EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of the 26th day of September, 1996, is made by and
between Xxxx Graphic Systems, Inc., a Delaware corporation having its principal
place of business in the State of Illinois (the "Company"), and Xxxxxx X. Xxxx
(the "Executive").
WHEREAS, the Company desires to obtain the services of the Executive, and
the Executive is willing to render such services, in accordance with the terms
hereinafter set forth; and
WHEREAS, the Executive wishes to be employed by the Company; and
WHEREAS, the Board of Directors of the Company (the "Board") by appropriate
resolutions has authorized the employment of the Executive as provided for in
this Agreement; and
WHEREAS, the parties hereto desire to amend, modify and restate, to the
extent that the Company has assumed any obligations under, the letter agreement
between the Executive and Rockwell International Corporation, dated as of
October 9, 1995;
NOW, THEREFORE, in consideration of the mutual promises set forth herein,
the adequacy of which is hereby acknowledged, the Company and the Executive
agree as follows:
ARTICLE I
Definitions
"Accrued Annual Base Salary" means that portion of the Executive's Annual
Base Salary which is accrued but unpaid as of the Date of Termination.
"Accrued Annual Bonus" means the sum of (i) the amount of any Annual Bonus
earned with respect to the Fiscal Year ending prior to the Date of Termination
but which is unpaid as of the Date of Termination plus (ii) with respect to the
Fiscal Year during which the Date of Termination occurs, a pro rata portion
(based on a fraction the numerator of which is the number of days which have
elapsed in such Fiscal Year through the Date of Termination, and the denominator
of which is 365) of the Annual Bonus which the Executive would have earned had
the Date of Termination been the last day of such Fiscal Year.
"Annual Base Salary" has the meaning specified in Section 4.1 of this
Agreement.
"Annual Bonus" has the meaning specified in Section 4.2 of this Agreement.
"Board" has the meaning specified in the recitals to this Agreement.
"Cause" means (i) the Executive's willful failure to perform the duties of
his employment in any material respect, (ii) malfeasance or negligence in the
performance of the Executive's duties of employment in any material respect,
(iii) the Executive's commission of a felony under the laws of the United States
or any state thereof (whether or not in connection with his employment), (iv)
the Executive's material disclosure of Protected Information (as defined in
Section 8.11(a)) respecting the Company's or any of its Subsidiaries' business
to any individual or entity which is not in the performance of the duties of his
employment, (v) the Executive's commission of an act or acts of sexual
harassment that would normally constitute grounds for termination under a formal
policy adopted by the Company, or (vi) any other act or omission by the
Executive (other than an act or omission resulting from the exercise by the
Executive of good faith business judgment) which is materially injurious to the
financial condition or the business reputation of the Company or any of its
affiliates.
Notwithstanding the foregoing, no act or omission by the Executive shall
constitute Cause hereunder unless the Company gives written notice thereof to
the Executive, and the Executive fails to remedy such act or omission within
thirty (30) days after receiving such notice.
"Change of Control" has the meaning described in the following paragraphs
(a) through (c):
(a) Prior to an initial public offering of the stock of GGS Holdings,
Inc. ("GGS"), the holding company for the Company, a "Change of Control" shall
be deemed to have occurred:
(i) Whenever Stonington Capital Appreciation 1994 Fund, L.P. (the
"Fund") (together with all affiliates) owns less than fifty-one percent (51%) of
either (A) the then outstanding shares of common stock of GGS (the "Outstanding
GGS Common Stock") or (B) the combined voting power of the then outstanding
voting securities of GGS entitled to vote generally in the election of directors
(the "Outstanding GGS Voting Securities"); or
(ii) Whenever GGS owns less than fifty-one percent (51%) of
either (A) the then outstanding shares of common stock of the Company or (B) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors.
