Exhibit 99.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is effective as of the
22nd day of June 2005 (the "Effective Date"), by and between CENVEO, INC., a
Colorado corporation (the "Company") and Xxxxx X. Xxxxxx ("Executive").
W I T N E S S E T H:
WHEREAS, the Company is engaged in, among other businesses, the
businesses of commercial printing, envelope manufacturing and printing,
printing of custom business documents, and printing of labels ("Business");
WHEREAS, the Company wishes to employ Executive as its President
and Chief Executive Officer;
WHEREAS, the Board believes it is imperative (i) to diminish the
inevitable and significant distractions of Executive and dilution of the
time of Executive, by virtue of the personal uncertainties and risks created
by a pending or threatened Triggering Event; (ii) to encourage Executive's
full attention and dedication to the Company currently and in the event of
any threatened or pending Triggering Event; (iii) to provide Executive with
compensation arrangements in the event of a Triggering Event which provide
Executive with financial security, which are competitive with those of other
corporations; (iv) to ensure that following a Triggering Event Executive
does not engage in activities or business pursuits which may threaten or
damage the Company; (v) to retain the services of Executive for a reasonable
period of time following any Triggering Event; and (vi) to obtain a full and
complete Release from Executive should a separation of employment occur in
connection with or subsequent to a Triggering Event; and
WHEREAS, in order to accomplish the objectives described in the
immediately preceding recitals, the Board desires to cause the Company to
enter into this Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained in this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Executive hereby agree as follows:
ARTICLE I
EMPLOYMENT, REPORTING AND DUTIES
1.1 Employment. On the terms and subject to the conditions of this
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Agreement, the Company hereby employs and engages the services of Executive
to serve as President and Chief Executive Officer, and Executive agrees to
diligently and competently serve as and perform the functions of President
and Chief Executive Officer (the "Office") for the term and for the
compensation and benefits stated herein.
1.2 Major Responsibilities; Authority. Executive shall have the
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authorities, duties, responsibilities and status (including offices, titles
and reporting requirements) usually associated with the Office of companies
or divisions of companies having operations, subsidiaries and assets similar
in nature and value to the operations, subsidiaries and assets of the
Company or its divisions. Executive shall also have such other duties as the
Board shall determine and Executive shall accept from time to time.
1.3 Extent of Service. During the Term (as defined in Section 4.1),
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and excluding any periods of vacation and sick leave to which Executive may
be entitled, Executive agrees to devote reasonable time and energies to the
Business consistent with the duties of the Office and shall not, during the
Term, be engaged in any business activity which would interfere or prevent
Executive from carrying out Executive's duties under this Agreement, except
that Executive shall be permitted to continue serving as a member of the
board of directors of AmSouth Bancorporation and Ametek, Inc., but not as an
officer or employee, and as a founding partner of Qorval LLC (the "Permitted
Business Relationships"). The Company hereby acknowledges that, as of the
Effective Date, Executive serves on the governing board or as an officer of
a number of other entities. Executive hereby agrees to sever completely
those business relationships, other than the Permitted Business
Relationships, no later than November 1, 2005, and further agrees not to
enter into any board, officer or employee relationship with any other entity
during the Term.
ARTICLE II
COMPENSATION AND RELATED ITEMS
2.1 Base Salary. During the Term, as compensation and consideration
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for the services to be rendered by Executive under this Agreement and for
the performance by Executive of the usual obligations of such employment,
the Company agrees to pay Executive during the Term, and Executive agrees to
accept, a base salary ("Base Salary") of $850,000 per annum which shall be
paid in accordance with Company's standard payroll practice. The Board of
Directors may, from time to time, increase Executive's Base Salary, and
after any such change, Executive's new level of Base Salary shall be
Executive's Base Salary for purposes of this Agreement until the effective
date of any subsequent change.
2.2 Annual Incentive Bonus. During the Term, Executive shall be
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eligible to participate in Company's Annual Incentive Program for executives
(the "Executive Bonus Program"). The award for an annual performance period
(the "Performance Period") in the event the annual performance goals are
attained is 100% of the Base Salary or such higher amount based on results
in excess of the performance goals as determined by the Board or, if
applicable, the Compensation Committee of the Board of Directors (the
"Committee").
(a) Initial Performance Period. Notwithstanding the
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preceding provisions of this Section 2.2, for the Performance
Period beginning on the Employment Date (as defined in Section
2.3(a)) and ending on December 31, 2005 (the "Initial Bonus
Period"), Executive's bonus award shall be paid irrespective of any
performance goals in an amount equal to annual Base Salary
multiplied by a fraction, the numerator of which is
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the number of days in the Initial Bonus Period and the denominator
of which is 365 (the "Initial Bonus"). The Initial Bonus shall be
paid to Executive as soon as reasonably practicable following
Executive's Employment Date. No other bonus shall be payable to
Executive under this Section 2.2 in respect of the Initial Bonus
Period. Executive shall reimburse the Company for the Initial Bonus
in the event before January 1, 2006 Executive terminates his
employment with the Company without Good Reason or the Company
terminates Executive's employment for Cause.
(b) Subsequent Performance Periods. Except as provided in
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Section 2.2(a), any and all annual bonuses under the Executive
Bonus Program will be based on the attainment of goals established
and approved by the Board or Committee, as applicable, in their
sole discretion, in accordance with the Executive Bonus Program.
