EXHIBIT 10.24
EMPLOYMENT AGREEMENT
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THIS AGREEMENT is made April ___, 1998, effective as of March 31, 1998, by
and between MASTER GRAPHICS, INC., a Tennessee corporation (the "Company"), and
XXXXXX X. XXXXX (the "Executive").
WHEREAS, the Company is engaged in the business of providing general
commercial printing services to its customers and acquiring companies in the
general commercial printing industry; and
WHEREAS, the Company desires to employ the Executive to devote full time to
the business of the Company as a senior management employee; and
WHEREAS, the Executive desires to be employed on the terms and subject to
the conditions hereinafter stated.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Employment Agreement, the parties hereby agree as follows:
ARTICLE 1
POSITION AND RESPONSIBILITIES
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During the Term of this Employment Agreement, the Executive agrees to serve
as chief operating officer ("COO") of the Company, and shall perform such duties
for such compensation and subject to such terms and conditions as are
hereinafter set forth.
ARTICLE 2
TERM AND DUTIES
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2.1 Term; Extension. The term of this Employment Agreement (the "Term of
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this Employment Agreement") will commence as of March 1, 1998, and shall
continue through February 28, 2001. On the third and each successive
anniversary of the effective date of this Employment Agreement, the Term of this
Employment Agreement shall be extended for an additional one (1) year period,
unless either party gives notice of such party's intent not to extend the Term
of this Employment Agreement not later than the anniversary date immediately
preceding the anniversary date on which such extension will occur.. Termination
of the Executive's employment pursuant to this Employment Agreement shall be
governed by Articles 4 and 5.
2.2 Duties. The Executive shall devote substantially all of his time and
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attention and best efforts during normal business hours to the Company's
affairs. The Executive shall have such duties and responsibilities as are
assigned to him from time to time by the Board of Directors. As of the effective
date of this Employment Agreement, the Executive shall continue to possess and
assume senior management authority and responsibility as chief operating officer
("COO") of the Company, consistent with directions from the Board of Directors
of the Company.
2.3 Location. The duties of the Executive shall be performed at such
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locations and places as may be directed by the Board of Directors.
ARTICLE 3
COMPENSATION AND BENEFITS
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3.1 Base Compensation. The Company shall pay the Executive a base salary
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("Base Salary") of One Hundred Seventy-Five Thousand and 00/100 Dollars
($175,000.00) per annum, subject to applicable withholdings. Base Salary shall
be payable according to the customary payroll practices of the Company but in no
event less frequently than once each month. The Base Salary shall be reviewed
annually and shall be subject to increase or decrease according to the policies
and practices adopted by the Board of Directors from time to time; provided,
however, that in no event shall the Base Salary for any year be decreased by
more than five percent (5%) from the immediately preceding year's Base Salary as
a result of any such annual review.
3.2 Annual Incentive Awards. The Company will pay the Executive annual
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incentive compensation (each an "Annual Incentive Award") of up to one hundred
percent (100%) of his Base Salary, in accordance with policies and based on
performance targets established annually by the Compensation Committee of the
Board of Directors. At all times, a majority of the Compensation Committee
shall consist of "Non-Employee Directors" of the Company, as such term is
defined in Section 16b-3, promulgated under the Securities Exchange Act of 1934,
as amended.
3.3 Additional Benefits. The Executive will be entitled to participate in
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all employee benefit plans or programs and receive all benefits and perquisites
to which salaried employees are eligible under any existing or future plan or
program established by the Company for salaried employees. The Executive will
participate to the extent permissible under the terms and provisions of such
plans or programs in accordance with program provisions. These may include group
hospitalization, health, dental care, life or other insurance, tax qualified
pension, car allowance, savings, thrift and profit sharing plans, termination
pay programs, sick leave plans, travel or accident insurance, disability
insurance, and contingent compensation plans, including capital accumulation
programs, restricted stock programs, stock purchase programs and stock options
plans. Nothing in this Agreement will preclude the Company from amending or
terminating any of the plans or programs applicable to salaried employees or
senior Executives. The Executive will be entitled to an annual paid vacation as
established by the Board of Directors.
