EXHIBIT 10.1
EMPLOYMENT AGREEMENT dated as of August 1, 1999 (the
"Agreement"), between AMERICAN COLOR GRAPHICS, INC., a New York corporation (the
"Company") and X.X. XXXXXXXX (the "Executive").
WHEREAS, the Company and the Executive have entered into an
Employment Agreement dated as of September 8, 1995, as amended (the "1995
Agreement"); and
WHEREAS, the parties hereto desire to replace the 1995
Agreement with this Agreement;
NOW, THEREFORE, in consideration of the covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. Effectiveness of Agreement
This Agreement shall become effective as of August 1, 1999.
2. Employment and Duties
2.1. General. The Company hereby employs the Executive,
and the Executive agrees to serve, as President of the Company's Print Division
("Print"), upon the terms and conditions herein contained. The Executive's
primary responsibilities shall be the active management of Print, subject to the
direction and control of the Company's Chief Executive Officer. The Executive
shall perform such other duties and services for the Company as may be
reasonably designated from time to time by the Company's Chief Executive
Officer. The Executive agrees to serve the Company faithfully and to the best of
his ability.
2.2. Exclusive Services. Except as may otherwise be
approved in advance by the Company's Chief Executive Officer, and except during
vacation periods and reasonable periods of absence due to sickness, personal
injury or other disability (or as otherwise permitted under the Company's Human
Resources Policy and Procedures Manual), the Executive shall devote his full
working time throughout the Employment Term (as defined in Section 2.3) to the
services required of him hereunder. The Executive shall render his services
exclusively to the Company during the Employment Term, and shall use his best
efforts, judgment and energy to improve and advance the business and interests
of the Company in a manner consistent with the duties of his position.
2.3. Term of Employment. The Executive's employment under
this Agreement shall commence as of the date hereof and shall terminate on the
earlier of (i) March 31, 2002 or (ii) termination of the Executive's employment
pursuant to this Agreement. Such period is hereinafter referred to as the
"Employment Term", provided that Article 7, and any other provisions of this
Agreement as they relate to Article 7, shall continue through the Consulting
Period.
2.4. Reimbursement of Expenses. The Company shall
reimburse the Executive for reasonable travel and other business expenses
incurred by him in the fulfillment of his duties hereunder upon presentation by
the Executive of an itemized account of such expenditures, in accordance with
Company practices consistently applied.
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3. Annual Compensation
3.1. Base Salary. During his employment under this
Agreement, the Executive shall be entitled to receive a base salary ("Base
Salary") at a rate of $350,000 per annum, payable in accordance with the
Company's payroll practices. The amount of the Base Salary shall be reviewed
annually by the Company, and may, in the Company's discretion, be increased.
3.2. Annual Bonus. During his employment under this
Agreement, the Executive shall be entitled to participate in an annual bonus
plan, under which the Executive shall be entitled to receive a bonus of up to
50% of his Base Salary, payable in accordance with the terms of such bonus plan
if the budget performance criteria for Print (as determined by the Board of
Directors of the Company from time to time) are satisfied.
4. Executive Benefits
The Executive shall, during his employment under this
Agreement, be included to the extent eligible thereunder in all executive
benefit plans, programs or arrangements (including, without limitation, any
plans, programs or arrangements providing for retirement benefits, profit
sharing, disability benefits, health and life insurance and paid holidays, but
not including bonus plans (except as provided in Section 3.2)) which shall be
established by the Company for, or made available to, Executives of the Company
generally.
5. Termination of Employment
5.1. Termination Without Cause; Resignation for Good
Reason.
5.1.1. General. Subject to the provisions of Sections
5.1.2 and 8, if, prior to the expiration of the Employment Term, the Executive's
employment is terminated by the Company without Cause (as defined in Section
5.3) or the Executive terminates his employment hereunder for Good Reason (as
defined in Section 5.4), the Company shall (w) continue to pay the Executive the
Base Salary (at the rate in effect on the date of such termination) for a period
of two years beginning as of the date of termination (such period being referred
to hereinafter as the 'Severance Period"), at such intervals as the same would
have been paid had the Executive remained in the active service of the Company;
(x) pay the Executive a pro rata portion of the bonus to which the Executive
would have been entitled for the year of termination pursuant to Section 3.2 had
the Executive remained employed for the entire year, which bonus shall be
payable at the time bonuses under the applicable bonus plan is paid to the
Company's executives generally; (y) provide the Executive, during the Severance
Period, with health insurance benefits substantially equivalent to the health
insurance benefits made available by the Company to active Executives of the
Company generally; and (z) make the payments referred to in Section 7.4 below at
such intervals as the same would have been paid had the Executive served as a
Consultant to the Company. The Company shall contribute to the cost of such
health insurance benefits to the same extent it contributes to the cost of such
benefits for such active Executives. The Executive shall have no further right
to receive any other compensation or benefits after such termination or
resignation of employment except as determined in accordance with the terms of
the Executive benefit plans or programs of the Company.
