Exhibit 10.29
October 27, 2005
Xx. Xxxxxx X. Xxxxxx
000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Dear Xxx:
On behalf of Cenveo, Inc. (the "Company"), we are pleased that you
have agreed to serve as the Chief Executive Officer ("CEO") of the Company,
effective as of September 12, 2005. This letter agreement (the "Agreement")
governs the terms of your employment. You and we hereby acknowledge that
your employment with the Company constitutes "at-will" employment and that
either party may terminate this Agreement at any time, upon written notice
of termination, subject to and in accordance with the provisions of this
Agreement.
1. Terms of Employment. The initial term of this Agreement
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commences as of September 12, 2005 and ends on December 31, 2008, unless
sooner terminated in accordance with the provisions of this Agreement (the
period during which you are employed hereunder being hereinafter referred to
as the "Term"). The Term will be subject to automatic one-year renewals
unless either party notifies the other, of non-renewal at least 90 days
prior to the end of the initial Term or any subsequent Term. In your
capacity as CEO, you will have the customary authorities, duties and
responsibilities of an executive in those positions at a company similar in
size and nature to the Company. You will also have such other duties as the
Board of Directors of the Company (the "Board") may determine and you accept
from time to time. You will report to the entire Board whether or not you
are an elected member of the Board. During your employment, you agree to
devote substantially all of your business time and energies to the
performance of the duties of CEO.
2. Compensation and Related Items. You will receive the following
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compensation and benefits from the Company in connection with your services
as CEO:
(a) Base Salary. The Company will pay you a base salary ("Base
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Salary") at the rate of $950,000 per year, or such higher amount as the
Board or its Compensation Committee (the "Committee") may from time to time
determine. Your Base Salary will be reviewed by the Board or the Committee
not less frequently than annually for possible increase (but not decrease)
thereto. Base salary will be paid in accordance with Company's normal
payroll practices.
(b) Annual Incentive Bonus. Beginning on January 1, 2006, you will
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be eligible to participate in the Company's annual incentive program for
executives (the "Bonus Program"). Your bonus opportunity will be 200% of
your Base Salary for an annual performance period, and your entitlement to a
bonus amount under the Bonus Program will be "all or nothing" (that is, you
will not be entitled to any bonus amount for
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attainment of less than your target goals). The performance goals under the
Bonus Program will include attainment of financial goals and will be set by
the Board or Committee, as applicable, in its sole discretion, after
consultation with you. Except as set forth in this Agreement, the terms and
conditions of the Bonus Program, as may be amended by the Board from time to
time, will govern the payment, if any, of the annual bonus.
(c) Equity Compensation. You will be entitled to receive, upon
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execution of this Agreement, a stock option award covering 500,000 shares of
the Company's common stock ("Stock"), a restricted share award for 200,000
shares of Stock and a restricted share unit award for 100,000 shares of
Stock, under the Company's 2001 Long-Term Equity Incentive Plan, as amended
(the "Equity Plan"). Such awards will be substantially in the form attached
hereto as Annexes B, C and D, respectively. The Company represents and
warrants that a sufficient number of shares are available for this purpose
under the Equity Plan.
(d) Other Benefits. Effective as of your employment date, to the
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extent permitted by applicable law, you will be entitled to participate in
and be covered under any and all employee benefit plans, programs,
arrangements, or policies that are made available by the Company and its
affiliates to executive employees of the Company generally.
(e) Expenses. The Company will provide you with an automobile
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allowance of $1,500 per month (exclusive of out-of-pocket expenses incurred
in connection with the business use of such automobile). The Company will
pay all dues for your membership in the country/social club of your choice
and any fees related to business purpose (not including initiation fees). In
addition, you will be reimbursed for all such additional reasonable and
necessary business expenses in connection with the performance of your
duties for the Company (including, without limitation, all out-of-pocket
expenses incurred by you in connection with your business use of an
automobile), within guidelines established by the Board as in effect at any
time with respect to key employees of the Company pursuant to Company
policy.
(f) Working Facilities. The Company will provide you with an office
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of a size and with other furnishings and appointments, administrative staff,
secretarial and other assistants, and such other facilities and services as
are suitable to your position and adequate for the performance of your
duties.
