EXHIBIT 10(U)
CHANGE IN CONTROL AND
TERMINATION BENEFITS AGREEMENT
THIS AGREEMENT is entered into as of the ___ day of _________, 1999 by
and between Multigraphics, Inc., a Delaware corporation (the "COMPANY"), and
________________ (the "EXECUTIVE").
W I T N E S S E T H
WHEREAS, the Executive currently serves as a key employee of the
Company or one of its subsidiaries and his services and knowledge are valuable
to the Company in connection with the management of the Company and its
operations; and
WHEREAS, the Board (as defined in Section 1) has determined that it is
in the best interests of the Company and its stockholders to secure the
Executive's continued services and to ensure Executive's continued dedication
and objectivity in the event of any threat or occurrence of, or negotiation or
other action that could lead to, or create the possibility of, a Change in
Control (as defined in Section 1) of the Company, without concern as to whether
the Executive might be hindered or distracted by personal uncertainties and
risks created by any such possible Change in Control, and to encourage the
Executive's full attention and dedication to the Company, the Board has
authorized the Company to enter into this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements herein contained, the Company and the Executive
hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the respective meanings set forth below:
(a) "BOARD" means the Board of Directors of the Company.
(b) "CAUSE" means (1) embezzlement or misappropriation of corporate
funds, other act of dishonesty, significant activities harmful to the reputation
of the Company, willful refusal to perform or substantial disregard of the
duties properly assigned to the Executive which do not differ in any material
respect from the duties and responsibilities of Executive on the date hereof
(other than as a result of the Executive's Incapacity), or significant violation
of any statutory or common law duty of loyalty to the Company or (2) a material
breach by Executive of this Agreement. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Executive a copy of a resolution duly
adopted by the affirmative
1
vote of not less than a majority of the entire membership of the Board at a
meeting of the Board called and held for the purpose (after reasonable notice to
the Executive and an opportunity for the Executive, together with his counsel,
to be heard before the Board), finding that in the good faith opinion of the
Board, the Executive engaged in the conduct set forth above in this subsection
(b) and specifying the particulars thereof in reasonable detail.
(c) "CHANGE IN CONTROL" means:
(1) the acquisition by any individual, entity or group (a "PERSON"),
including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), of beneficial
ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act,
of 50% or more of either (i) the then outstanding shares of common stock of the
Company (the "OUTSTANDING COMMON STOCK") or (ii) the combined voting power of
the then outstanding securities of the Company entitled to vote generally in the
election of directors (the "OUTSTANDING VOTING SECURITIES"); excluding, however,
the following: (a) any acquisition directly from the Company (excluding any
acquisition resulting from the exercise of an exercise, conversion or exchange
privilege unless the security being so exercised, converted or exchanged was
acquired directly from the Company), (b) any acquisition by the Company, (c) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (d)
any acquisition by any corporation pursuant to a transaction which complies with
clause (i) or (ii) of subsection 1(c)(3); PROVIDED FURTHER, that for purposes of
clause (b), if any Person (other than the Company or any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company) shall become the beneficial owner of 50% or more of
the Outstanding Common Stock or 50% or more of the Outstanding Voting Securities
by reason of an acquisition by the Company, and such Person shall, after such
acquisition by the Company, become the beneficial owner of any additional shares
of the Outstanding Common Stock or any additional Outstanding Voting Securities
and such beneficial ownership is publicly announced, such additional beneficial
ownership shall constitute a Change in Control; or
(2) individuals who, as of the date hereof, constitute the Board (the
"INCUMBENT BOARD") cease for any reason to constitute at least a majority of
such Board; PROVIDED that any individual who becomes a director of the Company
subsequent to the date hereof whose election, or nomination for election by the
Company's stockholders, was approved by the vote of at least a majority of the
directors then comprising the Incumbent Board shall be deemed to have been a
member of the Incumbent Board; and PROVIDED FURTHER, that no individual who was
initially elected as a director of the Company as a result of an actual or
threatened election contest, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act, or any other actual or threatened
solicitation of proxies or consents by or on behalf of any Person other than the
Board shall be deemed to have been a member of the Incumbent Board; or
2
(3) consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the Company (a
"CORPORATE TRANSACTION"); excluding, however, a Corporate Transaction pursuant
to which (i) all or substantially all of the individuals or entities who are the
beneficial owners, respectively, of the Outstanding Common Stock and the
Outstanding Voting Securities immediately prior to such Corporate Transaction
will beneficially own, directly or indirectly, more than 60% of, respectively,
the outstanding shares of common stock, and the combined voting power of the
outstanding securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's assets
either directly or indirectly) in substantially the same proportions relative to
each other as their ownership, immediately prior to such Corporate Transaction,
of the Outstanding Common Stock and the Outstanding Voting Securities, as the
case may be, or (ii) individuals who were members of the Incumbent Board will
constitute at least a majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction; or
(4) consummation of a plan of complete liquidation or dissolution of
the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "DATE OF TERMINATION" means (1) the effective date on which the
Executive's employment by the Company terminates as specified in a prior written
notice by the Company or the Executive, as the case may be, to the other,
delivered pursuant to Section 9 or (2) if the Executive's employment by the
Company terminates by reason of death, the date of death of the Executive.
