-----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, IUIuF16XiD0iI//ntNDklPanrcwdFfOeALc53gsMJfc2hKRxkpKLGasnkoS06/G7 TAmgXZ2sz6E57x0ERZYcrA== 0000950123-03-000414.txt : 20030117 0000950123-03-000414.hdr.sgml : 20030117 20030117112227 ACCESSION NUMBER: 0000950123-03-000414 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 20030103 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030117 FILER: 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07155 FILM NUMBER: 03517224 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 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DONNELLEY R H INC CENTRAL INDEX KEY: 0001065310 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS PUBLISHING [2741] IRS NUMBER: 362467635 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-59287 FILM NUMBER: 03517225 BUSINESS ADDRESS: STREET 1: 1 MANHATTANVILLE ROAD CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9149336400 MAIL ADDRESS: STREET 1: 1 MANHATTANVILLE ROAD CITY: PURCHASE STATE: NY ZIP: 10577 8-K 1 y82590e8vk.txt R.H. DONNELLEY CORPORATION/R.H. DONNELLEY INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ---------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): JANUARY 3, 2003 R.H. DONNELLEY CORPORATION (Exact Name of Registrant as Specified in Charter)
DELAWARE 1-07155 13-2740040 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.)
ONE MANHATTANVILLE ROAD, PURCHASE, NEW YORK 10577 (Address of Principal Executive Offices) (Zip Code)
R.H. DONNELLEY INC.* (Exact Name of Registrant as Specified in Charter)
DELAWARE 333-59287 36-2467635 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.)
ONE MANHATTANVILLE ROAD, PURCHASE, NEW YORK 10577 (Address of Principal Executive Offices) (Zip Code)
Registrants' telephone number, including area code: (914) 933-6400 Not Applicable (Former Name or Former Address, if Changed Since Last Report) *R.H. Donnelley Inc. is a wholly owned subsidiary of R.H. Donnelley Corporation, which became subject to the filing requirements of Section 15(d) on October 1, 1998. As of January 13, 2003, 100 shares of R.H. Donnelley Inc. common stock, no par value, were outstanding. ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On January 3, 2003, R.H. Donnelley Corporation (the "Company") completed the acquisition from Sprint Corporation ("Sprint") of Sprint's directory publishing business ("SPA") by purchasing the stock of two subsidiaries of Sprint, DirectoriesAmerica, Inc. and Centel Directory Company. The acquisition was accomplished pursuant to, and in accordance with, the terms of the Stock Purchase Agreement, dated as of September 21, 2002 (as supplemented and amended, the "Stock Purchase Agreement"), by and among the Company, Sprint and Centel Directories LLC, a Delaware limited liability company ("Centel"). The parties supplemented and amended certain of their obligations in connection with the transactions contemplated by the Stock Purchase Agreement pursuant to the Supplemental Agreement to Stock Purchase Agreement, dated as of December 31, 2002 (the "Supplemental Agreement"). Prior to the acquisition, the Company served as the exclusive sales agent for 41 Sprint Yellow Pages(R) directories in four states. Following the acquisition, the Company will publish 260 revenue-generating Sprint Yellow Pages(R) directories in 18 states. SPA will be operated as R.H. Donnelley Publishing & Advertising, Inc. ("RHDPA"), an indirect, wholly owned subsidiary of the Company. RHDPA is currently utilizing the pre-press operations acquired by the Company in the SPA acquisition. The aggregate purchase price for SPA was approximately $2.21 billion. The previously announced purchase price of $2.23 billion was reduced by approximately $16.5 million as a result of a preliminary net working capital adjustment in accordance with the provisions of the Stock Purchase Agreement. In addition, the Company paid $14 million to Sprint in settlement of a long-term liability. The Company funded the acquisition from the proceeds of a preferred stock investment by GS Capital Partners 2000, L.P. and affiliated entities ("GSCP 2000"), a new senior secured credit facility, each as described below in Item 5, and newly issued senior and senior subordinated notes. On January 3, 2003, the Company also repaid approximately $114.4 million under its existing senior credit facility and terminated the commitments thereunder and repurchased approximately $128.8 million aggregate principal amount of its existing 9 1/8% senior subordinated notes due 2008 in accordance with the terms and conditions of the Offer to Purchase and Consent Solicitation Statement, dated December 3, 2002, and the Consent and Letter of Transmittal, dated December 3, 2002. In connection with the closing of the SPA acquisition, the Company and/or certain of its affiliates entered into agreements with Sprint and/or certain of its affiliates, including a Directory Services License Agreement, a Trademark License Agreement, a Publisher Trademark License Agreement, a Non-Competition Agreement and a Subscriber Listings Agreement (collectively, the "Transaction Agreements"). Under the Directory Services License Agreement, a subsidiary of Sprint has granted the Company an exclusive license to publish and distribute all physical and non-physical media Sprint directories in the markets in which Sprint currently provides local telephone service and the related extended area service markets for an initial term of 50 years. The Company has also agreed, for an initial term of 50 years, to be responsible for all activities relating to the production, publication and distribution of the white and yellow pages directories for Sprint in Sprint's service areas. Under the Trademark License Agreement, Sprint has granted to the Company a non-transferable, royalty-free, exclusive right during the term of the Directory Services License Agreement to use the Sprint name and diamond logo to publish and solicit advertising for physical directories primarily distributed in, and non-physical directories primarily directed at, the Sprint service areas (the "Directories") and for certain ancillary matters. Pursuant to the Publisher Trademark License Agreement, in the event that the Directory Services License Agreement has been terminated as to any directory as a result of the Company's breach, Sprint will have the right to use certain trademarks sold to the Company as part of the acquisition of SPA that are associated with the "look and feel" of directories, including the red cover and the "Best Red Yellow Pages" tagline, on any directories as to which the Directory Services License Agreement has been terminated. The Publisher Trademark License Agreement has an initial term of 50 years, subject to extension (but not early termination) in the event of a renewal of the Directory Services License Agreement. Under the Non-Competition Agreement, Sprint has agreed not to engage in the business of (1) producing, publishing or distributing physical Directories primarily distributed to or directed at the Sprint service areas, (2) selling any advertising included in or accessible through a physical or non-physical directory regarding businesses located in the Sprint service areas, subject to certain exceptions, or (3) promoting or permitting a third party to promote an affiliation with Sprint as the incumbent local exchange carrier in connection with an activity of the type described in the preceding clauses (1) or (2). The term of the Non-Competition Agreement is generally concurrent with the term of the Directory Services License Agreement with certain limited exceptions. Under the Subscriber Listing Agreement, during the term of the Directory Services License Agreement, the Company has the right to purchase and use basic Sprint subscriber information and updates for the purpose of publishing directories and soliciting advertising. The terms of the SPA acquisition, including the consideration paid by the Company, were determined in arms'-length negotiations between the Company, on the one hand, and Sprint and Centel, on the other hand, and are set forth in the Stock Purchase Agreement, the Supplemental Agreement and the Transaction Agreements. The Stock Purchase Agreement and the Supplemental Agreement are filed herewith as Exhibits 2.1 and 2.2, respectively, and the Transaction Agreements are filed herewith as Exhibits 10.1 through 10.5. The foregoing descriptions of all such agreements are qualified in their entirety by the full text of each such document and are incorporated herein by reference. ITEM 5. OTHER EVENTS. Preferred Stock Investment Simultaneously with the SPA acquisition, GSCP 2000 invested an additional $130 million in the Company through the purchase of 130,000 shares (the "Preferred Shares") of a new series of convertible preferred stock of the Company (such new series, the "New Preferred Stock") and warrants to purchase an aggregate of 1,072,500 shares of common stock of the Company (the "New Warrants") pursuant to a preferred stock and warrant purchase agreement entered into as of September 21, 2002 (as amended, the "Preferred Stock Purchase Agreement"), filed herewith as Exhibit 10.6. As previously announced, GSCP 2000 had previously invested $70 million in the Company through the purchase of Series B-1 Convertible Cumulative Preferred Stock of the Company (the "Series B-1 Preferred Stock") and warrants to purchase an aggregate of 577,500 shares of common stock of the Company (the "November Warrants") pursuant to a letter agreement entered into on November 25, 2002 (the "Letter Agreement"),filed herewith as Exhibit 10.7. Pursuant to the terms of the Certificate of Designations governing the Series B-1 Preferred Stock (the "B-1 Certificate of Designations"), filed herewith as Exhibit 3.1, the shares of the Series B-1 Preferred Stock, including accrued dividends, automatically converted into shares of New Preferred Stock upon the closing of the sale of the Preferred Shares and the New Warrants. Consequently, GSCP 2000 holds an aggregate of 200,604 shares of New Preferred Stock. The November Warrants remain outstanding and are subject to the terms and conditions of the Warrant Agreement, a form of which is filed herewith as Exhibit 4.1. The additional $130 million investment, which resulted in net proceeds to the Company of $128.7 million, represented the balance of GSCP 2000's commitment pursuant to the terms of the Preferred Stock Purchase Agreement. In addition, the Company, R.H. Donnelley, Inc. ("RHD") and GSCP 2000 entered into a letter agreement, dated January 3, 2003 (the "Second Letter Agreement"), filed herewith as Exhibit 10.8, by which the parties agreed to certain definitions in the Preferred Stock Purchase Agreement that by the terms of the Preferred Stock Purchase Agreement were to be defined by the parties prior to the closing of the sale of the Preferred Shares and the New Warrants. The New Preferred Stock is subject to the terms and conditions of the Certificate of Designations governing the New Preferred Stock (the "Certificate of Designations"), filed herewith as Exhibit 3.2. The New Warrants are subject to the terms and conditions of the Warrant Agreement, a form of which is filed herewith as Exhibit 4.2. The Company has granted GSCP 2000 registration rights with respect to the New Preferred Stock and the common stock to be acquired upon the conversion of the New Preferred Stock and the exercise of the New Warrants and the November Warrants. The registration rights are subject to the terms and conditions of the Registration Rights Agreement (the "Preferred Stock Registration Rights Agreement"), filed herewith as Exhibit 10.9. The foregoing descriptions of the Preferred Stock Purchase Agreement, the Letter Agreement, the B-1 Certificate of Designations, the November Warrants, the Certificate of Designations, the New Warrants, the Preferred Stock Registration Rights Agreement and the Second Letter Agreement are qualified in their entirety by reference to the full text of each document and are incorporated by reference herein. Senior Secured Credit Facility Also in connection with the acquisition of SPA, RHD replaced its existing senior credit facility with a new senior secured credit facility arranged by Deutsche Bank Securities Inc., Salomon Smith Barney Inc. and Bear, Stearns & Co. Inc. The terms and conditions of the new facility are set forth in the Credit Agreement (the "Credit Agreement"), filed herewith as Exhibit 10.10. The Credit Agreement provides for a $500.0 million tranche A term loan facility, a $900.0 million tranche B term loan facility and a $125.0 million revolving credit facility. The tranche B term loans were funded into escrow on December 6, 2002 until the completion of the acquisition of SPA. The tranche A term loans and a portion of the revolving credit facility became available contemporaneously with the closing of the acquisition of SPA. Subject to certain limitations, the tranche A term loan facility and revolving credit facility each have terms of 6 years, and the tranche B term loan facility has a term of 7.5 years. The foregoing description of the Credit Agreement is qualified in its entirety by the full text of such document and is incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements of the Businesses Acquired. The financial statements required by this item will be filed within 60 days of January 18, 2003, the date on which the initial report on Form 8-K reporting the completion of the acquisition of SPA is required to be filed. (b) Pro Forma Financial Information. The pro forma financial information required by this item will be filed within 60 days of January 18, 2003, the date on which the initial report on Form 8-K reporting the completion of the acquisition of SPA is to be filed. (c) Exhibits.
Exhibit Number Description ------ ----------- 2.1 Stock Purchase Agreement, dated as of September 21, 2002, by and among R.H. Donnelley Corporation, Sprint Corporation and Centel Directories LLC (incorporated by reference to Exhibit 2.1 to the Form 8-K of the Company, filed on October 1, 2002, Commission File No. 1-07155). The registrant agrees to furnish supplementally a copy of any omitted schedules to the Commission upon request. 2.2* Supplemental Agreement to Stock Purchase Agreement, dated as of December 31, 2002, by and among R.H. Donnelley Corporation, Sprint Corporation and Centel Directories LLC. The registrant agrees to furnish supplementally a copy of any omitted schedules to the Commission upon request. 3.1 Certificate of Designations of Series B-1 Convertible Cumulative Preferred Stock of R.H. Donnelley Corporation (incorporated by reference to Exhibit 3.1 to the Form 8-K of the Company, filed on December 3, 2002, Commission File No. 1-07155). 3.2* Certificate of Designations of Convertible Cumulative Preferred Stock of R.H. Donnelley Corporation. 4.1* Form of Warrant Agreement, issued on November 25, 2002.
4.2* Form of Warrant Agreement, issued on January 3, 2003. 10.1* Directory Services License Agreement, dated as of January 3, 2003, by and among R.H. Donnelley Publishing & Advertising, Inc. (f/k/a Sprint Publishing & Advertising, Inc.), CenDon L.L.C., R.H. Donnelley Directory Company (f/k/a Centel Directory Company), Sprint Corporation, Sprint Directory Trademark Company, LLC and the Sprint Local Telecommunications Division. 10.2* Trademark License Agreement, dated as of January 3, 2003, by and among Sprint Directory Trademark Company, LLC, R.H. Donnelley Publishing & Advertising, Inc. (f/k/a Sprint Publishing & Advertising, Inc.), CenDon L.L.C. and R.H. Donnelley Directory Company (f/k/a Centel Directory Company). 10.3* Publisher Trademark License Agreement, dated as of January 3, 2003, by and among R.H. Donnelley Publishing & Advertising, Inc. (f/k/a Sprint Publishing & Advertising, Inc.), R.H. Donnelley Directory Company (f/k/a Centel Directory Company) and Sprint Corporation. 10.4* Non-Competition Agreement, dated as of January 3, 2003, by and among R.H. Donnelley Corporation, R.H. Donnelley Publishing & Advertising, Inc. (f/k/a Sprint Publishing & Advertising, Inc.), CenDon L.L.C., R.H. Donnelley Directory Company (f/k/a Centel Directory Company), Sprint Corporation and the Sprint Local Telecommunications Division. 10.5* Subscriber Listings Agreement, dated as of January 3, 2003, by and among R.H. Donnelley Publishing & Advertising, Inc. (f/k/a Sprint Publishing & Advertising, Inc.), CenDon L.L.C., R.H. Donnelley Directory Company (f/k/a Centel Directory Company), Sprint Corporation and the Sprint Local Telecommunications Division. 10.6 Preferred Stock and Warrant Purchase Agreement, dated as of September 21, 2002, among R.H. Donnelley Corporation and GS Capital Partners 2000, L.P. and entities affiliated therewith (incorporated by reference to Exhibit 2.2 to the Form 8-K of the Company, filed on October 1, 2002, Commission File No. 1-07155). 10.7 Letter Agreement, dated as of November 25, 2002, among R.H. Donnelley Corporation, R.H. Donnelley Inc. and GS Capital Partners 2000, L.P. and entities affiliated therewith (incorporated by reference to Exhibit 10.1 to the Form 8-K of the Company, filed on December 3, 2002, Commission File No. 1-07155). 10.8* Letter Agreement, dated as of January 3, 2003, among R.H. Donnelley Corporation, R.H. Donnelley Inc. and GS Capital Partners 2000, L.P. and entities affiliated therewith.
10.9 Registration Rights Agreement, dated as of November 25, 2002, among R.H. Donnelley Corporation and GS Capital Partners 2000, L.P. and entities affiliated therewith (incorporated by reference to Exhibit 10.2 to the Form 8-K of the Company, filed on December 3, 2002, Commission File No. 1-07155). 10.10* Credit Agreement, dated as of December 6, 2002, among R.H. Donnelley Corporation, R.H. Donnelley Inc., R.H. Donnelley Finance Corporation II, the several lenders from time to time party thereto, Bear Stearns Corporate Lending Inc. and Citicorp North America, Inc., as joint syndication agents, BNP Paribas and Fleet National Bank, as joint documentation agents, Deutsche Bank Trust Company Americas, as administrative agent, and Deutsche Bank Securities Inc., Salomon Smith Barney Inc. and Bear, Stearns & Co. Inc., as joint lead arrangers and joint bookrunners. 99.1* Press release, dated January 3, 2003.
* Filed herewith. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. R.H. Donnelley Corporation By: /s/ ROBERT J. BUSH ---------------------------------- Name: Robert J. Bush Title: Vice President and General Counsel R.H. Donnelley Inc. By: /s/ ROBERT J. BUSH ---------------------------------- Name: Robert J. Bush Title: Vice President and General Counsel Date: January 17, 2003 EXHIBIT INDEX
Exhibit Number Description ------ ----------- 2.1 Stock Purchase Agreement, dated as of September 21, 2002, by and among R.H. Donnelley Corporation, Sprint Corporation and Centel Directories LLC (incorporated by reference to Exhibit 2.1 to the Form 8-K of the Company, filed on October 1, 2002, Commission File No. 1-07155). The registrant agrees to furnish supplementally a copy of any omitted schedules to the Commission upon request. 2.2* Supplemental Agreement to Stock Purchase Agreement, dated as of December 31, 2002, by and among R.H. Donnelley Corporation, Sprint Corporation and Centel Directories LLC. The registrant agrees to furnish supplementally a copy of any omitted schedules to the Commission upon request. 3.1 Certificate of Designations of Series B-1 Convertible Cumulative Preferred Stock of R.H. Donnelley Corporation (incorporated by reference to Exhibit 3.1 to the Form 8-K of the Company, filed on December 3, 2002, Commission File No. 1-07155). 3.2* Certificate of Designations of Convertible Cumulative Preferred Stock of R.H. Donnelley Corporation. 4.1* Form of Warrant Agreement, issued on November 25, 2002. 4.2* Form of Warrant Agreement, issued on January 3, 2003. 10.1* Directory Services License Agreement, dated as of January 3, 2003, by and among R.H. Donnelley Publishing & Advertising, Inc. (f/k/a Sprint Publishing & Advertising, Inc.), CenDon L.L.C., R.H. Donnelley Directory Company (f/k/a Centel Directory Company), Sprint Corporation, Sprint Directory Trademark Company, LLC and the Sprint Local Telecommunications Division. 10.2* Trademark License Agreement, dated as of January 3, 2003, by and among Sprint Directory Trademark Company, LLC, R.H. Donnelley Publishing & Advertising, Inc. (f/k/a Sprint Publishing & Advertising, Inc.), CenDon L.L.C. and R.H. Donnelley Directory Company (f/k/a Centel Directory Company). 10.3* Publisher Trademark License Agreement, dated as of January 3, 2003, by and among R.H. Donnelley Publishing & Advertising, Inc. (f/k/a Sprint Publishing & Advertising, Inc.), R.H. Donnelley Directory Company (f/k/a Centel Directory Company) and Sprint Corporation.
10.4* Non-Competition Agreement, dated as of January 3, 2003, by and among R.H. Donnelley Corporation, R.H. Donnelley Publishing & Advertising, Inc. (f/k/a Sprint Publishing & Advertising, Inc.), CenDon L.L.C., R.H. Donnelley Directory Company (f/k/a Centel Directory Company), Sprint Corporation and the Sprint Local Telecommunications Division. 10.5* Subscriber Listings Agreement, dated as of January 3, 2003, by and among R.H. Donnelley Publishing & Advertising, Inc. (f/k/a Sprint Publishing & Advertising, Inc.), CenDon L.L.C., R.H. Donnelley Directory Company (f/k/a Centel Directory Company), Sprint Corporation and the Sprint Local Telecommunications Division. 10.6 Preferred Stock and Warrant Purchase Agreement, dated as of September 21, 2002, among R.H. Donnelley Corporation and GS Capital Partners 2000, L.P. and entities affiliated therewith (incorporated by reference to Exhibit 2.2 to the Form 8-K of the Company, filed on October 1, 2002, Commission File No. 1-07155). 10.7 Letter Agreement, dated as of November 25, 2002, among R.H. Donnelley Corporation, R.H. Donnelley Inc. and GS Capital Partners 2000, L.P. and entities affiliated therewith (incorporated by reference to Exhibit 10.1 to the Form 8-K of the Company, filed on December 3, 2002, Commission File No. 1-07155). 10.8* Letter Agreement, dated as of January 3, 2003, among R.H. Donnelley Corporation, R.H. Donnelley Inc. and GS Capital Partners 2000, L.P. and entities affiliated therewith. 10.9 Registration Rights Agreement, dated as of November 25, 2002, among R.H. Donnelley Corporation and GS Capital Partners 2000, L.P. and entities affiliated therewith (incorporated by reference to Exhibit 10.2 to the Form 8-K of the Company, filed on December 3, 2002, Commission File No. 1-07155). 10.10* Credit Agreement, dated as of December 6, 2002, among R.H. Donnelley Corporation, R.H. Donnelley Inc., R.H. Donnelley Finance Corporation II, the several lenders from time to time party thereto, Bear Stearns Corporate Lending Inc. and Citicorp North America, Inc., as joint syndication agents, BNP Paribas and Fleet National Bank, as joint documentation agents, Deutsche Bank Trust Company Americas, as administrative agent, and Deutsche Bank Securities Inc., Salomon Smith Barney Inc. and Bear, Stearns & Co. Inc., as joint lead arrangers and joint bookrunners. 99.1* Press release, dated January 3, 2003.
* Filed herewith. EX-2.2 3 y82590exv2w2.txt SUPPLEMENTAL AGREEMENT TO STOCK PURCHASE AGREEMENT EXHIBIT 2.2 EXECUTION COPY SUPPLEMENTAL AGREEMENT TO STOCK PURCHASE AGREEMENT THIS SUPPLEMENTAL AGREEMENT TO STOCK PURCHASE AGREEMENT, dated as of December 31, 2002 (this "Supplemental Agreement"), is made and entered into by and between Sprint Corporation, a Kansas corporation ("Sprint"), Centel Directories LLC, a Delaware limited liability company ("Centel LLC") ( Sprint and Centel LLC are collectively referred to in this Supplemental Agreement as "Sellers"), and R.H. Donnelley Corporation, a Delaware corporation ("Buyer"). RECITALS A. Sprint, Centel LLC and Buyer entered into a Stock Purchase Agreement, dated September 21, 2002 (the "Stock Purchase Agreement"), under which (i) Sprint will sell to Buyer all of the issued and outstanding shares of capital stock of DirectoriesAmerica, Inc., a Kansas corporation, which owns all of the issued and outstanding shares of capital stock of Sprint Publishing & Advertising, Inc., a Kansas corporation, and (ii) Centel LLC will sell to Buyer all of the issued and outstanding shares of capital stock of Centel Directory Company, a Delaware corporation, which owns a membership interest in CenDon, L.L.C., a Delaware limited liability company. B. Sprint, Centel LLC and Buyer desire to supplement and amend certain obligations of the Parties in connection with the transactions contemplated by the Stock Purchase Agreement pursuant to this Supplemental Agreement. Capitalized terms set forth in this Supplemental Agreement but not defined in this Supplemental Agreement have the meanings ascribed to the terms in the Stock Purchase Agreement. NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, agreements and conditions set forth in this Supplemental Agreement, and intending to be legally bound by this Supplemental Agreement, the Parties agree as follows: 1. POST-CLOSING PURCHASE PRICE ADJUSTMENT AND CLOSING. Sections 1.2, 1.3, 1.4 and 1.5 of the Stock Purchase Agreement are hereby replaced in their entirety by the revised Sections 1.2, 1.3, 1.4 and 1.5 below. Schedule 1.3 of the Stock Purchase Agreement is hereby replaced by the revised Schedule 1.3 attached hereto as Exhibit A. However, if the Closing does not occur on or before 5 p.m. New York City time, on January 3, 2003, this Section 1 of this Supplemental Agreement shall be of no effect whatsoever and the original Sections 1.2, 1.3, 1.4 and 1.5 of the Stock Purchase Agreement and the original Schedule 1.3 of the Stock Purchase Agreement shall remain in effect. "SECTION 1.2 PAYMENT OF PURCHASE PRICE. (a) In consideration for the sale, transfer and delivery of the Shares, at the Closing Buyer shall deliver or cause to be delivered to Sellers (or to such third parties as may be designated in writing by Sellers) the Estimated Purchase Price in accordance with Section 1.2(d). The "Estimated Purchase Price" payable at Closing shall equal (i) Two Billion Two Hundred Thirty Million Dollars ($2,230,000,000) minus (ii) Sixteen Million Five Hundred Twenty Five Thousand Dollars ($16,525,000), which is the excess of the Target Working Capital over the Estimated Working Capital (as such terms are defined below). (b) Sellers have delivered to Buyer an estimated combined consolidated balance sheet of the Companies as of the close of business on December 31, 2002, prepared in accordance with the Accounting Principles (as hereinafter defined) and a certificate setting forth the Estimated Working Capital based on such balance sheet. For the purposes of this Agreement, "Estimated Working Capital" equals $243,023,000, which represents the good faith, best estimate of Sellers of the book value of the Current Assets (as defined in Section 1.3) of the Companies less the book value of the Current Liabilities (as defined in Section 1.3) of the Companies as of the close of business on December 31, 2002, as reflected on such balance sheet, except that for the purposes of calculating the Estimated Working Capital the estimated amount of the payment by Sellers to the Company Employees described in Section 1.4(d)(ii)(A) below ($2,390,000) is treated as if it had occurred on December 31, 2002. (c) Within five business days after the determination of the Final Balance Sheet (as hereinafter defined) in accordance with Section 1.4 of this Agreement, (i) if the amount of the December 31 Working Capital calculated in accordance with Section 1.4 is less than the Estimated Working Capital, then Sellers shall pay to Buyer an amount equal to the difference between the Estimated Working Capital and the December 31 Working Capital plus interest or (ii) if the amount of the December 31 Working Capital calculated in accordance with Section 1.4 is greater than the Estimated Working Capital, Buyer shall pay to Sellers an amount equal to the difference between the December 31 Working Capital and the Estimated Working Capital, plus interest. Any interest on such payments shall be calculated using the prime rate of interest (as published in the "Money Rates" table of the Eastern U.S. Edition of The Wall Street Journal on the Closing Date) and shall begin on the Closing Date (as hereinafter defined) and end on the date of any such payment. (d) All payments required under this Section 1.2 shall be made in cash by wire transfer of immediately available federal funds to such bank account(s) as shall be designated in writing by the recipient at least three business days prior to the Closing or promptly upon the determination of the Final Balance Sheet, as the case may be. The net amount of all payments received by Sellers under this Section 1.2 is referred to in this Agreement as the "Purchase Price." SECTION 1.3 TARGET WORKING CAPITAL. "Target Working Capital" shall equal $259,548,000, which represents the book value of those categories of current assets of the Companies listed on Schedule 1.3 (the "Current Assets") less the book value of those categories of current liabilities of the Companies listed on Schedule 1.3 (the "Current Liabilities"), in each case as reflected on the audited combined consolidated balance sheet of the Companies as of December 31, 2001 (the "Year-End Balance Sheet"). SECTION 1.4 ADJUSTMENT OF PURCHASE PRICE. (a) For purposes of this Agreement, the "December 31 Working Capital" shall mean the book value of the Current Assets less the book value of the Current Liabilities as reflected on the Final Balance Sheet, except that for the purposes of calculating the December 31 Working Capital the payment by Sellers to the Company Employees described in Section 1.4(d)(ii)(A) below shall be treated as if it had occurred on December 31, 2002. December 31 Working Capital shall not include deferred directory costs, deferred revenue, any asset or liability related to Taxes, the payroll liabilities described in Section 1.4(d)(ii)(A) or any intercompany accounts settled pursuant to Section 5.22. (b) Promptly following the Closing, Sellers shall prepare a combined consolidated balance sheet of the Companies as of the close of business on December 31, 2002 (the "Preliminary Balance Sheet"), in accordance with the Accounting Principles. "Accounting Principles" means generally accepted accounting principles ("GAAP") on a basis consistent with the Year-End Balance Sheet and using the same policies and procedures as were used to prepare the Year-End Balance Sheet. Sellers shall engage Ernst & Young (the "Sellers' Auditor") to conduct an audit of the Preliminary Balance Sheet. Sellers and Buyer shall use all commercially reasonable efforts, including Buyer making available all necessary Company Employees to sign customary representation letters required by Sellers' Auditor, to enable Sellers to deliver to Buyer an audited Preliminary Balance Sheet on or prior to February 3, 2003, together with the opinion of the Sellers' Auditor thereon stating that the audit has been conducted in accordance with the Accounting Principles. Representatives of Buyer shall have the opportunity (i) to receive, prior to delivery of the Preliminary Balance Sheet, reasonably frequent updates from Sellers and Sellers' Auditor concerning the audit process and results and any adjustments to the December 31, 2002 financial statements of the Companies proposed by the Sellers' Auditor prior to such adjustments being made, (ii) to examine the work papers, schedules and other documents prepared by Sellers in connection with the preparation of the Preliminary Balance Sheet, and (iii) to otherwise participate in the audit process. Sellers shall use all commercially reasonable efforts to cause the Sellers' Auditor to permit Buyer and its accounting firm (the "Buyer's Auditor") to examine the Sellers' Auditor's work papers used in connection with its audit of the Preliminary Balance Sheet. Buyer shall be responsible for the fees and expenses of the Buyer Auditor, and Sellers shall be responsible for the fees and expenses of the Sellers' Auditor. (c) If Buyer objects to the Preliminary Balance Sheet, Buyer shall deliver to Sellers a written notice of objection (an "Objection Notice") within thirty (30) days following the delivery thereof. If Buyer has no objection to the Preliminary Balance Sheet, Buyer shall promptly deliver to Sellers a written notice of acceptance (an "Acceptance Notice"). The Preliminary Balance Sheet shall be final and binding on the parties if an Acceptance Notice is delivered or if no Objection Notice is delivered to Sellers within such 30-day period. Any payment or portion of any payment required under Section 1.2 not subject to the Objection Notice shall be paid within five business days following the delivery of the Objection Notice. Any Objection Notice shall specify in reasonable detail the disputed items on the Preliminary Balance Sheet and shall describe in reasonable detail the basis for the objection and all information in the possession of Buyer which forms the basis of the objection, as well as the amount in dispute. If an Objection Notice is given, the parties shall consult with each other with respect to the objection. If the parties are unable to reach agreement within thirty (30) days after an Objection Notice has been given, any unresolved disputed items shall be promptly referred to KPMG; provided, however, that if KPMG declines to accept such appointment then the parties shall mutually agree upon another nationally recognized independent accounting firm that has not provided material services to either party during the previous two years (the "Unrelated Accounting Firm"). The Unrelated Accounting Firm shall be directed to resolve disputed issues in accordance with the terms of this Agreement and render a written report on the unresolved disputed issues with respect to the Preliminary Balance Sheet as promptly as practicable and to resolve only those issues of dispute set forth in the Objection Notice. The resolution of the dispute by the Unrelated Accounting Firm shall be final and binding on the parties. The fees and expenses of the Unrelated Accounting Firm shall be borne equally by Sellers, on the one hand, and Buyer, on the other hand. The Preliminary Balance Sheet as finally determined pursuant to this Section 1.4(c) is referred to in this Agreement as the "Final Balance Sheet". (d) Notwithstanding any other Section of this Agreement (including Sections 2.3(a) and 5.1), Buyer and Sellers agree that after (but not including) December 31, 2002 (i) Sellers and their Affiliates will not distribute or transfer (by cash sweep or otherwise) any cash out of the Companies and (ii) none of Sellers, the Companies or their respective Affiliates will pay any accounts payable of the Companies, except that Sellers will pay the Company Employees (A) on or about January 3, 2003, for payroll, vacation, salesperson commissions and related withholdings accrued through the last payroll date prior to December 31, 2002 (the "Cut-off Date") and (B) on or about January 10, 2003, for payroll, vacation, salesperson commissions and related withholdings accrued from the Cut-off Date through January 3, 2003 (any portion attributable to the period from and including January 1, 2003 through January 3, 2003, excluding amounts paid with respect to floating holidays under Sellers' vacation plans, being herein referred to as the "2003 Employee Payment"). Buyer shall reimburse Sellers in full for the amount of the 2003 Employee Payment, which payment shall be due within five (5) days of the delivery to Buyer by Sellers of a notice of the amount of the 2003 Employee Payment accompanied by wire transfer instructions. The cash and accounts payable accrued by the Companies during the period from January 1, 2003, through the Closing will be transferred to Buyer with the Companies at Closing and will not be taken into account in calculating the post-closing Purchase Price adjustment contemplated by Section 1.2. SECTION 1.5 CLOSING. The Closing of the transactions contemplated by this Agreement shall take place on the latter to occur of (a) January 3, 2003 and (b) the fifth business day following the satisfaction or waiver of all of the conditions to Closing set forth in Article VI of this Agreement that are capable of being satisfied prior to the Closing Date, at 10:00 a.m., local time, at the offices of Jones, Day, Reavis & Pogue, 222 East 41st Street, New York, NY 10017, or on such other date and at such other time or place as the parties may agree. However, if the prior sentence would require the Closing to occur prior to January 30, 2003, Buyer may elect to defer the Closing to a date on or prior to January 30, 2003. The date of the Closing is sometimes referred to in this Agreement as the "Closing Date." The Closing will be effective as of the close of business on the Closing Date." 2. TRADENAMES AND TRADEMARKS. It is expressly agreed that Buyer is not purchasing, acquiring or otherwise obtaining any right, title or interest in the name "Centel" or any "Centel" tradenames, trademarks, identifying logos or service marks related thereto or employing any part or variation of any of the foregoing or any confusingly similar tradename, trademark or logo (collectively, the "Centel Tradenames and Logos") pursuant to the Stock Purchase Agreement. Buyer agrees that neither it nor any of its Affiliates shall make any use of the Centel Tradenames and Logos from and after the Closing Date; provided, however; that the name "CenDon" shall not be deemed to be one of the Centel Tradenames and Logos. Prior to the Closing, Sellers will cause the corporate names of CDC and SPA to be amended to remove any reference to the name "Centel" or "Sprint" respectively, or any other name that suggests CDC or SPA is a subsidiary of or affiliated with Sprint. As soon as practicable following the Closing, Buyer will cause each of SPA and CDC to amend their certificates of authority to conduct business in every foreign jurisdiction where they are currently qualified (as listed on Schedule 3.1 of the Stock Purchase Agreement) to remove any reference to the name "Sprint" or "Centel" or any other name that suggests SPA or CDC is a subsidiary of or affiliated with Sprint. Buyer's and Seller's obligations under Section 3 of this Supplemental Agreement are in addition to their respective obligations under the first two sentences of Section 2.1 of the Stock Purchase Agreement. 3. LOAN TERMINATION. Sellers represent and warrant to Buyer that the letter dated December 9, 2002 from SPA and CDC addressed to Deutsche Bank AG, New York Branch, as Administrative Agent (the "Loan Termination Letter") has (a) caused the Companies to be released as guarantor of all financing of Sellers and their Affiliates (other than the Companies) and (b) has caused the termination of the agreements listed on Schedule 3.7 of the Stock Purchase Agreement (except for any provisions thereof which expressly survive such termination). Sellers also represent and warrant to Buyer that the two commitments referenced in the Loan Termination Letter are the only two credit facilities under which any of the Companies are guarantors or parties and that no amounts have been drawn or are outstanding under either such commitment. 4. TELECOMMUNICATIONS SERVICE AGREEMENTS. Sprint, Centel LLC and Buyer acknowledge that the telecommunications service agreements contemplated by Section 16.2 of the Directory Services License Agreement will not be executed simultaneously with or prior to the effectiveness of the Directory Services License Agreement. Sprint, Centel LLC and Buyer will use their reasonable best efforts to cause Publisher and the applicable Sprint Entities (each as defined in the Directory Services License Agreement) to execute telecommunications services agreements (on the terms set forth in Section 16.2 of the Directory Services License Agreement and otherwise in forms mutually agreed to between the Parties) as soon as practicable following the effectiveness of the Directory Services License Agreement 5. MISCELLANEOUS. 5.1. Other Provisions. The provisions of Sections 10.3, 10.4, 10.5, 10.6, 10.8, 10.9, 10.10, 10.11, 10.12, 10.13 and 10.16 of the Stock Purchase Agreement are incorporated herein by this reference. 5.2. No Other Amendment. Except as expressly provided in this Supplemental Agreement, the Stock Purchase Agreement is and shall continue to be in full force and effect. IN WITNESS WHEREOF, the parties to this Supplemental Agreement have caused this Supplemental Agreement to be executed as of the date first above written. SPRINT CORPORATION By: /s/ CHARLES WUNSCH ----------------------------- Name: Charles Wunsch Title: Assistant Vice President CENTEL DIRECTORIES LLC By: /s/ CHARLES WUNSCH ----------------------------- Name: Charles Wunsch Title: Vice President R.H. DONNELLEY CORPORATION By: /s/ ROBERT J. BUSH ----------------------------- Name: Robert J. Bush Title: Vice President, General Counsel and Corporate Secretary EX-3.2 4 y82590exv3w2.txt CERT OF DESIGNATIONS OF CONVERTIBLE CM PREF STOCK EXHIBIT 3.2 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 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 2 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 3 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 January 3, 2013, 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 January 3, 2006 and before January 3, 2013, 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 January 3, 2018, the Corporation shall pay the redemption price pursuant to this Section 5(a) in cash. After January 3, 2018, 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 January 3, 2008, the redemption price per share will include dividends that would have accrued or been payable in accordance with Section 3 hereof until January 3, 2008, had the Convertible Preferred Stock not been 4 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 5 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 6 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 7 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 8 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 9 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 10 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, 11 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 12 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 13 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 January 3, 2006 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 14 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 15 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 16 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 17 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 18 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 19 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, 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 20 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. "ISSUE DATE" shall mean January 3, 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. 21 "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. "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 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. 22 IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed in its name and on its behalf and attested on this 3rd of January 2003 by duly authorized officers of the Corporation. R.H. DONNELLEY CORPORATION By: /s/ Frank M. Colarusso ------------------------------ Name: Frank M. Colarusso Title: Vice President and Treasurer ATTEST: By: /s/ Robert J. Bush ----------------------------- Name: Robert J. Bush Title: Secretary EX-4.1 5 y82590exv4w1.txt FORM OF WARRANT AGREEMENT: 11-25-2002 EXHIBIT 4.1 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, 2 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 3 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 4 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 5 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 6 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 7 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 8 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. 9 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 10 (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. * * * * * * 11 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: 12 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 14 R. H. DONNELLEY CORPORATION SCHEDULE OF DISTRIBUTION OF WARRANTS, ISSUED NOVEMBER 25, 2002, TO PURCHASE COMMON STOCK OF THE COMPANY ("NOVEMBER WARRANTS")
- -------------------------------------------------------------------------------------------- NUMBER OF NOVEMBER WARRANTS WARRANT HOLDER RECEIVED - -------------------------------------------------------------------------------------------- GS Capital Partners 2000, L.P. 318,470 - -------------------------------------------------------------------------------------------- GS Capital Partners 2000 Offshore, L.P. 115,719 - -------------------------------------------------------------------------------------------- GS Capital Partners 2000 GmbH & Co. Beteiligungs KG 13,311 - -------------------------------------------------------------------------------------------- GS Capital Partners 2000 Employee Fund, L.P. 101,125 - -------------------------------------------------------------------------------------------- Goldman Sachs Direct Investment Fund 2000, L.P. 28,875 - -------------------------------------------------------------------------------------------- TOTAL 577,500 - --------------------------------------------------------------------------------------------
EX-4.2 6 y82590exv4w2.txt FORM OF WARRANT AGREEMENT: 01-03-2003 EXHIBIT 4.2 This Warrant was originally issued on January 3, 2003, 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: January 3, 2003 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 (as amended, 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. 2 (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 3 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 January 3, 2006 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 4 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 5 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 6 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. 7 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 8 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 $28.62. "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 9 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 10 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. * * * * * * 11 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 R. H. DONNELLEY CORPORATION SCHEDULE OF DISTRIBUTION OF WARRANTS, ISSUED JANUARY 3, 2003, TO PURCHASE COMMON STOCK OF THE COMPANY ("NEW WARRANTS")
- ------------------------------------------------------------------------------------- NUMBER OF NEW WARRANTS WARRANT HOLDER RECEIVED - ------------------------------------------------------------------------------------- GS Capital Partners 2000, L.P. 591,442 - ------------------------------------------------------------------------------------- GS Capital Partners 2000 Offshore, L.P. 214,908 - ------------------------------------------------------------------------------------- GS Capital Partners 2000 GmbH & Co. Beteiligungs KG 24,721 - ------------------------------------------------------------------------------------- GS Capital Partners 2000 Employee Fund, L.P. 187,804 - ------------------------------------------------------------------------------------- Goldman Sachs Direct Investment Fund 2000, L.P. 53,625 - ------------------------------------------------------------------------------------- TOTAL 1,072,500 - -------------------------------------------------------------------------------------
EX-10.1 7 y82590exv10w1.txt DIRECTORY SERVICES LICENSE AGREEMENT EXHIBIT 10.1 EXECUTION COPY DIRECTORY SERVICES LICENSE AGREEMENT BY AND BETWEEN R.H. DONNELLEY PUBLISHING & ADVERTISING, INC., (F/K/A SPRINT PUBLISHING & ADVERTISING, INC.) CENDON, L.L.C., R.H. DONNELLEY DIRECTORY COMPANY, (F/K/A CENTEL DIRECTORY COMPANY) SPRINT CORPORATION, SPRINT DIRECTORY TRADEMARK COMPANY, LLC AND THE SPRINT LOCAL TELECOMMUNICATIONS DIVISION TABLE OF CONTENTS ARTICLE 1 DEFINITIONS............................................... 2 Section 1.1 Definitions............................................... 2 ARTICLE 2 LICENSE TO PUBLISH........................................ 7 Section 2.1 License to Publish........................................ 7 ARTICLE 3 GENERAL PUBLISHER OBLIGATIONS............................. 8 Section 3.1 General................................................... 8 Section 3.2 No Adverse Changes to White Pages......................... 8 Section 3.3 White Pages Listing....................................... 9 Section 3.4 Yellow Pages Listing...................................... 9 Section 3.5 Enhanced White Pages Products............................. 9 Section 3.6 Geographic Coverage Area.................................. 9 Section 3.7 Interfiling............................................... 10 Section 3.8 Information Pages......................................... 10 Section 3.9 Warehousing; Initial and Secondary Distribution........... 11 Section 3.10 Accuracy.................................................. 11 Section 3.11 Queries................................................... 11 Section 3.12 Publication Schedule...................................... 11 Section 3.13 Regulatory/Legal Matters Cooperation...................... 12 Section 3.14 Complaints................................................ 12 Section 3.15 Recycling Services........................................ 12 Section 3.16 Agreements with CLECS..................................... 12 Section 3.17 Additional Listing Information............................ 12 ARTICLE 4 GENERAL SPRINT LTD OBLIGATIONS............................ 13 Section 4.1 Distribution Information; Delivery Quantities............. 13 Section 4.2 Directory Sales-Initiated Changes......................... 13 Section 4.3 Accuracy.................................................. 13
Section 4.4 Complaints Relating to Sprint LTD's Services.............. 13 Section 4.5 Queries................................................... 14 Section 4.6 Directory Advertising Referrals........................... 14 ARTICLE 5 DIRECTORY ADVERTISING..................................... 14 Section 5.1 Policies.................................................. 14 Section 5.2 Restrictions on Advertising............................... 14 Section 5.3 Sprint LTD Advertising.................................... 14 Section 5.4 Premium Advertising....................................... 15 Section 5.5 Products and Services..................................... 15 Section 5.6 Sprint Minimum Spend...................................... 16 ARTICLE 6 OTHER COMMERCIAL AGREEMENTS............................... 16 Section 6.1 Trademark License Agreement............................... 16 Section 6.2 Publisher Trademark License Agreement..................... 16 Section 6.3 Subscriber Listings Agreement............................. 16 ARTICLE 7 BRANDING.................................................. 16 Section 7.1 Print Directory Cover..................................... 16 Section 7.2 Other Covers and Home Pages............................... 17 Section 7.3 Co-Branding............................................... 17 ARTICLE 8 TERM AND TERMINATION...................................... 18 Section 8.1 Term...................................................... 18 Section 8.2 Effects of Termination.................................... 18 Section 8.3 Early Termination by Sprint LTD........................... 19 Section 8.4 Adverse Effect on the Licensed Marks...................... 20 Section 8.5 Failure to Meet Regulatory Obligation..................... 20 Section 8.6 Early Termination by Publisher............................ 21 ARTICLE 9 SALE OF A SPRINT LTD SERVICE AREA......................... 21 Section 9.1 Sale of a Service Area.................................... 21 Section 9.2 Acquisition of a Service Area............................. 23
ii NONCOMPETE AND NONSOLICITATION............................................. 23 Section 10.1 Publisher Obligations..................................... 23 ARTICLE 11 CONFIDENTIAL INFORMATION.................................. 25 Section 11.1 Nondisclosure............................................. 25 Section 11.2 Relief.................................................... 25 Section 11.3 Termination of Agreement.................................. 25 ARTICLE 12 REPRESENTATIONS AND WARRANTIES............................ 26 Section 12.1 Sprint Representations and Warranties..................... 26 Section 12.2 Publisher Representations and Warranties.................. 26 Section 12.3 Disclaimer of Warranties.................................. 26 ARTICLE 13 INDEMNIFICATION; LIMITATION OF LIABILITY.................. 26 Section 13.1 Publisher Indemnity....................................... 26 Section 13.2 Sprint LTD Indemnity...................................... 26 Section 13.3 Procedure................................................. 27 Section 13.4 Limitation of Liability................................... 28 Section 13.5 Errors and Omissions...................................... 28 ARTICLE 14 ADDITIONAL REGULATORY REQUIREMENTS AND COSTS.............. 28 Section 14.1 Regulatory Requirements................................... 28 Section 14.2 Provision of Regulatory Information....................... 29 ARTICLE 15 SHARING OF INFORMATION.................................... 29 Section 15.1 Credit Matters............................................ 29 Section 15.2 Publisher Access to Sprint LTD Directory System........... 29 ARTICLE 16 INTERNET OPERATIONS AND OTHER SPRINT SERVICES............. 29 Section 16.1 Internet Links............................................ 29 Section 16.2 Sprint Services........................................... 29 Section 16.3 Information Systems....................................... 30 ARTICLE 17 DISPUTE RESOLUTION........................................ 30 Section 17.1 Option to Negotiate Disputes.............................. 30
iii Section 17.2 Governing Law............................................. 30 Section 17.3 Forum Selection........................................... 31 Section 17.4 Waiver of Jury Trial...................................... 31 Section 17.5 Attorneys' Fees........................................... 31 Section 17.6 Cumulative Remedies....................................... 31 ARTICLE 18 REAFFIRMATION OF CENDON PAYMENTS.......................... 31 Section 18.1 Former CenDon Directory Agreements........................ 31 ARTICLE 19 GENERAL................................................... 32 Section 19.1 Assignment................................................ 32 Section 19.2 Subcontractors............................................ 32 Section 19.3 Relationship.............................................. 32 Section 19.4 Notices................................................... 32 Section 19.5 Independent Contractor.................................... 33 Section 19.6 Entire Agreement.......................................... 33 Section 19.7 Severability.............................................. 33 Section 19.8 Compliance with Laws/Regulations.......................... 33 Section 19.9 Force Majeure............................................. 34 Section 19.10 No Third Party Beneficiaries.............................. 34 Section 19.11 Binding Effect............................................ 34 Section 19.12 Waivers................................................... 34 Section 19.13 Exhibits.................................................. 34 Section 19.14 Headings.................................................. 34 Section 19.15 Survival.................................................. 34 Section 19.16 Modifications............................................. 34 Section 19.17 Counterparts.............................................. 35 Section 19.18 Sprint LTD Obligation..................................... 35 Section 19.19 Publisher Reasonable Efforts.............................. 35
iv EXHIBITS Exhibit A Publication Schedule Exhibit B Advertising Policies Exhibit C Directory Cover Policies Exhibit D Service Levels for Distributions Exhibit E Sprint LTD Service Areas Exhibit F Current Practices Regarding Suitability and Usability Exhibit G Trademark License Agreement Exhibit H Publisher Trademark License Agreement Exhibit I Regulatory Cost Reimbursement Policies Exhibit J Co-Brand Standards
DIRECTORY SERVICES LICENSE AGREEMENT THIS DIRECTORY SERVICES LICENSE AGREEMENT ("Agreement") is effective as of this 3rd day of January, 2003, by and between R.H. Donnelley Publishing & Advertising, Inc. (f/k/a Sprint Publishing & Advertising, Inc.), a Kansas corporation ("RHDPA"), R.H. Donnelley Directory Company (f/k/a Centel Directory Company), a Delaware corporation ("RHDDC"), and CenDon, L.L.C., a Delaware limited liability company ("CenDon"), (RHDPA, RHDDC and Cendon are referred to collectively in this Agreement as the "Publisher"), Sprint Corporation, a Kansas corporation ("Sprint Parent"), Sprint Directory Trademark Company, LLC, a Delaware limited liability company ("Sprint Trademark Co."), and Sprint Minnesota, Inc., Sprint - Florida, Incorporated, Carolina Telephone & Telegraph Co., United Telephone - Southeast, Inc., United Telephone Company of the Carolinas, United Telephone Company of Southcentral Kansas, United Telephone Company of Eastern Kansas, United Telephone Company of Kansas, Sprint Missouri, Inc., United Telephone Company of Texas, Inc., United Telephone Company of the West, The United Telephone Company of Pennsylvania, United Telephone Company of New Jersey, Inc., United Telephone Company of the Northwest, United Telephone Company of Ohio, United Telephone Company of Indiana, Inc., Central Telephone Company, Central Telephone Company of Virginia and Central Telephone Company of Texas (collectively the "Sprint Local Telecommunications Division" or "Sprint LTD" and, together with Sprint Parent and Sprint Trademark Co., collectively, the "Sprint Companies" and each, a "Sprint Company"), each of which is a certificated provider of local telephone exchange service. Publisher, Sprint Trademark Co. and Sprint LTD are sometimes referred to in this Agreement as a "Party" and collectively as the "Parties." RECITALS: A. On the date of this Agreement, R.H. Donnelley Corporation, a Delaware corporation ("Buyer"), is acquiring all of the outstanding capital stock of DirectoriesAmerica, Inc., a Kansas corporation, and RHDDC from Sprint Parent and Centel Directories LLC, a Delaware limited liability company ("Centel LLC"), respectively (Sprint Parent and Centel LLC are referred to collectively in this Agreement as "Sellers"), pursuant to a Stock Purchase Agreement, dated as of September 21, 2002, between Sellers and Buyer (the "Stock Purchase Agreement"); B. The Stock Purchase Agreement provides that the Parties will enter into this Agreement as a condition to the closing of the transactions contemplated by the Stock Purchase Agreement; C. Sprint LTD desires to license to Publisher the right to produce, publish and distribute the Sprint LTD Directories on the terms and conditions set forth in this Agreement and the other Commercial Agreements; D. Publisher desires to produce, publish and distribute the Sprint LTD Directories, on the terms and conditions set forth in this Agreement and the other Commercial Agreements; E. The Sprint Companies desire to grant, and Publisher desires to obtain, subject to the terms and conditions of this Agreement and the other Commercial Agreements, a license to use the trademarks and service marks listed in the Trademark License Agreement (as defined in Section 6.1) in connection with the Sprint LTD Directories; and F. The Parties desire to set forth certain understandings among themselves with respect to certain aspects of Publisher's business from and after the date hereof. AGREEMENT NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements set forth in this Agreement and the consummation of the transactions contemplated by the Stock Purchase Agreement, the Parties agree as follows: ARTICLE 1 DEFINITIONS SECTION 1.1 DEFINITIONS. The following defined terms used in this Agreement will have the meanings specified below: (a) "Advertising Policies" means the policies set forth on Exhibit B. (b) "Affiliate" means a person or entity that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person or entity specified. (c) "CLEC" means any competitive local exchange carrier operating within the Service Areas. (d) "Commercial Agreements" means this Agreement, the Trademark License Agreement, the Publisher Trademark License Agreement and the Subscriber Listings Agreement. (e) "Confidential Information" means all information and documentation of a Party which such Party does not make generally available to the public, including confidential and/or proprietary technical or business information, confidential marketing and business plans and customer lists. Confidential Information does not include information which (i) was in the possession of the receiving Party free of restriction prior to its receipt from the disclosing Party, (ii) is or becomes publicly known or available through no breach of this Agreement by the receiving Party, (iii) is rightfully acquired by the receiving Party free of restrictions on its disclosure, or (iv) is independently developed by personnel of the receiving Party to which "Confidential Information" has not been previously disclosed. Subscriber Listing Information will be considered "Confidential Information" of Sprint LTD until the publication of such information in a Sprint LTD Directory, or until such information otherwise ceases to be "Confidential Information" for any of the reasons (i) through (iv) cited above. (f) "Current Practices" means the ordinary and customary business practices of Publisher during the twelve month period prior to the date of the Stock Purchase Agreement. 2 (g) "Directional Information" means subscriber name, address and primary telephone number (including mobile telephone number), email address, types of goods or services offered, hours of operation, methods of payment and other similar information primarily designed for the purpose of directing consumers who are seeking a product or service to providers of that product or service in order to satisfy such consumer's previously recognized need or desire for such product or service and is distinguished from "promotional information," which is primarily designed to stimulate (as opposed to direct) demand for products and services in consumers who did not previously recognize such need or desire for such products or services. (h) "Directory Advertising" means any advertising purchased from Publisher for inclusion in a Sprint LTD Directory, including Premium Advertising Products. "Directory Advertising" also includes (i) standard classified advertising and other advertising in Yellow Pages Directories, such as display advertising and in-column advertisements, free listings, foreign classified listings and listings under additional headings in Yellow Pages Directories and (ii) offerings of a promotional nature in White Pages Directories, including, without limitation red splash and in-column advertisements. Notwithstanding the preceding sentence, "Directory Advertising" does not include Enhanced White Pages Products. (i) "Directory Cover Policies" means the policies set forth on Exhibit C. (j) "Enhanced White Pages Products" means additional, alternate, foreign, nonpublished, nonlisted, enhanced, vanity or other listings, products or advertising in physical media White Pages Directories that are of an informational nature (such as an extra phone number or address) and are tariffed or price listed by Sprint LTD as of the date of the Stock Purchase Agreement. (k) "Extended Area Service" means an exchange or other geographic area outside of a Subscriber's home exchange which is part of the Subscriber's mandatory local calling area where Legal and Regulatory Requirements mandate that Subscriber Listings for such Extended Area Service area be included in such Subscriber's local Sprint LTD Directory. (l) "Geographic Coverage Area" for a Sprint LTD Directory means the geographic area where Subscribers reside whose Standard Listings are included in such Sprint LTD Directory. (m) "ILEC" means an incumbent local exchange carrier. (n) "Information Pages" means basic information pages generally included at the front of a physical media Sprint LTD Directory (and also a non-physical media Sprint LTD Directory but only if and to the extent that Legal and Regulatory Requirements require similar information to be included in non-physical media Sprint LTD Directories), commonly referred to in the telephone directory publishing industry as "Preliminary Pages" or "Information Pages," which (i) relate to services provided by Sprint LTD to its customers or (ii) are required by the Legal and Regulatory Requirements. (o) "Initial Distribution" means the primary distribution of a physical media Sprint LTD Directory to Subscribers located within the applicable Service Area pursuant to the terms and conditions of this Agreement. 3 (p) "Interfile" means the process of combining Subscriber Listing Information from Subscribers in two or more local exchange carriers or geographic areas into a single set of alphabetical listings, or combining residential and business Subscriber Listing Information into a single set of alphabetical listings. When referring to captions, "Interfile" means the process of combining Subscriber Listing Information of businesses operating under the same name, or other subscribers with multiple telephone numbers, into a single listing with multiple addresses and/or phone numbers. (q) "Legal and Regulatory Requirements" means all actions and requirements that are necessary to enable Sprint LTD to fulfill, with respect to the Sprint LTD Directories, (i) its contractual obligations related to directories under interconnection and similar agreements entered into between Sprint LTD and any CLEC and (ii) any order, injunction, decree, statute, law, ordinance, principle of common law, rule, tariff or regulation related to directories and applicable to Sprint LTD as a local exchange carrier (including Sprint LTD compliance with any applicable regulatory agency's customs and practices). (r) "Listing Information Updates" means current data concerning business Subscribers whose telephone service has been installed, disconnected, or otherwise changed, which data is required by Publisher in connection with the publication of Sprint LTD Directories and the sale of Directory Advertising. Listing Information Updates are used to correct or add information in or to the Sprint LTD Directory and as sales leads for Directory Advertising sales. (s) "Local Advertising" means advertising (whether space or preferred placement of listings) included in or accessible through a physical or non-physical directory that is intended to provide Directional Information regarding, or otherwise promote, a business or other organization located in or providing products or services in any Service Area. Notwithstanding the preceding sentence, "Local Advertising" excludes advertising sold to or promoting a business (or group of related businesses) that (i) sells products or services in three or more non-contiguous states or five or more states, and (ii) primarily targets advertising to consumers who are located or reside outside of the Service Areas. Notwithstanding the foregoing sentence, otherwise unrelated businesses which collectively form a group solely for purposes of purchasing advertising shall not qualify for the foregoing exclusion from "Local Advertising." (t) "New Service Area" means any additional geographic area where Sprint LTD becomes by any manner (including without limitation acquisition or purchase of rights) the ILEC after the date of the Stock Purchase Agreement. "New Service Area" does not include any geographic areas in which Sprint LTD is a competitive local exchange carrier or becomes a competitive local exchange carrier after the date of the Stock Purchase Agreement. (u) "Non-Competition Agreement" means that certain Non-Competition Agreement by and among Sprint Parent, Sprint LTD, Buyer and Publisher dated the date of this Agreement. (v) "Premium Advertising Products" means premium and non-traditional advertising products offered by Publisher with respect to the Sprint LTD Directories, such as tab advertising, banner advertising, filler advertising, and specific interest guides placed in the Sprint LTD Directories (e.g., menu or golf guides). Restricted Advertising Products are included in the definition of Premium Advertising Products. 4 (w) "Publication Month" means the calendar month during which the majority of copies of a particular issue of a physical media Sprint LTD Directory are distributed pursuant to the Initial Distribution for such Sprint LTD Directory. (x) "Publication Schedule" means the publication schedule provided to Sprint LTD by Publisher from time to time, in the form set forth as Exhibit A, which schedule includes the Publication Month and WHOA Date with respect to each physical media Sprint LTD Directory. (y) "Restricted Advertising Products" means (i) advertising products in a physical medium offered by Publisher with respect to physical media Sprint LTD Directories which are visible without opening the Sprint LTD Directory or which are not physically attached to the Sprint LTD Directory, such as cover advertising, spine advertising, tab advertising, advertising on cards inserted into the Sprint LTD Directories (blow-in cards) and advertising which is distributed together with the Sprint LTD Directories (e.g., ride-a-long advertisements which are delivered with the Sprint LTD Directories or advertising on bags in which the Sprint LTD Directories are delivered), (ii) advertising which is displayed on the home page (or any similar feature) of a non-physical media Sprint LTD Directory or otherwise in a preferred or pop-up position with respect to the home page or similar feature of any non-physical media Sprint LTD Directory and (iii) the materials described in Section 3.9(c). (z) "Secondary Distribution" means the provision and distribution of a physical media Sprint LTD Directory to Subscribers who have newly subscribed to local telephone exchange service within the applicable Service Area after Initial Distribution is completed and prior to publication of the next issue of the Sprint LTD Directory. (aa) "Service Areas" means geographic areas where Sprint LTD is obligated to provide local telephone exchange service as the ILEC as of the date of the Stock Purchase Agreement, as such areas may be extended to include any Extended Service Area markets. A list of the Sprint subsidiaries that own and operate Service Areas as of the date of the Stock Purchase Agreement is contained in Exhibit E. (bb) "Sprint Entity" means Sprint Parent, Sprint Trademark Co., Sprint LTD or any of their Affiliates. Sprint Parent, Sprint Trademark Co., Sprint LTD and their Affiliates are collectively referred to as the "Sprint Entities." (cc) "Sprint LTD Directory" means a White Pages Directory or a Yellow Pages Directory, or both if such physical directories are bound together or such non-physical directories are produced together, in each case as an integrated unit, distributed primarily in (or primarily directed at, in the case of non-physical directories) a Service Area and branded with one or more of the Licensed Marks. (dd) "Standard Listing" or "Listing" means a Sprint LTD Directory listing relating to a Subscriber. Except to the extent the Subscriber has requested that such information not appear in a Sprint LTD Directory, a "Standard Listing" or "Listing" with respect to a Sprint LTD Directory will consist of: (i) the Subscriber's name and one associated telephone number and one associated address and (ii) any information required by the Legal and Regulatory Requirements. 5 (ee) "Subscriber" means a person or entity (i) that subscribes to wireline local telephone exchange service from Sprint LTD in the Service Areas, (ii) that subscribes to wireline local telephone exchange service in the Service Areas from a CLEC which has entered into an agreement with Sprint LTD requiring Sprint LTD to publish such CLEC's Subscriber Listing Information in a Sprint LTD Directory (e.g., an interconnection agreement), or (iii) whose Subscriber Listing Information must be included in a Sprint LTD Directory to meet Legal and Regulatory Requirements. (ff) "Subscriber Listing Information" means (i) the names of Subscribers within a specified geographic area, and their associated telephone numbers and listed addresses, (ii) information required under applicable rules and regulations of the Federal Communications Commission to be provided to any requesting directory publishers, and (iii) all other information relating to Subscribers required to meet the Legal and Regulatory Requirements under this Agreement. "Subscriber Listing Information" does not include information relating to Subscribers who have requested to not be listed in a Sprint LTD Directory, other than such information as may be required to deliver Sprint LTD Directories to such Subscribers. (gg) "Subsidiary" means each corporation, association, subsidiary, partnership, limited liability company or other entity of which the applicable entity owns or controls, directly or indirectly, a majority of the outstanding equity or voting interests. (hh) "White Pages Directory" means any directory, whether in a physical media (e.g., print or CD ROM) or non-physical media (e.g., electronic), produced, published or distributed by Publisher that contains only Subscriber Listing Information, Information Pages, Enhanced White Pages Products, Directory Advertising, and such other information required by the Legal and Regulatory Requirements and may also include other information pertaining to Subscribers within the Geographic Coverage Area, including, but not limited to, mobile telephone numbers, e-mail addresses, website addresses and the like. The White Pages Directory may be bound or produced together, in each case as an integrated unit, with a Yellow Pages Directory. (ii) "WHOA Date" means the final date that service orders are accepted for a Sprint LTD Directory. (jj) "Yellow Pages Directory" means any directory, whether in a physical media (e.g., print or CD-ROM) or non-physical media (e.g., electronic), produced, published or distributed by Publisher that contains Directional Information, Subscriber Listing Information, Directory Advertising and other information, in each case with respect to Subscribers and businesses or organizations located or providing products or services within the Geographic Coverage Areas. The Yellow Pages Directory may be bound or produced together, in each case as an integrated unit, with a White Pages Directory. (kk) Additional Definitions: Term Section Agreement Introduction Available Products 5.4 Brand Identity Standards 7.3(d) Buyer Recitals 6 CenDon Introduction Centel LLC Recitals Co-Brand Standards 7.3(c) Expenses 13.1 First Option 5.4 Force Majeure 19.9 Former CenDon Directory Agreements 18.1 Initial Term 8.1 Licensed Marks 6.1 Losses 13.1 Non-Competition Agreement 6.4 Option Holders 5.4 Parties Introduction Party Introduction Publisher Introduction Publisher Co-Brand Marks 7.3(a) Publisher Marks 6.2 Publisher Trademark License Agreement 6.2 Renewal Term 8.1 Request 9.2 Reserved Products 5.4 RHDDC Introduction RHDPA Introduction Sellers Recitals Sprint Trademark Co. Introduction Sprint Companies Introduction Sprint Company Introduction Sprint Local Telecommunications Division Introduction Sprint LTD Introduction Sprint Parent Introduction Stock Purchase Agreement Recitals Subscriber Listings Agreement 6.3 Term 8.1 Trademark License Agreement 6.1 ARTICLE 2 LICENSE TO PUBLISH SECTION 2.1 LICENSE TO PUBLISH. (a) Sprint LTD hereby grants to Publisher a non-transferable (except as provided in Section 19.1 of this Agreement), exclusive license, without the right to sublicense, to produce, publish and distribute on behalf of Sprint LTD the physical media and non-physical media Sprint LTD Directories on the terms and conditions set forth in this Agreement and the other 7 Commercial Agreements; provided, however, that nothing in this Section 2.1(a) will be deemed to preclude any Sprint Entity from taking any actions or engaging in any activities (or authorizing a third party to take any actions or engage in any activities) not otherwise prohibited under the Non-Competition Agreement. (b) Subject to Section 9.2, the Parties acknowledge that the license grants in this Section 2.1 will not apply to any New Service Areas. (c) Any material breach of this Section 2.1 will constitute a material breach of this Agreement by Sprint LTD. ARTICLE 3 GENERAL PUBLISHER OBLIGATIONS SECTION 3.1 GENERAL. Except for the obligations of Sprint LTD under this Agreement and the Subscriber Listings Agreement, as between the Parties, Publisher will be responsible for all activities relating to the production, publication and distribution of the Sprint LTD Directories, including the following: (a) the printing of the print Sprint LTD Directories; (b) the compilation and layout of the Sprint LTD Directories; (c) the purchasing of paper and other raw materials necessary to produce the print Sprint LTD Directories; (d) the marketing and promotion of the Sprint LTD Directories; (e) all sales, billing and collection activities relating to Directory Advertising; (f) the preparation of advertisements in the Sprint LTD Directories; (g) subject to Article 14, all actions that are necessary to enable Sprint LTD to fulfill the Legal and Regulatory Requirements; (h) the distribution of the Sprint LTD Directories; and (i) certain other matters related to the Sprint LTD Directories as set forth in this Agreement. SECTION 3.2 NO ADVERSE CHANGES TO WHITE PAGES. Publisher will comply with the schedule of the Current Practices that affect the suitability and usability of the physical media White Pages Directories (such as font size, paperweight, or the publishing of objectionable advertising content) as described on Exhibit F. Publisher will have the right to make changes to Exhibit F as reasonably determined appropriate by Publisher to reflect cultural and competitive changes, provided that no such change will have an adverse effect on the Licensed Marks among a significant portion of the total population residing within the Service Areas in the aggregate or violate any Legal and Regulatory Requirement. 8 SECTION 3.3 WHITE PAGES LISTING. Publisher will include a Standard Listing in the applicable White Pages Directory as required by Legal and Regulatory Requirements for each Subscriber based on the Subscriber Listing Information provided to Publisher by Sprint LTD pursuant to the Subscriber Listings Agreement. SECTION 3.4 YELLOW PAGES LISTING. Consistent with the Legal and Regulatory Requirements, Publisher will include a Standard Listing in the applicable physical media Yellow Pages Directory for each business Subscriber based on the Subscriber Listing Information provided to Publisher by Sprint LTD pursuant to the Subscriber Listings Agreement. If Publisher no longer publishes an applicable physical media Yellow Pages Directory, then Publisher will include a Standard Listing in the applicable non-physical media Yellow Pages Directory for each business Subscriber based on the Subscriber Listing Information provided to Publisher by Sprint LTD. SECTION 3.5 ENHANCED WHITE PAGES PRODUCTS. Publisher will include in the physical media White Pages Directories all Enhanced White Pages Products sold by Sprint LTD to the extent that (i) Sprint LTD timely provides such Enhanced White Pages Products to Publisher, and (ii) such Enhanced White Pages Products do not conflict with any Legal and Regulatory Requirements. Sprint LTD and its Affiliates will maintain the exclusive right to sell Enhanced White Pages Products. Sprint LTD will bill for and retain all revenue for Enhanced White Pages Products sold by Sprint LTD or its Affiliates. All other products sold with respect to White Page Directories as of the date of the Stock Purchase Agreement shall be sold by Publisher. If additional white pages products which are informational, as opposed to promotional, in nature are proposed to be included in physical media Sprint LTD Directories, the Parties will negotiate in good faith to determine whether such products will be sold by Sprint LTD or Publisher. All products of a promotional nature proposed to be sold in a White Pages Directory shall be sold by Publisher. The Parties will agree upon a method to avoid conflicts in distribution channels in connection with the activities described in this Section 3.5. SECTION 3.6 GEOGRAPHIC COVERAGE AREA. Publisher will be entitled to determine each Sprint LTD Directory's Geographic Coverage Area, except that (a) Publisher may not significantly expand the scope of any White Pages Directory's Geographic Coverage Area to include areas outside of the applicable Service Area without providing prior written notice to Sprint LTD, and (b) Publisher may not decrease the scope of any White Pages Directory's Geographic Coverage Area without the prior written consent of Sprint LTD, which will not be unreasonably withheld, provided, that Sprint LTD's consent shall not be required (x) in the event Publisher decreases the scope of any underlay White Pages Directory so long as Publisher distributes to the affected Subscribers a White Pages Directory that covers the entire Geographic Coverage Area or (y) with respect to a White Pages Directory not required to be published by Legal and Regulatory Requirements. Notwithstanding the preceding sentence, (i) Publisher may not expand the scope of any Sprint LTD Directory's Geographic Coverage Area as of the date of this Agreement such that more than 15% of the persons or businesses listed in the Sprint LTD Directory after the expansion reside outside of both (A) the Geographic Coverage Area of the applicable Sprint LTD Directory as of the date of this Agreement and (B) the applicable Service Area as of the date of such determination, unless a greater expansion is required by the Legal and Regulatory Requirements and (ii) Publisher may not expand the scope of any Sprint LTD 9 Directory's Geographic Coverage Area into any area unless such area is adjacent to the Geographic Coverage Area and shares the same shopping patterns as the Geographic Coverage Area. Subject to Article 14, Publisher will ensure that the Geographic Coverage Area of the Sprint LTD Directories includes all geographic areas that are required in order to fulfill the Legal and Regulatory Requirements, including any requirements to include Listings for Extended Area Service markets. Sprint LTD will reimburse Publisher for the costs associated with including Listings for Extended Area Service markets as set forth on Exhibit I. Upon reasonable request, Publisher will provide to Sprint LTD coverage maps and other information that generally identifies the Geographic Coverage Area for each Sprint LTD Directory. None of the foregoing shall preclude Publisher from publishing or distributing underlay directories or changing their scoping in any Service Area so long as all Legal and Regulatory Requirements are satisfied. SECTION 3.7 INTERFILING. Publisher may Interfile the Listings in any Sprint LTD Directory. Interfiled Listings will be indistinguishable from Listings of other Subscribers in the applicable Sprint LTD Directory. Sprint LTD may submit to Publisher for its consideration caption listings in Sprint LTD's preferred format, except that the methodology used and format for Interfiling caption listings will be at Publisher's sole discretion. Publisher will use commercially reasonable efforts to provide Sprint LTD with written notice at least 120 days prior to the WHOA Date if Publisher intends to modify a White Pages Directory in order to effect Interfiling and/or business-residence splits. SECTION 3.8 INFORMATION PAGES. (a) In order to satisfy the Legal and Regulatory Requirements, (i) Sprint LTD may specify with regard to the Information Pages the (A) content (including copy, layout, color and paper type) of such pages, (B) placement of such pages, and (C) number of such pages, all as consistent with Current Practices with respect to each Sprint LTD Directory, and (ii) Sprint LTD may specify different content with respect to such pages for each Sprint LTD Directory. Sprint LTD will reimburse Publisher for the costs associated with printing such Information Pages as set forth on Exhibit I. Sprint LTD may specify more Information Pages for inclusion in a Sprint LTD Directory than is consistent with Current Practices, and the reasonable incremental costs incurred by Publisher in connection with the printing of such additional pages and any other reasonable incremental related costs, relative to Current Practices for such Sprint LTD Directory, will be borne by Sprint LTD as set forth on Exhibit I regardless of whether or not such additional pages are required in order to satisfy the Legal and Regulatory Requirements. Sprint LTD must reimburse Publisher for any such costs within sixty (60) days of receipt of Publisher's invoice for such costs. Publisher will include and publish the Information Pages as specified by Sprint LTD without alteration. Publisher will not be obligated to publish any content with respect to the Information Pages that is contrary to its reasonable publishing standards or any content that primarily promotes a party other than Sprint LTD and its Affiliates, except in accordance with Legal and Regulatory Requirements. Publisher will have the right to determine the format, style, content and number of all other information pages in the Sprint LTD Directories, except as otherwise provided in this Agreement and the other Commercial Agreements. (b) In order for information to be included in the Information Pages section of a White Pages Directory, Sprint LTD must provide adequate information to Publisher by the appropriate 10 dates (including those set forth in the Publication Schedule) for that White Pages Directory. In order for any changes to be made to information in the Information Pages section of a White Pages Directory prior to publication of that White Pages Directory, Sprint LTD must return proofs to Publisher by the appropriate dates (including those set forth in the Publication Schedule for that White Pages Directory). SECTION 3.9 WAREHOUSING; INITIAL AND SECONDARY DISTRIBUTION. (a) Warehousing. Publisher will be responsible for warehousing print Sprint LTD Directories in quantities sufficient to perform the Initial Distributions and Secondary Distributions and will warehouse such Sprint LTD Directories in quantities sufficient to distribute such Sprint LTD Directories in accordance with Legal and Regulatory Requirements. (b) Distribution Services. Publisher will produce, publish and distribute Sprint LTD Directories with such frequency as is required to fulfill the Legal and Regulatory Requirements. Publisher may adjust the specific publication date of a Sprint LTD Directory within a given publication cycle in order to meet Publisher's reasonable business concerns. Unless otherwise required by the Legal and Regulatory Requirements, Publisher may determine the number and distribution means (subject to this Section 3.9(b)) of Sprint LTD Directories to be delivered to each Subscriber. Publisher will distribute at no cost to Sprint LTD a reasonable number of print Sprint LTD Directories to Sprint LTD offices and sites for administrative use, consistent with Current Practices. Publisher also will fulfill, at its expense, reasonable requests for additional copies of print Sprint LTD Directories to be delivered to local, state, regional or national governmental agencies. Publisher will meet or exceed the service levels for the Initial Distributions and the Secondary Distributions set forth on Exhibit D. Publisher will have the right to make changes to Exhibit D as reasonably determined appropriate by Publisher to reflect cultural and competitive changes, provided that no such change will have an adverse effect on the Licensed Marks among a significant portion of the total population residing within the Service Areas in the aggregate or violate any Legal and Regulatory Requirement. (c) Ride Along Deliveries. Publisher may distribute other materials with the Sprint LTD Directories, including advertising, marketing or promotional materials distributed by Publisher or others, at Publisher's reasonable discretion. (d) Additional Directories. Publisher will provide additional copies of print Sprint LTD Directories to Subscribers upon reasonable terms and conditions. SECTION 3.10 ACCURACY. Publisher will work cooperatively with Sprint LTD and use commercially reasonable efforts to ensure that the Standard Listings are accurate; provided, that the Parties recognize that the accuracy of the Standard Listings is based primarily upon the information delivered by Sprint LTD to Publisher under the Subscriber Listings Agreement. SECTION 3.11 QUERIES. Publisher will provide Sprint LTD with contact numbers for queries concerning services to be provided by Publisher under this Agreement, and will use commercially reasonable efforts to respond to such queries within a timely fashion. SECTION 3.12 PUBLICATION SCHEDULE. Publisher may modify the Publication Schedule from time-to-time to reflect changes in the publication cycles of the Sprint LTD Directories, 11 including changes to WHOA Dates. Publisher will provide Sprint LTD with prompt written notice of any changes to the Publication Schedule, and such revised Publication Schedule shall be deemed to be incorporated as part of the terms and conditions of this Agreement in replacement of the prior Publication Schedule. SECTION 3.13 REGULATORY/LEGAL MATTERS COOPERATION. Each Party will promptly notify the other Party of, and at either Party's request, the other Party will cooperate with such Party with respect to, any inquiry, investigation, formal or informal complaint, lawsuit or docket relating to the matters covered by this Agreement begun or threatened by any regulatory or judicial entity with jurisdiction over such Party. Publisher will cooperate with Sprint LTD with respect to legal efforts to change legislation or regulations in an effort to minimize directory publication costs. SECTION 3.14 COMPLAINTS. Publisher will have the responsibility for responding to complaints relating to the Sprint LTD Directories or to any Directory Advertising. Sprint LTD will refer any such complaints to Publisher for its response. Publisher will use commercially reasonable efforts to resolve such complaints. Upon request by Publisher, Sprint LTD will cooperate with Publisher in order to resolve the complaints arising out of the services provided by Publisher. Publisher will direct to Sprint LTD all calls received by Publisher that were intended for Sprint LTD. SECTION 3.15 RECYCLING SERVICES. For a period of at least five (5) years following the date hereof, Publisher will handle recycling activities associated with the recovery of old print Sprint LTD Directories in a manner substantially consistent with Current Practices, but in any event in a manner consistent with fulfilling the Legal and Regulatory Requirements. SECTION 3.16 AGREEMENTS WITH CLECS. Publisher will include in the Sprint LTD Directories all information that Sprint LTD is required to include in the Sprint LTD Directories pursuant to Sprint LTD's agreements with CLECs (e.g., interconnection agreements). Publisher will treat Listings from CLECs in the same manner as it treats Listings from Sprint LTD, and as required in order to fulfill the Legal and Regulatory Requirements. SECTION 3.17 ADDITIONAL LISTING INFORMATION. (a) As permitted by applicable privacy and other laws, Publisher may request that Sprint LTD provide to Publisher for inclusion in the Listings additional information in Sprint LTD's possession that Sprint LTD is not required to publish pursuant to the Legal and Regulatory Requirements. Sprint LTD will be required to provide such information to Publisher if the cost to Sprint LTD in the aggregate resulting from the provision of the information to Publisher is de minimis, or if Publisher agrees to reimburse Sprint LTD for such cost. Otherwise, the Parties will discuss in good faith the terms and conditions upon which such information may be provided by Sprint LTD to Publisher. (b) Subject to applicable privacy and other laws, Sprint LTD may request that Publisher include in the Listings additional information concerning Subscribers that Sprint LTD is not required to publish pursuant to the Legal and Regulatory Requirements. Publisher will be required to provide such information in the Listings if the cost to Publisher in the aggregate 12 resulting from the inclusion of the information is de minimis (in which case the cost will be borne by Publisher), or if Sprint LTD agrees to reimburse Publisher for such cost; provided that Publisher will not be required to provide such information in the Listings if it would be contrary to directory publishing industry standards. Otherwise, the Parties will discuss in good faith the terms and conditions upon which such information may be included in the Listings. If the provision of any such additional information represents a revenue opportunity, then if such information relates to a White Pages Directory, it shall be governed by Section 3.5 hereof, and if such information relates to a Yellow Pages Directory, Publisher shall be entitled to sell or otherwise provide such additional information and recognize all revenues in connection therewith under this Agreement. (c) Notwithstanding the foregoing, Publisher will continue to include all Subscriber Listing Information with respect to each Sprint LTD Directory consistent with the Legal and Regulatory Requirements. ARTICLE 4 GENERAL SPRINT LTD OBLIGATIONS SECTION 4.1 DISTRIBUTION INFORMATION; DELIVERY QUANTITIES. At no charge to Publisher and in a format consistent with Current Practices, Sprint LTD will provide Publisher with all Subscriber distribution information, including non-published and non-listed Subscriber mailing and hand-delivery information, including zip codes, in Sprint LTD's possession reasonably required by Publisher to perform its distribution obligations under this Agreement. Publisher will use this information solely in connection with the delivery of Sprint LTD Directories under this Agreement. Where available, Sprint LTD also will provide to Publisher all street-mailing addresses associated with each Subscriber's enhanced 911 service. SECTION 4.2 DIRECTORY SALES-INITIATED CHANGES. To the extent commercially practicable with its existing systems, Sprint LTD will process Listing changes submitted to it via the Directory Change Request (DCR) form from Publisher's sales representatives. Sprint LTD further agrees to timely process Listing changes and queries submitted to it via the form 3235, or any later-created variation of that form, from Certified Marketing Representatives who sell national Directory Advertising. In processing these Listings changes, Sprint LTD will correct its Listing database as directed on the DCR or the form 3235. SECTION 4.3 ACCURACY. Sprint LTD agrees to work cooperatively with Publisher and use its commercially reasonable efforts to ensure that Subscriber Listing Information and Listing Information Updates are accurate and complete, including by properly designating the appropriate Subscriber Listing Information of non-published and unlisted Subscribers. SECTION 4.4 COMPLAINTS RELATING TO SPRINT LTD'S SERVICES. Sprint LTD will have the responsibility for responding to complaints relating to Enhanced White Pages or local telephone service. Publisher will refer any such complaints to Sprint LTD for its response. Sprint LTD will use commercially reasonable efforts to resolve such complaints. Upon request by Sprint LTD, Publisher will cooperate with Sprint LTD in order to resolve the complaints 13 arising out of the services provided by Sprint LTD. Sprint LTD will direct to Publisher all calls received by Sprint LTD that were intended for Publisher. SECTION 4.5 QUERIES. Sprint LTD will provide Publisher with contact numbers for queries concerning services provided by Sprint LTD to Publisher under this Agreement, and will respond to any such queries in a timely fashion. SECTION 4.6 DIRECTORY ADVERTISING REFERRALS. Sprint LTD will refer all Subscribers interested in purchasing Directory Advertising to Publisher. Publisher will provide contact information for this purpose to Sprint LTD. ARTICLE 5 DIRECTORY ADVERTISING SECTION 5.1 POLICIES. Publisher will formulate all policies relating to Directory Advertising, subject to the terms and conditions of this Agreement and the Trademark License Agreement and will advise Sprint LTD in writing of material changes in these policies, except that Publisher may not make any material change to the Advertising Policies or the Directory Cover Policies without the prior written consent of Sprint LTD, which will not be unreasonably withheld, particularly as necessary to permit Publisher to take advantage of advertising sales opportunities that are being utilized by other significant directory publishers. SECTION 5.2 RESTRICTIONS ON ADVERTISING. (a) Publisher may not sell or include any advertising for telecommunications services (including wireline or wireless voice or data services) in the Restricted Advertising Products, or permit any branding of the Sprint LTD Directories or the Restricted Advertising Products with any name or brand (other than the name or brand of the ILEC in the applicable Service Area) that is identified with the provision of telecommunications services (including wireline or wireless voice or data services), except (i) as required by law, (ii) with Sprint LTD's prior written consent, (iii) as required by Legal and Regulatory Requirements, or (iv) as required by Publisher in order to avoid a breach of any contract to which Publisher became a party prior to the execution of this Agreement until the end of the term of such contract (which will include any renewal only if such renewal is either automatic or at the other party's option). (b) Publisher may not sell or include in the Sprint LTD Directories any Directory Advertising that does not comply with the Advertising Policies (as they may be modified pursuant to Section 5.1) in all respects; provided, that a violation of this Section 5.2(b) that would otherwise constitute a material breach of this Agreement will not be deemed to be a material breach of this Agreement so long as Publisher has used reasonable efforts to comply with this Section and such violation is not materially inconsistent with the performance of Publisher prior to the date hereof with respect to the application of the then-existing Advertising Policies, and in no event will Publisher have any responsibility for any advertising placed prior to the date of this Agreement. SECTION 5.3 SPRINT LTD ADVERTISING. Publisher will provide Sprint LTD and the other Sprint Entities access to and pricing for all Directory Advertising on a most-favored- 14 customer basis for similarly situated customers that are purchasing equivalent volumes and types of advertising, including products that are subject to the right of first option pursuant to Section 5.4, except that such most-favored- customer terms for such advertising products will not be available to Sprint LTD and the other Sprint Entities during the thirty (30) days prior to the applicable WHOA Date of a particular Sprint LTD Directory. SECTION 5.4 PREMIUM ADVERTISING. Sprint LTD and the other Sprint Entities (collectively, the "Option Holders") will have a first option with respect to the purchase of all Premium Advertising Products offered in the Sprint LTD Directories, except for Premium Advertising Products sold to another party in the previous issue of the Sprint LTD Directory that are renewed by such party as contemplated by the provisions of this Section 5.4 (the "First Option"). Not less than 60 days prior to the beginning of the sales canvass for each Sprint LTD Directory, Publisher will notify Sprint LTD of all Premium Advertising Products in the applicable Sprint LTD Directory, specifying those Premium Advertising Products available for purchase by the Option Holders ("Available Products") and those Premium Advertising Products sold to another party in the immediately prior version of the applicable Sprint LTD Directory ("Reserved Products"). This notice shall include a description of such available products, the pricing for such products consistent with Section 5.3 above, and the sales canvass commencement date for the applicable Sprint LTD Directory. The Option Holders, or any one of them, may exercise the First Option by providing Publisher with a notice of exercise within thirty (30) days after receipt of notice. This notice of exercise must specify the Premium Advertising Product(s) for which the First Option is exercised, and must specify whether it relates to Available Products, Reserved Products or both. If the Option Holders exercise the First Option with respect to Available Products, then the Option Holders shall be required to purchase those Available Products on the terms specified by Publisher in its notice. If the Option Holders exercise the First Option with respect to Reserved Products, then the Option Holders shall be required to purchase, on the terms specified by Publisher in its notice, those Reserved Products only upon their becoming Available Products due to the non-renewal (for whatever reason) of the Reserved Product by the prior advertiser. For any Reserved Product for which the Option Holders do not exercise the First Option that subsequently becomes an Available Product due to the non-renewal (for whatever reason) of the Reserved Product by the prior advertiser, Publisher shall provide written notice thereof to the Option Holders and the Option Holders shall have ten business days within which to exercise the First Option. If the Option Holders do not exercise the First Option with respect to any Available Product at least 30 days prior to the sales canvass, the First Option shall expire and Publisher shall be permitted to sell the Premium Advertising Products for the applicable Sprint LTD Directory to third parties (at a price at equivalent volumes not less than that last offered to the Option Holders for similar quantities or size) as well as the Option Holders. Any Premium Advertising Products purchased by the Option Holders, whether pursuant to an exercise of the First Option or made after the sales canvass commencement date for the applicable Sprint LTD Directory, will be subject to the most-favored-customer provision set forth in Section 5.3. Sprint LTD will pay Publisher for any Premium Advertising Products purchased within sixty (60) days of receipt of an invoice from Publisher. SECTION 5.5 PRODUCTS AND SERVICES. Except as prohibited by law, Publisher will offer Sprint LTD all products and services that it offers other third parties on a non-discriminatory basis. 