EMPLOYMENT AGREEMENT
AGREEMENT made as of the 24th day of October 1997 by and between DISC
GRAPHICS, INC., a Delaware corporation (the "Company") and Xxxxxxx X. Xxxx, an
individual residing at________________ (hereinafter called the "Employee").
W I T N E S S E T H:
WHEREAS, pursuant to an Asset Purchase Agreement dated as of September 19,
1997 (the "Purchase Agreement"), the Company is acquiring substantially all of
the assets and certain of the liabilities of Xxxxxx Press Inc., an Indiana
corporation ("Press"); and
WHEREAS, the Company and the Employee are entering into this Employment
Agreement as a condition precedent to the consummation of the transactions
contemplated by the Purchase Agreement; and
WHEREAS, this Agreement is intended to supersede and replace all prior
agreements, understandings and arrangements between or among Press, the Company,
and the Employee relating to the employment of the Employee.
NOW, THEREFORE, it is agreed as follows:
1. Retention of Services. The Company hereby retains the services of
Employee, and Employee agrees to furnish such services, upon the terms and
conditions hereinafter set forth.
2. Term. Subject to earlier termination on the terms and conditions
hereinafter provided, and further subject to certain provisions hereof which
survive the term hereof, the term of this Agreement shall be comprised of a
three (3) year period of employment commencing on the date hereof, and shall be
extended thereafter for additional one-year periods unless or until the Company
or the Employee provides sixty (60) days' notice to the other party of the
termination of this Agreement.
3. Duties and Extent of Services During Period of Employment. During the
term of employment, Employee shall be employed by the Company as Midwest General
Manager or in such other equivalent positions with the Company and its
affiliates as may be determined by the President of the Company. In such
capacity, Employee agrees that he shall devote his full time business efforts to
serving the Company and its affiliates under the direction of the President of
the Company, shall perform all duties incident to his position on behalf of the
Company to the best of his ability and shall perform such other duties as may
from time to time be assigned to him by the President of the Company, including
the following: (i) management of the entire business operations at the Company's
midwest facility, including overseeing sales, manufacturing and administration;
(ii) ensuring the efficient workflow of customer order from the securing of
orders through printing and shipment; (iii) maintaining a high level of internal
controls so as to ensure the integrity of the books, records and information
systems; (iv) overseeing sales strategies to expand the Company's current
customer base, as well as adding new business through additional customers,
increased market share and expanded geographic regions; and (v) responsibility
for maintaining the morale and productivity of the workforce.
4. Restriction on Outside Activities. In light of the nature and extent of
Employee's duties and responsibilities under this Agreement, Employee shall not
engage in any outside business activities on his own account or on the account
of others, with or without compensation, as principal, agent, broker, employee,
consultant, adviser or otherwise, except the simple investment of money on his
own account, without the prior written consent of the President of the Company,
which consent shall not unreasonably be withheld. Any proposed outside business
activities shall be submitted to the President of the Company in writing prior
to commencing or entering commitments to commence such activities. Such notice
shall contain sufficient information and shall be provided sufficiently in
advance to enable the Company to reasonably investigate and assess the impact
that such proposed outside business activities may have on Employee's ability to
perform his obligations under and fulfill the terms of this Agreement.
Employee's engagement in prohibited outside business activities without the
written prior approval of the President of the Company, or without providing
timely written notice shall constitute a material failure to perform the
material duties and responsibilities of his position and a substantial violation
of the terms of this Agreement, and shall serve as grounds for termination with
cause under paragraph 10(a) hereof; provided, however, that in the event the
Company believes that the Employee has engaged in such prohibited outside
business activities, the Company shall provide written notice of such alleged
violation to the Employee, specifying in reasonable detail the alleged
violation, and the Employee shall be provided with an opportunity to cure such
breach by ceasing such conduct or obtaining such written approval from the
President of the Company within ten (10) days after receipt of such notice.
Notwithstanding the foregoing, the Company permits Employee to (i) act as a
director, officer and shareholder of Press and Xxxxxx Imaging, (ii) manage a
maximum of two rental properties, and (iii) attend up to four meetings in any
twelve month period during the term hereof as director of Campus Classics Inc.
5. Remuneration. During the period of employment, the Company shall pay to
Employee the following compensation for his services:
(a) The Company shall pay to Employee a salary at the rate of $100,000
per annum, payable in equal bi-weekly installments, or in such other manner as
shall be agreeable to the Company and Employee.
(b) During the initial term of this Agreement, the Company shall pay
to Employee a bonus in an amount equal to 1.25% percent of the net sales
generated by the accounts listed on Schedule 5(b) hereto. For the purposes of
this Agreement, "net sales" shall be deemed to be generated in the month in
which the Company receives payment in respect of any invoice. Such bonuses shall
be payable by the Company, on the fifteenth day of the next succeeding calendar
month.
