Management Consulting Agreement - Dex Media East LLC and WCAS Management Corp.
MANAGEMENT CONSULTING AGREEMENT
This Management Consulting Agreement (the "Agreement") is made as of
November 8, 2002, by and among Dex Media East LLC, a Delaware limited liability
company (the "Company") and WCAS Management Corporation, a Delaware corporation
("Welsh Carson").
RECITALS:
WHEREAS, Welsh Carson, by and through its officers, employees, agents,
representatives and affiliates, has expertise in the areas of corporate
management, finance, product strategy, investment, acquisitions and other
matters relating to the business of the Company; and
WHEREAS, the Company desires to avail itself of the expertise of Welsh
Carson in the aforesaid areas, in which it acknowledges the expertise of Welsh
Carson.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants and conditions herein set forth, the parties hereto agree as follows:
1. APPOINTMENT.
The Company hereby appoints Welsh Carson to render the advisory and
consulting services described in Section 2 hereof for the term of this
Agreement.
2. SERVICES.
(a) During the term of this Agreement, Welsh Carson shall render to the
Company, by and through such of Welsh Carson's officers, employees, agents,
representatives and affiliates as Welsh Carson, in its sole discretion, shall
designate, in cooperation with the Chief Executive Officer, from time to time,
advisory, consulting and other services (the "Oversight Services") in relation
to the operations of the Company, strategic planning, domestic marketing and
financial oversight and including, without limitation, advisory and consulting
services in relation to the selection, retention and supervision of independent
auditors, the selection, retention and supervision of outside legal counsel, the
selection, retention and supervision of investment bankers or other financial
advisors or consultants and the structuring and implementation of equity
participation plans, employee benefit plans and other incentive arrangements for
certain key executives of the Company.
(b) The parties hereto acknowledge that certain events will require
Welsh Carson to render services beyond the scope of activities which the parties
contemplate as part of the Oversight Services and for which Welsh Carson shall
be entitled to additional compensation hereunder. It is expressly agreed that
the Oversight Services shall not include
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Investment Banking Services. "Investment Banking Services" means investment
banking, financial advisory or any other services rendered by Welsh Carson to
the Company in connection with any acquisitions and divestitures by the Company
or any of its subsidiaries, including, without limitation, the sale of
substantially all or any portion of the assets of the Company, whether by a sale
of assets, the equity interests of the Company, merger or otherwise, and the
acquisition or sale of any subsidiary, division or service area of the Company,
or (iii) the public or private sale of debt or equity interests of the Company,
or any of its affiliates or any similar financing transactions. The Oversight
Services and the Investment Banking Services shall be referred to herein as the
"Services."
3. FEES.
(a) In consideration of the performance of the Oversight Services
contemplated by Section 2(a) hereof, the Company agrees to pay to Welsh Carson
(i) a closing fee of $15,000,000 and (ii) an aggregate per annum fee (the
"Fee"), continuing until such time as this Agreement is terminated in accordance
with Section 6, an amount equal to $l,OOO,OOO per annum. The Fee shall be
payable quarterly in advance beginning on the Closing Date (as such term is
defined in the Purchase Agreement by and among Qwest Dex, Inc., Qwest Services
Corporation, Qwest Communications International Inc. and Dex Holdings LLC dated
as of August 19, 2002). Fee payments shall be non-refundable.
(b) In consideration of any Investment Banking Services provided to the
Company, Welsh Carson shall be entitled to receive additional reasonable
compensation as agreed upon by the parties hereto and approved by a majority of
the members of the board of directors of the Company.
4. OUT-OF-POCKET EXPENSES.
In addition to the compensation payable to Welsh Carson pursuant to
Section 3 hereof, the Company shall, at the direction of Welsh Carson, pay
directly, or reimburse Welsh Carson for, its reasonable Out-of-Pocket Expenses.
For the purposes of this Agreement, the term "Out-of-Pocket Expenses" shall mean
the amounts actually paid by Welsh Carson in cash in connection with its
performance of the Services, including, without limitation, reasonable (i) fees
and disbursements (including underwriting fees) of any independent auditors,
outside legal counsel, consultants, investment bankers, financial advisors and
other independent professionals and organizations, (ii) costs of any outside
services or independent contractors such as financial printers, couriers,
business publications or similar services and (iii) transportation, per diem,
telephone calls, word processing expenses or any similar expense not associated
with its ordinary operations. All reimbursements for Out-of-Pocket Expenses
shall be made promptly upon or as soon as practicable after presentation by
Welsh Carson to the Company of the statement in connection therewith.
