8-K

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): September 21, 2002

R.H. DONNELLEY CORPORATION
(Exact Name of Registrant as Specified in Charter)

Delaware	1-07155	13-2740040
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer 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 of Incorporation)	(Commission File Number)	(IRS Employer 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 September 20, 2002, 100 shares of R.H. Donnelley Inc. common stock, no par value, were outstanding.

Item 5. Other Events.

     Pursuant to a Stock Purchase Agreement (the “Purchase Agreement”), dated as of September 21, 2002, by and among R.H. Donnelley Corporation, a Delaware corporation (the “Company”), Sprint Corporation, a Kansas corporation (“Sprint”), and Centel Directories LLC, a Delaware limited liability company, the Company will purchase Sprint’s directory publishing business (“SPA”) for $2.23 billion in cash. The transaction, which is structured as a stock purchase with a 338(h)(10) tax election, is expected to close in the first quarter of 2003, subject to certain regulatory approvals and customary closing conditions.

     As part of the transaction, the Company also announced that Goldman Sachs Capital Partners 2000, L.P. and affiliated entities, have entered into a definitive agreement to invest $200 million in the Company through the purchase of the Company’s newly issued convertible preferred stock pursuant to the Preferred Stock and Warrant Purchase Agreement (the “Preferred Stock and Warrant Purchase Agreement”), dated as of September 21, 2002. Goldman Sachs Capital Partners will also receive warrants to acquire 1.65 million shares of the Company’s common stock with an exercise price equal to the 30-day average of the common stock price at closing. The Company will issue treasury stock to satisfy conversion of the preferred stock and any exercise of the warrants. The Company has received a commitment from Bear Stearns, Deutsche Bank and Salomon Smith Barney to finance the remaining $2.03 billion of the purchase price and refinance existing debt. The preferred stock investment and debt financing are also expected to close in the first quarter of 2003, subject to certain regulatory approvals and customary closing conditions.

     In connection with the closing of the transaction, the Company and/or certain of its affiliates will enter into commercial arrangements with Sprint and/or its affiliates under which the Company will be the exclusive directory publisher for Sprint in the markets in which Sprint currently provides local telephone service for an initial term of 50 years (subject to customary early termination provisions).

     On September 21, 2002, the Board of Directors of the Company approved Amendment No. 2, dated as of September 21, 2002 (the “Amendment”), to the Rights Agreement, dated as of October 27, 1998, as amended (the “Rights Agreement”), between the Company and The Bank of New York (successor to First Chicago Trust Company), as rights agent. The Amendment made the provisions of the Rights Agreement inapplicable to the transactions contemplated by the Preferred Stock and Warrant Purchase Agreement.

     This description of the Purchase Agreement, the Preferred Stock and Warrant Purchase Agreement and the Amendment are qualified in their entirety by reference to the full text of such documents, copies of which are incorporated herein by this reference.

Item 7. Financial Statements and Exhibits.

2

(c) Exhibits.

2.1	Stock Purchase Agreement, dated as of September 21, 2002, by and among R.H. Donnelley Corporation, Sprint Corporation and Centel Directories LLC.
2.2	Preferred Stock and Warrant Purchase Agreement, dated as of September 21, 2002, among R.H. Donnelley Corporation and Goldman Sachs Capital Partners 2000, L.P. and entities affiliated therewith.
4.1	Amendment No. 2, dated as of September 21, 2002, to the Rights Agreement, dated as of October 27, 1998, as amended, between the Company and The Bank of New York (successor to First Chicago Trust Company), as rights agent, which is incorporated by reference to Exhibit 4.1 of the Registration Statement on Form 8-A (File No. 1-07155).

3

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:	September 30, 2002

4

EXHIBIT INDEX

2.1	Stock Purchase Agreement, dated as of September 21, 2002, by and among R.H. Donnelley Corporation, Sprint Corporation and Centel Directories LLC.
2.2	Preferred Stock and Warrant Purchase Agreement, dated as of September 21, 2002, among R.H. Donnelley Corporation and Goldman Sachs Capital Partners 2000, L.P. and entities affiliated therewith.
4.1	Amendment No. 2, dated as of September 21, 2002, to the Rights Agreement, dated as of October 27, 1998, as amended, between the Company and The Bank of New York (successor to First Chicago Trust Company), as rights agent, which is incorporated by reference to Exhibit 4.1 of the Registration Statement on Form 8-A (File No. 1-07155).

EX-2.1 3 l96450aexv2w1.txt EX-2.1 STOCK PURCHASE AGREEMENT Exhibit 2.1 STOCK PURCHASE AGREEMENT BY AND BETWEEN SPRINT CORPORATION, CENTEL DIRECTORIES LLC AND R.H. DONNELLEY CORPORATION AS OF SEPTEMBER 21, 2002 TABLE OF CONTENTS -----------------

PAGE ---- ARTICLE I PURCHASE AND SALE OF THE SHARES.............................2 Section 1.1 Purchase and Sale.............................................2 Section 1.2 Payment of Purchase Price.....................................2 Section 1.3 Target Working Capital........................................4 Section 1.4 Adjustment of Purchase Price..................................4 Section 1.5 Closing.......................................................6 Section 1.6 Deliveries by Sellers.........................................6 Section 1.7 Deliveries by Buyer...........................................7 Section 1.8 Initial and Second Closing...................................8 ARTICLE II RELATED MATTERS............................................14 Section 2.1 Use of Sprint's Name and Logos...............................14 Section 2.2 No Ongoing or Transition Services............................14 Section 2.3 Certain Pre-Closing Matters..................................14 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS..................16 Section 3.1 Organization.................................................16 Section 3.2 Authorization................................................17 Section 3.3 Capital Stock................................................18 Section 3.4 Ownership of the Capital Stock...............................19 Section 3.5 Consents and Approvals; No Violations........................19 Section 3.6 Financial Statements and Undisclosed Liabilities.............20 Section 3.7 Absence of Material Adverse Effect...........................21 Section 3.8 Title, Ownership and Related Matters.........................23 Section 3.9 Intellectual Property........................................25 Section 3.10 Computer Software............................................27 Section 3.11 Litigation...................................................28 Section 3.12 Compliance with Applicable Law...............................29 Section 3.13 Certain Contracts and Arrangements...........................29 Section 3.14 Employee Benefit Plans; ERISA................................31 Section 3.15 Labor Matters................................................34 Section 3.16 Taxes........................................................35 Section 3.17 Environmental................................................37 Section 3.18 Officers.....................................................37 Section 3.19 Certain Fees.................................................37 Section 3.20 Sufficiency of Assets........................................38 Section 3.21 Permits......................................................38 Section 3.22 Affiliates Engaged in the Business...........................38 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER....................39 Section 4.1 Organization and Authority of Buyer..........................39

