EX-10.1



 Exhibit 10.1 

Performance-Based Vesting 

Form for 2016 LTIP Award 

HOUGHTON MIFFLIN HARCOURT COMPANY 

2015 OMNIBUS INCENTIVE PLAN 

PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD NOTICE 

Houghton Mifflin Harcourt Company (the “Company”) has previously established the Houghton Mifflin Harcourt Company 2015 Omnibus Incentive
Plan (the “Plan”) and, pursuant thereto, the Company desires to grant to the Person identified on Schedule I hereto (the “Grantee”) performance-based Restricted Stock Units (“RSUs”) with
respect to the Company’s common stock, $0.01 par value per share (“Common Stock”), as of [            ], 2016 (the “Grant Date”), subject to the terms
and conditions set forth in this notice (“Award Notice”). 
 1.        Award. Subject
to the terms and conditions set forth herein and in the Plan, the Company hereby grants to the Grantee that number of RSUs as set forth on Schedule I attached hereto (the “Award”). The Award shall be credited to a separate
book-entry account maintained for the Grantee on the books of the Company. The Award shall vest and be settled in accordance with Section 2 hereof. 
  

	2.	Terms and Conditions. 

 (a) The Award shall be one hundred percent (100%) unvested
as of the Grant Date. Except as otherwise provided in the Plan and this Award Notice, the Award shall vest and become non-forfeitable on the later of (i) the third (3rd) anniversary of
the Grant Date (such date, the “Scheduled Vesting Date”, and such three-year period from the Grant Date, the “Applicable Period”) and (ii) the date that the Committee certifies the performance results as
described on Schedule I attached hereto (the “Performance Vesting Date”), provided that the Grantee remains in continuous service with the Company or any of its Subsidiaries on the Scheduled Vesting Date or the Performance
Vesting Date, as applicable. The Grantee shall be entitled to receive that number of RSUs (if any) equal to (x) the Performance Leverage Factor (as defined on Schedule I multiplied by (y) the Target RSUs (as defined on
Schedule I). 
 (b) Except as otherwise provided in this Section 2, in the event that the Grantee’s continuous service is
terminated by the Company or by the Grantee for any reason (including for death or Disability), the Grantee shall forfeit the unvested Award as of the Grantee’s termination date. 

(c) In the event that the Grantee’s continuous service is terminated by the Company due to the Grantee’s death or Disability
(i) after the one-year anniversary of the Grant Date but before the date that is six (6) months prior to the expiration of the Performance Period (as defined on Schedule I), the unvested Award shall immediately vest assuming that
Target Achievement Level (as defined on Schedule I) has been achieved, prorated to reflect the number of months employed during the Applicable Period; or (ii) after the date that is six (6) months prior to the expiration of the
Performance Period, the unvested Award shall vest on the Performance Vesting Date based on the Performance Leverage Factor achieved for the full 







 
Performance Period, prorated to reflect the number of months employed during the Applicable Period. 

(d) Except as otherwise provided in Section 2(e), in the event that the Grantee’s continuous service is terminated by the Company
without Cause after the one-year anniversary of the Grant Date but prior to either the Scheduled Vesting Date or the Performance Vesting Date, the unvested Award shall vest on the Performance Vesting Date based on the Performance Leverage Factor
achieved for the full Performance Period, prorated to reflect the number of months the Grantee was employed during the Applicable Period. 

(e) Immediately prior to a Change in Control, the Target RSUs shall convert into service-based RSUs and the Award shall vest on the Scheduled
Vesting Date (without regard to achievement of any of the performance metrics set forth on Schedule I), provided that the Grantee remains in continuous service with the Company or any of its Subsidiaries on the Scheduled Vesting Date.
Notwithstanding any provision herein to the contrary, (i) if the Committee has made a provision for the substitution, assumption, exchange or other continuation of the Award in connection with a Change in Control, then in the event that the
Grantee’s continuous service is terminated (A) by the Company due to death or Disability following the occurrence of the Change in Control, then Section 2(c) shall not apply and the unvested Award shall immediately fully vest, but
prorated to reflect the number of months employed during the Applicable Period, or (B) by the Company other than for Cause, and other than due to death or Disability, within one (1) year following the occurrence of the Change in Control,
the unvested Award shall become immediately fully vested; or (ii) if the Committee has not made a provision for the substitution, assumption, exchange or other continuation of the Award in connection with a Change in Control, then the unvested
Award shall become fully vested immediately prior to the Change in Control. 
 (f) Within 30 days following the Scheduled Vesting Date or the
Performance Vesting Date, as applicable (or, if applicable, an earlier vesting date pursuant to Section 2(c)(i) or Section 2(e) above) (such relevant date, the “Vesting Date”), the Company shall settle the Award and shall
therefore, subject to any required tax withholding and the execution of any required documentation, (i) issue and deliver to the Grantee one share of Common Stock for each earned and vested RSU as determined hereunder (the “RSU
Shares”) (and, upon such settlement, the RSUs shall cease to be credited to the account) and (ii) enter the Grantee’s name as a shareholder of record with respect to the RSU Shares on the books of the Company. Alternatively, the
Committee may, in its sole discretion, elect to pay cash or part cash and part RSU Shares in lieu of settling the vested RSUs solely in RSU Shares. If a cash payment is made in lieu of delivering RSU Shares, the amount of such payment shall be equal
to the Fair Market Value of the RSU Shares (determined as of the Vesting Date) less an amount equal to any federal, state, local and non-U.S. income and employment taxes required to be withheld. 

