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1998 Directors' Stock Plan

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Sectors: Services
Governing Law: Delaware, View Delaware State Laws
Effective Date: July 14, 1998
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R. H. DONNELLEY CORPORATION - --------------------------------------------------------------------------------


1998 DIRECTORS' STOCK PLAN


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R. H. DONNELLEY CORPORATION


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1998 DIRECTORS' STOCK PLAN


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Page
---- 1. Purpose........................................................... 1


2. Definitions....................................................... 1


3. Administration.................................................... 4


4. Shares Available Under the Plan................................... 4


5. Eligibility....................................................... 4


6. Initial and Annual Grants of Options.............................. 5


7. Grants of Deferred Shares and Restricted Stock.................... 6


8. Options Granted in Payment of Fees and Deferral of Fees
In Deferred Shares and Deferred Cash.............................. 7


9 Other Deferrals and Terms of Deferral Accounts.................... 10


10. Settlement of Deferral Accounts................................... 11


11. Amendment and Termination......................................... 12


12. General Provisions................................................ 12


3
R. H. DONNELLEY CORPORATION


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1998 DIRECTORS' STOCK PLAN


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1. PURPOSE. The purpose of this 1998 Directors' Stock Plan (the "Plan") is to aid R.H. Donnelley Corporation (the "Company") in attracting, retaining and compensating non-employee directors and to enable such persons to increase their proprietary interest in the Company. In furtherance of this purpose, the Plan provides to each such director (i) an automatic annual grant of Deferred Shares (as defined below), (ii) an automatic initial grant of an Option (as defined below) to each newly elected or appointed non-employee director, (iii) an automatic annual grant of an Option, (iv) an opportunity to elect deferred and alternative forms of compensation in lieu of cash fees for service as a director, including Options, Deferred Shares, and deferred cash, and (v) an opportunity to defer delivery of shares otherwise deliverable upon exercise of Options or settlement of Deferred Shares.


2. DEFINITIONS. In addition to the terms defined in Section 1 above, the following capitalized terms used in the Plan have the respective meanings set forth in this Section:


(a) "Act" means the Securities Exchange Act of 1934, as amended. References to any provision of the Exchange Act or rule thereunder shall include any successor provisions or rules.


(b) "Administrator" means the administrative committee specified in Section 3(b) to whom the Board has delegated the authority to take action under the Plan.


(c) "Beneficial Owner" has the meaning defined in Rule 13d-3 under the Act.


(d) "Beneficiary" means any person (which may include trusts and is not limited to one person) who has been designated by the Participant in his or her most recent written beneficiary designation filed with the Company to receive the benefits specified under the Plan in the event of the Participant's death. If no Beneficiary has been designated who survives the Participant's death, then Beneficiary means any person(s) entitled by will or, in the absence thereof, the laws of descent and distribution to receive such benefits.


(e) "Board" means the Board of Directors of the Company.


(f) "Change in Control" means the occurrence of any of the following events after the effective date of the Plan:


(i) Any "person," as such term is used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than the Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or any company owned,
directly or indirectly, by the shareholders of the 4
Company in substantially the same proportions as their ownership of stock
of the Company), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 20% or more of the combined voting power of the
Company's then outstanding securities;


(ii) During any period of two consecutive years commencing on July
14, 1998, individuals who at the beginning of such period constitute the
Board, and any new director (other than a director designated by a person
(as defined above) who has entered into an agreement with the Company to
effect a transaction described in subsections (i), (iii) or (iv) of this
definition) whose election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved cease for any reason to constitute at least a
majority thereof;


(iii) The shareholders of the Company have approved a merger or
consolidation of the Company with any other company and all other required
governmental approvals of such merger or consolidation have been obtained,
other than (A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 60% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or (B) a
merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no person (as defined above)
becomes the beneficial owner (as defined above) of more than 20% of the
combined voting power of the Company's then outstanding securities; or


(iv) The shareholders of the Company have approved a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets, and all other required governmental approvals of such transaction
have been obtained.