15 SECTION 5.6 SPRINT MINIMUM SPEND. Beginning with calendar year 2003 and ending with calendar year 2006, Sprint Entities shall purchase Directory Advertising from Publisher on the terms provided in this Article 5 aggregating at least $3,000,000 for each calendar year. ARTICLE 6 OTHER COMMERCIAL AGREEMENTS SECTION 6.1 TRADEMARK LICENSE AGREEMENT. Pursuant to the Trademark License Agreement in the form attached as Exhibit G (the "Trademark License Agreement") executed between Sprint Trademark Co. and Publisher as of the date of this Agreement, Publisher will receive a license to use specific trademarks of Sprint Trademark Co. (the "Licensed Marks") in connection with the production, publication and distribution of the Sprint LTD Directories. The terms and conditions of the Trademark License Agreement are hereby incorporated by reference into this Agreement. SECTION 6.2 PUBLISHER TRADEMARK LICENSE AGREEMENT. Pursuant to the Publisher Trademark License Agreement (the "Publisher Trademark License Agreement") executed among Sprint Parent, RHDPA and RHDDC as of the date of this Agreement, Sprint Parent will receive a license to use specific trademarks of RHDPA and RHDDC (the "Publisher Marks") upon the occurrence of certain events for the production, publication and distribution of telephone directories in certain geographic areas. The terms and conditions of the Publisher Trademark License Agreement are hereby incorporated by reference into this Agreement. SECTION 6.3 SUBSCRIBER LISTINGS AGREEMENT. Pursuant to the Subscriber Listings Agreement (the "Subscriber Listings Agreement") executed between Sprint LTD and Publisher as of the date of this Agreement, Publisher will receive a license to use the Subscriber Listing Information and Listing Information Updates in accordance with the terms and conditions set forth therein. The terms and conditions of the Subscriber Listings Agreement are hereby incorporated by reference into this Agreement. ARTICLE 7 BRANDING SECTION 7.1 PRINT DIRECTORY COVER. During the Term, and unless otherwise expressly agreed to in writing by the Parties, at no cost to Sprint LTD or the other Sprint Entities, the Licensed Marks will appear clearly and conspicuously on the front cover and the spine of each print Sprint LTD Directory (a) in the format and style specified in the Directory Cover Policies and (b) in compliance with all other terms of this Agreement (including the Directory Cover Policies) and the Trademark License Agreement. The design and layout of the front cover and the spines of the print Sprint LTD Directories must comply with the Directory Policies. Publisher may not make any change to the Directory Cover Policies without the prior written consent of Sprint LTD, which will not be unreasonably withheld, particularly as necessary to permit Publisher to take advantage of advertising sales opportunities that are being utilized by other significant directory publishers. Upon Sprint LTD's reasonable request, Publisher will 16 provide Sprint LTD with copies of the front cover and spine of any print Sprint LTD Directory prior to publication in order for Sprint LTD to ensure compliance with this Article 7. SECTION 7.2 OTHER COVERS AND HOME PAGES. Any use of the Licensed Marks in connection with and the design and layout of the cover, home page or similar feature of all non-print Sprint LTD Directories will comply with policies to be developed by the Parties which will be consistent with the principles set forth in the Directory Cover Policies. SECTION 7.3 CO-BRANDING (a) Publisher may co-brand the front covers and spines of the print Sprint LTD Directories with any trademark or trade name of Publisher (the "Publisher Co-Brand Marks"), provided that the Licensed Marks are clearly the dominant brand (i.e., the co-brand will not be more than 80% of the size of the Licensed Marks, except as otherwise provided in the Co-Brand Standards) on such covers and spines and the co-branding complies with the Co-Brand Standards. (b) Publisher may co-brand the cover, home page or similar feature of any non-print Sprint LTD Directory and any print or non-print related aspects of producing, publishing or distributing directories and soliciting and selling advertising in connection therewith in the Geographic Coverage Areas, such as sales collateral, stationary, contracts, invoices, customer correspondence, business cards and advertising and promotional materials with the Publisher Co-Brand Marks, provided that the Licensed Marks are clearly the dominant brand (i.e., the co-brand will not be more than 80% of the size of the Licensed Marks, except as otherwise provided in the Co-Brand Standards) and the co-branding complies with the Co-Brand Standards. (c) The Co-Brand Standards are attached hereto as Exhibit J (collectively, the "Co-Brand Standards"). If Publisher wishes to use the co-brand in a specific graphic use that is outside of the agreed-upon Co-Brand Standards, the Parties will once again negotiate in good faith to agree on Co-Brand Standards. Publisher may change the actual specific graphic uses of the co-branding of the Purchaser Co-Brand Marks and the Licensed Marks pursuant to this Section 7.3, provided such specific graphic uses comply with the Co-Brand Standards and this Section 7.3. (d) Notwithstanding any other provision of this Agreement, Publisher may not include on the front or back cover or spine of any print Sprint LTD Directory or the cover, home page or similar feature of any non-print Sprint LTD Directory (i) any advertising for telecommunications services (including wireline or wireless voice or data services) or (ii) any name or brand (other than the name or brand of the ILEC in the applicable Service Area) (1) that is identified with the provision of telecommunications services (including wireline or wireless voice or data services) except (x) as required by applicable law or the Legal and Regulatory Requirements or (y) as required by Publisher in order to avoid a breach of any contract to which Publisher became a party prior to the execution of this Agreement until the end of the term of such contract (which will include any renewal only if such renewal is either automatic or at the other party's option) or (2) of any entity engaged in any business of the type listed in the "Restricted Headings" section of the Advertising Policies attached as Exhibit B. The foregoing shall not preclude Publisher from including photographs of the Las Vegas strip on any cover of any print Sprint LTD Directory or on any cover, home page or similar feature of any non-print Sprint LTD Directory. 17 (e) For the two year period prior to the end of any Initial Term or Renewal Term for which any Party has provided notice to the others of its intention to terminate this Agreement at the end of such term, the Parties will agree in writing, prior to publication, upon revisions to the Co-Brand Standards, including the specific graphic uses of the Publisher Co-Brand Marks in relation to the Licensed Marks to be applied to the front covers and spines of the print Sprint LTD Directories and the cover, home page or similar feature of any non-print Sprint LTD Directory, provided that the Parties hereby agree that the Licensed Marks shall no longer be required to be the dominant brand, and the revised Co-Brand Standards shall be no more restrictive on Publisher than the then-existing Co-Brand Standards or then-existing Brand Identity Standards (as defined in the Trademark License Agreement). (f) In the event Sellers substitute any brand or trademark for the Licensed Marks in their provision of local telephone exchange service as the ILEC in any Service Area Sprint Trademark Co. will file U.S. trademark applications to register such new trademarks in its name for at least all of the goods and services permitted to be used by Publisher pursuant to this Agreement and the other Commercial Agreements, and upon first use such new trademarks will be deemed either added or substituted, as the case may be, and become Licensed Marks on Exhibit A of the Trademark License Agreement. ARTICLE 8 TERM AND TERMINATION SECTION 8.1 TERM. Except as otherwise provided in this Article 8, the term of this Agreement will commence on the date of this Agreement and will continue until December 31, 2052 (the "Initial Term"). Thereafter, the Agreement will automatically renew for successive five year terms ("Renewal Term(s)"), unless either Party terminates the Agreement by providing at least two years prior written notice to the other Party of its intent to terminate the Agreement at the end of the Initial Term or any Renewal Term. The Initial Term and any Renewal Term(s) are collectively referred to in this Agreement as the "Term." SECTION 8.2 EFFECTS OF TERMINATION. Except as otherwise provided in this Agreement, upon termination of this Agreement: (a) Publisher will no longer have access under the Subscriber Listings Agreement or this Agreement to Subscriber Listing Information from Sprint LTD. However, Sprint LTD will, upon the request of Publisher, provide Publisher with access to listing information and updates with respect to Subscribers consistent with Sprint LTD's applicable regulatory obligations; (b) the indemnification obligations of the Parties set forth in Article 13 will continue indefinitely, subject to any applicable statutes of limitation, and no termination of all or any part of this Agreement will release any Party from liability for prior breaches of any provisions of this Agreement; (c) Publisher's obligations set forth in Section 10.1 will terminate immediately; and (d) except as set forth in Section 8.6 of this Agreement, the Non-Competition Agreement will terminate immediately. 18 SECTION 8.3 EARLY TERMINATION BY SPRINT LTD. (a) If Publisher (i) materially breaches its obligations under this Agreement or any other Commercial Agreement with respect to a particular Sprint LTD Directory (or, if the breach is not directly related to a particular Sprint LTD Directory, a particular Service Area and fails to cure such material breach within a reasonable time period (not to exceed the later of (1) the next publication of any affected directory or (2) 12 months) after Sprint LTD provides written notice to Publisher of such breach, or (ii) repeats the same material breach of its obligations under this Agreement or any other Commercial Agreement with respect to a particular Sprint LTD Directory (or, if the breach is not directly related to a particular Sprint LTD Directory, a particular Service Area) two or more times following notice from Sprint LTD of the same breach with respect to the same Sprint LTD Directory (or, if the breach is not directly related to a particular Sprint LTD Directory, a particular Service Area), then Sprint LTD may, upon written notice to Publisher, in addition to all other rights and remedies Sprint LTD may have under applicable law or regulation or pursuant to this Agreement or any other Commercial Agreement, terminate the applicability of this Agreement and the other Commercial Agreements to the affected Sprint LTD Directory or Service Area (including with respect to the Sprint LTD Directories primarily distributed in or primarily directed at such Service Area), as the case may be. In case of any such termination of the applicability of this Agreement and the other Commercial Agreements pursuant to this Section 8.3(a), (i) the provisions of Section 8.2 will apply to such terminated Service Area and/or the applicable Sprint LTD Directory(ies) (including the immediate termination of Publisher's non-competition obligations under Section 10.1 with respect to such terminated Service Area and/or the terminated Sprint LTD Directory(ies)) and (ii) at Sprint LTD's option exercised by notice to Publisher at or prior to the termination of the applicability of this Agreement to the terminated Sprint LTD Directory(ies) or Service Area, Publisher will continue to produce, publish and distribute the White Pages Directory (including white pages listings and a classified business directory) under this Agreement for the affected Service Area for one additional publication cycle following the date of termination at Sprint LTD's cost in order to enable Sprint LTD to meet the Legal and Regulatory Requirements (in which case Publisher will continue to have access to Subscriber Listing Information with respect to the applicable Sprint LTD Directory(ies) under the Subscriber Listings Agreement solely for the purpose of complying with this obligation). (b) In addition to the rights of Sprint LTD under Section 8.4, if (i) Publisher willfully breaches this Agreement or any other Commercial Agreement with the intent of causing an adverse impact on the Licensed Marks and (ii) such breach results in a material adverse effect on the Licensed Marks among a significant portion of the total population residing within the Service Areas in the aggregate, Sprint LTD may, upon written notice to Publisher, in addition to all other rights and remedies Sprint LTD may have under applicable law or regulation or pursuant to this Agreement and the other Commercial Agreements, terminate this Agreement and the other Commercial Agreements. (c) If Publisher or any of its Subsidiaries directly or indirectly offers or sells, as principal, agent or reseller, wireline or wireless voice or data telecommunications services in the Geographic Coverage Areas which compete with a Sprint Entity's business and such activities continue for more than 30 days following notice from Sprint LTD, Sprint LTD may, upon written 19 notice to Publisher, in addition to all other rights and remedies Sprint LTD may have under any applicable law or regulation or pursuant to this Agreement and the other Commercial Agreements, terminate this Agreement and the other Commercial Agreements. Notwithstanding the foregoing, if Publisher or any of its Subsidiaries acquires an entity or business that directly or indirectly offers, sells or promotes, as principal, agent or reseller, such telecommunications services, Sprint LTD may not terminate this Agreement or any other Commercial Agreements under this Section 8.3(c) because of such offering, sale or promotion of such telecommunications services if Publisher or such Subsidiary is attempting in good faith to divest or otherwise terminate the offer, sale and promotion of such telecommunications services in the Geographic Coverage Areas, except that Publisher or such Subsidiary must divest or otherwise terminate the offer, sale and promotion of such telecommunications services within twelve (12) months of the closing of such acquisition. (d) In case of any termination of this Agreement and the other Commercial Agreements pursuant to Section 8.3(b) or 8.3(c), (i) the provisions of Section 8.2 will apply (including the immediate termination of the Publisher's non-competition obligations under Section 10.1) and (ii) at Sprint LTD's option exercised by notice to Publisher at or prior to the termination of this Agreement, Publisher will continue to produce, publish and distribute the White Pages Directories (including white pages listings and a classified business directory) under this Agreement for one additional publication cycle following the date of termination at Sprint LTD's cost in order to enable Sprint LTD to meet the Legal and Regulatory Requirements (in which case Publisher will continue to have access to Subscriber List Information under the Subscriber Listings Agreement solely for the purpose of complying with this obligation). (e) Any termination of this Agreement with respect to any particular Sprint LTD Directory under this Agreement shall constitute a termination with respect to both such Sprint LTD Directory and any related White Pages Directory or Yellow Pages Directory covering substantially the same Subscribers, whether or not such White Pages Directory or Yellow Pages Directory is bound or produced together with the affected Sprint LTD Directory. SECTION 8.4 ADVERSE EFFECT ON THE LICENSED MARKS. If Publisher breaches this Agreement or the Trademark License Agreement in a manner that results in a material adverse effect on the Licensed Marks among a significant portion of the total population in the Geographic Coverage Areas, in the aggregate, and such breach is incapable of cure or has not been cured by Publisher within one hundred twenty (120) days following notice from Sprint LTD, Sprint LTD may, upon written notice to Publisher, in addition to all other rights and remedies Sprint LTD may have under any applicable law or regulation or pursuant to this Agreement and the other Commercial Agreements, suspend all rights of Publisher to use the Licensed Marks under the Trademark License Agreement in the affected Geographic Coverage Areas until such breach is cured. For purposes of this Section 8.4 only, any breach that is substantially similar to an event that occurred prior to the date hereof that did not result in a recall or recirculation of a Sprint LTD Directory will not be taken into account in determining whether a "material adverse effect" on the Licensed Marks has occurred. SECTION 8.5 FAILURE TO MEET REGULATORY OBLIGATIONS. If at any time during the Term, Sprint LTD reasonably determines that Publisher is not likely to publish the White Pages 20 Directories for one or more Service Areas in accordance with the terms of this Agreement and in a manner that would enable Sprint LTD to fulfill the Legal and Regulatory Requirements with respect to such Sprint Service Area(s), Sprint LTD will notify Publisher thereof, and Publisher will use commercially reasonable efforts to cure. If Publisher fails to cure, Sprint LTD may elect to publish such White Pages Directories itself or contract with third parties to publish such White Pages Directories in order to fulfill the Legal and Regulatory Requirements. SECTION 8.6 EARLY TERMINATION BY PUBLISHER. If any Sprint Company (a) materially breaches its obligations under this Agreement, any other Commercial Agreement or the Non-Competition Agreement with respect to a particular Sprint LTD Directory (or, if the breach is not directly related to a particular Sprint LTD Directory, a particular Service Area) and fails to cure such material breach within a reasonable time period (not to exceed 12 months) after Publisher provides written notice to Sprint LTD of such breach, or (b) repeats the same material breach of its obligations under this Agreement or any other Commercial Agreement with respect to a particular Sprint LTD Directory (or, if the breach is not directly related to a particular Sprint LTD Directory, a particular Service Area) two or more times after notice from Publisher of the initial such material breach with respect to such Sprint LTD Directory (or, if the breach is not directly related to a particular Sprint LTD Directory, a particular Service Area), then Publisher may, upon written notice to Sprint LTD, in addition to all other rights and remedies it may have under applicable law or regulation or pursuant to this Agreement and the other Commercial Agreements, terminate the applicability of this Agreement and the other Commercial Agreements with respect to the affected Sprint LTD Directory or Service Area (including with respect to the Sprint LTD Directories primarily distributed in or primarily directed at such Service Area), as the case may be. In the case of such termination, the provisions of Section 8.2 will apply with respect to the affected Service Area and/or the applicable Sprint LTD Directory(ies), except that the Sprint Entities' obligations set forth in the Non-Competition Agreement will survive with respect to the affected Service Area and/or the applicable Sprint LTD Directory(ies) until the later to occur of (i) the fifth anniversary of such termination and (ii) December 31, 2052, except, that notwithstanding any other provision of the Non-Competition Agreement, Sprint LTD will be permitted to publish White Pages Directories (including white pages and classified business directories) in order to fulfill the Legal and Regulatory Requirements. ARTICLE 9 SALE OF A SPRINT LTD SERVICE AREA SECTION 9.1 SALE OF A SERVICE AREA. (a) Upon any direct or indirect sale or transfer by Sprint Parent, Sprint LTD or any other Sprint Entity of all or any part of a Service Area(s) after the date of the Stock Purchase Agreement (whether by a sale of assets or capital stock or by merger, including any change of control of Sprint Parent) the ultimate parent entity of the purchaser of any Service Area and its appropriate Affiliates will: (i) be entitled to the benefit of and will be required to assume in writing and continue all of Sprint Parent's (in the case of the ultimate parent entity of the purchaser), Sprint Trademark Co.'s (in the case of purchaser's Affiliate that owns any substituted 21 brand and trademarks described in clause (ii) below) and Sprint LTD's (in the case of purchaser's Affiliate that operates the Service Area, if other than the purchaser) rights and obligations under this Agreement, the other Commercial Agreements and the Non-Competition Agreement with respect to such Service Area (or part thereof) and the related Sprint LTD Directories; (ii) have the right (exercisable in such purchaser's sole discretion) to substitute any brand and trademarks for the brand and trademarks then used in the provision of local telephone exchange service as the ILEC in the applicable Service Area (or part thereof); and (iii) if the purchaser or any of its Affiliates substitutes any brand or trademarks pursuant to clause (ii) above, be obligated to substitute the substituted brand and trademarks for the Licensed Marks and to substitute substantially similar usage standards for the Brand Identity Standards, in each case pursuant to the terms and conditions of this Agreement and the Trademark License Agreement. In the case of any substitution for the Licensed Marks and the Brand Identity Standards as described in clause (iii) above, Publisher will be required to accept such substitution in accordance with the terms of this Agreement and the Trademark License Agreement. (b) At the closing of any sale or transfer of all or any part of a Service Area pursuant to Section 9.1(a), Sellers shall cause purchaser and its applicable Affiliates as contemplated by Section 9.1(a)(i) to enter into separate agreements in a form reasonably satisfactory to Publisher that contain substantially identical terms and conditions as this Agreement, the other Commercial Agreements and the Non-Competition Agreement with respect to the transferred Service Area(s) (or part thereof) and Sprint LTD Directory(ies). Upon the execution of the agreements referenced in the prior sentence, Publisher consents to the assignment and assumption of Sprint Parent's, Sprint LTD's and Sprint Trademark Co.'s rights and obligations under this Agreement, the other Commercial Agreements and the Non-Competition Agreement with respect to such Service Areas (or part thereof) and related Sprint LTD Directories to and by the purchaser and its Affiliates as contemplated by Section 9.1(a)(i) without any ongoing obligations of Sprint Parent and its Affiliates with respect thereto (i.e., a novation will occur). In addition, Sprint LTD will use its good faith commercially reasonable efforts to cause the purchaser to agree that prior to any substitution of any trademarks for the Licensed Marks pursuant to Section 9.1(a)(ii) the purchaser and its Affiliates will (i) transfer ownership of any such substituted trademarks into a bankrupt remote entity which has substantially similar governing documents as Sprint Trademark Co. and (ii) enter into an agreement with Publisher that has substantially similar terms and conditions as the SPV Agreement. This Agreement, the other Commercial Agreements, the SPV Agreement and the Non-Competition Agreement will remain in full force and effect with respect to any Service Areas (or parts thereof) which are not transferred. (c) Notwithstanding any novation of all or part of the Non-Competition Agreement pursuant to Section 9.1(b), in the event all or any part of a Service Area is sold or transferred pursuant to Section 9.1(a), Sprint Parent, Sprint LTD and their Affiliates will remain bound by the obligations of the Non-Competition Agreement, including, without limitation, with respect to the then applicable Geographic Coverage Areas relating to such sold or transferred Service Area 22 (or part thereof). Notwithstanding any sale of all or part of a Service Area, Sprint Parent, Sprint Trademark Co. and their Affiliates will ensure that Publisher continues to have all rights to use the Licensed Marks (as defined in the Trademark License Agreement) that are in effect as of the consummation of such sale pursuant to this Agreement and the Trademark License Agreement until substitution of brands or trademarks pursuant to Section 9.1(a)(ii). (d) Any material breach of this Section 9.1 will constitute a material breach of this Agreement by Sprint LTD. SECTION 9.2 ACQUISITION OF A SERVICE AREA. If Sprint LTD determines to outsource or sell the directory publishing business in any New Service Area after the date of the Stock Purchase Agreement, Sprint LTD will request Publisher to submit a written proposal to Sprint LTD outlining the specific terms and conditions under which Publisher is willing to perform or acquire such business, which Publisher will submit with thirty (30) days following Sprint LTD's request if Publisher desires to pursue such opportunity. Sprint LTD's request (the "Request") will specify which business it wishes to outsource or sell and whether it wishes to outsource or sell such business. If Publisher does not submit a proposal within such 30-day period, Sprint LTD may contract with a third party to perform or acquire the business offered to Publisher consistent with the Request in Sprint LTD's discretion. If Publisher submits a proposal during such 30-day period, for a period of thirty (30) days following the receipt by Sprint LTD of such proposal to Sprint LTD will negotiate in good faith with Publisher to agree on terms and conditions under which Publisher would perform or acquire such business, provided, however, that Sprint LTD agrees that the non-economic terms and conditions of this Agreement and the Stock Purchase Agreement, to the extent they are applicable, will be acceptable in connection with the acquisition or performance of such business. If no agreement has been reached by the end of the thirty (30) day period, Sprint LTD will request Publisher to submit a final written proposal Sprint LTD, who will have five business days to accept or reject such proposal. If Sprint LTD and Publisher are unable to agree on terms for Publisher to perform or acquire such business Sprint LTD may contract with a third party to perform or acquire such business on terms which in the aggregate are no more favorable to such third party than last offered in writing to Publisher. If Sprint LTD has not contracted with a third party within six months of Sprint LTD and Publisher's failing to reach agreement, this Section 9.2 will once again apply. Notwithstanding the foregoing, Sprint LTD will not have any obligation to Publisher under this Section 9.2 in connection with the extension or renewal of any contract under which a third party is providing directory publishing services in a New Service Area at the time Sprint LTD acquires or obtains such New Service Area. ARTICLE 10 NONCOMPETE AND NONSOLICITATION SECTION 10.1 PUBLISHER OBLIGATIONS. (a) During the Term of this Agreement, Publisher agrees that neither Publisher nor any of its Affiliates will directly or indirectly engage in, own, manage, operate, share any revenues of, have any profit or other equity interest in any business or entity (other than pursuant to this Agreement or by ownership of less than five percent of the outstanding capital stock of a 23 corporation whose securities are publicly traded) that engages in the business of producing, publishing and distributing (or selling advertising for inclusion in) any physical media directory which contains Directional Information relating to Subscribers that is distributed primarily in a Geographic Coverage Area; provided, that Publisher may produce, publish or distribute (and sell advertising for inclusion in) specialty guides or directories (e.g., niche, ethnic and new movers guides) containing Subscriber Listing Information or Directional Information distributed primarily in the Geographic Coverage Area, so long as (in any such case) such products do not materially compete with and are not significant substitutes for the physical media Sprint LTD Directories. Notwithstanding the foregoing, if Publisher acquires an entity or business that is engaged in operations that cause Publisher to otherwise be in violation of this Section 10.1(a), Publisher will not be deemed to be in violation of this Section 10.1(a) if Publisher or its Affiliates is in good faith attempting to divest or otherwise terminate the competing directories, except that Publisher or its Affiliates must divest or otherwise terminate the production, publication and distribution of such competing directories within twelve (12) months of the closing of the acquisition or similar agreement by Publisher or its Affiliates. In addition, if Publisher is acquired by an entity that is engaged in operations that cause Publisher to otherwise be in violation of this Section 10.1(a), Publisher will not be deemed to be in violation of this Section 10.1(a) as a result of any activities by the acquiring party and its Affiliates (other than Publisher and its Subsidiaries) that exist as of the closing of such sale. Any material breach of this Section 10.1(a) will constitute a material breach of this Agreement by Publisher. (b) In the event of a termination of this Agreement pursuant to Section 8.3(a), 8.3(b) or 8.3(c) (in its entirety or with respect to any Sprint LTD Directory or Service Area(s), as the case may be), or any suspension of the right to use the Licensed Marks pursuant to Section 8.4, the Publisher and its Affiliates will be prohibited from including on the cover or spine of any print directory primarily distributed in the affected Service Areas or the cover, home page or similar feature of any non-print directory primarily directed at persons or businesses within the affected Service Areas any name or brand (other than the name or brand of the ILEC in the applicable Service Area) that is identified with the provision of telecommunications services (including wireline or wireless voice or data services). The restriction under this Section 10.1(b) shall continue until (i) with respect to a termination pursuant to Section 8.3(a), 8.3(b) or 8.3(c), the later of (y) the fifth anniversary of the effective date of such termination of this Agreement and (z) December 31, 2052, and (ii) with respect to a termination pursuant to Section 8.4, during the term of such suspension. (c) During (i) the period between the date of this Agreement and the second anniversary of the date of this Agreement and (ii) the two year period following the termination of this Agreement, Publisher will not, directly or indirectly, through one or more of its Affiliates, on behalf of itself or any other person, recruit or otherwise solicit or induce any employee of Sprint LTD or any of its Affiliates or any of their successors to terminate his or her employment relationship with Sprint LTD or its Affiliates (other than Publisher and its subsidiaries). The foregoing will not, however, prohibit Publisher or any of its Affiliates from publishing any general public solicitation of employment opportunities. 24 ARTICLE 11 CONFIDENTIAL INFORMATION SECTION 11.1 NONDISCLOSURE. Each Party may disclose to the other Confidential Information. Each Party agrees to keep Confidential Information of the other Party confidential, and not to disclose such information to any third Party, except to those of its employees, subcontractors, consultants and agents with a need to know and solely for the purpose of performing the receiving Party's obligations under this Agreement and the other Commercial Agreements and as otherwise permitted under this Agreement and the other Commercial Agreements; provided, that any such employees, subcontractors, consultants or agents are informed by the recipient Party of the confidential nature of the Confidential Information and agree to be bound by the terms no less restrictive than this Article 11. The recipient of Confidential Information may use the Confidential Information and make copies of Confidential Information only as reasonably necessary to perform its obligations under this Agreement and the other Commercial Agreements and as otherwise permitted under this Agreement and the other Commercial Agreements. All such copies will be subject to the same restrictions and protections as the original. Each Party will safeguard such Confidential Information from unauthorized use or disclosure with at least the same degree of care with which the recipient Party safeguards its own Confidential Information. The recipient Party will be responsible for any breach of this Article 11 by the recipient's employees, subcontractors, consultants or agents. Confidential Information belonging to a Party that is in the possession of the other Party will be returned, or destroyed at the disclosing Party's request, within thirty (30) days after a written request is delivered to the recipient, including any copies made by the recipient Party. If either Party loses or makes an unauthorized disclosure of the other Party's Confidential Information, it will notify such other Party immediately and use reasonable efforts to retrieve the lost or wrongfully disclosed information. A Party may disclose Confidential Information which is required to be disclosed by law, a court of competent jurisdiction or governmental or administrative agency so long as the disclosing Party has been notified of the requirement promptly after the receiving Party becomes aware of the requirement and so long as the receiving Party undertakes all lawful measures to avoid disclosing such information until the disclosing Party has had reasonable time to seek a protective order and complies with any protective order that covers the Confidential Information to be disclosed. SECTION 11.2 RELIEF. Each Party agrees that the discloser of Confidential Information would be irreparably injured by a breach of Section 11.1 by the recipient of such Confidential Information or its representatives, and that the discloser will be entitled to seek equitable relief, including injunctive relief and specific performance, in the event of any breach of the provisions of Section 11.1. Such remedies will not be deemed to be the exclusive remedies for a breach of this Agreement, but will be in addition to all other remedies available at law or in equity. SECTION 11.3 TERMINATION OF AGREEMENT. The obligations and rights under this Article 11 will survive the termination of this Agreement for a period of three years from the effective date of such cancellation or termination. 25 ARTICLE 12 REPRESENTATIONS AND WARRANTIES SECTION 12.1 SPRINT REPRESENTATIONS AND WARRANTIES. Each of Sprint Parent, Sprint Trademark Co. and Sprint LTD represents and warrants to Publisher that it has the power and authority to enter into this Agreement. SECTION 12.2 PUBLISHER REPRESENTATIONS AND WARRANTIES. Publisher represents and warrants to Sprint LTD that Publisher has the power and authority to enter into this Agreement. SECTION 12.3 DISCLAIMER OF WARRANTIES. Except as expressly set forth in this Article 11, each Party makes no representation or warranty under this Agreement, and the Parties hereby disclaim all other warranties, whether express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, title, or noninfringement. ARTICLE 13 INDEMNIFICATION; LIMITATION OF LIABILITY SECTION 13.1 PUBLISHER INDEMNITY. Publisher will defend, hold harmless and indemnify each Sprint Entity and its officers, directors, shareholders, employees, contractors, agents and representatives from and against any and all losses, damages, claims, demands, suits, liabilities, fines, penalties, costs, obligations, settlement payments, awards, judgments, deficiencies or other charges ("Losses") and any and all expenses incurred in connection with investigating, defending or asserting any claim, action, suit or proceeding ("Expenses") arising out of, resulting from or based upon any pending or threatened claim, action, proceeding or suit by any third party, whether based on contract, tort or otherwise, arising out of or in connection with: (a) any errors, omissions, refusals to accept advertising, misclassification or misuse of information, claimed or actual, concerning any of the Sprint LTD Directories, except to the extent resulting from any errors, omissions or misclassifications in the Subscriber Listing Information provided by Sprint LTD under the Subscriber Listings Agreement; (b) any other claims by advertisers with respect to the Sprint LTD Directories; (c) any breach of this Agreement or any other Commercial Agreement by Publisher; (d) Publisher's activities with respect to the production, publishing and distribution of the Sprint LTD Directories; (e) the use of the Licensed Marks by Publisher in violation of this Agreement or the Trademark License Agreement; and (f) breach by Publisher of any of its representations or warranties set forth in Section 12.2. SECTION 13.2 SPRINT LTD INDEMNITY. Sprint LTD (with respect to clauses (a)-(e) below) and Sprint Parent (with respect to clause (f) below) will defend, hold harmless and indemnify Publisher and each of its Affiliates, officers, directors, shareholders, employees, contractors, agents and representatives from and against any and all Losses and Expenses arising out of, resulting from or based upon any pending or threatened claim, action, proceeding or suit by any third party, whether based on contract, tort or otherwise, arising out of or in connection with: (a) claims resulting from errors, omissions or misclassifications in the Subscriber Listing Information provided by a Sprint Entity; (b) any breach of this Agreement or the Subscriber 26 Listings Agreement by a Sprint Company; (c) breach by a Sprint Company of any of its representations or warranties set forth in Section 12.1; (d) claims relating to Enhanced White Pages or any services provided by a Sprint Entity, including without limitation, local, long distance, wireless or other telecommunications services; (e) any failure to satisfy the Legal and Regulatory Requirements accruing prior to the date of this Agreement; and (f) any breach of the Trademark License Agreement by Sprint Trademark Co. SECTION 13.3 PROCEDURE. Promptly after receipt by the indemnified party of notice by a third party of a claim or of the commencement of any action or proceeding with respect to which such indemnified party may be entitled to receive payment from the other party for any Losses or Expenses, such indemnified party will notify the indemnifying party of the notice of such claim or of the commencement of such action or proceeding; provided, however, that the failure to so notify the indemnifying party will relieve the indemnifying party from liability under this Agreement with respect to such claim, action or proceeding only if, and only to the extent that, such failure to notify the indemnifying party results in the forfeiture by the indemnifying party of rights and defenses otherwise available to the indemnifying party with respect to such claim, action or proceeding. The indemnifying party will have the right, upon written notice delivered to the indemnified party within thirty (30) days thereafter assuming formal responsibility for any Losses and Expenses resulting from such claim, action or proceeding, to assume control of the defense of such claim, action or proceeding, including the employment of counsel reasonably satisfactory to the indemnified party and the payment of the fees and disbursements of such counsel. In any claim, action or proceeding with respect to which indemnification is being sought hereunder, the indemnified party or the indemnifying party, whichever is not assuming the defense of such action, will have the right to participate in such matter and to retain its own counsel at such party's own expense. The indemnifying party or the indemnified party, as the case may be, will at all times use reasonable efforts to keep the indemnifying party or the indemnified party, as the case may be, reasonably apprised of the status of the defense of any action the defense of which they are maintaining and to cooperate (at the expense of the indemnifying party) in good faith with each other with respect to the defense of any such action. If the indemnifying party has assumed the defense of a claim, action or proceeding, no indemnified party may settle or compromise such matter or consent to the entry of any judgment with respect to such matter without the prior written consent of the indemnifying party. An indemnifying party may not, without the prior written consent of the indemnified party, settle or compromise any claim or consent to the entry of any judgment with respect to which indemnification is being sought hereunder unless (i) simultaneously with the effectiveness of such settlement, compromise or consent, the indemnifying party pays in full any obligation imposed on the indemnified party by such settlement, compromise or consent (ii) such settlement, compromise or consent contains a complete release of the indemnified party and its Affiliates and their respective directors, officers and employees and (iii) such settlement, compromise or consent does not contain any equitable order, judgment or term which in any manner affects, restrains or interferes with the business of the indemnified party or any of the indemnified party's Affiliates. In the event an indemnified party will claim a right to payment pursuant to this Agreement not involving a third party claim covered by Article 13, such indemnified party will send written notice of such claim to the appropriate indemnifying party. Such notice will specify the basis for such claim. As promptly as possible after the indemnified 27 party has given such notice, such indemnified party and the appropriate indemnifying party will establish the merits and amount of such claim (by mutual agreement, litigation, arbitration or otherwise) and, within five business days of the final determination of the merits and amount of such claim, the indemnifying party will pay to the indemnified party immediately available funds in an amount equal to such claim as determined hereunder. SECTION 13.4 LIMITATION OF LIABILITY. NONE OF A SPRINT COMPANY OR PUBLISHER OR ANY OF THEIR RESPECTIVE AFFILIATES WILL BE LIABLE TO THE OTHER PARTY WITH RESPECT TO ANY BREACH OF THIS AGREEMENT OR THE OTHER COMMERCIAL AGREEMENTS (EXCEPT THE TRADEMARK LICENSE AGREEMENT) FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, RELIANCE, OR SPECIAL DAMAGES SUFFERED BY SUCH OTHER PARTY (INCLUDING DAMAGES FOR HARM TO BUSINESS, LOST REVENUES, LOST SAVINGS, OR LOST PROFITS SUFFERED BY SUCH OTHER PARTY), REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, WARRANTY, STRICT LIABILITY, OR TORT, INCLUDING NEGLIGENCE OF ANY KIND WHETHER ACTIVE OR PASSIVE, AND REGARDLESS OF WHETHER THE PARTIES KNEW OF THE POSSIBILITY THAT SUCH DAMAGES COULD RESULT. EACH PARTY HEREBY RELEASES THE OTHER PARTIES (AND SUCH OTHER PARTIES' RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, PARTNERS, MEMBERS AND AFFILIATES) FROM ANY SUCH CLAIM. THE LIMITATION IN THIS SECTION 13.4 WILL NOT APPLY TO BREACHES OF (a) THE PARTIES' INDEMNIFICATION OBLIGATIONS, AS SPECIFIED ELSEWHERE IN ARTICLE 13 OF THIS AGREEMENT, OR (b) THE OBLIGATIONS OF THE PARTIES UNDER ARTICLE 2 OF THIS AGREEMENT. SECTION 13.5 ERRORS AND OMISSIONS. (a) Sprint LTD agrees to limit, by tariff or contract, its own and its contractors' and agents' (and hence Publisher's) liability to any Subscriber for any error or omission in any Subscriber Listing Information to no more than the cost, if any, assessed to the Subscriber for directory listing services. (b) Publisher agrees to limit, by contract, its own and its contractors' and agents' (and hence Sprint LTD's) liability to any advertiser for any error or omission in any Directory Advertising to no more than the cost assessed to the advertiser for such Directory Advertising. ARTICLE 14 ADDITIONAL REGULATORY REQUIREMENTS AND COSTS SECTION 14.1 REGULATORY REQUIREMENTS. Publisher will abide by and implement any changes related to the production, publishing and distribution of the Sprint LTD Directories that are required in order to fulfill the Legal and Regulatory Requirements. This obligation includes maintaining, retaining and producing upon request all records sufficient to show that Publisher has complied with the Legal and Regulatory Requirements. In accordance with the policies attached on Exhibit I, Sprint LTD will reimburse Publisher for reasonable incremental net costs 28 incurred by Publisher in connection with the production, publication and distribution of the Sprint LTD Directories resulting from Publisher's obligations under this Agreement to comply with changes after the date of the Stock Purchase Agreement to the Legal and Regulatory Requirements (which is intended for these purposes to include material changes to the terms of interconnection and similar agreements entered into by Sprint LTD and any CLEC, and is not intended to include new agreements entered into by Sprint LTD after the date of the Stock Purchase Agreement on the terms and conditions existing as of the date of the Stock Purchase Agreement). Publisher will be solely responsible for the costs of complying with any changes after the date of this Agreement to any legal and regulatory requirements applicable to Publisher which are not part of the Legal and Regulatory Requirements. SECTION 14.2 PROVISION OF REGULATORY INFORMATION. Sprint LTD will be responsible for notifying Publisher of any changes to the Legal and Regulatory Requirements after the date of this Agreement. The failure of Sprint LTD to notify Publisher of any such changes will not relieve Publisher of its obligations to fulfill the Legal and Regulatory Requirements if Publisher knew, or should have known, of any such changes to the Legal and Regulatory Requirements. ARTICLE 15 SHARING OF INFORMATION SECTION 15.1 CREDIT MATTERS. Subject to applicable privacy and other laws, Sprint LTD and Publisher will exchange information relating to customers who fail to pay their obligations to Sprint LTD and Publisher, respectively. SECTION 15.2 PUBLISHER ACCESS TO SPRINT LTD DIRECTORY SYSTEM. Subject to reasonable limitations imposed by Sprint LTD, Sprint LTD will grant Publisher read-only access to the Sprint Universal Directory System (or any successor system) to allow Publisher to comply with is obligations under this Agreement. ARTICLE 16 INTERNET OPERATIONS AND OTHER SPRINT SERVICES SECTION 16.1 INTERNET LINKS. Each Party agrees to provide on its website an Internet hyperlink to the other Party's website during the Term, such hyperlink to be approved in advance by the other Party in its reasonable business discretion, consistent with the purpose of and subject to the terms and conditions of the Commercial Agreements. SECTION 16.2 SPRINT SERVICES. On the date of this Agreement, Publisher and the applicable Sprint Entities will execute telecommunications services agreements (in forms mutually agreed to between the Parties prior to the date of this Agreement), which require Publisher to use the Sprint Entities' (but not their successors') local, long distance and data services, on an exclusive basis from the date of this Agreement until December 31, 2006; provided, that (i) the Sprint Entities provide Publisher such services on a most-favored-customer basis for similarly situated customers that are purchasing equivalent volumes and types of services, (ii) the Sprint Entities provide the type, prices and quality of services equal to the 29 services provided by other parties and (iii) the requirements of this Section 16.2 shall not apply to the extent that Publisher has existing contractual arrangements with another provider as of the date of this Agreement until the expiration of such arrangements in accordance with their terms, except that the wireless services used by the general employees and sales people of Publishers and directly paid for by Publisher will be Sprint Services if available in the employees' locations. SECTION 16.3 INFORMATION SYSTEMS. Sprint LTD will negotiate in good faith any enhancements that Publisher desires to make to connections between Publisher's and Sprint LTD's information technology systems, including with respect to the format of Subscriber Listing Information and updates. ARTICLE 17 DISPUTE RESOLUTION SECTION 17.1 OPTION TO NEGOTIATE DISPUTES. The Parties will attempt in good faith to resolve any issue, dispute, or controversy arising out of or relating to this Agreement, the Subscriber Listings Agreement or the Non-Competition Agreement using the procedures in this Section 17.1. Either Party may give the other Party written notice of any dispute not resolved in the normal course of business. Within ten (10) days after delivery of the notice, representatives of the Parties will meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the dispute by the respective representatives of the Parties within the time frames and escalation process set forth below:
SPRINT LTD (TITLE) PUBLISHER (TITLE) - ------------------------------------------------------------------------------------------ WITHIN 10 DAYS VICE PRESIDENT - LAW, MARKETING AND SALES GENERAL COUNSEL - ------------------------------------------------------------------------------------------ WITHIN 20 DAYS VICE PRESIDENT - BUSINESS PLANNING & CHIEF FINANCIAL OFFICER DEVELOPMENT - ------------------------------------------------------------------------------------------ WITHIN 30 DAYS PRESIDENT - LTD CHIEF EXECUTIVE OFFICER - ------------------------------------------------------------------------------------------
If a Party intends to be accompanied at a meeting by an attorney, the other Party will be given at least two business days' notice of such intention and may also be accompanied by an attorney. All negotiations pursuant to this Section 17.1 are confidential and will be treated as compromise and settlement negotiations for purposes of the Federal Rules of Evidence and State Rules of Evidence. SECTION 17.2 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES IS GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ITS CONFLICT OF LAWS PRINCIPLES. 30 SECTION 17.3 FORUM SELECTION. Any court proceeding brought by either Party shall be brought in the United States District Court for the District of Delaware in Wilmington, Delaware. Each Party agrees to personal jurisdiction in such court. SECTION 17.4 WAIVER OF JURY TRIAL. EACH PARTY WAIVES ITS RIGHT TO A JURY TRIAL IN ANY COURT ACTION ARISING AMONG ANY OF THE PARTIES, WHETHER UNDER OR RELATING TO THIS AGREEMENT, AND WHETHER MADE BY CLAIM, COUNTER-CLAIM, THIRD PARTY CLAIM OR OTHERWISE. If for any reason the jury waiver is held to be unenforceable, the parties agree to binding arbitration for any dispute arising out of this Agreement under the applicable commercial rules of the American Arbitration Association and 9 U.S.C. Section 1, et. seq. Any arbitration will be held in the Wilmington, Delaware metropolitan area and be subject to the Governing Law provision of this Agreement. Discovery in the arbitration will be governed by the Local Rules applicable in the United States District Court for the District of Delaware. The agreement of each party to waive its right to a jury trial will be binding on its successors and assigns and will survive the termination of this Agreement. SECTION 17.5 ATTORNEYS' FEES. The prevailing Party in any formal dispute will be entitled to reasonable attorneys' fees and costs, including reasonable expert fees and costs. This provision will not apply if the prevailing Party rejected a written settlement offer that exceeds the prevailing Party's recovery. SECTION 17.6 CUMULATIVE REMEDIES. No right or remedy in this Agreement conferred upon or reserved to either Party is intended to be exclusive of any other right or remedy, and each and every right and remedy will be cumulative and in addition to any other right or remedy under this Agreement or under applicable law, whether now or hereafter existing. The Parties agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with its terms and that the Parties will be entitled to specific performance and injunctive relief (without the necessity of posting bond) in addition to any other remedy to which they are entitled at law or equity. ARTICLE 18 REAFFIRMATION OF CENDON PAYMENTS SECTION 18.1 FORMER CENDON DIRECTORY AGREEMENTS. The Parties acknowledge that (i) this Agreement supercedes the Directory Services Agreement effective as of July 1, 2000, among RHDPA, CenDon and Sprint LTD, which in turn had superceded the CenDon Virginia Directory Agreement dated May 5, 1988, as amended; the CenDon Florida Directory Agreement dated May 5, 1988, as amended; the CenDon Nevada Directory Agreement dated May 5, 1988, as amended; and the CenDon North Carolina Directory Agreement, dated May 5, 1988, as amended (collectively, the "Former CenDon Directory Agreements") and (ii) pursuant to the Limited Liability Company Agreement of CenDon, dated April 27, 2000, CenDon assumed the rights and obligations of the CenDon Partnership (as defined in such Limited Liability Company Agreement) under the Former CenDon Directory Agreements. 31 ARTICLE 19 GENERAL SECTION 19.1 ASSIGNMENT. Except as provided in Section 9.1 of this Agreement, neither Party may assign all or any of its rights or obligations under the Agreement without the prior written consent of the other Party, except that either Party may assign all of its rights and obligations under the Agreement (a) in connection with a sale of all or substantially all of its assets or by merger if the purchaser assumes in writing all of the assigning Party's rights and obligations under this Agreement, the other Commercial Agreements and the Non-Competition Agreement in a form reasonably acceptable to the other Party, (b) to (i) any of its Affiliates or (ii) any lender or other party as collateral for any financing provided that no such assignment permitted by this clause (b) will relieve such Party of any of its obligations under this Agreement. SECTION 19.2 SUBCONTRACTORS. Notwithstanding the prohibition on sublicensing set forth in the Subscriber Listings Agreement and Section 2.1 hereof, any Party may subcontract with third parties or Affiliates of such Party for the performance of any of such Party's obligations under this Agreement. If any obligation is performed for either Party through a subcontractor, such Party will remain fully responsible for the performance of this Agreement in accordance with its terms, including any obligations it performs through subcontractors, and such Party will be solely responsible for payments due to its subcontractors. No contract, subcontract or other agreement entered into by either Party with any third party in connection with the provision of services under this Agreement will provide for any indemnity, guarantee or assumption of liability by, or other obligation of, the other Party with respect to such arrangement, except as consented to in writing by the other Party. No subcontractor will be deemed a third party beneficiary for any purposes under this Agreement. SECTION 19.3 RELATIONSHIP. Nothing contained in this Agreement shall be construed to create the relationship of employer and employee between any Sprint Entity and Publisher, franchisor - franchisee, or to make any Sprint Entity or Publisher partners, joint venturer or co-employer of the other, or result in joint service offerings to their respective customers. SECTION 19.4 NOTICES. Any notice required or permitted under this Agreement will be in writing and will be hand-delivered, sent by confirmed facsimile or mailed by overnight express mail. Notice will be deemed to have been given when such notice is received. Addresses for notices are as follows: If to a Sprint Company: Sprint Corporation 6200 Sprint Parkway Overland Park, KS 66251 KSOPHF 0202 - 2B579 Attention: Vice President, Business Planning & Development- LTD Facsimile: 913-794-0141 32 With a copy to: Sprint Corporation 6200 Sprint Parkway Overland Park, KS 66251 KSOPHF 0302 - 3B679 Attention: Legal - Corporate Secretary Facsimile: 913-794-0144 If to Publisher: R.H. Donnelley Corporation One Manhattanville Road Purchase, New York 10577 Attention: General Counsel Facsimile: 914-933-6844 or at such other address as either Party may provide to the other by written notice. SECTION 19.5 INDEPENDENT CONTRACTOR. The relationship between the Parties is that of an independent contractor. Each Party will be solely responsible for such Party's employees, including compliance with all employment laws, regulations, and rules and payment of wages, benefits and employment taxes such as Social Security, unemployment, workers compensation and federal and state withholding with respect to such employees. SECTION 19.6 ENTIRE AGREEMENT. The Commercial Agreements constitute the entire understanding and agreement of the Parties concerning the subject matter of this Agreement and the other Commercial Agreements, and supersede any prior agreements, representations, statements, understandings, proposals, undertakings or negotiations, whether written or oral, with respect to the subject matter expressly set forth in the Commercial Agreements. Notwithstanding the foregoing, the Subscriber Listings Agreement and the terms and conditions contained therein are incorporated by reference into this Agreement in their entirety. SECTION 19.7 SEVERABILITY. If any term, condition or provision of this Agreement is held to be invalid or unenforceable for any reason, such invalidity will not invalidate the entire Agreement, unless such construction would be unreasonable. This Agreement will be construed as if it did not contain the invalid or unenforceable provision or provisions, and the rights and obligations of each Party will be construed and enforced accordingly, except that in the event such invalid or unenforceable provision or provisions are essential elements of this Agreement and substantially impair the rights or obligations of either Party, the Parties will promptly negotiate in good faith a replacement provision or provisions. SECTION 19.8 COMPLIANCE WITH LAWS/REGULATIONS. Subject to Article 14, each Party will comply with all federal, state, and local laws, regulations, rules, ordinances and orders relating to the performance of its obligations and the use of services provided under the Agreement, including any rulings, modifications, regulations or orders of the Federal 33 Communications Commission and/or any applicable state utility commission to the extent this Agreement is subject to the jurisdiction of such regulatory authority. SECTION 19.9 FORCE MAJEURE. Neither Party will be liable for any delay or failure in performance of any part of this Agreement caused by a Force Majeure condition, including acts of God, a public enemy or terrorism, fires, floods, freight embargoes, earthquakes, volcanic actions, wars (whether against a nation or otherwise), civil disturbances or other similar causes beyond the reasonable control of the Party claiming excusable delay or other failure to perform (a "Force Majeure"). If any Force Majeure condition occurs, the Party whose performance fails or is delayed because of such Force Majeure condition will give prompt notice to the other Party, will use commercially reasonable efforts to perform in spite of the Force Majeure condition and upon cessation of such Force Majeure condition will give like notice and commence performance under the Agreement as promptly as reasonably practicable. SECTION 19.10 NO THIRD PARTY BENEFICIARIES. This Agreement is intended solely for the benefit of the Parties, and no third-party beneficiaries are created by this Agreement. This Agreement does not provide and should not be construed to provide third parties with any remedy, claim, liability, reimbursement, cause of action or other privilege. SECTION 19.11 BINDING EFFECT. This Agreement will be binding on and inure to the benefit of the Parties, and their respective successors and permitted assigns. SECTION 19.12 WAIVERS. No waiver of any provision of this Agreement, and no consent to any default under this Agreement, will be effective unless the same is in writing and signed by an officer of the Party against whom such waiver or consent is claimed. In addition, no course of dealing or failure of a Party strictly to enforce any term, right or condition of this Agreement will be construed as a waiver of such term, right or condition. Waiver by either Party of any default by the other Party will not be deemed a waiver of any subsequent or other default. SECTION 19.13 EXHIBITS. Exhibits to this Agreement are incorporated and made a part of this Agreement. In the event of a conflict between the terms of this Agreement and an exhibit to this Agreement, the terms of this Agreement will override and govern. SECTION 19.14 HEADINGS. The headings and numbering of sections and paragraphs in this Agreement are for convenience only and will not be construed to define or limit any of the terms in this Agreement or affect the meaning or interpretation of this Agreement. SECTION 19.15 SURVIVAL. Any liabilities or obligations of a Party for acts or omissions occurring prior to the cancellation or termination of this Agreement and any obligations of a Party under any other provisions of this Agreement which, by their terms, are contemplated to survive (or be performed after) termination of this Agreement (subject to any time limitations specified therein) will survive the cancellation or termination of this Agreement. SECTION 19.16 MODIFICATIONS. No amendments, deletions, additions or other modifications to this Agreement will be binding unless evidenced in writing and signed by an officer of each of the respective parties hereto. 34 SECTION 19.17 COUNTERPARTS. This Agreement may be executed in any number of counterparts, and each such counterpart will be deemed to be an original instrument, but all such counterparts together will constitute but one agreement. This Agreement will become effective when one or more counterparts have been signed by each and delivered to the other Party, it being understood that the Parties need not sign the same counterpart. SECTION 19.18 SPRINT LTD OBLIGATIONS. Each individual entity comprising Sprint LTD under this Agreement will be severally responsible for the obligations of Sprint LTD under this Agreement with respect to the specific Service Areas operated by such entity. Subject to any novation that occurs pursuant to Section 9.1(b), Sprint Parent will be jointly and severally responsible with each entity comprising Sprint LTD for the obligations of such entity under this Agreement. SECTION 19.19 PUBLISHER REASONABLE EFFORTS. No violation or breach of Sections 3.2, 3.5, 3.9, 3.16, 3.17(c), and 7.1 of this Agreement that would otherwise constitute a material breach of this Agreement will be deemed to constitute a material breach so long as Publisher has used its commercially reasonable efforts to comply with the applicable section and the action or omission constituting such violation or breach is not materially inconsistent with the performance of Publisher prior to the date hereof. 35 IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written. PUBLISHER: R.H. DONNELLEY PUBLISHING & ADVERTISING, INC. CENDON, L.L.C. (f/k/a Sprint Publishing & Advertising, Inc.) By: /s/ ROBERT J. BUSH By: /s/ ROBERT J. BUSH ---------------------------- --------------------------- Name: Robert J. Bush Name: Robert J. Bush Title: Vice President and Secretary Title: Authorized Signatory R.H. DONNELLEY DIRECTORY COMPANY (f/k/a Centel Directory Company) By: /s/ ROBERT J. BUSH ---------------------------- Name: Robert J. Bush Title: Vice President and Secretary [Directory Services License Agreement] SPRINT PARENT: SPRINT CORPORATION By: /s/ MICHAEL B. FULLER ---------------------------- Name: Michael B. Fuller Title: President, Local Telecom Division SPRINT DIRECTORY CO.: SPRINT DIRECTORY TRADEMARK COMPANY, LLC By: /s/ JOSEPH MEYER ---------------------------- Name: Joseph Meyer Title: President SPRINT LTD: SPRINT MINNESOTA, INC. SPRINT - FLORIDA, INCORPORATED By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER ---------------------------- --------------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President CAROLINA TELEPHONE & TELEGRAPH UNITED TELEPHONE - SOUTHEAST, CO. INC. By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER ---------------------------- --------------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President UNITED TELEPHONE COMPANY OF THE UNITED TELEPHONE COMPANY OF CAROLINAS SOUTHCENTRAL KANSAS By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER ---------------------------- --------------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President UNITED TELEPHONE COMPANY OF UNITED TELEPHONE COMPANY EASTERN KANSAS OF KANSAS By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER ---------------------------- --------------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President SPRINT MISSOURI, INC. UNITED TELEPHONE COMPANY OF TEXAS, INC. By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER ---------------------------- --------------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President UNITED TELEPHONE COMPANY THE UNITED TELEPHONE COMPANY OF THE WEST OF PENNSYLVANIA By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER ---------------------------- --------------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President UNITED TELEPHONE COMPANY UNITED TELEPHONE COMPANY OF OF NEW JERSEY, INC. THE NORTHWEST By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER ---------------------------- --------------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President UNITED TELEPHONE COMPANY UNITED TELEPHONE COMPANY OF OHIO OF INDIANA, INC. By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER ---------------------------- --------------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President CENTRAL TELEPHONE COMPANY CENTRAL TELEPHONE COMPANY OF VIRGINIA By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER ---------------------------- --------------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President CENTRAL TELEPHONE COMPANY OF TEXAS By: /s/ JOSEPH MEYER ---------------------------- Name: Joseph Meyer Title: Vice President EX-10.2 8 y82590exv10w2.txt TRADEMARK LICENSE AGREEMENT EXHIBIT 10.2 EXECUTION COPY TRADEMARK LICENSE AGREEMENT THIS TRADEMARK LICENSE AGREEMENT (this "Agreement") is effective as of this 3rd day of January, 2003, by and between Sprint Directory Trademark Company, LLC ("Licensor"), a Delaware limited liability company, and R.H. Donnelley Publishing & Advertising, Inc. (f/k/a Sprint Publishing & Advertising, Inc.), a Kansas corporation ("RHDPA"), CenDon, L.L.C., a Delaware limited liability company ("CenDon"), and R.H. Donnelley Directory Company (f/k/a Centel Directory Company), a Delaware corporation ("RHDDC") (RHDPA, CenDon and RHDDC are referred to collectively in this Agreement as the "Licensees") (Licensor and each Licensee are sometimes referred to in this Agreement as a "Party" and collectively as the "Parties"). RECITALS: A. On the date of this Agreement, R.H. Donnelley Corporation, a Delaware corporation ("Buyer"), is acquiring from Sprint Corporation, a Kansas corporation ("Sprint Parent"), all of the outstanding capital stock of DirectoriesAmerica, Inc., a Kansas corporation, which is the sole owner of RHDPA, and from Centel Directories LLC, a Delaware limited liability company ("Centel LLC"), all of the outstanding capital stock of RHDDC, which is a member of CenDon (Sprint Parent and Centel LLC are referred to collectively in this Agreement as the "Sellers"), pursuant to a Stock Purchase Agreement, dated as of September 21, 2002, between Sellers and Buyer (the "Stock Purchase Agreement"); B. Pursuant to the terms of the Stock Purchase Agreement, on the date of this Agreement, the Licensees, Sprint Parent and Sprint LTD (such term, and each other term used in this Agreement with initial capitalization and not otherwise defined herein, shall have the meaning ascribed to such term in the Directory Services License Agreement) are entering into a Directory Services License Agreement (the "Directory Services License Agreement") in order to provide Licensees, subject to the terms set forth therein, the right to continue producing, publishing and distributing the Sprint LTD Directories following the closing of the transactions contemplated by the Stock Purchase Agreement; C. Licensor owns the trademarks listed on Exhibit A (as amended from time to time pursuant to the terms of this Agreement and the Directory Services License Agreement, the "Licensed Marks"); D. The Stock Purchase Agreement provides that Licensor and Licensees will enter into this Agreement to provide for the continued use of the Licensed Marks by the Licensees during the Term of the Directory Services License Agreement; and E. Licensor desires to grant, and Licensees desire to obtain, subject to the terms and conditions of this Agreement, a license to use the Licensed Marks in connection with the Permitted Uses. AGREEMENT NOW, THEREFORE, in consideration of the mutual agreements of the Parties and other good and valuable consideration, the receipt and adequacy of which is acknowledged, the Parties agree as follows: SECTION 1. TRADEMARK LICENSE. (a) Subject to the terms and conditions of this Agreement and consistent with all of the terms and conditions of the Directory Services License Agreement, Licensor hereby grants to Licensees a non-transferable, royalty free, exclusive right to use for the term of this Agreement, the Licensed Marks on (i) any physical media directory that (A) contains primarily Subscriber Listing Information and other Directional Information with respect to Subscribers and other persons or businesses located or providing products or services within the Service Areas, (B) that is classified and/or searchable (e.g., by alphabet letter or category) and (C) is primarily distributed in the Service Area and (ii) related aspects of producing, publishing or distributing directories and soliciting and selling advertising in connection therewith in the Geographic Coverage Areas, such as sales collateral, stationary, contracts, invoices, customer correspondence, business cards and advertising and promotional materials. (b) Subject to the terms and conditions of this Agreement and consistent with all of the terms and conditions of the Directory Services License Agreement, Licensor hereby grants to Licensees a non-transferable, royalty free, exclusive right to use for the term of this Agreement, the Licensed Marks on (i) any non-physical media directory that (x) contains primarily Subscriber Listing Information and other Directional Information with respect to Subscribers and other persons or businesses located or providing products or services within the Service Areas, (y) that is classified and/or searchable (e.g., by alphabet letter or category) and (z) is primarily directed at Subscribers and other persons or businesses located or providing products or services within the Service Areas, and (ii) related aspects of producing, publishing or distributing directories and soliciting and selling advertising in connection therewith in the Geographic Coverage Areas, such as sales collateral, stationary, contracts, invoices, customer correspondence, business cards and advertising and promotional materials (collectively with the uses set forth in Section 1(a), the "Permitted Uses"). (c) Licensees may only sub-license their license to use the Licensed Marks under this Agreement to any controlled Affiliate of any Licensee and pursuant to Section 19. (d) Licensor will not license the Licensed Marks to any party in violation of the noncompetition obligations of Sprint Parent and its Affiliates under the Non-Competition Agreement (as defined in the Stock Purchase Agreement). SECTION 2. USE OF TRADEMARK. Other than the Permitted Uses, Licensees may not use the Licensed Marks in connection with any service or product or for any other purpose whatsoever, including any telecommunications services, Internet services other than non-physical media directories as provided in the Directory Services License Agreement or cable services. Notwithstanding anything to the contrary in this Section 2, upon the request of Licensees, the Licensor will register any Internet domain names which include both the Licensed Marks and the 2 brand used by Publisher pursuant to Section 7.3 of the Directory Services License Agreement and such domain names shall automatically become "Licensed Marks" hereunder. The Parties acknowledge that Publisher may use any domain name listed on Exhibit B, which will be deemed to be "Licensed Marks" for the purposes of this Agreement. SECTION 3. COMPLIANCE WITH BRAND IDENTITY STANDARDS. (a) Licensor's "Brand Identity Standards" are attached as Exhibit C. If there is an inconsistency between the terms of this Agreement and the Brand Identity Standards, the terms of this Agreement control. The parties acknowledge that the Brand Identity Standards are currently embodied in a document written for Sprint's internal departments, and as such, their application to Licensees under this Agreement should be read and interpreted with logical modifications, it being understood that the document may be modified in the future by mutual agreement of the Licensor and Licensees to apply more specifically to Licensees. For example, with respect to the current Brand Identity Standards and without limitation: (i) most references to "Sprint Legal" or "Sprint Law Department" should be read as referring to Licensees law department, (ii) many references to "Sprint" with respect to the introduction of new products should be read as referring to Licensees. Licensor may modify the Brand Identity Standards at any time, in its sole discretion, and will deliver a copy of the revised Brand Identity Standards to Licensees promptly after making any such modifications; provided, that any such modification must apply generally to substantially all licensees of the Licensed Marks. Licensees must comply at all times with the Brand Identity Standards established by Licensor and delivered to Licensees from time to time for each Licensed Mark. In addition to the foregoing, Licensees must at all times use each Licensed Mark in a manner that will preserve and protect the goodwill, reputation and name of the Licensed Mark and of Licensor with respect to the Licensed Mark. Compliance with the terms of the Directory Services License Agreement by the Licensees preserves and protects the goodwill, reputation and name of the Licensed Marks and of Licensor. (b) Upon a modification or substitution of the Licensed Marks as utilized by Sprint Parent or its Affiliates in their business generally or in a particular Service Area pursuant to the Directory Services Licenses Agreement, the Licensed Marks in Exhibit A will be amended to include such modifications or substitutions with respect to the affected Service Area(s). If Licensees' use of any Licensed Mark varies from the Brand Identity Standards because of a change to the Brand Identity Standards or the Licensed Marks by Licensor, Licensees (i) may exhaust their existing stocks of materials displaying the Licensed Mark within a commercially reasonable period of time, (ii) will be permitted to produce, publish and distribute Sprint LTD Directories containing the Licensed Marks which have a WHOA Date preceding the date of the change to the Brand Identity Standards or the Licensed Marks by Licensor, and (iii) will not be required to recall any Sprint LTD Directories containing the Licensed Marks published prior to the date of the change to the Brand Identity Standards or the Licensed Marks by Licensor. If Licensees' use of any Licensed Mark varies from this Agreement, the Directory Services License Agreement or the Brand Identity Standards, for any reason other than a change to the Brand 3 Identity Standards or the Licensed Marks by Licensor, Licensees will immediately cease using all materials displaying the Licensed Mark in violation of this Agreement, the Directory Services License Agreement or the Brand Identity Standards. (c) Licensees may request in writing that Licensor permit Licensees to vary from the Brand Identity Standards for Licensed Marks. Licensor may in its sole discretion approve or refuse the foregoing request, however, any approval to vary from the Brand Identity Standards for Licensed Marks must be in writing. SECTION 4. RESERVATION OF RIGHTS. Licensor reserves the right to use the Licensed Marks or license their use to third parties in connection with any activities that Sprint LTD or its Affiliates are not prohibited from engaging in under the terms of the Non-Competition Agreement. SECTION 5. CO-BRANDING. Licensees will not use any other trademark, service mark, phrase, word or symbol, whether owned by Licensees, their Affiliates or by third parties, in conjunction with the Licensed Marks, except as permitted by Section 7.3 of the Directory Services License Agreement. SECTION 6. SIMILAR MARKS. Neither Licensees nor their Affiliates may use: (a) any trademark or phrase which is similar to any Licensed Mark; or (b) any word, symbol, character, or set of words, symbols, or characters, which in any language would be identified as substantially the equivalent of a Licensed Mark. SECTION 7. PROPRIETARY RIGHTS; LEGENDS. Licensees' use of the Licensed Marks on the services and products authorized by this Agreement, shall include use of the notice of registration - (R) - one time on each good or service in a manner that is visible to the public. SECTION 8. PUBLISHER'S CORPORATE NAME. Licensees will not use any Licensed Mark or the name "Sprint" in their corporate or business name, nor allow any of their Affiliates to use any Licensed Mark or the name "Sprint" in their respective corporate or business names. Furthermore, Licensees and their Affiliates will not use any corporate or business name or any mark, logo or indicia that suggests in any manner that Licensees or their Affiliates are a subsidiary of or affiliated with Sprint or Licensor, provided, however, that Licensees may suggest and hold themselves out as having the rights provided to Publisher pursuant to Section 2.1 of the Directory Services License Agreement. The Parties acknowledge that any use of the Licensed Marks by Licensees in accordance with Section 1 hereof will not violate this Section 8. SECTION 9. APPROVAL OF MATERIALS. Subject to Article 7 of the Directory Services License Agreement, on Licensor's reasonable request, Licensees will provide to Licensor for approval prior to distribution reasonable samples of material on which a Licensed Mark appears and Licensees agree to modify any Sprint LTD Directory, packaging, labels, advertising and other material if the use of a Licensed Mark is not in accordance with the provisions of the Directory Services License Agreement. Licensees will provide to Licensor for review and approval representative samples of Licensees' proposed use of the Licensed Marks whenever 4 such samples are not consistent with the provisions of the Directory Services License Agreement, this Agreement or the Brand Identity Standards. In the event that Licensor does not notify Licensees within ten (10) days of its receipt of any such samples that it disapproves of Licensees' proposed use of the Licensed Marks, Licensor will be deemed to have approved of such use. SECTION 10. RIGHTS TO THE LICENSED MARKS (a) Interest in Licensed Marks. Licensees agree that the Licensed Marks are proprietary to Licensor and nothing in this Agreement constitutes the grant of a general license for their use; rather, they may only be used in accordance with the terms and conditions of this Agreement and the Directory Services License Agreement. Licensor represents and warrants that (i) it owns all right, title and interest (including the goodwill) in and to the Licensed Marks and (ii) the execution and performance of this Agreement by Licensor will not breach any other agreement or license relating to the Licensed Marks. In accepting this Agreement, Licensees acknowledge Licensor's ownership of the Licensed Marks, the goodwill connected with them and the validity of the Licensed Marks. Licensees acquire no right, title, or interest in the Licensed Marks or the goodwill associated with the Licensed Marks due to their use of the Licensed Marks, other than the right to use the Licensed Marks in accordance with the terms and conditions of this Agreement and the Directory Services License Agreement. Use of the Licensed Marks by Licensees and their Affiliates inures to the benefit of Licensor. Neither Licensees nor their Affiliates will attack the Licensed Marks in any manner whatsoever nor assist anyone in attacking the Licensed Marks. (b) Registration of Marks. Licensees agree that neither they nor their Affiliates will make any application to register the Licensed Marks, nor use, license or attempt to register any confusingly similar trademark, service mark, trade name or derivation, during and after expiration or termination of this Agreement. Licensees will not and neither will any of their Affiliates adopt, use, file for registration, or register any trademark, service mark, or trade name that is similar to any Licensed Mark or results in a likelihood of confusion with a Licensed Mark. Licensor shall maintain the federal registration of all Licensed Marks that are registered with the United States Patent and Trademark Office throughout the Term. Upon Licensee's request, Licensor will promptly register any trademark or service mark owned by Licensor and used by Licensees for all goods and services covered by its Permitted Use in accordance with this Agreement and the Directory Services License Agreement which are not already registered in the United States Patent and Trademark office and will add such trademarks and service marks to Exhibit A as Licensed Marks. Licensor shall bear all of the expenses relating to the prosecution of any application pursuant to this provision as well as all expenses relating to the maintenance of any registration issued pursuant to this provision. Licensees will take all reasonable actions necessary to assist with the prosecution of any application under this provision and the filing of any document or other materials required to maintain any registration issued pursuant to this provision. SECTION 11. TERMINATION OR EXPIRATION OF AGREEMENT. This Section 11 survives the termination or expiration of this Agreement. On termination or expiration of this Agreement, subject to the transition provisions in the Directory Services License Agreement, all rights 5 granted to Licensees under this Agreement in and to the Licensed Marks, together with any interest in and to the Licensed Marks which Licensees may have or may have acquired pursuant to this Agreement, the Directory Services License Agreement or otherwise, will forthwith, without further act or instrument, be assigned to and revert to Licensor. In addition, Licensees will execute any reasonable instruments prepared at the sole expense of and requested by Sprint LTD and Licensor that are necessary to accomplish or confirm the foregoing. Licensees will destroy all materials in Licensees' possession which contain the Licensed Marks within a reasonable period after the termination or expiration of the Agreement, provided that Licensees will be permitted to produce, publish and distribute Sprint LTD Directories containing the Licensed Marks which have a WHOA Date preceding the date of the termination or expiration of this Agreement and provided further that Licensees will not be required to recall any Sprint LTD Directories containing the Licensed Marks published prior to the date of termination or expiration of this Agreement. Licensees will refrain from further use of the Licensed Marks, or any other trademark, service mark, trade name, design or logo that is confusingly similar to the Licensed Marks. Licensees acknowledge and admit that there would be no adequate remedy at law for their failure to cease use of the Licensed Marks upon termination of this Agreement and the Directory Services License Agreement. Licensees agree that, in the event of such failure, Licensor will be entitled to seek equitable relief by the way of temporary, preliminary and permanent injunction and seek further relief as any court with jurisdiction may deem just and proper. SECTION 12. INFRINGEMENT. (a) Notice of Infringement. Licensor and Licensees will promptly notify each other of any infringement of any of the Licensed Marks that comes to their attention. Licensor may take such action as it determines may be required to terminate the infringement. If Licensor decides that action should be taken, Licensor may take the action either in its own name or, alternatively, Licensor may authorize Licensees to initiate the action in Licensor's name, at Licensor's sole cost and expense. (b) Defense by Licensees. If Licensor does not decide to take any action within thirty (30) days of its notification of the infringement, Licensees may notify Licensor in writing of its intention to prosecute the action at its own expense. Licensor will have twenty (20) days in which to respond to Licensees regarding their planned action in response to the notification, which action shall be in Licensor's reasonable discretion. If the response does not entail Licensor responding to the infringement, or if Licensor fails to respond to Licensees within the twenty (20) day period, Licensees will be entitled to undertake the action at Licensees' expense. Licensees and Licensor will keep each other apprised of all material developments in the case and will make no settlement of the action that could impair the goodwill or reputation of the Licensed Marks or Licensor's ownership in the name "Sprint" or the "Sprint diamond logo" for other purposes. (c) Cooperation. Each Party agrees to cooperate fully with the other Party to whatever extent necessary to prosecute any action with all expenses being borne by the Party bringing the action, or shared equally, if the Parties agree to both prosecute the action. 6 (d) Damages. Regardless of which Party prosecutes a Licensed Mark infringement claim, the damages recovered by the Parties will first be used to reimburse the expenses on a pro rata basis that each Party incurred in pursuing the prosecution. Expenses shall include time spent by in-house lawyers in managing and pursuing the prosecution. If there are recovered damages in excess of expenses then such recovered damages will be allocated between the Parties in accordance with the damage suffered by each. The provisions of this Section 12 will not be construed as limiting the rights of either Party to recover damages from, or to exercise any other right or remedy against, any third parties in respect of any other claim that either Party may have against the third parties. SECTION 13. FURTHER PROTECTION. At the reasonable request of Licensor and at Licensor's sole expense, Licensees will execute any papers or documents necessary to protect the rights of Licensor in the Licensed Marks and execute and deliver the other documents as may be reasonably requested by Licensor. SECTION 14. TERM. This Agreement will terminate upon the termination of the Directory Services License Agreement in accordance with its terms. SECTION 15. INDEMNIFICATION. (a) Licensees Indemnity. Licensees will defend, hold harmless and indemnify Licensor and each of its Affiliates, officers, directors, shareholders, employees, contractors, agents and representatives from and against any and all losses, damages, claims, demands, suits, liabilities, fines, penalties, costs, obligations, settlement payments, awards, judgments, deficiencies or other charges ("Losses") and any and all expenses incurred in connection with investigating, defending or asserting any claim, action, suit or proceeding incident to any matter indemnified under the Agreement ("Expenses") arising out of, resulting from or based upon any pending or threatened claim, action, proceeding or suit by any third party, whether based on contract, tort or otherwise, arising out of or in connection with: (i) any breach of this Agreement by Licensees and (ii) the use of the Licensed Marks by Licensees in violation of this Agreement. (b) Licensor Indemnity. Licensor will defend, hold harmless and indemnify Licensees and each of their Affiliates, officers, directors, shareholders, employees, contractors, agents and representatives from and against any and all Losses and Expenses arising out of, resulting from or based upon any pending or threatened claim, action, proceeding or suit by any third party, whether based on contract, tort or otherwise, arising out of or in connection with (i) any breach of this Agreement by Licensor and (ii) the use of the Licensed Marks by Licensees in accordance with the terms of this Agreement. (c) Procedure. Promptly after receipt by the indemnified party of notice by a third party of a claim or of the commencement of any action or proceeding with respect to which such indemnified party may be entitled to receive payment from the other party for any Losses or Expenses, such indemnified party will notify the indemnifying party of the notice of such claim or of the commencement of such action or proceeding; provided, however, that the failure to so notify the indemnifying party will relieve the indemnifying party from liability under this Agreement with respect to such claim, action or proceeding only if, and only to the extent that, 7 such failure to notify the indemnifying party results in the forfeiture by the indemnifying party of rights and defenses otherwise available to the indemnifying party with respect to such claim, action or proceeding. The indemnifying party will have the right, upon written notice delivered to the indemnified party within thirty (30) days thereafter assuming formal responsibility for any Losses and Expenses resulting from such claim, action or proceeding, to assume the defense of such claim, action or proceeding, including the employment of counsel reasonably satisfactory to the indemnified party and the payment of the fees and disbursements of such counsel. In any claim, action or proceeding with respect to which indemnification is being sought hereunder, the indemnified party or the indemnifying party, whichever is not assuming the defense of such action, will have the right to participate in such matter and to retain its own counsel at such party's own expense. The indemnifying party or the indemnified party, as the case may be, will at all times use reasonable efforts to keep the indemnifying party or the indemnified party, as the case may be, reasonably apprised of the status of the defense of any action the defense of which they are maintaining and to cooperate in good faith with each other with respect to the defense of any such action. If the indemnifying party has assumed the defense of a claim, action or proceeding, no indemnified party may settle or compromise such matter or consent to the entry of any judgment with respect to such matter without the prior written consent of the indemnifying party. An indemnifying party may not, without the prior written consent of the indemnified party, settle or compromise any claim or consent to the entry of any judgment with respect to which indemnification is being sought hereunder unless (i) simultaneously with the effectiveness of such settlement, compromise or consent, the indemnifying party pays in full any obligation imposed on the indemnified party by such settlement, compromise or consent (ii) such settlement, compromise or consent contains a complete release of the indemnified party and its Affiliates and their respective directors, officers and employees and (iii) such settlement, compromise or consent does not contain any equitable order, judgment or term which in any manner affects, restrains or interferes with the business of the indemnified party or any of the indemnified party's Affiliates. In the event an indemnified party will claim a right to payment pursuant to this Agreement not involving a third party claim covered by Section 15, such indemnified party will send written notice of such claim to the appropriate indemnifying party. Such notice will specify the basis for such claim. As promptly as possible after the indemnified party has given such notice, such indemnified party and the appropriate indemnifying party will establish the merits and amount of such claim (by mutual agreement, litigation, arbitration or otherwise) and, within five business days of the final determination of the merits and amount of such claim, the indemnifying party will pay to the indemnified party immediately available funds in an amount equal to such claim as determined hereunder. (d) Limitation on Liability. Notwithstanding anything to the contrary set forth in this Agreement, the sum of any amounts payable by (i) Sprint Parent or its Affiliates for consequential damages resulting from a breach of this Agreement, and (ii) Sellers pursuant to their indemnification obligations under the Stock Purchase Agreement, shall not exceed in the aggregate $660,000,000. 8 SECTION 16. DISPUTE RESOLUTION. (a) Option to Negotiate Disputes Other than a suit for injunctive relief to maintain the status quo, to stop an ongoing violation of this Agreement or to prevent a threatened violation of this Agreement, in the event of any dispute arising between the Parties in connection with the interpretation or performance of this Agreement, before either Party may initiate a formal proceeding in any tribunal, including arbitration or judicial proceedings, the Parties will negotiate in good faith to resolve such dispute amicably after receipt by the allegedly breaching Party of written notice of a dispute, stating the specific nature of the claimed breach and the specific nature of, and period for, the cure allegedly required, sent by the other Party in the manner set forth in Section 20. Within ten (10) days after delivery of the notice, representatives of the Parties will meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the dispute by the respective representatives of the Parties within the time frames and escalation process set forth below:
LICENSOR (TITLE) LICENSEES (TITLE) - ----------------------------------------------------------------------------------------- WITHIN 10 DAYS VICE PRESIDENT -- LAW, MARKETING AND SALES GENERAL COUNSEL - ----------------------------------------------------------------------------------------- WITHIN 20 DAYS VICE PRESIDENT -- BUSINESS PLANNING AND CHIEF FINANCIAL OFFICER DEVELOPMENT - ----------------------------------------------------------------------------------------- WITHIN 30 DAYS PRESIDENT -- LTD CHIEF EXECUTIVE OFFICER - -----------------------------------------------------------------------------------------
If a Party intends to be accompanied at a meeting by an attorney, the other Party will be given at least two business days' notice of such intention and may also be accompanied by an attorney. All negotiations pursuant to this Section 16(a) are confidential and will be treated as compromise and settlement negotiations for purposes of the Federal Rules of Evidence and State Rules of Evidence. (b) Other than a dispute for injunctive relief to maintain the status quo, to stop an ongoing violation of this Agreement or to prevent a threatened violation of this Agreement, any dispute between the Parties that is not resolved in accordance with the informal notice of breach provisions set forth in Section 16(a) and remains disputed by the Party alleged to have been in breach, shall be resolved by arbitration using the arbitration procedures set forth in this Section 16(b). In such event, either Party may serve a demand for arbitration in accordance with the Center for Public Resources Non-Administered Arbitration Rules ("Arbitration Rules") in which, in addition to any other requirements of the Arbitration Rules, the Party serving the demand states the specific nature of the claimed breach and the specific nature of, and period for, the cure allegedly required, and demands a determination by the arbitrators of the Parties' respective rights together with any other relief sought. Three arbitrators shall be chosen, and the proceedings shall be conducted in New York, New York generally in accordance with the Arbitration Rules, provided that (i) the Parties shall choose three arbitrators through a 9 self-administered process of striking names from a list of potential arbitrators and shall not employ the method provided for in the Arbitration Rules; (ii) the rules of evidence employed in federal courts at the time shall apply; and (iii) discovery shall be permitted in accordance with the Federal Rules of Civil Procedure. Any arbitration will be subject to the governing law provision set forth in Section 16(c) of this Agreement. If any interim or conservatory measures have been issued by a court or other tribunal, the arbitration tribunal shall not be bound by such interim or conservatory decision or measures when rendering its decision. The decision of the arbitrators will be final and binding upon the Parties to the maximum extent permitted under applicable law, and a final judgment may be entered on the award in any court of competent jurisdiction. (c) Governing Law. This Agreement shall be governed by and construed in accordance with laws of the State of Delaware (regardless of the laws that might otherwise govern under applicable principles of conflict of laws thereof) as to all matters, including but not limited to matters of validity, construction, effect, performance and remedies. (d) Attorneys' Fees. The prevailing Party in any formal dispute will be entitled to reasonable attorneys' fees and costs, including reasonable expert fees and costs. This provision will not apply if the prevailing Party rejected a written settlement offer that exceeds the prevailing Party's recovery. (e) Cumulative Remedies. No right or remedy in this Agreement conferred upon or reserved to any Party is intended to be exclusive of any other right or remedy, and each and every right and remedy will be cumulative and in addition to any other right or remedy under this Agreement or under applicable law, whether now or hereafter existing. The Parties agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with its terms and that the Parties will be entitled to seek specific performance in addition to any other remedy to which they are entitled at law or equity. SECTION 17. ASSIGNMENT. Except as provided in Section 9.1 of the Directory Services License Agreement, neither Party may assign all or any of its rights or obligations under the Agreement without the prior written consent of the other Party, except that either Party may assign all of its rights and obligations under the Agreement (a) in connection with a sale of all or substantially all of its assets or by merger if the purchaser assumes in writing all of the assigning Party's rights and obligations under this Agreement in a form reasonably acceptable to the other Party or (b) to (i) any of its Affiliates or (ii) any lender or any other party as collateral in connection with any financing provided that no such assignment permitted by this clause (b) will relieve such Party of any of its obligations under this Agreement. SECTION 18. RELATIONSHIP. Nothing contained in this Agreement shall be construed to create the relationship of employer and employee between any Licensor and Licensees, franchiser - franchisee, or to make any Licensor or Licensees partners, joint venturer or co-employer of the other, or result in joint service offerings to their respective customers. SECTION 19. SUBCONTRACTORS. Notwithstanding the prohibition on transferability set forth in Section 1, any Party may subcontract with third parties or Affiliates of such Party for the performance of any of such Party's obligations which require the use of the Licensed Marks. If 10 any obligation is performed for either Party through a subcontractor, such Party will remain fully responsible for the performance of its obligations under this Agreement in accordance with its terms and such Party will be solely responsible for payments due to its subcontractors. No contract, subcontract or other agreement entered into by either Party with any third party in connection with the provision of services utilizing the Licensed Marks will provide for any indemnity, guarantee or assumption of liability by, or other obligation of, the other Party with respect to such arrangement, except as consented to in writing by the other Party. No subcontractor will be deemed a third party beneficiary for any purposes under this Agreement. SECTION 20. NOTICES. Any notice required or permitted under this Agreement will be in writing and will be hand-delivered, sent by confirmed facsimile or mailed by overnight express mail. Notice will be deemed to have been given when such notice is received. Addresses for notices are as follows: If to Licensor: Sprint Corporation 6200 Sprint Parkway Overland Park, KS 66251 KSOPHF 0202 - 2B579 Attention: Vice President, Business Planning & Development- LTD Facsimile: 913-794-0141 With a copy to: Sprint Corporation 6200 Sprint Parkway Overland Park, KS 66251 KSOPHF 0302 - 3B679 Attention: Legal - Corporate Secretary Facsimile: 913-794-0144 If to Licensees: R.H. Donnelley Corporation One Manhattanville Road Purchase, New York 10577 Attention: General Counsel Facsimile: 914-933-6844 or at such other address as either Party may provide to the other by written notice. SECTION 21. INDEPENDENT CONTRACTOR. The relationship between the Parties is that of an independent contractor. Each Party will be solely responsible for such Party's employees, including compliance with all employment laws, regulations, and rules and payment of wages, benefits and employment taxes such as Social Security, unemployment, workers compensation and federal and state withholding with respect to such employees. 11 SECTION 22. ENTIRE AGREEMENT. This Agreement, the Directory Services License Agreement, the Non-Competition Agreement, the Subscriber Listings Agreement, and the Publisher Trademark License Agreement constitute the entire understanding and agreement of the Parties concerning the subject matter of this Agreement, and supersede any prior agreements, representations, statements, understandings, proposals, undertakings or negotiations, whether written or oral, with respect to the subject matter expressly set forth in this Agreement. SECTION 23. SEVERABILITY. If any term, condition or provision of this Agreement is held to be invalid or unenforceable for any reason, such invalidity will not invalidate the entire Agreement, unless such construction would be unreasonable. This Agreement will be construed as if it did not contain the invalid or unenforceable provision or provisions, and the rights and obligations of each Party will be construed and enforced accordingly, except that in the event such invalid or unenforceable provision or provisions are essential elements of this Agreement and substantially impair the rights or obligations of either Party, the Parties will promptly negotiate in good faith a replacement provision or provisions. SECTION 24. FORCE MAJEURE. Neither Party will be liable for any delay or failure in performance of any part of this Agreement caused by a Force Majeure condition, including acts of God, a public enemy or terrorism, fires, floods, freight embargoes, earthquakes, volcanic actions, wars (whether against a nation or otherwise), civil disturbances or other similar causes beyond the reasonable control of the Party claiming excusable delay or other failure to perform (a "Force Majeure"). If any Force Majeure condition occurs, the Party whose performance fails or is delayed because of such Force Majeure condition will give prompt notice to the other Party, will use commercially reasonable efforts to perform in spite of the Force Majeure condition and upon cessation of such Force Majeure condition will give like notice and commence performance under the Agreement as promptly as reasonably practicable. SECTION 25. NO THIRD PARTY BENEFICIARIES. This Agreement is intended solely for the benefit of the Parties, and no third-party beneficiaries are created by this Agreement. This Agreement does not provide and should not be construed to provide third parties with any remedy, claim, liability, reimbursement, cause of action or other privilege. SECTION 26. BINDING EFFECT. This Agreement will be binding on and inure to the benefit of the Parties, and their respective successors and permitted assigns. SECTION 27. WAIVERS. No waiver of any provision of this Agreement, and no consent to any default under this Agreement, will be effective unless the same is in writing and signed by an officer of the Party against whom such waiver or consent is claimed. In addition, no course of dealing or failure of a Party strictly to enforce any term, right or condition of this Agreement will be construed as a waiver of such term, right or condition. Waiver by either Party of any default by the other Party will not be deemed a waiver of any subsequent or other default. SECTION 28. HEADINGS. The headings and numbering of sections and paragraphs in this Agreement are for convenience only and will not be construed to define or limit any of the terms in this Agreement or affect the meaning or interpretation of this Agreement. SECTION 29. SURVIVAL. Any liabilities or obligations of a Party for acts or omissions 12 occurring prior to the cancellation or termination of this Agreement and any obligations of a Party under any other provisions of this Agreement which, by their terms, are contemplated to survive (or be performed after) termination of this Agreement (subject to any time limitations specified therein) will survive the cancellation or termination of this Agreement. SECTION 30. MODIFICATIONS. No amendments, deletions, additions or other modifications to this Agreement will be binding unless evidenced in writing and signed by an officer of each of the respective parties hereto. SECTION 31. COUNTERPARTS. This Agreement may be executed in any number of counterparts, and each such counterpart will be deemed to be an original instrument, but all such counterparts together will constitute but one agreement. This Agreement will become effective when one or more counterparts have been signed by each and delivered to the other Party, it being understood that the Parties need not sign the same counterpart. SECTION 32. CONFLICT. In the event of any conflict between this Agreement and the provisions of the Directory Services License Agreement, the provisions of the Directory Services License Agreement will control. 13 IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written. LICENSOR: SPRINT DIRECTORY TRADEMARK COMPANY, LLC By: /s/ JOSEPH MEYER ------------------------------ Name: Joseph Meyer Title: President LICENSEES: R.H. DONNELLEY PUBLISHING & ADVERTISING, INC. (f/k/a Sprint Publishing & Advertising, Inc.) CENDON, L.L.C. By: /s/ ROBERT J. BUSH By: /s/ ROBERT J. BUSH ------------------------------ --------------------------------- Name: Robert J. Bush Name: Robert J. Bush Title: Vice President and Secretary Title: Authorized Signatory R.H. DONNELLEY DIRECTORY COMPANY (f/k/a Centel Directory Company) By: /s/ ROBERT J. BUSH ------------------------------ Name: Robert J. Bush Title: Vice President and Secretary EX-10.3 9 y82590exv10w3.txt PUBLISHER TRADEMARK LICENSE AGREEMENT EXHIBIT 10.3 EXECUTION COPY PUBLISHER TRADEMARK LICENSE AGREEMENT THIS PUBLISHER TRADEMARK LICENSE AGREEMENT (this "Agreement") is effective as of this 3rd day of January, 2003, by and between R.H. Donnelley Publishing & Advertising, Inc. (f/k/a Sprint Publishing & Advertising, Inc.), a Kansas corporation ("RHDPA"), R.H. Donnelley Directory Company (f/k/a Centel Directory Company), a Delaware corporation ("RHDDC") (RHDPA and RHDDC are referred to collectively in this Agreement as "Licensors"), and Sprint Corporation, a Kansas corporation ("Licensee") (each Licensor and Licensee are sometimes referred to in this Agreement as a "Party" and collectively as the "Parties"). RECITALS A. On the date of this Agreement, R.H. Donnelley Corporation, a Delaware corporation ("Buyer") is acquiring from Licensee all of the outstanding capital stock of DirectoriesAmerica, Inc., a Kansas corporation, which is the sole owner of RHDPA, and from Centel Directories LLC, a Delaware limited liability company ("Centel LLC"), all of the outstanding capital stock of RHDDC (Licensee and Centel LLC are referred to collectively in this Agreement as "Sellers"), pursuant to a Stock Purchase Agreement, dated as of September 21, 2002, between Sellers and Buyer (the "Stock Purchase Agreement"); B. Pursuant to the terms of the Stock Purchase Agreement, on the date of this Agreement, Licensors and Sprint LTD (such term, and each other term used in this Agreement with initial capitalization and not otherwise defined herein, shall have the meaning ascribed to such term in the Directory Services License Agreement) are entering into a Directory Services License Agreement (the "Directory Services License Agreement") in order to provide, subject to the terms set forth therein, the right for Licensors and CenDon to continue producing, publishing and distributing the Sprint LTD Directories following the closing of the transactions contemplated by the Stock Purchase Agreement; C. Licensors are engaged in the business of producing, publishing and distributing directories; D. Licensors own the trademarks listed on Exhibit A (the "Publisher Marks"); E. The Stock Purchase Agreement provides that the Parties will enter into this Agreement to provide for the use of the Publisher Marks by Licensee in the event (i) Sprint LTD terminates the Directory Services License Agreement before the expiration of the Term or (ii) Sprint LTD elects to publish White Pages Directories itself pursuant to Section 8.5 of the Directory Services License Agreement; and F. Licensors desire to grant, and Licensee desires to obtain, subject to the terms and conditions of this Agreement, a license to use the Publisher Marks. AGREEMENT NOW, THEREFORE, in consideration of the mutual agreements of the Parties and other good and valuable consideration, the receipt and adequacy of which is acknowledged, the Parties agree as follows: SECTION 1. TRADEMARK LICENSE. (a) Subject to the terms and conditions of this Agreement, Licensors hereby grant to Licensee a non-transferable, royalty-free, non-exclusive license to use the Publisher Marks as follows: (i) If Sprint LTD terminates the entire Directory Services License Agreement pursuant to Section 8.3 of the Directory Services License Agreement, Licensee may use the Publisher Marks (immediately and without further action by any Party), in the production, publication and distribution of the Sprint LTD Directories and the solicitation of Directory Advertising and sales of advertising products in such Sprint LTD Directories, in each case in the Geographic Coverage Areas. (ii) If Sprint LTD terminates the applicability of the Directory Services License Agreement to one or more Sprint LTD Directories or Service Areas pursuant to Section 8.3 of the Directory Services License Agreement, Licensee may use the Publisher Marks (immediately and without further action by any Party), in the production, publication and distribution of the affected Sprint LTD Directories and the solicitation of Directory Advertising and sales of advertising products in such Sprint LTD Directories, in each case in the applicable Geographic Coverage Areas. (iii) If Sprint LTD elects to publish one or more White Pages Directories pursuant to Section 8.5 of the Directory Services License Agreement, Licensee may use the Publisher Marks (immediately and without any further action) in the production, publication and distribution of such White Pages Directories and the solicitation of Directory Advertising and sales of advertising products in such White Pages Directories, in each case in the applicable Geographic Coverage Areas. (b) Licensee may sub-license its license to use the Publisher Marks under this Agreement to any Affiliate of Licensee and pursuant to Section 20. SECTION 2. USE OF TRADEMARK. Other than the uses set forth in Section 1, Licensee may not use the Publisher Marks in connection with any service or product or for any other purpose whatsoever. Licensee may not register any Internet domain names which contain or are similar to the Publisher Marks. 2 SECTION 3. COMPLIANCE WITH BRAND IDENTITY STANDARDS. (a) Licensee will conform to its "Brand Identity Standards" (as defined in the Trademark License Agreement) in connection with Licensee's use of the Publisher Marks. If there is an inconsistency between the terms of this Agreement and such Brand Identity Standards, the terms of this Agreement control. Licensee may modify the Brand Identity Standards at any time, in its sole discretion, and will deliver a copy of the revised Brand Identity Standards to Licensors promptly after making any such modifications. Licensee must comply at all times with the Brand Identity Standards delivered to Licensors from time to time for each Publisher Mark. In addition to the foregoing, Licensee must at all times use each Publisher Mark in a manner that will preserve and protect the goodwill, reputation and name of the Publisher Mark and of Licensor with respect to the Publisher Mark. (b) If Licensors reasonably believe that the business operated by Licensee, any Sprint LTD Directories, any other product or service offered in connection with Licensee's business, or any other advertising or materials associated with Licensee's business does not conform with the quality standards set forth in this Agreement, Licensors may notify Licensee of such non-conformance. Licensee will promptly cure each such non-conformance with respect to all Sprint LTD Directories that are printed following such notice. SECTION 4. RESERVATION OF RIGHTS. (a) Licensors reserve the right to use the Publisher Marks or license their use to third parties in connection with any activities within or outside of the Service Areas that Licensors or their Affiliates are not prohibited from engaging in under the terms of the Directory Services License Agreement. (b) If and when Licensee acquires the right to use the Publisher Marks pursuant to Section 1, Licensors shall cease to use the Publisher Marks in any way which conflicts with Licensee's use of the Publisher Marks pursuant to Section 1 in the applicable Geographic Coverage Areas, and use of the Publisher Marks will then be exclusive to Licensee in the applicable Geographic Coverage Areas for the term of this Agreement. Furthermore, any license to use the Publisher Marks granted by Licensors to third parties after the date of this Agreement will acknowledge and be subordinate to (if and when Licensee acquires the right to use the Publisher Marks pursuant to this Agreement) the license to use the Publisher Marks granted to Licensee in Section 1 in the applicable Geographic Coverage Areas. SECTION 5. CO-BRANDING. Licensee will not use any other trademark, service mark, phrase, word or symbol, whether owned by Licensee, its Affiliates or by third parties, in conjunction with the Publisher Marks, without first consulting with Licensors and obtaining Licensors' prior written approval, not to be unreasonably withheld, with respect to the use of the trademark, service mark, phrase, word or symbol. 3 SECTION 6. SIMILAR MARKS. Neither Licensee nor its Affiliates may use: (a) any trademark or phrase which is similar to any Publisher Mark; or (b) any word, symbol, character, or set of words, symbols, or characters, which in any language would be identified as substantially the equivalent of a Publisher Mark. SECTION 7. PROPRIETARY RIGHTS; LEGENDS. Licensees' use of the Publisher Marks on the services and products authorized by this Agreement, shall include use of the notice of registration - (R) - one time on each good or service in a manner that is visible to the public. SECTION 8. PUBLISHER'S CORPORATE NAME. Licensee will not use any Publisher Mark in its corporate or business name, nor allow any of its Affiliates to use any Publisher Mark in their respective corporate or business names. Furthermore, Licensee and its Affiliates will not use any corporate or business name or any mark, logo or indicia that suggests in any manner that Licensee or any of its Affiliates is a subsidiary of or affiliated with Licensors. The Parties acknowledge that any use of the Publisher Marks by Licensee in accordance with Section 1 hereof will not violate this Section 8. SECTION 9. APPROVAL OF MATERIALS. On Licensors' reasonable request, Licensee will provide to Licensors for approval prior to distribution reasonable samples of material on which a Publisher Mark appears and Licensee agrees to modify any Sprint LTD Directory, packaging, labels, advertising and other material if the use of a Publisher Mark is not reasonably approved by Licensors. Licensee will provide to Licensors for review and approval representative samples of Licensee's proposed use of the Publisher Marks whenever such samples are not consistent with the Brand Identity Standards. In the event that Licensors do not notify Licensee within ten (10) days of its receipt of any such samples that it disapproves of Licensee's proposed use of the Publisher Marks, Licensors will be deemed to have approved of such use. SECTION 10. RIGHTS TO THE PUBLISHER MARKS. (a) Interest in Publisher Marks. Licensee agrees that the Publisher Marks are proprietary to Licensors and nothing in this Agreement constitutes the grant of a general license for their use; rather, they may only be used in accordance with the terms and conditions of this Agreement. Licensors represent and warrant that they own all right, title and interest (including the goodwill) in and to the Publisher Marks to the extent that all right, title and interest (including the goodwill) in the Publisher Marks was owned by Licensors as of the date of this Agreement. In accepting this Agreement, Licensee acknowledges Licensors' ownership of the Publisher Marks, the goodwill connected with them and the validity of the Publisher Marks. Licensee acquires no right, title, or interest in the Publisher Marks or the goodwill associated with the Publisher Marks due to its use of the Publisher Marks, other than the right to use the Publisher Marks in accordance with the terms and conditions of this Agreement. Use of the Publisher Marks by Licensee and its Affiliates inures to the benefit of Licensors. Neither Licensee nor its Affiliates will attack the Publisher Marks in any manner whatsoever nor assist anyone in attacking the Publisher Marks. 4 (b) Registration of Marks. Licensee agrees that neither they nor their Affiliates will make any application to register the Publisher Marks; nor use, license or attempt to register any confusingly similar trademark, service mark, trade name or derivation; during and after expiration or termination of this agreement. Licensee will not and neither will any of its Affiliates adopt, use, file for registration, or register any trademark, service mark, or trade name that is similar to any Publisher Mark or results in a likelihood of confusion with a Publisher Mark. SECTION 11. TERMINATION OR EXPIRATION OF AGREEMENT. This Section 11 survives the termination or expiration of this Agreement. On termination or expiration of this Agreement all rights granted to Licensee under this Agreement in and to the Publisher Marks, together with any interest in and to the Publisher Marks which Licensee may have or may have acquired pursuant to this Agreement or otherwise, will forthwith, without further act or instrument, be assigned to and revert to Licensors. In addition, Licensee will execute any reasonable instruments prepared at the sole expense of and requested by Licensors that are necessary to accomplish or confirm the foregoing. Licensee will destroy all materials in Licensee's possession which contain the Publisher Marks within a reasonable period after the termination or expiration of the Agreement, provided that Licensee will be permitted to produce, publish and distribute White Pages Directories and Yellow Pages Directories containing the Publisher Marks which have a WHOA Date preceding the date of the termination or expiration of this Agreement and provided further that Licensee will not be required to recall any White Page Directories or Yellow Page Directories containing the Publisher Marks published prior to the date of termination or expiration of this Agreement. Licensee will refrain from further use of or reference to the Publisher Marks, or any other trademark, service mark, trade name, design or logo that is confusingly similar to the Publisher Marks. Licensee acknowledges and admits that there would be no adequate remedy at law for their failure to cease use of the Publisher Marks upon termination of this Agreement. Licensee agrees that, in the event of such failure, Licensors will be entitled to seek equitable relief by the way of temporary, preliminary and permanent injunction and seek further relief as any court with jurisdiction may deem just and proper. SECTION 12. INFRINGEMENT. (a) Notice of Infringement. Licensors and Licensee will promptly notify each other of any infringement of a Publisher Mark that comes to their attention. Licensors may take such action as they determine may be required to terminate the infringement. If Licensors decide that action should be taken, Licensors may take the action either in their own name or, alternatively, Licensors may authorize Licensee to initiate the action in Licensee's names, at Licensors' sole cost and expense. (b) Defense by Licensee. If Licensors do not decide to take any action within thirty (30) days of its notification of the infringement, Licensee may notify Licensors in writing of its intention to prosecute the action at its own expense. Licensors will have twenty (20) days in which to respond to Licensee regarding their planned action in response to the notification, which action shall be in Licensors' reasonable discretion. If the response does not entail Licensors 5 responding to the infringement, or if Licensors fail to respond to Licensee within the twenty (20) day period, Licensee will be entitled to undertake the action at Licensee's expense. Licensors and Licensee will keep each other apprised of all material developments in the case and will make no settlement of the action that could impair the goodwill or reputation of the Publisher Marks. (c) Cooperation. Each Party agrees to cooperate fully with the other Party to whatever extent necessary to prosecute any action, with all expenses being borne by the Party bringing the action, or shared equally, if the Parties agree to both prosecute the action. (d) Damages. Regardless of which Party prosecutes a Publisher Mark infringement claim, the damages recovered by the Parties will first be used to reimburse the expenses on a pro rata basis that each Party incurred in pursuing the prosecution. Expenses shall include time spent by in-house lawyers in managing and pursuing the prosecution. If there are recovered damages in excess of expenses then such recovered damages will be allocated between the Parties in accordance with the damage suffered by each. The provisions of this Section 12 will not be construed as limiting the rights of either Party to recover damages from, or to exercise any other right or remedy against, any third parties in respect of any other claim that either Party may have against the third parties. SECTION 13. FURTHER PROTECTION. At the reasonable request of Licensors and at Licensors' sole expense, Licensee will execute any papers or documents necessary to protect the rights of Licensors in the Publisher Marks and execute and deliver the other documents as may be reasonably requested by Licensors. SECTION 14. TERM. This Agreement will terminate on the date on which the Initial Term would expire under the Directory Services License Agreement without early termination by either party, provided, that if Renewal Terms are adopted under the Directory Services License Agreement, this Agreement will terminate on the date on which the last Renewal Term would expire without early termination by either party. SECTION 15. TERMINATION. (a) By Licensors. (i) If Licensee (i) materially breaches its obligations under this Agreement and fails to cure such material breach within ninety (90) days after Licensors provide written notice to Licensee of such breach, or (ii) repeatedly and materially breaches its obligations under this Agreement, then Licensors may, upon written notice to Licensee, in addition to all other rights and remedies Licensors may have under law or pursuant to this Agreement, terminate this Agreement. (ii) In the event Licensors terminate the Directory Services License Agreement pursuant to Section 8.6 of the Directory Services License Agreement, Licensors may upon written notice to Licensee terminate this Agreement. 6 (b) By Licensee. If Licensors (i) materially breach their obligations under this Agreement and fail to cure such material breach within ninety (90) days after Licensee provides written notice to Licensors of such breach, or (ii) repeatedly and materially breach their obligations under this Agreement, then Licensee may, upon written notice to Licensors, in addition to all other rights and remedies Licensee may have under law or pursuant to this Agreement, terminate this Agreement. SECTION 16. INDEMNIFICATION. (a) Licensee Indemnity. Licensee will defend, hold harmless and indemnify Licensors and each of their Affiliates, officers, directors, shareholders, employees, contractors, agents and representatives from and against any and all losses, damages, claims, demands, suits, liabilities, fines, penalties, costs, obligations, settlement payments, awards, judgments, deficiencies or other charges ("Losses") and any and all expenses incurred in connection with investigating, defending or asserting any claim, action, suit or proceeding incident to any matter indemnified under the Agreement ("Expenses") arising out of, resulting from or based upon any pending or threatened claim, action, proceeding or suit by any third party, whether based on contract, tort or otherwise, arising out of or in connection with: (i) any breach of this Agreement by Licensee and (ii) the use of the Publisher Marks by Licensee in violation of this Agreement. (b) Licensors Indemnity. Licensors will defend, hold harmless and indemnify Licensee and each of its Affiliates, officers, directors, shareholders, employees, contractors, agents and representatives from and against any and all Losses and Expenses arising out of, resulting from or based upon any pending or threatened claim, action, proceeding or suit by any third party, whether based on contract, tort or otherwise, arising out of or in connection with (i) any breach of this Agreement by Licensors and (ii) the use of the Publisher Marks by Licensee in accordance with the terms of this Agreement. (c) Procedure. Promptly after receipt by the indemnified party of notice by a third party of a claim or of the commencement of any action or proceeding with respect to which such indemnified party may be entitled to receive payment from the other party for any Losses or Expenses, such indemnified party will notify the indemnifying party of the notice of such claim or of the commencement of such action or proceeding; provided, however, that the failure to so notify the indemnifying party will relieve the indemnifying party from liability under this Agreement with respect to such claim, action or proceeding only if, and only to the extent that, such failure to notify the indemnifying party results in the forfeiture by the indemnifying party of rights and defenses otherwise available to the indemnifying party with respect to such claim, action or proceeding. The indemnifying party will have the right, upon written notice delivered to the indemnified party within thirty (30) days thereafter assuming formal responsibility for any Losses and Expenses resulting from such claim, action or proceeding, to assume the defense of such claim, action or proceeding, including the employment of counsel reasonably satisfactory to the indemnified party and the payment of the fees and disbursements of such counsel. In any claim, action or proceeding with respect to which indemnification is being sought hereunder, the 7 indemnified party or the indemnifying party, whichever is not assuming the defense of such action, will have the right to participate in such matter and to retain its own counsel at such party's own expense. The indemnifying party or the indemnified party, as the case may be, will at all times use reasonable efforts to keep the indemnifying party or the indemnified party, as the case may be, reasonably apprised of the status of the defense of any action the defense of which they are maintaining and to cooperate in good faith with each other with respect to the defense of any such action. If the indemnifying party has assumed the defense of a claim, action or proceeding, no indemnified party may settle or compromise such matter or consent to the entry of any judgment with respect to such matter without the prior written consent of the indemnifying party. An indemnifying party may not, without the prior written consent of the indemnified party, settle or compromise any claim or consent to the entry of any judgment with respect to which indemnification is being sought hereunder unless (i) simultaneously with the effectiveness of such settlement, compromise or consent, the indemnifying party pays in full any obligation imposed on the indemnified party by such settlement, compromise or consent (ii) such settlement, compromise or consent contains a complete release of the indemnified party and its Affiliates and their respective directors, officers and employees and (iii) such settlement, compromise or consent does not contain any equitable order, judgment or term which in any manner affects, restrains or interferes with the business of the indemnified party or any of the indemnified party's Affiliates. In the event an indemnified party will claim a right to payment pursuant to this Agreement not involving a third party claim covered by Section 16, such indemnified party will send written notice of such claim to the appropriate indemnifying party. Such notice will specify the basis for such claim. As promptly as possible after the indemnified party has given such notice, such indemnified party and the appropriate indemnifying party will establish the merits and amount of such claim (by mutual agreement, litigation, arbitration or otherwise) and, within five business days of the final determination of the merits and amount of such claim, the indemnifying party will pay to the indemnified party immediately available funds in an amount equal to such claim as determined hereunder. SECTION 17. DISPUTE RESOLUTION. (a) Option to Negotiate Disputes. Other than a suit for injunctive relief to maintain the status quo, to stop an ongoing violation of this Agreement or to prevent a threatened violation of this Agreement, in the event of any dispute arising between the Parties in connection with the interpretation or performance of this Agreement, before either Party may initiate a formal proceeding in any tribunal, including arbitration or judicial proceedings, the Parties will negotiate in good faith to resolve such dispute amicably after receipt by the allegedly breaching Party of written notice of a dispute, stating the specific nature of the claimed breach and the specific nature of, and period for, the cure allegedly required, sent by the other Party in the manner set forth in Section 20. Within ten (10) days after delivery of the notice, representatives of the Parties will meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the dispute by the respective representatives of the Parties within the time frames and escalation process set forth below: 8
LICENSOR (TITLE) LICENSEES (TITLE) - --------------------------------------------------------------------------------------------- WITHIN 10 DAYS GENERAL COUNSEL VICE PRESIDENT -- LAW, MARKETING AND SALES - --------------------------------------------------------------------------------------------- WITHIN 20 DAYS CHIEF FINANCIAL OFFICER VICE PRESIDENT -- BUSINESS PLANNING AND DEVELOPMENT - --------------------------------------------------------------------------------------------- WITHIN 30 DAYS CHIEF EXECUTIVE OFFICER PRESIDENT - LTD - ---------------------------------------------------------------------------------------------
If a Party intends to be accompanied at a meeting by an attorney, the other Party will be given at least two business days' notice of such intention and may also be accompanied by an attorney. All negotiations pursuant to this Section 16(a) are confidential and will be treated as compromise and settlement negotiations for purposes of the Federal Rules of Evidence and State Rules of Evidence. (b) Other than a dispute for injunctive relief to maintain the status quo, to stop an ongoing violation of this Agreement or to prevent a threatened violation of this Agreement, any dispute between the Parties that is not resolved in accordance with the informal notice of breach provisions set forth in Section 16(a) and remains disputed by the Party alleged to have been in breach, shall be resolved by arbitration using the arbitration procedures set forth in this Section 16(b). In such event, either Party may serve a demand for arbitration in accordance with the Center for Public Resources Non-Administered Arbitration Rules ("Arbitration Rules") in which, in addition to any other requirements of the Arbitration Rules, the Party serving the demand states the specific nature of the claimed breach and the specific nature of, and period for, the cure allegedly required, and demands a determination by the arbitrators of the Parties' respective rights together with any other relief sought. Three arbitrators shall be chosen, and the proceedings shall be conducted in New York, New York generally in accordance with the Arbitration Rules, provided that (i) the Parties shall choose three arbitrators through a self-administered process of striking names from a list of potential arbitrators and shall not employ the method provided for in the Arbitration Rules; (ii) the rules of evidence employed in federal courts at the time shall apply; and (iii) discovery shall be permitted in accordance with the Federal Rules of Civil Procedure. Any arbitration will be subject to the governing law provision set forth in Section 16(c) of this Agreement. If any interim or conservatory measures have been issued by a court or other tribunal, the arbitration tribunal shall not be bound by such interim or conservatory decision or measures when rendering its decision. The decision of the arbitrators will be final and binding upon the Parties to the maximum extent permitted under applicable law, and a final judgment may be entered on the award in any court of competent jurisdiction. (c) Governing Law. This Agreement shall be governed by and construed in accordance with laws of the State of Delaware (regardless of the laws that might otherwise govern under applicable principles of conflict of laws thereof) as to all matters, including but not limited to matters of validity, construction, effect, performance and remedies. (d) Attorneys' Fees. The prevailing Party in any formal dispute will be entitled to reasonable attorneys' fees and costs, including reasonable expert fees and costs. This provision 9 will not apply if the prevailing Party rejected a written settlement offer that exceeds the prevailing Party's recovery. (e) Cumulative Remedies. No right or remedy in this Agreement conferred upon or reserved to any Party is intended to be exclusive of any other right or remedy, and each and every right and remedy will be cumulative and in addition to any other right or remedy under this Agreement or under applicable law, whether now or hereafter existing. The Parties agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with its terms and that the Parties will be entitled to seek specific performance in addition to any other remedy to which they are entitled at law or equity. SECTION 18. ASSIGNMENT. Neither Party may assign all or any of its rights or obligations under the Agreement without the prior written consent of the other Party, except that either Party may assign all of its rights and obligations under the Agreement (a) in connection with a sale of all or substantially all of its assets or by merger if the purchaser assumes in writing all of the assigning Party's rights and obligations under this Agreement in a form reasonably acceptable to the other Party or (b) to (i) any of its Affiliates or (ii) any lender or any other party as collateral in connection with any financing provided that no such assignment permitted by this clause (b) will relieve such Party of any of its obligations under this Agreement. SECTION 19. RELATIONSHIP. Nothing contained in this Agreement shall be construed to create the relationship of employer and employee between any Licensor and Licensees, franchiser - franchisee, or to make any Licensor or Licensees partners, joint venturer or co-employer of the other, or result in joint service offerings to their respective customers. SECTION 20. SUBCONTRACTORS. Notwithstanding the prohibition on transferability set forth in Section 1, any Party may subcontract with third parties or Affiliates of such Party for the performance of any of such Party's obligations which require the use of the Publisher Marks. If any obligation is performed for either Party through a subcontractor, such Party will remain fully responsible for the performance of its obligations under this Agreement in accordance with its terms and such Party will be solely responsible for payments due to its subcontractors. No contract, subcontract or other agreement entered into by either Party with any third party in connection with the provision of services utilizing the Publisher Marks will provide for any indemnity, guarantee or assumption of liability by, or other obligation of, the other Party with respect to such arrangement, except as consented to in writing by the other Party. No subcontractor will be deemed a third party beneficiary for any purposes under this Agreement. SECTION 21. NOTICES. Any notice required or permitted under this Agreement will be in writing and will be hand-delivered, sent by confirmed facsimile or mailed by overnight express mail. Notice will be deemed to have been given when such notice is received. Addresses for notices are as follows: 10 If to Licensor: Sprint Corporation 6200 Sprint Parkway Overland Park, KS 66251 KSOPHF 0202 - 2B579 Attention: Vice President, Business Planning & Development- LTD Facsimile: 913-794-0141 With a copy to: Sprint Corporation 6200 Sprint Parkway Overland Park, KS 66251 KSOPHF 0302 - 3B679 Attention: Legal - Corporate Secretary Facsimile: 913-794-0144 If to Licensees: R.H. Donnelley Corporation One Manhattanville Road Purchase, New York 10577 Attention: General Counsel Facsimile: 914-933-6844 or at such other address as either Party may provide to the other by written notice. SECTION 22. INDEPENDENT CONTRACTOR. The relationship between the Parties is that of an independent contractor. Each Party will be solely responsible for such Party's employees, including compliance with all employment laws, regulations, and rules and payment of wages, benefits and employment taxes such as Social Security, unemployment, workers compensation and federal and state withholding with respect to such employees. SECTION 23. ENTIRE AGREEMENT. This Agreement, the Directory Services License Agreement, the Non-Competition Agreement, the Subscriber Listings Agreement, and the Publisher Trademark License Agreement constitute the entire understanding and agreement of the Parties concerning the subject matter of this Agreement, and supersede any prior agreements, representations, statements, understandings, proposals, undertakings or negotiations, whether written or oral, with respect to the subject matter expressly set forth in this Agreement. SECTION 24. SEVERABILITY. If any term, condition or provision of this Agreement is held to be invalid or unenforceable for any reason, such invalidity will not invalidate the entire 11 Agreement, unless such construction would be unreasonable. This Agreement will be construed as if it did not contain the invalid or unenforceable provision or provisions, and the rights and obligations of each Party will be construed and enforced accordingly, except that in the event such invalid or unenforceable provision or provisions are essential elements of this Agreement and substantially impair the rights or obligations of either Party, the Parties will promptly negotiate in good faith a replacement provision or provisions. SECTION 25. FORCE MAJEURE. Neither Party will be liable for any delay or failure in performance of any part of this Agreement caused by a Force Majeure condition, including acts of God, a public enemy or terrorism, fires, floods, freight embargoes, earthquakes, volcanic actions, wars (whether against a nation or otherwise), civil disturbances or other similar causes beyond the reasonable control of the Party claiming excusable delay or other failure to perform (a "Force Majeure"). If any Force Majeure condition occurs, the Party whose performance fails or is delayed because of such Force Majeure condition will give prompt notice to the other Party, will use commercially reasonable efforts to perform in spite of the Force Majeure condition and upon cessation of such Force Majeure condition will give like notice and commence performance under the Agreement as promptly as reasonably practicable. SECTION 26. NO THIRD PARTY BENEFICIARIES. This Agreement is intended solely for the benefit of the Parties, and no third-party beneficiaries are created by this Agreement. This Agreement does not provide and should not be construed to provide third parties with any remedy, claim, liability, reimbursement, cause of action or other privilege. SECTION 27. BINDING EFFECT. This Agreement will be binding on and inure to the benefit of the Parties, and their respective successors and permitted assigns. SECTION 28. WAIVERS. No waiver of any provision of this Agreement, and no consent to any default under this Agreement, will be effective unless the same is in writing and signed by an officer of the Party against whom such waiver or consent is claimed. In addition, no course of dealing or failure of a Party strictly to enforce any term, right or condition of this Agreement will be construed as a waiver of such term, right or condition. Waiver by either Party of any default by the other Party will not be deemed a waiver of any subsequent or other default. SECTION 29. HEADINGS. The headings and numbering of sections and paragraphs in this Agreement are for convenience only and will not be construed to define or limit any of the terms in this Agreement or affect the meaning or interpretation of this Agreement. SECTION 30. SURVIVAL. Any liabilities or obligations of a Party for acts or omissions occurring prior to the cancellation or termination of this Agreement and any obligations of a Party under any other provisions of this Agreement which, by their terms, are contemplated to survive (or be performed after) termination of this Agreement (subject to any time limitations specified therein) will survive the cancellation or termination of this Agreement. SECTION 31. MODIFICATIONS. No amendments, deletions, additions or other modifications to this Agreement will be binding unless evidenced in writing and signed by an 12 officer of each of the respective parties hereto. SECTION 32. COUNTERPARTS. This Agreement may be executed in any number of counterparts, and each such counterpart will be deemed to be an original instrument, but all such counterparts together will constitute but one agreement. This Agreement will become effective when one or more counterparts have been signed by each and delivered to the other Party, it being understood that the Parties need not sign the same counterpart. SECTION 33. CONFLICT. In the event of any conflict between this Agreement and the provisions of the Directory Services License Agreement, the provisions of the Directory Services License Agreement will control. SECTION 34. COMPLIANCE WITH LAWS/REGULATIONS. Each Party will comply with all federal, state, and local laws, regulations, rules, ordinances and orders relating to the performance of its obligations and the use of services provided under this Agreement, including any rulings, modifications, regulations or orders of the Federal Communications Commission and/or any applicable state utility commission to the extent this Agreement is subject to the jurisdiction of such regulating authority. 13 IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written. LICENSORS: R.H. DONNELLEY PUBLISHING & ADVERTISING, INC. (f/k/a Sprint R.H. DONNELLEY DIRECTORY COMPANY Publishing & Advertising, Inc.) (f/k/a Centel Directory Company) By: /s/ ROBERT J. BUSH By: /s/ ROBERT J. BUSH --------------------------------- --------------------------------- Name: Robert J. Bush Name: Robert J. Bush Title: Vice President and Secretary Title: Vice President and Secretary LICENSEE: SPRINT CORPORATION By: /s/ CHARLES WUNSCH --------------------------------- Name: Charles Wunsch Title: Assistant Vice President EX-10.4 10 y82590exv10w4.txt NON-COMPETITION AGREEMENT EXHIBIT 10.4 EXECUTION COPY NON-COMPETITION AGREEMENT THIS NON-COMPETITION AGREEMENT (this "Agreement") is effective as of this 3rd day of January, 2003, by and between R.H. Donnelley Corporation, a Delaware corporation ("Buyer"), R.H. Donnelley Publishing & Advertising, Inc. (f/k/a Sprint Publishing & Advertising, Inc.), a Kansas corporation ("RHDPA"), CenDon, L.L.C., a Delaware limited liability company ("CenDon"), R.H. Donnelley Directory Company (f/k/a Centel Directory Company), a Delaware corporation ("RHDDC") (RHDPA, CenDon and RHDDC are referred to collectively in this Agreement as "Publisher"), Sprint Corporation, a Kansas corporation ("Sprint Parent") and Sprint Minnesota, Inc., Sprint - Florida, Incorporated, Carolina Telephone & Telegraph Co., United Telephone - Southeast, Inc., United Telephone Company of the Carolinas, United Telephone Company of Southcentral Kansas, United Telephone Company of Eastern Kansas, United Telephone Company of Kansas, Sprint Missouri, Inc., United Telephone Company of Texas, Inc., United Telephone Company of the West, The United Telephone Company of Pennsylvania, United Telephone Company of New Jersey, Inc., United Telephone Company of the Northwest, United Telephone Company of Ohio, United Telephone Company of Indiana, Inc., Central Telephone Company, Central Telephone Company of Virginia and Central Telephone Company of Texas (collectively "Sprint LTD"). Buyer, Publisher, Sprint Parent and Sprint LTD are sometimes referred to in this Agreement as a "Party" and collectively as the "Parties." RECITALS: A. On the date of this Agreement, Buyer is acquiring from Sprint Parent all of the outstanding capital stock of DirectoriesAmerica, Inc., a Kansas corporation, which is the sole owner of RHDPA, and from Centel Directories LLC, a Delaware limited liability company ("Centel LLC"), all of the outstanding capital stock of RHDDC, which is a member of CenDon (Sprint Parent and Centel LLC are referred to collectively in this Agreement as the "Sellers"), pursuant to a Stock Purchase Agreement, dated as of September 21, 2002, between Sellers and Buyer (the "Stock Purchase Agreement"); B. The Stock Purchase Agreement provides that the Parties will enter into this Agreement; C. Pursuant to the terms of the Stock Purchase Agreement, on the date of this Agreement, Publisher and Sprint LTD are entering into a Directory Services License Agreement (the "Directory Services License Agreement") in order to provide for the continued production, publication and distribution of the Sprint LTD Directories by Publisher following the closing of the transactions contemplated by the Stock Purchase Agreement; D. Sprint Parent and Sprint LTD acknowledge that the agreements and covenants contained in this Agreement are essential to protect the benefits that Buyer expects to receive pursuant to the transactions contemplated by the Stock Purchase Agreement; and E. Sprint Parent and Sprint LTD acknowledge that the agreements and covenants contained in this Agreement were a material inducement to Buyer's agreement to enter into the Stock Purchase Agreement and the other agreements contemplated by the Stock Purchase Agreement. F. Capitalized terms not otherwise defined in this Agreement shall have the meanings ascribed thereto in the Directory Services License Agreement. AGREEMENT NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements set forth in this Agreement and the consummation of the transactions contemplated by the Stock Purchase Agreement, the Parties agree as follows: ARTICLE 1 TERM AND TERMINATION SECTION 1.1 TERM. Except as otherwise provided in this Agreement or the Directory Services License Agreement, this Agreement will be coterminous with the Directory Services License Agreement and Sprint Parent's and Sprint LTD's obligations will terminate immediately upon the termination or expiration of the Directory Services License Agreement, provided however that no termination or expiration of this Agreement will release Sprint Parent or Sprint LTD from liability for prior breaches of any provision of this Agreement. ARTICLE 2 NON-COMPETITION AND NON-SOLICITATION SECTION 2.1 SPRINT OBLIGATIONS. (a) Until the termination or expiration of the Directory Services License Agreement (or such other time as specified by Section 8.6 of the Directory Services License Agreement, if applicable), no Sprint Entity will directly or indirectly engage in, own, manage, operate, share any revenues of or have any profit or other equity interest in (except pursuant to the Directory Services License Agreement or by ownership of less than five percent of the outstanding capital stock or equity interest of an entity whose securities are publicly traded), any business or entity engaged in: (i) the business of producing, publishing or distributing any physical media directory containing Subscriber Listing Information or Directional Information that is primarily distributed to or directed at Subscribers and businesses or organizations located or providing services within the Service Areas; (ii) the sale of any Local Advertising, subject to the provisions of Section 2.1(b) below; and 2 (iii) advertising, promoting or using, or entering into an agreement with any third party to advertise, promote or use, an affiliation with the Service Area ILEC or Service Area ILEC brand in connection with any of the foregoing. If a Sprint Entity acquires a party that is engaged in operations that cause such Sprint Entity to be in breach of this Section 2.1(a), the Sprint Entities will not be deemed to be in breach of this Section 2.1(a) if the acquiring Sprint Entity is in good faith attempting to divest or otherwise terminate the competing directories or other activities, except that such Sprint Entity must divest or otherwise terminate the production, publication and distribution of such competing directories or other activities within twelve (12) months of the closing of the acquisition by such Sprint Entity. (b) Notwithstanding any other provision of this Agreement or the Directory Services License Agreement (including Section 2.1(a) of this Agreement), no Sprint Entity will be prohibited from selling Local Advertising that is bundled with or otherwise comprises an integral part of the sale of a telecommunications product or service in any Service Area into or as part of a non-physical media directory if such Sprint Entity reasonably determines that it must sell such Local Advertising in order to remain competitive with regards to the sale of such telecommunications services or products in that particular Service Area, so long as such Sprint Entity complies with this Section 2.1(b). (i) In such circumstance, a Sprint Entity may only sell such Local Advertising through a third party if it complies with this Section 2.1(b)(i). (A) The Sprint Entity will submit a written proposal to Publisher outlining specific terms and conditions under which Publisher would act as the exclusive content provider and/or sales agent of the Sprint Entity for the sale of such Local Advertising, including compensation terms whereby Publisher would be entitled to receive and retain all revenues (or, if such Local Advertising is bundled with a telecommunications service or product, the fair market value thereof) from the sale of such Local Advertising. (B) The Sprint Entity will negotiate in good faith with Publisher for a period of thirty (30) days following the receipt by Publisher of such proposal to agree on terms and conditions under which Publisher would act as its exclusive content provider and/or sales agent for such Local Advertising. If no agreement has been reached by the end of the thirty (30) day period, the Sprint Entity will submit a final written proposal to Publisher who will have five business days to accept such proposal. (C) If the Sprint Entity and Publisher are unable to agree on terms for Publisher to act as content provider and/or sales agent by the end of the five business day period specified above or if Publisher is unable or unwilling to act as such content provider and/or sales agent, the Sprint Entity may engage a third party to act as content provider and/or sales agent for such Local Advertising but only on terms which in the aggregate are no more favorable to the third party than last offered in writing to Publisher. The term of any such third party agreement 3 will not exceed three years. In such event, no Sprint Entity will have any further obligation to Publisher with respect to the Local Advertising that was within the scope of the proposal, except that the Sprint Entity will repeat the process under this Section 2.1(b)(i) if it desires to continue to market such Local Advertising through a third party at the end of the term of the third party agreement. (ii) In those circumstances where a Sprint Entity is permitted to sell Local Advertising pursuant to Section 2.1(b) and sells such Local Advertising through its internal sales force (which will only be permitted where it is not commercially practicable to sell such Local Advertising using a third party sales agent), the applicable Sprint Entity will be required to pay to Publisher the Net Profits of the Sprint Entity from the sale of such Local Advertising (based on the fair market value of such Local Advertising). For purposes of this Section 2.1(b)(ii), "Net Profits" means (A) the amount (if any) separately billed by such Sprint Entity for the sale of such Local Advertising, (or, if greater, the fair market value of such Local Advertising) multiplied by (B) the profit margin typically recognized in the advertising industry for the sale of advertising similar to such Local Advertising (taking into account bad debt experience); provided that if no such standard is available, Net Profits will be determined based on an assumed profit margin of 25%. (iii) Nothing in this Section 2.1(b) shall give any Sprint Entity the right to sell Local Advertising in any physical or non-physical directory operated by Publisher. (c) For clarification purposes only, the Parties acknowledge that the noncompetition restrictions in this Article 2 are not intended to restrict any activities by non-Affiliates of Sprint Parent, such as (i) Sprint PCS network partners, mobile virtual network operators (e.g., Virgin Mobile), resellers or any other entities with which any Sprint Entity enters into similar contractual arrangements intended to expand such Sprint Entity's customer base or network usage, or (ii) providers of content for delivery by any Sprint Entity network who are not agents of any Sprint Entity for purposes of selling Local Advertising; provided, that, if and to the extent that a Sprint Entity has the contractual or other right to prevent such activities, no Sprint Entity shall solicit, consent to or approve any activities of such non-Affiliates that would be in breach of this Article 2 if such activities were conducted by a Sprint Entity. (d) Notwithstanding any other provision of this Agreement, upon any direct or indirect sale or transfer by Sprint Parent or Sprint LTD of all or any part of a Service Area(s) (whether by a sale of assets or capital stock or by merger, including any change of control of Sprint Parent) in accordance with Section 9.1 of the Directory Services License Agreement, neither the purchaser of such Service Area(s) nor any of its Affiliates nor any Sprint Entity will be deemed to be in violation of this Agreement as a result of any product or service and related activities by the purchaser and its Affiliates that exist as of the closing of such sale, provided that (i) Publisher continues to have for all purposes the exclusive right as set forth in the Directory Services License Agreement and the other Commercial Agreements to (a) produce, publish and distribute Sprint LTD Directories on behalf of the ILEC in the affected Service Area(s) and (b) to use in the affected Service Area(s) the brand and/or marks under which the ILEC provides local telephone exchange service in the affected Service Area(s), and (ii) in the event the purchaser at any time changes the brand and/or marks under which the ILEC provides local telephone exchange service in the affected Service Area(s), any product or service and related activities 4 that would otherwise violate this Agreement (a "Competing Directory") may not continue to be branded with any trademark or tradename that had previously been used by the purchaser or its Affiliates in connection with its physical or non-physical directories or ILEC business. (For example, if a purchaser acquires Sprint Parent, the purchaser and its Affiliates could continue to distribute any Competing Directory for as long as the Sprint brand is retained for the ILEC in the Service Areas; if the purchaser causes the ILEC to change the ILEC brand from the Sprint brand to a different brand, purchaser and its Affiliates would be required to rebrand, shut down or dispose of any Competing Directory that previously operated under purchaser's brand and the Publisher would have the exclusive right to use the new ILEC brand as contemplated by the Directory Services License Agreement and the Trademark License Agreement.) If a purchaser substitutes a different brand for the Licensed Marks pursuant to Section 9.1 of the Directory Services License Agreement, the purchaser will not be permitted to rebrand a Competing Directory with any of the Licensed Marks. (e) In the event a Service Area is sold or transferred pursuant to Section 9.1 of the Directory Services License Agreement, the Sprint Entities will remain bound by the obligations of Sections 2.1(a) and 2.1(b) of this Agreement with respect to the then applicable Geographic Coverage Areas relating to such sold or transferred Service Area. (f) The provisions of this Section 2.1 are subject to the terms of Articles 8 and 9 of the Directory Services License Agreement. SECTION 2.2 NON-SOLICITATION. During (i) the period between the date of this Agreement and the second anniversary of the date of this Agreement and (ii) the two year period following the termination of this Agreement, no Sprint Entity will, directly or indirectly, through one or more of its Affiliates, on behalf of itself or any other person, recruit or otherwise solicit or induce any employee of Publisher, its Subsidiaries or any of their successors to terminate his or her employment relationship with Publisher, its Subsidiaries or any of their successors. During (i) the period between the date of this Agreement and the fifth anniversary of the date of this Agreement and (ii) the five year period following the termination of this Agreement, no Sprint Entity will, directly or indirectly, through one or more of its Affiliates, on behalf of itself or any other person, recruit or otherwise solicit or induce the chief executive officer, chief financial officer, president, chief operating officer, chief information officer, chief technology officer or general counsel of Publisher or any sales employee of Publisher who is director level or above to terminate his or her employment relationship with Publisher or its Subsidiaries. The foregoing will not, however, prohibit any Sprint Entity from publishing any general public solicitation of employment opportunities. ARTICLE 3 MISCELLANEOUS SECTION 3.1 ASSIGNMENT. Except as provided in Section 9.1 of the Directory Services License Agreement, no Party may assign all or any of its rights or obligations under the Agreement without the prior written consent of the other Parties, except that any Party may assign all of its rights and obligations under the Agreement (a) in connection with a sale of all or substantially all of its assets or by merger if the purchaser assumes in writing all of the assigning 5 Party's rights and obligations under this Agreement in a form reasonably acceptable to the other Party and (b) to (i) any of its Affiliates or (ii) any lender or any other party as collateral in connection with any financing provided that no such assignment permitted by this clause (b) will relieve such Party of any of its obligations under this Agreement. SECTION 3.2 NOTICES. Any notice required or permitted under this Agreement will be in writing and will be hand-delivered, sent by confirmed facsimile or mailed by overnight express mail. Notice will be deemed to have been given when such notice is received. Addresses for notices are as follows: If to a Sprint Entity: Sprint Corporation 6200 Sprint Parkway Overland Park, KS 66251 KSOPHF 0202 - 2B579 Attention: Vice President, Business Planning & Development- LTD Facsimile: 913-794-0141 With a copy to: Sprint Corporation 6200 Sprint Parkway Overland Park, KS 66251 KSOPHF 0302 - 3B679 Attention: Legal - Corporate Secretary Facsimile: 913-794-0144 If to Buyer or Publisher: R.H. Donnelley Corporation One Manhattanville Road Purchase, New York 10577 Fax No. (914) 933-6844 Attention: General Counsel With a copy to: Jones, Day, Reavis & Pogue 222 East 41st Street New York, New York 10017 Fax No. (212) 755-7306 Attention: John J. Hyland or at such other address as any Party may provide to the others by written notice. 6 SECTION 3.3 ENTIRE AGREEMENT. This Agreement constitutes the entire understanding and agreement of the Parties concerning the subject matter of this Agreement, and supersedes any prior agreements, representations, statements, understandings, proposals, undertakings or negotiations, whether written or oral, with respect to the subject matter expressly set forth in this Agreement. SECTION 3.4 SEVERABILITY. If any term, condition or provision of this Agreement is held to be invalid or unenforceable for any reason, such invalidity will not invalidate the entire Agreement, unless such construction would be unreasonable. This Agreement will be construed as if it did not contain the invalid or unenforceable provision or provisions, and the rights and obligations of each Party will be construed and enforced accordingly, except that in the event such invalid or unenforceable provision or provisions are essential elements of this Agreement and substantially impair the rights or obligations of a Party, the Parties will promptly negotiate in good faith a replacement provision or provisions. SECTION 3.5 NO THIRD PARTY BENEFICIARIES. This Agreement is intended solely for the benefit of the Parties, and no third-party beneficiaries are created by this Agreement. This Agreement does not provide and should not be construed to provide third parties with any remedy, claim, liability, reimbursement, cause of action or other privilege. SECTION 3.6 BINDING EFFECT. This Agreement will be binding on and inure to the benefit of the Parties, and their respective successors and permitted assigns. SECTION 3.7 WAIVERS. No waiver of any provision of this Agreement, and no consent to any default under this Agreement, will be effective unless the same is in writing and signed by an officer of the Party against whom such waiver or consent is claimed. In addition, no course of dealing or failure of a Party strictly to enforce any term, right or condition of this Agreement will be construed as a waiver of such term, right or condition. Waiver by a Party of any default by any other Party will not be deemed a waiver of any subsequent or other default. SECTION 3.8 HEADINGS. The headings and numbering of sections and paragraphs in this Agreement are for convenience only and will not be construed to define or limit any of the terms in this Agreement or affect the meaning or interpretation of this Agreement. SECTION 3.9 SURVIVAL. Any liabilities or obligations of a Party for acts or omissions occurring prior to the cancellation or termination of this Agreement and any obligations of a Party under any other provisions of this Agreement which, by their terms, are contemplated to survive (or be performed after) termination of this Agreement (subject to any time limitations specified therein) will survive the cancellation or termination of this Agreement. SECTION 3.10 MODIFICATIONS. No amendments, deletions, additions or other modifications to this Agreement will be binding unless evidenced in writing and signed by an officer of each of the respective parties hereto. SECTION 3.11 COUNTERPARTS. This Agreement may be executed in any number of counterparts, and each such counterpart will be deemed to be an original instrument, but all such counterparts together will constitute but one agreement. This Agreement will become effective 7 when one or more counterparts have been signed by each and delivered to the other Parties, it being understood that the Parties need not sign the same counterpart. SECTION 3.12 REMEDIES. The Parties agree that all disputes or controversies arising out of or relating to this Agreement shall be resolved using the procedures set forth in the Directory Services License Agreement, including Sections 17.1, 17.3, 17.4, 17.5 and 17.6, which are incorporated herein by this reference. SECTION 3.13 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES IS GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ITS CONFLICT OF LAWS PRINCIPLES. SECTION 3.14 SPRINT LTD OBLIGATIONS. Each individual entity comprising Sprint LTD under this Agreement will be severally responsible for the obligations of Sprint LTD under this Agreement with respect to the specific Service Areas operated by such entity. Subject to any novation that occurs pursuant to Section 9.1(b) of the Directory Services License Agreement, Sprint Parent will be jointly and severally responsible with each entity comprising Sprint LTD for the obligations of such entity under this Agreement. 8 IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written. BUYER: R.H. DONNELLEY CORPORATION By: /s/ ROBERT J. BUSH --------------------------------- Name: Robert J. Bush Title: Vice President and Secretary PUBLISHER: R.H. DONNELLEY PUBLISHING & ADVERTISING, INC. CENDON, L.L.C. (f/k/a Sprint Publishing & Advertising, Inc.) By: /s/ ROBERT J. BUSH By: /s/ ROBERT J. BUSH --------------------------------- --------------------------- Name: Robert J. Bush Name: Robert J. Bush Title: Vice President and Secretary Title: Authorized Signatory R.H. DONNELLEY DIRECTORY COMPANY, (f/k/a Centel Directory Company) By: /s/ ROBERT J. BUSH --------------------------------- Name: Robert J. Bush Title: Vice President and Secretary SPRINT PARENT: SPRINT CORPORATION By: /s/ MICHAEL B. FULLER --------------------------------- Name: Michael B. Fuller Title: President, Local Telecom Division SPRINT LTD: SPRINT MINNESOTA, INC. By: /s/ JOSEPH MEYER ---------------------------------- Name: Joseph Meyer Title: Vice President SPRINT - FLORIDA, INCORPORATED CAROLINA TELEPHONE & TELEGRAPH CO. By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER --------------------------------- --------------------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President UNITED TELEPHONE - SOUTHEAST, UNITED TELEPHONE COMPANY OF INC. THE CAROLINAS By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER --------------------------------- --------------------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President UNITED TELEPHONE COMPANY OF UNITED TELEPHONE COMPANY OF SOUTHCENTRAL KANSAS EASTERN KANSAS By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER --------------------------------- --------------------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President 2 UNITED TELEPHONE COMPANY OF KANSAS SPRINT MISSOURI, INC. By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER --------------------------------- --------------------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President UNITED TELEPHONE COMPANY OF UNITED TELEPHONE COMPANY OF TEXAS, INC. THE WEST By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER --------------------------------- --------------------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President THE UNITED TELEPHONE COMPANY UNITED TELEPHONE COMPANY OF OF PENNSYLVANIA NEW JERSEY, INC. By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER --------------------------------- --------------------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President UNITED TELEPHONE COMPANY OF UNITED TELEPHONE COMPANY OF THE NORTHWEST OHIO By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER --------------------------------- --------------------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President 3 UNITED TELEPHONE COMPANY OF CENTRAL TELEPHONE COMPANY INDIANA, INC. By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER --------------------------------- --------------------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President CENTRAL TELEPHONE COMPANY OF CENTRAL TELEPHONE COMPANY OF VIRGINIA TEXAS By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER --------------------------------- --------------------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President 4 EX-10.5 11 y82590exv10w5.txt SUBSCRIBER LISTINGS AGREEMENT EXHIBIT 10.5 EXECUTION COPY SUBSCRIBER LISTINGS AGREEMENT THIS SUBSCRIBER LISTINGS AGREEMENT ("Agreement") is effective as of this 3rd day of January, 2003, by and between R.H. Donnelley Publishing & Advertising, Inc. (f/k/a Sprint Publishing & Advertising, Inc.), a Kansas corporation ("RHDPA"), CenDon, L.L.C., a Delaware limited liability company ("CenDon"), R.H. Donnelley Directory Company (f/k/a Centel Directory Company), a Delaware corporation ("RHDDC") (RHDPA, CenDon and RHDDC are referred to collectively in this Agreement as "Publisher"), Sprint Corporation, a Kansas Corporation ("Sprint Parent"), and Sprint Minnesota, Inc., Sprint - Florida, Incorporated, Carolina Telephone & Telegraph Co., United Telephone - Southeast, Inc., United Telephone Company of the Carolinas, United Telephone Company of Southcentral Kansas, United Telephone Company of Eastern Kansas, United Telephone Company of Kansas, Sprint Missouri, Inc., United Telephone Company of Texas, Inc., United Telephone Company of the West, The United Telephone Company of Pennsylvania, United Telephone Company of New Jersey, Inc., United Telephone Company of the Northwest, United Telephone Company of Ohio, United Telephone Company of Indiana, Inc., Central Telephone Company, Central Telephone Company of Virginia and Central Telephone Company of Texas (collectively the "Sprint Local Telecommunications Division" or "Sprint LTD"), each of which is a certificated provider of local telephone exchange service. Publisher, Sprint Parent and Sprint LTD are sometimes referred to in this Agreement as a "Party" and collectively as the "Parties." RECITALS A. On the date of this Agreement, R.H. Donnelley Corporation, a Delaware corporation ("Buyer"), is acquiring from Sprint Parent all of the outstanding capital stock of DirectoriesAmerica, Inc., a Kansas corporation, which is the sole owner of RHDPA, and from Centel Directories LLC, a Delaware limited liability company ("Centel LLC"), all of the outstanding capital stock of RHDDC, which is a member of CenDon (Sprint Parent and Centel LLC are referred to collectively in this Agreement as the "Sellers"), pursuant to a Stock Purchase Agreement, dated as of September 21, 2002, between Sellers and Buyer (the "Stock Purchase Agreement"); B. The Stock Purchase Agreement provides that the Parties will enter into this Agreement; C. Pursuant to the terms of the Stock Purchase Agreement, on the date of this Agreement, Publisher and Sprint LTD are entering into a Directory Services License Agreement (the "Directory Services License Agreement") in order to provide for the continued production, publication and distribution of the Sprint LTD Directories by Publisher following the closing of the transactions contemplated by the Stock Purchase Agreement; D. The Parties desire to set forth certain understandings among themselves with respect to the provision of the Subscriber Listing Information and Listing Information Updates. E. Capitalized terms not otherwise defined in this Agreement shall have the meanings ascribed thereto in the Directory Services License Agreement. AGREEMENT NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements set forth in this Agreement and the consummation of the transactions contemplated by the Stock Purchase Agreement, the Parties agree as follows: ARTICLE 1 SUBSCRIBER LISTING INFORMATION SECTION 1.1 LICENSE AND PROVISION OF SUBSCRIBER LISTING INFORMATION AND LISTING INFORMATION UPDATES. Sprint LTD hereby grants to Publisher a non-exclusive, non-transferable (except as provided in Section 9.1 of the Directory Services License Agreement), non-sublicensable license to use the Subscriber Listing Information and Listing Information Updates solely in accordance with the following provisions: (a) Upon the request of Publisher and in a format consistent with Current Practices, Sprint LTD will provide all Subscriber Listing Information to Publisher to be included in the Sprint LTD Directories. Sprint LTD will maintain the Standard Listings database for all Subscribers. The foregoing shall not prohibit Publisher from maintaining its own database of listings. Publisher and Sprint LTD will work cooperatively to ensure that the proper Subscriber Listing Information is provided to Publisher regardless of the NPA/NXX used in provisioning local telephone service. Publisher will request Subscriber Listing Information for each Sprint LTD Directory within a reasonable time prior to the publication of such Sprint LTD Directory in order to include as much updated Subscriber Listing Information in the Sprint LTD Directory as is reasonably practicable. (b) Sprint LTD will provide all Listing Information Updates for Sprint LTD's business Subscribers to Publisher in a form consistent with Current Practices. Sprint LTD will provide such Listing Information Updates as soon as reasonably practicable but in any event within three (3) business days of the update being added to Sprint LTD's records. (c) Except as otherwise permitted by any applicable law or regulation, Publisher will use the Subscriber Listing Information and Listing Information Updates only during the Term (provided, however, that after the Term Publisher will be permitted to use the Subscriber Listing Information for any Sprint LTD Directories that commenced production prior to the end of the Term and not be required to recall any Sprint LTD Directories published prior to the end of the Term) and for the sole purpose of publishing telephone directories in any format and soliciting advertising for such telephone directories. The foregoing shall not prohibit Publisher from maintaining its own database of listings. Publisher will not use such information in any manner or in any way that: (i) interferes with the proper and efficient furnishing of services by Sprint LTD to its customers; (ii) adversely affects the relationship between Sprint LTD and its 2 customers or the public; or (iii) would violate applicable law. Sprint LTD will retain the sole right to sell the Subscriber Listing Information and Listing Information Updates to third parties. Publisher will not publish in the Sprint LTD Directories or otherwise disclose any information (except for distribution purposes and as otherwise permitted by this Agreement) concerning Subscribers designated in the Subscriber Listing Information as "non-published" or "unlisted" or the like. Publisher will not use the Subscriber Listing Information to solicit the people or entities identified as such in connection with the sale of advertising in the Sprint LTD Directories. Publisher will own all information and work product relating to advertising in the Sprint LTD Directories, except for any such information or work product owned solely by the customers of Publisher or other parties. SECTION 1.2 PRICE. Publisher will pay to Sprint LTD $0.04 per Listing in the aggregate for Subscriber Listing Information and $0.06 per Listing in the aggregate for Listing Information Updates provided to Publisher. Sprint LTD may from time to time alter the rates charged by it for Listing Information and Listing Information Updates, upon prior written notice to Publisher, except that such rates will not exceed the maximum rates allowed by any applicable law or regulation for such Subscriber Listing Information and Listing Information Updates; provided, that any such payments will be made on a most-favored-customer basis at the lowest available discounted price, whether such price is that offered by Sprint LTD to any third party or suggested by the Federal Communications Commission. For purposes of the foregoing sentence, "aggregate" means on an aggregated basis regardless of how often and in what media, format or device such Listings are displayed by Publisher. On or before the fifteenth (15th) day of each month, Sprint LTD will deliver to Publisher an invoice setting forth in reasonable detail the payments due Sprint LTD under this Section 1.2 for the preceding month. Publisher will deliver payment in full to Sprint LTD within sixty (60) days of receipt of such invoice. SECTION 1.3 CLASSIFIED HEADINGS. Publisher will provide Sprint LTD with a list of authorized classified headings for use with business Subscribers. Publisher will place the Standard Listings in the Yellow Pages Directories under the heading assignments requested by the Subscribers. Sprint LTD will assign the Standard Listing to the appropriate classified heading provided by Publisher to Sprint LTD, unless Publisher determines in its reasonable discretion that the Subscriber was inadvertently assigned to the wrong classified heading by Sprint LTD in which case Publisher will confirm with the Subscriber the proper heading and reassign the Subscriber to such proper heading. SECTION 1.4 DIRECTORY SERVICES LICENSE AGREEMENT. Publisher's use of the Subscriber Listing Information and the Listing Information Updates shall also be subject to and in accordance with those terms and conditions of the Directory Services License Agreement that refer to the Subscriber Listing Information and/or Listing Information Updates. 3 ARTICLE 2 TERM AND TERMINATION SECTION 2.1 TERM. Except as otherwise provided in this Agreement or the Directory Services License Agreement, this Agreement will be coterminous with the Directory Services License Agreement and each Party's obligations will terminate immediately upon the termination or expiration of the Directory Services License Agreement; provided, however, that no termination or expiration of this Agreement will release any Party from liability for prior breaches of any provision of this Agreement. SECTION 2.2 EFFECTS OF TERMINATION. Except as otherwise provided in this Agreement, upon termination of this Agreement, Publisher will no longer have access under this Agreement to Subscriber Listing Information or Listing Information Updates. However, Sprint LTD will, upon the request of Publisher, provide Publisher with access to listing information of Subscribers consistent with Sprint LTD's applicable regulatory obligations. ARTICLE 3 GENERAL SECTION 3.1 ASSIGNMENT. Except as provided in Section 9.1 of the Directory Services License Agreement, no Party may assign all or any of its rights or obligations under the Agreement without the prior written consent of the other Parties, except that any Party may assign all of its rights and obligations under the Agreement (a) in connection with a sale of all or substantially all of its assets or by merger if the purchaser assumes in writing all of the assigning Party's rights and obligations under this Agreement in a form reasonably acceptable to the other Party or (b) to (i) any of its Affiliates or (ii) any lender or any other party as collateral in connection with any financing provided that no such assignment permitted by this clause (b) will relieve such Party of any of its obligations under this Agreement. SECTION 3.2 SUBCONTRACTORS. Any Party may subcontract with third parties or Affiliates of such Party for the performance of any of such Party's obligations under this Agreement. If any obligation is performed for either Party through a subcontractor, such Party will remain fully responsible for the performance of this Agreement in accordance with its terms, including any obligations it performs through subcontractors, and such Party will be solely responsible for payments due to its subcontractors. No contract, subcontract or other agreement entered into by either Party with any third party in connection with the provision of services under this Agreement will provide for any indemnity, guarantee or assumption of liability by, or other obligation of, the other Party with respect to such arrangement, except as consented to in writing by the other Party. No subcontractor will be deemed a third party beneficiary for any purposes under this Agreement. SECTION 3.3 RELATIONSHIP. Nothing contained in this Agreement shall be construed to create the relationship of employer and employee between any Sprint Entity and Publisher, 4 franchisor - franchisee, or to make any Sprint Entity or Publisher partners, joint venturer or co-employer of the other, or result in joint service offerings to their respective customers. SECTION 3.4 NOTICES. Any notice required or permitted under this Agreement will be in writing and will be hand-delivered, sent by confirmed facsimile or mailed by overnight express mail. Notice will be deemed to have been given when such notice is received. Addresses for notices are as follows: If to Sprint LTD: Sprint Corporation 6200 Sprint Parkway Overland Park, KS 66251 KSOPHF 0202 - 2B579 Attention: Vice President, Business Planning & Development- LTD Facsimile: 913-794-0141 With a copy to: Sprint Corporation 6200 Sprint Parkway Overland Park, KS 66251 KSOPHF 0302 - 3B679 Attention: Legal - Corporate Secretary Facsimile: 913-794-0144 If to Publisher: R.H. Donnelley Corporation One Manhattanville Road Purchase, New York 10577 Attention: General Counsel Facsimile: 914-933-6844 or at such other address as any Party may provide to the others by written notice. SECTION 3.5 INDEPENDENT CONTRACTOR. The relationship between the Parties is that of an independent contractor. Each Party will be solely responsible for such Party's employees, including compliance with all employment laws, regulations, and rules and payment of wages, benefits and employment taxes such as Social Security, unemployment, workers compensation and federal and state withholding with respect to such employees. SECTION 3.6 ENTIRE AGREEMENT. The Commercial Agreements constitute the entire understanding and agreement of the Parties concerning the subject matter of this Agreement, and supersede any prior agreements, representations, statements, understandings, proposals, 5 undertakings or negotiations, whether written or oral, with respect to the subject matter expressly set forth in this Agreement. SECTION 3.7 SEVERABILITY. If any term, condition or provision of this Agreement is held to be invalid or unenforceable for any reason, such invalidity will not invalidate the entire Agreement, unless such construction would be unreasonable. This Agreement will be construed as if it did not contain the invalid or unenforceable provision or provisions, and the rights and obligations of each Party will be construed and enforced accordingly, except that in the event such invalid or unenforceable provision or provisions are essential elements of this Agreement and substantially impair the rights or obligations of a Party, the Parties will promptly negotiate in good faith a replacement provision or provisions. SECTION 3.8 COMPLIANCE WITH LAWS/REGULATIONS. Each Party will comply with all federal, state, and local laws, regulations, rules, ordinances and orders relating to the performance of its obligations and the use of services provided under the Agreement, including any rulings, modifications, regulations or orders of the Federal Communications Commission and/or any applicable state utility commission to the extent this Agreement is subject to the jurisdiction of such regulatory authority. SECTION 3.9 FORCE MAJEURE. Neither Party will be liable for any delay or failure in performance of any part of this Agreement caused by a Force Majeure condition, including acts of God, a public enemy or terrorism, fires, floods, freight embargoes, earthquakes, volcanic actions, wars (whether against a nation or otherwise), civil disturbances or other similar causes beyond the reasonable control of the Party claiming excusable delay or other failure to perform (a "Force Majeure"). If any Force Majeure condition occurs, the Party whose performance fails or is delayed because of such Force Majeure condition will give prompt notice to the other Party, will use commercially reasonable efforts to perform in spite of the Force Majeure condition and upon cessation of such Force Majeure condition will give like notice and commence performance under the Agreement as promptly as reasonably practicable. SECTION 3.10 NO THIRD PARTY BENEFICIARIES. This Agreement is intended solely for the benefit of the Parties, and no third-party beneficiaries are created by this Agreement. This Agreement does not provide and should not be construed to provide third parties with any remedy, claim, liability, reimbursement, cause of action or other privilege. SECTION 3.11 BINDING EFFECT. This Agreement will be binding on and inure to the benefit of the Parties, and their respective successors and permitted assigns. SECTION 3.12 WAIVERS. No waiver of any provision of this Agreement, and no consent to any default under this Agreement, will be effective unless the same is in writing and signed by an officer of the Party against whom such waiver or consent is claimed. In addition, no course of dealing or failure of a Party strictly to enforce any term, right or condition of this Agreement will be construed as a waiver of such term, right or condition. Waiver by a Party of any default by any other Party will not be deemed a waiver of any subsequent or other default. 6 SECTION 3.13 HEADINGS. The headings and numbering of sections and paragraphs in this Agreement are for convenience only and will not be construed to define or limit any of the terms in this Agreement or affect the meaning or interpretation of this Agreement. SECTION 3.14 SURVIVAL. Any liabilities or obligations of a Party for acts or omissions occurring prior to the cancellation or termination of this Agreement and any obligations of a Party under any other provisions of this Agreement which, by their terms, are contemplated to survive (or be performed after) termination of this Agreement (subject to any time limitations specified therein) will survive the cancellation or termination of this Agreement. SECTION 3.15 MODIFICATIONS. No amendments, deletions, additions or other modifications to this Agreement will be binding unless evidenced in writing and signed by an officer of each of the respective parties hereto. SECTION 3.16 COUNTERPARTS. This Agreement may be executed in any number of counterparts, and each such counterpart will be deemed to be an original instrument, but all such counterparts together will constitute but one agreement. This Agreement will become effective when one or more counterparts have been signed by each and delivered to the other Parties, it being understood that the Parties need not sign the same counterpart. SECTION 3.17 REMEDIES. The Parties agree that all disputes or controversies arising out of or relating to this Agreement shall be resolved using the procedures set forth in the Directory Services License Agreement, including Sections 17.1, 17.3, 17.4, 17.5 and 17.6, which are incorporated herein by this reference. The provisions of Articles 11 and 13 of the Directory Services License Agreement also shall apply to this Agreement. SECTION 3.18 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES IS GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ITS CONFLICT OF LAWS PRINCIPLES. SECTION 3.19 SPRINT LTD OBLIGATIONS. Each individual entity comprising Sprint LTD under this Agreement will be severally responsible for the obligations of Sprint LTD under this Agreement with respect to the specific Service Areas operated by such entity. Subject to any novation that occurs pursuant to Section 9.1(b) of the Directory Services License Agreement, Sprint Parent will be jointly and severally responsible with each entity comprising Sprint LTD for the obligations of such entity under this Agreement. 7 IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written. PUBLISHER: R.H. DONNELLEY PUBLISHING & ADVERTISING, INC. (f/k/a Sprint CENDON, L.L.C. Publishing & Advertising, Inc.) By: /s/ ROBERT J. BUSH By: /s/ ROBERT J. BUSH ----------------------------- ----------------------------- Name: Robert J. Bush Name: Robert J. Bush Title: Vice President and Secretary Title: Authorized Signatory R.H. DONNELLEY DIRECTORY COMPANY (f/k/a Centel Directory Company) By: /s/ ROBERT J. BUSH ----------------------------- Name: Robert J. Bush Title: Vice President and Secretary SPRINT PARENT: SPRINT CORPORATION By: /s/ CHARLES WUNSCH ----------------------------- Name: Charles Wunsch Title: Assistant Vice President [Subscriber Listings Agreement] SPRINT LTD: SPRINT MINNESOTA, INC. SPRINT - FLORIDA, INCORPORATED By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER --------------------- --------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President CAROLINA TELEPHONE & TELEGRAPH UNITED TELEPHONE - SOUTHEAST, INC. CO. By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER --------------------- --------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President UNITED TELEPHONE COMPANY OF UNITED TELEPHONE COMPANY OF THE CAROLINAS SOUTHCENTRAL KANSAS By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER --------------------- --------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President UNITED TELEPHONE COMPANY UNITED TELEPHONE COMPANY OF OF EASTERN KANSAS KANSAS By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER --------------------- --------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President 9 SPRINT MISSOURI, INC. UNITED TELEPHONE COMPANY OF TEXAS, INC. By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER --------------------- --------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President UNITED TELEPHONE COMPANY OF THE UNITED TELEPHONE COMPANY THE WEST OF PENNSYLVANIA By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER --------------------- --------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President UNITED TELEPHONE COMPANY UNITED TELEPHONE COMPANY OF NEW JERSEY, INC. OF THE NORTHWEST By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER --------------------- --------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President UNITED TELEPHONE COMPANY UNITED TELEPHONE COMPANY OF OF OHIO INDIANA, INC. By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER --------------------- --------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President 10 CENTRAL TELEPHONE COMPANY CENTRAL TELEPHONE COMPANY OF VIRGINIA By: /s/ JOSEPH MEYER By: /s/ JOSEPH MEYER --------------------- --------------------- Name: Joseph Meyer Name: Joseph Meyer Title: Vice President Title: Vice President CENTRAL TELEPHONE COMPANY OF TEXAS By: /s/ JOSEPH MEYER --------------------- Name: Joseph Meyer Title: Vice President 11 EX-10.8 12 y82590exv10w8.txt LETTER AGREEMENT EXHIBIT 10.8 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 January 3, 2003 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 (as amended, 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"), as amended by the Letter Agreement, dated as of November 25, 2002, by and among the Purchasers, the Company and R.H. Donnelley Inc. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement. This letter agreement (this "Second Letter Agreement") will confirm our agreement as follows: 1. Amendments to Purchase Agreement. The Purchase Agreement is hereby amended as follows: 1.1. The following definition is added to Section 1.01 in alphanumeric order: "NEW CREDIT AGREEMENT" shall mean the Credit Agreement, dated as of December 6, 2002, by and among the Company, R.H. Donnelley Inc., as Borrower, R.H. Donnelley Finance Corporation II, as Special Purpose Borrower, the several banks and other financial institutions or entities from time to time parties thereto, as Lenders, Deutsche Bank Securities Inc., Salomon Smith Barney Inc. and Bear, Stearns & Co. Inc., as Lead Arrangers, Bear Stearns Corporate Lending Inc. and Citicorp North America, Inc., as Joint Syndication Agents, BNP Paribas and Fleet National Bank, as Joint Documentation Agents, and Deutsche Bank Trust Company Americas, as Administrative Agent. 1.2. Section 4.04(d) is hereby amended by replacing it in its entirety with the following: (d) incur, create, guarantee, become or be liable in any manner with respect to or permit to exist (other than pursuant to the Other Transactions Documents) any Indebtedness (as such term is defined in the New Credit Agreement) if the Consolidated Leverage Ratio (as such term is defined in the New Credit Agreement), 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; 2. Allocations. Pursuant to Section 2.05 of the Purchase Agreement, the parties agree that the Purchase Price will be allocated 91.9233% to the 130,000 Preferred Shares purchased by the Purchasers at the Closing and 8.0767% to the 1,075,000 Warrants purchased by the Purchasers at the Closing. 3. No Other Amendments. Except as set forth in this Second Letter Agreement, all provisions of the Purchase Agreement shall remain unchanged and in full force and effect. 4. Miscellaneous. 4.1. This Second 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. 4.2. 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 Second Letter Agreement and, by execution and delivery of this Second Letter Agreement, each of the parties to this Second Letter 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 of the Purchase Agreement) or any other manner permitted by law, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Second Letter Agreement. 4.3. No amendment, modification or alteration of the terms or provisions of this Second 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 Second Letter Agreement may be waived in writing at any time by the parties entitled to the benefits of such waived terms or provisions. 2 4.4. This Second 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. 4.5. Nothing contained in this Second 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. [Signatures are on the following pages.] 3 Please confirm your agreement with the foregoing by signing and returning one copy of this Second Letter Agreement to the undersigned, whereupon this Second 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 S-1 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 S-2 Accepted and agreed as of the date first written above: R.H. DONNELLEY CORPORATION By: Robert J. Bush --------------------- Name: Robert J. Bush Title: Vice President R.H. DONNELLEY INC. By: Robert J. Bush --------------------- Name: Robert J. Bush Title: Vice President S-3 EX-10.10 13 y82590exv10w10.txt CREDIT AGREEMENT EXHIBIT 10.10 EXECUTION COPY - -------------------------------------------------------------------------------- $1,525,000,000 CREDIT AGREEMENT among R.H. DONNELLEY CORPORATION, R.H. DONNELLEY INC., as Borrower, R.H. DONNELLEY FINANCE CORPORATION II, as Special Purpose Borrower, The Several Lenders from Time to Time Parties Hereto, BEAR STEARNS CORPORATE LENDING INC., and CITICORP NORTH AMERICA, INC., as Joint Syndication Agents, BNP PARIBAS and FLEET NATIONAL BANK, as Joint Documentation Agents, and DEUTSCHE BANK TRUST COMPANY AMERICAS, as Administrative Agent Dated as of December 6, 2002 ------------------------------------------------------------------------------ DEUTSCHE BANK SECURITIES INC., SALOMON SMITH BARNEY INC. and BEAR, STEARNS & CO. INC., as Joint Lead Arrangers and Joint Bookrunners TABLE OF CONTENTS