(f) "GOOD REASON" means, without the Executive's express written
consent, the occurrence of any of the following events:
(1) any of (i) the assignment to the Executive of any duties
inconsistent in any material respect with the Executive's position(s), duties,
responsibilities or status with the Company immediately prior to a Change in
Control, (ii) an effective change in the Executive's reporting responsibilities,
titles or offices with the Company as in effect on the date hereof, (iii) any
removal or involuntary termination of the Executive from the Company otherwise
than as expressly permitted by this Agreement or any failure to re-elect the
Executive to any position with the Company held by the Executive immediately
prior to the date hereof or (iv) any material breach by the Company of this
Agreement; or
(2) a reduction by the Company in the Executive's rate of annual base
salary as in effect on the date hereof or as the same may be increased from time
to time thereafter; or
3
(3) any requirement of the Company that the Executive (i) relocate
from the Chicago metropolitan area or (ii) travel on Company business to an
extent substantially more burdensome than the travel obligations of the
Executive on the date hereof; PROVIDED, HOWEVER, that traveling not more than an
average of once per month to and from the offices of the person who effects a
Change in Control shall not be deemed to be Good Reason; or
(4) the failure of the Company to (i) continue in effect any employee
benefit plan or compensation plan in which the Executive is participating on the
date hereof (including, without limitation, the Company's Executive Incentive
Compensation Plan or a replacement plan thereto), unless the Executive is
permitted to participate in other plans providing the Executive with
substantially comparable benefits, or the taking of any action by the Company
which would adversely affect the Executive's participation in or materially
reduce the Executive's benefits under any such plan, (ii) provide the Executive
and the Executive's dependents welfare benefits (including, without limitation,
medical, prescription, dental, disability, salary continuance, employee life,
group life, accidental death and travel accident insurance plans and programs)
in accordance with the most favorable plans, practices, programs and policies of
the Company and its affiliated companies in effect for the Executive on the date
hereof or, if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company and its
affiliated companies, (iii) provide fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive on the date hereof or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies,
(iv) provide an office of a size and with furnishings and other appointments,
together with secretarial and other assistance, at least equal to the most
favorable of the foregoing provided to the Executive by the Company and its
affiliated companies on the date hereof or, if more favorable to the Executive,
as provided generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies, (v) provide the
Executive with paid vacation and paid time off for illness in accordance with
the most favorable plans, policies, programs and practices of the Company and
its affiliated companies as in effect for the Executive on the date hereof or,
if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies, or (vi) reimburse the Executive promptly for all
reasonable employment expenses incurred by the Executive in accordance with the
most favorable policies, practices and procedures of the Company and its
affiliated companies in effect for the Executive on the date hereof or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies; or
(5) the failure of the Company to obtain the assumption agreement
from any successor or transferee as contemplated in Section 8(b); or
(6) any request by a director or executive officer of the Company
that the Executive participate in an unlawful act or take any action
constituting a breach of the Executive's professional standard of conduct.
4
For purposes of this Agreement, any good faith determination of Good
Reason made by the Executive shall be conclusive; PROVIDED, HOWEVER, that an
isolated, insubstantial and inadvertent action taken in good faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive shall not constitute Good Reason.
Notwithstanding anything in this Agreement to the contrary, the
Executive's right to terminate his employment for Good Reason shall not be
affected by his Incapacity.
(g) "INCAPACITY" means such physical or mental condition of the
Executive as is expected to continue indefinitely and which renders the
Executive incapable of performing any substantial portion of the Executive's
duties and responsibilities (as confirmed by competent medical evidence).
