Exhibit 10.3

 

DIPLOMAT PHARMACY, INC.

Form of Restricted Stock Unit Award Agreement (Performance-Based)

Make-Whole Inducement Equity Award

 

Grantee:  [               ]

Grant Date:  [                ]

Number of Restricted Stock Units:  [                ]

 

1.                                      Grant of RSUs.   Pursuant to and subject
to the terms and conditions set forth herein, effective as of the Grant Date set
forth above, Diplomat Pharmacy, Inc. (the “Company”) grants to the Grantee
identified above an award of [                ]Restricted Stock Units (the
“RSUs”), subject to increase or decrease as provided herein, on the terms and
subject to the conditions set forth in this Restricted Stock Unit Award
Agreement (this “Agreement”). Although the RSUs are being granted as an
inducement grant and not under any equity incentive compensation program of the
Company, this Agreement shall be construed as if such RSUs had been granted
under the Diplomat Pharmacy, Inc. 2014 Omnibus Incentive Plan (the “Plan”) in
accordance and consistent with, and subject to, the provisions of the Plan, the
terms of which are incorporated herein by reference. Except as expressly set
forth herein, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Agreement, the terms and conditions of
the Plan shall prevail. Each RSU that becomes earned and vested in accordance
with the terms of this Agreement represents the right to receive one share of
common stock, no par value, of Diplomat Pharmacy, Inc. (“Common Stock”).
Capitalized terms not defined in this Agreement have the meanings ascribed to
such terms in the Plan.

 

2.                                      Earning of RSUs.  Grantee shall have no
right or entitlement in respect of the RSUs unless and to the extent the RSUs
become earned and vested in accordance with this Agreement. The RSUs shall be
earned as follows:

 

(a)                                 [Revenues. [                ] percent
([                ]%) of the RSUs (“Revenue-based RSUs”) shall be earned as
follows:

 

(i)                                     Grantee will earn [                ]% of
the Revenue-based RSUs if the Company’s revenue for fiscal year ended
December 31, [                ] (the “Performance Year”) is at least
$[                ].

 

(ii)                                  Grantee will earn [                ]% of
the Revenue-based RSUs if the Company’s revenue for the Performance Year is at
least $[                ].

 

(iii)                               Grantee will earn [                ]% of the
Revenue-based RSUs if the Company’s revenue for the Performance Year is at least
$[                ].

 

(iv)                              Grantee will earn [                ]% of the
Revenue-based RSUs if the Company’s revenue for the Performance Year is at least
$[                ].

 

(v)                                 Grantee will forfeit [                ]% of
the Revenue-based RSUs if the Company’s revenue for the Performance Year is less
than $[                ].

 

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(vi)                              Grantee will earn a number of Revenue-based
RSUs corresponding to the linear increase in the Company’s revenue for the
Performance Year above each of the revenue thresholds set forth in subsections
(a)(i)-(a)(iii) above.]

 

(b)                                 [Adjusted EBITDA.  [                ]
percent ([                ]%) of the RSUs (“Adjusted EBITDA-based RSUs”) shall
be earned as follows:

 

(i)                                     Grantee will earn [                ]% of
the Adjusted EBITDA-based RSUs if the Company’s Adjusted EBITDA (to be
calculated in the same manner as under the Diplomat Pharmacy, Inc. Annual
Performance Bonus Plan) for the Performance Year is at least
$[                ].

 

(ii)                                  Grantee will earn [                ]% of
the Adjusted EBITDA-based RSUs if the Company’s Adjusted EBITDA for the
Performance Year is at least $[                ].

 

(iii)                               Grantee will earn [                ]% of the
Adjusted EBITDA-based RSUs if the Company’s Adjusted EBITDA for the Performance
Year is at least $[                ].

 

(iv)                              Grantee will earn [                ]% of the
Adjusted EBITDA-based RSUs if the Company’s Adjusted EBITDA for the Performance
Year is at least $[                ].

 

(v)                                 Grantee will forfeit [                ]% of
the Adjusted EBITDA-based RSUs if the Company’s Adjusted EBITDA for the
Performance Year is less than $[                ].