Section 4.2 Consents and Approvals; No Violations........................40 Section 4.3 Litigation...................................................40 Section 4.4 Certain Fees.................................................41 Section 4.5 Investment Representations...................................41 Section 4.6 Sufficient Funds.............................................41 ARTICLE V COVENANTS..................................................42 Section 5.1 Conduct of the Companies' Business...........................42 Section 5.2 Access to Information........................................44 Section 5.3 Consents.....................................................47 Section 5.4 Reasonable Best Efforts......................................49 Section 5.5 Public Announcements.........................................52 Section 5.6 Covenant to Satisfy Conditions...............................52 Section 5.7 Certain Tax Matters..........................................53 Section 5.8 No Solicitation..............................................61 Section 5.9 Transition Services Agreement................................62 Section 5.10 Directory Services License Agreement.........................62 Section 5.11 Guarantees...................................................62 Section 5.12 Investigation by Buyer.......................................62 Section 5.13 Mutual Release...............................................63 Section 5.14 Employees and Employee Benefit Plans.........................64 Section 5.15 No Solicitation of Transactions..............................69 Section 5.16 Non-Competition Agreement....................................70 Section 5.17 Subscriber Listings Agreement................................70 Section 5.18 Trademark License Agreement..................................70 Section 5.19 Publisher Trademark License Agreement........................70 Section 5.20 Transition of Certain Information............................70 Section 5.21 Interim Changes in Service Areas.............................71 Section 5.22 Intercompany Accounts; CenDon Payments.......................71 Section 5.23 Special Purpose Vehicle......................................72 Section 5.24 Co-Branding..................................................72 ARTICLE VI CONDITIONS TO OBLIGATIONS OF THE PARTIES...................73 Section 6.1 Conditions to Each Party's Obligation........................73 Section 6.2 Conditions to Obligations of Sellers.........................74 Section 6.3 Conditions to Obligations of Buyer...........................75 ARTICLE VII TERMINATION................................................76 Section 7.1 Termination..................................................76 Section 7.2 Procedure and Effect of Termination..........................78 ARTICLE VIII SURVIVAL OF REPRESENTATIONS................................79 Section 8.1 Survival of Representations, Warranties and Agreements.......79 ARTICLE IX INDEMNIFICATION............................................80 Section 9.1 Indemnification Obligations of Sellers.......................80 Section 9.2 Indemnification Obligations of Buyer.........................81 Section 9.3 Indemnification Procedure....................................81 Section 9.4 Claims Period................................................83 Section 9.5 Liability Limits.............................................84 Section 9.6 Netting of Losses............................................85 -ii- Section 9.7 Exclusive Remedies...........................................85 ARTICLE X MISCELLANEOUS..............................................86 Section 10.1 Fees and Expenses............................................86 Section 10.2 Further Assurances...........................................86 Section 10.3 Notices......................................................86 Section 10.4 Severability.................................................88 Section 10.5 Binding Effect; Assignment...................................88 Section 10.6 No Third Party Beneficiaries.................................89 Section 10.7 Interpretation...............................................89 Section 10.8 Jurisdiction and Consent to Service..........................90 Section 10.9 Entire Agreement.............................................90 Section 10.10 Governing Law................................................90 Section 10.11 Specific Performance.........................................90 Section 10.12 Counterparts.................................................91 Section 10.13 Amendment, Modification and Waiver...........................91 Section 10.14 Knowledge....................................................91 Section 10.15 Schedules and Exhibits.......................................91 Section 10.16 Waiver of Jury Trial.........................................91 -iii- DEFINED TERMS ------------- TERM SECTION 2001 Income Statement..................................................1.8(a) Acceptance Notice......................................................1.4(c) Accounting Principles..................................................1.4(b) ADSP................................................................5.7(b)(i) Affiliate.............................................................10.7(b) Agreement............................................................Preamble Allocation..........................................................5.7(b)(i) Ancillary Agreements...................................................1.6(c) Buyer 401(k) Plan.................................................5.14(b)(ii) Buyer Deductible..........................................................9.5 Buyer Indemnified Parties.................................................9.1 Buyer Losses..............................................................9.1 Buyer Material Adverse Effect.............................................4.2 Buyer Pension Plan................................................5.14(c)(ii) Buyer................................................................Preamble Buyer's Auditor........................................................1.4(b) Cap Amount................................................................9.5 CDC Shares...........................................................Recitals CDC..................................................................Recitals Cendon...............................................................Recitals Centel LLC...........................................................Preamble Claims Period.............................................................9.4 Closing Date Working Capital...........................................1.4(a) Closing Date..............................................................1.5 Closing...................................................................1.1 Companies............................................................Recitals Company Employee......................................................5.14(a) Company Employees.....................................................5.14(a) Company Intellectual Property..........................................3.9(a) Company Licensed Intellectual Property.................................3.9(a) Company Licensed Software.............................................3.10(a) Company Material Adverse Effect........................................3.1(b) Company Owned Intellectual Property....................................3.9(a) Company Proprietary Software..........................................3.10(a) Company Software......................................................3.10(a) Company..............................................................Recitals Competing Transaction....................................................5.15 Confidentiality Agreement .............................................5.2(b) Contracts................................................................3.13 Current Assets............................................................1.3 Current Liabilities.......................................................1.3 -iv- DAI Shares...........................................................Recitals DAI..................................................................Recitals Debt Financing Commitments................................................4.6 Directory Services License Agreement.....................................5.10 DOJ....................................................................5.3(d) Environmental Laws....................................................3.17(a) Equity Commitments........................................................4.6 ERISA Affiliate.......................................................3.14(b) ERISA.................................................................3.14(a) Estimated Purchase Price...............................................1.2(a) Estimated Working Capital..............................................1.2(b) Excluded Business......................................................1.8(b) Excluded States........................................................1.8(a) Final Balance Sheet....................................................1.4(c) Financial Statements...................................................3.6(a) Financing Commitments.....................................................4.6 FTC....................................................................5.3(d) GAAP...................................................................1.4(b) Group Contracts........................................................5.3(a) HSR Act...................................................................3.5 Indemnification Statement.........................................5.7(c)(iii) Indemnified Party .....................................................9.3(a) Indemnifying Party.....................................................9.3(a) Initial Closing........................................................1.8(a) Intellectual Property..................................................3.9(a) Interim Balance Sheet..................................................3.6(a) Leased Real Property................................................3.8(a)(i) Liens..............................................................3.8(a)(ii) Mutual Release...........................................................5.13 New Contracts..........................................................5.3(a) Non-Competition Agreement................................................5.16 Objection Notice.......................................................1.4(c) Ordinary Course of Business............................................3.7(a) Owned Real Property.................................................3.8(a)(i) Permits...............................................................3.21(a) Permitted Liens....................................................3.8(a)(ii) Person................................................................10.7(a) Pre-Closing Period Returns..........................................5.7(c)(i) Pre-Closing Period..................................................5.7(a)(i) Preliminary Balance Sheet..............................................1.4(b) Publisher Trademark License Agreement....................................5.19 Purchase Price.........................................................1.2(d) Real Property.......................................................3.8(a)(i) Regulatory Proposal................................................5.4(d)(iv) Second Closing.........................................................1.8(c) Second Closing Termination Date........................................1.8(c) -v- Section 338(h)(10) Election........................................5.7(a)(ii) Section 754 Election..............................................5.7(a)(iii) Seller Benefit Plan...................................................3.14(a) Seller Benefit Plans..................................................3.14(a) Seller ERISA Plan.....................................................3.14(a) Seller ERISA Plans....................................................3.14(a) Seller Indemnified Parties................................................9.2 Seller Losses.............................................................9.2 Seller Tradenames and Logos...............................................2.1 Sellers..............................................................Preamble Sellers' Auditor.......................................................1.4(b) Services Agreement.....................................................1.8(f) Shares...............................................................Recitals SPA..................................................................Recitals Sprint...............................................................Preamble SPV......................................................................5.22 SPV Agreement............................................................5.23 State Subsidiary.......................................................1.8(b) Straddle Period Returns............................................5.7(c)(ii) Straddle Period....................................................5.7(a)(iv) Subscriber Listings Agreement............................................5.17 Target Assets..........................................................1.8(g) Target Working Capital....................................................1.3 Tax Claim..........................................................5.7(e)(iv) Tax Indemnified Party..............................................5.7(e)(iv) Tax Indemnifying Party.............................................5.7(e)(iv) Tax Return........................................................3.16(c)(ii) Taxes..............................................................3.16(c)(i) Termination Date.......................................................7.1(e) Third Party Approval Contracts.........................................5.3(b) To the Knowledge of Buyer...............................................10.14 To the Knowledge of Sellers.............................................10.14 Trademark License Agreement..............................................5.18 Transfer Tax Limit................................................5.7(c)(vii) Transition Services Agreement............................................5.10 Unrelated Accounting Firm..............................................1.4(c) Wholly Owned Companies...............................................Recitals Wholly Owned Company.................................................Recitals Year-End Balance Sheet....................................................1.3 -vi- SCHEDULES --------- Schedule 1.3........................................Current Assets and Current Liabilities Schedule 1.8(a)..............................................................2001 Revenues Schedule 1.8(b)................................................Assets of Excluded Business Schedule 3.1........................................................Foreign Qualifications Schedule 3.3.................................................................Capital Stock Schedule 3.4....................................................Ownership of Capital Stock Schedule 3.5..............................................................Sellers Consents Schedule 3.6(b)........................................................Company Liabilities Schedule 3.7.............................................................Absence of Change Schedule 3.8(a)(i)...........................................................Real Property Schedule 3.8(a)(ii).................................................Title to Real Property Schedule 3.8(a)(iv).............................................Owned Real Property Access Schedule 3.8(a)(vi)...............................Notice of Condemnation or Eminent Domain Schedule 3.8(a)(vii).............................................Real Property Obligations Schedule 3.8(a)(viii)...........................................Use of Owned Real Property Schedule 3.8(b)............................................................Title to Assets Schedule 3.9(b)(i).......Adverse Claims Against Use of Company Owned Intellectual Property Schedule 3.9(b)(ii)....................................Company Owned Intellectual Property Schedule 3.9(b)(iii)................................Company Licensed Intellectual Property Schedule 3.9(c)..................Third Party Infringement of Company Intellectual Property Schedule 3.10(a).........................................................Computer Software Schedule 3.11...................................................................Litigation Schedule 3.12...............................................Compliance with Applicable Law Schedule 3.13....................................................................Contracts Schedule 3.14............................................................Employee Benefits Schedule 3.15................................................................Labor Matters Schedule 3.16........................................................................Taxes Schedule 3.17................................................................Environmental Schedule 3.18......................................................Officers; Bank Accounts Schedule 3.20........................................................Sufficiency of Assets Schedule 3.21......................................................................Permits Schedule 4.2................................................................Buyer Consents Schedule 5.1............................................Conduct of the Companies' Business Schedule 5.3(a)............................................................Group Contracts Schedule 5.14.............................................................Employee Matters Schedule 6.3(d).............................................................Sellers' Liens Schedule 6.3(f)..........................................................Required Consents Schedule 10.14.................................Officers and Affiliates of Sprint and Buyer -vii- EXHIBITS -------- EXHIBIT NUMBER Transition Services Agreement..............................................5.9 Directory Services License Agreement......................................5.10 Mutual Release............................................................5.14 Non-Competition Agreement.................................................5.16 Subscriber Listings Agreement.............................................5.17 Trademark License Agreement...............................................5.18 Publisher Trademark License Agreement.....................................5.19 Terms of SPV Operating Agreement and SPV Agreement........................5.23 -viii- STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT, dated as of September 21, 2002 (this "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 Agreement as "SELLERS"), and R.H. Donnelley Corporation, a Delaware corporation ("BUYER"). RECITALS 1. Sprint owns all of the issued and outstanding shares of capital stock (the "DAI SHARES") of DirectoriesAmerica, Inc., a Kansas corporation ("DAI"), which owns all of the issued and outstanding capital stock of Sprint Publishing & Advertising, Inc., a Kansas corporation ("SPA"). 2. Centel LLC owns all of the issued and outstanding shares of capital stock (the "CDC SHARES" and, collectively with the DAI Shares, the "SHARES") of Centel Directory Company, a Delaware corporation ("CDC"), which owns a membership interest in Cendon, L.L.C., a Delaware limited liability company ("CENDON") (DAI, SPA and CDC are hereinafter each referred to as a "WHOLLY OWNED COMPANY" and collectively referred to as the "WHOLLY OWNED Companies", and DAI, SPA, CDC and Cendon are hereinafter each referred to as a "COMPANY" and collectively referred to as the "COMPANIES"). 3. Pursuant to the terms and conditions of this Agreement, Sellers desire to sell to Buyer, and Buyer desires to purchase from Sellers, the Shares. NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, agreements and conditions set forth in this Agreement, and intending to be legally bound by this Agreement, the parties agree as follows: ARTICLE I PURCHASE AND SALE OF THE SHARES SECTION 1.1 PURCHASE AND SALE. Subject to the terms and conditions set forth in this Agreement, at the closing provided for in Section 1.5 of this Agreement (the "CLOSING"), Sellers agree to sell, transfer and deliver to Buyer, and Buyer agrees to purchase, acquire and accept from Sellers, the Shares. 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) and (ii) (A) plus an amount equal to the difference between the Estimated Working Capital and the Target Working Capital if the amount of Estimated Working Capital is greater than the Target Working Capital, or (B) less an amount equal to the difference between the Target Working Capital and the Estimated Working Capital if the amount of Estimated Working Capital is less than the Target Working Capital. (b) At least five business days prior to the Closing, Sellers shall deliver to Buyer an estimated combined consolidated balance sheet of the Companies as of the close of business on the Closing Date 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" shall mean 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 -2- Section 1.3) of the Companies as of the close of business on the Closing Date as reflected on such balance sheet. (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 Closing Date 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 Closing Date Working Capital plus interest or (ii) if the amount of the Closing Date 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 Closing Date 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." -3- 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 "CLOSING DATE 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. Closing Date Working Capital shall not include deferred directory costs, deferred revenue, any asset or liability related to Taxes or any intercompany accounts settled pursuant to Section 5.22. (b) Promptly following the Closing, Buyer shall prepare a combined consolidated balance sheet of the Companies as of the close of business on the Closing Date (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. Buyer shall engage PricewaterhouseCoopers LLP (the "BUYER'S AUDITOR") to conduct an audit of the Preliminary Balance Sheet. Buyer shall use all commercially reasonable efforts to deliver to Sellers a final draft of the Preliminary Balance Sheet within 90 days after the Closing Date, together with the opinion of the Buyer's Auditor thereon stating that the audit has been conducted in accordance with the Accounting Principles. Representatives of Sellers shall have the opportunity to examine the work papers, schedules and -4- other documents prepared by Buyer in connection with the preparation of the Preliminary Balance Sheet. Buyer shall use all commercially reasonable efforts to cause the Buyer's Auditor to permit Sellers and their accounting firm (the "SELLERS' AUDITOR") to examine the Buyer's 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 Sellers object to the Preliminary Balance Sheet, Sellers shall deliver to Buyer a written notice of objection (an "OBJECTION NOTICE") within thirty (30) days following the delivery thereof. If Sellers have no objection to the Preliminary Balance Sheet, Sellers shall promptly deliver to Buyer 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 Buyer 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 Sellers 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 -5- 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". SECTION 1.5 CLOSING. The Closing of the transactions contemplated by this Agreement shall take place on the later 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 King & Spalding, 1185 Avenue of the Americas, New York, NY 10036, 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." SECTION 1.6 DELIVERIES BY SELLERS. At the Closing, Sellers will deliver or cause to be delivered to Buyer (unless delivered previously) the following: (a) The stock certificates representing all of the Shares, duly endorsed in blank or accompanied by stock powers duly executed in blank; -6- (b) The resignations of all officers and members of the Boards of Directors of the Wholly Owned Companies and the managers of Cendon, in each case from their position as such, in a form reasonably satisfactory to Buyer; (c) The Transition Services Agreement (as hereinafter defined), the Directory Services License Agreement (as hereinafter defined), the Mutual Release (as hereinafter defined), the Non-Competition Agreement (as hereinafter defined), the Subscriber Listings Agreement (as hereinafter defined), the Trademark License Agreement (as hereinafter defined), the Publisher Trademark License Agreement (as hereinafter defined) and the SPV Agreement (as hereinafter defined), each executed by Sprint and/or the applicable subsidiary of Sprint (the "ANCILLARY AGREEMENTS"); and (d) All other documents, instruments and writings reasonably required by Buyer to be delivered by Sellers at or prior to the Closing pursuant to this Agreement or otherwise reasonably required in connection with the transactions contemplated by this Agreement. SECTION 1.7 DELIVERIES BY BUYER. At the Closing, Buyer will deliver or cause to be delivered to Sellers (unless previously delivered) the following: (a) The Estimated Purchase Price in accordance with Section 1.2(a) of this Agreement; (b) The Ancillary Agreements, each executed by Buyer or the Companies, as applicable; and (c) All other documents, instruments and writings reasonably required by Sellers to be delivered by the Buyer at or prior to the Closing pursuant to this Agreement or -7- otherwise reasonably required in connection with the transactions contemplated by this Agreement. SECTION 1.8 INITIAL AND SECOND CLOSING. (a) In the event that (i) at any time after the date hereof the only conditions to Closing capable of being satisfied prior to the Closing Date that have not been satisfied are Section 6.1(d) and/or Section 6.2(d) as a result of an action or, with respect to Section 6.1(d), failure to act by one or more state public utilities commissions or other state governmental or regulatory authorities and (ii) the directories published by the Companies in the state or states with respect to which such regulatory action has occurred or, with respect to Section 6.1(d), has failed to occur (the "EXCLUDED STATES") represent less than eight percent (8%) of the 2001 revenues of the Companies, as set forth on SCHEDULE 1.8(a) (the inclusion in this Section 1.8 of this percentage is not deemed to be an admission or representation by any party that this percentage of revenues is or is not "material" or would or could have a "material adverse effect" as contemplated by this Agreement), the parties will complete an initial Closing (the "INITIAL CLOSING") in accordance with this Agreement (including this Section 1.8) on the later to occur of (i) January 3, 2003, and (ii) the fifth business day following the satisfaction or waiver of all conditions to Closing set forth in Article VI of this Agreement that are capable of being satisfied prior to the Closing Date (other than Sections 6.1(d) and 6.2(d)). However, if the prior sentence would require the Initial Closing to occur prior to January 30, 2003, Buyer may elect to defer the Initial Closing to a date on or prior to January 30, 2003. (b) Immediately prior to the Initial Closing, (i) the Companies will contribute to one or more newly formed corporate or limited liability company subsidiaries (each, a "STATE SUBSIDIARY") those assets listed on SCHEDULE 1.8(b) relating to the directories -8- publishing business conducted by the Companies in each Excluded State as of the date of the Initial Closing (the "EXCLUDED BUSINESS"), (ii) each State Subsidiary will assume the liabilities listed on SCHEDULE 1.8(b) relating to the Excluded Business in its respective Excluded State, and (iii) all of the common stock or membership interests of the State Subsidiary will be distributed to DAI or Centel LLC, as applicable, pursuant to Sections 332 and 337 of the Code and thereafter, prior to the Second Closing Termination Date, Sellers will not take any action that would cause Centel LLC or DAI to no longer be part of their consolidated group for federal tax purposes. The respective assets and liabilities relating to the Excluded Business conducted in each Excluded State will be contributed to and assumed by a separate State Subsidiary. If required, the Parties will cause CenDon to make a non-cash, non-liquidating distribution of the common stock or membership interest of the State Subsidiary to CDC. (c) In the event that following the Initial Closing and prior to the termination of this Agreement, the conditions to closing set forth in Section 6.1(d) and Section 6.2(d) become satisfied (or waived) as to one or more Excluded States, the parties will complete a subsequent Closing (the "SECOND Closing") at which Sellers will sell to Buyer the shares or membership interests (as applicable) of the applicable State Subsidiary(ies) as to which the conditions in Section 6.1(d) and Section 6.2(d) have been satisfied (or waived). The Second Closing will take place on such date as is agreed to by the parties but in no event later than the business day prior to the one year anniversary of the date of this Agreement (the "SECOND CLOSING TERMINATION DATE"), assuming that all conditions to Closing have been satisfied as of such date (other than Section 6.1(d) or 6.2(d) with respect to any states that are not included in the Initial Closing). Notwithstanding the foregoing, if the conditions to the Closing in Section 6.1(d) or Section 6.2(d) have not been satisfied at the Initial Closing as to more than one -9- Excluded State, the Second Closing will occur within five business days of the satisfaction or waiver of all conditions to Closing set forth in Article VI of this Agreement that are capable of being satisfied prior to the Closing Date, including without limitation Sections 6.1(d) and 6.2(d), as to each of the Excluded States; PROVIDED, HOWEVER, that if, on the Second Closing Termination Date, the conditions in Sections 6.1(d) and 6.2(d) have not been satisfied as to any Excluded State, such Excluded State will not be the subject of a Second Closing. (d) For the purposes of the Initial Closing and the Second Closing, (i) the dollar amount indicated in the second sentence of Section 1.2(a) shall equal $2,230,000,000 TIMES the Applicable Fraction (as defined below) and (ii) the Target Working Capital shall equal $259,548,000 TIMES the Applicable Fraction. The "Applicable Fraction" means a fraction, the numerator of which is the revenues reflected on SCHEDULE 1.8(a) for the states with respect to which the business is being transferred at the Initial Closing or Second Closing (as applicable) and the denominator of which is the total revenues reflected on SCHEDULE 1.8(a). (e) At the Initial Closing, the DAI Shares will be retained by Sprint, and Buyer will purchase the CDC Shares and all of the issued and outstanding capital stock of SPA (which, together with the CDC Shares, will constitute the "Shares" for purposes of the Initial Closing). Prior to the Initial Closing, the parties will enter into an amendment to this Agreement that reflects the provisions of this Section 1.8 and otherwise causes the economic and legal substance of this Agreement to be retained and implemented with respect to the Initial Closing and the Second Closing, including without limitation to (i) remove DAI from the definition of "Companies" and include DAI in the definition of "Sellers", (ii) deem the State Subsidiaries to be "Companies" and "Wholly Owned Companies" for purposes of this Agreement and (iii) deem the word "Closing" to include the Second Closing. Notwithstanding -10- the foregoing, at the Initial Closing, the provisions of Section 5.14 and Section 5.7 will apply without amendment except as set forth in clauses (i) and (ii) above. Following the Initial Closing, this Agreement as so amended will remain in full force and effect in accordance with its terms. (f) After the Initial Closing, the Companies will manage and operate the Excluded Business on behalf of Sellers pursuant to the Services Agreement (as defined below), including (without limitation) by performing national and local sales, billing, credit and collection, customer service, pre-press, printing and distribution. All gross revenues of the Excluded Business will be collected by the Companies on behalf of Sellers and promptly transferred to Sellers. For each Excluded State (for so long as such Excluded State is subject to the Services Agreement), Sellers will pay the Companies a fee for the performance of such services for each fiscal year equal to 39% of the net billed revenue of the Excluded Business in the Excluded State for such fiscal year PLUS 110% of direct costs for printing, paper procurement and distribution for such Excluded Business for such fiscal year. The fee shall be prorated on a daily basis for any partial year during which the Services Agreement is in effect with respect to the Excluded Business in the applicable Excluded State. In connection with the Initial Closing, Sellers and the Companies will enter into a 50-year services agreement (the "SERVICES AGREEMENT") with respect to the Excluded Businesses to implement and reflect the provision of services and payment of fees for performance described in this Section 1.8(f) and otherwise containing substantially the same terms and conditions as are contained in the Directory Services License Agreement. The Services Agreement will terminate upon the Second Closing as to any Excluded Business acquired by Buyer in the Second Closing. -11- (g) If, at any time following the Second Closing Termination Date or the termination of this Agreement in accordance with its terms following the Initial Closing, Sellers determine to sell any of the State Subsidiary(ies) or all or any portion of the Excluded Business that has not been the subject of a Second Closing, Sellers will give notice to the Companies of such intent and request the Companies to submit a written proposal to Sellers outlining the specific terms and conditions under which the Companies are willing to purchase such State Subsidiary(ies) or the applicable portion of the Excluded Business (the "TARGET ASSETS"), which the Companies will submit within thirty (30) days following Sellers' request if the Company desires to pursue such opportunity. If the Companies do not submit a proposal within such 30-day period, Sellers may contract with a third party in Sellers' discretion to purchase the Target Assets. If the Companies submit a proposal during such 30-day period, Sellers will negotiate in good faith with the Companies for a period of thirty (30) days following the receipt by Sellers of such proposal to agree on terms and conditions under which the Companies would acquire the Target Assets. If no agreement has been reached by the end of the 30-day period, Sellers will submit a final written proposal to the Companies, who will have five business days to accept such proposal. If Sellers and the Companies are unable to agree on terms for the Companies to acquire the Target Assets within the time frame specified in this Section, Sellers may contract with a third party to acquire the Target Assets on terms which in the aggregate are no more favorable to the purchaser than last offered in writing to the Companies. If Sellers contract with a third party to acquire the Target Assets, the Services Agreement will terminate with respect to the Target Assets upon 60 days prior written notice to the Companies, in which event Sellers will be required to pay the unpaid fees accrued under the Services Agreement with respect to the Target Assets and reimburse the Companies for any amounts -12- payable under the Buyer's generally applicable severance plans with respect to employees that the Companies decide to terminate as a result of the termination of the Services Agreement with respect to the Target Assets; provided that the Companies will cooperate in good faith to permit the purchaser of the Target Assets to employ any of such employees. (h) In connection with the Initial Closing and the Second Closing, the definition of "Service Areas" in the Directory Services License Agreement will be revised to exclude the Services Areas in which the Excluded Business that has not been included in a Second Closing is conducted. (i) It is the intent of the parties that this Section 1.8 constitute a binding and enforceable agreement to proceed with the Initial Closing and the Second Closing in the circumstances described in Sections 1.8(a) and 1.8(c). The parties agree to use their good faith, reasonable best efforts to reach agreement on forms of amendments to this Agreement as contemplated by this Section 1.8 and each of the Ancillary Agreements and to enter into the Services Agreement, in each case as may be necessary to effect the Initial Closing and the Second Closing on the terms described in this Section 1.8. However, if the parties are unable to agree on any of the terms of such agreements, all issue(s) will be submitted at the request of either party to binding arbitration in accordance with the Expedited Procedures of the American Arbitration Association's Commercial Dispute Resolution Procedures, as amended and effective on July 1, 2002. If arbitration is requested, the Termination Date will be extended if necessary to a date that is thirty (30) days following the issuance of the arbitrator's ruling. -13- ARTICLE II RELATED MATTERS SECTION 2.1 USE OF SPRINT'S NAME AND LOGOS. Except as expressly provided in the Trademark License Agreement, it is expressly agreed that Buyer is not purchasing, acquiring or otherwise obtaining any right, title or interest in the name "Sprint" or any "Sprint" 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 "SELLER TRADENAMES AND LOGOS"). Buyer agrees that neither it nor any of its Affiliates (as hereinafter defined) shall make any use of the Seller Tradenames and Logos from and after the Closing Date except as provided in the Directory Services License Agreement and the Trademark License Agreement. Simultaneously with the Closing, Buyer will cause the corporate name of SPA to be amended to remove any reference to the name "Sprint" or any other name that suggests SPA is a subsidiary of or affiliated with Sprint. SECTION 2.2 NO ONGOING OR TRANSITION SERVICES. Except as provided in the Transition Services Agreement and the Directory Services License Agreement at the Closing, all data processing, accounting, insurance, banking, personnel, legal, communications and other services provided to the Companies by Sellers or any Affiliate of Sellers, including any agreements or understandings (written or oral) with respect thereto, will terminate. SECTION 2.3 CERTAIN PRE-CLOSING MATTERS. (a) The parties agree that Sellers shall have the right, at or prior to the Closing, to cause the Companies to distribute all of the cash held by the Companies to Sellers or their Affiliates on a basis consistent with Sprint's current practice of sweeping all cash on a daily -14- basis. Except as provided in Section 1.4 of this Agreement, no adjustment shall be made to the Purchase Price as a result of any such distributions. (b) Prior to or effective with the Closing, each Company shall assign to Sprint or its Affiliates, and Sprint or its Affiliates shall assume (i) all liabilities of each Company which have accrued on or before, or which are attributable to a Company's acts or omissions on or before, the Closing under each Seller Benefit Plan described in Section 3.14(a) and each other plan, contract, agreement, program, fund or arrangement which would be a Seller Benefit Plan described in Section 3.14(a) but for the fact that no Company has any material liability for the payment of benefits under, or makes material contributions to, such other plan, contract, agreement, program, fund or arrangement, and (ii) retention commitments set forth on SCHEDULE 3.13(d) that are (and shall remain after Closing) the sole responsibility of Sellers and their Affiliates (other than the Companies). (c) Except as expressly provided elsewhere in this Agreement, if, at any time following the Closing, Sellers or their Affiliates receive any cash or other assets belonging to any Company or Buyer, Sellers will, and will cause their Affiliates to, as promptly as practicable, deliver such cash or assets to such Company or Buyer, as applicable. -15- ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS Sellers hereby jointly and severally represent and warrant to Buyer, as of the date of this Agreement and as of the Closing Date, as follows: SECTION 3.1 ORGANIZATION. (a) Each of DAI, CDC and SPA is a corporation duly incorporated, validly existing and in good standing under the laws of the States of Kansas, Delaware and Kansas, respectively. Cendon is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware. Each Company has all requisite power and authority to own, lease and operate its properties and assets and to carry on its business and operations as now being conducted. Each Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property or assets owned, leased or operated by such Company or the nature of the business conducted by such Company makes such qualification necessary, except where the failure to be so duly qualified or licensed and in good standing would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect (as hereinafter defined). SCHEDULE 3.1 sets forth a list of all jurisdictions where each of the Companies is qualified to do business. Sellers have heretofore made available to Buyer complete and correct copies of the certificate of incorporation or articles of incorporation, as the case may be, and by-laws of the Wholly Owned Companies, as currently in effect, and the certificate of formation and limited liability company agreement of Cendon, as currently in effect. (b) As used in this Agreement, a "COMPANY MATERIAL ADVERSE EFFECt" shall mean any event, occurrence, development, state of circumstances or facts, change or effect -16- that has had, or would reasonably be expected to, individually or in the aggregate, have a material adverse effect upon the financial condition, operating results, business, assets or liabilities of the Companies on a consolidated basis; PROVIDED, HOWEVER, that a Company Material Adverse Effect shall not include any event, occurrence, development, state of circumstances or facts, change in or effect upon the financial condition, operating results, business, assets or liabilities of the Companies directly or indirectly arising out of, attributable to or as a consequence of conditions, events or circumstances generally affecting the telephone directory publishing industry, the securities markets or the overall economy (either generally in the U.S. or in one or more of the jurisdictions in which the Companies conduct business). SECTION 3.2 AUTHORIZATION. Sprint is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Kansas. Centel LLC is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware. Each Seller and each of its Affiliates has the power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is a party and perform its respective obligations under this Agreement and the Ancillary Agreements to which it is a party. The execution and delivery of this Agreement and the Ancillary Agreements and the performance by Sellers and its Affiliates of their respective covenants and agreements under this Agreement and the Ancillary Agreements have been duly and validly authorized by the Board of Directors of Sprint and the manager of Centel LLC, and no other proceeding on the part of Sellers, the Wholly Owned Companies, or their shareholders, members or Affiliates is necessary to authorize the execution, delivery and performance of this Agreement and the Ancillary Agreements or the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements. This Agreement has been, and at the Closing the Ancillary Agreements -17- shall be, duly executed and delivered by Sellers and its Affiliates, and this Agreement constitutes, and upon execution and delivery of the Ancillary Agreements, the Ancillary Agreements will constitute, a valid and binding agreement of Sellers and its Affiliates, enforceable against Sellers and its Affiliates, in accordance with their respective terms, except that (a) such enforcement may be subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other laws, now or hereafter in effect, relating to or limiting creditors' rights generally and (b) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. SECTION 3.3 CAPITAL STOCK. SCHEDULE 3.3 sets forth (a) the authorized, issued and outstanding capital stock of each of the Wholly Owned Companies, (b) the outstanding membership interests of Cendon and (c) the owners of the outstanding capital stock and membership interests of the Companies. The Shares and the outstanding capital stock of SPA have been validly issued, are fully paid and non-assessable and are free of preemptive rights of any kind. The membership interests in Cendon have been validly issued and are free of preemptive rights of any kind. There are no shares of capital stock of any Wholly Owned Company held as treasury shares. There are not any outstanding securities convertible into, exchangeable for, or carrying the right to acquire, equity securities of any Company, nor are there any subscriptions, warrants, options, rights or other arrangements or commitments which could obligate any Company to issue any shares of its capital stock or membership or other equity interests. Except for (i) the membership interest in Cendon owned by CDC and (ii) the issued and outstanding shares of capital stock of SPA owned by DAI, none of the Companies owns, directly or indirectly, any capital stock, membership interest or any other equity or debt -18- securities of any corporation, firm, partnership, limited liability company, joint venture, association or other entity. DAI owns no tangible or intangible assets (including properties or rights) other than the capital stock of SPA. SECTION 3.4 OWNERSHIP OF THE CAPITAL STOCK. Sellers and their respective wholly owned subsidiaries shown on SCHEDULE 3.4 as the owners of the outstanding capital stock or membership interests in the Companies have good title to such stock or membership interests, free and clear of all Liens (as hereinafter defined). SECTION 3.5 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and delivery of this Agreement does not, and the execution and delivery of the Ancillary Agreements will not, and the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements will not (a) conflict with or result in any breach of any provision of the governing instruments of Sellers or any of the Companies, (b) except as set forth in SCHEDULE 3.5 and for applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), require any filing with, or the obtaining of any permit, authorization, consent or approval of, or license, qualification or order of, any governmental or regulatory authority, (c) except as set forth in SCHEDULE 3.5, violate, conflict with or result in a default (or any event which, with notice or lapse of time or both, would constitute a default) under, or give rise to any right of termination, cancellation or acceleration under, any of the terms, conditions or provisions of any note, mortgage, other evidence of indebtedness, guarantee, license, agreement, lease or other contract, instrument or obligation to which any Company or Sellers are a party or by which any Company or Sellers or any of their respective assets may be bound or under which any Company receives any benefit, whether or not such Company is a party thereto, including, but not limited to, the Contracts (as hereinafter defined), or (d) violate -19- any order, injunction, decree, statute, rule or regulation applicable to any Company or Sellers, excluding from the foregoing clauses (b), (c) and (d) such requirements, violations, conflicts, defaults or rights (i) which would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect and would not adversely affect the ability of Sellers to consummate the transactions contemplated by this Agreement, or (ii) which become applicable as a result of the business or activities in which Buyer is or proposes to be engaged or as a result of any acts or omissions by, or the status of or any facts pertaining to, Buyer. SECTION 3.6 FINANCIAL STATEMENTS AND UNDISCLOSED LIABILITIES. (a) Sellers have made available to Buyer true and correct copies of the audited combined consolidated balance sheets of the Companies as of December 31, 1999, December 31, 2000, and December 31, 2001, the audited combined consolidated statements of income and cash flows of the Companies for each of the fiscal years then ended, including the notes thereto, and the unaudited combined consolidated balance sheet of the Companies, dated June 30, 2002 (the "INTERIM BALANCE SHEET"), and unaudited combined consolidated statements of income and cash flows of the Companies for the six (6) month period then ended presented on a basis consistent with the year-end audited financial statements. All of the foregoing financial statements are hereinafter collectively referred to as the "FINANCIAL STATEMENTS". Except as disclosed in the Financial Statements, the Financial Statements have been prepared from, and are in accordance with, the books and records of the Companies and present fairly and accurately, in all material respects, the financial position, results of operations and cash flows of the Companies on a combined consolidated basis as of the dates and for the applicable periods indicated, in each case in conformity with GAAP consistently applied except as noted therein. -20- (b) The Companies do not have any liabilities or obligations of any nature (whether accrued, absolute, contingent, unasserted or otherwise) required by GAAP to be reflected on the Financial Statements that would reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect, except (i) as disclosed, reflected or reserved against in the Financial Statements and the notes thereto, (ii) for liabilities and obligations incurred in the Ordinary Course of Business (as hereinafter defined) since December 31, 2001, and (iii) as set forth on SCHEDULE 3.6(b). This representation shall not be deemed breached as a result of a change in law after the Closing Date. The Companies do not have any off-balance sheet financing. SECTION 3.7 ABSENCE OF MATERIAL ADVERSE EFFECT. Except as set forth on SCHEDULE 3.7, since December 31, 2001, each Company has: (a) conducted such Company's business in the Company's ordinary course of business substantially consistent with past practice ("ORDINARY COURSE OF BUSINESS"); (b) not acquired, sold, disposed of, licensed, assigned, transferred or permitted to lapse any material asset other than sales of products and services in the Ordinary Course of Business; (c) maintained accounts receivable, inventory, accounts payable and other working capital accounts in a manner consistent with the Ordinary Course of Business; (d) not pledged or permitted the imposition of any Lien on any of its assets (except, with respect to real property, Permitted Liens); (e) not suffered a Company Material Adverse Effect; -21- (f) not suffered any damage, destruction or loss of tangible assets, whether or not covered by insurance, with a book value in excess of $500,000, in the aggregate with the other Companies; (g) not paid, discharged or satisfied any material claims, liabilities or obligations (absolute, accrued, contingent or otherwise), except in each case in the Ordinary Course of Business; (h) not cancelled any indebtedness for borrowed money or material claim or, except in the Ordinary Course of Business, waived any material claims or rights of substantial value; (i) not granted any material increase in the salaries, wages, fringe benefits or other compensation payable or to become payable to its officers, directors, consultants or employees (including any such increase pursuant to any bonus, severance, termination, pension, profit-sharing or other plan or commitment) or any special increase in the compensation payable or to become payable to any officer, director, consultant or employee, except for (i) normal merit and cost of living increases in the Ordinary Course of Business and (ii) retention commitments that are (and shall remain after Closing) the sole responsibility of Sellers and their Affiliates (other than the Companies); (j) not effected a material write down of any of its material assets; (k) not made any change to its accounting policies except as required by GAAP; (l) except in the Ordinary Course of Business, no Company has (i) acquired any material assets from any Person, (ii) consummated any transaction that is material to the Companies, taken as a whole, or (iii) made any material capital expenditure, or -22- commitment for a material capital expenditure, for additions or improvements to property, plan and equipment; and (m) there has not been any material labor dispute, other than routine individual grievances or, to the Knowledge of Sellers, any material activity or proceeding by a labor union or representative thereof to organize any employees of the Companies or any material lockouts, strikes, slowdowns, work stoppages or, to the Knowledge of Sellers, threats thereof by or with respect to any employees of the Companies. SECTION 3.8 TITLE, OWNERSHIP AND RELATED MATTERS. (a) Real Property. (i) SCHEDULE 3.8(a)(i) sets forth a list of the parcels of real property owned by any Company (together with the fixtures and improvements thereon, the "OWNED REAL PROPERTY"). SCHEDULE 3.8(a)(i) also sets forth a list of the parcels of real property currently leased by any Company (together with all fixtures and improvements thereon, the "LEASED REAL PROPERTY") and collectively with the Owned Real Property, the "REAL PROPERTY"). All properties occupied or used by any Company are owned or leased by such Company and are described on SCHEDULE 3.8(a)(i) or SCHEDULE 3.13. (ii) Except as set forth on SCHEDULE 3.8(a)(ii), each Company has good and marketable, indefeasible fee simple title to its Owned Real Property, free and clear of all liens, mortgages, deeds of trust, pledges, security interests, options to acquire, charges, claims, leasehold interests, tenancies, restrictions and encumbrances of any nature whatsoever (collectively, "LIENS") other than (A) Liens for Taxes not yet due and payable, (B) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and repairmen incurred in the Ordinary Course of Business and not yet delinquent, (C) matters of record set -23- forth on the title insurance policy issued by Lawyer's Title Insurance, dated January 5, 1995 (excluding items 2, 3 and 5 of Schedule B thereto) and (D) zoning, building or other restrictions, variances, covenants, rights of way, encumbrances, easements and other minor irregularities in title, none of such items in (A)-(D) which, individually or in the aggregate, materially and adversely detract from the value of such Owned Real Property based on its current use or interfere in any material respect with the current use or occupancy of such Owned Real Property (collectively, "PERMITTED LIENS"). (iii) Each Company has a valid leasehold interest in the Leased Real Property, free and clear of any Liens except for Permitted Liens. (iv) Except as set forth in SCHEDULE 3.8(a)(iv), the Owned Real Property currently has access to (a) public roads or valid easements over private streets or private property for such ingress to and egress from all such plants, buildings and structures, and (b) water supply, storm and sanitary sewer facilities, telephone, gas and electrical connections, fire protection, drainage and other public utilities, in each case as necessary for the operation or conduct of the business of the Companies as currently conducted. None of the structures on any such property substantially encroaches upon real property of another Person, and no structure of any other Person substantially encroaches upon the Owned Real Property. (v) Such Owned Real Property, and its continued use, occupancy and operation as currently used, occupied and operated, does not constitute a nonconforming use in any material respect under applicable building, zoning, subdivision and other land use and similar laws, regulations and ordinances. Valid certificates of occupancy permitting such uses are in effect with respect to the Owned Real Property. -24- (vi) Except as set forth on SCHEDULE 3.8(a)(vi), no Company has, in the last three years, received written notice of any pending or, to the Knowledge of Sellers, threatened condemnation or eminent domain proceeding with respect to the Owned Real Property or any part thereof. (vii) Except as set forth on SCHEDULE 3.8(a)(vii), there are no material options, rights of first refusal, contracts or other binding obligations granted by any Company for the sale, exchange, leasing, transfer, financing or refinancing of any of the Owned Real Property. (viii) Except as set forth on SCHEDULE 3.8(a)(viii), there are no matters that an accurate and complete survey of the Owned Real Property would disclose that would materially and adversely affect the ability of Buyer or the Companies to use the Owned Real Property as is currently being used or that would materially and adversely affect the value of the Owned Real Property. (ix) No party other than a Company is in possession, or has any possession of, all or any material portion of any of the Real Property. (b) TITLE TO ASSETS. Except as set forth in SCHEDULE 3.8(b), each Company has good and marketable title to its material assets, free and clear of all Liens (except, with respect to the Real Property, Permitted Liens). SECTION 3.9 INTELLECTUAL PROPERTY. (a) As used in this Agreement, (i) "INTELLECTUAL PROPERTY" means any trademarks, trade names, service marks, service names, trade dress (including but not limited to colors and combinations thereof, design graphics, cover graphics, "look and feel" or directory -25- design and package graphics), internet domain names, logos, assumed names, trade secrets, copyrights, patents or any registrations and applications therefor; Computer Software does not constitute Intellectual Property; (ii) "COMPANY OWNED INTELLECTUAL PROPERTY" means any Intellectual Property owned by Sellers or their Affiliates (including the Companies) and necessary for, or used by the Companies in, the operation of the Companies' businesses as currently conducted; (iii) "COMPANY LICENSED INTELLECTUAL PROPERTY" means any Intellectual Property licensed to the Companies and used by the Companies in the operation of the Companies' businesses as currently conducted; and (iv) "COMPANY INTELLECTUAL PROPERTY" means the Company Owned Intellectual Property and the Company Licensed Intellectual Property. (b) To the Knowledge of Sellers, the conduct of the business of the Companies does not infringe upon any Intellectual Property of any third party. Except as disclosed on SCHEDULE 3.9(b)(i), there are no pending, or to the Knowledge of Sellers threatened, proceedings, administrative claims or litigation or other adverse claims by any Person (as hereinafter defined) against the use by the Companies of any material Company Owned Intellectual Property. To the Knowledge of Sellers, there are no pending or threatened, proceedings, administrative claims or litigation or other adverse claims by any Person against the use by the Companies of any material Company Licensed Intellectual Property. SCHEDULE 3.9(b)(ii) sets forth a list of all material Company Owned Intellectual Property other than trade secrets, and SCHEDULE 3.9(b)(iii) sets forth a list of all material Company Licensed Intellectual Property, including a description of the license agreement with respect thereto. There is no material Intellectual Property necessary for, or used by the Companies in, the operation of the Companies' businesses as currently conducted that is not Company Intellectual Property. -26- (c) Each Company owns or has all valid licenses and other rights to use the Company Intellectual Property, except where the failure to have such ownership, licenses or rights would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect. Except as disclosed on SCHEDULE 3.9(c), to the Knowledge of the Sellers, there is no material unauthorized use, disclosure, infringement or misappropriation of any material Company Intellectual Property by any third party, including any employee or former employee of the Company. (d) None of Sellers or any of their Affiliates, including the Companies, is in default in any material respect regarding any of its obligations in respect of protecting or maintaining any material Company Intellectual Property and no Person has asserted any claim in writing delivered to Sellers or their Affiliates to the contrary. SECTION 3.10 COMPUTER SOFTWARE. (a) SCHEDULE 3.10(a) sets forth a true and complete list of: (i) all computer software owned by each of the Companies (the "COMPANY PROPRIETARY Software"), and (ii) all agreements by which the Company licenses computer software (other than off-the-shelf software) (the "COMPANY LICENSED SOFTWARE" and collectively with the Company Proprietary Software the "COMPANY SOFTWARE"). (b) Each Company has all right, title and interest in and to all intellectual property rights in the Company Proprietary Software. The use of the Company Software does not breach in any material respect any terms of any license or other contract between any Company and any third party. Each Company is in compliance in all material respects with the terms and conditions of all license agreements in favor of each Company relating to the Company Licensed Software. -27- (c) To the Knowledge of Sellers, the Company Proprietary Software does not infringe any patent, copyright, trademark or trade secret or any other intellectual property right of any third party. (d) No Company has granted rights in the Company Software to any third party. SECTION 3.11 LITIGATION. SCHEDULE 3.11 identifies (a) all material actions, suits and proceedings pending or, to the Knowledge of Sellers, threatened against any Company by or before any court or governmental or regulatory authority other than workers' compensation claims occurring in the Ordinary Course of Business, and (b) all material investigations by any governmental entity of which a Company has received written notice that are pending or threatened against any Company. None of such actions, suits, proceedings or investigations would reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect. There is (x) no action, suit or proceeding pending by or before any court, governmental or regulatory authority or, to the Knowledge of Sellers, threatened against the Sellers or the Companies, and (y) no investigation by any governmental entity of which a Company has received notice that is pending or, to the Knowledge of Sellers, threatened against the Sellers or the Companies, which challenges the validity of this Agreement or any Ancillary Agreement or which would be reasonably likely to adversely affect or restrict Sellers' ability to consummate the transactions contemplated by this Agreement or any Ancillary Agreement or that would reasonably be expected to result in a failure of the condition set forth in Sections 6.1(d) or 6.2(d). None of the Companies are in default with respect to or subject to any order, judgment, decision, decree, injunction or ruling of any federal, state, or local court or governmental agency, department or authority, except for such defaults that would not -28- reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect. SECTION 3.12 COMPLIANCE WITH APPLICABLE LAW. Except as disclosed on SCHEDULE 3.12, each Company has been in compliance in all material respects with all applicable laws, ordinances, rules and regulations of any federal, state, local or foreign governmental authority applicable to such Company or its operations, including without limitation any Environmental Law, except for instances of noncompliance that would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect. None of Sellers or the Companies has received any written communication from any governmental entity that alleges a Company is not currently in compliance in any material respect with any such laws, ordinances, rules or regulations. SECTION 3.13 CERTAIN CONTRACTS AND ARRANGEMENTS. SCHEDULE 3.13 sets forth a list of the following contracts, agreements or binding arrangements (whether written or oral) to which any Company is a party or by which it or any of its material properties or assets are bound: (a) all bonds, debentures, notes, loans, credit or loan agreements or loan commitments, mortgages, security agreements, pledges, indentures, guarantees or other contracts relating to the borrowing of money or binding upon any properties or assets (real, personal or mixed, tangible or intangible) of each Company; (b) all leases relating to the Leased Real Property or other leases or licenses involving any properties or assets (whether real, personal or mixed, tangible or intangible) involving an annual commitment or payment of more than $250,000 individually by a Company or in the aggregate with other Companies; (c) all contracts or agreements which limit or restrict a Company or any officers or key employees of a Company from engaging in any business in any jurisdiction; (d) any contract that provides for an increased or changed payment -29- or benefit, or accelerated vesting, upon the execution of this Agreement or the Closing or in connection with the transactions contemplated by this Agreement (including any severance, retention or golden parachute agreement); (e) any contract or agreement granting any third party a Lien on all or any part of the assets of the Companies; (f) any contract or agreement with any agent, distributor or representative which is not terminable without penalty on thirty (30) calendar days' or less notice; (g) any joint venture or partnership contract or other contract providing for the sharing of any profits; (h) any deferred compensation, retirement incentive bonus, severance retention or written employment agreement; (i) any contract or agreement with Sellers or any Affiliates of Sellers; and (j) each existing contract and commitment (other than those described in subsections (a) through (i) of this Section 3.13) to which any Company is a party or by which its assets are bound (A) involving an annual commitment or annual payment to or from a Company of more than $250,000 individually or in the aggregate with other Companies or (B) that is material to the business of the Companies as presently conducted (together with those contracts, agreements and understandings described in clauses (a) through (j), the "CONTRACTS"). Except as set forth on SCHEDULE 3.13, Sellers have made available to Buyer true and correct copies of all Contracts. All such Contracts are in full force and effect and are valid, binding and enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including concepts of materiality, reasonableness, good faith and fair dealing regardless of whether considered in a proceeding in equity or at law, and neither the applicable Company nor, to the Knowledge of Sellers, any other party thereto is in material default or breach under any of such Contracts. None of Sellers or any Company has exercised any right to terminate, or has -30- received any notice that any party to a Contract has exercised any right to terminate, such Contract (other than Contracts listed on SCHEDULE 3.13 which will be terminated at Closing). To the Knowledge of Sellers, no event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default or breach in any material respect under any Contract, except for such events or defaults that would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect. SECTION 3.14 EMPLOYEE BENEFIT PLANS; ERISA. (a) IDENTIFICATION. Each "employee benefit plan" (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, ("ERISA")) which provides benefits to current or former employees of any Company in their status as such (individually a "SELLER ERISA PLAN" and collectively the "SELLER ERISA PLANS") and each other employment, severance, golden parachute, retention, salary continuation, bonus, incentive, stock option, retirement, pension, profit sharing or deferred compensation plan, contract, agreement, program, fund or arrangement of any kind (whether written or oral, tax-qualified or non-tax qualified, funded or unfunded, foreign or domestic, active or frozen or terminated) and any related trust, insurance contract, escrow account or similar funding arrangement which provides benefits to any current or former officer, employee or director of, or any individual independent contractor who has provided or who currently provides services to, any Company to which, or with respect to which, such Company has a material liability for the payment of benefits or makes material contributions is shown on Schedule 3.14 (individually a "SELLER BENEFIT PLAN" and, together with the Seller ERISA Plans, collectively the "SELLER BENEFIT PLANS"), and there are no "employee benefit plans" (as defined in Section 3(3) of ERISA) which provide benefits to any current or former employees of any Company (in their status as such) and no other employment, -31- severance, golden parachute, retention, salary continuation, bonus, incentive, stock option, retirement, pension, profit sharing or deferred compensation plans, contracts, agreements, programs, funds or arrangements of any kind (whether written or oral, tax-qualified or non-tax qualified, funded or unfunded, foreign or domestic, active or frozen or terminated) or any related trusts, insurance contracts, escrow accounts or similar funding arrangements which provide benefits to current or former officers, employees or directors of, or individual independent contractors who have provided or who currently provide services to, any Company to which, or with respect to which, any Company has a material liability for the payment of benefits or makes material contributions except for the Seller Benefit Plans. (b) COMPLIANCE AND SPONSORSHIP. (i) Sprint is responsible for the administration of each of the Seller ERISA Plans and, except as set forth on SCHEDULE 3.14, each of the Seller ERISA Plans has been administered by Sprint in compliance in all material respects with ERISA, the Code and all other applicable laws, (ii) each Seller ERISA Plan is sponsored and maintained by Sprint for the benefit of eligible employees of each Company, Sprint and each other employer (other than a Company) which together with Sprint is treated under Section 414(b), Section 414(c) or Section 414(m) of the Code or Section 4001(b)(1) of ERISA as a "single employer" of such eligible employees (an "ERISA AFFILIATE"), (iii) there are two Seller ERISA Plans and two other defined contribution plans (as defined in Section 414(i) of the Code) maintained by Sprint that are intended to be "qualified" plans within the meaning of Section 401(a) of the Code, and each such plan has a favorable determination letter from the Internal Revenue Service to the effect that it is so qualified and, if the letter for such a plan is not current, such plan is the subject of a timely request for a current favorable determination letter, (iv) there is one Seller ERISA Plan which is subject to Title IV of ERISA, and no ERISA Affiliate has any -32- obligations or liabilities with respect to any other plan which is subject to Title IV of ERISA, (v) no Seller ERISA Plan is a multiemployer plan (as defined in Section 4001(a)(3) of ERISA), and neither Sprint nor any Company or ERISA Affiliate has any obligations or liabilities with respect to any multiemployer plan, and (vi) there are no pending or, to the Knowledge of Sellers, threatened material claims (other than routine claims for benefits) by, on behalf of or against any of the Seller Benefit Plans or any trusts, insurance contracts, escrow accounts or similar funding arrangements which are a part of such plans except as set forth on SCHEDULE 3.14. (c) COPIES. Sellers have (i) furnished or made available to Buyer a true, complete and correct copy of each Seller Benefit Plan which is set forth in writing and the current summary plan description of each Seller Benefit Plan that is subject to ERISA, (ii) furnished or made available a copy of the description of each other Seller Benefit Plan which is currently provided to participants in such plan and (iii) set forth in Schedule 3.14 a summary of the material terms of each Seller Benefit Plan that is not set forth in writing. (d) ADEQUATE FUNDING. With respect to each Seller Benefit Plan that is subject to Section 302 of ERISA or Section 412 of the Code, (i) no "accumulated funding deficiency" (within the meaning of Section 302 of ERISA or Section 412 of the Code) exists with respect to such plan, (ii) no waiver of the minimum funding standards of Section 302 of ERISA or Section 412 of the Code is in effect with respect to such plan and (iii) there is no lien in favor of such plan under Section 302(f) of ERISA or Section 412(n) of the Code. (e) NO PROHIBITED TRANSACTIONS OR FIDUCIARY BREACHES. With respect to each Seller Benefit Plan that is subject to Section 406 of ERISA or Section 4975 of the Code, there have been no non-exempt "prohibited transactions" (within the meaning of Section 406 of ERISA or Section 4975 of the Code) or breaches of any of the duties imposed by ERISA on -33- Sprint, a Company or an ERISA Affiliate or, to the Knowledge of Sellers, any other fiduciary (within the meaning of Section 3(21) of ERISA) at any time that could result in any material liability or excise tax under ERISA or the Code being imposed on any Company. (f) NO CHANGE IN CONTROL LIABILITIES. No Company has any obligation under any retention, stay-put, change in control or similar purpose agreement to make any payments to any officer, employee or director of such Company or to any individual independent contractor who has provided or who currently provides services to such Company or to make nonforfeitable any otherwise forfeitable benefits (except as provided in Section 5.14) as a result of the execution of this Agreement or the Closing of the transaction contemplated by this Agreement. SECTION 3.15 LABOR MATTERS. Each Company is in compliance with all federal and state laws respecting employment and employment practices, terms and conditions of employment, wages and hours, and is not engaged in any unfair labor or unlawful employment practice, the violation of or engagement in which would reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect. Except as set forth on SCHEDULE 3.15, there are no controversies pending or, to the Knowledge of the Sellers, threatened, between either Company and any of its employees, which controversies have had or would reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect. Except as set forth on SCHEDULE 3.15, none of the Companies is a party to any collective bargaining agreement or other labor union contract applicable to Persons employed by such Company. There are no unfair labor practice complaints pending against any Company before the National Labor Relations Board. There are no strikes, slowdowns, work stoppages, lockouts or, to the Knowledge of Sellers, threats thereof, by or with respect to any employees of -34- any Company. To the Knowledge of Sellers (which for this purpose only will exclude the knowledge of any officer of the Companies), except as set forth on SCHEDULE 3.15 or as required by Section 1.6(b), no officer of any Company has indicated as of the date hereof that he or she intends to resign from his or her capacity as an employee or retire as a result of the transactions contemplated by this Agreement. To the Knowledge of Sellers, except as set forth on SCHEDULE 3.15 or as required by Section 1.6(b), no director-level employee of any Company has indicated as of the date hereof that he or she intends to resign from his or her capacity as an employee or retire as a result of the transactions contemplated by this Agreement. SECTION 3.16 TAXES. (a) Either Sellers or the applicable Company (i) has timely filed or caused to be filed on a timely basis with the appropriate taxing authorities all material Tax Returns (as hereinafter defined) required to be filed by, with respect to or which are required to include the income or other information from the Companies, and (ii) has paid or made adequate provision for the payment of all Taxes (as hereinafter defined) shown to be due on such Tax Returns. Such Tax Returns are true, correct and complete in all material respects. (b) Except as set forth on SCHEDULE 3.16, (i) there are no liens for Taxes with respect to the assets of any Company (except for statutory liens for current taxes not yet delinquent) and no material claims with respect to Taxes have been asserted by any taxing authority in writing, (ii) none of the Tax Returns applicable to any Company are currently being audited or examined by any taxing authority, (iii) there is no material unpaid tax deficiency, determination or assessment currently outstanding against any Company, (iv) there are no outstanding agreements or waivers extending the statute of limitations relating to the assessment of Taxes applicable to any Company, (v) neither the applicable Company nor Sellers on behalf of -35- such Company have filed a consent pursuant to Section 341(f) of the Code, (vi) no taxing authority has claimed (A) since January 1, 1996 that any Wholly Owned Company should have filed any Tax Return that has not been filed or (B) since July 1, 2000 that CenDon should have filed any Tax Return that has not been filed, (vii) no closing agreement pursuant to Section 7121 of the Code (or any predecessor provision) or any similar provision of any state, provincial, local or foreign law has been entered into (A) since January 1, 1996 by or with respect to any Wholly Owned Company or any assets thereof or (B) since July 1, 2000 by or with respect to CenDon or any assets thereof, and (viii) no Company is currently required to include in income any adjustment pursuant to Section 481(a) of the Code (or similar provisions of other laws or regulations) in its current or in any future taxable period by reason of a change in accounting method. (c) As used in this Agreement: (i) "TAXES" shall mean all taxes, levies, charges, fees, duties or other assessments including income, corporation, advance corporation, gross receipts, transfer, excise, property, sales, use, value-added, license, payroll, pay-as-you-earn, withholding, social security and franchise or other governmental taxes or charges, imposed by the United States or any state, county, local or foreign government, and such term shall include any interest, penalties or additions attributable to such taxes; and (ii) "TAX RETURN" shall mean any report, return, declaration, claim for refund, information return or statement in connection with Taxes, including any schedule or attachment thereto, and including any amendment thereof. -36- SECTION 3.17 ENVIRONMENTAL. Except as set forth on SCHEDULE 3.17: (a) Each Company possesses, and is in compliance with, all material permits, licenses and government authorizations relating to protection of the environment, pollution control and hazardous materials ("ENVIRONMENTAL LAWS") applicable to such Company. (b) None of the Companies, Sellers or any Affiliates of Sellers have received notice that any Company is subject to any pending or, to the Knowledge of Sellers, threatened claim incurred or imposed or based upon any provision of any Environmental Law which claims, if adversely resolved, would reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect. (c) Prior to the date of this Agreement, Sellers have delivered to Buyer all environmental investigations, studies, audits, tests, reviews or analyses conducted during the five years prior to the date of this Agreement by or on behalf of any Company, any Seller or any Affiliate of any of them (or, to the Knowledge of Sellers, by a third party) in relation to the business conducted by the Companies or any property or facility currently owned or leased by the Companies, which is in the possession of any Company, any Seller or any Affiliate of any of them. SECTION 3.18 OFFICERS. SCHEDULE 3.18 lists each of the directors and officers (or equivalent positions) of the Companies and all of the accounts (and signatories thereto) of the Companies with any bank, brokerage firm or other financial institution or depository. SECTION 3.19 CERTAIN FEES. None of the Companies will have any liability for any financial advisory or finders' fees in connection with this Agreement or the transactions contemplated hereby. -37- SECTION 3.20 SUFFICIENCY OF ASSETS. Except as set forth on SCHEDULE 3.20, the tangible and intangible assets (including properties and rights) of the Companies, together with the rights to be granted and the services to be provided pursuant to the Ancillary Agreements, are sufficient for the conduct of the business of the Companies immediately following the Closing in substantially the same manner as currently conducted. SECTION 3.21 PERMITS. (a) SCHEDULE 3.21 sets forth all material certificates, licenses, permits, authorizations and approvals ("PERMITS") issued or granted to the Companies by governmental entities that are necessary or desirable for the operation or conduct of the business of the Companies. All such Permits are valid and in full force and effect, and the Companies have complied in all material respects with all terms and conditions thereof. During the past 12 months, no Company has received notice of any proceedings relating to the revocation, default or modification of any such Permits. This Section 3.21 does not apply to environmental matters, which are the subject of Section 3.17. (b) The Companies possess all Permits to own or hold under lease and operate the assets owned by the Companies and to conduct the business of the Companies as currently conducted, other than such Permits the absence of which would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect. SECTION 3.22 AFFILIATES ENGAGED IN THE BUSINESS. The parties identified collectively as "Sprint LTD" in the Directory Services License Agreement constitute all of the Affiliates of Sprint that, as of the date hereof and as of the Closing, provide wireline local telephone service. -38- ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer hereby represents and warrants to Sellers, as of the date of this Agreement and as of the Closing, as follows: SECTION 4.1 ORGANIZATION AND AUTHORITY OF BUYER. Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Buyer has the corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is a party and perform its obligations under this Agreement and the Ancillary Agreements to which it is a party. The execution and delivery of this Agreement and the Ancillary Agreements and the performance by Buyer of its covenants and agreements under this Agreement and the Ancillary Agreements to which it is a party have been duly and validly authorized by the Board of Directors of Buyer, and no other corporate proceedings on the part of Buyer are necessary to authorize the execution, delivery and performance of this Agreement or any of the Ancillary Agreements or the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements. This Agreement has been and at the Closing the Ancillary Agreements will be duly executed and delivered by Buyer and this Agreement constitutes, and upon execution and delivery of the Ancillary Agreements, the Ancillary Agreements will constitute a valid and binding agreement of Buyer, enforceable against such party in accordance with their respective terms, except that (a) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including concepts of materiality, reasonableness, good faith and fair dealing regardless of whether considered in a proceeding in equity or at law, and (b) the -39- remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. SECTION 4.2 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and delivery of this Agreement does not, and the execution and delivery of the Ancillary Agreements will not, and the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements will not (a) conflict with or result in any breach of any provision of the organizational documents of Buyer, (b) except as set forth in SCHEDULE 4.2 and for applicable requirements of the HSR Act, require any filing with, or the obtaining of any permit, authorization, consent or approval of, any governmental or regulatory authority or third party, (c) violate, conflict with or result in a default (or any event which, with notice or lapse of time or both, would constitute a default) under, or give rise to any right of termination, cancellation or acceleration under, any of the terms, conditions or provisions of any note, mortgage, other evidence of indebtedness, guarantee, license, agreement, lease or other contract, instrument or obligation to which Buyer is a party or by which Buyer or any of its assets may be bound or under which Buyer receives any benefit, whether or not Buyer is a party thereto, or (d) violate any order, injunction, decree, statute, rule or regulation applicable to any Buyer, excluding from the foregoing clause (c) such requirements, violations, conflicts, defaults or rights which would not reasonably be expected to adversely affect or restrict the ability Buyer to consummate the transactions contemplated by this Agreement or any Ancillary Agreement (a "BUYER MATERIAL ADVERSE EFFECT"). SECTION 4.3 LITIGATION. There is (a) no action, suit or proceeding pending by or before any court or governmental or regulatory authority or, to the Knowledge of Buyer, -40- threatened against Buyer, and (b) no investigation by any governmental entity of which Buyer has received written notice that is pending or, to the Knowledge of Buyer, threatened against Buyer, in either case which challenges the validity of this Agreement or any Ancillary Agreement or which would reasonably be expected to, individually or in the aggregate, have a Buyer Material Adverse Effect. Buyer is not in default with respect to or subject to any order, judgment, decision, decree, injunction or ruling of any federal, state, or local court or governmental agency, department or authority which challenges the validity of this Agreement or any Ancillary Agreement or which would reasonably be expected to, individually or in the aggregate, have a Buyer Material Adverse Effect. SECTION 4.4 CERTAIN FEES. Except for the engagement of Bear Stearns & Co., Inc. and Morgan Stanley & Co., Inc. (the fees and expenses of each which will be borne solely by Buyer), neither Buyer nor any of its Affiliates has employed any financial advisor or finder or incurred any liability for any financial advisory or finders' fees in connection with this Agreement or the transactions contemplated by this Agreement. SECTION 4.5 INVESTMENT REPRESENTATIONS. Buyer is acquiring the Shares solely for the purpose of investment and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable securities laws. SECTION 4.6 SUFFICIENT FUNDS. Buyer has prior to the date hereof delivered to Sellers true, complete and correct copies of executed commitment letters from certain lenders (the "DEBT FINANCING COMMITMENTS") committing such lenders to provide to Buyer debt financing for, among other things, the transactions contemplated by this Agreement in an aggregate amount of $2,425,000,000, subject to the terms and conditions set forth therein and (b) true, complete and correct copies of definitive agreements from certain equity investors, -41- committing them to provide to Buyer equity financing in an aggregate amount of $200,000,000, subject to the terms and conditions set forth therein (the "EQUITY COMMITMENTS" and, together with the Debt Financing Commitments, the "FINANCING COMMITMENTS"). As of the date hereof, the Financing Commitments are in full force and effect, have not been withdrawn or terminated, and Buyer has no reason to believe that any Financing Commitment will not lead to the financing contemplated by such Financing Commitment. The financing contemplated by the Financing Commitments constitute all of the financing required to be provided by Buyer for the consummation of the transactions contemplated by this Agreement and the payments of all fees and expenses incurred by Buyer in connection therewith. ARTICLE V COVENANTS SECTION 5.1 CONDUCT OF THE COMPANIES' BUSINESS. Sellers agree that, during the period from the date of this Agreement to the Closing, except as otherwise expressly permitted or required by this Agreement, SCHEDULE 5.1 or consented to by Buyer in writing, each Company shall and Sellers shall cause each Company: (a) to conduct its business operations in the Ordinary Course of Business; (b) to use reasonable efforts to (i) maintain and preserve its business operations, (ii) retain the services of its employees, except for attrition of such employees in the Ordinary Course of Business, and (iii) maintain, preserve and retain relationships with its suppliers and customers; -42- (c) not to acquire, sell, dispose of, license, assign or transfer or permit to lapse any material business, assets or property, except in the Ordinary Course of Business; (d) not to amend its governing instruments; (e) not to incur any indebtedness for borrowed money except in the Ordinary Course of Business, or guarantee any indebtedness for borrowed money of another Person; (f) not to change its accounting policies, except as required by GAAP; (g) not to grant any material increase in the salaries, wages, fringe benefits or other compensation payable or to become payable to its officers, directors, consultants or employees (including any such increase pursuant to any bonus, severance, termination, pension, profit-sharing or other plan or commitment) or any special increase in the compensation payable or to become payable to any officer, director, consultant or employee, except for (i) normal merit and cost of living increases in the Ordinary Course of Business or as may be required under existing agreements and (ii) retention commitments that are (and shall remain after Closing) the sole responsibility of Sellers and their Affiliates (other than the Companies); (h) not to terminate or make any material change in any Contract or Permit, except in the Ordinary Course of Business; (i) not to enter into any material contract except in the Ordinary Course of Business; (j) maintain accounts receivable, inventory, accounts payable and other working capital accounts in a manner consistent with the Ordinary Course of Business; -43- (k) not pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, contingent or otherwise), except in each case in the Ordinary Course of Business; (l) not cancel any indebtedness for borrowed money or material claim or, waive any material claims or rights of substantial value, except in the Ordinary Course of Business; (m) not to merge or consolidate with any other Person; (n) with respect to any sales campaign begun more than 14 days after the date hereof, not to implement the "value summit" business plan; (o) not to make any material change to the Current Practices (as defined in the Directory Services License Agreement); and (p) not to enter into any written agreement to do any of the foregoing. SECTION 5.2 ACCESS TO INFORMATION. (a) Between the date of this Agreement and the Closing, Sellers shall (i) give, and shall cause the Companies to give, Buyer and its authorized representatives reasonable access to all books, records, offices and other facilities and properties of, and relating to, the Companies and to the Companies' management, (ii) permit Buyer to make such inspections thereof as Buyer may reasonably request, (iii) cause the officers of the Companies to furnish Buyer with such financial and operating data and other information with respect to the business and properties of the Companies as Buyer may from time to time reasonably request subject to Section 5.2(b), and (iv) cooperate in good faith with Buyer's efforts to plan for the post-Closing integration of its business with the business of the Companies; PROVIDED, HOWEVER, that any such access or inspection shall be provided during normal business hours under the -44- supervision of Sellers' personnel and in such a manner as to maintain the confidentiality of this Agreement and the transactions contemplated by this Agreement and not interfere unreasonably with the business operations of Sellers or the Companies. (b) All information concerning Sellers or the Companies furnished or provided by Sellers or their Affiliates to Buyer or its representatives (whether furnished before or after the date of this Agreement) shall be held subject to the confidentiality agreements by and between Sprint (or its representatives) and Buyer dated as of May 15, 2002 (the "CONFIDENTIALITY AGREEMENT"). (c) Prior to Closing, Sellers shall provide to Buyer access to the Owned Real Property, and shall use commercially reasonable efforts to provide access to the Leased Real Property, for the performance of non-invasive Phase I environmental site assessments or transaction screens as part of Buyer's environmental assessment of the Real Property. (d) Sellers shall cooperate with Buyer with respect to obtaining title insurance relating to the Owned Real Property, including delivering, prior to Closing, such affidavits of title and possession, gap undertakings, non-imputation affidavits or similar documents in form or substance as may be reasonably required by a reputable title company licensed to do business in Tennessee selected by Buyer. (e) Promptly following the end of each fiscal quarter or year that ends prior to Closing, Sellers shall provide Buyer with quarter-end or audited year-end combined consolidated balance sheets of the Companies as of such quarter-end or year-end and combined consolidated statements of income and cash flows of the Companies for the year to date period then ended, presented on a basis consistent with the 2001 year-end audited financial statements -45- together with a SAS 71 report thereon from Sellers' independent accountants (for quarterly statements) and an opinion of Sellers' independent accountants (for year-end statements). In addition, on or prior to October 11, 2002, Sellers shall provide Buyer with a SAS 71 report from Sellers' independent accountants with respect to the June 30, 2002 financial statements referenced in Section 3.6, provided that Sellers will use their commercially reasonable efforts to provide such report to Buyer on or prior to October 4, 2002. Sellers will cooperate with Buyer in preparing, and will provide all information reasonably requested by Buyer for inclusion in, any offering document, Form 8-K or other Exchange Act filing to be incorporated by reference into a registration statement in connection therewith prepared in connection with the financings contemplated by the Commitment Letters. Buyer shall reimburse Sellers for all reasonable third party costs and expenses incurred by Sellers in connection with the fulfillment of its obligations under this Section 5.2. Any financial statements provided to Buyer pursuant to this Section 5.2 will be deemed to be included in the definition of "Financial Statements" for all purposes of Section 3.6. (f) Notwithstanding the above, nothing contained in this Section 5.2 or the Confidentiality Agreement will preclude any party from making any disclosures it determines in good faith to be required by law, regulation or listing agreement with or rules of any national securities exchange or national trading system or necessary and proper in conjunction with the filing of any tax return or other document required to be filed with any federal, state or local governmental body, authority or agency or sent to potential investors in connection with the financings contemplated by the Financing Commitments; PROVIDED, HOWEVER, that the party required to make the release or statement shall, if practicable under the -46- circumstances, allow the other party reasonable time to comment on such release or statement in advance of such issuance. (g) Between the date of this Agreement and the Closing Date, Sellers shall permit Buyer's senior officers to meet with the Assistant Controller of Sprint and officers of the Companies responsible for the Financial Statements, the internal controls of the Companies and the disclosure controls and procedures of the Companies to discuss such matters as Buyer may deem reasonably necessary or appropriate for Buyer to satisfy its obligations under Sections 302 and 906 the Sarbanes-Oxley Act of 2002 and any rules and regulations relating thereto. SECTION 5.3 CONSENTS. (a) Each of Sellers and Buyer shall cooperate, and use its reasonable best efforts, to (i) make all filings (including without limitation all filings required under the HSR Act) and obtain all licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and other third parties necessary to consummate the transactions contemplated by this Agreement and the Ancillary Agreements, including the foregoing required with respect to the items identified in SCHEDULE 3.5 and (ii) obtain new written contracts between the third parties to the Group Contracts and the Companies ("NEW CONTRACTS") that will provide for substantially the same continued benefits to the Companies as are currently provided to the Companies pursuant to the Group Contracts; PROVIDED, HOWEVER, that neither Seller nor Buyer shall be required to pay or agree to pay any compensation to the third parties to New Contracts or other contracts requiring consent or approval in exchange for such third parties' agreement to enter into a New Contract or provide such consent or approval. "GROUP CONTRACTS" means the contracts listed on SCHEDULE 5.3(a). In addition to the foregoing, Buyer -47- agrees to provide such security and assurances as to financial capability, resources and creditworthiness as may be reasonably requested by any governmental authority or other third party whose consent, approval or New Contract is sought in connection with the transactions contemplated hereby. (b) With respect to any Contracts for which any required consent or approval is not obtained, or New Contract that is not entered into, prior to the Closing (collectively, "THIRD PARTY APPROVAL CONTRACTS"), Sellers and Buyer shall each use their reasonable best efforts to obtain any such consent or approval or New Contract after the Closing Date until such consent or approval or New Contract has been obtained; PROVIDED, HOWEVER, that neither Seller nor Buyer shall be required to pay or agree to pay any compensation to the third parties to New Contracts or other contracts requiring consent or approval in exchange for such third parties' agreement to enter into a New Contract or provide such consent or approval. (c) To the extent that the consents or approvals or New Contracts referred to in clause (a) above are not obtained prior to the Closing, Sellers will use commercially reasonable efforts to (i) provide to the Companies, at its request, the benefits of any such Third Party Approval Contracts, (ii) cooperate in any reasonable and lawful arrangement designed to provide the benefits of such Third Party Approval Contracts to the Companies, and (iii) enforce, at the request and for the account of the Companies, any rights of the Seller Affiliates that are parties to such Third Party Approvals Contract against the other party or parties thereto arising under such Third Party Approvals Contract. Buyer will comply with all reasonable requests of the Sellers for cooperation in connection with the performance of Sellers' obligations under this Section 5.3(c). -48- (d) Without limiting any other provision hereof, each of the Sellers and Buyer shall, as promptly as practicable, but in no event later than twenty business days following the execution and delivery of this Agreement, file with the United States Federal Trade Commission (the "FTC") and the United States Department of Justice (the "DOJ") the notification and report form, if any, required for the transactions described herein and any supplemental information requested in connection therewith pursuant to the HSR Act. Any such notification and report form and supplemental information shall be in substantial compliance with the requirements of the HSR Act. Each of Sellers and Buyer shall furnish to the other such necessary information and reasonable assistance as the other may request in connection with its preparation of any filing or submission that is necessary under the HSR Act. Sellers and Buyer shall keep each other apprised of the status of any communications with, and any inquiries or requests for additional information from, the FTC and the DOJ and shall comply promptly with any such inquiry or request. SECTION 5.4 REASONABLE BEST EFFORTS. (a) Each of Sellers and Buyer shall cooperate and use its reasonable best efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations or otherwise to consummate the transactions contemplated by this Agreement. (b) Buyer will promptly notify Sellers of any proposal by any of the institutions party to a Financing Commitment to withdraw, terminate or make a material change in the amount or terms of such Financing Commitment that could reasonably be expected to adversely affect the ability of Buyer to consummate the financing contemplated by such Financing Commitment in accordance with its terms. In addition, upon Sellers' reasonable -49- request, Buyer shall advise and update Sellers, in a level of detail reasonably satisfactory to Sellers, with respect to the status, proposed closing date, and material terms of the Financing Commitments. Buyer shall not consent to any amendment, modification or early termination of any Financing Commitment that could reasonably be expected to adversely affect the ability of Buyer to consummate the transactions contemplated by this Agreement. (c) Buyer shall, and shall cause its Affiliates to, use reasonable best efforts to (i) maintain the effectiveness of the Financing Commitments in accordance with their terms, (ii) enter into definitive documentation with respect to the Debt Financing Commitments on the terms contained in the Debt Financing Commitments, (iii) satisfy all funding conditions to the Financing Commitments set forth in the definitive documentation with respect to the financing contemplated by the Financing Commitments, (iv) consummate the financing contemplated by the Financing Commitments (including by extension of the Financing Commitments on substantially equivalent or better terms or, if the Financing Commitments expire, obtaining alternative financing in an aggregate principal amount equal to the amounts set forth in, and on terms substantially equivalent to or better than the terms of, the Financing Commitments), including by drawing on the "Senior Subordinated Facility" and the "Senior Secured Credit Facility" (as such terms are defined in the Debt Financing Commitment Letters) prior to the expiration of the Debt Financing Commitments if the other conditions to Buyer's obligations to close set forth in Sections 6.1 and 6.3 have been satisfied or waived and (v) perform its obligations under the Financing Commitments. (d) Sellers will promptly notify Buyer of any proposal, whether formal or informal, by any state or federal governmental agency with jurisdiction over local telecommunications services or local telecommunications companies to assert jurisdiction over -50- all or any part of the transactions that are the subject matter of this Agreement, including but not limited to, (i) any proposal to require approval, consent or permission of such governmental agency to any part of the transactions which are the subject matter of this Agreement, (ii) any proposal that, individually or in the aggregate, may have a material adverse effect on the business of Sprint's Local Telecommunications Division, and (iii) any proposal that, individually or in the aggregate, may have a material adverse effect on the proceeds Sprint expects to receive from the transactions contemplated by this Agreement (each, a "REGULATORY PROPOSAL"). In addition, Sellers shall advise and update Buyer, in a level of detail reasonably satisfactory to Buyer, with respect to the status of any such Regulatory Proposal, including any formal or informal proceedings before such governmental agency with respect to the Regulatory Proposal. Sellers will promptly notify Buyer if Sellers consent to (i) the jurisdiction of any such governmental agency with respect to the transactions that are the subject of this Agreement or (ii) any order, decree, judgment or finding of such governmental agency with respect to the transactions that are the subject matter of this Agreement. (e) Sellers shall, and shall cause their Affiliates to, use reasonable best efforts to defeat any assertion of jurisdiction and any Regulatory Proposal and to obtain any necessary approvals, consents or permissions in response to any Regulatory Proposal, including but not limited to the timely initiation and prosecution of proceedings for injunctive relief, mandamus or other appropriate remedies in a court of competent jurisdiction, the initiation and prosecution of any available proceedings for appellate review of any order, decree, judgment or finding of such governmental agency or, if applicable, the prompt filing of any necessary applications with respect to such Regulatory Proposals. Sellers will forward to Buyer all copies of any material correspondence sent by it or its representatives or received by it from any -51- governmental authority regarding the transactions contemplated by this Agreement or a Regulatory Proposal. (f) Each of Sellers and Buyer shall negotiate in good faith to identify the MIS Services (as defined in the Transition Services Agreement) to be provided to Buyer under the Transition Services Agreement and the pricing therefor under the Transition Services Agreement. SECTION 5.5 PUBLIC ANNOUNCEMENTS. Except as otherwise agreed to by the parties, the parties shall not issue any report, statement or press release or otherwise make any public statements with respect to this Agreement and the transactions contemplated by this Agreement, except as in the reasonable judgment of the party may be required by law or any listing agreement with, or the rules of, any national securities exchange or national trading system. Upon the execution of this Agreement and the Closing, Sellers and Buyer will consult with each other with respect to the issuance of a joint report, statement or press release with respect to this Agreement and the transactions contemplated by this Agreement. SECTION 5.6 COVENANT TO SATISFY CONDITIONS. Sellers will use their reasonable best efforts to ensure that the conditions set forth in Article VI of this Agreement are satisfied, to the extent such matters are within the control of Sellers, and Buyer will use its reasonable best efforts to ensure that the conditions set forth in Article VI of this Agreement are satisfied to the extent such matters are within the control of Buyer. Sellers and Buyer further covenant and agree, with respect to a threatened or pending preliminary or permanent injunction or other order, decree or ruling or statute, rule, regulation or executive order that would adversely affect the ability of the parties to consummate the transactions contemplated by this Agreement, to use -52- their reasonable best efforts to prevent or lift the entry, enactment or promulgation thereof, as the case may be. SECTION 5.7 CERTAIN TAX MATTERS. (a) CERTAIN DEFINITIONS. As used in this Agreement: (i) "PRE-CLOSING PERIOD" means any taxable period, including that portion of any Straddle Period, which ends on or before the Closing Date; (ii) "SECTION 338(h)(10) ELECTION" means the election to be made by Buyer and Sprint pursuant to Section 338(h)(10) of the Code, as described in Section 5.7(b) of this Agreement; (iii) "SECTION 754 ELECTION" means the election to be made by Cendon pursuant to Section 754 of the Code, as described in Section 5.7(b)(ii) of this Agreement; and (iv) "STRADDLE PERIOD" means any taxable period that includes (but does not end on) the Closing Date. (b) SECTION 338(h)(10) AND SECTION 754 ELECTIONS. (i) Sprint will join with Buyer in making the Section 338(h)(10) Election to treat the transaction hereunder as the deemed sale of the assets of the Wholly Owned Companies for federal and, to the extent applicable, state and local income tax purposes. Buyer will determine an allocation of the "ADSP" (as defined in Treasury Regulation secs. 1.338-4 and 1.338(h)(10)-1) among the assets of the Companies pursuant to the applicable Treasury Regulations under Section 338 of the Code; PROVIDED, HOWEVER, that the Allocation will include an allocation of ADSP to any amounts receivable by any of the -53- Companies without regard to whether such receivables have been recognized or realized by the Sellers or any of the Companies for income tax or financial accounting purposes prior to Closing (as determined finally in accordance with this Section 5.7(b)(i), the "ALLOCATION"). Promptly following Buyer's determination of the Allocation, Buyer will deliver a proposed Allocation to Sprint. If Sprint objects to Buyer's Allocation, Sprint will deliver a notice of objection to Buyer no later than the later to occur of (A) thirty (30) days from the delivery of the proposed Allocation to Sprint and (B) one hundred and twenty (120) days before the due date of filing any Tax Returns for which the Allocation is relevant. If no such notice of objection is delivered, the Buyer's proposed Allocation shall be final, and if such notice of objection is delivered as set forth above, Buyer and Sellers will use their reasonable best efforts to agree upon the Allocation. If the parties are unable to agree upon the Allocation within ninety (90) days before the due date of filing any Tax Return for which the Allocation is relevant, the Allocation shall be made by the Unrelated Accounting Firm. Following final determination of the Allocation, Buyer and Sellers will use the Allocation in reporting the deemed purchase and sale of the assets of the Companies for federal and, to the extent applicable, state and local income tax purposes. (ii) The Sellers agree that the Sellers will cause Cendon to make the Section 754 Election for the taxable year including the Closing Date to adjust the basis of all properties and assets of Cendon to account for the transfer of CDC's membership interest in Cendon to Buyer for federal and, to the extent applicable, state and local income tax purposes. Sprint and Buyer agree that Buyer's basis in CenDon will be made based on and consistent with the Allocation made pursuant to Section 5.7(b)(i) of this Agreement. -54- (c) RETURN FILING, REFUNDS, CREDITS AND TRANSFER TAXES. (i) Except with regard to Tax Returns for Straddle Periods, Sellers shall prepare, or cause to be prepared, and file, or cause to be filed, on a timely basis all Tax Returns of or including the Companies for all Pre-Closing Periods (the "PRE-CLOSING PERIOD RETURNS"). Sellers shall pay, or cause to be paid, all Taxes with respect to the Companies shown to be due on the Pre-Closing Period Returns. (ii) Buyer shall prepare, or cause to be prepared, and shall file, or cause to be filed, on a timely basis all Tax Returns other than the Pre-Closing Period Returns with respect to the Companies, including Tax Returns, if any, for the Straddle Period (the "STRADDLE PERIOD RETURNS"). Buyer shall pay, or cause to be paid, all Taxes shown to be due on such Tax Returns. (iii) Buyer shall provide Sellers with copies of any Straddle Period Returns at least sixty (60) business days prior to the due date thereof (giving effect to any extensions thereto), accompanied by a statement calculating in reasonable detail Sellers' indemnification obligation pursuant to Section 5.7(e) of this Agreement (the "INDEMNIFICATION STATEMENT"). Sellers shall have the right to review such Straddle Period Returns and Indemnification Statement prior to the filing of such Straddle Period Returns. If Sellers dispute any amounts shown to be due on such Tax Returns or the amount calculated in the Indemnification Statement, Sellers and Buyer shall consult and resolve in good faith any issues arising as a result of the review of such Straddle Period Return and Indemnification Statement. If Sellers agree to the Indemnification Statement amount, Sellers shall pay to Buyer an amount equal to the Taxes shown on the Indemnification Statement less any amounts paid by Sellers or the Companies on or before the Closing Date with respect to estimated taxes not later than three -55- business days before the due date (including any extensions thereof) for payment of Taxes with respect to such Straddle Period Return. If the parties are unable to resolve any dispute within thirty (30) business days after Sellers' receipt of such Straddle Period Return and Indemnification Statement, such dispute shall be resolved by the Unrelated Accounting Firm, which shall resolve any issue in dispute as promptly as practicable. If the Unrelated Accounting Firm is unable to make a determination with respect to any disputed issue prior to the due date (including any extensions) for the filing of the Straddle Period Return in question, (A) Buyer shall file, or shall cause to be filed, such Straddle Period Return without such determination having been made and (B) Sellers shall pay to Buyer, not later than three days before the due date (including any extensions thereof) for the payment of Taxes with respect to such Straddle Period Return, an amount determined by Sellers as the proper amount chargeable to Sellers pursuant to this Section 5.7. Upon delivery to Sellers and Buyer by the Unrelated Accounting Firm of its determination, appropriate adjustments shall be made to the amount paid by Sellers in accordance with the immediately preceding sentence in order to reflect the decision of the Unrelated Accounting Firm. The determination by the Unrelated Accounting Firm shall be final, conclusive and binding on the parties. (iv) Sellers and Buyer shall reasonably cooperate, and shall cause their respective Affiliates, officers, employees, agents, auditors and representatives reasonably to cooperate, in preparing and filing all Tax Returns (including amended returns and claims for refund), including maintaining and making available to each other all necessary records in connection with determining Taxes and in resolving all disputes and audits with respect to all taxable periods relating to Taxes. Buyer recognizes that Sellers will need access, from time to time, after the Closing Date, to certain accounting and tax records and information -56- held by the Companies to the extent such records and information pertain to events occurring prior to the Closing Date; therefore, Buyer agrees that from and after the Closing Date Buyer shall, and shall cause the Companies to, (A) retain and maintain such records until such time as Sellers determine that such retention and maintenance is no longer necessary and (B) allow Sellers and their agents and representatives (and agents and representatives of their Affiliates) reasonable access to inspect, review and make copies of such records as Sellers may deem necessary or appropriate from time to time. Buyer shall indemnify Sellers from and against any penalties, additions to tax or interest imposed on Sellers as a direct result of any failure of Buyer to provide tax records or other information to Sellers in a reasonable timely manner. (v) Buyer shall not, and shall cause the Companies not to, dispose of or destroy any of the business records and files of the Companies relating to Taxes in existence on the Closing Date without first offering to turn over possession thereof to Sellers by written notice to Sellers at least 30 days prior to the proposed date of such disposition or destruction. (vi) Notwithstanding any other provision of this Agreement to the contrary, any refunds and credits of Taxes of the Companies (including any interest or similar benefit) received from or credited thereon by the applicable tax authority with respect to (A) any taxable period ending on or before the Closing Date or (B) Taxes for which Sellers have indemnified the Buyer under the Agreement, shall be for the account of Sellers, and if received or utilized by Buyer or the Companies, shall be paid to Sellers within five business days after Buyer or a Company receives such refund or utilizes such credit. Except as provided in the next sentence, any refunds or credits of the Companies with respect to any Straddle Period shall be apportioned between Sellers, on the one hand, and Buyer, on the other hand, on the basis of an -57- interim closing of the books. In the case of a refund or credit attributable to any Taxes that are imposed on a periodic basis and are attributable to the Straddle Period, other than Taxes based upon or related to gross or net income or receipts, the refund or credit of such Taxes of the Company for the Pre-Closing Period shall be deemed to be the amount of such refund or credit for the Straddle Period multiplied by a fraction the numerator of which is the number of days in the Straddle Period ending on the Closing Date and the denominator of which is the number of days in the Straddle Period. (vii) Notwithstanding any other provisions of this Agreement to the contrary, all sales, use, transfer, stamp, duties, recording and similar Taxes, but not including any Taxes on or measured by income, gains or profits, incurred in connection with and solely as a result of the transactions contemplated by this Agreement shall be paid by Buyer, and Buyer shall, at its own expense, accurately file or cause to be filed all necessary Tax Returns and other documentation with respect to such Taxes and timely pay all such Taxes; PROVIDED, HOWEVER, that in the event the amount of such Taxes exceeds $5,000 (the "TRANSFER TAX LIMIT"), Buyer and Sellers shall each be responsible for paying one-half of the amount by which such Taxes exceed the Transfer Tax Limit. If required by applicable law, Sellers will join in the execution of any such Tax Returns or such other documentation. (d) ELECTIONS. Except with respect to the Section 338(h)(10) Election and the Section 754 Election, Buyer shall not, and shall cause the Companies not to, make, amend, or revoke any Tax election if such action would adversely affect Sellers, or any Person (other than the Companies) as to whom or with whom Sellers have filed a consolidated return, with respect to any taxable period ending on or before the Closing Date or for the Pre-Closing -58- Period or any Tax refund with respect thereto and Seller shall not make any Tax election if such action would adversely affect Buyer or any Company. (e) TAX INDEMNIFICATION. (i) Buyer shall indemnify, defend and hold harmless Sellers and their Affiliates, at any time after the Closing, from and against any liability for Taxes of the Companies for any taxable period ending after the Closing Date except for Straddle Periods, in which case Buyer's indemnity will cover only that portion of any such Taxes that is not attributable to the Pre-Closing Period and, except to the extent any such Taxes arose out of or related to any breach of any representation made by Sellers pursuant to Section 3.16 of the Agreement. (ii) Sellers shall jointly and severally indemnify, defend and hold harmless Buyer and its Affiliates, at any time after the Closing, (A) from and against any liability for Taxes of the Companies, except as provided in Section 5.7(c)(vii) of the Agreement, for the Pre-Closing Period (including Taxes attributable to the portion of any Straddle Period ending on the Closing Date); and (B) any liability for income Taxes of any member of an affiliated group with which any Company files or has filed a consolidated or combined Tax Return with respect to any taxable period which ends before or includes the Closing Date by reason of any Company being severally liable for such Tax pursuant to Treasury Regulation sec. 1.1502-6 or any analogous provision of foreign, state or local law. (iii) In determining the responsibility of Sellers and Buyer for Taxes attributable to any Straddle Period, Taxes based upon or related to gross or net income or receipts shall be apportioned on the basis of an interim closing of the books as of the Closing Date (and for such purpose, the taxable period of any partnership or other pass-through entity -59- which is a Company or in which a Company holds an interest, shall be deemed to terminate at such time), and all other Taxes attributable to any Straddle Period shall be prorated on a daily basis. (iv) If a claim for Taxes shall be made by any taxing authority in writing, which, if successful, might result in an indemnity payment pursuant to this Section 5.7, the party seeking indemnification (the "TAX INDEMNIFIED PARTY") shall promptly notify the other party (the "TAX INDEMNIFYING PARTY") in writing of such claim (a "TAX CLAIM") within a reasonably sufficient period of time to allow the Tax Indemnifying Party effectively to contest such Tax Claim, and in reasonable detail to apprise the Tax Indemnifying Party of the nature of the Tax Claim, and provide copies of all correspondence and documents received by it from the relevant taxing authority. Failure to give prompt notice of a Tax Claim hereunder shall affect the Tax Indemnifying Party's obligation under this Section to the extent that the Tax Indemnifying Party is prejudiced by such failure to give prompt notice. (v) With respect to any Tax Claim which might result in an indemnity payment to Buyer pursuant to this Section 5.7(e) (including, without limitation, Taxes of a Company for a Straddle Period), Sellers shall, upon confirming in writing their obligation to indemnify Buyer in respect of such Tax Claim, control all proceedings taken in connection with such Tax Claim and, without limiting the foregoing, may in their sole discretion and at their sole expense pursue or forego any and all administrative appeals, proceedings, hearings and conferences with any taxing authority with respect thereto, and may, in their sole discretion, either pay the Tax claimed and sue for a refund where applicable law permits such refund suits or contest such Tax Claim. Buyer, without waiving its right to be indemnified in respect of such Tax Claim, shall not under any circumstances settle or otherwise compromise any Tax Claim -60- referred to in the preceding sentence without Sellers' prior written consent; PROVIDED, HOWEVER, that Sellers have confirmed in writing their obligation to indemnify Buyer in respect of such Tax Claim and are in material compliance with Sellers' indemnification obligation hereunder. In connection with any proceeding taken in connection with such Tax Claim, (A) Sellers shall keep Buyer informed of all material developments and events relating to such Tax Claim and (B) Buyer shall have the right, at its sole expense, to participate in any such proceedings. Buyer shall cooperate with Sellers in contesting such Tax Claim (without charge to Sellers), which cooperation shall include, without limitation, the retention and the provision to Sellers of records and information which are reasonably relevant to such Tax Claim, and making employees available to Sellers to provide additional information or explanation of any material provided hereunder or to testify at proceedings relating to such Tax Claim; PROVIDED, HOWEVER, that no charges shall be incurred by Sellers for the services of such employees. (vi) With respect to any Tax Claim not described in Section 5.7(e)(v) of this Agreement which might result in an indemnity payment to Sellers pursuant hereto, Buyer shall control all proceedings in accordance with provisions that are parallel to those in Section 5.7(e)(v) of this Agreement. (vii) All matters relating in any manner to Tax indemnification obligations and payment of Taxes shall be governed exclusively by this Section SECTION 5.8 NO SOLICITATION. If this Agreement is terminated for any reason pursuant to Article VII, for a period of two years following the effective date of such termination, neither Buyer nor any of its Affiliates shall, directly or indirectly, solicit or induce any employee, agent or contractor of any Company to leave such employment and become an employee, agent or contractor of Buyer or any of its Affiliates if Buyer was apprised of or had -61- contact with such employee, agent or contractor in connection with the transactions contemplated by this Agreement; PROVIDED, HOWEVER, that nothing in this Section 5.8 shall prohibit Buyer or any of its Affiliates from employing any person who contacts them on his or her own initiative and without any direct or indirect solicitation by Buyer or any of its Affiliates, as the case may be. This Section 5.8 shall not be interpreted to prohibit solicitations of employment through general advertising not specifically directed at the employees, agents or contractors of the Companies. If this Agreement is terminated pursuant to Article VII, this Section 5.8 supersedes the employee nonsolicitation provisions of the Confidentiality Agreements. SECTION 5.9 TRANSITION SERVICES AGREEMENT. At the Closing, Sprint and/or certain of its Affiliates and the Companies shall enter into a Transition Services Agreement substantially in the form attached as EXHIBIT 5.9 (the "TRANSITION SERVICES AGREEMENT"). SECTION 5.10 DIRECTORY SERVICES LICENSE AGREEMENT. At the Closing, the Companies and certain Affiliates of Sprint shall enter into a Directory Services License Agreement, substantially in the form attached as EXHIBIT 5.10 (the "DIRECTORY SERVICES LICENSE AGREEMENT"). SECTION 5.11 GUARANTEES. Prior to the Closing, Sellers shall (a) cause the Companies to be released as guarantor of any financing of Sellers and their Affiliates (other than the Companies), (b) cause the Companies to no longer be parties to the agreements listed on SCHEDULE 3.7 and (c) use commercially reasonable efforts to cause the Companies to be released from all past, present and future obligations under the agreements listed on SCHEDULE 3.7. SECTION 5.12 INVESTIGATION BY BUYER. Buyer has conducted its own independent review and analysis of the business, operations, technology, assets, liabilities, results -62- of operations, financial condition and prospects of the Companies and acknowledges that Sellers have provided Buyer with the access requested by Buyer to the personnel, properties, premises and records of the Companies for this purpose. In entering into this Agreement, Buyer has relied upon its own investigation and analysis as well as the representations and warranties of Sellers contained in this Agreement and the Ancillary Agreements, and Buyer (a) acknowledges that none of Sellers, the Companies or any of their respective directors, officers, employees, Affiliates, controlling Persons, agents or representatives makes or has made any representation or warranty, either express or implied, as to the accuracy or completeness of any of the information provided or made available to Buyer or its directors, officers, employees, Affiliates, controlling Persons, agents or representatives, and (b) agrees, to the fullest extent permitted by law, that neither Sellers, the Companies nor any of their respective directors, officers, employees, Affiliates, controlling Persons, agents or representatives shall have any liability or responsibility whatsoever to Buyer or its directors, officers, employees, Affiliates, controlling Persons, agents or representatives on any basis (including, without limitation, in contract or tort, under federal or state securities laws or otherwise) based upon any information provided or made available, or statements made, to Buyer or its directors, officers, employees, Affiliates, controlling Persons, agents or representatives (or any omissions therefrom), except in the case of clauses (a) and (b) as and only to the extent expressly set forth in this Agreement with respect to the representations and warranties of Sellers in Article III and subject to the limitations and restrictions contained in this Agreement. SECTION 5.13 MUTUAL RELEASE. Immediately prior to the Closing, Sellers and the Companies shall enter into a Mutual Release substantially in the form attached as EXHIBIT 5.13 (the "MUTUAL RELEASE"). -63- SECTION 5.14 EMPLOYEES AND EMPLOYEE BENEFIT PLANS. (a) EMPLOYMENT. Buyer shall cause each Company to continue to employ immediately after the Closing each of the individuals who were employed by such Company immediately before the Closing (individually a "COMPANY EMPLOYEE" and collectively the "COMPANY EMPLOYEES") at (1) substantially the same base salary or base hourly rate of compensation as in effect for each such individual immediately before the Closing and with (2)(A) benefits under a Buyer 401(k) Plan (as defined in Section 5.14(b)) and benefit accruals for service after the Closing under a Buyer Pension Plan (as defined in Section 5.14(c)) which are the same as the benefits Buyer provides for Buyer's employees who work in the same line of business as the Company Employees and (B) welfare benefits, including severance benefits (except for severance benefits during the one year period which begins on the Closing Date which shall be paid in accordance with Section 5.14(a)(3)), under Buyer's welfare plans (as defined in Section 3(1) of ERISA) which are the same to the maximum extent practicable as the welfare plan benefits Buyer provides for Buyer's employees who work in the same line of business as the Company Employees; provided, however, (3) Buyer shall provide severance benefits to any such individual whose employment is terminated by Buyer or, if Buyer transfers such individual to another employer as part of an outsourcing arrangement, is terminated by such other employer at any time during the one year period which starts on the Closing which are no less than the severance benefits provided under the Sprint Corporation Separation Plan which would have been payable under such plan if such individual's employment had been terminated by a Company under similar circumstances immediately before the Closing and (4) Buyer shall not have any obligation to employ immediately after the Closing (A) any individual named on SCHEDULE 5.14 or (B) any individual who has met all the requirements for short-term or long-term -64- disability benefits under one of the Seller Benefit Plans on or before the Closing until such individual is able to return to work, at which point Buyer's obligation to employ such individual shall be subject to such terms and conditions as permissible under applicable law with respect to any employee who had been on a short-term or long-term disability leave, and any such individual then employed by Buyer shall be eligible for the same benefits upon his or her employment as then provided to Company Employees. Each Company Employee shall receive credit for all service completed with Sellers, each Company and each ERISA Affiliate (and their predecessors) immediately prior to the Closing for all purposes under Buyer's employee benefit plans as if such service had been completed with Buyer; PROVIDED, HOWEVER that Buyer shall have no obligation to provide such service credit for purposes of computing any such employee's accrued benefit under any defined benefit plan (as defined in Section 414(j) of the Code) or determining any such employee's eligibility to receive post-retirement welfare benefits. (b) 401(K) PLANS. (i) SPRINT 401(K) PLAN. Sprint shall make contributions on behalf of the Company Employees to the Seller ERISA Plan which is the Sprint Retirement Savings Plan through the Closing, but Sprint shall take such action as necessary or appropriate to assure that no Company Employee shall be eligible to make or receive contributions under such plan for any period ending after the Closing and that no Company Employee will be eligible to otherwise actively participate in such plan after the Closing. Sprint shall take whatever action is necessary or appropriate with respect to each Company Employee who is employed by Buyer immediately after the Closing to (1) make his or her account under the Sprint Retirement Savings Plan nonforfeitable as of the Closing and (2) provide the same opportunity to each such Company Employee to repay his or her loan or loans, if any, from such plan as currently -65- provided under the terms of the Sprint Retirement Savings Plan to the only class of employees who currently have such opportunity under the terms of such plan upon a termination of employment. (ii) BUYER 401(k) PLAN. The Company Employees shall be eligible as of the Closing to participate in a plan established, maintained or adopted by Buyer which is described in Section 401(k) of the Code (individually a "BUYER 401(k) PLAN") and which shall provide for elective deferrals (as such deferrals are described in Section 402(g)(3)(A) of the Code) by participants under Section 401(k) of the Code and for matching contributions (as described in Section 401(m)(4)(A)(ii) of the Code) by Buyer with respect to such elective deferrals, all consistent with the requirements of Section 5.14(a)(2)(A). The Buyer 401(k) Plan shall provide that the Company Employees shall have the right to make direct rollovers to such plan of their vested accounts in the Sprint Retirement Savings Plan to the extent such rollovers constitute "eligible rollover distributions" within the meaning of Section 402(c)(4) of the Code. The Company Employees shall receive credit under the Buyer 401(k) Plan for all service with Sellers, each Company and each ERISA Affiliate (and their predecessors) for purposes of satisfying any service requirement to participate in such plan and any service requirement to earn a nonforfeitable benefit under such plan. (c) PENSION PLANS. (i) SPRINT PENSION PLAN. Sprint shall take such action as necessary or appropriate to assure that no Company Employees shall be eligible to accrue any benefits for service completed or compensation paid for periods after the Closing under the -66- Seller Benefit Plan which is the Sprint Retirement Pension Plan and that no Company Employees will be eligible to otherwise actively participate in such plan after the Closing. (ii) BUYER PENSION PLAN. If any employees of Buyer (as determined in accordance with the rules under Section 414(b) and Section 414(c) of the Code) participate in any defined benefit plan (as defined in Section 414(j) of the Code) other than a multiemployer plan (as defined in Section 414(f) of the Code) (individually a "BUYER PENSION PLAN"), the Company Employees shall be eligible to participate in such plan as of the Closing. If there is more than one Buyer Pension Plan, the Company Employees shall be eligible to participate in the Buyer Pension Plan which in Buyer's reasonable judgment provides benefits which in the aggregate are more like the benefits provided under the Sprint Retirement Pension Plan than the benefits provided under any other Buyer Pension Plan. The Company Employees shall receive credit under the Buyer Pension Plan in which such employees participate for all service with Sellers, each Company, and each ERISA Affiliate (and their predecessors) for purposes of satisfying any service requirement to participate in such plan and any service requirement to earn a nonforfeitable benefit under such plan, but Buyer shall have no obligation to provide such service credit for purposes of computing any such employee's accrued benefit under such plan. (d) MEDICAL AND RELATED HEALTHCARE BENEFITS AND LIFE INSURANCE. (i) SELLER WELFARE PLANS. Sellers shall continue after the Closing to make available to each Company Employee coverage under the Seller Benefit Plans which are welfare plans (as defined in Section 3(1) of ERISA), including post-retirement health and dental benefit coverage, to the same extent, and subject to the same terms and conditions, -67- that such coverage would be continued under the terms of such plans for any other former employee, and each such Company Employee who satisfies the age and service requirements for post-retirement health and dental benefit coverage immediately prior to the Closing shall have the same opportunity to receive such coverage after the Closing as if such Company Employee had terminated employment immediately prior to the Closing. (ii) BUYER WELFARE PLANS. Buyer on the Closing shall make available to the Company Employees Buyer's welfare plans (as defined in Section 3(1) of ERISA) consistent with the requirements of Section 5.14(a)(2)(B), and each Company Employee shall receive full credit under Buyer's welfare plans for all service completed with Sellers, each Company and each ERISA Affiliate (and their predecessors) and for all payments made by such employee under any similar Seller Benefit Plan to satisfy any deductible or co-pay requirements under such plan; PROVIDED, HOWEVER that Buyer shall have no obligation to provide such service credit for purposes of determining any such employee's eligibility to receive post-retirement welfare benefits. (e) 2002 MANAGEMENT INCENTIVE PLAN. In the event the Closing occurs prior to Sprint making the payments called for under the Companies' 2002 Management Incentive Plan for Company Employees based on their performance for the year 2002, Sprint shall compute the payments due such employees and shall instruct Buyer as to the amount of such payments due such employees. Buyer then shall make the payments due such Company Employees pursuant to such instructions. Sprint will reimburse Buyer for any payments made to such Company Employees pursuant to this Section 5.14(e) and for the tax paid by Buyer on such payments in accordance with Section 3111(b) of the Code within ten (10) business days of the -68- date Buyer certifies to Sprint that such payments have been made and such taxes have been paid. Sprint will be responsible for computing the payments due under this Section 5.14(e), for answering any questions from Company Employees regarding such payments and for resolving any disputes with any Company Employee regarding Sprint's computations. (f) NON-QUALIFIED DEFERRED COMPENSATION PLAN. The interest of each Company Employee in the Sprint Executive Deferred Compensation Plan shall remain nonforfeitable and shall be paid (subject to the terms and conditions of such plan) in accordance with the deferral elections made under such plan by such Company Employee. (g) SELLER BENEFIT PLANS. Buyer shall not have any liabilities with respect to any Seller Benefit Plans except to the extent (i) Buyer agrees to make any payments to Company Employees eligible for the Companies' 2002 Management Incentive Plan pursuant to Section 5.14(e), and (ii) any contribution required with respect to any Seller Benefit Plans for periods ending on or before the Closing remains unpaid after the Closing to the extent reflected on the Current Assets and the Current Liabilities of the Companies on the Final Balance Sheet. SECTION 5.15 NO SOLICITATION OF TRANSACTIONS. Until the valid termination of this Agreement pursuant to Article VII, none of Sellers or their Affiliates will directly or indirectly, through any officer, director, agent or otherwise, initiate, solicit or knowingly encourage (including by way of furnishing non-public information or assistance) any offer or proposal for, or enter into negotiations of any type, or any letter of intent or purchase agreement, merger agreement or other similar agreement with any person, firm or corporation other than Buyer with respect to, a sale of any assets (other than in the Ordinary Course of Business and not in violation of Section 5.1) of a Company, or a merger, consolidation or business combination in -69- which a Company is a constituent entity, any sale of all or any portion of a Company's capital stock or membership interests, or any liquidation or similar extraordinary transaction with respect to a Company (a "COMPETING TRANSACTION"). From and after the date hereof, Sellers will immediately cease all discussions and negotiations with respect to any Competing Transaction, and will promptly request the return or destruction of all confidential information previously distributed to all parties interested in a Competing Transaction (other than Buyer) pursuant to the terms of any confidentiality agreement or otherwise. SECTION 5.16 NON-COMPETITION AGREEMENT. At the Closing, Buyer, the Companies, Sprint and certain Affiliates of Sprint shall enter into a Non-Competition Agreement substantially in the form attached as EXHIBIT 5.16 (the "NON-COMPETITION AGREEMENT"). SECTION 5.17 SUBSCRIBER LISTINGS AGREEMENT. At the Closing, the Companies, Sprint and certain Affiliates of Sprint shall enter into a Subscriber Listings Agreement substantially in the form attached as EXHIBIT 5.17 (the "SUBSCRIBER LISTINGS AGREEMENT"). SECTION 5.18 TRADEMARK LICENSE AGREEMENT. At the Closing, the Companies and the SPV shall enter into a Trademark License Agreement substantially in the form attached as EXHIBIT 5.18 (the "TRADEMARK LICENSE AGREEMENT"). SECTION 5.19 PUBLISHER TRADEMARK LICENSE AGREEMENT. At the Closing, the Companies and Sprint shall enter into a Publisher Trademark License Agreement substantially in the form attached as EXHIBIT 5.19 (the "PUBLISHER TRADEMARK LICENSE AGREEMENT"). SECTION 5.20 TRANSITION OF CERTAIN INFORMATION. Prior to or on the Closing Date, or as reasonably practicable thereafter, Sellers will transfer, or cause to be transferred, to the Companies all books and records relating to the business of the Companies, including without limitation, the books of account, tax, financial, accounting and personnel records, files, -70- invoices, client (current and prospective) and supplier lists, business plans, marketing studies and other written material, including without limitation real estate and litigation files and both paper and electronic copies of all the financial data and human resource information system data which relate to the business of the Companies and are maintained on any of Sellers' or their Affiliates' computer systems that are not already owned by and in the possession of the Companies. Sellers will provide Buyer and the Companies with access to such information after Closing until such information is transferred to the Companies. SECTION 5.21 INTERIM CHANGES IN SERVICE AREAS. (a) Sellers and Buyer agree that the terms and conditions of Section 9.1 of the Directory Services License Agreement shall apply to any sale of a Service Area (as defined in the Directory Services License Agreement) by Sellers between the date hereof and the Closing Date such that the requirements of such Section 9.1 shall become effective on the Closing Date with respect to the local telephone division of Sprint and the purchaser of such Service Area with retroactive effect from the date of such sale. (b) Sellers and Buyer agree that the terms and conditions of Section 9.2 of the Directory Services License Agreement shall apply to any acquisition of a Service Area by Sellers or their Affiliates between the date hereof and the Closing Date such that the requirements of such Section 9.2 shall become effective on the Closing Date with respect to the local telephone division of Sprint and the purchaser of such Service Area on the Closing Date with retroactive effect from the date of such sale. SECTION 5.22 INTERCOMPANY ACCOUNTS; CENDON PAYMENTS. All intercompany accounts between Sellers or their respective Affiliates, on the one hand, and the Companies, on the other hand, as of the Closing shall be settled (irrespective of the terms of -71- payment and deemed without further action of such intercompany accounts) in full at or prior to the Closing by netting such balances against each other, and the resultant balance contributed to capital or paid by cash or dividend, as the case may be, and deemed without further action to be fully discharged as of the Closing Date. Buyer shall pay to Sellers (or to such third parties as may be designated in writing by Sellers) by wire transfer of available funds at Closing $14,000,000 in full settlement and satisfaction of Buyer's obligations set forth in Clause 12(i) of the CenDon Virginia Directory Agreement, dated May 5, 1988, as amended, Clause 12(i) of the CenDon Florida Directory Agreement, dated May 5, 1988, as amended, Clause 12(i) of the CenDon Nevada Directory Agreement, dated May 5, 1988, as amended, and Clause 12(i) of the CenDon North Carolina Directory Agreement, dated May 5, 1988, as amended. SECTION 5.23 SPECIAL PURPOSE VEHICLE. On or prior to the Closing, Sellers will (a) form a limited liability company (the "SPV") whose sole member is Sprint Communications Company L.P., (b) include in the operating agreement of the SPV the policies set forth on EXHIBIT 5.23, (c) cause Sprint Communications Company, L.P. to irrevocably contribute and assign all of its right, title and interest (including the associated goodwill) in the Licensed Marks (as defined in the Trademark License Agreement) to the SPV as an irrevocable contribution to the capital of the SPV (and not as security for a financing), and (d) make a capital contribution (and not as security for a financing) to the SPV of an amount estimated to cover the reasonably foreseeable expenses of the SPV. In addition, at the Closing, Sprint and Buyer will enter into an agreement (the "SPV AGREEMENT") that contains the representations and warranties, covenants and other provisions contemplated by EXHIBIT 5.23. SECTION 5.24 CO-BRANDING. The parties will use their respective good faith commercially reasonable efforts prior to Closing to agree upon (a) general standards and -72- guidelines with respect to the relative prominence and positioning of the Publisher Co-Brand Marks (as defined in the Directory Services License Agreement) and the Licensed Marks, provided that the parties agree that such general standards and guidelines will provide that the Publisher Co-Brand Marks will not be more than 80% of the size of the Licensed Marks in any usage, and (b) the specific graphic uses of the Publisher Co-Brand Marks relative to the Licensed Marks. ARTICLE VI CONDITIONS TO OBLIGATIONS OF THE PARTIES SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION. The respective obligation of each party to consummate the transactions contemplated by this Agreement is subject to the satisfaction at or prior to the Closing of the following conditions: (a) No statute, rule or regulation shall have been enacted, promulgated or enforced by any court or governmental authority which prohibits or restricts the consummation of the transactions contemplated by this Agreement; (b) There shall not be in effect any judgment, order, injunction or decree of any court of competent jurisdiction enjoining the consummation of the transactions contemplated by this Agreement; (c) Any waiting periods applicable to the transactions contemplated by this Agreement under the HSR Act shall have expired or early termination shall have been granted; (d) All consents, authorizations, waivers and approvals of any governmental authority or other regulatory body as may be required to be obtained in connection -73- with the performance of this Agreement, the failure to obtain which would prevent the consummation of the transactions contemplated by this Agreement or have a Company Material Adverse Effect, shall have been obtained; and (e) Buyer shall have received the proceeds of the financing contemplated by the Financing Commitments, on substantially the terms and subject to the conditions set forth therein. SECTION 6.2 CONDITIONS TO OBLIGATIONS OF SELLERS. The obligations of Sellers to consummate the transactions contemplated by this Agreement are further subject to the satisfaction (or waiver) at or prior to the Closing of the following conditions: (a) The representations and warranties of Buyer contained in Article IV of this Agreement that are (i) qualified as to Buyer Material Adverse Effect shall be true and correct and (ii) not so qualified shall be true and correct in all material respects (except for breaches as to matters that, individually or in the aggregate, could not reasonably be expected to have a Buyer Material Adverse Effect), in each case, as of the date of this Agreement and as of the Closing as if made at and as of such time (PROVIDED, HOWEVER, that representations and warranties which are as of a specific date shall speak only as of such date). Sellers shall have received a certificate dated as of the Closing Date executed by an officer of Buyer to such effect. (b) Buyer shall have performed in all material respects its obligations under this Agreement required to be performed by it at or prior to the Closing pursuant to the terms of this Agreement, and Sellers shall have received a certificate dated as of the Closing Date executed by an officer of Buyer to such effect; (c) Buyer shall have delivered to Sellers or their Affiliates those items set forth in Section 1.7 of this Agreement; and -74- (d) Except for any applicable Taxes, no state governmental authority or other state regulatory body shall have initiated a formal legal or administrative proceeding with respect to the transactions contemplated by this Agreement that would reasonably be expected to, individually or in aggregate, have a material adverse effect on the business of Sprint Local Telecommunications Division or on the proceeds Sprint expects to receive from the transactions contemplated by this Agreement. SECTION 6.3 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to consummate the transactions contemplated by this Agreement are further subject to the satisfaction (or waiver) at or prior to the Closing of the following conditions: (a) The representations and warranties of Sellers contained in Article III of this Agreement that are (i) qualified as to Company Material Adverse Effect shall be true and correct and (ii) not so qualified shall be true and correct in all material respects (except for breaches as to matters that would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect), in each case as of the date of this Agreement and as of the Closing as if made at and as of such time (PROVIDED, HOWEVER, that representations and warranties which are as of a specific date shall speak only as of such date) and the representation and warranty of Sellers in Section 3.4 shall be true and correct as of the Closing. Buyer shall have received a certificate dated as of the Closing Date executed by authorized representatives of each Seller to such effect; (b) Each Seller and each Wholly Owned Company shall have performed in all material respects its obligations under this Agreement required to be performed by it at or prior to the Closing pursuant to the terms of this Agreement, and Buyer shall have -75- received a certificate dated as of the Closing Date executed by authorized representatives of each Seller to such effect; (c) Sellers shall have delivered to Buyer those items set forth in Section 1.6 of this Agreement; (d) Buyer shall have received evidence reasonably satisfactory to it that (i) all Liens listed on SCHEDULE 6.3(d) have been released and fully discharged and (ii) all guarantees by the Companies of indebtedness for borrowed money of another Person shall be cancelled; (e) No Company shall have, or shall have guaranteed, any indebtedness for borrowed money and capitalized lease obligations that in accordance with GAAP are required to be reflected as indebtedness on a consolidated balance sheet of the Companies; and (f) All consents as are required from parties to those contracts of the Companies listed on SCHEDULE 6.3(f) in order to prevent any breach or violation of the terms of such contracts as a result of the consummation of the transactions contemplated by this Agreement shall have been obtained. ARTICLE VII TERMINATION SECTION 7.1 TERMINATION. This Agreement may be terminated and the transactions contemplated by this Agreement may be abandoned: (a) at any time, by mutual written consent of Sellers and Buyer; -76- (b) by either party if the transactions contemplated by this Agreement shall have been permanently enjoined by a court of competent jurisdiction; PROVIDED, HOWEVER, that no party who brought or is affiliated with the party who brought the action seeking the permanent enjoinment of the transactions contemplated by this Agreement may seek termination of this Agreement pursuant to this Section 7.1(b); (c) by Buyer if any of the conditions set forth in Sections 6.1 and 6.3 shall have become incapable of fulfillment prior to the Termination Date (as hereinafter defined) and shall not have been waived by Buyer; (d) by Sellers if any of the conditions set forth in Sections 6.1 or 6.2 shall have become incapable of fulfillment prior to the Termination Date and shall not have been waived by Sellers; (e) by Buyer or Sellers, at any time on or after the six month anniversary of the date of this Agreement (the "TERMINATION DATE"), if the Closing shall not have occurred on or prior to such date; PROVIDED, HOWEVER, that the right to terminate this Agreement under this Section 7.1(e) shall not be available to any party whose failure to fulfill any obligation under this Agreement has substantially contributed to, or resulted in, the failure of the Closing to have occurred on or before such date; PROVIDED, FURTHER, that if on the Termination Date the only conditions to Closing capable of being satisfied prior to the Closing Date that have not been fulfilled are Section 6.1(d) or 6.2(d), then the Termination Date shall be extended to the earlier to occur of (i) the first anniversary of the date of this Agreement and (ii) the tenth (10th) business day following the fulfillment of the closing conditions in Sections 6.1(d) or 6.2(d), as applicable; or -77- (f) by Sellers if any Financing Commitment ceases to remain in effect on substantially the terms and subject to the conditions set forth therein for a period of 10 or more business days and Buyer has not obtained within such 10 day period replacement financing commitments with terms and conditions regarding certainty of closing no less favorable to Buyer and Sellers. SECTION 7.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of the termination of this Agreement and the abandonment of the transactions contemplated by this Agreement pursuant to Section 7.1 of this Agreement, written notice thereof shall be given by Sellers, on the one hand, or Buyer, on the other hand, so terminating to the other party and this Agreement shall terminate and the transactions contemplated by this Agreement shall be abandoned, without further action by Sellers, or Buyer. If this Agreement is terminated pursuant to Section 7.1 of this Agreement: (a) unless the basis of a termination is as set forth in Section 7.2(c) for failure of a condition set forth in Sections 6.2(a) or (b), each party shall redeliver all documents, work papers and other materials of the other parties relating to the transactions contemplated by this Agreement, whether so obtained before or after the execution of this Agreement, to the party furnishing the same or, upon prior written notice to such party, shall destroy all such documents, work papers and other materials and deliver notice to the parties seeking destruction of such documents that such destruction has been completed, and all confidential information received by any party to this Agreement with respect to the other party shall be treated in accordance with the Confidentiality Agreement and Section 5.2(b) of this Agreement; -78- (b) all filings, applications and other submissions made pursuant to this Agreement shall, at the option of Sellers, and to the extent practicable, be withdrawn from the agency or other Person to which made; and (c) there shall be no liability or obligation under this Agreement on the part of Sellers, the Companies or Buyer or any of their respective directors, officers, employees, Affiliates, controlling Persons, agents or representatives, except that Sellers or Buyer, as the case may be, shall have liability to the other party if the basis of termination is fraud or a willful, material breach by Sellers or Buyer, as the case may be, of one or more of the provisions of this Agreement, and except that the obligations provided for in this Section and Sections 5.5, 5.8 and 10.1 of this Agreement and in the Confidentiality Agreement shall survive any such termination. ARTICLE VIII SURVIVAL OF REPRESENTATIONS SECTION 8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Notwithstanding any investigation by or on behalf of Buyer or the results of any such investigation and notwithstanding the participation of Buyer in the Closing, except for those representations and warranties in Sections 3.16 (Taxes) and 3.17 (Environmental) of this Agreement (which shall survive the applicable statute of limitations, including any extensions with respect thereto) and those representations and warranties in Sections 3.1 (Organization), 3.2 (Authorization), 3.3 (Capital Stock), 3.4 (Ownership of the Capital Stock), 3.19 (Certain Fees) and 4.1 (Buyer Organization) (which shall survive indefinitely), the representations and warranties of Sellers and Buyer in Articles III and IV of this Agreement, respectively, shall survive the Closing for a period of eighteen months following the Closing Date. -79- ARTICLE IX INDEMNIFICATION SECTION 9.1 INDEMNIFICATION OBLIGATIONS OF SELLERS. Sellers jointly and severally shall indemnify, defend and hold harmless Buyer and its Affiliates, and, effective as of the Closing, without duplication, the Companies, each of their respective officers, directors, employees, agents and representatives and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the "BUYER INDEMNIFIED PARTIES") from, against and in respect of any and all claims, liabilities (whether asserted or unasserted, absolute or contingent), obligations, losses, costs, expenses, penalties, fines and judgments (at equity or at law) and damages whenever arising or incurred (including, without limitation, amounts paid in settlement, costs and expenses of investigation and reasonable attorneys' fees and expenses) arising out of or relating to (a) any breach or inaccuracy of any representation or warranty made by Sellers in Article III of this Agreement (without giving effect to "Material Adverse Effect" or "in all material respects" qualifications contained in Article III of this Agreement other than those contained in Section 3.6) (other than a breach or inaccuracy of any representation or warranty under Section 3.16), (b) any breach or nonperformance of any covenant, agreement or undertaking of Sellers in this Agreement other than Seller's obligations under Section 5.6 to use its reasonable best efforts to satisfy the closing condition in Section 6.3(f) and (c) the agreements listed on SCHEDULE 3.7. Notwithstanding the preceding sentence, the indemnification or indemnification procedures provided for under this Section 9.1 shall not apply to Tax matters, which shall be governed exclusively by Section 5.7. -80- The claims, liabilities, obligations, losses, costs, expenses, penalties, fines and damages of the Buyer Indemnified Parties described in this Section 9.1 as to which the Buyer Indemnified Parties are entitled to indemnification are hereinafter collectively referred to as "BUYER LOSSES." SECTION 9.2 INDEMNIFICATION OBLIGATIONS OF BUYER. Buyer shall indemnify, defend and hold harmless Sellers and their Affiliates (excluding the Companies), each of their respective officers, directors, employees, agents and representatives and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the "SELLER INDEMNIFIED PARTIES") from, against and in respect of any and all claims, liabilities, obligations, losses, costs, expenses, penalties, fines and judgments (at equity or at law) and damages whenever arising or incurred (including, without limitation, amounts paid in settlement, costs and expenses of investigation and reasonable attorneys' fees and expenses) arising out of or relating to (a) any breach or inaccuracy of any representation or warranty made by Buyer in Article IV of this Agreement (without giving effect to "Material Adverse Effect" or "in all material respects" qualifications contained in Article IV of this Agreement) or (b) any breach or nonperformance of any covenant, agreement or undertaking of Buyer in this Agreement. Notwithstanding the preceding sentence, the indemnification or indemnification procedures provided for in this Section 9.2 shall not apply to Tax matters, which shall be governed exclusively by Section 5.7. The claims, liabilities, obligations, losses, costs, expenses, penalties, fines and damages of the Seller Indemnified Parties described in this Section 9.2 as to which the Seller Indemnified Parties are entitled to indemnification are hereinafter collectively referred to as "SELLER LOSSES." SECTION 9.3 INDEMNIFICATION PROCEDURE. (a) Promptly after receipt by a Buyer Indemnified Party or a Seller Indemnified Party (hereinafter collectively referred to as an "INDEMNIFIED PARTY") of written -81- notice by a third party of a threatened or filed claim or of the threatened or actual 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 Buyer Losses or Seller Losses (as the case may be), such Indemnified Party shall notify Buyer (on the one hand) or Sellers (on the other hand), whoever is the appropriate indemnifying party hereunder (the "INDEMNIFYING PARTY"), within thirty (30) days of the written notice of threatening or filing of such claim or of the threatened or actual commencement of such action or proceeding; PROVIDED, HOWEVER, that the failure to so notify the Indemnifying Party shall relieve the Indemnifying Party from liability under this Agreement with respect to such claim only if, and only to the extent that, such failure to notify the Indemnifying Party actually and materially prejudices the Indemnifying Party with respect to such claim. The Indemnifying Party shall have the right, upon written notice delivered to the Indemnified Party within thirty (30) days thereafter, to assume the defense of such 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 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, shall have the right to participate in such litigation and to retain its own counsel at such party's own expense. The Indemnifying Party or the Indemnified Party, as the case may be, shall 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. -82- (b) No Indemnified Party may settle or compromise any claim or consent to the entry of any judgment with respect to which indemnification is being sought hereunder 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, which releases the Indemnified Party completely in connection with such settlement, compromise or consent and (ii) 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. (c) In the event an Indemnified Party shall claim a right to payment pursuant to this Agreement not involving a third party claim covered by Section 9.3(a), such Indemnified Party shall send written notice of such claim to the appropriate Indemnifying Party. Such notice shall 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 shall 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 shall pay to the Indemnified Party immediately available funds in an amount equal to such claim as determined hereunder. SECTION 9.4 CLAIMS PERIOD. For purposes of this Agreement, a "CLAIMS PERIOD" shall be the period after the Closing Date which a claim for indemnification may be -83- asserted under this Agreement by an Indemnified Party. The Claims Periods under this Agreement shall commence on the Closing Date and shall terminate with respect to Buyer Losses or Seller Losses arising with respect to (a) any breach or inaccuracy of any representation or warranty on the expiration of the applicable survival period set forth in Section 8.1 and (b) with respect to any breach or nonperformance of any covenant or agreement in this Agreement, six months after the date Buyer (with respect to any Buyer Indemnified Party) or Sellers (with respect to any Seller Indemnified Party), as the case may be, obtains Knowledge of such breach or nonperformance. Notwithstanding the foregoing, if prior to the close of business on the last day of the applicable Claims Period, an Indemnifying Party shall have been properly notified of a claim for indemnity hereunder and such claim shall not have been finally resolved or disposed of at such date, such claim shall continue to survive and shall remain a basis for indemnity hereunder until such claim is finally resolved or disposed of in accordance with the terms of this Agreement. SECTION 9.5 LIABILITY LIMITS. Notwithstanding anything to the contrary set forth in this Agreement, except for fraud, the Buyer Indemnified Parties shall not make a claim against Sellers for indemnification under Section 9.1(a) for Buyer Losses (a) for any single Buyer Loss less than $250,000 and (b) unless and until the aggregate amount of Buyer Losses under Section 9.1(a) exceeds $25,000,000 (the "BUYER DEDUCTIBLE"), and then only to the extent such Buyer Losses exceed the Buyer Deductible. Further, the sum of Sellers' indemnification obligations hereunder and any amounts payable by Sprint for consequential damages resulting from a breach by Sprint or its Affiliates under the Trademark License Agreement, shall not exceed in the aggregate $660,000,000 (the "CAP AMOUNT"). -84- SECTION 9.6 NETTING OF LOSSES. The amount of any Seller Losses or Buyer Losses for which indemnification is provided under this Article IX shall take into account (a) in the case of Sellers' indemnification obligations under Section 9.1 of this Agreement, any specific reserves included in the Final Balance Sheet and included in the determination of Closing Date Net Working Capital, (b) in the case of Sellers' indemnification obligations under Section 9.1 of this Agreement or Buyer's indemnification obligations under Section 9.2 of this Agreement, (i) any amounts recovered by the Indemnified Party pursuant to any indemnification by, or indemnification agreement with, any third party, and (ii) any insurance proceeds or other cash receipts or sources of reimbursement received in connection with any such Seller Losses or Buyer Losses and (c) any Tax consequences associated with such Losses and the recovery thereof. If the amount to be netted hereunder from any payment required under Section 9.1 or Section 9.2 of this Agreement is determined after payment by the Indemnifying Party pursuant to this Article IX, the Indemnified Party shall repay to the Indemnifying Party, promptly after such determination, any amount that the Indemnifying Party would not have had to pay pursuant to this Article IX had such determination been made at the time of such payment. SECTION 9.7 EXCLUSIVE REMEDIES. Except for fraud, the provisions of this Article IX and Sections 5.7 and 10.11 set forth the exclusive rights and remedies of Buyer and Sellers to seek or obtain damages or any other remedy or relief whatsoever from any party with respect to matters arising under or in connection with this Agreement and the transactions contemplated by this Agreement (other than any remedy or relief arising from the failure of any party to perform its obligations under the Ancillary Agreements). All payments made between Buyer and Sellers pursuant to Article VII, this Article IX and Sections 5.7 and 10.11 shall constitute adjustments to the Purchase Price for all Tax and other purposes. -85- ARTICLE X MISCELLANEOUS SECTION 10.1 FEES AND EXPENSES. Whether or not the transactions contemplated by this Agreement are consummated, Sellers and Buyer shall pay all fees and expenses incurred by, or on behalf of, Sellers or Buyer, respectively, in connection with, or in anticipation of, this Agreement and the consummation of the transactions contemplated by this Agreement. SECTION 10.2 FURTHER ASSURANCES. From time to time after the Closing Date, at the reasonable request of the other party to this Agreement and at the expense of the party so requesting, each of the parties to this Agreement shall execute and deliver to such requesting party such documents and take such other action as such requesting party may reasonably request in order to consummate more effectively the transactions contemplated by this Agreement. SECTION 10.3 NOTICES. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and may be given by any of the following methods: (a) personal delivery; (b) facsimile transmission; (c) registered or certified mail, postage prepaid, return receipt requested; or (d) overnight courier. Notices shall be sent to the appropriate party at its address or facsimile number given below (or at such other address or facsimile number for such party as shall be specified by notice given under this Section 10.3): -86- If to Buyer, to: 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 If to Sellers, to: Sprint Corporation 6200 Sprint Parkway Overland Park, KS 66251 KSOPHF 0302 - 3B679 Fax No. (913) 794-0144 Attention: Legal - Corporate Secretary with a copy to: Sprint Corporation 6200 Sprint Parkway Overland Park, KS 66251 KSOPHF 0302 - 3B626 Fax No. (913) 794-0144 Attention: Legal - Assistant Vice President, Law - Corporate Transactions and a copy to: King & Spalding 191 Peachtree Street Atlanta, Georgia 30303-1763 Fax No. (404) 572-5146 Attention: Michael J. Egan III -87- All such notices, requests, demands, waivers and communications shall be deemed received upon (i) actual receipt thereof by the addressee, (ii) actual delivery thereof to the appropriate address or (iii) in the case of a facsimile transmissions, upon transmission thereof by the sender and issuance by the transmitting machine of a confirmation slip that the number of pages constituting the notice have been transmitted without error. In the case of notices sent by facsimile transmission, the sender shall contemporaneously mail a copy of the notice to the addressee at the address provided for above. However, such mailing shall in no way alter the time at which the facsimile notice is deemed received. SECTION 10.4 SEVERABILITY. Should any provision of this Agreement for any reason be declared invalid or unenforceable, such decision shall not affect the validity or enforceability of any of the other provisions of this Agreement, which remaining provisions shall remain in full force and effect and the application of such invalid or unenforceable provision to Persons or circumstances other than those as to which it is held invalid or unenforceable shall be valid and enforced to the fullest extent permitted by law; PROVIDED, that the economic or legal substance of the transactions contemplated hereby is not affected in any materially adverse manner to any party. Should Section 5.8 of this Agreement or any word, phrase, clause, sentence or other portion thereof for any reason be declared illegal or unenforceable, such Section or portions thereof shall be modified or deleted in such a manner so as to make Section 5.8 of this Agreement as modified legal and enforceable to the fullest extent permitted under applicable laws. SECTION 10.5 BINDING EFFECT; ASSIGNMENT. This Agreement and all of the provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties to -88- this Agreement and their respective successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, directly or indirectly, including, without limitation, by operation of law, by any party to this Agreement without the prior written consent of the other parties to this Agreement, except that Buyer may, without such consent assign all such rights and obligations to (a) an Affiliate of Buyer or (b) on or after the Closing Date, to any lender or other party as collateral in connection with any financing; PROVIDED, HOWEVER, that no such assignment shall release Buyer of any of its obligations under this Agreement. SECTION 10.6 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the benefit of Sellers, and their successors and permitted assigns, with respect to the obligations of Buyer under this Agreement, and for the benefit of Buyer, and its respective successors and permitted assigns, with respect to the obligations of Sellers, under this Agreement, and this Agreement shall not be deemed to confer upon or give to any other third party any remedy, claim, liability, reimbursement, cause of action or other right. SECTION 10.7 INTERPRETATION. (a) As used in this Agreement, the term "PERSON" shall mean and include an individual, a partnership, limited liability company, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof or other entity. (b) As used in this Agreement, the term "AFFILIATE" shall mean a person that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with the person specified. -89- SECTION 10.8 JURISDICTION AND CONSENT TO SERVICE. Without limiting the jurisdiction or venue of any other court, each of Sprint, Centel LLC and Buyer (a) agrees that any suit, action or proceeding arising out of or relating to this Agreement shall be brought solely in the state or federal courts of the State of Delaware, (b) consents to the exclusive jurisdiction of each such court in any suit, action or proceeding relating to or arising out of this Agreement, (c) waives any objection which it may have to the laying of venue in any such suit, action or proceeding in any such court, and (d) agrees that service of any court paper may be made in such manner as may be provided under applicable laws or court rules governing service of process. SECTION 10.9 ENTIRE AGREEMENT. This Agreement, the Confidentiality Agreement, the Schedules and other documents referred to in this Agreement or delivered pursuant to this Agreement which form a part of this Agreement constitute the entire agreement among the parties with respect to the subject matter of this Agreement and supersede all other prior agreements and understandings, both written and oral, between the parties or any of them with respect to the subject matter of this Agreement. SECTION 10.10 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware (regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof) as to all matters, including but not limited to matters of validity, construction, effect, performance and remedies. SECTION 10.11 SPECIFIC PERFORMANCE. The parties acknowledge and agree that any breach of the terms of this Agreement would give rise to irreparable harm for which money damages would not be an adequate remedy and accordingly the parties agree that, in addition to any other remedies, each shall be entitled to enforce the terms of this Agreement by a -90- decree of specific performance without the necessity of proving the inadequacy of money damages as a remedy and without the necessity of posting bond. SECTION 10.12 COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. SECTION 10.13 AMENDMENT, MODIFICATION AND WAIVER. This Agreement may be amended, modified or supplemented at any time by written agreement of Sellers and Buyer. Any failure of Sellers or Buyer to comply with any term or provision of this Agreement may be waived, with respect to Buyer, by Sellers and, with respect to Sellers, by Buyer, by an instrument in writing signed by or on behalf of the appropriate party, but such waiver or failure to insist upon strict compliance with such term or provision shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure to comply. SECTION 10.14 KNOWLEDGE. "TO THE KNOWLEDGE OF SELLERS" or any similar phrase contained in this Agreement shall mean the actual knowledge of the officers of Sprint and its Affiliates as set forth on SCHEDULE 10.14. "TO THE KNOWLEDGE OF BUYER" or any similar phrase contained in this Agreement shall mean the actual knowledge of the officers of Buyer and its Affiliates as set forth on SCHEDULE 10.14. SECTION 10.15 SCHEDULES AND EXHIBITS. The Schedules, including all supplements and amendments thereto, and all exhibits to this Agreement are hereby incorporated into this Agreement and are hereby made a part of this Agreement as if set out in full in this Agreement. SECTION 10.16 WAIVER OF JURY TRIAL. EACH PARTY WAIVES ITS RIGHT TO A JURY TRIAL IN ANY COURT ACTION ARISING AMONG ANY OF THE PARTIES, -91- 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 or any claim arising under any federal, state or local statutes, laws or regulations, under the applicable commercial rules of the American Arbitration Association and 9 U.S.C. sec. 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. -92- IN WITNESS WHEREOF, the parties to this Agreement have caused this Agreement to be executed as of the date first above written. SPRINT CORPORATION By: /s/ MICHAEL B. FULLER ----------------------------------------- Michael B. Fuller President and Chief Operating Officer - LTD CENTEL DIRECTORIES LLC By: /s/ MICHAEL B. FULLER ----------------------------------------- Michael B. Fuller Vice President R.H. DONNELLEY CORPORATION By: /s/ DAVID C. SWANSON ----------------------------------------- David C. Swanson President and Chief Executive Officer EX-2.2 4 l96450aexv2w2.txt EX-2.2 PREFERRED STOCK AGREEMENT Exhibit 2.2 R.H. DONNELLEY CORPORATION PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT Dated as of September 21, 2002 TABLE OF CONTENTS

