Exhibit 10.6(a)
EMPLOYMENT AGREEMENT
This Agreement, effective as of January 16, 2003, is entered into by and
between Applied Graphics Technologies, Inc., a Delaware corporation ("AGT"), and
Xxxxxx X. Xxxxxxxxxx, (hereinafter referred to as the "Employee"), an individual
presently residing at 0000 Xxxxx Xxxxxx Xxxxx, Xx. Xxxxxxx, Xxxxxxxx 00000. In
consideration of the mutual covenants set forth herein, the parties agree as
follows:
1. Employment Term. Subject to the further terms and conditions of this
Agreement, AGT shall continue to employ Employee for the period beginning on
January 16, 2003 (the "Commencement Date") and ending on January 15, 2005 (the
"Term"). After the Term, Employee shall be an employee "At will" and may be
terminated by AGT at any time with or without cause.
2. Compensation.
a. AGT will pay Employee a salary at the rate of Five Hundred and
Sixty Thousand Dollars ($560,000) per annum ("Base Salary"). The Base Salary
will be reviewed annually and may, in the sole discretion of the Board of
Directors, be increased but may not be reduced.
b. Employee will be eligible to receive a performance bonus with
respect to calendar year 2002 in accordance with the Management Incentive Plan
("MIP") for 2002, as previously approved by the Board of Directors, and for
future periods based upon the MIP approved by the Board with respect to each
subsequent period. In the event Employee's
employment shall terminate or expire for any reason other than for "Cause"
pursuant to paragraph 5(a) herein, after the end of any period with respect to
which an MIP bonus was based, but before said bonus was paid, Employee shall be
entitled to the full amount of said bonus to which he would otherwise have been
entitled had his employment not terminated or expired, such bonus to be payable
at the time, and in the manner, that MIP bonuses are paid to comparable
employees. In addition, Employee shall be eligible to receive any additional
bonus that may be approved by the Board of Directors in its sole discretion.
c. The Base Salary and bonuses referred to above represent all of
Employee's cash compensation, and accordingly, Employee shall not be entitled to
any overtime, weekend or holiday compensation. All payments made pursuant to
this Agreement shall be less applicable withholdings and deductions.
d. Employee shall be eligible to participate in those insurance,
retirement and other benefits generally provided to AGT's other senior
executives of similar rank and tenure from time to time.
e. Employee shall be reimbursed for all reasonable travel and
entertainment expenses incurred in the furtherance of AGT's business, upon
submission by Employee of appropriate documentation in accordance with AGT's
policies as are in effect from time to
time.
f. AGT shall provide Employee with an all-inclusive automobile
allowance of $1,000 per month.
3. Duties. Employee agrees to fulfill the duties of President and Chief
Operating Officer as such duties are defined by AGT's Board of Directors. It is
understood that the Company intends to commence a search for a new Chief
Executive Officer. In light of the foregoing and the requirements of the Company
as determined by the Board of Directors, it is
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understood that the Employee's duties may be modified from time to time in the
future. However, the Employee's duties must, at a minimum, consist of those
customarily performed by the Chief Operating Officer. Employee's reporting
relationship shall be as determined by the Board of Directors in its sole
discretion; provided that, unless and until the Board determines otherwise,
Employee shall report to Xxxx Xxxxxxx in his capacity as Chairman and Chief
Executive Officer. Employee shall devote all of his business efforts to the
performance of his duties hereunder and shall do so to the best of his
abilities. The Employee's principal office, which is currently in New York,
shall be in a location determined by the Board of Directors. Employee will
travel both in the United States and abroad as necessary and appropriate to
fulfill his duties.
4. Vacation. Employee shall be entitled to four (4) weeks vacation during
each year of the Term, to be taken at such times as shall be agreed between
Employee and the entity or person to whom he reports. Vacation days will accrue
and be paid in accordance with AGT's policies as are in effect from time to
time.
5. Termination. Subject to the provisions of this Paragraph 5, either AGT
or Employee may terminate this Agreement prior to the expiration of the Term, as
provided for hereinbelow.
(a) AGT shall have the right to terminate this Agreement for Cause (as
hereinafter defined), whereupon the Term shall be at an end.
