EXHIBIT 10.6
EMPLOYMENT AGREEMENT
This Employment Agreement is made as of November 19, 1996 by and among
Donnelley Enterprise Solutions Incorporated, a Delaware corporation (the
"Company"), and Xxxx X. Xxxxxx (the "Executive").
WHEREAS, the Company has filed a Registration Statement on Form S-1 under
which it proposes to complete an initial public offering of its common stock;
and
WHEREAS, following the closing of its initial public offering of common
stock the Company desires to employ the Executive as its Senior Vice President
and Chief Financial Officer, and the Executive desires to accept such
employment, for the term and upon the conditions set forth in this Agreement.
Agreement
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Now, therefore, the parties hereto hereby agree as follows:
1. Employment. Subject to the terms and conditions set forth in this
Agreement, the Company offers and the Executive hereby accepts employment,
effective as of the time of the closing of the Company's initial public offering
of its common stock ("Common Stock") (the date of such closing being referred to
herein as the "Effective Date"); provided, however, that should the Effective
Date be on or after July 1, 1997, this Agreement shall be void ab initio, and of
no further force and effect.
2. Term. Subject to earlier termination as hereafter provided, the
Executive shall be employed hereunder for an original term commencing on the
Effective Date and ending at 5:00 p.m., Chicago time, on the fourth anniversary
of the Effective Date, or such later date to which the parties may agree. The
term of this Agreement is hereafter referred to as "the term of this Agreement"
or "the term hereof".
3. Capacity and Performance.
3.1. Offices. During the term hereof and for the compensation
described in Section 4 below, the Executive shall serve as the Company's
Senior Vice President and Chief Financial Officer. The Executive shall be
subject to the direction of the Chairman, President and Chief Executive
Officer of the Company (or any one of them to whom the Executive then
reports, hereinafter referred to as the "Reporting Executive"), and shall
have such other powers, duties and responsibilities consistent
with the Executive's position as Senior Vice President and Chief Financial
Officer as may from time to time be prescribed by the Reporting Executive.
In addition, for so long as the Executive is employed by the Company and,
unless otherwise determined by the Reporting Executive, without further
compensation, the Executive shall serve as a director of one or more of the
Company's subsidiaries if so elected or appointed from time to time.
3.2. Performance. During the term hereof, the Executive shall be
employed by the Company and shall perform and discharge (faithfully,
diligently and to the best of the Executive's ability) such duties and
responsibilities on behalf of the Company and its subsidiaries as may be
designated from time to time by the Reporting Executive. During the term
hereof, the Executive shall devote the Executive's full business time and
attention to the advancement of the business and interests of the Company
and its subsidiaries and to the discharge of the Executive's duties and
responsibilities hereunder. Nothing contained herein shall be construed to
prohibit or restrict the Executive from (a) serving in various capacities
in community, civic, religious or charitable organizations, (b) serving as
a member of the boards of non-affiliated entities provided such entities do
not compete with the Company and such service does not create a conflict of
interest as determined by the Board, or (c) attending to personal business
and investment matters. It is expressly agreed that any such service or
activity permitted by the previous sentence shall not unreasonably
interfere with the performance of the Executive's duties and, if so, the
Executive, after consultation with the Board, will comply with the
reasonable requests to cease or limit the service or activity.
4. Compensation and Benefits. As compensation for all services performed
by the Executive under this Agreement and performance of the Executive's duties
and of the obligations to the Company and its subsidiaries, pursuant to this
Agreement or otherwise and subject to Section 5 hereof:
4.1. Base Salary. During the term hereof, (i) the Company shall pay
the Executive a base salary at the rate of $200,004 per year during the
period prior to January 1, 1997, and (ii) $225,000 per year during the
period beginning January 1, 1997, payable in accordance with the payroll
practices of the Company for its executives but no less than monthly and
subject to increase at any time or from time to time by the Reporting
Executive in his or her sole discretion. Such base salary, as from time to
time increased, is hereafter referred to as the "Base Salary". The Base
Salary payable to the Executive in 1996 shall be prorated for the period
from the Effective Date through December 31, 1996 and for any subsequent
period of service less than one full year.