(h) "QUALIFYING TERMINATION" means a termination of the Executive's
employment (1) by the Company for any reason other than for Cause or the
Executive's Incapacity or (2) by the Executive for a Good Reason.
(i) "RETIREMENT PLANS" means the Company's 401(k) plan(s), the
Retirement Accumulation Plan or any successor plans.
(j) "TERMINATION PERIOD" means the period of time beginning on the
date a Change in Control occurs and ending on the earlier to occur of (i) the
date which is 18 months after the date of such Change in Control and (ii) the
Executive's death.
2. PAYMENTS UPON TERMINATION OF EMPLOYMENT.
(a) If (x) during the Termination Period the employment of the
Executive shall terminate by reason of a Qualifying Termination or (y) the
employment of the Executive shall be terminated prior to a Change in Control by
the Company for any reason other than for Cause or the Executive's Incapacity at
a time when the Company is a party (or within 180 days after the effective date
of such termination of employment the Company becomes a party (the date the
Company becomes such a party being an "AGREEMENT DATE")) to a letter of intent
which contemplates effecting, or a binding written agreement (subject to
customary closing conditions) to effect, a transaction constituting a Change in
Control, then the Company shall pay to Executive (or the Executive's beneficiary
or estate), as compensation for services rendered to the Company:
(1) within 30 days after the Date of Termination (or within 30 days
after any Agreement Date), a lump sum cash amount equal to the sum of:
(i) the Executive's full annual base salary from the Company and its
affiliated companies through and including the Date of Termination, and the
Executive's annual bonus, as determined or if not yet determined, as determined
in a manner consistent with similar determinations with respect to other peer
executives of the Company and its affiliated
5
companies, in respect of the fiscal year immediately preceding the fiscal
year in which the Date of Termination occurs, each to the extent not
previously paid, and
(ii) any compensation previously deferred by the Executive (together
with any interest and earnings thereon) and any accrued vacation pay, in each
case to the extent not previously paid; plus
(2) within 30 days after the Date of Termination (or within 30
days after any Agreement Date), a lump sum cash amount equal to one and
one-half (1-1/2) times the Executive's highest rate of annual base salary
from the Company and its affiliated companies in effect at any time on or
after the date hereof and prior to the Date of Termination; PROVIDED,
HOWEVER, that any amount paid pursuant to this Section 2(a)(2) shall be paid
in lieu of any other amount of severance relating to salary continuation to
be received by the Executive upon termination of employment of the Executive
under any severance plan, policy or arrangement of the Company; plus
(3) within 30 days after the Date of Termination (or within 30 days
after any Agreement Date), a lump sum cash amount representing the Executive's
annual bonus (which amount shall be pro rated as set forth below) in respect of
the fiscal year in which the Date of Termination occurs in an amount determined
in accordance with the Company's Executive Incentive Compensation Plan or a
replacement plan thereto; PROVIDED, HOWEVER, that if the Date of Termination
occurs on or prior to the end of the second fiscal quarter of the Company, such
bonus shall be the target bonus of the Executive for such fiscal year; PROVIDED,
FURTHER, that if the Date of Termination occurs on or prior to the end of the
third fiscal quarter of the Company, the level of performance or the
satisfaction of performance criteria applicable to determining the amount of
such bonus shall be annualized and shall be determined based upon unaudited
financial statements and/or performance as of the last day (for performance
criteria based on balance sheet or similar items), or for the six-month period
ending on the last day (for performance criteria based on statement of
operations or similar items), of the second fiscal quarter of the fiscal year in
which the Date of Termination occurs; PROVIDED, FURTHER, that if the Date of
Termination occurs during the fourth fiscal quarter of the Company, the level of
performance or the satisfaction of performance criteria applicable to
determining the amount of such bonus shall be annualized and shall be determined
based upon unaudited financial statements and/or performance as of the last day
(for performance criteria based on balance sheet or similar items), or for the
nine-month period ending on the last day (for performance criteria based on
statement of operations or similar items), of the third fiscal quarter of the
fiscal year in which the Date of Termination occurs; PROVIDED, FURTHER, that the
amount of the Executive's bonus shall be the amount, if any, determined in
accordance with one of the four immediately preceding provisos, multiplied by a
fraction, the numerator of which is the number of days in the fiscal year in
which the Date of Termination occurs through and including the Date of
Termination and the denominator of which is 365 or 366, as applicable; and
PROVIDED FURTHER, that any amount paid pursuant to this Section 2(a)(3) shall be
paid in lieu of any other amount of severance relating to the Executive's annual
bonus to be
6
received by the Executive upon termination of employment of the Executive
under any severance plan, policy or arrangement of the Company.