 

(vi)                              Grantee will earn a number of Adjusted
EBITDA-based RSUs corresponding to the linear increase in the Company’s Adjusted
EBITDA for the Performance Year above each of the Adjusted EBITDA thresholds set
forth in subsections (b)(i)-(b)(iii) above.]

 

(c)                                  Rounding of Earned RSUs. The Board or
Compensation Committee shall round, up or down to the nearest whole number, the
number of earned RSUs and the revenue and Adjusted EBITDA for the Performance
Year, in its sole discretion provided that it calculates such measures
consistently for all RSUs with grant dates in the same year.

 

(d)                                 Timing of Determination of Earned RSUs. 
Whether and the extent to which RSUs become earned under Sections 2(a) and 2(b),
respectively, herein will be determined as of the earlier of the following dates
(the “Determination Date”) (i) the date the Company files with the Securities
and Exchange Commission its Annual Report on Form 10-K for the Performance Year,
which includes the audited financial statements for such year, or (ii) if the
filing specified in the foregoing clause (i) is not made by March 31 of the year
following the Performance Year, the date the Audit Committee of the Board of
Directors of the Company approves the financial statements of the Company for
the Performance Year.

 

(e)                                  Forfeiture of Unearned RSUs.  Upon the
Determination Date (defined below), any RSUs that have not been earned under
Sections 2(a) and 2(b), respectively, herein shall expire, terminate and be
forfeited and of no further force or effect. Each RSU that remains outstanding
and becomes earned under Sections 2(a) and 2(b), respectively, herein shall be
eligible

 

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to become vested in accordance with and subject to the terms and conditions set
forth in Sections 3 and 4 herein.

 

3.                                      Normal Vesting.   Grantee shall have no
right or entitlement in respect of the RSUs unless and to the extent the RSUs
have both become earned in accordance with Sections 2(a) and 2(b), respectively,
herein and become vested in accordance with this Section 3 or Section 4 herein.
For this purpose and except as provided in Section 4  herein, of the RSUs, if
any, that have become earned under Sections 2(a) and 2(b), respectively herein,
one-third of such earned RSUs shall become vested on the Determination Date and
each of the first and second anniversaries of the Determination Date, provided
that, (i) the earned RSUs shall cease vesting upon termination of Grantee’s
employment with the Company or a Subsidiary for any reason whatsoever and
(ii) no portion of the earned RSUs scheduled to vest on any such vesting date
shall vest unless Grantee has remained continuously employed by the Company or a
Subsidiary from the Grant Date to such vesting date.

 

4.                                      Accelerated Vesting upon Termination
after Change in Control.  Notwithstanding Section 3 herein, upon the termination
without Cause by the Company or a Subsidiary (or a successor, as applicable) of
Grantee’s service as an employee or if Grantee resigns for Good Reason (as
defined in Section 6 below) in connection with or within one year following the
consummation of a Change in Control, then the vesting of any earned but unvested
portion of the RSUs shall accelerate such that 100% of the earned RSUs shall
vest, effective immediately prior to such termination of Grantee’s employment. 
In the event of a Change in Control, if the Company’s successor (which, for the
purposes of this provision, is the acquirer of the Company’s assets in a Change
in Control resulting from the sale of all or substantially all of the Company’s
assets) does not agree to assume this Agreement, or to substitute an equivalent
award or right for this Award, and if Grantee has remained continuously employed
from the Grant Date to the date of the Change in Control, and does not
voluntarily resign without continuing with the Company’s successor, then the
vesting of any earned but unvested portion of the RSUs shall accelerate such
that the RSUs shall be vested to the same extent as if Grantee had been
terminated without Cause as described in this Section 4, effective immediately
prior to, and contingent upon, the consummation of such Change in Control.

 

5.                                      Termination of Employment.  Upon
termination of Grantee’s employment with the Company or a Subsidiary for any
reason (other than as set forth in Section 4 above), vesting of the RSUs shall
terminate and any portion of the RSUs that are unvested at the time of
termination of Grantee’s employment with the Company or a Subsidiary shall
expire, terminate and be forfeited and of no further force or effect.