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4.2. Bonus Compensation. During the term hereof, the Company from
time to time shall pay the Executive an annual bonus (the "Bonus"). The
Bonus in respect of 1996 (the "1996 Bonus") will be calculated and payable
in accordance with and based on the following factors:
(1) If the Company's net income for 1996, as set forth in the Company's
audited financial statements (the "1996 Net Income"), is less than
$1,604,250 (the "Minimum Target"), the 1996 Bonus shall equal zero;
(2) If the 1996 Net Income is equal to or greater than the Minimum Target
but less than $2,139,000 (the "Base Target"), the 1996 Bonus shall equal
the sum of (i) 20% of the Executive's Base Salary as of the Effective Date
plus (ii) the number obtained by multiplying 20% of the Executive's Base
Salary as of the Effective Date by a fraction (which shall not be greater
than one), the numerator of which is the difference between the 1996 Net
Income and the Minimum Target and the denominator of which is the amount
determined by subtracting the Minimum Target from the Base Target;
(3) If the 1996 Net Income is equal to or greater than the Base Target but
less than $3,208,500 (the "Maximum Target"), the 1996 Bonus shall equal the
sum of (i) 40% of the Executive's Base Salary as of the Effective Date plus
(ii) the number obtained by multiplying 40% of the Executive's Base Salary
as of the Effective Date by a fraction (which shall not be greater than
one), the numerator of which is the difference between the 1996 Net Income
and the Base Target and the denominator of which is the amount determined
by subtracting the Base Target from the Maximum Target; or
(4) If the 1996 Net Income is equal to or greater than the Maximum Target,
the 1996 Bonus shall equal 80% of the Executive's Base Salary as of the
Effective Date.
Any compensation paid to the Executive as Bonus shall be in addition to the
Base Salary. The 1996 Bonus, if any, shall be pro-rated by multiplying (x)
the amount of the 1996 Bonus by (y) a fraction, the numerator of which is
the lesser of (I) the number of days from and including the Effective Date
through and including December 31, 1996 and (II) the number of days from
and including the Effective Date through and including the date of the
Executive's termination of employment, and the denominator of which is 366.
Except with respect to the 1996 Bonus, any Bonus payable to the Executive
shall be pro-rated for any period of service less than a full year by
multiplying (x) the amount of the Bonus calculated for such year by (y) a
fraction, the numerator of which is the number of days from and including
January 1 of such year through and including the effective date of the
Executive's termination of employment and the denominator of which is 365.
All bonus and benefit plans are subject to annual
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review and change by the Board relative to key strategic objectives for the
year.
4.3. Stock Options.
4.3.1. The Company shall establish the 1996 Stock Incentive Plan
(the "Plan") for management/employees of the Company. As of the
Effective Date, the Company shall grant to the Executive, pursuant to
the Plan, options to purchase a total of 30,000 shares of Common Stock
at an exercise price equal to the initial public offering price (the
"Options"). Subject to the termination of employment provisions
contained in the agreement evidencing the Options, the Options will
become exercisable in four cumulative annual installments on the one
year (25%), two year (25%), three year (25%) and four year (25%)
anniversaries of the Effective Date, subject to acceleration of
vesting in accordance with the terms of the agreement evidencing the
Options.
4.3.2. Within three months after the Effective Date the Company
shall cause all shares subject to the Options and the Restricted Stock
to be registered on Form S-8.
4.4. Vacations. During the term hereof, the Executive shall be
entitled to five (5) weeks of vacation per annual vacation period of the
Company (currently March 1 of each year through the last day of February of
the following year), such vacation to be taken at such times and intervals
as shall be determined by the Executive in the Executive's reasonable
discretion, provided, that, for the annual vacation period commencing on
March 1, 1996 and ending on February 28, 1997, the Executive's number of
vacation days for the period commencing on the Effective Date and ending on
February 28, 1997 shall be reduced by the number of vacation days taken by
the Executive (whether as an employee of X. X. Xxxxxxxxx & Sons Company or
the Company) during the period commencing on March 1, 1996 and ending on
the day prior to the Effective Date. The Executive may not accumulate or
carry over from one calendar year to another any unused, accrued vacation
time, unless the Reporting Executive determines that business demands
require deferral and carry over of vacation from any year into up to the
first six (6) months of the succeeding year. The Executive shall not be
entitled to compensation for vacation time not taken, except that upon
termination of employment, the Executive shall be paid for all vacation
time accrued but not taken.
4.5. Other Benefits. During the term hereof and subject to any
contribution therefor generally required of executives of the Company, the
Executive shall be entitled to participate in all employee benefit plans
and other programs (including, but
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not limited to, any medical, dental, retirement, disability, life
insurance, sick leave and other benefits) from time to time adopted by the
Board and in effect for executives of the Company generally, except to the
extent such plans are in a category of benefit otherwise already provided
to the Executive. Such participation shall be subject to (i) the terms of
the applicable plan documents, (ii) generally applicable Company policies
and (iii) the discretion of the Board or any administrative or other
committee provided for in or contemplated by such plan. The Company may
alter, modify, add to or delete its employee benefit plans at any time as
the Board, in its sole judgment, determines to be appropriate.
