EXHIBIT 10.2
AMENDED AND RESTATED
EXECUTIVE SEVERANCE AGREEMENT
THIS AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT
("Agreement") is effective as of the ___ day of September, 2005 (the
"Effective Date"), by and between Cenveo, INC., a Colorado corporation (the
"Company), and <> <> ("Executive").
WHEREAS, the Board of Directors of the Company (the
"Board") has determined that it is in the best interests of the Company and
its stockholders to assure that the Company will have the continued
dedication of Executive, notwithstanding the possibility, threat or
occurrence of a Triggering Event (as defined herein);
WHEREAS, the Board believes it is imperative (i) to
diminish the inevitable and significant distractions of Executive and
dilution of the time of Executive, by virtue of the personal uncertainties
and risks created by a pending or threatened Triggering Event; (ii) to
encourage Executive's full attention and dedication to the Company currently
and in the event of any threatened or pending Triggering Event; (iii) (to
provide Executive with compensation arrangements in the event of a
Triggering Event which provide Executive with financial security, which are
competitive with those of other corporations; (iv) to ensure that following
a Triggering Event Executive does not engage in activities or business
pursuits which may threaten or damage the Company; (v) to retain the
services of Executive for a reasonable period of time following any
Triggering Event; and (vi) to obtain a full and complete Release from
Executive should a separation of employment occur in connection with or
subsequent to a Triggering Event; and
WHEREAS, the Company and Executive are parties to that
certain <> dated <> (the "Prior
Agreement");
WHEREAS, the parties hereto intend that the transactions
contemplated by the Settlement and Governance Agreement, dated September 8,
2005, among the Company, Xxxxxx Capital Management, LLC and Goodwood, Inc.
(the "Settlement Agreement") shall constitute a Triggering Event (as defined
herein)), and
WHEREAS, in order to effect the foregoing, the Company and
Executive wish to enter into an amended and restated severance agreement on
the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises, the
mutual covenants and agreements contained in this Agreement, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Executive hereby agree as follows:
ARTICLE I
TERM AND TERMINATION OF EMPLOYMENT
Section 1.1 Term. Except as otherwise set forth herein,
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the term of this Agreement ("Term") shall commence on the Effective Date and
shall continue for an initial period ending December 31, 2006 and shall
continue for additional 12-month periods thereafter unless written notice to
the contrary is given by either party to the other at least ninety (90) days
prior to the end of the then current term; provided, however, that if a
Triggering Event occurs during the Term (including any renewal period), the
Term shall be for the period commencing on the Effective Date and ending on
the second anniversary of such Triggering Event.
Section 1.2 Termination of Employment. Except as may
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otherwise be provided herein, Executive's employment under this Agreement
may terminate, and the Term shall terminate, upon the occurrence of:
(a) Notice by Company. Ten (10) days after written notice
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of termination is given by the Company, or a Segment Successor (as
defined herein), to Executive;
(b) Notice by Executive. Ten (10) days after written
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notice of termination is given by Executive to the Company; or
(c) Death or Disability. Executive's death or, at the
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Company's option, upon Executive's becoming Disabled. As used
herein, "Disabled" shall mean a mental or physical impairment
which, in the reasonable opinion of a qualified doctor selected by
the Company, renders Executive unable to perform with reasonable
diligence the ordinary functions and duties of Executive on a
full-time basis in accordance with the terms of this Agreement,
which inability continues for a period of not less than 180
consecutive days.
Any notice of termination given by the Company or a Segment Successor to
Executive under Section 1.2(a) above shall specify whether such termination
is with or without Cause (as defined in Section 1.6 hereof). Any notice of
termination given by Executive to the Company or a Segment Successor under
Section 1.2(b) above shall specify whether such termination is made with or
without Good Reason (as defined in Section 1.5(a) hereof).
