AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This AMENDED AND
RESTATED EMPLOYMENT AGREEMENT is made as of the 31
st day of December, 2008, by and between R.H.
Donnelley Corporation, a Delaware corporation (the
“COMPANY”), and David C. Swanson
(“EXECUTIVE”).
WHEREAS, Executive
is presently serving as Chairman and Chief Executive Officer of the
Company pursuant to an Amended and Restated Employment Agreement
dated October 3, 2005 (“PRIOR
AGREEMENT”);
WHEREAS, both the
Executive and the Company wish to continue the employment
relationship on the terms and conditions set forth in this Amended
and Restated Employment Agreement (this “AGREEMENT”),
which is being executed to evidence compliance with
Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), and the regulations thereunder
(collectively, “Section 409A”);
WHEREAS,
the Compensation and Benefits Committee of the Board of Directors
of the Company has authorized the Company to enter into this
Amended and Restated Employment Agreement; and
NOW, THEREFORE, in
consideration of the premises and mutual covenants contained herein
and for other good and valuable consideration, the validity and
sufficiency of which is hereby acknowledged, the parties agree
that, as of the date hereof, the Prior Agreement is amended and
restated as follows:
1. Term
of Employment . Subject to the provisions of Section 8 of
this Agreement, Executive shall be employed by the Company for a
period (the “EMPLOYMENT TERM”) commencing on the date
hereof (the “COMMENCEMENT DATE” and the
“EFFECTIVE DATE”) and ending on the first anniversary
of the date hereof. On the first anniversary and each succeeding
anniversary thereof, the Employment Term shall automatically be
extended for one additional year unless, not later than ninety days
prior to such anniversary, the Company or the Executive shall have
given notice of its or his intention not to extend the Employment
Term. Any such non-renewal of this Agreement by the Company shall
be treated as a termination of Executive’s employment without
Cause, as hereinafter defined. This Agreement, in amending and
restating the Prior Agreement, shall replace and supercede the
Prior Agreement as of the Effective Date.
2.
Position . (a) Executive shall serve as Chairman and
Chief Executive Officer of the Company. In such position, Executive
shall have such duties and authority commensurate with such
position and, to the extent not inconsistent with the foregoing, as
shall be determined from time to time by the Board. Executive shall
be employed as the senior most executive officer of the Company
(without regard to any Chairman) and shall report directly
to
the Board.
(b) During the Employment Term, Executive will devote
substantially all of his business time and best efforts to the
performance of his duties hereunder and will not engage in any
other business, profession or occupation for compensation or
otherwise which would conflict with the rendition of such services
either directly or indirectly, without the prior written consent of
the Board; provided that nothing herein shall be deemed to preclude
Executive from serving on business, civic or charitable boards or
committees, as long as such activities do not materially interfere
with the performance of Executive’s duties
hereunder.
3. Base
Salary . Company shall pay Executive an annual base salary (the
“BASE SALARY”) at the initial annual rate of $955,000
payable in equal bi-monthly installments or otherwise in accordance
with the payroll and personnel practices of the Company in effect
from time to time. Base Salary shall be reviewed annually by the
Board or a committee thereof to which the Board may from time to
time have delegated such authority (the “COMMITTEE”)
for possible increase (but not decrease) in the sole discretion of
the Board or the Committee, as the case may be.
4.
Bonus . With respect to each fiscal year all or part of
which is contained in the Employment Term, Executive shall be
eligible to participate in the Company’s Annual Incentive
Program under the 2005 Stock Award and Incentive Plan or any
successor program or plan thereto or thereunder, with a target
bonus opportunity of 125% of Base Salary (not less than 70% of
which shall be paid in cash) and a maximum bonus opportunity not
less than that for which Executive was eligible on January 1,
2008 (the “BONUS”). Any Bonus paid to Executive shall
be less applicable withholdings and shall be distributed pursuant
to policies as determined by the Company, but in no event later
than March 15 of the year following the year in which such
Bonus was earned.
5.
