORIES This Publishing Agreement (this "Agreement") is entered into as of November 8, 2002 (the "Effective Date") by and among Dex Holdings LLC ("Buyer"), SGN LLC, a Delaware limited liability company ("Dexter Publisher"), GPP LLC, a Delaware limited liability company ("Rodney Publisher") and Qwest Corporation, a Colorado corporation ("QC") (Buyer, Dexter Publisher and Rodney Publisher, together on the one hand, and QC on the other had being a "Party" and together the "Parties"). Capitalized terms not otherwise defined herein will have the meanings assigned to such terms in Article 1. RECITALS A. Qwest Dex, Inc. ("Dex"), Qwest Communications International Inc. ("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. QC has the right to offer and provide local telephone service in the Service Areas; E. QC is required to publish and deliver listings of certain residential and business Subscribers in each Service Area pursuant to (i) interconnection agreements with CLECs, LECs and Resellers, (ii) tariffs and (iii) laws, rules, regulations and orders of certain Governmental Entities, in each case as the same may be in effect from time to time (the "Publishing Obligation"); and F. QC desires that Publisher fulfill and Publisher is willing to fulfill the Publishing Obligation on behalf of QC on the terms and conditions set forth herein. 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. "Action" means any action, complaint, petition, investigation, suit or other proceeding, whether administrative, civil or criminal, in law or in equity, or before any arbitrator or Governmental Entity. "Activity Default Notice" has the meaning set forth in Section 6.2(d). "Additional Legal Requirement" has the meaning set forth in Section 3.1(d). "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 Introduction. "Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C. ss.101 et seq.), as amended from time to time, and any successor statute. "Border Community" has the meaning set forth in Section 3.11. "Breach Resolution Process" has the meaning set forth in Section 6.1(a). 2 "Buyer" has the meaning set forth in the Introduction. "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 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. "Claims" means any and all claims, causes of action, demands, complaints, disputes, liabilities, obligations, losses, damages, deficiencies, penalties, settlements, judgments, actions, proceedings and suits of whatever kind and nature. "CLEC" means a competitive local exchange carrier. "Closing Purchase Price" has the meaning set forth in each of the LLC Purchase Agreement and the LLC II Purchase Agreement, respectively. "Commercial Agreements" has the meaning set forth in the LLC Purchase Agreement. "Confidentiality Agreement" means that certain Confidentiality Agreement between Welsh, Carson, Anderson & Stowe IX, L.P. and QSC, dated as of April 22, 2002. "Courtesy Classified Listing" means one appearance of a business Subscriber's name, address and business telephone number in the Yellow Pages for such Subscriber's Scoped Area. "CPI-U" has the meaning set forth in Section 3.12(b). "Default Notice" has the meaning set forth in Section 6.1(a). "Dex" has the meaning set forth in the Recitals. "Dexter Publisher" has the meaning set forth in the Introduction. "Dexter Region" means the territory comprised of the seven states of Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South Dakota and the metropolitan statistical area of El Paso, Texas. "Directory Default Notice" has the meaning set forth in Section 6.2(b). 3 "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 Introduction. "Excess Premium Listings" has the meaning set forth in Section 3.2(b). "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. "Foreign Listing" means any listing of a Subscriber in a White Pages that is Published for an area outside of the geographic scope of the White Pages in which such Subscriber's Primary Listing appears or would appear. "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. "ILEC" has the meaning set forth in Section 3.10(a). "Indemnified Party" has the meaning set forth in Section 5.5. "Indemnifying Party" has the meaning set forth in Section 5.5. "LEC" means a local exchange carrier. "Legal Requirements" has the meaning set forth in Section 3.1(b). "List License Agreements" means that certain License Agreement for the Use of Directory Publisher Lists and Directory Delivery Lists of even date herewith between QC and Dexter Publisher and that certain License Agreement for the Use of Directory Publisher Lists and Directory Delivery Lists dated as of the Second Closing Date between QC and Rodney Publisher, as the each may be amended, modified or supplemented from time to time. "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 and are therefore a Party's direct damages. 4 "Material Default" means, with respect to either Party, a breach of any material term, condition, covenant or obligation of this Agreement, for any reason other than those described in Article 8, 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 of Section 9.6 with respect to assignment of this Agreement as a whole. "Material Regulatory Change" means a new or altered (i.e., imposed after the Effective Date) Legal Requirement imposed on QC by a Governmental Entity, in its capacity as the regulator of the LEC, that directly and materially increases Publisher's cost of fulfilling the Publishing Obligation in all or a portion of the Publisher Region and increases Publisher's net cost of fulfilling the Publishing Obligation in the Publisher Region taken as a whole. "Net Regulatory Cost Increase" means (i) a Regulatory Cost Increase, less (ii) any actual and incremental decrease in Publisher's costs to fulfill the Publishing Obligation directly resulting from any new or altered Legal Requirement imposed on QC by a Governmental Entity, in its capacity as the regulator of the LEC, with respect to the entire Publisher Region from the Effective Date. "New Customer" means a Subscriber to local phone service who does not currently have any local exchange service and specifically excludes customers who are changing their service from one LEC to another. "Non-Competition Agreement" means that certain Non-Competition and Non-Solicitation Agreement of even date herewith by and among Publisher, Buyer, QC, QCII and Dex, as the same may be amended, modified or supplemented from time to time. "Notice of Claim" has the meaning set forth in Section 5.5. "Open Access Termination" has the meaning set forth in Section 3.12(a). "Other Default" means a breach or violation of or default under this Agreement that is not a Material Default, Service Area Default, Primary Directory Default or Restricted Activity Default. "Other Default Notice" has the meaning set forth in Section 7.1. "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. "Premium Listings" means all Subscriber List Information other than Primary Listings, such as Foreign Listings, additional listings, informational listings and referral listings. "Premium Listings Dispute Notice" has the meaning set forth in Section 3.2(c). "Premium Listings Reimbursement Statement" has the meaning set forth in Section 3.2(c). "Primary Directories" means White Pages and/or Yellow Pages directories with respect to a particular Service Area that QC is required to publish and deliver in accordance with the Publishing Obligation. 5 "Primary Directory Default" has the meaning set forth in Section 6.2(b). "Primary Listing" means one appearance of a Subscriber's name, address and telephone number in the White Pages covering the Service Area where such customer has local exchange telephone service. "Professional Services Agreement" means that certain Professional Services Agreement of even date herewith between Dex and Publisher, as the same may be amended, modified or supplemented from time to time. "Publish" means all activities required to discharge the Publishing Obligation, or otherwise used to produce Primary Directories, and will include the following: (a) obtaining and including for directory publication Subscriber List Information, Subscriber Delivery Information, telephone service provider information, and community information; (b) selling, pricing and advertising; (c) promoting usage, marketing, and branding; (d) developing, designing, composing, arranging, compiling, advertising, contenting, formatting and styling; (e) exercising editorial control; (f) scoping, sizing, producing, printing and manufacturing; (g) delivering and distributing; and (h) managing other miscellaneous matters related to the Primary Directories. "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 Default Termination" has the meaning set forth in Section 6.5(a). "Publisher Liquidated Damages" has the meaning set forth in Section 6.4(a). "Publisher Region" means (i) from and after the First Closing Date, the Dexter Region, and (ii) from and after the Second Closing Date, if such date occurs, the territory comprising the Qwest Region. "Publishing Obligation" has the meaning set forth in the Recitals. "Publishing Order" has the meaning set forth in Section 3.14. "QC" has the meaning set forth in the Introduction. 6 "QCII" has the meaning set forth in the Recitals. "QC Default Termination" has the meaning set forth in Section 6.4(a). "QC Liquidated Damages" has the meaning set forth in Section 6.5(a). "QC Reimbursement Share" means (i) 50% of the Net Regulatory Cost Increase less (ii) the aggregate amount of any previous QC Reimbursement Shares. "QSC" has the meaning set forth in the Recitals. "Qwest Region" means the territory comprised of the fourteen states of Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming, and the metropolitan statistical area of El Paso, Texas. "Regional Advertiser" means an advertiser offering products and/or services to customers located in the Publisher Region (e.g., local restaurants, locksmiths, drycleaners and florists). Regional Advertisers do not include (i) advertisers offering products and/or services to customers outside the Publisher Region in any material respect (e.g., a destination resort located in the Publisher Region) or (ii) advertisers offering products and/or services to customers widely dispersed geographically (e.g., advertisers of the type currently classified as "national accounts" by Dex, such as Hertz, FTD, etc.) ("National Advertisers"). "Regulatory Change Dispute Notice" has the meaning set forth in Section 3.13(d). "Regulatory Change Notice" has the meaning set forth in Section 3.13(a). "Regulatory Change Reimbursement Statement" has the meaning set forth in Section 3.13(b). "Regulatory Cost Increase" means, with respect to any period during the Regulatory Reimbursement Period, the actual and incremental increase in Publisher's costs to fulfill the Publishing Obligation directly resulting from a Material Regulatory Change as measured with respect to the entire Publisher Region from the Effective Date. "Regulatory Reimbursement Period" means the period commencing on the Effective Date and ending on the seventh (7th) anniversary of the Effective Date. "Reseller" means a reseller of local exchange telephone service. "Restricted Activity Default" has the meaning set forth in Section 6.2(d). "Rodney Publisher" has the meaning set forth in the Introduction. "Rodney Region" means the territory comprised of the seven states of Arizona, Idaho, Montana, Oregon, Utah, Washington and Wyoming. 