Exhibit 99
R.R. DONNELLEY & SONS COMPANY
2000 BROAD-BASED STOCK INCENTIVE PLAN
(as adopted by the Board of Directors on January 27, 2000)
I. GENERAL
1. Plan. To provide incentives to certain key employees through rewards based
upon the ownership or performance of the common stock of R.R. Donnelley & Sons
Company (the "Company"), the Committee hereinafter designated, may grant cash or
bonus awards, stock options, stock appreciation rights ("SARs"), or combinations
thereof, to eligible participants, on the terms and subject to the conditions
stated in the Plan. For purposes of the Plan, references to employment by the
Company also means employment by a majority-owned subsidiary of the Company and
employment by any other entity designated by the Board of Directors of the
Company (the "Board") or the Committee in which the Company has a direct or
indirect equity interest.
2. Eligibility. "Exempt employees" as defined under the Fair Labor Standards
Act of 1938 and selected other employees of the Company, its subsidiaries, and
any other entity designated by the Board or the Committee in which the Company
has a direct or indirect equity interest, shall be eligible, upon selection by
the Committee, to receive cash or bonus awards, stock options or SARs, either
singly or in combination, as the Committee, in its discretion, shall determine
("participants").
3. Limitation on Shares to be Issued. Subject to adjustment as provided in
Section 5 of this Article I, 2,000,000 shares of common stock, par value $1.25
per share ("common stock"), shall be available under the Plan, reduced by the
aggregate number of shares of common stock which become subject to outstanding
bonus awards, stock options and SARs which are not granted in tandem with or by
reference to a stock option ("free-standing SARs"). Shares subject to a grant
or award under the Plan which for any reason are not issued or delivered,
including by reason of the expiration, termination, cancellation or forfeiture
of all or a portion of the grant or award or by reason of the delivery or
withholding of shares to pay all or a portion of the exercise price or to
satisfy tax withholding obligations, shall again be available for future grants
and awards; provided, however, that for purposes of this sentence, stock options
and SARs granted in tandem with or by reference to a stock option granted prior
to the grant of such SARs ("tandem SARs") shall be treated as one grant. In the
event the Company repurchases shares in the open market or otherwise, a number
of shares having a repurchase price equal to the aggregate proceeds received by
the Company from the exercise of stock
options granted by the Company under the Plan shall again be available for
future grants and awards.
Shares of common stock to be issued shall be treasury stock of the
Company.
4. Administration of the Plan. The Plan shall be administered by a Committee
designated by the Board of Directors (the "Committee"). Each member of the
Committee may be (i) an "outside director" within the meaning of Section 162(m)
of the Code and (ii) a "Non-Employee Director" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Committee shall, subject to the terms of the Plan, select eligible participants
for grants and awards; determine the form of each grant and award, either as
cash, a bonus award, stock options or SARs or a combination thereof; and
determine the number of shares or units subject to the grant or award, the fair
market value of the common stock or units when necessary, the time and
conditions of vesting, exercise or settlement, whether dividends or dividend
equivalents accrue under any award, and all other terms and conditions of each
grant and award, including, without limitation, the form of instrument
evidencing the grant or award. The Committee may establish rules and
regulations for the administration of the Plan, interpret the Plan, and impose,
incidental to a grant or award, conditions with respect to competitive
employment or other activities not inconsistent with the Plan. All such rules,
regulations, interpretations and conditions shall be conclusive and binding on
all parties. Each grant and award shall be evidenced by a written instrument
and no grant or award shall be valid until an agreement is executed by the
Company and such grant or award shall be effective as of the effective date set
forth in the agreement.
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 the
Committee may not delegate its power and authority with regard to (i) the
selection for participation in the Plan of (A) a participant 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
period a grant or award hereunder to such participant would be outstanding or
(B) an officer or other person subject to Section 16 of the Exchange Act or (ii)
decisions concerning the timing, pricing or amount of a grant or award to such a
participant, officer or other person. A majority of the Committee shall
constitute a quorum. The acts of the Committee shall be either (i) acts of a
majority of the members of the Committee present at any meeting at which a
quorum is present or (ii) acts approved in writing by all of the members of the
Committee without a meeting.
