PRELIMINARY COPY
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
R.H. DONNELLEY CORPORATION
---------------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
PRELIMINARY PROXY MATERIALS
R.H. DONNELLEY CORPORATION
One Manhattanville Road
Purchase, New York 10577
----------------------
To Our Stockholders:
You are cordially invited to attend the Special Meeting (the
"Meeting") of Stockholders of R.H. Donnelley Corporation (the "Company") to be
held on _______________, ___________, 1998 at 10:00 a.m. local time, at the
_____________________. At the Meeting, you will be asked to vote upon the
proposal set forth in the formal Notice (the "Notice") of the Meeting which
follows this letter.
As set forth in the Notice, the principal item of business to
be addressed at the Meeting is to consider and act upon a proposal to amend
the Company's Restated Certificate of Incorporation (the "Certificate of
Incorporation") to effect a one-for-five reverse stock split of the Company's
Common Stock (the "Common Stock"). This proposal will decrease the number of
outstanding shares of Common Stock from approximately 171.2 million to
approximately 34.2 million.
PLEASE NOTE THAT THE REVERSE STOCK SPLIT WILL NOT CHANGE YOUR PROPORTIONATE
EQUITY INTERESTS IN THE COMPANY, EXCEPT AS MAY RESULT FROM THE ELIMINATION OF
FRACTIONAL SHARES.
The Board of Directors believes that the current per share
price of the Company's Common Stock, which results from the Company's
separation from The Dun & Bradstreet Corporation on June 30, 1998, may reduce
its marketability. Furthermore, the Board of Directors also believes that a
reverse stock split could position the Company more attractively with
institutional investors who generally have restrictions on investing in low
priced stocks and retail stock brokers who are generally disinclined to invest
in low priced stocks.
The Board of Directors unanimously recommends that the
Company's stockholders approve of the proposal set forth in the Notice. The
enclosed Proxy Statement sets forth more detailed information regarding this
proposal. Please carefully review the information in the Proxy Statement.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, IT IS VERY
IMPORTANT THAT YOU MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE
ENVELOPE PROVIDED AS SOON AS POSSIBLE. IF YOU ATTEND THE MEETING, YOU MAY
REVOKE THE PROXY AT THAT TIME BY REQUESTING THE RIGHT TO VOTE IN PERSON.
Sincerely,
------------------------------------------
Frank R. Noonan
Chairman of the Board, President and Chief
Executive Officer
PRELIMINARY PROXY MATERIALS
R.H. DONNELLEY CORPORATION
One Manhattanville Road
Purchase, New York 10577
----------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON ___________, 1998
To the Stockholders of
R.H. Donnelley Corporation
Notice is hereby given that the Special Meeting of Stockholders
of R.H. Donnelley Corporation ("RHD" or the "Company") will be held on
____________, ____________, 1998 at 10:00 a.m., local time, at the
_____________________________________________, to consider and act on the
following:
1. To consider and approve a proposal to amend the Company's Restated
Certificate of Incorporation (the "Amendment") to effect a
one-for-five reverse stock split of the Company's Common Stock
(the "Common Stock") as a result of which holders of the Common
Stock will receive one share of Common Stock for each five shares
of Common Stock owned on the effective date of the Amendment; and
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record at the close of business on July
27, 1998 will be entitled to vote at the Special Meeting. A list of such
stockholders will be available at the time and place of meeting and, during
the ten days prior to the meeting, at the Company's executive offices located
at One Manhattanville Road, Purchase, New York 10577.
By Order of the Board of Directors
Frank R. Noonan
Chairman of the Board
Purchase, New York
____ __, 1998
- ------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING. WHETHER OR NOT
YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE URGED TO COMPLETE, SIGN,
DATE AND MAIL THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE
ENCLOSED STAMPED ENVELOPE. YOU MAY REVOKE THE PROXY AT ANY TIME PRIOR TO
ITS USE BY DELIVERING TO THE COMPANY A WRITTEN NOTICE OF REVOCATION OR DULY
EXECUTED PROXY BEARING A LATER DATE. ANY STOCKHOLDER WHO HAS EXECUTED A
PROXY BUT IS PRESENT AT THE SPECIAL MEETING AND WHO WISHES TO VOTE IN
PERSON MAY DO SO BY REVOKING HIS, HER OR ITS PROXY AS DESCRIBED IN THE
PRECEDING SENTENCE.