Additional Compensation . As further compensation, Executive
will be eligible for participation in all other bonuses, long-term
incentive compensation and stock options and other equity
participation arrangements made available generally to senior
executives of the Company, on terms and conditions no less
favorable than those offered to other senior executives of the
Company, and at no less attractive a level in the aggregate as that
for which he is eligible on the Effective Date.
6.
Employee Benefits . During the Employment Term, Executive
shall be eligible for employee benefits (including perquisites,
fringe benefits, vacation, pension and profit sharing plan
participation and life, health, accident and disability insurance)
made available generally to senior executives of the Company, on
terms and conditions no less favorable than those offered to other
senior executives of the Company, and at no less attractive a level
in the aggregate as that for which he is eligible on the Effective
Date. Notwithstanding the immediately preceding sentence, Executive
acknowledges that, effective December 31, 2008, as part of the
unified employee retirement savings strategy, the Company will
freeze the R.H. Donnelley Corporation Retirement Plan and the R.H.
Donnelley Pension Benefit Equalization Plan. As of the date, all
pension plan benefit accruals for participants in these defined
benefit plans (including Executive) will cease, although plan
balances will remain intact and interest credits will continue
going forward in accordance with the plans, as will service credit
for vesting and retirement eligibility.
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7.
Business Expenses . Reasonable travel, entertainment and
other business expenses incurred by Executive in the performance of
his duties hereunder shall be reimbursed by the Company in
accordance with Company policies in effect from time to time,
provided, however, that all such reimbursements shall be made by
March 15 of the year following the year in which the expenses
were incurred.
8.
Termination of Employment . Each of Executive and the
Company may terminate the employment of Executive hereunder at any
time in accordance with this Section 8. Executive’s
entitlements hereunder in the event of any such termination shall
be as set forth in this Section 8. The provisions of this
Section 8 (and any related provision of Section 10) shall
survive any non-renewal of this Agreement by the Company pursuant
to Section 1. With respect to any termination of employment
(voluntary or otherwise), any and all (i) accrued but unused
vacation shall be paid in the regular payroll check following the
Date of Termination, and (ii) earned but unpaid bonus (with
respect to any full performance period) will be paid at the same
time such bonuses are generally distributed to current employees,
but no later than March 15 of the year following the year in
which the bonus was earned.
(a) For Cause
by the Company . If Executive’s employment is terminated
by the Company for Cause (as defined in Section 9(a) herein), he
shall be entitled to receive his Base Salary through the Date of
Termination (as defined in Section 8(g)(ii) herein). All other
benefits due Executive following Executive’s termination of
employment pursuant to this Section 8(a) shall be determined in
accordance with the then-existing plans, policies and practices of
the Company.
(b) Death or
Disability . Executive’s employment hereunder shall
terminate upon his death and may be terminated by the Company upon
his Disability (as defined in Section 9(c) herein) during the
Employment Term. Upon termination of Executive’s employment
hereunder upon the Executive’s Disability or death, Executive
or his estate (as the case may be) shall be entitled to receive
Base Salary through the Date of Termination, plus a pro-rata
portion of the target Bonus, based on the number of whole or
partial months from the beginning of the bonus period to the Date
of Termination. Such pro-rata Bonus shall be payable in a lump sum
(less applicable withholdings) when such awards are generally
distributed to current employees for the current fiscal year, but
no later than March 15 of the year following the year in which
the Bonus was earned. In addition, if Executive’s employment
is terminated as a result of a Disability, Executive shall be
entitled to be reimbursed for the additional costs to Executive,
including any additional tax costs associated with such
reimbursements, of continuing health, medical and dental benefits
under COBRA at a level equivalent (e.g., family coverage versus
employee only) to those benefits in which he participated prior to
the Termination Date for a period of twenty nine (29) months from
the Termination Date (“COBRA Benefit Continuation
Period”) or, if COBRA is not available or is not adequate,
the actual costs associated with any other coverage that may be
necessary to obtain such equivalent coverage; provided that such
costs are consistent with the costs generally available on a
competitive basis for such coverage. Following the end of the
29-month COBRA Benefit Continuation Period, and continuing until
Executive reaches the age of 65 or is no longer
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subject to a
Disability, whichever date is earlier, Executive shall also be
entitled to be reimbursed for the additional actual costs,
including any additional tax costs associated with such
reimbursements, of obtaining such equivalent health, medical and
dental insurance coverage through an insurance policy or policies
he purchases on his own; provided that such costs are consistent
with the costs generally available on a competitive basis for such
coverage. Executive shall bear full responsibility for applying for
COBRA coverage and for obtaining coverage under any other insurance
policy subject to reimbursement under this Section 8(b), and
nothing herein shall constitute a guarantee of COBRA continuation
coverage or benefits or a guarantee of eligibility for health or
dental insurance coverage. Reimbursements under this Section 8(b)
shall be made on a monthly basis but no later than the last day of
the calendar year following the year in which the expenses were
incurred. Under no circumstances will Executive be entitled to a
cash payment in lieu of reimbursements for the actual costs of
premiums for health or dental coverage hereunder. The amount of
expenses eligible for reimbursement during any calendar year shall
not be affected by the amount of expenses eligible for
reimbursement in any other calendar year.
