**Exhibit10.13**

 
|  |   | 01/27/05 |
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**THE SHERIDAN GROUP, INC.**

 

**Change-of-ControlIncentive Plan**

 

CorporateStaff

 

The Sheridan Group, Inc. (the “Company”) proposes toadopt this Change-of-Control Incentive Plan (the “Plan”) for certain of itscorporate staff employees, providing for payment of the Severance Benefitsdescribed below in the event of certain terminations of employment following achange of control.  Any acquiror of theCompany will be required to assume the Plan.

 

**Severance Benefits:**  During the period of eighteen (18) monthsfollowing a Change of Control, each Covered Employee will be entitled topayment by the Successor Employer of Severance Compensation following anytermination of such Covered Employee’s employment as a result of (a) suchCovered Employee’s termination of his or her employment for Good Reason or (b)the Successor Employer’s termination of such Covered Employee’s employmentwithout Cause.

 

**Defined Terms:**

 

**“Applicable Period”** means, as toany Covered Employee, the longer of (a) six (6) months and (b) a period of twoweeks for each full year of such Covered Employee’s employment by the SuccessorEmployer, the Company, any subsidiary, or any predecessor of the Company or anyof its subsidiaries.

 

**“Board of Directors”** means theBoard of Directors of the Company.

 

**“Cause”** means:

 

(i)                                     theCovered Employee shall have committed an act of fraud, embezzlement ormisappropriation against the Successor Employer, including, but not limited to,the offer, payment, solicitation or acceptance of any unlawful bribe orkickback with respect to the Successor Employer’s business; or

 

(ii)                                  theCovered Employee shall have been convicted by a court of competent jurisdictionof, or pleaded guilty or nolocontendere to, any felony or anycrime involving moral turpitude; or

 

(iii)                               theCovered Employee shall have refused, after explicit written notice, to obey anylawful resolution of or direction by the Successor Board which is consistentwith the duties incident to his or her employment; or

 

(iv)                              theCovered Employee shall have been chronically absent from work (excludingvacations, illnesses or leaves of absence approved by the Successor Board); or

 

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(v)                                 theCovered Employee shall have failed to perform the duties incident to his or heremployment with the Successor Employer on a regular basis, and such failureshall have continued for a period of twenty (20) days after written notice tothe Covered Employee specifying such failure in reasonable detail (other thanas a result of the Covered Employee’s Disability); or

 

(vi)                              theCovered Employee shall have engaged in the unlawful use (including being underthe influence) or possession of illegal drugs on the Successor Employer’spremises.

 

**“Change of Control”** means (i)the sale or other transfer of all or substantially all of the assets of theCompany or its subsidiaries in a single transaction or series of relatedtransactions, (ii) the merger or consolidation of the Company with any otherentity, a majority of whose voting securities are owned by any persons or personsother than the holders of a majority of the currently outstanding votingsecurities of the Company, and (iii) the sale or other transfer of a majorityof the outstanding voting securities of the Company in a single transaction orseries of related transactions.

 

**“Covered Employees”** means thoseemployees of the Company or any of its subsidiaries, who:

 

(i)                                     fromtime to time have been designated as Covered Employees by the Board ofDirectors and with respect to whom that designation has not been revoked (theBoard of Directors shall have the right in its sole discretion to designateCovered Employees and to revoke that designation); and

 

(ii)                                  remainemployed by the Company

 

at the time of theclosing of a Change of Control.

 

**“Disability”** means that an independentmedical doctor (selected by the Successor Employer’s health or disabilityinsurer) shall have certified that the Covered Employee has for 180 days,consecutive or non-consecutive, in any twelve (12) month period been physicallyor mentally disabled in a manner which seriously interferes with his or herability to perform the duties incident to his or her employment.  Any refusal by a Covered Employee to submitto a medical examination for the purpose of certifying Disability shall bedeemed to constitute conclusive evidence of such Covered Employee’s Disability.