4.6. Business Expenses. The Company shall pay or reimburse the
Executive for all reasonable business expenses incurred or paid by the
Executive in the performance of the Executive's duties and responsibilities
hereunder, subject to (i) any expense policy of the Company set by the
Board from time to time, and (ii) such reasonable substantiation and
documentation requirements as may be specified by the Board from time to
time.
4.7. Severance. In the event the Executive's employment with the
Company is (i) terminated by the Company other than for Cause in accordance
with Section 5.4 or (ii) terminated by the Executive in accordance with
Section 5.5, the Executive will be entitled to receive twenty-four (24)
monthly payments equal to the Executive's then applicable Base Salary
calculated on a monthly basis at the time of such termination (i.e., 1/12th
of the Base Salary), paid on the last day of a calendar month.
4.8. Relocation. Pursuant to a letter dated March 21, 1996, the
Company agreed to pay and/or reimburse the Executive for certain relocation
expenses associated with Executive's move to the Chicago, Illinois area, up
to a maximum of $200,000. Nothing herein shall alter the Company's
obligation to make such payments and/or reimbursements up to a maximum
expenditure by the Company of $200,000, and the Company shall pay and/or
reimburse the Executive for such expenses provided the Company's
obligation, whether under the March 21, 1996 letter or under the provisions
of this Section 4.8 shall not exceed $200,000 and shall be subject to
reimbursement by the Executive to the Company as set forth in Sections 5.3
and 5.6 below.
5. Termination of Employment and Severance Benefits. Notwithstanding the
provisions of Section 2 hereof, the Executive's employment hereunder shall
terminate prior to the expiration of the term of this Agreement under the
following circumstances:
5.1. Retirement or Death. In the event of the Executive's retirement
or death during the term hereof, the Executive's employment hereunder shall
immediately and
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automatically terminate. In the event of the Executive's retirement after
the age of sixty-five, age fifty-five with the prior consent of the Board
or death during the term hereof, the Company shall pay to the Executive (or
in the case of death, the Executive's designated beneficiary or, if no
beneficiary has been designated by the Executive, to the Executive's
estate) (i) Base Salary earned but unpaid through and including the date of
such retirement or death, (ii) any amount payable pursuant to Section 4.6,
(iii) any unpaid portion of any Bonus for any fiscal year preceding the
year in which such retirement or death occurs that was earned but had not
previously been paid and (iv) at the times the Company pays its executives
bonuses in accordance with its general payroll policies, any Bonus which
would have been paid had such retirement or death not occurred during the
fiscal year of such retirement or death (pro-rated based on a formula, the
numerator of which shall be the number of days during the fiscal year of
such retirement or death in which the Executive was employed by the Company
and the denominator of which shall be 365 or 366, as the case may be).
5.2. Disability.
5.2.1. The Company may terminate the Executive's employment
hereunder, upon written notice to the Executive, in the event that the
Executive becomes disabled during the Executive's employment hereunder
through any illness, injury, accident or condition of either a
physical or psychological nature and, as a result, is unable to
perform substantially all of the Executive's duties and
responsibilities hereunder for an aggregate of one hundred eighty
(180) days during any period of three hundred and sixty-five (365)
consecutive calendar days.
5.2.2. The Board may designate another employee to act
temporarily in the Executive's place during any period of the
Executive's disability. Notwithstanding any such designation, the
Executive shall continue to receive the Base Salary in accordance with
Section 4.1 and to receive benefits in accordance with Section 4.5, to
the extent permitted by the then current terms of the applicable
benefit plans, until the Executive becomes eligible for disability
income benefits under any disability income plan maintained by the
Company or until the termination of the Executive's employment,
whichever shall first occur. Upon becoming so eligible, or upon such
termination, whichever shall first occur, the Company shall pay to the
Executive (i) Base Salary earned but unpaid through and including the
date of such eligibility or termination, (ii) any amount payable
pursuant to Section 4.6, (iii) any unpaid portion of any Bonus for any
fiscal year preceding the year in which such eligibility or
termination occurs that was earned but had not previously been paid
and (iv) at the times the Company
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pays its executives bonuses in accordance with its general payroll
policies, any Bonus which would have been paid had disability not
occurred during the fiscal year in which such eligibility or
termination occurs (pro-rated based on a formula, the numerator of
which shall be, as applicable, (i) the number of days from and
including January 1 of the fiscal year in which such eligibility
occurs to but excluding the date of such eligibility or (ii) the
number of days on which the Executive was employed by the Company
during the fiscal year in which such termination occurs and the
denominator of which shall be 365 or 366, as the case may be).
