-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BrlINPaN74TOHsLWIZ6kOzc1PISEUsNVvktYZXc/11wFqz8qz9xBJ0B8E+gx+IVF /kiynF3SjLWurVNDXKZfzg== 0000895345-02-000616.txt : 20021205 0000895345-02-000616.hdr.sgml : 20021205 20021205124648 ACCESSION NUMBER: 0000895345-02-000616 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 20 FILED AS OF DATE: 20021205 GROUP MEMBERS: GOLDMAN SACHS DIRECT INVESTMENT FUND 2000, L.P. GROUP MEMBERS: GOLDMAN, SACHS &CO. GROUP MEMBERS: GOLDMAN, SACHS &CO.OHG GROUP MEMBERS: GOLDMAN, SACHS MANAGEMENT GP GMBH GROUP MEMBERS: GS ADVISORS 2000, L.L.C. GROUP MEMBERS: GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P. GROUP MEMBERS: GS CAPITAL PARTNERS 2000 GMBH &CO.BETEILIGUNGS KG GROUP MEMBERS: GS CAPITAL PARTNERS 2000 OFFSHORE, L.P. GROUP MEMBERS: GS CAPITAL PARTNERS 2000, L.P. GROUP MEMBERS: GS EMPLOYEE FUNDS 2000 GP, L.L.C. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: R H DONNELLEY CORP CENTRAL INDEX KEY: 0000030419 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING [7310] IRS NUMBER: 132740040 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-10057 FILM NUMBER: 02849494 BUSINESS ADDRESS: STREET 1: ONE MANHATTANVILLE ROAD CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9149336800 MAIL ADDRESS: STREET 1: ONE MANHATTANVILLE ROAD CITY: PURCHASE STATE: NY ZIP: 10577 FORMER COMPANY: FORMER CONFORMED NAME: DUN & BRADSTREET COMPANIES INC DATE OF NAME CHANGE: 19790429 FORMER COMPANY: FORMER CONFORMED NAME: DUN & BRADSTREET CORP DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GOLDMAN SACHS GROUP INC/ CENTRAL INDEX KEY: 0000886982 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 134019460 STATE OF INCORPORATION: DE FISCAL YEAR END: 1129 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 85 BROAD ST CITY: NEW YORK STATE: NY ZIP: 10004 BUSINESS PHONE: 2129021000 MAIL ADDRESS: STREET 1: 85 BROAD ST CITY: NEW YORK STATE: NY ZIP: 10004 SC 13D 1 ds13d.txt 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934* R.H. Donnelley Corporation - ------------------------------------------------------------------------------- (Name of Issuer) Common Stock (Par Value $ 1.00 Per Share) - ------------------------------------------------------------------------------- (Title of Class of Securities) 74955W307 - ------------------------------------------------------------------------------- (CUSIP Number) David N. Shine, Esq. David J. Greenwald, Esq. Fried, Frank, Harris, Shriver & Jacobson Goldman, Sachs & Co. One New York Plaza 85 Broad Street New York, NY 10004 New York, NY 10004 (212) 859-8000 (212) 902-1000 - ------------------------------------------------------------------------------- (Name, Address and Telephone Number of Persons Authorized to Receive Notices and Communications) November 25, 2002 - ------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box |_|. *The remainder of this cover page will be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page will not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but will be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D CUSIP No. 74955W 30 7 Page 2 of 54 1. NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) The Goldman Sachs Group, Inc. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7. SOLE VOTING POWER SHARES 0 BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 3,488,159 REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH 0 10. SHARED DISPOSITIVE POWER 3,488,159 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,488,159 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 10.5% 14. TYPE OF REPORTING PERSON HC-CO SCHEDULE 13D CUSIP No. 74955W 30 7 Page 3 of 54 1. NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Goldman, Sachs & Co. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS AF, WC 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6. CITIZENSHIP OR PLACE OF ORGANIZATION New York NUMBER OF 7. SOLE VOTING POWER SHARES 0 BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 3,488,159 REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH 0 10. SHARED DISPOSITIVE POWER 3,488,159 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,488,159 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 10.5% 14. TYPE OF REPORTING PERSON BD-PN-IA SCHEDULE 13D CUSIP No. 74955W 30 7 Page 4 of 54 1. NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) GS Advisors 2000, L.L.C. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7. SOLE VOTING POWER SHARES 0 BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 2,622,504 REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH 0 10. SHARED DISPOSITIVE POWER 2,622,504 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,622,504 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.1% 14. TYPE OF REPORTING PERSON OO SCHEDULE 13D CUSIP No. 74955W 30 7 Page 5 of 54 1. NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Goldman, Sachs & Co. oHG 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6. CITIZENSHIP OR PLACE OF ORGANIZATION Germany NUMBER OF 7. SOLE VOTING POWER SHARES 0 BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 80,379 REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH 0 10. SHARED DISPOSITIVE POWER 80,379 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 80,379 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.3% 14. TYPE OF REPORTING PERSON PN SCHEDULE 13D CUSIP No. 74955W 30 7 Page 6 of 54 1. NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Goldman, Sachs Management GP GmbH 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6. CITIZENSHIP OR PLACE OF ORGANIZATION Germany NUMBER OF 7. SOLE VOTING POWER SHARES 0 BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 80,379 REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH 0 10. SHARED DISPOSITIVE POWER 80,379 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 80,379 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.3% 14. TYPE OF REPORTING PERSON CO SCHEDULE 13D CUSIP No. 74955W 30 7 Page 7 of 54 1. NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) GS Employee Funds 2000 GP, L.L.C. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7. SOLE VOTING POWER SHARES 0 BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 785,218 REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH 0 10. SHARED DISPOSITIVE POWER 785,218 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 785,218 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.6% 14. TYPE OF REPORTING PERSON OO SCHEDULE 13D CUSIP No. 74955W 30 7 Page 8 of 54 1. NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) GS Capital Partners 2000, L.P. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS WC 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7. SOLE VOTING POWER SHARES 1,923,542 BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 0 REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH 1,923,542 10. SHARED DISPOSITIVE POWER 0 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,923,542 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.1% 14. TYPE OF REPORTING PERSON PN SCHEDULE 13D CUSIP No. 74955W 30 7 Page 9 of 54 1. NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) GS Capital Partners 2000 Offshore, L.P. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS WC 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6. CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands NUMBER OF 7. SOLE VOTING POWER SHARES 698,962 BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 0 REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH 698,962 10. SHARED DISPOSITIVE POWER 0 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 698,962 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.3% 14. TYPE OF REPORTING PERSON PN SCHEDULE 13D CUSIP No. 74955W 30 7 Page 10 of 54 1. NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) GS Capital Partners 2000 GmbH & Co. Beteiligungs KG 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS WC 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6. CITIZENSHIP OR PLACE OF ORGANIZATION Germany NUMBER OF 7. SOLE VOTING POWER SHARES 80,379 BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 0 REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH 80,379 10. SHARED DISPOSITIVE POWER 0 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 80,379 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.3% 14. TYPE OF REPORTING PERSON PN SCHEDULE 13D CUSIP No. 74955W 30 7 Page 11 of 54 1. NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) GS Capital Partners 2000 Employee Fund, L.P. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS WC 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7. SOLE VOTING POWER SHARES 610,813 BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 0 REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH 610,813 10. SHARED DISPOSITIVE POWER 0 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 610,813 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.0% 14. TYPE OF REPORTING PERSON PN SCHEDULE 13D CUSIP No. 74955W 30 7 Page 12 of 54 1. NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Goldman Sachs Direct Investment Fund 2000, L.P. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS WC 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7. SOLE VOTING POWER SHARES 174,405 BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 0 REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH 174,405 10. SHARED DISPOSITIVE POWER 0 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 174,405 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.6% 14. TYPE OF REPORTING PERSON PN ITEM 1. SECURITY AND ISSUER. -------------------- This statement on Schedule 13D relates to the common stock, par value $1.00 per share (the "Common Stock"), of R.H. Donnelley Corporation, a Delaware corporation (the "Company"). The principal executive offices of the Company are at One Manhattanville Road, Purchase, New York 10577. ITEM 2. IDENTITY AND BACKGROUND. ------------------------ This statement is being filed by The Goldman Sachs Group, Inc. ("GS Group"), Goldman, Sachs & Co. ("Goldman Sachs"), GS Advisors 2000, L.L.C. ("GS Advisors"), Goldman, Sachs & Co. oHG ("GS oHG"), Goldman, Sachs Management GP GmbH ("GS GmbH"), GS Employee Funds 2000 GP, L.L.C. ("GS Employee 2000"), GS Capital Partners 2000, L.P. ("GS Capital"), GS Capital Partners 2000 Offshore, L.P. ("GS Offshore"), GS Capital Partners 2000 GmbH & Co. Beteiligungs KG ("GS Germany"), GS Capital Partners 2000 Employee Fund, L.P. ("GS Employee"), Goldman Sachs Direct Investment Fund 2000, L.P. ("GS Direct" and, together with GS Capital, GS Offshore, GS Germany and GS Employee, the "Purchasers") (GS Group, Goldman Sachs, GS Advisors, GS oHG, GS GmbH, GS Employee 2000, and the Purchasers, collectively, the "Filing Persons").1 GS Group is a Delaware corporation and holding company that (directly and indirectly through subsidiaries or affiliated companies or both) is a leading investment banking organization. Goldman Sachs, a New York limited partnership, is an investment banking firm and a member of the New York Stock Exchange, Inc. and other national exchanges. Goldman Sachs also serves as the manager for GS Advisors and GS Employee 2000 and the investment manager for GS Capital, GS Offshore, GS Germany, GS Employee and GS Direct. Goldman Sachs is wholly owned, directly and indirectly, by GS Group. GS Advisors, a Delaware limited liability company, is the sole general partner of GS Capital and GS Offshore. GS oHG, a German partnership, is the sole stockholder of GS GmbH. GS GmbH, a German corporation, is the sole managing partner of GS Germany. GS Employee 2000, a Delaware limited liability company, is the sole general partner of GS Employee and GS Direct. Each of GS Capital, a Delaware limited partnership, GS Offshore, a Cayman Islands exempted limited partnership, GS Germany, a German limited partnership, GS Employee, a Delaware limited partnership and GS Direct, a Delaware limited partnership, was formed for the purpose of investing in equity and equity-related securities primarily acquired or issued in leveraged acquisitions, reorganizations and other private equity transactions. The principal business address of each Filing Person (other than GS oHG, GS GmbH, GS Offshore and GS Germany) is 85 Broad Street, New York, NY 10004. The principal business address for GS Offshore is c/o Maples and Calder, P.O. Box 309, Grand Cayman, Cayman Islands. The principal business address for each of GS Germany, GS GmbH and GS oHG is MesseTurm, 60308 Frankfurt am Main, Germany. - -------------------- 1 Neither the present filing nor anything contained herein will be construed as an admission that any Filing Person constitutes a "person" for any purpose other than for compliance with Section 13(d) of the Securities Exchange Act of 1934. The name, business address, present principal occupation or employment and citizenship of each director of GS Group are set forth in Schedule I hereto and are incorporated herein by reference. The name, business address, present principal occupation or employment and citizenship of each executive officer of GS Advisors are set forth in Schedule II-A-i hereto and are incorporated herein by reference. The name, business address, present principal occupation or employment and citizenship of each member of the Principal Investment Area Investment Committee of Goldman Sachs, which is responsible for making all investment and management decisions for GS Advisors, GS Capital, GS Offshore, GS Germany, GS Employee and GS Direct on behalf of Goldman Sachs, are set forth in Schedule II-A-ii hereto and are incorporated herein by reference. The name, business address, present principal occupation or employment and citizenship of each executive officer and director of Goldman, Sachs & Co. Finanz GmbH, the sole managing general partner of GS oHG, are set forth in Schedule II-B-i hereto and are incorporated herein by reference. The name, business address, present principal occupation or employment and citizenship of each executive officer of the GS GmbH, the sole managing member of GS Germany, are set forth in Schedule II-B-ii hereto and are incorporated herein by reference. The name, business address, present principal occupation or employment and citizenship of each executive officer of GS Employee 2000 are set forth in Schedule II-C-i hereto and are incorporated herein by reference. The name, business address, present principal occupation or employment and citizenship of each member of the GS Employee Investment Committee of Goldman Sachs, which is responsible for making all investment and management decisions for GS Employee 2000 and GS Direct on behalf of Goldman Sachs, are set forth in Schedule II-C-ii hereto and are incorporated herein by reference. During the last five years, none of the Filing Persons, nor, to the knowledge of each of the Filing Persons, any of the persons listed on Schedules I, II-A-i, II-A-ii, II-B-i, II-B-ii, II-C-I or II-C-ii hereto, (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) except as set forth on Schedule III hereto, has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree, or final order enjoining future violations of, or prohibiting or mandating activities subject to federal or state securities laws or finding any violation with respect to such laws. The Filing Persons have entered into a Joint Filing Agreement, dated as of December 4, 2002, a copy of which is attached hereto as Exhibit 1. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. -------------------------------------------------- As more fully described herein, on November 25, 2002, (the "November Closing Date"), pursuant to a Letter Agreement, dated as of such date, by and among the Company, R.H. Donnelley, Inc. and the Purchasers (the "Letter Agreement"), the Purchasers purchased 70,000 shares (the "November Shares") of Series B-1 Convertible Cumulative Preferred Stock (the "Series B-1 Preferred Stock") and warrants (the "November Warrants" and, together with the November Shares, the "November Securities") to purchase an aggregate of 577,500 shares of Common Stock for an aggregate purchase price of $70,000,000 in cash (the "November Proceeds") less a closing payment of 1% of the November Proceeds which was netted against the November Proceeds. This $70,000,000 represented a portion of the $200,000,000 in securities the Purchasers previously agreed to purchase pursuant to the Purchase Agreement (as defined below). As of November 25, 2002, the November Shares purchased by the Purchasers are convertible into 2,910,601 shares of Common Stock. The Letter Agreement is filed as Exhibit 2 hereto and is incorporated herein by reference. The Certificate of Designations governing the Series B-1 Preferred Stock (the "Series B-1 Certificate of Designations") is filed as Exhibit 3 hereto and is incorporated herein by reference. The form of November Warrants is filed as Exhibit 4 hereto and is incorporated herein by reference. The funds used by the Purchasers to purchase the November Securities were obtained by such entities from capital contributions by their respective partners. None of the individuals listed on Schedules I, II-A-i, II-A-ii, II-B-i, II-B-ii, II-C-i, II-C-ii, II-D-i or II-D-ii hereto has contributed any funds or other consideration towards the purchase of the securities of the Company except insofar as they may have partnership interests in any of the Filing Persons and have made capital contributions to any of the Filing Persons, as the case may be. As referenced above, as more fully described herein, on September 21, 2002, the Company and the Purchasers entered into a Preferred Stock and Warrant Purchase Agreement which was amended by the Letter Agreement (as amended, the "Purchase Agreement"). The summaries and descriptions of the Purchase Agreement contained herein refer to the Purchase Agreement as amended by the Letter Agreement. Pursuant to the Purchase Agreement, the Purchasers agreed to purchase 200,000 shares (as such amount may be increased as described below in Item 4 under the Caption "Purchase Agreement-Share Adjustment") (the "Initial Preferred Shares") of Convertible Cumulative Preferred Stock (the "Preferred Stock") and warrants (the "Initial Warrants" and, together with the Initial Preferred Shares, the "Initial Securities") to purchase an aggregate of 1,650,000 shares of Common Stock (as such amount may be increased as described below in Item 4 under the Caption "Purchase Agreement-Share Adjustment") for an aggregate purchase price of $200,000,000 in cash (the "Initial Closing Proceeds") less a closing payment of 1% of the Initial Closing Proceeds to be netted against the Initial Closing Proceeds. Pursuant to the Letter Agreement, on November 25, 2002, the Purchasers purchased 70,000 shares of Preferred Stock and warrants to purchase 577,500 shares of Common Stock for an aggregate purchase price of $70,000,000 in cash less a closing payment of 1% which was netted against such purchase price. These amounts reduced the amounts of the Initial Closing Proceeds and the Initial Securities on a dollar-for-dollar and share-for-share basis, respectively, so that the Purchasers remaining commitment under the Purchase Agreement is to Purchase an aggregate of 130,000 shares of Preferred Stock (the "Preferred Shares") and warrants (the "Warrants" and, together with the Preferred Shares, the "Securities") to purchase an aggregate of 1,072,500 shares of Common Stock (as such amount may be increased as described below in Item 4 under the Caption "Purchase Agreement-Share Adjustment") for an aggregate purchase price of $130,000,000 in cash (the "Closing Proceeds") less a closing payment of 1% of the Closing Proceeds to be netted against the Closing Proceeds. Assuming all other conditions to the Purchase Agreement are satisfied, the purchase of the Securities will close simultaneously with the closing (the "Preferred Stock Closing") of the Company's acquisition of the directory publishing business of the Sprint Corporation (such date the "Preferred Stock Closing Date"). On the Preferred Stock Closing Date, assuming no adjustment is made as described below in Item 4 under the Caption "Purchase Agreement-Share Adjustment", the shares of Preferred Stock to be purchased by the Purchasers pursuant to the Purchase Agreement will be convertible into 5,405,405 shares of Common Stock. The Purchase Agreement is filed as Exhibit 5 hereto and is incorporated herein by reference. The form of the Certificate of Designations governing the Preferred Stock (the "Preferred Stock Certificate of Designations") is filed as Exhibit 6 hereto and is incorporated herein by reference. The form of the certificate for the Warrants is filed as Exhibit 7 hereto and is incorporated herein by reference. The funds used by the Purchasers to purchase the Novembers Securities were obtained from capital contributions made by their respective partners. The funds to be used by the Purchasers to purchase the Securities will be obtained from capital contributions made by their respective partners. ITEM 4. PURPOSE OF TRANSACTION. ----------------------- General - ------- The purpose of the acquisition of November Securities and the Securities by the Purchasers pursuant to the Letter Agreement and the Purchase Agreement, respectively, is to acquire a significant equity interest in the Company and to provide the Company with financing for the Company's acquisition of Sprint's directory publishing business. The Letter Agreement - -------------------- Pursuant to the Letter Agreement, the Purchasers purchased the November Shares and the November Warrants for an aggregate purchase price of $70,000,000 in cash less a closing payment of 1% of such amount which was netted against the purchase price. The Letter Agreement provided for certain amendments to the Purchase Agreement which are reflected in the summary of the terms of the Purchase Agreement contained below. In addition, the Letter Agreement also amended and restated the Preferred Stock Certificate of Designation, the form of the certificate for the Warrants (attached hereto as Exhibit 7) and the form of the Registration Rights Agreement (the "Registration Rights Agreement") (attached hereto as Exhibit 8). The Letter Agreement incorporated applicable provisions of the Purchase Agreement into the Letter Agreement including representations and warranties, certain covenants and indemnification provisions. Share Adjustment If, on or prior to the Preferred Stock Closing Date (or in connection with the Senior Credit Facility, the Senior Subordinated Credit Facility and/or the Senior Subordinated Notes (each term as defined in the Purchase Agreement)), the Company issues or sells any shares of Common Stock or any options, warrants or other equity securities of any nature convertible into or exchangeable for shares of Common Stock ("Common Stock Equivalents"), then an adjustment similar to the adjustment described below in this Item 4 under the Caption "Purchase Agreement-Share Adjustment" will be made to the November Shares and the November Warrants. Restricted Actions In addition to the restrictions set forth in the Purchase Agreement (as summarized below under the caption "The Purchase Agreement-Covenants-Restricted Actions"), the Letter Agreement restricts the Company from taking any of the following actions without the prior written consent of at least a majority of the then-outstanding November Shares or the affirmative vote in person or by proxy at a meeting called for that purpose of the holders of at least a majority of the November Shares voting at such meeting: (i) disposing of or acquiring any material assets for cash or equity; (ii) entering into any contract which requires the Company to make cash payments of more than $2 million in the aggregate; (iii) purchasing any equity securities of the Company on the open market; (iv) entering into, or amending in any material respect, any employment agreement with, or other compensation to, any of the Chief Executive Officer, the Chief Financial Offer, the General Counsel of the Company or the President of Donnelley Media; or (v) amending or modifying the DonTech Partnership Agreement (as defined in the Purchase Agreement) or any related agreement in any material respect (collectively, the "November Restricted Actions"). The November Restricted Actions terminate and are no longer effective from and after the earlier to occur of (i) such time as the Purchasers no longer hold any November Shares or (ii) such time as the Purchasers no longer have the right pursuant to the Series B-1 Certificate of Designations to elect a director. Agreement Regarding Dividends Pursuant to the Letter Agreement, the Company agreed that on and after January 31, 2003, the Company will pay cash dividends on the November Shares (assuming such shares have not automatically converted into shares of Preferred Stock as provided for in the Series B-1 Certificate of Designations) on a current basis so long as it is not precluded from doing so under law or its bank credit agreement or public indentures. In order to ensure the payment of these dividends, the Company agreed to (subject to the terms of its bank credit agreement and public indentures) refrain from entering into any agreements which would preclude such payments, seek a waiver under any agreements which would prevent such payments at any time and take whatever actions are necessary, including revaluing assets, to create surplus for the purpose of paying such dividends. The foregoing description of the Letter Agreement is not intended to be complete and is qualified in its entirety by the complete text of the Letter Agreement, which is filed as Exhibit 2 hereto and is incorporated herein by reference. The Purchase Agreement - ---------------------- Pursuant to the Purchase Agreement, the Purchasers initially agreed to purchase the Initial Securities for the Initial Closing Proceeds less a closing payment of 1% of such amount to be netted against the Initial Closing Proceeds. Pursuant to the Letter Agreement, these amounts were reduced on a share-for-share and dollar-for-dollar bases, respectively so that the Purchasers remaining commitment under the Purchase Agreement is to Purchase the Securities for the Closing Proceeds less a closing payment of 1% of the Closing Proceeds to be netted against the Closing Proceeds. The following summary of the Purchase Agreement reflects the terms of the Purchase Agreement as amended by the Letter Agreement. Share Adjustment If, on or prior to the Preferred Stock Closing Date (or in connection with the Senior Credit Facility, the Senior Subordinated Credit Facility and/or the Senior Subordinated Notes (each term as defined in the Purchase Agreement)), the Company issues or sells any Common Stock Equivalents, then the Company must issue to the Purchasers an additional number of shares of Preferred Stock determined by multiplying the number of Preferred Shares then outstanding by a fraction, the numerator of which shall be the number of shares of Common Stock or Common Stock Equivalents issued (a) in the case of an adjustment, if any, to be made on the Preferred Stock Closing Date, from September 21, 2002 to the Preferred Stock Closing Date or (b) in the case of an adjustment, if any, to be made after the Preferred Stock Closing Date, since the later of the Preferred Stock Closing Date or the date of any prior adjustment, and the denominator of which shall be the number of Voting Equity Interests (as defined in the Purchase Agreement) outstanding immediately prior to such issuance of Common Stock or Common Stock Equivalents, excluding (1) any Initial Preferred Shares then outstanding, if any, (2) any shares of Common Stock issuable upon conversion of the Initial Preferred Shares then outstanding, if any, (3) any shares of Common Stock issuable upon exercise of the Initial Warrants, and (4) the Common Stock or Common Stock Equivalents issued (a) in the case of an adjustment, if any, to be made on the Preferred Stock Closing Date, from the date hereof to the Preferred Stock Closing Date or (b) in the case of an adjustment, if any, to be made after the Preferred Stock Closing Date, since the later of the Preferred Stock Closing or the date of any prior adjustment. A similar adjustment will also be made to the number of Warrants issued to the Purchasers pursuant to the Purchase Agreement. Representations and Warranties The Purchase Agreement contains customary representations and warranties by the parties for transactions contemplated thereby. Conditions to Obligations of the Purchasers The obligations of the Purchasers to consummate the purchase of the Securities on the Preferred Stock Closing Date are subject to the satisfaction or waiver of each of the following conditions on or prior to the Preferred Stock Closing Date: (i) all of the representations and warranties of the Company set forth in the Purchase Agreement and the Ancillary Documents (as defined in the Purchase Agreement) must be true and correct on and as of the date of the Purchase Agreement and as of the Preferred Stock Closing Date; (ii) the Company must have performed all obligations and complied with all agreements, undertakings, covenants and conditions required to be performed by the Company at or prior to the Preferred Stock Closing; (iii) no statute, rule, order, decree or injunction of a court or agency of competent jurisdiction is enjoining or prohibiting the consummation of the transactions contemplated by the Purchase Agreement; (iv) all permits, consents, authorizations, orders and approvals of, and filings and registrations required under any federal or state law, rule or regulation for or in connection with the execution and delivery of the Purchase Agreement must have been obtained or made and all statutory waiting periods thereunder in respect thereof must have expired; (v) the delivery by the Company to the Purchasers of a certificate, dated the Preferred Stock Closing Date, signed by the chief executive officer and chief financial officer of the Company that the conditions described in this paragraph have been satisfied; (vi) the execution and delivery of the Registration Rights Agreement; (vii) the filing of the Preferred Stock Certificate of Designations with the Secretary of State of the State of Delaware and such Preferred Stock Certificate of Designations being effective and in full force and effect; (viii) (A) the Other Transaction Documents (as defined in the Purchase Agreement) which have been executed prior to the execution of the Purchase Agreement have not been amended, modified, supplemented, or provisions thereof waived in violation of the Purchase Agreement, (B) the Other Transaction Documents which were attached as a form to another Other Transaction Document at the time of the execution of the Purchase Agreement are executed in a form that is in all material respects in such form, and (C) the Purchasers are satisfied, in their sole discretion, with the form and substance of the Other Transaction Documents that were prepared and executed after the execution of the Purchase Agreement; (ix) the transactions contemplated by the Other Transaction Documents are completed prior to or concurrently with the Preferred Stock Closing; (x) receipt by the Purchasers of an opinion of counsel to the Company; (xi) each Purchaser must simultaneously purchase and pay for its Securities; (xii) the Purchaser Designees (as defined in the Purchase Agreement) must have been elected to the board of directors of the Company, and the board of directors must consist of no more than ten directors; (xiii) the absence of any event or occurrence, since December 31, 2001, that could reasonably be expected to result in any material adverse change in the business, assets, operations, properties, conditions, prospects, contingent liabilities or material agreements of the Company and the business acquired pursuant to the Sprint Transaction (as defined in the Purchase Agreement), taken as a whole; (xiv) the NYSE has (1) not withdrawn its advice that stockholder approval of the issuance of Common Stock upon conversion of the Initial Preferred Shares and exercise of the Initial Warrants is not required under Rule 312 of the NYSE Listed Company Manual and (2) confirmed that the terms of the Preferred Stock, as set forth in the Preferred Stock Certificate of Designations and the Purchase Agreement, comply with NYSE's Voting Rights Policy as set forth in Rule 313 of the NYSE Listed Company Manual, which advice has not been withdrawn; (xv) the Company has received the proceeds from the financing contemplated by the Commitment Letter (as defined in the Purchase Agreement). Conditions to Obligations of the Company The obligations of the Company to consummate the sale of the Securities on the Preferred Stock Closing Date are subject to the satisfaction or waiver of each of the following conditions on or prior to the Preferred Stock Closing Date: (i) all of the representations and warranties of the Purchasers set forth in the Purchase Agreement must be true and correct on and as of the date of the Purchase Agreement and as of the Preferred Stock Closing Date; (ii) the Purchasers must have performed all obligations and complied with all agreements, undertakings, covenants and conditions required to be performed by the Purchasers at or prior to the Preferred Stock Closing; (iii) no statute, rule, order, decree or injunction of a court or agency of competent jurisdiction is enjoining or prohibiting the consummation of the transactions contemplated by the Purchase Agreement; (iv) all permits, consents, authorizations, orders and approvals of, and filings and registrations required under any federal or state law, rule or regulation for or in connection with the execution and delivery of the Purchase Agreement must have been obtained or made and all statutory waiting periods thereunder in respect thereof must have expired; (v) the delivery by the Purchaser to the Company of a certificate, dated the Preferred Stock Closing Date, that the condition set forth in clauses (i) and (ii) of this paragraph have been satisfied; (vi) the Company received the proceeds from the financing contemplated by the Commitment Letter; (vii) the transactions contemplated by the Other Transaction Documents are completed immediately prior to or concurrently with the Preferred Stock Closing; (viii) the Purchasers delivered to the Company the Closing Proceeds in immediately available funds, by wire transfer to an account specified by the Company. Covenants Restricted Actions The Company agreed, that from and after the Preferred Stock Closing Date, the Company will not, and will not permit any Company Subsidiary (as defined in the Purchase Agreement) to, directly or indirectly, take any of the following actions without the prior written consent of at least a majority of the then-outstanding Initial Preferred Shares or the affirmative vote in person or by proxy at a meeting called for that purpose of the holders of at least a majority of the Initial Preferred Shares voting at such meeting: (a) sell, lease, transfer or otherwise dispose of any asset or assets of the Company or Company Subsidiaries, including the capital stock of any Company Subsidiary, other than a disposition of all or substantially all of the Company's assets in a transaction governed by Section 271 of the Delaware General Corporation Law, unless (i) the aggregate net proceeds received in connection with all of such transactions in any given twelve-month period (whether paid in cash or property) does not exceed $115 million, or (ii) such transaction is between the Company or its wholly owned Company Subsidiary, on the one hand, and any other wholly owned Company Subsidiary, on the other hand; (b) enter into or suffer to exist any contract, agreement, arrangement or transaction with any Affiliate (other than DonTech (as defined in the Purchase Agreement)), any Company Subsidiary, and any company that is acquired pursuant to the Other Transaction Documents), officer, director or stockholder holding greater than 5% of the Company's outstanding Common Stock (an "Affiliate Transaction"), unless such Affiliate Transaction (i) is determined by a majority of the board of directors to be fair and reasonable to the Company, and no less favorable to the Company than could have been obtained in an arm's length transaction with a third party, and (ii) is approved by a majority of the members of the board of directors that are disinterested in such transaction; (c) materially alter its principal line of business as conducted on the Preferred Stock Closing Date; (d) incur, create, guarantee, become or be liable in any manner with respect to or permit to exist (other than pursuant to the Other Transaction Documents) any Indebtedness (as such term will be defined by the parties prior to the Preferred Stock Closing Date) if the Leverage Ratio (as such term will be defined by the parties prior to the Preferred Stock Closing Date), as at such time, is greater than 5.0 to 1.0, provided that this restriction does not prohibit the Company from incurring up to $25 million of Indebtedness in any given twelve-month period; (e) acquire (by merging or consolidating with, or by purchasing an equity interest in or a portion of the assets of, or by any other manner) any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets in excess of $100 million in any given twelve-month period, other than inventory and other assets to be sold or used in the ordinary course of business and other than any transaction that requires the approval of the holders of the Company's Common Stock; (f) amend the Certificate of Incorporation of the Company to authorize the creation or issuance, or the increase in the authorized amount, of the Preferred Stock, any Parity Securities (as defined in the Preferred Stock Certificate of Designations) or Senior Securities (as defined in the Preferred Stock Certificate of Designations), or to authorize the creation or issuance of securities convertible into or exchangeable for, or options, warrants or other rights to acquire, the Preferred Stock, any Parity Securities or Senior Securities; (g) reclassify any series of Junior Securities (as defined in the Certificate of Designations) as Senior Securities or Parity Securities; (h) amend, repeal or change (whether by merger, consolidation or otherwise) any of the provisions of the Certificate of Incorporation or By-laws of the Company or the provisions of the Preferred Stock Certificate of Designations or the Initial Warrants in any manner that would alter or change the powers, preferences or rights of the shares of the Preferred Stock or the Initial Warrants, as the case may be, so as to affect them adversely, or otherwise restrict the rights, preferences or privileges of the Initial Securities; (i) pay or declare any dividend or distribution on any shares of its capital stock (other than dividends on the Common Stock payable in additional shares of Common Stock and other than dividends from a Company Subsidiary to its parent company) or apply any of its assets to the redemption, retirement, purchase or acquisition, directly or indirectly, through Company Subsidiaries or otherwise, of any shares of its capital stock (other than (A) redemptions, retirements, purchases or acquisitions of the Preferred Stock in accordance with the terms of the Preferred Stock Certificate of Designations, and (B) (x) the repurchase of shares of Common Stock from employees or former employees of the Company who acquired such shares directly from the Company and which repurchases are approved by a majority of the board of directors and (y) open market purchases, which, in the case of both (x) and (y) taken together are not in excess of the lesser of $25 million or 25% of the Company's Net Income (as defined in the Purchase Agreement) for the immediately preceding twelve months in any given twelve-month period); (j) sell, offer for sale or solicit offers to buy any security (as defined in the Securities Act of 1933, as amended (the "Securities Act")) that would be integrated with the sale of the Initial Securities in a manner that would require the registration under the Securities Act of the sale of the Initial Securities to the Purchasers or any Affiliate of the Purchasers; (k) prior to the 18-month anniversary of the Preferred Stock Closing Date, issue or sell any equity securities (or securities exchangeable for or convertible into equity securities, or any options, warrants, rights to subscribe to, scrip calls, contracts, undertakings, arrangements or commitments to issue which may result in the issuance of equity securities of the Company) other than a Permitted Issuance (as defined in the Preferred Stock Certificate of Designations); (l) increase the number of directors comprising the board of directors to more than ten directors; or (m) amend, modify or supplement any provision of the Rights Agreement (as defined in the Purchase Agreement) in a manner that adversely affects the rights and benefits of any Purchaser under any such provision. The aforementioned obligations of the Company terminate and will no longer be of any effect from and after the time as the Purchasers no longer have the right pursuant to the Preferred Stock Certificate of Designations to elect a director of the Company. Restrictions on Sale or Transfer by the Purchasers Pursuant to the Purchase Agreement, the Purchasers agreed not to, directly or indirectly, offer, sell, transfer, assign, pledge, hypothecate or otherwise dispose of the beneficial ownership of (any such act, a "Transfer") (x) any Securities prior to the first anniversary of the Preferred Stock Closing Date, or (y) any November Securities prior to the first anniversary of the November Closing Date, except in each case for, and subject in each case to compliance with all applicable requirements of law and the receipt of any necessary governmental approvals, (i) a Transfer by any Purchaser to an Affiliate of such Purchaser or a Designated Transferee (as defined in the Preferred Stock Certificate of Designations), provided that prior to such Transfer each such transferee consents in writing with the Company to be bound by the restrictions on transfer set forth in the Purchase Agreement and assumes all other rights and obligations of the Purchasers under the Purchase Agreement and the Registration Rights Agreement; (ii) a Transfer to the Company or to a wholly owned direct or indirect subsidiary of the Company; (iii) a Transfer pursuant to a merger or consolidation in which the Company is a constituent corporation; (iv) a Transfer pursuant to a bona fide third party tender offer or exchange offer; (v) redemptions and conversions of the shares of Preferred Stock in accordance with the terms of the Preferred Stock Certificate of Designations; and (vi) exercise of the Initial Warrants in accordance with their terms. The foregoing restrictions on Transfer cease to apply (i) in the case of any shares of Preferred Stock issued upon the exchange of the November Shares, and in the case of any November Warrants, from and after the first anniversary of the November Closing Date, (ii) in the case of any other Preferred Shares and Warrants issued on the Preferred Stock Closing Date, from and after the first anniversary of the Preferred Stock Closing Date and (iii) upon the Trigger Date (as defined in the Series B-1 Certificate of Designations), so long as, in each case, such Transfer is made in compliance with all applicable requirements of law and any necessary governmental approvals have been obtained. Board Representation The Purchasers have the right to elect certain directors to the board of directors as further described in Item 6 under the captions "Series B-1 Certificate of Designations-Voting Rights" and "Preferred Stock Certificate of Designations-Voting Rights". Pursuant to the Purchase Agreement, if the Purchasers convert the Preferred Stock following the delivery by the Company of a notice of redemption under the redemption under the Preferred Stock Certificate of Designations, the Purchasers are entitled to continue to designate and elect directors to the board of directors as and to the extent that they would have had such rights had the Purchasers not converted such shares. Conversion of the Preferred Stock will not result in any Purchaser Designee (as defined in the Purchase Agreement) being required to resign or be removed from the board of directors prior to the expiration of his applicable term. One Purchaser Designee also has the right, subject to compliance with applicable New York Stock Exchange and SEC rules and regulations, to sit on each committee of the board of directors. In addition, for so long as GS Capital and its affiliates collectively beneficially own a number of shares of Common Stock (which beneficial ownership shall assume immediate convertibility of all shares of Preferred Stock then owned) that is not less than 7.5% of the number of shares of Common Stock beneficially owned (which beneficial ownership shall assume immediate convertibility of all shares of Preferred Stock then owned) by them immediately after the Preferred Stock Closing Date, GS Capital has the right to designate one non-voting observer to the board of directors. Such non-voting observer has the right to attend each meeting of the board of directors and each meeting of any committee thereof and to participate in all discussions during each such meeting; provided, however, that the Company may exclude such non-voting observers from access to any material or meeting or portion thereof if the Company believes that such exclusion is reasonably necessary to preserve the attorney-client privilege or to protect confidential proprietary information. The Company must send to the non-voting observer the notice of the time and place of such meeting in the same manner and at the same time as it sends such notice to its directors or committee members, as the case may be. The Company must also provide to the non-voting observers copies of all notices, reports, minutes and consents at the time and in the manner as they are provided to the board of directors or committee, except for information reasonably designated as proprietary information by the board of directors. In addition, at any time that GS Capital is entitled to designate a non-voting member to the board of directors, GS Capital will also be entitled to consult with and advise management of the Company on significant business issues, including management's proposed annual operating plans, and management must meet with representatives of GS Capital at the Company's facilities at mutually agreeable times for such consultation and advice, including review progress in achieving said plans. Upon notice given by GS Capital to the Company, the Company will give to GS Capital reasonable advance written notice of any significant new initiatives or material changes to existing operating plans and must afford GS Capital adequate time to meet with management to consult on such initiatives or changes prior to implementation. Dividends Pursuant to the Purchase Agreement, the Company agreed that after the tenth anniversary of the Preferred Stock Closing Date, the Company will pay cash dividends on the Initial Preferred Shares on a current basis so long as it is not precluded from doing so under law. In order to ensure the payment of these dividends, the Company agreed to refrain from entering into any agreements which would preclude such payments, seek a waiver under any agreements which would prevent such payments at any time and take whatever actions are necessary, including revaluing assets, to create surplus for the purpose of paying such dividends. Indemnification Pursuant to the Purchase Agreement, the representations and warranties of the parties contained in the Purchase Agreement expire on the second anniversary of the Preferred Stock Closing Date, except that the representations and warranties entitled "Organization and Good Standing of Company; Authorization" and "Capitalization" survive indefinitely and the representations and warranties regarding ERISA Affiliates (as defined in the Purchase Agreement) and "Taxes" (as defined in the Purchase Agreement) survive until thirty days following the expiration of the applicable of statute of limitations. Pursuant to the Purchase Agreement, the Purchasers agreed, from and after the Preferred Stock Closing Date, to indemnify the Company and its Affiliates and agents, and the officers, directors, employees, successors, transferees and assigns of each of them (each, a "Company Indemnified Party") against and hold them harmless from and against all Losses (as defined in the Purchase Agreement) incurred by any of them based upon, resulting from or arising out of (i) the breach of any representation or warranty of such Purchaser contained in the Purchase Agreement or (ii) the breach of or failure to perform any covenant or agreement of such Purchaser contained in the Purchase Agreement. The Company agreed, from and after the Closing Date, to indemnify each of the Purchasers and each of their respective Affiliates and agents and the officers, directors, employees, members, successors, transferees and assigns of each of them (each, an "Purchaser Indemnified Party") against and hold them harmless from and against all Losses incurred by any of them based upon, resulting from or arising out of (i) the breach of any representation or warranty of the Company contained in the Purchase Agreement, (ii) the breach of or failure to perform any covenant or agreement of the Company contained in the Purchase Agreement or (iii) the litigation entitled DonTech vs. Adoption World v. Ameritech Corporation (Case Number 98 L 13197). Except for fraud, no claim may be made against the Company for indemnification for breaches of representations and warranties made by the Company for Purchaser Losses unless and until the aggregate amount of Purchaser Losses exceeds $1,000,000 and then the Company is only be liable for the amount of such Losses which exceeds $1,000,000. The maximum amount recoverable by a Purchaser Indemnified Party for breaches of representations and warranties made by the Company under the Purchase Agreement is $100,000,000 in the aggregate. Except for fraud, no claim may be made against the Purchasers for indemnification for breaches of representations and warranties made by the Purchasers for Company Losses unless and until the aggregate amount of Company Losses exceeds $1,000,000 and then the Purchasers are only be liable for the amount of such Losses which exceeds $1,000,000. The maximum amount recoverable by a Company Indemnified Party for breaches of representations and warranties made by the Purchasers under the Purchase Agreement is $100,000,000 in the aggregate. Expenses Pursuant to the Purchase Agreement, the Company agreed to pay (i) the reasonable third party and out-of-pocket expenses (including, without limitation, all reasonable fees and expenses of each counsel, accountants and consultants) incurred by the Purchasers or their Affiliates since August 16, 2002 in connection with the preparation, negotiation, execution, and performance of the Letter Agreement, Purchase Agreement or any of the transactions contemplated by thereby and (ii) all costs of filings required under the HSR Act in connection with the execution and performance of the Purchase Agreement. Rights Agreement Amendment - -------------------------- In connection with the transactions contemplated by the Purchase Agreement, the Board approved Amendment No. 2, dated as of September 21, 2002, to the Rights Agreement, dated as of October 27, 1998, as amended (the "Rights Agreement"), between the Company and The Bank of New York (successor to First Chicago Trust Company, as rights agent). This amendment made the provisions of the Rights Agreement inapplicable to the transactions contemplated by the Purchase Agreement. Other Plans and Proposals ------------------------- Except as described above or otherwise described in this Schedule 13D, the Filing Persons currently have no plans or proposals which relate to or would result in any transaction, event or action enumerated in paragraphs (a) through (j) of Item 4 of the form of Schedule 13D promulgated under the Act. Each of the Filing Persons reserves the right, in light of its ongoing evaluation of the Company's financial condition, business, operations and prospects, the market price of the Common Stock, conditions in the securities markets generally, general economic and industry conditions, its business objectives and other relevant factors, to change its plans and intentions at any time, as it deems appropriate. In particular, any one or more of the Filing Persons (and their respective affiliates) reserves the right, in each case subject to (a) the restrictions contained in the Purchase Agreement and (b) any applicable limitations imposed on the sale of any of their Company securities by the Securities Act or other applicable law, to (i) purchase additional shares of Common Stock or other securities of the Company, (ii) sell or transfer shares of Preferred Stock, Series B-1 Preferred Stock, Common Stock or other securities beneficially owned by them from time to time in public or private transactions, (iii) cause any of the Purchasers to distribute in kind to their respective partners or members, as the case may be, shares of Preferred Stock, Series B-1 Preferred Stock, Common Stock or other securities owned by such Purchasers and (iv) enter into privately negotiated derivative transactions with institutional counterparties to hedge the market risk of some or all of their positions in the shares of Common Stock, Preferred Stock, Series B-1 Preferred Stock or other securities. To the knowledge of each Filing Person, each of the persons listed on Schedules I, II-A-i, II-A-ii, II-B-i, II-B-ii, II-C-i or II-C-ii hereto may make similar evaluations from time to time or on an ongoing basis. ITEM 5. INTERESTS IN SECURITIES OF THE ISSUER. ------------------------------------- (a) Pursuant to a capitalization schedule provided by the Company and attached to the Letter Agreement, as of the November Closing Date there were 29,714,335 shares of Common Stock outstanding. As of the November Closing Date, GS Group may be deemed to beneficially own an aggregate of 3,488,159 shares of Common Stock, consisting of (i) 70,000 shares of Series B-1 Preferred Stock, which are convertible into 2,910,601 shares of Common Stock, which may be deemed to be beneficially owned by the Purchasers, (ii) November Warrants (which are exercisable immediately) to purchase 577,500 shares of Common Stock, which may be deemed to be beneficially owned by the Purchasers and (iii) 58 shares of Common Stock acquired by Goldman Sachs in ordinary course trading activities, representing in the aggregate approximately 10.5% of the outstanding Common Stock, based on calculations made in accordance with Rule 13d-3(d) of the Act. As of the November Closing Date, Goldman Sachs may be deemed to beneficially own an aggregate of 3,488,159 shares of Common Stock, consisting of (i) 70,000 shares of Series B-1 Preferred Stock, which are convertible into 2,910,601 shares of Common Stock, which may be deemed to be beneficially owned by the Purchasers, (ii) November Warrants (which are exercisable immediately) to purchase 577,500 shares of Common Stock, which may be deemed to be beneficially owned by the Purchasers and (iii) 58 shares of Common Stock acquired by Goldman Sachs in ordinary course trading activities, representing in the aggregate approximately 10.5% of the outstanding shares of Common Stock based on calculations made in accordance with Rule 13d-3(d) of the Act. GS Group and Goldman Sachs disclaim beneficial ownership of the shares of Common Stock beneficially owned by the Purchasers to the extent that partnership interests in the Purchasers are held by persons other than Goldman Sachs or its affiliates. In accordance with Securities and Exchange Commission Release No. 34-39538 (January 12, 1998), this filing reflects the securities beneficially owned by the investment banking division ("IBD"") of GS Group and its subsidiaries and affiliates (collectively, "Goldman Sachs Group"). This filing does not reflect securities, if any, beneficially owned by any other operating unit of Goldman Sachs Group. IBD disclaims beneficial ownership of the securities beneficially owned by (i) any client accounts with respect to which IBD or its employees have voting or investment discretion, or both and (ii) certain investment entities, of which IBD is the general partner, managing general partner or other manager, to the extent interests in such entities are held by persons other than IBD. As of the November Closing Date, GS Advisors may be deemed to beneficially own the aggregate of 2,622,504 shares of Common Stock that may be deemed to be beneficially owned by GS Capital and GS Offshore, consisting of (i) 52,629 shares of Series B-1 Preferred Stock, which are convertible into 2,188,315 shares of Common Stock and (ii) November Warrants (which are exercisable immediately) to purchase 434,189 shares of Common Stock, representing in the aggregate, approximately 8.1% of the outstanding shares of Common Stock based on calculations made in accordance with Rule 13d-3(d) of the Act. As of the November Closing Date, each of GS oHG and GS GmbH may be deemed to beneficially own the aggregate of 80,379 shares of Common Stock that may be deemed to be beneficially owned by GS Germany, consisting of (i) 1,613 shares of Series B-1 Preferred Stock which are convertible into 67,068 shares of Common Stock and (ii) November Warrants (which are exercisable immediately) to purchase 13,311 shares of Common Stock, representing in the aggregate, approximately 0.3% of the outstanding shares of Common Stock based on calculations made in accordance with Rule 13d-3(d) of the Act. As of the November Closing Date, GS Employee 2000 may be deemed to beneficially own the aggregate of 785,218 shares of Common Stock that may be deemed to be beneficially owned by GS Employee and GS Direct, consisting of (i) 15,758 shares of Series B-1 Preferred Stock which are convertible into 655,218 shares of Common Stock and (ii) November Warrants (which are exercisable immediately) to purchase 130,000 shares of Common Stock, representing in the aggregate, approximately 2.6% of the outstanding shares of Common Stock based on calculations made in accordance with Rule 13d-3(d) of the Act. As of the November Closing Date, GS Capital may be deemed to beneficially own 1,923,542 shares of Common Stock, consisting of (i) 38,602 shares of Series B-1 Preferred Stock, which are convertible into 1,605,072 shares of Common Stock and (ii) November Warrants (which are exercisable immediately) to Purchase 318,470 shares of Common Stock, representing in the aggregate, approximately 6.1% of the outstanding shares of Common Stock based on calculations made in accordance with Rule 13d-3(d) of the Act. As of the November Closing Date, GS Offshore may be deemed to beneficially own 698,962 shares of Common Stock, consisting of (i) 14,027 shares of Series B-1 Preferred Stock, which are convertible into 583,243 shares of Common Stock and (ii) November Warrants (which are exercisable immediately) to purchase 115,719 shares of Common Stock, representing in the aggregate, approximately 2.3% of the outstanding shares of Common Stock based on calculations made in accordance with Rule 13d-3(d) of the Act. As of the November Closing Date, GS Germany may be deemed to beneficially own 80,379 shares of Common Stock, consisting of (i) 1,613 shares of Series B-1 Preferred Stock, which are convertible into 67,068 shares of Common Stock and (ii) November Warrants (which are exercisable immediately) to purchase 13,311 shares of Common Stock, representing in the aggregate, approximately 0.3% of the outstanding shares of Common Stock based on calculations made in accordance with Rule 13d-3(d) of the Act. As of the November Closing Date, GS Employee may be deemed to beneficially own 610,813 shares of Common Stock, consisting of (i) 12,258 shares of Series B-1 Preferred Stock, which are convertible into 509,688 shares of Common Stock and (ii) November Warrants (which are exercisable immediately) to purchase 101,125 shares of Common Stock, representing in the aggregate, approximately 2.0% of the outstanding shares of Common Stock based on calculations made in accordance with Rule 13d-3(d) of the Act. As of the November Closing Date, GS Direct may be deemed to beneficially own 174,405 shares of Common Stock, consisting of (i) 3,500 shares of Series B-1 Preferred Stock, which are convertible into 145,530 shares of Common Stock and (ii) November Warrants (which are exercisable immediately) to purchase 28,875 shares of Common Stock, representing in the aggregate, approximately 0.6% of the outstanding shares of Common Stock based on calculations made in accordance with Rule 13d-3(d) of the Act. None of the Filing Persons or, to the knowledge of the Filing Persons, the persons listed on Schedules I, II-A-i, II-A-ii, II-B-i, II-B-ii, II-C-i or II-C-ii hereto beneficially owns any shares of Common Stock other than as set forth herein. (b) Each Filing Person shares the power to vote or direct the vote and to dispose or to direct the disposition of shares of Common Stock beneficially owned by such Filing Person as indicated above. (c) Schedule IV sets forth transactions in the Common Stock which were effected during the sixty day period from September 26, 2002 through November 25, 2002, all of which were effected in the ordinary course of business of Goldman Sachs. The transactions in the Common Stock, described in Schedule IV, were effected in the over-the-counter market. Except as described above or as set forth on Schedule IV hereto, no transactions in the shares of Common Stock were effected by the Filing Persons, or, to their knowledge, any of the persons listed on Schedules I, II-A-i, II-A-ii, II-B-i, II-B-ii, II-C-i or II-C-ii hereto, during the past sixty days. (d) Except for clients of Goldman Sachs who may have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, any shares of Common Stock held in Managed Accounts, no other person is known by any Filing Person to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, any shares of Common Stock that will be beneficially owned by any Filing Person after the purchase pursuant the Letter Agreement. (e) Not applicable. ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. ----------------------------------- The responses set forth in Items 3 and 4 of this Schedule 13D are incorporated herein by reference in their entirety. Registration Rights Agreement - ----------------------------- On November 25, 2002, the Company and the Purchasers entered into the Registration Rights Agreement. Pursuant to the Registration Rights Agreement, the Company granted the Purchasers the right, subject to certain limitations and restrictions, (i) to require the Company at the request of the Purchasers at any time after the earlier of (x) the Trigger Date (as defined below under the heading "Series B-1 Certificate of Designations-Defined Terms") and (y) November 25, 2003, on three separate occasions to effect a registration of shares of Registrable Securities (defined below) and (ii) to require the Company to include shares of Registrable Securities then held by the Purchasers in any other registration by the Company of its equity securities under the Securities Act. The Company agreed to pay certain expenses of the Purchasers in connection with such registrations as provided for in the Registration Rights Agreement. "Registrable Securities" means (a) any Common Stock (1) which may be issued or issuable upon conversion, exchange or redemption of the Preferred Stock or Series B-1 Preferred Stock, (2) which may be issued or issuable upon exercise of the Warrants or the November Warrants or (3) issued or distributed in respect of the Common Stock referred to in clauses (1) or (2) above by way of stock dividend or stock split or other distribution, recapitalization, reclassification, merger consolidation or otherwise, (b) the Preferred Stock and (c) the Series B-1 Preferred Stock. The foregoing description of the Registration Rights Agreement is not intended to be complete and is qualified in its entirety by the complete text of the Registration Rights Agreement, which is filed as Exhibit 8 hereto and is incorporated herein by reference. Series B-1 Certificate of Designations - -------------------------------------- Pursuant to and in connection with the consummation of the transactions contemplated by the Letter Agreement, on November 25, 2002, the Company filed the Series B-1 Certificate of Designations with the Secretary of State of the State of Delaware and issued to the Purchasers the Series B-1 Preferred Stock having the terms set forth in the Series B-1 Certificate of Designations. DEFINED TERMS. As used in the Series B-1 Certificate of Designations: "Convertible Preferred Amount" means an amount (as adjusted for any split, subdivision, combination, consolidation, recapitalization or similar event with respect to the Series B-1 Preferred Stock) equal to $1,000 for each share of Series B-1 Preferred Stock outstanding, plus an amount equal to all accrued but unpaid dividends thereon; provided, however, for the purpose of determining the amount of accrued and unpaid dividends as of any date after the Trigger Date, the calculation shall assume that the Dividend Rate (as defined below) was 15% per annum from the date of issuance of the shares of the Series B-1 Preferred Stock (the "Issue Date"). "Redemption Trigger Date" means the earliest of (a) the date that the Sprint Purchase Agreement (as defined in the Series B-1 Certificate of Designations) is terminated prior to the closing of the transactions contemplated thereby, (b) the date that the Purchase Agreement is terminated prior to the Preferred Stock Closing Date, (c) December 16, 2002, if the money to be funded into escrow (the "Escrow") pursuant to the Notes Closing (as defined in the Series B-1 Certificate of Designations) has not been so funded on or before December 16, 2002 and (d) the date on which the Escrow is terminated (other than in connection with the Preferred Stock Closing). "Trigger Date" means the earliest of (a) 30 days after the Redemption Trigger Date, (b) the day after the first Quarterly Dividend Payment Date (as defined in the Series B-1 Certificate of Designations) that (i) dividends due to be paid to the holders of shares of the Series B-1 Preferred Stock on such Quarterly Dividend Payment Date are not paid, in cash, in full on such Quarterly Dividend Payment Date and (ii) such dividend payment is not prohibited by any covenant restricting such payments contained in the Company's bank credit facility or public indentures, and (c) the date on which the Sprint Purchase Agreement or any agreement contemplated thereby is amended, modified, waived or terminated in any material respect without the prior written consent of the holders of at least 51% of the shares of Series B-1 Preferred Stock. RANK. Pursuant to the Series B-1 Certificate of Designations, the Series B-1 Preferred Stock, with respect to dividend rights and rights on liquidation, winding up and dissolution, ranks (i) senior to all classes of capital stock or series of preferred stock of the Company authorized, issued and outstanding on or after the Issue Date, the terms of which expressly provide that such class or series ranks junior to or which do not specify their rank with respect to, the Series B-1 Preferred Stock (collectively referred to, together with the Common Stock, as "Junior Securities"), (ii) on parity with each other class of capital stock or series of preferred stock of the Company issued by the Company after the Issue Date, the terms of which expressly provide that such class or series will rank on parity with the Series B-1 Preferred Stock, and (iii) junior as to each class of capital stock or series of preferred stock of the Company issued by the Company after the Issue Date, the terms of which expressly provide that such class or series will rank senior to the Series B-1 Preferred Stock. DIVIDENDS. The Series B-1 Certificate of Designations provides that the holders of shares of Series B-1 Preferred Stock are entitled to receive on each Quarterly Dividend Payment Date dividends payable in cash on each share of Series B-1 Preferred Stock at an annual rate of 8% (the "Dividend Rate") on the Convertible Preferred Amount; provided that on and after the Trigger Date, the Dividend Rate increases to 15%. Dividends are calculated and compounded quarterly and accrue and are payable quarterly, in arrears. Dividends begin to accrue on a daily basis and are cumulative from the Issue Date, whether or not declared by the Board of Directors and whether or not there are profits, surplus or other funds of the Company legally available for the payment of dividends, and continue to accrue and be cumulative until paid in full in cash or until the date of conversion or redemption of the Series B-1 Preferred Stock. In addition, in the event that the Company pays a dividend in cash, securities or other property on shares of Common Stock, then at the same time the Company must declare and pay an additional dividend on the Series B-1 Preferred Stock in the amount of dividends that would have been paid with respect to shares of Series B-1 Preferred Stock if such Series B-1 Preferred Stock had been converted into shares of Common Stock on the record date for such dividend. The Company may not make any payment on account of, or set apart for payment money for a sinking or other similar fund for, the purchase, redemption or other retirement of, any Junior Securities or other capital stock of the Company or any warrants, rights, calls or options exercisable for or convertible into any shares of Junior Securities or other capital stock of the Company, or make any distribution in respect thereof, either directly or indirectly, and whether in cash, obligations or shares of Junior Securities or other capital stock of the Company or other property, and may not permit any corporation or other entity directly or indirectly controlled by the Company to purchase or redeem any of the Junior Securities or other capital stock of the Company or any warrants, rights, calls or options exercisable for or convertible into any Junior Securities or other capital stock of the Company, unless all dividends that have accrued since the Issue Date on the shares of Series B-1 Preferred Stock have been paid. LIQUIDATION. Pursuant to the Series B-1 Certificate of Designations, upon the occurrence of a Liquidation Event (as defined in the Series B-1 Certificate of Designations), the holders of the Series B-1 Preferred Stock are entitled to receive out of assets of the Company available for distribution to its stockholders, before any payment is made or any assets distributed to the holders of any Junior Securities, an amount of cash equal to the greater of (i) the Convertible Preferred Amount, or (ii) the amount to which such holder would be entitled to receive in connection therewith had such holder converted such share of Series B-1 Preferred Stock into shares of Common Stock immediately prior to the Liquidation Event (such greater amount of (i) and (ii) being referred to as the "Liquidation Preference"). OPTIONAL REDEMPTION. The Series B-1 Certificate of Designations provides that the Company may, at its option, redeem at any time on or after the Redemption Trigger Date, all but not less than all of the shares of the Series B-1 Preferred Stock at a redemption price per share in cash equal to 101% of the Liquidation Preference. REDEMPTION UPON A CHANGE IN CONTROL. The Series B-1 Certificate of Designations provides that upon the occurrence of a Change of Control (as defined in the Series B-1 Certificate of Designations), each holder of Series B-1 Preferred Stock may elect to cause the Company to redeem such holder's Series B-1 Preferred Stock, in whole or in part, at a redemption price per share in cash equal to 101% of the Liquidation Preference. VOTING RIGHTS. The Series B-1 Certificate of Designations provides that each share of Series B-1 Preferred Stock entitles the holder thereof to vote on all matters submitted to a vote of the stockholders of the Company, voting together as a single class with the holders of Common Stock, with each share of Series B-1 Preferred Stock having the number of votes which is equal to the number of shares of Common Stock that would be obtained upon conversion of one share of Series B-1 Preferred Stock. In addition to these voting rights, so long as the outstanding shares of Series B-1 Preferred Stock Beneficially Owned (as defined within the meaning of Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended) by the Purchasers, their respective affiliates or any Designated Transferees (as defined in the Series B-1 Certificate of Designations) constitute 15% or more of the number of shares of Common Stock Beneficially Owned by them immediately after the Issue Date, the holders of Series B-1 Preferred Stock have the right to elect one director of the Company. In the event that a Trigger Date occurs, so long as the outstanding shares of Series B-1 Preferred Stock Beneficially Owned by the Purchasers, their respective affiliates or any Designated Transferees constitute 50% or more of the number of shares of Common Stock Beneficially Owned by them immediately after the Issue Date, then the holders of Series B-1 Preferred Stock will have the right to elect an additional director of the Company. OPTIONAL CONVERSION. The Series B-1 Certificate of Designations provides that each share of Series B-1 Preferred Stock is convertible at any time at the option of the holder into a number of fully paid and nonassessable shares of Common Stock equal to the Convertible Preferred Amount per share as of the date of conversion divided by $24.05. The Series B-1 Certificate of Designations contains customary anti-dilution protection for the shares of Series B-1 Preferred Stock. MANDATORY CONVERSION. The Series B-1 Certificate of Designations provides that, on the Preferred Stock Closing Date, each share of Series B-1 Preferred Stock automatically converts into a number of fully paid and nonassessable shares of Preferred Stock equal to the Convertible Preferred Amount per share as of the Preferred Stock Closing Date divided by $1,000. PURCHASE RIGHTS. Other than with respect to Permitted Issuances (as defined in the Series B-1 Certificate of Designations), if the Company issues any shares of Common Stock, options, convertible securities, other equity securities or securities containing options or rights to acquire any equity securities or any securities convertible or exchangeable for equity securities, the Company must offer such securities to the holders of Series B-1 Preferred Stock by delivery of a written notice (the "Proposed Issuance Notice") to such holders not less than 30 days prior to the date of the proposed issuance. The Proposed Issuance Notice must disclose in reasonable detail the proposed terms and conditions of the offer. With respect to offered securities that are any class or series of preferred stock, each holder of Series B-1 Preferred Stock has the right to purchase its ratable portion of such securities. With respect to offered securities that are any securities other than preferred stock, each holder of Series B-1 Preferred Stock has the right to purchase a number of such securities so that such holder's Ownership Ratio (as defined in the Series B-1 Certificate of Designations) immediately after the issuance of such securities would be equal to such holder's Ownership Ratio immediately prior to such issuance of securities. The foregoing description of the Series B-1 Certificate of Designations is not intended to be complete and is qualified in its entirety by the complete text of the Series B-1 Certificate of Designations, which is filed as Exhibit 3 hereto and is incorporated herein by reference. Preferred Stock Certificate of Designations - ------------------------------------------- As discussed in the summary of the Series B-1 Certificate of Designations above under the heading "Mandatory Conversion", on the Preferred Stock Closing Date, each share of Series B-1 Preferred Stock automatically converts into a certain number of fully paid and nonassessable shares of Preferred Stock. On the Preferred Stock Closing Date, the Company will file the Preferred Stock Certificate of Designations with the Secretary of State of the State of Delaware and issue to the Purchasers, in connection with conversion of shares of Series B-1 Preferred Stock and in connection with the purchase of the Preferred Shares pursuant to the Purchase Agreement, the Preferred Stock having the terms set forth in the Preferred Stock Certificate of Designations. RANK. Pursuant to the Preferred Stock Certificate of Designations, the Preferred Stock, with respect to dividend rights and rights on liquidation, winding up and dissolution, will rank (i) senior to all classes of capital stock or series of preferred stock of the Company authorized, issued and outstanding on or after the date of issuance of the shares of the Preferred Stock (the "Issue Date"), the terms of which expressly provide that such class or series ranks junior to or which do not specify their rank with respect to, the Preferred Stock (collectively referred to, together with the Common Stock, as "Junior Securities"), (ii) on parity with each other class of capital stock or series of preferred stock of the Company issued by the Company after the Issue Date, the terms of which expressly provide that such class or series will rank on parity with the Preferred Stock, and (iii) junior as to each class of capital stock or series of preferred stock of the Company issued by the Company after the Issue Date, the terms of which expressly provide that such class or series will rank senior to the Preferred Stock. DIVIDENDS. The Preferred Stock Certificate of Designations provides that the holders of shares of Preferred Stock are entitled to receive on each Quarterly Dividend Payment Date (as defined in the Preferred Stock Certificate of Designations) dividends payable in cash on each share of Preferred Stock at an annual rate of 8% (the "Dividend Rate") on the Convertible Preferred Amount; provided that on any day on or after the tenth anniversary of the Issue Date during which a Dividend Payment Default (as defined below under the caption "Voting Rights") exists, the Dividend Rate will be 10%. Dividends are calculated and compounded quarterly and accrue and are payable quarterly, in arrears. Dividends begin to accrue on a daily basis and are cumulative from the Issue Date, whether or not declared by the Board of Directors and whether or not there are profits, surplus or other funds of the Company legally available for the payment of dividends, and continue to accrue and be cumulative until paid in full in cash or until the date of conversion or redemption of the Preferred Stock. In addition, in the event that the Company pays a dividend in cash, securities or other property on shares of Common Stock, then at the same time the Company must declare and pay an additional dividend on the Preferred Stock in the amount of dividends that would have been paid with respect to shares of Preferred Stock if such Preferred Stock had been converted into shares of Common Stock on the record date for such dividend. The Company may not make any payment on account of, or set apart for payment money for a sinking or other similar fund for, the purchase, redemption or other retirement of, any Junior Securities or other capital stock of the Company or any warrants, rights, calls or options exercisable for or convertible into any shares of Junior Securities or other capital stock of the Company, or make any distribution in respect thereof, either directly or indirectly, and whether in cash, obligations or shares of Junior Securities or other capital stock of the Company or other property, and may not permit any corporation or other entity directly or indirectly controlled by the Company to purchase or redeem any of the Junior Securities or other capital stock of the Company or any warrants, rights, calls or options exercisable for or convertible into any Junior Securities or other capital stock of the Company, unless all dividends that have accrued since the tenth anniversary of the Issue Date on the shares of Preferred Stock have been paid. LIQUIDATION. Pursuant to the Preferred Stock Certificate of Designations, upon the occurrence of a Liquidation Event (as defined in the Preferred Stock Certificate of Designations), the holders of the Preferred Stock will be entitled to receive out of assets of the Company available for distribution to its stockholders, before any payment is made or any assets distributed to the holders of any Junior Securities, an amount of cash equal to the greater of (i) $1,000, plus an amount equal to all accrued but unpaid dividends thereon, whether or not declared, (such amount, the "Convertible Preferred Amount") or (ii) the amount to which such holder would be entitled to receive in connection therewith had such holder converted such share of Preferred Stock into shares of Common Stock immediately prior to the Liquidation Event (such greater amount of (i) and (ii) being referred to as the "Liquidation Preference"). OPTIONAL REDEMPTION. The Preferred Stock Certificate of Designations provides that the Company may, at its option, redeem (such redemption, an "Optional Redemption") at any time on or after the tenth anniversary of the Issue Date, all but not less than all of the shares of the Preferred Stock at a redemption price per share equal to the Liquidation Preference; provided, however, that in the event a Change of Control (as defined in the Preferred Stock Certificate of Designations) has occurred prior to an Optional Redemption, the redemption price per share shall be the greater of (A) the Liquidation Preference and (B) the Change of Control Amount (as defined below); provided, further, that the Company may consummate an Optional Redemption on or after the third anniversary of the Issue Date and before the tenth anniversary of the Issue Date, if the Current Market Price (as defined in the Preferred Stock Certificate of Designations) of the Common Stock exceeds 200% of the Conversion Price (as defined below) for 30 of the 45 Trading Days (as defined in the Preferred Stock Certificate of Designations) preceding the date notice is given by the Company of its intention to affect an Optional Redemption. Until the fifteenth anniversary of the Issue Date, the Company must pay the redemption price pursuant to an Optional Redemption in cash. After the fifteenth anniversary of the Issue Date, the Company may elect to pay the redemption price pursuant to an Optional Redemption in cash, Common Stock or a combination thereof. If the Company elects to pay all or a portion of the redemption price in Common Stock, the number of shares of Common Stock that the holders of Convertible Preferred Stock will be entitled to receive will be equal to the quotient of (1) the consideration to be received by the holders of Convertible Preferred Stock in the Optional Redemption with respect to the shares of Convertible Preferred Stock the Company has elected to pay in Common Stock divided by (2) the product of .95 multiplied by the average of the Current Market Price for the 30 Trading Days preceding the date the Company mails notice of such redemption. REDEMPTION UPON A CHANGE IN CONTROL. The Preferred Stock Certificate of Designations provides that upon the occurrence of a Change of Control, each holder of Preferred Stock may elect to cause the Company to redeem such holder's Preferred Stock, in whole or in part, at a redemption price per share in cash equal to the greater of (i) 101% of $1,000 plus accrued and unpaid dividends (whether or not declared) to the date of redemption; provided, however, that if the Change in Control occurs on or before the fifth anniversary of the Issue Date, the redemption price per share will include dividends that would have accrued or been payable until the fifth anniversary of the Issue Date, had the Convertible Preferred Stock not been redeemed prior thereto, or (ii) the amount to which such holder would be entitled to receive in connection therewith had such holder converted such share into shares of Common Stock immediately prior to such event. VOTING RIGHTS. The Preferred Stock Certificate of Designations provides that each share of Preferred Stock entitles the holder thereof to vote on all matters submitted to a vote of the stockholders of the Company, voting together as a single class with the holders of Common Stock, with each share of Preferred Stock having the number of votes which is equal to the number of shares of Common Stock that would be obtained upon conversion of one share of Preferred Stock. In addition to these voting rights, so long as the outstanding shares of Preferred Stock Beneficially Owned (as defined within the meaning of Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended) by the Purchasers, their respective affiliates or any Designated Transferees (as defined in the Preferred Stock Certificate of Designations) constitute 50% or more of the number of shares of Common Stock Beneficially Owned by them immediately after the Issue Date, the holders of Preferred Stock have the right to elect two directors of the Company as described in Item 4 above; and so long as the outstanding shares of Preferred Stock Beneficially Owned by the Purchasers, their respective affiliates or any Designated Transferees constitute 15% or more of the number of shares of Common Stock Beneficially Owned by them immediately after the Issue Date, the holders of Preferred Stock have the right to elect two directors of the Company. In the event that (i) dividends payable on any Quarterly Dividend Payment Date after the tenth anniversary of the Issue Date are not paid and are in arrears on such Quarterly Dividend Payment Date (each occurrence a "Dividend Payment Default") or (ii) if the Company fails to discharge any obligation pursuant to a request for redemption by the holders of Preferred Stock upon a Change of Control, so long as the outstanding shares of Preferred Stock Beneficially Owned by the Purchasers, their respective affiliates or any Designated Transferees constitute 50% or more of the number of shares of Common Stock Beneficially Owned by them immediately after the Issue Date, then the holders of Preferred Stock have the right to elect an additional director of the Company as described in Item 4 above. OPTIONAL CONVERSION. The Preferred Stock Certificate of Designations provides that each share of Preferred Stock is convertible at any time at the option of the holder into a number of fully paid and nonassessable shares of Common Stock equal to the Convertible Preferred Amount per share as of the date of conversion divided by $24.05 (as such amount may be adjusted prior to the Preferred Stock Closing Date as provided for in the Preferred Stock Certificate of Designations). The Preferred Stock Certificate of Designations also contains customary anti-dilution protection for the shares of Preferred Stock. PURCHASE RIGHTS. Other than with respect to Permitted Issuances (as defined in the Preferred Stock Certificate of Designations), if the Company issues any shares of Common Stock, options, convertible securities, other equity securities or securities containing options or rights to acquire any equity securities or any securities convertible or exchangeable for equity securities, the Company must offer such securities to the holders of Preferred Stock by delivery of a written notice (the "Proposed Issuance Notice") to such holders not less than 30 days prior to the date of the proposed issuance. The Proposed Issuance Notice must disclose in reasonable detail the proposed terms and conditions of the offer. With respect to offered securities that are any class or series of preferred stock, each holder of Preferred Stock has the right to purchase its ratable portion of such securities. With respect to offered securities that are any securities other than preferred stock, each holder of Preferred Stock has the right to purchase a number of such securities so that such holder's Ownership Ratio (as defined in the Preferred Stock Certificate of Designations) immediately after the issuance of such securities would be equal to such holder's Ownership Ratio immediately prior to such issuance of securities. The foregoing description of the Preferred Stock Certificate of Designations is not intended to be complete and is qualified in its entirety by the complete text of the Preferred Stock Certificate of Designations, which is filed as Exhibit 6 hereto and is incorporated herein by reference. The November Warrants and the Warrants - -------------------------------------- NOVEMBER WARRANTS Pursuant to and in connection with the Letter Agreement, on the November Closing Date, the Company issued to the Purchasers the November Warrants that provide the Purchasers with the right to purchase 577,500 shares of Common Stock of the Company for $26.28 per share. The Purchasers may exercise the November Warrants, in whole or in part, at any time prior to the fifth anniversary of the earlier of the date of (x) issuance of the Warrants pursuant to the Purchase Agreement (the "Warrants Issue Date") and (y) the termination of the Purchase Agreement prior to the closing thereunder. The November Warrants contain customary anti-dilution protection. The November Warrants do not grant the holder any voting rights or other rights as a stockholder of the Company. WARRANTS Pursuant to and in connection with the Purchase Agreement, on the Preferred Stock Closing Date, the Company will issue to the Purchasers the Warrants that provide the Purchasers with the right to purchase 1,072,500 shares of Common Stock of the Company at an exercise price equal to the average of the Current Market Price (as defined in the Warrants) of the Common Stock for the 30 Trading Days (as defined in the Warrants) immediately prior to the Preferred Stock Closing Date. The Purchasers may exercise the Warrants, in whole or in part, at any time after the Warrant Issue Date until the fifth anniversary of the Warrant Issue Date. The Warrants contain customary anti-dilution protection. The Warrants do not grant the holder any voting rights or other rights as a stockholder of the Company. The foregoing descriptions of the November Warrants and the Warrants are not intended to be complete and are qualified in their entirety by the complete text of the November Warrants and the Warrants, which are filed as Exhibit 4 and Exhibit 7 hereto, respectively, and both of which are incorporated herein by reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. -------------------------------- Exhibit 1 Joint Filing Agreement, dated as of December 4, 2002. Exhibit 2 Letter Agreement, dated as of November 25, 2002, by and among the Purchasers, R.H. Donnelley, Inc. and the Company. Exhibit 3 Series B-1 Convertible Cumulative Preferred Stock Certificate of Designations. Exhibit 4 Form of Warrant issued to the Purchasers on November 25, 2002. Exhibit 5 Preferred Stock and Warrant Purchase Agreement, dated as of September 21, 2002, by and among the Company and the Purchasers. Exhibit 6 Form of Convertible Cumulative Preferred Stock Certificate of Designations. Exhibit 7 Form of Warrant. Exhibit 8 Registration Rights Agreement, dated as of November 25, 2002, among the Purchasers and the Company. Exhibit 9 Power of Attorney, dated as of December 8, 2000, relating to The Goldman Sachs Group, Inc. Exhibit 10 Power of Attorney, dated as of December 8, 2000, relating to Goldman, Sachs & Co. Exhibit 11 Power of Attorney, dated as of December 20, 2000, relating to GS Advisors 2000, L.L.C. Exhibit 12 Power of Attorney, dated as of March 28, 2000, relating to Goldman, Sachs & Co. oHG. Exhibit 13 Power of Attorney, dated as of December 20, 2000, relating to Goldman, Sachs Management GP GmbH. Exhibit 14 Power of Attorney, dated as of December 20, 2000, relating to GS Employee Funds 2000 GP, L.L.C. Exhibit 15 Power of Attorney, dated as of December 20, 2000, relating to GS Capital Partners 2000, L.P. Exhibit 16 Power of Attorney, dated as of December 20, 2000, relating to GS Capital Partners 2000 Offshore, L.P. Exhibit 17 Power of Attorney, dated as of December 20, 2000, relating to GS Capital Partners 2000 GmbH & Co. Beteiligungs KG. Exhibit 18 Power of Attorney, dated as of December 20, 2000, relating to GS Capital Partners 2000 Employee Fund, L.P. Exhibit 19 Power of Attorney, dated as of November 27, 2002, relating to Goldman Sachs Direct Investment Fund 2000, L.P. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. December 4, 2002 THE GOLDMAN SACHS GROUP, INC. By: /s/ Roger S. Begelman -------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GOLDMAN, SACHS & CO. By: /s/ Roger S. Begelman -------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GS ADVISORS 2000, L.L.C. By: /s/ Roger S. Begelman -------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GOLDMAN, SACHS & CO. OHG By: /s/ Roger S. Begelman -------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GOLDMAN, SACHS MANAGEMENT GP GMBH By: /s/ Roger S. Begelman -------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GS EMPLOYEE FUNDS 2000 GP, L.L.C. By: /s/ Roger S. Begelman -------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GS CAPITAL PARTNERS 2000, L.P. By: /s/ Roger S. Begelman -------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GS CAPITAL PARTNERS 2000 OFFSHORE, L.P. By: /s/ Roger S. Begelman -------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GS CAPITAL PARTNERS 2000 GMBH & CO. BETEILIGUNGS KG By: /s/ Roger S. Begelman -------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P. By: /s/ Roger S. Begelman -------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GOLDMAN SACHS DIRECT INVESTMENT FUND 2000, L.P. By: /s/ Roger S. Begelman -------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact EXHIBITS Exhibit 1 Joint Filing Agreement, dated as of December 4, 2002. Exhibit 2 Letter Agreement, dated as of November 25, 2002, by and among the Purchasers, R.H. Donnelley, Inc. and the Company. Exhibit 3 Series B-1 Convertible Cumulative Preferred Stock Certificate of Designations. Exhibit 4 Form of Warrant issued to the Purchasers on November 25, 2002. Exhibit 5 Preferred Stock and Warrant Purchase Agreement, dated as of September 21, 2002, by and among the Company and the Purchasers. Exhibit 6 Form of Convertible Cumulative Preferred Stock Certificate of Designations. Exhibit 7 Form of Warrant. Exhibit 8 Registration Rights Agreement, dated as of November 25, 2002, among the Purchasers and the Company. Exhibit 9 Power of Attorney, dated as of December 8, 2000, relating to The Goldman Sachs Group, Inc. Exhibit 10 Power of Attorney, dated as of December 8, 2000, relating to Goldman, Sachs & Co. Exhibit 11 Power of Attorney, dated as of December 20, 2000, relating to GS Advisors 2000, L.L.C. Exhibit 12 Power of Attorney, dated as of March 28, 2000, relating to Goldman, Sachs & Co. oHG. Exhibit 13 Power of Attorney, dated as of December 20, 2000, relating to Goldman, Sachs Management GP GmbH. Exhibit 14 Power of Attorney, dated as of December 20, 2000, relating to GS Employee Funds 2000 GP, L.L.C. Exhibit 15 Power of Attorney, dated as of December 20, 2000, relating to GS Capital Partners 2000, L.P. Exhibit 16 Power of Attorney, dated as of December 20, 2000, relating to GS Capital Partners 2000 Offshore, L.P. Exhibit 17 Power of Attorney, dated as of December 20, 2000, relating to GS Capital Partners 2000 GmbH & Co. Beteiligungs KG. Exhibit 18 Power of Attorney, dated as of December 20, 2000, relating to GS Capital Partners 2000 Employee Fund, L.P. Exhibit 19 Power of Attorney, dated as of November 27, 2002, relating to Goldman Sachs Direct Investment Fund 2000, L.P. SCHEDULE I ---------- The name of each director of The Goldman Sachs Group, Inc. is set forth below. The business address of each person listed below is c/o Goldman, Sachs & Co., 85 Broad Street, New York, NY 10004. Each person is a citizen of the United States of America except for Lord Browne of Madingley, who is a citizen of the United Kingdom. The present principal occupation or employment of each of the listed persons is set forth below. Name Present Principal Occupation - ---- ---------------------------- Henry M. Paulson, Jr. Chairman and Chief Executive Officer of The Goldman Sachs Group, Inc. Robert J. Hurst Vice Chairman of The Goldman Sachs Group, Inc. John A. Thain President and Co-Chief Operating Officer of The Goldman Sachs Group, Inc. John L. Thornton President and Co-Chief Operating Officer of The Goldman Sachs Group, Inc. Lord Browne of Madingley Group Chief Executive of BP plc James A. Johnson Vice Chairman of Perseus, L.L.C. John H. Bryan Retired Chairman and Chief Executive Officer of Sara Lee Corporation Ruth J. Simmons President of Brown University Margaret C. Whitman President and Chief Executive Officer of eBay Inc. Morris Chang Chairman of Taiwan Semiconductor Manufacturing Company Ltd. Stephen Friedman Senior Principal of MMC Capital SCHEDULE II-A-i --------------- The name, position and present principal occupation of each executive officer of GS Advisors 2000, L.L.C., the sole general partner of GS Capital Partners 2000, L.P. and GS Capital Partners 2000 Offshore, L.P., are set forth below. The business address for all the executive officers listed below is 85 Broad Street, New York, New York 10004, except as follows: The business address of Richard S. Sharp, Antoine L. Schwartz, Hughes B. Lepic, Stephen S. Trevor, Atul Kapur, Michel Plantevin, Robert G. Doumar, Jr. and Ulrika Werdelin is Peterborough Court, 133 Fleet Street, London EC4A 2BB, England. The business address of Mary Nee is Cheung Kong Center, 68th Floor, 2 Queens Road, Central, Hong Kong. The business address of Joseph P. DiSabato and Melina E. Higgins is 2765 Sand Hill Road, Menlo Park, CA 94025. The business address of Gene T. Sykes is Fox Plaza, Suite 2600, 2121 Avenue of the Stars, Los Angeles, CA 90067. The business address of Muneer A. Satter is 4900 Sears Tower, Chicago, IL 60606. All executive officers listed below are United States citizens, except as follows: Richard S. Sharp is a citizen of the United Kingdom. Sanjeev K. Mehra is a citizen of India. Atul Kapur is a citizen of Singapore. Antoine L. Schwartz, Hughes B. Lepic and Michel Plantevin are citizens of France. Patrick E. Mulvihill is a citizen of Ireland. Ulrika Werdelin is a citizen of Sweden.
Name Position Present Principal Occupation - ---- -------- ---------------------------- Richard A. Friedman President Managing Director of Goldman, Sachs & Co. Joseph H. Gleberman Vice President Managing Director of Goldman, Sachs & Co Terence M. O'Toole Vice President Managing Director of Goldman, Sachs & Co. Gene T. Sykes Vice President Managing Director of Goldman, Sachs & Co. Henry Cornell Vice President Managing Director of Goldman, Sachs & Co. Richard S. Sharp Vice President Managing Director of Goldman Sachs International Esta E. Stecher Assistant Secretary Managing Director of Goldman, Sachs & Co. Sanjeev K. Mehra Vice President Managing Director of Goldman, Sachs & Co. Muneer A. Satter Vice President Managing Director of Goldman, Sachs & Co. Antoine L. Schwartz Vice President Managing Director of Goldman Sachs International Steven M. Bunson Assistant Secretary Managing Director of Goldman, Sachs & Co. Elizabeth C. Fascitelli Treasurer Managing Director of Goldman, Sachs & Co. Patrick E. Mulvihill Assistant Treasurer Managing Director of Goldman, Sachs & Co. David J. Greenwald Assistant Secretary Managing Director of Goldman, Sachs & Co. Dan H. Jester Assistant Treasurer Managing Director of Goldman, Sachs & Co. Hughes B. Lepic Vice President Managing Director of Goldman Sachs International Russell E. Makowsky Assistant Secretary Managing Director of Goldman, Sachs & Co. Sarah G. Smith Assistant Treasurer Managing Director of Goldman, Sachs & Co. Randall A. Blumenthal Vice President Managing Director of Goldman, Sachs & Co. Adrian M. Jones Vice President Managing Director of Goldman, Sachs & Co. Douglas F. Londal Vice President Managing Director of Goldman, Sachs & Co. Stephen S. Trevor Vice President Managing Director of Goldman Sachs International Abraham Bleiberg Vice President Managing Director of Goldman, Sachs & Co. Joseph P. DiSabato Vice President Managing Director of Goldman, Sachs & Co. Robert R. Gheewalla Vice President Managing Director of Goldman, Sachs & Co. Atul Kapur Vice President Managing Director of Goldman Sachs International Michel Plantevin Vice President Managing Director of Goldman Sachs International Robert G. Doumar, Jr. Vice President Managing Director of Goldman Sachs International Ben I. Adler Vice President Managing Director of Goldman, Sachs & Co. Melina E. Higgins Vice President Managing Director of Goldman, Sachs & Co. Elizabeth C. Marcellino Vice President Managing Director of Goldman, Sachs & Co. Gerald J. Cardinale Vice President Managing Director of Goldman, Sachs & Co. John E. Bowman Vice President Vice President of Goldman, Sachs & Co. Katherine B. Enquist Vice President/ Secretary Vice President of Goldman, Sachs & Co. James B. McHugh Assistant Secretary Vice President of Goldman, Sachs & Co. Beverly L. O'Toole Assistant Secretary Vice President of Goldman, Sachs & Co. Mitchell S. Weiss Vice President Vice President of Goldman, Sachs & Co. Mary Nee Vice President Executive Director of Goldman Sachs (Asia) L.L.C. Ulrika Werdelin Vice President Executive Director of Goldman Sachs International
SCHEDULE II-A-ii ---------------- The name and principal occupation of each member of the Principal Investment Area Investment Committee of Goldman, Sachs & Co., which exercises the authority of Goldman, Sachs & Co. in managing GS Advisors 2000, L.L.C., are set forth below. The business address for each member listed below is 85 Broad Street, New York, New York 10004, except as follows: The business address of Richard S. Sharp and Antoine L. Schwartz is Peterborough Court, 133 Fleet Street, London EC4A 2BB, England. The business address of Gene T. Sykes is Fox Plaza, Suite 2600, 2121 Avenue of the Stars, Los Angeles, CA 90067. The business address of Muneer A. Satter is 4900 Sears Tower, Chicago, IL 60606. All members listed below are United States citizens, except as follows: Richard S. Sharp is a citizen of the United Kingdom, Sanjeev K. Mehra is a citizen of India and Antoine L. Schwartz is a citizen of France. Name Present Principal Occupation Peter M. Sacerdote Advisory Director of Goldman, Sachs & Co. Richard A. Friedman Managing Director of Goldman, Sachs & Co. Joseph H. Gleberman Managing Director of Goldman, Sachs & Co. Terence M. O'Toole Managing Director of Goldman, Sachs & Co. Gene T. Sykes Managing Director of Goldman, Sachs & Co. Henry Cornell Managing Director of Goldman, Sachs & Co. Robert V. Delaney Managing Director of Goldman, Sachs & Co. Richard S. Sharp Managing Director of Goldman Sachs International Sanjeev K. Mehra Managing Director of Goldman, Sachs & Co. Muneer A. Satter Managing Director of Goldman, Sachs & Co. Peter G. Sachs Senior Director of The Goldman Sachs Group, Inc. Antoine L. Schwartz Managing Director of Goldman Sachs International SCHEDULE II-B-i --------------- The name, position and present principal occupation of each executive officer and director of Goldman, Sachs & Co. Finanz GmbH which is the sole managing general partner of Goldman, Sachs & Co. oHG are set forth below. The business address for each of the executive officers and directors listed below is MesseTurm, 60308 Frankfurt am Main, Germany. The directors and executive officers listed below are citizens of Germany. Name Position Present Principal Occupation - ---- -------- ---------------------------- Andreas Koernlein Managing Director Executive Director of Goldman, Sachs & Co. oHG Timothy C. Plaut Managing Director Managing Director of Goldman, Sachs & Co. oHG Alexander C. Dibelius Managing Director Managing Director of Goldman, Sachs & Co. oHG Carsten Kengeter Managing Director Managing Director of Goldman, Sachs & Co. oHG SCHEDULE II-B-ii ---------------- The name, position and present principal occupation of each executive officer of GS Management GP GmbH, the sole managing partner of GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, are set forth below. The business address for all the executive officers listed below is 85 Broad Street, New York, New York 10004, except as follows: All executive officers listed below are United States citizens except Patrick E. Mulvihill who is a citizen of Ireland.
Name Position Present Principal Occupation - ---- -------- ---------------------------- Richard A. Friedman Managing Director Managing Director of Goldman, Sachs & Co. Joseph H. Gleberman Managing Director Managing Director of Goldman, Sachs & Co. Terence M. O'Toole Managing Director Managing Director of Goldman, Sachs & Co. David A. Viniar Managing Director Managing Director of Goldman, Sachs & Co. Henry Cornell Managing Director Managing Director of Goldman, Sachs & Co. Esta E. Stecher Managing Director Managing Director of Goldman, Sachs & Co. Elizabeth C. Fascitelli Managing Director Managing Director of Goldman, Sachs & Co. Patrick E. Mulvihill Managing Director Managing Director of Goldman, Sachs & Co. David J. Greenwald Managing Director Managing Director of Goldman, Sachs & Co. Dan H. Jester Managing Director Managing Director of Goldman, Sachs & Co. Sarah E. Smith Managing Director Managing Director of Goldman, Sachs & Co. James B. McHugh Managing Director Vice President of Goldman, Sachs & Co. Katherine B. Enquist Managing Director Vice President of Goldman, Sachs & Co. John E. Bowman Managing Director Vice President of Goldman, Sachs & Co.
SCHEDULE II-C-i --------------- The name, position and present principal occupation of each executive officer of GS Employee Funds 2000 GP, L.L.C., the sole general partner of GS Capital Partners 2000 Employee Fund, L.P. and Goldman Sachs Direct Investment Fund 2000, L.P., are set forth below. The business address for all the executive officers listed below is 85 Broad Street, New York, New York 10004, except as follows: The business address of Richard S. Sharp, Antoine L. Schwartz, Hughes B. Lepic, Stephen S. Trevor, Atul Kapur, Michel Plantevin and Ulrika Werdelin is 133 Fleet Street, London EC4A 2BB, England. The business address of Mary Nee is Cheung Kong Center, 68th Floor, 2 Queens Road, Central, Hong Kong. The business address of Joseph P. DiSabato and Melina E. Higgins is 2765 Sand Hill Road, Menlo Park, CA 94025. The business address of Gene T. Sykes is Fox Plaza, Suite 2600, 2121 Avenue of the Stars, Los Angeles, CA 90067. The business address of Muneer A. Satter is 4900 Sears Tower, Chicago, IL 60606. All executive officers listed below are United States citizens, except as follows: Richard S. Sharp is a citizen of the United Kingdom. Sanjeev K. Mehra is a citizen of India. Atul Kapur is a citizen of Singapore. Antoine L. Schwartz, Hughes B. Lepic and Michel Plantevin are citizens of France. Patrick E. Mulvihill is a citizen of Ireland. Ulrika Werdelin is a citizen of Sweden.
Name Position Present Principal Occupation - ---- -------- ---------------------------- Richard A. Friedman President Managing Director of Goldman, Sachs & Co. Joseph H. Gleberman Vice President Managing Director of Goldman, Sachs & Co. Terence M. O'Toole Vice President Managing Director of Goldman, Sachs & Co. Gene T. Sykes Vice President Managing Director of Goldman, Sachs & Co. Henry Cornell Vice President Managing Director of Goldman, Sachs & Co. Richard S. Sharp Vice President Managing Director of Goldman Sachs International Esta E. Stecher Vice President/ Managing Director of Goldman, Sachs & Co. Assistant Secretary Sanjeev K. Mehra Vice President Managing Director of Goldman, Sachs & Co. Muneer A. Satter Vice President Managing Director of Goldman, Sachs & Co. Antoine L. Schwartz Vice President Managing Director of Goldman Sachs International Steven M. Bunson Vice President/ Managing Director of Goldman, Sachs & Co. Assistant Secretary Elizabeth C. Fascitelli Vice President Managing Director of Goldman, Sachs & Co. Patrick E. Mulvihill Assistant Treasurer Managing Director of Goldman, Sachs & Co. David J. Greenwald Vice President/ Managing Director of Goldman, Sachs & Co. Assistant Secretary Dan H. Jester Assistant Treasurer Managing Director of Goldman, Sachs & Co. Hughes B. Lepic Vice President Managing Director of Goldman Sachs International Russell E. Makowsky Vice President/ Managing Director of Goldman, Sachs & Co. Assistant Secretary Sarah G. Smith Assistant Treasurer Managing Director of Goldman, Sachs & Co. Randall A. Blumenthal Vice President Managing Director of Goldman, Sachs & Co. Adrian M. Jones Vice President Managing Director of Goldman, Sachs & Co. Douglas F. Londal Vice President Managing Director of Goldman, Sachs & Co. Stephen S. Trevor Vice President Managing Director of Goldman Sachs International Abraham Bleiberg Vice President Managing Director of Goldman, Sachs & Co. Joseph P. DiSabato Vice President Managing Director of Goldman, Sachs & Co. Robert R. Gheewalla Vice President Managing Director of Goldman, Sachs & Co. Robert G. Doumar, Jr. Vice President Managing Director of Goldman, Sachs & Co. Ben I. Adler Vice President Managing Director of Goldman, Sachs & Co. Melina E. Higgins Vice President Managing Director of Goldman, Sachs & Co. Elizabeth C. Marcellino Vice President Managing Director of Goldman, Sachs & Co. Gerald J. Cardinale Vice President Managing Director of Goldman, Sachs & Co. Atul Kapur Vice President Managing Director of Goldman Sachs International Michel Plantevin Vice President Managing Director of Goldman Sachs International John E. Bowman Vice President Vice President of Goldman, Sachs & Co. Katherine B. Enquist Vice President/ Vice President of Goldman, Sachs & Co. Secretary James B. McHugh Assistant Secretary Vice President of Goldman, Sachs & Co. Beverly L. O'Toole Assistant Secretary Vice President of Goldman, Sachs & Co. Raymond G. Matera Vice President Vice President of Goldman, Sachs & Co. Mitchell S. Weiss Vice President Vice President of Goldman, Sachs & Co. Mary Nee Vice President Executive Director of Goldman Sachs (Asia) L.L.C. Richard J. Stingi Vice President Vice President of Goldman, Sachs & Co. Ulrika Werdelin Vice President Executive Director of Goldman Sachs International
SCHEDULE II-C-ii ---------------- The name and principal occupation of each member of the GS Employee Funds Investment Committee of Goldman, Sachs & Co., which exercises the authority of Goldman, Sachs & Co. in managing GS Employee Funds 2000 GP, L.L.C. and Goldman Sachs Direct Investment Fund 2000, L.P., are set forth below. The business address for each member listed below is 85 Broad Street, New York, New York 10004, except as follows: The business address of Richard S. Sharp and Antoine L. Schwartz is 133 Fleet Street, London EC4A 2BB, England. The business address of Gene T. Sykes is Fox Plaza, Suite 2600, 2121 Avenue of the Stars, Los Angeles, CA 90067. The business address of Muneer A. Satter is 4900 Sears Tower, Chicago, IL 60606. All members listed below are United States citizens, except as follows: Richard S. Sharp is a citizen of the United Kingdom, Sanjeev K. Mehra is a citizen of India and Antoine L. Schwartz is a citizen of France. Name Present Principal Occupation - ---- ---------------------------- Peter M. Sacerdote Advisory Director of Goldman, Sachs & Co. Richard A. Friedman Managing Director of Goldman, Sachs & Co. Joseph H. Gleberman Managing Director of Goldman, Sachs & Co. Terence M. O'Toole Managing Director of Goldman, Sachs & Co. Gene T. Sykes Managing Director of Goldman, Sachs & Co. Henry Cornell Managing Director of Goldman, Sachs & Co. Robert V. Delaney Managing Director of Goldman, Sachs & Co. Richard S. Sharp Managing Director of Goldman Sachs International Sanjeev K. Mehra Managing Director of Goldman, Sachs & Co. Muneer A. Satter Managing Director of Goldman, Sachs & Co. Scott B. Kapnick Managing Director of Goldman, Sachs & Co. Peter G. Sachs Senior Director of The Goldman Sachs Group, Inc. Antoine L. Schwartz Managing Director of Goldman Sachs International SCHEDULE III ------------ On April 6, 2000, in connection with an industry-wide investigation by the Securities and Exchange Commission (the "SEC") relating to the pricing of government securities in advance refunding transactions, Goldman, Sachs & Co. (the "Firm") joined in a global settlement resolving the SEC investigation as well as a related qui tam lawsuit purportedly brought on behalf of the United States entitled United States ex rel. Lissack v. Goldman, Sachs & Co., et al., 95 Civ. 1363 (S.D.N.Y.)(BSJ). Pursuant to the settlement, without admitting or denying the findings, the Firm consented to the issuance of an SEC administrative order (SEA Rel. No. 42640) which, among other things, found that the Firm had violated Sections 17(a)(2) and (3) of the Securities Act of 1933 in connection with such pricing of government securities, required the Firm to cease and desist from violating such provisions, and ordered the Firm to make payments totaling approximately $5.1 Million to the U.S. Treasury and $104,000 to two municipalities. Under the global settlement, the qui tam lawsuit was dismissed with prejudice, and the Internal Revenue Service agreed not to challenge the tax-free nature of the refundings by virtue of the pricing of such securities. SCHEDULE IV -----------
Purchases Sales Price ($) Trade Date Settlement Date 58 shares of Common Stock --- 24.60 9-Oct-02 10-Oct-02
EX-99.1 3 ex99_1.txt JOINT FILING AGREEMENT EXHIBIT 1 - JOINT FILING AGREEMENT Joint Filing Agreement The undersigned hereby agree that the Statement on Schedule 13D filed herewith (and any amendments thereto), relating to the common stock, par value $1.00 per share, of R.H. Donnelley Corporation, is being filed jointly with the Securities and Exchange Commission pursuant to Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended, on behalf of each such person. December 4, 2002 THE GOLDMAN SACHS GROUP, INC. By: /s/ Roger S. Begelman --------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GOLDMAN, SACHS & CO. By: /s/ Roger S. Begelman --------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GS ADVISORS 2000, L.L.C. By: /s/ Roger S. Begelman --------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GOLDMAN, SACHS & CO. OHG By: /s/ Roger S. Begelman --------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GOLDMAN, SACHS MANAGEMENT GP GMBH By: /s/ Roger S. Begelman --------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GS EMPLOYEE FUNDS 2000 GP, L.L.C. By: /s/ Roger S. Begelman --------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GS CAPITAL PARTNERS 2000, L.P. By: /s/ Roger S. Begelman --------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GS CAPITAL PARTNERS 2000 OFFSHORE, L.P. By: /s/ Roger S. Begelman --------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GS CAPITAL PARTNERS 2000 GMBH & CO. BETEILIGUNGS KG By: /s/ Roger S. Begelman --------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P. By: /s/ Roger S. Begelman --------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact GOLDMAN SACHS DIRECT INVESTMENT FUND 2000, L.P. By: /s/ Roger S. Begelman --------------------------------- Name: Roger S. Begelman Title: Attorney-in-fact EX-99.2 4 ex99_2.txt LTR / NOV. 25 Exhibit 2 --------- EXECUTION COPY -------------- GS Capital Partners 2000, L.P. GS Capital Partners 2000 Offshore, L.P. GS Capital Partners 2000 GmbH & Co. Beteiligungs KG GS Capital Partners 2000 Employee Fund, L.P. Goldman Sachs Direct Investment Fund 2000, L.P. c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 November 25, 2002 R.H. Donnelley Corporation R.H. Donnelley Inc. One Manhattanville Road Purchase, NY 10577 Re: Investment in Preferred Stock of R.H. Donnelley Corporation Ladies and Gentlemen: Reference is made to the Preferred Stock and Warrant Purchase Agreement, dated as of September 21, 2002 (the "Purchase Agreement"), by and among R.H. Donnelley Corporation, a Delaware corporation (the "Company") and the investors listed in Schedule A thereto (the "Purchasers"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement. This will confirm our agreement as follows: 1. Purchase and Sale. ----------------- 1.1. The Company and the Purchasers hereby agree, subject to the terms and conditions of this letter agreement, that the Company will sell to the Purchasers and the Purchasers will purchase from the Company (i) 70,000 shares of Series B-1 Preferred Stock (the "November Shares") created pursuant to the Company's Certificate of Designations in the form of Exhibit A attached to this letter agreement (the "B-1 Certificate of Designations") and (ii) Warrants to purchase 577,500 shares of Common Stock in substantially the form attached hereto as Exhibit B (the "November Warrants"), for an aggregate purchase price of $70,000,000 (the "Proceeds"). The Proceeds paid to the Company hereunder shall reduce, on a dollar-for-dollar basis, the cash component of the Purchase Price payable at the Closing Date for the Preferred Stock and the Warrants pursuant to the Purchase Agreement. Unless the November Shares are repurchased by the Company prior to the date the Sprint Purchase Agreement is terminated prior to the closing thereof, the November Shares issued hereunder shall reduce on a share-for-share basis the number of Preferred Shares to which the Purchasers shall be entitled at the Closing, pursuant to the Purchase Agreement. The November Warrants issued hereunder shall reduce on a share-for-share basis the number of Warrants to which the Purchasers shall be entitled at the Closing pursuant to the Purchase Agreement. The closing of the transactions contemplated by this letter agreement (the "November Closing") shall take place on the date hereof (the date of such closing being referred to herein as the "November Closing Date"). The number of November Shares and the number of November Warrants to be purchased by each Purchaser at the November Closing and the portion of the Proceeds to be paid by each Purchaser at the November Closing in exchange therefor, shall be as specified in Schedule A hereto (with respect to each such Purchaser, such Purchaser's "Specified Purchase Price"). 1.2. At the November Closing: (i) the Company will deliver to the Purchasers certificates for the November Shares to be sold in accordance with the provisions of Section 1.1 hereto registered in the respective names and proportions set forth in Schedule A hereto; (ii) the Company will deliver to the Purchasers certificates for the November Warrants, to be sold in accordance with the provisions of Section 1.1 hereto, in each case duly executed in favor of the respective names and in the proportions set forth in Schedule A hereto; (iii) subject to Section 6 hereof, each Purchaser, in full payment for the November Shares and the November Warrants, will deliver to the Company immediately available funds, by wire transfer to such account as the Company shall specify, such Purchaser's Specified Purchase Price; and (iv) each party shall take or cause to happen such other actions, and shall execute and deliver such other instruments or documents, as shall be required under Section 2 hereof. 2. Conditions. The November Closing is subject to the following conditions: 2.1. Conditions of Purchase. The obligations of each Purchaser to purchase the November Shares and the November Warrants at the November Closing are subject to satisfaction or waiver of each of the following conditions on or prior to the November Closing Date. (i) Each of the conditions contained in Sections 5.01(a), (b), (c), (d), (e), (g)(A), (l) and (m) of the Purchase Agreement shall be satisfied on or prior to the November Closing as if set forth in their entirety herein and applicable to the transactions contemplated hereby. For further clarification, for purposes hereof, where appropriate, each reference in such sections to "the date of this Agreement" shall be deemed to refer to the date of this letter agreement, each reference to the "Closing Date" shall be deemed to refer to the "November Closing Date" and each reference to "this Agreement" shall be deemed to refer to this letter agreement. (ii) The B-1 Certificate of Designations shall have been duly filed with the Secretary of State of Delaware and shall have become effective and shall be in full force and effect; (iii) All waivers and consents from third parties that the Purchasers reasonably believe necessary or appropriate in connection with the transactions contemplated by this letter agreement shall have been received by the Company in form and substance reasonably satisfactory to the Purchasers, including without limitation a written confirmation from JPMorgan Chase Bank under the Credit Agreement, dated as of June 5, 1998, by and among the Company, R.H. Donnelley, Inc., The Chase Manhattan Bank, as Administrative Agent and the Lenders party thereto, as amended by the First Amendment to Credit Agreement, dated as of March 4, 1999, by and among the Company, R.H. Donnelley, Inc. The Chase Manhattan Bank, as Administrative Agent, and the Lenders party thereto (together, the "Current Credit Agreement") in form and substance reasonably satisfactory to the Purchasers that the defaults described in such confirmation are not or will not be continuing as described and conditioned in such confirmation; and (iv) The Purchasers shall have received, dated the November Closing Date and addressed to each Purchaser, an opinion of Jones, Day, Reavis & Pogue, counsel to the Company, substantially in the form attached as Exhibit C hereto; 2.2. Conditions of Sale. The obligation of the Company to sell the November Shares and the November Warrants at the November Closing is subject to the satisfaction or waiver of each of the following conditions precedent: (i) the conditions contained in Section 5.02(a), (b), (c), (d), and (e) of the Purchase Agreement shall be satisfied on or prior to the November Closing as if set forth in their entirety herein and applicable to the transactions contemplated hereby. For further clarification, for purposes hereof, where appropriate, each reference in such sections to "the date of this Agreement" shall be deemed to refer to the date of this letter agreement, each reference to the "Closing Date" shall be deemed to refer to the "November Closing Date" and each reference to "this Agreement" shall be deemed to refer to this letter agreement; and (ii) the Purchasers shall have delivered immediately prior to or concurrently with the November Closing in immediately available funds, by wire transfer to such account as the Company shall have specified, an amount equal to the Proceeds to have been paid pursuant to Section 1 hereof. 3. Amendments to Purchase Agreement. The Purchase Agreement is hereby amended as follows: 3.1. If at the Closing the Company is required to issue an additional amount of Preferred Shares to the Purchasers pursuant to Section 2.04 of the Purchase Agreement, the Company agrees that a similar adjustment shall also be made to the number of November Shares and November Warrants issued to the Purchasers pursuant to this letter agreement and to the Warrants issued to the Purchasers pursuant to the Purchase Agreement. Section 2.04 is hereby amended by adding "(other than the November Shares and the November Warrants)" immediately before the words "(Common Stock Equivalents)" therein. 3.2. Section 2.01 of the Purchase Agreement is hereby amended by deleting "$200.0 million" and by inserting in its place "$130.0 million or, $200.0 million in the event the November Shares are redeemed pursuant to Section 5(a) of the B-1 Certificate of Designations by the Company prior to the date the Sprint Purchase Agreement is terminated prior to the closing thereof". 3.3. Solely for purposes of this letter agreement, the terms "Indebtedness" and "Leverage Ratio" as used in Section 4.04(d) shall have the meanings ascribed to such terms in the Current Credit Agreement. 3.4. Section 4.02(b) of the Purchase Agreement is hereby amended by deleting clause (vii) thereof. 3.5. Section 4.04(e) of the Purchase Agreement is hereby amended by inserting at the end thereof: "and other than any transaction that requires the approval of the holders of the Company's common stock." 3.6. Section 4.04(i) of the Purchase Agreement is hereby amended by adding "and other than dividends from a wholly owned Company Subsidiary to its parent company" at the end of the first parenthetical thereof. 3.7. Section 4.04(k) of the Purchase Agreement is hereby amended by adding "or sell" after the word "issue" therein. 3.8. The first sentence of Section 4.10(a) of the Purchase Agreement is hereby amended by inserting "(i)" after the words "(any such act, a "Transfer") and by deleting the words "except for," and inserting in its place "or (ii) any November Shares or November Warrants prior to the first anniversary of the November Closing Date, except in each case for,". 3.9. The last sentence of Section 4.10(a) is hereby amended by replacing it in its entirety with the following: "The foregoing restrictions on Transfer shall cease to apply (i) in the case of any Preferred Shares issued upon the exchange of the November Shares, and in the case of any November Warrants, from and after the first anniversary of the November Closing Date, (ii) in the case of any other Preferred Shares and Warrants issued on the Closing Date, from and after the first anniversary of the Closing Date and (iii) upon the Trigger Date (as defined in the B-1 Certificate of Designations), so long as, in each case, such Transfer is made in compliance with all applicable requirements of law and any necessary governmental approvals have been obtained." 3.10. The Company's reimbursement obligations pursuant to Section 8.06(b)(ii) of the Purchase Agreement shall include the reasonable third party and out-of-pocket expenses (including, without limitation, all reasonable fees and expenses of each counsel, accountants and consultants of each such party) incurred by the Purchasers or their Affiliates in connection with the preparation, negotiation, execution and performance of this letter agreement or any of the transactions contemplated hereby. 3.11. Schedules 3.01(c), 3.01(d), 3.01(i)(i), 3.01(j) and 4.02 to the Purchase Agreement are amended by Schedules 3.01(c), 3.01(d), 3.01(i)(i), 3.01(j) and 4.02, respectively, to this letter agreement. 4. Amendments to Certificate of Designations, Warrants and Registration Rights Agreement. 4.1. The Certificate of Designations governing the Preferred Stock in the form of Exhibit A to the Purchase Agreement is hereby amended by deleting Exhibit A to the Purchase Agreement in its entirety and replacing it with the Certificate of Designations in the form attached as Exhibit D hereto. 4.2. The certificate for the Warrants in the form attached as Exhibit D to the Purchase Agreement is herby amended by deleting Exhibit D to the Purchase Agreement in its entirety and replacing it with the certificate for the Warrants in the form attached as Exhibit E hereto. 4.3. The Registration Rights Agreement in the form attached as Exhibit C to the Purchase Agreement is hereby amended by deleting Exhibit C to the Purchase Agreement in its entirety and replacing it with the Registration Rights Agreement in the form attached as Exhibit F hereto. 5. Use of Proceeds. The Company shall contribute the Proceeds to R.H. Donnelley Inc. 6. Closing Payment. On the November Closing Date, the Company agrees to pay to each Purchaser 1% of the portion of the Proceeds paid by such Purchaser to the Company on the November Closing Date. Any obligations owed by the Company to the Purchasers pursuant to this Section 6 of the letter agreement shall reduce on a dollar-for-dollar basis the amount payable to the Company by the Purchasers pursuant to Section 1.1 hereof. 7. Supplemental Indenture. Immediately following the receipt by the Company of the Proceeds, the Company shall deliver to The Bank of New York (the "Trustee") an executed copy of the Supplemental Indenture (the "Supplemental Indenture") in the form attached as Exhibit G hereto. The Company shall use its best efforts to have the Trustee execute and deliver the Supplemental Indenture, and any and all other documents required to make such Supplemental Indenture effective, to the Company, with a copy to the Purchasers, promptly after the receipt by the Company of the Proceeds. If the Trustee has not delivered to the Company and Purchasers a fully executed copy of the Supplemental Indenture by 5:00 p.m. New York time on November 27, 2002, the Purchasers shall have the right, exercisable by written notice to the Company, to require the Company to promptly repurchase the November Shares and the November Warrants for an aggregate price in cash equal to 101% of the Proceeds. 8. Certain Restricted Actions. -------------------------- 8.1. In addition to the restrictions set forth in Section 4.04 of the Purchase Agreement, from and after the November Closing Date, the Company shall not, and shall not permit any Company Subsidiary to, directly or indirectly, take any of the following actions without the prior written consent of at least a majority of the then-outstanding November Shares or the affirmative vote in person or by proxy at a meeting called for that purpose of the holders of at least a majority of the November Shares voting thereat: (i) dispose of or acquire any material assets for cash or equity; or (ii) enter into any contract which requires the Company to make cash payments of more than $2 million in the aggregate; or (iii) purchase any equity securities of the Company on the open market; or (iv) except as disclosed on Schedule 8 to this letter agreement, enter into, or amend in any material respect, any employment agreement with, or other compensation to, any of the Chief Executive Officer, the Chief Financial Offer, the General Counsel of the Company or the President of Donnelley Media; or (v) amend or modify the DonTech Partnership Agreement or any related agreement in any material respect. 8.2. Termination of Obligations. The obligations of the Company set forth in Section 8.1 hereof shall terminate and no longer be of any effect from and after the earlier to occur of (i) such time as the Purchasers no longer hold any November Shares or (ii) such time as the Purchasers no longer have the right pursuant to the B-1 Certificate of Designations to elect a Director of the Company. 9. Applicability of Purchase Agreement Provisions. The parties agree that the November Closing is intended to be treated as an initial closing under the Purchase Agreement for purposes of the representations, warranties, covenants, indemnities and agreements thereunder. In furtherance thereof, the parties agree that: 9.1. All representations and warranties of the Company and the Purchasers made in Article III of the Purchase Agreement shall be deemed to be made on the date of this letter agreement and on the November Closing Date as if set forth herein in their entirety and applicable to the transactions contemplated thereby. 9.2. The Schedules to the Purchase Agreement (other than Schedule A to the Purchase Agreement) shall be deemed to be Schedules to this letter agreement and this letter agreement shall be deemed to be disclosed on each Schedule to the Purchase Agreement where disclosure thereof would be appropriate. 9.3. The provisions of Article VII of the Purchase Agreement shall be applicable to the transactions contemplated by this letter agreement as if set forth herein in their entirety and applicable to the transactions contemplated hereby. In addition, the Company shall, from and after the November Closing Date, indemnify each of the Purchaser Indemnified Parties against and hold them harmless from and against all Losses incurred by any of them based upon, resulting from or arising out of any actual or threatened claim, action, suit, investigation or proceeding ("Litigation") against such Purchaser Indemnified Party by any Person in connection with (A) the transactions contemplated by this letter agreement, (B) the negotiation, execution, delivery and performance of this letter agreement, or any other document contemplated hereby, (C) any actions taken by any Purchaser Indemnified Party pursuant hereto or in connection with the transactions contemplated hereby (whether or not the transactions contemplated hereby are consummated) or (D) the direct or indirect ownership by a Purchaser Indemnified Party of any securities of the Company (including any Litigation to which a Purchaser Indemnified Party is made party as a result thereof). 9.4. Except as set forth in this letter agreement, Sections 4.03, 4.04, 4.05, 4.08, 4.09, 4.10, 4.11, 4.13 and 4.15 (each as may be amended hereby or from time to time) of the Purchase Agreement shall be applicable from and after the November Closing as if the November Closing were the Closing, and the November Shares shall be treated as if such shares are Preferred Shares. 10. Agreement Regarding Dividends. The Company agrees that on and after January 31, 2003 it shall pay cash dividends on the November Shares on a current basis so long as it is not precluded from doing so under law or its bank credit agreement or public indentures. In furtherance thereof, the Company shall (subject to the terms of its bank credit agreement and public indenture) refrain from entering into any agreements which would preclude such payments, seek a waiver under any agreements which would prevent such payments at any time and take whatever actions are necessary, including revaluing assets, to create surplus for the purpose of paying such dividends. 11. Disclosure. The Company shall not make any press release, public announcement or filing with any Governmental Entity concerning the transactions contemplated by this letter agreement or the Purchase Agreement unless mutually agreed by the Company and the Purchasers, except as and to the extent that the Company shall be obligated to make any such disclosure, by law or by the NYSE and then only after consultation with the Purchasers regarding the basis of such obligation and the content of such press release, public announcement or filing. 12. Allocations. The parties agree that, with respect to each Purchaser, the portion of the Proceeds payable by each Purchaser will be allocated: 90.0588% to the November Shares and 9.9413% to the November Warrants. The parties agree to report the sale and purchase of the November Shares and November Warrants for all federal, state, local and foreign tax purposes in a manner consistent with this allocation and agree to take no position inconsistent with the foregoing (unless otherwise required by a final determination by the appropriate taxing authority). 13. No Other Amendments. Except as set forth in this letter agreement, all provisions of the Purchase Agreement shall remain unchanged and in full force and effect. 14. Certain Consents. ---------------- 14.1. The Purchasers hereby consent, pursuant to Section 4.02(b) of the Purchase Agreement, to the transactions contemplated by this letter agreement. 14.2. Section 5(r) of the Purchase Agreement regarding the Company's Senior Notes due 2010 and Senior Subordinated Notes due 2012 shall not be amended or waived without the prior written consent of the Purchasers and the Purchasers shall be third party beneficiaries of such Section. 15. Miscellaneous. ------------- 15.1. This letter agreement shall be governed by, and interpreted in accordance with, the laws of the State of New York applicable to contracts made and to be performed in that State without giving effect to any conflict of laws rules or principles that might require the application of the laws of another jurisdiction. 15.2. The courts of the State of New York in New York County and the United States District Court for the Southern District of New York shall have jurisdiction over the parties with respect to any dispute or controversy between them arising under or in connection with this letter agreement and, by execution and delivery of this letter agreement, each of the parties to this Agreement submits to the jurisdiction of those courts, including but not limited to the in personam and subject matter jurisdiction of those courts, waives any objections to such jurisdiction on the grounds of venue or forum non conveniens, the absence of in personam or subject matter jurisdiction and any similar grounds, consents to service of process by mail (in accordance with Section 15.4 of this letter agreement) or any other manner permitted by law, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. 15.3. All shares of capital stock held or acquired by each of the Goldman Entities shall be aggregated together for the purpose of determining the availability and exercise of any right of each such Goldman Entity under this letter agreement. 15.4. All notices and other communications hereunder shall be in made in the manner described in the Purchase Agreement. 15.5. No amendment, modification or alteration of the terms or provisions of this letter agreement shall be binding on the parties hereto unless the same shall be in writing and duly executed by such parties, except that any of the terms or provisions of this letter agreement may be waived in writing at any time by the parties entitled to the benefits of such waived terms or provisions. No waiver of any of the provisions of this letter agreement shall be deemed to or shall constitute a waiver of any other provision hereof (whether or not similar). No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof. 15.6. This letter agreement may be executed by facsimile signature and may be executed in one or more counterparts, each of which shall be deemed to constitute an original, but all of which together shall constitute but one agreement. 15.7. Nothing contained in this letter agreement or in any instrument or document executed by any party in connection with the transactions contemplated hereby shall create any rights in, or be deemed to have been executed for the benefit of, any person that is not a party hereto or thereto, or, a successor or permitted assign of such a party. Please confirm your agreement with the foregoing by signing and returning one copy of this letter agreement to the undersigned, whereupon this letter agreement shall become a binding agreement between you and the Purchasers. Very truly yours, GS CAPITAL PARTNERS 2000, L.P. By: GS Advisors 2000, L.L.C. Its General Partner By: /s/ John E. Bowman ----------------------------------- Name: John E. Bowman Its: Vice President GS CAPITAL PARTNERS 2000 OFFSHORE, L.P. By: GS Advisors 2000, L.L.C. Its General Partner By: /s/ John E. Bowman ----------------------------------- Name: John E. Bowman Its: Vice President GS CAPITAL PARTNERS 2000 GmbH & CO. BETEILIGUNGS KG By: Goldman Sachs Management GP GmbH Its General Partner By: /s/ John E. Bowman ----------------------------------- Name: John E. Bowman Its: Managing Director GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P. By: GS Employee Funds 2000 GP, L.L.C. Its General Partner By: /s/ John E. Bowman ----------------------------------- Name: John E. Bowman Its: Vice President GOLDMAN SACHS DIRECT INVESTMENT FUND 2000, L.P. By: GS Employee Funds 2000 GP, L.L.C. Its General Partner By: /s/ John E. Bowman ----------------------------------- Name: John E. Bowman Title: Vice President Accepted and agreed as of the date first written above: R.H. DONNELLEY CORPORATION By: /s/ Robert J. Bush ---------------------------- Name: Robert J. Bush Title: Vice President R.H. DONNELLEY INC. By: /s/ Robert J. Bush ---------------------------- Name: Robert J. Bush Title: Vice President EX-99.3 5 ex99_3.txt CERTIFICATE OF DESIGNATIONS Exhibit 3 --------- CERTIFICATE OF DESIGNATIONS OF CONVERTIBLE CUMULATIVE PREFERRED STOCK OF R.H. DONNELLEY CORPORATION ---------------------------------- Pursuant to Section 151 of the General Corporation Law of the State of Delaware ---------------------------------- R.H. Donnelley Corporation (the "CORPORATION"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "DGCL"), hereby certifies as follows: FIRST: The Restated Certificate of Incorporation, as amended, of the Corporation authorizes the issuance of up to 10,000,000 shares of Preferred Stock, par value $1 per share (the "PREFERRED STOCK"), and further authorizes the Board of Directors of the Corporation by resolution or resolutions to provide for the issuance of Preferred Stock in series and to establish the number of shares to be included in each such series and to fix the designation, voting powers, preferences and relative rights and qualifications, limitations or restrictions of each such series. SECOND: On November 24, 2002, the Board of Directors of the Corporation adopted the following resolution authorizing the creation and issuance of a series of said Preferred Stock to be known as Series B-1 Convertible Cumulative Preferred Stock: RESOLVED, that pursuant to the authority vested in the Board of Directors of the Corporation in accordance with the provisions of its Restated Certificate of Incorporation, as amended, a series of Preferred Stock of the Corporation be, and it hereby is, created, and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as set forth in the Corporation's Restated Certificate of Incorporation and in this Certificate of Designations as follows: 1. Designation and Amount. The shares of such series of Preferred Stock shall be designated as Series B-1 Convertible Cumulative Preferred Stock (the "SERIES B-1 CONVERTIBLE PREFERRED STOCK"), and the number of shares constituting such series shall be 70,000. The initial liquidation preference of the Series B-1 Convertible Preferred Stock shall be $1,000 per share or right (the "LIQUIDATION VALUE"). 