Section 1.3 Obligations of the Company upon Termination in
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Anticipation of, on or after a Triggering Event:
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(a) Good Reason; Without Cause. If, during the Term of
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this Agreement, Executive terminates Executive's employment with
the Company or a Segment Successor on or after the occurrence of a
Triggering Event with Good Reason, or if during the Term of this
Agreement, the Company or a Segment Successor terminates
Executive's employment with the Company without Cause in
anticipation of, on or after the occurrence of a Triggering Event,
and in lieu of any other severance benefits that would otherwise be
payable to Executive, the Company or Segment Successor shall pay
the aggregate of the following amounts to Executive:
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(i) to the extent not theretofore paid, Executive's
base salary in effect at the time of such termination through the
date of termination;
(ii) in the case of compensation previously deferred
by Executive, all amounts previously deferred (together with any
accrued interest thereon) and not yet paid by the Company or
Segment Successor; and
(iii) all other amounts or benefits owing or accrued
to, vested in or earned through the date of separation under the
then existing or applicable plans, programs, arrangements, and
policies of the Company or Segment Successor and their respective
affiliates.
The obligations owing or accrued to, vested in, or earned
by Executive through the date of termination, including, but not
limited to, such amounts and benefits specified in clauses (i),
(ii), and (iii) of section 1.3(a) shall be hereinafter collectively
referred to as the "Accrued Obligations." The Accrued Obligations,
shall be paid or caused to be paid by the Company or Segment
Successor to Executive in accordance with the plans, programs or
agreements under which the Accrued Obligations were earned.
In addition, the Company or Segment Successor shall pay
Executive in one lump sum within five (5) days after the date of
such termination:
(iv) an amount equal to the sum of: (x)
<> times Executive's base salary in effect at
the time of such termination (but prior to giving effect to any
reduction therein which precipitated such termination), (y)
<> times Executive's "target bonus" (at 100% of
plan) for the calendar year in which such termination occurred (or,
if higher, as in effect immediately prior to the Triggering Event),
and (z) the pro-rata share of target bonus for the calendar year in
which such termination occurred based upon the proportion that the
number of complete months in such calendar year up to the date of
termination bears to the complete calendar year (or, if higher, the
pro rata amount based on the proportion that the number of complete
months in such calendar year up to the date of the Triggering Event
bears to the complete calendar year);
(v) if Executive elects medical or dental coverage
under the Company's or Segment Successor's group medical or dental
plans pursuant to Section 4980B of the Internal Revenue Code of
1986, as amended ("Code") ("COBRA Coverage"), reimbursement
promptly upon request by Executive (upon presentation of reasonable
documentation showing prior payment), of an amount equal to the
premium paid each month by Executive for COBRA Coverage during the
12 months of such COBRA Coverage (or during such shorter period
that COBRA Coverage for Executive in effect);
(vi) such individual outplacement service as are
appropriate for Executive's position for up to 12 months after
termination of employment for a cost not to exceed $10,000; and
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(vii) assistance to Executive to be provided by a "Big
Five" accounting firm selected by the Company or other mutually
agreeable accounting firm for federal and state income tax planning
and federal and state income tax return preparation for Executive
for the calendar year in which such termination of employment
occurred.
(b) Allocations. The payments made under this Section 1.3
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shall, in the aggregate, be in consideration for the Executive's
separate agreements under Sections 1.12 and 1.13 and Article II of
this Agreement and, in part, to provide Executive certain
additional severance benefits under the circumstances set forth in
this Section 1.3. The allocation of the aggregate payments under
this Agreement as the specific consideration for each separate
agreement of Executive and as an additional severance benefit shall
be in the reasonable discretion of Executive with the consent of
the Company, which consent shall not be unreasonably withheld.
(c) Exceptions. Section 1.3(a) (iv)-(vii) shall not apply
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to the termination by the Company of Executive's employment in
connection with the sale of the stock or assets of a Business
Segment (as defined herein) if Executive continues employment with,
or is offered employment by, the Business Segment or the Company in
a stock sale or the purchaser of the assets of the Business Segment
in an asset sale (in either case the "Segment Successor") on terms
that would not otherwise qualify as Good Reason.
Section 1.4 Other Terminations. If Executive's employment
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is terminated for any reason or circumstance not set forth in Section 1.3,
the Company shall pay to Executive all Accrued Obligations, as defined
above, owed to Executive.
Section 1.5 Good Reason.
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(a) As used in this Agreement, the term "Good Reason"
means:
(i) a substantial diminution in the nature of
Executive's authorities, duties, responsibilities or status
(including offices, titles, reporting requirements and supervisory
functions), from those in effect immediately prior to the
Triggering Event.
