Exhibit 10.4
EMPLOYMENT AGREEMENT
AGREEMENT dated as of April 13, 1998 by and between CUNNINGHAM
GRAPHICS, INC., a New Jersey corporation, with its principal offices located at
629 Grove Street, Jersey City, New Jersey 07310 (the "Company"), and GORDON
MAYS, with an address at 84 Earl Street, Westbury, New York 11590 ("Employee");
R E C I T A L S:
WHEREAS, the Employee is a shareholder and senior officer of the
Company; and
WHEREAS, the Company is contemplating a reorganization, by which it
will become a wholly-owned subsidiary of Cunningham Graphics International, Inc.
("CGII") and will be followed by an initial public offering of common stock by
CGII, and wishes to memorialize the terms of the Employee's employment by the
Company prior to the consummation of such transactions;
NOW, THEREFORE, it is agreed as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
set forth below:
1.1 "AFFILIATE" shall mean a Person which, directly or indirectly,
controls, is controlled by or is under common control with CGII or the Company,
and for purposes hereof, "control" shall mean the ownership of 20% or more of
the voting interests of the Person in question.
1.2 "BASIC SALARY" shall have the meaning assigned to that term in Section
5.1 of this Agreement.
1.3 "BOARD" shall mean the Board of Directors of the Company as duly
constituted from time to time. Any action of the Board hereunder with respect to
this Agreement shall require the approval of a majority of the whole Board of
Directors of the Company.
1.4 "BUSINESS" shall mean the business conducted by the Company or any
Subsidiary, directly or indirectly, including, but not limited to, commercial
printing and services ancillary thereto.
1.5 "CAUSE" shall mean any of the following:
(a) The conviction of Employee for a felony, or the willful commission
by Employee of a criminal act, that in the reasonable judgment of the Board
causes or will likely cause substantial economic damage to the Company or
substantial injury to the business reputation of the Company;
(b) The willful commission by Employee of an act of fraud in the
performance of such Employee's duties on behalf of the Company or a Subsidiary;
or
(c) The continuing willful failure of Employee to perform the
substantive duties of the Employee to the Company (other than any such failure
resulting from Employee's incapacity due to physical or mental illness) after
written notice thereof (specifying the particulars thereof in reasonable detail)
and a reasonable opportunity to be heard and cure such failure are given to
Employee by the Board.
For purposes of this subparagraph, no act, or failure to act, on
Employee's part shall be considered "willful" unless done, or omitted to be
done, by him not in good faith and without reasonable belief that his action or
omission was in the best interests of the Company or a Subsidiary.
1.6 "CHANGE OF CONTROL" shall mean:
(A) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Act")), other than a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or a Subsidiary, which becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities;
(B) 33-1/3% of the Board of Directors consists of individuals other than
the members of the Board of Directors on the Commencement Date (the "Incumbent
Directors"); provided, however, that any person becoming a director subsequent
to such date whose election or nomination for election was approved by at least
two-thirds of the directors who at the time of such election or nomination
comprised the Incumbent Directors shall for purposes of this definition be
considered an Incumbent Director;
(C) the shareholders of the Company approve, or if no shareholder approval
is required or obtained, the Company completes a merger, consolidation or
similar transaction of the Company with or into any other corporation, or a
binding share exchange involving the Company's securities occurs, other than any
such transaction which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 75% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such transaction; or
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(D) the shareholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of all
or substantially all the Company's assets.
1.7 "CODE" shall mean the Internal Revenue Code of 1986, as amended, and
the rules, regulations and interpretations issued thereunder.
1.8 "COMMENCEMENT DATE" shall mean the date that the Company's Registration
Statement on Form S-1 is declared effective by the United States Securities and
Exchange Commission and the Company consummates the initial public offering of
its securities.
1.9 "COMPENSATION" shall have the meaning assigned to that term in Section
4 of this Agreement.
