Exhibit 10.15
SALES AGENCY AGREEMENT
THIS AGREEMENT, entered into as of the 27th day of April, 2000, is by
and among X. X. Xxxxxxxxx Inc. (f/k/a The Xxxxxx X. Xxxxxxxxx Corporation), a
Delaware corporation ("Donnelley"), Centel Directory Company, a Delaware
corporation ("Centel"), and CenDon, L.L.C., a Delaware limited liability company
("CenDon"). Donnelley, Centel and CenDon are referred to in this Agreement
collectively as the "parties" or individually as a "party", as the context
requires. "Publisher" shall mean CenDon on and before December 31, 2004, and
Centel thereafter.
RECITALS:
A. Centel and Donnelley have caused CenDon, L.L.C. (the "Company") to
be formed as a limited liability company under the Delaware Limited Liability
Company Act and, as required thereunder, Centel and Donnelley entered into a
Limited Liability Company Agreement, of even date herewith (the "LLC
Agreement").
X. Xxxxxxxxx and Centel are parties to The CenDon Partnership Agreement
dated May 5, 1988, as amended to date (the "Partnership Agreement"), which
established The CenDon Partnership, a general partnership in which the parties
are partners (the "Partnership").
C. The Partnership has entered into directory agreements and amendments
thereto with the telephone operating company Affiliates of Centel identified in
Exhibit A to the LLC Agreement (the "Centel Operating Companies"), which
generally provide for the publication of telephone directories distributed
within defined geographic areas (the "Directory Agreements"). Copies of the
Directory Agreements and all amendments thereto are attached to the LLC
Agreement as Exhibit B.
D. The parties desire to convert the Partnership into the Company by
transferring to the Company all of their right, title and interest in the
Partnership, thereby causing the Partnership to cease to exist and all of its
assets and liabilities to be transferred to the Company.
E. The parties desire to appoint Donnelley as exclusive sales agent and
to specify the sales agency services that Donnelley shall perform with respect
to the Directories (as defined below) published following the Effective Date (as
defined below), in accordance with the terms of the LLC Agreement and this Sales
Agency Agreement.
IN CONSIDERATION of the covenants set forth in this Agreement, the
sufficiency and adequacy of which are acknowledged by each party, Donnelley,
Centel and CenDon agree as follows:
1. FORMATION OF CENDON. Effective as of the Effective Date, Donnelley and Centel
shall transfer to CenDon all of their right, title and interest in the
Partnership, and CenDon shall continue the business of the Partnership, hold all
Partnership assets and assume all Partnership liabilities. The business of the
Partnership after the Effective Date shall cease.
2. SALES AGENCY, SERVICES, AND FUNCTIONS.
2.1 GRANT OF EXCLUSIVE SALES AGENCY. During the term of this Agreement,
and subject to the terms hereof, Donnelley shall have the exclusive right and
obligation to solicit and sell:
(a) all local and foreign print advertising for inclusion in
the Directories, as defined in this Agreement, other than National
Yellow Pages Service or equivalent national advertising that may be
sold by other national yellow pages selling companies, or their
equivalent ("NYPS advertising");
(b) all local and foreign electronic advertising, other than
NYPS advertising, for inclusion in an electronic yellow pages directory
offered by Publisher to its advertising customers as a product or
service ancillary to print advertising sold for inclusion in the
Directories; and
(c) all local and foreign advertising associated with the
Hotel/Motel Program as such Program is presently constituted and
operated by the Partnership as reflected in the "CenDon Operating
Practices" issued November 30, 1999 (attached hereto as Schedule 2.1
(c)), which Program shall continue to be managed substantially as a
local advertising program.
(d) Notwithstanding the foregoing, Donnelley's exclusive right
and obligation to solicit and sell foreign advertising into the
Directories shall not apply to foreign advertising customers located
within the primary distribution area of any classified telephone
directory, other than the Directories, published by Publisher or an
Affiliate (as such term is defined in Section 12(d)) of Publisher for
general distribution to telephone subscribers; provided, however, that
Donnelley shall maintain an exclusive right to solicit and sell foreign
advertising to existing customers of Donnelley regardless of their
location within the primary distribution area of any classified
telephone directories (other than the Directories) published by
Publisher or one of its Affiliates. As used herein, "existing customers
of Donnelley" means directory advertising customers to which Donnelley
has sold advertising into the Directories during the last publication
cycle preceding the Effective Date.
2.2 SALES AND PUBLISHING SERVICES. Pursuant to the schedules
incorporated into this Agreement, and subject to the terms of this Agreement,
Donnelley shall provide certain services to Publisher as follows:
(a) ADVERTISING SALES AND SUPPORT SERVICES. As more
specifically identified in the Advertising Sales and Customer Support
Services Schedule attached hereto as Schedule 2.2(a), Donnelley agrees
to provide telephone directory advertising sales and customer support
services to Publisher on a fully-dedicated basis. As used herein, "a
fully-dedicated basis" shall mean that employees of Donnelley assigned
to work on the Directories shall not have assignments or
responsibilities for publications other than the Directories, except
that Donnelley employees who are assigned to work on the Directories
may be utilized to work on publications other than the Directories,
provided
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that (i) such utilization has either been provided for in the
applicable Annual Performance Plan (as defined herein) or, if such
deployment is not contemplated in the Annual Performance Plan, has been
reviewed and approved in writing by Publisher, and (ii) such deployment
or utilization is not reasonably projected to have an adverse effect on
the operations, sales, or revenues of the Directories. Donnelley may
also request other arrangements on a case-by-case basis, subject to the
written approval of Publisher, which shall not be unreasonably
withheld. Publisher shall consent to arrangements requested by
Donnelley hereunder so long as Donnelley can reasonably demonstrate no
dilution of efforts towards Publisher's sales revenue objectives and
commitment of resources in accordance with the Annual Performance Plan
(as defined herein).
(b) PUBLISHER ASSUMPTION OF SALES SUPPORT FUNCTIONS. Publisher
shall have the right to assume responsibility for certain sales and
customer support functions, as identified, and in accordance with the
time period specified, in Schedule 2.2(b). The Parties will cooperate
and take all reasonable measures to ensure an orderly transition of the
assumed sales support and related services and functions to Publisher.
Publisher shall reimburse Donnelley for those expenses of the type
identified on Schedule 2.2(b) that are reasonably incurred by Donnelley
in connection with its cooperation in the orderly transition of these
services and functions.
2.3 PUBLISHER FUNCTIONS. Subject to the terms of this Agreement,
Publisher shall be responsible for the publisher functions identified in the
Publisher Functions Schedule attached hereto as Schedule 2.3.
2.4 PROPOSAL AND BID RIGHTS. If any Affiliate of Publisher proposes to
sell telephone directory advertising for an electronic Classified Telephone
Directory as may be permitted by Section 12 of this Agreement, Publisher shall
use reasonable efforts to cause such Affiliate to present Donnelley with the
opportunity to submit a proposal or bid to sell local advertising into such
product offering. Such Affiliate may determine whether to utilize Donnelley for
such services in its sole discretion, and Donnelley's rights hereunder are
merely the right to present the proposal or bid. If such Affiliate determines to
use Donnelley for such services, such services will be provided under a sales
services agreement having terms, conditions and covenants mutually acceptable to
such Affiliate and Donnelley. Nothing in this Section 2.4 shall be construed to
give Donnelley any preference over any third party or other Affiliates of
Publisher with respect to such services or any right of first refusal or right
of first offer with respect thereto.
3. SCOPE OF RELATIONSHIP.
3.1 THE DIRECTORIES. The telephone directories (the "Directories")
subject to this Agreement are those telephone directories published by the
Partnership immediately prior to the Effective Date pursuant to the Directory
Agreements, which are identified in Schedule 3.1. The Directories also shall
mean and include any other printed or electronic directory or related product
made subject to this Agreement by the mutual agreement of the parties, which
shall be made by written instrument signed by both parties. With respect to the
Directories, the parties agree as follows:
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(a) In the event Publisher elects during the term of this
Agreement to exercise its right to re-scope, over-scope, under-scope,
reconfigure, substitute, or otherwise alter the Directories in
existence as of the date of this Agreement, then this Agreement shall
be applicable to such succeeding, re-scoped, over-scoped, under-scoped,
reconfigured, substituted or otherwise altered directories.
(b) If the Publisher re-scopes, over-scopes, under-scopes,
reconfigures, substitutes, or otherwise alters the Directories, to
include the addition of exchange areas outside the current geographic
scope of the Directories as depicted in Schedule 3.1 (b) hereto (the
"Current Area"), Donnelley shall have the exclusive right and
obligation to provide directory services under this Agreement for all
re-scopings, re-configurations and substitutions of the Directories
that include exchanges within the Current Area .
(c) It shall not be considered to be a re-scoping,
over-scoping, under-scoping, reconfiguration, substitution, or
alteration of the Directories for the Publisher to publish one or more
directories of general distribution that have ten percent (10%) or less
of each of their primary distribution scheduled for delivery in the
Current Area ("Other Directories"), provided that all of the Current
Area continues to be covered by the Directories and that such Other
Directories are not intended to be, or have the practical effect of
being, a substitute in whole or in part for any of the Directories.
Except as provided for in the following sentence, Publisher in its sole
discretion shall determine from whom it will request directory services
for the Other Directories. With respect to the solicitation and sale of
advertising for publication in such Other Directories, Donnelley shall
have the exclusive right and obligation to solicit telephone
subscribers within the Current Area for the sale of advertising to be
published by Publisher in such Other Directories
(d) Notwithstanding the exclusive sales agency granted
Donnelley under this Agreement, Publisher shall have the right, but not
an obligation, to engage in reciprocal selling arrangements with third
parties encompassing the Directories and other telephone directories
that are distributed primarily in geographic areas outside the primary
distribution area of the Directories, provided that (a) Donnelley shall
be allowed to retain its exclusive selling rights and related
commissions for any foreign advertising accounts included in the
Directories at the time the reciprocal selling arrangement is
established, and (b) Publisher shall not be permitted to accept from
other than Donnelley advertising sold to a telephone subscriber that is
billed to a telephone number located within the Current Area. In the
event Publisher elects to engage in such arrangements and unless
otherwise agreed upon in writing by the Parties, Donnelley will be
compensated and shall provide to Publisher sales agency services with
respect to advertising sold into such other telephone directories
consistent with the following terms: for any advertising sold by a
third party sales agent into the Directories during the term hereof,
Donnelley shall receive no compensation; and for advertising sold by
Donnelley into directories (other than the Directories) that are
published by or on behalf of Publisher's Affiliates, Donnelley shall be
compensated at the applicable commission rate under this Agreement. In
the event Publisher elects to engage in one or more reciprocal selling
arrangements, Publisher shall promptly notify Donnelley in writing of
such fact, which notice shall disclose the nature of the arrangement.
Within sixty (60) days after notification, the Parties shall
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consummate the specific terms governing Donnelley's provision of sales
agency services with respect to the disclosed reciprocal selling
arrangement, consistent with the requirements of this paragraph. The
terms governing the arrangement shall be reduced to a writing signed by
the Parties.