(g) No Board Compensation. During the Term of this Agreement, you
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will receive no separate compensation for serving as a member of the Board,
including as Chairman.
3. Exculpation and Indemnification. The Company agrees that you
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will not be liable for any claims, losses, expenses, costs or damages
("Losses") caused by or resulting from your recommendations, suggestions,
actions, errors, omissions or mistakes undertaken or proposed by you, to the
fullest extent permitted by applicable law. The Company agrees to indemnify
you against any Losses, arising from or in connection with
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your service as an officer or director of the Company, to the fullest extent
permitted by applicable law, and to maintain in effect officer's and
director's liability insurance coverage against such losses, which
indemnification and insurance will survive any termination of your
employment. Subject to your compliance with applicable law, the Company will
from time to time advance any and all claims, losses, expenses, costs or
damages (including, but not limited to, attorneys' fees and expenses)
incurred by you in any actual or threatened, pending or completed
arbitration, action, suit or other proceeding, whether civil, criminal,
administrative or investigative, and whether formal or informal. Your rights
under this Section 3 will not be deemed exclusive of, but will be cumulative
with, any and all other rights (including, but not limited to, rights of
indemnification and advancement of expenses) to which you may now or at any
time in the future be entitled under applicable law, the Company's articles
of incorporation, the Company's bylaws, any agreement (including, but not
limited to, this Agreement), any vote of stockholders, any resolution of
directors, or otherwise.
4. Termination of Employment. The Company may terminate your
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employment at any time on ten (10) days written notice to you, and you may
terminate your employment at any time on sixty (60) days written notice to
the Company. Your employment will terminate automatically upon your death.
Any notice of termination given by the Company to you must specify whether
such termination is with or without Cause (as defined in Annex A). Any
notice of termination given by you to the Company must specify whether such
termination is with or without Good Reason (as defined in Annex A).
5. Obligations of Company upon Termination.
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(a) All Terminations. In the case of any termination of your
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employment (by you or by the Company) for any reason, you will be entitled
to receive your Base Salary through the date of such termination (to the
extent not previously paid) plus all other amounts you are entitled to under
the terms of the Company's benefit plans, programs, and policies through the
date of such termination.
(b) Termination for Cause or without Good Reason. In the event the
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Company terminates your employment for Cause or you terminate your
employment without Good Reason (other than by reason of your disability) or
your employment terminates automatically upon your death, the Company will
have no obligations beyond those provided in Section 5(a).
(c) Termination without Cause or for Good Reason. If the Company
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terminates your employment without Cause (other than by reason of your
disability) or if you terminate your employment for Good Reason, in addition
to its obligations under Section 5(a), the Company will pay you the
following amounts under clauses (i) and (ii):
(i) In lieu of any other severance benefit that would
otherwise be payable to you, the Company will pay you in
one lump sum within ten (10) days after your termination
(or, if required by Section 409A
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of the Internal Revenue Code, six (6) months after your
termination) an amount equal to the sum of:
(A) two (2) times your annual Base Salary in effect at
the time of such termination;
(B) two (2) times your target bonus opportunity for
the calendar year in which such termination
occurs; provided, however, that in the event your
termination under this Section 5(c) occurs in
2005, your target bonus opportunity will be deemed
to be 200% of your Base Salary; and
(C) your automobile allowance for a period of
twenty-four (24) months after termination of
employment.
(ii) In addition, the Company will pay you or provide you
with the following:
(A) if you elect medical or dental coverage under the
Company's group medical or dental plans pursuant
to Section 4980B of the Code ("COBRA Coverage"),
the Company will pay or reimburse you, if paid by
you, promptly upon your request, an amount equal
to the premium for COBRA Coverage (for yourself
and your dependents) during a period not to exceed
twenty-four (24) months of such COBRA Coverage or
such shorter period to which you and your
dependents are entitled pursuant to COBRA; and
(B) reasonable assistance to you to be provided by a
nationally recognized accounting firm selected by
the Company (or other mutually agreeable
accounting firm) for federal and state income tax
preparation for you for the calendar year in which
such termination of employment occurs.