(g) Simultaneously with the settlement and delivery of RSU Shares as contemplated by Section 2(f), the Grantee shall be entitled to
receive an additional amount (the “Dividend Equivalent Amount”) equal to the product of (i) the cash amount of each per share dividend that was paid by the Company on shares of its Common Stock (“Shares”) on
any date that the Grantee’s RSUs remained outstanding hereunder (or, in the case of a dividend payable in Shares or other property, the per Share equivalent cash value of such dividend as determined in good


  
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faith by the Committee) and (ii) the number of RSU Shares so delivered (or, if the RSUs are not settled exclusively in Shares, the number of RSU Shares that would have been delivered had
they been settled exclusively in Shares). The Dividend Equivalent Amount shall be payable in cash or, at the discretion of the Committee, in Shares with an equivalent Fair Market Value on the date of payment. The Company shall establish a
bookkeeping methodology to account for the Dividend Equivalent Amount. The Dividend Equivalent Amount shall not bear interest. 
 (h)
The Company shall have the right to require prior to the issuance or delivery of any Shares or the payment of any cash pursuant to the Award, payment by the Grantee of any federal, state, local or other taxes that may be required to be withheld or
paid in connection with the Award. At the sole discretion of the Committee, the Grantee may satisfy such withholding obligation (1) by allowing the Company to withhold whole Shares that would otherwise be delivered to the Grantee, having an
aggregate Fair Market Value, determined as of the date the obligation to withhold or pay, equal to the minimum withholding taxes required in connection with the Award or by allowing the Company to withhold an amount of cash that would otherwise be
payable to the Grantee, in the amount necessary to satisfy any such obligation; (2) by paying such obligation in cash; (3) by delivering Shares or (4) by any combination of the foregoing (1) through (3). 

3.        Non-Transferability. The Award is subject to the restrictions on transferability set forth in
Section 15(b) of the Plan. In addition, with respect to any RSU Shares delivered upon settlement of the RSUs, the Grantee agrees to comply with any written holding requirement policy adopted by the Company for employees. 

4.        Rights as Shareholder. The Grantee shall have no rights as shareholder with respect to the
Shares subject to the Award unless, until and to the extent that (i) the Company shall have issued and delivered to the Grantee the RSU Shares (via certificates or book entry notation) and (ii) the Grantee’s name shall have been
entered as a shareholder of record with respect to such RSU Shares on the books of the Company. 

5.        Adjustments. The Award is subject to adjustment pursuant to Sections 12 and 13 of the Plan.

 6.        Applicable Securities Laws. Shares issued pursuant to the Award shall not be sold or
transferred unless either they first shall have been registered under the Securities Act or, upon request by the Company, the Company first shall have been furnished with an opinion of legal counsel, reasonably satisfactory to the Company, to the
effect that such sale or transfer is exempt from the registration requirements of the Securities Act. 

7.        Notice. Every notice or other communication relating to this Award Notice shall be in writing,
and shall be mailed to or delivered to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided; provided, that, unless and
until some other address be so designated, all notices or communications by the Grantee to the Company shall be mailed or delivered to the Company at its principal executive office, and all notices or communications by the Company to the Grantee may
be given to the Grantee personally or may be mailed to the Grantee’s address as recorded in the records of the Company or any Subsidiary. 

  
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 8.        Governing Law. This Award Notice shall be
construed and interpreted in accordance with the laws of the State of Delaware without regard to its conflict of law principles. 

9.        Plan. The terms and provisions of the Plan are incorporated herein by reference, a copy of
which has been provided or made available to the Grantee. In the event of a conflict or inconsistency between the terms and provisions of the Plan and the provisions of this Award Notice, the Plan shall govern and control. All capitalized terms not
defined herein shall have the meaning ascribed to them as set forth in the Plan. 