(b) (1) In addition to the payments to be made pursuant to
paragraph (a) of this Section 2, if on the Date of Termination the Executive
shall not be fully vested in the employer contributions made on his behalf
under the Retirement Plans, then the Company shall pay to the Executive
within 30 days after the Date of Termination (or within 30 days after any
Agreement Date) a lump sum cash amount equal to the value of the unvested
portion of such employer contributions; PROVIDED, HOWEVER, that if any
payment pursuant to this Section 2(b)(1) may or would result in such payment
being deemed a transaction which is subject to Section 16(b) of the
Securities Exchange Act of 1934, as amended, the Company shall make such
payment so as to meet the conditions for an exemption from such Section 16(b)
as set forth in the rules (and interpretive and no-action letters relating
thereto) under Section 16. The value of any such unvested employer
contributions shall be determined as of the Date of Termination; PROVIDED,
HOWEVER, that the value of a share of common stock of the Company shall be
the average closing price on the principal stock exchange or quotation system
for the 10 trading days ending on the Date of Termination or, if such date is
not a trading day, for the 10 trading days ending on the immediately
preceding trading day.
(2) For a period of 18 months commencing on the Date of Termination
(or any Agreement Date), the Company shall continue to keep in full force and
effect (or shall cause a successor to keep in full force and effect or shall
cause to be provided by a third-party provider) all policies of medical,
prescription, dental, accident, disability and life insurance with respect to
the Executive and the Executive's spouse and other dependents with the same
level of coverage, upon the same terms and otherwise to the same extent as such
policies shall have been in effect immediately prior to the Date of Termination
or, if more favorable to the Executive, as provided generally with respect to
other peer executives of the Company and its affiliated companies. The
obligation of the Company to continue coverage of the Executive and the
Executive's spouse and other dependents under such policies shall cease at such
time as the Executive and the Executive's spouse and other dependents obtain
substantially comparable coverage under another policy or policies, including a
policy maintained by another employer.
3. LIMITATION ON PAYMENTS BY THE COMPANY. (a) Anything in this
Agreement to the contrary notwithstanding, it is the intention of the Company
and the Executive that no portion of any payment under this Agreement, or
payments to or for the benefit of the Executive under any other agreement or
plan, be deemed to be an "EXCESS PARACHUTE PAYMENT" as defined in Section 280G
of the Code, or its successors. It is agreed that the present value of and
payments to or for the benefit of the Executive in the nature of compensation,
receipt of which is contingent on occurrence of a Change in Control, and to
which Section 280G of the Code applies (in the aggregate "TOTAL PAYMENTS") shall
not exceed an amount equal to one dollar less than the maximum amount that the
Company may pay without loss of deduction under Section 280G(a) of the Code.
Present value for purposes of this Agreement shall be calculated in accordance
with Section 280G(d)(4) of the Code. Within sixty (60) days following the
earlier of (i) the giving of the notice of termination of
7
employment or (ii) the giving of notice by the Company to the Executive of
its belief that there is a payment or benefit due the Executive which will
result in an Excess Parachute Payment, the Executive and the Company, at the
Company's expense, shall obtain the opinion of the Accounting Firm, which
opinion need not be unqualified, which sets forth: (i) the amount of the
"BASE PERIOD INCOME" of the Executive (as defined in Code Section 280G), (ii)
the present value of Total Payments and (iii) the amount and present value of
any Excess Parachute Payments. In the event that such opinion determines
that there would be an Excess Parachute Payment, the payment hereunder shall
be modified, reduced or eliminated as specified by the Executive in writing
delivered to the Company within thirty (30) days of his receipt of such
opinion or, if the Executive fails to so notify the Company, then as the
Company shall reasonably determine, so that under the bases of calculation
set forth in such opinion there will be no Excess Parachute Payment. In the
event that the provisions of Sections 280G and 4999 of the Code are repealed
without succession, this Section shall be of no further force or effect.
(b) In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change in Control, the
Executive shall appoint another nationally recognized "Big Five" public
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm under this Section 3).
All fees and expenses of the Accounting Firm shall be borne solely by the
Company. Any determination by the Accounting Firm shall be binding upon the
Company and the Executive.