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3.4 Life Insurance. For so long as the Executive is employed by the
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Company, the Company, at no cost to the Executive (other than taxes owed as a
result of the provision of such insurance), will pay annually up to the lesser
of (i) Five Thousand Dollars ($5,000.00) in life insurance premiums or (ii) the
amount of premium required to obtain a life insurance policy on the life of the
Executive with a death benefit equal to twice the Executive's Base Salary for
the year prior to the year in which such policy is procured. The
beneficiary(ies) under the Policy shall be designated by the Executive.
3.5 Business Expenses. The Company will reimburse the Executive for all
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reasonable travel and other expenses incurred by the Executive in connection
with the performance of his duties and obligations under this Employment
Agreement to the extent the same shall be properly documented in accordance with
the Company's policies and rules of the Internal Revenue Service.
3.6 Withholding. The Company may directly or indirectly withhold from any
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payments under this Employment Agreement all federal, state, city or other taxes
that shall be required pursuant to any law or governmental regulation.
ARTICLE 4
DEATH BENEFIT; DISABILITY COMPENSATION; KEY MAN INSURANCE
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4.1 Payment in Event of Death. In the event of the death of the Executive
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during the Term of this Employment Agreement, this Agreement will terminate and
the Company's obligation to make payments under this Employment Agreement shall
cease as of the date of death, except for earned but unpaid Base Salary and
incentive compensation which will be paid on a pro-rated basis for the year of
death. The Executive's designated beneficiary will be entitled to receive the
proceeds of any life or other insurance or other death benefit programs provided
or referred to in this Employment Agreement, other than "key man" life insurance
benefits.
4.2 Disability Compensation. Notwithstanding the disability of the
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Executive, the Company will continue to pay the Executive pursuant to Section 3
hereof during the Term of this Employment Agreement, unless the Executive's
employment is earlier terminated in accordance with this Employment Agreement.
In the event the disability continues for a period of three (3) months, the
Company may thereafter terminate this Employment Agreement and the Executive's
employment. Following such termination, the Company will pay the Executive
amounts equal to his regular installments of Base Salary, as of the time of
termination, for a period of six (6) months. All other compensation will cease
except for earned but unpaid incentive compensation awards which would be
payable on a pro-rated basis for the year in which the disability occurred,
through the date of termination.
4.3 Responsibilities in the Event of Disability. During the period the
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Executive is receiving payments following his disability and as long as he is
physically and mentally able to do so, the Executive will furnish information
and assistance to the Company and from time to time will make himself available
to the Company to undertake assignments consistent with his position or prior
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position with the Company and his physical and mental health. If the Company
fails to make a payment or provide a benefit required as part of this Employment
Agreement, the Executive's obligation to provide information and assistance will
end.
4.4 Definition of Disability. For purposes of this Employment Agreement,
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the term "disability" will have the same meaning as is ascribed to such term, or
any substantially similar term, in the Company's long term income disability
plan as in effect from time to time or if no such plan exists, the meaning
ascribed to such term in Section 22(e)(3) of the Internal Revenue Code of 1986,
as amended (the "Code").
4.5 Key-Man Life Insurance. Upon request by the Company, the Executive
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agrees to cooperate with the Company in obtaining "key man" life insurance on
the life of the Executive, with death benefits payable to the Company. Such
cooperation shall include the submission by the Executive to a medical
examination and his response to inquiries regarding his medical history.
ARTICLE 5
TERMINATION OF EMPLOYMENT
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Notwithstanding anything herein to the contrary, this Employment Agreement
and the Executive's employment with the Company may be terminated by the Company
at any time, subject to the terms and provisions of this Section 5.