- ------------------------------------------------------------------------------
These materials constitute preliminary proxy materials filed with respect to a
forthcoming special meeting of stockholders. Certain information, including
information relating to the proposed reverse stock split, will be revised to
reflect actual facts at the time the definitive proxy statements are mailed to
stockholders.
R.H. DONNELLEY CORPORATION
One Manhattanville Road
Purchase, New York 10577
----------------------
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of R.H. Donnelley Corporation ("RHD" or
the "Company") of proxies for use at the Special Meeting of Stockholders (the
"Special Meeting") or at any adjournments or postponements thereof. The
Special Meeting will be held on ____________, _____ __, 1998 at 10:00 a.m.,
local time, at the ____________________________________ for the purposes set
forth in the accompanying Notice of Special Meeting of Shareholders.
If a stockholder properly executes and returns the enclosed
form of proxy, it will be voted according to his, her or its instructions. If
no instructions are given, then the proxy will be voted FOR approval of the
amendment (the "Amendment") to the Company's Restated Certificate of
Incorporation (the "Certificate of Incorporation") to effect a one-for-five
reverse stock split of the Company's Common Stock (the "Common Stock"), and in
the discretion of the proxies named on the proxy card with respect to any
other matters properly brought before the Special Meeting. Any proxy given by
a stockholder may be revoked by the stockholder at any time before it is voted
by written notice to the Secretary of the Company, by a duly executed proxy
bearing a later date, or by voting in person at the meeting. No appraisal
rights exist for any action proposed to be taken at the Special Meeting.
The cost of soliciting proxies, including expenses in
connection with preparing and mailing this Proxy Statement, will be borne by
the Company. The solicitation of proxies may be made by directors, officers
and regular employees of the Company or any of its subsidiaries personally or
by mail, telephone, facsimile communication or telegraph. No additional
compensation will be paid for such solicitation. In addition, arrangements
will be made with brokerage houses and other custodians, nominees and
fiduciaries to forward proxy soliciting material to the beneficial owners of
stock held of record by such persons, and the Company will reimburse them for
reasonable out-of-pocket expenses incurred by them in so doing. In addition,
the Company has engaged the services of Innisfree M&A Incorporated to solicit
proxies and will pay such proxy soliciting agent $10,000 plus expenses in
connection therewith. Solicitation by such firm may be by mail, personal
interview, telephone, fax or telegraph.
So far as the management of the Company is aware, stockholders
will take action on no matters other than those described in this Proxy
Statement. In the event that any other matters properly come before the
meeting that call for a vote of stockholders, the persons named as proxies in
the enclosed form of proxy will vote in accordance with their best judgment on
such other matters.
The Company is mailing this Proxy Statement and the
accompanying form of proxy to stockholders on or about ____ ____, 1998.
VOTING
The Board of Directors has fixed the close of business on July
27, 1998 as the record date (the "Record Date") for determining stockholders
entitled to notice of and to vote at the Special Meeting. On the Record Date,
there were outstanding [_____________] shares of the Company's Common Stock,
par value $1 per share. At the Special Meeting, holders of issued and
outstanding shares of Common Stock are entitled to one vote for each share
they hold. The presence in person or by proxy of a majority of the votes
entitled to be cast will constitute a quorum for purposes of conducting
business at the Special Meeting. Shares represented by proxies that are
marked "abstain" will be counted as shares present for purposes of determining
the presence of a quorum on all matters. Proxies relating to "street name"
shares that are voted by brokers will be treated as shares present for
purposes of determining the presence of a quorum on all matters.
