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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of March 1, 1997 by and between
Vestcom International, Inc. (the "Company") and Xxxxx XxXxxxxxxx (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Company contemplates that it will merge, consolidate or
otherwise amalgamate with or acquire several companies (the "Amalgamation")
which provide computer output and document management services, including (i)
the production and distribution of documents on paper, microfilm, microfiche and
CD-Rom, (ii) computer center outsourcing services, (iii) marketing materials
fulfillment, (iv) mailing services, (v) demand publishing, and (vi) a variety of
ancillary or related services (the "Business" or the "Business Activities") each
company being referred to as a "Founding Company"; and
WHEREAS, the Executive has performed valuable services in connection
with the Amalgamation; and
WHEREAS, the Executive is willing to serve after the Amalgamation as
an officer and director of the Company and the Company desires to retain the
Executive in such capacities effective upon consummation of the Amalgamation on
the terms and conditions herein set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto hereby agree as follows:
SECTION 1. EMPLOYMENT. The Company agrees to employ the Executive,
and the Executive agrees to be employed by the Company, upon the terms and
conditions hereinafter provided, for a period commencing on the date first above
written (the "Commencement Date") and, subject to earlier termination pursuant
to Section 5 hereof, continuing until the third (3rd) anniversary of the
Consummation Date, as defined in the Agreement and Plan of Reorganization, dated
February 28, 1997 (the "Merger Agreement"), among the Company, Comvestrix Corp.
and various other parties (the "Term"). In the event that the Amalgamation is
not consummated on or prior to the date set forth in Section 12.1(ii) of the
Merger Agreement for any reason, then this Agreement shall terminate and be of
no further force and effect. The Executive hereby represents and warrants that
he has the legal capacity to execute and perform this Agreement, and that its
execution by him now, and performance by him on and after the Commencement Date
will not violate the terms of any existing agreement or understanding to which
the Executive is a party.
SECTION 2. POSITION AND DUTIES. During the Term, the Executive
agrees to serve as Chief Financial Officer and Executive Vice President of the
Company and will have such powers and duties as may be reasonably conferred upon
him by the Board of Directors of the Company (the "Board"). During the Term, and
except for reasonable vacation periods of up to four (4) weeks in any calendar
year (consistent with the vacation policies established by the Company's Board
of Directors, with a maximum of one (1) week of unused vacation time eligible to
be carried over to the subsequent calendar year), the Executive shall devote
substantially all of
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his business time, attention, skill and efforts exclusively to the business and
affairs of the Company and its subsidiaries and affiliates. Notwithstanding the
foregoing, the Executive may make personal investments in such form or manner as
will neither require his services in the operation or affairs of the business in
which such investments are made, nor violate the terms of Section 6(c) of this
Agreement.
SECTION 3. COMPENSATION. For all services rendered by the Executive
in any capacity required hereunder during the Term, including, without
limitation, services as an executive officer, director, or member of any
committee of the Company, or any subsidiary, affiliate or division thereof, the
Executive shall be compensated as follows:
(a) The Company shall pay the Executive a fixed salary at the
rate of $12,000 per month ($144,000 on an annualized basis) (the annualized
salary being referred to as the "Base Salary") in bi-weekly installments or
otherwise in accordance with the Company's payroll practices.
(b) Except as expressly modified by this Agreement, the
Executive shall be entitled to participate in all compensation and employee
benefit plans or programs, and to receive all benefits and perquisites, which
are approved by the Board of Directors of the Company and are generally made
available by the Company to all salaried employees of the Company or which are
now or hereafter established and maintained by the Company or any other
subsidiary of the Company acquired on the Commencement Date (a "Founding
Company") for all senior officers, subject to eligibility requirements and to
the extent permissible under the general terms and provisions of such plans or
programs and in accordance with the provisions thereof, including, without
limitation, incentive compensation, bonus, group hospitalization, health, life
insurance, pension, savings, thrift and profit-sharing plans, travel or accident
insurance, disability insurance and executive contingent compensation plans. The
Company shall also provide the Executive with a car allowance to cover all
business automobile expenses (including insurance) in the amount of $850 per
month, less $100 for personal use (net $750) plus $.12 per documented business
mile. No other car expenses shall be reimbursed. Notwithstanding the foregoing,
nothing in this Agreement shall require the Company nor any subsidiary of the
Company to establish, maintain or continue any particular plan or program nor
preclude the amendment, recision or termination of any such plan or program that
may be established from time to time, provided that such amendment, recision or
termination is applicable generally to the senior officers of the Company and
the Founding Companies.
