Document:

VRTV-20141231-Exhibit 10.24

EXHIBIT 10.24

VERITIV CORPORATION 
FORM OF PERFORMANCE SHARE AWARD AGREEMENT
(Relative TSR Performance Shares)
This certifies that Veritiv Corporation (the “Company”) grants to the Grantee named below, subject to the provisions of the Veritiv Corporation 2014 Omnibus Incentive Plan (the “Plan”) and this Performance Share Award Agreement (this “Award Agreement”), including the attached terms and conditions (which are incorporated herein and made a part of this Award Agreement), an Award of the target number of Performance Shares (the “Performance Shares”) set forth below on the Grant Date set forth below.  Capitalized terms used but not defined in this Award Agreement shall have the meanings assigned to such terms in the Plan.  This Award represents the contingent right to receive a number of Shares equal to all, a portion or a multiple (not to exceed 200%) of the target number of Performance Shares, subject to the achievement of the applicable Performance Goals based on Relative TSR (as defined below) and the other terms and conditions of this Award Agreement and the Plan.1 
		
	Name of Grantee:
	[•]

Target Number of
		
	Performance Shares:
	[•]

		
	Grant Date:
	[•]

		
	Performance Periods:
	January 1, [•] to December 31, [•],

January 1, [•] to December 31, [•], and

January 1, [•] to December 31, [•].

		
	Relative TSR:
	The percentile ranking of the Company’s total shareholder return relative to the total shareholder return of the applicable peer group established hereunder (the “Peer Group”) over the applicable Performance Period.  For purposes of this Award Agreement, “total shareholder return” or TSR means the percentage equal to (a) the appreciation in the stock price of a company from the beginning of the applicable Performance Period to the end of the applicable Performance Period, plus dividends deemed reinvested in company stock on a monthly basis, divided by (b) the stock price of the company at the beginning of the applicable Performance Period.  For this purpose, stock prices at the beginning and end of each Performance Period will be determined using the trailing average closing stock price of the 30 days prior to the beginning and end of the applicable Performance Period, as applicable.

 1Awards to executives outside the U.S. to provide for cash settlement, instead of settlement in Shares.

Performance Matrix:
	
		
	 

	 
	 

	90th Percentile or higher
	200%

	70th Percentile
	150%

	50th Percentile
	100%

	25th Percentile
	50%

	< 25th Percentile
	0%

Relative TSR performance between the percentile rankings indicated above will be interpolated on a straight-line basis.  In the event of a tie between Veritiv and a member of the Peer Group in TSR ranking for a Performance Period (including TSR rankings within 1/10th of one percent), the Company will be ranked above the applicable member of the Peer Group for the applicable Performance Period.  Any Peer Group company that files for bankruptcy during a Performance Period will be deemed to have negative one hundred percent (-100%) TSR for that Performance Period (and any succeeding Performance Period).

		
	Vesting Date:
	March 31, [•], or such earlier date after the end of the last Performance Period as determined by the Administrator, in its sole discretion.

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

VERITIV CORPORATION

__________________________________
By:
Title:

I acknowledge that I have received a copy of the Plan and that I have carefully reviewed the terms of this Award Agreement (including the attached terms and conditions) and wish to be eligible to receive the Award described herein.  I agree to comply with the terms of this Award Agreement (including the attached terms and conditions) in order to be eligible to receive this Award.

GRANTEE

___________________________________
Print Name: _________________________

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VERITIV CORPORATION
TERMS AND CONDITIONS OF 
PERFORMANCE SHARE AWARD
(Relative TSR Performance Shares)

Veritiv Corporation (the “Company”) has granted an Award of Performance Shares under the Plan to the Grantee named in this Award Agreement, subject to the provisions of the Plan and the terms and conditions set out below, which are incorporated into and made a part of this Award Agreement.  Capitalized terms used but not defined in this Award Agreement shall have the meanings set forth in the Plan.