(d) Disability Termination. In the event your employment is
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terminated on account of your disability, in addition to its obligations
under Section 5(a) and in lieu of any other severance benefit that would
otherwise be payable to you, the Company will pay you in one lump sum within
ten (10) days after your termination (or, if required by Section 409A of the
Internal Revenue Code, six (6) months after your termination) an amount
equal to two (2) times your annual Base Salary in effect at the time of such
termination. For purposes of this Agreement, you will be considered disabled
only in the event of a physical or mental disability rendering you
substantially unable to perform your duties hereunder for a period of at
least ninety (90) days out of any twelve-month period, provided that the
disability is determined to be permanent with regard to your ability to
return to work in your full capacity. Any determination of permanent
disability for this purpose will be made by the Board in consultation with a
qualified physician or physicians selected by the Board and reasonably
acceptable to you.
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(e) No Other Benefits. Except as specifically provided in this
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Section 5, you will not be entitled to any other compensation, severance or
other benefits from the Company upon the termination of this Agreement or
your employment for any reason.
6. Legal Fees and Expenses. The Company will promptly pay or
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reimburse you for attorneys' fees and expenses, in an amount not to exceed
$35,000, incurred by you in connection with entering into this Agreement. In
addition, the Company will pay as incurred any and all reasonable attorney,
accountants' and experts' fees and expenses and court costs incurred by you
to enforce this Agreement or in any action brought by the Company or others
contesting the validity or enforcement of, or the Company's obligations
under, this Agreement; provided, that if an arbitrator or a court of
competent jurisdiction finds that you have not acted in good faith in
bringing or defending any such contest or claim, you will be required to
refund the Company any amounts paid to you by the Company under this
sentence.
7. Full Payment; No Mitigation Obligation. The Company's obligation
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to make the payments provided for in Section 5 of this Agreement and
otherwise to perform its obligations hereunder is contingent upon your
execution of the release described in Section 8 below. You are not obligated
to seek other employment or take any other action by way of mitigation of
the amounts payable to you under any of the provisions of this Agreement.
8. Delivery of Release. As a condition to the obligation of the
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Company to make the payments provided for in this Agreement and otherwise
perform its obligations hereunder to you upon termination of your employment
(other than due to your death), you or your legal representatives must
deliver to the Company a written release, substantially in the form attached
hereto as Annex E, and the time for revocation of such release must have
expired without revocation by you.
9. Allocations; Mitigation of Excise Tax.
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(a) The payments made under Section 5 will, in the aggregate, be in
consideration for your separate agreements under Sections 8 and 10 of this
Agreement and, in part, to provide you certain additional severance
benefits. The allocation of the aggregate payments under this Agreement as
the specific consideration for each of your separate agreements and as an
additional severance benefit will be in your reasonable discretion with the
consent of the Company, which consent will not be unreasonably withheld or
denied.
(b) In the event any portion of the payments under Section 5 or
other benefits, including any acceleration of vesting or payment, provided
for under this Agreement or any other agreement or arrangement between you
and the Company ("Payments") would be subject to the excise tax imposed
pursuant to Section 4999 of the Internal Revenue Code, such Payments will be
reduced to the amount that would result in no portion of the Payments being
subject to the excise tax imposed pursuant to section 4999 of the Code;
provided that no such reduction will be made if the net after-
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tax benefit to which you otherwise would be entitled without such reduction
would be greater than the net after-tax benefit to you resulting from the
receipt of the Payments with such reduction. For purposes of the foregoing
calculation, your net after-tax benefit will be determined after taking into
account federal, state and local income and excise taxes. The allocation of
any reduction required hereby among the Payments will be determined by you.
The Company agrees that your reasonable allocation pursuant to Section 9(a)
(for severance amounts under this Agreement) to be in consideration for your
agreement under Section 8 may be used by you to mitigate the effects of
Section 4999 of the Internal Revenue Code.