5.1 Termination Without Cause.
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(1) Without a Change in Control. If the Executive suffers a
Termination Without Cause (hereinafter defined) or Constructive Termination
(hereinafter defined) and a Change in Control (hereinafter defined) shall not
have occurred within one (1) year prior thereto, the Company will pay to the
Executive upon such termination a lump sum in an amount equal to 200% of the sum
of the Executive's combined (i) Base Salary as in effect at the time of the
termination and (ii) the average of the Annual Incentive Award for the two (2)
immediately preceding completed calendar years. For six (6) months following
such Termination Without Cause or Constructive Termination, the Company shall
reimburse the Executive for the cost of the Executive's major medical health
insurance as in effect at the date of termination. The exercisability of stock
options granted to the Executive shall be governed by any applicable stock
option agreements and the terms of the respective stock option plans.
(2) Upon a Change in Control. If the Executive suffers a Termination
Without Cause or Constructive Termination at the time of or within one (1) year
following a Change in Control, the Company will pay to the Executive in a lump
sum upon such termination an amount equal to the sum of (i) 299% of the
Executive's combined (A) Base Salary as in effect at the time of the termination
and (B) the average of the Annual Incentive Award for the two (2) immediately
preceding completed calendar years, and (ii), to the extent that such foregoing
amount, when added to any other payment in the nature of compensation (within
the meaning of Section 280G of the
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Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder ("Section 280G")) to or for the benefit of the Executive (or any part
of such amount or other payment) constitutes an "excess parachute payment"
within the meaning of Section 280G, the amount, if any, of (A) such "excess
parachute payment" multiplied by a fraction, the numerator of which is the
number one (1.00) and the denominator of which is (I) the number one (1.00)
minus (II) the effective tax rate under Section 280G applicable to the Executive
expressed as a decimal, minus (B) the amount of such "excess parachute payment."
For six (6) months following such Termination Without Cause or Constructive
Termination, the Company shall reimburse the Executive for the cost of the
Executive's major medical health insurance as in effect at the date of
termination. The exercisability of stock options granted to the Executive shall
be governed by any applicable stock option agreements and the terms of the
respective stock option plans.
5.2 Termination With Cause; Voluntary Termination. If the Executive
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suffers a Termination with Cause or the Executive terminates his employment with
the Company (a "Voluntary Termination"), then, whether or not there has been a
Change in Control, the Company will not be obligated to pay the Executive any
amounts of compensation or benefits following the date of termination. However,
earned but unpaid Base Salary through the date of termination will be paid in a
lump sum at such time, and incentive compensation, if any, for the year during
which such termination occurs will be pro rated for the portion of the year
prior to the date of termination and paid in accordance with the Company's
customary practice for payment of incentive compensation.
5.3 Definitions. For purposes of this Employment Agreement, the following
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terms have the following meanings:
(1) A "Change in Control" shall occur if an event or series of events
occurs after the effective date of this Employment Agreement which would
constitute either a change in ownership of the Company, within the meaning of
Section 280G, or a change in the ownership of a substantial portion of the
Company's assets, within the meaning of Section 280G, but for purposes of this
definition, the fair market value threshold for determining "substantial portion
of the Company's assets" shall be "greater than 50%;" provided that a sale of
shares of Company stock in a public offering shall not constitute a change in
control for purposes of this Employment Agreement.
(2) "Constructive Termination" means termination of the Executive's
employment by the Executive (i) from a declined reassignment of a job that is
not the equivalent of his then current position as set forth herein (in
responsibility, compensation or geographic area of service, or (ii) on account
of conduct by the Company or the Board that constitutes continuous and material
interference by the Company or the Board with the Executive's performance of his
duties as set forth in Section 2 hereof or the intentional or material breach by
the Company of this Agreement. The Executive shall have a period of one (1)
year after termination of his employment to assert against the Company that he
has suffered a Constructive Termination, and after the expiration of such one
year period, the Executive shall be deemed to have irrevocably waived the right
to such assertion.
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(3) "Termination With Cause" means termination of the Executive's
employment by the Company, acting in good faith, by written notice to the
Executive specifying the event relied upon for such termination, due to the
Executive's conviction for a felony, the Executive's perpetration of a fraud,
embezzlement or other act of dishonesty or the Executive's intentional breach of
a trust or fiduciary duty which materially adversely affects the Company or its
shareholders.