(g) "Code" means the Internal Revenue Code of 1986, as amended. References to any provision of the Code or regulation (including a proposed regulation) thereunder shall include any successor provisions or regulations.


(h) "Deferral Account" means the account established and maintained by the Company for Deferred Shares credited under Sections 7 and 8 and deferred cash credited under Section 8. A Deferral Account shall include one or more subaccounts, including a Deferred Share Account for forfeitable Deferred Shares under Section 7, a Deferred Share Account for Deferred Shares that have become nonforfeitable under Section 7 or that are at all times nonforfeitable under Section 8(c), a Deferred Share Account for Deferred Shares resulting from Option exercises under Section 9(a), and a Deferred Cash Account described in Section 8(d). The Deferral Account and subaccounts, and Deferred Shares and deferred cash credited thereto, will


- 2 - 5 be maintained solely as bookkeeping entries by the Company to evidence unfunded obligations of the Company.


(i) "Deferred Share" means a credit to a Participant's Deferred Share Account under Sections 7 or 8 which represents the right to receive one share of Stock upon settlement of such Account.


(j) "Disability" means a Participant's termination of service as a director of the Company due to a physical or mental incapacity of long duration which renders the Participant unable to perform the duties of a director of the Company.


(k) "Effective Date" means July 14, 1998, the date the Plan becomes effective.


(l) "Fair Market Value" means, with respect to Stock as of a given date, the average of the high and low sales prices per share of Stock reported on a consolidated basis for securities listed on the principal stock exchange or market on which Stock is traded on the date immediately preceding the date as of which such value is being determined or, if there is no sale on that date, then on the last previous day on which a sale was reported, unless otherwise determined by the Committee.


(m) "Option" means the right, granted to a Participant under Section 6 or 8, to purchase a specified number of shares of Stock at the specified exercise price for a specified period of time under the Plan. All Options will be non-qualified stock options.


(n) "Option Valuation Methodology" means the method for determining the number of shares to be subject to Options, and the exercise price thereof, granted in payment of Retainer Fees under Section 8(b).


(o) "Other Director Compensation" means fees payable to a director in his or her capacity as such, other than Retainer Fees, for attending meetings and other service on the Board and Board committees or otherwise.


(p) "Participant" means any person who, while a director, has been granted an Option which remains outstanding, has Deferred Shares or cash credited to his or her Deferral Account, or has elected to be granted Options in payment of Retainer Fees or to defer payment of Retainer Fees and Other Director Compensation in the form of Deferred Shares or cash under the Plan.


(q) "Plan Year" means, with respect to a Participant, the period commencing at the time of election of the director at an annual meeting of shareholders (or the election of a class of directors if the Company then has a classified Board of Directors), or the director's initial appointment to the Board if not at an annual meeting of shareholders, and continuing until the close of business of the day preceding the next annual meeting of shareholders; provided, however, that the initial Plan Year for directors serving on the Effective Date shall begin at the opening of business on August 14, 1998.


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(r) "Restricted Stock" means shares of Stock granted under Section 7, subject to a risk of forfeiture and restrictions on transfer for a specified period.


(s) "Retainer Fees" means annual Board and chair retainer fees payable to a director in his or her capacity as such for service on the Board and Board committees.


(t) "Retirement" means a Participant's termination of service as a director of the Company at or after age 65.


(u) "Stock" means Common Stock, par value $1.00 per share, or any other equity securities of the Company substituted or resubstituted for Stock under Section 12(b).


(v) "Valuation Date" shall mean the close of business on the last business day of each calendar quarter and, in the case of any final distribution from a Participant's Deferred Cash Account, the day preceding such distribution.