Page ---- ARTICLE I. DEFINITIONS...............................................................................1 Section 1.01. Definitions........................................................................1 ARTICLE II. SALE AND PURCHASE OF THE PREFERRED SHARES AND WARRANTS....................................8 Section 2.01. Sale and Purchase of the Preferred Shares and the Warrants.........................8 Section 2.02. Closing............................................................................8 Section 2.03. Use of Proceeds....................................................................9 Section 2.04. Share Adjustment...................................................................9 Section 2.05. Allocation........................................................................10 ARTICLE III. REPRESENTATIONS AND WARRANTIES...........................................................10 Section 3.01. Representations and Warranties of the Company.....................................10 Section 3.02. Representations and Warranties of the Purchasers..................................22 ARTICLE IV. COVENANTS OF THE PARTIES.................................................................23 Section 4.01. Taking of Necessary Action........................................................23 Section 4.02. Conduct of Business...............................................................24 Section 4.03. Financial Statements and Other Reports............................................26 Section 4.04. Restricted Actions................................................................26 Section 4.05. Required Actions..................................................................28 Section 4.06. Termination of Obligations........................................................29 Section 4.07. Inspection of Property............................................................30 Section 4.08. Lost, Stolen, Destroyed or Mutilated Securities...................................30 Section 4.09. Listing...........................................................................30 Section 4.10. Restrictions on Sale or Transfer; Legend..........................................31 Section 4.11. Notice of Breach..................................................................32 Section 4.12. Non-Disclosure; Interim Public Filings............................................32 Section 4.13. Governance Rights.................................................................33 Section 4.14. Other Transaction Documents.......................................................34 Section 4.15. Transfer Taxes....................................................................34 Section 4.16. Dividends.........................................................................35 Section 4.17. Certain Information Rights........................................................35 ARTICLE V. CONDITIONS...............................................................................35 Section 5.01. Conditions of Purchase............................................................35 Section 5.02. Conditions of Sale................................................................37

i TABLE OF CONTENTS (cont.)

Page ---- ARTICLE VI. TERMINATION..............................................................................38 Section 6.01. Termination.......................................................................38 Section 6.02. Effect of Termination.............................................................38 ARTICLE VII. SURVIVAL; CERTAIN REMEDIES...............................................................39 Section 7.01. Survival..........................................................................39 Section 7.02. Indemnification by the Purchasers.................................................39 Section 7.03. Indemnification by the Company....................................................39 Section 7.04. Certain Qualifications............................................................39 Section 7.05. Indemnification Procedures........................................................40 Section 7.06. Liability Limits..................................................................41 Section 7.07. Duplication.......................................................................42 Section 7.08. Exclusive Remedies................................................................42 ARTICLE VIII. MISCELLANEOUS............................................................................42 Section 8.01. Notices...........................................................................42 Section 8.02. Entire Agreement; Amendments; Waivers.............................................43 Section 8.03. Counterparts......................................................................43 Section 8.04. Governing Law.....................................................................43 Section 8.05. Public Announcements..............................................................44 Section 8.06. Closing Payment; Expenses.........................................................44 Section 8.07. Successors and Assigns............................................................44 Section 8.08. Jurisdiction......................................................................44 Section 8.09. Captions; References..............................................................44 Section 8.10. Severability......................................................................45 Section 8.11. Aggregation of Stock..............................................................45