The proposal to amend the Certificate of Incorporation requires
the approval of a majority of the shares entitled to vote at the Special
Meeting. Abstentions with respect to Proposal 1 will have the same effect as
votes against such proposal. Additionally, with respect to Proposal 1, broker
non-votes will not be counted. However, such broker non-
votes will have the practical effect of reducing the number of affirmative
votes required to achieve a majority by reducing the total number of shares
from which such majority is calculated.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of the Company's
Common Stock beneficially owned as of June 30, 1998 by (i) owners of more than
5% of the outstanding shares of the Company's Common Stock, (ii) each of the
Company's directors, (iii) each of the Company's named executive officers, and
(iv) all directors and named executive officers of the Company as a group.
Except as indicated in the footnotes to the table, the Company believes that
the persons named in the table have sole voting and investment power with
respect to all shares owned beneficially by them. The mailing address for each
of the Company's directors and executive officers listed below is One
Manhattanville Road, Purchase, NY 10577.
<TABLE>
<CAPTION>
Shares of Common Stock
Amount Beneficially Percentage of
Beneficial Owners Owned(1) Class
- ----------------- ---------------------- ---------------
<S> <C> <C>
Frank R. Noonan.......................................... 1,151,212 (2) *
Phillip C. Danford....................................... 393,048 (3) *
Frederick J. Groser...................................... 249,926 (4) *
Alexander R. Marasco..................................... 376,645 (5) *
David C. Swanson......................................... 173,241 (6) *
Diane P. Baker........................................... 15,000 (7) *
William G. Jacobi........................................ 20,578 (7) *
Robert J. Kamerschen..................................... 15,000 (7) *
Barry Lawson Williams.................................... 15,000 (7) *
All Directors and Executive Officers as a Group.......... 2,833,722 1.65%
Harris Associates L.P. and its general partner,
Harris Associates, Inc............................. 17,374,440 (8) 10.14%
Two North LaSalle Street,
Ste. 500
Chicago, Illinois 60602-3790
AMVESCAP, PLC and certain of its subsidiaries............ 12,048,320 (9) 7.03%
11 Devonshire Square
London EC2M 4YR
England
- -----------
* Represents ownership of less than 1%.
(1) The amounts and percentage of the Company's Common Stock beneficially
owned are reported on the basis of rules and regulations of the
Securities and Exchange Commission (the "Commission") governing the
determination of beneficial ownership of securities. Under such rules
and regulations, a person is deemed to be a "beneficial owner" of a
security if that person has or shares "voting power", which includes
the power to vote or to direct the voting of such security, or
"investment power", which includes the power to dispose of or to direct
the disposition of such security. A person is also deemed to be a
beneficial owner of any securities which that person has a right to
acquire beneficial ownership of within 60 days. Under these rules and
regulations, more than one person may be deemed a beneficial owner of
the same securities and a person may be deemed to be a beneficial owner
of securities in which he has no economic interest.
(2) Includes 1,142,893 shares of the Company's Common Stock which may be
acquired pursuant to options exercisable as of June 30, 1998 or within
60 days thereafter.
(3) Includes 391,268 shares of the Company's Common Stock which may be
acquired pursuant to options exercisable as of June 30, 1998 or within
60 days thereafter.
(4) Includes 249,359 shares of the Company's Common Stock which may be
acquired pursuant to options exercisable as of June 30, 1998 or within
60 days thereafter.
(5) Includes 366,543 shares of the Company's Common Stock which may be
acquired pursuant to options exercisable as of June 30, 1998 or within
60 days thereafter.
(6) Includes 172,188 shares of the Company's Common Stock which may be
acquired pursuant to options exercisable as of June 30, 1998 or within
60 days thereafter.
(7) Includes (i) options to purchase 7500 shares of the Company's Common
Stock, which options will become exercisable in equal increments on
each of the first three anniversary's of the date of the grant, July
14, 1998, and (ii) 7500 deferred shares of Company's Common Stock which
will vest in equal increments on each of the first three anniversary's
of the date of the grant, July 14, 1998.
