Employment Agreement - Dex Media Inc. and George Burnett
EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), effective as of November
8, 2002 (the "Effective Date"), is made by and between George Burnett (the
"Executive") and Dex Media, Inc., a Delaware corporation, and any of its
subsidiaries and affiliates (including without limitation Dex Media East LLC) as
may employ Executive from time to time (collectively, and together with any
successor thereto, the "Company").
RECITALS
A. It is the desire of the Company to assure itself of the
services of the Executive by engaging the Executive to perform
services under the terms hereof.
B. The Executive desires to provide services to the Company on
the terms herein provided.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below the parties hereto agree as follows:
1. CERTAIN DEFINITIONS
(a) "Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or
under common control with, such Person where "control" shall
have the meaning given such term under Rule 405 of the
Securities Act.
(b) "Agreement" shall have the meaning set forth in the preamble
hereto.
(c) "Annual Base Salary" shall have the meaning set forth in
Section 3(a).
(d) "Board" shall mean the Board of Directors of the Company.
(e) The Company shall have "Cause" to terminate the Executive's
employment hereunder upon:
(i) The Executive's willful failure to substantially
perform the duties set forth in this Agreement (other
than any such failure resulting from the Executive's
Disability) which is not remedied within 30 days
after receipt of written notice from the Company
specifying such failure;
(ii) The Executive's willful failure to carry out, or
comply with, in any material respect any lawful and
reasonable directive of the Board not inconsistent
with the terms of this Agreement, which is not
remedied within 30 days after receipt of written
notice from the Company specifying such failure;
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(iii) The Executive's commission at any time of any act or
omission that results in, or that may reasonably be
expected to result in, a conviction, plea of no
contest, or imposition of unadjudicated probation for
any felony or crime involving moral turpitude;
(iv) The Executive's unlawful use (including being under
the influence) or possession of illegal drugs on the
Company's premises or while performing the
Executive's duties and responsibilities under this
Agreement; or
(v) The Executive's commission at any time of any act of
fraud, embezzlement, misappropriation, material
misconduct, or breach of fiduciary duty against the
Company (or any predecessor thereto or successor
thereof).
(f) "Change in Control" shall mean a change in ownership or
control of the Company effected through a transaction or
series of transactions (other than an offering of Common Stock
to the general public through a registration statement filed
with the Securities and Exchange Commission) whereby any
"person" or related "group" of "persons" (as such terms are
used in Sections 13(d) and 14(d)(2) of the Exchange Act)
(other than the Company, any of its subsidiaries, an employee
benefit plan maintained by the Company or any of its
subsidiaries, a Principal Stockholder or a "person" that,
prior to such transaction, directly or indirectly controls, is
controlled by, or is under common control with, the Company or
a Principal Stockholder) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 under
the Exchange Act) of securities of the Company possessing more
than fifty percent (50%) of the total combined voting power of
the Company's securities outstanding immediately after such
acquisition.
(g) "Common Stock" shall mean common stock of the Company, par
value $0.01 per share.
(h) "Company" shall have the meaning set forth in the preamble
hereto.
(i) "Compensation Committee" means the Compensation Committee of
the Board.
(j) "Date of Termination" shall mean (i) if the Executive's
employment is terminated by his death, the date of his death;
(ii) if the Executive's employment is terminated pursuant to
Section 4(a)(ii) - (vi) either the date indicated in the
Notice of Termination or the date specified by the Company
pursuant to Section 4(b), whichever is earlier; (iii) if the
Executive's employment is terminated pursuant to Section
4(a)(vii) or Section 4(a)(viii), the expiration of the
then-applicable Term.
(k) "Dex West Transaction" shall mean the transaction contemplated
by the Rodney Purchase Agreement.
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(l) "Directors and Officers Insurance" shall have the meaning set
forth in Section 13.
(m) A "Disability" shall have occurred when the Executive has been
unable to perform his duties because of physical or mental
incapacity for a period of at least 180 consecutive days as
determined by a medical doctor mutually agreed-upon by the
parties hereto.
(n) "EBITDA" for a given period shall mean the sum of (i) the
consolidated earnings before interest, taxes, depreciation,
amortization, and extraordinary items and (ii) any management
or similar fees charged to the Company by any Principal
Stockholder (but only to the extent such fees are deducted
from the earnings described in the preceding subsection (i)),
all as reflected on the Company's audited consolidated
financial statements for such period.
(o) "Effective Date" shall have the meaning set forth in the
preamble hereto.
(p) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
(q) "Executive" shall have the meaning set forth in the preamble
hereto.