(ii) the required relocation of Executive's place
of employment to a location in excess of thirty-five (35) miles
from the Executive's place of employment at the time Executive
terminates employment, except for required travel on Company
business to an extent substantially equivalent to Executive's
business travel obligations immediately prior to the Triggering
Event;
(iii) any reduction by the Company of Executive's
base salary, or a material reduction in Executive's opportunities,
profit sharing opportunities, or other incentive opportunities from
those in effect immediately prior to the Triggering Event;
(iv) the Company breaches any material provision of
this Agreement and such breach is not cured within thirty (30) days
after the Company's receipt of notice thereof from Executive;
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(v) the failure by the Company to increase
Executive's base salary in a manner consistent (both as to
frequency and percentage increase) with (A) the Company's practices
in effect immediately prior to the Triggering Event with respect to
similarly positioned employees or (B) the Company's practices
implemented subsequent to the Triggering Event with respect to
similarly positioned employees unless, in either case, such failure
is due to the failure by Executive to meet performance standards
applicable to similarly positioned employees;
(vi) the failure of the Company to continue in effect
Executive's participation in the Company's employee benefit plans,
programs, arrangements and policies, at a level substantially
equivalent in value to and on a basis consistent with the relative
levels of participation of other similarly positioned employees;
(vii) the failure of the Company to obtain from a
successor (including a successor to a material portion of the
business or assets of the Company) a satisfactory assumption in
writing of the Company's obligations under this Agreement;
(viii) the failure of the Company to continue to
provide Executive with office space, related facilities and support
personnel (including, but not limited to, administrative and
secretarial assistance) that are both commensurate in all material
respects with the Office and Executive's responsibilities to and
position with the Company immediately prior to the Change in
Control and not materially dissimilar to the office space, related
facilities and support personnel provided to other key executive
officers of the Company; or
(ix) the Company notifies Executive of the Company's
intention not to observe or perform one or more of the obligations
of the Company under this Agreement.
In no event shall Employee's resignation be for "Good
Reason" unless (A) an event or circumstance set forth in clauses (i) through
(ix) shall have occurred and Executive provides the Company with written
notice thereof within six (6) months after Executive has knowledge of the
occurrence or existence of such event or circumstance, which notice
specifically identifies the event or circumstance that Executive believes
constitutes Good Reason and (B) if capable of being cured, the Company fails
to correct the circumstance or event so identified within 10 days after the
receipt of such notice.
(b) If, at any time during the Term of this Agreement
whether before or after the occurrence of a Triggering Event,
Executive receives a description from the Company of the nature of
Executive's authorities, duties, responsibilities status, salary,
bonus and other employee benefits, or job location thereafter, and
Executive accepts such new authorities, duties, responsibilities,
status, salary, bonus and other employee benefits, or job location
("New Office") with the Company without determining that the New
Office causes a Good Reason as set forth in Section 1.5(a), then
for the remaining Term, the New Office shall be the authorities,
duties, responsibilities, status, salary, bonus and other employee
benefits, or job location to be used by Executive in determining
whether Good Reason occurs thereafter pursuant to Section 1.5(a).
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Section 1.6 Cause. The term "Cause" shall mean (i) willful
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misconduct by Executive or gross neglect by Executive of Executive's duties
as an employee, officer or director of the Company, (ii) the commission by
Executive of a crime constituting a felony, or (iii) the commission by
Executive of an act, other than an act taken in good faith within the course
and scope of Executive's employment, which is directly detrimental to the
Company and exposes the Company to material liability. In order for a
cessation of Executive's employment to be deemed to be a termination of
Executive's employment for Cause for the conduct described in clauses (i),
or (iii) above, as applicable, (A) the Company shall have provided written
notice to Executive that identifies such conduct, (B) in the event that the
event or condition is curable, Executive shall have failed to remedy such
event or condition within 30 days after Executive shall have received the
written notice from the Company described above, and (C) the final
determination that Executive's employment shall be terminated for Cause
shall have been made by the affirmative vote of two-thirds (2/3) of the
non-management membership of the Board at a meeting of the Board duly called
and held upon at least fifteen (15) days prior written notice to Executive
specifying the particulars of the action or inaction alleged to constitute
"Cause" (and at which meeting Executive and his counsel are entitled to be
present and are given a reasonable opportunity to be heard).