SECTION 4. BUSINESS EXPENSES. (a) The Company shall pay or reimburse
the Executive for all reasonable travel or other reasonable expenses incurred by
the Executive in connection with the performance of his duties and obligations
under this Agreement, subject to the Executive's presentation of appropriate
vouchers in accordance with such expense account policies and approval
procedures as the Company may from time to time establish for senior officers
(including but not limited to prior approval of extraordinary expenses) and to
preserve any deductions for Federal income taxation purposes to which the
Company may be entitled.
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(b) In addition, the Company acknowledges and agrees that the
Company will maintain an office in Boston, Massachusetts, at a cost of
approximately $2,000 per month during the Term.
SECTION 5. EFFECT OF TERMINATION OF EMPLOYMENT. (a) (i) In the event
the Executive's employment terminates during the Term due to a Without Cause
Termination (as defined below), the Company shall, as liquidated damages,
subject to the provisions of Section 6 below, pay to the Executive an amount in
cash equal to the Executive's Base Salary as in effect at the time of such
termination for the remainder of the Term payable in equal bi-weekly
installments over the remainder of the Term, subject to customary deductions,
and no further payments shall be due hereunder.
(ii) In the event the Executive's employment terminates
during the Term due to either the Executive's death or Permanent Disability (as
defined below), the Company shall, as a death benefit or severance pay, as the
case may be, subject to the provisions of Section 6 below, pay the Executive or
his heirs or legal representatives, as the case may be, a lump-sum amount in
cash equal to the Executive's one year Base Salary as in effect at the time of
such termination; and no further payments hereunder shall be due, but provided
further that in the case of death, such payments shall be offset by any amounts
otherwise paid to the Executive, his heirs or legal representatives, as the case
may be, under any life insurance policy maintained by the Company on the life of
the Executive as to which the Executive has the right to designate the
beneficiaries and in the case of Permanent Disability, such payments shall be
offset by any amounts otherwise paid to the Executive, his heirs or legal
representatives, as the case may be, under the Company's disability program
generally available to other employees. The Company shall have no obligation to
provide any such insurance policies or programs.
(iii) In addition to the sums paid pursuant to
subparagraphs (i) or (ii) above, earned but unpaid Base Salary as of the date of
termination of employment shall be payable in full. No payments or amounts due
under any incentive compensation, stock option, bonus or profit sharing plan
then maintained by the Company or any of its subsidiaries shall be due on
termination except as expressly provided in any such plan.
(iv) After termination of employment, the Executive
shall be entitled to continued group hospitalization and health care insurance
to the extent then specified in the Comprehensive Omnibus Budget Reconciliation
Act of 1985, as amended, or any successor law ("COBRA"), and subject to payment
by the Executive of the required amounts under COBRA.
(v) This Section 5(a) shall survive the expiration of
this Agreement and shall remain binding upon the Company until such time as the
Executive's employment relationship with the Company is terminated and the
benefits, if any, provided under this Section 5(a) are paid in full to the
Executive.
(b) In the event that the Executive's employment terminates
due to a Termination for Cause or the Executive terminates employment with the
Company for reasons other than death or Permanent Disability (other than
pursuant to a Termination for Cause), earned
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but unpaid Base Salary as of the date of termination of employment shall be
payable in full. However, notwithstanding the provisions of Section 5(a), no
other payments shall be made, or benefits provided, by the Company under this
Agreement except for benefits otherwise vested under the terms of employee
benefit programs maintained by the Company or its affiliates for its employees
and except as otherwise required by law. Further, the Executive shall remain
liable for damages if his termination is a breach of this Agreement.
(c) For purposes of this Agreement, the following terms have
the following meanings:
(i) The term "Termination for Cause" means, to the
maximum extent permitted by applicable law, a termination of the
Executive's employment by the Company for any event or circumstance
which, pursuant to applicable law, constitutes cause for dismissal,
including termination because the Executive has (a) materially
breached or failed to perform his duties under applicable law
(including but not limited to laws governing employment practices
and securities laws), this Agreement or any employment policies or
practices of the Company and such breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness, (b)
committed an act of dishonesty in the performance of his duties
hereunder, (c) intentionally engaged in conduct detrimental to the
business of the Company, (d) been convicted of a felony or a
misdemeanor involving moral turpitude, (e) materially breached or
failed to perform his obligations and duties hereunder or under any
policies or procedures of the Company, and, if such breach or
failure is curable, which breach or failure the Executive shall fail
to remedy within 15 days after written demand from the Company
(which demand shall specify the breach or failure and any necessary
or desired corrective action) or (f) violated in any material
respect the representations made in Section 1 above or the
provisions of Section 6 below.
