Exhibit 10.10
XXXXX CORPORATION LIMITED
c/x Xxxxx Executive Offices
Xxx Xxxxxxxxxx Xxxxx 0xx Xxxxx
Xxxxxxxx, XX 00000
December 9, 2002
Xxxx X. Xxxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Xxxx:
On behalf of Xxxxx Corporation Limited (the "Company"), we are all
extremely pleased that you have agreed to serve as the Chief Executive Officer
(the "CEO") of the Company, effective as of January 1, 2003, in accordance with
the provisions of this letter agreement (this "Agreement"), which governs the
terms of your employment. We and you hereby acknowledge that your employment
with the Company constitutes "at-will" employment and that either party may
terminate this Agreement at any time, upon written notice of termination within
a reasonable period of time before the effective date of the termination. With
respect to the terms of your employment with the Company, you will have the
customary duties, responsibilities and authorities of a chief executive officer
at a corporation of a similar size and nature. You will report to the board of
directors of the Company. You will also receive such office, staffing, and other
assistance commensurate with that received by such other chief executive
officers.
With respect to compensation for your services as CEO of the Company, you
will receive the following compensation and benefits, from which the Company may
withhold any amounts required by applicable law:
(i) The Company will pay you a base salary ("Base Salary") at the
rate of U.S. $1,000,000 per year. This Base Salary will be paid in
accordance with the normal payroll practices of the Company.
(ii) The Company will pay you an annual bonus (the "Annual Bonus")
in two components of not less than U.S. $1,000,000 each on an
all-or-nothing basis in respect of each fiscal year of the Company in
accordance with the Company's annual incentive compensation plan if the
Company achieves the performance objectives set forth by the board of
directors of the Company (the "Board") (or any designated committee
thereof) from time to time, after consultation with you;
(iii) You will be immediately eligible to participate in any
nonqualified pension plans (with no waiting period) and qualified plans,
if any (subject to
applicable waiting periods), in which the senior executive officers of the
Company customarily participate, and, in any event, you will be eligible
(a) to participate in the Company's Supplemental Executive Retirement Plan
and Supplemental Executive Health Plan, (b) for medical, hospital, dental,
vision, life and accidental death and dismemberment insurance in customary
amounts, and (c) to receive customary financial planning services; and
(iv) You will be eligible for four (4) weeks vacation annually.
If (i) the Company terminates your employment as CEO without Cause, as
defined in Annex A, (ii) you terminate your employment for Good Reason, as
defined in Annex A, prior to the third (3rd) anniversary hereof, or (iii) you
terminate your employment for any reason after the third (3rd) anniversary
hereof, the Company will pay you in a cash lump sum, an amount equal to two
times your Annualized Total Compensation (as defined below), subject to the
execution by you of a customary release; provided that if the Company terminates
your employment as CEO without Cause between January 1, 2004 and January 15,
2004, the cash lump sum payable by the Company shall be in an amount equal to
your Annualized Total Compensation. In the event the Company terminates your
employment as CEO without cause, in addition to the severance payments outlined
in the immediately preceding sentence, you shall receive a pro rata portion of
your Annual Bonus (as if all necessary targets and objectives have been met)
calculated based upon the number of months (including any partial month as a
whole month) in the relevant year during which you were employed as CEO plus, if
applicable, any portion of the Annual Bonus relating to a previous year that has
not yet been paid. Your rights of indemnification under the Company's and its
subsidiaries' and affiliates' organizational documents, any plan or agreement at
law or otherwise and your rights thereunder to director's and officer's
liability insurance coverage for, in both cases, actions as an officer and
director of the Company and its affiliates shall survive any termination of your
employment.
"Annualized Total Compensation" means Base Salary plus Annual Bonus (as if
all necessary targets and objectives were met) for one year at the rate in
effect immediately before the date your employment with the Company is
terminated (the "Termination Date").