(8) Harris Associates L.P. ("Harris") and its sole general partner, Harris
Associates, Inc. ("Harris Inc."), jointly filed a Schedule 13G with
the Commission on February 11, 1998. According to such Schedule 13G,
Harris, a registered investment adviser, had as of December 31, 1997,
shared voting power over 14,903,640 shares of the Company's Common
Stock. Of such shares, Harris had sole dispositive power over
5,171,140 shares and shared dispositive power over 9,732,500 shares.
On April 9, 1998, Harris and Harris Inc. jointly filed an amendment to
their Schedule 13G with the Commission which reported that as of March
31, 1998 Harris shared voting power over 17,374,440 shares of the
Company's Common Stock. Of such shares, Harris had sole dispositive
power over 5,435,440 shares and shared dispositive power over
11,939,000 shares. The foregoing Schedule 13G and the amendments
thereto related to the common stock of The Dun & Bradstreet
Corporation, the predecessor of the Company. See "Background of and
Reasons for the Reverse Stock Split".
(9) AMVESCAP PLC and its subsidiaries, ADZ, Inc. (a holding company), AIM
Management Group Inc. (a holding company), INVESCO, Inc. (a holding
company), INVESCO North American Holdings, Inc. (a holding company),
INVESCO Capital Management, Inc. (a registered investment adviser),
INVESCO Funds Group, Inc. (a registered investment adviser), INVESCO
Management & Research, Inc. (a registered investment adviser), and
INVESCO Realty Advisers, Inc. (a registered investment adviser),
jointly filed a Schedule 13G with the Commission on February 11, 1998.
This Schedule 13G reported that these companies had, as of December 31,
1997, shared voting power and shared dispositive power over 12,048,320
shares of the Company's Common Stock. The foregoing Schedule 13G
related to the common stock of The Dun & Bradstreet Corporation, the
predecessor of the Company. See "Background of and Reasons for the
Reverse Stock Split".
</TABLE>
PROPOSAL 1:
THE REVERSE STOCK SPLIT
General
The Board of Directors has determined that it would be
advisable to amend and restate the Company's Certificate of Incorporation to
effect a one-for-five reverse stock split (the "Reverse Stock Split") of the
Company's Common Stock. A copy of the proposed amendment to the Certificate
of Incorporation (the "Amendment") is attached hereto as Exhibit A. If the
Amendment is approved by the stockholders, each five shares of Common Stock,
par value $1 per share, (the "Old Common Stock") outstanding on the Effective
Date (as defined below) will be converted automatically into one share of new
Common Stock, par value $1 per share, (the "New Common Stock"). To avoid the
existence of fractional shares of New Common Stock, stockholders who would
otherwise be entitled to receive fractional shares of New Common Stock shall
receive a cash distribution in lieu thereof. See "Exchange of Stock
Certificates." The "Effective Date" of the Reverse Stock Split will be the
date on which the Amendment is filed with the Secretary of State of Delaware,
which is anticipated to be as soon as practicable following the date of the
Special Meeting.
Background of and Reasons for the Reverse Stock Split
On July 14, 1998, the Board of Directors adopted resolutions
approving the Amendment and directing that the Amendment be placed on the
agenda for the consideration of the stockholders at the Special Meeting.
On December 17, 1997, The Dun & Bradstreet Corporation ("Old
D&B"), the predecessor of the Company, announced its intention to separate
itself into two publicly-traded companies, The Dun & Bradstreet Corporation
("New D&B") and the Company, by means of a pro rata tax-free distribution (the
"Distribution") of all of New D&B common stock to holders of the Common Stock.
On June 3, 1998, Old D&B's Board of Directors formally approved the
Distribution and declared a dividend payable to each holder of record of Old
D&B's common stock at the close of business on June 17, 1998 of one share of
New D&B common stock for each share of D&B common stock held by such holder at
the close of business of June 17, 1998. Prior to the Distribution Old D&B
contributed to New D&B all or substantially all of the businesses which now
comprise the New D&B business. Such businesses had accounted for
approximately 84% of Old D&B's revenues and 75% of Old D&B's operating income
in 1997. In connection with the Distribution Old D&B changed its name to the
R.H. Donnelley Corporation and Old D&B common stock became the Common Stock of
the Company. The distribution was successfully completed on June 30, 1998.
