EX-10.3






EXHIBIT 10.3




R.H. Donnelley Corporation

2009 Long-Term Incentive Program

For Executive Officers




I. Introduction



1.1 Purposes. The purposes of this 2009 Long-Term Incentive Program for Executive
Officers, as established by R.H. Donnelley Corporation, a Delaware corporation (the “Company”), are
(i) to provide incentive compensation to Executive Officers (as defined below) and certain other
employees of the Company and its subsidiaries and affiliates based on the achievement of
performance goals designated by the Compensation and Benefits Committee of the Company’s Board of
Directors (the “Committee”) pursuant to the Company’s 2005 Stock Award and Incentive Plan, (ii) to
advance the interests of the Company and its stockholders by attracting and retaining highly
competent Executive Officers and employees and (iii) to motivate such persons to act in the
long-term best interests of the Company and its stockholders.



1.2 Certain Definitions. For purposes of the Program, the following capitalized terms
shall have the respective meanings set forth below. Capitalized terms not defined herein shall
have the respective meanings specified in the Plan. For purposes of the Program, references to
employment by the Company shall also mean employment by a subsidiary or an affiliate of the
Company.




     (a) “Annual Base Salary” means the annual base salary of a Participant for the 2009 Fiscal
Year.



     (b) “Award Notice” means a written notice from the Company to the recipient of a Long-Term
Incentive Award hereunder setting forth the terms and conditions of such Long-Term Incentive Award.



     (c) “Beneficiary” means the legal representatives of the Participant’s estate entitled by will
or the laws of descent and distribution to receive the benefits under a Participant’s Long-Term
Incentive Award upon a Participant’s death, provided that, if and to the extent authorized by the
Committee, a Participant may be permitted to designate a Beneficiary, in which case the
“Beneficiary” instead will be the person, persons, trust or trusts (if any are then surviving)
which have been designated by the Participant in his or her most recent written and duly filed
beneficiary designation to receive the benefits specified under the Participant’s Long-Term
Incentive Award upon such Participant’s death. Unless otherwise determined by the Committee, any
designation of a Beneficiary other than a Participant’s spouse shall be subject to the written
consent of such spouse.



     (d) “Board” means the Company’s Board of Directors.



     (e) “Cause” shall have the meaning defined in any employment agreement or severance agreement
between the Participant and the Company, then in effect or, if no such agreement is then in effect,
“Cause” shall mean (i) the Participant’s willful and continued failure substantially to perform the
duties of his or her position with the Company after notice and
opportunity to cure; (ii) any willful act or omission by the Participant constituting
dishonesty, fraud or other malfeasance, which in any such case is demonstrably injurious to the
financial



 









 







condition or business reputation of the Company or its subsidiaries or affiliates; (iii)
an act that constitutes misconduct resulting in a restatement of the Company’s financial statements
due to material non-compliance with any financial reporting requirement within the meaning of
Section 304 of The Sarbanes-Oxley Act of 2002, as amended; or (iv) a felony conviction in a court
of law under the laws of the United States or any state thereof or any other jurisdiction in which
the Company its subsidiaries or affiliates conduct business which materially impairs the value of
the Participant’s service to the Company; provided, however, that for purposes of
this definition, no act or failure to act shall be deemed “willful” unless effected by the
Participant not in good faith and without a reasonable belief that such action or failure to act
was in or not opposed to the Company’s best interests, and no act or failure to act shall be deemed
“willful” if it results from any incapacity of the Participant due to physical or mental illness.



     (f) “Cumulative Free Cash Flow” means the sum of the Free Cash Flow for the Company’s 2009,
2010 and 2011 Fiscal Years.



     (g) “Disability” shall have the meaning defined for such term in the long-term disability plan
of the Company, as in effect from time to time.



     (h) “Executive Officer” means an officer of the Company who is subject to Section 16 of the
Securities Exchange Act of 1934, as amended.



     (i) “Fiscal Year” means each consecutive twelve-month period beginning January 1 and ending
December 31.



     (j) “Free Cash Flow” means cash flow from operations minus (i) capital expenditures and (ii)
fees and other expenses directly related to the cost of restructuring, as determined by the
Committee and, to the extent applicable, as reported in the Company’s audited financial statements.



     (k) “Good Reason” shall have the meaning defined in any employment agreement or severance
agreement between the Participant and the Company, then in effect or, if no such agreement is then
in effect, “Good Reason” shall mean (i) any material diminution in the Participant’s annual base
salary with the Company; (ii) any material diminution in the Participant’s authority, duties or
responsibilities with the Company; or (iii) any material change in the geographic location at which
the Participant must perform services for the Company; provided, however, that the
Participant must notify the Company of his or her intention to terminate the Participant’s
employment by written notice to the Company within ninety (90) days of the initial existence of
such event and the Company shall have thirty (30) days to cure such event after receipt of such
notice.