(b) After an initial public offering of the stock of GGS, a "Change of
Control" shall mean:
(i) The acquisition by any Person or group of related Persons of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of twenty
percent (20%) or more of either the Outstanding GGS Common Stock or the
Outstanding GGS Voting Securities; provided, however, that for purposes of this
subparagraph (i), the following acquisitions shall not constitute a Change of
Control: (A) any acquisition directly from GGS, (B) any acquisition by GGS, or
(C)
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any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by GGS or any corporation controlled by GGS; and provided further
that no acquisition shall constitute a Change of Control unless, as a result
thereof, a Person or group of related Persons has beneficial ownership of a
larger percentage of the Outstanding GGS Common Stock or the Outstanding GGS
Voting Securities than is then beneficially owned by the Fund and its
affiliates; or
(ii) Individuals who, as of the date of the Closing, constitute
the board of directors of GGS (the "Incumbent Board") cease for any reason to
constitute at least a majority of the board of directors of GGS; provided,
however, that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the shareholders of GGS, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, 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 Incumbent Board; or
(iii) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding GGS Common
Stock and Outstanding GGS Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, at least sixty percent
(60%) of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their respective ownership, immediately
prior to such Business Combination, of the Outstanding GGS Common Stock and
Outstanding GGS Voting Securities; provided, however, that the provisions of
this paragraph (b) shall be applied, in connection with and after any such
Business Combination, as if all references to GGS (except in the definition of,
and references to, the Incumbent Board) were replaced by references to the
corporation resulting from such Business Combination and shall be applied, with
respect to any subsequent Business Combination, as if the reference in this
subparagraph (iii) to "at least sixty percent (60%)" were replaced by a
reference to "at least ninety-five percent (95%)"; or
(iv) Approval by the shareholders of the Company or of GGS of a
complete liquidation or dissolution of the Company or of GGS, respectively;
provided, however, that a Change of Control shall not result from approval by
the shareholders of GGS of a dissolution of GGS for the purpose of making a pro
rata distribution of shares of the Company to the shareholders of GGS; and
provided further that, after such distribution, the provisions of paragraph (a),
above, this paragraph (b), and paragraph (c), below, shall be applied as if all
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references to GGS (except in the definition of, and references to, the Incumbent
Board) were replaced by references to the Company; or
(v) Any event as a result of which GGS owns less than fifty-one
percent (51%) of either (A) the then outstanding shares of common stock of the
Company or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors.
(c) If the Fund makes a pro rata distribution of shares of common
stock or other securities of GGS to individuals or other entities who are
partners in the Fund, then the continued holding of such shares or other
securities of GGS by those distributees shall be deemed, for purposes of
paragraphs (a) and (b), above, to be continued holding of those shares or other
securities by the Fund and its affiliates.
"Closing" means the closing of the acquisition of Rockwell Graphic Systems
(a business unit of Rockwell International Corporation) by the Company from
Rockwell International Corporation.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Company" has the meaning specified in the recitals to this Agreement.
"Contract Term" has the meaning specified in Section 3.1 of this Agreement.
"Date of Termination" means the date as of which the Executive's employment
with the Company is terminated by the Company or by the Executive for any reason
including, but not limited to, death or Disability.
"Disability" means any medically determinable physical or mental
impairment, which shall have rendered the Executive unable to perform the duties
required under this Agreement for a continuous period of six (6) months. The
date of the determination of Disability is the date on which the Executive is
certified, following such six (6)-month period, by a physician reasonably
acceptable to the Company and the Executive, as having incurred a Disability.
"Executive" has the meaning specified in the recitals to this Agreement.
"Fiscal Year" means each period of twelve (12) months beginning on October
1 and ending on the following September 30.
"Good Reason" means the occurrence of any one of the following events:
(a) Assignment to the Executive of any duties materially and adversely
inconsistent with the Executive's position as specified in Article 11 hereof, or
any other action by the
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Company which results in a material and adverse change in the Executive's
position, authority, duties or responsibilities; or
(b) A change in the Executive's title or the line of authority through
which the Executive is required to report, it being understood that the
Executive shall report directly to the Board; or
(c) Failure to elect the Executive as a director of the Company and
Chairman of the Board; or
(d) Failure by the Company to adopt, not later than three (3) months after
the Closing, the annual bonus plan referred to in Section 4.2 of this Agreement;
or
(e) Failure by the Company to obtain, in accordance with Section 8.1,
below, the written agreement of any successor in interest to the business of the
Company or assignee of the Company to assume and perform the obligations of the
Company under this Agreement; or
(f) The failure by the Company to comply with any provision of Article IV
or Article V of this Agreement.