On June 30, 1998, the last trading day prior to the Distribution, the closing
price per share of the Company's Common Stock on the New York Stock Exchange
(the "NYSE") was $36.00. On July 1, 1998, the first day of trading
post-Distribution, the Common Stock traded at an average price of $3.1563.
Since the pre-Distribution market price of the Company's Common Stock
reflected the present and expected future earnings stream of the entire Old
D&B business (including the Company), the post-Distribution market prices of
the Company's Common Stock have been reduced significantly. Since July 1,
1998, the Common Stock has traded in a range of $3.00 to $3.94 per share.
Many investors look upon low priced stock as unduly speculative
in nature and, as a matter of policy, avoid investment in such stocks. Such
Investors may believe that low stock prices reflect companies that are of low
quality or poor performers. Accordingly, the Board of Directors believes that
the current per share price of the Common Stock may reduce the effective
marketability of the shares because of the reluctance of many leading
brokerage firms to recommend low priced stock to their clients. Further,
various brokerage house policies and practices tend to discourage individual
brokers from dealing in low priced stocks. Some of those policies and
practices pertain to the payment of brokers' commissions and to time-consuming
procedures which function to make the handling of low priced stocks
unattractive to brokers from an economic standpoint. Additionally, several
institutional investors have policies prohibiting them from holding low priced
stock in their own portfolios. In addition, the structure of trading
commissions also tends to have an adverse impact upon holders of low priced
stock because the brokerage commission on a sale of low priced stock generally
represents a higher percentage of the sales price than the commission on higher
priced issues.
The Board of Directors believes that the Reverse Stock Split
should result in a stock price of five times the current price range, putting
the stock in a price range where the aforementioned negative perceptions do
not exist. As a result, the Common Stock would be more effectively priced,
better reflecting the underlying equity valuation of the Company.
There can be no assurance, however, that the foregoing will
occur or that the market price of the Common Stock immediately after
implementation of the Reverse Stock Split will increase, and, if it increases,
no assurance that such increase can be maintained for any period of time, or
that such market price will approximate five times the market price before the
Reverse Stock Split.
Dissenting stockholders have no appraisal rights under Delaware
law or under the Company's Certificate of Incorporation and Bylaws in
connection with Reverse Stock Split.
FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT ALL STOCKHOLDERS VOTE FOR THE APPROVAL OF THE
AMENDMENT.
Effects of the Reverse Stock Split
General Effects. If the Amendment is approved by the
stockholders, the principal effect of the Reverse Stock Split will be to
decrease the number of outstanding shares of Common Stock from 171,291,317
shares to approximately 34,258,263 shares, based on share information as of
June 30, 1998. The Reverse Stock Split would not affect the proportionate
equity interest in the Company of any holder of Common Stock, except as may
result from the provisions for the elimination of fractional shares as
described below. The Reverse Stock Split will not affect the registration of
the Common Stock under the Exchange Act or the listing of the Common Stock on
the NYSE. The relative rights and preferences on the New Common Stock will be
identical to the relative rights and preferences of the Old Common Stock.
In order that the Company may avoid the expense and
inconvenience of issuing and transferring fractional shares of New Common
Stock, stockholders who would otherwise be entitled to receive a fractional
share of New Common Stock (the "Fractional Stockholders") shall receive
payment in cash in lieu of receiving a fractional share of New Common Stock.
See "Exchange of Stock Certificates."
The Reverse Stock Split may leave certain stockholders with one
or more "odd lots" of New Common Stock, i.e., stock in amounts of less than
100 shares. These odd lots may be more difficult to sell or require greater
transactions costs per share to sell, than shares in even multiples of 100.
