EXHIBIT 10(e)
R. R. DONNELLEY & SONS COMPANY
STOCK OPTION AGREEMENT
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(For Non-Employee Directors)
R. R. DONNELLEY & SONS COMPANY, a Delaware corporation (herein called the
"Company"), acting pursuant to the provisions of its 1995 Stock Incentive Plan,
which was approved by the stockholders on March 23, 1995 (as amended, herein
called the "Plan"), hereby grants to ___________________ (herein called
"Optionee"), as of ___________ (herein called the "option date"), an option to
purchase from the Company _____ shares of common stock of the Company, par value
$1.25 per share (herein called "common stock"), at a price of $_______ per share
(herein called the "option") to be exercisable during the term (i) commencing on
the date which is the first anniversary of the option date and (ii) ending on
the first business day preceding the tenth anniversary of the option date
(herein called the "option term"), but only upon the following terms and
conditions:
1. The option may be exercised by Optionee, in whole or in part, from
time to time, during the option term only in accordance with the following
conditions and limitations:
(a) Except as provided in Sections 5 and 7 hereof, Optionee must, at any time
the option becomes exercisable and at any time the option is exercised,
have been continuously a non-employee director of the Company since the
date hereof.
(b) Unless a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), is in effect as to the shares purchasable
under the option, no shares of common stock may be purchased under the
option unless, prior to the purchase thereof, the Company shall have
received an opinion of counsel to the effect that the sale of such shares
by the Company to Optionee will not constitute a violation of the
Securities Act. Optionee hereby agrees that as a condition of exercise,
Optionee will, if requested by the Company, submit a written statement, in
form satisfactory to counsel for the Company, to the effect that any shares
of common stock purchased upon exercise of the option will be purchased for
investment and not with a view to the distribution thereof within the
meaning of the Securities Act, and the Company shall have the right, in its
discretion, to cause the certificates (or other evidence of ownership)
representing shares of common stock purchased under
the option to be appropriately legended to refer to such undertaking or to
any legal restrictions imposed upon the transferability thereof by reason
of such undertaking.
(c) (1) Subject to Sections 5 and 7 hereof, at any time on and after the
earlier to occur of (i) the date which is the first anniversary of the
option date or (ii) the day immediately preceding the date of the first
annual meeting of stockholders of the
Company following the option date, Optionee may purchase all of the shares
of common stock subject to the option.
(2) Notwithstanding the foregoing subsection (1), if while any portion of
the option is outstanding and unexercisable, a Change in Control (as
defined in the Plan) occurs, then from and after the Acceleration Date (as
defined in the Plan), the option shall be exercisable with respect to all
of the shares of common stock subject to such portion of the option.
(d) No fractional shares may be purchased at any time.
2. Subject to the limitations herein set forth, the option may be
exercised by delivery of written notice to the Company specifying the number of
shares of common stock to be purchased and accompanied by payment in full of the
option price (or arrangement made for such payment to the Company's
satisfaction) for the number of shares so purchased.
The option price may be paid (i) in cash, (ii) by delivering
previously owned whole shares of common stock (which Optionee has held for at
least six months prior to the delivery of such shares or which Optionee
purchased on the open market and for Which Optionee has good title, free and
clear of all liens and encumbrances) having a fair market value equal to the
option price, or (iii) in a combination thereof. Payment of the option price,
or any part thereof, in previously owned shares of common stock shall not be
effective unless Optionee delivers one or more stock certificates (or otherwise
delivers shares of common stock to the satisfaction of the Company) representing
shares having a fair market value on the date of exercise equal to or in excess
of the option price, or applicable portion thereof, accompanied by such
endorsements, signature guarantees or other documents or assurances as may
reasonably be required to effect the transfer to the company of such number of
shares. If Optionee delivers a certificate or certificates (or otherwise
delivers shares of common stock to the satisfaction of the
Company) representing shares in excess of the number required to cover the
option price, a certificate (or other evidence of ownership) representing such
excess number of shares will be issued and redelivered to Optionee. For purposes
of this Agreement, the fair market value of the common stock on a specified date
shall be determined by reference to the average of the high and low transaction
prices in trading of the common stock on such date as reported in the New York
Stock Exchange-Composite Transactions, or, if no such trading in the common
stock occurred on such date, then on the next preceding date when such trading
occurred; provided, that if the Committee administering the Plan shall determine
that such New York Stock Exchange-Composite Transactions prices are not
representative of the fair market value, such Committee shall determine such
fair market value by such other appropriate means as it shall determine.