Except as set forth in this Agreement, the terms and conditions of
the Executive Bonus Program, as may be amended by the Board from
time to time, shall govern the payment, if any, of the annual
bonus.
2.3 Equity Compensation. In addition to the foregoing, as
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compensation and consideration for the services to be rendered by Executive
under this Agreement and for the performance by Executive of the usual
obligations of such employment, Executive shall be entitled to the following
equity incentive compensation under the Company's 2001 Long-Term Equity
Incentive Plan, as amended (the "Plan"). All such awards shall be in the
form of the Company's standard Stock Option Agreement or Restricted Stock
Award agreement, as issued by the Company to its executive officers.
(a) Stock Option Award. Executive shall receive a stock
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option award covering 400,000 shares of the Company's common stock
("Stock") as of his employment commencement date (the "Employment
Date") or as soon as reasonably practicable thereafter, with an
exercise price equal to fair market value on the date of grant (the
"Option"). The Option shall include a vesting schedule pursuant to
which the Option shall become exercisable over a four year period
of Executive's service to the Company starting with the Employment
Date. Accordingly, vesting shall occur in 8,333 share increments on
the end date of each month of Executive's service during the
vesting period, with the additional 16 shares being treated as
vesting on the last vesting date. Except as provided in this
Agreement, any portion of the Option remaining unvested upon
Executive's termination of employment shall be forfeited and shall
not thereafter become exercisable. The Option otherwise shall be
subject to such terms and conditions regarding the period of
exercisability following termination of employment as otherwise
applicable to officers and other key employees of the Company.
(b) Restricted Stock Award. Executive shall receive a
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restricted stock award covering 275,000 shares of Stock, as of the
Employment Date or as soon as reasonably practicable thereafter
("Restricted Stock"). The Restricted Stock shall be awarded at no
cost to Executive, and shall include a vesting schedule pursuant to
which the Restricted Stock shall become the property of Executive
on the three-year anniversary of the Employment Date, provided
Executive remains in service to Company on such anniversary date
(the "Anniversary Date"). Notwithstanding the preceding, if the
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Anniversary Date occurs during a period in which Executive is
restricted from selling shares of Stock in the open market because
of the operation of the Company's xxxxxxx xxxxxxx policy or similar
prohibition as then in effect (whether because a trading window is
not open or there is another restriction on trading), Executive's
vesting in the Restricted Stock will be delayed until the first
date on which he no longer is prohibited from selling shares of
Stock due to the xxxxxxx xxxxxxx plan restriction. Except as
otherwise provided in this Agreement, Executive shall forfeit the
Restricted Stock in the event Executive's termination of employment
occurs prior to the occurrence of vesting.
(c) Effect of a Triggering Event. Notwithstanding anything
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to the contrary in this Section 2.3 or under the Plan, in the event
a Triggering Event (as defined in Section 6.1) shall occur during
the Term of this Agreement, Executive's vesting in the Restricted
Stock and the Option shall accelerate to 100% of the number of
shares of Stock subject to the award.
2.4 Disability Coverage. During the Term, the Company shall
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maintain disability coverage for Executive, providing for salary
continuation in the event of termination of Executive's employment on
account of total and permanent disability. The coverage shall provide for
salary continuation during the period of long-term disability at no less
than $20,000 per month in the aggregate, after taking into account any
amount of long-term disability salary continuation payable under the
Company's long-term disability program (the "LTD Plan"). For purposes of
this Section 2.4, total and permanent disability shall be limited to a
disability that results in salary continuation payments under the LTD Plan.
In addition, the maximum disability payment period shall not exceed the
maximum period for such payments under the LTD Plan.
2.5 Other Benefits. During the Term, Executive (and Executive's
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spouse and dependents to the extent provided therein) shall be entitled to
participate in and be covered under any and all welfare benefit and similar
employee benefit plans, programs, arrangements, or policies that are
generally made available by the Company and its affiliates to other key
employees, including, but not limited to, any hospitalization, medical,
prescription, dental, disability, individual life insurance, group life
insurance, accidental death insurance, and travel accident insurance plans,
programs, arrangements, and policies. In addition, during the Term,
Executive shall be eligible to participate in and be covered under any and
all bonus, incentive, savings, retirement, profit sharing, pension, stock
option, restricted stock, employee stock ownership, supplemental executive
retirement and other employee benefit plans, programs, arrangements, and
policies that are generally made available by the Company and its
affiliates, and to receive fringe benefits in accordance with the fringe
benefit policies of the Company and its affiliates.
2.6 Expenses. The Company agrees that, during the Term, Executive
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shall be allowed reasonable and necessary business expenses in connection
with the performance of Executive's duties hereunder within guidelines
established by the Board as in effect at any time with respect to key
employees ("Business Expenses"), including, but not limited to, reasonable
and necessary expenses for food, travel, lodging, entertainment and other
items in the promotion of the Business within such guidelines. The Company
shall promptly reimburse Executive for all reasonable Business Expenses
incurred by Executive upon Executive's presentation to the
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Company of an itemized account thereof, together with receipts, vouchers, or
other supporting documentation. After termination of Executive's employment
under this Agreement, however such termination may come about, Executive
shall have ninety (90) days after the date of such termination to submit
Business Expenses incurred during the Term to the Company for reimbursement.