1.    Peer Groups; Allocation of Performance Shares to Performance Periods; Adjustments.

(a)    Within ninety (90) days after the beginning of each of the three Performance Periods set forth in this Award Agreement (each a “Performance Period” and collectively, the “Performance Periods”), the Company shall establish a Peer Group for the measurement of the Company’s Relative TSR (as defined in this Award Agreement) for the applicable Performance Period, which Peer Group will be set forth on an Exhibit to this Award Agreement and communicated to the Grantee.  In addition, if the Grantee’s Performance Shares are intended to qualify as “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code, the Administrator may establish (no later than the expiration of the applicable 90-day period described above) such additional objective, pre-established Performance Goal(s) and such other terms and conditions intended to cause the Performance Shares to qualify as “performance-based compensation”, and any such additional Performance Goal(s) and/or terms and conditions shall be set forth on an Exhibit to this Award Agreement and shall be applicable and controlling, notwithstanding any other provision of this Award Agreement to the contrary.
(b)    One-third of the target number of Performance Shares will be allocated to each of the three Performance Periods (subject to such rounding conventions as may be maintained by the Company from time to time).  With respect to each Performance Period, the Grantee's right to receive a credit of all, a portion or a multiple (not to exceed 200%) of the target number of Performance Shares allocated to that Performance Period shall be contingent upon the Company’s Relative TSR as compared to the Peer Group for the applicable Performance Period, determined by the Administrator in accordance with the Performance Matrix set forth in this Award Agreement.
(c)    The Administrator may in its sole discretion modify the Relative TSR Performance Goal or the related minimum acceptable level of achievement, in whole or in part, as the Administrator deems appropriate and equitable (i) to reflect a change in the business, operations, corporate structure or capital structure of the Company or its Affiliates, the manner in which it conducts its business, or other events or circumstances; or (ii) in the event that the Grantee’s responsibilities materially change.  Notwithstanding the foregoing, if the Administrator has designated the Grantee’s Performance Shares as intended to qualify as “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code, then no modification shall be made pursuant to this Section 1(c) that would cause the Performance Shares to fail to so qualify.
    

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2.    Crediting of Performance Shares.  

(a)      Within ninety (90) days after the end of each Performance Period, the Administrator shall determine in writing the extent, if any, to which the applicable Relative TSR Performance Goal has been satisfied and shall determine the number (if any) of Performance Shares that have been earned in accordance with this Award Agreement for the applicable Performance Period, which earned Performance Shares shall be credited to a notional account established for the Grantee, effective no later than March 31 of the calendar year immediately following the end of the applicable Performance Period.  Each Performance Share credited to the Grantee’s account pursuant to this Award Agreement shall represent the contingent right to receive one Share, subject to the terms and conditions of the Plan and this Award Agreement, and shall at all times be equal in value to one Share.
(b)    Except as otherwise provided in Sections 3(b) or 3(d) hereof, the Performance Shares allocated to a Performance Period shall be forfeited automatically without further action or notice to the extent that such Performance Shares are not earned pursuant to this Award Agreement based upon the achievement of the Relative TSR Performance Goal for the applicable Performance Period.

3.    Vesting.  

(a)    The Performance Shares (if any) credited to the Grantee’s account pursuant to Section 2 hereof shall become vested and nonforfeitable on the Vesting Date set out in this Award Agreement, provided that the Grantee remains in the continuous employment or other service of the Company and its Subsidiaries through the Vesting Date, except as otherwise provided herein.

(b)    Notwithstanding Section 3(a), if the Grantee’s continuous employment or other service with the Company and its Subsidiaries terminates prior to the Vesting Date as a result of the Grantee’s death, a pro rata portion of the Performance Shares shall become vested, determined by multiplying the target number of Performance Shares by a fraction, the numerator of which is the number of days of continuous employment or other service completed by the Grantee after the Grant Date of the Performance Shares and the denominator of which is 1096.

(c)    Notwithstanding Section 3(a), if the Grantee’s continuous employment or other service with the Company and its Subsidiaries terminates prior to the Vesting Date as a result of the Grantee’s Disability or Retirement (defined as the Grantee’s voluntary termination of employment with the consent of the Administrator (or the Administrator’s delegate) at or after age 60 with at least five years of service with the Company and its Subsidiaries), a pro rata portion of the Performance Shares shall become vested, effective as of December 31, 2017, determined by multiplying the number of Performance Shares that would have been earned pursuant to Section 2 hereof, based upon actual achievement of the applicable Relative TSR Performance Goals if the Grantee had remained in the continuous employment or other service of the Company and its Subsidiaries through the last day of the third Performance Period, by a fraction, the numerator of which is the number of days of continuous employment or other service completed by the Grantee after the Grant Date of the Performance Shares and the denominator of which is 1096.

(d)    In the event of a Change in Control prior to the Vesting Date:

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(i)    If the Performance Shares are honored, assumed or substituted in the form of an Alternative Award, and the Grantee’s continuous employment or other service with the Company and its Subsidiaries is terminated after the Change in Control and prior to the Vesting Date (A) by the Company or a Subsidiary without Cause, or (B) if the Grantee is covered by a severance plan, employment agreement or offer letter with the Company or a Subsidiary that provides for severance benefits in the event of a termination by the Grantee for Good Reason, by the Grantee for Good Reason, then the Performance Shares, to the extent not previously vested or forfeited, will vest, without pro ration and effective upon such termination of the Grantee’s employment with the Company and its Subsidiaries, as follows: (x) with respect to any Performance Period completed prior to the date of such termination of employment, the number of Performance Shares earned pursuant to Section 2 hereof, based upon actual achievement of the applicable Relative TSR Performance Goals with respect to such Performance Period, shall become vested, and (y) with respect to any Performance Period not completed prior to the date of such termination of employment, the portion of the target number of Performance Shares allocated to such Performance Period shall become vested.