(c) The Company shall issue to Employee options to purchase 50,000
shares of Common Stock of the Company having a term of five (5) years, an
exercise price equal to the average of the closing price of such Common Stock on
the NASDAQ Small Cap Market on the ten (10) days ending three (3) business days
prior to the date hereof.
(d) During any extension of the initial term, the Employee shall be
eligible to participate in the management employees' bonus pool in lieu of the
bonus payable to the Employee pursuant to Section 5(b), above.
6. Employee Benefits; Car Allowance.
(a) During the term of this Agreement, the Company shall provide to
the Employee the right to participate in the Company's then existing medical and
dental insurance and other employee benefit plans and policies on the same terms
as are then generally available to the Company's employees, subject to the
Employee's qualification with the standard requirements of such plans.
(b) During the term of this Agreement, the Company shall provide to
the Employee a car allowance in the amount of $500 per month.
7. Disability. In the event of the partial or total physical or mental
disability of the Employee during the Term, which renders him unable
substantially to perform the essential functions of his job, with or without
accommodation, for a period of 75 days in any twelve-month period during the
term of this Agreement, the Company may thereafter, upon at least 20 days'
written notice to Employee, place him on disability status. After such action by
the Company, Employee shall no longer be entitled to receive any compensation
hereunder until the Employee returns to full-time status; provided, that this
Section 7 is in not intended to and shall in no way alter, amend or diminish any
right the Employee may have under the Americans with Disabilities Act, the
Family and Medical Leave Act or any other federal or state statute or law.
8. Confidential Information.
(a) In the course of Employee's employment by the Company, Employee
will have access to and possession of valuable and important confidential or
proprietary data or information of the Company and its operations. Employee will
not during Employee's employment by the Company or at any time thereafter
divulge or communicate to any person nor shall Employee direct any employee,
representative or agent of the Company or its affiliates to divulge or
communicate to any person or entity (other than to a person or entity bound by
confidentiality obligations similar to those contained herein and other than as
necessary in performing Employee's duties hereunder) or use to the detriment of
the Company or for the benefit of any other person or entity, including without
limitation any competitor, supplier, licensor, licensee or customer of the
Company or Press, any of such confidential or proprietary data or information or
make or remove any copies thereof, whether or not marked or otherwise identified
as "confidential" or "secret." Employee shall take all reasonable precautions in
handling the confidential or proprietary data or information within the Company
to a strict need-to-know basis and shall comply with any and all security
systems and measures adopted from time to time by the Company to protect the
confidentiality of confidential or proprietary data or information.
(b) The term "confidential or proprietary data or information" as used
in this Agreement shall mean information not generally available to the public
which possesses independent economic value from not being generally known or
readily ascertainable to persons or entities who can obtain economic value from
its disclosure or use, including, without limitation, all database information,
personnel information, financial information, customer lists, account lists or
other account information, supplier lists, trade secrets, patented or
proprietary information, forms, information regarding operations, systems,
methods, financing, services, know how, computer and any other processed or
collated data, computer programs, pricing, marketing and advertising data of the
Company and its subsidiaries and, as of the date hereof, of Press.
(c) Employee will at all times promptly disclose to the Company in
such form and manner as the Company may reasonably require, any inventions,
improvements or procedural or methodological innovations, including without
limitation relating to programs, methods, forms, systems, services, designs,
marketing ideas, products or processes (whether or not capable of being
trademarked, copyrighted or patented) conceived or developed or created by
Employee during or in connection with Employee's employment hereunder and which
relate to the business of the Company ("Intellectual Property"). Employee agrees
that all such Intellectual Property shall be the sole property of the Company.
Employee further agrees that Employee will execute such instruments and perform
such acts as may reasonably be requested by the Company to transfer to and
perfect in the Company all legally protectable rights in such Intellectual
Property.
(d) All written materials, books, records and documents made by
Employee or coming into Employee's possession during Employee's employment by
the Company concerning any products, processes or equipment manufactured, used,
developed, investigated, purchased, sold or considered by the Company or
otherwise concerning the business or affairs of the Company, including without
limitation any files, customer records such as names, telephone numbers and
addresses, lists, firm records, brochures and literature, shall be the sole
property of the Company, shall not be removed from the Company's premises by the
Employee other than in the ordinary course of his employment, and upon
termination of Employee's employment by the Company, or upon request of the
Company during Employee's employment by the Company, Employee shall promptly
deliver the same to the Company. In addition, upon termination of Employee's
employment by the Company, Employee will deliver to the Company all other
Company property in Employee's possession or under Employee's control,
including, but not limited to, financial statements, marketing and sales data,
customer and supplier lists, account lists and other account information,
database information and other documents, and any Company credit cards.