(r) "Executive Bonus Plan" shall mean the bonus plan to be
developed by the Compensation Committee which shall
incorporate the targets attached hereto as Exhibit A.
(s) "Extension Term" shall have the meaning set forth in Section
2(b).
(t) The Executive shall have "Good Reason" to resign his
employment upon the occurrence of any of the following:
(i) Failure of the Company to continue the Executive in
the position of President and Chief Executive Officer
(or any other position not less senior to such
position);
(ii) A material diminution in the nature or scope of the
Executive's responsibilities, duties or authority;
(iii) Failure of the Company to make any material payment
or provide any material benefit under this Agreement;
or
(iv) The Company's material breach of this Agreement or
any Option Agreement;
provided, however, that notwithstanding the foregoing the
Executive may not resign his employment for Good Reason
unless: (A) the Executive provides the Company with at least
30 days prior written notice of his intent to resign for Good
Reason (which notice is provided not later than the 30th day
following the occurrence of the event constituting Good
Reason); and (B) the Company has not
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remedied the alleged violation(s) within the 30-day period;
and, provided, further, that the Executive shall not have Good
Reason to terminate his employment due to the failure to
consummate all or any portion of the Dex West Transaction; and
provided, further, that Executive may resign his employment
for Good Reason if in connection with any Change in Control
the purchaser does not assume the severance provisions set
forth in Section 5 (including corresponding definitions) (or
substitute substantially identical severance provisions) with
respect to the Executive and if Executive does not accept
employment with such purchaser in connection with the Change
in Control.
(u) "Initial Term" shall have the meaning set forth in Section
2(b).
(v) "Joint Management Agreement" shall have the meaning set forth
in Section 14.
(w) "Notice of Termination" shall have the meaning set forth in
Section 4(b).
(x) "Option Agreement" shall mean an agreement to purchase Common
Stock pursuant to the Option Plan.
(y) "Option Plan" shall have the meaning set forth in Section
3(c).
(z) "Person" shall mean an individual, partnership, corporation,
limited liability company, business trust, joint stock
company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
(aa) "Principal Stockholders" shall mean Carlyle Partners III, L.P.
a Delaware limited partnership; Welsh, Carson, Anderson &
Stowe IX, L.P., a Delaware limited partnership; and each of
their respective Affiliates.
(bb) "Related Agreements" shall have the meaning set forth in
Section 18.
(cc) "Rodney Purchase Agreement" shall mean that certain Purchase
Agreement by and among Qwest Dex, Inc., Qwest Services
Corporation, Qwest Communications International Inc.
(collectively, the "Qwest Parties") and Dex Holdings LLC,
dated as of August 19, 2002, pursuant to which the Qwest
Parties have agreed to sell all of the interests of GPP LLC
(as described in the Rodney Purchase Agreement) to Dex
Holdings LLC on the terms and conditions set forth therein.
(dd) "Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
(ee) "Term" shall have the meaning set forth in Section 2(b).
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2. EMPLOYMENT
(a) The Company shall employ the Executive and the Executive shall
enter the employ of the Company, for the period set forth in
Section 2(b), in the position set forth in Section 2(c), and
upon the other terms and conditions herein provided.
(b) The initial term of employment under this Agreement (the
"Initial Term") shall be for the period beginning on the
effective date of this Agreement and ending on December 31,
2005, unless earlier terminated as provided in Section 4. The
employment term hereunder shall automatically be extended for
successive one-year periods (each, an "Extension Term" and,
collectively with the Initial Term, the "Term") unless either
party gives notice of non-extension to the other no later than
90 days prior to the expiration of the then-applicable Term.
(c) Position and Duties.
(i) The Executive shall serve as President and
Chief Executive Officer of the Company with such customary
responsibilities, duties and authority customarily associated
with such positions in a company the size and nature of the
Company as may from time to time be assigned to the Executive
by the Board. Such duties, responsibilities and authority may
include services for one or more subsidiaries or affiliates of
the Company including, without limitation, services for Dex
Media West LLC following the consummation of all or any
portion of the Dex West Transaction. The Executive shall
report to the Board. The Executive agrees to observe and
comply with the Company's rules and policies as adopted by the
Company from time to time. The Executive shall devote
substantially all his working time and efforts to the business
and affairs of the Company; provided, that it shall not be
considered a violation of the foregoing for the Executive to
(A) with the prior consent of the Board (which consent shall
not unreasonably be withheld), serve on corporate, industry,
civic or charitable boards or committees, (B) accept speaking
engagements and (C) manage his personal affairs, so long as
none of such activities significantly interferes with the
Executive's duties hereunder.