5.2.3. Except as provided in Section 5.2.2, while receiving
disability income payments under any disability income plan maintained
by the Company, the Executive shall not be entitled to receive any
Base Salary under Section 4.1 or Bonus payments under Section 4.2 but
shall continue to participate in the Company's benefit plans in
accordance with Section 4.5 and the terms of such plans, until the
termination of the Executive's employment. During the twelve (12)
month period from and including the date of termination, the Company
shall pay for the cost of the Executive's participation in the
Company's group medical and dental plans, provided that the Executive
is entitled to continue such participation under applicable law and
the terms of such plan.
5.2.4. If any question shall arise as to whether during any
period the Executive is disabled through any illness, injury, accident
or condition of either a physical or psychological nature so as to be
unable to perform substantially all of the Executive's duties and
responsibilities hereunder, the Executive may, and at the request of
the Company shall, submit to a medical examination by a physician
either (i) mutually selected by the Company and the Executive or the
Executive's duly appointed guardian or (ii) failing mutual agreement,
a physician selected by each of a physician selected by the Company
and a physician selected by the Executive, to determine whether the
Executive is so disabled and such determination shall for the purposes
of this Agreement be conclusive of the issue. If such question shall
arise and the Executive shall fail to submit to such medical
examination, the Board's determination of the issue shall be binding
on the Executive.
5.3. By the Company for Cause. The Company may terminate the
Executive's employment hereunder for Cause as provided in Section 11.2. If
the Executive's employment hereunder is terminated for Cause, the Company
shall have no further obligation or liability to the Executive relating to
the Executive's employment hereunder, or the termination thereof, except
that the Company shall pay to the Executive (i) Base Salary earned but
unpaid through and including the date of
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termination, (ii) any amount payable pursuant to Section 4.6, and (iii) any
other amounts accrued by the Executive but unpaid through and including the
date of termination (it being understood that a Bonus does not accrue until
December 31 of the year on which such Bonus is based). Should the
Executive's employment be terminated pursuant to the provisions of this
Section 5.3 at any time prior to April 1, 1997, then the Executive shall
reimburse the Company for any amounts the Company shall have paid to the
Executive pursuant to the provisions of Section 4.8 above, and the Company
shall have the right to set-off such amounts to be reimbursed against any
payments to be made to the Executive under this Section 5.3.
5.4. By the Company other than for Cause. The Company may terminate
the Executive's employment hereunder other than for Cause at any time after
the Effective Date upon two weeks prior written notice to the Executive. In
the event of such termination, then the Company shall pay the Executive (i)
Base Salary earned but unpaid through and including the date of
termination, (ii) any amount payable pursuant to Section 4.6, (iii) the
amounts specified in Sections 4.7 and 4.8, (iv) any unpaid portion of any
Bonus for any fiscal year preceding the year in which such termination
occurs that was earned but had not previously been paid, (v) at the times
the Company pays its executives bonuses in accordance with its general
payroll policies, any Bonus which would have been paid had termination not
occurred during the fiscal year in which such termination occurs (pro-rated
based on a formula, the numerator of which shall be the number of days
during the fiscal year in which such termination occurs the Executive was
employed by the Company and the denominator of which shall be 365 or 366,
as the case may be), and (vi) any other amounts accrued by the Executive
but unpaid through and including the date of termination. In addition, 100%
of the number of shares of Common Stock subject to each option, including
the Options, held by the Executive on the date of such termination and
which are then unexercisable shall become exercisable as of the date of
such termination, and such Options may be exercised for a period up to
ninety (90) days following termination of the Executive's employment.