1.10 "CONFIDENTIAL INFORMATION" shall include, without limitation by reason
of specification, any information, including, without limitation, trade secrets,
operational methods, methods of doing business, technical processes, formulae,
designs and design projects, inventions, research projects, strategic plans,
possible acquisition information and other business affairs of the Company or
its Affiliates, which (i) is or are designed to be used in, or are or may be
useful in connection with, the Business of the Company, any Subsidiary or any
Affiliate of any thereof, or which, in the case of any of these entities,
results from any of the research or development activities of any such entity,
or (ii) is private or confidential in that it is not generally known or
available to the public, except as the result of unauthorized disclosure by or
information supplied by Employee, or (iii) gives the Company or a Subsidiary or
any Affiliate an opportunity or the possibility of obtaining an advantage over
competitors who may not know or use such information or who are not lawfully
permitted to use the same.
1.11 "DATE OF TERMINATION" shall mean the Term Date, or such earlier date
upon which this Agreement shall terminate pursuant to Section 7 hereof.
1.12 "DISABILITY" shall mean the inability of Employee to perform
Employee's duties of employment for the Company, if employed by the Company or a
Subsidiary, pursuant to the terms of this Agreement and by-laws of the Company
as hereinafter provided, because of physical or mental disability, where such
disability shall have existed for a period of more than 180 consecutive days or
an aggregate of 210 days in any 365 day period. The existence of a Disability
means that Employee's mental and/or physical condition substantially interferes
with Employee's performance of his substantive duties for the Company and/or its
Subsidiaries as specified in this Agreement. The fact of whether or not a
Disability exists hereunder shall be determined by professionally qualified
medical experts selected by the Board and reasonably acceptable to the Employee
or his agent.
1.13 "DUTIES" shall have the meaning assigned to that term in Section 2.1
of this Agreement.
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1.14 "EMPLOYMENT YEAR" shall mean each twelve-month period, or part
thereof, during which Employee is employed hereunder, commencing on the
Commencement Date and on the same day of the subsequent calendar year and each
consecutive 12 month period thereafter.
1.15 "GOOD REASON" shall have the meaning given such term in Section 7.6.
1.16 "PANEL" shall have the meaning given such terms in Section 8.
1.17 "PERSON" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
1.18 "RESTRICTED PERIOD" shall mean the Term and (i) the twelve month
period thereafter in the case of a termination of employment of Employee by the
Company for Cause; (ii) the twelve month period thereafter in the case of the
termination of Employee's employment voluntarily, other than for Good Reason;
and (iii) during the period of Disability.
1.19 "SUBSIDIARY" shall mean a Person, 50% or more of the outstanding
voting interests of which is owned or controlled, directly or indirectly, by the
Company.
1.20 "TERM" shall mean the period of employment of Employee under this
Agreement.
1.21 "TERM DATE" shall have the meaning assigned to that term in Section 3
of this Agreement.
Wherever from the context it appears appropriate, each word or phrase
stated in either the singular or the plural shall include the singular and the
plural, and each pronoun stated in the masculine, feminine or neuter gender
shall include the masculine, feminine and neuter.
2. EMPLOYMENT AND DUTIES OF EMPLOYEE
2.1 EMPLOYMENT; TITLE; DUTIES. The Company hereby employs Employee, and
Employee hereby accepts appointment, as Executive Vice President of the Company.
The duties of Employee shall be to have general supervisory responsibility for
the Company's marketing and business development plans and the Company's
information systems (collectively, the "Duties"), acting, in all instances,
under the supervision of the President of the Company and in accordance with the
policies set by the Board. To the extent that the Board determines to procure a
policy of directors and officers liability insurance, the Company shall take
such actions as are necessary to include Employee within the coverage of such
policy.
2.2 PERFORMANCE OF DUTIES. Employee shall devote substantially all his
working time to perform the Duties as an executive of the Company and for the
performance of such other executive duties as are reasonably assigned to him
from time-to-time by the Board. During the Term, Employee: (i) shall comply with
all laws, statutes, ordinances, rules and regulations
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relating to the Business, and (ii) shall not engage in or become employed,
directly or indirectly, in a business which competes with the Business of the
Company and its Affiliates, without the prior written consent of the Board, nor
shall he act as a consultant to or provide any services to, whether on a
remunerative basis or otherwise, the commercial or professional business of any
other Person which competes with the Business of the Company and its Affiliates,
without such written consent, which, in both instances, may be given or withheld
by the Board in its absolute discretion.