Employee shall have the right to terminate this Agreement for Good
Reason (as hereinafter defined), whereupon the Term shall be at an
end. If AGT terminates this Agreement for other than
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Cause or Employee terminates this Agreement for Good Reason, then
AGT shall pay and/or provide to Employee the following:
(i) all accrued but unpaid amounts payable hereunder with respect
to the period prior to the date of termination (including,
without limitation, base salary, any unpaid bonus which may
have been awarded to or earned by Employee, unused vacation
pay and reimbursable expenses); and
(ii) The sum of (A) all Base Salary which would have become payable
to Employee under this Agreement as if this Agreement had not
been terminated and Employee remained employed by AGT for a
period of 18 months following such termination, (the
"Severance Period"), and (B) the aggregate amount by which all
then unvested stock options are "in the money" on the date of
termination, said amount to be calculated by subtracting from
the market value of AGT stock as of the date of termination
the applicable exercise prices of the stock options;
(iii) The amounts referred to in subparagraphs (i) and (ii) above
are sometimes hereinafter referred to as the "Severance
Payments". The Severance Payments shall be paid in a lump sum
(without present value discount) within thirty (30) days after
the date of termination, except that any unpaid MIP bonus to
which Employee is entitled pursuant to paragraph 2(b) herein
shall be paid as provided in said paragraph. As a condition to
Employee's receipt of the Severance Payments, Employee will be
required
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to execute a Release in the form attached hereto as SCHEDULE
OF RELEASE; and
(iv) during the maximum period permitted by COBRA, but in no event
past the end of the Severance Period, AGT will provide
Employee, at AGT's expense, with COBRA coverage. During the
Severance Period, Employee shall not be entitled to any other
benefits provided in paragraph 2(d) except any conversion and
other rights which survive termination of employment under any
group life, disability insurance and/or other benefit plans of
AGT in which Employee participates or participated as an
employee of AGT. Anything contained herein to the contrary,
AGT's obligation to provide COBRA benefits shall terminate
upon the date the Employee is first eligible for medical
insurance related to his new employment.
(b) If AGT terminates this Agreement for Cause, or if Employee dies or
becomes permanently disabled (as hereinafter defined), then AGT
shall pay to Employee all accrued but unpaid amounts hereunder with
respect to the period prior to the date of termination, death or
disability (including, without limitation, Base Salary, unused
vacation pay and reimbursable expenses and, in the event Employee
dies or becomes permanently disabled, any unpaid bonus which may
have been awarded to or earned by Employee); said amounts to be paid
to Employee (or his estate) within 30 days after the date of such
termination, death or disability, except that any unpaid MIP bonus
to which Employee is entitled pursuant to paragraph 2(b) herein
shall be paid as provided in said paragraph.
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(c) For purposes of this Agreement, "Cause" shall mean: (i) indictment
for, conviction of or pleas of guilty or nolo contendre to any
felony (other than an offense involving a motor vehicle) or business
related misdemeanor; (ii) theft, fraud or embezzlement; (iii) an act
of gross neglect or gross misconduct; (iv) habitual drug or alcohol
abuse; (v) excessive absenteeism not related to illness; (vi) the
intentional failure to perform assigned duties; (vii) a material
breach of any of the provisions of this Agreement; (viii) the
commission of any other action with the intent to harm or injure
AGT, its parents, subsidiaries or affiliates; which, in the case of
clauses (v), (vi), (vii) and/or (viii) above, are not remedied by
Employee within thirty (30) days after receipt by Employee of
written notice from the Chairman of the Board of Directors of AGT
(the "Board").
(d) For purposes of this Agreement, "Good Reason" shall mean (i) if any
payment to be made by AGT to Employee is not made when due and
remains unpaid for fifteen (15) days after written notice from
Employee, and/or (ii) any other material breach by AGT of this
Agreement which is not remedied within thirty (30) days after
receipt of written notice thereof to AGT by Employee (including,
without limitation, any demotion in Employee's title or position
and/or any material diminution of Employee's powers, duties or
responsibilities).
(e) "Permanent disability" shall mean physical or mental illness,
disability or
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disfigurement which renders Employee incapable of performing his
normal services hereunder for a continuous period of 8 weeks, or an
aggregate of 16 weeks during any 52-week period. In the event
Employee is disabled less than such 8 or 16 weeks, respectively,
Employee shall nonetheless be entitled to full compensation during
such period. In the event of termination as a result of disability
under 5(b) above, Employee shall, in addition to any other payments
or benefits hereunder, be entitled to receive a severance payment
pursuant to company policy, but not less than one (1) year of Base
Salary.
(f) In the event that, on January 15, 2005, (A) Employee is still
employed by AGT, and (B) for any reason whatsoever, AGT has failed
to offer to enter into a written agreement extending the term of
Employee's employment by AGT for a period of at least one (1) year
beyond January 15, 2005, upon terms at least as favorable to
Employee as those set forth herein, then AGT shall pay and/or
provide to Employee the following:
(i) all accrued but unpaid amounts payable hereunder with
respect to the period ending on January 15, 2005
(including, without limitation, base salary, any unpaid
bonus which may have been awarded to or earned by
Employee, unused vacation pay and reimbursable
expenses); and
(ii) all base salary which would have become payable to
Employee under this Agreement, as if this term of this
Agreement had not expired and Employee remained employed
by AGT for an
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additional period of one (1) year following such
expiration, (the "Continuation Period").
(iii) the amounts referred to in subparagraphs (i) and (ii)
above are sometimes hereinafter referred to as the
"Continuation Payments". The Continuation Payments shall
be paid in a lump sum (without present value discount)
within thirty (30) days after the date of the expiration
of the Term except that any unpaid MIP bonus to which
Employee is entitled pursuant to paragraph 2(b) herein
shall be paid as provided in said paragraph. As a
condition to Employee's receipt of the Continuation
Payments, Employee will be required to execute a Release
in the form attached hereto as SCHEDULE OF RELEASE; and
(iv) during the maximum period permitted by COBRA, but in no
event past the end of the Continuation Period, AGT will
provide Employee, at AGT's expense, with COBRA coverage.