(ii) The term "Without Cause Termination" means a
termination of the Executive's employment by the Company other than
due to death, Permanent Disability or a Termination for Cause.
(iii) The term "Permanent Disability" means (to the
extent permitted by applicable law) permanently disabled so as to
qualify for full benefits under the Company's then-existing
long-term disability plan, if any; provided, however, that if the
Company does not maintain any such plan on the date of
determination, "Permanent Disability" shall mean the inability of
the Executive to productively work at his usual position with the
Company and discharge his normal responsibilities throughout normal
business hours for a period of six consecutive calendar months due
to illness or injury of a physical or mental nature, supported by
the completion by the Executive's attending physician of a medical
certification form outlining the disability and treatment.
(d) The Company shall have the right to suspend the Executive
with pay during any period in which it is investigating a possible basis for a
Termination for Cause.
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Upon suspension, the Company shall provide the Executive with reasonable notice
of the basis for suspension to the extent practical.
(e) During the period commencing on the Commencement Date
through March 31, 1998, the Executive's employment may only be terminated by the
Company based upon a Termination for Cause.
SECTION 6. CONFIDENTIALITY; COVENANT AGAINST COMPETITION. (a) The
Executive recognizes and acknowledges that all information pertaining to the
affairs, business, clients, or customers of the Company or any of its
subsidiaries or affiliates or predecessors (any or all of such entities being
hereinafter referred to as the "Business"), as such information may exist from
time to time, other than information that the Company has previously made
publicly available or which has otherwise entered the public domain through no
fault of the Executive, is confidential information and is a unique and valuable
asset of the Business, access to and knowledge of which will be essential to the
performance of the Executive's duties under this Agreement. In consideration of
the payments made to him hereunder, the Executive shall not, except to the
extent reasonably necessary in the performance of his duties under this
Agreement, or as required by law, during the term of his employment hereunder
and thereafter, divulge to any person, firm, association, corporation, or
governmental agency, any information concerning the affairs, businesses,
clients, or customers of the Business (except such information as is required by
law to be divulged to a government agency or pursuant to subpoena or similar
lawful process), or make use of any such information for his own purposes or for
the benefit of any person, firm, association or corporation (except the
Business) and shall use his reasonable best efforts to prevent the disclosure of
any such information by others. All records, memoranda, letters, books, papers,
reports, customer lists, accountings or other data, and other records and
documents relating to the Business, whether made by the Executive or otherwise
coming into his possession, are confidential information and are, shall be, and
shall remain the property of the Business. No copies thereof shall be made which
are not retained by the Business, and the Executive agrees, on termination of
his employment that he will not retain or make copies of any such documents
relating to the Business and, on demand of the Company, to deliver the same to
the Company.
(b) All proprietary information and all of the Executive's
interest in trade secrets, trademarks, computer programs, customer information,
customer lists, employee lists, products, procedures, copyrights, patents and
developments developed by the Executive as a result of, or in connection with,
his employment hereunder, shall belong to the Company; and without further
compensation, but at the Company's expense, upon the request of the Company, the
Executive shall execute any and all assignments or other documents and take any
and all such other action as the Company may reasonably request in order to vest
in the Company all of the Executive's right, title and interest in and to all of
the foregoing items, free and clear of all liens, charges and encumbrances of
the Executive of any kind.
(c) In consideration of the payments made to him hereunder,
during the period commencing on the effective date of the termination of his
employment (whether pursuant to this Agreement or under any extension of the
Term), and ending on the first (1st) anniversary of such effective date of
termination of his employment (the "Restrictive Period"), the Executive shall
not, without express prior written approval of the Board, as evidenced by a
resolution of the
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Board, directly or indirectly, for himself or on behalf of or in conjunction
with, any other person, persons, company, partnership, corporation or business
of whatever nature, own or hold any proprietary interest in, or be employed by
or receive remuneration from, or engage as an officer, director or in a
managerial capacity, whether as an employee, independent contractor, consultant
or advisor, or as a sales representative of, any corporation, partnership, sole
proprietorship or other entity (a "Competitor") engaged in competition with the
Business Activities of the Company or any of its subsidiaries or affiliates at
the time of such termination of employment, in the "Territory", other than
severance-type or retirement-type benefits from entities constituting prior
employers of the Executive. The Executive agrees that during such Restrictive
Period he will not solicit for himself or for the account of any Competitor, any
customer or client of the Company or its subsidiaries or affiliates, or, in the
event of the Executive's termination of his employment, any entity or individual
that was such a customer or client during the eighteen (18)-month period
immediately preceding the Executive's termination of employment.