2.3 LOCATION OF EMPLOYMENT. The principal place of employment of Employee
shall be within a thirty mile radius of Jersey City, New Jersey or such other
location as is consented to by Employee. The Duties shall not require Employee
to relocate his residence without his consent. It is, however, distinctly
understood and agreed that Employee may be required, in connection with the
performance of his duties, to work from time to time at other locations
designated by the Board or as required in connection with the Business of the
Company.
3. TERM OF EMPLOYMENT
The employment of Employee pursuant to this Agreement shall commence
as of the Commencement Date and shall end three years thereafter, unless
extended pursuant to the next sentence or unless sooner terminated pursuant to
Section 7 (the later of (i) the third anniversary of the Commencement Date and
(ii) the date to which Employee's period of employment has been extended, is the
"Term Date"). If Employee's employment hereunder has not previously been
terminated in accordance with Section 7 hereof, then on the second anniversary
of the Commencement Date, and on each subsequent anniversary of the Commencement
Date, the Term shall be extended for one additional year, unless the Board shall
provide written notice to Employee six months or more prior to such anniversary
date that this Agreement will not be so extended. The rights of termination set
forth in Section 7 shall be applicable during any such extended period of
employment.
4. COMPENSATION AND BENEFITS
The Company shall pay Employee, as compensation for all of the
services to be rendered by him hereunder during the Term, and in consideration
of the various restrictions imposed upon Employee during the Term and the
Restricted Period, and otherwise under this Agreement, the Basic Salary and
other benefits as provided for and determined pursuant to Sections 5 and 6,
inclusive, of this Agreement (collectively, the "Compensation"); provided,
however, that no Compensation shall be paid to Employee under this Agreement for
any period subsequent to the termination of employment of Employee for any
reason whatsoever, except as provided in Section 7.
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5. BASIC SALARY/BONUS
5.1 BASIC SALARY. The Company shall pay Employee, as compensation for all
of the services to be rendered by him hereunder during each Employment Year, a
salary of $175,000 per Employment Year (as adjusted upward by the Board from
time to time) (the "Basic Salary"), payable in substantially equal monthly
payments, less such deductions or amounts as are required to be deducted or
withheld by applicable laws or regulations, deductions for employee
contributions to welfare benefits provided by the Company to Employee and such
other deductions or amounts, if any, as are authorized by Employee. The Basic
Salary shall be prorated for the month in which employment by the Company or a
Subsidiary commences or terminates, and for any Employment Year which is less
than twelve (12) months in duration. The Basic Salary may be increased from
time-to-time by the Board (without Employee's participation as a director) and,
once increased, shall not thereafter be reduced. The Basic Salary shall be
reviewed at least once in every Employment Year by a committee of the Board
responsible for determining compensation of senior management of the Company,
each of the members of which is a "non-employee-director" as defined in Rule
16b-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended (the "Committee"). Any increase in Basic Salary shall
not serve to offset or reduce any other obligation to Employee under this
Agreement.
5.2 BONUS. Employee will be awarded and, unless deferred by Employee, paid
a cash bonus (the "Bonus") for each Employment Year within ninety days after the
close of the fiscal year of the Company ending within such Employment Year in an
amount determined in accordance with the Company's then-current bonus or
incentive compensation policy in an amount appropriate for an Executive Vice
President of the Company. The Committee in consultation with Employee shall
establish in advance of each fiscal year of the Company during the Term goals
and levels of the Bonus for such fiscal year which shall be related to the
estimated budget for the Company for such fiscal year.
