-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RadC6d6vRUnYP7Dbk4UIsedtjtiP/R/ZLPXPmZOUVFBxije9fUnFeUEw4U42Cr+8 w3iHBYX35dE1CsPzD/Uk0g== 0000950152-02-009059.txt : 20021203 0000950152-02-009059.hdr.sgml : 20021203 20021203145923 ACCESSION NUMBER: 0000950152-02-009059 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20021125 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20021203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: R H DONNELLEY CORP CENTRAL INDEX KEY: 0000030419 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING [7310] IRS NUMBER: 132740040 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07155 FILM NUMBER: 02847191 BUSINESS ADDRESS: STREET 1: ONE MANHATTANVILLE ROAD CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9149336800 MAIL ADDRESS: STREET 1: ONE MANHATTANVILLE ROAD CITY: PURCHASE STATE: NY ZIP: 10577 FORMER COMPANY: FORMER CONFORMED NAME: DUN & BRADSTREET COMPANIES INC DATE OF NAME CHANGE: 19790429 FORMER COMPANY: FORMER CONFORMED NAME: DUN & BRADSTREET CORP DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DONNELLEY R H INC CENTRAL INDEX KEY: 0001065310 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS PUBLISHING [2741] IRS NUMBER: 362467635 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-59287 FILM NUMBER: 02847192 BUSINESS ADDRESS: STREET 1: 1 MANHATTANVILLE ROAD CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9149336400 MAIL ADDRESS: STREET 1: 1 MANHATTANVILLE ROAD CITY: PURCHASE STATE: NY ZIP: 10577 8-K 1 l97536ae8vk.txt RH DONNELLEY CORP/RH DONNELLEY INC. 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): November 25, 2002 ----------------------- R.H. DONNELLEY CORPORATION -------------------------- (Exact Name of Registrant as Specified in Charter) DELAWARE 1-07155 13-2740040 - ---------------------------------------- -------------------------------------- ----------------------------------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) ONE MANHATTANVILLE ROAD, PURCHASE, NEW YORK 10577 - -------------------------------------------------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code)
R.H. DONNELLEY INC.* -------------------- (Exact Name of Registrant as Specified in Charter) DELAWARE 333-59287 36-2467635 - ---------------------------------------- -------------------------------------- ----------------------------------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) ONE MANHATTANVILLE ROAD, PURCHASE, NEW YORK 10577 - -------------------------------------------------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code)
Registrants' telephone number, including area code: (914) 933-6400 --------------- Not Applicable ----------------------------------- --------------- (Former Name or Former Address, if Changed Since Last Report) *R.H. Donnelley Inc. is a wholly owned subsidiary of R.H. Donnelley Corporation, which became subject to the filing requirements of Section 15(d) on October 1, 1998. As of November 27, 2002, 100 shares of R.H. Donnelley Inc. common stock, no par value, were outstanding. ITEM 5. OTHER EVENTS. As previously announced by R.H. Donnelley Inc. (the "Company"), as part of the Company's acquisition of Sprint Publishing & Advertising ("SPA") from Sprint Corporation, GS Capital Partners 2000, L.P. and affiliated entities ("GSCP 2000") have agreed to invest $200 million through the purchase of shares of a new series of convertible preferred stock of R.H. Donnelley Corporation, the Company's parent ("Donnelley"), and warrants to purchase an aggregate of 1,650,000 shares of common stock of Donnelley pursuant to a preferred stock and warrant purchase agreement entered into as of September 21, 2002. On November 25, 2002, pursuant to a letter agreement by Donnelley, the Company and GSCP 2000 (the "Letter Agreement"), attached hereto as Exhibit 10.1, GSCP 2000 invested $70 million in Donnelley through the purchase of 70,000 shares of convertible preferred stock (the "Preferred Stock") of Donnelley and warrants to purchase 577,500 shares of common stock (the "Warrants") of Donnelley. This $70 million investment is a portion of GSCP 2000's $200 million commitment. Upon receipt of the net proceeds of $69.3 million, Donnelley contributed such net proceeds to the Company. The $70 million investment was made earlier than previously anticipated to facilitate the cure of a technical default under the indenture governing the Company's existing 9 1/8% Senior Subordinated Notes due 2008. The technical default resulted from the inadvertent failure of the Company to cause certain subsidiaries to be added to such indenture in 2000. The receipt of $70 million by Donnelley and the simultaneous contribution of the net proceeds to the Company offset certain restricted payments that had been made by the Company to Donnelley in 2000 and 2001 while the technical default existed. As a result of the investment and simultaneous contribution and the execution of a supplemental indenture to add those subsidiaries as guarantors, this technical default has been cured. The remaining investment of $130 million will be made by GSCP 2000 and/or other third parties in connection with the consummation of the acquisition of SPA. The Preferred Stock is subject to the terms and conditions of the Certificate of Designations attached hereto as Exhibit 3.1. The Warrants are subject to the terms and conditions of the Warrant Agreement, a form of which is attached hereto as Exhibit 4.1. The foregoing description of the Letter Agreement, the Certificate of Designations and the Warrants is qualified in its entirety by reference to the full text of each document, copies of which are incorporated herein by this reference. In connection with the sale of the Preferred Stock and Warrants, Donnelley granted to GSCP 2000 certain rights to require Donnelley to register for sale under the federal securities laws the Preferred Stock and the common stock to be acquired upon conversion of the Preferred Stock and exercise of the Warrants. These registration rights are subject to the terms and conditions of the Registration Rights Agreement attached hereto as Exhibit 10.2. The foregoing description of the Registration Rights Agreement is qualified in its entirety by reference to the full text of the Registration Rights Agreement, a copy of which is incorporated herein by this reference. 2 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits.
Exhibit Number Description ------- ----------- 3.1 Certificate of Designations of Series B-1 Convertible Cumulative Preferred Stock of R.H. Donnelley Corporation. 4.1 Form of Warrant Agreement. 10.1 Letter Agreement, dated as of November 25, 2002, among R.H. Donnelley Corporation, R.H. Donnelley Inc. and GS Capital Partners 2000, L.P. and entities affiliated therewith. 10.2 Registration Rights Agreement, dated as of November 25, 2002, among R.H. Donnelley Corporation and GS Capital Partners 2000, L.P. and entities affiliated therewith.
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: December 2, 2002 4 EXHIBIT INDEX
Exhibit Number Description ------- ----------- 3.1 Certificate of Designations of Series B-1 Convertible Cumulative Preferred Stock of R.H. Donnelley Corporation. 4.1 Form of Warrant Agreement. 10.1 Letter Agreement, dated as of November 25, 2002, among R.H. Donnelley Corporation, R.H. Donnelley Inc. and GS Capital Partners 2000, L.P. and entities affiliated therewith. 10.2 Registration Rights Agreement, dated as of November 25, 2002, among R.H. Donnelley Corporation and GS Capital Partners 2000, L.P. and entities affiliated therewith.
5 EX-3.1 3 l97536aexv3w1.txt EXHIBIT 3.1 EXHIBIT 3.1 CERTIFICATE OF DESIGNATIONS OF CONVERTIBLE CUMULATIVE PREFERRED STOCK OF R.H. DONNELLEY CORPORATION ---------------------------------- Pursuant to Section 151 of the General Corporation Law of the State of Delaware ---------------------------------- R.H. Donnelley Corporation (the "CORPORATION"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "DGCL"), hereby certifies as follows: FIRST: The Restated Certificate of Incorporation, as amended, of the Corporation authorizes the issuance of up to 10,000,000 shares of Preferred Stock, par value $1 per share (the "PREFERRED STOCK"), and further authorizes the Board of Directors of the Corporation by resolution or resolutions to provide for the issuance of Preferred Stock in series and to establish the number of shares to be included in each such series and to fix the designation, voting powers, preferences and relative rights and qualifications, limitations or restrictions of each such series. SECOND: On November 24, 2002, the Board of Directors of the Corporation adopted the following resolution authorizing the creation and issuance of a series of said Preferred Stock to be known as Series B-1 Convertible Cumulative Preferred Stock: RESOLVED, that pursuant to the authority vested in the Board of Directors of the Corporation in accordance with the provisions of its Restated Certificate of Incorporation, as amended, a series of Preferred Stock of the Corporation be, and it hereby is, created, and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as set forth in the Corporation's Restated Certificate of Incorporation and in this Certificate of Designations as follows: 1. DESIGNATION AND AMOUNT. The shares of such series of Preferred Stock shall be designated as Series B-1 Convertible Cumulative Preferred Stock (the "SERIES B-1 CONVERTIBLE PREFERRED STOCK"), and the number of shares constituting such series shall be 70,000. The initial liquidation preference of the Series B-1 Convertible Preferred Stock shall be $1,000 per share or right (the "LIQUIDATION VALUE"). 2. RANK. The Series B-1 Convertible Preferred Stock shall, with respect to dividend rights and rights on liquidation, winding up and dissolution, rank (i) senior to both the Corporation's Common Stock and to all classes and series of stock of the Corporation now or hereafter authorized, issued or outstanding which by their terms expressly provide that they are junior to the Series B-1 Convertible Preferred Stock or which do not specify their rank (collectively with the Common Stock, the "JUNIOR SECURITIES"); (ii) on a parity with each other class of capital stock or series of preferred stock issued by the Corporation after the date hereof the terms of which specifically provide that such class or series will rank on a parity with the Series B-1 Convertible Preferred Stock as to dividend distributions and distributions upon the liquidation, winding up and dissolution of the Corporation (collectively referred to as "PARITY SECURITIES"); and (iii) junior to each other class of capital stock or other series of Preferred Stock issued by the Corporation after the date hereof the terms of which specifically provide that such class or series will rank senior to the Series B-1 Convertible Preferred Stock as to dividend distributions or distributions upon the liquidation, winding up and dissolution of the Corporation (collectively referred to as "SENIOR SECURITIES") 3. DIVIDENDS. (a) PAYMENT OF DIVIDENDS. The holders of shares of Series B-1 Convertible Preferred Stock, in preference to the holders of any shares of Common Stock or other capital stock of the Corporation, shall be entitled to receive, when, as and if declared by the Board of Directors, in their sole discretion, out of the assets of the Corporation legally available therefor, distributions in the form of cumulative cash dividends payable at an annual rate per share equal to 8% (the "DIVIDEND RATE") of the Convertible Preferred Amount from and after the date of issuance of the shares of Series B-1 Convertible Preferred Stock (the "ISSUE DATE"), as long as the shares of Series B-1 Convertible Preferred Stock remain outstanding. Dividends shall be (i) computed on the basis of the aggregate Convertible Preferred Amount; (ii) calculated and compounded quarterly; (iii) accrue and be payable quarterly, in arrears, on January 31, April 30, July 31 and October 31 (each such date being referred to herein as a "QUARTERLY DIVIDEND PAYMENT DATE"), except that if any Quarterly Dividend Payment Date is not a Business Day then the Quarterly Dividend Payment Date shall be on the first immediately succeeding Business Day, commencing on the first Quarterly Dividend Payment Date following the Issue Date; and (iv) payable in cash. Notwithstanding anything contained herein to the contrary, on and after the Trigger Date, the Dividend Rate shall be 15%. (b) ACCRUAL OF DIVIDENDS. Dividends payable pursuant to subsection (a) of this Section 3 shall begin to accrue on a daily basis and be cumulative from the Issue Date, whether or not declared by the Board of Directors and whether or not there are profits, surplus or other funds of the Corporation legally available for the payment of dividends, and shall continue to accrue and be cumulative (and compound as provided in (a) above) until paid in full in cash or until the date of conversion or redemption of the Series B-1 Convertible Preferred Stock (such dividends being referred to as the "CONVERTIBLE PREFERRED DIVIDENDS"). The amount of dividends so payable shall be determined on the basis of twelve 30-day months and a 360-day year. Dividends paid on shares of Series B-1 Convertible Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. 2 (c) RESTRICTED PAYMENTS. So long as any shares of Series B-1 Convertible Preferred Stock remain outstanding, the Corporation shall not make any payment on account of, or set apart for payment money for a sinking or other similar fund for, the purchase, redemption or other retirement of, any Junior Securities or other capital stock of the Corporation or any warrants, rights, calls or options exercisable for or convertible into any shares of Junior Securities or other capital stock of the Corporation, or make any distribution in respect thereof, either directly or indirectly, and whether in cash, obligations or shares of Junior Securities or other capital stock of the Corporation or other property, and shall not permit any corporation or other entity directly or indirectly controlled by the Corporation to purchase or redeem any of the Junior Securities or other capital stock of the Corporation or any warrants, rights, calls or options exercisable for or convertible into any Junior Securities or other capital stock of the Corporation, unless all dividends that have accrued since the Issue Date on the shares of Series B-1 Convertible Preferred Stock shall have been paid. (d) DIVIDENDS ON COMMON STOCK. So long as any shares of Series B-1 Convertible Preferred Stock remain outstanding, if the Corporation pays a dividend in cash, securities or other property on shares of Common Stock, then at the same time the Corporation shall declare and pay a dividend on shares of Series B-1 Convertible Preferred Stock (which would be in addition to any dividends payable under Section 3(a) and (b)) in the amount of dividends that would be paid with respect to shares of Series B-1 Convertible Preferred Stock if such shares were converted into shares of Common Stock on the record date for such dividend (or if no record date is established, at the date such dividend is declared). 4. LIQUIDATION PREFERENCE. (a) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation (each, a "LIQUIDATION EVENT"), the holders of shares of Series B-1 Convertible Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders an amount in cash equal to the greater of (i) the Convertible Preferred Amount, and (ii) the amount to which such holder would be entitled to receive in connection therewith had such holder converted such share into shares of Common Stock in accordance with the terms hereof immediately prior to such event (such greater amount of (i) and (ii) being referred to herein as the "LIQUIDATION PREFERENCE"), in either case before any payment shall be made or any assets distributed to the holders of any of the Junior Securities. If the assets of the Corporation are not sufficient to pay in full the liquidation payments payable to the holders of outstanding shares of the Series B-1 Convertible Preferred Stock and any Parity Securities, then the holders of all such shares shall share ratably in such distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which the holders of outstanding shares of Series B-1 Convertible Preferred Stock and the holders of outstanding shares of such Parity Securities are entitled were paid in full. (b) For the purposes of this Section 4, neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Corporation nor the consolidation or merger of the Corporation with any one or more other corporations shall be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the Corporation, 3 unless such voluntary sale, conveyance, exchange or transfer shall be in connection with a plan of liquidation, dissolution or winding up of the Corporation. 5. REDEMPTION. (a) OPTIONAL REDEMPTION. Subject to the rights of holders of shares of Series B-1 Convertible Preferred Stock set forth in Section 9 hereof, the Corporation may, at its option, redeem at any time on or after the Redemption Trigger Date, in the manner provided in Section 6 hereof, all but not less than all of the shares of the Series B-1 Convertible Preferred Stock at a redemption price per share in cash equal to 101% of the Liquidation Preference. (b) REDEMPTION UPON CHANGE IN CONTROL. Upon the occurrence of a Change in Control, each holder of Series B-1 Convertible Preferred Stock may elect to cause the Corporation to redeem such holder's Series B-1 Convertible Preferred Stock, in whole or in part, at a redemption price per share in cash equal to 101% of the Liquidation Preference. 6. PROCEDURE FOR REDEMPTION. (a) In the event that the Corporation shall redeem shares of Series B-1 Convertible Preferred Stock pursuant to Section 5(a) hereof, notice of such redemption shall be mailed by first-class mail, postage prepaid, and mailed not less than 30 days nor more than 60 days prior to the redemption date, to the holders of record of the shares to be redeemed at their respective addresses as they shall appear in the records of the Corporation; PROVIDED, HOWEVER, that failure to give such notice or any defect therein or in the mailing thereof shall not affect the validity of the proceeding for the redemption of any shares so to be redeemed except as to the holder to whom the Corporation has failed to give such notice or except as to the holder to whom notice was defective. Each such notice shall state: (i) the redemption date; (ii) the number of shares of Series B-1 Convertible Preferred Stock to be redeemed; (iii) the redemption price per share, including a calculation of such redemption price; (iv) the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date; and (vi) that the holder's right to convert such shares into shares of Common Stock shall terminate on the close of business on the second Business Day preceding such redemption date. (b) If a Change in Control should occur, then, in any one or more of such events the Corporation shall, within 10 days following the occurrence of the Change in Control, give written notice by first-class mail, postage prepaid, to each holder of Series B-1 Convertible Preferred Stock at its address as it appears in the records of the Corporation, which notice shall describe such Change in Control. Such notice shall also set forth: (i) each holder's right to require the Corporation to redeem in whole or in part shares of Series B-1 Convertible Preferred Stock held by such holder as a result of such Change in Control; (ii) the redemption price, including a calculation of such redemption price; (iii) the redemption date (which date shall be no earlier than 30 days from the date the notice in respect of such Change in Control is mailed); (iv) the procedures to be followed by such holder in exercising its right of redemption, including the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (v) that dividends on the shares to be redeemed will cease to accrue on the 4 redemption date and (vi) that the holder's right to convert such shares into shares of Common Stock shall terminate on the close of business on the second Business Day preceding such redemption date. In the event a holder of shares of Series B-1 Convertible Preferred Stock elects to require the Corporation to redeem any or all of such shares of Series B-1 Convertible Preferred Stock, such holder shall deliver, not later than two Business Days prior to the redemption date as set forth in the Corporation's notice described in this Section 6(b), a written notice stating such holder's election and specifying the number of shares to be redeemed pursuant to Section 5(b) hereof. (c) After notice by the Corporation has been mailed as provided in Section 6(a) hereof, or notices of election have been mailed by the holders as provided in Section 6(b) hereof, and PROVIDED that on or before the applicable redemption date funds necessary for such redemption shall have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares so called for or entitled to redemption, so as to be and to continue to be available therefor, then, from and after the redemption date (unless the Corporation defaults in the payment of the redemption price, in which case such rights shall continue until the redemption price is paid), dividends on the shares of Series B-1 Convertible Preferred Stock so called for or entitled to redemption shall cease to accrue, and said shares shall no longer be deemed to be outstanding and shall not have the status of shares of Series B-1 Convertible Preferred Stock, and all rights of the holders thereof as stockholders of the Corporation (except the right to receive the applicable redemption price and any accrued and unpaid dividends from the Corporation to the date of redemption calculated pursuant to Section 3 hereof and the right to convert such shares into shares of Common Stock, which shall continue until the close of business on the second Business Day preceding the date of redemption in accordance with Section 9 hereof) shall cease. Upon surrender of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Board of Directors of the Corporation shall so require and a notice by the Corporation shall so state), such shares shall be redeemed by the Corporation at the applicable redemption price as aforesaid. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate or certificates representing the unredeemed shares shall be issued to such holder within 5 days of the redemption date. 7. REACQUIRED SHARES. Shares of Series B-1 Convertible Preferred Stock that have been issued and reacquired in any manner, including without limitation shares reacquired by purchase, redemption or conversion pursuant to Section 9 hereof, shall (upon compliance with any applicable provisions of the laws of the State of Delaware) have the status of authorized and unissued shares of the class of Preferred Stock undesignated as to series and may be redesignated and reissued as part of any series of Preferred Stock other than Series B-1 Convertible Preferred Stock. 