EXHIBIT 3.2
CERTIFICATE OF DESIGNATIONS
OF
CONVERTIBLE CUMULATIVE
PREFERRED STOCK
OF
R.H. DONNELLEY CORPORATION
----------------------------------------
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
----------------------------------------
R.H. Donnelley Corporation (the "CORPORATION"), a corporation organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware (the "DGCL"), hereby certifies as follows:
FIRST: The Restated Certificate of Incorporation, as
amended, of the Corporation authorizes the issuance of up to 10,000,000 shares
of Preferred Stock, par value $1 per share (the "PREFERRED STOCK"), and further
authorizes the Board of Directors of the Corporation by resolution or
resolutions to provide for the issuance of Preferred Stock in series and to
establish the number of shares to be included in each such series and to fix the
designation, voting powers, preferences and relative rights and qualifications,
limitations or restrictions of each such series.
SECOND: On November 24, 2002, the Board of Directors of the
Corporation adopted the following resolution authorizing the creation and
issuance of a series of said Preferred Stock to be known as Convertible
Cumulative Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of its Restated
Certificate of Incorporation, as amended, a series of Preferred Stock of the
Corporation be, and it hereby is, created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as set forth in the Corporation's
Restated Certificate of Incorporation and in this Certificate of Designations as
follows:
1. Designation and Amount. The shares of such series of
Preferred Stock shall be designated as Convertible Cumulative Preferred
Stock (the "CONVERTIBLE PREFERRED STOCK"), and the number of shares
constituting such series shall be 250,000. The initial liquidation
preference of the Convertible Preferred Stock shall be $1,000 per share
or right (the "LIQUIDATION VALUE").
2. Rank. The Convertible Preferred Stock shall, with
respect to dividend rights and rights on liquidation, winding up and
dissolution, rank (i) senior to both the Corporation's Common Stock and
to all classes and series of stock of the Corporation now or hereafter
authorized, issued or outstanding which by their terms expressly
provide that they are junior to the Convertible Preferred Stock or
which do not specify their rank (collectively with the Common Stock,
the "JUNIOR SECURITIES"); (ii) on a parity with each other class of
capital stock or series of preferred stock issued by the Corporation
after the date hereof the terms of which specifically provide that such
class or series will rank on a parity with the Convertible Preferred
Stock as to dividend distributions and distributions upon the
liquidation, winding up and dissolution of the Corporation
(collectively referred to as "PARITY SECURITIES"); and (iii) junior to
each other class of capital stock or other series of Preferred Stock
issued by the Corporation after the date hereof the terms of which
specifically provide that such class or series will rank senior to the
Convertible Preferred Stock as to dividend distributions or
distributions upon the liquidation, winding up and dissolution of the
Corporation (collectively referred to as "Senior Securities")
3. Dividends. (a) Payment of Dividends. The holders of
shares of Convertible Preferred Stock, in preference to the holders of
any shares of Common Stock or other capital stock of the Corporation,
shall be entitled to receive, when, as and if declared by the Board of
Directors, in their sole discretion, out of the assets of the
Corporation legally available therefor, distributions in the form of
cumulative cash dividends payable at an annual rate per share equal to
8% (the "DIVIDEND RATE") of the Convertible Preferred Amount from and
after the date of issuance of the shares of Convertible Preferred Stock
(the "ISSUE DATE"), as long as the shares of Convertible Preferred
Stock remain outstanding. Dividends shall be (i) computed on the basis
of the aggregate Convertible Preferred Amount; (ii) calculated and
compounded quarterly; (iii) accrue and be payable quarterly, in
arrears, on March 31, June 30, September 30 and December 31 (each such
date being referred to herein as a "QUARTERLY DIVIDEND PAYMENT DATE"),
except that if any Quarterly Dividend Payment Date is not a Business
Day then the Quarterly Dividend Payment Date shall be on the first
immediately succeeding Business Day, commencing on the first Quarterly
Dividend Payment Date following the Issue Date; and (iv) payable in
cash. Notwithstanding anything contained herein to the contrary, on any
day on or after the tenth anniversary of the Issue Date during which a
Dividend Payment Default (as defined in Section 8(c)(i)) shall exist,
the Dividend Rate shall be 10%.
(b) Accrual of Dividends. Dividends payable pursuant to
subsection (a) of this Section 3 shall begin to accrue on a daily basis
and be cumulative from the Issue Date, whether or not declared by the
Board of Directors and whether or not there are profits, surplus or
other funds of the Corporation legally available for the payment of
dividends, and shall continue to accrue and be cumulative (and compound
as provided in (a) above) until paid in full in cash or until the date
of conversion or redemption of the Convertible Preferred Stock (such
dividends being referred to as the "CONVERTIBLE PREFERRED DIVIDENDS").
The amount of dividends so payable shall be determined on the basis of
twelve 30-day months and a 360-day year. Any dividends declared by the
Board of Directors and paid, in each case, after the tenth anniversary
of the Issue Date will be applied first against any dividends that have
accrued since the tenth anniversary of the Issue Date but that have not
been paid and then to dividends that have accrued since the
2
Issue Date but that have not been paid. Subject to the immediately
preceding sentence, dividends paid on shares of Convertible Preferred
Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on
a share-by-share basis among all such shares at the time outstanding.
(c) Restricted Payments. So long as any shares of
Convertible Preferred Stock remain outstanding, the Corporation shall
not make any payment on account of, or set apart for payment money for
a sinking or other similar fund for, the purchase, redemption or other
retirement of, any Junior Securities or other capital stock of the
Corporation or any warrants, rights, calls or options exercisable for
or convertible into any shares of Junior Securities or other capital
stock of the Corporation, or make any distribution in respect thereof,
either directly or indirectly, and whether in cash, obligations or
shares of Junior Securities or other capital stock of the Corporation
or other property, and shall not permit any corporation or other entity
directly or indirectly controlled by the Corporation to purchase or
redeem any of the Junior Securities or other capital stock of the
Corporation or any warrants, rights, calls or options exercisable for
or convertible into any Junior Securities or other capital stock of the
Corporation unless all dividends that have accrued since the tenth
anniversary of the Issue Date on the shares of Convertible Preferred
Stock shall have been paid.
(d) Dividends on Common Stock. So long as any shares of
Convertible Preferred Stock remain outstanding, if the Corporation pays
a dividend in cash, securities or other property on shares of Common
Stock, then at the same time the Corporation shall declare and pay a
dividend on shares of Convertible Preferred Stock (which would be in
addition to any dividends payable under Section 3(a) and (b)) in the
amount of dividends that would be paid with respect to shares of
Convertible Preferred Stock if such shares were converted into shares
of Common Stock on the record date for such dividend (or if no record
date is established, at the date such dividend is declared).
