Exhibit 99.11
CHANGE IN CONTROL SEVERANCE AGREEMENT
AGREEMENT made as of April 16, 1999 between World Color Press, Inc., a
Delaware corporation (the "Company"), with offices at 000 Xxxxxxxxxx Xxxx,
Xxxxxxxxx, XX 00000, and Xxxx X. Xxxxxx (the "Executive").
WHEREAS, the Executive is employed by the Company or by one of its
wholly-owned consolidated subsidiaries.
WHEREAS, the Company wishes to encourage the Executive to remain with
and devote full time and attention to the business affairs of the Company and
wishes to provide income protection to the Executive for a period of time in the
event of a Change in Control;
NOW, THEREFORE, in consideration of the mutual agreement and
understandings set forth herein and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the Company and the
Executive hereby agree as follows:
1. DEFINITIONS.
(a) "BASE SALARY" shall mean the Executive's regular annual
rate of base pay as of the date in question.
(b) "CAUSE" shall mean the Executive's (i) conviction or
guilty plea or plea of nolo contendere of a felony involving fraud or
dishonesty, (ii) theft or embezzlement of property from the Company or
(iii) willful and continued refusal by the Executive substantially to
perform the duties of his position (other than any such failure
resulting from Executive's incapacity due to physical or mental illness
or any such actual or anticipated failure after the Executive's
issuance of a notice of termination for "Good Reason", (as defined
herein)), within a reasonable period of time after receipt of written
notice from the Company specifying the manner in which the Company
believes the Executive is not substantially performing the duties of
his position. For this definition, no act or failure to act 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 interests of the Company.
(c) A "CHANGE OF CONTROL" shall be deemed to have taken place
if: (i) any person, corporation, or other entity or group, including
any "group" as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, other than any employee benefit plan then maintained by
the Company, becomes the beneficial owner of shares of the Company
having 30 percent or more of the total number of votes that may be cast
for the election of Directors of the Company; (ii) as the result of, or
in connection with, any contested election for the Board of Directors
of the Company, or any tender or exchange offer, merger or other
business combination or sale of assets, or any
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combination of the foregoing (a "Transaction"), the persons who were
directors of the Company before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company or any
successor to the Company or its assets, or (iii) at any time (a) the
Company shall consolidate or merge with any other Person and the
Company shall not be the continuing or surviving corporation, (b) any
Person shall consolidate or merge with the Company and the Company
shall be the continuing or surviving corporation and in connection
therewith, all or part of the outstanding Company stock shall be
changed into or exchanged for stock or other securities of any other
Person or cash or any other property, (c) the Company shall be a party
to a statutory share exchange with any other Person after which the
Company is a subsidiary of any other Person, or (d) the Company shall
sell or otherwise transfer 50% or more of the assets or earning power
of the Company and its subsidiaries (taken as a whole) to any Person or
Persons.
(d) The "CHANGE IN CONTROL DATE" shall mean the date
immediately prior to the effectiveness of the Change in Control.
(e) "DATE OF TERMINATION" shall mean fifteen days following a
party's receipt of the Notice of Termination.
(f) The Executive shall have "GOOD REASON" to terminate
employment if (i) the Executive is not elected, reelected, or otherwise
continued in the office of the Company or any of its subsidiaries which
he held immediately prior to the Change in Control Date, or he is
removed as a member of the Board of Directors of the Company or any of
its subsidiaries if the Executive was a director immediately prior to
the Change in Control Date; (ii) the Executive's duties,
responsibilities, status or authority are materially reduced,
diminished or adversely altered from those in effect on the Change in
Control Date or the Executive is assigned duties inconsistent with the
Executive's status as a senior officer of the Company; (iii) the
Executive's future or current compensation or benefits are reduced;
(iv) the Company reduces the potential earnings of the Executive under
any performance-based bonus, equity or other incentive plan of the
Company in effect immediately prior to the Change in Control Date; (v)
the Company requires that the Executive's employment be based at a
location more than ten miles away from the location at which it is
based at the Change in Control Date; (vi) any purchaser, assign,
surviving corporation, or successor of the Company or its business or
assets (whether by acquisition, merger, liquidation, consolidation,
reorganization, sale or transfer of assets of business, or otherwise)
fails or refuses to expressly assume in writing this Agreement and all
of the duties and obligations of the Company hereunder pursuant to
Section 14 hereof; (vii) the Company fails to pay any amounts due to
the Executive; (viii) the Company requires the Executive to travel
substantially more than he traveled prior to the Change in Control
Date; or (ix) the Company breaches any of the provisions of this
Agreement. The Executive shall also have Good Reason in the event upon
or following a Potential Change in Control any of the foregoing shall
occur.