5 8. VOTING RIGHTS. In addition to any voting rights provided by applicable law, the holders of Series B-1 Convertible Preferred Stock shall have the following voting rights: (a) GENERAL. Subject to Section 8(b) hereof, each share of Series B-1 Convertible Preferred Stock shall entitle the holder thereof to vote on all matters submitted to a vote of the stockholders of the Corporation, voting together as a single class with the holders of Common Stock. At any time, each share of Series B-1 Convertible Preferred Stock shall be entitled to a number of votes which is equal to the number of shares of Common Stock that could be obtained upon conversion of one share of Series B-1 Convertible Preferred Stock at the then applicable Conversion Price (as such amount may be adjusted pursuant to Section 9(f) hereof). (b) VOTING RIGHTS FOR DIRECTORS. (i) Subject to Section 8(b)(viii), in addition to any other rights to elect directors which the holders of Series B-1 Convertible Preferred Stock may have, from and after the Issue Date, the holders of all outstanding shares of Series B-1 Convertible Preferred Stock, voting separately as a class and to the exclusion of the holders of all other classes of stock of the Corporation, shall be entitled to elect one individual to serve as a member of the Board of Directors. Such director shall placed into a class if and to the same extent as the directors to be elected generally by the stockholders of the Corporation. (ii) The right to elect such director as described in Section 8(b)(i) hereof may be exercised either at a special meeting of the holders of Series B-1 Convertible Preferred Stock, called as hereinafter provided in Section 8(b)(iii) hereof, at any annual meeting of stockholders held for the purpose of electing directors, or by the written consent of the holders of Series B-1 Convertible Preferred Stock without a meeting pursuant to Section 228 of the DGCL and thereafter at such annual meeting or by written consent. (iii) The Secretary of the Corporation may, and upon the written request of the holders of record of at least 10% of the outstanding shares of Series B-1 Convertible Preferred Stock (addressed to the Secretary of the Corporation at the principal office of the Corporation) shall, call a special meeting of the holders of Series B-1 Convertible Preferred Stock for the election of the director to be elected by them as herein provided. Such call shall be made by notice to the holders of record by first-class mail, postage prepaid at their respective addresses as they shall appear in the records of the Corporation, and such notice shall be mailed at least 10 days but no more than 20 days before the date of the special meeting, or as required by law. Such meeting shall be held at the earliest practicable date upon the notice required for special meetings of stockholders at the place designated by the Secretary of the Corporation. If such meeting shall not be called by a proper officer of the Corporation within 15 days after receipt of such 6 written request by the Secretary of the Corporation, then the holders of record of at least 10% of the shares of Series B-1 Convertible Preferred Stock then outstanding may call such meeting at the expense of the Corporation, and such meeting may be called by such holders upon the notice required for special meetings of stockholders and shall be held at the place designated in such notice. Any holder of Series B-1 Convertible Preferred Stock that would be entitled to vote at any such meeting shall have access to the stock record books of the Corporation for the purpose of causing a meeting of holders of Series B-1 Convertible Preferred Stock to be called pursuant to the provisions of this Section 8(b)(iii). (iv) At any meeting held for the purpose of electing directors at which the holders of Series B-1 Convertible Preferred Stock shall have the right to elect a director as provided in this Section 8(b), the presence in person or by proxy of the holders of a majority of the then outstanding shares of Series B-1 Convertible Preferred Stock shall be required and be sufficient to constitute a quorum of such class for the election of a director by such class. At any such meeting or adjournment thereof, (x) the absence of a quorum of the holders of Series B-1 Convertible Preferred Stock shall not prevent the election of directors other than the director to be elected by the holders of Series B-1 Convertible Preferred Stock, and the absence of a quorum or quorums of the holders of capital stock entitled to elect such other directors shall not prevent the election of the director to be elected by the holders of Series B-1 Convertible Preferred Stock, and (y) in the absence of a quorum of the holders of Series B-1 Convertible Preferred Stock, a majority of the holders of Series B-1 Convertible Preferred Stock present in person or by proxy shall have the power to adjourn the meeting for the election of the director which such holders are entitled to elect, from time to time, without notice (except as required by law) other than announcement at the meeting, until a quorum shall be present. (v) Except as provided in Section 8(b)(viii) hereof, the term of office of any director elected by the holders of Series B-1 Convertible Preferred Stock pursuant to Section 8(b)(i) hereof in office at any time shall terminate upon the election of his or her successor at the annual meeting of stockholders held for the purpose of electing directors to the class of directors to which such director belongs. (vi) In case of a vacancy occurring in the office of any director so elected pursuant to Section 8(b)(i) hereof, the holders of a majority of the Series B-1 Convertible Preferred Stock then outstanding may, at a special meeting of the holders or by written consent as provided above, elect a successor to hold office for the unexpired term of such director. (vii) At any annual or special meeting held for the purpose of allowing the holders of the Series B-1 Convertible Preferred Stock to take any action pursuant to this Certificate of Designations, the November Letter Agreement or the Registration Rights Agreement and where a majority of 7 the then outstanding shares of Series B-1 Convertible Preferred Stock are present in person or by proxy, the affirmative vote of the holders present in person or by proxy at such meeting shall be sufficient for such action to have received the approval of the holders of the Series B-1 Convertible Preferred Stock. (viii) Notwithstanding the foregoing, at such time as the outstanding shares of Series B-1 Convertible Preferred Stock then Beneficially Owned by the Initial Purchasers, their respective Affiliates or any Designated Transferees constitutes less than 15% of the number of shares of Common Stock Beneficially Owned by them immediately after the Issue Date (as such number may be adjusted for stock dividends, stock splits, combinations and recapitalizations and other similar events), the holders of Series B-1 Convertible Preferred Stock shall not be entitled to designate or elect a director under this Section 8(b). (c) ADDITIONAL DIRECTORS. (i) In the event that a Trigger Date occurs, then the number of directors constituting the Board of Directors of the Corporation, without further action, shall be increased by one person and the holders of the Series B-1 Convertible Preferred Stock shall have the exclusive right, voting separately as a class, to nominate and elect such director (the "New Director") of the Corporation to fill such newly created directorship at each meeting of stockholders held for the purpose of electing directors to the class of directors to which such director belongs. (ii) Whenever such voting right shall have vested, such right may be exercised at a special meeting of the holders of the Series B-1 Convertible Preferred Stock called as hereinafter provided, at any annual meeting of stockholders held for the purpose of electing directors or by the written consent of the holders of Series B-1 Convertible Preferred Stock pursuant to Section 228 of the Delaware General Corporation Law. (iii) At any time when such voting right shall have vested in the holders of Series B-1 Convertible Preferred Stock and if such right shall not already have been initially exercised, a proper officer of the Corporation shall, upon the written request of any holder of record of Series B-1 Convertible Preferred Stock then outstanding, call a special meeting of holders of Series B-1 Convertible Preferred Stock. Such meeting shall be held at the earliest practicable date upon the notice required for annual meetings of stockholders. If such meeting shall not be called within 20 days after such written request, then the holders of record of 10% of the shares of Series B-1 Convertible Preferred Stock then outstanding may designate in writing a holder of Series B-1 Convertible Preferred Stock to call such meeting at the expense of the Corporation, and such meeting may be called by such person so designated upon the notice required for annual meetings of stockholders. Any holder of Series B-1 Convertible Preferred 8 Stock which would be entitled to vote at such meeting shall have access to the stock books of the Corporation for the purpose of causing a meeting of stockholders to be called pursuant to the provisions of this paragraph. Notwithstanding the provisions of this paragraph, however, no such special meeting shall be called during a period within 60 days immediately preceding the date fixed for the next annual meeting of stockholders. (iv) At any meeting at which the holders of Series B-1 Convertible Preferred Stock shall have the right to elect a New Director as provided herein, the presence in person or by proxy of the holders of at least a majority of the then outstanding shares of Series B-1 Convertible Preferred Stock shall be required and be sufficient to constitute a quorum. At any such meeting or adjournment thereof, the absence of a quorum of the holders of Series B-1 Convertible Preferred Stock shall not prevent the election of directors other than the New Director and the absence of a quorum or quorums of the holders of capital stock entitled to elect such other directors shall not prevent the election of any New Director. (v) The term of office of the New Director shall terminate upon the election of his successor by the holders of Series B-1 Convertible Preferred Stock. Upon any termination of the aforesaid voting rights in accordance with Section 8(c)(viii), the term of office of any New Director shall thereupon terminate and upon such termination the number of directors constituting the Board of Directors shall, without further action, be reduced by one. (vi) In the case of any vacancy occurring with respect to the New Director, the New Director who shall have been so elected may appoint a successor to hold office until his successor is elected at an annual or a special meeting of the stockholders. If the New Director shall cease to serve as a director before his term shall expire, the holders of Series B-1 Convertible Preferred Stock then outstanding may elect a successor (at any meeting of stockholders held for the purpose of electing directors or by the written consent of the holders of Series B-1 Convertible Preferred Stock pursuant to Section 228 of the Delaware General Corporation Law) to hold office until his successor is elected at an annual or a special meeting of the stockholders. The New Director may be removed, either for or without cause, by the holders of a majority of the Series B-1 Convertible Preferred Stock and any resulting vacancy may be filled as provided for in this subsection (vi). (vii) So long as any shares of Series B-1 Convertible Preferred Stock are outstanding, the Corporation shall take such action as may be necessary so that its By-laws shall contain provisions ensuring that the number of directors of the Corporation shall at all times be such that the exercise, by the holders of the Series B-1 Convertible Preferred Stock, of the right to elect a New Director will not contravene any provisions of the Certificate of Incorporation or By-laws. 9 (viii) Notwithstanding the foregoing, at such time, if any, as the outstanding shares of Series B-1 Convertible Preferred Stock then Beneficially Owned by the Initial Purchasers, their respective Affiliates or any Designated Transferees constitutes less than 50% of the number of shares of Common Stock Beneficially Owned by them immediately after the Issue Date (as such number may be adjusted for stock dividends, stock splits, combinations and recapitalizations and other similar events), the holders of Series B-1 Convertible Preferred Stock shall not be entitled to designate or elect any directors under this Section 8(c). 9. CONVERSION. (a) Any share of Series B-1 Convertible Preferred Stock shall be convertible at the option of the holder thereof into fully paid and nonassessable shares of Common Stock on the terms and conditions set forth in this Section 9, at any time upon surrender to the Corporation of the certificates for the shares to be converted, into a number of fully paid and nonassessable shares of Common Stock equal to the Convertible Preferred Amount per share as of the date of conversion divided by the Conversion Price. (b) Conversion of the Series B-1 Convertible Preferred Stock as permitted by Section 9(a) hereof may be effected by any holder thereof upon the surrender to the Corporation, at its principal office or at such other office or agency maintained by the Corporation for that purpose, of the certificate for the Series B-1 Convertible Preferred Stock to be converted accompanied by a written notice stating that such holder elects to convert all or a specified whole number of such shares in accordance with the provisions of this Section 9 and specifying the name or names in which such holder wishes the certificate or certificates for shares of Common Stock to be issued. In case such notice shall specify a name or names other than that of such holder, such notice shall be accompanied by payment of all transfer taxes payable upon the issuance of shares of Common Stock in such name or names. Other than such taxes, the Corporation will pay any and all issue and other taxes (other than taxes based on income) that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of Series B-1 Convertible Preferred Stock pursuant hereto. As promptly as practicable, and in any event within 5 Business Days after the surrender of such certificate or certificates and the receipt of such notice relating thereto and, if applicable, payment of all transfer taxes (or the demonstration to the reasonable satisfaction of the Corporation that such taxes have been paid), the Corporation shall deliver or cause to be delivered (i) certificates representing the number of validly issued, fully paid and nonassessable shares of Common Stock to which the holder of shares of Series B-1 Convertible Preferred Stock being converted shall be entitled, (ii) if less than the full number of shares of Series B-1 Convertible Preferred Stock evidenced by the surrendered certificate or certificates is being converted, a new certificate or certificates, of like tenor, for the number of shares and evidenced by such surrendered certificate or certificates less the number of shares being converted, and (iii) payment of all amounts to which a holder is entitled pursuant to Section 9(e) hereof. Such conversion shall be deemed to have been made at the close of business on the date of giving of such notice and of such surrender of the certificate or certificates representing the shares of Series B-1 10 Convertible Preferred Stock to be converted so that the rights of the holder thereof as to the shares being converted shall cease except for the right to receive shares of Common Stock in accordance herewith, and the Person entitled to receive the shares of Common Stock shall be treated for all purposes as having become the record holder of such shares of Common Stock at such time. (c) In case any shares of Series B-1 Convertible Preferred Stock are to be redeemed pursuant to Section 5 hereof, such right of conversion shall cease and terminate as to such shares at the close of business on the second Business Day preceding the date fixed for redemption or exchange, unless the Corporation shall default in the payment of the applicable redemption price, in which case such right of conversion shall not cease as to any share of Series B-1 Convertible Preferred Stock unless and until the redemption price with respect to such share has been paid in full. (d) The Corporation shall at all times reserve and keep available, free from liens, charges and security interests and not subject to any preemptive rights, for issuance upon conversion of the Series B-1 Convertible Preferred Stock such number of its authorized but unissued shares of Common Stock as will from time to time be sufficient to permit the conversion of all outstanding shares of Series B-1 Convertible Preferred Stock, and shall take all action required to increase the authorized number of shares of Common Stock if necessary to permit the conversion of all outstanding shares of Series B-1 Convertible Preferred Stock. (e) No fractional shares or scrip representing fractional shares of Common Stock shall be issued upon the conversion of any shares of Series B-1 Convertible Preferred Stock. Instead of any fractional interest in a share of Common Stock which would otherwise be deliverable upon the conversion of a share of Series B-1 Convertible Preferred Stock, the Corporation shall pay to the holder of such share an amount in cash equal to such fractional interest multiplied by the Current Market Price of the Common Stock on the day of conversion. If more than one share or right shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate Convertible Preferred Amount so surrendered. (f) The Conversion Price shall be subject to adjustment as follows: (i) In case the Corporation shall at any time or from time to time after the Issue Date (A) pay a dividend or make a distribution in shares of Common Stock or securities convertible into Common Stock, (B) subdivide or reclassify the outstanding shares of Common Stock into a greater number of shares of Common Stock, (C) combine or reclassify the outstanding shares of Common Stock into a smaller number of shares, or (D) otherwise issue by reclassification of the shares of Common Stock any shares of capital stock of the Corporation, then, and in each such case, the Conversion Price shall be adjusted so that the holder of any shares of Series B-1 Convertible Preferred Stock and thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other securities of the Corporation which such holder would have owned or have been entitled to receive after the happening of any of the events described above had such shares of Series B-1 Convertible Preferred Stock been surrendered for 11 conversion immediately prior to the happening of such event or the record date therefor, whichever is earlier. An adjustment made pursuant to this Section 9(f)(i) shall become applicable (x) in the case of any such dividend or distribution, immediately after the close of business on the record date for the determination of holders of shares of Common Stock entitled to receive such dividend or distribution and (y) in the case of any such subdivision, reclassification or combination, at the close of business on the day upon which such corporate action becomes effective. Such adjustment shall be made successively. (ii) In case the Corporation shall at any time or from time to time after the Issue Date declare, order, pay or make a dividend or other distribution (including without limitation any distribution of stock or other securities, evidences of indebtedness, property or assets or rights or warrants to subscribe for securities of the Corporation or any of its Subsidiaries) on its Common Stock (other than (A) regular quarterly dividends payable in cash or (B) dividends or distributions of shares of Common Stock referred to in Section 9(f)(i) hereof) (any one of the foregoing other than the items specified in clause (A) or (B) referred to as "SECURITIES OR Assets"), then and in each such case, unless the Corporation elects to reserve shares or other units of such Securities or Assets for distribution to the holders of the Series B-1 Convertible Preferred Stock upon the conversion of the shares of Series B-1 Convertible Preferred Stock so that any such holder converting shares of Series B-1 Convertible Preferred Stock will receive upon such conversion, in addition to the shares of the Common Stock to which such holder is entitled, the amount and kind of such Securities or Assets which such holder would have received if such holder had, immediately prior to the record date for the distribution of the Securities or Assets, converted its shares of Series B-1 Convertible Preferred Stock into Common Stock, the Conversion Price shall be adjusted so that such Conversion Price shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the date of such distribution by a fraction of which the numerator shall be the Current Market Price of the Common Stock on such record date less the then fair market value (as determined by the Board in good faith) of the portion of the capital stock or assets or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock, and of which the denominator shall be the Current Market Price of the Common Stock on such record date; PROVIDED, HOWEVER, that if the then fair market value (as so determined) of the portion of the Securities or Assets so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock on the record date mentioned above, in lieu of the foregoing adjustment, adequate provision 12 shall be made so that each holder of shares of the Series B-1 Convertible Preferred Stock shall have the right to receive the amount and kind of Securities or Assets which such holder would have received had such holder converted each such share of the Series B-1 Convertible Preferred Stock immediately prior to the record date for the distribution of the Securities or Assets. Such adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution. (iii) In case the Corporation shall issue or sell any Common Stock (or rights, options, warrants or other securities convertible into or exercisable or exchangeable for shares of Common Stock) (collectively, "ADDITIONAL SHARES") at any time from and after the Issue Date until the third anniversary of the Issue Date without consideration or for a consideration per share (or having a conversion, exchange or exercise price per share) (such per share amount, the "SALE PRICE") less than the greater of (A) the Current Market Price per share of Common Stock on the date preceding the earlier of the issuance or public announcement of the issuance of such Additional Shares of Common Stock and (B) the Conversion Price as of the date of such issuance of such shares (or, in the case of convertible or exchangeable or exercisable securities, less than the greater of the Current Market Price or the Conversion Price, as the case may be, as of the date of issuance of the rights, options, warrants or other securities in respect of which shares of Common Stock were issued) then, and in each such case, the Conversion Price shall be reduced to an amount determined by multiplying (A) the Conversion Price in effect on the day immediately prior to such date by (B) a fraction, the numerator of which shall be the sum of (1) the number of shares of Common Stock outstanding immediately prior to such sale or issuance multiplied by the greater of (a) the then applicable Conversion Price per share and (b) the Current Market Price per share of Common Stock on the date preceding the earlier of the issuance or public announcement of the issuance of such Additional Shares of Common Stock (the greater of (a) and (b) above hereinafter referred to as the "ADJUSTMENT PRICE") and (2) the aggregate consideration receivable by the Corporation for the total number of shares of Common Stock so issued (or into or for which the rights, options, warrants or other securities are convertible, exercisable or exchangeable), and the denominator of which shall equal to the product of (I) the sum of (x) the total number of shares of Common Stock outstanding immediately prior to such sale or issue and (y) the number of additional shares of Common Stock issued (or into or for which the rights, options, warrants or other securities may be converted, exercised or exchanged), multiplied by (II) the Adjustment Price. In case any portion of the consideration to be received by the Corporation shall be in a form other than cash, the fair market value of such noncash consideration shall be utilized in the foregoing computation. Such fair market value shall be determined in good faith by the Board of Directors. An adjustment made pursuant to this subsection (iii) shall be made on the next Business Day following the date 13 on which any such issuance is made and shall be effective retroactively to the close of business on the date of such issuance. For purposes of this subsection (iii), the aggregate consideration receivable by the Corporation in connection with the issuance of shares of Common Stock or of rights, warrants or other securities convertible into shares of Common Stock shall be deemed to be equal to the sum of the aggregate offering price (before deduction of underwriting discounts or commissions and expenses payable to third parties) of all such Common Stock, rights, warrants and convertible securities plus the aggregate amount (as determined on the date of issuance), if any, payable upon exercise or conversion of any such rights, warrants and convertible securities into shares of Common Stock. If, subsequent to the date of issuance of such right, warrants or other convertible securities, the exercise or conversion price thereof is reduced, such aggregate amount shall be recalculated and the Conversion Price shall be adjusted retroactively to give effect to such reduction. On the expiration of any option or the termination of any right to convert or exchange any securities into Additional