     (l) “Long-Term Incentive Award” means an award conferring a right, contingent upon the
attainment of specified Performance Measures within the Performance Period, to receive cash, as
determined by the Committee or as evidenced in the Award Notice relating to such Long-Term
Incentive Award.



     (m) “Participant” means a person holding an outstanding Long-Term Incentive Award granted
under the Program.



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     (n) “Payment Date” means the date the Participant or the Participant’s Beneficiary, as the
case may be, receives payment, if any, with respect to all or a portion of such Participant’s
Long-Term Incentive Award in accordance with Section 2.2(d).



     (o) “Performance Measures” means the performance measures designated by the Committee pursuant
to the terms of the Plan as a condition to the earning of a Long-Term Incentive Award granted
hereunder.



     (p) “Performance Period” means the Company’s 2009, 2010 and 2011 Fiscal Years with respect to
which the Performance Measures applicable to a Long-Term Incentive Award shall be measured.



     (q) “Plan” means the R.H. Donnelley Corporation 2005 Stock Award and Incentive Plan, as
amended from time to time.



     (r) “Program” means this R.H. Donnelley Corporation 2009 Long-Term Incentive Program for
Executive Officers, as amended from time to time.



     (s) “Successful Restructuring” means any restructuring, reorganization and/or recapitalization
of all or a significant portion of the Company’s outstanding indebtedness (including bank debt,
inclusive of letters of credit, bond debt, and other on and off balance sheet indebtedness, trade
claims, leases (both on and off balance sheet) and other litigation-related claims and obligations,
unfunded pension and retiree medical liabilities, or other liabilities (collectively, the “Existing
Obligations”) that is achieved, without limitation, through (i) a solicitation of waivers and
consents from the holders of all or a significant portion of the Existing Obligations; (ii)
rescheduling of the maturities of all or a significant portion of the Existing Obligations; (iii) a
change in interest rates; (iv) repurchase, settlement or forgiveness of all or a significant
portion of the Existing Obligations; (v) conversion of all or a significant portion of the Existing
Obligations into equity; (vi) an exchange offer involving the issuance of new securities in
exchange for all or a significant portion of the Existing Obligations; (vii) the issuance of new
securities; (viii) the sale or disposition of existing securities or assets; and/or (ix) other
similar transaction or series of transactions; provided, however, that in the event
the restructuring, reorganization and/or recapitalization of all or a significant portion of the
Existing Obligations is to be accomplished through a filing by the Company pursuant to Chapter 11
of the United States Bankruptcy Code, a Successful Restructuring shall be deemed to occur only
upon, prior to any such filing, (A) the receipt of votes sufficient to confirm a plan of
reorganization pursuant to the United States Bankruptcy Code providing for the restructuring,
reorganization and/or recapitalization; or (B) the entry by the Company into a lockup or similar
agreement or agreements providing for votes sufficient to confirm a plan of reorganization pursuant
to the United States Bankruptcy Code providing for the restructuring, reorganization and/or
recapitalization.



     (t) “Target Long-Term Incentive” means the dollar amount which is equal to a percentage of the
Participant’s Annual Base Salary as set forth in the Participant’s Award Notice.


1.3 Administration. The Program shall be administered by the Committee. The Committee
shall, in its sole and absolute discretion and subject only to the terms of the Program and the
Plan, have the full power and authority to interpret the Program and the application thereof,


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establish (and rescind) any rules and regulations it may deem necessary, appropriate or desirable
for the administration of the Program, make adjustments to applicable Performance Measures, subject
to the terms of the Plan, to reflect extraordinary events, and impose, incidental to the grant of a
Long-Term Incentive Award, conditions with respect to the Long-Term Incentive Award. All
interpretations, rules, regulations, conditions and other acts of the Committee shall be final,
binding and conclusive on all parties.




     The Committee may delegate some or all of its power and authority hereunder to the Chief
Executive Officer or other executive officer of the Company as the Committee deems appropriate;
provided, however, that with respect to any person who is a “covered employee”
within the meaning of Section 162(m) of the Code or who, in the Committee’s judgment, is likely to
be a covered employee at any time during the Performance Period, only the Committee shall be
permitted to (i) designate such person to participate in the Plan for the Performance Period, (ii)
establish performance goals and individual incentive levels for such person, and (iii) certify the
achievement of such performance goals. The Committee may also delegate ministerial administrative
functions, such as receipt of notices, implementation of Program payments and mathematical
calculations, to one or more employees or consultants as the Committee may deem necessary or
desirable.