(ii) As of the Effective Date, the Principal
Stockholders shall cause the Executive to be appointed or
elected to the Board. During the Term, the Board shall propose
the Executive for re-election to the Board and the Principal
Stockholders shall vote all of their shares of Common Stock in
favor of such re-election.
(iii) The Executive's principal place of
employment shall be the Company's offices in the Denver,
Colorado metropolitan area.
3. COMPENSATION AND RELATED MATTERS
(a) Annual Base Salary. During the Term, the Executive shall
receive a base salary at a rate of $450,000 per annum, which
shall be paid in accordance with the
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customary payroll practices of the Company (the "Annual Base
Salary"). The rate of the Annual Base Salary shall be reviewed
annually by the Compensation Committee on or prior to April 4
of each year (beginning with April 4, 2004) during the Term
and may be increased, but not decreased, upon such review. The
Annual Base Salary shall not be decreased at any time during
the Term without the Executive's consent, including for the
purpose of determining severance benefits under Section 5
hereof.
(b) Annual Bonus. With respect to each of the Company's fiscal
years that end during the Term, the Executive shall be
eligible to receive an annual performance-based bonus in
accordance with the terms of the Executive Bonus Plan. The
Executive Bonus Plan shall provide that (i) if the Company
achieves the Bank Case EBITDA Target (as set forth on Exhibit
A) for an applicable fiscal year, the Executive's annual bonus
shall be payable in an amount equal to 35% of his Annual Base
Salary, and (ii) if the Company achieves the Equity Case
EBITDA Target (as set forth on Exhibit A) for an applicable
fiscal year, the Executive's annual bonus shall be payable in
an amount equal to 75% of his Annual Base Salary. The
Compensation Committee may, in its sole discretion, provide
that the Executive shall be paid additional bonus amount
pursuant to the Executive Bonus Plan with respect to any
fiscal year (up to maximum aggregate annual bonus of 100% of
Annual Base Salary). The Annual Bonus shall be paid to the
Executive no later than 90 days following the then applicable
fiscal year.
(c) Stock Option Plan. As of the Effective Date, the Executive
shall be granted an option to purchase 58,648 shares of Common
Stock, pursuant to the terms and conditions of the Stock
Option Plan of Dex Media, Inc. (the "Option Plan") and an
Option Agreement entered into by and between Dex Media, Inc.
and the Executive as of the date hereof in substantially the
form attached hereto as Exhibit B. In the event that the Dex
West Transaction is consummated, then as of the Closing Date
(as defined in the Rodney Purchase Agreement), the Executive
shall be granted an option to purchase 58,647 shares of Common
Stock, pursuant to the terms and conditions of the Option Plan
and an Option Agreement entered into by and between the
Executive and the Company (or its applicable affiliate).
(d) Benefits. During the Term, the Executive shall be entitled to
participate in employee benefit plans, programs and
arrangements of the Company now (or, to the extent determined
by the Board, hereafter) in effect which are applicable to the
senior executives of the Company in accordance with their
terms including, without limitation, the Dex Media, Inc.
Pension Plan and the Dex Media, Inc. 401(k) Savings Plan. Such
benefits shall be provided at a level and on terms and
conditions consistent with the Executive's position, and shall
be no less favorable to the Executive than those benefit
levels applying to other senior executives of the Company.
(e) Vacation. During the Term, the Executive shall be entitled to
paid vacation in accordance with the Company's vacation
policies applicable to senior executives
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of the Company. Any vacation shall be taken at the reasonable
and mutual convenience of the Company and the Executive.
(f) Expenses. During the Term, the Company shall reimburse the
Executive for all reasonable travel and other business
expenses incurred by him in the performance of his duties to
the Company in accordance with the Company's expense
reimbursement policy.
(g) Legal Fees. The Company shall pay or reimburse the Executive
for all reasonable attorneys fees incurred by him in
connection with the negotiation of this Agreement and any
other agreements documenting his employment arrangement with
the Company, up to a maximum of $25,000. The Company may, in
its discretion, pay or reimburse the Executive for reasonable
legal expenses in excess of $25,000.
4. TERMINATION
The Executive's employment hereunder may be terminated by the Company
or the Executive, as applicable, without any breach of this Agreement only under
the following circumstances:
(a) Circumstances.
(i) Death. The Executive's employment hereunder shall
terminate upon his death.
(ii) Disability. If the Executive has incurred a
Disability, the Company may give the Executive
written notice of its intention to terminate the
Executive's employment, provided, however, that such
notice shall not be effective prior to the earlier to
occur of (A) the first anniversary of the date the
Executive incurred the Disability or (B) the
expiration of short-term disability benefits pursuant
to any applicable Company benefit plan. In that
event, the Executive's employment with the Company
shall terminate effective on the later to occur of
(X) the 30th day after the receipt of such notice by
the Executive or (Y) the earlier to occur of the
events described in subparagraphs (A) or (B) of this
Section 4(a)(ii), provided that prior to the
effective date of such termination, the Executive
shall not have returned to full-time performance of
his duties.