Shares, the Conversion Price then in effect hereunder shall forthwith be increased to the Conversion Price which would have been in effect at the time of such expiration or termination (but taking into account other adjustments or potential made following the time of issuance of such options or securities) had such option or security, to the extent outstanding immediately prior to such expiration or termination, never been issued. If Common Stock is sold as a unit with other securities, the aggregate consideration received for such Common Stock shall be deemed to be net of the fair market value (as determined by the Board of Directors in good faith) of such other securities. The issuance or reissuance of (A) any shares of Common Stock or rights, warrants or other securities convertible into shares of Common Stock (whether treasury shares or newly issued shares) (1) pursuant to a dividend or distribution on, or subdivision, combination or reclassification of, the outstanding shares of Common Stock requiring an adjustment in the Conversion Price pursuant to subsection (i) of this Section 9(f); (2) pursuant to any restricted stock or stock option plan or program of the Corporation involving the grant of options or rights to acquire shares of Common Stock after the date hereof to directors, officers and employees of the Corporation and its Subsidiaries; (3) pursuant to any option, warrant, right, or convertible security outstanding as of the Issue Date; (4) pursuant to any securities issued to a bank or other similar financial institution solely in connection with the Senior Credit Facility or the Senior Subordinated Credit Facility or (5) pursuant to an underwritten offering registered with the SEC if the offering price is greater than the Conversion Price then in effect; (B) the Series B-1 Convertible Preferred Stock and any shares of Common Stock issuable upon conversion or exercise thereof, (C) the Warrants and any shares of Common Stock issuable upon exercise thereof, or (D) the Initial Convertible Preferred Stock, shall not be deemed to constitute an issuance of Common Stock or convertible securities by the Corporation to which this subsection 14 (iii) applies. No adjustment shall be made pursuant to this subsection (iii) in connection with any transaction to which Section 9(g) applies. (iv) For purposes of this Section 9(f), the number of shares of Common Stock at any time outstanding shall not include any shares of Common Stock then owned or held by or for the account of the Corporation. (v) All calculations of the Conversion Price pursuant to this Section 9(f) shall be made to the nearest one one-hundredth of a cent. Anything in this Section 9(f) to the contrary notwithstanding, (A) the Corporation shall not be required to give effect to any adjustment in the Conversion Price unless and until the net effect of one or more adjustments (each of which shall be carried forward), determined as above provided, shall have resulted in a reduction of the Conversion Price of at least 1%, and when the cumulative net effect of more than one adjustment so determined shall be to reduce the Conversion Price by at least 1%, such reduction in Conversion Price shall thereupon be given effect and (B) in no event shall the then current Conversion Price be increased as a result of any calculation made at any time pursuant to this Section 9(f). (g) (i) In case of any capital reorganization or reclassification of outstanding shares of Common Stock (other than a reclassification to which Section 9(f)(i) hereof shall apply), or in case of any merger or consolidation of the Corporation with or into another Person (as defined below), or in case of any sale or conveyance to another Person of all or substantially all of the assets of the Corporation or any compulsory share exchange pursuant to which share exchange the shares of Common Stock are converted into other securities, cash or other property (each of the foregoing being referred to as a "TRANSACTION"), each share of Series B-1 Convertible Preferred Stock then outstanding shall thereafter be convertible into, in lieu of the Common Stock issuable upon such conversion prior to consummation of such Transaction, the kind and amount of shares of stock and other securities and property receivable (including cash) upon the consummation of such Transaction by a holder of that number of shares of Common Stock into which one share of Series B-1 Convertible Preferred Stock was convertible immediately prior to such Transaction (including, on a pro rata basis, the cash, securities or property received by holders of Common Stock in any tender or exchange offer that is a step in such Transaction). (ii) Notwithstanding anything contained herein to the contrary, the Corporation will not effect any Transaction unless, prior to the consummation thereof, (A) the Surviving Person (as defined below) shall agree that the shares of Series B-1 Convertible Preferred Stock shall be treated as provided in paragraph (i) of this Section 9(g) and the agreements governing such Transaction shall so provide, (B) the Surviving Person thereof shall assume, by written instrument mailed, by first-class mail, postage prepaid, to each holder of shares of Series B-1 Convertible Preferred 15 Stock at such holder's address as it appears in the records of the Corporation, the obligation to deliver to such holder such cash or other securities to which, in accordance with the foregoing provisions, such holder is entitled and such Surviving Person shall have mailed, by first-class mail, postage prepaid, to each holder of shares of Series B-1 Convertible Preferred Stock at such holder's address as it appears in the records of the Corporation, an opinion of independent counsel for such Person stating that such assumption agreement is a valid, binding and enforceable agreement of the Surviving Person, and (C) proper provision is made to ensure that the holders of shares of Series B-1 Convertible Preferred Stock will be entitled to receive the benefits afforded by Section 5(b) hereof. (h) In any case, if necessary, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions set forth in this Section 9 with respect to rights and interests thereafter of the holders of shares of Series B-1 Convertible Preferred Stock to the end that the provisions set forth herein for the protection of the conversion rights of Series B-1 Convertible Preferred Stock shall thereafter be applicable, as nearly as reasonably may be, to any such other shares of stock and other securities (other than the Common Stock) and property deliverable upon conversion of the shares of Series B-1 Convertible Preferred Stock remaining outstanding with such adjustments in the Conversion Price and such other adjustments in the provisions hereof as the Board of Directors shall in good faith determine to be appropriate. In case securities or property other than Common Stock shall be issuable or deliverable upon conversion as aforesaid, then all references in this Section 9 shall be deemed to apply, so far as appropriate and as nearly as may be, to such other securities or property. (i) If the Corporation shall pay any dividend or make any other distribution to the holders of its Common Stock (other than regular quarterly dividends payable in cash) or shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or any other right, or there shall be any Transaction, or there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Corporation, then, in any one or more of said cases the Corporation shall give at least 15 days prior written notice to the holders of record of Series B-1 Convertible Preferred Stock by first-class mail, postage prepaid, at their respective addresses as they shall appear in the records of the Corporation of the earlier of the dates on which (i) the books of the Corporation shall close or a record shall be taken for such stock dividend, distribution or subscription rights or (ii) such Transaction, dissolution, liquidation or winding up shall take place. Such notice shall also specify the date as of which the holders of the Common Stock of record shall participate in said dividend, distribution or subscription rights or shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale or conveyance or participate in such dissolution, liquidation or winding up, as the case may be. Failure to give such notice shall not invalidate any action so taken. (j) AUTOMATIC CONVERSION. On the Closing Date, each share of Series B-1 Convertible Preferred Stock shall, without further action, be automatically converted into a number of fully paid and nonassessable shares of Initial Convertible Preferred Stock equal to the Convertible Preferred Amount per share as of the Closing Date divided by $1,000 (as adjusted for any split, subdivision, combination, consolidation, recapitalization or similar event with respect to the Series B-1 Convertible Preferred Stock). The Corporation shall take, or cause to 16 be taken, all such further actions as shall be necessary to effectuate such conversion, including, without limitation, issuing shares of the Initial Convertible Preferred Stock to the holders of shares of Series B-1 Convertible Preferred Stock on the Closing Date. The provisions of Section 9(e) shall be applicable to any conversion pursuant to this Section 9(j). 10. REPORTS AS TO ADJUSTMENTS. Upon the occurrence of any event specified in Section 9(f) hereof that would result in any adjustment of the Conversion Price, then, and in each such case, the Corporation shall promptly deliver to the holders of record by first-class mail, postage prepaid, at their respective addresses as they shall appear in the records of the Corporation, a certificate signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation setting forth in reasonable detail the event requiring the adjustment and the method by which such adjustment was calculated and specifying the Conversion Price then in effect following such adjustment. Where appropriate, such notice to the holders of Series B-1 Convertible Preferred Stock may be given in advance and included as part of the notice required pursuant to Section 9(i) hereof. 11. PURCHASE RIGHTS. If the Corporation issues any shares of Common Stock, options, convertible securities, other equity securities or securities containing options or rights to acquire any equity securities or any securities convertible or exchangeable for equity securities, in each case after the date hereof (other than a Permitted Issuance) to any Person (the "OFFEREE"), such issuance (the "OFFER") will be subject to the right of first offer and participation rights set forth in Section 11(a) and Section 11(b) below. (a) PREFERRED STOCK ISSUANCES. If the securities to be issued in the Offer include any class or series of preferred stock of the Corporation whether by liquidation, dividend or voting rights, the Corporation shall offer such securities (the "PREFERRED OFFERED SECURITIES") to the holders of Series B-1 Convertible Preferred Stock by delivery of written notice to such holders not less than 30 days prior to the date of the proposed issuance. Such notice shall disclose in reasonable detail the proposed terms (including price terms) and conditions of the Offer (the "PREFERRED OFFER NOTICE"). Each holder of Series B-1 Convertible Preferred Stock shall have the right to purchase its ratable portion of the Preferred Offered Securities (determined by dividing the number of shares of Series B-1 Convertible Preferred Stock held by such holder by the total number of shares of Series B-1 Convertible Preferred Stock then outstanding) on the terms as set forth in the Preferred Offer Notice, by delivery of written notice to the Corporation of such election within 15 days after delivery of the Preferred Issuance Notice (the "PREFERRED ELECTION NOTICE"). If any holder of Series B-1 Convertible Preferred Stock has elected to purchase any Preferred Offered Securities, the sale of such securities shall be consummated simultaneously with the consummation of the sale to the Offeree. If the holders of Series B-1 Convertible Preferred Stock elect to purchase less than all of the Preferred Offered Securities as described above, the Corporation may issue such remaining Preferred Offered Securities to the Offeree at the same price and on the same terms as set forth in the Preferred Issuance Notice during the 45-day period beginning from the date on which the Preferred Election Notice has been delivered to the Corporation. Any Preferred 17 Offered Securities not issued within such 45-day period will be subject to this Section 11(a) upon subsequent proposed issuance. (b) OTHER ISSUANCES. If the securities to be issued pursuant to the Offer do not include any class or series of preferred stock of the Corporation whether by liquidation, dividend or voting rights, the Corporation shall offer to sell to each holder of Series B-1 Convertible Preferred Stock a number of such securities (the "OFFERED SECURITIES") so that such holder's Ownership Ratio immediately after the issuance of such securities would be equal to such holder's Ownership Ratio immediately prior to such issuance of securities. The Corporation shall give each holder of Series B-1 Convertible Preferred Stock at least 30 days prior written notice of any proposed issuance, which notice shall disclose in reasonable detail the proposed terms and conditions of such issuance (the "ISSUANCE NOTICE"). Each holder of Series B-1 Convertible Preferred Stock shall be entitled to purchase its ratable portion of the Offered Securities at the same price, on the same terms, and at the same time as the securities are issued to the Offeree by delivery of written notice to the Corporation of such election within 15 days after delivery of the Issuance Notice (the "ELECTION NOTICE"); PROVIDED, that if more than one type of security is proposed to be issued, such holder shall, if it exercises its rights pursuant to this Section 11(b), purchase such securities in the same ratio to be issued to the Offeree. If any holder of Series B-1 Convertible Preferred Stock has elected to purchase any Offered Securities, the sale of such securities shall be consummated simultaneously with the consummation of the sale to the Offeree. If the holders of Series B-1 Convertible Preferred Stock elect to purchase less than all of the Offered Securities as described above, the Corporation may issue such remaining Offered Securities to the Offeree at the same price and on the same terms as set forth in the Issuance Notice during the 45-day period beginning from the date on which the Election Notice has been delivered to the Corporation. Any Offered Securities not issued within such 45-day period must be reoffered to the holders of Series B-1 Convertible Preferred Stock in accordance with this Section 11(b) prior to issuance. (c) The election by any holder of Series B-1 Convertible Preferred Stock not to exercise purchase rights under this Section 11 in any one instance shall not affect such holders rights as to any subsequent proposed issuance. Any sale of such securities by the Corporation without first giving such holders the rights described in this Section 11 shall be void and of no force and effect, and the Corporation shall not register such sale or issuance on the books and records of the Corporation. 12. CERTAIN COVENANTS. Any holder of Series B-1 Convertible Preferred Stock may proceed to protect and enforce its rights and the rights of such holders by any available remedy by proceeding at law or in equity to protect and enforce any such rights, whether for the specific enforcement of any provision in this Certificate of Designations or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. 18 13. DEFINITIONS. For the purposes of this Certificate of Designations, the following terms shall have the meanings indicated: "AFFILIATE" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act or any successor provision. The terms "affiliated" and "non-affiliated" shall have meanings correlative to the foregoing. "BENEFICIALLY OWN" has the meaning set forth in Rules 13d-3 and 13d-5 promulgated under the Exchange Act. "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "CHANGE IN CONTROL" shall mean (i) any sale, transfer, conveyance or other disposition (other than by way of merger or consolidation) of all or substantially all of the Corporation's assets, on a consolidated basis, in one transaction or a series of related transactions, to any Person (including any group that is deemed to be a Person); (ii) the consummation of any transaction involving the Corporation, including, without limitation, any merger or consolidation, whereby any Person (including any group that is deemed to be a Person ) is or becomes the "beneficial owner," directly or indirectly, of more than 40% of the aggregate voting equity securities of the Corporation or the surviving entity or entities of such transaction if other than the Corporation; (iii) the Continuing Directors cease for any reason to constitute a majority of the members of the Board of Directors then in office; (iv) the approval by the Corporation's stockholders of a merger or consolidation of the Corporation with any other company and all other required governmental approvals have been obtained, other than a merger or consolidation which would result in the Voting Securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the Voting Securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation; or (v) the Corporation adopts a plan of liquidation. "CLOSING DATE" shall have the meaning set forth in the Stock Purchase Agreement. "COMMON STOCK" shall mean the common stock, par value $1 per share, of the Corporation, including any associated Right, as defined in and issued pursuant to the Rights Agreement, dated as of October 27, 1998, as amended, by and between the Corporation and The Bank of New York (as successor to First Chicago Trust Company of New York), as Rights Agent. "CONTINUING DIRECTORS" shall mean during any period of 12 consecutive months, individuals who at the beginning of any such 12-month period constituted the Board of Directors (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Corporation was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved, including new directors designated in or provided for in an agreement regarding the merger, consolidation or sale, 19 transfer or other conveyance, of all or substantially all of the assets of the Corporation, if such agreement was approved by a vote of such majority of directors). "CONVERTIBLE PREFERRED AMOUNT" shall mean an amount (as adjusted for any split, subdivision, combination, consolidation, recapitalization or similar event with respect to the Series B-1 Convertible Preferred Stock) equal to 100% of the Liquidation Value for each share outstanding, plus an amount equal to all accrued but unpaid dividends thereon, whether or not declared, to the date of, as applicable, (i) liquidation, dissolution or winding up as calculated pursuant to Section 4 hereof, (ii) redemption, as calculated pursuant to Section 5 hereof or (iii) conversion, as calculated pursuant to Section 9 hereof; PROVIDED, HOWEVER, for the purpose of determining the amount of accrued and unpaid dividends as of any date after the Trigger Date, the calculation shall assume that the Dividend Rate was 15% per annum from the date of issuance of the Series B-1 Preferred Stock through, as applicable, (i) the date of liquidation, dissolution or winding up as calculated pursuant to Section 4 hereof, (ii) the date of redemption, as calculated pursuant to Section 5 hereof or (iii) the date of conversion, as calculated pursuant to Section 9 hereof; provided that, for the avoidance of doubt, in the event that the Corporation shall have previously paid accrued dividends at the 8% Dividend Rate for any quarterly dividend period, such 15% per annum Dividend Rate shall still be applicable to such quarterly dividend period with the effect that the accrued and unpaid dividends amount for such quarterly dividend period shall equal the amount of accrued dividends calculated by using the 15% per annum Dividend Rate for such quarterly dividend period less the dividends actually paid by the Corporation with respect to such quarterly dividend period. "CONVERSION PRICE" shall mean, $24.05, and shall be subject to adjustment as provided for in Section 9(f). "CURRENT MARKET PRICE," when used with reference to shares of Common Stock or other securities on any date, shall mean the closing price per share of Common Stock or such other securities on such date and, when used with reference to shares of Common Stock or other securities for any period, shall mean the average of the daily closing prices per share of Common Stock or such other securities for such period. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Common Stock or such other securities are not listed or admitted to trading on the New York Stock Exchange, as reported, in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Common Stock or such other securities are listed or admitted to trading or, if the Common Stock or such other securities are not listed or admitted to trading on any national securities exchange, the last quoted sale price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or such other system then in use, or, if on any such date the Common Stock or such other securities are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock or such other securities selected by the Board of Directors of the Corporation. If the Common Stock or such other securities are not publicly held or so listed or publicly traded, "CURRENT MARKET PRICE" shall mean the fair market value per share of Common Stock or of such other securities as determined by an independent 20 investment banking firm with an established national reputation as a valuer of equity securities selected by the Corporation and reasonably acceptable to the holders of a majority of the shares of Series B-1 Convertible Preferred Stock outstanding at the time. "DESIGNATED TRANSFEREE" shall mean any Person to whom the Initial Purchasers or any Designated Transferee shall have sold or otherwise transferred at least 10,000 shares of Series B-1 Convertible Preferred Stock (as such number may be adjusted from time to time for any stock split, stock dividend, reverse split, combination, recapitalization, merger, or otherwise); PROVIDED, HOWEVER, that no Person primarily engaged in the business of publishing, printing or marketing yellow page directories (the "DIRECTORIES BUSINESS") and no Person which owns more than 40% of the outstanding voting equity securities of any Person primarily engaged in the Directories Business shall be a Designated Transferee unless the Corporation gives its written consent to such Person being a Designated Transferee. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934. "INITIAL CONVERTIBLE PREFERRED STOCK" shall mean the Convertible Preferred Stock, and any shares of Common Stock issuable upon conversion or exercise thereof, issuable pursuant to the Stock Purchase Agreement. "INITIAL PURCHASERS" shall mean GS Capital Partners 2000, L.P., a Delaware limited partnership; GS Capital Partners 2000 Offshore, L.P., a Cayman Islands exempted limited partnership; GS Capital Partners 2000 Employee Fund 2000, L.P., a Delaware limited partnership; GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, a German limited partnership; and Goldman Sachs Direct Investment Fund 2000, L.P. a Delaware limited partnership. "ISSUE DATE" shall mean November 25, 2002. "JUNIOR SECURITIES" shall have the meaning set forth in Section 2 hereof. "NOTES CLOSING" shall mean the closing of the offering of Senior Notes and Senior Subordinated Notes by R.H. Donnelley Finance Corporation I, pursuant to the Preliminary Offering Memorandum, dated November 12, 2002. "NOVEMBER LETTER AGREEMENT" shall mean that certain Letter Agreement, dated November 25, 2002, by and among the Corporation, R.H. Donnelley, Inc. and the Purchasers named therein, as such agreement may be amended from time to time. "OWNERSHIP RATIO" shall mean, as to any Person at any time of determination, the percentage obtained by dividing the amount of shares of Common Stock held by such Person on a fully diluted, as-if-converted basis at such time by the aggregate amount of shares of Common Stock outstanding on a fully diluted, as-if-converted basis at such time. For purposes of this definition, "fully diluted" shall exclude shares of Common Stock issuable pursuant to out-of-the-money options, warrants or other rights and options, warrants or other rights which are not exercisable by the holder thereof on the date of determination. "PARITY SECURITIES" shall have the meaning set forth in Section 2 hereof. 