5. Adjustments. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of common stock other than a regular cash
dividend, the number and class of securities available under the Plan, the
number and class of securities subject to each outstanding bonus award, the
number and class of securities subject to each outstanding stock option and the
purchase price per security and the terms of each outstanding SAR shall be
appropriately adjusted by the Committee, such adjustments to be made in the case
of
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outstanding stock options and SARs without an increase in the aggregate purchase
price or base price. If any such adjustment would result in a fractional
security being (i) available under the Plan, such fractional security shall be
disregarded, or (ii) subject to an outstanding grant or award under the Plan,
the Company shall pay the holder thereof, in connection with the first vesting,
exercise or settlement of such grant or award, in whole or in part, occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (A) the fair market value on the vesting, exercise or settlement date
over (B) the exercise or base price, if any, of such grant or award; provided,
however, that if the fair market value of such fractional security immediately
after such adjustment is less than the fair market value of one share of common
stock immediately prior to the adjustment, such fractional security shall be
disregarded and no payment shall be made.
6. Effective Date and Term of Plan. The Plan shall become effective on March
23, 2000. The Plan shall terminate on the date on which shares are no longer
available for grants or awards under the Plan, unless terminated prior thereto
by action of the Board. No further grants or awards shall be made under the
Plan after termination, but termination shall not affect the rights of any
participant under any grants or awards made prior to termination.
7. Amendments. The Plan may be amended or terminated by the Board in any
respect. No amendment may impair the rights of a holder of an outstanding grant
or award without the consent of such holder.
II. BONUS AWARDS
1. Form of Award. Bonus awards, whether performance awards or fixed awards,
may be made to eligible participants in the form of (i) cash, whether in an
absolute amount or as a percentage of compensation, (ii) stock units, each of
which is substantially the equivalent of a share of common stock but for the
power to vote and, subject to the Committee's discretion, the entitlement to an
amount equal to dividends or other distributions otherwise payable on a like
number of shares of common stock, (iii) shares of common stock issued to the
participant but forfeitable and with restrictions on transfer in any form as
hereinafter provided or (iv) any combination of the foregoing.
2. Performance Awards. (a) Awards may be made in terms of a stated potential
maximum dollar amount, percentage of compensation or number of units or shares,
with such actual amount, percentage or number to be determined by reference to
the level of achievement of corporate, sector, business unit, division,
individual or other specific performance goals over a performance period of not
less than one nor more than ten years, as determined by the Committee.
(b) In no event shall any participant receive a payment with respect to
any performance award if the minimum threshold performance goals requirement
applicable to the payment is not achieved during the performance period.
(c) The Committee retains sole discretion to reduce the amount of or
eliminate any payment otherwise payable to a participant with respect to any
performance award.
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The Committee may exercise such discretion by establishing conditions for
payments with respect to performance awards in addition to the performance
goals, including the achievement of financial, strategic or individual goals,
which may be objective or subjective, as it deems appropriate.
(e) For purposes of the Plan, "performance goals" means the
objectives established by the Committee which shall be satisfied or met during
the applicable performance period as a condition to a participant's receipt of
all or a part of a performance-based award under the Plan. The performance goals
may, without limitation, be tied to one or more of the following business
criteria, determined with respect to the Company or the applicable sector,
business unit or division: net sales, cost of sales, gross profit, earnings from
operations, earnings before interest, taxes, depreciation and amortization
("EBITDA"), earnings before income taxes, earnings before interest and taxes,
cash flow measures, return on equity, return on assets, return on net assets
employed, net income per common share (basic or diluted), EVA (Economic Value
Added, which represents the cash operating earnings of the Company after
deducting a charge for capital employed) or any other similar criteria
established by the Committee for the applicable performance period.