Section 1.7 Triggering Event. As used herein, the term
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"Triggering Event" shall mean the occurrence with respect to the Company of
any of the following events:
(a) a report on Schedule 13D is filed with the Securities
and Exchange Commission pursuant to Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), disclosing
that any person, entity or group (within the meaning of Section
13(d) or 14(d) of the Exchange Act), other than (i) the Company (or
one of its subsidiaries) or (ii) any employee benefit plan
sponsored by the Company (or one of its subsidiaries), is the
beneficial owner (as such term is defined in Rule l3d-3 promulgated
under the Exchange Act) directly or indirectly, of 50% or more of
the outstanding shares of common stock of the Company or 50% or
more of the combined voting power of the then outstanding
securities of the Company (as determined under paragraph (d) of
Rule l3d-3 promulgated under the Exchange Act, in case of rights to
acquire common stock or other securities);
(b) an event of a nature that would be required to be
reported in response to Item 1(a) of the Current Report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or
15(d) of the Exchange Act or would have been required to be so
reported but for the fact that such event had been "previously
reported" as that term is defined in Rule 12b-2 promulgated under
the Exchange Act;
(c) any person, entity or group (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), other than (i) the
Company (or one of its subsidiaries) or (ii) any employee benefit
plan sponsored by the Company (or one of its subsidiaries), shall
become the beneficial (as such term is defined in Rule l3d-3
promulgated under the Exchange Act), directly or indirectly, of
50% or more of the outstanding shares of common stock of the
Company or 50% or more of the combined voting power of the then
outstanding securities of the Company (as determined under
paragraph (d) of Rule 13d-3
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promulgated under the Exchange Act, in the case of rights to acquire
common stock or other securities);
(d) the stockholders of the Company shall approve any
liquidation or dissolution of the Company;
(e) the stockholders of the Company shall approve a
merger, consolidation, reorganization, recapitalization, exchange
offer, acquisition or disposition of assets or other transaction
after the consummation of which any person, entity or group (within
the meaning of Section 13(d) or 14(d) of the Exchange Act) would
become the beneficial owner (as such term is defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of
50% or more of the outstanding shares of common stock of the
Company or 50% or more of the combined voting power of the then
outstanding securities of the (as determined under paragraph (d) of
Rule 13d-3 promulgated under the Exchange Act, in the case of
rights to acquire common stock or other securities);
(f) individuals who constitute the Board on the date
hereof ("Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election, or
nomination for election by the Company's stockholders, was approved
by a vote of at least two-thirds of the directors comprising the
remaining members of the Incumbent 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 objection to
such nomination, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person
other than the Board) shall be, for purposes of this clause (f),
considered as though such person were a member of the Incumbent
Board (for the avoidance of doubt, the consummation of the
transactions contemplated by the Settlement Agreement shall
constitute a Triggering Event for purposes of this Section 1.7(f);
or
(g) a recapitalization or other transaction or series of
related transactions occurs which results in a decrease by 50% or
more in the aggregate percentage ownership of the then outstanding
common stock of the Company or 50% or more in the combined voting
power of the outstanding securities of the Company held by the
stockholders of the Company immediately prior to giving effect
thereto (on a primary basis or on a fully diluted basis after
giving effect to the exercise of stock options and warrants).
Section 1.8 Additional Triggering Events in Specific
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Circumstances. In addition to those Triggering Events specified in Sections
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1.7 above, the following events shall also be Triggering Events:
(a) With respect to an Executive who devotes substantially
all of his or her time and energy to the management and operation
of a Business Segment (a "Segment Executive"), the combination of
Business Segments, the sale of substantially all the capital stock
of a Business Segment, or the transfer, sale or contribution of
more than 50% of the Business Segment's Base Revenues (as defined
below) shall constitute a
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Triggering Event. For the purposes of this Agreement, a "Business
Segment" shall be defined as either Cenveo Envelope, Cenveo
Commercial Print Group or Cenveo Resale, as such businesses are
constituted as of the date hereof.
(b) With respect to a Cenveo Corporate Office Executive
who does not devote substantially all of their time and energy to
the management and operation of a single Business Segment, but
rather divides his or her time and energy among the Business
Segments or towards other Corporate objectives ("a Corporate
Executive").
