Form of Performance Restricted Stock Unit Award Agreement
DONNELLEY FINANCIAL SOLUTIONS, INC.
PERFORMANCE RESTRICTED STOCK UNIT AWARD
This Performance Restricted Stock Unit Award (Award) is granted as of [●], 20 (the Grant Date) by Donnelley Financial Solutions, Inc., a Delaware corporation (the Company), to XXXXXX (Grantee).
1. Grant of Award. This Award is granted as an incentive for Grantee to remain an employee of the Company and share in the future success of the Company. The Company hereby grants to Grantee XXXXX performance restricted stock units (the PRSUs), subject to the restrictions and on the terms and conditions set forth herein. This Award is made pursuant to the provisions of the Companys 2016 Amended and Restated Performance Incentive Plan (the 2016 PIP). Capitalized terms not defined herein shall have the meanings specified in the 2016 PIP. Grantee shall indicate acceptance of this Award by signing and returning a copy hereof.
2. Vesting. The PRSUs will be earned subject to the attainment of the performance condition as established by the Committee and set forth on Exhibit A hereto (the Performance Condition) for the applicable performance period (the Performance Period) as established by the Committee and set forth on Exhibit A and subject to the time-based vesting conditions set forth below. The Committee shall determine the attainment of the Performance Condition after the Performance Period.
3. Treatment Upon Separation from Service.
(a) Notwithstanding any other agreement with Grantee to the contrary, if Grantees employment terminates by reason of death or Disability (as defined in the applicable Company long-term disability policy as in effect at the time of Grantees disability) the unvested PRSUs shall become fully vested and payable.
(b) Subject to paragraph 4 below and the terms and conditions of any employment agreement between Grantee and the Company, if Grantees employment terminates for any reason other than as set forth above, any unvested PRSUs shall be forfeited.
4. Treatment upon Change in Control.
(a) Notwithstanding any other agreement with Grantee to the contrary, upon the date of a Change in Control, each Performance Condition shall be deemed met at the target performance level with respect to each open Performance Period. Such PRSUs will continue to remain subject to time-based vesting until the end of the Performance Period; provided, however, that if on or within three months prior to or two years after the date of such Change in Control, Grantees employment is terminated by the Company or any successor entity thereto without Cause (as defined below), or Grantee resigns his or her employment with Good Reason (as defined below), all of the PRSUs earned pursuant to this paragraph 4 shall immediately vest and become payable as of the date of such termination of employment. Unless otherwise defined in Grantees employment agreement or other arrangement with the Company, Cause and Good Reason shall have the meanings ascribed to them below.
(b) Cause means (i) Grantees willful and continued failure to perform substantially his or her duties with the Company (other than any such failure resulting from Grantees incapacity due to physical or mental illness or any such failure subsequent to Grantees being delivered a notice of termination without Cause) after a written demand for substantial performance is delivered to Grantee by the Group President, the Chief Executive Officer, or the Board that identifies the manner in which Grantee has not performed his or her duties, (ii) Grantees willful engaging in conduct which is demonstrably and materially injurious (monetarily or otherwise) to the business, reputation, character or community standing of the Company, (iii) conviction of or the pleading of nolo contendere with regard to a felony or any crime involving fraud, dishonesty or moral turpitude, or (iv) a refusal or failure to attempt in good faith to follow the written direction of the Group President, the Chief Executive Officer, or the Board (provided that such written direction is consistent with Grantees duty and station) promptly upon receipt of such written direction. For the purposes of this definition, no act or failure to act by Grantee shall be considered willful unless done or omitted to be done by Grantee in bad faith and without reasonable belief that Grantees action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of the Companys principal outside counsel shall be conclusively presumed to be done, or omitted to be done, by Grantee in good faith and in the best interests of the Company. Notwithstanding the foregoing, the Company shall provide Grantee with a reasonable amount of time, after a notice and demand for substantial performance is delivered to Grantee, to cure any such failure to perform, and if such failure is so cured within a reasonable time (which shall be no less than thirty (30) days) thereafter, such failure shall not be deemed to have occurred.