7 "Scoped Area" means the geographic area(s) associated with the Primary Listings included in and serviced by a particular White Pages as may be established and modified, subject to Section 3.1(b), by Publisher from time to time. "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. "Secondary Directories" means Directory Products (other than Primary Directories) consisting principally of listings of Subscribers having local exchange telephone service in the Service Areas, which Directory Products are targeted primarily at specified Service Areas and designated communities within such Service Areas. "Service Area(s)" means those geographic areas in which QC provides local telephone service listed on Exhibit A, including any such areas added to Exhibit A pursuant to Section 3.10 or Section 3.11 (subject to the limitations therein). "Service Area Default" has the meaning set forth in Section 6.1(c). "Service Area Default Liquidated Damages" has the meaning set forth in Section 6.4(b). "Service Area Default Notice" has the meaning set forth in Section 6.1 (c). "Service Area Default Termination" has the meaning set forth in Section 6.4(b). "Specified Restricted Activity" has the meaning set forth in Section 6.2(d). "Subscriber" means any person or business that orders and/or receives local exchange telephone service from a provider of such services. "Subscriber Delivery Information" means a list of the names and delivery addresses of the Subscribers of QC and certain other CLECs, LECs and Resellers as supplied to Publisher by QC, including any Subscribers that have elected not to be published in a Directory Product, and such other information, such as non-confidential telephone numbers, that Publisher and QC may agree from time to time is required or useful for the complete and accurate delivery of Primary Directories. "Subscriber List Information" means a list of the names, addresses and telephone numbers of the Subscribers of QC and certain other CLECs, LECs and Resellers as supplied to Publisher by QC and such other information about such Subscribers as Publisher and QC may agree from time to time is required or useful for Publisher to Publish complete and accurate Primary Directories. "Telecommunication Services" has the meaning set forth in Section 6.2(d). "Terminable Regulatory Change" means a Material Regulatory Change that (i) results in a Net Regulatory Cost Increase that represents an amount greater than twenty-five percent (25%) of Publisher's direct costs to fulfill the Publishing Obligation as compared to Publisher's direct costs to fulfill the Publishing Obligation immediately preceding such change and (ii) is not generally applicable, or reasonably expected to be generally applicable (i.e., is or expected to become the prevailing norm), to the manner in which ILECs are required to fulfill their respective directory publishing obligations. 8 "Transition Costs" has the meaning set forth in Section 6.3(a). "White Pages" means the information Published by Publisher with respect to a Service Area comprised of or containing the alphabetical listings of Subscribers having local exchange telephone service for such Service Area. "Yellow Pages" means the information Published by Publisher with respect to a Service Area comprised of or containing classified advertising, including Courtesy Classified Listings. ARTICLE II TERM OF AGREEMENT Subject to the provisions of Article 6, this Agreement will remain in effect until the fiftieth (50th) anniversary of the Effective Date. Thereafter, this Agreement will automatically renew for additional one year terms unless either Party provides written termination notice to the other Party at least twelve (12) months prior to the end of the then applicable term. ARTICLE III RIGHTS AND OBLIGATIONS OF PUBLISHER 3.1 Publication. ----------- (a) Publisher will, at no charge to QC or its Subscribers, subject to Section 3.13: (1) Publish Primary Directories covering, in the aggregate, the Service Areas in the Publisher Region (including those Service Areas discussed in Section 3.11); (2) Publish Primary Listings in the White Pages; (3) Publish a Courtesy Classified Listing in the applicable Yellow Pages for each of QC's business Subscribers (unless such Subscriber has indicated to Publisher or QC that it does not want such Courtesy Classified Listing to be Published); (4) as appropriate, co-mingle in such Primary Directories on a non-discriminatory basis QC's Subscriber List Information with Subscriber List Information received from other CLECs, LECs or Resellers; and (5) comply with any and all Subscriber-requested restrictions that are designated in the Subscriber List Information and are consistent with Publisher's policies. (b) Publisher acknowledges that the Publishing Obligation is required by and subject to certain (1) tariffs, (2) laws, rules, regulations and orders of certain Governmental Entities and (3) interconnection agreements with CLECs, LECs and Resellers (collectively, "Legal Requirements"). In discharging its obligations under this Agreement, Publisher, subject to Article 8, (i) will not take any action that will cause QC or Publisher to be in violation of any Legal Requirement, whether in effect now or in the future, and (ii) will treat all Subscribers and Subscriber List Information (regardless of the carrier of such Subscribers) in a non-discriminatory manner. Without limiting the foregoing, the Parties acknowledge that QC's Directory Products in the metropolitan statistical area of El Paso are Secondary Directories and, therefore, not subject to Legal Requirements. 9 (c) Without limiting the provisions of Section 3.1(b), Publisher will ensure that (1) the appearance (including font and size) and integration of all Subscriber List Information occurs in a non-discriminatory manner, (2) non-QC Subscriber List Information is included in the Primary Directories using the same methods and procedures, and under the same terms and conditions, as those with respect to QC Subscriber List Information, and (3) non-QC Subscriber List Information is provided with the same accuracy and reliability as QC Subscriber List Information. (d) QC will not propose, solicit or otherwise encourage any change in any Legal Requirement or any new or additional Legal Requirement, in any such case by any Governmental Entity, in the Publisher Region that would reasonably be expected to increase materially the cost of fulfilling the Publishing Obligation (an "Additional Legal Requirement"). If any applicable Governmental Entity proposes any Additional Legal Requirement in the Publisher Region, QC will, in good faith and using commercially reasonable efforts, object to and attempt to prevent the implementation of any such proposal and will involve and solicit advice from Publisher regarding how to respond to any such proposal. To the extent permitted by applicable law, QC will promptly update Publisher regarding any Additional Legal Requirement and will provide Publisher with prompt notice of any Governmental Entity's determination that there is a problem with the manner in which Publisher is fulfilling the Publishing Obligation. (e) QC will not (i) modify or amend its tariffs (except as required pursuant to laws, rules regulations or orders of Governmental Entities), or (ii) change in any material respect the nature or scope of the directory publishing obligations under interconnection agreements with CLECs LECs and Resellers, in either case in the Publisher Region that would reasonably be expected to increase materially the cost of fulfilling the Publishing Obligation. (f) For purposes of clarification, the Parties acknowledge that (i) where Publisher is QC's official publisher of a Secondary Directory or otherwise uses the marks, names or logos of QC or one of its Affiliates with respect to a Secondary Directory, Publisher will be subject to the terms of Exhibit C and (ii) except as described in clause (i), this Agreement does not restrict Publisher's ability to publish, market, sell or distribute Secondary Directories. 3.2 Premium Listings. ---------------- (a) Publisher will, at no additional charge to QC or its Subscribers (except as provided below), subject to Section 3.13, Publish the types of Premium Listings listed on Exhibit B, which are the Premium Listings being offered by QC to QC Subscribers in the Service Areas as of the Effective Date. Publisher's obligation to provide such Premium Listings at no charge will be conditioned upon QC offering such Premium Listings to its Subscribers in a manner that is consistent with its past practices as in effect on the Effective Date. (b) If (i) there is a material incremental increase in Publisher's costs to fulfill the Publishing Obligation directly resulting from an increase in the number of Persons for whom Publisher is obligated to provide Premium Listings at no charge pursuant to clause (a) above, and (ii) such increase is in excess of the growth of basic listings in the applicable Primary Directory (i.e., is unrelated to population growth in the relevant geographic area) ("Excess Premium Listings"), then QC will reimburse Publisher for its direct costs of Publishing the Excess Premium Listings plus ten percent (10%). 