4. Liquidation Preference. (a) In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation (each, a "LIQUIDATION EVENT"), the holders
of shares of Convertible Preferred Stock then outstanding shall be
entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders an amount (as adjusted for any split,
subdivision, combination, consolidation, recapitalization or similar
event with respect to the Convertible Preferred Stock) in cash equal to
the greater of (i) 100% of the Liquidation Value for each share
outstanding, plus an amount equal to all accrued but unpaid dividends
thereon, whether or not declared, (such amount, the "CONVERTIBLE
PREFERRED AMOUNT") to the date of liquidation, dissolution or winding
up as calculated pursuant to Section 3 hereof, or (ii) the amount to
which such holder would be entitled to receive in connection therewith
had such holder converted such share into shares of Common Stock in
accordance with the terms hereof immediately prior to such event (such
greater amount of (i) and (ii) being referred to herein as the
"LIQUIDATION PREFERENCE"), in either case before any payment shall be
made or any assets distributed to the holders of any of the Junior
Securities. If the assets of the Corporation are not sufficient to pay
in full the liquidation payments payable to the holders of outstanding
shares of the Convertible Preferred Stock and any Parity Securities,
then the holders of all such shares shall share ratably in such
distribution of assets in accordance with the amount which would be
3
payable on such distribution if the amounts to which the holders of
outstanding shares of Convertible Preferred Stock and the holders of
outstanding shares of such Parity Securities are entitled were paid in
full.
(b) For the purposes of this Section 4, neither the
voluntary sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all
of the property or assets of the Corporation nor the consolidation or
merger of the Corporation with any one or more other corporations shall
be deemed to be a voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, unless such voluntary sale, conveyance,
exchange or transfer shall be in connection with a plan of liquidation,
dissolution or winding up of the Corporation.
5. Redemption. (a) Optional Redemption. Subject to the
rights of holders of shares of Convertible Preferred Stock set forth in
Section 9 hereof, the Corporation may, at its option, redeem at any
time on or after January 3, 2013, in the manner provided in Section 6
hereof, all but not less than all of the shares of the Convertible
Preferred Stock at a redemption price per share equal to the
Liquidation Preference, provided, however, that in the event a Change
of Control (as defined below) has occurred prior to a redemption
pursuant to this Section 5(a), the redemption price per share shall be
the greater of (A) the Liquidation Preference and (B) the consideration
calculated in accordance with Section 5(b) hereof; provided, further,
that the Corporation may redeem the Convertible Preferred Stock
pursuant to this Section 5(a) on or after January 3, 2006 and before
January 3, 2013, if the Current Market Price (as defined below) of the
Common Stock has exceeded 200% of the Conversion Price for 30 of the 45
Trading Days preceding the date notice is given by the Corporation
pursuant to Section 6 hereof of its intention to redeem all of the
shares of Convertible Preferred Stock pursuant to this Section 5(a).
Until January 3, 2018, the Corporation shall pay the redemption price
pursuant to this Section 5(a) in cash. After January 3, 2018, the
Corporation may elect, in its sole discretion, to pay the redemption
price pursuant to this Section 5(a) in cash, Common Stock or a
combination thereof. If the Corporation elects to pay all or a portion
of the redemption price in Common Stock pursuant to the immediately
preceding sentence, the number of shares of Common Stock that the
holders of Convertible Preferred Stock shall be entitled to receive
will be equal to the quotient of (1) the consideration to be received
by the holders of Convertible Preferred Stock as determined pursuant to
this Section 5(a) with respect to the shares of Convertible Preferred
Stock the Corporation has elected to pay in Common Stock divided by (2)
the product of .95 multiplied by the average of the Current Market
Price for the 30 Trading Days preceding the date the Corporation mails
notice of such redemption pursuant to Section 6(a).
(b) Redemption Upon Change in Control. Upon the
occurrence of a Change in Control, each holder of Convertible
Preferred Stock may elect to cause the Corporation to redeem
such holder's Convertible Preferred Stock, in whole or in
part, at a redemption price per share in cash equal to the
greater of (i) 101% of the Liquidation Value plus accrued and
unpaid dividends (whether or not declared) to the date of
redemption; provided, however, that if the Change in Control
occurs on or before January 3, 2008, the redemption price per
share will include dividends that would have accrued or been
payable in accordance with Section 3 hereof until January 3,
2008, had the Convertible Preferred Stock not been
4
redeemed prior thereto or (ii) the amount to which such holder
would be entitled to receive in connection therewith had such
holder converted such share into shares of Common Stock in
accordance with the terms hereof immediately prior to such
event.
6. Procedure for Redemption. (a) In the event that the
Corporation shall redeem shares of Convertible Preferred Stock pursuant
to Section 5(a) hereof, notice of such redemption shall be mailed by
first-class mail, postage prepaid, and mailed not less than 30 days nor
more than 60 days prior to the redemption date, to the holders of
record of the shares to be redeemed at their respective addresses as
they shall appear in the records of the Corporation; provided, however,
that failure to give such notice or any defect therein or in the
mailing thereof shall not affect the validity of the proceeding for the
redemption of any shares so to be redeemed except as to the holder to
whom the Corporation has failed to give such notice or except as to the
holder to whom notice was defective. Each such notice shall state: (i)
the redemption date; (ii) the number of shares of Convertible Preferred
Stock to be redeemed; (iii) the redemption price per share, including a
calculation of such redemption price; (iv) the place or places where
certificates for such shares are to be surrendered for payment of the
redemption price; (v) that dividends on the shares to be redeemed will
cease to accrue on such redemption date; and (vi) that the holder's
right to convert such shares into shares of Common Stock shall
terminate on the close of business on the second Business Day preceding
such redemption date.
(b) If a Change in Control should occur, then, in any one
or more of such events the Corporation shall, within 10 days
following the occurrence of the Change in Control, give
written notice by first-class mail, postage prepaid, to each
holder of Convertible Preferred Stock at its address as it
appears in the records of the Corporation, which notice shall
describe such Change in Control. Such notice shall also set
forth: (i) each holder's right to require the Corporation to
redeem in whole or in part shares of Convertible Preferred
Stock held by such holder as a result of such Change in
Control; (ii) the redemption price, including a calculation of
such redemption price; (iii) the redemption date (which date
shall be no earlier than 30 days from the date the notice in
respect of such Change in Control is mailed); (iv) the
procedures to be followed by such holder in exercising its
right of redemption, including the place or places where
certificates for such shares are to be surrendered for payment
of the redemption price; (v) that dividends on the shares to
be redeemed will cease to accrue on the redemption date and
(vi) that the holder's right to convert such shares into
shares of Common Stock shall terminate on the close of
business on the second Business Day preceding such redemption
date. In the event a holder of shares of Convertible Preferred
Stock elects to require the Corporation to redeem any or all
of such shares of Convertible Preferred Stock, such holder
shall deliver, not later than two Business Days prior to the
redemption date as set forth in the Corporation's notice
described in this Section 6(b), a written notice stating such
holder's election and specifying the number of shares to be
redeemed pursuant to Section 5(b) hereof.
(c) After notice by the Corporation has been mailed as
provided in Section 6(a) hereof, or notices of election have
been mailed by the holders as provided in
5
Section 6(b) hereof, and provided that on or before the
applicable redemption date funds necessary for such redemption
shall have been set aside by the Corporation, separate and
apart from its other funds, in trust for the pro rata benefit
of the holders of the shares so called for or entitled to
redemption, so as to be and to continue to be available
therefor, then, from and after the redemption date (unless the
Corporation defaults in the payment of the redemption price,
in which case such rights shall continue until the redemption
price is paid), dividends on the shares of Convertible
Preferred Stock so called for or entitled to redemption shall
cease to accrue, and said shares shall no longer be deemed to
be outstanding and shall not have the status of shares of
Convertible Preferred Stock, and all rights of the holders
thereof as stockholders of the Corporation (except the right
to receive the applicable redemption price and any accrued and
unpaid dividends from the Corporation to the date of
redemption calculated pursuant to Section 3 hereof and the
right to convert such shares into shares of Common Stock,
which shall continue until the close of business on the second
Business Day preceding the date of redemption in accordance
with Section 9 hereof) shall cease. Upon surrender of the
certificates for any shares so redeemed (properly endorsed or
assigned for transfer, if the Board of Directors of the
Corporation shall so require and a notice by the Corporation
shall so state), such shares shall be redeemed by the
Corporation at the applicable redemption price as aforesaid.
