10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2005
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from           to

Commission File Number: 333-131626

Dex Media, Inc.

(Exact name of registrant as specified in its charter)

Delaware	20-4059762
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

1001 Winstead Drive

Cary, North Carolina 27513

(Address of principal executive offices)

(919) 297-1600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes þ     No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o     No þ

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large Accelerated Filer þ     Accelerated Filer o     Non-Accelerated Filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No þ

The aggregate market value at June 30, 2005, the last day of our most recently completed second quarter, of shares of the Registrant’s common stock held by non-affiliates of the registrant was approximately $1,738,302,202.

The registrant is a wholly-owned subsidiary of R.H. Donnelley Corporation. As of March 15, 2006, R.H. Donnelley Corporation owned all 1,000 outstanding shares of the registrant’s common stock, par value $0.01 per share.

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS I(1)(a) AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.

TABLE OF CONTENTS

PART I
Cautionary Note Regarding Forward-Looking Statements		1
Item 1.	Business	3
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	23
Item 2.	Properties	23
Item 3.	Legal Proceedings	23
Item 4.	Submission of Matters to a Vote of Security Holders*	24
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
Item 6.	Selected Financial Data**	25
Item 7.	Management’s Narrative Analysis of Results of Operations***	25
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 8.	Financial Statements and Supplementary Data	F-1
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	36
Item 9A.	Controls and Procedures	36
Item 9B.	Other Information	36
PART III
Item 10.	Directors and Executive Officers of the Registrant*	37
Item 11.	Executive Compensation*	37
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters*	37
Item 13.	Certain Relationships and Related Transactions*	37
Item 14.	Principal Accountant Fees and Services	37
PART IV
Item 15.	Exhibits and Financial Statement Schedules	38
Signatures		45
Agreement and Plan of Merger
Certificate of Merger
Certificate of Incorporation
Certificate of Amendment to the Certificate of Incorporation
Bylaws
Statement of Computation of Ration of Earning to Fixed Charges
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO & CFO Pursuant to Section 906

*	Omitted pursuant to General Instructions I(2)(c) of Form 10-K.
**	Omitted pursuant to General Instructions I(2)(a) of Form 10-K.
***	Pursuant to General Instructions I(2)(a) of Form 10-K: (i) the information called for by Item 7, Management’s Discussion and Analysis of Financial condition and Results of Operations has been omitted and (ii) the registrant is providing a management’s narrative analysis of results of operations.

PART I.

Cautionary Note Regarding Forward-Looking Statements

This annual report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements relate to Dex Media’s expectations as to future events and its future financial performance. In some cases, you can identify these forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” “assumption” or the negative of these terms or other comparable words. These statements are only predictions. Actual events or results may differ materially. In evaluating these statements, you should specifically consider various factors, including the risks described in this annual report. These factors may cause Dex Media’s actual results to differ materially from any of Dex Media’s forward-looking statements.

These risks and uncertainties are described in detail in Item 1A — “Risk Factors.” In summary, these risks and uncertainties include, without limitation: (i) our substantial indebtedness, which could impair our ability to operate our business; (ii) the terms of our subsidiaries’ credit facilities and indentures, which may restrict our access to cash flow and our ability to pursue our business strategies; (iii) the fact that we or our subsidiaries may incur more debt; (iv) the significant competition that we face, which could reduce our market share and harm our financial performance; (v) the loss of any of our key agreements with Qwest; (vi) adverse outcomes resulting from bankruptcy proceedings against Qwest; (vii) possible future changes in Qwest’s directory publishing obligations, which may increase our costs; (viii) declining usage of printed yellow page directories; (ix) our inability to renew customer advertising contracts; (x) risks related to the start-up of new print or Internet directories and media services; (xi) our reliance on, and extension of credit to, small and medium-sized enterprises; (xii) our dependence on third-party providers of printing, distribution and delivery services; (xiii) the impact of fluctuations in the price or availability of paper; (xiv) the impact of turnover among sales representatives or the loss of key personnel; (xv) the fact that our sales of advertising to national accounts is coordinated by third parties that we do not control; (xvi) the occurrence of strikes or work stoppages; (xvii) general economic factors and business conditions; (xviii) disruption resulting from our merger with R.H. Donnelley Corporation, making it more difficult to maintain relationships with customers, employees or suppliers; and (xix) uncertainties regarding Donnelley’s ability to successfully integrate Dex Media’s business. For additional information, see Item 1A — “Risk Factors.”

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. These forward-looking statements are made as of the date of this annual report and, except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission (the “SEC”), we assume no obligation to update or revise them or to provide reasons why actual results may differ.

We do not undertake any responsibility to release publicly any revisions to these forward-looking statements to take into account events or circumstances that occur after the date of this annual report. Additionally, we do not undertake any responsibility to update you on the occurrence of any unanticipated events which may cause actual results to differ from those expressed or implied by the forward-looking statements contained in this annual report.

We utilize the deferral and amortization accounting method, under which revenue and expenses are recognized over the lives of the directories. See Item 7 — “Management’s Narrative Analysis of Results of Operations.” A few of our competitors may utilize the point of publication accounting method of recognizing revenue and expenses, under which revenue and expenses are recognized when a directory is published. As a result, while we believe that the information presented herein with respect to ourselves and our competitors is comparable, comparisons made beyond the scope of those made in this annual report may be affected by these differing accounting methods.

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The following trademarks referred to in this annual report are registered trademarks of Dex Media, Inc.: “DEX^®,” “DexOnline.com^®” and “Dex Knows^®.” The following trademarks referred to in this annual report are registered trademarks of Qwest Communications International Inc. and are used by us under license: “QWEST DEX^®” and “QWEST DEX ADVANTAGE^®.”

Certain Definitions

As used in this annual report, the following terms shall have the following respective meanings, unless the context requires otherwise.

•  “Dex Media,” “we,” “our” and “us” refers collectively to Dex Media, Inc. and its consolidated subsidiaries and their predecessors;

•  “Donnelley” refers to R.H. Donnelley Corporation;

•  “Dex Media East” refers to Dex Media East LLC, an indirect wholly-owned subsidiary of Dex Media;

•  “Dex Media West” refers to Dex Media West LLC, an indirect wholly-owned subsidiary of Dex Media;

•  “Dex East States” refers to Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota, and South Dakota;

•  “Dex West States” refers to Arizona, Idaho, Montana, Oregon, Utah, Washington and Wyoming;

•  “Dex States” refers collectively to the Dex East States and the Dex West States;

•  “Qwest” refers to Qwest Communications International Inc. and its subsidiaries, including Qwest Corporation, the local exchange carrier subsidiary of Qwest Communications International Inc.; and

•  “Qwest Dex” refers collectively to Qwest Dex, Inc. and its parent, Qwest Dex Holdings, Inc.

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ITEM 1.   BUSINESS

Recent Development

On January 31, 2006, our predecessor, Dex Media, Inc., merged with and into Forward Acquisition Corporation (“FAC”), a wholly owned subsidiary of Donnelley. In the merger, each share of Dex Media, Inc. common stock was converted into the right to receive $12.30 in cash and 0.24154 of a share of Donnelley common stock. Donnelley also assumed all Dex Media, Inc.’s outstanding indebtedness on January 31, 2006 with a fair value of $5.7 billion. In connection with the consummation of the merger, the name of FAC was changed to Dex Media, Inc. As a result of the merger, we became a wholly owned subsidiary of Donnelley.

The Company

We are the exclusive publisher of the “official” yellow pages and white pages directories for Qwest in the following states where Qwest is the primary incumbent local exchange carrier: Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming. We have been publishing directories for over 100 years. Our contractual agreements with Qwest grant us the right to be the exclusive incumbent publisher of the “official” yellow pages and white pages directories for Qwest in the Dex States until November 2052 and prevent Qwest from competing with us in the directory products business in the Dex States until November 2042.

We are the largest directory publisher in the Dex States and, together with our parent, Donnelley, the third largest directory publisher in the United States. In 2005 and 2004, we published 293 and 269 directories, respectively, and printed approximately 51.8 and 44.5 million copies of these directories, respectively, for distribution to virtually all business and residential consumers throughout the Dex States. In addition, our Internet-based directory, DexOnline.com, further extends the distribution of our advertisers’ content. DexOnline.com, which is offered both bundled with our print directories and on a stand-alone basis, includes approximately 20 million business listings and 124 million residential listings from across the United States. Our other products and services include the sale of direct marketing lists and the sale of Dex directories and other publishers’ directories outside the normal delivery schedule.

We seek to bring buyers together with our advertising customers through a cost-effective, bundled advertising solution that includes print, Internet-based and CD-ROM directories. The majority of our advertising customers are local small and medium-sized enterprises (“SMEs”) and national businesses with a local presence. We believe that our advertising customers value: (i) our ability to provide consumers with an authoritative and diverse reference source to search for products and services across multiple platforms; (ii) our broad distribution to potential buyers of our advertisers’ products and services; (iii) our lower cost per usage compared with most other directories and a higher return on investment than other forms of local advertising; and (iv) the quality of our client service and support.

For the year ended December 31, 2005, we generated approximately 97% of our total revenue from the sale of bundled print and Internet directory advertising. Our other products and services accounted for the remaining 3% of our total revenue. For the years ended December 31, 2005 and 2004, we generated $1,658.4 million and $1,602.9 million in revenue, respectively. Excluding the effects of purchase accounting, as described in Item 7 — “Management’s Narrative Analysis of Results of Operations,” we generated $1,649.7 million in revenue for the year ended December 31, 2004. For complete information concerning our financial performance, see Item 8 — “Financial Statements and Supplementary Data.”

Our History

On August 19, 2002, Dex Holdings, LLC (“Dex Holdings”), the former parent of Dex Media, entered into two purchase agreements with Qwest to acquire the directory business of Qwest Dex, the directory services subsidiary of Qwest, in two separate phases, for an aggregate consideration of approximately $7.1 billion (excluding fees and expenses). In connection with the first phase, Dex Holdings assigned its right to purchase the directory business in the Dex East States to its indirect subsidiary, Dex Media East. Dex Media East consummated the first phase of the acquisition on November 8, 2002 (the “Dex East Acquisition”) and

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currently operates the acquired directory business in the Dex East States. In connection with the second phase, Dex Holdings assigned its right to purchase the directory business in the Dex West States to its indirect subsidiary, Dex Media West. Dex Media West consummated the second phase of the acquisition on September 9, 2003 (the “Dex West Acquisition” and together with the Dex East Acquisition, the “Acquisitions”) and currently operates the acquired directory business in the Dex West States. Dex Holdings was dissolved effective January 1, 2005.

In connection with the Acquisitions, we, Dex Media East and Dex Media West entered into a number of contractual agreements with Qwest. For a summary of the principal terms of certain of such agreements, see “Agreements Between Us, Dex Media East and/or Dex Media West and Qwest” in this Item 1.

On October 3, 2005, our predecessor, Dex Media, Inc., entered into an Agreement and Plan of Merger with Donnelley and FAC pursuant to which each issued and outstanding share of Dex Media, Inc. common stock was to be converted into $12.30 in cash and 0.24154 of a share of Donnelley common stock. On January 31, 2006, that merger was completed and Dex Media, Inc. merged with and into FAC, a wholly owned subsidiary of Donnelley. Donnelley also assumed all Dex Media, Inc.’s outstanding indebtedness on January 31, 2006 with a fair value of $5.7 billion. In connection with the consummation of the merger, the name of FAC was changed to Dex Media, Inc. As a result of the merger, we became a wholly owned subsidiary of Donnelley.

Markets

In 2005, we published 293 directories and printed approximately 51.8 million copies of these directories for distribution to virtually all business and residential consumers in the metropolitan areas and local communities in the Dex States. Our directories are generally well established in their communities and cover contiguous geographic areas to create a strong local market presence and achieve selling efficiencies.

We derive a significant portion of our directory services revenue from the sale of directory advertising to businesses in large metropolitan areas. For the year ended December 31, 2005, approximately 45% and 62% of our directory services revenue was derived from the sale of directory advertising in our 5 and 10 largest geographic markets, respectively.

Products and Services

We deliver a portfolio of advertising products focused on bringing buyers and sellers together, distributing relevant information across multiple platforms to assist in the buying decision. Our bundled print and Internet directory services generated approximately 97% of our total revenue for the year ended December 31, 2005.

Print Directories

In almost every market that we serve, Dex Media publishes both a white pages section and a yellow pages section in its print directory products. In 2005, we published 293 print directories, including directories that contained both white and yellow pages, directories that contained only yellow pages and directories that contained only white pages. Whenever practicable, we combine the two sections into one directory. In large markets where it is impractical to combine the two sections into one volume, separate stand-alone white and yellow pages directories are normally published at the same time.

Our print directories are designed to meet the advertising needs of local and national businesses and the informational needs of local consumers. The diversity of advertising options available enables us to create customized advertising programs that are responsive to specific customer needs and financial resources. Our yellow pages and white pages directories are also efficient sources of information for consumers, featuring a comprehensive list of businesses in the local market that are conveniently organized under thousands of directory headings.

We serve a diverse group of communities in our 14-state region, many of which have a number of consumers for whom English is not their primary language. In order to better serve our diverse base of consumers and further extend the reach of our advertisers, during 2005 we published Spanish language Yellow

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Pages in 22 markets. We expect to continue evaluating the needs of our multi-lingual communities and develop targeted segment products that best serve those communities.

Dex Media has two primary types of printed directories: core directories and community directories. Core directories generally cover large population or regional areas, whereas community directories typically focus on a sub-section of the areas addressed by a corresponding core directory. Most core directories contain yellow pages, white pages and specialty sections. Our print directory advertising products can be broken down into three basic categories: Yellow Pages, White Pages and Awareness Products.

Yellow Pages Directories.  We offer all businesses a basic listing at no charge in the relevant edition of our yellow pages directories. This listing includes the name, address and telephone number of the business and is included in alphabetical order in the relevant classification. In addition, we offer a range of paid advertising options in our yellow pages directories, as set forth below:

•  Listing Options.  An advertiser may enhance its complimentary listing in several ways. It may pay to have its listing highlighted or printed in bold or super bold text, which increases the visibility of the listing. An advertiser may also purchase extra lines of text to convey information such as hours of operation or a more detailed description of its business.

•  In-column Advertising Options.  For greater prominence on a page, an advertiser may expand its basic alphabetical listing by purchasing advertising space in the column in which the listing appears. The cost of in-column advertising depends on the size and type of the advertisement purchased and the heading under which it will be placed. In-column advertisements may include such features as bolding, special fonts, color and graphics.

•  Display Advertising Options.  A display advertisement allows businesses to include a wide range of information, illustrations, photographs and logos. The cost of display advertisements depends on the size and type of advertisement purchased and the heading under which it will be placed. Display advertisements are usually placed at the front of a heading, and are prioritized first by size and then by advertiser seniority. This process of prioritizing provides a strong incentive to advertisers to increase the size of their advertisements and renew their advertising purchases from year to year to ensure that their advertisements receive priority placement. Display advertisements range in size from a quarter column to as large as two pages (a “double truck” advertisement) and three pages (a “triple truck” advertisement). Various levels of color sophistication, including spot-four color, enhanced color, process photo and hi-impact are available for display products.

White Pages Directories.  State public utilities commissions require Qwest, as the local exchange carrier in its local service area, to have white pages directories published to serve its local service areas. Qwest has contracted with us to publish these directories until November 7, 2052. By virtue of this agreement, we provide a white pages listing to every residence and business in a given area that sets forth the name, address and phone number of each residence or business, unless they have requested to be non-listed.

Advertising options include bolding and highlighting for added visibility, extra lines for the inclusion of supplemental information and in-column and display advertisements.

Awareness Products.  Our line of “awareness products” allows businesses to advertise in a variety of highly visible locations on or in a directory. Each directory has a limited inventory of awareness products, which provide high value to advertisers and are priced at a premium to in-column and display advertisements. Our awareness products include:

•  Covers — Premium location advertisements that are available on the front cover, inside front and back cover and the outside back cover of a directory.

•  Spines — Premium location advertisements that are available on the spine of yellow and white pages directories.

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•  Tabs — A full-page, double-sided, hard stock, full-color insert that is bound inside and that separates key sections of the directory. These inserts enable advertisers to achieve prominence and increase the amount of information displayed to directory users.

•  Tip-Ons — Removable paper or magnet coupons that are placed on the front cover of a directory.

•  Banners — Advertisements sold at the top margin of a page in the Community or Government section of the directory.

•  Delivery Bags — Premium awareness space located on the bags used in the delivery of most print directories, with between one and three advertisers per bag.

•  Ride-alongs — Premium insert programs through which businesses deliver messages and promotional offers to customers in conjunction with directories delivered right to the mailbox or doorstep. Advertisers can choose between total market coverage inserts that “ride-along” with the new edition of directories as they are delivered to users, or new mover delivery inserts reaching the lucrative market of new movers within a few days of their new phone service connection.

Online Products

During 2003, we began to bundle our print and Internet display advertisements, providing advertisers with an effective means to extend their messages through DexOnline.com for one unified price. With this bundling strategy, we were able to collect and digitize our print directory advertising, making a proprietary structured database of content available to consumers searching for local products and services through DexOnline.com.

We have entered into content agreements and distribution agreements with various search engines, portals and local community destination web sites. These agreements are intended to provide additional distribution of our advertising, thereby enhancing the value proposition offered to advertisers.

DexOnline.com.  DexOnline.com incorporates free-text (“multi-dimensional”) search capability with a single search box similar in design and functionality to many popular search engines. In addition, DexOnline.com provides a search option based on popular business headings or categories with dynamically generated preferences, providing users the ability to refine their searches using criteria that include such things as specific product and brand names, hours of operation, payment options and locations.

DexOnline.com has grown to include fully searchable content from more than 475,000 Dex Media Yellow Pages advertisements. In addition, we purchase information from other national databases to supply out-of-region listings (although these out-of-region listings are not as rich as our in-region information). DexOnline.com includes approximately 20 million business listings and more than 124 million residential listings from across the United States. DexOnline.com was the number one local search site within our 14-state region for the past eight quarters, as measured by comScore, a market research firm.

Arrangements with Search Engines and Other Third Parties.  During 2005, our proprietary database of advertising content was made available to a number of popular Internet search engines and portals. These arrangements made our advertisers’ marketing messages available to the users of those search engines and portals. In addition, we have entered into distribution agreements with various local community web sites throughout the Dex States to make our structured database of content available to users of those local web sites. These agreements provide us with access to important channels as we enhance our distribution network on behalf of our advertisers. We believe this enhanced distribution will lead to increased usage among consumers and greater utility to our advertisers.

Dex Web Clicks^tm.  In February 2005, we introduced Dex Web Clicks throughout our 14-state region. Designed as an affordable solution for SMEs, Dex Web Clicks allows advertisers to begin participating in auction-based, paid search Internet advertising across multiple search engines and portals at fixed monthly prices. Dex Web Clicks provides advertisers with a guaranteed number of references, or “clicks,” to their web site over the contract term for a fixed monthly price. In addition, Dex Web Clicks offers web site design and hosting services to advertisers, in case they do not already have a web site. The guaranteed references are provided by a network of search engines and portals.

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Other Services

We sell direct marketing lists of residents and businesses in the Dex States that allow our customers to purchase accurate lists for their direct mail and telemarketing activities. We also have an extensive New Mover list that provides businesses access to the most current new business and/or residence lists in the Dex States. The lists we sell comply with do- not-call and do-not-mail requirements for the industry. In addition, these lists do not include any private, non-published or non-listed information.

We also have insert programs through which we help businesses deliver messages and promotional offers to users of our directories. Advertisers can choose between Total Market Coverage directory inserts, which go to all households and businesses within the Dex States and New Mover Delivery inserts, which reach the lucrative market of new movers within a few days of their new phone service connection.

Business cycle overview

Our directories usually have a 12-month directory cycle period. A publication process generally takes 15 to 20 months from the beginning of the sales cycle to the end of a directory’s life and the sales stage closes approximately 70 days prior to publication.

Sales

We believe that we have one of the most experienced sales forces in the U.S. directory advertising industry. Our sales activities are conducted through a local sales channel and a national sales channel.

Local Sales Channel

Our local sales force is comprised of approximately 1,000 quota-bearing sales representatives, who average approximately seven years of employment with us. For the year ended December 31, 2005, approximately 82% of our directory services revenue came through the local sales channel.

We assign our customers among premise representatives and telephone representatives based on a careful assessment of a customer’s expected advertising expenditures. This practice allows us to deploy our local sales force in an effective manner. Dex Media’s local sales force is decentralized and locally based, operating throughout the Dex States in their local service areas. We believe that our locally based sales force facilitates the establishment of personal, long-term relationships with local advertisers that are necessary to maintain a high rate of customer renewal.

The local sales channel is divided into three sales sub-channels: premise sales, telephone sales and centralized sales.

•  Premise sales representatives — conduct sales calls face-to-face at customers’ business locations and typically handle higher dollar and more complex accounts.

•  Telephone sales representatives — handle lower dollar value accounts and typically interact with customers over the telephone.

•  Centralized sales — includes multiple types of sales efforts, including centralized sales representatives, prospector sales representatives and a letter renewal effort. These sales mechanisms are used to contact very low dollar value customers that in many cases have renewed their account for the same product for several years. Some of these centralized efforts are also focused on customer win-back initiatives.

We believe that formal training is important to maintaining a highly productive sales channel. Our sales personnel undergo ongoing training, with new sales representatives receiving approximately eight weeks of training in their first year, including classroom training on sales techniques, our product portfolio, customer care and administration, and standards and ethics. Following classroom training, they are accompanied on sales calls by experienced sales personnel for further training. Ongoing training and our commitment to developing the best sales practices are intended to ensure that sales representatives are able to give advertisers high-quality service and advice on appropriate advertising products and services.

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National Sales Channel

In addition to its locally based sales personnel, Dex Media utilizes a separate sales channel to serve its national advertisers. For the year ended December 31, 2005, approximately 14% of our directory services revenue came through the national sales channel. National advertisers are typically national or large regional chains such as rental car companies, insurance companies and pizza businesses that purchase advertisements in many yellow pages directories in multiple geographic regions. In order to sell to national advertisers, we contract with third party Certified Marketing Representatives (“CMRs”). CMRs design and create advertisements for national companies and place those advertisements in relevant yellow pages directories nationwide. Some CMRs are departments of general advertising agencies, while others are specialized agencies that focus solely on directory advertising. The national advertiser pays the CMR, which then pays us after deducting its commission. We accept orders from approximately 155 CMRs and employ seven national account managers to manage our selling efforts to national customers. Dex Media relies particularly on one of its CMRs, TMP Worldwide Inc. (“TMP”), whose billings were approximately 24% (excluding Qwest) of Dex Media’s national revenue for the year ended December 31, 2005.

Marketing

Our sales and marketing processes are closely related and managed in an integrated manner. We believe that a bifurcated marketing process, composed of both centralized and decentralized strategies and responsibilities, best suits our needs.

Our marketing process includes the functions of market management, product development and management, marketing research, pricing, advertising and public relations. The market management function is decentralized and coordinates with local sales management to develop market plans and products that address the needs of individual local markets. The other marketing functions are centralized and provide support to all markets as needed. Advertising programs are targeted to advertisers and consumers and are determined by specific market and include television, radio, newspaper and outdoor ad placements.

Publishing and information services

Pre-press publishing activities include canvass and assignment preparation, sales order processing, graphics and ad composition, contract processing, white and yellow pages processing, database management and pagination. We provide comprehensive tools and information to effectively conduct sales and marketing planning, sales management, sales compensation and customer service activities. Once an individual sales campaign is complete and final advertisements have been produced, white and yellow pages are paginated, proofed and prepared for printing. Most of these functions are accomplished through an Amdocs^® publishing system, a leading industry system considered to be the standard. Dex Media’s information technology is managed from facilities in Omaha, Nebraska and Englewood, Colorado, with production and graphics activities located in Aurora, Colorado and six other locations throughout the Dex States.

Printing and Distribution

All our directories are printed by either R.R. Donnelley & Sons Company (“RRD”) or Quebecor World Directory Sales Corporation (“Quebecor”). In general, RRD prints our larger, higher-circulation directories and Quebecor prints those directories that are smaller and have a more limited circulation. Dex Media’s agreements with RRD and Quebecor do not contain any volume guarantees, and prices are adjusted annually based on changes to the consumer price index. Our contracts with RRD and Quebecor expire on December 31, 2011 and December 31, 2014, respectively. No common ownership or other business affiliation exists between RRD and Donnelley.

Nearly all copies of our directories are distributed by Product Development Corporation (“PDC”). Although prices under Dex Media’s agreement with PDC are fixed, they may be renegotiated under some circumstances, such as new service specifications or to match more favorable prices offered by PDC to other customers. Our contract with PDC expires on May 31, 2009. We rely on Matson Integrated Logistics

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(“Matson”) to manage the logistics of transporting our printed directories from our printers’ locations to PDC. Our contract with Matson expires on December 31, 2008.

Raw Materials

Paper is our principal raw material. Substantially all the paper that we use (other than for covers) is supplied by Nippon Paper Industries USA, Co., Ltd. (“Nippon”) and Catalyst Paper Corporation (“Catalyst”), formerly Norske Skog Canada (USA), Inc. Prices under these two agreements are negotiated each year based on prevailing market rates, which have been declining consistent with general U.S. market trends for directory paper over the last three years. Since the second half of 2004, pulp prices have been increasing at rates higher than the general inflation rate. This has resulted in upward pressure on Dex Media’s paper prices. The effect of such upward price pressure, however, has been moderated due to the fact that prices under both Dex Media’s paper agreements are subject to certain price escalation limits. Furthermore, Dex Media purchases paper used for the covers of its directories from Spruce Falls, Inc. (“Spruce Falls”). Pursuant to an agreement between Spruce Falls and Dex Media, Spruce Falls is obligated to provide 100% of Dex Media’s annual cover stock paper requirements. Prices under this agreement are negotiated each year. If, in a particular year, the parties are unable to agree on repricing, either party may terminate this agreement. This agreement expires on December 31, 2006.

Fuel is an indirect and minor part of Dex Media’s cost structure. However, rising fuel prices could impact the transportation and distribution of Dex Media’s print directories at the current service and cost levels. Dex Media’s existing transportation contract caps the diesel fuel surcharge well below the spot market diesel fuel surcharges. Although there is no current impact on Dex Media’s service levels and transportation/distribution costs, rising fuel costs could have a negative impact on us.

Credit Collections and Bad Debt Expense

Because most directories are published on 12-month cycles and most of our advertising customers are billed over the course of that 12-month period, we effectively extend credit to our customers. Many of these customers are SMEs with default rates that usually exceed those of larger businesses. Our policies toward the extension of credit and collection activities are market-specific and designed to manage the expected level of bad debt while accommodating reasonable sales growth.

Local advertising customers spending above identified levels as determined appropriate by management for a particular market may be subject to a credit review that includes, among other criteria, evaluation of credit or payment history with us, third party credit scoring, credit checks with other vendors along with consideration of credit risks associated with particular headings. Where appropriate, advance payments (in whole or in part) and/or personal guarantees from business owners may be required. Beyond efforts to assess credit risk prior to extending credit to advertising customers, we employ well-developed collection strategies utilizing an integrated system of internal, external and automated means to engage customers concerning payment obligations. In some markets, we charge back commissions to sales representatives when advertisers do not pay their local advertising charges.

Fees for national advertisers are typically billed upon issue of each directory in which advertising is placed by CMRs. Because we do not usually enter into contracts with our national advertisers directly, we are subject to the credit risk of CMRs on sales to those advertisers, to the extent we do not receive fees in advance. Dex has historically achieved favorable credit experience with CMRs.

For the year ended December 31, 2005, bad debt expense for all of our customers amounted to approximately 3.2% of revenue.

Agreements Between Us, Dex Media East and/or Dex Media West and Qwest

In connection with the Acquisitions, we, Dex Media East and Dex Media West entered into a number of contractual agreements with Qwest. Certain of these agreements are summarized below.

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•  Publishing Agreement.  Pursuant to a publishing agreement, Qwest granted us the right to be the exclusive official directory publisher of listings and classified advertisements of Qwest’s telephone customers in the geographic areas in the Dex States in which Qwest provides local telephone service. This agreement granted us the right to identify ourselves (including on our web sites) as Qwest’s exclusive official directory publisher for its legally required directories, as well as certain other directories in Qwest’s service areas in the Dex States. This agreement will remain in effect for 50 years from November 8, 2002 and will automatically renew for additional one year terms unless either Qwest or we provide 12 months’ notice of termination.

•  Non-Competition and Non-Solicitation Agreement.  Under a non-competition and non-solicitation agreement, Qwest agreed, for a period of 40 years after November 8, 2002, not to sell directory products consisting principally of listings and classified advertisements for subscribers in the geographic areas in the Dex States in which Qwest provides local telephone service directed primarily at customers in those geographic areas. The non-solicitation provisions contained in this agreement have expired.

•  Billing and Collection Services Agreement.  Pursuant to a billing and collection services agreement (which was renewed effective November  1, 2004), Qwest will continue until December 31, 2008 to bill and collect, on our behalf, amounts owed with respect to our directory services by our accounts that are also Qwest local telephone customers. In 2005, Qwest billed approximately 28% of our local revenue on our behalf, and we billed the remaining 72% directly. Qwest bills the account on the same billing statement on which it bills the customer for local telephone service. We have developed and continue to maintain the ability to transition from the Qwest billing and collection system to our own billing and collection system, for those accounts billed by Qwest, within approximately two weeks should we choose to do so.

•  Advertising Agreement.  Pursuant to an advertising agreement, Qwest agreed to purchase an aggregate of $20 million of advertising per year through 2017 from Dex Media East and/or Dex Media West. In the event that Qwest purchases more than $20 million of advertising from Dex Media East and/or Dex Media West in any one year, up to $5 million of the excess will be carried over to the subsequent year’s minimum advertising purchase requirement. The pricing will be on terms at least as favorable as those offered to similar large customers.

•  Master Telecommunications Commitment Agreement.  Under a master telecommunications commitment agreement, we must purchase from Qwest and its affiliates, on an exclusive basis, those telecommunications services and products that we use from time to time. Our obligation to purchase such telecommunications services from Qwest is subject to Qwest’s ability to offer pricing and service terms that are not, in the aggregate, materially less favorable than the terms generally available in the market to us from other telecommunications services providers that are nationally or regionally recognized as being highly reputable. Furthermore, Qwest is required to offer the telecommunications services to us on terms and conditions that are no less favorable than the terms and conditions that Qwest provides similar services, at similar volumes and for similar time periods, to other customers in the applicable service area. The term of the master telecommunications commitment agreement extends until November 8, 2017.

Additional agreements with Qwest related to intellectual property are described below in “Intellectual Property” in this Item 1.

Competition

The competitive dynamics in the vast majority of our markets are stable. Most markets have two to three existing publishers. Incumbent publishers benefit from pricing and efficiencies.

We face competition from other yellow pages publishers and from other types of media, including broadcasting, newspaper, radio and emerging technologies (e.g., Internet yellow pages). However, we believe that the preference for directory advertising is due to its relatively low cost, broad demographic and geographic distribution, directional and permission-based nature and high consumer usage rates. Directory advertising is

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attractive because consumers view directories as a free, comprehensive, non-intrusive single source of locally relevant information. Also, while overall advertising tends to track a local economy’s business cycle, directory advertising tends to be more stable and does not fluctuate as widely with economic cycles due to this preference by SMEs. Given the mature state of the directory advertising industry and our position in most of its markets, independent competitors are typically focused on aggressive pricing to gain market share.

The Internet has also emerged as a medium for advertisers. Although advertising on the Internet still represents only a small part of the total U.S. advertising market, as the Internet grows and high-speed Internet access becomes more mainstream, it has increasingly become important as an advertising medium. Most major yellow pages publishers operate an Internet-based directory business. From 1997 to 2000, overall references to print yellow pages directories in the U.S. declined; however, overall references to print yellow pages directories remained relatively stable from 2000 through 2005. We believe the past decline was primarily a result of demographic shifts among consumers, particularly the increase of households in which English was not the primary language spoken. We also believe that the past decline was attributable to increased usage of Internet-based directory products, particularly in business-to-business and retail categories, as well as the proliferation of very large retail stores for which consumers and businesses may not reference the yellow pages.

Directory publishers, including us, have increasingly bundled online advertising with their traditional print offerings in order to enhance total usage and advertiser value. In this regard, we compete through our Internet site, DexOnline.com. Through DexOnline.com, we compete with the Internet yellow pages directories of independent and other incumbent directory publishers, and with other Internet sites, including those available through wireless applications, that provide classified directory information, such as Switchboard.com, Citysearch.com and Zagat.com, and with search engines and portals, such as Yahoo!^®, Google^®, MSN^® and others, some of which have entered into affiliate agreements with other major directory publishers. We compete with all of these online competitors based on value, local relevance and features.

The yellow pages directory advertising business is subject to changes arising from developments in technology, including information distribution methods and users preferences. The use of the Internet and wireless devices by consumers as a means to transact commerce may result in new technologies being developed and services being provided that could compete with our traditional products and services. National search companies such as Google and Yahoo! are focusing and placing large priorities on local commercial search initiatives. Our growth and future financial performance may depend on our ability to develop and market new products and services and create new distribution channels, while enhancing existing products, services and distribution channels, to incorporate the latest technological advances and accommodate changing user preferences, including the use of the Internet and wireless devices.

Intellectual Property

We own and license a number of patents, copyrights and trademarks in the United States. The only trademarks we consider material to our operations are the DEX, DexOnline.com and Dex Knows trademarks, which are owned by us and are used by Dex Media, Dex Media East and Dex Media West. We do not consider any individual patent or other trademark to be material to our operations.

Pursuant to an intellectual property contribution agreement, Qwest assigned, in certain cases, and licensed, in other cases, to us the Qwest intellectual property used in the Qwest directory services business. We currently own all of Qwest’s former right, title and interest in certain Dex trademarks, including DEX and DexOnline.com. We also own specific patents and other intellectual property of Qwest Dex previously owned by Qwest and used in the directory services business, as well as all of Qwest’s former right, title and interest in registered copyrights for printed directories in the Qwest service areas in the Dex States and certain non-public data created by Qwest Dex regarding advertising customers in the Dex States.

Pursuant to a trademark license agreement, Qwest licensed to us the right to use the QWEST DEX and QWEST DEX ADVANTAGE marks until November 2007 in connection with directory products and related marketing materials in the Dex States. Qwest also licensed to us the right to use these marks in connection with DexOnline.com. Each of these licenses is generally exclusive for a period of time with respect to the sale

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of directory products consisting principally of listings and classified advertisements directed primarily at customers in the geographic areas in the Dex States in which Qwest provides local telephone service. We may terminate this agreement upon 30 days notice and Qwest may terminate this agreement in the event of an uncured material breach by us. In addition, this agreement may terminate if we cease using the licensed trademarks for a substantial period of time, or if the publishing agreement terminates before the expiration of the five-year term of this agreement.

Under license agreements for the use of directory publisher lists and directory delivery lists, Qwest granted to each of Dex Media East and Dex Media West a non-exclusive, non-transferable restricted license of listing and delivery information for persons and businesses that order and/or receive local exchange telephone services at prices set forth in the agreements. Dex Media East and Dex Media West may use the listing information solely for publishing directories and the delivery information solely for delivering directories. The initial term of the agreement with Dex Media East expired in November 2005, at which time it was automatically renewed for an additional 18-month term. The agreement with Dex Media West will remain in effect until September 2006. Each agreement is subject to automatic renewal for additional 18-month periods until either Qwest or Dex Media East or Dex Media West, as applicable, terminates the applicable agreement by providing 18 months’ notice. Our publishing agreement with Qwest, however, requires Qwest to continue to license the listing and delivery information to Dex Media East and Dex Media West for as long as the publishing agreement is in effect. Pursuant to license agreements for the expanded use of subscriber lists, Qwest granted to each of Dex Media East and Dex Media West a non-exclusive, non-transferable restricted license of listing information for persons and businesses that order and/or receive local exchange telephone services at prices set forth in the agreements. Dex Media East and Dex Media West may use this information for the sole purpose of reselling the information to third party entities solely for direct marketing activities, database marketing, telemarketing, market analysis purposes and internal marketing purposes, and for our use in direct marketing activities undertaken on behalf of third parties. Each of these agreements will be in effect until November 2007, subject to automatic renewal for additional one-year terms until either Qwest, on the one hand, or Dex Media East or Dex Media West, as applicable, on the other hand, terminates such agreement by providing six months notice.

Employees

As of December 31, 2005, we employed approximately 2,400 employees, of which approximately 66% were represented by labor unions covered by two collective bargaining agreements. Our collective bargaining agreement with the International Brotherhood of Electrical Workers (the “IBEW”), which covered approximately 33% of our unionized workforce as of December 31, 2005, expires in May 2006. Our collective bargaining agreement with the Communications Workers of America (the “CWA”), which covered approximately 67% of our unionized workforce as of December 31, 2005, expires in October 2006. Dex Media Service LLC, a bankruptcy-remote entity owned 49% by Dex Media East, Inc., 49% by Dex Media West, Inc. and 2% by Dex Media, employs all of our non-senior management employees and makes them available to Dex Media East and Dex Media West. Dex Media Service LLC was formed as a bankruptcy-remote entity pursuant to the terms of Dex Media West’s credit facilities and Dex Media East’s credit facilities in order to mitigate the risk of not having available to Dex Media West or Dex Media East the services of our non-management employees if the other entity merges, is acquired or files for bankruptcy. Effective January 1, 2005, all non-senior management employees in the state of Washington became employees of Dex Media West.

Web Site Access

Our web site address is www.dexmedia.com. You may obtain free electronic copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports at our investor relations web site, www.dexmedia.com/investors/overview.html, under the heading “SEC Filings.” These reports are available on our investor relations web site as soon as reasonably practicable after we electronically file them with the SEC. Our filings can also be obtained from the SEC web site,

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www.sec.gov. The information on our web site or the SEC web site is not part of this annual report and is not incorporated by reference herein.

We have adopted the Dex Media Code of Business Ethics and Conduct, which applies to all officers, directors and employees. The Code of Business Ethics and Conduct is available on our corporate web site at www.dexmedia.com under the heading “Code of Conduct.”

ITEM 1A.  RISK FACTORS

You should carefully consider the risks described below as well as the other information contained in this annual report. Any of the following risks could materially adversely affect our business, financial condition or results of operations.

The loss of any of our key agreements with Qwest could have a material adverse effect on our business.

We, Dex Media East and Dex Media West are party to several agreements with Qwest, including a publishing agreement, a non-competition agreement and billing and collection services agreements. We also have a hosting agreement with Qwest. The Qwest non-competition agreement prohibits Qwest from selling directory products consisting principally of listings and classified advertisements for subscribers in the geographic areas in the Dex States in which Qwest provides local telephone service that are directed primarily at customers in those geographic areas. However, under state and federal law, a covenant not to compete is only enforceable:

•  to the extent it is necessary to protect a legitimate business interest of the party seeking enforcement;

•  if it does not unreasonably restrain the party against whom enforcement is sought; and

•  if it is not contrary to the public interest.

Enforceability of a non-competition covenant is determined by a court based on all of the facts and circumstances of the specific case at the time enforcement is sought. For this reason, it is not possible for us to predict whether, or to what extent, a court would enforce Qwest’s covenants not to compete against us during the term of the non-competition agreement. If a court were to determine that the non-competition agreement is unenforceable, Qwest could compete directly against us in the previously restricted markets. Our inability to enforce the non-competition agreement with Qwest could have a material adverse effect on our financial condition or results of operations.

Under the Qwest publishing agreement, Dex Media is the exclusive official publisher of directories for Qwest in the Dex States until November 7, 2052. Under the billing and collection services agreements, as amended, Qwest has agreed until December 31, 2008 to continue to bill and collect, on behalf of Dex Media East and Dex Media West, amounts owed by Dex Media’s accounts, which are also Qwest local telephone customers, for Dex Media’s directory services. In 2005, Qwest billed approximately 28% of our local revenue on Dex Media’s behalf as part of Qwest’s telephone bill and held these collections in joint accounts with Qwest’s own collections. Under the hosting agreement, Qwest has agreed until October 1, 2009 to provide dedicated hosting services, including backup and recovery of data hosted on Dex Media’s servers in Qwest’s data centers. The termination of any of these agreements or the failure by Qwest to satisfy its obligations under these agreements could have a material adverse effect on our business.

Adverse outcomes resulting from bankruptcy proceedings against Qwest could adversely affect our financial results.

Qwest is currently highly leveraged and has a significant amount of debt service obligations over the near term and thereafter. In addition, Qwest has faced and may continue to face significant liquidity issues as well as issues relating to its compliance with certain covenants contained in the agreements governing its indebtedness. Based on Qwest’s public filings and announcements, Qwest has taken measures to improve its near-term liquidity and covenant compliance. However, Qwest still has a substantial amount of indebtedness outstanding and substantial debt service requirements. Consequently, it may be unable to meet its debt service

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obligations without obtaining additional financing or improving operating cash flow. Accordingly, we cannot assure you that Qwest will not ultimately seek protection under U.S. bankruptcy laws. In any such proceeding, our agreements with Qwest, and Qwest’s ability to provide the services under those agreements, could be adversely impacted. For example:

•  Qwest, or a trustee acting on its behalf, could seek to reject our agreements with Qwest as “executory” contracts under U.S. bankruptcy law, thus allowing Qwest to avoid its obligations under such contracts. Loss of substantial rights under these agreements could effectively require us to operate our business as an independent directory business, which could have a material adverse effect on our business.

•  Qwest could seek to sell certain of its assets, including the assets relating to Qwest’s local telephone business, to third parties pursuant to the approval of the bankruptcy court. In such case, the purchaser of any such assets might be able to avoid, among other things, our publishing agreement and non-competition agreement with Qwest.

•  We may have difficulties obtaining the funds collected by Qwest on our behalf pursuant to the billing and collection service agreements at the time such proceeding is instituted, although pursuant to such agreements, Qwest prepares settlement statements 10 times per month for each state in the Dex States summarizing the amounts due to Dex Media East and Dex Media West and purchases Dex Media East’s and Dex Media West’s accounts receivable billed by it within approximately nine business days following such settlement date. Further, if Qwest continued to bill our customers pursuant to the billing and collection services agreement following any such bankruptcy filing, customers of Qwest may be less likely to pay on time, or at all, bills received, including the amount owed to us. Qwest has completed the preparation of its billing and collection system so that we will be able to transition from the Qwest billing and collection system to our own billing and collection system within approximately two weeks should we choose to do so. See “Agreements between Us, Dex Media East and/or Dex Media West and Qwest — Billing and Collection Services Agreements” in Item 1.

Our substantial indebtedness could adversely affect our financial condition and impair our ability to operate our business.

We are a highly leveraged company. As of December 31, 2005, our total indebtedness was $5,292.7 million, including $1,960.2 million of indebtedness under our subsidiaries’ credit facilities, $1,135.0 million of our subsidiaries’ senior notes, $1,103.1 million of our subsidiaries’ senior subordinated notes, $500.0 million of our 8% notes due 2013 and $594.5 million ($750.0 million at maturity) of our 9% discount notes due 2013. For the year ended December 31, 2005, our ratio of total indebtedness to stockholders’ equity was 7.7 to 1.0. This level of indebtedness could have important consequences, including the following:

•  the agreements governing our indebtedness substantially limit our ability to access the cash flow and value of our subsidiaries and, therefore, to pay interest and/or principal on the indebtedness of Dex Media;

•  our indebtedness limits our ability to borrow money or sell stock to fund our working capital, capital expenditures, acquisitions and debt service requirements;

•  our interest expense could increase if interest rates in general increase because a substantial portion of our indebtedness bears interest at floating rates;

•  our indebtedness may limit our flexibility in planning for, or reacting to, changes in our business and future business opportunities;

•  we are more highly leveraged than some of our competitors, which may place us at a competitive disadvantage;

•  our indebtedness may make us more vulnerable to a downturn in our business or the economy;

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•  a substantial portion of our cash flow from operations is dedicated to the repayment of our indebtedness, including indebtedness we may incur in the future, and will not be available for other purposes; and

•  there would be a material adverse effect on our business and financial condition if we were unable to service our indebtedness or obtain additional financing, as needed.

Despite our substantial indebtedness, we may still incur significantly more debt. This could exacerbate the risks described above.

Although covenants under: (i) the indentures governing the subsidiary notes limit the ability of our subsidiaries to incur additional indebtedness; (ii) our subsidiaries’ credit facilities limit our ability and the ability of our subsidiaries to incur additional indebtedness; and (iii) the indentures governing our notes limit our ability and the ability of our subsidiaries to incur additional indebtedness, the terms of our subsidiaries’ credit facilities and the indentures permit Dex Media and our subsidiaries to incur significant additional indebtedness in the future if conditions are satisfied, including indebtedness under our subsidiaries’ revolving credit facilities. As of December 31, 2005, our subsidiaries had $176.9 million available for additional borrowing under our subsidiaries’ revolving credit facilities.

Dex Media has no operations of its own and depends on its subsidiaries for cash.

We have no operations of our own and derive all of our cash flow and liquidity from our two principal operating subsidiaries, Dex Media East and Dex Media West. Dex Media therefore depends on distributions from Dex Media East and Dex Media West to meet its debt service obligations and to pay dividends on its common stock. Because of the substantial leverage of Dex Media East and Dex Media West, and the dependence of Dex Media upon the operating performance of its subsidiaries to generate distributions to it, there can be no assurance that we will have adequate funds to fulfill our obligations in respect of our indebtedness when due or to pay dividends on its common stock. In connection with our subsidiaries’ credit facilities, Dex Media entered into support agreements providing that, upon an acceleration of Dex Media East’s or Dex Media West’s credit facility, Dex Media is obligated to partially repay such subsidiary’s credit facilities using a portion of any proceeds received by Dex Media from certain extraordinary events relating to the other subsidiary, including, for example, certain asset sale proceeds and excess distribution proceeds. A portion of any proceeds received from such extraordinary events from time to time is required to be pledged to secure Dex Media’s obligations under the applicable support agreement.

As of December 31, 2005, our subsidiaries had total indebtedness of approximately $4,198.2 million. Furthermore, $176.9 million was available to our subsidiaries for additional borrowing under our subsidiaries’ revolving credit facilities. In the event of bankruptcy, liquidation or dissolution of a subsidiary, following payment by the subsidiary of its liabilities, such subsidiary may not have sufficient assets to make payments to Dex Media.

The indentures governing our subsidiaries’ notes may restrict Dex Media’s access to the cash flow and other assets of our subsidiaries that may be needed to make payments on its indebtedness or the payment of dividends.

The indentures governing our subsidiaries’ notes significantly restrict our subsidiaries from paying dividends and otherwise transferring assets to Dex Media. We cannot assure you that the agreements governing our current and future indebtedness or other agreements will permit us to engage in transactions to fund scheduled interest and principal payments on our indebtedness when due, and no assurances can be given as to the timing or cost of, or our ability to effectuate any refinancing or renegotiation, if such transactions are necessary. If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking additional equity or reducing or delaying capital expenditures, strategic acquisitions, investments and alliances. We cannot assure you that any such actions, if necessary, could be effected on commercially reasonable terms, or at all.

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Specifically, the indentures relating to the senior notes and the senior subordinated notes of Dex Media East prohibit Dex Media East and its restricted subsidiaries from distributing funds to Dex Media if the amount of such distribution, together with all other restricted payments made by Dex Media East since November 8, 2002, would exceed the sum of: (i) 50% of the adjusted consolidated net income accrued by Dex Media East since January 1, 2003; (ii) the aggregate net proceeds from the sale of capital stock of Dex Media East; (iii) the amount of debt issued after the date of the indenture relating to the senior notes or senior subordinated notes that is subsequently converted into capital stock; and (iv) certain amounts of payments received or credited to Dex Media East by its unrestricted subsidiaries. In addition, in order to make any such distributions of funds to Dex Media, Dex Media East would have to meet the leverage tests relating to the issuance of indebtedness under the indentures relating to its senior notes and senior subordinated notes.

The indentures relating to the senior notes and the senior subordinated notes of Dex Media West permit Dex Media West and its restricted subsidiaries to make one or more distributions to Dex Media with an aggregate amount not to exceed $50.0 million each fiscal year for the sole purpose of paying interest on Dex Media’s debt obligations. However, the same indentures prohibit Dex Media West and its restricted subsidiaries from distributing funds to Dex Media in excess of $50.0 million each fiscal year to service interest on Dex Media’s debt obligations or for any other purpose if the amount of such distribution, together with all other restricted payments made by Dex Media West since September 9, 2003, would exceed the sum of: (i) 100% of the adjusted earnings before interest, tax, depreciation and amortization accrued since January 1, 2004 less 1.4 times the consolidated interest expense for the same period; (ii) the aggregate net proceeds from the sale of capital stock of Dex Media West; (iii) the amount of debt issued after the date of the indenture relating to the senior notes or senior subordinated notes that is subsequently converted into capital stock; and (iv) certain amounts of payments received or credited to Dex Media West by its unrestricted subsidiaries. In addition, in order to make any such distributions of funds to Dex Media, Dex Media West would have to meet the leverage tests relating to the issuance of indebtedness under the indentures relating to its senior notes and senior subordinated notes.

The terms of our subsidiaries’ credit facilities may limit our subsidiaries’ ability to pay dividends to Dex Media.

Although the terms of our subsidiaries’ credit facilities permit Dex Media East and Dex Media West to pay cash dividends to Dex Media in an amount not to exceed 42% and 58%, respectively, of regularly scheduled cash interest payable on the initial $250.0 million of our 8% notes due 2013 (provided that no event of default is continuing or would result therefrom), Dex Media East or Dex Media West, as applicable, may not pay dividends on its 42% or 58% portion, as applicable, of the regularly scheduled interest payments on the remaining $250.0 million of the $500.0 million of our 8% notes due 2013 unless Dex Media East or Dex Media West, as applicable, meets an interest coverage ratio for the four consecutive fiscal quarters prior to the payment of the dividend. Furthermore, in the event that: (i) Dex Media East or Dex Media West, as the case may be, is unable to pay any dividends to be used for payment of cash interest on our 8% notes due 2013 because an event of default is continuing or would result therefrom or (ii) Dex Media East or Dex Media West is unable to pay dividends in excess of its 42% or 58% portion, respectively, of the interest payments on $250.0 million of the $500.0 million of our 8% notes due 2013, the other subsidiary will not be permitted by the terms of its credit facility to pay dividends in excess of its 42% or 58% portion, as applicable, of the cash interest payments to replace the dividends that cannot be paid by the other subsidiary.

Additionally, although the terms of our subsidiaries’ credit facilities permitted Dex Media to issue discount notes, such credit facilities do not specifically permit the payment of dividends to Dex Media to pay cash interest on our 9% discount notes due 2013 when cash interest becomes payable on May 15, 2009. Accordingly, any dividend to Dex Media for payment of cash interest on our 9% discount notes due 2013 must be permitted to be paid pursuant to the general dividend basket of each of our subsidiaries’ credit facilities, which restricts Dex Media East (including its immediate parent and its subsidiaries) and Dex Media West (including its immediate parent and its subsidiaries), as applicable, from paying dividends to Dex Media in excess of $5.0 million and $12.5 million per year, respectively, if Dex Media East (including its immediate parent and its subsidiaries) or Dex Media West (including its immediate parent and its subsidiaries), as

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applicable, does not comply with a coverage ratio and a leverage ratio test. In any event, any such dividend would be limited to a portion of excess cash flow (as defined in the Dex Media East and Dex Media West credit facilities). If Dex Media East and Dex Media West are not able to pay Dex Media dividends under the general dividend basket of our subsidiaries’ credit facilities in amounts sufficient to meet Dex Media’s obligations to pay cash interest on our 9% discount notes due 2013 once cash payments become due, we will need to refinance or amend our subsidiaries’ credit facilities before such date. We cannot assure you that we will be able to refinance or amend our subsidiaries’ credit facilities on commercially reasonable terms or at all.

Our subsidiaries may enter into additional agreements or financings in the future, which could further limit Dex Media’s ability to access the assets and cash flow of our subsidiaries.

Our subsidiaries are permitted under the terms of our subsidiaries’ credit facilities, the indentures governing the subsidiary notes and the terms of other indebtedness to enter into other agreements or incur additional indebtedness that may severely restrict or prohibit the making of distributions, the payment of dividends or the making of loans by such subsidiaries to Dex Media. In addition to these contractual restrictions and prohibitions, the laws of our subsidiaries’ jurisdiction of organization may restrict or prohibit the making of distributions, the payment of dividends or the making of loans by our subsidiaries to Dex Media. The indentures governing our notes do not significantly limit our subsidiaries from entering into agreements restricting such distributions, dividends or loans. We cannot assure you that the agreements governing the current and future indebtedness of our subsidiaries, other agreements of our subsidiaries and statutory restrictions will permit our subsidiaries to provide Dex Media with sufficient dividends, distributions or loans to fund scheduled interest and principal payments on our indebtedness when due.

We may be restricted from paying dividends to Donnelley in the future.

The terms of our subsidiaries’ credit facilities, the indentures governing the subsidiary notes and/or the indentures governing our notes may restrict us from paying cash dividends on our common stock. See “— The indentures governing our subsidiaries’ notes may restrict Dex Media’s access to the cash flow and other assets of our subsidiaries that may be needed to make payment on its indebtedness or the payment of dividends,” “— The terms of our subsidiaries’ credit facilities may limit our subsidiaries’ ability to pay dividends to Dex Media” and “— Our subsidiaries may enter into additional agreements or financings in the future, which could further limit Dex Media’s ability to access the assets and cash flow of our subsidiaries” in this Item 1. Furthermore, we will be permitted under the terms of our debt agreements to incur additional indebtedness that may severely restrict or prohibit the payment of dividends. There can be no assurance that the agreements governing our current and future indebtedness will permit us to pay dividends to our parent, Donnelley.

We may experience difficulties integrating with Donnelley.

Our merger with and into a wholly owned subsidiary of Donnelley was consummated on January 31, 2006. Combining the operations, technologies and personnel of Dex Media and Donnelley, coordinating and integrating our two sales organizations and distribution channels, and implementing appropriate standards, internal controls, processes, procedures, policies and information systems will be time consuming and expensive. Disruption of, or loss of momentum in, the activities of Dex Media’s business or loss of key personnel caused by the integration process, diversion of management’s attention from our daily operations and any delays or difficulties encountered in connection with the merger and our integration with Donnelley could have an adverse effect on our business, results of operations or financial condition. In addition, during the integration process it is possible that some of our assets may be disposed of and a reduction in our workforce may occur, thereby resulting in restructuring charges that could adversely affect our financial results.

Achieving the expected benefits from our merger with Donnelley will depend in large part on successful integration of our operations with Donnelley’s operations. Failure to realize these benefits could have an adverse effect on our business, results of operations or financial condition.

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We face significant competition that may reduce our market share and harm our financial performance.

The U.S. directory advertising industry is highly competitive. Approximately 80% of total U.S. directory advertising sales are attributable to the regional bell operating companies and other incumbent directory publishers, collectively referred to as the incumbent publishers, that typically publish directories where they (or their licensors or affiliates) offer local phone service. In addition, more than 240 independent yellow pages directory publishers operating in the United States compete with those incumbent publishers and represent the remaining market share.

In nearly all markets, we compete with one or more yellow pages directory publishers, which are predominantly independent publishers, such as the U.S. business of Yell Group Ltd and Phone Directories Company. In some markets, we also compete with other incumbent publishers in overlapping and adjacent markets. Some of these independent publishers and other incumbent publishers with which we compete are larger than us and have greater financial resources than we have. We may not be able to compete effectively with these other publishers for advertising sales or acquisitions in the future.

We also compete for advertising sales with other traditional media, including newspapers, magazines, radio, direct mail, telemarketing, billboards and television. Many of these other traditional media competitors are larger than us and have greater financial resources than we have. We may not be able to compete effectively with these companies for advertising sales or acquisitions in the future.

The Internet has emerged as a medium for advertisers. Advances in technology have brought and likely will continue to bring new participants, new products and new channels to the industry, including increasing use of electronic delivery of traditional directory information and electronic search engines/services. The yellow pages directory advertising business is subject to changes arising from developments in technology, including information distribution methods and users’ preferences. The use of the Internet and wireless devices by consumers as a means to transact commerce may result in new technologies being developed and services being provided that could compete with our traditional products and services. National search companies such as Google and Yahoo! are focusing and placing large priorities on local commercial search initiatives. Our growth and future financial performance may depend on our ability to develop and market new products and services and create new distribution channels, while enhancing existing products, services and distribution channels, to incorporate the latest technological advances and accommodate changing user preferences, including the use of the Internet and wireless devices. We may not be able to respond successfully to any such developments.

Directory publishers, including Dex Media, have increasingly bundled online advertising with their traditional print offerings in order to enhance total usage and advertiser value. We compete through our Internet site, DexOnline.com with the Internet yellow pages directories of independent and other incumbent directory publishers, and with other Internet sites, including those available through wireless applications, that provide classified directory information, such as Switchboard.com, Citysearch.com and Zagat.com, and with search engines and portals, such as Yahoo!, Google, MSN and others, some of which have entered into affiliate agreements with other major directory publishers. We may not be able to compete effectively with these other companies, some of which may have greater resources than we do, such as private equity firms, for advertising sales or acquisitions in the future.