10 (c) Within sixty (60) days after each anniversary of the Effective Date, Publisher may provide QC with a written statement seeking reimbursement with respect to Excess Premium Listings (a "Premium Listings Reimbursement Statement"). Each Premium Listings Reimbursement Statement will specify in reasonable detail the Excess Premium Listings in the prior twelve (12) month period and Publisher's direct costs relating thereto (including itemization). Within sixty (60) days of QC's receipt of an Excess Premium Listings Reimbursement Statement, QC may either (i) pay the reimbursement amount identified therein, or (ii) provide Publisher with written notice stating its dispute with Publisher's assertion that Excess Premium Listings exist and/or Publisher's statement of its direct costs with respect thereto and setting forth in reasonable detail the basis therefore (a "Premium Listings Dispute Notice"). During such sixty (60) day period, Publisher will provide QC with any additional information it reasonably requests to assess such Premium Listings Reimbursement Statement, including access to Publisher's auditors and their work papers. (d) The Parties will attempt in good faith to resolve any such dispute set forth in a Premium Listings Dispute Notice by referring the dispute to a senior executive officer of each of QC and Publisher for ten (10) business days of the submission of the dispute to them. If such officers cannot resolve such dispute within such period, then the Parties will submit the dispute to arbitration pursuant to Section 9.7. (e) All other types of Premium Listings offered to QC Subscribers will be Published by Publisher in accordance with then prevailing policies and pricing, as both may be reasonably established by Publisher from time-to-time. 3.3 Foreign Language Directories. Publisher will include QC Subscriber List Information and permit QC Subscribers to advertise in any foreign language directories that Publisher may publish within the Service Areas in accordance with then prevailing policies and pricing, as both may be reasonably established by Publisher from time-to-time. 3.4 Phone Service Pages. Publisher will include phone service pages in the Primary Directories that provide information needed for users to establish, maintain and use local phone service. The content within such phone service pages will not be promotional or advertising. Publisher will have, subject to the terms of this Agreement (including Section 3.1(b)), the right to exercise final editorial control, which will be exercised in a commercially reasonable manner, over the Published version of the content, design, format and location of the phone service pages. The phone service pages in any White Pages will consist of two types: (a) Generic Phone Service Pages. At no charge to QC, subject to Section 3.13, Publisher will Publish: (1) any information required by any Legal Requirement, such as how to (a) request service, (b) contact repair service, (c) dial directory assistance, (d) reach an account representative, (e) request buried cable locate service, and (f) contact the special needs center for customers with disabilities; (2) information about QC's emergency numbers, consumer tips and local calling area in the phone service pages of the White Pages Published for the Service Areas; (3) non-company specific information, 11 including long distance calling, state and international area codes, and a time zone map of the United States; and (4) an instructional notice directing all Subscribers to contact their local service provider to request any modifications to their existing listing, or to request a new listing. QC will prepare and provide Publisher with this information, with the exception of information about other CLECs or LECs, which must be provided directly to Publisher by the CLEC or LEC. Publisher and QC will cooperate to integrate the content into the appropriate format and design and to ensure compliance with applicable regulations. (b) Premium Phone Service Pages. QC, and all other CLECs and LECs included within the Scoped Area of a given directory, may elect to purchase premium phone service pages for the purpose of providing specific product and service information that is factual, instructional and/or directional in nature in accordance with the then prevailing policies and pricing, as both may be reasonably established by Publisher from time to time; provided, however, that the prices charged by Publisher to QC for such premium phone service pages will be equal to or less than the lowest prices for comparable premium phone service pages then being charged by Publisher to any Person with respect to the applicable White Pages. (c) Ordering of Phone Service Pages. The generic phone service pages will appear before the premium phone service pages in each White Pages. Each of the generic phone service pages and the premium phone service pages will be arranged in alphabetical order, except that any LEC having an official publishing agreement with Publisher and sixty percent (60%) or more of the total number of Primary Listings for Subscribers in the relevant White Pages will automatically be placed in first position in the generic phone service pages and the premium phone service pages and the remainder of the LECs will appear in alphabetical order thereafter. 3.5 Editorial Discretion. Subject to Exhibit C and any Legal Requirements, Publisher will have the sole and exclusive right, acting in a commercially reasonable manner, to determine the scope, design, format, content, organization, style, size, and appearance of the Primary Directories, and all other aspects of Publishing the Primary Directories. 3.6 Policies. Subject to Section 3.1(b), Publisher may establish, discontinue, and modify its policies from time to time with regard to any and all aspects of Publishing; provided, however, that Publisher will give QC thirty (30) days prior written notification of any changes in Publisher's policies or products that are reasonably likely to impact materially QC's obligations under this Agreement (other than changes arising from Additional Legal Requirements); and provided further that Publisher may not alter the terms of this Agreement in any material manner by modification of its policies. Publisher's policies will be commercially reasonable. Publisher may not make any commitments on behalf of QC other than those as contemplated by the terms of this Agreement without the prior consent of QC or take any action that would materially impair or affect QC's ability to discharge its Publishing Obligation. If a change in policy by Publisher results in a material increase in QC's costs in meeting its obligations under this Agreement, the Parties agree to negotiate in good faith to establish an appropriate amount to compensate QC for such increased costs; provided, however, that no such policy change will become effective until the Parties have agreed in writing as to the amount of such compensation. 12 3.7 Length of Issue. Upon sixty (60) days prior written notice to QC (and subject to Section 3.1(b)), Publisher may alter the life of a Primary Directory. If any such voluntary change in a directory issue date requires or is subject to approval by a Governmental Entity, Publisher will bear any and all costs and expenses, including attorney fees, related to obtaining such approval, and QC will have no liability for any such costs and expenses. Notwithstanding the foregoing, neither Publisher (on the one hand) nor QC or Dex (on the other hand) will alter the life or publishing schedule of any Primary Directory during the period that Publisher is providing production services to Dex pursuant to the Professional Services Agreement, except as provided pursuant to Section 10.2 of the Professional Services Agreement. 3.8 Delivery and Distribution. ------------------------- (a) Initial Delivery. Publisher will timely deliver in accordance with the related Subscriber Delivery Information (i) at least one (1) White Pages and at least one (1) Yellow Pages or (ii) at least one (1) combined White Pages and Yellow Pages to all Subscribers within the Scoped Area covered by the related Primary Directory(s) at no charge to QC or its Subscribers. Subject to Section 3.1(b), Publisher may select the type or medium of delivery of such Primary Directories. (b) Replacements and New Customers. Subject to available inventory (which Publisher will maintain at reasonable levels consistent with Dex's past practices), subsequent to the initial distribution of Primary Directories, Publisher will timely deliver: (i) replacement Primary Directories to Subscribers within the Scoped Area of such Primary Directory upon any reasonable request from a Subscriber; and (ii) Primary Directories to New Customers within the Scoped Area for such Primary Directory, provided QC delivers timely New Customer information for the Service Areas in the Publisher Region (including those Service Areas discussed in Section 3.11) to Publisher in a mutually agreed to format. Publisher will make the foregoing deliveries at no charge to QC or its Subscribers. (c) Distribution Coverage and Policies. Publisher will provide to QC, at no charge: (i) one copy of Publisher's distribution policies for the Service Areas describing which Primary Directories Subscribers will receive and other matters relevant to the distribution of Primary Directories in the Service Areas in the Publisher Region (including those Service Areas discussed in Section 3.11); and (ii) one copy of the Primary Directory coverage information, including those geographic areas included in and served by the Primary Directories and government pages, for each of the Service Areas in the Publisher Region (including those Service Areas discussed in Section 3.11). QC may make and retain copies of the information and documents provided pursuant to (i) and (ii) above as necessary to perform its obligations hereunder. (d) Free Calling Area. In the event a QC local or extended calling area extends beyond the scope of a given White Pages, Publisher's delivery obligation will include only such additional White Pages as may be requested by a Subscriber in such free calling area and required to be provided to such Subscriber by regulatory order or rule. (e) Secondary Directories. To the extent that Publisher is authorized as the official publisher of a Secondary Directory pursuant to Exhibit C within 13 a Service Area, the obligations of Publisher with respect to delivery and distribution of Primary Directories set forth in this Section 3.8 will, upon request by Subscribers, apply to such Secondary Directories. 3.9 Rights in the Directory Products. The copyrights and other intellectual property rights in each Directory Product covered by this Agreement, and any and all illustrations, artwork, photographs, video, audio, text, maps and other advertising and information content created or procured for such Directory Product or for other Publisher products and services that are not submitted by or for QC or created at the request of QC, will be the sole and exclusive property of Publisher. Without limiting rights under applicable law, QC agrees not to copy the Directory Products or any other Publisher products and services, or any portion thereof, provided, however, that QC may make a reasonable number of copies of limited portions of the Primary Directories for use in performing its obligations under this Agreement and ensuring that its Subscribers are being listed in and receiving copies of the Primary Directories as provided herein. 