2.7 Vacation. During the Term, Executive shall be entitled to the
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number of weeks of vacation per year provided to the Company's officers and
other key employees.
2.8 Other Reimbursable Perquisites. The Company agrees that, during
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the Term, Executive shall be reimbursed for other perquisites in the amount
not to exceed $13,000 per calendar year, from an approved list of
reimbursable perquisites set forth in writing by the Compensation Committee
as is generally applicable to the Company's officers and other key
employees.
2.9 Working Facilities. During the Term, Executive shall be
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furnished with an office of a size and with other furnishings and
appointments, administrative staff, secretarial and other assistants,
stenographic help, and such other facilities and services as are suitable to
Executive's position and adequate for the performance of Executive's duties.
Executive's place of employment will not be relocated to a location in
excess of thirty-five (35) miles from Englewood, Colorado, except for
required travel on Company business.
2.10 Relocation Costs. The Company shall reimburse Executive for
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the reasonable costs of moving to the Englewood, Colorado area. In addition,
the Company shall reimburse Executive for temporary housing in the
Englewood, Colorado area for a period of up to 12 months in connection with
the commencement of Executive's employment.
ARTICLE III
EXCULPATION
The Company agrees that Executive will not be liable for any
losses, expenses, costs or damages caused by or resulting from the
recommendations, suggestions, actions, errors, omissions or mistakes of
Executive undertaken or proposed by Executive if Executive acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Company. Executive's rights under this Article III
shall not be deemed exclusive of, but shall be cumulative with, any and all
other rights (including, but not limited to, rights of indemnification and
advancement of expenses) to which Executive may now or at any time in the
future be entitled under applicable law, the Company's articles of
incorporation, the Company's bylaws, any agreement (including, but not
limited to, this Agreement), any vote of stockholders, any resolution of
directors, or otherwise.
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ARTICLE IV
TERM AND TERMINATION
4.1 Term. The term of Executive's employment under this Agreement
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("Term") shall be, unless otherwise terminated pursuant to Section 4.2, for
an initial term of three years commencing on the Effective Date (the
"Initial Term") and shall automatically be renewed for successive periods of
one year each thereafter (each, a "Renewal Term") unless Executive delivers
written notice of termination to the Company, or the Company delivers
written notice of termination to Executive, at least 60 days prior to the
end of the Initial Term or any Renewal Term. Upon delivery of any such
written notice of termination, the Term shall expire at the end of the
Initial Term or Renewal Term next occurring after such delivery.
4.2 Termination of Employment. Except as may otherwise be provided
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herein, Executive's employment under this Agreement may terminate, and the
Term shall terminate, upon the occurrence of:
(a) Notice by Company. Ten (10) days after written notice
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of termination is given by the Company to Executive;
(b) Notice by Executive. One-hundred twenty (120) days
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after written notice of termination is given by Executive to the
Company;
(c) Death or Disability. Executive's death or, at the
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Company's option upon Executive's becoming Disabled (as defined in
Section 4.6 hereof); or
(d) Triggering Event. One hundred twenty (120) days after
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written notice of termination is given by Executive to the Company
upon the occurrence of a Triggering Event (as defined in Section
6.1 and 6.2).
Any notice of termination given by the Company to Executive under
Section 4.2(a) above shall specify whether such termination is with or
without Cause (as defined in Section 4.4 hereof). Any notice of termination
given by Executive to the Company under Section 4.2(b) above shall specify
whether such termination is made with or without Good Reason (as defined in
Section 4.5 hereof). Any notice of termination given by Executive to the
Company under Section 4.2(d) above shall specify whether such termination is
made with or without Good Reason (as defined in Section 4.5 hereof).
4.3 Obligations of the Company Upon Termination.
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(a) Cause; Without Good Reason. If the Company terminates
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Executive's employment under this Agreement with Cause pursuant to
Section 4.2(a) hereof, or if Executive terminates his employment
without Good Reason, then Executive's employment with the Company
shall terminate without further obligations to Executive, other
than those obligations owing or accrued to, vested in, or earned by
Executive through the date of termination, including, but not
limited to:
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(i) to the extent not theretofore paid,
Executive's Base Salary in effect at the time of such
termination through the date of termination; and
(ii) all other amounts or benefits owing or
accrued to, vested in or earned by Executive through the
date of termination, including any deferred compensation,
under the terms of then existing or applicable plans,
programs, arrangements, and policies of the Company and
its affiliates, including, but not limited to, any such
plans, programs, arrangements, or policies described in
Section 2.4 hereof.
The obligations owing or accrued to, vested in, or earned
by Executive through the date of termination, including, but not
limited to, such amounts and benefits specified in clauses (i) and
(ii) of this Section 4.3(a) shall be hereinafter collectively
referred to as the "Accrued Obligations." The Accrued Obligations,
shall be paid or caused to be paid by the Company to Executive in
accordance with the plans, programs or agreements under which the
Accrued Obligations were earned.