ii PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT, dated as of September 21, 2002 (this "Agreement"), by and among R.H. Donnelley Corporation, a Delaware corporation (the "COMPANY"), and the investors listed in SCHEDULE A (each, a "PURCHASER"). Capitalized terms not otherwise defined where used herein shall have the meanings ascribed thereto in ARTICLE I. RECITALS: A. The Company has authorized a new series of its preferred stock, par value $1 per share, called the Convertible Cumulative Preferred Stock (the "PREFERRED STOCK"), which is convertible into shares of Common Stock in accordance with the terms of the Company's Certificate of Designations governing the Preferred Stock, in the form of EXHIBIT A (the "CERTIFICATE OF DESIGNATIONS"). B. The Purchasers have agreed to purchase from the Company, and the Company has agreed to sell to the Purchasers, subject to the terms and conditions of this Agreement, shares of the Preferred Stock and the Warrants. C. The Company and the Purchasers desire to set forth certain agreements herein. AGREEMENT: NOW THEREFORE, in consideration of the premises and the representations, warranties and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereby agree as follows: ARTICLE I. DEFINITIONS Section 1.01. DEFINITIONS. As used in this Agreement, the following terms shall have the meanings set forth below: "AFFILIATE" or "AFFILIATE" shall mean, with respect to any Person, any other Person that directly or indirectly controls or is controlled by or is under common control with such Person. As used in this definition, "control" (including its correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise) of such Person. "AFFILIATE TRANSACTION" shall have the meaning set forth in SECTION 4.04(b). "AGREEMENT" shall have the meaning set forth in the preamble. "ALLOCATION" shall have the meaning set forth in SECTION 2.05. "ANCILLARY DOCUMENTS" shall mean the Certificate of Designations, the Registration Rights Agreement, the Warrants and all other contracts, agreements and other documents being executed and delivered by the parties hereto pursuant to or in connection with this Agreement or the transactions contemplated hereby or thereby, but does not include the Other Transaction Documents. "BALANCE SHEET" shall have the meaning set forth in SECTION 3.01(e). "BUSINESS DAY" shall mean any day, other than a Saturday, Sunday or a day on which banking institutions in New York City are authorized or obligated by law or executive order to close. "CENDON" shall mean CenDon, L.L.C., a Delaware limited liability company. "CERTIFICATE OF DESIGNATIONS" shall have the meaning set forth in the recitals. "CERTIFICATE OF INCORPORATION" shall have the meaning set forth in SECTION 3.01(j). "CLOSING" shall have the meaning set forth in SECTION 2.02(a). "CLOSING DATE" shall have the meaning set forth in SECTION 2.02(a). "CLOSING PAYMENT" shall have the meaning set forth in SECTION 8.06(a). "CODE" shall mean the Internal Revenue Code of 1986. "COMMITMENT" shall have the meaning set forth in SECTION 3.01(t). "COMMITMENT LETTER" shall mean the (i) commitment letter, dated September 18, 2002, among Deutsche Bank Securities Inc., Deutsche Bank Trust Company Americas, Citicorp North America, Inc., Salomon Smith Barney Inc., Bear Stearns Corporate Lending Inc., Bear Stearns & Co. Inc., R.H. Donnelley Corporation and R.H. Donnelley Inc., (ii) the fee letter, dated September 18, 2002, among Deutsche Bank Securities Inc., Deutsche Bank Trust Company Americas, Citicorp North America, Inc., Salomon Smith Barney Inc., Bear Stearns Corporate Lending Inc., Bear Stearns & Co. Inc., R.H. Donnelley Corporation and R.H. Donnelley Inc., (iii) the engagement letter, dated September 18, 2002, among Deutsche Bank Securities Inc., Salomon Smith Barney Inc., Bear Stearns & Co. Inc., R.H. Donnelley Corporation and R.H. Donnelley Inc., (iv) the side letter related to an increase in the commitment amount, dated September 18, 2002, among Deutsche Bank Securities Inc., Deutsche Bank Trust Company Americas, Citicorp North America, Inc., Salomon Smith Barney Inc., Bear Stearns Corporate Lending Inc., Bear Stearns & Co. Inc., R.H. Donnelley Corporation and R.H. Donnelley Inc., and (v) the side letter related, in part, to the appointment of joint bookrunners, dated September 18, 2002, among Deutsche Bank Securities Inc., Salomon Smith Barney Inc., Bear -2- Stearns & Co. Inc., R.H. Donnelley Corporation and R.H. Donnelley Inc., and the exhibits, annexes and schedules to items (i) - (v). "COMMON STOCK" shall mean the common stock, par value $1 per share, of the Company, including any associated Right, as defined in and issued pursuant to the Rights Agreement. "COMMON STOCK EQUIVALENTS" shall have the meaning set forth in SECTION 2.04. "COMPANY" shall have the meaning set forth in the preamble. "COMPANY CERTIFICATE" shall have the meaning set forth in SECTION 5.01(d). "COMPANY INDEMNIFIED PARTY" shall have the meaning set forth in SECTION 7.02. "COMPANY PLAN" shall mean each plan, program or policy, payroll practice, contract, agreement or other arrangement providing for compensation, severance, termination pay, performance awards, stock or stock-related awards, profit-sharing, pensions, deferred or incentive compensation, retirement insurance, fringe benefits or other material employee benefits for Employees which is now or previously has been sponsored, maintained, contributed to or required to be contributed to by the Company or any Company Subsidiary or pursuant to which the Company or any of the Company Subsidiaries has or may have any liability. "COMPANY SUBSIDIARY" and "COMPANY SUBSIDIARIES" shall have the meanings set forth in SECTION 3.01(b). "DESIGNATED TRANSFEREE" shall have the meaning set forth in the Certificate of Designations. "DONTECH" shall mean the DonTech II partnership created by the DonTech II Partnership Agreement. "DONTECH PARTNERSHIP AGREEMENT" shall mean the DonTech II Partnership Agreement, effective as of August 19, 1997, by and between R.H. Donnelley Inc., a Delaware Corporation, and Ameritech Publishing of Illinois, Inc. "EMPLOYEE" shall mean each current, former or retired employee, officer or director of the Company or a Company Subsidiary. "EMPLOYEE AGREEMENT" shall mean each employment, severance or similar agreement, which is in effect on the date hereof or by which the Company or any Company Subsidiary is bound, between the Company or a Company Subsidiary and an Employee. "ENVIRONMENTAL LAWS" shall have the meaning set forth in SECTION 3.01(q). "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as -3- amended. "ERISA AFFILIATE" shall mean, with respect to any Person, any entity that is (i) a member of a "controlled group of corporations," under "common control" or a member of an "affiliated service group" within the meaning of Sections 414(b), (c) or (m) of the Code with such person, (ii) required to be aggregated under Section 414(o) of the Code with such person, or (iii) under "common control" with such person, within the meaning of Section 4001(a)(14) of ERISA, or any regulations promulgated or proposed under any of the foregoing Sections of the Code or ERISA. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934. "GAAP" shall mean generally accepted accounting principles in the United States of America in effect from time to time. "GOLDMAN ENTITIES" shall mean each of GSCP 2000, GS Capital Partners 2000 Offshore, L.P., a Cayman Islands exempted limited partnership, GS Capital Partners 2000 Employee Fund 2000, L.P., a Delaware limited partnership, GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, a German limited partnership, and Goldman Sachs Direct Investment Fund 2000, L.P. a Delaware limited partnership. "GOVERNMENTAL ENTITY" shall mean any court, department, body, board, bureau, administrative agency or commission or other governmental authority or instrumentality, whether federal, state, local or foreign. "GSCP 2000" shall mean GS Capital Partners 2000, L.P., a Delaware limited partnership. "HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976. "INDEMNIFICATION CLAIM NOTICE" shall have the meaning set forth in SECTION 7.05(a). "INDEMNIFIED PARTY" shall have the meaning set forth in SECTION 7.05(a). "INDEMNIFYING PARTY" shall have the meaning set forth in SECTION 7.05(a). "INTELLECTUAL PROPERTY" shall have the meaning set forth in SECTION 3.01(r). "KNOWLEDGE" shall mean the actual knowledge of the officers of the Company listed on EXHIBIT B after reasonable investigation and inquiry. "LIABILITY" shall mean any debt, liability or obligation, whether known or unknown, asserted or unasserted, accrued, absolute, contingent or otherwise, whether due or to become due. "LIENS" shall mean any liens, mortgages, deeds of trust, pledges, security -4- interests, charges, claims, leasehold interests, tenancies, restrictions and encumbrances of any nature whatsoever. "LITIGATION" shall have the meaning set forth in SECTION 3.01(h). "LOSSES" shall mean each and all of the following items: claims, losses (including, without limitation, losses of earnings), liabilities, obligations, payments, damages (actual but not punitive or consequential), charges, judgments, fines, penalties, amounts paid in settlement, and costs and expenses (including, without limitation, interest that may be imposed in connection therewith, costs and expenses of investigation, suits, proceedings, demands, assessments and fees, expenses and disbursements of counsel, consultants, and other experts. "MATERIAL ADVERSE EFFECT" shall mean, with respect to any reference to a state of facts, event, change, effect or condition, such state of facts, event, change, effect or condition that has had, has, or could reasonably be expected to have, a material adverse effect on (i) the business, assets, operations, properties, condition (financial or otherwise), prospects, contingent liabilities or material agreements of the Company and the Company Subsidiaries, taken as a whole (ii) the ability of the Company or any Company Subsidiary to perform its obligations under this Agreement, the Ancillary Documents or any Other Transaction Document, or (iii) the validity or enforceability of this Agreement, the Ancillary Documents or any Other Transaction Document or the rights or remedies of the Purchasers hereunder and thereunder. Notwithstanding anything contained herein to the contrary, the commencement by or against the Company or any Company Subsidiary of any case, proceeding or other action under any law relating to bankruptcy, insolvency or reorganization or the seeking of an appointment of a receiver, trustee, custodian or other similar official for the Company or any Company Subsidiary or for all or any substantial part of the Company's or any Company Subsidiary's assets, shall be deemed a Material Adverse Effect. "NET INCOME" shall mean with respect to the Net Income for any period, the amount reported in the line item of the Company's financial statements for such period entitled "Net Income" which financial statements appear in the most recent filing by the Company with the Securities and Exchange Commission. "OTHER TRANSACTION DOCUMENTS" shall mean the Sprint Purchase Agreement, the Sprint Transaction Documents, the Senior Credit Facility Documents, the Senior Subordinated Credit Facility Documents, the Senior Subordinated Notes Documents and the Commitment Letter. "PENSION PLAN" shall mean each Company Plan (other than a "multiemployer plan" (as defined in ERISA Section 3(37)) that is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA. "PERMITS" shall mean any licenses, permits, accreditations, consents, registrations, certificates, and other governmental or regulatory permits, accreditations, authorizations or approvals required for the operation of the businesses of the Company and the -5- Company Subsidiaries and for the ownership, lease or operation of the Company's and the Company Subsidiaries' properties. "PERMITTED LIENS" shall mean (i) Liens for Taxes not yet due and payable, (ii) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and repairmen incurred in the ordinary course of business and not yet delinquent, (iii) matters of record set forth on the title insurance policy insuring title to the owned real property and (iv) zoning, building or other restrictions, variances, covenants, rights of way, encumbrances, easements and other minor irregularities in title, none of such items in (i) - (iv) which, individually or in the aggregate, materially and adversely detract from the value of the owned or leased real property based on its current use or interfere in any material respect with the current use or occupancy of such owned or leased real property. "PERSON" or "PERSON" shall mean an individual, corporation, association, partnership, group (as defined in Section 13(d)(3) of the Exchange Act and the rules and regulations promulgated thereunder), trust, joint venture, business trust or unincorporated organization, or a government or any agency or political subdivision thereof. "PREFERRED SHARES" shall have the meaning set forth in SECTION 2.01. "PREFERRED STOCK" shall have the meaning set forth in the recitals. "PRINCIPAL MARKET" shall have the meaning set forth in SECTION 4.09. "PURCHASE PRICE" shall have the meaning set forth in SECTION 2.01. "PURCHASER" shall have the meaning set forth in the preamble. "PURCHASER DESIGNEES" shall mean the Directors (i) elected by the Purchasers to the Company's Board of Directors pursuant to Section 8 of the Certificate of Designations and (ii) designated pursuant to SECTION 4.13(a). "PURCHASER INDEMNIFIED PARTY" shall have the meaning set forth in SECTION 7.03. "PURCHASER'S CERTIFICATE" shall have the meaning set forth in SECTION 5.02(d). "REGISTRABLE SHARES" shall have the meaning set forth in the Registration Rights Agreement. "REGISTRATION RIGHTS AGREEMENT" shall mean the registration rights agreement to be executed by the Company and each Purchaser at the Closing, which shall be substantially in the form attached hereto as EXHIBIT C. "REPORTS" shall have the meaning set forth in SECTION 3.01(f). "RIGHTS AGREEMENT" shall mean the Rights Agreement, dated as of October 27, 1998, as amended, by and between the Company and The Bank of New York (successor -6- to First Chicago Trust Company of New York), as Rights Agent. "SEC" shall mean the United States Securities and Exchange Commission. "SECTION 203" shall have the meaning set forth in SECTION 3.01(s). "SECURITIES ACT" shall mean the Securities Act of 1933. "SENIOR CREDIT FACILITY" shall mean the Senior Facilities, as defined in the Commitment Letter. "SENIOR CREDIT FACILITY DOCUMENTS" shall mean any and all agreements, documents and instruments evidencing or governing the Senior Credit Facility. "SENIOR OFFICER'S CERTIFICATE" shall have the meaning set forth in SECTION 4.03(a). "SENIOR SUBORDINATED CREDIT FACILITY" shall mean the Senior Subordinated Facility, as defined in the Commitment Letter. "SENIOR SUBORDINATED CREDIT FACILITY DOCUMENTS" shall mean any and all agreements, documents and instruments evidencing or governing the Senior Subordinated Credit Facility. "SENIOR SUBORDINATED NOTES" shall have the meaning set forth in the Commitment Letter. "SENIOR SUBORDINATED NOTES DOCUMENTS" shall mean any and all agreements, documents and instruments evidencing or governing the Senior Subordinated Notes. "SPECIFIED PURCHASE PRICE" shall have the meaning set forth in SECTION 2.01. "SPRINT" shall mean Sprint Corporation, a Kansas corporation. "SPRINT PURCHASE AGREEMENT" shall mean the Stock Purchase Agreement, dated as of September 21, 2002, by and among Sprint, Centel Directories LLC, a Delaware limited liability company, and the Company. "SPRINT TRANSACTION" shall mean the purchase and sale of the Shares (as defined in the Sprint Purchase Agreement) pursuant to the terms and subject to the conditions of the Sprint Purchase Agreement and the other Sprint Transaction Documents. "SPRINT TRANSACTION DOCUMENTS" shall mean the Sprint Purchase Agreement and the Ancillary Agreements (as defined in the Sprint Purchase Agreement). "SUBSIDIARY" shall mean, with respect to any corporation (the "parent") any other corporation, association or other business entity of which more than 50% of the shares of the voting stock are owned or controlled, directly or indirectly, by the parent or one or more Subsidiaries of the parent, or by the parent and one or more of its Subsidiaries. -7- "TAX" and "TAXES" shall mean any and all federal, state, local, foreign or other taxes of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any taxing authority, including, without limitation, taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers' compensation, unemployment compensation, or net worth, and taxes or other charges in the nature of excise, withholding, ad valorem or value added, and includes, without limitation, any liability for Taxes of another person, as a transferee or successor, under Treas. Reg. Section 1.1502-6 or analogous provision of law or otherwise. "TAX RETURN" shall mean any return, report or similar statement (including the attached schedules) required to be filed with respect to any Tax, including, without limitation, any information return, claim for refund, amended return or declaration of estimated Tax. "TERMINATING BREACH" shall have the meaning set forth in SECTION 6.01(e). "TRANSFER" shall have the meaning set forth in SECTION 4.10(a). "VOTING EQUITY INTERESTS" shall have the meaning set forth in the Certificate of Designations. "WARRANTS" shall have the meaning set forth in SECTION 2.01. ARTICLE II. SALE AND PURCHASE OF THE PREFERRED SHARES AND WARRANTS Section 2.01. SALE AND PURCHASE OF THE PREFERRED SHARES AND THE WARRANTS. Subject to the terms and conditions of this Agreement, and in reliance upon the representations and warranties hereinafter set forth, the Company will sell to the Purchasers, and the Purchasers will purchase from the Company, (i) 200,000 shares of the Preferred Stock (as such number may be adjusted pursuant to SECTION 2.04, the "PREFERRED SHARES") and (ii) warrants to purchase 1,650,000 shares of Common Stock on the terms and subject to the conditions of the certificate for the Warrants in substantially the form attached hereto as EXHIBIT D (the "WARRANTS"), for an aggregate purchase price of $200.0 million (the "PURCHASE PRICE"). The number of shares of the Preferred Stock and the number of warrants to be purchased by each Purchaser at the Closing and the portion of the aggregate purchase price to be paid by each Purchaser at the Closing in the exchange therefor, shall be as specified in SCHEDULE A (with respect to each such Purchaser, such Purchaser's "SPECIFIED PURCHASE PRICE"). Section 2.02. CLOSING.(a) Subject to the satisfaction or waiver of the conditions set forth in this Agreement, the closing of the transactions contemplated by SECTION 2.01 (the "CLOSING") shall take place immediately prior to or concurrently with the closing of the Sprint Transaction, or at such other time as may be mutually agreed upon by the Purchasers and the Company (the "CLOSING DATE"). The Closing shall occur on the Closing Date at the offices of Jones, Day, Reavis & Pogue, 222 East 41st Street, New York, New York 10017. -8- (b) At the Closing: (i) the Company will deliver to the Purchasers certificates for the Preferred Shares to be sold in accordance with the provisions of SECTION 2.01 registered in the respective names and proportions set forth in SCHEDULE A; (ii) the Company will deliver to the Purchasers certificates for the Warrants, to be sold in accordance with the provisions of SECTION 2.01, in each case duly executed in favor of the respective names and in the proportions set forth in SCHEDULE A; (iii) subject to SECTION 8.06(a), each Purchaser, in full payment for the Preferred Shares and the Warrants, will deliver to the Company immediately available funds, by wire transfer to such account as the Company shall specify, such Purchaser's Specified Purchase Price; and (iv) each party shall take or cause to happen such other actions, and shall execute and deliver such other instruments or documents, as shall be required under ARTICLE V. Section 2.03. USE OF PROCEEDS. The Company shall use the proceeds from the sale of the Preferred Shares and the Warrants solely (i) to pay the consideration payable to Sprint or its Affiliates in or as a result of the Sprint Transaction and (ii) to pay the fees and out-of-pocket expenses relating to the transactions contemplated hereby and under the Other Transaction Documents. Section 2.04. SHARE ADJUSTMENT. If, on or prior to the Closing Date (or in connection with the Senior Credit Facility, the Senior Subordinated Credit Facility and/or the Senior Subordinated Notes), the Company shall issue or sell any shares of Common Stock or any options, warrants or other equity securities of any nature convertible into or exchangeable for shares of Common Stock ("COMMON STOCK EQUIVALENTS"), then the Company shall issue to the Purchasers an additional number of shares of Preferred Stock determined by multiplying the number of Preferred Shares then outstanding (which, in the case of an adjustment, if any, to be made on the Closing Date, shall be 200,000) by a fraction, the numerator of which shall be the number of shares of Common Stock or Common Stock Equivalents issued (a) in the case of an adjustment, if any, to be made on the Closing Date, from the date hereof to the Closing Date or (b) in the case of an adjustment, if any, to be made after the Closing Date, since the later of the Closing Date or the date of any prior adjustment made pursuant to this SECTION 2.04, and the denominator of which shall be the number of Voting Equity Interests outstanding immediately prior to such issuance of Common Stock or Common Stock Equivalents, excluding (1) any Preferred Shares the outstanding, if any, (2) any shares of Common Stock issuable upon conversion of the Preferred Shares then outstanding, if any, (3) any shares of Common Stock issuable upon exercise of the Warrants, and (4) the Common Stock or Common Stock Equivalents issued (a) in the case of an adjustment, if any, to be made on the Closing Date, from the date hereof to the Closing Date or (b) in the case of an adjustment, if any, to be made after the Closing Date, since the later of the Closing or the date of any prior adjustment made pursuant to this SECTION 2.04. Such number of additional shares will be allocated in a proportional amount to the Purchasers based on the allocation contained in SCHEDULE A. SCHEDULE 2.04 sets forth an example of how this adjustment provision will work. Section 2.05. ALLOCATION. On or prior to the Closing Date, the Purchasers will submit to the Company for the Company's approval (which shall not be unreasonably withheld) an allocation of the Purchase Price (the "ALLOCATION"), which Allocation will allocate the Purchase Price amongst the Warrants and the Preferred Shares. The parties agree to report the sale and purchase of the Preferred Shares and Warrants for all federal, state, local and foreign tax -9- purposes in a manner consistent with the Allocation and agree to take no position inconsistent with the foregoing (unless otherwise required by a final determination by the appropriate taxing authority). ARTICLE III. REPRESENTATIONS AND WARRANTIES Section 3.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to the Purchasers as follows: (a) ORGANIZATION AND GOOD STANDING OF THE COMPANY; AUTHORIZATION. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority and governmental authorizations to own, operate and lease its properties and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business in each other jurisdiction in which it owns or leases properties, or conducts business, so as to require such qualification, except where the failure to be so licensed or qualified in any such jurisdiction would not constitute a Material Adverse Effect. The Company has the corporate power and authority to execute and deliver this Agreement and the Ancillary Documents and perform its obligations hereunder and thereunder. The execution and delivery of this Agreement and the Ancillary Documents and the performance by the Company of its covenants and agreements under this Agreement and the Ancillary Documents have been duly and validly authorized by the Board of Directors of the Company, and no other corporate proceedings on the part of the Company (including, without limitation, any stockholder vote or approval) are necessary to authorize the execution, delivery and performance of this Agreement or the Ancillary Documents or the consummation of the transactions contemplated hereby and thereby (including, without limitation, the issuance of Common Stock upon conversion of the Preferred Stock and upon exercise of the Warrants). This Agreement and the Ancillary Documents have been duly executed and delivered by the Company and constitute the valid and binding agreements of the Company, enforceable against the Company in accordance with their terms, except that (a) such enforcement may be subject to any bankruptcy, insolvency, reorganization moratorium, fraudulent transfer or other laws, now or hereafter in effect relating to or limiting creditors' rights generally, and (b) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (b) ORGANIZATION AND GOOD STANDING OF COMPANY SUBSIDIARIES AND DONTECH. (i) SCHEDULE 3.01(b) lists all Subsidiaries of the Company and their respective jurisdictions of incorporation (collectively, the "COMPANY SUBSIDIARIES" and each, a "COMPANY SUBSIDIARY;" PROVIDED, that for the purposes of all other defined terms in this Agreement, SECTION 3.01, SECTION 4.03, and SECTION 4.07, DonTech shall not be deemed to be a Company Subsidiary, and PROVIDED, FURTHER, that with respect to the covenants and agreements as to Company Subsidiaries made in this Agreement, DonTech shall be deemed to be a Company Subsidiary, but the Company's obligations with respect to DonTech in this regard shall be limited to the extent the Company has rights under the DonTech Partnership Agreement that would permit it to comply with such obligations without violating any obligations of the Company, including its fiduciary obligations, under the DonTech Partnership Agreement or otherwise in respect to DonTech). Except as set forth in SCHEDULE 3.01(b), the Company owns, directly or indirectly, all the shares -10- of outstanding capital stock of each Company Subsidiary. Except as set forth in SCHEDULE 3.01(b), (a) there are outstanding no securities or rights convertible into or exchangeable for shares of any capital stock of any Company Subsidiary and (B) there are no contracts, commitments, understandings or arrangements by which any Company Subsidiary is bound to issue additional shares of its capital stock or options, warrants or rights to purchase or acquire any additional shares of its capital stock. All of the shares of capital stock of each of the Company Subsidiaries are duly and validly authorized, fully paid and non-assessable and, except as set forth in SCHEDULE 3.01(b), are owned by the Company free and clear of any Lien with respect thereto. Each Company Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and has all requisite corporate power and authority and governmental authorizations to own, operate and lease its properties and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business in each other jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification, except where the failure to be so licensed or qualified in any such jurisdiction would not constitute a Material Adverse Effect. (ii) To the Company's knowledge, DonTech is a general partnership duly organized, validly existing and in good standing under the laws of the State of Illinois, and has all requisite power and authority and governmental authorizations to own, operate and lease its properties and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business in each other jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification, except where failure to be so licensed or qualified in any such jurisdiction would not constitute a Material Adverse Effect. The Company, indirectly through R.H. Donnelley Inc., owns 50% of the general partnership interests of DonTech. (c) NO CONFLICTS. Except as set forth in SCHEDULE 3.01(c), neither the execution and delivery of this Agreement or the Ancillary Documents nor the consummation of the transactions contemplated by this Agreement or the Ancillary Documents will (i) conflict with or result in any breach of any provision of the incorporation documents or By-laws of the Company or any Company Subsidiary, (ii) except for applicable requirements of the HSR Act, require any filing with, or the obtaining of any permit, authorization, consent or approval of, any Governmental Entity, (iii) violate, conflict with or result in a default (or any event which, with notice or lapse of time or both, would constitute a default) or require any consent under, or give rise to any right of termination, cancellation or acceleration under, any of the terms, conditions or provisions of any note, mortgage, other evidence of indebtedness, guarantee, license, agreement, lease or other contract, instrument or obligation to which the Company or any Company Subsidiary or, to the Company's knowledge, DonTech is a party or by which the Company or any Company Subsidiary or any of their respective assets or, to the Company's knowledge, DonTech or any of its respective assets may be bound, or (iv) violate any order, injunction, decree, statute, rule or regulation applicable to the Company, excluding from the foregoing clauses (ii), (iii) and (iv) such requirements, violations, conflicts, defaults or rights that would not constitute a Material Adverse Effect. -11- (d) CAPITALIZATION. SCHEDULE 3.01(d) sets forth (i) the authorized capital stock of the Company, the number of shares of each class of capital stock issued and outstanding and the number of shares of Common Stock reserved for issuance in connection with employee benefit, stock option and dividend reinvestment plans in each case as of the date hereof, and (ii) all options, warrants, rights to subscribe to, scrip calls, contracts, undertakings, arrangements and commitments to issue which may result in the issuance of equity securities of the Company, in each case setting forth the identity of the holder thereof, the exercise or similar price and the date of expiration or termination thereof. All of the issued and outstanding shares of the Company's capital stock have been duly and validly authorized and issued and are fully paid and non-assessable and are not subject to any preemptive rights. Except as set forth in SCHEDULE 3.01(d) or pursuant to this Agreement, the Rights Agreement, the Warrants or the Certificate of Designations, (i) no equity securities of the Company are or may be required to be issued by reason of any options, warrants, rights to subscribe to, scrip calls or commitments of any character whatsoever, (ii) there are outstanding no securities or rights convertible into or exchangeable for shares of any capital stock of the Company, and (iii) there are no contracts, commitments, understandings or arrangements by which the Company is bound to issue additional shares of its capital stock or securities or rights convertible into or exchangeable for shares of any capital stock of the Company, or options, warrants or rights to purchase or acquire any additional shares of its capital stock. Neither the Company nor any Company Subsidiary is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any of its capital stock. Except as set forth in SCHEDULE 3.01(d), there are no contracts, agreements or understandings between the Company and any Person granting such Person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such Person or to require the Company to include such securities in any other registration statement filed by the Company under the Securities Act. (e) FINANCIAL STATEMENTS. The Company has previously delivered to the Purchasers copies of (i) the consolidated balance sheet of the Company and the Company Subsidiaries as of December 31 for the fiscal years 2000 and 2001, and the related consolidated statements of operations, statements of stockholders' equity and cash flows for the fiscal years 1999 through 2001, inclusive, as reported in the Company's Annual Report on Form 10-K (as amended) for the fiscal year ended December 31, 2001, filed by the Company with the SEC under the Exchange Act, in each case accompanied by the audit report of PricewaterhouseCoopers LLP, independent public accountants, and (ii) the unaudited consolidated balance sheet of the Company and the Company Subsidiaries as of June 30, 2002 (the "BALANCE SHEET") and the related unaudited consolidated statement of operations, statements of stockholders' equity and cash flows for the three- and six-month periods then ended as reported in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, filed with the SEC under the Exchange Act. All of such financial statements fairly present the consolidated financial position of the Company and the Company Subsidiaries as of the dates shown and the results of the consolidated operations, statements of stockholders' equity and cash flows of the Company and the Company Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth, in each case subject, as to interim statements, to changes resulting from year-end adjustments (none of which will be material in amount and effect). All of such financial statements have been prepared in accordance with GAAP consistently applied -12- during the periods involved, except as otherwise set forth in the notes thereto, and the Company and the Company Subsidiaries have no liabilities or obligations of any nature (absolute, accrued, contingent or otherwise) which are not fully reflected or reserved against in the balance sheet as of June 30, 2002, included in such financial statements, except for liabilities that may have arisen in the ordinary and usual course of business and consistent with past practice and that, individually or in the aggregate, would not constitute a Material Adverse Effect. Neither the Company nor any Company Subsidiary has entered into any off-balance sheet arrangements or transactions. (f) REPORTS. The Company has filed all reports, registration statements, proxy statements and other materials, together with any amendments required to be made with respect thereto, that were required to be filed with the SEC under the Securities Act or the Exchange Act after July 1, 1998 (all such reports and statements are collectively referred to herein as the "REPORTS") and with the New York Stock Exchange. As of their respective dates, the Reports, including the financial statements contained therein, complied in all material respects with all of the statutes and published rules and regulations enforced or promulgated by the regulatory authority with which they were filed, except to the extent the information in any Report has been revised or superseded by a later filed Report, did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. There are no facts existing as of the date hereof peculiar to the Company or any Company Subsidiary which the Company has not disclosed in the Reports or to the Purchasers in writing which, either individually or in the aggregate, would constitute a Material Adverse Effect. To the Company's knowledge, there are no facts existing as of the date hereof peculiar to DonTech that the Company has not disclosed in the Reports or to the Purchasers in writing which, either individually or in the aggregate, would constitute a Material Adverse Effect. (g) COMPLIANCE WITH APPLICABLE LAW. Each of the Company, each Company Subsidiary and, to the Company's knowledge, DonTech is not in default or violation in any respect of any law, statute, rule, regulation, policy or guideline of any Governmental Entity applicable to the Company, any of the Company Subsidiaries or DonTech, as the case may be, other than such defaults or violations that, either individually or in the aggregate, would not constitute a Material Adverse Effect, and the business of the Company, the Company Subsidiaries and, to the Company's knowledge, DonTech, are in compliance in all material respects with all applicable federal, state, local and foreign governments' laws and regulations. None of the Company the Company Subsidiaries or, to the Company's knowledge, DonTech is in default under or in breach of any order, judgment or decree of any arbitrator or other Governmental Entity, and neither the Company, nor any Company Subsidiary or, to the Company's knowledge, DonTech is a party or subject to any order, judgment or decree of any arbitrator or other Governmental Entity. (h) LITIGATION. As of the date of this Agreement, except as set forth in the Reports or in SCHEDULE 3.01(h), there is no claim, action, suit, investigation, proceeding or governmental investigation pending or, to the Company's knowledge, threatened by or before any arbitration tribunal, self regulatory agency or body (including, without limitation, the New York Stock Exchange), Governmental Entity or by any third party (a "LITIGATION") (i) against or -13- involving the Company or any of the Company Subsidiaries or involving any of their respective properties or assets, (ii) to the Company's knowledge, against or involving DonTech or involving any of its respective properties or assets or (iii) which challenges the validity of this Agreement or which could reasonably be expected to adversely affect or restrict the Company's ability to consummate the transactions contemplated by this Agreement and the Ancillary Documents. (i) EMPLOYEE BENEFITS. (i) SCHEDULE 3.01(i)(i) contains a true and complete list of (i) each material Company Plan and (ii) each material Employee Agreement. Except as set forth on SCHEDULE 3.01(i)(i), the Company and the Company Subsidiaries do not have any plan or legally binding commitment (i) to establish any new Company Plan or to modify or terminate any Company Plan or (ii) to enter into, modify or terminate any Employee Agreement. (ii) Current, accurate and complete copies of all documents embodying or relating to each Company Plan and each Employee Agreement have been made available to the Purchasers. (iii) Neither the Company nor a Company Subsidiary has, or has ever had, any ERISA Affiliates other than the Company or a Company Subsidiary. (iv) Each Company Plan and Employee Agreement has been established and maintained in accordance with its terms in all material respects and all applicable laws, statutes, orders, rules and regulations. Each Company Plan intended to qualify under Section 401 of the Code has a favorable determination letter from the Internal Revenue Service to the effect that it is so qualified and, if the letter for such a plan is not current, such plan is the subject of a timely request for a current favorable determination letter. (v) No steps have been taken to terminate any Pension Plan, no termination of any Pension Plan has occurred and no event has occurred and no condition exists that could constitute grounds for terminating any Pension Plan. Each Pension Plan has been maintained in compliance with the minimum funding standards of ERISA and the Code and no such Pension Plan has incurred any "accumulated funding deficiency," as defined in Section 412 of the Code and Section 302 of ERISA, whether or not waived. The funded status of each Pension Plan as reflected in the most recent actuarial report is accurate and such report fairly presents the funded status of such Pension Plan on the basis set forth therein. (vi) No Company Plan is under audit or investigation by the Internal Revenue Service, the Department of Labor, the Pension Benefit Guaranty Corporation or other governmental agency and, to the knowledge of the Company and the Company Subsidiaries, no such audit or investigation has been threatened. There are no actions, proceedings, arbitrations, suits or claims pending, or to the knowledge of the Company or any -14- Company Subsidiaries, threatened or anticipated (other than routine claims for benefits) against the Company or any Company Subsidiaries or any administrator, trustee or other fiduciary of any Company Plan with respect to any Company Plan or Employee Agreement, or against any Company Plan or against the assets of any Company Plan. (vii) Except as set forth on SCHEDULE 3.01(i)(vii), neither the Company nor the Company Subsidiaries maintains or contributes to any Company Plan which provides, or has any liability to provide, life insurance, medical, severance or other employee welfare benefits to any Employee upon his retirement or termination of employment, except as may be required by Section 4980B of the Code. (viii) Except as set forth on SCHEDULE 3.01(i)(viii), the execution and performance of the transactions contemplated in this Agreement will not (either alone or upon the occurrence of any additional or subsequent events) (i) constitute an event under any Company Plan or Employee Agreement that will or may result in any payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligations to fund benefits with respect to any Employee or (ii) result in the triggering or imposition of any restrictions or limitations on the right of the Company or a Company Subsidiary to amend or terminate any Company Plan. The execution and performance of the transactions contemplated in this Agreement will not cause any payment or benefit which will or may be made by the Company or a Company Subsidiary with respect to any Employees to be characterized as an "excess parachute payment," within the meaning of Section 280G(b)(1) of the Code. (ix) There are no, and have never been any, collective bargaining agreements or other labor union or similar contracts governing any Employees. (x) The Company and the Company Subsidiaries are in compliance in all material respects with all applicable federal, state and local laws, rules and regulations respecting employment. (j) ABSENCE OF CERTAIN CHANGES. Since December 31, 2001, the business of the Company and the Company Subsidiaries and, to the Company's knowledge, DonTech has been operated in the usual and ordinary course consistent with past practice and, except as set forth in the Reports or in SCHEDULE 3.01(j) or as provided in this Agreement or the Ancillary Documents: (i) there has been no event, condition or change that individually or in the aggregate constitutes a Material Adverse Effect; (ii) none of the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech has entered into any material transaction or incurred any material liability or material obligation, except in the ordinary course of its business consistent with past practice; -15- (iii) none of the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech has sold or transferred a material amount of the assets it owns except in the ordinary course of its business; (iv) none of the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech has incurred any indebtedness other than indebtedness to trade creditors incurred in the ordinary course of business; (v) none of the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech has changed its accounting policies or procedures as in effect on December 31, 2001; (vi) neither the Company nor any Company Subsidiary has amended or in any way altered its Restated Certificate of Incorporation, as amended ("CERTIFICATE OF INCORPORATION") or By-laws; (vii) the Company has not changed the number of shares of the authorized or issued capital stock of the Company, issued or granted any option, warrant, call, commitment, subscription, right to purchase or agreement of any character relating to the authorized or issued capital stock of the Company or any Company Subsidiary, or any securities convertible into shares of such stock (except for grants of options to purchase Common Stock to be granted pursuant to Company Plans), split, combined or reclassified any shares of the capital stock of the Company, declared, set aside or paid any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of the capital stock of the Company, or redeemed or otherwise acquired any shares of such capital stock; (viii) the Company has not increased the number of members of the Board of Directors of the Company; (ix) none of the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech has acquired any assets other than in the ordinary and usual course of business; (x) none of the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech has entered into employment agreements with any Employee (other than an agreement terminable at will without any financial penalty), or granted any increase in the compensation (including employee benefits) of any employee, except for increases (A) in the ordinary course of business and consistent with past practice, (B) as a result of collective bargaining or (C) as required by any employment or other agreement, policy or plan currently in effect; and (xi) none of the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech has agreed, whether in writing or otherwise, to -16- take any action that, if taken, would render any of the representations set forth in this SECTION 3.01(j) untrue. (k) PREFERRED SHARES AND WARRANTS. The Preferred Shares have been duly authorized by all necessary corporate action. When issued and sold against receipt of the consideration therefor, the Preferred Shares will be validly issued, fully paid and nonassessable, will not subject the holders thereof to any personal liability and will not be subject to any preemptive rights except as contemplated by this Agreement and the Certificate of Designations. When issued and sold against receipt of the consideration therefor, the Warrants will not subject the holders thereof to any personal liability and will not be subject to any preemptive rights except as contemplated by this Agreement and the Warrants. The Company has 21,909,939 shares of Common Stock that are in treasury and listed on the New York Stock Exchange. A total of 20,500,000 of such treasury shares of Common Stock have been duly reserved for issuance upon the conversion or redemption of the Preferred Shares and the exercise of the Warrants. The shares of Common Stock issuable upon conversion or redemption of the Preferred Shares and upon exercise of the Warrants have been duly and validly authorized and, if and when issued, will be validly issued, fully paid and non-assessable and will not be subject to any preemptive rights except as contemplated by this Agreement, the Warrants and the Certificate of Designations. At the Closing, the Purchasers will receive valid title to the Preferred Shares and the Warrants, free and clear of any Lien (other than any restrictions on transfer under state and/or federal securities laws). (l) OFFERING OF SECURITIES. Based in part on the representations and warranties of the Purchasers in SECTION 3.02, it is not necessary in connection with the offer, sale and delivery of the Preferred Shares and the Warrants to the Purchasers to register the offer and sale of the Preferred Shares and the Warrants under the Securities Act. The Company has not, directly or indirectly, offered, sold or solicited any offer to buy and will not, directly or indirectly, offer, sell or solicit any offer to buy, any security of a type or in a manner which would be integrated with the sale of the Preferred Shares and the Warrants and require any of the Preferred Shares or the Warrants to be registered under the Securities Act. None of the Company, its Affiliates or any person acting on its or any of their behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Rule 502(c) under the Securities Act) in connection with the offering of the Preferred Shares and the Warrants. (m) BROKERS AND FINDERS. Except for the engagement of Bear, Stearns & Co., Inc. and Morgan Stanley & Co., Inc. (the fees and expenses of each which will be borne solely by the Company), neither the Company nor any of its Affiliates has employed any financial advisor or finder or incurred any liability for any financial advisory or finders' fees in connection with this Agreement or the transactions contemplated by this Agreement. (n) PERMITS. The Company, each Company Subsidiary and, to the Company's knowledge, DonTech, possesses all Permits required for the conduct of its respective businesses, except where the failure to possess any such Permit would not constitute a Material Adverse Effect, and none of the Company, any Company Subsidiary nor, to the Company's knowledge, DonTech has received any notice of proceedings relating to the revocation or modification of any such Permit that, if determined adversely to the Company, DonTech or any such Company Subsidiary, individually or in the aggregate, would constitute a Material Adverse Effect. All of -17- such Permits of the Company and the Company Subsidiaries and, to the Company's knowledge such Permits of DonTech are valid and in full force and effect, and the Company, each of the Company Subsidiaries and to the Company's knowledge, DonTech have duly performed and are in compliance in all respects with all of their obligations under such Permits, except where the failure to perform or comply, individually or in the aggregate would not constitute a Material Adverse Effect. No event has occurred with respect to any of such Permits of the Company and the Company Subsidiaries or, to the Company's knowledge, such Permits of DonTech that allows, or after notice or lapse of time or both would allow, the suspension, limitation, revocation, non-renewal or termination thereof or would result in any other impairment of the rights of the holder thereof in and under any of such Permits that, if such event or events occurred, individually or in the aggregate, would constitute a Material Adverse Effect, and no terminations thereof or proceedings to suspend, limit, revoke or terminate any Permits of the Company and the Company Subsidiaries or, to the Company's knowledge, such Permits of DonTech, have been threatened that, if acted upon, individually or in the aggregate, would constitute a Material Adverse Effect. (o) TITLE TO PROPERTIES; INSURANCE. Except as set forth in SCHEDULE 3.01(o), the Company, the Company Subsidiaries and, to the Company's knowledge, DonTech have good and marketable title to all real properties and all other properties and assets owned by them that are material to their respective businesses, in each case free from Liens other than Permitted Liens. Except as set forth in SCHEDULE 3.01(o), the Company, the Company Subsidiaries and, to the Company's knowledge, DonTech hold any leased real or personal property that is material to their business under valid and enforceable leases enforceable against the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech, with no exceptions that would materially interfere with the use made or to be made thereof by them, in each case free from Liens other than Permitted Liens. The Company, the Company Subsidiaries and, to the Company's knowledge, DonTech have at all times maintained in full force and effect property damage, liability and other insurance with financially sound and reputable insurers at levels of coverage reasonable and customary for the Company's industry. (p) TAXES. All material Tax Returns required to be filed by the Company and each Company Subsidiary (provided that for the purposes of this SECTION 3.01(p) only, DonTech and CenDon shall each be deemed a Company Subsidiary), and, to the Company's knowledge, DonTech, have been filed, and all such Tax Returns are true, complete and correct in all material respects. Neither the Company nor any of the Company Subsidiaries, or to the Company's knowledge, DonTech has any liability for Taxes other than Taxes (i) currently payable without penalty or interest or (ii) being contested in good faith and by appropriate proceedings and for which, in the case of both clauses (i) and (ii), adequate reserves have been established on the Balance Sheet and books and records of the Company or the Company Subsidiaries, as applicable. There are no proposed Tax assessments against the Company or any of the Company Subsidiaries, or to the Company's knowledge, DonTech. Neither the Internal Revenue Service nor any other taxing authority has asserted any currently ongoing claim for Taxes, nor to the Company's knowledge, is threatening to assert any claims for such Taxes, against the Company or any of the Company Subsidiaries or DonTech. The Company and each of the Company Subsidiaries, and, to the Company's knowledge, DonTech have withheld or collected and paid over to the appropriate Governmental Entities (or are properly holding for such payment) all -18- Taxes required by law to be withheld or collected. There are no Liens for Taxes upon the assets of the Company or any of the Company Subsidiaries, or to the Company's knowledge, DonTech (other than Liens for Taxes that are not yet due). Neither the Company nor any of the Company Subsidiaries, or to the Company's knowledge, DonTech (i) has any liability under Treasury Regulation Section 1.1502-6 or analogous state, local, or foreign law provision for the Taxes of an entity other than the Company or any of the Company Subsidiaries or DonTech, as applicable, or (ii) is a party to a Tax sharing or Tax indemnity agreement or any other commitment of a similar nature with any entity other than the Company or any of the Company Subsidiaries that remains in effect and under which the Company or any of the Company Subsidiaries could have any material liability for Taxes. No claim has been made by a taxing authority in a jurisdiction where the Company or any of the Company Subsidiaries does not file Tax Returns that the Company or any of the Company Subsidiaries is or may be subject to taxation by that jurisdiction. To the Company's knowledge, no claim has been made by a taxing authority in a jurisdiction where DonTech does not file Tax Returns that DonTech is or may be subject to taxation by that jurisdiction. Neither the Company nor any of the Company Subsidiaries or to the Company's knowledge, DonTech is the subject of any currently ongoing audit or examination with respect to a material amount of Taxes, nor, to the Company's knowledge, has any such audit been threatened or proposed, by any taxing authority. (q) ENVIRONMENTAL MATTERS. The Company, the Company Subsidiaries and, to the Company's knowledge, DonTech (i) are in compliance with all applicable statutes, rules, regulations, decisions or orders of any Governmental Entity relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, "ENVIRONMENTAL LAWS"), (ii) have not generated, manufactured, treated, stored or disposed of any hazardous substances on any owned or operated (or previously owned or operated) real property, except in compliance with Environmental Laws, (iii) are not liable for any off-site disposal or contamination pursuant to any Environmental Laws, and (iv) are not subject to any pending claims relating to any Environmental Laws, which in each of clauses (i) through (iv) individually or in the aggregate, would constitute a Material Adverse Effect. (r) INTELLECTUAL PROPERTY. The Company, the Company Subsidiaries and, to the Company's knowledge, DonTech license, own or possess, or can acquire on reasonable terms, all patents, patent rights, licenses, inventions, copy-rights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names, Internet domain names, designs, logos, slogans and general intangibles of like nature, together with goodwill, and registrations and applications relating to any of the foregoing, as applicable ("INTELLECTUAL PROPERTY"), currently employed by them in connection with the respective business now operated by them, except where the failure to own or possess or otherwise be able to acquire such Intellectual Property, individually or in the aggregate, would not constitute a Material Adverse Effect. The Intellectual Property owned or used by the Company, the Company Subsidiaries and, to the Company's knowledge, DonTech has been duly maintained, is valid and subsisting, in full force and effect, and has not been cancelled, expired or abandoned, except where such cancellation, expiration or abandonment would not constitute a Material Adverse Effect. None of the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech has received any notice of -19- infringement of or conflict with asserted rights of others with respect to any of such Intellectual Property which, singly or in the aggregate, which, if determined adversely to the Company, would constitute a Material Adverse Effect. (s) DGCL SECTION 203 AND RIGHTS AGREEMENT. The Board of Directors of the Company has taken all action necessary to exempt from the provisions of Section 203 of the Delaware General Corporation Law ("SECTION 203") and from being deemed an "Acquiring Person" under the Rights Agreement, to the extent applicable, this Agreement, any acquisition by the Purchasers or their Affiliates of the Preferred Shares or the Warrants pursuant to this Agreement, the Warrants and the Certificate of Designations and any conversion or exercise by the Purchasers or their Affiliates of the Preferred Shares or the Warrants into Common Stock. No agreement or instrument to which the Company or the Company Subsidiaries is a party or by which any of them is bound, and no state statute similar to Section 203 that is applicable to the Company or the Company Subsidiaries imposes any restrictions on business combinations or similar transactions with interested stockholders of a nature similar to those set forth in Section 203. True and correct copies of the resolutions heretofore adopted by the Company's Board of Directors to implement the foregoing actions with respect to Section 203 and the Rights Agreement, have been delivered to the Purchasers and such resolutions are in full force and effect and have not been amended or modified. (t) COMMITMENTS. (i) This Agreement, the Ancillary Documents, the Other Transaction Documents, the agreements, documents and instruments set forth on SCHEDULE 3.01(t) and other schedules to this Agreement and all documents referenced in or attached as exhibits to the Reports constitute, as of the date of this Agreement all of the material contracts or agreements (whether written or oral), including any amendments thereto, (A) to which the Company, any Company Subsidiaries or, to the Company's knowledge, DonTech is a party or (B) by or to which the Company, any Company Subsidiaries or any of their properties or, to the Company's knowledge, DonTech or its properties may be bound or subject (individually a "COMMITMENT" and collectively, the "COMMITMENTS"). SCHEDULE 3.01(t) sets forth a complete and correct list of Commitments of the following type: Commitments relating to any Litigation; Commitments containing covenants of the Company or any Company Subsidiaries or any successor thereto not compete, not to engage in any line of business or conduct business in any geographical area or with any Person, or not to disclose certain information; and Commitments with any Affiliate. (ii) Complete and correct copies (or, if oral, full written descriptions) of all Commitments required to be listed on SCHEDULE 3.01(t), including all amendments thereto, have been made available to the Purchasers. All of the Commitments are valid, binding, in full force and effect and enforceable in accordance with their respective terms by the Company, a Company Subsidiary or, to the Company's knowledge, DonTech (as the case may be) against the respective counter parties to such Commitments, except where the failure to be valid, binding, enforceable or in full force and effect does not constitute a Material -20- Adverse Effect. Except as set forth on SCHEDULE 3.01(t), (a) there is no breach, violation or default and no event that, with or without notice or the passage of time or both, would constitute a breach, violation or default, or give rise to any Lien or right of termination, modification, cancellation, prepayment, suspension, limitation, revocation or acceleration under, any Commitment, (B) none of the Company, the Company Subsidiaries or, to the Company's knowledge, DonTech or any other party to any of the Commitments is in arrears in respect of the performance or satisfaction of the terms and conditions on its part to be performed or satisfied under any of such Commitments, and (C) no waiver thereunder has been granted by any of the Parties thereto except in each of clauses (A)-(C) where any such failure does not, individually or in the aggregate, constitute a Material Adverse Effect. (u) ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in the Reports or SCHEDULE 3.01(u) or the other Schedules to this Agreement, the Company does not have any Liabilities other than (a) Liabilities reserved against or otherwise disclosed in the Balance Sheet or the footnotes thereto, (b) other Liabilities which were incurred after June 30, 2002 in the ordinary course of business consistent (in amount and kind) with past practice (none of which is a liability resulting from breach of contract, breach of warranty, tort, infringement, claim or lawsuit) and which, individually or in the aggregate, do not exceed $1,500,000 and (c) Liabilities incurred in connection with this Agreement, the Ancillary Agreements and any Other Transaction Document. (v) DISCLOSURE. Neither this Agreement nor any other Ancillary Document, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. (w) HOLDING COMPANY ACT AND INVESTMENT COMPANY ACT. Neither the Company nor any of the Company Subsidiaries or, to the Company's knowledge, DonTech is: (i) a "public utility company" or a "holding company," or an "affiliate" or a "subsidiary company" of a "holding company," or an "affiliate" of such a "subsidiary company," as such terms are defined in the Public Utility Holding Company Act of 1935, as amended, or (ii) a "public utility," as defined in the Federal Power Act, as amended. None of the Company, any Company Subsidiary or, to the Company's knowledge, DonTech is an "investment company" as defined in the Investment Company Act of 1940, as amended or is controlled by or under control with an Affiliate of, an "investment company." (x) SOLVENCY. The Company is not, and after giving effect to the issuance and sale of the Preferred Shares and the Warrants and the application of the proceeds therefrom will not be, insolvent within the meaning of Title 11 of the United States Code, the General Corporation Law of the State of Delaware, or the General Laws of the State of New York. (y) D&O INSURANCE. The Company maintains director and officer liability insurance coverage in the aggregate amount of $100 million, which policy has no per individual deductible. -21- Section 3.02. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser represents and warrants to, and agrees with, the Company as follows: (a) ORGANIZATION. Such Purchaser is a limited partnership duly organized and validly existing under the laws of the state or country of its jurisdiction of formation. Such Purchaser has the power and authority to execute and deliver this Agreement and the Ancillary Documents to which it is a party and perform its obligations hereunder and thereunder. The execution and delivery of this Agreement and the Ancillary Documents to which it is a party and the performance by such Purchaser of its covenants and agreements under this Agreement and the Ancillary Documents to which it is a party have been duly and validly authorized by the general partner of such Purchaser, and no further proceedings on the part of such Purchaser are necessary to authorize the execution, delivery and performance of this Agreement or the Ancillary Documents to which it is a party or the consummation of the transactions contemplated hereby and thereby. This Agreement and the Ancillary Documents to which such Purchaser is a party have been duly executed and delivered by the Purchaser and constitute the valid and binding agreements of such Purchaser, enforceable against such Purchaser in accordance with their terms, except that (a) such enforcement may be subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other laws, now or hereafter in effect, relating to or limiting creditors' rights generally, and (b) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (b) AUTHORIZATION; NO CONFLICTS. Neither the execution and delivery of this Agreement or the Ancillary Documents to which such Purchaser is a party nor the consummation of the transactions contemplated by this Agreement or the Ancillary Documents to which such Purchaser is a party will (i) conflict with or result in any breach of any provision of the organization documents or by-laws of such Purchaser, (ii) except for the applicable requirements of the HSR Act, require any filing with, or the obtaining of any permit, authorization, consent or approval of, any Governmental Entity, (iii) violate, conflict with or result in a default (or any event which, with notice or lapse of time or both, would constitute a default) or require any consent under, or give rise to any right of termination, cancellation or acceleration under, any of the terms, conditions or provisions of any note, mortgage, other evidence of indebtedness, guarantee, license, agreement, lease or other contract, instrument or obligation to which such Purchaser is a party or by which such Purchaser or any of its assets may be bound, or (iv) violate any order, injunction, decree, statute, rule or regulation applicable to such Purchaser, excluding from the foregoing clauses (ii), (iii) and (iv) such requirements, violations, conflicts, defaults or rights that would not adversely affect the ability of such Purchaser to consummate the transactions contemplated by this Agreement. (c) BROKERS AND FINDERS. Neither such Purchaser nor any of its officers, directors, employees or agents has utilized any broker, finder, placement agent or financial advisor or incurred any liability for any fees or commissions in connection with any of the transactions contemplated hereby or by the Ancillary Documents. (d) Investment Representations. -22- (i) Such Purchaser is an "accredited investor" within the meaning of Rule 501 of Regulation D promulgated under the Securities Act and was not organized for the specific purpose of acquiring the Preferred Shares or the Warrants; (ii) such Purchaser has sufficient knowledge, sophistication and experience in financial and business matters as are necessary to evaluate the risks and merits of an investment in the Company; (iii) such Purchaser has had an opportunity to discuss the Company's business, management and financial affairs with the Company's management; (iv) the Preferred Shares and the Warrants being acquired by such Purchaser are being acquired for its own account for the purpose of investment and not with a view to or for sale in connection with any distribution thereof; and (v) such Purchaser understands that (A) none of the Preferred Shares, the shares of Common Stock issuable upon conversion or redemption thereof, the Warrants or the shares of Common Stock issuable upon the exercise thereof have been registered under the Securities Act and are being offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering, (B) the Preferred Shares, the shares of Common Stock issuable upon conversion or redemption thereof, the Warrants and the shares of Common Stock issuable upon the exercise thereof must be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act or is exempt from such registration, (C) the Preferred Shares, the shares of Common Stock issuable upon conversion or redemption thereof, the Warrants and the shares of Common Stock issuable upon the exercise thereof will bear a legend to such effect, as applicable, and (D) the Company will make a notation on its transfer books to such effect. ARTICLE IV. COVENANTS OF THE PARTIES Section 4.01. TAKING OF NECESSARY ACTION. Each of the parties hereto shall use its reasonable best efforts promptly to take or cause to be taken all action and promptly to do or cause to be done all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement. Without limiting the foregoing, the Company and each Purchaser will, and the Company shall cause each Company Subsidiary to, use its reasonable best efforts to make all filings (including, without limitation, under the HSR Act) and obtain all consents of Governmental Entities which may be necessary or, in the reasonable opinion of the Purchasers or the Company, as the case may be, advisable for the consummation of the transactions contemplated by this Agreement and the Ancillary Documents and with respect to the Company and the Company Subsidiaries, any Other Transaction Document and all third party consents and filings set forth in SCHEDULE 4.01. Section 4.02. CONDUCT OF BUSINESS. (a) Except as otherwise required to perform its obligations under this Agreement or any agreement contemplated herein, as set forth in SCHEDULE 4.02, or as otherwise agreed to in writing by the Purchasers, from the date hereof to the -23- Closing Date, the Company shall, and shall cause each Company Subsidiary to (i) conduct its business only in the ordinary course and consistent with past practice; (ii) use its reasonable best efforts to preserve and maintain its assets and properties and its relationships with its customers, suppliers, clients, advertisers, distributors, agents, officers and employees and other Persons with which it has significant business dealings; (iii) use its reasonable best efforts to maintain all of the material assets it owns or uses in the ordinary course of business consistent with past practice; (iv) use its reasonable best efforts to preserve the goodwill and ongoing operations of its business; (v) maintain its books and records in the usual, regular and ordinary manner, on a basis consistent with past practice; (vi) perform and comply in all material respects with its Commitments; (vii) maintain insurance in full force and effect with respect to its business with responsible companies, comparable in amount, scope and coverage to that in effect on the date of this Agreement; and (viii) comply in all material respects with applicable laws. (b) Except as expressly contemplated by this Agreement or as set forth on SCHEDULE 4.02, between the date hereof and the Closing Date, the Company shall not, and shall cause each Company Subsidiary not to, do any of the following without the prior written consent of the Purchasers: (i) amend or in any way alter its Certificate of Incorporation or By-laws; (ii) engage in any other act, other than in the ordinary course of business and consistent with past practice, that would constitute a Material Adverse Effect or in any way delay or impair consummation of the transactions contemplated by this Agreement, the Ancillary Documents or any Other Transaction Agreement; (iii) change the number of shares of the authorized or issued capital stock of the Company, issue or grant any option, warrant, call, commitment, subscription, right to purchase or agreement of any character relating to the authorized or issued capital stock of the Company or any Company Subsidiary, or any securities convertible into shares of such stock (except for grants of options to purchase Common Stock granted pursuant to employee benefit plans of the Company not to exceed the amount set forth in SCHEDULE 4.02 and, other than the issuance of equity securities in connection with the Senior Credit Facility, the Senior Subordinated Credit Facility and/or the Senior Subordinated Notes for which an adjustment is made pursuant to SECTION 2.04), split, combine or reclassify any shares of the capital stock of the Company, declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of the capital stock of the Company, or redeem or otherwise acquire any shares of such capital stock, other than open market purchases of Common Stock not in excess of the lesser of $25 million or 25% of the Company's Net Income for the immediately preceding twelve months in any given twelve month period; -24- (iv) issue any equity securities other than the issuance of equity securities in connection with the Senior Credit Facility or the Senior Subordinated Credit Facility for which an adjustment is made pursuant to SECTION 2.04.; (v) enter into any transaction or incur any liability or obligation, except in the ordinary course of business; (vi) sell, transfer or otherwise dispose of any assets, except in the ordinary course of business; (vii) incur any Lien (other than a Permitted Lien) or indebtedness other than (A) indebtedness to trade creditors incurred in the ordinary course of business or (B) pursuant to the Senior Credit Facility or the Senior Subordinated Credit Facility, or vary the terms of any existing Lien or indebtedness; (viii) change its independent accountants, accounting policies or procedures; (ix) acquire any assets other than in the ordinary and usual course of business; (x) enter into an Employee Agreement with any Employee (other than an agreement terminable at will without any financial penalty), vary the terms of any Company Plan in any material way or grant any material increase in the compensation (including employee benefits) of any Employee, except for increases or variances (A) in the ordinary course of business and consistent with past practice, (B) as a result of collective bargaining, or (C) as required by any employment or other agreement, policy or plan currently in effect; (xi) do any other act which is reasonably likely to cause any representation or warranty in this Agreement to be or become untrue in any material respect; (xii) transfer, grant, amend or knowingly terminate any of its rights under any of the Company's Intellectual Property other than in the ordinary course of business consistent with past practices; (xiii) enter into any transactions or agreements of any kind with any of its Affiliates, other than with any Company Subsidiary or between any Company Subsidiaries, including the making of any loans, advances or investments to or in such entity, except for transactions or agreements on terms at least as favorable to the Company entering into such transactions or agreements as the terms which would be available with independent third parties at arm's length; (xiv) make any change in the Company's or any Company Subsidiary's Tax accounting methods, any new election with respect to Taxes or any -25- modification or revocation of any existing election with respect to Taxes or settle or otherwise dispose of any Tax audit, dispute, or other Tax proceeding; or (xv) agree to take any of the actions restricted by this SECTION 4.02. Section 4.03. FINANCIAL STATEMENTS AND OTHER REPORTS. Subject to SECTION 4.06, the Company covenants that, from and after the Closing Date, it will deliver to each Purchaser: (a) as soon as practicable and in any event no later than the day that a Form 10-Q is required to be filed by the Company with the SEC following each quarterly period (other than the last quarterly period) in each fiscal year, consolidated statements of operations, statements of stockholders' equity and cash flows of the Company for the period from the beginning of the then current fiscal year to the end of such quarterly period, and a consolidated balance sheet of the Company as of the end of such quarterly period setting forth in each case in comparative form figures for the corresponding period or date in the preceding fiscal year, together with a certificate from a senior officer of the Company to the effect that such financial statements have been prepared in accordance with GAAP consistently applied during the periods involved (subject to year-end adjustments) and that such financial statements fairly present the results of operations and changes in financial position, stockholders' equity, cash flows and financial position of the Company and the Company Subsidiaries as of and for the period then ended (such certificate, the "SENIOR OFFICER'S CERTIFICATE"); provided, however, that delivery pursuant to SECTION 4.03(c) of a copy of the Company's periodic report on Form 10-Q or such period filed with the SEC shall be deemed to satisfy the requirements of this SECTION 4.03(a); (b) as soon as practicable and in any event no later than the day that a Form 10-K is required to be filed by the Company with the SEC following the end of each fiscal year, a consolidated balance sheet of the Company as of the end of such fiscal year and the related consolidated statements of operations, statements of stockholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the corresponding figures from the preceding fiscal year, together with the audit report of PricewaterhouseCoopers LLP or other independent public accountants of recognized standing selected by the Company; provided, however, that delivery pursuant to SECTION 4.03(c) below of a copy of the Annual Report on Form 10-K of the Company for such fiscal year filed with the SEC shall be deemed to satisfy the requirements of this SECTION 4.03(b); and (c) promptly upon transmission thereof, copies of all such financial statements, proxy statements, notices and reports as it shall send to its stockholders and copies of all such registration statements, other than registration statements relating to employee benefit or dividend reinvestment plans, and all such regular and periodic reports on Forms 10-K, 10-Q and 8-K (or similar or substitute forms) as it shall file with the SEC. Section 4.04. RESTRICTED ACTIONS. Subject to SECTION 4.06, from and after the Closing Date, the Company shall not, and shall not permit any Company Subsidiary to, directly or indirectly, take any of the following actions without the prior written consent of at least a majority of the then-outstanding Preferred Shares or the affirmative vote in person or by proxy at a meeting called for that purpose of the holders of at least a majority of the Preferred Shares voting thereat: -26- (a) sell, lease, transfer or otherwise dispose of any asset or assets of the Company or Company Subsidiaries, including the capital stock of any Company Subsidiary, other than a disposition of all or substantially all of the Company's assets in a transaction governed by Section 271 of the Delaware General Corporation Law, unless (i) the aggregate net proceeds received in connection with all of such transactions in any given twelve-month period (whether paid in cash or property) does not exceed $115 million, or (ii) such transaction is between the Company or its wholly owned Company Subsidiary, on the one hand, and any other wholly owned Company Subsidiary, on the other hand; (b) enter into or suffer to exist any contract, agreement, arrangement or transaction with any Affiliate (other than DonTech, any Company Subsidiary, and any company that is acquired pursuant to the Other Transaction Documents), officer, director or stockholder holding greater than 5% of the Company's outstanding Common Stock (an "AFFILIATE TRANSACTION"), unless such Affiliate Transaction (i) is determined by a majority of the Board of Directors to be fair and reasonable to the Company, and no less favorable to the Company than could have been obtained in an arm's length transaction with a third party, and (ii) is approved by a majority of the members of the Board of Directors that are disinterested in such transaction; (c) materially alter its principal line of business as conducted on the Closing Date; (d) incur, create, guarantee, become or be liable in any manner with respect to or permit to exist (other than pursuant to the Other Transaction Documents) any Indebtedness (as such term will be defined by the parties prior to the Closing Date) if the Leverage Ratio (as such term will be defined by the parties prior to the Closing Date), as at such time, is greater than 5.0 to 1.0; provided, however, that nothing in this SECTION 4.04(d) shall prohibit the Company from incurring up to $25 million of Indebtedness in any given twelve-month period; (e) acquire (by merging or consolidating with, or by purchasing an equity interest in or a portion of the assets of, or by any other manner) any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets in excess of $100 million in any given twelve-month period, other than inventory and other assets to be sold or used in the ordinary course of business; (f) amend the Certificate of Incorporation of the Company to authorize the creation or issuance, or the increase in the authorized amount, of the Preferred Stock, any Parity Securities (as defined in the Certificate of Designations) or Senior Securities (as defined in the Certificate of Designations), or to authorize the creation or issuance of securities convertible into or exchangeable for, or options, warrants or other rights to acquire, the Preferred Stock, any Parity Securities or Senior Securities; (g) reclassify any series of Junior Securities (as defined in the Certificate of Designations) as Senior Securities or Parity Securities; (h) amend, repeal or change (whether by merger, consolidation or otherwise) any of the provisions of the Certificate of Incorporation or By-laws of the Company or the provisions of the Certificate of Designations or the Warrants in any manner that would alter or -27- change the powers, preferences or rights of the shares of the Preferred Stock or the Warrants, as the case may be, so as to affect them adversely, or otherwise restrict the rights, preferences or privileges of the Preferred Stock or the Warrants; (i) pay or declare any dividend or distribution on any shares of its capital stock (other than dividends on the Common Stock payable in additional shares of Common Stock) or apply any of its assets to the redemption, retirement, purchase or acquisition, directly or indirectly, through Company Subsidiaries or otherwise, of any shares of its capital stock (other than (A) redemptions, retirements, purchases or acquisitions of the Preferred Stock in accordance with the terms of the Certificate of Designations, and (B) (x) the repurchase of shares of Common Stock from employees or former employees of the Company who acquired such shares directly from the Company and which repurchases are approved by a majority of the board of directors and (y) open market purchases, which, in the case of both (x) and (y) taken together are not in excess of the lesser of $25 million or 25% of the Company's Net Income for the immediately preceding twelve months in any given twelve-month period); (j) sell, offer for sale or solicit offers to buy any security (as defined in the Securities Act) that would be integrated with the sale of the Preferred Shares and the Warrants in a manner that would require the registration under the Securities Act of the sale of the Preferred Shares and the Warrants to the Purchasers or any Affiliate of the Purchasers; (k) prior to the 18-month anniversary of the Closing Date, issue any equity securities (or securities exchangeable for or convertible into equity securities, or any options, warrants, rights to subscribe to, scrip calls, contracts, undertakings, arrangements or commitments to issue which may result in the issuance of equity securities of the Company) other than a Permitted Issuance (as defined in the Certificate of Designations); (l) increase the number of directors comprising the board of directors to more than ten directors; or (m) amend, modify or supplement any provision of the Rights Agreement in a manner that adversely affects the rights and benefits of any Purchaser under any such provision. Section 4.05. REQUIRED ACTIONS. Subject to SECTION 4.06, from and after the Closing Date, the Company shall and, where applicable, shall cause each Company Subsidiary to: (a) use its reasonable best efforts to maintain at all times a valid listing for the Common Stock on the NYSE or another national securities exchange; (b) maintain and keep its properties in good repair, working order and condition, and from time to time make all necessary or desirable repairs, renewals and replacements; (c) maintain or cause to be maintained with financially sound and reputable insurers that have a rating of "A" or better as established by Best's Rating Guide (or an equivalent rating with such other publication of a similar nature as shall be in current use), (i) public liability and property damage insurance with respect to their respective businesses and -28- properties against loss or damage of the kinds and in amounts customarily carried or maintained by companies of established reputation engaged in similar businesses and (ii) directors' and officers' liability insurance providing at least the same coverage and amounts and containing terms and conditions which are not less advantageous in any material respect, in each case than the directors' and officers' liability insurance maintained by the Company as of the Closing Date; (d) pay and discharge when due all Tax liabilities, assessments and governmental charges or levies imposed upon its properties or upon the income or profits therefrom (in each case before the same become delinquent and before penalties accrue thereon), unless the same are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP, consistently applied, are being maintained by the Company; (e) at all times cause to be done all things necessary to maintain, preserve and renew all Permits required for the conduct of its respective business; (f) comply with all applicable laws, rules and regulations of all Governmental Entities, the violation of which would constitute a Material Adverse Effect; (g) maintain proper books of record and account which present fairly in all respects its financial condition and results of operations and make provisions on its financial statements for all such proper reserves as in each case are required in accordance with GAAP, consistently applied; (h) reserve and keep available out of its authorized shares of Common Stock, solely for the purposes of issuance upon conversion of the Preferred Shares and exercise of the Warrants, such number of shares of Common Stock as are issuable upon the conversion of all outstanding Preferred Shares and exercise of all Warrants as such number may change from time to time; and (i) use its reasonable best efforts to at all times file all reports (including annual reports, quarterly reports and the information, documentation and other reports) required to be filed by the Company under the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder, and the Company shall use its reasonable best efforts to file each of such reports on a timely basis, all to the extent required to enable such holders to sell securities pursuant to Rule 144 promulgated under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the SEC and to enable the Company to register securities with the SEC on Form S-3 or any similar short-form registration statement. Section 4.06. TERMINATION OF OBLIGATIONS. The obligations of the Company set forth in SECTION 4.03, SECTION 4.04 and SECTION 4.05 (other than the obligations set forth in SECTION 4.04(h) and SECTION 4.05(h)) shall terminate and no longer be of any effect from and after such time as the Purchasers no longer have the right pursuant to the Certificate of Designations to elect a Director of the Company. Section 4.07. INSPECTION OF PROPERTY. Until the Closing Date or the earlier termination of this Agreement, the Company will permit representatives of the Purchasers to visit -29- and inspect any of the properties of the Company or any of the Company Subsidiaries, to examine the corporate books, records, agreements and files of the Company and make copies or extracts therefrom and to request information at reasonable times and intervals concerning the general status of the Company's financial condition and operations, all upon reasonable notice and at such reasonable times and as often as such Purchaser may reasonably request. The Purchasers will, and will instruct each of their respective Affiliates, associates, partners, employees, agents and advisors to, hold in confidence all such information as is confidential or proprietary, will use such information only in connection with the purchase of the Preferred Shares and the Warrants in accordance with this Agreement and, if this Agreement is terminated in accordance with its terms, will deliver promptly to the Company all copies of such information (and any copies, compilations or extracts thereof or based thereon) then in their possession or under their control. Section 4.08. LOST, STOLEN, DESTROYED OR MUTILATED SECURITIES. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of any certificate for any security of the Company and, in the case of loss, theft or destruction, upon delivery of an undertaking by the holder thereof to indemnify the Company (and, if requested by the Company, the delivery of an indemnity bond sufficient in the judgment of the Company to protect the Company from any loss it may suffer if a certificate is replaced), or, in the case of mutilation, upon surrender and cancellation thereof, the Company will issue a new certificate for an equivalent number of shares or warrants. Section 4.09. LISTING. The Company shall promptly secure the listing of all of the Registrable Shares (as defined in the Registration Rights Agreement), other than any shares of the Preferred Stock and the Warrants, upon each national securities exchange and automated quotation system (as applicable, the "PRINCIPAL MARKET"), if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all Registrable Shares from time to time issuable under the terms of the Certificate of Designations. The Company shall pay all fees and expenses in connection with satisfying its obligations under this SECTION 4.09. Section 4.10. RESTRICTIONS ON SALE OR TRANSFER; LEGEND. No Purchaser will, directly or indirectly, offer, sell, transfer, assign, pledge, hypothecate or otherwise dispose of the beneficial ownership of (any such act, a "TRANSFER") any Preferred Shares or Warrants prior to the first anniversary of the Closing Date, except for, and subject in each case to compliance with all applicable requirements of law and the receipt of any necessary governmental approvals, (i) a Transfer by any Purchaser to an Affiliate of such Purchaser or a Designated Transferee, provided that prior to such Transfer each such transferee consents in writing with the Company to be bound by the restrictions on transfer set forth in this SECTION 4.10 and assumes all other rights and obligations of the Purchasers under this Agreement and the Registration Rights Agreement; (ii) a Transfer to the Company or to a wholly owned direct or indirect subsidiary of the Company; (iii) a Transfer pursuant to a merger or consolidation in which the Company is a constituent corporation; (iv) a Transfer pursuant to a bona fide third party tender offer or exchange offer; (v) redemptions and conversions of the Preferred Shares in accordance with the terms of the Certificate of Designations; and (vi) exercise of the Warrants in accordance with their terms. From and after the first anniversary of the Closing Date none of the foregoing restrictions on -30- Transfer shall apply, so long as such Transfer is made in compliance with all applicable requirements of law and any necessary governmental approvals have been obtained. (b) The Purchasers acknowledge and agree that as of the date hereof none of the Preferred Shares, the shares of Common Stock issuable upon conversion thereof, the Warrants or the shares of Common Stock issuable upon the exercise thereof have been nor will be registered under the Securities Act or the securities laws of any state and that they may be sold or otherwise disposed of only in one or more transactions registered under the Securities Act and, where applicable, such laws or as to which an exemption from the registration requirements of the Securities Act and, where applicable, such laws, is available. The Purchasers acknowledge that, except as provided in the Registration Rights Agreement, the Purchasers have no right to require the Company to register the Preferred Shares, the shares of Common Stock issuable upon conversion thereof, the Warrants or the shares of Common Stock issuable upon exercise thereof. The Purchasers further acknowledge and agree that each certificate for the Preferred Shares and the Warrants shall bear the following legend: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE SUCH A REGISTRATION IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS. THIS CERTIFICATE IS ISSUED PURSUANT TO AND SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF A PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT DATED AS OF SEPTEMBER 21, 2002 BETWEEN THE COMPANY AND THE PURCHASERS REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE COMPANY. EXCEPT AS PROVIDED IN SUCH PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE NOT TRANSFERABLE AND ANY PURPORTED TRANSFER IN VIOLATION OF THE PROVISIONS OF SUCH PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT SHALL BE VOID AND OF NO FORCE AND EFFECT. (c) Any holder of the Preferred Shares or the Warrants may request the Company to remove the legend described herein from the certificates evidencing such Preferred Shares or Warrants by submitting to the Company such certificates, together with an opinion of counsel reasonably satisfactory to the Company to the effect that such legend is no longer required under the Securities Act or this Agreement. Section 4.11. NOTICE OF BREACH. From the date hereof through the Closing Date, as promptly as practicable, and in any event not later than five business days after the Company becomes aware thereof, the Company shall provide the Purchasers with written notice of (a) any representation or warranty of the Company contained in this Agreement, the Ancillary Documents or any Other Transaction Document being untrue or inaccurate in any material respect at any time from the date hereof to the Closing Date, or (b) any failure of the Company to comply with or satisfy in any material respect any covenant, condition or agreement to be -31- complied with or satisfied by the Company under this Agreement, the Ancillary Documents or any Other Transaction Document; provided, however, that the delivery of any notice pursuant to this SECTION 4.11 shall not limit or otherwise affect the remedies available to the Purchasers, or modify in any way any disclosure made in this Agreement, the Ancillary Documents or any Other Transaction Document or the schedules hereto or thereto as of the date hereof. Section 4.12. NON-DISCLOSURE; INTERIM PUBLIC FILINGS. Subject to SECTION 8.05, the Company shall deliver to the Purchasers complete and correct copies of all press releases and public filings made between the date hereof and the Closing Date. The Company shall not disclose the name or identity of any of the Purchasers as a Purchaser without the prior written consent of such Purchaser, except in connection with the Company's filing of a Form 8-K under the Exchange Act, as a result of this Agreement, the Ancillary Documents or any Other Transaction Document or the transactions contemplated hereby and thereby, or other similarly required Exchange Act reports or is required by applicable law or the rules or regulations of any exchange on which securities of the Company are listed or traded, in which case prior to making such disclosure the Company shall give written notice to such Purchaser, describing in reasonable detail the proposed content of such disclosure, shall permit such Purchaser to review and comment upon the form and substance of such disclosure and shall take such comments into account (but shall not be required to accept such comments) in making such disclosure. Section 4.13. GOVERNANCE RIGHTS. (a) (i) The Purchasers shall be entitled to elect directors as set forth in the Certificate of Designations. (ii) In addition, if the Purchasers convert Preferred Stock following delivery by the Company of a notice of redemption in accordance with the provisions of Section 5(a) of the Certificate of Designations, such conversion shall not affect their rights to designate directors and in such case, the Purchasers shall continue to be entitled to designate directors as and to the extent they would have had such rights had the Purchasers not converted any Preferred Stock beneficially owned by them, namely that at such time, (x) as the outstanding shares of Common Stock then owned by the Purchasers, their respective Affiliates or any Designated Transferees constitutes less than 50% of the number of shares of Common Stock beneficially owned by them immediately after the Closing Date (as such number may be adjusted for stock dividends, stock splits, combinations and recapitalizations and other similar events), the number of directors the Purchasers are then entitled to designate and elect under this SECTION 4.13(a)(ii) shall be reduced by one; and (y) as the outstanding shares of Common Stock then owned by the Purchasers, their respective Affiliates or any Designated Transferees constitutes less than 15% of the number of shares of Common Stock beneficially owned by them immediately after the Closing Date (as such number may be adjusted for stock dividends, stock splits, combinations and recapitalizations and other similar events), the Purchasers shall not be entitled to designate or elect any directors under this SECTION 4.13(a)(ii). No conversion of Preferred Stock shall result in any Purchaser Designee being required to resign or be removed from the board of directors prior to the expiration of his then applicable term. To the extent Purchaser Designees are to be members of any class of directors, the identity of such class shall be as reasonably requested by the Purchasers. (iii) For so long as GSCP 2000 and its Affiliates collectively beneficially own a number of shares of Common Stock (which beneficial ownership shall assume immediate convertibility of all shares of Preferred Stock then owned) that is not less than 7.5% of the number of shares of Common Stock beneficially owned (which beneficial ownership shall assume immediate convertibility of all shares of Preferred Stock then owned) by -32- them immediately after the Closing (as such number may be adjusted for stock dividends, stock splits, combinations and recapitalizations and other similar events), GSCP 2000 shall have the right to designate, at all times and from time to time, one non-voting observer to the board of directors. (b) At any time the Purchasers shall be entitled to designate a Purchaser Designee (or a replacement therefor), the Company shall exercise all authority under applicable law to cause any slate of directors presented to stockholders for election of directors to the board of directors to contain such Purchaser Designee(s) and use its reasonable best efforts to have such Purchaser Designee(s) elected to the board of directors. (c) Prior to the Closing, each of the Company and the board of directors shall take such action as may be necessary (including seeking any necessary vote or approval of any stockholder of the Company, taking any action necessary to expand the size of the board of directors, or causing any existing director to resign in order to make room for the Purchaser Designees) to cause the Purchaser Designees to be elected to the board of directors. (d) Purchasers and the Company agree that one Purchaser Designee shall have the right, subject to compliance with applicable NYSE and SEC rules and regulations, to sit on each Committee of the board of directors. (e) If requested by a majority of the Purchasers, the Company will use its best efforts (in accordance with the certificate of incorporation and by-laws of the Company and the DGCL) to cause the removal of any Purchaser Designee (in accordance with the certificate of incorporation and by-laws of the Company and the DGCL). If any vacancy among the Purchaser Designees caused by removal or by the death, retirement or resignation of any Purchaser Designee exists, the Purchasers shall have the right to designate a replacement director for such Purchaser Designee and the Company shall exercise all authority under applicable law to cause such replacement director to be duly elected as a director of the Company. In the event that the term of any director who at such time is a Purchaser Designee is to expire, then in connection with any meeting of the Company's stockholders at which a successor to such director is to be elected, the Company shall nominate a Purchaser Designee designated by the Purchasers and shall recommend that stockholders vote in favor of such individual's election to the board of directors in any proxy statement, information statement or other communication to stockholders issued or disseminated by the Company. In the event of any vacancy among the Purchaser Designees, the board of directors shall not take any action not approved by the remaining Purchaser Designee (or by the Purchasers if there be no remaining Purchaser Designee) during the period from the time the Purchasers inform the Company of a designee to fill any such vacancy to the time such designee is duly appointed or elected to the board of directors. Whenever the number of directors that the Purchasers have the right to designate is reduced in accordance with the Certificate of Designations, the Purchaser will cause the appropriate number of Purchaser Designee(s) to promptly tender their resignation(s) from the board of directors. (f) At any time GSCP 2000 shall be entitled to designate a non-voting observer to the board of directors, the Company shall permit any such non-voting observer to attend each meeting of the board of directors of the Company and each meeting of any committee thereof and to participate in all discussions during each such meeting; provided, however, that the -33- Company reserves the right to exclude such non-voting observers from access to any material or meeting or portion thereof if the Company believes that such exclusion is reasonably necessary to preserve the attorney-client privilege or to protect confidential proprietary information. The Company shall send to the non-voting observers the notice of the time and place of such meeting in the same manner and at the same time as it shall send such notice to its directors or committee members, as the case may be. The Company shall also provide to the non-voting observers copies of all notices, reports, minutes and consents at the time and in the manner as they are provided to the board of directors or committee, except for information reasonably designated as proprietary information reasonably designated as proprietary information by the board of directors. At any time GSCP 2000 shall be entitled to designate a non-voting member to the board of directors, GSCP 2000 shall also be entitled to consult with and advise management of the Company on significant business issues, including management's proposed annual operating plans, and management will meet with representatives of GSCP 2000 at the Company's facilities at mutually agreeable times for such consultation and advice, including to review progress in achieving said plans. Upon notice given by GSCP 2000 to the Company, the Company shall commence to give GSCP 2000 reasonable advance written notice of any significant new initiatives or material changes to existing operating plans and shall afford GSCP 2000 adequate time to meet with management to consult on such initiatives or changes prior to implementation. (g) Notwithstanding SECTION 4.13(f), for so long as any Purchaser holds any Preferred Shares, the Company shall provide to the Purchasers copies of all notices, reports, minutes and consents at the time and in the manner as they are provided to the board of directors or committee, except for information reasonably designated as proprietary information by the board of directors. (h) The rights set forth in this SECTION 4.13 are intended to satisfy the requirement of contractual management rights for purposes of qualifying GSCP 2000's interests in the Company as venture capital investments for purposes of the Department of Labor's "plan assets" regulations, and in the event such rights are not satisfactory for such purposes, GSCP 2000, the Company and the Purchasers shall reasonably cooperate in good faith to agree upon mutually satisfactory management rights which satisfy such regulations. Section 4.14. OTHER TRANSACTION DOCUMENTS. The Company shall keep Purchasers fully informed of, provide Purchasers will copies of all drafts of, and discuss with the Purchasers on a timely basis, each of the Other Transaction Documents and shall not, without the prior written consent of each Purchaser, (i) execute any of the Other Transaction Documents to be executed after the date hereof or (ii) amend, waive, supplement or modify any provisions of any of the Other Transaction Documents executed on or prior to the date hereof. Section 4.15. TRANSFER TAXES. The Company shall be responsible for any Liability with respect to any transfer, stamp or similar non-income Taxes that may be payable in connection with the execution, delivery and performance of this Agreement including, without limitation, any such Taxes with respect to the issuance of the Preferred Shares or shares of Common Stock issuable upon conversion thereof. Section 4.16. DIVIDENDS. The Company agrees that, after the tenth anniversary of the Closing Date, it shall pay cash dividends on the Preferred Stock on a current basis so long as -34- it is not precluded from doing so under law. In furtherance thereof, the Company shall refrain from entering into any agreements which would preclude such payments, seek a waiver under any agreements which would prevent such payments at any time and take whatever actions are necessary, including revaluing assets, to create surplus for the purpose of paying such dividends. Section 4.17. CERTAIN INFORMATION RIGHTS. Between the date hereof and the Closing Date, the Company shall inform the Purchasers promptly of any inquiries, discussions, offers or proposals for, or negotiations looking toward, any purchase or other acquisition of any of the capital stock of or equity interests in (whether newly issued or currently outstanding) the Company or any of the Company Subsidiaries; and the Company shall provide promptly to the Purchasers copies of any written documents prepared by or received by the Company or its advisors in connection therewith. ARTICLE V. CONDITIONS Section 5.01. CONDITIONS OF PURCHASE. The obligations of each Purchaser to purchase the Preferred Shares and the Warrants at the Closing are subject to satisfaction or waiver of each of the following conditions on or prior to the Closing Date: (a) REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations and warranties of the Company contained in this Agreement and the Ancillary Documents shall be true and correct in all material respects (disregarding for these purposes any materiality, Material Adverse Effect or corollary qualifications contained therein) on and as of the date of this Agreement or the date of such Ancillary Documents, as the case may be, and on and as of the Closing Date with the same effect as though made on and as of such date, and the Company shall have performed all obligations and complied with all agreements, undertakings, covenants and conditions required hereunder and thereunder to be performed by it at or prior to the Closing. (b) NO INJUNCTION. There shall not be in effect any statute, rule, order, decree or injunction of a court or agency of competent jurisdiction which enjoins or prohibits consummation of the transactions contemplated hereby. (c) REGULATORY APPROVALS. All permits, consents, authorizations, orders and approvals of, and filings and registrations required under any federal or state law, rule or regulation for or in connection with the execution and delivery of this Agreement and the Ancillary Documents and the consummation by the parties hereto of the transactions contemplated on such parties' part hereby and thereby shall have been obtained or made and all statutory waiting periods thereunder in respect thereof shall have expired, including without limitation, any waiting periods under the HSR Act. (d) COMPANY CERTIFICATE. The Company shall have delivered to the Purchasers a certificate, dated the Closing Date, signed by its chief executive officer and its chief financial officer, in form and substance reasonably satisfactory to the Purchasers to the effect that the conditions set forth in this SECTION 5.01 have been satisfied (the "COMPANY CERTIFICATE"). (e) REGISTRATION RIGHTS AGREEMENT. The Registration Rights Agreement shall have been executed and delivered by the parties thereto and shall be in full force and effect. -35- (f) CERTIFICATE OF DESIGNATIONS. The Certificate of Designations shall have been duly filed with the Secretary of State of Delaware and shall have become effective and shall be in full force and effect. (g) CERTAIN TRANSACTION DOCUMENTS. (A) the Other Transaction Documents executed prior to or simultaneously with this Agreement shall not have been amended, modified, supplemented, or provisions thereof waived, in violation of SECTION 4.14, (b) the Other Transaction Documents a form of which is attached to an Other Transaction Document executed prior to or simultaneously with this Agreement shall, at the time of execution thereof, be in all material respects in the form as so attached (and the documentation pursuant to which the Special Purpose Vehicle Term Sheet (as defined in the Sprint Purchase Agreement) shall give effect in all material respects to the terms set forth in such Term Sheet and be otherwise reasonably satisfactory to the Purchasers), and (C) the Purchasers shall be satisfied in their sole discretion with the form and substance of any other of the Other Transaction Documents to be prepared after the execution of this Agreement. (h) OTHER TRANSACTIONS. The transactions contemplated by the Other Transaction Documents that by their terms are to be completed prior to or concurrently with the Closing (which shall include, without limitation, the Sprint Transaction) shall have been completed immediately prior to or concurrently with the Closing in accordance with the terms and provisions of the applicable Other Transaction Document. (i) LEGAL OPINION. The Purchasers shall have received, dated the Closing Date and addressed to each Purchaser, an opinion of Jones, Day, Reavis & Pogue, counsel to the Company, substantially in the form attached hereto as EXHIBIT E. (j) SIMULTANEOUS CLOSING BY OTHER PURCHASERS. Each other Purchaser shall concurrently purchase and pay for the Preferred Shares and the Warrants set forth opposite its name in SCHEDULE A. (k) DIRECTORS. The Purchaser Designees shall have been elected to the Board of Directors of the Company, effective as of the Closing and the Board of Directors of the Company shall consist of no more than ten directors. (l) MATERIAL ADVERSE CHANGE. There shall not have occurred since December 31, 2001 any event or occurrence which has resulted in or could reasonably be expected to result in any material adverse change in the business, assets, operations, properties, condition (financial or otherwise), prospects, contingent liabilities or material agreements of the Company and the business acquired pursuant to the Sprint Transaction, taken as a whole. (m) NYSE APPROVAL. The NYSE shall (1) not have withdrawn its advice that stockholder approval of the issuance of Common Stock upon conversion of the Preferred Shares and exercise of the Warrants is not required under Rule 312 of the NYSE Listed Company Manual and (2) have confirmed that the terms of the Preferred Stock, as set forth in the Certificate of Designations and this Agreement, comply with the NYSE's Voting Rights Policy as set forth in Rule 313 of the NYSE Listed Company Manual, which advice shall not have been withdrawn. -36- (n) DEBT FINANCING. The Company shall have received proceeds from the financing contemplated by the Commitment Letter on the terms and subject to the conditions thereof. Section 5.02. CONDITIONS OF SALE. The obligation of the Company to sell the Preferred Shares and the Warrants at the Closing is subject to satisfaction or waiver of each of the following conditions precedent: (a) REPRESENTATIONS AND WARRANTIES; COVENANTS The representations and warranties of the Purchasers contained in this Agreement shall be true and correct in all material respects (disregarding for these purposes any materiality, Material Adverse Effect or corollary qualifications contained therein) on and as of the date of this Agreement and on and as of the Closing Date with the same effect as though made on and as of such dates, and the Purchasers shall have performed all obligations and complied with all agreements, undertakings, covenants and conditions required hereunder to be performed at or prior to the Closing. (b) NO INJUNCTION. There shall not be in effect any statute, rule, order, decree or injunction of a court or agency of competent jurisdiction with enjoins or prohibits consummation of the transactions contemplated hereby. (c) REGULATORY CONSENTS. (i) All permits, consents, authorizations, orders and approvals of, and filings and registrations required under federal or state law, rule or regulation for or in connection with the execution and delivery of this Agreement and the Ancillary Documents to which such Purchaser is a party and the consummation by the parties hereto of the transactions contemplated on such parties' part hereby and thereby shall have been obtained or made and all statutory waiting periods thereunder in respect thereof shall have expired. (d) PURCHASER'S CERTIFICATE. Each Purchaser shall have delivered to the Company a certificate, dated the Closing Date, in form and substance reasonably satisfactory to the Company to the effect that the condition set forth in SECTION 5.02(a) have been satisfied (the "PURCHASER'S CERTIFICATE"). (e) NYSE APPROVAL. The NYSE shall (1) not have withdrawn its advice that stockholder approval of the issuance of Common Stock upon conversion of the Preferred Shares and exercise of the Warrants is not required under Rule 312 of the NYSE Listed Company Manual and (2) have confirmed that the terms of the Preferred Stock, as set forth in the Certificate of Designations and this Agreement, comply with the NYSE's Voting Rights Policy as set forth in Rule 313 of the NYSE Listed Company Manual, which advice shall not have been withdrawn. (f) DEBT FINANCING. The Company shall have received proceeds from the financing contemplated by the Commitment Letter on the terms and subject to the conditions thereof. (g) OTHER TRANSACTIONS. The transactions contemplated by the Other Transaction Documents that by their terms are to be completed prior to or concurrently with the Closing (which shall include, without limitation, the Sprint Transaction) shall have been -37- completed immediately prior to or concurrently with the Closing in accordance with the terms and provisions thereof. (h) PURCHASE PRICE. The Purchasers shall have delivered immediately prior to or concurrently with the Closing in immediately available funds, by wire transfer to such account as the Company shall have specified, an amount equal to the purchase price to have been paid pursuant to SECTION 2.01. ARTICLE VI. TERMINATION Section 6.01. TERMINATION. This Agreement may be terminated on or any time prior to the Closing: (a) by the mutual written consent of each of the Purchasers and the Company; or (b) by either the Company or the Purchasers if the Sprint Purchase Agreement shall have been terminated pursuant to its terms; or (c) by the Purchasers if the Closing shall not have occurred prior to January 31, 2003, unless the failure of such occurrence shall be due to the failure of the Purchasers to perform or observe any agreement set forth herein required to be performed or observed by the Purchasers on or before the Closing; or (d) by the Company or the Purchasers if a Governmental Entity shall have issued a nonappealable final order, decree or ruling or taken any other action having the effect of permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement; or (e) by the Purchasers or the Company, (i) if any representation or warranty of the other party set forth in this Agreement or in any other Ancillary Document shall be untrue in any material respect when made, or (ii) upon a breach in any material respect of any covenant or agreement on the part of the other set forth in this Agreement or in any other Ancillary Document (either (i) or (ii) above being a "TERMINATING BREACH"); provided, that, each Terminating Breach would cause the conditions to the non-terminating party's obligations not to be satisfied and such Terminating Breach is not cured within 20 days after written notice from the non-breaching party. Section 6.02. EFFECT OF TERMINATION. In the event of the termination of this Agreement as provided in SECTION 6.01, all obligations and agreements of the parties set forth in this Agreement shall forthwith become void except for the obligations set forth in SECTION 8.05 and SECTION 8.06 (which shall remain in full force and effect) and there shall be no liability or obligation on the part of the parties hereto except as otherwise provided in this Agreement. Notwithstanding the foregoing, the termination of this Agreement under SECTION 6.01(c) shall not relieve either party of any liability for breach of this Agreement prior to the date of termination. -38- ARTICLE VII. SURVIVAL; CERTAIN REMEDIES Section 7.01. SURVIVAL. The representations and warranties of the parties contained in this Agreement shall expire on the second anniversary of the Closing, except that the representations and warranties set forth in SECTIONS 3.01(a) and 3.01(d), shall survive indefinitely and the representations and warranties set forth in SECTIONS 3.01(i)(iii) and 3.01(p) shall survive until thirty days following the expiration of the applicable statute of limitations. After the expiration of such periods, any claim by a party hereto based upon any such representation or warranty shall be of no further force and effect unless a party has asserted a claim in accordance with this ARTICLE VII for breach of any such representation or warranty prior to the expiration of such period, in which event any representation or warranty to which such claim relates shall survive with respect to such claim until such claim is resolved as provided in this ARTICLE VII. The covenants and agreements of the parties contained in this Agreement shall survive the Closing in accordance with their terms without limitation as to time, unless a specified period is set forth in this Agreement, in which event such specified period will control. Section 7.02. INDEMNIFICATION BY THE PURCHASERS. Each Purchaser, severally and not jointly, shall, from and after the Closing Date, indemnify the Company and its Affiliates and agents, and the officers, directors, employees, successors, transferees and assigns of each of them (each, a "COMPANY INDEMNIFIED PARTY") against and hold them harmless from and against all Losses incurred by any of them based upon, resulting from or arising out of (i) the breach of any representation or warranty of such Purchaser contained in this Agreement or (ii) the breach of or failure to perform any covenant or agreement of such Purchaser contained in this Agreement. Section 7.03. INDEMNIFICATION BY THE COMPANY. The Company shall, from and after the Closing Date, indemnify each of the Purchasers and each of their respective Affiliates and agents and the officers, directors, employees, members, successors, transferees and assigns of each of them (each, an "PURCHASER INDEMNIFIED PARTY") against and hold them harmless from and against all Losses incurred by any of them based upon, resulting from or arising out of (i) the breach of any representation or warranty of the Company contained in this Agreement, (ii) the breach of or failure to perform any covenant or agreement of the Company contained in this Agreement or (iii) the Litigation entitled DonTech vs. Adoption World v. Ameritech Corporation (Case Number 98 L 13197). Section 7.04. CERTAIN QUALIFICATIONS. The Material Adverse Effect and other materiality (or correlative meaning) qualifications included in the representations, warranties, covenants and agreements contained herein shall have no effect on any provisions in this ARTICLE VII concerning the indemnities of the Company or the Purchasers with respect to such representations, warranties, covenants and agreements, each of which representations, warranties, covenants and agreements shall be read as though there were no Material Adverse Effect or other materiality qualification for purposes of such indemnities. All knowledge qualifications included in the representations, warranties, covenants and agreements contained herein with respect to DonTech or its business, operations, assets, financial condition, liabilities or agreements shall have no effect on any provisions of this Article VII concerning the indemnities of the Company with respect to such representations, warranties, covenants and agreements, each of which shall be read as though there were no such knowledge qualifications for purposes of such indemnities. -39- Section 7.05. Indemnification Procedures. (a) An Purchaser Indemnified Party or a Company Indemnified Party, as the case may be (for purposes of this SECTION 7.05, an "INDEMNIFIED PARTY"), shall give the indemnifying party under SECTION 7.02 or 7.03, as applicable (for purposes of this SECTION 7.05, an "INDEMNIFYING PARTY"), prompt written notice (the "INDEMNIFICATION CLAIM NOTICE") of any third party claim for which it will seek indemnification hereunder; provided that failure of the Indemnified Party to give the Indemnifying Party prompt written notice as provided herein shall not relieve the Indemnifying Party of any of its obligations hereunder except to the extent that the Indemnifying Party is prejudiced thereby. The Indemnifying Party shall have the right to assume, through counsel of its own choosing, which counsel shall be reasonably satisfactory to the Indemnified Party, the defense of any third party claim which is the subject of indemnification hereunder at its own expense. If the Indemnifying Party elects to assume the defense of any such claim, the Indemnified Party may participate with its own counsel in such defense, but in such case the fees and expenses of counsel to the Indemnified Party shall be paid by the Indemnified Party. The Indemnified Party shall, upon reasonable notice, provide the Indemnifying Party with access to its records and personnel relating to any such claim during normal business hours and shall otherwise cooperate with the Indemnifying Party in the defense or settlement thereof, and the Indemnifying Party shall reimburse the Indemnified Party for all its reasonable out-of-pocket expenses in connection therewith. If the Indemnifying Party elects to direct the defense of any such claim, the Indemnified Party shall not pay, or permit to be paid, any part of such claim unless the Indemnifying Party consents in writing to such payment (which consent shall not be unreasonably withheld) or unless the Indemnifying Party withdraws from or fails to maintain the defense of such claim or unless a final judgment from which no appeal may be taken by or on behalf of the Indemnifying Party is entered against the Indemnified Party for indemnification; PROVIDED that, if the third party claimant is prepared to settle its claim by payment to it of a specified amount and, notwithstanding the request of the Indemnified Party for consent to the proposed settlement, the Indemnifying Party does not consent thereto, then the Indemnifying Party shall indemnify the Indemnified Party separately for the difference, if any, between the specified amount of the proposed settlement and the amount which is finally adjudicated to be the amount of the Liability to the third party. No settlement in respect of any third-party claim may be effected by the Indemnifying Party without the Indemnified Party's prior written consent (which consent shall not be unreasonably withheld). If the Indemnifying Party shall fail to undertake any such defense (or shall fail upon request to advise the Indemnified Party in writing that it will undertake such defense) within 30 days of receipt of the Indemnification Claim Notice, or subsequently withdraws from or fails to maintain the defense of such claim, the Indemnified Party shall have the right to undertake the defense or settlement thereof at the Indemnifying Party's expense. If the Indemnified Party assumes the defense of any such claim pursuant to the previous sentence it may conduct such defense (including entering into any settlement) as it reasonably deems appropriate. (b) Notwithstanding the foregoing, with respect to any claim that the Indemnifying Party is defending, the Indemnified Party shall have the right to retain separate counsel to represent it and the Indemnifying Party shall pay the fees and expenses of such separate counsel if there are conflicts that make it reasonably necessary for separate counsel to represent the Indemnified Party and the Indemnifying Party. -40- (c) In the event that an Indemnified Party asserts the existence of a claim with respect to Losses (but excluding claims resulting from the assertion of Liability by third parties), it shall give written notice to the Indemnifying Party. Such written notice shall state that it is being given pursuant to this SECTION 7.05(c), specify the nature and amount of the claim asserted, and indicate the date on which such assertion shall be deemed accepted and the amount of the claim deemed a valid claim (such date to be established in accordance with the next sentence). If the Indemnifying Party, within 30 days after the mailing of notice by such Indemnified Party, shall not give written notice to such Indemnified Party announcing its intent to contest such assertion of such Indemnified Party, such assertion shall be deemed accepted and the amount of claim shall be deemed a valid claim. In the event, however, that the Indemnifying Party contests the assertion of a claim by giving such written notice to such Indemnified Party within said period, then the parties shall act in good faith to reach agreement regarding such claim. In the event that litigation shall arise with respect to any such claim, the prevailing party shall be entitled to reimbursement of costs and expenses incurred in connection with such litigation including attorney fees, if the parties hereto, acting in good faith, cannot reach agreement with respect to such claim within ten days after such notice. (d) The parties agree to treat any indemnification payments made by the Company pursuant to this Agreement for Tax purposes as adjustments to the purchase price of the Preferred Shares. Section 7.06. LIABILITY LIMITS. (a) Notwithstanding anything to the contrary set forth in this Agreement, except for fraud, the Purchaser Indemnified Parties shall not make a claim against the Company for indemnification under SECTION 7.03(i) (not including indemnification for breaches of the representations and warranties made by the Company in SECTION 3.01(i)(iii)) for Purchaser Losses unless and until the aggregate amount of Purchaser Losses under SECTION 7.03(i) (not including indemnification for breaches of the representations and warranties made by the Company in SECTION 3.01(i)(iii)) exceeds $1,000,000 and then the Purchaser Indemnified Parties shall be entitled to indemnification from first dollar. Further, the Company's indemnification obligations pursuant to SECTION 7.03(i) shall not exceed in the aggregate $100,000,000. (b) Notwithstanding anything to the contrary set forth in this Agreement, except for fraud, the Company Indemnified Parties shall not make a claim against the Purchasers for indemnification under SECTION 7.02(i) for Company Losses unless and until the aggregate amount of Company Losses under SECTION 7.02(i) exceeds $1,000,000 and then the Company Indemnified Parties shall be entitled to indemnification from first dollar. Further, the Purchasers' indemnification obligations pursuant to SECTION 7.02(i) shall not exceed in the aggregate $100,000,000. Section 7.07. DUPLICATION. Any Liability for indemnification hereunder shall be determined without duplication of recovery by reason of the state of facts giving rise to such Liability constituting a breach of more than one representation, warranty, covenant or agreement; provided, however, that subject to there being no duplication of recovery, the Indemnified Party shall be entitled to recover to the maximum extent provided in this Agreement (by way of example, if any Indemnified Party's entitlement to indemnification is both by reason for a breach of a representation and warranty to which the two year survival period of SECTION 7.01 applies -41- and by reason of a breach of a representation and warranty to which such survival period does not apply, the Indemnified Party shall be entitled to indemnification without regard to such two year survival period). The amount of any Loss for which indemnification is provided under this ARTICLE VII shall be calculated (i) net of any amounts actually recovered by the Indemnified Party (A) under insurance policies with respect to such Loss and (B) any amounts actually recovered from third parties pursuant to indemnification or otherwise with respect to such Loss, and (ii) net of any tax benefits obtained or reasonably expected to be obtained by the Indemnified Party or its affiliates with respect to such Loss. Section 7.08. EXCLUSIVE REMEDIES. Except for fraud, the provisions of this ARTICLE VII set forth the exclusive rights and remedies of the Purchasers and the Company to seek or obtain damages from any party after the Closing Date with respect to breaches of representations, warranties or covenants under this Agreement (other than any remedy or relief arising from the failure of any party to perform its obligations under the Ancillary Documents); PROVIDED, HOWEVER, that nothing herein shall limit any remedy in equity. ARTICLE VIII. MISCELLANEOUS Section 8.01. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given, if delivered personally, by facsimile or sent by overnight courier as follows: If to the Purchasers, to: GS Capital Partners 2000, L.P. GS Capital Partners 2000 Offshore, L.P. GS Capital Partners 2000 GmbH & Co. Beteiligungs KG GS Capital Partners 2000 Employee Fund, L.P. Goldman Sachs Direct Investment Fund 2000, L.P. c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Phone: (212) 902-1000 Fax: (212) 357-5505 Attention: Mr. Stuart Katz Attention: Ben Adler, Esq. with a copy to (which shall not constitute notice): Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10004 Phone: (212) 859-8000 Fax: (212) 859-8586 Attention: David N. Shine, Esq. If to the Company, to: -42- R.H. Donnelley Corporation One Manhattanville Road Purchase, NY 10577 Phone: (914) 933-6769 Fax: (914) 933-6844 Attention: Robert J. Bush, Esq. with a copy to (which shall not constitute notice): Jones, Day, Reavis & Pogue 901 Lakeside Avenue Cleveland, Ohio 44114 Phone: (216) 586-3939 Fax: (216) 579-0212 Attention: Thomas C. Daniels, Esq. or to such other address or addresses as shall be designated in writing. All notices shall be effective when received. Section 8.02. ENTIRE AGREEMENT; AMENDMENTS; WAIVERS. This Agreement and the Ancillary Documents set forth the entire agreement between the parties hereto with respect to the transactions contemplated by this Agreement. Any provision of this Agreement may be amended or modified in whole or in part at any time by an agreement in writing among the parties hereto executed in the same manner as this Agreement. No failure on the part of any party to exercise, and no delay in exercising, any right shall operate as a waiver thereof nor shall any single or partial exercise by any party of any right preclude any other or future exercise thereof or the exercise of any other right. No investigation by the Purchasers of the Company prior to or after the date hereof shall stop or prevent the Purchasers from exercising any right hereunder or be deemed to be a waiver of any such right. Section 8.03. COUNTERPARTS. This Agreement may be executed by facsimile signature and may be executed in one or more counterparts, each of which shall be deemed to constitute an original, but all of which together shall constitute one and the same documents. Section 8.04. GOVERNING LAW. This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of New York applicable to contracts made and to be performed in that State without giving effect to any conflict of laws rules or principles that might require the application of the laws of another jurisdiction. Section 8.05. PUBLIC ANNOUNCEMENTS. Each of the parties hereto agree to hold in strict confidence and not to publicly disclose the status of any discussions or relations between the parties with respect to the subject matter of this Agreement until such time as the parties mutually agree to publicly disclose such information or are legally obligated (whether by federal securities laws, the rules of any stock exchange or otherwise) to disclose such information. Subject to the provisions of the previous sentence, the parties hereto will cooperate with each other in the development and distribution of all news releases and other public information disclosures with respect to this Agreement and any of the transactions contemplated hereby, and -43- neither party hereto will make any news releases or other information disclosures with respect to the subject matter of this Agreement without the prior consent of the other party hereto. Section 8.06. CLOSING PAYMENT; EXPENSES. On the Closing Date, the Company will pay to each Purchaser 1% of the portion of the purchase price paid by such Purchaser to the Company on the Closing Date (the "CLOSING Payment"). Any obligation owed by the Company to the Purchasers pursuant to this SECTION 8.06 shall be offset by the Purchasers against the amount of the obligation owed to the Company by the Purchasers pursuant to SECTION 2.02(b). (b) The Company shall pay (i) all fees, costs and expenses incurred by it in connection with the preparation, negotiation, execution, and performance of this Agreement or any of the transactions contemplated by this Agreement or the Other Transaction Documents, (ii) the reasonable third party and out-of-pocket expenses (including, without limitation, all reasonable fees and expenses of each counsel, accountants and consultants of each such party) incurred by the Purchasers or their Affiliates since August 16, 2002 in connection with the preparation, negotiation, execution, and performance of this Agreement or any of the transactions contemplated by this Agreement and (iii) all costs of filings required under the HSR Act in connection with the execution and performance of this Agreement. Without limiting the generality of the foregoing, the expenses referred to in clause (iii) above shall be paid by the Company when due or payable and on the Closing Date or the date on which this Agreement is terminated pursuant to Article VI hereof, the Company shall pay all expenses listed in clause (ii) of the previous sentence which have accrued as of such date. Section 8.07. SUCCESSORS AND ASSIGNS. Subject to applicable law and the provisions of SECTION 4.10, each Purchaser may assign its rights under this Agreement in whole or in part to any of its respective Affiliates or any Designated Transferee, but no such assignment shall relieve such Purchaser of its obligations hereunder. The Company may not assign any of its rights or delegate any of its duties under this Agreement without the prior written consent of each of the Purchasers. Any purported assignment in violation of this SECTION 8.07 shall be void. Section 8.08. JURISDICTION. The courts of the State of New York in New York County and the United States District Court for the Southern District of New York shall have jurisdiction over the parties with respect to any dispute or controversy between them arising under or in connection with this agreement and, by execution and delivery of this agreement, each of the parties to this Agreement submits to the jurisdiction of those courts, including but not limited to the IN PERSONAM and subject matter jurisdiction of those courts, waives any objections to such jurisdiction on the grounds of venue or FORUM NON CONVENIENS, the absence of IN PERSONAM or subject matter jurisdiction and any similar grounds, consents to service of process by mail (in accordance with SECTION 8.01) or any other manner permitted by law, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. Section 8.09. CAPTIONS; REFERENCES. The captions contained in this Agreement are for reference purposes only and are not part of this Agreement. Unless otherwise indicated, all references to Articles, Sections, subsections, Schedules or Exhibits in this Agreement refer to the Articles, Sections, subsections and clauses of, and the Schedules or Exhibits to, this Agreement. -44- Section 8.10. SEVERABILITY. Should any part of this Agreement for any reason be declared invalid, such decision shall not affect the validity of any remaining portion, which remaining portion shall remain in full force and effect as if this Agreement had been executed with the invalid portion thereof eliminated, and it is hereby declared the intention of the parties hereto that they would have executed the remaining portion of this Agreement without including therein any such part or parts which may, for any reason, be hereafter declared invalid. Section 8.11. AGGREGATION OF STOCK. All shares of capital stock held or acquired by each of the Goldman Entities shall be aggregated together for the purpose of determining the availability and exercise of any right of each such Goldman Entity under this Agreement. -45- IN WITNESS WHEREOF, this Agreement has been executed by the respective duly authorized officers of the parties hereto, all as of the date first above written. R.H. DONNELLEY CORPORATION By: /s/ David C. Swanson ---------------------------------------- Name: David C. Swanson Title:President and Chief Executive Officer GS CAPITAL PARTNERS 2000, L.P. By: GS Advisors 2000, L.L.C. Its General Partner By: /s/ Katherine B. Enquist ---------------------------------------- Name: Katherine B. Enquist Its: Vice President GS CAPITAL PARTNERS 2000 OFFSHORE, L.P. By: GS Advisors 2000, L.L.C. Its General Partner By: /s/ Katherine B. Enquist ---------------------------------------- Name: Katherine B. Enquist Its: Vice President -46- GS CAPITAL PARTNERS 2000 GmbH & CO. BETEILIGUNGS KG By: Goldman Sachs Management GP GmbH Its General Partner By: /s/ John E. Bowman ----------------------------- Name: John E. Bowman Its: Managing Director GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P. By: GS Employee Funds 2000 GP, L.L.C. Its General Partner By: /s/ John E. Bowman ----------------------------- Name: John E. Bowman Its: Vice President GOLDMAN SACHS DIRECT INVESTMENT FUND 2000, L.P. By: GS Employee Funds 2000 GP, L.L.C. Its General Partner By: /s/ John E. Bowman ----------------------------- Name: John E. Bowman Its: Vice President -47- 8-K 5 l96450ae8vkxpdfy.pdf PDF COURTESY COPY OF R.H. 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EX-2.1

                                                                     Exhibit 2.1









                            STOCK PURCHASE AGREEMENT

                                 BY AND BETWEEN

                               SPRINT CORPORATION,

                             CENTEL DIRECTORIES LLC

                                       AND

                           R.H. DONNELLEY CORPORATION

                            AS OF SEPTEMBER 21, 2002









                                TABLE OF CONTENTS
                                -----------------




                                                                               PAGE
                                                                               ----



                                                                          
ARTICLE I             PURCHASE AND SALE OF THE SHARES.............................2
    Section 1.1     Purchase and Sale.............................................2
    Section 1.2     Payment of Purchase Price.....................................2
    Section 1.3     Target Working Capital........................................4
    Section 1.4     Adjustment of Purchase Price..................................4
    Section 1.5     Closing.......................................................6
    Section 1.6     Deliveries by Sellers.........................................6
    Section 1.7     Deliveries by Buyer...........................................7
    Section 1.8     Initial  and Second Closing...................................8
ARTICLE II            RELATED MATTERS............................................14
    Section 2.1     Use of Sprint's Name and Logos...............................14
    Section 2.2     No Ongoing or Transition Services............................14
    Section 2.3     Certain Pre-Closing Matters..................................14
ARTICLE III           REPRESENTATIONS AND WARRANTIES OF SELLERS..................16
    Section 3.1     Organization.................................................16
    Section 3.2     Authorization................................................17
    Section 3.3     Capital Stock................................................18
    Section 3.4     Ownership of the Capital Stock...............................19
    Section 3.5     Consents and Approvals; No Violations........................19
    Section 3.6     Financial Statements and Undisclosed Liabilities.............20
    Section 3.7     Absence of Material Adverse Effect...........................21
    Section 3.8     Title, Ownership and Related Matters.........................23
    Section 3.9     Intellectual Property........................................25
    Section 3.10    Computer Software............................................27
    Section 3.11    Litigation...................................................28
    Section 3.12    Compliance with Applicable Law...............................29
    Section 3.13    Certain Contracts and Arrangements...........................29
    Section 3.14    Employee Benefit Plans; ERISA................................31
    Section 3.15    Labor Matters................................................34
    Section 3.16    Taxes........................................................35
    Section 3.17    Environmental................................................37
    Section 3.18    Officers.....................................................37
    Section 3.19    Certain Fees.................................................37
    Section 3.20    Sufficiency of Assets........................................38
    Section 3.21    Permits......................................................38
    Section 3.22    Affiliates Engaged in the Business...........................38
ARTICLE IV            REPRESENTATIONS AND WARRANTIES OF BUYER....................39
    Section 4.1     Organization and Authority of Buyer..........................39




                                                                          
    Section 4.2     Consents and Approvals; No Violations........................40
    Section 4.3     Litigation...................................................40
    Section 4.4     Certain Fees.................................................41
    Section 4.5     Investment Representations...................................41
    Section 4.6     Sufficient Funds.............................................41
ARTICLE V             COVENANTS..................................................42
    Section 5.1     Conduct of the Companies' Business...........................42
    Section 5.2     Access to Information........................................44
    Section 5.3     Consents.....................................................47
    Section 5.4     Reasonable Best Efforts......................................49
    Section 5.5     Public Announcements.........................................52
    Section 5.6     Covenant to Satisfy Conditions...............................52
    Section 5.7     Certain Tax Matters..........................................53
    Section 5.8     No Solicitation..............................................61
    Section 5.9     Transition Services Agreement................................62
    Section 5.10    Directory Services License Agreement.........................62
    Section 5.11    Guarantees...................................................62
    Section 5.12    Investigation by Buyer.......................................62
    Section 5.13    Mutual Release...............................................63
    Section 5.14    Employees and Employee Benefit Plans.........................64
    Section 5.15    No Solicitation of Transactions..............................69
    Section 5.16    Non-Competition Agreement....................................70
    Section 5.17    Subscriber Listings Agreement................................70
    Section 5.18    Trademark License Agreement..................................70
    Section 5.19    Publisher Trademark License Agreement........................70
    Section 5.20    Transition of Certain Information............................70
    Section 5.21    Interim Changes in Service Areas.............................71
    Section 5.22    Intercompany Accounts; CenDon Payments.......................71
    Section 5.23    Special Purpose Vehicle......................................72
    Section 5.24    Co-Branding..................................................72
ARTICLE VI            CONDITIONS TO OBLIGATIONS OF THE PARTIES...................73
    Section 6.1     Conditions to Each Party's Obligation........................73
    Section 6.2     Conditions to Obligations of Sellers.........................74
    Section 6.3     Conditions to Obligations of Buyer...........................75
ARTICLE VII           TERMINATION................................................76
    Section 7.1     Termination..................................................76
    Section 7.2     Procedure and Effect of Termination..........................78
ARTICLE VIII          SURVIVAL OF REPRESENTATIONS................................79
    Section 8.1     Survival of Representations, Warranties and Agreements.......79
ARTICLE IX            INDEMNIFICATION............................................80
    Section 9.1     Indemnification Obligations of Sellers.......................80
    Section 9.2     Indemnification Obligations of Buyer.........................81
    Section 9.3     Indemnification Procedure....................................81
    Section 9.4     Claims Period................................................83
    Section 9.5     Liability Limits.............................................84
    Section 9.6     Netting of Losses............................................85





                                      -ii-


                                                                          
    Section 9.7     Exclusive Remedies...........................................85
ARTICLE X             MISCELLANEOUS..............................................86
    Section 10.1    Fees and Expenses............................................86
    Section 10.2    Further Assurances...........................................86
    Section 10.3    Notices......................................................86
    Section 10.4    Severability.................................................88
    Section 10.5    Binding Effect; Assignment...................................88
    Section 10.6    No Third Party Beneficiaries.................................89
    Section 10.7    Interpretation...............................................89
    Section 10.8    Jurisdiction and Consent to Service..........................90
    Section 10.9    Entire Agreement.............................................90
    Section 10.10   Governing Law................................................90
    Section 10.11   Specific Performance.........................................90
    Section 10.12   Counterparts.................................................91
    Section 10.13   Amendment, Modification and Waiver...........................91
    Section 10.14   Knowledge....................................................91
    Section 10.15   Schedules and Exhibits.......................................91
    Section 10.16   Waiver of Jury Trial.........................................91















                                     -iii-






                                  DEFINED TERMS
                                  -------------


TERM                                                                  SECTION

2001 Income Statement..................................................1.8(a)
Acceptance Notice......................................................1.4(c)
Accounting Principles..................................................1.4(b)
ADSP................................................................5.7(b)(i)
Affiliate.............................................................10.7(b)
Agreement............................................................Preamble
Allocation..........................................................5.7(b)(i)
Ancillary Agreements...................................................1.6(c)
Buyer 401(k) Plan.................................................5.14(b)(ii)
Buyer Deductible..........................................................9.5
Buyer Indemnified Parties.................................................9.1
Buyer Losses..............................................................9.1
Buyer Material Adverse Effect.............................................4.2
Buyer Pension Plan................................................5.14(c)(ii)
Buyer................................................................Preamble
Buyer's Auditor........................................................1.4(b)
Cap Amount................................................................9.5
CDC Shares...........................................................Recitals
CDC..................................................................Recitals
Cendon...............................................................Recitals
Centel LLC...........................................................Preamble
Claims Period.............................................................9.4
Closing Date Working Capital...........................................1.4(a)
Closing Date..............................................................1.5
Closing...................................................................1.1
Companies............................................................Recitals
Company Employee......................................................5.14(a)
Company Employees.....................................................5.14(a)
Company Intellectual Property..........................................3.9(a)
Company Licensed Intellectual Property.................................3.9(a)
Company Licensed Software.............................................3.10(a)
Company Material Adverse Effect........................................3.1(b)
Company Owned Intellectual Property....................................3.9(a)
Company Proprietary Software..........................................3.10(a)
Company Software......................................................3.10(a)
Company..............................................................Recitals
Competing Transaction....................................................5.15
Confidentiality Agreement .............................................5.2(b)
Contracts................................................................3.13
Current Assets............................................................1.3
Current Liabilities.......................................................1.3


                                      -iv-


DAI Shares...........................................................Recitals
DAI..................................................................Recitals
Debt Financing Commitments................................................4.6
Directory Services License Agreement.....................................5.10
DOJ....................................................................5.3(d)
Environmental Laws....................................................3.17(a)
Equity Commitments........................................................4.6
ERISA Affiliate.......................................................3.14(b)
ERISA.................................................................3.14(a)
Estimated Purchase Price...............................................1.2(a)
Estimated Working Capital..............................................1.2(b)
Excluded Business......................................................1.8(b)
Excluded States........................................................1.8(a)
Final Balance Sheet....................................................1.4(c)
Financial Statements...................................................3.6(a)
Financing Commitments.....................................................4.6
FTC....................................................................5.3(d)
GAAP...................................................................1.4(b)
Group Contracts........................................................5.3(a)
HSR Act...................................................................3.5
Indemnification Statement.........................................5.7(c)(iii)
Indemnified Party .....................................................9.3(a)
Indemnifying Party.....................................................9.3(a)
Initial Closing........................................................1.8(a)
Intellectual Property..................................................3.9(a)
Interim Balance Sheet..................................................3.6(a)
Leased Real Property................................................3.8(a)(i)
Liens..............................................................3.8(a)(ii)
Mutual Release...........................................................5.13
New Contracts..........................................................5.3(a)
Non-Competition Agreement................................................5.16
Objection Notice.......................................................1.4(c)
Ordinary Course of Business............................................3.7(a)
Owned Real Property.................................................3.8(a)(i)
Permits...............................................................3.21(a)
Permitted Liens....................................................3.8(a)(ii)
Person................................................................10.7(a)
Pre-Closing Period Returns..........................................5.7(c)(i)
Pre-Closing Period..................................................5.7(a)(i)
Preliminary Balance Sheet..............................................1.4(b)
Publisher Trademark License Agreement....................................5.19
Purchase Price.........................................................1.2(d)
Real Property.......................................................3.8(a)(i)
Regulatory Proposal................................................5.4(d)(iv)
Second Closing.........................................................1.8(c)
Second Closing Termination Date........................................1.8(c)


                                      -v-


Section 338(h)(10) Election........................................5.7(a)(ii)
Section 754 Election..............................................5.7(a)(iii)
Seller Benefit Plan...................................................3.14(a)
Seller Benefit Plans..................................................3.14(a)
Seller ERISA Plan.....................................................3.14(a)
Seller ERISA Plans....................................................3.14(a)
Seller Indemnified Parties................................................9.2
Seller Losses.............................................................9.2
Seller Tradenames and Logos...............................................2.1
Sellers..............................................................Preamble
Sellers' Auditor.......................................................1.4(b)
Services Agreement.....................................................1.8(f)
Shares...............................................................Recitals
SPA..................................................................Recitals
Sprint...............................................................Preamble
SPV......................................................................5.22
SPV Agreement............................................................5.23
State Subsidiary.......................................................1.8(b)
Straddle Period Returns............................................5.7(c)(ii)
Straddle Period....................................................5.7(a)(iv)
Subscriber Listings Agreement............................................5.17
Target Assets..........................................................1.8(g)
Target Working Capital....................................................1.3
Tax Claim..........................................................5.7(e)(iv)
Tax Indemnified Party..............................................5.7(e)(iv)
Tax Indemnifying Party.............................................5.7(e)(iv)
Tax Return........................................................3.16(c)(ii)
Taxes..............................................................3.16(c)(i)
Termination Date.......................................................7.1(e)
Third Party Approval Contracts.........................................5.3(b)
To the Knowledge of Buyer...............................................10.14
To the Knowledge of Sellers.............................................10.14
Trademark License Agreement..............................................5.18
Transfer Tax Limit................................................5.7(c)(vii)
Transition Services Agreement............................................5.10
Unrelated Accounting Firm..............................................1.4(c)
Wholly Owned Companies...............................................Recitals
Wholly Owned Company.................................................Recitals
Year-End Balance Sheet....................................................1.3









                                      -vi-




                                    SCHEDULES
                                    ---------


                                             
Schedule 1.3........................................Current Assets and Current Liabilities
Schedule 1.8(a)..............................................................2001 Revenues
Schedule 1.8(b)................................................Assets of Excluded Business
Schedule 3.1........................................................Foreign Qualifications
Schedule 3.3.................................................................Capital Stock
Schedule 3.4....................................................Ownership of Capital Stock
Schedule 3.5..............................................................Sellers Consents
Schedule 3.6(b)........................................................Company Liabilities
Schedule 3.7.............................................................Absence of Change
Schedule 3.8(a)(i)...........................................................Real Property
Schedule 3.8(a)(ii).................................................Title to Real Property
Schedule 3.8(a)(iv).............................................Owned Real Property Access
Schedule 3.8(a)(vi)...............................Notice of Condemnation or Eminent Domain
Schedule 3.8(a)(vii).............................................Real Property Obligations
Schedule 3.8(a)(viii)...........................................Use of Owned Real Property
Schedule 3.8(b)............................................................Title to Assets
Schedule 3.9(b)(i).......Adverse Claims Against Use of Company Owned Intellectual Property
Schedule 3.9(b)(ii)....................................Company Owned Intellectual Property
Schedule 3.9(b)(iii)................................Company Licensed Intellectual Property
Schedule 3.9(c)..................Third Party Infringement of Company Intellectual Property
Schedule 3.10(a).........................................................Computer Software
Schedule 3.11...................................................................Litigation
Schedule 3.12...............................................Compliance with Applicable Law
Schedule 3.13....................................................................Contracts
Schedule 3.14............................................................Employee Benefits
Schedule 3.15................................................................Labor Matters
Schedule 3.16........................................................................Taxes
Schedule 3.17................................................................Environmental
Schedule 3.18......................................................Officers; Bank Accounts
Schedule 3.20........................................................Sufficiency of Assets
Schedule 3.21......................................................................Permits
Schedule 4.2................................................................Buyer Consents
Schedule 5.1............................................Conduct of the Companies' Business
Schedule 5.3(a)............................................................Group Contracts
Schedule 5.14.............................................................Employee Matters
Schedule 6.3(d).............................................................Sellers' Liens
Schedule 6.3(f)..........................................................Required Consents
Schedule 10.14.................................Officers and Affiliates of Sprint and Buyer







                                     -vii-




                                    EXHIBITS
                                    --------


EXHIBIT                                                                 NUMBER

Transition Services Agreement..............................................5.9

Directory Services License Agreement......................................5.10

Mutual Release............................................................5.14

Non-Competition Agreement.................................................5.16

Subscriber Listings Agreement.............................................5.17

Trademark License Agreement...............................................5.18

Publisher Trademark License Agreement.....................................5.19

Terms of SPV Operating Agreement and SPV Agreement........................5.23










                                     -viii-




                            STOCK PURCHASE AGREEMENT

              THIS STOCK PURCHASE AGREEMENT, dated as of September 21, 2002
(this "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 Agreement as "SELLERS"), and R.H. Donnelley Corporation, a
Delaware corporation ("BUYER").

