EMPLOYMENT AGREEMENT dated as of August , 1997 (the
"Agreement"),between AMERICAN COLOR ("AC"), a division of AMERICAN COLOR
GRAPHICS, INC., a New York corporation (the "Company") and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇
(the "Executive").
WHEREAS, AC desires to employ Executive as its President and replace
the existing Employment Agreement, dated February 19, 1996, between AC and the
Executive;
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT AND DUTIES
1.1. General. The Company hereby employs the Executive, and the
Executive agrees to serve, as President of AC, upon the terms and conditions
contained herein. The Executive shall report directly to the Chief Executive
Officer of the Company's parent, ACG Holdings, Inc. ("ACG"), and shall be
responsible for all prepress and digital imaging activities of ACG and its
subsidiaries, with the exception of the Digiscope Division and the plant-based
prepress activities of the American Color Graphics Division, provided that
such prepress activities will be transferred to AC when, by mutual agreement
of the Executive and the CEO of ACG, AC has demonstrated its ability to
provide such services. The Executive shall perform such other duties and
services for the Company, commensurate with the Executive's position, as may
be designated from time to time by the CEO of ACG. The Executive agrees to
serve the Company faithfully and to the best of his ability under the
direction of the CEO of ACG.
1.2. Exclusive Services. Except as may otherwise be approved in
advance by the CEO of ACG, and except during vacation periods and reasonable
periods of absence due to sickness, personal injury or other disability, the
Executive shall devote his full working time throughout the Employment Term
(as defined in Section 1.3) 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.
1.3 Term of Employment. The Executive's employment under this
Agreement shall commence as of the date of this Agreement and
shall terminate on the earlier of (i) the third anniversary of
the date of this Agreement, or (ii) termination of the
Executive's employment pursuant to this Agreement; provided,
however, that the term of the Executive's employment shall be
automatically extended without further action of either party
for additional one year periods, unless written notice of
either party's intention not to extend has been given to the
other party at least one year prior to the expiration of the
then effective term. The period commencing as of the date of
this Agreement and ending on the third anniversary thereof or
such later date to which the term of the Executive's employment
under this Agreement shall have been extended is hereinafter
referred to as the "Employment Term".
1.4. Reimbursement of Expenses. AC 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 AC's practices
consistently applied.
1.5 Offices. Commencing September 1, 1997, Executive's office will
be located in Brentwood, Tennessee.
2. SALARY
2.1 Base Salary. From the date of this Agreement, the Executive
shall be entitled to receive a base salary ("Base Salary") at a rate of
$250,000 per annum, payable in arrears in equal installments not less
frequently than biweekly in accordance with AC's payroll practices, with such
increases as may be provided in accordance with the terms hereof. Once
increased, such higher amount shall constitute the Executive's annual Base
Salary.
2.2 Annual Review. The Executive's Base Salary shall be reviewed
by the CEO of ACG, based upon the Executive's performance, not less often
than annually, and may be increased but not decreased, provided that
Executive's Base Salary will be increased to at least $275,000 on July 1,
1998. In addition to any increases effected as a result of such review, the
CEO of ACG at any time may in its sole discretion increase the Executive's
Base Salary.
2.3 Annual Bonus. After the date of this Agreement, AC shall
annually adopt a bonus plan and performance criteria upon which the bonuses of
executives of AC shall be based. During his employment under this Agreement,
the Executive shall been titled to receive a bonus under such plan of up to
50% of his Base Salary, in accordance with the terms of such plan if the
budget performance criteria are satisfied.
2.4 Supplemental Bonus. For Fiscal Year 1998, Executive will
participate in a supplemental bonus plan pursuant to which he will receive an
amount equal to 30% of an incentive pool equal to 20% of the EBITDA of AC in
excess of $10,500,000.