3. Upon exercise of the option in whole or in part pursuant to
Section 2 hereof, the Company shall deliver or cause to be delivered a
certificate (or other evidence of ownership) representing the number of shares
specified against payment therefor and shall pay all original issue or transfer
taxes and all other fees and expenses incident to such delivery.
4. Optionee shall be entitled to the privileges of ownership with
respect to shares subject to the option only with respect to shares purchased
upon exercise of all or part of the option and as to which Optionee becomes a
stockholder of record.
5. (a) If Optionee ceases to serve as a non-employee director of the
Company by reason of death, then from and after the date of death the option
shall be exercisable by the executor, administrator, personal representative or
Optionee's beneficiary designated pursuant to the Beneficiary Designation Form
attached hereto as Exhibit A (herein called a "Beneficiary") during the 90-day
period commencing on the date of Optionee's death, but only during the option
term, to the extent Optionee was entitled under Section 1(c) hereof to exercise
the option on the date of Optionee's death. The portion of the option which may
not become exercisable pursuant to the preceding sentence shall be cancelled as
of the date of Optionee's death.
(b) If Optionee ceases to serve as a non-employee director of the
Company by reason of retirement or total and permanent disability, then from and
after the effective date of such cessation of service the option shall be
exercisable by Optionee during the five-year period
commencing on the effective date of such cessation of service, but only during
the option term, to the extent Optionee was entitled under Section 1(c) hereof
to exercise the option on the effective date of such cessation of service. The
portion of the option which may not become exercisable pursuant to the preceding
sentence shall be cancelled as of the effective date of Optionee's cessation of
service.
(c) If Optionee ceases to serve as a non-employee director of the
Company for any reason other than death, retirement or total and permanent
disability, then from and after the effective date of such cessation of service
the option shall be exercisable by Optionee during the 90-day period commencing
on the effective date of such cessation of service, but only during the option
term, to the extent Optionee was entitled under Section 1(c) hereof to exercise
the option on the effective date of such cessation of service. The portion of
the option which may not become exercisable pursuant to the preceding sentence
shall be cancelled as of the effective date of Optionee's cessation of service.
6. The option may not be transferred by Optionee other than:
(a) by will, the laws of descent and distribution or pursuant to the
beneficiary designation procedures approved by the Company;
(b) in whole or in part to one or more transferees; provided that (i) any such
transfer must be without consideration, (ii) each transferee must be a member of
Optionee's "immediate family," a trust established for the exclusive benefit of
Optionee and/or one or more members of Optionee's immediate family or a
partnership whose sole equity owners are Optionee and/or members of Optionee's
immediate family, and (iii) such transfer is specifically approved by the Vice
President, Compensation and Benefits or the Committee administering the Plan
following the receipt of a completed Assignment of Option to Purchase Common
Stock attached hereto as Exhibit B; or
(c) as otherwise set forth in an amendment to this Agreement.
Optionee hereby acknowledges that Optionee will recognize income upon exercise
of a transferred option and Optionee hereby agrees to pay to the Company such
amount as the Company is advised it is required under applicable federal, state,
local or other tax laws to withhold and pay over to governmental taxing
authorities by reason of the purchase of shares of common stock pursuant to the
option.
In the event the option is transferred as contemplated in this Section 6, such
transfer shall become effective when approved by the Vice President,
Compensation and Benefits or a member of the Committee administering the Plan
(as evidenced by counterexecution of the Assignment of Option to Purchase Common
Stock on behalf of the Company), and such option may not be subsequently
transferred by the
transferee other than by will or the laws of descent and distribution. Any
transferred option shall continue to be governed by and subject to the terms and
conditions of the Plan and the transferee shall be entitled to the same rights
as Optionee as if no transfer had taken place. During Optionee's lifetime the
option is exercisable only by Optionee or Optionee's guardian, personal
representative or similar person or by a transferee permitted under paragraph
(b) or (c) above. Except as permitted by the foregoing, the option may not 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 to so sell, transfer,
assign, pledge, hypothecate, encumber or otherwise dispose of the option, the
option and all rights hereunder shall immediately become null and void. As used
in this Section, "immediate family" shall mean, with respect to any person, any
spouse, child, stepchild or grandchild, and shall include relationships arising
from legal adoption.
