Form 10-K
Year Ended 12/31/99
Exhibit 10(f)
AGREEMENT
THIS AGREEMENT dated as of _______________ , is made by and between
X.X. Xxxxxxxxx & Sons Company, a Delaware corporation ("Donnelley"; Donnelley
and its Subsidiaries being hereafter referred to as the "Company"), and
____________ (the "Executive").
WHEREAS the Company considers it essential to the best interests of
its stockholders to xxxxxx the continuous employment of key management
personnel; and
WHEREAS the Board of Directors of Donnelley (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
Change in Control (as defined in the last Section hereof) exists and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders; and
WHEREAS the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
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members of the Company's management, including the Executive, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control;
NOW THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definition of capitalized terms used in this
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Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date
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hereof and shall continue in effect through December 31, 199X; provided,
however, that commencing on January 1, 199X and each January 1 there-after, the
term of this Agreement shall automatically be extended for one additional year
unless, not later than September 30 of the preceding year, the Company or the
Executive shall have given notice not to extend this Agreement or a Change in
Control shall have occurred prior to such January 1; provided, however, if a
Change in Control shall have occurred during the term of this Agreement, this
Agreement shall continue in effect for a period of not less than twenty-four
(24) months beyond the month in which such Change in Control occurred.
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3. Company's Covenants Summarized. In order to induce the Executive to
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remain in the employ of the Company and in consideration of the Executive's
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the Severance Payments and the
other payments and benefits described herein in the event the Executive's
employment with the Company is terminated following a Change in Control and
during the term of this Agreement. No amount or benefit shall be payable under
this Agreement unless there shall have been (or, under the terms hereof, there
shall be deemed to have been) a termination of the Executive's employment with
the Company following a Change in Control. This Agreement shall not be construed
as creating an express or implied contract of employment and, except as
otherwise agreed in writing between the Executive and the Company, the Executive
shall not have any right to be retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that, subject to
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the terms and conditions of this Agreement, in the event of a Potential Change
in Control during the term of this Agreement, the Executive will remain in the
employ of the Company until the earliest of (i) a date which is six (6) months
from the date of such Potential Change of Control, (ii) the date of a Change in
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Control, (iii) the date of termination by the Executive of the Executive's
employment for Good Reason (determined by treating the Potential Change in
Control as a Change in Control in applying the definition of Good Reason), by
reason of death, Disability or Retirement, or (iv) the termination by the
Company of the Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
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5.01 Following a Change in Control and during the term of this
Agreement, during any period that the Executive fails to perform the Executive's
full-time duties with the Company as a result of incapacity due to physical or
mental illness, the Company shall pay the Executive's full salary to the
Executive at the rate in effect at the commencement of any such period, together
with all compensation and benefits payable to the Executive under the terms of
any compensation or benefit plan, program or arrangement maintained by the
Company during such period, until the Executive's employment is terminated by
the Company for Disability.
5.02 If the Executive's employment shall be terminated for any reason
following a Change in Control and during the term of this Agreement, the Company
shall pay the Executive's full salary to the Executive through
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the Date of Termination at the rate in effect at the time the Notice of
Termination is given, together with all compensation and benefits payable to the
Executive through the Date of Termination under the terms of any compensation or
benefit plan, program or arrangement maintained by the Company during such
period.
5.03 If the Executive's employment shall be terminated for any reason
following a Change in Control and during the term of this Agreement, the Company
shall pay the Executive's normal post-termination compensation and benefits to
the Executive as such payments become due; provided that, in no event shall any
severance pay which might be payable to the Executive pursuant to the Company's
Standard Practice Manual or Special Severance Plan be paid if the Executive is
entitled to the Severance Payments as a result of such termination. Such post-
termination compensation and benefits shall be determined under, and paid in
accordance with, the Company's retirement, insurance and other compensation or
benefit plans, programs and arrangements.
6. Severance Payments.
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6.01 The Company shall pay the Executive the payments described in
this Section 6.01 (the "Severance Payments") upon the termination of the
Executive's employment following a Change in Control and during the
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term of this Agreement, in addition to the payments and benefits described in
Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii)
by reason of death or Disability or (iii) by the Executive without Good Reason.