21 "PERMITTED ISSUANCE" shall mean (i) the issuance or granting of Common Stock (including restricted, deferred or performance shares), options or convertible securities to employees of the Corporation and its Subsidiaries or the exercise thereof pursuant to a stock-based incentive plan, (ii) the issuance of Common Stock hereunder, (iii) the issuance of Common Stock by the Corporation for consideration other than cash pursuant to a consummated merger, consolidation, acquisition, or similar business combination, (iv) the issuance of Common Stock pursuant to any securities issued to a bank or other similar financial institution solely in connection with the Senior Credit Facility or the Senior Subordinated Credit Facility, (v) the issuance of Common Stock upon exercise of Warrants or (vi) the issuance of shares of the Initial Convertible Preferred Stock. "PERSON" shall mean any individual, firm, corporation or other entity, and shall include any successor (by merger or otherwise) of such entity. "REDEMPTION TRIGGER DATE" shall mean the date which is the earliest of (a) the date that the Sprint Purchase Agreement is terminated prior to the closing of the transactions contemplated thereby, (b) the date that the Stock Purchase Agreement is terminated prior to the Closing Date, (c) December 16, 2002, if the money to be funded into escrow (the "Escrow") pursuant to the Notes Closing has not been so funded on or before December 16, 2002 and (d) the date on which the Escrow is terminated (other than in connection with the Closing (as such term is defined in the Stock Purchase Agreement)). "REGISTRATION RIGHTS AGREEMENT" shall mean that certain Registration Rights Agreement, dated November 25, 2002, by and among the Corporation and the Purchasers named therein. "SENIOR CREDIT FACILITY" shall have the meaning set forth in the Stock Purchase Agreement. "SENIOR SUBORDINATED CREDIT FACILITY" shall have the meaning set forth in the Stock Purchase Agreement. "SPRINT PURCHASE AGREEMENT" shall mean the Stock Purchase Agreement, dated as of September 21, 2002, by an among Sprint Corporation, a Kansas corporation, Centel Directories LLC, a Delaware limited liability company, and the Corporation, as such agreement may be amended from time to time. "STOCK PURCHASE AGREEMENT" shall mean that certain Preferred Stock and Warrant Purchase Agreement, dated September 21, 2002, by and among the Corporation and the Purchasers named therein, as such agreement may be amended from time to time. "SUBSIDIARIES" shall have the meaning ascribed to the term "Company Subsidiaries" in the Stock Purchase Agreement. "SURVIVING PERSON" shall mean the continuing or surviving Person of a merger, consolidation or other corporate combination, the Person receiving a transfer of all or a substantial part of the properties and assets of the Corporation, or the Person consolidating with or merging into the Corporation in a merger, consolidation or other corporate combination in which the Corporation is the continuing or surviving Person, but in connection with which the Series B-1 Convertible Preferred Stock or Common Stock of the Corporation is exchanged or 22 converted into the securities of any other Person or the right to receive cash or any other property. "TRADING DAY" shall mean a day on which the principal national securities exchange on which the Common Stock is listed or admitted to trading is open for the transaction of business or, if the Common Stock is not listed or admitted to trading on any national securities exchange, a Business Day. "TRIGGER DATE" shall mean the date which is the earliest of (a) 30 days after the Redemption Trigger Date, (b) the day after the first Quarterly Dividend Payment Date that (i) dividends due to be paid to the holders of shares of the Series B-1 Convertible Preferred Stock on such Quarterly Dividend Payment Date are not paid, in cash, in full on such Quarterly Dividend Payment Date and (ii) such dividend payment is not prohibited by any covenant restricting such payments contained in the Corporation's bank credit facility or public indentures, and (c) the date on which the Sprint Purchase Agreement or any agreement contemplated thereby is amended, modified, waived or terminated in any material respect without the prior written consent of the holders of at least 51% of the shares of Series B-1 Convertible Preferred Stock. "VOTING EQUITY INTERESTS" shall mean any Voting Securities, securities of the Corporation convertible into Voting Securities, and options, warrants or other rights to acquire Voting Securities. "VOTING SECURITIES" shall mean the Common Stock, the Series B-1 Convertible Preferred Stock and any other securities of the Corporation having the voting power under ordinary circumstances with respect to the election of directors of the Corporation. "WARRANTS" shall mean the warrants to purchase shares of Common Stock issued pursuant to the Stock Purchase Agreement. 23 IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed in its name and on its behalf and attested on this 25th day of November, 2002 by duly authorized officers of the Corporation. R.H. DONNELLEY CORPORATION By: /s/ Steven M. Blondy -------------------------------------- Name: Steven M. Blondy Title: Senior Vice President and Chief Financial Officer ATTEST: By: /s/ Robert J. Bush ----------------------- Name: Robert J. Bush Title: Secretary 24 EX-4.1 4 l97536aexv4w1.txt EXHIBIT 4.1 EXHIBIT 4.1 This Warrant was originally issued on November 25, 2002 and such issuance was not registered under the Securities Act of 1933, as amended. The transfer of this Warrant and the securities obtainable upon exercise hereof is subject to the limitations and conditions on transfer specified in the Letter Agreement, dated as of November 25, 2002 (as it may be amended from time to time, the "LETTER AGREEMENT"), between the Company, R.H. Donnelley Inc. and the Registered Holder (each as defined herein), and the Company reserves the right to refuse the transfer of any such securities until such limitations have lapsed and conditions have been fulfilled, with respect to such transfer. Upon written request, a copy of the Letter Agreement shall be furnished by the Company to the holder hereof without charge. R.H. DONNELLEY CORPORATION STOCK PURCHASE WARRANT ----------------------- Date of Issuance: November 25, 2002 Certificate No. _____ FOR VALUE RECEIVED, R.H. Donnelley Corporation, a Delaware corporation (the "COMPANY"), hereby grants to _______________________________ or its registered assigns (the "REGISTERED HOLDER") the right to purchase from the Company _________ shares of the Company's Common Stock at the Exercise Price. This Warrant is one of several warrants (collectively, the "SERIES 1 WARRANTS") issued by the Company to certain investors (the "INVESTORS") pursuant to the letter agreement, dated as of November 25, 2002 (the "LETTER AGREEMENT"). Certain capitalized terms used herein are defined in SECTION 4 and capitalized terms used in this Warrant but not defined herein shall have the meanings ascribed thereto in the Letter Agreement. The amount and kind of securities obtainable pursuant to the purchase rights granted hereunder and the purchase price for such securities are subject to adjustment pursuant to the provisions contained in this Warrant. This Warrant is subject to the following provisions: Section 1. EXERCISE OF WARRANT. (a) EXERCISE PERIOD. The Registered Holder may exercise, in whole or in part (but not as to a fractional share of Common Stock), the purchase rights represented by this Warrant at any time and from time to time after the Date of Issuance to and including the fifth anniversary of the earlier of (i) the issuance of warrants under the Purchase Agreement or (ii) termination of the Purchase Agreement prior to the closing thereunder (the "EXERCISE PERIOD"). (b) EXERCISE PROCEDURE. (i) This Warrant shall be deemed to have been exercised when the Company has received all of the following items (the "EXERCISE TIME"): (A) a completed Exercise Agreement, as defined in SECTION 1(c), executed by the Person exercising all or part of the purchase rights represented by this Warrant (the "PURCHASER"); (B) this Warrant; (C) if this Warrant is not registered in the name of the Purchaser, an Assignment or Assignments in the form set forth in EXHIBIT I evidencing the assignment of this Warrant to the Purchaser, in which case the Registered Holder shall have complied with the provisions set forth in SECTION 6; and (D) either (1) a check payable to the Company in an amount equal to the product of the Exercise Price multiplied by the number of shares of Common Stock being purchased upon such exercise (the "AGGREGATE EXERCISE PRICE"), or (2) a written notice to the Company that the Purchaser is exercising the Warrant (or a portion thereof) by authorizing the Company to withhold from issuance a number of shares of Common Stock issuable upon such exercise of the Warrant that when multiplied by the Current Market Price of the Common Stock is equal to the Aggregate Exercise Price (which withheld shares shall no longer be issuable under this Warrant). (ii) Certificates for shares of Common Stock purchased upon exercise of this Warrant shall be delivered by the Company to the Purchaser within five Business Days after the date on which the Exercise Time occurs. Unless this Warrant has expired or all of the purchase rights represented hereby have been exercised, the Company shall prepare a new Warrant, substantially identical hereto, representing the purchase rights formerly represented by this Warrant that have not expired or been exercised and shall within such five-Business Day period deliver such new Warrant to the Person designated for delivery in the Exercise Agreement. (iii) The Common Stock issuable upon the exercise of this Warrant shall be deemed to have been issued to the Purchaser at the Exercise Time, and the Purchaser shall be deemed for all purposes to have become the record holder of such Common Stock as of the Exercise Time. (iv) The issuance of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Registered Holder or the Purchaser for any issuance tax in respect thereof if issued to the Registered Holder or other cost incurred by the Company in connection with such exercise and the related issuance of shares of Common Stock. Each share of Common Stock issuable upon exercise of this Warrant shall upon payment of the Exercise Price therefor, be fully paid and nonassessable and free from all liens and charges with respect to the issuance thereof. (v) The Company shall not close its books against the transfer of this Warrant or of any share of Common Stock issued or issuable upon the exercise of this Warrant in any manner that interferes with the timely and proper exercise of this Warrant. (vi) Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a registered public offering or the sale of the Company, the exercise of any portion of this Warrant may, at the election of the holder hereof, 2 be conditioned upon the consummation of the public offering or sale of the Company in which case such exercise shall not be deemed to be effective until the consummation of such transaction. (vii) The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of issuance upon the exercise of the Series 1 Warrants, such number of shares of Common Stock issuable upon the exercise of all outstanding Series 1 Warrants. The Company shall take all such actions as may be necessary to assure that all such shares of Common Stock may be so issued without violation of any law or governmental regulation applicable to the Company or any requirements of any domestic securities exchange upon which shares of Common Stock may be listed (except for official notice of issuance that shall be immediately delivered by the Company upon each such issuance). The Company shall not take any action that would cause the number of authorized but unissued shares of Common Stock to be less than the number of such shares required to be reserved hereunder for issuance upon exercise of the Series 1 Warrants. (c) EXERCISE AGREEMENT. Upon any exercise of this Warrant, the Exercise Agreement shall be substantially in the form set forth in EXHIBIT II (the "EXERCISE AGREEMENT"), except that if the shares of Common Stock are not to be issued in the name of the Person in whose name this Warrant is registered, the Exercise Agreement shall also state the name of the Person to whom the certificates for the shares of Common Stock are to be issued, and if the number of shares of Common Stock to be issued does not include all the shares of Common Stock purchasable hereunder, it shall also state the name of the Person to whom a new Warrant for the unexercised portion of the purchase rights hereunder is to be delivered. Such Exercise Agreement shall be dated the actual date of execution thereof. (d) FRACTIONAL SHARES. If a fractional share of Common Stock would be issuable upon exercise of the purchase rights represented by this Warrant, the Company shall, unless prohibited by any agreement to which the Company is a party, within five Business Days after the date on which the Exercise Time occurs, deliver to the Purchaser a check payable to the Purchaser in lieu of such fractional share in an amount equal to the difference between Current Market Price of such fractional share as of the date on which the Exercise Time occurs and the Exercise Price of such fractional share. Section 2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. In order to prevent dilution of the purchase rights granted under this Warrant, the Exercise Price shall be subject to adjustment from time to time as provided in this SECTION 2, and the number of shares of Common Stock obtainable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this SECTION 2. (a) The Exercise Price shall be subject to adjustment as follows: (i) In case the Company shall at any time or from time to time after the Date of Issuance (A) pay a dividend or make a distribution in shares of Common Stock or Convertible Securities into Common Stock, (B) subdivide or reclassify the outstanding shares of Common Stock into a greater number of shares of Common Stock, (C) combine or reclassify the outstanding shares of Common Stock into a smaller number of shares, or (D) otherwise issue by 3 reclassification of the shares of Common Stock any shares of capital stock of the Company, then, and in each such case, the Exercise Price in effect immediately prior to such action and the number of shares of Common Stock obtainable upon exercise of this Warrant shall be proportionately adjusted so that the holder of this Warrant shall be entitled to receive the number of shares of Common Stock or other securities of the Company upon exercise of this Warrant which such holder would have owned or have been entitled to receive after the happening of any of the events described above had such Warrant been exercised immediately prior to the happening of such event or the record date therefor, whichever is earlier. An adjustment made pursuant to this SECTION 2(a)(i) shall become applicable (x) in the case of any such dividend or distribution, immediately after the close of business on the record date for the determination of holders of shares of Common Stock entitled to receive such dividend or distribution and (y) in the case of any such subdivision, reclassification or combination, at the close of business on the day upon which such corporate action becomes effective. Such adjustment shall be made successively. (ii) In case the Company shall at any time or from time to time after the Date of Issuance declare, order, pay or make a dividend or other distribution (including without limitation any distribution of stock or other securities, evidences of indebtedness, property or assets or rights or warrants to subscribe for securities of the Company or any of its Subsidiaries) on its Common Stock (other than (A) regular quarterly dividends payable in cash or (B) dividends or distributions of shares of Common Stock referred to in SECTION 2(a)(i)) (any one of the foregoing other than the items specified in clause (A) or (B) referred to as "SECURITIES OR ASSETS"), then and in each such case, unless the Company elects to reserve shares or other units of such Securities or Assets for distribution to the holders of the Series 1 Warrants upon the exercise of such Series 1 Warrants so that any such holder exercising its Series 1 Warrants will receive upon such exercise, in addition to the shares of the Common Stock to which such holder is entitled, the amount and kind of such Securities or Assets which such holder would have received if such holder had, immediately prior to the record date for the distribution of the Securities or Assets, exercised its Warrant for Common Stock, the Exercise Price shall be adjusted so that such Exercise Price shall equal the price determined by multiplying the Exercise Price in effect immediately prior to the date of such distribution by a fraction of which the numerator shall be the Current Market Price of the Common Stock on such record date less the then fair market value (as determined by the Board in good faith) of the portion of the capital stock or assets or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock, and of which the denominator shall be the Current Market Price of the Common Stock on such record date; PROVIDED, HOWEVER, that if the then fair market value (as so determined) of the portion of the Securities or Assets so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock on the record date mentioned above, in lieu of the foregoing adjustment, adequate provision shall be made so that each holder of the Series 1 Warrants shall have the right to receive the amount and kind of Securities or Assets which such holder would have received had such holder exercised its Warrant immediately prior to the record date for the distribution of the Securities or Assets. Such adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution. (iii) In case the Company shall issue or sell any Common Stock (or rights, Options, warrants or other Convertible Securities) (collectively, "ADDITIONAL SHARES") at any 4 time after the date hereof until November 25, 2005 without consideration or for a consideration per share (or having a exercise, exchange or exercise price per share) (such per share amount, the "SALE PRICE") less than the greater of (A) the Current Market Price per share of Common Stock on the date preceding the earlier of the issuance or public announcement of the issuance of such Additional Shares of Common Stock and (B) the Exercise Price as of the date of such issuance of shares (or, in the case of Convertible Securities, less than the greater of the Current Market Price or the Exercise Price, as the case may be, as of the date of issuance of the rights, Options, warrants or other securities in respect of which shares of Common Stock were issued) then, and in each such case, the Exercise Price shall be reduced to an amount determined by multiplying (A) the Exercise Price in effect on the day immediately prior to such date by (B) a fraction, the numerator of which shall be the sum of (1) the number of shares of Common Stock outstanding immediately prior to such sale or issuance multiplied by the greater of (a) the then applicable Exercise Price per share and (b) the Current Market Price per share of Common Stock on the date preceding the earlier of the issuance or public announcement of the issuance of such Additional Shares of Common Stock (the greater of (a) and (b) above hereinafter referred to as the "ADJUSTMENT PRICE") and (2) the aggregate consideration receivable by the Company for the total number of shares of Common Stock so issued (or into or for which the rights, Options, warrants or other securities are convertible, exercisable or exchangeable), and the denominator of which shall equal to the product of (I) the sum of (x) the total number of shares of Common Stock outstanding immediately prior to such sale or issue and (y) the number of additional shares of Common Stock issued (or into or for which the rights, Options, warrants or other securities may be converted, exercised or exchanged), multiplied by (II) the Adjustment Price. In case any portion of the consideration to be received by the Company shall be in a form other than cash, the fair market value of such noncash consideration shall be utilized in the foregoing computation. Such fair market value shall be determined in good faith by the Board of Directors. Upon each such adjustment of the Exercise Price hereunder, the number of Shares of Common Stock acquirable upon exercise of this Warrant shall be adjusted to the number of shares determined by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. An adjustment made pursuant to this subsection (iii) shall be made on the next Business Day following the date on which any such issuance is made and shall be effective retroactively to the close of business on the date of such issuance. For purposes of this subsection (iii), the aggregate consideration receivable by the Company in connection with the issuance of shares of Common Stock or of rights, warrants or other Convertible Securities shall be deemed to be equal to the sum of the aggregate offering price (before deduction of underwriting discounts or commissions and expenses payable to third parties) of all such Common Stock, rights, warrants and Convertible Securities plus the aggregate amount (as determined on the date of issuance), if any, payable upon exercise or exercise of any such rights, warrants and Convertible Securities into shares of Common Stock. If, subsequent to the date of issuance of such right, warrants or other Convertible Securities, the conversion or exercise price thereof is reduced, such aggregate amount shall be recalculated and the Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant shall be adjusted retroactively to give effect to such reduction. On the expiration of any option or the termination of any right to convert or exchange any securities into Additional Shares, the Exercise Price then in effect hereunder shall forthwith be increased to the Exercise Price which would have been in 5 effect at the time of such expiration or termination (but taking into account other adjustments or potential made following the time of issuance of such Options or securities) had such option or security, to the extent outstanding immediately prior to such expiration or termination, never been issued and the number of shares of Common Stock obtainable upon exercise of this Warrant shall be correspondingly adjusted. If Common Stock is sold as a unit with other securities, the aggregate consideration received for such Common Stock shall be deemed to be net of the fair market value (as determined by the Board of Directors in good faith) of such other securities. The issuance or reissuance of (A) any shares of Common Stock or rights, warrants or other Convertible Securities (whether treasury shares or newly issued shares) (1) pursuant to a dividend or distribution on, or subdivision, combination or reclassification of, the outstanding shares of Common Stock requiring an adjustment in the Exercise Price pursuant to subsection (i) of this Section 2(a); (2) pursuant to any restricted stock or stock option plan or program of the Company involving the grant of Options or rights to acquire shares of Common Stock after the date hereof to directors, officers and employees of the Company and its Subsidiaries; (3) pursuant to any option, warrant, right, or Convertible Security outstanding as of the Date of Issuance; (4) pursuant to any securities issued to a bank or other similar financial institution solely in connection with the Senior Credit Facility and the Senior Subordinated Credit Facility; or (5) pursuant to an underwritten offering registered with the SEC if the offering price is greater than the Exercise Price then in effect; (B) the Preferred Stock and any shares of Common Stock issuable upon conversion or exercise thereof, or (C) the Series 1 Warrants and any shares of Common Stock issuable upon exercise thereof, shall not be deemed to constitute an issuance of Common Stock or Convertible Securities by the Company to which this subsection (iii) applies. No adjustment shall be made pursuant to this subsection (iii) in connection with any transaction to which SECTION 2(b) applies. (iv) For purposes of this SECTION 2(a), the number of shares of Common Stock