3.2 PUBLISHING RIGHTS. The parties acknowledge that the Centel
Operating Companies are regulated local exchange telecommunications carriers
("LECs"), and that LECs may from time-to-time acquire, sell, trade, or otherwise
dispose of local exchange areas, and that contractual relationships of LECs may
be subject to direction by regulatory authorities. Accordingly, the parties
agree as follows:
(a) MAINTAINING PUBLISHING RIGHTS. Publisher shall use its
reasonable best efforts to maintain its right to publish the
Directories for each of the Centel Operating Companies throughout the
term of this Agreement ("publishing rights"). Donnelley agrees to
cooperate with Publisher in any reasonable effort undertaken by
Publisher to maintain its publishing rights. In supporting Publisher's
efforts to maintain its publishing rights, Donnelley shall bear its own
internal costs of providing such support. In the event Donnelley incurs
costs for external legal services or external consultative services,
Publisher shall reimburse Donnelley for such external costs that are
reasonably incurred and authorized in advance by Publisher. As part of
its publishing rights, Publisher shall use its reasonable best efforts
to acquire (on a non-exclusive, but timely basis) from the Centel
Operating Companies all listing information and service orders needed
to publish the Directories, subject to any regulatory and other
restrictions the Centel Operating Companies place on the release of
such information.
(b) AFFILIATES. In the event Publisher loses its right to
publish the Directories for any of the Centel Operating Companies'
exchange areas covered thereby and an Affiliate of Publisher acquires
the right to publish telephone directories for the Centel Operating
Companies covering those exchange areas, Publisher shall cause such
Affiliate to enter into a sales agency agreement substantially on the
same terms and conditions as contained in this Agreement with respect
to such exchange areas (the "Affiliate Agreement"), it being the intent
of the parties in such case to preserve Donnelley's benefit of the
bargain under this Agreement. Donnelley shall be obligated to promptly
negotiate and enter into the Affiliate Agreement in accordance with the
terms of this Section 3.2 (b). Upon the execution of the Affiliate
Agreement, the exchange areas covered thereby shall be deleted from
this Agreement.
(c) REGULATORY ACTION. If, during the term of this Agreement,
Publisher loses its right to publish the Directories for any of the
Centel Operating Companies' exchange areas covered thereby because of
regulatory action, such exchange areas shall be deleted from this
Agreement, subject to the terms of this Section 3.2(c). Notwithstanding
the foregoing or anything else to the contrary contained herein, in the
event of any regulatory action which results, directly or indirectly,
in the sale, exchange or transfer (with or without consideration) of
exchange areas covered by this Agreement from any of the Centel
Operating Companies to any (i) Affiliate of Publisher, then such
transfer shall be covered by Section 3.2(b) above, or (ii) third party
that is not an Affiliate of Publisher, then such transfer shall be
covered by Section 3.2(d) below. Publisher shall promptly
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notify Donnelley of all areas covered by this Agreement for which
rights are to be lost as soon as practicable following such fact being
known to Publisher.
1. Upon receipt by Donnelley of notice from Publisher
of such deletion of any exchange area covered by this
Agreement, Donnelley shall have the right to: give written
notice to Publisher (a "Termination Notice") to terminate this
Agreement in its entirety within (90) days of Publisher's
notice of exchanges to be deleted due to lost publishing
rights (the Termination Notice to be effective for Directories
with canvasses with start dates six (6) months from the date
of such notice). In the event Donnelley does not give
Publisher a Termination Notice in accordance with the
foregoing, this Agreement shall continue in full force and
effect with respect to the exchange areas then remaining over
which Publisher continues to maintain a right to publish
Directories on behalf of the Centel Operating Companies.
2. With respect to the non-compete provisions of
Section 12 hereof (the "Noncompete Provision"), the Parties
agree as follows in the event of a loss of Publisher's right
to publish the Directories: If Donnelley elects to terminate
this Agreement in its entirety by giving a Termination Notice
to Publisher as hereinabove provided, the Noncompete Provision
shall not survive such termination. If Donnelley does not so
terminate this Agreement, then the Noncompete Provision shall
remain in effect, except that such provision thereafter shall
not apply with respect to any exchanges that are deleted from
this Agreement.
3. For purposes of this Agreement, Publisher shall
not be deemed to have lost its right to publish the
Directories for any Centel Operating Company exchange area
covered thereby if Publisher's right has been formally and
officially suspended or terminated by regulatory action,
provided (i) Publisher diligently pursues, or requests that
the applicable Centel Operating Company pursue, the retention
or restoration of such right pursuant to the process
prescribed by the appropriate regulatory agency, and such
other legal, equitable or injunctive legal action which may be
available to Publisher or the applicable Centel Operating
Company and which Publisher or the applicable Centel Operating
Company reasonably deems advisable to pursue, and (ii)
Publisher continues to receive Directory advertising revenues
from such exchange areas without material reduction resulting
from such regulatory action, other than reductions of
Directory advertising revenues attributable to such regulatory
action that continue for less than an aggregate of three (3)
months at any time during the term of this Agreement.
4. In the event such right is retained or restored
during the term of this Agreement, the exchange areas subject
to such right will continue to be subject to this Agreement.
In the event Publisher or the applicable Centel Operating
Company fails to retain or restore such right pursuant to the
prescribed regulatory process and such other legal, equitable
or injunctive legal action which may be available to Publisher
or the applicable Centel Operating Company and
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which Publisher or the applicable Centel Operating Company
reasonably deems advisable to pursue, such right shall be
deemed lost. Donnelley agrees to cooperate with Publisher or
the applicable Centel Operating Company in any reasonable
effort made by Publisher to so retain or restore such rights.
In supporting Publisher's efforts to maintain its publishing
rights, Donnelley shall bear its own internal costs of
providing such support. In the event Donnelley incurs costs
for external legal services or external consultative services,
Publishing shall reimburse Donnelley for such external costs
that are reasonably incurred and authorized in advance by
Publisher.
(d) SALES TO THIRD PARTIES. In the event all or any portion of
any Centel Operating Company's exchange areas covered by the
Directories are sold, exchanged, or otherwise transferred to another
person or entity (the "acquiror"), Publisher shall cause the Centel
Operating Company(s) engaged in such transaction to assign its rights
to, and require an assumption of, the applicable Directory Agreement(s)
by the acquiror, to the extent the Directory Agreement(s) relates to
the sold, exchanged, or transferred exchange area.
1. Alternatively, the acquiror shall be permitted to
negotiate and enter into a separate directory publishing
agreement with Publisher, on terms comparable to the Directory
Agreement(s) with respect to the acquired exchange areas, for
which Donnelley shall provide services and receive
compensation in accordance and consistent with this Agreement.
If such an alternative directory publishing agreement is
consummated, then the Centel Operating Company exchange areas
covered thereby may be sold, exchanged, or transferred free
and clear of any obligations under the Directory Agreement(s)
or this Agreement.
2. In lieu of the foregoing provisions of this
Section 3.2(d), if the Centel Operating Company(s) offers to
subject to the Directory Agreement(s) exchange areas
comparable to the sold, exchanged, or transferred exchange
areas in terms of economic value and geographic location, it
will have the right (subject to Donnelley's prior written
consent, not to be unreasonably withheld) to substitute those
exchange areas under the Directory Agreement(s) and the sold,
exchanged, or transferred exchanges thereafter will not be
subject to, or encumbered by, the Directory Agreement(s) or
this Agreement. Donnelley may not reasonably withhold consent
to the substitution of exchange areas as contemplated herein,
unless (i) the substituted exchange areas reasonably are
projected not to produce sales revenues comparable to the
sales revenues expected to be produced by the sold, exchanged,
or transferred exchange areas, or (ii) Donnelley reasonably
demonstrates that its costs of providing services required by
this Agreement for the substituted exchange areas would be
materially increased over the costs of providing those
services to the sold exchange areas, and Publisher elects not
to absorb such increased costs, or (iii) Donnelley is
contractually precluded (by contract or applicable law) from
serving as Publisher's sales agent in any of the substituted
exchange areas.
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(e) DIRECTORY AGREEMENTS. The parties acknowledge that the
terms of the Directory Agreements end on December 31, 2004 and that
Centel will replace the Directory Agreements so that Centel's right to
publish the Directories is coterminous with this Agreement. Centel
shall cause the Centel Operating Companies to enter into replacement
agreements, that extend Centel's right to publish the Directories at
least through the term of this Agreement. Donnelley agrees to assist,
at Centel's sole cost and expense, Centel's effort to renegotiate or
replace the Directory Agreements to the extent reasonably requested by
Centel. Publisher shall have the right, at any time during the term of
this Agreement, to make any modifications to the terms of the Directory
Agreements that it deems necessary or advisable, provided (a) Publisher
preserves its right to publish the Directories in accordance with the
terms of this Section 3.2, and (b) those modifications do not have a
material, adverse impact on Donnelley's compensation or the cost of
providing services under this Agreement. In the event that Centel fails
to so replace each of the Directory Agreements as provided above by
January 1, 2004, then, at any time prior to April 30, 2004, Donnelley,
in its sole and absolute discretion, may require Centel to purchase no
earlier than September 30, 2004 and no later than December 31, 2004
(the date of purchase hereafter referred to as the "Buy-out Date") for
cash Donnelley's rights under this Agreement (the "Put Option") at Fair
Market Value (as defined below). If such purchase is consummated in
accordance with the foregoing sentence, this Agreement thereafter shall
terminate. For purposes of this Section 3.2(e), "Fair Market Value"
shall mean (a) the present value (calculated using a discount rate
equal to the effective yield for "on the run" (if available) U.S.
Treasury securities with lives equal to the remaining Term (giving
effect to the Extended Term) of this Agreement (rounded up to the
nearest whole year) of the operating income to be earned by Donnelley
under this Agreement and the LLC Agreement (reduced for any operating
income received or to be received by Donnelley for Directory Agreements
for which replacements are received and for which Donnelley has agreed
to continue to provide the services contemplated by this Agreement)
from the Buy-out Date through December 31, 2010, using the preceding
12-month period's operating income of Donnelley under this Agreement
plus Donnelley's aggregate Priority Distributions under the LLC
Agreement during such 12-month period, if any (collectively, "Operating
Income"), as the base annual Operating Income, which base annual
Operating Income will have applied to it a compound annual growth rate
equal to the average growth rate in Operating Income for Donnelley over
the three (3) years prior to the calculation, plus (b) a terminal value
equal to (i) one times the then-current year's budgeted compensation
(salary, commission and bonus) for the sales and sales support
personnel dedicated to the performance of Donnelley's obligations under
this Agreement, (ii) the net book value of the fixed assets deployed
within all sales offices that support the Directories and (iii) all
costs associated with the termination or transfer of any contractual
obligations of Donnelley to the extent related to this Agreement (i.e.
leases). The terminal value under clause (b) above shall not be subject
to any discount rate. Donnelley shall be required to give to Centel a
non-compete covenant in connection with exercise of the Put Option, the
terms of which shall be substantially the same as the non-compete
provision (as applied to Donnelley) set forth in Section 12 of this
Agreement. The non-compete provision shall apply to Donnelley from the
Buy-out Date through December 31, 2010.