Effect on Stock Option Plans
As of [July 14], 1998, there were outstanding options to
purchase shares and outstanding grants for the right to purchase shares under
the Company's stock incentive and employee stock option plans relating to an
aggregate of [approximately 23.7 million] shares of Old Common Stock. On that
date [approximately 8.0 million] shares of Old Common Stock remained available
for grant under such plans. All of the stock compensation plans of the Company
include provisions for adjustments in the number of shares covered thereby,
the number of shares subject to and the exercise price of outstanding options
granted thereunder, in the event of a reverse stock split by appropriate
action of the Compensation & Benefits Committee of the Company's Board of
Directors. If the Reverse Stock Split is approved and effected, there would
be reserved for issuance upon exercise of all outstanding options and other
grants a total of [approximately 4.74 million] shares of New Common Stock.
Each of the outstanding options would thereafter evidence the right to
purchase 20% of the shares of New Common Stock previously covered thereby and
the exercise price per share would be five times the previous exercise price.
The number of shares available for grant under the Company's stock incentive
and employee stock purchase plans would be decreased to [approximately 1.60
million] New shares of Common Stock.
Changes in Stockholders' Equity
As an additional result of the Reverse Stock Split, the
Company's stated capital, which consists of the par value per share of Common
Stock multiplied by the number of shares of Common Stock issued, will be
reduced by approximately $137,033,054 to $34,258,263 on the Effective Date.
Correspondingly, the Company's capital in excess of par value, which consists
of the difference between the Company's stated capital and the aggregate
amount paid to the Company upon the issuance by the Company of all currently
outstanding Common Stock, will be increased by approximately $137,033,004.
The following table illustrates the principal effects of the
Reverse Stock Split discussed in the preceding paragraphs:
<TABLE>
<CAPTION>
Prior to Reverse After Reverse
Split and Amendment Split and Amendment
Number of Shares of Common Stock to Certificate to Certificate
- -------------------------------- ------------------- -------------------
<S> <C> <C>
Authorized................................................................... 400,000,000 400,000,000
Outstanding.................................................................. 171,291,317 34,258,263
Reserved for future issuance under stock compensation plans.................. [23,700,000] [4,740,000]
Available for future issuance by action of the Board of Directors (after
giving effect to the above reservations).................................... [8,000,000] [1,600,000]
</TABLE>
Assuming the Amendment effecting the Reverse Stock Split is
approved, the Amendment will be filed with the Secretary of State of the State
of Delaware as promptly as practicable thereafter. The Amendment and the
proposed Reverse Stock Split would become effective upon the Effective Date.
Federal Income Tax Consequences
The following summary of the federal income tax consequences of
the Reverse Stock Split is based on current law, including the Internal
Revenue Code of 1986, as amended (the "Code"), and is for general information
only. The tax treatment of a stockholder may vary depending upon the
particular facts and circumstances of such stockholder. Certain stockholders,
including insurance companies, tax-exempt organizations, financial
institutions, broker-dealers, non-resident aliens, foreign corporations and
persons who do not hold the Common Stock as a capital asset, may be subject
to special rules not discussed below.
ACCORDINGLY, EACH STOCKHOLDER SHOULD CONSULT HIS OR HER TAX ADVISOR TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER OF THE REVERSE STOCK
SPLIT, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL OR
FOREIGN INCOME TAX AND OTHER LAWS.
The receipt of shares of New Common Stock (except to the extent
that cash is received in lieu of fractional shares of New Common Stock) in the
Reverse Stock Split will be a nontaxable transaction under the Code for
federal income tax purposes. Consequently, except with respect to cash
received in lieu of fractional shares of New Common Stock, a stockholder
receiving shares of New Common Stock will not recognize either gain or loss
with respect to shares of New Common Stock received as a result of the Reverse
Stock Split. In addition, the aggregate tax basis (excluding the portion of
such basis allocable to fractional shares of New Common Stock) of such
stockholder's shares of Old Common Stock prior to the Reverse Stock Split will
carry over as the tax basis of the stockholder's shares of New Common Stock.
Each stockholder will be required to allocate such stockholder's basis in such
stockholder's shares of Old Common Stock ratably among the total number of
shares of New Common Stock owned following the Reverse Stock Split. The
holding period of the shares of New Common Stock will also include the holding
period during which the stockholder held the Common Stock, provided that such
Old Common Stock was held by the stockholder as a capital asset on the
Effective Date.