5.5. By the Executive upon Breach or for Good Reason. The Executive
may terminate the Executive's employment hereunder (i) in the event that
the Company fails to perform, in any material respect, its obligations
under this Agreement, after written notice to the Company setting forth in
reasonable detail the nature of such breach if such breach remains uncured
for a period of 30 days following such written notice to the Company
provided that said notice shall not be required in the event of repeated,
intentional or willful failure to perform by the Company, (ii) there is a
material diminution in the responsibilities, duties and powers of the
Executive, or (iii) the Executive's offices are moved from their present
location to a location outside of the
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Chicago, Illinois Metropolitan Area. In the event of termination in
accordance with this Section 5.5, then the Company shall pay to the
Executive (i) Base Salary earned but unpaid through and including the date
of termination, (ii) any amount payable pursuant to Section 4.6, (iii) the
amounts specified in Sections 4.7 and 4.8, (iv) any unpaid portion of any
Bonus for any fiscal year preceding the year in which such termination
occurs that was earned but had not previously been paid, (v) at the times
the Company pays its executives bonuses in accordance with its general
payroll policies, any Bonus which would have been paid had termination not
occurred during the fiscal year in which such termination occurs (pro-rated
based on a formula, the numerator of which shall be the number of days
during the fiscal year in which such termination occurs the Executive was
employed by the Company and the denominator of which shall be 365 or 366,
as the case may be), and (vi) any other amounts accrued by the Executive
but unpaid through and including the date of termination. In addition, 100%
of the number of shares of Common Stock subject to each option, including
the Options, held by the Executive on the date of such termination and
which are then unexercisable shall become exercisable as of the date of
such termination, and such Options may be exercised for a period up to
ninety (90) days following termination of the Executive's employment.
5.6. By the Executive Other than upon Breach or for Good Reason.
The Executive may terminate the Executive's employment hereunder at any
time upon ninety (90) days' written notice to the Company. In the event of
termination of the Executive pursuant to this Section 5.6, the Board may
elect to waive the period of notice, or any portion thereof, and, whether
or not the Board so elects, the Company shall pay to the Executive (i) Base
Salary for the full notice period, (ii) any amount payable pursuant to
Section 4.6, (iii) at the times the Company pays its executives bonuses in
accordance with its general payroll policies, any Bonus which would have
been paid had termination not occurred during the fiscal year in which such
termination occurs (pro-rated as set forth in Section 5.5 above), and (iv)
any other amounts accrued by the Executive but unpaid through and including
the date of termination. Should the Executive's employment be terminated
pursuant to the provisions of this Section 5.6 at any time prior to April
1, 1997, then the Executive shall reimburse the Company for any amounts the
Company shall have paid to the Executive pursuant to the provisions of
Section 4.8 above, and the Company shall have the right to set-off such
amounts to be reimbursed against any payments to be made to the Executive
under this Section 5.6.
5.7. Post-Agreement Employment. In the event the Executive remains
in the employ of the Company or any of its Affiliates following termination
of this Agreement, by the expiration of the term hereof or otherwise, then
such employment shall be at will, unless otherwise agreed in writing.
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6. Effect of Termination. The provisions of this Section 6 shall apply
in the event of termination due to the expiration of the term of this Agreement,
pursuant to Section 5 or otherwise.
6.1. Receipt of Certain Benefits. It is the mutual intention of the
Company and the Executive that the Executive receive the full benefit of
the compensation and benefits provided to the Executive during the term
hereof which compensation and benefits may be payable over periods beyond
the particular year of employment. The Executive shall not be obligated to
seek other employment by way of mitigation of the amounts due to the
Executive nor shall the Executive's earnings after termination reduce the
Company's obligations hereunder. Nothing in this Section 6.1 is intended or
shall be construed to affect the rights and obligations of the Company and
its Affiliates, on the one hand, and the Executive, on the other, with
respect to any loans, stock pledge arrangements, option plans or other
agreements to the extent said rights or obligations survive termination of
employment under the provisions of the documents relating thereto.
6.2. Termination of Health and Welfare Benefits. Except for medical
and dental insurance coverage continued pursuant to Sections 5.2 hereof and
any right of continuation of health coverage to the extent provided by
Sections 601 through 608 of ERISA, health and welfare benefits shall
terminate pursuant to the terms of the applicable benefit plans based on
the date of termination of the Executive's employment without regard to any
continuation of Base Salary or other payments to the Executive following
such date of termination pursuant to Section 5.
6.3. Survival of Certain Provisions. Provisions of this Agreement
shall survive any termination if so provided herein or if necessary or
desirable fully to accomplish the purposes of such provision, including,
without limitation, the obligations of the Executive under Sections 5.3,
5.6, 7 and 8 hereof. The obligation of the Company to make payments to or
on behalf of the Executive under Sections 4.7, 5.4 or 5.5 hereof is
expressly conditioned upon the Executive's continued full performance of
obligations under Sections 7 and 8 hereof. The Executive recognizes that,
except as expressly provided in Section 4.7, 5.4 or 5.5, no compensation is
earned after termination of employment.