The Executive's employment shall be deemed to have been terminated following a
Change in Control by the Company without Cause or by the Executive with Good
Reason if the Executive's employment is terminated prior to a Change in Control
without Cause at the direction of a Person who has entered into an agreement
with the Company the consummation of which will constitute a Change in Control
or if the Executive terminates his employment with Good Reason prior to a Change
in Control (determined by treating a Potential Change in Control as a Change in
Control in applying the definition of Good Reason) if the circumstance or event
which constitutes Good Reason occurs at the direction of such Person.
(A) In lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination and in lieu of any
severance benefit otherwise payable to the Executive, the Company shall
pay to the Executive a lump sum severance payment, in cash, equal to an
amount equal to three (3), or, if less, the number of years,
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including fractional parts thereof, from the Date of Termination until
the Executive reaches Normal Retirement Age, times the Executive's
Planned Compensation;
(B) Notwithstanding any provision of any Bonus Plan, the Company
shall pay to the Executive a lump sum amount, in cash, equal to the sum
of (i) any incentive compensation which has been allocated or awarded
to the Executive for a completed year or other measuring period
preceding the Date of Termination under any such Bonus Plan but has not
yet been paid (pursuant to Section 5.02 hereof or otherwise), and (ii)
the aggregate value of all contingent incentive compensation awards to
the Executive for all uncompleted periods under any such Bonus Plan,
assuming (a) any and all target levels of achievement for the period
with respect to which such awards have been made have been met and (b)
any period of continued employment specified in such awards upon which
such awards are contingent have been completed;
(C) Notwithstanding any provision of the Stock Plans, the Company
shall pay to the Executive, in lieu of any stock bonus awards granted
to the Executive under the Stock Plans, a lump sum payment,
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in cash, equal to the sum of (i) the amount determined by multiplying
the number of outstanding stock units granted at any time to the
Executive under the Stock Plan, whether or not vested, by the higher of
the Exchange Price and the Transaction Price and (ii) the amount of any
dividends and interest credited to the Executive's cash account in
connection with the grant of such units;
(D) In lieu of Company Shares issuable upon exercise of
outstanding Options (which Options shall be canceled upon the making of
the payment referred to below), the Company shall pay the Executive a
lump sum amount, in cash, equal to the product of (i) the excess of (x)
in the case of ISOs granted after the date hereof, the Exchange Price,
or in the case of all other Options, the higher of the Exchange Price
and the Transaction Price, over (y) the per share exercise price of
each such Option held by the Executive (whether or not then fully
exercisable), times (ii) the number of Company Shares covered by each
such Option;
(E) In addition to the retirement benefits to which the Executive
is entitled under the Pension Plan or any successor plans thereto, the
Company shall pay the Executive a lump sum amount,
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in cash, equal to the actuarial equivalent of the excess of (i) the
retirement pension (determined as a straight life annuity commencing at
Normal Retirement Age) which the Executive would have accrued under the
terms of the Pension Plan (without regard to any amendment to the
Pension Plan made subsequent to a Change in Control and on or prior to
the Date of Termination, which amendment adversely affects in any
manner the computation of retirement benefits thereunder), determined
as if the Executive were fully vested thereunder and had accumulated
(after the Date of Termination) thirty-six (36) (or, if less, a number
equal to the number of months, including fractional parts thereof, from
the Date of Termination until the Executive reaches Normal Retirement
Age) additional months of service credit thereunder at the Executive's
highest annual rate of compensation during the twelve (12) months
immediately preceding the Date of Termination, and (ii) the retirement
pension (determined as a straight life annuity commencing at Normal
Retirement Age) which the Executive had then accrued pursuant to the
provisions of the Pension Plan. For purposes of this Section 6.01(E),
"actuarial equiva-
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lent" shall be determined using the same assumptions utilized under the
Pension Plan immediately prior to the Date of Termination.