In addition, the market position of telephone utilities, including those with which we have relationships, may be adversely impacted by the Telecommunications Act of 1996, which effectively opened local telephone markets to increased competition. In addition, Federal Communication Commission rules regarding local number portability, advances in communications technology (such as wireless devices and voice over Internet protocol) and demographic factors (such as potential shifts in younger generations away from wireline telephone communications towards wireless or other communications technologies) may further erode the market position of telephone utilities, including Qwest. As a result, it is possible that Qwest will not remain the primary local telephone service provider in its local service areas. If Qwest were no longer the primary local telephone service provider in any particular local service area, our license to be the exclusive publisher in that market and to use the Qwest brand name on our directories in that market may not be as valuable as

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we presently anticipate, and we may not realize some of the existing benefits under our commercial arrangement with Qwest.

We could be materially adversely affected by declining usage of printed yellow pages directories.

From 1997 to 2000, overall references to print yellow pages directories in the United States declined; however, overall references to print yellow pages directories remained relatively stable from 2000 through 2005. We believe the past decline was primarily a result of demographic shifts among consumers, particularly the increase of households in which English was not the primary language spoken. We also believe that the past decline was attributable to increased usage of Internet-based directory products, particularly in business-to-business and retail categories, as well as the proliferation of very large retail stores for which consumers and businesses may not reference the yellow pages. We believe that over the next several years, references to print yellow pages directories may gradually decline as users may increasingly turn to digital and interactive media delivery devices for local commercial search information.

Any decline in usage could:

•  impair our ability to maintain or increase our advertising prices;

•  cause businesses that purchase advertising in our yellow pages directories to reduce or discontinue those purchases; and

•  discourage businesses that do not purchase advertising in our yellow pages directories from doing so.

Although we believe that any decline in the usage of our printed directories may be offset in part by an increase in usage of our Internet-based directory, we cannot assure you that such increase in usage will result in additional revenue. Any of the factors that may contribute to a decline in usage of our print directories, or a combination of them, could impair our revenues and have a material adverse effect on our business.

The directory advertising industry is subject to changes arising from developments in technology, including information distribution methods and users’ technological preferences. The use of the Internet and wireless devices by consumers as a means to transact commerce may result in new technologies being developed and services being provided that could compete with our products and services. As a result of these factors, our growth and future financial performance may depend on our ability to develop and market new products and services and create new distribution channels, while enhancing existing products, services and distribution channels, to incorporate the latest technological advances and accommodate changing user preferences, including the use of the Internet. We may not be able to provide services over the Internet successfully or compete successfully with other Internet-based directory services. In addition, if we fail to anticipate or respond adequately to changes in technology and user preferences or are unable to finance the capital expenditures necessary to respond to such changes, our results of operations or financial condition could be materially adversely affected.

Restrictive covenants in our subsidiaries’ credit facilities and the indentures may restrict our ability to pursue our business strategies.

Our subsidiaries’ credit facilities, the indentures governing the subsidiary notes and/or the indentures governing our notes limit Dex Media’s ability and/or the ability of our subsidiaries, among other things, to:

•  access the cash flow and value of our subsidiaries and, therefore, to pay interest and/or principal on the indebtedness of Dex Media or to pay dividends on its common stock;

•  incur additional indebtedness;

•  pay dividends or make distributions in respect of Dex Media’s or the applicable subsidiary’s capital stock or to make certain other restricted payments or investments;

•  sell assets, including capital stock of Dex Media’s or the applicable subsidiary’s future restricted subsidiaries;

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•  agree to payment restrictions affecting Dex Media’s or the applicable subsidiary’s future restricted subsidiaries;

•  consolidate, merge, sell or otherwise dispose of all or substantially all of Dex Media’s or the applicable subsidiary’s assets;

•  enter into transactions with Dex Media’s or the applicable subsidiary’s affiliates;

•  incur liens;

•  designate any of Dex Media’s or the applicable subsidiary’s future subsidiaries as unrestricted subsidiaries; and

•  enter into new lines of business.

In addition, our subsidiaries’ credit facilities include other and more restrictive covenants and prohibit our subsidiaries from prepaying our other indebtedness while indebtedness under our subsidiaries’ credit facilities is outstanding. The agreements governing our subsidiaries’ credit facilities also require our subsidiaries to achieve specified financial and operating results and maintain compliance with specified financial ratios. Our subsidiaries’ ability to comply with these ratios may be affected by events beyond our control.

The restrictions contained in the indentures governing the subsidiary notes, the indentures governing our notes and the agreements governing our subsidiaries’ credit facilities could limit our ability to plan for or react to market conditions or meet capital needs or otherwise restrict our activities or business plans and adversely affect our ability to finance our operations, investments or alliances or other capital needs or to engage in other business activities that would be in our interest.

A breach of any of these restrictive covenants or our inability to comply with the required financial ratios could result in a default under the agreements governing our subsidiaries’ credit facilities. If a default occurs, the lenders under our subsidiaries’ credit facilities may elect to declare all borrowings outstanding, together with accrued interest and other fees, to be immediately due and payable or prevent our subsidiaries from making distributions to Dex Media in order for Dex Media to make payments on its indebtedness, either of which could result in an event of default under such indebtedness. The lenders will also have the right in these circumstances to terminate any commitments they have to provide further borrowings. If we are unable to repay outstanding borrowings when due, the lenders under our subsidiaries’ credit facilities will also have the right to proceed against the collateral, including our available cash, granted to them to secure the indebtedness. If the indebtedness under our subsidiaries’ credit facilities, the subsidiary notes and our notes were to be accelerated, we can make no assurances that our assets would be sufficient to repay in full that indebtedness and our other indebtedness.

General economic factors could adversely affect our results of operations and financial condition.

Our business results could be adversely affected by a prolonged national or regional economic recession. We derive substantially all of our net revenue from the sale of advertising in directories. Typically, our advertising revenues, as well as those of yellow pages publishers in general, do not fluctuate widely with economic cycles. However, a prolonged national or regional economic recession could have a material adverse effect on our business, operating results or financial condition. As a result, we may experience lower than expected revenues for our business in the future.

In addition, any residual economic effects of, and uncertainties regarding the following could adversely affect our business:

•  the general possibility, express threat or future occurrence of terrorist or other related disruptive events; or

•  the United States’ continuing or expanded involvement in war, especially with respect to the major markets in which we operate that depend heavily upon travel, tourism or the military.

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Our dependence on third-party providers of printing, delivery and transportation services could materially adversely affect us.

We depend on third parties for the printing and distribution of our directories. We have contracts with two companies, RRD and Quebecor, for the printing of our directories, which expire on December 31, 2011 and December 31, 2014, respectively. Because of the large print volume and specialized binding of directories, there are only a small number of companies in the printing industry that could service our needs. Accordingly, the inability or unwillingness of RRD or Quebecor to provide printing services to us on acceptable terms or at all could have a material adverse effect on our business.

We have a contract with a single company, PDC, for the delivery of nearly all our directories. Although this contract expires on May 31, 2009, PDC may terminate the contract upon 120 days prior written notice. Only a limited number of companies are capable of serving our delivery needs. We have a contract with Matson to provide logistical support and to transport our printed directories from our printers’ locations to PDC. This contract expires on December 31, 2008. We rely on Matson’s services extensively for our transportation and logistical needs, and only a limited number of companies could service our transportation needs. Accordingly, the inability or unwillingness of our current vendors to provide delivery or transportation services on acceptable terms or at all could have a material adverse effect on our business.

Fluctuations in the price or availability of paper could materially adversely affect us.

The principal raw material that we use is paper. All of the paper that we use is supplied by two companies: Nippon and Catalyst. Pursuant to our agreements with Nippon and Catalyst, they are obligated to provide up to 60% and 40% of our annual paper requirements, respectively. Prices under the two agreements are set each year based on prevailing market rates. If, in a particular year, the parties to either of the agreements are unable to agree on repricing, either party may terminate the agreement. The contract with Nippon expires on December 31, 2009 and the contract with Catalyst expires on December 31, 2008. Furthermore, we purchase paper used for the covers of our directories from Spruce Falls. Pursuant to an agreement between Spruce Falls and us, Spruce Falls is obligated to provide 100% of our annual cover stock paper requirements. Prices under this agreement are negotiated each year. If, in a particular year, Spruce Falls and we are unable to agree on repricing, either party may terminate this agreement. This agreement expires on December 31, 2006.

Changes in the supply of, or demand for, paper could affect market prices or delivery times. Paper is one of our and largest cost items, accounting for approximately 6% of our total operating expenses during the year ended December 31, 2005. We cannot assure you that we will continue to have access to paper in the necessary amounts or at reasonable prices or that any increases in the cost of paper will not have a material adverse effect on our business, results of operations or financial condition. See Item 7 — “Management’s Narrative Analysis and Results of Operations.”

We could be materially adversely affected by turnover among sales representatives or loss of key personnel.

The success of Dex Media’s business is dependent on the leadership of its key personnel. The loss of a significant number of experienced sales representatives could adversely affect our results of operations, financial condition and liquidity, as well as our ability to service our debt. Our success will also depend on our ability to identify, hire, train and retain qualified sales personnel. Dex Media currently expends significant resources and management time in identifying and training its sales representatives and sales managers. Our ability to attract and retain qualified sales personnel will depend, however, on numerous factors, including factors outside the combined company’s control, such as conditions in the local employment markets in which the combined company will operate.

Furthermore, we depend on the continued services of key personnel, including our senior management and regional sales management personnel. If we fail to retain the necessary key personnel, our results of operations, financial condition and liquidity, as well as our ability to service our debt, could be adversely affected.

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Following our merger with Donnelley, a number of the officers of our predecessor have left Dex Media or notified us of their intention to leave Dex Media. Further loss of key personnel could result from the integration process with Donnelley. Although we believe that we can replace key employees within a reasonable time, the loss of key personnel could have a material adverse effect on our business.

Our business may be adversely affected by our reliance on, and our extension of credit to, SMEs.

Approximately 82% of our directory advertising revenue is derived from selling advertising to SMEs. In the ordinary course of our yellow pages publishing business, we extend credit to these advertisers for advertising purchases. SMEs, however, tend to have fewer financial resources and higher failure rates than large businesses. The proliferation of very large retail stores may continue to harm SMEs. We believe these limitations are significant contributing factors to having advertisers in any given year not renew their advertising in the following year. In addition, full or partial collection of delinquent accounts can take an extended period of time. Consequently, we could be adversely affected by our dependence on and our extension of credit to SMEs.

Our sales of advertising to national accounts is coordinated by third parties that we do not control.

Approximately 14% of our revenue for the year ended December 31, 2005 was derived from the sale of advertising to national or large regional chains, such as rental car companies, insurance companies and pizza delivery businesses, that purchase advertising in several of the directories that we publish. Substantially all of the revenue derived from national accounts is serviced through the CMRs with whom we contract. CMRs are independent third parties that act as agents for national companies and design their advertisements, arrange for the placement of those advertisements in directories and provide billing services. As a result, our relationships with these national advertisers depend significantly on the performance of these third party CMRs that we do not control. In particular, we rely on one CMR, TMP, whose billings were approximately 24% (excluding Qwest) of Dex Media’s national revenue for the year ended December 31, 2005. Although we believe that our respective relationships with these CMRs have been mutually beneficial, if some or all of the CMRs with whom Dex Media has established relationships were unable or unwilling to do business with us on acceptable terms or at all, such inability or unwillingness could materially adversely affect our business. In addition, any decline in the performance of TMP or the other CMRs with whom we contract could harm our ability to generate revenue from our national accounts and could materially adversely affect our business. We are also subject to credit risk with CMRs with whom we contract.

We may be subject to work stoppages, which could increase our operating costs and disrupt our operations.

As of December 31, 2005, approximately 66% of our workforce was represented by labor unions covered by two collective bargaining agreements. Our collective bargaining agreement with the International Brotherhood of Electrical Workers, or IBEW, which covered approximately 33% of our unionized workforce as of December 31, 2005, expires in May 2006. Our collective bargaining agreement with the Communications Workers of America, or CWA, which covered approximately 67% of our unionized workforce as of December 31, 2005, expires in October 2006. If our unionized workers were to engage in a strike, work stoppage or other slowdown in the future, we could experience a significant disruption of our operations and an increase in our operating costs, which could have a material adverse effect on us. We cannot assure you that the collective bargaining agreements with the IBEW and CWA will be renewed on satisfactory terms or at all and upon expiration of such agreements we cannot assure you that a strike or other work stoppage may not ensue. In addition, if a greater percentage of our work force becomes unionized, our business and financial results could be materially adversely affected.

Future changes in Qwest’s directory publishing obligations in the Dex States may increase our costs.

Pursuant to our publishing agreement with Qwest, we are required to discharge Qwest’s regulatory obligation to publish white pages directories covering each service territory in the Dex States where it provides local telephone service as the incumbent service provider. If the staff of a state public utility commission in a

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Dex State were to impose additional or changed legal requirements with respect to Qwest’s obligation, we would be obligated to comply with these requirements on behalf of Qwest, even if such compliance were to increase our publishing costs. Pursuant to the publishing agreement, Qwest will only be obligated to reimburse us for one half of any material net increase in our costs of publishing directories that satisfy Qwest’s publishing obligations (less the amount of any previous reimbursements) resulting from new governmental legal requirements, and this obligation will expire on November 7, 2009. Our competitive position relative to competing directory publishers could be adversely affected if we are not able to recover from Qwest that portion of our increased costs that Qwest has agreed to reimburse and, moreover, we cannot assure you that we would be able to increase our revenue to cover any unreimbursed compliance costs.

The loss of important intellectual property rights could adversely affect our competitiveness.

Some trademarks, such as “DEX,” “DexOnline.com,” “Dex Knows” and other intellectual property rights are important to our business. We rely upon a combination of copyright and trademark laws as well as contractual arrangements to establish and protect our intellectual property rights. We are required from time to time to bring lawsuits against third parties to protect our intellectual property rights. Similarly, from time to time, we may be party to proceedings whereby third parties challenge our rights. We cannot be sure that any lawsuits or other actions brought by us will be successful or that we will not be found to infringe the intellectual property rights of third parties. Although we are not aware of any material infringements of any trademark rights that are significant to our business, any lawsuits, regardless of their outcome, could result in substantial costs and diversion of resources and could have a material adverse effect on our business, financial condition or results of operations. Furthermore, the loss of important intellectual property rights such as trademarks could have a material adverse effect upon our business, financial condition and results of operations.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

None.

ITEM 2.   PROPERTIES

We lease all our facilities. Our headquarters are located at 1001 Winstead Drive, Cary, North Carolina. We have significant operations at our facility located at 198 Inverness Drive West, Englewood, Colorado. Dex Media East subleases this facility from Qwest. The lease covering this facility expires on October 31, 2008 and Dex Media East has the option to renew it for one additional five-year term. Dex Media West has co-occupancy rights with Dex Media East for the Englewood facility. Dex Media East also has significant operations at its facility located at 3190 South Vaughn Way, Aurora, Colorado, which it leases from a third party. The lease covering this facility expires on October 31, 2008, and Dex Media East has the option to renew it for two additional terms, each for a period of five years. Dex Media West has significant operations at its facilities located at 9300 SW Nimbus Avenue, Beaverton, Oregon, which it leases from a third party. The lease covering this facility expires on June 30, 2016, and Dex Media West has the option to renew it for five years. We operate from approximately 57 other facilities and, in the aggregate, utilize approximately 1.0 million square feet.

ITEM 3.   LEGAL PROCEEDINGS

From time to time, we are a party to litigation matters arising in connection with the normal course of our business. In many of these matters, plaintiffs allege that they have suffered damages from errors or omissions or improper listings contained in directories published by us. Although we have not had notice of any such claims that we believe to be material, any pending or future claim could have a material adverse effect on our business.

In addition, we are exposed to defamation and breach of privacy claims arising from our publication of directories and our methods of collecting, processing and using personal data. The subjects of our data and users of data that we collect and publish could have claims against us if such data were found to be inaccurate, or if personal data stored by us were improperly accessed and disseminated by unauthorized persons. Although

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to date we have not had notice of any material claims relating to defamation or breach of privacy claims, we may be party to litigation matters that could have a material adverse effect on our business.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Omitted pursuant to General Instructions I(2)(c) of Form 10-K.

PART II

ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Equity Securities of Dex Media, Inc.

All outstanding shares of our common stock are owned by Donnelley. There is currently no established trading market for our equity securities. Donnelley’s common stock is traded on the New York Stock Exchange under the symbol “RHD.”

Between July 22, 2004, the date of the completion of our predecessor’s initial public offering (the “IPO”), and January 31, 2006, the date on which our merger with Donnelley was consummated, Dex Media’s common stock was traded on the New York Stock Exchange. Upon completion of the merger, Dex Media’s common stock was delisted from the New York Stock Exchange. The following table sets forth the high and low closing sales prices of our predecessor’s common stock for the periods indicated.

	Market Price
	High		Low
2005
First quarter	$	25.01	$	20.65
Second quarter		24.70		20.90
Third quarter		28.90		24.41
Fourth quarter		27.45		26.38
2004
Third quarter (beginning July 22, 2004)		22.01		17.80
Fourth quarter		25.24		20.60

Dividends

On December 15, 2005, we declared a common stock dividend of $0.09 per common share, which was paid on January 16, 2006 to shareholders of record as of January 3, 2006. On September 22, 2005, we declared a common stock dividend of $0.09 per common share, which was paid on October 31, 2005 to shareholders of record as of October 13, 2005. On May 19, 2005, we declared a common stock dividend of $0.09 per common share, which was paid on July 15, 2005 to shareholders of record as of June 16, 2005. On February 17, 2005, we declared a common stock dividend of $0.09 per common share, which was paid on April 15, 2005 to stockholders of record as of March 18, 2005. On December 14, 2004, we declared a quarterly cash dividend of $0.09 per share of common stock, which was paid on January 31, 2005 to stockholders of record as of January 3, 2005.

The terms of our indebtedness and the terms of our subsidiaries’ indebtedness include restrictions on cash dividends on our common stock under some circumstances. See Item 1A — “Risk Factors — The indentures governing our subsidiaries’ notes may restrict Dex Media’s access to the cash flow and other assets of our subsidiaries that may be needed to make payment on its indebtedness,” “— The terms of our subsidiaries’ credit facilities may limit our subsidiaries’ ability to pay dividends to Dex Media,” “— Our subsidiaries may enter into additional agreements or financings in the future which could further limit Dex Media’s ability to access the assets and cash flow of our subsidiaries” and “— We may be restricted from paying dividends to Donnelley in the future.”

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On February 17, 2004, we made a distribution of $250.5 million to our stockholders with the proceeds received from the issuance of our 9% discount notes due 2013 issued in February 2004.

Securities Authorized for Issuance Under Compensation Plans

We have no compensation plans under which our equity securities are authorized for issuance.

Sales of Unregistered Equity Securities

During the year ended December 31, 2005, Dex Media did not sell any equity securities that were not registered under the Securities Act of 1933, as amended.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

ITEM 6.   SELECTED FINANCIAL DATA

Omitted pursuant to General Instructions I(2)(a) of Form 10-K.

ITEM 7.   MANAGEMENT’S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

Pursuant to General Instructions I(2)(a) of Form 10-K: (i) the information called for by Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, has been omitted and (ii) we are providing the following management’s narrative analysis of results of operations.

Recent Development

On January 31, 2006, our predecessor, Dex Media, Inc., merged with and into FAC, a wholly owned subsidiary of Donnelley. In the merger, each share of Dex Media, Inc. common stock was converted into the right to receive $12.30 in cash and 0.24154 of a share of Donnelley common stock. Donnelley also assumed all of Dex Media, Inc.’s outstanding indebtedness on January 31, 2006 with a fair value of $5.7 billion. In connection with the consummation of the merger, the name of FAC was changed to Dex Media, Inc. As a result of the merger, we became a wholly owned subsidiary of Donnelley.

Background

The following narrative analysis of our results of operations covers periods prior to and subsequent to the consummation of the Dex East Acquisition on November 8, 2002 and the Dex West Acquisition on September 9, 2003. We have operated as a stand-alone company since the Dex East Acquisition. The Dex East Acquisition and the Dex West Acquisition have been accounted for under the purchase method of accounting. Under this method, the pre-acquisition deferred revenue and related deferred costs associated with directories that were published prior to the acquisition dates were not carried over to our balance sheet. The effect of this accounting treatment was to reduce revenue and related costs that would otherwise have been recognized during the twelve months subsequent to the respective acquisition dates.

Our historical consolidated financial statements included in this annual report have been prepared on the basis of the deferral and amortization method of accounting, under which revenue and cost of revenue related to the publication of directories are initially deferred and then recognized ratably over the life of each directory, commencing in the month of delivery. From time to time, we have determined that the publication dates of certain directories will be extended. These extensions are made to more efficiently manage work and customer flow. The lives of the affected directories are expected to be 12 months following the new publication date. Generally, we are able to bill and collect for additional periods related to directory extensions and under the deferral and amortization method of accounting, our related cost of revenue is amortized over the extended estimated useful life of the directory. As a result, the extensions made through December 31, 2005 did not have a significant impact on our results of operations for the years ended December 31, 2005 or

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2004 and are not expected to have a material effect on revenue or cost of revenue in future periods. Certain prior period amounts have been reclassified to conform to the 2005 presentation.

Overview

General

We are the exclusive publisher of the “official” yellow pages and white pages directories for Qwest in the following states where Qwest is the primary incumbent local exchange carrier: Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming. We have been publishing directories for over 100 years. Our contractual agreements with Qwest grant us the right to be the exclusive incumbent publisher of the “official” yellow pages and white pages directories for Qwest in the Dex States until November 2052 and prevent Qwest from competing with us in the directory products business in the Dex States until November 2042.

We are the largest directory publisher in the Dex States and, together with our parent, Donnelley, the third largest directory publisher in the U.S. In 2005, we published 293 directories and printed approximately 51.8 million copies of these directories for distribution to virtually all business and residential consumers throughout the Dex States. In addition, our Internet-based directory, DexOnline.com, further extends the distribution of our advertisers’ content. DexOnline.com, which is offered both bundled with our print directories and on a stand-alone basis, includes approximately 20 million business listings and 124 million residential listings from across the United States. Our other products and services include the sale of direct marketing lists and the sale of Dex directories and other publishers’ directories outside the normal delivery schedule.

We seek to bring buyers together with our advertising customers through a cost-effective, bundled advertising solution that includes print, Internet-based and CD-ROM directories. The majority of our advertising customers are local SMEs and national businesses with a local presence. We believe that our advertising customers value: (i) our ability to provide consumers with an authoritative and diverse reference source to search for products and services across multiple platforms; (ii) our broad distribution to potential buyers of our advertisers’ products and services; (iii) our lower cost per usage compared with most other directories and a higher return on investment than other forms of local advertising; and (iv) the quality of our client service and support.

For the year ended December 31, 2005, we generated approximately 97% of our total revenue from the sale of bundled print and Internet directory advertising. Our other products and services account for the remaining 3% of our total revenue. For the years ended December 31, 2005 and 2004, we generated $1,658.4 million and $1,602.9 million in total revenue, respectively. Excluding the effects of purchase accounting, as described in this Item 7 — “Management’s Narrative Analysis of Results of Operations,” we generated $1,649.7 million in total revenue for the year ended December 31, 2004. For complete information concerning our financial performance, see Item 8 — “Financial Statements and Supplementary Data.”

Results of Operations

Revenue

We derive approximately 97% of our revenue from the sale of advertising in our printed directories, which we refer to as directory services revenue. The sale of advertising in our printed directories also includes the replication of listings and display advertisements in DexOnline.com, our Internet-based directory. We also provide related services, including other Internet-related products, direct marketing lists and the sale of Dex directories and other publishers’ directories outside of the normal delivery schedule, which we refer to collectively as other revenue. Directory services revenue is affected by several factors, including changes in the quantity and size of advertisements sold, defectors and new advertisers as well as the proportion of premium advertisements sold, changes in the pricing of advertising, changes in the quantity and mix of advertising purchased per account and the introduction of additional products which generate incremental revenue. Directory services revenue may also increase through the publication of new print directories.

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Revenue recognized on sales under our Advertising Commitment Agreement with Qwest consists primarily of directory services revenue.

Our revenue and cost of revenue for the twelve months following the consummation of the Acquisitions were lower than they otherwise would have been because the Acquisitions were accounted for under the purchase method of accounting. Under the purchase method of accounting, deferred revenue and deferred directory costs associated with the directories published and distributed prior to the Acquisitions were not carried over to our balance sheet at the time of purchase. The effect of this accounting treatment was to reduce revenue and related costs that would otherwise be recognized in the twelve months subsequent to the Acquisitions. The purchase method of accounting did not affect our revenue and directory costs in periods subsequent to September 2004. These purchase accounting adjustments are non-recurring and have no impact on cash flows.

We enter into transactions such as exclusivity arrangements, sponsorships and other media access transactions where our products and services are promoted by a third party and, in exchange, we carry that party’s advertisement. We account for these transactions in accordance with Emerging Issues Task Force (“EITF”) Issue No. 99-17, “Accounting for Advertising Barter Transactions.” Revenue and expense related to such transactions are included in the consolidated statements of operations consistent with reasonably similar items sold or purchased for cash. These related revenue items are currently included in local directory services revenue. The revenue from such transactions for the year ended December 31, 2005 represented less than 1% of total revenue for the year. The revenue and related expense have no impact on net income or cash flow over the life of the bartered advertisement.

In certain cases, we enter into agreements with accounts that involve the delivery of more than one product or service. We allocate revenue for such arrangements in accordance with EITF Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables.”

Cost of Revenue

We account for cost of revenue under the deferral and amortization method of accounting. Accordingly, our cost of revenue recognized in a reporting period consists of: (i) costs incurred in that period and recognized in that period, principally sales salaries and wages; (ii) costs incurred in a prior period, a portion of which are amortized and recognized in the current period; and (iii) costs incurred in the current period, a portion of which are amortized and recognized in that period and the balance of which are deferred until future periods. Consequently, there will be a difference between the cost of revenue recognized in any given period and the costs incurred in that period. Such differences may be significant.

Costs incurred in the current period and subject to deferral include direct costs associated with the publication of directories, including sales commissions, paper, printing, transportation, distribution and pre-press production, as well as employee and systems support costs relating to each of the foregoing. Sales commissions include commissions paid to employees for sales to local advertisers and to CMRs, which act as our channel to national advertisers. All deferred costs related to the sale and production of directories are recognized ratably over the life of each directory under the deferral and amortization method of accounting, with cost recognition commencing in the month of delivery.

General and Administrative Expense

Our general and administrative expense consists primarily of the costs of advertising, promotion and marketing, administrative staff, pension and other post-retirement benefits, information technology, training, account billing, corporate management, office and facilities expense and bad debt expense. All our general and administrative expense is recognized in the period in which it is incurred.

Income Tax Provision

We account for income taxes under the asset and liability method of accounting. Deferred tax assets and liabilities are recorded to reflect the future tax consequences of temporary differences between the financial

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reporting bases of assets and liabilities and their tax bases at each year end. Deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Deferred tax assets and liabilities are adjusted for future income tax rate changes in the year the changes are enacted. Deferred tax assets are recognized for operating loss and tax credit carry forwards if management believes, based upon existing evidence, that it is more likely than not that the carry forward will be utilized. All deferred tax assets are reviewed for realizability, and valuation allowances are recorded if it is more likely than not that the deferred tax assets will not be realized.

Items Affecting Comparability Between Periods

Our revenue and cost of revenue for the twelve months following the consummation of the Dex West Acquisition in September 2003 were $120.6 million and $31.6 million lower, respectively, than our revenue and cost of revenue would have been otherwise because the Dex West Acquisition was accounted for under the purchase method of accounting. Under the purchase method of accounting, deferred revenue and related deferred directory costs associated with directories that had previously been published and distributed were not carried over to the balance sheet. The effect of this accounting treatment is to reduce revenue and related costs that would otherwise have been recognized in the twelve months subsequent to the Acquisitions. The purchase method of accounting did not affect our revenue and directory costs in periods subsequent to September 2004. These purchase accounting adjustments are non-recurring and have no historical or future cash impact.

Prior to the IPO in July 2004, we were obligated to pay an annual advisory fee of $2.0 million to each of The Carlyle Group (“Carlyle”) and Welsh Carson Anderson & Stowe (“WCAS”). In connection with the IPO, we made a lump sum payment of $10.0 million to each of Carlyle and WCAS to terminate our obligation to pay such annual advisory fee. An aggregate of approximately $2.0 million of such advisory fees is reflected in our historical financial data for the year ended December 31, 2004. Such amount does not include the $10.0 million paid to each of Carlyle and WCAS at the time of the IPO to terminate our obligation to pay such annual advisory fee.

During the year ended December 31, 2004, we paid and recorded a redemption fee of $24.1 million to redeem a portion of our senior subordinated notes in conjunction with the IPO in July 2004. The redemption fee was recorded as interest expense in the year ended December 31, 2004. No such fees were incurred during the year ended December 31, 2005.

During the year ended December 31, 2005, we incurred $11.7 million of costs related to our acquisition by Donnelley. These costs primarily relate to financial advisory, legal and accounting fees and are included in general and administrative expense in our condensed consolidated statements of operations. No such costs were recorded in the year ended December 31, 2004.

During the year ended December 31, 2005, we recorded a pension settlement loss of $3.3 million as a result of lump sum payments to participants in excess of the sum of the service cost plus the interest cost component of the periodic pension costs for the year. No pension settlement losses were recorded in the year ended December 31, 2004.

During the year ended December 31, 2005, we recorded stock compensation expense of $11.3 million related to modifications of certain stock options. See Note 9(f) to the consolidated financial statements contained elsewhere in this annual report. No such expense was recorded in the year end December 31, 2004.

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Year ended December 31, 2005 compared to the year ended December 31, 2004

	Year Ended
	December 31,
	2005			2004
	(Dollars in thousands)
Revenue:
Local directory services	$	1,359,037		$	1,353,229
National directory services		232,223			191,146
Qwest advertising		18,233			23,133
Other revenue		48,923			35,406
Total revenue		1,658,416			1,602,914
Cost of revenue, excluding depreciation and amortization expense		504,453			485,505
Gross profit, excluding depreciation and amortization expense	$	1,153,963		$	1,117,409
Gross margin, excluding depreciation and amortization expense		69.6	%		69.7	%
General and administrative expense, including bad debt expense and termination of annual advisory fees	$	252,705		$	251,566

Revenue

Total revenue increased $55.5 million, or 3.5%, to $1,658.4 million for the year ended December 31, 2005, from $1,602.9 million for the year ended December 31, 2004. Total revenue for the year ended December 31, 2004 was $46.8 million lower than it would have been due to the effects of purchase accounting. Excluding the effects of purchase accounting in 2004, total revenue would have increased $8.7 million, or 0.5%, for the year ended December 31, 2005. The increase in total revenue, excluding the effects of purchase accounting, was primarily due to increases in national directory services revenue and other revenue, and was partially offset by decreases in local directory services revenue and Qwest advertising revenue.

Local and national directory services revenue is affected by a variety of volume and pricing factors. Volume related factors include quantity of advertisements sold, the change in mix of advertisements among our product families, the proportion of advertisements sold with premium features, the volume of promotional services obtained from our advertisers in exchange for our publication of their advertisements in our directories, the number of local advertisers’ disconnects and the number of new advertisers obtained during a period. Pricing factors include price increases related to our standard rates that may be made from time to time in varying markets for varying categories, and are offset by discount programs that may be initiated in local markets for certain advertiser headings. Such factors generally affect the dollar volume of orders initiated in a period which are recognized as revenue over the life of a given directory, beginning in the month of delivery. Fluctuations in product mix and pricing are among the multiple factors that contributed to the change in local and national directory services revenue.

Local directory services revenue increased $5.8 million, or 0.4%, to $1,359.0 million for the year ended December 31, 2005, compared to $1,353.2 million for the year ended December 31, 2004. Local directory service revenue for the year ended December 31, 2004 was $9.6 million lower than it would have been due to the effects of purchase accounting. Excluding the effects of purchase accounting in 2004, local directory services revenue decreased $3.8 million, or 0.3%, for the year ended December 31, 2005. Local directory services revenue, excluding the effects of purchase accounting in 2004, accounted for 81.9% and 82.6% of revenue for the year ended December 31, 2005 and the year ended December 31, 2004, respectively.

Revenue from national advertisers increased $41.1 million, or 21.5%, to $232.2 million for the year ended December 31, 2005, compared to $191.1 million for the year ended December 31, 2004. Revenue from national advertisers for the year ended December 31, 2004 was $37.2 million lower than it would have been due to the effects of purchase accounting. Excluding the effects of purchase accounting in 2004, revenue from national advertisers, increased $3.9 million, or 1.7%, for the year ended December 31, 2005. Revenue from

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national advertisers, excluding the effects of purchase accounting in 2004, accounted for 14.0% and 13.8% of revenue for the year ended December 31, 2005 and the year ended December 31, 2004, respectively.

Revenue from Qwest advertising decreased $4.9 million, or 21.2%, to $18.2 million for the year ended December 31, 2005, from $23.1 million for the year ended December 31, 2004. This decrease in Qwest advertising revenue was a result of the timing of Qwest’s purchases under its Advertising Commitment Agreement with us. Under the Advertising Commitment Agreement, Qwest is obligated to purchase $20.0 million in advertising annually from us. However, if in any given year Qwest exceeds the $20.0 million of advertising purchases, up to $5.0 million of the excess may be credited to the following year’s purchase commitment. As a result of purchases in excess of the $20.0 million for the year ended December 31, 2003, Qwest purchased less than $20.0 million of Dex advertising in 2004, of which a portion is deferred and recognized over the life of the related directory in 2005.

Other revenue increased $13.5 million, or 38.2%, to $48.9 million for the year ended December 31, 2005, from $35.4 million for the year ended December 31, 2004. This increase in other revenue was primarily due to an increase in Internet revenue and an increase in the fees the Company collects from customers who pay their accounts late, and was partially offset by a decrease in our direct marketing revenue.

Cost of Revenue

Cost of revenue recognized was $504.5 million for the year ended December 31, 2005, compared to $485.5 million for the year ended December 31, 2004. Cost of revenue recognized for the year ended December 31, 2004 was $10.5 million lower than it would have been due to the effects of purchase accounting. Cost of revenue recognized, excluding the effects of purchase accounting in 2004, represented 30.4% and 30.1% of revenue for the year ended December 31, 2005 and 2004, respectively. The cost of revenue recognized does not include any depreciation and amortization expense.

For the year ended December 31, 2005 and 2004, we incurred costs subject to deferral and amortization of $494.0 million and $502.2 million, respectively.

Employee costs incurred decreased $16.6 million, or 7.6%, to $201.2 million for the year ended December 31, 2005 from $217.8 million for the year ended December 31, 2004. The decrease primarily resulted from a reduction in the number of our employees, which related primarily to planned workforce reductions.

Direct publishing costs incurred, which primarily include paper, printing and distribution, decreased $3.4 million, or 2.0%, to $169.9 million for the year ended December 31, 2005, from $173.3 million for the year ended December 31, 2004. The decrease is primarily a result of printing costs declining in 2005 due to the implementation of a new printing agreement with one of our two outside providers of printing services, and was partially offset by an increase in the number of directories we published in 2005.

Contracting and professional fees incurred increased $13.7 million, or 46.0%, to $43.5 million for the year ended December 31, 2005, from $29.8 million for the year ended December 31, 2004. This increase was primarily due to costs related to supporting our new production system, which we began to incur in the second quarter of 2004 and incremental costs paid to vendors related to the fulfillment of our new Dex Web Clicks product, which launched in early 2005.

National commissions incurred increased $4.5 million, or 9.3%, to $53.1 million for the year ended December 31, 2005 from $48.6 million for the year ended December 31, 2004 as a result of national directory services revenue growth and commissions on extension billings for directories with extended lives.

Other cost of revenue incurred, which primarily includes systems expense and office and facilities expense, was $26.3 million for the year ended December 31, 2005, compared to $32.7 million for the year ended December 31, 2004.

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Gross Profit

Our gross profit was $1,154.0 million for the year ended December 31, 2005, compared to $1,117.4 million for the year ended December 31, 2004. Excluding the effects of purchase accounting, gross profit for the year ended December 31, 2004 would have been $1,153.7 million. Gross margin, excluding the effects of purchase accounting in 2004, was 69.6% for the year ended December 31, 2005, compared to 69.9% for the year ended December 31, 2004.

General and Administrative Expense

General and administrative expense, including bad debt expense, increased $1.1 million, or 0.5% to $252.7 million for the year ended December 31, 2005, compared to $251.6 million for the year ended December 31, 2004.

Employee costs were $79.0 million for the year ended December 31, 2005 compared to $64.3 million for the year ended December 31, 2004. Employee costs include salaries and wages, benefits, including pension expense and employee stock compensation, and other employee costs. Salaries and wages were $34.7 million for the year ended December 31, 2005 compared to $36.6 million for the year ended December 31, 2004. Benefits were $32.2 million for the year ended December 31, 2005 compared to $17.6 million for the year ended December 31, 2004. The increase in benefits was due primarily to a one-time stock-based compensation charge of $11.3 million related to the modification of certain stock option terms and a pension settlement loss of $3.3 million as a result of lump sum payments to participants in excess of the sum of the service cost plus the interest cost component of the periodic pension costs for the year. Other employee costs were $12.1 million for the year ended December 31, 2005 compared to $10.1 million for the year ended December 31, 2004, respectively.

Advertising expense decreased $5.7 million, or 14.7%, to $33.2 million for the year ended December 31, 2005, from $38.9 million for the year ended December 31, 2004. The decrease in advertising reflects lower levels of discretionary spending in 2005. Advertising expense as a percentage of revenue, excluding the effects of purchase accounting in 2004, decreased to 2.0% for the year ended December 31, 2005 from 2.4% for the year ended December 31, 2004.

Contracting and professional fees increased $7.6 million, or 16.6%, to $53.3 million for the year ended December 31, 2005, from $45.7 million for the year ended December 31, 2004. The increase in contracting and professional fees was primarily a result of financial advisory, accounting and legal fees incurred in 2005 in connection with our merger with Donnelley. This increase was partially offset by the elimination in 2004 of the $2.0 million annual advisory fee payable to each of Carlyle and WCAS.

At the time of our IPO in July 2004, we paid $10.0 million to each of Carlyle and WCAS to eliminate our contractual obligation to pay such annual advisory fee.

Bad debt expense increased $8.7 million, or 19.9%, to $52.4 million for the year ended December 31, 2005, from $43.7 million for the year ended December 31, 2004. Bad debt expense as a percentage of total revenue, excluding the effects of purchase accounting in 2004, was 3.2% for the year ended December 31, 2005, and 2.6% for the year ended December 31, 2004. The increase in bad debt expense reflects the Company’s decision to accept higher levels of credit risk.

All other general and administrative expense decreased $4.2 million, or 10.8%, to $34.8 million for the year ended December 31, 2005, from $39.0 million for the year ended December 31, 2004.

Amortization of Intangibles

For the years ended December 31, 2005 and 2004, we recognized $345.7 million and $412.4 million, respectively, in amortization expense related to our identifiable intangible assets. The decrease in amortization expense was the result of a declining method used to amortize the value of the acquired accounts in proportion with their estimated retention lives.

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Interest Expense

Interest expense was $446.4 million and $505.5 million for the year ended December 31, 2005 and 2004, respectively. Interest expense for the year ended December 31, 2005 includes $37.0 million of amortization of deferred financing costs and $48.5 million of accretion on discount notes. Interest expense for the year ended December 31, 2004 includes $63.5 million of amortization of deferred financing costs, including the write off of $5.6 million of deferred financing costs in conjunction with our subsidiaries’ senior note redemption. Interest expense for the year ended December 31, 2004 also includes $42.3 million of accretion on discount notes and $24.1 million of early redemption premium paid to redeem a portion of our subsidiaries senior subordinated notes.

Income Taxes

Statement of Financial Accounting Standard (“SFAS”) No. 109 requires that we recognize deferred income tax assets on net operating losses to the extent that realization of these assets is more likely than not. As of December 31, 2005, we have recorded $65.0 million of net deferred income tax assets, of which $82.9 million is the result of estimated net operating loss carryforwards of $204.2 million. As of December 31, 2004, we recorded $98.6 million of deferred income tax assets, of which $107.3 million resulted from estimated net operating loss carryforwards of $271.2 million. Net operating loss carryforwards do not begin to expire until 2022. Based on current projections of income and expenses, we have determined that it is more likely than not that we will utilize the deferred tax assets associated with the net operating losses before the expiration of the net operating loss carryforward periods. Accordingly, no valuation allowance has been recorded for this issue.

MATERIAL TRENDS, KNOWN FACTS AND UNCERTAINTIES

Directory Services Revenue

For the year ended December 31, 2005, approximately 97% of our revenue came from directory services, our bundled advertising solution that includes print, Internet-based and CD-ROM directories. Our ability to increase directory services revenue is dependent on our ability to attract and retain advertisers or increase revenue per advertiser account through a change in advertising volume and/or rates.

Competition

The U.S. directory advertising industry is highly competitive. In nearly all markets, we compete with one or more yellow pages directory publishers, which are predominantly independent publishers, such as the U.S. business of Yell Group Ltd and Phone Directories Company. In some markets, we also compete with other incumbent publishers in overlapping and adjacent markets. Competition from other yellow pages publishers affects our ability to attract and retain advertisers and to increase advertising rates.

The Internet has emerged as a medium for advertisers. We compete through our Internet site, DexOnline.com with the Internet yellow pages directories of independent and other incumbent directory publishers, and with other Internet sites, including those available through wireless applications, that provide classified directory information, such as Switchboard.com, Citysearch.com and Zagat.com, and with search engines and portals, such as Yahoo!, Google, MSN and others, some of which have entered into affiliate agreements with other major directory publishers. We may not be able to compete effectively with these other companies, some of which may have greater resources than we do, for advertising sales or acquisitions in the future. We also compete for advertising sales with other traditional media, including newspapers, magazines, radio, direct mail, telemarketing, billboards and television. We may not be able to compete effectively with these other companies, some of which may have greater resources than we do, for advertising sales or acquisitions in the future.

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Internet

We believe that our Internet-based directory, DexOnline.com, is an extension of our printed directories. We believe that any decline in the usage of our printed directories could be offset in part by an increase in usage of our Internet-based directory, DexOnline.com. Additionally, the full roll-out of Dex Web Clicks will serve to provide our advertisers with a simplified solution to their participation in the complex area of auction-based internet advertising and could provide us with incremental revenue growth. However, if we are unsuccessful in monetizing increased usage from our Internet-based directory or are not able to effectively deliver our Dex Web Clicks product, our business could be negatively impacted.

Paper Prices

Paper is our principal raw material. Substantially all of the paper that we use (other than for covers) is supplied by two companies: Nippon and Catalyst. Prices under these two agreements are negotiated each year based on prevailing market rates, which have been declining consistent with general U.S. market trends for directory paper over the last three years. Since the second half of 2004, pulp prices have been increasing at rates higher than the general inflation rate. This has resulted in upward pressure on our paper prices. The effect of such upward price pressure, however, has been moderated due to the fact that prices under both our paper agreements are subject to certain price escalation limits.

Fuel Prices

Fuel is an indirect and minor part of our cost structure. However, rising fuel prices could impact the transportation and distribution of our print directories at the current service and cost levels. Our existing transportation agreement caps the diesel fuel surcharge well below the spot market diesel fuel surcharges. Although there is no current impact on our service levels and transportation/distribution costs, rising fuel costs could have a negative impact on us.

Income Taxes

The Company is subject to income taxes in the United States. The Company recently completed, subject to the Area Director’s approval, an audit by the IRS for the tax years ending November 30, 2002 and 2003. In connection with the audit, the Company and the IRS have agreed that approximately $95 million of costs incurred to consummate the Dex East Acquisition and Dex West Acquisition should be capitalized to the cost of the assets acquired and amortized over 15 years. This settlement is not material to our financial position, results of operations or cash flows.

New Accounting Standards

In November 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 151 “Inventory Costs — an amendment of ARB No. 43, Chapter 4”. This statement amends the guidance in ARB No. 43, Chapter 4 “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling cost and wasted material. This statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. We do not expect the adoption of SFAS No. 151 to have a material impact on our financial statements.

In December 2004, the FASB issued SFAS No. 123R “Share-Based Payment” and has subsequently issued various related FASB Staff Positions (“FSPs”). This statement and FSPs establish standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services, focusing primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. This statement and FSPs are effective for public companies for new awards granted and outstanding awards modified, repurchased or cancelled for periods beginning after the effective date. The statement and FSPs also require that for outstanding options accounted for under APB

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No. 25 or SFAS No. 123, stock-based compensation expense be recognized in earnings for periods beginning after the effective date for the portion of those awards for which the requisite service has not yet been rendered, based upon the grant date fair value of such awards calculated under SFAS 123. The adoption of SFAS 123R and FSPs will not have a material impact on the Company’s financial statements.

On March 29, 2005, the SEC released SAB No. 107, which provides an interpretation of SFAS No. 123R and its interaction with certain SEC rules and regulations and provides the SEC’s views regarding the valuation of share-based payment arrangements for public companies. SAB No. 107 provides guidance with regard to share-based payment transactions with non-employees, the transition from nonpublic to public entity status, valuation methods (including assumptions such as expected volatility and expected term), the accounting for certain redeemable financial instruments issued under share-based payment arrangements, the classification of compensation expense, non-GAAP financial measures, first-time adoption of SFAS No. 123R, the modification of employee share options prior to adoptions of SFAS No. 123R and disclosures in Management’s Discussion and Analysis subsequent to the adoption of SFAS No. 123R. The adoption of SFAS 123R will not have a material impact on the Company’s financial statements.

On April 14, 2005, the SEC announced the adoption of a new rule that amends the compliance dates for SFAS No. 123R. Under SFAS No. 123R, registrants would have been required to implement the standard as of the beginning of the first interim or annual period that begins after June 15, 2005. The SEC’s new rule requires companies to implement SFAS No. 123R at the beginning of their next fiscal year beginning on or after June 15, 2005, instead of the first reporting period that begins after June 15, 2005. As a result, the financial statements of the Company must comply with SFAS No. 123R beginning with the interim financial statements for the first quarter of 2006. The SEC’s new rule does not change the accounting required by SFAS No. 123R; it changes only the dates for compliance with the standard.

During May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections — a Replacement of APB Opinion No. 20 and FASB Statement No. 3.” This statement applies to all voluntary changes in accounting principle and requires retrospective application of the new accounting principle to prior accounting periods as if that principle had always been used. In addition, this statement requires that a change in depreciation method be accounted for as a change in estimate. The requirements are effective for changes made in fiscal years beginning after December 15, 2005. The Company does not expect the adoption of SFAS No. 154 to have a material impact on the Company’s financial statements.

Other Items

In its final review of the Company’s financial statements included in this annual report on Form 10-K, management identified and corrected a misclassification that appeared in our press release dated February 22, 2006, which was filed as Exhibit 99.1 to our Current Report on form 8-K furnished to the SEC on February 22, 2006. The misclassification involved outstanding accounts receivable balances that were improperly classified as cash. The result of correcting this misclassification is a decrease in cash and cash provided by operating activities of $1.0 million (to $1.8 million and $569.4 million, respectively) as of and for the year ended December 31, 2005, and an increase in accounts receivable and accounts payable of $1.8 million and $0.8 million, respectively (to $134.8 million and $54.2 million, respectively) as of December 31, 2005.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Long-Term Debt

As of December 31, 2005, we had a total outstanding debt balance of $5,292.7 million, comprised of: (i) $1,960.2 million of variable rate debt drawn under our subsidiaries’ credit facilities; (ii) $1,135.0 million of unsecured senior notes and $1,103.1 million of senior unsecured subordinated notes issued by our subsidiaries; (iii) and $1,094.5 million of cash pay and discount notes issued directly by us. Dex Media East’s credit facilities were made up of $322.0 million of a Tranche A term loan maturing in November 2008, $433.5 million of a Tranche B term loan maturing in May 2009 and $17.0 million borrowings on a revolving

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loan. Dex Media West’s credit facilities were made up of $339.4 million of a Tranche A term loan maturing in September 2009, $843.3 million of a Tranche B term loan maturing in March 2010 and $5.0 million borrowings on a revolving loan. Due to the variable rate characteristics of the credit facilities, the carrying amounts of the Tranche A term loans, Tranche B term loans and revolving credit facilities approximated fair values.

Dex Media East’s $450.0 million of unsecured senior notes bears a fixed interest rate of 9.875% and matures in November 2009. Dex Media West’s $385.0 million of unsecured senior notes bears a fixed interest rate of 8.5% and matures in August 2010. Dex Media West’s $300.0 million of unsecured senior notes bears a fixed interest rate of 5.875% and matures in November 2011. Due to changes in interest rates and market conditions since the issuance of these fixed rate notes, the fair values of the Dex Media East’s and Dex Media West’s senior notes were $487.1 million, $405.2 million and $301.5 million, respectively, as of December 31, 2005.

Dex Media East’s $341.3 million of unsecured senior subordinated notes bears a fixed interest rate of 12.125% and matures in November 2012. Dex Media West’s $761.8 million of unsecured senior subordinated notes bears a fixed interest rate of 9.875% and matures in August 2013. Due to changes in interest rates and market conditions since the issuance of these fixed rate notes, the fair values of the Dex Media East’s and Dex Media West’s senior subordinated notes were $399.7 million and $844.6 million, respectively, as of December 31, 2005. Please refer to Note 6 in the consolidated financial statements contained elsewhere in this annual report for details on the required annual principal payments on long-term debt.

The $500.0 million cash pay notes and the $594.5 million discount notes issued directly by us all mature in November 2013. The cash pay notes bear a fixed interest rate of 8.0% while the discount notes bear a fixed interest rate of 9%. Interest accrues on the discount notes in the form of an increase in the accreted value between the date of the original issuance and November 15, 2008. Due to changes in interest rates and market conditions since the issuance of these fixed rate notes, the fair values of the cash pay and the discount notes were $511.3 million and $597.2 million, respectively, as of December 31, 2005.

Interest Rate Risk

As of December 31, 2005, we had $22.0 million outstanding under our subsidiaries’ revolving credit facilities (with an approximate additional $1.1 million committed under two stand-by letters of credit), $661.4 million of debt outstanding under our subsidiaries’ Tranche A term loan facilities and $1,276.8 million of debt outstanding under our subsidiaries’ Tranche B term loan facilities. Our subsidiaries’ revolving credit facilities and term loan facilities are subject to variable rates. Accordingly, our earnings and cash flow are affected by changes in interest rates. We have hedged a portion of our interest rate risk. The Dex Media East interest rate swap agreements became effective May 8, 2003. Currently, Dex Media East has two interest rate swap agreements: an interest rate swap with a notional amount of $50.0 million and an applicable fixed rate of 3.638% that will expire in November 2007, and an interest rate swap with a notional amount of $75.0 million and an applicable fixed rate of 4.085% that will expire in May 2008. The Dex Media West fixed interest rate swap agreements, which were entered into in October 2004, have an aggregate notional amount of $300.0 million, with applicable preset monthly fixed rates ranging from 1.901% to 3.61% and expire in October 2006. Assuming we had incurred this level of borrowings and interest rate swap agreements on January 1, 2005 with interest payable at variable rates and assuming a one percentage point increase in the average interest rate under these borrowings and interest rate swap agreements, our interest expense for the year ended December 31, 2005 would have increased by $13.4 million, which included a $2.1 million offset related to the changes in the fair value of the swap agreements. We do not intend to use any financial derivative instruments for speculative purposes.

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ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2005 and 2004		F-4
Consolidated Statements of Operations for the years ended December 31, 2005, 2004 and 2003		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003		F-6
Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income (Loss) for the years ended December 31, 2005, 2004 and 2003		F-7
Notes to Consolidated Financial Statements		F-8

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Dex Media, Inc.:

We have audited the accompanying consolidated balance sheets of Dex Media, Inc. and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations, cash flows, and changes in stockholders’ equity and comprehensive income (loss) for each of the years in the three-year period ended December 31, 2005. We also have audited management’s assessment, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting, that Dex Media, Inc. and subsidiaries maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Dex Media, Inc.’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on these consolidated financial statements, an opinion on management’s assessment, and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audit of financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

F-2

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Dex Media, Inc. and subsidiaries as of December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, management’s assessment that Dex Media, Inc. and subsidiaries maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Furthermore, in our opinion, Dex Media, Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

KPMG LLP

Denver, Colorado

March 15, 2006

F-3

DEX MEDIA, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

	As of December 31,
	2005			2004
	(Dollars in thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	1,808		$	9,234
Accounts receivable, net		134,816			104,232
Deferred directory costs		293,616			291,237
Current deferred income taxes		21,592			13,438
Other current assets		13,647			13,102
Total current assets		465,479			431,243
Property, plant and equipment, net		106,926			101,471
Goodwill		3,081,446			3,081,446
Intangible assets, net		2,687,957			3,033,659
Deferred income taxes		43,444			85,149
Deferred financing costs		109,033			142,182
Other assets		2,740			2,815
Total Assets	$	6,497,025		$	6,877,965
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	54,160		$	48,410
Employee compensation		26,190			36,432
Common stock dividend payable		13,645			13,528
Deferred revenue and customer deposits		221,448			207,655
Accrued interest payable		72,230			63,202
Current portion of long-term debt		239,652			189,534
Other accrued liabilities		29,753			18,563
Total current liabilities		657,078			577,324
Long-term debt		5,053,088			5,537,848
Post-retirement and other post-employment benefit obligations		94,311			81,095
Other liabilities		1,608			1,163
Total Liabilities		5,806,085			6,197,430
Commitments and contingencies (Note 12)
Stockholders’ Equity:
Preferred Stock, $0.01 par value, 250 million shares authorized, of which 200,000 shares were designated as Series A Junior Participating Preferred Stock, none issued and outstanding		—			—
Common stock, $0.01 par value, 700 million shares authorized, 150,689,740 and 150,281,662 shares issued and outstanding at December 31, 2005 and 2004, respectively		1,507			1,503
Additional paid-in capital		795,253			833,736
Accumulated deficit		(107,133	)		(153,916	)
Accumulated other comprehensive income (loss)		1,313			(788	)
Total Stockholders’ Equity		690,940			680,535
Total Liabilities and Stockholders’ Equity	$	6,497,025		$	6,877,965

See accompanying notes to consolidated financial statements.

F-4

DEX MEDIA, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

	Year Ended December 31,
	2005			2004			2003
	(Dollars in thousands, except per share data)
Revenue	$	1,658,416		$	1,602,914		$	883,057
Operating Expenses:
Cost of revenue		504,453			485,505			265,333
General and administrative expense		200,291			187,849			114,426
Bad debt expense		52,414			43,717			32,054
Termination of annual advisory fees		—			20,000			—
Depreciation and amortization expense		31,529			30,781			15,360
Amortization of intangibles		345,702			412,441			290,060
Total operating expenses		1,134,389			1,180,293			717,233
Operating income		524,027			422,621			165,824
Other (income) expense:
Interest income		(615	)		(666	)		(1,095	)
Interest expense		446,357			505,470			277,626
Other (income) expense, net		(1,274	)		65			12,058
Income (loss) before income taxes		79,559			(82,248	)		(122,765	)
Income tax provision (benefit)		32,776			(31,472	)		(47,729	)
Net income (loss)	$	46,783		$	(50,776	)	$	(75,036	)
Basic and Diluted income (loss) per common share	$	0.31		$	(0.39	)	$	(1.09	)

See accompanying notes to consolidated financial statements.

