Exhibit 10.3
EXECUTION COPY
NON-COMPETITION
AGREEMENT
This Non-Competition Agreement (this
“ Agreement ”) is entered into as of
November 17, 2006 between Idearc Media Corp., a Delaware
corporation (“ Publisher ”), and Verizon
Communications Inc., a Delaware corporation (“ Verizon
”). Capitalized terms not otherwise defined herein shall have
the meanings assigned to such terms the Publishing Agreement (as
defined below).
RECITALS
WHEREAS, Verizon and Idearc Inc.
(“ Spinco ”), Publisher’s ultimate parent
company, have entered into the Distribution Agreement, dated as of
November 13, 2006 (the “ Distribution Agreement
”), pursuant to which ( i ) Verizon shall
separate the Spinco Assets (as defined in the Distribution
Agreement) from the Verizon Assets (as defined in the Distribution
Agreement), ( ii ) in exchange for the contribution to
Spinco, directly or indirectly, of the Spinco Assets, Spinco shall
issue to Verizon the Spinco Common Stock (as defined in the
Distribution Agreement) and the Spinco Exchange Notes (as defined
in the Distribution Agreement) and cash and ( iii
) Verizon shall distribute all of the issued and outstanding
shares of Spinco Common Stock to Verizon’s
stockholders;
WHEREAS, in connection with the
transactions contemplated by the Distribution Agreement, Publisher,
Verizon and certain of Verizon’s Affiliates are, concurrently
with the execution of this Agreement, entering the Publishing
Agreement (the “ Publishing Agreement ”),
pursuant to which Verizon is, among other things, designating
Publisher as its exclusive official publisher of Directory Products
within certain of its Service Areas, subject to the terms and
conditions set forth therein;
WHEREAS, in connection with the
transactions contemplated by the Distribution Agreement and the
Publishing Agreement, Verizon has agreed to certain non-competition
and non-solicitation covenants, as set forth in this
Agreement;
NOW, THEREFORE, in consideration of
the premises and of the mutual covenants and agreements herein
contained, the Parties, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 General Rules of
Construction . For all purposes of this Agreement: (i) the
terms defined in this Agreement include the plural as well as the
singular; (ii) all references in this Agreement to designated
“Articles,” “Sections” and other
subdivisions are to the designated Articles, Sections and other
subdivisions of the body of this Agreement; (iii) pronouns of
either gender or neuter include, as appropriate, the other pronoun
forms; (iv) the words “herein,”
“hereof” and “hereunder” and other words
of
similar import refer to this Agreement as a
whole and not to any particular Article, Section or other
subdivision; (v) “or” is not exclusive;
(vi) “including” and “includes” shall
be deemed to be followed by “but not limited to” and
“but is not limited to,” respectively; (vii) any
definition of or reference to any law, agreement, instrument or
other document herein shall be construed as referring to such law,
agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified; and (viii) any
definition of or reference to any statute shall be construed as
referring also to any rules and regulations promulgated
thereunder.
Section 1.2 Definitions
. The following definitions shall apply within this
Agreement.
“ Agreement ” has
the meaning set forth in the introductory paragraph of this
Agreement.
“ Branding Agreement
” means the Branding Agreement, dated as of the date hereof,
between Verizon Licensing Company and Publisher.
“ Business Day ”
means any day other than a Saturday, a Sunday or a day on which
banks in New York, New York are authorized or obligated by law or
executive order to close.
“ Covenant Cure Period
” has the meaning set forth in Section 3.2.
“ Directory Product
” means a telephone directory product or service consisting
principally of searchable (e.g., by alphabet letter or category of
products or services) multiple landline telephone listings and
classified advertisements that is delivered or otherwise made
available to end users in tangible media (e.g., paper directories,
CD-ROM), or digital media (e.g., PDA download but only downloads of
a complete directory product that is otherwise published in
tangible media) but shall not include any of the foregoing products
or service made available or delivered by electronic media (e.g.,
Internet, CATV, satellite, broadcasting).
“ Distribution
Agreement ” has the meaning set forth in the first
recital of this Agreement.
“ Excluded Affiliates
” means Cellco Partnership, d/b/a Verizon Wireless (for so
long as it is not a wholly owned subsidiary of Verizon) and each
subsidiary partnership, corporation, limited liability company or
other business entity thereof, and any other entity as to which
Verizon does not directly or indirectly possess the sole legal or
contractual right to cause such entity to enter into contractual
arrangements (it being understood that no wholly owned subsidiary
of Verizon shall be an Excluded Affiliate); provided that
any such entity shall cease to be an Excluded Affiliate if, when
and for so long as Verizon obtains the sole legal or contractual
right to cause such entity to enter into contractual
arrangements.