(c) Good Reason means, without Grantees express written consent, the occurrence of any of the following events: (i) a change in Grantees duties or responsibilities (including reporting responsibilities) that taken as a whole represents a material and adverse diminution of Grantees duties, responsibilities or status with the Company (other than a temporary change that results from or relates to Grantees incapacitation due to physical or mental illness), (ii) a reduction by the Company in Grantees rate of annual base salary or annual target bonus opportunity (including any material and adverse change in the formula for such annual bonus target) as the same may be increased from time to time, (iii) any requirement of the Company that Grantees office be more than seventy-five (75) miles from Grantees then-primary work location, or (iv) any material breach by the Company of any employment agreement between Grantee and the Company. Notwithstanding the foregoing, a Good Reason event shall not be deemed to have occurred if the Company cures such action, failure or breach within thirty (30) days after receipt of notice thereof given by Grantee. Grantees right to terminate employment for Good Reason shall not be affected by Grantees incapacities due to mental or physical illness and Grantees continued employment shall not constitute consent to, or a waiver of rights with respect to, any event or condition constituting Good Reason; provided, however, that Grantee must provide notice of termination of employment within ninety (90) days following Grantees knowledge of an event constituting Good Reason or such event shall not constitute Good Reason under this Agreement.
5. Period of Restriction.
(a) Performance-Based Vesting. Subject to Grantees continued employment with the Company through the end of the Performance Period, the performance-based vesting restrictions set forth in this Award with respect to the PRSUs shall lapse upon certification by the Committee that the Performance Condition for the Performance Period set forth on Exhibit A has been satisfied (the Performance Vesting Date). Unless the vesting of the PRSUs is accelerated under the circumstances set forth above, if the Performance Condition is not satisfied, then the PRSUs shall be forfeited.
(b) Time-Based Vesting. In addition to satisfying the Performance Condition as described above, the PRSUs shall also be subject to the time-based vesting conditions set forth on Exhibit A.
6. Issuance of Common Stock in Satisfaction of PRSUs. As soon as practicable, but not more than 21⁄2 months following achievement of of the Performance Condition and the applicable time-based vesting condition, the Company shall issue one share of common stock of the Company (Common Stock) to Grantee for each PRSU that has vested on such date. Each PRSU shall be cancelled upon the issuance of a share of Common Stock with respect thereto.
7. Dividends. No dividends or dividend equivalents will accrue with respect to the PRSUs.
8. Rights as a Shareholder. Prior to issuance, Grantee shall not have the right to vote, nor have any other rights of ownership in, the shares of Common Stock to be issued in satisfaction of PRSUs upon their vesting.
9. Withholding Taxes.
(a) As a condition precedent to the issuance to Grantee of any shares of Common Stock pursuant to this Award, Grantee shall, upon request by the Company, pay to the Company such amount of cash as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the Required Tax Payments) with respect to the Award. If Grantee shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to Grantee.
(b) Grantee may elect to satisfy his obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company, (2) delivery to the Company of previously owned whole shares of Common Stock for which Grantee has good title, free and clear of all liens and encumbrances, having a fair market value, determined as of the date the obligation to withhold or pay taxes first arises in connection
with the Award (the Tax Date), equal to the Required Tax Payments, (3) directing the Company to withhold a number of shares of Common Stock otherwise issuable to Grantee pursuant to this Award having a fair market value, determined as of the Tax Date, equal to the Required Tax Payments or (4) any combination of (1)-(3). Any fraction of a share of Common Stock which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cash by Grantee. No certificate representing a share of Common Stock shall be delivered until the Required Tax Payments have been satisfied in full. For purposes of this Award, the fair market value of a share of Common Stock on a specified date shall be determined by reference to the closing stock price in trading of the Common Stock on such date or, if no such trading in the Common Stock occurred on such date, then on the next preceding date when such trading occurred.
(a) Grantee hereby acknowledges that the Companys relationship with the customer or customers Grantee serves, and with other employees, is special and unique, based upon the development and maintenance of good will resulting from the customers and other employees contacts with the Company and its employees, including Grantee. As a result of Grantees position and customer contacts, Grantee recognizes that Grantee will gain valuable information about (i) the Companys relationship with its customers, their buying habits, special needs, and purchasing policies, (ii) the Companys pricing policies, purchasing policies, profit structures, and margin needs, (iii) the skills, capabilities and other employment-related information relating to Company employees, and (iv) and other matters of which Grantee would not otherwise know and that is not otherwise readily available. Such knowledge is essential to the business of the Company and Grantee recognizes that, if Grantee has a Separation from Service, the Company will be required to rebuild that customer relationship to retain the customers business. Grantee recognizes that during a period following Separation from Service, the Company is entitled to protection from Grantees use of the information and customer and employee relationships with which Grantee has been entrusted by the Company during Grantees employment.