In case fewer than all the shares represented by any such
certificate are redeemed, a new certificate or certificates
representing the unredeemed shares shall be issued to such
holder within 5 days of the redemption date.
7. Reacquired Shares. Shares of Convertible Preferred
Stock that have been issued and reacquired in any manner, including
without limitation shares reacquired by purchase, redemption or
conversion pursuant to Section 9 hereof, shall (upon compliance with
any applicable provisions of the laws of the State of Delaware) have
the status of authorized and unissued shares of the class of Preferred
Stock undesignated as to series and may be redesignated and reissued as
part of any series of Preferred Stock other than Convertible Preferred
Stock.
8. Voting Rights. In addition to any voting rights
provided by applicable law, the holders of Convertible Preferred Stock
shall have the following voting rights:
(a) General. Subject to Section 8(b) hereof, each share
of Convertible Preferred Stock shall entitle the holder
thereof to vote on all matters submitted to a vote of the
stockholders of the Corporation, voting together as a single
class with the holders of Common Stock. At any time, each
share of Convertible Preferred Stock shall be entitled to a
number of votes which is equal to the number of shares of
Common Stock that could be obtained upon conversion of one
share of Convertible Preferred Stock at the then applicable
Conversion Price (as such amount may be adjusted pursuant to
Section 9(f) hereof).
(b) Voting Rights for Directors.
(i) Subject to Section 8(b)(viii), in addition to any
other rights to elect directors which the holders of
Convertible Preferred Stock may have, from
6
and after the Issue Date, the holders of all
outstanding shares of Convertible Preferred Stock,
voting separately as a class and to the exclusion of
the holders of all other classes of stock of the
Corporation, shall be entitled to elect a total of
two individuals to serve as members of the Board of
Directors. Such directors shall be divided into
classes if and to the same extent as the directors to
be elected generally by the stockholders of the
Corporation.
(ii) The right to elect directors as described in Section
8(b)(i) hereof may be exercised either at a special
meeting of the holders of Convertible Preferred
Stock, called as hereinafter provided in Section
8(b)(iii) hereof, at any annual meeting of
stockholders held for the purpose of electing
directors, or by the written consent of the holders
of Convertible Preferred Stock without a meeting
pursuant to Section 228 of the DGCL and thereafter at
such annual meeting or by written consent.
(iii) The Secretary of the Corporation may, and upon the
written request of the holders of record of at least
10% of the outstanding shares of Convertible
Preferred Stock (addressed to the Secretary of the
Corporation at the principal office of the
Corporation) shall, call a special meeting of the
holders of Convertible Preferred Stock for the
election of the directors to be elected by them as
herein provided. Such call shall be made by notice to
the holders of record by first-class mail, postage
prepaid at their respective addresses as they shall
appear in the records of the Corporation, and such
notice shall be mailed at least 10 days but no more
than 20 days before the date of the special meeting,
or as required by law. Such meeting shall be held at
the earliest practicable date upon the notice
required for special meetings of stockholders at the
place designated by the Secretary of the Corporation.
If such meeting shall not be called by a proper
officer of the Corporation within 15 days after
receipt of such written request by the Secretary of
the Corporation, then the holders of record of at
least 10% of the shares of Convertible Preferred
Stock then outstanding may call such meeting at the
expense of the Corporation, and such meeting may be
called by such holders upon the notice required for
special meetings of stockholders and shall be held at
the place designated in such notice. Any holder of
Convertible Preferred Stock that would be entitled to
vote at any such meeting shall have access to the
stock record books of the Corporation for the purpose
of causing a meeting of holders of Convertible
Preferred Stock to be called pursuant to the
provisions of this Section 8(b)(iii).
(iv) At any meeting held for the purpose of electing
directors at which the holders of Convertible
Preferred Stock shall have the right to elect
directors as provided in this Section 8(b), the
presence in person or by proxy of the holders of a
majority of the then outstanding shares of
Convertible Preferred Stock shall be required and be
sufficient to constitute a quorum of such class for
the election of directors by such class. At any such
meeting or adjournment thereof, (x) the absence of a
7
quorum of the holders of Convertible Preferred Stock
shall not prevent the election of directors other
than the directors to be elected by the holders of
Convertible Preferred Stock, and the absence of a
quorum or quorums of the holders of capital stock
entitled to elect such other directors shall not
prevent the election of the directors to be elected
by the holders of Convertible Preferred Stock, and
(y) in the absence of a quorum of the holders of
Convertible Preferred Stock, a majority of the
holders of Convertible Preferred Stock present in
person or by proxy shall have the power to adjourn
the meeting for the election of directors which such
holders are entitled to elect, from time to time,
without notice (except as required by law) other than
announcement at the meeting, until a quorum shall be
present.
(v) Except as provided in Section 8(b)(viii) hereof, the
term of office of any director elected by the holders
of Convertible Preferred Stock pursuant to Section
8(b)(i) hereof in office at any time shall terminate
upon the election of his or her successor at the
annual meeting of stockholders held for the purpose
of electing directors to the class of directors to
which such director belongs.
(vi) In case of a vacancy occurring in the office of any
director so elected pursuant to Section 8(b)(i)
hereof, the holders of a majority of the Convertible
Preferred Stock then outstanding may, at a special
meeting of the holders or by written consent as
provided above, elect a successor to hold office for
the unexpired term of such director.
(vii) At any annual or special meeting held for the purpose
of allowing the holders of the Convertible Preferred
Stock to take any action pursuant to this Certificate
of Designations, the Stock Purchase Agreement or the
Registration Rights Agreement and where a majority of
the then outstanding shares of Convertible Preferred
Stock are present in person or by proxy, the
affirmative vote of the holders present in person or
by proxy at such meeting shall be sufficient for such
action to have received the approval of the holders
of the Convertible Preferred Stock.
(viii) Notwithstanding the foregoing: (x) at such time, if
any, as the outstanding shares of Convertible
Preferred Stock then Beneficially Owned by the
Initial Purchasers, their respective Affiliates or
any Designated Transferees constitutes less than 50%
of the number of shares of Common Stock Beneficially
Owned by them immediately after the Issue Date (as
such number may be adjusted for stock dividends,
stock splits, combinations and recapitalizations and
other similar events), the number of directors the
holders of Convertible Preferred Stock are then
entitled to designate and elect under this Section
8(b) shall be reduced by one; and (y) at such time as
the outstanding shares of Convertible Preferred Stock
then Beneficially Owned by the Initial Purchasers,
their respective Affiliates or any Designated
Transferees constitutes less than 15% of the number
of shares of Common Stock Beneficially Owned by them
8
immediately after the Issue Date (as such number may
be adjusted for stock dividends, stock splits,
combinations and recapitalizations and other similar
events), the holders of Convertible Preferred Stock
shall not be entitled to designate or elect any
directors under this Section 8(b).
(c) Additional Directors.