     No member of the Board or Committee, and neither the Chief Executive Officer nor any other
person to whom the Committee delegates any of its power and authority hereunder, shall be liable
for any act, omission, interpretation, construction or determination made in connection with this
Program in good faith, and each such person shall be entitled to indemnification and reimbursement
by the Company in respect of any claim, loss, damage or expense (including attorneys’ fees) arising
therefrom to the full extent permitted by law (except as otherwise may be provided in the Company’s
Certificate of Incorporation and/or By-Laws) and under any directors’ and officers’ liability
insurance that may be in effect from time to time.



II. Terms Of Long-Term Incentive Awards



2.1 Eligibility. Participants in the Program shall consist of (i) such Executive Officers
as the Committee in its sole discretion may select from time to time and (ii) such other employees
of the Company and its subsidiaries and affiliates as the Chief Executive Officer in his sole
discretion may select from time to time, based on a determination that such employees are critical
to a Successful Restructuring. A grant of a Long-Term Incentive Award to any person shall not
entitle such person to an additional grant of Long-Term Incentive Awards at any subsequent time.



2.2 Terms of Long-Term Incentive Awards. (a) In General. Long-Term Incentive
Awards granted under this Program shall be subject to the terms and conditions set forth in this
Section 2.2, and shall contain such additional terms and conditions, not inconsistent with the
terms of the Program and the Plan, as the Committee shall deem advisable. Except as provided in
Section 2.2(c) below, no Participant shall receive any payment with respect to a Long-Term
Incentive Award unless the Participant remains continuously employed by the Company through the
applicable Payment Date.




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     (b) Amount of Long-Term Incentive Award and Performance Measures. The amount of each
Participant’s Long-Term Incentive Award shall be determined based on the following Performance
Measures.



          (i) Cumulative Free Cash Flow. Subject to Section 2.2(a) and Section 2.2(c), a
Participant shall receive an amount equal to the percentage of the Participant’s Target Long-Term
Incentive stated in the table below, based on the Company’s Cumulative Free Cash Flow during the
Performance Period.




	 	 	 	 	 
	Cumulative Free Cash Flow	 	Percentage of Target Long-Term Incentive
	Less than $0
	 	 	0	%
	$75 million
	 	 	50	%
	$150 million
	 	 	100	%
	$225 million
	 	 	150	%
	$300 million or more
	 	 	200	%





If the Cumulative Free Cash Flow is $0 or more and less than $300 million, and is not set forth
above, the applicable percentage of the Target Long-Term Incentive shall be determined by prorating
the amounts set forth above. The Committee shall adjust the Company’s Cumulative Free Cash Flow as
it determines to be appropriate to reflect purchase accounting impacts related to acquisitions and
other extraordinary, non-recurring or unusual events or accounting treatments. Notwithstanding the
foregoing, the amount payable to a Participant, if any, pursuant to this Section 2.2(b)(i) shall be
reduced dollar-for-dollar by any amount paid to the Participant pursuant to Section 2.2(b)(ii)
below; provided, however, that in no event shall any such reduction require any
Participant to repay to the Company an amount received pursuant to Section 2.2(b)(ii) below.




          (ii) Successful Restructuring. Subject to Section 2.2(a) and Section 2.2(c), in the
event of the Company’s Successful Restructuring during the Performance Period, each Participant
shall receive an amount equal to one hundred percent (100%) of the Participant’s Target Long-Term
Incentive.




     (c) Special Termination Rules and Forfeiture.




     (i) Termination by the Participant for Good Reason, by the Company without Cause or
as a Result of the Participant’s Death or Disability. If the Participant’s employment
is terminated by the Participant with Good Reason, by the Company without Cause or as a
result of the Participant’s death or Disability, then the Long-Term Incentive Award shall be
paid, to the extent earned, to the Participant or the Participant’s Beneficiary, as the case
may be, as if the Participant had remained employed with the Company through the applicable
Payment Date.



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     (ii) Any Other Termination. If the Participant’s employment with the Company
is terminated under circumstances other than as described in Section 2.2(c)(i) above, then
the Participant shall not be entitled to any payments with respect to any Long-Term
Incentive Award following such termination of employment, and such portion of the Long-Term
Incentive Award shall be immediately forfeited.