(b) Good Reason; Without Cause. If Executive terminates
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Executive's employment under this Agreement with Good Reason
pursuant to Section 4.2(b) or 4.2(d), or if the Company terminates
Executive's employment without Cause and pursuant to Section 4.1 or
4.2(a), then Executive's employment with the Company shall
terminate, and in lieu of any other severance benefit that would
otherwise be payable to Executive:
(i) the Company shall pay Executive all Accrued
Obligations in accordance with the plans, programs or
agreements under which the Accrued Obligations were
earned; and
(ii) the Company shall, in addition, pay the
aggregate of the following amounts to Executive in one
lump sum within ninety (90) days after the effective date
of such termination or, if required by Section 409A of the
Internal Revenue Code of 1986, as amended (the "Code"), as
of the first business day six months and a day following
Executive's termination of employment:
(A) an amount equal to: (I) if the
termination of employment occurs prior to the
one-year anniversary of the Employment Date, the
sum of (x) one (1) times Executive's Base Salary
in effect at the time of such termination (but
prior to giving effect to any reduction therein
which precipitated such termination), and (y) one
times Executive's target bonus (at 100% of plan)
for the calendar year in which such termination
occurred; (I) otherwise, the sum: of (x) two (2)
times Executive's Base Salary in effect at the
time of such termination (but prior to giving
effect to any reduction therein which
precipitated such termination), and (y) two times
Executive's target bonus (at 100% of plan) for
the calendar year in which such termination
occurred;
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(B) provided that the termination of
employment occurs after December 31, 2005, the
pro-rata share of Executive's target bonus (at
100% of plan) for the Performance Period in which
such termination occurred based upon the
proportion that the number of complete months in
such Performance Period up to the date of
termination bears to the complete Performance
Period;
(C) if Executive elects medical or
dental coverage under the Company's group medical
or dental plans pursuant to Section 4980B of the
Internal Revenue Code of 1986, as amended
("Code") ("COBRA Coverage"), the Company shall
reimburse Executive, promptly upon request by
Executive (upon presentation of reasonable
documentation showing prior payment), an amount
equal to the premium paid each month by Executive
for COBRA Coverage during the eighteen (18)
months of such COBRA Coverage;
(D) such individual outplacement service
as is appropriate for Executive's position for up
to 24 months after termination of employment for
a cost not to exceed $15,000; and
(E) assistance to Executive to be
provided by a nationally recognized accounting
firm selected by the Company or other mutually
agreeable accounting firm for federal and state
income tax preparation for Executive for the
calendar year in which such termination of
employment occurs.
(c) Death. If Executive's employment is terminated under
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Section 4.2(c) hereof by reason of Executive's death, the Company
shall pay to Executive's legal representatives the full amount of
the Accrued Obligations in accordance with the plans, programs, or
agreements under which the Accrued Obligations were earned.
(d) Disability. If Executive's employment is terminated
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under Section 4.2(c) hereof by reason of Executive becoming
Disabled then the Company shall pay to Executive or Executive's
legal representative the full amount of the Accrued Obligations in
accordance with the plans, programs, or agreements under which the
Accrued Obligations were earned.
4.4 Cause. As used in this Agreement, the term "Cause" means and is
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limited to (i) willful misconduct by Executive or gross neglect by Executive
of his duties as an employee, officer or director of the Company which
continues for more than thirty (30) days after Executive's receipt of
written notice from the Board to Executive specifically identifying the
willful misconduct or gross negligence of Executive and directing Executive
to discontinue the same, (ii) the commission by Executive of a crime
constituting a felony, or (iii) the commission by Executive of an act, other
than an act taken in good faith within the course and scope of Executive's
employment, which is intended to be directly detrimental to the Company and
exposes the Company to material liability.
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4.5 Good Reason.
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(a) As used in this Agreement, the term "Good Reason"
means, provided that no prior event or circumstance which
constitutes Cause has occurred or continues to exist:
(i) a substantial diminution in the nature of
Executive's authorities, duties, responsibilities or
status (including offices, titles, reporting requirements
and supervisory functions) from those in effect at the
time of execution of this Agreement. Notwithstanding the
foregoing, Executive shall not assert as "Good Reason" the
sole fact that a portion of Executive's duties and
responsibilities directly attributable to a change in the
ownership of the Company or a Business Segment, as the
case may be, has been eliminated (the "Eliminated Duties
and Responsibilities"), unless the performance of all or a
material portion of the Eliminated Duties and
Responsibilities continue to be required;
(ii) the required relocation of Executive's place
of employment to a location in excess of thirty-five (35)
miles from the Executive's place of employment at the time
Executive commences employment, except for required travel
on Company business to an extent substantially equivalent
to Executive's business travel obligations at the time of
execution of this Agreement;
(iii) any reduction by the Company of Executive's
base salary, or a material reduction in Executive's bonus
opportunities, or other incentive opportunities (other
than reductions made in any retirement or savings plan
intended to qualify under Code Section 401(a)) from those
in effect at the time of execution of this Agreement;
(iv) the Company breaches any material provision
of this Agreement and such breach is not cured within
thirty (30) days after the Company's receipt of notice
thereof from Executive;
(v) the failure of the Company to continue in
effect Executive's participation in the Company's employee
benefit plans, programs, arrangements and policies, at a
level substantially equivalent in value to and on a basis
consistent with the relative levels of participation of
other similarly positioned employees; or
(vi) the failure of the Company to obtain from a
successor (including a successor to a material portion of
the business or assets of the Company) a satisfactory
assumption in writing of the Company's obligations under
this Agreement;
(vii) the failure of the Company to continue to
provide Executive with office space, related facilities
and support personnel (including, but not limited to,
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administrative and secretarial assistance) that are both
commensurate in all material respects with the Office and
Executive's responsibilities to and position with the
Company, unless they are not materially dissimilar to the
office space, related facilities and support personnel
provided to other key executive officers of the Company;
(viii) the Company notifies Executive of the
Company's intention not to observe or perform one or more
of the material obligations of the Company under this
Agreement;
(x) the Company's termination of Executive's
employment pursuant to a failure or refusal of the Company
to renew this Agreement (by giving Executive Notice of
such decision pursuant to Section 4.1); or
(xi) without, in each case, Executive's prior
written consent, (A) the removal of Executive as a
director of the Company, if it is a surviving entity in
the change-in-control transaction of the type described in
Section 6.1 herein, or (B) the failure of Executive to be
named as a director of any successor to the Company (a
"Successor Entity"), or (C) the failure of Executive to be
nominated for election to the Board of Directors of the
Company or any Successor Entity or (D) the failure of
Executive to be elected or reelected to the Board of
Directors of the Company or any such Successor Entity, or
(E) the failure of Executive to be appointed to the Board
of Directors of any entity that controls the Company or
any Successor Entity (a "Controlling Entity") or (F) the
removal of Executive as a director of any Controlling
Entity, or (G) the failure of Executive to be nominated
for election to the Board of Directors of any Controlling
Entity, or (H) the failure of Executive to be elected or
reelected to the Board of Directors of any Controlling
Entity.