F. For a twenty-four (24) month period after the Date of
Termination, the Company shall arrange to provide the Executive with
life, disability, accident and health insurance benefits substantially
similar to those which the Executive is receiving immediately prior to
the Notice of Termination (without giving effect to any reduction in
such benefits subsequent to a Change in Control which reduction
constitutes Good Reason); provided, however, that, in the event the
date upon which the Executive attains Normal Retirement Age occurs
during such twenty-four month period, the Executive shall thereafter
receive such life, disability, accident and health insurance benefits
as would be provided to him as a retiree. Benefits otherwise receivable
by the Executive pursuant to this Section 6.01(F) shall be reduced to
the extent comparable benefits are actually received by or made
available to the Executive without cost during the twenty-four (24)
month period following the Executive's termination of employment (and
any such benefits
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actually received by the Executive shall be reported to the Company by
the Executive).
6.02 (A) Whether or not the Executive becomes entitled to the
Severance Payments, if any of the Total Payments will be subject to the Excise
Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive, after deduction of
any Excise Tax on the Total Payments and any federal, state and local income tax
and Excise Tax upon the payment provided for by this Section 6.02, shall be
equal to the excess of the Total Payments over the payment provided for by this
Section 6.02.
(B) For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) any payments or benefits received or to be received by
the Executive in connection with a Change in Control or the Executive's
termination of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company,
any Person whose actions result in a Change in Control or any Person
affiliated with the Company or such Person) (the "Total Payments")
shall be treated as "parachute
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payments" (within the meaning of section 280G(b)(2) of the Code)
unless, in the opinion of tax counsel selected by the Company's
independent auditors and reasonably acceptable to the Executive, such
payments or benefits (in whole or in part) do not constitute parachute
payments, including by reason of section 280G(b)(4)(A) of the Code, and
all "excess parachute payments" (within the meaning of section
280G(b)(1) of the Code) shall be treated as subject to the Excise Tax
unless, in the opinion of such tax counsel, such excess parachute
payments (in whole or in part) represent reasonable compensation for
services actually rendered (within the meaning of section 280G(b)(4)(B)
of the Code), or are otherwise not subject to the Excise Tax, and (ii)
the value of any noncash benefits or any deferred payment or benefit
shall be determined by the Company's independent auditors in accordance
with the principles of sections 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment, the
Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at
the highest
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marginal rate of taxation in the state and locality of the Executive's
residence on the Date of Termination, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such
state and local taxes.
(C) In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at
the time of termination of the Executive's employment, the Executive
shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus that portion of
the Gross-Up Payment attributable to the Excise Tax and federal, state
and local income tax imposed on the Gross-Up Payment being repaid by
the Executive to the extent that such repayment results in a reduction
in Excise Tax and/or a federal, state or local income tax deduction)
plus interest on the amount of such repayment at the rate provided in
section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the
time of the termination of the Executive's employment (including
increases in the Excise Tax resulting
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from any payment the existence or amount of which could not be
determined at the time of the Gross-Up Payment), the Company shall make
an additional Gross-Up Payment in respect of such excess (plus any
interest, penalties or additions payable by the Executive with respect
to such excess) at the time that the amount of such excess is finally
determined. The Executive and the Company shall each reasonably
cooperate with the other in connection with any administrative or
judicial proceedings concerning the existence or amount of liability
for Excise Tax with respect to the Total Payments.
6.03 The payments provided for in Section 6.01 (other than
Section 6.01(F)) and 6.02 hereof shall be made not later than the fifth (5th)
day following the Date of Termination; provided, however, that, if the amounts
of such payments cannot be finally determined on or before such day, the Company
shall pay to the Executive on such day an estimate, as determined in good faith
by the Company, of the minimum amount of such payments to which the Executive is
clearly entitled and shall pay the remainder of such payments (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as
the amount thereof can be determined
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but in no event later than the thirtieth (30th) day after the Date of
Termination. In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall constitute a
loan by the Company to the Executive, payable on the fifth (5th) business day
after demand by the Company (together with interest at the rate provided in
section 1274(b)(2)(B) of the Code). At the time that payments are made under
this Section, the Company shall provide the Executive with a written statement
setting forth the manner in which such payments were calculated and the basis
for such calculations including, without limitation, any opinions or other
advice the Company has received from outside counsel, auditors or consultants
(and any such opinions or advice which are in writing shall be attached to the
statement).