     (d) Payment. Not later than (i) the March 15th occurring immediately after the year
in which the Performance Period ends, for purposes of Section 2.2(b)(i), or (ii) thirty (30) days
following the date on which the Successful Restructuring occurs, for purposes of Section
2.2(b)(ii), the Participant or the Participant’s Beneficiary, as the case may be, shall receive a
lump sum cash payment from the Company in an amount equal, as determined by the Committee in
accordance with Section 2.2(b), to the amount of the Long-Term Incentive Award earned by such
Participant or Beneficiary, if any, subject to the deduction of taxes and other amounts pursuant to
Section 3.4 of the Program.


2.3 Section 409A. All payments under this Program are intended to be exempt from Section
409A of the Code as “short-term deferrals,” within the meaning of the Treasury Regulations
promulgated under Section 409A of the Code.




III. General



3.1 Effective Date and Term of Program. The Program shall be effective as of January 1,
2009, and shall continue until all Long-Term Incentive Awards have been paid or forfeited pursuant
to the terms of the Program.



3.2 Amendments. The Board may amend the Program and any Award Notice as it shall deem
advisable in the exercise of its sole and absolute discretion; provided, however
that no such amendment may adversely affect the rights granted to a Participant with respect to an
outstanding Long-Term Incentive Award pursuant to its related Award Notice without the consent of
such Participant.



3.3 Non-Transferability. No Long-Term Incentive Award or any rights thereunder shall be
transferable other than by will or the laws of descent and distribution or pursuant to any
Beneficiary designation procedures as may approved by the Committee for such purpose. Except as
permitted by the preceding sentence, no Long-Term Incentive Award hereunder shall be sold,
transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by
operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any
attempt by the holder of a Long-Term Incentive Award to so sell, transfer, assign, pledge,
hypothecate, encumber or otherwise dispose of such Long-Term Incentive Award, such Long-Term
Incentive Award and all rights thereunder shall immediately become null and void.



3.4 Tax and Other Withholding. The Company shall have the right to deduct from any amounts
paid pursuant to the Program (or from other compensation payable by the Company to the Participant)
all Federal, state, local and other taxes and any other amounts which may be required under law or
elected by the Participant to be withheld or paid in connection with the settlement of a Long-Term
Incentive Award.




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3.5 No Right of Participation or Employment. No person shall have any right to participate
in the Program or to be granted Long-Term Incentive Awards under the Program. Neither the Program
nor any Award Notice relating to a Long-Term Incentive Award granted hereunder shall confer upon
any person any right to be employed, reemployed or continue employment by the Company or affect in
any manner the right of the Company to terminate the employment of any person with or without
notice at any time for any reason without liability hereunder. Nothing herein shall confer any
right or benefit or any entitlement to any benefit on any Participant unless and until a benefit is
actually paid pursuant to the Program. The adoption and maintenance of the Program shall not be
deemed to constitute a contract of employment or otherwise between the Company and any Participant,
or to be a consideration for or an inducement or condition of any employment. Neither the
provisions of the Program nor any action taken by the Company or the Board or the Committee
pursuant to the provisions of the Program shall be deemed to create any trust, express or implied,
or any fiduciary relationship between or among the Company, the Board or Committee, any member of
the Board or Committee, or any employee, former employee or beneficiary thereof.



3.6 Unfunded Arrangement. The Program shall at all times be entirely unfunded and no
provision shall at any time be made with respect to segregating assets of the Company for payment
of any benefit hereunder. No holder of a Long-Term Incentive Award shall have any interest in any
particular assets of the Company or any of its Affiliates by reason of the right to receive a
benefit under the Program and any such holder shall have only the rights of an unsecured creditor
of the Company with respect to any rights under the Program.



3.7 Severability; Entire Agreement. If any of the provisions of this Program or any Award
Notice is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such
provision shall be deemed modified to the extent, but only to the extent, of such invalidity,
illegality or unenforceability, and the remaining provisions shall not be affected thereby;
provided, that, if any of such provisions is finally held to be invalid, illegal, or unenforceable
because it exceeds the maximum scope determined to be acceptable to permit such provision to be
enforceable, such provision shall be deemed to be modified to the minimum extent necessary to
modify such scope in order to make such provision enforceable hereunder. The Plan, the Program and
any Award Notice contain the entire agreement of the parties with respect to the subject matter
thereof and supersede all prior agreements, promises, covenants, arrangements, communications,
representations and warranties between them, whether written or oral with respect to the subject
matter thereof.



3.8 Governing Law. This Program, each Long-Term Incentive Award granted hereunder and its
related Award Notice, and all determinations made and actions taken pursuant thereto, to the extent
not otherwise governed by the laws of the United States, shall be governed by the laws of the State
of Delaware and construed in accordance therewith without giving effect to principles of conflicts
of laws.





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