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5.1.2. Conditions Applicable to the Severance Period. If,
during the Severance Period, the Executive materially breaches his obligations
under Section 9 of this Agreement, the Company may, upon written notice to the
Executive, terminate the Severance Period and cease to make any further payments
or provide any benefits described in Section 5.1.1.
5.1.3. Date of Termination. The date of termination of
employment without Cause shall be the date specified in a written notice of
termination to the Executive. The date of resignation for Good Reason shall be
the date specified in the written notice of resignation from the Executive to
the Company; provided, however, that no such written notice shall be effective
unless the cure period specified in Section 5.4 has expired without the Company
having corrected, to the reasonable satisfaction of the Executive, the event or
events subject to cure. If no date of resignation is specified in the written
notice from the Executive to the Company, the date of termination shall be the
first day following such expiration of such cure period.
5.2. Termination for Cause: Resignation Without Good
Reason.
5.2.1. General. If, prior to the expiration of the
Employment Term, the Executive's employment is terminated by the Company for
Cause, or the Executive resigns from his employment hereunder other than for
Good Reason, the Executive shall be entitled only to payment of his Base Salary
as then in effect through and including the date of termination or resignation.
The Executive shall have no further right to receive any other compensation,
payments or benefits after such termination or resignation of employment, except
as determined in accordance with the terms of the Executive benefit plans or
programs of the Company.
5.2.2. Date of Termination. Subject to the proviso to
Section 5.3, the date of termination for Cause shall be the date specified in a
written notice of termination to the Executive. The date of resignation without
Good Reason shall be the date specified in the written notice of resignation
from the Executive to the Company, or if no date is specified therein, 10
business days after receipt by the Company of written notice of resignation from
the Executive.
5.3. Cause. Termination for "Cause" shall mean termination
of the Executive's employment because of:
(i) any act or omission that constitutes a material
breach by the Executive of any of his obligations under this Agreement;
(ii) the continued failure or refusal of the
Executive to substantially perform the duties reasonably required of him as an
Executive or consultant of the Company;
(iii) any willful and material violation by the
Executive of any Federal or state law or regulation applicable to the business
of the Company, ACG Holdings, Inc. ("ACG Holdings") or any of their respective
subsidiaries, or the Executive's conviction of a felony, or any willful
perpetration by the Executive of a common law fraud; or
(iv) any other willful misconduct by the Executive
which is materially injurious to the financial condition or business reputation
of, or is otherwise materially injurious to the Company, ACG Holdings or any of
their respective subsidiaries or affiliates (it being understood that the good
faith performance by the Executive of the duties required of him pursuant to
Sections 2.1 shall not constitute "misconduct" for purposes of this clause
(iv)); provided, however, that if any such Cause relates to the Executive's
obligations under this Agreement, the Company shall not terminate the
Executive's employment hereunder unless the Company first gives the Executive
notice of its intention to terminate and of the grounds for such termination,
and the Executive has not, within 20 business days following receipt of the
notice, cured such Cause, or in the event such Cause is not susceptible to cure
within such 20 business day period, the Executive has not taken all reasonable
steps within such 20 business day period to cure such Cause as promptly as
practicable thereafter.
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5.4. Good Reason. For purposes of this Agreement, "Good
Reason' shall mean any of the following (without the Executive's prior written
consent):
(i) a decrease in the Executive's base rate of
compensation or a failure by the Company to pay material compensation due and
payable to the Executive in connection with his employment;
(ii) a material diminution of the responsibilities of
the Executive with the Company; or
(iii) the Executive is required to be based at an
office or location more than 25 miles from his current principal employment
location; or
(iv) a material breach by the Company of any term or
provision of this Agreement,
provided, however, that no event or condition described in this Section 5.4
shall constitute Good Reason unless (X) the Executive gives the Company written
notice of his objection to such event or condition, (Y) such event or condition
is not corrected by the Company within 20 business days of its receipt of such
notice (or in the event that such event or condition is not susceptible to
correction within such 20 business-day period, the Company has not taken all
reasonable steps within such 20 business-day period to correct such event or
condition as promptly as practicable thereafter) and (Z) the Executive resigns
his employment with the Company and its subsidiaries not more than 60 days
following the expiration of the 20 business-day period described in the
foregoing clause (Y).