6.04 The Company also shall pay to the Executive all legal fees and
expenses incurred by the Executive as a result of a termination which entitles
the Executive to the Severance Payments (including all such fees and expenses,
if any, incurred in disputing any such termination or in seeking in good faith
to obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to the
application of section 4999 of
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the Code to any payment or benefit provided hereunder). Such payments shall be
made within five (5) business days after delivery of the Executive's written
requests for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
7. Termination Procedures and Compensation During Dispute.
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7.01 Notice of Termination. After a Change in Control and during the
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term of this Agreement, any purported termination of the Executive's employment
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
Section 10 hereof. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. Further, a Notice of Termination
for Cause is required to include a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board at a meeting of the Board which was called and held for the purpose
of considering such termination (after
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reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive was guilty of
conduct set forth in clause (i) or (ii) of the definition of Cause herein, and
specifying the particulars thereof in detail.
7.02 Date of Termination. "Date of Termination," with respect to any
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purported termination of the Executive's employment after a Change in Control
and during the term of this Agreement, shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned to the
full-time performance of the Executive's duties during such thirty (30) day
period), and (ii) if the Executive's employment is terminated for any other
reason, the date specified in the Notice of Termination (which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except in
the case of a termination for Cause) and, in the case of a termination by the
Executive, shall not be less than fifteen (15) days nor more than sixty (60)
days, respectively, from the date such Notice of Termination is given).
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7.03 Dispute Concerning Termination. If within fifteen (15)
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days after any Notice of Termination is given, or, if later, prior to the Date
of Termination (as determined without regard to this Section 7.03), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be the date on
which the dispute is finally resolved, either by mutual written agreement of the
parties or by a final judgment, order or decree (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected) of a court of competent jurisdiction; provided, however, that
the Date of Termination shall be extended by a notice of dispute only if such
notice is given in good faith and the party giving such notice pursues the
resolution of such dispute with reasonable diligence.
7.04 Compensation During Dispute. If a purported termination
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occurs following a Change in Control and during the term of this Agreement, and
such termination is disputed in accordance with Section 7.03 hereof, the Company
shall continue to pay the Executive the full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to,
salary) and continue the Executive as a participant
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in all compensation, benefit and insurance plans in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with Section 7.03 hereof. Amounts paid
under this Section 7.04 are in addition to all other amounts due under this
Agreement (other than those due under Section 5.02 hereof) and shall not be
offset against or reduce any other amounts due under this Agreement.
8. No Mitigation. The Company agrees that, if the Executive's
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employment by the Company is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section 6
or Section 7.04 hereof. Further, the amount of any payment or benefit provided
for in Section 6 (other than Section 6.01(F)) or Section 7.04 hereof shall not
be reduced by any compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
9. Successors; Binding Agreement.
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9.01 In addition to any obligations imposed by law upon any
successor to Donnelley, Donnelley will
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require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of Donnelley to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that Donnelley would be required to
perform it if no such succession had taken place. Failure of Donnelley to obtain
such assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive to
compensation in the same amount and on the same terms as the Executive would be
entitled to hereunder if the Executive were to terminate the Executive's
employment for Good Reason after a Change in Control, except that, for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
9.02 This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all
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such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the executors, personal representatives or
administrators of the Executive's estate.
10. Notices. For the purpose of this Agreement, notices and
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all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth below, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon actual receipt:
To the Company:
X.X. Xxxxxxxxx & Sons Company
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: General Counsel
To the Executive:
_________________________
_________________________
_________________________
11. Miscellaneous. No provision of this Agreement may be
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modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board. No waiver
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by either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Illinois. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law and any additional withholding to which the
Executive has agreed. The obligations of the Company and the Executive under
Sections 6 and 7 hereof shall survive the expiration of the term of this
Agreement.