If the Company terminates your employment without Cause, or if you
terminate your employment for Good Reason, following a Change in Control, as
defined in Annex A, such amount will be increased to three times rather than two
times Annualized Total Compensation and, if applicable, you will be entitled to
receive Gross-Up Payments as described in Annex B. Any termination by the
Company without Cause or termination by you for Good Reason, which takes place
within six (6) months prior to a Change in Control, shall be, presumptively, a
termination following a Change in Control. Upon any termination by the Company
without Cause or termination by you for Good Reason, all outstanding stock
options, grants, restricted stock awards or other equity grants issued to you
will vest 100% immediately either as of the Termination Date (in the case of a
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termination by the Company without Cause or a termination by you for Good
Reason) or prior to the Change in Control becoming effective (solely in the
event that upon or in connection with such Change in Control your employment
with the Company is terminated without Cause or you terminate your employment
for Good Reason), as applicable. The payments under this paragraph are in lieu
of any notice requirements of any Canadian federal or provincial law.
In the event of any termination of your employment, you agree to resign as
an officer and director of the Company and its subsidiaries and affiliates.
In addition, as soon as practicable after the date of this Agreement, you
will be granted options to purchase Common Shares to be issued under the
Company's stock option plan or long term incentive plan in an amount to be
agreed (the "Initial Grant"). Each year, you will also be considered by the
Board or the applicable committee thereof to receive options to purchase
additional Common Shares or other long term incentive compensation under the
Company's stock option plan or other long term incentive plans as may be in
effect from time to time after the date of this Agreement. All options in the
Initial Grant shall vest 33 1/3% per year over three (3) years beginning on the
first anniversary of the date the options are granted and then on each
succeeding anniversary of the date the options are granted provided you are then
employed.
You agree (i) that at all times both during and after your employment, you
will respect the confidentiality of Company's and its subsidiaries' and
affiliates' confidential information and will not disparage the Company and its
subsidiaries and affiliates or their officers, directors or employees, and (ii)
during your employment and for one (1) year thereafter, you will not (a) accept
a position with, or provide material services to, an entity whose principal
business is the printing business, (b) solicit or hire, or assist others in the
solicitation or hiring of, the Company's employees (other than your
secretary/administrative assistant and Xxxxxxx X. Xxxxx) or (c) interfere with
the Company's business relationships with any material customers or suppliers.
All notices or communications under this Agreement must be in writing,
addressed; (i) if to the Company, to the attention of the Senior Vice President,
General Counsel at principal executive offices of the Company from time to time
and (ii) if to you, at your address first written above (or to any other
addresses as either party may designate in a notice duly delivered as described
in this paragraph). Any notice or communication shall be delivered by facsimile
(with proof of transmission), by hand or by courier (with proof of delivery).
Notices and communications may also be sent by certified or registered mail,
return receipt requested, postage prepaid, addressed as above. Notice shall be
effective upon the actual receipt of notice by the recipient thereof.
The Company shall reimburse you for the reasonable fees and expenses of
Xxxxxxx Xxxxxxxx & Xxxx in connection with the negotiation and delivery of this
Agreement; provided that the aggregate amount that the Company is required to
reimburse you pursuant to this paragraph shall not exceed $5,000.
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Any controversy or claim arising out of or relating to this Agreement or
the breach of this Agreement that cannot be resolved by you and the Company,
including any dispute as to the calculation of any payments hereunder, and the
terms of this Agreement, shall be determined by a single arbitrator in New York
City, New York, in accordance with the rules of the American Arbitration
Association. The decision of the arbitrator shall be final and binding and may
be entered in any court of competent jurisdiction. This Agreement shall be
interpreted in accordance with the laws of New York. The arbitrator may award
the party he determines has prevailed in the arbitration any legal fees and
other fees and expenses that may be incurred in respect of enforcing its
respective rights under this Agreement.