at any time outstanding shall not include any shares of Common Stock then owned or held by or for the account of the Company. (v) All calculations of the Exercise Price pursuant to this SECTION 2(a) shall be made to the nearest one one-hundredth of a cent. Anything in this SECTION 2(a) to the contrary notwithstanding, (A) the Company shall not be required to give effect to any adjustment in the Exercise Price unless and until the net effect of one or more adjustments (each of which shall be carried forward), determined as above provided, shall have resulted in a reduction of the Exercise Price of at least 1%, and when the cumulative net effect of more than one adjustment so determined shall be to reduce the Exercise Price by at least 1%, such reduction in Exercise Price shall thereupon be given effect and (B) in no event shall the then current Exercise Price be increased as a result of any calculation made at any time pursuant to this SECTION 2(a). (b) (i) In case of any capital reorganization or reclassification of outstanding shares of Common Stock (other than a reclassification to which SECTION 2(a)(i) shall apply), or in case of any merger or consolidation of the Company with or into another Person (as defined below), or in case of any sale or conveyance to another Person of all or substantially all of the assets of the Company or any compulsory share exchange pursuant to which share exchange the shares of Common Stock are converted into other securities, cash or other property (each of the foregoing being referred to as a "TRANSACTION"), this Warrant shall thereafter be exercisable for, in lieu of the shares of Common Stock issuable upon such exercise prior to consummation of 6 such Transaction, the kind and amount of shares of stock and other securities and property receivable (including cash) upon the consummation of such Transaction by a holder of that number of shares of Common Stock into which the Warrant was exercisable for immediately prior to such Transaction (including, on a pro rata basis, the cash, securities or property received by holders of Common Stock in any tender or exchange offer that is a step in such Transaction). (ii) Notwithstanding anything contained herein to the contrary, the Company will not effect any Transaction unless, prior to the consummation thereof, (A) the Surviving Person shall agree that the Series 1 Warrants shall be treated as provided in paragraph (i) of this SECTION 2(b) and the agreements governing such Transaction shall so provide and (B) the Surviving Person thereof shall assume, by written instrument mailed, by first-class mail, postage prepaid, to each holder of the Series 1 Warrants at such holder's address as it appears in the records of the Company, the obligation to deliver to such holder such cash or other securities to which, in accordance with the foregoing provisions, such holder is entitled and such Surviving Person shall have mailed, by first-class mail, postage prepaid, to each holder of the Series 1 Warrants at such holder's address as it appears in the records of the Company, and an opinion of independent counsel for such Person stating that such assumption agreement is a valid, binding and enforceable agreement of the Surviving Person. (c) In any case, if necessary, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions set forth in this SECTION 2 with respect to rights and interests thereafter of the holders of the Series 1 Warrants to the end that the provisions set forth herein for the protection of the purchase rights of the Series 1 Warrants shall thereafter be applicable, as nearly as reasonably may be, to any such other shares of stock and other securities (other than the Common Stock) and property deliverable upon exercise of the Series 1 Warrants remaining outstanding with such adjustments in the Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant and such other adjustments in the provisions hereof as the Board of Directors shall in good faith determine to be appropriate. In case securities or property other than Common Stock shall be issuable or deliverable upon exercise as aforesaid, then all references in this SECTION 2 shall be deemed to apply, so far as appropriate and as nearly as may be, to such other securities or property. (d) If the Company shall pay any dividend or make any other distribution to the holders of its Common Stock (other than regularly quarterly dividends payable in cash) or shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or any other right, or there shall be any Transaction, or there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company, then, in any one or more of said cases the Company shall give at least 15 days prior written notice to the holders of the Series 1 Warrants by first-class mail, postage prepaid, at their respective addresses as they shall appear in the records of the Company of the earlier of the dates on which (i) the books of the Company shall close or a record shall be taken for such stock dividend, distribution or subscription rights or (ii) such Transaction, dissolution, liquidation or winding up shall take place. Such notice shall also specify that date as of which the holders of the Common Stock of record shall participate in said dividend, distribution of subscription rights or shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale or conveyance or participate in such dissolution, liquidation or 7 winding up, as the case may be. Failure to give such notice shall not invalidate any action so taken. Section 3. REPORTS AS TO ADJUSTMENTS. Upon the occurrence of any event specified in SECTION 2(a) that would result in any adjustment of the Exercise Price, then, and in each such case, the Company shall promptly deliver by first-class mail, postage prepaid, at their respective addresses as they shall appear in the records of the Company, a certificate signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Company setting forth in reasonable detail the event requiring the adjustment and the method by which such adjustment was calculated and specifying the Exercise Price then in effect and the number of shares of Common Stock obtainable upon exercise of the Series 1 Warrants following such adjustment. Where appropriate, such notice to the holders of the Series 1 Warrants may be given in advance and included as part of the notice required pursuant to SECTION 2(d). Section 4. DEFINITIONS. The following terms have meanings set forth below: "BUSINESS DAY" means any day other than a Saturday, Sunday, or any day on which banks in New York City are authorized or obligated by applicable law to close. "COMMON STOCK" means, collectively, the Company's Common Stock, par value $1 per share (including any associated Right, as defined in and issued pursuant to the Rights Agreement, dated as of October 27, 1998, as amended, by and between the Company and The Bank of New York (successor to First Chicago Trust Company of New York), as Rights Agent. "CONVERTIBLE SECURITIES" means any stock or securities (directly or indirectly, after the passage of time or otherwise) convertible into or exercisable or exchangeable for Common Stock. "CURRENT MARKET PRICE," when used with reference to shares of Common Stock or other securities on any date, shall mean the closing price per share of Common Stock or such other securities on such date and, when used with reference to shares of Common Stock or other securities for any period, shall mean the average of the daily closing prices per share of Common Stock or such other securities for such period. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Common Stock or such other securities are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Common Stock or such other securities are listed or admitted to trading or, if the Common Stock or such other securities are not listed or admitted to trading on any national securities exchange, the last quoted sale price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or such other system then in use, or, if on any such date the Common Stock or such other securities are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional 8 market maker making a market in the Common Stock or such other securities selected by the Board of Directors of the Company. If the Common Stock or such other securities are not publicly held or so listed or publicly traded, "CURRENT MARKET PRICE" shall mean the fair market value per share of Common Stock or of such other securities as determined by an independent investment banking firm with an established national reputation as a valuer of equity securities selected by the Company and reasonably acceptable to the holders of a majority of the shares of Preferred Stock outstanding at the time. "EXERCISE PRICE" shall mean $26.28. "OPTIONS" means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities. "PERSON" or "PERSON" means any corporation, individual, limited liability company, joint stock company, joint venture, partnership, unincorporated association, governmental regulatory entity, country, state or political subdivision thereof, trust, municipality or other entity. "PURCHASE AGREEMENT" means the Preferred Stock and Warrant Purchase Agreement, dated as of September 21, 2002, by and among the Company and the investors listed in Schedule A thereto. "SURVIVING PERSON" shall mean the continuing or surviving Person of a merger, consolidation or other corporate combination, the Person receiving a transfer of all or a substantial part of the properties and assets of the Company, or the Person consolidating with or merging into the Company in a merger, consolidation or other corporate combination in which the Company is the continuing or surviving Person, but in connection with which the Preferred Stock, Series 1 Warrants or Common Stock of the Company is exchanged or converted into the securities of any other Person or the right to receive cash or any other property. "TRADING DAY" shall mean a day on which the principal national securities exchange on which the Common Stock is listed or admitted to trading is open for the transaction of business or, if the Common Stock is not listed or admitted to trading on any national exchange, a Business Day. Section 5. NO VOTING RIGHTS; LIMITATIONS OF LIABILITY. This Warrant shall not entitle the holder hereof to any voting rights or other rights as a stockholder of the Company. No provision hereof, in the absence of affirmative action by the Registered Holder to purchase Common Stock, and no enumeration herein of the rights or privileges of the Registered Holder shall give rise to any liability of such holder for the Exercise Price of Common Stock acquirable by exercise hereof or as a stockholder of the Company. Section 6. WARRANT TRANSFERABLE. Subject to the transfer conditions referred to in the legend endorsed hereon, including the provisions of the Letter Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, without charge to the Registered Holder, upon surrender of this Warrant with a properly executed Assignment (in the form of Exhibit I) at the principal office of the Company. 9 Section 7. WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant is exchangeable, upon the surrender hereof by the Registered Holder at the principal office of the Company, for new Series 1 Warrants of like tenor representing in the aggregate the purchase rights hereunder, and each of such new Series 1 Warrants shall represent such portion of such purchase rights as is designated by the Registered Holder at the time of such surrender. The date the Company initially issues this Warrant shall be deemed to be the "DATE OF ISSUANCE" hereof regardless of the number of times new certificates representing the unexpired and unexercised purchase rights formerly represented by this Warrant shall be issued. All Series 1 Warrants representing portions of the purchase rights hereunder are referred to herein as the "SERIES 1 WARRANTS." Section 8. REPLACEMENT. Upon receipt of evidence reasonably satisfactory to the Company (an affidavit of the Registered Holder shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing the Series 1 Warrants, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Company (provided that if the holder is a financial institution or other institutional investor its own agreement shall be satisfactory), or, in the case of any such mutilation upon surrender of such certificate, the Company shall (at its expense) execute and deliver in lieu of such certificate a new certificate of like kind representing the number of Series 1 Warrants of such class represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate. Section 9. NOTICES. Except as otherwise expressly provided hereunder, all notices referred to herein shall be in writing and shall be delivered by registered or certified mail, return receipt requested and postage prepaid, or by reputable overnight courier service, charges prepaid, and shall be deemed to have been given when so mailed or sent (i) to the Company, at its principal executive offices, Attention: General Counsel and (ii) to any Registered Holder, at such holder's address as it appears in the stock records of the Company (unless otherwise indicated by any such holder). Section 10. AMENDMENT AND WAIVER. Any provision of this Warrant may be amended or modified in whole or in part at any time by an agreement in writing among the Company and the holder of this Warrant. No failure on the part of either the Company or the holder of this Warrant to exercise, and no delay in exercising, any right shall operate as a waiver thereof nor shall any single or partial exercise by either the Company or the holder of this Warrant of any right preclude any other or future exercise thereof or the exercise of any other right. Section 11. DESCRIPTIVE HEADINGS; GOVERNING LAW. The descriptive headings of the several Sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. References in this Warrant to Sections and Exhibits are references to Sections of, and Exhibits to, this Warrant unless otherwise noted. The corporation laws of the State of Delaware shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by the internal law of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule 10 (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Section 12. SEVERABILITY. Should any part of this Warrant for any reason be declared invalid, such decision shall not affect the validity of the remaining portion, which remaining portion shall remain in full force and effect as if this Warrant had been executed with the invalid portion thereof eliminated, and it is hereby declared the intention of the Company hereto that it would have executed the remaining portion of this Warrant without including therein any such parts or parts which may, for any reason, be hereafter declared invalid. Section 13. ENTIRE AGREEMENT. This Warrant and the Letter Agreement and the documents described herein and therein or attached or delivered pursuant hereto or thereto set forth the entire agreement between the Company and the Registered Holder with respect to the transactions contemplated by this Warrant. * * * * * * 11 IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and attested by its duly authorized officers under its corporate seal and to be dated the Date of Issuance hereof. R.H. DONNELLEY CORPORATION By: ------------------------------------- Name: Title: Attest: - ------------------------------------ Name: Title: 12 EXHIBIT I ASSIGNMENT FOR VALUE RECEIVED, ______________________________ hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (Certificate No. ____) with respect to the number of shares of the Common Stock, par value $1 per share, of R.H. Donnelley Corporation, a Delaware corporation, covered thereby set forth below, unto:
Names of Assignee Address No. of Shares - ----------------- ------- -------------
Signature: --------------------------------- Address: --------------------------------- Witness: --------------------------------- EXHIBIT II EXERCISE AGREEMENT To: R.H. Donnelley Corporation Dated: The undersigned, pursuant to the provisions set forth in the attached Warrant (Certificate No. ______), hereby agrees to subscribe for the purchase of ______ shares of the Common Stock, par value $1 per share (the "COMMON STOCK"), of R.H. Donnelley Corporation, a Delaware corporation (the "COMPANY"), covered by such Warrant and makes payment herewith in full therefor at the price per share provided by such Warrant. The undersigned1 represents to the Company as follows: (i) such Person (as defined in the Warrant) is an "accredited investor" within the meaning of Rule 501 of Regulation D promulgated under the Securities Act of 1933 (the "SECURITIES ACT") and was not organized for the specific purpose of acquiring the Common Stock issuable upon exercise thereof; (ii) such person has sufficient knowledge, sophistication and experience in financial and business matters as are necessary to evaluate the risks and merits of an investment in the Company; (iii) such Person has had an opportunity to discuss the Company's business, management and financial affairs with the Company's management; (iv) the Common Stock being acquired by such Person is being acquired for its own account for the purpose of investment and not with a view to or for sale in connection with any distribution thereof; and (v) such Person understands that (A) none of the shares of Common Stock issuable upon the exercise of the Warrant have been registered under the Securities Act and are being issued in reliance upon federal and state exemptions for transactions not involving any public offering, (B) the shares of Common Stock issuable upon the exercise of the Warrant must be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act or is exempt from such registration, (C) the shares of Common Stock issuable upon the exercise of the Warrant will bear a legend to such effect, as applicable, and (D) the Company will make a notation on its transfer books to such effect. [NAME OF PERSON] By: ------------------------------------- Name: Title: Address: - -------- 1 In the event that the shares of Common Stock are not issued in the name of the Person (as defined in the Warrant) in whose name the Warrant is registered or if the number of shares of Common Stock to be issued does not include all of the shares purchasable under the Warrant, then this Exercise Agreement shall be modified to include applicable language with respect to the provisions of this Exercise Agreement 14 EX-10.1 5 l97536aexv10w1.txt EXHIBIT 10.1 EXHIBIT 10.1 EXECUTION COPY GS Capital Partners 2000, L.P. GS Capital Partners 2000 Offshore, L.P. GS Capital Partners 2000 Gmbh & Co. Beteiligungs KG GS Capital Partners 2000 Employee Fund, L.P. Goldman Sachs Direct Investment Fund 2000, L.P. c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 November 25, 2002 R.H. Donnelley Corporation R.H. Donnelley Inc. One Manhattanville Road Purchase, NY 10577 Re: Investment in Preferred Stock of R.H. Donnelley Corporation Ladies and Gentlemen: Reference is made to the Preferred Stock and Warrant Purchase Agreement, dated as of September 21, 2002 (the "Purchase Agreement"), by and among R.H. Donnelley Corporation, a Delaware corporation (the "Company") and the investors listed in Schedule A thereto (the "Purchasers"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement. This will confirm our agreement as follows: 1. PURCHASE AND SALE. 1.1. The Company and the Purchasers hereby agree, subject to the terms and conditions of this letter agreement, that the Company will sell to the Purchasers and the Purchasers will purchase from the Company (i) 70,000 shares of Series B-1 Preferred Stock (the "November Shares") created pursuant to the Company's Certificate of Designations in the form of EXHIBIT A attached to this letter agreement (the "B-1 Certificate of Designations") and (ii) Warrants to purchase 577,500 shares of Common Stock in substantially the form attached hereto as EXHIBIT B (the "November Warrants"), for an aggregate purchase price of $70,000,000 (the "Proceeds"). The Proceeds paid to the Company hereunder shall reduce, on a dollar-for-dollar basis, the cash component of the Purchase Price payable at the Closing Date for the Preferred Stock and the Warrants pursuant to the Purchase Agreement. Unless the November Shares are repurchased by the Company prior to the date the Sprint Purchase Agreement is terminated prior to the closing thereof, the November Shares issued hereunder shall reduce on a share-for-share basis the number of Preferred Shares to which the Purchasers shall be entitled at the Closing, pursuant to the Purchase Agreement. The November Warrants issued hereunder shall reduce on a share-for-share basis the number of Warrants to which the Purchasers shall be entitled at the Closing pursuant to the Purchase Agreement. The closing of the transactions contemplated by this letter agreement (the "November Closing") shall take place on the date hereof (the date of such closing being referred to herein as the "November Closing Date"). The number of November Shares and the number of November Warrants to be purchased by each Purchaser at the November Closing and the portion of the Proceeds to be paid by each Purchaser at the November Closing in exchange therefor, shall be as specified in SCHEDULE A hereto (with respect to each such Purchaser, such Purchaser's "Specified Purchase Price"). 1.2. At the November Closing: (i) the Company will deliver to the Purchasers certificates for the November Shares to be sold in accordance with the provisions of SECTION 1.1 hereto registered in the respective names and proportions set forth in SCHEDULE A hereto; (ii) the Company will deliver to the Purchasers certificates for the November Warrants, to be sold in accordance with the provisions of SECTION 1.1 hereto, in each case duly executed in favor of the respective names and in the proportions set forth in SCHEDULE A hereto; (iii) subject to SECTION 6 hereof, each Purchaser, in full payment for the November Shares and the November Warrants, will deliver to the Company immediately available funds, by wire transfer to such account as the Company shall specify, such Purchaser's Specified Purchase Price; and (iv) each party shall take or cause to happen such other actions, and shall execute and deliver such other instruments or documents, as shall be required under SECTION 2 hereof. 2. CONDITIONS. The November Closing is subject to the following conditions: 2.1. CONDITIONS OF PURCHASE. The obligations of each Purchaser to purchase the November Shares and the November Warrants at the November Closing are subject to satisfaction or waiver of each of the following conditions on or prior to the November Closing Date. (i) Each of the conditions contained in Sections 5.01(a), (b), (c), (d), (e), (g)(A), (l) and (m) of the Purchase Agreement shall be satisfied on or prior to the November Closing as if set forth in their entirety herein and applicable to the transactions contemplated hereby. For further clarification, for purposes hereof, where appropriate, each reference in such sections to "the date of this Agreement" shall be deemed to refer to the date of this letter agreement, each reference to the "Closing Date" shall be deemed to refer to the "November Closing Date" and each reference to "this Agreement" shall be deemed to refer to this letter agreement. (ii) The B-1 Certificate of Designations shall have been duly filed with the Secretary of State of Delaware and shall have become effective and shall be in full force and effect; (iii) All waivers and consents from third parties that the Purchasers reasonably believe necessary or appropriate in connection with the transactions contemplated by this letter agreement shall have been received by the Company in form and substance reasonably satisfactory to the Purchasers, including without limitation a written confirmation from JPMorgan Chase Bank under the Credit Agreement, dated as of June 5, 1998, by and among the Company, R.H. Donnelley, Inc., The Chase Manhattan Bank, as Administrative Agent and the Lenders party thereto, as amended by the First Amendment to Credit Agreement, dated as of March 4, 1999, by and among the Company, R.H. Donnelley, Inc. The Chase Manhattan Bank, as Administrative Agent, and the Lenders party thereto (together, the "Current Credit Agreement") in form and substance reasonably satisfactory to the Purchasers that the defaults described in such confirmation are not or will not be continuing as described and conditioned in such confirmation; and (iv) The Purchasers shall have received, dated the November Closing Date and addressed to each Purchaser, an opinion of Jones, Day, Reavis & Pogue, counsel to the Company, substantially in the form attached as EXHIBIT C hereto; 2.2. CONDITIONS OF SALE. The obligation of the Company to sell the November Shares and the November Warrants at the November Closing is subject to the satisfaction or waiver of each of the following conditions precedent: (i) the conditions contained in Section 5.02(a), (b), (c), (d), and (e) of the Purchase Agreement shall be satisfied on or prior to the November Closing as if set forth in their entirety herein and applicable to the transactions contemplated hereby. For further clarification, for purposes hereof, where appropriate, each reference in such sections to "the date of this Agreement" shall be deemed to refer to the date of this letter agreement, each reference to the "Closing Date" shall be deemed to refer to the "November Closing Date" and each reference to "this Agreement" shall be deemed to refer to this letter agreement; and (ii) the Purchasers shall have delivered immediately prior to or concurrently with the November Closing in immediately available funds, by wire transfer to such account as the Company shall have specified, an amount equal to the Proceeds to have been paid pursuant to Section 1 hereof. 