10. Non-Competition and Non-Solicitation. You agree (i) that at all
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times both during and after your employment, you will respect the
confidentiality of the Company's and its subsidiaries' confidential
information, and (ii) during your employment and for two (2) years
thereafter you will not (a) provide material services to, an entity that
competes with a portion of the Company's business representing more than 15%
of the Company's revenues on the date of your departure (provided that
nothing in this clause (i) prohibits you from (x) taking any action to
enforce your rights under this Agreement or (y) making any disclosures
required by law), (b) solicit or hire, or assist others in the solicitation
or hiring of, the Company's employees (other than any of your children) or
(c) interfere in any material respect with the Company's business
relationships with any material customers or suppliers.
11. Notices. All notices or communications under this Agreement
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must be in writing, addressed (i) if to the Company, to the Compensation
Committee of the Board of Directors with a copy to the attention of the
General Counsel at the Company's headquarters address and (ii) if to you, at
your address first written above (or to any other addresses as either party
may designate in a notice duly delivered as described in this paragraph).
Any notice or communication must be delivered by telecopy, by hand or by
courier. Notices and communications may also be sent by certified or
registered mail, return receipt requested, postage prepaid, addressed as
above and the third business day after the actual date of mailing will
constitute the time at which notice was given.
12. Governing Law. This Agreement will be governed by and construed
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in accordance with the laws of New York.
13. Arbitration of Disputes. Any dispute or controversy arising
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under or in connection with this Agreement that cannot be resolved by you
and the Company will be determined by arbitration in New York City, New
York, in accordance with the rules set forth by the American Arbitration
Association. The decision of the arbitrator will be final and binding on you
and the Company and judgment may be entered on such decision in any court of
competent jurisdiction.
14. Successors and Assigns. This Agreement will inure to the
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benefit of and be enforceable by your legal representatives and heirs. This
Agreement will inure to the benefit of and be binding upon the Company and
its successors and assigns. The Company must require any corporation,
entity, individual or other person who is the successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization, or otherwise)
to all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform, by a written agreement in form and
substance
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satisfactory to you, all of the obligations of the Company under this
Agreement. As used in this Agreement, the term "Company" means the Company
as hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, written agreement, or otherwise.
15. Withholding. The Company may withhold from any amounts payable
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under this Agreement such federal, state or local taxes as are required to
be withheld pursuant to any applicable law or regulation.
16. Entire Agreement; Modifications. This Agreement (and the
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Annexes hereto) constitutes the entire agreement and understanding between
you and the Company with respect to the subject matter hereof, and may not
be amended or modified except by subsequent written agreement executed by
both parties hereto. At your request, the Company agrees to negotiate in
good faith with you to make such amendments to this Agreement as may be
necessary or appropriate to comply with Section 409A of the Code.
17. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which will constitute an original, and all of which
together will constitute one and the same Agreement.
If the foregoing terms and conditions are acceptable and agreed to by you,
please sign the line provided below to signify such acceptance and agreement
and return the executed copy to the undersigned.
CENVEO, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Director and Chairperson of
Compensation Committee
Accepted and Agreed this
day of October, 2005.
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/s/ Xxxxxx X. Xxxxxx, Xx.
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Xxxxxx X. Xxxxxx, Xx.
ANNEX A
DEFINITIONS
a. "CAUSE" means:
(i) the willful and continued failure of Xxxxxx X. Xxxxxx ("Executive")
to perform substantially his duties with the Company (other than any such
failure resulting from Executive's incapacity due to physical or mental
illness or any such failure subsequent to Executive being delivered a notice
of termination without Cause by the Company or delivering a notice of
termination for Good Reason to the Company) after a written demand for
substantial performance is delivered to Executive by the Board which
specifically identifies the manner in which the Board believes that
Executive has not substantially performed Executive's duties;
(ii) the willful engaging by Executive in illegal conduct or misconduct
which is demonstrably and materially injurious (monetarily or otherwise) to
the Company or its subsidiaries;
(iii) conviction of, or the pleading of nolo contendere with regard to, a
crime constituting a felony.
A termination for Cause after a Change in Control (as defined in the Equity
Plan, as of the date hereof) shall be based only on events occurring after
such Change in Control; provided, however, the foregoing limitation shall
not apply to an event constituting Cause that was not discovered by the
Company prior to a Change in Control. For purpose of this definition, no act
or failure to act by Executive shall be considered "willful" unless done or
omitted to be done by Executive in bad faith and without reasonable belief
that Executive's action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to
a resolution duly adopted by the Board based upon the advice of counsel for
the Company shall be conclusively presumed to be done, or omitted to be
done, by Executive in good faith and in the best interests of the Company.