                                    RECITALS

       1. Sprint owns all of the issued and outstanding shares of capital stock
(the "DAI SHARES") of DirectoriesAmerica, Inc., a Kansas corporation ("DAI"),
which owns all of the issued and outstanding capital stock of Sprint Publishing
& Advertising, Inc., a Kansas corporation ("SPA").

       2. Centel LLC owns all of the issued and outstanding shares of capital
stock (the "CDC SHARES" and, collectively with the DAI Shares, the "SHARES") of
Centel Directory Company, a Delaware corporation ("CDC"), which owns a
membership interest in Cendon, L.L.C., a Delaware limited liability company
("CENDON") (DAI, SPA and CDC are hereinafter each referred to as a "WHOLLY OWNED
COMPANY" and collectively referred to as the "WHOLLY OWNED Companies", and DAI,
SPA, CDC and Cendon are hereinafter each referred to as a "COMPANY" and
collectively referred to as the "COMPANIES").

       3. Pursuant to the terms and conditions of this Agreement, Sellers desire
to sell to Buyer, and Buyer desires to purchase from Sellers, the Shares.

              NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and conditions set
forth in this Agreement, and intending to be legally bound by this Agreement,
the parties agree as follows:





                                   ARTICLE I

                         PURCHASE AND SALE OF THE SHARES


         SECTION 1.1 PURCHASE AND SALE. Subject to the terms and conditions set
forth in this Agreement, at the closing provided for in Section 1.5 of this
Agreement (the "CLOSING"), Sellers agree to sell, transfer and deliver to Buyer,
and Buyer agrees to purchase, acquire and accept from Sellers, the Shares.

         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) and (ii) (A) plus an amount equal to the difference
between the Estimated Working Capital and the Target Working Capital if the
amount of Estimated Working Capital is greater than the Target Working Capital,
or (B) less an amount equal to the difference between the Target Working Capital
and the Estimated Working Capital if the amount of Estimated Working Capital is
less than the Target Working Capital.

         (b) At least five business days prior to the Closing, Sellers shall
deliver to Buyer an estimated combined consolidated balance sheet of the
Companies as of the close of business on the Closing Date 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" shall mean 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



                                      -2-


Section 1.3) of the Companies as of the close of business on the Closing Date as
reflected on such balance sheet.

         (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 Closing Date 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 Closing Date Working Capital plus interest or
(ii) if the amount of the Closing Date 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 Closing Date 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."





                                      -3-


         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 "CLOSING DATE 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. Closing Date
Working Capital shall not include deferred directory costs, deferred revenue,
any asset or liability related to Taxes or any intercompany accounts settled
pursuant to Section 5.22.

              (b) Promptly following the Closing, Buyer shall prepare a combined
consolidated balance sheet of the Companies as of the close of business on the
Closing Date (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. Buyer shall engage PricewaterhouseCoopers LLP (the
"BUYER'S AUDITOR") to conduct an audit of the Preliminary Balance Sheet. Buyer
shall use all commercially reasonable efforts to deliver to Sellers a final
draft of the Preliminary Balance Sheet within 90 days after the Closing Date,
together with the opinion of the Buyer's Auditor thereon stating that the audit
has been conducted in accordance with the Accounting Principles. Representatives
of Sellers shall have the opportunity to examine the work papers, schedules and






                                      -4-


other documents prepared by Buyer in connection with the preparation of the
Preliminary Balance Sheet. Buyer shall use all commercially reasonable efforts
to cause the Buyer's Auditor to permit Sellers and their accounting firm (the
"SELLERS' AUDITOR") to examine the Buyer's 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 Sellers object to the Preliminary Balance Sheet, Sellers
shall deliver to Buyer a written notice of objection (an "OBJECTION NOTICE")
within thirty (30) days following the delivery thereof. If Sellers have no
objection to the Preliminary Balance Sheet, Sellers shall promptly deliver to
Buyer 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 Buyer 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 Sellers 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






                                      -5-


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".

         SECTION 1.5 CLOSING. The Closing of the transactions contemplated by
this Agreement shall take place on the later 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 King & Spalding, 1185 Avenue of the Americas, New York, NY 10036, 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."

         SECTION 1.6 DELIVERIES BY SELLERS. At the Closing, Sellers will deliver
or cause to be delivered to Buyer (unless delivered previously) the following:

              (a) The stock certificates representing all of the Shares, duly
endorsed in blank or accompanied by stock powers duly executed in blank;





                                      -6-


              (b) The resignations of all officers and members of the Boards of
Directors of the Wholly Owned Companies and the managers of Cendon, in each case
from their position as such, in a form reasonably satisfactory to Buyer;

              (c) The Transition Services Agreement (as hereinafter defined),
the Directory Services License Agreement (as hereinafter defined), the Mutual
Release (as hereinafter defined), the Non-Competition Agreement (as hereinafter
defined), the Subscriber Listings Agreement (as hereinafter defined), the
Trademark License Agreement (as hereinafter defined), the Publisher Trademark
License Agreement (as hereinafter defined) and the SPV Agreement (as hereinafter
defined), each executed by Sprint and/or the applicable subsidiary of Sprint
(the "ANCILLARY AGREEMENTS"); and

              (d) All other documents, instruments and writings reasonably
required by Buyer to be delivered by Sellers at or prior to the Closing pursuant
to this Agreement or otherwise reasonably required in connection with the
transactions contemplated by this Agreement.

         SECTION 1.7 DELIVERIES BY BUYER. At the Closing, Buyer will deliver or
cause to be delivered to Sellers (unless previously delivered) the following:

              (a) The Estimated Purchase Price in accordance with Section 1.2(a)
of this Agreement;

              (b) The Ancillary Agreements, each executed by Buyer or the
Companies, as applicable; and

              (c) All other documents, instruments and writings reasonably
required by Sellers to be delivered by the Buyer at or prior to the Closing
pursuant to this Agreement or





                                      -7-


otherwise reasonably required in connection with the transactions contemplated
by this Agreement.

         SECTION 1.8 INITIAL AND SECOND CLOSING.

              (a) In the event that (i) at any time after the date hereof the
only conditions to Closing capable of being satisfied prior to the Closing Date
that have not been satisfied are Section 6.1(d) and/or Section 6.2(d) as a
result of an action or, with respect to Section 6.1(d), failure to act by one or
more state public utilities commissions or other state governmental or
regulatory authorities and (ii) the directories published by the Companies in
the state or states with respect to which such regulatory action has occurred
or, with respect to Section 6.1(d), has failed to occur (the "EXCLUDED STATES")
represent less than eight percent (8%) of the 2001 revenues of the Companies, as
set forth on SCHEDULE 1.8(a) (the inclusion in this Section 1.8 of this
percentage is not deemed to be an admission or representation by any party that
this percentage of revenues is or is not "material" or would or could have a
"material adverse effect" as contemplated by this Agreement), the parties will
complete an initial Closing (the "INITIAL CLOSING") in accordance with this
Agreement (including this Section 1.8) on the later to occur of (i) January 3,
2003, and (ii) the fifth business day following the satisfaction or waiver of
all conditions to Closing set forth in Article VI of this Agreement that are
capable of being satisfied prior to the Closing Date (other than Sections 6.1(d)
and 6.2(d)). However, if the prior sentence would require the Initial Closing to
occur prior to January 30, 2003, Buyer may elect to defer the Initial Closing to
a date on or prior to January 30, 2003.

              (b) Immediately prior to the Initial Closing, (i) the Companies
will contribute to one or more newly formed corporate or limited liability
company subsidiaries (each, a "STATE SUBSIDIARY") those assets listed on
SCHEDULE 1.8(b) relating to the directories






                                      -8-


publishing business conducted by the Companies in each Excluded State as of the
date of the Initial Closing (the "EXCLUDED BUSINESS"), (ii) each State
Subsidiary will assume the liabilities listed on SCHEDULE 1.8(b) relating to the
Excluded Business in its respective Excluded State, and (iii) all of the common
stock or membership interests of the State Subsidiary will be distributed to DAI
or Centel LLC, as applicable, pursuant to Sections 332 and 337 of the Code and
thereafter, prior to the Second Closing Termination Date, Sellers will not take
any action that would cause Centel LLC or DAI to no longer be part of their
consolidated group for federal tax purposes. The respective assets and
liabilities relating to the Excluded Business conducted in each Excluded State
will be contributed to and assumed by a separate State Subsidiary. If required,
the Parties will cause CenDon to make a non-cash, non-liquidating distribution
of the common stock or membership interest of the State Subsidiary to CDC.

              (c) In the event that following the Initial Closing and prior to
the termination of this Agreement, the conditions to closing set forth in
Section 6.1(d) and Section 6.2(d) become satisfied (or waived) as to one or more
Excluded States, the parties will complete a subsequent Closing (the "SECOND
Closing") at which Sellers will sell to Buyer the shares or membership interests
(as applicable) of the applicable State Subsidiary(ies) as to which the
conditions in Section 6.1(d) and Section 6.2(d) have been satisfied (or waived).
The Second Closing will take place on such date as is agreed to by the parties
but in no event later than the business day prior to the one year anniversary of
the date of this Agreement (the "SECOND CLOSING TERMINATION DATE"), assuming
that all conditions to Closing have been satisfied as of such date (other than
Section 6.1(d) or 6.2(d) with respect to any states that are not included in the
Initial Closing). Notwithstanding the foregoing, if the conditions to the
Closing in Section 6.1(d) or Section 6.2(d) have not been satisfied at the
Initial Closing as to more than one





                                      -9-


Excluded State, the Second Closing will occur within five business days of the
satisfaction or waiver of all conditions to Closing set forth in Article VI of
this Agreement that are capable of being satisfied prior to the Closing Date,
including without limitation Sections 6.1(d) and 6.2(d), as to each of the
Excluded States; PROVIDED, HOWEVER, that if, on the Second Closing Termination
Date, the conditions in Sections 6.1(d) and 6.2(d) have not been satisfied as to
any Excluded State, such Excluded State will not be the subject of a Second
Closing.

              (d) For the purposes of the Initial Closing and the Second
Closing, (i) the dollar amount indicated in the second sentence of Section
1.2(a) shall equal $2,230,000,000 TIMES the Applicable Fraction (as defined
below) and (ii) the Target Working Capital shall equal $259,548,000 TIMES the
Applicable Fraction. The "Applicable Fraction" means a fraction, the numerator
of which is the revenues reflected on SCHEDULE 1.8(a) for the states with
respect to which the business is being transferred at the Initial Closing or
Second Closing (as applicable) and the denominator of which is the total
revenues reflected on SCHEDULE 1.8(a).

              (e) At the Initial Closing, the DAI Shares will be retained by
Sprint, and Buyer will purchase the CDC Shares and all of the issued and
outstanding capital stock of SPA (which, together with the CDC Shares, will
constitute the "Shares" for purposes of the Initial Closing). Prior to the
Initial Closing, the parties will enter into an amendment to this Agreement that
reflects the provisions of this Section 1.8 and otherwise causes the economic
and legal substance of this Agreement to be retained and implemented with
respect to the Initial Closing and the Second Closing, including without
limitation to (i) remove DAI from the definition of "Companies" and include DAI
in the definition of "Sellers", (ii) deem the State Subsidiaries to be
"Companies" and "Wholly Owned Companies" for purposes of this Agreement and
(iii) deem the word "Closing" to include the Second Closing. Notwithstanding






                                      -10-


the foregoing, at the Initial Closing, the provisions of Section 5.14 and
Section 5.7 will apply without amendment except as set forth in clauses (i) and
(ii) above. Following the Initial Closing, this Agreement as so amended will
remain in full force and effect in accordance with its terms.

              (f) After the Initial Closing, the Companies will manage and
operate the Excluded Business on behalf of Sellers pursuant to the Services
Agreement (as defined below), including (without limitation) by performing
national and local sales, billing, credit and collection, customer service,
pre-press, printing and distribution. All gross revenues of the Excluded
Business will be collected by the Companies on behalf of Sellers and promptly
transferred to Sellers. For each Excluded State (for so long as such Excluded
State is subject to the Services Agreement), Sellers will pay the Companies a
fee for the performance of such services for each fiscal year equal to 39% of
the net billed revenue of the Excluded Business in the Excluded State for such
fiscal year PLUS 110% of direct costs for printing, paper procurement and
distribution for such Excluded Business for such fiscal year. The fee shall be
prorated on a daily basis for any partial year during which the Services
Agreement is in effect with respect to the Excluded Business in the applicable
Excluded State. In connection with the Initial Closing, Sellers and the
Companies will enter into a 50-year services agreement (the "SERVICES
AGREEMENT") with respect to the Excluded Businesses to implement and reflect the
provision of services and payment of fees for performance described in this
Section 1.8(f) and otherwise containing substantially the same terms and
conditions as are contained in the Directory Services License Agreement. The
Services Agreement will terminate upon the Second Closing as to any Excluded
Business acquired by Buyer in the Second Closing.




                                      -11-



              (g) If, at any time following the Second Closing Termination Date
or the termination of this Agreement in accordance with its terms following the
Initial Closing, Sellers determine to sell any of the State Subsidiary(ies) or
all or any portion of the Excluded Business that has not been the subject of a
Second Closing, Sellers will give notice to the Companies of such intent and
request the Companies to submit a written proposal to Sellers outlining the
specific terms and conditions under which the Companies are willing to purchase
such State Subsidiary(ies) or the applicable portion of the Excluded Business
(the "TARGET ASSETS"), which the Companies will submit within thirty (30) days
following Sellers' request if the Company desires to pursue such opportunity. If
the Companies do not submit a proposal within such 30-day period, Sellers may
contract with a third party in Sellers' discretion to purchase the Target
Assets. If the Companies submit a proposal during such 30-day period, Sellers
will negotiate in good faith with the Companies for a period of thirty (30) days
following the receipt by Sellers of such proposal to agree on terms and
conditions under which the Companies would acquire the Target Assets. If no
agreement has been reached by the end of the 30-day period, Sellers will submit
a final written proposal to the Companies, who will have five business days to
accept such proposal. If Sellers and the Companies are unable to agree on terms
for the Companies to acquire the Target Assets within the time frame specified
in this Section, Sellers may contract with a third party to acquire the Target
Assets on terms which in the aggregate are no more favorable to the purchaser
than last offered in writing to the Companies. If Sellers contract with a third
party to acquire the Target Assets, the Services Agreement will terminate with
respect to the Target Assets upon 60 days prior written notice to the Companies,
in which event Sellers will be required to pay the unpaid fees accrued under the
Services Agreement with respect to the Target Assets and reimburse the Companies
for any amounts


                                      -12-


payable under the Buyer's generally applicable severance plans with respect to
employees that the Companies decide to terminate as a result of the termination
of the Services Agreement with respect to the Target Assets; provided that the
Companies will cooperate in good faith to permit the purchaser of the Target
Assets to employ any of such employees.

              (h) In connection with the Initial Closing and the Second Closing,
the definition of "Service Areas" in the Directory Services License Agreement
will be revised to exclude the Services Areas in which the Excluded Business
that has not been included in a Second Closing is conducted.

              (i) It is the intent of the parties that this Section 1.8
constitute a binding and enforceable agreement to proceed with the Initial
Closing and the Second Closing in the circumstances described in Sections 1.8(a)
and 1.8(c). The parties agree to use their good faith, reasonable best efforts
to reach agreement on forms of amendments to this Agreement as contemplated by
this Section 1.8 and each of the Ancillary Agreements and to enter into the
Services Agreement, in each case as may be necessary to effect the Initial
Closing and the Second Closing on the terms described in this Section 1.8.
However, if the parties are unable to agree on any of the terms of such
agreements, all issue(s) will be submitted at the request of either party to
binding arbitration in accordance with the Expedited Procedures of the American
Arbitration Association's Commercial Dispute Resolution Procedures, as amended
and effective on July 1, 2002. If arbitration is requested, the Termination Date
will be extended if necessary to a date that is thirty (30) days following the
issuance of the arbitrator's ruling.





                                      -13-


                                   ARTICLE II

                                 RELATED MATTERS


         SECTION 2.1 USE OF SPRINT'S NAME AND LOGOS. Except as expressly
provided in the Trademark License Agreement, it is expressly agreed that Buyer
is not purchasing, acquiring or otherwise obtaining any right, title or interest
in the name "Sprint" or any "Sprint" 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 "SELLER TRADENAMES AND LOGOS"). Buyer agrees that neither it
nor any of its Affiliates (as hereinafter defined) shall make any use of the
Seller Tradenames and Logos from and after the Closing Date except as provided
in the Directory Services License Agreement and the Trademark License Agreement.
Simultaneously with the Closing, Buyer will cause the corporate name of SPA to
be amended to remove any reference to the name "Sprint" or any other name that
suggests SPA is a subsidiary of or affiliated with Sprint.

         SECTION 2.2 NO ONGOING OR TRANSITION SERVICES. Except as provided in
the Transition Services Agreement and the Directory Services License Agreement
at the Closing, all data processing, accounting, insurance, banking, personnel,
legal, communications and other services provided to the Companies by Sellers or
any Affiliate of Sellers, including any agreements or understandings (written or
oral) with respect thereto, will terminate.

         SECTION 2.3 CERTAIN PRE-CLOSING MATTERS.

              (a) The parties agree that Sellers shall have the right, at or
prior to the Closing, to cause the Companies to distribute all of the cash held
by the Companies to Sellers or their Affiliates on a basis consistent with
Sprint's current practice of sweeping all cash on a daily





                                      -14-


basis. Except as provided in Section 1.4 of this Agreement, no adjustment shall
be made to the Purchase Price as a result of any such distributions.

              (b) Prior to or effective with the Closing, each Company shall
assign to Sprint or its Affiliates, and Sprint or its Affiliates shall assume
(i) all liabilities of each Company which have accrued on or before, or which
are attributable to a Company's acts or omissions on or before, the Closing
under each Seller Benefit Plan described in Section 3.14(a) and each other plan,
contract, agreement, program, fund or arrangement which would be a Seller
Benefit Plan described in Section 3.14(a) but for the fact that no Company has
any material liability for the payment of benefits under, or makes material
contributions to, such other plan, contract, agreement, program, fund or
arrangement, and (ii) retention commitments set forth on SCHEDULE 3.13(d) that
are (and shall remain after Closing) the sole responsibility of Sellers and
their Affiliates (other than the Companies).

              (c) Except as expressly provided elsewhere in this Agreement, if,
at any time following the Closing, Sellers or their Affiliates receive any cash
or other assets belonging to any Company or Buyer, Sellers will, and will cause
their Affiliates to, as promptly as practicable, deliver such cash or assets to
such Company or Buyer, as applicable.






                                      -15-


                                  ARTICLE III

                    REPRESENTATIONS AND WARRANTIES OF SELLERS


         Sellers hereby jointly and severally represent and warrant to Buyer, as
of the date of this Agreement and as of the Closing Date, as follows:

         SECTION 3.1 ORGANIZATION.

              (a) Each of DAI, CDC and SPA is a corporation duly incorporated,
validly existing and in good standing under the laws of the States of Kansas,
Delaware and Kansas, respectively. Cendon is a limited liability company duly
formed, validly existing and in good standing under the laws of the State of
Delaware. Each Company has all requisite power and authority to own, lease and
operate its properties and assets and to carry on its business and operations as
now being conducted. Each Company is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property or assets
owned, leased or operated by such Company or the nature of the business
conducted by such Company makes such qualification necessary, except where the
failure to be so duly qualified or licensed and in good standing would not
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect (as hereinafter defined). SCHEDULE 3.1 sets forth a list
of all jurisdictions where each of the Companies is qualified to do business.
Sellers have heretofore made available to Buyer complete and correct copies of
the certificate of incorporation or articles of incorporation, as the case may
be, and by-laws of the Wholly Owned Companies, as currently in effect, and the
certificate of formation and limited liability company agreement of Cendon, as
currently in effect.

              (b) As used in this Agreement, a "COMPANY MATERIAL ADVERSE EFFECt"
shall mean any event, occurrence, development, state of circumstances or facts,
change or effect





                                      -16-


that has had, or would reasonably be expected to, individually or in the
aggregate, have a material adverse effect upon the financial condition,
operating results, business, assets or liabilities of the Companies on a
consolidated basis; PROVIDED, HOWEVER, that a Company Material Adverse Effect
shall not include any event, occurrence, development, state of circumstances or
facts, change in or effect upon the financial condition, operating results,
business, assets or liabilities of the Companies directly or indirectly arising
out of, attributable to or as a consequence of conditions, events or
circumstances generally affecting the telephone directory publishing industry,
the securities markets or the overall economy (either generally in the U.S. or
in one or more of the jurisdictions in which the Companies conduct business).

         SECTION 3.2 AUTHORIZATION. Sprint is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Kansas.
Centel LLC is a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware. Each Seller and each of
its Affiliates has the power and authority to execute and deliver this Agreement
and the Ancillary Agreements to which it is a party and perform its respective
obligations under this Agreement and the Ancillary Agreements to which it is a
party. The execution and delivery of this Agreement and the Ancillary Agreements
and the performance by Sellers and its Affiliates of their respective covenants
and agreements under this Agreement and the Ancillary Agreements have been duly
and validly authorized by the Board of Directors of Sprint and the manager of
Centel LLC, and no other proceeding on the part of Sellers, the Wholly Owned
Companies, or their shareholders, members or Affiliates is necessary to
authorize the execution, delivery and performance of this Agreement and the
Ancillary Agreements or the consummation of the transactions contemplated by
this Agreement and the Ancillary Agreements. This Agreement has been, and at the
Closing the Ancillary Agreements






                                      -17-


shall be, duly executed and delivered by Sellers and its Affiliates, and this
Agreement constitutes, and upon execution and delivery of the Ancillary
Agreements, the Ancillary Agreements will constitute, a valid and binding
agreement of Sellers and its Affiliates, enforceable against Sellers and its
Affiliates, in accordance with their respective terms, except that (a) such
enforcement may be subject to any bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other laws, now or hereafter in effect,
relating to or limiting creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.

         SECTION 3.3 CAPITAL STOCK. SCHEDULE 3.3 sets forth (a) the authorized,
issued and outstanding capital stock of each of the Wholly Owned Companies, (b)
the outstanding membership interests of Cendon and (c) the owners of the
outstanding capital stock and membership interests of the Companies. The Shares
and the outstanding capital stock of SPA have been validly issued, are fully
paid and non-assessable and are free of preemptive rights of any kind. The
membership interests in Cendon have been validly issued and are free of
preemptive rights of any kind. There are no shares of capital stock of any
Wholly Owned Company held as treasury shares. There are not any outstanding
securities convertible into, exchangeable for, or carrying the right to acquire,
equity securities of any Company, nor are there any subscriptions, warrants,
options, rights or other arrangements or commitments which could obligate any
Company to issue any shares of its capital stock or membership or other equity
interests. Except for (i) the membership interest in Cendon owned by CDC and
(ii) the issued and outstanding shares of capital stock of SPA owned by DAI,
none of the Companies owns, directly or indirectly, any capital stock,
membership interest or any other equity or debt





                                      -18-


securities of any corporation, firm, partnership, limited liability company,
joint venture, association or other entity. DAI owns no tangible or intangible
assets (including properties or rights) other than the capital stock of SPA.

         SECTION 3.4 OWNERSHIP OF THE CAPITAL STOCK. Sellers and their
respective wholly owned subsidiaries shown on SCHEDULE 3.4 as the owners of the
outstanding capital stock or membership interests in the Companies have good
title to such stock or membership interests, free and clear of all Liens (as
hereinafter defined).

         SECTION 3.5 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and
delivery of this Agreement does not, and the execution and delivery of the
Ancillary Agreements will not, and the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements will not (a)
conflict with or result in any breach of any provision of the governing
instruments of Sellers or any of the Companies, (b) except as set forth in
SCHEDULE 3.5 and for applicable requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), require any filing with,
or the obtaining of any permit, authorization, consent or approval of, or
license, qualification or order of, any governmental or regulatory authority,
(c) except as set forth in SCHEDULE 3.5, violate, conflict with or result in a
default (or any event which, with notice or lapse of time or both, would
constitute a default) under, or give rise to any right of termination,
cancellation or acceleration under, any of the terms, conditions or provisions
of any note, mortgage, other evidence of indebtedness, guarantee, license,
agreement, lease or other contract, instrument or obligation to which any
Company or Sellers are a party or by which any Company or Sellers or any of
their respective assets may be bound or under which any Company receives any
benefit, whether or not such Company is a party thereto, including, but not
limited to, the Contracts (as hereinafter defined), or (d) violate






                                      -19-


any order, injunction, decree, statute, rule or regulation applicable to any
Company or Sellers, excluding from the foregoing clauses (b), (c) and (d) such
requirements, violations, conflicts, defaults or rights (i) which would not
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect and would not adversely affect the ability of Sellers to
consummate the transactions contemplated by this Agreement, or (ii) which become
applicable as a result of the business or activities in which Buyer is or
proposes to be engaged or as a result of any acts or omissions by, or the status
of or any facts pertaining to, Buyer.

         SECTION 3.6 FINANCIAL STATEMENTS AND UNDISCLOSED LIABILITIES.

              (a) Sellers have made available to Buyer true and correct copies
of the audited combined consolidated balance sheets of the Companies as of
December 31, 1999, December 31, 2000, and December 31, 2001, the audited
combined consolidated statements of income and cash flows of the Companies for
each of the fiscal years then ended, including the notes thereto, and the
unaudited combined consolidated balance sheet of the Companies, dated June 30,
2002 (the "INTERIM BALANCE SHEET"), and unaudited combined consolidated
statements of income and cash flows of the Companies for the six (6) month
period then ended presented on a basis consistent with the year-end audited
financial statements. All of the foregoing financial statements are hereinafter
collectively referred to as the "FINANCIAL STATEMENTS". Except as disclosed in
the Financial Statements, the Financial Statements have been prepared from, and
are in accordance with, the books and records of the Companies and present
fairly and accurately, in all material respects, the financial position, results
of operations and cash flows of the Companies on a combined consolidated basis
as of the dates and for the applicable periods indicated, in each case in
conformity with GAAP consistently applied except as noted therein.






                                      -20-


              (b) The Companies do not have any liabilities or obligations of
any nature (whether accrued, absolute, contingent, unasserted or otherwise)
required by GAAP to be reflected on the Financial Statements that would
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect, except (i) as disclosed, reflected or reserved against
in the Financial Statements and the notes thereto, (ii) for liabilities and
obligations incurred in the Ordinary Course of Business (as hereinafter defined)
since December 31, 2001, and (iii) as set forth on SCHEDULE 3.6(b). This
representation shall not be deemed breached as a result of a change in law after
the Closing Date. The Companies do not have any off-balance sheet financing.

         SECTION 3.7 ABSENCE OF MATERIAL ADVERSE EFFECT. Except as set forth on
SCHEDULE 3.7, since December 31, 2001, each Company has:

              (a) conducted such Company's business in the Company's ordinary
course of business substantially consistent with past practice ("ORDINARY COURSE
OF BUSINESS");

              (b) not acquired, sold, disposed of, licensed, assigned,
transferred or permitted to lapse any material asset other than sales of
products and services in the Ordinary Course of Business;

              (c) maintained accounts receivable, inventory, accounts payable
and other working capital accounts in a manner consistent with the Ordinary
Course of Business;

              (d) not pledged or permitted the imposition of any Lien on any of
its assets (except, with respect to real property, Permitted Liens);

              (e) not suffered a Company Material Adverse Effect;




                                      -21-


              (f) not suffered any damage, destruction or loss of tangible
assets, whether or not covered by insurance, with a book value in excess of
$500,000, in the aggregate with the other Companies;

              (g) not paid, discharged or satisfied any material claims,
liabilities or obligations (absolute, accrued, contingent or otherwise), except
in each case in the Ordinary Course of Business;

              (h) not cancelled any indebtedness for borrowed money or material
claim or, except in the Ordinary Course of Business, waived any material claims
or rights of substantial value;

              (i) not granted any material increase in the salaries, wages,
fringe benefits or other compensation payable or to become payable to its
officers, directors, consultants or employees (including any such increase
pursuant to any bonus, severance, termination, pension, profit-sharing or other
plan or commitment) or any special increase in the compensation payable or to
become payable to any officer, director, consultant or employee, except for (i)
normal merit and cost of living increases in the Ordinary Course of Business and
(ii) retention commitments that are (and shall remain after Closing) the sole
responsibility of Sellers and their Affiliates (other than the Companies);

              (j) not effected a material write down of any of its material
assets;

              (k) not made any change to its accounting policies except as
required by GAAP;

              (l) except in the Ordinary Course of Business, no Company has (i)
acquired any material assets from any Person, (ii) consummated any transaction
that is material to the Companies, taken as a whole, or (iii) made any material
capital expenditure, or






                                      -22-


commitment for a material capital expenditure, for additions or improvements to
property, plan and equipment; and

              (m) there has not been any material labor dispute, other than
routine individual grievances or, to the Knowledge of Sellers, any material
activity or proceeding by a labor union or representative thereof to organize
any employees of the Companies or any material lockouts, strikes, slowdowns,
work stoppages or, to the Knowledge of Sellers, threats thereof by or with
respect to any employees of the Companies.

         SECTION 3.8 TITLE, OWNERSHIP AND RELATED MATTERS.

              (a) Real Property.

                    (i) SCHEDULE 3.8(a)(i) sets forth a list of the parcels of
real property owned by any Company (together with the fixtures and improvements
thereon, the "OWNED REAL PROPERTY"). SCHEDULE 3.8(a)(i) also sets forth a list
of the parcels of real property currently leased by any Company (together with
all fixtures and improvements thereon, the "LEASED REAL PROPERTY") and
collectively with the Owned Real Property, the "REAL PROPERTY"). All properties
occupied or used by any Company are owned or leased by such Company and are
described on SCHEDULE 3.8(a)(i) or SCHEDULE 3.13.

                    (ii) Except as set forth on SCHEDULE 3.8(a)(ii), each
Company has good and marketable, indefeasible fee simple title to its Owned Real
Property, free and clear of all liens, mortgages, deeds of trust, pledges,
security interests, options to acquire, charges, claims, leasehold interests,
tenancies, restrictions and encumbrances of any nature whatsoever (collectively,
"LIENS") other than (A) Liens for Taxes not yet due and payable, (B) statutory
Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen
and repairmen incurred in the Ordinary Course of Business and not yet
delinquent, (C) matters of record set






                                      -23-


forth on the title insurance policy issued by Lawyer's Title Insurance, dated
January 5, 1995 (excluding items 2, 3 and 5 of Schedule B thereto) and (D)
zoning, building or other restrictions, variances, covenants, rights of way,
encumbrances, easements and other minor irregularities in title, none of such
items in (A)-(D) which, individually or in the aggregate, materially and
adversely detract from the value of such Owned Real Property based on its
current use or interfere in any material respect with the current use or
occupancy of such Owned Real Property (collectively, "PERMITTED LIENS").

                    (iii) Each Company has a valid leasehold interest in the
Leased Real Property, free and clear of any Liens except for Permitted Liens.

                    (iv) Except as set forth in SCHEDULE 3.8(a)(iv), the Owned
Real Property currently has access to (a) public roads or valid easements over
private streets or private property for such ingress to and egress from all such
plants, buildings and structures, and (b) water supply, storm and sanitary sewer
facilities, telephone, gas and electrical connections, fire protection, drainage
and other public utilities, in each case as necessary for the operation or
conduct of the business of the Companies as currently conducted. None of the
structures on any such property substantially encroaches upon real property of
another Person, and no structure of any other Person substantially encroaches
upon the Owned Real Property.

                    (v) Such Owned Real Property, and its continued use,
occupancy and operation as currently used, occupied and operated, does not
constitute a nonconforming use in any material respect under applicable
building, zoning, subdivision and other land use and similar laws, regulations
and ordinances. Valid certificates of occupancy permitting such uses are in
effect with respect to the Owned Real Property.




                                      -24-


                    (vi) Except as set forth on SCHEDULE 3.8(a)(vi), no Company
has, in the last three years, received written notice of any pending or, to the
Knowledge of Sellers, threatened condemnation or eminent domain proceeding with
respect to the Owned Real Property or any part thereof. (vii) Except as set
forth on SCHEDULE 3.8(a)(vii), there are no material options, rights of first
refusal, contracts or other binding obligations granted by any Company for the
sale, exchange, leasing, transfer, financing or refinancing of any of the Owned
Real Property.

                    (viii) Except as set forth on SCHEDULE 3.8(a)(viii), there
are no matters that an accurate and complete survey of the Owned Real Property
would disclose that would materially and adversely affect the ability of Buyer
or the Companies to use the Owned Real Property as is currently being used or
that would materially and adversely affect the value of the Owned Real Property.

                    (ix) No party other than a Company is in possession, or has
any possession of, all or any material portion of any of the Real Property.

              (b) TITLE TO ASSETS. Except as set forth in SCHEDULE 3.8(b), each
Company has good and marketable title to its material assets, free and clear of
all Liens (except, with respect to the Real Property, Permitted Liens).

         SECTION 3.9 INTELLECTUAL PROPERTY.

              (a) As used in this Agreement, (i) "INTELLECTUAL PROPERTY" means
any trademarks, trade names, service marks, service names, trade dress
(including but not limited to colors and combinations thereof, design graphics,
cover graphics, "look and feel" or directory





                                      -25-


design and package graphics), internet domain names, logos, assumed names, trade
secrets, copyrights, patents or any registrations and applications therefor;
Computer Software does not constitute Intellectual Property; (ii) "COMPANY OWNED
INTELLECTUAL PROPERTY" means any Intellectual Property owned by Sellers or their
Affiliates (including the Companies) and necessary for, or used by the Companies
in, the operation of the Companies' businesses as currently conducted; (iii)
"COMPANY LICENSED INTELLECTUAL PROPERTY" means any Intellectual Property
licensed to the Companies and used by the Companies in the operation of the
Companies' businesses as currently conducted; and (iv) "COMPANY INTELLECTUAL
PROPERTY" means the Company Owned Intellectual Property and the Company Licensed
Intellectual Property.

              (b) To the Knowledge of Sellers, the conduct of the business of
the Companies does not infringe upon any Intellectual Property of any third
party. Except as disclosed on SCHEDULE 3.9(b)(i), there are no pending, or to
the Knowledge of Sellers threatened, proceedings, administrative claims or
litigation or other adverse claims by any Person (as hereinafter defined)
against the use by the Companies of any material Company Owned Intellectual
Property. To the Knowledge of Sellers, there are no pending or threatened,
proceedings, administrative claims or litigation or other adverse claims by any
Person against the use by the Companies of any material Company Licensed
Intellectual Property. SCHEDULE 3.9(b)(ii) sets forth a list of all material
Company Owned Intellectual Property other than trade secrets, and SCHEDULE
3.9(b)(iii) sets forth a list of all material Company Licensed Intellectual
Property, including a description of the license agreement with respect thereto.
There is no material Intellectual Property necessary for, or used by the
Companies in, the operation of the Companies' businesses as currently conducted
that is not Company Intellectual Property.




                                      -26-


              (c) Each Company owns or has all valid licenses and other rights
to use the Company Intellectual Property, except where the failure to have such
ownership, licenses or rights would not reasonably be expected to, individually
or in the aggregate, have a Company Material Adverse Effect. Except as disclosed
on SCHEDULE 3.9(c), to the Knowledge of the Sellers, there is no material
unauthorized use, disclosure, infringement or misappropriation of any material
Company Intellectual Property by any third party, including any employee or
former employee of the Company.

              (d) None of Sellers or any of their Affiliates, including the
Companies, is in default in any material respect regarding any of its
obligations in respect of protecting or maintaining any material Company
Intellectual Property and no Person has asserted any claim in writing delivered
to Sellers or their Affiliates to the contrary.

         SECTION 3.10 COMPUTER SOFTWARE.

              (a) SCHEDULE 3.10(a) sets forth a true and complete list of: (i)
all computer software owned by each of the Companies (the "COMPANY PROPRIETARY
Software"), and (ii) all agreements by which the Company licenses computer
software (other than off-the-shelf software) (the "COMPANY LICENSED SOFTWARE"
and collectively with the Company Proprietary Software the "COMPANY SOFTWARE").

              (b) Each Company has all right, title and interest in and to all
intellectual property rights in the Company Proprietary Software. The use of the
Company Software does not breach in any material respect any terms of any
license or other contract between any Company and any third party. Each Company
is in compliance in all material respects with the terms and conditions of all
license agreements in favor of each Company relating to the Company Licensed
Software.




                                      -27-


              (c) To the Knowledge of Sellers, the Company Proprietary Software
does not infringe any patent, copyright, trademark or trade secret or any other
intellectual property right of any third party.

              (d) No Company has granted rights in the Company Software to any
third party.

         SECTION 3.11 LITIGATION. SCHEDULE 3.11 identifies (a) all material
actions, suits and proceedings pending or, to the Knowledge of Sellers,
threatened against any Company by or before any court or governmental or
regulatory authority other than workers' compensation claims occurring in the
Ordinary Course of Business, and (b) all material investigations by any
governmental entity of which a Company has received written notice that are
pending or threatened against any Company. None of such actions, suits,
proceedings or investigations would reasonably be expected to, individually or
in the aggregate, have a Company Material Adverse Effect. There is (x) no
action, suit or proceeding pending by or before any court, governmental or
regulatory authority or, to the Knowledge of Sellers, threatened against the
Sellers or the Companies, and (y) no investigation by any governmental entity of
which a Company has received notice that is pending or, to the Knowledge of
Sellers, threatened against the Sellers or the Companies, which challenges the
validity of this Agreement or any Ancillary Agreement or which would be
reasonably likely to adversely affect or restrict Sellers' ability to consummate
the transactions contemplated by this Agreement or any Ancillary Agreement or
that would reasonably be expected to result in a failure of the condition set
forth in Sections 6.1(d) or 6.2(d). None of the Companies are in default with
respect to or subject to any order, judgment, decision, decree, injunction or
ruling of any federal, state, or local court or governmental agency, department
or authority, except for such defaults that would not





                                      -28-


reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect.

         SECTION 3.12 COMPLIANCE WITH APPLICABLE LAW. Except as disclosed on
SCHEDULE 3.12, each Company has been in compliance in all material respects with
all applicable laws, ordinances, rules and regulations of any federal, state,
local or foreign governmental authority applicable to such Company or its
operations, including without limitation any Environmental Law, except for
instances of noncompliance that would not reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect. None
of Sellers or the Companies has received any written communication from any
governmental entity that alleges a Company is not currently in compliance in any
material respect with any such laws, ordinances, rules or regulations.

         SECTION 3.13 CERTAIN CONTRACTS AND ARRANGEMENTS. SCHEDULE 3.13 sets
forth a list of the following contracts, agreements or binding arrangements
(whether written or oral) to which any Company is a party or by which it or any
of its material properties or assets are bound: (a) all bonds, debentures,
notes, loans, credit or loan agreements or loan commitments, mortgages, security
agreements, pledges, indentures, guarantees or other contracts relating to the
borrowing of money or binding upon any properties or assets (real, personal or
mixed, tangible or intangible) of each Company; (b) all leases relating to the
Leased Real Property or other leases or licenses involving any properties or
assets (whether real, personal or mixed, tangible or intangible) involving an
annual commitment or payment of more than $250,000 individually by a Company or
in the aggregate with other Companies; (c) all contracts or agreements which
limit or restrict a Company or any officers or key employees of a Company from
engaging in any business in any jurisdiction; (d) any contract that provides for
an increased or changed payment





                                      -29-


or benefit, or accelerated vesting, upon the execution of this Agreement or the
Closing or in connection with the transactions contemplated by this Agreement
(including any severance, retention or golden parachute agreement); (e) any
contract or agreement granting any third party a Lien on all or any part of the
assets of the Companies; (f) any contract or agreement with any agent,
distributor or representative which is not terminable without penalty on thirty
(30) calendar days' or less notice; (g) any joint venture or partnership
contract or other contract providing for the sharing of any profits; (h) any
deferred compensation, retirement incentive bonus, severance retention or
written employment agreement; (i) any contract or agreement with Sellers or any
Affiliates of Sellers; and (j) each existing contract and commitment (other than
those described in subsections (a) through (i) of this Section 3.13) to which
any Company is a party or by which its assets are bound (A) involving an annual
commitment or annual payment to or from a Company of more than $250,000
individually or in the aggregate with other Companies or (B) that is material to
the business of the Companies as presently conducted (together with those
contracts, agreements and understandings described in clauses (a) through (j),
the "CONTRACTS"). Except as set forth on SCHEDULE 3.13, Sellers have made
available to Buyer true and correct copies of all Contracts. All such Contracts
are in full force and effect and are valid, binding and enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity, including concepts of materiality, reasonableness, good
faith and fair dealing regardless of whether considered in a proceeding in
equity or at law, and neither the applicable Company nor, to the Knowledge of
Sellers, any other party thereto is in material default or breach under any of
such Contracts. None of Sellers or any Company has exercised any right to
terminate, or has





                                      -30-


received any notice that any party to a Contract has exercised any right to
terminate, such Contract (other than Contracts listed on SCHEDULE 3.13 which
will be terminated at Closing). To the Knowledge of Sellers, no event or
circumstance has occurred that, with notice or lapse of time or both, would
constitute an event of default or breach in any material respect under any
Contract, except for such events or defaults that would not reasonably be
expected to, individually or in the aggregate, have a Company Material Adverse
Effect.

         SECTION 3.14 EMPLOYEE BENEFIT PLANS; ERISA.

              (a) IDENTIFICATION. Each "employee benefit plan" (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended,
("ERISA")) which provides benefits to current or former employees of any Company
in their status as such (individually a "SELLER ERISA PLAN" and collectively the
"SELLER ERISA PLANS") and each other employment, severance, golden parachute,
retention, salary continuation, bonus, incentive, stock option, retirement,
pension, profit sharing or deferred compensation plan, contract, agreement,
program, fund or arrangement of any kind (whether written or oral, tax-qualified
or non-tax qualified, funded or unfunded, foreign or domestic, active or frozen
or terminated) and any related trust, insurance contract, escrow account or
similar funding arrangement which provides benefits to any current or former
officer, employee or director of, or any individual independent contractor who
has provided or who currently provides services to, any Company to which, or
with respect to which, such Company has a material liability for the payment of
benefits or makes material contributions is shown on Schedule 3.14 (individually
a "SELLER BENEFIT PLAN" and, together with the Seller ERISA Plans, collectively
the "SELLER BENEFIT PLANS"), and there are no "employee benefit plans" (as
defined in Section 3(3) of ERISA) which provide benefits to any current or
former employees of any Company (in their status as such) and no other
employment,





                                      -31-


severance, golden parachute, retention, salary continuation, bonus, incentive,
stock option, retirement, pension, profit sharing or deferred compensation
plans, contracts, agreements, programs, funds or arrangements of any kind
(whether written or oral, tax-qualified or non-tax qualified, funded or
unfunded, foreign or domestic, active or frozen or terminated) or any related
trusts, insurance contracts, escrow accounts or similar funding arrangements
which provide benefits to current or former officers, employees or directors of,
or individual independent contractors who have provided or who currently provide
services to, any Company to which, or with respect to which, any Company has a
material liability for the payment of benefits or makes material contributions
except for the Seller Benefit Plans.

              (b) COMPLIANCE AND SPONSORSHIP. (i) Sprint is responsible for the
administration of each of the Seller ERISA Plans and, except as set forth on
SCHEDULE 3.14, each of the Seller ERISA Plans has been administered by Sprint in
compliance in all material respects with ERISA, the Code and all other
applicable laws, (ii) each Seller ERISA Plan is sponsored and maintained by
Sprint for the benefit of eligible employees of each Company, Sprint and each
other employer (other than a Company) which together with Sprint is treated
under Section 414(b), Section 414(c) or Section 414(m) of the Code or Section
4001(b)(1) of ERISA as a "single employer" of such eligible employees (an "ERISA
AFFILIATE"), (iii) there are two Seller ERISA Plans and two other defined
contribution plans (as defined in Section 414(i) of the Code) maintained by
Sprint that are intended to be "qualified" plans within the meaning of Section
401(a) of the Code, and each such plan has a favorable determination letter from
the Internal Revenue Service to the effect that it is so qualified and, if the
letter for such a plan is not current, such plan is the subject of a timely
request for a current favorable determination letter, (iv) there is one Seller
ERISA Plan which is subject to Title IV of ERISA, and no ERISA Affiliate has any






                                      -32-


obligations or liabilities with respect to any other plan which is subject to
Title IV of ERISA, (v) no Seller ERISA Plan is a multiemployer plan (as defined
in Section 4001(a)(3) of ERISA), and neither Sprint nor any Company or ERISA
Affiliate has any obligations or liabilities with respect to any multiemployer
plan, and (vi) there are no pending or, to the Knowledge of Sellers, threatened
material claims (other than routine claims for benefits) by, on behalf of or
against any of the Seller Benefit Plans or any trusts, insurance contracts,
escrow accounts or similar funding arrangements which are a part of such plans
except as set forth on SCHEDULE 3.14.

              (c) COPIES. Sellers have (i) furnished or made available to Buyer
a true, complete and correct copy of each Seller Benefit Plan which is set forth
in writing and the current summary plan description of each Seller Benefit Plan
that is subject to ERISA, (ii) furnished or made available a copy of the
description of each other Seller Benefit Plan which is currently provided to
participants in such plan and (iii) set forth in Schedule 3.14 a summary of the
material terms of each Seller Benefit Plan that is not set forth in writing.

              (d) ADEQUATE FUNDING. With respect to each Seller Benefit Plan
that is subject to Section 302 of ERISA or Section 412 of the Code, (i) no
"accumulated funding deficiency" (within the meaning of Section 302 of ERISA or
Section 412 of the Code) exists with respect to such plan, (ii) no waiver of the
minimum funding standards of Section 302 of ERISA or Section 412 of the Code is
in effect with respect to such plan and (iii) there is no lien in favor of such
plan under Section 302(f) of ERISA or Section 412(n) of the Code.

              (e) NO PROHIBITED TRANSACTIONS OR FIDUCIARY BREACHES. With respect
to each Seller Benefit Plan that is subject to Section 406 of ERISA or Section
4975 of the Code, there have been no non-exempt "prohibited transactions"
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) or
breaches of any of the duties imposed by ERISA on





                                      -33-


Sprint, a Company or an ERISA Affiliate or, to the Knowledge of Sellers, any
other fiduciary (within the meaning of Section 3(21) of ERISA) at any time that
could result in any material liability or excise tax under ERISA or the Code
being imposed on any Company.

              (f) NO CHANGE IN CONTROL LIABILITIES. No Company has any
obligation under any retention, stay-put, change in control or similar purpose
agreement to make any payments to any officer, employee or director of such
Company or to any individual independent contractor who has provided or who
currently provides services to such Company or to make nonforfeitable any
otherwise forfeitable benefits (except as provided in Section 5.14) as a result
of the execution of this Agreement or the Closing of the transaction
contemplated by this Agreement.

         SECTION 3.15 LABOR MATTERS. Each Company is in compliance with all
federal and state laws respecting employment and employment practices, terms and
conditions of employment, wages and hours, and is not engaged in any unfair
labor or unlawful employment practice, the violation of or engagement in which
would reasonably be expected to, individually or in the aggregate, have a
Company Material Adverse Effect. Except as set forth on SCHEDULE 3.15, there are
no controversies pending or, to the Knowledge of the Sellers, threatened,
between either Company and any of its employees, which controversies have had or
would reasonably be expected to, individually or in the aggregate, have a
Company Material Adverse Effect. Except as set forth on SCHEDULE 3.15, none of
the Companies is a party to any collective bargaining agreement or other labor
union contract applicable to Persons employed by such Company. There are no
unfair labor practice complaints pending against any Company before the National
Labor Relations Board. There are no strikes, slowdowns, work stoppages, lockouts
or, to the Knowledge of Sellers, threats thereof, by or with respect to any
employees of





                                      -34-


any Company. To the Knowledge of Sellers (which for this purpose only will
exclude the knowledge of any officer of the Companies), except as set forth on
SCHEDULE 3.15 or as required by Section 1.6(b), no officer of any Company has
indicated as of the date hereof that he or she intends to resign from his or her
capacity as an employee or retire as a result of the transactions contemplated
by this Agreement. To the Knowledge of Sellers, except as set forth on SCHEDULE
3.15 or as required by Section 1.6(b), no director-level employee of any Company
has indicated as of the date hereof that he or she intends to resign from his or
her capacity as an employee or retire as a result of the transactions
contemplated by this Agreement.

         SECTION 3.16 TAXES.

              (a) Either Sellers or the applicable Company (i) has timely filed
or caused to be filed on a timely basis with the appropriate taxing authorities
all material Tax Returns (as hereinafter defined) required to be filed by, with
respect to or which are required to include the income or other information from
the Companies, and (ii) has paid or made adequate provision for the payment of
all Taxes (as hereinafter defined) shown to be due on such Tax Returns. Such Tax
Returns are true, correct and complete in all material respects.

              (b) Except as set forth on SCHEDULE 3.16, (i) there are no liens
for Taxes with respect to the assets of any Company (except for statutory liens
for current taxes not yet delinquent) and no material claims with respect to
Taxes have been asserted by any taxing authority in writing, (ii) none of the
Tax Returns applicable to any Company are currently being audited or examined by
any taxing authority, (iii) there is no material unpaid tax deficiency,
determination or assessment currently outstanding against any Company, (iv)
there are no outstanding agreements or waivers extending the statute of
limitations relating to the assessment of Taxes applicable to any Company, (v)
neither the applicable Company nor Sellers on behalf of





                                      -35-


such Company have filed a consent pursuant to Section 341(f) of the Code, (vi)
no taxing authority has claimed (A) since January 1, 1996 that any Wholly Owned
Company should have filed any Tax Return that has not been filed or (B) since
July 1, 2000 that CenDon should have filed any Tax Return that has not been
filed, (vii) no closing agreement pursuant to Section 7121 of the Code (or any
predecessor provision) or any similar provision of any state, provincial, local
or foreign law has been entered into (A) since January 1, 1996 by or with
respect to any Wholly Owned Company or any assets thereof or (B) since July 1,
2000 by or with respect to CenDon or any assets thereof, and (viii) no Company
is currently required to include in income any adjustment pursuant to Section
481(a) of the Code (or similar provisions of other laws or regulations) in its
current or in any future taxable period by reason of a change in accounting
method.

              (c) As used in this Agreement:

                    (i) "TAXES" shall mean all taxes, levies, charges, fees,
duties or other assessments including income, corporation, advance corporation,
gross receipts, transfer, excise, property, sales, use, value-added, license,
payroll, pay-as-you-earn, withholding, social security and franchise or other
governmental taxes or charges, imposed by the United States or any state,
county, local or foreign government, and such term shall include any interest,
penalties or additions attributable to such taxes; and

                    (ii) "TAX RETURN" shall mean any report, return,
declaration, claim for refund, information return or statement in connection
with Taxes, including any schedule or attachment thereto, and including any
amendment thereof.




                                      -36-



         SECTION 3.17 ENVIRONMENTAL. Except as set forth on SCHEDULE 3.17:

              (a) Each Company possesses, and is in compliance with, all
material permits, licenses and government authorizations relating to protection
of the environment, pollution control and hazardous materials ("ENVIRONMENTAL
LAWS") applicable to such Company.

              (b) None of the Companies, Sellers or any Affiliates of Sellers
have received notice that any Company is subject to any pending or, to the
Knowledge of Sellers, threatened claim incurred or imposed or based upon any
provision of any Environmental Law which claims, if adversely resolved, would
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect.

              (c) Prior to the date of this Agreement, Sellers have delivered to
Buyer all environmental investigations, studies, audits, tests, reviews or
analyses conducted during the five years prior to the date of this Agreement by
or on behalf of any Company, any Seller or any Affiliate of any of them (or, to
the Knowledge of Sellers, by a third party) in relation to the business
conducted by the Companies or any property or facility currently owned or leased
by the Companies, which is in the possession of any Company, any Seller or any
Affiliate of any of them.

         SECTION 3.18 OFFICERS. SCHEDULE 3.18 lists each of the directors and
officers (or equivalent positions) of the Companies and all of the accounts (and
signatories thereto) of the Companies with any bank, brokerage firm or other
financial institution or depository.

         SECTION 3.19 CERTAIN FEES. None of the Companies will have any
liability for any financial advisory or finders' fees in connection with this
Agreement or the transactions contemplated hereby.





                                      -37-


         SECTION 3.20 SUFFICIENCY OF ASSETS. Except as set forth on SCHEDULE
3.20, the tangible and intangible assets (including properties and rights) of
the Companies, together with the rights to be granted and the services to be
provided pursuant to the Ancillary Agreements, are sufficient for the conduct of
the business of the Companies immediately following the Closing in substantially
the same manner as currently conducted.

         SECTION 3.21 PERMITS.

              (a) SCHEDULE 3.21 sets forth all material certificates, licenses,
permits, authorizations and approvals ("PERMITS") issued or granted to the
Companies by governmental entities that are necessary or desirable for the
operation or conduct of the business of the Companies. All such Permits are
valid and in full force and effect, and the Companies have complied in all
material respects with all terms and conditions thereof. During the past 12
months, no Company has received notice of any proceedings relating to the
revocation, default or modification of any such Permits. This Section 3.21 does
not apply to environmental matters, which are the subject of Section 3.17.

              (b) The Companies possess all Permits to own or hold under lease
and operate the assets owned by the Companies and to conduct the business of the
Companies as currently conducted, other than such Permits the absence of which
would not reasonably be expected to, individually or in the aggregate, have a
Company Material Adverse Effect.


         SECTION 3.22 AFFILIATES ENGAGED IN THE BUSINESS. The parties identified
collectively as "Sprint LTD" in the Directory Services License Agreement
constitute all of the Affiliates of Sprint that, as of the date hereof and as of
the Closing, provide wireline local telephone service.






                                      -38-


                                   ARTICLE IV

                     REPRESENTATIONS AND WARRANTIES OF BUYER


         Buyer hereby represents and warrants to Sellers, as of the date of this
Agreement and as of the Closing, as follows:

         SECTION 4.1 ORGANIZATION AND AUTHORITY OF BUYER. Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. Buyer has the corporate power and authority to execute and
deliver this Agreement and the Ancillary Agreements to which it is a party and
perform its obligations under this Agreement and the Ancillary Agreements to
which it is a party. The execution and delivery of this Agreement and the
Ancillary Agreements and the performance by Buyer of its covenants and
agreements under this Agreement and the Ancillary Agreements to which it is a
party have been duly and validly authorized by the Board of Directors of Buyer,
and no other corporate proceedings on the part of Buyer are necessary to
authorize the execution, delivery and performance of this Agreement or any of
the Ancillary Agreements or the consummation of the transactions contemplated by
this Agreement and the Ancillary Agreements. This Agreement has been and at the
Closing the Ancillary Agreements will be duly executed and delivered by Buyer
and this Agreement constitutes, and upon execution and delivery of the Ancillary
Agreements, the Ancillary Agreements will constitute a valid and binding
agreement of Buyer, enforceable against such party in accordance with their
respective terms, except that (a) such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
other similar laws affecting creditors' rights generally from time to time in
effect and to general principles of equity, including concepts of materiality,
reasonableness, good faith and fair dealing regardless of whether considered in
a proceeding in equity or at law, and (b) the





                                      -39-


remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.

         SECTION 4.2 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and
delivery of this Agreement does not, and the execution and delivery of the
Ancillary Agreements will not, and the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements will not (a)
conflict with or result in any breach of any provision of the organizational
documents of Buyer, (b) except as set forth in SCHEDULE 4.2 and for applicable
requirements of the HSR Act, require any filing with, or the obtaining of any
permit, authorization, consent or approval of, any governmental or regulatory
authority or third party, (c) violate, conflict with or result in a default (or
any event which, with notice or lapse of time or both, would constitute a
default) under, or give rise to any right of termination, cancellation or
acceleration under, any of the terms, conditions or provisions of any note,
mortgage, other evidence of indebtedness, guarantee, license, agreement, lease
or other contract, instrument or obligation to which Buyer is a party or by
which Buyer or any of its assets may be bound or under which Buyer receives any
benefit, whether or not Buyer is a party thereto, or (d) violate any order,
injunction, decree, statute, rule or regulation applicable to any Buyer,
excluding from the foregoing clause (c) such requirements, violations,
conflicts, defaults or rights which would not reasonably be expected to
adversely affect or restrict the ability Buyer to consummate the transactions
contemplated by this Agreement or any Ancillary Agreement (a "BUYER MATERIAL
ADVERSE EFFECT").

         SECTION 4.3 LITIGATION. There is (a) no action, suit or proceeding
pending by or before any court or governmental or regulatory authority or, to
the Knowledge of Buyer,





                                      -40-


threatened against Buyer, and (b) no investigation by any governmental entity of
which Buyer has received written notice that is pending or, to the Knowledge of
Buyer, threatened against Buyer, in either case which challenges the validity of
this Agreement or any Ancillary Agreement or which would reasonably be expected
to, individually or in the aggregate, have a Buyer Material Adverse Effect.
Buyer is not in default with respect to or subject to any order, judgment,
decision, decree, injunction or ruling of any federal, state, or local court or
governmental agency, department or authority which challenges the validity of
this Agreement or any Ancillary Agreement or which would reasonably be expected
to, individually or in the aggregate, have a Buyer Material Adverse Effect.

         SECTION 4.4 CERTAIN FEES. Except for the engagement of Bear Stearns &
Co., Inc. and Morgan Stanley & Co., Inc. (the fees and expenses of each which
will be borne solely by Buyer), neither Buyer nor any of its Affiliates has
employed any financial advisor or finder or incurred any liability for any
financial advisory or finders' fees in connection with this Agreement or the
transactions contemplated by this Agreement.

         SECTION 4.5 INVESTMENT REPRESENTATIONS. Buyer is acquiring the Shares
solely for the purpose of investment and not with a view to, or for offer or
sale in connection with, any distribution thereof in violation of applicable
securities laws.

         SECTION 4.6 SUFFICIENT FUNDS. Buyer has prior to the date hereof
delivered to Sellers true, complete and correct copies of executed commitment
letters from certain lenders (the "DEBT FINANCING COMMITMENTS") committing such
lenders to provide to Buyer debt financing for, among other things, the
transactions contemplated by this Agreement in an aggregate amount of
$2,425,000,000, subject to the terms and conditions set forth therein and (b)
true, complete and correct copies of definitive agreements from certain equity
investors,





                                      -41-


committing them to provide to Buyer equity financing in an aggregate amount of
$200,000,000, subject to the terms and conditions set forth therein (the "EQUITY
COMMITMENTS" and, together with the Debt Financing Commitments, the "FINANCING
COMMITMENTS"). As of the date hereof, the Financing Commitments are in full
force and effect, have not been withdrawn or terminated, and Buyer has no reason
to believe that any Financing Commitment will not lead to the financing
contemplated by such Financing Commitment. The financing contemplated by the
Financing Commitments constitute all of the financing required to be provided by
Buyer for the consummation of the transactions contemplated by this Agreement
and the payments of all fees and expenses incurred by Buyer in connection
therewith.

                                   ARTICLE V

                                    COVENANTS


         SECTION 5.1 CONDUCT OF THE COMPANIES' BUSINESS. Sellers agree that,
during the period from the date of this Agreement to the Closing, except as
otherwise expressly permitted or required by this Agreement, SCHEDULE 5.1 or
consented to by Buyer in writing, each Company shall and Sellers shall cause
each Company:

              (a) to conduct its business operations in the Ordinary Course of
Business;

              (b) to use reasonable efforts to (i) maintain and preserve its
business operations, (ii) retain the services of its employees, except for
attrition of such employees in the Ordinary Course of Business, and (iii)
maintain, preserve and retain relationships with its suppliers and customers;





                                      -42-


              (c) not to acquire, sell, dispose of, license, assign or transfer
or permit to lapse any material business, assets or property, except in the
Ordinary Course of Business;

              (d) not to amend its governing instruments;

              (e) not to incur any indebtedness for borrowed money except in the
Ordinary Course of Business, or guarantee any indebtedness for borrowed money of
another Person;

              (f) not to change its accounting policies, except as required by
GAAP;

              (g) not to grant any material increase in the salaries, wages,
fringe benefits or other compensation payable or to become payable to its
officers, directors, consultants or employees (including any such increase
pursuant to any bonus, severance, termination, pension, profit-sharing or other
plan or commitment) or any special increase in the compensation payable or to
become payable to any officer, director, consultant or employee, except for (i)
normal merit and cost of living increases in the Ordinary Course of Business or
as may be required under existing agreements and (ii) retention commitments that
are (and shall remain after Closing) the sole responsibility of Sellers and
their Affiliates (other than the Companies);

              (h) not to terminate or make any material change in any Contract
or Permit, except in the Ordinary Course of Business;

              (i) not to enter into any material contract except in the Ordinary
Course of Business;

              (j) maintain accounts receivable, inventory, accounts payable and
other working capital accounts in a manner consistent with the Ordinary Course
of Business;




                                      -43-


              (k) not pay, discharge or satisfy any material claims, liabilities
or obligations (absolute, accrued, contingent or otherwise), except in each case
in the Ordinary Course of Business;

              (l) not cancel any indebtedness for borrowed money or material
claim or, waive any material claims or rights of substantial value, except in
the Ordinary Course of Business;

              (m) not to merge or consolidate with any other Person;

              (n) with respect to any sales campaign begun more than 14 days
after the date hereof, not to implement the "value summit" business plan;

              (o) not to make any material change to the Current Practices (as
defined in the Directory Services License Agreement); and

              (p) not to enter into any written agreement to do any of the
foregoing.