5. INDEMNIFICATION.
The Company will indemnify and hold harmless Welsh Carson and its
officers, employees, agents, representatives, members and affiliates (each being
an "Indemnified Party")
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from and against any and all losses, costs, expenses, claims, damages and
liabilities (the "Liabilities") to which such Indemnified Party may become
subject under any applicable law, or any claim made by any third party, or
otherwise, to the extent they relate to or arise out of the performance of the
Services contemplated by this Agreement or the engagement of Welsh Carson
pursuant to, and the performance by Welsh Carson of the Services contemplated
by, this Agreement. The Company will reimburse any Indemnified Party for all
reasonable costs and expenses (including reasonable attorneys' fees and
expenses) as they are incurred in connection with the investigation of,
preparation for or defense of any pending or threatened claim for which the
Indemnified Party would be entitled to indemnification under the terms of the
previous sentence, or any action or proceeding arising therefrom, whether or not
such Indemnified Party is a party hereto, provided that, subject to the
following sentence, the Company shall be entitled to assume the defense thereof
at its own expense, with counsel satisfactory to such Indemnified Party in its
reasonable judgment. Any Indemnified Party may, at its own expense, retain
separate counsel to participate in such defense, and in any action, claim or
proceeding in which the Company, on the one hand, and an Indemnified Party, on
the other hand, is, or is reasonably likely to become, a party, such Indemnified
Party shall have the right to employ separate counsel at the Company's expense
and to control its own defense of such action, claim or proceeding if, in the
reasonable opinion of counsel to such Indemnified Party, a conflict or potential
conflict exists between the Company, on the one hand, and such Indemnified
Party, on the other hand, that would make such separate representation
advisable. The Company agrees that it will not, without the prior written
consent of the applicable Indemnified Party, settle, compromise or consent to
the entry of any judgment in any pending or threatened claim, action or
proceeding relating to the matters contemplated hereby (if any Indemnified Party
is a party thereto or has been actually threatened to be made a party thereto)
unless such settlement, compromise or consent includes an unconditional release
of the applicable Indemnified Party and each other Indemnified Party from all
liability arising or that may arise out of such claim, action or proceeding.
Provided that the Company is not in breach of its indemnification obligations
hereunder, no Indemnified Party shall settle or compromise any claim subject to
indemnification hereunder without the consent of the Company. The Company will
not be liable under the foregoing indemnification provision to the extent that
any loss, claim, damage, liability, cost or expense is determined by a court, in
a final judgment from which no further appeal may be taken, to have resulted
solely from the gross negligence or willful misconduct of Welsh Carson. If an
Indemnified Party is reimbursed hereunder for any expenses, such reimbursement
of expenses shall be refunded to the extent it is finally judicially determined
that the Liabilities in question resulted solely from the gross negligence or
willful misconduct of Welsh Carson.
6. TERMINATION.
This Agreement shall be in effect on the date hereof and shall continue
until such time as Welsh Carson or one or more of its affiliates collectively
control, in the aggregate, less than 10% of the equity interests of the Company,
or such earlier time as the Company and Welsh Carson may mutually agree. The
provisions of Sections 5 and 8 and otherwise as the context so requires shall
survive the termination of this Agreement.
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7. OTHER ACTIVITIES.
Nothing herein shall in any way preclude Welsh Carson or its officers,
employees, agents, representatives, members or affiliates from engaging in any
business activities or from performing services for its own account or for the
account of others, including for companies that may be in competition with the
business conducted by the Company.
8. GENERAL.
(a) No amendment or waiver of any provision of this Agreement, or
consent to any departure by either party from any such provision, shall be
effective unless the same shall be in writing and signed by the parties to this
Agreement, and, in any case, such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(b) This Agreement and the rights of the parties hereunder may not be
assigned without the prior written consent of the parties hereto; provided,
however, that Welsh Carson may, at its sole discretion, assign or transfer its
duties or interests hereunder to its affiliates.
(c ) Any and all notices hereunder shall, in the absence of receipted
hand delivery, be deemed duly given when mailed, if the same shall be sent by
registered or certified mail, return receipt requested, and the mailing date
shall be deemed the date from which all time periods pertaining to a date of
notice shall run. Notices shall be addressed to the parties at the following
addresses:
If to Welsh Carson: WCAS Management Corporation
c/o Welsh Carson, Anderson & Stowe
320 Park Avenue
Suite 2500
New York, NY 10022
Attention: Anthony J. de Nicola
If to the Company: Dex Media East LLC
198 Inverness Drive West
Englewood, CO 80112
Attention: Chief Executive Officer
(d) This Agreement shall constitute the entire agreement between the
parties with respect to the subject matter hereof, and shall supersede all
previous oral and written (and all contemporaneous oral) negotiations,
commitments, agreements and understandings relating hereto.
(e) This Agreement shall be governed by, and enforced in accordance
with, the laws of the State of New York (excluding the choice of law principles
thereof). Each of the parties hereby irrevocably and unconditionally consents to
submit to the exclusive
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jurisdiction of the courts of the State of New York and of the United States of
America, in each case located in the County of New York, in any action or
proceeding arising out of or relating to this Agreement. This Agreement shall
inure to the benefit of, and be binding upon, Welsh Carson and the Company
(including any present or future subsidiaries of the Company that are not
signatories hereto), and their respective successors and assigns.
(f) This Agreement may be executed in multiple counterparts, and by
different parties on separate counterparts. Each set of counterparts showing
execution by all parties shall be deemed an original, and shall constitute one
and the same instrument.
(g) The waiver by any party of any breach of this Agreement shall not
operate as or be construed to be a waiver by such party of any subsequent
breach.
[signature page to follow]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers or agents as set forth
below.
DEX MEDIA EAST LLC
By: /s/ George Burnett
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Name: George Burnett
Title: CEO and President
WCAS MANAGEMENT CORPORATION
By:
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Name: Anthony J. de Nicola
Title: Managing Member