3.10 Changes in Service Areas. ------------------------ (a) QC may update Exhibit A on a regular basis by written notice to Publisher, and the rights and obligations of this Agreement will extend to any new, altered or changed local telephone service areas of QC within the Publisher Region, including any such service areas that extend outside the Publisher Region by reason of being located on or near the border of the Publisher Region. Publisher will have fifteen (15) months following written notice from QC regarding the addition of any service area to include QC's listings from such service area in a Primary Directory without being in violation of Section 3.1(a). Notwithstanding the foregoing, the rights and obligations of this Agreement will not, without an amendment to this Agreement, extend to any geographic area (i) that QC expands into as a CLEC or (ii) in which QC becomes the incumbent local exchange carrier (the "ILEC") 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 ILEC. (b) If QC intends to cease providing local telephone service in a geographic area within any Service Area, QC will advise Publisher as soon as practicable (and, in any event, no later than the date on which this information may be made public). Upon QC ceasing to provide local telephone service in a geographic area, Publisher will no longer have any obligation under this Agreement to Publish Primary Directories for that geographic area; provided, however, that Publisher will Publish any Primary Directories scheduled to be issued within one year of QC ceasing such service if required by any Legal Requirement. (c) Notwithstanding Section 3.10(b), 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 party 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 and the Non-Competition Agreement to the 14 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 under the applicable Commercial Agreements (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, including the obligation to Publish Primary Directories for the relevant Service Area(s). 3.11 Border Service Areas. As reflected in Exhibit A, certain Service Areas include communities located in the Rodney Region by reason of such communities being located on or near the border between the Rodney Region and the Publisher Region. Similarly, certain communities in the Publisher Region are not presently within a Service Area covered by this Agreement because they are located on or near the border between the Rodney Region and the Publisher Region part of a service area (in which Dex is QC's official directory publisher) that extends into the Publisher Region from within the Rodney Region (in either case, a "Border Community"). If the LLC II Purchase Agreement terminates such that the Second Closing does not occur, at any time following the third (3rd) anniversary of the Effective Date and no later than the fifth (5th) anniversary of the Effective Date, either Party may terminate this Agreement with respect to any Border Community located in the Rodney Region by providing the other Party with not less than fifteen (15) months written notice, in which case the Parties will cooperate in good faith to transition the Publishing Obligation to such Person or Persons that QC desires and to ensure that the Publishing Obligation is discharged until such transition is complete, with the Party that requested such termination bearing all costs and expenses related to such transitioning of the Publishing Obligation. If the LLC II Purchase Agreement terminates such that the Second Closing does not occur, at any time following the third (3rd) anniversary of the Effective Date and no later than the fifth (5th) anniversary of the Effective Date, either Party may extend this Agreement to any Border Community located in the Publisher Region by providing the other Party with not less than fifteen (15) months written notice, in which case the Parties will cooperate in good faith to transition the Publishing Obligation to Publisher, with the Party that requested such expansion bearing all costs and expenses related to such transitioning of the Publishing Obligation. If no such notice is given, the Border Communities will continue to be included in (or excluded from, as applicable) the relevant Services Areas for all purposes under this Agreement. 3.12 Open Access Termination. ----------------------- (a) If federal law no longer requires QC to provide Subscriber List Information and Subscriber Delivery Information under nondiscriminatory and reasonable rates, terms and conditions to any Person requesting such information for the purpose of publishing directories ("Open Access Termination"), QC will continue to license such information to Publisher for the term of this Agreement on terms and conditions at least as favorable as those then being offered by QC to any Person materially doing business in the Publisher Region. (b) If Open Access Termination occurs, QC will charge Publisher for Subscriber List Information and Subscriber Delivery Information as follows: (i) If Open Access termination occurs prior to the end of the Regulatory Reimbursement Period, until the end of such period QC will charge Publisher for Subscriber List Information and Subscriber 15 Delivery Information the prices in effect under the List License Agreements at the time of Open Access Termination, provided that QC may, from time to time during the Regulatory Reimbursement Period, increase the prices by a percentage reflecting any percentage increase in the Consumer Price Index for all Urban Consumers published by the U.S. Bureau of Labor Statistics ("CPI-U"), comparing the CPI-U for the month in which the prices were last set to the CPI-U for the month immediately prior to the month in which QC elects to increase the prices. (ii) After the Regulatory Reimbursement Period, regardless of whether Open Access Termination occurred before or after the end of the Regulatory Reimbursement Period, QC will charge Publisher for Subscriber List Information and Subscriber Delivery Information under the List License Agreements at prices equal to or less than the lowest price then being charged by QC for such information to any Person doing business in the Publisher Region; provided, however, that if QC is not licensing Subscriber List Information and Subscriber Delivery Information to at least two (2) other bona fide purchasers of such information (other than Affiliates of QC) in the Publisher Region, the prices that QC charges Publisher for such information will be equal to the average price that other ILECs of comparable size charge for such information. 3.13 Regulatory Change. ----------------- (a) During the Regulatory Reimbursement Period, each Party will provide the other Party with prompt written notice of the announcement by a Governmental Entity of any Additional Legal Requirement that such Party believes is reasonably likely to result in a Material Regulatory Change (a "Regulatory Change Notice"). Notwithstanding the foregoing, Publisher's failure to provide QC with a Regulatory Change Notice in a timely manner will not limit Publisher's right to seek reimbursement from QC pursuant to this Section 3.13 with respect to such Material Regulatory Change unless and to the extent that such failure prejudices QC. (b) Within sixty (60) days after each anniversary of the Effective Date during the Regulatory Reimbursement Period, Publisher may provide QC with a written statement seeking reimbursement with respect to one or more Material Regulatory Changes (a "Regulatory Change Reimbursement Statement"). Each Regulatory Change Reimbursement Statement will specify in reasonable detail (including itemization) (i) each Material Regulatory Change, (ii) the manner in which Publisher responded to such Material Regulatory Change, (iii) a calculation of the Regulatory Cost Increase, (iv) a calculation of the Net Regulatory Cost Increase, and (v) a calculation of the percentage increase of Publishers direct costs to fulfill the Publishing Obligation that such Net Regulatory Cost Increase represents. (c) Publisher will exercise reasonably prudent business judgment with respect to the manner that it responds to any Material Regulatory Change and comply with such change as if Publisher was responsible for all compliance costs. If after exercising such reasonable efforts there is Net Regulatory Cost Increase, as finally determined pursuant to this Section 3.13, QC will promptly pay to Publisher the QC Reimbursement Share. 16 (d) Within sixty (60) days of QC's receipt of a Regulatory Change Reimbursement Statement, QC may either (i) pay the QC Reimbursement Share with respect to such Net Regulatory Cost Increase or (ii) provide Publisher with written notice stating its dispute with Publisher's assertion that a Material Regulatory Change exists and/or Publishers estimate of the Net Regulatory Cost Increase and setting forth in reasonable detail the basis therefore (a "Regulatory Change Dispute Notice"). During such sixty (60) day period, Publisher will provide QC with any additional information it reasonably requests to assess such Regulatory Change Reimbursement Statement, including access to Publisher's auditors and their work papers. (e) The Parties will attempt in good faith to resolve any such dispute set forth in a Regulatory Change Dispute Notice by referring the dispute to a senior executive officer of each of QC and Publisher for ten (10) business days of the submission of the dispute to them. If such officers cannot resolve such dispute within such period, then the Parties will submit the dispute to binding resolution as follows: (i) if the dispute is with respect to whether a Material Regulatory Change has occurred, the dispute will be submitted to arbitration pursuant to Section 9.7 below; and (ii) if the dispute is with respect to the amount of the Net Regulatory Cost Increase, the dispute will be submitted to a mutually-acceptable qualified independent financial expert. If the Parties cannot agree on an expert within a five (5) business day period following notice from either Party of termination of discussions between the officers (as described above), each Party will select its own expert within a further five (5) business day period who will then together select a third qualified independent expert. The Parties will provide such information, including written submissions, as are reasonably requested by the expert(s). The Net Regulatory Cost Increase that is the average of the valuations of the three experts will be binding on the Parties. If the Parties agree on a single expert, they will equally share such expert's fees and costs. If the Parties cannot agree on a single expert, each Party will pay the fees and costs of the expert it selects and equally share the fees and costs of the expert that the Parties' experts select. The experts selected pursuant to clause (ii) above will be independent of both Parties and their respective Affiliates and will be qualified with respect to the LEC industry and valuation techniques. 