(i) Subject to Section 8(c)(viii), in the event that (i)
dividends payable on any Quarterly Dividend Payment
Date after the tenth anniversary of the Issue Date
are not paid and are in arrears on such Quarterly
Dividend Payment Date (each occurrence a "Dividend
Payment Default") or (ii) if the Corporation shall
have failed to discharge any obligation pursuant to a
request for redemption pursuant to Section 5(b) (the
"Redemption Obligation") (each of the foregoing a
"Triggering Event"), then the number of directors
constituting the Board of Directors of the
Corporation, without further action, shall be
increased by one person and the holders of the
Convertible Preferred Stock shall have the exclusive
right, voting separately as a class, to nominate and
elect such director (the "New Director") of the
Corporation to fill such newly created directorship
at each meeting of stockholders held for the purpose
of electing directors to the class of directors to
which such director belongs.
(ii) Whenever such voting right shall have vested, such
right may be exercised at a special meeting of the
holders of the Convertible Preferred Stock called as
hereinafter provided, at any annual meeting of
stockholders held for the purpose of electing
directors or by the written consent of the holders of
Convertible Preferred Stock pursuant to Section 228
of the Delaware General Corporation Law. Such voting
right shall continue until such time as all
cumulative dividends accumulated on the Convertible
Preferred Stock since the tenth anniversary of the
Issue Date shall have been paid in full or the
Corporation shall have fulfilled its Redemption
Obligation in full, as the case may be, at which time
such voting right of the holders of Convertible
Preferred Stock shall terminate, but such voting
right shall again vest in the event of each and every
subsequent failure of the Corporation to pay
dividends for the requisite number of periods or to
discharge any Redemption Obligation as described
above.
(iii) At any time when such voting right shall have vested
in the holders of Convertible Preferred Stock and if
such right shall not already have been initially
exercised, a proper officer of the Corporation shall,
upon the written request of any holder of record of
Convertible Preferred Stock then outstanding, call a
special meeting of holders of Convertible Preferred
Stock. Such meeting shall be held at the earliest
practicable date upon the notice required for annual
meetings of stockholders. If such meeting shall not
be called within 20 days after such written request,
then the holders of record of 10% of the shares of
Convertible Preferred Stock then outstanding may
designate in writing a holder of Convertible
Preferred Stock to call such meeting at the expense
of the Corporation, and such
9
meeting may be called by such person so designated
upon the notice required for annual meetings of
stockholders. Any holder of Convertible Preferred
Stock which would be entitled to vote at such meeting
shall have access to the stock books of the
Corporation for the purpose of causing a meeting of
stockholders to be called pursuant to the provisions
of this paragraph. Notwithstanding the provisions of
this paragraph, however, no such special meeting
shall be called during a period within 60 days
immediately preceding the date fixed for the next
annual meeting of stockholders.
(iv) At any meeting at which the holders of Convertible
Preferred Stock shall have the right to elect a New
Director as provided herein, the presence in person
or by proxy of the holders of at least a majority of
the then outstanding shares of Convertible Preferred
Stock shall be required and be sufficient to
constitute a quorum. At any such meeting or
adjournment thereof, the absence of a quorum of the
holders of Convertible Preferred Stock shall not
prevent the election of directors other than the New
Director and the absence of a quorum or quorums of
the holders of capital stock entitled to elect such
other directors shall not prevent the election of any
New Director.
(v) For so long as the aforesaid voting rights are vested
in the holders of Convertible Preferred Stock, the
term of office of the New Director shall terminate
upon the election of his successor by the holders of
Convertible Preferred Stock. Upon any termination of
the aforesaid voting rights in accordance with
Section 8(c)(ii) or Section 8(c)(viii), the term of
office of any New Director shall thereupon terminate
and upon such termination the number of directors
constituting the Board of Directors shall, without
further action, be reduced by one.
(vi) In the case of any vacancy occurring with respect to
the New Director, the New Director who shall have
been so elected may appoint a successor to hold
office until his successor is elected at an annual or
a special meeting of the stockholders. If the New
Director shall cease to serve as a director before
his term shall expire, the holders of Convertible
Preferred Stock then outstanding may elect a
successor (at any meeting of stockholders held for
the purpose of electing directors or by the written
consent of the holders of Convertible Preferred Stock
pursuant to Section 228 of the Delaware General
Corporation Law) to hold office until his successor
is elected at an annual or a special meeting of the
stockholders. The New Director may be removed, either
for or without cause, by the holders of a majority of
the Convertible Preferred Stock and any resulting
vacancy may be filled as provided for in this
subsection (vi).
(vii) So long as any shares of Convertible Preferred Stock
are outstanding, the Corporation shall take such
action as may be necessary so that its By-laws shall
contain provisions ensuring that the number of
directors of the Corporation shall at all times be
such that the exercise, by the holders of
10
the Convertible Preferred Stock, of the right to
elect a New Director will not contravene any
provisions of the Certificate of Incorporation or
By-laws.
(viii) Notwithstanding the foregoing, at such time, if any,
as the outstanding shares of Convertible Preferred
Stock then Beneficially Owned by the Initial
Purchasers, their respective Affiliates or any
Designated Transferees constitutes less than 50% of
the number of shares of Common Stock Beneficially
Owned by them immediately after the Issue Date (as
such number may be adjusted for stock dividends,
stock splits, combinations and recapitalizations and
other similar events), the holders of Convertible
Preferred Stock shall not be entitled to designate or
elect any directors under this Section 8(c).
9. Conversion. (a) Any share of Convertible Preferred
Stock shall be convertible at the option of the holder thereof into
fully paid and nonassessable shares of Common Stock on the terms and
conditions set forth in this Section 9, at any time upon surrender to
the Corporation of the certificates for the shares to be converted,
into a number of fully paid and nonassessable shares of Common Stock
equal to the Convertible Preferred Amount per share as of the date of
conversion divided by the Conversion Price.
(b) Conversion of the Convertible Preferred Stock as
permitted by Section 9(a) hereof may be effected by any holder
thereof upon the surrender to the Corporation, at its
principal office or at such other office or agency maintained
by the Corporation for that purpose, of the certificate for
the Convertible Preferred Stock to be converted accompanied by
a written notice stating that such holder elects to convert
all or a specified whole number of such shares in accordance
with the provisions of this Section 9 and specifying the name
or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. In case
such notice shall specify a name or names other than that of
such holder, such notice shall be accompanied by payment of
all transfer taxes payable upon the issuance of shares of
Common Stock in such name or names. Other than such taxes, the
Corporation will pay any and all issue and other taxes (other
than taxes based on income) that may be payable in respect of
any issue or delivery of shares of Common Stock on conversion
of Convertible Preferred Stock pursuant hereto. As promptly as
practicable, and in any event within 5 Business Days after the
surrender of such certificate or certificates and the receipt
of such notice relating thereto and, if applicable, payment of
all transfer taxes (or the demonstration to the reasonable
satisfaction of the Corporation that such taxes have been
paid), the Corporation shall deliver or cause to be delivered
(i) certificates representing the number of validly issued,
fully paid and nonassessable shares of Common Stock to which
the holder of shares of Convertible Preferred Stock being
converted shall be entitled, (ii) if less than the full number
of shares of Convertible Preferred Stock evidenced by the
surrendered certificate or certificates is being converted, a
new certificate or certificates, of like tenor, for the number
of shares and evidenced by such surrendered certificate or
certificates less the number of shares being converted,
11
and (iii) payment of all amounts to which a holder is entitled
pursuant to Section 9(e) hereof. Such conversion shall be
deemed to have been made at the close of business on the date
of giving of such notice and of such surrender of the
certificate or certificates representing the shares of
Convertible Preferred Stock to be converted so that the rights
of the holder thereof as to the shares being converted shall
cease except for the right to receive shares of Common Stock
in accordance herewith, and the Person entitled to receive the
shares of Common Stock shall be treated for all purposes as
having become the record holder of such shares of Common Stock
at such time.