(4) "Termination Without Cause" means termination of the Executive's
employment by the Company other than due to the Executive's death or disability
or Termination With Cause.
ARTICLE 6
OTHER DUTIES OF THE EXECUTIVE DURING
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AND AFTER THE TERM OF THIS EMPLOYMENT AGREEMENT
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6.1 Additional Information. The Executive will, upon reasonable notice,
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during or after the Term of this Employment Agreement, furnish information as
may be in his possession and cooperate with the Company as may reasonably be
requested in connection with any claims or legal actions in which the Company is
or may become a party. The Executive shall receive reasonable compensation for
the time expended by him pursuant to this Section 6.1.
6.2 Confidentiality. The Executive recognizes and acknowledges that all
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information pertaining to the affairs, business, clients, customers or other
relationships of the Company, as hereinafter defined, is confidential and is a
unique and valuable asset of the Company. Access to and knowledge of this
information are essential to the performance of the Executive's duties under
this Employment Agreement. The Executive will not during the Term of this
Employment Agreement or thereafter, except to the extent reasonably necessary in
the performance of his duties under this Agreement, give to any person, firm,
association, corporation or governmental agency any information concerning the
affairs, business, clients, customers or other relationships of the Company
except as required by law. The Executive will not make use of this type of
information for his own purposes or for the benefit of any person or
organization other than the Company. The Executive will also use his best
efforts to prevent the disclosure of this information by others. All records,
memoranda, etc. relating to the business of the Company whether made by the
Executive or otherwise coming into his possession are confidential and will
remain the property of the Company.
6.3 Noncompetition.
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(a) During the Term of Employment. The Executive will not Compete
with the Company (as defined in subsection (d) hereafter) at any time while he
is employed by the Company or receiving payments from the Company.
(b) Voluntary Termination; Termination With Cause. In the event of a
Voluntary Termination or a Termination With Cause, and upon payment of all
amounts due to Executive under Section 5.2, the Executive will not Compete with
the Company for a period consisting of the longer
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of (i) the remaining Term of this Employment Agreement or (ii) one (1) year;
provided that if a Voluntary Termination follows a notice by the Company under
Section 2.1 that the Term of this Employment Agreement will not be automatically
extended, there will be no restriction on the Executive's right to Compete with
the Company after the date his employment terminates.
(c) Termination Without Cause; Constructive Termination. In the event
of a Termination Without Cause or Constructive Termination, upon payment of all
amounts due under Section 5.1, the Executive will not Compete with the Company
for the then remaining Term of this Employment Agreement.
(d) Definition of "Compete" with the Company. For the purposes of
this Section 6, the term "Compete with the Company" means action by the
Executive, direct or indirect, for his own account or for the account of others,
either as an officer, director, stockholder, owner, partner, member, promoter,
employee, consultant, advisor, agent, manager, creditor or in any other
capacity, resulting in the Executive having any pecuniary interest, legal or
equitable ownership, or other financial or non-financial interest in, or
employment, association or affiliation with, any corporation, business trust,
partnership, limited liability company, proprietorship or other business or
professional enterprise that provides printing services within a fifty (50) mile
radius of any location where the Company or any subsidiary or affiliate of the
Company performs such services at the date of a termination of the Executive's
employment or has performed such services within one year prior to such
termination of employment; provided, however, that the term "Compete with the
Company" shall not include ownership (without any more extensive relationship)
of a less than a 5% interest in any publicly-held corporation or other business
entity.
(e) Reasonableness of Scope and Duration; Remedies. The Executive
acknowledges that the covenants contained herein are reasonable as to geographic
and temporal scope. The Executive acknowledges that his breach or threatened or
attempted breach of any provision of Section 6 would cause irreparable harm to
the Company not compensable in monetary damages and that the Company shall be
entitled, in addition to all other applicable remedies, to a temporary and
permanent injunction and a decree for specific performance of the terms of
Section 6 without being required to prove damages or furnish any bond or other
security.