         SECTION 5.2 ACCESS TO INFORMATION.

              (a) Between the date of this Agreement and the Closing, Sellers
shall (i) give, and shall cause the Companies to give, Buyer and its authorized
representatives reasonable access to all books, records, offices and other
facilities and properties of, and relating to, the Companies and to the
Companies' management, (ii) permit Buyer to make such inspections thereof as
Buyer may reasonably request, (iii) cause the officers of the Companies to
furnish Buyer with such financial and operating data and other information with
respect to the business and properties of the Companies as Buyer may from time
to time reasonably request subject to Section 5.2(b), and (iv) cooperate in good
faith with Buyer's efforts to plan for the post-Closing integration of its
business with the business of the Companies; PROVIDED, HOWEVER, that any such
access or inspection shall be provided during normal business hours under the







                                      -44-


supervision of Sellers' personnel and in such a manner as to maintain the
confidentiality of this Agreement and the transactions contemplated by this
Agreement and not interfere unreasonably with the business operations of Sellers
or the Companies.

              (b) All information concerning Sellers or the Companies furnished
or provided by Sellers or their Affiliates to Buyer or its representatives
(whether furnished before or after the date of this Agreement) shall be held
subject to the confidentiality agreements by and between Sprint (or its
representatives) and Buyer dated as of May 15, 2002 (the "CONFIDENTIALITY
AGREEMENT").

              (c) Prior to Closing, Sellers shall provide to Buyer access to the
Owned Real Property, and shall use commercially reasonable efforts to provide
access to the Leased Real Property, for the performance of non-invasive Phase I
environmental site assessments or transaction screens as part of Buyer's
environmental assessment of the Real Property.

              (d) Sellers shall cooperate with Buyer with respect to obtaining
title insurance relating to the Owned Real Property, including delivering, prior
to Closing, such affidavits of title and possession, gap undertakings,
non-imputation affidavits or similar documents in form or substance as may be
reasonably required by a reputable title company licensed to do business in
Tennessee selected by Buyer.

              (e) Promptly following the end of each fiscal quarter or year that
ends prior to Closing, Sellers shall provide Buyer with quarter-end or audited
year-end combined consolidated balance sheets of the Companies as of such
quarter-end or year-end and combined consolidated statements of income and cash
flows of the Companies for the year to date period then ended, presented on a
basis consistent with the 2001 year-end audited financial statements






                                      -45-


together with a SAS 71 report thereon from Sellers' independent accountants (for
quarterly statements) and an opinion of Sellers' independent accountants (for
year-end statements). In addition, on or prior to October 11, 2002, Sellers
shall provide Buyer with a SAS 71 report from Sellers' independent accountants
with respect to the June 30, 2002 financial statements referenced in Section
3.6, provided that Sellers will use their commercially reasonable efforts to
provide such report to Buyer on or prior to October 4, 2002. Sellers will
cooperate with Buyer in preparing, and will provide all information reasonably
requested by Buyer for inclusion in, any offering document, Form 8-K or other
Exchange Act filing to be incorporated by reference into a registration
statement in connection therewith prepared in connection with the financings
contemplated by the Commitment Letters. Buyer shall reimburse Sellers for all
reasonable third party costs and expenses incurred by Sellers in connection with
the fulfillment of its obligations under this Section 5.2. Any financial
statements provided to Buyer pursuant to this Section 5.2 will be deemed to be
included in the definition of "Financial Statements" for all purposes of Section
3.6.

              (f) Notwithstanding the above, nothing contained in this Section
5.2 or the Confidentiality Agreement will preclude any party from making any
disclosures it determines in good faith to be required by law, regulation or
listing agreement with or rules of any national securities exchange or national
trading system or necessary and proper in conjunction with the filing of any tax
return or other document required to be filed with any federal, state or local
governmental body, authority or agency or sent to potential investors in
connection with the financings contemplated by the Financing Commitments;
PROVIDED, HOWEVER, that the party required to make the release or statement
shall, if practicable under the






                                      -46-


circumstances, allow the other party reasonable time to comment on such release
or statement in advance of such issuance.

              (g) Between the date of this Agreement and the Closing Date,
Sellers shall permit Buyer's senior officers to meet with the Assistant
Controller of Sprint and officers of the Companies responsible for the Financial
Statements, the internal controls of the Companies and the disclosure controls
and procedures of the Companies to discuss such matters as Buyer may deem
reasonably necessary or appropriate for Buyer to satisfy its obligations under
Sections 302 and 906 the Sarbanes-Oxley Act of 2002 and any rules and
regulations relating thereto.

         SECTION 5.3 CONSENTS.

              (a) Each of Sellers and Buyer shall cooperate, and use its
reasonable best efforts, to (i) make all filings (including without limitation
all filings required under the HSR Act) and obtain all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and other third parties necessary to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements, including the
foregoing required with respect to the items identified in SCHEDULE 3.5 and (ii)
obtain new written contracts between the third parties to the Group Contracts
and the Companies ("NEW CONTRACTS") that will provide for substantially the same
continued benefits to the Companies as are currently provided to the Companies
pursuant to the Group Contracts; PROVIDED, HOWEVER, that neither Seller nor
Buyer shall be required to pay or agree to pay any compensation to the third
parties to New Contracts or other contracts requiring consent or approval in
exchange for such third parties' agreement to enter into a New Contract or
provide such consent or approval. "GROUP CONTRACTS" means the contracts listed
on SCHEDULE 5.3(a). In addition to the foregoing, Buyer






                                      -47-


agrees to provide such security and assurances as to financial capability,
resources and creditworthiness as may be reasonably requested by any
governmental authority or other third party whose consent, approval or New
Contract is sought in connection with the transactions contemplated hereby.

              (b) With respect to any Contracts for which any required consent
or approval is not obtained, or New Contract that is not entered into, prior to
the Closing (collectively, "THIRD PARTY APPROVAL CONTRACTS"), Sellers and Buyer
shall each use their reasonable best efforts to obtain any such consent or
approval or New Contract after the Closing Date until such consent or approval
or New Contract has been obtained; PROVIDED, HOWEVER, that neither Seller nor
Buyer shall be required to pay or agree to pay any compensation to the third
parties to New Contracts or other contracts requiring consent or approval in
exchange for such third parties' agreement to enter into a New Contract or
provide such consent or approval.

              (c) To the extent that the consents or approvals or New Contracts
referred to in clause (a) above are not obtained prior to the Closing, Sellers
will use commercially reasonable efforts to (i) provide to the Companies, at its
request, the benefits of any such Third Party Approval Contracts, (ii) cooperate
in any reasonable and lawful arrangement designed to provide the benefits of
such Third Party Approval Contracts to the Companies, and (iii) enforce, at the
request and for the account of the Companies, any rights of the Seller
Affiliates that are parties to such Third Party Approvals Contract against the
other party or parties thereto arising under such Third Party Approvals
Contract. Buyer will comply with all reasonable requests of the Sellers for
cooperation in connection with the performance of Sellers' obligations under
this Section 5.3(c).





                                      -48-


              (d) Without limiting any other provision hereof, each of the
Sellers and Buyer shall, as promptly as practicable, but in no event later than
twenty business days following the execution and delivery of this Agreement,
file with the United States Federal Trade Commission (the "FTC") and the United
States Department of Justice (the "DOJ") the notification and report form, if
any, required for the transactions described herein and any supplemental
information requested in connection therewith pursuant to the HSR Act. Any such
notification and report form and supplemental information shall be in
substantial compliance with the requirements of the HSR Act. Each of Sellers and
Buyer shall furnish to the other such necessary information and reasonable
assistance as the other may request in connection with its preparation of any
filing or submission that is necessary under the HSR Act. Sellers and Buyer
shall keep each other apprised of the status of any communications with, and any
inquiries or requests for additional information from, the FTC and the DOJ and
shall comply promptly with any such inquiry or request.

         SECTION 5.4 REASONABLE BEST EFFORTS.

              (a) Each of Sellers and Buyer shall cooperate and use its
reasonable best efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations or otherwise to consummate the transactions contemplated by
this Agreement.

              (b) Buyer will promptly notify Sellers of any proposal by any of
the institutions party to a Financing Commitment to withdraw, terminate or make
a material change in the amount or terms of such Financing Commitment that could
reasonably be expected to adversely affect the ability of Buyer to consummate
the financing contemplated by such Financing Commitment in accordance with its
terms. In addition, upon Sellers' reasonable





                                      -49-


request, Buyer shall advise and update Sellers, in a level of detail reasonably
satisfactory to Sellers, with respect to the status, proposed closing date, and
material terms of the Financing Commitments. Buyer shall not consent to any
amendment, modification or early termination of any Financing Commitment that
could reasonably be expected to adversely affect the ability of Buyer to
consummate the transactions contemplated by this Agreement.

              (c) Buyer shall, and shall cause its Affiliates to, use reasonable
best efforts to (i) maintain the effectiveness of the Financing Commitments in
accordance with their terms, (ii) enter into definitive documentation with
respect to the Debt Financing Commitments on the terms contained in the Debt
Financing Commitments, (iii) satisfy all funding conditions to the Financing
Commitments set forth in the definitive documentation with respect to the
financing contemplated by the Financing Commitments, (iv) consummate the
financing contemplated by the Financing Commitments (including by extension of
the Financing Commitments on substantially equivalent or better terms or, if the
Financing Commitments expire, obtaining alternative financing in an aggregate
principal amount equal to the amounts set forth in, and on terms substantially
equivalent to or better than the terms of, the Financing Commitments), including
by drawing on the "Senior Subordinated Facility" and the "Senior Secured Credit
Facility" (as such terms are defined in the Debt Financing Commitment Letters)
prior to the expiration of the Debt Financing Commitments if the other
conditions to Buyer's obligations to close set forth in Sections 6.1 and 6.3
have been satisfied or waived and (v) perform its obligations under the
Financing Commitments.

              (d) Sellers will promptly notify Buyer of any proposal, whether
formal or informal, by any state or federal governmental agency with
jurisdiction over local telecommunications services or local telecommunications
companies to assert jurisdiction over





                                      -50-


all or any part of the transactions that are the subject matter of this
Agreement, including but not limited to, (i) any proposal to require approval,
consent or permission of such governmental agency to any part of the
transactions which are the subject matter of this Agreement, (ii) any proposal
that, individually or in the aggregate, may have a material adverse effect on
the business of Sprint's Local Telecommunications Division, and (iii) any
proposal that, individually or in the aggregate, may have a material adverse
effect on the proceeds Sprint expects to receive from the transactions
contemplated by this Agreement (each, a "REGULATORY PROPOSAL").

         In addition, Sellers shall advise and update Buyer, in a level of
detail reasonably satisfactory to Buyer, with respect to the status of any such
Regulatory Proposal, including any formal or informal proceedings before such
governmental agency with respect to the Regulatory Proposal. Sellers will
promptly notify Buyer if Sellers consent to (i) the jurisdiction of any such
governmental agency with respect to the transactions that are the subject of
this Agreement or (ii) any order, decree, judgment or finding of such
governmental agency with respect to the transactions that are the subject matter
of this Agreement.

              (e) Sellers shall, and shall cause their Affiliates to, use
reasonable best efforts to defeat any assertion of jurisdiction and any
Regulatory Proposal and to obtain any necessary approvals, consents or
permissions in response to any Regulatory Proposal, including but not limited to
the timely initiation and prosecution of proceedings for injunctive relief,
mandamus or other appropriate remedies in a court of competent jurisdiction, the
initiation and prosecution of any available proceedings for appellate review of
any order, decree, judgment or finding of such governmental agency or, if
applicable, the prompt filing of any necessary applications with respect to such
Regulatory Proposals. Sellers will forward to Buyer all copies of any material
correspondence sent by it or its representatives or received by it from any





                                      -51-


governmental authority regarding the transactions contemplated by this Agreement
or a Regulatory Proposal.

              (f) Each of Sellers and Buyer shall negotiate in good faith to
identify the MIS Services (as defined in the Transition Services Agreement) to
be provided to Buyer under the Transition Services Agreement and the pricing
therefor under the Transition Services Agreement.

         SECTION 5.5 PUBLIC ANNOUNCEMENTS. Except as otherwise agreed to by the
parties, the parties shall not issue any report, statement or press release or
otherwise make any public statements with respect to this Agreement and the
transactions contemplated by this Agreement, except as in the reasonable
judgment of the party may be required by law or any listing agreement with, or
the rules of, any national securities exchange or national trading system. Upon
the execution of this Agreement and the Closing, Sellers and Buyer will consult
with each other with respect to the issuance of a joint report, statement or
press release with respect to this Agreement and the transactions contemplated
by this Agreement.

              SECTION 5.6 COVENANT TO SATISFY CONDITIONS. Sellers will use their
reasonable best efforts to ensure that the conditions set forth in Article VI of
this Agreement are satisfied, to the extent such matters are within the control
of Sellers, and Buyer will use its reasonable best efforts to ensure that the
conditions set forth in Article VI of this Agreement are satisfied to the extent
such matters are within the control of Buyer. Sellers and Buyer further covenant
and agree, with respect to a threatened or pending preliminary or permanent
injunction or other order, decree or ruling or statute, rule, regulation or
executive order that would adversely affect the ability of the parties to
consummate the transactions contemplated by this Agreement, to use





                                      -52-


their reasonable best efforts to prevent or lift the entry, enactment or
promulgation thereof, as the case may be.

         SECTION 5.7 CERTAIN TAX MATTERS.

              (a) CERTAIN DEFINITIONS. As used in this Agreement:

                    (i) "PRE-CLOSING PERIOD" means any taxable period, including
that portion of any Straddle Period, which ends on or before the Closing Date;

                    (ii) "SECTION 338(h)(10) ELECTION" means the election to be
made by Buyer and Sprint pursuant to Section 338(h)(10) of the Code, as
described in Section 5.7(b) of this Agreement;

                    (iii) "SECTION 754 ELECTION" means the election to be made
by Cendon pursuant to Section 754 of the Code, as described in Section
5.7(b)(ii) of this Agreement; and

                    (iv) "STRADDLE PERIOD" means any taxable period that
includes (but does not end on) the Closing Date.


              (b) SECTION 338(h)(10) AND SECTION 754 ELECTIONS.

                    (i) Sprint will join with Buyer in making the Section
338(h)(10) Election to treat the transaction hereunder as the deemed sale of the
assets of the Wholly Owned Companies for federal and, to the extent applicable,
state and local income tax purposes. Buyer will determine an allocation of the
"ADSP" (as defined in Treasury Regulation secs. 1.338-4 and 1.338(h)(10)-1)
among the assets of the Companies pursuant to the applicable Treasury
Regulations under Section 338 of the Code; PROVIDED, HOWEVER, that the
Allocation will include an allocation of ADSP to any amounts receivable by any
of the





                                      -53-


Companies without regard to whether such receivables have been recognized or
realized by the Sellers or any of the Companies for income tax or financial
accounting purposes prior to Closing (as determined finally in accordance with
this Section 5.7(b)(i), the "ALLOCATION"). Promptly following Buyer's
determination of the Allocation, Buyer will deliver a proposed Allocation to
Sprint. If Sprint objects to Buyer's Allocation, Sprint will deliver a notice of
objection to Buyer no later than the later to occur of (A) thirty (30) days from
the delivery of the proposed Allocation to Sprint and (B) one hundred and twenty
(120) days before the due date of filing any Tax Returns for which the
Allocation is relevant. If no such notice of objection is delivered, the Buyer's
proposed Allocation shall be final, and if such notice of objection is delivered
as set forth above, Buyer and Sellers will use their reasonable best efforts to
agree upon the Allocation. If the parties are unable to agree upon the
Allocation within ninety (90) days before the due date of filing any Tax Return
for which the Allocation is relevant, the Allocation shall be made by the
Unrelated Accounting Firm. Following final determination of the Allocation,
Buyer and Sellers will use the Allocation in reporting the deemed purchase and
sale of the assets of the Companies for federal and, to the extent applicable,
state and local income tax purposes.

                    (ii) The Sellers agree that the Sellers will cause Cendon to
make the Section 754 Election for the taxable year including the Closing Date to
adjust the basis of all properties and assets of Cendon to account for the
transfer of CDC's membership interest in Cendon to Buyer for federal and, to the
extent applicable, state and local income tax purposes. Sprint and Buyer agree
that Buyer's basis in CenDon will be made based on and consistent with the
Allocation made pursuant to Section 5.7(b)(i) of this Agreement.




                                      -54-


              (c) RETURN FILING, REFUNDS, CREDITS AND TRANSFER TAXES.


                    (i) Except with regard to Tax Returns for Straddle Periods,
Sellers shall prepare, or cause to be prepared, and file, or cause to be filed,
on a timely basis all Tax Returns of or including the Companies for all
Pre-Closing Periods (the "PRE-CLOSING PERIOD RETURNS"). Sellers shall pay, or
cause to be paid, all Taxes with respect to the Companies shown to be due on the
Pre-Closing Period Returns.

                    (ii) Buyer shall prepare, or cause to be prepared, and shall
file, or cause to be filed, on a timely basis all Tax Returns other than the
Pre-Closing Period Returns with respect to the Companies, including Tax Returns,
if any, for the Straddle Period (the "STRADDLE PERIOD RETURNS"). Buyer shall
pay, or cause to be paid, all Taxes shown to be due on such Tax Returns.

                    (iii) Buyer shall provide Sellers with copies of any
Straddle Period Returns at least sixty (60) business days prior to the due date
thereof (giving effect to any extensions thereto), accompanied by a statement
calculating in reasonable detail Sellers' indemnification obligation pursuant to
Section 5.7(e) of this Agreement (the "INDEMNIFICATION STATEMENT"). Sellers
shall have the right to review such Straddle Period Returns and Indemnification
Statement prior to the filing of such Straddle Period Returns. If Sellers
dispute any amounts shown to be due on such Tax Returns or the amount calculated
in the Indemnification Statement, Sellers and Buyer shall consult and resolve in
good faith any issues arising as a result of the review of such Straddle Period
Return and Indemnification Statement. If Sellers agree to the Indemnification
Statement amount, Sellers shall pay to Buyer an amount equal to the Taxes shown
on the Indemnification Statement less any amounts paid by Sellers or the
Companies on or before the Closing Date with respect to estimated taxes not
later than three





                                      -55-


business days before the due date (including any extensions thereof) for payment
of Taxes with respect to such Straddle Period Return. If the parties are unable
to resolve any dispute within thirty (30) business days after Sellers' receipt
of such Straddle Period Return and Indemnification Statement, such dispute shall
be resolved by the Unrelated Accounting Firm, which shall resolve any issue in
dispute as promptly as practicable. If the Unrelated Accounting Firm is unable
to make a determination with respect to any disputed issue prior to the due date
(including any extensions) for the filing of the Straddle Period Return in
question, (A) Buyer shall file, or shall cause to be filed, such Straddle Period
Return without such determination having been made and (B) Sellers shall pay to
Buyer, not later than three days before the due date (including any extensions
thereof) for the payment of Taxes with respect to such Straddle Period Return,
an amount determined by Sellers as the proper amount chargeable to Sellers
pursuant to this Section 5.7. Upon delivery to Sellers and Buyer by the
Unrelated Accounting Firm of its determination, appropriate adjustments shall be
made to the amount paid by Sellers in accordance with the immediately preceding
sentence in order to reflect the decision of the Unrelated Accounting Firm. The
determination by the Unrelated Accounting Firm shall be final, conclusive and
binding on the parties.

                    (iv) Sellers and Buyer shall reasonably cooperate, and shall
cause their respective Affiliates, officers, employees, agents, auditors and
representatives reasonably to cooperate, in preparing and filing all Tax Returns
(including amended returns and claims for refund), including maintaining and
making available to each other all necessary records in connection with
determining Taxes and in resolving all disputes and audits with respect to all
taxable periods relating to Taxes. Buyer recognizes that Sellers will need
access, from time to time, after the Closing Date, to certain accounting and tax
records and information





                                      -56-


held by the Companies to the extent such records and information pertain to
events occurring prior to the Closing Date; therefore, Buyer agrees that from
and after the Closing Date Buyer shall, and shall cause the Companies to, (A)
retain and maintain such records until such time as Sellers determine that such
retention and maintenance is no longer necessary and (B) allow Sellers and their
agents and representatives (and agents and representatives of their Affiliates)
reasonable access to inspect, review and make copies of such records as Sellers
may deem necessary or appropriate from time to time. Buyer shall indemnify
Sellers from and against any penalties, additions to tax or interest imposed on
Sellers as a direct result of any failure of Buyer to provide tax records or
other information to Sellers in a reasonable timely manner.

              (v) Buyer shall not, and shall cause the Companies not to, dispose
of or destroy any of the business records and files of the Companies relating to
Taxes in existence on the Closing Date without first offering to turn over
possession thereof to Sellers by written notice to Sellers at least 30 days
prior to the proposed date of such disposition or destruction.

              (vi) Notwithstanding any other provision of this Agreement to the
contrary, any refunds and credits of Taxes of the Companies (including any
interest or similar benefit) received from or credited thereon by the applicable
tax authority with respect to (A) any taxable period ending on or before the
Closing Date or (B) Taxes for which Sellers have indemnified the Buyer under the
Agreement, shall be for the account of Sellers, and if received or utilized by
Buyer or the Companies, shall be paid to Sellers within five business days after
Buyer or a Company receives such refund or utilizes such credit. Except as
provided in the next sentence, any refunds or credits of the Companies with
respect to any Straddle Period shall be apportioned between Sellers, on the one
hand, and Buyer, on the other hand, on the basis of an





                                      -57-


interim closing of the books. In the case of a refund or credit attributable to
any Taxes that are imposed on a periodic basis and are attributable to the
Straddle Period, other than Taxes based upon or related to gross or net income
or receipts, the refund or credit of such Taxes of the Company for the
Pre-Closing Period shall be deemed to be the amount of such refund or credit for
the Straddle Period multiplied by a fraction the numerator of which is the
number of days in the Straddle Period ending on the Closing Date and the
denominator of which is the number of days in the Straddle Period.

                    (vii) Notwithstanding any other provisions of this Agreement
to the contrary, all sales, use, transfer, stamp, duties, recording and similar
Taxes, but not including any Taxes on or measured by income, gains or profits,
incurred in connection with and solely as a result of the transactions
contemplated by this Agreement shall be paid by Buyer, and Buyer shall, at its
own expense, accurately file or cause to be filed all necessary Tax Returns and
other documentation with respect to such Taxes and timely pay all such Taxes;
PROVIDED, HOWEVER, that in the event the amount of such Taxes exceeds $5,000
(the "TRANSFER TAX LIMIT"), Buyer and Sellers shall each be responsible for
paying one-half of the amount by which such Taxes exceed the Transfer Tax Limit.
If required by applicable law, Sellers will join in the execution of any such
Tax Returns or such other documentation.


              (d) ELECTIONS. Except with respect to the Section 338(h)(10)
Election and the Section 754 Election, Buyer shall not, and shall cause the
Companies not to, make, amend, or revoke any Tax election if such action would
adversely affect Sellers, or any Person (other than the Companies) as to whom or
with whom Sellers have filed a consolidated return, with respect to any taxable
period ending on or before the Closing Date or for the Pre-Closing






                                      -58-


Period or any Tax refund with respect thereto and Seller shall not make any Tax
election if such action would adversely affect Buyer or any Company.

              (e) TAX INDEMNIFICATION.

                    (i) Buyer shall indemnify, defend and hold harmless Sellers
and their Affiliates, at any time after the Closing, from and against any
liability for Taxes of the Companies for any taxable period ending after the
Closing Date except for Straddle Periods, in which case Buyer's indemnity will
cover only that portion of any such Taxes that is not attributable to the
Pre-Closing Period and, except to the extent any such Taxes arose out of or
related to any breach of any representation made by Sellers pursuant to Section
3.16 of the Agreement.

                    (ii) Sellers shall jointly and severally indemnify, defend
and hold harmless Buyer and its Affiliates, at any time after the Closing, (A)
from and against any liability for Taxes of the Companies, except as provided in
Section 5.7(c)(vii) of the Agreement, for the Pre-Closing Period (including
Taxes attributable to the portion of any Straddle Period ending on the Closing
Date); and (B) any liability for income Taxes of any member of an affiliated
group with which any Company files or has filed a consolidated or combined Tax
Return with respect to any taxable period which ends before or includes the
Closing Date by reason of any Company being severally liable for such Tax
pursuant to Treasury Regulation sec. 1.1502-6 or any analogous provision of
foreign, state or local law.

                    (iii) In determining the responsibility of Sellers and Buyer
for Taxes attributable to any Straddle Period, Taxes based upon or related to
gross or net income or receipts shall be apportioned on the basis of an interim
closing of the books as of the Closing Date (and for such purpose, the taxable
period of any partnership or other pass-through entity





                                      -59-


which is a Company or in which a Company holds an interest, shall be deemed to
terminate at such time), and all other Taxes attributable to any Straddle Period
shall be prorated on a daily basis.

                    (iv) If a claim for Taxes shall be made by any taxing
authority in writing, which, if successful, might result in an indemnity payment
pursuant to this Section 5.7, the party seeking indemnification (the "TAX
INDEMNIFIED PARTY") shall promptly notify the other party (the "TAX INDEMNIFYING
PARTY") in writing of such claim (a "TAX CLAIM") within a reasonably sufficient
period of time to allow the Tax Indemnifying Party effectively to contest such
Tax Claim, and in reasonable detail to apprise the Tax Indemnifying Party of the
nature of the Tax Claim, and provide copies of all correspondence and documents
received by it from the relevant taxing authority. Failure to give prompt notice
of a Tax Claim hereunder shall affect the Tax Indemnifying Party's obligation
under this Section to the extent that the Tax Indemnifying Party is prejudiced
by such failure to give prompt notice.

                    (v) With respect to any Tax Claim which might result in an
indemnity payment to Buyer pursuant to this Section 5.7(e) (including, without
limitation, Taxes of a Company for a Straddle Period), Sellers shall, upon
confirming in writing their obligation to indemnify Buyer in respect of such Tax
Claim, control all proceedings taken in connection with such Tax Claim and,
without limiting the foregoing, may in their sole discretion and at their sole
expense pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with any taxing authority with respect thereto, and
may, in their sole discretion, either pay the Tax claimed and sue for a refund
where applicable law permits such refund suits or contest such Tax Claim. Buyer,
without waiving its right to be indemnified in respect of such Tax Claim, shall
not under any circumstances settle or otherwise compromise any Tax Claim






                                      -60-


referred to in the preceding sentence without Sellers' prior written consent;
PROVIDED, HOWEVER, that Sellers have confirmed in writing their obligation to
indemnify Buyer in respect of such Tax Claim and are in material compliance with
Sellers' indemnification obligation hereunder. In connection with any proceeding
taken in connection with such Tax Claim, (A) Sellers shall keep Buyer informed
of all material developments and events relating to such Tax Claim and (B) Buyer
shall have the right, at its sole expense, to participate in any such
proceedings. Buyer shall cooperate with Sellers in contesting such Tax Claim
(without charge to Sellers), which cooperation shall include, without
limitation, the retention and the provision to Sellers of records and
information which are reasonably relevant to such Tax Claim, and making
employees available to Sellers to provide additional information or explanation
of any material provided hereunder or to testify at proceedings relating to such
Tax Claim; PROVIDED, HOWEVER, that no charges shall be incurred by Sellers for
the services of such employees.

                    (vi) With respect to any Tax Claim not described in Section
5.7(e)(v) of this Agreement which might result in an indemnity payment to
Sellers pursuant hereto, Buyer shall control all proceedings in accordance with
provisions that are parallel to those in Section 5.7(e)(v) of this Agreement.

                    (vii) All matters relating in any manner to Tax
indemnification obligations and payment of Taxes shall be governed exclusively
by this Section

              SECTION 5.8 NO SOLICITATION. If this Agreement is terminated for
any reason pursuant to Article VII, for a period of two years following the
effective date of such termination, neither Buyer nor any of its Affiliates
shall, directly or indirectly, solicit or induce any employee, agent or
contractor of any Company to leave such employment and become an employee, agent
or contractor of Buyer or any of its Affiliates if Buyer was apprised of or had






                                      -61-


contact with such employee, agent or contractor in connection with the
transactions contemplated by this Agreement; PROVIDED, HOWEVER, that nothing in
this Section 5.8 shall prohibit Buyer or any of its Affiliates from employing
any person who contacts them on his or her own initiative and without any direct
or indirect solicitation by Buyer or any of its Affiliates, as the case may be.
This Section 5.8 shall not be interpreted to prohibit solicitations of
employment through general advertising not specifically directed at the
employees, agents or contractors of the Companies. If this Agreement is
terminated pursuant to Article VII, this Section 5.8 supersedes the employee
nonsolicitation provisions of the Confidentiality Agreements.

       SECTION 5.9 TRANSITION SERVICES AGREEMENT. At the Closing, Sprint and/or
certain of its Affiliates and the Companies shall enter into a Transition
Services Agreement substantially in the form attached as EXHIBIT 5.9 (the
"TRANSITION SERVICES AGREEMENT").

       SECTION 5.10 DIRECTORY SERVICES LICENSE AGREEMENT. At the Closing, the
Companies and certain Affiliates of Sprint shall enter into a Directory Services
License Agreement, substantially in the form attached as EXHIBIT 5.10 (the
"DIRECTORY SERVICES LICENSE AGREEMENT").

       SECTION 5.11 GUARANTEES. Prior to the Closing, Sellers shall (a) cause
the Companies to be released as guarantor of any financing of Sellers and their
Affiliates (other than the Companies), (b) cause the Companies to no longer be
parties to the agreements listed on SCHEDULE 3.7 and (c) use commercially
reasonable efforts to cause the Companies to be released from all past, present
and future obligations under the agreements listed on SCHEDULE 3.7.

       SECTION 5.12 INVESTIGATION BY BUYER. Buyer has conducted its own
independent review and analysis of the business, operations, technology, assets,
liabilities, results





                                      -62-


of operations, financial condition and prospects of the Companies and
acknowledges that Sellers have provided Buyer with the access requested by Buyer
to the personnel, properties, premises and records of the Companies for this
purpose. In entering into this Agreement, Buyer has relied upon its own
investigation and analysis as well as the representations and warranties of
Sellers contained in this Agreement and the Ancillary Agreements, and Buyer
(a) acknowledges that none of Sellers, the Companies or any of their
respective directors, officers, employees, Affiliates, controlling Persons,
agents or representatives makes or has made any representation or warranty,
either express or implied, as to the accuracy or completeness of any of the
information provided or made available to Buyer or its directors, officers,
employees, Affiliates, controlling Persons, agents or representatives, and (b)
agrees, to the fullest extent permitted by law, that neither Sellers, the
Companies nor any of their respective directors, officers, employees,
Affiliates, controlling Persons, agents or representatives shall have any
liability or responsibility whatsoever to Buyer or its directors, officers,
employees, Affiliates, controlling Persons, agents or representatives on any
basis (including, without limitation, in contract or tort, under federal or
state securities laws or otherwise) based upon any information provided or made
available, or statements made, to Buyer or its directors, officers, employees,
Affiliates, controlling Persons, agents or representatives (or any omissions
therefrom), except in the case of clauses (a) and (b) as and only to the extent
expressly set forth in this Agreement with respect to the representations and
warranties of Sellers in Article III and subject to the limitations and
restrictions contained in this Agreement.

       SECTION 5.13 MUTUAL RELEASE. Immediately prior to the Closing, Sellers
and the Companies shall enter into a Mutual Release substantially in the form
attached as EXHIBIT 5.13 (the "MUTUAL RELEASE").




                                      -63-


       SECTION 5.14 EMPLOYEES AND EMPLOYEE BENEFIT PLANS.

              (a) EMPLOYMENT. Buyer shall cause each Company to continue to
employ immediately after the Closing each of the individuals who were employed
by such Company immediately before the Closing (individually a "COMPANY
EMPLOYEE" and collectively the "COMPANY EMPLOYEES") at (1) substantially the
same base salary or base hourly rate of compensation as in effect for each such
individual immediately before the Closing and with (2)(A) benefits under a Buyer
401(k) Plan (as defined in Section 5.14(b)) and benefit accruals for service
after the Closing under a Buyer Pension Plan (as defined in Section 5.14(c))
which are the same as the benefits Buyer provides for Buyer's employees who work
in the same line of business as the Company Employees and (B) welfare benefits,
including severance benefits (except for severance benefits during the one year
period which begins on the Closing Date which shall be paid in accordance with
Section 5.14(a)(3)), under Buyer's welfare plans (as defined in Section 3(1) of
ERISA) which are the same to the maximum extent practicable as the welfare plan
benefits Buyer provides for Buyer's employees who work in the same line of
business as the Company Employees; provided, however, (3) Buyer shall provide
severance benefits to any such individual whose employment is terminated by
Buyer or, if Buyer transfers such individual to another employer as part of an
outsourcing arrangement, is terminated by such other employer at any time during
the one year period which starts on the Closing which are no less than the
severance benefits provided under the Sprint Corporation Separation Plan which
would have been payable under such plan if such individual's employment had been
terminated by a Company under similar circumstances immediately before the
Closing and (4) Buyer shall not have any obligation to employ immediately after
the Closing (A) any individual named on SCHEDULE 5.14 or (B) any individual who
has met all the requirements for short-term or long-term



                                      -64-


disability benefits under one of the Seller Benefit Plans on or before the
Closing until such individual is able to return to work, at which point Buyer's
obligation to employ such individual shall be subject to such terms and
conditions as permissible under applicable law with respect to any employee who
had been on a short-term or long-term disability leave, and any such individual
then employed by Buyer shall be eligible for the same benefits upon his or her
employment as then provided to Company Employees. Each Company Employee shall
receive credit for all service completed with Sellers, each Company and each
ERISA Affiliate (and their predecessors) immediately prior to the Closing for
all purposes under Buyer's employee benefit plans as if such service had been
completed with Buyer; PROVIDED, HOWEVER that Buyer shall have no obligation to
provide such service credit for purposes of computing any such employee's
accrued benefit under any defined benefit plan (as defined in Section 414(j) of
the Code) or determining any such employee's eligibility to receive
post-retirement welfare benefits.

              (b) 401(K) PLANS.

                    (i) SPRINT 401(K) PLAN. Sprint shall make contributions on
behalf of the Company Employees to the Seller ERISA Plan which is the Sprint
Retirement Savings Plan through the Closing, but Sprint shall take such action
as necessary or appropriate to assure that no Company Employee shall be eligible
to make or receive contributions under such plan for any period ending after the
Closing and that no Company Employee will be eligible to otherwise actively
participate in such plan after the Closing. Sprint shall take whatever action is
necessary or appropriate with respect to each Company Employee who is employed
by Buyer immediately after the Closing to (1) make his or her account under the
Sprint Retirement Savings Plan nonforfeitable as of the Closing and (2) provide
the same opportunity to each such Company Employee to repay his or her loan or
loans, if any, from such plan as currently





                                      -65-


provided under the terms of the Sprint Retirement Savings Plan to the only class
of employees who currently have such opportunity under the terms of such plan
upon a termination of employment.


                    (ii) BUYER 401(k) PLAN. The Company Employees shall be
eligible as of the Closing to participate in a plan established, maintained or
adopted by Buyer which is described in Section 401(k) of the Code (individually
a "BUYER 401(k) PLAN") and which shall provide for elective deferrals (as such
deferrals are described in Section 402(g)(3)(A) of the Code) by participants
under Section 401(k) of the Code and for matching contributions (as described in
Section 401(m)(4)(A)(ii) of the Code) by Buyer with respect to such elective
deferrals, all consistent with the requirements of Section 5.14(a)(2)(A). The
Buyer 401(k) Plan shall provide that the Company Employees shall have the right
to make direct rollovers to such plan of their vested accounts in the Sprint
Retirement Savings Plan to the extent such rollovers constitute "eligible
rollover distributions" within the meaning of Section 402(c)(4) of the Code. The
Company Employees shall receive credit under the Buyer 401(k) Plan for all
service with Sellers, each Company and each ERISA Affiliate (and their
predecessors) for purposes of satisfying any service requirement to participate
in such plan and any service requirement to earn a nonforfeitable benefit under
such plan.

              (c) PENSION PLANS.

                    (i) SPRINT PENSION PLAN. Sprint shall take such action as
necessary or appropriate to assure that no Company Employees shall be eligible
to accrue any benefits for service completed or compensation paid for periods
after the Closing under the





                                      -66-


Seller Benefit Plan which is the Sprint Retirement Pension Plan and that no
Company Employees will be eligible to otherwise actively participate in such
plan after the Closing.

                    (ii) BUYER PENSION PLAN. If any employees of Buyer (as
determined in accordance with the rules under Section 414(b) and Section 414(c)
of the Code) participate in any defined benefit plan (as defined in Section
414(j) of the Code) other than a multiemployer plan (as defined in Section
414(f) of the Code) (individually a "BUYER PENSION PLAN"), the Company Employees
shall be eligible to participate in such plan as of the Closing. If there is
more than one Buyer Pension Plan, the Company Employees shall be eligible to
participate in the Buyer Pension Plan which in Buyer's reasonable judgment
provides benefits which in the aggregate are more like the benefits provided
under the Sprint Retirement Pension Plan than the benefits provided under any
other Buyer Pension Plan. The Company Employees shall receive credit under the
Buyer Pension Plan in which such employees participate for all service with
Sellers, each Company, and each ERISA Affiliate (and their predecessors) for
purposes of satisfying any service requirement to participate in such plan and
any service requirement to earn a nonforfeitable benefit under such plan, but
Buyer shall have no obligation to provide such service credit for purposes of
computing any such employee's accrued benefit under such plan.

              (d) MEDICAL AND RELATED HEALTHCARE BENEFITS AND LIFE INSURANCE.

                    (i) SELLER WELFARE PLANS. Sellers shall continue after the
Closing to make available to each Company Employee coverage under the Seller
Benefit Plans which are welfare plans (as defined in Section 3(1) of ERISA),
including post-retirement health and dental benefit coverage, to the same
extent, and subject to the same terms and conditions,





                                      -67-


that such coverage would be continued under the terms of such plans for any
other former employee, and each such Company Employee who satisfies the age and
service requirements for post-retirement health and dental benefit coverage
immediately prior to the Closing shall have the same opportunity to receive such
coverage after the Closing as if such Company Employee had terminated employment
immediately prior to the Closing.

                    (ii) BUYER WELFARE PLANS. Buyer on the Closing shall make
available to the Company Employees Buyer's welfare plans (as defined in Section
3(1) of ERISA) consistent with the requirements of Section 5.14(a)(2)(B), and
each Company Employee shall receive full credit under Buyer's welfare plans for
all service completed with Sellers, each Company and each ERISA Affiliate (and
their predecessors) and for all payments made by such employee under any similar
Seller Benefit Plan to satisfy any deductible or co-pay requirements under such
plan; PROVIDED, HOWEVER that Buyer shall have no obligation to provide such
service credit for purposes of determining any such employee's eligibility to
receive post-retirement welfare benefits.

              (e) 2002 MANAGEMENT INCENTIVE PLAN. In the event the Closing
occurs prior to Sprint making the payments called for under the Companies' 2002
Management Incentive Plan for Company Employees based on their performance for
the year 2002, Sprint shall compute the payments due such employees and shall
instruct Buyer as to the amount of such payments due such employees. Buyer then
shall make the payments due such Company Employees pursuant to such
instructions. Sprint will reimburse Buyer for any payments made to such Company
Employees pursuant to this Section 5.14(e) and for the tax paid by Buyer on such
payments in accordance with Section 3111(b) of the Code within ten (10) business
days of the





                                      -68-


date Buyer certifies to Sprint that such payments have been made and such taxes
have been paid. Sprint will be responsible for computing the payments due under
this Section 5.14(e), for answering any questions from Company Employees
regarding such payments and for resolving any disputes with any Company Employee
regarding Sprint's computations.

                    (f) NON-QUALIFIED DEFERRED COMPENSATION PLAN. The interest
of each Company Employee in the Sprint Executive Deferred Compensation Plan
shall remain nonforfeitable and shall be paid (subject to the terms and
conditions of such plan) in accordance with the deferral elections made under
such plan by such Company Employee.

                    (g) SELLER BENEFIT PLANS. Buyer shall not have any
liabilities with respect to any Seller Benefit Plans except to the extent (i)
Buyer agrees to make any payments to Company Employees eligible for the
Companies' 2002 Management Incentive Plan pursuant to Section 5.14(e), and (ii)
any contribution required with respect to any Seller Benefit Plans for periods
ending on or before the Closing remains unpaid after the Closing to the extent
reflected on the Current Assets and the Current Liabilities of the Companies on
the Final Balance Sheet.

       SECTION 5.15 NO SOLICITATION OF TRANSACTIONS. Until the valid termination
of this Agreement pursuant to Article VII, none of Sellers or their Affiliates
will directly or indirectly, through any officer, director, agent or otherwise,
initiate, solicit or knowingly encourage (including by way of furnishing
non-public information or assistance) any offer or proposal for, or enter into
negotiations of any type, or any letter of intent or purchase agreement, merger
agreement or other similar agreement with any person, firm or corporation other
than Buyer with respect to, a sale of any assets (other than in the Ordinary
Course of Business and not in violation of Section 5.1) of a Company, or a
merger, consolidation or business combination in






                                      -69-


which a Company is a constituent entity, any sale of all or any portion of a
Company's capital stock or membership interests, or any liquidation or similar
extraordinary transaction with respect to a Company (a "COMPETING TRANSACTION").
From and after the date hereof, Sellers will immediately cease all discussions
and negotiations with respect to any Competing Transaction, and will promptly
request the return or destruction of all confidential information previously
distributed to all parties interested in a Competing Transaction (other than
Buyer) pursuant to the terms of any confidentiality agreement or otherwise.

       SECTION 5.16 NON-COMPETITION AGREEMENT. At the Closing, Buyer, the
Companies, Sprint and certain Affiliates of Sprint shall enter into a
Non-Competition Agreement substantially in the form attached as EXHIBIT 5.16
(the "NON-COMPETITION AGREEMENT").

       SECTION 5.17 SUBSCRIBER LISTINGS AGREEMENT. At the Closing, the
Companies, Sprint and certain Affiliates of Sprint shall enter into a Subscriber
Listings Agreement substantially in the form attached as EXHIBIT 5.17 (the
"SUBSCRIBER LISTINGS AGREEMENT").

       SECTION 5.18 TRADEMARK LICENSE AGREEMENT. At the Closing, the Companies
and the SPV shall enter into a Trademark License Agreement substantially in the
form attached as EXHIBIT 5.18 (the "TRADEMARK LICENSE AGREEMENT").

       SECTION 5.19 PUBLISHER TRADEMARK LICENSE AGREEMENT. At the Closing, the
Companies and Sprint shall enter into a Publisher Trademark License Agreement
substantially in the form attached as EXHIBIT 5.19 (the "PUBLISHER TRADEMARK
LICENSE AGREEMENT").

       SECTION 5.20 TRANSITION OF CERTAIN INFORMATION. Prior to or on the
Closing Date, or as reasonably practicable thereafter, Sellers will transfer, or
cause to be transferred, to the Companies all books and records relating to the
business of the Companies, including without limitation, the books of account,
tax, financial, accounting and personnel records, files,




                                      -70-


invoices, client (current and prospective) and supplier lists, business plans,
marketing studies and other written material, including without limitation real
estate and litigation files and both paper and electronic copies of all the
financial data and human resource information system data which relate to the
business of the Companies and are maintained on any of Sellers' or their
Affiliates' computer systems that are not already owned by and in the possession
of the Companies. Sellers will provide Buyer and the Companies with access to
such information after Closing until such information is transferred to the
Companies.

       SECTION 5.21 INTERIM CHANGES IN SERVICE AREAS.

              (a) Sellers and Buyer agree that the terms and conditions of
Section 9.1 of the Directory Services License Agreement shall apply to any sale
of a Service Area (as defined in the Directory Services License Agreement) by
Sellers between the date hereof and the Closing Date such that the requirements
of such Section 9.1 shall become effective on the Closing Date with respect to
the local telephone division of Sprint and the purchaser of such Service Area
with retroactive effect from the date of such sale.

              (b) Sellers and Buyer agree that the terms and conditions of
Section 9.2 of the Directory Services License Agreement shall apply to any
acquisition of a Service Area by Sellers or their Affiliates between the date
hereof and the Closing Date such that the requirements of such Section 9.2 shall
become effective on the Closing Date with respect to the local telephone
division of Sprint and the purchaser of such Service Area on the Closing Date
with retroactive effect from the date of such sale.

       SECTION 5.22 INTERCOMPANY ACCOUNTS; CENDON PAYMENTS. All intercompany
accounts between Sellers or their respective Affiliates, on the one hand, and
the Companies, on the other hand, as of the Closing shall be settled
(irrespective of the terms of





                                      -71-


payment and deemed without further action of such intercompany accounts) in full
at or prior to the Closing by netting such balances against each other, and the
resultant balance contributed to capital or paid by cash or dividend, as the
case may be, and deemed without further action to be fully discharged as of the
Closing Date. Buyer shall pay to Sellers (or to such third parties as may be
designated in writing by Sellers) by wire transfer of available funds at Closing
$14,000,000 in full settlement and satisfaction of Buyer's obligations set forth
in Clause 12(i) of the CenDon Virginia Directory Agreement, dated May 5, 1988,
as amended, Clause 12(i) of the CenDon Florida Directory Agreement, dated May 5,
1988, as amended, Clause 12(i) of the CenDon Nevada Directory Agreement, dated
May 5, 1988, as amended, and Clause 12(i) of the CenDon North Carolina Directory
Agreement, dated May 5, 1988, as amended.

       SECTION 5.23 SPECIAL PURPOSE VEHICLE. On or prior to the Closing, Sellers
will (a) form a limited liability company (the "SPV") whose sole member is
Sprint Communications Company L.P., (b) include in the operating agreement of
the SPV the policies set forth on EXHIBIT 5.23, (c) cause Sprint Communications
Company, L.P. to irrevocably contribute and assign all of its right, title and
interest (including the associated goodwill) in the Licensed Marks (as defined
in the Trademark License Agreement) to the SPV as an irrevocable contribution to
the capital of the SPV (and not as security for a financing), and (d) make a
capital contribution (and not as security for a financing) to the SPV of an
amount estimated to cover the reasonably foreseeable expenses of the SPV. In
addition, at the Closing, Sprint and Buyer will enter into an agreement (the
"SPV AGREEMENT") that contains the representations and warranties, covenants and
other provisions contemplated by EXHIBIT 5.23.

       SECTION 5.24 CO-BRANDING. The parties will use their respective good
faith commercially reasonable efforts prior to Closing to agree upon (a) general
standards and





                                      -72-


guidelines with respect to the relative prominence and positioning of the
Publisher Co-Brand Marks (as defined in the Directory Services License
Agreement) and the Licensed Marks, provided that the parties agree that such
general standards and guidelines will provide that the Publisher Co-Brand Marks
will not be more than 80% of the size of the Licensed Marks in any usage, and
(b) the specific graphic uses of the Publisher Co-Brand Marks relative to the
Licensed Marks.

                                   ARTICLE VI

                    CONDITIONS TO OBLIGATIONS OF THE PARTIES


       SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION. The respective
obligation of each party to consummate the transactions contemplated by this
Agreement is subject to the satisfaction at or prior to the Closing of the
following conditions:

              (a) No statute, rule or regulation shall have been enacted,
promulgated or enforced by any court or governmental authority which prohibits
or restricts the consummation of the transactions contemplated by this
Agreement;

              (b) There shall not be in effect any judgment, order, injunction
or decree of any court of competent jurisdiction enjoining the consummation of
the transactions contemplated by this Agreement;

              (c) Any waiting periods applicable to the transactions
contemplated by this Agreement under the HSR Act shall have expired or early
termination shall have been granted;

              (d) All consents, authorizations, waivers and approvals of any
governmental authority or other regulatory body as may be required to be
obtained in connection






                                      -73-


with the performance of this Agreement, the failure to obtain which would
prevent the consummation of the transactions contemplated by this Agreement or
have a Company Material Adverse Effect, shall have been obtained; and

              (e) Buyer shall have received the proceeds of the financing
contemplated by the Financing Commitments, on substantially the terms and
subject to the conditions set forth therein.

       SECTION 6.2 CONDITIONS TO OBLIGATIONS OF SELLERS. The obligations of
Sellers to consummate the transactions contemplated by this Agreement are
further subject to the satisfaction (or waiver) at or prior to the Closing of
the following conditions:

              (a) The representations and warranties of Buyer contained in
Article IV of this Agreement that are (i) qualified as to Buyer Material Adverse
Effect shall be true and correct and (ii) not so qualified shall be true and
correct in all material respects (except for breaches as to matters that,
individually or in the aggregate, could not reasonably be expected to have a
Buyer Material Adverse Effect), in each case, as of the date of this Agreement
and as of the Closing as if made at and as of such time (PROVIDED, HOWEVER, that
representations and warranties which are as of a specific date shall speak only
as of such date). Sellers shall have received a certificate dated as of the
Closing Date executed by an officer of Buyer to such effect.

              (b) Buyer shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Closing pursuant to the terms of this Agreement, and Sellers shall have
received a certificate dated as of the Closing Date executed by an officer of
Buyer to such effect;

              (c) Buyer shall have delivered to Sellers or their Affiliates
those items set forth in Section 1.7 of this Agreement; and





                                      -74-


              (d) Except for any applicable Taxes, no state governmental
authority or other state regulatory body shall have initiated a formal legal or
administrative proceeding with respect to the transactions contemplated by this
Agreement that would reasonably be expected to, individually or in aggregate,
have a material adverse effect on the business of Sprint Local
Telecommunications Division or on the proceeds Sprint expects to receive from
the transactions contemplated by this Agreement.

       SECTION 6.3 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer
to consummate the transactions contemplated by this Agreement are further
subject to the satisfaction (or waiver) at or prior to the Closing of the
following conditions:

              (a) The representations and warranties of Sellers contained in
Article III of this Agreement that are (i) qualified as to Company Material
Adverse Effect shall be true and correct and (ii) not so qualified shall be true
and correct in all material respects (except for breaches as to matters that
would not reasonably be expected to, individually or in the aggregate, have a
Company Material Adverse Effect), in each case as of the date of this Agreement
and as of the Closing as if made at and as of such time (PROVIDED, HOWEVER, that
representations and warranties which are as of a specific date shall speak only
as of such date) and the representation and warranty of Sellers in Section 3.4
shall be true and correct as of the Closing. Buyer shall have received a
certificate dated as of the Closing Date executed by authorized representatives
of each Seller to such effect;

              (b) Each Seller and each Wholly Owned Company shall have performed
in all material respects its obligations under this Agreement required to be
performed by it at or prior to the Closing pursuant to the terms of this
Agreement, and Buyer shall have






                                      -75-


received a certificate dated as of the Closing Date executed by authorized
representatives of each Seller to such effect;

              (c) Sellers shall have delivered to Buyer those items set forth in
Section 1.6 of this Agreement;

              (d) Buyer shall have received evidence reasonably satisfactory to
it that (i) all Liens listed on SCHEDULE 6.3(d) have been released and fully
discharged and (ii) all guarantees by the Companies of indebtedness for borrowed
money of another Person shall be cancelled;

              (e) No Company shall have, or shall have guaranteed, any
indebtedness for borrowed money and capitalized lease obligations that in
accordance with GAAP are required to be reflected as indebtedness on a
consolidated balance sheet of the Companies; and

              (f) All consents as are required from parties to those contracts
of the Companies listed on SCHEDULE 6.3(f) in order to prevent any breach or
violation of the terms of such contracts as a result of the consummation of the
transactions contemplated by this Agreement shall have been obtained.

                                  ARTICLE VII

                                   TERMINATION


       SECTION 7.1 TERMINATION. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned:

              (a) at any time, by mutual written consent of Sellers and Buyer;




                                      -76-


              (b) by either party if the transactions contemplated by this
Agreement shall have been permanently enjoined by a court of competent
jurisdiction; PROVIDED, HOWEVER, that no party who brought or is affiliated with
the party who brought the action seeking the permanent enjoinment of the
transactions contemplated by this Agreement may seek termination of this
Agreement pursuant to this Section 7.1(b);

              (c) by Buyer if any of the conditions set forth in Sections 6.1
and 6.3 shall have become incapable of fulfillment prior to the Termination Date
(as hereinafter defined) and shall not have been waived by Buyer;

              (d) by Sellers if any of the conditions set forth in Sections 6.1
or 6.2 shall have become incapable of fulfillment prior to the Termination Date
and shall not have been waived by Sellers;

              (e) by Buyer or Sellers, at any time on or after the six month
anniversary of the date of this Agreement (the "TERMINATION DATE"), if the
Closing shall not have occurred on or prior to such date; PROVIDED, HOWEVER,
that the right to terminate this Agreement under this Section 7.1(e) shall not
be available to any party whose failure to fulfill any obligation under this
Agreement has substantially contributed to, or resulted in, the failure of the
Closing to have occurred on or before such date; PROVIDED, FURTHER, that if on
the Termination Date the only conditions to Closing capable of being satisfied
prior to the Closing Date that have not been fulfilled are Section 6.1(d) or
6.2(d), then the Termination Date shall be extended to the earlier to occur of
(i) the first anniversary of the date of this Agreement and (ii) the tenth
(10th) business day following the fulfillment of the closing conditions in
Sections 6.1(d) or 6.2(d), as applicable; or





                                      -77-


              (f) by Sellers if any Financing Commitment ceases to remain in
effect on substantially the terms and subject to the conditions set forth
therein for a period of 10 or more business days and Buyer has not obtained
within such 10 day period replacement financing commitments with terms and
conditions regarding certainty of closing no less favorable to Buyer and
Sellers.

       SECTION 7.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of the
termination of this Agreement and the abandonment of the transactions
contemplated by this Agreement pursuant to Section 7.1 of this Agreement,
written notice thereof shall be given by Sellers, on the one hand, or Buyer, on
the other hand, so terminating to the other party and this Agreement shall
terminate and the transactions contemplated by this Agreement shall be
abandoned, without further action by Sellers, or Buyer. If this Agreement is
terminated pursuant to Section 7.1 of this Agreement:

              (a) unless the basis of a termination is as set forth in Section
7.2(c) for failure of a condition set forth in Sections 6.2(a) or (b), each
party shall redeliver all documents, work papers and other materials of the
other parties relating to the transactions contemplated by this Agreement,
whether so obtained before or after the execution of this Agreement, to the
party furnishing the same or, upon prior written notice to such party, shall
destroy all such documents, work papers and other materials and deliver notice
to the parties seeking destruction of such documents that such destruction has
been completed, and all confidential information received by any party to this
Agreement with respect to the other party shall be treated in accordance with
the Confidentiality Agreement and Section 5.2(b) of this Agreement;





                                      -78-


              (b) all filings, applications and other submissions made pursuant
to this Agreement shall, at the option of Sellers, and to the extent
practicable, be withdrawn from the agency or other Person to which made; and

              (c) there shall be no liability or obligation under this Agreement
on the part of Sellers, the Companies or Buyer or any of their respective
directors, officers, employees, Affiliates, controlling Persons, agents or
representatives, except that Sellers or Buyer, as the case may be, shall have
liability to the other party if the basis of termination is fraud or a willful,
material breach by Sellers or Buyer, as the case may be, of one or more of the
provisions of this Agreement, and except that the obligations provided for in
this Section and Sections 5.5, 5.8 and 10.1 of this Agreement and in the
Confidentiality Agreement shall survive any such termination.

                                  ARTICLE VIII

                           SURVIVAL OF REPRESENTATIONS


              SECTION 8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. Notwithstanding any investigation by or on behalf of Buyer or the
results of any such investigation and notwithstanding the participation of Buyer
in the Closing, except for those representations and warranties in Sections 3.16
(Taxes) and 3.17 (Environmental) of this Agreement (which shall survive the
applicable statute of limitations, including any extensions with respect
thereto) and those representations and warranties in Sections 3.1
(Organization), 3.2 (Authorization), 3.3 (Capital Stock), 3.4 (Ownership of the
Capital Stock), 3.19 (Certain Fees) and 4.1 (Buyer Organization) (which shall
survive indefinitely), the representations and warranties of Sellers and Buyer
in Articles III and IV of this Agreement, respectively, shall survive the
Closing for a period of eighteen months following the Closing Date.





                                      -79-


                                   ARTICLE IX

                                 INDEMNIFICATION


              SECTION 9.1 INDEMNIFICATION OBLIGATIONS OF SELLERS. Sellers
jointly and severally shall indemnify, defend and hold harmless Buyer and its
Affiliates, and, effective as of the Closing, without duplication, the
Companies, each of their respective officers, directors, employees, agents and
representatives and each of the heirs, executors, successors and assigns of any
of the foregoing (collectively, the "BUYER INDEMNIFIED PARTIES") from, against
and in respect of any and all claims, liabilities (whether asserted or
unasserted, absolute or contingent), obligations, losses, costs, expenses,
penalties, fines and judgments (at equity or at law) and damages whenever
arising or incurred (including, without limitation, amounts paid in settlement,
costs and expenses of investigation and reasonable attorneys' fees and expenses)
arising out of or relating to (a) any breach or inaccuracy of any representation
or warranty made by Sellers in Article III of this Agreement (without giving
effect to "Material Adverse Effect" or "in all material respects" qualifications
contained in Article III of this Agreement other than those contained in Section
3.6) (other than a breach or inaccuracy of any representation or warranty under
Section 3.16), (b) any breach or nonperformance of any covenant, agreement or
undertaking of Sellers in this Agreement other than Seller's obligations under
Section 5.6 to use its reasonable best efforts to satisfy the closing condition
in Section 6.3(f) and (c) the agreements listed on SCHEDULE 3.7. Notwithstanding
the preceding sentence, the indemnification or indemnification procedures
provided for under this Section 9.1 shall not apply to Tax matters, which shall
be governed exclusively by Section 5.7.




                                      -80-


       The claims, liabilities, obligations, losses, costs, expenses, penalties,
fines and damages of the Buyer Indemnified Parties described in this Section 9.1
as to which the Buyer Indemnified Parties are entitled to indemnification are
hereinafter collectively referred to as "BUYER LOSSES."

       SECTION 9.2 INDEMNIFICATION OBLIGATIONS OF BUYER. Buyer shall indemnify,
defend and hold harmless Sellers and their Affiliates (excluding the Companies),
each of their respective officers, directors, employees, agents and
representatives and each of the heirs, executors, successors and assigns of any
of the foregoing (collectively, the "SELLER INDEMNIFIED PARTIES") from, against
and in respect of any and all claims, liabilities, obligations, losses, costs,
expenses, penalties, fines and judgments (at equity or at law) and damages
whenever arising or incurred (including, without limitation, amounts paid in
settlement, costs and expenses of investigation and reasonable attorneys' fees
and expenses) arising out of or relating to (a) any breach or inaccuracy of any
representation or warranty made by Buyer in Article IV of this Agreement
(without giving effect to "Material Adverse Effect" or "in all material
respects" qualifications contained in Article IV of this Agreement) or (b) any
breach or nonperformance of any covenant, agreement or undertaking of Buyer in
this Agreement. Notwithstanding the preceding sentence, the indemnification or
indemnification procedures provided for in this Section 9.2 shall not apply to
Tax matters, which shall be governed exclusively by Section 5.7.

         The claims, liabilities, obligations, losses, costs, expenses,
penalties, fines and damages of the Seller Indemnified Parties described in this
Section 9.2 as to which the Seller Indemnified Parties are entitled to
indemnification are hereinafter collectively referred to as "SELLER LOSSES."

       SECTION 9.3 INDEMNIFICATION PROCEDURE.

              (a) Promptly after receipt by a Buyer Indemnified Party or a
Seller Indemnified Party (hereinafter collectively referred to as an
"INDEMNIFIED PARTY") of written




                                      -81-



notice by a third party of a threatened or filed claim or of the threatened or
actual 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 Buyer Losses or Seller Losses (as the case may be), such Indemnified Party
shall notify Buyer (on the one hand) or Sellers (on the other hand), whoever is
the appropriate indemnifying party hereunder (the "INDEMNIFYING PARTY"), within
thirty (30) days of the written notice of threatening or filing of such claim or
of the threatened or actual commencement of such action or proceeding; PROVIDED,
HOWEVER, that the failure to so notify the Indemnifying Party shall relieve the
Indemnifying Party from liability under this Agreement with respect to such
claim only if, and only to the extent that, such failure to notify the
Indemnifying Party actually and materially prejudices the Indemnifying Party
with respect to such claim. The Indemnifying Party shall have the right, upon
written notice delivered to the Indemnified Party within thirty (30) days
thereafter, to assume the defense of such 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 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, shall have the right to participate in such litigation
and to retain its own counsel at such party's own expense. The Indemnifying
Party or the Indemnified Party, as the case may be, shall 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.





                                      -82-


              (b) No Indemnified Party may settle or compromise any claim or
consent to the entry of any judgment with respect to which indemnification is
being sought hereunder 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, which releases the
Indemnified Party completely in connection with such settlement, compromise or
consent and (ii) 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.

              (c) In the event an Indemnified Party shall claim a right to
payment pursuant to this Agreement not involving a third party claim covered by
Section 9.3(a), such Indemnified Party shall send written notice of such claim
to the appropriate Indemnifying Party. Such notice shall 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 shall
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
shall pay to the Indemnified Party immediately available funds in an amount
equal to such claim as determined hereunder.

       SECTION 9.4 CLAIMS PERIOD. For purposes of this Agreement, a "CLAIMS
PERIOD" shall be the period after the Closing Date which a claim for
indemnification may be




                                      -83-


asserted under this Agreement by an Indemnified Party. The Claims Periods under
this Agreement shall commence on the Closing Date and shall terminate with
respect to Buyer Losses or Seller Losses arising with respect to (a) any breach
or inaccuracy of any representation or warranty on the expiration of the
applicable survival period set forth in Section 8.1 and (b) with respect to any
breach or nonperformance of any covenant or agreement in this Agreement, six
months after the date Buyer (with respect to any Buyer Indemnified Party) or
Sellers (with respect to any Seller Indemnified Party), as the case may be,
obtains Knowledge of such breach or nonperformance. Notwithstanding the
foregoing, if prior to the close of business on the last day of the applicable
Claims Period, an Indemnifying Party shall have been properly notified of a
claim for indemnity hereunder and such claim shall not have been finally
resolved or disposed of at such date, such claim shall continue to survive and
shall remain a basis for indemnity hereunder until such claim is finally
resolved or disposed of in accordance with the terms of this Agreement.

       SECTION 9.5 LIABILITY LIMITS. Notwithstanding anything to the contrary
set forth in this Agreement, except for fraud, the Buyer Indemnified Parties
shall not make a claim against Sellers for indemnification under Section 9.1(a)
for Buyer Losses (a) for any single Buyer Loss less than $250,000 and (b) unless
and until the aggregate amount of Buyer Losses under Section 9.1(a) exceeds
$25,000,000 (the "BUYER DEDUCTIBLE"), and then only to the extent such Buyer
Losses exceed the Buyer Deductible. Further, the sum of Sellers' indemnification
obligations hereunder and any amounts payable by Sprint for consequential
damages resulting from a breach by Sprint or its Affiliates under the Trademark
License Agreement, shall not exceed in the aggregate $660,000,000 (the "CAP
AMOUNT").




                                      -84-


       SECTION 9.6 NETTING OF LOSSES. The amount of any Seller Losses or Buyer
Losses for which indemnification is provided under this Article IX shall take
into account (a) in the case of Sellers' indemnification obligations under
Section 9.1 of this Agreement, any specific reserves included in the Final
Balance Sheet and included in the determination of Closing Date Net Working
Capital, (b) in the case of Sellers' indemnification obligations under Section
9.1 of this Agreement or Buyer's indemnification obligations under Section 9.2
of this Agreement, (i) any amounts recovered by the Indemnified Party pursuant
to any indemnification by, or indemnification agreement with, any third party,
and (ii) any insurance proceeds or other cash receipts or sources of
reimbursement received in connection with any such Seller Losses or Buyer Losses
and (c) any Tax consequences associated with such Losses and the recovery
thereof. If the amount to be netted hereunder from any payment required under
Section 9.1 or Section 9.2 of this Agreement is determined after payment by the
Indemnifying Party pursuant to this Article IX, the Indemnified Party shall
repay to the Indemnifying Party, promptly after such determination, any amount
that the Indemnifying Party would not have had to pay pursuant to this Article
IX had such determination been made at the time of such payment.

       SECTION 9.7 EXCLUSIVE REMEDIES. Except for fraud, the provisions of this
Article IX and Sections 5.7 and 10.11 set forth the exclusive rights and
remedies of Buyer and Sellers to seek or obtain damages or any other remedy or
relief whatsoever from any party with respect to matters arising under or in
connection with this Agreement and the transactions contemplated by this
Agreement (other than any remedy or relief arising from the failure of any party
to perform its obligations under the Ancillary Agreements). All payments made
between Buyer and Sellers pursuant to Article VII, this Article IX and Sections
5.7 and 10.11 shall constitute adjustments to the Purchase Price for all Tax and
other purposes.




                                      -85-


                                   ARTICLE X

                                  MISCELLANEOUS


       SECTION 10.1 FEES AND EXPENSES. Whether or not the transactions
contemplated by this Agreement are consummated, Sellers and Buyer shall pay all
fees and expenses incurred by, or on behalf of, Sellers or Buyer, respectively,
in connection with, or in anticipation of, this Agreement and the consummation
of the transactions contemplated by this Agreement.

       SECTION 10.2 FURTHER ASSURANCES. From time to time after the Closing
Date, at the reasonable request of the other party to this Agreement and at the
expense of the party so requesting, each of the parties to this Agreement shall
execute and deliver to such requesting party such documents and take such other
action as such requesting party may reasonably request in order to consummate
more effectively the transactions contemplated by this Agreement.