During the Continuation Period, Employee shall not be
entitled to any other benefits provided in paragraph
2(d) except any conversion and other rights which
survive termination of employment under any group life,
disability insurance and/or other benefit plans of AGT
in which Employee participates or participated as an
employee of AGT. Anything contained herein to the
contrary, AGT's obligation to provide COBRA benefits
shall terminate upon the
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date the employee is first eligible for medical
insurance related to his new employment.
(g) Employee shall not be obligated to seek or accept other employment
in mitigation of any amounts payable hereunder and the obtaining of
any such other employment shall in no event effect any reduction of
AGT's obligations to make the payments or, except as provided in
subsections (a)(iv) and (f)(iv) above, to provide the benefits
required hereunder."
6. Noncompetition, Nonsolicitation and Confidentiality. As a material
inducement to continue to employ him, Employee agrees to execute the
Noncompetition, Nonsolicitation and Confidentiality Agreement attached hereto as
Exhibit A, the terms of which are incorporated herein by reference.
7. Absence of Restrictions. Employee represents and warrants that he is
not a party to any agreement or contract pursuant to which there is any
restriction or limitation upon him entering into this Agreement or performing
the duties called for by this Agreement.
8. Notices. All notices, consents and other communications required or
permitted to be given hereunder shall be in writing and delivered personally or
sent by certified or registered mail, postage prepaid, as follows:
a. if to Employee, to: Xxxxxx Xxxxxx Xxxxxxxxxx, 0000 Xxxxx
Xxxxxx Xxxxx, Xx. Xxxxxxx, Xxxxxxxx 00000
b. if to AGT, to: Chairman of the Board of Directors, 000 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx
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Xxxx 00000-0000, with a copy to Xxxxxx X. Xxxxx, Chief Legal
Officer, at 000 Xxxx 00xx Xxxxxx, Xxxxx Xxxxx, Xxx Xxxx Xxx
Xxxx 00000-0000.
Any notice so given shall be deemed received when delivered personally,
or, if mailed, three days after it is deposited, postage prepaid, by certified
mail, in the United States mail. Either party may change the address to which
notices are to be sent by giving written notice of such change of address to the
other party in the manner herein provided for giving notice.
9. General.
a. Any controversy or claim arising out of or relating to this
Agreement, or any breach thereof, shall be subject to
resolution in the state or federal courts in New York and
shall be governed by and construed and enforced in accordance
with the laws of the State of New York applicable to
agreements made and to be performed entirely in New York
without giving effect to principles of conflicts of laws
thereof.
b. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or
interpretation of this Agreement. This Agreement sets forth
the entire agreement and understanding of the parties hereto
concerning the subject matter hereof, and supersedes all prior
agreements, arrangements and understandings between the
parties hereto, including without limitation the employment
agreements between AGT and Employee dated May 1, 2000,
November 30, 2000 and Amendment #1 to Employment Agreement
dated March 1, 2002.
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c. AGT may assign its rights and obligations under this Agreement
to any successor thereto or to any corporation or other entity
controlled, or under common control with AGT or any of its
affiliates. This Agreement is personal to employee, and
neither this Agreement nor any of Employee's rights or
obligations hereunder may be assigned, pledged or encumbered
by him, without the prior written approval of AGT.
d. This Agreement may be amended, modified, superseded or
canceled, and the terms or covenants hereof may be waived,
only by a written instrument executed by both parties hereto,
or, in the case of a waiver, by the party waiving compliance.
The failure of either party at any time or times to require
performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by
either party of the breach of any term or covenant contained
in this Agreement, whether by conduct or otherwise, in any one
or more instances, shall be deemed to be, or construed as a
further or continuing waiver of any such breach or waiver of
the breach of any other term or covenant in this Agreement.
e. In the event that any one or more of the provisions of this
Agreement shall be determined to be invalid or unenforceable
in any respect, the validity and enforceability of the
remaining provisions of this Agreement shall not in any way be
affected or impaired thereby.
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f. This Agreement may be executed in counterparts; each of which
shall be deemed to be an original but all of which together
shall be deemed to be one and the same instrument.
g. Except with regard to employee's obligations under the
Noncompetition, Nonsolicitation and Confidentiality Agreement
attached hereto as Exhibit A, and with regard to AGT's
obligations under Paragraphs 5, this Agreement shall be of no
further force and effect and AGT shall have no further
obligations hereunder after the expiration or termination of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
shown below.
XXXXXX X. XXXXXXXXXX APPLIED GRAPHICS TECHNOLOGIES, INC.
By: _____________________________ By: _______________________________
Dated: __________________________ Title: ____________________________
Dated: ____________________________
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