(iii) Termination for Cause. The Company may terminate the
Executive's employment for Cause.
(iv) Termination without Cause. The Company may terminate
the Executive's employment without Cause.
(v) Resignation for Good Reason. The Executive may resign
his employment for Good Reason.
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(vi) Resignation without Good Reason. The Executive may
resign his employment without Good Reason upon not
less than 60 days advance written notice to the
Board.
(vii) Non-extension of Term by the Company. The Company may
give notice of non-extension to the Executive
pursuant to Section 2(b).
(viii) Non-extension of Term by the Executive. The Executive
may give notice of non-extension to the Company
pursuant to Section 2(b).
(b) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive under this
Section 4 (other than termination pursuant to paragraph
(a)(i)) shall be communicated by a written notice to the other
party hereto indicating the specific termination provision in
this Agreement relied upon, setting forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision
so indicated, and specifying a Date of Termination which, if
submitted by the Executive, shall be at least 30 days
following the date of such notice (a "Notice of Termination")
provided, however, that the Company may, in its sole
discretion, change the Date of Termination to any date
following the Company's receipt of the Notice of Termination.
A Notice of Termination submitted by the Company may provide
for a Date of Termination on the date the Executive receives
the Notice of Termination, or any date thereafter elected by
the Company in its sole discretion. The failure by the
Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a
showing of Cause or Good Reason shall not waive any right of
the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or
circumstance in enforcing the Executive's or the Company's
rights hereunder.
(c) Company Obligations upon Termination (including due to death
or Disability). Upon termination of the Executive's employment
(including due to Executive's death or Disability), the
Executive (or the Executive's estate) shall be entitled to
receive (i) except in the event of the Executive's Disability,
any amount of the Executive's Annual Base Salary through the
Date of Termination not theretofore paid, (ii) a prorated
amount of the Executive's Annual Bonus based on the Company's
year-to-date performance through the Date of Termination in
relation to the performance targets set forth in the Executive
Bonus Plan (such amount to be determined in good faith by the
Compensation Committee and payable at such time as Executive's
Annual Bonus would otherwise have been payable pursuant to the
Executive Bonus Plan), (iii) any expenses owed to the
Executive under Section 3(f), (iv) any accrued vacation pay
owed to the Executive pursuant to Section 3(e), and (v) any
amount arising from the Executive's participation in, or
benefits under any employee benefit plans, programs or
arrangements under Section 3(d), which amounts shall be
payable in accordance with the terms and conditions of such
employee benefit plans, programs or arrangements including,
where applicable, any death and disability benefits (which
death or disability
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benefits, to the extent provided by the Joint Management
Agreement, shall not be reduced). In the event of the
Executive's Disability, in lieu of Annual Base Salary during
such period of Disability, Executive shall be entitled to
receive any applicable short-term disability benefits pursuant
to any applicable Company benefit plan.
5. SEVERANCE PAYMENTS
(a) Termination without Cause, resignation for Good Reason, or
non-extension of the Term by the Company. If the Executive's
employment shall terminate without Cause pursuant to Section
4(a)(iv), for Good Reason pursuant to Section 4(a)(v), or
pursuant to non-extension of the Term by the Company pursuant
to Section 4(a)(vii), the Company shall, subject to the
Executive's execution of a general waiver and release of
claims agreement in the Company's customary form:
(i) Continue to pay to the Executive his base salary as
described in Section 3(a), in accordance with the
Company's regular payroll practices, during the
period beginning on the Date of Termination and
ending on the earliest to occur of (A) the 18-month
anniversary of the Date of Termination; or (B) the
first date that the Executive violates any covenant
contained in Section 6, 7 or 8; and
(ii) To the extent permitted by the Company's applicable
health and welfare benefit plans and programs,
continue for 18 months the Executive's coverage under
the Company's health and welfare benefit plans and
programs in which the Executive was entitled to
participate immediately prior to the Date of
Termination (or, if the Company amends, replaces or
terminates any such plan or program following such
Date of Termination, the Company medical and dental
plans provided to similarly situated employees), as
if the Executive were an active employee during such
time, subject to standard employee contributions by
the Executive as are required under such plans.
(b) Survival. The expiration or termination of the Term shall not
impair the rights or obligations of any party hereto, which
shall have accrued prior to such expiration or termination.