(i) the sale of any Business Segment or Business
Segments in the aggregate constituting more than 50% of the
revenues of the Company (excluding discontinued operations) as such
revenues were reported in the Company's Annual Report on Form 10(K)
for the year ended December 31, 2000 ("Base Revenues") shall
constitute a Triggering Event;
(ii) the elimination of the Corporate Executive's
corporate department or major corporate function, such as legal,
human resources, purchasing, treasury or the like.
Section 1.9 Legal Fees and Expenses. The Company shall pay
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as incurred any and all reasonable attorney, accounts' and experts' fees and
expenses and court costs incurred by Executive in any contest by the Company
or others contesting the validity or enforcement of, or liability under, any
term or provision of this Agreement; provided, that if an arbitrator or a
court of competent jurisdiction finds that Executive has not acted in good
faith in bringing or defending any such contest or claim, Executive shall be
required to refund to the Company any such costs incurred by the Company
pursuant to this Section 1.9.
Section 1.10 Non-exclusivity of Rights. Except as provided
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in Section 4.4 below, nothing in this Agreement shall prevent or limit
Executive's continuing or future participation in any benefit, bonus,
incentive or other plan, program, arrangement or policy provided by the
Company or any of its affiliates and for which Executive and/or Executive's
family may qualify, nor shall anything herein limit or otherwise affect such
rights as Executive and/or Executive's family may have under any other
agreements with the Company or any of its affiliates. Amounts which are
vested benefits or which Executive and/or Executive's family is otherwise
entitled to receive under any plan, program, arrangement or policy of the
Company or any of its affiliates at or subsequent to the date of termination
of Executive's employment under this Agreement shall be payable in
accordance with such plan, program, arrangement or policy.
Section 1.11 Full Payment; No Mitigation Obligation. The
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Company's obligation to make the payments provided for in sections
1.3(a)(iv)-(vii) in this Agreement and otherwise to perform its obligations
hereunder shall be subject to any set-off, counterclaim, recoupment, defense
or other claim, right or action which the Company may have against Executive
or others, and is also contingent upon Executive's execution of the release
described in Section 1.12. In no event shall Executive be obligated to seek
other employment or take any other action by way of mitigation of the
amounts payable to Executive under any of the provisions of this Agreement.
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Section 1.12 Delivery of Release. As a condition to the
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obligation of the Company to make the payments provided for in this
Agreement and otherwise perform its obligations hereunder to Executive upon
termination of Executive's employment (other than due to death of Executive)
Executive, or Executive's legal representatives shall deliver to the Company
a written release, substantially in the form attached hereto as Annex A.
Section 1.13 Stay-on Requirement. In consideration for the
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agreements of the Company hereunder and as a condition for the payments to
be made to pursuant to Section 1.3(a)(iv)-(vii) hereof, Executive agrees
that Executive will not voluntarily terminate his employment with the
Company or, in the case of a Segment Executive, with any Segment Successor
with respect to which Executive is a Segment Executive, other than for Good
Reason and prior to or within three months following a Triggering Event.
Section 1.14 Mitigation. At the sole option of the
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Executive, if a reduction in the payments made under Section 1.3(a) (iv),
(v) and (vi) would eliminate some or all of the excise taxes (the "Excise
Tax") imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), the payment payable under such Sections may, if the
Executive so elects, be reduced by the amount that will eliminate the
imposition of such Excise Tax. The Executive will not rely on any
representation or advice of the Company in making such an election. The
Company agrees that the Executive's reasonable allocation under Section
1.3(b) (for severance amounts under this agreement, subject to the Company's
consent which shall not be unreasonably withheld) to be in consideration for
Executive's agreement under Article II may be used by the Executive in
Executive's discretion to mitigate the effects of Sections 280G and 4999 of
the Code.
ARTICLE II
NON-COMPETITION AND NON-SOLICITATION
Section 2.1 Non-Competition.
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(a) Executive acknowledges that during his employment with
the Company he has enjoyed a position of trust and confidence that
gave him complete access to Confidential and Proprietary
Information (as defined herein), which has value to the Company.
(b) Executive acknowledges that his service as <