3. EMPLOYEE BENEFITS
3.1 The Executive shall, during his employment under this Agreement,
be included to the extent eligible thereunder in all employee benefit plans,
programs or arrangements (including, without limitation, any plans, programs
or arrangements providing for retirement benefits, incentive compensation,
profit sharing, bonuses, disability benefits, health and life insurance, or
vacation and paid holidays) which shall be established by AC for, or made
available to, its senior executives.
3.2 The Executive shall be entitled to participate in the Company's
Supplemental Executive Retirement Plan (the "SERP") at a benefit level of
$50,000 per annum upon retirement in accordance with the terms of the SERP.
3.3 The Executive will also be reimbursed for membership fees and
annual dues in a country club in Nashville, Tennessee.
4. TERMINATION OF EMPLOYMENT
4.1 Termination Without Cause; Resignation for Good Reason.
4.1.1 General. Subject to the provisions of Sections 4.1.2 and
4.1.3, if, prior to the expiration of the Employment Term, the Executive's
employment is terminated by the Company without Cause (as defined in Section
4.3), or if the Executive terminates his employment hereunder for Good Reason
(as defined in Section 4.4), the Company shall (x)continue to pay the
Executive the Base Salary (at the rate in effect on the date of such
termination)for the greater of (i) the remainder of the Employment Term and
(ii) 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 AC, and (y)pay the Executive a pro rata portion of the bonus or incentive
payment to which the Executive would have been entitled for the year of
termination pursuant to Section 2.3 and Section 2.4 had the Executive remained
employed for the entire year, which bonus shall be payable at the time
payments under the applicable bonus plan or incentive program are paid to AC's
executives generally. In addition, the Executive shall be entitled to continue
to participate during the Severance Period in all employee benefit plans
(other than equity-based plans, except to the extent otherwise provided
therein, or bonus plans) that AC provides (and continues to provide) generally
to its employees, provided that the Executive is entitled to continue to
participate in such plans under the terms thereof. 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 employee benefit plans or programs of AC.
4.1.2 Conditions Applicable to the Severance Period. If, during
the Severance Period, the Executive materially breaches his obligations under
Section 7 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 4.1.1.
4.1.3 Date of Termination. The date of termination of employment
with 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 4.4 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.
4.2 Termination for Cause; Resignation Without Good Reason.
4.2.1 General. If, prior to the expiration of the Employment
Term, the Executive's employment is terminated by AC 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 or
benefits after such termination or resignation of employment, except as
determined in accordance with the terms of the employee benefit plans or
programs of AC.
4.2.2 Date of Termination. Subject to the proviso to Section 4.3,
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.
4.3 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
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
employee 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 or any of its affiliates, 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 or any of its
affiliates (it being understood that the good faith performance by the
Executive of the duties required of him pursuant to Section 1.1 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.
4.4 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 or title of the
Executive with the Company;
(iii) the Company's requiring the Executive to be based at any office
or location more than 20 miles from (a) until September 1, 1997, Phoenix
Arizona, or(b) after September 1, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇;
(iv) a material breach by the Company of any term or provision of
this Agreement; provided, however, that no event or condition described
in clauses (i)through (iii) of this Section 4.4 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).
5. 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 Base Salary and benefits
determined under Sections 2 and 3 hereof through the date of termination.
Other benefits shall be determined in accordance with the benefit plans
maintained by the AC, 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 employee of the
Company, which disability or infirmity shall exist for any continuous period
of 180 days.
6. MITIGATION OF DAMAGES
The Executive shall be required to mitigate the amount of any payment
provided for in Section 4.1 by seeking other employment, and any such payment
will be reduced in the event such other employment is obtained.
7. NON-SOLICITATION; CONFIDENTIALITY; NON-COMPETITION
7.1 Non-solicitation. For so long as the Executive is employed 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 employee, associate, consultant or agent
of any person, partnership, corporation or other business organization or
entity other than the Company: (x) solicit or endeavor to entice away from
the Company, ACG 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 or any of their
respective subsidiaries; or (y) solicit or endeavor to entice away from the
Company, ACG 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 or any of their
respective subsidiaries.