3. Fixed Awards. Awards may be made which are not contingent on the
achievement of specific objectives, but are contingent on the participant's
continuing in the Company's employ for a period specified in the award.
4. Rights with Respect to Restricted Shares. If shares of restricted common
stock are subject to an award, the participant shall have the right, unless and
until such award is forfeited or unless otherwise determined by the Committee at
the time of grant, to vote the shares and to receive dividends thereon from the
date of grant and the right to participate in any capital adjustment applicable
to all holders of common stock; provided, however, that a distribution with
respect to shares of common stock, other than a regular quarterly cash dividend,
shall be deposited with the Company and shall be subject to the same
restrictions as the shares of common stock with respect to which such
distribution was made.
During the restriction period, a certificate or certificates
representing restricted shares shall be registered in the holder's name or the
name of a nominee of the Company and may bear a legend, in addition to any
legend which may be required under applicable laws, rules or regulations,
indicating that the ownership of the shares of common stock represented by such
certificate is subject to the restrictions, terms and conditions of the Plan and
the agreement relating to the restricted shares. All such certificates shall be
deposited with the Company, together with stock powers or other instruments of
assignment (including a power of attorney), each endorsed in blank with a
guarantee of signature if deemed necessary or appropriate, which would permit
transfer to the Company of all or a portion of the shares of common stock
subject to the award in the event such award is forfeited in whole or in part.
Upon termination of any applicable restriction period, including, if applicable,
the satisfaction or achievement of applicable objectives, and subject to the
Company's right to require payment of any taxes, the
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requisite number of shares of common stock shall be delivered to the holder of
such award.
5. Rights with Respect to Stock Units. If stock units are credited to a
participant pursuant to an award, then, subject to the Committee's discretion,
amounts equal to dividends and other distributions otherwise payable on a like
number of shares of common stock after the crediting of the units (unless the
record date for such dividends or other distributions precedes the date of grant
of such award) shall be credited to an account for the participant and held
until the award is forfeited or paid out and interest shall be credited on the
account at a rate determined by the Committee.
6. Vesting and Resultant Events. The Committee may, in its discretion, provide
for early vesting of an award in the event of the participant's death, permanent
and total disability or retirement. At the time of vesting, (i) the award (and
any dividend equivalents, other distributions and interest which have been
credited), if in units, shall be paid to the participant either in shares of
common stock equal to the number of units, in cash equal to the fair market
value of such shares, or in such combination thereof as the Committee shall
determine, (ii) the award, if a cash bonus award, shall be paid to the
participant either in cash, or in shares of common stock with a then fair market
value equal to the amount of such award, or in such combination thereof as the
Committee shall determine and (iii) shares of restricted common stock issued
pursuant to an award shall be released from the restrictions.
III. STOCK OPTIONS
1. Grants for Eligible Participants. Options to purchase shares of common
stock of the Company may be granted to such eligible participants as may be
selected by the Committee.
2. Number of Shares and Purchase Price. The number of shares of common stock
subject to an option and the purchase price per share of common stock
purchasable upon exercise of the option shall be determined by the Committee;
provided, however, that the purchase price per share of common stock shall not
be less than 100% of the fair market value of a share of common stock on the
date of grant of the option.
3. Exercise of Options. The period during which options granted hereunder may
be exercised shall be determined by the Committee; provided, however, that no
stock option shall be exercised later than ten years after its date of grant.
The Committee may, in its discretion, establish performance measures which shall
be satisfied or met as a condition to the grant of an option or to the
exercisability of all or a portion of an option. The Committee shall determine
whether an option shall become exercisable in cumulative or non-cumulative
installments and in part or in full at any time. An exercisable option, or
portion thereof, may be exercised only with respect to whole shares of common
stock.