2. Rank. The Series B-1 Convertible Preferred Stock shall, with respect to dividend rights and rights on liquidation, winding up and dissolution, rank (i) senior to both the Corporation's Common Stock and to all classes and series of stock of the Corporation now or hereafter authorized, issued or outstanding which by their terms expressly provide that they are junior to the Series B-1 Convertible Preferred Stock or which do not specify their rank (collectively with the Common Stock, the "JUNIOR SECURITIES"); (ii) on a parity with each other class of capital stock or series of preferred stock issued by the Corporation after the date hereof the terms of which specifically provide that such class or series will rank on a parity with the Series B-1 Convertible Preferred Stock as to dividend distributions and distributions upon the liquidation, winding up and dissolution of the Corporation (collectively referred to as "PARITY SECURITIES"); and (iii) junior to each other class of capital stock or other series of Preferred Stock issued by the Corporation after the date hereof the terms of which specifically provide that such class or series will rank senior to the Series B-1 Convertible Preferred Stock as to dividend distributions or distributions upon the liquidation, winding up and dissolution of the Corporation (collectively referred to as "SENIOR SECURITIES") 3. Dividends. (a) Payment of Dividends. The holders of shares of Series B-1 Convertible Preferred Stock, in preference to the holders of any shares of Common Stock or other capital stock of the Corporation, shall be entitled to receive, when, as and if declared by the Board of Directors, in their sole discretion, out of the assets of the Corporation legally available therefor, distributions in the form of cumulative cash dividends payable at an annual rate per share equal to 8% (the "Dividend Rate") of the Convertible Preferred Amount from and after the date of issuance of the shares of Series B-1 Convertible Preferred Stock (the "Issue Date"), as long as the shares of Series B-1 Convertible Preferred Stock remain outstanding. Dividends shall be (i) computed on the basis of the aggregate Convertible Preferred Amount; (ii) calculated and compounded quarterly; (iii) accrue and be payable quarterly, in arrears, on January 31, April 30, July 31 and October 31 (each such date being referred to herein as a "Quarterly Dividend Payment Date"), except that if any Quarterly Dividend Payment Date is not a Business Day then the Quarterly Dividend Payment Date shall be on the first immediately succeeding Business Day, commencing on the first Quarterly Dividend Payment Date following the Issue Date; and (iv) payable in cash. Notwithstanding anything contained herein to the contrary, on and after the Trigger Date, the Dividend Rate shall be 15%. (b) Accrual of Dividends. Dividends payable pursuant to subsection (a) of this Section 3 shall begin to accrue on a daily basis and be cumulative from the Issue Date, whether or not declared by the Board of Directors and whether or not there are profits, surplus or other funds of the Corporation legally available for the payment of dividends, and shall continue to accrue and be cumulative (and compound as provided in (a) above) until paid in full in cash or until the date of conversion or redemption of the Series B-1 Convertible Preferred Stock (such dividends being referred to as the "Convertible Preferred Dividends"). The amount of dividends so payable shall be determined on the basis of twelve 30-day months and a 360-day year. Dividends paid on shares of Series B-1 Convertible Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. (c) Restricted Payments. So long as any shares of Series B-1 Convertible Preferred Stock remain outstanding, the Corporation shall not make any payment on account of, or set apart for payment money for a sinking or other similar fund for, the purchase, redemption or other retirement of, any Junior Securities or other capital stock of the Corporation or any warrants, rights, calls or options exercisable for or convertible into any shares of Junior Securities or other capital stock of the Corporation, or make any distribution in respect thereof, either directly or indirectly, and whether in cash, obligations or shares of Junior Securities or other capital stock of the Corporation or other property, and shall not permit any corporation or other entity directly or indirectly controlled by the Corporation to purchase or redeem any of the Junior Securities or other capital stock of the Corporation or any warrants, rights, calls or options exercisable for or convertible into any Junior Securities or other capital stock of the Corporation, unless all dividends that have accrued since the Issue Date on the shares of Series B-1 Convertible Preferred Stock shall have been paid. (d) Dividends on Common Stock. So long as any shares of Series B-1 Convertible Preferred Stock remain outstanding, if the Corporation pays a dividend in cash, securities or other property on shares of Common Stock, then at the same time the Corporation shall declare and pay a dividend on shares of Series B-1 Convertible Preferred Stock (which would be in addition to any dividends payable under Section 3(a) and (b)) in the amount of dividends that would be paid with respect to shares of Series B-1 Convertible Preferred Stock if such shares were converted into shares of Common Stock on the record date for such dividend (or if no record date is established, at the date such dividend is declared). 4. Liquidation Preference. (a) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation (each, a "LIQUIDATION EVENT"), the holders of shares of Series B-1 Convertible Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders an amount in cash equal to the greater of (i) the Convertible Preferred Amount, and (ii) the amount to which such holder would be entitled to receive in connection therewith had such holder converted such share into shares of Common Stock in accordance with the terms hereof immediately prior to such event (such greater amount of (i) and (ii) being referred to herein as the "LIQUIDATION PREFERENCE"), in either case before any payment shall be made or any assets distributed to the holders of any of the Junior Securities. If the assets of the Corporation are not sufficient to pay in full the liquidation payments payable to the holders of outstanding shares of the Series B-1 Convertible Preferred Stock and any Parity Securities, then the holders of all such shares shall share ratably in such distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which the holders of outstanding shares of Series B-1 Convertible Preferred Stock and the holders of outstanding shares of such Parity Securities are entitled were paid in full. (b) For the purposes of this Section 4, neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Corporation nor the consolidation or merger of the Corporation with any one or more other corporations shall be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the Corporation, unless such voluntary sale, conveyance, exchange or transfer shall be in connection with a plan of liquidation, dissolution or winding up of the Corporation. 5. Redemption. (a) Optional Redemption. Subject to the rights of holders of shares of Series B-1 Convertible Preferred Stock set forth in Section 9 hereof, the Corporation may, at its option, redeem at any time on or after the Redemption Trigger Date, in the manner provided in Section 6 hereof, all but not less than all of the shares of the Series B-1 Convertible Preferred Stock at a redemption price per share in cash equal to 101% of the Liquidation Preference. (b) Redemption Upon Change in Control. Upon the occurrence of a Change in Control, each holder of Series B-1 Convertible Preferred Stock may elect to cause the Corporation to redeem such holder's Series B-1 Convertible Preferred Stock, in whole or in part, at a redemption price per share in cash equal to 101% of the Liquidation Preference. 6. Procedure for Redemption. (a) In the event that the Corporation shall redeem shares of Series B-1 Convertible Preferred Stock pursuant to Section 5(a) hereof, notice of such redemption shall be mailed by first-class mail, postage prepaid, and mailed not less than 30 days nor more than 60 days prior to the redemption date, to the holders of record of the shares to be redeemed at their respective addresses as they shall appear in the records of the Corporation; provided, however, that failure to give such notice or any defect therein or in the mailing thereof shall not affect the validity of the proceeding for the redemption of any shares so to be redeemed except as to the holder to whom the Corporation has failed to give such notice or except as to the holder to whom notice was defective. Each such notice shall state: (i) the redemption date; (ii) the number of shares of Series B-1 Convertible Preferred Stock to be redeemed; (iii) the redemption price per share, including a calculation of such redemption price; (iv) the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date; and (vi) that the holder's right to convert such shares into shares of Common Stock shall terminate on the close of business on the second Business Day preceding such redemption date. (b) If a Change in Control should occur, then, in any one or more of such events the Corporation shall, within 10 days following the occurrence of the Change in Control, give written notice by first-class mail, postage prepaid, to each holder of Series B-1 Convertible Preferred Stock at its address as it appears in the records of the Corporation, which notice shall describe such Change in Control. Such notice shall also set forth: (i) each holder's right to require the Corporation to redeem in whole or in part shares of Series B-1 Convertible Preferred Stock held by such holder as a result of such Change in Control; (ii) the redemption price, including a calculation of such redemption price; (iii) the redemption date (which date shall be no earlier than 30 days from the date the notice in respect of such Change in Control is mailed); (iv) the procedures to be followed by such holder in exercising its right of redemption, including the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (v) that dividends on the shares to be redeemed will cease to accrue on the redemption date and (vi) that the holder's right to convert such shares into shares of Common Stock shall terminate on the close of business on the second Business Day preceding such redemption date. In the event a holder of shares of Series B-1 Convertible Preferred Stock elects to require the Corporation to redeem any or all of such shares of Series B-1 Convertible Preferred Stock, such holder shall deliver, not later than two Business Days prior to the redemption date as set forth in the Corporation's notice described in this Section 6(b), a written notice stating such holder's election and specifying the number of shares to be redeemed pursuant to Section 5(b) hereof. (c) After notice by the Corporation has been mailed as provided in Section 6(a) hereof, or notices of election have been mailed by the holders as provided in Section 6(b) hereof, and provided that on or before the applicable redemption date funds necessary for such redemption shall have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares so called for or entitled to redemption, so as to be and to continue to be available therefor, then, from and after the redemption date (unless the Corporation defaults in the payment of the redemption price, in which case such rights shall continue until the redemption price is paid), dividends on the shares of Series B-1 Convertible Preferred Stock so called for or entitled to redemption shall cease to accrue, and said shares shall no longer be deemed to be outstanding and shall not have the status of shares of Series B-1 Convertible Preferred Stock, and all rights of the holders thereof as stockholders of the Corporation (except the right to receive the applicable redemption price and any accrued and unpaid dividends from the Corporation to the date of redemption calculated pursuant to Section 3 hereof and the right to convert such shares into shares of Common Stock, which shall continue until the close of business on the second Business Day preceding the date of redemption in accordance with Section 9 hereof) shall cease. Upon surrender of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Board of Directors of the Corporation shall so require and a notice by the Corporation shall so state), such shares shall be redeemed by the Corporation at the applicable redemption price as aforesaid. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate or certificates representing the unredeemed shares shall be issued to such holder within 5 days of the redemption date. 7. Reacquired Shares. Shares of Series B-1 Convertible Preferred Stock that have been issued and reacquired in any manner, including without limitation shares reacquired by purchase, redemption or conversion pursuant to Section 9 hereof, shall (upon compliance with any applicable provisions of the laws of the State of Delaware) have the status of authorized and unissued shares of the class of Preferred Stock undesignated as to series and may be redesignated and reissued as part of any series of Preferred Stock other than Series B-1 Convertible Preferred Stock. 8. Voting Rights. In addition to any voting rights provided by applicable law, the holders of Series B-1 Convertible Preferred Stock shall have the following voting rights: (a) General. Subject to Section 8(b) hereof, each share of Series B-1 Convertible Preferred Stock shall entitle the holder thereof to vote on all matters submitted to a vote of the stockholders of the Corporation, voting together as a single class with the holders of Common Stock. At any time, each share of Series B-1 Convertible Preferred Stock shall be entitled to a number of votes which is equal to the number of shares of Common Stock that could be obtained upon conversion of one share of Series B-1 Convertible Preferred Stock at the then applicable Conversion Price (as such amount may be adjusted pursuant to Section 9(f) hereof). (b) Voting Rights for Directors. --------------------------- (i) Subject to Section 8(b)(viii), in addition to any other rights to elect directors which the holders of Series B-1 Convertible Preferred Stock may have, from and after the Issue Date, the holders of all outstanding shares of Series B-1 Convertible Preferred Stock, voting separately as a class and to the exclusion of the holders of all other classes of stock of the Corporation, shall be entitled to elect one individual to serve as a member of the Board of Directors. Such director shall placed into a class if and to the same extent as the directors to be elected generally by the stockholders of the Corporation. (ii) The right to elect such director as described in Section 8(b)(i) hereof may be exercised either at a special meeting of the holders of Series B-1 Convertible Preferred Stock, called as hereinafter provided in Section 8(b)(iii) hereof, at any annual meeting of stockholders held for the purpose of electing directors, or by the written consent of the holders of Series B-1 Convertible Preferred Stock without a meeting pursuant to Section 228 of the DGCL and thereafter at such annual meeting or by written consent. (iii) The Secretary of the Corporation may, and upon the written request of the holders of record of at least 10% of the outstanding shares of Series B-1 Convertible Preferred Stock (addressed to the Secretary of the Corporation at the principal office of the Corporation) shall, call a special meeting of the holders of Series B-1 Convertible Preferred Stock for the election of the director to be elected by them as herein provided. Such call shall be made by notice to the holders of record by first-class mail, postage prepaid at their respective addresses as they shall appear in the records of the Corporation, and such notice shall be mailed at least 10 days but no more than 20 days before the date of the special meeting, or as required by law. Such meeting shall be held at the earliest practicable date upon the notice required for special meetings of stockholders at the place designated by the Secretary of the Corporation. If such meeting shall not be called by a proper officer of the Corporation within 15 days after receipt of such written request by the Secretary of the Corporation, then the holders of record of at least 10% of the shares of Series B-1 Convertible Preferred Stock then outstanding may call such meeting at the expense of the Corporation, and such meeting may be called by such holders upon the notice required for special meetings of stockholders and shall be held at the place designated in such notice. Any holder of Series B-1 Convertible Preferred Stock that would be entitled to vote at any such meeting shall have access to the stock record books of the Corporation for the purpose of causing a meeting of holders of Series B-1 Convertible Preferred Stock to be called pursuant to the provisions of this Section 8(b)(iii). (iv) At any meeting held for the purpose of electing directors at which the holders of Series B-1 Convertible Preferred Stock shall have the right to elect a director as provided in this Section 8(b), the presence in person or by proxy of the holders of a majority of the then outstanding shares of Series B-1 Convertible Preferred Stock shall be required and be sufficient to constitute a quorum of such class for the election of a director by such class. At any such meeting or adjournment thereof, (x) the absence of a quorum of the holders of Series B-1 Convertible Preferred Stock shall not prevent the election of directors other than the director to be elected by the holders of Series B-1 Convertible Preferred Stock, and the absence of a quorum or quorums of the holders of capital stock entitled to elect such other directors shall not prevent the election of the director to be elected by the holders of Series B-1 Convertible Preferred Stock, and (y) in the absence of a quorum of the holders of Series B-1 Convertible Preferred Stock, a majority of the holders of Series B-1 Convertible Preferred Stock present in person or by proxy shall have the power to adjourn the meeting for the election of the director which such holders are entitled to elect, from time to time, without notice (except as required by law) other than announcement at the meeting, until a quorum shall be present. (v) Except as provided in Section 8(b)(viii) hereof, the term of office of any director elected by the holders of Series B-1 Convertible Preferred Stock pursuant to Section 8(b)(i) hereof in office at any time shall terminate upon the election of his or her successor at the annual meeting of stockholders held for the purpose of electing directors to the class of directors to which such director belongs. (vi) In case of a vacancy occurring in the office of any director so elected pursuant to Section 8(b)(i) hereof, the holders of a majority of the Series B-1 Convertible Preferred Stock then outstanding may, at a special meeting of the holders or by written consent as provided above, elect a successor to hold office for the unexpired term of such director. (vii) At any annual or special meeting held for the purpose of allowing the holders of the Series B-1 Convertible Preferred Stock to take any action pursuant to this Certificate of Designations, the November Letter Agreement or the Registration Rights Agreement and where a majority of the then outstanding shares of Series B-1 Convertible Preferred Stock are present in person or by proxy, the affirmative vote of the holders present in person or by proxy at such meeting shall be sufficient for such action to have received the approval of the holders of the Series B-1 Convertible Preferred Stock. (viii) Notwithstanding the foregoing, at such time as the outstanding shares of Series B-1 Convertible Preferred Stock then Beneficially Owned by the Initial Purchasers, their respective Affiliates or any Designated Transferees constitutes less than 15% of the number of shares of Common Stock Beneficially Owned by them immediately after the Issue Date (as such number may be adjusted for stock dividends, stock splits, combinations and recapitalizations and other similar events), the holders of Series B-1 Convertible Preferred Stock shall not be entitled to designate or elect a director under this Section 8(b). (c) Additional Directors. -------------------- (i) In the event that a Trigger Date occurs, then the number of directors constituting the Board of Directors of the Corporation, without further action, shall be increased by one person and the holders of the Series B-1 Convertible Preferred Stock shall have the exclusive right, voting separately as a class, to nominate and elect such director (the "New Director") of the Corporation to fill such newly created directorship at each meeting of stockholders held for the purpose of electing directors to the class of directors to which such director belongs. (ii) Whenever such voting right shall have vested, such right may be exercised at a special meeting of the holders of the Series B-1 Convertible Preferred Stock called as hereinafter provided, at any annual meeting of stockholders held for the purpose of electing directors or by the written consent of the holders of Series B-1 Convertible Preferred Stock pursuant to Section 228 of the Delaware General Corporation Law. (iii) At any time when such voting right shall have vested in the holders of Series B-1 Convertible Preferred Stock and if such right shall not already have been initially exercised, a proper officer of the Corporation shall, upon the written request of any holder of record of Series B-1 Convertible Preferred Stock then outstanding, call a special meeting of holders of Series B-1 Convertible Preferred Stock. Such meeting shall be held at the earliest practicable date upon the notice required for annual meetings of stockholders. If such meeting shall not be called within 20 days after such written request, then the holders of record of 10% of the shares of Series B-1 Convertible Preferred Stock then outstanding may designate in writing a holder of Series B-1 Convertible Preferred Stock to call such meeting at the expense of the Corporation, and such meeting may be called by such person so designated upon the notice required for annual meetings of stockholders. Any holder of Series B-1 Convertible Preferred Stock which would be entitled to vote at such meeting shall have access to the stock books of the Corporation for the purpose of causing a meeting of stockholders to be called pursuant to the provisions of this paragraph. Notwithstanding the provisions of this paragraph, however, no such special meeting shall be called during a period within 60 days immediately preceding the date fixed for the next annual meeting of stockholders. (iv) At any meeting at which the holders of Series B-1 Convertible Preferred Stock shall have the right to elect a New Director as provided herein, the presence in person or by proxy of the holders of at least a majority of the then outstanding shares of Series B-1 Convertible Preferred Stock shall be required and be sufficient to constitute a quorum. At any such meeting or adjournment thereof, the absence of a quorum of the holders of Series B-1 Convertible Preferred Stock shall not prevent the election of directors other than the New Director and the absence of a quorum or quorums of the holders of capital stock entitled to elect such other directors shall not prevent the election of any New Director. (v) The term of office of the New Director shall terminate upon the election of his successor by the holders of Series B-1 Convertible Preferred Stock. Upon any termination of the aforesaid voting rights in accordance with Section 8(c)(viii), the term of office of any New Director shall thereupon terminate and upon such termination the number of directors constituting the Board of Directors shall, without further action, be reduced by one. (vi) In the case of any vacancy occurring with respect to the New Director, the New Director who shall have been so elected may appoint a successor to hold office until his successor is elected at an annual or a special meeting of the stockholders. If the New Director shall cease to serve as a director before his term shall expire, the holders of Series B-1 Convertible Preferred Stock then outstanding may elect a successor (at any meeting of stockholders held for the purpose of electing directors or by the written consent of the holders of Series B-1 Convertible Preferred Stock pursuant to Section 228 of the Delaware General Corporation Law) to hold office until his successor is elected at an annual or a special meeting of the stockholders. The New Director may be removed, either for or without cause, by the holders of a majority of the Series B-1 Convertible Preferred Stock and any resulting vacancy may be filled as provided for in this subsection (vi). (vii) So long as any shares of Series B-1 Convertible Preferred Stock are outstanding, the Corporation shall take such action as may be necessary so that its By-laws shall contain provisions ensuring that the number of directors of the Corporation shall at all times be such that the exercise, by the holders of the Series B-1 Convertible Preferred Stock, of the right to elect a New Director will not contravene any provisions of the Certificate of Incorporation or By-laws. (viii) Notwithstanding the foregoing, at such time, if any, as the outstanding shares of Series B-1 Convertible Preferred Stock then Beneficially Owned by the Initial Purchasers, their respective Affiliates or any Designated Transferees constitutes less than 50% of the number of shares of Common Stock Beneficially Owned by them immediately after the Issue Date (as such number may be adjusted for stock dividends, stock splits, combinations and recapitalizations and other similar events), the holders of Series B-1 Convertible Preferred Stock shall not be entitled to designate or elect any directors under this Section 8(c). 9. Conversion. (a) Any share of Series B-1 Convertible Preferred Stock shall be convertible at the option of the holder thereof into fully paid and nonassessable shares of Common Stock on the terms and conditions set forth in this Section 9, at any time upon surrender to the Corporation of the certificates for the shares to be converted, into a number of fully paid and nonassessable shares of Common Stock equal to the Convertible Preferred Amount per share as of the date of conversion divided by the Conversion Price. (b) Conversion of the Series B-1 Convertible Preferred Stock as permitted by Section 9(a) hereof may be effected by any holder thereof upon the surrender to the Corporation, at its principal office or at such other office or agency maintained by the Corporation for that purpose, of the certificate for the Series B-1 Convertible Preferred Stock to be converted accompanied by a written notice stating that such holder elects to convert all or a specified whole number of such shares in accordance with the provisions of this Section 9 and specifying the name or names in which such holder wishes the certificate or certificates for shares of Common Stock to be issued. In case such notice shall specify a name or names other than that of such holder, such notice shall be accompanied by payment of all transfer taxes payable upon the issuance of shares of Common Stock in such name or names. Other than such taxes, the Corporation will pay any and all issue and other taxes (other than taxes based on income) that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of Series B-1 Convertible Preferred Stock pursuant hereto. As promptly as practicable, and in any event within 5 Business Days after the surrender of such certificate or certificates and the receipt of such notice relating thereto and, if applicable, payment of all transfer taxes (or the demonstration to the reasonable satisfaction of the Corporation that such taxes have been paid), the Corporation shall deliver or cause to be delivered (i) certificates representing the number of validly issued, fully paid and nonassessable shares of Common Stock to which the holder of shares of Series B-1 Convertible Preferred Stock being converted shall be entitled, (ii) if less than the full number of shares of Series B-1 Convertible Preferred Stock evidenced by the surrendered certificate or certificates is being converted, a new certificate or certificates, of like tenor, for the number of shares and evidenced by such surrendered certificate or certificates less the number of shares being converted, and (iii) payment of all amounts to which a holder is entitled pursuant to Section 9(e) hereof. Such conversion shall be deemed to have been made at the close of business on the date of giving of such notice and of such surrender of the certificate or certificates representing the shares of Series B-1 Convertible Preferred Stock to be converted so that the rights of the holder thereof as to the shares being converted shall cease except for the right to receive shares of Common Stock in accordance herewith, and the Person entitled to receive the shares of Common Stock shall be treated for all purposes as having become the record holder of such shares of Common Stock at such time. (c) In case any shares of Series B-1 Convertible Preferred Stock are to be redeemed pursuant to Section 5 hereof, such right of conversion shall cease and terminate as to such shares at the close of business on the second Business Day preceding the date fixed for redemption or exchange, unless the Corporation shall default in the payment of the applicable redemption price, in which case such right of conversion shall not cease as to any share of Series B-1 Convertible Preferred Stock unless and until the redemption price with respect to such share has been paid in full. (d) The Corporation shall at all times reserve and keep available, free from liens, charges and security interests and not subject to any preemptive rights, for issuance upon conversion of the Series B-1 Convertible Preferred Stock such number of its authorized but unissued shares of Common Stock as will from time to time be sufficient to permit the conversion of all outstanding shares of Series B-1 Convertible Preferred Stock, and shall take all action required to increase the authorized number of shares of Common Stock if necessary to permit the conversion of all outstanding shares of Series B-1 Convertible Preferred Stock. (e) No fractional shares or scrip representing fractional shares of Common Stock shall be issued upon the conversion of any shares of Series B-1 Convertible Preferred Stock. Instead of any fractional interest in a share of Common Stock which would otherwise be deliverable upon the conversion of a share of Series B-1 Convertible Preferred Stock, the Corporation shall pay to the holder of such share an amount in cash equal to such fractional interest multiplied by the Current Market Price of the Common Stock on the day of conversion. If more than one share or right shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate Convertible Preferred Amount so surrendered. (f) The Conversion Price shall be subject to adjustment as follows: (i) In case the Corporation shall at any time or from time to time after the Issue Date (A) pay a dividend or make a distribution in shares of Common Stock or securities convertible into Common Stock, (B) subdivide or reclassify the outstanding shares of Common Stock into a greater number of shares of Common Stock, (C) combine or reclassify the outstanding shares of Common Stock into a smaller number of shares, or (D) otherwise issue by reclassification of the shares of Common Stock any shares of capital stock of the Corporation, then, and in each such case, the Conversion Price shall be adjusted so that the holder of any shares of Series B-1 Convertible Preferred Stock and thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other securities of the Corporation which such holder would have owned or have been entitled to receive after the happening of any of the events described above had such shares of Series B-1 Convertible Preferred Stock been surrendered for conversion immediately prior to the happening of such event or the record date therefor, whichever is earlier. An adjustment made pursuant to this Section 9(f)(i) shall become applicable (x) in the case of any such dividend or distribution, immediately after the close of business on the record date for the determination of holders of shares of Common Stock entitled to receive such dividend or distribution and (y) in the case of any such subdivision, reclassification or combination, at the close of business on the day upon which such corporate action becomes effective. Such adjustment shall be made successively. (ii) In case the Corporation shall at any time or from time to time after the Issue Date declare, order, pay or make a dividend or other distribution (including without limitation any distribution of stock or other securities, evidences of indebtedness, property or assets or rights or warrants to subscribe for securities of the Corporation or any of its Subsidiaries) on its Common Stock (other than (A) regular quarterly dividends payable in cash or (B) dividends or distributions of shares of Common Stock referred to in Section 9(f)(i) hereof) (any one of the foregoing other than the items specified in clause (A) or (B) referred to as "SECURITIES OR ASSETS"), then and in each such case, unless the Corporation elects to reserve shares or other units of such Securities or Assets for distribution to the holders of the Series B-1 Convertible Preferred Stock upon the conversion of the shares of Series B-1 Convertible Preferred Stock so that any such holder converting shares of Series B-1 Convertible Preferred Stock will receive upon such conversion, in addition to the shares of the Common Stock to which such holder is entitled, the amount and kind of such Securities or Assets which such holder would have received if such holder had, immediately prior to the record date for the distribution of the Securities or Assets, converted its shares of Series B-1 Convertible Preferred Stock into Common Stock, the Conversion Price shall be adjusted so that such Conversion Price shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the date of such distribution by a fraction of which the numerator shall be the Current Market Price of the Common Stock on such record date less the then fair market value (as determined by the Board in good faith) of the portion of the capital stock or assets or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock, and of which the denominator shall be the Current Market Price of the Common Stock on such record date; provided, however, that if the then fair market value (as so determined) of the portion of the Securities or Assets so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock on the record date mentioned above, in lieu of the foregoing adjustment, adequate provision shall be made so that each holder of shares of the Series B-1 Convertible Preferred Stock shall have the right to receive the amount and kind of Securities or Assets which such holder would have received had such holder converted each such share of the Series B-1 Convertible Preferred Stock immediately prior to the record date for the distribution of the Securities or Assets. Such adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution. (iii) In case the Corporation shall issue or sell any Common Stock (or rights, options, warrants or other securities convertible into or exercisable or exchangeable for shares of Common Stock) (collectively, "Additional Shares") at any time from and after the Issue Date until the third anniversary of the Issue Date without consideration or for a consideration per share (or having a conversion, exchange or exercise price per share) (such per share amount, the "Sale Price") less than the greater of (A) the Current Market Price per share of Common Stock on the date preceding the earlier of the issuance or public announcement of the issuance of such Additional Shares of Common Stock and (B) the Conversion Price as of the date of such issuance of such shares (or, in the case of convertible or exchangeable or exercisable securities, less than the greater of the Current Market Price or the Conversion Price, as the case may be, as of the date of issuance of the rights, options, warrants or other securities in respect of which shares of Common Stock were issued) then, and in each such case, the Conversion Price shall be reduced to an amount determined by multiplying (A) the Conversion Price in effect on the day immediately prior to such date by (B) a fraction, the numerator of which shall be the sum of (1) the number of shares of Common Stock outstanding immediately prior to such sale or issuance multiplied by the greater of (a) the then applicable Conversion Price per share and (b) the Current Market Price per share of Common Stock on the date preceding the earlier of the issuance or public announcement of the issuance of such Additional Shares of Common Stock (the greater of (a) and (b) above hereinafter referred to as the "Adjustment Price") and (2) the aggregate consideration receivable by the Corporation for the total number of shares of Common Stock so issued (or into or for which the rights, options, warrants or other securities are convertible, exercisable or exchangeable), and the denominator of which shall equal to the product of (I) the sum of (x) the total number of shares of Common Stock outstanding immediately prior to such sale or issue and (y) the number of additional shares of Common Stock issued (or into or for which the rights, options, warrants or other securities may be converted, exercised or exchanged), multiplied by (II) the Adjustment Price. In case any portion of the consideration to be received by the Corporation shall be in a form other than cash, the fair market value of such noncash consideration shall be utilized in the foregoing computation. Such fair market value shall be determined in good faith by the Board of Directors. An adjustment made pursuant to this subsection (iii) shall be made on the next Business Day following the date on which any such issuance is made and shall be effective retroactively to the close of business on the date of such issuance. For purposes of this subsection (iii), the aggregate consideration receivable by the Corporation in connection with the issuance of shares of Common Stock or of rights, warrants or other securities convertible into shares of Common Stock shall be deemed to be equal to the sum of the aggregate offering price (before deduction of underwriting discounts or commissions and expenses payable to third parties) of all such Common Stock, rights, warrants and convertible securities plus the aggregate amount (as determined on the date of issuance), if any, payable upon exercise or conversion of any such rights, warrants and convertible securities into shares of Common Stock. If, subsequent to the date of issuance of such right, warrants or other convertible securities, the exercise or conversion price thereof is reduced, such aggregate amount shall be recalculated and the Conversion Price shall be adjusted retroactively to give effect to such reduction. On the expiration of any option or the termination of any right to convert or exchange any securities into Additional Shares, the Conversion Price then in effect hereunder shall forthwith be increased to the Conversion Price which would have been in effect at the time of such expiration or termination (but taking into account other adjustments or potential made following the time of issuance of such options or securities) had such option or security, to the extent outstanding immediately prior to such expiration or termination, never been issued. If Common Stock is sold as a unit with other securities, the aggregate consideration received for such Common Stock shall be deemed to be net of the fair market value (as determined by the Board of Directors in good faith) of such other securities. The issuance or reissuance of (A) any shares of Common Stock or rights, warrants or other securities convertible into shares of Common Stock (whether treasury shares or newly issued shares) (1) pursuant to a dividend or distribution on, or subdivision, combination or reclassification of, the outstanding shares of Common Stock requiring an adjustment in the Conversion Price pursuant to subsection (i) of this Section 9(f); (2) pursuant to any restricted stock or stock option plan or program of the Corporation involving the grant of options or rights to acquire shares of Common Stock after the date hereof to directors, officers and employees of the Corporation and its Subsidiaries; (3) pursuant to any option, warrant, right, or convertible security outstanding as of the Issue Date; (4) pursuant to any securities issued to a bank or other similar financial institution solely in connection with the Senior Credit Facility or the Senior Subordinated Credit Facility or (5) pursuant to an underwritten offering registered with the SEC if the offering price is greater than the Conversion Price then in effect; (B) the Series B-1 Convertible Preferred Stock and any shares of Common Stock issuable upon conversion or exercise thereof, (C) the Warrants and any shares of Common Stock issuable upon exercise thereof, or (D) the Initial Convertible Preferred Stock, shall not be deemed to constitute an issuance of Common Stock or convertible securities by the Corporation to which this subsection (iii) applies. No adjustment shall be made pursuant to this subsection (iii) in connection with any transaction to which Section 9(g) applies. (iv) For purposes of this Section 9(f), the number of shares of Common Stock at any time outstanding shall not include any shares of Common Stock then owned or held by or for the account of the Corporation. (v) All calculations of the Conversion Price pursuant to this Section 9(f) shall be made to the nearest one one-hundredth of a cent. Anything in this Section 9(f) to the contrary notwithstanding, (A) the Corporation shall not be required to give effect to any adjustment in the Conversion Price unless and until the net effect of one or more adjustments (each of which shall be carried forward), determined as above provided, shall have resulted in a reduction of the Conversion Price of at least 1%, and when the cumulative net effect of more than one adjustment so determined shall be to reduce the Conversion Price by at least 1%, such reduction in Conversion Price shall thereupon be given effect and (B) in no event shall the then current Conversion Price be increased as a result of any calculation made at any time pursuant to this Section 9(f). (g) (i) In case of any capital reorganization or reclassification of outstanding shares of Common Stock (other than a reclassification to which Section 9(f)(i) hereof shall apply), or in case of any merger or consolidation of the Corporation with or into another Person (as defined below), or in case of any sale or conveyance to another Person of all or substantially all of the assets of the Corporation or any compulsory share exchange pursuant to which share exchange the shares of Common Stock are converted into other securities, cash or other property (each of the foregoing being referred to as a "TRANSACTION"), each share of Series B-1 Convertible Preferred Stock then outstanding shall thereafter be convertible into, in lieu of the Common Stock issuable upon such conversion prior to consummation of such Transaction, the kind and amount of shares of stock and other securities and property receivable (including cash) upon the consummation of such Transaction by a holder of that number of shares of Common Stock into which one share of Series B-1 Convertible Preferred Stock was convertible immediately prior to such Transaction (including, on a pro rata basis, the cash, securities or property received by holders of Common Stock in any tender or exchange offer that is a step in such Transaction). (ii) Notwithstanding anything contained herein to the contrary, the Corporation will not effect any Transaction unless, prior to the consummation thereof, (A) the Surviving Person (as defined below) shall agree that the shares of Series B-1 Convertible Preferred Stock shall be treated as provided in paragraph (i) of this Section 9(g) and the agreements governing such Transaction shall so provide, (B) the Surviving Person thereof shall assume, by written instrument mailed, by first-class mail, postage prepaid, to each holder of shares of Series B-1 Convertible Preferred Stock at such holder's address as it appears in the records of the Corporation, the obligation to deliver to such holder such cash or other securities to which, in accordance with the foregoing provisions, such holder is entitled and such Surviving Person shall have mailed, by first-class mail, postage prepaid, to each holder of shares of Series B-1 Convertible Preferred Stock at such holder's address as it appears in the records of the Corporation, an opinion of independent counsel for such Person stating that such assumption agreement is a valid, binding and enforceable agreement of the Surviving Person, and (C) proper provision is made to ensure that the holders of shares of Series B-1 Convertible Preferred Stock will be entitled to receive the benefits afforded by Section 5(b) hereof. (h) In any case, if necessary, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions set forth in this Section 9 with respect to rights and interests thereafter of the holders of shares of Series B-1 Convertible Preferred Stock to the end that the provisions set forth herein for the protection of the conversion rights of Series B-1 Convertible Preferred Stock shall thereafter be applicable, as nearly as reasonably may be, to any such other shares of stock and other securities (other than the Common Stock) and property deliverable upon conversion of the shares of Series B-1 Convertible Preferred Stock remaining outstanding with such adjustments in the Conversion Price and such other adjustments in the provisions hereof as the Board of Directors shall in good faith determine to be appropriate. In case securities or property other than Common Stock shall be issuable or deliverable upon conversion as aforesaid, then all references in this Section 9 shall be deemed to apply, so far as appropriate and as nearly as may be, to such other securities or property. (i) If the Corporation shall pay any dividend or make any other distribution to the holders of its Common Stock (other than regular quarterly dividends payable in cash) or shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or any other right, or there shall be any Transaction, or there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Corporation, then, in any one or more of said cases the Corporation shall give at least 15 days prior written notice to the holders of record of Series B-1 Convertible Preferred Stock by first-class mail, postage prepaid, at their respective addresses as they shall appear in the records of the Corporation of the earlier of the dates on which (i) the books of the Corporation shall close or a record shall be taken for such stock dividend, distribution or subscription rights or (ii) such Transaction, dissolution, liquidation or winding up shall take place. Such notice shall also specify the date as of which the holders of the Common Stock of record shall participate in said dividend, distribution or subscription rights or shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale or conveyance or participate in such dissolution, liquidation or winding up, as the case may be. Failure to give such notice shall not invalidate any action so taken. (j) Automatic Conversion. On the Closing Date, each share of Series B-1 Convertible Preferred Stock shall, without further action, be automatically converted into a number of fully paid and nonassessable shares of Initial Convertible Preferred Stock equal to the Convertible Preferred Amount per share as of the Closing Date divided by $1,000 (as adjusted for any split, subdivision, combination, consolidation, recapitalization or similar event with respect to the Series B-1 Convertible Preferred Stock). The Corporation shall take, or cause to be taken, all such further actions as shall be necessary to effectuate such conversion, including, without limitation, issuing shares of the Initial Convertible Preferred Stock to the holders of shares of Series B-1 Convertible Preferred Stock on the Closing Date. The provisions of Section 9(e) shall be applicable to any conversion pursuant to this Section 9(j). 10. Reports as to Adjustments. Upon the occurrence of any event specified in Section 9(f) hereof that would result in any adjustment of the Conversion Price, then, and in each such case, the Corporation shall promptly deliver to the holders of record by first-class mail, postage prepaid, at their respective addresses as they shall appear in the records of the Corporation, a certificate signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation setting forth in reasonable detail the event requiring the adjustment and the method by which such adjustment was calculated and specifying the Conversion Price then in effect following such adjustment. Where appropriate, such notice to the holders of Series B-1 Convertible Preferred Stock may be given in advance and included as part of the notice required pursuant to Section 9(i) hereof. 11. Purchase Rights. If the Corporation issues any shares of Common Stock, options, convertible securities, other equity securities or securities containing options or rights to acquire any equity securities or any securities convertible or exchangeable for equity securities, in each case after the date hereof (other than a Permitted Issuance) to any Person (the "OFFEREE"), such issuance (the "OFFER") will be subject to the right of first offer and participation rights set forth in Section 11(a) and Section 11(b) below. (a) Preferred Stock Issuances. If the securities to be issued in the Offer include any class or series of preferred stock of the Corporation whether by liquidation, dividend or voting rights, the Corporation shall offer such securities (the "PREFERRED OFFERED SECURITIES") to the holders of Series B-1 Convertible Preferred Stock by delivery of written notice to such holders not less than 30 days prior to the date of the proposed issuance. Such notice shall disclose in reasonable detail the proposed terms (including price terms) and conditions of the Offer (the "PREFERRED OFFER NOTICE"). Each holder of Series B-1 Convertible Preferred Stock shall have the right to purchase its ratable portion of the Preferred Offered Securities (determined by dividing the number of shares of Series B-1 Convertible Preferred Stock held by such holder by the total number of shares of Series B-1 Convertible Preferred Stock then outstanding) on the terms as set forth in the Preferred Offer Notice, by delivery of written notice to the Corporation of such election within 15 days after delivery of the Preferred Issuance Notice (the "PREFERRED ELECTION NOTICE"). If any holder of Series B-1 Convertible Preferred Stock has elected to purchase any Preferred Offered Securities, the sale of such securities shall be consummated simultaneously with the consummation of the sale to the Offeree. If the holders of Series B-1 Convertible Preferred Stock elect to purchase less than all of the Preferred Offered Securities as described above, the Corporation may issue such remaining Preferred Offered Securities to the Offeree at the same price and on the same terms as set forth in the Preferred Issuance Notice during the 45-day period beginning from the date on which the Preferred Election Notice has been delivered to the Corporation. Any Preferred Offered Securities not issued within such 45-day period will be subject to this Section 11(a) upon subsequent proposed issuance. (b) Other Issuances. If the securities to be issued pursuant to the Offer do not include any class or series of preferred stock of the Corporation whether by liquidation, dividend or voting rights, the Corporation shall offer to sell to each holder of Series B-1 Convertible Preferred Stock a number of such securities (the "OFFERED SECURITIES") so that such holder's Ownership Ratio immediately after the issuance of such securities would be equal to such holder's Ownership Ratio immediately prior to such issuance of securities. The Corporation shall give each holder of Series B-1 Convertible Preferred Stock at least 30 days prior written notice of any proposed issuance, which notice shall disclose in reasonable detail the proposed terms and conditions of such issuance (the "ISSUANCE NOTICE"). Each holder of Series B-1 Convertible Preferred Stock shall be entitled to purchase its ratable portion of the Offered Securities at the same price, on the same terms, and at the same time as the securities are issued to the Offeree by delivery of written notice to the Corporation of such election within 15 days after delivery of the Issuance Notice (the "ELECTION NOTICE"); provided, that if more than one type of security is proposed to be issued, such holder shall, if it exercises its rights pursuant to this Section 11(b), purchase such securities in the same ratio to be issued to the Offeree. If any holder of Series B-1 Convertible Preferred Stock has elected to purchase any Offered Securities, the sale of such securities shall be consummated simultaneously with the consummation of the sale to the Offeree. If the holders of Series B-1 Convertible Preferred Stock elect to purchase less than all of the Offered Securities as described above, the Corporation may issue such remaining Offered Securities to the Offeree at the same price and on the same terms as set forth in the Issuance Notice during the 45-day period beginning from the date on which the Election Notice has been delivered to the Corporation. Any Offered Securities not issued within such 45-day period must be reoffered to the holders of Series B-1 Convertible Preferred Stock in accordance with this Section 11(b) prior to issuance. (c) The election by any holder of Series B-1 Convertible Preferred Stock not to exercise purchase rights under this Section 11 in any one instance shall not affect such holders rights as to any subsequent proposed issuance. Any sale of such securities by the Corporation without first giving such holders the rights described in this Section 11 shall be void and of no force and effect, and the Corporation shall not register such sale or issuance on the books and records of the Corporation. 12. Certain Covenants. Any holder of Series B-1 Convertible Preferred Stock may proceed to protect and enforce its rights and the rights of such holders by any available remedy by proceeding at law or in equity to protect and enforce any such rights, whether for the specific enforcement of any provision in this Certificate of Designations or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. 13. Definitions. For the purposes of this Certificate of Designations, the following terms shall have the meanings indicated: "AFFILIATE" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act or any successor provision. The terms "affiliated" and "non-affiliated" shall have meanings correlative to the foregoing. "BENEFICIALLY OWN" has the meaning set forth in Rules 13d-3 and 13d-5 promulgated under the Exchange Act. "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "CHANGE IN CONTROL" shall mean (i) any sale, transfer, conveyance or other disposition (other than by way of merger or consolidation) of all or substantially all of the Corporation's assets, on a consolidated basis, in one transaction or a series of related transactions, to any Person (including any group that is deemed to be a Person); (ii) the consummation of any transaction involving the Corporation, including, without limitation, any merger or consolidation, whereby any Person (including any group that is deemed to be a Person ) is or becomes the "beneficial owner," directly or indirectly, of more than 40% of the aggregate voting equity securities of the Corporation or the surviving entity or entities of such transaction if other than the Corporation; (iii) the Continuing Directors cease for any reason to constitute a majority of the members of the Board of Directors then in office; (iv) the approval by the Corporation's stockholders of a merger or consolidation of the Corporation with any other company and all other required governmental approvals have been obtained, other than a merger or consolidation which would result in the Voting Securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the Voting Securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation; or (v) the Corporation adopts a plan of liquidation. "CLOSING DATE" shall have the meaning set forth in the Stock Purchase Agreement. "COMMON STOCK" shall mean the common stock, par value $1 per share, of the Corporation, including any associated Right, as defined in and issued pursuant to the Rights Agreement, dated as of October 27, 1998, as amended, by and between the Corporation and The Bank of New York (as successor to First Chicago Trust Company of New York), as Rights Agent. "CONTINUING DIRECTORS" shall mean during any period of 12 consecutive months, individuals who at the beginning of any such 12-month period constituted the Board of Directors (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Corporation was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved, including new directors designated in or provided for in an agreement regarding the merger, consolidation or sale, transfer or other conveyance, of all or substantially all of the assets of the Corporation, if such agreement was approved by a vote of such majority of directors). "CONVERTIBLE PREFERRED AMOUNT" shall mean an amount (as adjusted for any split, subdivision, combination, consolidation, recapitalization or similar event with respect to the Series B-1 Convertible Preferred Stock) equal to 100% of the Liquidation Value for each share outstanding, plus an amount equal to all accrued but unpaid dividends thereon, whether or not declared, to the date of, as applicable, (i) liquidation, dissolution or winding up as calculated pursuant to Section 4 hereof, (ii) redemption, as calculated pursuant to Section 5 hereof or (iii) conversion, as calculated pursuant to Section 9 hereof; provided, however, for the purpose of determining the amount of accrued and unpaid dividends as of any date after the Trigger Date, the calculation shall assume that the Dividend Rate was 15% per annum from the date of issuance of the Series B-1 Preferred Stock through, as applicable, (i) the date of liquidation, dissolution or winding up as calculated pursuant to Section 4 hereof, (ii) the date of redemption, as calculated pursuant to Section 5 hereof or (iii) the date of conversion, as calculated pursuant to Section 9 hereof; provided that, for the avoidance of doubt, in the event that the Corporation shall have previously paid accrued dividends at the 8% Dividend Rate for any quarterly dividend period, such 15% per annum Dividend Rate shall still be applicable to such quarterly dividend period with the effect that the accrued and unpaid dividends amount for such quarterly dividend period shall equal the amount of accrued dividends calculated by using the 15% per annum Dividend Rate for such quarterly dividend period less the dividends actually paid by the Corporation with respect to such quarterly dividend period. "CONVERSION PRICE" shall mean, $24.05, and shall be subject to adjustment as provided for in Section 9(f). "CURRENT MARKET PRICE," when used with reference to shares of Common Stock or other securities on any date, shall mean the closing price per share of Common Stock or such other securities on such date and, when used with reference to shares of Common Stock or other securities for any period, shall mean the average of the daily closing prices per share of Common Stock or such other securities for such period. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Common Stock or such other securities are not listed or admitted to trading on the New York Stock Exchange, as reported, in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Common Stock or such other securities are listed or admitted to trading or, if the Common Stock or such other securities are not listed or admitted to trading on any national securities exchange, the last quoted sale price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or such other system then in use, or, if on any such date the Common Stock or such other securities are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock or such other securities selected by the Board of Directors of the Corporation. If the Common Stock or such other securities are not publicly held or so listed or publicly traded, "CURRENT MARKET PRICE" shall mean the fair market value per share of Common Stock or of such other securities as determined by an independent investment banking firm with an established national reputation as a valuer of equity securities selected by the Corporation and reasonably acceptable to the holders of a majority of the shares of Series B-1 Convertible Preferred Stock outstanding at the time. "DESIGNATED TRANSFEREE" shall mean any Person to whom the Initial Purchasers or any Designated Transferee shall have sold or otherwise transferred at least 10,000 shares of Series B-1 Convertible Preferred Stock (as such number may be adjusted from time to time for any stock split, stock dividend, reverse split, combination, recapitalization, merger, or otherwise); provided, however, that no Person primarily engaged in the business of publishing, printing or marketing yellow page directories (the "DIRECTORIES BUSINESS") and no Person which owns more than 40% of the outstanding voting equity securities of any Person primarily engaged in the Directories Business shall be a Designated Transferee unless the Corporation gives its written consent to such Person being a Designated Transferee. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934. "INITIAL CONVERTIBLE PREFERRED STOCK" shall mean the Convertible Preferred Stock, and any shares of Common Stock issuable upon conversion or exercise thereof, issuable pursuant to the Stock Purchase Agreement. "INITIAL PURCHASERS" shall mean GS Capital Partners 2000, L.P., a Delaware limited partnership; GS Capital Partners 2000 Offshore, L.P., a Cayman Islands exempted limited partnership; GS Capital Partners 2000 Employee Fund 2000, L.P., a Delaware limited partnership; GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, a German limited partnership; and Goldman Sachs Direct Investment Fund 2000, L.P. a Delaware limited partnership. "ISSUE DATE" shall mean November 25, 2002. "JUNIOR SECURITIES" shall have the meaning set forth in Section 2 hereof. "NOTES CLOSING" shall mean the closing of the offering of Senior Notes and Senior Subordinated Notes by R.H. Donnelley Finance Corporation I, pursuant to the Preliminary Offering Memorandum, dated November 12, 2002. "NOVEMBER LETTER AGREEMENT" shall mean that certain Letter Agreement, dated November 25, 2002, by and among the Corporation, R.H. Donnelley, Inc. and the Purchasers named therein, as such agreement may be amended from time to time. "OWNERSHIP RATIO" shall mean, as to any Person at any time of determination, the percentage obtained by dividing the amount of shares of Common Stock held by such Person on a fully diluted, as-if-converted basis at such time by the aggregate amount of shares of Common Stock outstanding on a fully diluted, as-if-converted basis at such time. For purposes of this definition, "fully diluted" shall exclude shares of Common Stock issuable pursuant to out-of-the-money options, warrants or other rights and options, warrants or other rights which are not exercisable by the holder thereof on the date of determination. "PARITY SECURITIES" shall have the meaning set forth in Section 2 hereof. "PERMITTED ISSUANCE" shall mean (i) the issuance or granting of Common Stock (including restricted, deferred or performance shares), options or convertible securities to employees of the Corporation and its Subsidiaries or the exercise thereof pursuant to a stock-based incentive plan, (ii) the issuance of Common Stock hereunder, (iii) the issuance of Common Stock by the Corporation for consideration other than cash pursuant to a consummated merger, consolidation, acquisition, or similar business combination, (iv) the issuance of Common Stock pursuant to any securities issued to a bank or other similar financial institution solely in connection with the Senior Credit Facility or the Senior Subordinated Credit Facility, (v) the issuance of Common Stock upon exercise of Warrants or (vi) the issuance of shares of the Initial Convertible Preferred Stock. "PERSON" shall mean any individual, firm, corporation or other entity, and shall include any successor (by merger or otherwise) of such entity. "REDEMPTION TRIGGER DATE" shall mean the date which is the earliest of (a) the date that the Sprint Purchase Agreement is terminated prior to the closing of the transactions contemplated thereby, (b) the date that the Stock Purchase Agreement is terminated prior to the Closing Date, (c) December 16, 2002, if the money to be funded into escrow (the "Escrow") pursuant to the Notes Closing has not been so funded on or before December 16, 2002 and (d) the date on which the Escrow is terminated (other than in connection with the Closing (as such term is defined in the Stock Purchase Agreement)). "REGISTRATION RIGHTS AGREEMENT" shall mean that certain Registration Rights Agreement, dated November 25, 2002, by and among the Corporation and the Purchasers named therein. "SENIOR CREDIT FACILITY" shall have the meaning set forth in the Stock Purchase Agreement. "SENIOR SUBORDINATED CREDIT FACILITY" shall have the meaning set forth in the Stock Purchase Agreement. "SPRINT PURCHASE AGREEMENT" shall mean the Stock Purchase Agreement, dated as of September 21, 2002, by an among Sprint Corporation, a Kansas corporation, Centel Directories LLC, a Delaware limited liability company, and the Corporation, as such agreement may be amended from time to time. "STOCK PURCHASE AGREEMENT" shall mean that certain Preferred Stock and Warrant Purchase Agreement, dated September 21, 2002, by and among the Corporation and the Purchasers named therein, as such agreement may be amended from time to time. "SUBSIDIARIES" shall have the meaning ascribed to the term "Company Subsidiaries" in the Stock Purchase Agreement. "SURVIVING PERSON" shall mean the continuing or surviving Person of a merger, consolidation or other corporate combination, the Person receiving a transfer of all or a substantial part of the properties and assets of the Corporation, or the Person consolidating with or merging into the Corporation in a merger, consolidation or other corporate combination in which the Corporation is the continuing or surviving Person, but in connection with which the Series B-1 Convertible Preferred Stock or Common Stock of the Corporation is exchanged or converted into the securities of any other Person or the right to receive cash or any other property. "TRADING DAY" shall mean a day on which the principal national securities exchange on which the Common Stock is listed or admitted to trading is open for the transaction of business or, if the Common Stock is not listed or admitted to trading on any national securities exchange, a Business Day. "TRIGGER DATE" shall mean the date which is the earliest of (a) 30 days after the Redemption Trigger Date, (b) the day after the first Quarterly Dividend Payment Date that (i) dividends due to be paid to the holders of shares of the Series B-1 Convertible Preferred Stock on such Quarterly Dividend Payment Date are not paid, in cash, in full on such Quarterly Dividend Payment Date and (ii) such dividend payment is not prohibited by any covenant restricting such payments contained in the Corporation's bank credit facility or public indentures, and (c) the date on which the Sprint Purchase Agreement or any agreement contemplated thereby is amended, modified, waived or terminated in any material respect without the prior written consent of the holders of at least 51% of the shares of Series B-1 Convertible Preferred Stock. "VOTING EQUITY INTERESTS" shall mean any Voting Securities, securities of the Corporation convertible into Voting Securities, and options, warrants or other rights to acquire Voting Securities. "VOTING SECURITIES" shall mean the Common Stock, the Series B-1 Convertible Preferred Stock and any other securities of the Corporation having the voting power under ordinary circumstances with respect to the election of directors of the Corporation. "WARRANTS" shall mean the warrants to purchase shares of Common Stock issued pursuant to the Stock Purchase Agreement. IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed in its name and on its behalf and attested on this 25th day of November, 2002 by duly authorized officers of the Corporation. R.H. DONNELLEY CORPORATION By: /s/ Steven M. Blondy ----------------------------- Name: Steven M. Blondy Title: Senior Vice President and ATTEST: Chief Financial Officer By: /s/ Robert J. Bush -------------------------------- Name: Robert J. Bush Title: Secretary EX-99.4 6 ex99_4.txt STOCK PURCHASE WARRANT Exhibit 4 --------- This Warrant was originally issued on November 25, 2002 and such issuance was not registered under the Securities Act of 1933, as amended. The transfer of this Warrant and the securities obtainable upon exercise hereof is subject to the limitations and conditions on transfer specified in the Letter Agreement, dated as of November 25, 2002 (as it may be amended from time to time, the "LETTER AGREEMENT"), between the Company, R.H. Donnelley Inc. and the Registered Holder (each as defined herein), and the Company reserves the right to refuse the transfer of any such securities until such limitations have lapsed and conditions have been fulfilled, with respect to such transfer. Upon written request, a copy of the Letter Agreement shall be furnished by the Company to the holder hereof without charge. R.H. DONNELLEY CORPORATION STOCK PURCHASE WARRANT ---------------------- Date of Issuance: November 25, 2002 Certificate No. ------ FOR VALUE RECEIVED, R.H. Donnelley Corporation, a Delaware corporation (the "COMPANY"), hereby grants to ________________________________ or its registered assigns (the "REGISTERED HOLDER") the right to purchase from the Company ________ shares of the Company's Common Stock at the Exercise Price. This Warrant is one of several warrants (collectively, the "SERIES 1 WARRANTS") issued by the Company to certain investors (the "INVESTORS") pursuant to the letter agreement, dated as of November 25, 2002 (the "LETTER AGREEMENT"). Certain capitalized terms used herein are defined in Section 4 and capitalized terms used in this Warrant but not defined herein shall have the meanings ascribed thereto in the Letter Agreement. The amount and kind of securities obtainable pursuant to the purchase rights granted hereunder and the purchase price for such securities are subject to adjustment pursuant to the provisions contained in this Warrant. This Warrant is subject to the following provisions: Section 1. Exercise of Warrant. (a) Exercise Period. The Registered Holder may exercise, in whole or in part (but not as to a fractional share of Common Stock), the purchase rights represented by this Warrant at any time and from time to time after the Date of Issuance to and including the fifth anniversary of the earlier of (i) the issuance of warrants under the Purchase Agreement or (ii) termination of the Purchase Agreement prior to the closing thereunder (the "EXERCISE PERIOD"). (b) Exercise Procedure. (i) This Warrant shall be deemed to have been exercised when the Company has received all of the following items (the "EXERCISE TIME"): (A) a completed Exercise Agreement, as defined in Section 1(c), executed by the Person exercising all or part of the purchase rights represented by this Warrant (the "PURCHASER"); (B) this Warrant; (C) if this Warrant is not registered in the name of the Purchaser, an Assignment or Assignments in the form set forth in Exhibit I evidencing the assignment of this Warrant to the Purchaser, in which case the Registered Holder shall have complied with the provisions set forth in Section 6; and (D) either (1) a check payable to the Company in an amount equal to the product of the Exercise Price multiplied by the number of shares of Common Stock being purchased upon such exercise (the "AGGREGATE EXERCISE PRICE"), or (2) a written notice to the Company that the Purchaser is exercising the Warrant (or a portion thereof) by authorizing the Company to withhold from issuance a number of shares of Common Stock issuable upon such exercise of the Warrant that when multiplied by the Current Market Price of the Common Stock is equal to the Aggregate Exercise Price (which withheld shares shall no longer be issuable under this Warrant). (ii) Certificates for shares of Common Stock purchased upon exercise of this Warrant shall be delivered by the Company to the Purchaser within five Business Days after the date on which the Exercise Time occurs. Unless this Warrant has expired or all of the purchase rights represented hereby have been exercised, the Company shall prepare a new Warrant, substantially identical hereto, representing the purchase rights