F-5

DEX MEDIA, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

	Year Ended December 31,
	2005			2004			2003
	(Dollars in thousands)
Operating activities:
Net income (loss)	$	46,783		$	(50,776	)	$	(75,036	)
Adjustments to net income (loss):
Bad debt expense		52,414			43,717			32,054
Depreciation and amortization expense		31,529			30,781			15,360
Amortization of intangibles		345,702			412,441			290,060
Accretion on discount notes		48,484			42,251			3,139
Stock option expense		13,755			1,301			—
Realized gain on foreign currency derivative instrument		—			—			(3,875	)
Realized loss on translation of foreign currency debt		—			—			3,908
Amortization of deferred financing costs		36,957			63,479			24,285
Loss on disposition of assets		196			32			—
Deferred tax provision (benefit)		32,765			(31,472	)		(47,729	)
Changes in operating assets and liabilities:
Accounts receivable		(80,357	)		(31,540	)		(11,902	)
Deferred directory costs		(2,379	)		(20,610	)		(34,974	)
Other current assets		492			(1,736	)		(2,547	)
Other long-term assets		1,116			1,894			(1,119	)
Accounts payable and other liabilities		4,609			(8,746	)		29,810
Accrued interest		9,028			(10,618	)		48,885
Other long-term liabilities		1,251			(588	)		—
Deferred revenue and customer deposits		13,793			39,901			104,657
Employee benefit plan obligations and other, net		13,216			11,714			5,409
Cash provided by operating activities		569,354			491,425			380,385
Investing activities:
Expenditures for property, plant and equipment		(8,652	)		(14,360	)		(9,107	)
Capitalized software development costs		(28,528	)		(40,231	)		(31,441	)
Acquisition of Dex West		—			7,871			(4,290,104	)
Payment of acquisition expenses		—			—			(54,391	)
Acquisition of Dex East		—			—			(778	)
Proceeds from disposition of investment		—			—			17,190
Escrow deposits		—			—			(2,000	)
Escrow funds released		—			—			4,000
Cash used for investing activities		(37,180	)		(46,720	)		(4,366,631	)
Financing activities:
Proceeds from borrowings on revolving credit facilities		288,000			61,000			9,000
Repayments of borrowings on revolving credit facilities		(266,000	)		(61,000	)		(9,000	)
Proceeds from issuance of long-term debt		—			550,476			4,288,181
Payments on long-term debt		(505,125	)		(962,532	)		(405,135	)
Cash received on foreign currency swap settlement		—			—			4,538
Issuance of preferred stock		—			62			192,400
Redemption of preferred stock		—			(125,684	)		—
Issuance of common stock		—			375,256			769,600
Common stock offering costs		—			(21,214	)		—
Exercise of employee stock options		1,460			4,426			—
Payment of financing costs		(3,808	)		(10,359	)		(125,386	)
Distributions to stockholders		(54,127	)		(248,148	)		(741,865	)
Preferred dividends paid		—			(5,170	)		(8,316	)
Payment of debt commitment fees		—			—			(17,981	)
Cash (used for) provided by financing activities		(539,600	)		(442,887	)		3,956,036
Cash and cash equivalents:
(Decrease) increase		(7,426	)		1,818			(30,210	)
Beginning balance		9,234			7,416			37,626
Ending balance	$	1,808		$	9,234		$	7,416
Supplemental cash flow disclosures
Interest paid	$	355,483		$	411,236		$	200,092

See accompanying notes to consolidated financial statements.

F-6

DEX MEDIA INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income (Loss)

																	Accumulated			Total
											Additional						Other			Stock-			Compre-
	Preferred Stock						Common Stock				Paid in			Accumulated			Comprehensive			holders’			hensive
	Shares			Amount			Shares		Amount		Capital			Deficit			Income (Loss)			Equity			Income (Loss)
	(Dollars in thousands)
Balance, December 31, 2002		131,000		$	1			52,400,000	$	524	$	654,475		$	(28,104	)	$	(3,517	)	$	623,379
Issuance of preferred stock		192,812			2							192,621									192,623
Issuance of common stock								77,125,570		771		769,725									770,496
Distribution to stockholder												(741,865	)								(741,865	)
Preferred dividends declared and paid												(8,316	)								(8,316	)
Net loss															(75,036	)					(75,036	)	$	(75,036	)
Other comprehensive loss																		(509	)		(509	)		(509	)
Comprehensive loss																							$	(75,545	)
Balance, December 31, 2003		323,812		$	3			129,525,570	$	1,295	$	866,640		$	(103,140	)	$	(4,026	)	$	760,772
Stock based compensation expense												1,301									1,301
Common stock option exercise								953,350		10		4,416									4,426
Issuance of preferred stock		158			—							62									62
Issuance of common stock related to the IPO								19,736,842		197		374,803									375,000
Management purchase of common stock								65,900		1		255									256
Common stock offering costs												(21,214	)								(21,214	)
Common stock dividends declared												(13,528	)								(13,528	)
Preferred stock redemption		(323,970	)		(3	)						(125,681	)								(125,684	)
Distribution to owners												(248,148	)								(248,148	)
Preferred dividends declared and paid												(5,170	)								(5,170	)
Net loss															(50,776	)					(50,776	)	$	(50,776	)
Other comprehensive income																		3,238			3,238			3,238
Comprehensive loss																							$	(47,538	)
Balance, December 31, 2004		—		$	—			150,281,662	$	1,503	$	833,736		$	(153,916	)	$	(788	)	$	680,535
Stock based compensation expense												13,755									13,755
Issuance of restricted stock								93,500		1											1
Common stock option exercise								314,578		3		1,457									1,460
Tax impact of common stock option exercise												550									550
Common stock dividends declared												(54,245	)								(54,245	)
Net income															46,783						46,783		$	46,783
Other comprehensive income																		2,101			2,101			2,101
Comprehensive income																							$	48,884
Balance, December 31, 2005		—		$	—			150,689,740	$	1,507	$	795,253		$	(107,133	)	$	1,313		$	690,940

See accompanying notes to consolidated financial statements.

F-7

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Description of business

(a)  The Company

Dex Media, Inc. (“Dex Media” or the “Company”) is the exclusive official directory publisher for Qwest Corporation, the local exchange carrier of Qwest Communications International Inc. (“Qwest”), in Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South Dakota (collectively the “Dex East States”) and Arizona, Idaho, Montana, Oregon, Utah, Washington and Wyoming (collectively the “Dex West States,” and, together with the Dex East States, the “Dex States”).

Dex Media is the indirect parent of Dex Media East LLC (“Dex Media East”) and Dex Media West LLC (“Dex Media West”). Dex Media East operates the directory business in the Dex East States and Dex Media West operates the directory business in the Dex West States.

The Company’s directory business was acquired from Qwest Dex, Inc. (“Qwest Dex”) in a two phase purchase between Dex Holdings LLC (“Dex Holdings”), the former parent of Dex Media and Qwest Dex. Dex Holdings and Dex Media were formed by two private equity firms: The Carlyle Group (“Carlyle”) and Welsh, Carson, Anderson & Stowe (“WCAS”). In the first phase of the purchase, which was consummated on November 8, 2002, Dex Holdings assigned its right to purchase the directory business of Qwest Dex in the Dex East States (“Dex East” or the “Predecessor”) to the Company (the “Dex East Acquisition”). In the second phase of the purchase, which was consummated on September 9, 2003, Dex Holdings assigned its right to purchase the directory business of Qwest Dex in the Dex West States (“Dex West”) to the Company (the “Dex West Acquisition”). Dex Holdings was dissolved effective January 1, 2005.

On January 31, 2006, Dex Media merged with and into Forward Acquisition Corporation (“FAC”), a wholly owned subsidiary of R.H. Donnelley Corporation (“Donnelley”). In the merger, each share of Dex Media, Inc.’s common stock was converted into the right to receive $12.30 in cash and 0.24154 of a share of Donnelley common stock. In connection with the consummation of this merger (the “Donnelley Merger”), the name of FAC was changed to Dex Media, Inc. See Note 14 for additional information regarding this transaction.

Unless otherwise noted in this report, the terms “Dex Media,” “we,” “our” and “us” refers collectively to Dex Media, Inc. and its Consolidated Subsidiaries and their predecessors.

(b)  Operations

The Company is the largest telephone directory publisher of white and yellow pages directories to businesses and residents in the Dex States. The Company provides directory, Internet and direct marketing solutions to local and national advertisers. Virtually all of the Company’s revenue is derived from the sale of advertising in its various directories. Published directories are distributed to residents and businesses in the Dex States through third-party vendors. The Company operates as a single segment.

(c)  Dex Media’s Initial Public Offering

Effective July 21, 2004, the Company consummated its initial public offering of common stock (the “IPO”). The Company issued 19,736,842 shares of common stock at an IPO price of $19.00 per share for net proceeds of $354.0 million. A portion of the net proceeds was used to redeem all of the Company’s outstanding 5% Series A Preferred Stock, including accrued and unpaid dividends, for $128.5 million and to pay fees and expenses related to the IPO. On August 26, 2004, the remainder of net proceeds related to the IPO was used to redeem $183.8 million of Dex Media East’s senior subordinated notes at a redemption price of 112.125% along with the accrued and unpaid interest and $18.2 million of Dex Media West’s senior subordinated notes at a redemption price of 109.875% along with the accrued and unpaid interest. Also in connection with the IPO, the Company paid $10.0 million to each of Carlyle and WCAS to eliminate the

F-8

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

$4.0 million aggregate annual advisory fees payable under Dex Media East’s and Dex Media West’s management consulting agreements. Immediately prior to the IPO, the Company effected a 10-for-1 common stock split. The share and per share data for all periods subsequent to November 8, 2002 have been adjusted to reflect the effects of the stock split.

2.   Basis of Presentation

(a)  The Company

The accompanying consolidated balance sheets as of December 31, 2005 and 2004, and the consolidated statements of operations, cash flows and changes in stockholders’ equity for the years ended December 31, 2005, 2004 and 2003 reflect the consolidated financial position, results of operations and cash flows of the Company, which includes its wholly-owned subsidiaries, Dex Media East for all periods presented, and Dex Media West from the date of the Dex West Acquisition.

(b)  Reclassifications

Certain prior period amounts have been reclassified to conform to the 2005 presentation. During the year ended December 31, 2005, the Company reclassified amounts for late fees received from its customers from interest income to revenue. Late fees received for the years ended December 31, 2005, 2004 and 2003 totaling $3.1 million, $0.8 million and $0.3 million, respectively, were recorded in revenue in the accompanying consolidated statements of operations.

3.   Summary of Significant Accounting Policies

(a)  Principles of Consolidation

The consolidated financial statements of the Company include the results of operations, financial position and cash flows of Dex Media and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

(b)  Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts and disclosures reported in these consolidated financial statements and accompanying notes. Actual results could differ significantly from those estimates.

(c)  Revenue Recognition

The sale of advertising in printed directories published by the Company is the primary source of revenue. The Company recognizes revenue ratably over the life of each directory using the deferral and amortization method of accounting, with revenue recognition commencing in the month of delivery. The Company recognizes revenue for advertising on its Internet-based directory, DexOnline.com, ratably over the period the advertisement appears on the site. Other products and services are recognized as delivered or provided.

The Company publishes white and yellow pages directories with primarily 12-month lives. From time to time, the Company may choose to change the publication dates of certain directories in order to more efficiently manage work and customer flow. The lives of the affected directories are expected to be 12 months thereafter. Such publication date changes do not have a significant impact on the Company’s recognized revenue as the Company’s sales contracts generally allow for the billing of additional monthly charges in the case of directories with extended lives. For the years ended December 31, 2005, 2004 and 2003, the Company published 293, 269 and 182 directories, respectively.

F-9

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company enters into transactions such as exclusivity arrangements, sponsorships, and other media access transactions, where the Company’s products and services are promoted by a third party and, in exchange, the Company carries the party’s advertisement. The Company accounts for these transactions in accordance with Emerging Issues Task Force (“EITF”) Issue No. 99-17 “Accounting for Advertising Barter Transactions”. Revenue and expense related to such transactions are included in the consolidated statements of operations consistent with reasonably similar items sold or purchased for cash. Such barter transactions were not significant to the Company’s financial results for the years ended December 31, 2005, 2004 and 2003.

In certain cases, the Company enters into agreements with customers that involve the delivery of more than one product or service. Revenue for such arrangements is allocated in accordance with EITF Issue No. 00-21 “Revenue Arrangements with Multiple Deliverables”.

(d)  Cost of Revenue

The Company accounts for cost of revenue under the deferral and amortization method of accounting. Accordingly, the Company’s cost of revenue recognized in a reporting period consists of: (i) costs incurred in that period and recognized in that period, principally sales salaries and wages; (ii) costs incurred in a prior period, a portion of which are amortized and recognized in the current period; and (iii) costs incurred in the current period, a portion of which are amortized and recognized in that period and the balance of which are deferred until future periods. Consequently, there will be a difference between the cost of revenue recognized in any given period and the costs incurred in the given period. Such difference may be significant.

Costs incurred in the current period and subject to deferral include direct costs associated with the publication of directories, including sales commissions, paper, printing, transportation, distribution and pre-press production and employee and systems support costs relating to each of the foregoing. Sales commissions include commissions paid to employees for sales to local advertisers and to third-party certified marketing representatives, which act as the Company’s channel to national advertisers. All deferred costs related to the sale and production of directories are recognized ratably over the life of each directory under the deferral and amortization method of accounting, with cost recognition commencing in the month of delivery. From time to time the Company has changed the publication dates of certain directories to more effectively manage work and customer flow. In such cases, the estimated life of related unamortized deferred cost of revenue is revised to amortize such costs over the new remaining estimated life. Changes in directory publication dates typically do not result in any additional direct incurred costs.

(e)  Deferred Revenue

Deferred revenue represents amounts billed and advance payments received from customers that have not yet been recognized as revenue.

(f)  Deferred Directory Costs

Deferred directory costs represent costs incurred in the production of directories prior to publication and incurred costs for directories that have been delivered that have not yet been recognized as cost of revenue. Deferred directory costs are amortized ratably to cost of revenue over the life of each directory beginning in the month of delivery.

(g)  Advertising Costs

Costs related to advertising are expensed as incurred. Advertising expenses of $33.2 million, $38.9 million and $19.9 million are included in general and administrative expense in the Company’s consolidated statements of operations for the years ended December 31, 2005, 2004 and 2003, respectively.

F-10

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(h)  Cash and Cash Equivalents

The Company considers cash on hand, deposits in banks and investments purchased with original maturities of three months or less to be cash and cash equivalents.

(i)  Accounts Receivable

The Company has a billing and collection agreement with Qwest. Under that agreement, certain receivables are billed and collected by Qwest on behalf of the Company for customers common between the Company and Qwest within the Dex States. Qwest purchases these accounts receivable from the Company on a full recourse basis, and as such, the Company continues to include its portion of any related bad debt reserves in its consolidated balance sheets.

The Company reports its accounts receivable at the outstanding principal net of the allowance for doubtful accounts. The allowance for doubtful accounts for Company billed local trade receivables is estimated based upon a combination of historical experience of actual sales write-offs and an analysis of amounts past due more than 75 days, as determined by the contractual term of each sale. The allowance for doubtful accounts for national trade receivables includes specifically identified uncollectible accounts. Receivables are charged against the allowance for doubtful accounts when deemed uncollectible by collection managers and any recoveries of previous charges are recorded as a reduction of the allowance for doubtful accounts.

For accounts receivable purchased by Qwest, the Company uses a rolling 12-month average of write-offs compared to the prior 12 months of billings to estimate the allowance for doubtful accounts. When a receivable is deemed to be uncollectible, the Company reduces its receivable against the allowance for doubtful accounts. Any recoveries of amounts previously charged against the allowance for doubtful accounts are recorded as a reduction of the allowance for doubtful accounts.

The Company charges a percentage finance charge on certain past due trade receivables. The Company does not recognize finance charges until the cash is collected from the customer.

The following table presents a breakdown of accounts receivable balances as of December 31, (in thousands):

	2005			2004
Trade accounts receivable	$	155,420		$	114,547
Amounts due from Qwest related to purchased accounts receivable		2,635			13,686
Other accounts receivable		—			1,132
Less: allowance for doubtful accounts		(23,239	)		(25,133	)
Accounts receivable, net	$	134,816		$	104,232

	Balance at
	Beginning		Costs and							Balance at
	of Period		Expenses		Other(1)		Deductions(2)			End of Period
Allowance for doubtful accounts (in thousands):
Year ended December 31, 2003	$	8,013	$	32,054	$	13,462	$	(33,003	)	$	20,526
Year ended December 31, 2004		20,526		43,717		—		(39,110	)		25,133
Year ended December 31, 2005		25,133		52,414		—		(54,308	)		23,239

(1)	Represents the allowance for doubtful accounts related to the Dex West Acquisition on September 9, 2003.
(2)	Represents uncollectible accounts charged against the allowance for doubtful accounts.

F-11

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(j)  Property, Plant and Equipment

Assets acquired as part of the acquisitions of Dex East and Dex West (the “Acquisitions”) were recorded at fair value as of the acquisition dates and are amortized over their remaining useful life using the straight-line method. For assets purchased after the Acquisitions, property, plant and equipment are carried at cost and are depreciated using the straight-line method over the estimated useful lives of the assets except that leasehold improvements are depreciated over the shorter of the estimated useful life or remaining life of the lease. The following table presents the estimated useful lives of each asset type:

	Estimated Lives
Computers and equipment	3-7 years
Leasehold improvements	5 years
Capitalized software	9 months-7 years
Furniture and fixtures	7 years

The cost of additions and improvements are capitalized and expenditures for repairs and maintenance are expensed as incurred. When property, plant and equipment is sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in other (income) expense.

(k)  Computer Software

Internally used software, whether purchased or internally developed, is capitalized and amortized using the straight-line method over an estimated useful life of 18 months to seven years. In accordance with Statement of Position (“SOP”) 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use,” certain costs associated with internally developed software such as payroll costs of employees devoting time to the projects and external direct costs for materials and services are capitalized. Subsequent additions, modifications or upgrades to internal-use software are capitalized only to the extent that those modifications enable the software to perform tasks that it was previously incapable of performing. Software maintenance and training costs are expensed in the period in which they are incurred. Gross computer software costs of $128.0 million and $97.1 million as of December 31, 2005 and 2004, respectively, are included in property, plant and equipment. Amortization of capitalized computer software costs totaled $19.8 million, $20.1 million and $9.3 million, for the years ended December 31, 2005, 2004 and 2003, respectively.

During 2005, the Company shortened the estimated useful life of certain software projects. The Company accounts for such changes in estimate prospectively from the date of the change.

(l)  Deferred Financing Costs

Costs incurred in connection with financing activities are deferred and amortized using the effective interest method over the terms of the related debt agreements ranging from six to ten years. Amortization of these costs and a proportionate amount of unamortized costs related to debt prepayments are charged to interest expense in the accompanying consolidated statements of operations. The carrying values of deferred financing costs in the accompanying consolidated balance sheets as of December 31, 2005 and 2004 were $109.0 million and $142.2 million, respectively.

(m)  Long-Lived Assets

The impairment of long-lived assets is assessed whenever events or changes in circumstances indicate that their carrying value may not be recoverable through expected future undiscounted cash flows. If the total expected future undiscounted cash flows are less than the carrying value of the asset, the asset is written down to its estimated fair value. Cash flow projections, although subject to a degree of uncertainty, are based on

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DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

trends of historical performance and management’s estimate of future performance, giving consideration to existing and anticipated competitive and economic conditions.

(n)  Goodwill and Intangible Assets

Goodwill represents the excess purchase price paid by the Company over the fair value of the tangible and identifiable intangible assets and liabilities acquired from Qwest Dex on November 8, 2002, the date of the acquisition of Dex East, and on September 9, 2003, the date of the acquisition of Dex West. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” goodwill and indefinite-lived intangible assets are not amortized, but instead are tested for impairment at least annually in accordance with the provisions of SFAS No. 142. SFAS No. 142 also requires that intangible assets with finite useful lives be amortized over their respective estimated useful lives to their residual values, and reviewed for impairment in accordance with SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets”.

Intangible assets acquired include trademarks, customer relationships, non-compete/publishing agreements and an advertising agreement. The acquired Dex trademark is a perpetual asset and not subject to amortization. Annual amortization for customer relationships is calculated using a declining method in relation to the estimated retention periods of the acquired customers. Other intangible assets are amortized on a straight-line basis over the estimated lives of the assets ranging from four to forty years.

The Company’s policy is to evaluate the carrying value of goodwill and identified intangibles not subject to amortization at the end of the third quarter of each fiscal year. Under SFAS No. 142, impairment of goodwill may exist if the carrying value of the reporting unit to which it is allocated exceeds the fair value of the reporting unit. The Company has two reporting units, being Dex Media East and Dex Media West, and therefore compares the carrying value of each reporting unit to the fair value of each respective reporting unit. The fair value of Dex Media East and Dex Media West is estimated using a multiple of earnings before interest, taxes, depreciation and amortization (“EBITDA”). Under SFAS No. 142, indefinite-lived intangible assets are impaired if the fair value of the asset exceeds its carrying value.

In accordance with SFAS No. 144, the Company assesses its intangible assets subject to amortization for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The Company evaluates at least annually the assumptions utilized by the independent specialist at the time of the Acquisitions to determine the initial value and useful life of the intangible assets to determine if any events or changes in circumstances have occurred that might have caused the intangible assets to be impaired.

If a triggering event has occurred, the Company assesses the ongoing recoverability of its intangible assets subject to amortization by determining whether the intangible balance can be recovered over the remaining amortization period through projected undiscounted future cash flows. If projected undiscounted future cash flows indicate that the unamortized intangible asset balances will not be recovered, an adjustment is made to reduce the net intangible asset to an amount consistent with projected future cash flows discounted at the Company’s incremental borrowing rate. Cash flow projections, although subject to a degree of uncertainty, are based on trends of historical performance and management’s estimate of future performance, giving consideration to existing and anticipated competitive and economic conditions.

As of December 31, 2005, the Company does not believe any impairment of goodwill or other identified intangible assets has occurred.

(o)  Stock-Based Compensation

The Company accounts for the Stock Option Plan of Dex Media, Inc., (the “2002 Plan”) and the Dex Media, Inc. 2004 Incentive Award Plan (the “2004 Plan”) as more fully discussed in Note 9(f), under the

F-13

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

recognition and measurement principles of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations. The Company recognizes compensation expense for its awards with pro rata vesting on a straight-line basis. Had the Company accounted for employee stock option grants under the minimum value method for options issued prior to Dex Media becoming a publicly traded company and the fair value method after Dex Media became a publicly traded company, both of which are prescribed by SFAS No. 123, “Accounting for Stock-Based Compensation,” the pro forma results of the Company for the years ended December 31, 2005, 2004 and 2003 would have been as follows (in thousands, except per share data):

	For the Year Ended December 31,
	2005			2004			2003
Net income (loss):
As reported	$	46,783		$	(50,776	)	$	(75,036	)
Add: Stock-based employee compensation expense included in reported net income (loss), net of related tax effects		7,758			763			—
Deduct: Stock-based employee compensation expense determined under minimum value or fair value based method, as applicable, for all awards, net of related tax effects		(1,956	)		(1,369	)		(256	)
Pro forma	$	52,585		$	(51,382	)	$	(75,292	)
Basic income (loss) per common share:
As reported	$	0.31		$	(0.39	)	$	(1.09	)
Pro forma		0.35			(0.40	)		(1.10	)
Diluted income (loss) per common share:
As reported	$	0.31		$	(0.39	)	$	(1.09	)
Pro forma		0.34			(0.40	)		(1.10	)

(p)  Derivative Instruments and Hedging Activities

The Company follows the provisions of SFAS No. 133, “Accounting for Derivative Instruments and Certain Hedging Activities,” SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities, an Amendment of SFAS 133,” and SFAS No. 149 “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS Nos. 133, 138 and 149 require that all derivative instruments be recorded on the balance sheet at their respective fair values.

On the date a derivative contract is executed, the Company may designate the derivative as a hedge of the variability of cash flows to be received or paid related to a recognized asset or liability or forecasted transaction (cash-flow hedge). For all hedging relationships, the Company formally documents the hedging relationship and its risk-management objective and strategy for undertaking the hedge, the hedging instrument, the item, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed, and a description of the method of measuring ineffectiveness. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items.

Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash-flow hedge are recorded in accumulated other comprehensive income to the extent that the derivative is effective as a hedge, until earnings are affected by the variability in cash flows of the designated hedged item. The ineffective portion of the change in fair value of a derivative instrument that qualifies as a cash-flow hedge is reported in earnings.

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DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the cash flows of the hedged item, the derivative or hedged item is expired, sold, terminated, exercised, or management determines that designation of the derivative as a hedging instrument is no longer appropriate. In situations in which hedge accounting is discontinued, the Company continues to carry the derivative at its fair value on the balance sheet and recognizes any subsequent changes in its fair value in earnings.

For derivative instruments that are not designated or do not qualify as hedged transactions, the initial fair value, if any, and any subsequent changes in the fair value are reported in earnings as a component of interest expense.

(q)  Income (Loss) Per Common Share

The Company calculates income (loss) per common share in accordance with SFAS No. 128, “Earning per Share.” Basic income (loss) per common share is calculated by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted income (loss) per common share reflects the effect, if dilutive, of the assumed exercise of outstanding stock options (see Note 9(d)) and the assumed conversion of Series A Preferred Stock into common stock through the date of its redemption (see Note 9(a)).

(r)  Comprehensive Income (Loss)

The Company follows the provisions of SFAS No. 130, “Reporting Comprehensive Income,” which establishes standards for reporting and disclosure of comprehensive income (loss) and its components. In addition to net income (loss), comprehensive income (loss) includes all changes in net assets during a period, except those resulting from equity contributions and distributions.

(s)  Income Tax Provision

The Company files a consolidated Federal income tax return and combined or consolidated state income tax returns, where permitted. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recorded to reflect the future tax consequences of temporary differences between the financial reporting bases of assets and liabilities and their tax bases at each year end. Deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Deferred tax assets and liabilities are adjusted for future income tax rate changes in the year the changes are enacted. Deferred tax assets are recognized for operating loss and tax credit carryforwards if management believes, based upon existing evidence, that it is more likely than not that the carryforwards will be utilized. All deferred tax assets are reviewed for realizability and valuation allowances are recorded if it is more likely than not that the deferred tax assets will not be realized.

(t)  Fair Value of Financial Instruments

Financial instruments include cash and cash equivalents, accounts receivable, accounts payable and long-term borrowings. The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate their fair values because of their short-term nature. The carrying value of the Company’s variable-rate long-term debt approximates fair value because the related interest rates reset to current market interest rates on a short-term basis. The fair value of the Company’s fixed-rate long-term debt is estimated by the current market price as provided by a third party investment bank as of December 31, 2005.

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DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(u)  New Accounting Standards

In November 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 151 “Inventory Costs — an amendment of ARB No. 43, Chapter 4”. This statement amends the guidance in ARB No. 43, Chapter 4 “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling cost and wasted material. This statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. We do not expect the adoption of SFAS No. 151 to have a material impact on our financial statements.

In December 2004, the FASB issued SFAS No. 123R “Share-Based Payment” and has subsequently issued various related FASB Staff Positions (“FSPs”). This statement and FSPs establish standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services, focusing primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. This statement and FSPs are effective for public companies for new awards granted and outstanding awards modified, repurchased or cancelled for periods beginning after the effective date. The statement and FSPs also require that for outstanding options accounted for under APB No. 25 or SFAS No. 123, stock-based compensation expense be recognized in earnings for periods beginning after the effective date for the portion of those awards for which the requisite service has not yet been rendered, based upon the grant date fair value of such awards calculated under SFAS 123. The adoption of SFAS 123R and FSPs will not have a material impact on the Company’s financial statements.

On March 29, 2005, the Securities and Exchange Commission (“SEC”) released Staff Accounting Bulletin (“SAB”) No. 107, “Share-based Payment.” SAB No. 107 provides an interpretation of SFAS No. 123R, “Share-based Payment” and its interaction with certain SEC rules and regulations and provides the SEC’s views regarding the valuation of share-based payment arrangements for public companies. SAB No. 107 provides guidance with regard to share-based payment transactions with non-employees, the transition from nonpublic to public entity status, valuation methods (including assumptions such as expected volatility and expected term), the accounting for certain redeemable financial instruments issued under share-based payment arrangements, the classification of compensation expense, non-GAAP financial measures, first-time adoption of SFAS No. 123R, the modification of employee share options prior to adoptions of SFAS No. 123R and disclosures in Management’s Discussion and Analysis of Financial Condition and Results of Operations subsequent to the adoption of SFAS No. 123R. The adoption of SFAS 123R will not have a material impact on the Company’s financial statements.

On April 14, 2005, the SEC announced the adoption of a new rule that amends the compliance dates for SFAS No. 123R. Originally, registrants would have been required to implement the standard as of the beginning of the first interim or annual period beginning after June 15, 2005. The SEC’s new rule requires companies to implement SFAS No. 123R at the beginning of their first fiscal year beginning on or after June 15, 2005, instead of the first reporting period that begins after June 15, 2005. As a result, the financial statements of the Company must comply with SFAS No. 123R beginning with the interim financial statements for the first quarter of 2006. The SEC’s new rule does not change the accounting required by SFAS No. 123R; it changes only the dates for compliance with the standard.

During May 2005, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 154, “Accounting Changes and Error Corrections — a Replacement of ABP Opinion No. 20 and FASB Statement No. 3.” This statement applies to all voluntary changes in accounting principle and requires retrospective application of the new accounting principle to prior accounting periods as if that principle had always been used. In addition, this statement requires that a change in depreciation method be accounted for as a change in estimate. The requirements are effective for changes made in fiscal years beginning after December 15, 2005.

F-16

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company does not expect the adoption of SFAS No. 154 to have a material impact on the Company’s financial statements.

4.   Property, Plant and Equipment

The following table presents the composition of property, plant and equipment as of December 31 (dollars in thousands):

	2005			2004
Computers and equipment	$	35,202		$	30,092
Leasehold improvements		6,664			5,831
Capitalized software		127,988			97,108
Furniture and fixtures		3,512			2,375
Construction in progress		9,885			12,998
Gross property, plant and equipment		183,251			148,404
Less: accumulated depreciation and amortization		(76,325	)		(46,933	)
Net property, plant and equipment	$	106,926		$	101,471

Depreciation and amortization expense (excluding amortization of definite-lived intangibles) for the years ended December 31, 2005, 2004 and 2003 was $31.5 million, $30.8 million and $15.4 million, respectively.

Included in computers and equipment above is $0.6 million net book value of equipment obtained under capital lease agreements. The following are the future minimum lease payments required under these capital leases (in thousands):

2006	$	401
2007		121
2008		93
2009		58
Total lease obligation		673
Less: interest		(75	)
Less: executory costs		(215	)
Capital lease obligation		383
Less: current portion		(167	)
Long-term capital lease obligation	$	216

5.   Goodwill and Intangible Assets

The excess purchase price paid by the Company over its estimates of the fair value of the tangible assets and liabilities of Dex East related to the Dex East Acquisition was approximately $2,681.7 million ($890.7 million of goodwill and $1,791.0 million of identifiable intangible assets). The excess purchase price paid by the Company over its estimates of the fair value of the tangible assets and liabilities of Dex West related to the Dex West Acquisition was $4,167.7 million ($2,190.7 million of goodwill and $1,977.0 million of identifiable intangible assets). In order to determine an estimate of the fair value of identifiable intangible assets, the Company utilized an independent valuation specialist to assist in determining the amount at which an asset could be bought or sold between willing parties, other than in a forced liquidation sale. In its analysis, the specialist relied primarily on the market approach, whereby transactions in which similar assets are bought or sold are identified.

F-17

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The initial purchase price and fair value estimates recorded upon the September 9, 2003 Dex West Acquisition were adjusted upon settlement of the working capital adjustment with the seller in 2004 pursuant to the provisions of the Dex West Purchase Agreement.

The Company evaluates the carrying value of goodwill and indefinite-lived intangible assets at the end of the third quarter of each fiscal year. Based upon the evaluation performed as of September 30, 2005, goodwill was determined not to be impaired at September 30, 2005. No events have occurred since the date of the Company’s evaluation that would indicate the Company’s goodwill and indefinite-lived intangible assets may be impaired as of December 31, 2005.

Intangible assets (other than goodwill), net of amortization, totaled $2,688.0 million and $3,033.7 million at December 31, 2005 and 2004, respectively. The gross carrying amount and accumulated amortization of other intangible assets and their estimated useful lives are as follows (dollars in thousands):

	As of December 31, 2005
	Gross
	Carrying		Accumulated			Net Book
	Value		Amortization			Value		Life
Intangible Assets
Customer relationships — local	$	1,787,000	$	(786,976	)	$	1,000,024		20 years	(1)
Customer relationships — national		493,000		(164,540	)		328,460		25 years	(1)
Non-compete/publishing agreements		610,000		(40,927	)		569,073		39-40 years
Dex Trademark		696,000		—			696,000		Indefinite
Qwest Dex Trademark agreement		133,000		(78,556	)		54,444		4-5 years
Advertising agreement		49,000		(9,044	)		39,956		14-15 years
Totals	$	3,768,000	$	(1,080,043	)	$	2,687,957

	As of December 31, 2004
	Gross
	Carrying		Accumulated			Net Book
	Value		Amortization			Value		Life
Intangible Assets
Customer relationships — local	$	1,787,000	$	(542,968	)	$	1,244,032		20 years	(1)
Customer relationships — national		493,000		(110,722	)		382,278		25 years	(1)
Non-compete/publishing agreements		610,000		(25,488	)		584,512		39-40 years
Dex Trademark		696,000		—			696,000		Indefinite
Qwest Dex Trademark agreement		133,000		(49,480	)		83,520		4-5 years
Advertising agreement		49,000		(5,683	)		43,317		14-15 years
Totals	$	3,768,000	$	(734,341	)	$	3,033,659

⁽¹⁾ Amortization expense is calculated using a declining method in relation to estimated retention lives of acquired customers.

The determination of useful lives for customer relationships was made based on historical and expected customer attrition rates. Useful lives for non-compete/publishing agreements, the Qwest Dex Trademark agreement, and advertising agreements are based upon the remaining life of the related agreements.

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DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Amortization expense for amortizing intangible assets for the years ended December 31, 2005, 2004 and 2003 were $345.7 million, $412.4 million and $290.1 million, respectively. Estimated amortization expense for the next five years and thereafter is (in thousands):

2006	$	291,400
2007		243,341
2008		182,035
2009		152,599
2010		128,696
Thereafter		993,886
	$	1,991,957

6.   Long-Term Debt

Long-term debt is comprised of the following (in thousands):

	December 31,
	2005		2004
Dex Media East Notes Payable to Banks (equal right of payment):
Notes payable to banks, Tranche A term loan, bearing interest at adjusted London Interbank Offering Rate (“LIBOR”) plus the current applicable interest spread of 1.25% (weighted average rate of 5.51% at December 31, 2005), interest payable at various intervals based on interest rate periods, and principal payable quarterly, maturing in November 2008. The notes are secured by substantially all of Dex Media East’s assets. Due to the repricing characteristics of the debt, the carrying amount of the debt approximates fair value	$	321,981	$	474,654
Notes payable to banks, Tranche B term loan, bearing interest at adjusted LIBOR plus the current applicable interest spread of 1.75% (weighted average rate of 5.99% at December 31, 2005), interest payable at various intervals based on interest rate periods, and principal payable quarterly, maturing in May 2009. The notes are secured by substantially all of Dex Media East’s assets. Due to the repricing characteristics of the debt, the carrying amount of the debt approximates fair value		433,517		494,630
Revolving loan bearing interest at Alternative Base Rate (“ABR”) plus the current applicable spread of 0.25% or at adjusted LIBOR plus the current applicable interest spread of 1.25% (weighted average interest rate of 6.19% at December 31, 2005). The revolving loan is secured by substantially all of Dex Media East’s assets		17,000		—

F-19

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	December 31,
	2005		2004
Dex Media West Notes Payable to Banks (equal right of payment):
Notes payable to banks, Tranche A term loan, bearing interest at adjusted LIBOR plus the current applicable interest spread of 1.25% (weighted average of 5.55% at December 31, 2005), interest payable at various intervals based on interest rate periods, and principal payable quarterly beginning on June 30, 2005, maturing in September 2009. The notes are secured by substantially all of Dex Media West’s assets. Due to the repricing characteristics of the debt, the carrying amount of the debt approximates fair value		339,379		492,848
Notes payable to banks, Tranche B term loan, bearing interest at adjusted LIBOR plus the current applicable interest spread of 1.75% (weighted average of 6.05% at December 31, 2005), interest payable at various intervals based on interest rate periods, and principal payable quarterly beginning on June 30, 2005, maturing in March 2010. The notes are secured by substantially all of Dex Media West’s assets. Due to the repricing characteristics of the debt, the carrying amount of the debt approximates fair value		843,282		981,152
Revolving loan bearing interest at ABR plus the current applicable spread of 0.25% or at adjusted LIBOR plus the current applicable interest spread of 1.25% (weighted average interest rate of 7.50% at December 31, 2005). The revolving loan is secured by substantially all of Dex Media West’s assets		5,000		—
Dex Media East Unsecured Notes Payable (in descending order of right of payment):
Unsecured senior notes payable, bearing interest at 9.875%, interest payable semi-annually (May and November), principal due in November 2009. At December 31, 2005, the fair value of the notes was $487.1 million		450,000		450,000
Unsecured senior subordinated notes payable, bearing interest at 12.125%, interest payable semi-annually (May and November), principal due in November 2012. At December 31, 2005, the fair value of the notes was $399.7 million		341,250		341,250
Dex Media West Unsecured Notes Payable (in descending order of right of payment; senior notes equal right of payment):
Unsecured senior notes payable, bearing interest at 8.5%, interest payable semi-annually (February and August), principal due in August 2010. At December 31, 2005 the fair value of the notes was $405.2 million		385,000		385,000
Unsecured senior notes payable, bearing interest at 5.875%, interest payable semiannually (May and November), principal due in November 2011. At December 31, 2005, the fair value of the notes was $301.5 million		300,000		300,000
Unsecured senior subordinated notes payable, bearing interest at 9.875%, interest payable semi-annually (February and August), principal due in August 2013. At December 31, 2005, the fair value of the notes was $844.6 million		761,800		761,800

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DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	December 31,
	2005			2004
Dex Media Unsecured Notes Payable (equal right of payment):
Unsecured senior notes payable, bearing interest at 8%, interest payable semi-annually (May and November), principal due in November 2013. At December 31, 2005, the fair value of the notes was $511.3 million		500,000			500,000
Unsecured senior discount notes payable, prior to November 2008, interest accrues at the rate of 9% per annum in the form of an increase in the initial accreted value of approximately $643 per $1,000 principal amount at maturity of the notes. Thereafter, cash interest on the discount notes will accrue and be payable at the rate of 9% per annum semi-annually (May and November), principal due in November 2013 ($750.0 million at maturity). At December 31, 2005, the fair value of the notes was $597.2 million		594,531			546,048
		5,292,740			5,727,382
Less: current portion of long-term debt		(239,652	)		(189,534	)
	$	5,053,088		$	5,537,848

At December 31, 2005 the aggregate amounts of required principal payments on long-term debt are as follows (in thousands):

2006	$	239,652
2007		239,386
2008		453,348
2009		1,287,320
2010		575,452
Thereafter		2,497,582
	$	5,292,740

Dex Media East Long-Term Debt:

In connection with the Dex East Acquisition, Dex Media East entered into a syndicated credit facility consisting of (i) a $100.0 million six year revolving credit facility, (ii) a $530.0 million six year term loan (Tranche A), (iii) a $660.7 million six and a half year term loan (Tranche B), and (iv) a $39.0 million six and a half year term loan payable in Euros (Tranche B-Euros). The entire proceeds from the Tranche A, Tranche B, and Tranche B-Euros term loans, along with $50.0 million of the revolving credit facility were used to consummate the Dex East Acquisition. In conjunction with the consummation of the Dex West Acquisition on September 9, 2003, Dex Media East borrowed $160.0 million under the delayed draw provision of its Tranche A term loan. During the years ended December 31, 2005, 2004 and 2003 Dex Media East repaid $213.8 million, $380.3 million and $230.1 million, respectively, on Tranche A term loan, Tranche B term loan and senior subordinated notes. As of December 31, 2005, Dex Media East had $81.9 million available for additional borrowing under its revolving credit facility. During the year ended December 31, 2005, Dex Media East borrowed $170.5 million and repaid $153.5 million on the revolving credit facility. During the years ended December 31, 2004 and 2003 the Dex Media East borrowed and repaid $38.0 million and $9.0 million, respectively on the revolving credit facility. The $50.0 million from the revolving credit facility was repaid in December 2002.

Effective October 31, 2003, Dex Media East amended and restated its credit agreement for the Tranche A, Tranche B, and Tranche B-Euros term loans. In connection with the amendment and restatement, the Tranche B

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DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

and Tranche B-Euros term loans were refinanced on November 10, 2003 with proceeds of a new Tranche B term loan. In addition, the applicable margins on the revolving credit facility, Tranche A term loan and Tranche B term loan were reduced. A one-percent prepayment fee totaling $6.2 million was paid in conjunction with the refinancing and is included in interest expense for the year ended December 31, 2003.

In connection with the July 2004 amendment and restatement of Dex Media East’s credit agreement, the applicable margins on the revolving credit facility, Tranche A term loan and Tranche B term loan have been reduced further. The commitment fee on the unused portion of the revolving credit facility has been reduced to 0.375% from 0.5%. The reductions have been effective since June 11, 2004.

As discussed in Note 1(c), a portion of the net proceeds from the IPO was used to redeem $183.8 million of Dex Media East’s senior subordinated notes at a redemption price of 112.125% plus accrued and unpaid interest.

On November 24, 2004, Dex Media East amended its credit facilities to, among other things, allow for the repricing of the Tranche B term loans on more favorable terms to Dex Media East.

On June 16, 2005, Dex Media East amended its credit agreement, as amended and restated, to, among other things (i) permit Dex Media East to engage in accounts receivable securitization transactions not exceeding $168.0 million in the aggregate at any time; (ii) increase the restricted payment basket for cash dividends by Dex Media East from $29.4 million to $42.0 million annually; and (iii) reduce the applicable margins for Tranche A term loans and revolving loans made under such credit agreement.

Interest rate periods under the bank facility can, at the option of Dex Media East, be for various maturities, ranging from overnight up to six months, and are subject to interest rate options. Interest rate periods greater than three months require quarterly cash interest payments. The interest rate options allow Dex Media East to choose, each time floating interest rates are reset, a LIBOR-based rate or an ABR which shall be the higher of the prime rate or Federal Funds plus 50 basis points. The current applicable interest rate spreads added to LIBOR-based borrowings is 1.25% for Tranche A term loans and 1.75% for Tranche B term loans. The corresponding spreads on ABR borrowings is 0.25% for Tranche A term loans and 0.75% for Tranche B term loans. Dex Media East is required to pay an annual revolving facility commitment fee of 0.375% payable quarterly, on the unused portion of the revolving credit facility, and during the years ended December 31, 2005, 2004 and 2003, Dex Media East paid commitment fees of $0.3 million, $0.4 million and $1.1 million, respectively. Dex Media East uses the revolving credit facility for general corporate purposes. As of December 31, 2005, there were $17.0 million of borrowings under the revolving credit facility (with an additional approximate $1.1 million committed under two standby letters of credit). The interest rates on Tranche A term loan and revolving credit facility may be reduced depending on certain financial ratios. The Company paid interest and fees on the bank facility, senior notes, senior subordinated notes and settlements on the interest rate swap (as more fully discussed in Note 7) of $126.4 million, $174.4 million and $182.9 million for the years ended December 31, 2005, 2004 and 2003, respectively.

Dex Media East entered into interest rate swaps, an interest rate cap and a foreign currency hedging transaction to mitigate the interest rate and foreign currency exchange rate risk related to the credit facilities mentioned above. Refer to Note 7 for disclosure on these transactions.

The credit agreement related to the revolving credit facility and term loan facilities and the indentures related to Dex Media East’s senior notes and senior subordinated notes contain various provisions that limit additional borrowings, capital expenditures, dividend payments and require the maintenance of certain financial covenants. As of December 31, 2005, Dex Media East was in compliance with these covenants.

The obligations under Dex Media East’s revolving credit facility and term loan facilities are guaranteed jointly and severally by Dex Media East, Inc., Dex Media Finance Co. and Dex Media International, Inc. (“East Credit Guarantors”). The East Credit Guarantors shall be responsible for repaying these obligations in

F-22

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the event that Dex Media East fails to perform under these facilities, although the East Credit Guarantors had no independent assets or operations as of December 31, 2005.

The obligations under Dex Media East’s senior notes and senior subordinated notes are guaranteed by Dex Media International, Inc. Dex Media East and Dex Media International, Inc. are all under the common control of Dex Media. Dex Media East has a principal obligation of $791.3 million for these notes, for which Dex Media International, Inc. shall be responsible for repaying in the event that Dex Media East and Dex Media East Finance Co., co-issuer of the senior notes and senior subordinated notes, fail to perform under these notes, although the co-issuer had no independent assets or operations as of December 31, 2005.

Dex Media East registered its senior notes and subordinated senior notes with the SEC through an exchange offer completed on May 6, 2003.

Dex Media West Long-Term Debt:

In connection with the Dex West Acquisition, Dex Media West entered into a syndicated credit facility consisting of (i) a $100.0 million six year revolving credit facility, (ii) a $960.0 million six year term loan (Tranche A), and (iii) a $1,200.0 million six and a half year term loan (Tranche B). The entire proceeds from the Tranche A and Tranche B term loans along with $53.0 million from the revolving credit facility were used to finance the Dex West Acquisition. During the years ended December 31, 2005, 2004 and the period from September 10 to December 31, 2003 Dex Media West repaid $291.3 million, $582.2 million and $175.0 million, respectively, on Tranche A term loan, Tranche B term loan and senior subordinated notes. As of December 31, 2005, Dex Media West had $95.0 million available for additional borrowing under its revolving credit facility. During the year ended December 31, 2005, Dex Media West borrowed $117.5 million and repaid $112.5 million on the revolving credit facility. During the year ended December 31, 2004 Dex Media West borrowed and repaid $23.0 million on the revolving credit facility. The $53.0 million from the revolving credit facility was repaid in September 2003.

In connection with the July 2004 amendment and restatement of Dex Media West’s Credit Agreement, the applicable margins on the revolving credit facility, Tranche A term loan and Tranche B term loan have been reduced. The commitment fee on the unused portion of the revolving credit facility has been reduced to 0.375% from 0.5%. The reductions have been effective since June 11, 2004.

As discussed in Note 1(c), a portion of the net proceeds from the IPO was used to redeem $18.2 million of the Dex Media West’s senior subordinated notes at a redemption price of 109.875% plus accrued and unpaid interest.

On November 24, 2004, Dex Media West amended its credit facilities to, among other things, allow for a repricing of its Tranche B term loans on terms more favorable to Dex Media West. In connection with the repricing, Dex Media West and Dex Media West Finance Co. issued $300.0 million 57/8% senior notes due 2011. Dex Media West used the gross proceeds of the offering to repay a portion of its Tranche A term loans under its credit facilities.

On June 16, 2005, Dex Media West amended its credit agreement, as amended and restated, to, among other things: (i) permit Dex Media West to engage in accounts receivable securitization transactions not exceeding $232.0 million in the aggregate at any time; (ii) increase the restricted payment basket for cash dividends by Dex Media West from $40.6 million to $58.0 million annually; and (iii) reduce the applicable margins for Tranche A term loans and revolving loans made under such credit agreement.

Interest rate periods under the bank facility can, at the option of Dex Media West, be for various maturities, ranging from overnight up to six months, and are subject to interest rate options. Interest rate periods greater than three months require quarterly cash interest payments. The interest rate options allow Dex Media West to choose, each time floating interest rates are reset, a LIBOR-based rate or an ABR which shall

F-23

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

be the higher of the prime rate or Federal Funds rate plus 50 basis points. The current applicable interest rate spreads added to LIBOR-based borrowings are 1.25% for Tranche A term loans and 1.75% for Tranche B term loans. The corresponding spreads on ABR borrowings are 0.25% for Tranche A term loans and 0.75% for Tranche B term loans. Dex Media West is required to pay an annual revolving facility commitment fee of 0.375%, payable quarterly, on the unused portion of the revolving credit facility, and during the years ended December 31, 2005, 2004 and 2003, Dex Media East paid commitment fees of $0.3 million, $0.4 million and $0.1 million, respectively. Dex Media West uses the credit facility for general corporate purposes. As of December 31, 2005, there were $5.0 million of borrowings under the revolving credit facility. The interest rates on the Tranche A term loan and the revolving facility may be reduced depending on certain financial ratios. The Company paid interest and fees on the bank facility, senior notes, senior subordinated notes and settlements on the interest rate swaps (as more fully discussed in Note 7) of $186.2 million and $192.1 million for the years ended December 31, 2005 and 2004, respectively. The Company paid interest and fees on the bank facility of $14.3 million for the period from September 10 to December 31, 2003.

Dex Media West entered into fixed interest rate swaps to mitigate the interest rate risk related to the credit facilities mentioned above. Refer to Note 7 for disclosure on these transactions.

The obligations under Dex Media West’s revolving credit facility and term loan facilities are guaranteed jointly and severally by Dex Media West, Inc. and Dex Media West Finance Co. (“West Credit Guarantors”). Dex Media West and these entities are all under the common control of Dex Media. The West Credit Guarantors shall be responsible for repaying these obligations in the event that Dex Media West fails to perform under these facilities, although the West Credit Guarantors had no independent assets or operations as of December 31, 2005.

Dex Media West and Dex Media West Finance Co. have issued $1,465.0 million of senior notes and senior subordinated notes, of which $1,446.8 million of principal is outstanding at December 31, 2005. The co-issuer of the senior notes and senior subordinated notes shall be responsible for repaying in the event Dex Media West fails to perform under these notes, although the co-issuer had no independent assets or operations as of December 31, 2005.

The credit agreement related to Dex Media West’s revolving credit facility and term loan facilities and the indentures related to Dex Media West’s senior notes and senior subordinated notes contain various provisions that limit additional borrowings, capital expenditures, dividend payments and require the maintenance of certain financial covenants. As of December 31, 2005, Dex Media West was in compliance with these covenants.

Dex Media West registered its 8.5% senior notes and 9.875% subordinated senior notes with the SEC through an exchange offer completed on June 20, 2004. Dex Media West registered its 5.875% senior notes with the SEC through an exchange offer completed on March 8, 2005.

Dex Media Long-Term Debt:

Dex Media has no operations of its own and derives all of its cash flow and liquidity from its two principal operating subsidiaries, Dex Media East and Dex Media West. The Company therefore depends on distributions from Dex Media East and Dex Media West to meet its debt service obligations, including the interest and principal on the senior notes. Dex Media has a principal obligation of $1,094.5 million for these notes at December 31, 2005. Since the obligations under Dex Media’s senior notes are not guaranteed by the Company’s subsidiaries, these notes are effectively subordinated to the prior payment of all obligations (including trade payables) of the subsidiaries. The Company paid interest on the senior notes of $40.0 million and $40.6 million for the years ended December 31, 2005 and 2004, respectively.

Dex Media registered its senior notes and senior subordinated discount notes with the SEC through an exchange offer completed September 17, 2004.

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DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

7.   Derivative Instruments and Hedging Activities

The Company utilizes a combination of fixed-rate and variable-rate debt to finance its operations. The variable-rate debt exposes the Company to variability in interest payments due to changes in interest rates. Management believes that it is prudent to mitigate the interest rate risk on a portion of its variable-rate borrowings. To meet this objective, the Company entered into fixed interest rate swap agreements and an interest rate cap agreement to manage fluctuations in cash flows resulting from adverse changes in interest rates on variable rate debt. The fixed interest rate swaps effectively change the variable-rate cash flow exposure on the debt obligations, to the extent of the notional amounts of the swaps, to fixed cash flows. Under the terms of the fixed interest rate swaps, the Company receives fluctuating interest rate payments and makes fixed interest rate payments, thereby creating the equivalent of fixed-rate interest payments. The purpose of the interest rate cap agreement is to limit interest payments resulting from materially adverse changes in interest rates made to the extent of the notional amount of the cap agreement.

By using derivative financial instruments to hedge exposures to changes in interest rates, the Company exposes itself to credit risk and market risk. Credit risk is the possible failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty and, therefore, it does not possess credit risk. The Company minimizes the credit risk in derivative instruments by entering into transactions with high-quality counterparties.

Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

The Company assesses interest rate cash flow risk by identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows. The Company maintains a risk management model to monitor interest rate cash flow risk attributable to both the Company’s outstanding debt obligations as well as the Company’s offsetting hedge positions. The risk management model involves the use of analytical techniques, including cash flow sensitivity analysis, to estimate the expected impact of changes in interest rates on the Company’s future cash flows.

During November 2002, Dex Media East entered into four interest rate swap agreements to hedge against the effects of increases in the interest rates associated with floating rate debt on Dex Media East’s term loan facilities. During November 2004, an interest rate swap with a notional amount of $120.0 million and an applicable fixed rate of 2.354% expired. During May 2005, an interest rate swap with a notional amount of $125.0 million and an applicable fixed rate of 3.01% expired. As of December 31, 2005, there were two interest rate swap agreements, an interest rate swap agreement with a notional amount of $50.0 million, and an applicable fixed rate of 3.638% that will expire in November 2007, and an interest rate swap agreement with a notional amount of $75.0 million and an applicable fixed rate of 4.085% that will expire in May 2008.

Changes in the fair value of interest rate swaps designated as hedging instruments that effectively offset the variability of cash flows associated with Dex Media East’s variable-rate term loan obligations are reported in accumulated other comprehensive income, net of tax (“AOCI”). These amounts subsequently are reclassified into interest expense as a yield adjustment of the hedged interest payments in the same period in which the related interest payments affect earnings. During the years ended December 31, 2005, 2004 and 2003, the Company reclassified $1.0 million, $6.2 million and $4.6 million of hedging losses into earnings, respectively. For the years ended December 31, 2005 and 2004, the Company had $2.1 million and $3.2 million of unrealized gains, net of tax included in other comprehensive income. For the year ended December 31, 2003 the Company had $0.5 million of unrealized losses, net of tax included in other comprehensive income. The

F-25

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Company had $1.3 million of unrealized gains and $0.8 million of unrealized losses, net of tax, included in AOCI as of December 31, 2005 and 2004, respectively.

As of December 31, 2005, $0.6 million of deferred gains, net of tax, on derivative instruments recorded in other comprehensive income are expected to be reclassified to earnings during the next 12 months. Transactions and events are expected to occur over the next 12 months that will necessitate reclassifying these derivative gains to earnings.

During November 2002, Dex Media East entered into a foreign currency swap agreement to hedge against the effects of foreign currency fluctuations between the U.S. Dollar and the Euro on Dex Media East’s Tranche B-Euros. The foreign currency swap agreement did not qualify for hedge accounting treatment and, therefore, all gains and losses resulting from the change in fair value of the foreign currency swap were reported directly in earnings. In conjunction with the refinancing of Tranche B-Euros in November 2003, as more fully discussed in Note 6, the foreign currency swap agreement was settled resulting in a gain of $3.9 million reported in earnings for the year ended December 31, 2003.

During November 2002, Dex Media East entered into an interest rate cap agreement. The Company has not designated the interest rate cap as a hedging instrument and therefore reports all gains and losses in the change in fair value of the interest rate cap directly in earnings. The losses reported in earnings in the years ended December 31, 2004 and 2003 amounted to less than $0.1 million and $0.6 million, respectively. The interest rate cap had a notional amount of $200.0 million and expired in May 2005.

In October 2004, Dex Media West entered into four fixed interest rate swap agreements to hedge against the effects of increases in the interest rates associated with the floating rate debt on Dex Media West term loans facilities. The interest rate swap agreements have an aggregate notional amount of $300.0 million, applicable preset monthly fixed rates ranging from 1.901% to 3.61% and expire in October 2006. They were not designated as hedging instruments and therefore all gains and losses in the change in fair value were reported directly in earnings as a component of interest expense. For the years ended December 31, 2005 and 2004, the Company recorded gains of $3.4 million and $2.2 million, respectively, as reductions to interest expense.

In May 2005 and June 2005, Dex Media West terminated the six floating interest rate swap agreements entered into in November 2004. Under the terms of the floating interest rate swaps, Dex Media West received fixed interest payments that matched the interest obligations of the 57/8% notes issued in November 2004 and made floating interest payments, thereby converting the fixed interest rate notes into floating rate debt instruments. The floating interest rate swaps had an aggregate notional amount of $300.0 million, floating rate LIBOR that reset semi-annually in May and November, plus applicable margins ranging from 1.4975% to 1.57%, and were to expire in November 2011. The Company had not designated these interest rate swap agreements as hedged instruments and therefore, reported all gains and losses in the change in fair value directly in earnings as a component of interest expense. For the year ended December 31, 2005, Dex Media West recorded net gains, as a reduction to interest expense, of $2.2 million. Upon termination of the swaps a cumulative net gain was recognized of $0.4 million during the life of those swaps. Dex Media West paid $2.1 million upon termination of the swaps. For the year ended December 31, 2004, Dex Media West recorded a net loss as an increase to interest expense of $1.8 million.

8.   Comprehensive Income (Loss)

Components of comprehensive income (loss) are changes in equity other than those resulting from contributions by stockholders and distributions to stockholders. For the Company, the component of comprehensive income (loss) other than net income (loss) is the change in fair value on derivatives designated as hedging instruments, net of tax. For the years ended December 31, 2005, 2004 and 2003, the Company recognized income tax benefit of $0.4 million, $2.4 million and $1.6 million related to hedging losses. For the

F-26

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

years ended December 31, 2005, 2004 and 2003, the Company recognized income tax expense of $1.7 million, $4.5 million and $1.3 million related to changes in fair value of derivatives. The aggregate amounts of such changes to equity that have not yet been recognized in net income are reported in the equity portion of the consolidated balance sheets as accumulated other comprehensive income (loss).