In order for a cessation of Executive's employment to be deemed to be a
termination of Executive's employment for Cause for the conduct described
above, (A) the Board (upon the approval of a majority of the entire Board,
excluding Executive) shall have provided written notice to Executive that
identifies such conduct, and (B) in the event that the event or condition is
curable, Executive shall have failed to remedy such event or condition
within thirty (30) days after Executive has received such written notice
from the Board, and (C) the final determination that Executive's employment
shall be terminated for Cause shall have been made (specifying the
particular details thereof) by the affirmative vote of two-thirds (2/3) of
the entire Board (excluding Executive) at a meeting of the Board duly called
and held for such purpose after at least fifteen (15) days prior written
notice to Executive specifying the particulars of the action or inaction
alleged to constitute "Cause" (and at which meeting Executive and his
counsel are entitled to be present and are given a reasonable opportunity to
be heard), provided that the Company may in appropriate circumstances
suspend the Executive with pay (without
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it being Good Reason) pending such meeting. The Board must initially notify
Executive of any event constituting Cause within ninety (90) days following
the Company's knowledge of its existence or such event shall not constitute
Cause under this Agreement.
b. "GOOD REASON" means, without Executive's express written consent, the
occurrence of any of the following events:
(i) the assignment to Executive of any duties or responsibilities
(including reporting responsibilities) that are inconsistent with
Executive's position(s), duties, responsibilities or status with the
Company, or any diminution of such duties or responsibilities (other than
temporarily while incapacitated because of physical or mental illness), or
an adverse change in Executive's titles or offices (including Executive's
membership on the Board) with the Company;
(ii) a reduction by the Company in Executive's rate of annual base salary
or annual target bonus opportunity (including any adverse change in the
formula for such annual bonus target) or other incentive opportunities as
the same may be increased from time to time thereafter;
(iii) any requirement of the Company that Executive be based anywhere more
than thirty-five (35) miles from Greenwich, CT or such other place of
employment as mutually agreed upon by the Company and Executive;
(iv) any material breach of this Agreement by the Company, or the Company
notifies Executive of the Company's intention not to observe or perform one
or more of the material obligations of the Company under this Agreement;
(v) the failure of the Company to continue in effect Executive's
participation in the Company's employee benefit plans, programs,
arrangements and policies, at a level substantially equivalent in value to
and on a basis consistent with the relative levels of participation of other
similarly positioned senior executive officers;
(vi) the failure of the Company to obtain from a successor (including a
successor to a material portion of the business or assets of the Company) a
satisfactory assumption in writing of the Company's obligations under this
Agreement;
(vii) the failure of the Company to continue to provide Executive with
office space, related facilities and support personnel (including, but not
limited to, administrative and secretarial assistance) that are both
commensurate with Executive's responsibilities to and position with the
Company; or
(viii) without, in each case, Executive's prior written consent,
(A) the failure of Executive to be appointed or elected (or reappointed or
reelected) as a director of the Company (or the successor to the Company),
(B) the failure of Executive to be appointed or elected (or reappointed or
reelected) to the board of directors of any entity that controls the Company
or a successor (a "Controlling Entity"), or (C) the removal of Executive, or
the failure of Executive to be nominated for election (or reelection), as a
director of the Company or any successor entity or as a director of any
Controlling Entity; or
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(ix) the Company's notice to Executive of the non-renewal of this
Agreement.
Notwithstanding the foregoing, a Good Reason event shall not be deemed to
have occurred if the Company cures such action, failure or breach within ten
(10) days after receipt of notice thereof given by Executive. Executive's
right to terminate employment for Good Reason shall not be affected by
Executive's incapacities due to mental or physical illness and Executive's
continued employment shall not constitute consent to, or a waiver of rights
with respect to, any event or condition constituting Good Reason; provided,
however, that Executive must provide notice of termination of employment
within six (6) days following Executive's knowledge of an event constituting
Good Reason or such event shall not constitute Good Reason under this
Agreement.