       SECTION 10.3 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and may be given by any of the following methods: (a) personal
delivery; (b) facsimile transmission; (c) registered or certified mail, postage
prepaid, return receipt requested; or (d) overnight courier. Notices shall be
sent to the appropriate party at its address or facsimile number given below (or
at such other address or facsimile number for such party as shall be specified
by notice given under this Section 10.3):




                                      -86-


                                    If to Buyer, to:


                                    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

                                    If to Sellers, to:

                                    Sprint Corporation
                                    6200 Sprint Parkway
                                    Overland Park, KS 66251
                                    KSOPHF 0302 - 3B679
                                    Fax No.  (913) 794-0144
                                    Attention:  Legal - Corporate Secretary

                                    with a copy to:

                                    Sprint Corporation
                                    6200 Sprint Parkway
                                    Overland Park, KS 66251
                                    KSOPHF 0302 - 3B626
                                    Fax No. (913) 794-0144
                                    Attention: Legal - Assistant Vice President,
                                               Law - Corporate Transactions

                                    and a copy to:

                                    King & Spalding
                                    191 Peachtree Street
                                    Atlanta, Georgia 30303-1763
                                    Fax No.  (404) 572-5146
                                    Attention: Michael J. Egan III



                                      -87-


All such notices, requests, demands, waivers and communications shall be deemed
received upon (i) actual receipt thereof by the addressee, (ii) actual delivery
thereof to the appropriate address or (iii) in the case of a facsimile
transmissions, upon transmission thereof by the sender and issuance by the
transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error. In the case of
notices sent by facsimile transmission, the sender shall contemporaneously mail
a copy of the notice to the addressee at the address provided for above.
However, such mailing shall in no way alter the time at which the facsimile
notice is deemed received.

       SECTION 10.4 SEVERABILITY. Should any provision of this Agreement for any
reason be declared invalid or unenforceable, such decision shall not affect the
validity or enforceability of any of the other provisions of this Agreement,
which remaining provisions shall remain in full force and effect and the
application of such invalid or unenforceable provision to Persons or
circumstances other than those as to which it is held invalid or unenforceable
shall be valid and enforced to the fullest extent permitted by law; PROVIDED,
that the economic or legal substance of the transactions contemplated hereby is
not affected in any materially adverse manner to any party.

         Should Section 5.8 of this Agreement or any word, phrase, clause,
sentence or other portion thereof for any reason be declared illegal or
unenforceable, such Section or portions thereof shall be modified or deleted in
such a manner so as to make Section 5.8 of this Agreement as modified legal and
enforceable to the fullest extent permitted under applicable laws.

       SECTION 10.5 BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions of this Agreement shall be binding upon and shall inure to the
benefit of the parties to






                                      -88-


this Agreement and their respective successors and permitted assigns. Neither
this Agreement nor any of the rights, interests or obligations under this
Agreement shall be assigned, directly or indirectly, including, without
limitation, by operation of law, by any party to this Agreement without the
prior written consent of the other parties to this Agreement, except that Buyer
may, without such consent assign all such rights and obligations to (a) an
Affiliate of Buyer or (b) on or after the Closing Date, to any lender or other
party as collateral in connection with any financing; PROVIDED, HOWEVER, that no
such assignment shall release Buyer of any of its obligations under this
Agreement.

       SECTION 10.6 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for
the benefit of Sellers, and their successors and permitted assigns, with respect
to the obligations of Buyer under this Agreement, and for the benefit of Buyer,
and its respective successors and permitted assigns, with respect to the
obligations of Sellers, under this Agreement, and this Agreement shall not be
deemed to confer upon or give to any other third party any remedy, claim,
liability, reimbursement, cause of action or other right.

       SECTION 10.7 INTERPRETATION.

              (a) As used in this Agreement, the term "PERSON" shall mean and
include an individual, a partnership, limited liability company, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof or other entity.

              (b) As used in this Agreement, the term "AFFILIATE" shall mean a
person that directly or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with the person specified.




                                      -89-


       SECTION 10.8 JURISDICTION AND CONSENT TO SERVICE. Without limiting the
jurisdiction or venue of any other court, each of Sprint, Centel LLC and Buyer
(a) agrees that any suit, action or proceeding arising out of or relating to
this Agreement shall be brought solely in the state or federal courts of the
State of Delaware, (b) consents to the exclusive jurisdiction of each such court
in any suit, action or proceeding relating to or arising out of this Agreement,
(c) waives any objection which it may have to the laying of venue in any such
suit, action or proceeding in any such court, and (d) agrees that service of any
court paper may be made in such manner as may be provided under applicable laws
or court rules governing service of process.

       SECTION 10.9 ENTIRE AGREEMENT. This Agreement, the Confidentiality
Agreement, the Schedules and other documents referred to in this Agreement or
delivered pursuant to this Agreement which form a part of this Agreement
constitute the entire agreement among the parties with respect to the subject
matter of this Agreement and supersede all other prior agreements and
understandings, both written and oral, between the parties or any of them with
respect to the subject matter of this Agreement.

       SECTION 10.10 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof) as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies.

       SECTION 10.11 SPECIFIC PERFORMANCE. The parties acknowledge and agree
that any breach of the terms of this Agreement would give rise to irreparable
harm for which money damages would not be an adequate remedy and accordingly the
parties agree that, in addition to any other remedies, each shall be entitled to
enforce the terms of this Agreement by a






                                      -90-


decree of specific performance without the necessity of proving the inadequacy
of money damages as a remedy and without the necessity of posting bond.

       SECTION 10.12 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.

       SECTION 10.13 AMENDMENT, MODIFICATION AND WAIVER. This Agreement may be
amended, modified or supplemented at any time by written agreement of Sellers
and Buyer. Any failure of Sellers or Buyer to comply with any term or provision
of this Agreement may be waived, with respect to Buyer, by Sellers and, with
respect to Sellers, by Buyer, by an instrument in writing signed by or on behalf
of the appropriate party, but such waiver or failure to insist upon strict
compliance with such term or provision shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure to comply.

       SECTION 10.14 KNOWLEDGE. "TO THE KNOWLEDGE OF SELLERS" or any similar
phrase contained in this Agreement shall mean the actual knowledge of the
officers of Sprint and its Affiliates as set forth on SCHEDULE 10.14. "TO THE
KNOWLEDGE OF BUYER" or any similar phrase contained in this Agreement shall mean
the actual knowledge of the officers of Buyer and its Affiliates as set forth on
SCHEDULE 10.14.

       SECTION 10.15 SCHEDULES AND EXHIBITS. The Schedules, including all
supplements and amendments thereto, and all exhibits to this Agreement are
hereby incorporated into this Agreement and are hereby made a part of this
Agreement as if set out in full in this Agreement.

       SECTION 10.16 WAIVER OF JURY TRIAL. EACH PARTY WAIVES ITS RIGHT TO A JURY
TRIAL IN ANY COURT ACTION ARISING AMONG ANY OF THE PARTIES,






                                      -91-


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 or any claim arising under any federal, state or local statutes, laws
or regulations, under the applicable commercial rules of the American
Arbitration Association and 9 U.S.C. sec. 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.



























                                      -92-






         IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed as of the date first above written.

                                SPRINT CORPORATION


                                By:   /s/ MICHAEL B. FULLER
                                   -----------------------------------------
                                    Michael B. Fuller
                                    President and Chief Operating Officer - LTD

                                CENTEL DIRECTORIES LLC


                                By:   /s/ MICHAEL B. FULLER
                                   -----------------------------------------
                                    Michael B. Fuller
                                    Vice President

                                R.H. DONNELLEY CORPORATION


                                By:   /s/ DAVID C. SWANSON
                                   -----------------------------------------
                                    David C. Swanson
                                    President and Chief Executive Officer

EX-2.2

                                                                     Exhibit 2.2

                           R.H. DONNELLEY CORPORATION


                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT






                         Dated as of September 21, 2002








                                TABLE OF CONTENTS



                                                                                                        Page
                                                                                                        ----

                                                                                                      
ARTICLE I.      DEFINITIONS...............................................................................1

     Section 1.01.     Definitions........................................................................1

ARTICLE II.     SALE AND PURCHASE OF THE PREFERRED SHARES AND WARRANTS....................................8

     Section 2.01.     Sale and Purchase of the Preferred Shares and the Warrants.........................8

     Section 2.02.     Closing............................................................................8

     Section 2.03.     Use of Proceeds....................................................................9

     Section 2.04.     Share Adjustment...................................................................9

     Section 2.05.     Allocation........................................................................10

ARTICLE III.    REPRESENTATIONS AND WARRANTIES...........................................................10

     Section 3.01.     Representations and Warranties of the Company.....................................10

     Section 3.02.     Representations and Warranties of the Purchasers..................................22

ARTICLE IV.     COVENANTS OF THE PARTIES.................................................................23

     Section 4.01.     Taking of Necessary Action........................................................23

     Section 4.02.     Conduct of Business...............................................................24

     Section 4.03.     Financial Statements and Other Reports............................................26

     Section 4.04.     Restricted Actions................................................................26

     Section 4.05.     Required Actions..................................................................28

     Section 4.06.     Termination of Obligations........................................................29

     Section 4.07.     Inspection of Property............................................................30

     Section 4.08.     Lost, Stolen, Destroyed or Mutilated Securities...................................30

     Section 4.09.     Listing...........................................................................30

     Section 4.10.     Restrictions on Sale or Transfer; Legend..........................................31

     Section 4.11.     Notice of Breach..................................................................32

     Section 4.12.     Non-Disclosure; Interim Public Filings............................................32

     Section 4.13.     Governance Rights.................................................................33

     Section 4.14.     Other Transaction Documents.......................................................34

     Section 4.15.     Transfer Taxes....................................................................34

     Section 4.16.     Dividends.........................................................................35

     Section 4.17.     Certain Information Rights........................................................35

ARTICLE V.      CONDITIONS...............................................................................35

     Section 5.01.     Conditions of Purchase............................................................35

     Section 5.02.     Conditions of Sale................................................................37


                                       i


                                TABLE OF CONTENTS
                                     (cont.)



                                                                                                        Page
                                                                                                        ----

                                                                                                      
ARTICLE VI.     TERMINATION..............................................................................38

     Section 6.01.     Termination.......................................................................38

     Section 6.02.     Effect of Termination.............................................................38

ARTICLE VII.    SURVIVAL; CERTAIN REMEDIES...............................................................39

     Section 7.01.     Survival..........................................................................39

     Section 7.02.     Indemnification by the Purchasers.................................................39

     Section 7.03.     Indemnification by the Company....................................................39

     Section 7.04.     Certain Qualifications............................................................39

     Section 7.05.     Indemnification Procedures........................................................40

     Section 7.06.     Liability Limits..................................................................41

     Section 7.07.     Duplication.......................................................................42

     Section 7.08.     Exclusive Remedies................................................................42

ARTICLE VIII.   MISCELLANEOUS............................................................................42

     Section 8.01.     Notices...........................................................................42

     Section 8.02.     Entire Agreement; Amendments; Waivers.............................................43

     Section 8.03.     Counterparts......................................................................43

     Section 8.04.     Governing Law.....................................................................43

     Section 8.05.     Public Announcements..............................................................44

     Section 8.06.     Closing Payment; Expenses.........................................................44

     Section 8.07.     Successors and Assigns............................................................44

     Section 8.08.     Jurisdiction......................................................................44

     Section 8.09.     Captions; References..............................................................44

     Section 8.10.     Severability......................................................................45

     Section 8.11.     Aggregation of Stock..............................................................45




                                       ii




                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT


                  PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT, dated as of
September 21, 2002 (this "Agreement"), by and among R.H. Donnelley Corporation,
a Delaware corporation (the "COMPANY"), and the investors listed in SCHEDULE A
(each, a "PURCHASER"). Capitalized terms not otherwise defined where used herein
shall have the meanings ascribed thereto in ARTICLE I.

                                    RECITALS:

                  A. The Company has authorized a new series of its preferred
stock, par value $1 per share, called the Convertible Cumulative Preferred Stock
(the "PREFERRED STOCK"), which is convertible into shares of Common Stock in
accordance with the terms of the Company's Certificate of Designations governing
the Preferred Stock, in the form of EXHIBIT A (the "CERTIFICATE OF
DESIGNATIONS").

                  B. The Purchasers have agreed to purchase from the Company,
and the Company has agreed to sell to the Purchasers, subject to the terms and
conditions of this Agreement, shares of the Preferred Stock and the Warrants.

                  C. The Company and the Purchasers desire to set forth certain
agreements herein.

                                   AGREEMENT:

                  NOW THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereby agree
as follows:

                             ARTICLE I. DEFINITIONS

                  Section 1.01. DEFINITIONS. As used in this Agreement, the
following terms shall have the meanings set forth below:

                  "AFFILIATE" or "AFFILIATE" shall mean, with respect to any
         Person, any other Person that directly or indirectly controls or is
         controlled by or is under common control with such Person. As used in
         this definition, "control" (including its correlative meanings,
         "controlled by" and "under common control with") shall mean possession,
         directly or indirectly, of power to direct or cause the direction of
         management or policies (whether through ownership of securities or
         partnership or other ownership interests, by contract or otherwise) of
         such Person.

                  "AFFILIATE TRANSACTION" shall have the meaning set forth in
         SECTION 4.04(b).



                  "AGREEMENT" shall have the meaning set forth in the preamble.

                  "ALLOCATION" shall have the meaning set forth in SECTION 2.05.

                  "ANCILLARY DOCUMENTS" shall mean the Certificate of
         Designations, the Registration Rights Agreement, the Warrants and all
         other contracts, agreements and other documents being executed and
         delivered by the parties hereto pursuant to or in connection with this
         Agreement or the transactions contemplated hereby or thereby, but does
         not include the Other Transaction Documents.

                  "BALANCE SHEET" shall have the meaning set forth in SECTION
         3.01(e).

                  "BUSINESS DAY" shall mean any day, other than a Saturday,
         Sunday or a day on which banking institutions in New York City are
         authorized or obligated by law or executive order to close.

                  "CENDON" shall mean CenDon, L.L.C., a Delaware limited
         liability company.

                  "CERTIFICATE OF DESIGNATIONS" shall have the meaning set forth
         in the recitals.

                  "CERTIFICATE OF INCORPORATION" shall have the meaning set
         forth in SECTION 3.01(j).

                  "CLOSING" shall have the meaning set forth in SECTION 2.02(a).

                  "CLOSING DATE" shall have the meaning set forth in SECTION
         2.02(a).

                  "CLOSING PAYMENT" shall have the meaning set forth in SECTION
         8.06(a).

                  "CODE" shall mean the Internal Revenue Code of 1986.

                  "COMMITMENT" shall have the meaning set forth in SECTION
         3.01(t).

                  "COMMITMENT LETTER" shall mean the (i) commitment letter,
         dated September 18, 2002, among Deutsche Bank Securities Inc., Deutsche
         Bank Trust Company Americas, Citicorp North America, Inc., Salomon
         Smith Barney Inc., Bear Stearns Corporate Lending Inc., Bear Stearns &
         Co. Inc., R.H. Donnelley Corporation and R.H. Donnelley Inc., (ii) the
         fee letter, dated September 18, 2002, among Deutsche Bank Securities
         Inc., Deutsche Bank Trust Company Americas, Citicorp North America,
         Inc., Salomon Smith Barney Inc., Bear Stearns Corporate Lending Inc.,
         Bear Stearns & Co. Inc., R.H. Donnelley Corporation and R.H. Donnelley
         Inc., (iii) the engagement letter, dated September 18, 2002, among
         Deutsche Bank Securities Inc., Salomon Smith Barney Inc., Bear Stearns
         & Co. Inc., R.H. Donnelley Corporation and R.H. Donnelley Inc., (iv)
         the side letter related to an increase in the commitment amount, dated
         September 18, 2002, among Deutsche Bank Securities Inc., Deutsche Bank
         Trust Company Americas, Citicorp North America, Inc., Salomon Smith
         Barney Inc., Bear Stearns Corporate Lending Inc., Bear Stearns & Co.
         Inc., R.H. Donnelley Corporation and R.H. Donnelley Inc., and (v) the
         side letter related, in part, to the appointment of joint bookrunners,
         dated September 18, 2002, among Deutsche Bank Securities Inc., Salomon
         Smith Barney Inc., Bear



                                      -2-


         Stearns & Co. Inc., R.H. Donnelley Corporation and R.H. Donnelley Inc.,
         and the exhibits, annexes and schedules to items (i) - (v).

                  "COMMON STOCK" shall mean the common stock, par value $1 per
         share, of the Company, including any associated Right, as defined in
         and issued pursuant to the Rights Agreement.

                  "COMMON STOCK EQUIVALENTS" shall have the meaning set forth in
         SECTION 2.04.

                  "COMPANY" shall have the meaning set forth in the preamble.

                  "COMPANY CERTIFICATE" shall have the meaning set forth in
         SECTION 5.01(d).

                  "COMPANY INDEMNIFIED PARTY" shall have the meaning set forth
         in SECTION 7.02.

                  "COMPANY PLAN" shall mean each plan, program or policy,
         payroll practice, contract, agreement or other arrangement providing
         for compensation, severance, termination pay, performance awards, stock
         or stock-related awards, profit-sharing, pensions, deferred or
         incentive compensation, retirement insurance, fringe benefits or other
         material employee benefits for Employees which is now or previously has
         been sponsored, maintained, contributed to or required to be
         contributed to by the Company or any Company Subsidiary or pursuant to
         which the Company or any of the Company Subsidiaries has or may have
         any liability.

                  "COMPANY SUBSIDIARY" and "COMPANY SUBSIDIARIES" shall have the
         meanings set forth in SECTION 3.01(b).

                  "DESIGNATED TRANSFEREE" shall have the meaning set forth in
         the Certificate of Designations.

                  "DONTECH" shall mean the DonTech II partnership created by the
         DonTech II Partnership Agreement.

                  "DONTECH PARTNERSHIP AGREEMENT" shall mean the DonTech II
         Partnership Agreement, effective as of August 19, 1997, by and between
         R.H. Donnelley Inc., a Delaware Corporation, and Ameritech Publishing
         of Illinois, Inc.

                  "EMPLOYEE" shall mean each current, former or retired
         employee, officer or director of the Company or a Company Subsidiary.

                  "EMPLOYEE AGREEMENT" shall mean each employment, severance or
         similar agreement, which is in effect on the date hereof or by which
         the Company or any Company Subsidiary is bound, between the Company or
         a Company Subsidiary and an Employee.

                  "ENVIRONMENTAL LAWS" shall have the meaning set forth in
         SECTION 3.01(q).

                  "ERISA" shall mean the Employee Retirement Income Security Act
         of 1974, as


                                      -3-

         amended.

                  "ERISA AFFILIATE" shall mean, with respect to any Person, any
         entity that is (i) a member of a "controlled group of corporations,"
         under "common control" or a member of an "affiliated service group"
         within the meaning of Sections 414(b), (c) or (m) of the Code with such
         person, (ii) required to be aggregated under Section 414(o) of the Code
         with such person, or (iii) under "common control" with such person,
         within the meaning of Section 4001(a)(14) of ERISA, or any regulations
         promulgated or proposed under any of the foregoing Sections of the Code
         or ERISA.

                  "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934.

                  "GAAP" shall mean generally accepted accounting principles in
         the United States of America in effect from time to time.

                  "GOLDMAN ENTITIES" shall mean each of GSCP 2000, GS Capital
         Partners 2000 Offshore, L.P., a Cayman Islands exempted limited
         partnership, GS Capital Partners 2000 Employee Fund 2000, L.P., a
         Delaware limited partnership, GS Capital Partners 2000 GmbH & Co.
         Beteiligungs KG, a German limited partnership, and Goldman Sachs Direct
         Investment Fund 2000, L.P. a Delaware limited partnership.

                  "GOVERNMENTAL ENTITY" shall mean any court, department, body,
         board, bureau, administrative agency or commission or other
         governmental authority or instrumentality, whether federal, state,
         local or foreign.

                  "GSCP 2000" shall mean GS Capital Partners 2000, L.P., a
         Delaware limited partnership.

                  "HSR ACT" shall mean the Hart-Scott-Rodino Antitrust
         Improvements Act of 1976.

                  "INDEMNIFICATION CLAIM NOTICE" shall have the meaning set
         forth in SECTION 7.05(a).

                  "INDEMNIFIED PARTY" shall have the meaning set forth in
         SECTION 7.05(a).

                  "INDEMNIFYING PARTY" shall have the meaning set forth in
         SECTION 7.05(a).

                  "INTELLECTUAL PROPERTY" shall have the meaning set forth in
         SECTION 3.01(r).

                  "KNOWLEDGE" shall mean the actual knowledge of the officers of
         the Company listed on EXHIBIT B after reasonable investigation and
         inquiry.

                  "LIABILITY" shall mean any debt, liability or obligation,
         whether known or unknown, asserted or unasserted, accrued, absolute,
         contingent or otherwise, whether due or to become due.

                  "LIENS" shall mean any liens, mortgages, deeds of trust,
         pledges, security


                                      -4-


         interests, charges, claims, leasehold interests, tenancies,
         restrictions and encumbrances of any nature whatsoever.

                  "LITIGATION" shall have the meaning set forth in SECTION
         3.01(h).

                  "LOSSES" shall mean each and all of the following items:
         claims, losses (including, without limitation, losses of earnings),
         liabilities, obligations, payments, damages (actual but not punitive or
         consequential), charges, judgments, fines, penalties, amounts paid in
         settlement, and costs and expenses (including, without limitation,
         interest that may be imposed in connection therewith, costs and
         expenses of investigation, suits, proceedings, demands, assessments and
         fees, expenses and disbursements of counsel, consultants, and other
         experts.

                  "MATERIAL ADVERSE EFFECT" shall mean, with respect to any
         reference to a state of facts, event, change, effect or condition, such
         state of facts, event, change, effect or condition that has had, has,
         or could reasonably be expected to have, a material adverse effect on
         (i) the business, assets, operations, properties, condition (financial
         or otherwise), prospects, contingent liabilities or material agreements
         of the Company and the Company Subsidiaries, taken as a whole (ii) the
         ability of the Company or any Company Subsidiary to perform its
         obligations under this Agreement, the Ancillary Documents or any Other
         Transaction Document, or (iii) the validity or enforceability of this
         Agreement, the Ancillary Documents or any Other Transaction Document or
         the rights or remedies of the Purchasers hereunder and thereunder.
         Notwithstanding anything contained herein to the contrary, the
         commencement by or against the Company or any Company Subsidiary of any
         case, proceeding or other action under any law relating to bankruptcy,
         insolvency or reorganization or the seeking of an appointment of a
         receiver, trustee, custodian or other similar official for the Company
         or any Company Subsidiary or for all or any substantial part of the
         Company's or any Company Subsidiary's assets, shall be deemed a
         Material Adverse Effect.

                  "NET INCOME" shall mean with respect to the Net Income for any
         period, the amount reported in the line item of the Company's financial
         statements for such period entitled "Net Income" which financial
         statements appear in the most recent filing by the Company with the
         Securities and Exchange Commission.

                  "OTHER TRANSACTION DOCUMENTS" shall mean the Sprint Purchase
         Agreement, the Sprint Transaction Documents, the Senior Credit Facility
         Documents, the Senior Subordinated Credit Facility Documents, the
         Senior Subordinated Notes Documents and the Commitment Letter.

                  "PENSION PLAN" shall mean each Company Plan (other than a
         "multiemployer plan" (as defined in ERISA Section 3(37)) that is an
         "employee pension benefit plan" within the meaning of Section 3(2) of
         ERISA.

                  "PERMITS" shall mean any licenses, permits, accreditations,
         consents, registrations, certificates, and other governmental or
         regulatory permits, accreditations, authorizations or approvals
         required for the operation of the businesses of the Company and the


                                      -5-


         Company Subsidiaries and for the ownership, lease or operation of the
         Company's and the Company Subsidiaries' properties.

                  "PERMITTED LIENS" shall mean (i) Liens for Taxes not yet due
         and payable, (ii) statutory Liens of landlords and Liens of carriers,
         warehousemen, mechanics, materialmen and repairmen incurred in the
         ordinary course of business and not yet delinquent, (iii) matters of
         record set forth on the title insurance policy insuring title to the
         owned real property and (iv) zoning, building or other restrictions,
         variances, covenants, rights of way, encumbrances, easements and other
         minor irregularities in title, none of such items in (i) - (iv) which,
         individually or in the aggregate, materially and adversely detract from
         the value of the owned or leased real property based on its current use
         or interfere in any material respect with the current use or occupancy
         of such owned or leased real property.

                  "PERSON" or "PERSON" shall mean an individual, corporation,
         association, partnership, group (as defined in Section 13(d)(3) of the
         Exchange Act and the rules and regulations promulgated thereunder),
         trust, joint venture, business trust or unincorporated organization, or
         a government or any agency or political subdivision thereof.

                  "PREFERRED SHARES" shall have the meaning set forth in SECTION
         2.01.

                  "PREFERRED STOCK" shall have the meaning set forth in the
         recitals.

                  "PRINCIPAL MARKET" shall have the meaning set forth in SECTION
         4.09.

                  "PURCHASE PRICE" shall have the meaning set forth in SECTION
         2.01.

                  "PURCHASER" shall have the meaning set forth in the preamble.

                  "PURCHASER DESIGNEES" shall mean the Directors (i) elected by
         the Purchasers to the Company's Board of Directors pursuant to Section
         8 of the Certificate of Designations and (ii) designated pursuant to
         SECTION 4.13(a).

                  "PURCHASER INDEMNIFIED PARTY" shall have the meaning set forth
         in SECTION 7.03.

                  "PURCHASER'S CERTIFICATE" shall have the meaning set forth in
         SECTION 5.02(d).

                  "REGISTRABLE SHARES" shall have the meaning set forth in the
         Registration Rights Agreement.

                  "REGISTRATION RIGHTS AGREEMENT" shall mean the registration
         rights agreement to be executed by the Company and each Purchaser at
         the Closing, which shall be substantially in the form attached hereto
         as EXHIBIT C.

                  "REPORTS" shall have the meaning set forth in SECTION 3.01(f).

                  "RIGHTS AGREEMENT" shall mean the Rights Agreement, dated as
         of October 27, 1998, as amended, by and between the Company and The
         Bank of New York (successor


                                      -6-


         to First Chicago Trust Company of New York), as Rights Agent.

                  "SEC" shall mean the United States Securities and Exchange
         Commission.

                  "SECTION 203" shall have the meaning set forth in SECTION
         3.01(s).

                  "SECURITIES ACT" shall mean the Securities Act of 1933.

                  "SENIOR CREDIT FACILITY" shall mean the Senior Facilities, as
         defined in the Commitment Letter.

                  "SENIOR CREDIT FACILITY DOCUMENTS" shall mean any and all
         agreements, documents and instruments evidencing or governing the
         Senior Credit Facility.

                  "SENIOR OFFICER'S CERTIFICATE" shall have the meaning set
         forth in SECTION 4.03(a).

                  "SENIOR SUBORDINATED CREDIT FACILITY" shall mean the Senior
         Subordinated Facility, as defined in the Commitment Letter.

                  "SENIOR SUBORDINATED CREDIT FACILITY DOCUMENTS" shall mean any
         and all agreements, documents and instruments evidencing or governing
         the Senior Subordinated Credit Facility.

                  "SENIOR SUBORDINATED NOTES" shall have the meaning set forth
         in the Commitment Letter.

                  "SENIOR SUBORDINATED NOTES DOCUMENTS" shall mean any and all
         agreements, documents and instruments evidencing or governing the
         Senior Subordinated Notes.

                  "SPECIFIED PURCHASE PRICE" shall have the meaning set forth in
         SECTION 2.01.

                  "SPRINT" shall mean Sprint Corporation, a Kansas corporation.

                  "SPRINT PURCHASE AGREEMENT" shall mean the Stock Purchase
         Agreement, dated as of September 21, 2002, by and among Sprint, Centel
         Directories LLC, a Delaware limited liability company, and the Company.

                  "SPRINT TRANSACTION" shall mean the purchase and sale of the
         Shares (as defined in the Sprint Purchase Agreement) pursuant to the
         terms and subject to the conditions of the Sprint Purchase Agreement
         and the other Sprint Transaction Documents.

                  "SPRINT TRANSACTION DOCUMENTS" shall mean the Sprint Purchase
         Agreement and the Ancillary Agreements (as defined in the Sprint
         Purchase Agreement).

                  "SUBSIDIARY" shall mean, with respect to any corporation (the
         "parent") any other corporation, association or other business entity
         of which more than 50% of the shares of the voting stock are owned or
         controlled, directly or indirectly, by the parent or one or more
         Subsidiaries of the parent, or by the parent and one or more of its
         Subsidiaries.


                                      -7-


                  "TAX" and "TAXES" shall mean any and all federal, state,
         local, foreign or other taxes of any kind (together with any and all
         interest, penalties, additions to tax and additional amounts imposed
         with respect thereto) imposed by any taxing authority, including,
         without limitation, taxes or other charges on or with respect to
         income, franchises, windfall or other profits, gross receipts,
         property, sales, use, capital stock, payroll, employment, social
         security, workers' compensation, unemployment compensation, or net
         worth, and taxes or other charges in the nature of excise, withholding,
         ad valorem or value added, and includes, without limitation, any
         liability for Taxes of another person, as a transferee or successor,
         under Treas. Reg. Section 1.1502-6 or analogous provision of law or
         otherwise.

                  "TAX RETURN" shall mean any return, report or similar
         statement (including the attached schedules) required to be filed with
         respect to any Tax, including, without limitation, any information
         return, claim for refund, amended return or declaration of estimated
         Tax.

                  "TERMINATING BREACH" shall have the meaning set forth in
         SECTION 6.01(e).

                  "TRANSFER" shall have the meaning set forth in SECTION
         4.10(a).

                  "VOTING EQUITY INTERESTS" shall have the meaning set forth in
         the Certificate of Designations.

                  "WARRANTS" shall have the meaning set forth in SECTION 2.01.

       ARTICLE II. SALE AND PURCHASE OF THE PREFERRED SHARES AND WARRANTS

                  Section 2.01. SALE AND PURCHASE OF THE PREFERRED SHARES AND
THE WARRANTS. Subject to the terms and conditions of this Agreement, and in
reliance upon the representations and warranties hereinafter set forth, the
Company will sell to the Purchasers, and the Purchasers will purchase from the
Company, (i) 200,000 shares of the Preferred Stock (as such number may be
adjusted pursuant to SECTION 2.04, the "PREFERRED SHARES") and (ii) warrants to
purchase 1,650,000 shares of Common Stock on the terms and subject to the
conditions of the certificate for the Warrants in substantially the form
attached hereto as EXHIBIT D (the "WARRANTS"), for an aggregate purchase price
of $200.0 million (the "PURCHASE PRICE"). The number of shares of the Preferred
Stock and the number of warrants to be purchased by each Purchaser at the
Closing and the portion of the aggregate purchase price to be paid by each
Purchaser at the Closing in the exchange therefor, shall be as specified in
SCHEDULE A (with respect to each such Purchaser, such Purchaser's "SPECIFIED
PURCHASE PRICE").

                  Section 2.02. CLOSING.(a) Subject to the satisfaction or
waiver of the conditions set forth in this Agreement, the closing of the
transactions contemplated by SECTION 2.01 (the "CLOSING") shall take place
immediately prior to or concurrently with the closing of the Sprint Transaction,
or at such other time as may be mutually agreed upon by the Purchasers and the
Company (the "CLOSING DATE"). The Closing shall occur on the Closing Date at the
offices of Jones, Day, Reavis & Pogue, 222 East 41st Street, New York, New York
10017.


                                      -8-


                  (b) At the Closing: (i) the Company will deliver to the
Purchasers certificates for the Preferred Shares to be sold in accordance with
the provisions of SECTION 2.01 registered in the respective names and
proportions set forth in SCHEDULE A; (ii) the Company will deliver to the
Purchasers certificates for the Warrants, to be sold in accordance with the
provisions of SECTION 2.01, in each case duly executed in favor of the
respective names and in the proportions set forth in SCHEDULE A; (iii) subject
to SECTION 8.06(a), each Purchaser, in full payment for the Preferred Shares and
the Warrants, will deliver to the Company immediately available funds, by wire
transfer to such account as the Company shall specify, such Purchaser's
Specified Purchase Price; and (iv) each party shall take or cause to happen such
other actions, and shall execute and deliver such other instruments or
documents, as shall be required under ARTICLE V.

                  Section 2.03. USE OF PROCEEDS. The Company shall use the
proceeds from the sale of the Preferred Shares and the Warrants solely (i) to
pay the consideration payable to Sprint or its Affiliates in or as a result of
the Sprint Transaction and (ii) to pay the fees and out-of-pocket expenses
relating to the transactions contemplated hereby and under the Other Transaction
Documents.

                  Section 2.04. SHARE ADJUSTMENT. If, on or prior to the Closing
Date (or in connection with the Senior Credit Facility, the Senior Subordinated
Credit Facility and/or the Senior Subordinated Notes), the Company shall issue
or sell any shares of Common Stock or any options, warrants or other equity
securities of any nature convertible into or exchangeable for shares of Common
Stock ("COMMON STOCK EQUIVALENTS"), then the Company shall issue to the
Purchasers an additional number of shares of Preferred Stock determined by
multiplying the number of Preferred Shares then outstanding (which, in the case
of an adjustment, if any, to be made on the Closing Date, shall be 200,000) by a
fraction, the numerator of which shall be the number of shares of Common Stock
or Common Stock Equivalents issued (a) in the case of an adjustment, if any, to
be made on the Closing Date, from the date hereof to the Closing Date or (b) in
the case of an adjustment, if any, to be made after the Closing Date, since the
later of the Closing Date or the date of any prior adjustment made pursuant to
this SECTION 2.04, and the denominator of which shall be the number of Voting
Equity Interests outstanding immediately prior to such issuance of Common Stock
or Common Stock Equivalents, excluding (1) any Preferred Shares the outstanding,
if any, (2) any shares of Common Stock issuable upon conversion of the Preferred
Shares then outstanding, if any, (3) any shares of Common Stock issuable upon
exercise of the Warrants, and (4) the Common Stock or Common Stock Equivalents
issued (a) in the case of an adjustment, if any, to be made on the Closing Date,
from the date hereof to the Closing Date or (b) in the case of an adjustment, if
any, to be made after the Closing Date, since the later of the Closing or the
date of any prior adjustment made pursuant to this SECTION 2.04. Such number of
additional shares will be allocated in a proportional amount to the Purchasers
based on the allocation contained in SCHEDULE A. SCHEDULE 2.04 sets forth an
example of how this adjustment provision will work.

                  Section 2.05. ALLOCATION. On or prior to the Closing Date, the
Purchasers will submit to the Company for the Company's approval (which shall
not be unreasonably withheld) an allocation of the Purchase Price (the
"ALLOCATION"), which Allocation will allocate the Purchase Price amongst the
Warrants and the Preferred Shares. The parties agree to report the sale and
purchase of the Preferred Shares and Warrants for all federal, state, local and
foreign tax


                                      -9-


purposes in a manner consistent with the Allocation and agree to take no
position inconsistent with the foregoing (unless otherwise required by a final
determination by the appropriate taxing authority).

                  ARTICLE III. REPRESENTATIONS AND WARRANTIES

                  Section 3.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Purchasers as follows:

                  (a) ORGANIZATION AND GOOD STANDING OF THE COMPANY;
AUTHORIZATION. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all requisite
corporate power and authority and governmental authorizations to own, operate
and lease its properties and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each other
jurisdiction in which it owns or leases properties, or conducts business, so as
to require such qualification, except where the failure to be so licensed or
qualified in any such jurisdiction would not constitute a Material Adverse
Effect. The Company has the corporate power and authority to execute and deliver
this Agreement and the Ancillary Documents and perform its obligations hereunder
and thereunder. The execution and delivery of this Agreement and the Ancillary
Documents and the performance by the Company of its covenants and agreements
under this Agreement and the Ancillary Documents have been duly and validly
authorized by the Board of Directors of the Company, and no other corporate
proceedings on the part of the Company (including, without limitation, any
stockholder vote or approval) are necessary to authorize the execution, delivery
and performance of this Agreement or the Ancillary Documents or the consummation
of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of Common Stock upon conversion of the Preferred Stock
and upon exercise of the Warrants). This Agreement and the Ancillary Documents
have been duly executed and delivered by the Company and constitute the valid
and binding agreements of the Company, enforceable against the Company in
accordance with their terms, except that (a) such enforcement may be subject to
any bankruptcy, insolvency, reorganization moratorium, fraudulent transfer or
other laws, now or hereafter in effect relating to or limiting creditors' rights
generally, and (b) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.

                  (b) ORGANIZATION AND GOOD STANDING OF COMPANY SUBSIDIARIES AND
DONTECH. (i) SCHEDULE 3.01(b) lists all Subsidiaries of the Company and their
respective jurisdictions of incorporation (collectively, the "COMPANY
SUBSIDIARIES" and each, a "COMPANY SUBSIDIARY;" PROVIDED, that for the purposes
of all other defined terms in this Agreement, SECTION 3.01, SECTION 4.03, and
SECTION 4.07, DonTech shall not be deemed to be a Company Subsidiary, and
PROVIDED, FURTHER, that with respect to the covenants and agreements as to
Company Subsidiaries made in this Agreement, DonTech shall be deemed to be a
Company Subsidiary, but the Company's obligations with respect to DonTech in
this regard shall be limited to the extent the Company has rights under the
DonTech Partnership Agreement that would permit it to comply with such
obligations without violating any obligations of the Company, including its
fiduciary obligations, under the DonTech Partnership Agreement or otherwise in
respect to DonTech). Except as set forth in SCHEDULE 3.01(b), the Company owns,
directly or indirectly, all the shares


                                      -10-


of outstanding capital stock of each Company Subsidiary. Except as set forth in
SCHEDULE 3.01(b), (a) there are outstanding no securities or rights convertible
into or exchangeable for shares of any capital stock of any Company Subsidiary
and (B) there are no contracts, commitments, understandings or arrangements by
which any Company Subsidiary is bound to issue additional shares of its capital
stock or options, warrants or rights to purchase or acquire any additional
shares of its capital stock. All of the shares of capital stock of each of the
Company Subsidiaries are duly and validly authorized, fully paid and
non-assessable and, except as set forth in SCHEDULE 3.01(b), are owned by the
Company free and clear of any Lien with respect thereto. Each Company Subsidiary
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and has all requisite corporate power
and authority and governmental authorizations to own, operate and lease its
properties and to carry on its business as it is now being conducted, and is
duly licensed or qualified to do business in each other jurisdiction in which it
owns or leases properties, or conducts any business, so as to require such
qualification, except where the failure to be so licensed or qualified in any
such jurisdiction would not constitute a Material Adverse Effect.

                  (ii) To the Company's knowledge, DonTech is a general
         partnership duly organized, validly existing and in good standing under
         the laws of the State of Illinois, and has all requisite power and
         authority and governmental authorizations to own, operate and lease its
         properties and to carry on its business as it is now being conducted,
         and is duly licensed or qualified to do business in each other
         jurisdiction in which it owns or leases properties, or conducts any
         business, so as to require such qualification, except where failure to
         be so licensed or qualified in any such jurisdiction would not
         constitute a Material Adverse Effect. The Company, indirectly through
         R.H. Donnelley Inc., owns 50% of the general partnership interests of
         DonTech.

                  (c) NO CONFLICTS. Except as set forth in SCHEDULE 3.01(c),
neither the execution and delivery of this Agreement or the Ancillary Documents
nor the consummation of the transactions contemplated by this Agreement or the
Ancillary Documents will (i) conflict with or result in any breach of any
provision of the incorporation documents or By-laws of the Company or any
Company Subsidiary, (ii) except for applicable requirements of the HSR Act,
require any filing with, or the obtaining of any permit, authorization, consent
or approval of, any Governmental Entity, (iii) violate, conflict with or result
in a default (or any event which, with notice or lapse of time or both, would
constitute a default) or require any consent under, or give rise to any right of
termination, cancellation or acceleration under, any of the terms, conditions or
provisions of any note, mortgage, other evidence of indebtedness, guarantee,
license, agreement, lease or other contract, instrument or obligation to which
the Company or any Company Subsidiary or, to the Company's knowledge, DonTech is
a party or by which the Company or any Company Subsidiary or any of their
respective assets or, to the Company's knowledge, DonTech or any of its
respective assets may be bound, or (iv) violate any order, injunction, decree,
statute, rule or regulation applicable to the Company, excluding from the
foregoing clauses (ii), (iii) and (iv) such requirements, violations, conflicts,
defaults or rights that would not constitute a Material Adverse Effect.


                                      -11-


                  (d) CAPITALIZATION. SCHEDULE 3.01(d) sets forth (i) the
authorized capital stock of the Company, the number of shares of each class of
capital stock issued and outstanding and the number of shares of Common Stock
reserved for issuance in connection with employee benefit, stock option and
dividend reinvestment plans in each case as of the date hereof, and (ii) all
options, warrants, rights to subscribe to, scrip calls, contracts, undertakings,
arrangements and commitments to issue which may result in the issuance of equity
securities of the Company, in each case setting forth the identity of the holder
thereof, the exercise or similar price and the date of expiration or termination
thereof. All of the issued and outstanding shares of the Company's capital stock
have been duly and validly authorized and issued and are fully paid and
non-assessable and are not subject to any preemptive rights. Except as set forth
in SCHEDULE 3.01(d) or pursuant to this Agreement, the Rights Agreement, the
Warrants or the Certificate of Designations, (i) no equity securities of the
Company are or may be required to be issued by reason of any options, warrants,
rights to subscribe to, scrip calls or commitments of any character whatsoever,
(ii) there are outstanding no securities or rights convertible into or
exchangeable for shares of any capital stock of the Company, and (iii) there are
no contracts, commitments, understandings or arrangements by which the Company
is bound to issue additional shares of its capital stock or securities or rights
convertible into or exchangeable for shares of any capital stock of the Company,
or options, warrants or rights to purchase or acquire any additional shares of
its capital stock. Neither the Company nor any Company Subsidiary is subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any of its capital stock. Except as set forth in SCHEDULE 3.01(d), there
are no contracts, agreements or understandings between the Company and any
Person granting such Person the right to require the Company to file a
registration statement under the Securities Act with respect to any securities
of the Company owned or to be owned by such Person or to require the Company to
include such securities in any other registration statement filed by the Company
under the Securities Act.

                  (e) FINANCIAL STATEMENTS. The Company has previously delivered
to the Purchasers copies of (i) the consolidated balance sheet of the Company
and the Company Subsidiaries as of December 31 for the fiscal years 2000 and
2001, and the related consolidated statements of operations, statements of
stockholders' equity and cash flows for the fiscal years 1999 through 2001,
inclusive, as reported in the Company's Annual Report on Form 10-K (as amended)
for the fiscal year ended December 31, 2001, filed by the Company with the SEC
under the Exchange Act, in each case accompanied by the audit report of
PricewaterhouseCoopers LLP, independent public accountants, and (ii) the
unaudited consolidated balance sheet of the Company and the Company Subsidiaries
as of June 30, 2002 (the "BALANCE SHEET") and the related unaudited consolidated
statement of operations, statements of stockholders' equity and cash flows for
the three- and six-month periods then ended as reported in the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, filed with
the SEC under the Exchange Act. All of such financial statements fairly present
the consolidated financial position of the Company and the Company Subsidiaries
as of the dates shown and the results of the consolidated operations, statements
of stockholders' equity and cash flows of the Company and the Company
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth, in each case subject, as to interim statements, to changes
resulting from year-end adjustments (none of which will be material in amount
and effect). All of such financial statements have been prepared in accordance
with GAAP consistently applied


                                      -12-


during the periods involved, except as otherwise set forth in the notes thereto,
and the Company and the Company Subsidiaries have no liabilities or obligations
of any nature (absolute, accrued, contingent or otherwise) which are not fully
reflected or reserved against in the balance sheet as of June 30, 2002, included
in such financial statements, except for liabilities that may have arisen in the
ordinary and usual course of business and consistent with past practice and
that, individually or in the aggregate, would not constitute a Material Adverse
Effect. Neither the Company nor any Company Subsidiary has entered into any
off-balance sheet arrangements or transactions.

                  (f) REPORTS. The Company has filed all reports, registration
statements, proxy statements and other materials, together with any amendments
required to be made with respect thereto, that were required to be filed with
the SEC under the Securities Act or the Exchange Act after July 1, 1998 (all
such reports and statements are collectively referred to herein as the
"REPORTS") and with the New York Stock Exchange. As of their respective dates,
the Reports, including the financial statements contained therein, complied in
all material respects with all of the statutes and published rules and
regulations enforced or promulgated by the regulatory authority with which they
were filed, except to the extent the information in any Report has been revised
or superseded by a later filed Report, did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. There are no facts
existing as of the date hereof peculiar to the Company or any Company Subsidiary
which the Company has not disclosed in the Reports or to the Purchasers in
writing which, either individually or in the aggregate, would constitute a
Material Adverse Effect. To the Company's knowledge, there are no facts existing
as of the date hereof peculiar to DonTech that the Company has not disclosed in
the Reports or to the Purchasers in writing which, either individually or in the
aggregate, would constitute a Material Adverse Effect.

                  (g) COMPLIANCE WITH APPLICABLE LAW. Each of the Company, each
Company Subsidiary and, to the Company's knowledge, DonTech is not in default or
violation in any respect of any law, statute, rule, regulation, policy or
guideline of any Governmental Entity applicable to the Company, any of the
Company Subsidiaries or DonTech, as the case may be, other than such defaults or
violations that, either individually or in the aggregate, would not constitute a
Material Adverse Effect, and the business of the Company, the Company
Subsidiaries and, to the Company's knowledge, DonTech, are in compliance in all
material respects with all applicable federal, state, local and foreign
governments' laws and regulations. None of the Company the Company Subsidiaries
or, to the Company's knowledge, DonTech is in default under or in breach of any
order, judgment or decree of any arbitrator or other Governmental Entity, and
neither the Company, nor any Company Subsidiary or, to the Company's knowledge,
DonTech is a party or subject to any order, judgment or decree of any arbitrator
or other Governmental Entity.

                  (h) LITIGATION. As of the date of this Agreement, except as
set forth in the Reports or in SCHEDULE 3.01(h), there is no claim, action,
suit, investigation, proceeding or governmental investigation pending or, to the
Company's knowledge, threatened by or before any arbitration tribunal, self
regulatory agency or body (including, without limitation, the New York Stock
Exchange), Governmental Entity or by any third party (a "LITIGATION") (i)
against or


                                      -13-


involving the Company or any of the Company Subsidiaries or involving any of
their respective properties or assets, (ii) to the Company's knowledge, against
or involving DonTech or involving any of its respective properties or assets or
(iii) which challenges the validity of this Agreement or which could reasonably
be expected to adversely affect or restrict the Company's ability to consummate
the transactions contemplated by this Agreement and the Ancillary Documents.

         (i) EMPLOYEE BENEFITS.

             (i) SCHEDULE 3.01(i)(i) contains a true and complete list of (i)
         each material Company Plan and (ii) each material Employee Agreement.
         Except as set forth on SCHEDULE 3.01(i)(i), the Company and the Company
         Subsidiaries do not have any plan or legally binding commitment (i) to
         establish any new Company Plan or to modify or terminate any Company
         Plan or (ii) to enter into, modify or terminate any Employee Agreement.

             (ii) Current, accurate and complete copies of all documents
         embodying or relating to each Company Plan and each Employee Agreement
         have been made available to the Purchasers.

             (iii) Neither the Company nor a Company Subsidiary has, or has ever
         had, any ERISA Affiliates other than the Company or a Company
         Subsidiary.

             (iv) Each Company Plan and Employee Agreement has been established
         and maintained in accordance with its terms in all material respects
         and all applicable laws, statutes, orders, rules and regulations. Each
         Company Plan intended to qualify under Section 401 of the Code has a
         favorable determination letter from the Internal Revenue Service to the
         effect that it is so qualified and, if the letter for such a plan is
         not current, such plan is the subject of a timely request for a current
         favorable determination letter.

             (v) No steps have been taken to terminate any Pension Plan, no
         termination of any Pension Plan has occurred and no event has occurred
         and no condition exists that could constitute grounds for terminating
         any Pension Plan. Each Pension Plan has been maintained in compliance
         with the minimum funding standards of ERISA and the Code and no such
         Pension Plan has incurred any "accumulated funding deficiency," as
         defined in Section 412 of the Code and Section 302 of ERISA, whether or
         not waived. The funded status of each Pension Plan as reflected in the
         most recent actuarial report is accurate and such report fairly
         presents the funded status of such Pension Plan on the basis set forth
         therein.

             (vi) No Company Plan is under audit or investigation by the
         Internal Revenue Service, the Department of Labor, the Pension Benefit
         Guaranty Corporation or other governmental agency and, to the knowledge
         of the Company and the Company Subsidiaries, no such audit or
         investigation has been threatened. There are no actions, proceedings,
         arbitrations, suits or claims pending, or to the knowledge of the
         Company or any


                                      -14-


         Company Subsidiaries, threatened or anticipated (other than routine
         claims for benefits) against the Company or any Company Subsidiaries or
         any administrator, trustee or other fiduciary of any Company Plan with
         respect to any Company Plan or Employee Agreement, or against any
         Company Plan or against the assets of any Company Plan.

             (vii) Except as set forth on SCHEDULE 3.01(i)(vii), neither the
         Company nor the Company Subsidiaries maintains or contributes to any
         Company Plan which provides, or has any liability to provide, life
         insurance, medical, severance or other employee welfare benefits to any
         Employee upon his retirement or termination of employment, except as
         may be required by Section 4980B of the Code.

             (viii) Except as set forth on SCHEDULE 3.01(i)(viii), the execution
         and performance of the transactions contemplated in this Agreement will
         not (either alone or upon the occurrence of any additional or
         subsequent events) (i) constitute an event under any Company Plan or
         Employee Agreement that will or may result in any payment (whether of
         severance pay or otherwise), acceleration, forgiveness of indebtedness,
         vesting, distribution, increase in benefits or obligations to fund
         benefits with respect to any Employee or (ii) result in the triggering
         or imposition of any restrictions or limitations on the right of the
         Company or a Company Subsidiary to amend or terminate any Company Plan.
         The execution and performance of the transactions contemplated in this
         Agreement will not cause any payment or benefit which will or may be
         made by the Company or a Company Subsidiary with respect to any
         Employees to be characterized as an "excess parachute payment," within
         the meaning of Section 280G(b)(1) of the Code.

             (ix) There are no, and have never been any, collective bargaining
         agreements or other labor union or similar contracts governing any
         Employees.

             (x) The Company and the Company Subsidiaries are in compliance in
         all material respects with all applicable federal, state and local
         laws, rules and regulations respecting employment.

         (j) ABSENCE OF CERTAIN CHANGES. Since December 31, 2001, the business
of the Company and the Company Subsidiaries and, to the Company's knowledge,
DonTech has been operated in the usual and ordinary course consistent with past
practice and, except as set forth in the Reports or in SCHEDULE 3.01(j) or as
provided in this Agreement or the Ancillary Documents:

             (i) there has been no event, condition or change that individually
         or in the aggregate constitutes a Material Adverse Effect;

             (ii) none of the Company, the Company Subsidiaries or, to the
         Company's knowledge, DonTech has entered into any material transaction
         or incurred any material liability or material obligation, except in
         the ordinary course of its business consistent with past practice;


                                      -15-


             (iii) none of the Company, the Company Subsidiaries or, to the
         Company's knowledge, DonTech has sold or transferred a material amount
         of the assets it owns except in the ordinary course of its business;

             (iv) none of the Company, the Company Subsidiaries or, to the
         Company's knowledge, DonTech has incurred any indebtedness other than
         indebtedness to trade creditors incurred in the ordinary course of
         business;

             (v) none of the Company, the Company Subsidiaries or, to the
         Company's knowledge, DonTech has changed its accounting policies or
         procedures as in effect on December 31, 2001;

             (vi) neither the Company nor any Company Subsidiary has amended or
         in any way altered its Restated Certificate of Incorporation, as
         amended ("CERTIFICATE OF INCORPORATION") or By-laws;

             (vii) the Company has not changed the number of shares of the
         authorized or issued capital stock of the Company, issued or granted
         any option, warrant, call, commitment, subscription, right to purchase
         or agreement of any character relating to the authorized or issued
         capital stock of the Company or any Company Subsidiary, or any
         securities convertible into shares of such stock (except for grants of
         options to purchase Common Stock to be granted pursuant to Company
         Plans), split, combined or reclassified any shares of the capital stock
         of the Company, declared, set aside or paid any dividend or other
         distribution (whether in cash, stock or property or any combination
         thereof) in respect of the capital stock of the Company, or redeemed or
         otherwise acquired any shares of such capital stock;

             (viii) the Company has not increased the number of members of the
         Board of Directors of the Company;

             (ix) none of the Company, the Company Subsidiaries or, to the
         Company's knowledge, DonTech has acquired any assets other than in the
         ordinary and usual course of business;

             (x) none of the Company, the Company Subsidiaries or, to the
         Company's knowledge, DonTech has entered into employment agreements
         with any Employee (other than an agreement terminable at will without
         any financial penalty), or granted any increase in the compensation
         (including employee benefits) of any employee, except for increases (A)
         in the ordinary course of business and consistent with past practice,
         (B) as a result of collective bargaining or (C) as required by any
         employment or other agreement, policy or plan currently in effect; and

             (xi) none of the Company, the Company Subsidiaries or, to the
         Company's knowledge, DonTech has agreed, whether in writing or
         otherwise, to


                                      -16-


                  take any action that, if taken, would render any of the
                  representations set forth in this SECTION 3.01(j) untrue.

                  (k) PREFERRED SHARES AND WARRANTS. The Preferred Shares have
been duly authorized by all necessary corporate action. When issued and sold
against receipt of the consideration therefor, the Preferred Shares will be
validly issued, fully paid and nonassessable, will not subject the holders
thereof to any personal liability and will not be subject to any preemptive
rights except as contemplated by this Agreement and the Certificate of
Designations. When issued and sold against receipt of the consideration
therefor, the Warrants will not subject the holders thereof to any personal
liability and will not be subject to any preemptive rights except as
contemplated by this Agreement and the Warrants. The Company has 21,909,939
shares of Common Stock that are in treasury and listed on the New York Stock
Exchange. A total of 20,500,000 of such treasury shares of Common Stock have
been duly reserved for issuance upon the conversion or redemption of the
Preferred Shares and the exercise of the Warrants. The shares of Common Stock
issuable upon conversion or redemption of the Preferred Shares and upon exercise
of the Warrants have been duly and validly authorized and, if and when issued,
will be validly issued, fully paid and non-assessable and will not be subject to
any preemptive rights except as contemplated by this Agreement, the Warrants and
the Certificate of Designations. At the Closing, the Purchasers will receive
valid title to the Preferred Shares and the Warrants, free and clear of any Lien
(other than any restrictions on transfer under state and/or federal securities
laws).

                  (l) OFFERING OF SECURITIES. Based in part on the
representations and warranties of the Purchasers in SECTION 3.02, it is not
necessary in connection with the offer, sale and delivery of the Preferred
Shares and the Warrants to the Purchasers to register the offer and sale of the
Preferred Shares and the Warrants under the Securities Act. The Company has not,
directly or indirectly, offered, sold or solicited any offer to buy and will
not, directly or indirectly, offer, sell or solicit any offer to buy, any
security of a type or in a manner which would be integrated with the sale of the
Preferred Shares and the Warrants and require any of the Preferred Shares or the
Warrants to be registered under the Securities Act. None of the Company, its
Affiliates or any person acting on its or any of their behalf has engaged or
will engage in any form of general solicitation or general advertising (within
the meaning of Rule 502(c) under the Securities Act) in connection with the
offering of the Preferred Shares and the Warrants.

                  (m) BROKERS AND FINDERS. Except for the engagement of Bear,
Stearns & Co., Inc. and Morgan Stanley & Co., Inc. (the fees and expenses of
each which will be borne solely by the Company), neither the Company nor any of
its Affiliates has employed any financial advisor or finder or incurred any
liability for any financial advisory or finders' fees in connection with this
Agreement or the transactions contemplated by this Agreement.

                  (n) PERMITS. The Company, each Company Subsidiary and, to the
Company's knowledge, DonTech, possesses all Permits required for the conduct of
its respective businesses, except where the failure to possess any such Permit
would not constitute a Material Adverse Effect, and none of the Company, any
Company Subsidiary nor, to the Company's knowledge, DonTech has received any
notice of proceedings relating to the revocation or modification of any such
Permit that, if determined adversely to the Company, DonTech or any such Company
Subsidiary, individually or in the aggregate, would constitute a Material
Adverse Effect. All of


                                      -17-


such Permits of the Company and the Company Subsidiaries and, to the Company's
knowledge such Permits of DonTech are valid and in full force and effect, and
the Company, each of the Company Subsidiaries and to the Company's knowledge,
DonTech have duly performed and are in compliance in all respects with all of
their obligations under such Permits, except where the failure to perform or
comply, individually or in the aggregate would not constitute a Material Adverse
Effect. No event has occurred with respect to any of such Permits of the Company
and the Company Subsidiaries or, to the Company's knowledge, such Permits of
DonTech that allows, or after notice or lapse of time or both would allow, the
suspension, limitation, revocation, non-renewal or termination thereof or would
result in any other impairment of the rights of the holder thereof in and under
any of such Permits that, if such event or events occurred, individually or in
the aggregate, would constitute a Material Adverse Effect, and no terminations
thereof or proceedings to suspend, limit, revoke or terminate any Permits of the
Company and the Company Subsidiaries or, to the Company's knowledge, such
Permits of DonTech, have been threatened that, if acted upon, individually or in
the aggregate, would constitute a Material Adverse Effect.

                  (o) TITLE TO PROPERTIES; INSURANCE. Except as set forth in
SCHEDULE 3.01(o), the Company, the Company Subsidiaries and, to the Company's
knowledge, DonTech have good and marketable title to all real properties and all
other properties and assets owned by them that are material to their respective
businesses, in each case free from Liens other than Permitted Liens. Except as
set forth in SCHEDULE 3.01(o), the Company, the Company Subsidiaries and, to the
Company's knowledge, DonTech hold any leased real or personal property that is
material to their business under valid and enforceable leases enforceable
against the Company, the Company Subsidiaries or, to the Company's knowledge,
DonTech, with no exceptions that would materially interfere with the use made or
to be made thereof by them, in each case free from Liens other than Permitted
Liens. The Company, the Company Subsidiaries and, to the Company's knowledge,
DonTech have at all times maintained in full force and effect property damage,
liability and other insurance with financially sound and reputable insurers at
levels of coverage reasonable and customary for the Company's industry.

                  (p) TAXES. All material Tax Returns required to be filed by
the Company and each Company Subsidiary (provided that for the purposes of this
SECTION 3.01(p) only, DonTech and CenDon shall each be deemed a Company
Subsidiary), and, to the Company's knowledge, DonTech, have been filed, and all
such Tax Returns are true, complete and correct in all material respects.
Neither the Company nor any of the Company Subsidiaries, or to the Company's
knowledge, DonTech has any liability for Taxes other than Taxes (i) currently
payable without penalty or interest or (ii) being contested in good faith and by
appropriate proceedings and for which, in the case of both clauses (i) and (ii),
adequate reserves have been established on the Balance Sheet and books and
records of the Company or the Company Subsidiaries, as applicable. There are no
proposed Tax assessments against the Company or any of the Company Subsidiaries,
or to the Company's knowledge, DonTech. Neither the Internal Revenue Service nor
any other taxing authority has asserted any currently ongoing claim for Taxes,
nor to the Company's knowledge, is threatening to assert any claims for such
Taxes, against the Company or any of the Company Subsidiaries or DonTech. The
Company and each of the Company Subsidiaries, and, to the Company's knowledge,
DonTech have withheld or collected and paid over to the appropriate Governmental
Entities (or are properly holding for such payment) all


                                      -18-


Taxes required by law to be withheld or collected. There are no Liens for Taxes
upon the assets of the Company or any of the Company Subsidiaries, or to the
Company's knowledge, DonTech (other than Liens for Taxes that are not yet due).
Neither the Company nor any of the Company Subsidiaries, or to the Company's
knowledge, DonTech (i) has any liability under Treasury Regulation Section
1.1502-6 or analogous state, local, or foreign law provision for the Taxes of an
entity other than the Company or any of the Company Subsidiaries or DonTech, as
applicable, or (ii) is a party to a Tax sharing or Tax indemnity agreement or
any other commitment of a similar nature with any entity other than the Company
or any of the Company Subsidiaries that remains in effect and under which the
Company or any of the Company Subsidiaries could have any material liability for
Taxes. No claim has been made by a taxing authority in a jurisdiction where the
Company or any of the Company Subsidiaries does not file Tax Returns that the
Company or any of the Company Subsidiaries is or may be subject to taxation by
that jurisdiction. To the Company's knowledge, no claim has been made by a
taxing authority in a jurisdiction where DonTech does not file Tax Returns that
DonTech is or may be subject to taxation by that jurisdiction. Neither the
Company nor any of the Company Subsidiaries or to the Company's knowledge,
DonTech is the subject of any currently ongoing audit or examination with
respect to a material amount of Taxes, nor, to the Company's knowledge, has any
such audit been threatened or proposed, by any taxing authority.

                  (q) ENVIRONMENTAL MATTERS. The Company, the Company
Subsidiaries and, to the Company's knowledge, DonTech (i) are in compliance with
all applicable statutes, rules, regulations, decisions or orders of any
Governmental Entity relating to the use, disposal or release of hazardous or
toxic substances or relating to the protection or restoration of the environment
or human exposure to hazardous or toxic substances (collectively, "ENVIRONMENTAL
LAWS"), (ii) have not generated, manufactured, treated, stored or disposed of
any hazardous substances on any owned or operated (or previously owned or
operated) real property, except in compliance with Environmental Laws, (iii) are
not liable for any off-site disposal or contamination pursuant to any
Environmental Laws, and (iv) are not subject to any pending claims relating to
any Environmental Laws, which in each of clauses (i) through (iv) individually
or in the aggregate, would constitute a Material Adverse Effect.

                  (r) INTELLECTUAL PROPERTY. The Company, the Company
Subsidiaries and, to the Company's knowledge, DonTech license, own or possess,
or can acquire on reasonable terms, all patents, patent rights, licenses,
inventions, copy-rights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names, Internet domain names,
designs, logos, slogans and general intangibles of like nature, together with
goodwill, and registrations and applications relating to any of the foregoing,
as applicable ("INTELLECTUAL PROPERTY"), currently employed by them in
connection with the respective business now operated by them, except where the
failure to own or possess or otherwise be able to acquire such Intellectual
Property, individually or in the aggregate, would not constitute a Material
Adverse Effect. The Intellectual Property owned or used by the Company, the
Company Subsidiaries and, to the Company's knowledge, DonTech has been duly
maintained, is valid and subsisting, in full force and effect, and has not been
cancelled, expired or abandoned, except where such cancellation, expiration or
abandonment would not constitute a Material Adverse Effect. None of the Company,
the Company Subsidiaries or, to the Company's knowledge, DonTech has received
any notice of


                                      -19-


infringement of or conflict with asserted rights of others with respect to any
of such Intellectual Property which, singly or in the aggregate, which, if
determined adversely to the Company, would constitute a Material Adverse Effect.

                  (s) DGCL SECTION 203 AND RIGHTS AGREEMENT. The Board of
Directors of the Company has taken all action necessary to exempt from the
provisions of Section 203 of the Delaware General Corporation Law ("SECTION
203") and from being deemed an "Acquiring Person" under the Rights Agreement, to
the extent applicable, this Agreement, any acquisition by the Purchasers or
their Affiliates of the Preferred Shares or the Warrants pursuant to this
Agreement, the Warrants and the Certificate of Designations and any conversion
or exercise by the Purchasers or their Affiliates of the Preferred Shares or the
Warrants into Common Stock. No agreement or instrument to which the Company or
the Company Subsidiaries is a party or by which any of them is bound, and no
state statute similar to Section 203 that is applicable to the Company or the
Company Subsidiaries imposes any restrictions on business combinations or
similar transactions with interested stockholders of a nature similar to those
set forth in Section 203. True and correct copies of the resolutions heretofore
adopted by the Company's Board of Directors to implement the foregoing actions
with respect to Section 203 and the Rights Agreement, have been delivered to the
Purchasers and such resolutions are in full force and effect and have not been
amended or modified.

                  (t) COMMITMENTS. (i) This Agreement, the Ancillary Documents,
the Other Transaction Documents, the agreements, documents and instruments set
forth on SCHEDULE 3.01(t) and other schedules to this Agreement and all
documents referenced in or attached as exhibits to the Reports constitute, as of
the date of this Agreement all of the material contracts or agreements (whether
written or oral), including any amendments thereto, (A) to which the Company,
any Company Subsidiaries or, to the Company's knowledge, DonTech is a party or
(B) by or to which the Company, any Company Subsidiaries or any of their
properties or, to the Company's knowledge, DonTech or its properties may be
bound or subject (individually a "COMMITMENT" and collectively, the
"COMMITMENTS"). SCHEDULE 3.01(t) sets forth a complete and correct list of
Commitments of the following type:

                  Commitments relating to any Litigation;

                  Commitments containing covenants of the Company or any Company
Subsidiaries or any successor thereto not compete, not to engage in any line of
business or conduct business in any geographical area or with any Person, or not
to disclose certain information; and

                  Commitments with any Affiliate.

                           (ii) Complete and correct copies (or, if oral, full
                  written descriptions) of all Commitments required to be listed
                  on SCHEDULE 3.01(t), including all amendments thereto, have
                  been made available to the Purchasers. All of the Commitments
                  are valid, binding, in full force and effect and enforceable
                  in accordance with their respective terms by the Company, a
                  Company Subsidiary or, to the Company's knowledge, DonTech (as
                  the case may be) against the respective counter parties to
                  such Commitments, except where the failure to be valid,
                  binding, enforceable or in full force and effect does not
                  constitute a Material


                                      -20-


                  Adverse Effect. Except as set forth on SCHEDULE 3.01(t), (a)
                  there is no breach, violation or default and no event that,
                  with or without notice or the passage of time or both, would
                  constitute a breach, violation or default, or give rise to any
                  Lien or right of termination, modification, cancellation,
                  prepayment, suspension, limitation, revocation or acceleration
                  under, any Commitment, (B) none of the Company, the Company
                  Subsidiaries or, to the Company's knowledge, DonTech or any
                  other party to any of the Commitments is in arrears in respect
                  of the performance or satisfaction of the terms and conditions
                  on its part to be performed or satisfied under any of such
                  Commitments, and (C) no waiver thereunder has been granted by
                  any of the Parties thereto except in each of clauses (A)-(C)
                  where any such failure does not, individually or in the
                  aggregate, constitute a Material Adverse Effect.

                  (u) ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in
the Reports or SCHEDULE 3.01(u) or the other Schedules to this Agreement, the
Company does not have any Liabilities other than (a) Liabilities reserved
against or otherwise disclosed in the Balance Sheet or the footnotes thereto,
(b) other Liabilities which were incurred after June 30, 2002 in the ordinary
course of business consistent (in amount and kind) with past practice (none of
which is a liability resulting from breach of contract, breach of warranty,
tort, infringement, claim or lawsuit) and which, individually or in the
aggregate, do not exceed $1,500,000 and (c) Liabilities incurred in connection
with this Agreement, the Ancillary Agreements and any Other Transaction
Document.