7. Confidential Information; Intellectual Property.
7.1. Confidentiality. The Executive acknowledges that the Company
and its Affiliates continually develop Confidential Information, that the
Executive may develop
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Confidential Information for the Company or its Affiliates and that the
Executive may learn of Confidential Information during the course of
employment. The Executive will comply with the policies and procedures of
the Company for protecting Confidential Information and shall never
disclose to any Person (except as required by applicable law or for the
proper performance of the Executive's duties and responsibilities to the
Company and its Affiliates), or use for the Executive's own benefit or gain
or otherwise use in a manner adverse to the interests of the Company and
its Affiliates, any Confidential Information obtained by the Executive
incident to the Executive's employment or other association with the
Company or any of its Affiliates. The Executive understands that this
restriction shall continue to apply after the Executive's employment
terminates, regardless of the reason for such termination. Notwithstanding
the foregoing, the Executive's covenant not to disclose Confidential
Information does not apply to information which (i) becomes generally
available to the public or otherwise becomes known through sources other
than the Executive, (ii) is subsequently disclosed to the Executive by a
source other than the Company who was under no duty of confidence or (iii)
is required to be disclosed by the Executive through discovery in
litigation or by order of a court or otherwise as required by law.
7.2. Return of Documents. All documents, records, tapes and other
media of every kind and description relating to the business, present or
otherwise, of the Company or its Affiliates and any copies, in whole or in
part, thereof (the "Documents"), whether or not prepared by the Executive,
shall be the sole and exclusive property of the Company and its Affiliates,
provided, however, that Executive shall in all cases be entitled to retain
copies of documents relating to the Executive's employment rights,
compensation, benefits or other obligations of the Company to the Executive
and the Executive to the Company. The Executive shall safeguard all
Documents and shall surrender to the Company at the time the Executive's
employment terminates, or at such earlier time or times as the Board or its
designee may specify, all Documents then in the Executive's possession or
control.
7.3. Assignment of Rights to Intellectual Property. The Executive
shall promptly and fully disclose all Intellectual Property to the Company.
The Executive hereby assigns and agrees to assign to the Company (or as
otherwise directed by the Company) the Executive's full right, title and
interest in and to all Intellectual Property. The Executive agrees to
execute any and all applications for domestic and foreign patents,
copyrights or other proprietary rights and to do such other acts (including
without limitation the execution and delivery of instruments of further
assurance or confirmation) requested by the Company to assign the
Intellectual Property to the Company and to permit the Company to enforce
any patents, copyrights or other proprietary rights to the Intellectual
Property. The Executive will not charge the
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Company for time spent in complying with these obligations. All
copyrightable works that the Executive creates shall be considered "work
made for hire".
8. Agreement not to Compete with the Business. The Executive agrees that
during the term of the Executive's employment hereunder and for a period of two
(2) years following the date of termination thereof (the "Non-Competition
Period"), the Executive will not, directly or indirectly (a) own, manage,
operate, control or participate in any manner in the ownership, management,
operation or control of, or be connected as an officer, employee, partner,
director, principal, consultant, agent or otherwise with, or have any financial
interest in, or aid or assist anyone else in the conduct of, any business,
venture or activity which competes with the business of the Company, or any
group, division or subsidiary of the Company, as described in the Company's
Registration Statement on Form S-1 relating to the Company's initial public
offering of Common Stock or, beginning with the Company's Annual Report on Form
10-K for the year ending December 31, 1996, the Company's most recent Annual
Report on Form 10-K filed with the Securities and Exchange Commission prior to
the date (the "Date of Termination") the Executive's employment under this
Agreement is terminated (hereinafter, "Competitive Business") in the United
States or any other geographic area where such Competitive Business is being
conducted at the Date of Termination or (b) recruit or otherwise seek to induce
any employees of the Company or any of its subsidiaries to terminate their
employment or violate any agreement with or duty to the Company or any of its
subsidiaries. It is understood and agreed that, for the purposes of the
foregoing provisions of this Section 8, (i) no business, venture or activity
shall be deemed to be a Competitive Business unless not less than five percent
of the Company's consolidated gross sales or operating income is derived from,
or not less than five percent of the Company's consolidated assets are devoted
to, such business, venture or activity; and (ii) no business, venture or
activity conducted by any entity by which the Executive is employed or in which
the Executive is interested or with which the Executive is connected or
associated shall be deemed to be a Competitive Business unless it is one from
which five percent or more of such entity's consolidated gross sales or
operating income is derived, or to which five percent or more of such entity's
consolidated assets are devoted; provided, however, that if the actual gross
sales or operating income or assets of such entity derived from or devoted to
such business, venture or activity is equal to or in excess of 10% of the most
nearly comparable figure for the Company, such business, venture or activity of
such entity shall be deemed to be a Competitive Business. Further, ownership of
not more than five percent of the voting stock of any publicly held corporation
shall not, of itself, constitute a violation of this Section 8.