3.14 Publishing Order. If any Governmental Entity having jurisdiction over QC requires QC to Publish a White Pages (and does not allow QC to delegate such requirement to Publisher), or if such an order declares this Agreement null and void with respect to a White Pages ("Publishing Order"), QC will Publish the affected White Pages; provided, however, that, any White Pages that QC Publishes to fulfill the Publishing Obligation will contain only the information required to be in such White Pages (e.g., Primary Listings) and will not include any paid advertising content. ARTICLE IV RIGHTS AND OBLIGATIONS OF QC 4.1 Delivery of Subscriber List Information and Subscriber Delivery Information. (a) Pursuant to the List License Agreements and in accordance with Exhibit D, QC will, consistent with past practices, diligence and care, deliver or cause to be delivered Subscriber List Information for Subscribers in the 17 Service Areas, including any and all additions to, deletions from, and changes in such information from time to time so as to enable Publisher to Publish Primary Directories in accordance with Publisher's publication schedule. (b) Pursuant to the List License Agreements and in accordance with Exhibit D, QC will, consistent with past practices, diligence and care, deliver or cause to be delivered Subscriber Delivery Information for Subscribers in the Service Areas, including any and all additions to, deletions from, and changes in such information from time to time so as to enable Publisher to deliver Primary Directories to all such Subscribers. (c) QC and Publisher will use electronic means for the provision of Subscriber List Information and Subscriber Delivery Information and will cooperate in good faith to achieve an efficient and effective provisioning delivery process, including having QC provide such information in a format as Publisher may reasonably request from time to time if Publisher pays all of QC's one-time and on-going costs to provide the information in such format on a fully burdened cost basis plus ten percent (10%). (d) If QC elects to use a third party to deliver Subscriber List Information and/or Subscriber Delivery Information to Publisher, then QC will prepare and promptly provide to Publisher and such third party duplicate written authorizations to facilitate such delivery and QC will clearly designate and distinguish its information from all other information delivered by, or through such third party, provided that QC will in any event remain liable for its obligations hereunder. QC will also promptly resolve any problems that may arise with respect to such third party deliveries. (e) QC will use commercially reasonable efforts to provide mutually agreed upon indicators with all of QC's Subscriber List Information and QC's Subscriber Delivery Information in a form that will ensure that such Subscribers' listings, published advertising, and/or advertisement billings will not be adversely impacted if a Subscriber changes its LEC. (f) The Parties acknowledge that Publisher requires the Subscriber List Information provided under the List License Agreements to perform its obligations, and enjoy its rights and privileges, under this Agreement. Consequently, the Parties agree that if either of the List License Agreements is terminated due to Publisher's breach thereof, QC will reinstate such List License Agreement or enter into a new agreement on terms and conditions as set forth in Section 3.12; provided that Publisher has identified the cause of such breach, fully remedied such breach and established reasonable procedures to prevent the recurrence of such breach. If Publisher assigns its rights under this Agreement in accordance with the provisions herein, QC will enter into a list license agreement with such successor entity on the terms and conditions herein. 4.2 Official Directory Publisher Designation. For the term of this Agreement, (i) QC designates Publisher as its exclusive official publisher of all Directory Products consisting principally of listings and classified advertisements for Subscribers in the Publisher Region and directed primarily at end users in the Publisher Region for the Service Areas covered by this Agreement; and (ii) QC grants Publisher the branding rights and Publisher agrees to the obligations and other restrictions set forth in Exhibit C. Either Party 18 may elect, but will not be obligated, to disclose Publisher's official directory publisher status in their public announcements, promotional and advertising materials and sales contacts; provided, however, that the general nature of such disclosure will first be reviewed and approved in writing by the other Party, which approval will not be unreasonably withheld. QC further agrees that any referrals it makes in response to inquiries concerning Yellow Pages advertising from Regional Advertisers with respect to the Service Areas will be made solely to Publisher and that QC may refer any inquiries concerning Yellow Pages advertising from National Advertisers to Publisher concurrently with any referral to any other directory publishing entity. ARTICLE V CLAIMS, LIABILITY AND INDEMNIFICATION 5.1 Listing Claims. Subject to Publisher's indemnification obligations as set forth in Section 5.4(a), Claims regarding the listing of QC's Subscribers in Publisher's Directory Products will be referred to QC. QC will use commercially reasonable efforts to promptly investigate, defend against, and resolve the same. 5.2 Advertising Claims. Subject to QC's indemnification obligations as set forth in Section 5.4(b), Claims regarding advertising in Publisher's Directory Products will be referred to Publisher. Publisher will use commercially reasonable efforts to promptly investigate, defend against and resolve the same. 5.3 Cooperation. The Parties will cooperate in good faith in their investigation, defense, settlement and resolution of Claims arising out of any error or omission in or of any Subscriber listing and/or advertising in the Directory Products. In the event of a demand or complaint asserting that Publisher and QC are jointly liable, Publisher will assume the responsibility for and advance the cost of defending that portion of the Claim relating to any advertising; and QC will assume the responsibility for and advance the cost of defending that portion of the Claim relating to any of QC Subscribers' listings; and the Parties will cooperate, share information and coordinate their efforts in an attempt to eliminate or minimize any liability and their respective attorneys' fees and costs. This assumption of the defense of a Claim, or portion thereof, does not imply or create an assumption of liability for any final settlement or judgment for such Claim, or portion thereof. 5.4 Indemnification. --------------- (a) Subject to Section 6.5, Buyer and Publisher will jointly and severally indemnify and hold harmless QC and its directors, officers, employees, Affiliates, agents and assigns from and against any and all Losses directly or indirectly based upon, arising from or resulting from (i) Publisher's failure to perform any of its obligations under this Agreement (including Sections 3.1(a) and 3.1(b)); (ii) any third party claims arising from any error or omission in or of a QC Subscriber's listing or advertising in a Directory Product caused by Publisher, its employees, agents, representatives or subcontractors and (iii) any claims that the Directory Products or the grants that Publisher makes in Exhibit C violate or infringe the intellectual property rights of any third party or require the consent of any third party. 19 (b) Subject to Section 6.4, QC will indemnify and hold harmless Publisher and its directors, officers, employees, Affiliates, agents and assigns from and against any and all Losses directly or indirectly based upon, arising from or resulting from (i) its failure to perform any of its obligations under this Agreement; (ii) any third party claims arising from any error or omission in or of a QC Subscriber's listing or advertising in a Directory Product caused by QC, its employees, agents, representatives or subcontractors (in which case QC will not seek indemnification from Publisher under the applicable List License Agreement) and (iii) any claims that the grants that QC or QCII makes in Exhibit C violate or infringe the intellectual property rights of any third party or require the consent of any third party. (c) Notwithstanding Section 5.4(a), if Publisher's failure to perform, error, omission, violation or infringement is limited in geographic scope to either the Dexter Region or the Rodney Region, the foregoing indemnity will not be deemed to be made jointly and severally by Buyer and Dexter Publisher and Rodney Publisher in their joint capacity as Publisher, but instead will be deemed made jointly and severally by Buyer and Dexter Publisher with respect to the Dexter Region, and jointly and severally by Buyer and Rodney Publisher with respect to the Rodney Region. 5.5 Notice and Procedures. A Party seeking indemnification (the "Indemnified Party") will give prompt written notice in reasonable detail (the "Notice of Claim") to the indemnifying Party (the "Indemnifying Party") stating the basis of any Claim for which indemnification is being sought hereunder within thirty (30) days after its knowledge thereof; provided 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 unless and 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 in accordance with Section 5.3 above 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 that 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. 5.6 Time Limitation. Any Notice of Claim as provided hereunder must be made within eighteen (18) months after the publication of the Directory Product giving rise to such Claim. 