formerly represented by this Warrant that have not expired or been exercised and shall within such five-Business Day period deliver such new Warrant to the Person designated for delivery in the Exercise Agreement. (iii) The Common Stock issuable upon the exercise of this Warrant shall be deemed to have been issued to the Purchaser at the Exercise Time, and the Purchaser shall be deemed for all purposes to have become the record holder of such Common Stock as of the Exercise Time. (iv) The issuance of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Registered Holder or the Purchaser for any issuance tax in respect thereof if issued to the Registered Holder or other cost incurred by the Company in connection with such exercise and the related issuance of shares of Common Stock. Each share of Common Stock issuable upon exercise of this Warrant shall upon payment of the Exercise Price therefor, be fully paid and nonassessable and free from all liens and charges with respect to the issuance thereof. (v) The Company shall not close its books against the transfer of this Warrant or of any share of Common Stock issued or issuable upon the exercise of this Warrant in any manner that interferes with the timely and proper exercise of this Warrant. (vi) Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a registered public offering or the sale of the Company, the exercise of any portion of this Warrant may, at the election of the holder hereof, be conditioned upon the consummation of the public offering or sale of the Company in which case such exercise shall not be deemed to be effective until the consummation of such transaction. (vii) The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of issuance upon the exercise of the Series 1 Warrants, such number of shares of Common Stock issuable upon the exercise of all outstanding Series 1 Warrants. The Company shall take all such actions as may be necessary to assure that all such shares of Common Stock may be so issued without violation of any law or governmental regulation applicable to the Company or any requirements of any domestic securities exchange upon which shares of Common Stock may be listed (except for official notice of issuance that shall be immediately delivered by the Company upon each such issuance). The Company shall not take any action that would cause the number of authorized but unissued shares of Common Stock to be less than the number of such shares required to be reserved hereunder for issuance upon exercise of the Series 1 Warrants. (c) Exercise Agreement. Upon any exercise of this Warrant, the Exercise Agreement shall be substantially in the form set forth in Exhibit II (the "EXERCISE AGREEMENT"), except that if the shares of Common Stock are not to be issued in the name of the Person in whose name this Warrant is registered, the Exercise Agreement shall also state the name of the Person to whom the certificates for the shares of Common Stock are to be issued, and if the number of shares of Common Stock to be issued does not include all the shares of Common Stock purchasable hereunder, it shall also state the name of the Person to whom a new Warrant for the unexercised portion of the purchase rights hereunder is to be delivered. Such Exercise Agreement shall be dated the actual date of execution thereof. (d) Fractional Shares. If a fractional share of Common Stock would be issuable upon exercise of the purchase rights represented by this Warrant, the Company shall, unless prohibited by any agreement to which the Company is a party, within five Business Days after the date on which the Exercise Time occurs, deliver to the Purchaser a check payable to the Purchaser in lieu of such fractional share in an amount equal to the difference between Current Market Price of such fractional share as of the date on which the Exercise Time occurs and the Exercise Price of such fractional share. Section 2. Adjustment of Exercise Price and Number of Shares. In order to prevent dilution of the purchase rights granted under this Warrant, the Exercise Price shall be subject to adjustment from time to time as provided in this Section 2, and the number of shares of Common Stock obtainable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this Section 2. (a) The Exercise Price shall be subject to adjustment as follows: (i) In case the Company shall at any time or from time to time after the Date of Issuance (A) pay a dividend or make a distribution in shares of Common Stock or Convertible Securities into Common Stock, (B) subdivide or reclassify the outstanding shares of Common Stock into a greater number of shares of Common Stock, (C) combine or reclassify the outstanding shares of Common Stock into a smaller number of shares, or (D) otherwise issue by reclassification of the shares of Common Stock any shares of capital stock of the Company, then, and in each such case, the Exercise Price in effect immediately prior to such action and the number of shares of Common Stock obtainable upon exercise of this Warrant shall be proportionately adjusted so that the holder of this Warrant shall be entitled to receive the number of shares of Common Stock or other securities of the Company upon exercise of this Warrant which such holder would have owned or have been entitled to receive after the happening of any of the events described above had such Warrant been exercised immediately prior to the happening of such event or the record date therefor, whichever is earlier. An adjustment made pursuant to this Section 2(a)(i) shall become applicable (x) in the case of any such dividend or distribution, immediately after the close of business on the record date for the determination of holders of shares of Common Stock entitled to receive such dividend or distribution and (y) in the case of any such subdivision, reclassification or combination, at the close of business on the day upon which such corporate action becomes effective. Such adjustment shall be made successively. (ii) In case the Company shall at any time or from time to time after the Date of Issuance declare, order, pay or make a dividend or other distribution (including without limitation any distribution of stock or other securities, evidences of indebtedness, property or assets or rights or warrants to subscribe for securities of the Company or any of its Subsidiaries) on its Common Stock (other than (A) regular quarterly dividends payable in cash or (B) dividends or distributions of shares of Common Stock referred to in Section 2(a)(i)) (any one of the foregoing other than the items specified in clause (A) or (B) referred to as "SECURITIES OR ASSETS"), then and in each such case, unless the Company elects to reserve shares or other units of such Securities or Assets for distribution to the holders of the Series 1 Warrants upon the exercise of such Series 1 Warrants so that any such holder exercising its Series 1 Warrants will receive upon such exercise, in addition to the shares of the Common Stock to which such holder is entitled, the amount and kind of such Securities or Assets which such holder would have received if such holder had, immediately prior to the record date for the distribution of the Securities or Assets, exercised its Warrant for Common Stock, the Exercise Price shall be adjusted so that such Exercise Price shall equal the price determined by multiplying the Exercise Price in effect immediately prior to the date of such distribution by a fraction of which the numerator shall be the Current Market Price of the Common Stock on such record date less the then fair market value (as determined by the Board in good faith) of the portion of the capital stock or assets or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock, and of which the denominator shall be the Current Market Price of the Common Stock on such record date; provided, however, that if the then fair market value (as so determined) of the portion of the Securities or Assets so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock on the record date mentioned above, in lieu of the foregoing adjustment, adequate provision shall be made so that each holder of the Series 1 Warrants shall have the right to receive the amount and kind of Securities or Assets which such holder would have received had such holder exercised its Warrant immediately prior to the record date for the distribution of the Securities or Assets. Such adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution. (iii) In case the Company shall issue or sell any Common Stock (or rights, Options, warrants or other Convertible Securities) (collectively, "ADDITIONAL SHARES") at any time after the date hereof until November 25, 2005 without consideration or for a consideration per share (or having a exercise, exchange or exercise price per share) (such per share amount, the "SALE PRICE") less than the greater of (A) the Current Market Price per share of Common Stock on the date preceding the earlier of the issuance or public announcement of the issuance of such Additional Shares of Common Stock and (B) the Exercise Price as of the date of such issuance of shares (or, in the case of Convertible Securities, less than the greater of the Current Market Price or the Exercise Price, as the case may be, as of the date of issuance of the rights, Options, warrants or other securities in respect of which shares of Common Stock were issued) then, and in each such case, the Exercise Price shall be reduced to an amount determined by multiplying (A) the Exercise Price in effect on the day immediately prior to such date by (B) a fraction, the numerator of which shall be the sum of (1) the number of shares of Common Stock outstanding immediately prior to such sale or issuance multiplied by the greater of (a) the then applicable Exercise Price per share and (b) the Current Market Price per share of Common Stock on the date preceding the earlier of the issuance or public announcement of the issuance of such Additional Shares of Common Stock (the greater of (a) and (b) above hereinafter referred to as the "ADJUSTMENT PRICE") and (2) the aggregate consideration receivable by the Company for the total number of shares of Common Stock so issued (or into or for which the rights, Options, warrants or other securities are convertible, exercisable or exchangeable), and the denominator of which shall equal to the product of (I) the sum of (x) the total number of shares of Common Stock outstanding immediately prior to such sale or issue and (y) the number of additional shares of Common Stock issued (or into or for which the rights, Options, warrants or other securities may be converted, exercised or exchanged), multiplied by (II) the Adjustment Price. In case any portion of the consideration to be received by the Company shall be in a form other than cash, the fair market value of such noncash consideration shall be utilized in the foregoing computation. Such fair market value shall be determined in good faith by the Board of Directors. Upon each such adjustment of the Exercise Price hereunder, the number of Shares of Common Stock acquirable upon exercise of this Warrant shall be adjusted to the number of shares determined by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. An adjustment made pursuant to this subsection (iii) shall be made on the next Business Day following the date on which any such issuance is made and shall be effective retroactively to the close of business on the date of such issuance. For purposes of this subsection (iii), the aggregate consideration receivable by the Company in connection with the issuance of shares of Common Stock or of rights, warrants or other Convertible Securities shall be deemed to be equal to the sum of the aggregate offering price (before deduction of underwriting discounts or commissions and expenses payable to third parties) of all such Common Stock, rights, warrants and Convertible Securities plus the aggregate amount (as determined on the date of issuance), if any, payable upon exercise or exercise of any such rights, warrants and Convertible Securities into shares of Common Stock. If, subsequent to the date of issuance of such right, warrants or other Convertible Securities, the conversion or exercise price thereof is reduced, such aggregate amount shall be recalculated and the Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant shall be adjusted retroactively to give effect to such reduction. On the expiration of any option or the termination of any right to convert or exchange any securities into Additional Shares, the Exercise Price then in effect hereunder shall forthwith be increased to the Exercise Price which would have been in effect at the time of such expiration or termination (but taking into account other adjustments or potential made following the time of issuance of such Options or securities) had such option or security, to the extent outstanding immediately prior to such expiration or termination, never been issued and the number of shares of Common Stock obtainable upon exercise of this Warrant shall be correspondingly adjusted. If Common Stock is sold as a unit with other securities, the aggregate consideration received for such Common Stock shall be deemed to be net of the fair market value (as determined by the Board of Directors in good faith) of such other securities. The issuance or reissuance of (A) any shares of Common Stock or rights, warrants or other Convertible Securities (whether treasury shares or newly issued shares) (1) pursuant to a dividend or distribution on, or subdivision, combination or reclassification of, the outstanding shares of Common Stock requiring an adjustment in the Exercise Price pursuant to subsection (i) of this Section 2(a); (2) pursuant to any restricted stock or stock option plan or program of the Company involving the grant of Options or rights to acquire shares of Common Stock after the date hereof to directors, officers and employees of the Company and its Subsidiaries; (3) pursuant to any option, warrant, right, or Convertible Security outstanding as of the Date of Issuance; (4) pursuant to any securities issued to a bank or other similar financial institution solely in connection with the Senior Credit Facility and the Senior Subordinated Credit Facility; or (5) pursuant to an underwritten offering registered with the SEC if the offering price is greater than the Exercise Price then in effect; (B) the Preferred Stock and any shares of Common Stock issuable upon conversion or exercise thereof, or (C) the Series 1 Warrants and any shares of Common Stock issuable upon exercise thereof, shall not be deemed to constitute an issuance of Common Stock or Convertible Securities by the Company to which this subsection (iii) applies. No adjustment shall be made pursuant to this subsection (iii) in connection with any transaction to which Section 2(b) applies. (iv) For purposes of this Section 2(a), the number of shares of Common Stock at any time outstanding shall not include any shares of Common Stock then owned or held by or for the account of the Company. (v) All calculations of the Exercise Price pursuant to this Section 2(a) shall be made to the nearest one one-hundredth of a cent. Anything in this Section 2(a) to the contrary notwithstanding, (A) the Company shall not be required to give effect to any adjustment in the Exercise Price unless and until the net effect of one or more adjustments (each of which shall be carried forward), determined as above provided, shall have resulted in a reduction of the Exercise Price of at least 1%, and when the cumulative net effect of more than one adjustment so determined shall be to reduce the Exercise Price by at least 1%, such reduction in Exercise Price shall thereupon be given effect and (B) in no event shall the then current Exercise Price be increased as a result of any calculation made at any time pursuant to this Section 2(a). (b) (i) In case of any capital reorganization or reclassification of outstanding shares of Common Stock (other than a reclassification to which Section 2(a)(i) shall apply), or in case of any merger or consolidation of the Company with or into another Person (as defined below), or in case of any sale or conveyance to another Person of all or substantially all of the assets of the Company or any compulsory share exchange pursuant to which share exchange the shares of Common Stock are converted into other securities, cash or other property (each of the foregoing being referred to as a "TRANSACTION"), this Warrant shall thereafter be exercisable for, in lieu of the shares of Common Stock issuable upon such exercise prior to consummation of such Transaction, the kind and amount of shares of stock and other securities and property receivable (including cash) upon the consummation of such Transaction by a holder of that number of shares of Common Stock into which the Warrant was exercisable for immediately prior to such Transaction (including, on a pro rata basis, the cash, securities or property received by holders of Common Stock in any tender or exchange offer that is a step in such Transaction). (ii) Notwithstanding anything contained herein to the contrary, the Company will not effect any Transaction unless, prior to the consummation thereof, (A) the Surviving Person shall agree that the Series 1 Warrants shall be treated as provided in paragraph (i) of this Section 2(b) and the agreements governing such Transaction shall so provide and (B) the Surviving Person thereof shall assume, by written instrument mailed, by first-class mail, postage prepaid, to each holder of the Series 1 Warrants at such holder's address as it appears in the records of the Company, the obligation to deliver to such holder such cash or other securities to which, in accordance with the foregoing provisions, such holder is entitled and such Surviving Person shall have mailed, by first-class mail, postage prepaid, to each holder of the Series 1 Warrants at such holder's address as it appears in the records of the Company, and an opinion of independent counsel for such Person stating that such assumption agreement is a valid, binding and enforceable agreement of the Surviving Person. (c) In any case, if necessary, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions set forth in this Section 2 with respect to rights and interests thereafter of the holders of the Series 1 Warrants to the end that the provisions set forth herein for the protection of the purchase rights of the Series 1 Warrants shall thereafter be applicable, as nearly as reasonably may be, to any such other shares of stock and other securities (other than the Common Stock) and property deliverable upon exercise of the Series 1 Warrants remaining outstanding with such adjustments in the Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant and such other adjustments in the provisions hereof as the Board of Directors shall in good faith determine to be appropriate. In case securities or property other than Common Stock shall be issuable or deliverable upon exercise as aforesaid, then all references in this Section 2 shall be deemed to apply, so far as appropriate and as nearly as may be, to such other securities or property. (d) If the Company shall pay any dividend or make any other distribution to the holders of its Common Stock (other than regularly quarterly dividends payable in cash) or shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or any other right, or there shall be any Transaction, or there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company, then, in any one or more of said cases the Company shall give at least 15 days prior written notice to the holders of the Series 1 Warrants by first-class mail, postage prepaid, at their respective addresses as they shall appear in the records of the Company of the earlier of the dates on which (i) the books of the Company shall close or a record shall be taken for such stock dividend, distribution or subscription rights or (ii) such Transaction, dissolution, liquidation or winding up shall take place. Such notice shall also specify that date as of which the holders of the Common Stock of record shall participate in said dividend, distribution of subscription rights or shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale or conveyance or participate in such dissolution, liquidation or winding up, as the case may be. Failure to give such notice shall not invalidate any action so taken. Section 3. Reports as to Adjustments. Upon the occurrence of any event specified in Section 2(a) that would result in any adjustment of the Exercise Price, then, and in each such case, the Company shall promptly deliver by first-class mail, postage prepaid, at their respective addresses as they shall appear in the records of the Company, a certificate signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Company setting forth in reasonable detail the event requiring the adjustment and the method by which such adjustment was calculated and specifying the Exercise Price then in effect and the number of shares of Common Stock obtainable upon exercise of the Series 1 Warrants following such adjustment. Where appropriate, such notice to the holders of the Series 1 Warrants may be given in advance and included as part of the notice required pursuant to Section 2(d). Section 4. Definitions. The following terms have meanings set forth below: "BUSINESS DAY" means any day other than a Saturday, Sunday, or any day on which banks in New York City are authorized or obligated by applicable law to close. "COMMON STOCK" means, collectively, the Company's Common Stock, par value $1 per share (including any associated Right, as defined in and issued pursuant to the Rights Agreement, dated as of October 27, 1998, as amended, by and between the Company and The Bank of New York (successor to First Chicago Trust Company of New York), as Rights Agent. "CONVERTIBLE SECURITIES" means any stock or securities (directly or indirectly, after the passage of time or otherwise) convertible into or exercisable or exchangeable for Common Stock. "CURRENT MARKET PRICE," when used with reference to shares of Common Stock or other securities on any date, shall mean the closing price per share of Common Stock or such other securities on such date and, when used with reference to shares of Common Stock or other securities for any period, shall mean the average of the daily closing prices per share of Common Stock or such other securities for such period. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Common Stock or such other securities are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Common Stock or such other securities are listed or admitted to trading or, if the Common Stock or such other securities are not listed or admitted to trading on any national securities exchange, the last quoted sale price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or such other system then in use, or, if on any such date the Common Stock or such other securities are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock or such other securities selected by the Board of Directors of the Company. If the Common Stock or such other securities are not publicly held or so listed or publicly traded, "CURRENT MARKET PRICE" shall mean the fair market value per share of Common Stock or of such other securities as determined by an independent investment banking firm with an established national reputation as a valuer of equity securities selected by the Company and reasonably acceptable to the holders of a majority of the shares of Preferred Stock outstanding at the time. "EXERCISE PRICE" shall mean $26.28. "OPTIONS" means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities. "PERSON" or "PERSON" means any corporation, individual, limited liability company, joint stock company, joint venture, partnership, unincorporated association, governmental regulatory entity, country, state or political subdivision thereof, trust, municipality or other entity. "PURCHASE AGREEMENT" means the Preferred Stock and Warrant Purchase Agreement, dated as of September 21, 2002, by and among the Company and the investors listed in Schedule A thereto. "SURVIVING PERSON" shall mean the continuing or surviving Person of a merger, consolidation or other corporate combination, the Person receiving a transfer of all or a substantial part of the properties and assets of the Company, or the Person consolidating with or merging into the Company in a merger, consolidation or other corporate combination in which the Company is the continuing or surviving Person, but in connection with which the Preferred Stock, Series 1 Warrants or Common Stock of the Company is exchanged or converted into the securities of any other Person or the right to receive cash or any other property. "TRADING DAY" shall mean a day on which the principal national securities exchange on which the Common Stock is listed or admitted to trading is open for the transaction of business or, if the Common Stock is not listed or admitted to trading on any national exchange, a Business Day. Section 5. No Voting Rights; Limitations of Liability. This Warrant shall not entitle the holder hereof to any voting rights or other rights as a stockholder of the Company. No provision hereof, in the absence of affirmative action by the Registered Holder to purchase Common Stock, and no enumeration herein of the rights or privileges of the Registered Holder shall give rise to any liability of such holder for the Exercise Price of Common Stock acquirable by exercise hereof or as a stockholder of the Company. Section 6. Warrant Transferable. Subject to the transfer conditions referred to in the legend endorsed hereon, including the provisions of the Letter Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, without charge to the Registered Holder, upon surrender of this Warrant with a properly executed Assignment (in the form of Exhibit I) at the principal office of the Company. Section 7. Warrant Exchangeable for Different Denominations. This Warrant is exchangeable, upon the surrender hereof by the Registered Holder at the principal office of the Company, for new Series 1 Warrants of like tenor representing in the aggregate the purchase rights hereunder, and each of such new Series 1 Warrants shall represent such portion of such purchase rights as is designated by the Registered Holder at the time of such surrender. The date the Company initially issues this Warrant shall be deemed to be the "DATE OF ISSUANCE" hereof regardless of the number of times new certificates representing the unexpired and unexercised purchase rights formerly represented by this Warrant shall be issued. All Series 1 Warrants representing portions of the purchase rights hereunder are referred to herein as the "SERIES 1 WARRANTS." Section 8. Replacement. Upon receipt of evidence reasonably satisfactory to the Company (an affidavit of the Registered Holder shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing the Series 1 Warrants, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Company (provided that if the holder is a financial institution or other institutional investor its own agreement shall be satisfactory), or, in the case of any such mutilation upon surrender of such certificate, the Company shall (at its expense) execute and deliver in lieu of such certificate a new certificate of like kind representing the number of Series 1 Warrants of such class represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate. Section 9. Notices. Except as otherwise expressly provided hereunder, all notices referred to herein shall be in writing and shall be delivered by registered or certified mail, return receipt requested and postage prepaid, or by reputable overnight courier service, charges prepaid, and shall be deemed to have been given when so mailed or sent (i) to the Company, at its principal executive offices, Attention: General Counsel and (ii) to any Registered Holder, at such holder's address as it appears in the stock records of the Company (unless otherwise indicated by any such holder). Section 10. Amendment and Waiver. Any provision of this Warrant may be amended or modified in whole or in part at any time by an agreement in writing among the Company and the holder of this Warrant. No failure on the part of either the Company or the holder of this Warrant to exercise, and no delay in exercising, any right shall operate as a waiver thereof nor shall any single or partial exercise by either the Company or the holder of this Warrant of any right preclude any other or future exercise thereof or the exercise of any other right. Section 11. Descriptive Headings; Governing Law. The descriptive headings of the several Sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. References in this Warrant to Sections and Exhibits are references to Sections of, and Exhibits to, this Warrant unless otherwise noted. The corporation laws of the State of Delaware shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by the internal law of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Section 12. Severability. Should any part of this Warrant for any reason be declared invalid, such decision shall not affect the validity of the remaining portion, which remaining portion shall remain in full force and effect as if this Warrant had been executed with the invalid portion thereof eliminated, and it is hereby declared the intention of the Company hereto that it would have executed the remaining portion of this Warrant without including therein any such parts or parts which may, for any reason, be hereafter declared invalid. Section 13. Entire Agreement. This Warrant and the Letter Agreement and the documents described herein and therein or attached or delivered pursuant hereto or thereto set forth the entire agreement between the Company and the Registered Holder with respect to the transactions contemplated by this Warrant. * * * * * * IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and attested by its duly authorized officers under its corporate seal and to be dated the Date of Issuance hereof. R.H. DONNELLEY CORPORATION By: ------------------------------- Name: Title: Attest: - ------------------------------ Name: Title: EXHIBIT I ASSIGNMENT ---------- FOR VALUE RECEIVED, ______________________________ hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (Certificate No. ____) with respect to the number of shares of the Common Stock, par value $1 per share, of R.H. Donnelley Corporation, a Delaware corporation, covered thereby set forth below, unto: Names of Assignee Address No. of Shares - ----------------- ------- ------------- Signature: ---------------------------- Address: ---------------------------- Witness: ---------------------------- EXHIBIT II EXERCISE AGREEMENT ------------------ To: R.H. Donnelley Corporation Dated: The undersigned, pursuant to the provisions set forth in the attached Warrant (Certificate No. ______), hereby agrees to subscribe for the purchase of ______ shares of the Common Stock, par value $1 per share (the "COMMON STOCK"), of R.H. Donnelley Corporation, a Delaware corporation (the "COMPANY"), covered by such Warrant and makes payment herewith in full therefor at the price per share provided by such Warrant. The undersigned(1) represents to the Company as follows: (i) such Person (as defined in the Warrant) is an "accredited investor" within the meaning of Rule 501 of Regulation D promulgated under the Securities Act of 1933 (the "SECURITIES ACT") and was not organized for the specific purpose of acquiring the Common Stock issuable upon exercise thereof; (ii) such person has sufficient knowledge, sophistication and experience in financial and business matters as are necessary to evaluate the risks and merits of an investment in the Company; (iii) such Person has had an opportunity to discuss the Company's business, management and financial affairs with the Company's management; (iv) the Common Stock being acquired by such Person is being acquired for its own account for the purpose of investment and not with a view to or for sale in connection with any distribution thereof; and (v) such Person understands that (A) none of the shares of Common Stock issuable upon the exercise of the Warrant have been registered under the Securities Act and are being issued in reliance upon federal and state exemptions for transactions not involving any public offering, (B) the shares of Common Stock issuable upon the exercise of the Warrant must be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act or is exempt from such registration, (C) the shares of Common Stock issuable upon the exercise of the Warrant will bear a legend to such effect, as applicable, and (D) the Company will make a notation on its transfer books to such effect. [NAME OF PERSON] By: --------------------------------- Name: Title: Address: - ------------------- (1) In the event that the shares of Common Stock are not issued in the name of the Person (as defined in the Warrant) in whose name the Warrant is registered or if the number of shares of Common Stock to be issued does not include all of the shares purchasable under the Warrant, then this Exercise Agreement shall be modified to include applicable language with respect to the provisions of this Exercise Agreement EX-99.5 7 ex99_5.txt PREFERRED STOCK & WARRANT Exhibit 5 --------- EXECUTION COPY R.H. DONNELLEY CORPORATION PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT Dated as of September 21, 2002 TABLE OF CONTENTS Page ---- ARTICLE I. DEFINITIONS...................................................1 Section 1.01. Definitions..........................................1 ARTICLE II. SALE AND PURCHASE OF THE PREFERRED SHARES AND WARRANTS........8 Section 2.01. Sale and Purchase of the Preferred Shares and the Warrants.....................................8 Section 2.02. Closing..............................................8 Section 2.03. Use of Proceeds......................................9 Section 2.04. Share Adjustment.....................................9 Section 2.05. Allocation..........................................10 ARTICLE III. REPRESENTATIONS AND WARRANTIES...............................10 Section 3.01. Representations and Warranties of the Company.......10 Section 3.02. Representations and Warranties of the Purchasers....22 ARTICLE IV. COVENANTS OF THE PARTIES.....................................23 Section 4.01. Taking of Necessary Action..........................23 Section 4.02. Conduct of Business.................................24 Section 4.03. Financial Statements and Other Reports..............26 Section 4.04. Restricted Actions..................................26 Section 4.05. Required Actions....................................28 Section 4.06. Termination of Obligations..........................29 Section 4.07. Inspection of Property..............................30 Section 4.08. Lost, Stolen, Destroyed or Mutilated Securities.....30 Section 4.09. Listing.............................................30 Section 4.10. Restrictions on Sale or Transfer; Legend............31 Section 4.11. Notice of Breach....................................32 Section 4.12. Non-Disclosure; Interim Public Filings..............32 Section 4.13. Governance Rights...................................33 Section 4.14. Other Transaction Documents.........................34 Section 4.15. Transfer Taxes......................................34 Section 4.16. Dividends...........................................35 Section 4.17. Certain Information Rights..........................35 ARTICLE V. CONDITIONS...................................................35 Section 5.01. Conditions of Purchase..............................35 Section 5.02. Conditions of Sale..................................37 ARTICLE VI. TERMINATION..................................................38 Section 6.01. Termination.........................................38 Section 6.02. Effect of Termination...............................38 ARTICLE VII. SURVIVAL; CERTAIN REMEDIES...................................39 Section 7.01. Survival............................................39 Section 7.02. Indemnification by the Purchasers...................39 Section 7.03. Indemnification by the Company......................39 Section 7.04. Certain Qualifications..............................39 Section 7.05. Indemnification Procedures..........................40 Section 7.06. Liability Limits....................................41 Section 7.07. Duplication.........................................42 Section 7.08. Exclusive Remedies..................................42 ARTICLE VIII. MISCELLANEOUS................................................42 Section 8.01. Notices.............................................42 Section 8.02. Entire Agreement; Amendments; Waivers...............43 Section 8.03. Counterparts........................................43 Section 8.04. Governing Law.......................................43 Section 8.05. Public Announcements................................44 Section 8.06. Closing Payment; Expenses...........................44 Section 8.07. Successors and Assigns..............................44 Section 8.08. Jurisdiction........................................44 Section 8.09. Captions; References................................44 Section 8.10. Severability........................................45 Section 8.11. Aggregation of Stock................................45 Exhibits - -------- Exhibit A Form of Certificate of Designations Exhibit B Certain Officers of the Company Exhibit C Form of Registration Rights Agreement Exhibit D Form of Warrant Exhibit E Form of Legal Opinion Schedules - --------- Schedule A Purchasers; Specified Purchase Price Schedule 2.04 Share Adjustment Schedule 3.01(b) Company Subsidiaries Schedule 3.01(c) Exceptions No Conflicts Representation Schedule 3.01(d) Capitalization Schedule 3.01(h) Litigation Schedule 3.01(i)(i) Company Plans and Employee Agreements Schedule 3.01(i)(vii) Retirement and Termination Benefits Schedule 3.01(i)(viii) Certain Exceptions Related to Company Plans and Employee Agreements Representation Schedule 3.01(j) Exceptions to Absence of Certain Changes Representation Schedule 3.01(o) Exceptions to Title to Properties; Insurance Representation Schedule 3.01(t) Commitments Schedule 3.01(u) Exceptions to Absence of Undisclosed Liabilities Representation Schedule 4.01 Certain Consents Schedule 4.02 Exceptions to Conduct of Business Covenant PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT, dated as of September 21, 2002 (this "AGREEMENT"), by and among R.H. Donnelley Corporation, a Delaware corporation (the "COMPANY"), and the investors listed in Schedule A (each, a "PURCHASER"). Capitalized terms not otherwise defined where used herein shall have the meanings ascribed thereto in Article I. RECITALS: A. The Company has authorized a new series of its preferred stock, par value $1 per share, called the Convertible Cumulative Preferred Stock (the "PREFERRED STOCK"), which is convertible into shares of Common Stock in accordance with the terms of the Company's Certificate of Designations governing the Preferred Stock, in the form of Exhibit A (the "CERTIFICATE OF DESIGNATIONS"). B. The Purchasers have agreed to purchase from the Company, and the Company has agreed to sell to the Purchasers, subject to the terms and conditions of this Agreement, shares of the Preferred Stock and the Warrants. C. The Company and the Purchasers desire to set forth certain agreements herein. AGREEMENT: NOW THEREFORE, in consideration of the premises and the representations, warranties and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereby agree as follows: ARTICLE I. DEFINITIONS Section 1.01. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: "AFFILIATE" or "AFFILIATE" shall mean, with respect to any Person, any other Person that directly or indirectly controls or is controlled by or is under common control with such Person. As used in this definition, "control" (including its correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise) of such Person. "AFFILIATE TRANSACTION" shall have the meaning set forth in Section 4.04(b). "AGREEMENT" shall have the meaning set forth in the preamble. "ALLOCATION" shall have the meaning set forth in Section 2.05. "ANCILLARY DOCUMENTS" shall mean the Certificate of Designations, the Registration Rights Agreement, the Warrants and all other contracts, agreements and other documents being executed and delivered by the parties hereto pursuant to or in connection with this Agreement or the transactions contemplated hereby or thereby, but does not include the Other Transaction Documents. "BALANCE SHEET" shall have the meaning set forth in Section 3.01(e). "BUSINESS DAY" shall mean any day, other than a Saturday, Sunday or a day on which banking institutions in New York City are authorized or obligated by law or executive order to close. "CENDON" shall mean CenDon, L.L.C., a Delaware limited liability company. "CERTIFICATE OF DESIGNATIONS" shall have the meaning set forth in the recitals. "CERTIFICATE OF INCORPORATION" shall have the meaning set forth in Section 3.01(j). "CLOSING" shall have the meaning set forth in Section 2.02(a). "CLOSING DATE" shall have the meaning set forth in Section 2.02(a). "CLOSING PAYMENT" shall have the meaning set forth in Section 8.06(a). "CODE" shall mean the Internal Revenue Code of 1986. "COMMITMENT" shall have the meaning set forth in Section 3.01(t). "COMMITMENT LETTER" shall mean the (i) commitment letter, dated September 18, 2002, among Deutsche Bank Securities Inc., Deutsche Bank Trust Company Americas, Citicorp North America, Inc., Salomon Smith Barney Inc., Bear Stearns Corporate Lending Inc., Bear Stearns & Co. Inc., R.H. Donnelley Corporation and R.H. Donnelley Inc., (ii) the fee letter, dated September 18, 2002, among Deutsche Bank Securities Inc., Deutsche Bank Trust Company Americas, Citicorp North America, Inc., Salomon Smith Barney Inc., Bear Stearns Corporate Lending Inc., Bear Stearns & Co. Inc., R.H. Donnelley Corporation and R.H. Donnelley Inc., (iii) the engagement letter, dated September 18, 2002, among Deutsche Bank Securities Inc., Salomon Smith Barney Inc., Bear Stearns & Co. Inc., R.H. Donnelley Corporation and R.H. Donnelley Inc., (iv) the side letter related to an increase in the commitment amount, dated September 18, 2002, among Deutsche Bank Securities Inc., Deutsche Bank Trust Company Americas, Citicorp North America, Inc., Salomon Smith Barney Inc., Bear Stearns Corporate Lending Inc., Bear Stearns & Co. Inc., R.H. Donnelley Corporation and R.H. Donnelley Inc., and (v) the side letter related, in part, to the appointment of joint bookrunners, dated September 18, 2002, among Deutsche Bank Securities Inc., Salomon Smith Barney Inc., Bear Stearns & Co. Inc., R.H. Donnelley Corporation and R.H. Donnelley Inc., and the exhibits, annexes and schedules to items (i) - (v). "COMMON STOCK" shall mean the common stock, par value $1 per share, of the Company, including any associated Right, as defined in and issued pursuant to the Rights Agreement. "COMMON STOCK EQUIVALENTS" shall have the meaning set forth in Section 2.04. "COMPANY" shall have the meaning set forth in the preamble. "COMPANY CERTIFICATE" shall have the meaning set forth in Section 5.01(d). "COMPANY INDEMNIFIED PARTY" shall have the meaning set forth in Section 7.02. "COMPANY PLAN" shall mean each plan, program or policy, payroll practice, contract, agreement or other arrangement providing for compensation, severance, termination pay, performance awards, stock or stock-related awards, profit-sharing, pensions, deferred or incentive compensation, retirement insurance, fringe benefits or other material employee benefits for Employees which is now or previously has been sponsored, maintained, contributed to or required to be contributed to by the Company or any Company Subsidiary or pursuant to which the Company or any of the Company Subsidiaries has or may have any liability. "COMPANY SUBSIDIARY" and "COMPANY SUBSIDIARIES" shall have the meanings set forth in Section 3.01(b). "DESIGNATED TRANSFEREE" shall have the meaning set forth in the Certificate of Designations. "DONTECH" shall mean the DonTech II partnership created by the DonTech II Partnership Agreement. "DONTECH PARTNERSHIP AGREEMENT" shall mean the DonTech II Partnership Agreement, effective as of August 19, 1997, by and between R.H. Donnelley Inc., a Delaware Corporation, and Ameritech Publishing of Illinois, Inc. "EMPLOYEE" shall mean each current, former or retired employee, officer or director of the Company or a Company Subsidiary. "EMPLOYEE AGREEMENT" shall mean each employment, severance or similar agreement, which is in effect on the date hereof or by which the Company or any Company Subsidiary is bound, between the Company or a Company Subsidiary and an Employee. "ENVIRONMENTAL LAWS" shall have the meaning set forth in Section 3.01(q). "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "ERISA AFFILIATE" shall mean, with respect to any Person, any entity that is (i) a member of a "controlled group of corporations," under "common control" or a member of an "affiliated service group" within the meaning of Sections 414(b), (c) or (m) of the Code with such person, (ii) required to be aggregated under Section 414(o) of the Code with such person, or (iii) under "common control" with such person, within the meaning of Section 4001(a)(14) of ERISA, or any regulations promulgated or proposed under any of the foregoing Sections of the Code or ERISA. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934. "GAAP" shall mean generally accepted accounting principles in the United States of America in effect from time to time. "GOLDMAN ENTITIES" shall mean each of GSCP 2000, GS Capital Partners 2000 Offshore, L.P., a Cayman Islands exempted limited partnership, GS Capital Partners 2000 Employee Fund 2000, L.P., a Delaware limited partnership, GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, a German limited partnership, and Goldman Sachs Direct Investment Fund 2000, L.P. a Delaware limited partnership. "GOVERNMENTAL ENTITY" shall mean any court, department, body, board, bureau, administrative agency or commission or other governmental authority or instrumentality, whether federal, state, local or foreign. "GSCP 2000" shall mean GS Capital Partners 2000, L.P., a Delaware limited partnership. "HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976. "INDEMNIFICATION CLAIM NOTICE" shall have the meaning set forth in Section 7.05(a). "INDEMNIFIED PARTY" shall have the meaning set forth in Section 7.05(a). "INDEMNIFYING PARTY" shall have the meaning set forth in Section 7.05(a). "INTELLECTUAL PROPERTY" shall have the meaning set forth in Section 3.01(r). "KNOWLEDGE" shall mean the actual knowledge of the officers of the Company listed on Exhibit B after reasonable investigation and inquiry. "LIABILITY" shall mean any debt, liability or obligation, whether known or unknown, asserted or unasserted, accrued, absolute, contingent or otherwise, whether due or to become due. "LIENS" shall mean any liens, mortgages, deeds of trust, pledges, security interests, charges, claims, leasehold interests, tenancies, restrictions and encumbrances of any nature whatsoever. "LITIGATION" shall have the meaning set forth in Section 3.01(h). "LOSSES" shall mean each and all of the following items: claims, losses (including, without limitation, losses of earnings), liabilities, obligations, payments, damages (actual but not punitive or consequential), charges, judgments, fines, penalties, amounts paid in settlement, and costs and expenses (including, without limitation, interest that may be imposed in connection therewith, costs and expenses of investigation, suits, proceedings, demands, assessments and fees, expenses and disbursements of counsel, consultants, and other experts. "MATERIAL ADVERSE EFFECT" shall mean, with respect to any reference to a state of facts, event, change, effect or condition, such state of facts, event, change, effect or condition that has had, has, or could reasonably be expected to have, a material adverse effect on (i) the business, assets, operations, properties, condition (financial or otherwise), prospects, contingent liabilities or material agreements of the Company and the Company Subsidiaries, taken as a whole (ii) the ability of the Company or any Company Subsidiary to perform its obligations under this Agreement, the Ancillary Documents or any Other Transaction Document, or (iii) the validity or enforceability of this Agreement, the Ancillary Documents or any Other Transaction Document or the rights or remedies of the Purchasers hereunder and thereunder. Notwithstanding anything contained herein to the contrary, the commencement by or against the Company or any Company Subsidiary of any case, proceeding or other action under any law relating to bankruptcy, insolvency or reorganization or the seeking of an appointment of a receiver, trustee, custodian or other similar official for the Company or any Company Subsidiary or for all or any substantial part of the Company's or any Company Subsidiary's assets, shall be deemed a Material Adverse Effect. "NET INCOME" shall mean with respect to the Net Income for any period, the amount reported in the line item of the Company's financial statements for such period entitled "Net Income" which financial statements appear in the most recent filing by the Company with the Securities and Exchange Commission. "OTHER TRANSACTION DOCUMENTS" shall mean the Sprint Purchase Agreement, the Sprint Transaction Documents, the Senior Credit Facility Documents, the Senior Subordinated Credit Facility Documents, the Senior Subordinated Notes Documents and the Commitment Letter. "PENSION PLAN" shall mean each Company Plan (other than a "multiemployer plan" (as defined in ERISA Section 3(37)) that is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA. "PERMITS" shall mean any licenses, permits, accreditations, consents, registrations, certificates, and other governmental or regulatory permits, accreditations, authorizations or approvals required for the operation of the businesses of the Company and the Company Subsidiaries and for the ownership, lease or operation of the Company's and the Company Subsidiaries' properties. "PERMITTED LIENS" shall mean (i) Liens for Taxes not yet due and payable, (ii) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and repairmen incurred in the ordinary course of business and not yet delinquent, (iii) matters of record set forth on the title insurance policy insuring title to the owned real property and (iv) zoning, building or other restrictions, variances, covenants, rights of way, encumbrances, easements and other minor irregularities in title, none of such items in (i) - (iv) which, individually or in the aggregate, materially and adversely detract from the value of the owned or leased real property based on its current use or interfere in any material respect with the current use or occupancy of such owned or leased real property. "PERSON" or "PERSON" shall mean an individual, corporation, association, partnership, group (as defined in Section 13(d)(3) of the Exchange Act and the rules and regulations promulgated thereunder), trust, joint venture, business trust or unincorporated organization, or a government or any agency or political subdivision thereof. "PREFERRED SHARES" shall have the meaning set forth in Section 2.01. "PREFERRED STOCK" shall have the meaning set forth in the recitals. "PRINCIPAL MARKET" shall have the meaning set forth in Section 4.09. "PURCHASE PRICE" shall have the meaning set forth in Section 2.01. "PURCHASER" shall have the meaning set forth in the preamble. "PURCHASER DESIGNEES" shall mean the Directors (i) elected by the Purchasers to the Company's Board of Directors pursuant to Section 8 of the Certificate of Designations and (ii) designated pursuant to Section 4.13(a). "PURCHASER INDEMNIFIED PARTY" shall have the meaning set forth in Section 7.03. "PURCHASER'S CERTIFICATE" shall have the meaning set forth in Section 5.02(d). "REGISTRABLE SHARES" shall have the meaning set forth in the Registration Rights Agreement. "REGISTRATION RIGHTS AGREEMENT" shall mean the registration rights agreement to be executed by the Company and each Purchaser at the Closing, which shall be substantially in the form attached hereto as Exhibit C. "REPORTS" shall have the meaning set forth in Section 3.01(f). "RIGHTS AGREEMENT" shall mean the Rights Agreement, dated as of October 27, 1998, as amended, by and between the Company and The Bank of New York (successor to First Chicago Trust Company of New York), as Rights Agent. "SEC" shall mean the United States Securities and Exchange Commission. "SECTION 203" shall have the meaning set forth in Section 3.01(s). "SECURITIES ACT" shall mean the Securities Act of 1933. "SENIOR CREDIT FACILITY" shall mean the Senior Facilities, as defined in the Commitment Letter. "SENIOR CREDIT FACILITY DOCUMENTS" shall mean any and all agreements, documents and instruments evidencing or governing the Senior Credit Facility. "SENIOR OFFICER'S CERTIFICATE" shall have the meaning set forth in Section 4.03(a). "SENIOR SUBORDINATED CREDIT FACILITY" shall mean the Senior Subordinated Facility, as defined in the Commitment Letter. "SENIOR SUBORDINATED CREDIT FACILITY DOCUMENTS" shall mean any and all agreements, documents and instruments evidencing or governing the Senior Subordinated Credit Facility. "SENIOR SUBORDINATED NOTES" shall have the meaning set forth in the Commitment Letter. "SENIOR SUBORDINATED NOTES DOCUMENTS" shall mean any and all agreements, documents and instruments evidencing or governing the Senior Subordinated Notes. "SPECIFIED PURCHASE PRICE" shall have the meaning set forth in Section 2.01. "SPRINT" shall mean Sprint Corporation, a Kansas corporation. "SPRINT PURCHASE AGREEMENT" shall mean the Stock Purchase Agreement, dated as of September 21, 2002, by and among Sprint, Centel Directories LLC, a Delaware limited liability company, and the Company. "SPRINT TRANSACTION" shall mean the purchase and sale of the Shares (as defined in the Sprint Purchase Agreement) pursuant to the terms and subject to the conditions of the Sprint Purchase Agreement and the other Sprint Transaction Documents. "SPRINT TRANSACTION DOCUMENTS" shall mean the Sprint Purchase Agreement and the Ancillary Agreements (as defined in the Sprint Purchase Agreement). "SUBSIDIARY" shall mean, with respect to any corporation (the "parent") any other corporation, association or other business entity of which more than 50% of the shares of the voting stock are owned or controlled, directly or indirectly, by the parent or one or more Subsidiaries of the parent, or by the parent and one or more of its Subsidiaries. "TAX" and "TAXES" shall mean any and all federal, state, local, foreign or other taxes of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any taxing authority, including, without limitation, taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers' compensation, unemployment compensation, or net worth, and taxes or other charges in the nature of excise, withholding, ad valorem or value added, and includes, without limitation, any liability for Taxes of another person, as a transferee or successor, under Treas. Reg. Section 1.1502-6 or analogous provision of law or otherwise. "TAX RETURN" shall mean any return, report or similar statement (including the attached schedules) required to be filed with respect to any Tax, including, without limitation, any information return, claim for refund, amended return or declaration of estimated Tax. "TERMINATING BREACH" shall have the meaning set forth in Section 6.01(e). "TRANSFER" shall have the meaning set forth in Section 4.10(a). "VOTING EQUITY INTERESTS" shall have the meaning set forth in the Certificate of Designations. "WARRANTS" shall have the meaning set forth in Section 2.01. ARTICLE II. SALE AND PURCHASE OF THE PREFERRED SHARES AND WARRANTS Section 2.01. Sale and Purchase of the Preferred Shares and the Warrants. Subject to the terms and conditions of this Agreement, and in reliance upon the representations and warranties hereinafter set forth, the Company will sell to the Purchasers, and the Purchasers will purchase from the Company, (i) 200,000 shares of the Preferred Stock (as such number may be adjusted pursuant to Section 2.04, the "PREFERRED SHARES") and (ii) warrants to purchase 1,650,000 shares of Common Stock on the terms and subject to the conditions of the certificate for the Warrants in substantially the form attached hereto as Exhibit D (the "WARRANTS"), for an aggregate purchase price of $200.0 million (the "PURCHASE PRICE"). The number of shares of the Preferred Stock and the number of warrants to be purchased by each Purchaser at the Closing and the portion of the aggregate purchase price to be paid by each Purchaser at the Closing in the exchange therefor, shall be as specified in Schedule A (with respect to each such Purchaser, such Purchaser's "SPECIFIED PURCHASE PRICE"). Section 2.02. Closing. (a) Subject to the satisfaction or waiver of the conditions set forth in this Agreement, the closing of the transactions contemplated by Section 2.01 (the "CLOSING") shall take place immediately prior to or concurrently with the closing of the Sprint Transaction, or at such other time as may be mutually agreed upon by the Purchasers and the Company (the "CLOSING DATE"). The Closing shall occur on the Closing Date at the offices of Jones, Day, Reavis & Pogue, 222 East 41st Street, New York, New York 10017. (b) At the Closing: (i) the Company will deliver to the Purchasers certificates for the Preferred Shares to be sold in accordance with the provisions of Section 2.01 registered in the respective names and proportions set forth in Schedule A; (ii) the Company will deliver to the Purchasers certificates for the Warrants, to be sold in accordance with the provisions of Section 2.01, in each case duly executed in favor of the respective names and in the proportions set forth in Schedule A; (iii) subject to Section 8.06(a), each Purchaser, in full payment for the Preferred Shares and the Warrants, will deliver to the Company immediately available funds, by wire transfer to such account as the Company shall specify, such Purchaser's Specified Purchase Price; and (iv) each party shall take or cause to happen such other actions, and shall execute and deliver such other instruments or documents, as shall be required under Article V. Section 2.03. Use of Proceeds. The Company shall use the proceeds from the sale of the Preferred Shares and the Warrants solely (i) to pay the consideration payable to Sprint or its Affiliates in or as a result of the Sprint Transaction and (ii) to pay the fees and out-of-pocket expenses relating to the transactions contemplated hereby and under the Other Transaction Documents. Section 2.04. Share Adjustment. If, on or prior to the Closing Date (or in connection with the Senior Credit Facility, the Senior Subordinated Credit Facility and/or the Senior Subordinated Notes), the Company shall issue or sell any shares of Common Stock or any options, warrants or other equity securities of any nature convertible into or exchangeable for shares of Common Stock ("COMMON STOCK EQUIVALENTS"), then the Company shall issue to the Purchasers an additional number of shares of Preferred Stock determined by multiplying the number of Preferred Shares then outstanding (which, in the case of an adjustment, if any, to be made on the Closing Date, shall be 200,000) by a fraction, the numerator of which shall be the number of shares of Common Stock or Common Stock Equivalents issued (a) in the case of an adjustment, if any, to be made on the Closing Date, from the date hereof to the Closing Date or (b) in the case of an adjustment, if any, to be made after the Closing Date, since the later of the Closing Date or the date of any prior adjustment made pursuant to this Section 2.04, and the denominator of which shall be the number of Voting Equity Interests outstanding immediately prior to such issuance of Common Stock or Common Stock Equivalents, excluding (1) any Preferred Shares the outstanding, if any, (2) any shares of Common Stock issuable upon conversion of the Preferred Shares then outstanding, if any, (3) any shares of Common Stock issuable upon exercise of the Warrants, and (4) the Common Stock or Common Stock Equivalents issued (a) in the case of an adjustment, if any, to be made on the Closing Date, from the date hereof to the Closing Date or (b) in the case of an adjustment, if any, to be made after the Closing Date, since the later of the Closing or the date of any prior adjustment made pursuant to this Section 2.04. Such number of additional shares will be allocated in a proportional amount to the Purchasers based on the allocation contained in Schedule A. Schedule 2.04 sets forth an example of how this adjustment provision will work. Section 2.05. Allocation. On or prior to the Closing Date, the Purchasers will submit to the Company for the Company's approval (which shall not be unreasonably withheld) an allocation of the Purchase Price (the "ALLOCATION"), which Allocation will allocate the Purchase Price amongst the Warrants and the Preferred Shares. The parties agree to report the sale and purchase of the Preferred Shares and Warrants for all federal, state, local and foreign tax purposes in a manner consistent with the Allocation and agree to take no position inconsistent with the foregoing (unless otherwise required by a final determination by the appropriate taxing authority). ARTICLE III. REPRESENTATIONS AND WARRANTIES Section 3.01. Representations and Warranties of the Company. The Company represents and warrants to the Purchasers as follows: (a) Organization and Good Standing of the Company; Authorization. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority and governmental authorizations to own, operate and lease its properties and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business in each other jurisdiction in which it owns or leases properties, or conducts business, so as to require such qualification, except where the failure to be so licensed or qualified in any such jurisdiction would not constitute a Material Adverse Effect. The Company has the corporate power and authority to execute and deliver this Agreement and the Ancillary Documents and perform its obligations hereunder and thereunder. The execution and delivery of this Agreement and the Ancillary Documents and the performance by the Company of its covenants and agreements under this Agreement and the Ancillary Documents have been duly and validly authorized by the Board of Directors of the Company, and no other corporate proceedings on the part of the Company (including, without limitation, any stockholder vote or approval) are necessary to authorize the execution, delivery and performance of this Agreement or the Ancillary Documents or the consummation of the transactions contemplated hereby and thereby (including, without limitation, the issuance of Common Stock upon conversion of the Preferred Stock and upon exercise of the Warrants). This Agreement and the Ancillary Documents have been duly executed and delivered by the Company and constitute the valid and binding agreements of the Company, enforceable against the Company in accordance with their terms, except that (a) such enforcement may be subject to any bankruptcy, insolvency, reorganization moratorium, fraudulent transfer or other laws, now or hereafter in effect relating to or limiting creditors' rights generally, and (b) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (b) Organization and Good Standing of Company Subsidiaries and DonTech. (i) Schedule 3.01(b) lists all Subsidiaries of the Company and their respective jurisdictions of incorporation (collectively, the "COMPANY SUBSIDIARIES" and each, a "COMPANY SUBSIDIARY;" provided, that for the purposes of all other defined terms in this Agreement, Section 3.01, Section 4.03, and Section 4.07, DonTech shall not be deemed to be a Company Subsidiary, and provided, further, that with respect to the covenants and agreements as to Company Subsidiaries made in this Agreement, DonTech shall be deemed to be a Company Subsidiary, but the Company's obligations with respect to DonTech in this regard shall be limited to the extent the Company has rights under the DonTech Partnership Agreement that would permit it to comply with such obligations without violating any obligations of the Company, including its fiduciary obligations, under the DonTech Partnership Agreement or otherwise in respect to DonTech). Except as set forth in Schedule 3.01(b), the Company owns, directly or indirectly, all the shares of outstanding capital stock of each Company Subsidiary. Except as set forth in Schedule 3.01(b), (A) there are outstanding no securities or rights convertible into or exchangeable for shares of any capital stock of any Company Subsidiary and (B) there are no contracts, commitments, understandings or arrangements by which any Company Subsidiary is bound to issue additional shares of its capital stock or options, warrants or rights to purchase or acquire any additional shares of its capital stock. All of the shares of capital stock of each of the Company Subsidiaries are duly and validly authorized, fully paid and non-assessable and, except as set forth in Schedule 3.01(b), are owned by the Company free and clear of any Lien with respect thereto. Each Company Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and has all requisite corporate power and authority and governmental authorizations to own, operate and lease its properties and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business in each other jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification, except where the failure to be so licensed or qualified in any such jurisdiction would not constitute a Material Adverse Effect. (ii) To the Company's knowledge, DonTech is a general partnership duly organized, validly existing and in good standing under the laws of the State of Illinois, and has all requisite power and authority and governmental authorizations to own, operate and lease its properties and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business in each other jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification, except where failure to be so licensed or qualified in any such jurisdiction would not constitute a Material Adverse Effect. The Company, indirectly through R.H. Donnelley Inc., owns 50% of the general partnership interests of DonTech. (c) No Conflicts. Except as set forth in Schedule 3.01(c), neither the execution and delivery of this Agreement or the Ancillary Documents nor the consummation of the transactions contemplated by this Agreement or the Ancillary Documents will (i) conflict with or result in any breach of any provision of the incorporation documents or By-laws of the Company or any Company Subsidiary, (ii) except for applicable requirements of the HSR Act, require any filing with, or the obtaining of any permit, authorization, consent or approval of, any Governmental Entity, (iii) violate, conflict with or result in a default (or any event which, with notice or lapse of time or both, would constitute a default) or require any consent under, or give rise to any right of termination, cancellation or acceleration under, any of the terms, conditions or provisions of any note, mortgage, other evidence of indebtedness, guarantee, license, agreement, lease or other contract, instrument or obligation to which the Company or any Company Subsidiary or, to the Company's knowledge, DonTech is a party or by which the Company or any Company Subsidiary or any of their respective assets or, to the Company's knowledge, DonTech or any of its respective assets may be bound, or (iv) violate any order, injunction, decree, statute, rule or regulation applicable to the Company, excluding from the foregoing clauses (ii), (iii) and (iv) such requirements, violations, conflicts, defaults or rights that would not constitute a Material Adverse Effect. (d) Capitalization. Schedule 3.01(d) sets forth (i) the authorized capital stock of the Company, the number of shares of each class of capital stock issued and outstanding and the number of shares of Common Stock reserved for issuance in connection with employee benefit, stock option and dividend reinvestment plans in each case as of the date hereof, and (ii) all options, warrants, rights to subscribe to, scrip calls, contracts, undertakings, arrangements and commitments to issue which may result in the issuance of equity securities of the Company, in each case setting forth the identity of the holder thereof, the exercise or similar price and the date of expiration or termination thereof. All of the issued and outstanding shares of the Company's capital stock have been duly and validly authorized and issued and are fully paid and non-assessable and are not subject to any preemptive rights. Except as set forth in Schedule 3.01(d) or pursuant to this Agreement, the Rights Agreement, the Warrants or the Certificate of Designations, (i) no equity securities of the Company are or may be required to be issued by reason of any options, warrants, rights to subscribe to, scrip calls or commitments of any character whatsoever, (ii) there are outstanding no securities or rights convertible into or exchangeable for shares of any capital stock of the Company, and (iii) there are no contracts, commitments, understandings or arrangements by which the Company is bound to issue additional shares of its capital stock or securities or rights convertible into or exchangeable for shares of any capital stock of the Company, or options, warrants or rights to purchase or acquire any additional shares of its capital stock. Neither the Company nor any Company Subsidiary is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any of its capital stock. Except as set forth in Schedule 3.01(d), there are no contracts, agreements or understandings between the Company and any Person granting such Person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such Person or to require the Company to include such securities in any other registration statement filed by the Company under the Securities Act. (e) Financial Statements. The Company has previously delivered to the Purchasers copies of (i) the consolidated balance sheet of the Company and the Company Subsidiaries as of December 31 for the fiscal years 2000 and 2001, and the related consolidated statements of operations, statements of stockholders' equity and cash flows for the fiscal years 1999 through 2001, inclusive, as reported in the Company's Annual Report on Form 10-K (as amended) for the fiscal year ended December 31, 2001, filed by the Company with the SEC under the Exchange Act, in each case accompanied by the audit report of PricewaterhouseCoopers LLP, independent public accountants, and (ii) the unaudited consolidated balance sheet of the Company and the Company Subsidiaries as of June 30, 2002 (the "BALANCE SHEET") and the related unaudited consolidated statement of operations, statements of stockholders' equity and cash flows for the three- and six-month periods then ended as reported in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, filed with the SEC under the Exchange Act. All of such financial statements fairly present the consolidated financial position of the Company and the Company Subsidiaries as of the dates shown and the results of the consolidated operations, statements of stockholders' equity and cash flows of the Company and the Company Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth, in each case subject, as to interim statements, to changes resulting from year-end adjustments (none of which will be material in amount and effect). All of such financial statements have been prepared in accordance with GAAP consistently applied during the periods involved, except as otherwise set forth in the notes thereto, and the Company and the Company Subsidiaries have no liabilities or obligations of any nature (absolute, accrued, contingent or otherwise) which are not fully reflected or reserved against in the balance sheet as of June 30, 2002, included in such financial statements, except for liabilities that may have arisen in the ordinary and usual course of business and consistent with past practice and that, individually or in the aggregate, would not constitute a Material Adverse Effect. Neither the Company nor any Company Subsidiary has entered into any off-balance sheet arrangements or transactions. (f) Reports. The Company has filed all reports, registration statements, proxy statements and other materials, together with any amendments required to be made with respect thereto, that were required to be filed with the SEC under the Securities Act or the Exchange Act after July 1, 1998 (all such reports and statements are collectively referred to herein as the "REPORTS") and with the New York Stock Exchange. As of their respective dates, the Reports, including the financial statements contained therein, complied in all material respects with all of the statutes and published rules and regulations enforced or promulgated by the regulatory authority with which they were filed, except to the extent the information in any Report has been revised or superseded by a later filed Report, did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. There are no facts existing as of the date hereof peculiar to the Company or any Company Subsidiary which the Company has not disclosed in the Reports or to the Purchasers in writing which, either individually or in the aggregate, would constitute a Material Adverse Effect. To the Company's knowledge, there are no facts existing as of the date hereof peculiar to DonTech that the Company has not disclosed in the Reports or to the Purchasers in writing which, either individually or in the aggregate, would constitute a Material Adverse Effect. (g) Compliance with Applicable Law. Each of the Company, each Company Subsidiary and, to the Company's knowledge, DonTech is not in default or violation in any respect of any law, statute, rule, regulation, policy or guideline of any Governmental Entity applicable to the Company, any of the Company Subsidiaries or DonTech, as the case may be, other than such defaults or violations that, either individually or in the aggregate, would not constitute a Material Adverse Effect, and the business of the Company, the Company Subsidiaries and, to the Company's knowledge, DonTech, are in compliance in all material respects with all applicable federal, state, local and foreign governments' laws and regulations. None of the Company the Company Subsidiaries or, to the Company's knowledge, DonTech is in default under or in breach of any order, judgment or decree of any arbitrator or other Governmental Entity, and neither the Company, nor any Company Subsidiary or, to the Company's knowledge, DonTech is a party or subject to any order, judgment or decree of any arbitrator or other Governmental Entity. (h) Litigation. As of the date of this Agreement, except as set forth in the Reports or in Schedule 3.01(h), there is no claim, action, suit, investigation, proceeding or governmental investigation pending or, to the Company's knowledge, threatened by or before any arbitration tribunal, self regulatory agency or body (including, without limitation, the New York Stock Exchange), Governmental Entity or by any third party (a "LITIGATION") (i) against or involving the Company or any of the Company Subsidiaries or involving any of their respective properties or assets, (ii) to the Company's knowledge, against or involving DonTech or involving any of its respective properties or assets or (iii) which challenges the validity of this Agreement or which could reasonably be expected to adversely affect or restrict the Company's ability to consummate the transactions contemplated by this Agreement and the Ancillary Documents. (i) Employee Benefits. (i) Schedule 3.01(i)(i) contains a true and complete list of (i) each material Company Plan and (ii) each material Employee Agreement. Except as set forth on Schedule 3.01(i)(i), the Company and the Company Subsidiaries do not have any plan or legally binding commitment (i) to establish any new Company Plan or to modify or terminate any Company Plan or (ii) to enter into, modify or terminate any Employee Agreement. (ii) Current, accurate and complete copies of all documents embodying or relating to each Company Plan and each Employee Agreement have been made available to the Purchasers. (iii) Neither the Company nor a Company Subsidiary has, or has ever had, any ERISA Affiliates other than the Company or a Company Subsidiary. (iv) Each Company Plan and Employee Agreement has been established and maintained in accordance with its terms in all material respects and all applicable laws, statutes, orders, rules and regulations. Each Company Plan intended to qualify under Section 401 of the Code has a favorable determination letter from the Internal Revenue Service to the effect that it is so qualified and, if the letter for such a plan is not current, such plan is the subject of a timely request for a current favorable determination letter. (v) No steps have been taken to terminate any Pension Plan, no termination of any Pension Plan has occurred and no event has occurred and no condition exists that could constitute grounds for terminating any Pension Plan. Each Pension Plan has been maintained in compliance with the minimum funding standards of ERISA and the Code and no such Pension Plan has incurred any "accumulated funding deficiency," as defined in Section 412 of the Code and Section 302 of ERISA, whether or not waived. The funded status of each Pension Plan as reflected in the most recent actuarial report is accurate and such report fairly presents the funded status of such Pension Plan on the basis set forth therein. (vi) No Company Plan is under audit or investigation by the Internal Revenue Service, the Department of Labor, the Pension Benefit Guaranty Corporation or other governmental agency and, to the knowledge of the Company and the Company Subsidiaries, no such audit or investigation has been threatened. There are no actions, proceedings, arbitrations, suits or claims pending, or to the knowledge of the Company or any Company Subsidiaries, threatened or anticipated (other than routine claims for benefits) against the Company or any Company Subsidiaries or any administrator, trustee or other fiduciary of any Company Plan with respect to any Company Plan or Employee Agreement, or against any Company Plan or against the assets of any Company Plan. (vii) Except as set forth on Schedule 3.01(i)(vii), neither the Company nor the Company Subsidiaries maintains or contributes to any Company Plan which provides, or has any liability to provide, life insurance, medical, severance or other employee welfare benefits to any Employee upon his retirement or termination of employment, except as may be required by Section 4980B of the Code. (viii) Except as set forth on Schedule 3.01(i)(viii), the execution and performance of the transactions contemplated in this Agreement will not (either alone or upon the occurrence of any additional or subsequent events) (i) constitute an event under any Company Plan or Employee Agreement that will or may result in any payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligations to fund benefits with respect to any Employee or (ii) result in the triggering or imposition of any restrictions or limitations on the right of the Company or a Company Subsidiary to amend or terminate any Company Plan. The execution and performance of the transactions contemplated in this Agreement will not cause any payment or benefit which will or may be made by the Company or a Company Subsidiary with respect to any Employees to be characterized as an "excess parachute payment," within the meaning of Section 280G(b)(1) of the Code. (ix) There are no, and have never been any, collective bargaining agreements or other labor union or similar contracts governing any Employees. (x) The Company and the Company Subsidiaries are in compliance in all material respects with all applicable federal, state and local laws, rules and regulations respecting employment. (j) Absence of Certain Changes. Since December 31, 2001, the business of the Company and the Company Subsidiaries and, to the Company's knowledge, DonTech has been operated in the usual and ordinary course consistent with past practice and, except as set forth in the Reports or in Schedule 3.01(j) or as provided in this Agreement or the Ancillary Documents: (i) there has been no event, condition or change that individually or in the aggregate constitutes a Material Adverse Effect; (ii) none of the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech has entered into any material transaction or incurred any material liability or material obligation, except in the ordinary course of its business consistent with past practice; (iii) none of the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech has sold or transferred a material amount of the assets it owns except in the ordinary course of its business; (iv) none of the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech has incurred any indebtedness other than indebtedness to trade creditors incurred in the ordinary course of business; (v) none of the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech has changed its accounting policies or procedures as in effect on December 31, 2001; (vi) neither the Company nor any Company Subsidiary has amended or in any way altered its Restated Certificate of Incorporation, as amended ("CERTIFICATE OF INCORPORATION") or By-laws; (vii) the Company has not changed the number of shares of the authorized or issued capital stock of the Company, issued or granted any option, warrant, call, commitment, subscription, right to purchase or agreement of any character relating to the authorized or issued capital stock of the Company or any Company Subsidiary, or any securities convertible into shares of such stock (except for grants of options to purchase Common Stock to be granted pursuant to Company Plans), split, combined or reclassified any shares of the capital stock of the Company, declared, set aside or paid any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of the capital stock of the Company, or redeemed or otherwise acquired any shares of such capital stock; (viii) the Company has not increased the number of members of the Board of Directors of the Company; (ix) none of the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech has acquired any assets other than in the ordinary and usual course of business; (x) none of the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech has entered into employment agreements with any Employee (other than an agreement terminable at will without any financial penalty), or granted any increase in the compensation (including employee benefits) of any employee, except for increases (A) in the ordinary course of business and consistent with past practice, (B) as a result of collective bargaining or (C) as required by any employment or other agreement, policy or plan currently in effect; and (xi) none of the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech has agreed, whether in writing or otherwise, to take any action that, if taken, would render any of the representations set forth in this Section 3.01(j) untrue. (k) Preferred Shares and Warrants. The Preferred Shares have been duly authorized by all necessary corporate action. When issued and sold against receipt of the consideration therefor, the Preferred Shares will be validly issued, fully paid and nonassessable, will not subject the holders thereof to any personal liability and will not be subject to any preemptive rights except as contemplated by this Agreement and the Certificate of Designations. When issued and sold against receipt of the consideration therefor, the Warrants will not subject the holders thereof to any personal liability and will not be subject to any preemptive rights except as contemplated by this Agreement and the Warrants. The Company has 21,909,939 shares of Common Stock that are in treasury and listed on the New York Stock Exchange. A total of 20,500,000 of such treasury shares of Common Stock have been duly reserved for issuance upon the conversion or redemption of the Preferred Shares and the exercise of the Warrants. The shares of Common Stock issuable upon conversion or redemption of the Preferred Shares and upon exercise of the Warrants have been duly and validly authorized and, if and when issued, will be validly issued, fully paid and non-assessable and will not be subject to any preemptive rights except as contemplated by this Agreement, the Warrants and the Certificate of Designations. At the Closing, the Purchasers will receive valid title to the Preferred Shares and the Warrants, free and clear of any Lien (other than any restrictions on transfer under state and/or federal securities laws). (l) Offering of Securities. Based in part on the representations and warranties of the Purchasers in Section 3.02, it is not necessary in connection with the offer, sale and delivery of the Preferred Shares and the Warrants to the Purchasers to register the offer and sale of the Preferred Shares and the Warrants under the Securities Act. The Company has not, directly or indirectly, offered, sold or solicited any offer to buy and will not, directly or indirectly, offer, sell or solicit any offer to buy, any security of a type or in a manner which would be integrated with the sale of the Preferred Shares and the Warrants and require any of the Preferred Shares or the Warrants to be registered under the Securities Act. None of the Company, its Affiliates or any person acting on its or any of their behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Rule 502(c) under the Securities Act) in connection with the offering of the Preferred Shares and the Warrants. (m) Brokers and Finders. Except for the engagement of Bear, Stearns & Co., Inc. and Morgan Stanley & Co., Inc. (the fees and expenses of each which will be borne solely by the Company), neither the Company nor any of its Affiliates has employed any financial advisor or finder or incurred any liability for any financial advisory or finders' fees in connection with this Agreement or the transactions contemplated by this Agreement. (n) Permits. The Company, each Company Subsidiary and, to the Company's knowledge, DonTech, possesses all Permits required for the conduct of its respective businesses, except where the failure to possess any such Permit would not constitute a Material Adverse Effect, and none of the Company, any Company Subsidiary nor, to the Company's knowledge, DonTech has received any notice of proceedings relating to the revocation or modification of any such Permit that, if determined adversely to the Company, DonTech or any such Company Subsidiary, individually or in the aggregate, would constitute a Material Adverse Effect. All of such Permits of the Company and the Company Subsidiaries and, to the Company's knowledge such Permits of DonTech are valid and in full force and effect, and the Company, each of the Company Subsidiaries and to the Company's knowledge, DonTech have duly performed and are in compliance in all respects with all of their obligations under such Permits, except where the failure to perform or comply, individually or in the aggregate would not constitute a Material Adverse Effect. No event has occurred with respect to any of such Permits of the Company and the Company Subsidiaries or, to the Company's knowledge, such Permits of DonTech that allows, or after notice or lapse of time or both would allow, the suspension, limitation, revocation, non-renewal or termination thereof or would result in any other impairment of the rights of the holder thereof in and under any of such Permits that, if such event or events occurred, individually or in the aggregate, would constitute a Material Adverse Effect, and no terminations thereof or proceedings to suspend, limit, revoke or terminate any Permits of the Company and the Company Subsidiaries or, to the Company's knowledge, such Permits of DonTech, have been threatened that, if acted upon, individually or in the aggregate, would constitute a Material Adverse Effect. (o) Title to Properties; Insurance. Except as set forth in Schedule 3.01(o), the Company, the Company Subsidiaries and, to the Company's knowledge, DonTech have good and marketable title to all real properties and all other properties and assets owned by them that are material to their respective businesses, in each case free from Liens other than Permitted Liens. Except as set forth in Schedule 3.01(o), the Company, the Company Subsidiaries and, to the Company's knowledge, DonTech hold any leased real or personal property that is material to their business under valid and enforceable leases enforceable against the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech, with no exceptions that would materially interfere with the use made or to be made thereof by them, in each case free from Liens other than Permitted Liens. The Company, the Company Subsidiaries and, to the Company's knowledge, DonTech have at all times maintained in full force and effect property damage, liability and other insurance with financially sound and reputable insurers at levels of coverage reasonable and customary for the Company's industry. (p) Taxes. All material Tax Returns required to be filed by the Company and each Company Subsidiary (provided that for the purposes of this Section 3.01(p) only, DonTech and CenDon shall each be deemed a Company Subsidiary), and, to the Company's knowledge, DonTech, have been filed, and all such Tax Returns are true, complete and correct in all material respects. Neither the Company nor any of the Company Subsidiaries, or to the Company's knowledge, DonTech has any liability for Taxes other than Taxes (i) currently payable without penalty or interest or (ii) being contested in good faith and by appropriate proceedings and for which, in the case of both clauses (i) and (ii), adequate reserves have been established on the Balance Sheet and books and records of the Company or the Company Subsidiaries, as applicable. There are no proposed Tax assessments against the Company or any of the Company Subsidiaries, or to the Company's knowledge, DonTech. Neither the Internal Revenue Service nor any other taxing authority has asserted any currently ongoing claim for Taxes, nor to the Company's knowledge, is threatening to assert any claims for such Taxes, against the Company or any of the Company Subsidiaries or DonTech. The Company and each of the Company Subsidiaries, and, to the Company's knowledge, DonTech have withheld or collected and paid over to the appropriate Governmental Entities (or are properly holding for such payment) all Taxes required by law to be withheld or collected. There are no Liens for Taxes upon the assets of the Company or any of the Company Subsidiaries, or to the Company's knowledge, DonTech (other than Liens for Taxes that are not yet due). Neither the Company nor any of the Company Subsidiaries, or to the Company's knowledge, DonTech (i) has any liability under Treasury Regulation Section 1.1502-6 or analogous state, local, or foreign law provision for the Taxes of an entity other than the Company or any of the Company Subsidiaries or DonTech, as applicable, or (ii) is a party to a Tax sharing or Tax indemnity agreement or any other commitment of a similar nature with any entity other than the Company or any of the Company Subsidiaries that remains in effect and under which the Company or any of the Company Subsidiaries could have any material liability for Taxes. No claim has been made by a taxing authority in a jurisdiction where the Company or any of the Company Subsidiaries does not file Tax Returns that the Company or any of the Company Subsidiaries is or may be subject to taxation by that jurisdiction. To the Company's knowledge, no claim has been made by a taxing authority in a jurisdiction where DonTech does not file Tax Returns that DonTech is or may be subject to taxation by that jurisdiction. Neither the Company nor any of the Company Subsidiaries or to the Company's knowledge, DonTech is the subject of any currently ongoing audit or examination with respect to a material amount of Taxes, nor, to the Company's knowledge, has any such audit been threatened or proposed, by any taxing authority. (q) Environmental Matters. The Company, the Company Subsidiaries and, to the Company's knowledge, DonTech (i) are in compliance with all applicable statutes, rules, regulations, decisions or orders of any Governmental Entity relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, "ENVIRONMENTAL LAWS"), (ii) have not generated, manufactured, treated, stored or disposed of any hazardous substances on any owned or operated (or previously owned or operated) real property, except in compliance with Environmental Laws, (iii) are not liable for any off-site disposal or contamination pursuant to any Environmental Laws, and (iv) are not subject to any pending claims relating to any Environmental Laws, which in each of clauses (i) through (iv) individually or in the aggregate, would constitute a Material Adverse Effect. (r) Intellectual Property. The Company, the Company Subsidiaries and, to the Company's knowledge, DonTech license, own or possess, or can acquire on reasonable terms, all patents, patent rights, licenses, inventions, copy-rights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names, Internet domain names, designs, logos, slogans and general intangibles of like nature, together with goodwill, and registrations and applications relating to any of the foregoing, as applicable ("INTELLECTUAL PROPERTY"), currently employed by them in connection with the respective business now operated by them, except where the failure to own or possess or otherwise be able to acquire such Intellectual Property, individually or in the aggregate, would not constitute a Material Adverse Effect. The Intellectual Property owned or used by the Company, the Company Subsidiaries and, to the Company's knowledge, DonTech has been duly maintained, is valid and subsisting, in full force and effect, and has not been cancelled, expired or abandoned, except where such cancellation, expiration or abandonment would not constitute a Material Adverse Effect. None of the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech has received any notice of infringement of or conflict with asserted rights of others with respect to any of such Intellectual Property which, singly or in the aggregate, which, if determined adversely to the Company, would constitute a Material Adverse Effect. (s) DGCL Section 203 and Rights Agreement. The Board of Directors of the Company has taken all action necessary to exempt from the provisions of Section 203 of the Delaware General Corporation Law ("SECTION 203") and from being deemed an "Acquiring Person" under the Rights Agreement, to the extent applicable, this Agreement, any acquisition by the Purchasers or their Affiliates of the Preferred Shares or the Warrants pursuant to this Agreement, the Warrants and the Certificate of Designations and any conversion or exercise by the Purchasers or their Affiliates of the Preferred Shares or the Warrants into Common Stock. No agreement or instrument to which the Company or the Company Subsidiaries is a party or by which any of them is bound, and no state statute similar to Section 203 that is applicable to the Company or the Company Subsidiaries imposes any restrictions on business combinations or similar transactions with interested stockholders of a nature similar to those set forth in Section 203. True and correct copies of the resolutions heretofore adopted by the Company's Board of Directors to implement the foregoing actions with respect to Section 203 and the Rights Agreement, have been delivered to the Purchasers and such resolutions are in full force and effect and have not been amended or modified. (t) Commitments. (i) This Agreement, the Ancillary Documents, the Other Transaction Documents, the agreements, documents and instruments set forth on Schedule 3.01(t) and other schedules to this Agreement and all documents referenced in or attached as exhibits to the Reports constitute, as of the date of this Agreement all of the material contracts or agreements (whether written or oral), including any amendments thereto, (A) to which the Company, any Company Subsidiaries or, to the Company's knowledge, DonTech is a party or (B) by or to which the Company, any Company Subsidiaries or any of their properties or, to the Company's knowledge, DonTech or its properties may be bound or subject (individually a "COMMITMENT" and collectively, the "COMMITMENTS"). Schedule 3.01(t) sets forth a complete and correct list of Commitments of the following type: Commitments relating to any Litigation; Commitments containing covenants of the Company or any Company Subsidiaries or any successor thereto not compete, not to engage in any line of business or conduct business in any geographical area or with any Person, or not to disclose certain information; and Commitments with any Affiliate. (ii) Complete and correct copies (or, if oral, full written descriptions) of all Commitments required to be listed on Schedule 3.01(t), including all amendments thereto, have been made available to the Purchasers. All of the Commitments are valid, binding, in full force and effect and enforceable in accordance with their respective terms by the Company, a Company Subsidiary or, to the Company's knowledge, DonTech (as the case may be) against the respective counter parties to such Commitments, except where the failure to be valid, binding, enforceable or in full force and effect does not constitute a Material Adverse Effect. Except as set forth on Schedule 3.01(t), (A) there is no breach, violation or default and no event that, with or without notice or the passage of time or both, would constitute a breach, violation or default, or give rise to any Lien or right of termination, modification, cancellation, prepayment, suspension, limitation, revocation or acceleration under, any Commitment, (B) none of the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech or any other party to any of the Commitments is in arrears in respect of the performance or satisfaction of the terms and conditions on its part to be performed or satisfied under any of such Commitments, and (C) no waiver thereunder has been granted by any of the Parties thereto except in each of clauses (A)-(C) where any such failure does not, individually or in the aggregate, constitute a Material Adverse Effect. (u) Absence of Undisclosed Liabilities. Except as disclosed in the Reports or Schedule 3.01(u) or the other Schedules to this Agreement, the Company does not have any Liabilities other than (a) Liabilities reserved against or otherwise disclosed in the Balance Sheet or the footnotes thereto, (b) other Liabilities which were incurred after June 30, 2002 in the ordinary course of business consistent (in amount and kind) with past practice (none of which is a liability resulting from breach of contract, breach of warranty, tort, infringement, claim or lawsuit) and which, individually or in the aggregate, do not exceed $1,500,000 and (c) Liabilities incurred in connection with this Agreement, the Ancillary Agreements and any Other Transaction Document. (v) Disclosure. Neither this Agreement nor any other Ancillary Document, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. (w) Holding Company Act and Investment Company Act. Neither the Company nor any of the Company Subsidiaries or, to the Company's knowledge, DonTech is: (i) a "public utility company" or a "holding company," or an "affiliate" or a "subsidiary company" of a "holding company," or an "affiliate" of such a "subsidiary company," as such terms are defined in the Public Utility Holding Company Act of 1935, as amended, or (ii) a "public utility," as defined in the Federal Power Act, as amended. None of the Company, any Company Subsidiary or, to the Company's knowledge, DonTech is an "investment company" as defined in the Investment Company Act of 1940, as amended or is controlled by or under control with an Affiliate of, an "investment company." (x) Solvency. The Company is not, and after giving effect to the issuance and sale of the Preferred Shares and the Warrants and the application of the proceeds therefrom will not be, insolvent within the meaning of Title 11 of the United States Code, the General Corporation Law of the State of Delaware, or the General Laws of the State of New York. (y) D&O Insurance. The Company maintains director and officer liability insurance coverage in the aggregate amount of $100 million, which policy has no per individual deductible. Section 3.02. Representations and Warranties of the Purchasers. Each Purchaser represents and warrants to, and agrees with, the Company as follows: (a) Organization. Such Purchaser is a limited partnership duly organized and validly existing under the laws of the state or country of its jurisdiction of formation. Such Purchaser has the power and authority to execute and deliver this Agreement and the Ancillary Documents to which it is a party and perform its obligations hereunder and thereunder. The execution and delivery of this Agreement and the Ancillary Documents to which it is a party and the performance by such Purchaser of its covenants and agreements under this Agreement and the Ancillary Documents to which it is a party have been duly and validly authorized by the general partner of such Purchaser, and no further proceedings on the part of such Purchaser are necessary to authorize the execution, delivery and performance of this Agreement or the Ancillary Documents to which it is a party or the consummation of the transactions contemplated hereby and thereby. This Agreement and the Ancillary Documents to which such Purchaser is a party have been duly executed and delivered by the Purchaser and constitute the valid and binding agreements of such Purchaser, enforceable against such Purchaser in accordance with their terms, except that (a) such enforcement may be subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other laws, now or hereafter in effect, relating to or limiting creditors' rights generally, and (b) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (b) Authorization; No Conflicts. Neither the execution and delivery of this Agreement or the Ancillary Documents to which such Purchaser is a party nor the consummation of the transactions contemplated by this Agreement or the Ancillary Documents to which such Purchaser is a party will (i) conflict with or result in any breach of any provision of the organization documents or by-laws of such Purchaser, (ii) except for the applicable requirements of the HSR Act, require any filing with, or the obtaining of any permit, authorization, consent or approval of, any Governmental Entity, (iii) violate, conflict with or result in a default (or any event which, with notice or lapse of time or both, would constitute a default) or require any consent under, or give rise to any right of termination, cancellation or acceleration under, any of the terms, conditions or provisions of any note, mortgage, other evidence of indebtedness, guarantee, license, agreement, lease or other contract, instrument or obligation to which such Purchaser is a party or by which such Purchaser or any of its assets may be bound, or (iv) violate any order, injunction, decree, statute, rule or regulation applicable to such Purchaser, excluding from the foregoing clauses (ii), (iii) and (iv) such requirements, violations, conflicts, defaults or rights that would not adversely affect the ability of such Purchaser to consummate the transactions contemplated by this Agreement. (c) Brokers and Finders. Neither such Purchaser nor any of its officers, directors, employees or agents has utilized any broker, finder, placement agent or financial advisor or incurred any liability for any fees or commissions in connection with any of the transactions contemplated hereby or by the Ancillary Documents. (d) Investment Representations. (i) Such Purchaser is an "accredited investor" within the meaning of Rule 501 of Regulation D promulgated under the Securities Act and was not organized for the specific purpose of acquiring the Preferred Shares or the Warrants; (ii) such Purchaser has sufficient knowledge, sophistication and experience in financial and business matters as are necessary to evaluate the risks and merits of an investment in the Company; (iii) such Purchaser has had an opportunity to discuss the Company's business, management and financial affairs with the Company's management; (iv) the Preferred Shares and the Warrants being acquired by such Purchaser are being acquired for its own account for the purpose of investment and not with a view to or for sale in connection with any distribution thereof; and (v) such Purchaser understands that (A) none of the Preferred Shares, the shares of Common Stock issuable upon conversion or redemption thereof, the Warrants or the shares of Common Stock issuable upon the exercise thereof have been registered under the Securities Act and are being offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering, (B) the Preferred Shares, the shares of Common Stock issuable upon conversion or redemption thereof, the Warrants and the shares of Common Stock issuable upon the exercise thereof must be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act or is exempt from such registration, (C) the Preferred Shares, the shares of Common Stock issuable upon conversion or redemption thereof, the Warrants and the shares of Common Stock issuable upon the exercise thereof will bear a legend to such effect, as applicable, and (D) the Company will make a notation on its transfer books to such effect. ARTICLE IV. COVENANTS OF THE PARTIES Section 4.01. Taking of Necessary Action. Each of the parties hereto shall use its reasonable best efforts promptly to take or cause to be taken all action and promptly to do or cause to be done all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement. Without limiting the foregoing, the Company and each Purchaser will, and the Company shall cause each Company Subsidiary to, use its reasonable best efforts to make all filings (including, without limitation, under the HSR Act) and obtain all consents of Governmental Entities which may be necessary or, in the reasonable opinion of the Purchasers or the Company, as the case may be, advisable for the consummation of the transactions contemplated by this Agreement and the Ancillary Documents and with respect to the Company and the Company Subsidiaries, any Other Transaction Document and all third party consents and filings set forth in Schedule 4.01. Section 4.02. Conduct of Business. (a) Except as otherwise required to perform its obligations under this Agreement or any agreement contemplated herein, as set forth in Schedule 4.02, or as otherwise agreed to in writing by the Purchasers, from the date hereof to the Closing Date, the Company shall, and shall cause each Company Subsidiary to (i) conduct its business only in the ordinary course and consistent with past practice; (ii) use its reasonable best efforts to preserve and maintain its assets and properties and its relationships with its customers, suppliers, clients, advertisers, distributors, agents, officers and employees and other Persons with which it has significant business dealings; (iii) use its reasonable best efforts to maintain all of the material assets it owns or uses in the ordinary course of business consistent with past practice; (iv) use its reasonable best efforts to preserve the goodwill and ongoing operations of its business; (v) maintain its books and records in the usual, regular and ordinary manner, on a basis consistent with past practice; (vi) perform and comply in all material respects with its Commitments; (vii) maintain insurance in full force and effect with respect to its business with responsible companies, comparable in amount, scope and coverage to that in effect on the date of this Agreement; and (viii) comply in all material respects with applicable laws. (b) Except as expressly contemplated by this Agreement or as set forth on Schedule 4.02, between the date hereof and the Closing Date, the Company shall not, and shall cause each Company Subsidiary not to, do any of the following without the prior written consent of the Purchasers: (i) amend or in any way alter its Certificate of Incorporation or By-laws; (ii) engage in any other act, other than in the ordinary course of business and consistent with past practice, that would constitute a Material Adverse Effect or in any way delay or impair consummation of the transactions contemplated by this Agreement, the Ancillary Documents or any Other Transaction Agreement; (iii) change the number of shares of the authorized or issued capital stock of the Company, issue or grant any option, warrant, call, commitment, subscription, right to purchase or agreement of any character relating to the authorized or issued capital stock of the Company or any Company Subsidiary, or any securities convertible into shares of such stock (except for grants of options to purchase Common Stock granted pursuant to employee benefit plans of the Company not to exceed the amount set forth in Schedule 4.02 and, other than the issuance of equity securities in connection with the Senior Credit Facility, the Senior Subordinated Credit Facility and/or the Senior Subordinated Notes for which an adjustment is made pursuant to Section 2.04), split, combine or reclassify any shares of the capital stock of the Company, declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of the capital stock of the Company, or redeem or otherwise acquire any shares of such capital stock, other than open market purchases of Common Stock not in excess of the lesser of $25 million or 25% of the Company's Net Income for the immediately preceding twelve months in any given twelve month period; (iv) issue any equity securities other than the issuance of equity securities in connection with the Senior Credit Facility or the Senior Subordinated Credit Facility for which an adjustment is made pursuant to Section 2.04.; (v) enter into any transaction or incur any liability or obligation, except in the ordinary course of business; (vi) sell, transfer or otherwise dispose of any assets, except in the ordinary course of business; (vii) incur any Lien (other than a Permitted Lien) or indebtedness other than (A) indebtedness to trade creditors incurred in the ordinary course of business or (B) pursuant to the Senior Credit Facility or the Senior Subordinated Credit Facility, or vary the terms of any existing Lien or indebtedness; (viii) change its independent accountants, accounting policies or procedures; (ix) acquire any assets other than in the ordinary and usual course of business; (x) enter into an Employee Agreement with any Employee (other than an agreement terminable at will without any financial penalty), vary the terms of any Company Plan in any material way or grant any material increase in the compensation (including employee benefits) of any Employee, except for increases or variances (A) in the ordinary course of business and consistent with past practice, (B) as a result of collective bargaining, or (C) as required by any employment or other agreement, policy or plan currently in effect; (xi) do any other act which is reasonably likely to cause any representation or warranty in this Agreement to be or become untrue in any material respect; (xii) transfer, grant, amend or knowingly terminate any of its rights under any of the Company's Intellectual Property other than in the ordinary course of business consistent with past practices; (xiii) enter into any transactions or agreements of any kind with any of its Affiliates, other than with any Company Subsidiary or between any Company Subsidiaries, including the making of any loans, advances or investments to or in such entity, except for transactions or agreements on terms at least as favorable to the Company entering into such transactions or agreements as the terms which would be available with independent third parties at arm's length; (xiv) make any change in the Company's or any Company Subsidiary's Tax accounting methods, any new election with respect to Taxes or any modification or revocation of any existing election with respect to Taxes or settle or otherwise dispose of any Tax audit, dispute, or other Tax proceeding; or (xv) agree to take any of the actions restricted by this Section 4.02. Section 4.03. Financial Statements and Other Reports. Subject to Section 4.06, the Company covenants that, from and after the Closing Date, it will deliver to each Purchaser: (a) as soon as practicable and in any event no later than the day that a Form 10-Q is required to be filed by the Company with the SEC following each quarterly period (other than the last quarterly period) in each fiscal year, consolidated statements of operations, statements of stockholders' equity and cash flows of the Company for the period from the beginning of the then current fiscal year to the end of such quarterly period, and a consolidated balance sheet of the Company as of the end of such quarterly period setting forth in each case in comparative form figures for the corresponding period or date in the preceding fiscal year, together with a certificate from a senior officer of the Company to the effect that such financial statements have been prepared in accordance with GAAP consistently applied during the periods involved (subject to year-end adjustments) and that such financial statements fairly present the results of operations and changes in financial position, stockholders' equity, cash flows and financial position of the Company and the Company Subsidiaries as of and for the period then ended (such certificate, the "SENIOR OFFICER'S CERTIFICATE"); provided, however, that delivery pursuant to Section 4.03(c) of a copy of the Company's periodic report on Form 10-Q or such period filed with the SEC shall be deemed to satisfy the requirements of this Section 4.03(a); (b) as soon as practicable and in any event no later than the day that a Form 10-K is required to be filed by the Company with the SEC following the end of each fiscal year, a consolidated balance sheet of the Company as of the end of such fiscal year and the related consolidated statements of operations, statements of stockholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the corresponding figures from the preceding fiscal year, together with the audit report of PricewaterhouseCoopers LLP or other independent public accountants of recognized standing selected by the Company; provided, however, that delivery pursuant to Section 4.03(c) below of a copy of the Annual Report on Form 10-K of the Company for such fiscal year filed with the SEC shall be deemed to satisfy the requirements of this Section 4.03(b); and (c) promptly upon transmission thereof, copies of all such financial statements, proxy statements, notices and reports as it shall send to its stockholders and copies of all such registration statements, other than registration statements relating to employee benefit or dividend reinvestment plans, and all such regular and periodic reports on Forms 10-K, 10-Q and 8-K (or similar or substitute forms) as it shall file with the SEC. Section 4.04. Restricted Actions. Subject to Section 4.06, from and after the Closing Date, the Company shall not, and shall not permit any Company Subsidiary to, directly or indirectly, take any of the following actions without the prior written consent of at least a majority of the then-outstanding Preferred Shares or the affirmative vote in person or by proxy at a meeting called for that purpose of the holders of at least a majority of the Preferred Shares voting thereat: (a) sell, lease, transfer or otherwise dispose of any asset or assets of the Company or Company Subsidiaries, including the capital stock of any Company Subsidiary, other than a disposition of all or substantially all of the Company's assets in a transaction governed by Section 271 of the Delaware General Corporation Law, unless (i) the aggregate net proceeds received in connection with all of such transactions in any given twelve-month period (whether paid in cash or property) does not exceed $115 million, or (ii) such transaction is between the Company or its wholly owned Company Subsidiary, on the one hand, and any other wholly owned Company Subsidiary, on the other hand; (b) enter into or suffer to exist any contract, agreement, arrangement or transaction with any Affiliate (other than DonTech, any Company Subsidiary, and any company that is acquired pursuant to the Other Transaction Documents), officer, director or stockholder holding greater than 5% of the Company's outstanding Common Stock (an "AFFILIATE TRANSACTION"), unless such Affiliate Transaction (i) is determined by a majority of the Board of Directors to be fair and reasonable to the Company, and no less favorable to the Company than could have been obtained in an arm's length transaction with a third party, and (ii) is approved by a majority of the members of the Board of Directors that are disinterested in such transaction; (c) materially alter its principal line of business as conducted on the Closing Date; (d) incur, create, guarantee, become or be liable in any manner with respect to or permit to exist (other than pursuant to the Other Transaction Documents) any Indebtedness (as such term will be defined by the parties prior to the Closing Date) if the Leverage Ratio (as such term will be defined by the parties prior to the Closing Date), as at such time, is greater than 5.0 to 1.0; provided, however, that nothing in this Section 4.04(d) shall prohibit the Company from incurring up to $25 million of Indebtedness in any given twelve-month period; (e) acquire (by merging or consolidating with, or by purchasing an equity interest in or a portion of the assets of, or by any other manner) any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets in excess of $100 million in any given twelve-month period, other than inventory and other assets to be sold or used in the ordinary course of business; (f) amend the Certificate of Incorporation of the Company to authorize the creation or issuance, or the increase in the authorized amount, of the Preferred Stock, any Parity Securities (as defined in the Certificate of Designations) or Senior Securities (as defined in the Certificate of Designations), or to authorize the creation or issuance of securities convertible into or exchangeable for, or options, warrants or other rights to acquire, the Preferred Stock, any Parity Securities or Senior Securities; (g) reclassify any series of Junior Securities (as defined in the Certificate of Designations) as Senior Securities or Parity Securities; (h) amend, repeal or change (whether by merger, consolidation or otherwise) any of the provisions of the Certificate of Incorporation or By-laws of the Company or the provisions of the Certificate of Designations or the Warrants in any manner that would alter or change the powers, preferences or rights of the shares of the Preferred Stock or the Warrants, as the case may be, so as to affect them adversely, or otherwise restrict the rights, preferences or privileges of the Preferred Stock or the Warrants; (i) pay or declare any dividend or distribution on any shares of its capital stock (other than dividends on the Common Stock payable in additional shares of Common Stock) or apply any of its assets to the redemption, retirement, purchase or acquisition, directly or indirectly, through Company Subsidiaries or otherwise, of any shares of its capital stock (other than (A) redemptions, retirements, purchases or acquisitions of the Preferred Stock in accordance with the terms of the Certificate of Designations, and (B) (x) the repurchase of shares of Common Stock from employees or former employees of the Company who acquired such shares directly from the Company and which repurchases are approved by a majority of the board of directors and (y) open market purchases, which, in the case of both (x) and (y) taken together are not in excess of the lesser of $25 million or 25% of the Company's Net Income for the immediately preceding twelve months in any given twelve-month period); (j) sell, offer for sale or solicit offers to buy any security (as defined in the Securities Act) that would be integrated with the sale of the Preferred Shares and the Warrants in a manner that would require the registration under the Securities Act of the sale of the Preferred Shares and the Warrants to the Purchasers or any Affiliate of the Purchasers; (k) prior to the 18-month anniversary of the Closing Date, issue any equity securities (or securities exchangeable for or convertible into equity securities, or any options, warrants, rights to subscribe to, scrip calls, contracts, undertakings, arrangements or commitments to issue which may result in the issuance of equity securities of the Company) other than a Permitted Issuance (as defined in the Certificate of Designations); (l) increase the number of directors comprising the board of directors to more than ten directors; or (m) amend, modify or supplement any provision of the Rights Agreement in a manner that adversely affects the rights and benefits of any Purchaser under any such provision. Section 4.05. Required Actions. Subject to Section 4.06, from and after the Closing Date, the Company shall and, where applicable, shall cause each Company Subsidiary to: (a) use its reasonable best efforts to maintain at all times a valid listing for the Common Stock on the NYSE or another national securities exchange; (b) maintain and keep its properties in good repair, working order and condition, and from time to time make all necessary or desirable repairs, renewals and replacements; (c) maintain or cause to be maintained with financially sound and reputable insurers that have a rating of "A" or better as established by Best's Rating Guide (or an equivalent rating with such other publication of a similar nature as shall be in current use), (i) public liability and property damage insurance with respect to their respective businesses and properties against loss or damage of the kinds and in amounts customarily carried or maintained by companies of established reputation engaged in similar businesses and (ii) directors' and officers' liability insurance providing at least the same coverage and amounts and containing terms and conditions which are not less advantageous in any material respect, in each case than the directors' and officers' liability insurance maintained by the Company as of the Closing Date; (d) pay and discharge when due all Tax liabilities, assessments and governmental charges or levies imposed upon its properties or upon the income or profits therefrom (in each case before the same become delinquent and before penalties accrue thereon), unless the same are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP, consistently applied, are being maintained by the Company; (e) at all times cause to be done all things necessary to maintain, preserve and renew all Permits required for the conduct of its respective business; (f) comply with all applicable laws, rules and regulations of all Governmental Entities, the violation of which would constitute a Material Adverse Effect; (g) maintain proper books of record and account which present fairly in all respects its financial condition and results of operations and make provisions on its financial statements for all such proper reserves as in each case are required in accordance with GAAP, consistently applied; (h) reserve and keep available out of its authorized shares of Common Stock, solely for the purposes of issuance upon conversion of the Preferred Shares and exercise of the Warrants, such number of shares of Common Stock as are issuable upon the conversion of all outstanding Preferred Shares and exercise of all Warrants as such number may change from time to time; and (i) use its reasonable best efforts to at all times file all reports (including annual reports, quarterly reports and the information, documentation and other reports) required to be filed by the Company under the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder, and the Company shall use its reasonable best efforts to file each of such reports on a timely basis, all to the extent required to enable such holders to sell securities pursuant to Rule 144 promulgated under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the SEC and to enable the Company to register securities with the SEC on Form S-3 or any similar short-form registration statement. Section 4.06. Termination of Obligations. The obligations of the Company set forth in Section 4.03, Section 4.04 and Section 4.05 (other than the obligations set forth in Section 4.04(h) and Section 4.05(h)) shall terminate and no longer be of any effect from and after such time as the Purchasers no longer have the right pursuant to the Certificate of Designations to elect a Director of the Company. Section 4.07. Inspection of Property. Until the Closing Date or the earlier termination of this Agreement, the Company will permit representatives of the Purchasers to visit and inspect any of the properties of the Company or any of the Company Subsidiaries, to examine the corporate books, records, agreements and files of the Company and make copies or extracts therefrom and to request information at reasonable times and intervals concerning the general status of the Company's financial condition and operations, all upon reasonable notice and at such reasonable times and as often as such Purchaser may reasonably request. The Purchasers will, and will instruct each of their respective Affiliates, associates, partners, employees, agents and advisors to, hold in confidence all such information as is confidential or proprietary, will use such information only in connection with the purchase of the Preferred Shares and the Warrants in accordance with this Agreement and, if this Agreement is terminated in accordance with its terms, will deliver promptly to the Company all copies of such information (and any copies, compilations or extracts thereof or based thereon) then in their possession or under their control. Section 4.08. Lost, Stolen, Destroyed or Mutilated Securities. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of any certificate for any security of the Company and, in the case of loss, theft or destruction, upon delivery of an undertaking by the holder thereof to indemnify the Company (and, if requested by the Company, the delivery of an indemnity bond sufficient in the judgment of the Company to protect the Company from any loss it may suffer if a certificate is replaced), or, in the case of mutilation, upon surrender and cancellation thereof, the Company will issue a new certificate for an equivalent number of shares or warrants. Section 4.09. Listing. The Company shall promptly secure the listing of all of the Registrable Shares (as defined in the Registration Rights Agreement), other than any shares of the Preferred Stock and the Warrants, upon each national securities exchange and automated quotation system (as applicable, the "PRINCIPAL MARKET"), if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all Registrable Shares from time to time issuable under the terms of the Certificate of Designations. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4.09. Section 4.10. Restrictions on Sale or Transfer; Legend. (a) No Purchaser will, directly or indirectly, offer, sell, transfer, assign, pledge, hypothecate or otherwise dispose of the beneficial ownership of (any such act, a "TRANSFER") any Preferred Shares or Warrants prior to the first anniversary of the Closing Date, except for, and subject in each case to compliance with all applicable requirements of law and the receipt of any necessary governmental approvals, (i) a Transfer by any Purchaser to an Affiliate of such Purchaser or a Designated Transferee, provided that prior to such Transfer each such transferee consents in writing with the Company to be bound by the restrictions on transfer set forth in this Section 4.10 and assumes all other rights and obligations of the Purchasers under this Agreement and the Registration Rights Agreement; (ii) a Transfer to the Company or to a wholly owned direct or indirect subsidiary of the Company; (iii) a Transfer pursuant to a merger or consolidation in which the Company is a constituent corporation; (iv) a Transfer pursuant to a bona fide third party tender offer or exchange offer; (v) redemptions and conversions of the Preferred Shares in accordance with the terms of the Certificate of Designations; and (vi) exercise of the Warrants in accordance with their terms. From and after the first anniversary of the Closing Date none of the foregoing restrictions on Transfer shall apply, so long as such Transfer is made in compliance with all applicable requirements of law and any necessary governmental approvals have been obtained. (b) The Purchasers acknowledge and agree that as of the date hereof none of the Preferred Shares, the shares of Common Stock issuable upon conversion thereof, the Warrants or the shares of Common Stock issuable upon the exercise thereof have been nor will be registered under the Securities Act or the securities laws of any state and that they may be sold or otherwise disposed of only in one or more transactions registered under the Securities Act and, where applicable, such laws or as to which an exemption from the registration requirements of the Securities Act and, where applicable, such laws, is available. The Purchasers acknowledge that, except as provided in the Registration Rights Agreement, the Purchasers have no right to require the Company to register the Preferred Shares, the shares of Common Stock issuable upon conversion thereof, the Warrants or the shares of Common Stock issuable upon exercise thereof. The Purchasers further acknowledge and agree that each certificate for the Preferred Shares and the Warrants shall bear the following legend: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE SUCH A REGISTRATION IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS. THIS CERTIFICATE IS ISSUED PURSUANT TO AND SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF A PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT DATED AS OF SEPTEMBER 21, 2002 BETWEEN THE COMPANY AND THE PURCHASERS REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE COMPANY. EXCEPT AS PROVIDED IN SUCH PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE NOT TRANSFERABLE AND ANY PURPORTED TRANSFER IN VIOLATION OF THE PROVISIONS OF SUCH PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT SHALL BE VOID AND OF NO FORCE AND EFFECT. (c) Any holder of the Preferred Shares or the Warrants may request the Company to remove the legend described herein from the certificates evidencing such Preferred Shares or Warrants by submitting to the Company such certificates, together with an opinion of counsel reasonably satisfactory to the Company to the effect that such legend is no longer required under the Securities Act or this Agreement. Section 4.11. Notice of Breach. From the date hereof through the Closing Date, as promptly as practicable, and in any event not later than five business days after the Company becomes aware thereof, the Company shall provide the Purchasers with written notice of (a) any representation or warranty of the Company contained in this Agreement, the Ancillary Documents or any Other Transaction Document being untrue or inaccurate in any material respect at any time from the date hereof to the Closing Date, or (b) any failure of the Company to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by the Company under this Agreement, the Ancillary Documents or any Other Transaction Document; provided, however, that the delivery of any notice pursuant to this Section 4.11 shall not limit or otherwise affect the remedies available to the Purchasers, or modify in any way any disclosure made in this Agreement, the Ancillary Documents or any Other Transaction Document or the schedules hereto or thereto as of the date hereof. Section 4.12. Non-Disclosure; Interim Public Filings. Subject to Section 8.05, the Company shall deliver to the Purchasers complete and correct copies of all press releases and public filings made between the date hereof and the Closing Date. The Company shall not disclose the name or identity of any of the Purchasers as a Purchaser without the prior written consent of such Purchaser, except in connection with the Company's filing of a Form 8-K under the Exchange Act, as a result of this Agreement, the Ancillary Documents or any Other Transaction Document or the transactions contemplated hereby and thereby, or other similarly required Exchange Act reports or is required by applicable law or the rules or regulations of any exchange on which securities of the Company are listed or traded, in which case prior to making such disclosure the Company shall give written notice to such Purchaser, describing in reasonable detail the proposed content of such disclosure, shall permit such Purchaser to review and comment upon the form and substance of such disclosure and shall take such comments into account (but shall not be required to accept such comments) in making such disclosure. Section 4.13. Governance Rights. (a) (i) The Purchasers shall be entitled to elect directors as set forth in the Certificate of Designations. (ii) In addition, if the Purchasers convert Preferred Stock following delivery by the Company of a notice of redemption in accordance with the provisions of Section 5(a) of the Certificate of Designations, such conversion shall not affect their rights to designate directors and in such case, the Purchasers shall continue to be entitled to designate directors as and to the extent they would have had such rights had the Purchasers not converted any Preferred Stock beneficially owned by them, namely that at such time, (x) as the outstanding shares of Common Stock then owned by the Purchasers, their respective Affiliates or any Designated Transferees constitutes less than 50% of the number of shares of Common Stock beneficially owned by them immediately after the Closing Date (as such number may be adjusted for stock dividends, stock splits, combinations and recapitalizations and other similar events), the number of directors the Purchasers are then entitled to designate and elect under this Section 4.13(a)(ii) shall be reduced by one; and (y) as the outstanding shares of Common Stock then owned by the Purchasers, their respective Affiliates or any Designated Transferees constitutes less than 15% of the number of shares of Common Stock beneficially owned by them immediately after the Closing Date (as such number may be adjusted for stock dividends, stock splits, combinations and recapitalizations and other similar events), the Purchasers shall not be entitled to designate or elect any directors under this Section 4.13(a)(ii). No conversion of Preferred Stock shall result in any Purchaser Designee being required to resign or be removed from the board of directors prior to the expiration of his then applicable term. To the extent Purchaser Designees are to be members of any class of directors, the identity of such class shall be as reasonably requested by the Purchasers. (iii) For so long as GSCP 2000 and its Affiliates collectively beneficially own a number of shares of Common Stock (which beneficial ownership shall assume immediate convertibility of all shares of Preferred Stock then owned) that is not less than 7.5% of the number of shares of Common Stock beneficially owned (which beneficial ownership shall assume immediate convertibility of all shares of Preferred Stock then owned) by them immediately after the Closing (as such number may be adjusted for stock dividends, stock splits, combinations and recapitalizations and other similar events), GSCP 2000 shall have the right to designate, at all times and from time to time, one non-voting observer to the board of directors. (b) At any time the Purchasers shall be entitled to designate a Purchaser Designee (or a replacement therefor), the Company shall exercise all authority under applicable law to cause any slate of directors presented to stockholders for election of directors to the board of directors to contain such Purchaser Designee(s) and use its reasonable best efforts to have such Purchaser Designee(s) elected to the board of directors. (c) Prior to the Closing, each of the Company and the board of directors shall take such action as may be necessary (including seeking any necessary vote or approval of any stockholder of the Company, taking any action necessary to expand the size of the board of directors, or causing any existing director to resign in order to make room for the Purchaser Designees) to cause the Purchaser Designees to be elected to the board of directors. (d) Purchasers and the Company agree that one Purchaser Designee shall have the right, subject to compliance with applicable NYSE and SEC rules and regulations, to sit on each Committee of the board of directors. (e) If requested by a majority of the Purchasers, the Company will use its best efforts (in accordance with the certificate of incorporation and by-laws of the Company and the DGCL) to cause the removal of any Purchaser Designee (in accordance with the certificate of incorporation and by-laws of the Company and the DGCL). If any vacancy among the Purchaser Designees caused by removal or by the death, retirement or resignation of any Purchaser Designee exists, the Purchasers shall have the right to designate a replacement director for such Purchaser Designee and the Company shall exercise all authority under applicable law to cause such replacement director to be duly elected as a director of the Company. In the event that the term of any director who at such time is a Purchaser Designee is to expire, then in connection with any meeting of the Company's stockholders at which a successor to such director is to be elected, the Company shall nominate a Purchaser Designee designated by the Purchasers and shall recommend that stockholders vote in favor of such individual's election to the board of directors in any proxy statement, information statement or other communication to stockholders issued or disseminated by the Company. In the event of any vacancy among the Purchaser Designees, the board of directors shall not take any action not approved by the remaining Purchaser Designee (or by the Purchasers if there be no remaining Purchaser Designee) during the period from the time the Purchasers inform the Company of a designee to fill any such vacancy to the time such designee is duly appointed or elected to the board of directors. Whenever the number of directors that the Purchasers have the right to designate is reduced in accordance with the Certificate of Designations, the Purchaser will cause the appropriate number of Purchaser Designee(s) to promptly tender their resignation(s) from the board of directors. (f) At any time GSCP 2000 shall be entitled to designate a non-voting observer to the board of directors, the Company shall permit any such non-voting observer to attend each meeting of the board of directors of the Company and each meeting of any committee thereof and to participate in all discussions during each such meeting; provided, however, that the Company reserves the right to exclude such non-voting observers from access to any material or meeting or portion thereof if the Company believes that such exclusion is reasonably necessary to preserve the attorney-client privilege or to protect confidential proprietary information. The Company shall send to the non-voting observers the notice of the time and place of such meeting in the same manner and at the same time as it shall send such notice to its directors or committee members, as the case may be. The Company shall also provide to the non-voting observers copies of all notices, reports, minutes and consents at the time and in the manner as they are provided to the board of directors or committee, except for information reasonably designated as proprietary information reasonably designated as proprietary information by the board of directors. At any time GSCP 2000 shall be entitled to designate a non-voting member to the board of directors, GSCP 2000 shall also be entitled to consult with and advise management of the Company on significant business issues, including management's proposed annual operating plans, and management will meet with representatives of GSCP 2000 at the Company's facilities at mutually agreeable times for such consultation and advice, including to review progress in achieving said plans. Upon notice given by GSCP 2000 to the Company, the Company shall commence to give GSCP 2000 reasonable advance written notice of any significant new initiatives or material changes to existing operating plans and shall afford GSCP 2000 adequate time to meet with management to consult on such initiatives or changes prior to implementation. (g) Notwithstanding Section 4.13(f), for so long as any Purchaser holds any Preferred Shares, the Company shall provide to the Purchasers copies of all notices, reports, minutes and consents at the time and in the manner as they are provided to the board of directors or committee, except for information reasonably designated as proprietary information by the board of directors. (h) The rights set forth in this Section 4.13 are intended to satisfy the requirement of contractual management rights for purposes of qualifying GSCP 2000's interests in the Company as venture capital investments for purposes of the Department of Labor's "plan assets" regulations, and in the event such rights are not satisfactory for such purposes, GSCP 2000, the Company and the Purchasers shall reasonably cooperate in good faith to agree upon mutually satisfactory management rights which satisfy such regulations. Section 4.14. Other Transaction Documents. The Company shall keep Purchasers fully informed of, provide Purchasers will copies of all drafts of, and discuss with the Purchasers on a timely basis, each of the Other Transaction Documents and shall not, without the prior written consent of each Purchaser, (i) execute any of the Other Transaction Documents to be executed after the date hereof or (ii) amend, waive, supplement or modify any provisions of any of the Other Transaction Documents executed on or prior to the date hereof. Section 4.15. Transfer Taxes. The Company shall be responsible for any Liability with respect to any transfer, stamp or similar non-income Taxes that may be payable in connection with the execution, delivery and performance of this Agreement including, without limitation, any such Taxes with respect to the issuance of the Preferred Shares or shares of Common Stock issuable upon conversion thereof. Section 4.16. Dividends. The Company agrees that, after the tenth anniversary of the Closing Date, it shall pay cash dividends on the Preferred Stock on a current basis so long as it is not precluded from doing so under law. In furtherance thereof, the Company shall refrain from entering into any agreements which would preclude such payments, seek a waiver under any agreements which would prevent such payments at any time and take whatever actions are necessary, including revaluing assets, to create surplus for the purpose of paying such dividends. Section 4.17. Certain Information Rights. Between