6. ADDITIONAL BENEFITS AND REIMBURSEMENT FOR EXPENSES
6.1 ADDITIONAL BENEFITS. The Company shall provide the following additional
benefits to Employee during the Term:
(i) provision of a comprehensive medical indemnity policy for Employee
and his family having terms no less favorable than the coverage made available
to Employee and his family on the day prior to the Commencement Date;
(ii) provision of an automobile at a monthly cost up to $500, plus
insurance;
(iii) such other benefits as the Board shall lawfully adopt and
approve for Employee;
(iv) four (4) weeks of paid vacation;
(v) long term disability insurance coverage consistent with current
Company policy; and
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(vi) term life insurance in the amount of $1,000,000 payable to his
spouse, or such other designated beneficiary as Employee may specify from time
to time, to the extent the same is available at normal market rates.
6.2 REIMBURSEMENT FOR EXPENSES. The Company shall pay or reimburse Employee
for all reasonable expenses actually incurred or paid by him during the Term in
the performance of his services under this Agreement, upon presentation of such
bills, expense statements, vouchers or such other supporting information as the
Board may reasonably require. In the event the Company requires Employee to
travel on business during the Term, Employee shall be reimbursed for any related
travel expenses in accordance with this Section 6.2.
7. TERMINATION OF EMPLOYMENT
7.1 DEATH. If Employee dies during the Term, this Agreement shall
terminate, except that the Company shall continue to pay to Employee's spouse,
or in the absence of a surviving spouse, his estate, Employee's Compensation for
a period through the third full month following the date of death, pay any other
amounts which were accrued but unpaid, provide welfare benefits to his family
for the balance of the stated Term as if Employee had not died and provide for
the payment of the life insurance benefit provided for in Section 6.1.
7.2 DISABILITY. If, during the Term, Employee has a Disability, the Company
may, at any time after Employee has a Disability, terminate Employee's
employment by written notice to him. In the event that Employee's employment is
terminated, this Agreement shall terminate except that the Company shall
continue to pay Employee's Compensation for a period through the third full
month following the date of the termination of his employment, pay any other
amounts which were accrued but unpaid, and provide welfare benefits to his
family for the balance of the stated Term, as if Employee had not been
terminated for Disability and pay or provide for the payment of the disability
benefit provided for in Section 6.1, until Employee reaches age 65.
7.3 VOLUNTARY TERMINATION. This Agreement may be terminated by Employee at
any time with or without cause upon 30 days prior written notice to the Company.
After such 30 day period, the Company shall have no further liability to make
payments hereunder except those required by law or which were accrued and unpaid
at the end of the Term.
7.4 TERMINATION FOR CAUSE. The Company may terminate Employee's employment
hereunder for Cause at any time by written notice given to Employee by the
Board. Upon such termination Employee shall not have any right to receive any
further payments hereunder except for amounts accrued and unpaid hereunder prior
thereto and provide welfare benefits as required by law and except as provided
in Section 7.8.
7.5 TERMINATION WITHOUT CAUSE. If this Agreement is terminated by the
Company without Cause, Employee shall be entitled to a lump sum payment equal to
one half of Employee's then current Basic Salary, payable upon the Date of
Termination, payment of any accrued but unpaid amounts, and provided with the
benefits described in Section 6.1 (except
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clauses (iii) and (iv)) until the Term Date. If a Change of Control occurs and
this Agreement is terminated by the Company without Cause within a period of one
year following the Change of Control, then Employee shall be entitled to a lump
sum payment equal to two times his then current Basic Salary, payable uon the
Date of Termination, payment of any accrued but unpaid amounts, and provided
with the benefits described in Section 6.1 (except clauses (iii) and (iv) until
the Term Date or for a period of six months, whichever is longer.