This Agreement sets forth the entire agreement between us with respect to
the matters set forth herein, and fully supersedes any prior agreements or
understandings between us. This Agreement may be executed in counterparts. This
Agreement may not be modified or terminated orally.
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If the foregoing terms and conditions are acceptable and agreed to by you,
please sign on the line provided below to signify such acceptance and agreement
and return the executed copy to the Senior Vice President, General Counsel of
the Company, One Canterbury Green, Stamford, Connecticut 06901.
XXXXX CORPORATION LIMITED
By: /s/ Xxxxxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: Senior Vice President, General
Counsel and Acting Secretary
Accepted and Agreed as of this 9th day of December, 2002
/s/ Xxxx X. Xxxxxxxx
----------------------------
Xxxx X. Xxxxxxxx
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ANNEX A
DEFINITIONS
a. "CAUSE" means (i) the willful and continued failure of Executive to
perform substantially his duties with the Company (other than any such failure
resulting from Executive's incapacity due to physical or mental illness or any
such failure subsequent to Executive being delivered a notice of termination
without Cause by the Company or delivering a notice of termination for Good
Reason to the Company) after a written demand for substantial performance is
delivered to Executive by the Board that specifically identifies the manner in
which the Board believes that Executive has not substantially performed
Executive's duties, (ii) the willful engaging by Executive in illegal conduct or
breach of fiduciary duty which is intended to enrich Executive and is materially
injurious (monetarily or otherwise) to the Company or its subsidiaries and
affiliates, (iii) conviction of, or the pleading of nolo contendere with regard
to, a felony or any crime involving fraud, dishonesty or moral turpitude, or
(iv) refusal or failure to attempt in good faith to follow the written direction
of the Board (provided that such written direction is consistent with
Executive's duty and station) promptly upon receipt of such written direction. A
termination for Cause after a Change in Control shall be based only on events
occurring after such Change in Control; provided, however, the foregoing
limitation shall not apply to an event constituting Cause which was not
discovered by the Company prior to a Change in Control. For purpose of this
paragraph (a), no act or failure to act by Executive shall be considered
"willful" unless done or omitted to be done by Executive in bad faith and
without reasonable belief that Executive's action or omission was in the best
interests of the Company or its subsidiaries and affiliates. Any act, or failure
to act, based upon authority given to the Executive pursuant to a resolution
duly adopted by the Board or, based upon the advice of counsel for the Company,
shall be conclusively presumed to be done, or omitted to be done, by Executive
in good faith and in the best interests of the Company. Cause shall not exist
unless and until the Company has delivered to Executive a copy of a resolution
duly adopted by at least three-quarters (3/4) of the entire Board at a meeting
of the Board called and held for such purpose (after reasonable notice to
Executive and an opportunity for Executive, together with counsel, to be heard
before the Board), finding that in the good faith opinion of the Board an event
set forth in clauses (i) through (iv) has occurred and specifying the
particulars thereof in detail, provided that the Company may suspend the
Executive with pay (without it being Good Reason) pending such meeting. The
Company must notify Executive of any event constituting Cause within ninety (90)
days following the Company's knowledge of its existence or such event shall not
constitute Cause under this Agreement.
