As of December 11, 2000
Mr. Robert Lewis
55 Tanners Drive
Wilton, CT 06897
Dear Bob:
On behalf of Moore Corporation Limited (the "Company"), we are all
extremely pleased that you have agreed to serve as the Executive Vice President,
Chief Financial Officer (the "EVP, CFO") of the Company, effective as of the
closing of the purchase of the Company's securities (the "Purchase") by Chancery
Lane/GSC, L.P. (which is expected to occur on or about December 21, 2000), in
accordance with the provisions of this letter agreement (the "Agreement"), which
governs the terms of your employment. You will as of the date hereof in any
event become a nonexecutive employee of the Company's subsidiary Moore U.S.A.
Inc. ("MUSAI"). Furthermore, the Company shall have the right to assign its
obligations under this Agreement to MUSAI and treat you as an employee of MUSAI,
except for actions you take as an officer of the Company and you shall remain
EVP, CFO of the Company. We and you hereby acknowledge that your employment with
the Company and MUSAI 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 an executive vice
president, chief financial officer at a corporation of a similar size and
nature. You will report to the Chief Executive Officer of the Company (the
"CEO").
I. COMPENSATION
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. $360,000 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") of up to 100% Base Salary in respect of each fiscal year of the
Company in accordance with the Company's annual incentive compensation
plan if the Company achieves the following performance objectives set
forth by the board of directors of the Company (the "Board") (or any
designated committee thereof) from time to time: (A) meeting or
exceeding established EPS target, (B) meeting
or exceeding established EBITDA target, and (C) meeting or exceeding
your individual performance objectives. The Annual Bonus shall be
approved by the CEO and the Board and shall be paid on an
all-or-nothing basis, provided, however, that with respect to the
Company's 2001 fiscal year (which begins on January 1, 2001 and ends on
December 31, 2001), your Annual Bonus will be at least equal to U.S.
$360,000.
(iii) The Company will provide you with an automobile
allowance of $1,300 per month. In addition, 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. The Company will compensate you for any
benefit that you may have earned in a qualified plan where the
applicable waiting period causes you not to begin receiving benefits
immediately, as if you had met the waiting period eligibility.
(iv) Further, with respect to any relocation expenses you may
incur relating to the commencement of your employment with the Company
in the United States Corporate Headquarters, the Company will reimburse
you for all such reasonable expenses. Such expenses will be reimbursed
upon presentation by you from time to time of appropriately itemized
and approved (consistent with the Company's policy) accounts of such
expenditures.
II. SEVERANCE; CHANGE OF CONTROL
If the Company terminates your employment as EVP, CFO without Cause, as
defined in Annex A, or if you terminate your employment for Good Reason, as
defined in Annex A, whether the same occurs before or following a Change of
Control (as defined in Annex A), the Company will pay you in a cash lump sum, an
amount equal to one and a half (1.5) times your Annualized Total Compensation
(as defined below), subject to the execution by you of a customary release. The
Company will also provide to you a continuation of all benefits, including
automobile and other related benefits, if any, which you were eligible to
receive immediately prior to such termination, for a period of eighteen (18)
months following the date of such termination. Your rights of indemnification
under the Company's and MUSAI's 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 termination. In addition, all outstanding stock
options, grants, restricted stock awards or other equity grants issued to you
will vest 100% immediately prior to the Change of Control becoming effective.
You will be entitled to receive Gross-Up Payments, as described in Annex B
hereto, if such payments are applicable as a result of the immediately preceding
sentence. The payments under this paragraph are in lieu of any
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notice requirements of any Canadian national or provincial law. In the event of
any termination, you agree to resign as an officer and director of the Company
and its affiliates.