(ii)    If the Performance Shares are not honored, assumed or substituted in the form of an Alternative Award, then the target number of Performance Shares will vest in full, without pro ration, effective upon such Change in Control.

(e)    For purposes of this Section 3, the continuous employment or other service of the Grantee with the Company and its Subsidiaries shall not be deemed to have been interrupted, and the Grantee shall not be deemed to have ceased to be an Employee of the Company and its Subsidiaries, by reason of the transfer of his or her employment or other service among the Company and its Subsidiaries.

4.    Forfeiture of Performance Shares.

(a)    Except as otherwise provided in Section 3 of this Award Agreement or as otherwise determined by the Committee or as otherwise provided in the Grantee’s employment agreement (if any) with the Company or a Subsidiary (including, without limitation, an offer letter), or as otherwise provided in a Company severance or other agreement (if any) to which the Grantee is a party or participant, the Performance Shares will automatically be forfeited without further action by the Company or the Grantee if the Grantee’s employment or other service with the Company and its Subsidiaries terminates for any reason (including, without limitation, in the event of termination of the Grantee’s employment or other service by the Company or a Subsidiary for Cause) prior to the Vesting Date.

(b)    If the Company determines that the Grantee has committed an act of Misconduct either during employment or other service or within 180 days thereafter, the Company or Affiliate may cause the Performance Shares to be forfeited or, if paid, is entitled to repayment of the Performance Shares previously paid under this Award Agreement (by return of any Shares delivered pursuant to this Award Agreement or by repayment in cash equal to the Fair Market Value as of the date of repayment of the number of Shares delivered pursuant to this Award Agreement that have been disposed of by the Grantee) within 30 days of the issuance of a letter by the Company to the Grantee claiming such Misconduct and demand for repayment.  For purposes of this Award Agreement, “Misconduct” shall be determined by the Company in its sole discretion and shall include, but not be limited to, any act detrimental to the business or reputation of the Company, any act determined to be a deliberate disregard of the Company’s  or Affiliate’s rules or 

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policies, or any violation of any confidentiality, non-solicitation or non-competition restriction applicable to the Grantee.

(c)    The Company shall have the sole and absolute discretion to take action or not to take action pursuant to this Section 4 upon discovery of Misconduct, and its determination not to take action in any particular instance shall not in any way limit its authority to cause the forfeiture of the Performance Shares or to recoup the Award by sending a notice in any other instance.

(d)    The Performance Shares shall be subject to any generally applicable policies as to forfeiture, recoupment or “clawback” adopted by the Company or an Affiliate that are communicated to the Grantee or any such policy adopted to comply with applicable law.

(e)    Further, as a convenience and benefit to the Grantee in facilitating the repayment, the Grantee hereby authorizes the Company or Affiliate to withhold funds from any remaining payroll compensation, including pay for unused vacation, to be applied toward any repayment pursuant to this Section 3, where the law allows.

5.    Payment of Performance Shares.  Except as otherwise may be provided pursuant to Section 7 hereof, on the Vesting Date, or within seventy (70) days after such earlier date as the Performance Shares become vested in accordance with Section 3 hereof (and in any case after the Administrator’s written certification of the achievement of the applicable Relative TSR Performance Goals pursuant to Section 2 hereof), the Company will deliver to the Grantee (or to the Grantee’s estate in the event of death) the Shares underlying the vested Performance Shares.

6.      Shareholder Rights.  The Company's obligations with respect to the Performance Shares shall be satisfied in full upon payment of the Performance Shares in accordance with Section 5 hereof.  The Grantee shall not possess any incidents of ownership (including, without limitation, dividend or voting rights) in the Shares to which the Performance Shares relate until such time as such Shares have been delivered to the Grantee in accordance with Section 5 hereof.  The rights of the Grantee hereunder will be no greater than those of an unsecured general creditor of the Company. No assets of the Company will be held or set aside as security for the obligations of the Company hereunder.

7.    Section 409A of the Code.  The Company intends that each Award of Performance Shares will be exempt from or comply with the requirements of Section 409A of the Code, and this Award Agreement shall be interpreted and administered in accordance with such intent.  In particular, and notwithstanding any other provision of this Award Agreement to the contrary: (a) the phrase “termination of employment or other service” or words of similar import shall mean the Grantee’s “separation from service” with the Company within the meaning of Section 409A of the Code; (b) if the Grantee is a “specified employee” at the time of his or her “separation from service” with the Company (as determined by the Company in accordance with Section 409A of the Code), then, to the extent necessary to comply with Section 409A of the Code, any Performance Shares otherwise payable as a result of the Grantee’s separation from service shall be paid within thirty (30) days after the first business day which is at least six (6) months after the Grantee’s separation from service (or if earlier, within 70 days after the Grantee’s death); and (c) to the extent required to comply with Section 409A of the Code, any Performance Shares otherwise payable as a result of a Change in Control shall not be paid at such time unless the Change in Control qualifies as a “change in control event” within the meaning of Section 409A of the Code and the Treasury Regulations 