Page ---- SECTION 1. DEFINITIONS................................................................................ 2 1.1. Defined Terms.............................................................................. 2 1.2. Other Definitional Provisions.............................................................. 29 SECTION 2. AMOUNT AND TERMS OF TERM COMMITMENTS....................................................... 30 2.1. Term Commitments........................................................................... 30 2.2. Procedure for Tranche B Term Loan Borrowing................................................ 30 2.3. Procedure for Tranche A Term Loan Borrowing................................................ 31 2.4. Repayment of Term Loans.................................................................... 31 2.5. Commitment Fees............................................................................ 33 2.6. Termination or Reduction of Unused Tranche A Commitments................................... 34 SECTION 3. AMOUNT AND TERMS OF REVOLVING COMMITMENTS.................................................. 34 3.1. Revolving Commitments...................................................................... 34 3.2. Procedure for Revolving Loan Borrowing..................................................... 34 3.3. Swingline Commitment....................................................................... 35 3.4. Procedure for Swingline Borrowing; Refunding of Swingline Loans............................ 35 3.5. Commitment and Other Fees.................................................................. 37 3.6. Termination or Reduction of Revolving Commitments.......................................... 37 3.7 L/C Commitment............................................................................. 37 3.8 Procedure for Issuance of Letter of Credit................................................. 38 3.9 Fees and Other Charges..................................................................... 38 3.10 L/C Participations......................................................................... 38 3.11 Reimbursement Obligation of the Borrower................................................... 39 3.12 Obligations Absolute....................................................................... 40 3.13 Letter of Credit Payments.................................................................. 40 3.14 Letter of Credit Requests.................................................................. 40 SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT............................... 40 4.1. Optional Prepayments....................................................................... 40 4.2. Mandatory Prepayments and Commitment Reductions............................................ 41 4.3. Conversion and Continuation Options........................................................ 44 4.4. Limitations on Eurodollar Tranches......................................................... 45 4.5. Interest Rates and Payment Dates........................................................... 45 4.6. Computation of Interest and Fees........................................................... 45 4.7. Inability to Determine Interest Rate....................................................... 46 4.8. Pro Rata Treatment and Payments............................................................ 46 4.9. Requirements of Law........................................................................ 48 4.10. Taxes...................................................................................... 49
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Page ---- 4.11. Indemnity.................................................................................. 51 4.12. Change of Lending Office................................................................... 51 4.13. Replacement of Lenders..................................................................... 52 4.14. Evidence of Debt........................................................................... 52 4.15. Illegality................................................................................. 53 SECTION 5. REPRESENTATIONS AND WARRANTIES............................................................. 53 5.1. Financial Condition........................................................................ 53 5.2. No Change.................................................................................. 54 5.3. Corporate Existence; Compliance with Law................................................... 54 5.4. Power; Authorization; Enforceable Obligations.............................................. 55 5.5. No Legal Bar............................................................................... 55 5.6. Litigation................................................................................. 55 5.7. No Default................................................................................. 55 5.8. Ownership of Property; Liens............................................................... 56 5.9. Intellectual Property...................................................................... 56 5.10. Taxes...................................................................................... 56 5.11. Federal Regulations........................................................................ 56 5.12. ERISA...................................................................................... 56 5.13. Investment Company Act; Other Regulations.................................................. 57 5.14. Subsidiaries and Joint Ventures............................................................ 57 5.15. Use of Proceeds............................................................................ 57 5.16. Environmental Matters...................................................................... 58 5.17. Accuracy of Information, etc............................................................... 58 5.18. Security Documents......................................................................... 59 5.19. Solvency................................................................................... 60 5.20. Senior Debt................................................................................ 60 5.21. Regulation H............................................................................... 60 5.22. Certain Documents.......................................................................... 60 SECTION 6. CONDITIONS PRECEDENT....................................................................... 60 6.1. Conditions to Effectiveness of Agreement and Initial Escrowed Extension of Credit.......... 60 6.2. Conditions to Initial Extensions of Credit under the Tranche A Term Facility and the Revolving Facility and Release of the Tranche B Term Loans from Escrow................... 63 6.3. Conditions to Final Acquisition Closing Date............................................... 68 6.4. Conditions to Each Extension of Credit..................................................... 70 SECTION 7. AFFIRMATIVE COVENANTS...................................................................... 70 7.1. Financial Statements....................................................................... 70 7.2. Certificates; Other Information............................................................ 71 7.3. Payment of Obligations..................................................................... 73 7.4. Maintenance of Existence; Compliance....................................................... 73
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Page ---- 7.5. Maintenance of Property; Insurance......................................................... 73 7.6. Inspection of Property; Books and Records; Discussions..................................... 73 7.7. Notices.................................................................................... 74 7.8. Environmental Laws......................................................................... 74 7.9. Interest Rate Protection................................................................... 75 7.10. Additional Collateral, etc................................................................. 75 7.11. Further Assurances......................................................................... 77 SECTION 8. NEGATIVE COVENANTS......................................................................... 77 8.1. Financial Condition Covenants.............................................................. 77 8.2. Indebtedness............................................................................... 82 8.3. Liens...................................................................................... 85 8.4. Fundamental Changes........................................................................ 88 8.5. Disposition of Property.................................................................... 89 8.6. Restricted Payments........................................................................ 89 8.7. Capital Expenditures....................................................................... 91 8.8. Investments................................................................................ 91 8.9. Optional Payments and Modifications of Certain Debt Instruments............................ 93 8.10. Transactions with Affiliates............................................................... 94 8.11. Sales and Leasebacks....................................................................... 94 8.12. Hedge Agreements........................................................................... 95 8.13. Changes in Fiscal Periods.................................................................. 95 8.14. Negative Pledge Clauses.................................................................... 95 8.15. Clauses Restricting Subsidiary Distributions............................................... 95 8.16. Lines of Business.......................................................................... 96 8.17. Amendments to Acquisition Documents........................................................ 96 8.18. Amendments to Material Agreements; Other Agreements........................................ 96 SECTION 9. EVENTS OF DEFAULT.......................................................................... 96 SECTION 10. THE AGENTS................................................................................. 101 10.1. Appointment................................................................................ 101 10.2. Delegation of Duties....................................................................... 101 10.3. Exculpatory Provisions..................................................................... 101 10.4. Reliance by Agents......................................................................... 102 10.5. Notice of Default.......................................................................... 102 10.6. Non-Reliance on Agents and Other Lenders................................................... 102 10.7. Indemnification............................................................................ 103 10.8. Agent in Its Individual Capacity........................................................... 103 10.9. Successor Administrative Agent............................................................. 103 10.10. Agents Generally........................................................................... 104 10.11. The Lead Arrangers......................................................................... 104
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Page ---- SECTION 11. MISCELLANEOUS.............................................................................. 104 11.1. Amendments and Waivers..................................................................... 104 11.2. Notices.................................................................................... 106 11.3. No Waiver; Cumulative Remedies............................................................. 107 11.4. Survival of Representations and Warranties................................................. 107 11.5. Payment of Expenses and Taxes.............................................................. 107 11.6. Successors and Assigns; Participations and Assignments..................................... 108 11.7. Adjustments; Set-off....................................................................... 111 11.8. Counterparts............................................................................... 112 11.9. Severability............................................................................... 112 11.10. Integration................................................................................ 112 11.11. GOVERNING LAW.............................................................................. 112 11.12. Submission To Jurisdiction; Waivers........................................................ 112 11.13. Acknowledgments............................................................................ 113 11.14. Releases of Guarantees and Liens........................................................... 113 11.15. Confidentiality............................................................................ 114 11.16. WAIVERS OF JURY TRIAL...................................................................... 114 11.17. Delivery of Addenda........................................................................ 114 11.18. Termination................................................................................ 114
ANNEX: A Pricing Grid
SCHEDULES: - ---------- 1.1 Mortgaged Property 5.4 Consents, Authorizations, Filings and Notices 5.6 Litigation 5.14 Subsidiaries 5.18(a) UCC Filing Jurisdictions 5.18(b) Mortgage Filing Jurisdictions 7.6 Agreements Containing Confidentiality Provisions 8.2(a)(iv) Existing Indebtedness 8.2(b)(i) Existing Indebtedness 8.3(a)(vi) Existing Liens 8.3(b)(vi) Existing Liens 8.14 Existing Negative Pledge Clauses 8.15 Existing Subsidiary Distribution Restrictions
EXHIBITS: - --------- A Form of Guarantee and Collateral Agreement B Form of Compliance Certificate
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Page ---- C Form of Closing Certificate D Form of Mortgage E Form of Assignment and Assumption F-1 Form of Legal Opinion of Jones, Day, Reavis & Pogue F-2 Form of Legal Opinion of Robert J. Bush, Esq. G Form of Prepayment Option Notice H Form of Exemption Certificate I-1 Form of Term Note I-2 Form of Revolving Note I-3 Form Swingline Note J Form of Addendum K Form of Escrow Agreement L Form of Securities Account Control Agreement M Form of Lien Subordination Agreement N Form of Letter of Credit Request
v CREDIT AGREEMENT, dated as of December 6, 2002, among R.H DONNELLEY CORPORATION, a Delaware corporation ("Holdings"), R.H. DONNELLEY INC., a Delaware corporation and a wholly owned subsidiary of Holdings ("RHDonnelley" or the "Borrower"), R.H. DONNELLEY FINANCE CORPORATION II, a Delaware corporation (the "Special Purpose Borrower"), the several banks and other financial institutions or entities from time to time parties to this Agreement (the "Lenders"), DEUTSCHE BANK SECURITIES INC., SALOMON SMITH BARNEY INC. and BEAR, STEARNS & CO. INC., as joint lead arrangers and joint bookrunners (in such capacity, the "Lead Arrangers"), BEAR STEARNS CORPORATE LENDING INC. and CITICORP NORTH AMERICA, INC., as joint syndication agents (in such capacity, the "Syndication Agents"), BNP PARIBAS and FLEET NATIONAL BANK, as joint documentation agents (in such capacity, the "Documentation Agents"), and DEUTSCHE BANK TRUST COMPANY AMERICAS, as administrative agent (in such capacity, the "Administrative Agent"). Recitals WHEREAS, Holdings has entered into a Stock Purchase Agreement, dated as of September 21, 2002 (the "Acquisition Agreement"), by and among Sprint Corporation ("Sprint"), Centel Directories LLC ("Centel", and together with Sprint, the "Sellers") and Holdings, pursuant to which the Borrower will acquire (the "Acquisition") all of the issued and outstanding Capital Stock (as defined below) of Directories Americas Inc. and Centel Directory Company (together with their subsidiaries, the "Acquired Business") for a purchase price of $2,230,000,000 (subject to adjustment as described therein); WHEREAS, Holdings and the Borrower intend to finance the Acquisition and the related fees, expenses and debt repayment premiums from the following sources: (a) Holdings has issued or will issue convertible preferred stock (the "Preferred Stock") to Goldman Sachs Capital Partners 2000, L.P. and its affiliated entities (collectively, "Goldman Sachs") or assignees of Goldman Sachs for net proceeds of not less than $198,000,000 in one or more transactions and will contribute to the Borrower in cash as common equity the full amount of such net proceeds (the "Equity Investment"); (b) the Borrower will obtain new senior secured credit facilities in an aggregate principal amount of $1,525,000,000 pursuant to this Agreement (the "Senior Facilities"); (c) the Borrower has issued senior unsecured notes (the "Senior Unsecured Notes") in aggregate principal amount of $325,000,000 and senior subordinated notes (the "Senior Subordinated Notes" and, together with the Senior Unsecured Notes, the "Notes") in aggregate principal amount equal to $600,000,000 (the Notes were issued by R.H. Donnelley Finance Corporation I, a special purpose subsidiary of the Borrower (the "Special Purpose Issuer") as described below and will subsequently be assumed by the Borrower upon consummation of the Acquisition); WHEREAS, in connection with the Acquisition, Holdings and the Borrower will (a) repay all of their outstanding indebtedness under the Credit Agreement, dated as of June 5, 1998 (the "Existing Credit Agreement"), among Holdings, the Borrower, the lenders party thereto and JPMorgan Chase Bank, as administrative agent (in such capacity, the "Existing Administrative Agent"); (b) repurchase any of the Borrower's outstanding 91/8% Senior Subordinated Notes due 2008 (the "Existing Subordinated Notes") validly tendered and not otherwise withdrawn pursuant to the tender offer and exit consent solicitation made by the 2 Borrower offering to repurchase such Existing Subordinated Notes, provided that at least a majority in aggregate principal amount of the outstanding Existing Subordinated Notes are tendered (the "Tender Offer"); and (c) pay approximately $14,000,000 in termination payments related to certain contracts with Sprint and its affiliates (clauses (a), (b) and (c) together, the "Refinancing"); WHEREAS, after giving effect to the Acquisition, 100% of the issued and outstanding Capital Stock of the Acquired Business will be owned by the Borrower and 100% of the issued and outstanding Capital Stock of the Borrower will be owned by Holdings; WHEREAS, Holdings and the Borrower have requested that the Lenders enter into this Agreement to provide the Senior Facilities to finance, in part, the Acquisition and the Refinancing, and to pay related fees, expenses and debt repayment premiums; WHEREAS, in order to facilitate the availability of the Senior Facilities to finance the Acquisition, Holdings and the Borrower (a) have caused the Special Purpose Issuer to issue the Notes and to place the proceeds thereof in escrow pursuant to two escrow agreements (the "Notes Escrow") pending consummation of the Acquisition (up to $150,000,000 in proceeds from the issuance of the Senior Subordinated Notes shall be used to refinance Existing Subordinated Notes pursuant to the Tender Offer, with any such proceeds that are not so used being used (i) in the event no Existing Subordinated Notes are purchased pursuant to the Tender Offer (because there shall not have been validly tendered and not withdrawn at least a majority in aggregate principal amount of the Existing Subordinated Notes), to redeem Senior Subordinated Notes or (ii) in the event that at least a majority in aggregate principal amount of the Existing Subordinated Notes are purchased pursuant to the Tender Offer, to prepay Loans under the Senior Facilities as hereinafter provided in this Agreement) and (b) have requested that the Lenders enter into this Agreement prior to the closing of the Acquisition and to fund into escrow a portion of the Senior Facilities as described herein (such escrowed funds will be returned to the relevant Lenders in the event that the Acquisition does not close within the period specified herein); and WHEREAS, the Lenders are willing to provide the Senior Facilities on the terms and conditions set forth herein. Now, therefore, the parties hereto hereby agree as follows: SECTION 1. DEFINITIONS 1.1. Defined Terms. As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1. "Acquired Business": as defined in the recitals to this Agreement; provided that, in the event that the Excluded Business is not sold to the Borrower on the Acquisition Closing Date pursuant to Section 1.8 of the Acquisition Agreement, the "Acquired Business" shall refer only to those Companies actually sold by the Sellers on the Acquisition Closing Date until such time, if any, as the Final Acquisition Closing Date shall have occurred and the Excluded Business (or any portion thereof) shall have been sold to the Borrower pursuant to Section 1.8 of the Acquisition Agreement. 3 "Acquisition": as defined in the recitals to this Agreement. "Acquisition Agreement": as defined in the recitals to this Agreement. "Acquisition Closing Date": the date on which the conditions precedent set forth in Section 6.2 shall have been satisfied. "Acquisition Closing Date Mortgaged Properties": as defined in Section 6.2(l). "Acquisition Documentation": collectively, the Acquisition Agreement and all schedules, exhibits and annexes thereto and all side letters and agreements affecting the terms thereof or entered into in connection therewith. "Addendum:": an instrument, substantially in the form of Exhibit J, by which a Lender becomes a party to this Agreement as of the Initial Closing Date. "Additional High Yield Debt": any Indebtedness of the Borrower having substantially the same terms and conditions as the Senior Subordinated Notes (but in no event with an earlier maturity) and any Guarantee Obligations of any Subsidiary Guarantor or Holdings in respect of such Indebtedness; provided that such Guarantee Obligations are subordinated to the same extent as the obligations of the Borrower in respect of the Senior Subordinated Notes. "Additional High Yield Debt Documents": the agreements pursuant to which any Additional High Yield Debt is issued. "Adjustment Date": as defined in the Pricing Grid. "Administrative Agent": as defined in the recitals to this Agreement. "Affiliate": as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or Persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. "Agents": the collective reference to the Syndication Agents, the Lead Arrangers, the Administrative Agent and, solely for purposes of Sections 4.10, 10, 11.1 and 11.16, the Documentation Agent. "Aggregate Exposure": with respect to any Lender at any time, an amount equal to (a) until the Initial Closing Date, the aggregate amount of such Lender's Commitments at such time and (b) thereafter, the sum of (i) the aggregate then unpaid principal amount of such Lender's Term Loans, (ii) the amount of such Lender's then unused Tranche A Term Commitment, if any, and (iii) the amount of such Lender's Revolving Commitment then in effect or, if the Revolving Commitments have been terminated, the amount of such Lender's Revolving Extensions of Credit then outstanding. 4 "Aggregate Exposure Percentage": with respect to any Lender at any time, the ratio (expressed as a percentage) of such Lender's Aggregate Exposure at such time to the Aggregate Exposure of all Lenders at such time. "Agreement": this Credit Agreement. "Applicable Margin": for each Type of Loan, the rate per annum set forth below:
Eurodollar Loans Base Rate Loans ---------------- --------------- Revolving Loans and Swingline Loans 3.50% 2.50% Tranche A Term Loans 3.50% 2.50% Tranche B Term Loans 4.00% 3.00%
; provided, that, on and after the first Adjustment Date (as defined in the Pricing Grid) occurring after the completion of two full fiscal quarters of Holdings after the Acquisition Closing Date, the Applicable Margin with respect to Revolving Loans, Swingline Loans and Tranche A Term Loans will be determined pursuant to the Pricing Grid. "Asset Sale": any Disposition of property or series of related Dispositions of property (excluding any such Disposition permitted by clause Section 8.5 (other than clause (j) thereof)) that yields gross proceeds to any Group Member (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds) in excess of $1,000,000. "Assignee": as defined in Section 11.6(b). "Assignment and Assumption": an Assignment and Assumption, substantially in the form of Exhibit E. "Available Revolving Commitment": as to any Revolving Lender at any time, an amount equal to the excess, if any, of (a) such Lender's Revolving Commitment then in effect over (b) such Lender's Revolving Extensions of Credit then outstanding; provided that, in calculating any Lender's Revolving Extensions of Credit for the purpose of determining such Lender's Available Revolving Commitment pursuant to Section 3.5, the aggregate principal amount of Swingline Loans then outstanding shall be deemed to be zero. "Base Rate": for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 0.50%. For purposes hereof: "Prime Rate" shall mean the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City (the Prime Rate not being intended to be the lowest rate of interest charged by the Administrative Agent in connection with extensions of credit to debtors). Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective as of the opening 5 of business on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. "Base Rate Loans": Loans the rate of interest applicable to which is based upon the Base Rate. "Benefitted Lender": as defined in Section 11.7(a). "Board": the Board of Governors of the Federal Reserve System of the United States (or any successor). "Borrower": as defined in the preamble to this Agreement. "Borrowing Date": any Business Day specified by the Borrower as a date on which the Borrower requests the relevant Lenders to make Loans hereunder. "Business": as defined in Section 5.16(b). "Business Day": a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close, provided, that with respect to notices and determinations in connection with, and payments of principal and interest on, Eurodollar Loans, such day is also a day for trading by and between banks in Dollar deposits in the interbank eurodollar market. "Capital Lease Obligations": as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP. "Capital Stock": any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing. "Code": the Internal Revenue Code of 1986, as amended from time to time. "Collateral": all property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document. "Commitment": as to any Lender, the sum of the Tranche A Term Commitment, the Tranche B Term Commitment and the Revolving Commitment of such Lender. "Commitment Fee Rate": (a) in respect of the Revolving Facility, 0.50% per annum, and (b) in respect of the Tranche A Term Facility at any time, 50% of the Applicable Margin then in effect in respect of Eurodollar Loans under such Facility. 6 "Commonly Controlled Entity": an entity, whether or not incorporated, that is under common control with the Borrower within the meaning of Section 4001(14) of ERISA or is part of a group that includes the Borrower and that is treated as a single employer under Section 414 of the Code. "Companies": as defined in the Acquisition Agreement. "Compliance Certificate": a certificate duly executed by a Responsible Officer substantially in the form of Exhibit B. "Conduit Lender": any special purpose entity organized and administered by any Lender for the purpose of making Loans otherwise required to be made by such Lender and designated by such Lender in a written instrument, subject to the consent of the Administrative Agent and the Borrower (which consent shall not be unreasonably withheld); provided, that the designation by any Lender of a Conduit Lender shall not relieve the designating Lender of any of its obligations to fund a Loan under this Agreement if, for any reason, its Conduit Lender fails to fund any such Loan, and the designating Lender (and not the Conduit Lender) shall have the sole right and responsibility to deliver all consents and waivers required or requested under this Agreement with respect to its Conduit Lender, and provided, further, that no Conduit Lender shall (a) be entitled to receive any greater amount pursuant to Section 4.9, 4.10, 4.11 or 11.5 than the designating Lender would have been entitled to receive in respect of the extensions of credit made by such Conduit Lender or (b) be deemed to have any Commitment. "Confidential Information Memoranda": the Confidential Information Memoranda furnished to the Lenders. "Consolidated Capital Expenditures": for any period, with respect to Holdings, the aggregate of all expenditures by Holdings and its Subsidiaries for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) that should be capitalized under GAAP on a consolidated balance sheet of Holdings and its Subsidiaries. "Consolidated Current Assets": at any date, all amounts (other than cash and Permitted Investments) that would, in conformity with GAAP, be set forth opposite the caption "total current assets" (or any like caption) on a consolidated balance sheet of Holdings and its Subsidiaries at such date. "Consolidated Current Liabilities": at any date, all amounts that would, in conformity with GAAP, be set forth opposite the caption "total current liabilities" (or any like caption) on a consolidated balance sheet of Holdings and its Subsidiaries at such date, but excluding (a) the current portion of any Funded Debt of Holdings and its Subsidiaries and (b) without duplication of clause (a) above, all Indebtedness consisting of Revolving Loans or Swingline Loans to the extent otherwise included therein. "Consolidated EBITDA": for any period, Consolidated Net Income for such period plus, without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, 7 discounts and other fees and charges associated with Indebtedness (including the Loans), (c) depreciation and amortization expense, (d) any extraordinary charges or losses determined in accordance with GAAP, (e) non-cash compensation expenses arising from the issuance of stock, options to purchase stock and stock appreciation rights to the management of Holdings and (f) any other non-cash charges (including charges against goodwill), non-cash expenses or non-cash losses of Holdings or any of its Subsidiaries for such period (excluding any such charge, expense or loss incurred in the ordinary course of business that constitutes an accrual of or a reserve for cash charges for any future period), provided, however, that cash payments made in such period or in any future period in respect of such non-cash charges, expenses or losses (excluding any such charge, expense or loss incurred in the ordinary course of business that constitutes an accrual of or a reserve for cash charges for any future period) shall be subtracted from Consolidated Net Income in calculating Consolidated EBITDA in the period when such payments are made, and minus, to the extent included in the statement of such Consolidated Net Income for such period, the sum of (a) interest income, (b) any extraordinary income or gains determined in accordance with GAAP and (c) any other non-cash income (excluding any items that represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period that are described in the parenthetical to clause (f) above), all as determined on a consolidated basis, provided that, for purposes of Section 8.1 and with respect to any period ending prior to December 31, 2003, Consolidated EBITDA shall be calculated on a pro forma basis giving effect to the adjustments described in Section 6.1(p) as if they occurred on the first day of the relevant period and consistent with the calculation of Consolidated EBITDA for purposes of Section 6.1(p). For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a "Reference Period") pursuant to any determination of the Consolidated Leverage Ratio, (i) if at any time during such Reference Period Holdings or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period and (ii) if during such Reference Period Holdings or any Subsidiary shall have made a Material Acquisition (other than the Acquisition), Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period. As used in this definition, "Material Acquisition" means any acquisition of property or series of related acquisitions of property that (a) constitutes assets comprising all or substantially all of an operating unit of a business or constitutes all or substantially all of the common stock of a Person and (b) would have increased or decreased Consolidated EBITDA for the most recent period of four consecutive fiscal quarters for which financial statements are available by more than $1,000,000; and "Material Disposition" means any Disposition of property or series of related Dispositions of property that contributed more than $1,000,000 to Consolidated EBITDA for the most recent period of four consecutive fiscal quarters for which financial statements are available. "Consolidated Fixed Charge Coverage Ratio": for any period, the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Fixed Charges for such period. "Consolidated Fixed Charges": for any period, the sum (without duplication) of (a) Consolidated Interest Expense for such period plus (b) Consolidated Capital Expenditures for 8 such period plus (c) cash income tax expense of Holdings and its Subsidiaries for such period plus (d) dividends paid in cash (without duplication) by Holdings during such period plus (e) the aggregate principal amount of long term Indebtedness of Holdings and its Subsidiaries scheduled to be amortized during such period (without giving effect to any prepayments). "Consolidated Interest Coverage Ratio": for any period, the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for such period. "Consolidated Interest Expense": for any period, total cash interest expense (including that attributable to Capital Lease Obligations) of Holdings and its Subsidiaries for such period with respect to all outstanding Indebtedness of Holdings and its Subsidiaries (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing and net costs under Hedge Agreements in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP). "Consolidated Leverage Ratio": at any time, the ratio of (a) Consolidated Total Debt at such time to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters ended on the last day of the most recently completed fiscal quarter for which financial statements have been delivered pursuant to Section 7.1. "Consolidated Net Income": for any period, the consolidated net income (or loss) of Holdings and its Subsidiaries, determined on a consolidated basis in accordance with GAAP but in any event prior to the payment or accrual of dividends on the Preferred Stock and any non-cash adjustments to net income or loss in respect of the Preferred Stock in accordance with GAAP; provided that there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of Holdings or is merged into or consolidated with Holdings or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary of Holdings) in which Holdings or any of its Subsidiaries has an ownership interest (including the portion of Consolidated Net Income allocable to minority interests in unconsolidated Persons (including the Material Joint Venture) to the extent that cash distributions have not actually been received from such Persons), except to the extent that any such income is actually received by Holdings or such Subsidiary in the form of dividends or similar distributions, (c) the undistributed earnings of any Subsidiary of Holdings to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than under any Loan Document) or Requirement of Law applicable to such Subsidiary, (d) all non-cash accounting adjustments attributable to the application of purchase method accounting of the Acquisition in accordance with GAAP and (e) any non-cash impact of the reduction in deferred revenue as a result of the fair value exercise undertaken as required by the purchase method of accounting for the transactions contemplated by the Acquisition Agreement in accordance with GAAP during the twelve consecutive months following the consummation of the Acquisition. "Consolidated Senior Secured Debt": all Consolidated Total Debt that is secured by a Lien on any assets of Holdings or its Subsidiaries. "Consolidated Senior Secured Leverage Ratio": at any time, the ratio of (a) Consolidated Senior Secured Debt at such time to (b) Consolidated EBITDA for the period of 9 four consecutive fiscal quarters ended on the last day of the most recently completed fiscal quarter for which financial statements have been delivered pursuant to Section 7.1. "Consolidated Total Debt": at any date, the sum of, without duplication, (a) the aggregate principal amount of all Indebtedness of Holdings and its Subsidiaries at such date, determined on a consolidated basis in accordance with GAAP, and (b) the aggregate principal amount of all Indebtedness of the Material Joint Venture at such date. "Consolidated Working Capital": at any date, Consolidated Current Assets on such date minus Consolidated Current Liabilities on such date (which shall be positive if Consolidated Current Assets are greater than Consolidated Current Liabilities and negative if Consolidated Current Assets are less than Consolidated Current Liabilities). "Continuing Directors": the directors of Holdings on the Initial Closing Date, and each other director, if, in each case, such other director's nomination for election to the board of directors of Holdings is recommended by at least 66-2/3% of the then Continuing Directors. "Contractual Obligation": as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. "Default": any of the events specified in Section 9, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied. "Disposition": with respect to any property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof. The terms "Dispose" and "Disposed of" shall have correlative meanings. "Documentation Agents": as defined in the preamble to this Agreement. "Dollars" and "$": dollars in lawful currency of the United States. "Domestic Subsidiary": any Subsidiary of the Borrower organized under the laws of any jurisdiction within the United States. "DonTech II": DonTech II, an Illinois partnership, and its successors. "ECF Percentage": 50%. "Environment": any indoor or outdoor surface, soil, surface waters, groundwaters, land, sediments, surface or subsurface strata, ambient air and any other environment medium or occupied space. "Environmental Laws": any and all foreign, federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health, natural resources or the Environment, as now or may at any time hereafter be in effect. 10 "Equity Investment": as defined in the recitals to this Agreement. "ERISA": the Employee Retirement Income Security Act of 1974, as amended from time to time. "Escrow Account": the account entitled "R.H. Donnelley Finance Corporation II Senior Secured Credit Facility Escrow Account" established by Deutsche Bank Trust Company Americas, as securities intermediary, pursuant to Section 2(b)(i) of the Escrow Agreement. "Escrow Agreement": the Escrow Agreement, to be executed by the Special Purpose Borrower, RHDonnelley, the Administrative Agent, the Securities Intermediary and the Existing Administrative Agent, substantially in the form of Exhibit K. "Escrow Period": the period from and including the Initial Closing Date to and including the Acquisition Closing Date. "Eurocurrency Reserve Requirements": for any day as applied to a Eurodollar Loan, the aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including basic, supplemental, marginal and emergency reserves under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto) dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board) maintained by a member bank of the Federal Reserve System. "Eurodollar Base Rate": with respect to each day during each Interest Period pertaining to a Eurodollar Loan, the rate per annum determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period. In the event that such rate does not appear on Page 3750 of the Telerate screen (or otherwise on such screen), the "Eurodollar Base Rate" shall be determined by reference to such other comparable publicly available service for displaying eurodollar rates as may be selected by the Administrative Agent or, in the absence of such availability, by reference to the rate at which the Administrative Agent is offered Dollar deposits at or about 10:00 A.M., New York City time, two Business Days prior to the beginning of such Interest Period in the interbank eurodollar market where its eurodollar and foreign currency and exchange operations are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein. "Eurodollar Loans": Loans the rate of interest applicable to which is based upon the Eurodollar Rate. "Eurodollar Rate": with respect to each day during each Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%): Eurodollar Base Rate ------------------------------------ 1.00 - Eurocurrency Reserve Requirements 11 "Eurodollar Tranche": the collective reference to Eurodollar Loans under a particular Facility the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day). "Event of Default": any of the events specified in Section 9, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied. "Excess Cash Flow": for any fiscal year of Holdings, the excess, if any, of (a) the sum, without duplication, of (i) Consolidated Net Income for such fiscal year, (ii) the amount of all non-cash charges (including depreciation, amortization and non-cash taxes) deducted in arriving at such Consolidated Net Income, (iii) decreases in Consolidated Working Capital for such fiscal year, and (iv) the aggregate net amount of non-cash loss on the Disposition of property by Holdings and its Subsidiaries during such fiscal year, to the extent deducted in arriving at such Consolidated Net Income over (b) the sum, without duplication, of (i) the amount of all non-cash credits included in arriving at such Consolidated Net Income, (ii) the aggregate amount actually paid by Holdings and its Subsidiaries in cash during such fiscal year on account of Consolidated Capital Expenditures (excluding the principal amount of Indebtedness incurred to finance such expenditures and any such expenditures financed with the proceeds of any Reinvestment Deferred Amount), (iii) the aggregate amount of all prepayments of Revolving Loans and Swingline Loans during such fiscal year to the extent accompanying permanent optional reductions of the Revolving Commitments and all optional prepayments of the Term Loans during such fiscal year, (iv) the aggregate amount of all regularly scheduled principal payments of Funded Debt (including the Term Loans) of Holdings and its Subsidiaries made during such fiscal year (other than in respect of any revolving credit facility to the extent there is not an equivalent permanent reduction in commitments thereunder), (v) increases in Consolidated Working Capital for such fiscal year, and (vi) the aggregate net amount of non-cash gain on the Disposition of property by Holdings and its Subsidiaries during such fiscal year (other than sales of inventory in the ordinary course of business), to the extent included in arriving at such Consolidated Net Income. "Excess Cash Flow Application Date": as defined in Section 4.2(d). "Excluded Business": as defined in Section 1.8 of the Acquisition Agreement. "Excluded Business Acquisition": as defined in Section 6.3. "Excluded Business Subsidiaries": as defined in Section 6.2(b). "Excluded Indebtedness": all Indebtedness permitted by Section 8.2(a), other than Indebtedness permitted by clause (xv) thereof. "Existing Administrative Agent": as defined in the recitals to this Agreement. "Existing Credit Agreement": as defined in the recitals to this Agreement. "Existing Subordinated Notes": as defined in the recitals to this Agreement. 12 "Existing Subordinated Debt Documents": the Indenture, dated as of June 5, 1998, under which the Existing Subordinated Notes were issued and all other instruments, agreements and other documents evidencing or governing the Existing Subordinated Notes. "Facility": each of (a) the Tranche A Term Commitments and the Tranche A Term Loans made thereunder (the "Tranche A Term Facility"), (b) the Tranche B Term Commitments and the Tranche B Term Loans made thereunder (the "Tranche B Term Facility"), and (c) the Revolving Commitments and the extensions of credit made thereunder (the "Revolving Facility"). "Federal Funds Effective Rate": for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. "Fee Payment Date": the third Business Day following the last day of each March, June, September and December and (b) the last day of the Revolving Commitment Period. "Final Acquisition Closing Date": the date on which the Second Closing shall occur and on which the conditions precedent set forth in Section 6.3 shall have been satisfied. "Foreign Subsidiary": any Subsidiary of the Borrower that is not a Domestic Subsidiary. "Funded Debt": as to any Person, all Indebtedness of such Person that matures more than one year from the date of its creation or matures within one year from such date but is renewable or extendible, at the option of such Person, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, including all current maturities and current sinking fund payments in respect of such Indebtedness whether or not required to be paid within one year from the date of its creation and, in the case of the Borrower, Indebtedness in respect of the Loans. "Funding Office": the office of the Administrative Agent specified in Section 11.2 or such other office as may be specified from time to time by the Administrative Agent as its funding office by written notice to the Borrower and the Lenders. "GAAP": generally accepted accounting principles in the United States as in effect from time to time. In the event that any Accounting Change (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then Holdings and the Administrative Agent agree to negotiate in good faith in order to amend such provisions of this Agreement so as to equitably reflect such Accounting Changes with the desired result that the criteria for evaluating Holdings' financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made. Until such time as such an amendment shall have been executed 13 and delivered by Holdings, the Administrative Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred. "Accounting Changes" refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC. "Goldman Hedge Agreement": the Hedge Agreement dated June 18, 1998 entered into with Goldman Sachs, as in effect on the date hereof. "Goldman Sachs": as defined in the recitals to this Agreement. "Governmental Authority": any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization (including the National Association of Insurance Commissioners). "Group Members": the collective reference to Holdings, the Borrower and their respective Subsidiaries. "Guarantee and Collateral Agreement": the Guarantee and Collateral Agreement to be executed and delivered by Holdings, the Borrower and each Subsidiary Guarantor, substantially in the form of Exhibit A. "Guarantee Obligation": as to any Person (the "guaranteeing person"), any obligation of (a) the guaranteeing person or (b) another Person (including any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the "primary obligations") of any other third Person (the "primary obligor") in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be 14 such guaranteeing person's maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith. "Guarantors": the collective reference to Holdings and the Subsidiary Guarantors. "Hedge Agreements": any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or the Subsidiaries shall be a Hedge Agreement. "Holdings": as defined in the preamble to this Agreement. "Immaterial Subsidiary": any Subsidiary of the Borrower with total assets not exceeding $1,000,000; provided that the aggregate total assets of all Immaterial Subsidiaries shall not exceed $5,000,000 at any time. "Indebtedness": of any Person at any date, without duplication, (a) the principal of and premium on (if any, and to the extent such premium has become due) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than (i) current trade payables incurred in the ordinary course of such Person's business, (ii) customary indemnification obligations entered into in connection with an Acquisition or Disposition permitted under this Agreement and (iii) the purchase price adjustment pursuant to Section 1.2(c) of the Acquisition Agreement and similar customary purchase price adjustments based on differences between estimated assets or liabilities at closing and subsequent final determination of such assets or liabilities following closing), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property) (other than customary indemnification obligations entered into in connection with an Acquisition or Disposition permitted under this Agreement), (e) all Capital Lease Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under or in respect of acceptances, letters of credit, surety bonds or similar arrangements, (g) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (f) above, (h) all obligations of the kind referred to in clauses (a) through (g) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation (the amount of such obligations with respect to such Person being deemed to be the lesser of the value of such property and the amount of obligations so secured), and (i) for the purposes of Sections 8.2 and 9(e) only, all obligations of such Person in respect of Hedge Agreements. The Indebtedness of any Person shall include the 15 Indebtedness of any other entity (including the Material Joint Venture or any other partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefore; provided that for purposes of the definition of "Consolidated Total Debt," the Indebtedness of Holdings and its Subsidiaries shall include only that percentage of the Indebtedness of the Material Joint Venture equal to the percentage interest in the Material Joint Venture, so long as the long-term unsecured debt securities of each other partner in the Material Joint Venture (or any entity that holds, directly or indirectly, 100% of the Capital Stock of such partner) are rated at least BBB- by S&P and Baa3 by Moody's. "Indebtedness Measurement Date": as defined in Section 8.2(a) (viii). "Indemnified Liabilities": as defined in Section 11.5. "Indemnity": as defined in Section 11.5. "Indemnity Agreement": the Indemnity and Joint Defense Agreement, dated as of October 28, 1996, among AC Nielsen Corporation, Holdings and Cognizant Corporation. "Independent Financial Advisor": an accounting, appraisal or investment banking firm of national standing or any third party appraiser or recognized expert with experience in appraising the terms and conditions of the type of transaction or series of related transactions for which an opinion is required; provided that such firm or appraiser is not an Affiliate of the Borrower. "Initial Closing Date": the date on which the conditions precedent set forth in Section 6.1 shall have been satisfied. "Insolvency": with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA. "Insolvent": pertaining to a condition of Insolvency. "Intellectual Property": the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom. "Interest Payment Date": (a) as to any Base Rate Loan (other than any Swingline Loan), the last day of each March, June, September and December to occur while such Loan is outstanding and the final maturity date of such Loan, (b) as to any Eurodollar Loan with an Interest Period of three months or less, the last day of such Interest Period, and as to any Eurodollar Loan with an Interest Period longer than three months, each day that is three months (and, if applicable, each day that is six or nine months) after the first day of such Interest Period and the last day of such Interest Period, (c) as to any Loan (other than any Revolving Loan that is 16 a Base Rate Loan and any Swingline Loan), the date of any repayment or prepayment made in respect thereof and (d) as to any Swingline Loan, the day that such Loan is required to be paid. "Interest Period": as to any Eurodollar Loan, (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or six or (if available to all Lenders under the relevant Facility and subject to certain administrative procedures to be determined by the Administrative Agent) nine or twelve months thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three or six or (if available to all Lenders under the relevant Facility) nine or twelve months thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent no later than 11:00 A.M., New York City time, on the date that is three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following: (i) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day; (ii) the Borrower may not select an Interest Period under a particular Facility that would extend beyond the Revolving Termination Date or beyond the date final payment is due on the Tranche A Term Loans or the Tranche B Term Loans, as the case may be; (iii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; and (iv) the Borrower shall select Interest Periods so as not to require a payment or prepayment of any Eurodollar Loan during an Interest Period for such Loan. "Investments": as defined in Section 8.8. "Issuing Lender": the Administrative Agent or any Affiliate thereof (including Deutsche Bank AG, New York Branch), or any other Lender which at the request of the Borrower and with the consent of the Administrative Agent agrees to become an Issuing Lender; provided, however, that until the Administrative Agent notifies the Borrower otherwise, neither the Administrative Agent or its Affiliates (including Deutsche Bank AG, New York Branch) shall be obligated to issue any Letter of Credit other than a standby Letter of Credit. In the event there is more than one Issuing Lender, each reference to the "Issuing Lender" in this Agreement 17 and the other Loan Documents shall, where appropriate, be deemed to be a reference to each Issuing Lender. "L/C Commitment": $10,000,000. "L/C Obligations": at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit that have not then been reimbursed pursuant to Section 3.11. "L/C Participants": the collective reference to all the Revolving Lenders other than the Issuing Lender. "Lead Arrangers": as defined in the recitals to this Agreement. "Lenders": as defined in the preamble hereto; provided, that unless the context otherwise requires, each reference herein to the Lenders shall be deemed to include any Conduit Lender. "Letter of Credit Request": a Letter of Request, substantially in the form of Exhibit N, submitted by the Borrower to the Issuing Lender to request the issuance of a Letter of Credit. "Letters of Credit": as defined in Section 3.7(a). "Lien": any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing). "Lien Subordination Agreement": the Lien Subordination Agreement, to be executed by the Borrower, Holdings, the Subsidiary Guarantors, the Administrative Agent and the Existing Administrative Agent, substantially in the form of Exhibit M. "Loan": any loan made by any Lender pursuant to this Agreement. "Loan Documents": this Agreement, any Letter of Credit Requests, the Security Documents and the Promissory Notes. "Loan Party": each Group Member that is a party to a Loan Document. "Majority Facility Lenders": with respect to any Facility, the holders of more than 50% of the aggregate unpaid principal amount of the Term Loans (and, if applicable, the unused Tranche A Term Commitments) or the Total Revolving Extensions of Credit, as the case may be, outstanding under such Facility (or, in the case of the Revolving Facility, prior to any termination of the Revolving Commitments, the holders of more than 50% of the Total Revolving Commitments). 18 "Mandatory Prepayment Date": as defined in Section 4.2(h). "Material Adverse Effect": a material adverse effect on (a) the business, assets, property, operations, condition (financial or otherwise), contingent liabilities, material agreements or prospects of Holdings, the Borrower and their respective Subsidiaries, taken as a whole (after giving effect to the Acquisition), or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Agents or the Lenders hereunder or thereunder. "Material Agreements": (a) the Partnership Agreement, dated as of August 19, 1997, between the Borrower and Ameritech Publishing of Illinois, Inc., with respect to DonTech II, (b) the Revenue Participation Agreement, (c) the Indemnity Agreement, (d) the Master Agreement, dated as of August 19, 1997, among Holdings, The Dun & Bradstreet Corporation, The Am-Don Partnership, DonTech II, Ameritech Publishing, Inc., Ameritech Publishing of Illinois, Inc., Ameritech Corporation, DonTech I Publishing Company LLC, and the APIL Partners Partnership and (e) the Exclusive Sales Agency Agreement, dated as of August 19, 1997, between APIL Partners Partnership and DonTech II, in each case as amended, revised or replaced from time to time in accordance with Section 8.18. "Material Joint Venture": DonTech II. "Materials of Environmental Concern": any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including asbestos, polychlorinated biphenyls and urea-formaldehyde insulation. "Moody's": Moody's Investors Service, Inc. "Mortgaged Properties": the real properties listed on Schedule 1.1, as to which the Administrative Agent for the benefit of the Lenders shall be granted a Lien pursuant to the Mortgages. "Mortgages": each of the mortgages and deeds of trust made by any Loan Party in favor of, or for the benefit of, the Administrative Agent for the benefit of the Lenders, substantially in the form of Exhibit D (with such changes thereto as shall be advisable under the law of the jurisdiction in which such mortgage or deed of trust is to be recorded). "Multiemployer Plan": a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Net Cash Proceeds": (a) in connection with any Asset Sale or any Recovery Event, the proceeds thereof in the form of cash and Permitted Investments (including any such proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or by the Disposition of any non-cash consideration received in connection therewith or otherwise, but only as and when received) of such Asset Sale or Recovery Event, net of attorneys' fees, accountants' fees, investment banking fees, amounts required to be applied to the repayment of Indebtedness secured by a Lien expressly permitted hereunder on any asset that is the subject of such Asset Sale or Recovery 19 Event (other than any Lien pursuant to a Security Document) and other customary fees and expenses actually incurred in connection therewith; net of taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements); and net of reasonable reserves in respect of post-closing adjustments and escrows (such reserves and escrowed amounts shall be disclosed to the Administrative Agent at the time taken or made and shall be deemed to be "Net Cash Proceeds" when such reserves and escrowed amounts are no longer required to be maintained) and (b) in connection with any issuance or sale of Capital Stock or any incurrence of Indebtedness, the cash proceeds received from such issuance or incurrence, net of attorneys' fees, investment banking fees, accountants' fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith. "Non-Excluded Taxes": as defined in Section 4.10(a). "Non-U.S. Lender": as defined in Section 4.10(d). "Notes": as defined in the recitals to this Agreement. "Notes Escrow": as defined in the recitals to this Agreement. "Notes Escrow Agreements": the Senior Subordinated Notes Escrow Agreement and the Senior Unsecured Notes Escrow Agreement, collectively. "Notes Indentures": the Senior Subordinated Notes Indenture and the Senior Unsecured Notes Indenture, collectively. "Obligations": the unpaid principal of and interest on (including interest accruing after the maturity of the Loans and Reimbursement Obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities of the Borrower to any Agent or to any Lender (or, in the case of Specified Hedge Agreements, any affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, the Letters of Credit, any Specified Hedge Agreement or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including all fees, charges and disbursements of counsel to any Agent or to any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise; provided, that (i) obligations of the Borrower or any Subsidiary under any Specified Hedge Agreement shall be secured and guaranteed pursuant to the Security Documents only to the extent that, and for so long as, the other Obligations are so secured and guaranteed and (ii) any release of Collateral or Guarantors effected in the manner permitted by this Agreement shall not require the consent of holders of obligations under Specified Hedge Agreements. "Optional Prepayment Date": as defined in Section 4.1(b). "Optional Tranche B Prepayment Amount": as defined in Section 4.1(b). 20 "Other Taxes": any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document. "Participant": as defined in Section 11.6(c). "PBGC": the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor). "Permitted Acquisition": any acquisition, whether in a single transaction or series of related transactions, by the Borrower or any one or more Domestic Subsidiaries, or any combination thereof, of (i) the Capital Stock of the Material Joint Venture not owned by the Borrower on the date hereof or (ii) all or a substantial part of the assets, or a going concern business or division, of any Person organized under the laws of any jurisdiction within the United States and conducting substantially all of its business therein, whether through purchase of assets or securities, by merger or otherwise (it being understood that the assets of such Person may include foreign assets (including Capital Stock of Subsidiaries) that are not a material portion of the assets acquired); provided that: (a) both before and immediately after giving effect to such acquisition, no Default or Event of Default shall have occurred and be continuing; (b) the Person whose assets, securities or equity interests are being acquired is engaged in the same line of business activity as the Borrower and its Subsidiaries and businesses reasonably related thereto in compliance with Section 8.16 and such acquisition is initiated and completed with the approval of the board of directors (or other analogous body) of such Person or otherwise on a friendly basis; (c) immediately after giving effect to such acquisition, the Borrower shall be in compliance with the ratios set forth in Section 8.1 opposite the period in which the date of proposed consummation of such acquisition falls (the "Transaction Date") (and, for purposes of determining such compliance, "Consolidated EBITDA," the "Consolidated Interest Coverage Ratio" and the "Consolidated Fixed Charge Coverage Ratio" shall each be as in effect on the last day of the fiscal quarter most recently ended on or prior to such Transaction Date for which financial statements have been delivered pursuant to Section 7.1 and adjusted to give effect to the proposed acquisition as if it had occurred on the first day of the relevant period for testing compliance and "Consolidated Total Debt" and "Consolidated Senior Secured Debt" shall be as in effect on such Transaction Date and assuming the proposed acquisition had been consummated); (d) if immediately after giving effect to such acquisition, the Borrower shall have any additional Subsidiaries, (i) such additional Subsidiaries shall be Domestic Subsidiaries (except for Foreign Subsidiaries that, together with all other foreign assets acquired, are not a material portion of the assets acquired) and (ii) the Borrower shall have complied, and shall have caused such additional Subsidiaries to have complied, with the provisions of Section 7.10 with respect thereto; and 21 (e) the Borrower has delivered to the Administrative Agent a certificate of a Responsible Officer certifying compliance (with supporting information in reasonable detail) with the conditions set forth above and in Section 8.8 in connection with such acquisition. "Permitted Asset Swap": any transfer of properties or assets of the Borrower or any of its Subsidiaries (other than any interest in DonTech II or any rights under any Material Agreement) in which at least 90% of the consideration received by the transferor consists of properties or assets (other than cash) that will be used in the business of publishing yellow pages directories and the sale of advertising in connection therewith; provided that the aggregate fair market value (as determined in good faith by the board of directors of the Borrower and the board of directors of Holdings) of the properties or assets being transferred by the Borrower or such Subsidiary (a) is not greater than the aggregate fair market value (as determined in good faith by the board of directors of the Borrower and the board of directors of Holdings) of the properties or assets received by the Borrower or such Subsidiary in such exchange and (b) does not exceed, at the time such Permitted Asset Swap is completed, together with the cumulative aggregate fair market value of all other Permitted Asset Swaps completed prior to the date thereof, 15% of consolidated net revenues of Holdings and its Subsidiaries (as determined on a consolidated basis in accordance with GAAP) for the last full fiscal year for which financial statements have been delivered pursuant to Section 7.1; provided, further, that with respect to any transaction or series of related transactions that constitute a Permitted Assets Swap with an aggregate fair market value in excess of $25,000,000, the Borrower, prior to consummation thereof, shall be required to obtain a written opinion from an Independent Financial Advisor to the effect that such transaction or series of related transactions are fair from a financial point of view to the Borrower and its Subsidiaries, taken as a whole. "Permitted Investments": any (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof; (b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, a rating of at least A-1 from S&P or a rating of at least P-1 from Moody's; (c) investments in certificates of deposit, banker's acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000 and whose debt has a rating, at the time as of which any investment therein is made, of at least P-1 from Moody's or at least A-1 from S&P; (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and 22 (e) shares of money market mutual or similar funds that invest exclusively in assets satisfying the requirements of clauses (a) through (d) above. "Person": an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "Plan": at a particular time, any employee benefit plan that is covered by ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "Preferred Stock": as defined in the recitals to this Agreement. "Pricing Grid": the pricing grid attached hereto as Annex A. "Pro Forma Financial Statements": as defined in Section 5.1(a). "Projections": as defined in Section 7.2(c). "Promissory Notes": the collective reference to any promissory note evidencing Loans. "Properties": as defined in Section 5.16(a). "Recovery Event": any settlement of or payment in respect of any property or casualty insurance claim or any condemnation proceeding relating to any asset of any Group Member in excess of $1,000,000. "Refinanced Revolving Commitments": as defined in Section 11.1. "Refinancing": as defined in the recitals to this Agreement. "Refunded Swingline Loans": as defined in Section 3.4(b). "Refunding Date": as defined in Section 3.4(c). "Register": as defined in Section 11.6(b). "Regulation U": Regulation U of the Board as in effect from time to time. "Reimbursement Obligation": the obligation of the Borrower to reimburse the Issuing Lender pursuant to Section 3.11 for amounts drawn under Letters of Credit. "Reinvestment Deferred Amount": with respect to any Reinvestment Event, the aggregate Net Cash Proceeds received by any Group Member in connection therewith that are not applied to prepay the Term Loans (and, if applicable, reduce any unused Tranche A Term Commitments) or reduce the Revolving Commitments pursuant to Section 4.2(c) as a result of the delivery of a Reinvestment Notice. 23 "Reinvestment Event": any Asset Sale or Recovery Event in respect of which the Borrower has delivered a Reinvestment Notice. "Reinvestment Notice": a written notice executed by a Responsible Officer stating that no Event of Default has occurred and is continuing and that the Borrower (directly or indirectly through a Subsidiary) intends and expects to use all or a specified portion of the Net Cash Proceeds of an Asset Sale or Recovery Event to acquire, replace or repair fixed or capital assets useful in its business. "Reinvestment Prepayment Amount": with respect to any Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant Reinvestment Prepayment Date to acquire, replace or repair fixed or capital assets useful in the Borrower's business. "Reinvestment Prepayment Date": with respect to any Reinvestment Event, the earlier of (a) the date occurring 12 months after such Reinvestment Event and (b) the date on which the Borrower shall have determined not to, or shall have otherwise ceased to, acquire, replace or repair fixed or capital assets useful in the Borrower's business with all or any portion of the relevant Reinvestment Deferred Amount. "Release": any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, pouring, emitting, emptying, escaping or leaching of any Materials of Environmental Concern into the Environment (including the abandonment or discarding of barrels, containers or other closed receptacles containing any Materials of Environmental Concern). "Reorganization": with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA. "Replacement Revolving Commitments": as defined in Section 11.1. "Reportable Event": any of the events set forth in Section 4043(b) of ERISA, other than those events as to which the thirty day notice period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. Section 4043. "Required Lenders": at any time, the holders of more than 50% of (a) until the Initial Closing Date, the Commitments then in effect and (b) thereafter, the sum of (i) the aggregate unpaid principal amount of the Term Loans then outstanding, (ii) the unused Tranche A Term Commitments, if any, and (iii) the Total Revolving Commitments then in effect or, if the Revolving Commitments have been terminated, the Total Revolving Extensions of Credit then outstanding. "Requirement of Law": as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. 24 "Responsible Officer": the chief executive officer, president, chief financial officer or treasurer of the Borrower, but in any event, with respect to financial matters, the chief financial officer of the Borrower. "Restricted Payments": as defined in Section 8.6. "Revenue Participation Agreement": the Revenue Participation Agreement, dated as of August 19, 1997, between the Borrower and the APIL Partners Partnership. "Revolving Commitment": as to any Lender, the obligation of such Lender, if any, to make Revolving Loans and participate in Swingline Loans in an aggregate principal and/or face amount not to exceed the amount set forth under the heading "Revolving Commitment" under such Lender's name on such Lender's Addendum or in the Assignment and Assumption pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The original amount of the Total Revolving Commitments is $125,000,000. "Revolving Commitment Period": the period from and including the Acquisition Closing Date to the Revolving Termination Date. "Revolving Extensions of Credit": as to any Revolving Lender at any time, an amount equal to the sum of (a) the aggregate principal amount of all Revolving Loans held by such Lender then outstanding, (b) such Lender's Revolving Percentage of the L/C Obligations then outstanding and (c) such Lender's Revolving Percentage of the aggregate principal amount of Swingline Loans then outstanding. "Revolving Lender": each Lender that has a Revolving Commitment or that holds Revolving Loans. "Revolving Loans": as defined in Section 3.1(a). "Revolving Percentage": as to any Revolving Lender at any time, the percentage which such Lender's Revolving Commitment then constitutes of the Total Revolving Commitments (or, at any time after the Revolving Commitments shall have expired or terminated, the percentage which the aggregate principal amount of such Lender's Revolving Extensions of Credit then outstanding constitutes of the aggregate principal amount of the Revolving Extensions of Credit then outstanding). "Revolving Termination Date": the sixth anniversary of the Acquisition Closing Date; provided that, in the event that there shall be more than $25,000,000 in aggregate principal amount of the Existing Subordinated Notes outstanding on December 1, 2007, the Revolving Termination Date shall be December 1, 2007. "RHDonnelley": as defined in the recitals to this Agreement. "S&P": Standard & Poor's Rating Services. 25 "SEC": the Securities and Exchange Commission, any successor thereto and any analogous Governmental Authority. "Second Closing": as defined in Section 1.8(c) of the Acquisition Agreement. "Second Closing Termination Date": as defined in Section 1.8(c) of the Acquisition Agreement. "Securities Account Control Agreement": the Securities Account Control Agreement, to be executed by the Special Purpose Borrower, the Administrative Agent and the Securities Intermediary, substantially in the form of Exhibit L. "Securities Intermediary": Deutsche Bank Trust Company Americas, in its capacity as securities intermediary and escrow agent under the Escrow Agreement and the Securities Account Control Agreement, and its successors and assigns. "Security Documents": the collective reference to the Guarantee and Collateral Agreement, the Mortgages, the Escrow Agreement, the Securities Account Control Agreement, the Lien Subordination Agreement and all other security documents hereafter delivered to the Administrative Agent granting a Lien on any property of any Person to secure the obligations and liabilities of any Loan Party under any Loan Document. "Sellers": as defined in the recitals to this Agreement. "Senior Facilities": as defined in the recitals to this Agreement. "Senior Subordinated Notes": as defined in the recitals to this Agreement. "Senior Subordinated Notes Escrow Agreement": the Escrow and Pledge Agreement dated as of December 3, 2002, among the Special Purpose Issuer, the Borrower, Deutsche Bank Trust Company Americas, as securities intermediary, and The Bank of New York, as trustee, with respect to the proceeds of the issuance of the Senior Subordinated Notes. "Senior Subordinated Notes Indenture": the Indenture entered into by the Special Purpose Issuer in connection with the issuance of the Senior Subordinated Notes, together with all instruments and other agreements entered into by the Borrower or the Special Purpose Issuer in connection therewith. "Senior Unsecured Notes": as defined in the recitals to this Agreement. "Senior Unsecured Notes Escrow Agreement": the Escrow and Pledge Agreement dated as of December 3, 2002, among the Special Purpose Issuer, the Borrower, Deutsche Bank Trust Company Americas, as securities intermediary, and The Bank of New York, as trustee, with respect to the proceeds of the issuance of the Senior Unsecured Notes. "Senior Unsecured Notes Indenture": the Indenture entered into by the Special Purpose Issuer in connection with the issuance of the Senior Unsecured Notes, together with all 26 instruments and other agreements entered into by the Borrower or the Special Purpose Issuer in connection therewith. "Single Employer Plan": any Plan that is covered by Title IV of ERISA, but that is not a Multiemployer Plan. "Solvent": when used with respect to any Person, means that, as of any date of determination, (a) the amount of the "present fair saleable value" of the assets of such Person will, as of such date, exceed the amount of all "liabilities of such Person, contingent or otherwise", as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature. For purposes of this definition, (i) "debt" means liability on a "claim", and (ii) "claim" means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured. "Special Mandatory Prepayment Event": as defined in Section 3(b) of the Escrow Agreement. "Special Purpose Borrower": R.H. Donnelley Finance Corporation II, a special purpose Subsidiary formed by the Borrower solely for the purpose of borrowing the Tranche B Term Loans during the Escrow Period. All references to the "Borrower" in this Agreement and the other Loan Documents shall, during the Escrow Period and solely where appropriate, include the Special Purpose Borrower. "Special Purpose Issuer": as defined in the recitals to this Agreement. "Specified Change of Control": a "Change of Control" (or any other defined term having a similar purpose) as defined in the Notes Indentures, the Additional High Yield Debt Documents or the Existing Subordinated Debt Documents. "Specified Hedge Agreement": any Hedge Agreement (a) entered into by (i) the Borrower or any of its Subsidiaries and (ii) any Agent or Lender or any affiliate thereof, as counterparty and (b) that has been designated by such Agent or Lender, as the case may be, and the Borrower, by notice to the Administrative Agent, as a Specified Hedge Agreement. The designation of any Hedge Agreement as a Specified Hedge Agreement shall not create in favor of the Agent, Lender or affiliate thereof that is a party thereto any rights in connection with the management or release of any Collateral or of the obligations of any Guarantor under the Guarantee and Collateral Agreement. 27 "Subsidiary": as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person, it being understood that (i) no Subsidiary forming part of the Acquired Business shall be a Subsidiary of the Borrower prior to the Acquisition Closing Date unless otherwise specified herein (and upon consummation of the Acquisition, any Subsidiary acquired in the Acquisition shall be a Subsidiary) and (ii) no Excluded Business Subsidiary shall be a "Subsidiary" hereunder until such Subsidiary is acquired by the Borrower. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower. "Subsidiary Guarantor": each Subsidiary of the Borrower other than any Foreign Subsidiary and the Special Purpose Issuer. "Supermajority Lenders": at any time, the holders of more than 66 2/3% of (a) until the Initial Closing Date, the Commitments then in effect and (b) thereafter, the sum of (i) the aggregate unpaid principal amount of the Term Loans then outstanding, (ii) the unused Tranche A Term Commitments, if any, and (iii) the Total Revolving Commitments then in effect or, if the Revolving Commitments have been terminated, the Total Revolving Extensions of Credit then outstanding. "Swingline Commitment": the obligation of the Swingline Lender to make Swingline Loans pursuant to Section 3.3 in an aggregate principal amount at any one time outstanding not to exceed $20,000,000. "Swingline Lender": Deutsche Bank Trust Company Americas, in its capacity as the lender of Swingline Loans. "Swingline Loans": as defined in Section 3.3(a). "Swingline Participation Amount": as defined in Section 3.4(c). "Syndication Agents": as defined in the preamble to this Agreement. "Tender Offer": as defined in the recitals to this Agreement. "Term Lenders": the collective reference to the Tranche A Term Lenders and the Tranche B Term Lenders. "Term Loans": the collective reference to the Tranche A Term Loans and Tranche B Term Loans. "Title Insurance Company": as defined in Section 6.2(l) 28 "Total Revolving Commitments": at any time, the aggregate amount of the Revolving Commitments then in effect. "Total Revolving Extensions of Credit": at any time, the aggregate amount of the Revolving Extensions of Credit of the Revolving Lenders outstanding at such time. "Tranche A Term Commitment": as to any Lender, the obligation of such Lender, if any, to make Tranche A Term Loans to the Borrower hereunder in an aggregate principal amount not to exceed the amount set forth under the heading "Tranche A Term Commitment" under such Lender's name on such Lender's Addendum. The original aggregate amount of the Tranche A Term Commitments is $500,000,000. "Tranche A Term Lender": each Lender that has a Tranche A Term Commitment or that holds a Tranche A Term Loan. "Tranche A Term Loan": as defined in Section 2.1. "Tranche A Term Percentage": as to any Tranche A Term Lender at any time, the percentage which such Lender's Tranche A Term Commitment then constitutes of the aggregate Tranche A Term Commitments (or, at any time after the Acquisition Closing Date, the percentage which the sum of (a) the aggregate principal amount of such Lender's Tranche A Term Loans then outstanding and (b) if the Excluded Business is not acquired on the Acquisition Closing Date, the amount of such Lender's then unused Tranche A Term Commitment constitutes of the sum of (i) the aggregate principal amount of the Tranche A Term Loans then outstanding and (ii) if the Excluded Business is not acquired on the Acquisition Closing Date, the aggregate then unused Tranche A Term Commitments of the Tranche A Term Lender). "Tranche B Prepayment Amount": as defined in Section 4.2(h). "Tranche B Term Commitment": as to any Lender, the obligation of such Lender, if any, to make a Tranche B Term Loan to the Borrower hereunder in a principal amount not to exceed the amount set forth under the heading "Tranche B Term Commitment" under such Lender's name on such Lender's Addendum. The original aggregate amount of the Tranche B Term Commitments is $900,000,000. "Tranche B Term Lender": each Lender that has a Tranche B Term Commitment or that holds a Tranche B Term Loan. "Tranche B Term Loan": as defined in Section 2.1. "Tranche B Term Percentage": as to any Tranche B Lender at any time, the percentage which such Lender's Tranche B Term Commitment then constitutes of the aggregate Tranche B Term Commitments (or, at any time after the Initial Closing Date, the percentage which the aggregate principal amount of such Lender's Tranche B Term Loans then outstanding constitutes of the aggregate principal amount of the Tranche B Term Loans then outstanding). 29 "Transaction Screens": the environmental due diligence reports prepared in accordance with the ASTM E 1528-00 Standard Practice for Environmental Site Assessments: Transaction Screen Process. "Transferee": any Assignee or Participant. "Type": as to any Loan, its nature as a Base Rate Loan or a Eurodollar Loan. "United States": the United States of America. "Wholly Owned Subsidiary": as to any Person, any other Person all of the Capital Stock of which (other than directors' qualifying shares required by law) is owned by such Person directly and/or through other Wholly Owned Subsidiaries. "Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that is a Wholly Owned Subsidiary of the Borrower. 1.2. Other Definitional Provisions. (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto. (b) As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, (i) accounting terms relating to any Group Member not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP, (ii) the words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation", (iii) the word "incur" shall be construed to mean incur, create, issue, assume, become liable in respect of or suffer to exist (and the words "incurred" and "incurrence" shall have correlative meanings), and (iv) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any right or interest in or to assets or property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, including cash, Capital Stock, securities, revenues, accounts, leasehold interests and contract rights, and (v) references to agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer to such agreements or Contractual Obligations as amended, supplemented, restated or otherwise modified from time to time (subject to any applicable restrictions hereunder). (c) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified. (d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. 30 SECTION 2. AMOUNT AND TERMS OF TERM COMMITMENTS 2.1. Term Commitments. Subject to the terms and conditions hereof, (a) each Tranche A Term Lender severally agrees to make a term loan (a "Tranche A Term Loan") to the Borrower on the Acquisition Closing Date in an amount not to exceed the amount of the Tranche A Term Commitment of such Lender; provided, however, that if, pursuant to Section 1.8 of the Acquisition Agreement, the Excluded Business is not acquired by the Borrower on the Acquisition Closing Date (i) the aggregate amount of Tranche A Term Loans made on the Acquisition Closing Date shall be reduced by an amount equal to the amount of the reduction in the purchase price payable under the Acquisition Agreement on the Acquisition Closing Date provided for in Section 1.8(d) of the Acquisition Agreement and (ii) each Tranche A Term Lender severally agrees to make an additional term loan (which shall be part of such Lender's Tranche A Term Loan) on the Final Acquisition Closing Date (but, in no event later than the earlier of September 21, 2003 and the Second Closing Termination Date) in an amount not to exceed the amount of its unused Tranche A Term Commitment, provided, that the aggregate amount of Tranche A Term Loans made on the Final Acquisition Closing Date shall not exceed $180,000,000; provided, further, that if the Acquisition shall not have been consummated on or prior to January 31, 2003, the Tranche A Term Commitments shall automatically and immediately terminate, and (b) each Tranche B Term Lender severally agrees to make a term loan (a "Tranche B Term Loan") to the Special Purpose Borrower on the Initial Closing Date in an amount not to exceed the amount of the Tranche B Term Commitment of such Lender, provided, that, upon the occurrence of the Acquisition Closing Date and immediately prior to or concurrently with the release of funds from the Escrow Account, the Special Purpose Borrower shall be merged with and into RHDonnelley and RHDonnelley shall, and does hereby, become the "Borrower" of the Tranche B Term Loans hereunder and shall, and does hereby, assume all of the obligations of the Special Purpose Borrower in respect thereof. The Term Loans may from time to time be Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2, 2.3 and 4.3. 2.2. Procedure for Tranche B Term Loan Borrowing. The Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 12:00 Noon, New York City time, one Business Day prior to the anticipated Initial Closing Date) requesting that the Tranche B Term Lenders make the Tranche B Term Loans on the Initial Closing Date and specifying the amount to be borrowed. The Tranche B Term Loans made on the Initial Closing Date shall initially be Base Rate Loans and no Tranche B Term Loan may be converted into or continued as a Eurodollar Loan prior to the date that is 15 Business Days after the Initial Closing Date and, thereafter and until the Acquisition Closing Date, no Tranche B Term Loan may be converted into or continued as a Eurodollar Loan with an Interest Period in excess of one month. Upon receipt of such notice the Administrative Agent shall promptly notify each Tranche B Term Lender thereof. Not later than 12:00 Noon, New York City time, on the Initial Closing Date, each Tranche B Term Lender shall make available to the Administrative Agent, for transfer to the Securities Intermediary for deposit into the Escrow Account pursuant to the Escrow Agreement, an amount in immediately available funds equal to the Tranche B Term Loan to be made by such Lender. All such amounts shall be held in the Escrow Account by the Securities Intermediary for the benefit of the Tranche B Term Lenders until the satisfaction of all conditions precedent set forth in Section 6.2 or otherwise released in accordance with the terms of the Escrow Agreement. Subject to the 31 Escrow Agreement, upon the written direction of the Administrative Agent, not later than 12:00 Noon, New York City time on the Acquisition Closing Date, the Securities Intermediary shall transfer to the Existing Administrative Agent, the Borrower (or its designee) and the Administrative Agent in accordance with Section 3(a) of the Escrow Agreement all amounts held by the Securities Intermediary in the Escrow Account by wire transfer in immediately available funds pursuant to the payment instructions set forth in the notice of release delivered by the Administrative Agent pursuant to Section 3(a) of the Escrow Agreement. Upon delivery of the notice of release to the Securities Intermediary pursuant to Section 3(a) of the Escrow Agreement, the Administrative Agent shall credit the account of the Borrower on the books of the Funding Office of the Administrative Agent with the aggregate of the amounts made available to the Securities Intermediary by the Tranche B Term Lenders on the Initial Closing Date and in like funds as received by the Existing Administrative Agent, the Borrower and the Administrative Agent from the Securities Intermediary on the Acquisition Closing Date. 2.3. Procedure for Tranche A Term Loan Borrowing. The Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 12:00 Noon, New York City time, one Business Day prior to the anticipated Acquisition Closing Date or, if applicable, the Final Acquisition Closing Date) requesting that the Tranche A Term Lenders make Tranche A Term Loans on the Acquisition Closing Date or, if applicable, the Final Acquisition Closing Date and specifying the amount to be borrowed. The Tranche A Term Loans made on the Acquisition Closing Date or, if applicable, the Final Acquisition Closing Date shall initially be Base Rate Loans. Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify each Tranche A Term Lender thereof. Not later than 12:00 Noon, New York City time, on the Acquisition Closing Date or, if applicable, the Final Acquisition Closing Date, each Tranche A Term Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the Tranche A Term Loans to be made by such Lender. The Administrative Agent shall credit the account of the Borrower on the books of such office of the Administrative Agent with the aggregate of the amounts made available to the Administrative Agent by the Tranche A Term Lenders. 2.4. Repayment of Term Loans. (a) The Tranche A Term Loans of each Tranche A Lender shall mature in 24 consecutive quarterly installments, commencing on March 31, 2003, each of which shall be in an amount equal to such Lender's Tranche A Term Percentage multiplied by the amount set forth below opposite such installment; provided that in the event the Excluded Business is not acquired on the Acquisition Closing Date (i) until such time as the Final Acquisition Closing Date occurs (if ever), each of the amounts set forth below shall be reduced by a percentage equal to the percentage that the unused Tranche A Term Commitments, after giving effect to the consummation of the Acquisition on the Acquisition Closing Date, constitute of the aggregate Tranche A Term Commitments immediately prior to the consummation of the Acquisition on the Acquisition Closing Date and (ii) and the Final Acquisition Closing Date subsequently occurs, (A) each of the amounts set forth below shall be reduced by a percentage equal to the percentage which the unused Tranche A Term Commitments, after giving effect to the consummation of the Acquisition on the Acquisition Closing Date and the acquisition of any Excluded Business Subsidiaries on the Final Acquisition Closing Date, constitute of the aggregate Tranche A Term Commitments immediately prior to the consummation of the Acquisition on the Acquisition Closing Date and (B) the next 32 installment due after the consummation of such acquisition of the Excluded Business Subsidiaries shall be increased by an amount equal to the difference between the aggregate amount that would have been paid prior to such date pursuant to this clause (ii) and the aggregate amount that has been paid prior to such date pursuant to clause (i):