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(g) NOTICE OF TERMINATION. After a Change in Control and
during the 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 Paragraph 15 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.
(h) "PERSON" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Securities Exchange Act of 1934 and used in
Sections 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d).
(i) 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) The Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(II) The Company or any Person publicly announces an
intention to take or to consider taking actions which, if consummated,
would constitute a Change in Control; or
(III) The Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control has
occurred.
(j) "TARGET BONUS" shall mean the Executive's maximum bonus
eligibility under the Company's management bonus plan.
(k) "TERMINATION OF EMPLOYMENT" shall mean the termination of
the Executive's employment with the Company other than such a
termination in connection with an offer of immediate reemployment by a
successor or assign of the company or purchaser of the Company or its
assets under terms and conditions which would not permit the Executive
to terminate his employment for Good Reason.
2. TERM. The initial term of this Agreement shall be for the
period commencing on the date hereof and ending on the fifth
anniversary thereafter. The Term shall be automatically extended by one
additional day for each day beyond the fifth anniversary of the date of
this Agreement that the Executive remains employed by the Company until
such time as the Company elects to cease such extension by giving
written notice of such to the Executive. (In such event, the Agreement
shall thus terminate on the second anniversary of the effective date of
such notice).
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3. ELIGIBILITY FOR SEVERANCE BENEFITS. The Executive shall be
eligible for the benefits described in Paragraph 4 (the "Severance
Benefits") if, during the Term there has been a Change in Control and
during the two year period commencing on the Change of Control Date,
the Executive has a Termination of Employment initiated (i) by the
Company without Cause or (ii) by the Executive for Good Reason. The
Executive's employment shall also be deemed to have a Termination of
Employment following a Change in Control if the Executive's employment
is terminated in connection with or following a Potential Change in
Control and prior to the actual Change in Control.
4. SEVERANCE BENEFITS. Upon satisfaction of the requirements
set forth in Paragraph 3, and subject to Paragraphs 7 and 11, the
Executive shall be entitled to the following Severance Benefits:
(a) CASH PAYMENT. The Executive shall be entitled to
receive an amount of cash equal to three (3) times the greater of
(i) the sum of the Executive's Base Salary
and Target Bonus, in each case as in effect upon the Termination of
Employment, or
(ii) the sum of the Executive's Base Salary
and Target Bonus, in each case as in effect on the Change in Control
Date.
Notwithstanding the foregoing, in each case, the Base Salary and Target
Bonus shall be those in effect prior to any reductions giving rise to a
termination for Good Reason. The payment shall be made in a single lump
sum upon the Executive's Termination of Employment unless the Executive
shall have elected another method on the signature page hereof.
(b) EQUITY-BASED COMPENSATION. To the extent not
already vested pursuant to the terms of any option plans then in
effect, any and all (i) options, phantom units, and other awards
granted to Executive pursuant to any such plan to purchase Company
stock or which is measured by the current market value of Company stock
and (ii) restricted stock of the Company, granted to the Executive,
shall be fully vested. If the Executive shall so elect, the Company
shall, in lieu of issuing Company shares upon the exercise of
outstanding options, pay the Executive a lump sum amount, less required
withholding, equal to the difference between the aggregate exercise
price of such options and the product of the aggregate numbers of
options held by the Executive times the greater of (A) the per share
value of the consideration received by shareholders of the Company upon
the consummation of the Change in Control and (B) the fair market value
per share of the Company stock upon a Change of Control.