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thereunder  and payment at such time is otherwise permitted without the imposition of additional tax under Section 409A of the Code (and if payment of Performance Shares that become vested upon a Change in Control is not so permitted, payment of such vested Performance Shares will be made on the earlier of the Vesting Date or within 70 days after the Grantee’s separation from service (subject to any six-month delay required for a specified employee as provided herein)).  Although the Company will use reasonable efforts to avoid the imposition of taxation, interest and penalties under Section 409A of the Code, the tax treatment of the Performance Shares is not warranted or guaranteed.  Neither the Company, its Subsidiaries nor their respective directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by the Grantee (or any other individual claiming a benefit through the Grantee) as a result of this Award Agreement or the Performance Shares granted hereunder.

8.    Tax Withholding.  The Grantee is responsible for any federal, state, local or other taxes with respect to the Performance Shares.  The Company does not guarantee any particular tax treatment or results in connection with the grant or vesting of the Performance Shares or the delivery of Shares pursuant to this Award Agreement.  To the extent the Company or any Subsidiary is required to withhold any federal, state, local, foreign or other taxes in connection with the delivery of Shares under this Award Agreement, then, except as otherwise provided below, the Company or Subsidiary (as applicable) shall retain a number of Shares otherwise deliverable hereunder with a value equal to the required withholding (based on the Fair Market Value of the Shares on the date of delivery); provided that in no event shall the value of the Shares retained exceed the minimum amount of taxes required to be withheld or such other amount that will not result in a negative accounting impact. Notwithstanding the preceding sentence, the Grantee may elect, on a form provided by the Company and subject to any terms and conditions imposed by the Company, to pay or provide for payment of the required tax withholding.  If the Company or any Subsidiary is required to withhold any federal, state, local or other taxes at any time other than upon delivery of Shares under this Award Agreement, then the Company or Subsidiary (as applicable) shall have the right in its sole discretion to (a) require the Grantee to pay or provide for payment of the required tax withholding, or (b) deduct the required tax withholding from the amount of salary, bonus, incentive compensation or other amounts otherwise payable in cash to the Grantee (other than deferred compensation subject to Section 409A of the Code).  

9.    No Employment Contract.  Nothing contained in this Award Agreement or the Plan shall confer upon the Grantee any right with respect to continuance of employment by, or other service with, the Company and its Subsidiaries, nor limit or affect in any manner the right of the Company and its Subsidiaries to terminate the employment or other service or adjust the compensation of the Grantee, in each case with or without Cause.

10.    Relation to Other Benefits.  Any economic or other benefit to the Grantee under this Award Agreement or the Plan shall not be taken into account in determining any benefits to which the Grantee may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained by the Company or a Subsidiary and shall not affect the amount of any life insurance coverage available to any beneficiary under any life insurance plan covering employees of the Company or a Subsidiary.   

11.      Transferability.  The Performance Shares will not be subject to transfer, anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to transfer, anticipate, alienate, sell, assign, pledge, encumber, or charge such right or benefit will be void. The Performance Shares will not in any manner be liable for or subject to the debts, liabilities, or torts of the Grantee.

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12.    Adjustments.  The number and kind of Performance Shares are subject to adjustment as provided in Section 4.3 of the Plan; provided that if the Administrator has designated the Grantee’s Performance Shares as intended to qualify as “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code, then no adjustment shall be made pursuant to this Section 12 that would cause the Performance Shares to fail to so qualify.   

13.    Compliance with Law.  The Company shall make reasonable efforts to comply with all applicable federal and state securities laws and listing requirements with respect to the Performance Shares and, notwithstanding any other provision of this Award, the Company shall not be obligated to deliver any Shares pursuant to this Award Agreement if the delivery of Shares would result in a violation of any such law or listing requirement.

14.      Successors.  The obligations of the Company under this Award Agreement shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to all or substantially all of the assets and business of the Company and its Affiliates, taken as a whole.

15.    Severability.  If any provision of this Award Agreement is determined to be unenforceable or invalid under any applicable law, such provision will be applied to the maximum extent permitted by applicable law, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable law.

16.    Relation to Plan.  This Award Agreement and the Performance Shares granted hereunder are subject to the terms and conditions of the Plan.  This Award Agreement and the Plan contain the entire agreement and understanding of the parties with respect to the subject matter hereof, and supersede all prior written or oral communications, representations and negotiations in respect thereto.  In the event of any inconsistency between the provisions of this Award Agreement and the Plan, the Plan shall govern.  The Administrator, acting pursuant to the Plan, have the right to determine any questions which arise in connection with the grant of the Performance Shares.