3. AMENDMENTS TO PURCHASE AGREEMENT. The Purchase Agreement is hereby amended as follows: 3.1. If at the Closing the Company is required to issue an additional amount of Preferred Shares to the Purchasers pursuant to Section 2.04 of the Purchase Agreement, the Company agrees that a similar adjustment shall also be made to the number of November Shares and November Warrants issued to the Purchasers pursuant to this letter agreement and to the Warrants issued to the Purchasers pursuant to the Purchase Agreement. Section 2.04 is hereby amended by adding "(other than the November Shares and the November Warrants)" immediately before the words "(Common Stock Equivalents)" therein. 3.2. Section 2.01 of the Purchase Agreement is hereby amended by deleting "$200.0 million" and by inserting in its place "$130.0 million or, $200.0 million in the event the November Shares are redeemed pursuant to Section 5(a) of the B-1 Certificate of Designations by the Company prior to the date the Sprint Purchase Agreement is terminated prior to the closing thereof". 3.3. Solely for purposes of this letter agreement, the terms "Indebtedness" and "Leverage Ratio" as used in Section 4.04(d) shall have the meanings ascribed to such terms in the Current Credit Agreement. 3.4. Section 4.02(b) of the Purchase Agreement is hereby amended by deleting clause (vii) thereof. 3.5. Section 4.04(e) of the Purchase Agreement is hereby amended by inserting at the end thereof: "and other than any transaction that requires the approval of the holders of the Company's common stock." 3.6. Section 4.04(i) of the Purchase Agreement is hereby amended by adding "and other than dividends from a wholly owned Company Subsidiary to its parent company" at the end of the first parenthetical thereof. 3.7. Section 4.04(k) of the Purchase Agreement is hereby amended by adding "or sell" after the word "issue" therein. 3.8. The first sentence of Section 4.10(a) of the Purchase Agreement is hereby amended by inserting "(i)" after the words "(any such act, a "Transfer") and by deleting the words "except for," and inserting in its place "or (ii) any November Shares or November Warrants prior to the first anniversary of the November Closing Date, except in each case for,". 3.9. The last sentence of Section 4.10(a) is hereby amended by replacing it in its entirety with the following: "The foregoing restrictions on Transfer shall cease to apply (i) in the case of any Preferred Shares issued upon the exchange of the November Shares, and in the case of any November Warrants, from and after the first anniversary of the November Closing Date, (ii) in the case of any other Preferred Shares and Warrants issued on the Closing Date, from and after the first anniversary of the Closing Date and (iii) upon the Trigger Date (as defined in the B-1 Certificate of Designations), so long as, in each case, such Transfer is made in compliance with all applicable requirements of law and any necessary governmental approvals have been obtained." 3.10. The Company's reimbursement obligations pursuant to Section 8.06(b)(ii) of the Purchase Agreement shall include the reasonable third party and out-of-pocket expenses (including, without limitation, all reasonable fees and expenses of each counsel, accountants and consultants of each such party) incurred by the Purchasers or their Affiliates in connection with the preparation, negotiation, execution and performance of this letter agreement or any of the transactions contemplated hereby. 3.11. Schedules 3.01(c), 3.01(d), 3.01(i)(i), 3.01(j) and 4.02 to the Purchase Agreement are amended by Schedules 3.01(c), 3.01(d), 3.01(i)(i), 3.01(j) and 4.02, respectively, to this letter agreement. 4. AMENDMENTS TO CERTIFICATE OF DESIGNATIONS, WARRANTS AND REGISTRATION RIGHTS AGREEMENT. 4.1. The Certificate of Designations governing the Preferred Stock in the form of EXHIBIT A to the Purchase Agreement is hereby amended by deleting EXHIBIT A to the Purchase Agreement in its entirety and replacing it with the Certificate of Designations in the form attached as EXHIBIT D hereto. 4.2. The certificate for the Warrants in the form attached as EXHIBIT D to the Purchase Agreement is herby amended by deleting EXHIBIT D to the Purchase Agreement in its entirety and replacing it with the certificate for the Warrants in the form attached as EXHIBIT E hereto. 4.3. The Registration Rights Agreement in the form attached as EXHIBIT C to the Purchase Agreement is hereby amended by deleting EXHIBIT C to the Purchase Agreement in its entirety and replacing it with the Registration Rights Agreement in the form attached as EXHIBIT F hereto. 5. USE OF PROCEEDS. The Company shall contribute the Proceeds to R.H. Donnelley Inc. 6. CLOSING PAYMENT. On the November Closing Date, the Company agrees to pay to each Purchaser 1% of the portion of the Proceeds paid by such Purchaser to the Company on the November Closing Date. Any obligations owed by the Company to the Purchasers pursuant to this Section 6 of the letter agreement shall reduce on a dollar-for-dollar basis the amount payable to the Company by the Purchasers pursuant to Section 1.1 hereof. 7. SUPPLEMENTAL INDENTURE. Immediately following the receipt by the Company of the Proceeds, the Company shall deliver to The Bank of New York (the "Trustee") an executed copy of the Supplemental Indenture (the "Supplemental Indenture") in the form attached as EXHIBIT G hereto. The Company shall use its best efforts to have the Trustee execute and deliver the Supplemental Indenture, and any and all other documents required to make such Supplemental Indenture effective, to the Company, with a copy to the Purchasers, promptly after the receipt by the Company of the Proceeds. If the Trustee has not delivered to the Company and Purchasers a fully executed copy of the Supplemental Indenture by 5:00 p.m. New York time on November 27, 2002, the Purchasers shall have the right, exercisable by written notice to the Company, to require the Company to promptly repurchase the November Shares and the November Warrants for an aggregate price in cash equal to 101% of the Proceeds. 8. CERTAIN RESTRICTED ACTIONS. 8.1. In addition to the restrictions set forth in Section 4.04 of the Purchase Agreement, from and after the November Closing Date, the Company shall not, and shall not permit any Company Subsidiary to, directly or indirectly, take any of the following actions without the prior written consent of at least a majority of the then-outstanding November Shares or the affirmative vote in person or by proxy at a meeting called for that purpose of the holders of at least a majority of the November Shares voting thereat: (i) dispose of or acquire any material assets for cash or equity; or (ii) enter into any contract which requires the Company to make cash payments of more than $2 million in the aggregate; or (iii) purchase any equity securities of the Company on the open market; or (iv) except as disclosed on Schedule 8 to this letter agreement, enter into, or amend in any material respect, any employment agreement with, or other compensation to, any of the Chief Executive Officer, the Chief Financial Offer, the General Counsel of the Company or the President of Donnelley Media; or (v) amend or modify the DonTech Partnership Agreement or any related agreement in any material respect. 8.2. TERMINATION OF OBLIGATIONS. The obligations of the Company set forth in Section 8.1 hereof shall terminate and no longer be of any effect from and after the earlier to occur of (i) such time as the Purchasers no longer hold any November Shares or (ii) such time as the Purchasers no longer have the right pursuant to the B-1 Certificate of Designations to elect a Director of the Company. 9. APPLICABILITY OF PURCHASE AGREEMENT PROVISIONS. The partie agree that the November Closing is intended to be treated as an initial closing under the Purchase Agreement for purposes of the representations, warranties, covenants, indemnities and agreements thereunder. In furtherance thereof, the parties agree that: 9.1. All representations and warranties of the Company and the Purchasers made in Article III of the Purchase Agreement shall be deemed to be made on the date of this letter agreement and on the November Closing Date as if set forth herein in their entirety and applicable to the transactions contemplated thereby. 9.2. The Schedules to the Purchase Agreement (other than Schedule A to the Purchase Agreement) shall be deemed to be Schedules to this letter agreement and this letter agreement shall be deemed to be disclosed on each Schedule to the Purchase Agreement where disclosure thereof would be appropriate. 9.3. The provisions of Article VII of the Purchase Agreement shall be applicable to the transactions contemplated by this letter agreement as if set forth herein in their entirety and applicable to the transactions contemplated hereby. In addition, the Company shall, from and after the November Closing Date, indemnify each of the Purchaser Indemnified Parties against and hold them harmless from and against all Losses incurred by any of them based upon, resulting from or arising out of any actual or threatened claim, action, suit, investigation or proceeding ("Litigation") against such Purchaser Indemnified Party by any Person in connection with (A) the transactions contemplated by this letter agreement, (B) the negotiation, execution, delivery and performance of this letter agreement, or any other document contemplated hereby, (C) any actions taken by any Purchaser Indemnified Party pursuant hereto or in connection with the transactions contemplated hereby (whether or not the transactions contemplated hereby are consummated) or (D) the direct or indirect ownership by a Purchaser Indemnified Party of any securities of the Company (including any Litigation to which a Purchaser Indemnified Party is made party as a result thereof). 9.4. Except as set forth in this letter agreement, Sections 4.03, 4.04, 4.05, 4.08, 4.09, 4.10, 4.11, 4.13 and 4.15 (each as may be amended hereby or from time to time) of the Purchase Agreement shall be applicable from and after the November Closing as if the November Closing were the Closing, and the November Shares shall be treated as if such shares are Preferred Shares. 10. AGREEMENT REGARDING DIVIDENDS. The Company agrees that on and after January 31, 2003 it shall pay cash dividends on the November Shares on a current basis so long as it is not precluded from doing so under law or its bank credit agreement or public indentures. In furtherance thereof, the Company shall (subject to the terms of its bank credit agreement and public indenture) refrain from entering into any agreements which would preclude such payments, seek a waiver under any agreements which would prevent such payments at any time and take whatever actions are necessary, including revaluing assets, to create surplus for the purpose of paying such dividends. 11. DISCLOSURE. The Company shall not make any press release, public announcement or filing with any Governmental Entity concerning the transactions contemplated by this letter agreement or the Purchase Agreement unless mutually agreed by the Company and the Purchasers, except as and to the extent that the Company shall be obligated to make any such disclosure, by law or by the NYSE and then only after consultation with the Purchasers regarding the basis of such obligation and the content of such press release, public announcement or filing. 12. ALLOCATIONS. The parties agree that, with respect to each Purchaser, the portion of the Proceeds payable by each Purchaser will be allocated: 90.0588% to the November Shares and 9.9413% to the November Warrants. The parties agree to report the sale and purchase of the November Shares and November Warrants for all federal, state, local and foreign tax purposes in a manner consistent with this allocation and agree to take no position inconsistent with the foregoing (unless otherwise required by a final determination by the appropriate taxing authority). 13. NO OTHER AMENDMENTS. Except as set forth in this letter agreement, all provisions of the Purchase Agreement shall remain unchanged and in full force and effect. 14. CERTAIN CONSENTS. 14.1. The Purchasers hereby consent, pursuant to Section 4.02(b) of the Purchase Agreement, to the transactions contemplated by this letter agreement. 14.2. Section 5(r) of the Purchase Agreement regarding the Company's Senior Notes due 2010 and Senior Subordinated Notes due 2012 shall not be amended or waived without the prior written consent of the Purchasers and the Purchasers shall be third party beneficiaries of such Section. 15. MISCELLANEOUS. 15.1. This letter agreement shall be governed by, and interpreted in accordance with, the laws of the State of New York applicable to contracts made and to be performed in that State without giving effect to any conflict of laws rules or principles that might require the application of the laws of another jurisdiction. 15.2. The courts of the State of New York in New York County and the United States District Court for the Southern District of New York shall have jurisdiction over the parties with respect to any dispute or controversy between them arising under or in connection with this letter agreement and, by execution and delivery of this letter agreement, each of the parties to this Agreement submits to the jurisdiction of those courts, including but not limited to the IN PERSONAM and subject matter jurisdiction of those courts, waives any objections to such jurisdiction on the grounds of venue or FORUM NON CONVENIENS, the absence of IN PERSONAM or subject matter jurisdiction and any similar grounds, consents to service of process by mail (in accordance with Section 15.4 of this letter agreement) or any other manner permitted by law, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. 15.3. All shares of capital stock held or acquired by each of the Goldman Entities shall be aggregated together for the purpose of determining the availability and exercise of any right of each such Goldman Entity under this letter agreement. 15.4. All notices and other communications hereunder shall be in made in the manner described in the Purchase Agreement. 15.5. No amendment, modification or alteration of the terms or provisions of this letter agreement shall be binding on the parties hereto unless the same shall be in writing and duly executed by such parties, except that any of the terms or provisions of this letter agreement may be waived in writing at any time by the parties entitled to the benefits of such waived terms or provisions. No waiver of any of the provisions of this letter agreement shall be deemed to or shall constitute a waiver of any other provision hereof (whether or not similar). No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof. 15.6. This letter agreement may be executed by facsimile signature and may be executed in one or more counterparts, each of which shall be deemed to constitute an original, but all of which together shall constitute but one agreement. 15.7. Nothing contained in this letter agreement or in any instrument or document executed by any party in connection with the transactions contemplated hereby shall create any rights in, or be deemed to have been executed for the benefit of, any person that is not a party hereto or thereto, or, a successor or permitted assign of such a party. Please confirm your agreement with the foregoing by signing and returning one copy of this letter agreement to the undersigned, whereupon this letter agreement shall become a binding agreement between you and the Purchasers. Very truly yours, GS CAPITAL PARTNERS 2000, L.P. By: GS Advisors 2000, L.L.C. Its General Partner By: /s/ John E. Bowman --------------------------------- Name: John E. Bowman Its: Vice President GS CAPITAL PARTNERS 2000 OFFSHORE, L.P. By: GS Advisors 2000, L.L.C. Its General Partner By: /s/ John E. Bowman --------------------------------- Name: John E. Bowman Its: Vice President GS CAPITAL PARTNERS 2000 GmbH & CO. BETEILIGUNGS KG By: Goldman Sachs Management GP GmbH Its General Partner By: /s/ John E. Bowman --------------------------------- Name: John E. Bowman Its: Managing Director GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P. By: GS Employee Funds 2000 GP, L.L.C. Its General Partner By: /s/ John E. Bowman --------------------------------- Name: John E. Bowman Its: Vice President GOLDMAN SACHS DIRECT INVESTMENT FUND 2000, L.P. By: GS Employee Funds 2000 GP, L.L.C. Its General Partner By: /s/ John E. Bowman --------------------------------- Name: John E. Bowman Title: Vice President Accepted and agreed as of the date first written above: R.H. DONNELLEY CORPORATION By: /s/ Robert J. Bush ----------------------------- Name: Robert J. Bush Title: Vice President R.H. DONNELLEY INC. By: /s/ Robert J. Bush ----------------------------- Name: Robert J. Bush Title: Vice President EX-10.2 6 l97536aexv10w2.txt EXHIBIT 10.2 EXHIBIT 10.2 EXHIBIT F REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT, dated as of this 25th day of November, 2002 (this "AGREEMENT"), among R.H. DONNELLEY CORPORATION, a Delaware corporation (the "COMPANY"), GS Capital Partners 2000, L.P., a Delaware limited partnership, GS Capital Partners 2000 Offshore, L.P., a Cayman Islands exempted limited partnership, GS Capital Partners 2000 Employee Fund 2000, L.P., a Delaware limited partnership, GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, a German limited partnership, and Goldman Sachs Direct Investment Fund 2000, L.P. a Delaware limited partnership (each, a "PURCHASER"). RECITALS: A. Pursuant to the Preferred Stock and Warrant Purchase Agreement, dated September 21, 2002 (the "STOCK PURCHASE AGREEMENT"), by and between the Company and the Purchasers, and the Letter Agreement, dated November 25, 2002 (the "Letter Agreement"), by and between the Company, R.H. Donnelley Inc. and the Purchasers, the Purchasers have agreed to purchase, in the aggregate, $200,000,000 of the Company's Convertible Cumulative Preferred Stock, par value $1 per share (the "Convertible Cumulative Preferred Stock") and the Company's Series B-1 Convertible Cumulative Preferred Stock, par value $1 per share (the "Series B-1 Convertible Cumulative Preferred Stock"). B. To induce the Purchasers to purchase the Preferred Stock (as defined below), the Company has agreed to provide the registration rights set forth in this Agreement. C. The execution and delivery of this Agreement is a condition to the obligation of the Purchasers to purchase the Preferred Stock pursuant to the Stock Purchase Agreement and the Letter Agreement. AGREEMENT: NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. DEFINITIONS. As used herein, the following terms shall have the following respective meanings: "AFFILIATE" shall have the meaning set forth in the Stock Purchase Agreement. "CERTIFICATE OF DESIGNATIONS" shall mean the Certificate of Designations governing the Series B-1 Convertible Cumulative Preferred Stock; PROVIDED, HOWEVER, that if the Series B-1 Convertible Cumulative Preferred Stock is exchanged for the Convertible Cumulative Preferred Stock, in accordance with Section 9(j) of the Certificate of Designations governing the Series B-1 Convertible Cumulative Preferred Stock, or if any shares of Convertible Cumulative Preferred Stock are otherwise issued and outstanding and no shares of Series B-1 Convertible Cumulative Preferred Stock are outstanding, then "Certificate of Designations" shall mean the Certificate of Designations governing the Convertible Cumulative Preferred Stock. "COMMON STOCK" shall mean the common stock, par value $1 per share, of the Company, including any associated Right, as defined in and issued pursuant to the Rights Agreement, dated as of October 27, 1998, as amended, by and between the Corporation and The Bank of New York (as successor to First Chicago Trust Company of New York), as Rights Agent, and any and all securities of any kind whatsoever of the Company which are received in exchange for Common Stock or into which the Common Stock is converted. "DESIGNATED TRANSFEREE" shall have the meaning set forth in the Certificate of Designations. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934. "HOLDERS" shall mean the Purchasers, Affiliates of the Purchasers and any Designated Transferees who are holders of record of shares of Registrable Shares, and any combination of them, and the term "HOLDER" shall mean any such Person. "INDEMNIFIED PARTIES" shall have the meaning set forth in SECTION 8(a). "ISSUE DATE" shall have the meaning set forth in the Certificate of Designations. "LETTER AGREEMENT" shall have the meaning set forth in the preamble. "NASD" shall mean the National Association of Securities Dealers, Inc. "NYSE" shall mean The New York Stock Exchange. "OTHER HOLDERS" shall mean Persons who are holders of record of equity securities of the Company who subsequent to the date hereof acquire more than 5% of the outstanding shares of Common Stock pursuant to a transaction with the Company and to whom the Company has granted registration rights pursuant to a written agreement. "PERSON" shall mean any individual, corporation, association, partnership, group (as defined in Section 13(d)(3) of the Exchange Act and the rules and regulations promulgated thereunder), joint venture, business trust or unincorporated organization, or a government or any agency or political subdivision thereof. "PREFERRED STOCK" shall mean the Convertible Cumulative Preferred Stock, the Series B-1 Convertible Cumulative Preferred Stock, and any equity securities issued or issuable in exchange for or with respect to the Convertible Cumulative Preferred Stock or the Series B-1 Convertible Cumulative Preferred Stock by way of a stock dividend, stock split or combination of shares or in connection with a reclassification, recapitalization, merger, consolidation or other reorganization. "REGISTRABLE SHARES" shall mean (i) any Common Stock (A) which may be issued or issuable upon conversion, exchange or redemption of the Preferred Stock, (B) which may be issued or issuable upon exercise of the Warrants or (C) issued or distributed in respect of the Common Stock referred to in clauses (A) or (B) above by way of stock dividend or stock split or other distribution, recapitalization, reclassification, merger consolidation or otherwise and (ii) any Preferred Stock. As to any particular Registrable Share, such Registrable Share shall cease to be a Registrable Share when (x) it shall have been sold, transferred or otherwise disposed of or exchanged pursuant to a registration statement under the Securities Act or to a Person other than a Designated Transferee pursuant to an exemption from registration under the Securities Act or (y) it shall have been distributed to the public pursuant to Rule 144 (or any successor provision) under the Securities Act. "REGISTRATION EXPENSES" shall have the meaning set forth in SECTION 7(b). "REQUESTING HOLDER" shall have the meaning set forth in SECTION 2(a). "SEC" shall mean the United States Securities and Exchange Commission. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended. "STOCK PURCHASE AGREEMENT" shall have the meaning set forth in the preamble. "TRIGGER DATE" shall have the meaning set forth in the Certificate of Designations for the Series B-1 Convertible Cumulative Preferred Stock 2 "WARRANTS" shall mean the warrants to purchase shares of Common Stock issued pursuant to the Stock Purchase Agreement or the Letter Agreement. 