20 ARTICLE VI TERMINATION 6.1 Termination by Publisher. ------------------------ (a) If QC commits a Material Default, Publisher may provide written notice to QC specifying such Material Default in reasonable detail (a "Default Notice"). Upon receipt of a Default Notice, QC may elect to (i) cure such Material Default (unless such Material Default is not susceptible to cure) and (ii) agree to indemnify Publisher pursuant to Section 5.4(b). If within ninety (90) days of Publisher providing QC with a Default Notice QC has not cured such Material Default (or, if not reasonably curable within such ninety (90) day period, provided Publisher with reasonable assurances that it has diligently commenced all actions necessary to cure such Material Default as soon as reasonably practicable) and given Publisher written notice of its agreement to indemnify Publisher for such Material Default Publisher may terminate this Agreement immediately. Notwithstanding the foregoing, if QC provides Publisher with written notice disputing the existence of a Material Default within ninety (90) days of the delivery of the Default Notice, the Parties will attempt in good faith to resolve such dispute and determine the appropriate remedial action, as follows (such action, "Breach Resolution Process"): (A) the dispute will first be referred to a senior executive officer of each of QC and Publisher for ten (10) business days of the submission of the dispute to them; and (B) if such officers cannot resolve any such dispute within ten (10) business days, then the Parties will submit the dispute to binding arbitration pursuant to Section 9.7 below. If it is then determined via binding arbitration that such Material Default occurred and remains uncured following such binding arbitration, Publisher may terminate this Agreement immediately thereafter. (b) If Publisher believes that a Terminable Regulatory Change has occurred after the expiration of the Regulatory Reimbursement Period, it may, within one (1) year following the occurrence of such Terminable Regulatory Change, provide QC with written notice of its intent to terminate this Agreement, which written notice will be effective in ninety (90) days unless QC provides written notice to Publisher within such ninety (90) day period of its dispute that a Terminable Regulatory Change has occurred. If QC disputes the occurrence of a Terminable Regulatory Change, the Parties will attempt in good faith to resolve such dispute and determine the appropriate remedial action, as follows: (A) the dispute will first be referred to a senior executive officer of each of QC and Publisher for ten (10) business days of the submission of the dispute to them; and (B) if such officers cannot resolve any such dispute within ten (10) business days, then the Parties will submit the dispute to binding arbitration pursuant to Section 9.7 below. If it is then determined via binding arbitration that a Terminable Regulatory Change has been implemented after the expiration of the Regulatory Reimbursement Period, Publisher may terminate this Agreement immediately thereafter. (c) If QC (i) breaches Section 3.10(c) of this Agreement or (ii) commits a Material Default with respect to any Service Area as opposed to the Agreement taken as a whole (each of clauses (i) and (ii) a "Service Area Default"), Publisher may provide written notice to QC specifying such Service Area Default in reasonable detail (a "Service Area Default Notice"). Upon receipt of a Service Area Default Notice, QC may elect to (A) cure the Service Area Default (unless such Service Area Default is not susceptible to cure) and (B) agree to indemnify Publisher pursuant to Section 5.4(b). If within ninety 21 (90) days of Publisher providing QC with a Service Area Default Notice QC has not cured such Service Area Default (or, if not reasonably curable within such ninety (90) day period, provided Publisher with reasonable assurances that it has diligently commenced all actions necessary to cure such Service Area Default as soon as reasonably practicable) and given Publisher written notice of its agreement to indemnify Publisher for such Service Area Default, Publisher may terminate this Agreement with respect to Service Area(s) that are the subject of such Service Area Default. Notwithstanding the foregoing, if QC provides Publisher with written notice disputing the existence of a Service Area Default within ninety (90) days of the delivery of a Service Area Default Notice, the Parties will attempt in good faith to resolve such dispute and determine the appropriate remedial action pursuant to a Breach Resolution Process. If it is then determined via binding arbitration that a Service Area Default occurred and remains uncured following such binding arbitration, Publisher may terminate immediately this Agreement with respect to the Service Area(s) that are the subject of such Service Area Default. 6.2 Termination by QC. ----------------- (a) If Publisher commits a Material Default, QC may provide Publisher with a Default Notice. Upon receipt of a Default Notice, Publisher may elect to (i) cure such Material Default (unless such Material Default is not susceptible to cure) and (ii) agree to indemnify QC pursuant to Section 5.4(a). If within ninety (90) days of QC providing Publisher with a Default Notice Publisher has not cured such Material Default (or, if not reasonably curable within such ninety (90) day period, provided QC with reasonable assurances that it has diligently commenced all actions necessary to cure such Material Default as soon as reasonably practicable) and given QC written notice of its agreement to indemnify QC for such Material Default, QC may terminate this Agreement (including Publisher's official directory publisher status) immediately. Notwithstanding the foregoing, if Publisher provides QC with written notice disputing the existence of a Material Default within ninety (90) days of the delivery of the Default Notice, the Parties will attempt in good faith to resolve such dispute and determine the appropriate remedial action pursuant to a Breach Resolution Process. If it is then determined via binding arbitration that a Material Default occurred and remains uncured following such binding arbitration, QC may terminate this Agreement (including Publisher's official directory publisher status) immediately thereafter. (b) If Publisher breaches this Agreement in a manner that results in a material and continuing failure to discharge the Publishing Obligation with respect to any Primary Directory (a "Primary Directory Default"), QC may provide written notice to Publisher specifying such Primary Directory Default in reasonable detail (a "Directory Default Notice"). Upon receipt of a Directory Default Notice, Publisher may elect to (i) cure the Primary Directory Default (unless such Primary Directory Default is not susceptible to cure) and (ii) agree to indemnify QC pursuant to Section 5.4(a). If within ninety (90) days of QC providing Publisher with a Directory Default Notice Publisher has not cured such Primary Directory Default (or, if not reasonably curable within such ninety (90) day period, provided QC with reasonable assurances that it has diligently commenced all actions necessary to cure such Primary Directory Default as soon as reasonably practicable) and given QC written notice of its agreement to indemnify QC for such Primary Directory Default, QC may terminate this Agreement (including Publisher's official directory publisher status) with respect to the Service Area covered by the affected Primary Directory immediately. Notwithstanding the foregoing, if Publisher provides QC with written notice 22 disputing the existence of a Primary Directory Default within ninety (90) days of the delivery of the Directory Default Notice, the Parties will attempt in good faith to resolve such dispute and determine the appropriate remedial action pursuant to a Breach Resolution Process. If it is then determined via binding arbitration that a Primary Directory Default occurred and remains uncured following such binding arbitration, QC may terminate this Agreement (including Publisher's official directory publisher status) immediately with respect to the Service Area covered by the affected Primary Directory. (c) QC may terminate this Agreement (including Publisher's official directory publisher status) immediately if QC has terminated this Agreement pursuant to Section 6.2(b) above with respect to twenty percent (20%) of QC Subscribers in the Service Areas, such percentage determined by using a numerator of the total number of QC Subscribers in the Service Areas terminated by QC pursuant to Section 6.2(b) above and a denominator of the total number of QC Subscribers in the Service Areas that would have been subject to this Agreement had QC not elected to terminate any such Service Areas pursuant to Section 6.2(b) above. (d) If Publisher or any of its subsidiaries (i) engages in the marketing, sale or distribution of any telecommunications, internet connectivity, wireless communications or other comparable or successor telephony or data products or services ("Telecommunication Services") in the Qwest Region, (ii) acts as a sales agent for any Person with respect to the marketing, sale or distribution of Telecommunications Services (other than QC or its Affiliates) in the Qwest Region, or (iii) enters into a joint venture, strategic alliance, product bundling, revenue sharing or similar arrangement with any Person (other than QC or its Affiliates) pursuant to which such Person's Telecommunications Services are offered, marketed, sold or priced or otherwise provided in connection with Publisher's Directory Products in the Qwest Region (each of clauses (i), (ii) and (iii), a "Restricted Activity Default"), QC may provide written notice to Publisher specifying such Restricted Activity Default in reasonable detail (an "Activity Default Notice"). For avoidance of doubt, the Parties acknowledge that it will not constitute a Restricted Activity Default if the owner or other Affiliate of Publisher is a provider of Telecommunications Services, so long as the activities set forth in clauses (i), (ii) and (iii) of the preceding sentence are not occurring with respect to Publisher's Directory Products. Upon receipt of an Activity Default Notice, Publisher may elect to (A) discontinue or terminate the activity, agreement or arrangement specified in such Activity Default Notice (the "Specified Restricted Activity") and (B) agree to indemnify QC pursuant to Section 5.4(a). If within ninety (90) days of QC providing Publisher with an Activity Default Notice Publisher has not discontinued or terminated the Specified Restricted Activity (or, if the Specified Restricted Activity cannot reasonably be terminated or discontinued within such ninety (90) day period, provided QC with reasonable assurances that it has diligently commenced all actions necessary to discontinue or terminate such Specified Restricted Activity as soon as reasonably practicable) and given QC written notice of its agreement to indemnify QC for such Restricted Activity Default, QC may terminate this Agreement (including Publisher's official directory publisher status) with respect to the Service Area in which the Specified Restricted Activity occurred. Notwithstanding the foregoing, if Publisher provides QC with written notice disputing the existence of a Restricted Activity Default within ninety (90) days of the delivery of the Activity Default Notice, the Parties will attempt in good faith to resolve such dispute and determine the appropriate remedial action pursuant to a Breach Resolution Process. If it is then determined via binding arbitration that a Restricted Activity Default occurred and remains uncured following such binding arbitration, QC may terminate this Agreement (including Publisher's official 23 directory publisher status) immediately with respect to the Service Area in which the Specified Restricted Activity occurred. Notwithstanding the foregoing, this Section 6.2(d) will not apply to any Person to whom Publisher has assigned this Agreement (whether with respect to a particular Service Area or Service Areas or the entire Publisher Region) in compliance with subsection (ii) or (iv) of Section 9.6. (e) For purposes of clarification, the Parties acknowledge that nothing in Section 6.2(d) is intended to restrict Publisher's ability to continue to offer (consistent with Dex's past practices) web hosting services to small business customers or its "Call Management Services" product or any similar product or service designed and implemented principally to measure the usage and effectiveness of advertisements in Publisher's Directory Products. 