4. WITHHOLDING TAXES. The Company may withhold from all payments
due to the Executive (or the Executive's beneficiary or estate) hereunder all
taxes which, by applicable federal, state, local or other law, the Company is
required to withhold therefrom.
5. REIMBURSEMENT OF EXPENSES. If any contest or dispute shall arise
under this Agreement involving termination of the Executive's employment with
the Company or its affiliated companies or involving the failure or refusal of
the Company to perform fully in accordance with the terms hereof, the Company
shall reimburse the Executive, on a current basis, for all legal fees and
expenses, if any, incurred by the Executive in connection with such contest or
dispute, together with interest in an amount equal to the prime rate quoted in
the "Money Rates" section of THE WALL STREET JOURNAL from time to time
in effect, but in no event higher than the maximum legal rate permissible
under applicable law, such interest to accrue from and including the date the
Company receives the Executive's statement for such fees and expenses through
but excluding the date of payment thereof; PROVIDED, HOWEVER, that in the
event the resolution of any such contest or dispute includes a finding
denying, in total, the Executive's claims in such contest or dispute, the
Executive shall be required to reimburse the Company, over a period of 12
months from the date of such resolution, for all sums advanced to the
Executive pursuant to this Section 5, together with interest in an amount
equal to the prime rate quoted in the "Money Rates" section of THE WALL
STREET JOURNAL from time to time in effect.
8
6. TERMINATION OF AGREEMENT. (a) This Agreement shall be effective
on the date hereof and shall continue until terminated by the Company as
provided in Section 6(b); PROVIDED, HOWEVER, that this Agreement shall terminate
in any event upon the earlier to occur of (i) subject to Section 2(a)(y),
termination of the Executive's employment with the Company prior to a Change in
Control and (ii) the Executive's death.
(b) The Company shall have the right prior to a Change in Control, in
its sole discretion, pursuant to action by the Board, to approve the termination
of this Agreement, which termination shall not become effective until the date
fixed by the Board for such termination, which date shall be at least 180 days
after notice thereof is given by the Company to the Executive in accordance with
Section 9; PROVIDED, HOWEVER, that no such action shall be taken by the Board
during any period of time when the Board has knowledge that any person has taken
steps reasonably calculated to effect a Change in Control until, in the opinion
of the Board, such person has abandoned or terminated its efforts to effect a
Change in Control; and PROVIDED FURTHER, that in no event shall this Agreement
be terminated in the event of a Change in Control.
7. SCOPE OF AGREEMENT. Nothing in this Agreement shall be deemed to
entitle the Executive to continued employment with the Company or its
subsidiaries, and except as set forth in Section 2(a)(y), if the Executive's
employment with the Company shall terminate prior to a Change in Control, then
the Executive shall have no further rights under this Agreement; PROVIDED,
HOWEVER, that any termination of the Executive's employment following a Change
in Control shall be subject to all of the provisions of this Agreement.
8. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall not be terminated by any merger or
consolidation of the Company whereby the Company is or is not the surviving or
resulting corporation or as a result of any transfer of all or substantially all
of the assets of the Company. In the event of any such merger, consolidation or
transfer of assets, the provisions of this Agreement shall be binding upon the
surviving or resulting corporation or the person or entity to which such assets
are transferred.
(b) The Company agrees that concurrently with any merger,
consolidation or transfer of assets referred to in paragraph (a) of this Section
8, it will cause any successor or transferee unconditionally to assume, by
written instrument delivered to the Executive (or the Executive's beneficiary or
estate), all of the obligations of the Company hereunder. Failure of the
Company to obtain such assumption prior to the effectiveness of any such merger,
consolidation or transfer of assets shall be a breach of this Agreement and
shall entitle the Executive to compensation and other benefits from the Company
in the same amount and on the same terms as the Executive would be entitled
hereunder if the Executive's employment were terminated following a Change in
Control by reason of a Qualifying Termination. For purposes of implementing the
foregoing, the date on which any such merger, consolidation or transfer becomes
effective shall be deemed the Date of Termination.
9
(c) 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 amounts would be payable to the Executive hereunder had the
Executive continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to such person or
persons appointed in writing by the Executive to receive such amounts or, if no
person is so appointed, to the Executive's estate.
9. NOTICE. (a) For purposes of this Agreement, all notices and
other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered or five days after
deposit in the United States mail, certified and return receipt requested,
postage prepaid, addressed (1) if to the Executive, to his address as set forth
in the records of the Company, and if to the Company, to the Company's principal
executive offices, attention Chief Financial Officer, or (2) to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon
actual receipt.