9. Enforcement of Covenants. The Executive acknowledges that the
Executive has carefully read and considered all the terms and conditions of this
Agreement, including without limitation the restraints imposed upon the
Executive pursuant to Sections 7 and 8 hereof. The Executive agrees that said
restraints are necessary for the reasonable and proper protection of
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the Company and its Affiliates and that the restraints are reasonable as to the
definition of Competitive Business and length of time. The Executive further
acknowledges that, were the Executive to breach any of the covenants or
agreements contained in Sections 7 or 8 hereof, the damage to the Company could
be irreparable. The Executive therefore agrees that the Company, in addition to
any other remedies available to it, shall be entitled to preliminary and
permanent injunctive relief against any breach or threatened breach by the
Executive of any of said covenants or agreements. The parties further agree that
in the event that any provision of Section 7 or 8 hereof shall be determined by
any Court of competent jurisdiction to be unenforceable by reason of its being
extended over too great a time, too large a geographic area or too great a range
of activities, such provision shall be deemed to be modified to permit its
enforcement to the maximum extent permitted by law.
10. Conflicting Agreements. The Executive hereby represents and warrants
that the execution of this Agreement and the performance of the Executive's
obligations hereunder will not breach or be in conflict with any other agreement
to which or by which the Executive is a party or is bound and that the Executive
is not now subject to any covenants against competition or similar covenants
that would affect the performance of the Executive's obligations hereunder. The
Executive will not disclose to or use on behalf of the Company or any of its
Affiliates any proprietary information of a third party without such party's
consent.
11. Definitions. Terms defined elsewhere in this Agreement are used
herein as so defined. In addition, the following terms shall have the following
meanings:
11.1. Affiliates. "Affiliates" means all persons and entities
directly or indirectly controlling, controlled by or under common control
with the Company.
11.2. Cause. The following events or conditions shall constitute
"Cause" for termination: (i) the willful refusal of the Executive to
substantially perform the Executive's duties to the Company (other than any
refusal resulting from the Executive's incapacity due to physical or mental
illness), including the Executive's obligations under this Agreement or
(ii) a willful and material breach by the Executive of Section 7.1, 7.3 or
8 or (iii) a conviction for fraud, embezzlement or other act of dishonesty
by the Executive that causes material injury to the Company or any of its
Affiliates or (iv) conviction of, or plea of nolo contendere to, any felony
involving dishonesty or moral turpitude; or (v) the Executive's engaging in
activities (A) which constitute a violation of any policy, rule or
regulation adopted by the Company, including policies related to conflicts
of interest, xxxxxxx xxxxxxx, reimbursement of business expenses and the
like, or (B) which result in a material injury to the business, financial
condition, results of operations or prospects of the Company or its
Affiliates, as determined by not less than a 75% vote of the Board.
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For purposes of this Section 11.2, no act or failure to act on the
Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that
the actions or omissions were in the best interest of the Company.
Notwithstanding and with respect to clause (i) only in the immediately
preceding paragraph, the Executive shall not be deemed terminated for Cause
unless and until there shall have been delivered to the Executive a copy of
a resolution duly adopted by the affirmative vote of not less than 75% of
the entire membership of the Board (excluding the Executive if the
Executive is a member of the Board) at a meeting of the Board called and
held for such purpose (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's counsel, to be
heard before the Board and after the Executive has been provided with a
period of not less than 30 days within which to correct the situation)
finding that in the opinion of the Board the Executive engaged in the
conduct set forth in such clause (i) and specifying the particulars in
reasonable detail.
11.3. Confidential Information. "Confidential Information" means
any and all information of the Company and its Affiliates that is not
generally known by others with whom they compete or do business, or with
whom they plan to compete or do business and any and all information the
disclosure of which would otherwise be adverse to the interests of the
Company or any of its Affiliates. Confidential Information includes without
limitation such information relating to (i) the services or products sold
or offered by the Company or any of its Affiliates, (ii) the costs, sources
of supply, financial performance and strategic plans of the Company and its
Affiliates, (iii) the identity and special needs of the customers of the
Company and its Affiliates and (iv) the people and organizations with whom
the Company and its Affiliates have business relationships and those
relationships. Confidential Information also includes comparable
information that the Company or any of its Affiliates have received
belonging to others or which was received by the Company or any of its
Affiliates with any understanding that it would not be disclosed.