Notwithstanding the foregoing, no act or omission by the Company shall
constitute Good Reason hereunder unless (i) the Executive gives the Company
written notice thereof within two (2) months after he first knew or should have
known of such act or omission, and the Company fails to remedy such act or
omission within thirty (30) days after receiving such notice, or (ii) such act
or omission is part of a series of two (2) or more acts or omissions, each of
which constitutes Good Reason without regard to this proviso, and which occur
within a period of twelve (12) months or less.
Anything in this Agreement to the contrary notwithstanding, termination by
the Executive for any reason during the period of three (3) months which begins
one (1) month after a Change of Control which occurs within three (3) years
after the Closing shall be deemed to be a termination for Good Reason for all
purposes of this Agreement.
"Initial Grant" has the meaning specified in Section 4.3 of this Agreement.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Prohibited Business" has the meaning specified in Section 8.12 of this
Agreement.
"Protected Information" has the meaning specified in Section 8.11 of this
Agreement.
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"Retirement" means the termination of the Executive's employment after
attainment of retirement age as set forth in the retirement policy of the
Company as may be in force from time to time and applicable to other senior
executives of the Company.
"Stock Options" has the meaning specified in Section 4.3 of this Agreement.
"Stockholders Agreement" means the Stockholders Agreement, dated as of the
Closing, among the Management Investors named therein, the Company, the Fund,
and Xxxxxxx Xxxxx KECALP L.P. 1994.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which an aggregate of more than fifty percent (50%) of the outstanding capital
stock having ordinary voting power to elect a majority of the board of directors
of such corporation (irrespective of whether, at the time, stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, and (b) any partnership in which such Person and/or
one or more Subsidiaries of such Person shall have an interest (whether in the
form of voting or participation in profits or capital contribution) of more than
fifty percent (50%).
"Termination of Employment Without Cause" means a termination of the
Executive's employment by the Company for any reason other than Cause.
ARTICLE II
Duties
2.1 Employment. This Agreement amends, modifies and restates, to the extent
that the Company has assumed any obligations under, the letter agreement between
the Executive and Rockwell International Corporation, dated as of October 9,
1995, and such letter agreement, to the extent that the Company has assumed any
obligations thereunder, shall be superseded by, and shall be deemed modified in
full in accordance with, the provisions hereof.
2.2 Duties. The Company hereby employs the Executive to serve as Chairman
of the Board, Chief Executive Officer and President of the Company during the
Contract Term with overall charge and responsibility for the business and
affairs of the Company and to perform such duties consistent with such position
as the Executive shall reasonably be directed to perform by the Board of
Directors of the Company or as may be specified in the Company's bylaws (if
applicable), and the Executive hereby accepts such employment. During the
Contract Term, and excluding any periods of vacation, sick leave or disability
to which the Executive is entitled, the Executive agrees to devote the
Executive's full business time and attention to the business affairs of the
Company. It is anticipated that such services will be performed primarily in
Westmont, Illinois.
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2.3 Other Activities. During the Contract Term, it shall not be a violation
of this Agreement for the Executive to (a) serve on corporate, civic or
charitable boards or committees, (b) deliver lectures or fulfill speaking
engagements, or (c) manage personal investments, so long as such activities are
consistent with the policies of the Company and do not interfere with the
performance of the Executive's duties in accordance with this Agreement.
ARTICLE III
Term of Agreement
3.1 Term. The initial term of this Agreement shall commence on the Closing
and terminate on the second anniversary of the Closing. This initial term,
however, shall be automatically extended without further action of either party
for successive additional two (2)-year periods, unless written notice of either
party's intention not to extend has been given to the other party hereto at
least three (3) months prior to the expiration of the then effective term (the
initial term or such longer period for which the term of the Executive's
employment shall have been so extended is hereinafter referred to as the
"Contract Term"). Except as provided in Article VI, the Executive's employment
shall not be terminated prior to the end of the Contract Term.
ARTICLE IV
Compensation
4.1 Base Salary. Commencing as of the Closing and while the Executive is
employed by the Company during the Contract Term, the Company shall pay or cause
to be paid to the Executive in cash, in installments not less frequently than
monthly, an annual base salary ("Annual Base Salary") at the rate of $550,000;
provided, however, that no payments shall be made or accrued pursuant to this
Agreement prior to the Closing. The Company shall review the Executive's Annual
Base Salary no less frequently than annually and may from time to time make
increases or decreases in the Executive's Annual Base Salary, provided that it
shall not be reduced to an annual rate of less than $550,000. The term Annual
Base Salary as used in this Agreement shall refer to the Annual Base Salary as
so increased or decreased.