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4. PUBLISHER DISCRETION.
4.1 PUBLISHING POLICIES AND PROCEDURES. In addition to those rights
generally afforded publishers, unless otherwise specifically restricted
elsewhere in this Agreement, Publisher shall have the authority and the
obligation to establish and maintain all publishing policies and procedures,
including without limitation those publishing policies relating to product
specifications, compilation, composition, printing, advertising sales, customer
service, publication and distribution of all Directories. Publisher's
requirements for advertising sales, customer service, compilation and
composition services to be provided by Donnelley pursuant to this Agreement are
as specified herein.
4.2 CHANGES IN PUBLISHING POLICIES OR PROCEDURES. As part of the annual
planning process provided for in Section 6 of this Agreement, Publisher agrees
to notify Donnelley of any changes to be made in Publisher's policies or
procedures from those in existence as of the date of this Agreement that
reasonably could have a material impact on the performance of this Agreement or
on the revenues derived from, or costs incurred by Donnelley for, advertising
sales in the Directories, so that such changes and their impact can be taken
into consideration as part of the next annual planning cycle. If the
contemplated changes, in the aggregate, are reasonably projected to result in an
increase in Donnelley's cost of performing services under this Agreement or a
reduction in sales revenues derived from advertising sales in the Directories,
Donnelley shall promptly notify Publisher of the projected increase in
performance costs and/or reduction in sales revenues, in which case Publisher
may elect to implement the change and reimburse Donnelley for, or otherwise
bear, the actual cost increase or revenue reduction caused by the change, or may
elect to modify or forego the change.
4.3 ENUMERATION OF PUBLISHER'S RIGHTS. Subject to Section 4.2,
Publisher's rights reserved hereunder shall include, but are not limited to, the
right to:
(a) Establish advertising rates (including without limitation
discount programs and promotions), items, item codes, formats, forms
and specifications; provided, however, if Publisher establishes
discount programs for bundled services or cross-promotional programs
that involve services or products offered by any Affiliates of
Publisher and Donnelley provides no sales agency services with respect
to such services or products, Donnelley shall receive compensation
under this Agreement equivalent to what it would have received absent
the bundled services or cross-promotional program discount.
(b) Establish directory publication dates, distribution dates,
publishing copy flow schedules and alphabetical and classified close
dates.
(c) Establish directory content such as maps, consumer guides
or other enhancements to be included in the Directories, size of the
Directories and location of particular content or directory features
within the Directories, including re-scopings of the distribution area
of the Directories, the exchanges to be included in each of the
Directories, and the alphabetical listings (white pages) to be
associated with each of the Directories.
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(d) Establish publishing guidelines, policies and procedures
relating to the Directories, including without limitation restrictions
on types of advertising and classified headings.
(e) Reject or not accept for publication any submitted
advertising which fails to meet Publisher's specifications or is
otherwise objectionable.
(f) Design all forms relative to Publisher's rights, including
advertising order forms and copy sheets. To the extent that the design
of the forms affect Donnelley or its ability to carry out its
obligations under this Agreement, Publisher and Donnelley shall
mutually agree on such design. Publisher shall have the right at its
sole discretion to prescribe the terms and conditions upon which it
sells directory advertising.
(g) Require, not require and waive special charges and fees to
be borne by the advertiser such as the one-time graphics fee for
display ads. Publisher shall receive all revenues from such charges.
(h) Establish credit and advance payment policies.
(i) Establish national yellow pages publishing policies,
provided that such policies are in general conformance with those
established within the national yellow pages industry and intended to
preserve the distinction between advertising that is national in
character and geographic scope and advertising that is of a local
nature. Notwithstanding the foregoing, all advertising associated with
the Hotel/Motel Program, as presently constituted and operated by the
Partnership (as set forth in Schedule 2.1(c) hereto), will continue to
be managed substantially as a local advertising program.
(j) Contact customers directly for the purpose of product
promotion, good will, customer appreciation, customer feedback, surveys
and research provided that such customer contact is coordinated with
Donnelley in order to minimize possible advertiser confusion and
potential disruption of sales activities of Donnelley.
(k) Establish, at Publisher's cost, Publisher-sponsored sales
incentive and recognition programs to be coordinated with Donnelley.
(l) Add new publications to this Agreement, such as
neighborhood or community directories, to be primarily distributed
substantially within the current geographic scope of the Directories.
4.4 MAINTAINING SUPPORT. Publisher shall maintain advertising and
marketing support for the sale of advertising into the Directories at a level
that is qualitatively comparable to the practice of the Partnership immediately
prior to the Effective Date. This covenant shall not preclude Publisher from
achieving cost savings through process improvements and economies of scale so
long as the quality of support is maintained.
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5. WORK PRODUCT.
5.1 DEFINITION OF WORK PRODUCT. As used herein, the term "Work Product"
shall mean and include all: (i) compilations of information, (ii) collective
works (including without limitation the directories), (iii) advertising copy,
(iv) display advertising, (v) classified headings, (vi) reports, (vii) surveys,
(viii) studies (ix) service order data, (x) local, national and publishing
databases, (xi) lists of sales leads, sales contracts forms and executed sales
contracts, (xii) advertising orders, advertiser acknowledgement letter files,
and other advertising correspondence files, (xiii) quality check, statistical
sampling and process control technique data, (xiv) electronic ads, including
in-column, traditional display, high impact, process color, and similar types of
advertisements, (xv) digital storage and ad graphics databases, (xvi) directory
pages, on-line batch pages and digital files of the same, (xvii) billing
information for local, national and foreign ads and vendors, electronic files of
such billing information and financial and statistical reports concerning such
billing information, (xviii) copies of and procedural information concerning
book covers, mastheads, tabs, maps, fillers, telephone company information
pages, local community information pages and government information pages,
including electronic materials, (xix) white pages listings from local telephone
companies in camera-ready and electronic format, page proofs and customer book
pages, (xx) information provided by Publisher to Donnelley that is owned
exclusively by Publisher, (xxi) any and all such work product developed or owned
by the Partnership prior to the date hereof and any derivative works thereof,
and (xxii) modifications made by Publisher or Donnelley to any of the foregoing
and all other materials developed by Donnelley on behalf of Publisher, as work
performed directly for or required in connection with the performance of its
obligations under this Agreement. Work Product shall not include that portion of
materials prepared by Donnelley solely in connection with its internal reporting
on the management of its affairs or that relates solely to other Donnelley
businesses or customers but in no event shall it refer to any software or
related technology owned or licensed from any third party by Donnelley used
directly or indirectly by Donnelley in the performance of its obligations under
this Agreement.
5.2 ASSIGNMENT OF WORK PRODUCT. Donnelley acknowledges and agrees that
all of the Work Product is developed and provided under this Agreement to
Publisher on a works made for hire basis and Donnelley agrees to cause each of
its employees, vendors, subcontractors or independent contractors that will be
developing Work Product to agree that all Work Product is developed or provided
to Donnelley or Publisher on a works made for hire basis. Donnelley hereby
assigns to Publisher all of its rights, title, and interest in and to the Work
Product, whether developed by Donnelley or its employees, vendors,
subcontractors or independent contractors, including any copyrights therein and
the right to xxx and recover for any infringement thereof. It is understood that
Donnelley makes no representation or warranty of any kind that the Work Product
provided to Publisher is subject to copyright. Some or all of the Work Product
may be subject to copyright and to the extent that such copyright exists and
belongs to Donnelley then this provision shall be applicable. Donnelley further
agrees to take such actions and to execute such instruments as may be reasonably
requested by Publisher from time to time to ensure that the ownership of the
Work Product, including without limitation the ownership of any copyrights that
may exist therein, vests in Publisher.
6. PERFORMANCE. In conjunction with the periodic planning for the Directories as
contemplated in the Advertising Sales and Customer Services Schedule, Donnelley
and Publisher
11
will identify and agree in writing upon (a) performance indicators in the areas
of sales, customer service and production, and (b) productivity and efficiency
initiatives that Donnelley will undertake to achieve within the context of its
overall responsibilities.
6.1 ANNUAL PERFORMANCE PLAN. For each annual business cycle during the
term of this Agreement, the parties shall jointly develop a written business
plan ("Annual Performance Plan") covering the Directories to be published during
the annual business cycle. Each Annual Performance Plan shall be developed prior
to the commencement of the annual business cycle to which it applies. The first
annual business cycle will begin on July 1, 2000 and end on December 31, 2000,
and, with respect to the first Annual Performance Plan, the parties will utilize
the business plan in place for the Partnership immediately prior to the
Effective Date. Each subsequent annual business cycle will begin on January 1
and end on December 31 of the applicable calendar year. The Annual Performance
Plan shall establish comprehensive and fully defined performance objectives and
indicators relating to the provision of the services to be provided by Donnelley
under this Agreement and shall be consistent with, and in fulfillment of, the
terms of the Advertising Sales and Customer Service Schedule. The Annual
Performance Plan shall also establish expected levels of performance by
Donnelley, their measurement, and the resources to be committed toward achieving
them. The Annual Performance Plan and the performance objectives contained
within the Annual Performance Plan shall address, but shall not necessarily be
limited to (i) those items and areas of performance outlined in the Key
Performance Indicators Schedule attached hereto as Schedule 6.1, and (ii)
productivity, efficiency and quality initiatives for sales, sales support, and
customer service. The Annual Performance Plan shall provide for periodic
reports, the frequency and content of which shall be sufficient to meet the
reasonable needs of Publisher, on Donnelley's implementation of the Annual
Performance Plan and achievement of the objectives contained in the Annual
Performance Plan. The Annual Performance Plan shall contain detailed sections
which include, but are not limited to:
- Marketing (pricing/product changes, enhancements, advertising,
promotion, policy changes)
- Sales Plans (deployment, staffing, objectives, campaign
schedules, key dates)
- Production (specifications, product changes and key dates)
- Distribution (policies and schedules)
- Customer Service (policy and/or procedural changes)
- Credit and Collections (policy and/or procedural changes)
- Billing
The Marketing section of the Annual Performance Plan shall be submitted by
Publisher to Donnelley at least 60 days prior to the deadline for development of
all other sections of the Annual Performance Plan. In the event that the
Marketing section is delayed, then the deadline dates for the other sections of
the Annual Performance Plan shall be automatically adjusted to account for such
delay. The parties have jointly developed Schedule 6.1 to specify in detail all
of the required contents and timing aspects of the Annual Performance Plan.
6.2 PERFORMANCE REVIEWS. Upon the conclusion of each annual business
cycle, but in no event later than March 31 of each year during the term of this
Agreement, the Parties shall
12
conduct a comprehensive review of Donnelley's performance under the Annual
Performance Plan during the preceding annual business cycle. In conjunction with
each annual review, Publisher shall notify Donnelley of any failure by Donnelley
to meet the performance objectives contained in the Annual Performance Plan,
where such failure is due in whole or in part to Donnelley's failure to
adequately apply the resources committed in the Annual Performance Plan toward
achieving those objectives. In the event Publisher notifies Donnelley of a
failure to achieve performance objectives in accordance with the foregoing
paragraph, as part of the next Annual Performance Plan, Donnelley shall commit
to specific plans to rectify the performance deficiency. Such specific plans
shall be included in the Annual Performance Plan jointly established by the
Parties for the next annual business cycle.