10.        Interpretation. Any dispute regarding the interpretation of this Award Notice shall be
submitted by the Grantee or the Company to the Committee for review. The resolution of such a dispute by the Committee shall be binding on the Company and the Grantee. 

11.        No Right to Continued Service. Nothing in this Award Notice shall be deemed by implication or
otherwise to impose any limitation on any right of the Company or any Subsidiary to terminate the Grantee’s service. 

12.        Severability. Every provision of this Award Notice is intended to be severable and any
illegal or invalid term shall not affect the validity or legality of the remaining terms. 

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

14.        Section 409A. It is intended that the Award be exempt from or comply with
Section 409A of the Code and this Award Notice shall be interpreted consistent therewith. 

15.        Clawback. To the extent required by applicable law (including, without limitation,
Section 304 of the Sarbanes-Oxley Act and Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act) and/or the rules and regulations of NASDAQ or any other securities exchange or inter-dealer quotation service on which
the Shares are listed or quoted, or if so required pursuant to a written policy adopted by the Company, this Award shall be subject (including on a retroactive basis) to clawback, forfeiture or similar requirements. 

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

17.        Entire Agreement. This Award Notice and the Plan contain the entire agreement and
understanding of the parties hereto with respect to the subject matter contained herein and supersede all prior communications, representations and negotiations in respect thereof. 

18.        Counterparts. This Award Notice may be signed in counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 
 [signature page follows] 

  
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 IN WITNESS WHEREOF, the Company has caused this Award Notice to be executed by its duly
authorized representative and the Grantee has executed this Award Notice, effective as of the Grant Date. 
  

			
	HOUGHTON MIFFLIN HARCOURT COMPANY
		
	By:	 	 
		 	 Name: Linda K. Zecher
 Title: President and
Chief Executive Officer



  

	
	GRANTEE
	
	   

	Name:









 SCHEDULE I 

Performance Leverage Factor 
 Except as
may otherwise be provided herein, the RSUs shall vest as to the performance conditions based on the achievement of specified levels of the Performance Goals for the Performance Period, as set forth herein. 

Target RSUs = [            ] shares of Common Stock. 

 

	(i)	Billings Metric 

 Billings Target RSUs =
[            ] shares of Common Stock 
 The Billings Payout Percentage will be
based on the achievement of cumulative Billings (as defined below) for the Company’s 2016, 2017 and 2018 fiscal years (such three-fiscal-year period, the “Performance Period”), as follows: 

 

							
	 Achievement Level
	  	Billings Goal	  	Billings
Achievement
Percentage	  	Billings
Payout
Percentage
	 Maximum
	  	$[_____]	  	[        ]	  	[        ]
	 Target
	  	$[_____]	  	[        ]	  	[        ]
	 Threshold
	  	$[_____]	  	[        ]	  	[        ]

 If the Billings Achievement Percentage for the Performance Period is greater than Threshold Achievement Level
and less than Target Achievement Level, or greater than Target Achievement Level and less than Maximum Achievement Level, then the Billings Achievement Percentage (and, in turn, the Billings Payout Percentage) shall be determined based on linear
interpolation between the applicable Achievement Levels. If Billings Achievement Percentage for the Performance Period is equal to or greater than the Maximum Achievement Level, then the Billings Payout Percentage shall be capped at 150%. 

For the avoidance of doubt, if the Billings Achievement Percentage achieved for the Performance Period is less than Threshold Achievement
Level, then the Billings Achievement Percentage shall be zero. 
 “Billings” is measured by Net Sales in accordance with
accounting principles generally accepted in the United States adjusted for the change in deferred revenue on the balance sheet during the period and for the impact of material acquisitions and divestitures. 

 

	(ii)	Total Shareholder Return Metric 

 TSR Target RSUs =
[            ] shares of Common Stock 
 The TSR Payout Percentage will be based
on the Total Shareholder Return (“TSR”) (as defined below) for the Company as compared and ranked against the TSR performance of each 







 
of the companies in the Peer Group (as defined below) for the Performance Period (the “TSR Percentile Ranking”), as follows: 

 

					
	 Achievement Level
	  	TSR Percentile
Ranking	  	TSR Payout
Percentage
	 Maximum
	  	[        ]	  	[        ]
	 Stretch
	  	[        ]	  	[        ]
	 Target
	  	[        ]	  	[        ]
	 Threshold
	  	[        ]	  	[        ]