An option may be exercised (i) by giving written notice to the Company
specifying the number of whole shares of common stock to be purchased and
accompanied by payment therefor in full (or arrangement made for such payment to
the
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Company's satisfaction) either (A) in cash, (B) in previously owned whole shares
of common stock (which the optionee has held for at least six months prior to
delivery of such shares or which the optionee purchased on the open market and
for which the optionee has good title free and clear of all liens and
encumbrances) having a fair market value, determined as of the date of exercise,
equal to the aggregate purchase price payable by reason of such exercise, (C) in
cash by a broker-dealer acceptable to the Company to whom the optionee has
submitted an irrevocable notice of exercise or (D) a combination of (A) and (B),
(ii) if applicable, by surrendering to the Company any SARs which are canceled
by reason of the exercise of the option and (iii) by executing such documents as
the Company may reasonably request. The Committee shall have sole discretion to
disapprove of an election pursuant to any of clauses (B)-(D). Any fraction of a
share of common stock which would be required to pay such purchase price shall
be disregarded and the remaining amount due shall be paid in cash by the
optionee. No shares of common stock shall be delivered until the full purchase
price therefor has been paid.
4. Termination of Employment or Service. Subject to the requirements of the
Code, all of the terms relating to the exercise, cancellation or other
disposition of an option upon a termination of employment with the Company or
service on the Board, as the case may be, of the holder of such option, whether
by reason of disability, retirement, death or any other reason, shall be
determined by the Committee; provided, however, that the expiration date of an
option may never be extended beyond the original expiration date of such option.
IV. STOCK APPRECIATION RIGHTS
1. Grants. Free-standing SARs entitling the grantee to receive cash or shares
of common stock having a fair market value equal to the appreciation in market
value of a stated number of shares of common stock from the date of grant to the
date of exercise of such SARs, or in the case of tandem SARs, from the date of
grant of the related stock option to the date of exercise of such tandem SARs,
may be granted to such participants as may be selected by the Committee. The
holder of a tandem SAR may elect to exercise either the option or the SAR, but
not both. Tandem SARs shall be automatically canceled upon exercise of the
related stock option.
2. Number of SARs and Base Price. The number of SARs subject to a grant shall
be determined by the Committee. The base price of a tandem SAR shall be the
purchase price per share of common stock of the related option. The base price
of a free-standing SAR shall be determined by the Committee; provided, however,
that such base price shall not be less than 100% of the fair market value of a
share of common stock on the date of grant of such SAR.
3. Exercise of SARs. The agreement relating to a grant of SARs may specify
whether such grant shall be settled in shares of common stock (including
restricted shares of common stock) or cash or a combination thereof. Upon
exercise of an SAR, the grantee shall be paid the excess of the then fair market
value of the number of shares of common
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stock to which the SAR relates over the base price of the SAR. Such excess shall
be paid in cash or in shares of common stock having a fair market value equal to
such excess or in such combination thereof as the Committee shall determine. The
period during which SARs granted hereunder may be exercised shall be determined
by the Committee; provided, however, no SAR shall be exercised later than ten
years after the date of its grant; and provided, further, that no tandem SAR
shall be exercised if the related option has expired or has been canceled or
forfeited or has otherwise terminated. The Committee may, in its discretion,
establish performance measures which shall be satisfied or met as a condition to
the grant of an SAR or to the exercisability of all or a portion of an SAR. The
Committee shall determine whether an SAR may be exercised in cumulative or non-
cumulative installments and in part or in full at any time. An exercisable SAR,
or portion thereof, may be exercised, in the case of a tandem SAR, only with
respect to whole shares of common stock and, in the case of a free-standing SAR,
only with respect to a whole number of SARs. If an SAR is exercised for
restricted shares of common stock, the restricted shares shall be issued in
accordance with Section 4 of Article II and the holder of such restricted shares
shall have such rights of a stockholder of the Company as determined pursuant to
such Section. Prior to the exercise of an SAR for shares of common stock,
including restricted shares, the holder of such SAR shall have no rights as a
stockholder of the Company with respect to the shares of common stock subject to
such SAR.
