Exhibit 10.31

LSC Communications, Inc.

 

Retention Bonus Letter

 

 

[●], 2019

 

[Name]

 

 

Dear [Name]:

As you know, on July 23, 2019, LSC Communications, Inc. (the “Company”) and
Quad/Graphics Inc. (“Quad”) announced the mutual termination of the merger
agreement that would have resulted in the combination of the Company with Quad. 
The Company is committed to continuing to innovate and drive shareholder value,
and we appreciate your hard work throughout the past year as we worked toward
the Quad merger.  You continue to be a highly valued employee of the Company and
I am pleased to inform you that you have been selected to be eligible to receive
a retention bonus (the “Retention Bonus”) in accordance with the terms of this
letter.  We are looking forward to your continued contributions and high level
of commitment to the Company.

1.

Retention Bonus

The aggregate amount of your potential Retention Bonus is $[●].  Subject to your
continued employment with the Company through each applicable vesting date and
the other terms and conditions set forth in this letter, your Retention Bonus
will be paid in three installments as follows:

(i)One-third of the Retention Bonus will vest on August 5, 2020.

(ii)Subject to the achievement of the performance metric applicable to the
Company’s 2021 fiscal year set forth on Annex A, one-third of the Retention
Bonus will vest on the date the Human Resources Committee of the Company’s Board
of Directors (the “HR Committee”) certifies the achievement of such performance
metric.  The HR Committee will certify the achievement of such performance
metric as soon as administratively practicable after the end of the 2021 fiscal
year, but no later than March 15, 2022.

(iii)Subject to the achievement of the performance metric applicable to the
Company’s 2022 fiscal year set forth on Annex A, one-third of the Retention
Bonus will vest on the date the HR Committee certifies the achievement of such
performance metric.  The HR Committee will certify the achievement of such
performance metric as soon as administratively practicable after the end of the
2022 fiscal year, but no later than March 15, 2023.

 

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Each vested portion of the Retention Bonus will be payable in cash, less
applicable withholdings, within 30 days after the applicable vesting date.  If
your employment is terminated for any reason or no reason prior to a vesting
date, other than due to your death, the unvested portion of the Retention Bonus
will be forfeited in its entirety.  If your employment with the Company
terminates due to your death, your estate will receive a pro-rated portion of
your Retention Bonus, which will be equal to the unvested portion of the
Retention Bonus multiplied by the quotient obtained by dividing the number of
days elapsed between August 5, 2019 and the date of your death over
1,244.  Payment of such pro-rated portion will be made as soon as
administratively practicable, but no later than 30 days, following the date of
your death.

2.

Restrictive Covenants

You acknowledge and reaffirm your obligations under the restrictive covenants
set forth in [Annex A of your Participation Agreement under the Company’s Key
Employee Severance Plan (the “KESP”)][section XX of your employment agreement
with the Company].  As acknowledged and agreed in the
[Participation][Employment] Agreement, those obligations are necessary to
protect and preserve the value and goodwill of the Company.

3.

Section 409A Compliance

This letter is intended to comply with, or be exempt from, the requirements of
Section 409A of the Code (together with the applicable regulations thereunder,
“Section 409A”). To the extent that any provision in this letter is ambiguous as
to its compliance with Section 409A or to the extent any provision in this
letter must be modified to comply with Section 409A (including, without
limitation, Treasury Regulation 1.409A-3(c)), such provision will be read, or
will be modified (with the mutual consent of the parties, which consent will not
be unreasonably withheld), as the case may be, in such a manner so that all
payments due under this letter will comply with Section 409A. For purposes of
Section 409A, each payment made under this letter will be treated as a separate
payment. In no event may you, directly or indirectly, designate the calendar
year of payment.

4.

General Provisions

a.Not a Contract of Employment; No Impact on Other Benefits; No Assignment.  You
and the Company acknowledge that this letter does not constitute a contract of
employment and your employment with any of the Company’s entities continues to
be for an indefinite period and may be terminated by you or us at any time.  The
Retention Bonus pursuant to Section 1 of this letter will not count toward or be
considered in determining, if applicable at any time, severance or employment
payments or benefits due under any applicable law, any plan, program, policy or
arrangement sponsored or maintained by the Company, nor are subject to any
employer matching contribution under any benefit or deferred compensation
plan.  This letter is personal to you and you will not have any right to
transfer, assign, pledge, alienate or create a lien

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upon this letter or any rights hereunder.  The Retention Bonus is unfunded and
unsecured and payable out of the general funds of the Company, or any successor
to the Company.

b.Amendments and Waivers.  Any provision of this letter may be amended or waived
but only if the amendment or waiver is in writing and signed, in the case of an
amendment, by you and the Company or, in the case of a waiver, by the party that
would have benefited from the provision waived.

c.Counterparts.  This letter may be executed as counterparts, each of which will
constitute an original and all of which, when taken together, will constitute
one agreement.  Photographic, faxed or PDF copies of such signed counterparts
may be used in lieu of the originals for any purpose.

d.Successors; Binding Agreement.  The rights and obligations of the Company
under this letter shall be binding on any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.

e.Notices.  All notices, requests, demands and other communications under this
letter must be in writing and addressed to (i) the Company at its corporate
headquarters and to the attention of its General Counsel and (ii) to you at the
address or email address on file with the Company from time to time.

f.Taxes.  Any amounts payable or otherwise provided under this letter are
subject to withholding for applicable federal, state and local taxes or
otherwise as required by law.

g.Governing Law.  The laws of the State of Illinois, without giving effect to
its conflict of laws principles, govern all matters arising out of or relating
to this letter, including its interpretation, construction, performance and
enforcement.

h.Entire Agreement; Required Recoupment.  This letter, together with your
[Participation Agreement under the KESP][employment agreement with the Company]
set forth the entire agreement between the parties with respect to the subject
matter hereof, and fully supersede any and all prior agreements, understandings,
or representations between the parties pertaining to the subject matter of this
letter and your [Participation Agreement] [employment agreement].  For the
avoidance of doubt, the Retention Bonus referred to in this letter shall be
subject to recoupment to the extent required under applicable law or regulation
as in effect from time to time.

i.Limitations.  The provisions of this letter are subject to the terms and
conditions of all applicable law.  

*                                  *                                  *

[Remainder of Page Intentionally Blank]

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We thank you for the service you have rendered in the past and look forward to
your continued contribution to Company’s success.  Please acknowledge your
agreement and acceptance of the terms of this letter by signing below and
returning a copy of this letter to Tom Konieczka at
thomas.f.konieczka@lsccom.com as soon as possible but no later than [●], 2019.

 

Very truly yours,

 

LSC Communications, Inc.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

Agreed and accepted:

 

 

 

_______________________

[Name]

Date:

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