 

6.                                      Certain Definitions.

 

As used herein, “Good Reason” shall mean Grantee’s resignation due to the
occurrence of any of the following conditions which occurs without Grantee’s
written consent, provided that the requirements regarding advance notice and an
opportunity to cure set forth below are satisfied:  (1) a reduction of Grantee’s
then current base salary by 10% or more unless such reduction is part of a
generalized salary reduction affecting similarly situated employees; (2) a
change in Grantee’s position with the Company that materially reduces

 

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Grantee’s duties, level of authority or responsibility; (3) a material breach of
any employment agreement between Grantee and the Company or a Subsidiary (if
any); or (4) the Company conditions Grantee’s continued service with the Company
on Grantee’s being transferred to a site of employment that would increase
Grantee’s one-way commute by more than 50 miles from Grantee’s then principal
residence.  In order for Grantee to resign for Good Reason, Grantee must provide
written notice to the Company of the existence of the Good Reason condition
within 30 days of the initial existence of such Good Reason condition.  Upon
receipt of such notice, the Company will have 30 days during which it may remedy
the Good Reason condition and not be required to provide for the vesting
acceleration described herein as a result of such proposed resignation.  If the
Good Reason condition is not remedied within such 30-day period, Grantee may
resign based on the Good Reason condition specified in the notice effective no
later than 30 days following the expiration of the 30-day cure period.

 

(b)                                 As used herein, “Change in Control” shall
mean a transaction or series of related transactions that meets the definition
of the term “Change in Control” in the Plan.

 

7.                                      Settlement of RSUs and Issuance of
Shares.  Subject to Section 12 herein regarding withholding tax, as soon as
practicable (but within 15 days) after an RSU becomes both earned and vested,
the Company will issue and transfer to the Grantee one share of Common Stock. 
No fractional shares will be issued.

 

8.                                      Dividend Equivalent Rights.  For each
cash dividend that is declared on the Common Stock after the date of this Award
and prior to the vesting date of an RSU and that is payable on or before the
vesting date of the RSU, then, on the payment date of such dividend, Grantee
shall be credited with an amount equal to the amount dividends that would have
been paid to Grantee if one share of Common Stock hadbeen issued on the Grant
Date for each RSU granted to Grantee under this Award that is outstanding on the
date of payment of the dividends.  Each such credited amount shall vest on the
same date that the respective RSUs become vested, and the vested credited amount
(less tax withholdings) shall be paid in cash to Grantee, without interest, on
the 30th day following the date the respective RSUs become vested.

 

9.                                      Non-Transferability of RSUs.  The RSUs
are personal to Grantee and are not transferable by Grantee.

 

10.                               Restrictive Covenants; Compensation Recovery. 
By signing this Agreement, Grantee acknowledges and agrees that the RSUs (and
any stock or stock-based award previously granted by the Company or a Subsidiary
to Grantee, including under the Plan, or otherwise) shall (i) be subject to
forfeiture as a result of Grantee’s violation of any agreement with the Company
or a Subsidiary regarding non-competition, non-solicitation, confidentiality,
non-disparagement, inventions and/or similar restrictive covenants (the
“Restrictive Covenants Agreement”), and (ii) be subject to forfeiture and/or
recovery under any compensation recovery policy that may be adopted from time to
time by the Company or any of its Subsidiaries. For avoidance of doubt,
compensation recovery rights to the RSUs or other shares of Company stock
(including shares of stock acquired under previously granted stock-based awards)
shall extend to the proceeds realized by Grantee due to sale or other transfer
of such stock. Grantee’s prior execution of the Restrictive

 

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Covenants Agreement was a material inducement for the Company’s grant of the
RSUs under this Agreement.

 

11.                               Rights of Grantee.  Nothing contained in this
Agreement shall (i) interfere with or limit in any way the right of the Company
or a Subsidiary to terminate Grantee’s employment at any time and for any or no
reason, (ii) confer upon Grantee any right to be selected as a Plan Participant 
or give Grantee any claim to be granted any award under any option or other
benefit plan or to be treated uniformly with other Participants and employees,
or (iii) require or permit any adjustment to the number of RSUs upon or as a
result of the occurrence of any subsequent event (except as provided herein or
as provided in Section 13 of the Plan).  Since no property is transferred to
Grantee until shares of Common Stock are issued upon vesting of earned RSUs,
Grantee acknowledges and agrees that Grantee cannot and will not attempt to make
an election under Section 83(b) of the Internal Revenue Code of 1986, as
amended, to include the fair market value of the RSUs in Grantee’s gross income
for the taxable year of the grant of the Award.