(c) In case any shares of Convertible Preferred Stock are
to be redeemed pursuant to Section 5 hereof, such right of
conversion shall cease and terminate as to such shares at the
close of business on the second Business Day preceding the
date fixed for redemption or exchange, unless the Corporation
shall default in the payment of the applicable redemption
price, in which case such right of conversion shall not cease
as to any share of Convertible Preferred Stock unless and
until the redemption price with respect to such share has been
paid in full.
(d) The Corporation shall at all times reserve and keep
available, free from liens, charges and security interests and
not subject to any preemptive rights, for issuance upon
conversion of the Convertible Preferred Stock such number of
its authorized but unissued shares of Common Stock as will
from time to time be sufficient to permit the conversion of
all outstanding shares of Convertible Preferred Stock, and
shall take all action required to increase the authorized
number of shares of Common Stock if necessary to permit the
conversion of all outstanding shares of Convertible Preferred
Stock.
(e) No fractional shares or scrip representing fractional
shares of Common Stock shall be issued upon the conversion of
any shares of Convertible Preferred Stock. Instead of any
fractional interest in a share of Common Stock which would
otherwise be deliverable upon the conversion of a share of
Convertible Preferred Stock, the Corporation shall pay to the
holder of such share an amount in cash equal to such
fractional interest multiplied by the Current Market Price of
the Common Stock on the day of conversion. If more than one
share or right shall be surrendered for conversion at one time
by the same holder, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the
basis of the aggregate Convertible Preferred Amount so
surrendered.
(f) The Conversion Price shall be subject to adjustment
as follows:
(i) In case the Corporation shall at any time or from
time to time after the Issue Date (A) pay a dividend
or make a distribution in shares of Common Stock or
securities convertible into Common Stock, (B)
subdivide or reclassify the outstanding shares of
Common Stock into a greater number of shares of
Common Stock, (C) combine or reclassify the
outstanding shares of Common Stock into a smaller
number of shares, or (D) otherwise issue by
reclassification of the shares of Common Stock any
shares of capital stock of the Corporation, then, and
in each such case, the
12
Conversion Price shall be adjusted so that the holder
of any shares of Convertible Preferred Stock and
thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common
Stock or other securities of the Corporation which
such holder would have owned or have been entitled to
receive after the happening of any of the events
described above had such shares of Convertible
Preferred Stock been surrendered for conversion
immediately prior to the happening of such event or
the record date therefor, whichever is earlier. An
adjustment made pursuant to this Section 9(f)(i)
shall become applicable (x) in the case of any such
dividend or distribution, immediately after the close
of business on the record date for the determination
of holders of shares of Common Stock entitled to
receive such dividend or distribution and (y) in the
case of any such subdivision, reclassification or
combination, at the close of business on the day upon
which such corporate action becomes effective. Such
adjustment shall be made successively.
(ii) In case the Corporation shall at any time or from
time to time after the Issue Date declare, order, pay
or make a dividend or other distribution (including
without limitation any distribution of stock or other
securities, evidences of indebtedness, property or
assets or rights or warrants to subscribe for
securities of the Corporation or any of its
Subsidiaries) on its Common Stock (other than (A)
regular quarterly dividends payable in cash or (B)
dividends or distributions of shares of Common Stock
referred to in Section 9(f)(i) hereof) (any one of
the foregoing other than the items specified in
clause (A) or (B) referred to as "SECURITIES OR
ASSETS"), then and in each such case, unless the
Corporation elects to reserve shares or other units
of such Securities or Assets for distribution to the
holders of the Convertible Preferred Stock upon the
conversion of the shares of Convertible Preferred
Stock so that any such holder converting shares of
Convertible Preferred Stock will receive upon such
conversion, in addition to the shares of the Common
Stock to which such holder is entitled, the amount
and kind of such Securities or Assets which such
holder would have received if such holder had,
immediately prior to the record date for the
distribution of the Securities or Assets, converted
its shares of Convertible Preferred Stock into Common
Stock, the Conversion Price shall be adjusted so that
such Conversion Price shall equal the price
determined by multiplying the Conversion Price in
effect immediately prior to the date of such
distribution by a fraction of which the numerator
shall be the Current Market Price of the Common Stock
on such record date less the then fair market value
(as determined by the Board in good faith) of the
portion of the capital stock or assets or evidences
of indebtedness so distributed or of such rights or
warrants applicable to one share of Common Stock, and
of which the denominator shall be the Current Market
Price of the Common Stock on such record date;
provided, however, that if the then fair market value
(as so determined) of the portion of the Securities
or Assets so distributed applicable to one share of
Common Stock is equal to or greater than the Current
Market Price of the Common Stock on the record date
mentioned above, in lieu of the
13
foregoing adjustment, adequate provision shall be
made so that each holder of shares of the Convertible
Preferred Stock shall have the right to receive the
amount and kind of Securities or Assets which such
holder would have received had such holder converted
each such share of the Convertible Preferred Stock
immediately prior to the record date for the
distribution of the Securities or Assets. Such
adjustment shall become effective immediately after
the record date for the determination of shareholders
entitled to receive such distribution.
(iii) In case the Corporation shall issue or sell any
Common Stock (or rights, options, warrants or other
securities convertible into or exercisable or
exchangeable for shares of Common Stock)
(collectively, "ADDITIONAL SHARES") at any time from
and after the Issue Date until January 3, 2006
without consideration or for a consideration per
share (or having a conversion, exchange or exercise
price per share) (such per share amount, the "SALE
PRICE") less than the greater of (A) the Current
Market Price per share of Common Stock on the date
preceding the earlier of the issuance or public
announcement of the issuance of such Additional
Shares of Common Stock and (B) the Conversion Price
as of the date of such issuance of such shares (or,
in the case of convertible or exchangeable or
exercisable securities, less than the greater of the
Current Market Price or the Conversion Price, as the
case may be, as of the date of issuance of the
rights, options, warrants or other securities in
respect of which shares of Common Stock were issued)
then, and in each such case, the Conversion Price
shall be reduced to an amount determined by
multiplying (A) the Conversion Price in effect on the
day immediately prior to such date by (B) a fraction,
the numerator of which shall be the sum of (1) the
number of shares of Common Stock outstanding
immediately prior to such sale or issuance multiplied
by the greater of (a) the then applicable Conversion
Price per share and (b) the Current Market Price per
share of Common Stock on the date preceding the
earlier of the issuance or public announcement of the
issuance of such Additional Shares of Common Stock
(the greater of (a) and (b) above hereinafter
referred to as the "ADJUSTMENT PRICE") and (2) the
aggregate consideration receivable by the Corporation
for the total number of shares of Common Stock so
issued (or into or for which the rights, options,
warrants or other securities are convertible,
exercisable or exchangeable), and the denominator of
which shall equal to the product of (I) the sum of
(x) the total number of shares of Common Stock
outstanding immediately prior to such sale or issue
and (y) the number of additional shares of Common
Stock issued (or into or for which the rights,
options, warrants or other securities may be
converted, exercised or exchanged), multiplied by
(II) the Adjustment Price. In case any portion of the
consideration to be received by the Corporation shall
be in a form other than cash, the fair market value
of such noncash consideration shall be utilized in
the foregoing computation. Such fair market value
shall be determined in good faith by the Board of
Directors. An adjustment made pursuant to this
subsection (iii) shall be made on the next Business
Day following the date on which any such
14
issuance is made and shall be effective retroactively
to the close of business on the date of such
issuance. For purposes of this subsection (iii), the
aggregate consideration receivable by the Corporation
in connection with the issuance of shares of Common
Stock or of rights, warrants or other securities
convertible into shares of Common Stock shall be
deemed to be equal to the sum of the aggregate
offering price (before deduction of underwriting
discounts or commissions and expenses payable to
third parties) of all such Common Stock, rights,
warrants and convertible securities plus the
aggregate amount (as determined on the date of
issuance), if any, payable upon exercise or
conversion of any such rights, warrants and
convertible securities into shares of Common Stock.