                  (v) DISCLOSURE. Neither this Agreement nor any other Ancillary
Document, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading.

                  (w) HOLDING COMPANY ACT AND INVESTMENT COMPANY ACT. Neither
the Company nor any of the Company Subsidiaries or, to the Company's knowledge,
DonTech is: (i) a "public utility company" or a "holding company," or an
"affiliate" or a "subsidiary company" of a "holding company," or an "affiliate"
of such a "subsidiary company," as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended, or (ii) a "public utility," as defined
in the Federal Power Act, as amended. None of the Company, any Company
Subsidiary or, to the Company's knowledge, DonTech is an "investment company" as
defined in the Investment Company Act of 1940, as amended or is controlled by or
under control with an Affiliate of, an "investment company."

                  (x) SOLVENCY. The Company is not, and after giving effect to
the issuance and sale of the Preferred Shares and the Warrants and the
application of the proceeds therefrom will not be, insolvent within the meaning
of Title 11 of the United States Code, the General Corporation Law of the State
of Delaware, or the General Laws of the State of New York.

                  (y) D&O INSURANCE. The Company maintains director and officer
liability insurance coverage in the aggregate amount of $100 million, which
policy has no per individual deductible.


                                      -21-


                  Section 3.02. REPRESENTATIONS AND WARRANTIES OF THE
PURCHASERS. Each Purchaser represents and warrants to, and agrees with, the
Company as follows:

                  (a) ORGANIZATION. Such Purchaser is a limited partnership duly
organized and validly existing under the laws of the state or country of its
jurisdiction of formation. Such Purchaser has the power and authority to execute
and deliver this Agreement and the Ancillary Documents to which it is a party
and perform its obligations hereunder and thereunder. The execution and delivery
of this Agreement and the Ancillary Documents to which it is a party and the
performance by such Purchaser of its covenants and agreements under this
Agreement and the Ancillary Documents to which it is a party have been duly and
validly authorized by the general partner of such Purchaser, and no further
proceedings on the part of such Purchaser are necessary to authorize the
execution, delivery and performance of this Agreement or the Ancillary Documents
to which it is a party or the consummation of the transactions contemplated
hereby and thereby. This Agreement and the Ancillary Documents to which such
Purchaser is a party have been duly executed and delivered by the Purchaser and
constitute the valid and binding agreements of such Purchaser, enforceable
against such Purchaser in accordance with their terms, except that (a) such
enforcement may be subject to any bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other laws, now or hereafter in effect,
relating to or limiting creditors' rights generally, and (b) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.

                  (b) AUTHORIZATION; NO CONFLICTS. Neither the execution and
delivery of this Agreement or the Ancillary Documents to which such Purchaser is
a party nor the consummation of the transactions contemplated by this Agreement
or the Ancillary Documents to which such Purchaser is a party will (i) conflict
with or result in any breach of any provision of the organization documents or
by-laws of such Purchaser, (ii) except for the applicable requirements of the
HSR Act, require any filing with, or the obtaining of any permit, authorization,
consent or approval of, any Governmental Entity, (iii) violate, conflict with or
result in a default (or any event which, with notice or lapse of time or both,
would constitute a default) or require any consent under, or give rise to any
right of termination, cancellation or acceleration under, any of the terms,
conditions or provisions of any note, mortgage, other evidence of indebtedness,
guarantee, license, agreement, lease or other contract, instrument or obligation
to which such Purchaser is a party or by which such Purchaser or any of its
assets may be bound, or (iv) violate any order, injunction, decree, statute,
rule or regulation applicable to such Purchaser, excluding from the foregoing
clauses (ii), (iii) and (iv) such requirements, violations, conflicts, defaults
or rights that would not adversely affect the ability of such Purchaser to
consummate the transactions contemplated by this Agreement.

                  (c) BROKERS AND FINDERS. Neither such Purchaser nor any of its
officers, directors, employees or agents has utilized any broker, finder,
placement agent or financial advisor or incurred any liability for any fees or
commissions in connection with any of the transactions contemplated hereby or by
the Ancillary Documents.

                  (d) Investment Representations.


                                      -22-


                           (i) Such Purchaser is an "accredited investor" within
                  the meaning of Rule 501 of Regulation D promulgated under the
                  Securities Act and was not organized for the specific purpose
                  of acquiring the Preferred Shares or the Warrants;

                           (ii) such Purchaser has sufficient knowledge,
                  sophistication and experience in financial and business
                  matters as are necessary to evaluate the risks and merits of
                  an investment in the Company;

                           (iii) such Purchaser has had an opportunity to
                  discuss the Company's business, management and financial
                  affairs with the Company's management;

                           (iv) the Preferred Shares and the Warrants being
                  acquired by such Purchaser are being acquired for its own
                  account for the purpose of investment and not with a view to
                  or for sale in connection with any distribution thereof; and

                           (v) such Purchaser understands that (A) none of the
                  Preferred Shares, the shares of Common Stock issuable upon
                  conversion or redemption thereof, the Warrants or the shares
                  of Common Stock issuable upon the exercise thereof have been
                  registered under the Securities Act and are being offered and
                  sold in reliance upon federal and state exemptions for
                  transactions not involving any public offering, (B) the
                  Preferred Shares, the shares of Common Stock issuable upon
                  conversion or redemption thereof, the Warrants and the shares
                  of Common Stock issuable upon the exercise thereof must be
                  held indefinitely unless a subsequent disposition thereof is
                  registered under the Securities Act or is exempt from such
                  registration, (C) the Preferred Shares, the shares of Common
                  Stock issuable upon conversion or redemption thereof, the
                  Warrants and the shares of Common Stock issuable upon the
                  exercise thereof will bear a legend to such effect, as
                  applicable, and (D) the Company will make a notation on its
                  transfer books to such effect.

                      ARTICLE IV. COVENANTS OF THE PARTIES

                  Section 4.01. TAKING OF NECESSARY ACTION. Each of the parties
hereto shall use its reasonable best efforts promptly to take or cause to be
taken all action and promptly to do or cause to be done all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement. Without limiting the
foregoing, the Company and each Purchaser will, and the Company shall cause each
Company Subsidiary to, use its reasonable best efforts to make all filings
(including, without limitation, under the HSR Act) and obtain all consents of
Governmental Entities which may be necessary or, in the reasonable opinion of
the Purchasers or the Company, as the case may be, advisable for the
consummation of the transactions contemplated by this Agreement and the
Ancillary Documents and with respect to the Company and the Company
Subsidiaries, any Other Transaction Document and all third party consents and
filings set forth in SCHEDULE 4.01.

                  Section 4.02. CONDUCT OF BUSINESS. (a) Except as otherwise
required to perform its obligations under this Agreement or any agreement
contemplated herein, as set forth in SCHEDULE 4.02, or as otherwise agreed to in
writing by the Purchasers, from the date hereof to the


                                      -23-


Closing Date, the Company shall, and shall cause each Company Subsidiary to (i)
conduct its business only in the ordinary course and consistent with past
practice; (ii) use its reasonable best efforts to preserve and maintain its
assets and properties and its relationships with its customers, suppliers,
clients, advertisers, distributors, agents, officers and employees and other
Persons with which it has significant business dealings; (iii) use its
reasonable best efforts to maintain all of the material assets it owns or uses
in the ordinary course of business consistent with past practice; (iv) use its
reasonable best efforts to preserve the goodwill and ongoing operations of its
business; (v) maintain its books and records in the usual, regular and ordinary
manner, on a basis consistent with past practice; (vi) perform and comply in all
material respects with its Commitments; (vii) maintain insurance in full force
and effect with respect to its business with responsible companies, comparable
in amount, scope and coverage to that in effect on the date of this Agreement;
and (viii) comply in all material respects with applicable laws.

                  (b) Except as expressly contemplated by this Agreement or as
set forth on SCHEDULE 4.02, between the date hereof and the Closing Date, the
Company shall not, and shall cause each Company Subsidiary not to, do any of the
following without the prior written consent of the Purchasers:

                      (i) amend or in any way alter its Certificate of
                  Incorporation or By-laws;

                      (ii) engage in any other act, other than in the ordinary
                  course of business and consistent with past practice, that
                  would constitute a Material Adverse Effect or in any way delay
                  or impair consummation of the transactions contemplated by
                  this Agreement, the Ancillary Documents or any Other
                  Transaction Agreement;

                      (iii) change the number of shares of the authorized or
                  issued capital stock of the Company, issue or grant any
                  option, warrant, call, commitment, subscription, right to
                  purchase or agreement of any character relating to the
                  authorized or issued capital stock of the Company or any
                  Company Subsidiary, or any securities convertible into shares
                  of such stock (except for grants of options to purchase Common
                  Stock granted pursuant to employee benefit plans of the
                  Company not to exceed the amount set forth in SCHEDULE 4.02
                  and, other than the issuance of equity securities in
                  connection with the Senior Credit Facility, the Senior
                  Subordinated Credit Facility and/or the Senior Subordinated
                  Notes for which an adjustment is made pursuant to SECTION
                  2.04), split, combine or reclassify any shares of the capital
                  stock of the Company, declare, set aside or pay any dividend
                  or other distribution (whether in cash, stock or property or
                  any combination thereof) in respect of the capital stock of
                  the Company, or redeem or otherwise acquire any shares of such
                  capital stock, other than open market purchases of Common
                  Stock not in excess of the lesser of $25 million or 25% of the
                  Company's Net Income for the immediately preceding twelve
                  months in any given twelve month period;


                                      -24-


                      (iv) issue any equity securities other than the issuance
                  of equity securities in connection with the Senior Credit
                  Facility or the Senior Subordinated Credit Facility for which
                  an adjustment is made pursuant to SECTION 2.04.;

                      (v) enter into any transaction or incur any liability or
                  obligation, except in the ordinary course of business;

                      (vi) sell, transfer or otherwise dispose of any assets,
                  except in the ordinary course of business;

                      (vii) incur any Lien (other than a Permitted Lien) or
                  indebtedness other than (A) indebtedness to trade creditors
                  incurred in the ordinary course of business or (B) pursuant to
                  the Senior Credit Facility or the Senior Subordinated Credit
                  Facility, or vary the terms of any existing Lien or
                  indebtedness;

                      (viii) change its independent accountants, accounting
                  policies or procedures;

                      (ix) acquire any assets other than in the ordinary and
                  usual course of business;

                      (x) enter into an Employee Agreement with any Employee
                  (other than an agreement terminable at will without any
                  financial penalty), vary the terms of any Company Plan in any
                  material way or grant any material increase in the
                  compensation (including employee benefits) of any Employee,
                  except for increases or variances (A) in the ordinary course
                  of business and consistent with past practice, (B) as a result
                  of collective bargaining, or (C) as required by any employment
                  or other agreement, policy or plan currently in effect;

                      (xi) do any other act which is reasonably likely to cause
                  any representation or warranty in this Agreement to be or
                  become untrue in any material respect;

                      (xii) transfer, grant, amend or knowingly terminate any of
                  its rights under any of the Company's Intellectual Property
                  other than in the ordinary course of business consistent with
                  past practices;

                      (xiii) enter into any transactions or agreements of any
                  kind with any of its Affiliates, other than with any Company
                  Subsidiary or between any Company Subsidiaries, including the
                  making of any loans, advances or investments to or in such
                  entity, except for transactions or agreements on terms at
                  least as favorable to the Company entering into such
                  transactions or agreements as the terms which would be
                  available with independent third parties at arm's length;

                      (xiv) make any change in the Company's or any Company
                  Subsidiary's Tax accounting methods, any new election with
                  respect to Taxes or any


                                      -25-


                  modification or revocation of any existing election with
                  respect to Taxes or settle or otherwise dispose of any Tax
                  audit, dispute, or other Tax proceeding; or

                      (xv) agree to take any of the actions restricted by this
                  SECTION 4.02.

                  Section 4.03. FINANCIAL STATEMENTS AND OTHER REPORTS. Subject
to SECTION 4.06, the Company covenants that, from and after the Closing Date, it
will deliver to each Purchaser:

                  (a) as soon as practicable and in any event no later than the
day that a Form 10-Q is required to be filed by the Company with the SEC
following each quarterly period (other than the last quarterly period) in each
fiscal year, consolidated statements of operations, statements of stockholders'
equity and cash flows of the Company for the period from the beginning of the
then current fiscal year to the end of such quarterly period, and a consolidated
balance sheet of the Company as of the end of such quarterly period setting
forth in each case in comparative form figures for the corresponding period or
date in the preceding fiscal year, together with a certificate from a senior
officer of the Company to the effect that such financial statements have been
prepared in accordance with GAAP consistently applied during the periods
involved (subject to year-end adjustments) and that such financial statements
fairly present the results of operations and changes in financial position,
stockholders' equity, cash flows and financial position of the Company and the
Company Subsidiaries as of and for the period then ended (such certificate, the
"SENIOR OFFICER'S CERTIFICATE"); provided, however, that delivery pursuant to
SECTION 4.03(c) of a copy of the Company's periodic report on Form 10-Q or such
period filed with the SEC shall be deemed to satisfy the requirements of this
SECTION 4.03(a);

                  (b) as soon as practicable and in any event no later than the
day that a Form 10-K is required to be filed by the Company with the SEC
following the end of each fiscal year, a consolidated balance sheet of the
Company as of the end of such fiscal year and the related consolidated
statements of operations, statements of stockholders' equity and cash flows for
such fiscal year, setting forth in each case in comparative form the
corresponding figures from the preceding fiscal year, together with the audit
report of PricewaterhouseCoopers LLP or other independent public accountants of
recognized standing selected by the Company; provided, however, that delivery
pursuant to SECTION 4.03(c) below of a copy of the Annual Report on Form 10-K of
the Company for such fiscal year filed with the SEC shall be deemed to satisfy
the requirements of this SECTION 4.03(b); and

                  (c) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as it shall send to
its stockholders and copies of all such registration statements, other than
registration statements relating to employee benefit or dividend reinvestment
plans, and all such regular and periodic reports on Forms 10-K, 10-Q and 8-K (or
similar or substitute forms) as it shall file with the SEC.

                  Section 4.04. RESTRICTED ACTIONS. Subject to SECTION 4.06,
from and after the Closing Date, the Company shall not, and shall not permit any
Company Subsidiary to, directly or indirectly, take any of the following actions
without the prior written consent of at least a majority of the then-outstanding
Preferred Shares or the affirmative vote in person or by proxy at a meeting
called for that purpose of the holders of at least a majority of the Preferred
Shares voting thereat:



                                      -26-


                  (a) sell, lease, transfer or otherwise dispose of any asset or
assets of the Company or Company Subsidiaries, including the capital stock of
any Company Subsidiary, other than a disposition of all or substantially all of
the Company's assets in a transaction governed by Section 271 of the Delaware
General Corporation Law, unless (i) the aggregate net proceeds received in
connection with all of such transactions in any given twelve-month period
(whether paid in cash or property) does not exceed $115 million, or (ii) such
transaction is between the Company or its wholly owned Company Subsidiary, on
the one hand, and any other wholly owned Company Subsidiary, on the other hand;

                  (b) enter into or suffer to exist any contract, agreement,
arrangement or transaction with any Affiliate (other than DonTech, any Company
Subsidiary, and any company that is acquired pursuant to the Other Transaction
Documents), officer, director or stockholder holding greater than 5% of the
Company's outstanding Common Stock (an "AFFILIATE TRANSACTION"), unless such
Affiliate Transaction (i) is determined by a majority of the Board of Directors
to be fair and reasonable to the Company, and no less favorable to the Company
than could have been obtained in an arm's length transaction with a third party,
and (ii) is approved by a majority of the members of the Board of Directors that
are disinterested in such transaction;

                  (c) materially alter its principal line of business as
conducted on the Closing Date;

                  (d) incur, create, guarantee, become or be liable in any
manner with respect to or permit to exist (other than pursuant to the Other
Transaction Documents) any Indebtedness (as such term will be defined by the
parties prior to the Closing Date) if the Leverage Ratio (as such term will be
defined by the parties prior to the Closing Date), as at such time, is greater
than 5.0 to 1.0; provided, however, that nothing in this SECTION 4.04(d) shall
prohibit the Company from incurring up to $25 million of Indebtedness in any
given twelve-month period;

                  (e) acquire (by merging or consolidating with, or by
purchasing an equity interest in or a portion of the assets of, or by any other
manner) any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire or agree to
acquire any assets in excess of $100 million in any given twelve-month period,
other than inventory and other assets to be sold or used in the ordinary course
of business;

                  (f) amend the Certificate of Incorporation of the Company to
authorize the creation or issuance, or the increase in the authorized amount, of
the Preferred Stock, any Parity Securities (as defined in the Certificate of
Designations) or Senior Securities (as defined in the Certificate of
Designations), or to authorize the creation or issuance of securities
convertible into or exchangeable for, or options, warrants or other rights to
acquire, the Preferred Stock, any Parity Securities or Senior Securities;

                  (g) reclassify any series of Junior Securities (as defined in
the Certificate of Designations) as Senior Securities or Parity Securities;

                  (h) amend, repeal or change (whether by merger, consolidation
or otherwise) any of the provisions of the Certificate of Incorporation or
By-laws of the Company or the provisions of the Certificate of Designations or
the Warrants in any manner that would alter or


                                      -27-


change the powers, preferences or rights of the shares of the Preferred Stock or
the Warrants, as the case may be, so as to affect them adversely, or otherwise
restrict the rights, preferences or privileges of the Preferred Stock or the
Warrants;

                  (i) pay or declare any dividend or distribution on any shares
of its capital stock (other than dividends on the Common Stock payable in
additional shares of Common Stock) or apply any of its assets to the redemption,
retirement, purchase or acquisition, directly or indirectly, through Company
Subsidiaries or otherwise, of any shares of its capital stock (other than (A)
redemptions, retirements, purchases or acquisitions of the Preferred Stock in
accordance with the terms of the Certificate of Designations, and (B) (x) the
repurchase of shares of Common Stock from employees or former employees of the
Company who acquired such shares directly from the Company and which repurchases
are approved by a majority of the board of directors and (y) open market
purchases, which, in the case of both (x) and (y) taken together are not in
excess of the lesser of $25 million or 25% of the Company's Net Income for the
immediately preceding twelve months in any given twelve-month period);

                  (j) sell, offer for sale or solicit offers to buy any security
(as defined in the Securities Act) that would be integrated with the sale of the
Preferred Shares and the Warrants in a manner that would require the
registration under the Securities Act of the sale of the Preferred Shares and
the Warrants to the Purchasers or any Affiliate of the Purchasers;

                  (k) prior to the 18-month anniversary of the Closing Date,
issue any equity securities (or securities exchangeable for or convertible into
equity securities, or any options, warrants, rights to subscribe to, scrip
calls, contracts, undertakings, arrangements or commitments to issue which may
result in the issuance of equity securities of the Company) other than a
Permitted Issuance (as defined in the Certificate of Designations);

                  (l) increase the number of directors comprising the board of
directors to more than ten directors; or

                  (m) amend, modify or supplement any provision of the Rights
Agreement in a manner that adversely affects the rights and benefits of any
Purchaser under any such provision.

                  Section 4.05. REQUIRED ACTIONS. Subject to SECTION 4.06, from
and after the Closing Date, the Company shall and, where applicable, shall cause
each Company Subsidiary to:

                  (a) use its reasonable best efforts to maintain at all times a
valid listing for the Common Stock on the NYSE or another national securities
exchange;

                  (b) maintain and keep its properties in good repair, working
order and condition, and from time to time make all necessary or desirable
repairs, renewals and replacements;

                  (c) maintain or cause to be maintained with financially sound
and reputable insurers that have a rating of "A" or better as established by
Best's Rating Guide (or an equivalent rating with such other publication of a
similar nature as shall be in current use), (i) public liability and property
damage insurance with respect to their respective businesses and


                                      -28-


properties against loss or damage of the kinds and in amounts customarily
carried or maintained by companies of established reputation engaged in similar
businesses and (ii) directors' and officers' liability insurance providing at
least the same coverage and amounts and containing terms and conditions which
are not less advantageous in any material respect, in each case than the
directors' and officers' liability insurance maintained by the Company as of the
Closing Date;

                  (d) pay and discharge when due all Tax liabilities,
assessments and governmental charges or levies imposed upon its properties or
upon the income or profits therefrom (in each case before the same become
delinquent and before penalties accrue thereon), unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP, consistently applied, are being maintained by the Company;

                  (e) at all times cause to be done all things necessary to
maintain, preserve and renew all Permits required for the conduct of its
respective business;

                  (f) comply with all applicable laws, rules and regulations of
all Governmental Entities, the violation of which would constitute a Material
Adverse Effect;

                  (g) maintain proper books of record and account which present
fairly in all respects its financial condition and results of operations and
make provisions on its financial statements for all such proper reserves as in
each case are required in accordance with GAAP, consistently applied;

                  (h) reserve and keep available out of its authorized shares of
Common Stock, solely for the purposes of issuance upon conversion of the
Preferred Shares and exercise of the Warrants, such number of shares of Common
Stock as are issuable upon the conversion of all outstanding Preferred Shares
and exercise of all Warrants as such number may change from time to time; and

                  (i) use its reasonable best efforts to at all times file all
reports (including annual reports, quarterly reports and the information,
documentation and other reports) required to be filed by the Company under the
Securities Act and the Exchange Act and the rules and regulations promulgated
thereunder, and the Company shall use its reasonable best efforts to file each
of such reports on a timely basis, all to the extent required to enable such
holders to sell securities pursuant to Rule 144 promulgated under the Securities
Act (as such rule may be amended from time to time) or any similar rule or
regulation hereafter adopted by the SEC and to enable the Company to register
securities with the SEC on Form S-3 or any similar short-form registration
statement.

                  Section 4.06. TERMINATION OF OBLIGATIONS. The obligations of
the Company set forth in SECTION 4.03, SECTION 4.04 and SECTION 4.05 (other than
the obligations set forth in SECTION 4.04(h) and SECTION 4.05(h)) shall
terminate and no longer be of any effect from and after such time as the
Purchasers no longer have the right pursuant to the Certificate of Designations
to elect a Director of the Company.

                  Section 4.07. INSPECTION OF PROPERTY. Until the Closing Date
or the earlier termination of this Agreement, the Company will permit
representatives of the Purchasers to visit


                                      -29-


and inspect any of the properties of the Company or any of the Company
Subsidiaries, to examine the corporate books, records, agreements and files of
the Company and make copies or extracts therefrom and to request information at
reasonable times and intervals concerning the general status of the Company's
financial condition and operations, all upon reasonable notice and at such
reasonable times and as often as such Purchaser may reasonably request. The
Purchasers will, and will instruct each of their respective Affiliates,
associates, partners, employees, agents and advisors to, hold in confidence all
such information as is confidential or proprietary, will use such information
only in connection with the purchase of the Preferred Shares and the Warrants in
accordance with this Agreement and, if this Agreement is terminated in
accordance with its terms, will deliver promptly to the Company all copies of
such information (and any copies, compilations or extracts thereof or based
thereon) then in their possession or under their control.

                  Section 4.08. LOST, STOLEN, DESTROYED OR MUTILATED SECURITIES.
Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of any certificate for any security of the Company
and, in the case of loss, theft or destruction, upon delivery of an undertaking
by the holder thereof to indemnify the Company (and, if requested by the
Company, the delivery of an indemnity bond sufficient in the judgment of the
Company to protect the Company from any loss it may suffer if a certificate is
replaced), or, in the case of mutilation, upon surrender and cancellation
thereof, the Company will issue a new certificate for an equivalent number of
shares or warrants.

                  Section 4.09. LISTING. The Company shall promptly secure the
listing of all of the Registrable Shares (as defined in the Registration Rights
Agreement), other than any shares of the Preferred Stock and the Warrants, upon
each national securities exchange and automated quotation system (as applicable,
the "PRINCIPAL MARKET"), if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing of all
Registrable Shares from time to time issuable under the terms of the Certificate
of Designations. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this SECTION 4.09.

                  Section 4.10. RESTRICTIONS ON SALE OR TRANSFER; LEGEND. No
Purchaser will, directly or indirectly, offer, sell, transfer, assign, pledge,
hypothecate or otherwise dispose of the beneficial ownership of (any such act, a
"TRANSFER") any Preferred Shares or Warrants prior to the first anniversary of
the Closing Date, except for, and subject in each case to compliance with all
applicable requirements of law and the receipt of any necessary governmental
approvals, (i) a Transfer by any Purchaser to an Affiliate of such Purchaser or
a Designated Transferee, provided that prior to such Transfer each such
transferee consents in writing with the Company to be bound by the restrictions
on transfer set forth in this SECTION 4.10 and assumes all other rights and
obligations of the Purchasers under this Agreement and the Registration Rights
Agreement; (ii) a Transfer to the Company or to a wholly owned direct or
indirect subsidiary of the Company; (iii) a Transfer pursuant to a merger or
consolidation in which the Company is a constituent corporation; (iv) a Transfer
pursuant to a bona fide third party tender offer or exchange offer; (v)
redemptions and conversions of the Preferred Shares in accordance with the terms
of the Certificate of Designations; and (vi) exercise of the Warrants in
accordance with their terms. From and after the first anniversary of the Closing
Date none of the foregoing restrictions on


                                      -30-


Transfer shall apply, so long as such Transfer is made in compliance with all
applicable requirements of law and any necessary governmental approvals have
been obtained.

                  (b) The Purchasers acknowledge and agree that as of the date
hereof none of the Preferred Shares, the shares of Common Stock issuable upon
conversion thereof, the Warrants or the shares of Common Stock issuable upon the
exercise thereof have been nor will be registered under the Securities Act or
the securities laws of any state and that they may be sold or otherwise disposed
of only in one or more transactions registered under the Securities Act and,
where applicable, such laws or as to which an exemption from the registration
requirements of the Securities Act and, where applicable, such laws, is
available. The Purchasers acknowledge that, except as provided in the
Registration Rights Agreement, the Purchasers have no right to require the
Company to register the Preferred Shares, the shares of Common Stock issuable
upon conversion thereof, the Warrants or the shares of Common Stock issuable
upon exercise thereof. The Purchasers further acknowledge and agree that each
certificate for the Preferred Shares and the Warrants shall bear the following
legend:

                  THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933, AND MAY NOT BE
                  TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE SUCH A
                  REGISTRATION IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE
                  SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
                  UNDER SUCH ACT OR SUCH LAWS. THIS CERTIFICATE IS ISSUED
                  PURSUANT TO AND SUBJECT TO THE RESTRICTIONS ON TRANSFER AND
                  OTHER PROVISIONS OF A PREFERRED STOCK AND WARRANT PURCHASE
                  AGREEMENT DATED AS OF SEPTEMBER 21, 2002 BETWEEN THE COMPANY
                  AND THE PURCHASERS REFERRED TO THEREIN, A COPY OF WHICH IS ON
                  FILE WITH THE COMPANY. EXCEPT AS PROVIDED IN SUCH PREFERRED
                  STOCK AND WARRANT PURCHASE AGREEMENT, THE SECURITIES
                  REPRESENTED BY THIS CERTIFICATE ARE NOT TRANSFERABLE AND ANY
                  PURPORTED TRANSFER IN VIOLATION OF THE PROVISIONS OF SUCH
                  PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT SHALL BE VOID
                  AND OF NO FORCE AND EFFECT.

                  (c) Any holder of the Preferred Shares or the Warrants may
request the Company to remove the legend described herein from the certificates
evidencing such Preferred Shares or Warrants by submitting to the Company such
certificates, together with an opinion of counsel reasonably satisfactory to the
Company to the effect that such legend is no longer required under the
Securities Act or this Agreement.

                  Section 4.11. NOTICE OF BREACH. From the date hereof through
the Closing Date, as promptly as practicable, and in any event not later than
five business days after the Company becomes aware thereof, the Company shall
provide the Purchasers with written notice of (a) any representation or warranty
of the Company contained in this Agreement, the Ancillary Documents or any Other
Transaction Document being untrue or inaccurate in any material respect at any
time from the date hereof to the Closing Date, or (b) any failure of the Company
to comply with or satisfy in any material respect any covenant, condition or
agreement to be


                                      -31-


complied with or satisfied by the Company under this Agreement, the Ancillary
Documents or any Other Transaction Document; provided, however, that the
delivery of any notice pursuant to this SECTION 4.11 shall not limit or
otherwise affect the remedies available to the Purchasers, or modify in any way
any disclosure made in this Agreement, the Ancillary Documents or any Other
Transaction Document or the schedules hereto or thereto as of the date hereof.

                  Section 4.12. NON-DISCLOSURE; INTERIM PUBLIC FILINGS. Subject
to SECTION 8.05, the Company shall deliver to the Purchasers complete and
correct copies of all press releases and public filings made between the date
hereof and the Closing Date. The Company shall not disclose the name or identity
of any of the Purchasers as a Purchaser without the prior written consent of
such Purchaser, except in connection with the Company's filing of a Form 8-K
under the Exchange Act, as a result of this Agreement, the Ancillary Documents
or any Other Transaction Document or the transactions contemplated hereby and
thereby, or other similarly required Exchange Act reports or is required by
applicable law or the rules or regulations of any exchange on which securities
of the Company are listed or traded, in which case prior to making such
disclosure the Company shall give written notice to such Purchaser, describing
in reasonable detail the proposed content of such disclosure, shall permit such
Purchaser to review and comment upon the form and substance of such disclosure
and shall take such comments into account (but shall not be required to accept
such comments) in making such disclosure.

                  Section 4.13. GOVERNANCE RIGHTS. (a) (i) The Purchasers shall
be entitled to elect directors as set forth in the Certificate of Designations.
(ii) In addition, if the Purchasers convert Preferred Stock following delivery
by the Company of a notice of redemption in accordance with the provisions of
Section 5(a) of the Certificate of Designations, such conversion shall not
affect their rights to designate directors and in such case, the Purchasers
shall continue to be entitled to designate directors as and to the extent they
would have had such rights had the Purchasers not converted any Preferred Stock
beneficially owned by them, namely that at such time, (x) as the outstanding
shares of Common Stock then owned by the Purchasers, their respective Affiliates
or any Designated Transferees constitutes less than 50% of the number of shares
of Common Stock beneficially owned by them immediately after the Closing Date
(as such number may be adjusted for stock dividends, stock splits, combinations
and recapitalizations and other similar events), the number of directors the
Purchasers are then entitled to designate and elect under this SECTION
4.13(a)(ii) shall be reduced by one; and (y) as the outstanding shares of Common
Stock then owned by the Purchasers, their respective Affiliates or any
Designated Transferees constitutes less than 15% of the number of shares of
Common Stock beneficially owned by them immediately after the Closing Date (as
such number may be adjusted for stock dividends, stock splits, combinations and
recapitalizations and other similar events), the Purchasers shall not be
entitled to designate or elect any directors under this SECTION 4.13(a)(ii). No
conversion of Preferred Stock shall result in any Purchaser Designee being
required to resign or be removed from the board of directors prior to the
expiration of his then applicable term. To the extent Purchaser Designees are to
be members of any class of directors, the identity of such class shall be as
reasonably requested by the Purchasers. (iii) For so long as GSCP 2000 and its
Affiliates collectively beneficially own a number of shares of Common Stock
(which beneficial ownership shall assume immediate convertibility of all shares
of Preferred Stock then owned) that is not less than 7.5% of the number of
shares of Common Stock beneficially owned (which beneficial ownership shall
assume immediate convertibility of all shares of Preferred Stock then owned) by



                                      -32-


them immediately after the Closing (as such number may be adjusted for stock
dividends, stock splits, combinations and recapitalizations and other similar
events), GSCP 2000 shall have the right to designate, at all times and from time
to time, one non-voting observer to the board of directors.

                  (b) At any time the Purchasers shall be entitled to designate
a Purchaser Designee (or a replacement therefor), the Company shall exercise all
authority under applicable law to cause any slate of directors presented to
stockholders for election of directors to the board of directors to contain such
Purchaser Designee(s) and use its reasonable best efforts to have such Purchaser
Designee(s) elected to the board of directors.

                  (c) Prior to the Closing, each of the Company and the board of
directors shall take such action as may be necessary (including seeking any
necessary vote or approval of any stockholder of the Company, taking any action
necessary to expand the size of the board of directors, or causing any existing
director to resign in order to make room for the Purchaser Designees) to cause
the Purchaser Designees to be elected to the board of directors.

                  (d) Purchasers and the Company agree that one Purchaser
Designee shall have the right, subject to compliance with applicable NYSE and
SEC rules and regulations, to sit on each Committee of the board of directors.

                  (e) If requested by a majority of the Purchasers, the Company
will use its best efforts (in accordance with the certificate of incorporation
and by-laws of the Company and the DGCL) to cause the removal of any Purchaser
Designee (in accordance with the certificate of incorporation and by-laws of the
Company and the DGCL). If any vacancy among the Purchaser Designees caused by
removal or by the death, retirement or resignation of any Purchaser Designee
exists, the Purchasers shall have the right to designate a replacement director
for such Purchaser Designee and the Company shall exercise all authority under
applicable law to cause such replacement director to be duly elected as a
director of the Company. In the event that the term of any director who at such
time is a Purchaser Designee is to expire, then in connection with any meeting
of the Company's stockholders at which a successor to such director is to be
elected, the Company shall nominate a Purchaser Designee designated by the
Purchasers and shall recommend that stockholders vote in favor of such
individual's election to the board of directors in any proxy statement,
information statement or other communication to stockholders issued or
disseminated by the Company. In the event of any vacancy among the Purchaser
Designees, the board of directors shall not take any action not approved by the
remaining Purchaser Designee (or by the Purchasers if there be no remaining
Purchaser Designee) during the period from the time the Purchasers inform the
Company of a designee to fill any such vacancy to the time such designee is duly
appointed or elected to the board of directors. Whenever the number of directors
that the Purchasers have the right to designate is reduced in accordance with
the Certificate of Designations, the Purchaser will cause the appropriate number
of Purchaser Designee(s) to promptly tender their resignation(s) from the board
of directors.

                  (f) At any time GSCP 2000 shall be entitled to designate a
non-voting observer to the board of directors, the Company shall permit any such
non-voting observer to attend each meeting of the board of directors of the
Company and each meeting of any committee thereof and to participate in all
discussions during each such meeting; provided, however, that the


                                      -33-


Company reserves the right to exclude such non-voting observers from access to
any material or meeting or portion thereof if the Company believes that such
exclusion is reasonably necessary to preserve the attorney-client privilege or
to protect confidential proprietary information. The Company shall send to the
non-voting observers the notice of the time and place of such meeting in the
same manner and at the same time as it shall send such notice to its directors
or committee members, as the case may be. The Company shall also provide to the
non-voting observers copies of all notices, reports, minutes and consents at the
time and in the manner as they are provided to the board of directors or
committee, except for information reasonably designated as proprietary
information reasonably designated as proprietary information by the board of
directors. At any time GSCP 2000 shall be entitled to designate a non-voting
member to the board of directors, GSCP 2000 shall also be entitled to consult
with and advise management of the Company on significant business issues,
including management's proposed annual operating plans, and management will meet
with representatives of GSCP 2000 at the Company's facilities at mutually
agreeable times for such consultation and advice, including to review progress
in achieving said plans. Upon notice given by GSCP 2000 to the Company, the
Company shall commence to give GSCP 2000 reasonable advance written notice of
any significant new initiatives or material changes to existing operating plans
and shall afford GSCP 2000 adequate time to meet with management to consult on
such initiatives or changes prior to implementation.

                  (g) Notwithstanding SECTION 4.13(f), for so long as any
Purchaser holds any Preferred Shares, the Company shall provide to the
Purchasers copies of all notices, reports, minutes and consents at the time and
in the manner as they are provided to the board of directors or committee,
except for information reasonably designated as proprietary information by the
board of directors.

                  (h) The rights set forth in this SECTION 4.13 are intended to
satisfy the requirement of contractual management rights for purposes of
qualifying GSCP 2000's interests in the Company as venture capital investments
for purposes of the Department of Labor's "plan assets" regulations, and in the
event such rights are not satisfactory for such purposes, GSCP 2000, the Company
and the Purchasers shall reasonably cooperate in good faith to agree upon
mutually satisfactory management rights which satisfy such regulations.

                  Section 4.14. OTHER TRANSACTION DOCUMENTS. The Company shall
keep Purchasers fully informed of, provide Purchasers will copies of all drafts
of, and discuss with the Purchasers on a timely basis, each of the Other
Transaction Documents and shall not, without the prior written consent of each
Purchaser, (i) execute any of the Other Transaction Documents to be executed
after the date hereof or (ii) amend, waive, supplement or modify any provisions
of any of the Other Transaction Documents executed on or prior to the date
hereof.

                  Section 4.15. TRANSFER TAXES. The Company shall be responsible
for any Liability with respect to any transfer, stamp or similar non-income
Taxes that may be payable in connection with the execution, delivery and
performance of this Agreement including, without limitation, any such Taxes with
respect to the issuance of the Preferred Shares or shares of Common Stock
issuable upon conversion thereof.

                  Section 4.16. DIVIDENDS. The Company agrees that, after the
tenth anniversary of the Closing Date, it shall pay cash dividends on the
Preferred Stock on a current basis so long as


                                      -34-


it is not precluded from doing so under law. In furtherance thereof, the Company
shall refrain from entering into any agreements which would preclude such
payments, seek a waiver under any agreements which would prevent such payments
at any time and take whatever actions are necessary, including revaluing assets,
to create surplus for the purpose of paying such dividends.

                  Section 4.17. CERTAIN INFORMATION RIGHTS. Between the date
hereof and the Closing Date, the Company shall inform the Purchasers promptly of
any inquiries, discussions, offers or proposals for, or negotiations looking
toward, any purchase or other acquisition of any of the capital stock of or
equity interests in (whether newly issued or currently outstanding) the Company
or any of the Company Subsidiaries; and the Company shall provide promptly to
the Purchasers copies of any written documents prepared by or received by the
Company or its advisors in connection therewith.

                             ARTICLE V. CONDITIONS

                  Section 5.01. CONDITIONS OF PURCHASE. The obligations of each
Purchaser to purchase the Preferred Shares and the Warrants at the Closing are
subject to satisfaction or waiver of each of the following conditions on or
prior to the Closing Date:

                  (a) REPRESENTATIONS AND WARRANTIES; COVENANTS. The
representations and warranties of the Company contained in this Agreement and
the Ancillary Documents shall be true and correct in all material respects
(disregarding for these purposes any materiality, Material Adverse Effect or
corollary qualifications contained therein) on and as of the date of this
Agreement or the date of such Ancillary Documents, as the case may be, and on
and as of the Closing Date with the same effect as though made on and as of such
date, and the Company shall have performed all obligations and complied with all
agreements, undertakings, covenants and conditions required hereunder and
thereunder to be performed by it at or prior to the Closing.

                  (b) NO INJUNCTION. There shall not be in effect any statute,
rule, order, decree or injunction of a court or agency of competent jurisdiction
which enjoins or prohibits consummation of the transactions contemplated hereby.

                  (c) REGULATORY APPROVALS. All permits, consents,
authorizations, orders and approvals of, and filings and registrations required
under any federal or state law, rule or regulation for or in connection with the
execution and delivery of this Agreement and the Ancillary Documents and the
consummation by the parties hereto of the transactions contemplated on such
parties' part hereby and thereby shall have been obtained or made and all
statutory waiting periods thereunder in respect thereof shall have expired,
including without limitation, any waiting periods under the HSR Act.

                  (d) COMPANY CERTIFICATE. The Company shall have delivered to
the Purchasers a certificate, dated the Closing Date, signed by its chief
executive officer and its chief financial officer, in form and substance
reasonably satisfactory to the Purchasers to the effect that the conditions set
forth in this SECTION 5.01 have been satisfied (the "COMPANY CERTIFICATE").

                  (e) REGISTRATION RIGHTS AGREEMENT. The Registration Rights
Agreement shall have been executed and delivered by the parties thereto and
shall be in full force and effect.


                                      -35-


                  (f) CERTIFICATE OF DESIGNATIONS. The Certificate of
Designations shall have been duly filed with the Secretary of State of Delaware
and shall have become effective and shall be in full force and effect.

                  (g) CERTAIN TRANSACTION DOCUMENTS. (A) the Other Transaction
Documents executed prior to or simultaneously with this Agreement shall not have
been amended, modified, supplemented, or provisions thereof waived, in violation
of SECTION 4.14, (b) the Other Transaction Documents a form of which is attached
to an Other Transaction Document executed prior to or simultaneously with this
Agreement shall, at the time of execution thereof, be in all material respects
in the form as so attached (and the documentation pursuant to which the Special
Purpose Vehicle Term Sheet (as defined in the Sprint Purchase Agreement) shall
give effect in all material respects to the terms set forth in such Term Sheet
and be otherwise reasonably satisfactory to the Purchasers), and (C) the
Purchasers shall be satisfied in their sole discretion with the form and
substance of any other of the Other Transaction Documents to be prepared after
the execution of this Agreement.

                  (h) OTHER TRANSACTIONS. The transactions contemplated by the
Other Transaction Documents that by their terms are to be completed prior to or
concurrently with the Closing (which shall include, without limitation, the
Sprint Transaction) shall have been completed immediately prior to or
concurrently with the Closing in accordance with the terms and provisions of the
applicable Other Transaction Document.

                  (i) LEGAL OPINION. The Purchasers shall have received, dated
the Closing Date and addressed to each Purchaser, an opinion of Jones, Day,
Reavis & Pogue, counsel to the Company, substantially in the form attached
hereto as EXHIBIT E.

                  (j) SIMULTANEOUS CLOSING BY OTHER PURCHASERS. Each other
Purchaser shall concurrently purchase and pay for the Preferred Shares and the
Warrants set forth opposite its name in SCHEDULE A.

                  (k) DIRECTORS. The Purchaser Designees shall have been elected
to the Board of Directors of the Company, effective as of the Closing and the
Board of Directors of the Company shall consist of no more than ten directors.

                  (l) MATERIAL ADVERSE CHANGE. There shall not have occurred
since December 31, 2001 any event or occurrence which has resulted in or could
reasonably be expected to result in any material adverse change in the business,
assets, operations, properties, condition (financial or otherwise), prospects,
contingent liabilities or material agreements of the Company and the business
acquired pursuant to the Sprint Transaction, taken as a whole.

                  (m) NYSE APPROVAL. The NYSE shall (1) not have withdrawn its
advice that stockholder approval of the issuance of Common Stock upon conversion
of the Preferred Shares and exercise of the Warrants is not required under Rule
312 of the NYSE Listed Company Manual and (2) have confirmed that the terms of
the Preferred Stock, as set forth in the Certificate of Designations and this
Agreement, comply with the NYSE's Voting Rights Policy as set forth in Rule 313
of the NYSE Listed Company Manual, which advice shall not have been withdrawn.


                                      -36-


                  (n) DEBT FINANCING. The Company shall have received proceeds
from the financing contemplated by the Commitment Letter on the terms and
subject to the conditions thereof.

                  Section 5.02. CONDITIONS OF SALE. The obligation of the
Company to sell the Preferred Shares and the Warrants at the Closing is subject
to satisfaction or waiver of each of the following conditions precedent:

                  (a) REPRESENTATIONS AND WARRANTIES; COVENANTS The
representations and warranties of the Purchasers contained in this Agreement
shall be true and correct in all material respects (disregarding for these
purposes any materiality, Material Adverse Effect or corollary qualifications
contained therein) on and as of the date of this Agreement and on and as of the
Closing Date with the same effect as though made on and as of such dates, and
the Purchasers shall have performed all obligations and complied with all
agreements, undertakings, covenants and conditions required hereunder to be
performed at or prior to the Closing.

                  (b) NO INJUNCTION. There shall not be in effect any statute,
rule, order, decree or injunction of a court or agency of competent jurisdiction
with enjoins or prohibits consummation of the transactions contemplated hereby.

                  (c) REGULATORY CONSENTS. (i) All permits, consents,
authorizations, orders and approvals of, and filings and registrations required
under federal or state law, rule or regulation for or in connection with the
execution and delivery of this Agreement and the Ancillary Documents to which
such Purchaser is a party and the consummation by the parties hereto of the
transactions contemplated on such parties' part hereby and thereby shall have
been obtained or made and all statutory waiting periods thereunder in respect
thereof shall have expired.

                  (d) PURCHASER'S CERTIFICATE. Each Purchaser shall have
delivered to the Company a certificate, dated the Closing Date, in form and
substance reasonably satisfactory to the Company to the effect that the
condition set forth in SECTION 5.02(a) have been satisfied (the "PURCHASER'S
CERTIFICATE").

                  (e) NYSE APPROVAL. The NYSE shall (1) not have withdrawn its
advice that stockholder approval of the issuance of Common Stock upon conversion
of the Preferred Shares and exercise of the Warrants is not required under Rule
312 of the NYSE Listed Company Manual and (2) have confirmed that the terms of
the Preferred Stock, as set forth in the Certificate of Designations and this
Agreement, comply with the NYSE's Voting Rights Policy as set forth in Rule 313
of the NYSE Listed Company Manual, which advice shall not have been withdrawn.

                  (f) DEBT FINANCING. The Company shall have received proceeds
from the financing contemplated by the Commitment Letter on the terms and
subject to the conditions thereof.

                  (g) OTHER TRANSACTIONS. The transactions contemplated by the
Other Transaction Documents that by their terms are to be completed prior to or
concurrently with the Closing (which shall include, without limitation, the
Sprint Transaction) shall have been


                                      -37-


completed immediately prior to or concurrently with the Closing in accordance
with the terms and provisions thereof.

                  (h) PURCHASE PRICE. The Purchasers shall have delivered
immediately prior to or concurrently with the Closing in immediately available
funds, by wire transfer to such account as the Company shall have specified, an
amount equal to the purchase price to have been paid pursuant to SECTION 2.01.

                            ARTICLE VI. TERMINATION

                  Section 6.01. TERMINATION. This Agreement may be terminated on
or any time prior to the Closing:

                  (a) by the mutual written consent of each of the Purchasers
and the Company; or

                  (b) by either the Company or the Purchasers if the Sprint
Purchase Agreement shall have been terminated pursuant to its terms; or

                  (c) by the Purchasers if the Closing shall not have occurred
prior to January 31, 2003, unless the failure of such occurrence shall be due to
the failure of the Purchasers to perform or observe any agreement set forth
herein required to be performed or observed by the Purchasers on or before the
Closing; or

                  (d) by the Company or the Purchasers if a Governmental Entity
shall have issued a nonappealable final order, decree or ruling or taken any
other action having the effect of permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement; or

                  (e) by the Purchasers or the Company, (i) if any
representation or warranty of the other party set forth in this Agreement or in
any other Ancillary Document shall be untrue in any material respect when made,
or (ii) upon a breach in any material respect of any covenant or agreement on
the part of the other set forth in this Agreement or in any other Ancillary
Document (either (i) or (ii) above being a "TERMINATING BREACH"); provided,
that, each Terminating Breach would cause the conditions to the non-terminating
party's obligations not to be satisfied and such Terminating Breach is not cured
within 20 days after written notice from the non-breaching party.

                  Section 6.02. EFFECT OF TERMINATION. In the event of the
termination of this Agreement as provided in SECTION 6.01, all obligations and
agreements of the parties set forth in this Agreement shall forthwith become
void except for the obligations set forth in SECTION 8.05 and SECTION 8.06
(which shall remain in full force and effect) and there shall be no liability or
obligation on the part of the parties hereto except as otherwise provided in
this Agreement. Notwithstanding the foregoing, the termination of this Agreement
under SECTION 6.01(c) shall not relieve either party of any liability for breach
of this Agreement prior to the date of termination.



                                      -38-


                    ARTICLE VII. SURVIVAL; CERTAIN REMEDIES

                  Section 7.01. SURVIVAL. The representations and warranties of
the parties contained in this Agreement shall expire on the second anniversary
of the Closing, except that the representations and warranties set forth in
SECTIONS 3.01(a) and 3.01(d), shall survive indefinitely and the representations
and warranties set forth in SECTIONS 3.01(i)(iii) and 3.01(p) shall survive
until thirty days following the expiration of the applicable statute of
limitations. After the expiration of such periods, any claim by a party hereto
based upon any such representation or warranty shall be of no further force and
effect unless a party has asserted a claim in accordance with this ARTICLE VII
for breach of any such representation or warranty prior to the expiration of
such period, in which event any representation or warranty to which such claim
relates shall survive with respect to such claim until such claim is resolved as
provided in this ARTICLE VII. The covenants and agreements of the parties
contained in this Agreement shall survive the Closing in accordance with their
terms without limitation as to time, unless a specified period is set forth in
this Agreement, in which event such specified period will control.

                  Section 7.02. INDEMNIFICATION BY THE PURCHASERS. Each
Purchaser, severally and not jointly, shall, from and after the Closing Date,
indemnify the Company and its Affiliates and agents, and the officers,
directors, employees, successors, transferees and assigns of each of them (each,
a "COMPANY INDEMNIFIED PARTY") against and hold them harmless from and against
all Losses incurred by any of them based upon, resulting from or arising out of
(i) the breach of any representation or warranty of such Purchaser contained in
this Agreement or (ii) the breach of or failure to perform any covenant or
agreement of such Purchaser contained in this Agreement.

                  Section 7.03. INDEMNIFICATION BY THE COMPANY. The Company
shall, from and after the Closing Date, indemnify each of the Purchasers and
each of their respective Affiliates and agents and the officers, directors,
employees, members, successors, transferees and assigns of each of them (each,
an "PURCHASER INDEMNIFIED PARTY") against and hold them harmless from and
against all Losses incurred by any of them based upon, resulting from or arising
out of (i) the breach of any representation or warranty of the Company contained
in this Agreement, (ii) the breach of or failure to perform any covenant or
agreement of the Company contained in this Agreement or (iii) the Litigation
entitled DonTech vs. Adoption World v. Ameritech Corporation (Case Number 98 L
13197).

                  Section 7.04. CERTAIN QUALIFICATIONS. The Material Adverse
Effect and other materiality (or correlative meaning) qualifications included in
the representations, warranties, covenants and agreements contained herein shall
have no effect on any provisions in this ARTICLE VII concerning the indemnities
of the Company or the Purchasers with respect to such representations,
warranties, covenants and agreements, each of which representations, warranties,
covenants and agreements shall be read as though there were no Material Adverse
Effect or other materiality qualification for purposes of such indemnities. All
knowledge qualifications included in the representations, warranties, covenants
and agreements contained herein with respect to DonTech or its business,
operations, assets, financial condition, liabilities or agreements shall have no
effect on any provisions of this Article VII concerning the indemnities of the
Company with respect to such representations, warranties, covenants and
agreements, each of which shall be read as though there were no such knowledge
qualifications for purposes of such indemnities.


                                      -39-


                  Section 7.05. Indemnification Procedures.

                  (a) An Purchaser Indemnified Party or a Company Indemnified
Party, as the case may be (for purposes of this SECTION 7.05, an "INDEMNIFIED
PARTY"), shall give the indemnifying party under SECTION 7.02 or 7.03, as
applicable (for purposes of this SECTION 7.05, an "INDEMNIFYING PARTY"), prompt
written notice (the "INDEMNIFICATION CLAIM NOTICE") of any third party claim for
which it will seek indemnification hereunder; provided that failure of the
Indemnified Party to give the Indemnifying Party prompt written notice as
provided herein shall not relieve the Indemnifying Party of any of its
obligations hereunder except to the extent that the Indemnifying Party is
prejudiced thereby. The Indemnifying Party shall have the right to assume,
through counsel of its own choosing, which counsel shall be reasonably
satisfactory to the Indemnified Party, the defense of any third party claim
which is the subject of indemnification hereunder at its own expense. If the
Indemnifying Party elects to assume the defense of any such claim, the
Indemnified Party may participate with its own counsel in such defense, but in
such case the fees and expenses of counsel to the Indemnified Party shall be
paid by the Indemnified Party. The Indemnified Party shall, upon reasonable
notice, provide the Indemnifying Party with access to its records and personnel
relating to any such claim during normal business hours and shall otherwise
cooperate with the Indemnifying Party in the defense or settlement thereof, and
the Indemnifying Party shall reimburse the Indemnified Party for all its
reasonable out-of-pocket expenses in connection therewith. If the Indemnifying
Party elects to direct the defense of any such claim, the Indemnified Party
shall not pay, or permit to be paid, any part of such claim unless the
Indemnifying Party consents in writing to such payment (which consent shall not
be unreasonably withheld) or unless the Indemnifying Party withdraws from or
fails to maintain the defense of such claim or unless a final judgment from
which no appeal may be taken by or on behalf of the Indemnifying Party is
entered against the Indemnified Party for indemnification; PROVIDED that, if the
third party claimant is prepared to settle its claim by payment to it of a
specified amount and, notwithstanding the request of the Indemnified Party for
consent to the proposed settlement, the Indemnifying Party does not consent
thereto, then the Indemnifying Party shall indemnify the Indemnified Party
separately for the difference, if any, between the specified amount of the
proposed settlement and the amount which is finally adjudicated to be the amount
of the Liability to the third party. No settlement in respect of any third-party
claim may be effected by the Indemnifying Party without the Indemnified Party's
prior written consent (which consent shall not be unreasonably withheld). If the
Indemnifying Party shall fail to undertake any such defense (or shall fail upon
request to advise the Indemnified Party in writing that it will undertake such
defense) within 30 days of receipt of the Indemnification Claim Notice, or
subsequently withdraws from or fails to maintain the defense of such claim, the
Indemnified Party shall have the right to undertake the defense or settlement
thereof at the Indemnifying Party's expense. If the Indemnified Party assumes
the defense of any such claim pursuant to the previous sentence it may conduct
such defense (including entering into any settlement) as it reasonably deems
appropriate.

                  (b) Notwithstanding the foregoing, with respect to any claim
that the Indemnifying Party is defending, the Indemnified Party shall have the
right to retain separate counsel to represent it and the Indemnifying Party
shall pay the fees and expenses of such separate counsel if there are conflicts
that make it reasonably necessary for separate counsel to represent the
Indemnified Party and the Indemnifying Party.


                                      -40-


                  (c) In the event that an Indemnified Party asserts the
existence of a claim with respect to Losses (but excluding claims resulting from
the assertion of Liability by third parties), it shall give written notice to
the Indemnifying Party. Such written notice shall state that it is being given
pursuant to this SECTION 7.05(c), specify the nature and amount of the claim
asserted, and indicate the date on which such assertion shall be deemed accepted
and the amount of the claim deemed a valid claim (such date to be established in
accordance with the next sentence). If the Indemnifying Party, within 30 days
after the mailing of notice by such Indemnified Party, shall not give written
notice to such Indemnified Party announcing its intent to contest such assertion
of such Indemnified Party, such assertion shall be deemed accepted and the
amount of claim shall be deemed a valid claim. In the event, however, that the
Indemnifying Party contests the assertion of a claim by giving such written
notice to such Indemnified Party within said period, then the parties shall act
in good faith to reach agreement regarding such claim. In the event that
litigation shall arise with respect to any such claim, the prevailing party
shall be entitled to reimbursement of costs and expenses incurred in connection
with such litigation including attorney fees, if the parties hereto, acting in
good faith, cannot reach agreement with respect to such claim within ten days
after such notice.

                  (d) The parties agree to treat any indemnification payments
made by the Company pursuant to this Agreement for Tax purposes as adjustments
to the purchase price of the Preferred Shares.

                  Section 7.06. LIABILITY LIMITS. (a) Notwithstanding anything
to the contrary set forth in this Agreement, except for fraud, the Purchaser
Indemnified Parties shall not make a claim against the Company for
indemnification under SECTION 7.03(i) (not including indemnification for
breaches of the representations and warranties made by the Company in SECTION
3.01(i)(iii)) for Purchaser Losses unless and until the aggregate amount of
Purchaser Losses under SECTION 7.03(i) (not including indemnification for
breaches of the representations and warranties made by the Company in SECTION
3.01(i)(iii)) exceeds $1,000,000 and then the Purchaser Indemnified Parties
shall be entitled to indemnification from first dollar. Further, the Company's
indemnification obligations pursuant to SECTION 7.03(i) shall not exceed in the
aggregate $100,000,000.

                  (b) Notwithstanding anything to the contrary set forth in this
Agreement, except for fraud, the Company Indemnified Parties shall not make a
claim against the Purchasers for indemnification under SECTION 7.02(i) for
Company Losses unless and until the aggregate amount of Company Losses under
SECTION 7.02(i) exceeds $1,000,000 and then the Company Indemnified Parties
shall be entitled to indemnification from first dollar. Further, the Purchasers'
indemnification obligations pursuant to SECTION 7.02(i) shall not exceed in the
aggregate $100,000,000.

                  Section 7.07. DUPLICATION. Any Liability for indemnification
hereunder shall be determined without duplication of recovery by reason of the
state of facts giving rise to such Liability constituting a breach of more than
one representation, warranty, covenant or agreement; provided, however, that
subject to there being no duplication of recovery, the Indemnified Party shall
be entitled to recover to the maximum extent provided in this Agreement (by way
of example, if any Indemnified Party's entitlement to indemnification is both by
reason for a breach of a representation and warranty to which the two year
survival period of SECTION 7.01 applies


                                      -41-


and by reason of a breach of a representation and warranty to which such
survival period does not apply, the Indemnified Party shall be entitled to
indemnification without regard to such two year survival period). The amount of
any Loss for which indemnification is provided under this ARTICLE VII shall be
calculated (i) net of any amounts actually recovered by the Indemnified Party
(A) under insurance policies with respect to such Loss and (B) any amounts
actually recovered from third parties pursuant to indemnification or otherwise
with respect to such Loss, and (ii) net of any tax benefits obtained or
reasonably expected to be obtained by the Indemnified Party or its affiliates
with respect to such Loss.

                  Section 7.08. EXCLUSIVE REMEDIES. Except for fraud, the
provisions of this ARTICLE VII set forth the exclusive rights and remedies of
the Purchasers and the Company to seek or obtain damages from any party after
the Closing Date with respect to breaches of representations, warranties or
covenants under this Agreement (other than any remedy or relief arising from the
failure of any party to perform its obligations under the Ancillary Documents);
PROVIDED, HOWEVER, that nothing herein shall limit any remedy in equity.

                          ARTICLE VIII. MISCELLANEOUS

                  Section 8.01. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given, if
delivered personally, by facsimile or sent by overnight courier as follows:

                           If to the Purchasers, to:

                           GS Capital Partners 2000, L.P.
                           GS Capital Partners 2000 Offshore, L.P.
                           GS Capital Partners 2000 GmbH & Co. Beteiligungs KG
                           GS Capital Partners 2000 Employee Fund, L.P.
                           Goldman Sachs Direct Investment Fund 2000, L.P.
                           c/o Goldman, Sachs & Co.
                           85 Broad Street
                           New York, New York  10004
                           Phone: (212) 902-1000
                           Fax:   (212) 357-5505
                           Attention: Mr. Stuart Katz
                           Attention: Ben Adler, Esq.

                           with a copy to (which shall not constitute notice):

                           Fried, Frank, Harris, Shriver & Jacobson
                           One New York Plaza
                           New York, New York 10004
                           Phone: (212) 859-8000
                           Fax:   (212) 859-8586
                           Attention: David N. Shine, Esq.

                           If to the Company, to:


                                      -42-



                           R.H. Donnelley Corporation
                           One Manhattanville Road
                           Purchase, NY  10577
                           Phone: (914) 933-6769
                           Fax:   (914) 933-6844
                           Attention: Robert J. Bush, Esq.

                           with a copy to (which shall not constitute notice):

                           Jones, Day, Reavis & Pogue
                           901 Lakeside Avenue
                           Cleveland, Ohio 44114
                           Phone: (216) 586-3939
                           Fax:   (216) 579-0212
                           Attention: Thomas C. Daniels, Esq.

or to such other address or addresses as shall be designated in writing. All
notices shall be effective when received.

                  Section 8.02. ENTIRE AGREEMENT; AMENDMENTS; WAIVERS. This
Agreement and the Ancillary Documents set forth the entire agreement between the
parties hereto with respect to the transactions contemplated by this Agreement.
Any provision of this Agreement may be amended or modified in whole or in part
at any time by an agreement in writing among the parties hereto executed in the
same manner as this Agreement. No failure on the part of any party to exercise,
and no delay in exercising, any right shall operate as a waiver thereof nor
shall any single or partial exercise by any party of any right preclude any
other or future exercise thereof or the exercise of any other right. No
investigation by the Purchasers of the Company prior to or after the date hereof
shall stop or prevent the Purchasers from exercising any right hereunder or be
deemed to be a waiver of any such right.

                  Section 8.03. COUNTERPARTS. This Agreement may be executed by
facsimile signature and may be executed in one or more counterparts, each of
which shall be deemed to constitute an original, but all of which together shall
constitute one and the same documents.

                  Section 8.04. GOVERNING LAW. This Agreement shall be governed
by, and interpreted in accordance with, the laws of the State of New York
applicable to contracts made and to be performed in that State without giving
effect to any conflict of laws rules or principles that might require the
application of the laws of another jurisdiction.

                  Section 8.05. PUBLIC ANNOUNCEMENTS. Each of the parties hereto
agree to hold in strict confidence and not to publicly disclose the status of
any discussions or relations between the parties with respect to the subject
matter of this Agreement until such time as the parties mutually agree to
publicly disclose such information or are legally obligated (whether by federal
securities laws, the rules of any stock exchange or otherwise) to disclose such
information. Subject to the provisions of the previous sentence, the parties
hereto will cooperate with each other in the development and distribution of all
news releases and other public information disclosures with respect to this
Agreement and any of the transactions contemplated hereby, and


                                      -43-


neither party hereto will make any news releases or other information
disclosures with respect to the subject matter of this Agreement without the
prior consent of the other party hereto.

                  Section 8.06. CLOSING PAYMENT; EXPENSES. On the Closing Date,
the Company will pay to each Purchaser 1% of the portion of the purchase price
paid by such Purchaser to the Company on the Closing Date (the "CLOSING
Payment"). Any obligation owed by the Company to the Purchasers pursuant to this
SECTION 8.06 shall be offset by the Purchasers against the amount of the
obligation owed to the Company by the Purchasers pursuant to SECTION 2.02(b).

                  (b) The Company shall pay (i) all fees, costs and expenses
incurred by it in connection with the preparation, negotiation, execution, and
performance of this Agreement or any of the transactions contemplated by this
Agreement or the Other Transaction Documents, (ii) the reasonable third party
and out-of-pocket expenses (including, without limitation, all reasonable fees
and expenses of each counsel, accountants and consultants of each such party)
incurred by the Purchasers or their Affiliates since August 16, 2002 in
connection with the preparation, negotiation, execution, and performance of this
Agreement or any of the transactions contemplated by this Agreement and (iii)
all costs of filings required under the HSR Act in connection with the execution
and performance of this Agreement. Without limiting the generality of the
foregoing, the expenses referred to in clause (iii) above shall be paid by the
Company when due or payable and on the Closing Date or the date on which this
Agreement is terminated pursuant to Article VI hereof, the Company shall pay all
expenses listed in clause (ii) of the previous sentence which have accrued as of
such date.

                  Section 8.07. SUCCESSORS AND ASSIGNS. Subject to applicable
law and the provisions of SECTION 4.10, each Purchaser may assign its rights
under this Agreement in whole or in part to any of its respective Affiliates or
any Designated Transferee, but no such assignment shall relieve such Purchaser
of its obligations hereunder. The Company may not assign any of its rights or
delegate any of its duties under this Agreement without the prior written
consent of each of the Purchasers. Any purported assignment in violation of this
SECTION 8.07 shall be void.

                  Section 8.08. JURISDICTION. The courts of the State of New
York in New York County and the United States District Court for the Southern
District of New York shall have jurisdiction over the parties with respect to
any dispute or controversy between them arising under or in connection with this
agreement and, by execution and delivery of this agreement, each of the parties
to this Agreement submits to the jurisdiction of those courts, including but not
limited to the IN PERSONAM and subject matter jurisdiction of those courts,
waives any objections to such jurisdiction on the grounds of venue or FORUM NON
CONVENIENS, the absence of IN PERSONAM or subject matter jurisdiction and any
similar grounds, consents to service of process by mail (in accordance with
SECTION 8.01) or any other manner permitted by law, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement.

                  Section 8.09. CAPTIONS; REFERENCES. The captions contained in
this Agreement are for reference purposes only and are not part of this
Agreement. Unless otherwise indicated, all references to Articles, Sections,
subsections, Schedules or Exhibits in this Agreement refer to the Articles,
Sections, subsections and clauses of, and the Schedules or Exhibits to, this
Agreement.


                                      -44-


                  Section 8.10. SEVERABILITY. Should any part of this Agreement
for any reason be declared invalid, such decision shall not affect the validity
of any remaining portion, which remaining portion shall remain in full force and
effect as if this Agreement had been executed with the invalid portion thereof
eliminated, and it is hereby declared the intention of the parties hereto that
they would have executed the remaining portion of this Agreement without
including therein any such part or parts which may, for any reason, be hereafter
declared invalid.

                  Section 8.11. AGGREGATION OF STOCK. All shares of capital
stock held or acquired by each of the Goldman Entities shall be aggregated
together for the purpose of determining the availability and exercise of any
right of each such Goldman Entity under this Agreement.




                                      -45-



                  IN WITNESS WHEREOF, this Agreement has been executed by the
respective duly authorized officers of the parties hereto, all as of the date
first above written.

                        R.H. DONNELLEY CORPORATION




                        By:      /s/ David C. Swanson
                            ----------------------------------------
                              Name: David C. Swanson
                              Title:President and Chief Executive Officer


                        GS CAPITAL PARTNERS 2000, L.P.
                        By:      GS Advisors 2000, L.L.C.
                                 Its General Partner



                        By:         /s/ Katherine B. Enquist
                            ----------------------------------------
                                 Name: Katherine B. Enquist
                                 Its: Vice President


                        GS CAPITAL PARTNERS 2000 OFFSHORE, L.P.
                        By:      GS Advisors 2000, L.L.C.
                                 Its General Partner



                        By:         /s/ Katherine B. Enquist
                            ----------------------------------------
                                 Name: Katherine B. Enquist
                                 Its: Vice President




                                      -46-





                        GS CAPITAL PARTNERS 2000 GmbH & CO. BETEILIGUNGS KG
                        By:  Goldman Sachs Management GP GmbH
                             Its General Partner



                        By:     /s/ John E. Bowman
                             -----------------------------
                             Name: John E. Bowman
                             Its: Managing Director


                        GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P.
                        By:  GS Employee Funds 2000 GP, L.L.C.
                             Its General Partner



                        By:  /s/ John E. Bowman
                             -----------------------------
                             Name: John E. Bowman
                             Its: Vice President


                        GOLDMAN SACHS DIRECT INVESTMENT FUND 2000, L.P.
                        By:  GS Employee Funds 2000 GP, L.L.C.
                             Its General Partner



                        By:  /s/ John E. Bowman
                             -----------------------------
                             Name: John E. Bowman
                             Its: Vice President



                                      -47-