b. "CHANGE IN CONTROL" means the occurrence of any one of the following
events:
(i) individuals who, on the date of this Agreement, constitute the
Board (the "Incumbent Directors") cease for any reason to constitute at
least a majority of the Board, provided that any person becoming a
director subsequent to the date of this Agreement, whose election or
nomination for election was
A-1
ANNEX A
approved by a vote of at least two-thirds of the Incumbent Directors then
on the Board (either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a nominee for
director, without written objection to such nomination) shall be an
Incumbent Director; provided, however, that no individual initially
elected or nominated as a director of the Company as a result of an actual
or threatened election contest with respect to directors or as a result of
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 be an
Incumbent Director;
(ii) any "person" (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "Exchange Act") and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 35% or
more of the combined voting power of the Company's then outstanding
securities eligible to vote for the election of the Board (the "Company
Voting Securities"); provided, however, that the event described in this
paragraph (ii) shall not be deemed to be a Change in Control by virtue of
any of the following acquisitions: (A) by the Company or any subsidiary,
(B) by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any subsidiary, (C) by any underwriter
temporarily holding securities pursuant to an offering of such securities,
or (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph
(iii));
(iii) the consummation of an arrangement, amalgamation, merger,
consolidation, statutory share exchange or similar form of corporate
transaction involving the Company or any of its Subsidiaries that requires
the approval of the Company's stockholders, whether for such transaction
or the issuance of securities in the transaction (a "Business
Combination"), unless immediately following such Business Combination: (A)
more than 50% of the total voting power of (x) the corporation resulting
from such Business Combination (the "Surviving Corporation"), or (y) if
applicable, the ultimate parent corporation that directly or indirectly
has beneficial ownership of 100% of the voting securities eligible to
elect directors of the Surviving Corporation (the "Parent Corporation"),
is represented by Company Voting Securities that were outstanding
immediately prior to such Business Combination (or, if applicable, is
represented by shares into which such Company Voting Securities were
converted pursuant to such Business Combination), and such voting power
among the holders thereof is in substantially the same proportion as the
voting power of such Company Voting Securities among the holders thereof
immediately prior to the Business Combination, (B) no person (other than
any employee benefit plan (or related trust) sponsored or maintained by
the Surviving Corporation or the Parent Corporation), is or becomes the
beneficial owner, directly or indirectly, of 35% or more of the total
voting power of the outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no Parent
Corporation, the
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ANNEX A
Surviving Corporation) other than persons set forth in (A) through (D) of
paragraph (ii) and (C) at least a majority of the members of the board of
directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) following the consummation of the
Business Combination were Incumbent Directors at the time of the Board's
approval of the execution of the initial agreement providing for such
Business Combination (any Business Combination which satisfies all of the
criteria specified in (A), (B) and (C) above shall be deemed to be a
"Non-Qualifying Transaction");
(iv) the closing of a sale of all or substantially all of the
Company's assets, other than to an entity or in a manner where the voting
securities immediately prior to such sale represent directly or indirectly
after such sale at least 50% of the voting securities of the entity
acquiring such assets in approximately the same proportion as prior to
such sale; or
(v) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control of the Company shall
not be deemed to occur solely because any person acquires beneficial ownership
of more than 35% of the Company Voting Securities as a result of the acquisition
of Company Voting Securities by the Company which reduces the number of Company
Voting Securities outstanding; provided, that if after such acquisition by the
Company such person becomes the beneficial owner of additional Company Voting
Securities that increases the percentage of outstanding Company Voting
Securities beneficially owned by such person, a Change in Control of the Company
shall then occur.
c. "GOOD REASON" means, without Executive's express written consent, the
occurrence of any of the following events:
(i) (A) the assignment to Executive of any duties or
responsibilities (including reporting responsibilities) that is
inconsistent in any material and adverse respect with Executive's
position(s), duties, responsibilities or status with the Company or any
material and adverse diminution of such duties or responsibilities (other
than temporarily while incapacitated because of physical or mental
illness) or (B) a material and adverse change in Executive's titles or
offices (including, if applicable, membership on the Board) with the
Company;
(ii) a reduction by the Company in Executive's rate of annual base
salary or annual target bonus opportunity (including any material and
adverse change in the formula for such annual bonus target) as the same
may be increased from time to time;
(iii) any requirement of the Company that Executive's office be more
than fifty (50) miles from Executive's place of residence as of the date
of this Agreement;
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ANNEX A
(iv) any material breach of the Agreement by the Company.
Notwithstanding anything herein to the contrary, termination of employment
by Executive for any reason during the 30-day period commencing one (1) year
after the date of a Change in Control shall constitute Good Reason.