7.6. TERMINATION FOR GOOD REASON. In the event this Agreement is terminated
by Employee for Good Reason, Employee shall be entitled to a lump sum payment
equal to two times his then current Basic Salary payable on the Date of
Termination and provided with the benefits described in Section 6.1 (except
clauses (iii) and (iv)) until the Term Date. For purposes of this Agreement,
Good Reason shall mean:
(a) A reduction or non-payment of Employee's Compensation or failure
to review Employee's Compensation as required in this Agreement;
(b) A breach by the Company of this Agreement which is not cured
within thirty (30) days after written notice thereof to the Board by Employee;
(c) The failure by the Company to continue to provide Employee with
substantially the same welfare benefits (which for purposes of this Agreement
shall mean benefits under all welfare plans as that term is defined in Section
3(1) of the Employee Retirement Income Security Act of 1974, as amend), any
prerequisites, including participation on a comparable basis in retirement
plans, stock option plans, stock award plans, and other plans in which
executives of the Company of comparable title and salary participate, or with a
package of welfare benefits and prerequisites, that, though one or more of such
benefits or prerequisites may vary from those, including participation on a
comparable basis in such retirement plans, stock option plans and stock award
plans, is substantially comparable in all material respects to such welfare
benefits and prerequisites, including participation on a comparable basis in the
Company's retirement plans, stock option plans and stock award plans, taken as a
whole;
(d) The failure of the Company to award or pay Employee the Bonus as
provided in Section 5.2, or the failure of the Company to provide Employee with
the benefits provided for in Section 6.1.
7.7 NOTICE OF TERMINATION. Any purported termination of employment by the
Company by reason of Employee's Disability or for Cause, or by Employee for Good
Reason shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice given by Employee or the Company, which shall indicate the specific basis
for termination of employment and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for determination of any payments
under this Agreement.
7.8 DATE OF TERMINATION. For purposes of this Agreement, "Date of
Termination" shall mean the date of termination of employment specified in the
Notice of Termination, which shall not be more than ninety (90) days after such
Notice of Termination is given, as such date may be
modified pursuant to the following two sentences. If within thirty (30) days
after any Notice of Termination is given, the party who receives such Notice of
Termination notifies the other party that a dispute exists as to the reasons
given in the Notice of Termination (a "Dispute" and the giving of such notice, a
"Notice of Dispute"), the Date of Termination shall be the date on which the
Dispute is finally determined, either by mutual written agreement of the
parties, by the Panel, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected); provided that the Date of Termination shall be
extended by a Notice of Dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such Dispute with
reasonable diligence and provided further that pending the resolution of any
such Dispute, the Company shall continue to pay Employee the same Compensation
and to provide Employee with the same or substantially comparable welfare
benefits and prerequisites, including participation in the Company's retirement
plans, profit sharing plans, to the extent then so available at the date of such
determination, stock option plans, stock award plans or stock appreciation right
plans that Employee was paid and provided to the extent that such continued
participation is possible under the general terms and provisions of such plans,
programs and benefits but in no event beyond the Term Date. Should a Dispute
asserted by Employee ultimately be determined in favor of the Company, then all
sums (net of tax withholdings by the Company from such sums) paid by the Company
to Employee from the Date of Termination specified in the Notice of Termination
until final resolution of the Dispute pursuant to this paragraph, exclusive of
accrued, unpaid amounts prior to the Date of Termination, shall be repaid
promptly by Employee to the Company, all options, rights and stock awards
granted to Employee during such period shall be canceled or returned to the
Company, and no service as an employee shall be credited to Employee for such
period for pension purposes. Employee shall not be obligated to pay to the
Company the cost of providing Employee with welfare benefits and prerequisites
for such period unless the final judgment, order or decree of a court
arbitration panel or other body resolving the Dispute determines that Employee
acted in bad faith in giving a Notice of Dispute. Should a Dispute ultimately be
determined in favor of Employee, then Employee shall be entitled to retain all
sums paid to Employee under this subparagraph pending resolution of the Dispute
and shall be entitled to receive, in addition, the payments and other benefits
provided for in this Section 7 to the extent not previously paid hereunder and
the payment of Employee's reasonable legal fees incurred as a result of such
Dispute upon submission to the Company of a detailed statement of fees from
Employee's attorneys.