(b) A written notice of the Executive's Date of Termination by the
Company or by the Executive, as the case may be, to the other, shall (i)
indicate the specific termination provision in this Agreement relied upon, (ii)
to the extent applicable, 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 and (iii) specify the termination
date (which date shall be not less than 15 days after the giving of such
notice). The failure by the Executive or the Company to set forth in such
notice any fact or circumstance which contributes to a showing of Good Reason or
Cause shall not waive any right of the Executive or the Company hereunder or
preclude the Executive or the Company from asserting such fact or circumstance
in enforcing the Executive's or the Company's rights hereunder.
10. FULL SETTLEMENT; RESOLUTION OF DISPUTES. (a) The Company's
obligation to make any payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, such amounts shall not be reduced whether or
not the Executive obtains other employment.
(b) Any controversy or claim arising out of this Agreement, or breach
hereof, shall be settled by arbitration in the Chicago metropolitan area in
accordance with the laws of the State of Illinois by three disinterested
arbitrators, one of whom shall be appointed by the Company, one by the
Executive, and the third of whom shall be appointed by the first two
arbitrators. If the third arbitrator cannot be agreed upon, the third
arbitrator shall be appointed by the Chief Judge of the United States Court of
Appeals for the Seventh Circuit. The arbitration shall be conducted in
accordance with the rules of the American Arbitration
10
Association, except with respect to the selection of arbitrators. The
arbitrators' determination shall be final and binding upon all parties and
judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof.
(c) If there shall be any dispute between the Company and the
Executive in the event of any termination of the Executive's employment, then,
unless and until there is a final determination by the arbitrators as set forth
in the foregoing subsection (b) declaring that such termination was for Cause,
that the determination by the Executive of the existence of Good Reason was not
made in good faith, or that the Company is not otherwise obligated to pay any
amount or provide any benefit to the Executive and the Executive's spouse and
other dependents or other beneficiaries, as the case may be, under Section 2,
the Company shall pay all amounts, and provide all benefits, to the Executive
and the Executive's spouse and other dependents or other beneficiaries, as the
case may be, that the Company would be required to pay or provide pursuant to
Section 2 as though such termination were by the Company without Cause or by the
Executive with Good Reason; PROVIDED, HOWEVER, that the Company shall not be
required to pay any disputed amounts pursuant to this paragraph except upon
receipt of an undertaking by or on behalf of the Executive to repay all such
amounts to which the Executive is ultimately adjudged by such court not to be
entitled.
11. EMPLOYMENT WITH SUBSIDIARIES. Employment with the Company for
purposes of this Agreement shall include employment with any corporation or
other entity in which the Company has a direct or indirect ownership interest of
50% or more of the total combined voting power of the then outstanding
securities of such corporation or other entity entitled to vote generally in the
election of directors.
12. PARTICIPATION IN CHANGE IN CONTROL. The Executive agrees to
notify the Company promptly of the Executive's determination to participate, or
of any request, inquiry or invitation from any person that the Executive
participate, in any activity or transaction which might reasonably be expected
to result in a Change in Control.
13. GOVERNING LAW; VALIDITY. The interpretation, construction and
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Illinois without regard to its
conflicts of laws principles. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which other provisions shall remain in
full force and effect.
14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
11
15. MISCELLANEOUS. No provision of this Agreement may be modified
or waived unless such modification or waiver is agreed to in writing and
signed by the Executive and by a duly authorized officer of the Company. No
waiver 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. Failure by the Executive or the Company to insist upon strict
compliance with any provision of this Agreement or to assert any right the
Executive or the Company may have hereunder, including, without limitation,
the right of the Executive to terminate employment for Good Reason, shall not
be deemed to be a waiver of such provision or right or any other provision or
right of this Agreement. Except as otherwise specifically set forth herein,
the rights of, and benefits payable to, the Executive or the Executive's
estate or beneficiaries pursuant to this Agreement are in addition to any
rights of, or benefits payable to, the Executive or the Executive's estate or
beneficiaries under any other employee benefit plan or compensation program
of the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized member of the Compensation and Management
Committee of the Board and the Executive has executed this Agreement as of the
day and year first above written.
MULTIGRAPHICS, INC.
By:_____________________________________
Xxxxxxx X. Xxxxxxxx
Director, Chairman Compensation and
Management Committee
_____________________________________
Executive
12