 If the TSR Percentile Ranking achieved for the Performance Period is greater than Threshold Achievement Level
and less than Target Achievement Level, or greater than Target Achievement Level and less than Stretch Achievement Level, or greater than Stretch Achievement Level and less than Maximum Achievement Level, then the TSR Payout Percentage shall be
determined based on linear interpolation between the applicable Achievement Levels. If the TSR Percentile Ranking for the Performance Period is equal to or greater than the Maximum Achievement Level, then the TSR Payout Percentage shall be capped at
200%. 
 Notwithstanding the foregoing, if the Company’s TSR for the Performance Period is negative, then the TSR Payout Percentage
shall be capped at 100%. For the avoidance of doubt, if the TSR Percentile Ranking achieved for the Performance Period is less than Threshold Achievement Level, then the TSR Payout Percentage shall be zero. 

“Company Average Share Price” shall mean the average closing price of the Common Stock (as reported on the principal stock
exchange or automated quotation system on which the Common Stock is traded or listed) for the twenty (20) consecutive market trading days ending on and including the date of determination (adjusted, as applicable, for stock splits,
reorganizations, recapitalizations, or similar corporate transactions during such period). 
 “Company Share Price
Appreciation” shall mean the result (which may be negative) obtained by subtracting the Company Average Share Price as of the last day of the Performance Period from the Company Average Share Price on the day prior to the first day of the
Performance Period. 
 “Peer Group” shall mean the companies included in the Russell 2000 Small Cap Market Index on the
first day of the Performance Period; provided however, that, any company included in the Russell 2000 Small Cap Market Index for less than the entire Performance Period either due to an acquisition, a going private transaction, or a merger where the
surviving entity does not remain in the Peer Group, shall be excluded from and not considered part of the Peer Group. 
 “Peer Group
Company Average Share Price” shall mean, with respect to each company in the Peer Group, the average closing price of the common stock of the applicable Peer Group company (as reported on the principal stock exchange or automated quotation
system on which such common stock is traded or listed) for the twenty (20) consecutive market trading days 







 
ending on and including the date of determination (adjusted, as applicable, for stock splits, reorganizations, recapitalizations, or similar corporate transactions during such period). 

“Peer Group Company Share Price Appreciation” shall mean the result (which may be negative) obtained by subtracting the Peer
Group Company Average Share Price as of the last day of the Performance Period from the Peer Group Company Average Share Price on the day prior to the first day of the Performance Period. 

“Total Shareholder Return” shall mean: 

(1) as applied to the Company, the quotient (expressed as a percentage return, which may be negative) obtained by dividing (A) by (B),
where: 
 (A) is the sum of: 

(i) the Company Share Price Appreciation, plus 

(ii) dividends and distributions made or declared during the Performance Period (it shall be assumed that such dividends or distributions are
immediately reinvested in Common Stock as of the dividend payment date by dividing such dividends or distributions (or the fair market value of any non-cash dividends or distributions as determined by the Committee) by the closing share price for
the Common Stock (as reported on the principal stock exchange or automated quotation system on which the Common Stock is traded or listed) as of the dividend payment date, and then converted back to a cash amount by dividing by the closing share
price of the Common Stock (as reported on the principal stock exchange or automated quotation system on which the Common Stock is traded or listed) as of the last day of the Performance Period); and 

(B) is the Company Average Share Price as of day immediately prior to the first day of the Performance Period; and 

(2) as applied to each company in the Peer Group, the quotient (expressed as a percentage return, which may be negative) obtained by dividing
(A) by (B), where: 
 (A) is the sum of: 

(i) the applicable Peer Group Company Share Price Appreciation, plus 

(ii) dividends and distributions made or declared during the Performance Period (it shall be assumed that such dividends or distributions are
immediately reinvested in the common stock of the relevant Peer Group company as of the dividend payment date by dividing such dividends or distributions (or the fair market value of any non-cash dividends or distributions as determined by the
Committee) by the closing share price for such stock (as reported on the principal stock exchange or automated quotation system on which such stock is traded or listed) as of the dividend payment date, and then converted back to a cash amount by
dividing by the closing share price of the relevant stock (as reported on the principal stock exchange or automated quotation system on which such stock is traded or listed) as of the last day of the Performance Period); and 







 (B) is the applicable Peer Group Company Average Share Price as of day immediately prior to the
first day of the Performance Period; and 
 Performance Leverage Factor Calculation 

The Performance Leverage Factor (expressed as a percentage) shall be the quotient obtained by dividing (A) by (B), where: 

(A) is the sum of: 
 (i)
Billings Payout Percentage * Billings Target RSUs, plus 
 (ii) TSR Payout Percentage * TSR Target RSUs, and 

(B) is the number of Target RSUs.