17.      Governing Law.  This Award Agreement shall be construed in accordance with and governed by the laws of the State of Delaware, regardless of the application of rules of conflict of law that would apply the laws of any other jurisdiction.

18.      Amendment.  Subject to the terms of the Plan, the Committee may modify this Award Agreement upon written notice to the Grantee; provided that if the Administrator has designated the Grantee’s Performance Shares as intended to qualify as “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code, then no amendment shall be made pursuant to this Section 18 that would cause the Performance Shares to fail to so qualify.  Any amendment to the Plan shall be deemed to be an amendment to this Award Agreement to the extent that the amendment is applicable hereto.  Notwithstanding the foregoing (and except as otherwise may be provided in the Plan), no amendment of the Plan or this Award Agreement shall adversely impair any rights of the Grantee under this Award Agreement without the Grantee’s written consent.

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19.    No Fractional Shares.  Fractional Shares or units will be subject to rounding conventions adopted by the Company from time to time; provided that in no event will the total Shares issued exceed the total units granted under this Award Agreement.

20.    Use of Grantee’s Information.  Information about the Grantee and the Grantee’s participation in the Plan may be collected, recorded and held, used and disclosed for any purpose related to the administration of the Plan.  The Grantee understands that such processing of this information may need to be carried out by the Company and its Subsidiaries and by third party administrators whether such persons are located within the Grantee’s country or elsewhere, including the United States of America.  The Grantee consents to the processing of information relating to the Grantee and the Grantee’s participation in the Plan in any one or more of the ways referred to above.

21.    Electronic Delivery.  The Grantee hereby consents and agrees to electronic delivery of any documents that the Company may elect 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 forms of communications) in connection with any Award made or offered under the Plan. The Grantee understands that, unless earlier revoked by the Grantee by giving written notice to the Company’s Senior Vice President, General Counsel and Corporate Secretary, this consent shall be effective for the duration of the Award.  The Grantee also understands that he or she shall have the right at any time to request that the Company deliver written copies of any and all materials referred to above at no charge. The Grantee hereby consents to any and all procedures the Company has established or may establish for an electronic signature system for delivery and acceptance of any such documents that the Company may elect to deliver, and agrees that his or her electronic signature is the same as, and shall have the same force and effect as, his or her manual signature. The Grantee consents and agrees that any such procedures and delivery may be effected by a third party engaged by the Company to provide administrative services related to the Plan.

* * * * * * * *

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EXHIBIT A
Peer Group for [•] Relative TSR Performance Shares

The Peer Group applicable to the Performance Shares allocated to the Performance Periods from January 1, [•] to December 31, [•], January 1, [•] to December 31, [•], and January 1, [•] to December 31, [•], shall consist of the following companies:

[•]

Notwithstanding the foregoing, if any of the companies listed above enters into a definitive agreement to be acquired (by acquisition of shares, merger or otherwise):  (a) during [•] or [•], such company will be eliminated from the Peer Group for all Performance Periods, (b) during [•], such company’s TSR ranking relative to Veritiv for the final Performance Period will be determined using trailing 30-trading day average closing stock prices up to the day before the announcement of such acquisition, or (c) by Veritiv or one of its Subsidiaries during any of the Performance Periods, such company will be eliminated from the Peer Group for all Performance Periods.VRTV-20141231-Exhibit 10.25

EXHIBIT 10.25

VERITIV CORPORATION
ANNUAL INCENTIVE PLAN
(As Adopted on March 4, 2015)
I.  Purposes
The purposes of the Veritiv Corporation Annual Incentive Plan (the “Plan”) are to retain and motivate the officers and other employees of Veritiv Corporation (the “Company”) and its subsidiaries who have been designated by the Committee to participate in the Plan for a specified Performance Period by providing them with the opportunity to earn incentive payments based upon the extent to which specified performance goals have been achieved or exceeded for an applicable Performance Period.  It is intended that all amounts payable to Participants who are “covered employees” within the meaning of Section 162(m) of the Code will constitute “qualified performance-based compensation” within the meaning of U.S. Treasury regulations promulgated thereunder, and the Plan and the terms of any awards hereunder shall be so interpreted and construed to the maximum extent possible.
II.  Certain Definitions
“Board” means the Board of Directors of the Company.
“Code” means the Internal Revenue Code of 1986, as amended.
“Committee” means the Compensation and Leadership Development Committee of the Board or such other committee or subcommittee designated by the Board or the Compensation and Leadership Development Committee that satisfies any then applicable requirements of the New York Stock Exchange, or such other principal national stock exchange on which the common stock of the Company is then traded, to constitute a compensation committee, and which consists of two or more members of the Board, each of whom is intended to be an “outside director” within the meaning of Section 162(m) of the Code.
“Company” means Veritiv Corporation, a Delaware corporation, and any successor thereto.
“Competitive Activity” means a Participant’s material breach of restrictive covenants relating to noncompetition, nonsolicitation (of customers or employees) or preservation of confidential information, or other covenants having the same or similar scope, included in an award under this Plan, an award under the Company’s 2014 Omnibus Incentive Plan or any agreement to which the Participant and the Company or any of its subsidiaries is a party. 
“Determination Period” means, with respect to any Performance Period, a period commencing on or before the first day of the Performance Period and ending not later than the earlier of (i) 90 days after the commencement of the Performance Period and (ii) the date on which twenty-five percent (25%) of the Performance Period has been completed.  Any action required to be taken within a Determination Period may be taken at a later date if permissible 