7. In the event of the death of Optionee (a) during the five-year period
commencing on the effective date of Optionee's cessation of service as a non-
employee director by reason of retirement or total and permanent disability or
(b) during the 90-day period commencing on the effective date of Optionee's
cessation of service as a non-employee director for any other reason, the option
may be exercised by the executor, administrator, personal representative or
Beneficiary of Optionee during the 90-day period commencing on the date of
Optionee's death, but only during the option term, to the extent Optionee was
entitled to exercise the option on the date of Optionee's death.
8. 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 subject to the option and the purchase price per
security shall be appropriately adjusted by the Committee without an increase in
the aggregate purchase price, other than an increase resulting from rounding. If
any adjustment would result in a fractional security being subject to the
Option, the Company shall pay the Optionee, in connection with the first
exercise of the Option, 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 of the common stock on the exercise date over (B) the exercise
price of the option. The decision of the Committee regarding the amount and
timing of any adjustment pursuant to this Section 8 shall be final, binding and
conclusive.
9. The option is subject to the condition that if the listing,
registration or qualification of the shares subject to the option on any
securities exchange or under any state or federal law, or if the assent or
approval of any regulatory body shall be necessary as a condition of, or in
connection with, the granting of the option or the delivery or purchase of
shares thereunder, the option may not be exercised in whole or in part unless
and until such listing, registration, qualification, consent or approval shall
have been effected or obtained. The Company agrees to use its best efforts to
obtain any such requisite listing, registration, qualification, consent or
approval.
10. The Committee administering the Plan, as from time to time
constituted, shall have the right to determine any questions which arise in
connection with this Agreement or the option. This Agreement and the option are
subject to the provisions of the Plan and shall be interpreted in accordance
therewith.
11. The option shall not be treated as an incentive stock option within
the meaning of Section 422 of the Code.
12. This Agreement shall be binding upon and shall inure to the benefit
of any successor or successors of the Company and any person or persons who
shall, upon the death of the Optionee, acquire any rights in the option.
13. Any notice, including a Beneficiary Designation Form and a notice of
exercise of the option, required to be given hereunder to the Company shall be
addressed to the Company at its office at 77 West Wacker Drive, Chicago,
Illinois 60601-1696, attention of the Vice President, Compensation and Benefits,
and any notice required to be given hereunder to Optionee shall be addressed to
Optionee at Optionee's residence address as shown in the Company's records,
subject to the right of either party hereafter to designate in writing to the
other some other address. Any such notice shall be deemed to have been duly
given on the day that such notice is received by the Vice President,
Compensation and Benefits. Any such notice shall be (i) delivered to the Vice
President, Compensation and Benefits by personal delivery, facsimile, United
States mail or by express courier service and (ii) deemed to be received upon
personal delivery, upon confirmation of receipt of facsimile transmission or
upon receipt by the Vice President, Compensation and Benefits if by United
States mail or express courier service; provided, however, that if any notice is
not received during
regular business hours, it shall be deemed to be received on the next succeeding
business day of the Company.
14. The option, this Agreement, and all determinations made and actions
taken pursuant hereto and thereto, to the extent not 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.
IN WITNESS WHEREOF, R. R. DONNELLEY & SONS COMPANY has caused this
instrument to be executed as of the day and year first above written.
R. R. DONNELLEY & SONS COMPANY
By
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Dewey Ingham
V.P., Compensation & Benefits
The terms and conditions of the
foregoing Stock Option Agreement
are hereby accepted by the
undersigned as of March 26, 1998.
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Exhibit A
R.R. DONNELLEY & SONS COMPANY
1995 STOCK INCENTIVE PLAN
BENEFICIARY DESIGNATION FORM
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Stock Option Agreement (the "Option") dated:
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(fill in option date)
You may designate a primary beneficiary and a secondary beneficiary.