ARTICLE 7
CONSOLIDATION, MERGER OR SALE OF ASSETS
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Nothing in this Employment Agreement shall preclude the Company from
consolidating or merging into or with, or transferring all or substantially all
of its assets to, another corporation or organization which assumes this
Employment Agreement and all obligations and undertakings of the Company
hereunder. Upon such a consolidation, merger or sale of assets, the term "the
Company"
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as used herein will mean or include the other corporation or organization and
this Employment Agreement shall continue in full force and effect. This Section
7 is not intended to modify or limit the rights of the Executive hereunder.
ARTICLE 8
MISCELLANEOUS
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8.1 Entire Agreement. This Employment Agreement contains the entire
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understanding between the Company and the Executive with respect to the subject
matter and supersedes any prior employment or severance agreements between the
Company and its affiliates, and the Executive.
8.2 Amendment; Waiver. This Employment Agreement may not be modified or
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amended except in writing signed by the parties. No term or condition of this
Employment Agreement will be deemed to have been waived except in writing by the
party charged with waiver. A waiver shall operate only as to the specific term
or condition waived and will not constitute a waiver for the future or act on
anything other than that which is specifically waived.
8.3 Severability; Modification of Covenant. Should any part of this
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Employment Agreement be declared invalid for any reason, such invalidity shall
not affect the validity of any remaining portion hereof and such remaining
portion shall continue in full force and effect as if this Employment Agreement
had been originally executed without including the invalid part. Should any
covenant of this Employment Agreement be unenforceable because of its geographic
scope or term, its geographic scope or term shall be modified to such extent as
may be necessary to render such covenant enforceable.
8.4 Effect of Captions. Titles and captions in no way define, limit,
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extend or describe the scope of this Employment Agreement nor the intent of any
provision thereof.
8.5 Counterpart Execution. This Employment Agreement may be executed in
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any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
8.6 Governing Law; Arbitration. This Employment Agreement has been
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executed and delivered in the State of Tennessee and its validity,
interpretation, performance and enforcement shall be governed by the laws of
that state. Any dispute among the parties hereto shall be settled by
arbitration in Memphis, Tennessee, in accordance with the rules then obtaining
of the American Arbitration Association and judgment upon the award rendered may
be entered in any court having jurisdiction thereof. All provisions hereof are
for the protection and are intended to be for the benefit of the parties hereto
and enforceable directly by and binding upon each party. Each party hereto
agrees that the remedy at law of the other for any actual or threatened breach
of this Employment Agreement would be inadequate and that the other party shall
be entitled to specific performance hereof or injunctive relief or both, by
temporary or permanent injunction or such other appropriate judicial remedy,
writ or orders as may be decided by a court of competent jurisdiction in
addition to
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any damages which the complaining party may be legally entitled to recover
together with reasonable expenses of litigation, including attorney's fees
incurred in connection therewith, as may be approved by such court.
8.7 Notices. All notices, requests, consents and other communications
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hereunder shall be in writing and shall be deemed to have been made when
delivered or mailed first-class postage prepaid by registered mail, return
receipt requested, or when delivered if by hand, overnight delivery service or
confirmed facsimile transmission, to the following:
(1) If to the Company, at 0000 Xxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxxx or at such other address as may have been furnished to
the Executive by the Company in writing; or
(2) If to the Executive, at 0000 Xxxxx Xxxxxxx,
Xxxxxxxxxxxx, Xxxxxxxxx or such other address as may have been furnished to
the Company by the Executive in writing.
8.8 Binding Agreements. This Employment Agreement shall be binding on the
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parties' successors, heirs and assigns.
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IN WITNESS WHEREOF, the undersigned have executed this Employment Agreement
as of the date first above written.
MASTER GRAPHICS, INC.
By: /s/ Xxxx X. Xxxxxx
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Title: President
EXECUTIVE:
BY: /s/ Xxxxxx X. Xxxxx
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XXXXXX X. XXXXX
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