2. INCIDENTAL REGISTRATIONS. (a) RIGHT TO INCLUDE REGISTRABLE SHARES. Subject to SECTION 2(b), each time the Company shall determine to file a registration statement under the Securities Act in connection with the proposed offer and sale for cash of any equity securities (other than (i) debt securities which are convertible into equity securities and (ii) shares of Common Stock (A) to be issued solely in connection with the acquisition of any Person or the assets of any Person, (B) issuable upon the exercise of grants under stock-based incentive plans, or (C) issuable pursuant to employee benefits plans) either by it or by any holders of its outstanding equity securities (a "REQUESTING HOLDER"), the Company will give prompt written notice of its determination to each Holder and of such Holder's rights under this SECTION 2(a), at least 21 days prior to the anticipated filing date of such registration statement. Upon the written request of each Holder made within 14 days after the receipt of any such notice from the Company (which request shall specify the Registrable Shares intended to be disposed of by such Holder), the Company will use its reasonable best efforts to effect the registration under the Securities Act of all Registrable Shares which the Company has been so timely requested to register by the Holders thereof, to the extent required to permit the disposition of the Registrable Shares so to be registered; PROVIDED, that (i) if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company or the Requesting Holder, as applicable, shall determine for any reason not to proceed with the proposed registration of the securities to be sold by the Company or the Requesting Holder, as applicable, the Company may, at its election, give written notice of such determination to each Holder and thereupon shall be relieved of its obligation to register any Registrable Shares in connection with such registration (but not from its obligation to pay the Registration Expenses in connection therewith), and (ii) if such registration involves an underwritten public offering, all Holders of Registrable Shares requesting to be included in the Company's registration must sell their Registrable Shares to the underwriters on the same terms and conditions as apply to the Company or the Requesting Holder, as applicable, with such differences, including any with respect to indemnification, as may be customary or appropriate in combined primary and secondary offerings. If a registration requested pursuant to this SECTION 2(a) involves an underwritten public offering, any Holder of Registrable Shares requesting to be included in such registration may elect, in writing prior to the effective date of the registration statement filed in connection with such registration, not to register such securities in connection with such registration. No registration effected under this SECTION 2(a) shall relieve the Company of its obligations to effect registrations upon request pursuant to the terms and subject to the conditions of SECTION 4. Any Holder shall have the right to withdraw its request for inclusion of its Registrable Shares in any registration statement pursuant to this SECTION 2 by giving written notice to the Company of its request to withdraw; PROVIDED, HOWEVER, that (i) such request must be made in writing prior to the earlier of the execution of the underwriting agreement or the execution of the custody agreement with respect to such registration and (ii) such withdrawal shall be irrevocable and, after making such withdrawal, a Holder shall no longer have any right to include Registrable Shares in the registration as to which such withdrawal has been made. (b) PRIORITY IN INCIDENTAL REGISTRATIONS. If a registration pursuant to this SECTION 2 involves an underwritten public offering and the managing underwriter or underwriters in its judgment advises the Company in writing that, in its opinion, the number of securities which the Company, the Holders and any other Persons intend to include in such registration exceeds the largest number of securities which can be sold in such offering without having an adverse effect on such offering (including the price at which such securities can be sold), then the Company shall include in such registration (i) FIRST, if the registration pursuant to this SECTION 2 was initiated by Other Holders exercising demand registration rights, 100% of the securities such Other Holders propose to sell (except to the extent the terms of such Other Holders' registration rights provide otherwise); (ii) SECOND, 100% of the securities the Company proposes to sell for its own account, if any; (iii) THIRD, to the extent that the number of securities which such Other Holders exercising demand registration rights and the Company propose to sell is, in the aggregate, less than the number of securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, such number of Registrable Shares which the Holders have requested to be included in such registration and such number of securities which Other Holders have requested to be included in such registration, in each case pursuant to SECTION 2(a) or other piggyback or incidental registration rights and which, in the opinion of such managing underwriter or underwriters, can be sold without having the 3 adverse effect referred to above, such number of Registrable Shares and securities to be included on a pro rata basis among all requesting Holders and Other Holders on the basis of the relative number of shares of Common Stock beneficially owned (as such term is used in Rule 13d-3 of the Exchange Act) by such Holders and Other Holders (PROVIDED, that if the number of Registrable Shares requested to be included in such registration by the Holders pursuant to SECTION 2(a) and permitted to be included in such registration by the Holders pursuant to this SECTION 2(b) exceeds the number which the Company has been advised can be sold in such offering without having the adverse effect referred to above, the number of such Registrable Shares to be included in such registration by the Holders shall be allocated pro rata among such Holders on the basis of the relative number of Registrable Shares each such Holder has requested to be included in such registration); and (iv) FOURTH, to the extent that the number of securities which are to be included in such registration pursuant to clauses (i), (ii) and (iii) of this SECTION 2(b) is, in the aggregate, less than the number of securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, such number of other securities requested to be included in the offering for the account of any other Persons which, in the opinion of such managing underwriter or underwriters, can be sold without having the adverse effect referred to above, such number to be allocated pro rata among all holders of such other securities on the basis of the relative number of such other securities each other Person has requested to be included in such registration. 3. HOLDBACK AGREEMENTS. (a) If any registration of Registrable Shares shall be in connection with an underwritten public offering, the Holders agree not to effect any public sale or distribution (except in connection with such public offering), of any equity securities of the Company, or of any security convertible into or exchangeable or exercisable for any equity security of the Company (in each case, other than as part of such underwritten public offering), during the 180-day period (or such lesser period as the managing underwriter or underwriters may permit) beginning on the effective date of such registration, if, and to the extent, the managing underwriter or underwriters of any such offering determines such action is necessary or desirable with respect to such offering, provided that each Holder has received the written notice required by SECTION 2(a). (b) If any registration of Registrable Shares shall be in connection with any underwritten public offering, the Company agrees not to effect any public sale or distribution (except in connection with such public offering) of any of its equity securities or of any security convertible into or exchangeable or exercisable for any of its equity securities (in each case other than as part of such underwritten public offering) during the 180-day period (or such lesser period as the managing underwriter or underwriters may permit) beginning on the effective date of such registration, and the Company also agrees to use its reasonable best efforts to cause each member of the management of the Corporation who holds any equity security and each other holder of 5% or more of the outstanding shares of any equity security, or of any security convertible into or exchangeable or exercisable for any equity security, of the Company purchased from the Company (at any time other than in a public offering) to so agree. 4. REGISTRATION ON REQUEST. (a) REQUEST BY HOLDERS. From and after the earlier of (i) the Trigger Date and (ii) November 25, 2003 upon the written request of the Holder or Holders of at least 25% of the Registrable Shares that the Company effect the registration under the Securities Act of all or part of such Holder or Holders' Registrable Shares, and specifying the amount and intended method of disposition thereof, the Company will promptly give notice of such requested registration to all other Holders of Registrable Shares and, as expeditiously as practicable, use its reasonable best efforts to effect the registration under the Securities Act (including, without limitation, by means of a shelf registration pursuant to Rule 415 under the Securities Act if so requested, and if the Company is then eligible to use such registration) of: (i) the Registrable Shares which the Company has been so requested to register by such Holder or Holders; and (ii) all other Registrable Shares which the Company has been requested to register by any other Holder thereof by written request received by the Company within 14 days after the giving of such written notice by the Company (which request shall specify the intended method of disposition of such Registrable Shares); PROVIDED, HOWEVER, that the Company shall not be required to effect more than one registration during any twelve-month period pursuant to this SECTION 4; PROVIDED, FURTHER, that the Company shall not be obligated to file a registration statement relating to a registration request under this SECTION 4 (other than on Form S-3 or any similar short-form registration statement) within a period of 180 days after the effective date of any other registration statement of the Company other than registration statements on Form S-3 (or any similar short-form registration 4 statement) or any-successor or similar forms; PROVIDED, FURTHER, that in no event shall the Company be required to effect more than three registrations pursuant to this SECTION 4; PROVIDED, FURTHER, that the Company shall not be required to effect any registration if the Company determines that the aggregate offering value of all of the shares to be offered is not reasonably expected to equal at least (i) prior to the occurrence of a Trigger Date or after the Closing Date (as defined in the Stock Purchase Agreement), $75 million or (ii) after the occurrence of a Trigger Date but prior to the Closing Date, $15 million. Promptly after the expiration of the 14-day period referred to in clause (ii) above, the Company will notify all the Holders to be included in the registration of the other Holders and the number of shares of Registrable Shares requested to be included therein. The Holders initially requesting a registration pursuant to this SECTION 4(a) may, at any time prior to the effective date of the registration statement relating to such registration, revoke such request by providing a written notice to the Company revoking such request; PROVIDED, HOWEVER, that, in the event the Holders shall have made a written request for a demand registration (i) which is subsequently withdrawn by the Holders after the Company has filed a registration statement with the SEC in connection therewith but prior to such demand registration being declared effective by the SEC or (ii) which is not declared effective solely as a result of the failure of the Holders to take all actions reasonably required in order to have the registration and the related registration statement declared effective by the SEC, then, in any such event, such demand registration shall be counted as a demand registration for purposes of this SECTION 4(a). (b) REGISTRATION STATEMENT FORM. If any registration requested pursuant to this SECTION 4 which is proposed by the Company to be effected by the filing of a registration statement on Form S-3 (or any successor or similar short-form registration statement) shall be in connection with an underwritten public offering, and if the managing underwriter or underwriters shall advise the Company in writing that, in its opinion, the use of another form of registration statement is of material importance to the success of such proposed offering, then such registration shall be effected on such other form. (c) EFFECTIVE REGISTRATION STATEMENT. A registration requested pursuant to this SECTION 4 will not be deemed to have been effected unless it has become effective under the Securities Act and, has remained effective for 180 days or such shorter period as all the Registrable Shares included in such registration have actually been sold thereunder. In addition, if within 90 days after it has become effective, the offering of Registrable Shares pursuant to such registration is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court, such registration will be deemed not to have been effected. (d) PRIORITY IN REQUESTED REGISTRATIONS. If a requested registration pursuant to this SECTION 4 involves an underwritten public offering and the managing underwriter or underwriters in good faith advises the Company in writing that, in its opinion, the number of securities requested to be included in such registration (including securities of the Company which are not Registrable Shares) exceeds the largest number of securities which can be sold in such offering without having an adverse effect on such offering (including the price at which such securities can be sold), then the Company will include in such registration (i) FIRST, 100% of the Registrable Shares requested to be registered pursuant to SECTION 4(a) (provided that if the number of Registrable Shares requested to be registered pursuant to SECTION 4(a) exceeds the number which the Company has been advised can be sold in such offering without having the adverse effect referred to above, the number of such Registrable Shares to be included in such registration by the Holders shall be allocated pro rata among such Holders on the basis of the relative number of Registrable Shares each such Holder has requested to be included in such registration); (ii) SECOND, to the extent that the number of Registrable Shares requested to be registered pursuant to SECTION 4(a) is less than the number of securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, such number of shares of equity securities the Company requests to be included in such registration; and (iii) THIRD, to the extent that the number of Registrable Shares requested to be included in such registration pursuant to SECTION 4(a) and the securities which the Company proposes to sell for its own account are, in the aggregate, less than the number of equity securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, such number of other securities proposed to be sold by any other person which, in the opinion of such managing underwriter or underwriters, can be sold without having the adverse effect referred to above (provided that if the number of such securities of such other Persons requested to be registered exceeds the number which the Company has been advised can be sold in such offering without having the adverse effect referred to above, the number of such securities to be included in such registration pursuant to this 5 SECTION 4(d) shall be allocated pro rata among all such other Persons on the basis of the relative number of securities each such Person has requested to be included in such registration). (e) ADDITIONAL RESTRICTIONS ON REGISTRATIONS. Not more than once in any twelve-month period, the Company may postpone for a reasonable period, not to exceed an aggregate of 90 days, the filing or the effectiveness of a registration statement pursuant to SECTION 4(a), if the Company determines reasonably and in good faith that such filing would have a material adverse effect on any proposal or plan by the Company to engage in any significant transaction, provided that in such event the Holders of Registrable Shares initially requesting such demand registration will be entitled to withdraw such request and, if such request is withdrawn, such demand registration will not count as a demand registration for purposes of SECTION 4(a). The Company may postpone for up to 45 days the filing or the effectiveness of a registration statement for a demand registration pursuant to SECTION 4(a) for the purpose of preparing audited financial statements, if such statements are required for the demand registration. 5. REGISTRATION PROCEDURES. (a) If and whenever the Company is required by the provisions of SECTION 2 or SECTION 4 to use its reasonable best efforts to effect or cause the registration of Registrable Shares, the Company shall as expeditiously as practicable: (i) prepare and, in any event within 60 days after the Company's receipt of a request for registration, file with the SEC a registration statement with respect to such Registrable Shares and use its reasonable best efforts to cause such registration statement to become effective; (ii) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith that the Company determines are necessary to keep such registration statement effective for a period not in excess of 180 days (PROVIDED, that such 180 day period shall not apply to any such registration statement filed pursuant to Rule 415 under the Securities Act,) and to comply with the provisions of the Securities Act, the Exchange Act, and the rules and regulations promulgated thereunder with respect to the disposition of all the securities covered by such registration statement during such period in accordance with the intended methods of disposition by the Holders thereof set forth in such registration statement; PROVIDED, that (A) before filing a registration statement (including an initial filing) or prospectus, or any amendments or supplements thereto, the Company will furnish to one counsel selected by the Holders of a majority of the Registrable Shares covered by such registration statement copies of all documents proposed to be filed, and (B) the Company will notify each Holder of Registrable Shares covered by such registration statement of any stop order issued or threatened by the SEC, any other order suspending the use of any preliminary prospectus or of the suspension of the qualification of the registration statement for offering or sale in any jurisdiction, and take all reasonable actions required to prevent the entry of such stop order, other order or suspension or to remove it if entered; (iii) furnish, without charge, to each Holder and each underwriter, if applicable, of Registrable Shares covered by such registration statement such number of copies of the registration statement and of each amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and summary prospectus), in conformity with the requirements of the Securities Act, and such other documents as each Holder of Registrable Shares covered by such registration statement may reasonably request in order to facilitate the disposition of the Registrable Shares owned by such Holder; (iv) use its reasonable best efforts to register or qualify such Registrable Shares covered by such registration statement under the state securities or blue sky laws of such jurisdictions as each Holder of Registrable Shares covered by such registration statement and, if applicable, each underwriter, may reasonably request, and do any and all other acts and things which may be reasonably necessary to consummate the disposition in such jurisdictions of the Registrable Shares owned by such Holder, except 6 that the Company shall not for any purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction where, but for the requirements of this clause (iv), it would not be obligated to be so qualified; (v) use its reasonable best efforts to cause such Registrable Shares covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the Holders thereof to consummate the disposition of such Registrable Shares; (vi) if at any time when a prospectus relating to the Registrable Shares is required to be delivered under the Securities Act any event shall have occurred as the result of which any such prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, immediately give written notice thereof to each Holder and the managing underwriter or underwriters, if any, of such Registrable Shares and prepare and furnish to each such Holder a reasonable number of copies of an amended or supplemental prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Shares, such prospectus shall not include an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (vii) other than with respect to any Preferred Stock, (A) use its reasonable best efforts to list such Registrable Shares on any securities exchange on which similar securities of the Company are then listed (if any), and enter into customary agreements including a listing application in customary form, PROVIDED that the applicable listing requirements are satisfied or (B) if no similar securities are then so listed, use its reasonable best efforts to (1) cause all such Registrable Shares to be listed on a national securities exchange or (2) failing that, secure designation of all such Registrable Shares as a National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") "national market system security" within the meaning of Rule 11Aa2-1 under the Exchange Act or (3) failing that, to secure NASDAQ authorization for shares and, without limiting the generality of the foregoing, to arrange for at least two market makers to register as such with respect to such shares with the National Association of Securities Dealers, Inc.; (viii) provide a transfer agent and registrar for such Registrable Shares covered by such registration statement not later than the effective date of such registration statement; (ix) enter into such customary agreements (including an underwriting agreement in customary form) and take such other actions as each Holder of Registrable Shares being sold or the underwriter or underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Shares, including customary indemnification and opinions; (x) use its reasonable best efforts to obtain (A) a "cold comfort" letter or letters from the Company's independent public accountants in customary form and covering matters of the type customarily covered by "cold comfort" letters and (B) an opinion of counsel for the Company, as the Holders of at least 25% of the Registrable Shares being sold or the underwriters retained by such Holders shall reasonably request; (xi) make available for inspection by representatives of any Holder of Registrable Shares covered by such registration statement, by any underwriter participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by such Holders or any such underwriter, all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries, and cause all of the Company's and its subsidiaries' officers, directors and employees to supply all information and respond to all inquiries reasonably requested by such Holders or any such representative, underwriter, attorney, accountant or agent in connection with such registration statement; 7 (xii) deliver promptly to counsel for the Holders of Registrable Shares included in such registration statement and each underwriter, if any, participating in the offering of the Registrable Shares, copies of all correspondence between the SEC and the Company, its counsel or auditors and all memoranda relating to discussions with the SEC or its staff with respect to such registration statement; (xiii) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable after the effective date of the