 

12.                               Withholding of Taxes.  The Company will
determine, in its discretion, the manner in which to satisfy the tax withholding
obligations in connection with the issuance of Common Stock or payment of
dividend equivalents upon vesting of RSUs, including, without limitation, any of
the following:  (a) withholding from issuance or payment to Grantee of
sufficient shares of Common Stock and/or cash having a fair market value
sufficient to satisfy the withholding tax obligation; (b) sale of such number of
shares of Common Stock having a fair market value sufficient to satisfy the
withholding tax obligation and application of the proceeds of the sale to
satisfaction of the withholding tax obligation; (c)  payment by Grantee to the
Company of the withholding amount by wire transfer, certified check, or other
means acceptable to the Company; or (d) by additional payroll withholding from
other compensation payable to Grantee.  To the extent that the value of any
whole shares of Common Stock withheld exceeds applicable tax withholding
obligations, the Company agrees to pay the excess in cash to Grantee through
payroll or by check as soon as practicable. To the extent the tax withholding
obligations are satisfied pursuant to subsection (b) in this Section 12, this
Section 12 is intended to constitute a written plan pursuant to
Rule 10b5-1(c) under the Securities Exchange Act of 1934.  To the extent
applicable, Grantee shall take actions necessary to ensure that any such sales
shall comply with Rule 144 under the Securities Act of 1933.

 

13.                               Resale Restrictions.  The Company currently
has an effective registration statement on file with the Securities and Exchange
Commission with respect to the RSUs. The Company currently intends to maintain
this registration, but has no obligation to do so. If the registration ceases to
be effective, Grantee will not be able to sell or transfer Common Stock issued
to Grantee upon vesting of earned RSUs unless an exemption from registration
under applicable securities laws is available. Grantee agrees that any resale by
Grantee of Common Stock acquired upon vesting of earned RSUs shall comply in all
respects with the requirements of all applicable securities laws, rules and
regulations (including, without limitation, the provisions of the Securities Act
of 1933, as amended, the Exchange Act, and the respective rules and regulations
promulgated thereunder) and any other law, rule or regulation applicable
thereto, as such laws, rules and regulations may be amended from time to time.
Notwithstanding any other provision of this Agreement, the Company shall not be
obligated to issue shares of Common Stock or permit their resale if such
issuance or resale would violate any such requirements.

 

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14.                               Consent to Transfer of Personal Data.  In
administering this Agreement, or to comply with applicable legal, regulatory,
tax or accounting requirements, it may be necessary for the Company to transfer
certain Grantee personal data to a Subsidiary, or to outside service providers,
or to governmental agencies. By signing this Agreement and accepting the award
of the RSUs, Grantee consents, to the fullest extent permitted by law, to the
use and transfer, electronically or otherwise, of Grantee’s personal data to
such entities for such purposes.

 

15.                               Consent to Electronic Delivery.  In lieu of
receiving documents in hard copy paper format, Grantee agrees, to the fullest
extent permitted by law, to accept electronic delivery of any documents that the
Company may be required to deliver (including, but not limited to, prospectuses,
prospectus supplements, grant or award notifications and agreements, account
statements, annual and quarterly reports, and all other agreements, documents,
forms and communications) in connection with the RSUs and any other prior or
future incentive award or program made or offered by the Company, a Subsidiary
and their predecessors or successors. Electronic delivery of a document to
Grantee may be via a Company or Subsidiary email system or by reference to a
location on a Company or Subsidiary intranet site to which Grantee has access.

 

16.                               No Ownership of Common Stock Until Vesting. 
Prior to the time an RSU becomes both earned and vested, Grantee shall not
possess any incidents of ownership of the share of Common Stock underlying or
relating to the RSU, including voting or dividend rights.