6.3 EXTENSION OF AGREEMENT TERM. The Extension Term, as defined in this
Agreement, shall take effect automatically, unless Donnelley has failed to meet
the minimum number of the Extension KPIs (as defined herein) specified in
Schedule 6.3 and Publisher has notified Donnelley of such failure in accordance
with this Section 6.3. The parties have agreed upon certain performance
indicators, which are set forth in the Extension Key Performance Indicators
Schedule attached hereto as Schedule 6.3 (the "Extension KPIs"). The following
provisions shall govern the Publisher's evaluation of Donnelley's performance of
the Extension KPIs and the impact of that performance upon the Extension Term:
(a) At the conclusion of the 2006 annual business cycle under
this Agreement, but in no event later than March 31, 2007, the parties
shall conduct a review of Donnelley's performance of the Extension KPIs
during each of the 2003, 2004, 2005, and 2006 annual business cycles
(the "Extension KPI Review"). The purpose of the Extension KPI Review
shall be to determine if Donnelley has met or exceeded the minimum
number of Extension KPIs specified in Schedule 6.3. In conducting the
Extension KPI Review, the parties shall promptly devote adequate
resources and provide all information needed to conduct a full and
comprehensive review of Donnelley's performance.
(b) If, as a consequence of the Extension KPI Review,
Publisher demonstrates that Donnelley has failed to meet or exceed the
minimum number of Extension KPIs specified in Schedule 6.3 during the
time periods indicated therein, then the Extension Term shall not
become effective, and this Agreement shall terminate at the conclusion
of the Initial Term, as defined herein, subject to the following
procedures:
1. Within thirty (30) days of the completion of the
Extension KPI Review, Publisher shall deliver to Donnelley a
written termination notice ("Publisher's Termination Notice").
Publisher's Termination Notice shall specify: which Extension
KPIs Donnelley has failed to meet; describe the nature and
particulars of, and the basis upon which Publisher asserts,
the failure; and advise Donnelley that this Agreement will
terminate at the end of the Initial Term.
2. This Agreement shall thereafter terminate at the
end of the Initial Term, unless, within thirty (30) days of
Donnelley's receipt of Publisher's Termination Notice,
Donnelley notifies Publisher in writing that Donnelley is
13
disputing Publisher's Termination Notice. Donnelley's notice
shall state in detail the basis for Donnelley's dispute of
Publisher's Termination Notice.
3. If Donnelley disputes Publisher's Termination
Notice, the parties immediately thereafter shall submit the
dispute to arbitration in accordance with the expedited
arbitration procedures provided for in Section 16.3 (a) of
this Agreement. The sole issue for determination by
arbitration shall be whether or not the conditions precedent
to Publisher's right to terminate this Agreement at the end of
the Initial Term pursuant to this Section 6.3 have been
fulfilled, based upon the performance deficiencies alleged in
Publisher's Termination Notice. If the arbitration panel
determines that such conditions have not been fulfilled, then
Publisher's Termination Notice shall have no effect and the
Extension Term shall be effective. If the arbitration panel
determines that such conditions have been fulfilled, then
Publisher's Termination Notice shall be effective and this
Agreement shall terminate upon the expiration of the Initial
Term.
6.4 REVIEW OBLIGATIONS. The obligation to reach a mutual agreement on
specific performance plans, criteria and indicators shall be a reasonable best
efforts obligation of each party to this Agreement. In fulfilling this
obligation, each party agrees to address in good faith the items and areas
outlined in the Schedules incorporated in this Agreement, and acknowledges the
paramount purposes of achieving improvements in sales performance, customer
service, and production efficiencies. Each party agrees to promptly provide such
information within its possession or under its control to the other party as
reasonably needed to develop the Plans. Donnelley agrees to promptly provide
Publisher with access to such information within Donnelley's possession or under
its control as reasonably needed to evaluate Donnelley's performance under this
Agreement.
7. COMPENSATION.
7.1 COMPENSATION TO DONNELLEY. In consideration for the services
performed by Donnelley pursuant to this Agreement, Publisher shall pay to
Donnelley, in the amounts and at the times set forth therein, the Sales
Commissions specified in the Compensation and Fee Schedule attached hereto as
Schedule 7.1
7.2 EXCLUSION FOR AFFILIATE ADVERTISING. The parties acknowledge that,
from time-to-time, Publisher provides to its Affiliates space in the Directories
for public service messages and advertising free of charge. Provided Publisher
receives no revenue from its Affiliates for, and Donnelley provides no sales
agency services with respect to, such space, no compensation shall be paid to
Donnelley in connection with the provision of such space.
7.3 THIRD PARTY LICENSING FEES AND ROYALTIES. The compensation payable
to Donnelley does not cover the costs of any license or royalty fees associated
with any process, proprietary right or intellectual property right of third
parties that may be incurred in connection with the publication of the
Directories. All such fees shall be the responsibility of Publisher, provided
that Publisher has approved in writing in advance any such process or use of
proprietary or intellectual property right and such fees related thereto.
Notwithstanding the foregoing, Publisher shall not be responsible for any
liability, whether in the form of license fees,
14
royalties, or otherwise, arising from any claim that any process or method
utilized by Donnelley in the performance of its obligations under this Agreement
infringes on any third-party right, including without limitation, any patent,
copyright or trade secret.
8. INFORMATION ACCESS AND AUDIT RIGHTS.
8.1 ACCESS TO INFORMATION. Subject to the confidentiality and
nondisclosure provisions contained within this Agreement, each party hereby
agrees to provide to the other party such information within its possession or
under its control related to the performance of this Agreement and the
Publishing Services Agreement. Without limiting the generality of the foregoing,
such information shall include: advertising revenue data; data relating to costs
or expenses passed through to Publisher; customer information and records (to
the extent permitted by law); data underlying plans, initiatives and reports
provided hereunder; reports and records relating to Donnelley sales and sales
management personnel assigned to the performance of this Agreement; marketing
plans, surveys and reports; agreements with third parties relative to the
performance of this Agreement; and information underlying any item contained
within budgets or financial projections relating to this Agreement. Such
information shall be provided promptly upon request in the format as is
reasonably requested. Notwithstanding the foregoing, Donnelley shall not be
required to provide Publisher with access to (i) Donnelley's employment files,
(ii) Donnelley's data on its internal production costs, or (iii) Donnelley's
internal budgets and financial projections.
8.2 AUDIT PROVISIONS. The following audit provisions shall apply with
respect to the performance of this Agreement:
(a) AUDIT OF FUNCTIONS. Each party (the "auditing party")
shall have the right, upon written notice, to audit all records and
data, including measurements and calculations, within possession or
under the control of the other party, related to the other party's
performance and attainment of the performance objectives contained in
each Annual Performance Plan (as defined in Section 6.1) and all
objectives relating to the Extension KPIs, as defined in Section 6.3.
Any such audit shall be conducted during normal business hours, subject
to the other party's reasonable security measures, and at the auditing
party's expense. The auditing party may, at its expense, engage
independent auditors to audit and certify, such records and data, and
the other party's attainment of, or failure to attain, the relevant
performance objectives or Extension KPI objectives, provided such
independent auditor shall be what is commonly known as a "Big Five
Accounting Firm" or its equivalent. Each party agrees to pay the other
party any amount determined by the audit to be owed to the other party
within forty-five (45) days following notification of the auditor's
determination, unless one or both parties elect to dispute the
independent auditor's determination, in which case the dispute shall be
submitted to arbitration for resolution in accordance with the
expedited arbitration procedures outlined in Section 16.3(a) of this
Agreement.
(b) UNCOLLECTIBLES. For each Directory publication and in
connection with the true up of actual uncollectibles versus estimated
uncollectibles, Publisher will provide Donnelley with a written report
of uncollectibles experienced for such publication. Donnelley may, at
its expense, engage independent auditors to audit and certify
15
uncollectibles, as of the true-up date, provided such independent
auditor shall be what is commonly known as a "Big Five Accounting Firm"
or its equivalent. Any such audit shall be conducted during normal
business hours and subject to Publisher's reasonable security measures.
Each party agrees to be bound by these certified audits and to pay the
other party any amount determined by the audit to be owed to the other
party within forty-five (45) days following notification of the
auditor's determination, unless one or both parties elect to dispute
the independent auditor's determination, in which case the dispute
shall be submitted to arbitration for resolution in accordance with the
expedited arbitration procedures outlined in Section 16.3(a) of this
Agreement.
9. USE AND PROTECTION OF PROPRIETARY INFORMATION AND MARKS.
9.1 PUBLISHER'S PROPRIETARY INFORMATION. "Publisher's Proprietary
Information" is defined as follows: Information relating to Publisher's
operations or business provided by or on behalf of Publisher or created,
gathered or compiled by or on behalf of Donnelley in connection with its
performance of this Agreement. This information shall include, but shall not be
limited to, all directory advertising orders, printing orders, customer proofs,
galleys, veloxes, artwork, customer records (including listing data, advertising
items, billing information and account history), re-scopings, sales visuals and
delivery records for the Directories. To the extent that statistical reports,
management reports, revenue, cost and sales cost and sales data and analysis,
marketing research, marketing plans and business plans are prepared in
connection with Donnelley's performance of this Agreement, then such materials
shall be considered to be Publisher Proprietary Information. However, other than
desegregated data proprietary to Publisher, any of Donnelley's internal
statistical reports, management reports, revenue, cost and sales data and
analysis, marketing research, marketing plans and business plans created or
prepared by Donnelley for its internal management or to comply with legal
reporting requirements shall be held confidential but shall not be deemed to be
Publisher Proprietary Information. Publisher Proprietary Information shall also
include information relating to Publisher's affiliated telephone companies to
which Donnelley is given access in the course of its performance of this
Agreement. Specifically excluded from Publisher's Proprietary Information are
reports and records with respect to Donnelley's personnel and their performance;
provided, however, any sales or revenue data contained in such reports or
records shall be treated as Publisher's Proprietary Information.
9.2 DONNELLEY'S PROPRIETARY INFORMATION. "Donnelley's Proprietary
Information" is defined as follows: Any information provided by or on behalf of
Donnelley to Publisher relative to the operations or business of Donnelley (but
excluding costs and other information that relate specifically to the provision
of services under this Agreement); compensation and benefits paid to Donnelley's
employees; and information specifically relating to Donnelley's other customers
or other third parties with whom Donnelley does business that does not relate
specifically to the provision of services hereunder.