- --------------------------------------------------------------- Installment Principal Amount ----------- ---------------- - --------------------------------------------------------------- March 31, 2003 $15,000,000 - --------------------------------------------------------------- June 30, 2003 $15,000,000 - --------------------------------------------------------------- September 30, 2003 $15,000,000 - --------------------------------------------------------------- December 31, 2003 $15,000,000 - --------------------------------------------------------------- March 31, 2004 $20,000,000 - --------------------------------------------------------------- June 30, 2004 $20,000,000 - --------------------------------------------------------------- September 30, 2004 $20,000,000 - --------------------------------------------------------------- December 31, 2004 $20,000,000 - --------------------------------------------------------------- March 31, 2005 $20,000,000 - --------------------------------------------------------------- June 30, 2005 $20,000,000 - --------------------------------------------------------------- September 30, 2005 $20,000,000 - --------------------------------------------------------------- December 31, 2005 $20,000,000 - --------------------------------------------------------------- March 31, 2006 $20,000,000 - --------------------------------------------------------------- June 30, 2006 $20,000,000 - --------------------------------------------------------------- September 30, 2006 $20,000,000 - --------------------------------------------------------------- December 31, 2006 $20,000,000 - --------------------------------------------------------------- March 31, 2007 $25,000,000 - --------------------------------------------------------------- June 30, 2007 $25,000,000 - --------------------------------------------------------------- September 30, 2007 $25,000,000 - --------------------------------------------------------------- December 31, 2007 $25,000,000 - --------------------------------------------------------------- March 31, 2008 $25,000,000 - --------------------------------------------------------------- June 30, 2008 $25,000,000 - --------------------------------------------------------------- September 30, 2008 $25,000,000 - --------------------------------------------------------------- December 31, 2008 $25,000,000 - ---------------------------------------------------------------
, provided, however, that in the event that there shall be more than $25,000,000 in aggregate principal amount of the Existing Subordinated Notes outstanding on December 1, 2007, the aggregate outstanding unpaid principal amount of the Tranche A Term Loans shall be due and payable on December 1, 2007. (b) The Tranche B Term Loan of each Tranche B Lender shall mature in 30 consecutive quarterly installments, commencing on March 31, 2003, each of which shall be in an amount equal to such Lender's Tranche B Term Percentage multiplied by the amount set forth below opposite such installment:
- --------------------------------------------------------------- Installment Principal Amount - ----------- ---------------- - --------------------------------------------------------------- March 31, 2003 $ 2,250,000 - ---------------------------------------------------------------
33
- --------------------------------------------------------------- Installment Principal Amount - ----------- ---------------- - --------------------------------------------------------------- June 30, 2003 $ 2,250,000 - --------------------------------------------------------------- September 30, 2003 $ 2,250,000 - --------------------------------------------------------------- December 31, 2003 $ 2,250,000 - --------------------------------------------------------------- March 31, 2004 $ 2,250,000 - --------------------------------------------------------------- June 30, 2004 $ 2,250,000 - --------------------------------------------------------------- September 30, 2004 $ 2,250,000 - --------------------------------------------------------------- December 31, 2004 $ 2,250,000 - --------------------------------------------------------------- March 31, 2005 $ 2,250,000 - --------------------------------------------------------------- June 30, 2005 $ 2,250,000 - --------------------------------------------------------------- September 30, 2005 $ 2,250,000 - --------------------------------------------------------------- December 31, 2005 $ 2,250,000 - --------------------------------------------------------------- March 31, 2006 $ 2,250,000 - --------------------------------------------------------------- June 30, 2006 $ 2,250,000 - --------------------------------------------------------------- September 30, 2006 $ 2,250,000 - --------------------------------------------------------------- December 31, 2006 $ 2,250,000 - --------------------------------------------------------------- March 31, 2007 $ 2,250,000 - --------------------------------------------------------------- June 30, 2007 $ 2,250,000 - --------------------------------------------------------------- September 30, 2007 $ 2,250,000 - --------------------------------------------------------------- December 31, 2007 $ 2,250,000 - --------------------------------------------------------------- March 31, 2008 $ 2,250,000 - --------------------------------------------------------------- June 30, 2008 $ 2,250,000 - --------------------------------------------------------------- September 30, 2008 $ 2,250,000 - --------------------------------------------------------------- December 31, 2008 $ 2,250,000 - --------------------------------------------------------------- March 31, 2009 $135,000,000 - --------------------------------------------------------------- June 30, 2009 $135,000,000 - --------------------------------------------------------------- September 30, 2009 $135,000,000 - --------------------------------------------------------------- December 31, 2009 $135,000,000 - --------------------------------------------------------------- March 31, 2010 $153,000,000 - --------------------------------------------------------------- June 30, 2010 $153,000,000 - ---------------------------------------------------------------
, provided, however, that in the event that there shall be more than $25,000,000 in aggregate principal amount of the Existing Subordinated Notes outstanding on December 1, 2007, the aggregate outstanding unpaid principal amount of the Tranche B Term Loans shall be due and payable on December 1, 2007. 2.5. Commitment Fees. The Borrower agrees to pay to the Administrative Agent for the account of each Tranche A Term Lender a commitment fee for the period from and including the Initial Closing Date to the earlier of (i) the Final Acquisition Closing Date and (ii) the Second Closing Termination Date, with respect to the unused portion of the Tranche A Term Commitment of such Lender during the period for which payment is made and computed at a rate per annum equal to the Commitment Fee Rate, payable quarterly in arrears on the last day of each March, June, September and December and on either the Final Acquisition Closing Date or the Second Closing Termination Date (or, if earlier, the date the unused Tranche A Term 34 Commitments otherwise terminate), as the case may be, commencing on the first of such dates to occur after the date hereof. 2.6. Termination or Reduction of Unused Tranche A Commitments. The Borrower shall have the right, upon not less than three Business Days' notice to the Administrative Agent, if the Excluded Business is not acquired on the Acquisition Closing Date, at any time thereafter, to terminate or reduce the unused Tranche A Term Commitments. Any such reduction shall be in an amount equal to $1,000,000, or a whole multiple thereof, and shall reduce permanently the Tranche A Term Commitments then in effect. SECTION 3. AMOUNT AND TERMS OF REVOLVING COMMITMENTS 3.1. Revolving Commitments. (a) Subject to the terms and conditions hereof, each Revolving Lender severally agrees to make revolving credit loans ("Revolving Loans") to the Borrower from time to time during the Revolving Commitment Period in an aggregate principal amount at any one time outstanding which, when added to such Lender's Revolving Percentage of the sum of (i) the L/C Obligations then outstanding and (ii) the aggregate principal amount of the Swingline Loans then outstanding, does not exceed the amount of such Lender's Revolving Commitment; provided, that if the Acquisition shall not have been consummated on or prior to January 31, 2003, the Revolving Commitments shall automatically and immediately terminate. During the Revolving Commitment Period, the Borrower may use the Revolving Commitments by borrowing, prepaying and reborrowing the Revolving Loans in whole or in part, all in accordance with the terms and conditions hereof. The Revolving Loans may from time to time be Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 3.2 and 4.3. (b) The Borrower shall repay all outstanding Revolving Loans on the Revolving Termination Date. 3.2. Procedure for Revolving Loan Borrowing. The Borrower may borrow under the Revolving Commitments during the Revolving Commitment Period on any Business Day, provided that the Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 12:00 Noon, New York City time, (a) three Business Days prior to the requested Borrowing Date, in the case of Eurodollar Loans, or (b) one Business Day prior to the requested Borrowing Date, in the case of Base Rate Loans), specifying (i) the amount and Type of Revolving Loans to be borrowed, (ii) the requested Borrowing Date and (iii) in the case of Eurodollar Loans, the respective amounts of each such Type of Loan and the respective lengths of the initial Interest Period therefor. Any Revolving Loans made on the Acquisition Closing Date shall initially be Base Rate Loans. Each borrowing under the Revolving Commitments shall be in an amount equal to (x) in the case of Base Rate Loans, $1,000,000 or a whole multiple thereof (or, if the then aggregate Available Revolving Commitments are less than $1,000,000, such lesser amount) and (y) in the case of Eurodollar Loans, $5,000,000 or a whole multiple of $1,000,000 in excess thereof; provided, that the Swingline Lender may request, on behalf of the Borrower, borrowings under the Revolving Commitments that are Base Rate Loans in other amounts pursuant to Section 3.4. Upon receipt 35 of any such notice from the Borrower, the Administrative Agent shall promptly notify each Revolving Lender thereof. Each Revolving Lender will make the amount of its pro rata share of each borrowing available to the Administrative Agent for the account of the Borrower at the Funding Office prior to 12:00 Noon, New York City time, on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Revolving Lenders and in like funds as received by the Administrative Agent. Not more than the sum of (1) $40,000,000 and (2) any purchase price adjustment payable on the Acquisition Closing Date pursuant to the Acquisition Agreement in the aggregate of Revolving Loans and Swingline Loans shall be made on the Acquisition Closing Date. 3.3. Swingline Commitment. (a) Subject to the terms and conditions hereof, the Swingline Lender agrees to make a portion of the credit otherwise available to the Borrower under the Revolving Commitments from time to time during the Revolving Commitment Period by making swing line loans ("Swingline Loans") to the Borrower; provided that (i) the aggregate principal amount of Swingline Loans outstanding at any time shall not exceed the Swingline Commitment then in effect (notwithstanding that the Swingline Loans outstanding at any time, when aggregated with the Swingline Lender's other outstanding Revolving Loans hereunder, may exceed the Swingline Commitment then in effect) and (ii) the Borrower shall not request, and the Swingline Lender shall not make, any Swingline Loan if, after giving effect to the making of such Swingline Loan, the aggregate amount of the Available Revolving Commitments would be less than zero. During the Revolving Commitment Period, the Borrower may use the Swingline Commitment by borrowing, repaying and reborrowing, all in accordance with the terms and conditions hereof. Swingline Loans shall be Base Rate Loans only. (b) The Borrower shall repay all outstanding Swingline Loans on the Revolving Termination Date. 3.4. Procedure for Swingline Borrowing; Refunding of Swingline Loans. (a) Whenever the Borrower desires that the Swingline Lender make Swingline Loans it shall give the Swingline Lender irrevocable telephonic notice confirmed promptly in writing (which telephonic notice must be received by such Swingline Lender not later than 12 Noon, New York City time, on the proposed Borrowing Date), specifying (i) the amount to be borrowed and (ii) the requested Borrowing Date (which shall be a Business Day during the Revolving Commitment Period). Each borrowing under the Swingline Commitment shall be in an amount equal to $500,000 or a whole multiple of $100,000 in excess thereof. Not later than 4:00 P.M., New York City time, on the Borrowing Date specified in a notice in respect of Swingline Loans, the Swingline Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the amount of the Swingline Loans to be made by the Swingline Lender. The Administrative Agent shall make the proceeds of such Swingline Loans available to the Borrower on such Borrowing Date by depositing such proceeds in the account of the Borrower with the Administrative Agent on such Borrowing Date in immediately available funds. 36 (b) The Swingline Lender, at any time and from time to time in its sole and absolute discretion may, on behalf of the Borrower (which hereby irrevocably directs the Swingline Lender to act on its behalf), on one Business Day's notice given by the Swingline Lender no later than 12:00 Noon, New York City time, request each Revolving Lender to make, and each Revolving Lender hereby agrees to make, a Revolving Loan, in an amount equal to such Revolving Lender's Revolving Percentage of the aggregate amount of the Swingline Loans (the "Refunded Swingline Loans") outstanding on the date of such notice, to repay the Swingline Lender. Each Revolving Lender shall make the amount of such Revolving Loan available to the Administrative Agent at the Funding Office in immediately available funds, not later than 10:00 A.M., New York City time, one Business Day after the date of such notice. The proceeds of such Revolving Loans shall be immediately made available by the Administrative Agent to the Swingline Lender for application by the Swingline Lender to the repayment of the Refunded Swingline Loans. The Borrower irrevocably authorizes the Swingline Lender to charge the Borrower's accounts with the Administrative Agent (up to the amount available in each such account) in order to immediately pay the amount of such Refunded Swingline Loans to the extent amounts received from the Revolving Lenders are not sufficient to repay in full such Refunded Swingline Loans. (c) If, prior to the time a Revolving Loan would have otherwise been made pursuant to Section 3.4(b), one of the events described in Section 9(f) shall have occurred and be continuing with respect to the Borrower or if for any other reason, as determined by the Swingline Lender in its sole discretion, Revolving Loans may not be made as contemplated by Section 3.4(b), each Revolving Lender shall, on the date such Revolving Loan was to have been made pursuant to the notice referred to in Section 3.4(b) (the "Refunding Date"), purchase for cash an undivided participating interest in the then outstanding Swingline Loans by paying to the Swingline Lender an amount (the "Swingline Participation Amount") equal to (i) such Revolving Lenders' Revolving Percentage times (ii) the sum of the aggregate principal amount of relevant Swingline Loans then outstanding that were to have been repaid with such Revolving Loans. (d) Whenever, at any time after the Swingline Lender has received from any Revolving Lender such Lender's Swingline Participation Amount in respect of Swingline Loans made by the Swingline Lender, the Swingline Lender receives any payment on account of such Swingline Loans, the Swingline Lender will distribute to such Lender its Swingline Participation Amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participating interest was outstanding and funded and, in the case of principal and interest payments, to reflect such Lender's pro rata portion of such payment if such payment is not sufficient to pay the principal of and interest on all such Swingline Loans then due); provided, however, that in the event that such payment received by the Swingline Lender is required to be returned, such Revolving Lender will return to the Swingline Lender any portion thereof previously distributed to it by the Swingline Lender. (e) Each Revolving Lender's obligation to make the Loans referred to in Section 3.4(b) and to purchase participating interests pursuant to Section 3.4(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment, defense or other right that such Revolving Lender or the Borrower may have against the Swingline Lender, the Borrower or any other Person for any reason whatsoever; (ii) the occurrence or continuance of a Default or an Event of Default or the failure 37 to satisfy any of the other conditions specified in Section 6; (iii) any adverse change in the condition (financial or otherwise) of the Borrower; (iv) any breach of this Agreement or any other Loan Document by the Borrower, any other Loan Party or any other Revolving Lender; or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. 3.5. Commitment and Other Fees. (a) The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a commitment fee for the period from and including the Initial Closing Date to the last day of the Revolving Commitment Period, computed at the Commitment Fee Rate on the average daily amount of the Available Revolving Commitment of such Lender during the period for which payment is made, payable quarterly in arrears on each Fee Payment Date, commencing on the first such date to occur after the date hereof. (b) The Borrower agrees to pay to the Administrative Agent and the Lead Arrangers the fees in the amounts and on the dates previously agreed to in writing by the Borrower and the Administrative Agent. 3.6. Termination or Reduction of Revolving Commitments. The Borrower shall have the right, upon not less than three Business Days' notice to the Administrative Agent, to terminate the Revolving Commitments or, from time to time, to reduce the amount of the Revolving Commitments; provided that no such termination or reduction of Revolving Commitments shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Loans and Swingline Loans made on the effective date thereof, the Total Revolving Extensions of Credit would exceed the Total Revolving Commitments. Any such reduction shall be in an amount equal to $1,000,000, or a whole multiple thereof, and shall reduce permanently the Revolving Commitments then in effect. 3.7 L/C Commitment. (a) Subject to the terms and conditions hereof, the Issuing Lender, in reliance on the agreements of the other Revolving Lenders set forth in Section 3.10(a), agrees to issue letters of credit ("Letters of Credit") for the account of the Borrower on any Business Day during the Revolving Commitment Period in such form as may be approved from time to time by the Issuing Lender; provided that the Issuing Lender shall have no obligation to issue any Letter of Credit after the day that is 30 days before the Revolving Termination Date; provided, further, that the Issuing Lender shall have no obligation to issue any Letter of Credit if, after giving effect to such issuance, (x) the L/C Obligations would exceed the L/C Commitment or (y) the aggregate amount of the Available Revolving Commitments would be less than zero. Each Letter of Credit shall (i) be denominated in Dollars, (ii) expire no later than the earlier of (A) the first anniversary of its date of issuance and (B) (1) if such Letter of Credit is a standby Letter of Credit, the date that is five Business Days prior to the Revolving Termination Date, or (2) if such Letter of Credit is a commercial Letter of Credit, the date that is 30 days before the Revolving Termination Date and (iii) be payable upon presentation of sight drafts; provided, further, that any Letter of Credit with a one-year term may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (ii) above). 38 (b) The Issuing Lender shall not at any time be obligated to issue any Letter of Credit if such issuance would conflict with, or cause the Issuing Lender or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law. 3.8 Procedure for Issuance of Letter of Credit. The Borrower may from time to time request that the Issuing Lender issue a Letter of Credit by delivering to the applicable Issuing Lender at its address for notices specified herein, with a copy to the Administrative Agent, a Letter of Credit Request, accompanied by such other certificates, documents or other papers as may be requested by the Issuing Lender, including such Issuing Lender's standard form of application. Upon receipt of a Letter of Credit Request, the applicable Issuing Lender will process such request in accordance with its customary procedures and shall issue the Letter of Credit requested thereby after securing the Administrative Agent's authorization to do so (but in no event shall the applicable Issuing Lender be required to issue any Letter of Credit earlier than three Business Days after its receipt of the Letter of Credit Request and all such other certificates, documents and other papers and information relating thereto). Promptly after the issuance of or amendment to a standby Letter of Credit, the Issuing Lender shall notify the Administrative Agent and the Borrower, in writing, of such issuance or amendment, and such notice shall be accompanied by a copy of such issuance or amendment. Upon receipt of the notice, the Administrative Agent shall promptly notify the Lenders of such issuance or amendment and, if so requested by any Lender, the Administrative Agent shall furnish such Lender with copies of the issuance or amendment. With regard to any commercial Letter of Credit, the Issuing Lender shall on the first Business Day of each week provide the Administrative Agent by facsimile with a report detailing the daily aggregate outstanding amount of such Letters of Credit issued by the Issuing Lender for the previous week. 3.9 Fees and Other Charges. (a) The Borrower will pay a participation fee to the Administrative Agent for the ratable benefit of the Lenders on all outstanding Letters of Credit at a per annum rate equal to the Applicable Margin then in effect with respect to Eurodollar Loans under the Revolving Facility, shared ratably among the Revolving Lenders and payable quarterly in arrears on each Fee Payment Date after the issuance date. In addition, the Borrower shall pay to the Issuing Lender for its own account a fronting fee of 0.25% per annum (and, in any event, no less than $500 per year) on the undrawn and unexpired amount of each Letter of Credit, payable quarterly in arrears on each Fee Payment Date after the issuance date. (b) In addition to the foregoing fees, the Borrower shall pay or reimburse the Issuing Lender for such normal and customary costs and expenses as are incurred or charged by the Issuing Lender in issuing, negotiating, effecting payment under, amending or otherwise administering any Letter of Credit. 3.10 L/C Participations. (a) The Issuing Lender irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce the Issuing Lender to issue Letters of Credit, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Lender, on the terms and conditions set forth below, for such L/C Participant's own account and risk an undivided interest equal to such L/C Participant's Revolving Percentage in the Issuing Lender's obligations and rights under and in respect of each Letter of Credit and the amount of each draft paid by the Issuing Lender thereunder. Each L/C Participant agrees with the Issuing Lender that, if a draft is paid under any Letter of Credit for 39 which the Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at the Issuing Lender's address for notices specified herein an amount equal to such L/C Participant's Revolving Percentage of the amount of such draft, or any part thereof, that is not so reimbursed. Each L/C Participant's obligation to pay such amount shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment, defense or other right that such L/C Participant may have against the Issuing Lender, the Borrower or any other Person for any reason whatsoever, (ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the other conditions specified in Section 6, (iii) any adverse change in the condition (financial or otherwise) of the Borrower, (iv) any breach of this Agreement or any other Loan Document by the Borrower, any other Loan Party or any other L/C Participant or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing (b) If any amount required to be paid by any L/C Participant to the Issuing Lender pursuant to Section 3.10(a) in respect of any unreimbursed portion of any payment made by the Issuing Lender under any Letter of Credit is paid to the Issuing Lender within three Business Days after the date such payment is due, such L/C Participant shall pay to the Issuing Lender on demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal Funds Effective Rate during the period from and including the date such payment is required to the date on which such payment is immediately available to the Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. If any such amount required to be paid by any L/C Participant pursuant to Section 3.10(a) is not made available to the Issuing Lender by such L/C Participant within three Business Days after the date such payment is due, the Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to Base Rate Loans under the Revolving Facility. A certificate of the Issuing Lender submitted to any L/C Participant with respect to any amounts owing under this Section shall be conclusive in the absence of manifest error. (c) Whenever, at any time after the Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its pro rata share of such payment in accordance with Section 3.10(a), the Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied thereto by the Issuing Lender), or any payment of interest on account thereof, the Issuing Lender will distribute to such L/C Participant its pro rata share thereof; provided, however, that in the event that any such payment received by the Issuing Lender shall be required to be returned by the Issuing Lender, such L/C Participant shall return to the Issuing Lender the portion thereof previously distributed by the Issuing Lender to it. 3.11 Reimbursement Obligation of the Borrower. If any draft is paid under any Letter of Credit, the Borrower shall reimburse the Issuing Lender for the amount of (a) the draft so paid and (b) any taxes, fees, charges or other costs or expenses incurred by the Issuing Lender in connection with such payment, not later than 12:00 Noon, New York City time, on (i) the Business Day that the Borrower receives notice of such draft, if such notice is received on such day prior to 10:00 A.M., New York City time, or (ii) if clause (i) above does not apply, the 40 Business Day immediately following the day that the Borrower receives such notice. Each such payment shall be made to the Issuing Lender at its address for notices referred to herein in Dollars and in immediately available funds. Interest shall be payable on any such amounts from the date on which the relevant draft is paid until payment in full at the rate set forth in (x) until the Business Day next succeeding the date of the relevant notice, Section 4.5(b) and (y) thereafter, Section 4.5(c). 3.12 Obligations Absolute. The Borrower's obligations under this Section 3 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment that the Borrower may have or have had against the Issuing Lender, any beneficiary of a Letter of Credit or any other Person. The Borrower also agrees with the Issuing Lender that the Issuing Lender shall not be responsible for, and the Borrower's Reimbursement Obligations under Section 3.11 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee. The Issuing Lender shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Issuing Lender. The Borrower agrees that any action taken or omitted by the Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct, shall be binding on the Borrower and shall not result in any liability of the Issuing Lender to the Borrower. 3.13 Letter of Credit Payments. If any draft shall be presented for payment under any Letter of Credit, the Issuing Lender shall promptly notify the Borrower of the date and amount thereof. The responsibility of the Issuing Lender to the Borrower in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are substantially in conformity with such Letter of Credit. 3.14 Letter of Credit Requests. To the extent that any provision of any Letter of Credit Request or any Issuing Lender's standard form of application referred to in Section 3.8 is inconsistent with the provisions of this Section 3, the provisions of this Section 3 shall apply. SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT 4.1. Optional Prepayments. (a) Subject to Section 4.2(i), the Borrower may at any time and from time to time prepay the Loans, in whole or in part, without premium or penalty, upon irrevocable notice delivered to the Administrative Agent no later than 1:00 P.M., New York City time, three Business Days prior thereto, in the case of Eurodollar Loans, and no later than 11:00 A.M., New York City time, on the date thereof, in the case of Base Rate Loans, 41 which notice shall specify the date and amount of prepayment and whether the prepayment is of Eurodollar Loans or Base Rate Loans; provided, that if a Eurodollar Loan is prepaid on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 4.11. Upon receipt of any such notice, the Administrative Agent shall promptly notify each relevant Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with (except in the case of Revolving Loans that are Base Rate Loans and Swingline Loans) accrued interest to such date on the amount prepaid. Partial prepayments of Term Loans and Revolving Loans shall be in an aggregate principal amount of $1,000,000 or a whole multiple thereof. Partial prepayments of Swingline Loans shall be in an aggregate principal amount of $100,000 or a whole multiple thereof. (b) Notwithstanding anything to the contrary in Section 4.1(a) or 4.8, with respect to the amount of any optional prepayment described in Section 4.1(a) that is allocated to Tranche B Term Loans (such amounts, the "Optional Tranche B Prepayment Amount"), at any time when Tranche A Term Loans (or, if applicable, Tranche A Term Commitments) remain outstanding, the Borrower will, in lieu of applying such amount to the prepayment of Tranche B Term Loans as provided in Sections 4.1(a) and 4.8, on the date specified in Section 4.1(a) for such prepayment, give the Administrative Agent telephonic notice (promptly confirmed in writing) requesting that the Administrative Agent prepare and provide to each Tranche B Lender a Prepayment Option Notice as described below. As promptly as practicable after receiving such notice from the Borrower, the Administrative Agent will send to each Tranche B Lender a Prepayment Option Notice, which shall be in the form of Exhibit G, and shall include an offer by the Borrower to prepay on the date (each an "Optional Prepayment Date") that is 10 Business Days after the date of the Prepayment Option Notice, the relevant Term Loans of such Lender by an amount equal to the portion of the Optional Tranche B Prepayment Amount indicated in such Lender's Prepayment Option Notice as being applicable to such Lender's Tranche B Term Loans. On the Optional Prepayment Date, (i) the Borrower shall pay to the relevant Tranche B Lenders the aggregate amount necessary to prepay that portion of the outstanding relevant Term Loans in respect of which such Lenders have accepted prepayment as described above, (ii) any unused Tranche A Term Commitments shall first be reduced and then, the Tranche A Term Loans shall be prepaid in an aggregate amount equal to the portion of the Optional Tranche B Prepayment Amount not accepted by the relevant Lenders, and such amount shall be applied to the prepayment of the Tranche A Term Loans to the extent so required. 4.2. Mandatory Prepayments and Commitment Reductions. (a) If any Indebtedness shall be incurred by any Group Member (other than Excluded Indebtedness), an amount equal to 100% of the Net Cash Proceeds thereof shall be applied on the date of such incurrence toward the prepayment of the Term Loans (and, if applicable, the reduction of any unused Tranche A Term Commitments) and the reduction of the Revolving Commitments as set forth in Section 4.2(g); provided that (i) to the extent that the Consolidated Leverage Ratio as of the date of incurrence of Indebtedness pursuant to Section 8.2(a)(xv), calculated on a pro forma basis after giving effect to the incurrence of such Indebtedness (and any required repayments hereunder), is greater than or equal to 4.0 to 1.0 but less than 5.0 to 1.0, in each case after giving effect thereto, only 75% of the Net Cash Proceeds of such Indebtedness shall be applied on the date of such incurrence toward the prepayment of the Term Loans (and, if applicable, the reduction of any unused Tranche A Term Commitments) and the reduction of the Revolving 42 Commitments as set forth in Section 4.2(g) and (ii) to the extent that the Consolidated Leverage Ratio as of the date of incurrence of Indebtedness pursuant to Section 8.2(a)(xv), calculated on a pro forma basis after giving effect to the incurrence of such Indebtedness (and any required repayments hereunder), is less than 4.0 to 1.0 after giving effect thereto, only 50% of the Net Cash Proceeds of such Indebtedness shall be applied on the date of such incurrence toward the prepayment of the Term Loans (and, if applicable, the reduction of any unused Tranche A Term Commitments) and the reduction of the Revolving Commitments as set forth in Section 4.2(g). (b) If any Capital Stock shall be issued or sold by any Group Member (other than issuances of Capital Stock to any Group Member or as contemplated by Section 8.6(d)), an amount equal to 50% of the Net Cash Proceeds thereof shall be applied on the date of such issuance or sale toward the prepayment of the Term Loans (and, if applicable, the reduction of any unused Tranche A Term Commitments) and the reduction of the Revolving Commitments as set forth in Section 4.2(g). (c) If on any date any Group Member shall receive Net Cash Proceeds from any Asset Sale or Recovery Event then, unless a Reinvestment Notice shall be delivered in respect thereof, an amount equal to 100% of such Net Cash Proceeds shall be applied on such date toward the prepayment of the Term Loans (and, if applicable, the reduction of any unused Tranche A Term Commitments) and the reduction of the Revolving Commitments as set forth in Section 4.2(g); provided, that (i) notwithstanding the foregoing, on each Reinvestment Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event shall be applied toward the prepayment of the Term Loans (and, if applicable, the reduction of any unused Tranche A Term Commitments) and the reduction of the Revolving Commitments as set forth in Section 4.2(g) and (ii) the Borrower shall use the Net Cash Proceeds of any Disposition to prepay Term Loans (and, if applicable, reduce any unused Tranche A Term Commitments) and reduce the Revolving Commitments as set forth in Section 4.2(g) to the extent necessary to avoid having to prepay or to offer to prepay any of the Notes, the Existing Subordinated Notes or any Additional High Yield Debt. (d) If, for any fiscal year of the Borrower commencing with the fiscal year ending December 31, 2003, there shall be Excess Cash Flow, the Borrower shall, on the relevant Excess Cash Flow Application Date, apply the ECF Percentage of such Excess Cash Flow toward the prepayment of the Term Loans (and, if applicable, the reduction of the unused Tranche A Term Commitments) and the reduction of the Revolving Commitments as set forth in Section 4.2(g). Each such prepayment and commitment reduction shall be made on a date (an "Excess Cash Flow Application Date") no later than five days after the earlier of (i) the date on which the financial statements of the Borrower referred to in Section 7.1(a), for the fiscal year with respect to which such prepayment is made, are required to be delivered to the Lenders and (ii) the date such financial statements are actually delivered. (e) In the event that the amounts on deposit in the Escrow Account are released (other than, upon satisfaction of the conditions set forth therein, to finance the Acquisition and to repay the obligations outstanding under the Existing Credit Agreement), including as a result of a Special Mandatory Prepayment Event or pursuant to Section 3(f) of the Escrow Agreement, the Administrative Agent shall apply an amount equal to 100% of such funds received by the Administrative Agent from the Securities Intermediary toward the prepayment of the Tranche B 43 Term Loans and the payment of accrued interest in respect thereof. If a Special Mandatory Prepayment Event shall occur but the funds released to the Administrative Agent from the Escrow Account, as described in the preceding sentence, are insufficient to prepay in full the Tranche B Term Loans and the accrued interest in respect thereof, the Borrower shall, within one Business Day of written notice from the Administrative Agent, pay any remaining principal amount of Tranche B Term Loans outstanding and any remaining accrued interest or other amounts owing in respect thereof. (f) If on any date any Group Member shall receive any payment from any party under any escrow or indemnification arrangements under the Acquisition Documentation or as a direct or indirect result of any breach of any term or provision of the Acquisition Documentation or otherwise in respect of any claim by any Group Member arising out of the Acquisition, the Borrower shall apply 100% of such payment on the date of receipt toward the prepayment of the Term Loans (and, if applicable, the reduction of the unused Tranche A Term Commitments) and the reduction of the Revolving Commitments as set forth in Section 4.2(g). (g) Amounts to be applied in connection with prepayments and Commitment reductions made pursuant to Section 4.2 shall be applied, first, to prepay the Term Loans (and, if applicable, to reduce the unused Tranche A Term Commitments, which commitments shall be reduced prior to any prepayment of Tranche A Term Loans) and, second, to reduce permanently the Revolving Commitments. Any such reduction of the Revolving Commitments shall be accompanied by prepayment of the Revolving Loans and/or Swingline Loans to the extent, if any, that the Total Revolving Extensions of Credit exceed the amount of the Total Revolving Commitments as so reduced, provided that if the aggregate principal amount of Revolving Loans and Swingline Loans then outstanding is less than the amount of such excess (because L/C Obligations constitute a portion thereof), the Borrower shall, to the extent of the balance of such excess, replace outstanding Letters of Credit and/or deposit an amount in cash in a cash collateral account established with the Administrative Agent for the benefit of the Lenders on terms and conditions satisfactory to the Administrative Agent. The application of any prepayment pursuant to Section 4.2 shall be made, first, to Base Rate Loans and, second, to Eurodollar Loans. Each prepayment of the Loans under Section 4.2 (except in the case of Revolving Loans that are Base Rate Loans and Swingline Loans) shall be accompanied by accrued interest to the date of such prepayment on the amount prepaid. (h) Notwithstanding anything to the contrary in Section 4.2(g) or 4.8, with respect to the amount of any mandatory prepayment described in Section 4.2 that is allocated to Tranche B Term Loans (such amounts, the "Tranche B Prepayment Amount"), at any time when Tranche A Term Loans (or, if applicable, Tranche A Term Commitments) remain outstanding, the Borrower will, in lieu of applying such amount to the prepayment of Tranche B Term Loans as provided in paragraph (g) above, on the date specified in Section 4.2 for such prepayment, give the Administrative Agent telephonic notice (promptly confirmed in writing) requesting that the Administrative Agent prepare and provide to each Tranche B Lender a Prepayment Option Notice as described below. As promptly as practicable after receiving such notice from the Borrower, the Administrative Agent will send to each Tranche B Lender a Prepayment Option Notice, which shall be in the form of Exhibit G, and shall include an offer by the Borrower to prepay on the date (each a "Mandatory Prepayment Date") that is 10 Business Days after the date of the Prepayment Option Notice, the relevant Term Loans of such Lender by an amount equal to 44 the portion of the Tranche B Prepayment Amount indicated in such Lender's Prepayment Option Notice as being applicable to such Lender's Tranche B Term Loans. On the Mandatory Prepayment Date, (i) the Borrower shall pay to the relevant Tranche B Lenders the aggregate amount necessary to prepay that portion of the outstanding relevant Term Loans in respect of which such Lenders have accepted prepayment as described above, (ii) any unused Tranche A Term Commitments shall first be reduced and then, the Tranche A Term Loans shall be prepaid in an aggregate amount equal to the portion of the Tranche B Prepayment Amount not accepted by the relevant Lenders, and such amount shall be applied to the prepayment of the Tranche A Term Loans to the extent so required. (i) Each mandatory prepayment pursuant to Section 4.2(a) in respect of the Tranche B Term Loans or any prepayment in connection with a refinancing of this Agreement, in each case on or prior to the second anniversary of the Closing Date, shall be accompanied by a prepayment premium equal to (i) if such prepayment is made prior to the first anniversary of the Closing Date, 2.0% of the principal amount of such prepayment and (ii) if such prepayment is made on or after the first anniversary of the Closing Date and on or prior to the second anniversary of the Closing Date, 1.0% of the principal amount of such prepayment. (j) Notwithstanding anything to the contrary in Section 4.2(g) or 4.8, if the Tender Offer is consummated but not all the Existing Subordinated Notes are refinanced thereby, the Borrower shall, on the earlier of the third Business Day following the date that Existing Subordinated Notes are purchased pursuant to the Tender Offer and the release of the relevant funds from the Notes Escrow, apply an amount equal to the aggregate principal amount of Existing Subordinated Notes not refinanced pursuant to the Tender Offer, first, to prepay (without any reduction in the Revolving Commitments) any outstanding Revolving Loans (other than any Revolving Loans used to finance any purchase price adjustment payable on the Acquisition Closing Date pursuant to the Acquisition Agreement) and, second, to prepay the Term Loans (and, if applicable, to reduce any unused Tranche A Term Commitments, which commitments shall be reduced prior to any prepayment of Tranche A Term Loans). 4.3. Conversion and Continuation Options. (a) The Borrower may elect from time to time to convert Eurodollar Loans to Base Rate Loans by giving the Administrative Agent prior irrevocable notice of such election no later than 12:00 Noon, New York City time, on the Business Day preceding the proposed conversion date, provided that any such conversion of Eurodollar Loans may only be made on the last day of an Interest Period with respect thereto. The Borrower may elect from time to time to convert Base Rate Loans to Eurodollar Loans by giving the Administrative Agent prior irrevocable notice of such election no later than 12:00 Noon, New York City time, on the Business Day preceding the proposed conversion date (which notice shall specify the length of the initial Interest Period therefor), provided that no Base Rate Loan under a particular Facility may be converted into a Eurodollar Loan when any Event of Default has occurred and is continuing and the Administrative Agent or the Majority Facility Lenders in respect of such Facility have determined in its or their sole discretion not to permit such conversions. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof. (b) Any Eurodollar Loan may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving irrevocable notice to the 45 Administrative Agent, in accordance with the applicable provisions of the term "Interest Period" set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Loans, provided that no Eurodollar Loan under a particular Facility may be continued as such when any Event of Default has occurred and is continuing and the Administrative Agent has or the Majority Facility Lenders in respect of such Facility have determined in its or their sole discretion not to permit such continuations, and provided, further, that if the Borrower shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso such Loans shall be automatically converted to Base Rate Loans on the last day of such then expiring Interest Period. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof. 4.4. Limitations on Eurodollar Tranches. Notwithstanding anything to the contrary in this Agreement, all borrowings, conversions and continuations of Eurodollar Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, (a) after giving effect thereto, the aggregate principal amount of the Eurodollar Loans comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof and (b) no more than 20 Eurodollar Tranches shall be outstanding at any one time. 4.5. Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such day plus the Applicable Margin. (b) Each Base Rate Loan shall bear interest at a rate per annum equal to the Base Rate plus the Applicable Margin. (c) (i) If all or a portion of the principal amount of any Loan or Reimbursement Obligation shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to (x) in the case of the Loans, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section plus 2% or (y) in the case of Reimbursement Obligations, the rate applicable to Base Rate Loans under the Revolving Facility plus 2%, and (ii) if all or a portion of any interest payable on any Loan or Reimbursement Obligation or any commitment fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then applicable to Base Rate Loans under the relevant Facility plus 2% (or, in the case of any such other amounts that do not relate to a particular Facility, the rate then applicable to Base Rate Loans under the Revolving Facility plus 2%), in each case, with respect to clauses (i) and (ii) above, from the date of such non-payment until such amount is paid in full (as well after as before judgment). (d) Interest shall be payable in arrears on each Interest Payment Date, provided that interest accruing pursuant to paragraph (c) of this Section shall be payable from time to time on demand. 4.6. Computation of Interest and Fees. (a) Interest and fees payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed, except that, 46 with respect to Base Rate Loans the rate of interest on which is calculated on the basis of the Prime Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of each determination of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a change in the Base Rate or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change becomes effective. The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of the effective date and the amount of each such change in interest rate. (b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to Section 4.5(a). 4.7. Inability to Determine Interest Rate. If prior to the first day of any Interest Period: (a) the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, or (b) the Administrative Agent shall have received notice from the Majority Facility Lenders in respect of the relevant Facility that the Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period, the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the relevant Lenders as soon as practicable thereafter. If such notice is given (x) any Eurodollar Loans under the relevant Facility requested to be made on the first day of such Interest Period shall be made as Base Rate Loans, (y) any Loans under the relevant Facility that were to have been converted on the first day of such Interest Period to Eurodollar Loans shall be continued as Base Rate Loans and (z) any outstanding Eurodollar Loans under the relevant Facility shall be converted, on the last day of the then-current Interest Period, to Base Rate Loans. Until such notice has been withdrawn by the Administrative Agent, no further Eurodollar Loans under the relevant Facility shall be made or continued as such, nor shall the Borrower have the right to convert Loans under the relevant Facility to Eurodollar Loans. 4.8. Pro Rata Treatment and Payments. (a) Each borrowing by the Borrower from the Lenders hereunder, each payment by the Borrower on account of any commitment or participation fees and any reduction of the Commitments of the Lenders shall be made pro rata according to the respective Tranche A Term Percentages, Tranche B Term Percentages or Revolving Percentages, as the case may be, of the relevant Lenders. 47 (b) Each payment (including each prepayment) by the Borrower on account of principal of and interest on the Term Loans shall be made pro rata according to the respective outstanding principal amounts of the Term Loans then held by the Term Lenders (except as otherwise provided in Sections 4.1(b), 4.2(e), 4.2(h) and 4.2(j)), provided that, for purposes of Sections 4.1(b), 4.2(g) and 4.2(h), any unused Tranche A Term Commitment shall, for purposes of the foregoing, be treated the same as outstanding Tranche A Term Loans. The amount of each principal prepayment of the Term Loans shall be applied to reduce the then remaining installments of the Tranche A Term Loans and Tranche B Term Loans, as the case may be, pro rata based upon the then remaining principal amount thereof. Amounts prepaid on account of the Term Loans may not be reborrowed. (c) Each payment (including each prepayment) by the Borrower on account of principal of and interest on the Revolving Loans shall be made pro rata according to the respective outstanding principal amounts of the Revolving Loans then held by the Revolving Lenders. (d) All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 1:00 P.M., New York City time, on the due date thereof to the Administrative Agent, for the account of the Lenders, at the Funding Office, in Dollars and in immediately available funds. The Administrative Agent shall distribute such payments to the Lenders promptly upon receipt in like funds as received. If any payment hereunder (other than payments on the Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day. If any payment on a Eurodollar Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. In the case of any extension of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension. (e) Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation for the period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this paragraph shall be conclusive in the absence of manifest error. If such Lender's share of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days of such Borrowing Date, the Administrative Agent shall also be entitled to 48 recover such amount with interest thereon at the rate per annum applicable to Base Rate Loans under the relevant Facility, on demand, from the Borrower. (f) Unless the Administrative Agent shall have been notified in writing by the Borrower prior to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is making such payment, and the Administrative Agent may, but shall not be required to, in reliance upon such assumption, make available to the Lenders their respective pro rata shares of a corresponding amount. If such payment is not made to the Administrative Agent by the Borrower within three Business Days after such due date, the Administrative Agent shall be entitled to recover, on demand, from each Lender to which any amount which was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of the Administrative Agent or any Lender against the Borrower. 4.9. Requirements of Law. (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof: (i) shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any Letter of Credit or any Eurodollar Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except for Non-Excluded Taxes covered by Section 4.10 and changes in the rate of tax on the overall net income of such Lender); (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender that is not otherwise included in the determination of the Eurodollar Rate hereunder; or (iii) shall impose on such Lender any other condition; and the result of any of the foregoing is to increase the cost to such Lender, by an amount that such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar Loans or issuing or participating in Letters of Credit, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender on an after-tax basis for such increased cost or reduced amount receivable. If any Lender becomes entitled to claim any additional amounts pursuant to this paragraph, it shall promptly notify the Borrower in writing (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled, which notice shall set forth in reasonable detail the basis for the calculation of such amounts. 49 (b) If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender's or such corporation's capital as a consequence of its obligations hereunder or under or in respect of any Letter of Credit to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a written request therefor, the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such corporation on an after-tax basis for such reduction. (c) A certificate as to any additional amounts payable pursuant to this Section submitted by any Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in the absence of manifest error. Notwithstanding anything to the contrary in this Section, the Borrower shall not be required to compensate a Lender pursuant to this Section for any amounts incurred more than six months prior to the date that such Lender notifies the Borrower of such Lender's intention to claim compensation therefor; provided that, if the circumstances giving rise to such claim have a retroactive effect, then such six-month period shall be extended to include the period of such retroactive effect. The obligations of the Borrower pursuant to this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. 4.10. Taxes. (a) All payments made by the Borrower under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on any Agent or any Lender as a result of a present or former connection between such Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from such Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded Taxes") or Other Taxes are required to be withheld from any amounts payable to any Agent or any Lender hereunder, the amounts so payable to such Agent or such Lender shall be increased to the extent necessary to yield to such Agent or such Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement, provided, however, that the Borrower shall not be required to increase any such amounts payable to any Lender with respect to any Non-Excluded Taxes (i) that are attributable to such Lender's failure to comply with the requirements of paragraph (d) or (e) of this Section or (ii) that are United States withholding taxes imposed on amounts payable to such Lender at the time such Lender becomes a party to this Agreement, except to the extent that such Lender's assignor (if 50 any) was entitled, at the time of assignment, to receive additional amounts from the Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph. (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. (c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly as possible after payment thereof the Borrower shall send to the Administrative Agent for its own account or for the account of the relevant Agent or Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, the Borrower shall indemnify the Agents and the Lenders for any incremental taxes, interest or penalties that may become payable by any Agent or any Lender as a result of any such failure. (d) Each Lender (or Transferee) that is not a "U.S. Person" as defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver to the Borrower and the Administrative Agent (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of "portfolio interest", a statement substantially in the form of Exhibit H and a Form W-8BEN, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the Borrower under this Agreement and the other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before the date such Participant purchases the related participation). In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant to this paragraph that such Non-U.S. Lender is not legally able to deliver. (e) A Lender that is entitled to an exemption from or reduction of non-U.S. withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate, provided that such Lender is legally entitled to complete, execute and deliver such documentation and in such Lender's judgment such completion, execution or submission would not materially prejudice the legal position of such Lender. 51 (f) If any Agent or any Lender determines, in its sole discretion, that it has received a refund of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 4.10, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 4.10 with respect to the Non-Excluded Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of such Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that the Borrower, upon the request of such Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to such Agent or such Lender in the event such Agent or such Lender is required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require any Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person. (g) The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. 4.11. Indemnity. The Borrower agrees to indemnify each Lender and to hold each Lender harmless from any loss or expense that such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment of or conversion from Eurodollar Loans after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a prepayment of Eurodollar Loans on a day that is not the last day of an Interest Period with respect thereto (including, without limitation, any such prepayment from funds released from the Escrow Account). Such indemnification may include an amount equal to the excess, if any, of (i) the amount of interest that would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Loans provided for herein (excluding, however, the Applicable Margin included therein, if any) over (ii) the amount of interest (as reasonably determined by such Lender) that would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market. A certificate as to any amounts payable pursuant to this Section submitted to the Borrower by any Lender shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. 4.12. Change of Lending Office. Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 4.9 or 4.10(a) with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event; provided, that such 52 designation is made on terms that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to suffer no economic, legal or regulatory disadvantage, and provided, further, that nothing in this Section shall affect or postpone any of the obligations of the Borrower or the rights of any Lender pursuant to Section 4.9 or 4.10(a). 4.13. Replacement of Lenders. The Borrower shall be permitted to replace any Lender that (a) requests reimbursement for amounts owing pursuant to Section 4.9 or 4.10(a) or (b) defaults in its obligation to make Loans hereunder, with a replacement financial institution; provided that (i) such replacement does not conflict with any Requirement of Law, (ii) no Event of Default shall have occurred and be continuing at the time of such replacement, (iii) prior to any such replacement, such Lender shall have taken no action under Section 4.12 so as to eliminate the continued need for payment of amounts owing pursuant to Section 4.9 or 4.10(a), (iv) the replacement financial institution shall purchase, at par, all Loans and other amounts owing to such replaced Lender on or prior to the date of replacement, (v) the Borrower shall be liable to such replaced Lender under Section 4.11 if any Eurodollar Loan owing to such replaced Lender shall be purchased other than on the last day of the Interest Period relating thereto, (vi) the replacement financial institution, if not already a Lender, shall be reasonably satisfactory to the Administrative Agent, (vii) the replaced Lender shall be obligated to make such replacement in accordance with the provisions of Section 11.6 (provided that the Borrower shall be obligated to pay the registration and processing fee referred to therein), (viii) until such time as such replacement shall be consummated, the Borrower shall pay all additional amounts (if any) required pursuant to Section 4.9 or 4.10(a), as the case may be, and (ix) any such replacement shall not be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender. 4.14. Evidence of Debt. (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing indebtedness of the Borrower to such Lender resulting from each Loan of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. (b) The Administrative Agent, on behalf of the Borrower, shall maintain the Register pursuant to Section 11.6(b), and a subaccount therein for each Lender, in which shall be recorded (i) the amount of each Loan made hereunder and any Promissory Note evidencing such Loan, the Type of such Loan and each Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) both the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender's share thereof. (c) The entries made in the Register and the accounts of each Lender maintained pursuant to Section 4.14(a) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain the Register or any such account, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of this Agreement. 53 (d) The Borrower agrees that, upon the request to the Administrative Agent by any Lender, the Borrower will execute and deliver to such Lender a promissory note of the Borrower evidencing any Term Loans, Revolving Credit Loans or Swingline Loans, as the case may be, of such Lender, substantially in the forms of Exhibit I-1, I-2 or I-3, respectively, with appropriate insertions as to date and principal amount. 4.15. Illegality. Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled and (b) such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a Eurodollar Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to Section 4.11. SECTION 5. REPRESENTATIONS AND WARRANTIES To induce the Agents and the Lenders to enter into this Agreement and to make the Loans and issue or participate in the Letters of Credit, Holdings and the Borrower hereby jointly and severally represent and warrant to each Agent and each Lender that: 5.1. Financial Condition. (a) The unaudited pro forma consolidated balance sheet and statement of operations of Holdings and its consolidated Subsidiaries as at September 30, 2002, (including the notes thereto) (the "Pro Forma Financial Statements"), copies of which will be or have been furnished to each Lender, giving effect (as if such events had occurred on such date or the first day of the relevant period, as the case may be) to (i) the consummation of the Acquisition, (ii) the Refinancing, (iii) the Equity Investment, (iv) the Loans to be made (or otherwise outstanding) on the Acquisition Closing Date and the issuance of the Notes and the use of proceeds thereof and (v) the payment of fees, expenses and debt repayment premiums in connection with the foregoing. The Pro Forma Financial Statements were prepared based on the best information available to the Borrower as of the date of delivery thereof, and present fairly on a pro forma basis the estimated financial position and operations of Holdings and its consolidated Subsidiaries as at September 30, 2002 or for the relevant period, as the case may be, assuming that the events specified in the preceding sentence had actually occurred at such date or the first day of the relevant period, as the case may be. (b) The audited consolidated balance sheets of Holdings as at December 31, 1999, December 31, 2000 and December 31, 2001 and the related consolidated statements of operations and of cash flows for the fiscal years ended on such dates, reported on by and accompanied by an unqualified report from PricewaterhouseCoopers LLP, present fairly the consolidated financial condition of Holdings as at such date, and the consolidated results of its operations and its consolidated cash flows for the respective fiscal years then ended. The 54 unaudited consolidated balance sheet of Holdings as at September 30, 2002, and the related unaudited consolidated statements of operations, cash flows and changes in shareholders equity for the nine-month period ended on such date, present fairly the consolidated financial condition of Holdings as at such date, and the consolidated results of its operations and its consolidated cash flows for the nine-month period then ended (subject to normal year-end audit adjustments). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein). No Group Member has any material Guarantee Obligations, contingent liabilities and liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the financial statements referred to in the preceding sentence (it being understood that with respect to Guarantee Obligations, the underlying debt is so reflected). During the period from December 31, 2001 to and including the date hereof there has been no Disposition by Holdings or any of its Subsidiaries of any material part of its business or property. (c) The audited balance sheets of DonTech II as at December 31, 1999, December 31, 2000 and December 31, 2001, and the related statements of income and of cash flows for the fiscal years ended on such dates, reported on by and accompanied by an unqualified report from PricewaterhouseCoopers LLP, present fairly the financial condition of DonTech II as at such date, and the results of its operations and cash flows for the respective fiscal years then ended. The unaudited balance sheet of DonTech II as at September 30, 2002, and the related unaudited statements of income and cash flows for the nine-month period ended on such date, present fairly the financial condition of DonTech II as at such date, and the results of its operations and cash flows for the nine-month period then ended (subject to normal year-end audit adjustments). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein). DonTech II does not have any material Guarantee Obligations, contingent liabilities and liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the most recent financial statements referred to in this paragraph. 5.2. No Change. Since December 31, 2001, there has been no development, circumstance or event that has had or could reasonably be expected to have a Material Adverse Effect. 5.3. Corporate Existence; Compliance with Law. Each Group Member and the Material Joint Venture (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification and (d) is in compliance with all Requirements of Law, in each case with respect to clauses (c) and (d), except to the extent that the failure to 55 comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. 5.4. Power; Authorization; Enforceable Obligations. Each Loan Party has the power and authority, and the legal right, to execute, deliver and perform the Loan Documents to which it is a party and, in the case of the Borrower, to obtain extensions of credit hereunder. Each Loan Party has taken all necessary organizational action to authorize the execution, delivery and performance of the Loan Documents to which it is a party and, in the case of the Borrower, to authorize the extensions of credit on the terms and conditions of this Agreement. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the Acquisition and the extensions of credit hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement or any of the Loan Documents, except (i) consents, authorizations, filings and notices described in Schedule 5.4, which consents, authorizations, filings and notices have been obtained or made and are in full force and effect (except, with respect to consents, authorizations, filings and notices solely in connection with the Acquisition, as could not reasonably be expected to have a Material Adverse Effect) and (ii) the filings referred to in Section 5.18. Each Loan Document has been duly executed and delivered on behalf of each Loan Party party thereto. This Agreement constitutes, and each other Loan Document upon execution will constitute, a legal, valid and binding obligation of each Loan Party party thereto, enforceable against each such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 5.5. No Legal Bar. The execution, delivery and performance of this Agreement and the other Loan Documents, the issuance of Letters of Credit, the borrowings hereunder and the use of the proceeds thereof will not violate any Requirement of Law or any Contractual Obligation of any Group Member or the Material Joint Venture and will not result in, or require, the creation or imposition of any Lien on any of their respective properties or revenues pursuant to any Requirement of Law or any such Contractual Obligation (other than the Liens created by the Security Documents). No Requirement of Law or Contractual Obligation applicable to Holdings, the Borrower or any of its Subsidiaries or the Material Joint Venture could reasonably be expected to have a Material Adverse Effect. 5.6. Litigation. Except as set forth on Schedule 5.6, no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of Holdings or the Borrower, threatened by or against any Group Member or the Material Joint Venture or against any of their respective properties or revenues (a) with respect to the Acquisition (including, if applicable, the acquisition of the Excluded Business pursuant to Section 1.8 of the Acquisition Agreement), any of the Loan Documents, the Existing Credit Agreement, the Existing Subordinated Debt Documents, the Acquisition Documentation or the Material Agreements or any of the transactions contemplated hereby or thereby, or (b) that could reasonably be expected to have a Material Adverse Effect. 5.7. No Default. No Group Member or the Material Joint Venture is in default under or with respect to any of its Contractual Obligations in any respect that could reasonably 56 be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing. 5.8. Ownership of Property; Liens. Each Group Member and the Material Joint Venture has title in fee simple to, or a valid leasehold interest in, all its real property, and good title to, or a valid leasehold interest in, all its other property, except to the extent the failure to do so could not reasonably be expected to have a Material Adverse Effect, and none of such property is subject to any Lien except as permitted by Section 8.3. 5.9. Intellectual Property. Each Group Member and the Material Joint Venture owns, or is licensed to use, all Intellectual Property necessary for the conduct of its business as currently conducted, except to the extent the failure to do so could not reasonably be expected to have a Material Adverse Effect. No material claim has been asserted and is pending by any Person challenging or questioning the use of any Intellectual Property or the validity or effectiveness of any Intellectual Property, nor does Holdings or the Borrower know of any valid basis for any such claim that could reasonably be expected to have a Material Adverse Effect. The use of Intellectual Property by each Group Member and the Material Joint Venture does not infringe on the rights of any Person, except to the extent the same could not reasonably be expected to have a Material Adverse Effect. 5.10. Taxes. Each Group Member and the Material Joint Venture has filed or caused to be filed all federal, state and other material tax returns that are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of Holdings, the Borrower or its Subsidiaries or the Material Joint Venture, as the case may be); no tax Lien has been filed, and, to the knowledge of Holdings and the Borrower, no claim is being asserted, with respect to any such tax, fee or other charge. 5.11. Federal Regulations. No part of the proceeds of any Loans, and no other extensions of credit hereunder, will be used for "buying" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms under Regulation U as now and from time to time hereafter in effect or for any purpose that violates the provisions of the Regulations of the Board. If requested by any Lender or the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in Regulation U. 5.12. ERISA. Neither a Reportable Event nor an "accumulated funding deficiency" (within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Plan, and each Plan has complied in all material respects with the applicable provisions of ERISA and the Code. No termination of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such five-year period. The present value of all accrued benefits under each Single Employer Plan (based on those 57 assumptions used to fund such Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits by a material amount. Neither the Borrower nor any Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan that has resulted or could reasonably be expected to result in a material liability under ERISA, and neither the Borrower nor any Commonly Controlled Entity would become subject to any material liability under ERISA if the Borrower or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made. No such Multiemployer Plan is in Reorganization or Insolvent. 5.13. Investment Company Act; Other Regulations. No Loan Party is an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. No Loan Party or the Material Joint Venture is a "holding company", or a company "controlled" by a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. No Loan Party is subject to regulation under any Requirement of Law (other than Regulation X of the Board) that limits its ability to incur Indebtedness. 5.14. Subsidiaries and Joint Ventures. (a) As of the Initial Closing Date, (i) Schedule 5.14(a) sets forth the name and jurisdiction of incorporation of each Subsidiary, the Material Joint Venture and each other partnership or joint venture to which the Borrower is a party or in which the Borrower has an economic interest on the Initial Closing Date and, as to each such Subsidiary, the Material Joint Venture and each such other partnership or joint venture, as the case may be, the percentage of each class of Capital Stock (or other economic interest) owned by any Loan Party and (ii) there are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than stock options granted to employees or directors and directors' qualifying shares) of any nature relating to any Capital Stock of the Borrower, any Subsidiary or the Material Joint Venture, except as created by the Loan Documents. (b) After giving effect to the Acquisition, (i) Schedule 5.14 (b) (as supplemented in writing on or prior to the Acquisition Closing Date or the Final Acquisition Closing Date, as the case may be) sets forth the name and jurisdiction of incorporation of each new Subsidiary acquired on the Acquisition Closing Date or the Final Acquisition Closing Date, as the case may be, and, as to each such Subsidiary, the percentage of each class of Capital Stock owned by any Loan Party and (ii) there are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than stock options granted to employees or directors and directors' qualifying shares) of any nature relating to any Capital Stock of the Borrower or any Subsidiary, except as created by the Loan Documents. 5.15. Use of Proceeds. The proceeds of the Term Loans shall be used to finance a portion of the Acquisition and the Refinancing and to pay related fees, expenses and debt repayment premiums. The proceeds of the Revolving Loans shall be used to finance a portion of the Acquisition and the Refinancing and to pay related fees, expenses and debt repayment premiums and, following the consummation of the Acquisition, shall be used, together with the proceeds of the Swingline Loans and the Letters of Credit, for general corporate purposes. 58 5.16. Environmental Matters. Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect: (a) the facilities and properties owned, leased or operated by any Group Member or the Material Joint Venture (the "Properties") do not contain, and have not previously contained, any Materials of Environmental Concern in amounts or concentrations or under circumstances that constitute or constituted a violation of, or could give rise to liability under, any Environmental Law; (b) no Group Member or the Material Joint Venture has received or is aware of any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Properties or the business operated by any Group Member or the Material Joint Venture (the "Business"), nor does Holdings or the Borrower have knowledge or reason to believe that any such notice will be received or is being threatened; (c) Materials of Environmental Concern have not been transported or disposed of from the Properties in violation of, or in a manner or to a location that could give rise to liability under, any Environmental Law, nor have any Materials of Environmental Concern been generated, treated, stored or disposed of at, on or under any of the Properties in violation of, or in a manner that could give rise to liability under, any applicable Environmental Law; (d) no judicial proceeding or governmental or administrative action is pending or, to the knowledge of Holdings and the Borrower, threatened, under any Environmental Law to which any Group Member or the Material Joint Venture is or will be named as a party with respect to the Properties or the Business, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Properties or the Business; (e) there has been no Release or threat of Release of Materials of Environmental Concern at or from the Properties, or arising from or related to the operations of any Group Member or of the Material Joint Venture in connection with the Properties or otherwise in connection with the Business, in violation of or in amounts or in a manner that could give rise to liability under Environmental Laws; (f) the Properties and all operations at the Properties are in compliance, and have in the last five years been in compliance, with all applicable Environmental Laws, and there is no violation of any Environmental Law with respect to the Business; and (g) no Group Member or Material Joint Venture has assumed any liability of any other Person under Environmental Laws. 5.17. Accuracy of Information, etc. No statement or information contained in this Agreement, any other Loan Document, the Confidential Information Memoranda or any other document, certificate or statement furnished by or on behalf of any Loan Party to the Administrative Agent or the Lenders, or any of them, for use in connection with the transactions 59 contemplated by this Agreement or the other Loan Documents, contained as of the date such statement, information, document or certificate was so furnished (or, in the case of the Confidential Information Memoranda, as of the date of this Agreement), any untrue statement of a material fact or omitted to state a material fact necessary to make the statements contained herein or therein not misleading. The projections and pro forma financial information contained in the materials referenced above are based upon good faith estimates and assumptions believed by management of the Borrower to be reasonable at the time made, it being recognized by the Lenders that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount. As of the date hereof, the Acquisition Closing Date and, if applicable, the Final Acquisition Closing Date, the representations and warranties of Holdings contained in the Acquisition Documentation are or will be true and correct in all material respects (except to the extent such representations and warranties relate to a specific date, then as of such date). On the date hereof, there is no fact known to any Loan Party that could reasonably be expected to have a Material Adverse Effect that has not been expressly disclosed herein, in the other Loan Documents, in the Confidential Information Memoranda or in any other documents, certificates and statements furnished to the Administrative Agent and the Lenders for use in connection with the transactions contemplated hereby and by the other Loan Documents. 5.18. Security Documents. (a) The Guarantee and Collateral Agreement is effective to create in favor of the Administrative Agent, for the benefit of the Lenders, a legal, valid and enforceable security interest in the Collateral described therein and proceeds thereof. In the case of the Pledged Stock described in the Guarantee and Collateral Agreement, when stock certificates representing such Pledged Stock are delivered to the Administrative Agent, and in the case of the other Collateral described in the Guarantee and Collateral Agreement, when financing statements and other filings specified on Schedule 5.18(a) in appropriate form are filed in the offices specified on Schedule 5.18(a), the Guarantee and Collateral Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral and the proceeds thereof, as security for the Obligations (as defined in the Guarantee and Collateral Agreement), in each case prior and superior in right to any other Person (except Liens permitted by Section 8.3). (b) Each of the Mortgages is effective to create in favor of the Administrative Agent, for the benefit of the Lenders, a legal, valid and enforceable Lien on the Mortgaged Properties described therein and proceeds thereof, and when the Mortgages are filed in the offices specified on Schedule 5.18(b) (as supplemented in writing on or prior to the Acquisition Closing Date or the Final Acquisition Closing Date, as the case may be), each such Mortgage shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in the Mortgaged Properties and the proceeds thereof, as security for the Obligations (as defined in the relevant Mortgage), in each case prior and superior in right to any other Person. Schedule 1.1 lists, as of the Initial Closing Date, and as anticipated on the Acquisition Closing Date and, if applicable, the Final Acquisition Closing Date, each parcel of owned real property and each leasehold interest in real property located in the United States and held by the Borrower or any of its Subsidiaries. 60 (c) The Escrow Agreement is effective to create in favor of the Administrative Agent, for the benefit of the Lenders, a legal, valid and enforceable Lien on the Escrow Account and all amounts and other property held therein. Upon the execution and delivery of the Securities Account Control Agreement, the Escrow Agreement shall constitute a fully perfected Lien on, and security interest in, all rights of the Special Purpose Borrower in the Collateral (as defined in the Escrow Agreement) and the proceeds thereof, as security for the Secured Obligations (as defined in the Escrow Agreement), in each case prior and superior in right to any other Person. 5.19. Solvency. The Loan Parties, taken as a whole, are, and after giving effect to the Acquisition (and, if applicable, after giving effect to the acquisition of the Excluded Business pursuant to Section 1.8 of the Acquisition Agreement), the Refinancing, the Equity Investment (and the transactions and other arrangements contemplated by each of the Acquisition, the Refinancing and the Equity Investment) and the incurrence of all Indebtedness and obligations being incurred in connection herewith and therewith will be and will continue to be, Solvent. 5.20. Senior Debt. The Obligations constitute "Senior Debt" and "Designated Senior Debt" of the Borrower and each Subsidiary Guarantor under and as defined in the Senior Subordinated Notes Indenture and the Existing Subordinated Debt Documents, respectively. 5.21. Regulation H. No Mortgage encumbers improved real property that is located in an area that has been identified by the Secretary of Housing and Urban Development as an area having special flood hazards and in which flood insurance has been made available under the National Flood Insurance Act of 1968. 5.22. Certain Documents. The Borrower has delivered to the Administrative Agent a complete and correct copy of the Existing Credit Agreement, the Existing Subordinated Debt Documents, the Acquisition Documentation, the Notes Indentures, the documents relating to the Tender Offer and the Material Agreements, including any amendments, supplements or modifications with respect to any of the foregoing. SECTION 6. CONDITIONS PRECEDENT 6.1. Conditions to Effectiveness of Agreement and Initial Escrowed Extension of Credit. The effectiveness of this Agreement and the agreement of each Tranche B Lender to make the initial extension of credit requested to be made by it is subject to the satisfaction, prior to or concurrently with the making of such extension of credit on the Initial Closing Date (but in any event no later than December 9, 2002), of the following conditions precedent: (a) Loan Documents. The Administrative Agent shall have received (i) this Agreement, or, in the case of the Lenders, an Addendum, executed and delivered by each Agent, Holdings, the Borrower and each Lender, (ii) the Guarantee and Collateral Agreement, executed and delivered by Holdings, the Borrower and each Subsidiary Guarantor, (iii) an Acknowledgment and Consent in the form attached to the Guarantee and Collateral Agreement, executed and delivered by each Issuer (as defined therein), if any, that is not a Loan Party, (iv) the Escrow Agreement executed and delivered by the 61 Special Purpose Borrower, RHDonnelley, the Administrative Agent, the Securities Intermediary and the Existing Administrative Agent, (v) the Securities Account Control Agreement executed and delivered by the Special Purpose Borrower, the Administrative Agent and the Securities Intermediary and (vi) the Lien Subordination Agreement executed and delivered by Holdings, RHDonnelley, the Special Purpose Borrower, the Subsidiaries of the Borrower party thereto, the Administrative Agent and the Existing Administrative Agent. (b) Notes. (i) The Special Purpose Issuer shall have issued Senior Unsecured Notes in an aggregate principal amount of $325,000,000 and Senior Subordinated Notes in an aggregate principal amount of $600,000,000 on terms and conditions satisfactory to the Agents and (ii) the Borrower or the Special Purpose Issuer shall have deposited $951,184,000 with Deutsche Bank Trust Company Americas, in its capacity as escrow agent for the holders of the Notes, in the Notes Escrow on terms and conditions satisfactory to the Agents. (c) Financial Statements. The Lenders shall have received the financial statements referred to in Section 5.1. (d) Approvals. All governmental and third party approvals (including landlords' and other consents) necessary in connection with the financing contemplated hereby shall have been obtained and be in full force and effect. (e) Lien Searches. The Administrative Agent shall have received the results of a recent Lien search in each of the jurisdictions where assets of the Loan Parties and the Material Joint Venture are located (within the meaning of the Uniform Commercial Code), and such search shall reveal no liens on any of the assets of the Loan Parties or the Material Joint Venture, except for liens permitted by Section 8.3 or discharged on or prior to the Initial Closing Date pursuant to documentation satisfactory to the Administrative Agent. (f) Environmental Audit. The Administrative Agent shall have received Transaction Screens with respect to the real properties owned by the Borrower and its Subsidiaries and with respect to the property leased by the Borrower at 6001 Hospitality Court, Morrisville, North Carolina, and the Agents shall be reasonably satisfied as to the amount and nature of any environmental and employee health and safety liabilities and exposures to which the Group Members may be subject. (g) Expenses. The Lenders and the Agents shall have received all expenses required to be paid or reimbursed for which invoices have been presented (including the reasonable fees and expenses of legal counsel) on or before the Initial Closing Date. All such amounts will be paid with proceeds of Loans made on the Initial Closing Date and will be reflected in the funding instructions given by the Borrower to the Administrative Agent on or before the Initial Closing Date. (h) Closing Certificate. The Administrative Agent shall have received a certificate of each Loan Party, dated the Initial Closing Date, substantially in the form of 62 Exhibit C, with appropriate insertions and attachments including the certificate of incorporation of each Loan Party that is a corporation certified by the relevant authority of the jurisdiction of organization of such Loan Party, and a long form good standing certificate for each Loan Party from its jurisdiction of organization. (i) Legal Opinions. The Administrative Agent shall have received the following executed legal opinions: (i) the legal opinion of Jones, Day, Reavis & Pogue, counsel to the Borrower and its Subsidiaries, substantially in the form of Exhibit F-1; and (ii) the legal opinion of Robert J. Bush, Esq., general counsel of the Borrower and its Subsidiaries, substantially in the form of Exhibit F-2. Each such legal opinion shall cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require. (j) Pledged Stock; Stock Powers; Pledged Notes. The Administrative Agent (or its agent) shall have received (i) the certificates representing the shares of Capital Stock pledged pursuant to the Guarantee and Collateral Agreement as of the Initial Closing Date, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof and (ii) each promissory note (if any) pledged to the Administrative Agent pursuant to the Guarantee and Collateral Agreement as of the Initial Closing Date endorsed (without recourse) in blank (or accompanied by an executed transfer form in blank) by the pledgor thereof. (k) Filings, Registrations and Recordings. Each document (including any Uniform Commercial Code financing statement) required by the Security Documents or under law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Lenders, a perfected Lien on the Collateral described therein as of the Initial Closing Date, prior and superior in right to any other Person (other than with respect to Liens expressly permitted by Section 8.3), shall be in proper form for filing, registration or recordation. (l) Solvency Certificate. The Administrative Agent shall have received a certificate of the chief financial officer of Holdings certifying as to the solvency of the Loan Parties, taken as a whole, on the Initial Closing Date. (m) Insurance. The Administrative Agent shall have received insurance certificates satisfying the requirements of Section 7.5(b) hereof and Section 5.2(b) of the Guarantee and Collateral Agreement with respect to the grantors parties thereto. (n) Amendments to Existing Credit Agreement; Designation of Unrestricted Subsidiaries. The Agents shall have received evidence satisfactory to them that the Existing Credit Agreement has been amended or modified in order to permit the Loan Parties to execute, deliver and perform this Agreement and the other Loan Documents, to borrow hereunder and to use the proceeds hereof and to permit the issuance of the Notes 63 and the Notes Escrow in a manner that will not violate the terms and provisions of the Existing Credit Agreement. The Administrative Agent shall have received evidence satisfactory to it that the Special Purpose Borrower and the Special Purpose Issuer shall each have been designated as "Unrestricted Subsidiaries" under the Existing Subordinated Debt Documents pursuant to documentation in form and substance satisfactory to the Administrative Agent. (o) Escrow Account; Related Documents. A minimum of $908,230,000 shall be deposited into the Escrow Account on the Initial Closing Date. The Administrative Agent shall also have received such legal opinions, certificates and other documents as it may reasonably request in connection with the Escrow Agreement. (p) Minimum Consolidated EBITDA. Consolidated EBITDA for the most recently completed period of four consecutive fiscal quarters prior to the Acquisition Closing Date (for which financial statements are available), determined on a pro-forma basis in accordance with Regulation S-X under the Securities Act of 1933, as amended, or as otherwise approved by the Agents, without giving effect to the restructuring charge of $18,600,000 and the investment impairment charge of $11,400,000 taken in the fourth quarter of 2001 but after giving effect (as if such events had occurred on the first day of such period but only to the extent such events would impact the calculation of Consolidated EBITDA in accordance with GAAP) to (i) the consummation of the Acquisition (assuming the acquisition of the Excluded Business, even if such business is not acquired on the Acquisition Closing Date), (ii) the Loans to be made (or otherwise outstanding) on the Acquisition Closing Date and the issuance of the Notes and the use of the proceeds thereof, (iii) the Refinancing, (iv) the Equity Investment and (v) the payment of fees, expenses and debt repayment premiums in connection with the foregoing, shall be no less than $395,000,000. (q) Acquisition Documentation. The Acquisition Documentation shall not have been terminated and shall be in full force and effect. 