III. INDUCEMENT OPTIONS
In addition, effective immediately, you will be granted options (the
"Initial Grant") to purchase an aggregate of 200,000 non-voting preference
shares (the "Preference Shares") to be issued by the Company and having the
terms set forth in Annex C. The Company represents and warrants that all
necessary corporate action has been taken to authorize the Preference Shares and
their issuance. Each year, during the ordinary course of business and based upon
individual performance, you will also be considered by the Board or the
applicable committee thereof to receive options to purchase common shares of the
Company under the Company's stock option plan. The Initial Grant options will
vest 25 percent over four years, beginning on January 3, 2002 and then on each
succeeding anniversary of the date the options are granted provided you are then
employed. The Initial Grant options will be fully vested on January 3, 2005, so
long as you are still employed by the Company at such time.
You agree (i) that at all times both during and (subject to your
receiving full severance payments as outlined above) after your employment, you
will respect the confidentiality of Company's and its affiliates' confidential
information and will not disparage the Company and its affiliates or their
officers, directors or employees, and (ii) during your employment and (subject
to your receiving full severance payments as outlined above) for one (1) year
thereafter, you will not (a) accept a position with, or provide material
services to, an entity that competes with a portion of the Company's business
representing more than 15% of the Company's revenues on the date of your
departure, (b) solicit or hire, or assist others in the solicitation or hiring
of, the Company's employees 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 Chief Executive's attention at the
Company's address first written above 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 telecopy, by hand or by courier. Notices and
communications may also be sent by certified or registered mail, return receipt
requested, postage prepaid, addressed as above and the third business day after
the actual date of mailing shall constitute the time at which notice was given.
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
Connecticut, in accordance with the rules of the American Arbitration
Association. The decision of the arbitrator shall be final and
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binding and may be entered in any court of competent jurisdiction. The
arbitrator may award the party he determines has prevailed in the arbitration
any legal fees and other fees and expenses which may be incurred in respect of
enforcing its respective rights under this Agreement. This Agreement shall be
interpreted in accordance with the laws of Connecticut.
This Agreement may be executed in counterparts. This Agreement is our
full agreement and may not be modified or terminated orally.
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 undersigned.
MOORE CORPORATION LIMITED
By: Robert G. Burton
---------------------------------
Name: Robert G. Burton
Title: Chief Executive Officer
Accepted and Agreed as of this 11th day of December, 2000
Robert Lewis
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Robert Lewis
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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 which 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
misconduct which is demonstrably and materially injurious (monetarily or
otherwise) to the Company or its affiliates, (iii) any misappropriation, fraud
or breach of fiduciary duty with regard to the Company or its affiliates or any
of the assets of the Company or its affiliates (other than good faith expense
account disputes), (iv) conviction of, or the pleading of nolo contendere with
regard to, a felony or any crime involving fraud, dishonesty or moral turpitude,
or (v) refusal or failure to attempt in good faith to follow the written
direction of the Board promptly upon receipt of such written direction. A
termination for Cause after a Change of Control shall be based only on events
occurring after such Change of 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 of Control. For purpose of this
paragraph (b), 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 affiliates. Any act, or failure to act, based
upon authority given pursuant to a resolution duly adopted by the Board, 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 three-quarters
(3/4) of the entire Board (excluding Executive if Executive is a Board member)
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) or (ii) 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 pursuant to the Debenture Purchase Agreement of
December 11, 2000, between Moore
ANNEX A
Corporation Limited and Chancery Lane/GSC Investors, L.P., or
subsequent to the date of this Agreement, whose election or nomination
for election was 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 25%
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, (D) pursuant to a Non-Qualifying Transaction (as
defined in paragraph (iii)), (E) pursuant to any acquisition or
ownership by Robert G. Burton ("Burton") or any group of persons
including Burton (or any entity controlled by Burton or any group of
persons including Burton), or (F) pursuant to an acquisition or
ownership by Ted Ammon or Greenwich Street Capital Partners or any
group of persons including Ted Ammon or Greenwich Street Capital
Partners (or any entity controlled by Ted Ammon or Greenwich Street
Capital Partners or any group of persons including Ted Ammon or
Greenwich Street Capital Partners);
(iii) the consummation of a 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
ANNEX A
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 25% 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
Surviving Corporation) other than persons set forth in (A) through (F)
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 25% 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) 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
ANNEX A
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 thereafter;
(iii) any requirement of the Company that Executive (A) be
based anywhere more than fifty (50) miles from the office where the
Chief Executive Officer establishes the United States executive offices
of the Company, it being recognized that Executive will also have an
office in the Toronto area of Canada;
(iv) any material breach of the Agreement by the Company.