If, subsequent to the date of issuance of such right,
warrants or other convertible securities, the
exercise or conversion price thereof is reduced, such
aggregate amount shall be recalculated and the
Conversion Price shall be adjusted retroactively to
give effect to such reduction. On the expiration of
any option or the termination of any right to convert
or exchange any securities into Additional Shares,
the Conversion Price then in effect hereunder shall
forthwith be increased to the Conversion Price which
would have been in effect at the time of such
expiration or termination (but taking into account
other adjustments or potential made following the
time of issuance of such options or securities) had
such option or security, to the extent outstanding
immediately prior to such expiration or termination,
never been issued. If Common Stock is sold as a unit
with other securities, the aggregate consideration
received for such Common Stock shall be deemed to be
net of the fair market value (as determined by the
Board of Directors in good faith) of such other
securities. The issuance or reissuance of (A) any
shares of Common Stock or rights, warrants or other
securities convertible into shares of Common Stock
(whether treasury shares or newly issued shares) (1)
pursuant to a dividend or distribution on, or
subdivision, combination or reclassification of, the
outstanding shares of Common Stock requiring an
adjustment in the Conversion Price pursuant to
subsection (i) of this Section 9(f); (2) pursuant to
any restricted stock or stock option plan or program
of the Corporation involving the grant of options or
rights to acquire shares of Common Stock after the
date hereof to directors, officers and employees of
the Corporation and its Subsidiaries; (3) pursuant to
any option, warrant, right, or convertible security
outstanding as of the Issue Date; (4) pursuant to any
securities issued to a bank or other similar
financial institution solely in connection with the
Senior Credit Facility or the Senior Subordinated
Credit Facility or (5) pursuant to an underwritten
offering registered with the SEC if the offering
price is greater than the Conversion Price then in
effect; (B) the Series B-1 Convertible Preferred
Stock and any shares of Common Stock issuable upon
conversion or exercise thereof, or (C) the Warrants
and any shares of Common Stock issuable upon exercise
thereof, shall not be deemed to constitute an
issuance of Common Stock or convertible securities by
the Corporation to which this subsection (iii)
applies. No adjustment shall be made pursuant
15
to this subsection (iii) in connection with any
transaction to which Section 9(g) applies.
(iv) For purposes of this Section 9(f), the number of
shares of Common Stock at any time outstanding shall
not include any shares of Common Stock then owned or
held by or for the account of the Corporation.
(v) All calculations of the Conversion Price pursuant to
this Section 9(f) shall be made to the nearest one
one-hundredth of a cent. Anything in this Section
9(f) to the contrary notwithstanding, (A) the
Corporation shall not be required to give effect to
any adjustment in the Conversion Price unless and
until the net effect of one or more adjustments (each
of which shall be carried forward), determined as
above provided, shall have resulted in a reduction of
the Conversion Price of at least 1%, and when the
cumulative net effect of more than one adjustment so
determined shall be to reduce the Conversion Price by
at least 1%, such reduction in Conversion Price shall
thereupon be given effect and (B) in no event shall
the then current Conversion Price be increased as a
result of any calculation made at any time pursuant
to this Section 9(f).
(g) (i) In case of any capital reorganization or
reclassification of outstanding shares of Common Stock (other than a
reclassification to which Section 9(f)(i) hereof shall apply), or in
case of any merger or consolidation of the Corporation with or into
another Person (as defined below), or in case of any sale or conveyance
to another Person of all or substantially all of the assets of the
Corporation or any compulsory share exchange pursuant to which share
exchange the shares of Common Stock are converted into other
securities, cash or other property (each of the foregoing being
referred to as a "TRANSACTION"), each share of Convertible Preferred
Stock then outstanding shall thereafter be convertible into, in lieu of
the Common Stock issuable upon such conversion prior to consummation of
such Transaction, the kind and amount of shares of stock and other
securities and property receivable (including cash) upon the
consummation of such Transaction by a holder of that number of shares
of Common Stock into which one share of Convertible Preferred Stock was
convertible immediately prior to such Transaction (including, on a pro
rata basis, the cash, securities or property received by holders of
Common Stock in any tender or exchange offer that is a step in such
Transaction).
(ii) Notwithstanding anything contained herein to the
contrary, the Corporation will not effect any Transaction unless, prior
to the consummation thereof, (A) the Surviving Person (as defined
below) shall agree that the shares of Convertible Preferred Stock shall
be treated as provided in paragraph (i) of this Section 9(g) and the
agreements governing such Transaction shall so provide, (B) the
Surviving Person thereof shall assume, by written instrument mailed, by
first-class mail, postage prepaid, to each holder of shares of
Convertible Preferred Stock at such holder's address as it appears in
the records of the Corporation, the obligation to deliver to such
holder such cash or other securities to which, in accordance with the
foregoing provisions, such holder is entitled and such Surviving Person
shall have mailed, by first-class mail, postage prepaid, to each holder
of shares of Convertible Preferred Stock at such holder's
16
address as it appears in the records of the Corporation, an opinion of
independent counsel for such Person stating that such assumption
agreement is a valid, binding and enforceable agreement of the
Surviving Person, and (C) proper provision is made to ensure that the
holders of shares of Convertible Preferred Stock will be entitled to
receive the benefits afforded by Section 5(b) hereof.
(h) In any case, if necessary, appropriate adjustment
(as determined in good faith by the Board of Directors) shall
be made in the application of the provisions set forth in this
Section 9 with respect to rights and interests thereafter of
the holders of shares of Convertible Preferred Stock to the
end that the provisions set forth herein for the protection of
the conversion rights of Convertible Preferred Stock shall
thereafter be applicable, as nearly as reasonably may be, to
any such other shares of stock and other securities (other
than the Common Stock) and property deliverable upon
conversion of the shares of Convertible Preferred Stock
remaining outstanding with such adjustments in the Conversion
Price and such other adjustments in the provisions hereof as
the Board of Directors shall in good faith determine to be
appropriate. In case securities or property other than Common
Stock shall be issuable or deliverable upon conversion as
aforesaid, then all references in this Section 9 shall be
deemed to apply, so far as appropriate and as nearly as may
be, to such other securities or property.
