EXHIBIT 10.6
R.H. DONNELLEY CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
ARTICLE I
INTRODUCTION
     This Supplemental Executive Retirement Agreement (the “Agreement”) is made
effective as of December 31, 2008 by and between R.H. Donnelley Corporation (the
“Company”) and David C. Swanson, the Chairman and Chief Executive Officer of the
Company (the “Executive”).
ARTICLE II
DEFINITIONS
     For the purposes of this Agreement, the following terms shall have the
meanings indicated, unless the context clearly indicates otherwise:
     2.1 “Actuarial Equivalent” means equivalence in value between two or more
forms and/or times of payment based on a determination by an actuary chosen by
the Compensation Committee, using sound actuarial assumptions at the time of
such determination consistent with assumptions used by the Company under its
defined benefit plans.
     2.2 “Applicable Percentage” means the percentage of the Supplemental
Retirement Benefit that the Executive is entitled to receive as determined in
accordance with Article III.
     2.3 “Beneficiary” means a person determined in accordance with Article V to
be the person to whom benefits under this Agreement shall be paid in the event
of the Executive’s death.
     2.4 “Board” means the Board of Directors of the Company.
     2.5 “Cause” shall have the meaning set forth in the Employment Agreement.
     2.6 “Change in Control” means any of the following (as such terms are
defined in Section 409A except as otherwise provided in (B) below):
          (A) Change in the Ownership of the Company. A change in the ownership
of the Company occurs on the date that any one person or persons acting as a
group (as defined in Section 409A), acquires ownership of stock of the Company
that, together with stock held by such person or group, constitutes more than
fifty percent (50%) of the total fair market value or total voting power of the
stock of the Company. The acquisition of additional stock by the same person or
group is not considered to cause a change in the ownership of the Company.
          (B) Change in the Effective Control of the Company. A change in the
effective control of the Company shall be deemed to occur on either of the
following dates:
               (i) The date any one person, or persons acting as a group,
acquires (or has acquired during the twelve (12) month period ending on the date
of the most recent acquisition by such person or group) ownership of stock of
the Company possessing fifty percent (50%) or more of the total voting power of
the stock of the Company; or
               (ii) The date a majority of members of the Company’s board of
directors is replaced during any twelve (12) month period by directors whose
appointment or election is not endorsed by a majority of the members of the
Board before the date of the appointment or election.

 

--------------------------------------------------------------------------------

 

          (C) Change in the Ownership of a Substantial Portion of the Company’s
Assets. A change in the ownership of a substantial portion of the Company’s
assets shall be deemed to occur on the date that any one person or group
acquires (or has acquired during the twelve (12) month period ending on the date
of the most recent acquisition by such person or persons) assets from the
Company that have a total gross fair market value equal to or more than forty
percent (40%) of the total gross fair market value of all of the assets of the
Company immediately before such acquisition or acquisitions. No Change in
Control shall result if the assets are transferred to certain entities
controlled directly or indirectly by the shareholders of the transferring
corporation.
     2.7 “Code” means the Internal Revenue Code of 1986, as amended.
     2.8 “Company” means R.H. Donnelley Corporation, any subsidiaries or
affiliates thereof, or any successors thereto.
     2.9 “Compensation Committee” means the Compensation and Benefits Committee
of the Board of Directors of the Company.
     2.10 “Disabled” or “Disability” shall have the meaning set forth in the
Employment Agreement.
     2.11 “Employment Agreement” means that certain Amended and Restated
Employment Agreement dated as of December 31, 2008 by and between the Executive
and the Company, together with all amendments thereto, except as provided in
Section 2.13.
     2.12 “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.
     2.13 “Good Reason” shall have the meaning set forth in the Employment
Agreement entered into as of October 3, 2005 as in effect prior to the Amended
and Restated Employment Agreement dated as of December 31, 2008.
     2.14 “Involuntary Separation from Service” means a Separation from Service
due to the independent exercise of the unilateral authority of the Company to
terminate the Executive’s services, other than at the Executive’s implicit or
explicit request, and other than for Cause or Disability.
     2.15 “Other Company Plans” means the R.H. Donnelley Corporation Retirement
Account, the R.H. Donnelley Pension Benefit Equalization Plan and any other
defined benefit plan (as such term is defined in section 3(35) of ERISA)
sponsored by the Company.
     2.16 “Retirement” shall refer to the date on which the Executive Separates
from Service after attaining age 60.
     2.17 “Section 409A” means Code Section 409A and the Treasury Regulations
promulgated thereunder.
     2.18 “Separation from Service (Separates from Service)” and “Termination of
Employment” shall be used interchangeably for the purposes of this Agreement and
shall be interpreted in accordance with the provisions of Section 409A. Whether
a separation from service has occurred is determined based on whether the facts
and circumstances indicate that the Company and the Executive reasonably
anticipate that no further services will be performed after a certain date or
that the level of bona fide services the Executive will perform after such date
(whether as an employee or as an independent contractor) will permanently
decrease to no more than twenty (20%) percent of the average level of bona fide
services performed (as an employee or an independent contractor) over the
immediately preceding 36-month period.
     2.19 “Supplemental Retirement Benefit” means the amount necessary to cause
the Executive’s annual retirement benefit from this Agreement and projected
benefits from all Other Company Plans to yield a total single life annuity of
Five Hundred Thousand Dollars ($500,000) per year if the Executive were to
retire at age 60 and all benefits under all Other Company Plans were paid in a
single life annuity commencing at age 60.