(c) Termination
Not Following a Change in Control . If, during the Employment
Term and prior to a Change in Control (as defined in Section 9(b)
herein) or more than two years after a Change in Control,
Executive’s employment is terminated by the Company without
Cause, or by Executive under subclauses (i), (ii) or
(iii) of the definition of Good Reason (as defined in Section
9(d) herein), Executive shall be entitled to the
following:
(i) Base Salary
through the Date of Termination at the rate in effect at the time
of Notice of Termination, as defined in Section 8(g)(i)
herein, is given, or if higher, at the rate in effect immediately
prior to the event or circumstance leading to the termination of
employment, plus a pro-rata (based on number of days employed
during calendar year divided by 360) portion of the target Bonus,
plus all other amounts to which Executive is entitled under any
then-existing compensation or benefit plan of the Company. Such
pro-rata Bonus shall be payable in lump sum (less applicable
withholdings) when such awards are generally distributed to current
employees for the current fiscal year, but no later than
March 15 of the year following the year in which the Bonus was
earned.
(ii) In lieu of
any further salary payments to Executive for periods subsequent to
the Date of Termination, the Company shall pay as severance pay a
severance payment (the “SEVERANCE PAYMENT”) equal to
two times the sum of (A) Base Salary at the rate in effect on
the date Notice of Termination is given, or if higher, at the rate
in effect immediately prior to the event or circumstance leading to
the termination of employment, plus (B) target Bonus at the
rate in effect on the date of the Notice of Termination is given,
or if higher, at the rate in effect immediately prior to the event
or circumstance leading to the termination of employment without
Cause. The Severance Payment shall be paid in lump-sum, without
reduction for time value of money, within seven (7) calendar
days following the effective date of the General Release executed
by Executive under
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Section 8(h) of this Agreement, but in no
event later than seventy four (74) days after the Date of
Termination.
(iii)
Reimbursement for the additional costs to Executive, including any
additional tax costs associated with such reimbursements, of
obtaining health, medical and dental insurance and long term
disability insurance benefits equivalent (e.g., for health, medical
and dental, family coverage versus employee only) to the plans in
which he participated prior to the Date of Termination for a period
of two (2) years, or, if sooner, until comparable insurance
coverage is available to Executive in connection with subsequent
employment or self-employment, as follows: (aa) the Company
shall reimburse Executive for the additional costs in continuing
group health, medical and dental benefits under COBRA for a period
of eighteen (18) months from the Termination Date (“COBRA
Benefit Continuation Period”) or, if COBRA is not available
or is not adequate, the actual costs associated with any other
coverage that may be necessary to obtain such equivalent coverage,
provided that such costs are consistent with the costs generally
available on a competitive basis for such coverage; (bb) for
the period immediately following the end of the 18-month COBRA
Benefit Continuation Period (the “Post-COBRA Period”),
and continuing until the end of the two (2) year period,
Executive shall also be entitled to be reimbursed for the
additional actual costs of obtaining equivalent health, medical and
dental insurance coverage through an insurance policy or policies
he purchases on his own, provided that such costs are consistent
with the costs generally available on a competitive basis for such
coverage; and (cc) for the two (2) year period following
the Date of Termination, the Company shall reimburse Executive for
the actual costs incurred by Executive in obtaining an individual
long term disability insurance policy equivalent in coverage to
that elected by Executive at the time of the Notice of Termination,
provided that such costs are consistent with the costs generally
available on a competitive basis for such coverage.