7.2 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
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 domain, with respect to the Company's, ACG'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 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 operates other than as a result of disclosure by the
Executive in violation of his agreements under this Section 7.2 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.
7.3 No Competing Employment. For so long as the Executive is
employed by the Company and continuing for two years thereafter (or, if the
Executive is entitled to a continuation of his Base Salary under Section
4.1.1, the period during which such Base Salary is continued), the 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 a5% interest), officer or director of a corporation, or
as an employee, associate, consultant or agent of any person, partnership,
corporation or other business organization or entity other than the Company,
ACG, or any of their respective subsidiaries, 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 AC, the Company, ACG or any of their
respective subsidiaries.
7.4 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.
7.5 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 7 may result in material and
irreparable injury to the Company, ACG 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 there of, 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 7 or such other relief as may be required specifically to enforce any
of the covenants in this Section 7. If for any reason, it is held that the
restrictions under this Section 7 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 7 as will
render such restrictions valid and enforceable.
8. ENFORCEMENT OF AGREEMENT
In the event that legal action is undertaken by either party to
enforce any provision of this Agreement, the Company shall reimburse the
Executive for any related reasonable legal fees and out-of-pocket expenses
directly attributable to such action, provided that such legal fees are
calculated on an hourly, and not on a contingency fee, basis and provided,
further, that the Executive shall bear all such fees and out-of-pocket
expenses (and reimburse the Company for its portion of such expenses) if the
relevant trier-of-fact determines that the Executive's claim or position was
frivolous and without reasonable foundation.
9. REPRESENTATION
The Executive hereby represents that (i) he is not in possession of
any documents or materials containing information constituting Confidential
Information (as such term is defined in the employment agreement (the "Wace
Agreement") dated October 4, 1988 between Executive and Techtron Graphic Arts,
Inc. ("Wace"), (ii) he has not and will not violate the provisions of the Wace
Agreement, including without limitation, Section 13 thereof and (iii)he has
read and will comply with the provisions of Exhibit C attached hereto.
10. INDEMNIFICATION
The Company shall indemnify the Executive and hold him harmless
against any and all damages, expenses and attorney's fees relating to any
Claim (as hereinafter defined). As used herein, "Claim" means any threatened,
pending or completed action, suit, proceeding, alternative dispute resolution
mechanism, inquiry, hearing or investigation by Wace against the Executive
based on an alleged breach by the Executive of the Wace Agreement, if such
alleged breach occurred after the date hereof. Notwithstanding the foregoing,
no amount shall be payable to the Executive pursuant to the immediately
preceding paragraph to the extent that (i) the Executive is in breach of this
Agreement or (ii) the Executive enters into a settlement agreement with Wace
in which he agrees to pay Wace an amount to settle such Claim. If either
(i)or (ii) of the immediately preceding sentence is true, the Executive shall
immediately reimburse the Company for any payment it made to him pursuant to
the preceding paragraph, and the Company shall have the right to set off the
amount of any such payment from any amounts it owes the Executive.
11. MISCELLANEOUS
11.1 Notices. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company:
American Color Graphics, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President,
General Counsel and Secretary
To the Executive:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Riordan, Larson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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.
11.2 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.
11.3 Assignment. The Company's rights and obligations under this
Agreement shall not be assignable by the Company except as incident to a
reorganization, merger or consolidation, or transfer of all or substantially
all of the Company's business and properties (or portion thereof in which the
Executive is employed). Neither this Agreement nor any rights hereunder shall
be assignable or otherwise subject to hypothecation by the Executive.
11.4 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.
11.5 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 employee benefit
plans, if any.
11.6 Governing Law. This Agreement shall be construed, interpreted,
and governed in accordance with the laws of New York without reference to
rules relating to conflict of law.
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: _________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
EXECUTIVE:
__________________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