(b) New Office. If, at any time during the Term of this
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Agreement, whether before or after the occurrence of a Triggering
Event, Executive receives a written description from the Company of
the nature of Executive's authorities, duties, responsibilities,
status, salary, bonus and other employee benefits, or job location
thereafter, and Executive accepts in writing such new authorities,
duties, responsibilities, status, salary, bonus and other employee
benefits, or job location ("New Office") with the Company without
determining that the New Office causes a Good Reason as set forth
in Section 4.5(a), then for the remaining Term, the New Office
shall be the authorities, duties, responsibilities, status, salary,
bonus and other employee benefits, or job location to be used by
Executive in determining whether Good Reason occurs thereafter
pursuant to Section 4.5(a).
4.6 Disabled. As used herein, "Disabled" shall mean a mental or
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physical impairment which, in the reasonable opinion of a qualified doctor
selected by the Company, renders Executive unable to perform with reasonable
diligence the ordinary functions and duties of Executive on a full-time
basis in accordance with the terms of this Agreement, which inability
continues for a period of not less than 180 consecutive days.
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4.7 Affiliate. As used herein, "affiliate" and "affiliates" shall
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mean, when used with respect to any specified entity, individual, or other
person, any other entity, individual, or other person which, directly or
indirectly, through one or more intermediaries controls, or is controlled
by, or is under common control with such specified entity, individual or
person. The term "control" and derivations thereof when used in the
immediately preceding sentence means the ownership, directly or indirectly,
of 50% or more of the outstanding voting equity interests of an entity or
other person or possessing the power to direct or cause the direction of the
management and policies of such entity or other person, whether through the
ownership of voting equity interests, by contract or otherwise.
4.8 Return of Materials; Confidential Information. In connection
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with Executive's separation from employment for any reason, Executive shall
return any and all property belonging to the Company including, but not
limited to, any and all documents or other media containing Confidential and
Proprietary Information, any customer information, production information,
manufacturing-related information, pricing information, files, memoranda,
reports, pass codes/access cards, training or other reference manuals,
Company vehicle, telephone, gas cards or other Company credit cards, keys,
computers, laptops, including any computer disks, software, facsimile
machines, printers, telephones, pagers or the like.
4.9 Legal Fees and Expenses. If Executive shall substantially
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prevail in any contest by or against the Company or others contesting the
validity or enforcement of, or liability under, any term or provision of
this Agreement, the Company shall pay any and all reasonable attorneys' fees
and expenses incurred by Executive as a result of any such contest.
Otherwise, each party shall bear his, her or its own expenses in connection
with any such contest.
4.10 Non-exclusivity of Rights. Nothing in this Agreement shall
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prevent or limit Executive's continuing or future participation in any
benefit, bonus, incentive or other plan, program, arrangement or policy
provided by the Company or any of its affiliates (including, but not limited
to, any plan, program, arrangement or policy described in Section 2.5
hereof) and for which Executive and/or Executive's spouse and dependents may
qualify.
4.11 Full Payment; No Mitigation Obligation. The Company's
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obligation to make the payments provided for in sections 4.3(b)(ii)(A)-(E)
of this Agreement and otherwise to perform its obligations hereunder shall
be subject to any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against Executive, and is also
contingent upon Executive's execution of the release described in Section
4.12 below. In no event shall Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts
payable to Executive under any of the provisions of this Agreement.
4.12 Delivery of Release. Within thirty (30) days after Executive
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terminates employment with Good Reason or the Company terminates Executive's
employment without Cause, the Company shall provide to Executive, or
Executive's legal representative, a customary form of written release,
reasonably favorable to the Company, its agents and assigns, which form
shall be satisfactory to the Company and generally consistent with the form
of release used by the Company prior to such termination of employment (the
"Release"). As a condition to the
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obligation of the Company to make the payments provided for in this
Agreement and otherwise perform its obligations hereunder to Executive upon
termination of Executive's employment, Executive, or Executive's legal
representative, shall execute and deliver the Release to the Company.