8. ARBITRATION
Except as otherwise provided herein, the parties hereby agree that any
dispute regarding the rights and obligations of any party under this Agreement
or under any law governing the relationship created by this Agreement, including
without limitation Employee's challenge of a purported termination for Cause or
Disability, must be resolved pursuant to this Section 8. Within seven (7) days
of either party's written notice to the other of his or its desire to submit any
arbitrable matter as set forth herein to arbitration, the parties will meet to
attempt to amicably resolve their differences and, failing such resolution,
either or both of the parties may submit the matter to mandatory and binding
arbitration with the Center for Public Resources ("CPR"). The issue(s) in
dispute shall be settled by arbitration in accordance with the Center for Public
Resources Rules for Non-Administered Arbitration of Business Disputes, by a
panel of three
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arbitrators (the "Panel"). The only issue(s) to be determined by the Panel will
be those issues specifically submitted to the Panel. The Panel will not extend,
modify or suspend any of the terms of this Agreement. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. ss.1-16, and judgment
upon the award rendered by the Panel may be entered by any court having
jurisdiction thereof. A determination of the Panel shall be by majority vote.
Promptly following receipt of the request for arbitration, CPR shall
convene the parties in person or by telephone to attempt to select the
arbitrators by agreement of the parties. If agreement is not reached, the
Company shall select one arbitrator and Employee shall select one other
arbitrator. These two arbitrators shall select a third arbitrator. If these two
arbitrators are unable to select the third arbitrator by mutual agreement, CPR
shall submit to the parties a list of not less than eleven (11) candidates. Such
list shall include a brief statement of each candidate's qualifications. Each
party shall number the candidates in order of preference, shall note any
objection they may have to any candidate, and shall deliver the list so marked
back to CPR. Any party failing without good cause to return the candidate list
so marked within ten (10) days after receipt shall be deemed to have assented to
all candidates listed thereon. CPR shall designate the arbitrator willing to
serve for whom the parties collectively have indicated the highest preference
and who does not appear to have a conflict of interest. If a tie should result
between two candidates, CPR may designate either candidate.
This agreement to arbitrate is specifically enforceable. Judgment upon any
award rendered by the Panel may be entered in any court having jurisdiction. The
decision of the Panel within the scope of the submission is final and binding on
all parties, and any right to judicial action on any matter subject to
arbitration hereunder hereby is waived (unless otherwise provided by applicable
law), except suit to enforce this arbitration award or in the event arbitration
is not available for any reason or in the event the Company shall seek equitable
relief to enforce Section 9 of this Agreement. If the rules of the CPR differ
from those of this Section 8, the provisions of this Section 8 will control. The
Company shall pay all the costs of arbitration including the fees of the
arbitrators, and the arbitrators shall award reasonable legal fees to Employee,
unless the arbitrators or a judicial forum shall finally determine that Employee
acted in bad faith.
9. CONFIDENTIAL INFORMATION AND PROPRIETARY INTERESTS
9.1 ACKNOWLEDGMENT OF CONFIDENTIALITY. Employee understands and
acknowledges that he may obtain Confidential Information during the course of
his employment by the Company. Accordingly, Employee agrees that he shall not,
either during the Term or at any time within two years after the Date of
Termination, (i) use or disclose any such Confidential Information outside the
Company, its Subsidiaries and Affiliates; or (ii) except as required in the
proper performance of his services hereunder, remove or aid in the removal of
any Confidential Information or any property or material relating thereto from
the premises of the Company or any Subsidiary or Affiliate.
The foregoing confidentiality provisions shall cease to be applicable
to any Confidential Information which becomes generally available to the public
(except by reason of or as a consequence of a breach by Employee of his
obligations under this Section 9).
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In the event Employee is required by law or a court order to
disclose any such Confidential Information, he shall promptly notify the Company
of such requirement and provide the Company with a copy of any court order or of
any law which in his opinion requires such disclosure and, if the Company so
elects, to the extent that he is legally able, permit the Company an adequate
opportunity, at its own expense, to contest such law or court order.
9.2 DELIVERY OF MATERIAL. Employee shall promptly, and without charge,
deliver to the Company on the termination of his employment hereunder, or at any
other time the Company may so request, all memoranda, notes, records, reports,
manuals, computer disks, videotapes, drawings, blueprints and other documents
(and all copies thereof) relating to the Business of the Company, its
Subsidiaries and its Affiliates, and all property associated therewith, which he
may then possess or have under his control.