12. Validity. The invalidity or unenforceability or any
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provision of this Agreement shall not affect the validity or enforceability of
any other
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provision of this Agreement, which shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in several
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counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the
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Executive for benefits under this Agreement shall be directed to and determined
by the Board and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board shall afford a reasonable opportunity
to the Executive for a review of the decision denying a claim and shall further
allow the Executive to appeal to the Board a decision of the Board within sixty
(60) days after notification by the Board that the Executive's claim has been
denied. Any further dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration in Chicago, Illinois,
in accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's
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award in any court having jurisdiction; provided, however, that the Executive
shall be entitled to seek specific performance of the Executive's right to be
paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
15. Definitions. For purposes of this Agreement, the
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following terms shall have the meanings indicated below:
(A) "Base Amount" shall have the meaning defined in
section 280G(b)(3) of the Code.
(B) "Beneficial Owner" shall have the meaning defined
in Rule 13d-3 under the Exchange Act.
(C) "Board" shall mean the Board of Directors of
Donnelley.
(D) "Bonus Plan" shall mean the Senior Management Annual
Incentive Plan or other supplementary compensation plan or bonus plan
or arrangement, or any similar successor plan or arrangement,
applicable to the Executive, other than the 1991 Stock Incentive Plan.
(E) "Cause" for termination by the Company of the
Executive's employment, after any Change in Control, shall mean (i)
the willful and continued failure by the Executive to substantially
perform the Executive's duties with the Company
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(other than any such failure resulting from the Executive's incapacity
due to physical or mental illness or any such actual or anticipated
failure after the issuance of a Notice of Termination for Good Reason
by the Executive pursuant to Section 7.01 hereof) after a written
demand for substantial performance is delivered to the Executive by
the Board, which demand specifically identifies the manner in which
the Board believes that the Executive has not substantially performed
the Executive's duties, or (ii) the willful engaging by the Executive
in conduct which is demonstrably and materially injurious to the
Company, monetarily or otherwise. For purposes of clauses (i) and (ii)
of this definition, no act, or failure to act, on the Executive's part
shall be deemed "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the
Executive's act, or failure to act, was in the best interest of the
Company.
(F) A "Change in Control" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(I) any Person is or becomes the
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Beneficial Owner, directly or indirectly, of securities of
Donnelley (not including in the securities beneficially owned
by such Person any securities acquired directly from Donnelley
or its affiliates) representing 50% or more of the combined
voting power of Donnelley's then outstanding securities; or
(II) during any period of two (2) consecutive years
(not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the Board and any new director (other than a
director designated by a Person who has entered into an
agreement with Donnelley to effect a transaction described in
clause (I), (III) or (IV) of this paragraph) whose election by
the Board or nomination for election by Donnelley's
stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved
(a "Continuing Director"), cease for any reason to constitute
a majority thereof; or
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(III) the stockholders of Donnelley approve a
merger or consolidation of Donnelley with any other
corporation, other than (i) a merger or consolidation which
would result in the voting securities of Donnelley outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, at least 50% of
the combined voting power of the voting securities of
Donnelley or such surviving entity outstanding immediately
after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of
Donnelley (or similar transaction) in which no Person acquires
more than 50% of the combined voting power of the Company's
then outstanding securities; or
(IV) the stockholders of Donnelley approve a plan
of complete liquidation of Donnelley or an agreement for the
sale or
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disposition by Donnelley of all or substantially all
Donnelley's assets.
The foregoing to the contrary notwithstanding, a Change in
Control shall not be deemed to have occurred with respect to the Executive if
(i) the event first giving rise to the Potential Change in Control involves a
publicly announced transaction or publicly announced proposed transaction which
at the time of the announcement has not been previously approved by the Board
and (ii) the Executive is "part of a purchasing group" proposing the
transaction. A Change in Control shall also not be deemed to have occurred with
respect to the Executive if the Executive is part of a purchasing group which
consummates the Change in Control transaction. The Executive shall be deemed
"part of a purchasing group" for purposes of the two preceding sentences if the
Executive is an equity participant or has agreed to become an equity participant
in the purchasing company or group (except for (i) passive ownership of less
than 5% of the stock of the purchasing company or (ii) ownership of equity
participation in the purchasing company or group which is otherwise not deemed
to be significant, as determined prior to the Change in Control by a majority of
the nonemployee Continuing Directors).