For the years ended December 31, 2005, 2004 and 2003, comprehensive income (loss) included the following components (in thousands):

	Year Ended December 31,
	2005			2004			2003
Net income (loss)	$	46,783		$	(50,776	)	$	(75,036	)
Hedging losses reclassified, net of tax		(586	)		(3,752	)		(3,018	)
Changes in fair value of derivatives, net of tax		2,687			6,990			2,509
Comprehensive income (loss)	$	48,884		$	(47,538	)	$	(75,545	)

9.   Stockholders’ Equity

(a)  Preferred stock

As discussed in Note 1(c), all outstanding preferred stock was redeemed on July 27, 2004 for $128.5 million, including accrued and unpaid dividends of $2.8 million, in connection with the IPO.

(b)  Common stock

During the year ended December 31, 2005, the Company issued 314,578 shares of common stock upon the exercise of stock options and issued 93,500 shares of restricted common stock to certain employees and directors. Effective January 25, 2005, the Company consummated a secondary offering of common stock to sell 18 million of the shares of common stock held by Carlyle and WCAS. All of the proceeds were paid to Carlyle and WCAS. As mentioned in Note 1(c), the Company consummated its IPO effective July 21, 2004. As part of the IPO, the Company issued 19,736,842 shares of common stock. Immediately prior to the IPO, the Company completed a 10-for-1 stock split of common shares outstanding.

(c)  Dividends

As mentioned in Note 9(a), all accrued and unpaid preferred stock dividends were distributed on July 27, 2004 in connection with the IPO. On January 28, 2004, Dex Media declared a distribution to its parent of $250.5 million which was paid February 17, 2004 and included payment of cumulative undeclared dividends on its Series A Preferred Stock up to February 17, 2004 of $2.4 million.

On December 15, 2005, Dex Media announced a common stock dividend of $0.09 per common share, which was paid on January 16, 2006 to shareholders of record as of January 3, 2006. On September 22, 2005, Dex Media announced a common stock dividend of $0.09 per common share, which was paid on October 31, 2005 to shareholders of record as of October 13, 2005. On May 19, 2005, Dex Media announced a common stock dividend of $0.09 per common share, which was paid on July 15, 2005 to shareholders of record as of June 16, 2005. On February 17, 2005, Dex Media announced a common stock dividend of $0.09 per common share, which was paid on April 15, 2005 to stockholders of record as of March 18, 2005. On December 14, 2004, Dex Media announced a common stock dividend of $0.09 per common share, payable January 31, 2005, to shareholders of record as of January 3, 2005.

The terms of the Company’s indebtedness include certain restrictions on the payment of cash dividends on our common stock. The indentures relating to Dex Media’s senior notes permit us to make one or more distributions to our shareholders. However, the same indentures prohibit Dex Media from distributing funds to

F-27

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

shareholders if the amount of such distribution, together with all other restricted payments made by Dex Media since November 8, 2002 exceed the sum of: (i) 100% of the adjusted earnings before interest, tax, depreciation and amortization accrued since January 1, 2003, less 1.4 times the consolidated interest expense for the same period; (ii) the aggregate net proceeds from the sale of capital stock of Dex Media; (iii) the amount of debt issued after the date of the indenture relating to the senior notes that is subsequently converted into capital stock; and (iv) certain payments received or credited to Dex Media by its unrestricted subsidiaries. In addition, in order to make any such distribution of funds to shareholders, Dex Media would have to meet the leverage tests relating to the issuance of indebtedness under the indentures relating to its senior notes. In addition, the indentures governing the senior notes and senior subordinated notes of Dex Media East and Dex Media West include restrictions on their ability to pay dividends to Dex Media, which restricts the Company’s ability to pay cash dividends on our common stock. These restrictions did not adversely affect the Company’s ability to pay such dividends during the year ended December 31, 2005.

(d)  Basic and Diluted Income (Loss) Per Common Share

	Year Ended December 31,
	2005		2004			2003
	(Dollars in thousands, except
	per share data)
Net income (loss)	$	46,783	$	(50,776	)	$	(75,036	)
Dividend accumulated on Series A Preferred Stock		—		(3,929	)		(8,594	)
Income (loss) available to common shareholders	$	46,783	$	(54,705	)	$	(83,630	)
Basic and Diluted income (loss) per share	$	0.31	$	(0.39	)	$	(1.09	)

The following table reflects the basic and diluted weighted-average shares outstanding used to calculate basic and diluted net income (loss) per share.

	Year Ended December 31,
	2005		2004		2003
Denominator for basic net income (loss) per common share — weighted-average common shares outstanding		150,389,176		139,097,208		76,436,822
Dilutive impact of options and unvested restricted stock outstanding		2,164,647		—		—
Denominator for diluted net income (loss) per common share — weighted-average diluted common shares outstanding		152,553,823		139,097,208		76,436,822

For the years ended December 31, 2005, 2004 and 2003, the effect of 76,984, 4,992,802, and 4,991,460, respectively, of outstanding stock options were excluded from the calculation of diluted loss per common share because the effect of the assumed exercise was anti-dilutive. In addition, for the year ended December 31, 2003, the effect of 323,812 shares of Series A Preferred Stock were excluded from the calculation because the effect of the assumed conversion was anti-dilutive.

(e)  Rights Plan

In connection with the IPO, we entered into a rights agreement pursuant to which each share of our common stock has one right attached to it. Each right entitles the holder to purchase one one-thousandth of a share of a new series of our preferred stock designated as Series A junior participating preferred stock at an exercise price to be determined by our board of directors. Rights will only be exercisable under limited

F-28

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

circumstances specified in the rights agreement when there has been a distribution of the rights and such rights are no longer redeemable by us.

If any person or group, other than one involving Carlyle and WCAS, acquires beneficial ownership of 15% or more of the outstanding shares of our common stock, or acquires shares representing 15% or more of the voting power of our outstanding common stock, the “flip-in” provision of the rights agreement will be triggered and the rights will entitle a holder, other than such person, any member of such group or related person (as to whom such rights will be null and void) to acquire a number of additional shares of our common stock having a market value of twice the exercise price of each right. If we are involved in a merger or other business combination transaction, each right will entitle its holder to purchase, at the right’s then-current exercise price, a number of shares of the acquiring or surviving company’s common stock having a market value at that time of twice the rights’ exercise price.

The rights will expire upon the tenth anniversary of the date of the rights agreement unless such date is extended or the rights are earlier redeemed or exchanged by us. At no time will the rights have any voting powers. The provisions of the rights agreement may be amended by our board of directors in some circumstances.

The rights have certain anti-takeover effects. The rights will cause substantial dilution to a person or group that attempts to acquire Dex Media in certain circumstances. Accordingly, the existence of the rights may deter certain acquirers from making takeover proposals or tender offers. However, the rights are not intended to prevent a takeover, but rather are designed to enhance the ability of the board of directors to negotiate with a potential acquirer on behalf of all of the stockholders.

No rights were exercised in connection with the Company’s merger on January 31, 2006 with and into FAC, a wholly owned subsidiary of Donnelley. FAC has not established any rights agreement. In connection with the consummation of the merger, the name of FAC was changed to Dex Media, Inc.

(f)  Stock-Based Awards

On November 8, 2002, Dex Media adopted the Stock Option Plan of Dex Media, Inc. (the “2002 Plan”) that permits the grant of nonqualified and incentive stock options to its employees, consultants and independent directors or those of its wholly owned subsidiaries. Effective May 2004, Dex Media adopted the Dex Media, Inc. 2004 Incentive Award Plan (the “2004 Plan”). The 2004 Plan provides for a variety of stock-based awards, including non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, deferred stock awards, dividend equivalents, performance-based awards and other stock-based awards. Effective with the adoption of the 2004 Plan, the Company discontinued grants under the 2002 Plan while the options outstanding under the 2002 Plan remain outstanding pursuant to the terms of that plan. Upon adoption of the 2004 Plan, 210,110 shares available for issuance under the 2002 Plan became available for issuance under the 2004 Plan. As of December 31, 2005, 5,868,572 shares of common stock were available for grant under the 2004 Plan and 2002 Plan. As of December 31, 2004, 6,251,650 shares of common stock were available for grant under the 2004 Plan and 2002 Plan.

The Compensation Committee of Dex Media determines the exercise price for each option. Outstanding options issued pursuant to the 2002 Plan vest in two segments. Subject to the optionee’s continued employment with the Company: (i) 25% of the options granted will vest in equal annual installments of 5% each on each December 31 beginning in the year of grant or the following year, depending upon when during the calendar year the options are granted, and ending five years after and (ii) 75% of the options granted will vest in full on the eighth anniversary of the grant date; however, an installment equal to 15% of the options granted shall become vested following each of the fiscal years beginning in the year of grant or the following year, depending upon when during the calendar year the options are granted, and ending five years after if certain

F-29

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

EBITDA targets are met with respect to each year. Options outstanding issued pursuant to the 2004 Plan vest in equal annual installments over four years.

On October 5, 2005, Dex Media entered into a Retirement and General Release Agreement with Robert M. Neumeister, Jr. (the Company’s then-Executive Vice President and Chief Financial Officer) and on October 2, 2005, Dex Media entered into a Letter Agreement with Marilyn Neal (the Company’s then- Executive Vice President and Chief Operating Officer). These agreements, among other things, modified the terms of the stock options issued to these officers under the 2002 Plan. These modifications included accelerating the vesting and extending the life of certain options upon these officers’ termination. As a result of these modifications, the Company recorded stock-based employee compensation expense of $11.3 million during the year ended December 31, 2005 under the guidance of APB 25 and related interpretations. On October 5, 2005, Dex Media entered into Letter Agreements with its other officers which, among other things, included terms to accelerate the vesting of certain stock options upon consummation of the Donnelley Merger. There was no impact to the Company’s financial statements for the year ended December 31, 2005 as a result of these modifications.

On November 10, 2003, Dex Media declared and paid a distribution to its parent of $750.2 million. As a result of the distribution and as provided under the 2002 Plan, Dex Media adjusted the exercise price of all outstanding options to $6.00, effective November 2003. On January 28, 2004, Dex Media declared another distribution to its parent of $250.5 million, which was paid in February 2004. As a result of the distribution and as provided under the 2002 Plan, Dex Media adjusted the exercise price of outstanding options to $4.64 and increased the number of outstanding options by 9.3587%, effective February 2004. The effect of these changes has been included in the SFAS No. 123 pro forma net income (loss) below.

During the year ended December 31, 2005, 93,500 shares of restricted stock were granted with a weighted average grant date fair value of $23.34.

F-30

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Summarized below is information regarding options granted, exercised or forfeited under the 2004 Plan and 2002 Plan during the years ended December 31, 2005, 2004 and 2003:

						Weighted		Weighted
				Number of		Average		Average
	Number			Shares		Exercise		Grant Date
	of Options			Exercisable		Price		Fair Value
Options outstanding at December 31, 2002		1,587,440			—	$	4.64
Options:
Granted below market price		224,480					4.64	$	0.68
Granted at market price		3,179,540					4.64		1.37
Options outstanding at December 31, 2003		4,991,460					4.64
Options exercisable at December 31, 2003					953,350		4.64
Options:
Granted below market price		1,115,990					4.64		8.41
Granted at market price		137,300					24.36		6.26
Exercised		(953,350	)				4.64
Forfeited		(298,598	)				4.64
Options outstanding at December 31, 2004		4,992,802					5.19
Options exercisable at December 31, 2004					1,194,522		4.64
Options:
Granted at market price		43,918					22.86		5.35
Exercised		(314,578	)				4.64
Forfeited		(96,682	)				5.71
Options outstanding at December 31, 2005		4,625,460					5.38
Options exercisable at December 31, 2005					2,341,773		4.93

Summarized below is information regarding options outstanding under the 2004 Plan and 2002 Plan as of December 31, 2005:

					Weighted Average				Weighted Average
	Weighted Average				Remaining Contractual				Exercise Price
	Exercise Price		Options		Life (Years) of Options		Options		of Options
Range	of Options Outstanding		Outstanding		Outstanding		Exercisable		Exercisable
$4.64	$	4.64		4,449,492		7.51		2,307,448	$	4.64
$21.43-26.10	$	23.99		175,968		9.06		34,325	$	24.36
				4,625,460				2,341,773

F-31

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Had the Company accounted for the 2004 Plan and 2002 Plan under the minimum value or fair value method, as applicable, prescribed by SFAS No. 123, the pro forma results of the Company for years ended December 31, 2005, 2004 and 2003 would have been as follows (in thousands):

	Year Ended December 31,
	2005			2004			2003
Net income (loss):
As reported	$	46,783		$	(50,776	)	$	(75,036	)
Add: Stock-based employee compensation expense included in reported net income (loss), net of related tax effects		7,758			763			—
Deduct: Stock-based employee compensation expense determined under minimum value or fair value based method, as applicable, for all awards, net of related tax effects		(1,956	)		(1,369	)		(256	)
Pro forma	$	52,585		$	(51,382	)	$	(75,292	)
Basic income (loss)per common share:
As reported	$	0.31		$	(0.39	)	$	(1.09	)
Pro forma		0.35			(0.40	)		(1.10	)
Diluted income (loss) per common share:
As reported	$	0.31		$	(0.39	)	$	(1.09	)
Pro forma		0.34			(0.40	)		(1.10	)

Following are the weighted-average assumptions used to estimate the fair value of options granted under the 2004 Plan and 2002 Plan during the years ended December 31, 2005, 2004 and 2003. The assumptions for the year ended December 31, 2004 have been segregated between grants under the minimum value method of SFAS No. 123 prior to the IPO and grants valued utilizing the fair value method of SFAS No. 123 after the IPO.

				7/22/04 -			1/1/04 -
	2005			12/31/04			7/21/04			2003
Risk-free interest rate		3.93	%		3.53	%		3.21	%		3.19	%
Expected dividend yield		1.50	%		1.50	%		0	%		0	%
Expected option life (years)		5.0			5.0			5.0			5.0
Expected stock price volatility		22.68	%		25.28	%		0	%		0	%

F-32

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

10.   Income Taxes

The composition of the income tax provision (benefit) is as follows (in thousands):

	Year Ended December 31,
	2005			2004			2003
Federal:
Deferred	$	26,347		$	(26,788	)	$	(40,177	)
Long-term valuation allowance		3,821			—			—
State rate change		—			(105	)		—
Other		(4,507	)		—			—
Total Federal		25,661			(26,893	)		(40,177	)
State and Local:
Current		10			—			—
Deferred		4,820			(4,879	)		(7,552	)
Long-term valuation allowance		697			—			—
State rate change		—			300			—
Other		1,588			—			—
Total State and Local		7,115			(4,579	)		(7,552	)
Total income tax provision (benefit)	$	32,776		$	(31,472	)	$	(47,729	)

The effective tax rate differs from the statutory tax rate as follows:

	Year Ended December 31,
	2005			2004			2003
Federal statutory rate		35.0	%		35.0	%		35.0	%
State income taxes, net		3.9			3.9			4.3
Permanent differences		0.4			—			—
Valuation allowance		5.6			—			—
Other		(3.7	)		(0.6	)		(0.4	)
Effective tax rate		41.2	%		38.3	%		38.9	%

The Acquisitions (as more fully described in Note 1 (a)) were considered to be taxable asset acquisitions for income tax purposes. As a result, the Company recorded the tax basis of all acquired assets at their fair value at the date of acquisition. In addition, the Company acquired several intangible assets for tax purposes that are amortized on a straight-line basis over a 15-year period beginning with the date of acquisition.

For the year ended December 31, 2005, the Company generated a net operating loss of $5.3 million pending final tax filing. For the years ended December 31, 2004 and 2003, the Company generated a loss for tax purposes of $87.2 million and $106.8 million, respectively. Because the period from September 10, 2003 to December 31, 2003 for Dex Media West is considered to be a short-period for income tax purposes, certain items included in the computation of the tax loss were adjusted to reflect limitations imposed by existing tax law associated with short-period income tax returns. The net operating loss for the years ended December 31, 2005, 2004 and 2003 will expire in the years 2025, 2024 and 2023, respectively. No valuation allowance has been provided for the remaining net operating losses as, in management’s judgment, it is more likely than not that the net operating loss carryovers will be utilized before the end of the expiration periods. This presumption is based upon the book and taxable income expected to be generated by the Company over the

F-33

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

next several years. No significant payments for income taxes were made for the years ending December 31, 2005, 2004 and 2003.

The components of the net deferred tax assets are as follows (in thousands):

	As of December 31,
	2005		2004
Assets:
Book/tax difference in amounts owed to related party for employee benefit expenses not currently deductible	$	5,218	$	2,667
Book/tax difference in post employment benefit expenses not currently deductible		14,392		8,627
Net operating loss carryforward		82,940		107,294
Depreciation		6,080		—
Allowance for doubtful accounts		8,992		9,567
Mark-to-market adjustments		—		502
Other expenses not currently deductible		1,604		2,788
Total Assets	$	119,226	$	131,445
Liabilities:
Book/tax difference in employee benefit expenses previously deducted		455		876
Amortization of goodwill and other intangibles		26,446		25,395
Depreciation		20,596		6,438
Mark-to-market adjustments		836		—
Other expenses previously deducted		1,339		149
Total Liabilities	$	49,672	$	32,858
Valuation Allowance
Capitalized merger costs	$	4,518	$	—

Included in other noncurrent deferred tax (liabilities) assets as of December 31, 2005, 2004 and 2003 are $(0.8) million, $0.5 million and $2.6 million, respectively in deferred tax (liabilities) assets associated with mark-to-market adjustments for the Company’s derivative financial instruments, with the related benefit included in accumulated other comprehensive income (loss) on the consolidated balance sheets.

The Company was audited by the Internal Revenue Service (“IRS”) in 2005 for the tax years ending November 30, 2002 and 2003. As a result of this audit, $31.0 million of deferred tax assets was reclassified from net operating loss carryforward to amortization of goodwill and other intangibles.

Management of the Company believes that it is more likely than not that some of the deferred tax assets associated with capitalized merger and stock offering costs will not be realized in the future. Therefore, a valuation allowance has been established in the amount of $4.5 million to reduce the noncurrent deferred tax asset to realizable value.

Dex Media, Inc. had an ownership change under Internal Revenue Code section 382 upon the consummation of its merger with and into FAC, a wholly owned subsidiary of Donnelley, on January 31, 2006. It is expected that the consummation of the merger will not affect the Company’s ability to use its remaining net operating loss carryforwards.

F-34

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

11.   Employee Benefit Plans

(a)  Pension and other post-retirement benefits

(i)  General description

Effective November 8, 2002, Dex Media adopted a pension plan and effective December 1, 2002, Dex Media adopted an other post-retirement benefit plan providing retiree healthcare (together, the “Dex Media Plans”). The noncontributory defined benefit pension plan included substantially all management and occupational (union) employees. Post-retirement healthcare and life insurance plans provide medical, dental and life insurance benefits for certain retirees.

Pension costs and other post-retirement costs are recognized over the periods in which the employee renders services and becomes eligible to receive benefits as determined by using the projected unit credit method. Dex Media’s funding policy is to make contributions with the objective of accumulating sufficient assets to pay all benefits when due. No pension funding was required for Dex Media for 2005, 2004 or 2003. The other post-retirement benefit plan is pay-as-you go and is funded out of Dex Media’s operating cash as the costs are incurred.

On December 8, 2003 the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (“Medicare Act”) was signed into law. The Medicare Act introduces a prescription drug benefit under Medicare Part D as well as a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. As provided by FASB Staff Position No. FAS 106-1, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003,” Dex Media elected to defer recognizing the effects of the Medicare Act on its post-retirement benefit plan in 2004. Effects of the Medicare Act are reflected in the measures of accumulated post-retirement obligation and net periodic post-retirement benefit costs in 2005. The impact was not material to the financial statements.

Effective February 1, 2004, Dex Media’s pension plan was amended to eliminate the death benefit previously provided to certain management employees. This amendment resulted in $0.2 million in annual expense savings and a reduction in the projected benefit obligation of $2.0 million.

Effective January 1, 2004, several changes were made to the Company’s retiree health care plan for management and Communications Workers of America (“CWA”) retirees resulting in $0.6 million in annual expense savings and a reduction in the projected benefit obligation of $4.5 million. The changes were as follows: (i) elimination of Company-provided post-65 medical coverage for management retirees; (ii) elimination of Medicare Part B reimbursement for management retirees; (iii) implementation of pre-65 retiree medical plan for all management employees with associated employee contributions; (iv) change in dental coverage to a voluntary retiree-paid plan for management and CWA retirees; and (v) a reduction in the life insurance benefit for management and CWA retirees.

F-35

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(ii)  Obligations and funded status (in thousands)

	Pension Benefit						Post-Retirement Benefits
	Year Ended						Year Ended
	December 31,						December 31,
	2005			2004			2005			2004
Change in benefit obligation
Projected benefit obligation at beginning of period	$	218,939		$	202,781		$	63,206		$	55,479
Service cost		9,769			10,467			2,334			2,570
Interest cost		11,959			12,695			3,741			3,581
Amendments		—			—			—			—
Actuarial loss (gain)		7,781			15,566			(2,541	)		2,294
Benefits paid		(1,053	)		(22,570	)		(1,631	)		(718	)
Plan settlements		(52,751	)		—			—			—
Projected benefit obligation at end of period	$	194,644		$	218,939		$	65,109		$	63,206
Change in plan assets
Fair value of plan assets at beginning of period	$	198,340		$	194,025		$	—		$	—
Actual return on plan assets		11,345			26,885			—			—
Employer contribution		—			—			1,631			718
Benefits paid		(1,053	)		(22,570	)		(1,631	)		(718	)
Plan settlements		(52,751	)		—			—			—
Fair value of plan assets at end of period	$	155,881		$	198,340		$	—		$	—
Funded status	$	(38,763	)	$	(20,599	)	$	(65,109	)	$	(63,206	)
Unrecognized net actuarial loss		10,584			1,827			4,102			6,687
Unrecognized prior service cost		(1,557	)		(1,765	)		(3,568	)		(4,039	)
Total accrued liabilities	$	(29,736	)	$	(20,537	)	$	(64,575	)	$	(60,558	)

The accumulated benefit obligation for the defined benefit pension plan was $177.3 million and $196.5 million at December 31, 2005 and 2004, respectively.

(iii)  Components of net periodic benefit cost (in thousands)

	Pension Benefit									Post-Retirement Benefits
	Year Ended									Year Ended
	December 31,									December 31,
	2005			2004			2003			2005			2004			2003
Service cost	$	9,769		$	10,467		$	6,512		$	2,334		$	2,570		$	1,230
Interest cost		11,959			12,695			8,494			3,741			3,581			2,426
Amortization of prior service costs		(208	)		(208	)		—			(470	)		(471	)		—
Expected return on plan assets		(15,629	)		(16,246	)		(9,700	)		—			—			—
Recognized net actuarial loss		—			—			—			43			96			—
Loss from plan settlement		3,307			—			—			—			—			—
Total net periodic benefit cost	$	9,198		$	6,708		$	5,306		$	5,648		$	5,776		$	3,656

F-36

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

To compute its expected return on plan assets, Dex Media applies its expected rate of return to the market-related value of the pension plan assets. In computing the market-related asset value, companies may elect to amortize the difference between the actual return on plan assets and the expected return on plan assets over a period of time, not to exceed five years. In accordance with SFAS No. 87, “Employers’ Accounting for Pensions,” Dex Media elected to amortize actual returns on its plan assets falling outside a defined corridor over a five year period. Any actual returns falling within the corridor are recognized currently. Dex Media defined the corridor as a range that is 50% higher and 50% lower than the expected return on plan assets. For the year ending December 31, 2005, the corridor is defined as the range from 4.5% to 13.5%, based upon its expected return of 9.0%.

On August 1, 2005, a settlement of the Company’s defined benefit pension obligation occurred as defined by SFAS 88 “Employers Accounting for Settlements and Curtailments of Defined Benefit Plans and for Termination Benefits.” At that time, lump sum payments to participants exceeded the sum of the service cost plus interest cost component of the net periodic benefit costs for the year. The settlement resulted in the recognition of $3.3 million in actuarial losses. In addition, 2005 pension expense was recomputed based on assumptions as of the settlement date, including a decrease in the discount rate from 6.00% to 5.50%. This resulted in an immaterial change to pension expense for the remainder of the year.

(iv)  Assumptions

The actuarial assumptions used to compute the pension and other post-retirement net periodic benefit costs are based upon information available as of August 2, 2005, January 1, 2005, January 1, 2004 and January 1, 2003, respectively, and are as follows:

	Pension Benefits												Post-Retirement Benefits
	August 2-			January 1-
	December 31,			August 1,
	2005			2005			2004			2003			2005			2004			2003
Weighted average discount rate		5.50	%		6.00	%		6.25	%		6.50	%		6.00	%		6.25	%		6.50	%
Weighted average rate of compensation increase		4.00	%		4.00	%		4.00	%		4.65	%		N/A			N/A			N/A
Expected long-term rate of return on plan assets		9.00	%		9.00	%		9.00	%		8.00	%		N/A			N/A			N/A
Initial healthcare cost trend rate		N/A			N/A			N/A			N/A			9.50	%		10.00	%		10.00	%
Ultimate healthcare cost trend rate		N/A			N/A			N/A			N/A			5.00	%		5.00	%		5.00	%
Year ultimate trendrate is reached		N/A			N/A			N/A			N/A			2014			2014			2013

The actuarial assumptions used to compute the projected benefit obligation for the plans are based upon information available as of December 31, 2005 and 2004, respectively, and are as follows:

	Pension Benefits						Post-Retirement Benefits
	2005			2004			2005			2004
Weighted average discount rate		5.75	%		6.00	%		5.75	%		6.00	%
Weighted average rate of compensation increase		4.00	%		4.00	%		N/A			N/A
Initial healthcare cost trend rate		N/A			N/A			9.00	%		9.50	%
Ultimate healthcare cost trend rate		N/A			N/A			5.00	%		5.00	%
Year ultimate trend rate is reached		N/A			N/A			2014			2014

F-37

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The discount rate is the current rate at which the pension and post-retirement obligations can effectively be settled as of the end of the calendar year. To determine this rate for each of the years presented, the Company selected an actuarially computed composite rate based upon high quality (AA-/Aa- rated or better), non-callable corporate bonds whose cash flows match the expected timing of the settlement of the pension and post-retirement obligations. The high quality corporate bond rates were based on information obtained from Standard and Poor’s.

Assumed health care cost trend rates have a significant effect on the amounts reported for the post-retirement plan. A one-percent change in the assumed healthcare cost trend rate would have had the following effects at December 31, 2005 (in thousands):

	One Percent Change
	Increase		Decrease
Effect on the aggregate of the service and interest cost components of net periodic post-retirement benefit cost (statement of operations)	$	214	$	(184	)
Effect on accumulated post-retirement benefit obligation (balance sheet)	$	1,819	$	(1,593	)

(v)  Plan assets

Dex Media’s pension plan weighted-average asset allocations at December 31, 2005, by asset category, are as follows:

	Plan Assets at			Asset
	December 31,			Allocation
	2005			Target
Asset Category
Equity Securities		68	%		65	%
Debt Securities		25	%		26	%
Real Estate		5	%		5	%
Cash		2	%		4	%
Total		100	%		100	%

The plan’s assets are invested in accordance with investment practices that emphasize long-term investment fundamentals. The plan’s investment objective is to achieve a positive rate of return over the long-term from capital appreciation and a growing stream of current income that would significantly contribute to meeting the plan’s current and future obligations. These objectives can be obtained through a well-diversified portfolio structure in a manner consistent with the plan’s investment policy statement.

The plan’s assets are invested in marketable equity and fixed income securities managed by professional investment managers. The plan’s assets are to be broadly diversified by asset class, investment style, number of issues, issue type and other factors consistent with the investment objectives outlined in the plan’s investment policy statement. The plan’s assets are to be invested with prudent levels of risk and with the expectation that long-term returns will maintain and contribute to increasing purchasing power of the plan’s assets, net of all disbursements, over the long-term.

The plan’s assets in separately managed accounts may not be used for the following purposes: short sales, purchases of letter stock, private placements, leveraged transactions, commodities transactions, option strategies, investments in some limited partnerships, investments by the managers in their own securities, their affiliates or subsidiaries, investment in futures, use of margin or investments in any derivative not explicitly permitted in the plan’s investment policy statement.

F-38

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In 2003, the Dex Media pension plan assumed an expected long-term rate of return of 8% in computing its net periodic pension cost. The basis used for determining this rate was the historical capital market returns for an asset mix similar to the Pension Plan’s 65% equity and 35% fixed income. Dex Media did not begin to manage the trust assets until November 1, 2003, when Qwest transferred assets from its pension trust to the Dex Media pension trust. From January 1, 2003 until the date of transfer, Qwest Asset Management Company managed the Dex Media pension assets as provided for in the Purchase Agreement. In determining the 2004 and 2005 expected long-term rate of return of 9%, Dex Media took into consideration the change in its asset allocation as well as the expectation that there is opportunity for active management of the trust’s investments to add value over the long term. The active asset management expectation was supported by calculating historical returns for the eight investment managers who were selected to actively manage the trust’s assets.

(vi)  Cash flows

Dex Media does not expect to make any contributions to its pension plan in 2006.

The pension benefits and post-retirement benefits expected to be paid in each year 2006-2010 and the aggregate benefits expected to be paid 2011-2015 are as follows (in thousands):

	Pension		Post-Retirement
	Benefits		Benefits
2006	$	22,509	$	2,830
2007		14,995		2,289
2008		15,286		2,821
2009		16,455		3,355
2010		17,276		3,904
2011-2015		89,733		26,069

The expected benefits to be paid are based on the same assumptions used to measure the Company’s benefit obligations at December 31, 2005 and include estimated future employee service.

(vii)  Subsequent Events

As more fully described in Note 14, on January 31, 2006, the Company merged with Donnelley. At this time and for the remainder of 2006, there are no plans to change any of the existing employee benefits.

(b)  401(k) plan

Effective November 1, 2002, Dex Media adopted a defined contribution benefit plan covering substantially all management and occupational employees of Dex Media. Under this plan, employees may contribute a percentage of their annual compensation to the plan up to a maximum percentage identified in the plan. The annual pre-tax dollar contribution of the employees is limited to the maximum amount determined by the Internal Revenue Service.

Dex Media matches a percentage of employee contributions, and those matching contributions as recorded by the Company in the statement of operations were $6.3 million, $6.7 million, and $3.6 million for the years ended December 31, 2005, 2004 and 2003, respectively. Effective January 1, 2004, Dex Media increased the matching formula for all management employees participating in its defined contribution plan from 100% on the first 3% of employee contributions to 100% on the first 4% of employee contributions and 50% on the next 2% of employee contributions.

F-39

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

12.   Commitments and Contingencies

(a)  Lease commitments

The Company has entered into operating leases for office facilities and equipment with terms ranging up to 15 years. Minimum future lease payments for the operating leases as of December 31, 2005, are as follows (in thousands):

2006	$	11,912
2007		10,763
2008		8,591
2009		5,558
2010		3,750
Thereafter		7,097
	$	47,671

The Company recorded rent expense under the provisions of SFAS No. 13 “Accounting for Leases” for operating leases of $20.4 million, $17.7 million and $11.6 million for the years ended December 31, 2005, 2004 and 2003.

As required by the Dex East Purchase Agreement, Dex Media East has leased its Englewood facility (located at 198 Inverness Drive West in Englewood, Colorado) from Qwest on terms and conditions that are reasonably acceptable to the Company. The aggregate lease commitments disclosed above include the amounts associated with this provision of the agreement.

(b)  Litigation

The Company is involved, from time to time, in litigation arising in the normal course of business. The outcome of this litigation is not expected to have a material adverse impact on the Company.

(c)  Collective Bargaining Agreement

As of December 31, 2005, 22% and 44% of the Company’s employees were members of the International Brotherhood of Electrical Workers (“IBEW”) and the Communication Workers of America (“CWA”), respectively. The collective bargaining agreement covering the IBEW members’ employment will expire in May 2006 and the collective bargaining agreement covering the CWA members’ employment will expire in October 2006.

13.   Related Party Transactions

In connection with the Acquisitions, the Company entered into management consulting agreements with each of Carlyle and WCAS. Each agreement allowed the Company access to Carlyle and WCAS’s expertise in areas such as corporate management, financial transactions, product strategy, investment, acquisitions and other matters that relate to the Company’s business, administration and policies. Each of Carlyle and WCAS received a one-time transaction fee for structuring the transactions related to the Dex East Acquisition and the Dex West Acquisition of $15.0 million and $20.1 million, respectively. In addition, each of Carlyle and WCAS received an annual advisory fee of $2.0 million for advisory, consulting and other services. The annual advisory fees payable under the agreements were terminated for a one-time fee of $10.0 million paid to each of Carlyle and WCAS in conjunction with the IPO. Thereafter, Carlyle and WCAS maintained the right to act as Dex Media’s financial advisor or investment banker in conjunction with any merger, acquisition, disposition,

F-40

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

finance or the like in return for additional reasonable compensation and expenses as may be agreed upon by the parties. Pursuant to these management consulting agreements, the Company incurred $2.0 million and $2.6 million in annual advisory fees for the years ended December 31, 2004 and 2003, respectively. The management consulting agreements have been terminated. No amounts were owed to Carlyle or WCAS at December 31, 2005.

During February 2003, Dex Media entered into a five-year agreement with Amdocs, Inc. (“Amdocs”) for the complete modernization of its core production platform. This project is designed to upgrade the Company’s existing software system to enhance its functionality. WCAS was a shareholder of Amdocs at the time the Company entered into the agreement and ceased to be a shareholder during 2004. For the years ended December 31, 2005, 2004 and 2003, the Company paid Amdocs $33.5 million, $47.6 million and $15.0 million, respectively, under this agreement and other related on-going support.

14.   Subsequent Events

As discussed in Note 1(a), Dex Media merged with Donnelley on January 31, 2006. Pursuant to the Agreement and Plan of Merger dated October 3, 2005, each issued and outstanding share of Dex Media common stock was converted into $12.30 in cash and 0.24154 of a share of Donnelley common stock, resulting in an aggregate cash value of $1.9 billion and an aggregate stock value of $2.2 billion, based on 36,547,381 newly issued shares of Donnelley common stock. All outstanding stock options of Dex Media were converted into stock options of Donnelley at a ratio of 1 to 0.43077 and the 2002 Plan and 2004 Plan governing those Dex Media stock options were terminated. Additionally, Donnelley assumed Dex Media’s outstanding indebtedness on January 31, 2006 with a fair value of $5.7 billion. The acquired Dex Media directory business now operates as Dex Media, Inc., one of Donnelley’s direct wholly owned subsidiaries.

As a result of the modifications discussed in Note 9(f), stock options to purchase approximately 1.3 million shares of Dex Media common stock became fully exercisable immediately prior to the consummation of the Donnelley Merger. Dex Media expects to recognize additional stock compensation expense in its January 2006 financial statements as a result of these modifications.

Costs of $11.7 million related to the Donnelley Merger are included in the statement of operations for the year ended December 31, 2005. These costs relate primarily to financial advisory, legal and accounting fees and are included in general and administrative expense.

In connection with the Donnelley Merger, on January 31, 2006, Dex Media, as successor to Dex Media, Inc. (“DMI”), entered into an Amended and Restated Credit Agreement (the “Amended West Credit Agreement”), by and among Dex Media West, Inc. (“Dex West”), Dex Media West, the administrative agent and the lenders and other agents parties thereto, relating to the Credit Agreement, dated as of September 9, 2003, as amended (the “Original West Credit Agreement”), among DMI, Dex West, the Dex Media West, the administrative agent and the lenders and other agents parties thereto.

The Amended West Credit Agreement amends and restates the Original West Credit Agreement in its entirety, to, among other things: (i) permit the Donnelley Merger; (ii) provide up to $503 million of Tranche B-1 term loans to redeem certain indebtedness in connection with change in control offers required to be made as a result of the Donnelley Merger and to fund a portion of the cash consideration to be paid to DMI’s stockholders in connection with the Donnelley Merger, and $50 million of which may also be used for general corporate purposes; (iii) permit certain additional restricted payments to Dex Media; (iv) modify the financial performance covenants contained in the Original West Credit Agreement; and (v) provide for shared service arrangements between R.H. Donnelley Inc., an affiliate of Dex Media, and its subsidiaries (collectively, the “RHDI Entities”), on the one hand, and Dex Media and its subsidiaries (collectively, the “Dex Entities”), on the other hand.

F-41

DEX MEDIA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In addition, in connection with the Amended West Credit Agreement, Dex Media, Dex West and its subsidiaries reaffirmed, pursuant to a Reaffirmation Agreement dated as of January 31, 2006 (the “West Reaffirmation Agreement”) that the obligations under the Amended West Credit Agreement continue to be secured by: (i) the pledge of the stock of Dex West under that certain Pledge Agreement dated as of November 10, 2003 and (ii) the assets of and guarantee by Dex West and its subsidiaries pursuant to the terms of that certain Amended and Restated Guarantee and Collateral Agreement, dated as of September 9, 2003.

In addition, on January 31, 2006, the Company entered into an Amended and Restated Credit Agreement (the “Amended East Credit Agreement”), by and among Dex Media East, Inc. (“Dex East”), Dex Media East, the administrative agent and the lenders and other agents parties thereto, relating to the Credit Agreement, dated as of November 8, 2002, as amended (the “Original East Credit Agreement”), among DMI, Dex East, Dex Media East, the administrative agent and the lenders and other agents parties thereto.

The Amended East Credit Agreement amends and restates the Original East Credit Agreement in its entirety, to, among other things: (i) permit the Donnelley Merger; (ii) permit certain additional restricted payments to Dex Media; (iii) modify the financial performance covenants contained in the Original East Credit Agreement; and (iv) provide for shared service arrangements between the RHDI Entities, on the one hand, and the Dex Entities, on the other hand.

In addition, in connection with the Amended East Credit Agreement, Dex Media, Dex East and its subsidiaries reaffirmed, pursuant to a Reaffirmation Agreement dated as of January 31, 2006 (the “East Reaffirmation Agreement”) that the obligations under the Amended East Credit Agreement continue to be secured by: (i) the pledge of the stock of Dex East under that certain Pledge Agreement dated as of November 10, 2003 and (ii) the assets of and guarantee by Dex East and its subsidiaries pursuant to the terms of that certain Amended and Restated Guarantee and Collateral Agreement, dated as of November 8, 2002.

In connection with the Donnelley Merger, on January 31, 2006, Dex Media entered into three supplemental indentures (the “Supplemental Indentures”) with U.S. Bank National Association, as trustee (the “Trustee”) to amend: (i) the Indenture, dated as of November 10, 2003, as amended (the “8% Notes Indenture”), between DMI and the Trustee relating to DMI’s 8% Notes due 2013 (the “8% Notes”); (ii) the Indenture, dated as of November 10, 2003, as amended (the “2003 Discount Notes Indenture”), between DMI and the Trustee relating to DMI’s 9% Discount Notes due 2013 (the “2003 Discount Notes”); and (iii) the Indenture, dated as of February 11, 2004, as amended (the “2004 Discount Notes Indenture”), between DMI and the Trustee relating to DMI’s 9% Discount Notes due 2013 (the “2004 Discount Notes”). Pursuant to the Supplemental Indentures, Dex Media assumed DMI’s obligations under the 8% Notes, 2003 Discount Notes and 2004 Discount Notes, and agreed to comply with the conditions and covenants under the 8% Notes Indenture, 2003 Discount Notes Indenture and 2004 Discount Notes Indenture.

In connection with the Donnelley Merger and the entry into the Amended West Credit Agreement, on January 31, 2006, the Company and the administrative agent party thereto also entered into a Termination Agreement (the “Termination Agreement”) to terminate certain support obligations of Dex Media, as successor to DMI, under the Agreement, dated September 9, 2003, between DMI and the administrative agent (the “Support Agreement”). Under the Support Agreement, DMI was required to retain and pledge to the administrative agent a calculated amount of certain dividends or distributions received by DMI with respect to equity interests of Dex East and its subsidiaries to secure the obligations of DMI to purchase subordinated participations in loans or other letters of credit in the event of the acceleration of the obligations of the West Borrower under the Original West Credit Agreement.

F-42

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.   CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Dex Media maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to Dex Media’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, Dex Media carried out an assessment, under the supervision and with the participation of Dex Media’s management, including its Chief Executive Officer and Chief Financial Officer, regarding the effectiveness of the design and operation of Dex Media’s disclosure controls and procedures. Based on that assessment, Dex Media’s Chief Executive Officer and Chief Financial Officer concluded that Dex Media’s disclosure controls and procedures were effective as of the end of the period covered by this report.

Management’s Annual Report on Internal Control Over Financial Reporting

The management of Dex Media is responsible for establishing and maintaining adequate internal control over the company’s financial reporting (as defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements in the financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with policies and procedures may deteriorate.

Management assessed the effectiveness of Dex Media’s internal controls over its financial reporting as of December 31, 2005. In undertaking this assessment, management used the criteria established by the Committee of the Sponsoring Organizations (“COSO”) of the Treadway Commission contained in the Internal Control — Integrated Framework.

Based on its assessment, management has concluded that as of December 31, 2005, the Company’s internal control over financial reporting is effective based on the COSO criteria.

KPMG LLP, the independent registered accounting firm that audited the financial statements included in this annual report, has issued an attestation report on management’s assessment of Dex Media’s internal control over financial reporting. Such attestation report is included on pages F-2 and F-3 of this annual report.

Changes in Internal Controls

During the fiscal quarter ended December 31, 2005, there was no change in Dex Media’s internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, Dex Media’s internal controls over financial reporting.

ITEM 9B.   OTHER INFORMATION

None.

36

PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Omitted pursuant to General Instructions I(2)(c) of Form 10-K.

ITEM 11.   EXECUTIVE COMPENSATION

Omitted pursuant to General Instructions I(2)(c) of Form 10-K.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Omitted pursuant to General Instructions I(2)(c) of Form 10-K.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Omitted pursuant to General Instructions I(2)(c) of Form 10-K.

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

KPMG LLP serves as the Company’s independent registered public accounting firm. The following table presents fees for professional services rendered by KPMG LLP for the audit of Dex Media’s annual financial statements for the years ended December 31, 2005 and 2004 and fees billed for other services rendered by KPMG LLP during those periods.

	2005		2004
Audit fees(1)	$	1,996,860	$	1,997,700
Audit-related fees(2)		202,500		—
Tax fees(3)		27,525		86,158
All other fees		—		—
Total fees	$	2,226,885	$	2,083,858

(1)	Audit fees consisted principally of fees for the audit of financial statements and review of the financial statements included in our Quarterly Reports on Form 10-Q, comfort letters, consents and assistance with and review of Dex Media’s registration statements filed with the SEC.
(2)	Audit-related fees consisted of financial due diligence performed prior to entering into our merger with Donnelley.
(3)	Tax fees consisted principally of fees for tax consultation and tax compliance activities.

The Audit Committee is responsible for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. As part of this responsibility, the Audit Committee is required to pre-approve the non-audit services performed by the independent registered public accounting firm in order to ensure their independence of our independent registered public accounting firm. The Audit Committee has adopted a pre-approval process with respect to the provision of non-audit services to be performed by KPMG LLP. This pre-approval process requires the Audit Committee to review and approve all audit services and permitted non-audit services to be performed by KPMG LLP. Pre-approval fee levels for all services to be provided by KPMG LLP are established annually by the Audit Committee. Audit services are subject to specific pre-approval while audit-related services, tax services and all other services may be granted pre-approvals within specified categories. Any proposed services exceeding these levels require specific pre-approval by the Audit committee. Additionally, the Audit Committee may delegate either type of pre-approval authority to one or more of its members.

37

PART IV

ITEM 15.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are being filed as part of this report:

(1) Consolidated Financial Statements.  The following consolidated financial statements of Dex Media are filed as part of this report:

	Page
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2005 and 2004		F-4
Consolidated Statements of Operations for the years ended December 31, 2005, 2004 and 2003		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003		F-6
Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income (Loss) for the years ended December 31, 2005, 2004 and 2003		F-7
Notes to Consolidated Financial Statements		F-8

(2) Financial Statement Schedules.  All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions, are inapplicable or not material, or the information called for thereby is otherwise included in the financial statements and therefore has been omitted.

(3) Exhibits

Number			Description
	2	.1+	Purchase Agreement, dated as of August 19, 2002, by and between Qwest Dex, Inc., Qwest Services Corporation, and Qwest Communications International Inc., on the one hand, and Dex Holdings LLC, on the other hand.
	2	.2+	Amendment No. 1 dated September 9, 2003 to Purchase Agreement, dated as of August 19, 2002, by and between Qwest Dex, Inc., Qwest Services Corporation, and Qwest Communications International Inc., on the one hand, and Dex Holdings LLC, on the other hand
	2	.3	Agreement and Plan of Merger, dated as of October 3, 2005, by and among Dex Media, Inc., R.H. Donnelley Corporation and Forward Acquisition Corp.
	2	.4	Certificate of Merger of Dex Media, Inc. into Forward Acquisition Corp.
	3	.1++	Form of Amended and Restated Certificate of Incorporation of Dex Media, Inc.
	3	.2++	Form of Amended and Restated By-laws of Dex Media, Inc.
	3	.3	Certificate of Incorporation of Forward Acquisition Corp.
	3	.4	Certificate of Amendment to the Certificate of Incorporation of Forward Acquisition Corp.
	3	.5	Bylaws of Forward Acquisition Corp.
	4	.1+	Note Indenture with respect to the 8% Notes due 2013, between Dex Media, Inc. and U.S. Bank National Association, as trustee, dated November 10, 2003.
	4	.2+	Form of 8% Notes due 2013 (included in exhibit 4.1).
	4	.3+	Discount Note Indenture with respect to the 9% Discount Notes due 2013, between Dex Media, Inc. and U.S. Bank National Association, as trustee, dated November 10, 2003.
	4	.4+	Form of 9% Discount Notes due 2013 (included in exhibit 4.3).
	4	.5+	Discount Note Indenture with respect to the 9% Discount Notes due 2013, between Dex Media, Inc. and U.S. Bank National Association, as trustee, dated February 11, 2004.
	4	.6+	Form of 9% Discount Notes due 2013 (included in exhibit 4.5).
	4	.7+	Senior Note Indenture with respect to the 97/8% Senior Notes due 2009, among Dex Media East LLC, Dex Media East Finance Co. and U.S. Bank National Association, as trustee, dated November 8, 2002.

38

Number			Description
	4	.8+	Form of 97/8% Senior Notes due 2009 (included in exhibit 4.7)
	4	.9+	Senior Subordinated Note Indenture with respect to the 121/8% Senior Subordinated Notes due 2012, among Dex Media East LLC, Dex Media East Finance Co. and U.S. Bank National Association, as trustee, dated November 8, 2002.
	4	.10+	Form of 121/8% Senior Subordinated Notes due 2012 (included in exhibit 4.9)
	4	.11+	Senior Note Indenture with respect to the 81/2% Senior Notes due 2010, among Dex Media West LLC, Dex Media West Finance Co. and U.S. Bank National Association, as trustee, dated August 29, 2003.
	4	.12+	Form of 81/2% Senior Notes due 2010 (included in exhibit 4.11).
	4	.13+	Senior Subordinated Note Indenture with respect to the 97/8% Senior Subordinated Notes due 2013, among Dex Media West LLC, Dex Media West Finance Co. and U.S. Bank National Association, as trustee, dated August  29, 2003.
	4	.14+	Form of 97/8% Senior Subordinated Notes due 2013 (included in exhibit 4.13)
	4	.15++	Form of Rights Plan.
	4	.16++	Specimen common stock certificate.
	4	.17	Indenture with respect to the 57/8% Senior Notes due 2011, among Dex Media West LLC, Dex Media West Finance Co., and U.S. Bank National Association, as trustee, dated November 24, 2004 (incorporated by reference to Dex Media West LLC and Dex Media West Finance Co.’s Registration Statement on Form S-4 (File No. 333-121259), declared effective on February 3, 2005).
	4	.18	Form of 57/8% Senior Notes due 2011 (included in Exhibit 4.20) (incorporated by reference to Dex Media West LLC and Dex Media West Finance Co.’s Registration Statement on Form S-4 (File No. 333-121259), declared effective on February 3, 2005).
	4	.19	Supplemental Indenture, dated as of January 31, 2006, between U.S. Bank National Association, as trustee, and Dex Media, Inc. (f/k/a Forward Acquisition Corp.) to the Indenture, dated November 10, 2003, between Dex Media, Inc. and U.S. Bank National Association, as trustee related to Dex Media’s 8% Notes due 2013 (incorporated by reference to Dex Media, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2006).
	4	.20	Supplemental Indenture, dated as of January 31, 2006, between U.S. Bank National Association, as trustee, and Dex Media, Inc. (f/k/a Forward Acquisition Corp.) to the Indenture, dated November 10, 2003, between Dex Media, Inc. and U.S. Bank National Association, as trustee related to Dex Media’s 9% Notes due 2013 (incorporated by reference to Dex Media, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2006).
	4	.21	Supplemental Indenture, dated as of January 31, 2006, between U.S. Bank National Association, as trustee, and Dex Media, Inc. (f/k/a Forward Acquisition Corp.) to the Indenture, dated November 10, 2003, between Dex Media, Inc. and U.S. Bank National Association, as trustee related to Dex Media’s 9% Notes due 2014 (incorporated by reference to Dex Media, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2006).
	10	.1+	Second Amendment and Restatement of Credit Agreement, dated as of October 31, 2003, by and among Dex Media, Inc., Dex Media East, Inc., Dex Media East LLC, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint bookrunners and joint lead arrangers, J.P. Morgan Europe, Limited, as London Agent, and Bank of America, N.A., Lehman Commercial Paper Inc., Wachovia Bank, National Association and Deutsche Bank Trust Company Americas, as co-syndication agents.

39

Number			Description
	10	.2++	Third Amendment, dated as of June 11, 2004, to the Credit Agreement, dated as of November 8, 2002, as amended and restated as of October 31, 2003, by and among Dex Media, Inc., Dex Media East, Inc., Dex Media East LLC, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint bookrunners and joint lead arrangers, and Bank of America, N.A., Wachovia Bank, National Association, Lehman Commercial Paper Inc. and Deutsche Bank Trust Company Americas, as co-syndication agents.
	10	.3+++	Fourth Amendment, dated as of November 24, 2004, to the Credit Agreement, dated as of November 8, 2002, as amended and restated as of October 31, 2003, by and among Dex Media, Inc., Dex Media East, Inc., Dex Media East LLC, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint bookrunners and joint lead arrangers, and Bank of America, N.A., Wachovia Bank, National Association, Lehman Commercial Paper Inc. and Deutsche Bank Trust Company Americas, as co-syndication agents.
	10	.4+	Guarantee and Collateral Agreement, dated as of November 8, 2002, by and among Dex Media East, Inc., Dex Media East LLC (f/k/a SGN LLC), Dex Media East Finance Co., LCI International, Inc. (Dex Media International, Inc.) and JPMorgan Chase Bank, as collateral agent.
	10	.5+	Agreement, dated as of November 8, 2002, between Dex Media, Inc. and JPMorgan Chase Bank, as administrative agent under the Credit Agreement (the “Parent Support Agreement” relating to the Dex Media East Credit Agreement), as amended.
	10	.6+	Credit Agreement, dated as of September 9, 2003, among Dex Media, Inc., Dex Media West, Inc., Dex Media West LLC, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint bookrunners and joint lead arrangers, and Bank of America, N.A., Wachovia Bank, National Association, Lehman Commercial Paper Inc. and Deutsche Bank Trust Company Americas, as co-syndication agents.
	10	.7+	First Amendment, dated as of October 31, 2003, to the Credit Agreement, dated as of September 9, 2003, among Dex Media, Inc., Dex Media West, Inc., Dex Media West LLC, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint bookrunners and joint lead arrangers, and Bank of America, N.A., Wachovia Bank, National Association, Lehman Commercial Paper Inc. and Deutsche Bank Trust Company Americas, as co-syndication agents.
	10	.8++	Second Amendment, dated as of June 11, 2004, to the Credit Agreement, dated as of September 9, 2003, as amended as of October 31, 2003, by and among Dex Media, Inc., Dex Media West, Inc., Dex Media West LLC, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint bookrunners and joint lead arrangers, and Bank of America, N.A., Wachovia Bank, National Association, Lehman Commercial Paper Inc. and Deutsche Bank Trust Company Americas, as co-syndication agents.
	10	.9+++	Third Amendment, dated as of November 24, 2004, to the Credit Agreement, dated as of September 9, 2003, among Dex Media, Inc., Dex Media West, Inc., Dex Media West LLC JPMorgan Chase Bank, N.A. (formerly known as JPMorgan Chase Bank), as administrative agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint bookrunners and joint lead arrangers, and Bank of America, N.A., Wachovia Bank, National Association, Lehman Commercial Paper Inc. and Deutsche Bank Trust Company Americas, as co-syndication agents.
	10	.10+	Guarantee and Collateral Agreement, dated as of September 9, 2003, among Dex Media West, Inc., Dex Media West LLC, Dex Media West Finance Co. and JPMorgan Chase Bank, as collateral agent.
	10	.11+	Agreement, dated as of September 9, 2003, between Dex Media, Inc. and JPMorgan Chase Bank, as administrative agent under the Credit Agreement (the “Parent Support Agreement” relating to the Dex Media West Credit Agreement).
	10	.12+	Amended and Restated Billing and Collection Agreement, dated September 1, 2003, by and between Qwest Corporation and Dex Media East LLC (f/k/a SGN LLC).
	10	.13+	Billing and Collection Agreement, dated as of September 1, 2003, by and between Qwest Corporation and Dex Media West LLC (f/k/a GPP LLC).

40

Number			Description
	10	.14+	Non-Competition and Non-Solicitation Agreement, dated November 8, 2002, by and among Dex Media East LLC (f/k/a SGN LLC), Dex Media West LLC (f/k/a GPP LLC), Dex Holdings LLC and Qwest Corporation, Qwest Communications International Inc. and Qwest Dex, Inc.
	10	.15++	Form of Amended and Restated Management Consulting Agreement among Dex Media East LLC and The Carlyle Group.
	10	.16++	Form of Amended and Restated Management Consulting Agreement among Dex Media East LLC and Welsh, Carson, Anderson & Stowe.
	10	.17++	Form of Amended and Restated Management Consulting Agreement among Dex Media West LLC and The Carlyle Group.
	10	.18++	Form of Amended and Restated Management Consulting Agreement among Dex Media West LLC and Welsh, Carson, Anderson & Stowe
	10	.19++	Sponsor Stockholders Agreement among Dex Media, Inc., Carlyle Partners III, L.P., CP III Coinvestment L.P., Carlyle-Dex Partners L.P., Carlyle-Dex Partners II, L.P., Carlyle High Yield Partners, L.P., Welsh, Carson, Anderson & Stowe IX, L.P., WD GP Associates LLC, WD Investors LLC and A.S.F. Co-Investment Partners, L.P.
	10	.20+	Joinder Agreement to the Dex Holdings LLC Equityholders Agreement, effective as of April 30, 2003.
	10	.21+	Agreement Among Members (Dex Holdings LLC) among Carlyle Partners III, L.P., Carlyle-Dex Partners L.P., Carlyle-Dex Partners II L.P., Welsh, Carson, Anderson & Stowe IX, L.P., WD Investors LLC, Dex Holdings LLC, Dex Media, Inc., Dex Media East, Inc. and Dex Media East LLC, dated November 8, 2002.
	10	.22+	First Amendment to the Agreement Among Members (Dex Holdings LLC) among Carlyle Partners III, L.P., Carlyle-Dex Partners L.P., Carlyle-Dex Partners II L.P., Welsh, Carson, Anderson & Stowe IX, L.P., WD Investors LLC, Dex Holdings LLC, Dex Media, Inc., Dex Media East, Inc., Dex Media East LLC, Dex Media West, Inc. and Dex Media West LLC, dated September 8, 2003.
	10	.23+	Publishing Agreement by and among Dex Media, Inc., Dex Media East LLC (f/k/a SGN LLC), Dex Media West LLC (f/k/a/ GPP LLC) and Qwest Corporation, dated November 8, 2002, as amended.
	10	.24+*	Employment Agreement, effective as of November 8, 2002, by and between George Burnett and Dex Media, Inc.
	10	.25+*	Employment Agreement, effective as of January 2, 2003, by and between Robert M. Neumeister, Jr. and Dex Media, Inc.
	10	.26+*	Employment Agreement, effective as of November 8, 2002, by and between Marilyn B. Neal and Dex Media, Inc.
	10	.27+*	Employment Agreement, effective as of November 8, 2002, by and between Maggie Le Beau and Dex Media, Inc.
	10	.28+*	Employment Agreement, effective as of January 2, 2003, by and between Linda Martin and Dex Media, Inc.
	10	.29+*	Employment Agreement, effective as of November 8, 2002, by and between Kristine Shaw and Dex Media, Inc.
	10	.30+*	Amended and Restated Management Stockholders Agreement of Dex Media, Inc., entered into as of November 11, 2003, by and among Dex Media, Inc., Dex Holdings LLC, and those members of management who become parties thereto from time to time.
	10	.31+*	Stock Option Plan of Dex Media, Inc., effective as of November 8, 2002.
	10	.32+*	First Amendment to Stock Option Plan of Dex Media, Inc., effective as of September 9, 2003.
	10	.33+*	Second Amendment to Stock Option Plan of Dex Media, Inc., effective as of December 18, 2003.
	10	.34+	Employee Cost Sharing Agreement, by and among Dex Media Service LLC, Dex Media, Inc., Dex Media East LLC and Dex Media West LLC, effective as of December 31, 2003.