9.3 NON-PROPRIETARY INFORMATION. The following information shall not be
deemed either Publisher's or Donnelley's Proprietary Information ("Proprietary
Information"): (a) information that can be shown to have been in the public
domain at the time of the disclosure, or (b) information in the recipient's
possession at the time of disclosure to the recipient (as shown in the
recipient's files and records prior to the time of disclosure), or (c)
information independently
16
developed by the recipient's employees or agents that had no access to the
Proprietary Information received hereunder, or (d) information which, though
originally confidential information, subsequently becomes part of the public
knowledge or literature (though not as a result of any inappropriate action or
inaction on the part of the recipient, its employees or agents), or (e)
information which is specifically approved for release by written authorization
of an officer of the party having a proprietary interest in the information, or
(f) information disclosed pursuant to an order of a court having competent
jurisdiction (however, recipient will use reasonable efforts to assist the other
party in obtaining a protective order or other appropriate relief or remedy to
prevent or restrict such disclosure).
9.4 USE AND NON-DISCLOSURE OBLIGATIONS. During the term of this
Agreement, and for a period of three (3) years thereafter, with respect to the
other party's Proprietary Information, each party agrees:
(a) Not to make any use of the Proprietary Information other
than in performance of this Agreement, unless provided for in a
separate written agreement between the parties.
(b) Not to disclose the Proprietary Information to any third
party, except to those employees or agents who need to know the
Proprietary Information in connection with the performance of this
Agreement. Each party agrees to advise each employee or agent given
access to the other party's Proprietary Information as to the
confidential and proprietary nature thereof and as to the existence of
this Agreement and its obligations.
(c) To take reasonable security measures and to use reasonable
care to prevent the unauthorized disclosure or use of the Proprietary
Information. Each party agrees to promptly notify a party in writing in
the event the receiving party becomes aware of any unauthorized
disclosure or use of such other party's Proprietary Information.
(d) To return to the furnishing party, or at the furnishing
party's direction, destroy, the other party's Proprietary Information,
and all copies thereof, in its possession or under its control upon
termination of this Agreement or at such earlier time as the party
furnishing the Proprietary Information may request, provided however
that such Proprietary Information is no longer needed for the
fulfillment of contractual or legal obligations, in which case the
Proprietary Information shall be held solely and exclusively for such
purposes (which shall be communicated in writing to the party that
furnished the Proprietary Information) and then relinquished or
destroyed as soon as such identified purposes cease; provided, further,
that if such Proprietary Information is embedded within the
information, systems, material or documents of a party, such party
shall not be required to return to the furnishing party such
Proprietary Information, but shall remove such Proprietary Information
therefrom and destroy it. In the event the destruction of Proprietary
Information is made, the party responsible for the destruction will
furnish to the furnishing party an affidavit that the Proprietary
Information has been destroyed.
9.5 MARKS AND TRADE NAMES. The parties contemplate that it may be
necessary or advisable for Donnelley to utilize Publisher's or its Affiliate's
trade names, marks and/or
17
copyrighted materials (the "Sprint Intellectual Property") in connection with
certain customer communications or on business cards and similar materials. Any
use of the Sprint Intellectual Property must be approved in writing by Publisher
and will be permitted only to the extent such use furthers the performance of
this Agreement. In connection with such approval, Publisher may require
Donnelley to enter into an appropriate trademark license agreement (royalty
free) with Publisher and/or Publisher's Affiliates consistent with this Section
9.5. In connection with such use, Donnelley shall abide by Publisher's and its
Affiliate's corporate identification guidelines governing the use of the Sprint
Intellectual Property and any other specific guidelines regarding their use as
prescribed by Publisher. Upon termination, by cancellation, expiration or
otherwise, of this Agreement, any permitted use of the Sprint Intellectual
Property shall automatically terminate.
10. TERM AND CANCELLATION OF AGREEMENT.
10.1 TERM. The initial term of this Agreement shall commence with all
Directories scheduled to be published on or after July 1, 2000 and shall expire
with respect to any Directories scheduled to be published on or after January 1,
2009, unless earlier terminated as provided below (the "Initial Term"). The
commencement date of this Agreement shall be deemed July 1, 2000 (the "Effective
Date"). Subject to Section 6.3, the term of this Agreement shall be extended for
a two-year term commencing with all Directories scheduled to be published on or
after January 1, 2009 and expiring with respect to any Directories scheduled to
be published on or after January 1, 2011, unless earlier terminated as provided
below (the "Extension Term" and together with the Initial Term, the "Term").
Schedule 3.1 attached hereto sets forth the title and anticipated publication
date of all Directories that shall be governed by this Agreement during the
Initial Term and all Directories that shall be governed by this Agreement during
the Extension Term. The parties acknowledge and agree that Schedule 3.1 shall be
amended and supplemented from time to time so as to accurately reflect the title
and anticipated publication date of all Directories that are intended by the
parties to be so covered by this Agreement. Notwithstanding the foregoing or
anything else to the contrary contained herein or in any Schedule hereto, with
respect to the July 2008 (during the Initial Term) and July 2010 (during the
Extension Term, if applicable) Las Vegas Directories, any and all advertising
sold by Donnelley into those directories but which also is scheduled to appear
in the January 2009 and January 2011 Las Vegas Directories, respectively, shall
be covered by and compensated in accordance with the terms and conditions of
this Agreement.
10.2 CANCELLATION. Any party may cancel this Agreement for cause
amounting to a material breach of the terms and conditions hereof following
written notice of breach setting forth with specificity the acts or omissions
that are asserted to constituted a material breach of this Agreement.
(a) The recipient of such notice of breach shall within thirty
(30) days of this receipt of the notice of breach either (i)
acknowledge that there has been a material breach and notify the
complaining party in writing of the recipient's intent to commence
corrective action within a reasonable time (in no event to exceed
thirty (30) days) after receipt of such notice (with such corrective
action resulting in a substantial cure of such breach within ninety
(90) days after receipt of such notice); (ii) respond in writing to the
complaining party that the recipient of the notice of breach disputes
that there either has
18
been a breach or that if there has been a violation of this Agreement
that the violation does not constitute a material breach and provide
the basis for such assertion of non-breach or non-material breach; or
(iii) tender in writing to the complaining party a proposed resolution
of claimed breach without taking a position with respect to whether the
claimed breach is or is not a breach (or whether the breach is
material) of this Agreement.
(b) Upon receipt of a reply from the recipient of a notice of
breach, the complaining party may elect to (i) withdraw its notice of
breach in writing; (ii) provide notice of its desire to negotiate and
set forth the issues to be negotiated; or (iii) provide notice to the
recipient of the notice of breach that the complaining party considers
the differences between the parties to be unresolveable, the basis for
such assertion, and the intent, if any, to commence litigation pursuant
to Section 16.3(b) hereof, or to seek an agreement from the other party
to arbitrate the dispute in accordance with Section 16.3(a) of this
Agreement.
(c) In the event there has been a material breach of this
Agreement that cannot be cured or otherwise resolved then upon such
determination either by acknowledgement of the parties or by
arbitration, the complaining party shall have the right to issue a
written notice of final cancellation to the breaching party.
Cancellation shall be effective on a date specified by the
non-breaching party, not less than six months nor more than twelve
months after a written notice of final cancellation is sent by
certified mail to the party-in-breach. Each party shall fulfill all of
its obligations under this Agreement until the effective date of
cancellation.
(d) In the event any party commits a material breach of this
Agreement which is not cured as hereinabove provided, then, in addition
to the right of cancellation provided for in this Section 10 hereof, a
non-breaching party shall have available to it all other remedies
against the breaching party provided by law or in equity.
10.3 RESPONSIBILITIES RELATING TO TERMINATION. Upon
termination of this Agreement, by expiration, cancellation or
otherwise, the parties agree as follows:
(a) To comply with the confidentiality provisions set forth in
Section 9 hereof.
(b) Donnelley shall complete services provided hereunder
related to any directory sales canvass underway prior to the effective
date of termination, and Publisher shall compensate Donnelley for such
services in accordance with the terms of this Agreement.
(c) Each party will use their reasonable best efforts to
insure a smooth and orderly transition, including all reasonable
efforts to maximize directory revenues. Without limiting the generality
of the foregoing, Publisher shall continue to xxxx and collect for
advertising and to remit to Donnelley such compensation as Donnelley
may be entitled for the balance of the life of the issues of the
Directories for which Donnelley has provided services hereunder. On and
after the date on which this Agreement is canceled, Publisher shall
continue to take reasonable steps to (a) collect advertising charges,
(b)
19
handle claims, and (c) handle settlements, judgements and legal matters
relating to such Directories in a manner consistent with the terms of
this Agreement. Donnelley shall provide its reasonable cooperation and
support in connection with Publishers post-cancellation efforts in a
manner consistent with the terms of this Agreement.
(d) If requested in writing, Donnelley will notify
subscribers, prior to the termination or expiration hereof, that it
will no longer represent Publisher with respect to subsequent
directories, such notification to be subject to Publisher's prior
review and approval.
(e) The parties agree that for a period of two (2) years
following termination they will take reasonable measures to avoid
subscriber confusion with respect to the identity of competing
directory Publishers including, without limitation, clearly identifying
the company and product represented. No party shall make use of another
party's trade names, trademarks or trade-dress.
11. REPRESENTATIONS AND WARRANTIES.
11.1 CENTEL'S REPRESENTATIONS AND WARRANTIES. Centel represents and
warrants to Donnelley and CenDon as follows:
(a) Centel is a corporation duly organized and validly
existing under the laws of the State of Delaware. Centel is duly
qualified to do business and is in good standing in the states of
Nevada, Florida, Virginia, and North Carolina, and in every other
jurisdiction in which the failure to qualify would have a material
adverse effect on the conduct of its business or the performance of its
obligations hereunder. Centel has all requisite corporate power and
authority to execute, deliver and perform this Agreement and the other
documents contemplated herein. The execution, delivery and performance
of this Agreement have been duly authorized by all necessary corporate
actions of Centel. This Agreement constitutes the valid and binding
obligation of Centel, enforceable in accordance with its terms, except
as the same may be limited by general principles of equity or
bankruptcy, insolvency, reorganization or similar laws affecting the
rights of creditors generally.
(b) Centel warrants that as of the date of the execution of
this Agreement there are no known impediments to the enforcement of
this Agreement and its terms including any limitations that may be
imposed by general principles of equity or bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors
generally.
(c) Neither the execution, performance, and delivery of this
Agreement nor the consummation of the transactions contemplated hereby,
(i) violates any provision of Centel's certificate of incorporation or
bylaws, (ii) subject to Section 3.2 hereof, violates any material
statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge, or other restriction of any government,
governmental agency, or court to which Centel is subject, which in each
case would have a material adverse effect on the conduct of its
business or the performance of its obligations hereunder, or (iii)
results in a breach
20
of, or constitutes a default under, any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, security
interest, lien, or other arrangement to which Centel is a party or by
which it is bound, in each case, which would have a material adverse
effect on the conduct of its business or the performance of its
obligations hereunder.
(d) As used in subpart (c) above, a "material statute,
regulation, rule, judgment, order, decree, stipulation, injunction,
charge, or other restriction of any government, governmental agency, or
court to which Centel is subject" is one which Centel is not able to
cause itself to be in compliance with within ninety (90) days from its
being made aware of its applicability to Centel.