6. Death, Disability or Retirement
In the event of termination of employment by reason of
death, Permanent Disability (as hereinafter defined) or retirement, the
Executive (or his estate, as applicable) shall be entitled to (x) Base Salary
and benefits determined under Sections 3.1 and 4 hereof through the date of
termination and (y) a pro rata portion of the bonus to which the Executive would
have been entitled for the year of termination pursuant to Section 3.2 had the
Executive remained employed for the entire year, which bonus shall be payable at
the time bonuses under the applicable bonus plan is paid to the Company's
executives generally. Other benefits shall be determined in accordance with the
benefit plans maintained by the Company, and the Company shall have no further
obligation hereunder. For purposes of this Agreement, "Permanent Disability"
means a physical or mental disability or infirmity of the Executive that
prevents the normal performance of substantially all his duties as an Executive
of the Company, which disability or infirmity shall exist for any continuous
period of 180 days.
7. Consulting Engagement
7.1 General. Effective April 1, 2002, the Company hereby
agrees to engage the Executive as a consultant to the Company and the Executive
hereby accepts such engagement with the Company for the period set forth in
Section 7.2 below, with the responsibilities determined pursuant to Section 7.3
below, all in accordance with the terms and conditions hereof.
7.2 Consulting Period. The period during which the
Executive shall be engaged as a consultant by the Company (the "Consulting
Period") shall commence on April 1, 2002, subject to Section 7.1 above, and
shall terminate on the second anniversary thereof; provided, however, that the
Company may, upon written notice to the Executive, terminate the Consulting
Period and cease to make any payments described in Section 7.4 upon the
occurrence of any event that constitutes Cause (including without limitation,
any material breach by the Executive of his obligations under Section 9).
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7.3 Consulting Services. The Executive's services
hereunder during the Consulting Period shall consist of such consulting and
advisory services, and shall be provided at such times, as may be requested from
time to time by the Board or the President of the Company; provided, however,
that such services shall not be required for more than 50 working days during
any one-year period.
7.4 Compensation During Consulting Period. During the
Consulting Period, as compensation for the consulting services to be performed
by the Executive hereunder, and in lieu of the payments set forth in Article 3
above, the Company shall pay the Executive a fee of $125,000 per annum, payable
in equal installments not less frequently than bi-weekly in accordance with the
Company's payroll practices. In addition to the compensation provided for
herein, Executive shall be entitled to be reimbursed for all reasonable and
necessary expenses incurred in connection with and while performing his duties
under this Agreement.
7.5 Independent Contractor Status During Consulting
Period. The Company and the Executive agree that the Executive shall not be an
Executive of the Company or any of its affiliates during the Consulting Period
but shall act in the capacity of an independent contractor. Consequently, the
Executive shall not (except as required by applicable law) be entitled to
participate during the Consulting Period in any of the Executive benefit plans,
programs or arrangements of the Company or any of its affiliates other than in
the Company's health plan, until such time as Executive is 65 years of age,
provided that Executive pays the Executive portion of the premiums under such
plan.
8. Mitigation Of Damages
Any payment to Executive provided for in Section 5.1 above
will be reduced by any amounts which the Executive receives or is entitled to
receive from another employer with respect to the Severance Period. The
Executive shall promptly notify the Company in writing in the event that other
employment is obtained during the Severance Period, and of the amounts which the
Executive receives or is entitled to receive from such other employment.
9. Non-solicitation; Confidentiality; Non-competition.
9.1. Non-solicitation. For so long as the Executive is
employed or retained as a consultant by the Company and continuing for two years
thereafter, the Executive shall not, without the prior written consent of the
Company, directly or indirectly, as a sole proprietor, member of a partnership,
stockholder or investor, officer or director of a corporation, or as an
Executive, associate, consultant or agent of any person, partnership,
corporation or other business organization or entity other than the Company: (x)
solicit, hire, have contact with, or endeavor to entice away from the Company,
ACG Holdings or any of their respective subsidiaries any person or entity who
is, or, during the then most recent 12-month period, was employed by, or had
served as an agent or key consultant of, the Company, ACG Holdings or any of
their respective subsidiaries; or (y) solicit, hire, have contact with, or
endeavor to entice away from the Company, ACG Holdings or any of their
respective subsidiaries any person or entity who is, or was within the then most
recent 12-month period, a customer or client (or reasonably anticipated (to the
general knowledge of the Executive or the public) to become a customer or
client) of the Company, ACG Holdings or any of their respective subsidiaries.