(e) The Employee acknowledges that the covenants contained in this
Section 8 are fair and reasonable in order to protect the Company's business and
were a material and necessary inducement for the Company to agree to the terms
of this Agreement and the transactions contemplated by the Purchase Agreement.
The Employee further acknowledges that he has realized significant monetary
benefit from these transactions, that any remedy at law for any breach or
threatened or attempted breach of the covenants contained in this Section 8 may
be inadequate and that the violation of any of the covenants contained in this
Section 8 will cause irreparable and continuing damage to the Company.
Accordingly, the Company may seek specific performance or any other mode of
injunctive and/or other equitable relief to enforce its rights hereunder,
including without limitation an order restraining any further violation of such
covenants, or any other relief a court might award, and such injunctive relief
shall be cumulative and in addition to any other rights or remedies to which the
Company may be entitled. The covenants in this Section 8 shall run in favor of
the Company and its successors and assigns. In addition, the Employee agrees to
pay the Company the costs it incurs, including reasonable attorneys' fees and
expenses, in bringing and prosecuting any proceeding to enforce the terms of
this Agreement; provided, that the Company is successful in such proceeding.
(f) The provisions of this Section 8 shall survive the termination of
this Employment Agreement.
9. Non-Competition.
(a) During the term of this Agreement and, other than with respect to
clause (i) below, for two years thereafter (the "Restricted Period"), the
Employee shall not, without the written consent of the Company, directly or
indirectly,
(i) become associated with, render services to, invest in,
represent, advise or otherwise participate in as an officer, employee, director,
stockholder, partner, promoter, agent of, consultant for or otherwise, any
business which is conducted in the State of Indiana and which is competitive
with the manufacturing and printing specialty packaging business;
(ii) for the Employee's own account or for the account of any other
person or entity (A) interfere with the Company's or Press' relationship with
any of its respective suppliers, material customers, accounts, brokers,
representatives or agents or (B) contact, telephone, meet, solicit or transact
any business with any material customer, account or supplier of the Company or
Press who or which transacts or has transacted business with the Company Press
at any time during the term of this Agreement, and in the case of Press, six (6)
months prior thereto; or
(iii) employ or otherwise engage, or solicit, entice or induce on
behalf of the Employee or any other person or entity, the services, retention or
employment of any person who has been an employee, principal, partner,
stockholder, sales representative, trainee, consultant to or agent of the
Company or Press within one year of the date of such offer or solicitation.
(b) Nothing herein contained shall be construed as prohibiting the
Company or Press from pursuing any other remedies available to it for such
violation, including but not limited to any injunctive or other equitable relief
or the recovery of damages from the Employee.
(c) The Employee acknowledges that the covenants contained in this
Section 9 are fair and reasonable in order to protect the Company's or Press'
business and were a material and necessary inducement for the Company to agree
to the terms of this Agreement and to the transactions contemplated by the
Purchase Agreement. The Employee further acknowledges that he has realized
significant monetary benefit from these transactions, that any remedy at law for
any breach or threatened or attempted breach of the covenants contained in this
Section 9 may be inadequate and that the violation of any of the covenants
contained in this Section 9 will cause irreparable and continuing damage to the
Company. Accordingly, the Company may seek specific performance or any other
mode of injunctive and/or other equitable relief to enforce their rights
hereunder, including without limitation an order restraining any further
violation of such covenants, or any other relief a court might award, and such
injunctive relief shall be cumulative and in addition to any other rights or
remedies to which the Company and Press may be entitled. The covenants in this
Section 9 shall run in favor of the Company and its successors and assigns. In
addition, the Employee agrees to pay the Company the costs it incurs, including
reasonable attorneys' fees and expenses, in bringing and prosecuting any
proceeding to enforce the terms of this Agreement; provided, that the Company is
successful in such proceeding.
(d) In case any one or more of the terms or provisions contained in
this Section 9 shall for any reason be held invalid, illegal or unenforceable,
such invalidity, illegality or unenforceability shall not affect any other terms
or provisions hereof, but such term or provision shall be deemed modified or
deleted as or to the extent required by applicable law, and such modification or
deletion shall not affect the validity of the other terms or provisions of this
Section 9. In addition, if any one or more of the restrictions contained in this
Section 9 shall for any reason be held to be unreasonable with regard to time,
duration, geographic scope or activity, the parties contemplate and hereby agree
that such restriction shall be modified and shall be enforced to the full extent
compatible with applicable law. The parties hereto intend that the covenants
contained in this Section 9 shall be deemed a series of separate covenants for
each country, state, county and city. If, in any judicial proceeding, a court
shall refuse to enforce all the separate covenants deemed included in this
Section 9 because, taken together, they cover too extensive a geographic area,
the parties intend that those of such covenants (taken in order of the cities,
counties, states and countries therein which are lease populous) which if
eliminated would permit the remaining separate covenants to be enforced in such
proceeding shall, for the purpose of such proceeding, be deemed eliminated from
the provisions of this Section 9.