The receipt by a Fractional Stockholder of cash in lieu of a
fractional share of New Common Stock pursuant to the Reverse Stock Split will
be a taxable transaction for federal income tax purposes. The receipt of cash
in lieu of fractional shares of New Common Stock will generally result in gain
or loss to the Fractional Stockholders measured by the difference between the
amount of cash received and the adjusted basis of the fractional share.
Shareholders owning a substantial interest in the Company, however, should
consult their tax advisors as to the possibility of dividend treatment upon
the receipt of cash in lieu of a fractional share pursuant to Section 302 of
the Code. Assuming that the receipt of cash in lieu of a fractional share is
not treated as a dividend and that the Old Common Stock was held by the
Fractional Shareholder as a capital asset on the Effective Date, any such gain
or loss will be capital gain or loss, and will be long term capital gain or
loss if on the Effective Date the shares of Old Common Stock have been held by
the Fractional Stockholder for more than one year.
Based on certain exceptions contained in regulations issued by
the Internal Revenue Service, the Company does not believe that it or
Fractional Stockholders will be subject to backup withholding or information
reporting with respect to the cash distributed to a Fractional Stockholder
unless the amount of cash distributed to the Fractional Shareholder is $20.00
or more.
Exchange of Stock Certificates
If the proposal to implement the Reverse Stock Split is
adopted, stockholders will be required to exchange their stock certificates
for new certificates representing the shares of New Common Stock.
Stockholders of record on the Effective Date will be furnished the necessary
materials and instructions for the surrender and exchange of share
certificates at the appropriate time by the Company's Transfer Agent (the
"Transfer Agent"). Stockholders will not have to pay a transfer fee or other
fee in connection with the exchange of certificates. Stockholders should not
submit any certificates until requested to do so.
As soon as practicable after the Effective Date, the Transfer
Agent will send a letter of transmittal to each stockholder advising such
holder of the procedure for surrendering stock certificates in exchange for
new certificates representing the ownership of New Common Stock. No
certificates representing fractional shares shall be issued. In lieu thereof,
a certificate or certificates evidencing the aggregate of all fractional
shares otherwise issuable (rounded, if necessary, to the next higher whole
share) shall be issued to the Transfer Agent or its nominee, as agent for the
accounts of all holders of Old Common Stock otherwise entitled to have a
fraction of a share issued to them in connection with the Reverse Stock Split.
Sales of fractional interests will be effected by the Transfer Agent as soon
as practicable on the basis of prevailing market prices of the New Common
Stock on the NYSE at the time of sale. After the Effective Date, the Transfer
Agent will pay to such stockholders their pro rata share of the net proceeds
derived from the sale of their fractional interests upon surrender of their
stock certificates. No service charges or brokerage commissions will be
payable by stockholders in connection with the sale of fractional interests,
all of which costs will be borne by the Company.
Until they have surrendered their stock certificates for
exchange, stockholders will not be entitled to receive any dividends or other
distributions that may be declared and payable to holders of record. Upon the
surrender of certificates representing Old Common Stock, certificates
representing New Common Stock together with any such withheld dividends or
other distributions, without interest, will be delivered. At the same time or
as soon as possible thereafter, any cash payment for a fractional share will
be paid (without interest).
Any stockholder whose certificate for Old Common Stock has been
lost, destroyed or stolen, will be entitled to issuance of a certificate
representing the shares of New Common Stock into which such shares will have
been converted upon compliance with such requirements as the Company and the
Transfer Agent customarily apply in connection with lost, stolen or destroyed
certificates.
STOCKHOLDER PROPOSALS FOR ANNUAL MEETING
Proposals of the Company's stockholders intended to be
presented at the Company's 1999 Annual Meeting of Stockholders must be
received by the Company no later than December 28, 1998 to be included in the
Company's proxy statement and form of proxy relating to such annual meeting.