under Section 162(m) of the Code or regulations promulgated thereunder, as they may be amended from time to time.
“Individual Award Opportunity” means the potential of a Participant to receive an incentive payment based on the extent to which the applicable performance goals for a Performance Period shall have been satisfied.  An Individual Award Opportunity may be expressed in U.S. dollars or pursuant to a formula that is consistent with the provisions of the Plan.
“Participant” means an officer or other employee of the Company or any of its subsidiaries who is designated by the Committee to participate in the Plan for a Performance Period, in accordance with Article III.
“Performance Period” means any period commencing on or after January 1, 2015, for which performance goals are established pursuant to Article IV.  A Performance Period may be coincident with one or more fiscal years of the Company or a portion of any fiscal year of the Company.
“Plan” means the Veritiv Corporation Annual Incentive Plan, as set forth herein, as it may be amended from time to time.
III.  Administration
3.1.    General.  The Plan shall be administered by the Committee, which shall have the full power and authority to interpret, construe and administer the Plan and any Individual Award Opportunity granted hereunder (including reconciling any inconsistencies, correcting any defaults and addressing any omissions).  The Committee’s interpretation, construction and administration of the Plan and all its determinations hereunder shall be final, conclusive and binding on all persons for all purposes.  
3.2.    Powers and Responsibilities.  The Committee shall have the following discretionary powers, rights and responsibilities in addition to those described in Section 3.1:
		
	(a)
	to designate within the Determination Period the Participants for a Performance Period;

		
	(b)
	to establish within the Determination Period the performance goals and other terms and conditions that are to apply to each Participant’s Individual Award Opportunity, including the extent to which any incentive payment shall be made to a Participant in the event of (A) the Participant’s termination of employment with the Company due to disability, retirement, death or any other reason or (B) a change of control of the Company;  

		
	(c)
	to determine the form of payment of Individual Award Opportunities, which may include, without limitation, cash, shares of Company common 

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stock or stock-based awards granted under the Company’s equity incentive plan as in effect from time to time, or any other property approved by the Committee;
		
	(d)
	to determine and certify in writing prior to the payment under any Individual Award Opportunity that the performance goals for a Performance Period and other material terms applicable to the Individual Award Opportunity have been satisfied;

		
	(e)
	subject to the requirements of Section 409A of the Code, to decide whether, and under what circumstances and subject to what terms, Individual Award Opportunities are to be paid on a deferred basis, including whether such a deferred payment shall be made solely at the Committee’s discretion or whether a Participant may elect deferred payment; and

		
	(f)
	to adopt, revise, suspend, waive or repeal, when and as appropriate, in its sole and absolute discretion, such administrative rules, guidelines and procedures for the Plan as it deems necessary or advisable to implement the terms and conditions of the Plan.

3.3.    Delegation of Power.  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 with respect to any person 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 applicable Performance Period, only the Committee shall be permitted to (i) designate such person to participate in the Plan for such Performance Period, (ii) establish performance goals and Individual Award Opportunities for such person, and (iii) certify the achievement of such performance goals.
IV.  Performance Goals
The Committee shall establish within the Determination Period of each Performance Period one or more objective performance goals for each Participant or for any group of Participants (or both), provided that the outcome of each goal is substantially uncertain at the time the Committee establishes such goal.  At the discretion of the Committee, the performance goals may be based upon (alone or in combination): (a) net or operating income (before or after taxes) or other income measures; (b) earnings before taxes, interest, depreciation and/or amortization (“EBITDA”); (c) net income before equity in earnings of unconsolidated subsidiaries, income tax expense, loss on early debt extinguishment, interest and other (expense) income, realized gain (loss) on investments, interest expense, equity-based compensation expense, related party management fees, restructuring charges and depreciation and amortization expense and net income attributable to noncontrolling interests (“Adjusted EBITDA”); (d) basic or diluted earnings per share or improvement in basic or diluted earnings per share; (e) sales (including, but not limited to, total sales, net sales and revenue growth); (f) profit (including, but 