“ Independent Markets
” means geographic areas listed on Schedule 1.2.
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“ Intellectual Property
Agreement ” means the Intellectual Property Agreement,
dated as of the date hereof, between Verizon and
Publisher.
“ Internet ”
means the collection of computer and telecommunications facilities,
including equipment and operating software, which comprise the
interconnected world-wide network of networks that employ the
“transmission control protocol/internet protocol”, or
any predecessor or successor protocols to such protocol, and
includes the world wide web.
“ Internet Services
” has the meaning set forth in the Branding
Agreement.
“ IYP Directory Product
” means that portion of Internet Services provided via a
web-site intended to be accessible by end-users using a personal
computer that consists primarily of searchable (e.g., by alphabet
letter or category) multiple wireline telephone listings of
businesses and classified (in a manner substantially similar to
that used in Publisher’s print Directory Products)
advertisements located in the United States of America (excluding
its territories and possessions) and which is substantially similar
in all material respects as to look and functionality, to the
“Yellow Pages” web pages portion contained in
Publisher’s “SuperPages.com” web site as of the
Effective Date.
“ IYP Restrictions
” means the restrictions contained in Section 2.1(b), as
limited by Section 2.3(o).
“ Law ” means any
federal, state, local, municipal, foreign, international,
multinational or other constitution, law, ordinance, principle of
common law, code, regulation, statute or treaty.
“ Material Default
” means, with respect to either Party, a breach of any
material term, condition, covenant or obligation of this Agreement
that is so material and continuing that it has the effect of
abrogating such Party’s performance and the other
Party’s enjoyment of the benefits under this Agreement taken
as a whole, including an uncured breach by Verizon of
Section 2.2(a).
“ Party ” means
each of Publisher and Verizon (collectively, the “
Parties ”).
“ Person ” means
an association, a corporation, an individual, a partnership, a
limited liability company, a trust or any other entity or
organization, including a Governmental Entity.
“ Publisher ” has
the meaning set forth in the preamble to this Agreement.
“ Publisher Parties
” has the meaning set forth in the introductory paragraph of
this Agreement.
“ Publishing Agreement
” has the meaning set forth in the second recital of this
Agreement.
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“ Publisher Region
” means (i) the geographic area (which may not be
contiguous) comprised of all of the Service Areas and (ii) the
geographic area (which may not be contiguous) comprised of all of
the Independent Markets.
“ Remediable Breach
” has the meaning set forth in Section 3.2
“ Restricted Activity
Notice ” has the meaning set forth in
Section 3.1.
“ Spinco ” has
the meaning set forth in the first recital of this
Agreement.
“ Verizon ” has
the meaning set forth in the preamble to this Agreement.
“ Verizon Restricted
Activities ” has the meaning set forth in
Section 2.1.
“ Verizon Successor
” has the meaning set forth in Section 2.2
(a).
“ Voice Portal
Directory ” means a telephone directory product or
service that the user accesses through an interactive voice
portal.
ARTICLE II
VERIZON NON-COMPETITION COVENANTS
Section 2.1 Restrictions
.
(a) Subject to the exclusions,
exceptions and limitations expressly set forth in this Agreement,
and without limiting any restriction with respect to
Verizon’s use of trademarks and trade names as set forth in
the Intellectual Property Agreement, Verizon agrees that it and its
Affiliates (other than the Excluded Affiliates) (i) shall not,
(ii) shall not act as a sales agent on behalf of a third
Person in order to, or (iii) shall not enter into a joint
venture, strategic alliance, product bundling, revenue sharing or
similar arrangement with a third Person a purpose of which is to
(or subsequently vote in favor of or give its consent to any
modification of any such arrangement a primary purpose of which is
to), publish, market, sell or distribute any Directory Products
that (A) consist principally of listings and classified
advertisements of subscribers in the Publisher Region and
(B) are directed primarily at end users in the Publisher
Region (“ Verizon Restricted Activities ”);
provided , however , that if the Publishing Agreement
is terminated with respect to any Service Area(s) (thereby causing
the definition of Publisher Region to exclude such Service
Area(s)), the obligations and restrictions of this Section 2.1
shall no longer apply with respect to such Service Area(s), without
limiting the continued application of such obligations and
restrictions with respect to the remaining Service
Areas.