4.13 Allocations. The payments made under Section 4.3(b)(ii)(A)-(E)
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shall, in the aggregate, be in consideration for the Executive's separate
agreements under Sections 4.12 and Article V of this Agreement and, in part,
to provide Executive certain additional severance benefits under the
circumstances set forth in this Section 6.2. The allocation of the aggregate
payment as the specific consideration for each separate agreement of
Executive and as an additional severance benefit shall be in the sole
discretion of the Company.
4.14 Mitigation. Executive agrees to do anything reasonably
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requested by Company to mitigate the effects of Sections 280G and 4999 of
the Internal Revenue Code of 1986, as amended (the "Code") or any interest
or penalties incurred by Executive with respect to such excise tax (such
excise tax, together with any such interest or penalties, are hereinafter
collectively referred to as the "Excise Tax") by agreeing to a reallocation
of the payments made by the Company pursuant to Section 4.13 above. In
addition, at the option of the Executive, if a reduction in the payments
made under Section 4.3(b)(ii)(A)-(E) would eliminate some or all of the
Excise Taxes, the payment payable under such Sections will be reduced by the
amount that will eliminate the imposition of such Excise Tax. Executive
agrees that any such election shall be made based on the independent tax
advice received by the Executive.
4.15 Exceptions. Section 4.3(b)(ii)(A)-(E) shall not apply to the
----------
termination by the Company of Executive's employment if Executive continues
employment with, or is offered employment by the Company or its successor on
terms that would not otherwise qualify as Good Reason.
ARTICLE V
NON-COMPETITION AND NON-SOLICITATION
5.1 Non-Competition.
---------------
(a) Executive acknowledges that during his employment with
the Company he has enjoyed a position of trust and confidence that
gave him complete access to Confidential and Proprietary
Information, which has value to the Company.
(b) Executive agrees that he will continue to protect the
confidentiality of all such Confidential and Proprietary
Information and will not disclose it at any time following his
termination of employment. It is understood that this prohibition
may be enforced by injunctive relief because the disclosure of such
information would be likely to result in irreparable injury to the
Company.
(c) Executive acknowledges that his service as President
and Chief Executive Officer of the Company means that he comes
within the statutory exception contained in
12
subsection 2(d) of C.R.S. Section 8-2-113, which allows for
non-competition agreements between employers and executives,
managers, officers and professional staff.
(d) Executive accordingly agrees that for the term of this
Agreement and for the duration of the Restriction Period (as
defined in Section 5.6) he shall not directly or indirectly engage
in competition with the Company by taking any of the following
actions:
(i) Owning, managing, operating, joining,
controlling or providing services to (or participating in
the ownership, management, operation or control of, other
than as a holder of less than 5% of the shares of a public
company), aiding or assisting any corporation,
association, partnership, limited liability company,
proprietorship or other business entity, regardless of
form, that at any location in the United States or Canada
engages in the business of commercial, envelope, label
and/or office products printing, as such businesses are
currently engaged in by the Company or as may be engaged
in by the Company at the time of termination of
Executive's employment;
(ii) Serving as an employee, agent, consultant,
officer, director, advisor, or creditor of any such
business entity or enterprise described in (i) above;
(iii) Inducing or attempting to induce any
customer, supplier or business relation of the Company to
cease doing business with the Company or in any other way
interfering with the relationship between any customer,
supplier or business relation and the Company; or
(iv) Executive acknowledges that the restrictions
set forth above are reasonable and appropriate to protect
the Confidential and Proprietary Information of value to
the Company, which would be inevitably disclosed if he
competed, directly or indirectly, as set forth above. If
however, a court determines that any of the foregoing
restrictions are unreasonable in duration, scope or area
of restriction, then Executive and the Company agree that
the restrictions shall be applied only to the activities
and territory, and only for the period of time, that the
court determines reasonable in light of all then-existing
circumstances.
5.2 Non-Solicitation of Employees. The Executive agrees that for
-----------------------------
the term of this Agreement and for the duration of the Restriction Period
(as defined in Section 5.6) he shall not directly or indirectly solicit or
recruit, or attempt to solicit or recruit, or hire, or attempt to hire, any
employee of the Company who is employed by the Company or was employed by
the Company at any time during the last year of the Executive's employment
with the Company.