6. NON-COMPETITION; NON-SOLICITATION
(a) The Executive shall not, at any time during the Term or during
the 18-month period following the Date of Termination (the
"Restricted Period"):
(i) Directly or indirectly engage in, have any equity
interest in, or manage or operate (whether as
director, officer, employee, agent, representative,
partner, security holder, consultant or otherwise)
any of the following
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entities, or any subsidiary thereof, or any successor
thereto (the "Competitive Entities"):
(A) Verizon Information Services, a
division of Verizon Communications
Inc.
(B) BellSouth Advertising & Publishing
Corporation (including L. M. Berry)
(C) Southwestern Bell Yellow Pages, a
division of SBC Communications Inc.
(D) Alltel Publishing, a division of
Alltel Corporation
(E) R. H. Donnelley Inc. (including
Sprint Publishing & Advertising)
(F) TransWestern Publishing Company LLC
(G) Yell Group PLC
(H) Yellow Pages Group Company
(I) White Directory Publishers, Inc.
provided, however, that the Executive shall be
permitted to acquire a passive stock or equity
interest in such entity provided the stock or other
equity interest acquired is not more than five
percent (5%) of the outstanding interest in such
entity; and provided, further, that, notwithstanding
the foregoing, at no time during the Restricted
Period may the Executive directly or indirectly
engage in, have any equity interest in, or manage or
operate (whether as director, officer, employee,
agent, representative, partner, security holder,
consultant or otherwise) any parent entity or other
Affiliate of any of the Competitive Entities to the
extent that such parent entity or other Affiliate
engages in (or the Executive's services therefor
relate to) telephone directory publishing, marketing
or advertising (or any other business directly
engaged in by the Company during the Restricted
Period).
(ii) Directly or indirectly solicit, on his own behalf or
on behalf of any other person or entity, the services
of any individual who is (or, at any time during the
previous two years, was) an employee of the Company
(other than an individual who was within the previous
two years his personal assistant or secretary), or
solicit any of the Company's then employees to
terminate employment with the Company; or
(iii) Directly or indirectly, on his own behalf or on
behalf of any other person or entity, recruit or
otherwise solicit or induce any customer, subscriber
or
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supplier of the Company to terminate its employment
or arrangement with the Company, otherwise change its
relationship with the Company, or establish any
relationship with the Executive or any of his
affiliates for any business purpose deemed
competitive with the business of the Company.
(b) In the event the terms of this Section 6 shall be determined
by any court of competent jurisdiction to be unenforceable by
reason of its extending for too great a period of time or over
too great a geographical area or by reason of its being too
extensive in any other respect, it will be interpreted to
extend only over the maximum period of time for which it may
be enforceable, over the maximum geographical area as to which
it may be enforceable, or to the maximum extent in all other
respects as to which it may be enforceable, all as determined
by such court in such action.
(c) As used in this Section 6, the term "Company" shall include
the Company, its parent, related entities, and any of its
direct or indirect subsidiaries.
(d) The restrictions set forth in Sections 6(a)(i) and (iii) above
shall expire prior to the end of the Restricted Period if,
following the Executive's Termination of Employment, the
Company breaches any of its material obligations to the
Executive hereunder, which breach is not fully cured following
30 days written notice from the Executive to the Company
requesting cure of such breach.
(e) The provisions contained in Section 6(a) may be altered and/or
waived with the prior written consent of the Board or the
Compensation Committee.
7. NONDISCLOSURE OF PROPRIETARY INFORMATION
(a) Except as required in the faithful performance of the
Executive's duties hereunder or pursuant to Section 7(c), the
Executive shall, during the Term and after the Date of
Termination, maintain in confidence and shall not directly or
indirectly, use, disseminate, disclose or publish, or use for
his benefit or the benefit of any person, firm, corporation or
other entity any confidential or proprietary information or
trade secrets of or relating to the Company, including,
without limitation, information with respect to the Company's
operations, processes, protocols, products, inventions,
business practices, finances, principals, vendors, suppliers,
customers, potential customers, marketing methods, costs,
prices, contractual relationships, regulatory status,
compensation paid to employees or other terms of employment
("Proprietary Information"), or deliver to any person, firm,
corporation or other entity any document, record, notebook,
computer program or similar repository of or containing any
such Proprietary Information. The Executive's obligation to
maintain and not use, disseminate, disclose or publish, or use
for his benefit or the benefit of any person, firm,
corporation or other entity any Proprietary Information after
the Date of Termination will continue so long as such
Proprietary Information is not, or has not by legitimate means
become, generally known and in the public domain (other than
by means
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of the Executive's direct or indirect disclosure of such
Proprietary Information) and is continued to be maintained as
Proprietary Information by the Company. The parties hereby
stipulate and agree that as between them, the Proprietary
Information identified herein is important, material and
affects the successful conduct of the businesses of the
Company (and any successor or assignee of the Company).