4.2 Annual Bonus. While the Executive is employed by the Company during the
Contact Term, the Company shall pay or cause to be paid to the Executive an
annual cash bonus ("Annual Bonus") in accordance with the terms of a bonus plan
for senior executives of the Company, which plan shall be adopted by the Board
not later than three (3) months after the Closing and the terms of which shall
reflect the recommendations of, and be acceptable to, the Executive; provided,
however, that such plan shall specify that the annual target bonus for the
Executive shall be equal to the Executive's Annual Base Salary.
4.3 Stock Options.
(a) Grant of Stock Options. Effective as of the Closing, the Company shall
grant (the "Initial Grant") to the Executive options ("Stock Options") to
purchase 26,000 shares of common stock of the Company pursuant to the Company's
Management Stock Incentive Plan, of which
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13,000 shall be Incentive Options and 13,000 shall be Performance Options (as
such terms are defined in the Management Stock Incentive Plan).
(b) Exercise Price. The exercise price of the Stock Options shall be
$100.00 per share, payable on the terms and subject to the adjustments set forth
in the Management Stock Incentive Plan.
ARTICLE V
Other Benefits
5.1 Incentive, Savings and Retirement Plans. The Executive shall be
entitled to participate while the Executive is employed by the Company during
the Contract Term in all incentives (including long-term incentives), savings
and retirement plans, practices, policies and programs applicable to other
senior executives of the Company. In addition, the Executive shall be entitled
to receive from the Company a supplemental lifetime retirement benefit in the
amount of $32,000 per year, commencing upon the termination of his employment
for any reason at any time after the Executive reaches the age of 62; provided,
however, that that supplemental retirement benefit will not be payable if the
Executive voluntarily terminates his employment with the Company, other than for
Good Reason, prior to October 9, 2000.
5.2 Welfare Benefits. While the Executive is employed by the Company during
the Contract Term, the Executive and/or the Executive's family, as the case may
be, shall be eligible for participation in and shall receive all benefits under
all welfare benefit plans, practices, policies and programs provided by the
Company and applicable to other senior executives of the Company; provided,
however, that in any event the Company shall during the Contract Term provide
the Executive with long-term disability insurance coverage and shall also pay,
in an amount up to a maximum of forty thousand dollars ($40,000) annually, the
premiums on life insurance policy number CUL 002771Z issued by Connecticut
General Life Insurance Co.
5.3 Fringe Benefits. While the Executive is employed by the Company during
the Contract Term, the Executive shall be entitled to all fringe benefits
applicable to other senior executives of the Company, and the Executive shall in
any event be entitled to a car allowance of $1,000 per month to be used for
lease payments on a car selected by the Executive.
5.4 Reimbursement of Business Expenses. The Executive shall be entitled to
receive prompt reimbursement for all reasonable business expenses incurred while
the Executive is employed by the Company, upon the Company's receipt of
accountings therefor.
5.5 Reimbursement of Other Travel Expenses. The Executive shall be entitled
to receive prompt reimbursement, upon the Company's receipt of accounting
therefor, (a) for all reasonable expenses incurred by the Executive in
connection with having his spouse accompany him for a good business reason when
the Executive is traveling on Company business and (b) for all reasonable
expenses incurred by the Executive for travel by the Executive and his spouse
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between the Executive's residence in Oak Brook, Illinois and his residence in
Newport, Rhode Island.
5.6 Relocation Expenses. As reimbursement to the Executive for reasonable
moving and relocation expenses incurred by the Executive in connection with the
relocation of his principal residence to Illinois, the Company shall pay to the
Executive upon the execution of this Agreement a lump sum of $46,000.
5.7 Vacation. While the Executive is employed by the Company during the
Contract Term, the Executive shall be entitled to paid vacation time in
accordance with the plans, practices, policies, and programs applicable to other
senior executives of the Company.