6.2. Conditions to Initial Extensions of Credit under the Tranche A Term Facility and the Revolving Facility and Release of the Tranche B Term Loans from Escrow. The agreement of each Tranche A Term Lender and each Revolving Lender to make their respective initial extensions of credit requested to be made by them and the release of the Tranche B Term Loans from the Escrow Account are subject to the satisfaction of the following conditions precedent: (a) Acquisition, etc. The following transactions shall have been or shall concurrently be consummated, in each case on terms and conditions reasonably satisfactory to each Agent: (i) The Borrower shall acquire all of issued and outstanding shares of Capital Stock of the Companies from the Sellers pursuant to the Acquisition Agreement for a purchase price not to exceed $2,230,000,000 (subject to adjustment for working capital as provided in the Acquisition Agreement); provided that the Excluded Business 64 shall not be required to be sold to the Borrower on or prior to the Acquisition Closing Date to the extent provided in Section 1.8 of the Acquisition Agreement; (ii) Holdings shall have received at least $198,000,000 in net proceeds from the issuance of the Preferred Stock by Holdings to Goldman Sachs or any other Person, and such proceeds shall have been contributed to the Borrower as common equity; (iii) A portion of the proceeds from the issuance of the Notes shall have been released to the Borrower from the Notes Escrow, together with any other amounts on deposit therein, in an aggregate amount equal to (A) the aggregate amount on deposit therein minus (B) the amount necessary to (1) repurchase the Existing Subordinated Notes that have been validly tendered and not withdrawn pursuant to the Tender Offer, plus accrued interest thereon or (2) redeem Senior Subordinated Notes in an aggregate principal amount of $150,000,000 plus accrued interest thereon, and a Responsible Officer of the Borrower shall have delivered a certificate to the Administrative Agent to such effect; (iv) the Administrative Agent shall have received satisfactory evidence that the fees, expenses and debt repayment premiums incurred in connection with the Acquisition, the Refinancing, the Equity Investment (and the transactions and other arrangements contemplated by each of the Acquisition, the Refinancing and the Equity Investment) shall not exceed $105,000,000; (v) the Administrative Agent shall have received satisfactory evidence that (A) the Existing Credit Agreement shall have been terminated and all amounts thereunder shall have been repaid in full and (B) satisfactory arrangements shall have been made for the release of all Liens granted in connection therewith and the discharge of all other obligations in connection therewith; and (vi) the Administrative Agent shall have received satisfactory evidence that the Special Purpose Borrower shall have been merged with and into the Borrower, with the Borrower as the surviving entity, including, without limitation, a true, correct and complete copy of the related certificate of merger or agreement of merger filed by the Borrower with the Secretary of State of the State of Delaware. (b) Guarantee and Collateral Agreement. The Administrative Agent shall have received (i) a Supplement to the Guarantee and Collateral Agreement, executed and delivered by the Companies and each of their Subsidiaries (other than the Subsidiaries which own the Excluded Business (the "Excluded Business Subsidiaries") to the extent the Excluded Business is not acquired on the Acquisition Closing Date) and (ii) an Acknowledgment and Consent in the form attached to the Guarantee and Collateral Agreement, executed and delivered by each such Person (or any of its Subsidiaries) which is an Issuer (as defined therein) but is not a Loan Party. (c) Financial Statements. The Lenders shall have received copies of all financial statements described in Section 3.6 of the Acquisition Agreement or then required to be 65 delivered by the Sellers to Holdings pursuant to Section 5.2(e) of the Acquisition Agreement. (d) Approvals. All governmental and third party approvals (including landlords' and other consents) necessary in connection with the Acquisition, the Refinancing, the Equity Investment (and the transactions and other arrangements contemplated by each of the Acquisition, the Refinancing and the Equity Investment), the continuing operations of the Group Members (including all new Subsidiaries acquired by the Borrower pursuant to the Acquisition Agreement on or prior to the Acquisition Closing Date) and the financing contemplated hereby shall have been obtained and be in full force and effect (except, with respect to consents, authorizations, filings and notices solely in connection with the Acquisition, as could not reasonably be expected to have a Material Adverse Effect), and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority that would restrain, prevent or otherwise impose adverse conditions on the Acquisition or the financing contemplated hereby. (e) Lien Searches. The Administrative Agent shall have received the results of a recent Lien search in each of the jurisdictions where assets of the Companies and each of their Subsidiaries (other than the Excluded Business Subsidiaries to the extent the Excluded Business is not acquired on the Acquisition Closing Date) are located (within the meaning of the Uniform Commercial Code), and such search shall reveal no Liens on any of the assets of such Loan Parties, except for Liens permitted by Section 8.3 or discharged on or prior to the Acquisition Closing Date pursuant to documentation satisfactory to the Administrative Agent. (f) Environmental Audit. The Administrative Agent shall have received Transaction Screens with respect to the real properties owned by the Borrower and its Subsidiaries, and the Agents shall be reasonably satisfied as to the amount and nature of any environmental and employee health and safety liabilities and exposures to which the Group Members may be subject. (g) Fees. The Lenders and the Agents shall have received all fees required to be paid, and all expenses for which invoices have been presented (including the reasonable fees and expenses of legal counsel), on or before the Acquisition Closing Date. All such amounts will be paid with proceeds of Loans made on the Acquisition Closing Date and will be reflected in the funding instructions given by the Borrower to the Administrative Agent on or before the Acquisition Closing Date. (h) Closing Certificate. The Administrative Agent shall have received a certificate of each Company and each of its Subsidiaries (other than the Excluded Business Subsidiaries to the extent that the Excluded Business is not acquired on the Acquisition Closing Date), dated the Acquisition Closing Date, substantially in the form of Exhibit C, with appropriate insertions and attachments including the certificate of incorporation of each such Loan Party that is a corporation certified by the relevant authority of the jurisdiction of organization of such Loan Party, and (ii) a long form good standing certificate for each such Loan Party from its jurisdiction of organization. 66 (i) Legal Opinions. The Administrative Agent shall have received the following executed legal opinions: (i) the legal opinion of Jones, Day, Reavis & Pogue, in form and substance satisfactory to the Administrative Agent; (ii) the legal opinion of Robert J. Bush, Esq., in form and substance satisfactory to the Administrative Agent; and (iii) to the extent consented to by the relevant counsel, each legal opinion, if any, delivered in connection with the Acquisition Agreement, accompanied by a reliance letter in favor of the Lenders. Each such legal opinion shall cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require but, in any event with respect to the opinions described in clauses (i) and (ii) above, shall be substantially similar in form, substance and scope as the opinions delivered pursuant to Section 6.1(i). (j) Pledged Stock; Stock Powers; Pledged Notes. The Administrative Agent shall have received (i) the certificates representing the shares of Capital Stock pledged pursuant to the Guarantee and Collateral Agreement as of the Acquisition Closing Date, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof and (ii) each promissory note (if any) pledged to the Administrative Agent pursuant to the Guarantee and Collateral Agreement as of the Acquisition Closing Date endorsed (without recourse) in blank (or accompanied by an executed transfer form in blank) by the pledgor thereof. (k) Filings, Registrations and Recordings. Each document (including any Uniform Commercial Code financing statement) required by the Security Documents or under law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Lenders, a perfected Lien on the Collateral described therein as of the Acquisition Closing Date, prior and superior in right to any other Person (other than with respect to Liens expressly permitted by Section 8.3), shall be in proper form for filing, registration or recordation. (l) Mortgages, etc. (i) The Administrative Agent shall have received a Mortgage with respect to each Mortgaged Property to be subject to a Mortgage as of the Acquisition Closing Date as described on Schedule 1.1 (the "Acquisition Closing Date Mortgaged Properties"), executed and delivered by a duly authorized officer of each party thereto. (ii) If requested by the Administrative Agent, the Administrative Agent shall have received, and the title insurance company issuing the policy referred to in clause (iii) below (the "Title Insurance Company") shall have received, maps or plats of an as-built survey of the sites of the Acquisition Closing Date Mortgaged Properties certified to the Administrative Agent and the Title Insurance Company in a manner 67 satisfactory to them, dated a date reasonably satisfactory to the Administrative Agent and the Title Insurance Company by an independent professional licensed land surveyor reasonably satisfactory to the Administrative Agent and the Title Insurance Company, which must show the following: (A) the locations on such sites of all the buildings, structures and other improvements and the established building setback lines; (B) the lines of streets abutting the sites and width thereof; (C) all access and other easements appurtenant to the sites (or if the surveyor is not able to locate an easement, the survey shall include a note to that effect); (D) all roadways, paths, driveways, easements, encroachments and overhanging projections and similar encumbrances affecting the site, whether recorded or apparent from a physical inspection of the sites; (E) any encroachments on any adjoining property by the building structures and improvements on the sites; and (F) the flood zone designations, if any, in which the Acquisition Closing Date Mortgaged Properties are located. (iii) The Administrative Agent shall have received in respect of each Acquisition Closing Date Mortgaged Property a mortgagee's title insurance policy (or policies) or marked up unconditional binder for such insurance. Each such policy shall (A) be in an amount reasonably satisfactory to the Administrative Agent (but in any event not in excess of the fair market value of such Acquisition Closing Date Mortgaged Property); (B) be issued at ordinary rates; (C) insure that the Mortgage insured thereby creates a valid first Lien on such Acquisition Closing Date Mortgaged Property free and clear of all defects and encumbrances, except as provided in Section 8.3 or as disclosed therein; (D) name the Administrative Agent for the benefit of the Lenders as the insured thereunder; (E) be in the form of ALTA Loan Policy - 1970 (Amended 10/17/70 and 10/17/84) (or equivalent policies); (F) contain such endorsements and affirmative coverage as the Administrative Agent may reasonably request and (G) be issued by title companies reasonably satisfactory to the Administrative Agent (including any such title companies acting as co-insurers or reinsurers, at the option of the Administrative Agent). The Administrative Agent shall have received evidence reasonably satisfactory to it that all premiums in respect of each such policy, all charges for mortgage recording tax, and all related expenses, if any, have been paid. (iv) If requested by the Administrative Agent, and to the extent available at commercially reasonable rates, the Administrative Agent shall have received a policy of flood insurance that (1) covers any parcel of improved real property that is located in a flood zone and encumbered by any Mortgage as of the Acquisition Closing Date (2) is written in an amount not less than the outstanding principal amount of the indebtedness secured by such Mortgage that is reasonably allocable to such real property or the maximum limit of coverage made available with respect to the particular type of property under the National Flood Insurance Act of 1968, whichever is less, and (3) has a term ending not later than the maturity of the Indebtedness secured by such Mortgage. (v) The Administrative Agent shall have received a copy of all recorded documents referred to, or listed as exceptions to title in, the title policy or policies referred to in clause (iii) above. 68 (m) Solvency Certificate. The Administrative Agent shall have received a certificate of the chief financial officer of Holdings certifying as to the solvency of the Loan Parties, taken as a whole, on the Acquisition Closing Date. (n) Insurance. The Administrative Agent shall have received insurance certificates satisfying the requirements of Section 7.5(b) hereof and Section 5.2(b) of the Guarantee and Collateral Agreement. (o) Control Agreements. The Administrative Agent shall have received control agreements executed by all parties thereto with respect to each Deposit Account (as defined in the Guarantee and Collateral Agreement) or Securities Account (as defined in the Guarantee and Collateral Agreement) pledged by any Loan Party to the Administrative Agent pursuant to the Guarantee and Collateral Agreement (subject to the proviso in Section 7.10(e) hereof), in each case in form and substance satisfactory to the Administrative Agent. 6.3. Conditions to Final Acquisition Closing Date. The agreement of each Tranche A Term Lender to make the extensions of credit requested to be made by it on the Final Acquisition Closing Date is subject to the satisfaction of the following conditions precedent: (a) Acquisition of Excluded Business. The Borrower shall acquire all of issued and outstanding shares of Capital Stock of the relevant Excluded Business Subsidiaries from the Sellers, for a purchase price not to exceed the amount provided in Section 1.8 of the Acquisition Agreement (the "Excluded Business Acquisition") and the Administrative Agent shall have received satisfactory evidence, including a certificate from a Responsible Officer, that the Second Closing shall have been consummated in accordance with the terms of Section 1.8 of the Acquisition Agreement. (b) Guarantee and Collateral Agreement. The Administrative Agent shall have received (i) a Supplement to the Guarantee and Collateral Agreement, executed and delivered by each Excluded Business Subsidiary acquired by the Borrower pursuant to the Excluded Business Acquisition on the Final Acquisition Closing Date and (ii) an Acknowledgment and Consent in the form attached to the Guarantee and Collateral Agreement, executed and delivered by each new Issuer (as defined therein) acquired by the Borrower pursuant to the Excluded Business Acquisition on the Final Acquisition Closing Date, if any, that is not a Loan Party. (c) Approvals. All governmental and third party approvals (including landlords' and other consents) necessary in connection with the Excluded Business Acquisition, the continuing operations of the Group Members (including, the Excluded Business Subsidiaries) and the financing contemplated hereby shall have been obtained and be in full force and effect (except, with respect to consents, authorizations, filings and notices solely in connection with the Excluded Business Acquisition, as could not reasonably be expected to have a Material Adverse Effect), and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority that would restrain, prevent or otherwise impose adverse conditions on the Excluded Business Acquisition or the financing contemplated hereby. 69 (d) Lien Searches. The Administrative Agent shall have received the results of a recent Lien search in each of the jurisdictions where assets of each relevant Excluded Business Subsidiary are located (within the meaning of the Uniform Commercial Code), and such search shall reveal no Liens on any of the assets of such Subsidiaries, except for Liens permitted by Section 8.3 or discharged on or prior to the Final Acquisition Closing Date pursuant to documentation satisfactory to the Administrative Agent. (e) Fees. The Lenders and the Agents shall have received all fees required to be paid, and all expenses for which invoices have been presented (including the reasonable fees and expenses of legal counsel), on or before the Final Acquisition Closing Date. All such amounts will be paid with proceeds of Loans made on the Final Acquisition Closing Date and will be reflected in the funding instructions given by the Borrower to the Administrative Agent on or before the Final Acquisition Closing Date. (f) Closing Certificate. The Administrative Agent shall have received a certificate of each relevant Excluded Business Subsidiary, dated the Final Acquisition Closing Date, substantially in the form of Exhibit C, with appropriate insertions and attachments including the certificate of incorporation of each such Loan Party that is a corporation certified by the relevant authority of the jurisdiction of organization of such Loan Party, and (ii) a long form good standing certificate for each such Loan Party from its jurisdiction of organization. (g) Legal Opinions. The Administrative Agent shall have received the following executed legal opinions: (i) the legal opinion of Jones, Day, Reavis & Pogue, in form and substance satisfactory to the Administrative Agent; (ii) the legal opinion of Robert J. Bush, Esq., in form and substance satisfactory to the Administrative Agent; and (iii) to the extent consented to by the relevant counsel, each legal opinion, if any, delivered in connection with the Second Closing under the Acquisition Agreement, accompanied by a reliance letter in favor of the Lenders. Each such legal opinion shall cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require but, in any event with respect to the opinions described in clauses (i) and (ii) above, shall be substantially similar in form, substance and scope as the opinions delivered pursuant to Section 6.1(i). (h) Pledged Stock; Stock Powers; Pledged Notes. The Administrative Agent shall have received (i) the certificates representing the shares of Capital Stock pledged pursuant to the Guarantee and Collateral Agreement as of the Final Acquisition Closing Date, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof and (ii) each promissory note (if any) pledged to the Administrative Agent pursuant to the Guarantee and Collateral Agreement 70 as of the Final Acquisition Closing Date endorsed (without recourse) in blank (or accompanied by an executed transfer form in blank) by the pledgor thereof. (i) Filings, Registrations and Recordings. Each document (including any Uniform Commercial Code financing statement) required by the Security Documents or under law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Lenders, a perfected Lien on the Collateral described therein as of the Final Acquisition Closing Date, prior and superior in right to any other Person (other than with respect to Liens expressly permitted by Section 8.3), shall be in proper form for filing, registration or recordation. 6.4. Conditions to Each Extension of Credit. The agreement of each Lender to make any extension of credit requested to be made by it on any date (including any extension of credit on the Initial Closing Date, the Acquisition Closing Date or thereafter, as applicable) is subject to the satisfaction of the following conditions precedent: (a) No Default. No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extensions of credit requested to be made on such date. (b) Representations and Warranties. Each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct on and as of such date as if made on and as of such date except to the extent such representations and warranties relate to a specified date, then as of such date. (c) Certificate. At the request of the Administrative Agent, the Borrower shall have delivered to the Administrative Agent a certificate of a Responsible Officer certifying the satisfaction of the conditions set forth in Sections 6.4(a) and 6.4(b). Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower hereunder shall constitute a representation and warranty by the Borrower as of the date of such extension of credit that the conditions contained in this Section 6.4 have been satisfied. SECTION 7. AFFIRMATIVE COVENANTS Holdings and the Borrower hereby jointly and severally agree that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding or any Loan or other amount is owing to any Lender or Agent hereunder, each of Holdings and the Borrower shall, and the Borrower shall cause each of its Subsidiaries to: 7.1. Financial Statements. Furnish to the Administrative Agent (with copies for each Lender): (a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower, a copy of the audited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such year and the related audited consolidated statements of operations cash flows and changes in shareholders' 71 equity for such year, setting forth in each case in comparative form the figures for the previous year, reported on without a "going concern" or like qualification or exception, or qualification arising out of the scope of the audit, by PricewaterhouseCoopers LLP or other independent certified public accountants of nationally recognized standing; (b) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, the unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of operations for such quarter and the portion of the fiscal year through the end of such quarter and statements of changes in shareholders' equity and cash flows for the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments); (c) as soon as available, but in any event within 90 days after the end of each fiscal year of the Material Joint Venture, a copy of the audited balance sheet of the Material Joint Venture as at the end of such year and the related audited statements of income and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without "giving concern" or like qualification or exception, or qualification arising out of the scope of the audit, by PricewaterhouseCoopers LLP or other independent certified public accountants of nationally recognized standing; and (d) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Material Joint Venture, the unaudited balance sheet of the Material Joint Venture as at the end of such quarter and the related unaudited statements of income for such quarter and the portion of the fiscal year through the end of such quarter and the unaudited statement of cash flows for the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments). All such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein). 7.2. Certificates; Other Information. Furnish to the Administrative Agent (with copies for each Lender) (or, in the case of clause (g), to the relevant Lender): (a) concurrently with the delivery of the financial statements referred to in Section 7.1(a), a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default, except as specified in such certificate; 72 (b) concurrently with the delivery of any financial statements pursuant to Section 7.1(a) and (b), (i) a certificate of a Responsible Officer stating that, to the best of each such Responsible Officer's knowledge, each Loan Party during such period has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Agreement and the other Loan Documents to which it is a party to be observed, performed or satisfied by it, and that such Responsible Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate and (ii) in the case of quarterly or annual financial statements, (x) a Compliance Certificate containing all information and calculations necessary for determining compliance by each Group Member with the provisions of this Agreement referred to therein as of the last day of the fiscal quarter or fiscal year of the Borrower, as the case may be, and, if applicable, for determining the Applicable Margins, and (y) to the extent not previously disclosed to the Administrative Agent, a listing of any material Intellectual Property acquired by any Loan Party since the date of the most recent list delivered pursuant to this clause (y) (or, in the case of the first such list so delivered, since the Initial Closing Date); (c) as soon as available, and in any event no later than 30 days after the commencement for each fiscal year of the Borrower, a detailed consolidated budget for the following fiscal year (including a projected consolidated balance sheet and related consolidated statements of projected operations and cash flow as of the end of such fiscal year and the assumptions used therein), in each case with supporting commentary and discussion and in form reasonably satisfactory to the Administration Agent, and, promptly when available, any material revision of such budget (collectively, the "Projections"); (d) if the Borrower is not then a reporting company under the Securities Exchange Act of 1934, as amended, within 45 days after the end of each fiscal quarter of the Borrower or 90 days in the case of the last fiscal quarter of each fiscal year, a narrative discussion and analysis of the financial condition and results of operations of the Borrower and its Subsidiaries for such fiscal quarter and for the period from the beginning of the then current fiscal year to the end of such fiscal quarter, as compared to the portion of the Projections covering such periods and to the comparable periods of the previous year; (e) no later than five Business Days prior to the effectiveness thereof, copies of substantially final drafts of any proposed amendment, supplement, waiver or other modification with respect to the Notes Escrow, the Notes Indentures, the Material Agreements, the Existing Credit Agreement, the Existing Subordinated Debt Documents or the Acquisition Documentation; (f) within five days after the same are sent, copies of all financial statements and reports that Holdings, the Borrower or the Material Joint Venture sends to the holders of any class of its debt securities or public equity securities and, within five days after the same are filed, copies of all financial statements and reports that Holdings, the Borrower or the Material Joint Venture may make to, or file with, the SEC; 73 (g) promptly following receipt thereof, copies of financial statements required to be delivered by the Sellers pursuant to Section 5.2(e) of the Acquisition Agreement; and (h) promptly, such additional financial and other information, including, such other information regarding the operations, business affairs and financial condition of Holdings, the Borrower or any of their respective Subsidiaries or the Material Joint Venture, and compliance with the terms of any Loan Document, Acquisition Documentation or Material Agreement, as the Administrative Agent or any Lender may from time to time reasonably request. 7.3. Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its material obligations of whatever nature, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) Holdings, the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP, (c) such contest effectively suspends collection of the contested obligation and the enforcement of any Lien securing such obligation and (d) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect. 7.4. Maintenance of Existence; Compliance. (a) (i) Preserve, renew and keep in full force and effect its organizational existence and (ii) take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business, except, in each case, as otherwise permitted by Section 8.4 and except, in the case of clause (ii) above, to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (b) comply with all Contractual Obligations and Requirements of Law except to the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. 7.5. Maintenance of Property; Insurance. (a) Keep all property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted and (b) maintain with financially sound and reputable insurance companies insurance on all its property in at least such amounts and against at least such risks (but including in any event public liability, product liability and business interruption) as are usually insured against in the same general area by companies engaged in the same or a similar business. 7.6. Inspection of Property; Books and Records; Discussions. (a) Keep proper books of records and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities and (b) upon reasonable prior notice permit representatives of any Lender to visit and inspect any of its properties and examine and make abstracts from any of its books and records at any reasonable time and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition of the Group Members with officers and employees of the Group Members and with their independent certified public accountants (with respect to any of the foregoing in this clause (b) relating to the Material Joint Venture, subject to confidentiality provisions contained in the agreements listed on Schedule 7.6 pursuant to which information may not be disclosed to the Borrower and therefore may not be disclosed by the Borrower to the Lenders, in each case as such agreements 74 may be amended (so long as the confidentiality provisions remain comparable or substantially similar or are consistent with such provision prior to such amendment) or any agreement containing comparable or substantially similar confidentiality provisions or confidentiality provisions consistent with the foregoing). In addition, Holdings and the Borrower will, and will cause each of its Subsidiaries to, use its reasonable efforts to give the Lenders the rights set forth in Section 7.6(b) with respect to the Material Joint Venture. 7.7. Notices. Promptly give notice to the Administrative Agent and each Lender of: (a) the occurrence of any Default or Event of Default; (b) any (i) default or event of default under any Contractual Obligation of any Group Member or, to the knowledge of the Borrower, of the Material Joint Venture, in each case which could reasonably be expected to have a Material Adverse Effect or (ii) litigation, investigation or proceeding that may exist at any time between (A) any Group Member or the Material Joint Venture, and (B) any Governmental Authority, that in either case, if not cured or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect; (c) any litigation or proceeding affecting any Group Member or the Material Joint Venture (i) in which the amount involved is $10,000,000 or more and not covered by insurance or by indemnification from a credit worthy third party, (ii) in which injunctive or similar relief is sought and which, if adversely determined, could reasonably be expected to have a Material Adverse Effect or (iii) which relates to any Loan Document; (d) the following events, as soon as possible and in any event within 30 days after the Borrower knows or has reason to know thereof: (i) the occurrence of any Reportable Event with respect to any Plan, a failure to make any required contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the termination, Reorganization or Insolvency of, any Plan; and (e) any development or event that has had or could reasonably be expected to have a Material Adverse Effect. Each notice pursuant to this Section 7.7 shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action Holdings, the Borrower or the relevant Subsidiary proposes to take with respect thereto. 7.8. Environmental Laws. (a) Comply in all material respects with, and ensure compliance in all material respects by all tenants and subtenants, if any, with, all applicable Environmental Laws, and obtain and comply in all material respects with and maintain, and ensure that all tenants and subtenants obtain and comply in all material respects with and maintain, any and all licenses, approvals, notifications, registrations or permits required 75 by applicable Environmental Laws, except where the failure to so comply, could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. (b) Conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws and promptly comply in all material respects with all lawful orders and directives of all Governmental Authorities regarding Environmental Laws except where the failure to so conduct and complete such investigations, studies, sampling and testing, could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. 7.9. Interest Rate Protection. In the case of the Borrower, within 90 days after the Acquisition Closing Date, enter into, and thereafter maintain, Hedge Agreements to the extent necessary to provide that at least 50% of the aggregate principal amount of all Funded Debt at such time is subject to either a fixed interest rate or interest rate protection for a period of not less than three years, which Hedge Agreements shall have terms and conditions reasonably satisfactory to the Administrative Agent. 7.10. Additional Collateral, etc. (a) With respect to any property acquired after the Initial Closing Date by any Group Member (other than (x) any property described in paragraph (b), (c) or (d) below, (y) any property subject to a Lien expressly permitted by Section 8.3(a)(viii) and (z) property acquired by any Foreign Subsidiary or the Special Purpose Issuer) as to which the Administrative Agent, for the benefit of the Lenders, does not have a perfected Lien, promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement or such other documents as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a security interest in such property and (ii) take all actions necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest in such property, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be requested by the Administrative Agent. (b) With respect to any fee interest in any real property having a value (together with improvements thereof) of at least $2,500,000 acquired after the Initial Closing Date by any Group Member (other than (x) any real property subject to a Lien expressly permitted by Section 8.3(a)(viii) and (y) real property acquired by any Foreign Subsidiary), promptly (i) execute and deliver a first priority Mortgage, in favor of the Administrative Agent, for the benefit of the Lenders, covering such real property, (ii) if requested by the Administrative Agent, provide the Lenders with (x) title insurance covering such real property in an amount at least equal to the purchase price of such real property (or such other amount as shall be reasonably specified by the Administrative Agent) as well as a current as-built survey thereof, together with a surveyor's certificate and (y) any consents or estoppels reasonably deemed necessary or advisable by the Administrative Agent in connection with such Mortgage, each of the foregoing in form and substance reasonably satisfactory to the Administrative Agent and (iii) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent. 76 (c) With respect to any new Subsidiary (other than a Foreign Subsidiary) created or acquired after the Initial Closing Date by any Group Member (which, for the purposes of this paragraph (c), shall include any new Subsidiary acquired by the Borrower pursuant to the Acquisition (including, if applicable, any Excluded Business Subsidiary)), promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest in the Capital Stock and intercompany obligations of such new Subsidiary that is owned by any Group Member, (ii) deliver to the Administrative Agent the certificates representing such Capital Stock and any intercompany notes evidencing such obligations, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of the relevant Group Member, (iii) cause such new Subsidiary (A) to become a party to the Guarantee and Collateral Agreement, (B) to take such actions necessary or advisable to grant to the Administrative Agent for the benefit of the Lenders a perfected first priority security interest in the Collateral described in the Guarantee and Collateral Agreement with respect to such new Subsidiary, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be requested by the Administrative Agent and (C) to deliver to the Administrative Agent a certificate of such Subsidiary, substantially in the form of Exhibit C, with appropriate insertions and attachments, and (iv) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent. (d) With respect to any new Foreign Subsidiary created or acquired after the Initial Closing Date by any Group Member (other than by any Group Member that is a Foreign Subsidiary), promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest in the Capital Stock and intercompany obligations of such new Subsidiary that is owned by any such Group Member (provided that in no event shall more than 65% of the total outstanding Capital Stock of any such new Subsidiary be required to be so pledged), (ii) deliver to the Administrative Agent the certificates representing such Capital Stock and any intercompany notes evidencing such obligations, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of the relevant Group Member, as the case may be, and take such other action as may be necessary or, in the opinion of the Administrative Agent, desirable to perfect the Administrative Agent's security interest therein, and (iii) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent. (e) From and after the Acquisition Closing Date, with respect to any Deposit Account (as defined in the Guarantee and Collateral Agreement) or Securities Account (as defined in the Guarantee and Collateral Agreement) of any Loan Party, cause such Loan Party and the relevant securities intermediary or depository institution to enter into a control agreement in form and substance satisfactory to the Administrative Agent, provided that control agreements shall not be required with respect to Deposit Accounts and Securities Accounts having an aggregate balance of less than $1,000,000 at any one time. 77 (f) Notwithstanding anything to the contrary set forth herein, any Subsidiary which guarantees the Notes, the Existing Subordinated Notes or any Additional High Yield Debt shall comply with the requirements of Section 7.10(c). 7.11. Further Assurances. From time to time execute and deliver, or cause to be executed and delivered, such additional instruments, certificates or documents, and take all such actions, as the Administrative Agent may reasonably request for the purposes of implementing or effectuating the provisions of this Agreement and the other Loan Documents, or of more fully perfecting or renewing the rights of the Administrative Agent and the Lenders with respect to the Collateral (or with respect to any additions thereto or replacements or proceeds thereof or with respect to any other property or assets hereafter acquired by the Borrower or any Subsidiary which may be deemed to be part of the Collateral) pursuant hereto or thereto. Upon the exercise by the Administrative Agent or any Lender of any power, right, privilege or remedy pursuant to this Agreement or the other Loan Documents which requires any consent, approval, recording qualification or authorization of any Governmental Authority, the Borrower will execute and deliver, or will cause the execution and delivery of, all applications, certifications, instruments and other documents and papers that the Administrative Agent or such Lenders may be required to obtain from the Borrower or any of its Subsidiaries for such governmental consent, approval, recording, qualification or authorization. SECTION 8. NEGATIVE COVENANTS Holdings and the Borrower hereby jointly and severally agree that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding or any Loan or other amount is owing to any Lender or Agent hereunder, each of Holdings and the Borrower shall not, and the Borrower shall not permit any of its Subsidiaries to, directly or indirectly: 8.1. Financial Condition Covenants. (a) Consolidated Leverage Ratio. Subject to Section 8.1(e), permit the Consolidated Leverage Ratio at any time during any fiscal quarter set forth below to exceed the ratio set forth below opposite such fiscal quarter:
Fiscal Quarter Consolidated Leverage Ratio -------------- --------------------------- March 31, 2003 6.35 to 1.0 June 30, 2003 6.35 to 1.0 September 30, 2003 6.35 to 1.0 December 31, 2003 6.35 to 1.0 March 31, 2004 6.25 to 1.0 June 30, 2004 6.25 to 1.0 September 30, 2004 6.00 to 1.0 December 31, 2004 6.00 to 1.0 March 31, 2005 5.75 to 1.0 June 30, 2005 5.50 to 1.0 September 30, 2005 5.25 to 1.0 December 31, 2005 5.00 to 1.0 March 31, 2006 4.50 to 1.0 June 30, 2006 4.50 to 1.0
78
Fiscal Quarter Consolidated Leverage Ratio -------------- --------------------------- September 30, 2006 4.50 to 1.0 December 31, 2006 4.50 to 1.0 March 31, 2007 4.00 to 1.0 June 30, 2007 4.00 to 1.0 September 30, 2007 4.00 to 1.0 December 31, 2007 4.00 to 1.0 March 31, 2008 3.50 to 1.0 June 30, 2008 3.50 to 1.0 September 30, 2008 3.50 to 1.0 December 31, 2008 3.50 to 1.0 March 31, 2009 3.25 to 1.0 June 30, 2009 3.25 to 1.0 September 30, 2009 3.25 to 1.0 December 31, 2009 3.25 to 1.0 March 31, 2010 3.00 to 1.0 June 30, 2010 3.00 to 1.0
(b) Consolidated Senior Secured Leverage Ratio. Subject to Section 8.1(e), permit the Consolidated Senior Secured Leverage Ratio at any time during any fiscal quarter set forth below to exceed the ratio set forth opposite such fiscal quarter:
Consolidated Senior Fiscal Quarter Secured Leverage Ratio -------------- ---------------------- March 31, 2003 3.90 to 1.0 June 30, 2003 3.90 to 1.0 September 30, 2003 3.90 to 1.0 December 31, 2003 3.90 to 1.0 March 31, 2004 3.75 to 1.0 June 30, 2004 3.75 to 1.0 September 30, 2004 3.25 to 1.0 December 31, 2004 3.25 to 1.0 March 31, 2005 3.00 to 1.0 June 30, 2005 3.00 to 1.0 September 30, 2005 2.75 to 1.0 December 31, 2005 2.75 to 1.0 March 31, 2006 2.25 to 1.0 June 30, 2006 2.25 to 1.0 September 30, 2006 2.25 to 1.0 December 31, 2006 2.25 to 1.0 March 31, 2007 2.00 to 1.0 June 30, 2007 2.00 to 1.0 September 30, 2007 2.00 to 1.0 December 31, 2007 2.00 to 1.0
79
Consolidated Senior Fiscal Quarter Secured Leverage Ratio -------------- ---------------------- March 31, 2008 1.50 to 1.0 June 30, 2008 1.50 to 1.0 September 30, 2008 1.50 to 1.0 December 31, 2008 1.50 to 1.0 March 31, 2009 1.50 to 1.0 June 30, 2009 1.50 to 1.0 September 30, 2009 1.50 to 1.0 December 31, 2009 1.50 to 1.0 March 31, 2010 1.50 to 1.0 June 30, 2010 1.50 to 1.0
(c) Consolidated Interest Coverage Ratio. Subject to Section 8.1(e), permit the Consolidated Interest Coverage Ratio for any period of four consecutive fiscal quarters of Holdings ending with any fiscal quarter set forth below to be less than the ratio set forth below opposite such fiscal quarter: 80
Consolidated Interest Fiscal Quarter Coverage Ratio -------------- -------------- March 31, 2003 1.80 to 1.0 June 30, 2003 1.80 to 1.0 September 30, 2003 1.80 to 1.0 December 31, 2003 1.80 to 1.0 March 31, 2004 1.80 to 1.0 June 30, 2004 1.80 to 1.0 September 30, 2004 1.80 to 1.0 December 31, 2004 1.80 to 1.0 March 31, 2005 1.90 to 1.0 June 30, 2005 1.90 to 1.0 September 30, 2005 2.00 to 1.0 December 31, 2005 2.00 to 1.0 March 31, 2006 2.25 to 1.0 June 30, 2006 2.25 to 1.0 September 30, 2006 2.25 to 1.0 December 31, 2006 2.25 to 1.0 March 31, 2007 2.50 to 1.0 June 30, 2007 2.50 to 1.0 September 30, 2007 2.50 to 1.0 December 31, 2007 2.50 to 1.0 March 31, 2008 2.75 to 1.0 June 30, 2008 2.75 to 1.0 September 30, 2008 2.75 to 1.0 December 31, 2008 2.75 to 1.0 March 31, 2009 3.25 to 1.0 June 30, 2009 3.25 to 1.0 September 30, 2009 3.25 to 1.0 December 31, 2009 3.25 to 1.0 March 31, 2010 3.25 to 1.0 June 30, 2010 3.25 to 1.0
provided that, with respect to the periods ending March 31, 2003, June 30, 2003 and September 30, 2003, Consolidated Interest Expense for such periods shall be calculated by multiplying (x) Consolidated Interest Expense for the three, six and nine month periods, respectively, ending on such dates, by (y) 4, 2 and 4/3, respectively. (d) Consolidated Fixed Charge Coverage Ratio. Subject to Section 8.1(e), permit the Consolidated Fixed Charge Coverage Ratio for any period of four consecutive fiscal quarters of Holdings ending with any fiscal quarter set forth below to be less than the ratio set forth below opposite such fiscal quarter: 81
Consolidated Fixed Fiscal Quarter Charge Coverage Ratio -------------- --------------------- March 31, 2003 1.00 to 1.0 June 30, 2003 1.00 to 1.0 September 30, 2003 1.00 to 1.0 December 31, 2003 1.00 to 1.0 March 31, 2004 1.00 to 1.0 June 30, 2004 1.00 to 1.0 September 30, 2004 1.05 to 1.0 December 31, 2004 1.05 to 1.0 March 31, 2005 1.10 to 1.0 June 30, 2005 1.10 to 1.0 September 30, 2005 1.10 to 1.0 December 31, 2005 1.10 to 1.0 March 31, 2006 1.10 to 1.0 June 30, 2006 1.10 to 1.0 September 30, 2006 1.10 to 1.0 December 31, 2006 1.10 to 1.0 March 31, 2007 1.20 to 1.0 June 30, 2007 1.20 to 1.0 September 30, 2007 1.20 to 1.0 December 31, 2007 1.20 to 1.0 March 31, 2008 1.25 to 1.0 June 30, 2008 1.25 to 1.0 September 30, 2008 1.25 to 1.0 December 31, 2008 1.25 to 1.0 March 31, 2009 1.25 to 1.0 June 30, 2009 1.25 to 1.0 September 30, 2009 1.25 to 1.0 December 31, 2009 1.25 to 1.0 March 31, 2010 1.25 to 1.0 June 30, 2010 1.25 to 1.0
provided that, with respect to the periods ending March 31, 2003, June 30, 2003 and September 30, 2003, Consolidated Fixed Charges for such periods shall be calculated by multiplying (x) Consolidated Fixed Charged for the three, six and nine month periods, respectively, ended on such dates, by (y) 4, 2 and 4/3, respectively. (e) Adjustment of Financial Covenants. In the event that (i) the Excluded Business is not acquired on the Acquisition Closing Date and (ii) the Final Acquisition Closing Date does not occur on or prior to September 21, 2003, the Agents and the Borrower shall negotiate in good faith to change the levels set forth in Sections 8.1(a), (b), (c) and (d) to reflect the decrease in Indebtedness (and associated costs) required to fund the Acquisition and the projected decrease in Consolidated EBITDA as a result thereof. A copy of such changes shall be delivered to the Lenders. 82 8.2. Indebtedness. (a) Create, issue, incur, assume, become liable in respect of or suffer to exist any Indebtedness, except: (i) Indebtedness of any Loan Party pursuant to any Loan Document; (ii) Indebtedness (A) of the Borrower to any Subsidiary, (B) of any Subsidiary Guarantor to the Borrower or any other Subsidiary, (C) of any Foreign Subsidiary to any Foreign Subsidiary and (D) subject to Section 8.8(f), of any Foreign Subsidiary to the Borrower or any Subsidiary Guarantor; (iii) Guarantee Obligations incurred in the ordinary course of business by the Borrower or any of its Subsidiaries of obligations of the Borrower, any Subsidiary Guarantor and, subject to Section 8.8(f), of any Foreign Subsidiary; (iv) Indebtedness outstanding on the date hereof and listed on Schedule 8.2(a)(iv) and any refinancings, refundings, renewals or extensions thereof (without shortening the maturity of, or increasing the principal amount thereof or decreasing weighted average life thereof); (v) Indebtedness (including, without limitation, Capital Lease Obligations) to finance the acquisition, construction or improvement of fixed or capital assets secured by Liens permitted by Section 8.3(a)(viii) in an aggregate principal amount not to exceed $20,000,000 at any one time outstanding; (vi) (i) Indebtedness of the Borrower (or, if applicable, the Special Purpose Issuer) in respect of the Notes in an aggregate principal amount not to exceed $925,000,000 and (ii) after the Acquisition Closing Date, Guarantee Obligations of any Subsidiary Guarantor or of Holdings in respect of the Notes, provided that the Guarantee Obligations in respect of the Senior Subordinated Notes are subordinated to the same extent as the obligations of the Borrower in respect of the Senior Subordinated Notes, provided, further, that during the Escrow Period and so long as the Senior Subordinated Notes constitute Indebtedness solely of the Special Purpose Issuer, such Senior Subordinated Notes will not be required to be subordinated to the Obligations; (vii) Indebtedness of any Person that becomes a Subsidiary after the date hereof (other than the Companies and their Subsidiaries (including the Excluded Business Subsidiaries)); provided that (A) such Indebtedness exists at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Subsidiary and (B) the aggregate principal amount of Indebtedness permitted by this paragraph (vii) shall not exceed $25,000,000 (or, at any time that the Consolidated Leverage Ratio is less than 4.5 to 1.0, $50,000,000) at any time outstanding; (viii) Indebtedness of the Borrower incurred to finance the cash consideration for Permitted Acquisitions that are permitted by Section 8.8(m) so long as (v) such Indebtedness is subordinated to the Indebtedness created under the Loan Documents in a manner substantially equivalent to the subordination of 83 the Senior Subordinated Notes, (w) the terms of such Indebtedness are no more restrictive than the terms applicable to the Loans, (x) the final maturity of such Indebtedness is no earlier than the final maturity of the Loans, (y) such Indebtedness shall not require any payments of principal thereof prior to the final maturity of the Loans and (z) the aggregate principal amount of such Indebtedness shall not exceed $50,000,000; provided that, immediately after giving effect to the incurrence of such Indebtedness, the Borrower shall be in compliance with the ratios set forth in Section 8.1 opposite the period in which the date of the proposed incurring of such Indebtedness falls (the "Indebtedness Measurement Date") (and, for purposes of determining such compliance, the "Consolidated EBITDA," the "Consolidated Fixed Charge Coverage Ratio" and the "Consolidated Interest Coverage Ratio" shall each be as in effect on the last day of the fiscal quarter most recently ended on or prior to such Indebtedness Measurement Date and adjusted to give effect to the proposed incurrence of Indebtedness and the uses of the proceeds thereof as if such Indebtedness had been incurred and such acquisition had occurred on the first day of the relevant period for testing compliance and "Consolidated Total Debt" and "Consolidated Senior Secured Debt" shall be as in effect on such Indebtedness Measurement Date and assuming the proposed Indebtedness had been incurred); (ix) Hedge Agreements permitted under Section 8.12 and the Goldman Hedge Agreement; (x) (i) during the Escrow Period, Indebtedness under the Existing Credit Agreement and the Existing Subordinated Notes and (ii) thereafter, Indebtedness under the Existing Subordinated Notes not refinanced pursuant to the Tender Offer or any Additional High Yield Debt the proceeds of which are used to refinance the Existing Subordinated Notes (without increasing the principal amount thereof); (xi) Guarantee Obligations of the Borrower or any of its Subsidiaries with respect to borrowings by employees in connection with the purchase of Capital Stock of Holdings by employees or Holdings or any of its Subsidiaries; provided that the aggregate outstanding amount of such Guarantee Obligations, together with the aggregate outstanding principal amount of loans and advances pursuant to Section 8.8(i) shall not exceed $5,000,000 at any time prior to the first anniversary of the Initial Closing Date and $2,500,000 at any time thereafter; (xii) Indebtedness of the Borrower or any of its Subsidiaries in the ordinary course of business in respect of netting services, overdraft protection and other services in connection with deposit accounts; provided that the aggregate amount of such Indebtedness shall not exceed $1,000,000 at any time; (xiii) Indebtedness of the Borrower or any of its Subsidiaries in connection with surety, performance, appeal or similar bonds, completion guarantees or similar instruments (other than letters of credit) issued in the ordinary course of business and with respect to obligations other than 84 Indebtedness, including any such instruments pursuant to self-insurance and workers' compensation programs; (xiv) Indebtedness of the Borrower or any of its Subsidiaries arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds in the ordinary course of business; provided that such Indebtedness is extinguished within two Business Days of incurrence of such Indebtedness; (xv) Additional High Yield Debt, so long as Holdings and its Subsidiaries are in compliance, on a pro forma basis after giving effect to the incurrence of such Additional High Yield Debt, with the covenants set forth in Section 8.1 opposite the period in which the Indebtedness Measurement Date (and, for purposes of determining such compliance, the "Consolidated EBITDA," the "Consolidated Fixed Charge Coverage Ratio" and the "Consolidated Interest Coverage Ratio" shall each be as in effect on the last day of the fiscal quarter most recently ended on or prior to such Indebtedness Measurement Date and adjusted to give effect to the proposed incurrence of Indebtedness and the uses of the proceeds thereof as if such Indebtedness had been incurred on the first day of the relevant period for testing compliance and "Consolidated Total Debt" and "Consolidated Senior Secured Debt" shall be as in effect on such Indebtedness Measurement Date and assuming the proposed Indebtedness had been incurred); provided that no Default or Event of Default shall have then occurred and be continuing or would result therefrom; (xvi) additional Indebtedness of the Borrower or any of its Subsidiaries in an aggregate principal amount (for the Borrower and all Subsidiaries) not to exceed $20,000,000 at any one time outstanding; and (xvii) (A) Indebtedness incurred to refinance, refund or replace Indebtedness outstanding under Sections 8.2(a)(v) and 8.2(a)(vii) without increasing the principal amount thereof, (B) Additional High Yield Debt incurred to refinance, refund or replace the Senior Subordinated Notes or any Indebtedness outstanding under Section 8.2(a)(viii) without increasing the principal amount thereof and (C) Indebtedness of the Borrower and the Subsidiary Guarantors or Holdings incurred to refinance, refund or replace the Senior Unsecured Notes without increasing the principal amount thereof, so long as such Indebtedness has substantially the same terms and conditions as the Senior Subordinated Notes (but in no event with an earlier maturity). (b) Vote its direct or indirect interest in the Material Joint Venture to permit the Material Joint Venture to create, incur, assume, become liable in respect of or suffer to exist any Indebtedness, except: (i) Indebtedness outstanding on the date hereof and listed on Schedule 8.2(b)(i) and any refinancings, refundings, renewals or extensions thereof 85 (without shortening the maturity of, or increasing the principal amount thereof or decreasing the weighted average life thereof); and (ii) additional Indebtedness of the Material Joint Venture in an aggregate principal amount not to exceed $15,000,000 or, together with the amount of any Investments made pursuant to Section 8.8(h) after the date hereof, not to exceed $25,000,000 after the date hereof. 8.3. Liens. (a) Create, incur, assume or suffer to exist any Lien upon any of its property, whether now owned or hereafter acquired, except for: (i) Liens for taxes not yet due or that are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Borrower or its Subsidiaries, as the case may be, in conformity with GAAP; (ii) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business that are not overdue for a period of more than 30 days or that are being contested in good faith by appropriate proceedings; (iii) Liens arising solely by virtue of any statutory or common law provisions relating to bankers' Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depositary institution; (iv) pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation; (v) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (vi) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business that, in the aggregate, are not substantial in amount and that do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower or any of its Subsidiaries; (vii) Liens in existence on the date hereof listed on Schedule 8.3(a)(vii), securing Indebtedness permitted by Section 8.2(a)(iv), provided that no such Lien is spread to cover any additional property after the date hereof and that the principal amount of Indebtedness secured thereby is not increased; (viii) Liens securing Indebtedness of the Borrower or any other Subsidiary incurred pursuant to Section 8.2(a)(v) to finance the acquisition, construction or improvement of fixed or capital assets, provided that (A) such 86 Liens shall be created substantially simultaneously with the acquisition, construction or improvement of such fixed or capital assets, (B) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (C) the principal amount of Indebtedness secured thereby is not increased; (ix) Liens created pursuant to the Security Documents; (x) any Lien (other than Liens permitted by paragraph (vii)) existing on any property or asset prior to the acquisition thereof by the Borrower or any Subsidiary (other than pursuant to the Acquisition) or existing on any property or asset of any Person that becomes a Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary (other than pursuant to the Acquisition); provided that (A) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as the case may be, (B) such Lien shall not apply to any other property or assets of the Borrower or any Subsidiary and (C) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be; (xi) any interest or title of a lessor under any lease entered into by the Borrower or any other Subsidiary in the ordinary course of its business and covering only the assets so leased; (xii) during the Escrow Period, (A) Liens on cash and Permitted Investments to secure the Notes pursuant to the Notes Escrow, provided that the aggregate amount of cash and Permitted Investments subject to such Lien shall not exceed $951,184,000 (plus earnings thereon permitted by the Notes Escrow Agreements) and (B) Liens securing the Existing Credit Agreement (other than Liens on the Escrow Account); (xiii) any provision for the retention of title to any property by the vendor or transferor of such property, which property is acquired by the Borrower or a Subsidiary in a transaction entered into in the ordinary course of business of the Borrower or such Subsidiary and for which kind of transaction it is normal market practice for such retention of title provision to be included; (xiv) Liens arising by means of any judgment of any court to the extent not otherwise resulting in a Default; provided that any such Lien is released within 30 days following the creation thereof; and (xv) Liens not otherwise permitted by this Section so long as neither (A) the aggregate outstanding principal amount of the obligations secured thereby nor (B) the aggregate fair market value (determined as of the date such Lien is incurred) of the assets subject thereto exceeds (as to the Borrower and all Subsidiaries) $5,000,000 at any one time. 87 (b) Vote its direct or indirect interest in the Material Joint Venture to permit the Material Joint Venture to create, incur, assume or suffer to exist any Lien upon any of its properties, whether now owned or hereafter acquired, except for: (i) Liens for taxes not yet due or that are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Material Joint Venture in conformity with GAAP; (ii) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business that are not overdue for a period of more than 30 days or that are being contested in good faith by appropriate proceedings; (iii) Liens arising solely by virtue of any statutory or common law provisions relating to bankers' Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depositary institution; (iv) pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation; (v) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (vi) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business that, in the aggregate, are not substantial in amount and that do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Material Joint Venture; (vii) Liens in existence on the date hereof listed on Schedule 8.3(b)(vi), securing Indebtedness permitted by Section 8.2(b)(i), provided that no such Lien is spread to cover any additional property after the date hereof and that the principal amount of Indebtedness secured thereby is not increased; (viii) Liens securing Indebtedness of the Material Joint Venture incurred pursuant to Section 8.2(b)(ii) to finance the acquisition, construction or improvement of fixed or capital assets, provided that (A) such Liens shall be created substantially simultaneously with the acquisition, construction or improvement of such fixed or capital assets, (B) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (C) the principal amount Indebtedness secured thereby is not increased; (ix) any Lien existing on any property or asset prior to the acquisition thereof by the Material Joint Venture; provided that (A) such Lien is not created 88 in contemplation of or in connection with such acquisition, (B) such Lien shall not apply to any other property or assets of the Material Joint Venture and (C) such Lien shall secure only those obligations which it secures on the date of such acquisition; (x) any interest or title of a lessor under any lease entered into by the Material Joint Venture in the ordinary course of business and covering only the assets so leased; (xi) any provision for the retention of title to any property by the vendor or transferor of such property, which property is acquired by the Material Joint Venture in a transaction entered into in the ordinary course of business of the Material Joint Venture and for which kind of transaction it is normal market practice for such retention of title provision to be included; (xii) Liens arising by means of any judgment of any court to the extent not otherwise resulting in a Default; provided that any such Lien is released within 30 days following the creation thereof; and (xiii) Liens not otherwise permitted by this Section so long as neither (A) the aggregate outstanding principal amount of the obligations secured thereby nor (B) the aggregate fair market value (determined as of the date such Lien is incurred) of the assets subject thereto exceeds $1,000,000 at any one time. 8.4. Fundamental Changes. Enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of all or substantially all of its property or business, except that: (a) any Subsidiary of the Borrower may be merged or consolidated with or into the Borrower (provided that the Borrower shall be the continuing or surviving corporation) or with or into any Subsidiary Guarantor (provided that the Subsidiary Guarantor shall be the continuing or surviving corporation) or, subject to Section 8.8(f), with or into any Foreign Subsidiary; (b) any Subsidiary of the Borrower may Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any Subsidiary Guarantor or, subject to Section 8.8(f), any Foreign Subsidiary; (c) any Subsidiary may merge or consolidate with any other Person to effect an Investment permitted under Section 8.8(m)(x); (d) any Subsidiary may merge or consolidate with any other Person to effect a Disposition permitted under Section 8.5; and (e) the Borrower may dispose of any or all of its assets to any Subsidiary Guarantor. 89 8.5. Disposition of Property. Dispose of any of its property, whether now owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any Person, except: (a) the Disposition in the ordinary course of business of obsolete, worn out or permanently retired equipment or facilities that is no longer useful in the conduct of the business; (b) the sale of inventory in the ordinary course of business; (c) the Disposition of Permitted Investments in the ordinary course of business; (d) Dispositions permitted by Section 8.4(a), (b) or (e); (e) the sale or issuance of any Subsidiary's Capital Stock to the Borrower or any Subsidiary Guarantor; (f) the Disposition of the Borrower's facility at 1615 Bluff City Highway, Bristol, Tennessee; (g) the licensing or sublicensing of Intellectual Property in the ordinary course of business in a manner that does not materially interfere with the business of the Borrower and its Subsidiaries; (h) Dispositions of property by a Foreign Subsidiary to another Foreign Subsidiary; (i) Restricted Payments permitted by Section 8.6; (j) the Disposition of other property (other than Dispositions of less than all of the Capital Stock of any Subsidiary owned by the Group Members and other than Dispositions of any Material Agreement or any Capital Stock of the Material Joint Venture) having a fair market value not to exceed $15,000,000 in the aggregate for any fiscal year of the Borrower; provided that all Dispositions permitted by this Section 8.5(j) shall be made for fair value and at least 75% of the consideration therefor shall consist of cash or Permitted Investments; and (k) Permitted Asset Swaps. 8.6. Restricted Payments. Declare or pay any dividend (other than dividends payable solely in common stock of the Person making such dividend) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of (nor will any Group Member vote its direct or indirect interest in the Material Joint Venture to permit the Material Joint Venture to declare or pay any dividend (other than dividends payable in common stock of the Person making such dividend) on, or make any payment on account of, or set apart assets for a sinking fund or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of), any Capital Stock of any Group Member, whether now or hereafter outstanding, 90 or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Holdings, the Borrower or any Subsidiary (collectively, "Restricted Payments"), except that: (a) any Subsidiary may make Restricted Payments to the Borrower or any Subsidiary Guarantor (and, if such Subsidiary is not a Wholly Owned Subsidiary, to its other holders of common Capital Stock on a pro rata basis); (b) so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom, the Borrower may pay dividends to Holdings to permit Holdings to purchase, and Holdings may so purchase, (i) Holdings' common stock or common stock options from present or former directors, officers or employees of any Group Member upon the death, disability, retirement or termination of employment of such officer or employee or a change of control (under the applicable plan) and (ii) Holdings' common stock for contributions to its employee stock purchase and deferred compensation plans in the ordinary course of business, provided, that the aggregate amount of payments under this clause (b) after the date hereof (net of any proceeds received by Holdings and contributed to the Borrower after the date hereof in connection with resales of any common stock or common stock options so purchased) shall not exceed $5,000,000; (c) the Borrower may pay dividends to Holdings to permit Holdings to (i) (A) pay franchise taxes and other amounts allocable to the Borrower required by Holdings to maintain its corporate existence, (B) pay for operating and overhead expenses of Holdings allocable to the Borrower (including, without limitation, salaries and other compensation of employees, directors' fees and expenses and travel and entertainment expenses) incurred by Holdings in the ordinary course of business, (C) pay Holdings fees for services provided by Holdings to the Borrower that would otherwise have been performed by third parties (including accounting, treasury, tax, legal, strategic consulting and corporate development services), (D) to reimburse Holdings for the payment of amounts relating to services (including, without limitation, legal, consulting, software, insurance and accounting services) provided by third parties on the Borrower's or any Subsidiary's behalf, in each case under this clause (i) to the extent such costs and expenses are incurred in the ordinary course of business and do not, for all costs and expenses described in this clause (i), exceed $10,000,000 in any fiscal year and (ii) pay any taxes that are due and payable by Holdings and the Borrower as part of a consolidated group; (d) Holdings may pay current quarterly dividends on the Preferred Stock with proceeds not in excess of $4,000,000 per quarter from the issuance of shares of common stock by Holdings pursuant to an ongoing program of issuance of common stock arranged and managed by a financial institution; provided that no Default or Event of Default shall have then occurred and be continuing or would result therefrom; (e) Holdings may pay quarterly dividends on the Preferred Stock in an aggregate amount not to exceed 50% of the Net Cash Proceeds of any issuance of Capital Stock of Holdings after the date hereof (other than issuances of Capital Stock to any Group 91 Member or as contemplated by Section 8.6(d)) minus the aggregate amount of Permitted Acquisitions consummated in reliance on clause (ii)(B) of the proviso in Section 8.8(m); provided that no Default or Event of Default shall have then occurred and be continuing or would result therefrom; (f) the Borrower may make Restricted Payments to Holdings to enable Holdings to pay, and Holdings may pay, quarterly dividends on the Preferred Stock, provided that (i) no Default or Event of Default shall have then occurred and be continuing or would result therefrom and (b) after giving effect thereto, on a pro forma basis, the Consolidated Senior Secured Leverage Ratio is not greater than 2.5 to 1; (g) any Foreign Subsidiary may make Restricted Payments to any other Foreign Subsidiary; and (h) Restricted Payments not otherwise permitted by this Section, so long as the aggregate amount of such Restricted Payments, together with all other Restricted Payments made pursuant to this Section 8.6(h) prior to the date thereof, shall not exceed $5,000,000. 8.7. Capital Expenditures. Make or commit to make any Consolidated Capital Expenditure, except (a) Consolidated Capital Expenditures of the Borrower and its Subsidiaries not exceeding $25,000,000 during each of the 2003 and 2004 fiscal years and $20,000,000 in any fiscal year thereafter; provided, that (i) up to 100% of any such amount referred to above, if not so expended in the fiscal year for which it is permitted, may be carried over for expenditure in the next succeeding fiscal year and (ii) Consolidated Capital Expenditures made pursuant to this clause (a) during any fiscal year shall be deemed made, first, in respect of amounts permitted for such fiscal year as provided above and, second, in respect of amounts carried over from the prior fiscal year pursuant to subclause (i) above and (b) Consolidated Capital Expenditures made in an amount equal to the proceeds of any Reinvestment Deferred Amount. 8.8. Investments. Make any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase any Capital Stock, bonds, notes, debentures or other debt securities of, or any assets constituting a business unit of, or make any other investment in, any Person (all of the foregoing, "Investments"), except: (a) extensions of trade credit in the ordinary course of business; (b) cash and Permitted Investments; (c) Guarantee Obligations permitted by Section 8.2; (d) the Acquisition and the transactions contemplated thereby (including, the Excluded Business Acquisition, if applicable); (e) intercompany Investments by any Group Member in the Borrower or any Person that, prior to such Investment, is a Subsidiary Guarantor; 92 (f) intercompany Investments by the Borrower or any Subsidiary Guarantor in any Person, that, prior to such Investment, is a Foreign Subsidiary (including, without limitation, Guarantee Obligations with respect to obligations of any such Foreign Subsidiary, loans made to any such Foreign Subsidiary and Investments resulting from mergers with or sales of assets to any such Foreign Subsidiary) in an aggregate amount (valued at cost) not to exceed $5,000,000 during the term of this Agreement; (g) Investments on the date hereof in the Material Joint Venture; (h) additional Investments in the Material Joint Venture after the date hereof in an aggregate amount not to exceed, together with all outstanding Indebtedness of the Material Joint Venture permitted under Section 8.2(b)(ii), $25,000,000; (i) loans and advances to employees of the Borrower or any of its Subsidiaries in the ordinary course of business; provided that the aggregate outstanding amount of such loans and advances, together with the aggregate outstanding principal amount of Guarantee Obligations pursuant to Section 8.2(a)(xi), shall not exceed $5,000,000 at any time prior to the first anniversary of the Initial Closing Date and $2,500,000 at any time thereafter; (j) stock, obligations or other securities received in settlement or good faith compromise of debts created in the ordinary course of business and owing to the Borrower or a Subsidiary or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of a debtor; (k) Investments in prepaid expenses and deposits in respect of workers' compensation and other similar deposits provided to third parties in the ordinary course of business, provided that the aggregate outstanding amount of such prepaid expenses and deposits shall not exceed $10,000,000 at any one time; (l) purchases of Existing Subordinated Notes pursuant to the Tender Offer (any such Existing Subordinated Notes so purchased shall immediately be cancelled); (m) Investments not otherwise permitted by the foregoing clauses of this Section and consisting of (x) a Permitted Acquisition, provided that (i) the consideration for any such Permitted Acquisition shall consist of common stock of the Borrower, cash, assumed Indebtedness or any combination thereof, (ii) the aggregate amount of cash and assumed Indebtedness in connection with all such Permitted Acquisitions shall not exceed an amount equal to the sum of (A) the product of $50,000,000 (or, in the case of any fiscal year with respect to which the Consolidated Leverage Ratio (measured on the last day of such fiscal year) is less than 4.5 to 1.0, $75,000,000) times the number of fiscal years elapsed since January 1, 2003 and (B) (1) 50% of the Net Cash Proceeds of any issuance of Capital Stock by any Group Member after the date hereof (other than issuances of Capital Stock to any Group Member or as contemplated by Section 8.6(d)) minus (2) the aggregate amount of Restricted Payments made pursuant to Section 8.6(e) since the Initial Closing Date, (iii) no such Permitted Acquisition shall be made for consideration consisting of common stock of the Borrower prior to the first anniversary 93 of the Initial Closing Date other than any such Permitted Acquisition of the Capital Stock of the Material Joint Venture not owned by the Borrower as of the Initial Closing Date and (iv) the aggregate cumulative amount of all consideration for all such Permitted Acquisitions (other than the acquisition of the Capital Stock of the Material Joint Venture) consisting of common stock of the Borrower paid after the first anniversary of the Initial Closing Date shall not exceed $300,000,000; provided, further, that (I) at least seven Business Days prior to consummating any Permitted Acquisition, the Borrower shall have delivered to the Lenders a certificate of a Responsible Officer of the Borrower certifying that the conditions described in the definition of "Permitted Acquisition" have been met with respect thereto and setting forth in reasonable detail satisfactory to the Administrative Agent the calculations required to be made pursuant to clause (c) of such definition and the assumptions used by the Borrower to make such calculations and (II) in the case of any Permitted Acquisition made at a time when the aggregate amount of Permitted Acquisitions made pursuant to this clause (x) exceeds $15,000,000 (after giving effect to such Permitted Acquisition) and to the extent that all or any portion of the consideration for such Permitted Acquisition consists of cash or assumed Indebtedness, the Consolidated Leverage Ratio is less than 5.0 to 1.0 and (y) Investments in joint ventures and partnerships (other than Permitted Acquisitions) organized under the laws of any jurisdiction within the United States of America and conducting substantially all of its business therein in an aggregate amount not to exceed on any date $15,000,000; and (n) Investments not otherwise permitted by the foregoing clauses of this Section, so long as the aggregate amount of such Investments, together with all other Investments permitted pursuant to this Section 8.8(n) prior to the date thereof, shall not exceed $5,000,000. 8.9. Optional Payments and Modifications of Certain Debt Instruments. (a) Make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Indebtedness, or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Indebtedness, except (i) payment of Indebtedness created under the Loan Documents, (ii) payment of regularly scheduled interest and principal payments as and when due in respect of any Indebtedness, other than payments in respect of the Senior Subordinated Notes, the Additional High Yield Debt and Existing Subordinated Notes that remain outstanding after the Acquisition Closing Date prohibited by the subordination provisions thereof, (iii) payment of secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness, (iv) payments on intercompany Indebtedness, (v) the redemption of Senior Subordinated Notes in accordance with the Senior Subordinated Notes Indenture in an amount equal to the principal and accrued interest and fees on $150,000,000 of Senior Subordinated Notes (which redemption shall be effected unless there shall have been validly tendered and not withdrawn less than a majority in aggregate principal amount of Existing Subordinated Notes pursuant to the Tender Offer) and (vi) refinancings, refundings or replacements of Indebtedness permitted under Section 8.2(a)(iv), (v), (vii) and (x); (b) amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the terms of the Notes, the 94 Additional High Yield Debt, the Notes Escrow Agreements or any Existing Subordinated Notes (other than as contemplated in connection with the Tender Offer) that remain outstanding after the Acquisition Date, other than any such amendment, modification, waiver or other change that (i) would extend the maturity, reduce the amount of any payment of principal thereof, reduce the rate or extend any date for payment of interest thereon or would change the covenants therein in a manner not materially more restrictive to the Borrower and its Subsidiaries and (ii) does not involve the payment of a consent fee; (c) amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the terms of the Preferred Stock, other than any such amendment, modification, waiver or other change that (i) would extend the scheduled redemption date, reduce the amount of any scheduled redemption payment, reduce the rate or extend any date for payment of dividends thereon or would change the covenants therein in a manner not materially more restrictive to the Borrower and its Subsidiaries and (ii) does not involve the payment of a consent fee; or (d) designate any Indebtedness (other than obligations of the Loan Parties pursuant to the Loan Documents) as "Designated Senior Debt" (or any other defined term having a similar purpose) for the purposes of the Senior Subordinated Notes Indenture, any Additional High Yield Debt Documents and the Existing Subordinated Debt Documents. It is hereby agreed and understood that on the Acquisition Closing Date, the Borrower shall be permitted to (i) repay all amounts outstanding under the Existing Credit Agreement in full and terminate the Existing Credit Agreement and each agreement related thereto and (ii) release all Liens granted under the Existing Credit Agreement and each agreement related thereto and discharge all obligations in connection therewith. It is hereby further expressly understood and agreed that on or within five Business Days after the acceptance of all Existing Subordinated Notes validly tendered and not withdrawn pursuant to the Tender Offer, the Borrower shall be permitted to repurchase such Existing Subordinated Notes pursuant to the Tender Offer. 8.10. Transactions with Affiliates. Enter into any transaction, including any purchase, sale, lease or exchange of property, the rendering of any service or the payment of any management, advisory or similar fees, with any Affiliate (other than Holdings, the Borrower or any Wholly Owned Subsidiary Guarantor) unless such transaction is (a) otherwise permitted under this Agreement, and (b) upon fair and reasonable terms no less favorable to the relevant Group Member, taken as a whole, than it would obtain in a comparable arm's length transaction with a Person that is not an Affiliate; provided that this Section 8.10 shall not prohibit or require Holdings or the Borrower to modify (i) any existing agreement with respect to the Material Joint Venture, (ii) any arrangement with the Sellers and their Affiliates in connection with the Acquisition or (iii) any Restricted Payment permitted under Section 8.6. 8.11. Sales and Leasebacks. Enter into any arrangement with any Person (other than a Wholly Owned Subsidiary Guarantor) providing for the leasing by any Group Member of real or personal property that has been or is to be sold or transferred by such Group Member to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of such Group Member, except to the extent permitted by Sections 8.2(a)(v) and 8.3(b)(viii). 95 8.12. Hedge Agreements. Enter into any Hedge Agreement, except (a) the Hedge Agreements contemplated by Section 7.9, (b) Hedge Agreements entered into to hedge or mitigate risks to which the Borrower or any Subsidiary has actual exposure (other than those in respect of Capital Stock or the Notes, any Additional High Yield Debt and any Existing Subordinated Notes that remain outstanding after Acquisition Closing Date) and (c) Hedge Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of the Borrower or any Subsidiary. 8.13. Changes in Fiscal Periods. Permit the fiscal year of the Borrower to end on a day other than December 31 or change the Borrower's method of determining fiscal quarters. 8.14. Negative Pledge Clauses. Except during the Escrow Period with respect to the Existing Credit Agreement, enter into or suffer to exist or become effective any agreement that prohibits or limits the ability of any Group Member to create, incur, assume or suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, other than (a) this Agreement and the other Loan Documents, the Existing Subordinated Debt Documents, the Notes Indentures, the Additional High Yield Debt Documents and the Preferred Stock, (b) any agreements governing any purchase money Liens or Capital Lease Obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby), (c) customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary or assets pending such sale; provided such restrictions and conditions apply only to the Subsidiary or assets that are to be sold and such sale is permitted under this Agreement, (d) any restrictions in effect on the date hereof and set forth on Schedule 8.14 hereto, (e) customary provisions in leases and other contracts restricting assignment thereof in existence on the date hereof or entered into consistent with past practice and (f) any restrictions imposed by any agreement relating to secured Indebtedness permitted by Sections 8.2 and 8.3, so long as the restrictions under this clause (f) apply only to the collateral on which a Lien is permitted with respect thereto pursuant to Section 8.3. 8.15. Clauses Restricting Subsidiary Distributions. (a) Except during the Escrow Period with respect to the Existing Credit Agreement, enter into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary of the Borrower to (i) make Restricted Payments in respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness owed to, the Borrower or any other Subsidiary of the Borrower, (ii) make loans or advances to, or other Investments in, the Borrower or any other Subsidiary of the Borrower or (iii) transfer any of its assets to the Borrower or any other Subsidiary of the Borrower, except for such encumbrances or restrictions existing under or by reason of (A) any restrictions imposed by law or existing under the Loan Documents, the Existing Subordinated Debt Documents, the Notes Indentures, the Additional High Yield Debt Documents and the Preferred Stock, (B) any restrictions in effect on the date hereof and set forth on Schedule 8.15 hereto, (C) any restrictions with respect to a Subsidiary imposed pursuant to an agreement that has been entered into in connection with the Disposition of all or substantially all of the Capital Stock or assets of such Subsidiary and (D) any restrictions imposed by any agreement relating to secured Indebtedness permitted by Sections 8.2 and 8.3, so long as the restrictions under this 96 clause (D) apply only to the collateral on which a Lien is permitted with respect thereto pursuant to Section 8.3. 8.16. Lines of Business. (a) Enter into any business, either directly or through any Subsidiary, except for those businesses in which the Borrower and its Subsidiaries are engaged on the Acquisition Closing Date (after giving effect to the Acquisition) or that are reasonably related thereto. (b) Vote its direct or indirect interest in the Material Joint Venture to permit the Material Joint Venture to enter into any business, either directly or through any Subsidiaries, except for those businesses in which the Material Joint Venture is engaged on the date of this Agreement or that are reasonably related thereto. 8.17. Amendments to Acquisition Documents. (a) Amend, supplement or otherwise modify (pursuant to a waiver or otherwise) the terms and conditions of the indemnities and licenses furnished to the Borrower or any of its Subsidiaries pursuant to the Acquisition Documentation such that after giving effect thereto such indemnities or licenses shall be materially less favorable to the interests of the Loan Parties or the Lenders with respect thereto, (b) amend, supplement or otherwise modify (pursuant to a waiver or otherwise) Section 1.8 of the Acquisition Agreement or any such other terms or conditions of the Acquisition Documentation that concern the Excluded Business, the Second Closing and the transactions contemplated thereby, except with the consent of the Agents (not to be unreasonably withheld), or (c) otherwise amend, supplement or otherwise modify (pursuant to a waiver or otherwise) the terms and conditions of the Acquisition Documentation or any such other documents in any material respect (but in no event to increase the purchase price payable thereunder) except for any such amendment, supplement or modification that (i) becomes effective before the Acquisition Closing Date and to which the Agents have consented (not to be unreasonably withheld) or (ii) becomes effective after the Acquisition Closing Date and could not reasonably be expected to have a Material Adverse Effect. 8.18. Amendments to Material Agreements; Other Agreements. Amend, supplement or otherwise modify (or vote its direct or indirect interest in the Material Joint Venture to permit the Material Joint Venture to amend, supplement or otherwise modify) the terms and conditions of (i) any Material Agreement, except with the consent of the Agents (not to be unreasonably withheld), provided, however, that such consent shall not be required to amend, supplement or otherwise modify the confidentiality provisions therein (subject to Section 7.6 of this Agreement), and solely in the case of the Indemnity Agreement, for any such amendment, supplement or modification that could not reasonably be expected to have a Material Adverse Effect, (ii) the Existing Credit Agreement, except in the manner contemplated by, and consistent with, the terms and provisions of this Agreement or (iii) the Tender Offer, except with the consent of the Agents (not to be unreasonably withheld). SECTION 9. EVENTS OF DEFAULT If any of the following events shall occur and be continuing: 97 (a) the Borrower shall fail to pay any principal of any Loan or Reimbursement Obligation when due in accordance with the terms hereof; or the Borrower shall fail to pay any interest on any Loan or Reimbursement Obligation, or any other amount payable hereunder or under any other Loan Document, within five days after any such interest or other amount becomes due in accordance with the terms hereof; or (b) any representation or warranty made or deemed made by any Loan Party herein or in any other Loan Document or that is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this Agreement or any such other Loan Document shall prove to have been inaccurate in any material respect on or as of the date made or deemed made; or (c) any Loan Party shall default in the observance or performance of any agreement contained in clause (i) or (ii) of Section 7.4(a) (with respect to Holdings and the Borrower only), Section 7.7(a) or Section 8 of this Agreement or Sections 5.5 and 5.7(b) of the Guarantee and Collateral Agreement shall have occurred and be continuing; or (d) any Loan Party shall default in the observance or performance of any other agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of 30 days after notice to the Borrower from the Administrative Agent or any Lender; or (e) any Group Member shall (i) default in making any payment of any principal of any Indebtedness (including any Guarantee Obligation, but excluding the Loans) on the scheduled or original due date with respect thereto; or (ii) default in making any payment of any interest on any such Indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created; or (iii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or to become subject to a mandatory offer to purchase by the obligor thereunder or (in the case of any such Indebtedness constituting a Guarantee Obligation) to become payable; provided, that a default, event or condition described in clause (i), (ii) or (iii) of this paragraph (e) shall not at any time constitute an Event of Default unless, at such time, one or more defaults, events or conditions of the type described in clauses (i), (ii) and (iii) of this paragraph (e) shall have occurred and be continuing with respect to Indebtedness the outstanding principal amount of which exceeds in the aggregate $10,000,000; or (f) (i) any Group Member (other than any Immaterial Subsidiary) or the Material Joint Venture shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, 98 insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or any Group Member (other than any Immaterial Subsidiary) or the Material Joint Venture shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against any Group Member (other than any Immaterial Subsidiary) or the Material Joint Venture any case, proceeding or other action of a nature referred to in clause (i) above that (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against any Group Member (other than any Immaterial Subsidiary) or the Material Joint Venture any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) any Group Member (other than any Immaterial Subsidiary) or the Material Joint Venture shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) any Group Member (other than any Immaterial Subsidiary) or the Material Joint Venture shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or (g) (i) any Person shall engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of any Group Member or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) any Group Member or any Commonly Controlled Entity shall, or in the reasonable opinion of the Required Lenders is likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could, in the sole judgment of the Required Lenders, reasonably be expected to have a Material Adverse Effect; or (h) one or more judgments or decrees shall be entered against any Group Member or the Material Joint Venture involving in the aggregate a liability (not paid or fully covered by insurance as to which the relevant insurance company has acknowledged coverage) of $10,000,000 or more, and all such judgments or decrees shall not have been 99 vacated, discharged, stayed or bonded pending appeal within 45 days from the entry thereof; or (i) any of the Security Documents shall cease, for any reason, to be in full force and effect, or any Loan Party or any Affiliate of any Loan Party shall so assert, or any Lien created by any of the Security Documents shall cease to be enforceable and of the same effect and priority purported to be created thereby (other than in respect of Collateral which in the aggregate has a fair market value not in excess of $1,000,000); or (j) the guarantee contained in Section 2 of the Guarantee and Collateral Agreement shall cease, for any reason, to be in full force and effect or any Loan Party or any Affiliate of any Loan Party shall so assert; or (k) (i) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), shall become, or obtain rights (whether by means or warrants, options or otherwise) to become, the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of more than 40% (or 50%, in the case of Goldman Sachs or any "group" of which Goldman Sachs is a member) of the outstanding common stock of Holdings; (ii) the board of directors of Holdings shall cease to consist of a majority of Continuing Directors; (iii) Holdings shall cease to own and control, of record and beneficially, directly, 100% of each class of outstanding Capital Stock of the Borrower free and clear of all Liens (except Liens created by the Guarantee and Collateral Agreement); or (iv) a Specified Change of Control shall occur; or (l) Holdings shall (i) conduct, transact or otherwise engage in, or commit to conduct, transact or otherwise engage in, any business or operations other than those incidental to its ownership of the Capital Stock of the Borrower, (ii) incur, create, assume or suffer to exist any Indebtedness or other liabilities or financial obligations, except (x) nonconsensual obligations imposed by operation of law, (y) pursuant to the Loan Documents to which it is a party and (z) obligations with respect to its Capital Stock, or (iii) own, lease, manage or otherwise operate any properties or assets (including cash (other than cash received in connection with dividends made by the Borrower in accordance with Section 8.6 pending application in the manner contemplated by said Section) and cash equivalents) other than the ownership of shares of Capital Stock of the Borrower; or (m) the Special Purpose Borrower shall (i) conduct, transact or otherwise engage in, or commit to conduct, transact or otherwise engage in, any business or operations other than those incidental to its obligations under this Agreement, (ii) incur, create, assume or suffer to exist any Indebtedness or other liabilities or financial obligations, except (x) nonconsensual obligations imposed by operation of law, (y) pursuant to the Loan Documents to which it is a party and (z) obligations with respect to its Capital Stock, or (iii) own, lease, manage or otherwise operate any properties or assets (other than the properties or assets held in the Escrow Account); or 100 (n) the Special Purpose Issuer shall (i) conduct, transact or otherwise engage in, or commit to conduct, transact or otherwise engage in, any business or operations other than those incidental to its obligations under the Notes Indentures, (ii) incur, create, assume or suffer to exist any Indebtedness or other liabilities or financial obligations, except (x) nonconsensual obligations imposed by operation of law, (y) pursuant to the Notes Indentures and (z) obligations with respect to its Capital Stock, or (iii) own, lease, manage or otherwise operate any properties or assets (other than the properties or assets held in the Notes Escrow); or (o) the Senior Subordinated Notes, Existing Subordinated Notes that remain outstanding after the Acquisition Closing Date or the guarantees thereof shall cease, for any reason, to be validly subordinated to the Obligations or the obligations of the Subsidiary Guarantors under the Guarantee and Collateral Agreement, as the case may be, as provided in the Senior Subordinated Notes Indenture or the Existing Subordinated Debt Documents, or any Loan Party, any Affiliate of any Loan Party, the trustee in respect of the Senior Subordinated Notes or any Existing Subordinated Notes to extent remaining outstanding after the Acquisition Closing Date, as the case may be, or the holders of at least 25% in aggregate principal amount of the Senior Subordinated Notes or the Existing Subordinated Notes that remain outstanding after the Acquisition Closing Date, as the case may be, shall so assert; or (p) (i) any Material Agreement shall cease, for any reason, to be in full force and effect, or the Material Joint Venture or any Affiliate of the Material Joint Venture shall so assert, or (ii) any Material Agreement shall terminate (other than on the final scheduled termination date thereof in accordance with the terms of such Material Agreement); then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) above with respect to the Borrower, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) to be due and payable forthwith, whereupon the same shall immediately become due and payable. With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to this paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and 101 unexpired amount of such Letters of Credit. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and under the other Loan Documents. After all such Letters of Credit shall have expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other obligations of the Borrower hereunder and under the other Loan Documents shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower (or such other Person as may be lawfully entitled thereto). Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived by the Borrower. SECTION 10. THE AGENTS 10.1. Appointment. Each Lender hereby irrevocably designates and appoints each Agent as the agent of such Lender under this Agreement and the other Loan Documents, and each such Lender irrevocably authorizes such Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to such Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, no Agent shall have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against any Agent. Each Lender hereby expressly authorizes the Administrative Agent to execute, deliver and perform the Lien Subordination Agreement and the Security Documents on behalf of such Lender. 10.2. Delegation of Duties. Each Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. No Agent shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. 10.3. Exculpatory Provisions. Neither any Agent nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such Person's own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agents under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party a party thereto to perform its obligations hereunder or thereunder. The Agents shall not be under any obligation to 102 any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party or the Material Joint Venture. 10.4. Reliance by Agents. Each Agent shall be entitled to rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to Holdings or the Borrower), independent accountants and other experts selected by such Agent. The Administrative Agent may deem and treat the payee of any Promissory Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. Each Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. The Agents shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans. 10.5. Notice of Default. No Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless such Agent has received notice from a Lender, Holdings or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement); provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders. 10.6. Non-Reliance on Agents and Other Lenders. Each Lender expressly acknowledges that neither the Agents nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates have made any representations or warranties to it and that no act by any Agent hereafter taken, including any review of the affairs of a Loan Party or a Material Joint Venture or any Affiliate of a Loan Party or any Affiliate of a Material Joint Venture, shall be deemed to constitute any representation or warranty by any Agent to any Lender. Each Lender represents to the Agents that it has, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and the Material 103 Joint Venture and their respective affiliates and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and the Material Joint Venture and their respective Affiliates. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of any Loan Party or the Material Joint Venture or any Affiliate of a Loan Party or any Affiliate of a Material Joint Venture that may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates. 10.7. Indemnification. The Lenders agree to indemnify each Agent in its capacity as such (to the extent not reimbursed by Holdings or the Borrower and without limiting the obligation of Holdings or the Borrower to do so), ratably according to their respective Aggregate Exposure Percentages in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Aggregate Exposure Percentages immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent's gross negligence or willful misconduct. The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder. 10.8. Agent in Its Individual Capacity. Each Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Loan Party or the Material Joint Venture as though such Agent were not an Agent. With respect to its Loans made or renewed by it and with respect to any Letter of Credit issued or participated in by it, each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms "Lender" and "Lenders" shall include each Agent in its individual capacity. 10.9. Successor Administrative Agent. The Administrative Agent may resign as Administrative Agent upon 30 Business Days' notice to the Lenders and the Borrower. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other 104 Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default under Section 9(a) or Section 9(f) with respect to the Borrower shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term "Administrative Agent" shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent's rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans. If no successor agent has accepted appointment as Administrative Agent by the date that is 10 days following a retiring Administrative Agent's notice of resignation, the retiring Administrative Agent's resignation shall nevertheless thereupon become effective and the Lenders shall assume and perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. After any retiring Administrative Agent's resignation as Administrative Agent, the provisions of this Section 10 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents. 10.10. Agents Generally. Except as expressly set forth herein, no Agent shall have any duties or responsibilities hereunder in its capacity as such, and shall incur no liability, under this Agreement and the other Loan Documents. 10.11. The Lead Arrangers. The Lead Arrangers, in their capacity as such, shall have no duties or responsibilities, and shall incur no liability, under this Agreement and other Loan Documents. SECTION 11. MISCELLANEOUS 11.1. Amendments and Waivers. Neither this Agreement, any other Loan Document, the Lien Subordination Agreement, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 11.1. The Required Lenders and each Loan Party party to the relevant Loan Document may, or, with the written consent of the Required Lenders, the Administrative Agent and each Loan Party party to the relevant Loan Document (and (1) in the case of the Escrow Agreement, the Securities Intermediary and the Existing Administrative Agent, (2) in the case of the Securities Account Control Agreement, the Securities Intermediary and (3) in the case of the Lien Subordination Agreement, the Existing Administrative Agent) may, from time to time, (a) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Administrative Agent, as the case may be (and (1) in the case of the Escrow Agreement, the Securities Intermediary and the Existing Administrative Agent, (2) in the case of the Securities Account Control Agreement, the Securities Intermediary and (3) in the case of the Lien Subordination Agreement, the Existing Administrative Agent), may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its 105 consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (i) forgive the principal amount or extend the final scheduled date of maturity of any Loan, extend the scheduled date of any amortization payment in respect of any Term Loan, reduce the stated rate of any interest or fee payable hereunder (except (x) in connection with the waiver of applicability of any post-default increase in interest rates, which waiver shall be effective with the consent of the Majority Facility Lenders of each adversely affected Facility and (y) that any amendment or modification of defined terms used in the financial covenants in this Agreement shall not constitute a reduction in the rate of interest or fees for purposes of this clause (i)) or extend the scheduled date of any payment thereof, or increase the amount or extend the expiration date of any Lender's Commitment, in each case without the written consent of each Lender directly affected thereby; (ii) eliminate or reduce the voting rights of any Lender under this Section 11.1 without the written consent of such Lender; (iii) reduce any percentage specified in the definition of Required Lenders or Supermajority Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Loan Documents, release a substantial part of the Collateral or release a substantial part of the Subsidiary Guarantors from their obligations under the Guarantee and Collateral Agreement, in each case without the written consent of all Lenders; (iv) amend, modify or waive any provision of Section 4.8 without the written consent of the Majority Facility Lenders in respect of each Facility adversely affected thereby; (v) reduce the percentage specified in the definition of Majority Facility Lenders with respect to any Facility without the written consent of all Lenders under such Facility; (vi) amend, modify or waive any provision of Section 10 without the written consent of each Agent adversely affected thereby; (vii) amend, modify or waive any provision of Section 3.3 or 3.4 without the written consent of each Swingline Lender adversely affected thereby; (viii) amend or modify any provision of Section 11.6 to add any additional consent requirements necessary to effect any assignment or participation under such Section without the consent of the Supermajority Lenders; (ix) amend, modify or waive any provision of Sections 3.7 through 3.14 without the written consent of the Issuing Lender; (x) amend, modify or waive any provision of the Escrow Agreement or Section 4.1(b), 4.2(e) or 4.2(h) without the consent of the Majority Facility Lenders in respect of the Tranche B Term Facility or (xi) amend, modify or waive Section 4.2(j) without the consent of the Majority Facility Lenders in respect of the Tranche A Term Facility, Tranche B Term Facility and the Revolving Facility. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Loan Parties, the Lenders, the Agents and all future holders of the Loans. In the case of any waiver, the Loan Parties, the Lenders and the Agents shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. In addition, notwithstanding the foregoing, this Agreement may be amended at any time after the fifth anniversary of the Initial Closing Date with the written consent of the Administrative Agent, the Borrower and the Lenders providing the Replacement Revolving Commitments (as defined below) to permit the refinancing of all outstanding Revolving Commitments ("Refinanced Revolving Commitments") with a replacement revolving facility hereunder ("Replacement Revolving Commitments"); provided that (a) the aggregate principal amount of such Replacement Revolving Commitments shall not exceed the aggregate principal amount of such Refinanced Revolving Commitments, (b) the Applicable Margin for such 106 Replacement Revolving Commitments shall not be higher than the Applicable Margin for such Refinanced Revolving Commitments, (c) the final maturity of such Replacement Revolving Commitments shall not be earlier than the final maturity date of the Tranche B Term Loans at the time of such refinancing and (d) all other terms applicable to such Replacement Revolving Commitments shall be substantially identical to, or less favorable to the Lenders providing such Replacement Revolving Commitments than, those applicable to such Refinanced Revolving Commitments, except to the extent that such substantially identical or less favorable terms may be extended to cover any period after the latest final maturity of the Revolving Commitments in effect immediately prior to such refinancing. 11.2. Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, addressed as follows in the case of Holdings, the Borrower and the Administrative Agent, and as set forth in an administrative questionnaire delivered to the Administrative Agent in the case of the Lenders, or to such other address as may be hereafter notified by the respective parties hereto: Holdings: R.H. Donnelley Corporation One Manhattanville Road Purchase, New York 10577 Attention: General Counsel Telecopy: (914) 933-6844 Telephone: The Borrower: R.H. Donnelley, Inc. One Manhattanville Road Purchase, New York 10577 Attention: Telecopy: Telephone: The Administrative Agent: Deutsche Bank Trust Company Americas 31 West 52nd Street, 7th Floor New York, New York 10019 Attention: Susan L. LeFevre Telecopy: 646-324-7456/7460 Telephone: 646-324-2207 provided that any notice, request or demand to or upon any Agent or the Lenders shall not be effective until received. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Section 2 unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative 107 Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. 11.3. No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of any Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 11.4. Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans and other extensions of credit hereunder. 11.5. Payment of Expenses and Taxes. The Borrower agrees (a) to pay or reimburse each Agent for all their out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including the reasonable fees and disbursements of counsel to such Agent and filing and recording fees and expenses, with statements with respect to the foregoing to be submitted to the Borrower prior to the Initial Closing Date, the Acquisition Closing Date or the Final Acquisition Closing Date, as the case may be, (in the case of amounts to be paid on the Initial Closing Date, the Acquisition Closing Date or the Final Acquisition Closing Date, as the case may be), and from time to time thereafter on a quarterly basis or such other periodic basis as such Agent shall deem appropriate, (b) to pay or reimburse the Administrative Agent for all of its out-of-pocket costs and expenses incurred in connection with any amendment, supplement or modification to this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, (c) to pay or reimburse each Lender and Agent for all its costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents and any such other documents, including the fees and disbursements of counsel (including the allocated fees and expenses of in-house counsel) to each Lender and of counsel to such Agent, (d) to pay, indemnify, and hold each Lender and Agent harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, that may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents, and (e) to pay, indemnify, and hold each Lender and Agent and their respective officers, directors, employees, affiliates, agents, trustees, advisors and controlling persons (each, an "Indemnitee") harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the other Loan Documents and any such other documents, 108 including any of the foregoing relating to the use of proceeds of the Loans or the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of any Group Member or the Material Joint Venture or any of the Properties and the reasonable fees and expenses of legal counsel in connection with claims, actions or proceedings by any Indemnitee against any Loan Party under any Loan Document (all the foregoing in this clause (e), collectively, the "Indemnified Liabilities"), provided, that the Borrower shall have no obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnitee. Without limiting the foregoing, and to the extent permitted by applicable law, the Borrower agrees not to assert and to cause its Subsidiaries not to assert, and hereby waives and agrees to cause its Subsidiaries to waive, all rights for contribution or any other rights of recovery with respect to all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature, under or related to Environmental Laws, that any of them might have by statute or otherwise against any Indemnitee. All amounts due under this Section 11.5 shall be payable not later than 10 days after written demand therefor. Statements payable by the Borrower pursuant to this Section 11.5 shall be submitted to the Borrower at the address set forth in Section 11.2, or to such other Person or address as may be hereafter designated by the Borrower in a written notice to the Administrative Agent. The agreements in this Section 11.5 shall survive repayment of the Loans and all other amounts payable hereunder. 11.6. Successors and Assigns; Participations and Assignments. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any affiliate of the Issuing Lender that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) (except that the Borrower may assume the obligations of the Special Purpose Borrower hereunder as set forth in Section 2.1(b)) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. (b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees (each, an "Assignee") all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of: (A) the Borrower, provided that no consent of the Borrower shall be required (i) for an assignment to a Lender or a Lender Affiliate (as defined below), (ii) for an assignment by any assigning Lender after the Initial Closing Date of its Term Loans or (iii) if a Default or Event of Default has occurred and is continuing, for an assignment to any other Person; and (B) the Administrative Agent, provided that no consent of the Administrative Agent shall be required (i) for an assignment to an Assignee that is a Lender immediately prior to giving effect to such assignment, except in the case of an assignment of a Revolving Commitment to an Assignee that does not already have a Revolving Commitment, (ii) 109 for an assignment by any assigning Lender after the Initial Closing Date of its Term Loans or (iii) for an assignment to a Lender or a Lender Affiliate. (ii) Assignments shall be subject to the following additional conditions: (A) except in the case of an assignment to a Lender or a Lender Affiliate or an assignment of the entire remaining amount of the assigning Lender's Commitments or Loans under any Facility, the amount of the Commitments or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $1,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, provided that (1) no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing and (2) such amounts shall be aggregated in respect of each Lender and its Lender Affiliates, if any; (B) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 (it being understood that only a single processing and recordation fee of $3,500 will be payable with respect to any multiple assignments to a Lender or a Lender Affiliate pursuant to clause (ii)(A) above that are simultaneously consummated pursuant to a single Assignment and Assumption); and (C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an administrative questionnaire. For the purposes of this Section 11.6, the term "Lender Affiliate" has the following meaning: "Lender Affiliate" means, with respect to any Lender, (a) such Lender's parent company and/or any affiliate of such Lender that is at least 50% owned by such Lender or its parent company and (b) an Approved Fund. "Approved Fund" means, with respect to any Lender that is a fund that invests in loans, any other fund that invests in loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor. (iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) below, from and after the effective date specified in each Assignment and Assumption, the Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 4.9, 4.10 and 4.11 and 11.5). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 110 11.6 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section. (iv) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent, the Issuing Lender and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Lender and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an Assignee, the Assignee's completed administrative questionnaire (unless the Assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b)(ii) of this Section and any written consent to such assignment required by paragraph (b)(i) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph. (c) (i) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other entities (a "Participant") in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided that (A) such Lender's obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent, the Issuing Lender and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that (1) requires the consent of each Lender directly affected thereby pursuant to clause (i) of the proviso to the second sentence of Section 11.1 and (2) directly affects such Participant. Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 4.9, 4.10 and 4.11 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 11.7(b) as though it were a Lender, provided such Participant shall be subject to Section 11.7(a) as though it were a Lender. (ii) A Participant shall not be entitled to receive any greater payment under Section 4.9 or 4.10 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant 111 is made with the Borrower's prior written consent. Any Participant that is a Non-U.S. Lender shall not be entitled to the benefits of Section 4.10 unless such Participant complies with Section 4.10(d). (d) Nothing in this Agreement or any other Loan Document shall prevent or prohibit any Lender from pledging its Loans and Promissory Notes hereunder to a Federal Reserve Bank in support of borrowings made by such Lender from such Federal Reserve Bank and, with prior notification to the Administrative Agent (but without the consent of the Administrative Agent or the Borrower), any Lender that is a fund may pledge all or any portion of its Loans and Promissory Notes to its trustee, to a collateral agent or to another creditor providing credit or credit support to such Lender in support of its obligations to such trustee, such collateral agent or a holder of such obligations, or such other creditor as the case may be. No pledge pursuant to this clause (d) shall release the transferor Lender from any of its obligations hereunder. (e) The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue Promissory Notes to any Lender requiring Promissory Notes to facilitate transactions of the type described in paragraph (d) above. (f) Notwithstanding the foregoing, any Conduit Lender may assign any or all of the Loans it may have funded hereunder to its designating Lender without the consent of the Borrower or the Administrative Agent and without regard to the limitations set forth in Section 11.6(b). Each of Holdings, the Borrower, each Lender and the Administrative Agent hereby confirms that it will not, in its capacity as such, institute against a Conduit Lender or join any other Person in instituting against a Conduit Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any state bankruptcy or similar law, for one year and one day after the payment in full of the latest maturing commercial paper note issued by such Conduit Lender; provided, however, that each Lender designating any Conduit Lender hereby agrees to indemnify, save and hold harmless each other party hereto for any loss, cost, damage or expense arising out of its inability to institute such a proceeding against such Conduit Lender during such period of forbearance. 11.7. Adjustments; Set-off. (a) Except to the extent that this Agreement expressly provides for payments to be allocated to a particular Lender or to the Lenders under a particular Facility, if any Lender (a "Benefitted Lender") shall receive any payment of all or part of the Obligations owing to it, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 9(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other relevant Lender, if any, in respect of the Obligations owing to such other Lender, such Benefitted Lender shall purchase for cash from the other relevant Lenders a participating interest in such portion of the Obligations owing to each such other Lender, or shall provide such other Lenders with the benefits of any such collateral, as shall be necessary to cause such Benefitted Lender to share the excess payment or benefits of such collateral ratably with each of the relevant Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. 112 (b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to Holdings or the Borrower, any such notice being expressly waived by Holdings and the Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by Holdings or the Borrower hereunder (whether at the stated maturity, by acceleration or otherwise), to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of Holdings or the Borrower, as the case may be. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such setoff and application. 11.8. Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent. 11.9. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 11.10. Integration. This Agreement and the other Loan Documents represent the entire agreement of Holdings, the Borrower, the Agents and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by any Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents. 11.11. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 11.12. Submission To Jurisdiction; Waivers. Each of Holdings and the Borrower hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States for the Southern District of New York, and appellate courts from any thereof; 113 (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to Holdings or the Borrower, as the case may be at its address set forth in Section 11.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages. 11.13. Acknowledgments. Each of Holdings and the Borrower hereby acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents; (b) no Agent or Lender has any fiduciary relationship with or duty to Holdings or the Borrower arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Agents and Lenders, on one hand, and Holdings and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among Holdings, the Borrower and the Lenders. 11.14. Releases of Guarantees and Liens. (a) Notwithstanding anything to the contrary contained herein or in any other Loan Document, the Administrative Agent is hereby irrevocably authorized by each Lender (without requirement of notice to or consent of any Lender except as expressly required by Section 11.1) to take any action requested by the Borrower having the effect of releasing any Collateral or guarantee obligations (i) to the extent necessary to permit consummation of any transaction not prohibited by any Loan Document or that has been consented to in accordance with Section 11.1 or (ii) under the circumstances described in paragraph (b) below. (b) At such time as the Loans, the Reimbursement Obligations and the other obligations under the Loan Documents (other than obligations under or in respect of Specified Hedge Agreements) shall have been paid in full, the Commitments have been terminated and no Letters of Credit shall be outstanding, the Collateral shall be released from the Liens created by 114 the Security Documents, and the Security Documents and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Loan Party under the Security Documents shall terminate, all without delivery of any instrument or performance of any act by any Person. 11.15. Confidentiality. Each Agent and each Lender agrees to keep confidential all non-public information provided to it by any Loan Party pursuant to this Agreement that is designated by such Loan Party as confidential; provided that nothing herein shall prevent any Agent or any Lender from disclosing any such information (a) to any Agent, any other Lender or any of their respective Affiliates, (b) subject to an agreement to comply with the provisions of this Section, to any actual or prospective Transferee or any direct or indirect counterparty to any Hedge Agreement or any securitization or derivative transaction (or any professional advisor to such counterparty), (c) to its employees, directors, agents, attorneys, accountants and other professional advisors or those of any of its affiliates, (d) upon the request or demand of any Governmental Authority, (e) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (f) if requested or required to do so in connection with any litigation or similar proceeding, (g) that has been publicly disclosed, (h) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender's investment portfolio in connection with ratings issued with respect to such Lender, or (i) in connection with the exercise of any remedy hereunder or under any other Loan Document. Notwithstanding the foregoing, each Lender and its Affiliates shall have the right to (i) list the names and logos of the Borrower and Holdings, as provided by the Borrower and Holdings from time to time, and describe the transaction that is the subject to this Agreement in their marketing materials and (ii) post such information, including, without limitation, a customary "tombstone," on their website. 11.16. WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, THE AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 11.17. Delivery of Addenda. Each initial Lender shall become a party to this Agreement by delivering to the Administrative Agent an Addendum duly executed by such Lender. 11.18. Termination. If the Acquisition is not consummated on or before January 31, 2003, the Tranche A Term Commitments and the Revolving Commitments are terminated in accordance with this Agreement, and all outstanding Tranche B Term Loans have been paid in full in accordance with this Agreement, together with accrued interest thereon and all other amounts owing in respect thereof or otherwise payable hereunder, this Agreement shall terminate (except for those provisions of this Agreement that are stated to survive termination of this Agreement). 115 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. 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 R.H. DONNELLEY FINANCE CORPORATION II By: /s/ ROBERT J. BUSH -------------------------------------- Name: Robert J. Bush Title: Vice President DEUTSCHE BANK TRUST COMPANY AMERICAS, as Administrative Agent By: /s/ SUSAN L. LEFEVRE -------------------------------------- Name: Susan L. LeFevre Title: Director BEAR STEARNS CORPORATE LENDING INC., as Joint Syndication Agent By: /s/ KEITH C. BARNISH -------------------------------------- Name: Keith C. Barnish Title: Executive Vice President 116 CITICORP NORTH AMERICA, INC., as Joint Syndication Agent By: /s/ JOHN P. JUDGE --------------------------------------- Name: John P. Judge Title: Vice President DEUTSCHE BANK SECURITIES INC., as Joint Lead Arranger By: /s/ J. OGDEN --------------------------------------- Name: J. Ogden Title: Managing Director By: /s/ ROBERT W. HEVNER --------------------------------------- Name: Robert W. Hevner Title: Managing Director SALOMON SMITH BARNEY INC., as Joint Lead Arranger By: /s/ JOHN P. JUDGE --------------------------------------- Name: John P. Judge Title: Vice President BEAR, STEARNS & CO. INC., as Joint Lead Arranger By: /s/ KEITH C. BARNISH --------------------------------------- Name: Keith C. Barnish Title: Senior Managing Director 117 BNP PARIBAS , as Joint Documentation Agent By: /s/ BEN TODRES ---------------------------------------- Name: Ben Todres Title: Director By: /s/ LYNNE RANDALL ---------------------------------------- Name: Lynne Randall Title: Managing Director FLEET NATIONAL BANK, as Joint Documentation Agent By: /s/ DENIS D. HAMBOYAN ---------------------------------------- Name: Denis D. Hamboyan Title: Managing Director 118 Annex A PRICING GRID FOR REVOLVING LOANS, SWINGLINE LOANS, AND TRANCHE A TERM LOANS
- --------------------------------------------------------------------------------------- Applicable Margin Applicable Margin for Pricing Level for Eurodollar Loans Base Rate Loans - --------------------------------------------------------------------------------------- I 3.50% 2.50% - --------------------------------------------------------------------------------------- II 3.25% 2.25% - --------------------------------------------------------------------------------------- III 3.00% 2.00% - --------------------------------------------------------------------------------------- IV 2.75% 1.75% - ---------------------------------------------------------------------------------------
The Applicable Margin for Revolving Loans, Swingline Loans and Tranche A Term Loans shall be adjusted, on and after the first Adjustment Date (as defined below) occurring after the completion of two full fiscal quarters of the Borrower after the Acquisition Closing Date, based on changes in the Consolidated Leverage Ratio, with such adjustments to become effective on the date (the "Adjustment Date") that is three Business Days after the date on which the relevant financial statements are delivered to the Lenders pursuant to Section 7.1 and to remain in effect until the next adjustment to be effected pursuant to this paragraph. If any financial statements referred to above are not delivered within the time periods specified in Section 7.1, then, until the date that is three Business Days after the date on which such financial statements are delivered, the highest rate set forth in each column of the Pricing Grid shall apply. On each Adjustment Date, the Applicable Margin for Revolving Loans, Swingline Loans and Tranche A Term Loans shall be adjusted to be equal to the Applicable Margins opposite the Pricing Level determined to exist on such Adjustment Date from the financial statements relating to such Adjustment Date. As used herein, the following rules shall govern the determination of Pricing Levels on each Adjustment Date: "Pricing Level I" shall exist on an Adjustment Date if the Consolidated Leverage Ratio for the relevant period is greater than or equal to 5.00 to 1.00. "Pricing Level II" shall exist on an Adjustment Date if the Consolidated Leverage Ratio for the relevant period is less than 5.00 to 1.00 but greater than or equal to 4.50 to 1.00. "Pricing Level III" shall exist on an Adjustment Date if the Consolidated Leverage Ratio for the relevant period is less than 4.50 to 1.00 but greater than or equal to 4.0 to 1.00. "Pricing Level IV" shall exist on an Adjustment Date if the Consolidated Leverage Ratio for the relevant period is less than 4.00 to 1.00. EXHIBIT A ================================================================================ GUARANTEE AND COLLATERAL AGREEMENT made by R.H. DONNELLEY CORPORATION R.H. DONNELLEY INC. and certain of its Subsidiaries in favor of DEUTSCHE BANK TRUST COMPANY AMERICAS, as Administrative Agent Dated as of December 6, 2002 ================================================================================ TABLE OF CONTENTS
Page ---- Section 1. DEFINED TERMS......................................................... 2 1.1 Definitions........................................................... 2 1.2 Other Definitional Provisions......................................... 5 Section 2. Guarantee............................................................. 6 2.1 Guarantee............................................................. 6 2.2 Right of Contribution................................................. 7 2.3 No Subrogation........................................................ 7 2.4 Amendments, etc. with respect to the Borrower Obligations............. 7 2.5 Guarantee Absolute and Unconditional.................................. 7 2.6 Reinstatement......................................................... 8 2.7 Payments.............................................................. 8 Section 3. GRANT OF SECURITY INTEREST............................................ 9 Section 4. REPRESENTATIONS AND WARRANTIES........................................ 10 4.1 Title; No Other Liens................................................. 10 4.2 Perfected First Priority Liens........................................ 10 4.3 Jurisdiction of Organization; Chief Executive Office.................. 11 4.4 Inventory and Equipment............................................... 11 4.5 Farm Products......................................................... 11 4.6 Investment Property................................................... 11 4.7 Receivables........................................................... 11 4.8 Contracts............................................................. 12 4.9 Intellectual Property................................................. 12 4.10 Deposit Accounts, Securities Accounts................................. 13 Section 5. COVENANTS............................................................. 13 5.1 Delivery of Instruments, Certificated Securities and Chattel Paper.... 13 5.2 Maintenance of Insurance.............................................. 13 5.3 Payment of Obligations................................................ 14 5.4 Maintenance of Perfected Security Interest; Further Documentation..... 14 5.5 Changes in Locations, Name, etc....................................... 15 5.6 Notices............................................................... 15 5.7 Investment Property................................................... 15 5.8 Receivables........................................................... 16 5.9 Contracts............................................................. 16 5.10 Intellectual Property................................................. 17
i 5.11 Commercial Tort Claims................................................ 18 5.12 Deposit Accounts, Securities Accounts................................. 18 Section 6. REMEDIAL PROVISIONS................................................... 18 6.1 Certain Matters Relating to Receivables............................... 18 6.2 Communications with Obligors; Grantors Remain Liable.................. 19 6.3 Pledged Stock......................................................... 19 6.4 Proceeds to be Turned Over To Administrative Agent.................... 20 6.5 Application of Proceeds............................................... 21 6.6 Code and Other Remedies............................................... 21 6.7 Registration Rights................................................... 22 6.8 Deficiency............................................................ 23 Section 7. THE ADMINISTRATIVE AGENT.............................................. 23 7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc........... 23 7.2 Duty of Administrative Agent.......................................... 25 7.3 Execution of Financing Statements..................................... 25 7.4 Authority of Administrative Agent..................................... 25 Section 8. MISCELLANEOUS......................................................... 26 8.1 Amendments in Writing................................................. 26 8.2 Notices............................................................... 26 8.3 No Waiver by Course of Conduct; Cumulative Remedies................... 26 8.4 Enforcement Expenses; Indemnification................................. 26 8.5 Successors and Assigns................................................ 27 8.6 Set-Off............................................................... 27 8.7 Counterparts.......................................................... 27 8.8 Severability.......................................................... 27 8.9 Section Headings...................................................... 27 8.10 Integration........................................................... 28 8.11 GOVERNING LAW......................................................... 28 8.12 Submission To Jurisdiction; Waivers................................... 28 8.13 Acknowledgements...................................................... 28 8.14 Additional Grantors................................................... 29 8.15 Releases.............................................................. 29 8.16 WAIVER OF JURY TRIAL.................................................. 29
SCHEDULES - --------- Schedule 1 Notice Addresses Schedule 2 Investment Property Schedule 3 Perfection Matters Schedule 4 Jurisdictions of Organization and Chief Executive Offices Schedule 5 Inventory and Equipment Locations
ii Schedule 6 Intellectual Property Schedule 7 Contracts
ANNEXES - ------- Annex I Form of Assumption Agreement Annex II Form of Acknowledgement and Consent
iii GUARANTEE AND COLLATERAL AGREEMENT GUARANTEE AND COLLATERAL AGREEMENT, dated as of December 6, 2002, made by each of the signatories hereto (together with any other entity that may become a party hereto as provided herein, the "Grantors"), in favor of Deutsche Bank Trust Company Americas, as Administrative Agent (in such capacity, the "Administrative Agent") for the banks and other financial institutions or entities (the "Lenders") from time to time parties to the Credit Agreement, dated as of December 6, 2002 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among R.H. Donnelley Corporation ("Holdings"), R.H. Donnelley Inc. (the "Borrower"), R.H. Donnelley Finance Corporation II, a Delaware corporation (the "Special Purpose Borrower"), the several banks and other financial institutions or entities from time to time parties to the Credit Agreement (the "Lenders"), Deutsche Bank Securities Inc., Salomon Smith Barney Inc. and Bear, Stearns & Co. Inc., as joint lead arrangers and joint bookrunners (in such capacity, the "Lead Arrangers"), Bear Stearns Corporate Lending Inc. and Citicorp North America, N.A., as joint syndication agents (in such capacity, the "Syndication Agents"), Fleet National Bank and BNP Paribas, as documentation agents (in such capacity, the "Documentation Agents") and the Administrative Agent (together with the Lead Arrangers, the Syndication Agents and the Documentation Agents, the "Agents"). W I T N E S S E T H: WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make extensions of credit to the Borrower upon the terms and subject to the conditions set forth therein; WHEREAS, the Borrower is a member of an affiliated group of companies that includes each other Grantor; WHEREAS, the proceeds of the extensions of credit under the Credit Agreement will be used in part to enable the Borrower to make valuable transfers to one or more of the other Grantors in connection with the operation of their respective businesses; WHEREAS, the Borrower and the other Grantors are engaged in related businesses, and each Grantor will derive substantial direct and indirect benefit from the making of the extensions of credit under the Credit Agreement; and WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective extensions of credit to the Borrower under the Credit Agreement that the Grantors shall have executed and delivered this Agreement to the Administrative Agent for the ratable benefit of the Lenders and the Agents (collectively, the "Secured Parties"); NOW, THEREFORE, in consideration of the premises and to induce the Secured Parties to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, each Grantor hereby agrees with the Administrative Agent, for the ratable benefit of the Secured Parties, as follows: 1 SECTION 12. DEFINED TERMS 12.1. Definitions. (a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement, and the following terms are used herein as defined in the New York UCC: Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims, Documents, Equipment, Farm Products, General Intangibles, Instruments, Inventory, Letter-of-Credit Rights, Securities Account and Supporting Obligations. (a) The following terms shall have the following meanings: "Agents": as defined in the preamble. "Agreement": this Guarantee and Collateral Agreement, as the same may be amended, supplemented or otherwise modified from time to time. "Borrower Obligations": the collective reference to the unpaid principal of and interest on the Loans and all other obligations and liabilities of the Borrower (including, without limitation, interest accruing at the then applicable rate provided in the Credit Agreement after the maturity of the Loans and interest accruing at the then applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) to any Secured Party (or, in the case of any Specified Hedge Agreement, any Affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, this Agreement, the other Loan Documents, any Letter of Credit, any Specified Hedge Agreement or any other document made, delivered or given in connection with any of the foregoing, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Secured Parties that are required to be paid by the Borrower pursuant to the terms of any of the foregoing agreements). "Collateral": as defined in Section 3. "Collateral Account": any collateral account established by the Administrative Agent as provided in Section 6.1 or 6.4. "Contracts": the Master Agreement, the Revenue Participation Agreement, the Indemnity Agreement and the Acquisition Agreement, as the same may be amended, supplemented or otherwise modified from time to time, including, without limitation, (i) all rights of any Grantor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of any Grantor to damages arising thereunder and (iii) all rights of any Grantor to perform and to exercise all remedies thereunder. "Copyrights": (i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished (including, without limitation, those listed in Schedule 6), all 2 registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, and (ii) the right to obtain all renewals thereof. "Copyright Licenses": any written agreement naming any Grantor as licensor or licensee (including, without limitation, those listed in Schedule 6), granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright. "Deposit Account": as defined in the Uniform Commercial Code of any applicable jurisdiction and, in any event, including, without limitation, any demand, time, savings, passbook or like account maintained with a depositary institution. "DonTech II": DonTech II, an Illinois partnership, and its successors. "Foreign Subsidiary": any Subsidiary organized under the laws of any jurisdiction outside the United States of America. "Foreign Subsidiary Voting Stock": the voting Capital Stock of any Foreign Subsidiary. "Grantors": as defined in the preamble hereto. "Guarantor Obligations": with respect to any Guarantor, all obligations and liabilities of such Guarantor which may arise under or in connection with this Agreement (including, without limitation, Section 2) or any other Loan Document to which such Guarantor is a party, in each case whether on account of guarantee obligations, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Secured Parties that are required to be paid by such Guarantor pursuant to the terms of this Agreement or any other Loan Document). "Guarantors": the collective reference to each Grantor other than the Borrower. "Intellectual Property": the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom. "Intercompany Note": any promissory note evidencing loans made by any Grantor to Holdings or any of its Subsidiaries. "Investment Property": the collective reference to (i) all "investment property," as such term is defined in Section 9-102(a)(49) of the New York UCC (other than any Foreign Subsidiary Voting Stock excluded from the definition of "Pledged Stock") and (ii) whether or not constituting "investment property" as so defined, all Pledged Notes and all Pledged Stock. 3 "Issuers": the collective reference to each issuer of any Investment Property. "Master Agreement": the Master Agreement, dated as of August 19, 1997, among Holdings, The Dun & Bradstreet Corporation, The Am-Don Partnership (also known as DonTech), DonTech II, Ameritech Publishing, Inc., Ameritech Publishing of Illinois, Inc., Ameritech Corporation, DonTech I Publishing Company LLC and The APIL Partners Partnership, as the same may be amended, supplemented or otherwise modified from time to time. "Master Agreement Rights": all rights, benefits and interests of Holdings and its Subsidiaries under the Master Agreement, including, without limitation, all rights to receive any distributions or proceeds thereunder, whether in cash or property and whether in respect of Revenue Participation Interests (as defined in the Revenue Participation Agreement), any Asset Disposition (as defined in the Master Agreement) or otherwise. "New York UCC": the Uniform Commercial Code as from time to time in effect in the State of New York. "Obligations": (i) in the case of the Borrower, the Borrower Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations. "Partnership Agreement": the Partnership Agreement, dated as of August 19, 1997, between the Borrower and Ameritech Publishing of Illinois, Inc., with respect to DonTech II, as the same may be amended, supplemented or otherwise modified from time to time. "Partnership Rights": all rights and economic interests of the Borrower under the Partnership Agreement, including, without limitation, all rights to receive any distributions or proceeds, whether in cash or in property and whether on account of a liquidation of DonTech II or otherwise. "Patents": (i) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, including, without limitation, any of the foregoing referred to in Schedule 6, (ii) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, including, without limitation, any of the foregoing referred to in Schedule 6 and (iii) all rights to obtain any reissues or extensions of the foregoing. "Patent License": all agreements, whether written or oral, providing for the grant by or to any Grantor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent, including, without limitation, any of the foregoing referred to in Schedule 6. "Pledged Notes": all promissory notes listed on Schedule 2, all Intercompany Notes at any time issued to any Grantor and all other promissory notes issued to or held by any Grantor (other than promissory notes issued in connection with extensions of trade credit by any Grantor in the ordinary course of business). 4 "Pledged Stock": the shares of Capital Stock listed on Schedule 2, together with any other shares, stock certificates, options, interests or rights of any nature whatsoever in respect of the Capital Stock of any Person that may be issued or granted to, or held by, any Grantor while this Agreement is in effect; provided that in no event shall more than 65% of the total outstanding Foreign Subsidiary Voting Stock of any Foreign Subsidiary be required to be pledged hereunder. "Proceeds": all "proceeds," as such term is defined in Section 9-102(a)(64) of the New York UCC and, in any event, shall include, without limitation, all dividends or other income from the Investment Property, collections thereon or distributions or payments with respect thereto. "Receivable": any right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including, without limitation, any Account). "Revenue Participation Agreement": the Revenue Participation Agreement, dated as of August 19, 1997, between the Borrower and the APIL Partners Partnership, as the same may be amended, supplemented or otherwise modified from time to time. "Revenue Participation Rights": all rights, benefits and interests of the Borrower under the Revenue Participation Agreement, including, without limitation, all rights to receive any distributions or proceeds thereunder, whether in cash or property and whether in respect of Revenue Participation Interests (as defined in the Revenue Participation Agreement) or otherwise. "Securities Act": the Securities Act of 1933, as amended. "Trademarks": (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common-law rights related thereto, including, without limitation, any of the foregoing referred to in Schedule 6, and (ii) the right to obtain all renewals thereof. "Trademark License": any agreement, whether written or oral, providing for the grant by or to any Grantor of any right to use any Trademark, including, without limitation, any of the foregoing referred to in Schedule 6. 12.2. Other Definitional Provisions. (b) The words "hereof," "herein," "hereto" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified. (a) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. 5 (b) Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor's Collateral or the relevant part thereof. (c) All references to the "Borrower" in this Agreement shall, during the Escrow Period and solely where appropriate, include the Special Purpose Borrower. (d) All references to the Lenders hereunder shall, where appropriate, include any Affiliate of any Lender that is a party to a Specified Hedge Agreement. SECTION 13. Guarantee 13.1. Guarantee. (c) Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantees to the Administrative Agent, for the ratable benefit of the Secured Parties and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance by the Borrower when due (whether at the stated maturity, by acceleration or otherwise) of the Borrower Obligations. (a) Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Loan Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws relating to the insolvency of debtors (after giving effect to the right of contribution established in Section 2.2). (b) Each Guarantor agrees that the Borrower Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of any Secured Party hereunder. (c) The guarantee contained in this Section 2 shall remain in full force and effect until all the Borrower Obligations and the obligations of each Guarantor under the guarantee contained in this Section 2 shall have been satisfied by payment in full, no Letter of Credit shall be outstanding and the Commitments shall be terminated, notwithstanding that from time to time during the term of the Credit Agreement the Borrower may be free from any Borrower Obligations. (d) No payment made by the Borrower, any of the Guarantors, any other guarantor or any other Person or received or collected by any Secured Party from the Borrower, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Borrower Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Borrower Obligations or any payment received or collected from such Guarantor in respect of the Borrower Obligations), remain liable for the Borrower Obligations up to the maximum liability of such Guarantor hereunder until the Borrower Obligations are paid in full, no Letter of Credit shall be outstanding and the Commitments are terminated. 6 13.2. Right of Contribution. Each Subsidiary Guarantor hereby agrees that to the extent that a Subsidiary Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Subsidiary Guarantor shall be entitled to seek and receive contribution from and against any other Subsidiary Guarantor hereunder which has not paid its proportionate share of such payment. Each Subsidiary Guarantor's right of contribution shall be subject to the terms and conditions of Section 2.3. The provisions of this Section 2.2 shall in no respect limit the obligations and liabilities of any Subsidiary Guarantor to the Secured Parties, and each Subsidiary Guarantor shall remain liable to the Secured Parties for the full amount guaranteed by such Subsidiary Guarantor hereunder. 13.3. No Subrogation. Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by any Secured Party, no Guarantor shall be entitled to be subrogated to any of the rights of any Secured Party against the Borrower or any other Guarantor or any collateral security or guarantee or right of offset held by any Secured Party for the payment of the Borrower Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Borrower or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Secured Parties by the Borrower on account of the Borrower Obligations are paid in full, no Letter of Credit shall be outstanding and the Commitments are terminated. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Borrower Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Secured Parties, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Administrative Agent in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Administrative Agent, if required), to be applied against the Borrower Obligations, whether matured or unmatured, in such order as the Administrative Agent may determine. 13.4. Amendments, etc. with respect to the Borrower Obligations. Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Borrower Obligations made by any Secured Party may be rescinded by such Secured Party and any of the Borrower Obligations continued, and the Borrower Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any Secured Party, and the Credit Agreement and the other Loan Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Administrative Agent (or the Required Lenders or all Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by any Secured Party for the payment of the Borrower Obligations may be sold, exchanged, waived, surrendered or released. No Secured Party shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Borrower Obligations or for the guarantee contained in this Section 2 or any property subject thereto. 13.5. Guarantee Absolute and Unconditional. Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Borrower Obligations and 7 notice of or proof of reliance by any Secured Party upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Borrower Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the Borrower and any of the Guarantors, on the one hand, and the Secured Parties, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Borrower or any of the Guarantors with respect to the Borrower Obligations. Each Guarantor understands and agrees that the guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or enforceability of the Credit Agreement or any other Loan Document, any of the Borrower Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any Secured Party, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by the Borrower or any other Person against any Secured Party, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Borrower or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower for the Borrower Obligations, or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, any Secured Party may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against the Borrower, any other Guarantor or any other Person or against any collateral security or guarantee for the Borrower Obligations or any right of offset with respect thereto, and any failure by any Secured Party to make any such demand, to pursue such other rights or remedies or to collect any payments from the Borrower, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Borrower, any other Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of any Secured Party against any Guarantor. For the purposes hereof "demand" shall include the commencement and continuance of any legal proceedings. 13.6. Reinstatement. The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Borrower Obligations is rescinded or must otherwise be restored or returned by any Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. 13.7. Payments. Each Guarantor hereby guarantees that payments hereunder will be paid to the Administrative Agent without set-off or counterclaim in Dollars at the Funding Office. 8 SECTION 14. GRANT OF SECURITY INTEREST Each Grantor hereby assigns and transfers to the Administrative Agent, and hereby grants to the Administrative Agent, for the ratable benefit of the Secured Parties, a security interest in, all of the following property now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the "Collateral"), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of such Grantor's Obligations,: (a) all Accounts; (b) all Chattel Paper; (c) all Contracts; (d) all Deposit Accounts; (e) all Documents; (f) all Equipment; (g) all General Intangibles; (h) all Instruments; (i) all Intellectual Property; (j) all Inventory; (k) all Investment Property; (l) all Letter-of-Credit Rights; (m) all Revenue Participation Rights and all Master Agreement Rights; (n) to the extent such assignment, transfer and grant of a security interest does not constitute a breach or default under or result in the dissolution of DonTech II or the termination of the Partnership Agreement (unless the term in the Partnership Agreement providing for any such breach, default or termination is ineffective under applicable law), all Partnership Rights; (o) all other property not otherwise described above; (p) all books and records pertaining to the Collateral; and (q) to the extent not otherwise included, all Proceeds, Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing; 9 provided, however, that notwithstanding any of the other provisions set forth in this Section 3, this Agreement shall not constitute a grant of a security interest in any property to the extent that such grant of a security interest is (i) prohibited by any Requirements of Law of a Governmental Authority, requires a consent not obtained of any Governmental Authority pursuant to such Requirement of Law, (ii) is prohibited by, or constitutes a breach or default under or results in the termination of or requires any consent not obtained under, any contract, license, agreement, instrument or other document evidencing or giving rise to such property, or (iii) in the case of any Investment Property, Pledged Stock or Pledged Note, any applicable shareholder or similar agreement, except in each case to the extent that such Requirement of Law or the term in such contract, license, agreement, instrument or other document or shareholder or similar agreement providing for such prohibition, breach, default or termination or requiring such consent is ineffective under applicable law. SECTION 15. REPRESENTATIONS AND WARRANTIES To induce the Secured Parties to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, each Grantor hereby represents and warrants to each Secured Party that: 15.1. Title; No Other Liens. Except for the security interest granted to the Administrative Agent for the ratable benefit of the Secured Parties pursuant to this Agreement and the other Liens permitted to exist on the Collateral by the Credit Agreement (including, without limitation, Liens outstanding during the Escrow Period in favor of the lenders and the administrative agent under the Existing Credit Agreement), such Grantor owns each item of the Collateral free and clear of any and all Liens or claims of others. No financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Administrative Agent, for the ratable benefit of the Secured Parties pursuant to this Agreement or as are permitted by the Credit Agreement. For the avoidance of doubt, it is understood and agreed that any Grantor may, as part of its business, grant licenses to third parties to use Intellectual Property owned or developed by a Grantor. For purposes of this Agreement and the other Loan Documents, such licensing activity shall not constitute a "Lien" on such Intellectual Property. Each Secured Party understands that any such licenses may be exclusive to the applicable licensees, and such exclusivity provisions may limit the ability of the Administrative Agent to utilize, sell, lease or transfer the related Intellectual Property or otherwise realize value from such Intellectual Property pursuant hereto. 15.2. Perfected First Priority Liens. The security interests granted pursuant to this Agreement (a) upon completion of the filings and other actions specified on Schedule 3 (which, in the case of all filings and other documents referred to on said Schedule, have been delivered to the Administrative Agent in completed and duly executed form) will constitute valid perfected security interests in all of the Collateral in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, as collateral security for such Grantor's Obligations, enforceable in accordance with the terms hereof against all creditors of such Grantor and any Persons purporting to purchase any Collateral from such Grantor and (b) are prior to all other Liens on the Collateral in existence on the date hereof except for unrecorded Liens permitted by 10 the Credit Agreement which have priority over the Liens on the Collateral by operation of law or as provided in the Lien Subordination Agreement. 15.3. Jurisdiction of Organization; Chief Executive Office. On the date hereof, such Grantor's jurisdiction of organization, identification number from the jurisdiction of organization (if any), and the location of such Grantor's chief executive office or sole place of business or principal residence, as the case may be, are specified on Schedule 4. Such Grantor has furnished to the Administrative Agent a certified charter, certificate of incorporation or other organizational document and a long-form good standing certificate as of a date which is recent to the date hereof. 15.4. Inventory and Equipment. On the date hereof, the Inventory and the Equipment (other than mobile goods) are kept at the locations listed on Schedule 5. 15.5. Farm Products. None of the Collateral constitutes, or is the Proceeds of, Farm Products. 15.6. Investment Property. (d) The shares of Pledged Stock pledged by such Grantor hereunder constitute all the issued and outstanding shares of all classes of the Capital Stock of each Issuer owned by such Grantor or, in the case of Foreign Subsidiary Voting Stock, if less, 65% of the outstanding Foreign Subsidiary Voting Stock of each relevant Issuer. (a) All the shares of the Pledged Stock have been duly and validly issued and are fully paid and nonassessable. (b) Each of the Pledged Notes constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (c) Such Grantor is the record and beneficial owner of, and has good and marketable title to, the Investment Property pledged by it hereunder, free of any and all Liens or options in favor of, or claims of, any other Person, except the security interest created by this Agreement and the Liens under the Existing Credit Agreement that shall be outstanding solely during the Escrow Period. 15.7. Receivables. (e) No amount payable to such Grantor under or in connection with any Receivable is evidenced by any Instrument or Chattel Paper which has not been delivered to the Administrative Agent (except for any such Instrument or Chattel Paper that has been delivered to the administrative agent under the Existing Credit Agreement, which Instrument or Chattel Paper, as the case may be, shall be delivered to the Administrative Agent on the Acquisition Closing Date). (a) None of the obligors on any Receivables is a Governmental Authority. 11 (b) The amounts represented by such Grantor to the Secured Parties from time to time as owing to such Grantor in respect of the Receivables will at such times be accurate. 15.8. Contracts. (f) No consent of any party (other than such Grantor) to any Contract is required in connection with the execution, delivery and performance of this Agreement, except as has been obtained. (a) Each Contract is in full force and effect and constitutes a valid and legally enforceable obligation of the parties thereto, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (b) No consent or authorization of, filing with or other act by or in respect of any Governmental Authority is required in connection with the execution, delivery, performance, validity or enforceability of any of the Contracts by any party thereto other than those which have been duly obtained, made or performed, are in full force and effect and do not subject the scope of any such Contract to any material adverse limitation, either specific or general in nature. (c) Neither such Grantor nor (to such Grantor's knowledge) any of the other parties to the Contracts is in default in the performance or observance of any of the terms thereof. (d) The right, title and interest of such Grantor in, to and under the Contracts are not subject to any defenses, offsets, counterclaims or claims. (e) Such Grantor has delivered to the Administrative Agent a complete and correct copy of each Contract, including all amendments, supplements and other modifications thereto. (f) No amount payable to such Grantor under or in connection with any Contract is evidenced by any Instrument or Chattel Paper which has not been delivered to the Administrative Agent. (g) None of the parties to any Contract is a Governmental Authority. 15.9. Intellectual Property. (g) Schedule 6 lists all Copyrights, Trademarks, Patents and applications for the foregoing owned by such Grantor in its own name on the date hereof and all Copyright Licenses, Patent Licenses and Trademark Licenses. (a) On the date hereof, all material Intellectual Property is valid, subsisting, unexpired and enforceable, has not been abandoned and, to the knowledge of such Grantor, does not infringe the intellectual property rights of any other Person. (b) Except as set forth in Schedule 6 hereto, on the date hereof, none of the Intellectual Property is the subject of any licensing or franchise agreement pursuant to which such Grantor is the licensor or franchisor. 12 (c) No holding, decision or judgment has been rendered by any Governmental Authority which would limit, cancel or question the validity of, or such Grantor's rights in, any Intellectual Property in any respect that could reasonably be expected to have a Material Adverse Effect. (d) No action or proceeding is pending, or, to the knowledge of such Grantor, threatened, on the date hereof (i) seeking to limit, cancel or question the validity of any Intellectual Property or such Grantor's ownership interest therein, or (ii) which, if adversely determined, would have a material adverse effect on the value of any Intellectual Property. 15.10. Deposit Accounts, Securities Accounts. Schedule 7 hereto sets forth each Deposit Account or Securities Account in which any Grantor has any interest on the date hereof. SECTION 16. COVENANTS Each Grantor covenants and agrees with the Secured Parties that, from and after the date of this Agreement until the Obligations shall have been paid in full, no Letter of Credit shall be outstanding and the Commitments shall have terminated: 16.1. Delivery of Instruments, Certificated Securities and Chattel Paper. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument, Certificated Security or Chattel Paper, such Instrument, Certificated Security or Chattel Paper shall be immediately delivered to the Administrative Agent (except for any Instrument, Certificated Security or Chattel Paper that has been delivered to the administrative agent under the Existing Credit Agreement, which Instrument, Certificated Security or Chattel Paper, as the case may be, shall be delivered to the Administrative Agent on the Acquisition Closing Date), duly indorsed in a manner satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Agreement. On or before the Acquisition Closing Date, each Grantor shall deliver to the Administrative Agent any Instrument, Certificated Security or Chattel Paper evidencing any of the Collateral (a) acquired by such Grantor in the Acquisition or (b) previously delivered to the administrative agent pursuant to the Existing Credit Agreement. 1.2 Maintenance of Insurance. (a) Such Grantor will maintain, with financially sound and reputable companies, insurance policies (i) insuring the Inventory and Equipment against loss by fire, explosion, theft and such other casualties as may be reasonably satisfactory to the Administrative Agent and (ii) to the extent requested by the Administrative Agent, insuring such Grantor against liability for personal injury and property damage relating to such Inventory and Equipment, such policies to be in such form and amounts and having such coverage as may be reasonably satisfactory to the Administrative Agent. (a) All such insurance shall (i) provide that no cancellation, material reduction in amount or material change in coverage thereof shall be effective unless the insurer gives at least 30 days notice to the Administrative Agent, (ii) name the Administrative Agent as insured party or loss payee, as applicable, and (iii) be reasonably satisfactory in all other respects to the Administrative Agent. (b) The Borrower shall deliver to the Administrative Agent a report of a reputable insurance broker with respect to such insurance substantially concurrently with each 13 delivery of the Borrower's audited annual financial statements and such supplemental reports with respect thereto as the Administrative Agent may from time to time reasonably request. 1.3 Payment of Obligations. Such Grantor will pay and discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all taxes, assessments and governmental charges or levies imposed upon the Collateral or in respect of income or profits therefrom, as well as all claims of any kind (including, without limitation, claims for labor, materials and supplies) against or with respect to the Collateral, except that no such charge need be paid if the amount or validity thereof is currently being contested in good faith by appropriate proceedings, reserves in conformity with GAAP with respect thereto have been provided on the books of such Grantor and such proceedings could not reasonably be expected to result in the sale, forfeiture or loss of any material portion of the Collateral or any interest therein. 16.2. Maintenance of Perfected Security Interest; Further Documentation. (a) Such Grantor shall maintain the security interest created by this Agreement as a perfected security interest having at least the priority described in Section 4.2 and shall defend such security interest against the claims and demands of all Persons whomsoever (other than as against the lenders and the administrative agent that hold Liens under the Existing Credit Agreement during the Escrow Period or as against any Person that holds a Lien otherwise permitted under the Credit Agreement), subject to the rights of such Grantor under the Loan Documents to dispose of the Collateral. (a) Such Grantor will furnish to the Administrative Agent from time to time statements and schedules further identifying and describing the assets and property of such Grantor and such other reports in connection therewith as the Administrative Agent may reasonably request, all in reasonable detail. (b) At any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of such Grantor, such Grantor will promptly and duly execute and deliver, and have recorded, such further instruments and documents and take such further actions as the Administrative Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including, without limitation, (i) filing any financing or continuation statements under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby and (ii) in the case of Investment Property, Deposit Accounts, Letter-of-Credit Rights and any other relevant Collateral, taking any actions necessary to enable the Administrative Agent to obtain "control" (within the meaning of the applicable Uniform Commercial Code) with respect thereto. (c) Such Grantor will not establish any additional Deposit Accounts or Securities Accounts without executing and delivering, concurrently with the establishment of such account, a control agreement in form and substance satisfactory to the Administrative Agent and the related depositary bank or securities intermediary, as the case may be, in order to perfect the security interest of the Administrative Agent in such account under the Uniform Commercial Code. 14 16.3. Changes in Locations, Name, etc. Such Grantor will not, except upon 15 days' prior written notice to the Administrative Agent and delivery to the Administrative Agent of all additional executed financing statements and other documents reasonably requested by the Administrative Agent to maintain the validity, perfection and priority of the security interests provided for herein: (i) change its jurisdiction of organization or the location of its chief executive office or sole place of business or principal residence from that referred to in Section 4.3; or (ii) change its name. 16.4. Notices. Such Grantor will advise the Administrative Agent promptly, in reasonable detail (which notice shall specify that it is being delivered pursuant to this Section), of: (a) any Lien (other than security interests created hereby or Liens permitted under the Credit Agreement) on any of the Collateral which would adversely affect the ability of the Administrative Agent to exercise any of its remedies hereunder; and (b) of the occurrence of any other event which could reasonably be expected to have a material adverse effect on the aggregate value of the Collateral or on the security interests created hereby. 16.5. Investment Property. (b) If such Grantor shall become entitled to receive or shall receive any certificate (including, without limitation, any certificate representing a dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option or rights in respect of the Capital Stock of any Issuer, whether in addition to, in substitution of, as a conversion of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the same as the agent of the Secured Parties, hold the same in trust for the Secured Parties and deliver the same forthwith to the Administrative Agent in the exact form received, duly indorsed by such Grantor to the Administrative Agent, if required, together with an undated stock power covering such certificate duly executed in blank by such Grantor and with, if the Administrative Agent so requests, signature guaranteed, to be held by the Administrative Agent, subject to the terms hereof, as additional collateral security for the Obligations. Any sums paid upon or in respect of the Investment Property upon the liquidation or dissolution of any Issuer shall be paid over to the Administrative Agent to be held by it hereunder as additional collateral security for the Obligations, and in case any distribution of capital shall be made on or in respect of the Investment Property or any property shall be distributed upon or with respect to the Investment Property pursuant to the recapitalization or reclassification of the capital of any Issuer or pursuant to the reorganization thereof, the property so distributed shall, unless otherwise subject to a perfected security interest in favor of the Administrative Agent, be delivered to the Administrative Agent to be held by it hereunder as additional collateral security for the Obligations. If any sums of money or property so paid or distributed in respect of the Investment Property shall be received by such Grantor, such Grantor shall, until such money or property is paid or delivered to the Administrative Agent, hold such money or property in trust 15 for the Secured Parties, segregated from other funds of such Grantor, as additional collateral security for the Obligations. (a) Without the prior written consent of the Administrative Agent, such Grantor will not (i) vote to enable, or take any other action to permit, any Issuer to issue any Capital Stock of any nature or to issue any other securities convertible into or granting the right to purchase or exchange for any Capital Stock of any nature of any Issuer, except to the extent permitted by the Credit Agreement, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, the Investment Property or Proceeds thereof (except pursuant to a transaction expressly permitted by the Credit Agreement), (iii) create, incur or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Investment Property or Proceeds thereof, or any interest therein, except for the security interests created by this Agreement and the Liens permitted by the Credit Agreement (including, without limitation, any such Liens in favor of the lenders and the administrative agent under the Existing Credit Agreement during the Escrow Period) or (iv) enter into any agreement or undertaking restricting the right or ability of such Grantor or the Administrative Agent to sell, assign or transfer any of the Investment Property or Proceeds thereof. (b) In the case of each Grantor which is an Issuer, such Issuer agrees that (i) it will be bound by the terms of this Agreement relating to the Investment Property issued by it and will comply with such terms insofar as such terms are applicable to it, (ii) it will notify the Administrative Agent promptly in writing of the occurrence of any of the events described in Section 5.7(a) with respect to the Investment Property issued by it and (iii) the terms of Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to all actions that may be required of it pursuant to Section 6.3(c) or 6.7 with respect to the Investment Property issued by it. 1.4 Receivables. (a) Other than in the ordinary course of business consistent with its past practice, such Grantor will not (i) grant any extension of the time of payment of any Receivable, (ii) compromise or settle any Receivable for less than the full amount thereof, (iii) release, wholly or partially, any Person liable for the payment of any Receivable, (iv) allow any credit or discount whatsoever on any Receivable or (v) amend, supplement or modify any Receivable in any manner that could reasonably be expected to adversely affect the value thereof. (c) Such Grantor will deliver to the Administrative Agent a copy of each material demand, notice or document received by it that questions or calls into doubt the validity or enforceability of more than 5% of the aggregate amount of the then outstanding Receivables. 1.5 Contracts. (a) Such Grantor will perform and comply in all material respects with all its obligations under the Contracts. (d) Such Grantor will exercise promptly and diligently each and every material right which it may have under each Contract (other than any right of termination). (e) Such Grantor will deliver to the Administrative Agent a copy of each material demand, notice or document received by it relating in any way to any Contract that questions the validity or enforceability of such Contract. 16 16.6. Intellectual Property. (b) Except to the extent any Grantor reasonably determines that any Intellectual Property is no longer used or useful in its business, such Grantor (either itself or through licensees) will (i) continue to use commercially each material Trademark in order to maintain such Trademark in full force free from any claim of abandonment for non-use, (ii) maintain as in the past the quality of products and services offered under such Trademark, (iii) use such Trademark with the appropriate notice of registration and all other notices and legends required by applicable Requirements of Law, (iv) not adopt or use any mark which is confusingly similar or a colorable imitation of such Trademark unless the Administrative Agent, for the ratable benefit of the Secured Parties, shall obtain a perfected security interest in such mark pursuant to this Agreement, and (v) not (and not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby such Trademark may become invalidated or impaired in any way. (a) Such Grantor (either itself or through licensees) will not do any act, or omit to do any act, whereby any material Patent may become forfeited, abandoned or dedicated to the public. (b) Such Grantor (either itself or through licensees) (i) will employ each material Copyright and (ii) will not (and will not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby any material portion of the Copyrights may become invalidated or otherwise impaired. Such Grantor will not (either itself or through licensees) do any act whereby any material portion of the Copyrights may fall into the public domain. (c) Such Grantor (either itself or through licensees) will not do any act that knowingly uses any material Intellectual Property to infringe the intellectual property rights of any other Person. (d) Such Grantor will notify the Administrative Agent immediately if it knows, or has reason to know, that any application or registration relating to any material Intellectual Property may become forfeited, abandoned or dedicated to the public, or of any final or non-appealable adverse determination or development (including, without limitation, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court or tribunal in any country) regarding such Grantor's ownership of, or the validity of, any material Intellectual Property or such Grantor's right to register the same or to own and maintain the same. (e) Whenever such Grantor, either by itself or through any agent, employee, licensee or designee, shall file an application for the registration of any Intellectual Property with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, such Grantor shall report such filing to the Administrative Agent within five Business Days after the last day of the fiscal quarter in which such filing occurs. Upon request of the Administrative Agent, such Grantor shall execute and deliver, and have recorded, any and all agreements, instruments, documents, and papers as the Administrative Agent may request to evidence the Administrative Agent's security interest in any Copyright, Patent or Trademark and the goodwill and general intangibles of such Grantor relating thereto or represented thereby. 17 (f) Such Grantor will take all reasonable and necessary steps, including, without limitation, in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of the material Intellectual Property, including, without limitation, filing of applications for renewal, affidavits of use and affidavits of incontestability. (g) In the event that any material Intellectual Property is infringed, misappropriated or diluted by a third party, such Grantor shall (i) take such actions as such Grantor shall reasonably deem appropriate under the circumstances to protect such Intellectual Property and (ii) if such Intellectual Property is of material economic value, promptly notify the Administrative Agent after it learns thereof and sue for infringement, misappropriation or dilution, to seek appropriate relief and to recover any and all damages for such infringement, misappropriation or dilution. 16.7. Commercial Tort Claims. Such Grantor shall advise the Administrative Agent and the Lenders promptly of any Commercial Tort Claim held by such Grantor in excess of $1,000,000 and shall promptly execute a supplement to this Agreement in form and substance satisfactory to the Administrative Agent to grant a security interest in such Commercial Tort Claim to the Administrative Agent for the benefit of the Secured Parties. 16.8. Deposit Accounts, Securities Accounts. On or prior to the Acquisition Closing Date, each Grantor shall deliver to the Administrative Agent a control agreement, executed by all parties thereto, for each Deposit Account or Securities Account listed on Schedule 7 hereto in which any Grantor has an interest on the date hereof. No Deposit Account or Securities Account of any Grantor will exist on the Acquisition Closing Date for which such Grantor has not delivered to the Administrative Agent a control agreement executed by all parties thereto, provided that the Grantors shall not be required to enter into control agreements with respect to any Deposit Account or Securities Account having an aggregate balance of less than $1,000,000. SECTION 17. REMEDIAL PROVISIONS 17.1. Certain Matters Relating to Receivables. (c) After an Event of Default has occurred and is continuing, The Administrative Agent shall have the right to make test verifications of the Receivables in any manner and through any medium that it reasonably considers advisable, and each Grantor shall furnish all such assistance and information as the Administrative Agent may require in connection with such test verifications. (a) The Administrative Agent hereby authorizes each Grantor to collect such Grantor's Receivables. The Administrative Agent may curtail or terminate said authority at any time after the occurrence and during the continuance of an Event of Default. If required by the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, any payments of Receivables, when collected by any Grantor, (i) shall be forthwith (and, in any event, within two Business Days) deposited by such Grantor in the exact form received, duly indorsed by such Grantor to the Administrative Agent if required, in a Collateral 18 Account maintained under the sole dominion and control of the Administrative Agent, subject to withdrawal by the Administrative Agent for the account of the Secured Parties only as provided in Section 6.5, and (ii) until so turned over, shall be held by such Grantor in trust for the Secured Parties, segregated from other funds of such Grantor. Each such deposit of Proceeds of Receivables shall be accompanied by a report identifying in reasonable detail the nature and source of the payments included in the deposit. (b) At the Administrative Agent's request, upon the occurrence and during the continuance of an Event of Default, each Grantor shall deliver to the Administrative Agent all original and other documents evidencing, and relating to, the agreements and transactions which gave rise to the Receivables, including, without limitation, all original orders, invoices and shipping receipts. 17.2. Communications with Obligors; Grantors Remain Liable. (d) The Administrative Agent in its own name or in the name of others may at any time after the occurrence and during the continuance of an Event of Default and after prior notice to the Grantors communicate with obligors under the Receivables and parties to the Contracts to verify with them to the Administrative Agent's satisfaction the existence, amount and terms of any Receivables or Contracts. (a) After the occurrence and during the continuance of an Event of Default, the Administrative Agent in its own name or in the name of others may, and upon the request of the Administrative Agent each Grantor shall, notify obligors on the Receivables and parties to the Contracts that the Receivables and the Contracts have been assigned to the Administrative Agent for the ratable benefit of the Secured Parties and that payments in respect thereof shall be made directly to the Administrative Agent. Without limiting the generality of the foregoing, after the occurrence and during the continuance of an Event of Default, the Administrative Agent in its own name or in the name of others may direct the counterparty of the Borrower under the Revenue Participation Agreement that such counterparty shall deal directly with the Administrative Agent and shall pay any amounts payable under the Revenue Participation Agreement directly to an account designated by the Administrative Agent. (b) Anything herein to the contrary notwithstanding, each Grantor shall remain liable under each of the Receivables and Contracts to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise thereto. No Secured Party shall have any obligation or liability under any Receivable (or any agreement giving rise thereto) or Contract by reason of or arising out of this Agreement or the receipt by any Secured Party of any payment relating thereto, nor shall any Secured Party be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any Receivable (or any agreement giving rise thereto) or Contract, to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. 17.3. Pledged Stock. (e) Unless an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice to the relevant Grantor of the 19 Administrative Agent's intent to exercise its corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted to receive all cash dividends paid in respect of the Pledged Stock and all payments made in respect of the Pledged Notes, in each case paid in the normal course of business of the relevant Issuer and consistent with past practice, to the extent permitted in the Credit Agreement, and to exercise all voting and corporate or other organizational rights with respect to the Investment Property; provided, however, that no vote shall be cast or corporate or other organizational right exercised or other action taken which, in the Administrative Agent's reasonable judgment, would result in any violation of any provision of the Credit Agreement, this Agreement or any other Loan Document. (a) If an Event of Default shall occur and be continuing and the Administrative Agent shall give notice of its intent to exercise such rights to the relevant Grantor or Grantors, (i) the Administrative Agent shall have the right to receive any and all cash dividends, payments or other Proceeds paid in respect of the Investment Property and make application thereof to the Obligations in such order as the Administrative Agent may determine, and (ii) any or all of the Investment Property shall be registered in the name of the Administrative Agent or its nominee, and the Administrative Agent or its nominee may thereafter exercise (x) all voting, corporate and other rights pertaining to such Investment Property at any meeting of shareholders of the relevant Issuer or Issuers or otherwise and (y) any and all rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to such Investment Property as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Investment Property upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate or other organizational structure of any Issuer, or upon the exercise by any Grantor or the Administrative Agent of any right, privilege or option pertaining to such Investment Property, and in connection therewith, the right to deposit and deliver any and all of the Investment Property with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Administrative Agent may determine), all without liability except to account for property actually received by it, but the Administrative Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing. (b) Each Grantor hereby authorizes and instructs each Issuer of any Investment Property pledged by such Grantor hereunder to (i) comply with any instruction received by it from the Administrative Agent in writing that (x) states that an Event of Default has occurred and is continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from such Grantor, and each Grantor agrees that each Issuer shall be fully protected in so complying, and (ii) upon delivery of any notice to such effect pursuant to Section 6.3(a), pay any dividends or other payments with respect to the Investment Property directly to the Administrative Agent. 