41

Number			Description
	10	.35+	Shared Services Agreement, by and among Dex Media, Inc., Dex Media East LLC, Dex Media West LLC, and any direct or indirect subsidiary of Dex Media that becomes a party thereto, effective as of December 31, 2003.
	10	.36+	Intercompany License Agreement, by and among Dex Media, Inc., Dex Media East LLC and Dex Media West LLC, effective as of September 9, 2003.
	10	.37*	Dex Media, Inc. 2004 Incentive Award Plan (incorporated by reference to our Registration Statement on Form S-8 (File No. 333-120631), filed on November 19, 2004).
	10	.38*	Dex Media, Inc. Senior Executive Incentive Bonus Plan (incorporated by reference to our Current Report on Form 8-K dated February 17, 2005).
	10	.39*	Form of Restricted Stock Agreement pursuant to the 2004 Incentive Award Plan of Dex Media, Inc. (incorporated by reference to our Current Report on Form 8-K dated March 4, 2005).
	10	.40	Master Agreement for Printing Services dated as of March 31, 2005, by and between Dex Media, Inc., on behalf of itself and it subsidiaries Dex Media East LLC and Dex Media West LLC, and Quebecor World (USA) Inc. (incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2005).
	10	.41*	Dex Media, Inc. Deferred Compensation Plan (incorporated by reference to our Current Report on Form 8-K dated May 17, 2005).
	10	.42*	Dex Media, Inc. Corporate Aircraft Policy (incorporated by reference to our Current Report on Form 8-K dated May 17, 2005).
	10	.43*	Dex Media, Inc. Financial Planning Benefit (incorporated by reference to our Current Report on Form 8-K dated May 17, 2005).
	10	.44*	Dex Media, Inc. 2005 Bonus Plan Targets (incorporated by reference to our Current Report on Form 8-K dated May 17, 2005).
	10	.45	Fourth Amendment, dated as of June 16, 2005, to the Credit Agreement dated as of September  9, 2003, as amended and restated as of July 27, 2004, by and among Dex Media, Inc., Dex Media West, Inc., Dex Media West LLC, JPMorgan Chase Bank, N.A., as administrative agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint bookrunners and co-lead arrangers, and Bank of America, N.A., Wachovia Bank, National Association, Lehman Commercial Paper Inc. and Deutsche Bank Trust Company Americas, as co-syndication agents (incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2005).
	10	.46	Fifth Amendment, dated as of June 16, 2005, to the Credit Agreement, dated as of November  8, 2002, as amended and restated as of October 31, 2003, by and among Dex Media, Inc., Dex Media East, Inc., Dex Media East LLC, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint bookrunners and co-lead arrangers, and Bank of America, N.A., Wachovia Bank, National Association, Lehman Commercial Paper Inc. and Deutsche Bank Trust company Americas, as co-syndication agents (incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2005).
	10	.47*	Retirement and General Release Agreement dated October 5, 2005, by and between Dex Media, Inc. and Robert M. Neumeister, Jr. (incorporated by reference to our Current Report on Form 8-K dated October 2, 2005).
	10	.48	Agreement and Plan of Merger, dated as of October 3, 2005, by and among Dex Media, Inc., R.H. Donnelley Corporation and Forward Acquisition Corp. (included in Exhibit 2.3).
	10	.49*	Letter Agreement dated October 2, 2005, by and between Dex Media, Inc. and George Burnett (incorporated by reference to our Current Report on Form 8-K/A dated October 18, 2005).
	10	.50*	Letter Agreement dated October 2, 2005, by and between Dex Media, Inc. and Marilyn Neal (incorporated by reference to our Current Report on Form 8-K/A dated October 18, 2005).
	10	.51*	Form of Letter Agreement dated October 2, 2005, by and between Dex Media, Inc. and each of its Senior Vice Presidents (incorporated by reference to our Current Report on Form 8-K/A dated October 18, 2005).

42

Number			Description
	10	.52*	Form of Letter Agreement dated October 2, 2005, by and between Dex Media, Inc. and each of its Vice Presidents (incorporated by reference to our Current Report on Form 8-K/A dated October 18, 2005).
	10	.53*	Letter Agreement dated December 19, 2005, by and between Dex Media, Inc. and Linda A. Martin (incorporated by reference to our Current Report on Form 8-K/A dated December 21, 2005).
	10	.54*	Letter Agreement dated December 19, 2005, by and between Dex Media, Inc. and George A. Burnett (incorporated by reference to our Current Report on Form 8-K dated December 19, 2005).
	10	.55*	Letter Agreement dated December 19, 2005, by and between Dex Media, Inc. and Scott A. Pomeroy (incorporated by reference to our Current Report on Form 8-K dated December 19, 2005).
	10	.56*	Form of Letter Agreement dated December 19, 2005, by and between Dex Media, Inc. and each of its Senior Vice Presidents and Vice Presidents (incorporated by reference to our Current Report on Form 8-K dated December 19, 2005).
	10	.57*	Letter Agreement dated December 19, 2005, by and between Dex Media, Inc. and Robert M. Neumeister, Jr. (incorporated by reference to our Current Report on Form 8-K dated December 19, 2005).
	10	.58*	Letter Agreement dated December 19, 2005, by and between Dex Media, Inc. and Marilyn B. Neal (incorporated by reference to our Current Report on Form 8-K dated December 19, 2005).
	10	.59	Amended and Restated Credit Agreement, dated January 31, 2006, by and among Dex Media, Inc. (f/k/a Forward Acquisition Corp.), Dex Media East, Inc., Dex Media East LLC, JPMorgan Chase Bank, N.A., as administrative agent, and the other entities from time to time parties thereto (incorporated by reference to Dex Media, Inc.’s current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2006).
	10	.60	Reaffirmation Agreement, dated January 31, 2006, among Dex Media, Inc., Dex Media East, Inc., Dex Media East LLC, Dex Media East Finance Co. and JPMorgan Chase Bank, N.A., as collateral agent (incorporated by reference to Dex Media, Inc.’s Current Report on Form 8-K filed wit the Securities and Exchange commission on February 6, 2006).
	10	.61	Amended and Restated Credit Agreement, dated January 31, 2006, by and among Dex Media, Inc. (f/k/a Forward Acquisition Corp.), Dex Media West, Inc., Dex Media West LLC, JPMorgan Chase Bank, N.A., as administrative agent, and the other entities from time to time parties thereto (incorporated by reference to Dex Media, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2006).
	10	.62	Reaffirmation Agreement, dated January 31, 2006, among Dex Media, Inc., Dex Media West, Inc., Dex Media West LLC, Dex Media West Finance Co., and JPMorgan Chase Bank, N.A., as collateral agent (incorporated by reference to Dex Media’s Current Report of Form 8-K filed with the Securities and Exchange commission on February 6, 2006).
	12	.1	Statement of Computation of Ratio of Earnings to Fixed Charges and Ratio of Total Debt to Owner’s Equity.
	31	.1	Certification of Chief Executive Officer of Dex Media, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31	.2	Certification of Chief Financial Officer of Dex Media, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32	.1++++	Certification of Chief Executive Officer and Chief Financial Officer of Dex Media, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

+	Incorporated by reference to our Registration Statement on Form S-4 (File No. 333-114472), declared effective on May 14, 2004.
++	Incorporated by reference to our Registration Statement on Form S-1 (File No. 333-115489) and amendments thereto, declared effective on July 21, 2004.

43

+++	Incorporated by reference to our Registration Statement on Form S-1 (File No. 333-121859) and amendments thereto, declared effective on January 25, 2005.
++++	Exhibit 32.1 is being furnished solely to accompany this report pursuant to U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any of our filings, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
*	Identifies each management contract or compensatory plan or arrangement.

44

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed by the undersigned, thereunto duly authorized.

DEX MEDIA, INC.

By:  /s/  SCOTT A. POMEROY

Scott A. Pomeroy

Chief Financial Officer

Date: March 16, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Titles	Date
/s/  GEORGE A. BURNETT George A. Burnett	President and Chief Executive Officer (Principal Executive Officer)	March 16, 2006
/s/  SCOTT A. POMEROY Scott A. Pomeroy	Chief Financial Officer (Principal Financial and Accounting Officer)	March 16, 2006
/s/  STEVEN M. BLONDY Steven M. Blondy	Director	March 16, 2006
/s/  ROBERT J. BUSH Robert J. Bush	Director	March 16, 2006
/s/  JENNY L. APKER Jenny L. Apker	Director	March 16, 2006

45

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT
TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT
REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT

The registrant has not sent to its sole security holder an annual report to security holders covering the registrant’s last fiscal year or any proxy statement, form of proxy or other proxy soliciting material with respect to any annual or other meeting of security holders.

46

EXHIBIT INDEX

Number			Description
	2	.1+	Purchase Agreement, dated as of August 19, 2002, by and between Qwest Dex, Inc., Qwest Services Corporation, and Qwest Communications International Inc., on the one hand, and Dex Holdings LLC, on the other hand.
	2	.2+	Amendment No. 1 dated September 9, 2003 to Purchase Agreement, dated as of August 19, 2002, by and between Qwest Dex, Inc., Qwest Services Corporation, and Qwest Communications International Inc., on the one hand, and Dex Holdings LLC, on the other hand.
	2	.3	Agreement and Plan of Merger, dated as of October 3, 2005, by and among Dex Media, Inc., R.H. Donnelley Corporation and Forward Acquisition Corp.
	2	.4	Certificate of Merger of Dex Media, Inc. into Forward Acquisition Corp.
	3	.1++	Form of Amended and Restated Certificate of Incorporation of Dex Media, Inc.
	3	.2++	Form of Amended and Restated By-laws of Dex Media, Inc.
	3	.3	Certificate of Incorporation the Forward Acquisition Corp.
	3	.4	Certificate of Amendment to the Certificate of Incorporation of Forward Acquisition Corp.
	3	.5	Bylaws of Forward Acquisition Corp.
	4	.1+	Note Indenture with respect to the 8% Notes due 2013, between Dex Media, Inc. and U.S. Bank National Association, as trustee, dated November 10, 2003.
	4	.2+	Form of 8% Notes due 2013 (included in exhibit 4.1).
	4	.3+	Discount Note Indenture with respect to the 9% Discount Notes due 2013, between Dex Media, Inc. and U.S. Bank National Association, as trustee, dated November 10, 2003.
	4	.4+	Form of 9% Discount Notes due 2013 (included in exhibit 4.3).
	4	.5+	Discount Note Indenture with respect to the 9% Discount Notes due 2013, between Dex Media, Inc. and U.S. Bank National Association, as trustee, dated February 11, 2004.
	4	.6+	Form of 9% Discount Notes due 2013 (included in exhibit 4.5).
	4	.7+	Senior Note Indenture with respect to the 97/8% Senior Notes due 2009, among Dex Media East LLC, Dex Media East Finance Co. and U.S. Bank National Association, as trustee, dated November 8, 2002.
	4	.8+	Form of 97/8% Senior Notes due 2009 (included in exhibit 4.7)
	4	.9+	Senior Subordinated Note Indenture with respect to the 121/8% Senior Subordinated Notes due 2012, among Dex Media East LLC, Dex Media East Finance Co. and U.S. Bank National Association, as trustee, dated November  8, 2002.
	4	.10+	Form of 121/8% Senior Subordinated Notes due 2012 (included in exhibit 4.9)
	4	.11+	Senior Note Indenture with respect to the 81/2% Senior Notes due 2010, among Dex Media West LLC, Dex Media West Finance Co. and U.S. Bank National Association, as trustee, dated August 29, 2003.
	4	.12+	Form of 81/2% Senior Notes due 2010 (included in exhibit 4.11).
	4	.13+	Senior Subordinated Note Indenture with respect to the 97/8% Senior Subordinated Notes due 2013, among Dex Media West LLC, Dex Media West Finance Co. and U.S. Bank National Association, as trustee, dated August  29, 2003.
	4	.14+	Form of 97/8% Senior Subordinated Notes due 2013 (included in exhibit 4.13)
	4	.15++	Form of Rights Plan.
	4	.16++	Specimen common stock certificate.

47

Number			Description
	4	.17	Indenture with respect to the 57/8% Senior Notes due 2011, among Dex Media West LLC, Dex Media West Finance Co., and U.S. Bank National Association, as trustee, dated November 24, 2004 (incorporated by reference to Dex Media West LLC and Dex Media West Finance Co.’s Registration Statement on Form S-4 (File No. 333-121259), declared effective on February 3, 2005).
	4	.18	Form of 57/8% Senior Notes due 2011 (included in Exhibit 4.20) (incorporated by reference to Dex Media West LLC and Dex Media West Finance Co.’s Registration Statement on Form S-4 (File No. 333-121259), declared effective on February 3, 2005).
	4	.19	Supplemental Indenture, dated as of January 31, 2006, between U.S. Bank National Association, as trustee, and Dex Media, Inc. (f/k/a Forward Acquisition Corp.) to the Indenture, dated November 10, 2003, between Dex Media, Inc. and U.S. Bank National Association, as trustee related to Dex Media’s 8% Notes due 2013 (incorporated by reference to Dex Media, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2006).
	4	.20	Supplemental Indenture, dated as of January 31, 2006, between U.S. Bank National Association, as trustee, and Dex Media, Inc. (f/k/a Forward Acquisition Corp.) to the Indenture, dated November 10, 2003, between Dex Media, Inc. and U.S. Bank National Association, as trustee related to Dex Media’s 9% Notes due 2013 (incorporated by reference to Dex Media, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2006).
	4	.21	Supplemental Indenture, dated as of January 31, 2006, between U.S. Bank National Association, as trustee, and Dex Media, Inc. (f/k/a Forward Acquisition Corp.) to the Indenture, dated November 10, 2003, between Dex Media, Inc. and U.S. Bank National Association, as trustee related to Dex Media’s 9% Notes due 2014 (incorporated by reference to Dex Media, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2006).
	10	.1+	Second Amendment and Restatement of Credit Agreement, dated as of October 31, 2003, by and among Dex Media, Inc., Dex Media East, Inc., Dex Media East LLC, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint bookrunners and joint lead arrangers, J.P. Morgan Europe, Limited, as London Agent, and Bank of America, N.A., Lehman Commercial Paper Inc., Wachovia Bank, National Association and Deutsche Bank Trust Company Americas, as co-syndication agents.
	10	.2++	Third Amendment, dated as of June 11, 2004, to the Credit Agreement, dated as of November 8, 2002, as amended and restated as of October 31, 2003, by and among Dex Media, Inc., Dex Media East, Inc., Dex Media East LLC, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint bookrunners and joint lead arrangers, and Bank of America, N.A., Wachovia Bank, National Association, Lehman Commercial Paper Inc. and Deutsche Bank Trust Company Americas, as co-syndication agents.
	10	.3+++	Fourth Amendment, dated as of November 24, 2004, to the Credit Agreement, dated as of November 8, 2002, as amended and restated as of October 31, 2003, by and among Dex Media, Inc., Dex Media East, Inc., Dex Media East LLC, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint bookrunners and joint lead arrangers, and Bank of America, N.A., Wachovia Bank, National Association, Lehman Commercial Paper Inc. and Deutsche Bank Trust Company Americas, as co-syndication agents.
	10	.4+	Guarantee and Collateral Agreement, dated as of November 8, 2002, by and among Dex Media East, Inc., Dex Media East LLC (f/k/a SGN LLC), Dex Media East Finance Co., LCI International, Inc. (Dex Media International, Inc.) and JPMorgan Chase Bank, as collateral agent.

48

Number			Description
	10	.5+	Agreement, dated as of November 8, 2002, between Dex Media, Inc. and JPMorgan Chase Bank, as administrative agent under the Credit Agreement (the “Parent Support Agreement” relating to the Dex Media East Credit Agreement), as amended.
	10	.6+	Credit Agreement, dated as of September 9, 2003, among Dex Media, Inc., Dex Media West, Inc., Dex Media West LLC, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint bookrunners and joint lead arrangers, and Bank of America, N.A., Wachovia Bank, National Association, Lehman Commercial Paper Inc. and Deutsche Bank Trust Company Americas, as co-syndication agents.
	10	.7+	First Amendment, dated as of October 31, 2003, to the Credit Agreement, dated as of September 9, 2003, among Dex Media, Inc., Dex Media West, Inc., Dex Media West LLC, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint bookrunners and joint lead arrangers, and Bank of America, N.A., Wachovia Bank, National Association, Lehman Commercial Paper Inc. and Deutsche Bank Trust Company Americas, as co-syndication agents.
	10	.8++	Second Amendment, dated as of June 11, 2004, to the Credit Agreement, dated as of September 9, 2003, as amended as of October 31, 2003, by and among Dex Media, Inc., Dex Media West, Inc., Dex Media West LLC, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint bookrunners and joint lead arrangers, and Bank of America, N.A., Wachovia Bank, National Association, Lehman Commercial Paper Inc. and Deutsche Bank Trust Company Americas, as co-syndication agents.
	10	.9+++	Third Amendment, dated as of November 24, 2004, to the Credit Agreement, dated as of September 9, 2003, among Dex Media, Inc., Dex Media West, Inc., Dex Media West LLC JPMorgan Chase Bank, N.A. (formerly known as JPMorgan Chase Bank), as administrative agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint bookrunners and joint lead arrangers, and Bank of America, N.A., Wachovia Bank, National Association, Lehman Commercial Paper Inc. and Deutsche Bank Trust Company Americas, as co-syndication agents.
	10	.10+	Guarantee and Collateral Agreement, dated as of September 9, 2003, among Dex Media West, Inc., Dex Media West LLC, Dex Media West Finance Co. and JPMorgan Chase Bank, as collateral agent.
	10	.11+	Agreement, dated as of September 9, 2003, between Dex Media, Inc. and JPMorgan Chase Bank, as administrative agent under the Credit Agreement (the “Parent Support Agreement” relating to the Dex Media West Credit Agreement).
	10	.12+	Amended and Restated Billing and Collection Agreement, dated September 1, 2003, by and between Qwest Corporation and Dex Media East LLC (f/k/a SGN LLC).
	10	.13+	Billing and Collection Agreement, dated as of September 1, 2003, by and between Qwest Corporation and Dex Media West LLC (f/k/a GPP LLC).
	10	.14+	Non-Competition and Non-Solicitation Agreement, dated November 8, 2002, by and among Dex Media East LLC (f/k/a SGN LLC), Dex Media West LLC (f/k/a GPP LLC), Dex Holdings LLC and Qwest Corporation, Qwest Communications International Inc. and Qwest Dex, Inc.
	10	.15++	Form of Amended and Restated Management Consulting Agreement among Dex Media East LLC and The Carlyle Group.
	10	.16++	Form of Amended and Restated Management Consulting Agreement among Dex Media East LLC and Welsh, Carson, Anderson & Stowe.
	10	.17++	Form of Amended and Restated Management Consulting Agreement among Dex Media West LLC and The Carlyle Group.
	10	.18++	Form of Amended and Restated Management Consulting Agreement among Dex Media West LLC and Welsh, Carson, Anderson & Stowe.

49

Number			Description
	10	.19++	Sponsor Stockholders Agreement among Dex Media, Inc., Carlyle Partners III, L.P., CP III Coinvestment L.P., Carlyle-Dex Partners L.P., Carlyle-Dex Partners II, L.P., Carlyle High Yield Partners, L.P., Welsh, Carson, Anderson & Stowe IX, L.P., WD GP Associates LLC, WD Investors LLC and A.S.F. Co-Investment Partners, L.P.
	10	.20+	Joinder Agreement to the Dex Holdings LLC Equityholders Agreement, effective as of April 30, 2003.
	10	.21+	Agreement Among Members (Dex Holdings LLC) among Carlyle Partners III, L.P., Carlyle-Dex Partners L.P., Carlyle-Dex Partners II L.P., Welsh, Carson, Anderson & Stowe IX, L.P., WD Investors LLC, Dex Holdings LLC, Dex Media, Inc., Dex Media East, Inc. and Dex Media East LLC, dated November 8, 2002.
	10	.22+	First Amendment to the Agreement Among Members (Dex Holdings LLC) among Carlyle Partners III, L.P., Carlyle-Dex Partners L.P., Carlyle-Dex Partners II L.P., Welsh, Carson, Anderson & Stowe IX, L.P., WD Investors LLC, Dex Holdings LLC, Dex Media, Inc., Dex Media East, Inc., Dex Media East LLC, Dex Media West, Inc. and Dex Media West LLC, dated September 8, 2003.
	10	.23+	Publishing Agreement by and among Dex Media, Inc., Dex Media East LLC (f/k/a SGN LLC), Dex Media West LLC (f/k/a/ GPP LLC) and Qwest Corporation, dated November 8, 2002, as amended.
	10	.24+*	Employment Agreement, effective as of November 8, 2002, by and between George Burnett and Dex Media, Inc.
	10	.25+*	Employment Agreement, effective as of January 2, 2003, by and between Robert M. Neumeister, Jr. and Dex Media, Inc.
	10	.26+*	Employment Agreement, effective as of November 8, 2002, by and between Marilyn B. Neal and Dex Media, Inc.
	10	.27+*	Employment Agreement, effective as of November 8, 2002, by and between Maggie Le Beau and Dex Media, Inc.
	10	.28+*	Employment Agreement, effective as of January 2, 2003, by and between Linda Martin and Dex Media, Inc.
	10	.29+*	Employment Agreement, effective as of November 8, 2002, by and between Kristine Shaw and Dex Media, Inc.
	10	.30+*	Amended and Restated Management Stockholders Agreement of Dex Media, Inc., entered into as of November 11, 2003, by and among Dex Media, Inc., Dex Holdings LLC, and those members of management who become parties thereto from time to time.
	10	.31+*	Stock Option Plan of Dex Media, Inc., effective as of November 8, 2002.
	10	.32+*	First Amendment to Stock Option Plan of Dex Media, Inc., effective as of September 9, 2003.
	10	.33+*	Second Amendment to Stock Option Plan of Dex Media, Inc., effective as of December 18, 2003.
	10	.34+	Employee Cost Sharing Agreement, by and among Dex Media Service LLC, Dex Media, Inc., Dex Media East LLC and Dex Media West LLC, effective as of December 31, 2003.
	10	.35+	Shared Services Agreement, by and among Dex Media, Inc., Dex Media East LLC, Dex Media West LLC, and any direct or indirect subsidiary of Dex Media that becomes a party thereto, effective as of December 31, 2003.
	10	.36+	Intercompany License Agreement, by and among Dex Media, Inc., Dex Media East LLC and Dex Media West LLC, effective as of September 9, 2003.
	10	.37*	Dex Media, Inc. 2004 Incentive Award Plan (incorporated by reference to our Registration Statement on Form S-8 (File No. 333-120631), filed on November 19, 2004).

50

Number			Description
	10	.38*	Dex Media, Inc. Senior Executive Incentive Bonus Plan (incorporated by reference to our Current Report on Form 8-K dated February 17, 2005).
	10	.39*	Form of Restricted Stock Agreement pursuant to the 2004 Incentive Award Plan of Dex Media, Inc. (incorporated by reference to our Current Report on Form 8-K dated March 4, 2005).
	10	.40	Master Agreement for Printing Services dated as of March 31, 2005, by and between Dex Media, Inc., on behalf of itself and it subsidiaries Dex Media East LLC and Dex Media West LLC, and Quebecor World (USA) Inc. (incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2005).
	10	.41*	Dex Media, Inc. Deferred Compensation Plan (incorporated by reference to our Current Report on Form 8-K dated May 17, 2005).
	10	.42*	Dex Media, Inc. Corporate Aircraft Policy (incorporated by reference to our Current Report on Form 8-K dated May 17, 2005).
	10	.43*	Dex Media, Inc. Financial Planning Benefit (incorporated by reference to our Current Report on Form 8-K dated May 17, 2005).
	10	.44*	Dex Media, Inc. 2005 Bonus Plan Targets (incorporated by reference to our Current Report on Form 8-K dated May 17, 2005).
	10	.45	Fourth Amendment, dated as of June 16, 2005, to the Credit Agreement dated as of September  9, 2003, as amended and restated as of July 27, 2004, by and among Dex Media, Inc., Dex Media West, Inc., Dex Media West LLC, JPMorgan Chase Bank, N.A., as administrative agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint bookrunners and co-lead arrangers, and Bank of America, N.A., Wachovia Bank, National Association, Lehman Commercial Paper Inc. and Deutsche Bank Trust Company Americas, as co-syndication agents (incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2005).
	10	.46	Fifth Amendment, dated as of June 16, 2005, to the Credit Agreement, dated as of November  8, 2002, as amended and restated as of October 31, 2003, by and among Dex Media, Inc., Dex Media East, Inc., Dex Media East LLC, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint bookrunners and co-lead arrangers, and Bank of America, N.A., Wachovia Bank, National Association, Lehman Commercial Paper Inc. and Deutsche Bank Trust company Americas, as co-syndication agents (incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2005).
	10	.47*	Retirement and General Release Agreement dated October 5, 2005, by and between Dex Media, Inc. and Robert M. Neumeister, Jr. (incorporated by reference to our Current Report on Form 8-K dated October 2, 2005).
	10	.48	Agreement and Plan of Merger, dated as of October 3, 2005, by and among Dex Media, Inc., R.H. Donnelley Corporation and Forward Acquisition Corp. (included in Exhibit 2.3).
	10	.49*	Letter Agreement dated October 2, 2005, by and between Dex Media, Inc. and George Burnett (incorporated by reference to our Current Report on Form 8-K/A dated October 18, 2005).
	10	.50*	Letter Agreement dated October 2, 2005, by and between Dex Media, Inc. and Marilyn Neal (incorporated by reference to our Current Report on Form 8-K/A dated October 18, 2005).
	10	.51*	Form of Letter Agreement dated October 2, 2005, by and between Dex Media, Inc. and each of its Senior Vice Presidents (incorporated by reference to our Current Report on Form 8-K/A dated October 18, 2005).
	10	.52*	Form of Letter Agreement dated October 2, 2005, by and between Dex Media, Inc. and each of its Vice Presidents (incorporated by reference to our Current Report on Form 8-K/A dated October 18, 2005).

51

Number			Description
	10	.53*	Letter Agreement dated December 19, 2005, by and between Dex Media, Inc. and Linda A. Martin (incorporated by reference to our Current Report on Form 8-K/A dated December 21, 2005).
	10	.54*	Letter Agreement dated December 19, 2005, by and between Dex Media, Inc. and George A. Burnett (incorporated by reference to our Current Report on Form 8-K dated December 19, 2005).
	10	.55*	Letter Agreement dated December 19, 2005, by and between Dex Media, Inc. and Scott A. Pomeroy (incorporated by reference to our Current Report on Form 8-K dated December 19, 2005).
	10	.56*	Form of Letter Agreement dated December 19, 2005, by and between Dex Media, Inc. and each of its Senior Vice Presidents and Vice Presidents (incorporated by reference to our Current Report on Form 8-K dated December 19, 2005).
	10	.57*	Letter Agreement dated December 19, 2005, by and between Dex Media, Inc. and Robert M. Neumeister, Jr. (incorporated by reference to our Current Report on Form 8-K dated December 19, 2005).
	10	.58*	Letter Agreement dated December 19, 2005, by and between Dex Media, Inc. and Marilyn B. Neal (incorporated by reference to our Current Report on Form 8-K dated December 19, 2005).
	10	.59	Amended and Restated Credit Agreement, dated January 31, 2006, by and among Dex Media, Inc. (f/k/a Forward Acquisition Corp.), Dex Media East, Inc., Dex Media East LLC, JPMorgan Chase Bank, N.A., as administrative agent, and the other entities from time to time parties thereto (incorporated by reference to Dex Media, Inc.’s current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2006).
	10	.60	Reaffirmation Agreement, dated January 31, 2006, among Dex Media, Inc., Dex Media East, Inc., Dex Media East LLC, Dex Media East Finance Co. and JPMorgan Chase Bank, N.A., as collateral agent (incorporated by reference to Dex Media, Inc.’s Current Report on Form 8-K filed wit the Securities and Exchange commission on February 6, 2006).
	10	.61	Amended and Restated Credit Agreement, dated January 31, 2006, by and among Dex Media, Inc. (f/k/a Forward Acquisition Corp.), Dex Media West, Inc., Dex Media West LLC, JPMorgan Chase Bank, N.A., as administrative agent, and the other entities from time to time parties thereto (incorporated by reference to Dex Media, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2006).
	10	.62	Reaffirmation Agreement, dated January 31, 2006, among Dex Media, Inc., Dex Media West, Inc., Dex Media West LLC, Dex Media West Finance Co., and JPMorgan Chase Bank, N.A., as collateral agent (incorporated by reference to Dex Media’s Current Report of Form 8-K filed with the Securities and Exchange commission on February 6, 2006).
	12	.1	Statement of Computation of Ratio of Earnings to Fixed Charges and Ratio of Total Debt to Owner’s Equity.
	31	.1	Certification of Chief Executive Officer of Dex Media, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31	.2	Certification of Chief Financial Officer of Dex Media, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32	.1++++	Certification of Chief Executive Officer and Chief Financial Officer of Dex Media, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

+	Incorporated by reference to our Registration Statement on Form S-4 (File No. 333-114472), declared effective on May 14, 2004.
++	Incorporated by reference to our Registration Statement on Form S-1 (File No. 333-115489) and amendments thereto, declared effective on July 21, 2004.

52

+++	Incorporated by reference to our Registration Statement on Form S-1 (File No. 333-121859) and amendments thereto, declared effective on January 25, 2005.
++++	Exhibit 32.1 is being furnished solely to accompany this report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any of our filings, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
*	Identifies each management contract or compensatory plan or arrangement.

53

EX-2.3

                          AGREEMENT AND PLAN OF MERGER

     This AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as of
October 3, 2005, by and among Dex Media, Inc., a Delaware corporation (the
"Company"), R.H. Donnelley Corporation, a Delaware corporation ("Parent"), and
Forward Acquisition Corp., a Delaware corporation and wholly owned subsidiary of
Parent ("Merger Sub").

                                    RECITALS:

     A. The Boards of Directors of the Company, Parent and Merger Sub have
determined that it is in the best interests of their respective companies and
stockholders to enter into a business combination pursuant to the terms and
subject to the conditions set forth herein, and have approved this Agreement and
the Merger;

     B. This Agreement contemplates (1) the merger of the Company with and into
Merger Sub (the "Merger") and (2) the conversion of the capital stock of the
Company into the right to receive cash and capital stock of Parent;

     C. For federal income tax purposes, it is intended that the Merger qualify
as a "reorganization" and this Agreement shall constitute a "plan of
reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code") and the Treasury Regulations promulgated
thereunder;

     D. It is intended that Parent will be treated as the acquiring entity for
accounting purposes;

     E. As an inducement and condition to Parent's entering into this Agreement,
Parent and certain stockholders of the Company (collectively, the "Company
Sponsors") are entering into (1) support agreements pursuant to which, among
other things, the Company Sponsors have agreed to vote in favor of the adoption
of this Agreement (the "Company Sponsors Support Agreements") and (2)
stockholders agreements (the "Sponsor Stockholders Agreements"), effective as of
the Effective Time, providing for certain rights of the Company Sponsors;

     F. In connection with the parties entering into this Agreement, Parent,
R.H. Donnelley, Inc. and certain investment partnerships affiliated with The
Goldman Sachs Group, Inc. (collectively, the "GS Funds") are entering into an
agreement pursuant to which, among other things, the GS Funds have agreed to
vote in favor of the issuance of the Parent Shares in the Merger (the "GS
Support Agreement"); and

     G. The parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.

     NOW, THEREFORE, the parties agree as follows:

                              ARTICLE I. THE MERGER

     1.1 The Merger. Subject to the terms of this Agreement and the conditions
set forth in Article VII, and in accordance with the Delaware General
Corporation Law (the "DGCL"),

at the Effective Time, the Company will be merged with and into Merger Sub, the
separate corporate existence of the Company will cease and Merger Sub will
continue as the surviving corporation of the Merger (the "Surviving
Corporation").

     1.2 Effective Time. As promptly as practicable after the satisfaction or,
if permissible, waiver of the conditions set forth in Article VII, the parties
hereto will cause the Merger to be consummated by filing a certificate of merger
(the "Certificate of Merger") with the Secretary of State of the State of
Delaware, in such form as is required by, and executed in accordance with, the
relevant provisions of the DGCL (the date and time of such filing of the
Certificate of Merger (or such later time as may be agreed by each of the
parties hereto and specified in the Certificate of Merger) being the "Effective
Time").

     1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
will be as provided in the DGCL.

     1.4 Certificate of Incorporation and Bylaws of the Surviving Corporation.
At the Effective Time, the Certificate of Incorporation and Bylaws of Merger
Sub, attached hereto as Exhibit A and Exhibit B, respectively, will be the
Certificate of Incorporation and Bylaws, respectively, of the Surviving
Corporation until thereafter amended in accordance with applicable Law.

     1.5 Directors and Officers of the Surviving Corporation. The directors of
Merger Sub immediately prior to the Effective Time will be the directors of the
Surviving Corporation until the next annual meeting (or the earlier of their
resignation or removal) and until their respective successors are duly elected
and qualified, as the case may be. The officers of Merger Sub immediately prior
to the Effective Time will be the officers of the Surviving Corporation until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.

     1.6 Bylaws of the Parent. At the Effective Time, the Bylaws of Parent will
be amended and restated in the form attached hereto as Exhibit C.

     1.7 Tax Consequences. It is intended that (i) the Merger qualify as a
"reorganization" within the meaning of Section 368(a) of the Code, (ii) this
Agreement will constitute a "plan of reorganization" within the meaning of
Treasury Regulation Section 1.368-2(g), and (iii) the Company, Parent and Merger
Sub will each be a party to the reorganization within the meaning of Section
368(b) of the Code.

     1.8 Headquarters. The headquarters of Parent will be in Raleigh, North
Carolina. The parties expect to maintain a significant operating presence in
Denver, Colorado.

     1.9 Certain Executive Officers of Parent and Other Matters. Immediately
following the Effective Time, the individuals set forth on Exhibit D will have
the executive officer positions at Parent as set forth therein, until the
earlier of their resignation or removal and until their respective successors
are duly elected and qualified, as the case may be. In addition, certain other
matters with respect to Parent following the Effective Time are set forth on
Exhibit D.


                                       2

     1.10 Parent Board. Effective as of the Effective Time, (i) the Parent Board
shall be composed of 13 directors, consisting of (A) Parent's Chief Executive
Officer, (B) six individuals designated by Parent from among the members of the
Parent Board prior to the Effective Time (at least five of whom shall be
independent under the New York Stock Exchange (the "NYSE") rules and
regulations), (C) the Chief Executive Officer of the Company immediately prior
to the Effective Time, (D) one designee of each Company Sponsor, pursuant to the
terms of the Sponsor Stockholders Agreements, and (E) three individuals
designated by the Company from among the members of the Company Board prior to
the Effective Time, each of whom shall be independent under the NYSE rules and
regulations and not affiliated with any Company Sponsor (with the individuals
described in clauses (C) through (E) being referred to as the "Company
Directors"), (ii) two Company Directors shall have been assigned to each of the
three classes of directors on the Parent Board; provided, however, that three
Company Directors may be elected to the class of Parent directors whose term
expires in 2008 (with the remaining directors spread as evenly as possible among
the other two classes) and the Company will designate the individuals to be
assigned to each class in accordance with the foregoing, and (iii) the Presiding
Director (as defined in the Parent Bylaws) shall be an individual designated by
Parent from among the members of the Parent Board prior to the Effective Time
who shall be independent under the NYSE rules and regulations.

         ARTICLE II. CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES

     2.1 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of the Company, Parent, Merger Sub or
the holders of any of the following securities:

          (a) Cancellation of Certain Company Common Stock. Each share of common
stock, par value $0.01 per share, of the Company (the "Company Common Stock")
issued and outstanding and owned by Parent, Merger Sub or any direct or indirect
wholly owned subsidiary of Parent or of the Company (all issued and outstanding
shares of the Company Common Stock being hereinafter collectively referred to as
the "Company Shares") and each share of Company Common Stock held in the
treasury of the Company immediately prior to the Effective Time will be canceled
without any conversion thereof and no payment or distribution will be made with
respect thereto.

          (b) Shares of Merger Sub Stock. Each share of common stock, par value
$0.01 per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time will be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock, par value $0.01 per share,
of the Surviving Corporation.

          (c) Conversion of Company Common Stock. Each Company Share (other than
any Company Shares canceled pursuant to Section 2.1(a)) will be canceled and
converted automatically, subject to adjustment in accordance with this Section
2.1 and Section 2.2, into the right to receive (i) $12.30 in cash (the "Cash
Consideration") and (ii) 0.24154 of a share of common stock (the "Exchange
Ratio"), par value $1.00 per share ("Parent Shares"), of Parent (the "Stock
Consideration," together with the Cash Consideration, the "Merger
Consideration"),


                                       3

in each case payable upon surrender, in the manner provided in Section 2.2, of
the certificate that formerly evidenced such Company Share.

          (d) Anti-Dilution Provisions. In the event either Parent or the
Company (i) changes (or establishes a record date for changing) the number of
shares of its capital stock issued and outstanding prior to the Effective Time
as a result of a stock split, reverse stock split, stock dividend (including any
dividend or distribution of securities convertible into shares of its capital
stock), extraordinary dividends, stock combination, recapitalization,
reclassification, reorganization, combination, exchange of shares or similar
transaction or like change with respect to shares of its capital stock or
(ii) pays or makes an extraordinary dividend or distribution in respect of
shares of its capital stock (other than a distribution referred to in clause (i)
of this sentence) and, in either case, the record date therefor is prior to the
Effective Time, the Merger Consideration will be proportionately adjusted. Cash
dividends and increases thereon, the purchase referred to in Section 6.15 and
redemptions not prohibited by Sections 5.2(c) and 5.3(c) of this Agreement will
not be considered extraordinary for purposes of the preceding sentence.

     2.2 Exchange of Certificates and Cash Consideration. (a) Exchange Agent.
Parent will deposit, or cause to be deposited, with a bank or trust company
designated by Parent (the "Exchange Agent"), for the benefit of the holders of
Company Shares, for exchange in accordance with this Article II through the
Exchange Agent, certificates representing the Parent Shares issuable pursuant to
Section 2.1, and cash, from time to time as required to make payments in respect
of the Cash Consideration and payments in lieu of any fractional shares pursuant
to Section 2.2(e) (such cash and certificates for Parent Shares, together with
any dividends or distributions with respect thereto, being hereinafter referred
to as the "Exchange Fund"). The Exchange Agent will, pursuant to irrevocable
instructions, deliver the Parent Shares and cash payments contemplated to be
issued pursuant to Section 2.1 out of the Exchange Fund. Except as contemplated
by Section 2.2(f), the Exchange Fund will not be used for any other purpose.

          (b) Exchange Procedures. As promptly as practicable after the
Effective Time, Parent will cause the Exchange Agent to mail to each person who
was, at the Effective Time, a holder of record of Company Shares entitled to
receive the Merger Consideration pursuant to Section 2.1(c): (i) a letter of
transmittal (which will be in customary form and will specify that delivery will
be effected, and risk of loss and title to the certificates evidencing such
Company Shares (the "Certificates") will pass, only upon proper delivery of the
Certificates to the Exchange Agent) and (ii) instructions for use in effecting
the surrender of the Certificates pursuant to such letter of transmittal. Upon
surrender to the Exchange Agent of a Certificate for cancellation, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, (i) the holder of such Certificate will be
entitled to receive in exchange therefor (A) a certificate representing that
number of whole Parent Shares which such holder has the right to receive in
respect of the Company Shares formerly represented by such Certificate (after
taking into account all Company Shares then held by such holder), if any, (B)
cash in respect of the Cash Consideration to be received by such holder, if any,
(C) cash in lieu of any fractional Parent Shares to which such holder is
entitled pursuant to Section 2.2(e), and (D) any dividends or other
distributions to which such holder is entitled pursuant to Section 2.2(c) (such
items described in clauses (A) - (D), the "Delivered Items"), and (ii) the
Certificate so


                                       4

surrendered will forthwith be cancelled. In the event of a transfer of ownership
of Company Shares that is not registered in the transfer records of the Company,
the Delivered Items may be issued to a transferee if the Certificate
representing such Company Shares is presented to the Exchange Agent, accompanied
by all documents required to evidence and effect such transfer and by evidence
that any applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate will be deemed at all times
after the Effective Time to represent only the right to receive upon such
surrender the Delivered Items.

          (c) Distributions with Respect to Unexchanged Parent Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Shares with a record date after the Effective Time will be
paid to the holder of any unsurrendered Certificate with respect to the Parent
Shares represented thereby, and no cash payment in lieu of any fractional shares
will be paid to any such holder pursuant to Section 2.2(e), until the holder of
such Certificate surrenders such Certificate. Subject to the effect of escheat,
tax or other applicable Laws, following surrender of any such Certificate, there
will be paid to the holder of the certificates representing whole Parent Shares
issued in exchange therefor, without interest, (i) promptly, the amount of any
cash payable with respect to a fractional Parent Share to which such holder is
entitled pursuant to Section 2.2(e) and the amount of dividends or other
distributions with a record date after the Effective Time and theretofore paid
with respect to such whole Parent Shares and (ii) at the appropriate payment
date, the amount of dividends or other distributions, with a record date after
the Effective Time but prior to surrender and a payment date occurring after
surrender, payable with respect to such whole Parent Shares.

          (d) No Further Rights in Company Common Stock. All Merger
Consideration issued upon conversion of the Company Shares in accordance with
the terms hereof (together with cash paid pursuant to Section 2.2(c) or Section
2.2(e)) will be deemed to have been issued in full satisfaction of all rights
pertaining to such Company Shares, including any "Rights" under the Company
Rights Agreement.

          (e) No Fractional Shares. No certificate or scrip representing
fractional Parent Shares will be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any other rights of a stockholder of Parent.
Notwithstanding any other provision of this Agreement, each holder of shares of
Company Common Stock converted pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of Parent Common Stock (after
taking into account all Certificates delivered by such holder) will receive, in
lieu thereof, cash (without interest) in an amount equal to such fraction as
determined below. As promptly as practicable following the Effective Time, the
Exchange Agent will determine the excess of (i) the number of full Parent Shares
delivered to the Exchange Agent by Parent for issuance to holders of
Certificates over (ii) the aggregate number of full Parent Shares to be
distributed to holders of Company Common Stock (such excess being herein
referred to as the "Excess Shares"). As soon as practicable after the Effective
Time, the Exchange Agent, as agent for such holders of Company Common Stock will
sell the Excess Shares at then prevailing prices on the NYSE all in the manner
provided herein. The sale of the Excess Shares by the Exchange Agent will be
executed on the NYSE and will be executed in round lots to the extent
practicable. Until the net proceeds of any such sale or sales have been
distributed to the holders of Company Common Stock, the Exchange Agent will hold
such proceeds in trust for such holders. Parent will pay all commissions,
transfer taxes and other out-of-pocket transaction costs of the Exchange Agent
incurred in connection with such


                                       5

sale or sales of Excess Shares and the Exchange Agent's compensation and
expenses in connection with such sale or sales. The Exchange Agent will
determine the portion of such net proceeds to which each holder of Company
Common Stock will be entitled, if any, by multiplying the amount of the
aggregate net proceeds by a fraction, the numerator of which is the amount of
the fractional share interest to which such holder of Company Common Stock is
entitled (after taking into account all Certificates then held by such holder)
and the denominator of which is the aggregate amount of fractional share
interests to which all holders of Company Common Stock are entitled. As soon as
practicable after the determination of the amount of cash, if any, to be paid to
holders of Certificates with respect to any fractional share interests, the
Exchange Agent will promptly pay such amounts to such holders of Company Common
Stock, subject to and in accordance with the terms of Sections 2.2(b) and (c).

          (f) Termination of Exchange Fund and Additional Exchange Fund. Any
portion of the Exchange Fund that remains undistributed to the holders of
Company Shares for one year after the Effective Time will be delivered to
Parent, upon demand, and any holders of Company Shares who have not theretofore
complied with this Article II will thereafter look only to Parent for the
Delivered Items. Any portion of the Exchange Fund remaining unclaimed by holders
of Company Shares as of a date which is immediately prior to such time as such
amounts would otherwise escheat to or become property of any government entity
will, to the extent permitted by applicable Law, become the property of Parent
free and clear of any claims or interest of any person previously entitled
thereto.

          (g) No Liability. None of the Exchange Agent, Parent or the Surviving
Corporation will be liable to any holder of Company Shares for any such Company
Shares (or dividends or distributions with respect thereto), or cash delivered
to a public official pursuant to any abandoned property, escheat or similar Law.

          (h) Withholding Rights. Each of the Surviving Corporation and Parent
will be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Company Shares, options to purchase
shares of Company Common Stock (a "Company Stock Option") or other awards based
on Company Common Stock (the "Company Stock-Based Awards"), such amounts as it
is required to deduct and withhold with respect to the making of such payment
under the Code, or any provision of state, local or foreign tax Law. To the
extent that amounts are so withheld by the Surviving Corporation or Parent, as
the case may be, such withheld amounts will be treated for all purposes of this
Agreement as having been paid to the holder of the Company Shares, Company Stock
Options or Company Stock-Based Awards in respect of which such deduction and
withholding was made by the Surviving Corporation or Parent, as the case may be.
Any amounts deducted and withheld from the consideration otherwise payable
pursuant to this Agreement shall be remitted by Parent or the Surviving
Corporation to the appropriate governmental authority on a timely basis.

          (i) Lost Certificates. If any Certificate has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond, in such reasonable
amount as the Surviving Corporation may direct, as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the
Delivered Items.


                                       6

     2.3 Stock Transfer Books. At the Effective Time, the stock transfer books
of the Company will be closed and there will be no further registration of
transfers of Company Shares thereafter on the records of the Company. From and
after the Effective Time, the holders of Certificates will cease to have any
rights with respect to such Company Shares, except as provided in this Agreement
or by Law. On or after the Effective Time, subject to, with respect to the
relevant holders of Company Shares, their delivery of the Certificates required
by Section 2.2 of this Agreement, any Certificates presented to the Exchange
Agent or Parent for any reason will be converted into the Delivered Items.

     2.4 Company Options; Other Company Stock-Based Awards. (a) As soon as
practicable following the date of this Agreement, the Company will take such
actions so that the Company Board or, if appropriate, any committee thereof
administering the Company Stock Plans (as identified on Section 3.11(a) of the
Company Disclosure Schedule) adopts such resolutions and takes such other
actions (including obtaining any required consents) as may be required to
provide that each Company Stock Option that is outstanding immediately prior to
the Effective Time, whether vested or unvested, will, at the Effective Time, be
converted into an option to purchase a number of shares of Parent Common Stock
equal to the number of shares of Company Common Stock subject to such Company
Stock Option multiplied by 0.43077 (the "Stock Exchange Ratio") (rounded down to
the nearest whole share), at an exercise price per share of Parent Common Stock
equal to the exercise price per share of Company Common Stock under such Company
Stock Option divided by the Stock Exchange Ratio (rounded up to the nearest
whole cent), and otherwise having the same terms and conditions as were
applicable under such Company Stock Option immediately prior to the Effective
Time (each, a "Company Rollover Option"). Notwithstanding the foregoing, the
Company may adjust the conversion described in this Section 2.4(a) by modifying
the exercise price per share of Parent Common Stock and may take such actions as
may be necessary or appropriate to comply with Section 409A of the Code and to
preserve the intended tax treatment of the Company Rollover Options; provided,
however, that in no event shall any such adjustment to the conversion described
in this Section 2.4(a) increase the aggregate number of shares of Parent Common
Stock subject to the Company Rollover Options without the prior written consent
of Parent.

          (b) The Company will take all actions necessary to ensure that all
restrictions and limitations on vesting, transfer and exercise and all risk of
forfeiture and rights of repurchase with respect to Company Stock Options,
shares of Company Common Stock and other Company Stock-Based Awards, to the
extent not already lapsed as of the Effective Time, will remain in full force
and effect with respect to such Company Stock Options, shares of Company Common
Stock and other Company Stock-Based Awards after giving effect to the Merger and
their conversion into Company Rollover Options, shares of Parent Common Stock
and awards denominated in Parent Common Stock, except to the extent required by
the terms of such Company Stock Options and Company Stock-Based Awards Benefit
Plan or pursuant to any Company Benefit Plan as in effect on the date hereof and
except as set forth on Section 2.4(b) of the Company Disclosure Schedule.



                                       7


          (c) Parent will prepare and file with the Securities and Exchange
Commission (the "SEC"), and use reasonable best efforts to cause to be effective
prior to or at the Effective Time, a registration statement on Form S-8 (or
another appropriate form) registering under the Company Stock Plans all shares
of Parent Common Stock subject to the Company Rollover Options and the Company
Stock-Based Awards which survive the Effective Time and become denominated in
the form of Parent Common Stock. Such registration statement will be kept
effective (and the current status of the prospectus or prospectuses required
thereby will be maintained) as long as any Company Rollover Options and Company
Stock-Based Awards remain outstanding.

     2.5 Appraisal Rights/Dissenting Shares. (a) Notwithstanding any provision
of this Agreement to the contrary and to the extent available under the DGCL,
Company Shares that are outstanding immediately prior to the Effective Time and
that are held by stockholders who have neither voted in favor of the Merger nor
consented thereto in writing and who have demanded properly in writing appraisal
for such Company Shares in accordance with Section 262 of the DGCL
(collectively, the "Dissenting Shares") will not be converted into, or represent
the right to receive, the Merger Consideration payable to No Election Shares.
Such stockholders will be entitled to receive payment of the appraised value of
Dissenting Shares held by them in accordance with the provisions of such Section
262, except that all Company Shares held by stockholders who have failed to
perfect or who effectively have withdrawn or lost their rights to appraisal of
such Dissenting Shares under such Section 262, will thereupon be deemed to have
been converted into, and to have become exchangeable for, as of the


                                       8

Effective Time, the right to receive the Merger Consideration, without any
interest thereon, upon surrender, in the manner provided in Section 2.2, of the
certificate or certificates that formerly evidenced such Company Shares.
Notwithstanding anything to the contrary contained in this Section 2.5, if the
Merger is rescinded or abandoned, then the right of any stockholder to be paid
the appraised value of such stockholder's Dissenting Shares pursuant to Section
262 of the DGCL will cease.

          (b) The Company will give Parent (i) prompt (and in any event prior to
the Effective Time) notice of any demands for appraisal received by the Company,
and prompt notice of any withdrawals of such demands, and any other instruments
served pursuant to the DGCL and received by the Company and (ii) the opportunity
to direct all negotiations and proceedings with respect to demands for appraisal
under the DGCL. The Company will not, except with the prior written consent of
Parent, make any payment with respect to any demands for appraisal or offer to
settle or settle any such demands.

           ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     Except as disclosed in (x) a publicly available final registration
statement, prospectus, report, form, schedule or definitive proxy statement
filed since January 1, 2005 by the Company with the SEC pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), or the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (collectively, the
"Company SEC Reports"), and prior to the close of business on September 30, 2005
(the "Measurement Date"), but excluding any risk factor disclosure contained in
any such Company SEC Report under the heading "Risk Factors" or "Forward-Looking
Information," or (y) the disclosure letter (the "Company Disclosure Schedule")
delivered by the Company to Parent prior to the execution of this Agreement
(which letter sets forth items of disclosure with specific reference to the
particular Section or subsection of this Agreement to which the information in
the Company Disclosure Schedule relates; provided, however, that any information
set forth in one section of the Company Disclosure Schedule will be deemed to
apply to each other Section or subsection of this Agreement to which its
relevance is reasonably apparent; provided, further, that, notwithstanding
anything in this Agreement to the contrary, the inclusion of an item in such
schedule as an exception to a representation or warranty will not be deemed an
admission that such item represents a material exception or material fact, event
or circumstance or that such item has had or would reasonably be expected to
have a Material Adverse Effect on the Company), the Company represents and
warrants to Parent as follows:

     3.1 Corporate Organization. (a) The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company. As used in this Agreement, the term
"Material Adverse Effect" means, with respect to Parent or the Company, as the
case may be, any change, effect, event, occurrence or state of facts that has
had or would be reasonably expected to have a material adverse effect on


                                       9

(i) the business, results of operations or financial condition of such party and
its Subsidiaries, taken as a whole (provided, however, that with respect to this
clause (i), Material Adverse Effect will be deemed not to include effects to the
extent resulting from (A) changes in or relating to the United States economy or
United States financial, credit or securities markets in general or (B) changes
in or relating to the industries in which such party operates or the markets for
any of such party's products or services in general, which changes in the case
of clauses (A) and (B) do not affect such party to a materially disproportionate
degree relative to other entities operating in such markets or industries or
serving such markets) or (ii) the ability of such party to consummate the
transactions contemplated by this Agreement in the manner contemplated hereby.

          (b) True and complete copies of the Second Amended and Restated
Certificate of Incorporation of the Company, as amended through, and as in
effect as of, the date of this Agreement (including any certificates of
designation thereto) (the "Company Charter"), and the Amended and Restated
By-laws of the Company, as amended through, and as in effect as of, the date of
this Agreement (the "Company Bylaws"), have previously been made available to
Parent.

          (c) Each Company Subsidiary (i) is duly organized and validly existing
under the laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified, and (iii) has all requisite
corporate power and authority to own or lease its properties and assets and to
carry on its business as now conducted, except for such variances from the
matters set forth in any of clauses (i), (ii) or (iii) as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.

     3.2 Capitalization. (a) As of the date of this Agreement, the authorized
Company capital stock consists of (i) 700,000,000 shares of Company Common Stock
of which, as of the Measurement Date, 150,508,492 shares were issued and
outstanding, and (ii) 200,000 shares of Company Series A junior participating
preferred stock, par value $0.01 per share, of which, as of the Measurement
Date, no shares were issued and outstanding (the "Company Series A Preferred
Stock" and, together with the Company Common Stock, the "Company Capital
Stock"). As of the Measurement Date, no shares of Company Capital Stock were
held in the Company's treasury. As of the Measurement Date, no shares of Company
Capital Stock were reserved for issuance except for 4,821,858 shares of Company
Common Stock reserved for issuance upon the exercise of Company Stock Options or
Company Stock-Based Awards issued or issuable pursuant to the equity-based
compensation plans identified on Section 3.11(a) of the Company Disclosure
Schedule (the "Company Stock Plans"). All of the issued and outstanding shares
of Company Capital Stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. As of the date of this Agreement,
except as set forth above or in the last sentence of this Section 3.2(a), or
pursuant to this Agreement and the Company Stock Plans, there are no outstanding
shares of capital stock or other voting securities of the Company, and the
Company does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments, preemptive rights, redemption obligations
or agreements of any character calling for the purchase, issuance or
registration of any shares of


                                       10

the Company's capital stock or any other equity securities of the Company or any
securities representing the right to purchase or otherwise receive any shares of
the Company's capital stock. Section 3.2(a) of the Company Disclosure Schedule
sets forth the following information with respect to each Company Stock Option
and Company Stock-Based Award outstanding as of the date of this Agreement, as
applicable: (i) the name of the recipient; (ii) the number of shares of Company
Common Stock subject to such Company Stock Option or Company Stock-Based Award;
(iii) the exercise, purchase or grant price; (iv) the date of grant; (v) the
applicable vesting schedule; (vi) the date of expiration; (vii) the type of such
awards and the Company Stock Plans under which such Company Stock Options or
Company Stock-Based Awards were issued; and (viii) whether the exercisability of
such Company Stock Option or Company Stock-Based Award will be accelerated in
any way by the transactions contemplated by this Agreement, and the extent of
such acceleration. From and after the Measurement Date through the date hereof,
the Company has not issued or awarded any Company Capital Stock, Company Stock
Options or Company Stock-Based Awards (other than upon the exercise or
satisfaction of Company Stock Options or Company Stock-Based Awards or the
conversion of convertible securities, in each case outstanding as of the
Measurement Date).

          (b) As of the date of this Agreement, no bonds, debentures, notes or
other indebtedness of the Company having the right to vote on any matters on
which stockholders may vote ("Company Voting Debt") are issued or outstanding.

          (c) All of the issued and outstanding shares of capital stock or other
equity ownership interests of each "significant subsidiary" (as such term is
defined under Regulation S-X of the SEC) of the Company are owned by the
Company, directly or indirectly, free and clear of any material liens, pledges,
charges and security interests and similar encumbrances, other than for Taxes
that are not yet due ("Liens"), and free of any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other equity ownership
interest (other than restrictions under applicable securities Laws), and all of
such shares or equity ownership interests are duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights. No such
significant subsidiary is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of capital stock or any other equity security
of such significant subsidiary or any securities representing the right to
purchase or otherwise receive any shares of capital stock or any other equity
security of such significant subsidiary. Except for the capital stock or other
equity ownership interests of the Company Subsidiaries, as of the date of this
Agreement, the Company does not beneficially own directly or indirectly any
capital stock, membership interest, partnership interest, joint venture interest
or other equity interest in any Person that constitutes a Substantial
Investment. As used in this Agreement, (i) "Person" means an individual, a
corporation, a partnership, an association, a joint stock company, a business
trust or an unincorporated organization, (ii) "Subsidiary," when used with
respect to either party, means any corporation, partnership, limited liability
company or other organization, whether incorporated or unincorporated, (x) of
which such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting
interests in such partnership) or (y) a majority of the securities or other
interests of which having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or


                                       11

controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries, and the terms "Company Subsidiary"
and "Parent Subsidiary" will mean any Subsidiary of the Company or Parent,
respectively, and (iii) "Substantial Investment," when used with respect to
either party, means a stock or other equity investment having a fair market
value or book value in excess of $5 million, directly or indirectly, in any
Person.