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(G) "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(H) "Company" shall mean Donnelley and its
Subsidiaries.
(I) "Company Shares" shall mean shares of common
stock of Donnelley or any equity securities into which such shares
have been converted.
(J) "Date of Termination" shall have the meaning
stated in Section 7.02 hereof.
(K) "Disability" shall be deemed the reason for the
termination by the Company of the Executive's employment, if, as a
result of the Executive's incapacity due to physical or mental
illness, the Executive shall have been absent from the full-time
performance of the Executive's duties with the Company for a period of
six (6) consecutive months, the Company shall have given the Executive
a Notice of Termination for Disability, and, within thirty (30) days
after such Notice of Termination is given, the Executive shall not
have returned to the full-time performance of the Executive's duties.
(L) "Donnelley" shall mean X.X. Xxxxxxxxx & Sons
Company and any successor to its business or assets which assumes and
agrees to perform this Agreement by operation of law, or otherwise
(except
29
in determining, under Section 15(F) hereof, whether or not any Change
in Control of Donnelley has occurred in connection with such
succession).
(M) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended from time to time.
(N) "Exchange Price" shall mean the higher of the
closing price of Company Shares reported on the New York Stock
Exchange--Composite Tape on or nearest the Date of Termination (or, if
not listed on such exchange, on the nationally recognized exchange or
quotation system on which trading volume in Company Shares is
highest).
(O) "Excise Tax" shall mean any excise tax imposed
under section 4999 of the Code.
(P) "Executive" shall mean the individual named in
the first paragraph of this Agreement.
(Q) "Good Reason" for termination by the Executive
of the Executive's employment shall mean the occurrence (without the
Executive's express written consent) of any one of the following acts
by the Company, or failures by the Company to act, unless, in the case
of any act or failure to act described in paragraph (I), (V), (VI),
(VII), or (VIII) below, such act or failure to act is
30
corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(I) the assignment to the Executive of any
duties inconsistent with the Executive's status as a senior
officer of the Company or a substantial adverse alteration in
the nature or status of the Executive's responsibilities from
those in effect immediately prior to the Change in Control;
(II) a reduction by the Company in the
Executive's annual base salary as in effect on the date hereof
or as the same may be increased from time to time;
(III) the Company's requiring that the
Executive's principal place of business be at an office
located more than 25 miles from the site of the Executive's
principal place of business immediately prior to the Change in
Control except for required travel on the Company's business
to an extent substantially consistent with the Executive's
present business travel obligations;
(IV) the failure by the Company,
31
without the Executive's consent, to pay to the Executive any
portion of the Executive's current compensation, or to pay to
the Executive any portion of an installment of deferred
compensation under any deferred compensation program of the
Company, within seven (7) days of the date such compensation
is due;
(V) the failure by the Company to continue in
effect any compensation plan in which the Executive
participates immediately prior to the Change in Control which
is material to the Executive's total compensation, including
but not limited to the Company's Senior Officers Supplementary
Compensation Plan and the Stock Plans, or any substitute plans
adopted prior to the Change in Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the failure
by the Company to continue the Executive's participation
therein (or in such substitute or alternative plan) on a basis
not materially less favorable, both in terms of the amount of
32
benefits provided and the level of the Executive's
participation relative to other participants, as existed at
the time of the Change in Control;
(VI) the failure by the Company to continue to
provide the Executive with benefits substantially similar to
those enjoyed by the Executive under any of the Company's
pension, life insurance, medical, health and accident, or
disability plans in which the Executive was participating at
the time of the Change in Control, the taking of any action by
the Company which would directly or indirectly materially
reduce any of such benefits or deprive the Executive of any
material fringe benefit enjoyed by the Executive at the time
of the Change in Control, or the failure by the Company to
provide the Executive with the number of paid vacation days to
which the Executive is entitled on the basis of years of
service with the Company in accordance with the Company's
normal vacation policy in effect at the time of the Change in
Control; or
(VII) any purported termination of
33
the Executive's employment which is not effected pursuant to a
Notice of Termination satisfying the requirements of Section
9.01 hereof; for purposes of this Agreement, no such purported
termination shall be effective.