(c) CONTINUATION OF BENEFITS. For a thirty-six (36)
month period after the Date of Termination, the Company shall arrange
to provide the
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Executive with life, disability, accident, health and dental 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.) Benefits otherwise
receivable by the Executive pursuant to this Section shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost during the thirty-six (36)
month period following the Executive's termination of employment (and
any such benefits actually received by the Executive shall be reported
to the Company by the Executive.)
(d) RETIREMENT BENEFITS. The Company shall pay the
Executive a lump sum in an amount equal to the benefits under all
defined benefit and cash balance plans (including but not limited to
the World Color Press, Inc. Cash Balance plan and Supplemental
Executive Retirement Plan (collectively, the "Pension Plans")) which
the Executive would have accrued had he continued his employment with
the Company until the third anniversary of the Date of Termination
assuming no change in base compensation and bonus potential and
assuming full bonus payout and without regard to any amendment to the
Pension Plan(s) made subsequent to a Change in Control or a Potential
Change in Control which becomes a Change in Control.
(e) PLAN AMENDMENTS. The Company may adopt such
amendments to its employee benefit plans and insurance policies as are
necessary to effectuate the provisions of this Agreement. If and to the
extent any benefits under this Paragraph 4 are not paid or payable or
otherwise provided to the Executive or his dependents or beneficiaries
under any such plan or policy (whether due to the terms of the plan or
policy, the termination thereof, applicable law, the failure of the
Company to adopt such amendments or otherwise), then the Company itself
shall pay or provide for such benefits.
(f) LEGAL FEES. 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
Benefits (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 the Code to any payment of
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.
5. PAYMENTS OTHER THAN SEVERANCE. In the event the Severance
Benefits outlined in paragraph 4 above are payable, the Executive shall
also be entitled to all compensation and other amounts accrued, due and
owing to Executive from the Company as of the date of Termination of
Employment.
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6. EXECUTIVE'S AGREEMENTS.
(a) CONTINUATION OF EMPLOYMENT. In exchange for, and in
consideration of the Severance Benefits, Executive agrees that subject
to the terms and condition of this Agreement to remain in the employ of
the Company until the earliest of (i) a date which is six months from
the date of such Potential Change of Control, (ii) the date of a Change
in 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.
(b) NON-COMPETE. In consideration of and in connection with
the Severance Benefits provided under the Agreement, and in order to
protect the good will of the Company, the Executive hereby covenants
and agrees that for the eighteen (18) month period following his
initial receipt of Severance Benefits he shall not directly or
indirectly, own, manage, operate, join, control or participate in the
ownership, management, operation or control, or be connected as a
director, officer, employee, partner, consultant or otherwise with any
Competing Business, other than as a shareholder or beneficial owner,
directly or indirectly of five (5) percent or less of the outstanding
securities of a publicly held Competing Business. For purposes of this
Agreement, "Competing Business" means any business, firm or enterprise
engaged in a business substantially similar to the Company's business
within the same geographical locations in which the Company operates on
the Date of Termination. The Executive acknowledges and agrees that at
least one half (1/2) of the Severance Benefits received hereunder is in
exchange for this non-competition covenant.