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.
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. Notwithstanding the foregoing, any amounts
includable as parachute payments as a result of Executive's ownership in the
Company through an interest in Chancery Lane/GSC Investors, L.P. or a similar
investment vehicle shall not be treated as parachute payments for purposes of
this Annex B and calculation of the Gross-Up Payment.
(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 thirty (30) 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"). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. The
Gross-up Payment under this Annex B with respect to any Payments shall be made
no later than sixty (60) 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 (based on substantial authority) will not
ANNEX B
result in the imposition of a negligence or similar penalty. The Determination
by the Accounting Firm shall be binding upon the Company and Executive, except
as provided hereafter. 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.
ANNEX C
PREFERENCE SHARES TERM SHEET
ISSUER: The Company.
DIVIDENDS: Each Preference Share will be entitled to a
non-cumulative preferential annual dividend of Cdn
$.001, payable annually from and after the date of
issuance, and also shall receive any dividend paid
on a Common Share.
LIQUIDATION PREFERENCE: Upon the liquidation and winding up of the
corporation, each Preference Share will be entitled
to a distribution from the Company's assets (in
preference to any distribution being made on the
Common Shares) of Cdn $.001 and thereafter shall
participate on a share-for-share basis with the
Common Shares.
VOTING RIGHTS: The Preference Shares will be non-voting; the holder
will irrevocably waive any class voting rights which
may be waived under applicable law and will
otherwise irrevocably agree to exercise any
remaining class voting rights in accordance with the
recommendation of the Board.
TRANSFER: Neither the options received in the Initial Grant
(the "Options"), nor the Preference Shares received
upon exercise thereof, will be transferable by the
holder.
EXERCISE PRICE: The Options will have an exercise price of Cdn. $__
per share (the "Exercise Price").
CASH-OUT RIGHT: The Options will contain a cash-out provision
permitting the holder to receive, at his election
and in lieu of the delivery of Preference Shares, an
amount with respect to each Preference Share equal
to the positive difference between the Current
Market Value per Preference Share (as defined below)
and the Exercise Price; the Current Market Value per
Preference Share shall be equal to the closing price
per Common Share on the trading day immediately
prior to exercise on the principal stock exchange
(which shall be the Toronto Stock Exchange as long
as the Common Shares are listed thereon) on which
the Common Shares are then listed, or if not so
listed, shall be conclusively
ANNEX C
deemed to be equal to the closing price of a Common
Share as is applicable under the Company's customary
form of option grant and the plans relating thereto.
ANTI-DILUTION PROTECTIONS: The Options will be subject to anti-dilution and
similar adjustments under the circumstances provided
in the Company's customary form of option grant
agreement and the plans relating thereto.
CONVERSION TO NON- In the event that, at the time of exercise of an
VOTING COMMON: Option, the holder of an Option elects to receive
Preference Shares and the Company then has an
authorized class of non-voting common shares, the
Preference Shares issued upon the exercise of an
Option shall automatically convert into such class
of non-voting shares (on a share-for-share basis)
immediately upon such exercise (and in such event,
the cash-out provision described above shall not be
applicable with respect to the non-voting Common
Shares delivered).
EXPIRATION: Each Option will expire immediately prior to the
tenth anniversary of the date of the grant thereof
or under the circumstances relating to expiration
upon a separation of employment provided in the
Company's customary form of option grant agreement
and the plans relating thereto.