10. NON-COMPETITION PROVISIONS
Employee agrees that he will not, during the Restricted Period, compete
directly or indirectly with the Business. The phrase "compete directly or
indirectly with the Business" shall be deemed to include, without limiting the
generality thereof, (1) engaging or having a material interest, directly or
indirectly, as owner, employee, officer, director, partner, sales
representative, stockholder, capital investor, lessor, renderer of consultation
services or advise, either alone or in association with other, in the operation
of any aspect of any type of business or enterprise competitive with the
Business; (2) soliciting any of the employees of the Company or any Affiliate to
leave the employ of the Company or the Affiliate; (3) soliciting any of the
employees of the Company or any Affiliate to become employees of any other
Person; or (4) soliciting any customer of the Company or any Affiliate with
respect to the Business. Similarly, Employee shall not raid, entice or induce
any Person who on the Date of Termination is, or within one (1) year immediately
preceding the Date of Termination was, a customer of the Company or any
Affiliate, to become a customer of any other Person for products or services the
same as, or similar to, those products and services as from time to time shall
be provided by the Company or any Affiliate, and Employee shall not approach any
Person for such purpose; nor shall Employee raid, entice or induce any Person
who on the Date of Termination is, or within one year immediately preceding the
Date of Termination was, an employee of the Company or any Affiliate, to become
employed by any other Person; similarly, Employee shall not approach any such
employee for such purpose or authorize or knowingly approve the taking of such
actions by any other Person or assist any such other Person in taking any such
action.
The phrase "compete directly or indirectly with the Business" shall
not be deemed to include an ownership interest as an inactive investor, which,
for purposes of this Agreement, shall mean only the beneficial ownership of less
than five (5%) percent of the outstanding shares of any series or class of
securities of any competitor of the Company or any Affiliate, which securities
of such series or class are publicly traded in the securities market.
11. SURVIVAL
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The provisions of Sections 7, 8, 9, 10, and 14 shall survive
termination of this Agreement and remain enforceable according to their terms.
12. SEVERABILITY
The invalidity or unenforceability of any provision of this Agreement
shall in no way affect the validity or enforceability of any other provisions
hereof.
13. NOTICES
All notices, demands and requests required or permitted to be given
under the provisions of this Agreement shall be deemed duly given if made in
writing and delivered personally or mailed by postage prepaid certified or
registered mail, return receipt requested, accompanied by a second copy sent by
ordinary mail, which notices shall be addressed as follows:
If to the Company:
Cunningham Graphics, Inc.
629 Grove Street
Jersey City, New Jersey 07310
Attn: President
If to Employee:
Gordon Mays
84 Earl Street
Westbury, New York 11590
with a copy to:
David I. Ferber, Esq.
Ferber Chan & Essner
530 Fifth Avenue
New York, New York 10036-5101
By notifying the other parties in writing, given as aforesaid, any
party may from time-to-time change its address or the name of any person to
whose attention notice is to be given, or may add another person to whose
attention notice is to be given, in connection with notice to any party.
14. ASSIGNMENT AND SUCCESSORS
Neither this Agreement nor any of his rights or duties hereunder may
be assigned or delegated by Employee. This Agreement is not assignable by the
Company except to any
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successor in interest which takes over all or substantially all of the business
of the Company, as it is conducted at the time of such assignment. Any
corporation into or with which the Company is merged or consolidated or which
takes over all or substantially all of the business of the Company shall be
deemed to be a successor of the Company for purposes hereof. This Agreement
shall be binding upon and, except as aforesaid, shall inure to the benefit of
the parties and their respective successors and permitted assigns.