5.3 Confidential Information. As used herein, "Confidential and
------------------------
Proprietary Information" means all information of a technical or business
nature such as ideas, discoveries, inventions, improvements, trade secrets,
know-how, manufacturing processes, specifications,
13
writings and other works of authorship, computer programs, software and
data, source codes, financial figures and reports, marketing plans and data,
customer lists and data, business plans or data which relate to the actual
or anticipated business of the Company or any of its affiliates or their
actual or anticipated areas of research and development, evaluations of, and
the use or non-use by Company or any of its affiliates of, technical or
business information in the public domain, forecasts, strategic plans,
arrangements with manufacturers, suppliers, brokers and other third parties,
financing plans, personnel records, customer lists, manuals, records,
information regarding actual or potential customers or suppliers, marketing
plans, present and proposed trade marks, service marks, names, brands and
labels, packaging and advertising plans and data, product formulations,
regulatory plans, programs and data, legal matters, patent and trademark
matters and any proprietary or secret information (whether such information
is owned by, licensed to or otherwise possessed by the Company or any of its
affiliates), whether patentable or not. Executive shall, both during and
after Executive's employment with the Company, protect and maintain the
confidential, trade secret and/or proprietary character of all Confidential
Information. Executive shall not, during or after termination of Executive's
employment, directly or indirectly, use (for Executive or another) or
disclose any Confidential Information, except as may be necessary for the
performance of Executive's duties under this Agreement. Executive shall
deliver promptly to the Company, at the termination of Executive's
employment, or at any other time at the Company's request, without retaining
any copies, all documents and other material in Executive's possession
relating, directly or indirectly, to any Confidential Information. Each of
Executive's obligations in this Section 5.3 shall also apply to the
confidential, trade secret and proprietary information learned or acquired
by Executive during Executive's employment from others with whom the Company
or any of its affiliates has a business relationship. In the Event Executive
becomes legally compelled to disclose Confidential and Proprietary
Information pursuant to a subpoena, summons, order or other judicial or
governmental process, Executive shall provide the Company with prompt
written notice thereof. The Company may either seek a protective order or
another appropriate remedy, or waive Executive's compliance with the
relevant provisions of this Agreement. In the event such a protective order
or other remedy is not obtained, or the Company provides the waiver without
having sought the protective order or other remedy, Executive shall furnish
only that portion of the Confidential and Proprietary Information that is
legally required.
5.4 Specific Enforcement; Modification. Executive acknowledges that
----------------------------------
the provisions of Sections 5.1, 5.2 and 5.3 are reasonable and necessary for
the protection of the Company and that the Company will be irrevocably
damaged if such provisions are not specifically enforced. Accordingly,
Executive agrees that, in addition to any other remedy to which the Company
may be entitled, the Company shall be entitled to seek and obtain injunctive
relief from a court of competent jurisdiction for the purposes of
restraining it from any actual or threatened breach of such provisions,
without bond or other security being required. Should a court of competent
jurisdiction declare any of the covenants set forth in Article V
unenforceable, the court shall be empowered to modify and reform such
covenants so as to provide relief reasonably necessary to protect the
interests of the Company and Executive and to award injunctive relief, or
damages, or both, to which the Company may be entitled.
5.5 Provisions Not Exclusive. The provisions of Sections 5.1, 5.2,
------------------------
5.3 and 5.4 do not supercede or replace any non-competition, confidentiality
or non-solicitation agreements
14
between Executive and the Company or any of its affiliates now in effect or
entered into in the future.
5.6 Restriction Period Defined. For purposes of this Article V, the
--------------------------
term "Restriction Period" shall mean the two- (2-) year period immediately
following Executive's termination of employment from the Company without
Good Reason, for Cause or on account of Disability. Otherwise, the
"Restriction Period" shall mean the one- (1-) year period immediately
following Executive's termination of employment from the Company.
ARTICLE VI
FUNDAMENTAL CHANGES/TRIGGERING EVENTS
6.1 Triggering Event. As used herein, the term "Triggering Event"
----------------
shall mean the occurrence with respect to the Company of any of the
following events:
(a) a report on Schedule 13D is filed with the Securities
and Exchange Commission pursuant to Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), disclosing
that any person, entity or group (within the meaning of Section
13(d) or 14(d) of the Exchange Act), other than (i) the Company (or
one of its subsidiaries) or (ii) any employee benefit plan
sponsored by the Company (or one of its subsidiaries), is the
beneficial owner (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act), directly or indirectly, of 50% or more of
the outstanding shares of common stock of the Company or 50% or
more of the combined voting power of the then outstanding
securities of the Company (as determined under paragraph (d) of
Rule 13d-3 promulgated under the Exchange Act, in the case of
rights to acquire common stock or other securities);
(b) an event of a nature that would be required to be
reported in response to Item 5.01(a) of the Current Report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or
15(d) of the Exchange Act or would have been required to be so
reported but for the fact that such event had been "previously
reported" as that term is defined in Rule 12b-2 promulgated under
the Exchange Act;
(c) any person, entity or group (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), other than (i) the
Company (or one of its subsidiaries) or (ii) any employee benefit
plan sponsored by the Company (or one of its subsidiaries), shall
become the beneficial owner (as such term is defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of 50%
or more of the outstanding shares of common stock of the Company or
50% or more of the combined voting power of the then outstanding
securities of the Company (as determined under paragraph (d) of
Rule 13d-3 promulgated under the Exchange Act, in the case of
rights to acquire common stock or other securities);
(d) the stockholders of the Company shall approve any
liquidation or dissolution of the Company;
15
(e) the stockholders of the Company shall approve a
merger, consolidation, reorganization, recapitalization, exchange
offer, acquisition or disposition of assets or other transaction
after the consummation of which any person, entity or group (within
the meaning of Section 13(d) or 14(d) of the Exchange Act) would
become the beneficial owner (as such term is defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of 50%
or more of the outstanding shares of common stock of the Company or
50% or more of the combined voting power of the then outstanding
securities of the Company (as determined under paragraph (d) of
Rule 13d-3 promulgated under the Exchange Act, in the case of
rights to acquire common stock or other securities);
(f) individuals who constitute the Board on the date
hereof ("Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election, or
nomination for election by the Company's stockholders, was approved
by a vote of at least two-thirds of the directors comprising the
remaining members of the Incumbent Board (either by a specific vote
or by approval of the proxy statement of the Company in which such
person is named as a nominee for director, without objection to
such nomination) shall be, for purposes of this clause (f),
considered as though such person were a member of the Incumbent
Board; or
(g) a recapitalization or other transaction or series of
related transactions occurs which results in a decrease by 50% or
more in the aggregate percentage ownership of the then outstanding
common stock of the Company or 50% or more in the combined voting
power of the outstanding securities of the Company held by the
stockholders of the Company immediately prior to giving effect
thereto (on a primary basis or on a fully diluted basis after
giving effect to the exercise of stock options and warrants).