registration statement, an earnings statement which shall satisfy the provisions of SECTION 11(a) of the Securities Act and the rules and regulations promulgated thereunder; (xiv) other than with respect to any Preferred Stock, use its reasonable best efforts to obtain and provide a CUSIP number for all Registrable Shares not later than the effective date of such registration statement, and provide the applicable transfer agents with printed certificates for the Registrable Shares which are in a form eligible for deposit with the Depository Trust Company; (xv) notify counsel for the Holders of Registrable Shares included in such registration statement and the managing underwriter or underwriters, if any, immediately, and confirm the notice in writing, (A) when the registration statement, or any post-effective amendment to the registration statement, shall have become effective, or any supplement to the prospectus or any amendment prospectus shall have been filed, (B) of the receipt of any comments from the SEC, and (C) of any request of the SEC to amend the registration statement or amend or supplement the prospectus or for additional information; (xvi) other than with respect to any Preferred Stock, cooperate with each seller of Registrable Shares and each underwriter, if any, participating in the disposition of such Registrable Shares and their respective counsel in connection with any filings required to be made with the NYSE; (xvii) other than with respect to any Preferred Stock, cause its officers to use their reasonable best efforts to support the marketing of the Registrable Shares covered by the registration statement (including, without limitation, participation in "road shows") taking into account the Company's business needs; and (xviii) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of the registration statement. (b) Each Holder of Registrable Shares hereby agrees that, upon receipt of any notice from the Company of the happening of any event of the type described in SECTION 5(a)(vi), such Holder shall forthwith discontinue disposition of such Registrable Shares covered by such registration statement or related prospectus until such Holder's receipt of the copies of the supplemental or amended prospectus contemplated by SECTION 5(a)(vi), and, if so directed by the Company, such Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the prospectus covering such Registrable Shares at the time of receipt of such notice. In the event the Company shall give any such notice, the period mentioned in SECTION 5(a)(ii) shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to SECTION 5(a)(vi) and including the date when such Holder shall have received the copies of the supplemental or amended prospectus contemplated by SECTION 5(a)(vi). If for any other reason the effectiveness of any registration statement filed pursuant to SECTION 4 is suspended or interrupted prior to the expiration of the time period regarding the maintenance of the effectiveness of such Registration Statement required by SECTION 5(a)(ii) so that Registrable Shares may not be sold pursuant thereto, the applicable time period shall be extended by the number of days equal to the number of days during the period beginning with the date of such suspension or interruption to and ending with the date when the sale of Registrable Shares pursuant to such registration statement may be recommenced. (c) Each Holder hereby agrees to provide the Company, upon receipt of its request, with such information about such Holder to enable the Company to comply with the requirements of the Securities Act and to 8 execute such certificates as the Company may reasonably request in connection with such information and otherwise to satisfy any requirements of law. (d) Notwithstanding anything in this Agreement to the contrary, the Company shall control any "road show" or presentations with respect to any offering of securities of the Company. 6. UNDERWRITTEN REGISTRATIONS. Subject to the provisions of SECTION 2, SECTION 3 and SECTION 4, any of the Registrable Shares covered by a registration statement may be sold in an underwritten public offering at the discretion of the Holder thereof. In the case of an underwritten public offering pursuant to SECTION 2, the managing underwriter or underwriters that will administer the offering shall be selected by the Company. In the case of any underwritten public offering pursuant to SECTION 4, the managing underwriter or underwriters that will administer the offering shall be selected by the Holders of a majority of the Registrable Shares to be registered, PROVIDED, that such underwriters are reasonably satisfactory to the Company. 7. EXPENSES. (a) The fees, costs and expenses of all registrations in accordance with SECTIONS 2 and SECTION 4 shall be borne by the Company, subject to the provisions of SECTION 7(b); PROVIDED, HOWEVER, that the Holder shall reimburse the Company for any fees, costs and expenses paid by the Company for any registration (i) which is subsequently withdrawn by the Holders after the Company has filed a registration statement with the SEC in connection therewith but prior to such registration being declared effective by the SEC or (ii) which is not declared effective solely as a result of the failure of the Holders to take all actions reasonably required in order to have the registration and the related registration statement declared effective by the SEC. (b) The fees, costs and expenses of registration to be borne as provided in SECTION 7(a) shall include, without limitation, all expenses incident to the Company's performance of or compliance with this Agreement, including without limitation all SEC and stock exchange registration and filing fees and expenses, reasonable fees and expenses of any "qualified independent underwriter" and its counsel as may be required by the rules of the NASD, fees and expenses of compliance with securities or blue sky laws (including without limitation reasonable fees and disbursements of counsel for the underwriters, if any, or for the selling Holders, in connection with blue sky qualifications of the Registrable Shares), printing expenses (including expenses of printing certificates for Registrable Shares and prospectuses), messenger, telephone and delivery expenses, the fees and expenses incurred in connection with the listing of the securities to be registered on each securities exchange or national market system on which similar securities issued by the Company are then listed, fees and disbursements of counsel for the Company and all independent certified public accountants (including the expenses of any annual audit, special audit and "cold comfort" letters required by or incident to such performance and compliance), the fees and disbursements of underwriters customarily paid by issuers or sellers of securities (including, without limitation, expenses relating to "road shows" and other marketing activities), the reasonable fees of one counsel retained in connection with each such registration by the Holders of a majority of the Registrable Shares being registered (such counsel fees not to exceed $35,000 per registration), the reasonable fees and expenses of any special experts retained by the Company in connection with such registration, and fees and expenses of other Persons retained by the Company (but not including any underwriting discounts or commissions or transfer taxes, if any, attributable to the sale of Registrable Shares by such Holders) (collectively, "REGISTRATION EXPENSES"). 8. INDEMNIFICATION. (a) INDEMNIFICATION BY THE COMPANY. In the event of any registration of any securities of the Company under the Securities Act pursuant to SECTION 2 or SECTION 4, the Company will, and it hereby does, indemnify and hold harmless, to the extent permitted by law, each of the Holders of any Registrable Shares covered by such registration statement, each affiliate of such Holder and their respective directors and officers or general and limited partners (and the directors, officers, general and limited partners, affiliates and controlling Persons thereof), each other Person who participates as an underwriter in the offering or sale of such securities and each other Person, if any, who controls such Holder or any such underwriter within the meaning of the Securities Act (collectively, the "INDEMNIFIED PARTIES"), against any and all losses, claims, damages or liabilities, joint or several, and expenses 9 (including any amounts paid in any settlement effected with the Company's consent) to which any Indemnified Party may become subject under the Securities Act, state securities or blue sky laws, common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof, whether or not such Indemnified Party is a party thereto) or expenses arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such securities were registered under the Securities Act, any preliminary, final or summary prospectus contained therein, or any amendment or supplement thereto, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any violation by the Company of any federal, state or common law rule or regulation applicable to the Company and relating to action required of or inaction by the Company in connection with any such registration; provided, that the Company shall not be liable to any Indemnified Party in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement or amendment or supplement thereto or in any such preliminary, final or summary prospectus in reliance upon and in conformity with written information with respect to such Holder furnished by such Holder to the Company. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any Indemnified Party and shall survive the transfer of such securities by such Holder. (b) INDEMNIFICATION BY THE HOLDERS AND UNDERWRITERS. The Company may require, as a condition to including any Registrable Shares in any registration statement filed in accordance with SECTION 2 or SECTION 4, that the Company shall have received an undertaking reasonably satisfactory to it from the Holders of such Registrable Shares or any underwriter to indemnify and hold harmless (in the same manner and to the same extent as set forth in SECTION 8(a)) the Company with respect to any statement or alleged statement in or omission or alleged omission from such registration statement, any preliminary, final or summary prospectus contained therein, or any amendment or supplement, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information with respect to the Holders of the Registrable Shares being registered or such underwriter furnished in writing to the Company by such Holders or such underwriter, or a document incorporated by reference into any of the foregoing; PROVIDED, that no such Holder shall be liable for any indemnity claims in excess of the amount of net proceeds received by such Holder from the sale of Registrable Shares. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any of the Holders, or any of their respective affiliates, directors, officers or controlling Persons, and shall survive the transfer of such securities by such Holder. (c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified party hereunder of written notice of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this SECTION 8, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action; PROVIDED, that the failure of the indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under this SECTION 8, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense thereof, with counsel satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation; PROVIDED that the indemnified party shall have the right to employ counsel to represent the indemnified party and its respective controlling persons, directors, officers, general or limited partners, employees or agents who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the indemnified party against such indemnifying party under this SECTION 8 if (i) the employment of such counsel shall have been authorized in writing by such indemnifying party in connection with the defense of such action, (ii) the indemnifying party shall not have promptly employed counsel reasonably satisfactory to the indemnified party to assume the defense of such action or counsel, or (iii) any indemnified party shall have reasonably concluded that there may be defenses available to such indemnified party or its respective controlling persons, directors, officers, employees or agents which are in conflict with or in addition to those available to the indemnifying party, and in that event the reasonable fees and expenses of one firm of separate counsel for the indemnified party shall be paid by the indemnifying party. No indemnifying party will consent to entry of any judgment or enter into any settlement which 10 does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. (d) If the indemnification provided for in this SECTION 8 shall for any reason be unavailable to any indemnified party under SECTION 8(a) or SECTION 8(b) or is insufficient to hold it harmless in respect of any loss, claim, damage or liability, or any action in respect thereof referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the indemnified party and indemnifying party or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnified party and indemnifying party with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. Notwithstanding any other provision of this SECTION 8(d), no Holder of Registrable Shares shall be required to contribute an amount greater than the dollar amount of the proceeds received by such Holder with respect to the sale of any such Registrable Shares. No person guilty of fraudulent misrepresentation (within the meaning of SECTION 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (e) OTHER INDEMNIFICATION. Indemnification similar to that specified in the preceding subdivisions of this SECTION 8 (with appropriate modifications) shall be given by the Company and each Holder of Registrable Shares with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Securities Act. (f) NON-EXCLUSIVITY. The obligations of the parties under this SECTION 8 shall be in addition to any liability which any party may otherwise have to any other party. 9. RULE 144. The Company covenants that it will use its reasonable best efforts to file in a timely manner the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Holder of Registrable Shares, make publicly available such information), and it will take such further action as any Holder of Registrable Shares may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Shares without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder of Registrable Shares, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements. 10. SPECIFIC PERFORMANCE. The Company acknowledges that the rights granted to the Holders in this Agreement are of a special, unique and extraordinary character, and that any breach of this Agreement by the Company could not be compensated for by damages. Accordingly, if the Company breaches its obligations under this Agreement, the Holders shall be entitled, in addition to any other remedies that they may have, to enforcement of this Agreement by a decree of specific performance requiring the Company to fulfill its obligations under this Agreement. 11. DEFAULTS. A default by any party to this Agreement in such party's compliance with any of the conditions or covenants hereof or performance of any of the obligations of such party hereunder shall not constitute a default by any other party. 12. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given, if delivered personally, by telecopier or sent by overnight courier as follows: 11 If to the Purchasers, to: GS Capital Partners 2000, L.P. GS Capital Partners 2000 Offshore, L.P. GS Capital Partners 2000 GmbH & Co. Beteiligungs KG GS Capital Partners 2000 Employee Fund, L.P. Goldman Sachs Direct Investment Fund 2000, L.P. 85 Broad Street New York, New York 10004 Phone: (212) 902-1000 Fax: (212) 357-5505 Attention: Mr. Stuart Katz Attention: Ben Adler, Esq. with a copy to (which shall not constitute notice): Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10014 Phone: (212) 859-8000 Fax: (212) 859-8586 Attention: David N. Shine If to the Company, to: R.H. Donnelley Corporation One Manhattanville Road Purchase, NY 10577 Phone: (914) 933-6769 Fax: (914) 933-6844 Attention: Robert J. Bush with a copy to (which shall not constitute notice): Jones, Day, Reavis & Pogue 901 Lakeside Avenue Cleveland, Ohio 44114 Phone: (216) 586-3939 Fax: (216) 579-0212 Attention: Thomas C. Daniels, Esq. or to such other address or addresses as shall be designated in writing. All notices shall be effective when received. 13. ENTIRE AGREEMENT; AMENDMENTS; WAIVERS. This Agreement, the Stock Purchase Agreement, the Letter Agreement and the Certificate of Designations and the documents described herein and therein or attached or delivered pursuant hereto or thereto set forth the entire agreement between the parties hereto with respect to the transactions contemplated by this Agreement. Any provision of this Agreement may be amended or modified in whole or in part at any time by an agreement in writing among the Company and a majority of the Holders executed in the same manner as this Agreement. No failure on the part of any party to exercise, and no delay in exercising, any right shall operate as a waiver thereof nor shall any single or partial exercise by any party of any right preclude any other or future exercise thereof or the exercise of any other right. No investigation by the Purchasers of the Company prior to or after the date hereof shall stop or prevent the Purchasers from exercising any right hereunder or be deemed to be a waiver of any such right. 12 14. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to constitute an original, but all of which together shall constitute one and the same documents. 15. GOVERNING LAW. This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of New York applicable to contracts made and to be performed in that State. 16. SUCCESSORS AND ASSIGNS. The Company may not assign any of its rights or delegate any of its duties under this Agreement without the prior written consent of a majority of the Holders. Any purported assignment in violation of this SECTION 16 shall be void. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, personal representatives and permitted assigns, whether so expressed or not. Subject to SECTION 17 hereof, if any Person shall acquire 5% or more of the Registrable Shares outstanding on the Issue Date, in any manner, whether by operation of law or otherwise, such transferee shall promptly notify the Company and such Registrable Shares acquired from such Holder shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Shares such Person shall be entitled to receive the benefits of and be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement. If the Company shall so request, any such successor or assign shall agree in writing to acquire and hold the Registrable Shares acquired from such Holder subject to all of the terms hereof. If any Holder shall acquire additional Registrable Shares, such Registrable Shares shall be subject to all of the terms, and entitled to all the benefits, of this Agreement. 17. TRANSFER OF CERTAIN RIGHTS. The rights granted to each Holder pursuant to this Agreement may be transferred by such Holder to any person or entity who acquires at least 5% of the Registrable Shares outstanding on the Issue Date; PROVIDED, that the Company is given written notice by the transferee at the time of such transfer stating the name and address of the transferee and identifying the securities with respect to which such rights are being assigned. Any transferee (other than a Holder who is a party to this Agreement) to whom rights hereunder are transferred shall, as a condition to such transfer, deliver to the Company a written instrument by which such transferee agrees to be bound by the obligations imposed upon Holders of Registrable Shares under this Agreement to the same extent as if such transferee were a party hereto and shall at such time be entitled to all of the benefits to and subject to all of the obligations of a Holder. Notwithstanding anything to the contrary herein, any Holder may transfer rights granted to it hereunder to any Affiliate of such Holder to whom Registrable Shares are transferred and who delivers to the Company a written instrument in accordance with the second sentence of this SECTION 17 and containing the representation that the transfer is exempt from registration under the Securities Act. In the event of such transfer, such Affiliate shall be deemed a Holder. 18. NO INCONSISTENT AGREEMENTS. The Company will not, on or after the date of this Agreement, enter into any agreement with respect to its securities which is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof, other than any customary lock-up agreement with the underwriters in connection with any offering effected hereunder, pursuant to which the Company shall agree not to register for sale, and the Company shall agree not to sell or otherwise dispose of, Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, for a specified period (not to exceed 180 days) following such offering. The Company has not previously entered into any agreement with respect to its securities granting any registration rights to any Person. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with any other agreements to which the Company is a party or by which it is bound. The Company further agrees that if any other registration rights agreement entered into after the date of this Agreement with respect to any of its securities contains terms which are more favorable to, or less restrictive on, the other party thereto than the terms and conditions contained in this Agreement (insofar as they are applicable) with respect to the Holders, then the terms and conditions of this Agreement shall immediately be deemed to have been amended without further action by the Company or the Holders so that the Holders shall be entitled to the benefit of any such more favorable or less restrictive terms or conditions. 19. JURISDICTION. The courts of the State of New York in New York County and the United States District Court for the Southern District of New York shall have jurisdiction over the parties with respect to any dispute or controversy between them arising under or in connection with this agreement and, by execution and delivery of this agreement, each of the parties to this Agreement submits to the jurisdiction of those courts, including 13 but not limited to the IN PERSONAM and subject matter jurisdiction of those courts, waives any objections to such jurisdiction on the grounds of venue or FORUM NON CONVENIENS, the absence of IN PERSONAM or subject matter jurisdiction and any similar grounds, consents to service of process by mail (in accordance with SECTION 12) or any other manner permitted by law, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. 20. CAPTIONS; REFERENCES. The captions contained in this Agreement are for reference purposes only and are not part of this Agreement. Unless otherwise indicated, all references to Sections and clauses in this Agreement refer to Sections and clauses of this Agreement. 21. SEVERABILITY. Should any part of this Agreement for any reason be declared invalid, such decision shall not affect the validity of any remaining portion, which remaining portion shall remain in full force and effect as if this Agreement had been executed with the invalid portion thereof eliminated, and it is hereby declared the intention of the parties hereto that they would have executed the remaining portion of this Agreement without including therein any such part or parts which may, for any reason, be hereafter declared invalid. [SIGNATURES ON FOLLOWING PAGE] 14 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective authorized officers as of the date aforesaid. R. H. DONNELLEY CORPORATION By: /s/ Robert J. Bush ------------------------------------------ Name: Robert J. Bush Title: Vice President and General Counsel GS CAPITAL PARTNERS 2000, L.P. By: GS Advisors 2000, L.L.C. Its General Partner By: /s/ John E. Bowman ----------------------------------------- Name: John E. Bowman Its: Vice President GS CAPITAL PARTNERS 2000 OFFSHORE, L.P. By: GS Advisors 2000, L.L.C. Its General Partner By: /s/ John E. Bowman ------------------------------------------ Name: John E. Bowman Its: Vice President 15 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 16 -----END PRIVACY-ENHANCED MESSAGE-----