(e) As used in subpart (c) above, a "material adverse effect"
shall be any effect arising from the things described in subpart (c)
which would place any material limitation or material delay on the
implementation, performance or operation of this Agreement.
(f) Centel is not, and to the best knowledge of Centel,
Donnelley is not, in breach or default under the Partnership Agreement
or any other agreement, written or otherwise, in which Centel and
Donnelley are parties. To the best knowledge of Centel, Centel does not
have any claim, other than claims for payment in the ordinary course of
business, against Donnelley or its Affiliates relating to or arising
out of the Partnership or the Partnership Agreement.
11.2 DONNELLEY'S REPRESENTATIONS AND WARRANTIES. Donnelley represents
and warrants to Centel and CenDon as follows:
(a) Donnelley is a corporation duly organized and validly
existing under the laws of the State of Delaware. Donnelley is duly
qualified to do business and is in good standing in the states of
Nevada, Florida, Virginia, and North Carolina, and in every other
jurisdiction in which the failure to qualify would have a material
adverse effect on the conduct of its business or the performance of its
obligations hereunder. Donnelley has all requisite corporate power and
authority to execute, deliver and perform this Agreement and the other
documents contemplated herein. The execution, delivery and performance
of this Agreement have been duly authorized by all necessary corporate
actions of Donnelley. This Agreement constitutes the valid and binding
obligation of Donnelley, enforceable in accordance with its terms,
except as the same may be limited by general principles of equity or
bankruptcy, insolvency, reorganization or similar laws affecting the
rights of creditors generally.
(b) Donnelley warrants that as of the date of the execution of
this Agreement there are no known impediments to the enforcement of
this Agreement and its terms including any limitations that may be
imposed by general principles of equity or bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors
generally.
21
(c) Neither the execution, performance, and delivery of this
Agreement nor the consummation of the transactions contemplated hereby,
(i) violates any provision of Donnelley's articles of incorporation or
bylaws, (ii) violates any material statute, regulation, rule, judgment,
order, decree, stipulation, injunction, charge, or other restriction of
any government, governmental agency, or court to which Donnelley is
subject, which in each case would have a material adverse effect on the
conduct of its business or the performance of its obligations
hereunder, or (iii) results in a breach or, or constitutes a default
under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument
of indebtedness, security interest, lien, or other arrangement to which
it is a party or by which it is bound, in each case, which would have a
material adverse effect on the conduct of its business or the
performance of its obligations hereunder.
(d) As used in subpart (c) above, a "material statute,
regulation rule, judgment, order, decree, stipulation, injunction,
charge, or other restriction of any government, governmental agency, or
court to which Donnelley is subject is one which Donnelley is not able
to cause itself to be in compliance with within ninety (90) days from
its being made aware of its applicability to Donnelley.
(e) As used in subpart (c) above, a "material adverse effect"
shall be any effect arising from the things described in subpart (c)
which would place any material limitation or material delay on the
implementation, performance or operation of this Agreement.
(f) Donnelley is not, and to the best knowledge of Donnelley,
Centel is not, in breach or default under the Partnership Agreement or
any other agreement, written or otherwise, in which Centel and
Donnelley are parties. To the best knowledge of Donnelley, Donnelley
does not have any claim, other than claims for payment in the ordinary
course of business, against Centel or its Affiliates relating to or
arising out of the Partnership or the Partnership Agreement.
11.3 WARRANTY OF QUALITY. Each party warrants that the services to be
provided hereunder by it will be provided in a timely, accurate and professional
manner and that such services will be performed substantially in accordance with
the requirements of this Agreement.
12. NON-COMPETE PROVISION.
(a) COVENANT. Subject to the limitations set forth below and
except as otherwise provided in this Agreement, no party or any of its
Affiliates shall, during the Term of this Agreement, (i) directly or
indirectly publish, or sell, market or solicit advertising for
publication, in any printed Classified Telephone Directory (other than
the Directories) ten percent (10%) or more of whose primary
distribution is within the Service Area, or (ii) sell, market, or
solicit advertising for inclusion in any electronic Classified
Telephone Directory (other than electronic advertising sold as an
ancillary to print advertising sold into the Directories for which
Donnelley serves as Agent hereunder or sold by Donnelley pursuant to
Section 2.4 hereof) from any advertiser within the Service Area,
without the prior written consent of the other party, which may be
given or
22
withheld in such other party's sole and absolute discretion
(collectively, the "Competitive Activity").
(b) LIMITATIONS. Without recognizing that such would otherwise
be the case, neither the non-compete covenant set forth in Section
12(a) above nor any other provision of this Agreement shall apply to,
restrict or proscribe:
1. The sale, publication, compilation or distribution
by or on behalf of any party or its Affiliates of (i) national
yellow pages advertising in any print or electronic Classified
Telephone Directory (other than the Directories) through the
national yellow pages sales channel (NYPS) or its equivalent,
(ii) advertising incidentally distributed within the Service
Area through the sale or distribution of any Classified
Telephone Directory other than the Directories, or (iii)
advertising in any print or electronic Classified Telephone
Directory within any Centel Operating Company exchange area
deleted from this Agreement pursuant to Section 3.2 hereof;
2. The sale or delivery of telephone subscriber or
similar information, or any other information which, in each
case, is required by law to be provided to any business,
person or entity that engages in the publication, compilation,
distribution or sale of any Classified Telephone Directory
(whether in printed or electronic form) within the Service
Area, regardless of the compensation arrangements related
thereto; or
3. The Bundling of any electronic Classified
Telephone Directory service or product (the "bundled product")
with any telephony service or product, including without
limitation any fixed or mobile wireless telecommunications
service (the "telephony service") so long as the bundled
product is not offered or distributed primarily within the
Service Area. A bundled product shall not be deemed
distributed primarily within the Service Area, unless more
than ten percent (10%) of the revenues derived from the
telephony service to which the bundled product is bundled is
derived from the Service Area when compared to total revenues
derived from such telephony service throughout the United
States of America.
(c) ACQUISITIONS. The above non-compete covenant shall not
apply to, restrict or proscribe (i) the direct or indirect acquisition
by any party or its Affiliates of any business, person or entity that
engages in the Competitive Activity (an "acquired entity") or the
subsequent ownership, control or operation of an acquired entity, or
(ii) the direct or indirect acquisition of any party or its Affiliates
by any business, person or entity that engages in the Competitive
Activity (an "acquiring entity"), in either case, if the revenues of an
acquired entity or an acquiring entity (determined at the applicable
acquisition close) attributable to the Competitive Activity comprise
less than ten percent (10%) of such acquired or acquiring entity's
total revenues derived from all of its businesses and operations. In
determining an acquired or acquiring entity's total revenues, the
revenues of all businesses, persons and entities affiliated with the
acquired or acquiring entity that are acquired in the same transaction
or series of related transactions shall be included.
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(d) DEFINITIONS. As used in this Section 12, the following
terms shall have the meanings set forth in this Section 12(d):
1. "AFFILIATE" means any other person or entity
which, directly or indirectly, controls, is controlled by, or
is under common control with, such party.
2. "CLASSIFIED TELEPHONE DIRECTORY" means a telephone
directory containing yellow pages advertising that is
published for general distribution to substantially all local
telephone subscribers within the geographic markets served by
that telephone directory.
3. "BUNDLING" means offering or providing a product
or service as an ancillary to other products or services. By
way of example, the provisioning of access to an electronic
yellow pages through a wireless telephone service, such as
Sprint PCS wireless telephone service, is a "Bundling" of the
electronic yellow pages service with a telephony service.
4. "SERVICE AREA" means the primary distribution area
of the Directories as of the time of any determination
concerning activity that may be subject to the non-compete
provisions of this Section 12.
13. ASSIGNMENTS, TRANSFERS, AND CHANGES OF CONTROL.
13.1 ASSIGNMENTS. No party may assign this Agreement or any of its
rights hereunder nor delegate any of its obligations (collectively,
"assignment") without the prior written consent of the other parties, which
consent shall not unreasonably be withheld or delayed. A condition to the
effectiveness of any such assignment shall be the prior delivery by the assignor
to the other parties of a written confirmation by the assignee of its assumption
of the assignor's obligations under the Agreement. Notwithstanding the
foregoing, any party may assign any or all of its rights or obligations under
this Agreement to an Affiliate (as defined below) of that party.
(a) Centel and CenDon agree that they shall not withhold or
delay their consent to any proposed assignment by Donnelley of any of
its rights or obligations under this Agreement if (a) the assignee is
not a Competitor (as defined below), (b) in the event that the assignee
provides print or electronic directory advertising or related services
to a Competitor, that the assignee agrees to (i) maintain the acquired
Donnelley business as a separate unit or line of business, or (ii)
implement such other screening techniques (such as "Chinese" walls)
reasonably acceptable to Centel and CenDon to ensure that all
competitively sensitive information concerning them is kept
confidential and not shared with others in the assignee's organization
who have responsibility for such Competitor's business, (c) Donnelley
provides Centel and CenDon with a written undertaking to continue to be
subject to and bound by Section 12 of this Agreement for the remaining
term of this Agreement (without giving effect to the Extended Term),
and (d) in the event that Publisher has reasonable grounds to question
the assignee's ability to perform its obligations under this Agreement
and its financial obligations under the LLC Agreement (including
without limitation Section 3.2(b) and thereof), then Centel and CenDon
may require, as a condition to its consent to the assignment that the
assignee or R.H.
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Donnelley Corporation (or the then-existing ultimate parent company of
Donnelley) provide Publisher with reasonable security or assurance with
respect to such assignee's performance obligations under this Agreement
and its financial obligations under the LLC Agreement (including
without limitation Section 3.2(b) thereof).
(b) In the event of a proposed assignment by Centel or CenDon
of any of its respective rights or obligations under this Agreement,
then Donnelley may require, as a condition to its consent to such
assignment, that Sprint (or the then existing ultimate parent company
of Centel) provide Donnelley with a written undertaking, on behalf of
itself and its Affiliates, to refrain from engaging in the publication
of print classified directories in the Service Area utilizing the then
current branding of Sprint or any successor of Sprint, during the
shorter of (a) the one year period commencing on the date of such
assignment, or (b) the remaining term of this Agreement (without giving
effect to the Extended Term). In addition, in the event that Donnelley
has reasonable grounds to question the assignee's ability to perform
its obligations under this Agreement and to perform its financial
obligations under the LLC Agreement (including without limitation
Section 3.2(a) thereof), then Donnelley may require, as a further
condition to its consent to such assignment that the assignee or Sprint
Corporation (or the then-existing ultimate parent company of Publisher)
provide Donnelley with reasonable security or assurance with respect to
such assignee's performance obligations under this Agreement and
ability to perform its financial obligations under the LLC Agreement
(including without limitation Section 3.2(a) thereof).