(e) The provisions of this Section 9 shall survive the termination of
this Employment Agreement.
10. Termination.
(a) The Company may terminate the Employee's services hereunder "for
cause" by delivering to Employee not less than ten (10) days prior to the date
on which the termination is to be effective, a written notice of termination for
cause specifying the act, acts or failure to act that constitute the cause. For
the purposes of this agreement, "for cause" shall mean; (i) any act of
dishonesty, fraud or embezzlement adversely affecting the financial, market,
reputation or other interests of the Company, its subsidiaries or any of their
affiliates, (ii) in the event that the Employee is unable to perform the
essential functions of his job, as described in Section 7 hereof, more than once
during the term hereof, (iii) in the event of a conviction of the Employee for
any crime of moral turpitude or any knowing violation of any federal or state
securities law or regulation or any crime resulting in his imprisonment for more
than 90 days, (iv) failure to perform Employees duties hereunder, (v) any
material breach by the Employee of this Agreement, or (vi) the death of the
Employee.
(b) If the Company terminates Employee's employment hereunder for any
reason other than "for cause" as set forth in Section 10(a) hereof, the Company
shall pay to the Employee compensation pursuant to Sections 5(a) and 5(b) hereof
at the time and in the manner provided for herein, and no other compensation
payable hereunder shall be payable to the Employee. If the Company terminates
Employee's employment hereunder "for cause" as set forth in Section 10(a)
hereof, Employee shall not be entitled to receive any further compensation
hereunder. Employee and the Company acknowledge that the foregoing provisions of
this paragraph 10(b) are reasonable and are based upon the facts and
circumstances of the parties at the time of entering into this Agreement, and
with due regard to future expectations.
11. Notices. Any notice to be given to the Company hereunder shall be
deemed sufficient if addressed to the Company in writing and delivered or mailed
by certified or registered mail to it at 00 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx
00000, Attention: Xxxxxxxx Xxxxxxxx or case to such other address as the Company
may hereafter designate, and a copy to Blau, Kramer, Wactlar & Xxxxxxxxx, P.C.,
000 Xxxxxxx Xxxxxxxxxx, Xxxxxxx, Xxx Xxxx 00000, Attention: Xxxxx X. Xxxxxxxxx,
Esq. Any notice to be given to Employee hereunder shall be delivered or mailed
by certified or registered mail to him at the address set forth at the head of
this Agreement or such other address as he may hereafter designate.
12. Successors and Assigns; Third Party Beneficiaries. This Agreement shall
be binding upon and inure to the benefit of the successors and assigns of the
Company, and unless clearly inapplicable, all references herein to the Company
shall be deemed to include any such successor. In addition, this Agreement shall
be binding upon and inure to the benefit of the Employee and his heirs,
executors, legal representatives and assigns; provided, however, that the
obligations of Employee hereunder may not be delegated without the prior written
approval of the Board of Directors of the Company. The Company and the Employee
acknowledge and agree that Press and Imaging are entitled to the benefits of
certain provisions of this Agreement as a third party beneficiary and shall be
entitled to enforce any such provision of this Agreement as fully as if it were
the Company or otherwise a party hereto.
13. Amendments. This Agreement may not be altered, modified, amended or
terminated except by a written instrument signed by each of the parties hereto.
14. Prior Agreements Superseded. This Agreement contains the entire
agreement of the parties and supersedes any other agreements, oral or written,
entered into between Employee and the Company prior to the date of this
Agreement.
15. Applicable Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of New York, without regard to
conflicts of laws.
16. Severability. If any provision of this Agreement shall be held by a
court of competent jurisdiction to be contrary to law or public policy, the
remaining provisions shall remain in full force and effect.
17. Waiver. No term or provision hereof shall be deemed waived and no
breach consented to or excused, unless such waiver, consent or excuse shall be
in writing and signed by the party claimed to have waived, consented or excused.
A consent, waiver or excuse of any breach shall not constitute a consent to,
waiver or, or excuse of any other or subsequent breach whether or not of the
same kind of the original breach.
18. Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one and the same
agreement.
19. Acknowledgment. Employee acknowledges that he has carefully read this
Agreement, has had an opportunity to consult counsel regarding this Agreement
and hereby represents and warrants to the Company that Employee's entering into
this Agreement, and the obligations and duties undertaken by Employee hereunder,
will not conflict with, constitute a breach of or otherwise violate the terms of
any other agreement to which Employee is a party and that Employee is not
required to obtain the consent of any person, firm, corporation or other entity
in order to enter into and perform his obligations under this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
DISC GRAPHICS, INC.
By:
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Name:
Title:
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Xxxxxxx X. Xxxx