5.8 Legal and Financial Planning Fees and Expenses. Subject to an annual
limit of $10,000, the Company shall pay all reasonable attorneys' fees, other
professional fees and disbursements incurred by the Executive for estate
planning and for personal financial planning while the Executive is employed by
the Company during the Contract Term. In addition, the Company shall pay all
reasonable attorneys' fees and disbursements incurred by the Executive in
connection with the negotiation and preparation of this Agreement, the
Stockholders Agreement, the Management Stock Incentive Plan, and other
agreements and plans relating to the Executive's employment by the Company.
ARTICLE VI
Termination of Employment
6.1 Termination of Employment for Cause or Other Than for Good Reason or
Retirement. If, before the end of the Contract Term, the Company terminates the
Executive's employment for Cause or the Executive terminates employment other
than for Good Reason or Retirement, then the Company shall pay immediately after
the Date of Termination to the Executive an amount equal to the Executive's
Accrued Annual Base Salary. The Executive shall have no further right to receive
any Accrued Annual Bonus, unaccrued Annual Bonus or other compensation after
such termination or resignation of employment with respect to the year in which
such termination or resignation occurs or later years or to accrue from and
after the Date of Termination any further benefits under any other plan or
arrangement. If the Company terminates the Executive's employment for Cause, it
shall provide the Executive with not less than ten (10) days' advance written
notice of termination, including a statement of the Date of Termination and the
specific detailed basis for such termination. In this connection, as provided
for in the definition of "Cause" contained in Article I hereof, the Company
shall not have the right to terminate the Executive's employment for Cause
unless the notice and cure provisions in said definition have first been
complied with.
6.2 Termination of Employment for Death, Disability or Retirement. If,
before the end of the Contract Term, the Executive's employment terminates due
to death or Disability or Retirement, the Company shall pay to the Executive,
the beneficiaries designated in writing by the Executive, or the Executive's
estate, as the case may be, immediately after the Date of
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Termination an amount which is equal to the sum of (a) the Executive's Accrued
Annual Base Salary as of the Date of Termination and (b) the Executive's Accrued
Annual Bonus which is unpaid as of the Date of Termination (except that the
portion of such Accrued Annual Bonus which is applicable to the Fiscal Year in
which the termination occurs shall be paid promptly following delivery of the
audited financial statements for the Company for such year).
6.3 Termination of Employment by the Company Without Cause or by the
Executive for Good Reason. If, before the end of the Contract Term, there is a
Termination of Employment Without Cause or a termination of employment by the
Executive for Good Reason, the Executive shall receive promptly after the Date
of Termination in a lump sum in immediately available funds an amount equal to
the sum of (a) the Executive's Accrued Annual Base Salary and the Annual Base
Salary which would have been payable to the Executive if his employment had
continued for the period from the Date of Termination until the second
anniversary of the Date of Termination, and (b) any Accrued Annual Bonus (except
that the portion of such Accrued Annual Bonus which is applicable to the Fiscal
Year in which the termination occurs shall be paid promptly following the
delivery of the audited financial statements for the Company for such year). In
addition, for a period of two (2) years after the Date of Termination, the
Company shall also continue to provide benefits to the Executive and/or the
Executive's family at least equal to those which would have been provided to
them in accordance with the plans, practices, policies and programs referred to
in Section 5.2 of this Agreement; provided, however, that such benefits may be
discontinued earlier in the event that, and to the extent that, the Executive
becomes entitled to comparable benefits from a subsequent employer. Finally,
until the Executive reaches age 62, the Company will continue to pay, up to a
maximum annual amount of $40,000, the premiums on the life insurance policy
described in Section 5.2, above; provided, however, that such payments may be
discontinued earlier in the event that, and to extent that, the Executive
becomes entitled to have those premiums paid by a subsequent employer. The
Executive agrees to promptly advise the Company when and if he commences
employment with a subsequent employer.
6.4 Other Termination Benefits. In addition to any amounts or benefits
payable upon termination of employment hereunder and except as otherwise
provided herein, the Executive shall be entitled to any payments or benefits
explicitly provided under the terms of any plan, policy or program of the
Company or as otherwise required by applicable law.
ARTICLE VII
Representations and Warranties of the Executive
To induce the Company to enter into this Agreement, the Executive makes the
following representations and warranties to the Company, each and all of which
shall be true as of the date of execution and delivery of this Agreement and
shall survive the execution and delivery of this Agreement:
7.1 Power, Legal Competence, Enforceable Obligations. The Executive is a
bona fide resident of the State of Illinois, over 21 years of age, and has the
power and is legally competent
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to execute, deliver and perform this Agreement and all documents and instruments
to be delivered by the Executive hereunder. This Agreement constitutes a legal,
valid and binding obligation of the Executive, enforceable against him in
accordance with its terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally or by
general principles of equity.