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not limited to, net profit, gross profit, operating profit, net operating profit, economic profit or other corporate profit measures); (g) financial return measures (including, but not limited to, return on assets, income, capital, invested capital, equity, investments, sales and revenue); (h) cash flow measures (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity and cash flow return on investment); (i) productivity ratios (including, but not limited to, measuring liquidity, profitability and leverage); (j) share price (including, but not limited to, growth measures and total shareholder return); (k) expense/cost management targets (including, but not limited, to expense management, expense ratio, expense efficiency ratios or other expense measures); (l) margins (including, but not limited to, operating margin, net income margin, cash margin, gross, net or operating profit margins, EBITDA margins and Adjusted EBITDA margins); (m) operating efficiency; (n) market share or market penetration; (o) customer targets (including, but not limited to, customer growth and customer satisfaction); (p) working capital targets or improvements; (q) economic value added; (r) balance sheet metrics (including, but not limited to, inventory, inventory turns, receivables turnover, net asset turnover, total debt, net debt, debt reduction, retained earnings, year-end cash, cash conversion cycle and ratio of debt to equity or to EBITDA); (s) workforce targets (including, but not limited to, diversity goals, employee engagement or satisfaction, employee retention and workplace health and safety goals); (t) implementation, completion or attainment of measurable objectives with respect to research and development, key products or key projects, lines of business, acquisitions and divestitures and strategic plan development and/or implementation; (u) comparisons with various stock market indices, peer companies or industry groups or classifications with regard to one more of these criteria, (v) improvements in capital structure, (w) business expansion or consolidation (acquisitions and divestitures), (x) internal rate of return or increase in net present value, (y) productivity measures, (z) cost reduction measures or, for any period of time in which Section 162(m) is not applicable to the Company and the Plan, or at any time in the case of (A) persons who are not “covered employees” under Section 162(m) of the Code or (B) awards (whether or not to “covered employees”) not intended to qualify as performance-based compensation under Section 162(m) of the Code, such other criteria as may be determined by the Committee. 
Performance goals may be established on a Company-wide basis or with respect to one or more subsidiaries or affiliates or business units, divisions, regions, departments, functions or products within the Company, a subsidiary or affiliate and may be expressed in absolute terms, or an adjusted basis, in percentages, or in terms of growth from period to period or growth rates over time, or measured relative to (i) current internal targets or budgets, (ii) the past performance of the Company (including the performance of one or more subsidiaries, divisions or operating units), (iii) the performance of one or more similarly situated companies, (iv) the performance of an index covering a peer group of companies or (v) other external measures of the selected performance criteria. Performance goals need not be based upon an increase or positive result under a business criterion and could include, for example, the maintenance of the status quo or the limitation of economic losses (measured, in each case, by reference to a specific business criterion). Any performance objective may measure performance on an individual basis, as appropriate. The Committee may provide for a threshold level of performance below which no payment will be made, and a maximum level of performance above which no additional payments will be made, and it may provide for differing amounts of payments for different levels 

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of performance. When establishing performance goals for a Performance Period, the Committee may determine that any or all “extraordinary items” as determined under U.S. generally accepted accounting principles and as identified in the financial statements, notes to the financial statements or management’s discussion and analysis in the annual report, including, without limitation, the charges or costs associated with restructurings of the Company, discontinued operations, extraordinary items, capital gains and losses, dividends, share repurchase, other unusual or non-recurring items, and the cumulative effects of accounting changes shall be excluded from the determination as to whether the performance goals have been met. Except in the case of awards to “covered employees” intended to be performance-based compensation under Section 162(m) of the Code, the Committee may also adjust the performance goals for any Performance Period as it deems equitable in recognition of unusual or non-recurring events affecting the Company, changes in applicable tax laws or accounting principles, or such other factors as the Committee may determine.
V.  Individual Award Opportunities
5.1.    Terms.  At the time performance goals are established for a Performance Period, the Committee also shall establish an Individual Award Opportunity for each Participant or group of Participants, which shall be based on the achievement of one or more specified targets of performance goals.  The targets shall be expressed in terms of an objective formula or standard and the Individual Award Opportunity may, at the discretion of the Committee, be based upon the Participant’s annual base salary or pay level midpoint or a multiple thereof.  In all cases the Committee shall have the sole and absolute discretion to reduce the amount of any payment under any Individual Award Opportunity that would otherwise be made to any Participant or to decide that no payment shall be made, and the Committee may in its sole discretion establish secondary performance goals, that need not be specified in Article IV of the Plan, which the Committee may use as guidelines in making the decision whether to reduce any such payment.  No Participant shall receive a payment under the Plan with respect to any fiscal year of the Company in excess of $10,000,000, which maximum amount shall be proportionately increased or decreased with respect to Performance Periods that are more or less than one year in duration.
5.2.    Incentive Payments.  Subject to Section 3.2(e), payments under Individual Award Opportunities shall be made within 21⁄2 months after the end of the Performance Period for which the incentive awards are payable, except that no such payment shall be made unless and until the Committee, based to the extent applicable on the Company’s audited consolidated financial statements for such Performance Period (as prepared and reviewed by the Company’s independent public accountants), has certified in writing the extent to which the applicable performance goals for such Performance Period have been satisfied.
5.3    Forfeiture of Awards.  Awards granted under this Plan shall be subject to such generally applicable policies as to forfeiture and recoupment (including, without limitation, upon the occurrence of material financial or accounting errors, financial or other misconduct, Competitive Activity or other conduct by a Participant that is detrimental to the business or reputation of the Company and/or its affiliates) as may be adopted by the Committee or the Board from time to time and communicated to Participants. Any such policies may (in the 