(b) Upon termination of the Executive's employment with the
Company for any reason, the Executive will promptly deliver to
the Company all correspondence, drawings, manuals, letters,
notes, notebooks, reports, programs, plans, proposals,
financial documents, or any other documents concerning the
Company's customers, business plans, marketing strategies,
products or processes. Notwithstanding the foregoing, the
Executive may retain documents relating to his personal
compensation and entitlements, provided that such documents
are retained solely for personal use and are not disclosed to
anyone other than the Executive.
(c) The Executive may respond to a lawful and valid subpoena or
other legal process but shall give the Company the earliest
possible notice thereof, shall, as much in advance of the
return date as possible, make available to the Company and its
counsel the documents and other information sought and shall
assist such counsel in resisting or otherwise responding to
such process.
(d) The Executive agrees not to disparage the Company, any of its
products or practices, or any of its directors, officers,
agents, representatives, stockholders or affiliates, either
orally or in writing, at any time; provided, that the
Executive may confer in confidence with his legal
representatives and make truthful statements as required by
law.
(e) The Company agrees to instruct the members of the Board and
the executive officers of the Company not to disparage the
Executive, either orally or in writing, at any time; provided,
that, the Company may confer in confidence with its legal
representatives and make truthful statements as required by
law.
(f) As used in this Section 7, the term "Company" shall include
the Company, its parent, related entities, and any of its
direct or indirect subsidiaries.
8. NON-DISPARAGEMENT
Each of the parties agrees that, during and following the Term, he or
it will not disparage or denigrate to any person any aspect of his or its past
relationship with the other, nor the character of the other or the other's
agents, representatives, products, or operating methods, whether past, present,
or future.
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9. INJUNCTIVE RELIEF
It is recognized and acknowledged by the Executive that a breach of the
covenants contained in Sections 6, 7 and 8 will cause irreparable damage to
Company and its goodwill, the exact amount of which will be difficult or
impossible to ascertain, and that the remedies at law for any such breach will
be inadequate. Accordingly, the Executive agrees that in the event of a breach
of any of the covenants contained in Sections 6, 7 and 8, in addition to any
other remedy which may be available at law or in equity, the Company will be
entitled to specific performance and injunctive relief.
10. PARACHUTE TAXES
The Company shall use its best reasonable efforts to secure the
approval of any payment or benefits paid or provided to the Executive in
connection with the Executive's employment with the Company in such a fashion
that the Executive is not required to pay an excise tax under Section 4999 of
the Code with respect to any such payment or benefit.
11. ASSIGNMENT AND SUCCESSORS
The Company may assign its rights and obligations under this Agreement
to any entity, including any successor to all or substantially all the assets of
the Company, by merger or otherwise, and may assign or encumber this Agreement
and its rights hereunder as security for indebtedness of the Company and its
affiliates. The Executive may not assign his rights or obligations under this
Agreement to any individual or entity. This Agreement shall be binding upon and
inure to the benefit of the Company, the Executive and their respective
successors, assigns, personnel and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.
12. INDEMNIFICATION AND INSURANCE; LEGAL EXPENSES
During the Term and so long as the Executive has not breached any of
his obligations set forth in Sections 6, 7 and 8, the Company shall indemnify
the Executive to the fullest extent permitted by the laws of the State of
Delaware, as in effect at the time of the subject act or omission, and shall
advance to the Executive reasonable attorneys' fees and expenses as such fees
and expenses are incurred (subject to an undertaking from the Executive to repay
such advances if it shall be finally determined by a judicial decision which is
not subject to further appeal that the Executive was not entitled to the
reimbursement of such fees and expenses). During the Term, the Executive shall
be entitled to the protection of any insurance policies the Company shall elect
to maintain generally for the benefit of its directors and officers ("Directors
and Officers Insurance") against all costs, charges and expenses incurred or
sustained by him in connection with any action, suit or proceeding to which he
may be made a party by reason of his being or having been a director, officer or
employee of the Company or any of its subsidiaries or his serving or having
served any other enterprise as a director, officer or employee at the request of
the Company (other than any dispute, claim or controversy arising under or
relating to this Agreement). Provided there is no non-de minimis incremental
cost to the Company, for six years following the Date of Termination the
Executive shall be entitled to continued coverage
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under Directors and Officers Insurance no less favorable than that (if any)
provided to any other present or former director or officer of the Company.