6.3 Transition upon Termination. --------------------------- (a) If this Agreement terminates pursuant to Section 6.1(a), the Parties will cooperate in good faith to transition the Publishing Obligation to such Person or Persons that QC desires as soon as reasonably practicable and to ensure that the Publishing Obligation is discharged until such transition is complete, with QC bearing all direct costs and expenses related to such transitioning of the Publishing Obligation (e.g., data migration and third party consents) ("Transition Costs"); provided that in no event will such transition last more than fifteen (15) months from the date of termination. (b) If Publisher terminates this Agreement with respect to any Service Area pursuant to Section 6.1(c), the Parties will cooperate in good faith to transition the Publishing Obligation with respect to such Service Area to such Person or Persons that QC desires as soon as reasonably practicable and to ensure that the Publishing Obligation is discharged until such transition is complete, with QC bearing all Transition Costs; provided that in no event will such transition last more than fifteen (15) months from the date of termination with respect to such Service Area. (c) If this Agreement terminates pursuant to Section 6.1(b), Section 6.2(a) or Section 6.2(c), the Parties will cooperate in good faith to transition the Publishing Obligation to such Person or Persons that QC desires as soon as reasonably practicable and to ensure that the Publishing Obligation is discharged until such transition is complete, with Publisher bearing all Transition Costs; provided that in no event will such transition last more than fifteen (15) months from the date of termination. (d) If QC terminates this Agreement with respect to any Service Area pursuant to Section 6.2(b) or Section 6.2(d), the Parties will cooperate in good faith to transition the Publishing Obligation with respect to such Service Area to such Person or Persons that QC desires as soon as reasonably practicable and to ensure that the Publishing Obligation is discharged until such transition is complete, with Publisher bearing all Transition Costs; provided that in no event will such transition last more than fifteen (15) months from the date of termination with respect to such Service Area. 24 (e) Nothing contained in this Section 6.3 will be a deemed a waiver or release of any rights or remedies that a Party may have on account of any termination of this Agreement (whether in its entirety or only with respect to a particular Service Area or Service Areas), including its rights to Publisher Liquidated Damages, Service Area Default Liquidated Damages or QC Liquidated Damages. 6.4 Publisher's Liquidated Damages. ------------------------------ (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 Non-Competition Agreement and that QC's performance of this Agreement and the Non-Competition 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 upon a termination of this Agreement by Publisher pursuant to Section 6.1(a) (a "QC Default Termination") 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 QC Default Termination and to provide certainty to the Parties with respect to such damages, each of the Parties agrees that, in the event of (i) a QC Default Termination or (ii) any formal repudiation or rejection of this Agreement by QC (except, in any of the foregoing cases, to the extent that this Agreement has been terminated or is in the process of being terminated pursuant to Section 6.2), 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 post-closing adjustment pursuant to the LLC Purchase Agreement) less the amounts, if any, paid to Publisher by or on behalf of QC pursuant to Section 6.4(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 (as adjusted by any post-closing adjustment pursuant to the LLC Purchase Agreement and LLC II Purchase Agreement) less the aggregate amount, if any, paid to Publisher by or on behalf of QC pursuant to Section 6.4(b). (b) Service Area Default Liquidated Damages. In order to reasonably approximate the probable damages to Publisher stemming from a termination of this Agreement by Publisher with respect to one or more Service Areas pursuant to Section 6.1(c) (a "Service Area Default Termination"), each of the Parties agree that, in the event of a Service Area Default Termination with respect to the Service Area(s) that are the subject of a Service Area 25 Default, Publisher will be entitled to receive a payment from QC (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 QC Default Termination and a Service Area Default Termination; (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 Non-Competition 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 lieu of actual, direct, indirect, consequential, special or other damages for, respectively, a QC Default Termination and a Service Area Default Termination 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 QC Default Termination or Service Area Default Termination. (f) In Lieu of Liquidated Damages Under Non-Competition 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 26 in lieu of, and not in addition to, the liquidated damages provisions contained in the Non-Competition 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 Non-Competition Agreement nor will Publisher be entitled to receive Publisher Liquidated Damages on more than one occasion or Service Area Default Liquidated Damages more than one time with respect to the same Service Area. (g) Enforceability. Notwithstanding (d) above, if any portion of this Section 6.4 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 6.4 will be deemed valid and enforceable to the extent possible. Moreover, if this Section 6.4 is deemed unenforceable, QC acknowledges that Publisher has in no way waived a right or claim to receive damages resulting from a QC Default Termination or a Service Area Default Termination, 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 6.4 been fully enforced. 6.5 QC's Liquidated Damages. ----------------------- (a) QC's Liquidated Damages. The Parties acknowledge and agree that: (i) QC would not have entered into the LLC Purchase Agreement and the LLC II Purchase Agreement, if Publisher had not simultaneously agreed to be bound by this Agreement and the Non-Competition Agreement and that Publisher's performance of this Agreement and the Non-Competition Agreement form a significant part of the benefit that QC 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 QC would incur upon a termination of this Agreement by QC pursuant to Section 6.2(b) with respect to one or more Service Areas (a "Publisher Default Termination") would be substantial and significant, and would include, among other things, the costs of transitioning the Publishing Obligation to another Person; 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 QC stemming from a Publisher Default Termination and to provide certainty to the Parties with respect to such damages, each of the Parties agrees that, subject to Section 5.4(c), in the event of (i) a Publisher Default Termination or (ii) any formal repudiation or rejection of this Agreement by Publisher (except, in any of the foregoing cases, to the extent that this Agreement has been terminated or is in the process of being terminated pursuant to Section 6.1), QC will be entitled to receive a payment from Publisher (the "QC Liquidated Damages") equal to the following amount: one 27 hundred twenty-five percent (125%) of the net present value of the anticipated costs to QC, through the remaining term of this Agreement, to transition from Publisher and perform, or cause another Person to perform, the Publishing Obligation. (b) Additional Acknowledgements. Each Party acknowledges and agrees that: (i) as set forth in subsections (a) and (b) above, the QC Liquidated Damages are intended to be a reasonable measure of the anticipated probable harm resulting from a Publisher Default Termination; (ii) the Parties acknowledge that the damages actually incurred by QC (including actual, direct, indirect, consequential, special and other damages) might exceed or be less than the amount of the QC Liquidated Damages; (iii) the QC Liquidated Damages is not a penalty of any kind; and (iv) the QC Liquidated Damages were negotiated at arms-length between parties of equal bargaining power, both of which were represented by competent counsel. (c) Waiver. Publisher hereby waives, to the extent permitted by applicable law, any defense as to the validity of the QC Liquidated Damages on the grounds that the QC Liquidated Damages are void as penalties. (d) In Lieu of Actual Damages. Each Party agrees that the QC Liquidated Damages will be lieu of actual, direct, indirect, consequential, special or other damages for, respectively, a Publisher Default Termination and the collection of such QC Liquidated Damages is the sole remedy of QC in the event of a Publisher Default Termination except as expressly provided in this Agreement (e.g., pursuant to Section 6.2). (e) Enforceability. Notwithstanding (d) above, if any portion of this Section 6.5 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 6.5 will be deemed valid and enforceable to the extent possible. Moreover, if this Section 6.5 is deemed unenforceable, Publisher acknowledges that QC has in no way waived a right or claim to receive damages resulting from a Publisher Default Termination; provided, however, that QC will not be entitled to receive damages in the aggregate in excess of the QC Liquidated Damages to which QC would have been entitled had the provisions of this Section 6.5 been fully enforced. 