the date hereof and the Closing Date, the Company shall inform the Purchasers promptly of any inquiries, discussions, offers or proposals for, or negotiations looking toward, any purchase or other acquisition of any of the capital stock of or equity interests in (whether newly issued or currently outstanding) the Company or any of the Company Subsidiaries; and the Company shall provide promptly to the Purchasers copies of any written documents prepared by or received by the Company or its advisors in connection therewith. ARTICLE V. CONDITIONS Section 5.01. Conditions of Purchase. The obligations of each Purchaser to purchase the Preferred Shares and the Warrants at the Closing are subject to satisfaction or waiver of each of the following conditions on or prior to the Closing Date: (a) Representations and Warranties; Covenants. The representations and warranties of the Company contained in this Agreement and the Ancillary Documents shall be true and correct in all material respects (disregarding for these purposes any materiality, Material Adverse Effect or corollary qualifications contained therein) on and as of the date of this Agreement or the date of such Ancillary Documents, as the case may be, and on and as of the Closing Date with the same effect as though made on and as of such date, and the Company shall have performed all obligations and complied with all agreements, undertakings, covenants and conditions required hereunder and thereunder to be performed by it at or prior to the Closing. (b) No Injunction. There shall not be in effect any statute, rule, order, decree or injunction of a court or agency of competent jurisdiction which enjoins or prohibits consummation of the transactions contemplated hereby. (c) Regulatory Approvals. All permits, consents, authorizations, orders and approvals of, and filings and registrations required under any federal or state law, rule or regulation for or in connection with the execution and delivery of this Agreement and the Ancillary Documents and the consummation by the parties hereto of the transactions contemplated on such parties' part hereby and thereby shall have been obtained or made and all statutory waiting periods thereunder in respect thereof shall have expired, including without limitation, any waiting periods under the HSR Act. (d) Company Certificate. The Company shall have delivered to the Purchasers a certificate, dated the Closing Date, signed by its chief executive officer and its chief financial officer, in form and substance reasonably satisfactory to the Purchasers to the effect that the conditions set forth in this Section 5.01 have been satisfied (the "COMPANY CERTIFICATE"). (e) Registration Rights Agreement. The Registration Rights Agreement shall have been executed and delivered by the parties thereto and shall be in full force and effect. (f) Certificate of Designations. The Certificate of Designations shall have been duly filed with the Secretary of State of Delaware and shall have become effective and shall be in full force and effect. (g) Certain Transaction Documents. (A) the Other Transaction Documents executed prior to or simultaneously with this Agreement shall not have been amended, modified, supplemented, or provisions thereof waived, in violation of Section 4.14, (B) the Other Transaction Documents a form of which is attached to an Other Transaction Document executed prior to or simultaneously with this Agreement shall, at the time of execution thereof, be in all material respects in the form as so attached (and the documentation pursuant to which the Special Purpose Vehicle Term Sheet (as defined in the Sprint Purchase Agreement) shall give effect in all material respects to the terms set forth in such Term Sheet and be otherwise reasonably satisfactory to the Purchasers), and (C) the Purchasers shall be satisfied in their sole discretion with the form and substance of any other of the Other Transaction Documents to be prepared after the execution of this Agreement. (h) Other Transactions. The transactions contemplated by the Other Transaction Documents that by their terms are to be completed prior to or concurrently with the Closing (which shall include, without limitation, the Sprint Transaction) shall have been completed immediately prior to or concurrently with the Closing in accordance with the terms and provisions of the applicable Other Transaction Document. (i) Legal Opinion. The Purchasers shall have received, dated the Closing Date and addressed to each Purchaser, an opinion of Jones, Day, Reavis & Pogue, counsel to the Company, substantially in the form attached hereto as Exhibit E. (j) Simultaneous Closing by Other Purchasers. Each other Purchaser shall concurrently purchase and pay for the Preferred Shares and the Warrants set forth opposite its name in Schedule A. (k) Directors. The Purchaser Designees shall have been elected to the Board of Directors of the Company, effective as of the Closing and the Board of Directors of the Company shall consist of no more than ten directors. (l) Material Adverse Change. There shall not have occurred since December 31, 2001 any event or occurrence which has resulted in or could reasonably be expected to result in any material adverse change in the business, assets, operations, properties, condition (financial or otherwise), prospects, contingent liabilities or material agreements of the Company and the business acquired pursuant to the Sprint Transaction, taken as a whole. (m) NYSE Approval. The NYSE shall (1) not have withdrawn its advice that stockholder approval of the issuance of Common Stock upon conversion of the Preferred Shares and exercise of the Warrants is not required under Rule 312 of the NYSE Listed Company Manual and (2) have confirmed that the terms of the Preferred Stock, as set forth in the Certificate of Designations and this Agreement, comply with the NYSE's Voting Rights Policy as set forth in Rule 313 of the NYSE Listed Company Manual, which advice shall not have been withdrawn. (n) Debt Financing. The Company shall have received proceeds from the financing contemplated by the Commitment Letter on the terms and subject to the conditions thereof. Section 5.02. Conditions of Sale. The obligation of the Company to sell the Preferred Shares and the Warrants at the Closing is subject to satisfaction or waiver of each of the following conditions precedent: (a) Representations and Warranties; Covenants The representations and warranties of the Purchasers contained in this Agreement shall be true and correct in all material respects (disregarding for these purposes any materiality, Material Adverse Effect or corollary qualifications contained therein) on and as of the date of this Agreement and on and as of the Closing Date with the same effect as though made on and as of such dates, and the Purchasers shall have performed all obligations and complied with all agreements, undertakings, covenants and conditions required hereunder to be performed at or prior to the Closing. (b) No Injunction. There shall not be in effect any statute, rule, order, decree or injunction of a court or agency of competent jurisdiction with enjoins or prohibits consummation of the transactions contemplated hereby. (c) Regulatory Consents. (i) All permits, consents, authorizations, orders and approvals of, and filings and registrations required under federal or state law, rule or regulation for or in connection with the execution and delivery of this Agreement and the Ancillary Documents to which such Purchaser is a party and the consummation by the parties hereto of the transactions contemplated on such parties' part hereby and thereby shall have been obtained or made and all statutory waiting periods thereunder in respect thereof shall have expired. (d) Purchaser's Certificate. Each Purchaser shall have delivered to the Company a certificate, dated the Closing Date, in form and substance reasonably satisfactory to the Company to the effect that the condition set forth in Section 5.02(a) have been satisfied (the "PURCHASER'S CERTIFICATE"). (e) NYSE Approval. The NYSE shall (1) not have withdrawn its advice that stockholder approval of the issuance of Common Stock upon conversion of the Preferred Shares and exercise of the Warrants is not required under Rule 312 of the NYSE Listed Company Manual and (2) have confirmed that the terms of the Preferred Stock, as set forth in the Certificate of Designations and this Agreement, comply with the NYSE's Voting Rights Policy as set forth in Rule 313 of the NYSE Listed Company Manual, which advice shall not have been withdrawn. (f) Debt Financing. The Company shall have received proceeds from the financing contemplated by the Commitment Letter on the terms and subject to the conditions thereof. (g) Other Transactions. The transactions contemplated by the Other Transaction Documents that by their terms are to be completed prior to or concurrently with the Closing (which shall include, without limitation, the Sprint Transaction) shall have been completed immediately prior to or concurrently with the Closing in accordance with the terms and provisions thereof. (h) Purchase Price. The Purchasers shall have delivered immediately prior to or concurrently with the Closing in immediately available funds, by wire transfer to such account as the Company shall have specified, an amount equal to the purchase price to have been paid pursuant to Section 2.01. ARTICLE VI. TERMINATION Section 6.01. Termination. This Agreement may be terminated on or any time prior to the Closing: (a) by the mutual written consent of each of the Purchasers and the Company; or (b) by either the Company or the Purchasers if the Sprint Purchase Agreement shall have been terminated pursuant to its terms; or (c) by the Purchasers if the Closing shall not have occurred prior to January 31, 2003, unless the failure of such occurrence shall be due to the failure of the Purchasers to perform or observe any agreement set forth herein required to be performed or observed by the Purchasers on or before the Closing; or (d) by the Company or the Purchasers if a Governmental Entity shall have issued a nonappealable final order, decree or ruling or taken any other action having the effect of permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement; or (e) by the Purchasers or the Company, (i) if any representation or warranty of the other party set forth in this Agreement or in any other Ancillary Document shall be untrue in any material respect when made, or (ii) upon a breach in any material respect of any covenant or agreement on the part of the other set forth in this Agreement or in any other Ancillary Document (either (i) or (ii) above being a "TERMINATING BREACH"); provided, that, each Terminating Breach would cause the conditions to the non-terminating party's obligations not to be satisfied and such Terminating Breach is not cured within 20 days after written notice from the non-breaching party. Section 6.02. Effect of Termination. In the event of the termination of this Agreement as provided in Section 6.01, all obligations and agreements of the parties set forth in this Agreement shall forthwith become void except for the obligations set forth in Section 8.05 and Section 8.06 (which shall remain in full force and effect) and there shall be no liability or obligation on the part of the parties hereto except as otherwise provided in this Agreement. Notwithstanding the foregoing, the termination of this Agreement under Section 6.01(c) shall not relieve either party of any liability for breach of this Agreement prior to the date of termination. ARTICLE VII. SURVIVAL; CERTAIN REMEDIES Section 7.01. Survival. The representations and warranties of the parties contained in this Agreement shall expire on the second anniversary of the Closing, except that the representations and warranties set forth in Sections 3.01(a) and 3.01(d), shall survive indefinitely and the representations and warranties set forth in Sections 3.01(i)(iii) and 3.01(p) shall survive until thirty days following the expiration of the applicable statute of limitations. After the expiration of such periods, any claim by a party hereto based upon any such representation or warranty shall be of no further force and effect unless a party has asserted a claim in accordance with this Article VII for breach of any such representation or warranty prior to the expiration of such period, in which event any representation or warranty to which such claim relates shall survive with respect to such claim until such claim is resolved as provided in this Article VII. The covenants and agreements of the parties contained in this Agreement shall survive the Closing in accordance with their terms without limitation as to time, unless a specified period is set forth in this Agreement, in which event such specified period will control. Section 7.02. Indemnification by the Purchasers. Each Purchaser, severally and not jointly, shall, from and after the Closing Date, indemnify the Company and its Affiliates and agents, and the officers, directors, employees, successors, transferees and assigns of each of them (each, a "COMPANY INDEMNIFIED PARTY") against and hold them harmless from and against all Losses incurred by any of them based upon, resulting from or arising out of (i) the breach of any representation or warranty of such Purchaser contained in this Agreement or (ii) the breach of or failure to perform any covenant or agreement of such Purchaser contained in this Agreement. Section 7.03. Indemnification by the Company. The Company shall, from and after the Closing Date, indemnify each of the Purchasers and each of their respective Affiliates and agents and the officers, directors, employees, members, successors, transferees and assigns of each of them (each, an "PURCHASER INDEMNIFIED PARTY") against and hold them harmless from and against all Losses incurred by any of them based upon, resulting from or arising out of (i) the breach of any representation or warranty of the Company contained in this Agreement, (ii) the breach of or failure to perform any covenant or agreement of the Company contained in this Agreement or (iii) the Litigation entitled DonTech vs. Adoption World v. Ameritech Corporation (Case Number 98 L 13197). Section 7.04. Certain Qualifications. The Material Adverse Effect and other materiality (or correlative meaning) qualifications included in the representations, warranties, covenants and agreements contained herein shall have no effect on any provisions in this Article VII concerning the indemnities of the Company or the Purchasers with respect to such representations, warranties, covenants and agreements, each of which representations, warranties, covenants and agreements shall be read as though there were no Material Adverse Effect or other materiality qualification for purposes of such indemnities. All knowledge qualifications included in the representations, warranties, covenants and agreements contained herein with respect to DonTech or its business, operations, assets, financial condition, liabilities or agreements shall have no effect on any provisions of this Article VII concerning the indemnities of the Company with respect to such representations, warranties, covenants and agreements, each of which shall be read as though there were no such knowledge qualifications for purposes of such indemnities. Section 7.05. Indemnification Procedures. (a) An Purchaser Indemnified Party or a Company Indemnified Party, as the case may be (for purposes of this Section 7.05, an "INDEMNIFIED PARTY"), shall give the indemnifying party under Section 7.02 or 7.03, as applicable (for purposes of this Section 7.05, an "INDEMNIFYING PARTY"), prompt written notice (the "INDEMNIFICATION CLAIM NOTICE") of any third party claim for which it will seek indemnification hereunder; provided that failure of the Indemnified Party to give the Indemnifying Party prompt written notice as provided herein shall not relieve the Indemnifying Party of any of its obligations hereunder except to the extent that the Indemnifying Party is prejudiced thereby. The Indemnifying Party shall have the right to assume, through counsel of its own choosing, which counsel shall be reasonably satisfactory to the Indemnified Party, the defense of any third party claim which is the subject of indemnification hereunder at its own expense. If the Indemnifying Party elects to assume the defense of any such claim, the Indemnified Party may participate with its own counsel in such defense, but in such case the fees and expenses of counsel to the Indemnified Party shall be paid by the Indemnified Party. The Indemnified Party shall, upon reasonable notice, provide the Indemnifying Party with access to its records and personnel relating to any such claim during normal business hours and shall otherwise cooperate with the Indemnifying Party in the defense or settlement thereof, and the Indemnifying Party shall reimburse the Indemnified Party for all its reasonable out-of-pocket expenses in connection therewith. If the Indemnifying Party elects to direct the defense of any such claim, the Indemnified Party shall not pay, or permit to be paid, any part of such claim unless the Indemnifying Party consents in writing to such payment (which consent shall not be unreasonably withheld) or unless the Indemnifying Party withdraws from or fails to maintain the defense of such claim or unless a final judgment from which no appeal may be taken by or on behalf of the Indemnifying Party is entered against the Indemnified Party for indemnification; provided that, if the third party claimant is prepared to settle its claim by payment to it of a specified amount and, notwithstanding the request of the Indemnified Party for consent to the proposed settlement, the Indemnifying Party does not consent thereto, then the Indemnifying Party shall indemnify the Indemnified Party separately for the difference, if any, between the specified amount of the proposed settlement and the amount which is finally adjudicated to be the amount of the Liability to the third party. No settlement in respect of any third-party claim may be effected by the Indemnifying Party without the Indemnified Party's prior written consent (which consent shall not be unreasonably withheld). If the Indemnifying Party shall fail to undertake any such defense (or shall fail upon request to advise the Indemnified Party in writing that it will undertake such defense) within 30 days of receipt of the Indemnification Claim Notice, or subsequently withdraws from or fails to maintain the defense of such claim, the Indemnified Party shall have the right to undertake the defense or settlement thereof at the Indemnifying Party's expense. If the Indemnified Party assumes the defense of any such claim pursuant to the previous sentence it may conduct such defense (including entering into any settlement) as it reasonably deems appropriate. (b) Notwithstanding the foregoing, with respect to any claim that the Indemnifying Party is defending, the Indemnified Party shall have the right to retain separate counsel to represent it and the Indemnifying Party shall pay the fees and expenses of such separate counsel if there are conflicts that make it reasonably necessary for separate counsel to represent the Indemnified Party and the Indemnifying Party. (c) In the event that an Indemnified Party asserts the existence of a claim with respect to Losses (but excluding claims resulting from the assertion of Liability by third parties), it shall give written notice to the Indemnifying Party. Such written notice shall state that it is being given pursuant to this Section 7.05(c), specify the nature and amount of the claim asserted, and indicate the date on which such assertion shall be deemed accepted and the amount of the claim deemed a valid claim (such date to be established in accordance with the next sentence). If the Indemnifying Party, within 30 days after the mailing of notice by such Indemnified Party, shall not give written notice to such Indemnified Party announcing its intent to contest such assertion of such Indemnified Party, such assertion shall be deemed accepted and the amount of claim shall be deemed a valid claim. In the event, however, that the Indemnifying Party contests the assertion of a claim by giving such written notice to such Indemnified Party within said period, then the parties shall act in good faith to reach agreement regarding such claim. In the event that litigation shall arise with respect to any such claim, the prevailing party shall be entitled to reimbursement of costs and expenses incurred in connection with such litigation including attorney fees, if the parties hereto, acting in good faith, cannot reach agreement with respect to such claim within ten days after such notice. (d) The parties agree to treat any indemnification payments made by the Company pursuant to this Agreement for Tax purposes as adjustments to the purchase price of the Preferred Shares. Section 7.06. Liability Limits. (a) Notwithstanding anything to the contrary set forth in this Agreement, except for fraud, the Purchaser Indemnified Parties shall not make a claim against the Company for indemnification under Section 7.03(i) (not including indemnification for breaches of the representations and warranties made by the Company in Section 3.01(i)(iii)) for Purchaser Losses unless and until the aggregate amount of Purchaser Losses under Section 7.03(i) (not including indemnification for breaches of the representations and warranties made by the Company in Section 3.01(i)(iii)) exceeds $1,000,000 and then the Purchaser Indemnified Parties shall be entitled to indemnification from first dollar. Further, the Company's indemnification obligations pursuant to Section 7.03(i) shall not exceed in the aggregate $100,000,000. (b) Notwithstanding anything to the contrary set forth in this Agreement, except for fraud, the Company Indemnified Parties shall not make a claim against the Purchasers for indemnification under Section 7.02(i) for Company Losses unless and until the aggregate amount of Company Losses under Section 7.02(i) exceeds $1,000,000 and then the Company Indemnified Parties shall be entitled to indemnification from first dollar. Further, the Purchasers' indemnification obligations pursuant to Section 7.02(i) shall not exceed in the aggregate $100,000,000. Section 7.07. Duplication. Any Liability for indemnification hereunder shall be determined without duplication of recovery by reason of the state of facts giving rise to such Liability constituting a breach of more than one representation, warranty, covenant or agreement; provided, however, that subject to there being no duplication of recovery, the Indemnified Party shall be entitled to recover to the maximum extent provided in this Agreement (by way of example, if any Indemnified Party's entitlement to indemnification is both by reason for a breach of a representation and warranty to which the two year survival period of Section 7.01 applies and by reason of a breach of a representation and warranty to which such survival period does not apply, the Indemnified Party shall be entitled to indemnification without regard to such two year survival period). The amount of any Loss for which indemnification is provided under this Article VII shall be calculated (i) net of any amounts actually recovered by the Indemnified Party (A) under insurance policies with respect to such Loss and (B) any amounts actually recovered from third parties pursuant to indemnification or otherwise with respect to such Loss, and (ii) net of any tax benefits obtained or reasonably expected to be obtained by the Indemnified Party or its affiliates with respect to such Loss. Section 7.08. Exclusive Remedies. Except for fraud, the provisions of this Article VII set forth the exclusive rights and remedies of the Purchasers and the Company to seek or obtain damages from any party after the Closing Date with respect to breaches of representations, warranties or covenants under this Agreement (other than any remedy or relief arising from the failure of any party to perform its obligations under the Ancillary Documents); provided, however, that nothing herein shall limit any remedy in equity. ARTICLE VIII. MISCELLANEOUS Section 8.01. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given, if delivered personally, by facsimile or sent by overnight courier as follows: If to the Purchasers, to: GS Capital Partners 2000, L.P. GS Capital Partners 2000 Offshore, L.P. GS Capital Partners 2000 GmbH & Co. Beteiligungs KG GS Capital Partners 2000 Employee Fund, L.P. Goldman Sachs Direct Investment Fund 2000, L.P. c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Phone: (212) 902-1000 Fax: (212) 357-5505 Attention: Mr. Stuart Katz Attention: Ben Adler, Esq. with a copy to (which shall not constitute notice): Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10004 Phone: (212) 859-8000 Fax: (212) 859-8586 Attention: David N. Shine, Esq. If to the Company, to: R.H. Donnelley Corporation One Manhattanville Road Purchase, NY 10577 Phone: (914) 933-6769 Fax: (914) 933-6844 Attention: Robert J. Bush, Esq. with a copy to (which shall not constitute notice): Jones, Day, Reavis & Pogue 901 Lakeside Avenue Cleveland, Ohio 44114 Phone: (216) 586-3939 Fax: (216) 579-0212 Attention: Thomas C. Daniels, Esq. or to such other address or addresses as shall be designated in writing. All notices shall be effective when received. Section 8.02. Entire Agreement; Amendments; Waivers. This Agreement and the Ancillary Documents set forth the entire agreement between the parties hereto with respect to the transactions contemplated by this Agreement. Any provision of this Agreement may be amended or modified in whole or in part at any time by an agreement in writing among the parties hereto executed in the same manner as this Agreement. No failure on the part of any party to exercise, and no delay in exercising, any right shall operate as a waiver thereof nor shall any single or partial exercise by any party of any right preclude any other or future exercise thereof or the exercise of any other right. No investigation by the Purchasers of the Company prior to or after the date hereof shall stop or prevent the Purchasers from exercising any right hereunder or be deemed to be a waiver of any such right. Section 8.03. Counterparts. This Agreement may be executed by facsimile signature and may be executed in one or more counterparts, each of which shall be deemed to constitute an original, but all of which together shall constitute one and the same documents. Section 8.04. Governing Law. This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of New York applicable to contracts made and to be performed in that State without giving effect to any conflict of laws rules or principles that might require the application of the laws of another jurisdiction. Section 8.05. Public Announcements. Each of the parties hereto agree to hold in strict confidence and not to publicly disclose the status of any discussions or relations between the parties with respect to the subject matter of this Agreement until such time as the parties mutually agree to publicly disclose such information or are legally obligated (whether by federal securities laws, the rules of any stock exchange or otherwise) to disclose such information. Subject to the provisions of the previous sentence, the parties hereto will cooperate with each other in the development and distribution of all news releases and other public information disclosures with respect to this Agreement and any of the transactions contemplated hereby, and neither party hereto will make any news releases or other information disclosures with respect to the subject matter of this Agreement without the prior consent of the other party hereto. Section 8.06. Closing Payment; Expenses. (a) On the Closing Date, the Company will pay to each Purchaser 1% of the portion of the purchase price paid by such Purchaser to the Company on the Closing Date (the "CLOSING PAYMENT"). Any obligation owed by the Company to the Purchasers pursuant to this Section 8.06 shall be offset by the Purchasers against the amount of the obligation owed to the Company by the Purchasers pursuant to Section 2.02(b). (b) The Company shall pay (i) all fees, costs and expenses incurred by it in connection with the preparation, negotiation, execution, and performance of this Agreement or any of the transactions contemplated by this Agreement or the Other Transaction Documents, (ii) the reasonable third party and out-of-pocket expenses (including, without limitation, all reasonable fees and expenses of each counsel, accountants and consultants of each such party) incurred by the Purchasers or their Affiliates since August 16, 2002 in connection with the preparation, negotiation, execution, and performance of this Agreement or any of the transactions contemplated by this Agreement and (iii) all costs of filings required under the HSR Act in connection with the execution and performance of this Agreement. Without limiting the generality of the foregoing, the expenses referred to in clause (iii) above shall be paid by the Company when due or payable and on the Closing Date or the date on which this Agreement is terminated pursuant to Article VI hereof, the Company shall pay all expenses listed in clause (ii) of the previous sentence which have accrued as of such date. Section 8.07. Successors and Assigns. Subject to applicable law and the provisions of Section 4.10, each Purchaser may assign its rights under this Agreement in whole or in part to any of its respective Affiliates or any Designated Transferee, but no such assignment shall relieve such Purchaser of its obligations hereunder. The Company may not assign any of its rights or delegate any of its duties under this Agreement without the prior written consent of each of the Purchasers. Any purported assignment in violation of this Section 8.07 shall be void. Section 8.08. Jurisdiction. The courts of the State of New York in New York County and the United States District Court for the Southern District of New York shall have jurisdiction over the parties with respect to any dispute or controversy between them arising under or in connection with this agreement and, by execution and delivery of this agreement, each of the parties to this Agreement submits to the jurisdiction of those courts, including but not limited to the in personam and subject matter jurisdiction of those courts, waives any objections to such jurisdiction on the grounds of venue or forum non conveniens, the absence of in personam or subject matter jurisdiction and any similar grounds, consents to service of process by mail (in accordance with Section 8.01) or any other manner permitted by law, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. Section 8.09. Captions; References. The captions contained in this Agreement are for reference purposes only and are not part of this Agreement. Unless otherwise indicated, all references to Articles, Sections, subsections, Schedules or Exhibits in this Agreement refer to the Articles, Sections, subsections and clauses of, and the Schedules or Exhibits to, this Agreement. Section 8.10. Severability. Should any part of this Agreement for any reason be declared invalid, such decision shall not affect the validity of any remaining portion, which remaining portion shall remain in full force and effect as if this Agreement had been executed with the invalid portion thereof eliminated, and it is hereby declared the intention of the parties hereto that they would have executed the remaining portion of this Agreement without including therein any such part or parts which may, for any reason, be hereafter declared invalid. Section 8.11. Aggregation of Stock. All shares of capital stock held or acquired by each of the Goldman Entities shall be aggregated together for the purpose of determining the availability and exercise of any right of each such Goldman Entity under this Agreement. IN WITNESS WHEREOF, this Agreement has been executed by the respective duly authorized officers of the parties hereto, all as of the date first above written. R.H. DONNELLEY CORPORATION By: /s/ David C. Swanson ---------------------------------------- Name: David C. Swanson Title: President and Chief Executive Officer GS CAPITAL PARTNERS 2000, L.P. By: GS Advisors 2000, L.L.C. Its General Partner By: /s/ Katherine B. Enquist ---------------------------------------- Name: Katherine B. Enquist Its: Vice President GS CAPITAL PARTNERS 2000 OFFSHORE, L.P. By: GS Advisors 2000, L.L.C. Its General Partner By: /s/ Katherine B. Enquist ---------------------------------------- Name: Katherine B. Enquist Its: Vice President GS CAPITAL PARTNERS 2000 GmbH & CO. BETEILIGUNGS KG By: Goldman Sachs Management GP GmbH Its General Partner By: /s/ John E. Bowman ---------------------------------------- Name: John E. Bowman Its: Managing Director GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P. By: GS Employee Funds 2000 GP, L.L.C. Its General Partner By: /s/ John E. Bowman ---------------------------------------- Name: John E. Bowman Its: Vice President GOLDMAN SACHS DIRECT INVESTMENT FUND 2000, L.P. By: GS Employee Funds 2000 GP, L.L.C. Its General Partner By: /s/ John E. Bowman ---------------------------------------- Name: John E. Bowman Title: Vice President EX-99.6 8 ex99_6.txt CERTIFICATE OF DESIGNATIONS Exhibit 6 --------- CERTIFICATE OF DESIGNATIONS OF CONVERTIBLE CUMULATIVE PREFERRED STOCK OF R.H. DONNELLEY CORPORATION ---------------------------------- Pursuant to Section 151 of the General Corporation Law of the State of Delaware ---------------------------------- R.H. Donnelley Corporation (the "CORPORATION"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "DGCL"), hereby certifies as follows: FIRST: The Restated Certificate of Incorporation, as amended, of the Corporation authorizes the issuance of up to 10,000,000 shares of Preferred Stock, par value $1 per share (the "PREFERRED STOCK"), and further authorizes the Board of Directors of the Corporation by resolution or resolutions to provide for the issuance of Preferred Stock in series and to establish the number of shares to be included in each such series and to fix the designation, voting powers, preferences and relative rights and qualifications, limitations or restrictions of each such series. SECOND: On September 21, 2002, the Board of Directors of the Corporation adopted the following resolution authorizing the creation and issuance of a series of said Preferred Stock to be known as Convertible Cumulative Preferred Stock: RESOLVED, that pursuant to the authority vested in the Board of Directors of the Corporation in accordance with the provisions of its Restated Certificate of Incorporation, as amended, a series of Preferred Stock of the Corporation be, and it hereby is, created, and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as set forth in the Corporation's Restated Certificate of Incorporation and in this Certificate of Designations as follows: 1. Designation and Amount. The shares of such series of Preferred Stock shall be designated as Convertible Cumulative Preferred Stock (the "CONVERTIBLE PREFERRED STOCK"), and the number of shares constituting such series shall be 250,000. The initial liquidation preference of the Convertible Preferred Stock shall be $1,000 per share or right (the "LIQUIDATION VALUE"). 2. Rank. The Convertible Preferred Stock shall, with respect to dividend rights and rights on liquidation, winding up and dissolution, rank (i) senior to both the Corporation's Common Stock and to all classes and series of stock of the Corporation now or hereafter authorized, issued or outstanding which by their terms expressly provide that they are junior to the Convertible Preferred Stock or which do not specify their rank (collectively with the Common Stock, the "JUNIOR SECURITIES"); (ii) on a parity with each other class of capital stock or series of preferred stock issued by the Corporation after the date hereof the terms of which specifically provide that such class or series will rank on a parity with the Convertible Preferred Stock as to dividend distributions and distributions upon the liquidation, winding up and dissolution of the Corporation (collectively referred to as "PARITY SECURITIES"); and (iii) junior to each other class of capital stock or other series of Preferred Stock issued by the Corporation after the date hereof the terms of which specifically provide that such class or series will rank senior to the Convertible Preferred Stock as to dividend distributions or distributions upon the liquidation, winding up and dissolution of the Corporation (collectively referred to as "SENIOR SECURITIES") 3. Dividends. (a) Payment of Dividends. The holders of shares of Convertible Preferred Stock, in preference to the holders of any shares of Common Stock or other capital stock of the Corporation, shall be entitled to receive, when, as and if declared by the Board of Directors, in their sole discretion, out of the assets of the Corporation legally available therefor, distributions in the form of cumulative cash dividends payable at an annual rate per share equal to 8% (the "Dividend Rate") of the Convertible Preferred Amount from and after the date of issuance of the shares of Convertible Preferred Stock (the "Issue Date"), as long as the shares of Convertible Preferred Stock remain outstanding. Dividends shall be (i) computed on the basis of the aggregate Convertible Preferred Amount; (ii) calculated and compounded quarterly; (iii) accrue and be payable quarterly, in arrears, on March 31, June 30, September 30 and December 31 (each such date being referred to herein as a "Quarterly Dividend Payment Date"), except that if any Quarterly Dividend Payment Date is not a Business Day then the Quarterly Dividend Payment Date shall be on the first immediately succeeding Business Day, commencing on the first Quarterly Dividend Payment Date following the Issue Date; and (iv) payable in cash. Notwithstanding anything contained herein to the contrary, on any day on or after the tenth anniversary of the Issue Date during which a Dividend Payment Default (as defined in Section 8(c)(i)) shall exist, the Dividend Rate shall be 10%. (b) Accrual of Dividends. Dividends payable pursuant to subsection (a) of this Section 3 shall begin to accrue on a daily basis and be cumulative from the Issue Date, whether or not declared by the Board of Directors and whether or not there are profits, surplus or other funds of the Corporation legally available for the payment of dividends, and shall continue to accrue and be cumulative (and compound as provided in (a) above) until paid in full in cash or until the date of conversion or redemption of the Convertible Preferred Stock (such dividends being referred to as the "Convertible Preferred Dividends"). The amount of dividends so payable shall be determined on the basis of twelve 30-day months and a 360-day year. Any dividends declared by the Board of Directors and paid, in each case, after the tenth anniversary of the Issue Date will be applied first against any dividends that have accrued since the tenth anniversary of the Issue Date but that have not been paid and then to dividends that have accrued since the Issue Date but that have not been paid. Subject to the immediately preceding sentence, dividends paid on shares of Convertible Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. (c) Restricted Payments. So long as any shares of Convertible Preferred Stock remain outstanding, the Corporation shall not make any payment on account of, or set apart for payment money for a sinking or other similar fund for, the purchase, redemption or other retirement of, any Junior Securities or other capital stock of the Corporation or any warrants, rights, calls or options exercisable for or convertible into any shares of Junior Securities or other capital stock of the Corporation, or make any distribution in respect thereof, either directly or indirectly, and whether in cash, obligations or shares of Junior Securities or other capital stock of the Corporation or other property, and shall not permit any corporation or other entity directly or indirectly controlled by the Corporation to purchase or redeem any of the Junior Securities or other capital stock of the Corporation or any warrants, rights, calls or options exercisable for or convertible into any Junior Securities or other capital stock of the Corporation unless all dividends that have accrued since the tenth anniversary of the Issue Date on the shares of Convertible Preferred Stock shall have been paid. (d) Dividends on Common Stock. So long as any shares of Convertible Preferred Stock remain outstanding, if the Corporation pays a dividend in cash, securities or other property on shares of Common Stock, then at the same time the Corporation shall declare and pay a dividend on shares of Convertible Preferred Stock (which would be in addition to any dividends payable under Section 3(a) and (b)) in the amount of dividends that would be paid with respect to shares of Convertible Preferred Stock if such shares were converted into shares of Common Stock on the record date for such dividend (or if no record date is established, at the date such dividend is declared). 4. Liquidation Preference. (a) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation (each, a "LIQUIDATION EVENT"), the holders of shares of Convertible Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders an amount (as adjusted for any split, subdivision, combination, consolidation, recapitalization or similar event with respect to the Convertible Preferred Stock) in cash equal to the greater of (i) 100% of the Liquidation Value for each share outstanding, plus an amount equal to all accrued but unpaid dividends thereon, whether or not declared, (such amount, the "CONVERTIBLE PREFERRED AMOUNT") to the date of liquidation, dissolution or winding up as calculated pursuant to Section 3 hereof, or (ii) the amount to which such holder would be entitled to receive in connection therewith had such holder converted such share into shares of Common Stock in accordance with the terms hereof immediately prior to such event (such greater amount of (i) and (ii) being referred to herein as the "LIQUIDATION PREFERENCE"), in either case before any payment shall be made or any assets distributed to the holders of any of the Junior Securities. If the assets of the Corporation are not sufficient to pay in full the liquidation payments payable to the holders of outstanding shares of the Convertible Preferred Stock and any Parity Securities, then the holders of all such shares shall share ratably in such distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which the holders of outstanding shares of Convertible Preferred Stock and the holders of outstanding shares of such Parity Securities are entitled were paid in full. (b) For the purposes of this Section 4, neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Corporation nor the consolidation or merger of the Corporation with any one or more other corporations shall be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the Corporation, unless such voluntary sale, conveyance, exchange or transfer shall be in connection with a plan of liquidation, dissolution or winding up of the Corporation. 5. Redemption. (a) Optional Redemption. Subject to the rights of holders of shares of Convertible Preferred Stock set forth in Section 9 hereof, the Corporation may, at its option, redeem at any time on or after [TENTH ANNIVERSARY OF THE ISSUE DATE], in the manner provided in Section 6 hereof, all but not less than all of the shares of the Convertible Preferred Stock at a redemption price per share equal to the Liquidation Preference, provided, however, that in the event a Change of Control (as defined below) has occurred prior to a redemption pursuant to this Section 5(a), the redemption price per share shall be the greater of (A) the Liquidation Preference and (B) the consideration calculated in accordance with Section 5(b) hereof; provided, further, that the Corporation may redeem the Convertible Preferred Stock pursuant to this Section 5(a) on or after [THIRD ANNIVERSARY OF THE ISSUE DATE] and before [TENTH ANNIVERSARY OF THE ISSUE DATE], if the Current Market Price (as defined below) of the Common Stock has exceeded 200% of the Conversion Price for 30 of the 45 Trading Days preceding the date notice is given by the Corporation pursuant to Section 6 hereof of its intention to redeem all of the shares of Convertible Preferred Stock pursuant to this Section 5(a). Until [FIFTEENTH ANNIVERSARY OF THE ISSUE DATE], the Corporation shall pay the redemption price pursuant to this Section 5(a) in cash. After [FIFTEENTH ANNIVERSARY OF THE ISSUE DATE], the Corporation may elect, in its sole discretion, to pay the redemption price pursuant to this Section 5(a) in cash, Common Stock or a combination thereof. If the Corporation elects to pay all or a portion of the redemption price in Common Stock pursuant to the immediately preceding sentence, the number of shares of Common Stock that the holders of Convertible Preferred Stock shall be entitled to receive will be equal to the quotient of (1) the consideration to be received by the holders of Convertible Preferred Stock as determined pursuant to this Section 5(a) with respect to the shares of Convertible Preferred Stock the Corporation has elected to pay in Common Stock divided by (2) the product of .95 multiplied by the average of the Current Market Price for the 30 Trading Days preceding the date the Corporation mails notice of such redemption pursuant to Section 6(a). (b) Redemption Upon Change in Control. Upon the occurrence of a Change in Control, each holder of Convertible Preferred Stock may elect to cause the Corporation to redeem such holder's Convertible Preferred Stock, in whole or in part, at a redemption price per share in cash equal to the greater of (i) 101% of the Liquidation Value plus accrued and unpaid dividends (whether or not declared) to the date of redemption; provided, however, that if the Change in Control occurs on or before [FIFTH ANNIVERSARY OF THE ISSUE DATE], the redemption price per share will include dividends that would have accrued or been payable in accordance with Section 3 hereof until [FIFTH ANNIVERSARY OF THE ISSUE DATE], had the Convertible Preferred Stock not been redeemed prior thereto or (ii) the amount to which such holder would be entitled to receive in connection therewith had such holder converted such share into shares of Common Stock in accordance with the terms hereof immediately prior to such event. 6. Procedure for Redemption. (a) In the event that the Corporation shall redeem shares of Convertible Preferred Stock pursuant to Section 5(a) hereof, notice of such redemption shall be mailed by first-class mail, postage prepaid, and mailed not less than 30 days nor more than 60 days prior to the redemption date, to the holders of record of the shares to be redeemed at their respective addresses as they shall appear in the records of the Corporation; provided, however, that failure to give such notice or any defect therein or in the mailing thereof shall not affect the validity of the proceeding for the redemption of any shares so to be redeemed except as to the holder to whom the Corporation has failed to give such notice or except as to the holder to whom notice was defective. Each such notice shall state: (i) the redemption date; (ii) the number of shares of Convertible Preferred Stock to be redeemed; (iii) the redemption price per share, including a calculation of such redemption price; (iv) the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date; and (vi) that the holder's right to convert such shares into shares of Common Stock shall terminate on the close of business on the second Business Day preceding such redemption date. (b) If a Change in Control should occur, then, in any one or more of such events the Corporation shall, within 10 days following the occurrence of the Change in Control, give written notice by first-class mail, postage prepaid, to each holder of Convertible Preferred Stock at its address as it appears in the records of the Corporation, which notice shall describe such Change in Control. Such notice shall also set forth: (i) each holder's right to require the Corporation to redeem in whole or in part shares of Convertible Preferred Stock held by such holder as a result of such Change in Control; (ii) the redemption price, including a calculation of such redemption price; (iii) the redemption date (which date shall be no earlier than 30 days from the date the notice in respect of such Change in Control is mailed); (iv) the procedures to be followed by such holder in exercising its right of redemption, including the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (v) that dividends on the shares to be redeemed will cease to accrue on the redemption date and (vi) that the holder's right to convert such shares into shares of Common Stock shall terminate on the close of business on the second Business Day preceding such redemption date. In the event a holder of shares of Convertible Preferred Stock elects to require the Corporation to redeem any or all of such shares of Convertible Preferred Stock, such holder shall deliver, not later than two Business Days prior to the redemption date as set forth in the Corporation's notice described in this Section 6(b), a written notice stating such holder's election and specifying the number of shares to be redeemed pursuant to Section 5(b) hereof. (c) After notice by the Corporation has been mailed as provided in Section 6(a) hereof, or notices of election have been mailed by the holders as provided in Section 6(b) hereof, and provided that on or before the applicable redemption date funds necessary for such redemption shall have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares so called for or entitled to redemption, so as to be and to continue to be available therefor, then, from and after the redemption date (unless the Corporation defaults in the payment of the redemption price, in which case such rights shall continue until the redemption price is paid), dividends on the shares of Convertible Preferred Stock so called for or entitled to redemption shall cease to accrue, and said shares shall no longer be deemed to be outstanding and shall not have the status of shares of Convertible Preferred Stock, and all rights of the holders thereof as stockholders of the Corporation (except the right to receive the applicable redemption price and any accrued and unpaid dividends from the Corporation to the date of redemption calculated pursuant to Section 3 hereof and the right to convert such shares into shares of Common Stock, which shall continue until the close of business on the second Business Day preceding the date of redemption in accordance with Section 9 hereof) shall cease. Upon surrender of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Board of Directors of the Corporation shall so require and a notice by the Corporation shall so state), such shares shall be redeemed by the Corporation at the applicable redemption price as aforesaid. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate or certificates representing the unredeemed shares shall be issued to such holder within 5 days of the redemption date. 7. Reacquired Shares. Shares of Convertible Preferred Stock that have been issued and reacquired in any manner, including without limitation shares reacquired by purchase, redemption or conversion pursuant to Section 9 hereof, shall (upon compliance with any applicable provisions of the laws of the State of Delaware) have the status of authorized and unissued shares of the class of Preferred Stock undesignated as to series and may be redesignated and reissued as part of any series of Preferred Stock other than Convertible Preferred Stock. 8. Voting Rights. In addition to any voting rights provided by applicable law, the holders of Convertible Preferred Stock shall have the following voting rights: (a) General. Subject to Section 8(b) hereof, each share of Convertible Preferred Stock shall entitle the holder thereof to vote on all matters submitted to a vote of the stockholders of the Corporation, voting together as a single class with the holders of Common Stock. At any time, each share of Convertible Preferred Stock shall be entitled to a number of votes which is equal to the number of shares of Common Stock that could be obtained upon conversion of one share of Convertible Preferred Stock at the then applicable Conversion Price (as such amount may be adjusted pursuant to Section 9(f) hereof). (b) Voting Rights for Directors. --------------------------- (i) Subject to Section 8(b)(viii), in addition to any other rights to elect directors which the holders of Convertible Preferred Stock may have, from and after the Issue Date, the holders of all outstanding shares of Convertible Preferred Stock, voting separately as a class and to the exclusion of the holders of all other classes of stock of the Corporation, shall be entitled to elect a total of two individuals to serve as members of the Board of Directors. Such directors shall be divided into classes if and to the same extent as the directors to be elected generally by the stockholders of the Corporation. (ii) The right to elect directors as described in Section 8(b)(i) hereof may be exercised either at a special meeting of the holders of Convertible Preferred Stock, called as hereinafter provided in Section 8(b)(iii) hereof, at any annual meeting of stockholders held for the purpose of electing directors, or by the written consent of the holders of Convertible Preferred Stock without a meeting pursuant to Section 228 of the DGCL and thereafter at such annual meeting or by written consent. (iii) The Secretary of the Corporation may, and upon the written request of the holders of record of at least 10% of the outstanding shares of Convertible Preferred Stock (addressed to the Secretary of the Corporation at the principal office of the Corporation) shall, call a special meeting of the holders of Convertible Preferred Stock for the election of the directors to be elected by them as herein provided. Such call shall be made by notice to the holders of record by first-class mail, postage prepaid at their respective addresses as they shall appear in the records of the Corporation, and such notice shall be mailed at least 10 days but no more than 20 days before the date of the special meeting, or as required by law. Such meeting shall be held at the earliest practicable date upon the notice required for special meetings of stockholders at the place designated by the Secretary of the Corporation. If such meeting shall not be called by a proper officer of the Corporation within 15 days after receipt of such written request by the Secretary of the Corporation, then the holders of record of at least 10% of the shares of Convertible Preferred Stock then outstanding may call such meeting at the expense of the Corporation, and such meeting may be called by such holders upon the notice required for special meetings of stockholders and shall be held at the place designated in such notice. Any holder of Convertible Preferred Stock that would be entitled to vote at any such meeting shall have access to the stock record books of the Corporation for the purpose of causing a meeting of holders of Convertible Preferred Stock to be called pursuant to the provisions of this Section 8(b)(iii). (iv) At any meeting held for the purpose of electing directors at which the holders of Convertible Preferred Stock shall have the right to elect directors as provided in this Section 8(b), the presence in person or by proxy of the holders of a majority of the then outstanding shares of Convertible Preferred Stock shall be required and be sufficient to constitute a quorum of such class for the election of directors by such class. At any such meeting or adjournment thereof, (x) the absence of a quorum of the holders of Convertible Preferred Stock shall not prevent the election of directors other than the directors to be elected by the holders of Convertible Preferred Stock, and the absence of a quorum or quorums of the holders of capital stock entitled to elect such other directors shall not prevent the election of the directors to be elected by the holders of Convertible Preferred Stock, and (y) in the absence of a quorum of the holders of Convertible Preferred Stock, a majority of the holders of Convertible Preferred Stock present in person or by proxy shall have the power to adjourn the meeting for the election of directors which such holders are entitled to elect, from time to time, without notice (except as required by law) other than announcement at the meeting, until a quorum shall be present. (v) Except as provided in Section 8(b)(viii) hereof, the term of office of any director elected by the holders of Convertible Preferred Stock pursuant to Section 8(b)(i) hereof in office at any time shall terminate upon the election of his or her successor at the annual meeting of stockholders held for the purpose of electing directors to the class of directors to which such director belongs. (vi) In case of a vacancy occurring in the office of any director so elected pursuant to Section 8(b)(i) hereof, the holders of a majority of the Convertible Preferred Stock then outstanding may, at a special meeting of the holders or by written consent as provided above, elect a successor to hold office for the unexpired term of such director. (vii) At any annual or special meeting held for the purpose of allowing the holders of the Convertible Preferred Stock to take any action pursuant to this Certificate of Designations, the Stock Purchase Agreement or the Registration Rights Agreement and where a majority of the then outstanding shares of Convertible Preferred Stock are present in person or by proxy, the affirmative vote of the holders present in person or by proxy at such meeting shall be sufficient for such action to have received the approval of the holders of the Convertible Preferred Stock. (viii) Notwithstanding the foregoing: (x) at such time, if any, as the outstanding shares of Convertible Preferred Stock then Beneficially Owned by the Initial Purchasers, their respective Affiliates or any Designated Transferees constitutes less than 50% of the number of shares of Common Stock Beneficially Owned by them immediately after the Issue Date (as such number may be adjusted for stock dividends, stock splits, combinations and recapitalizations and other similar events), the number of directors the holders of Convertible Preferred Stock are then entitled to designate and elect under this Section 8(b) shall be reduced by one; and (y) at such time as the outstanding shares of Convertible Preferred Stock then Beneficially Owned by the Initial Purchasers, their respective Affiliates or any Designated Transferees constitutes less than 15% of the number of shares of Common Stock Beneficially Owned by them immediately after the Issue Date (as such number may be adjusted for stock dividends, stock splits, combinations and recapitalizations and other similar events), the holders of Convertible Preferred Stock shall not be entitled to designate or elect any directors under this Section 8(b). (c) Additional Directors. -------------------- (i) Subject to Section 8(c)(viii), in the event that (i) dividends payable on any Quarterly Dividend Payment Date after the tenth anniversary of the Issue Date are not paid and are in arrears on such Quarterly Dividend Payment Date (each occurrence a "Dividend Payment Default") or (ii) if the Corporation shall have failed to discharge any obligation pursuant to a request for redemption pursuant to Section 5(b) (the "Redemption Obligation") (each of the foregoing a "Triggering Event"), then the number of directors constituting the Board of Directors of the Corporation, without further action, shall be increased by one person and the holders of the Convertible Preferred Stock shall have the exclusive right, voting separately as a class, to nominate and elect such director (the "New Director") of the Corporation to fill such newly created directorship at each meeting of stockholders held for the purpose of electing directors to the class of directors to which such director belongs. (ii) Whenever such voting right shall have vested, such right may be exercised at a special meeting of the holders of the Convertible Preferred Stock called as hereinafter provided, at any annual meeting of stockholders held for the purpose of electing directors or by the written consent of the holders of Convertible Preferred Stock pursuant to Section 228 of the Delaware General Corporation Law. Such voting right shall continue until such time as all cumulative dividends accumulated on the Convertible Preferred Stock since the tenth anniversary of the Issue Date shall have been paid in full or the Corporation shall have fulfilled its Redemption Obligation in full, as the case may be, at which time such voting right of the holders of Convertible Preferred Stock shall terminate, but such voting right shall again vest in the event of each and every subsequent failure of the Corporation to pay dividends for the requisite number of periods or to discharge any Redemption Obligation as described above. (iii) At any time when such voting right shall have vested in the holders of Convertible Preferred Stock and if such right shall not already have been initially exercised, a proper officer of the Corporation shall, upon the written request of any holder of record of Convertible Preferred Stock then outstanding, call a special meeting of holders of Convertible Preferred Stock. Such meeting shall be held at the earliest practicable date upon the notice required for annual meetings of stockholders. If such meeting shall not be called within 20 days after such written request, then the holders of record of 10% of the shares of Convertible Preferred Stock then outstanding may designate in writing a holder of Convertible Preferred Stock to call such meeting at the expense of the Corporation, and such meeting may be called by such person so designated upon the notice required for annual meetings of stockholders. Any holder of Convertible Preferred Stock which would be entitled to vote at such meeting shall have access to the stock books of the Corporation for the purpose of causing a meeting of stockholders to be called pursuant to the provisions of this paragraph. Notwithstanding the provisions of this paragraph, however, no such special meeting shall be called during a period within 60 days immediately preceding the date fixed for the next annual meeting of stockholders. (iv) At any meeting at which the holders of Convertible Preferred Stock shall have the right to elect a New Director as provided herein, the presence in person or by proxy of the holders of at least a majority of the then outstanding shares of Convertible Preferred Stock shall be required and be sufficient to constitute a quorum. At any such meeting or adjournment thereof, the absence of a quorum of the holders of Convertible Preferred Stock shall not prevent the election of directors other than the New Director and the absence of a quorum or quorums of the holders of capital stock entitled to elect such other directors shall not prevent the election of any New Director. (v) For so long as the aforesaid voting rights are vested in the holders of Convertible Preferred Stock, the term of office of the New Director shall terminate upon the election of his successor by the holders of Convertible Preferred Stock. Upon any termination of the aforesaid voting rights in accordance with Section 8(c)(ii) or Section 8(c)(viii), the term of office of any New Director shall thereupon terminate and upon such termination the number of directors constituting the Board of Directors shall, without further action, be reduced by one. (vi) In the case of any vacancy occurring with respect to the New Director, the New Director who shall have been so elected may appoint a successor to hold office until his successor is elected at an annual or a special meeting of the stockholders. If the New Director shall cease to serve as a director before his term shall expire, the holders of Convertible Preferred Stock then outstanding may elect a successor (at any meeting of stockholders held for the purpose of electing directors or by the written consent of the holders of Convertible Preferred Stock pursuant to Section 228 of the Delaware General Corporation Law) to hold office until his successor is elected at an annual or a special meeting of the stockholders. The New Director may be removed, either for or without cause, by the holders of a majority of the Convertible Preferred Stock and any resulting vacancy may be filled as provided for in this subsection (vi). (vii) So long as any shares of Convertible Preferred Stock are outstanding, the Corporation shall take such action as may be necessary so that its By-laws shall contain provisions ensuring that the number of directors of the Corporation shall at all times be such that the exercise, by the holders of the Convertible Preferred Stock, of the right to elect a New Director will not contravene any provisions of the Certificate of Incorporation or By-laws. (viii) Notwithstanding the foregoing, at such time, if any, as the outstanding shares of Convertible Preferred Stock then Beneficially Owned by the Initial Purchasers, their respective Affiliates or any Designated Transferees constitutes less than 50% of the number of shares of Common Stock Beneficially Owned by them immediately after the Issue Date (as such number may be adjusted for stock dividends, stock splits, combinations and recapitalizations and other similar events), the holders of Convertible Preferred Stock shall not be entitled to designate or elect any directors under this Section 8(c). 