9.2. Confidentiality. The Executive covenants and agrees
with the Company that he will not at any time, except in performance of his
obligations to the Company hereunder or with the prior written consent of the
Company, directly or indirectly, disclose any secret or confidential information
that he may learn or has learned by reason of his association with the Company,
ACG Holdings or any of their respective subsidiaries and affiliates. The term
"confidential information" includes information not previously disclosed to the
public or to the trade by the Company's management, or otherwise in the public
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domain, with respect to the Company's, Communication's or any of their
respective affiliates' or subsidiaries', products, facilities, applications and
methods, trade secrets and other intellectual property, systems, procedures,
manuals, confidential reports, product price lists, customer lists, technical
information, financial information (including the revenues, costs or profits
associated with any of the Company's or products), business plans, prospects or
opportunities, but shall exclude any information which (i) is or becomes
available to the public or is generally known in the industry or industries in
which the Company or operates other than as a result of disclosure by the
Executive in violation of his agreements under this Section 9.2 or (ii) the
Executive is required to disclose under any applicable laws, regulations or
directives of any government agency, tribunal or authority having jurisdiction
in the matter or under subpoena or other process of law.
9.3. No Competing Employment. For so long as the Executive
is employed or retained as a consultant by the Company, and continuing for two
years thereafter, Executive shall not, directly or indirectly, as a sole
proprietor, member of a partnership, stockholder or investor (other than a
stockholder or investor owning not more than a 5% interest), officer or director
of a corporation, or as an Executive, associate, consultant or agent of any
person, partnership, corporation or other business organization or entity other
than the Company, render any service to or in any way be affiliated with a
competitor (or any person or entity that is reasonably anticipated (to the
general knowledge of the Executive or the public) to become a competitor) of the
Company, ACG Holdings or any of their respective subsidiaries.
9.4. Exclusive Property. The Executive confirms that all
confidential information is and shall remain the exclusive property of the
Company. All business records, papers and documents kept or made by the
Executive relating to the business of the Company shall be and remain the
property of the Company, except for such papers customarily deemed to be the
personal copies of the Executive.
9.5 Injunctive Relief. Without intending to limit the
remedies available to the Company, the Executive acknowledges that a breach of
any of the covenants contained in this Section 8 may result in material and
irreparable injury to the Company, ACG Holdings or their respective affiliates
or subsidiaries for which there is no adequate remedy at law, that it will not
be possible to measure damages for such injuries precisely and that, in the
event of such a breach or threat thereof, the Company shall be entitled to seek
a temporary restraining order and/or a preliminary or permanent injunction
restraining the Executive from engaging in activities prohibited by this Section
9 or such other relief as may be required specifically to enforce any of the
covenants in this Section 9. If for any reason, it is held that the restrictions
under this Section 9 are not reasonable or that consideration therefor is
inadequate, such restrictions shall be interpreted or modified to include as
much of the duration and scope identified in this Section 8 as will render such
restrictions valid and enforceable.
10. Miscellaneous
10.1. Notices. All notices or communications hereunder
shall be in writing, addressed as follows:
To the Company:
American Color Graphics, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telecopier No.: 000-000-0000
Attention: Xxxxx Xxxxxxx, Esq.
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with a copy to:
ACG Holdings, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Telecopier No.: 000-000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
To the Executive:
X.X. Xxxxxxxx
000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
with a copy to:
All such notices shall be conclusively deemed to be
received and shall be effective, (i) if sent by hand delivery, upon receipt,
(ii) if sent by telecopy or facsimile transmission, upon confirmation of receipt
by the sender of such transmission or (iii) if sent by registered or certified
mail, on the fifth day after the day on which such notice is mailed.
10.2. Severability. Each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
10.3. Assignment. This Agreement shall be binding upon and
inure to the benefit of the heirs and representatives of the Executive and the
assigns and successors of the Company, but neither this Agreement nor any rights
hereunder shall be assignable or otherwise subject to hypothecation by the
Executive.
10.4. Entire Agreement. This Agreement represents the
entire agreement of the parties and shall supersede any and all previous
contracts, arrangements or understandings between the Company, and the
Executive. This Agreement may be amended at any time by mutual written agreement
of the parties hereto.
10.5 Withholding. The payment of any amount pursuant to
this Agreement shall be subject to applicable withholding and payroll taxes, and
such other deductions as may be required under the Company's Executive benefit
plans, if any.
10.6 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the state of Tennessee applicable
to contracts executed in and to be performed entirely within that state.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed and the Executive has hereunto set his hand, as of the day and
year first above written.
AMERICAN COLOR GRAPHICS, INC.
By: Xxxxxxx X. Xxxxx
-----------------------------------------
Xxxxxxx X. Xxxxx
Chairman and Chief Executive Officer
EXECUTIVE
By: X.X. Xxxxxxxx
-----------------------------------------
X.X. Xxxxxxxx