17.4. Proceeds to be Turned Over To Administrative Agent. In addition to the rights of the Secured Parties specified in Section 6.1 with respect to payments of Receivables, if an Event of Default shall occur and be continuing, all Proceeds received by any Grantor consisting of cash, checks and other near-cash items shall be held by such Grantor in trust for the Secured Parties, segregated from other funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to the Administrative Agent in the exact form received by such 20 Grantor (duly indorsed by such Grantor to the Administrative Agent, if required). All Proceeds received by the Administrative Agent hereunder shall be held by the Administrative Agent in a Collateral Account maintained under its sole dominion and control. All Proceeds while held by the Administrative Agent in a Collateral Account (or by such Grantor in trust for the Secured Parties) shall continue to be held as collateral security for all the Obligations and shall not constitute payment thereof until applied as provided in Section 6.5. 17.5. Application of Proceeds. At such intervals as may be agreed upon by the Borrower and the Administrative Agent, or, if an Event of Default shall have occurred and be continuing, at any time at the Administrative Agent's election, the Administrative Agent may apply all or any part of Proceeds constituting Collateral, whether or not held in any Collateral Account, and any proceeds of the guarantee set forth in Section 2, in payment of the Obligations in the following order: First, to pay incurred and unpaid fees and expenses of the Administrative Agent under the Loan Documents; Second, to the Administrative Agent, for application by it towards payment of amounts then due and owing and remaining unpaid in respect of the Obligations, pro rata among the parties to which such Obligations are then due and owing based on the respective amounts thereof; Third (this clause being applicable only if an Event of Default shall have occurred and be continuing), to the Administrative Agent, for application by it towards prepayment of the Obligations, pro rata among the parties holding such Obligations based on the respective amounts thereof; and Fourth, any balance of such Proceeds remaining after the Obligations shall have been paid in full, no Letters of Credit shall be outstanding and the Commitments shall have terminated shall be paid over to the Borrower or to whomsoever may be lawfully entitled to receive the same. 17.6. Code and Other Remedies. If an Event of Default shall occur and be continuing, the Administrative Agent, on behalf of the Secured Parties, may exercise, in addition to all other rights and remedies granted to them in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the New York UCC or any other applicable law. Without limiting the generality of the foregoing, the Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker's board or office of any Secured Party or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit 21 risk. Any Secured Party shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Grantor, which right or equity is hereby waived and released. Each Grantor further agrees, at the Administrative Agent's request, to assemble the Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall reasonably select, whether at such Grantor's premises or elsewhere. The Administrative Agent shall apply the net proceeds of any action taken by it pursuant to this Section 6.6, after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Secured Parties hereunder, including, without limitation, reasonable attorneys' fees and disbursements, to the payment in whole or in part of the Obligations, in such order as the Administrative Agent may elect, and only after such application and after the payment by the Administrative Agent of any other amount required by any provision of law, including, without limitation, Section 9-615(a)(3) of the New York UCC, need the Administrative Agent account for the surplus, if any, to any Grantor. To the extent permitted by applicable law, each Grantor waives all claims, damages and demands it may acquire against the Secured Parties arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition. 17.7. Registration Rights. (f) If the Administrative Agent shall determine to exercise its right to sell any or all of the Pledged Stock pursuant to Section 6.6, and if in the opinion of the Administrative Agent it is necessary or advisable to have the Pledged Stock, or that portion thereof to be sold, registered under the provisions of the Securities Act, the relevant Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the directors and officers of such Issuer to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts as may be, in the opinion of the Administrative Agent, necessary or advisable to register the Pledged Stock, or that portion thereof to be sold, under the provisions of the Securities Act, (ii) use its best efforts to cause the registration statement relating thereto to become effective and to remain effective for a period of one year from the date of the first public offering of the Pledged Stock, or that portion thereof to be sold, and (iii) make all amendments thereto and/or to the related prospectus which, in the opinion of the Administrative Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto. Each Grantor agrees to cause such Issuer to comply with the provisions of the securities or "Blue Sky" laws of any and all jurisdictions which the Administrative Agent shall designate and to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) which will satisfy the provisions of Section 11(a) of the Securities Act. (a) Each Grantor recognizes that the Administrative Agent may be unable to effect a public sale of any or all the Pledged Stock, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if 22 such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Administrative Agent shall be under no obligation to delay a sale of any of the Pledged Stock for the period of time necessary to permit the Issuer thereof to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if such Issuer would agree to do so. (b) Each Grantor agrees to use its best efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Stock pursuant to this Section 6.7 valid and binding and in compliance with any and all other applicable Requirements of Law. Each Grantor further agrees that a breach of any of the covenants contained in this Section 6.7 will cause irreparable injury to the Secured Parties, that the Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 6.7 shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred under the Credit Agreement. 17.8. Deficiency. Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay its Obligations and the fees and disbursements of any attorneys employed by any Secured Party to collect such deficiency. SECTION 18. THE ADMINISTRATIVE AGENT 18.1. Administrative Agent's Appointment as Attorney-in-Fact, etc. (g) Each Grantor hereby irrevocably constitutes and appoints the Administrative Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, each Grantor hereby gives the Administrative Agent the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the following: (i) in the name of such Grantor or its own name, or otherwise, take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Receivable or Contract or with respect to any other Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Administrative Agent for the purpose of collecting any and all such moneys due under any Receivable or Contract or with respect to any other Collateral whenever payable; (ii) in the case of any Intellectual Property, execute and deliver, and have recorded, any and all agreements, instruments, documents and papers as the 23 Administrative Agent may reasonably request to evidence the Administrative Agent's security interest in such Intellectual Property (and the associated goodwill) and general intangibles of such Grantor relating thereto or represented thereby; (iii) pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof; (iv) execute, in connection with any sale provided for in Section 6.6 or 6.7, any indorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and (v) (1) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct; (2) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (3) sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (4) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (5) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (6) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Administrative Agent may deem appropriate; (7) assign any Copyright, Patent or Trademark (along with the goodwill of the business to which any such Copyright, Patent or Trademark pertains), throughout the world for such term or terms, on such conditions, and in such manner, as the Administrative Agent shall in its sole discretion determine; and (8) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes, and do, at the Administrative Agent's option and such Grantor's expense, at any time, or from time to time, all acts and things which the Administrative Agent deems necessary to protect, preserve or realize upon the Collateral and Administrative Agent's security interests therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do. Anything in this Section 7.1(a) to the contrary notwithstanding, the Administrative Agent agrees that it will not exercise any rights under the power of attorney provided for in this Section 7.1(a) unless an Event of Default shall have occurred and be continuing. 24 (b) If any Grantor fails to perform or comply with any of its agreements contained herein, the Administrative Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement. (c) The expenses of the Administrative Agent incurred in connection with actions undertaken as provided in this Section 7.1, together with interest thereon at the rate applicable hereto under Section 4.5(c) of the Credit Agreement, from the date of payment by the Administrative Agent to the date reimbursed by the relevant Grantor, shall be payable by such Grantor to the Administrative Agent on demand. (d) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released. 18.2. Duty of Administrative Agent. The Administrative Agent's sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with similar property for its own account. No Secured Party nor any of its officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. The powers conferred on the Administrative Agent and the Secured Parties hereunder are solely to protect the Secured Parties' interests in the Collateral and shall not impose any duty upon the Administrative Agent or any Secured Party to exercise any such powers. The Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct. 18.3. Execution of Financing Statements. Pursuant to any applicable law, each Grantor authorizes the Administrative Agent to file or record financing statements and other filing or recording documents or instruments with respect to the Collateral without the signature of such Grantor in such form and in such offices as the Administrative Agent determines appropriate to perfect the security interests of the Administrative Agent under this Agreement. Each Grantor authorizes the Administrative Agent to use the collateral description "all personal property" in any such financing statement. Each Grantor hereby ratifies and authorizes the filing by the Administrative Agent of any financing statement with respect to the Collateral made prior to the date hereof. 18.4. Authority of Administrative Agent. Each Grantor acknowledges that the rights and responsibilities of the Administrative Agent under this Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between the Administrative Agent and the other Secured Parties, be governed by the Credit Agreement and by such other agreements with 25 respect thereto as may exist from time to time among them, but, as between the Administrative Agent and the Grantors, the Administrative Agent shall be conclusively presumed to be acting as agent for the Secured Parties with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority. SECTION 19. MISCELLANEOUS 19.1. Amendments in Writing. None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 11.1 of the Credit Agreement. 19.2. Notices. All notices, requests and demands to or upon the Administrative Agent or any Grantor hereunder shall be effected in the manner provided for in Section 11.2 of the Credit Agreement; provided that any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at its notice address set forth on Schedule 1 or such other address specified in writing to the Administrative Agent in accordance with such Section. 19.3. No Waiver by Course of Conduct; Cumulative Remedies. No Secured Party shall by any act (except by a written instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of any Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by any Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which such Secured Party would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 19.4. Enforcement Expenses; Indemnification. (h) Each Guarantor agrees to pay or reimburse each Secured Party for all its costs and expenses incurred in collecting against such Guarantor under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under this Agreement and the other Loan Documents to which such Guarantor is a party, including, without limitation, the fees and disbursements of counsel (including the allocated fees and expenses of in-house counsel) to each Secured Party. (a) Each Guarantor agrees to pay, and to save the Secured Parties harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement. (b) Each Guarantor agrees to pay, and to save the Secured Parties harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, 26 expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement to the extent the Borrower would be required to do so pursuant to Section 11.5 of the Credit Agreement. (c) The agreements in this Section 8.4 shall survive repayment of the Obligations and all other amounts payable under the Credit Agreement and the other Loan Documents. 19.5. Successors and Assigns. This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure to the benefit of the Secured Parties and their successors and assigns; provided that no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent. 19.6. Set-Off. Each Grantor hereby irrevocably authorizes each Secured Party at any time and from time to time, without notice to such Grantor or any other Grantor, any such notice being expressly waived by each Grantor, to set-off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Secured Party to or for the credit or the account of such Grantor, or any part thereof in such amounts as such Secured Party may elect, against and on account of the obligations and liabilities of such Grantor to such Secured Party hereunder and claims of every nature and description of such Secured Party against such Grantor, in any currency, whether arising hereunder, under the Credit Agreement, any other Loan Document or otherwise, as such Secured Party may elect, whether or not any Secured Party has made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured. Each Secured Party shall notify such Grantor promptly of any such set-off and the application made by such Secured Party of the proceeds thereof, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Secured Party under this Section 8.6 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which such Secured Party may have. 19.7. Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 19.8. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 19.9. Section Headings. The Section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 27 19.10. Integration. This Agreement and the other Loan Documents represent the agreement of the Grantors, the Secured Parties with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by any Secured Party relative to subject matter hereof and thereof not expressly set forth or referred to herein or in the other Loan Documents. 1.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 19.11. Submission To Jurisdiction; Waivers. Each Grantor hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Grantor at its address referred to in Section 8.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages. 19.12. Acknowledgements. Each Grantor hereby acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents to which it is a party; (b) no Secured Party has any fiduciary relationship with or duty to any Grantor arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Grantors, on the one hand, and the Secured Parties, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and 28 (c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Secured Parties or among the Grantors and the Secured Parties. 19.13. Additional Grantors. Each Subsidiary of the Borrower that is required to become a party to this Agreement pursuant to Section 7.10 of the Credit Agreement shall become a Grantor for all purposes of this Agreement upon execution and delivery by such Subsidiary of an Assumption Agreement in the form of Annex I hereto. 19.14. Releases. (a) At such time as the Loans and the other Obligations (other than Obligations in respect of Specified Hedge Agreements) shall have been paid in full and the Commitments have been terminated, the Collateral shall be released from the Liens created hereby, and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Grantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Grantors. At the request and sole expense of any Grantor following any such termination, the Administrative Agent shall deliver to such Grantor any Collateral held by the Administrative Agent hereunder, and execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination. (a) If any of the Collateral shall be sold, transferred or otherwise disposed of by any Grantor in a transaction permitted by the Credit Agreement, then the Administrative Agent, at the request and sole expense of such Grantor, shall execute and deliver to such Grantor all releases or other documents reasonably necessary or desirable for the release of the Liens created hereby on such Collateral. At the request and sole expense of the Borrower, a Subsidiary Guarantor shall be released from its obligations hereunder in the event that all the Capital Stock of such Subsidiary Guarantor shall be sold, transferred or otherwise disposed of in a transaction permitted by the Credit Agreement; provided that the Borrower shall have delivered to the Administrative Agent, at least ten Business Days prior to the date of the proposed release, a written request for release identifying the relevant Subsidiary Guarantor and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification by the Borrower stating that such transaction is in compliance with the Credit Agreement and the other Loan Documents. 1.7 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 29 IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and Collateral Agreement to be duly executed and delivered as of the date first above written. R.H. DONNELLEY CORPORATION By:____________________________________ Name: Title: R.H. DONNELLEY INC. By:____________________________________ Name: Title: R.H. DONNELLEY ACQUISITIONS, INC. By:____________________________________ Name: Title: R.H. DONNELLEY APIL, INC. By:____________________________________ Name: Title: R.H. DONNELLEY CD, INC. By:____________________________________ Name: Title: R.H. DONNELLEY FINANCE CORPORATION II By:____________________________________ Name: Title: GET DIGITAL SMART. COM, INC. By:____________________________________ Name: Title: EXHIBIT D This Instrument prepared by, and after recording, return to: Simpson Thacher & Bartlett a partnership which includes professional corporations 425 Lexington Avenue New York, New York 10017 ATTN: Cynthia Parker DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES AND SECURITY AGREEMENT from R.H. DONNELLEY PUBLISHING & ADVERTISING, INC. (F/K/A SPRINT PUBLISHING & ADVERTISING, INC.), Grantor to DEUTSCHE BANK TRUST COMPANY AMERICAS, as Administrative Agent, Beneficiary (COLLATERAL IS OR INCLUDES FIXTURES) DATED AS OF JANUARY 3, 2003 MAXIMUM PRINCIPAL INDEBTEDNESS FOR TENNESSEE RECORDING TAX PURPOSES IS $8,533,218 PURSUANT TO T.C.A. Section 47-28-104 THIS INSTRUMENT SECURES OBLIGATORY ADVANCES AND IS FOR COMMERCIAL PURPOSES This instrument covers property which has become so affixed to real property as to become fixtures and constitutes a fixture filing under Section 47-9-402 of the Tennessee Code Annotated. TABLE OF CONTENTS
Page ---- Background .................................................................................. 1 Granting Clauses .................................................................................. 2 Terms and Conditions .................................................................................. 5 1. Warranty of Title........................................................ 5 2. Requirements............................................................. 5 3. Payment of Taxes and Other Impositions................................... 5 4. Insurance................................................................ 6 5. Restrictions on Liens and Encumbrances................................... 7 6. Due on Sale and Other Transfer Restrictions.............................. 7 7. Condemnation/Eminent Domain.............................................. 7 8. Leases................................................................... 8 9. Further Assurances....................................................... 8 10. Beneficiary's Right to Perform........................................... 8 11. Remedies................................................................. 8 12. Right of Beneficiary to Credit Sale...................................... 10 13. Appointment of Receiver.................................................. 11 14. Extension, Release, etc.................................................. 11 15. Security Agreement under Uniform Commercial Code......................... 12 16. Assignment of Rents...................................................... 13 17. Trust Funds.............................................................. 13 18. Additional Rights........................................................ 13 19. Notices.................................................................. 14 20. No Oral Modification..................................................... 14 21. Partial Invalidity....................................................... 14
-i- 22. Grantor's Waiver of Rights............................................... 14 23. Remedies Not Exclusive................................................... 14 24. Multiple Security........................................................ 15 25. Successors and Assigns................................................... 16 26. No Waivers, etc.......................................................... 16 27. Waiver Of Trial By Jury.................................................. 16 28. Governing Law, etc....................................................... 17 29. Certain Definitions...................................................... 17 30. Trustee's Powers and Liabilities......................................... 17 31. Last Dollars Secured; Priority........................................... 17
-ii- [Tennessee] (COLLATERAL IS OR INCLUDES FIXTURES) DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES AND SECURITY AGREEMENT THIS DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES AND SECURITY AGREEMENT (this "Deed of Trust"), dated as of January 3, 2003, is made by R.H. R.Y. DONNELLEY PUBLISHING & ADVERTISING, INC. (F/K/A SPRINT PUBLISHING & ADVERTISING, INC.), a Kansas corporation ("Grantor"), whose address is 6450 c/o R.H. Donnelley Corporation, One Manhattanville Road, Purchase, NY 10577, to Stuart Jones c/o LandAmerica Financial Group, Inc. ("Trustee") an individual resident of Tennessee whose address is Sun Trust Financial Center, 424 Church Street, Suite 900, Nashville, TN 37219, for the use and benefit of DEUTSCHE BANK TRUST COMPANY AMERICAS, as administrative agent for the Lenders referred to below (in such capacity, "Beneficiary"), whose address is 31 West 52nd Street, 7th Floor, New York, NY 10019. References to this "Deed of Trust" shall mean this instrument and any and all renewals, modifications, amendments, supplements, extensions, consolidations, substitutions, spreaders and replacements of this instrument. Background A. R.H. Donnelley Corporation and R.H. Donnelley Inc. (collectively referred to as "Borrower") are parties to that certain Credit Agreement dated as of the date hereof (as the same may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement") with the several banks and other financial institutions from time to time parties thereto (the "Lenders"), Bear Stearns Corporate Lending Inc. and Citicorp North America, Inc., as Joint Syndication Agents, and Beneficiary. The terms of the Credit Agreement are incorporated by reference in this Deed of Trust as if the terms thereof were fully set forth herein. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement. References in this Deed of Trust to the "Default Rate" shall mean the applicable interest rate per annum set forth in Section 4.5(c) of the Credit Agreement. B. Grantor is the owner of the parcel(s) of real property described on Schedule A attached (such real property, together with all of the buildings, improvements, structures and fixtures now or subsequently located thereon (the "Improvements"), being collectively referred to as the "Real Estate"). C. Pursuant to the terms and conditions of the Credit Agreement, inter alia, (1) the Tranche A Term Loan Lenders have agreed to make Tranche A Term Loans to Borrower in an aggregate principal amount not to exceed Five Hundred Seventy Five Million Dollars ($500,000,000), (2) the Tranche B Term Loan Lenders have agreed to make Tranche A Term Loans to Borrower in an aggregate principal amount not to exceed Nine Hundred Million Dollars ($900,000,000), (3) the Revolving Lenders have agreed to make one or more Revolving Loans in an aggregate principal amount not to exceed One Hundred Twenty Five Million Dollars ($125,000,000), which include the Swingline Lender's agreement to make certain Swingline Loans in an aggregate principal amount at any time outstanding not to exceed Twenty Million Dollars ($20,000,000). The latest maturity date of the Loans is June 30, 2010. D. It is a condition precedent, among others, to the effectiveness of the Credit Agreement and the obligations of the Lenders to make their respective extensions of credit to the Borrower, inter alia, that (i) Grantor guaranty the obligations of the Borrower under the Credit Agreement and the other Loan Documents by executing and delivering that certain Guarantee and Collateral Agreement dated as of the dated hereof in favor of Beneficiary (as the same may be amended, confirmed, modified or supplemented from time to time, the "Guarantee") and (ii) Grantor secure its obligations under the Guarantee by executing and delivering this Deed of Trust to Beneficiary for the ratable benefit of the Lenders. Grantor, a wholly owned subsidiary of the Borrower, will receive substantial direct and indirect benefit from the extensions of credit made to the Borrower under the Credit Agreement. Granting Clauses For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor agrees that to secure the following (collectively, the "Obligations"): 19.15. payment and performance by Grantor of all its obligations and liabilities, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereinafter incurred, under, arising out of or otherwise in connection with the Guarantee; and 19.16. all obligations and liabilities of such Guarantor which may arise under or in connection with Deed of Trust or any other Loan Document to which such Guarantor is a party, in each case whether on account of guarantee obligations, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent or to the Lenders that are required to be paid by such Guarantor pursuant to the terms of this Deed of Trust or any other Loan Document), GRANTOR HEREBY CONVEYS TO TRUSTEE AND HEREBY GRANTS, SELLS, BARGAINS, CONFIRMS, ASSIGNS, TRANSFERS AND SETS OVER TO TRUSTEE, WITH POWER OF SALE FOR THE USE AND BENEFIT OF BENEFICIARY, AND GRANTS BENEFICIARY AND TRUSTEE INSOFAR AS ANY PROPERTY CONSTITUTES PERSONAL PROPERTY, A SECURITY INTEREST IN AND TO, GRANTOR'S RIGHT, TITLE AND INTEREST IN AND TO ALL OF THE FOLLOWING: 1. the Real Estate; 2. all the estate, right, title, claim or demand whatsoever of Grantor, in possession or expectancy, in and to the Real Estate or any part thereof; 2 3. all right, title and interest of Grantor in, to and under all easements, rights of way, gores of land, streets, ways, alleys, passages, sewer rights, waters, water courses, water and riparian rights, development rights, air rights, mineral rights and all estates, rights, titles, interests, privileges, licenses, tenements, hereditaments and appurtenances belonging, relating or appertaining to the Real Estate, and any reversions, remainders, rents, issues, profits and revenue thereof and all land lying in the bed of any street, road or avenue, in front of or adjoining the Real Estate to the center line thereof; 4. all of the fixtures, chattels, business machines, machinery, apparatus, equipment, furnishings, fittings and articles of personal property of every kind and nature whatsoever, and all appurtenances and additions thereto and substitutions or replacements thereof (together with, in each case, attachments, components, parts and accessories) currently owned or subsequently acquired by Grantor and now or subsequently attached to, or contained in or used or usable in any way in connection with any operation or letting of the Real Estate, including but without limiting the generality of the foregoing, all screens, awnings, shades, blinds, curtains, draperies, artwork, carpets, rugs, storm doors and windows, furniture and furnishings, heating, electrical, and mechanical equipment, lighting, switchboards, plumbing, ventilating, air conditioning and air-cooling apparatus, refrigerating, and incinerating equipment, escalators, elevators, loading and unloading equipment and systems, stoves, ranges, laundry equipment, cleaning systems (including window cleaning apparatus), telephones, communication systems (including satellite dishes and antennae), televisions, computers, sprinkler systems and other fire prevention and extinguishing apparatus and materials, security systems, motors, engines, machinery, pipes, pumps, tanks, conduits, appliances, fittings and fixtures of every kind and description (all of the foregoing in this paragraph (D) being referred to as the "Equipment"); 5. all right, title and interest of Grantor in and to all substitutes and replacements of, and all additions and improvements to, the Real Estate and the Equipment, subsequently acquired by or released to Grantor or constructed, assembled or placed by Grantor on the Real Estate, immediately upon such acquisition, release, construction, assembling or placement, including, without limitation, any and all building materials whether stored at the Real Estate or offsite, and, in each such case, without any further Deed of Trust, conveyance, assignment or other act by Grantor; 6. all right, title and interest of Grantor in, to and under all leases, subleases, underlettings, concession agreements, management agreements, licenses and other agreements relating to the use or occupancy of the Real Estate or the Equipment or any part thereof, now existing or subsequently entered into by Grantor and whether written or oral and all guarantees of any of the foregoing (collectively, as any of the foregoing may be amended, restated, extended, renewed or modified from time to time, the "Leases"), and all rights of Grantor in respect of cash and securities deposited thereunder and the right to receive and collect the revenues, income, rents, issues and profits thereof, together with all other rents, royalties, issues, profits, revenue, income and other benefits arising from the use and enjoyment of the Trust Property (as defined below) (collectively, the "Rents"); 7. all trade names, trade marks, logos, copyrights, good will and books and records relating to or used in connection with the operation of the Real Estate or the 3 Equipment or any part thereof; all general intangibles related to the operation of the Improvements now existing or hereafter arising; 8. all unearned premiums under insurance policies now or subsequently obtained by Grantor relating to the Real Estate or Equipment and Grantor's interest in and to all proceeds of any such insurance policies (including title insurance policies) including the right to collect and receive such proceeds, subject to the provisions relating to insurance generally set forth below; and all awards and other compensation, including the interest payable thereon and the right to collect and receive the same, made to the present or any subsequent owner of the Real Estate or Equipment for the taking by eminent domain, condemnation or otherwise, of all or any part of the Real Estate or any easement or other right therein; 9. all right, title and interest of Grantor in and to (i) all contracts from time to time executed by Grantor or any manager or agent on its behalf relating to the ownership, construction, maintenance, repair, operation, occupancy, sale or financing of the Real Estate or Equipment or any part thereof and all agreements relating to the purchase or lease of any portion of the Real Estate or any property which is adjacent or peripheral to the Real Estate, together with the right to exercise such options and all leases of Equipment, (ii) all consents, licenses, building permits, certificates of occupancy and other governmental approvals relating to construction, completion, occupancy, use or operation of the Real Estate or any part thereof and (iii) all drawings, plans, specifications and similar or related items relating to the Real Estate; 10. any and all monies now or subsequently on deposit for the payment of real estate taxes or special assessments against the Real Estate or for the payment of premiums on insurance policies covering the foregoing property or otherwise on deposit with or held by Beneficiary as provided in this Deed of Trust; and 11. all proceeds, both cash and noncash, of the foregoing; (All of the foregoing property and rights and interests now owned or held or subsequently acquired by Grantor and described in the foregoing clauses (A) through (E) are collectively referred to as the "Premises", and those described in the foregoing clauses (A) through (K) are collectively referred to as the "Trust Property".) All of the Trust Property hereinabove described, real, personal and mixed, whether affixed or annexed to the Real Estate or not and all rights hereby conveyed and granted are intended so to be as a unit and are hereby understood, agreed and declared, to the maximum extent permitted by law, to form a part and parcel of the Real Estate and to be appropriated to the use of the Real Estate, and shall be for the purposes of this Deed of Trust deemed to be real estate and conveyed hereby; provided, however, as to any of the property aforesaid which does not so form a part and parcel of the Real Estate or does not constitute a "fixture" (as defined in the Uniform Commercial Code of Tennessee (the "Code")), this Deed of Trust is hereby deemed to also be a Security Agreement under the Code for purposes of granting a security interest in such property, which Grantor hereby grants to Beneficiary, as Secured Party (as defined in the Code), as more particularly provided below in this Deed of Trust. TO HAVE AND TO HOLD the Trust Property and the rights and privileges hereby granted, together with the right to retain possession of the Trust Property after a default or 4 Event of Default hereunder, unto Beneficiary, its successors and assigns, for the uses and purposes set forth, until the Obligations are fully paid and performed. PROVIDED, NEVERTHELESS, that if the Obligations are fully paid and performed, then the lien of this Deed of Trust and the interest of Beneficiary in the Trust Property shall be released at the cost of Grantor. Terms and Conditions Grantor further represents, warrants, covenants and agrees with Beneficiary, as follows: (i) Warranty of Title. Grantor warrants the title to the Real Property, subject only to the matters that are set forth in Schedule B of the title insurance policy or policies being issued to Beneficiary to insure the lien of this Deed of Trust (the "Permitted Exceptions"). (ii) Requirements. From and after the date of this Deed of Trust, Grantor shall not by act or omission permit any building or other improvement on any premises not subject to the lien created by this Deed of Trust to rely on the Premises or any part thereof or any interest therein to fulfill any Requirement of Law, and Grantor hereby assigns to Beneficiary any and all rights to give consent for all or any portion of the Premises or any interest therein to be so used. Grantor shall not by act or omission impair the integrity of any of the Real Estate as a single zoning lot separate and apart from all other premises. Grantor represents that each parcel of the Real Estate constitutes a legally subdivided lot, in compliance with all subdivision laws and similar Requirements of Law. Any act or omission by Grantor which would result in a violation of any of the provisions of this subsection shall be void. (iii) Payment of Taxes and Other Impositions. (a) Except as may be expressly permitted under the Credit Agreement, but in no event prior to delinquency, promptly when due, Grantor shall pay and discharge all taxes of every kind and nature (including, without limitation, all real and personal property, income, franchise, withholding, transfer, gains, profits and gross receipts taxes), all charges for any easement or agreement maintained for the benefit of any of the Trust Property, all general and special assessments, levies, permits, inspection and license fees, all water and sewer rents and charges, vault taxes, and all other public charges even if unforeseen or extraordinary, imposed upon or assessed against or which may become a lien on any of the Trust Property, or arising in respect of the occupancy, use or possession thereof, together with any penalties or interest on any of the foregoing (all of the foregoing are collectively referred to as the "Impositions"). Unless the Impositions are then in the process of being contested in accordance with Section 3(c) below, within 30 days of a request by Beneficiary, Grantor shall deliver to Beneficiary (i) original or copies of receipted bills and cancelled checks evidencing payment of such Imposition if it is a real estate tax or other public charge and (ii) evidence reasonably acceptable to Beneficiary showing the payment of any other such Imposition. If by law any Imposition, at Grantor's option, may be paid in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Grantor may elect to pay such Imposition in such installments and shall be responsible for the payment of such installments with interest, if any. (A) Nothing herein shall affect any right or remedy of Trustee or Beneficiary under this Deed of Trust or otherwise, without notice or demand to Grantor, to pay any Imposition after the date such Imposition shall have become due. Any sums paid by Trustee 5 or Beneficiary in discharge of any Impositions shall be payable within 30 days of a request by Grantor to Trustee or Beneficiary, as the case may be, together with interest at the Default Rate. (B) Grantor shall have the right before any delinquency occurs to contest or object in good faith to the amount or validity of any Imposition by appropriate legal proceedings, but such right shall not be deemed or construed in any way as relieving, modifying, or extending Grantor's covenant to pay any such Imposition at the time and in the manner provided in this Section unless (i) Grantor has given prior written notice to Beneficiary of Grantor's intent so to contest or object to an Imposition which exceeds, either individually or the aggregate of each such contested Imposition, for any individual parcel or grouping of related parcels, $1,000,000 and, (ii) the legal proceedings operate conclusively to prevent the sale of the Trust Property, or any part thereof, to satisfy such Imposition prior to final determination of such proceedings and (iii) Grantor shall either (x) furnish a good and sufficient bond or surety as requested by and reasonably satisfactory to Beneficiary or (y) maintain adequate reserves in accordance with GAAP on Grantor's books, in each case in the amount of the Impositions which are being contested plus any interest and penalty which may be imposed thereon and which could become a lien against the Real Estate or any part of the Trust Property. (iv) Insurance. (b) Grantor shall maintain or cause to be maintained on all of the Premises: (a) property insurance against loss or damage by fire, lightning, windstorm, tornado, water damage, flood, earthquake and by such other further risks and hazards as now are or subsequently may be covered by an "all risk" policy or a fire policy covering "special" causes of loss, and the policy limits shall be automatically reinstated after each loss; (b) commercial general liability insurance under a policy including the "broad form CGL endorsement" (or which incorporates the language of such endorsement), covering all claims for personal injury, bodily injury or death, or property damage occurring on, in or about the Premises in such amounts as would be maintained by a prudent operator of property of similar use and configuration to the Premises and located in the locality where the Premises are located (a "Prudent Operator"); and (c) if any portion of the Premises are located in an area identified as a special flood hazard area by the Federal Emergency Management Agency or other applicable agency, flood insurance in an amount satisfactory to Beneficiary, but in no event less than the maximum limit of coverage available under the National Flood Insurance Act of 1968, as amended. (B) Each insurance policy (other than flood insurance) shall (x) provide that should any such policy be cancelled before the expiration date thereof, the issuing company will endeavor to mail 30 days written notice to the Beneficiary, (y) with respect to all property insurance, provide for deductibles in an amount reasonably satisfactory to Beneficiary, with loss payable solely to Beneficiary (modified, if necessary, to provide that proceeds in the amount of replacement cost may be retained by Beneficiary without the obligation to rebuild) as its interest may appear, without contribution, under a "standard" or "New York" mortgagee clause reasonably acceptable to Beneficiary, and (z) be reasonably satisfactory in all other respects to the Administrative Agent. 6 (C) Grantor shall deliver to Beneficiary a certificate of such insurance reasonably acceptable to Beneficiary. (D) If Grantor is in default of its obligations to insure or deliver any such prepaid policy or policies, then Beneficiary, at its option upon 5 days' notice to Grantor, may effect such insurance from year to year at rates substantially similar to the rate at which Grantor had insured the Premises, and pay the premium or premiums therefor, and Grantor shall pay to Beneficiary on demand such premium or premiums so paid by Beneficiary with interest from the time of payment at the Default Rate. (E) If the Trust Property, or any material portion thereof, shall be destroyed or damaged, Grantor shall give prompt notice thereof to Beneficiary. Following and during the continuation of any Event of Default, Beneficiary is hereby authorized and empowered by Grantor to settle or compromise any claim in connection with such insurance and to receive all awards and proceeds thereof to be held by Beneficiary as collateral to secure the payment and performance of the Obligations. Notwithstanding the preceding sentence, provided no Event of Default shall have occurred and be continuing, Grantor shall, at its expense, diligently prosecute any proceeding relating to such insurance, settle or compromise any claims in connection therewith, and, in connection therewith, any awards or proceeds thereof shall constitute Net Cash Proceeds, and shall be governed by the applicable provisions of the Credit Agreement. (F) In the event of foreclosure of this Deed of Trust or other transfer of title to the Trust Property, all right, title and interest of Grantor in and to any insurance policies then in force shall pass to the purchaser or grantee. (v) Restrictions on Liens and Encumbrances. Except for the lien of this Deed of Trust and the Permitted Exceptions, and except as expressly permitted under the Credit Agreement, Grantor shall not further mortgage, nor otherwise encumber the Trust Property nor create or suffer to exist any lien, charge or encumbrance on the Trust Property, or any part thereof, whether superior or subordinate to the lien created by this Deed of Trust and whether recourse or non-recourse. Except as may be contemplated under the Credit Agreement, Beneficiary has not consented and will not consent to any contract or to any work or to the furnishing of any materials which might be deemed to create a lien or liens superior to the lien of this instrument, either under Section 66-11-108 of the Tennessee Code Annotated, or otherwise. (vi) Due on Sale and Other Transfer Restrictions. Except as expressly permitted under the Credit Agreement, Grantor shall not sell, transfer, convey or assign all or any portion of, or any interest in, the Trust Property. (vii) Condemnation/Eminent Domain. Promptly upon obtaining knowledge of the institution of any proceedings for the condemnation of the Trust Property, or any portion thereof, Grantor will notify Beneficiary of the pendency of such proceedings. Following and during the continuation of any Event of Default, Beneficiary is hereby authorized and empowered by Grantor to settle or compromise any claim in connection with such condemnation and to receive all awards and proceeds thereof to be held by Beneficiary as collateral to secure the payment and performance of the Obligations. Notwithstanding the preceding sentence, provided no Event of Default shall have occurred and be continuing, Grantor shall, at its expense, diligently prosecute any proceeding relating to such condemnation, settle or compromise any claims in connection therewith, and, in connection therewith, any awards or 7 proceeds thereof shall constitute Net Cash Proceeds, and shall be governed by the applicable provisions of the Credit Agreement. (viii) Leases. (c) Except as expressly permitted under the Credit Agreement, Grantor shall not (i) execute an assignment or pledge of any Lease relating to all or any portion of the Trust Property other than in favor of Beneficiary, or (ii) execute or permit to exist any Lease of any of the Trust Property, other than on market terms as reasonably determined by Grantor at the commencement of the Lease. (A) As to any Lease now in existence or subsequently consented to by Beneficiary, and except as expressly permitted under the Credit Agreement, Grantor shall not accept a surrender or terminate, cancel, rescind, (except upon the failure of the payment of rents beyond any applicable grace periods by Grantor's tenants) materially supplement, alter, revise, modify or amend such Lease or permit any such action to be taken nor shall Grantor accept the payment of rent more than thirty (30) days in advance of its due date. (ix) Further Assurances. To further assure Beneficiary's and Trustee's rights under this Deed of Trust, Grantor agrees within 30 days of a request of Beneficiary or Trustee to do any act or execute any additional documents (including, but not limited to, security agreements on any personalty included or to be included in the Trust Property and a separate assignment of each Lease in recordable form) as may be required by Beneficiary or Trustee to confirm the lien of this Deed of Trust and as may be reasonably required to confirm all other rights or benefits conferred on Beneficiary or Trustee by this Deed of Trust. (x) Beneficiary's Right to Perform. If Grantor fails to perform any of the covenants or agreements of Grantor, Beneficiary or Trustee, without waiving or releasing Grantor from any obligation or default under this Deed of Trust, may, at any time upon 5 days' notice to Grantor (but shall be under no obligation to) pay or perform the same, and the amount or cost thereof, with interest at the Default Rate, shall be due within 30 days of a request from Grantor to Beneficiary or Trustee (as the case may be) and the same shall be secured by this Deed of Trust and shall be an encumbrance on the Trust Property prior to any right, title to, interest in or claim upon the Trust Property attaching subsequent to the date of this Deed of Trust. No payment or advance of money by Beneficiary or Trustee under this Section shall be deemed or construed to cure Grantor's default or waive any right or remedy of Beneficiary or Trustee. (xi) Remedies. (d) Upon the occurrence of any Event of Default, in addition to any other rights and remedies Beneficiary and the Agents may have pursuant to the Loan Documents, or as provided by law, and without limitation, Beneficiary may immediately take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Grantor and in and to the Trust Property, including, but not limited to, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such manner as Beneficiary may determine, in its sole discretion, without impairing or otherwise affecting the other rights and remedies of Beneficiary: (a) Beneficiary may elect to cause the Trust Property or any part thereof to be sold as follows: The Trustee, his successor or substitute, is authorized and empowered and it shall be his special duty at the request of Beneficiary to enter and take possession of the Trust Property, and before or after such entry to advertise the sale of the Trust Property for 20 days by 3 weekly notices in some newspaper published in the county 8 where such sale is to be made and to sell the Trust Property or any part thereof situated in the State of Tennessee at the courthouse door of any county in the State of Tennessee in which any part of the Trust Property is situated, at public venue to the highest bidder for cash between the hours of 10 o'clock A.M. and 4 o'clock P.M. of the day fixed in the notice. Said sale shall be free from equity of redemption, statutory right of redemption, homestead, dower, and all other rights and exemptions of every kind, all of which are hereby waived, and the Trustee shall execute a conveyance to the Purchaser and deliver possession to the Purchaser, which Grantor binds itself shall be given without obstruction, hindrance or delay. Any sale made by the Trustee hereunder may be as an entirety or in such parcels or parts as Beneficiary may request, and any sale may be adjourned by announcement at the time and place appointed for such sale without further notice except as may be required by law. The sale by the Trustee of less than the whole of the Trust Property shall not exhaust the power of sale herein granted, and the Trustee is specifically empowered to make successive sale or sales under such power until the whole of the Trust Property shall be sold; and, if the proceeds of such sale of less then the whole of the Trust Property shall be less than the aggregate of the Indebtedness secured hereby and the expense of executing this trust as provided herein, this Deed of Trust and the lien hereof shall remain in full force and effect as to the unsold portion of the Trust Property just as though no sale had been made; provided, however, that Grantor shall never have any right to require the sale of less than the whole of the Mortgaged Property but Beneficiary shall have the right, at its sole election, to request the Trustee to sell less than the whole of the Trust Property. After each sale, the Trustee shall make to the purchaser or purchasers at such sale good and sufficient conveyances, conveying the property so sold to the purchaser or purchasers with general warranty of title as then possessed by the Trustee, and after each sale the Trustee shall receive the proceeds of said sale or sales and apply the same as herein provided. The power of sale granted herein shall not be exhausted by any sale held hereunder by the Trustee or his substitute or successor, and such power of sale may be exercised from time to time and as many times as the Beneficiary may deem necessary until all the Trust Property has been duly sold and all secured indebtedness has been fully paid. In the event any sale hereunder is not completed or is defective in the opinion of the Beneficiary, such sale shall not exhaust the power of sale hereunder and the Beneficiary shall have the right to cause a subsequent sale or sales to be made hereunder. Any and all statements of fact or other recitals made in any deed or deeds given by the Trustee or any successor or substitute appointed hereunder as to nonpayment of the Indebtedness or as to the occurrence of any default, or as to Beneficiary having declared all such indebtedness to be due and payable, or as to the request to sell, or as to notice of time, place and terms of sale and the properties to be sold having been duly given, or as to the refusal, failure or inability to act of the Trustee or any substitute or successor, or as to the appointment of any substitute or successor, shall be taken as prima facie evidence of the truth of the facts so stated and recited. The Trustee, his successor or substitute, may appoint or delegate any one or more persons as agent to perform any act or acts necessary or incident to any sale held by the Trustee, including the posting of notices and the conduct of sale, but in the name and on behalf of the Trustee, his successor or substitute. This Deed of Trust shall be effective as a mortgage as well as a deed of trust and upon the occurrence of a default may be foreclosed as to any of the Trust Property in any manner permitted by the laws of the State of Tennessee or of any other state in which any part of the Trust Property is situated, and any foreclosure suit may be brought by the Trustee or by Beneficiary. In the event a foreclosure hereunder shall be commenced by the Trustee, or his substitute or 9 successor, Beneficiary may at any time before the sale of the Trust Property direct the said Trustee to abandon the sale, and may then institute suit for the collection of the Note and the other Indebtedness and Obligations secured hereby, and for the foreclosure of the lien of this Deed of Trust. It is agreed that if Beneficiary should institute a suit for the collection of the Note and/or any other secured Indebtedness and for the foreclosure of the lien of this Deed of Trust, Beneficiary may at any time before the entry of a final judgment in said suit dismiss the same, and require the Trustee, his substitute or successor to sell the property in accordance with the provisions of this Deed of Trust. (b) Beneficiary may, to the extent permitted by applicable law, (A) institute and maintain an action of judicial foreclosure against all or any part of the Trust Property, (B) institute and maintain an action on the Indebtedness, or (C) take such other action at law or in equity for the enforcement of this Deed of Trust or any of the Loan Documents as the law may allow. Beneficiary may proceed in any such action to final judgment and execution thereon for all sums due hereunder, together with interest thereon at the Default Rate and all costs of suit, including, without limitation, reasonable attorneys' fees and disbursements. Interest at the Default Rate shall be due on any judgment obtained by Beneficiary from the date of judgment until actual payment is made of the full amount of the judgment. (c) Beneficiary may personally, or by its agents, attorneys and employees and without regard to the adequacy or inadequacy of the Trust Property or any other collateral as security for the Indebtedness and Obligations enter into and upon the Trust Property and each and every part thereof and exclude Grantor and its agents and employees therefrom without liability for trespass, damage or otherwise (Grantor hereby agreeing to surrender possession of the Trust Property to Beneficiary upon demand at any such time) and use, operate, manage, maintain and control the Trust Property and every part thereof. Following such entry and taking of possession, Beneficiary shall be entitled, without limitation, (x) to lease all or any part or parts of the Trust Property for such periods of time and upon such conditions as Beneficiary may, in its discretion, deem proper, (y) to enforce, cancel or modify any Lease and (z) generally to execute, do and perform any other act, deed, matter or thing concerning the Trust Property as Beneficiary shall deem appropriate as fully as Grantor might do. (B) Beneficiary, in any action to foreclose this Deed of Trust in a judicial procedure or in connection with the exercise of any non-judicial power of sale by Trustee, shall be entitled to the appointment of a receiver. In case of a trustee's sale or foreclosure sale, the Real Estate may be sold, at Beneficiary's election, in one parcel or in more than one parcel and Beneficiary is specifically empowered (without being required to do so, and in its sole and absolute discretion) to cause successive sales of portions of the Trust Property to be held. (C) In the event of any breach of any of the covenants, agreements, terms or conditions contained in this Deed of Trust, Beneficiary or Trustee shall be entitled to enjoin such breach and obtain specific performance of any covenant, agreement, term or condition and Beneficiary and Trustee shall have the right to invoke any equitable right or remedy as though other remedies were not provided for in this Deed of Trust. (xii) Right of Beneficiary to Credit Sale. Upon the occurrence of any sale made under this Deed of Trust, whether made under the power of sale or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, Beneficiary may bid for 10 and acquire the Trust Property or any part thereof. In lieu of paying cash therefor, Beneficiary may make settlement for the purchase price by crediting upon the Indebtedness or other sums secured by this Deed of Trust the net sales price after deducting therefrom the expenses of sale and the cost of the action and any other sums which Beneficiary is authorized to deduct under this Deed of Trust. In such event, this Deed of Trust, the Credit Agreement, Notes, Guarantee and Collateral Agreement and any other documents evidencing expenditures secured hereby may be presented to the person or persons conducting the sale in order that the amount so used or applied may be credited upon the Indebtedness as having been paid. (xiii) Appointment of Receiver. If an Event of Default shall have occurred and be continuing, Beneficiary as a matter of right and without notice to Grantor, unless otherwise required by applicable law, and without regard to the adequacy or inadequacy of the Trust Property or any other collateral as security for the Indebtedness and Obligations or the interest of Grantor therein, shall have the right to apply to any court having jurisdiction to appoint a receiver or receivers or other manager of the Trust Property, and Grantor hereby irrevocably consents to such appointment and waives notice of any application therefor (except as may be required by law). Any such receiver or receivers shall have all the usual powers and duties of receivers in like or similar cases and all the powers and duties of Beneficiary in case of entry as provided in this Deed of Trust, including, without limitation and to the extent permitted by law, the right to enter into leases of all or any part of the Trust Property, and shall continue as such and exercise all such powers until the date of confirmation of sale of the Trust Property unless such receivership is sooner terminated. (xiv) Extension, Release, etc. (e) Without affecting the lien or charge of this Deed of Trust upon any portion of the Trust Property not then or theretofore released as security for the full amount of the Indebtedness, Beneficiary may, from time to time and without notice, agree to (i) release any person liable for the Indebtedness, (ii) extend the maturity or alter any of the terms of the Indebtedness or any guaranty thereof, (iii) grant other indulgences, (iv) release or reconvey, or cause to be released or reconveyed at any time at Beneficiary's option any parcel, portion or all of the Trust Property, (v) take or release any other or additional security for any obligation herein mentioned, or (vi) make compositions or other arrangements with debtors in relation thereto. If at any time this Deed of Trust shall secure less than all of the principal amount of the Indebtedness, it is expressly agreed that any repayments of the principal amount of the Indebtedness shall not reduce the amount of the lien created by this Deed of Trust until the lien amount shall equal the principal amount of the Indebtedness outstanding. (A) No recovery of any judgment by Beneficiary and no levy of an execution under any judgment upon the Trust Property or upon any other property of Grantor shall affect the lien created by this Deed of Trust or any liens, rights, powers or remedies of Beneficiary or Trustee hereunder, and such liens, rights, powers and remedies shall continue unimpaired. (B) If Beneficiary shall have the right to foreclose this Deed of Trust or to direct the Trustee to exercise its power of sale, Grantor authorizes Beneficiary at its option to foreclose the lien of this Deed of Trust (or direct the Trustee to sell the Trust Property, as the case may be) subject to the rights of any tenants of the Trust Property. The failure to make any such tenants parties defendant to any such foreclosure proceeding and to foreclose their rights, or to provide notice to such tenants as required in any statutory procedure governing a sale of the Trust Property by Trustee, or to terminate such tenant's rights in such sale will not be asserted by 11 Grantor as a defense to any proceeding instituted by Beneficiary to collect the Indebtedness or to foreclose the lien created by this Deed of Trust. (C) Unless expressly provided otherwise, in the event that Beneficiary's interest in this Deed of Trust and title to the Trust Property or any estate therein shall become vested in the same person or entity, this Deed of Trust shall not merge in such title but shall continue as a valid lien on the Trust Property for the amount secured hereby. (xv) Security Agreement under Uniform Commercial Code. (f) It is the intention of the parties hereto that this Deed of Trust shall constitute a Security Agreement within the meaning of the Code. If an Event of Default shall occur under this Deed of Trust, then in addition to having any other right or remedy available at law or in equity, Beneficiary shall have the option of either (i) proceeding under the Code and exercising such rights and remedies as may be provided to a secured party by the Code with respect to all or any portion of the Trust Property which is personal property (including, without limitation, taking possession of and selling such property) or (ii) treating such property as real property and proceeding with respect to both the real and personal property constituting the Trust Property in accordance with Beneficiary's rights, powers and remedies with respect to the real property (in which event the default provisions of the Code shall not apply). If Beneficiary shall elect to proceed under the Code, then five days' notice of sale of the personal property shall be deemed reasonable notice and the reasonable expenses of retaking, holding, preparing for sale, selling and the like incurred by Beneficiary shall include, but not be limited to, reasonable attorneys' fees and reasonable legal expenses. At Beneficiary's request, Grantor shall assemble the personal property and make it available to Beneficiary at a place designated by Beneficiary which is reasonably convenient to both parties. (A) Grantor and Beneficiary agree, to the extent permitted by law, that: (i) all of the goods described within the definition of the word "Equipment" are or are to become fixtures on the Real Estate; (ii) this Deed of Trust upon recording or registration in the real estate records of the proper office shall constitute a financing statement filed as a "fixture filing" within the meaning of Sections 9-502 and 9-604 of the Code; (iii) Grantor is the record owner of the Real Estate; and (iv) the addresses of Grantor and Beneficiary are as set forth on the first page of this Deed of Trust. (B) Grantor, upon request by Beneficiary from time to time, shall execute, acknowledge and deliver to Beneficiary one or more separate security agreements, in form reasonably satisfactory to Grantor and Beneficiary, covering all or any part of the Trust Property and will further execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any financing statement, affidavit, continuation statement or certificate or other document as Beneficiary may reasonably request in order to perfect, preserve, maintain, continue or extend the security interest under and the priority of this Deed of Trust and such security instrument. Grantor further agrees to pay to Beneficiary on demand all reasonable costs and expenses incurred by Beneficiary in connection with the preparation, execution, recording, filing and re-filing of any such document and all reasonable costs and expenses of any record searches for financing statements Beneficiary shall reasonably require. If Grantor shall fail to furnish any financing or continuation statement within 10 days after request by Beneficiary, then pursuant to the provisions of the Code, Grantor hereby authorizes Beneficiary, without the signature of Grantor, to execute and file any such financing and continuation statements. The filing of any financing or continuation statements in the records relating to personal property or chattels shall 12 not be construed as in any way impairing the right of Beneficiary to proceed against any personal property encumbered by this Deed of Trust as real property, as set forth above. (xvi) Assignment of Rents. Grantor hereby assigns to Trustee, for the benefit of Beneficiary, the Rents as further security for the payment of the Indebtedness and performance of the Obligations, and Grantor, upon the occurrence and during the continuance of an Event of Default, grants to Trustee and Beneficiary the right to enter the Trust Property for the purpose of collecting the same and to let the Trust Property or any part thereof, and to apply the Rents on account of the Indebtedness. The foregoing assignment and grant is present and absolute and shall continue in effect until the Indebtedness is paid in full, but Beneficiary and Trustee hereby waive the right to enter the Trust Property for the purpose of collecting the Rents and Grantor shall be entitled to collect, receive, use and retain the Rents until the occurrence and continuance of an Event of Default under this Deed of Trust; such right of Grantor to collect, receive, use and retain the Rents may be revoked by Beneficiary upon the occurrence and continuance of any Event of Default under this Deed of Trust by giving not less than five days' written notice of such revocation to Grantor; in the event such notice is given, Grantor shall pay over to Beneficiary, or to any receiver appointed to collect the Rents, any lease security deposits, and shall pay monthly in advance to Beneficiary, or to any such receiver, the fair and reasonable rental value as determined by Beneficiary for the use and occupancy of the Trust Property or of such part thereof as may be in the possession of Grantor or any affiliate of Grantor, and upon default in any such payment Grantor and any such affiliate will vacate and surrender the possession of the Trust Property to Beneficiary or to such receiver, and in default thereof may be evicted by summary proceedings or otherwise. Grantor shall not accept prepayments of installments of Rent to become due for a period of more than one month in advance (except for security deposits and estimated payments of percentage rent, if any). (xvii) Trust Funds. All lease security deposits of the Real Estate shall be treated as trust funds not to be commingled with any other funds of Grantor. Within 10 days after request by Beneficiary, Grantor shall furnish Beneficiary satisfactory evidence of compliance with this subsection, together with a statement of all lease security deposits by lessees and copies of all Leases not previously delivered to Beneficiary, which statement shall be certified by Grantor. (xviii) Additional Rights. The holder of any subordinate lien or subordinate deed of trust on the Trust Property shall have no right to terminate any Lease whether or not such Lease is subordinate to this Deed of Trust nor shall any holder of any subordinate lien or subordinate deed of trust join any tenant under any Lease in any trustee's sale or action to foreclose the lien or modify, interfere with, disturb or terminate the rights of any tenant under any Lease. By recordation of this Deed of Trust all subordinate lienholders and the trustees and beneficiaries under subordinate deeds of trust are subject to and notified of this provision, and any action taken by any such lienholder or trustee or beneficiary contrary to this provision shall be null and void. Upon the occurrence and continuance of any Event of Default, Beneficiary may, in its sole discretion and without regard to the adequacy of its security under this Deed of Trust, apply all or any part of any amounts on deposit with Beneficiary under this Deed of Trust against all or any part of the Indebtedness. Any such application shall not be construed to cure or waive any Default or Event of Default or invalidate any act taken by Beneficiary on account of such Default or Event of Default. 13 (xix) Notices. All notices, requests, demands and other communications hereunder shall be given in accordance with the provisions of subsection 11.2 of the Credit Agreement to Grantor and to Beneficiary as specified therein. (xx) No Oral Modification. This Deed of Trust may not be amended, supplemented or otherwise modified except in accordance with the provisions of subsection 11.1 of the Credit Agreement. Any agreement made by Grantor and Beneficiary after the date of this Deed of Trust relating to this Deed of Trust shall be superior to the rights of the holder of any intervening or subordinate deed of trust, lien or encumbrance. Trustee's execution of any written agreement between Grantor and Beneficiary shall not be required for the effectiveness thereof as between Grantor and Beneficiary. (xxi) Partial Invalidity. In the event any one or more of the provisions contained in this Deed of Trust shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, but each shall be construed as if such invalid, illegal or unenforceable provision had never been included. Notwithstanding to the contrary anything contained in this Deed of Trust or in any provisions of the Loan Documents, the obligations of Grantor and of any other obligor under the Loan Documents shall be subject to the limitation that Beneficiary shall not charge, take or receive, nor shall Grantor or any other obligor be obligated to pay to Beneficiary, any amounts constituting interest in excess of the maximum rate permitted by law to be charged by Beneficiary. (xxii) Grantor's Waiver of Rights. To the fullest extent permitted by law, Grantor waives the benefit of all laws now existing or that may subsequently be enacted providing for (i) any appraisement before sale of any portion of the Trust Property, (ii) any extension of the time for the enforcement of the collection of the Indebtedness or the creation or extension of a period of redemption from any sale made in collecting such debt and (iii) exemption of the Trust Property from attachment, levy or sale under execution or exemption from civil process. To the full extent Grantor may do so, Grantor agrees that Grantor will not at any time insist upon, plead, claim or take the benefit or advantage of any law now or hereafter in force providing for any appraisement, valuation, stay, exemption, extension, or requiring foreclosure of this Deed of Trust before exercising any other remedy granted hereunder and Grantor, for Grantor and its successors and assigns, and for any and all persons ever claiming any interest in the Trust Property, to the extent permitted by law, hereby waives and releases all rights of valuation, appraisement, stay of execution, notice of election to mature or declare due the whole of the secured indebtedness and marshalling in the event of exercise by Trustee or Beneficiary of the power of sale or other rights hereby created. (xxiii) Remedies Not Exclusive. Beneficiary and Trustee shall be entitled to enforce payment of the Indebtedness and performance of the Obligations and to exercise all rights and powers under this Deed of Trust or under any of the other Loan Documents or other agreement or any laws now or hereafter in force, notwithstanding some or all of the Indebtedness and Obligations may now or hereafter be otherwise secured, whether by deed of trust, mortgage, security agreement, pledge, lien, assignment or otherwise. Neither the acceptance of this Deed of Trust nor its enforcement, shall prejudice or in any manner affect Beneficiary's or Trustee's right to realize upon or enforce any other security now or hereafter held by Beneficiary or Trustee, it being agreed that Beneficiary and Trustee shall be entitled to enforce this Deed of Trust and any other security now or hereafter held by Beneficiary or Trustee in such order and 14 manner as Beneficiary may determine in its absolute discretion. No remedy herein conferred upon or reserved to Trustee or Beneficiary is intended to be exclusive of any other remedy herein or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. Every power or remedy given by any of the Loan Documents to Beneficiary or Trustee or to which either may otherwise be entitled, may be exercised, concurrently or independently, from time to time and as often as may be deemed expedient by Beneficiary or Trustee, as the case may be. In no event shall Beneficiary or Trustee, in the exercise of the remedies provided in this Deed of Trust (including, without limitation, in connection with the assignment of Rents, or the appointment of a receiver and the entry of such receiver on to all or any part of the Trust Property), be deemed a "mortgagee in possession," and neither Beneficiary nor Trustee shall in any way be made liable for any act, either of commission or omission, in connection with the exercise of such remedies. (xxiv) Multiple Security. If (a) the Premises shall consist of one or more parcels, whether or not contiguous and whether or not located in the same county, or (b) in addition to this Deed of Trust, Beneficiary shall now or hereafter hold or be the beneficiary of one or more additional mortgages, liens, deeds of trust or other security (directly or indirectly) for the Indebtedness upon other property in the State in which the Premises are located (whether or not such property is owned by Grantor or by others) or (c) both the circumstances described in clauses (a) and (b) shall be true, then to the fullest extent permitted by law, Beneficiary may, at its election, commence or consolidate in a single trustee's sale or foreclosure action all trustee's sale or foreclosure proceedings against all such collateral securing the Indebtedness (including the Trust Property), which action may be brought or consolidated in the courts of, or sale conducted in, any county in which any of such collateral is located. Grantor acknowledges that the right to maintain a consolidated trustee's sale or foreclosure action is a specific inducement to Beneficiary to extend the Indebtedness, and Grantor expressly and irrevocably waives any objections to the commencement or consolidation of the foreclosure proceedings in a single action and any objections to the laying of venue or based on the grounds of forum non conveniens which it may now or hereafter have. Grantor further agrees that if Trustee or Beneficiary shall be prosecuting one or more foreclosure or other proceedings against a portion of the Trust Property or against any collateral other than the Trust Property, which collateral directly or indirectly secures the Indebtedness, or if Beneficiary shall have obtained a judgment of foreclosure and sale or similar judgment against such collateral (or, in the case of a trustee's sale, shall have met the statutory requirements therefor with respect to such collateral), then, whether or not such proceedings are being maintained or judgments were obtained in or outside the State in which the Premises are located, Beneficiary may commence or continue any trustee's sale or foreclosure proceedings and exercise its other remedies granted in this Deed of Trust against all or any part of the Trust Property and Grantor waives any objections to the commencement or continuation of a foreclosure of this Deed of Trust or exercise of any other remedies hereunder based on such other proceedings or judgments, and waives any right to seek to dismiss, stay, remove, transfer or consolidate either any action under this Deed of Trust or such other proceedings on such basis. The commencement or continuation of proceedings to sell the Trust Property in a trustee's sale, to foreclose this Deed of Trust or the exercise of any other rights hereunder or the recovery of any judgment by Beneficiary or the occurrence of any sale by the Trustee in any such proceedings shall not prejudice, limit or preclude Beneficiary's right to commence or continue one or more trustee's sales, foreclosure or other proceedings or obtain a judgment against (or, in the case of a trustee's sale, to meet the statutory requirements for, any such sale of) any other collateral (either in or outside the State in which the Real Estate is 15 located) which directly or indirectly secures the Indebtedness, and Grantor expressly waives any objections to the commencement of, continuation of, or entry of a judgment in such other sales or proceedings or exercise of any remedies in such sales or proceedings based upon any action or judgment connected to this Deed of Trust, and Grantor also waives any right to seek to dismiss, stay, remove, transfer or consolidate either such other sales or proceedings or any sale or action under this Deed of Trust on such basis. It is expressly understood and agreed that to the fullest extent permitted by law, Beneficiary may, at its election, cause the sale of all collateral which is the subject of a single trustee's sale or foreclosure action at either a single sale or at multiple sales conducted simultaneously and take such other measures as are appropriate in order to effect the agreement of the parties to dispose of and administer all collateral securing the Indebtedness (directly or indirectly) in the most economical and least time-consuming manner. (xxv) Successors and Assigns. All covenants of Grantor contained in this Deed of Trust are imposed solely and exclusively for the benefit of Beneficiary and Trustee and their respective successors and assigns, and no other person or entity shall have standing to require compliance with such covenants or be deemed, under any circumstances, to be a beneficiary of such covenants, any or all of which may be freely waived in whole or in part by Beneficiary or Trustee at any time if in the sole discretion of either of them such waiver is deemed advisable. All such covenants of Grantor shall run with the land and bind Grantor, the successors and assigns of Grantor (and each of them) and all subsequent owners, encumbrancers and tenants of the Trust Property, and shall inure to the benefit of Beneficiary, its successors and assigns. Without limiting the generality of the foregoing, any successor to Trustee appointed by Beneficiary shall succeed to all rights of Trustee as if such successor had been originally named as Trustee hereunder. The word "Grantor" shall be construed as if it read "Grantors" whenever the sense of this Deed of Trust so requires and if there shall be more than one Grantor, the obligations of the Grantors shall be joint and several. (xxvi) No Waivers, etc. Any failure by Beneficiary to insist upon the strict performance by Grantor of any of the terms and provisions of this Deed of Trust shall not be deemed to be a waiver of any of the terms and provisions hereof, and Beneficiary or Trustee, notwithstanding any such failure, shall have the right thereafter to insist upon the strict performance by Grantor of any and all of the terms and provisions of this Deed of Trust to be performed by Grantor. Beneficiary may release, regardless of consideration and without the necessity for any notice to or consent by the beneficiary of any subordinate deed of trust or the holder of any subordinate lien on the Trust Property, any part of the security held for the obligations secured by this Deed of Trust without, as to the remainder of the security, in anywise impairing or affecting this Deed of Trust or the priority of this Deed of Trust over any subordinate lien or deed of trust. (xxvii) Waiver Of Trial By Jury. GRANTOR, TRUSTEE AND BENEFICIARY EACH HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY ACTION, CLAIM, SUIT OR PROCEEDING RELATING TO THIS DEED OF TRUST AND FOR ANY COUNTERCLAIM BROUGHT THEREIN. GRANTOR, TRUSTEE AND BENEFICIARY HEREBY WAIVES ALL RIGHTS TO INTERPOSE ANY COUNTERCLAIM IN ANY SUIT BROUGHT BY GRANTOR, BENEFICIARY OR TRUSTEE (AS THE CASE MAY BE) HEREUNDER AND ALL RIGHTS TO HAVE ANY SUCH SUIT CONSOLIDATED WITH ANY SEPARATE SUIT, ACTION OR PROCEEDING. 16 (xxviii) Governing Law, etc. This Deed of Trust shall be governed by and construed in accordance with the laws of Tennessee, except that Grantor expressly acknowledges that by its terms the Note shall be governed and construed in accordance with the laws of the State of New York, without regard to principles of conflict of law, and for purposes of consistency, Grantor agrees that in any in personam proceeding related to this Deed of Trust the rights of the parties to this Deed of Trust shall also be governed by and construed in accordance with the laws of the State of New York governing contracts made and to be performed in that State, without regard to principles of conflict of law. (xxix) Certain Definitions. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Deed of Trust shall be used interchangeably in singular or plural form and the word "Grantor" shall mean "each Grantor or any subsequent owner or owners of the Trust Property or any part thereof or interest therein," the word "Beneficiary" shall mean "Beneficiary or any successor agent for the Secured Parties," the word "Trustee" shall mean "Trustee and any successor trustee hereunder," the word "Indebtedness" or "Guarantee and Collateral Agreement" shall mean "the Notes, Credit Agreement, the Guarantee or any other evidence of indebtedness secured by this Deed of Trust," the word "person" shall include any individual, corporation, partnership, limited liability company, trust, unincorporated association, government, governmental authority, or other entity, and the words "Trust Property" shall include any portion of the Trust Property or interest therein. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa. The captions in this Deed of Trust are for convenience or reference only and in no way limit or amplify the provisions hereof. (xxx) Trustee's Powers and Liabilities. (g) Beneficiary may substitute, for any reason whatsoever, a successor Trustee or successor Trustees for the Trustee hereunder from time to time by an instrument in writing in any manner now or hereafter provided by law. Such right of substitution may be exercised at any time and more than once for so long as any part of the Indebtedness and Obligations remains unpaid. Such writing, upon recordation, shall be conclusive proof of proper substitution of each such successor Trustee or Trustees, who shall thereupon and without conveyance from the predecessor Trustee, succeed to all its title, estate, rights, powers and duties hereunder. The making of oath and giving bond by Trustee or any successor Trustee is hereby expressly waived by Grantor. The Trustee may sell and convey said property under the power set out herein, to any person, firm or corporation, although said Trustee has been, may now be or may hereafter be attorney for or agent of Beneficiary. (A) At any time or from time to time, without liability therefor, and without notice, upon the written request of Beneficiary and presentation of the Note and this Deed of Trust for endorsement, without affecting the liability of any person for the payment of the indebtedness secured hereby, and without affecting the lien of the Deed of Trust upon the Trust Property for the full amount of all amounts secured hereby, upon Beneficiary's request Trustee may (i) release all or any part of the Trust Property, (ii) consent to the making of any map or plat thereof, (iii) join in granting any easement thereon or in creating any covenants or conditions restricting use or occupancy thereof, or (iv) join in any extension agreement or in any agreement subordinating the lien or charge hereof. (xxxi) Last Dollars Secured; Priority. Pursuant to Section 47-28-104 of Tennessee Code Annotated, this Deed of Trust secures future advances which are "obligatory 17 advances" as defined in the aforesaid statute. This Deed of Trust is for commercial purposes as defined in said statute. This Deed of Trust secures only a portion of the indebtedness owing or which may become owing by the Grantor to the Secured Parties. The parties agree that any payments or repayments of such indebtedness shall be and be deemed to be applied first to the portion of the indebtedness that is not secured hereby, it being the parties' intent that the portion of the indebtedness last remaining unpaid shall be secured hereby. This Deed of Trust has been duly executed by Grantor on ___________, 2003, and is intended to be effective as of the date first above written. R.H. DONNELLEY PUBLISHING & ADVERTISING, INC. By: ___________________________ Name: Robert J. Bush Title: Vice President 18 STATE OF NEW YORK ) COUNTY OF NEW YORK ) Before me, ________________, the undersigned, a Notary Public in and for the County and State aforesaid, personally appeared Robert J. Bush with whom I am personally acquainted (or proved to me on the basis of satisfactory evidence), and who, upon oath, acknowledged himself/herself to be the Vice President of R.H. Donnelley Publishing & Advertising, Inc. (f/k/a Sprint Publishing & Advertising, Inc.), the within named bargainor, a corporation, and that he/she as such Vice President, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself/herself as such Vice President. WITNESS my hand and seal this the ____ day of January, 2003. ___________________________ Notary Public My Commission Expires: ___________________________________ Schedule A Description of the Premises The instrument from which Grantor received its legal and equitable interest in the foregoing property is by deed from L.M. Berry and Company, of record in Deed Book 1039C, Page 584, Register's Office for Sullivan County, Tennessee. [IF NEEDED] SPECIAL SWORN STATEMENT IN ACCORDANCE WITH T.C.A. Section 67-4-409 STATE OF NEW YORK ) ) COUNTY OF NEW YORK ) The undersigned, being first duly sworn, deposes and says that he is Vice President of R.H. Donnelley Publishing & Advertising, Inc. and makes this affidavit in compliance with the above-indicated tax statute of the State of Tennessee. Total Principal Indebtedness under any contingency $1,525,000,000.00(1) Value of property (collateral) located within the State of Tennessee: $3,548,412.00(2) Total value of collateral: $634,000,000.00(3) (1) X (2)/(3)=: $8,535,218.00(4) Subtract $2,000.00 $8,533,218.00(5) Tax Due (Calculated at $0.115 per hundred of figure on line 5): $9,813.20(6)
Any amount of indebtedness and value of property stated herein is made in good faith and for the sole purpose of determining tax liability. The loan documents secure future advances and contingent liabilities of every kind and character. THE AFORESAID AMOUNTS SHALL IN NO WAY BE CONSTRUED TO LIMIT THE AMOUNT OF INDEBTEDNESS OR THE VALUE OF THE PROPERTY STANDING AS SECURITY THEREFOR DESCRIBED IN THE ACCOMPANYING FINANCING STATEMENT OR MORTGAGE AND SHOULD NOT BE CONSIDERED BY ANY THIRD PARTY AS A REPRESENTATION OF THE ACTUAL INDEBTEDNESS CONCURRENTLY OR FROM TIME TO TIME OWING BY BORROWER TO THE LENDER. By: ___________________________ Name: Robert J. Bush Title: Vice President Sworn to and subscribed before me this ___ day of January, 2003. ________________________________ Notary Public in and for the State of ____________ My Commission Expires:________________ 2 EX-99.1 14 y82590exv99w1.txt PRESS RELEASE EXHIBIT 99.1 R.H. DONNELLEY COMPLETES ACQUISITION OF SPRINT DIRECTORY PUBLISHING BUSINESS PURCHASE, N.Y.--(BUSINESS WIRE)--Jan. 3, 2003--R.H. Donnelley Corporation (NYSE:RHD - News), today announced that it has completed the acquisition of Sprint's (NYSE: FON - News, PCS - News) directory publishing business, Sprint Publishing & Advertising, for $2.23 billion in cash, creating the nation's largest public stand-alone publisher of yellow pages directories. R.H. Donnelley will now publish all 260 Sprint Yellow Pages(R) directories in 18 states. Prior to the acquisition, R.H. Donnelley served as the exclusive sales agent for 41 Sprint directories in four states. In addition, the Company will continue to be the exclusive sales agent for 129 SBC directories in Illinois and Northwest Indiana through DonTech, its perpetual partnership with SBC. "This acquisition is a defining moment in R.H. Donnelley's history," said David C. Swanson, Chairman and Chief Executive Officer. "By building on our long-standing partnership with Sprint and our core competencies in the yellow pages business, the new R.H. Donnelley will have a strong platform with significant growth potential. We are excited about our new opportunities as a fully integrated yellow pages publishing company and we look forward to capitalizing on them in 2003 and beyond." As part of the transaction, Goldman Sachs Capital Partners 2000, L.P. and affiliated entities have purchased a total of $200 million of R.H. Donnelley's convertible preferred stock and warrants, giving them approximately 23% ownership in the Company on a fully diluted basis. Effective today, Terence O'Toole and Robert Gheewalla have joined R.H. Donnelley's Board of Directors. Both Mr. O'Toole and Mr. Gheewalla are Managing Directors at Goldman Sachs & Co. As previously announced, Peter J. McDonald, who most recently served as President of SBC Directory Operations, the nation's largest yellow pages publisher, has been named President of Donnelley Media, the new unit that will manage the Sprint directory publishing business. About R.H. Donnelley R.H. Donnelley, the nation's largest public stand-alone publisher of yellow pages directories, publishes 260 Sprint Yellow Pages(R) directories in 18 states, with major markets including Las Vegas, Orlando and Ft. Myers. The Company also serves as the exclusive sales agent for 129 SBC directories in Illinois and Northwest Indiana through DonTech, its perpetual partnership with SBC, and provides pre-press publishing services. In total, R.H. Donnelley serves more than 250,000 local and national advertisers. For more information, please visit R.H. Donnelley at www.rhd.com. About Goldman Sachs Capital Partners Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high net worth individuals. Founded in 1869, it is one of the oldest and largest investment banking firms. The firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world. GS Capital Partners is the current primary investment vehicle of Goldman Sachs for making privately negotiated equity investments. The current GS Capital Partners fund was formed in July 2000 with total committed capital of $5.25 billion, $1.5 billion of which was committed by Goldman Sachs and its employees, with the remainder committed by institutional and individual investors. Safe Harbor Provision Certain statements contained in this press release regarding R.H. Donnelley's future operating results or performance or business plans or prospects and any other statements not constituting historical fact are "forward-looking statements" subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Where possible, the words "believe," "expect," "anticipate," "should," "planned," "estimated," "potential," "goal," "outlook," and similar expressions, as they relate to R.H. Donnelley or its management, have been used to identify such forward-looking statements. Regardless of any identifying phrases, these statements and all other forward-looking statements reflect only R.H. Donnelley's current beliefs and assumptions with respect to future business plans, prospects, decisions and results, and are based on information currently available to R.H. Donnelley. Accordingly, the statements are subject to significant risks, uncertainties and contingencies which could cause R.H. Donnelley's actual operating results, performance or business plans or prospects to differ from those expressed in, or implied by, these statements. Such risks, uncertainties and contingencies are described in detail in Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Annual Report on Form 10-K for the year ended December 31, 2001, as well as the Company's other periodic filings with the Securities and Exchange Commission, and in summary and without limitation include the following: (1) dependence on a limited number of relationships and on our business partners; (2) uncertainties caused by the consolidation of the telecommunications industry and/or changes in the yellow pages industries; (3) introduction of competing products or technologies by other companies and/or pricing pressures from competitors and/or customers; (4) reversal or slowdown of the modest economic recovery presently being experienced in the United States, especially with respect to the markets in which we operate and/or residual economic effects of, and uncertainties regarding (i) the terrorist attacks that occurred on September 11, 2001, (ii) the general possibility or express threat of similar terrorist or other related disruptive events, and (iii) future occurrence of similar terrorist or other related disruptive events, especially with respect to the major markets in which we operate that depend so heavily upon travel and tourism; (5) risks related to the varying opportunities for the Company's use of its cash flow; and (6) any share repurchases would be subject to market conditions and compliance with legal restrictions and the company's debt covenants. Additional risks that would cause actual results to differ materially from such statements include, without limitation, the inability of R.H. Donnelley to achieve synergies in connection with the acquisition, the incurrence of unexpected costs in connection with the acquisition and other contingencies and risks relating to the integration of Sprint's directory publishing operations and business. -----END PRIVACY-ENHANCED MESSAGE-----