(b) Grantee acknowledges and agrees that any injury to the Companys customer relationships, or the loss of those relationships, would cause irreparable harm to the Company. Accordingly, Grantee shall not, while employed by the Company and for a period of one year from the date of Grantees Separation from Service for any reason, including Separation from Service initiated by the Company with or without cause, directly or indirectly, either on Grantees own behalf or on behalf of any other person, firm or entity, solicit or provide services that are the same as or similar to the services the Company provided or offered while Grantee was employed by the Company to any customer or prospective customer of the Company (i) with whom Grantee had direct contact during the last two years of Grantees employment with the Company or about whom Grantee learned confidential information as a result of his or her employment with the Company or (ii) with whom any person over whom Grantee had supervisory authority at any time had direct contact during the last two years of Grantees employment with the Company or about whom such person learned confidential information as a result of his or her employment with the Company.
(c) Grantee shall not, while employed by the Company and for a period of two years following Grantees Separation from Service for any reason, including Separation from Service initiated by the Company with or without cause, either directly or indirectly solicit, induce or encourage any individual who was a Company employee at the time of, or within six months prior to, Grantees Separation from Service, to terminate their employment with the Company or accept employment with any entity, including but not limited to a competitor, supplier or customer of the Company, nor shall Grantee cooperate with any others in doing or attempting to do so. As used herein, the term solicit, induce or encourage includes, but is not limited to, (i) initiating communications with a Company employee relating to possible employment, (ii) offering bonuses or other compensation to encourage a Company employee to terminate his or her employment with the Company and accept employment with any entity, including but not limited to a competitor, supplier or customer of the Company, or (iii) referring Company employees to personnel or agents employed by any entity, including but not limited to competitors, suppliers or customers of the Company.
(d) Grantee acknowledges that the non-solicitation restrictions set forth in this Section 10 apply whether or not the Shares subject to this Award actually vest.
(a) The Company shall pay all original issue or transfer taxes with respect to the issuance or delivery of the shares of Common Stock pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection therewith, and will use reasonable efforts to comply with all laws and regulations which, in the opinion of counsel for the Company, shall be applicable thereto.
(b) Nothing in this Award shall confer upon Grantee any right to continue in the employ of the Company or any other company that is controlled, directly or indirectly, by the Company or to interfere in any way with the right of the Company to terminate Grantees employment at any time.
(c) This Award shall be governed in accordance with the laws of the state of Delaware.
(d) This Award shall be binding upon and inure to the benefit of any successor or successors to the Company.
(e) Neither this Award nor the PRSUs nor any rights hereunder or thereunder may be transferred or assigned by Grantee prior to vesting other than by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company or other procedures approved by the Company. Any other transfer or attempted assignment, pledge or hypothecation, whether or not by operation of law, shall be void.
(f) The Committee, as from time to time constituted, shall have the right to determine any questions which arise in connection with this Award or the PRSUs. This Award and the PRSUs are subject to the provisions of the 2016 PIP and shall be interpreted in accordance therewith.
(g) If Grantee is a resident of Canada, Grantee further agrees and represents that any acquisitions of Common Stock hereunder are for his own account for investment, and without the present intention of distributing or selling such Common Stock or any of them. Further, the Company and its subsidiaries expressly reserve the right at any time to dismiss Grantee free from any liability, or any claim under this Award, except as provided herein or in any agreement entered into hereunder. Any obligation of the Company under this Award to make any payment at any future date or issue Common Stock merely constitutes the unfunded and unsecured promise of the Company to make such payment or issue such Common Stock; any payment shall be from the Companys general assets in accordance with this Award and the issuance of any Common Stock shall be subject to the Companys compliance with all applicable laws including securities law and the laws its jurisdiction of incorporation or continuance, as applicable, and no Grantee shall have any interest in, or lien or prior claim upon, any property of the Company or any subsidiary by reason of that obligation. If Grantee is a resident of Canada, Grantee hereby indemnifies the Company against and agrees to hold it free and harmless from any loss, damage, expense or liability resulting to the Company if any sale or distribution of the Common Stock by Grantee is contrary to the representations and agreements referred to above.
(h) If there is any inconsistency between the terms and conditions of this Award and the terms and conditions of Grantees employment agreement, employment letter or other similar agreement, the terms and conditions of such agreement shall control.
IN WITNESS WHEREOF, the Company has caused this Award to be duly executed by its duly authorized officer.
Donnelley Financial Solutions, Inc.
Chief Human Resources Officer
All of the terms of this Award are accepted as of this day of , 20 .