(i) If the Corporation shall pay any dividend or make any
other distribution to the holders of its Common Stock (other
than regular quarterly dividends payable in cash) or shall
offer for subscription pro rata to the holders of its Common
Stock any additional shares of stock of any class or any other
right, or there shall be any Transaction, or there shall be a
voluntary or involuntary dissolution, liquidation or winding
up of the Corporation, then, in any one or more of said cases
the Corporation shall give at least 15 days prior written
notice to the holders of record of Convertible Preferred Stock
by first-class mail, postage prepaid, at their respective
addresses as they shall appear in the records of the
Corporation of the earlier of the dates on which (i) the books
of the Corporation shall close or a record shall be taken for
such stock dividend, distribution or subscription rights or
(ii) such Transaction, dissolution, liquidation or winding up
shall take place. Such notice shall also specify the date as
of which the holders of the Common Stock of record shall
participate in said dividend, distribution or subscription
rights or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale
or conveyance or participate in such dissolution, liquidation
or winding up, as the case may be. Failure to give such notice
shall not invalidate any action so taken.
10. Reports as to Adjustments. Upon the occurrence of any
event specified in Section 9(f) hereof that would result in any
adjustment of the Conversion Price, then, and in each such case, the
Corporation shall promptly deliver to the holders of record by
first-class mail, postage prepaid, at their respective addresses as
they shall appear in the records of the Corporation, a certificate
signed by the President or a Vice President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the
Corporation setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated and
specifying the Conversion Price
17
then in effect following such adjustment. Where appropriate, such
notice to the holders of Convertible Preferred Stock may be given in
advance and included as part of the notice required pursuant to Section
9(i) hereof.
11. Purchase Rights. If the Corporation issues any shares
of Common Stock, options, convertible securities, other equity
securities or securities containing options or rights to acquire any
equity securities or any securities convertible or exchangeable for
equity securities, in each case after the date hereof (other than a
Permitted Issuance) to any Person (the "OFFEREE"), such issuance (the
"OFFER") will be subject to the right of first offer and participation
rights set forth in Section 11(a) and Section 11(b) below.
(a) Preferred Stock Issuances. If the securities to be
issued in the Offer include any class or series of preferred
stock of the Corporation whether by liquidation, dividend or
voting rights, the Corporation shall offer such securities
(the "PREFERRED OFFERED SECURITIES") to the holders of
Convertible Preferred Stock by delivery of written notice to
such holders not less than 30 days prior to the date of the
proposed issuance. Such notice shall disclose in reasonable
detail the proposed terms (including price terms) and
conditions of the Offer (the "PREFERRED OFFER NOTICE"). Each
holder of Convertible Preferred Stock shall have the right to
purchase its ratable portion of the Preferred Offered
Securities (determined by dividing the number of shares of
Convertible Preferred Stock held by such holder by the total
number of shares of Convertible Preferred Stock then
outstanding) on the terms as set forth in the Preferred Offer
Notice, by delivery of written notice to the Corporation of
such election within 15 days after delivery of the Preferred
Issuance Notice (the "PREFERRED ELECTION NOTICE"). If any
holder of Convertible Preferred Stock has elected to purchase
any Preferred Offered Securities, the sale of such securities
shall be consummated simultaneously with the consummation of
the sale to the Offeree. If the holders of Convertible
Preferred Stock elect to purchase less than all of the
Preferred Offered Securities as described above, the
Corporation may issue such remaining Preferred Offered
Securities to the Offeree at the same price and on the same
terms as set forth in the Preferred Issuance Notice during the
45-day period beginning from the date on which the Preferred
Election Notice has been delivered to the Corporation. Any
Preferred Offered Securities not issued within such 45-day
period will be subject to this Section 11(a) upon subsequent
proposed issuance.
(b) Other Issuances. If the securities to be issued
pursuant to the Offer do not include any class or series of
preferred stock of the Corporation whether by liquidation,
dividend or voting rights, the Corporation shall offer to sell
to each holder of Convertible Preferred Stock a number of such
securities (the "OFFERED SECURITIES") so that such holder's
Ownership Ratio immediately after the issuance of such
securities would be equal to such holder's Ownership Ratio
immediately prior to such issuance of securities. The
Corporation shall give each holder of Convertible Preferred
Stock at least 30 days prior written notice of any proposed
issuance, which notice shall disclose in reasonable detail the
proposed terms and conditions of such issuance (the "ISSUANCE
NOTICE"). Each holder of Convertible Preferred Stock shall be
entitled to purchase its ratable portion of the Offered
Securities at the same price, on the same terms, and at the
same time as the
18
securities are issued to the Offeree by delivery of written
notice to the Corporation of such election within 15 days
after delivery of the Issuance Notice (the "ELECTION NOTICE");
provided, that if more than one type of security is proposed
to be issued, such holder shall, if it exercises its rights
pursuant to this Section 11(b), purchase such securities in
the same ratio to be issued to the Offeree. If any holder of
Convertible Preferred Stock has elected to purchase any
Offered Securities, the sale of such securities shall be
consummated simultaneously with the consummation of the sale
to the Offeree. If the holders of Convertible Preferred Stock
elect to purchase less than all of the Offered Securities as
described above, the Corporation may issue such remaining
Offered Securities to the Offeree at the same price and on the
same terms as set forth in the Issuance Notice during the
45-day period beginning from the date on which the Election
Notice has been delivered to the Corporation. Any Offered
Securities not issued within such 45-day period must be
reoffered to the holders of Convertible Preferred Stock in
accordance with this Section 11(b) prior to issuance.
(c) The election by any holder of Convertible Preferred
Stock not to exercise purchase rights under this Section 11 in
any one instance shall not affect such holders rights as to
any subsequent proposed issuance. Any sale of such securities
by the Corporation without first giving such holders the
rights described in this Section 11 shall be void and of no
force and effect, and the Corporation shall not register such
sale or issuance on the books and records of the Corporation.
12. Certain Covenants. Any holder of Convertible
Preferred Stock may proceed to protect and enforce its rights and the
rights of such holders by any available remedy by proceeding at law or
in equity to protect and enforce any such rights, whether for the
specific enforcement of any provision in this Certificate of
Designations or in aid of the exercise of any power granted herein, or
to enforce any other proper remedy.
13. Definitions. For the purposes of this Certificate of
Designations, the following terms shall have the meanings indicated:
"AFFILIATE" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act or any successor
provision. The terms "affiliated" and "non-affiliated" shall have meanings
correlative to the foregoing.
"BENEFICIALLY OWN" has the meaning set forth in Rules 13d-3 and 13d-5
promulgated under the Exchange Act.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"CHANGE IN CONTROL" shall mean (i) any sale, transfer, conveyance or
other disposition (other than by way of merger or consolidation) of all or
substantially all of the Corporation's assets, on a consolidated basis, in one
transaction or a series of related transactions, to any Person (including any
group that is deemed to be a Person); (ii) the consummation of any
19
transaction involving the Corporation, including, without limitation, any merger
or consolidation, whereby any Person (including any group that is deemed to be a
Person ) is or becomes the "beneficial owner," directly or indirectly, of more
than 40% of the aggregate voting equity securities of the Corporation or the
surviving entity or entities of such transaction if other than the Corporation;
(iii) the Continuing Directors cease for any reason to constitute a majority of
the members of the Board of Directors then in office; (iv) the approval by the
Corporation's stockholders of a merger or consolidation of the Corporation with
any other company and all other required governmental approvals have been
obtained, other than a merger or consolidation which would result in the Voting
Securities of the Corporation outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined voting power
of the Voting Securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation; or (v) the Corporation adopts a
plan of liquidation.