13.2 CHANGES OF CONTROL. In the event of a Change of Control (as
defined below) of any party, the following provisions shall govern:
(a) Prior to the effectiveness of any Change of Control of
Centel or CenDon, in the event that Donnelley has reasonable grounds to
question the Acquiror's or Centel's or CenDon's, as the case may be,
ability to perform its obligations under this Agreement and its
financial obligations under the LLC Agreement (including without
limitation Section 3.2(a) thereof) after the Change of Control, then
Donnelley may require, as a condition to the continued performance of
its obligations under this Agreement, that the Acquiror provide
Donnelley with reasonable security or assurance with respect to
Acquiror's or Centel's or CenDon's ability to perform its obligations
under this Agreement and its financial obligations under the LLC
Agreement (including without limitation Section 3.2(a) thereof). In
addition, and notwithstanding the generality of the foregoing,
Donnelley may require, as a further condition to its continued
performance under this Agreement, that Sprint (or the ultimate parent
company of Centel immediately prior to such Change of Control) provide
Donnelley with a written undertaking, on behalf of itself and its
Affiliates, to refrain from engaging in the publication of print
classified directories in the Service Area utilizing the then current
branding of Sprint or any successor of Sprint, during the shorter of
(a) the one year period commencing on the date of such Change of
Control, or (b) the remaining term of this Agreement (without giving
effect to the Extended Term).
(b) Prior to the effectiveness of any Change of Control of
Donnelley, in the event that Publisher has reasonable grounds to
question the Acquiror's or Donnelley's, as
25
the case may be, ability to perform its obligations under this
Agreement and its financial obligations under the LLC Agreement
(including without limitation Section 3.2(b) thereof) after the Change
of Control, then Publisher may require, as a condition to the continued
performance of its obligations under the Agreement, that the Acquiror
provide Publisher with reasonable security or assurance with respect to
the Acquiror's or Donnelley's ability to perform its obligations under
this Agreement and its financial obligations under the LLC Agreement
(including without limitation Section 3.2(b) thereof). Notwithstanding
the foregoing, in the event that the Control Person (as defined below)
is:
1. Not a Competitor, then Publisher may require, as a
condition to the continued performance of its obligations
under this Agreement, (A) that the Acquiror or Donnelley, as
the case may be, agrees to (i) maintain the acquired Donnelley
business as a separate unit or line of business, or (ii)
implement such other screening techniques (such as "Chinese"
walls) reasonably acceptable to Publisher, in either case to
ensure that all competitively sensitive information concerning
Publisher is kept confidential and not shared with others in
the Control Person's organization who have responsibility for
any Competitor's business, and (B) Donnelley shall provide
Publisher with a written undertaking to refrain from engaging
in any Competitive Activity for the remaining term of the
Agreement (without giving effect to the Extended Terms); or
2. Is a Competitor, then Publisher may require, as a
condition to the continued performance of its obligations
under this Agreement that at the election of Publisher either:
(A) Donnelley grants Centel or CenDon a right to purchase the
Acquiror's rights under this Agreement at Fair Market Value
(as defined below) which would include a covenant from
Donnelley not to engage in any Competitive Activity for a
period of two years from the date of such sale, or (B) (i) the
Acquiror or Donnelley, as the case may be, agrees to (y)
maintain the acquired Donnelley business as a separate unit or
line of business, or (z) implement such other screening
techniques (such as "Chinese" walls) reasonably acceptable to
Publisher, in either case to ensure that all competitively
sensitive information concerning them is kept confidential and
not shared with others in the Control Person's organization
who have responsibility for any Competitor's business, and
(ii) Donnelley provides Publisher with a written undertaking
to refrain from engaging in any Competitive Activity for the
remaining Term of the Agreement (giving effect to the Extended
Term).
(c) As used in this Section 13, the following capitalized
terms shall have the following meanings:
1. "Acquiror" means an entity that, as a result of a
Change of Control, (a) acquires 50% or more of the assets of a
party to the Agreement, or (b) acquires 50% or more of the
voting power of the securities of a party to the Agreement, or
(c) merges or consolidates or undergoes any similar
transaction with a party to the Agreement and is the surviving
entity in such merger or consolidation or other transaction.
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2. "Affiliate" means, in the case of (a) Publisher,
any legal entity in which Sprint Corporation, or its
successor, or a direct or indirect wholly-owned subsidiary
thereof, owns more than 50% of the outstanding voting power of
the entity; and (b) Donnelley, any legal entity in which X.X.
Xxxxxxxxx Corporation, or its successor, or any direct or
indirect wholly-owned subsidiary thereof, owns more than 50%
of the outstanding voting power of the entity.
3. "Change of Control" means, with respect to a party
hereto, (a) a merger or consolidation of such party with or
into another corporation (or other entity) or corporations (or
other entities) in which the persons and entities who are the
stockholders of such party immediately prior to the
effectiveness of such merger or consolidation, do not own
immediately after the effectiveness of such merger or
consolidation, at least 50% of the then outstanding voting
power of the surviving entity or resulting entity of such
merger or consolidation; (b) the sale of 50% or more of the
assets of such party; (c) any transaction or series of related
transactions in which capital stock (or other equity) of such
party representing in excess of 50% of the voting power of all
then outstanding capital stock of such party is transferred to
a single corporation, entity, person or "group" (as defined in
Section 13(d) of the Securities Exchange Act of 1934 and the
rules thereunder), or (d) any transaction or series of related
transactions if, within two (2) years after the completion
thereof, the individuals who at the beginning of such period
constituted the Board of Directors of the party cease for any
reason to constitute 50% or more of the directors of such
party. Notwithstanding the foregoing, neither an acquisition
of the stock of Publisher's ultimate corporate parent, nor the
merger or consolidation of such parent with another entity,
shall be a Change of Control under this Section 13.2. Without
limiting the generality of the foregoing, the proposed merger
of Sprint Corporation with and into MCI WORLDCOM, Inc. shall
not be deemed a Change of Control.
4. "Competitor" means any entity, other than
Donnelley or its Affiliates, substantially engaged in the
publication of either print yellow pages or other related
directory services that directly and substantially competes
with Publisher.
5. "Control Person" means, collectively, the ultimate
parent company of a party hereto after taking into effect a
Change of Control of such party and all Affiliates of such
ultimate parent company, including the Acquiror, if any.
6. "Fair Market Value" means (a) the present value
(calculated using a discount rate equal to the effective yield
for "on the run" (if available) U.S. Treasury securities with
lives equal to the remaining Term (giving effect to the
Extension Term) of this Agreement (rounded to the nearest
whole year) as of the date of the Change of Control) of the
Operating Income to be earned by Donnelley under this
Agreement and the LLC Agreement from the date of the Change of
Control through December 31, 2010, using the preceding
12-month period's Operating Income as the base annual
Operating Income, which base annual Operating Income will have
applied to it a compound annual growth rate
27
consistent with the average annual growth rate in Operating
Income for Donnelley over the three (3) years prior to the
calculation, plus (b) a terminal value equal to (i) one times
the then-current year's budgeted compensation (salary,
commission and bonus) for the sales and sales support
personnel dedicated to the performance of Donnelley's
obligations under this Agreement, (ii) the net book value of
the fixed assets deployed within all sales offices that
support the Directories and (iii) all costs associated with
the termination or transfer of any obligations of Donnelley
related to this Agreement (i.e. leases). The terminal value
under clause (b) above shall not be subject to any discount
rate.
14. INDEMNIFICATION AND CLAIMS PROCEDURE.
14.1 MUTUAL INDEMNIFICATION. Each party agrees to indemnify and hold
harmless the other party and the other party's officers, agents, employees and
Affiliates from and against any and all Eligible Claims (as defined herein) and
reasonable attorney's fees incurred in the defense of Eligible Claims. Without
limiting the generality of the foregoing, each party agrees to indemnify and
hold harmless the other party and the other party's officers, agents, employees
and Affiliates from and against all Eligible Claims, arising from injury to
their respective agents and employees incurred while working on the premises of
the other party, provided such injury is not the result of the other party's
negligence or deliberate acts. Each party shall promptly notify the other of any
claims made upon it for which the other may be liable under this Section 14.1,
and both parties shall cooperate in the handling of any and all such Eligible
Claims. As used herein, "Eligible Claims" means any claims and causes of action
of third parties (a) arising from the other party's negligence, failure to
perform in accordance with the terms of this Agreement or any breach of any
representation, warranty or covenant made hereunder, that, when considered
together with all other claims and causes of action of third parties arising
from, or relating to, the same acts, facts, or circumstances, exceed $50,000 in
claimed or incurred losses, damages and costs, provided, however, that with
respect to claims, actions, losses, damages and costs that are required to be
covered by insurance pursuant to Section 16.1 hereof, the $50,000 limitation set
forth above shall not apply, or (b) that in whole or in part are predicated upon
the gross negligence or willful misconduct of a party, regardless of the amount
of claimed or incurred losses, damages, or costs.
14.2 CLAIMS PROCESSING BY DONNELLEY. Donnelley shall process all claims
from local and foreign subscribers or other third parties or as additionally
authorized by Publisher with respect to directory errors, omissions,
misrepresentations or infringements. Pursuant to Publisher's guidelines or
authorization, Donnelley shall make applicable settlements or adjustments. If
however, Donnelley should desire to settle a customer complaint or lawsuit
outside of Publisher's guidelines and without prior approval from Publisher,
Donnelley may do so but Publisher shall not be obligated to reimburse the costs
and expenses of such resolution.
14.3 CLAIMS HANDLING BY PUBLISHER. Publisher shall be responsible for
the handling of claims which cannot be settled or adjusted by Donnelley in
accordance with Publisher's guidelines or pursuant to Publisher's authorization.
Publisher and Donnelley shall fully cooperate with each other in handling any
such claims. Where Donnelley has acted in conformance with the Publisher's
guidelines and authorization, Publisher shall hold Donnelley harmless from and
against any and all claims, suits, losses, damages, costs and reasonable
28
attorney's fees to the extent arising from the implementation of such guidelines
and authorization, provided however such hold harmless obligation shall not
apply to any claims, suits, losses, damages, costs or attorney's fees arising
from Donnelley's negligence or performance deficiencies hereunder.
14.4 QUALITY STANDARDS. Donnelley shall use its reasonable best efforts
to maintain superior standards for avoidance of errors and omissions. Donnelley
and Publisher will jointly develop standards for acceptable quality and accuracy
as part of the performance objectives and indicators developed by the parties
pursuant to Section 6 hereof. Should Donnelley's error rate become excessive,
the parties agree to meet and adopt those procedures and policies and take such
actions as are necessary to regain acceptable levels of accuracy and quality.
15. RELATIONSHIP OF PARTIES; EMPLOYEE MATTERS.
15.1 RELATIONSHIP OF PARTIES. It is agreed and understood that
Donnelley, with respect to the provision of sales support services pursuant to
this Agreement, is an independent contractor and that it and its agents,
consultants, subcontractors and employees are neither agents, consultants,
subcontractors nor employees of Publisher. As such, neither Donnelley, its
agents, consultants, subcontractors or its employees shall have the authority to
act for or on behalf of Publisher or to obligate Publisher in any manner not
specifically authorized herein or in a writing signed by Publisher. It also is
agreed that, with respect to the provision of sales agency services hereunder,
Donnelley shall be considered an agent for Publisher, the scope and authority of
which shall be limited by the terms of this Agreement.