(b) For a period of one year from
the Effective Date, Verizon agrees that it and its Affiliates
(other than Excluded Affiliates) (i) shall not,
(ii) shall not act as a sales agent on behalf of a third
Person in order to, or (iii) shall not enter into a joint
venture, strategic alliance, product bundling, revenue sharing or
similar arrangement with a third Person a purpose of which is to
(or subsequently vote in favor of or give its consent to
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any modification of any such arrangement a
primary purpose of which is to) publish, market, or sell any IYP
Directory Product provided by Publisher.
Section 2.2 Successor
Restrictions .
(a) Subject to the exclusions,
exceptions and limitations expressly set forth in this Agreement,
following a Change of Control of Verizon whereby Verizon is no
longer directly bound as a Party to this Agreement (e.g., because
the Change of Control is a sale or transfer of assets or is the
result of a transaction pursuant to which the successor, surviving
or acquiring entity (the “ Verizon Successor ”)
does not automatically succeed to the obligations of Verizon by
operation of law), Verizon shall require the Verizon Successor to
agree in writing to assume this Agreement on substantially similar
terms as are then in effect hereunder.
(b) Subject to the exclusions,
exceptions and limitations expressly set forth in this Agreement,
if Verizon exits any Service Area in the Publisher Region as a
result of (i) a sale, assignment or other transfer of access
lines, (ii) a merger or other business combination transaction
with a Person in respect of access lines, or (iii) any other
agreement with any third Person pursuant to which such Person shall
provide local telephone service in lieu of Verizon in such Service
Area (or portion thereof), and, in any of the foregoing cases, such
event does not constitute a Change of Control: ( A
) Verizon shall, if Publisher has entered into with the
acquiring Person binding agreements on terms substantially similar
to the Publishing Agreement and Branding Agreement (to the extent
set forth in Section 3.8(c) of the Publishing Agreement),
require the acquiring Person to agree to enter into with Publisher,
and Publisher shall enter into with such Person, a binding
agreement on terms substantially similar to this Agreement,
excluding Section 2.1(b), with respect to the relevant Service
Area(s) and ( B ) neither Publisher nor Verizon shall
be released from its obligations under this Agreement other than
with respect to such Service Area or portion thereof.
Section 2.3 Exceptions and
Limitations .
(a) None of Verizon, the Verizon
Successor or any of their respective Affiliates shall be deemed to
have engaged in Verizon Restricted Activities or violated the IYP
Restrictions with respect to marketing and sales by non-employee
sales agents if such Person uses its commercially reasonable
efforts, including establishing reasonable procedures, to restrict
the activities of those of their respective agents and other
distribution parties that are marketing Verizon local telephone
service on an exclusive basis (e.g., the agents do not represent
any other provider of local telephone service) from engaging in
Verizon Restricted Activities.
(b) Publisher acknowledges and
agrees that, except for the IYP Restrictions, none of Verizon, the
Verizon Successor or any of their respective Affiliates (including
the Excluded Affiliates) shall have any restrictions on the
publication, marketing, sale or distribution of Directory Products
directed principally at end-users outside the Publisher
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Region using any brand, other than the brands
“SuperPages” or any combination mark of
“SuperPages” and “Spinco”.
(c) Nothing contained in this
Agreement shall prohibit any of Verizon, the Verizon Successor or
any of their respective Affiliates (including, for the avoidance of
doubt, the Excluded Affiliates) from engaging in any activity in
which it is required by Law to engage in itself or through its
Affiliates, including publishing or distributing White Pages to the
extent permitted or required in the event of a Publishing Order,
subject and pursuant to the terms and conditions of
Section 3.11 of the Publishing Agreement.
(d) Nothing contained in this
Agreement shall restrict the Verizon Successor from continuing to
publish, market, sell or distribute (on its own behalf or on behalf
of any third Person) Directory Products in those Service Areas and
Independent Markets in the Publisher Region in which it was
conducting any such business at the date of execution of the
agreement(s) pursuant to which such Change of Control or
disposition transaction occurs; provided , however ,
that the Verizon Successor: (i) may not materially expand the
geographic scope of such Directory Products within such Service
Area(s); and (ii) beginning with the publication of any
Directory Product that is printed or otherwise distributed more
than 15 months after the Change of Control or disposition
transaction is consummated, the Verizon Successor may not brand any
such Directory Product with the brand used by Verizon or any
successor of Verizon (other than the Verizon Successor) that is an
incumbent local exchange carrier in the Service Areas in its
capacity as the incumbent local exchange carrier in the Service
Area(s) covered by such Directory Product.
(e) Nothing contained in this
Agreement shall prohibit Verizon or any its Affiliates from
a
