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