15. LIMITATION ON PAYMENTS
In the event that any payment or benefit received or to be received by
Employee in connection with the termination of Employee's employment (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in a Change in
Control of the Company or any person affiliated with the Company or such person)
(collectively with the payments and benefits hereunder, "Total Payments") would
not be deductible (in whole or part) as a result of section 280G of the Code by
the Company, an affiliate or other person making such payment or providing such
benefit, the payments and benefits hereunder shall be reduced until no portion
of the Total Payments is not deductible, or the payments and benefits hereunder
are reduced to zero. At Employee's request, such reduction may be effected by
extending the date the payment would otherwise be due by not more than five
years or by decreasing the amount of the payment or benefit otherwise due and
payable. For purposes of this limitation (i) no portion of the Total Payments
the receipt or enjoyment of which Employee shall have effectively waived in
writing prior to the date of payment shall be taken into account, (ii) no
portion of the Total Payments shall be taken into account which, in the opinion
of tax counsel selected by Employee and acceptable to the Company's independent
auditors, is not likely to constitute a "parachute payment" within the meaning
of section 280G(b)(2) of the Code, (iii) the payments and benefits hereunder
shall be reduced only to the extent necessary so that, in the opinion of the tax
counsel referred to in clause (ii), the Total Payments (other than those
referred to in clauses (i) or (ii)) in their entirety are likely to constitute
reasonable compensation for services actually rendered within the meaning of
section 280G(b)(4) of the Code or are otherwise not likely to be subject to
disallowance as deductions; and (iv) the value of any non-cash benefit or any
deferred payment or benefit included in the Total Payments shall be determined
by the Company's independent auditors in accordance with the principles of
sections 280G(d)(3) and (4) of the Code.
16. ENTIRE AGREEMENT, WAIVER AND OTHER
16.1. INTEGRATION. This Agreement contains the entire agreement of the
parties hereto on its subject matter and supersedes all previous agreements
between the parties hereto, written or oral, express or implied, covering the
subject matter hereof. No representations, inducements, promises or agreements,
oral or otherwise, not embodied herein, shall be of any force or effect.
16.2. NO WAIVER. No waiver or modification of any of the provisions of this
Agreement shall be valid unless in writing and signed by or on behalf of the
party granting such waiver or modification. No waiver by any party of any breach
or default hereunder shall be deemed a waiver of any repetition of such breach
or default or shall be deemed a waiver of any other breach or default, nor shall
it in any way affect any of the other terms or conditions of this
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Agreement or the enforceability thereof. No failure of the Company or Employee
to exercise any power given it/him hereunder or to insist upon strict compliance
by the other party with any obligation hereunder, and no custom or practice at
variance with the terms hereof, shall constitute a waiver of the right of the
other party to demand strict compliance with the terms hereof.
Employee shall not have the right to sign any waiver or modification
of any provisions of this Agreement on behalf of the Company, nor shall any
action taken by Employee reduce his obligations under this Agreement.
This Agreement may not be supplemented or rescinded except by
instrument in writing signed by all of the parties hereto after the date hereof.
Neither this Agreement nor any of the rights of any of the parties hereunder may
be terminated except as provided herein.
17. MISCELLANEOUS
17.1 GOVERNING LAW. This Agreement shall be governed by and construed, and
the rights and obligations of the parties hereto enforced, in accordance with
the laws of the State of New Jersey.
17.2 HEADINGS. The Section and Subsection headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
17.3 SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall in no way affect the validity or enforceability of any
other provisions hereof.
17.4 OBLIGATIONS OF COMPANY. The Company's obligation to pay Employee the
compensation and to make the arrangements provided herein shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right which
the Company may have against Employee or anyone else. All amounts payable by the
Company hereunder shall be paid without notice or demand. Except as expressly
provided herein, the Company waives all rights which it may now have or may
hereafter have conferred upon it, by statute or otherwise, to terminate, cancel
or rescind this Agreement in whole or in part. Except as provided in Section 7.8
herein, each and every payment made hereunder by the Company shall be final and
the Company will not seek to recover for any reason all or any part of such
payment from Employee or any person entitled thereto. Employee shall not be
required to mitigate the amount of any payment or other benefit provided for in
this Agreement by seeking other employment or otherwise.
17.5 RIGHTS OF BENEFICIARIES OF EMPLOYEE. This Agreement shall inure to the
benefit of, and be enforceable by, Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Employee should die while any amounts would still be payable to
Employee hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Employee's devisee, legatee or other designee or, if there be no
such designee, to Employee's estate.
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above, to be effective as of the Commencement Date.
CUNNINGHAM GRAPHICS, INC.
By:
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Name: Michael R. Cunningham
Title: President and Chief
Executive Officer
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Gordon Mays
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