2

--------------------------------------------------------------------------------

 

     2.20 “Unapproved Change in Significant Control” means when a person, or
persons acting as a group, acquires (or has acquired during the twelve
(12) month period ending on the date of the most recent acquisition by such
person or group) ownership of stock of the Company possessing at least thirty
percent (30%) but less than fifty percent (50%) of the total voting power of the
stock of the Company (thereby constituting a change in control under
Section 409A but not a Change in Control as defined in this Agreement) and such
acquisition is not approved or endorsed by the Board on or before its effective
time.
     2.21 “Voluntary Termination” means voluntary resignation of employment by
the Executive, other than for Good Reason or as a result of his Disability,
prior to his attaining age 60.
ARTICLE III
SUPPLEMENTAL RETIREMENT BENEFITS
     3.1 Applicable Percentage.
          3.1.1 Schedule. Except as otherwise provided in this Section 3.1, the
percentage of the Supplemental Retirement Benefit the Executive will be entitled
to receive shall be determined by reference to his age and the following
schedule, assuming his continued employment with the Company:

          Executive’s Age   Applicable Percentage
55
     50 %
56
     66.66 %
57
     83.32 %
58
     100 %

          3.1.2. Forfeiture Events. The Applicable Percentage shall be zero, and
the Executive’s right to the Supplemental Retirement Benefit shall be forfeited
in its entirety, if the event of:
               (A) The Executive’s Voluntary Termination prior to age 60 (except
as provided in Section 3.4); or
               (B) Termination of the Executive’s employment with the Company
for Cause or the Executive’s violation of the restrictive covenants of his
Employment Agreement;
provided, however, that no reduction in the Applicable Percentage shall apply
under this Section 3.1.2 to the extent the Applicable Percentage previously
became payable under Section 3.3.
          3.1.3. Acceleration Events. The Applicable Percentage shall be 100% in
the event of:
               (A) Termination of the Executive’s employment with the Company as
a result of his death or Disability; or
               (B) Within two years following a Change in Control, the
Executive’s employment is terminated as a result of his Involuntary Separation
from Service or termination for Good Reason. For purposes of this Agreement,
termination of employment after the commencement of negotiations with a
potential acquiror or business combination partner shall be deemed to be a
termination of employment within two years following a Change in Control if
within 2 years after the Executive’s termination such negotiations result in a
transaction with such acqurior or business combination partner which constitutes
a Change in Control.
Except as provided in this Section 3.1.3, Executive shall have no right to the
unvested portion of the Supplemental Retirement Benefit following termination of
his employment for any reason.