7.2 Investment Knowledge and Experience. The Executive has sufficient
knowledge and experience in financial, business and tax matters to be capable of
evaluating the risks and merits inherent in an investment in the Company and of
making an informed investment decision with respect thereto.
7.3 Adequate Means. The Executive, at the present time, has adequate means
of providing for his current needs and personal contingencies, including the
payment of income tax liabilities attributable to the taxable income from the
common stock of the Company and Stock Options that he will receive under this
Agreement and the Executive has no need, at the present time, for liquidity in
the common stock of the Company and Stock Options that he will receive under
this Agreement.
7.4 Investment Purposes. The Executive is presently obtaining the common
stock of the Company and Stock Options hereunder for his own account, for
investment and not with a view, during the period of his employment with the
Company, to the resale, transfer or distribution of all or any such shares of
common stock or Stock Options.
7.5 Resale of Shares. The Executive will not resell or distribute the
shares of common stock of the Company or Stock Options that he will receive
under this Agreement unless such shares are registered under the Securities Act
of 1933, as amended, or an exemption from such registration is available.
ARTICLE VIII
Miscellaneous
8.1 Assignment, Successors. The Company may freely assign its respective
rights and obligations under this Agreement to a successor to the Company's
business, without the prior written consent of the Executive, provided that such
successor assumes in writing all of the Company's obligations hereunder. This
Agreement shall be binding upon and inure to the benefit of the Executive and
the Executive's estate and the Company and any assignee of or successor to the
Company.
8.2 Nonalienation of Benefits. Benefits payable under this Agreement shall
not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, prior to actually being received by the
Executive, and any such attempt to dispose of any right to benefits payable
hereunder shall be void.
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8.3 Severability. If all or any part of this Agreement is declared by any
court or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any portion of this Agreement not
declared to be unlawful or invalid. Any paragraph or part of a paragraph so
declared to be unlawful or invalid shall, if possible, be construed in a manner
which will give effect to the terms of such paragraph or part of a paragraph to
the fullest extent possible while remaining lawful and valid.
8.4 Amendment and Waiver. This Agreement shall not be altered, amended or
modified except by written instrument executed by the Company and Executive. A
waiver of any term, covenant, agreement or condition contained in this Agreement
shall not be deemed a waiver of any other term, covenant, agreement or
condition, and any waiver of any default as to any such term, covenant,
agreement or condition shall not be deemed a waiver of any later default as to
such term or as to any other term, covenant, agreement or condition.
8.5 Notices. All notices and other communications hereunder shall be in
writing and delivered by hand, by facsimile transmission, by first class
registered or certified mail, return receipt requested, postage prepaid, or by
reputable commercial delivery service, addressed as follows:
If to the Company: Xxxx Graphic Systems, Inc.
c/o Stonington Partners, Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
With a copy to: Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx
Fax: (000) 000-0000
If to the Executive: Xxxxxx X. Xxxx
0000 Xxxxxxx Xxxx Xxxxxxx
Xxx Xxxxx, Xxxxxxxx 00000
With a copy to: Xxxxxx X. Xxxxxxx, Esq.
Vedder, Price, Xxxxxxx & Kammholz
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
Either party may from time to time designate a new address by notice given in
accordance with this section. Notice and communications shall be effective when
delivered by hand or
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commercial delivery service, when received by facsimile transmission, or three
(3) business days after being mailed as set forth above.
8.6 Counterpart Originals. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
8.7 Entire Agreement. This Agreement, together with the Stockholders
Agreement, the Pledge Agreement dated as of the date hereof between the Company
and the Executive, the Management Stock Subscription Agreement dated as of the
Closing among the Company and the Management Investors named therein, the
Management Stock Incentive Plan and the agreement or agreements pursuant to
which options are granted to the Executive under the Management Stock Incentive
Plan, form the entire agreement between the parties hereto with respect to any
severance payments and with respect to the subject matter of this Agreement.
8.8 Effect on Other Agreements. This Agreement shall supersede all prior
agreements, promises and representations, whether in writing or otherwise,
regarding the Executive's employment with the Company, including severance or
other payments contingent upon termination of such employment.