     3.3 Authority; No Violation. (a) The Company has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of the Company (the "Company Board").
The Company Board has determined that this Agreement and the transactions
contemplated hereby are in the best interests of the Company and its
stockholders, has resolved to recommend that holders of Company Common Stock
vote in favor of the adoption of this Agreement and has directed that this
Agreement be submitted to the Company's stockholders for adoption, and the
Merger be submitted to the Company's stockholders for approval, at a duly held
meeting of such stockholders (the "Company Stockholders Meeting"), and, except
for the adoption of this Agreement and the approval of the Merger at such
meeting by the affirmative vote of the holders of a majority of the Company
Shares issued an outstanding and entitled to vote thereon ("Company Stockholder
Approval"), no other corporate proceedings on the part of the Company or vote by
the holders of any class or series of Company Capital Stock are necessary to
approve or adopt this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by the
Company and (assuming due authorization, execution and delivery by the other
parties hereto) constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms (except as may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar Laws
affecting the rights of creditors generally and the availability of equitable
remedies).

          (b) Neither the execution and delivery of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
hereby, nor compliance by the Company with any of the terms or provisions of
this Agreement, will (i) assuming that the Company Stockholder Approval is
obtained, violate any provision of the Company Charter or the Company Bylaws or
(ii) assuming that the consents, approvals and filings referred to in Section
3.4 are duly obtained and/or made, (A) violate any order, injunction or decree
issued by any court or agency of competent jurisdiction or other legal restraint
or prohibition (an "Injunction") or any federal, state, local or foreign laws,
statutes, ordinances, rules, regulations, judgments, orders, Injunctions,
decrees, arbitration awards, agency requirements, licenses and permits of all
Governmental Entities (each, a "Law" and collectively, "Laws") applicable to the
Company, any of the Company Subsidiaries or any of their respective properties
or assets or (B) violate, conflict with, result in a breach of any provision of
or the loss of any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the termination of or a right of termination or cancellation under, accelerate
the performance required by, or result in the creation of any Lien upon any of
the respective properties or assets of the Company or any of the Company
Subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Company or any of the Company


                                       12

Subsidiaries is a party, or by which they or any of their respective properties
or assets may be bound or affected, except, in the case of clause (ii), for such
violations, conflicts, breaches, defaults, terminations, rights of termination
or cancellation, accelerations or Liens that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.

     3.4 Consents and Approvals. Except for (i) the filing with the SEC of a
Joint Proxy Statement in definitive form relating to the Company Stockholders
Meeting and the Parent Stockholders Meeting (the "Joint Proxy Statement") and of
a registration statement on Form S-4 (the "Form S-4") in which the Joint Proxy
Statement will be included as a prospectus, and declaration of effectiveness of
the Form S-4, (ii) the filing of the Certificate of Merger with the Delaware
Secretary of State pursuant to the DGCL, (iii) any notices or filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (iv) such filings and approvals as are required to be made or obtained
under the securities or "Blue Sky" laws of various states in connection with the
issuance of the shares of Parent capital stock pursuant to this Agreement, (v)
the Company Stockholder Approval and Parent Stockholder Approval, and (vi) the
consents or approvals listed in Section 3.4 of the Company Disclosure Schedule,
no consents or approvals of or filings or registrations with any federal, state,
local or foreign government, court of competent jurisdiction, administrative
agency, commission or other governmental authority or instrumentality (each, a
"Governmental Entity") are necessary in connection with (A) the execution and
delivery by the Company of this Agreement or (B) the consummation by the Company
of the Merger and the other transactions contemplated by this Agreement.

     3.5 Reports. The Company and each of the Company Subsidiaries have timely
filed all reports, registrations, schedules, forms, statements and other
documents, together with any amendments required to be made with respect
thereto, that they were required to file since July 22, 2004 with (i) the SEC,
(ii) any state or other federal regulatory authority (other than any taxing
authority, which is covered by Section 3.10), and (iii) any foreign regulatory
authority (other than any taxing authority, which is covered by Section 3.10)
(collectively, "Regulatory Agencies"), and have paid all fees and assessments
due and payable in connection therewith, except in each case under clauses (ii)
and (iii) where the failure to file such report, registration, schedule, form,
statement or other document, or to pay such fees and assessments, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. No Company SEC Report, as of the date of such
Company SEC Report, contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances in which they
were made, not misleading, except that information as of a later date (but
before the date of this Agreement) will be deemed to modify information as of an
earlier date. Since July 22, 2004, as of their respective dates, all Company SEC
Reports complied as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, and the rules and
regulations thereunder with respect thereto.

     3.6 Financial Statements. The Company has previously made available to
Parent copies of (i) the consolidated balance sheets of the Company and the
Company Subsidiaries as of December 31, 2004 and 2003, the related consolidated
statements of operations and cash flows for the years ended December 31, 2004
and December 31, 2003 and for the periods from


                                       13

November 9 to December 31, 2002 and January 1 to November 8, 2002, and the
related consolidated statements of changes in stockholders' equity and
comprehensive loss for the years ended December 31, 2004 and December 31, 2003
and for the period from November 9 to December 31, 2002, as reported in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2004, including any amendments thereto filed with the SEC prior to the
Measurement Date (collectively, the "Company 2004 10-K"), filed with the SEC
under the Exchange Act, accompanied by the audit report of KPMG LLP, the
independent registered public accounting firm with respect to the Company for
such periods (such balance sheets and statements, the "Audited Company Financial
Statements"), and (ii) the unaudited condensed consolidated balance sheet of the
Company and the Company Subsidiaries as of June 30, 2005 and the related
condensed consolidated statements of operations and cash flows for the six-month
periods ended June 30, 2005 and 2004, as reported in the Company's Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 2005, including any
amendments thereto filed with the SEC prior to the Measurement Date
(collectively, the "Company 10-Q") (such balance sheets and statements, the
"Unaudited Company Financial Statements" and, together with the Audited Company
Financial Statements, the "Company Financial Statements"). The consolidated
balance sheets of the Company (including the related notes, where applicable)
included in the Company Financial Statements fairly present in all material
respects the consolidated financial position of the Company and the Company
Subsidiaries as of the dates thereof, and the other financial statements
included in the Company Financial Statements (including the related notes, where
applicable) fairly present in all material respects the results of the
consolidated operations, cash flows and changes in stockholders' equity of the
Company and the Company Subsidiaries for the respective periods therein set
forth, subject in the case of the Unaudited Company Financial Statements to
normal year-end audit adjustments that are immaterial in nature and in amounts
consistent with past experience; each of such statements (including the related
notes, where applicable) complies in all material respects with the published
rules and regulations of the SEC with respect thereto; and each of the Company
Financial Statements (including the related notes, where applicable) has been
prepared in all material respects in accordance with U.S. generally accepted
accounting principles ("GAAP") consistently applied during the periods involved,
except, in each case, as indicated in such statements or in the notes thereto.
To the knowledge of the Company, there is no applicable accounting rule,
consensus or pronouncement that has been adopted by the SEC, the Financial
Accounting Standards Board, the Emerging Issues Task Force or any similar body
but is not in effect as of the date of this Agreement that, if implemented,
would reasonably be expected to have a Material Adverse Effect on the Company.

     3.7 Advisors' Fees. None of the Company, any Company Subsidiary or any of
their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or related transactions contemplated by this
Agreement, other than Lehman Brothers Inc. and Merrill Lynch & Co. (the
"Company's Advisors"), which firms the Company retained pursuant to engagement
letters, copies of which have been provided to Parent.

     3.8 Absence of Certain Changes or Events. (a) Since June 30, 2005, no event
has occurred that has had or would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Company.


                                       14

          (b) From June 30, 2005, through the date hereof, the Company and the
Company Subsidiaries have carried on their respective businesses in all material
respects in the ordinary course and have not taken any action or failed to take
any action that would have resulted in a breach of Section 5.2 had such section
been in effect since June 30, 2005.

          (c) The aggregate amount of payments permitted to be made under the
restricted payments covenant under each of the indentures governing the notes of
the Company and Dex Media West, LLC is at least $450 million and $200 million,
respectively.

     3.9 Legal Proceedings. (a) None of the Company or any of the Company
Subsidiaries is a party to any, and there are no pending or, to the knowledge of
the Company, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations or reviews of any
nature against the Company or any of the Company Subsidiaries, except as would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.

          (b) There is no Injunction, judgment, or regulatory restriction
imposed upon the Company, any of the Company Subsidiaries or the assets of the
Company or any of the Company Subsidiaries that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.

     3.10 Taxes and Tax Returns. (a) Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company: (i) the Company and the Company Subsidiaries have timely filed all Tax
Returns required to be filed by them on or prior to the date of this Agreement
taking into account any extensions of time within which to file such Tax Returns
(all such returns being accurate and complete in all material respects) and have
paid all Taxes required to be paid by them other than Taxes that are not yet due
or that are being contested in good faith in appropriate proceedings; (ii) there
are no Liens for Taxes on any assets of the Company or the Company Subsidiaries
other than Liens for Taxes that are not yet due and payable; (iii) no deficiency
for any Tax has been asserted or assessed by a taxing authority against the
Company or any of the Company Subsidiaries which deficiency has not been paid or
is not being contested in good faith in appropriate proceedings; (iv) the
Company and the Company Subsidiaries have provided adequate reserves in their
financial statements for any Taxes that have not been paid; and (v) neither the
Company nor any of the Company Subsidiaries is a party to or is bound by any Tax
sharing, allocation or indemnification agreement or arrangement (other than such
an agreement or arrangement exclusively between or among the Company and the
Company Subsidiaries).

          (b) Within the past five years, neither the Company nor any of the
Company Subsidiaries has been a "distributing corporation" or a "controlled
corporation" in a distribution intended to qualify for tax-free treatment under
Section 355 of the Code.

          (c) Neither the Company nor any of the Company Subsidiaries has been a
party to a transaction that, as of the date of this Agreement, constitutes a
"listed transaction" for purposes of Section 6011 of the Code and applicable
Treasury Regulations thereunder (or a similar provision of state law). To the
knowledge of the Company, the Company has disclosed to Parent all "reportable
transactions" within the meaning of Treasury Regulation Section


                                       15

1.6011-4(b) (or a similar provision of state law) to which it or any of the
Company Subsidiaries has been a party.

          (d) Neither the Company nor any of the Company Subsidiaries has any
liability for the Taxes of any person other than the Company or the Company
Subsidiaries under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract, or otherwise.

          (e) Neither the Company nor any of the Company Subsidiaries will be
required to include any item of income in, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof) ending after
the Closing Date (except consistent with its treatment of such items in Tax
Returns for prior periods) as a result of any (i) change in method of
accounting, (ii) agreement with a Tax authority relating to Taxes, (iii)
installment sale or open transaction disposition or intercompany transaction
made on or prior to the Effective Time, (iv) the completed contract method of
accounting or other method of accounting applicable to long-term contracts (or
any comparable provisions of state, local or foreign law), or (v) prepaid amount
received prior to the Effective Time.

          (f) As used in this Agreement, the term "Tax" or "Taxes" means (i) all
federal, state, local and foreign income, excise, gross receipts, gross income,
ad valorem, profits, gains, property, capital, sales, transfer, use, payroll,
employment, severance, withholding, duties, intangibles, franchise, backup
withholding and other taxes, charges, levies or like assessments together with
all penalties and additions to tax and interest thereon and (ii) any liability
for Taxes described in clause (i) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign Law), and the term "Tax Return"
means any return, filing, report, questionnaire, information statement or other
document required to be filed, including any amendments that may be filed, for
any taxable period with any taxing authority (whether or not a payment is
required to be made with respect to such filing).

     3.11 Employees. (a) As of the date of this Agreement, the Company
Disclosure Schedule sets forth a true and complete list of each material benefit
or compensation plan, program, fund, contract, arrangement or agreement,
including any material bonus, incentive, deferred compensation, vacation, stock
purchase, stock option, severance, employment, golden parachute, retention,
salary continuation, change of control, retirement, pension, profit sharing or
fringe benefit plan, program, fund, contract, arrangement or agreement of any
kind (whether written or oral, tax-qualified or non-tax qualified, funded or
unfunded, foreign or domestic, active, frozen or terminated) and any related
trust, insurance contract, escrow account or similar funding arrangement, that
is maintained or contributed to by the Company or any Company Subsidiary (or
required to be maintained or contributed to by the Company or any Company
Subsidiary) for the benefit of current or former directors, officers or
employees of, or consultants to, the Company and the Company Subsidiaries or
with respect to which the Company or the Company Subsidiaries may, directly or
indirectly, have any liability, as of the date of this Agreement (the "Company
Benefit Plans").

          (b) The Company has heretofore made available to Parent true and
complete copies of (i) each written Company Benefit Plan, (ii) the actuarial
report for each Company Benefit Plan (if applicable) for each of the last three
years, (iii) the most recent determination


                                       16

letter from the Internal Revenue Service ("IRS") (if applicable) for each
Company Benefit Plan, (iv) the current summary plan description of each Company
Benefit Plan that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), (v) a copy of the description of each Company
Benefit Plan not subject to ERISA that is currently provided to participants in
such plan, (vi) a summary of the material terms of each unwritten Company
Benefit Plan, and (vii) the annual report for each Company Benefit Plan (if
applicable) for each of the last three years.

          (c) Except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on the Company, (i) each of the
Company Benefit Plans has been operated and administered in compliance with its
terms and applicable Law, including ERISA and the Code, (ii) each of the Company
Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code is so qualified, and there are no existing circumstances or any events
that have occurred that would reasonably be expected to adversely affect the
qualified status of any such Company Benefit Plan, and each such plan has a
favorable determination letter from the IRS to the effect that it is so
qualified or the applicable remedial amendment period has not expired and, if
the letter for such plan is not current, such plan is the subject of a timely
request for a current favorable determination letter or the applicable remedial
amendment period has not expired, (iii) with respect to each Company Benefit
Plan that is subject to Title IV of ERISA, the present value (as defined under
Section 3(27) of ERISA) of accumulated benefit obligations under such Company
Benefit Plan, based upon the actuarial assumptions used for funding purposes in
the most recent actuarial report prepared by such Company Benefit Plan's actuary
with respect to such Company Benefit Plan, did not, as of its latest valuation
date, exceed the then current value (as defined under Section 3(26) of ERISA) of
the assets of such Company Benefit Plan allocable to such accrued benefits, (iv)
no Company Benefit Plan that is an employee welfare benefit plan (including any
plan described in Section 3(1) of ERISA) (a "Welfare Plan") provides benefits
coverage, including death or medical benefits coverage (whether or not insured),
with respect to current or former employees or directors of the Company or the
Company Subsidiaries beyond their retirement or other termination of service,
other than (A) coverage mandated by applicable Law, (B) benefits the full cost
of which is borne by such current or former employee or director (or his or her
beneficiary), (C) coverage through the last day of the calendar month in which
retirement or other termination of service occurs, or (D) medical expense
reimbursement accounts, (v) no liability under Title IV of ERISA has been
incurred by the Company, the Company Subsidiaries or any trade or business,
whether or not incorporated, all of which together with the Company would be
deemed a "single employer" within the meaning of Section 414(b), 414(c) or
414(m) of the Code or Section 4001(b) of ERISA (a "Company ERISA Affiliate"),
that has not been satisfied in full, and no condition exists that presents a
material risk to the Company, the Company Subsidiaries or any Company ERISA
Affiliate of incurring a liability thereunder, (vi) no Company Benefit Plan is a
"multiemployer plan" (as such term is defined in Section 3(37) of ERISA) or a
"multiple employer plan" (as described in Section 413(c) of the Code), (vii)
none of the Company or the Company Subsidiaries or, to the knowledge of the
Company, any other Person, including any fiduciary, has engaged in a transaction
in connection with which the Company, the Company Subsidiaries or any Company
Benefit Plan would reasonably be expected to be subject to either a civil
penalty assessed pursuant to Section 409 or 502(i) of ERISA or a Tax imposed
pursuant to Section 4975 or 4976 of the Code, (viii) to the knowledge of the
Company, there are no pending, threatened or anticipated claims (other than
routine claims


                                       17

for benefits) by, on behalf of or against any of the Company Benefit Plans or
any trusts, insurance contracts, escrow accounts or similar funding arrangements
related thereto, (ix) all contributions or other amounts required to be paid by
the Company or the Company Subsidiaries as of the Effective Time with respect to
each Company Benefit Plan in respect of current or former plan years have been
paid in accordance with Section 412 of the Code or accrued in accordance with
GAAP (as applicable) and (x) since December 31, 2004, no Company Benefit Plan
has been amended or modified in any material respect or adopted or terminated.

          (d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will (either
alone or in conjunction with any other event) (i) result in the Surviving
Corporation or any of its Subsidiaries being liable for any payment or benefit
(including non-deductible employee remuneration (described in Section 162(m) of
the Code), severance, retention, stay-put, change of control, unemployment
compensation, "excess parachute payment" (within the meaning of Section 280G of
the Code), tax gross-up, forgiveness of indebtedness or otherwise) becoming due
to any director, officer or employee of, or any consultant to, the Company or
any of the Company Subsidiaries from the Company or any of the Company
Subsidiaries under any Company Benefit Plan or otherwise, (ii) increase any
amounts or benefits otherwise payable or due to any such Person under any
Company Benefit Plan or otherwise, or (iii) result in any acceleration of the
time of payment or vesting of, or any requirement to fund or secure, any such
amounts or benefits (including any Company Stock Option or Company Stock-Based
Award) or result in any breach of or default under any Company Benefit Plan.

          (e) (i) There are no controversies relating to or arising out of a
collective bargaining relationship between the Company or any Company Subsidiary
and any union pending or, to the knowledge of the Company, threatened between
the Company or any Company Subsidiary and any of their respective employees,
which controversies would, individually or in the aggregate, have a Material
Adverse Effect on the Company, (ii) to the knowledge of the Company, as of the
date hereof there are not any organizational campaigns, petitions or other
activities or proceedings of any labor union to organize any such employees that
would, individually or in the aggregate, have a Material Adverse Effect on the
Company, (iii) neither the Company nor any Company Subsidiary has breached or
otherwise failed to comply with any provision of any collective bargaining or
other labor union contract applicable to persons employed by the Company or any
Company Subsidiary (including any obligation that the Company or any Company
Subsidiary can, will or may have in connection with a sale, merger or any other
like transaction) that would individually or in the aggregate, have a Material
Adverse Effect on the Company, and there are no material grievances outstanding
against the Company or any Company Subsidiary under any such agreement or
contract that would, individually or in the aggregate, have a Material Adverse
Effect on the Company, (iv) there are no unfair labor practice complaints
pending against the Company or any Company Subsidiary before the National Labor
Relations Board or any other Governmental Entity or any current union
representation questions involving employees of the Company or any Company
Subsidiary that would, individually or in the aggregate, have a Material Adverse
Effect on the Company, and (v) as of the date hereof, there is no strike,
slowdown, work stoppage or lockout, or, to the knowledge of the Company, threat
thereof by any union or significant group of union workers, by or with respect
to any employees of the Company or any Company Subsidiary.


                                       18

          (f) The Company and each Company Subsidiary is in material compliance
with all applicable Laws relating to the employment of labor, including those
related to wages, hours, collective bargaining and the payment and withholding
of taxes and other sums as required by the appropriate Governmental Entity and
have withheld and paid to the appropriate Governmental Entity or are holding for
payment not yet due to such Governmental Entity all amounts required to be
withheld from employees of the Company or any Company Subsidiary and are not
liable for any arrears of wages, taxes, penalties or other sums for failure to
comply with any of the foregoing except for such failures that would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
The Company and each Company Subsidiary has paid in full to all employees or
adequately accrued for in accordance with GAAP consistently applied all wages,
salaries, commissions, bonuses, benefits and other compensation due to or on
behalf of such employees and there is no claim with respect to payment of wages,
salary or overtime pay that has been asserted or is now pending or threatened
before any Governmental Entity with respect to any persons currently or formerly
employed by the Company or any Company Subsidiary, that would, individually or
in the aggregate, have a Material Adverse Effect on the Company. Neither the
Company nor any Company Subsidiary is a party to, or otherwise bound by, any
consent decree with any Governmental Entity relating to employees or employment
practices. There is no charge or proceeding with respect to a violation of any
occupational safety or health standards that has been asserted or is now pending
or threatened with respect to the Company or any Company Subsidiary, that would,
individually or in the aggregate, have a Material Adverse Effect on the Company.
There is no charge of discrimination in employment or employment practices, for
any reason, including age, gender, race, religion or other legally protected
category, which has been asserted or is now pending or threatened before the
United States Equal Employment Opportunity Commission, or any other Governmental
Entity in any jurisdiction in which the Company or any Company Subsidiary has
employed or employ any person that would, individually or in the aggregate, have
a Material Adverse Effect on the Company.

     3.12 Internal Controls. The Company and the Company Subsidiaries have
designed and maintained a system of internal controls over financial reporting
(as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to
provide reasonable assurances regarding the reliability of financial reporting.
The Company (i) has designed and maintains disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that
material information required to be disclosed by the Company in the reports that
it files or submits under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC's rules and forms and
is accumulated and communicated to the Company's management as appropriate to
allow timely decisions regarding required disclosure and (ii) has disclosed to
the Company's auditors and the audit committee of the Company Board and Parent
(A) any significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting that are reasonably
likely to adversely affect in any material respect the Company's ability to
record, process, summarize and report financial information and (B) any fraud,
whether or not material, that involves management or other employees who have a
significant role in the Company's internal controls over financial reporting.

     3.13 Compliance with Laws; Licenses. The businesses of each of the Company
and the Company Subsidiaries have been conducted in compliance with all Laws,
except where the


                                       19

failure to so comply would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company. Each of the Company
and each Company Subsidiary is in possession of all governmental permits,
licenses, franchises, variances, exemptions, orders issued or granted by a
Governmental Entity and all other authorizations, consents, certificates of
public convenience and/or necessity and approvals issued or granted by a
Governmental Entity (collectively, "Licenses") necessary for each of the Company
or the Company Subsidiaries to own, lease and operate its properties or to carry
on its business as it is now being conducted, except where the failure to have,
or the suspension or cancellation of, any such License would not, individually
or in the aggregate, have a Material Adverse Effect on the Company. As of the
date of this Agreement, no suspension or cancellation of any such License is
pending or, to the knowledge of the Company, threatened, except where the
failure to have, or the suspension or cancellation of, any such License would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. Neither the Company nor any Company Subsidiary is in conflict with, or
in default, breach or violation of, any such License, except for any such
conflicts, defaults, breaches or violations that would not, individually or in
the aggregate, have a Material Adverse Effect on the Company.

     3.14 Certain Contracts. (a) Neither the Company nor any of the Company
Subsidiaries is a party to or bound by any contract, arrangement, commitment or
understanding (whether written or oral) (i) that is a "material contract" (as
such term is defined in Item 601(b)(10) of SEC Regulation S-K) to be performed
after the date of this Agreement that has not been made available to Parent
prior to the date hereof, (ii) that materially restricts the conduct of any
material line of business by the Company or, upon consummation of the Merger,
will materially restrict the ability of Parent following the Effective Time to
engage in any line of business material to the Company or, to the knowledge of
the Company, Parent, (iii) with or to a labor union or guild (including any
collective bargaining agreement) except for the Agreement, effective as of May
16, 1998, between the International Brotherhood of Electrical Workers, AFL-CIO,
Local 1269 and the Company, and the Agreement for Clerical, Production and Sales
Employees, effective October 16, 2003, between the Communications Workers of
America and Dex Media East, LLC, or (iv) a credit agreement or indenture to
which the Company or any Company Subsidiary is a party, guarantor or by which
any of them is bound and pursuant to which Indebtedness in excess of $5,000,000
of the Company and/or any Company Subsidiary is outstanding. Each contract,
arrangement, commitment or understanding of the type described in clauses (i),
(ii), (iii) and (iv) of this Section 3.14(a), whether or not set forth in the
Company Disclosure Schedule or made available to Parent in the case of clause
(i), is referred to as a "Company Contract," and neither the Company nor any of
the Company Subsidiaries knows of, or has received notice of, any violation of
any Company Contract by any of the other parties thereto that would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.

          (b) With such exceptions that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company, (i) each Company Contract is valid and binding on the Company or the
applicable Company Subsidiary, as applicable, and is in full force and effect,
(ii) the Company and each of the Company Subsidiaries has performed all
obligations required to be performed by it to date under each Company Contract,
and (iii) no event or condition exists that constitutes or, after notice or
lapse


                                       20

of time or both, will constitute, a default on the part of the Company or any of
the Company Subsidiaries under any such Company Contract.

          (c) None of the confidentiality agreements or standstill agreements
the Company has entered into with a third party (or any agent thereof) that is
in effect on the date hereof contains any exclusivity or standstill provisions
that are or will be binding on the Company or any Company Subsidiary or, after
the Effective Time, the Parent or any Parent Subsidiary.

     3.15 Agreements with Regulatory Agencies. Neither the Company nor any of
the Company Subsidiaries is subject to any material cease-and-desist or other
material order or enforcement action issued by, or is a party to any material
written agreement, consent agreement or memorandum of understanding with, or is
a party to any material commitment letter or similar undertaking to, or is
subject to any material order or directive by, or has been ordered to pay any
material civil money penalty by, any Regulatory Agency or other Governmental
Entity (other than a taxing authority, which is covered by Section 3.10), other
than those of general application that apply to similarly situated directory
publication companies or their Subsidiaries (each item in this sentence, whether
or not set forth in the Company Disclosure Schedule, a "Company Regulatory
Agreement"), nor has the Company or any of the Company Subsidiaries been advised
in writing since January 1, 2004 by any Regulatory Agency or other Governmental
Entity that it is considering issuing, initiating, ordering, or requesting any
such Company Regulatory Agreement.

     3.16 Undisclosed Liabilities. Except for those liabilities that are
reflected or reserved against on the Company's condensed consolidated balance
sheet or disclosed in the notes to the Unaudited Company Financial Statements,
in each case included in the Company 10-Q, and for liabilities incurred in the
ordinary course of business consistent with past practice since June 30, 2005,
since such date, neither the Company nor any of the Company Subsidiaries has
incurred any liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due and including any
off-balance sheet loans, financings, indebtedness, make-whole or similar
liabilities or obligations) that would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.

     3.17 Environmental Liability. There are no pending or, to the knowledge of
the Company, threatened legal, administrative, arbitral or other proceedings,
claims, actions, causes of action, private environmental investigations or
remediation activities, or governmental investigations, requests for information
or notices of violation of any nature seeking to impose, or that are reasonably
likely to result in the imposition, on the Company or any of the Company
Subsidiaries, of any liability or obligation arising under common law or under
any local, state or federal environmental statute, regulation, permit or
ordinance including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), which liability or obligation
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company. To the knowledge of the Company, there
is no reasonable basis for any such proceeding, claim, action, investigation or
remediation that would impose any liability or obligation that would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on


                                       21

the Company. Neither the Company nor any of the Company Subsidiaries is subject
to any agreement, order, judgment, decree, directive or Lien by or with any
Governmental Entity or third party with respect to any environmental liability
or obligation that would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company.

     3.18 Real Property.

          (a) Neither the Company nor any Company Subsidiary owns any parcel of
real property that is material to the business of the Company and the Company
Subsidiaries, taken as a whole.

          (b) Section 3.18(b) of the Company Disclosure Schedule lists by
address each material parcel of real property leased or subleased by the Company
or any Company Subsidiary that is currently used in and material to the conduct
of the business of the Company and the Company Subsidiaries, taken as a whole
(the "Company Leased Properties"), and any material guaranty given by the
Company or any Company Subsidiary in connection therewith. The Company or one of
its Subsidiaries has a valid leasehold interest in all of the Company Leased
Properties, free and clear of all Liens, except (i) Liens for current taxes and
assessments not yet past due, (ii) inchoate mechanics' and materialmen's Liens
for construction in progress, (iii) workmen's, repairmen's, warehousemen's and
carriers' Liens arising in the ordinary course of business of the Company or
such Company Subsidiary consistent with past practice, and (iv) all Liens and
other imperfections of title (including matters of record) and encumbrances that
do not materially interfere with the conduct of the business of the Company and
the Company Subsidiaries, taken as a whole, or as have not had, and would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect (collectively, "Permitted Liens"). Except as has not had, and
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company, the Company or one of the Company
Subsidiaries has the right to the use and occupancy of the Company Leased
Properties, subject to the terms of the applicable leases and subleases relating
thereto and Permitted Liens.

     3.19 State Takeover Laws; Company Rights Agreement. (a) The Company Board
has approved this Agreement, the Company Sponsors Support Agreement and the
transactions contemplated hereby and thereby as required to render inapplicable
to such agreements and transactions the restrictions set forth in Section 203 of
the DGCL, and, to the knowledge of the Company, there are no other similar
"takeover" or "interested stockholder" law applicable to the transactions
contemplated by this Agreement (any such laws, "Takeover Statutes").

          (b) The Company has taken all action, if any, necessary or appropriate
so that (i) the execution of this Agreement and the consummation of the
transactions contemplated hereby do not and will not result in the ability of
any Person to exercise any "Rights" under the Rights Agreement (the "Company
Rights Agreement"), dated as of July 27, 2004, between the Company and Wachovia
Bank, N.A., (ii) neither Parent nor any of its affiliates is or will become an
"Acquiring Person" under the Company Rights Agreement, (iii) neither a
"Distribution Date" or "Shares Acquisition Date" under the Company Rights
Agreement will occur by reason of the approval, execution, delivery or
announcement of this Agreement or the consummation of the transactions
contemplated hereby, including the Merger, and (iv) that the Company Rights
Agreement will terminate upon consummation of the Merger.


                                       22

     3.20 Intellectual Property.

          (a) Section 3.20(a) of the Company Disclosure Schedule lists all
material (i) issued patents and pending patent applications, (ii) trademark and
service mark registrations and applications for registration thereof, (iii)
copyright registrations and applications for registration thereof, and (iv)
internet domain name registrations, in each case that are that are owned by the
Company or any of the Company Subsidiaries and are material to the business of
the Company and the Company Subsidiaries, taken as a whole. Except as disclosed
in Section 3.20(a) of the Company Disclosure, with respect to each item that is
required to be identified therein: (A) the Company or the applicable Company
Subsidiary is the sole owner and possesses all material right, title and
interest in and to the item in the listed country or jurisdiction, free and
clear of any Liens, the absence of such interest which would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect of
the Company and (B) neither the Company nor any Company Subsidiary has received
written notice of any pending or threatened action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand that challenges the legality,
validity, enforceability, registrations, use or ownership of the item in the
listed country or jurisdiction that would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.

          (b) Except as disclosed in Section 3.20(b) of the Company Disclosure
Schedule, to the knowledge of the Company, neither the Company nor any Company
Subsidiary is infringing or misappropriating any material Intellectual Property
rights of third parties in connection with the operation of the Business that
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company. Except as disclosed in Section 3.20(b)
of the Company Disclosure Schedule, neither the Company nor any Company
Subsidiary has received any written charge, complaint, claim, demand or notice
during the past two years (or earlier, if not resolved) alleging any such
infringement or misappropriation that would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company. To the
knowledge of the Company, except as disclosed in Section 3.20(b) of the Company
Disclosure Schedule, during the past two years (or earlier, if not resolved) no
third party has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property rights of the Company or any
Company Subsidiary which interference, infringement, misappropriation or
conflict would, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on the Company. For purposes of this Agreement,
"Intellectual Property" means (i) all inventions, all patents and patent
applications, (ii) all trademarks, service marks, trade dress, logos, brand
names, trade names and domain names and all registrations of and applications to
register the foregoing, (iii) all copyrightable works, all copyrights and all
registrations of and applications to register the foregoing, (iv) all trade
secrets, know how and confidential business information, and (v) all other
proprietary rights that are, in the case of clauses (i) through (v), material to
the business of the Company and the Company Subsidiaries, taken as a whole.

          (c) The Company's and the Company Subsidiaries' use and dissemination
of any data and information concerning users of their web sites is in compliance
with all applicable privacy policies, terms of use, and Laws, the violation of
which would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on the Company. The transactions contemplated
hereunder will not violate any privacy policy, terms of use, or Laws


                                       23

relating to the use, dissemination or transfer of such data or information,
except for such violations which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.

     3.21 Reorganization. As of the date of this Agreement, the Company is not
aware of any agreement, plan, fact or circumstance that could reasonably be
expected to prevent the Merger from qualifying as a "reorganization" within the
meaning of Section 368(a) of the Code.

     3.22 Opinions. Prior to the execution of this Agreement, the Company has
received opinions from Lehman Brothers Inc. and Merrill Lynch & Co., copies of
which have been or will promptly be provided to Parent, to the effect that as of
the date thereof and based upon and subject to the matters set forth therein the
Merger Consideration to be received by holders of Company Common Stock is fair
from a financial point of view to such holders. Such opinions have not been
amended or rescinded as of the date of this Agreement.

     3.23 Company Information. The information relating to the Company and the
Company Subsidiaries that is provided by the Company or its representatives for
inclusion in the Joint Proxy Statement and the Form S-4, or in any other
document filed with any other Regulatory Agency in connection with the
transactions contemplated by this Agreement, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading. The Joint Proxy Statement (except for such portions thereof that
relate only to Parent or any of the Parent Subsidiaries) will comply in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.

     3.24 Affiliate Transactions. As of the date hereof, there are no
transactions, contracts, arrangements, commitments or understandings between the
Company or any of the Company Subsidiaries, on the one hand, and any of the
Company's affiliates (other than wholly owned Company Subsidiaries), on the
other hand, that would be required to be disclosed by the Company under Item 404
of Regulation S-K under the Securities Act (the "Company S-K 404 Arrangements").

      ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

     Except as disclosed in (x) a publicly available final registration
statement, prospectus, report, form, schedule or definitive proxy statement
filed since January 1, 2005 by Parent with the SEC pursuant to the Securities
Act or the Exchange Act (collectively, the "Parent SEC Reports") and prior to
the Measurement Date, but excluding any risk factor disclosure contained in any
such Parent SEC Report under the heading "Risk Factors" or "Forward-Looking
Statements," or (y) the disclosure letter (the "Parent Disclosure Schedule")
delivered by Parent to the Company prior to the execution of this Agreement
(which letter sets forth items of disclosure with specific reference to the
particular Section or subsection of this Agreement to which the information in
the Parent Disclosure Schedule relates; provided, however, that any information
set forth in one section of the Parent Disclosure Schedule will be deemed to
apply to each other Section or subsection of this Agreement to which its
relevance is reasonably apparent; provided,


                                       24

further, that, notwithstanding anything in this Agreement to the contrary, the
inclusion of an item in such schedule as an exception to a representation or
warranty will not be deemed an admission that such item represents a material
exception or material fact, event or circumstance or that such item has had or
would reasonably be expected to have a Material Adverse Effect on Parent),
Parent and Merger Sub jointly and severally represent and warrant to the Company
as follows:

     4.1 Corporate Organization. (a) Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Parent has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent.

          (b) True and complete copies of the Restated Certificate of
Incorporation of Parent, as amended through, and as in effect as of, the date of
this Agreement (including any certificates of designation thereto) (the "Parent
Charter"), and the Amended and Restated By-Laws of Parent, as amended through,
and as in effect as of, the date of this Agreement (the "Parent Bylaws"), have
previously been made available to the Company.

          (c) Each Parent Subsidiary (i) is duly organized and validly existing
under the laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified, and (iii) has all requisite
corporate power and authority to own or lease its properties and assets and to
carry on its business as now conducted, except for such variances from the
matters set forth in any of clauses (i), (ii) or (iii) as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent.

     4.2 Capitalization. (a) As of the date of this Agreement, the authorized
Parent capital stock consists of (i) 400,000,000 shares of Parent common stock,
of which, as of the Measurement Date, 31,856,812 shares were issued and
outstanding (the "Parent Common Stock"), (ii) 10,000,000 shares of Parent
Convertible Cumulative Preferred Stock, of which, as of the Measurement Date,
100,301 shares were issued and outstanding (the "Parent Convertible Preferred
Stock"), and (iii) 400,000 shares of Series B Participating Cumulative Preferred
Stock, of which, as of the Measurement Date, no shares were issued and
outstanding (the "Series B Preferred Stock" and, together with the Parent Common
Stock and the Parent Convertible Preferred Stock, the "Parent Capital Stock").
As of the Measurement Date, no more than 19,765,082 shares of Parent's capital
stock were held in Parent's treasury. As of the Measurement Date, no shares of
Parent Capital Stock were reserved for issuance except for (i) 5,249,895 shares
of Parent Common Stock reserved for issuance upon the exercise of Parent Stock
Options or for other awards based on Parent Common Stock (the "Parent
Stock-Based Awards") issued or issuable pursuant to the Parent Stock Plans, (ii)
6,000,000 shares of Parent Common Stock reserved for issuance upon conversion of
shares of Parent Convertible Preferred Stock, and (iii) 1,650,000 shares of
Parent Common Stock reserved for issuance upon exercise of the Warrant
Agreements, dated as of November 25, 2002 and January 3,


                                       25

2003, among Parent and the GS Funds. All of the issued and outstanding shares of
Parent Capital Stock have been duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement, except as
set forth above or in the last sentence of this Section 4.2(a), or pursuant to
this Agreement, the Registration Rights Agreement, dated as of November 25,
2002, among Parent and the GS Funds, the Preferred Stock and Warrant Purchase
Agreement, dated as of September 21, 2002, among Parent and the GS Funds, as
amended, the Parent Stock Plans and the Parent Charter, there are no outstanding
shares of capital stock, securities convertible into shares of Parent Common
Stock or other voting securities of Parent, and Parent does not have and is not
bound by any outstanding subscriptions, options, warrants, calls, commitments,
preemptive rights, redemption obligations or agreements of any character calling
for the purchase, issuance or registration of any shares of Parent's capital
stock or any other equity securities of Parent or any securities representing
the right to purchase or otherwise receive any shares of Parent's capital stock.
From and after the Measurement Date through the date hereof, Parent has not
issued or awarded any Parent Capital Stock, Parent Stock Options or Parent
Stock-Based Awards (other than upon the exercise or satisfaction of Parent Stock
Options or Parent Stock-Based Awards or the conversion of convertible
securities, in each case outstanding as of the Measurement Date).

          (b) As of the date of this Agreement, no bonds, debentures, notes or
other indebtedness of Parent having the right to vote on any matters on which
stockholders may vote ("Parent Voting Debt") are issued or outstanding.

          (c) All of the issued and outstanding shares of capital stock or other
equity ownership interests of each "significant subsidiary" (as such term is
defined under Regulation S-X of the SEC) of Parent are owned by Parent, directly
or indirectly, free and clear of any Liens and free of any restriction on the
right to vote, sell or otherwise dispose of such capital stock or other equity
ownership interest (other than restrictions under applicable securities Laws),
and all of such shares or equity ownership interests are duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights.
No such significant subsidiary is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of capital stock or any other equity
security of such significant subsidiary or any securities representing the right
to purchase or otherwise receive any shares of capital stock or any other equity
security of such significant subsidiary. Except for the capital stock or other
equity ownership interests of the Parent Subsidiaries, as of the date of this
Agreement, Parent does not beneficially own directly or indirectly any capital
stock, membership interest, partnership interest, joint venture interest or
other equity interest in any Person that constitutes a Substantial Investment.

     4.3 Authority; No Violation. (a) Parent has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Parent (the "Parent Board"). The
Parent Board has determined that this Agreement and the transactions
contemplated hereby are in the best interests of Parent and its stockholders,
has resolved to recommend that holders of Parent Common Stock vote in favor of
the approval of this Agreement, the Sponsor Stockholders Agreements and the
transactions contemplated


                                       26

hereby and thereby and has directed that this Agreement and the Sponsor
Stockholders Agreements be submitted to Parent's stockholders for approval at a
duly held meeting of such stockholders (the "Parent Stockholders Meeting"), and,
except for (i) the approval of this Agreement, the Sponsor Stockholders
Agreements and the transactions contemplated hereby and thereby by the
affirmative vote of stockholders of Parent having the majority of the voting
power present in person or represented by proxy at the Parent Stockholders
Meeting or any adjournment or postponement thereof (assuming that the total vote
cast on the proposal represents a majority in interest of all outstanding shares
of Parent Common Stock entitled to vote) (the "Parent Stockholder Approval"),
and (ii) the adoption of this Agreement and the approval of the Merger by Parent
as the sole stockholder of Merger Sub, no other corporate proceedings on the
part of Parent or vote by the holders of any class or series of Parent Capital
Stock are necessary to approve or adopt this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent and (assuming due authorization, execution and
delivery by the other parties hereto) constitutes the valid and binding
obligation of Parent, enforceable against Parent in accordance with its terms
(except as may be limited by bankruptcy, insolvency, moratorium, reorganization
or similar Laws affecting the rights of creditors generally and the availability
of equitable remedies).

          (b) Neither the execution and delivery of this Agreement by Parent and
Merger Sub nor the consummation by Parent and Merger Sub of the transactions
contemplated hereby, nor compliance by Parent and Merger Sub with any of the
terms or provisions of this Agreement will (i) violate any provision of the
Parent Charter or the Parent Bylaws or (ii) assuming that the consents,
approvals and filings referred to in Section 4.4 are duly obtained and/or made,
(A) violate any Injunction or any Law applicable to Parent, any of the Parent
Subsidiaries or any of their respective properties or assets or (B) violate,
conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Parent or any of the Parent Subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Parent or
any of the Parent Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected, except, in the case of
clause (ii), for such violations, conflicts, breaches, defaults, terminations,
rights of termination or cancellation, accelerations or Liens that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent.

     4.4 Consents and Approvals. Except for (i) the filing with the SEC of the
Joint Proxy Statement and the Form S-4 in which the Joint Proxy Statement will
be included as a prospectus, and declaration of effectiveness of the Form S-4,
(ii) the filing of the Certificate of Merger with the Delaware Secretary of
State pursuant to the DGCL, (iii) any notices or filings under the HSR Act, (iv)
such filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the issuance
of the shares of Parent capital stock pursuant to this Agreement, (v) the Parent
Stockholder Approval and Company Stockholder Approval, and (vi) the consents or
approvals listed in Section 4.4 of the Parent Disclosure Schedule, no consents
or approvals of or filings or registrations with any


                                       27

Governmental Entity are necessary in connection with (A) the execution and
delivery by Parent and Merger Sub of this Agreement or (B) the consummation by
Parent of the Merger and the other transactions contemplated by this Agreement.

     4.5 Reports. Parent and each of the Parent Subsidiaries have timely filed
all reports, registrations, schedules, forms, statements and other documents,
together with any amendments required to be made with respect thereto, that they
were required to file since January 1, 2003 with the Regulatory Agencies, and
have paid all fees and assessments due and payable in connection therewith,
except where the failure to file such report, registration, schedule, form,
statement or other document, or to pay such fees and assessments, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent. No Parent SEC Report, as of the date of such Parent
Report, contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to make
the statements made therein, in light of the circumstances in which they were
made, not misleading, except that information as of a later date (but before the
date of this Agreement) will be deemed to modify information as of an earlier
date. Since January 1, 2003, as of their respective dates, all Parent SEC
Reports complied as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, and the rules and
regulations thereunder with respect thereto.

     4.6 Financial Statements. Parent has previously made available to the
Company copies of (i) the consolidated balance sheet of Parent at December 31,
2004 and 2003, and the related consolidated statements of operations, cash flows
and changes in stockholders' equity (deficit) for the three years ended December
31, 2004, as reported in Parent's Annual Report on Form 10-K for the fiscal year
ended December 31, 2004, including any amendments thereto filed with the SEC
prior to the Measurement Date (collectively, the "Parent 2004 10-K"), filed with
the SEC under the Exchange Act, accompanied by the audit report of
PricewaterhouseCoopers LLP, independent public accountants with respect to
Parent (such balance sheets and statements, the "Audited Parent Financial
Statements"), and (ii) the unaudited consolidated balance sheet of Parent at
June 30, 2005 and the related consolidated statements of operations and
comprehensive income (loss) and cash flows for the six-month ended June 30, 2005
and 2004, as reported in Parent's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2005, including any amendments thereto filed
with the SEC prior to the Measurement Date (collectively, the "Parent 10-Q")
(such balance sheets and statements, the "Unaudited Parent Financial Statements"
and, together with the Audited Parent Financial Statements, the "Parent
Financial Statements"). The consolidated balance sheets of Parent (including the
related notes, where applicable) included in the Parent Financial Statements
fairly present in all material respects the consolidated financial position of
Parent and the Parent Subsidiaries as of the dates thereof, and the other
financial statements included in the Parent Financial Statements (including the
related notes, where applicable) fairly present in all material respects the
results of the consolidated operations, cash flows (and in the case of the
Audited Parent Financial Statements, changes in stockholders' equity) of Parent
and the Parent Subsidiaries for the respective periods therein set forth,
subject in the case of the Unaudited Parent Financial Statements to normal
year-end audit adjustments that are immaterial in nature and in amounts
consistent with past experience; each of such statements (including the related
notes, where applicable) complies in all material respects with the published
rules and regulations of the SEC with respect thereto; and each of the Parent


                                       28

Financial Statements (including the related notes, where applicable) has been
prepared in all material respects in accordance with GAAP consistently applied
during the periods involved, except, in each case, as indicated in such
statements or in the notes thereto. To the knowledge of Parent, there is no
applicable accounting rule, consensus or pronouncement that has been adopted by
the SEC, the Financial Accounting Standards Board, the Emerging Issues Task
Force or any similar body but is not in effect as of the date of this Agreement
that, if implemented, would reasonably be expected to have a Material Adverse
Effect on Parent.

     4.7 Advisors' Fees. None of Parent, any Parent Subsidiary or any of their
respective officers or directors has employed any broker or finder or incurred
any liability for any broker's fees, commissions or finder's fees in connection
with the Merger or related transactions contemplated by this Agreement, other
than JP Morgan Securities Inc. and Bear, Stearns & Co. Inc.

     4.8 Absence of Certain Changes or Events. (a) Since June 30, 2005, no event
has occurred that has had or would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Parent.

          (b) From June 30, 2005 through the date hereof, Parent and the Parent
Subsidiaries have carried on their respective businesses in all material
respects in the ordinary course and have not taken any action or failed to take
any action that would have resulted in a breach of Section 5.3 had such section
been in effect since June 30, 2005.

     4.9 Legal Proceedings. (a) None of Parent or any of the Parent Subsidiaries
is a party to any, and there are no pending or, to the knowledge of Parent,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations or reviews of any nature
against Parent or any of the Parent Subsidiaries, except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent.

          (b) There is no Injunction, judgment, or regulatory restriction
imposed upon Parent, any of the Parent Subsidiaries or the assets of Parent or
any of the Parent Subsidiaries that would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent.

     4.10 Taxes and Tax Returns. (a) Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent:
(i) Parent and the Parent Subsidiaries have timely filed all Tax Returns
required to be filed by them on or prior to the date of this Agreement taking
into account any extension of time within which to file such Tax Returns (all
such returns being accurate and complete in all material respects) and have paid
all Taxes required to be paid by them other than Taxes that are not yet due or
that are being contested in good faith in appropriate proceedings; (ii) there
are no Liens for Taxes on any assets of Parent or the Parent Subsidiaries; (iii)
no deficiency for any Tax has been asserted or assessed by a taxing authority
against Parent or any of the Parent Subsidiaries which deficiency has not been
paid or is not being contested in good faith in appropriate proceedings; (iv)
Parent and the Parent Subsidiaries have provided adequate reserves in their
financial statements for any Taxes that have not been paid; and (v) neither
Parent nor any of the Parent


                                       29

Subsidiaries is a party to or is bound by any Tax sharing, allocation or
indemnification agreement or arrangement (other than such an agreement or
arrangement exclusively between or among Parent and the Parent Subsidiaries).

          (b) Within the past five years, neither Parent nor any of the Parent
Subsidiaries has been a "distributing corporation" or a "controlled corporation"
in a distribution intended to qualify for tax-free treatment under Section 355
of the Code.

          (c) Neither Parent nor any of the Parent Subsidiaries has been a party
to a transaction that, as of the date of this Agreement, constitutes a "listed
transaction" for purposes of Section 6011 of the Code and applicable Treasury
Regulations thereunder (or a similar provision of state law). To the knowledge
of Parent, Parent has disclosed to the Company all "reportable transactions"
within the meaning of Treasury Regulation Section 1.6011-4(b) (or a similar
provision of state law) to which it or any of the Parent Subsidiaries has been a
party.

          (d) Neither Parent nor any of the Parent Subsidiaries has any
liability for the Taxes of any person other than the Parent or the Parent
Subsidiaries under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract, or otherwise.

          (e) Neither Parent nor any of the Parent Subsidiaries will be required
to include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date
(except consistent with its treatment of such items in Tax Returns for prior
periods) as a result of any (i) change in method of accounting, (ii) agreement
with a Tax authority relating to Taxes, (iii) installment sale or open
transaction disposition or intercompany transaction made on or prior to the
Effective Time, (iv) the completed contract method of accounting or other method
of accounting applicable to long-term contracts (or any comparable provisions of
state, local or foreign law), or (v) prepaid amount received prior to the
Effective Time.

     4.11 Employees. (a) As of the date of this Agreement, the Parent Disclosure
Schedule sets forth a true and complete list of each material benefit or
compensation plan, program, fund, contract, arrangement or agreement, including
any material bonus, incentive, deferred compensation, vacation, stock purchase,
stock option, severance, employment, golden parachute, retention, salary
continuation, change of control, retirement, pension, profit sharing or fringe
benefit plan, program, fund, contract, arrangement or agreement of any kind
(whether written or oral, tax-qualified or non-tax qualified, funded or
unfunded, foreign or domestic, active, frozen or terminated) and any related
trust, insurance contract, escrow account or similar funding arrangement, that
is maintained or contributed to by Parent or any Parent Subsidiary (or required
to be maintained or contributed to by Parent or any Parent Subsidiary) for the
benefit of current or former directors, officers or employees of, or consultants
to, Parent and the Parent Subsidiaries or with respect to which Parent or the
Parent Subsidiaries may, directly or indirectly, have any liability, as of the
date of this Agreement (the "Parent Benefit Plans").

          (b) Parent has heretofore made available to the Company true and
complete copies of (i) each written Parent Benefit Plan, (ii) the actuarial
report for each Parent Benefit


                                       30

Plan (if applicable) for each of the last three years, (iii) the most recent
determination letter from the IRS (if applicable) for each Parent Benefit Plan,
(iv) the current summary plan description of each Parent Benefit Plan that is
subject to ERISA, (v) a copy of the description of each Parent Benefit Plan not
subject to ERISA that is currently provided to participants in such plan, (vi) a
summary of the material terms of each unwritten Parent Benefit Plan, and (vii)
the annual report for each Parent Benefit Plan (if applicable) for each of the
last three years.

          (c) Except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Parent, (i) each of the Parent
Benefit Plans has been operated and administered in compliance with its terms
and applicable Law, including ERISA and the Code, (ii) each of the Parent
Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code is so qualified, and there are no existing circumstances or any events
that have occurred that would reasonably be expected to adversely affect the
qualified status of any such Parent Benefit Plan, and each such plan has a
favorable determination letter from the IRS to the effect that it is so
qualified or the applicable remedial amendment period has not expired and, if
the letter for such plan is not current, such plan is the subject of a timely
request for a current favorable determination letter or the applicable remedial
amendment period has not expired, (iii) with respect to each Parent Benefit Plan
that is subject to Title IV of ERISA, the present value (as defined under
Section 3(27) of ERISA) of accumulated benefit obligations under such Parent
Benefit Plan, based upon the actuarial assumptions used for funding purposes in
the most recent actuarial report prepared by such Parent Benefit Plan's actuary
with respect to such Parent Benefit Plan, did not, as of its latest valuation
date, exceed the then current value (as defined under Section 3(26) of ERISA) of
the assets of such Parent Benefit Plan allocable to such accrued benefits, (iv)
no Parent Benefit Plan that is a Welfare Plan provides benefits coverage,
including death or medical benefits coverage (whether or not insured), with
respect to current or former employees or directors of Parent or the Parent
Subsidiaries beyond their retirement or other termination of service, other than
(A) coverage mandated by applicable Law, (B) benefits the full cost of which is
borne by such current or former employee or director (or his or her
beneficiary), (C) coverage through the last day of the calendar month in which
retirement or other termination of service occurs, or (D) medical expense
reimbursement accounts, (v) no liability under Title IV of ERISA has been
incurred by Parent, the Parent Subsidiaries or any trade or business, whether or
not incorporated, all of which together with Parent would be deemed a "single
employer" within the meaning of Section 414(b), 414(c) or 414(m) of the Code or
Section 4001(b) of ERISA (a "Parent ERISA Affiliate"), that has not been
satisfied in full, and no condition exists that presents a material risk to
Parent, the Parent Subsidiaries or any Parent ERISA Affiliate of incurring a
liability thereunder, (vi) no Parent Benefit Plan is a "multiemployer plan" (as
such term is defined in Section 3(37) of ERISA) or a "multiple employer plan"
(as described in Section 413(c) of the Code), (vii) none of Parent or the Parent
Subsidiaries or, to the knowledge of Parent, any other Person, including any
fiduciary, has engaged in a transaction in connection with which Parent, the
Parent Subsidiaries or any Parent Benefit Plan would reasonably be expected to
be subject to either a civil penalty assessed pursuant to Section 409 or 502(i)
of ERISA or a Tax imposed pursuant to Section 4975 or 4976 of the Code, (viii)
to the knowledge of Parent, there are no pending, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of or against any
of the Parent Benefit Plans or any trusts, insurance contracts, escrow accounts
or similar funding arrangements related thereto, (ix) all contributions or other
amounts required to be paid by Parent or the Parent Subsidiaries as of the
Effective Time with respect to each Parent Benefit Plan in


                                       31

respect of current or former plan years have been paid in accordance with
Section 412 of the Code or accrued in accordance with GAAP (as applicable) and
(x) since December 31, 2004, no Parent Benefit Plan has been amended or modified
in any material respect or adopted or terminated.

          (d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will (either
alone or in conjunction with any other event) (i) result in the Surviving
Corporation or any of its Subsidiaries being liable for any payment or benefit
(including non-deductible employee remuneration (described in Section 162(m) of
the Code), severance, retention, stay-put, change of control, unemployment
compensation, "excess parachute payment" (within the meaning of Section 280G of
the Code), tax gross-up, forgiveness of indebtedness or otherwise) becoming due
to any director, officer or employee of, or any consultant to, Parent or any of
the Parent Subsidiaries from Parent or any of the Parent Subsidiaries under any
Parent Benefit Plan or otherwise, (ii) increase any amounts or benefits
otherwise payable or due to any such Person under any Parent Benefit Plan or
otherwise, or (iii) result in any acceleration of the time of payment or vesting
of, or any requirement to fund or secure, any such amounts or benefits
(including any Parent Stock Option or Parent Stock-Based Award) or result in any
breach of or default under any Parent Benefit Plan.

          (e) (i) There are no controversies relating to or arising out of a
collective bargaining relationship between Parent or any Parent Subsidiary and
any union pending or, to the knowledge of Parent, threatened between Parent or
any Parent Subsidiary and any of their respective employees, which controversies
would, individually or in the aggregate, have a Material Adverse Effect on
Parent, (ii) to the knowledge of Parent, as of the date hereof there are not any
organizational campaigns, petitions or other activities or proceedings of any
labor union to organize any such employees that would, individually or in the
aggregate, have a Material Adverse Effect on Parent, (iii) neither Parent nor
any Parent Subsidiary has breached or otherwise failed to comply with any
provision of any collective bargaining or other labor union contract applicable
to persons employed by Parent or any Parent Subsidiary (including any obligation
that Parent or any Parent subsidiary can, will or may have in connection with a
sale, merger or any other like transaction) that would, individually or in the
aggregate, have a Material Adverse Effect on the Company, and there are no
material grievances outstanding against Parent or any Parent Subsidiary under
any such agreement or contract that would, individually or in the aggregate,
have a Material Adverse Effect on Parent, (iv) there are no unfair labor
practice complaints pending against Parent or any Parent Subsidiary before the
National Labor Relations Board or any other Governmental Entity or any current
union representation questions involving employees of Parent or any Parent
Subsidiary that would, individually or in the aggregate, have a Material Adverse
Effect on Parent, and (v) as of the date hereof, there is no strike, slowdown,
work stoppage or lockout, or, to the knowledge of Parent, threat thereof by any
union or significant group of union workers, by or with respect to any employees
of Parent or any Parent Subsidiary.