The Executive's right to terminate the Executive's
employment for Good Reason shall not be affected by the Executive's incapacity
due to physical or mental illness. The Executive's continued employment shall
not constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.
(R) "Gross-Up Payment" shall have the meaning given
in Section 6.02 hereof.
(S) "ISOs" shall mean options qualifying as
incentive stock options under section 422A of the Code.
(T) "Normal Retirement Age" shall mean the earliest
age at which the Executive may commence Retirement and become entitled
to an unreduced pension under the Pension Plan.
(U) "Notice of Termination" shall have the meaning
stated in Section 7.01 hereof.
(V) "Options" shall mean options for
34
Company Shares granted to the Executive under any Stock Plan, other
than ISOs granted on or before the date of this Agreement and ISOs
which have not become exercisable on the Date of Termination.
(W) "Pension Plan" shall mean the Company's
Retirement Benefit Plan.
(X) "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d)
and 14(d) thereof; provided, however, that a Person shall not include
(i) Donnelley or any of its Subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, (iii) an underwriter temporarily holding securities pursuant
to an offering of such securities, or (iv) a corporation owned,
directly or indirectly, by the stockholders of Donnelley in
substantially the same proportions as their ownership of stock of
Donnelley.
(Y) "Planned Compensation" shall mean the annual
"planned compensation" approved by the Executive Committee of the
Board to be paid to the Executive (or, if the Executive's "planned
compensation" is not presented for approval at the Executive
Committee level, then as otherwise
35
established by Donnelley or one of its Subsidiaries) with respect to
the year in which the Date of Termination occurs, or with respect to
either of the previous two (2) calendar years, whichever is highest,
such "planned compensation" being a gross amount comprised of base
salary plus any bonus payable to the Executive under any Bonus Plan
for the calendar year in question, assuming any and all target levels
of achievement for the period with respect to which such bonus was
paid have been met.
(Z) a "Potential Change in Control" shall be deemed
to have occurred if the conditions set forth in any one of the
following paragraphs shall have been satisfied:
(I) Donnelley enters into an agreement, the
consummation of which would result in the occurrence of a
Change in Control;
(II) Donnelley or any Person publicly announces
an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(III) any Person who is or becomes
36
the Beneficial Owner, directly or indirectly, of securities of
Donnelley representing at least 9-1/2% or more of the combined
voting power of Donnelley's then outstanding securities
increases such Person's beneficial ownership of such
securities by 5% or more over the percentage so owned by such
Person on the date hereof; or
(IV) the Board adopts a resolution to the
effect that, for purposes of this Agreement, a Potential
Change in Control has occurred.
(AA) "Retirement" shall be deemed the reason for the
termination by the Company or the Executive of the Executive's
employment if such employment is terminated in accordance with the
Company's retirement policy, not including early retirement, generally
applicable to its salaried employees, as in effect immediately prior
to the Change in Control, or in accordance with any retirement
arrangement established with the Executive's consent with respect to
the Executive.
(BB) "Severance Payments" shall mean those payments
described in Section 6.01 hereof.
37
(CC) "Stock Plans" shall mean the Company's 1981
Stock Incentive Plan, 1986 Stock Incentive Plan, 1991 Stock Incentive
Plan and any other stock compensation plan applicable to the
Executive, or any similar successor plan or arrangement.
(DD) "Subsidiary" shall mean any corporation,
partnership or other entity, at least a majority of the outstanding
voting shares or controlling interest of which is at the time directly
or indirectly owned or controlled (either alone or through
Subsidiaries or together with Subsidiaries) by Donnelley or another
Subsidiary.
(EE) "Total Payments" shall mean those payments
described in Section 6.02 hereof.
(FF) "Transaction Price" shall mean the highest per
share price for Company Shares actually paid in connection with any
Change in Control.
X.X. XXXXXXXXX & SONS COMPANY
By ____________________________
Authorized Officer
____________________________
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