6.2 Obligations of the Company upon Certain Termination in
------------------------------------------------------
Anticipation of, on or after a Section 6.1 Triggering Event Occurring on or
---------------------------------------------------------------------------
after the One-Year Anniversary. If on or after the one-year anniversary of
------------------------------
the Employment Date:
(a) Executive terminates Executive's employment with the
Company, pursuant to Section 4.2(d), on or after the occurrence of
a Triggering Event of the type described in Section 6.1 above with
Good Reason, or
(b) the Company terminates Executive's employment with the
Company without Cause in anticipation of, on or after the
occurrence of a Triggering Event of the type described in Section
6.1 above, then
in lieu of any other severance benefits that would otherwise be payable to
Executive the Company shall pay that amount due and owing to Executive under
Section 4.3(b) above, plus an additional amount equal to the sum of (i) one
(1) times Executive's Base Salary in effect at the time of such termination
(but prior to giving effect to any reduction thereof which precipitated such
termination) plus (ii) one (1) times Executive's target bonus (at 100% of
plan) for the
16
calendar year in which such termination occurred. If the amounts just
described are payable to Executive under this Section 6.2, the Company shall
in addition reimburse Executive for the reasonable costs of moving from the
Englewood, Colorado area to his new place of residence.
6.3 Stay-on Requirement. In consideration for the agreements of the
-------------------
Company hereunder and as a condition for the payments to be made to pursuant
to Section 6.2 hereof, Executive agrees that Executive will not terminate
his employment with the Company prior to or within one hundred twenty (120)
days following a Triggering Event.
ARTICLE VII
GENERAL PROVISIONS
7.1 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the state of Colorado.
7.2 Assignability. This Agreement is personal to Executive and
-------------
without the prior written consent of the Company shall not be assignable by
Executive other than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by Executive's
legal representatives and heirs. This Agreement shall inure to the benefit
of and be binding upon the Company and its successors and assigns. The
Company shall require any corporation, entity, individual or other person
who is the successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization, or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform, by a written agreement in form and substance satisfactory to
Executive, all of the obligations of the Company under this Agreement. As
used in this Agreement, the term "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, written agreement, or otherwise.
7.3 Withholding. The Company may withhold from any amounts payable
-----------
under this Agreement such federal, state or local taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
7.4 Entire Agreement; Amendment. This Agreement constitutes the
---------------------------
entire agreement and understanding between Executive and the Company with
respect to the subject matter hereof and, except as otherwise expressly
provided herein, supersedes any prior agreements or understandings, whether
written or oral, with respect to the subject matter hereof. Except as may be
otherwise provided herein, this Agreement may not be amended or modified
except by subsequent written agreement executed by both parties hereto.
7.5 Multiple Counterparts. This Agreement may be executed in
---------------------
multiple counterparts, each of which shall constitute an original, but all
of which together shall constitute one Agreement.
17
7.6 Notices. Any notice provided for in this Agreement shall be
-------
deemed delivered upon deposit in the United States mails, registered or
certified mail, addressed to the party to whom directed at the addresses set
forth below or at such other addresses as may be substituted therefor by
notice given hereunder. Notice given by any other means must be in writing
and shall be deemed delivered only upon actual receipt.
If to the Company:
Cenveo, Inc.
0000 X. Xxxxxx Xxxxxxx, #000
Xxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Chairman of the Board
with a copy to:
Cenveo, Inc.
0000 X. Xxxxxx Xxxxxxx, #000
Xxxxxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
If to Executive:
Xxxxx X. Xxxxxx
0000 Xxxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxx 00000
7.7 Waiver. The waiver of any breach of any term or condition of
------
this Agreement shall not be deemed to constitute the waiver of any breach of
the same or any other term or condition of this Agreement.
7.8 Severability. In the event any provision of this Agreement is
------------
found to be unenforceable or invalid, such provision shall be severable from
this Agreement and shall not effect the enforceability or validity of any
other provision of this Agreement. If any provision of this Agreement is
capable to two constructions, one of which would render the provision void
and the other that would render the provision valid, then the provision
shall have the construction that renders it valid.
7.9 Other Severance Benefits. This Agreement replaces and
------------------------
supercedes any and all provisions of and benefits under any other severance
agreement or program under which Executive would otherwise be entitled to
severance benefits.
7.10 Arbitration of Disputes. Except for disputes and controversies
-----------------------
arising under Article V or involving equitable or injunctive relief, any
dispute or controversy arising under or in connection with this Agreement
shall be conducted in accordance with the rules set forth by the American
Arbitration Association. The decision of the arbitrator shall be binding on
18
Executive and the Company. Judgment may be entered on the arbitrator's award
in any court having jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the Effective Date.
CENVEO, INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman
/s/ Xxxxx X. Xxxxxx
------------------------------------------
Xxxxx X. Xxxxxx
19