          (f) Parent and each Parent Subsidiary is in material compliance with
all applicable Laws relating to the employment of labor, including those related
to wages, hours, collective bargaining and the payment and withholding of taxes
and other sums as required by the appropriate Governmental Entity and have
withheld and paid to the appropriate


                                       32

Governmental Entity or are holding for payment not yet due to such Governmental
Entity all amounts required to be withheld from employees of Parent or any
Parent Subsidiary and are not liable for any arrears of wages, taxes, penalties
or other sums for failure to comply with any of the foregoing except for such
failures that would not, individually or in the aggregate, have a Material
Adverse Effect on Parent. Parent and each Parent Subsidiary has paid in full to
all employees or adequately accrued for in accordance with GAAP consistently
applied all wages, salaries, commissions, bonuses, benefits and other
compensation due to or on behalf of such employees and there is no claim with
respect to payment of wages, salary or overtime pay that has been asserted or is
now pending or threatened before any Governmental Entity with respect to any
persons currently or formerly employed by Parent or any Parent Subsidiary, that
would, individually or in the aggregate, have a Material Adverse Effect on
Parent. Neither Parent nor any Parent Subsidiary is a party to, or otherwise
bound by, any consent decree with any Governmental Entity relating to employees
or employment practices. There is no charge or proceeding with respect to a
violation of any occupational safety or health standards that has been asserted
or is now pending or threatened with respect to Parent or any Parent Subsidiary,
that would, individually or in the aggregate, have a Material Adverse Effect on
Parent. There is no charge of discrimination in employment or employment
practices, for any reason, including age, gender, race, religion or other
legally protected category, which has been asserted or is now pending or
threatened before the United States Equal Employment Opportunity Commission, or
any other Governmental Entity in any jurisdiction in which Parent or any Parent
Subsidiary has employed or employ any person that would, individually or in the
aggregate, have a Material Adverse Effect on Parent.

     4.12 Internal Controls. Parent and the Parent Subsidiaries have designed
and maintained a system of internal controls over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to
provide reasonable assurances regarding the reliability of financial reporting.
Parent (i) has designed and maintains disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that
material information required to be disclosed by Parent in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms and is
accumulated and communicated to Parent's management as appropriate to allow
timely decisions regarding required disclosure and (ii) has disclosed to
Parent's auditors and the audit committee of the Parent Board (A) any
significant deficiencies and material weaknesses in the design or operation of
internal controls over financial reporting that are reasonably likely to
adversely affect in any material respect Parent's ability to record, process,
summarize and report financial information and (B) any fraud, whether or not
material, that involves management or other employees who have a significant
role in Parent's internal controls over financial reporting.

     4.13 Compliance with Laws; Licenses. The businesses of each of Parent and
the Parent Subsidiaries have been conducted in compliance with all Laws, except
where the failure to so comply would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent. Each of
Parent and each Parent Subsidiary is in possession of all Licenses necessary for
each of Parent or the Parent Subsidiaries to own, lease and operate its
properties or to carry on its business as it is now being conducted, except
where the failure to have, or the suspension or cancellation of, any such
License would not, individually or in the aggregate, have a Material Adverse
Effect on Parent. As of the date of this Agreement, no


                                       33

suspension or cancellation of any such License is pending or, to the knowledge
of Parent, threatened, except where the failure to have, or the suspension or
cancellation of, any such License would not, individually or in the aggregate,
have a Material Adverse Effect on Parent. Neither Parent nor any Parent
Subsidiary is in conflict with, or in default, breach or violation of, any such
License, except for any such conflicts, defaults, breaches or violations that
would not, individually or in the aggregate, have a Material Adverse Effect on
Parent.

     4.14 Certain Contracts. (a) Neither Parent nor any of the Parent
Subsidiaries is a party to or bound by any contract, arrangement, commitment or
understanding (whether written or oral) (i) that is a "material contract" (as
such term is defined in Item 601(b)(10) of SEC Regulation S-K) to be performed
after the date of this Agreement that has not been made available to the Company
prior to the date hereof, (ii) that materially restricts the conduct of any
material line of business by Parent or upon consummation of the Merger will
materially restrict the ability of Parent following the Effective Time to engage
in any line of business material to Parent or, to the knowledge of Parent, the
Company, (iii) with or to a labor union or guild (including any collective
bargaining agreement), or (iv) a credit agreement or indenture to which Parent
or any Parent Subsidiary is a party, guarantor or by which any of them is bound
and pursuant to which Indebtedness in excess of $5,000,000 of the Parent and/or
any Parent Subsidiary is outstanding. Each contract, arrangement, commitment or
understanding of the type described in clauses (i), (ii), (iii) and (iv) of this
Section 4.14(a), whether or not set forth in the Parent Disclosure Schedule or
made available to the Company in the case of clause (i), is referred to as a
"Parent Contract," and neither Parent nor any of the Parent Subsidiaries knows
of, or has received notice of, any violation of any Parent Contract by any of
the other parties thereto that would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent.

          (b) With such exceptions that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent,
(i) each Parent Contract is valid and binding on Parent or the applicable Parent
Subsidiary, as applicable, and is in full force and effect, (ii) Parent and each
of the Parent Subsidiaries has performed all obligations required to be
performed by it to date under each Parent Contract, and (iii) no event or
condition exists that constitutes or, after notice or lapse of time or both,
will constitute, a default on the part of Parent or any of the Parent
Subsidiaries under any such Parent Contract.

          (c) None of the confidentiality agreements or standstill agreements
Parent has entered into with a third party (or any agent thereof) that is in
effect on the date hereof contains any exclusivity or standstill provisions that
are or will be binding on Parent or any Parent Subsidiary after the Effective
Time.

     4.15 Agreements with Regulatory Agencies. Neither Parent nor any of the
Parent Subsidiaries is subject to any material cease-and-desist or other
material order or enforcement action issued by, or is a party to any material
written agreement, consent agreement or memorandum of understanding with, or is
a party to any material commitment letter or similar undertaking to, or is
subject to any material order or directive by, or has been ordered to pay any
material civil money penalty by, any Regulatory Agency or other Governmental
Entity (other than a taxing authority, which is covered by Section 4.10), other
than those of general application that apply to similarly situated directory
publication companies or their


                                       34

Subsidiaries (each item in this sentence, whether or not set forth in the Parent
Disclosure Schedule, a "Parent Regulatory Agreement"), nor has Parent or any of
the Parent Subsidiaries been advised in writing since January 1, 2004 by any
Regulatory Agency or other Governmental Entity that it is considering issuing,
initiating, ordering, or requesting any such Parent Regulatory Agreement.

     4.16 Undisclosed Liabilities. Except for those liabilities that are
reflected or reserved against on Parent's consolidated balance sheet or
disclosed in the notes to the Unaudited Parent Financial Statements, in each
case included in the Parent 10-Q, and for liabilities incurred in the ordinary
course of business consistent with past practice since June 30, 2005, since such
date, neither Parent nor any of the Parent Subsidiaries has incurred any
liability of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due and including any off-balance sheet
loans, financings, indebtedness, make-whole or similar liabilities or
obligations) that would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent.

     4.17 Environmental Liability. There are no pending or, to the knowledge of
Parent, threatened legal, administrative, arbitral or other proceedings, claims,
actions, causes of action, private environmental investigations or remediation
activities, or governmental investigations, requests for information or notices
of violation of any nature seeking to impose, or that are reasonably likely to
result in the imposition, on Parent or any of the Parent Subsidiaries, of any
liability or obligation arising under common law or under any local, state or
federal environmental statute, regulation, permit or ordinance including CERCLA,
which liability or obligation would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent. To the
knowledge of Parent, there is no reasonable basis for any such proceeding,
claim, action, investigation or remediation that would impose any liability or
obligation that would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on Parent. Neither Parent nor any of the
Parent Subsidiaries is subject to any agreement, order, judgment, decree,
directive or Lien by or with any Governmental Entity or third party with respect
to any environmental liability or obligation that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent.

     4.18 Real Property.

          (a) Section 4.18(a) of the Parent Disclosure Schedule lists by address
each parcel of real property owned by Parent or any Parent Subsidiary that is
material to the business of Parent and the Parent Subsidiaries, taken as a whole
(the "Parent Owned Property").

          (b) Section 4.18(b) of the Parent Disclosure Schedule lists by address
each material parcel of real property leased or subleased by the Parent or any
Parent Subsidiary that is currently used in and material to the conduct of the
business of Parent and the Subsidiaries, taken as a whole (the "Parent Leased
Properties" and, together with the Parent Leased Properties, the "Parent
Properties"), and any material guaranty given by Parent or any Parent Subsidiary
in connection therewith. Parent or one of the Parent Subsidiaries validly owns,
or has a valid leasehold interest in, all of the Parent Properties, free and
clear of all Liens, except (i) Liens for current taxes and assessments not yet
past due, (ii) inchoate mechanics' and materialmen's Liens


                                       35

for construction in progress, (iii) workmen's, repairmen's, warehousemen's and
carriers' Liens arising in the ordinary course of business of Parent or such
Subsidiary consistent with past practice, and (iv) all Liens and other Permitted
Liens. Except as has not had, and would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent, Parent or
one of the Parent Subsidiaries has the right to the use and occupancy of the
Parent Properties, subject to the terms of the applicable leases and subleases
relating thereto and Permitted Liens.

     4.19 State Takeover Laws. (a) The Parent Board has approved this Agreement,
the GS Support Agreement, the Company Sponsors Support Agreements, the Sponsor
Stockholders Agreements and the transactions contemplated hereby and thereby, as
required to render inapplicable to such agreements and transactions the
restrictions set forth in Section 203 of the DGCL (including any deemed
agreement, arrangement or understanding for purposes of acquiring, holding,
voting or disposing of Parent Shares between the Company Sponsors as a result of
the execution, delivery or performance of this Agreement, the GS Support
Agreement, the Company Sponsors Support Agreements, the Sponsor Stockholders
Agreements and the transactions contemplated hereby and thereby), and, to the
knowledge of Parent, there are no other Takeover Statutes.

          (b) As of the date hereof, Parent shall have taken all action, if any,
necessary or appropriate so that (i) the execution of this Agreement and the
consummation of the transactions contemplated hereby do not and will not result
in the ability of any Person to exercise any "Rights" under the Rights Agreement
(the "Parent Rights Agreement"), dated as of October 27, 1998, between Parent
and First Chicago Trust Company, as amended from time to time, (ii) (A) neither
the Company nor any of its affiliates is or will become an "Acquiring Person"
under the Parent Rights Agreement and (B) neither a "Distribution Date" nor a
"Stock Acquisition Date" under the Parent Rights Agreement will occur, in each
case, by reason of the approval, execution, delivery or announcement of this
Agreement or the consummation of the transactions contemplated hereby, including
the Merger. As of the date hereof, the Parent Rights Agreement shall have been
amended to provide that so long as a Company Sponsor complies with the ownership
limitations imposed on such Company Sponsor in such Company Sponsor's
Stockholders Agreement, then such Company Sponsor shall not be deemed (including
by participation in a "group" (as defined in Rule 13d-5 under the Exchange Act)
with the other Company Sponsor) to be an "Acquiring Person" under the Parent
Rights Agreement.

     4.20 Intellectual Property.

          (a) Section 4.20(a) of the Parent Disclosure Schedule lists all
material (i) trademark and service mark registrations and applications for
registration thereof, (ii) copyright registrations and applications for
registration thereof, and (iii) internet domain name registrations, in each case
that are that are owned by Parent or any of the Parent Subsidiaries and are
material to the business of Parent and the Subsidiaries, taken as a whole.
Except as disclosed in Section 4.20(a) of the Parent Disclosure Schedule, with
respect to each item that is required to be identified in therein: (A) Parent or
the applicable Parent Subsidiary is the sole owner and possesses all material
right, title and interest in and to the item in the listed country or
jurisdiction, free and clear of any Liens, the absence of such interest which
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on


                                       36

Parent; and (B) neither Parent nor any Parent Subsidiary has received written
notice of any pending or threatened action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand that challenges the legality,
validity, enforceability, registrations, use or ownership of the item in the
listed country or jurisdiction that would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent.

          (b) Except as disclosed in Section 4.20(b) of the Parent Disclosure
Schedule, to the knowledge of Parent, neither Parent nor any Parent Subsidiary
is infringing or misappropriating any material Intellectual Property rights of
third parties in connection with the operation of the Business that would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent. Except as disclosed in Section 4.20(b) of the Parent
Disclosure Schedule, neither Parent nor any Parent Subsidiary has received any
written charge, complaint, claim, demand or notice during the past two years (or
earlier, if not resolved) alleging any such infringement or misappropriation
that would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent. To the knowledge of Parent, except as
disclosed in Section 4.20(b), during the past two years (or earlier, if not
resolved) no third party has interfered with, infringed upon, misappropriated or
otherwise come into conflict with any Intellectual Property rights of Parent or
any Parent Subsidiary which interference, infringement, misappropriation or
conflict would, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on Parent.

          (c) Parent's and the Parent Subsidiaries' use and dissemination of any
data and information concerning users of their web sites is in compliance with
all applicable privacy policies, terms of use, and Laws, the violation of which
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent. The transactions contemplated hereunder will
not violate any privacy policy, terms of use, or Laws relating to the use,
dissemination or transfer of such data or information, except for such
violations that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent.

     4.21 Reorganization. As of the date of this Agreement, Parent is not aware
of any plan, agreement, fact or circumstance that could reasonably be expected
to prevent the Merger from qualifying as a "reorganization" within the meaning
of Section 368(a) of the Code.

     4.22 Opinions. Prior to the execution of this Agreement, Parent has
received opinions from JP Morgan Securities Inc. and/or Bear, Stearns & Co.
Inc., copies of which have been or will promptly be provided to the Company, to
the effect that as of the date thereof and based upon and subject to the matters
set forth therein the Merger Consideration to be paid by Parent is fair to
Parent from a financial point of view. Such opinions have not been amended or
rescinded as of the date of this Agreement.

     4.23 Parent Information. The information relating to Parent and the Parent
Subsidiaries that is provided by Parent or its representatives for inclusion in
the Joint Proxy Statement and the Form S-4, or in any other document filed with
any other Regulatory Agency in connection with the transactions contemplated by
this Agreement, will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light of
the circumstances in which they are made, not misleading. The


                                       37

Joint Proxy Statement (except for such portions thereof that relate only to the
Company or any of the Company Subsidiaries) will comply in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder.

     4.24 Affiliate Transactions. As of the date hereof, there are no
transactions, contracts, arrangements, commitments or understandings between
Parent or any of the Parent Subsidiaries, on the one hand, and any of Parent's
affiliates (other than wholly owned Parent Subsidiaries), on the other hand,
that would be required to be disclosed by Parent under Item 404 of Regulation
S-K under the Securities Act (the "Parent S-K 404 Arrangements").

     4.25 Financing. Prior to the date hereof, Parent has delivered to the
Company true, complete and correct copies of executed commitment letters from
certain lenders (the "Financing Commitments") committing such lenders to provide
to Parent, the Company and their respective Subsidiaries, as applicable, debt
financing necessary to consummate the Merger and the other transactions
contemplated hereby and thereby, subject to the terms and conditions set forth
therein. As of the date hereof, the Financing Commitments have not been
withdrawn or terminated, and Parent has no reason to believe that the financing
contemplated by the Financing Commitments will not be available. The financing
contemplated by the Financing Commitments constitutes all of the financing
required for the consummation of the transactions contemplated by this Agreement
and the Financing Commitments and the payments of all fees and expenses incurred
by Parent in connection therewith.

     4.26 Merger Sub. (a) True and complete copies of the constituent documents
of Merger Sub, each as in effect as of the date of this Agreement, have
previously been made available to the Company.

          (b) The authorized capital stock of Merger Sub, as of the date hereof,
consists of 1,000 shares of common stock, par value $0.01 per share, of which
1,000 shares are issued and outstanding. Parent is the legal and beneficial
owner of all of the issued and outstanding shares of Merger Sub. Merger Sub was
recently formed by Parent solely for the purpose of effecting the Merger and the
other transactions contemplated by this Agreement. Except as contemplated by
this Agreement, Merger Sub does not hold and has not held any material assets or
incurred any material liabilities, and has not carried on any business
activities other than in connection with the Merger and the other transactions
contemplated by this Agreement.

          (c) Merger Sub has full corporate or other requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Merger Sub. This Agreement has
been duly and validly executed and delivered by Merger Sub and (assuming due
authorization, execution and delivery by the other parties hereto) constitutes
the valid and binding obligation of Merger Sub enforceable against Merger Sub in
accordance with its terms (except as may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar Laws affecting the rights of creditors
generally and the availability of equitable remedies).


                                       38

              ARTICLE V. COVENANTS RELATING TO CONDUCT OF BUSINESS

     5.1 Conduct of Businesses Prior to the Effective Time. During the period
from the date of this Agreement to the Effective Time, except as expressly
contemplated or permitted by this Agreement and except as specifically set forth
in the Company Disclosure Schedule and the Parent Disclosure Schedule, as
applicable (in each case subject to Section 6.1(c)), each of the Company and
Parent will, and will cause each of its respective Subsidiaries to (i) conduct
its business in the ordinary course in all material respects, (ii) use
reasonable best efforts to maintain and preserve intact its business
organization and advantageous business relationships and retain the services of
its officers and key employees, and (iii) take no action that would prohibit or
materially impair or delay the ability of either the Company or Parent to obtain
any necessary approvals of any Regulatory Agency or other Governmental Entity
required for the transactions contemplated hereby or to consummate the
transactions contemplated hereby.

     5.2 Company Forbearances. During the period from the date of this Agreement
to the Effective Time, except as set forth in the Company Disclosure Schedule
and except as required by Law or as expressly contemplated or permitted by this
Agreement, the Company will not, and will not permit any of the Company
Subsidiaries to, without the prior written consent of Parent:

          (a) incur any indebtedness for borrowed money (other than indebtedness
of the Company or any of the wholly owned Company Subsidiaries to the Company or
any of the wholly owned Company Subsidiaries or between wholly owned Company
Subsidiaries) in excess of $25 million in the aggregate, or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity, or make any loan or
advance;

          (b) adjust, split, combine or reclassify any of the Company's capital
stock;

          (c) make, declare or pay any dividend, or make any other distribution
on, or directly or indirectly redeem, purchase or otherwise acquire, any shares
of its capital stock or any securities or obligations convertible (whether
currently convertible or convertible only after the passage of time or the
occurrence of certain events) into or exchangeable for any shares of its capital
stock (except (i) dividends paid by any of the wholly owned Company Subsidiaries
to the Company or to any of its wholly owned Subsidiaries, (ii) regular
quarterly dividends with respect to shares of Company Common Stock not to exceed
$0.09 per share per quarter for the third and fourth quarters of the fiscal year
ending on December 31, 2005 and any subsequent fiscal quarters of the fiscal
year ending December 31, 2006 that are completed prior to the Effective Time,
and (iii) the acceptance of shares of Company Common Stock as payment for the
exercise price of Company Stock Options or for withholding taxes incurred in
connection with the exercise of Company Stock Options, in each case, in
accordance with past practice and the terms of the applicable award agreements);

          (d) grant any stock appreciation right, any Company Stock Options or
any other right to acquire any shares of its capital stock or other Company
Stock-Based Awards,


                                       39

other than as required by employment agreements with the Company as in effect on
the date hereof;

          (e) issue any additional shares of capital stock, any Company Voting
Debt or any securities convertible into or exchangeable for, or any warrants or
options to acquire, any such shares or Company Voting Debt, except (i) pursuant
to the exercise of Company Stock Options or the satisfaction of any Company
Stock-Based Awards, in each case, outstanding and in accordance with the terms
and conditions in effect as of the date of this Agreement or issued hereafter in
compliance with this Agreement or (ii) for issuances by a wholly owned Company
Subsidiary of capital stock to such Subsidiary's parent or another wholly owned
Company Subsidiary;

          (f) notwithstanding any other provision hereof, increase, decrease,
change or exchange any Company Common Stock for a different number or kind of
shares or securities as a result of a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar change in capitalization;

          (g) other than as required to comply with applicable Law (including
Section 409A of the Code) or a Company Benefit Plan as in effect on the date
hereof or collective bargaining or similar labor union or other agreement the
existence of which does not breach this Agreement, (i) other than in the
ordinary course of business consistent with past practice, increase the wages,
salaries, compensation, bonus, pension or other benefits or perquisites payable
to any current or former director, officer or employee, (ii) grant or increase
any severance, change of control, termination or similar compensation or
benefits payable to any current or former director, officer or employee, (iii)
except in the ordinary course of business and consistent with past practice, pay
any bonus, (iv) adopt, enter into, terminate or amend in any material respect
any Company Benefit Plan or any collective bargaining or similar labor union
agreement, (v) except for the provision of indemnification pursuant to
indemnification agreements in effect on the date hereof, enter into any Company
S-K 404 Arrangement, other than in connection with the appointment or election
of new directors or the hiring or promotion of new officers in the ordinary
course of business, or (vi) accelerate the time of payment or vesting of, or the
lapsing of restrictions with respect to, or fund or otherwise secure the payment
of, any compensation or benefits under any Company Benefit Plan; provided,
however, that in no event may any such acceleration of vesting, lapse of
restrictions or funding be as a result of the execution and delivery of this
Agreement or the consummation of the transactions contemplated by this Agreement
unless required to comply with applicable Law;

          (h) sell, transfer, mortgage, encumber or otherwise dispose of any of
its properties or assets that are material to the Company and the Company
Subsidiaries, taken as a whole, in any transaction or series of transactions, to
any Person other than the Company or a Company Subsidiary, or cancel, release or
assign to any such Person any indebtedness or any claims held by the Company or
any Company Subsidiary, in each case that is material to the Company and the
Company Subsidiaries, taken as a whole, other than in the ordinary course of
business consistent with past practice);

          (i) enter into any new line of business that is material to the
Company and the Company Subsidiaries, taken as a whole;


                                       40

          (j) make any material acquisition or investment either by purchase of
stock or securities, contributions to capital, property transfers, or by
purchase of any property or assets of any other Person, or make any capital
expenditures, in each case other than (i) investments in wholly owned
Subsidiaries or (ii) acquisitions of assets used in the operations of the
Company and its Subsidiaries in the ordinary course of business;

          (k) amend its Certificate of Incorporation or Bylaws or similar
organizational documents, or amend, or redeem the rights issued under, the
Company Rights Agreement, or otherwise take any action to exempt any Person
(other than as required pursuant to Section 3.19(b) of this Agreement), or any
action taken by any such Person, from the Company Rights Agreement or any
Takeover Statute or similarly restrictive provisions of its organizational
documents, or terminate, amend or waive any provisions of any confidentiality or
standstill agreements in place with any third parties;

          (l) settle any material claim, action or proceeding, except (i) in the
ordinary course of business or (ii) settlements to the extent subject to and not
in excess of reserves that relate to the matter being settled existing as of
June 30, 2005 in accordance with GAAP;

          (m) take any action that is intended or would be reasonably likely to
result in any of the conditions to the Merger set forth in Article VII not being
satisfied, except as may be required by applicable Law;

          (n) implement or adopt any material change in its tax accounting or
financial accounting policies, practices or methods, other than as may be
required by applicable Law, GAAP or regulatory guidelines;

          (o) amend in any material respect, waive any of its material rights
under, or enter into any contract or binding agreement that would be a Company
Contract;

          (p) take, or agree to take, any action that would prevent the Merger
from qualifying as a "reorganization" within the meaning of Section 368(a) of
the Code;

          (q) except in the ordinary course of business, sell, assign, abandon,
license, or otherwise dispose of any Intellectual Property that is used in the
conduct of, or is otherwise material to, the business of Company and the Company
Subsidiaries;

          (r) pay or agree to pay to the Company's Advisors any investment
banking or fairness opinion fees in connection with the Merger or related
transactions contemplated by this Agreement in excess of the amount set forth on
Section 5.2(r) to the Company Disclosure Schedule; or

          (s) agree or commit to take any of the actions prohibited by this
Section 5.2.

     5.3 Parent Forbearances. During the period from the date of this Agreement
to the Effective Time, except as set forth in the Parent Disclosure Schedule
(subject to Section 6.1(c)) and except as required by Law or as expressly
contemplated or permitted by this Agreement, Parent will not, and will not
permit any of the Parent Subsidiaries to, without the prior written consent of
the Company:


                                       41

          (a) incur any indebtedness for borrowed money (except for indebtedness
contemplated by the Financing Commitments and other than indebtedness of Parent
or any of the wholly owned Parent Subsidiaries to Parent or any of the wholly
owned Parent Subsidiaries or between wholly owned Parent Subsidiaries) in excess
of $25 million in the aggregate, or assume, guarantee, endorse or otherwise as
an accommodation become responsible for the obligations of any other individual,
corporation or other entity, or make any loan or advance;

          (b) adjust, split, combine or reclassify any of Parent's capital
stock;

          (c) make, declare or pay any dividend, or make any other distribution
on, or directly or indirectly redeem, purchase or otherwise acquire, any shares
of its capital stock or any securities or obligations convertible (whether
currently convertible or convertible only after the passage of time or the
occurrence of certain events) into or exchangeable for any shares of its capital
stock (except (i) dividends paid by any of the wholly owned Parent Subsidiaries
to Parent or to any of its wholly owned Subsidiaries, (ii) dividends paid on, or
conversion of, Parent Preferred Stock outstanding on the date hereof in
accordance with the certificate of designation for such Parent Preferred Stock,
and (iii) the acceptance of shares of Parent Common Stock as payment for the
exercise price of Parent Stock Options or for withholding taxes incurred in
connection with the exercise of Parent Stock Options, in each case, in
accordance with past practice and in accordance with applicable Law and the
terms of the applicable award agreements);

          (d) issue any additional shares of capital stock, any Parent Voting
Debt or any securities convertible into or exchangeable for, or any warrants or
options to acquire, any such shares or Parent Voting Debt, except (i) pursuant
to the exercise of Parent Stock Options or the satisfaction of any Parent
Stock-Based Awards, in each case, outstanding and in accordance with the terms
and conditions in effect as of the date of this Agreement or issued thereafter
in compliance with this Agreement, (ii) upon the conversion of convertible
securities outstanding as of the date of this Agreement, or (iii) for issuances
by a wholly owned Parent Subsidiary of capital stock to such Subsidiary's parent
or another wholly owned Parent Subsidiary;

          (e) notwithstanding any other provision hereof, increase, decrease,
change or exchange any Parent Preferred Stock for a different number or kind of
shares or securities as a result of a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar change in capitalization, in each case other than as required by the
terms thereof as in effect on the date of this Agreement;

          (f) other than as required to comply with applicable Law (including
Section 409A of the Code) or a Parent Benefit Plan as in effect on the date
hereof or collective bargaining or similar labor union or other agreement the
existence of which does not breach this Agreement, (i) other than in the
ordinary course of business consistent with past practice, increase the wages,
salaries, compensation, bonus, pension or other benefits or perquisites payable
to any current or former director, officer or employee, (ii) grant or increase
any severance, change of control, termination or similar compensation or
benefits payable to any current or former director, officer or employee, (iii)
except in the ordinary course of business and consistent with past practice pay
any bonus, (iv) adopt, enter into, terminate or amend in any material respect
any Parent Benefit Plan or any collective bargaining or similar labor union


                                       42

agreement, (v) except for the provision of indemnification pursuant to
indemnification agreements in effect on the date hereof, enter into any Parent
S-K 404 Arrangement, other than in connection with the appointment or election
of new directors or the hiring or promotion of new officers in the ordinary
course of business, or (vi) accelerate the time of payment or vesting of, or the
lapsing of restrictions with respect to, or fund or otherwise secure the payment
of, any compensation or benefits under any Parent Benefit Plan; provided,
however, that in no event may any such acceleration of vesting, lapse of
restrictions or funding be as a result of the execution and delivery of this
Agreement or the consummation of the transactions contemplated by this Agreement
unless required to comply with applicable Law;

          (g) sell, transfer, mortgage, encumber or otherwise dispose of any of
its properties or assets that are material to Parent and the Parent
Subsidiaries, taken as a whole, in any transaction or series of transactions, to
any Person other than Parent or a Parent Subsidiary or cancel, release or assign
to any such Person any indebtedness or any claims held by Parent or any Parent
Subsidiary, in each case that is material to Parent and the Parent Subsidiaries,
taken as a whole, other than in the ordinary course of business consistent with
past practice);

          (h) enter into any new line of business that is material to Parent and
the Parent Subsidiaries, taken as a whole;

          (i) make any material acquisition or investment either by purchase of
stock or securities, contributions to capital, property transfers, or by
purchase of any property or assets of any other Person, or make any capital
expenditures, in each case other than (i) investments in wholly owned
Subsidiaries or (ii) acquisitions of assets used in the operations of Parent and
its Subsidiaries in the ordinary course of business;

          (j) amend its Certificate of Incorporation or Bylaws or similar
organizational documents, or amend, or redeem the rights issued under, the
Parent Rights Agreement, or otherwise take any action to exempt any Person
(other than as required pursuant to Section 4.19(b) of this Agreement), or any
action taken by any Person, from the Parent Rights Agreement or from any
Takeover Statute or similarly restrictive provisions of its organizational
documents, or terminate, amend or waive any provisions of any confidentiality or
standstill agreements in place with any third parties;

          (k) settle any material claim, action or proceeding, except (i) in the
ordinary course of business or (ii) settlements to the extent subject to and not
in excess of reserves that relate to the matter being settled existing as of
June 30, 2005 in accordance with GAAP;

          (l) take any action that is intended or would be reasonably likely to
result in any of the conditions to the Merger set forth in Article VII not being
satisfied, except as may be required by applicable Law; or

          (m) implement or adopt any material change in its tax accounting or
financial accounting policies, practices or methods, other than as may be
required by applicable Law, GAAP or regulatory guidelines;

          (n) take, or agree to take, any action that would prevent the Merger
from qualifying as a "reorganization" within the meaning of Section 368(a) of
the Code;


                                       43

          (o) except in the ordinary course of business, sell, assign, abandon,
license, or otherwise dispose of any Intellectual Property that is used in the
conduct of, or is otherwise material to, the business of Parent and the Parent
Subsidiaries; or

          (p) agree or commit to take any of the actions prohibited by this
Section 5.3.

     5.4 Control of Other Party's Business. Nothing contained in this Agreement
will give Parent, directly or indirectly, the right to control or direct the
Company's operations prior to the Effective Time. Nothing contained in this
Agreement will give the Company, directly or indirectly, the right to control or
direct Parent's operations prior to the Effective Time. Prior to the Effective
Time, each of Parent and the Company will exercise, consistent with the terms
and conditions of this Agreement, complete control and supervision over its
respective operations.

                        ARTICLE VI. ADDITIONAL AGREEMENTS

     6.1 Regulatory and Tax Matters. (a) Parent and the Company will promptly
prepare and file with the SEC the Joint Proxy Statement and Form S-4 in which
the Joint Proxy Statement will be included as a prospectus and any amendments or
supplements thereto. Each of Parent and the Company will use their reasonable
best efforts to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing, and each of the Company and Parent
will thereafter mail or deliver the Joint Proxy Statement to its respective
stockholders. Each party will also use its reasonable best efforts to obtain all
necessary state securities law or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement, and each party will
furnish all information concerning such party and the holders of its capital
stock as may be reasonably requested in connection with any such action. The
parties will promptly provide copies to and consult with each other and prepare
written responses with respect to any written comments received from the SEC
with respect to the Form S-4 and the Joint Proxy Statement and promptly advise
the other party of any oral comments received from the SEC.

          (b) Without limiting Section 6.4, the parties will cooperate with each
other and use their respective reasonable best efforts to promptly prepare and
file all necessary documentation, to effect all applications, notices, petitions
and filings, to obtain as promptly as practicable all permits, consents,
approvals and authorizations of all third parties and Governmental Entities that
are necessary or advisable to consummate the transactions contemplated by this
Agreement (including the Merger) and to comply with the terms and conditions of
all such permits, consents, approvals and authorizations of all such
Governmental Entities. The Company and Parent will have the right to review in
advance, and, to the extent practicable, each will consult the other on, in each
case, subject to applicable Law relating to the exchange of information, all the
information relating to the Company or Parent, as the case may be, and any of
their respective Subsidiaries, that appears in any filing made with, or written
materials submitted to, any third party or any Governmental Entity in connection
with the transactions contemplated by this Agreement. In exercising the
foregoing right, each of the parties will act reasonably and as promptly as
practicable. The parties will consult with each other with respect to obtaining
all permits, consents, approvals and authorizations of all third parties and
Governmental Entities necessary or advisable to consummate the transactions


                                       44

contemplated by this Agreement, and each party will keep the other apprised of
the status of matters relating to completion of the transactions contemplated by
this Agreement.

          (c) The parties will cooperate with each other and use their
respective reasonable best efforts to cause the Merger to qualify as a
"reorganization" within the meaning of Section 368(a) of the Code (the "Intended
Tax Treatment"), including (A) not taking any action that such party knows is
reasonably likely to prevent the Intended Tax Treatment, (B) executing such
amendments to this Agreement as may be reasonably required in order to obtain
the Intended Tax Treatment (it being understood that no party will be required
to agree to any such amendment (x) that it determines in good faith materially
adversely affects the value of the transactions contemplated hereby to such
party or its stockholders or (y) after the date of the Company Stockholders
Meeting or the Parent Stockholders Meeting, as applicable, which under
applicable Law expressly requires the further approval of its stockholders), and
(C) using their respective reasonable best efforts to obtain the opinions
referred to in Sections 7.2(c) and 7.3(c). Parent, Merger Sub and the Company
shall each deliver to counsel to Parent and counsel to the Company, for the
purpose of their rendering the opinions referred to in Sections 7.2(c) and
7.3(c), representations reasonably requested by such counsel at such time or
times as may be reasonably requested by such counsel, including at the effective
date of the Form S-4 and at the Effective Time. For tax purposes, each of the
Company, Parent and Merger Sub will report the Merger in a manner consistent
with Section 1.7.

          (d) Each of Parent and the Company will, upon request, furnish to the
other all information concerning itself, its Subsidiaries, directors, officers
and stockholders and such other matters as may be reasonably necessary or
advisable in connection with the Joint Proxy Statement, the Form S-4 or any
other statement, filing, notice or application made by or on behalf of Parent,
the Company or any of their respective Subsidiaries to any Governmental Entity
in connection with the Merger and the other transactions contemplated by this
Agreement.

          (e) Each of Parent and the Company will promptly advise the other upon
receiving any communication from any Governmental Entity and any material
communication given or received in connection with any proceeding by a private
party, in each case in connection with the Merger and the other transactions
contemplated by this Agreement.

     6.2 Access to Information. (a) Upon reasonable notice and subject to
applicable Law relating to the exchange of information, each of the Company and
Parent will, and will cause each of its Subsidiaries to, afford to the officers,
employees, accountants, counsel and other representatives of the other,
reasonable access, during normal business hours during the period prior to the
Effective Time, to all its properties, books, contracts, commitments and
records, and, during such period, each party will, and will cause its
Subsidiaries to, make available to the other party (i) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws or
federal or state laws applicable to such party (other than reports or documents
that such party is not permitted to disclose under applicable Law) and (ii) all
other information concerning its business, properties and personnel as the other
may reasonably request, including information (financial or otherwise) regarding
the Company and the Company Subsidiaries as may be necessary or appropriate to
complete the financings contemplated by the Financing Commitments.
Notwithstanding the foregoing, neither the


                                       45

Company nor Parent nor any of their Subsidiaries will be required to provide
access to or to disclose information where such access or disclosure would
jeopardize the attorney-client privilege of such party or its Subsidiaries or
contravene any Law, fiduciary duty or binding agreement entered into prior to
the date of this Agreement or entered into after the date of this Agreement in
the ordinary course of business. The parties will use their reasonable best
efforts to make appropriate substitute arrangements to permit reasonable
disclosure under circumstances in which the restrictions of the preceding
sentence apply. Whenever any event occurs that is required to be set forth in an
amendment or supplement to the Proxy Statement or the offering memoranda or
other materials pursuant to which the debt financing contemplated by the
Financing Commitments (the "Debt Financing") is offered to potential purchasers
or lenders (the "Debt Offer Documents"), the Company or Parent, as the case may
be, will promptly inform the other party of such occurrence and cooperate in
filing with the SEC and/or mailing to the stockholders of the Company, in the
case of the Proxy Statement, or the extent required to the potential purchasers
or lenders of the Debt Financing, such amendment or supplement, in each case as
promptly as practicable. The information provided and to be provided by Parent,
Merger Sub and the Company, respectively, for use in the Proxy Statement or any
amendment or supplement thereto and the Debt Offer Documents or any amendment or
supplement thereto, in the case of the Proxy Statement, at the time of the
Company Stockholders Meeting and the Parent Stockholders Meeting, and in the
case of the Debt Offer Documents or any amendments or supplements thereto, at
the time the Debt Offer Documents are first made available to potential
purchasers or lenders of the Debt Financing and at the time of the consummation
of the Debt Financing, will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The Company will, and will cause the
Company Subsidiaries to, cooperate in good faith with Parent's efforts to plan
for the post-Closing integration of its business with the business of the
Company and the Company Subsidiaries.

          (b) All information and materials provided pursuant to this Agreement
will be subject to the provisions of the Non Disclosure Agreement, dated June
13, 2005, between the Company and Parent, as amended from time to time (the
"Confidentiality Agreement").

          (c) No investigation by either of the parties or their respective
representatives will affect the representations and warranties of the other set
forth in this Agreement.

     6.3 Stockholder Approvals. (a) Each of Parent and the Company will duly
call, convene and hold a meeting of its stockholders to be held as soon as
reasonably practicable after the Form S-4 is declared effective for the purpose
of obtaining the Parent Stockholder Approval and the Company Stockholder
Approval, and each will use its reasonable best efforts to cause such meetings
to occur as soon as reasonably practicable and on the same date. Subject to
Section 6.10, the Board of Directors of each of Parent and the Company will use
its reasonable best efforts to obtain from its respective stockholders the
Parent Stockholder Approval and the Company Stockholder Approval. Without
limiting the generality of the foregoing but subject to Sections 8.1(j) and
8.1(k), respectively, Parent's and the Company's obligations pursuant to this
Section 6.3(a) will not be affected by the commencement, public proposal, public
disclosure or communication to such party or its respective representatives of
any Acquisition Proposal.


                                       46

          (b) Except as permitted by Section 6.10(g), the Parent Board will
recommend to the Parent stockholders the approval of this Agreement, the Sponsor
Stockholders Agreements and the transactions contemplated hereby and thereby and
will include such recommendation in the Joint Proxy Statement.

          (c) Except as permitted by Section 6.10(g), the Company Board will
recommend to the Company stockholders the adoption of this Agreement and the
approval of the Merger and will include such recommendation in the Joint Proxy
Statement.

          (d) Nothing set forth in this Section 6.3 shall limit the ability of
Parent or the Company to enter into an agreement in connection with a Superior
Proposal, so long as it first terminates this Agreement in accordance with
Section 8.1(j) or 8.1(k), as the case may be.

     6.4 Legal Conditions to Merger. (a) Each of Parent and the Company will,
and will cause its Subsidiaries to, use their reasonable best efforts (i) to
take, or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements that may be imposed on such party or its
Subsidiaries with respect to the Merger and to consummate the transactions
contemplated by this Agreement as soon as practicable after the date hereof and
(ii) to obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party that is required to be obtained by the Company
or Parent or any of their respective Subsidiaries in connection with the Merger,
the financing contemplated by the Financing Commitments and the other
transactions contemplated by this Agreement, including all steps necessary to
promptly identify any impediments to complying with all legal requirements or to
obtaining such consents, authorizations, orders, approvals, or exemptions.
Parent and Company will cooperate with one another and with Governmental
Entities to resolve or settle any issues as early as possible and with a view to
the Termination Date. Nothing in this Agreement will require, or be deemed to
require, the parties to this Agreement to agree to take any of the following
actions in order to obtain the consent, authorization, order, approval or
exemption of any Governmental Entity in order to satisfy the condition set forth
in Section 7.1(c) where such actions would have a Material Adverse Effect on the
party taking the action or would result in a breach the obligations of Parent or
any Parent Subsidiary under the agreements listed in Section 6.4(a) of the
Parent Disclosure Schedule or of the Company or any Company Subsidiary under the
agreements listed in Section 6.4(b) of the Company Disclosure Schedule: (i)
sell, hold separate or otherwise dispose of assets of such party or its
Subsidiaries or conduct its business in a specified manner; (ii) agree to sell,
hold separate or otherwise dispose of assets of such party or its Subsidiaries
or conduct its business in a specified manner; or (iii) permit assets of such
party or its Subsidiaries to be sold, held separate or disposed of or permit its
business to be conducted in a specified manner. This Section 6.4 does not
require either the Parent or the Company to enter into any agreement with a
third party to undertake any obligations or make any divestitures, unless such
agreement is conditioned on the consummation of the transactions contemplated by
this Agreement.

          (b) In furtherance and not in limitation of the covenants of the
parties contained in Sections 6.1 or 6.4(a), if any administrative or judicial
action or proceeding, including any proceeding by a private party, is instituted
(or threatened to be instituted) challenging any transaction contemplated by
this Agreement as violative of any applicable Law


                                       47

or legal obligation or requirement, or if any statute, rule, regulation or
Injunction is enacted, entered, promulgated or enforced by a Governmental Entity
that would make the Merger or the other transactions contemplated hereby illegal
or would otherwise prohibit or materially impair or materially delay the
consummation of the Merger or the other transactions contemplated hereby, each
of the Company and Parent will cooperate in all respects with each other and use
its respective reasonable best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any judgment,
Injunction or other order, whether temporary, preliminary or permanent, that is
in effect and that prohibits, prevents or restricts consummation of the Merger
or the other transactions contemplated by this Agreement and to have such
statute, rule, regulation or Injunction repealed, rescinded or made inapplicable
so as to permit consummation of the transactions contemplated by this Agreement.
Notwithstanding the foregoing or any other provision of this Agreement, nothing
in this Section 6.4(b) will limit either the Company's or Parent's right to
terminate this Agreement pursuant to Article VIII so long as such party has up
to the date of termination complied with its obligations under this Section 6.4.

          (c) Each party hereto and its Board of Directors will, if any Takeover
Statute becomes applicable to this Agreement, the Merger or any other
transactions contemplated hereby, take all action reasonably necessary to ensure
that the Merger and the other transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise to minimize the effect of such statute on this Agreement, the Merger
and the other transactions contemplated hereby.

          (d) Immediately following the execution of this Agreement, Parent will
adopt this Agreement as the sole stockholder of Merger Sub.

     6.5 Affiliates. The Company will use its reasonable best efforts to cause
each director, executive officer and other Person who is an "affiliate" (for
purposes of Rule 145 under the Securities Act) of the Company to deliver to
Parent, as soon as practicable after the date of this Agreement, and prior to
the date of the Company Stockholders Meeting, a written agreement, in the form
of Exhibit E.

     6.6 Listing. Parent will use its reasonable best efforts to cause the
shares of Parent Common Stock to be issued in the Merger to be authorized for
listing on the NYSE, subject to official notice of issuance, prior to the
Effective Time.

     6.7 Indemnification; Directors' and Officers' Insurance. (a) From and after
the Effective Time, Parent will indemnify and hold harmless, as and to the
fullest extent permitted by applicable Law, each individual who is now, or has
been at any time prior to the date of this Agreement, or who becomes prior to
the Effective Time, a director or officer of the Company or any of the Company
Subsidiaries or who is or was serving at the request of the Company or any of
the Company Subsidiaries as a director or officer of another Person (the
"Company Indemnified Parties") against any losses, claims, damages, liabilities,
costs, expenses (including reimbursement for reasonable fees and expenses
incurred in advance of the final disposition of any claim, suit, proceeding or
investigation to each Company Indemnified Party), judgments, fines and, subject
to approval by Parent, amounts paid in settlement in connection with any
threatened or actual claim, action, suit, proceeding or investigation to


                                       48

which such Company Indemnified Party is, or is threatened to be, made a party
based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that such individual is or was a director or officer
of the Company or any of the Company Subsidiaries or (ii) this Agreement or any
of the transactions contemplated by this Agreement, whether asserted or arising
before or after the Effective Time.

          (b) Parent will cause to be maintained in effect for a period of six
years from the Effective Time the directors' and officers' liability insurance
policy maintained at the Effective Time by the Company (the "Company D&O
Policy") (provided, that Parent may substitute therefor policies of at least the
same coverage and amounts and may cause coverage to be extended under the
Company D&O Policy by obtaining a six-year "tail" policy, in each case
containing terms and conditions that are not less advantageous than the Company
D&O Policy) with respect to claims arising from facts, events, acts or omissions
occurring prior to the Effective Time; provided, however, that in no event will
Parent be required to expend in the aggregate in excess of 300% of the annual
aggregate premiums currently paid by the Company for such insurance (the
"Maximum Premium"). If such insurance coverage cannot be obtained at all, or can
only be obtained at an annual premium in excess of the Maximum Premium, Parent
will cause to be maintained the most advantageous policies of directors' and
officers' insurance obtainable for an annual premium equal to the Maximum
Premium.

          (c) The provisions of this Section 6.7 will survive the Effective Time
and are intended to be for the benefit of, and will be enforceable by, each
Company Indemnified Party and his or her heirs and representatives.

          (d) If Parent or any of its successors or assigns (i) consolidates
with or merges into any other Person and is not the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and assets to any Person,
then, and in each such case, to the extent necessary, proper provision will be
made so that the successors and assigns of Parent, as the case may be, will
assume the obligations set forth in this Section 6.7.

     6.8 Advice of Changes. Each of Parent and the Company will promptly advise
the other of any change or event (i) having or reasonably expected to result in
a Material Adverse Effect on Parent or a Material Adverse Effect on the Company,
as the case may be, or (ii) that it believes results or would be reasonably
expected to result in a failure of any condition set forth in Sections 7.2(a),
(b) and (c) and 7.3(a), (b) and (c); provided, however, that no such
notification will affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the conditions
to the obligations of the parties under this Agreement; provided, further,
however, that a failure to comply with this Section 6.8 will not constitute the
failure of any condition set forth in Article VII to be satisfied unless the
underlying Material Adverse Effect or breach would independently result in the
failure of a condition set forth in Article VII to be satisfied.

     6.9 Exemption from Liability Under Section 16(b). Parent and the Company
agree that, in order to most effectively compensate and retain Insiders in
connection with the Merger, both prior to and after the Effective Time, it is
desirable that Insiders be relieved of the risk of liability under Section 16(b)
of the Exchange Act to the fullest extent permitted by applicable


                                       49

Law in connection with the conversion of shares of Company Common Stock, Company
Stock Options and Company Stock-Based Awards into shares of Parent Common Stock
and Company Rollover Options and other awards denominated in shares of Parent
Common Stock in the Merger, and for that compensatory and retentive purpose
agree to the provisions of this Section 6.9. Following the delivery to Parent of
the Section 16 Information in a timely fashion, the Parent Board, or a committee
of "Non-Employee Directors" thereof (as such term is defined for purposes of
Rule 16b-3(d) under the Exchange Act), will adopt a resolution providing that
the receipt by Insiders of Parent Common Stock in exchange for or satisfaction
of shares of Company Common Stock or Company Stock-Based Awards, and of Company
Rollover Options upon conversion of Company Stock Options, in each case,
pursuant to the transactions contemplated by this Agreement and to the extent
such securities are listed in the Section 16 Information, are intended to be
exempt from liability pursuant to Section 16(b) under the Exchange Act. "Section
16 Information" will mean information accurate in all material respects
regarding Insiders, the number of shares of Company Common Stock held by each
such Insider and expected to be exchanged for Parent Common Stock in the Merger,
and the number and description of Company Stock Options and Company Stock-Based
Awards held by each such Insider and expected to be converted into Company
Rollover Options and exchanged for Parent Common Stock or awards denominated
therein in connection with the Merger; provided, however, that the requirement
for a description of any Company Stock Options and Company Stock-Based Awards
will be deemed to be satisfied if copies of all Company Stock Plans and other
Company Benefit Plans, and forms of agreements evidencing grants thereunder,
under which such Company Stock Options and Company Stock-Based Awards,
respectively, have been granted to Insiders, have been made available to Parent.
"Insiders" will mean those officers and directors of the Company who are or are
expected to become subject to the reporting requirements of Section 16(a) of the
Exchange Act and who are listed in the Section 16 Information.

     6.10 No Solicitation. (a) Parent will not, and will cause the Parent
Subsidiaries and each officer, director, employee, agent or representative
(including any financial or legal advisor or other retained representative) of
Parent or any Parent Subsidiaries not to, directly or indirectly, (i) solicit,
initiate or facilitate (including by way of furnishing information) or take any
other action designed to facilitate any inquiries or proposals regarding any
merger, share exchange, consolidation, sale of assets, sale of shares of capital
stock (including by way of a tender offer or exchange offer) or similar
transactions involving Parent or any of the Parent Subsidiaries that, if
consummated, would constitute an Alternative Transaction (as defined in
paragraph (c) below) (any of the foregoing inquiries or proposals being referred
to herein as a "Parent Acquisition Proposal"), (ii) participate in any
discussions or negotiations regarding, or furnish to any Person any information
in connection with, or otherwise cooperate in any way with any Person in
connection with, an Alternative Transaction, or (iii) enter into any agreement
regarding any Alternative Transaction.

          (b) The Company will not, and will cause the Company Subsidiaries and
each officer, director, employee, agent or representative (including any
financial or legal advisor or other retained representative) of the Company or
any Company Subsidiaries not to, directly or indirectly, (i) solicit, initiate
or facilitate (including by way of furnishing information) or take any other
action designed to facilitate any inquiries or proposals regarding any merger,
share exchange, consolidation, sale of assets, sale of shares of capital stock
(including by way of a


                                       50

tender offer or exchange offer) or similar transactions involving the Company or
any of the Company Subsidiaries that, if consummated, would constitute an
Alternative Transaction (any of the foregoing inquiries or proposals being
referred to herein as a "Company Acquisition Proposal" and, with a Parent
Acquisition Proposal, an "Acquisition Proposal"), (ii) participate in any
discussions or negotiations regarding, or furnish to any Person any information
in connection with, or otherwise cooperate in any way with any Person in
connection with, an Alternative Transaction, or (iii) enter into any agreement
regarding any Alternative Transaction.

          (c) As used in this Agreement, "Alternative Transaction" means, with
respect to the Company or Parent, as the case may be (for this purpose, the
"Target Party"), any of (i) a transaction pursuant to which any third Person (or
group of Persons) other than the other party to this Agreement (the "Non-Target
Party") or its affiliates, directly or indirectly, acquires or would acquire
more than 20% of the outstanding shares of common stock of the Target Party or
of the outstanding voting power of the Target Party, whether from the Target
Party or pursuant to a tender offer or exchange offer or otherwise, (ii) a
merger, share exchange, consolidation, business combination, recapitalization or
any other transaction involving the Target Party (other than the Merger) or any
of its Subsidiaries pursuant to which any third Person or group of Persons
(other than the Non-Target Party or its affiliates) party thereto, or its
stockholders, owns or would own more than 20% of the outstanding shares of
common stock or the outstanding voting power of the Target Party or, if
applicable, the parent entity resulting from any such transaction immediately
upon consummation thereof, or (iii) any transaction pursuant to which any third
Person (or group of Persons) other than the Non-Target Party or its affiliates
acquires or would acquire control of assets (including for this purpose the
outstanding equity securities of the Subsidiaries of the Target Party and
securities of the entity surviving any merger or business combination involving
any of the Subsidiaries of the Target Party) of the Target Party or any of its
Subsidiaries representing more than 20% of the fair market value of all the
assets of the Target Party and its Subsidiaries, taken as a whole, immediately
prior to such transaction.

          (d) The Target Party will notify the Non-Target Party promptly (but in
no event later than 48 hours) after receipt of any Acquisition Proposal, or any
material modification of or material amendment to any Acquisition Proposal, or
any request for non-public information relating to the Target Party or any of
its Subsidiaries or for access to the properties, books or records of the Target
Party or any of its Subsidiaries by any Person that informs the Board of
Directors of the Target Party (the "Target Board") or any of its Subsidiaries
that it is considering making, or has made, an Acquisition Proposal. Such notice
to the Non-Target Party will be made orally and in writing and will indicate the
identity of the Person making the Acquisition Proposal or intending to make or
considering making an Acquisition Proposal or requesting non-public information
or access to the properties, books or records of the Target Party or any of its
Subsidiaries, and the material terms of any such Acquisition Proposal or
modification or amendment to an Acquisition Proposal. The Target Party will (i)
keep the Non-Target Party informed, on a current basis (but in no event later
than 48 hours) of any material changes in the status and any material changes or
modifications in the terms of any such Acquisition Proposal, indication or
request and (ii) provide to the Non-Target Party as soon as practicable after
receipt or delivery thereof with copies of all correspondence and other written
material sent or provided to the Target Party from any third party in connection
with any Acquisition Proposal or sent or provided by the Target Party to any
third party in connection with any Acquisition Proposal.


                                       51

          (e) Notwithstanding anything to the contrary in this Section 6.10, at
any time prior to obtaining the Parent Stockholder Approval or the Company
Stockholder Approval, as applicable, the Target Party may furnish or cause to be
furnished information to, and enter or cause to be entered into discussions
with, a Person who has made an unsolicited bona fide written proposal or offer
regarding an Acquisition Proposal which did not result from a breach of Section
6.10(a) or 6.10(b), as applicable, if the Target Board has (i) determined in
good faith (after consultation with its outside legal counsel and financial
advisor or advisors) that such proposal or offer constitutes or is reasonably
likely to lead to a Superior Proposal and, taking into account any revisions to
the terms of the Merger or this Agreement proposed by the Non-Target Party after
being notified pursuant to Section 6.10(g), that doing so is necessary for the
Target Board to comply with its fiduciary duties to the Target Party's
stockholders under applicable law, (ii) provided prior or contemporaneous notice
to the Non-Target Party of its intent to furnish information to or enter into
discussions with such Person, (iii) obtained from such Person an executed
confidentiality agreement containing terms with respect to confidentiality that
are determined by the Target Party to be substantially similar to and not less
favorable to the Target Party in the aggregate than those contained in the
Confidentiality Agreement (it being understood that such confidentiality
agreement and any related agreements will not include any provision calling for
any exclusive right to negotiate with such party or having the effect of
prohibiting the Target Party from satisfying its obligations under this
Agreement), and (iv) the Target Party complies with all of its obligations under
Sections 6.10(a) or 6.10(b), as applicable, and Sections 6.3, 6.10(d) and
6.10(g). The Target Party will provide the Non-Target Party with all information
regarding the Target Party with which the Non-Target Party has not previously
been provided that is provided to any Person making any such Acquisition
Proposal.

          (f) As used in this Agreement, "Superior Proposal" means a bona fide
written proposal or offer made by a third Person (or group of Persons) to
consummate any of the following transactions: (i) a merger, share exchange,
consolidation, business combination or other similar transaction involving the
Target Party pursuant to which the stockholders of the Target Party immediately
preceding such transaction would hold less than 50% of the outstanding shares of
common stock of, and less than 50% of the outstanding voting power of, the
Target Party or the parent entity resulting from any such transaction
immediately upon consummation thereof, (ii) the acquisition by any third Person
or group of Persons (including by means of a tender offer or an exchange offer
or a two-step transaction involving a tender offer followed with reasonable
promptness by a cash-out merger involving the Target Party), directly or
indirectly, of ownership of more than 50% of the outstanding shares of common
stock of, and more than 50% of the outstanding voting power of, the Target
Party, or (iii) the acquisition by any third Person (or group of Persons) of
more than 50% of the fair market value of all the assets of the Target Party and
its Subsidiaries, taken as a whole, immediately prior to such transaction, in
each case that the Target Board determines in good faith (after consultation
with its outside legal counsel and its financial advisor or advisors) to be more
favorable from a financial point of view to the Target Party stockholders than
the Merger, taking into account all relevant factors as well as any revisions to
the terms of the Merger or this Agreement proposed by the Non-Target Party after
being notified pursuant to Section 6.10(g).