Notwithstanding the foregoing, a Good Reason event shall not be deemed to
have occurred if the Company cures such action, failure or breach within ten
(10) days after receipt of notice thereof given by Executive. Executive's right
to terminate employment for Good Reason shall not be affected by Executive's
incapacities due to mental or physical illness and Executive's continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any event or condition constituting Good Reason; provided, however, that
Executive must provide notice of termination of employment within ninety (90)
days following Executive's knowledge of an event constituting Good Reason or
such event shall not constitute Good Reason under this Agreement.
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ANNEX B
GROSS-UP PAYMENTS
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment, award, benefit or distribution
(or any acceleration of any payment, award, benefit or distribution) by the
Company (or any of its affiliated entities) or any entity which effectuates a
Change in Control (or any of its affiliated entities) to or for the benefit of
Executive (whether pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Annex
B) (the "Payments") would be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), or any interest
or penalties are incurred by Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Company shall pay to
Executive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by Executive of all taxes (including any Excise Tax) imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments. For purposes of determining the
amount of the Gross-up Payment, the Executive shall be deemed to (i) pay federal
income taxes at the highest marginal rates of federal income taxation for the
calendar year in which the Gross-up Payment is to be made, and (ii) pay
applicable state and local income taxes at the highest marginal rate of taxation
for the calendar year in which the Gross-up Payment is to be made, net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes.
(b) Subject to the provisions of paragraph (a) of this Annex B, all
determinations required to be made under this Annex B, including whether and
when a Gross-Up Payment is required, the amount of such Gross-Up Payment, and
the assumptions to be utilized in arriving at such determinations, shall be made
by the public accounting firm that is retained by the Company as of the date
immediately prior to the Change in Control (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and Executive
within fifteen (15) business days of the receipt of notice from the Company or
the Executive that there has been a Payment, or such earlier time as is
requested by the Company (collectively, the "Determination"). In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, Executive may appoint another
nationally recognized public accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company and the Company shall enter into any agreement reasonably
requested by the Accounting Firm in connection with the performance of the
services hereunder. The Gross-up Payment under this Annex B with respect to any
Payments shall be made no later than thirty (30) days following such Payment. If
the Accounting Firm determines that no Excise Tax is payable by Executive, it
shall furnish Executive with a written opinion to such effect, and to the effect
that failure to report the Excise Tax, if any, on Executive's applicable federal
income tax return will not result in the imposition of a
B-1
ANNEX B
negligence or similar penalty. The Determination by the Accounting Firm shall be
binding upon the Company and Executive, except as provided below. As a result of
the uncertainty in the application of Section 4999 of the Code at the time of
the Determination, it is possible that Gross-Up Payments which will not have
been made by the Company should have been made ("Underpayment") or Gross-up
Payments are made by the Company which should not have been made
("Overpayment"), consistent with the calculations required to be made hereunder.
In the event that the Executive thereafter is required to make payment of any
Excise Tax or additional Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment (together
with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall
be promptly paid by the Company to or for the benefit of Executive. In the event
the amount of the Gross-up Payment exceeds the amount necessary to reimburse the
Executive for his Excise Tax, the Accounting Firm shall determine the amount of
the Overpayment that has been made and any such Overpayment (together with
interest at the rate provided in Section 1274(b)(2) of the Code) shall be
promptly paid by Executive (to the extent he has received a refund if the
applicable Excise Tax has been paid to the Internal Revenue Service) to or for
the benefit of the Company. Executive shall cooperate, to the extent his
expenses are reimbursed by the Company, with any reasonable requests by the
Company in connection with any contests or disputes with the Internal Revenue
Service in connection with the Excise Tax and the Executive shall permit the
Company to control issues related to the Excise Tax (at its expense) to permit a
representative of the Company to accompany the Executive to any conference with
any taxing authority and to promptly deliver to the Company copies of any
written communications and summaries of any verbal communications with any
taxing authority regarding the Excise Tax.
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