6.6 Termination Without Prejudice. No Party will be subject to damages or have any other liability to another solely as a result of such Party's terminating this Agreement in accordance with its terms, and, except as provided in Section 6.4 or Section 6.5, any such termination of this Agreement by a Party will be without prejudice to any other right or remedy of such Party under this Agreement or applicable law. 28 ARTICLE VII OTHER DEFAULTS; LIMITATION OF LIABILITY 7.1 Other Defaults. If a Party commits an Other Default, the non-defaulting Party may provide written notice to the defaulting Party specifying such Other Default in reasonable detail (an "Other Default Notice"). Upon receipt of an Other Default Notice, the defaulting Party may elect to (i) cure such Other Default (unless such Other Default is not susceptible to cure) and (ii) agree to indemnify the non-defaulting Party pursuant to Section 5.4. If within thirty (30) days of the defaulting Party providing the non-defaulting Party with an Other Default Notice the non-default Party has not cured such Other Default (or, if not reasonably curable within such thirty (30) day period, provided the non-defaulting Party with reasonable assurances that it has diligently commenced all actions necessary to cure such Other Default as soon as reasonably practicable) and given the non-defaulting party written notice of its agreement to indemnify the non-defaulting Party for Such Other Default, the non-defaulting Party may pursue any remedy available to in pursuant to Section 9.7. Notwithstanding the foregoing, if the defaulting Party provides the non-defaulting Party with written notice disputing the existence of an Other Default within thirty (30) days of the delivery of the Other Default Notice, the Parties will attempt in good faith to resolve such dispute and determine the appropriate remedial action pursuant to a Breach Resolution Process. 7.2 Limitation of Liability. Subject to Section 6.4 and Section 6.5, neither Party, or its Affiliates, will be liable to the other Party, or its Affiliates, for any damages other than direct damages, except in the case of fraud or willful misconduct. 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. 7.3 Determination of Other Default Through Arbitration. If in an arbitration proceeding commenced pursuant to Section 9.7, it is determined that a purported Material Default, Service Area Default, Primary Directory Default or Restricted Activity Default is in actuality an Other Default, the non-defaulting Party will be entitled to seek adjudication of such Other Default pursuant to Section 9.7 without complying with the requirements of Section 7.1. ARTICLE VIII EXCUSED PERFORMANCE 8.1 General Force Majeure. Neither Party will be in default under this Agreement or liable for any nonperformance that is caused by any occurrence or circumstance 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 act, order or requirement of a regulatory body (but without limiting the Parties respective rights and obligations under Sections 3.1(d) and 3.13), court or legislature, civil or military authority, 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 29 disturbance) during the period and to the extent that such extraordinary condition delays, impairs or prevents such Party's performance. 8.2 Obligations with Respect to Regulatory Requirements. With respect to any act, order or requirement of a Governmental Entity that would reasonably be expected to delay, impair or prevent a Party's performance such that it would fall into the scope of Section 8.1, each Party agrees that: (i) it will not propose, solicit or otherwise encourage any such act, order or requirement; and (ii) if any applicable Governmental Entity proposes any such act, order or requirement, such Party will, in good faith and using commercially reasonable efforts (A) object to and attempt to prevent the implementation of any such proposal and (B) involve and solicit advice from the other Party regarding how to respond to any such proposal. ARTICLE IX MISCELLANEOUS 9.1 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 9.1 will survive the termination or expiration of this Agreement for a period of one (1) year. 9.2 Further Assurances. Each Party will take such other actions as the 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. 9.3 No Agency; Right to Subcontract. (a) Nothing in this Agreement or in any other document related to this transaction, and no action of or inaction by either of the Parties hereto will be deemed or construed to constitute an agency relationship between the Parties hereto. Each Party is acting independently of the other and neither Party has the authority to act on behalf of or bind the other. (b) Notwithstanding anything to the contrary contained herein, Publisher will be permitted, at any time and from time to time, to carry out or otherwise fulfill its Publishing Obligations hereunder through one or more agents, subcontractors or other representatives, each engaged with due care and required to be experienced, capable and of similar quality as Publisher, provided that in any event Publisher will remain liable for such obligations hereunder. Notwithstanding the foregoing, Publisher will not have the right to sublicense any marks or other intellectual property granted under this Agreement. 9.4 Governing Laws. 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 30 without regard to conflicts of law doctrines unless certain matters are preempted by federal law. 9.5 Amendments; Waivers. Except as expressly provided herein, this Agreement and any attached Exhibit may be amended only by agreement in writing of the 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 both Parties and then only to the specific purpose, extent and instance so provided. No failure on the part of either 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. 9.6 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 Non-Competition Agreement on substantially similar terms as are then in effect under the applicable Commercial Agreements and the assigning Party remains liable for its obligations hereunder; (ii) a Change of Control of either 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 Party to be a third party beneficiary or in a separate agreement) to assume this Agreement, except as set forth in the last sentence of Section 6.2(d), and the Non-Competition Agreement on substantially similar terms as are then in effect under the applicable Commercial Agreements; (iii) Publisher may assign this Agreement and the rights and obligations under it to its lenders for collateral security purposes, so long as Publisher remains liable for its obligations hereunder; and (iv) 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, except as set forth in the last sentence of Section 6.2(d), and the Non-Competition 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 under the applicable Commercial Agreements, with respect to such Service Area(s), and Publisher will have no rights or obligations under this Agreement with respect to such Service Area(s). 9.7 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 31 arbitrators will be three, QC, on the one hand, and Publisher, 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, Service Area Default Liquidated Damages and QC Liquidated Damages but otherwise excluding consequential, punitive or other special damages pursuant to Section 7.2). Except as otherwise expressly provided in this Section 9.7, 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 9.7, such 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. 9.8 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 Publisher and QC will, unless another address is specified by Publisher or QC hereafter in writing, be sent to the address indicated below: If to Publisher, addressed to: Dex Media East LLC 198 Inverness Drive West, Eighth Floor Englewood, Colorado Attention: Chief Executive Officer Fax: (303) 784-1964 AND 32 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 Latham & Watkins 885 Third Avenue, Suite 1000 New York, New York 10022 Attention: R. Ronald Hopkinson, Esq. Fax: (212) 751-4864 If to QC, 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 33 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 9.9 Entire Agreement. This Agreement, including any exhibits attached hereto, and the Commercial Agreements constitute the entire agreement between the Parties pertaining to the subject matter hereof and supersedes all prior agreements and understandings of the Parties in connection therewith. 9.10 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. 9.11 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. 9.12 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. 9.13 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. 9.14 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. In the event of an inconsistency between the provisions of this Agreement and the provisions of the List License Agreements, the provisions of this Agreement will be controlling. 34 IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be duty executed for and on its behalf as of the day and year first above written. QWEST CORPORATION By: /s/ Yash A. Rana ------------------------------------ Name: Yash A. Rana Title: Vice 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 EX-99 5 ex99_3.txt EXHIBIT 99.3 Exhibit 99.3 ------------ 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. 2 "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. 3 "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. 4 "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 5 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. ---------------------- (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. -------------------------- (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. 6 (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. 7 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. -------------------------- (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. 8 (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. ---------------------------- (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 9 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 10 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. ------------------ (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] 18 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 EX-99 6 ex99_4.txt EXHIBIT 99.4 Exhibit 99.4 ------------ SEPARATION AGREEMENT -------------------- 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 -------- 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. ------------------ (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. ---------------------- (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 2 (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. -------------------------------- (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). 3 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. ----------------- (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. 4 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, 5 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 6 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. 7 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, 8 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 9 "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 10 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
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