          (g) Except as permitted by this Section 6.10(g), neither the Target
Board nor any committee thereof will (A) withdraw, modify or qualify in a manner
adverse to the Non-Target Party the recommendation by the Target Board, or any
such committee, of this Agreement


                                       52

and the Merger (in the case of the Company) or this Agreement, the Sponsor
Stockholders Agreements and the transactions contemplated hereby and thereby (in
the case of Parent), (B) recommend the approval or adoption of any Acquisition
Proposal or fail to recommend against any Acquisition Proposal, or (C) resolve,
agree or propose publicly to take any such actions (each such action set forth
in this sentence of this Section 6.10(g) being referred to herein as an "Adverse
Recommendation Change") or approve, adopt or recommend, or cause or permit the
Target Party to enter into, any letter of intent, agreement or obligation with
respect to, any Alternative Transaction (other than a confidentiality agreement
as referred to in Section 6.10(e)). Notwithstanding anything to the contrary in
this Section 6.10, if, at any time prior to obtaining the Parent Stockholder
Approval or the Company Stockholder Approval, as applicable, (i) the Target
Board, in the exercise of its fiduciary duties, determines in good faith, after
consultation with outside legal counsel and financial advisor or advisors, that
to do otherwise would be inconsistent with its fiduciary duties under applicable
Law, (ii) before taking any such action, the Target Party promptly gives the
Non-Target Party written notice advising the Non-Target Party of the decision of
the Target Board to take such action, including the reasons therefor and, in the
event that such decision relates to an Acquisition Proposal, such notice
specifies the material terms and conditions of such Acquisition Proposal and
identifies the Person making such Acquisition Proposal (and the Target Party
will also promptly give the Non-Target Party such a notice with respect to any
subsequent change in such proposal) as required by Section 6.10(d) and the
Target Party has given the Non-Target Party at least three business days after
delivery of each such notice to propose revisions to the terms of this Agreement
(or to make another proposal) in response to such Acquisition Proposal and has
negotiated in good faith with the Non-Target Party with respect to such proposed
revisions or other proposal, if any, (iii) if such Adverse Recommendation Change
relates to an Acquisition Proposal received by the Target Party or made directly
to the Target Party's stockholders, such Acquisition Proposal constitutes a
Superior Proposal, and (iv) the Target Party has complied with its obligations
set forth in this Section 6.10, then the Target Board may make an Adverse
Recommendation Change; provided, that if the Target Party makes an Adverse
Recommendation Change, then, notwithstanding such Adverse Recommendation Change,
the Target Company will nevertheless submit this Agreement and the Merger (in
the case of the Company) or this Agreement, the Sponsor Stockholders Agreements
and the transactions contemplated hereby and thereby (in the case of Parent) to
its stockholders for the purpose of obtaining the Company Stockholder Approval
or Parent Stockholder Approval, as applicable, and nothing contained herein will
be deemed to relieve the Target Party of such obligation, unless this Agreement
is terminated in accordance with its terms (including termination in connection
with a Superior Proposal in accordance with Section 8.1(j) or 8.1(k), as the
case may be) prior to the Company Stockholder Meeting or Parent Stockholder
Meeting, as applicable.

          (h) Nothing contained in this Section 6.10 will prohibit the Target
Party or its Subsidiaries from taking and disclosing to its stockholders a
position required by Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange
Act; provided, however, that any such disclosure that relates to an Acquisition
Proposal will be deemed to be an Adverse Recommendation Change unless the Target
Board reaffirms its recommendation of this Agreement and the Merger (in the case
of the Company) or this Agreement and the Merger, the Sponsor Stockholders
Agreements and the transactions contemplated hereby and thereby (in the case of
Parent), as applicable. Notwithstanding any other provision hereof, no
disclosure that the Parent Board or the Company Board may determine (after
consultation with counsel) that it or Parent or the


                                       53

Company, as applicable, is required to make under applicable Law will constitute
a violation of this Agreement.

          (i) Each of Parent and the Company and their respective Subsidiaries
will immediately cease and cause to be terminated any existing discussions or
negotiations with any Persons (other than the other party) conducted heretofore
with respect to any Alternative Transaction, and will use reasonable best
efforts to cause all Persons, other than the other party hereto, who have been
furnished confidential information regarding such party in connection with the
solicitation of or discussions regarding an Acquisition Proposal within the 12
months prior to the date hereof promptly to return or destroy such information.
Each of Parent and the Company will, as soon as practicable after the date
hereof, take all steps necessary to terminate any approval that may have been
heretofore given under any provisions of any standstill or similar agreements
authorizing any Person to make an Acquisition Proposal.

          (j) It is understood that any violation of the restrictions set forth
in this Section 6.10 by any officer, director, employee, agent or representative
(including financial or legal advisor or other retained representative) of
either party or any of its Subsidiaries, at the direction or with the consent of
such party or any of its Subsidiaries, will be deemed to be a breach of this
Section 6.10 by such party.

     6.11 FIRPTA. The Company shall furnish to Parent an affidavit dated as of
the Closing Date, stating, under penalty of perjury, that the Company is not and
has not been a US real property holding corporation within the meaning of Code
Section 897(c)(2) during the applicable period described in Code Section
897(c)(1)(A)(ii).

     6.12 Financing Commitments. (a) Parent will promptly notify the Company of
(i) the expiration, termination, modification or amendment for any reason of the
Financing Commitments and (ii) any proposal by any of the institutions party to
a Financing Commitments to withdraw, terminate or make a material change in the
amount or terms of such Financing Commitments that could reasonably be expected
to adversely affect the ability of Parent to consummate the financing
contemplated by such Financing Commitments in accordance with its terms. In
addition, upon the Company's reasonable request, Parent will advise and update
the Company, in a level of detail reasonably satisfactory to the Company, with
respect to the status, proposed closing date, and material terms of the
Financing Commitments. Parent will not consent to any amendment, modification or
early termination of any Financing Commitments that could reasonably be expected
to materially delay or adversely affect the ability of Parent to consummate the
transactions contemplated by this Agreement.

          (b) Parent will, and will cause its Subsidiaries to, use reasonable
best efforts to (i) maintain the effectiveness of the Financing Commitments in
accordance with their terms, (ii) enter into definitive documentation with
respect to the Financing Commitments on the terms contained in the Financing
Commitments, (iii) satisfy all funding conditions to the Financing Commitments
set forth in the definitive documentation with respect to the financing
contemplated by the Financing Commitments, (iv) consummate the financing
contemplated by the Financing Commitments (including by Parent's extension of
the Financing Commitments on substantially equivalent or better terms or, if the
Financing Commitments expire, obtaining alternative financing in an aggregate
principal amount equal to the amounts set forth in, and on


                                       54

terms substantially equivalent to or better than the terms of, the Financing
Commitments if, in each case, the Company has consented to such extension or
replacement) prior to the expiration of the Financing Commitments if the other
conditions to Parent's obligations to close set forth in Sections 7.1 and 7.2
have been satisfied or waived, and (v) perform its obligations under the
Financing Commitments.

          (c) The Company shall provide, and shall cause the Company
Subsidiaries to provide, and shall use commercially reasonable efforts to cause
the respective officers, employees, representatives and advisers of the Company
and the Company Subsidiaries to provide, all cooperation reasonably requested by
Parent in connection with the financings contemplated by the Financing
Commitments (the "Debt Financing") and shall (i) cause appropriate officers and
employees to be available on a customary basis (A) to meet with prospective
lenders in presentations, meetings, road shows, due diligence sessions and
sessions with ratings agencies, (B) to assist with the preparation of
prospectuses, offering memoranda, private placement memoranda and other
disclosure documents in connection therewith and the Debt Financing, including
assistance with the preparation of projections to be used in connection
therewith, as applicable, and (C) to execute and deliver any pledge and security
documents, other definitive financing documents and other certificates or
documents as may be required pursuant to the Financing Commitments, (ii) take
all necessary corporate action to consummate the Debt Financing immediately
prior to the Closing and (iii) use commercially reasonable efforts to cause its
independent accountants to provide assistance to Parent, including providing
consent, on a customary basis, to Parent to use their audit reports relating to
the Company and the Company Subsidiaries and, at the cost of Parent, to provide
any necessary customary "comfort letters."

     6.13 Parent Board. Parent shall take all steps necessary or desirable to
cause the satisfaction of the condition set forth in Section 7.3(e).

     6.14 Employee Matters. (a) As of the Effective Time, Parent shall assume
all of the employment agreements, as amended, set forth in Section 6.14(a) of
the Company Disclosure Schedule, and Parent shall perform all obligations
thereunder.

          (b) As of the Effective Time, Parent shall grant options to purchase
an aggregate of 800,000 shares of Parent Common Stock to individuals employed by
the Company immediately prior to the Effective Time. The individuals to whom
such options are granted and the number of shares subject to such options shall
be determined by the Parent taking into consideration the recommendation of the
Company's Chief Executive Officer (or his delegate). All other terms of such
options shall be substantially identical to the "Founders' Grant" options
granted by Parent to its employees in connection with transactions contemplated
by this Agreement.

          (c) If the Company and Parent determine in good faith that any payment
(whether in cash or property or the vesting of property) that may be made to any
Company employee who is a "disqualified individual" (within the meaning of
Section 280G(c) of the Code) in connection with the Merger is reasonably likely
to constitute an "excess parachute payment" (as defined in Section 280G(b)(1) of
the Code), then the Company will use its reasonable best efforts to take such
actions as it (in consultation with Parent, if Parent so requests) determines
are necessary or appropriate to eliminate or mitigate the effect of such


                                       55

excess parachute payment on the disqualified individual and the Company,
including accelerating severance pay, bonus awards and options and other equity
awards, encouraging employees to exercise options, and exercising and/or
recommending that the Company Board or any committee thereof so exercise, any
available discretion in respect of options and other equity awards; provided,
however, that no such action may impair the rights of any disqualified
individual without such disqualified individual's prior written consent.

     6.15 GS Funds Redemption. At or prior to the Effective Time, Parent will
consummate the purchase of all of the Parent Convertible Preferred Stock owned
by the GS Funds in accordance with the terms and subject to the conditions of
the Stock Purchase and Support Agreement, dated as of October 3, 2005, by and
among Parent, R.H. Donnelley Inc. and the Stockholders of Parent listed on
Schedule A attached thereto, as it may be amended from time to time (the
"Redemption Agreement"). Notwithstanding anything to the contrary in this
Agreement or the Redemption Agreement, no consent of the Company will be
required for the consummation of such purchase or the performance of Parent's
obligations under the Redemption Agreement. The prior written consent of the
Company will be required for any material amendment to the Redemption Agreement.

                        ARTICLE VII. CONDITIONS PRECEDENT

     7.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligations of the parties to effect the Merger shall be subject to
the satisfaction, or waiver by each of the parties, at or prior to the Effective
Time of the following conditions:

          (a) Stockholder Approvals. The approval of the holders of capital
stock of Parent and the Company required for the consummation of the Merger and
the transactions contemplated hereby shall have been obtained.

          (b) Listing. The shares of Parent Common Stock to be issued to holders
of Company Common Stock shall have been authorized for listing on the NYSE,
subject to official notice of issuance.

          (c) HSR Approval. The waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been earlier terminated.

          (d) Form S-4. The Form S-4 shall have become effective under the
Securities Act, and no stop order suspending the effectiveness of the Form S-4
shall have been issued and no proceedings for that purpose shall have been
initiated or be threatened by the SEC.

          (e) No Injunctions or Restraints; Illegality. No Injunction preventing
the consummation of the Merger shall be in effect. No statute, rule, regulation,
order, Injunction or decree shall have been enacted, entered, promulgated or
enforced by any Governmental Entity that prohibits or makes illegal consummation
of the Merger.

     7.2 Conditions to Obligations of Parent. The obligation of Parent to effect
the Merger is also subject to the satisfaction, or waiver by Parent, at or prior
to the Effective Time of the following conditions:


                                       56

          (a) Representations and Warranties. (i) Each of the representations
and warranties (other than as set forth in Sections 3.2(a), 3.8(a) and (c) and
3.19) of the Company set forth in this Agreement shall be true and correct on
the date of this Agreement, and as of the Closing Date, as if made at and as of
such date (except to the extent expressly made as of an earlier date, in which
case as of such date), except where the failure of such representations and
warranties to be so true and correct (without giving effect to any limitation as
to "materiality" or "Material Adverse Effect" set forth therein), individually
or in the aggregate, does not have, and would not be reasonably expected to
have, a Material Adverse Effect on the Company, (ii) the representations and
warranties of the Company set forth in Sections 3.8(a) and (c) and 3.19 shall be
true and correct on the date of this Agreement, and as of the Closing Date, as
if made at and as of such date (except to the extent expressly made as of an
earlier date, in which case as of such date), and (iii) the representations and
warranties of the Company set forth in Section 3.2(a) shall be true and correct
in all material respects on the date of this Agreement, and as of the Closing
Date, as if made at and as of such date (except to the extent expressly made as
of an earlier date, in which case as of such date), and Parent shall have
received a certificate signed on behalf of the Company by the Chief Executive
Officer or the Chief Financial Officer of the Company to the foregoing effects.

          (b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Parent shall have
received a certificate signed on behalf of the Company by the Chief Executive
Officer or the Chief Financial Officer of the Company to such effect.

          (c) Parent Tax Opinion. Parent shall have received an opinion of Jones
Day in form and substance reasonably satisfactory to Parent, on the basis of
certain facts, representations and assumptions set forth in such opinion, dated
as of the Closing Date, to the effect that (i) the Merger will be treated for
federal income tax purposes as a "reorganization" under Section 368(a) of the
Code, and (ii) each of the Company, Parent and Merger Sub will be a "party to
the reorganization" within the meaning of Section 368(a) of the Code. In
rendering such opinion, such advisor shall be entitled to rely upon
representations of officers of the Company, Parent and Merger Sub described in
Section 6.1(c). The condition set forth in this Section 7.2(c) shall not be
waivable after receipt of the Parent Stockholder Approval unless further Parent
Stockholder Approval is obtained with appropriate disclosure.

          (d) Dissenters. The number of shares of the Company Common Stock as to
which holders thereof have exercised appraisal rights under Section 262 of the
DGCL shall not exceed 5% of the issued and outstanding Company Common Stock
immediately prior to the Effective Time.

     7.3 Conditions to Obligations of the Company. The obligation of the Company
to effect the Merger is also subject to the satisfaction, or waiver by the
Company, at or prior to the Effective Time, of the following conditions:

          (a) Representations and Warranties. (i) Each of the representations
and warranties (other than as set forth in Sections 4.2(a), 4.8(a) and 4.19) of
Parent set forth in this Agreement shall be true and correct on the date of this
Agreement, and as of the Closing Date, as


                                       57

if made at and as of such date (except to the extent expressly made as of an
earlier date, in which case as of such date), except where the failure of such
representations and warranties to be so true and correct (without giving effect
to any limitation as to "materiality" or "Material Adverse Effect" set forth
therein), individually or in the aggregate, does not have, and would not be
reasonably expected to have, a Material Adverse Effect on Parent, (ii) the
representations and warranties of Parent set forth in Sections 4.8(a) and 4.19
shall be true and correct on the date of this Agreement, and as of the Closing
Date, as if made at and as of such date (except to the extent expressly made as
of an earlier date, in which case as of such date), and (iii) the
representations and warranties of Parent set forth in Section 4.2(a) shall be
true and correct in all material respects on the date of this Agreement, and as
of the Closing Date, as if made at and as of such date (except to the extent
expressly made as of an earlier date, in which case as of such date), and the
Company shall have received a certificate signed on behalf of Parent by the
Chief Executive Officer or the Chief Financial Officer of Parent to the
foregoing effects.

          (b) Performance of Obligations of Parent. Parent shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and the Company shall have
received a certificate signed on behalf of Parent by the Chief Executive Officer
or the Chief Financial Officer of Parent to such effect.

          (c) Company Tax Opinion. The Company shall have received an opinion of
Latham & Watkins LLP in form and substance reasonably satisfactory to the
Company, on the basis of certain facts, representations and assumptions set
forth in such opinion, dated as of the Closing Date, to the effect that (i) the
Merger will be treated for federal income tax purposes as a "reorganization"
under Section 368(a) of the Code, and (ii) that each of the Company, Parent and
Merger Sub will be a "party to the reorganization" within the meaning of Section
368(a) of the Code. In rendering such opinion, such advisor shall be entitled to
rely upon customary representations of officers of the Company, Parent and
Merger Sub described in Section 6.1(c). The condition set forth in this Section
7.3(c) shall not be waivable after receipt of the Company Stockholder Approval
unless further Company Stockholder Approval is obtained with appropriate
disclosure.

          (d) Parent Board. The Parent Board composition contemplated by Section
1.10 shall have been implemented effective as of the Effective Date.

                     ARTICLE VIII. TERMINATION AND AMENDMENT

     8.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of Parent or the Company, by
action taken or authorized by the Board of Directors of the terminating party or
parties:

          (a) by mutual consent of Parent and the Company in a written
instrument, if the Board of Directors of each so determines;

          (b) by either the Parent Board or the Company Board if any
Governmental Entity of competent jurisdiction shall have issued a final and
nonappealable order permanently enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this


                                       58

Agreement, except that no party may terminate this Agreement pursuant to this
Section 8.1(b) if its breach of its obligations under this Agreement proximately
contributed to the occurrence of such order;

          (c) by either the Parent Board or the Company Board if the Parent
Stockholder Approval shall not have been obtained at a Parent Stockholders
Meeting or any adjournment or postponement thereof at which the vote was taken;

          (d) by either the Parent Board or the Company Board if the Company
Stockholder Approval shall not have been obtained at a Company Stockholders
Meeting or any adjournment or postponement thereof at which the vote was taken;

          (e) by either the Parent Board or the Company Board if the Merger
shall not have been consummated on or before June 30, 2006; provided, however,
that the right to terminate this Agreement under this Section 8.1(e) shall not
be available to any party whose failure to fulfill any obligation hereunder in
any material respect has been the primary cause of or primarily resulted in the
failure of the Closing to occur on or before June 30, 2006;

          (f) by the Parent Board if there shall have been a breach of any of
the covenants or agreements or any of the representations or warranties set
forth in this Agreement on the part of the Company, which breach, either
individually or in the aggregate, would result in, if occurring or continuing on
the Closing Date, the failure of the conditions set forth in Section 7.2(a) or
(b) and which is not cured within 45 days following written notice to the
Company or by its nature or timing cannot be cured within such time period;

          (g) by the Company Board if there shall have been a breach of any of
the covenants or agreements or any of the representations or warranties set
forth in this Agreement on the part of Parent, which breach, either individually
or in the aggregate, would result in, if occurring or continuing on the Closing
Date, the failure of the conditions set forth in Section 7.3(a) or (b) and which
is not cured within 45 days following written notice to Parent or by its nature
or timing cannot be cured within such time period;

          (h) by the Parent Board in the event of an Adverse Recommendation
Change by the Company Board related to an Acquisition Proposal with respect to
the Company;

          (i) by the Company Board in the event of an Adverse Recommendation
Change by the Parent Board related to an Acquisition Proposal with respect to
Parent;

          (j) by Parent, if prior to the Parent Stockholder Approval, Parent
receives a Superior Proposal and the Parent Board determines in good faith,
after consultation with outside legal counsel, to enter into an agreement to
effect the Superior Proposal; provided, that Parent may not terminate this
Agreement pursuant to this Section 8.1(j) unless (i) Parent has complied with
its obligations under Section 6.10 and (ii) three (3) business days have elapsed
following delivery to the Company of a written notice of such determination by
the Parent Board and during such three (3) business day period the Company has
not made a binding proposal to revise the terms of the Merger or this Agreement
(or made another binding offer) that the Parent Board has determined in its good
faith judgment to result in the Merger (or such other proposal or offer)


                                       59

being at least as favorable to Parent's stockholders as the Superior Proposal;
provided, further, that Parent fulfills its obligations pursuant to Section 9.3.

          (k) by the Company, if prior to the Company Stockholder Approval, the
Company receives a Superior Proposal and the Company Board determines in good
faith, after consultation with outside legal counsel, to enter into an agreement
to effect the Superior Proposal; provided, that the Company may not terminate
this Agreement pursuant to this Section 8.1(k) unless (i) the Company has
complied with its obligations under Section 6.10 and (ii) three (3) business
days have elapsed following delivery to Parent of a written notice of such
determination by the Company Board and during such three (3) business day period
Parent has not made a binding proposal to revise the terms of the Merger or this
Agreement (or made another binding offer) that the Company Board has determined
in its good faith judgment to result in the Merger (or such other proposal or
offer) being at least as favorable to the Company's stockholders as the Superior
Proposal; provided, further, that the Company fulfills its obligations pursuant
to Section 9.3.

     8.2 Effect of Termination. In the event of termination of this Agreement by
either the Company or Parent as provided in Section 8.1, this Agreement will
forthwith become void and have no effect, and none of the Company, Parent, any
of their respective Subsidiaries or any of the officers or directors of any of
them will have any liability of any nature whatsoever under this Agreement, or
in connection with the transactions contemplated by this Agreement, except that
(i) Sections 6.2(b), 8.2, 9.3, 9.4, 9.5, 9.7, 9.8, 9.9, 9.10 and 9.11 will
survive any termination of this Agreement and (ii) notwithstanding anything to
the contrary contained in this Agreement, neither the Company nor Parent will be
relieved or released from any liabilities or damages arising out of its willful
breach of any provision of this Agreement.

     8.3 Amendment and Other Matters. Subject to Sections 7.2(c) and 7.3(c) and
compliance with applicable Law, this Agreement may be amended by Parent (on
behalf of itself and Merger Sub) and the Company, by action taken or authorized
by their respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Merger by the stockholders of the
Company or Parent; provided, however, that after any approval of the
transactions contemplated by this Agreement by the stockholders of the Company
and Parent, there may not be, without further approval of such stockholders, any
amendment of this Agreement that changes the amount or the form of the
consideration to be delivered under this Agreement to the holders of Company
Capital Stock, other than as contemplated by this Agreement, or which by
applicable Law otherwise expressly requires the further approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.

     8.4 Extension; Waiver. At any time prior to the Effective Time, Parent (on
behalf of itself and Merger Sub) and the Company, by action taken or authorized
by their respective Board of Directors, may, to the extent legally allowed, (a)
extend the time for the performance of any of the obligations or other acts of
the other party, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement, and (c) waive compliance with any of the
agreements or conditions contained in this Agreement provided, however, that
after any approval of the transactions contemplated by this Agreement by the
stockholders of the Company and Parent, there may not be, without further
approval of such stockholders, any


                                       60

extension or waiver which by applicable Law otherwise expressly requires the
further approval of such stockholders. Any agreement on the part of a party to
any such extension or waiver will be valid only if set forth in a written
instrument signed on behalf of such party, but such extension or waiver or
failure to insist on strict compliance with an obligation, covenant, agreement
or condition will not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.

                         ARTICLE IX. GENERAL PROVISIONS

     9.1 Closing. On the terms and subject to conditions set forth in this
Agreement, the closing of the Merger (the "Closing") will take place at 10:00
a.m. on a date and at a place to be specified by the parties, which date will be
no later than five business days after the satisfaction or waiver (subject to
applicable Law) of the latest to occur of the conditions set forth in Article
VII (other than those conditions that by their nature are to be satisfied or
waived at the Closing), unless extended by mutual agreement of the Company and
Parent (the "Closing Date").

     9.2 Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants and agreements set forth in this
Agreement or in any instrument delivered pursuant to this Agreement will survive
the Effective Time, except for those covenants and agreements contained in this
Agreement that by their terms apply or are to be performed in whole or in part
after the Effective Time.

     9.3 Fees and Expenses. (a) Except as provided in this Section 9.3, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated by this Agreement will be paid by the party incurring
such expense; provided, however, that the costs and expenses of printing and
mailing the Joint Proxy Statement, and all filing and other fees paid to the SEC
or under the HSR Act in connection with the Merger, will be borne equally by
Parent and the Company.

          (b) In the event that this Agreement is terminated:

               (i) (x) by the Company Board or the Parent Board pursuant to
     Section 8.1(e), or by the Parent Board pursuant to Section 8.1(f), and (y)
     a proposal for an Alternative Transaction with respect to the Company has
     been made to the Company or its stockholders or such a proposal or an
     intention to make such a proposal has been publicly announced or has
     otherwise become publicly known after the date of this Agreement and prior
     to such termination (whether or not conditional and whether or not
     withdrawn) and (z) within 12 months after such termination, the Company or
     any of its Subsidiaries enters into any definitive agreement providing for
     any Alternative Transaction or any Alternative Transaction is consummated;

               (ii) by the Parent Board pursuant to Section 8.1(h) and a
     proposal for an Alternative Transaction with respect to the Company has
     been made to the Company or its stockholders or such a proposal or an
     intention to make such a proposal has been publicly announced or has
     otherwise become publicly known after the date of this


                                       61

     Agreement and prior to such termination (whether or not conditional and
     whether or not withdrawn);

               (iii) by the Parent Board or the Company Board pursuant to
     Section 8.1(d) and the Company Board is not at the time of the Company
     Stockholders Meeting entitled to terminate this Agreement pursuant to
     Section 8.1(g) (without giving effect to the notice and cure provisions
     thereof); or

               (iv) by the Company Board pursuant to Section 8.1(k);

then, in the case of a termination pursuant to (1) Section 9.3(b)(i), the
Company shall pay to Parent an amount equal to $150,000,000 (the "Company
Termination Fee"), by wire transfer of same day funds to an account designated
by Parent, upon the earlier to occur of the consummation of such Alternative
Transaction and the execution of such agreement, as applicable, (2) Section
9.3(b)(ii) or Section 9.3(b)(iv), the Company shall pay to Parent an amount
equal to the Company Termination Fee, which payment shall be made within two
business days after such termination and (3) Section 9.3(b)(iii), the Company
shall pay to Parent an amount equal to (A) $45,000,000 within two business days
after such termination, by wire transfer of same day funds to an account
designated by Parent and (B) $105,000,000, by wire transfer of same day funds to
an account designated by Parent, if, within 12 months after such termination,
the Company enters into any definitive agreement providing for any Alternative
Transaction or any Alternative Transaction is consummated. For purposes of this
Section 9.3(b), references to 20% in the definition of "Alternative Transaction"
will be deemed to be references to 50%.

          (c) In the event that this Agreement is terminated:

               (i) (x) by the Parent Board or the Company Board pursuant to
     Section 8.1(e), or by the Company Board pursuant to Section 8.1(g), and (y)
     a proposal for an Alternative Transaction with respect to Parent has been
     made to Parent or its stockholders or such a proposal or an intention to
     make such a proposal has been publicly announced or has otherwise become
     publicly known after the date of this Agreement and prior to such
     termination (whether or not conditional and whether or not withdrawn) and
     (z) within 12 months after such termination, Parent enters into any
     definitive agreement providing for any Alternative Transaction or any
     Alternative Transaction is consummated; or

               (ii) by the Company Board pursuant to Section 8.1(i) and a
     proposal for an Alternative Transaction with respect to Parent has been
     made to Parent or its stockholders or such a proposal or an intention to
     make such a proposal has been publicly announced or has otherwise become
     publicly known after the date of this Agreement and prior to such
     termination (whether or not conditional and whether or not withdrawn);

               (iii) by the Parent Board or the Company Board pursuant to
     Section 8.1(c) and the Parent Board is not at the time of the Parent
     Stockholders Meeting entitled to terminate this Agreement pursuant to
     Section 8.1(f) (without giving effect to the notice and cure provisions
     thereof); or


                                       62

               (iv) by the Parent Board pursuant to Section 8.1(j);

then, in the case of a termination pursuant to (1) Section 9.3(c)(i), Parent
shall pay to the Company an amount equal to $90,000,000 (the "Parent Termination
Fee"), by wire transfer of same day funds to an account designated by the
Company, upon the earlier to occur of the consummation of such Alternative
Transaction and the execution of such agreement, as applicable, (2) Section
9.3(c)(ii) or Section 9.3(c)(iv), Parent shall pay to the Company an amount
equal to the Parent Termination Fee, which payment shall be made within two
business days after such termination and (3) Section 9.3(c)(iii), Parent shall
pay to the Company an amount equal to (A) $45,000,000 within two business days
after such termination, by wire transfer of same day funds to an account
designated by the Company and (B) $45,000,000, by wire transfer of same day
funds to an account designated by the Company, if, within 12 months after such
termination, Parent or any of its Subsidiaries enters into any definitive
agreement providing for any Alternative Transaction or any Alternative
Transaction is consummated. For purposes of this Section 9.3(c), references to
20% in the definition of "Alternative Transaction" will be deemed to be
references to 50%.

          (d) Each party acknowledges that the agreements contained in this
Section 9.3 are an integral part of the transactions contemplated by this
Agreement and that, without these agreements, the other party would not enter
into this Agreement. Accordingly, if a party fails promptly to pay the amounts
due pursuant to this Section 9.3 and, in order to obtain such payment, the other
party commences a suit that results in a judgment against the first party for
the amounts set forth in this Section 9.3, the first party will pay to the other
party interest on the amounts set forth in this Section 9.3 at a rate per annum
equal to the three-month LIBOR (as reported in The Wall Street Journal
(Northeast edition) or, if not reported therein, in another authoritative source
selected by the party entitled to such amounts) on the date such payment was
required to be made (or if no quotation for three-month LIBOR is available for
such date, on the next preceding date for which such a quotation is available)
plus 250 basis points, and including reasonable fees and related expenses of
collection.

     9.4 Notices. All notices and other communications in connection with this
Agreement will be in writing and will be deemed given (and will be deemed to
have been duly given upon receipt) if delivered personally, sent via facsimile
(with confirmation), mailed by registered or certified mail (return receipt
requested) or delivered by an express courier (with confirmation) to the parties
at the following addresses (or at such other address for a party as will be
specified by like notice):

               (a)  if to the Company, to:

                    Dex Media, Inc.
                    198 Inverness Drive West
                    Englewood, CO 80112
                    Attention: Frank M. Eichler
                               Senior Vice President, General Counsel
                    Facsimile: (303) 784-1915


                                       63

                    with a copy to:

                    Latham & Watkins LLP
                    885 Third Avenue, Suite 1000
                    New York, NY 10022
                    Attention: R. Ronald Hopkinson
                    Facsimile: (212) 751-4864

               (b)  if to Parent or Merger Sub, to:

                    R.H. Donnelley Corporation
                    1001 Winstead Drive
                    Cary, NC 27531
                    Attention: Robert J. Bush
                               Vice President, General Counsel and
                               Corporate Secretary
                    Facsimile: (919) 279-1518

                    with a copy to:

                    Jones Day
                    222 East 41st Street
                    New York, NY 10017
                    Attention: John J. Hyland
                    Facsimile: (212) 755-7306

     9.5 Interpretation. When a reference is made in this Agreement to Articles,
Sections, Exhibits or Schedules, such reference will be to an Article or Section
of or Exhibit or Schedule to this Agreement unless otherwise indicated. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
will be deemed to be followed by the words "without limitation." Unless the
context otherwise requires (i) "or" is disjunctive but not necessarily
exclusive, (ii) words in the singular include the plural and vice versa, (iii)
the use in this Agreement of a pronoun in reference to a party hereto includes
the masculine, feminine or neuter, as the context may require, and (iv) terms
used herein that are defined in GAAP have the meanings ascribed to them therein.
"Knowledge" of any Person, whether capitalized or not, means, with respect to
any specific matter, the actual knowledge of such Person's executive officers
and other officers having primary responsibility for such matter, and "business
day" means any day on which banks are not required or authorized to close in the
City of New York. No provision of this Agreement will be interpreted in favor
of, or against, any of the parties to this Agreement by reason of the extent to
which any such party or its counsel participated in the drafting thereof or by
reason of the extent to which any such provision is inconsistent with any prior
draft hereof, and no rule of strict construction will be applied against any
party hereto. The Company Disclosure Schedule and the Parent Disclosure
Schedule, as well as all other schedules and all exhibits hereto, will be deemed
part of this Agreement and included in any reference to this Agreement. This
Agreement will not be interpreted or construed to require any Person to take any
action, or fail to take any action, if to


                                       64

do so would violate any applicable Law. References to the "other party" or
"either party" will be deemed to refer to the Company and Merger Sub
collectively, on the one hand, and Parent, on the other hand.

     9.6 Counterparts. This Agreement may be executed in two or more
counterparts, all of which will be considered one and the same agreement and
will become effective when counterparts have been signed by each of the parties
and delivered to the other party, it being understood that each party need not
sign the same counterpart.

     9.7 Entire Agreement. This Agreement (including the documents and the
instruments referred to in this Agreement), together with the Confidentiality
Agreement, constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter of this Agreement, other than the Confidentiality Agreement.

     9.8 Governing Law. This Agreement will be governed and construed in
accordance with the internal laws of the State of Delaware applicable to
contracts made and wholly performed within such state, without regard to any
applicable conflict of laws principles.

     9.9 Jurisdiction. Each of the parties hereto hereby agrees that any claim,
suit, action or other proceeding, directly or indirectly, arising out of, under
or relating to this Agreement will be heard and determined in the Chancery Court
of the State of Delaware (and each agrees that no such claim, action, suit or
other proceeding relating to this Agreement will be brought by it or any of its
affiliates except in such court), and the parties hereto hereby irrevocably and
unconditionally submit to the exclusive jurisdiction of any such court in any
such claim, suit, action or other proceeding and irrevocably and unconditionally
waive the defense of an inconvenient forum to the maintenance of any such claim,
suit, action or other proceeding. Each of the parties hereto further agrees
that, to the fullest extent permitted by applicable Law, service of any process,
summons, notice or document by U.S. registered mail to such Person's respective
address set forth in Section 9.4 will be effective service of process for any
claim, action, suit or other proceeding in Delaware with respect to any matters
to which it has submitted to jurisdiction as set forth above in the immediately
preceding sentence. The parties hereto hereby agree that a final judgment in any
such claim, suit, action or other proceeding will be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by applicable Law.

     9.10 Publicity. Neither the Company nor Parent will, and neither the
Company nor Parent will permit any of its Subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to,
or otherwise make any public statement concerning, the transactions contemplated
by this Agreement without the prior consent (which consent will not be
unreasonably withheld) of Parent, in the case of a proposed announcement or
statement by the Company, or the Company, in the case of a proposed announcement
or statement by Parent; provided, however, that either party may, without the
prior consent of the other party, (i) issue or cause the publication of any
press release or other public announcement to the extent it determines that so
doing is or may be required by Law or by the rules and regulations of the NYSE
and (ii) make public statements (but may not publish any press


                                       65

release) that are consistent with the parties' prior (but after the date of this
Agreement) public disclosures regarding the transactions contemplated by this
Agreement.

     9.11 Assignment; Third Party Beneficiaries. Neither this Agreement nor any
of the rights, interests or obligations under this Agreement will be assigned by
any of the parties (whether by operation of law or otherwise) without the prior
written consent of the other party. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
each of the parties and their respective successors and assigns. Except as
otherwise specifically provided in Section 6.7, this Agreement (including the
documents and instruments referred to in this Agreement) is not intended to and
does not confer upon any Person other than the parties hereto any rights or
remedies under this Agreement.

     9.12 Specific Performance. The parties acknowledge and agree that any
breach of the terms of this Agreement would give rise to irreparable harm for
which money damages would not be an adequate remedy, and, accordingly, the
parties agree that, in addition to any other remedies, each will be entitled to
enforce the terms of this Agreement by a decree of specific performance without
the necessity of proving the inadequacy of money damages as a remedy and without
the necessity of posting bond.

     9.13 Severability. If any term or other provision of this Agreement is
declared invalid, illegal or unenforceable, all other conditions and provisions
of this Agreement will nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties will negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the
maximum extent possible.

     9.14 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY WAIVES TRIAL BY JURY
IN ANY JUDICIAL PROCEEDING DIRECTLY INVOLVING ANY MATTERS (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED
WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

                  [Remainder of Page Intentionally Left Blank]


                                       66

     IN WITNESS WHEREOF, the Company, Parent and Merger Sub have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.

                                        DEX MEDIA, INC.


                                        By:    /s/ Frank M. Eichler
                                               ---------------------------------
                                        Name:  Frank M. Eichler
                                        Title: Senior Vice President and General
                                               Counsel



                                        R.H. DONNELLEY CORPORATION


                                        By:    /s/ Robert J. Bush
                                               ---------------------------------
                                        Name:  Robert J. Bush
                                        Title: Vice President, General Counsel
                                               and Corporate Secretary



                                        FORWARD ACQUISITION CORP.


                                        By:    /s/ Robert J. Bush
                                               ---------------------------------
                                        Name:  Robert J. Bush
                                        Title: Authorized Person


                [Signature Page to Agreement and Plan of Merger]

EX-2.4

DELAWARE

PAGE 1

The First State

     I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF MERGER, WHICH MERGES:

     “DEX MEDIA, INC.”, A DELAWARE CORPORATION,

      WITH AND INTO “FORWARD ACQUISITION CORP.” UNDER THE NAME OF “FORWARD ACQUISITION CORP.”, A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE, AS RECEIVED AND FILED UNDER THE LAWS OF THE STATE OF DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE THIRTY-FIRST DAY OF JANUARY, A.D. 2006, AT 7:30 O’CLOCK A.M.

     A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS.

/s/ Harriet Smith Windsor

Harriet Smith Windsor, Secretary of State

AUTHENTICATION: 4487369

4034452    8100M
060089179

DATE: 01-31-06

State of Delaware
Secretary of State
Division of Corporation
Delivered 07:25 AM 01/31/2006
FILED 07:30 AM 01/31/2006
SRV 060089179 - 4034452 FILE

CERTIFICATE OF MERGER
OF
DEX MEDIA, INC.
INTO
FORWARD ACQUISITION CORP.

     Pursuant to Title 8, Section 251(c) of the General Corporation Law of the State of Delaware (the “DGCL”), the undersigned corporation executed the following Certificate of Merger:

     FIRST: R H Donnelley Corporation, a Delaware corporation (“Donnelley”), and Dex Media, Inc., a Delaware corporation (“Dex Media”), have entered into an Agreement and Plan of Merger (the “Agreement and Plan of Merger”), dated as of October 3, 2005, by and among Donnelley, Dex Media and Forward Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Donnelley (“Merger Sub”), pursuant to which Dex Media will be merged with and into Merger Sub.

     SECOND: In accordance with Section 251 of the DGCL, the Agreement and Plan of Merger has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations and their respective stockholders.

     THIRD: The name of the surviving corporation is Forward Acquisition Corp

     FOURTH: The certificate of incorporation of the surviving corporation shall be the certificate of incorporation of Merger Sub

     FIFTH: The merger is to become effective upon the filing of this Certificate of Merger with the Secretary of State of the State of Delaware (the “Effective Time”).

     SIXTH: The Agreement and Plan of Merger is on file at the corporate offices of Merger Sub, located at 1001 Winstead Drive, Cary, North Caroling 27531

     SEVENTH: A copy of the Agreement and Plan of Merger will be furnished by the surviving corporation on request, without cost, to any stockholder of the constituent corporations.

[Signature page to follow]

IN WITNESS WHEREOF, said surviving corporation has caused this certificate to be signed by an authorized officer on the 31st day of January, 2006.

FORWARD ACQUISITION CORP.

/s/  Robert J. Bush

Robert J. Bush

Vice President and Corporate Secretary

EX-3.3

DELAWARE

PAGE 1

The First State

     I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF INCORPORATION OF “FORWARD ACQUISITION CORP.”, FILED IN THIS OFFICE ON THE THIRTIETH DAY OF SEPTEMBER, A.D. 2006, AT 5:37 O’CLOCK P.M.

     A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS.

/s/ Harriet Smith Windsor

Harriet Smith Windsor, Secretary of State

AUTHENTICATION: 4197920

4034452    8100
050805209

DATE: 10-03-05

State of Delaware
Secretary of State
Division of Corporations
Delivered 05:57 PM 09/30/2005
FILED 05:37 PM 09/30/2005
SRV 050805209 - 4034452 FILE

CERTIFICATE OF INCORPORATION
OF
FORWARD ACQUISITION CORP.

I, the undersigned, for the purpose of incorporating and organizing a corporation under the General Corporation Law of the State of Delaware (the “DGCL”), do hereby certify as follows:

FIRST:  The name of the corporation (the “Corporation”) is Forward Acquisition Corp.

SECOND:  The address of the Corporation’s registered office in the State of Delaware is the Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, and the name of the registered agent of the Corporation in the State of Delaware at such address is the Corporation Service Company.

THIRD:  The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.

FOURTH:  The total number of shares of stock that the Corporation shall have authority to issue is 1,000. The par value of such shares is $0.01 per share. All such shares are of one class and are Common Stock.

FIFTH:  Elections of directors need not be by written ballot except and to the extent provided in the bylaws of the Corporation.

SIXTH:  To the fullest extent permitted by the DGCL or any other applicable laws presently or hereafter in effect, no director of the Corporation shall be personally liable to the Corporation or its stockholders for or with respect to any acts or omissions in the performance of his or her duties as a director of the Corporation. Any repeal or modification of this Article Sixth shall not adversely affect any right or protection of a director of the Corporation existing immediately prior to such repeal or modification.

SEVENTH:  Each person who is or was or has agreed to become a director or officer of the Corporation, or each such person who is or was serving or who had agreed to serve at the request of the Board of Directors as an officer of the Corporation or as an employee or agent of the Corporation or as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including the heirs, executors, administrators or estate of such person), shall be indemnified by the Corporation to the fullest extent permitted by the DGCL or any other applicable laws as presently or hereafter in effect. Without limiting the generality or the effect of the foregoing, the Corporation may enter into one or more agreements with any person which provide for indemnification greater or different than that provided in this Article Seventh. Any repeal or modification of this Article Seventh shall not adversely affect any right or protection existing hereunder immediately prior to such repeal or modification.

EIGHTH:  In furtherance and not in limitation of the rights, powers, privileges, and discretionary authority granted or conferred by the DGCL or other statutes or laws of the State of Delaware, the Board of Directors is expressly authorized to make, alter, amend or repeal the bylaws of the Corporation, without any action on the part of the stockholders, but the stockholders may make additional bylaws and may alter, amend or repeal any bylaw whether adopted by them or otherwise. The Corporation may in its bylaws confer powers upon its Board of Directors in addition to the foregoing and in addition to the powers and authorities expressly conferred upon the Board of Directors by applicable law.

NINTH:  The Corporation reserves the right at any time and from time to time to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed herein or by applicable law; and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by the pursuant to this Certificate of Incorporation in its present form or as hereafter amended are granted subject to this reservation.

TENTH:  The name of the sole incorporator is Robert J. Bush, and the address of incorporator is c/o R.H. Donnelley Corporation, 1001 Winstead Drive, Cary, North Carolina 27513.

IN WITNESS WHEREOF, I have hereunto set my hand, this 30^th day of September, 2005.

/s/  Robert J. Bush

Robert J. Bush

Sole Incorporator

2

EX-3.4

DELAWARE

PAGE 1

The First State

     I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF “FORWARD ACQUISITION CORP.”, CHANGING ITS NAME FROM “FORWARD ACQUISITION CORP.” TO “DEX MEDIA, INC.”, FILED IN THIS OFFICE ON THE THIRTY-FIRST DAY OF JANUARY, A.D. 2006, AT 7:31 O’CLOCK A.M.

     A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS.

/s/ Harriet Smith Windsor

Harriet Smith Windsor, Secretary of State

AUTHENTICATION: 4487370

4034452    8100
060089180

DATE: 01-31-06

State of Delaware
Secretary of State
Division of Corporations
Delivered 07:25 AM 01/31/2006
FILED 07:31 AM 01/31/2006
SRV 060089180 - 4034452 FILE

CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
FORWARD ACQUISITION CORP.

Forward Acquisition Corp. (the “Corporation”), a corporation organized and existing under and pursuant to the General Corporation Law of the State of Delaware (the “DGCL”), does hereby certify:

FIRST:  That the Certificate of Incorporation of the Corporation be, and hereby is, amended by deleting Article First in its entirety and substituting in lieu thereof a new Article First to read as follows:

“First:  The name of the Corporation is Dex Media, Inc.”

SECOND:  That the Board of Directors of the Corporation approved the foregoing amendment by written consent, declaring said amendment to be advisable, and directing that said amendments be presented to the stockholders of the Corporation for their consideration, approval and adoption thereof at a special meeting of the stockholders or by written consent of the stockholders.

THIRD:  That the stockholders entitled to vote thereon approved the foregoing amendments by written consent of its sole stockholder in accordance with Sections 228 and 242 of the DGCL.

FOURTH:  That the aforesaid amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

[Signature page follows]

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment this 31st day of January, 2006.

/s/  Robert J. Bush

Robert J. Bush

Vice President and Corporate Secretary

-2-

EX-3.5

Exhibit 3.5

BYLAWS
OF
FORWARD ACQUISITION CORP.

ARTICLE I

MEETINGS OF STOCKHOLDERS

     Section 1. Time and Place of Meetings. All meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, within or without the State of Delaware, as may be designated by the Board of Directors, or by the President or the Secretary in the absence of a designation by the Board of Directors, and stated in the notice of the meeting or in a duly executed waiver of notice thereof.

     Section 2. Annual Meeting. An annual meeting of the stockholders shall be held on such date and time as shall be designated from time to time by the Board of Directors, at which meeting the stockholders shall elect by a plurality vote the directors to succeed those whose terms expire and shall transact such other business as may properly be brought before the meeting.

     Section 3. Special Meetings. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by law or by the Certificate of Incorporation, may be called by the Board of Directors or the President, and shall be called by the President at the request in writing of stockholders owning a majority in interest of the entire capital stock of the Corporation issued and outstanding and entitled to vote. Such request shall be sent to the President and shall state the purpose or purposes of the proposed meeting.

     Section 4. Notice of Meetings. Written notice of every meeting of the stockholders, stating the place, date and hour of the meeting, the means of electronic communication, if any, by which stockholders may participate and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting, except as otherwise provided herein or by law. When a meeting is adjourned to another place, date or time, written notice need not be given of the adjourned meeting if the place, date and time thereof are announced at the meeting at which the adjournment is taken; provided, however, that if the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, written notice of the place, date and time of the adjourned meeting shall be given in conformity herewith. At any adjourned meeting, any business may be transacted which might have been transacted at the original meeting.

     Section 5. Quorum. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by law or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present

B-1

in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented.

     Section 6. Voting. Except as otherwise provided by law or by the Certificate of Incorporation, each stockholder shall be entitled at every meeting of the stockholders to one vote for each share of stock having voting power standing in the name of such stockholder on the books of the Corporation on the record date for the meeting and such votes may be cast either in person or by written proxy. Every proxy must be duly executed and filed with the Secretary of the Corporation. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the Corporation. The vote upon any question brought before a meeting of the stockholders may be by voice vote, unless the holders of a majority of the outstanding shares of all classes of stock entitled to vote thereon present in person or by proxy at such meeting shall so determine. Every vote taken by written ballot shall be counted by one or more inspectors of election appointed by the Board of Directors. When a quorum is present at any meeting, the vote of the holders of a majority of the stock which has voting power present in person or represented by proxy shall decide any question properly brought before such meeting, unless the question is one upon which by express provision of law, the Certificate of Incorporation or these bylaws, a different vote is required, in which case such express provision shall govern and control the decision of such question.

     Section 7. Action by Consent. Any action required or permitted to be taken at any meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if, prior to such action, a written consent or consents thereto, setting forth such action, is signed by the holders of record of shares of the stock of the Corporation, issued and outstanding and entitled to vote thereon, having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

ARTICLE II

DIRECTORS

     Section 1. Powers. The business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the Certificate of Incorporation directed or required to be exercised or done by the stockholders.

     Section 2. Number and Term of Office. The Board of Directors shall consist of one or more members. The number of directors shall be changed by resolution of the Board of Directors. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 3 of this Article II, and each director elected shall hold office until his successor is elected and qualified, except as otherwise required by law. Any decrease in the authorized number of directors shall not be effective until the expiration of the term of the directors then in office, unless, at the time of such decrease, there shall be vacancies on the Board which are being eliminated by such decrease.

B-2

     Section 3. Vacancies and New Directorships. Vacancies and newly created directorships resulting from any increase in the authorized number of directors which occur between annual meetings of the stockholders may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so elected shall hold office until the next annual meeting of the stockholders and until their successors are elected and qualified, except as required by law.

     Section 4. Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and place as shall from time to time be determined by the Board of Directors.

     Section 5. Special Meetings. Special meetings of the Board of Directors may be called by the President on one day’s written notice to each director by whom such notice is not waived, given either personally or by mail or telecopy, and shall be called by the President in like manner and on like notice on the written request of any two directors.

     Section 6. Quorum. At all meetings of the Board of Directors, a majority of the total number of directors then in office shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time to another place, time or date, without notice other than announcement at the meeting, until a quorum shall be present.

     Section 7. Written Action. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board consent thereto in writing or by electronic transmission, and such consent is to be filed with the minutes or proceedings of the Board or Committee.

     Section 8. Participation in Meetings by Conference Telephone. Members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any such committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

ARTICLE III

NOTICES

     Section 1. Generally. Whenever by law or under the provisions of the Certificate of Incorporation or these bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telecopier or telephone.

B-3

     Section 2. Waivers. Whenever any notice is required to be given by law or under the provisions of the Certificate of Incorporation or these bylaws, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to such notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

ARTICLE IV

OFFICERS

     Section 1. Generally. The officers of the Corporation shall be elected by the Board of Directors and shall consist of a President, a Secretary, and a Treasurer. The Board of Directors may also elect one or more Vice-Presidents, Assistant Secretaries, Assistant Treasurers and such other officers and agents as it may deem proper and may define their respective powers and duties. Any number of offices may be held by the same person.

     Section 2. Compensation. The compensation of all officers and agents of the Corporation who are also directors of the Corporation shall be fixed by the Board of Directors. The Board of Directors may delegate the power to fix the compensation of other officers and agents of the Corporation to an officer of the Corporation.

     Section 3. Succession. The officers of the Corporation shall hold office until their successors are elected and qualified. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the directors. Any vacancy occurring in any office of the Corporation may be filled by the Board of Directors.

     Section 4. Authority and Duties. Each of the officers of the Corporation shall have such authority and shall perform such duties as are stated in these bylaws or as may be specified by the Board of Directors in a resolution which is not inconsistent with these bylaws.

     Section 5. President. The President shall be responsible for the active management and direction of the business and affairs of the Corporation and shall have such other duties and responsibilities as may be assigned to him by the Board of Directors.

     Section 6. Execution of Documents and Action with Respect to Securities of Other Corporations. The President shall have and is hereby given, full power and authority, except as otherwise required by law, by the stockholders of the Corporation or directed by the Board of Directors, (a) to execute, on behalf of the Corporation, all duly authorized contracts, agreements, deeds, conveyances or other obligations of the Corporation, applications, consents, proxies and other powers of attorney, and other documents and instruments, and (b) to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of stockholders (or with respect to any action of such stockholders) of any other corporation in which the Corporation may hold securities and otherwise to exercise any and all rights and powers which the Corporation may possess by reason of its ownership of securities of such other corporation. In addition, the President may delegate to other officers, employees and agents of the Corporation

B-4

the power and authority to take any action which the President is authorized to take under this Section 6, with such limitations as the President may specify; such authority so delegated by the President shall not be re-delegated by the person to whom such execution authority has been delegated.

     Section 7. Vice President. Each Vice President, however titled, shall perform such duties and services and shall have such authority and responsibilities as shall be assigned to or required from time to time by the Board of Directors or the President.

     Section 8. Secretary and Assistant Secretaries.

(a)

The Secretary shall attend all meetings of the stockholders and all meetings of the Board of Directors and record all proceedings of the meetings of the stockholders and of the Board of Directors. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and meetings of the Board of Directors. The Secretary shall perform such duties as may be prescribed by the Board of Directors or the President. The Secretary shall have charge of the seal of the Corporation and authority to affix the seal to any instrument. The Secretary or any Assistant Secretary may attest to the corporate seal by handwritten or facsimile signature. The Secretary shall keep and account for all books, documents, papers and records of the Corporation except those for which some other officer or agent has been designated or is otherwise properly accountable. The Secretary shall have authority to sign stock certificates.

(b)

Assistant Secretaries, in the order of their seniority, shall assist the Secretary and, if the Secretary is unavailable or fails to act, perform the duties and exercise the authorities of the Secretary.

     Section 9. Treasurer and Assistant Treasurers.

(a)

The Treasurer shall have the custody of the funds and securities belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Treasurer with the prior approval of the Board of Directors or the President. The Treasurer shall disburse the funds and pledge the credit of the Corporation as may be directed by the Board of Directors and shall render to the Board of Directors and the President, as and when required by them, or any of them, an account of all transactions by the Treasurer.

(b)

Assistant Treasurers, in the order of their seniority, shall assist the Treasurer and, if the Treasurer is unavailable or fails to act, perform the duties and exercise the authorities of the Treasurer.

ARTICLE V

STOCK

     Section 1. Certificates. Certificates representing shares of stock of the Corporation shall be in such form as shall be determined by the Board of Directors, subject to applicable legal requirements. Such certificates shall be numbered and their issuance recorded in the books of

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     the Corporation, and such certificate shall exhibit the holder’s name and the number of shares and shall be signed by, or in the name of the Corporation by the President, or a Vice President, and by the Secretary, or an Assistant Secretary, of the Corporation and shall bear the corporate seal. Any or all of the signatures and the seal of the Corporation, if any, upon such certificates may be facsimiles, engraved or printed.

     Section 2. Transfer. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue, or to cause its transfer agent to issue, a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

     Section 3. Lost, Stolen or Destroyed Certificates. The Secretary may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact, satisfactory to the Secretary, by the person claiming the certificate of stock to be lost, stolen or destroyed. As a condition precedent to the issuance of a new certificate or certificates the Secretary may require the owner of such lost, stolen or destroyed certificate or certificates to give the Corporation a bond in such sum and with such surety or sureties as the Secretary may direct as indemnity against any claims that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed or the issuance of the new certificate.

     Section 4. Record Date.

(a)

In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than 60 nor less than 10 days before the date of such meeting. If no record is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

(b)

In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or an officer or agent

B-6

of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

(c)

In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

ARTICLE VI

GENERAL PROVISIONS

     Section 1. Fiscal Year. The fiscal year of the Corporation shall be fixed from time to time by the Board of Directors.

     Section 2. Corporate Seal. The Board of Directors may adopt a corporate seal and use the same by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

     Section 3. Reliance upon Books, Reports and Records. Each director and each officer of the Corporation shall, in the performance of his or her duties, be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees or by any other person as to matters the director or officer believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

     Section 4. Time Periods. In applying any provision of these bylaws which requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded and the day of the event shall be included.

     Section 5. Dividends. The Board of Directors may from time to time declare and the Corporation may pay dividends upon its outstanding shares of capital stock, in the manner and upon the terms and conditions provided by law and the Certificate of Incorporation.

B-7

ARTICLE VII

AMENDMENTS

     Section 1. Amendments. These bylaws may be altered, amended or repealed, or new bylaws may be adopted, by the stockholders or by the Board of Directors.

B-8

EX-12.1

EXHIBIT 12.1

DEX MEDIA, INC.

RATIO OF EARNINGS TO FIXED CHARGES

(Dollars in thousands)	Predecessor				Dex Media
	Year Ended		Period from		Period from
	December		January 1 to		November 9 to
	31,		November 8,		December 31,			Year Ended December 31,
	2001		2002		2002			2003			2004			2005
Earnings (loss) before income taxes	$	268,847	$	263,722	$	(46,983	)	$	(122,765	)	$	(82,249	)	$	79,559
Interest expense		112,944		87,165		27,866			277,626			505,470			446,357
Interest factor on rentals (a)		3,063		1,502		476			3,276			4,503			6,802
Earnings available for fixed charges	$	384,854	$	352,389	$	(18,641	)	$	158,137		$	427,724		$	532,718
Interest expense	$	112,944	$	87,165	$	27,866		$	277,626		$	505,470		$	446,357
Interest factor on rentals (a)		3,063		1,502		476			3,276			4,503			6,802
Preferred stock dividend requirements		—		—		1,612			14,061			6,548			—
Fixed charges	$	116,007	$	88,667	$	29,954		$	294,963		$	516,521		$	453,159
Ratio of earnings to fixed charges		3.3x		4.0x		—			—			—			1.2x

The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, earnings include pre-tax income from continuing operations and fixed charges include interest, whether expensed or capitalized, and an estimate of interest within rental expense. For the period from November 9 to December 31, 2002 and the years ended December 31, 2003 and 2004, earnings were inadequate to cover fixed charges. The deficiencies for those periods were $48.6 million, $136.8 million and $88.8 million, respectively.

(a) The Company uses one-third of rental expense as an estimation of the interest factor on its rental expense.

EX-31.1

EXHIBIT 31.1

SECTION 302 CERTIFICATION

I, George A. Burnett, certify that:

1. I have reviewed this annual report on Form 10-K of Dex Media, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 16, 2006

/s/ GEORGE A. BURNETT

George A. Burnett

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

SECTION 302 CERTIFICATION

I, Scott A. Pomeroy, certify that:

1. I have reviewed this annual report on Form 10-K of Dex Media, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 16, 2006

/s/ SCOTT A. POMEROY

Scott A. Pomeroy

Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, George A. Burnett, the President and Chief Executive Officer of Dex Media, Inc. (the “Registrant”), and Scott A. Pomeroy, the Chief Financial Officer of the Registrant, each hereby certifies that, to the best of his knowledge:

     1. The Registrant’s Annual Report on Form 10-K for the period ended December 31, 2005, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

     2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition of the Registrant at the end of the period covered by the Periodic Report and results of operations of the Registrant for the periods covered by the Periodic Report.

Date: March 16, 2006

/s/ GEORGE A. BURNETT	/s/ SCOTT A. POMEROY
George A. Burnett	Scott A. Pomeroy
President and Chief Executive Officer	Chief Financial Officer
(Principal Executive Officer)	(Principal Financial Officer)