3

--------------------------------------------------------------------------------

 

     3.1.4 Continued Vesting Following Certain Change in Control Payments. If a
payment is made in connection with a Change in Control and no termination of
employment has occurred, the unvested portion of the Supplemental Retirement
Benefit will remain outstanding and continue to vest in accordance with the
schedule above, subject to the Executive’s continued employment with the
Company.
     3.2 Form of Benefit Payment. The Actuarial Equivalent of the Applicable
Percentage of the Supplemental Retirement Benefit, adjusted to present value in
any case in which payments will commence other than upon attaining age 60 shall
be paid in the form of a lump sum. Present value shall be based on the interest
rate then used for present valuing benefits under the Company’s defined benefit
plans.
     3.3 Time for Payment. The Applicable Percentage of the Supplemental
Retirement Benefit (as determined under Section 3.2) shall be paid on the later
of (i) the date the Executive attains age 60 or (ii) the first day of the
seventh (7th ) month commencing after his Separation from Service; provided,
however, that in the event of any of the following events, payment shall be
accelerated to commence upon the earlier of :
          (A) On the first day of the month following the date of the
Executive’s death;
          (B) On the first day of the seventh (7th) month commencing after his
Separation from Service due to Disability, Involuntary Separation from Service
or termination for Good Reason; and
          (C) On the effective date in the event of a Change in Control.
     3.4 Special Vesting Rule for Unapproved Change in Significant Control. If
an Unapproved Change in Significant Control occurs, payment of the Applicable
Percentage of the Supplemental Retirement Benefit will not accelerate as
described in 3.3(C) above, but the risk of forfeiture associated with the
Executive’s Voluntary Termination prior to attaining age 60 shall lapse as to
the then-vested portion of his Supplemental Retirement Benefit. (For the
avoidance of doubt, if the same change in significant control were to occur with
the approval or endorsement of the Board, this risk of forfeiture would not
lapse.)
     3.5 Death of Executive During Active Employment. In the event the Executive
dies while employed by the Company, no death benefits shall be payable under
this Agreement but any Supplemental Retirement Benefits due to the Executive
under this Agreement shall be paid to his designated Beneficiary as described in
Article V below.
     3.6 Withholding of Payroll Taxes. The Company shall withhold from payments
made hereunder any taxes required to be withheld from the Executive’s benefits
under federal, state or local law. However, a Beneficiary may elect not to have
withholding for federal income tax purposes pursuant to Code Section 3405(a)(2),
or any successor provision thereto.
     3.7 Payment to Guardian. If a Supplemental Retirement Benefit is payable to
a minor or a person declared incompetent or to a person incapable of handling
the disposition of his property, the Compensation Committee may direct payment
of such benefit to the guardian, legal representative or such person having the
care and custody of such minor, incompetent or person. The Compensation
Committee may require proof of incompetency, minority, incapacity or
guardianship as it may deem appropriate prior to distribution of the benefit.
Such distribution shall completely discharge the Compensation Committee and the
Company from all liability with respect to such benefit.
ARTICLE IV
ADMINISTRATION
     4.1 Compensation Committee and Duties. This Agreement shall be administered
by the Compensation Committee. The Compensation Committee shall have the sole
and exclusive authority to make, amend, interpret, and enforce all appropriate
rules and regulations for the administration of this Agreement and

4

--------------------------------------------------------------------------------

 