Executive shall
bear full responsibility for applying for COBRA coverage and for
obtaining coverage under any other insurance policy subject to
reimbursement under this Section 8(c)(iii), and nothing herein
shall constitute a guarantee of COBRA continuation coverage or
benefits or a guarantee of eligibility for health, dental or long
term disability insurance coverage. Reimbursements under this
Section 8(c)(iii) shall be made on a monthly basis but in no
event later than the last day of the calendar year following the
year in which the expenses were incurred. Under no circumstances
will Executive be entitled to a cash payment or other benefit in
lieu of reimbursements for the actual costs of premiums for health,
dental or long term disability coverage hereunder. The amount of
expenses eligible for reimbursement during any calendar year shall
not be affected by the amount of expenses eligible for
reimbursement in any other calendar year. Executive shall provide
the Company with notice of any subsequent employment or
self-employment under which equivalent health, dental or disability
insurance becomes available within thirty (30) days of
commencement.
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(iv) Reimbursement
for the actual costs incurred by Executive, including any
additional tax costs associated with such reimbursements, in
obtaining term life insurance coverage equivalent in coverage to
that elected by Executive at the time of the Notice of Termination,
following the Date of Termination and continuing until the last day
of the second calendar year beginning after the Date of
Termination, or, if sooner, until comparable life insurance
coverage is available to Executive in connection with subsequent
employment or self-employment. Executive shall bear full
responsibility for applying for life insurance coverage subject to
reimbursement under this Section 8(c)(iv), and nothing herein
shall constitute a guarantee of eligibility for life insurance
coverage. Reimbursements under this Section 8(c)(iv) shall be
made on a monthly basis but in no event later than the last day of
the calendar year following the year in which the expenses were
incurred. Under no circumstances will Executive be entitled to a
cash payment or other benefit in lieu of reimbursements for the
actual costs of premiums for term life insurance coverage
hereunder. The amount of expenses eligible for reimbursement during
any calendar year shall not be affected by the amount of expenses
eligible for reimbursement in any other calendar year. Executive
shall provide the Company with notice of any subsequent employment
or self-employment under which equivalent life insurance coverage
becomes available within thirty (30) days of commencement such
employment.
(d) Termination
Within Two Years Following a Change in Control . If, during the
Employment Term and within two years following a Change in Control,
Executive’s employment is terminated by the Company without
Cause, or by the Executive for Good Reason, as hereinafter defined,
Executive shall be entitled to the payments and benefits set forth
in Section 8(c), except that for purposes of this
Section 8(d), references in such Section to “two
times” or “two years” shall be changed to
“three times” and “three years.” In
addition, Executive shall be entitled to receive the following:
(i) for the three years following termination of employment
or, if sooner, until subsequently employed or self-employed,
reimbursements, including any additional tax costs associated with
such reimbursements, for Executive’s expenses (aa) for
dues for continuing the health club and country club memberships,
if any, provided to him by the Company prior to the Date of
Termination, (bb) relating to financial planning services, up
to a maximum amount per year equal to the average of such amounts
paid to Executive for the two (2) calendar years preceding the
Date of Termination, and (cc) actual expenses in replacing any
other perquisites and similar benefits Executive was receiving
immediately prior to the Termination Date, up to a maximum amount
per year equal to one hundred and twenty percent (120%) of such
amounts paid to Executive during the two (2) calendar years
preceding the Date of Termination; and (ii) during the two
year period following the Date of Termination reimbursement of
expenses relating to outplacement services, subject to a maximum
total reimbursement of $25,000. In connection with reimbursements
under Section 8(d)(i)(aa) and (bb), under no circumstances
will Executive be entitled to a cash
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payment or
other benefit in lieu of such reimbursements and the amount of
expenses eligible for reimbursement during any calendar year shall
not be affected by the amount of expenses eligible for
reimbursement in any other calendar year.