A tandem SAR may be exercised (i) by giving written notice to the
Company specifying the number of whole SARs which are being exercised, (ii) by
surrendering to the Company any options which are canceled by reason of the
exercise of such SAR and (iii) by executing such documents as the Company may
reasonably request. A free-standing SAR may be exercised (i) by giving written
notice to the Company specifying the whole number of SARs which are being
exercised and (ii) by executing such documents as the Company may reasonably
request.
4. Termination of Employment. Subject to the requirements of the Code, all of
the terms relating to the exercise, cancellation or other disposition of an SAR
upon a termination of employment with the Company of the holder of such SAR,
whether by reason of disability, retirement, death or any other reason, shall be
determined by the Committee; provided, however, that the expiration date of an
SAR may never be extended beyond the original expiration date of such SAR.
V. OTHER
1. Non-Transferability of Options and Stock Appreciation Rights. No option or
SAR shall be transferable other than (i) by will, the laws of descent and
distribution or pursuant to beneficiary designation procedures approved by the
Company or (ii) as otherwise set forth in the agreement relating to such option
or SAR. Each option or SAR may be exercised during the participant's lifetime
only by the participant or the participant's guardian, legal representative or
similar person or the permitted transferee of the participant. Except as
permitted by the second preceding sentence, no option or SAR may be sold,
transferred, assigned, pledged, hypothecated, encumbered or otherwise
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disposed of (whether by operation of law or otherwise) or be subject to
execution, attachment or similar process. Upon any attempt to so sell, transfer,
assign, pledge, hypothecate, encumber or otherwise dispose of any option or SAR,
such award and all rights thereunder shall immediately become null and void.
2. Tax Withholding. The Company shall have the right to require, prior to the
issuance or delivery of any shares of common stock or the payment of any cash
pursuant to a grant or award hereunder, payment by the holder thereof of any
Federal, state, local or other taxes which may be required to be withheld or
paid in connection therewith. An agreement may provide that (i) the Company
shall withhold whole shares of common stock which would otherwise be delivered
to a holder, having an aggregate fair market value determined as of the date the
obligation to withhold or pay taxes arises in connection therewith (the "Tax
Date"), or withhold an amount of cash which would otherwise be payable to a
holder, in the amount necessary to satisfy any such obligation or (ii) the
holder may satisfy any such obligation by any of the following means: (A) a
cash payment to the Company, (B) delivery to the Company of previously owned
whole shares of common stock (which the holder has held for at least six months
prior to the delivery of such shares or which the holder purchased on the open
market and for which the holder has good title, free and clear of all liens and
encumbrances) having an aggregate fair market value determined as of the Tax
Date, equal to the amount necessary to satisfy any such obligation, (C)
authorizing the Company to withhold whole shares of common stock which would
otherwise be delivered having an aggregate fair market value determined as of
the Tax Date or withhold an amount of cash which would otherwise be payable to a
holder, equal to the amount necessary to satisfy any such liability, (D) in the
case of the exercise of an option, a cash payment by a broker-dealer acceptable
to the Company to whom the optionee has submitted an irrevocable notice of
exercise or (E) any combination of (A), (B) and (C); provided, however, that the
Committee shall have sole discretion to disapprove of an election pursuant to
any of clauses (B)-(E). An agreement relating to a grant or award hereunder may
not provide for shares of common stock to be withheld having an aggregate fair
market value in excess of the minimum amount of taxes required to be withheld.
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 the holder.