decide or resolve any and all questions including interpretations of this
Agreement, including the calculation of benefits and any other questions as may
arise in connection with the Agreement.
     4.2 Agents. In the administration of this Agreement, the Compensation
Committee may, from time to time, employ agents and delegate to them such
administrative duties as it sees fit, and may from time to time consult with
counsel who may be counsel to the Company.
     4.3 Binding Effect of Decisions. The decision or action of the Compensation
Committee in respect of any question arising out of or in connection with the
administration, interpretation and application of the Agreement and the rules
and regulations promulgated hereunder shall be final and conclusive and binding
upon all persons having any interest in the Agreement.
     4.4 Indemnity. The Company shall indemnify and hold harmless the members of
the Compensation Committee against any and all claims, loss, damage, expense, or
liability arising from any action or failure to act with respect to this
Agreement, except in the case of gross negligence or willful misconduct.
ARTICLE V
BENEFICIARY DESIGNATION
     5.1 Beneficiary Designation. The Executive shall have the right, at any
time, to designate any person or persons as his Beneficiary or Beneficiaries
(both primary as well as secondary) to whom benefits under this Agreement shall
be paid in the event of his death prior to complete distribution of the benefits
due under the Agreement. Each Beneficiary designation shall be in a written form
approved by the Compensation Committee, a form of which is attached as Exhibit
A, and will be effective only when filed with the Chief Financial Officer of the
Company during the Executive’s lifetime.
     5.2 Amendments to Beneficiary Designation. Any Beneficiary designation may
be changed by the Executive without the consent of any designated Beneficiary by
the filing of a new Beneficiary designation with the Chief Financial Officer of
the Company. The filing of a new Beneficiary designation form will cancel all
Beneficiary designations previously filed. If the Executive’s compensation is
community property, any Beneficiary designation shall be valid or effective only
as permitted under applicable law.
     5.3 No Effective Designation. In the absence of an effective Beneficiary
designation, or if all designated Beneficiaries predecease the Executive or die
prior to complete distribution of the Executive’s benefits, then the Executive’s
designated Beneficiary shall be deemed to be the Executive’s estate.
     5.4 Effect of Payment. The payment to the deemed Beneficiary shall
completely discharge the Company’s obligations under this Agreement.
ARTICLE VI
CLAIMS PROCEDURE
     6.1 Claim. If the Executive or the Executive’s beneficiary believes that he
or she is entitled to benefits under the Agreement which are not being paid to
him or which are not be accrued for his or her benefit, he or she shall file a
written claim with the Company. Any such claim shall be adjudicated in
accordance with the claim and appeal procedures set out in Article VII of the
Company’s Pension Benefit Equalization Plan as amended to date, which are
incorporated herein by reference.
     6.2 Arbitration of Disputes. Any dispute between the parties to this
Agreement arising from or relating to the terms of this Agreement shall be
submitted to arbitration in New York, New York under the auspices of the
American Arbitration Association.

5

--------------------------------------------------------------------------------

 

ARTICLE VII
MISCELLANEOUS
     7.1 Unfunded Plan. This Agreement is intended to be an unfunded plan
maintained primarily to provide deferred compensation benefits for a select
group of “management or highly compensated employees” within the meaning of
Sections 201, 301, and 401 of ERISA, and therefore to be exempt from the
provisions of Parts 2, 3, and 4 of Title I ERISA. Accordingly, the Agreement
shall terminate and no further benefits shall be paid hereunder in the event it
is determined by a court of competent jurisdiction or by an opinion of counsel
that the Agreement constitutes an employee pension benefit plan within the
meaning of Section 3(2) of ERISA which is not so exempt.
     7.2 Unsecured General Creditor. The Executive and his Beneficiaries, heirs,
successors, and assigns shall have no legal or equitable rights, interest or
claims in any property or assets of the Company, nor shall they be Beneficiaries
of, or have any rights, claims or interests in any life insurance policies,
annuity contracts, or the proceeds therefrom owned or which may be acquired by
the Company. Except as may be provided in Section 7.3, such policies, annuity
contracts or other assets of the Company, if any, shall not be held under any
trust for the benefit of the Executive, his Beneficiaries, heirs, successors or
assigns, or held in any way as collateral security for the fulfilling of the
obligations of the Company under this Agreement. Any and all of the Company’s
assets and policies shall be, and remain, the general, unpledged, unrestricted
assets of the Company. The Company’s obligation under the Agreement shall be
that of an unfunded and unsecured promise to pay money in the future.
     7.3 Trust Fund. The Company shall be responsible for the payment of all
benefits provided under the Agreement. At its discretion, the Company may
establish one or more trusts, with such trustee as the Board may approve, for
the purpose of providing for the payment of such benefits. Such trust or trusts
may be irrevocable, but the assets thereof shall be subject to the claims of the
Company’s creditors. To the extent any benefits provided under the Agreement are
actually paid from any such trust, the Company shall have no further obligation
with respect thereto, but to the extent not so paid, such benefits shall remain
the obligation of, and shall be paid by, the Company.
     7.4 Nonassignability. Neither the Executive nor any other person shall have
any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate or convey in advance of actual receipt
the amounts, if any, payable hereunder, or any part thereof, which are, and all
rights to which are, expressly declared to be unassignable and nontransferable.
No part of the amount payable shall, prior to actual payment, be subject to
seizure or sequestration for the payment of any debts, judgments, alimony or
separate maintenance owed by the Executive or any other person, nor be
transferable by operation of law in the event of the Executive’s or any other
person’s bankruptcy or insolvency.
     7.5 Not a Contract of Employment. The terms and conditions of this
Agreement shall not be deemed to constitute a contract of employment between the
Company and the Executive, and the Executive (or his Beneficiary) shall have no
rights against the Company except as may otherwise be specifically provided
herein. Moreover, nothing in this Agreement shall be deemed to give the
Executive the right to be retained in the service of the Company or to interfere
with the right of the Company to discipline or discharge him at any time.
     7.6 Protective Provisions. The Executive will cooperate with the Company by
furnishing any and all information requested by the Company, in order to
facilitate the payment of benefit hereunder, and by taking such physical
examinations as the Company may deem necessary and taking such other action as
may be requested by the Company.
     7.7 Terms; Gender. Whenever any words are used herein in the masculine,
they shall be construed as though they were used in the feminine in all cases
where they would so apply; and wherever any words are used herein in the
singular or in the plural, they shall be construed as though they were used in
the plural or singular, as the case may be, in all cases where they would so
apply.