13. JOINT MANAGEMENT AGREEMENT
Notwithstanding any other provision of this Agreement (a) the
Executive's employment shall be subject to the terms and conditions of the Joint
Management Agreement attached hereto as Exhibit C (the "Joint Management
Agreement"), and (b) during the term of the Joint Management Agreement the
Company shall pay to the Executive an annualized base salary in the amount equal
to the excess of (i) $450,000 over (ii) the amount of the annual base salary
paid to the Executive by Qwest Dex, Inc. and its affiliates. This Agreement
shall remain in effect upon the terms and conditions described herein following
the closing of the Dex West Transaction (or, as applicable, following the time
that it is determined that all or any portion of the Dex West Transaction will
not be consummated).
14. GOVERNING LAW
This Agreement shall be governed, construed, interpreted and enforced
in accordance with the substantive laws of the state of Delaware, without
reference to the principles of conflicts of law of Delaware or any other
jurisdiction, and where applicable, the laws of the United States.
15. VALIDITY
The invalidity or unenforceability of any provision or provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
16. NOTICES
Any notice, request, claim, demand, document and other communication
hereunder to any party shall be effective upon receipt (or refusal of receipt)
and shall be in writing and delivered personally or sent by telex, telecopy, or
certified or registered mail, postage prepaid, as follows:
(a) If to the Company:
Dex Media, Inc.
198 Inverness Drive West
Englewood, CO 80112
Fax.: (303) 784-1964
Attn: Vice President of Human Resources
with copies to:
The Carlyle Group Welsh, Carson, Anderson & Stowe
520 Madison Avenue 320 Park Avenue
41st Floor Suite 2500
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New York, New York 10022 New York, New York 10022
Fax: (212) 381-4901 Fax: (212) 893-9562
Attn: James A. Attwood Attn: Anthony J. de Nicola
and a copy to:
Latham & Watkins, LLP
885 Third Avenue
New York, New York 10022-4802
Fax: (212) 751-4864
Attn: R. Ronald Hopkinson
(b) If to the Executive, to the address set forth on the signature
page hereto
or at any other address as any party shall have specified by notice in writing
to the other party.
17. COUNTERPARTS
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original, but all of which together will constitute one
and the same Agreement.
18. ENTIRE AGREEMENT
The terms of this Agreement and the other agreements and instruments
contemplated hereby or referred to herein (collectively the "Related
Agreements") are intended by the parties to be the final expression of their
agreement with respect to the employment of the Executive by the Company and may
not be contradicted by evidence of any prior or contemporaneous agreement
(including without limitation any Term Sheet or similar agreement entered into
between the Company and the Executive). The parties further intend that this
Agreement and the Related Agreements shall constitute the complete and exclusive
statement of their terms and that no extrinsic evidence whatsoever may be
introduced in any judicial, administrative, or other legal proceeding to vary
the terms of this Agreement and the Related Agreements.
19. AMENDMENTS; WAIVERS
This Agreement may not be modified, amended, or terminated except by an
instrument in writing, signed by the Executive and a duly authorized officer of
Company which expressly identifies the amended provision of this Agreement. By
an instrument in writing similarly executed and similarly identifying the waived
compliance, the Executive or a duly authorized officer of the Company may waive
compliance by the other party or parties with any provision of this Agreement
that such other party was or is obligated to comply with or perform, provided,
however, that such waiver shall not operate as a waiver of, or estoppel with
respect to, any other or subsequent failure. No failure to exercise and no delay
in exercising any right, remedy, or power hereunder preclude any other or
further exercise of any other right, remedy, or power provided herein or by law
or in equity.
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20. NO INCONSISTENT ACTIONS
The parties hereto shall not voluntarily undertake or fail to undertake
any action or course of action inconsistent with the provisions or essential
intent of this Agreement. Furthermore, it is the intent of the parties hereto to
act in a fair and reasonable manner with respect to the interpretation and
application of the provisions of this Agreement.
21. CONSTRUCTION
This Agreement shall be deemed drafted equally by both the parties. Its
language shall be construed as a whole and according to its fair meaning. Any
presumption or principle that the language is to be construed against any party
shall not apply. The headings in this Agreement are only for convenience and are
not intended to affect construction or interpretation. Any references to
paragraphs, subparagraphs, sections or subsections are to those parts of this
Agreement, unless the context clearly indicates to the contrary. Also, unless
the context clearly indicates to the contrary, (a) the plural includes the
singular and the singular includes the plural; (b) "and" and "or" are each used
both conjunctively and disjunctively; (c) "any," "all," "each," or "every" means
"any and all," and "each and every"; (d) "includes" and "including" are each
"without limitation"; (e) "herein," "hereof," "hereunder" and other similar
compounds of the word "here" refer to the entire Agreement and not to any
particular paragraph, subparagraph, section or subsection; and (f) all pronouns
and any variations thereof shall be deemed to refer to the masculine, feminine,
neuter, singular or plural as the identity of the entities or persons referred
to may require.