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discretion of the Committee or the Board) be applied to outstanding awards at the time of adoption of such policies, or on a prospective basis only. The Committee may specify that a Participant’s rights, payments and benefits with respect to an award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain events (including, without limitation, upon the occurrence of material financial or accounting errors, financial or other misconduct, Competitive Activity or other conduct by the Participant that is detrimental to the business or reputation of the Company and/or its affiliates).  A Participant shall also forfeit and disgorge to the Company any awards granted or paid to the extent required by applicable law or regulations in effect on or after the effective date of the Plan, including Section 304 of the Sarbanes-Oxley Act of 2002 and Section 10D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For the avoidance of doubt, the Committee shall have full authority to implement any policies and procedures necessary to comply with Section 10D of the Exchange Act and any rules promulgated thereunder. The implementation of policies and procedures pursuant to this Section 5.3 and any modification of the same shall not be subject to any restrictions on amendment or modification of awards.
5.4  Clawbacks. Awards shall be subject to any generally applicable clawback policy adopted by the Committee, the Board or the Company that is communicated to Participants or any such policy adopted to comply with applicable law.
VI.  General
6.1.    Effective Date and Term of Plan.  The Plan shall be submitted to the stockholders of the Company for approval at the 2015 annual meeting of stockholders and, if approved by the affirmative vote of the holders of a majority in voting power of the shares of common stock of the Company entitled to vote and represented in person or by proxy at the annual meeting, shall become effective for Performance Periods beginning on and after January 1, 2015.  This Plan may be terminated at any time by the Committee.  In the event that this Plan is not approved by the stockholders of the Company, this Plan shall be null and void.
6.2.    Amendment or Termination of Plan.  The Committee may amend or terminate this Plan as it shall deem advisable, subject to any requirement of stockholder approval required by applicable law, rule or regulation, including Section 162(m) of the Code.
6.3.    Non-Transferability of Awards.  No award under the Plan shall be transferable other than by will, the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company.  Except to the extent permitted by the foregoing sentence, no award may 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 sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any such award, such award and all rights thereunder shall immediately become null and void.
6.4.    Tax Withholding.  The Company shall have the right to require, prior to the payment of any amount pursuant to an award made hereunder, payment by the Participant of any 

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Federal, state, local or other taxes which may be required to be withheld or paid in connection with such award.
6.5.    No Right of Participation or Employment.  No person shall have any right to participate in this Plan.  Neither this Plan nor any 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.
6.6.    Designation of Beneficiary.  If permitted by the Company, a Participant may file with the Company a written designation of one or more persons as such Participant’s beneficiary or beneficiaries (both primary and contingent) in the event of the Participant’s death.  Each beneficiary designation shall become effective only when filed in writing with the Company during the Participant’s lifetime on a form prescribed by the Company.  The spouse of a married Participant domiciled in a community property jurisdiction shall join in any designation of a beneficiary other than such spouse.  The filing with the Company of a new beneficiary designation shall cancel all previously filed beneficiary designations.  If a Participant fails to designate a beneficiary, or if all designated beneficiaries of a Participant predecease the Participant, then each outstanding award shall be payable to the Participant’s executor, administrator, legal representative or similar person.
6.7.    Governing Law.  This Plan and each award hereunder, 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.
6.8.    Other Plans.  Neither the adoption of the Plan nor the submission of the Plan to the Company’s stockholders for their approval shall be construed as limiting the power of the Board or the Committee to adopt such other incentive arrangements as it may otherwise deem appropriate.
6.9.    Binding Effect.  The Plan shall be binding upon the Company and its successors and assigns and the Participants and their beneficiaries, personal representatives and heirs.  If the Company becomes a party to any merger, consolidation or reorganization, then the Plan shall remain in full force and effect as an obligation of the Company or its successors in interest, unless the Plan is amended or terminated pursuant to Section 6.2.

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