7. GOLDEN PARACHUTE GROSS-UP. If, in the written opinion of a Big 5
accounting firm engaged by either the Company or the Executive for this
purpose (at the Company's expense), or if so alleged by the Internal
Revenue Service, the aggregate of the benefit payments under this
Agreement would cause the payment of one or more of such benefits to
constitute an "excess parachute payment" as defined in Section 280G(b)
of the Internal Revenue Code ("Code"), then the Company will pay to the
Executive an additional amount in cash (the "Gross-Up Payment") equal
to the amount necessary to cause the net amount retained by the
Executive, after deduction of any (i) excise tax on the payments under
Xxxxxxxxx 0, (xx) federal, state or local income tax on the Gross-Up
payment, and (iii) excise tax on the Gross-Up payment, to be equal to
the aggregate remuneration the Executive would have received under
Section 4, excluding such Gross-Up Payment (net of all federal, state
and local excise and income taxes), as if Sections 280G and 4999 of the
Code (and any successor provisions thereto) had not been enacted into
law. The Gross-Up Payment provided for in this Paragraph shall be made
within ten (10) days after the termination of
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Executive's employment, provided however that if the amount of the
payment cannot be finally determined at the time, the Company shall pay
to Executive an estimate as determined in good faith by the Company 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 but in no event later than the thirtieth (30th) day after
the date of termination. Any dispute concerning the application of this
paragraph shall be resolved pursuant to paragraph 10, and if Paragraph
11 applies, any reference in this Paragraph to Paragraph 4 shall also
be deemed to include a reference to Paragraph 11 as well.
8. EMPLOYMENT AT-WILL. Notwithstanding anything to the contrary
contained herein, the Executive's employment with the Company is not
for any specified term and may be terminated by the Executive or by the
Company at any time, for any reason, with or without cause, without
liability except with respect to the Severance Benefits provided
hereunder or as required by law or any other contract or employee
benefit plan.
9. WAIVER OF OTHER SEVERANCE BENEFITS. The benefits payable
pursuant to this Agreement are in lieu of any other severance benefits
which may otherwise by payable to the Executive upon termination
following a Change in Control pursuant to Agreement, policy or
practice, except those benefits which are to be made available to the
Executive as required by applicable law.
10. DISPUTE. All claims by the 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. Any dispute or controversy arising
under, out of, in connection with or in relation to this Agreement
shall, at the election and upon written demand of either party, be
finally determined and settled by binding arbitration in the city of
Greenwich, CT, using a single arbitrator, in accordance with the Labor
Arbitration rules and procedures of the American Arbitration
Association, and judgment upon the award may be entered in any court
having jurisdiction thereof. The arbitrator shall have the power to
order specific performance, mandamus, or other appropriate legal or
equitable relief to enforce the provisions of this Agreement. The
company shall pay all costs of the arbitration and all reasonable
attorney's and accountant's fees of the Executive in connection
therewith.
11. COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control or a Potential Change in Control leading
to a Change in Control and during the Term of this Agreement, and such
termination is disputed by any party, the Company shall continue to pay
the Executive the full compensation in effect when the notice giving
rise to
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the dispute was given (including, but not limited to, salary) and
continue the Executive as a participant 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 Paragraph 10 hereof. Amounts paid
under this paragraph 11 are in addition to all other amounts due under
this Agreement (other than those due under paragraph 5 hereof) and
shall not be offset against or reduce any other amounts due under this
Agreement. In addition, any Gross-Up Payment due under Paragraph 7
shall be increased to take into account any increased benefits under
this Paragraph.
12. NO SET-OFF. There shall be no right of set-off or counterclaim
in respect of any claim, debt, or obligation against any payment to or
benefit for the Executive provided for in this Agreement.
13. NO MITIGATION OBLIGATION. The parties hereto expressly agree
that the payment of the benefits by the Company to the Executive in
accordance with the terms of this Agreement will be liquidated damages,
and that the Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment
or otherwise, not shall any profits, income, earnings or other benefits
from any source whatsoever create any mitigation, offset, reduction or
any other obligation on the part of the Executive hereunder or
otherwise.
14. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company or by any merger or
consolidation where the Company is not the surviving corporation, or
upon any transfer of all or substantially all of the Company's assets,
or any other Change in Control. The Company shall require any
purchaser, assign, surviving corporation, or successor (whether direct
or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business and/or assets of
the Company, by agreement in the form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent the Company would be required to
perform if no such succession had taken place. This Agreement shall be
binding upon and inure to the benefit of the Company and any purchaser,
assign, surviving corporation of successor to the Company, including
without limitation any persons acquiring directly or indirectly all or
substantially all of the business and assets of the Company whether by
purchase, merger, consolidation, reorganization, transfer of all or
substantially all of the business or assets of the Company, or
otherwise (and such purchaser, assign, surviving corporation or
successor shall thereafter be deemed the "Company" for the purposes of
this Agreement), but this Agreement shall not otherwise be assignable,
transferable or delegable by the Company.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or
legatees.
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(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in this Section 14. Without
limiting the generality of the foregoing, the Executive's right to
receive payments hereunder shall not be assignable, transferable or
delegable, whether by pledge, creation of a security interest or
otherwise, or otherwise subject to anticipation, alienation, sale,
encumbrance, charge, hypothecation, or set-off in respect of any claim,
debt, or obligation, or to execution, attachment, levy or similar
process, or assignment by operation of law, other than by a transfer by
his will or by the laws of descent and distribution. Any attempt,
voluntary or involuntary, to effect any action prohibited by this
Paragraph shall be null, void, and of no effect.
15. NOTICES. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt
(or refusal or receipt) and shall be in writing and delivered
personally or sent by telex, telecopy, or certified or registered mail,
postage prepaid, or other similar means of communication, as follows:
(a) If to the Company, addressed to its principal executive
offices to the attention of its Secretary;
(b) If to the Executive, to him or her at the address set
forth below under the Executive's signature; or at any such other
address as either party shall have specified by notice in writing to
the other.
16. AMENDMENTS; WAIVERS. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, signed by
the Executive and by a duly authorized representative of the Company.
By an instrument in writing similarly executed, either party may waive
compliance by the other party with any provision of this Agreement that
such other party was or is obligated to comply with or perform;
provided, however, that such waiver shall not operate as a waiver of,
estoppel with respect to, any other or subsequent failure. No failure
to exercise and no delay in exercising any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, or power hereunder preclude any
other or further exercise thereof or the exercise of any other right,
remedy, or power provided herein or by law or in equity.
17. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreement, promises,
covenants, arrangement, communication, representations or warranties,
whether oral or written, by any officer, employee or representative of
any party hereto. The parties further intend that this Agreement shall
constitute the complete and exclusive statement of its terms and that
no extrinsic evidence whatsoever may be introduced in any judicial,
administrative, or other legal proceeding involving this Agreement.
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18. SEVERABILITY; ENFORCEMENT. If any provision of this Agreement,
or the application thereof to any person, place or circumstance shall
be held by a court of competent jurisdiction to be invalid,
unenforceable or void, the remainder of this Agreement and such
provisions as applied to other persons, places and circumstances shall
remain in full force and effect.
19. INDEMNIFICATION. The Company shall indemnify, defend, and hold
the Executive harmless from and against any liability, damaged, costs,
or expenses (including attorney's fees) in connection with any claim,
cause of action, investigation, litigation, or proceeding involving him
by reason of his having been an officer, director, employee, or agent
of the Company, unless it is judicially determined, in a final,
nonappealable order, that the Executive was guilty of gross negligence
or willful misconduct. The Company also agrees to maintain adequate
directors and officer liability insurance for the benefit of Executive
for the term of this Agreement and for at least three years thereafter.
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20. GOVERNING LAW. This Agreement shall be interpreted,
administered and enforced in accordance with the law of the State of
Connecticut, except to the extent pre-empted by Federal law.
The parties have duly executed this Agreement as of the date first
written above.
EXECUTIVE
By:
-------------------------- -----------------------
Xxxx X. Xxxxxx
00 Xxxxxx Xxx
Xxxxxxxxx, XX 00000
Form of Cash Benefit Payment paragraph 4(a)
_____ One lump sum payment
_____ Equal monthly installment payments each in the
amount of Executive's monthly Base Salary as of the
date of termination of employment.
---------------------------
Xxxx X. Xxxxxx
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