"COMMON STOCK" shall mean the common stock, par value $1 per share, of
the Corporation, including any associated Right, as defined in and issued
pursuant to the Rights Agreement, dated as of October 27, 1998, as amended, by
and between the Corporation and The Bank of New York (as successor to First
Chicago Trust Company of New York), as Rights Agent.
"CONTINUING DIRECTORS" shall mean during any period of 12 consecutive
months, individuals who at the beginning of any such 12-month period constituted
the Board of Directors (together with any new directors whose election by such
Board of Directors or whose nomination for election by the shareholders of the
Corporation was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved, including new
directors designated in or provided for in an agreement regarding the merger,
consolidation or sale, transfer or other conveyance, of all or substantially all
of the assets of the Corporation, if such agreement was approved by a vote of
such majority of directors).
"CONVERSION PRICE" shall mean, $24.05, and shall be subject to
adjustment as provided for in Section 9(f).
"CURRENT MARKET PRICE," when used with reference to shares of Common
Stock or other securities on any date, shall mean the closing price per share of
Common Stock or such other securities on such date and, when used with reference
to shares of Common Stock or other securities for any period, shall mean the
average of the daily closing prices per share of Common Stock or such other
securities for such period. For the avoidance of doubt, "CURRENT MARKET PRICE"
as used in Section 5(a) hereof shall mean the closing price per share of Common
Stock on each of the 30 Trading Days preceding the date notice is given by the
Corporation pursuant to Section 6 hereof of its notice of intention to redeem
all of the shares of Convertible Preferred Stock pursuant to Section 5(a). The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Common Stock or
such other securities are not listed or admitted to trading on the New York
Stock Exchange, as reported, in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the
20
Common Stock or such other securities are listed or admitted to trading or, if
the Common Stock or such other securities are not listed or admitted to trading
on any national securities exchange, the last quoted sale price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System or such other system then in use, or, if on any such
date the Common Stock or such other securities are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock or such other
securities selected by the Board of Directors of the Corporation. If the Common
Stock or such other securities are not publicly held or so listed or publicly
traded, "CURRENT MARKET PRICE" shall mean the fair market value per share of
Common Stock or of such other securities as determined by an independent
investment banking firm with an established national reputation as a valuer of
equity securities selected by the Corporation and reasonably acceptable to the
holders of a majority of the shares of Convertible Preferred Stock outstanding
at the time.
"DESIGNATED TRANSFEREE" shall mean any Person to whom the Initial
Purchasers or any Designated Transferee shall have sold or otherwise transferred
at least 10,000 shares of Convertible Preferred Stock (as such number may be
adjusted from time to time for any stock split, stock dividend, reverse split,
combination, recapitalization, merger, or otherwise); provided, however, that no
Person primarily engaged in the business of publishing, printing or marketing
yellow page directories (the "DIRECTORIES BUSINESS") and no Person which owns
more than 40% of the outstanding voting equity securities of any Person
primarily engaged in the Directories Business shall be a Designated Transferee
unless the Corporation gives its written consent to such Person being a
Designated Transferee.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934.
"INITIAL PURCHASERS" shall mean GS Capital Partners 2000, L.P., a Delaware
limited partnership; GS Capital Partners 2000 Offshore, L.P., a Cayman Islands
exempted limited partnership; GS Capital Partners 2000 Employee Fund 2000, L.P.,
a Delaware limited partnership; GS Capital Partners 2000 GmbH & Co. Beteiligungs
KG, a German limited partnership; and Goldman Sachs Direct Investment Fund 2000,
L.P. a Delaware limited partnership.
"ISSUE DATE" shall mean January 3, 2003.
"JUNIOR SECURITIES" shall have the meaning set forth in Section 2
hereof.
"OWNERSHIP RATIO" shall mean, as to any Person at any time of
determination, the percentage obtained by dividing the amount of shares of
Common Stock held by such Person on a fully diluted, as-if-converted basis at
such time by the aggregate amount of shares of Common Stock outstanding on a
fully diluted, as-if-converted basis at such time. For purposes of this
definition, "fully diluted" shall exclude shares of Common Stock issuable
pursuant to out-of-the-money options, warrants or other rights and options,
warrants or other rights which are not exercisable by the holder thereof on the
date of determination.
"PARITY SECURITIES" shall have the meaning set forth in Section 2
hereof.
21
"PERMITTED ISSUANCE" shall mean (i) the issuance or granting of Common
Stock (including restricted, deferred or performance shares), options or
convertible securities to employees of the Corporation and its Subsidiaries or
the exercise thereof pursuant to a stock-based incentive plan, (ii) the issuance
of Common Stock hereunder, (iii) the issuance of Common Stock by the Corporation
for consideration other than cash pursuant to a consummated merger,
consolidation, acquisition, or similar business combination, (iv) the issuance
of Common Stock pursuant to any securities issued to a bank or other similar
financial institution solely in connection with the Senior Credit Facility or
the Senior Subordinated Credit Facility, or (v) the issuance of Common Stock
upon exercise of Warrants.
"PERSON" shall mean any individual, firm, corporation or other entity,
and shall include any successor (by merger or otherwise) of such entity.
"REGISTRATION RIGHTS AGREEMENT" shall mean that certain Registration
Rights Agreement, dated November 25, 2002, by and among the Corporation and the
Purchasers named therein.
"SENIOR CREDIT FACILITY" shall have the meaning set forth in the Stock
Purchase Agreement.
"SENIOR SUBORDINATED CREDIT FACILITY" shall have the meaning set forth
in the Stock Purchase Agreement.
"STOCK PURCHASE AGREEMENT" shall mean that certain Preferred Stock and
Warrant Purchase Agreement, dated September 21, 2002, by and among the
Corporation and the Purchasers named therein, as such agreement may be amended
from time to time.
"SUBSIDIARIES" shall have the meaning ascribed to the term "Company
Subsidiaries" in the Stock Purchase Agreement.
"SURVIVING PERSON" shall mean the continuing or surviving Person of a
merger, consolidation or other corporate combination, the Person receiving a
transfer of all or a substantial part of the properties and assets of the
Corporation, or the Person consolidating with or merging into the Corporation in
a merger, consolidation or other corporate combination in which the Corporation
is the continuing or surviving Person, but in connection with which the
Convertible Preferred Stock or Common Stock of the Corporation is exchanged or
converted into the securities of any other Person or the right to receive cash
or any other property.
"TRADING DAY" shall mean a day on which the principal national
securities exchange on which the Common Stock is listed or admitted to trading
is open for the transaction of business or, if the Common Stock is not listed or
admitted to trading on any national securities exchange, a Business Day.
"VOTING SECURITIES" shall mean the Common Stock, the Convertible
Preferred Stock and any other securities of the Corporation having the voting
power under ordinary circumstances with respect to the election of directors of
the Corporation.
"WARRANTS" shall mean the warrants to purchase shares of Common Stock
issued pursuant to the Stock Purchase Agreement.
22
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed in its name and on its behalf and attested on this 3rd of January 2003 by
duly authorized officers of the Corporation.
R.H. DONNELLEY CORPORATION
By: /s/ Frank M. Colarusso
------------------------------
Name: Frank M. Colarusso
Title: Vice President and Treasurer
ATTEST:
By: /s/ Robert J. Bush
-----------------------------
Name: Robert J. Bush
Title: Secretary