8.9 Applicable Law. The provisions of this Agreement shall be interpreted
and construed in accordance with the laws of the State of Delaware, without
regard to its choice of law principles.
8.10 Survival of Certain Rights and Obligations. The Executive's rights
under Article VI hereof, and his obligations under Sections 8.11, 8.12 and 8.13
hereof, shall survive the termination of the Executive's employment and/or the
termination of this Agreement.
8.11 Trade Secrets, Confidential and Proprietary Business Information. (a)
The Company has advised the Executive and the Executive acknowledges that it is
the policy of the Company to maintain as secret and confidential all Protected
Information (as defined below), and that Protected Information has been and will
be developed at substantial cost and effort to the Company. "Protected
Information" means trade secrets and confidential and proprietary business
information of the Company, including, but not limited to, such information
regarding customers (including potential customers), sources of supply,
processes, methods, plans, apparatus, specifications, materials, pricing
information, intellectual property (including applications and rights in
discoveries, inventions or patents), internal memoranda, marketing plans,
contracts, finances, personnel, research and internal policies, other than any
information which has entered the public domain (unless such information entered
the public domain through the efforts of or on account of the Executive).
(b) The Executive acknowledges that the Executive will acquire Protected
Information with respect to the Company and its successors in interest, which
information is a valuable,
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special and unique asset of the Company's business and operations, and that
disclosure of such Protected Information would cause irreparable damage to the
Company.
(c) The Executive shall not, directly or indirectly, divulge, furnish or
willfully make accessible to any person, firm, corporation, association or other
entity (otherwise than as may be required in the regular course of the
Executive's employment or by law) nor use in any manner, either during (other
than as may be required in the regular course of the Executive's employment or
by law) or after termination of employment by the Company, any Protected
Information, or cause any such information of the Company to enter the public
domain.
8.12 Non-Competition. (a) The Executive agrees that the Executive shall not
during the Executive's employment with the Company, and, if the Executive
terminates employment during the Contract Term without Good Reason or if the
Company terminates the Executive's employment during the Contract Term for
Cause, thereafter for one (1) year, directly or indirectly, in any capacity,
engage or participate in, or become employed by or render advisory or consulting
or other services in connection with, any Prohibited Business as defined in
Section 8.12(c).
(b) The Executive agrees that the Executive shall not, during the
Executive's employment with the Company, and, if the Executive terminates
employment during the Contract Term without Good Reason or if the Company
terminates the Executive's employment during the Contract Term for Cause,
thereafter for one (1) year, make any financial investment, whether in the form
of equity or debt, or own any interest, directly or indirectly, in any
Prohibited Business. Nothing in this Section 8.12 shall, however, restrict the
Executive from making any investment in any company whose stock is listed on an
American securities exchange or traded in the over-the-counter market and has
sales in excess of $100 million; provided that (i) such investment does not give
the Executive the right or ability to control or influence the policy decisions
of any Prohibited Business, and (ii) such investment does not create a conflict
of interest between the Executive's duties hereunder and the Executive's
interest in such investment.
(c) A "Prohibited Business" shall mean any business involving designing,
developing, engineering, manufacturing, selling, installing or servicing
printing press systems for newspaper, insert or commercial printing or other
graphic arts.
8.13 Undertaking Regarding Employees. From the date of the Closing until
two (2) years after the Date of Termination, the Executive shall not, directly
or indirectly, except with the permission in writing of the Company, (a) induce
or encourage any employee of the Company or of any successor in interest to
leave employment with the Company or any successor in interest; or (b) employ,
hire, solicit or cause to be employed, hired or solicited for employment (other
than by the Company or any successor in interest), or establish a business with
or encourage others to hire, any person who within one (1) year prior thereto
was, to the knowledge of the Executive, employed by the Company or any successor
in interest; provided, however, that the Executive will not be prohibited from
hiring or employing (or causing to be hired or
14
employed) any person whose termination of employment with the Company or any
successor in interest was not directly or indirectly induced, encouraged or
solicited by the Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement on this 26th
day of September, 1996.
XXXX GRAPHIC SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
/s/ Xxxxxx X. Xxxx
--------------------------------
Xxxxxx X. Xxxx
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