You may name more than one person as a primary or secondary beneficiary. For
example, you may wish to name your spouse as primary beneficiary and your
children as secondary beneficiaries. Your secondary beneficiary(ies) will
receive nothing if any of your primary beneficiaries survive you. All primary
beneficiaries will share equally unless you indicate otherwise. The same rule
applies for secondary beneficiaries.
Designate Your Beneficiary(ies):
Primary Beneficiary(ies) (give name, address and relationship to you):
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Secondary Beneficiary(ies) (give name, address and
relationship to you):
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I certify that my designation of beneficiary set forth above is my
free act and deed.
If you are married and are not naming your spouse as the sole primary
beneficiary, please print the name, address and social security number of your
spouse in the following space:
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Name (Please Print) Signature
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Date
This Beneficiary Designation Form shall be effective on the day it is
received by the Vice President, Compensation and Benefits of the Company at 77
West Wacker Drive, Chicago, Illinois 60601-1696. This Form shall be (i)
delivered to the Vice President, Compensation and Benefits by personal delivery,
facsimile, United States mail or by express courier service and (ii) deemed to
be received upon personal delivery, upon confirmation of receipt of facsimile
transmission or upon receipt by the Vice President, Compensation and Benefits if
by United States mail or express courier service;
provided, however, that if this Form is not received during regular business
hours, it shall be deemed to be received on the next succeeding business day of
the Company.
NOTICE: The signature on this Beneficiary Designation Form shall correspond to
the name in which the Option is registered in the books and records of the
Company; provided, however, that if the person executing this Form is not such
registered owner, proof of such person's right to execute this Form is being
delivered with this Form. The Company shall have sole and final authority to
determine whether such proof is satisfactory.
Exhibit B
R.R. DONNELLEY & SONS COMPANY
ASSIGNMENT OF OPTION TO
PURCHASE COMMON STOCK
I, _____________________ (the "Transferor"), hereby transfer unto
_______________ (the "Transferee"), as a gift and without receipt of any
consideration, those option(s) (or portions thereof specified below) to purchase
shares of common stock of the Company ("Common Stock") standing in my name on
the books of the Company, and set forth as follows (the "Options"):
Date of Grant Shares being Transferred Exercise Price Expiration Date
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1.
2.
3.
I hereby authorize the Secretary to transfer the Options (or portions thereof)
as set forth above on the books and records of the Company. I understand that
the proposed transfer(s) set forth above are subject to the approval of the
Company and, if approved, the proposed transfer(s) shall become effective on the
date this Assignment is signed by the Company.
Date signed: Signature
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Print Name:
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NOTICE: The signature on this Assignment shall correspond to the name in which
the Option(s) is registered on the books and records of the Company; provided,
however, that if the person transferring the Option(s) is not such registered
owner, proof of such person's right to transfer the Option(s) is being delivered
with this Assignment. The Company shall have sole and final authority to
determine whether such proof is satisfactory.
To: R.R. Donnelley & Sons Company
The undersigned Transferee acknowledges and agrees that he or she has received
and reviewed a copy of the R.R. Donnelley & Sons Company 1995 Stock Incentive
Plan (the "Plan"), the agreement relating to each Option (including any
amendment to each such Option), the Prospectus of the Company relating to the
shares of Common Stock subject to each such Option, the Company's most recent
Annual Report to Stockholders and the Company's Proxy Statement relating to its
most recent Annual Meeting of Stockholders. The undersigned Transferee further
acknowledges and agrees that, except as otherwise specifically provided in an
amendment to an Option, each Option (i) shall be governed by and remain subject
to the terms and conditions of the Plan and related Option Agreement, as so
amended, including provisions relating to the expiration date, exercisibility,
exercise price and forfeiture of an Option, (ii) except as set forth in any such
amendment, the Transferee shall be entitled to the same rights as the person
transferring the Option as if no transfer had taken place and (iii) may be
amended by the Transferor (and not the Transferee) subsequent to the date this
Assignment is signed by the Transferee.
TRANSFEREE
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Signature Date signed
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Street Address Zip Code
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Print Name and, if applicable, representative capacity (e.g., as State trustee,
as general partner)
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Taxpayer I.D. Number
ACKNOWLEDGED AND AGREED:
R.R. DONNELLEY & SONS COMPANY
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Print Name and Title Date signed