3. ADMINISTRATION.


(a) Authority. Both the Board and the Administrator (subject to the ability of the Board to restrict the Administrator) shall administer the Plan in accordance with its terms, and shall have all powers necessary to accomplish such purpose, including the power and authority to construe and interpret the Plan, to define the terms used herein, to prescribe, amend and rescind rules and regulations, agreements, forms, and notices relating to the administration of the Plan, and to make all other determinations necessary or advisable for the administration of the Plan. The Administrator may perform any function of the Board under the Plan, except for grants of Awards under Sections 6 and 7, adoption of material amendments to the Plan under Section 11, or other functions from time to time specifically reserved by the Board to itself. Any actions of the Board or the Administrator with respect to the Plan shall be conclusive and binding upon all persons interested in the Plan, except that any action of the Administrator will not be binding on the Board. The Board and Administrator may each appoint agents and delegate thereto powers and duties under the Plan, except as otherwise limited by the Plan.


(b) Administrator. The Administrator shall be the Compensation and Benefits Committee of the Board of Directors or such other committee as may designated by the Board. No member of the Administrator shall be entitled to act on or decide any matter relating solely to himself or herself or any of his or her rights or benefits under the Plan. No bond or other security need be required of the Administrator or any member thereof in any jurisdiction.


(c) Limitation of Liability. Each member of the Board and the Administrator shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or other employee of the Company or any subsidiary, the Company's independent certified public accountants, or any legal counsel, executive compensation consultant, or other professional retained by the Company to assist in the administration of the Plan. To the maximum extent permitted by law, no member of the Board or the Administrator, nor


- 4 - 7 any person to whom ministerial duties under the Plan have been delegated, shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of the Plan.


4. SHARES AVAILABLE UNDER THE PLAN. The total number of shares of Stock reserved and available for delivery under the Plan is 750,000, subject to adjustment as provided in Section 12(b). Shares that may be delivered under the Plan shall be treasury shares or shares acquired in the market for the account of the Participant. For purposes of the Plan, shares that may be purchased upon exercise of an Option or distributed in settlement of Deferred Shares will not be considered to be available after such Option has been granted or Deferred Share credited, except for purposes of delivery in connection with such Option or Deferred Share; provided, however, that, if an Option expires for any reason without having been exercised in full or Deferred Shares or shares of Restricted Stock are forfeited or cancelled, the shares subject to the unexercised portion of such Option or to the forfeited or cancelled Deferred Shares or Restricted Stock will again be available for delivery under the Plan. The Company will use its best efforts to ensure that, at any time shares are deliverable by the Company under the Plan, the Company has a sufficient number of treasury shares available for such delivery.


5. ELIGIBILITY. Each non-employee director of the Company who is paid fees for service on the Board or a Board committee may participate in the Plan, subject to the terms hereof. No person other than those specified in this Section 5 will be eligible to participate in the Plan. The Administrator will notify each person of his or her eligibility to participate in the Plan on an elective basis not later than 15 days (or such other period as may be determined by the Administrator) prior to any deadline for filing an election form.


6. INITIAL AND ANNUAL GRANTS OF OPTIONS. Options shall be granted to non-employee directors in accordance with policies established from time to time by the Board specifying the classes of directors to be granted Options, the number of shares to be subject to each Option, and the time or times at which such Options shall be granted.


(a) Initial Policy -- Option Grants. The initial policy with respect to Options granted under this Section 6, effective as of the Effective Date and continuing until modified or revoked by the Board, shall be as follows:


(i) Initial Grants. At the date of a person's initial election or
appointment as a member of the Board after the Effective Date, such
person, if he or she is a non-employee director eligible to participate
upon such election or appointment, shall be granted an Option to purchase
during the Option term 7,500 shares of Stock, subject to adjustment as
provided in Section 12(b). At the Effective Date, each person who is a
non-employee member of the Board eligible to participate at that date
shall be granted an Option to purchase during the Option term 7,500 shares
of Stock.


(ii) Annual Grants. At the date of each annual meeting of
shareholders at which a director is elected or reelected as a member of
the Board (or at which members of another class of directors are elected
or reelected, if the Company then has a classified


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Board), such director, if he or she is
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