6

--------------------------------------------------------------------------------

 

     7.8 Captions. The captions of the articles, sections, and paragraphs of
this Agreement are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
     7.9 Governing Law. The provisions of this Agreement shall be construed,
interpreted, and governed in all respects in accordance with applicable federal
law and, to the extent not preempted by such federal law, in accordance with the
laws of the State of New York.
     7.10 Validity. If any provision of this Agreement shall be held illegal or
invalid for any reason, the remaining provisions shall nevertheless continue in
full force and effect without being impaired or invalidated in any way.
     7.11 Notice. Any notice or filing required or permitted to be given under
the Agreement shall be sufficient in writing and hand delivered, or sent by
registered or certified mail, to the Chief Financial Officer of the Company, or
to the Company’s statutory agent. Such notice shall be deemed given as of the
date of delivery or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.
     7.12 Successors. The provisions of this Agreement shall bind and inure to
the benefit of the Company and its successors and assigns. The term successors
as used herein shall include any corporate or other business entity which shall,
whether by merger, consolidation, purchase or otherwise acquire all or
substantially all of the business and assets of the Company, and successors of
any such corporation or other business entity.
     7.13 Interpret Agreement in Conformity with Section 409A. It is the
intention of the Company that the Agreement complies with all applicable
provisions of Section 409A. In the event any provision of this Agreement is
ambiguous, then it shall be interpreted in a manner that is consistent with
Section 409A.
     7.14 Exhibit. Exhibit A is incorporated herein and shall be interpreted in
all respects in conformity with and shall be subject to the terms and conditions
of the Agreement.
     7.15 Amendment or Termination of Agreement. The Compensation Committee may
amend, suspend or terminate the Agreement at any time. However, no amendment,
suspension or termination of the Agreement shall reduce the Executive’s
Supplemental Retirement Benefit without the consent of the Executive.
Notwithstanding the foregoing, except to the extent required to comply with
Section 409A, no amendment to the definition of Change in Control shall be made
without the consent of the Executive.
     7.16 Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, with the same effect as if the signatures affixed
thereto were upon the same instrument.

7

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.

                  R. H. DONNELLEY CORPORATION    
 
           
 
  By:   /s/ Gretchen Zech
 
     Signature    
 
                Title: Senior Vice President, HR    
 
                EXECUTIVE    
 
                              /s/ David C. Swanson                     
           David C. Swanson    

8