22. ARBITRATION
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before an
arbitrator in New York, New York in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitration award in any court having jurisdiction, provided, however, that the
Company shall be entitled to seek a restraining order or injunction in any court
of competent jurisdiction to prevent any continuation of any violation of the
provisions of Sections 6, 7 and 8 of the Agreement and the Executive hereby
consents that such restraining order or injunction may be granted without
requiring the Company to post a bond. Only individuals who are (a) lawyers
engaged full-time in the practice of law; and (b) on the AAA register of
arbitrators shall be selected as an arbitrator. Within 20 days of the conclusion
of the arbitration hearing, the arbitrator shall prepare written findings of
fact and conclusions of law. It is mutually agreed that the written decision of
the arbitrator shall be valid, binding, final and non-appealable, provided
however, that the parties hereto agree that the arbitrator shall not be
empowered to award punitive damages against any party to such arbitration. The
arbitrator shall require the non-prevailing party to pay the arbitrator's full
fees and expenses or, if in the arbitrator's opinion there is no prevailing
party, the arbitrator's fees and expenses will be borne equally by the parties
thereto. In the event action is brought to enforce the provisions of this
Agreement pursuant to this Section 22, (x) if the Executive prevails in such
action, the Company shall be required to pay the reasonable attorney's fees and
expenses of the Executive and (y) if the Company prevails in such action or if,
in the opinion of the court or arbitrator deciding such action, there is no
prevailing party, each party shall pay his or its own attorney's fees and
expenses.
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23. ENFORCEMENT
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term of this
Agreement, such provision shall be fully severable; this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a portion of this Agreement; and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance from this
Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable
provision there shall be added automatically as part of this Agreement a
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
24. WITHHOLDING
The Company shall be entitled to withhold from any amounts payable
under this Agreement any federal, state, local or foreign withholding or other
taxes or charges which the Company is required to withhold. The Company shall be
entitled to rely on an opinion of counsel if any questions as to the amount or
requirement of withholding shall arise.
25. EMPLOYEE ACKNOWLEDGEMENT
The Executive acknowledges that he has read and understands this
Agreement, is fully aware of its legal effect, has not acted in reliance upon
any representations or promises made by the Company other than those contained
in writing herein, and has entered into this Agreement freely based on his own
judgment.
26. DESIGNATION OF BENEFICIARIES
The Executive shall be entitled to elect beneficiaries with respect to
any applicable benefits or payments provided or referenced hereunder pursuant to
the Company's beneficiary designation form customarily applicable to any such
benefits or payments.
[signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
COMPANY
By: /s/ Scott Pomeroy
--------------------------------
Name: Scott Pomeroy
Title: Vice President
EXECUTIVE
By: /s/ George Burnett
--------------------------------
George Burnett
<PAGE>
EXHIBIT A
EXECUTIVE BONUS PLAN
ANNUAL BONUS EBITDA TARGETS
($ MILLIONS)
YEAR ENDING DECEMBER 31
DEX
<CAPTION>
PROJECTED EBITDA SUMMARY* 2003 2004 2005 2006 2007
------------------------- ---- ---- ---- ---- ----
BANK CASE
Dex East EBITDA $364 $365 $373 $ 383 $ 394
Dex EBITDA $906 $917 $939 $ 966 $ 996
EQUITY CASE
Dex East EBITDA $369 $378 $393 $ 411 $ 430
Dex EBITDA $913 $942 $976 $1,020 $1,069
---------------------------
* With respect to each calendar year ending prior to the closing of the
Dex West Transaction, the respective Bank Case and Equity Case "Dex East EBITDA"
targets shall apply. With respect to the calendar year in which the closing of
the Dex West Transaction occurs and each calendar year thereafter, the
respective Bank Case and Equity Case "Dex EBITDA" targets shall apply for
purposes of this Agreement. In the event that the Dex West Transaction is not
consummated, the respective Bank Case and Equity Case "Dex East EBITDA" targets
shall apply with respect to all calendar years for purposes of this Agreement.
EBITDA targets shall be adjusted as appropriate to reflect acquisitions,
divestitures and other recapitalizations (other than the Dex West Transaction).
<PAGE>
EXHIBIT B
[OPTION AGREEMENT]
<PAGE>
EXHIBIT C
[JOINT MANAGEMENT AGREEMENT]
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