3. Acceleration Upon Change in Control. If while (i) any performance award or
fixed award granted under Article II is outstanding or (ii) any stock option
granted under Article III of the Plan or SAR granted under Article IV of the
Plan is outstanding --
(a) any "person," as such term is defined in Section 3(a)(9) of the
Exchange Act, as modified and used in Section 13(d) and 14(d) thereof (but
not including (i) the Company or any of its subsidiaries, (ii) a trustee
or other fiduciary holding securities under an employee benefit plan of
the Company or any of its subsidiaries, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock
of the Company) (hereinafter a "Person") is or becomes the beneficial
owner, as defined in Rule 13d-3 of the Exchange Act,
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directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its affiliates, excluding an acquisition
resulting from the exercise of a conversion or exchange privilege in
respect of outstanding convertible or exchangeable securities)
representing 50% or more of the combined voting power of the Company's
then outstanding securities; or
(b) during any period of two (2) consecutive years beginning January
1, 2000, individuals who at the beginning of such period constitute the
Board and any new director (other than a director designated by a Person
who has entered into any agreement with the Company to effect a
transaction described in Clause (a), (c) or (d) of this Section) whose
election by the Board or nomination for election by the Company's
stockholders 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 a majority thereof; or
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (i) 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 or acquiring entity), in combination with the ownership of any
trustee or other fiduciary holding securities under an employee benefit
plan of the Company, at least 50% of the combined voting power of the
voting securities of the Company or such surviving or acquiring entity
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person acquires more than 50%
of the combined voting power of the Company's then outstanding securities;
or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all the Company's assets,
(any of such events being hereinafter referred to as a "Change in Control"),
then from and after the date on which public announcement of the acquisition of
such percentage shall have been made, or the date on which the change in the
composition of the Board set forth above shall have occurred, or the date of any
such stockholder approval of a merger, consolidation, plan of complete
liquidation or an agreement for the sale of the Company's assets as described
above occurs (the applicable date being hereinafter referred to as the
"Acceleration Date"), (i) with respect to such performance awards, the highest
level of achievement specified in the award shall be deemed met and the award
shall be immediately and fully vested, (ii) with respect to such fixed awards,
the period of continued employment specified in the award upon which the award
is contingent shall be deemed completed and the award shall be immediately and
fully vested and (iii) with
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respect to such options and SARs, all such options and SARs, whether or not then
exercisable in whole or in part, shall be fully and immediately exercisable.
4. Restrictions on Shares. Each grant and award made hereunder shall be
subject to the requirement that if at any time the Company determines that the
listing, registration or qualification of the shares of common stock subject
thereto upon any securities exchange or under any law, or the consent or
approval of any governmental body, or the taking of any other action is
necessary or desirable as a condition of, or in connection with, the delivery of
shares thereunder, such shares shall not be delivered unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the Company. The
Company may require that certificates evidencing shares of common stock
delivered pursuant to any grant or award made hereunder bear a legend indicating
that the sale, transfer or other disposition thereof by the holder is prohibited
except in compliance with the Securities Act of 1933, as amended, and the rules
and regulations thereunder.
5. No Right of Participation or Employment. No person shall have any right to
participate in the Plan. Neither the Plan nor any grant or award made hereunder
shall confer upon any person any right to continued employment by the Company,
any subsidiary or any affiliate of the Company or affect in any manner the right
of the Company, any subsidiary or any affiliate of the Company to terminate the
employment of any person at any time without liability hereunder.
6. Rights as Stockholder. No person shall have any right as a stockholder of
the Company with respect to any shares of common stock or other equity security
of the Company which is subject to a grant or award hereunder unless and until
such person becomes a stockholder of record with respect to such shares of
common stock or equity security.
7. Governing Law. The Plan, each grant and award hereunder and the related
agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or 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.
8. Foreign Participants. Notwithstanding any provision of the Plan to the
contrary the Committee may, with a view to both promoting achievement of the
purposes of the plan and complying with provisions of laws in countries outside
the United States in which the Company or its subsidiaries operate or have
employees, determine which persons outside the United States shall be eligible
to participate in the Plan on such terms and conditions different from those
specified in the Plan as may in the judgement of the Committee be necessary or
advisable and, to that end, the Committee may establish sub-plans, modified
option exercise procedures and other terms and procedures.
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