11.4. ERISA. "ERISA" means the federal Employee Retirement Income
Security Act of 1974 or any successor statute, and the rules and
regulations thereunder, and in the case of any referenced section thereof
any successor section thereto, collectively and as from time to time
amended and in effect.
11.5. Intellectual Property. "Intellectual Property" means
inventions, discoveries, developments, methods, processes, compositions,
works, concepts and ideas (whether or not patentable or copyrightable or
constituting trade secrets) conceived, made, created, developed or reduced
to practice by the Executive (whether
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alone or with others, whether or not during normal business hours or on or
off Company premises) during the Executive's employment that relate to
either the business of the Company or any of its Affiliates or any
prospective activity of the Company or any of its Affiliates.
11.6. Person. "Person" means an individual, a corporation, an
association, a partnership, a limited liability company, an estate, a trust
and any other entity or organization.
12. Withholding. All payments made by the Company under this Agreement
shall be reduced by any tax or other amounts required to be withheld by the
Company under applicable law.
13. Miscellaneous.
13.1. Assignment. Neither the Company nor the Executive may make any
assignment of this Agreement or any interest herein (provided, however,
that nothing contained herein shall be construed to place any limitation or
restriction on the transfer of the Common Stock in addition to any
restrictions set forth in any agreement applicable to such shares) without
the prior written consent of the other. This Agreement shall inure to the
benefit of and be binding upon the Company and the Executive, and their
respective successors, executors, administrators, heirs and permitted
assigns.
13.2. Severability. If any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by a court of
competent jurisdiction, then the application of such provision in such
circumstances shall be deemed modified to permit its enforcement to the
maximum extent permitted by law, and both the application of such portion
or provision in circumstances other than those as to which it is so
declared illegal or unenforceable and the remainder of this Agreement shall
not be affected thereby, and each portion and provision of this Agreement
shall be valid and enforceable to the fullest extent permitted by law.
13.3. Waiver; Amendment. No waiver of any provision hereof shall be
effective unless made in writing and signed by the waiving party. The
failure of either party to require the performance of any term or
obligation of this Agreement, or the waiver by either party of any breach
of this Agreement, shall not prevent any subsequent enforcement of such
term or obligation or be deemed a waiver of any subsequent breach. This
Agreement may be amended or modified only by a written instrument signed by
the Executive and the Company.
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13.4. Notices. Any and all notices, requests, demands and other
communications provided for by this Agreement shall be in writing and shall
be effective when delivered in person or two business days after being
deposited in the United States mail, postage prepaid, registered or
certified, and addressed (a) in the case of the Executive, to Xxxxxx X.
Xxxxxxxx at Donnelley Enterprise Solutions Incorporated, 000 Xxxxx Xxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000 or, (b) in the case of the
Company, at its principal place of business and to the attention of Board
of Directors; or to such other address as either party may specify by
notice to the other.
13.5. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the terms and conditions of
the Executive's employment and, except as otherwise provided herein,
supersedes all prior communications, agreements and understandings, written
or oral, with the Company with respect to the terms and conditions of the
Executive's employment, including the Original Agreement.
13.6. Headings. The headings and captions in this Agreement are for
convenience only and in no way define or describe the scope or content of
any provision of this Agreement.
13.7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which together
shall constitute one and the same instrument.
13.8. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic substantive laws of the State of
Illinois without giving effect to any choice or conflict of laws provision
or rule that would cause the application of the domestic substantive laws
of any other jurisdiction.
13.9. Legal Fees. In any action brought by the Executive to enforce
the Executive's rights hereunder, DESI shall reimburse, indemnify and hold
harmless the Executive from her fees and reasonable expenses of counsel;
provided, however, that such indemnification shall not extend to any action
brought by the Executive in bad faith or without a reasonable likelihood of
success under the terms of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been executed by the Company, by its
duly authorized representative, and by the Executive, as of the date first above
written.
THE COMPANY: DONNELLEY ENTERPRISE SOLUTIONS INCORPORATED
By/s/ Xxxxxx X. Xxxxxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President, CEO
THE EXECUTIVE: /s/ Xxxx X. Xxxxxx
-------------------------------------------
Xxxx X. Xxxxxx
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