9. Conversion. (a) Any share of Convertible Preferred Stock shall be convertible at the option of the holder thereof into fully paid and nonassessable shares of Common Stock on the terms and conditions set forth in this Section 9, at any time upon surrender to the Corporation of the certificates for the shares to be converted, into a number of fully paid and nonassessable shares of Common Stock equal to the Convertible Preferred Amount per share as of the date of conversion divided by the Conversion Price. (b) Conversion of the Convertible Preferred Stock as permitted by Section 9(a) hereof may be effected by any holder thereof upon the surrender to the Corporation, at its principal office or at such other office or agency maintained by the Corporation for that purpose, of the certificate for the Convertible Preferred Stock to be converted accompanied by a written notice stating that such holder elects to convert all or a specified whole number of such shares in accordance with the provisions of this Section 9 and specifying the name or names in which such holder wishes the certificate or certificates for shares of Common Stock to be issued. In case such notice shall specify a name or names other than that of such holder, such notice shall be accompanied by payment of all transfer taxes payable upon the issuance of shares of Common Stock in such name or names. Other than such taxes, the Corporation will pay any and all issue and other taxes (other than taxes based on income) that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of Convertible Preferred Stock pursuant hereto. As promptly as practicable, and in any event within 5 Business Days after the surrender of such certificate or certificates and the receipt of such notice relating thereto and, if applicable, payment of all transfer taxes (or the demonstration to the reasonable satisfaction of the Corporation that such taxes have been paid), the Corporation shall deliver or cause to be delivered (i) certificates representing the number of validly issued, fully paid and nonassessable shares of Common Stock to which the holder of shares of Convertible Preferred Stock being converted shall be entitled, (ii) if less than the full number of shares of Convertible Preferred Stock evidenced by the surrendered certificate or certificates is being converted, a new certificate or certificates, of like tenor, for the number of shares and evidenced by such surrendered certificate or certificates less the number of shares being converted, and (iii) payment of all amounts to which a holder is entitled pursuant to Section 9(e) hereof. Such conversion shall be deemed to have been made at the close of business on the date of giving of such notice and of such surrender of the certificate or certificates representing the shares of Convertible Preferred Stock to be converted so that the rights of the holder thereof as to the shares being converted shall cease except for the right to receive shares of Common Stock in accordance herewith, and the Person entitled to receive the shares of Common Stock shall be treated for all purposes as having become the record holder of such shares of Common Stock at such time. (c) In case any shares of Convertible Preferred Stock are to be redeemed pursuant to Section 5 hereof, such right of conversion shall cease and terminate as to such shares at the close of business on the second Business Day preceding the date fixed for redemption or exchange, unless the Corporation shall default in the payment of the applicable redemption price, in which case such right of conversion shall not cease as to any share of Convertible Preferred Stock unless and until the redemption price with respect to such share has been paid in full. (d) The Corporation shall at all times reserve and keep available, free from liens, charges and security interests and not subject to any preemptive rights, for issuance upon conversion of the Convertible Preferred Stock such number of its authorized but unissued shares of Common Stock as will from time to time be sufficient to permit the conversion of all outstanding shares of Convertible Preferred Stock, and shall take all action required to increase the authorized number of shares of Common Stock if necessary to permit the conversion of all outstanding shares of Convertible Preferred Stock. (e) No fractional shares or scrip representing fractional shares of Common Stock shall be issued upon the conversion of any shares of Convertible Preferred Stock. Instead of any fractional interest in a share of Common Stock which would otherwise be deliverable upon the conversion of a share of Convertible Preferred Stock, the Corporation shall pay to the holder of such share an amount in cash equal to such fractional interest multiplied by the Current Market Price of the Common Stock on the day of conversion. If more than one share or right shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate Convertible Preferred Amount so surrendered. (f) The Conversion Price shall be subject to adjustment as follows: (i) In case the Corporation shall at any time or from time to time after the Issue Date (A) pay a dividend or make a distribution in shares of Common Stock or securities convertible into Common Stock, (B) subdivide or reclassify the outstanding shares of Common Stock into a greater number of shares of Common Stock, (C) combine or reclassify the outstanding shares of Common Stock into a smaller number of shares, or (D) otherwise issue by reclassification of the shares of Common Stock any shares of capital stock of the Corporation, then, and in each such case, the Conversion Price shall be adjusted so that the holder of any shares of Convertible Preferred Stock and thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other securities of the Corporation which such holder would have owned or have been entitled to receive after the happening of any of the events described above had such shares of Convertible Preferred Stock been surrendered for conversion immediately prior to the happening of such event or the record date therefor, whichever is earlier. An adjustment made pursuant to this Section 9(f)(i) shall become applicable (x) in the case of any such dividend or distribution, immediately after the close of business on the record date for the determination of holders of shares of Common Stock entitled to receive such dividend or distribution and (y) in the case of any such subdivision, reclassification or combination, at the close of business on the day upon which such corporate action becomes effective. Such adjustment shall be made successively. (ii) In case the Corporation shall at any time or from time to time after the Issue Date declare, order, pay or make a dividend or other distribution (including without limitation any distribution of stock or other securities, evidences of indebtedness, property or assets or rights or warrants to subscribe for securities of the Corporation or any of its Subsidiaries) on its Common Stock (other than (A) regular quarterly dividends payable in cash or (B) dividends or distributions of shares of Common Stock referred to in Section 9(f)(i) hereof) (any one of the foregoing other than the items specified in clause (A) or (B) referred to as "SECURITIES OR ASSETS"), then and in each such case, unless the Corporation elects to reserve shares or other units of such Securities or Assets for distribution to the holders of the Convertible Preferred Stock upon the conversion of the shares of Convertible Preferred Stock so that any such holder converting shares of Convertible Preferred Stock will receive upon such conversion, in addition to the shares of the Common Stock to which such holder is entitled, the amount and kind of such Securities or Assets which such holder would have received if such holder had, immediately prior to the record date for the distribution of the Securities or Assets, converted its shares of Convertible Preferred Stock into Common Stock, the Conversion Price shall be adjusted so that such Conversion Price shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the date of such distribution by a fraction of which the numerator shall be the Current Market Price of the Common Stock on such record date less the then fair market value (as determined by the Board in good faith) of the portion of the capital stock or assets or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock, and of which the denominator shall be the Current Market Price of the Common Stock on such record date; provided, however, that if the then fair market value (as so determined) of the portion of the Securities or Assets so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock on the record date mentioned above, in lieu of the foregoing adjustment, adequate provision shall be made so that each holder of shares of the Convertible Preferred Stock shall have the right to receive the amount and kind of Securities or Assets which such holder would have received had such holder converted each such share of the Convertible Preferred Stock immediately prior to the record date for the distribution of the Securities or Assets. Such adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution. (iii) In case the Corporation shall issue or sell any Common Stock (or rights, options, warrants or other securities convertible into or exercisable or exchangeable for shares of Common Stock) (collectively, "Additional Shares") at any time from and after the Issue Date until [THIRD ANNIVERSARY OF THE ISSUE DATE] without consideration or for a consideration per share (or having a conversion, exchange or exercise price per share) (such per share amount, the "Sale Price") less than the greater of (A) the Current Market Price per share of Common Stock on the date preceding the earlier of the issuance or public announcement of the issuance of such Additional Shares of Common Stock and (B) the Conversion Price as of the date of such issuance of such shares (or, in the case of convertible or exchangeable or exercisable securities, less than the greater of the Current Market Price or the Conversion Price, as the case may be, as of the date of issuance of the rights, options, warrants or other securities in respect of which shares of Common Stock were issued) then, and in each such case, the Conversion Price shall be reduced to an amount determined by multiplying (A) the Conversion Price in effect on the day immediately prior to such date by (B) a fraction, the numerator of which shall be the sum of (1) the number of shares of Common Stock outstanding immediately prior to such sale or issuance multiplied by the greater of (a) the then applicable Conversion Price per share and (b) the Current Market Price per share of Common Stock on the date preceding the earlier of the issuance or public announcement of the issuance of such Additional Shares of Common Stock (the greater of (a) and (b) above hereinafter referred to as the "Adjustment Price") and (2) the aggregate consideration receivable by the Corporation for the total number of shares of Common Stock so issued (or into or for which the rights, options, warrants or other securities are convertible, exercisable or exchangeable), and the denominator of which shall equal to the product of (I) the sum of (x) the total number of shares of Common Stock outstanding immediately prior to such sale or issue and (y) the number of additional shares of Common Stock issued (or into or for which the rights, options, warrants or other securities may be converted, exercised or exchanged), multiplied by (II) the Adjustment Price. In case any portion of the consideration to be received by the Corporation shall be in a form other than cash, the fair market value of such noncash consideration shall be utilized in the foregoing computation. Such fair market value shall be determined in good faith by the Board of Directors. An adjustment made pursuant to this subsection (iii) shall be made on the next Business Day following the date on which any such issuance is made and shall be effective retroactively to the close of business on the date of such issuance. For purposes of this subsection (iii), the aggregate consideration receivable by the Corporation in connection with the issuance of shares of Common Stock or of rights, warrants or other securities convertible into shares of Common Stock shall be deemed to be equal to the sum of the aggregate offering price (before deduction of underwriting discounts or commissions and expenses payable to third parties) of all such Common Stock, rights, warrants and convertible securities plus the aggregate amount (as determined on the date of issuance), if any, payable upon exercise or conversion of any such rights, warrants and convertible securities into shares of Common Stock. If, subsequent to the date of issuance of such right, warrants or other convertible securities, the exercise or conversion price thereof is reduced, such aggregate amount shall be recalculated and the Conversion Price shall be adjusted retroactively to give effect to such reduction. On the expiration of any option or the termination of any right to convert or exchange any securities into Additional Shares, the Conversion Price then in effect hereunder shall forthwith be increased to the Conversion Price which would have been in effect at the time of such expiration or termination (but taking into account other adjustments or potential made following the time of issuance of such options or securities) had such option or security, to the extent outstanding immediately prior to such expiration or termination, never been issued. If Common Stock is sold as a unit with other securities, the aggregate consideration received for such Common Stock shall be deemed to be net of the fair market value (as determined by the Board of Directors in good faith) of such other securities. The issuance or reissuance of (A) any shares of Common Stock or rights, warrants or other securities convertible into shares of Common Stock (whether treasury shares or newly issued shares) (1) pursuant to a dividend or distribution on, or subdivision, combination or reclassification of, the outstanding shares of Common Stock requiring an adjustment in the Conversion Price pursuant to subsection (i) of this Section 9(f); (2) pursuant to any restricted stock or stock option plan or program of the Corporation involving the grant of options or rights to acquire shares of Common Stock after the date hereof to directors, officers and employees of the Corporation and its Subsidiaries; (3) pursuant to any option, warrant, right, or convertible security outstanding as of the Issue Date; (4) pursuant to any securities issued to a bank or other similar financial institution solely in connection with the Senior Credit Facility or the Senior Subordinated Credit Facility or (5) pursuant to an underwritten offering registered with the SEC if the offering price is greater than the Conversion Price then in effect; (B) the Series B-1 Convertible Preferred Stock and any shares of Common Stock issuable upon conversion or exercise thereof, or (C) the Warrants and any shares of Common Stock issuable upon exercise thereof, shall not be deemed to constitute an issuance of Common Stock or convertible securities by the Corporation to which this subsection (iii) applies. No adjustment shall be made pursuant to this subsection (iii) in connection with any transaction to which Section 9(g) applies. (iv) For purposes of this Section 9(f), the number of shares of Common Stock at any time outstanding shall not include any shares of Common Stock then owned or held by or for the account of the Corporation. (v) All calculations of the Conversion Price pursuant to this Section 9(f) shall be made to the nearest one one-hundredth of a cent. Anything in this Section 9(f) to the contrary notwithstanding, (A) the Corporation shall not be required to give effect to any adjustment in the Conversion Price unless and until the net effect of one or more adjustments (each of which shall be carried forward), determined as above provided, shall have resulted in a reduction of the Conversion Price of at least 1%, and when the cumulative net effect of more than one adjustment so determined shall be to reduce the Conversion Price by at least 1%, such reduction in Conversion Price shall thereupon be given effect and (B) in no event shall the then current Conversion Price be increased as a result of any calculation made at any time pursuant to this Section 9(f). (g) (i) In case of any capital reorganization or reclassification of outstanding shares of Common Stock (other than a reclassification to which Section 9(f)(i) hereof shall apply), or in case of any merger or consolidation of the Corporation with or into another Person (as defined below), or in case of any sale or conveyance to another Person of all or substantially all of the assets of the Corporation or any compulsory share exchange pursuant to which share exchange the shares of Common Stock are converted into other securities, cash or other property (each of the foregoing being referred to as a "TRANSACTION"), each share of Convertible Preferred Stock then outstanding shall thereafter be convertible into, in lieu of the Common Stock issuable upon such conversion prior to consummation of such Transaction, the kind and amount of shares of stock and other securities and property receivable (including cash) upon the consummation of such Transaction by a holder of that number of shares of Common Stock into which one share of Convertible Preferred Stock was convertible immediately prior to such Transaction (including, on a pro rata basis, the cash, securities or property received by holders of Common Stock in any tender or exchange offer that is a step in such Transaction). (ii) Notwithstanding anything contained herein to the contrary, the Corporation will not effect any Transaction unless, prior to the consummation thereof, (A) the Surviving Person (as defined below) shall agree that the shares of Convertible Preferred Stock shall be treated as provided in paragraph (i) of this Section 9(g) and the agreements governing such Transaction shall so provide, (B) the Surviving Person thereof shall assume, by written instrument mailed, by first-class mail, postage prepaid, to each holder of shares of Convertible Preferred Stock at such holder's address as it appears in the records of the Corporation, the obligation to deliver to such holder such cash or other securities to which, in accordance with the foregoing provisions, such holder is entitled and such Surviving Person shall have mailed, by first-class mail, postage prepaid, to each holder of shares of Convertible Preferred Stock at such holder's address as it appears in the records of the Corporation, an opinion of independent counsel for such Person stating that such assumption agreement is a valid, binding and enforceable agreement of the Surviving Person, and (C) proper provision is made to ensure that the holders of shares of Convertible Preferred Stock will be entitled to receive the benefits afforded by Section 5(b) hereof. (h) In any case, if necessary, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions set forth in this Section 9 with respect to rights and interests thereafter of the holders of shares of Convertible Preferred Stock to the end that the provisions set forth herein for the protection of the conversion rights of Convertible Preferred Stock shall thereafter be applicable, as nearly as reasonably may be, to any such other shares of stock and other securities (other than the Common Stock) and property deliverable upon conversion of the shares of Convertible Preferred Stock remaining outstanding with such adjustments in the Conversion Price and such other adjustments in the provisions hereof as the Board of Directors shall in good faith determine to be appropriate. In case securities or property other than Common Stock shall be issuable or deliverable upon conversion as aforesaid, then all references in this Section 9 shall be deemed to apply, so far as appropriate and as nearly as may be, to such other securities or property. (i) If the Corporation shall pay any dividend or make any other distribution to the holders of its Common Stock (other than regular quarterly dividends payable in cash) or shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or any other right, or there shall be any Transaction, or there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Corporation, then, in any one or more of said cases the Corporation shall give at least 15 days prior written notice to the holders of record of Convertible Preferred Stock by first-class mail, postage prepaid, at their respective addresses as they shall appear in the records of the Corporation of the earlier of the dates on which (i) the books of the Corporation shall close or a record shall be taken for such stock dividend, distribution or subscription rights or (ii) such Transaction, dissolution, liquidation or winding up shall take place. Such notice shall also specify the date as of which the holders of the Common Stock of record shall participate in said dividend, distribution or subscription rights or shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale or conveyance or participate in such dissolution, liquidation or winding up, as the case may be. Failure to give such notice shall not invalidate any action so taken. 10. Reports as to Adjustments. Upon the occurrence of any event specified in Section 9(f) hereof that would result in any adjustment of the Conversion Price, then, and in each such case, the Corporation shall promptly deliver to the holders of record by first-class mail, postage prepaid, at their respective addresses as they shall appear in the records of the Corporation, a certificate signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation setting forth in reasonable detail the event requiring the adjustment and the method by which such adjustment was calculated and specifying the Conversion Price then in effect following such adjustment. Where appropriate, such notice to the holders of Convertible Preferred Stock may be given in advance and included as part of the notice required pursuant to Section 9(i) hereof. 11. Purchase Rights. If the Corporation issues any shares of Common Stock, options, convertible securities, other equity securities or securities containing options or rights to acquire any equity securities or any securities convertible or exchangeable for equity securities, in each case after the date hereof (other than a Permitted Issuance) to any Person (the "OFFEREE"), such issuance (the "OFFER") will be subject to the right of first offer and participation rights set forth in Section 11(a) and Section 11(b) below. (a) Preferred Stock Issuances. If the securities to be issued in the Offer include any class or series of preferred stock of the Corporation whether by liquidation, dividend or voting rights, the Corporation shall offer such securities (the "PREFERRED OFFERED SECURITIES") to the holders of Convertible Preferred Stock by delivery of written notice to such holders not less than 30 days prior to the date of the proposed issuance. Such notice shall disclose in reasonable detail the proposed terms (including price terms) and conditions of the Offer (the "PREFERRED OFFER NOTICE"). Each holder of Convertible Preferred Stock shall have the right to purchase its ratable portion of the Preferred Offered Securities (determined by dividing the number of shares of Convertible Preferred Stock held by such holder by the total number of shares of Convertible Preferred Stock then outstanding) on the terms as set forth in the Preferred Offer Notice, by delivery of written notice to the Corporation of such election within 15 days after delivery of the Preferred Issuance Notice (the "PREFERRED ELECTION NOTICE"). If any holder of Convertible Preferred Stock has elected to purchase any Preferred Offered Securities, the sale of such securities shall be consummated simultaneously with the consummation of the sale to the Offeree. If the holders of Convertible Preferred Stock elect to purchase less than all of the Preferred Offered Securities as described above, the Corporation may issue such remaining Preferred Offered Securities to the Offeree at the same price and on the same terms as set forth in the Preferred Issuance Notice during the 45-day period beginning from the date on which the Preferred Election Notice has been delivered to the Corporation. Any Preferred Offered Securities not issued within such 45-day period will be subject to this Section 11(a) upon subsequent proposed issuance. (b) Other Issuances. If the securities to be issued pursuant to the Offer do not include any class or series of preferred stock of the Corporation whether by liquidation, dividend or voting rights, the Corporation shall offer to sell to each holder of Convertible Preferred Stock a number of such securities (the "OFFERED SECURITIES") so that such holder's Ownership Ratio immediately after the issuance of such securities would be equal to such holder's Ownership Ratio immediately prior to such issuance of securities. The Corporation shall give each holder of Convertible Preferred Stock at least 30 days prior written notice of any proposed issuance, which notice shall disclose in reasonable detail the proposed terms and conditions of such issuance (the "ISSUANCE NOTICE"). Each holder of Convertible Preferred Stock shall be entitled to purchase its ratable portion of the Offered Securities at the same price, on the same terms, and at the same time as the securities are issued to the Offeree by delivery of written notice to the Corporation of such election within 15 days after delivery of the Issuance Notice (the "ELECTION NOTICE"); provided, that if more than one type of security is proposed to be issued, such holder shall, if it exercises its rights pursuant to this Section 11(b), purchase such securities in the same ratio to be issued to the Offeree. If any holder of Convertible Preferred Stock has elected to purchase any Offered Securities, the sale of such securities shall be consummated simultaneously with the consummation of the sale to the Offeree. If the holders of Convertible Preferred Stock elect to purchase less than all of the Offered Securities as described above, the Corporation may issue such remaining Offered Securities to the Offeree at the same price and on the same terms as set forth in the Issuance Notice during the 45-day period beginning from the date on which the Election Notice has been delivered to the Corporation. Any Offered Securities not issued within such 45-day period must be reoffered to the holders of Convertible Preferred Stock in accordance with this Section 11(b) prior to issuance. (c) The election by any holder of Convertible Preferred Stock not to exercise purchase rights under this Section 11 in any one instance shall not affect such holders rights as to any subsequent proposed issuance. Any sale of such securities by the Corporation without first giving such holders the rights described in this Section 11 shall be void and of no force and effect, and the Corporation shall not register such sale or issuance on the books and records of the Corporation. 12. Certain Covenants. Any holder of Convertible Preferred Stock may proceed to protect and enforce its rights and the rights of such holders by any available remedy by proceeding at law or in equity to protect and enforce any such rights, whether for the specific enforcement of any provision in this Certificate of Designations or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. 13. Definitions. For the purposes of this Certificate of Designations, the following terms shall have the meanings indicated: "AFFILIATE" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act or any successor provision. The terms "affiliated" and "non-affiliated" shall have meanings correlative to the foregoing. "BENEFICIALLY OWN" has the meaning set forth in Rules 13d-3 and 13d-5 promulgated under the Exchange Act. "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "CHANGE IN CONTROL" shall mean (i) any sale, transfer, conveyance or other disposition (other than by way of merger or consolidation) of all or substantially all of the Corporation's assets, on a consolidated basis, in one transaction or a series of related transactions, to any Person (including any group that is deemed to be a Person); (ii) the consummation of any transaction involving the Corporation, including, without limitation, any merger or consolidation, whereby any Person (including any group that is deemed to be a Person ) is or becomes the "beneficial owner," directly or indirectly, of more than 40% of the aggregate voting equity securities of the Corporation or the surviving entity or entities of such transaction if other than the Corporation; (iii) the Continuing Directors cease for any reason to constitute a majority of the members of the Board of Directors then in office; (iv) the approval by the Corporation's stockholders of a merger or consolidation of the Corporation with any other company and all other required governmental approvals have been obtained, other than a merger or consolidation which would result in the Voting Securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the Voting Securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation; or (v) the Corporation adopts a plan of liquidation. "COMMON STOCK" shall mean the common stock, par value $1 per share, of the Corporation, including any associated Right, as defined in and issued pursuant to the Rights Agreement, dated as of October 27, 1998, as amended, by and between the Corporation and The Bank of New York (as successor to First Chicago Trust Company of New York), as Rights Agent. "CONTINUING DIRECTORS" shall mean during any period of 12 consecutive months, individuals who at the beginning of any such 12-month period constituted the Board of Directors (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Corporation was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved, including new directors designated in or provided for in an agreement regarding the merger, consolidation or sale, transfer or other conveyance, of all or substantially all of the assets of the Corporation, if such agreement was approved by a vote of such majority of directors). "CONVERSION PRICE" shall mean, [$24.05 MINUS AN AMOUNT EQUAL TO THE PRODUCT OF $0.01 MULTIPLIED BY THE AMOUNT (IF POSITIVE) BY WHICH THE WEIGHTED AVERAGE COST OF FUNDS (EXPRESSED IN BASIS POINTS) EXCEEDS 850 BASIS POINTS], and shall be subject to adjustment as provided for in Section 9(f). "CURRENT MARKET PRICE," when used with reference to shares of Common Stock or other securities on any date, shall mean the closing price per share of Common Stock or such other securities on such date and, when used with reference to shares of Common Stock or other securities for any period, shall mean the average of the daily closing prices per share of Common Stock or such other securities for such period. For the avoidance of doubt, "CURRENT MARKET PRICE" as used in Section 5(a) hereof shall mean the closing price per share of Common Stock on each of the 30 Trading Days preceding the date notice is given by the Corporation pursuant to Section 6 hereof of its notice of intention to redeem all of the shares of Convertible Preferred Stock pursuant to Section 5(a). The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Common Stock or such other securities are not listed or admitted to trading on the New York Stock Exchange, as reported, in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Common Stock or such other securities are listed or admitted to trading or, if the Common Stock or such other securities are not listed or admitted to trading on any national securities exchange, the last quoted sale price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or such other system then in use, or, if on any such date the Common Stock or such other securities are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock or such other securities selected by the Board of Directors of the Corporation. If the Common Stock or such other securities are not publicly held or so listed or publicly traded, "CURRENT MARKET PRICE" shall mean the fair market value per share of Common Stock or of such other securities as determined by an independent investment banking firm with an established national reputation as a valuer of equity securities selected by the Corporation and reasonably acceptable to the holders of a majority of the shares of Convertible Preferred Stock outstanding at the time. "DESIGNATED TRANSFEREE" shall mean any Person to whom the Initial Purchasers or any Designated Transferee shall have sold or otherwise transferred at least 10,000 shares of Convertible Preferred Stock (as such number may be adjusted from time to time for any stock split, stock dividend, reverse split, combination, recapitalization, merger, or otherwise); provided, however, that no Person primarily engaged in the business of publishing, printing or marketing yellow page directories (the "DIRECTORIES BUSINESS") and no Person which owns more than 40% of the outstanding voting equity securities of any Person primarily engaged in the Directories Business shall be a Designated Transferee unless the Corporation gives its written consent to such Person being a Designated Transferee. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934. "INITIAL PURCHASERS" shall mean GS Capital Partners 2000, L.P., a Delaware limited partnership; GS Capital Partners 2000 Offshore, L.P., a Cayman Islands exempted limited partnership; GS Capital Partners 2000 Employee Fund 2000, L.P., a Delaware limited partnership; GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, a German limited partnership; and Goldman Sachs Direct Investment Fund 2000, L.P. a Delaware limited partnership. "INTEREST RATE DETERMINATION DATE" shall mean the earlier of (x) the date of issuance of the Senior Subordinated Notes or (y) [THE DATE THAT IS 6 MONTHS AFTER THE CLOSING DATE OF THE PURCHASE AGREEMENT]. "ISSUE DATE" shall mean ___________, 2003. "JUNIOR SECURITIES" shall have the meaning set forth in Section 2 hereof. "OWNERSHIP RATIO"shall mean, as to any Person at any time of determination, the percentage obtained by dividing the amount of shares of Common Stock held by such Person on a fully diluted, as-if-converted basis at such time by the aggregate amount of shares of Common Stock outstanding on a fully diluted, as-if-converted basis at such time. For purposes of this definition, "fully diluted" shall exclude shares of Common Stock issuable pursuant to out-of-the-money options, warrants or other rights and options, warrants or other rights which are not exercisable by the holder thereof on the date of determination. "PARITY SECURITIES" shall have the meaning set forth in Section 2 hereof. "PERMITTED ISSUANCE" shall mean (i) the issuance or granting of Common Stock (including restricted, deferred or performance shares), options or convertible securities to employees of the Corporation and its Subsidiaries or the exercise thereof pursuant to a stock-based incentive plan, (ii) the issuance of Common Stock hereunder, (iii) the issuance of Common Stock by the Corporation for consideration other than cash pursuant to a consummated merger, consolidation, acquisition, or similar business combination, (iv) the issuance of Common Stock pursuant to any securities issued to a bank or other similar financial institution solely in connection with the Senior Credit Facility or the Senior Subordinated Credit Facility, or (v) the issuance of Common Stock upon exercise of Warrants. "PERSON" shall mean any individual, firm, corporation or other entity, and shall include any successor (by merger or otherwise) of such entity. "REGISTRATION RIGHTS AGREEMENT" shall mean that certain Registration Rights Agreement, dated November [25], 2002, by and among the Corporation and the Purchasers named therein. "SENIOR CREDIT FACILITY" shall have the meaning set forth in the Stock Purchase Agreement. "SENIOR SUBORDINATED CREDIT FACILITY" shall have the meaning set forth in the Stock Purchase Agreement. "SENIOR SUBORDINATED NOTES" shall mean the senior subordinated notes of the Corporation or any of the Subsidiaries (other than those issued pursuant to the Senior Subordinated Credit Facility) issued in connection with, or to refinance the financing incurred in connection with, the transactions contemplated by the Sprint Purchase Agreement. "SPRINT PURCHASE AGREEMENT" shall mean the Stock Purchase Agreement, dated as of September 21, 2002, by an among Sprint Corporation, a Kansas corporation, Centel Directories LLC, a Delaware limited liability company, and the Corporation, as such agreement may be amended from time to time. "STOCK PURCHASE AGREEMENT" shall mean that certain Preferred Stock and Warrant Purchase Agreement, dated September 21, 2002, by and among the Corporation and the Purchasers named therein, as such agreement may be amended from time to time. "SUBSIDIARIES" shall have the meaning ascribed to the term "Company Subsidiaries" in the Stock Purchase Agreement. "SURVIVING PERSON" shall mean the continuing or surviving Person of a merger, consolidation or other corporate combination, the Person receiving a transfer of all or a substantial part of the properties and assets of the Corporation, or the Person consolidating with or merging into the Corporation in a merger, consolidation or other corporate combination in which the Corporation is the continuing or surviving Person, but in connection with which the Convertible Preferred Stock or Common Stock of the Corporation is exchanged or converted into the securities of any other Person or the right to receive cash or any other property. "TRADING DAY" shall mean a day on which the principal national securities exchange on which the Common Stock is listed or admitted to trading is open for the transaction of business or, if the Common Stock is not listed or admitted to trading on any national securities exchange, a Business Day. "VOTING EQUITY INTERESTS" shall mean any Voting Securities, securities of the Corporation convertible into Voting Securities, and options, warrants or other rights to acquire Voting Securities. "VOTING SECURITIES" shall mean the Common Stock, the Convertible Preferred Stock and any other securities of the Corporation having the voting power under ordinary circumstances with respect to the election of directors of the Corporation. "WARRANTS" shall mean the warrants to purchase shares of Common Stock issued pursuant to the Stock Purchase Agreement. "WEIGHTED AVERAGE COST OF FUNDS" shall mean the sum of the Weighted Average Interest Rate for each tranche or type of indebtedness under (i) the Senior Credit Facility and (ii) the Senior Subordinated Credit Facility and/or the Senior Subordinated Notes. "WEIGHTED AVERAGE INTEREST RATE" shall be determined as of the Interest Rate Determination Date, and shall mean with respect to each tranche or type of indebtedness under the Senior Credit Facility, the Senior Subordinated Credit Facility and/or the Senior Subordinated Notes, the product of (i) the stated contract interest rate (or the effective rate of interest in the case of an original issue discount, as applicable) of such tranche or type of indebtedness (provided, however, that if the Interest Rate Determination Date is [THE DATE THAT IS 6 MONTHS AFTER THE CLOSING DATE OF THE PURCHASE AGREEMENT], the stated contract interest (or the effective rate of interest in the case of an original issue discount, as applicable) rate of the Senior Subordinated Credit Facility shall be deemed to be the highest rate of interest that may exist on such facility according to its terms), expressed in basis points per annum, calculated on the basis of actual days elapsed over a year of 365 days, without regard to any interest rate swap, hedging or similar transactions, multiplied by (ii) the quotient of (x) the amount of the outstanding principal of such tranche or type of indebtedness, divided by (y) the aggregate amount of the outstanding principal of all tranches or types of indebtedness under the Senior Credit Facility, the Senior Subordinated Credit Facility and/or the Senior Subordinated Notes. IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed in its name and on its behalf and attested on this day of , 2003 by duly authorized officers of the Corporation. R.H. DONNELLEY CORPORATION By: ------------------------------ Name: Title: ATTEST: By: ---------------------------- Name: Title: EX-99.7 9 ex99_7.txt STOCK PURCHASE WARRANT Exhibit 7 --------- This Warrant was originally issued on [DATE OF THE CLOSING], and such issuance was not registered under the Securities Act of 1933, as amended. The transfer of this Warrant and the securities obtainable upon exercise hereof is subject to the limitations and conditions on transfer specified in the Preferred Stock and Warrant Purchase Agreement, dated as of September [21], 2002 (as it may be amended from time to time, the "PURCHASE AGREEMENT"), between the Company and the Registered Holder (each as defined herein), and the Company reserves the right to refuse the transfer of any such securities until such limitations have lapsed and conditions have been fulfilled, with respect to such transfer. Upon written request, a copy of the Purchase Agreement shall be furnished by the Company to the holder hereof without charge. R.H. DONNELLEY CORPORATION STOCK PURCHASE WARRANT Date of Issuance: [DATE OF THE CLOSING] Certificate No. ------ FOR VALUE RECEIVED, R.H. Donnelley Corporation, a Delaware corporation (the "COMPANY"), hereby grants to ________________________________ or its registered assigns (the "REGISTERED HOLDER") the right to purchase from the Company ________ shares of the Company's Common Stock at the Exercise Price. This Warrant is one of several warrants (collectively, the "SERIES 2 WARRANTS") issued by the Company to certain investors (the "INVESTORS") pursuant to the Preferred Stock and Warrant Purchase Agreement, dated as of September [21], 2002 (the "PURCHASE AGREEMENT"). Certain capitalized terms used herein are defined in Section 4 and capitalized terms used in this Warrant but not defined herein shall have the meanings ascribed thereto in the Purchase Agreement. The amount and kind of securities obtainable pursuant to the purchase rights granted hereunder and the purchase price for such securities are subject to adjustment pursuant to the provisions contained in this Warrant. This Warrant is subject to the following provisions: Section 1. Exercise of Warrant. (a) Exercise Period. The Registered Holder may exercise, in whole or in part (but not as to a fractional share of Common Stock), the purchase rights represented by this Warrant at any time and from time to time after the Date of Issuance to and including the fifth anniversary thereof (the "EXERCISE PERIOD"). (b) Exercise Procedure. (i) This Warrant shall be deemed to have been exercised when the Company has received all of the following items (the "EXERCISE TIME"): (A) a completed Exercise Agreement, as defined in Section 1(c), executed by the Person exercising all or part of the purchase rights represented by this Warrant (the "PURCHASER"); (B) this Warrant; (C) if this Warrant is not registered in the name of the Purchaser, an Assignment or Assignments in the form set forth in Exhibit I evidencing the assignment of this Warrant to the Purchaser, in which case the Registered Holder shall have complied with the provisions set forth in Section 6; and (D) either (1) a check payable to the Company in an amount equal to the product of the Exercise Price multiplied by the number of shares of Common Stock being purchased upon such exercise (the "AGGREGATE EXERCISE PRICE"), or (2) a written notice to the Company that the Purchaser is exercising the Warrant (or a portion thereof) by authorizing the Company to withhold from issuance a number of shares of Common Stock issuable upon such exercise of the Warrant that when multiplied by the Current Market Price of the Common Stock is equal to the Aggregate Exercise Price (which withheld shares shall no longer be issuable under this Warrant). (ii) Certificates for shares of Common Stock purchased upon exercise of this Warrant shall be delivered by the Company to the Purchaser within five Business Days after the date on which the Exercise Time occurs. Unless this Warrant has expired or all of the purchase rights represented hereby have been exercised, the Company shall prepare a new Warrant, substantially identical hereto, representing the purchase rights formerly represented by this Warrant that have not expired or been exercised and shall within such five-Business Day period deliver such new Warrant to the Person designated for delivery in the Exercise Agreement. (iii) The Common Stock issuable upon the exercise of this Warrant shall be deemed to have been issued to the Purchaser at the Exercise Time, and the Purchaser shall be deemed for all purposes to have become the record holder of such Common Stock as of the Exercise Time. (iv) The issuance of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Registered Holder or the Purchaser for any issuance tax in respect thereof if issued to the Registered Holder or other cost incurred by the Company in connection with such exercise and the related issuance of shares of Common Stock. Each share of Common Stock issuable upon exercise of this Warrant shall upon payment of the Exercise Price therefor, be fully paid and nonassessable and free from all liens and charges with respect to the issuance thereof. (v) The Company shall not close its books against the transfer of this Warrant or of any share of Common Stock issued or issuable upon the exercise of this Warrant in any manner that interferes with the timely and proper exercise of this Warrant. (vi) Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a registered public offering or the sale of the Company, the exercise of any portion of this Warrant may, at the election of the holder hereof, be conditioned upon the consummation of the public offering or sale of the Company in which case such exercise shall not be deemed to be effective until the consummation of such transaction. (vii) The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of issuance upon the exercise of the Series 2 Warrants, such number of shares of Common Stock issuable upon the exercise of all outstanding Series 2 Warrants. The Company shall take all such actions as may be necessary to assure that all such shares of Common Stock may be so issued without violation of any law or governmental regulation applicable to the Company or any requirements of any domestic securities exchange upon which shares of Common Stock may be listed (except for official notice of issuance that shall be immediately delivered by the Company upon each such issuance). The Company shall not take any action that would cause the number of authorized but unissued shares of Common Stock to be less than the number of such shares required to be reserved hereunder for issuance upon exercise of the Series 2 Warrants. (c) Exercise Agreement. Upon any exercise of this Warrant, the Exercise Agreement shall be substantially in the form set forth in Exhibit II (the "EXERCISE AGREEMENT"), except that if the shares of Common Stock are not to be issued in the name of the Person in whose name this Warrant is registered, the Exercise Agreement shall also state the name of the Person to whom the certificates for the shares of Common Stock are to be issued, and if the number of shares of Common Stock to be issued does not include all the shares of Common Stock purchasable hereunder, it shall also state the name of the Person to whom a new Warrant for the unexercised portion of the purchase rights hereunder is to be delivered. Such Exercise Agreement shall be dated the actual date of execution thereof. (d) Fractional Shares. If a fractional share of Common Stock would be issuable upon exercise of the purchase rights represented by this Warrant, the Company shall, unless prohibited by any agreement to which the Company is a party, within five Business Days after the date on which the Exercise Time occurs, deliver to the Purchaser a check payable to the Purchaser in lieu of such fractional share in an amount equal to the difference between Current Market Price of such fractional share as of the date on which the Exercise Time occurs and the Exercise Price of such fractional share. Section 2. Adjustment of Exercise Price and Number of Shares. In order to prevent dilution of the purchase rights granted under this Warrant, the Exercise Price shall be subject to adjustment from time to time as provided in this Section 2, and the number of shares of Common Stock obtainable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this Section 2. (a) The Exercise Price shall be subject to adjustment as follows: (i) In case the Company shall at any time or from time to time after the Date of Issuance (A) pay a dividend or make a distribution in shares of Common Stock or Convertible Securities into Common Stock, (B) subdivide or reclassify the outstanding shares of Common Stock into a greater number of shares of Common Stock, (C) combine or reclassify the outstanding shares of Common Stock into a smaller number of shares, or (D) otherwise issue by reclassification of the shares of Common Stock any shares of capital stock of the Company, then, and in each such case, the Exercise Price in effect immediately prior to such action and the number of shares of Common Stock obtainable upon exercise of this Warrant shall be proportionately adjusted so that the holder of this Warrant shall be entitled to receive the number of shares of Common Stock or other securities of the Company upon exercise of this Warrant which such holder would have owned or have been entitled to receive after the happening of any of the events described above had such Warrant been exercised immediately prior to the happening of such event or the record date therefor, whichever is earlier. An adjustment made pursuant to this Section 2(a)(i) shall become applicable (x) in the case of any such dividend or distribution, immediately after the close of business on the record date for the determination of holders of shares of Common Stock entitled to receive such dividend or distribution and (y) in the case of any such subdivision, reclassification or combination, at the close of business on the day upon which such corporate action becomes effective. Such adjustment shall be made successively. (ii) In case the Company shall at any time or from time to time after the Date of Issuance declare, order, pay or make a dividend or other distribution (including without limitation any distribution of stock or other securities, evidences of indebtedness, property or assets or rights or warrants to subscribe for securities of the Company or any of its Subsidiaries) on its Common Stock (other than (A) regular quarterly dividends payable in cash or (B) dividends or distributions of shares of Common Stock referred to in Section 2(a)(i)) (any one of the foregoing other than the items specified in clause (A) or (B) referred to as "SECURITIES OR ASSETS"), then and in each such case, unless the Company elects to reserve shares or other units of such Securities or Assets for distribution to the holders of the Series 2 Warrants upon the exercise of such Series 2 Warrants so that any such holder exercising its Series 2 Warrants will receive upon such exercise, in addition to the shares of the Common Stock to which such holder is entitled, the amount and kind of such Securities or Assets which such holder would have received if such holder had, immediately prior to the record date for the distribution of the Securities or Assets, exercised its Warrant for Common Stock, the Exercise Price shall be adjusted so that such Exercise Price shall equal the price determined by multiplying the Exercise Price in effect immediately prior to the date of such distribution by a fraction of which the numerator shall be the Current Market Price of the Common Stock on such record date less the then fair market value (as determined by the Board in good faith) of the portion of the capital stock or assets or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock, and of which the denominator shall be the Current Market Price of the Common Stock on such record date; provided, however, that if the then fair market value (as so determined) of the portion of the Securities or Assets so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock on the record date mentioned above, in lieu of the foregoing adjustment, adequate provision shall be made so that each holder of the Series 2 Warrants shall have the right to receive the amount and kind of Securities or Assets which such holder would have received had such holder exercised its Warrant immediately prior to the record date for the distribution of the Securities or Assets. Such adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution. (iii) In case the Company shall issue or sell any Common Stock (or rights, Options, warrants or other Convertible Securities) (collectively, "ADDITIONAL SHARES") at any time after the date hereof until [THIRD ANNIVERSARY OF THE CLOSING] without consideration or for a consideration per share (or having a exercise, exchange or exercise price per share) (such per share amount, the "SALE PRICE") less than the greater of (A) the Current Market Price per share of Common Stock on the date preceding the earlier of the issuance or public announcement of the issuance of such Additional Shares of Common Stock and (B) the Exercise Price as of the date of such issuance of shares (or, in the case of Convertible Securities, less than the greater of the Current Market Price or the Exercise Price, as the case may be, as of the date of issuance of the rights, Options, warrants or other securities in respect of which shares of Common Stock were issued) then, and in each such case, the Exercise Price shall be reduced to an amount determined by multiplying (A) the Exercise Price in effect on the day immediately prior to such date by (B) a fraction, the numerator of which shall be the sum of (1) the number of shares of Common Stock outstanding immediately prior to such sale or issuance multiplied by the greater of (a) the then applicable Exercise Price per share and (b) the Current Market Price per share of Common Stock on the date preceding the earlier of the issuance or public announcement of the issuance of such Additional Shares of Common Stock (the greater of (a) and (b) above hereinafter referred to as the "ADJUSTMENT PRICE") and (2) the aggregate consideration receivable by the Company for the total number of shares of Common Stock so issued (or into or for which the rights, Options, warrants or other securities are convertible, exercisable or exchangeable), and the denominator of which shall equal to the product of (I) the sum of (x) the total number of shares of Common Stock outstanding immediately prior to such sale or issue and (y) the number of additional shares of Common Stock issued (or into or for which the rights, Options, warrants or other securities may be converted, exercised or exchanged), multiplied by (II) the Adjustment Price. In case any portion of the consideration to be received by the Company shall be in a form other than cash, the fair market value of such noncash consideration shall be utilized in the foregoing computation. Such fair market value shall be determined in good faith by the Board of Directors. Upon each such adjustment of the Exercise Price hereunder, the number of Shares of Common Stock acquirable upon exercise of this Warrant shall be adjusted to the number of shares determined by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. An adjustment made pursuant to this subsection (iii) shall be made on the next Business Day following the date on which any such issuance is made and shall be effective retroactively to the close of business on the date of such issuance. For purposes of this subsection (iii), the aggregate consideration receivable by the Company in connection with the issuance of shares of Common Stock or of rights, warrants or other Convertible Securities shall be deemed to be equal to the sum of the aggregate offering price (before deduction of underwriting discounts or commissions and expenses payable to third parties) of all such Common Stock, rights, warrants and Convertible Securities plus the aggregate amount (as determined on the date of issuance), if any, payable upon exercise or exercise of any such rights, warrants and Convertible Securities into shares of Common Stock. If, subsequent to the date of issuance of such right, warrants or other Convertible Securities, the conversion or exercise price thereof is reduced, such aggregate amount shall be recalculated and the Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant shall be adjusted retroactively to give effect to such reduction. On the expiration of any option or the termination of any right to convert or exchange any securities into Additional Shares, the Exercise Price then in effect hereunder shall forthwith be increased to the Exercise Price which would have been in effect at the time of such expiration or termination (but taking into account other adjustments or potential made following the time of issuance of such Options or securities) had such option or security, to the extent outstanding immediately prior to such expiration or termination, never been issued and the number of shares of Common Stock obtainable upon exercise of this Warrant shall be correspondingly adjusted. If Common Stock is sold as a unit with other securities, the aggregate consideration received for such Common Stock shall be deemed to be net of the fair market value (as determined by the Board of Directors in good faith) of such other securities. The issuance or reissuance of (A) any shares of Common Stock or rights, warrants or other Convertible Securities (whether treasury shares or newly issued shares) (1) pursuant to a dividend or distribution on, or subdivision, combination or reclassification of, the outstanding shares of Common Stock requiring an adjustment in the Exercise Price pursuant to subsection (i) of this Section 2(a); (2) pursuant to any restricted stock or stock option plan or program of the Company involving the grant of Options or rights to acquire shares of Common Stock after the date hereof to directors, officers and employees of the Company and its Subsidiaries; (3) pursuant to any option, warrant, right, or Convertible Security outstanding as of the Date of Issuance; (4) pursuant to any securities issued to a bank or other similar financial institution solely in connection with the Senior Credit Facility and the Senior Subordinated Credit Facility; or (5) pursuant to an underwritten offering registered with the SEC if the offering price is greater than the Exercise Price then in effect; (B) the Preferred Stock and any shares of Common Stock issuable upon conversion or exercise thereof, or (C) the Series 2 Warrants and any shares of Common Stock issuable upon exercise thereof, shall not be deemed to constitute an issuance of Common Stock or Convertible Securities by the Company to which this subsection (iii) applies. No adjustment shall be made pursuant to this subsection (iii) in connection with any transaction to which Section 2(b) applies. (iv) For purposes of this Section 2(a), the number of shares of Common Stock at any time outstanding shall not include any shares of Common Stock then owned or held by or for the account of the Company. (v) All calculations of the Exercise Price pursuant to this Section 2(a) shall be made to the nearest one one-hundredth of a cent. Anything in this Section 2(a) to the contrary notwithstanding, (A) the Company shall not be required to give effect to any adjustment in the Exercise Price unless and until the net effect of one or more adjustments (each of which shall be carried forward), determined as above provided, shall have resulted in a reduction of the Exercise Price of at least 1%, and when the cumulative net effect of more than one adjustment so determined shall be to reduce the Exercise Price by at least 1%, such reduction in Exercise Price shall thereupon be given effect and (B) in no event shall the then current Exercise Price be increased as a result of any calculation made at any time pursuant to this Section 2(a). (b) (i) In case of any capital reorganization or reclassification of outstanding shares of Common Stock (other than a reclassification to which Section 2(a)(i) shall apply), or in case of any merger or consolidation of the Company with or into another Person (as defined below), or in case of any sale or conveyance to another Person of all or substantially all of the assets of the Company or any compulsory share exchange pursuant to which share exchange the shares of Common Stock are converted into other securities, cash or other property (each of the foregoing being referred to as a "TRANSACTION"), this Warrant shall thereafter be exercisable for, in lieu of the shares of Common Stock issuable upon such exercise prior to consummation of such Transaction, the kind and amount of shares of stock and other securities and property receivable (including cash) upon the consummation of such Transaction by a holder of that number of shares of Common Stock into which the Warrant was exercisable for immediately prior to such Transaction (including, on a pro rata basis, the cash, securities or property received by holders of Common Stock in any tender or exchange offer that is a step in such Transaction). (ii) Notwithstanding anything contained herein to the contrary, the Company will not effect any Transaction unless, prior to the consummation thereof, (A) the Surviving Person shall agree that the Series 2 Warrants shall be treated as provided in paragraph (i) of this Section 2(b) and the agreements governing such Transaction shall so provide and (B) the Surviving Person thereof shall assume, by written instrument mailed, by first-class mail, postage prepaid, to each holder of the Series 2 Warrants at such holder's address as it appears in the records of the Company, the obligation to deliver to such holder such cash or other securities to which, in accordance with the foregoing provisions, such holder is entitled and such Surviving Person shall have mailed, by first-class mail, postage prepaid, to each holder of the Series 2 Warrants at such holder's address as it appears in the records of the Company, and an opinion of independent counsel for such Person stating that such assumption agreement is a valid, binding and enforceable agreement of the Surviving Person. (c) In any case, if necessary, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions set forth in this Section 2 with respect to rights and interests thereafter of the holders of the Series 2 Warrants to the end that the provisions set forth herein for the protection of the purchase rights of the Series 2 Warrants shall thereafter be applicable, as nearly as reasonably may be, to any such other shares of stock and other securities (other than the Common Stock) and property deliverable upon exercise of the Series 2 Warrants remaining outstanding with such adjustments in the Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant and such other adjustments in the provisions hereof as the Board of Directors shall in good faith determine to be appropriate. In case securities or property other than Common Stock shall be issuable or deliverable upon exercise as aforesaid, then all references in this Section 2 shall be deemed to apply, so far as appropriate and as nearly as may be, to such other securities or property. (d) If the Company shall pay any dividend or make any other distribution to the holders of its Common Stock (other than regularly quarterly dividends payable in cash) or shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or any other right, or there shall be any Transaction, or there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company, then, in any one or more of said cases the Company shall give at least 15 days prior written notice to the holders of the Series 2 Warrants by first-class mail, postage prepaid, at their respective addresses as they shall appear in the records of the Company of the earlier of the dates on which (i) the books of the Company shall close or a record shall be taken for such stock dividend, distribution or subscription rights or (ii) such Transaction, dissolution, liquidation or winding up shall take place. Such notice shall also specify that date as of which the holders of the Common Stock of record shall participate in said dividend, distribution of subscription rights or shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale or conveyance or participate in such dissolution, liquidation or winding up, as the case may be. Failure to give such notice shall not invalidate any action so taken. Section 3. Reports as to Adjustments. Upon the occurrence of any event specified in Section 2(a) that would result in any adjustment of the Exercise Price, then, and in each such case, the Company shall promptly deliver by first-class mail, postage prepaid, at their respective addresses as they shall appear in the records of the Company, a certificate signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Company setting forth in reasonable detail the event requiring the adjustment and the method by which such adjustment was calculated and specifying the Exercise Price then in effect and the number of shares of Common Stock obtainable upon exercise of the Series 2 Warrants following such adjustment. Where appropriate, such notice to the holders of the Series 2 Warrants may be given in advance and included as part of the notice required pursuant to Section 2(d). Section 4. Definitions. The following terms have meanings set forth below: "BUSINESS DAY" means any day other than a Saturday, Sunday, or any day on which banks in New York City are authorized or obligated by applicable law to close. "COMMON STOCK" means, collectively, the Company's Common Stock, par value $1 per share (including any associated Right, as defined in and issued pursuant to the Rights Agreement, dated as of October 27, 1998, as amended, by and between the Company and The Bank of New York (successor to First Chicago Trust Company of New York), as Rights Agent. "CONVERTIBLE SECURITIES" means any stock or securities (directly or indirectly, after the passage of time or otherwise) convertible into or exercisable or exchangeable for Common Stock. "CURRENT MARKET PRICE," when used with reference to shares of Common Stock or other securities on any date, shall mean the closing price per share of Common Stock or such other securities on such date and, when used with reference to shares of Common Stock or other securities for any period, shall mean the average of the daily closing prices per share of Common Stock or such other securities for such period. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Common Stock or such other securities are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Common Stock or such other securities are listed or admitted to trading or, if the Common Stock or such other securities are not listed or admitted to trading on any national securities exchange, the last quoted sale price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or such other system then in use, or, if on any such date the Common Stock or such other securities are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock or such other securities selected by the Board of Directors of the Company. If the Common Stock or such other securities are not publicly held or so listed or publicly traded, "CURRENT MARKET PRICE" shall mean the fair market value per share of Common Stock or of such other securities as determined by an independent investment banking firm with an established national reputation as a valuer of equity securities selected by the Company and reasonably acceptable to the holders of a majority of the shares of Preferred Stock outstanding at the time. "EXERCISE PRICE" shall mean the average of the Current Market Price of the Common Stock for the 30 Trading Days immediately prior to the Closing Date. "OPTIONS" means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities. "PERSON" or "PERSON" means any corporation, individual, limited liability company, joint stock company, joint venture, partnership, unincorporated association, governmental regulatory entity, country, state or political subdivision thereof, trust, municipality or other entity. "SURVIVING PERSON" shall mean the continuing or surviving Person of a merger, consolidation or other corporate combination, the Person receiving a transfer of all or a substantial part of the properties and assets of the Company, or the Person consolidating with or merging into the Company in a merger, consolidation or other corporate combination in which the Company is the continuing or surviving Person, but in connection with which the Preferred Stock, Series 2 Warrants or Common Stock of the Company is exchanged or converted into the securities of any other Person or the right to receive cash or any other property. "TRADING DAY" shall mean a day on which the principal national securities exchange on which the Common Stock is listed or admitted to trading is open for the transaction of business or, if the Common Stock is not listed or admitted to trading on any national exchange, a Business Day. Section 5. No Voting Rights; Limitations of Liability. This Warrant shall not entitle the holder hereof to any voting rights or other rights as a stockholder of the Company. No provision hereof, in the absence of affirmative action by the Registered Holder to purchase Common Stock, and no enumeration herein of the rights or privileges of the Registered Holder shall give rise to any liability of such holder for the Exercise Price of Common Stock acquirable by exercise hereof or as a stockholder of the Company. Section 6. Warrant Transferable. Subject to the transfer conditions referred to in the legend endorsed hereon, including the provisions of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, without charge to the Registered Holder, upon surrender of this Warrant with a properly executed Assignment (in the form of Exhibit I) at the principal office of the Company. Section 7. Warrant Exchangeable for Different Denominations. This Warrant is exchangeable, upon the surrender hereof by the Registered Holder at the principal office of the Company, for new Series 2 Warrants of like tenor representing in the aggregate the purchase rights hereunder, and each of such new Series 2 Warrants shall represent such portion of such purchase rights as is designated by the Registered Holder at the time of such surrender. The date the Company initially issues this Warrant shall be deemed to be the "DATE OF ISSUANCE" hereof regardless of the number of times new certificates representing the unexpired and unexercised purchase rights formerly represented by this Warrant shall be issued. All Series 2 Warrants representing portions of the purchase rights hereunder are referred to herein as the "SERIES 2 WARRANTS." Section 8. Replacement. Upon receipt of evidence reasonably satisfactory to the Company (an affidavit of the Registered Holder shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing the Series 2 Warrants, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Company (provided that if the holder is a financial institution or other institutional investor its own agreement shall be satisfactory), or, in the case of any such mutilation upon surrender of such certificate, the Company shall (at its expense) execute and deliver in lieu of such certificate a new certificate of like kind representing the number of Series 2 Warrants of such class represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate. Section 9. Notices. Except as otherwise expressly provided hereunder, all notices referred to herein shall be in writing and shall be delivered by registered or certified mail, return receipt requested and postage prepaid, or by reputable overnight courier service, charges prepaid, and shall be deemed to have been given when so mailed or sent (i) to the Company, at its principal executive offices, Attention: General Counsel and (ii) to any Registered Holder, at such holder's address as it appears in the stock records of the Company (unless otherwise indicated by any such holder). Section 10. Amendment and Waiver. Any provision of this Warrant may be amended or modified in whole or in part at any time by an agreement in writing among the Company and the holder of this Warrant. No failure on the part of either the Company or the holder of this Warrant to exercise, and no delay in exercising, any right shall operate as a waiver thereof nor shall any single or partial exercise by either the Company or the holder of this Warrant of any right preclude any other or future exercise thereof or the exercise of any other right. Section 11. Descriptive Headings; Governing Law. The descriptive headings of the several Sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. References in this Warrant to Sections and Exhibits are references to Sections of, and Exhibits to, this Warrant unless otherwise noted. The corporation laws of the State of Delaware shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by the internal law of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Section 12. Severability. Should any part of this Warrant for any reason be declared invalid, such decision shall not affect the validity of the remaining portion, which remaining portion shall remain in full force and effect as if this Warrant had been executed with the invalid portion thereof eliminated, and it is hereby declared the intention of the Company hereto that it would have executed the remaining portion of this Warrant without including therein any such parts or parts which may, for any reason, be hereafter declared invalid. Section 13. Entire Agreement. This Warrant and the Purchase Agreement and the documents described herein and therein or attached or delivered pursuant hereto or thereto set forth the entire agreement between the Company and the Registered Holder with respect to the transactions contemplated by this Warrant. * * * * * * IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and attested by its duly authorized officers under its corporate seal and to be dated the Date of Issuance hereof. R.H. DONNELLEY CORPORATION By: -------------------------------- Name: Title: Attest: - --------------------------- Name: Title: EXHIBIT I ASSIGNMENT ---------- FOR VALUE RECEIVED, ______________________________ hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (Certificate No. ____) with respect to the number of shares of the Common Stock, par value $1 per share, of R.H. Donnelley Corporation, a Delaware corporation, covered thereby set forth below, unto: Names of Assignee Address No. of Shares - ----------------- ------- ------------- Signature: ----------------------------- Address: ----------------------------- Witness: ----------------------------- EXHIBIT II EXERCISE AGREEMENT ------------------ To: R.H. Donnelley Corporation Dated: The undersigned, pursuant to the provisions set forth in the attached Warrant (Certificate No. ______), hereby agrees to subscribe for the purchase of ______ shares of the Common Stock, par value $1 per share (the "COMMON STOCK"), of R.H. Donnelley Corporation, a Delaware corporation (the "COMPANY"), covered by such Warrant and makes payment herewith in full therefor at the price per share provided by such Warrant. The undersigned(1) represents to the Company as follows: (i) such Person (as defined in the Warrant) is an "accredited investor" within the meaning of Rule 501 of Regulation D promulgated under the Securities Act of 1933 (the "SECURITIES ACT") and was not organized for the specific purpose of acquiring the Common Stock issuable upon exercise thereof; (ii) such person has sufficient knowledge, sophistication and experience in financial and business matters as are necessary to evaluate the risks and merits of an investment in the Company; (iii) such Person has had an opportunity to discuss the Company's business, management and financial affairs with the Company's management; (iv) the Common Stock being acquired by such Person is being acquired for its own account for the purpose of investment and not with a view to or for sale in connection with any distribution thereof; and (v) such Person understands that (A) none of the shares of Common Stock issuable upon the exercise of the Warrant have been registered under the Securities Act and are being issued in reliance upon federal and state exemptions for transactions not involving any public offering, (B) the shares of Common Stock issuable upon the exercise of the Warrant must be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act or is exempt from such registration, (C) the shares of Common Stock issuable upon the exercise of the Warrant will bear a legend to such effect, as applicable, and (D) the Company will make a notation on its transfer books to such effect. [NAME OF PERSON] By: ------------------------------ Name: Title: Address: - ---------------------- 1 In the event that the shares of Common Stock are not issued in the name of the Person (as defined in the Warrant) in whose name the Warrant is registered or if the number of shares of Common Stock to be issued does not include all of the shares purchasable under the Warrant, then this Exercise Agreement shall be modified to include applicable language with respect to the provisions of this Exercise Agreement EX-99.8 10 ex99_8.txt REGISTRATION RIGHTS AGREEMENT Exhibit 8 --------- EXECUTION COPY -------------- REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT, dated as of this 25th day of November, 2002 (this "Agreement"), among R.H. DONNELLEY CORPORATION, a Delaware corporation (the "Company"), GS Capital Partners 2000, L.P., a Delaware limited partnership, GS Capital Partners 2000 Offshore, L.P., a Cayman Islands exempted limited partnership, GS Capital Partners 2000 Employee Fund 2000, L.P., a Delaware limited partnership, GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, a German limited partnership, and Goldman Sachs Direct Investment Fund 2000, L.P. a Delaware limited partnership (each, a "Purchaser"). RECITALS: A. Pursuant to the Preferred Stock and Warrant Purchase Agreement, dated September 21, 2002 (the "Stock Purchase Agreement"), by and between the Company and the Purchasers, and the Letter Agreement, dated November 25, 2002 (the "Letter Agreement"), by and between the Company, R.H. Donnelley Inc. and the Purchasers, the Purchasers have agreed to purchase, in the aggregate, $200,000,000 of the Company's Convertible Cumulative Preferred Stock, par value $1 per share (the "Convertible Cumulative Preferred Stock") and the Company's Series B-1 Convertible Cumulative Preferred Stock, par value $1 per share (the "Series B-1 Convertible Cumulative Preferred Stock"). B. To induce the Purchasers to purchase the Preferred Stock (as defined below), the Company has agreed to provide the registration rights set forth in this Agreement. C. The execution and delivery of this Agreement is a condition to the obligation of the Purchasers to purchase the Preferred Stock pursuant to the Stock Purchase Agreement and the Letter Agreement. AGREEMENT: NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Definitions. As used herein, the following terms shall have the following respective meanings: "Affiliate" shall have the meaning set forth in the Stock Purchase Agreement. "Certificate of Designations" shall mean the Certificate of Designations governing the Series B-1 Convertible Cumulative Preferred Stock; provided, however, that if the Series B-1 Convertible Cumulative Preferred Stock is exchanged for the Convertible Cumulative Preferred Stock, in accordance with Section 9(j) of the Certificate of Designations governing the Series B-1 Convertible Cumulative Preferred Stock, or if any shares of Convertible Cumulative Preferred Stock are otherwise issued and outstanding and no shares of Series B-1 Convertible Cumulative Preferred Stock are outstanding, then "Certificate of Designations" shall mean the Certificate of Designations governing the Convertible Cumulative Preferred Stock. "Common Stock" shall mean the common stock, par value $1 per share, of the Company, including any associated Right, as defined in and issued pursuant to the Rights Agreement, dated as of October 27, 1998, as amended, by and between the Corporation and The Bank of New York (as successor to First Chicago Trust Company of New York), as Rights Agent, and any and all securities of any kind whatsoever of the Company which are received in exchange for Common Stock or into which the Common Stock is converted. "Designated Transferee" shall have the meaning set forth in the Certificate of Designations. "Exchange Act" shall mean the Securities Exchange Act of 1934. "Holders" shall mean the Purchasers, Affiliates of the Purchasers and any Designated Transferees who are holders of record of shares of Registrable Shares, and any combination of them, and the term "Holder" shall mean any such Person. "Indemnified Parties" shall have the meaning set forth in Section 8(a). "Issue Date" shall have the meaning set forth in the Certificate of Designations. "Letter Agreement" shall have the meaning set forth in the preamble. "NASD" shall mean the National Association of Securities Dealers, Inc. "NYSE" shall mean The New York Stock Exchange. "Other Holders" shall mean Persons who are holders of record of equity securities of the Company who subsequent to the date hereof acquire more than 5% of the outstanding shares of Common Stock pursuant to a transaction with the Company and to whom the Company has granted registration rights pursuant to a written agreement. "Person" shall mean any individual, corporation, association, partnership, group (as defined in Section 13(d)(3) of the Exchange Act and the rules and regulations promulgated thereunder), joint venture, business trust or unincorporated organization, or a government or any agency or political subdivision thereof. "Preferred Stock" shall mean the Convertible Cumulative Preferred Stock, the Series B-1 Convertible Cumulative Preferred Stock, and any equity securities issued or issuable in exchange for or with respect to the Convertible Cumulative Preferred Stock or the Series B-1 Convertible Cumulative Preferred Stock by way of a stock dividend, stock split or combination of shares or in connection with a reclassification, recapitalization, merger, consolidation or other reorganization. "Registrable Shares" shall mean (i) any Common Stock (A) which may be issued or issuable upon conversion, exchange or redemption of the Preferred Stock, (B) which may be issued or issuable upon exercise of the Warrants or (C) issued or distributed in respect of the Common Stock referred to in clauses (A) or (B) above by way of stock dividend or stock split or other distribution, recapitalization, reclassification, merger consolidation or otherwise and (ii) any Preferred Stock. As to any particular Registrable Share, such Registrable Share shall cease to be a Registrable Share when (x) it shall have been sold, transferred or otherwise disposed of or exchanged pursuant to a registration statement under the Securities Act or to a Person other than a Designated Transferee pursuant to an exemption from registration under the Securities Act or (y) it shall have been distributed to the public pursuant to Rule 144 (or any successor provision) under the Securities Act. "Registration Expenses" shall have the meaning set forth in Section 7(b). "Requesting Holder" shall have the meaning set forth in Section 2(a). "SEC" shall mean the United States Securities and Exchange Commission. "Securities Act" shall mean the Securities Act of 1933, as amended. "Stock Purchase Agreement" shall have the meaning set forth in the preamble. "Trigger Date" shall have the meaning set forth in the Certificate of Designations for the Series B-1 Convertible Cumulative Preferred Stock "Warrants" shall mean the warrants to purchase shares of Common Stock issued pursuant to the Stock Purchase Agreement or the Letter Agreement. 