 

17.                               Notices.  Any and all notices, designations,
consents, offers, acceptances and any other communications provided for herein
shall be given in writing and shall be delivered either personally or by
registered or certified mail, postage prepaid, which shall be addressed, in the
case of the Company, to the General Counsel of the Company at the principal
office of the Company and, in the case of the Grantee, to the Grantee’s address
appearing on the books of the Company or to such other address as may be
designated in writing by the Grantee.

 

18.                               Successors.  The terms of this Agreement shall
be binding upon and inure to the benefit of the Company, its successors and
assigns, and of the Grantee and the beneficiaries, executors, administrators,
heirs and successors of the Grantee.

 

19.                               Invalid Provision.  The invalidity or
unenforceability of any particular provision hereof shall not affect the other
provisions hereof, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provision had been omitted.

 

20.                               Modifications.  Except as provided in this
Agreement, no change, modification or waiver of any provision of this Agreement
shall be valid unless the same is in writing and signed by the parties hereto.

 

21.                               Entire Agreement.  This Agreement contains the
entire agreement and understanding of the parties hereto with respect to the
subject matter contained herein and therein and supersede all prior
communications, representations and negotiations in respect thereto.

 

22.                               Governing Law.  This Agreement and the rights
of Grantee hereunder shall be governed, construed, and administered in
accordance with the laws of the State of Michigan (regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws of such
jurisdiction or any other jurisdiction).

 

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23.                               Headings.  The headings of the Sections hereof
are provided for convenience only and are not to serve as a basis for
interpretation or construction, and shall not constitute a part, of this
Agreement.

 

24.                               Counterparts.  This Agreement may be executed
in counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

25.                               Committee Determinations Final and Binding. 
The Committee shall have final authority to interpret and construe this
Agreement (including the Plan) and to make any and all determinations
thereunder, and its decision shall be binding and conclusive upon Grantee and
his/her legal representative in respect of any questions arising under this
Agreement (including the Plan).

 

26.                               Code Section 409A.  This Agreement (and the
benefits and payments provided for under this Agreement) are intended to be
exempt from or to comply with Section 409A of the Internal Revenue Code of 1986,
as amended, and the regulations and other guidance issued thereunder (“Code
Section 409A”), and this Agreement shall be interpreted and administered in a
manner consistent with that intention; provided, however, that under no
circumstances shall the Company or a Subsidiary be liable for any additional tax
or other sanction imposed upon the Grantee, or other damage suffered by the
Grantee, on account of this Agreement (or the benefits and payments provided for
under this Agreement) being subject to and not in compliance with Code
Section 409A. For purposes of this Agreement, if necessary to avoid the
imposition of additional taxes upon the Grantee under Code Section 409A, the
Grantee’s employment will not be considered to have terminated until and if the
Grantee has experienced, in respect of the Company or a Subsidiary (or successor
thereto), as applicable, a “separation from service” within the meaning of
Treasury Regulation section 1.409A-1(h). Where Common Stock is required by this
Agreement to be issued to the Grantee (and where dividend equivalent amounts are
required to be paid to the Grantee) within a 15 day period following an
applicable vesting date, the Company shall determine when during that 15 day
period the Common Stock will be issued and the dividend equivalent amount will
be paid to the Grantee.  If and to the extent necessary to avoid the imposition
of additional taxes upon the Grantee under Code Section 409A, if the Grantee is
entitled to receive Common Stock or dividend equivalent amounts upon or as a
result of the Grantee’s separation from service, and if the Grantee is a
“specified employee” (within the meaning of Treasury Regulation section
1.409A-1(i)) on the date of his or her separation from service, notwithstanding
any other provision of this Agreement to the contrary, such Common Stock shall
be issued and such dividend equivalent amounts shall be paid to the Grantee no
earlier than the earliest to occur of (i) the day next following the date that
is the six-month anniversary of the date of the Grantee’s separation from
service, or (ii) the date of the Grantee’s death.

 

[signature page follows.]

 

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Diplomat Pharmacy, Inc.

 

 

 

By

 

 

 

 

Name:

 

 

Its:

 

 

The undersigned hereby acknowledges having read this Agreement and agrees to be
bound by all provisions set forth herein.

 

Dated as of:

 

 

GRANTEE:

 

 

 

 

Name:

 

 

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