For purposes of
this Agreement, termination of employment after the commencement of
negotiations with a potential acquiror or business combination
partner but prior to an actual Change of Control shall be deemed to
be a termination of employment within two years following a Change
in Control if such negotiations subsequently result in a
transaction with such acquiror or business combination partner
which constitutes a Change in Control (“Look-Back
CIC”). Executive shall be entitled to such additional
benefits as the result of a Look-Back CIC under this Section 8(d)
only if the Change in Control transaction occurs within two
(2) years following the Date of Termination. Any additional
payments due to Executive as the result of the Look-Back CIC shall
be payable to Executive in a lump sum (less applicable
withholdings) within ten (10) calendar days following the
effective date of the General Release under Section 8(h), but
in no event later than seventy four (74) days following such
Change in Control.
(e)
Retirement . If during the Employment Term, Executive
retires at normal retirement age under the Company’s
qualified pension plan or any successor plan, Executive shall be
entitled to the payments and benefits specified in Section 8(b) as
if his employment had terminated as a result of
Disability.
(f) Voluntary
Termination of Employment . If during the Employment Term,
Executive terminates his employment under circumstances other than
those specified elsewhere in this Section 8, Executive shall
be entitled to the payments and benefits specified in
Section 8(a).
(g) Notice and
Date of Termination . (i) Any purported termination of
employment by the Company or by Executive shall be communicated by
written Notice of Termination to the other party hereto in
accordance with Section 17(i) hereof. For purposes of this
Agreement, a “NOTICE OF TERMINATION” shall mean a
notice which shall indicate (by reference to specific Section and
sub-section numbers and letters, for example, Section 8(d))
the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of
employment under the provision so indicated. If the event or
circumstance on which the proposed termination of employment is
based is susceptible of cure, the Notice of Termination shall not
be deemed effective until Executive or the Company, as the case may
be, has had at least 30 days to effect such cure, and unless
such event or circumstance persists at the end of such cure period.
In the event Executive wishes to terminate his employment for Good
Reason, as defined in Section 9(d), Executive must provide a
Notice of Termination to the Company describing the condition
giving rise to Good Reason within ninety (90) days following
the occurrence of the condition giving rise to Good Reason.
Executive may only exercise his rights to terminate for Good Reason
thereafter if the Company does not cure such condition within
thirty (30) days following the receipt of such written notice
from Executive, and Executive resigns from the Company within two
(2) years following the initial existence of such
condition.
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(ii) “DATE
OF TERMINATION” shall mean (A) if employment is
terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that Executive shall not have
returned to the full-time performance of his duties during such
thirty (30) day period), (B) if employment is terminated
by reason of death, the date of death, and (C) if employment
is terminated for any other reason, subject to the effectiveness of
notice and “cure” provisions of clause (i) above,
the date specified in the Notice of Termination (which, in the case
of a termination of employment by the Company for Cause shall not
be less than ten (10) days after the date such Notice of
Termination is given); provided that if within thirty
(30) days after any Notice of Termination is given the party
receiving such Notice of Termination notifies the other party that
a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a
binding arbitration award, or by a final judgment, order or decree
of a court of competent jurisdiction (which is not appealable or
the time for appeal therefrom having expired and no appeal having
been perfected); provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the
resolution of such dispute with reasonable diligence; and provided,
further that in the event Executive gives Notice of Termination for
Good Reason based upon any matter referred to in clause
(ii) of the definition of Good Reason, and it is thereafter
determined that said grounds do not constitute Good Reason, then so
long as Executive reasonably believed in good faith that he had
grounds for termination of employment for Good Reason, the Company
may not terminate Executive’s employment for Cause based upon
such matters.
(h) Release of
Claims. Any provision of this Agreement to the contrary
notwithstanding, Executive shall be obligated to execute and not
revoke a valid general release of claims (“General
Release”) from time-to-time in favor of th
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