 

**“First Change of Control”**meansthe first Change of Control to occur after the date of adoption of the Plan.

 

**“Good Reason”** means theoccurrence of any of the events or conditions described in subparagraphs (i) -(iv) of this definition, without the Covered Employee’s express writtenconsent, which is not corrected within twenty (20) days after delivery by theCovered Employee of written notice thereof to the Successor Employer:

 

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(i)                                     amaterial reduction in the Covered Employee’s status, title, position, scope ofauthority or responsibilities, or the assignment to the Covered Employee of anyduties or responsibilities which are materially inconsistent with such status,title, position, authority or responsibilities;

 

(ii)                                  involuntaryrelocation of the Covered Employee;

 

(iii)                               anyremoval of the Covered Employee from or failure to reappoint him or her to anyof his or her positions held on the date of the Change of Control, except inconnection with the termination of his or her employment by the SuccessorEmployer for Cause or by the Covered Employee other than for Good Reason, or asa result of the Covered Employee’s death or Disability; or

 

(iv)                              amaterial reduction by the Successor Employer in the Covered Employee’scompensation or benefits as in effect on the date of the Change of Control.

 

**“Severance Compensation”**means:

 

(i)                                     severancepayments, in accordance with the Successor Employer’s then current payrollpractices, at an annual rate equal to the Covered Employee’s base salary ineffect on the date of the Change of Control, for the Applicable Period;

 

(ii)                                  continuedcoverage during the Applicable Period under the health insurance planmaintained by the Successor Employer for its full-time, salaried employees; and

 

(iii)                               paymentof any expense reimbursements for expenses incurred in the performance of theCovered Employee’s duties prior to termination of his or her employment.

 

**“Successor Board”**meansthe Board of Directors of the Successor Employer.

 

**“Successor Employer”**means the entity continuing the business of the Company and its subsidiaries,or a part thereof, and employing the Covered Employee following a Change ofControl.

 

**Other Terms:**

 

**At Will Employment: **Each of the Covered Employees is anat-will employee of the Company or one of its subsidiaries, and his or heremployment may be terminated at any time by such Covered Employee’s or by hisor her employer’s giving the other party written notice of termination.  Nothing contained in this Plan is intended tocreate for any of the Covered Employees any right to continued employment withthe Company, any of its subsidiaries, or any Successor Employer, or employmentin the same position or on the same terms as those currently in effect.

 

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**Arbitration of Disputes: **Any controversy or claim between anyCovered Employee and a Successor Employer arising out of or relating to thisPlan or the breach thereof shall, to the extent permitted by law, be settled byarbitration in any forum and form agreed upon by the Covered Employee and theSuccessor Employer, or in the absence of such an agreement, under the auspicesof the American Arbitration Association (“AAA”) in Baltimore, Maryland inaccordance with the Employment Dispute Resolution Rules of the AAA, including,but not limited to, the rules and procedures applicable to the selection ofarbitrators, except that the Successor Employer shall pay all administrativefees and arbitrator’s fees and expenses related to such arbitration.  Notwithstanding the foregoing, this provisionshall not preclude any party from pursuing a court action for the sole purposeof obtaining a temporary restraining order or a preliminary injunction incircumstances in which such relief is appropriate, provided that any otherrelief shall be pursued through an arbitration proceeding as provided herein.

 

**Severability: **If any provision of this Plan is orbecomes invalid, illegal or unenforceable in any respect under any law, thevalidity, legality and enforceability of the remaining provisions hereof shallnot in any way be affected or impaired.

 

**Waivers:**  No delay or omission by any Covered Employee,by the Company or any of its subsidiaries, or by any Successor Employer inexercising any right, power or privilege hereunder shall impair such right,power or privilege, nor shall any single or partial exercise of any such right,power or privilege preclude any further exercise thereof or the exercise of anyother right, power or privilege.

 

**Amendment; Termination: **The Successor Board may, by action(s)duly approved in accordance with the Company’s By-Laws and applicable law,amend or terminate the Plan at any time (or, in the case of amendments, fromtime to time) after the date of completion of the First Change of Control, providedthat no such amendment or termination shall, without the prior written consentof the Covered Employee(s) so affected, adversely affect any of the rights orbenefits to which any of the Covered Employees is entitled under the Planimmediately following the completion of the First Change of Control (includingall rights to payments and benefits upon a subsequent termination of theemployment of such Covered Employee(s)).

 

**Assignment; Rights of Parties: **The rights and obligations of theCompany, its subsidiaries, each of the Covered Employees and each SuccessorEmployer shall inure to the benefit of, and shall be binding upon, thesuccessors and assigns of each of them.

 

**GOVERNING LAW.  THIS PLAN SHALL BE GOVERNED BY AND CONSTRUEDIN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND, WITHOUT REFERENCE TOPRINCIPLES OF CONFLICTS OF LAW.**

 

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