2. Incidental Registrations. ------------------------ (a) Right to Include Registrable Shares. Subject to Section 2(b), each time the Company shall determine to file a registration statement under the Securities Act in connection with the proposed offer and sale for cash of any equity securities (other than (i) debt securities which are convertible into equity securities and (ii) shares of Common Stock (A) to be issued solely in connection with the acquisition of any Person or the assets of any Person, (B) issuable upon the exercise of grants under stock-based incentive plans, or (C) issuable pursuant to employee benefits plans) either by it or by any holders of its outstanding equity securities (a "Requesting Holder"), the Company will give prompt written notice of its determination to each Holder and of such Holder's rights under this Section 2(a), at least 21 days prior to the anticipated filing date of such registration statement. Upon the written request of each Holder made within 14 days after the receipt of any such notice from the Company (which request shall specify the Registrable Shares intended to be disposed of by such Holder), the Company will use its reasonable best efforts to effect the registration under the Securities Act of all Registrable Shares which the Company has been so timely requested to register by the Holders thereof, to the extent required to permit the disposition of the Registrable Shares so to be registered; provided, that (i) if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company or the Requesting Holder, as applicable, shall determine for any reason not to proceed with the proposed registration of the securities to be sold by the Company or the Requesting Holder, as applicable, the Company may, at its election, give written notice of such determination to each Holder and thereupon shall be relieved of its obligation to register any Registrable Shares in connection with such registration (but not from its obligation to pay the Registration Expenses in connection therewith), and (ii) if such registration involves an underwritten public offering, all Holders of Registrable Shares requesting to be included in the Company's registration must sell their Registrable Shares to the underwriters on the same terms and conditions as apply to the Company or the Requesting Holder, as applicable, with such differences, including any with respect to indemnification, as may be customary or appropriate in combined primary and secondary offerings. If a registration requested pursuant to this Section 2(a) involves an underwritten public offering, any Holder of Registrable Shares requesting to be included in such registration may elect, in writing prior to the effective date of the registration statement filed in connection with such registration, not to register such securities in connection with such registration. No registration effected under this Section 2(a) shall relieve the Company of its obligations to effect registrations upon request pursuant to the terms and subject to the conditions of Section 4. Any Holder shall have the right to withdraw its request for inclusion of its Registrable Shares in any registration statement pursuant to this Section 2 by giving written notice to the Company of its request to withdraw; provided, however, that (i) such request must be made in writing prior to the earlier of the execution of the underwriting agreement or the execution of the custody agreement with respect to such registration and (ii) such withdrawal shall be irrevocable and, after making such withdrawal, a Holder shall no longer have any right to include Registrable Shares in the registration as to which such withdrawal has been made. (b) Priority in Incidental Registrations. If a registration pursuant to this Section 2 involves an underwritten public offering and the managing underwriter or underwriters in its judgment advises the Company in writing that, in its opinion, the number of securities which the Company, the Holders and any other Persons intend to include in such registration exceeds the largest number of securities which can be sold in such offering without having an adverse effect on such offering (including the price at which such securities can be sold), then the Company shall include in such registration (i) first, if the registration pursuant to this Section 2 was initiated by Other Holders exercising demand registration rights, 100% of the securities such Other Holders propose to sell (except to the extent the terms of such Other Holders' registration rights provide otherwise); (ii) second, 100% of the securities the Company proposes to sell for its own account, if any; (iii) third, to the extent that the number of securities which such Other Holders exercising demand registration rights and the Company propose to sell is, in the aggregate, less than the number of securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, such number of Registrable Shares which the Holders have requested to be included in such registration and such number of securities which Other Holders have requested to be included in such registration, in each case pursuant to Section 2(a) or other piggyback or incidental registration rights and which, in the opinion of such managing underwriter or underwriters, can be sold without having the adverse effect referred to above, such number of Registrable Shares and securities to be included on a pro rata basis among all requesting Holders and Other Holders on the basis of the relative number of shares of Common Stock beneficially owned (as such term is used in Rule 13d-3 of the Exchange Act) by such Holders and Other Holders (provided, that if the number of Registrable Shares requested to be included in such registration by the Holders pursuant to Section 2(a) and permitted to be included in such registration by the Holders pursuant to this Section 2(b) exceeds the number which the Company has been advised can be sold in such offering without having the adverse effect referred to above, the number of such Registrable Shares to be included in such registration by the Holders shall be allocated pro rata among such Holders on the basis of the relative number of Registrable Shares each such Holder has requested to be included in such registration); and (iv) fourth, to the extent that the number of securities which are to be included in such registration pursuant to clauses (i), (ii) and (iii) of this Section 2(b) is, in the aggregate, less than the number of securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, such number of other securities requested to be included in the offering for the account of any other Persons which, in the opinion of such managing underwriter or underwriters, can be sold without having the adverse effect referred to above, such number to be allocated pro rata among all holders of such other securities on the basis of the relative number of such other securities each other Person has requested to be included in such registration. 3. Holdback Agreements. (a) If any registration of Registrable Shares shall be in connection with an underwritten public offering, the Holders agree not to effect any public sale or distribution (except in connection with such public offering), of any equity securities of the Company, or of any security convertible into or exchangeable or exercisable for any equity security of the Company (in each case, other than as part of such underwritten public offering), during the 180-day period (or such lesser period as the managing underwriter or underwriters may permit) beginning on the effective date of such registration, if, and to the extent, the managing underwriter or underwriters of any such offering determines such action is necessary or desirable with respect to such offering, provided that each Holder has received the written notice required by Section 2(a). (b) If any registration of Registrable Shares shall be in connection with any underwritten public offering, the Company agrees not to effect any public sale or distribution (except in connection with such public offering) of any of its equity securities or of any security convertible into or exchangeable or exercisable for any of its equity securities (in each case other than as part of such underwritten public offering) during the 180-day period (or such lesser period as the managing underwriter or underwriters may permit) beginning on the effective date of such registration, and the Company also agrees to use its reasonable best efforts to cause each member of the management of the Corporation who holds any equity security and each other holder of 5% or more of the outstanding shares of any equity security, or of any security convertible into or exchangeable or exercisable for any equity security, of the Company purchased from the Company (at any time other than in a public offering) to so agree. 4. Registration on Request. ----------------------- (a) Request by Holders. From and after the earlier of (i) the Trigger Date and (ii) November 25, 2003 upon the written request of the Holder or Holders of at least 25% of the Registrable Shares that the Company effect the registration under the Securities Act of all or part of such Holder or Holders' Registrable Shares, and specifying the amount and intended method of disposition thereof, the Company will promptly give notice of such requested registration to all other Holders of Registrable Shares and, as expeditiously as practicable, use its reasonable best efforts to effect the registration under the Securities Act (including, without limitation, by means of a shelf registration pursuant to Rule 415 under the Securities Act if so requested, and if the Company is then eligible to use such registration) of: (i) the Registrable Shares which the Company has been so requested to register by such Holder or Holders; and (ii) all other Registrable Shares which the Company has been requested to register by any other Holder thereof by written request received by the Company within 14 days after the giving of such written notice by the Company (which request shall specify the intended method of disposition of such Registrable Shares); provided, however, that the Company shall not be required to effect more than one registration during any twelve-month period pursuant to this Section 4; provided, further, that the Company shall not be obligated to file a registration statement relating to a registration request under this Section 4 (other than on Form S-3 or any similar short-form registration statement) within a period of 180 days after the effective date of any other registration statement of the Company other than registration statements on Form S-3 (or any similar short-form registration statement) or any-successor or similar forms; provided, further, that in no event shall the Company be required to effect more than three registrations pursuant to this Section 4; provided, further, that the Company shall not be required to effect any registration if the Company determines that the aggregate offering value of all of the shares to be offered is not reasonably expected to equal at least (i) prior to the occurrence of a Trigger Date or after the Closing Date (as defined in the Stock Purchase Agreement), $75 million or (ii) after the occurrence of a Trigger Date but prior to the Closing Date, $15 million. Promptly after the expiration of the 14-day period referred to in clause (ii) above, the Company will notify all the Holders to be included in the registration of the other Holders and the number of shares of Registrable Shares requested to be included therein. The Holders initially requesting a registration pursuant to this Section 4(a) may, at any time prior to the effective date of the registration statement relating to such registration, revoke such request by providing a written notice to the Company revoking such request; provided, however, that, in the event the Holders shall have made a written request for a demand registration (i) which is subsequently withdrawn by the Holders after the Company has filed a registration statement with the SEC in connection therewith but prior to such demand registration being declared effective by the SEC or (ii) which is not declared effective solely as a result of the failure of the Holders to take all actions reasonably required in order to have the registration and the related registration statement declared effective by the SEC, then, in any such event, such demand registration shall be counted as a demand registration for purposes of this Section 4(a). (b) Registration Statement Form. If any registration requested pursuant to this Section 4 which is proposed by the Company to be effected by the filing of a registration statement on Form S-3 (or any successor or similar short-form registration statement) shall be in connection with an underwritten public offering, and if the managing underwriter or underwriters shall advise the Company in writing that, in its opinion, the use of another form of registration statement is of material importance to the success of such proposed offering, then such registration shall be effected on such other form. (c) Effective Registration Statement. A registration requested pursuant to this Section 4 will not be deemed to have been effected unless it has become effective under the Securities Act and, has remained effective for 180 days or such shorter period as all the Registrable Shares included in such registration have actually been sold thereunder. In addition, if within 90 days after it has become effective, the offering of Registrable Shares pursuant to such registration is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court, such registration will be deemed not to have been effected. (d) Priority in Requested Registrations. If a requested registration pursuant to this Section 4 involves an underwritten public offering and the managing underwriter or underwriters in good faith advises the Company in writing that, in its opinion, the number of securities requested to be included in such registration (including securities of the Company which are not Registrable Shares) exceeds the largest number of securities which can be sold in such offering without having an adverse effect on such offering (including the price at which such securities can be sold), then the Company will include in such registration (i) first, 100% of the Registrable Shares requested to be registered pursuant to Section 4(a) (provided that if the number of Registrable Shares requested to be registered pursuant to Section 4(a) exceeds the number which the Company has been advised can be sold in such offering without having the adverse effect referred to above, the number of such Registrable Shares to be included in such registration by the Holders shall be allocated pro rata among such Holders on the basis of the relative number of Registrable Shares each such Holder has requested to be included in such registration); (ii) second, to the extent that the number of Registrable Shares requested to be registered pursuant to Section 4(a) is less than the number of securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, such number of shares of equity securities the Company requests to be included in such registration; and (iii) third, to the extent that the number of Registrable Shares requested to be included in such registration pursuant to Section 4(a) and the securities which the Company proposes to sell for its own account are, in the aggregate, less than the number of equity securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, such number of other securities proposed to be sold by any other person which, in the opinion of such managing underwriter or underwriters, can be sold without having the adverse effect referred to above (provided that if the number of such securities of such other Persons requested to be registered exceeds the number which the Company has been advised can be sold in such offering without having the adverse effect referred to above, the number of such securities to be included in such registration pursuant to this Section 4(d) shall be allocated pro rata among all such other Persons on the basis of the relative number of securities each such Person has requested to be included in such registration). (e) Additional Restrictions on Registrations. Not more than once in any twelve-month period, the Company may postpone for a reasonable period, not to exceed an aggregate of 90 days, the filing or the effectiveness of a registration statement pursuant to Section 4(a), if the Company determines reasonably and in good faith that such filing would have a material adverse effect on any proposal or plan by the Company to engage in any significant transaction, provided that in such event the Holders of Registrable Shares initially requesting such demand registration will be entitled to withdraw such request and, if such request is withdrawn, such demand registration will not count as a demand registration for purposes of Section 4(a). The Company may postpone for up to 45 days the filing or the effectiveness of a registration statement for a demand registration pursuant to Section 4(a) for the purpose of preparing audited financial statements, if such statements are required for the demand registration. 5. Registration Procedures. ----------------------- (a) If and whenever the Company is required by the provisions of Section 2 or Section 4 to use its reasonable best efforts to effect or cause the registration of Registrable Shares, the Company shall as expeditiously as practicable: (i) prepare and, in any event within 60 days after the Company's receipt of a request for registration, file with the SEC a registration statement with respect to such Registrable Shares and use its reasonable best efforts to cause such registration statement to become effective; (ii) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith that the Company determines are necessary to keep such registration statement effective for a period not in excess of 180 days (provided, that such 180 day period shall not apply to any such registration statement filed pursuant to Rule 415 under the Securities Act,) and to comply with the provisions of the Securities Act, the Exchange Act, and the rules and regulations promulgated thereunder with respect to the disposition of all the securities covered by such registration statement during such period in accordance with the intended methods of disposition by the Holders thereof set forth in such registration statement; provided, that (A) before filing a registration statement (including an initial filing) or prospectus, or any amendments or supplements thereto, the Company will furnish to one counsel selected by the Holders of a majority of the Registrable Shares covered by such registration statement copies of all documents proposed to be filed, and (B) the Company will notify each Holder of Registrable Shares covered by such registration statement of any stop order issued or threatened by the SEC, any other order suspending the use of any preliminary prospectus or of the suspension of the qualification of the registration statement for offering or sale in any jurisdiction, and take all reasonable actions required to prevent the entry of such stop order, other order or suspension or to remove it if entered; (iii) furnish, without charge, to each Holder and each underwriter, if applicable, of Registrable Shares covered by such registration statement such number of copies of the registration statement and of each amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and summary prospectus), in conformity with the requirements of the Securities Act, and such other documents as each Holder of Registrable Shares covered by such registration statement may reasonably request in order to facilitate the disposition of the Registrable Shares owned by such Holder; (iv) use its reasonable best efforts to register or qualify such Registrable Shares covered by such registration statement under the state securities or blue sky laws of such jurisdictions as each Holder of Registrable Shares covered by such registration statement and, if applicable, each underwriter, may reasonably request, and do any and all other acts and things which may be reasonably necessary to consummate the disposition in such jurisdictions of the Registrable Shares owned by such Holder, except that the Company shall not for any purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction where, but for the requirements of this clause (iv), it would not be obligated to be so qualified; (v) use its reasonable best efforts to cause such Registrable Shares covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the Holders thereof to consummate the disposition of such Registrable Shares; (vi) if at any time when a prospectus relating to the Registrable Shares is required to be delivered under the Securities Act any event shall have occurred as the result of which any such prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, immediately give written notice thereof to each Holder and the managing underwriter or underwriters, if any, of such Registrable Shares and prepare and furnish to each such Holder a reasonable number of copies of an amended or supplemental prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Shares, such prospectus shall not include an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (vii) other than with respect to any Preferred Stock, (A) use its reasonable best efforts to list such Registrable Shares on any securities exchange on which similar securities of the Company are then listed (if any), and enter into customary agreements including a listing application in customary form, provided that the applicable listing requirements are satisfied or (B) if no similar securities are then so listed, use its reasonable best efforts to (1) cause all such Registrable Shares to be listed on a national securities exchange or (2) failing that, secure designation of all such Registrable Shares as a National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") "national market system security" within the meaning of Rule 11Aa2-1 under the Exchange Act or (3) failing that, to secure NASDAQ authorization for shares and, without limiting the generality of the foregoing, to arrange for at least two market makers to register as such with respect to such shares with the National Association of Securities Dealers, Inc.; (viii) provide a transfer agent and registrar for such Registrable Shares covered by such registration statement not later than the effective date of such registration statement; (ix) enter into such customary agreements (including an underwriting agreement in customary form) and take such other actions as each Holder of Registrable Shares being sold or the underwriter or underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Shares, including customary indemnification and opinions; (x) use its reasonable best efforts to obtain (A) a "cold comfort" letter or letters from the Company's independent public accountants in customary form and covering matters of the type customarily covered by "cold comfort" letters and (B) an opinion of counsel for the Company, as the Holders of at least 25% of the Registrable Shares being sold or the underwriters retained by such Holders shall reasonably request; (xi) make available for inspection by representatives of any Holder of Registrable Shares covered by such registration statement, by any underwriter participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by such Holders or any such underwriter, all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries, and cause all of the Company's and its subsidiaries' officers, directors and employees to supply all information and respond to all inquiries reasonably requested by such Holders or any such representative, underwriter, attorney, accountant or agent in connection with such registration statement; (xii) deliver promptly to counsel for the Holders of Registrable Shares included in such registration statement and each underwriter, if any, participating in the offering of the Registrable Shares, copies of all correspondence between the SEC and the Company, its counsel or auditors and all memoranda relating to discussions with the SEC or its staff with respect to such registration statement; (xiii) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable after the effective date of the registration statement, an earnings statement which shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and regulations promulgated thereunder; (xiv) other than with respect to any Preferred Stock, use its reasonable best efforts to obtain and provide a CUSIP number for all Registrable Shares not later than the effective date of such registration statement, and provide the applicable transfer agents with printed certificates for the Registrable Shares which are in a form eligible for deposit with the Depository Trust Company; (xv) notify counsel for the Holders of Registrable Shares included in such registration statement and the managing underwriter or underwriters, if any, immediately, and confirm the notice in writing, (A) when the registration statement, or any post-effective amendment to the registration statement, shall have become effective, or any supplement to the prospectus or any amendment prospectus shall have been filed, (B) of the receipt of any comments from the SEC, and (C) of any request of the SEC to amend the registration statement or amend or supplement the prospectus or for additional information; (xvi) other than with respect to any Preferred Stock, cooperate with each seller of Registrable Shares and each underwriter, if any, participating in the disposition of such Registrable Shares and their respective counsel in connection with any filings required to be made with the NYSE; (xvii) other than with respect to any Preferred Stock, cause its officers to use their reasonable best efforts to support the marketing of the Registrable Shares covered by the registration statement (including, without limitation, participation in "road shows") taking into account the Company's business needs; and (xviii) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of the registration statement. (b) Each Holder of Registrable Shares hereby agrees that, upon receipt of any notice from the Company of the happening of any event of the type described in Section 5(a)(vi), such Holder shall forthwith discontinue disposition of such Registrable Shares covered by such registration statement or related prospectus until such Holder's receipt of the copies of the supplemental or amended prospectus contemplated by Section 5(a)(vi), and, if so directed by the Company, such Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the prospectus covering such Registrable Shares at the time of receipt of such notice. In the event the Company shall give any such notice, the period mentioned in Section 5(a)(ii) shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 5(a)(vi) and including the date when such Holder shall have received the copies of the supplemental or amended prospectus contemplated by Section 5(a)(vi). If for any other reason the effectiveness of any registration statement filed pursuant to Section 4 is suspended or interrupted prior to the expiration of the time period regarding the maintenance of the effectiveness of such Registration Statement required by Section 5(a)(ii) so that Registrable Shares may not be sold pursuant thereto, the applicable time period shall be extended by the number of days equal to the number of days during the period beginning with the date of such suspension or interruption to and ending with the date when the sale of Registrable Shares pursuant to such registration statement may be recommenced. (c) Each Holder hereby agrees to provide the Company, upon receipt of its request, with such information about such Holder to enable the Company to comply with the requirements of the Securities Act and to execute such certificates as the Company may reasonably request in connection with such information and otherwise to satisfy any requirements of law. (d) Notwithstanding anything in this Agreement to the contrary, the Company shall control any "road show" or presentations with respect to any offering of securities of the Company. 6. Underwritten Registrations. Subject to the provisions of Section 2, Section 3 and Section 4, any of the Registrable Shares covered by a registration statement may be sold in an underwritten public offering at the discretion of the Holder thereof. In the case of an underwritten public offering pursuant to Section 2, the managing underwriter or underwriters that will administer the offering shall be selected by the Company. In the case of any underwritten public offering pursuant to Section 4, the managing underwriter or underwriters that will administer the offering shall be selected by the Holders of a majority of the Registrable Shares to be registered, provided, that such underwriters are reasonably satisfactory to the Company. 7. Expenses. -------- (a) The fees, costs and expenses of all registrations in accordance with Sections 2 and Section 4 shall be borne by the Company, subject to the provisions of Section 7(b); provided, however, that the Holder shall reimburse the Company for any fees, costs and expenses paid by the Company for any registration (i) which is subsequently withdrawn by the Holders after the Company has filed a registration statement with the SEC in connection therewith but prior to such registration being declared effective by the SEC or (ii) which is not declared effective solely as a result of the failure of the Holders to take all actions reasonably required in order to have the registration and the related registration statement declared effective by the SEC. (b) The fees, costs and expenses of registration to be borne as provided in Section 7(a) shall include, without limitation, all expenses incident to the Company's performance of or compliance with this Agreement, including without limitation all SEC and stock exchange registration and filing fees and expenses, reasonable fees and expenses of any "qualified independent underwriter" and its counsel as may be required by the rules of the NASD, fees and expenses of compliance with securities or blue sky laws (including without limitation reasonable fees and disbursements of counsel for the underwriters, if any, or for the selling Holders, in connection with blue sky qualifications of the Registrable Shares), printing expenses (including expenses of printing certificates for Registrable Shares and prospectuses), messenger, telephone and delivery expenses, the fees and expenses incurred in connection with the listing of the securities to be registered on each securities exchange or national market system on which similar securities issued by the Company are then listed, fees and disbursements of counsel for the Company and all independent certified public accountants (including the expenses of any annual audit, special audit and "cold comfort" letters required by or incident to such performance and compliance), the fees and disbursements of underwriters customarily paid by issuers or sellers of securities (including, without limitation, expenses relating to "road shows" and other marketing activities), the reasonable fees of one counsel retained in connection with each such registration by the Holders of a majority of the Registrable Shares being registered (such counsel fees not to exceed $35,000 per registration), the reasonable fees and expenses of any special experts retained by the Company in connection with such registration, and fees and expenses of other Persons retained by the Company (but not including any underwriting discounts or commissions or transfer taxes, if any, attributable to the sale of Registrable Shares by such Holders) (collectively, "Registration Expenses"). 8. Indemnification. --------------- (a) Indemnification by the Company. In the event of any registration of any securities of the Company under the Securities Act pursuant to Section 2 or Section 4, the Company will, and it hereby does, indemnify and hold harmless, to the extent permitted by law, each of the Holders of any Registrable Shares covered by such registration statement, each affiliate of such Holder and their respective directors and officers or general and limited partners (and the directors, officers, general and limited partners, affiliates and controlling Persons thereof), each other Person who participates as an underwriter in the offering or sale of such securities and each other Person, if any, who controls such Holder or any such underwriter within the meaning of the Securities Act (collectively, the "Indemnified Parties"), against any and all losses, claims, damages or liabilities, joint or several, and expenses (including any amounts paid in any settlement effected with the Company's consent) to which any Indemnified Party may become subject under the Securities Act, state securities or blue sky laws, common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof, whether or not such Indemnified Party is a party thereto) or expenses arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such securities were registered under the Securities Act, any preliminary, final or summary prospectus contained therein, or any amendment or supplement thereto, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any violation by the Company of any federal, state or common law rule or regulation applicable to the Company and relating to action required of or inaction by the Company in connection with any such registration; provided, that the Company shall not be liable to any Indemnified Party in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement or amendment or supplement thereto or in any such preliminary, final or summary prospectus in reliance upon and in conformity with written information with respect to such Holder furnished by such Holder to the Company. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any Indemnified Party and shall survive the transfer of such securities by such Holder. (b) Indemnification by the Holders and Underwriters. The Company may require, as a condition to including any Registrable Shares in any registration statement filed in accordance with Section 2 or Section 4, that the Company shall have received an undertaking reasonably satisfactory to it from the Holders of such Registrable Shares or any underwriter to indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 8(a)) the Company with respect to any statement or alleged statement in or omission or alleged omission from such registration statement, any preliminary, final or summary prospectus contained therein, or any amendment or supplement, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information with respect to the Holders of the Registrable Shares being registered or such underwriter furnished in writing to the Company by such Holders or such underwriter, or a document incorporated by reference into any of the foregoing; provided, that no such Holder shall be liable for any indemnity claims in excess of the amount of net proceeds received by such Holder from the sale of Registrable Shares. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any of the Holders, or any of their respective affiliates, directors, officers or controlling Persons, and shall survive the transfer of such securities by such Holder. (c) Notices of Claims, Etc. Promptly after receipt by an indemnified party hereunder of written notice of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Section 8, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action; provided, that the failure of the indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under this Section 8, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense thereof, with counsel satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation; provided that the indemnified party shall have the right to employ counsel to represent the indemnified party and its respective controlling persons, directors, officers, general or limited partners, employees or agents who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the indemnified party against such indemnifying party under this Section 8 if (i) the employment of such counsel shall have been authorized in writing by such indemnifying party in connection with the defense of such action, (ii) the indemnifying party shall not have promptly employed counsel reasonably satisfactory to the indemnified party to assume the defense of such action or counsel, or (iii) any indemnified party shall have reasonably concluded that there may be defenses available to such indemnified party or its respective controlling persons, directors, officers, employees or agents which are in conflict with or in addition to those available to the indemnifying party, and in that event the reasonable fees and expenses of one firm of separate counsel for the indemnified party shall be paid by the indemnifying party. No indemnifying party will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. (d) If the indemnification provided for in this Section 8 shall for any reason be unavailable to any indemnified party under Section 8(a) or Section 8(b) or is insufficient to hold it harmless in respect of any loss, claim, damage or liability, or any action in respect thereof referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the indemnified party and indemnifying party or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnified party and indemnifying party with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. Notwithstanding any other provision of this Section 8(d), no Holder of Registrable Shares shall be required to contribute an amount greater than the dollar amount of the proceeds received by such Holder with respect to the sale of any such Registrable Shares. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (e) Other Indemnification. Indemnification similar to that specified in the preceding subdivisions of this Section 8 (with appropriate modifications) shall be given by the Company and each Holder of Registrable Shares with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Securities Act. (f) Non-Exclusivity. The obligations of the parties under this Section 8 shall be in addition to any liability which any party may otherwise have to any other party. 9. Rule 144. The Company covenants that it will use its reasonable best efforts to file in a timely manner the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Holder of Registrable Shares, make publicly available such information), and it will take such further action as any Holder of Registrable Shares may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Shares without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder of Registrable Shares, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements. 10. Specific Performance. The Company acknowledges that the rights granted to the Holders in this Agreement are of a special, unique and extraordinary character, and that any breach of this Agreement by the Company could not be compensated for by damages. Accordingly, if the Company breaches its obligations under this Agreement, the Holders shall be entitled, in addition to any other remedies that they may have, to enforcement of this Agreement by a decree of specific performance requiring the Company to fulfill its obligations under this Agreement. 11. Defaults. A default by any party to this Agreement in such party's compliance with any of the conditions or covenants hereof or performance of any of the obligations of such party hereunder shall not constitute a default by any other party. 12. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given, if delivered personally, by telecopier or sent by overnight courier as follows: If to the Purchasers, to: GS Capital Partners 2000, L.P. GS Capital Partners 2000 Offshore, L.P. GS Capital Partners 2000 GmbH & Co. Beteiligungs KG GS Capital Partners 2000 Employee Fund, L.P. Goldman Sachs Direct Investment Fund 2000, L.P. 85 Broad Street New York, New York 10004 Phone: (212) 902-1000 Fax: (212) 357-5505 Attention: Mr. Stuart Katz Attention: Ben Adler, Esq. with a copy to (which shall not constitute notice): Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10014 Phone: (212) 859-8000 Fax: (212) 859-8586 Attention: David N. Shine If to the Company, to: R.H. Donnelley Corporation One Manhattanville Road Purchase, NY 10577 Phone: (914) 933-6769 Fax: (914) 933-6844 Attention: Robert J. Bush with a copy to (which shall not constitute notice): Jones, Day, Reavis & Pogue 901 Lakeside Avenue Cleveland, Ohio 44114 Phone: (216) 586-3939 Fax: (216) 579-0212 Attention: Thomas C. Daniels, Esq. or to such other address or addresses as shall be designated in writing. All notices shall be effective when received. 13. Entire Agreement; Amendments; Waivers. This Agreement, the Stock Purchase Agreement, the Letter Agreement and the Certificate of Designations and the documents described herein and therein or attached or delivered pursuant hereto or thereto set forth the entire agreement between the parties hereto with respect to the transactions contemplated by this Agreement. Any provision of this Agreement may be amended or modified in whole or in part at any time by an agreement in writing among the Company and a majority of the Holders executed in the same manner as this Agreement. No failure on the part of any party to exercise, and no delay in exercising, any right shall operate as a waiver thereof nor shall any single or partial exercise by any party of any right preclude any other or future exercise thereof or the exercise of any other right. No investigation by the Purchasers of the Company prior to or after the date hereof shall stop or prevent the Purchasers from exercising any right hereunder or be deemed to be a waiver of any such right. 14. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to constitute an original, but all of which together shall constitute one and the same documents. 15. Governing Law. This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of New York applicable to contracts made and to be performed in that State. 16. Successors and Assigns. The Company may not assign any of its rights or delegate any of its duties under this Agreement without the prior written consent of a majority of the Holders. Any purported assignment in violation of this Section 16 shall be void. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, personal representatives and permitted assigns, whether so expressed or not. Subject to Section 17 hereof, if any Person shall acquire 5% or more of the Registrable Shares outstanding on the Issue Date, in any manner, whether by operation of law or otherwise, such transferee shall promptly notify the Company and such Registrable Shares acquired from such Holder shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Shares such Person shall be entitled to receive the benefits of and be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement. If the Company shall so request, any such successor or assign shall agree in writing to acquire and hold the Registrable Shares acquired from such Holder subject to all of the terms hereof. If any Holder shall acquire additional Registrable Shares, such Registrable Shares shall be subject to all of the terms, and entitled to all the benefits, of this Agreement. 17. Transfer of Certain Rights. The rights granted to each Holder pursuant to this Agreement may be transferred by such Holder to any person or entity who acquires at least 5% of the Registrable Shares outstanding on the Issue Date; provided, that the Company is given written notice by the transferee at the time of such transfer stating the name and address of the transferee and identifying the securities with respect to which such rights are being assigned. Any transferee (other than a Holder who is a party to this Agreement) to whom rights hereunder are transferred shall, as a condition to such transfer, deliver to the Company a written instrument by which such transferee agrees to be bound by the obligations imposed upon Holders of Registrable Shares under this Agreement to the same extent as if such transferee were a party hereto and shall at such time be entitled to all of the benefits to and subject to all of the obligations of a Holder. Notwithstanding anything to the contrary herein, any Holder may transfer rights granted to it hereunder to any Affiliate of such Holder to whom Registrable Shares are transferred and who delivers to the Company a written instrument in accordance with the second sentence of this Section 17 and containing the representation that the transfer is exempt from registration under the Securities Act. In the event of such transfer, such Affiliate shall be deemed a Holder. 18. No Inconsistent Agreements. The Company will not, on or after the date of this Agreement, enter into any agreement with respect to its securities which is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof, other than any customary lock-up agreement with the underwriters in connection with any offering effected hereunder, pursuant to which the Company shall agree not to register for sale, and the Company shall agree not to sell or otherwise dispose of, Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, for a specified period (not to exceed 180 days) following such offering. The Company has not previously entered into any agreement with respect to its securities granting any registration rights to any Person. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with any other agreements to which the Company is a party or by which it is bound. The Company further agrees that if any other registration rights agreement entered into after the date of this Agreement with respect to any of its securities contains terms which are more favorable to, or less restrictive on, the other party thereto than the terms and conditions contained in this Agreement (insofar as they are applicable) with respect to the Holders, then the terms and conditions of this Agreement shall immediately be deemed to have been amended without further action by the Company or the Holders so that the Holders shall be entitled to the benefit of any such more favorable or less restrictive terms or conditions. 19. Jurisdiction. The courts of the State of New York in New York County and the United States District Court for the Southern District of New York shall have jurisdiction over the parties with respect to any dispute or controversy between them arising under or in connection with this agreement and, by execution and delivery of this agreement, each of the parties to this Agreement submits to the jurisdiction of those courts, including but not limited to the in personam and subject matter jurisdiction of those courts, waives any objections to such jurisdiction on the grounds of venue or forum non conveniens, the absence of in personam or subject matter jurisdiction and any similar grounds, consents to service of process by mail (in accordance with Section 12) or any other manner permitted by law, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. 20. Captions; References. The captions contained in this Agreement are for reference purposes only and are not part of this Agreement. Unless otherwise indicated, all references to Sections and clauses in this Agreement refer to Sections and clauses of this Agreement. 21. Severability. Should any part of this Agreement for any reason be declared invalid, such decision shall not affect the validity of any remaining portion, which remaining portion shall remain in full force and effect as if this Agreement had been executed with the invalid portion thereof eliminated, and it is hereby declared the intention of the parties hereto that they would have executed the remaining portion of this Agreement without including therein any such part or parts which may, for any reason, be hereafter declared invalid. [SIGNATURES ON FOLLOWING PAGE] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective authorized officers as of the date aforesaid. R. H. DONNELLEY CORPORATION By: /s/ Robert J. Bush --------------------------------- Name: Robert J. Bush Title: Vice President and General Counsel GS CAPITAL PARTNERS 2000, L.P. By: GS Advisors 2000, L.L.C. Its General Partner By: /s/ John E. Bowman --------------------------------- Name: John E. Bowman Its: Vice President GS CAPITAL PARTNERS 2000 OFFSHORE, L.P. By: GS Advisors 2000, L.L.C. Its General Partner By: /s/ John E. Bowman --------------------------------- Name: John E. Bowman Its: Vice President GS CAPITAL PARTNERS 2000 GMBH & CO. BETEILIGUNGS KG By: Goldman Sachs Management GP GmbH Its General Partner By: /s/ John E. Bowman --------------------------------- Name: John E. Bowman Its: Managing Director GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P. By: GS Employee Funds 2000 GP, L.L.C. Its General Partner By: /s/ John E. Bowman --------------------------------- Name: John E. Bowman Its: Vice President GOLDMAN SACHS DIRECT INVESTMENT FUND 2000, L.P. By: GS Employee Funds 2000 GP, L.L.C. Its General Partner By: /s/ John E. Bowman --------------------------------- Name: John E. Bowman Its: Vice President EX-99.9 11 ex99_9.txt POWER OF ATTORNEY EXHIBIT 9 - POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS that THE GOLDMAN SACHS GROUP, INC. (the "Company") does hereby make, constitute and appoint each of Hans L. Reich and Roger S. Begelman, acting individually, its true and lawful attorney, to execute and deliver in its name and on its behalf whether the Company is acting individually or as representative of others, any and all filings required to be made by the Company under the Securities Exchange Act of 1934 (as amended, the "Act"), with respect to securities which may be deemed to be beneficially owned by the Company under the Act, giving and granting unto each said attorney-in-fact power and authority to act in the premises as fully and to all intents and purposes as the Company might or could do if personally present by one of its authorized signatories, hereby ratifying and confirming all that said attorney-in-fact shall lawfully do or cause to be done by virtue hereof. THIS POWER OF ATTORNEY shall remain in full force and effect until either revoked in writing by the undersigned or until such time as the person or persons to whom power of attorney has been hereby granted cease(s) to be an employee of The Goldman Sachs Group, Inc. or one of its affiliates. IN WITNESS WHEREOF, the undersigned has duly subscribed these presents as of December 8, 2000. THE GOLDMAN SACHS GROUP, INC. By: /s/ Gregory K. Palm - --------------------------------- Name: Gregory K. Palm Title: Executive Vice President and General Counsel EX-99.10 12 ex99_10.txt POWER OF ATTORNEY EXHIBIT 10 - POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS that GOLDMAN, SACHS & CO. (the "Company") does hereby make, constitute and appoint each of Hans L. Reich and Roger S. Begelman, acting individually, its true and lawful attorney, to execute and deliver in its name and on its behalf whether the Company is acting individually or as representative of others, any and all filings required to be made by the Company under the Securities Exchange Act of 1934 (as amended, the "Act"), with respect to securities which may be deemed to be beneficially owned by the Company under the Act, giving and granting unto each said attorney-in-fact power and authority to act in the premises as fully and to all intents and purposes as the Company might or could do if personally present by one of its authorized signatories, hereby ratifying and confirming all that said attorney-in-fact shall lawfully do or cause to be done by virtue hereof. THIS POWER OF ATTORNEY shall remain in full force and effect until either revoked in writing by the undersigned or until such time as the person or persons to whom power of attorney has been hereby granted cease(s) to be an employee of The Goldman Sachs Group, Inc. or one of its affiliates. IN WITNESS WHEREOF, the undersigned has duly subscribed these presents as of December 8, 2000. GOLDMAN, SACHS & CO. By: The Goldman, Sachs & Co. L.L.C. By: /s/ Gregory K. Palm - --------------------------------- Name: Gregory K. Palm Title: Managing Director EX-99.11 13 ex99_11.txt POWER OF ATTORNEY EXHIBIT 11 - POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS that GS ADVISORS 2000, L.L.C. (the "Company") does hereby make, constitute and appoint each of Hans L. Reich and Roger S. Begelman, acting individually, its true and lawful attorney, to execute and deliver in its name and on its behalf whether the Company is acting individually or as representative of others, any and all filings required to be made by the Company under the Securities Exchange Act of 1934, as amended, giving and granting unto each said attorney-in-fact power and authority to act in the premises as fully and to all intents and purposes as the Company might or could do if personally present by one of its authorized signatories, hereby ratifying and confirming all that said attorney-in-fact shall lawfully do or cause to be done by virtue hereof. THIS POWER OF ATTORNEY shall remain in full force and effect until either revoked in writing by the undersigned or until such time as the person or persons to whom power of attorney has been hereby granted cease(s) to be an employee of The Goldman Sachs Group, Inc. or one of its affiliates. IN WITNESS WHEREOF, the undersigned has duly subscribed these presents as of December 20, 2000. GS ADVISORS 2000, L.L.C. By: /s/ John E. Bowman - --------------------------------- Name: John E. Bowman Title: Vice President EX-99.12 14 ex99_12.txt POWER OF ATTORNEY EXHIBIT 12 - POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS that GOLDMAN, SACHS & CO. oHG (the "Company") does hereby make, constitute and appoint each of Hans L. Reich and Roger S. Begelman, acting individually, its true and lawful attorney, to execute and deliver in its name and on its behalf whether the Company is acting individually or as representative of others, any and all filings required to be made by the Company under the Securities Exchange Act of 1934, as amended, giving and granting unto each said attorney-in-fact power and authority to act in the premises as fully and to all intents and purposes as the Company might or could do if personally present by one of its authorized signatories, hereby ratifying and confirming all that said attorney-in-fact shall lawfully do or cause to be done by virtue hereof. THIS POWER OF ATTORNEY shall remain in full force and effect until either revoked in writing by the undersigned or until such time as the person or persons to whom power of attorney has been hereby granted cease(s) to be an employee of The Goldman Sachs Group, Inc. or one of its affiliates. IN WITNESS WHEREOF, the undersigned has duly subscribed these presents as of March 28, 2000. GOLDMAN, SACHS & CO. oHG By: /s/ Andreas Kornlein By: /s/ Sabine Mock --------------------------------- --------------------------------- Name: Andreas Kornlein Name: Sabine Mock Title: Executive Director Title: Executive Director EX-99.13 15 ex99_13.txt POWER OF ATTORNEY EXHIBIT 13 - POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS that GOLDMAN, SACHS MANAGEMENT GP GmbH (the "Company") does hereby make, constitute and appoint each of Hans L. Reich and Roger S. Begelman, acting individually, its true and lawful attorney, to execute and deliver in its name and on its behalf whether the Company is acting individually or as representative of others, any and all filings required to be made by the Company under the Securities Exchange Act of 1934, as amended, giving and granting unto each said attorney-in-fact power and authority to act in the premises as fully and to all intents and purposes as the Company might or could do if personally present by one of its authorized signatories, hereby ratifying and confirming all that said attorney-in-fact shall lawfully do or cause to be done by virtue hereof. THIS POWER OF ATTORNEY shall remain in full force and effect until either revoked in writing by the undersigned or until such time as the person or persons to whom power of attorney has been hereby granted cease(s) to be an employee of The Goldman Sachs Group, Inc. or one of its affiliates. IN WITNESS WHEREOF, the undersigned has duly subscribed these presents as of December 20, 2000. GOLDMAN, SACHS MANAGEMENT GP GmbH By: /s/ John E. Bowman - --------------------------------- Name: John E. Bowman Title: Managing Director EX-99.14 16 ex99_14.txt POWER OF ATTORNEY EXHIBIT 14 - POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS that GS EMPLOYEE FUNDS 2000 GP, L.L.C. (the "Company") does hereby make, constitute and appoint each of Hans L. Reich and Roger S. Begelman, acting individually, its true and lawful attorney, to execute and deliver in its name and on its behalf whether the Company is acting individually or as representative of others, any and all filings required to be made by the Company under the Securities Exchange Act of 1934, as amended, giving and granting unto each said attorney-in-fact power and authority to act in the premises as fully and to all intents and purposes as the Company might or could do if personally present by one of its authorized signatories, hereby ratifying and confirming all that said attorney-in-fact shall lawfully do or cause to be done by virtue hereof. THIS POWER OF ATTORNEY shall remain in full force and effect until either revoked in writing by the undersigned or until such time as the person or persons to whom power of attorney has been hereby granted cease(s) to be an employee of The Goldman Sachs Group, Inc. or one of its affiliates. IN WITNESS WHEREOF, the undersigned has duly subscribed these presents as of December 20, 2000. GS EMPLOYEE FUNDS 2000 GP, L.L.C. By: /s/ John E. Bowman - --------------------------------- Name: John E. Bowman Title: Vice President EX-99.15 17 ex99_15.txt POWER OF ATTORNEY EXHIBIT 15 - POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS that GS CAPITAL PARTNERS 2000, L.P. (the "Company") does hereby make, constitute and appoint each of Hans L. Reich and Roger S. Begelman, acting individually, its true and lawful attorney, to execute and deliver in its name and on its behalf whether the Company is acting individually or as representative of others, any and all filings required to be made by the Company under the Securities Exchange Act of 1934, as amended, giving and granting unto each said attorney-in-fact power and authority to act in the premises as fully and to all intents and purposes as the Company might or could do if personally present by one of its authorized signatories, hereby ratifying and confirming all that said attorney-in-fact shall lawfully do or cause to be done by virtue hereof. THIS POWER OF ATTORNEY shall remain in full force and effect until either revoked in writing by the undersigned or until such time as the person or persons to whom power of attorney has been hereby granted cease(s) to be an employee of The Goldman Sachs Group, Inc. or one of its affiliates. IN WITNESS WHEREOF, the undersigned has duly subscribed these presents as of December 20, 2000. GS CAPITAL PARTNERS 2000, L.P. By: GS Advisors 2000, L.L.C. By: /s/ John E. Bowman - --------------------------------- Name: John E. Bowman Title: Vice President EX-99.16 18 ex99_16.txt POWER OF ATTORNEY EXHIBIT 16 - POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS that GS CAPITAL PARTNERS 2000 OFFSHORE, L.P. (the "Company") does hereby make, constitute and appoint each of Hans L. Reich and Roger S. Begelman, acting individually, its true and lawful attorney, to execute and deliver in its name and on its behalf whether the Company is acting individually or as representative of others, any and all filings required to be made by the Company under the Securities Exchange Act of 1934, as amended, giving and granting unto each said attorney-in-fact power and authority to act in the premises as fully and to all intents and purposes as the Company might or could do if personally present by one of its authorized signatories, hereby ratifying and confirming all that said attorney-in-fact shall lawfully do or cause to be done by virtue hereof. THIS POWER OF ATTORNEY shall remain in full force and effect until either revoked in writing by the undersigned or until such time as the person or persons to whom power of attorney has been hereby granted cease(s) to be an employee of The Goldman Sachs Group, Inc. or one of its affiliates. IN WITNESS WHEREOF, the undersigned has duly subscribed these presents as of December 20, 2000. GS CAPITAL PARTNERS 2000 OFFSHORE, L.P. By: GS Advisors 2000, L.L.C. By: /s/ John E. Bowman - --------------------------------- Name: John E. Bowman Title: Vice President EX-99.17 19 ex99_17.txt POWER OF ATTORNEY EXHIBIT 17 - POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS that GS CAPITAL PARTNERS 2000 GmbH & CO. BETEILIGUNGS KG (the "Company") does hereby make, constitute and appoint each of Hans L. Reich and Roger S. Begelman, acting individually, its true and lawful attorney, to execute and deliver in its name and on its behalf whether the Company is acting individually or as representative of others, any and all filings required to be made by the Company under the Securities Exchange Act of 1934, as amended, giving and granting unto each said attorney-in-fact power and authority to act in the premises as fully and to all intents and purposes as the Company might or could do if personally present by one of its authorized signatories, hereby ratifying and confirming all that said attorney-in-fact shall lawfully do or cause to be done by virtue hereof. THIS POWER OF ATTORNEY shall remain in full force and effect until either revoked in writing by the undersigned or until such time as the person or persons to whom power of attorney has been hereby granted cease(s) to be an employee of The Goldman Sachs Group, Inc. or one of its affiliates. IN WITNESS WHEREOF, the undersigned has duly subscribed these presents as of December 20, 2000. GS CAPITAL PARTNERS 2000 GMBH & CO. BETEILIGUNGS KG By: Goldman, Sachs Management GP GmbH By: /s/ John E. Bowman - --------------------------------- Name: John E. Bowman Title: Managing Director EX-99.18 20 ex99_18.txt POWER OF ATTORNEY EXHIBIT 18 - POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS that GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P. (the "Company") does hereby make, constitute and appoint each of Hans L. Reich and Roger S. Begelman, acting individually, its true and lawful attorney, to execute and deliver in its name and on its behalf whether the Company is acting individually or as representative of others, any and all filings required to be made by the Company under the Securities Exchange Act of 1934, as amended, giving and granting unto each said attorney-in-fact power and authority to act in the premises as fully and to all intents and purposes as the Company might or could do if personally present by one of its authorized signatories, hereby ratifying and confirming all that said attorney-in-fact shall lawfully do or cause to be done by virtue hereof. THIS POWER OF ATTORNEY shall remain in full force and effect until either revoked in writing by the undersigned or until such time as the person or persons to whom power of attorney has been hereby granted cease(s) to be an employee of The Goldman Sachs Group, Inc. or one of its affiliates. IN WITNESS WHEREOF, the undersigned has duly subscribed these presents as of December 20, 2000. GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P. By: GS Employee Funds 2000 GP, L.L.C. By: /s/ John E. Bowman - --------------------------------- Name: John E. Bowman Title: Vice President EX-99.19 21 ex99_19.txt POWER OF ATTORNEY EXHIBIT 19 - POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS that GOLDMAN SACHS DIRECT INVESTMENT FUND 2000, L.P. (the "Company") does hereby make, constitute and appoint each of Hans L. Reich, Roger S. Begelman and Edward T. Joel, acting individually, its true and lawful attorney, to execute and deliver in its name and on its behalf whether the Company is acting individually or as representative of others, any and all filings required to be made by the Company under the Securities Exchange Act of 1934, (as amended, the "Act"), with respect to securities which may be deemed to be beneficially owned by the Company under the Act, giving and granting unto each said attorney-in-fact power and authority to act in the premises as fully and to all intents and purposes as the Company might or could do if personally present by one of its authorized signatories, hereby ratifying and confirming all that said attorney-in-fact shall lawfully do or cause to be done by virtue hereof. THIS POWER OF ATTORNEY shall remain in full force and effect until either revoked in writing by the undersigned or until such time as the person or persons to whom power of attorney has been hereby granted cease(s) to be an employee of The Goldman Sachs Group, Inc. or one of its affiliates. IN WITNESS WHEREOF, the undersigned has duly subscribed these presents as of November 27, 2002. GOLDMAN SACHS DIRECT INVESTMENT FUND 2000, L.P. By: GS Employee Funds 2000 GP, L.L.C. By: /s/ Kaca B. Enquist - ----------------------------------------------- KACA B. ENQUIST, Vice President -----END PRIVACY-ENHANCED MESSAGE-----