Any proposal should be addressed to Stephen B. Wiznitzer Esq., Senior Vice
President and General Counsel, R.H. Donnelley Corporation, One Manhattanville
Road, Purchase, New York 10577, and should be sent by certified mail, return
receipt requested.
OTHER MATTERS
The Board of Directors knows of no other matters to be
presented for action at the forthcoming Special Meeting. However, the proxy
confers upon the persons named therein discretionary authority to act upon any
other matter that may properly come before the meeting.
By Order of the Board of Directors
Frank R. Noonan
Chairman of the Board
July __, 1998
Purchase, New York
EXHIBIT A
PROPOSED CERTIFICATE OF AMENDMENT
TO THE RESTATED CERTIFICATE OF INCORPORATION,
OF R.H. DONNELLEY CORPORATION
R.H. Donnelly Corporation (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of
the State of Delaware (the "DGCL"), does hereby amend the Restated Certificate
of Incorporation of the Corporation.
The undersigned hereby certifies that this amendment to the
Restated Certificate of Incorporation of the Corporation has been duly adopted
in accordance with Section 242 of the DGCL.
Article FOURTH of the Restated Certificate of Incorporation of
the Corporation is hereby amended to include the following text after the last
paragraph thereof:
5. Reverse Stock Split. Effective as of the close of business on the
date of filing this Amendment to the Restated Certificate of
Incorporation (the "Effective Time"), the filing of this Amendment,
shall effect a reverse stock split (the "Reverse Stock Split") pursuant
to which each five (5) shares of common stock, par value $1 per share,
of the corporation issued and outstanding, shall be combined into one
(1) validly issued, fully paid and nonassessable share of common stock,
par value $1 per share, of the corporation. The number of authorized
shares, the number of shares of treasury stock and the par value of the
common stock shall not be affected by the Reverse Stock Split. Each
stock certificate that prior to the Effective Time represented shares of
common stock shall, following the Effective Time, represent the number
of shares into which the shares of common stock represented by such
certificate shall be combined. The corporation shall not issue
fractional shares or scrip as a result of the Reverse Stock Split, but
shall arrange for the disposition of shares on behalf of those record
holders of common stock at the Effective Time who would otherwise be
entitled to fractional shares as a result of the Reverse Stock.
THE UNDERSIGNED, being the ______________ of the Corporation,
for the purpose of amending the Restated Certificate of Incorporation, of the
Corporation pursuant to the DGCL, does make this amendment to the Restated
Certificate of Incorporation of the Corporation, hereby declaring and
certifying that this is my act and deed and the facts herein stated are true,
and accordingly have hereunto set my hand as of this _____ day of ________,
1998.
R.H. DONNELLY CORPORATION
By:
--------------------------------
Name:
Title:
ATTEST:
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Name:
Title:
APPENDIX I -- FORM OF PROXY
R.H. DONNELLY CORPORATION
SPECIAL MEETING OF STOCKHOLDERS -- ______, 1998
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Frank R.
Noonan, Phillip C. Danford and Stephen B. Wiznitzer, and each of them, his,
her or its true and lawful agents and proxies with full power of substitution
in each, to represent the undersigned at the Special Meeting of Stockholders
of R.H. Donnelly Corporation (the "Company"), to be held at the
_____________________, on ________, ______, 1998 at 10:00 a.m. local time, and
at any adjournments or postponements thereof, and to vote all the shares of
stock of the Company which the undersigned may be entitled to vote on all
matters coming before said meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE AMENDMENT OF THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION TO EFFECT A ONE-FOR-FIVE REVERSE SPLIT OF THE COMPANY'S COMMON
STOCK AND IN THE DISCRETION OF THE PROXIES ON ALL OTHER MATTERS. PLEASE MARK
THIS PROXY CARD, FILL IN THE DATE AND SIGN AND RETURN PROMPTLY IN THE
ACCOMPANYING ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
1. Amend the Company's Restated Certificate of Incorporation to effect a
one-for-five reverse split of the Company's Common Stock
FOR AGAINST ABSTAIN
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Please sign exactly as name appears
hereon. Joint owners should each
sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such.
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Signature(s) Date