15.2 EMPLOYEE MATTERS. Publisher shall reimburse Donnelley for
severance payments ("Severance Payments") made to those employees of Donnelley
who are terminated from employment by Donnelley solely because the sales support
services and functions (as identified in Schedule 2.2(b) hereto) supported by
the terminated employee have been assumed by Publisher pursuant to Section
2.2(b) of this Agreement (collectively, "Eligible Employees"). After the payment
of any such Severance Payment amounts by Donnelley, it shall submit a written
invoice to Publisher that reflects such payment amounts and details the
calculation thereof. Within 60 days of Publisher's receipt of such invoice, it
shall reimburse Donnelley for the invoiced amounts, provided the invoice
properly reflects such amounts calculated in accordance with this Section 15.2.
The parties agree that the Severance Payments to which Publisher's reimbursement
obligation applies only to (i) any salary continuation and annual bonus
severance payment made in lieu of normal compensation based on length of service
with Donnelley, (ii) employee benefits continuation, (iii) outplacement services
and (iv) all tax obligations Donnelley incurs solely because of the Severance
Payments made to Eligible Employees in accordance with clauses (i) through (iii)
above. All such Severance Payments shall be made by Donnelley only in accordance
with Donnelley's existing severance policy and practices. Publisher shall not be
responsible for costs incurred by Donnelley as a result of a claim made by an
Eligible Employee against Donnelley on the basis of employment termination,
including without limitation, claims arising from the administration of
Donnelley's benefit plans and claims based on allegations of employment
discrimination. In no event will Publisher's aggregate obligations to reimburse
Severance Payments, with respect to each group of Eligible Employees, as
identified in Schedule 15.2, exceed the amounts specified in Schedule 15.2 for
each such group.
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15.3 RETENTION BONUSES. In that it is in the interest of both parties
that the sales support services or functions identified in Section 2.2(b) be
transitioned from Donnelley to Publisher in a smooth and orderly fashion, the
parties agree that it may be necessary and appropriate to pay retention bonuses
to certain key employees of Donnelley that are among the Eligible Employees
prior to their scheduled termination date. Accordingly, Publisher shall
reimburse Donnelley for retention bonus payments made to any Eligible Employee
set forth on Schedule 15.3. The parties will jointly agree (in writing as part
of Schedule 15.3) which, if any, Eligible Employees are to be provided with a
retention bonus as a means of retaining each such Eligible Employee's expertise
and services during the interim period of time during which sales support
services and functions identified in Section 2.2(b) are transitioned from
Donnelley to Publisher. The parties will agree (in writing as part of Schedule
15.3) upon the amount of retention bonus payable to each such Eligible Employee.
In no event will Publisher's aggregate obligation to reimburse Donnelley for
retention bonus payments exceed $705,000.
15.4 NO THIRD PARTY BENEFICIARIES. The parties acknowledge and agree
that nothing contained in this Agreement is intended for the benefit of, or to
create any rights in favor of, any other party, including without limitation
Eligible Employees. The parties hereby expressly disclaim any intent to create
third-party beneficiary rights under this Agreement.
16. MISCELLANEOUS PROVISIONS.
16.1 INSURANCE:
(a) INSURANCE ON WORK-IN-PROCESS. The parties acknowledge
that, in providing services under this Agreement, each party will have
in its possession and control materials and data critical to the
publication of the Directories. Each party agrees to take reasonable
measures to protect such materials and data from loss or destruction
due to theft, casualty or otherwise, including without limitation the
maintenance of back-up copies thereof as much as practicable. In the
event such materials or data are lost or destroyed, each party shall be
obligated at its expense to replace or reconstruct such materials and
data on an expedited basis, it being understood that time is of the
essence in publishing and distributing the Directories. Each party
shall maintain adequate business interruption insurance coverage
(subject to such deductibles as it shall in its sole discretion deem
appropriate) to cover any loss for which it is responsible hereunder.
(b) GENERAL LIABILITY INSURANCE. Donnelley and Publisher each
shall be obligated to carry general liability insurance coverage and
automotive liability insurance coverage with coverage limits of not
less than three million dollars ($3,000,000) per occurrence, containing
appropriate contractual liability endorsements, which may be subject to
such deductibles as each Party shall in its sole discretion deem
appropriate.
(c) WORKERS COMPENSATION INSURANCE. Donnelley, as an
independent contractor to Publisher, agrees to maintain and pay for
workers compensation insurance coverage applicable to Donnelley's
employees in accordance with the requirements of applicable law.
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16.2 FORCE MAJEURE.
(a) Except as provided below, if any party is prevented from
performing any of its obligations (other than payment obligations)
under this Agreement because of any act of God, lockout, strike or
other labor dispute, riot or civil commotion, act of public enemy, law,
order or act of government, whether federal, state or local, or other
similar event beyond the Party's control (a "Force Majeure Event"),
then that party will be excused from performing any of its obligations
which are so prevented. However, the party so excused is responsible
for performing those obligations of which it had been relieved due to
the Force Majeure Event as soon as the Force Majeure Event has ceased
to prevent the party's performance. During the pendency of the Force
Majeure Event, the other parties shall also be excused from performing
its obligations hereunder, including any payment obligations that
relate to the work not performed because of the Force Majeure Event.
(b) If a Force Majeure Event excuses Donnelley from performing
its duties under this Agreement, Publisher may procure substitute
performance for the duration of the Force Majeure Event; however, as
soon as commercially practicable upon Donnelley's providing notice that
the Force Majeure Event has ceased to prevent its performance both
parties shall be entitled and obligated to resume performance of their
respective obligations under this Agreement.
16.3 DISPUTE RESOLUTION.
(a) EXPEDITED ARBITRATION. Any dispute arising under or
related to this Agreement that(i) by the terms hereof, must be resolved
by arbitration, or (ii) the parties, in each of their sole and absolute
discretion, elect to submit to arbitration, shall be governed by the
Commercial Arbitration Rules of the American Arbitration Association
attached to this Agreement as Schedule 16.3 (a) (the "Arbitration
Rules"). Any such arbitration shall be conducted in accordance with the
expedited procedures set forth in Paragraphs E-1 through E-10 of the
Arbitration Rules. The decision of, and any award made by, the
arbitrator shall be final and binding on the parties and may be entered
as a judgment in any court having competent jurisdiction over the
parties.
(b) LITIGATION. For all other disputes arising under or
related to this Agreement, each party shall have the right to bring an
action in any court having competent jurisdiction over the parties and
the subject matter in dispute, subject to the dispute resolution
covenants set forth in this Section 16.3 (b). If one or more disputes
subject to arbitration under Section 16.3 (a) require the resolution of
issues of fact or law common with, or related to, issues raised in a
dispute governed by this Section 16.3 (b), then all such disputes shall
be resolved in accordance with this Section 16.3 (b), and the
arbitration requirements of Section 16.3 (a) shall not apply to them.
The following dispute resolution covenants shall govern all actions
subject to this Section 16.3 (b):
1. GOVERNING LAW. This agreement and the rights and
obligations of the parties is governed by the laws of the
State of Kansas, without regard to its conflict of laws
principles.
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2. WAIVER OF JURY TRIAL. Each party waives its right
to a jury trial in any court action among the parties arising
under or related to this Agreement, whether made by claim,
counter-claim, third party claim, or otherwise. If for any
reason this jury waiver is held to be unenforceable, the
parties agree to binding arbitration for any dispute arising
under or related to this Agreement, pursuant to the
Arbitration Rules, except that the expedited procedures
referred to in Section 16.3 (a) shall not apply. The parties
agreement to arbitrate any dispute under this provision shall
extend to any claim by or against any third party that could
have been brought in a court action between the parties,
whether as a claim, counterclaim, or third-party claim,
subject to the agreement of such third parties. The agreement
of each party to waive its right to a jury trial will be
binding on its successors and assigns and will survive the
termination of this Agreement.
3. ATTORNEY'S FEES. The prevailing party in any
dispute adjudicated by lawsuit or arbitration will be entitled
to reasonable attorney's fees and costs, including reasonable
expert fees and costs. This provision will not apply if the
prevailing party rejected a written settlement offer that
exceeds the prevailing party's recovery.
16.4 NOTICES. All notices, demands or requests required or permitted to
be given pursuant to this Agreement shall be in writing and shall be deemed to
have been given when delivered personally or upon receipt if delivered by
certified mail, return receipt requested, addressed as follows:
(a) If to Centel, to:
Centel Directory Company
0000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxx 00000-0000
ATTENTION: President
cc: General Counsel
Or at such other address as Centel may furnish to Donnelley in accordance with
the provisions of this Section 16.4.
(b) If to CenDon, to:
CenDon, L.L.C.
c/o Centel Directory Company
0000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxx 00000-0000
ATTENTION: President
cc: General Counsel
32
Or at such other address as CenDon may furnish to Donnelley in accordance with
the provisions of this Section 16.4.
(c) If to Donnelley:
X. X. Xxxxxxxxx Inc.
Xxx Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
ATTENTION: President
cc: General Counsel
Or such other address as Donnelley may furnish to Publisher in accordance with
the provisions of this Section 16.4.
16.5 ENTIRE AGREEMENT MODIFICATIONS. This Agreement, together with the
Exhibits, Schedules and other documents referred to herein, constitutes the
entire agreement between the Parties hereto with respect to the subject matter
hereof and there are no other understandings, representations or warranties,
oral or written, relating to the subject matter of this Agreement which shall be
deemed to exist or bind either of the parties hereto, their respective successor
or assigns. This Agreement may not be modified or amended except by written
instrument executed by both parties.
16.6 HEADINGS. The headings of Sections in this Agreement are for
convenience only and are not a part of this Agreement.
16.7 CONSENTS. Any consents granted by a party hereto pursuant to the
terms of this Agreement shall not be binding or enforceable unless provided by a
written instrument signed by an officer of the consenting party.
16.8 SEVERABILITY. If any term of this Agreement is invalid or
unenforceable under any statute, regulation, ordinance, executive order, or
other rule of law, such term will be deemed reformed or deleted, but only to the
extent necessary to comply with such statute, regulation, ordinance, order, or
rule, and the remaining provisions of this Agreement will remain in full force
and effect.
16.9 NON-WAIVER. The failure of any party at any time to require strict
performance by another party of any provision of this Agreement will in no way
affect the right to require such strict performance at any time thereafter, nor
will the waiver by any party of a breach of any provision constitute a waiver of
any succeeding breach of the same or any other provision.
16.10 GOOD FAITH. Each Party shall perform each and every covenant
applicable to it under this Agreement in good faith. Any specific reference
herein to the obligation to perform any covenant in good faith shall not be
interpreted as imposing any greater or lesser duty than imposed by this Section
16.10.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
signature of their duly authorized officers as of the day and year first above
written.
X. X. XXXXXXXXX INC.
("Donnelley")
By: /s/ Xxxxx X. Xxxxxxx
Title: President
CENTEL DIRECTORY COMPANY
("Centel")
By: /s/ Xxxxxx X. Xxxxx
Title: President
CENDON, L.L.C.
("CenDon")
By: /s/ Xxxx X. Xxxxxx
Title: Vice President
34