The Executive agrees that the restrictive covenants contained herein
are in addition and not in lieu of any similar covenants contained in the Merger
Agreement.
In addition, during such Restrictive Period the Executive agrees not
to act on behalf of himself or any Competitor to interfere with the relationship
between the Company or its subsidiaries or affiliates and their employees,
independent contractors, customers or suppliers. The Executive also agrees,
during such Restrictive Period not to hire an employee of the Company or its
subsidiaries or induce any such employee to leave the employment of the Company
or its subsidiaries, provided that the Executive shall be permitted to call upon
and hire any member of his immediate family.
For purposes of this Agreement, "Territory" shall mean an area
within 100 miles of any place of business, office, warehouse or other facility
where the Company, or any of its affiliates or subsidiaries then conducts
business.
For purposes of the preceding paragraphs, (i) the term "proprietary
interest" means legal or equitable ownership, whether through stockholding or
otherwise, of an equity interest in a business, firm or entity other than
ownership of less than two (2%) percent of any class of equity interest in a
publicly held business, firm or entity and (ii) an entity shall be considered to
be "engaged in competition" if such entity is, or is a holding company for, a
company engaged in any aspect of the Business or providing any other services
competitive with the business then being conducted by the Company and/or its
subsidiaries at the date of termination of employment, in the Territory.
(d) The Executive acknowledges the reasonableness of the
restrictions contained in this Section 6. The Executive acknowledges that the
Company and its subsidiaries and their successors and assigns would be
irreparably injured in a manner not adequately compensated by money damages by a
breach or violation (or threatened breach or violation) of the provisions of
this Section 6 by the Executive. Therefore, in the event of any such breach or
violation (or threatened breach or violation), in addition to all other rights
and remedies which the Company may have, whether at law or in equity, the
Company and its successors and assigns shall be entitled to obtain injunctive or
other equitable relief against the Executive without the need to
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post bond or other security in connection therewith and the Executive hereby
consents to the entry of an order for such injunctive or other equitable relief.
(e) The Executive's agreement as set forth in this Section 6
shall survive the expiration of the Term and the termination of the Executive's
employment with the Company.
(f) If any court determines that the provisions of this
Section 6, or any part hereof, is unenforceable because of the duration or
geographic scope of such provisions, such court shall have the power to reduce
the duration or scope of such provisions, as the case may be, so that, as so
reduced, such provisions are then enforceable to the maximum extent permitted by
applicable law.
SECTION 7. WITHHOLDING TAXES. The Company may directly or indirectly
withhold from any payments made under this Agreement all Federal, state, city or
other taxes and all other deductions as shall be required pursuant to any law or
governmental regulation or ruling or pursuant to any contributory benefit plan
maintained by the Company in which the Executive may participate.
SECTION 8. CONSOLIDATION, MERGER, OR SALE OF ASSETS. Nothing in this
Agreement shall preclude the Company from consolidating or merging into or with,
or transferring all or substantially all of its assets to, another person or
entity which assumes this Agreement and all obligations and undertakings of the
Company hereunder. Upon such a consolidation, merger or transfer of assets and
assumption, the term "Company" as used herein shall mean such other entity and
this Agreement shall continue in full force and effect, unless the Executive
elects to terminate this Agreement pursuant to Section 8(b). The Executive
acknowledges and understands that the Amalgamation is specifically excluded from
the provisions of this Section 8.
(a) In the event of a pending Change in Control (as defined below)
with respect to which the Executive has not received, at least ten (10) business
days prior to the anticipated closing date of the transaction giving rise to the
Change in Control, written notice from the successor to all or a substantial
portion of the Company's business and/or assets that such successor is willing
as of the closing to assume and agree to perform the Company's obligations under
this Agreement in the same manner and to the same extent that the Company is
hereby required to perform (including retaining the Executive as Executive Vice
President) such Change in Control shall be deemed to be a Without Cause
Termination and the applicable portions of Section 5(a) shall apply.
(b) In any Change in Control situation, the Executive may, at his
sole discretion, elect to terminate this Agreement by providing written notice
to the Company at least five (5) business days prior to the anticipated closing
of the transaction giving rise to the Change in Control. In such case, the
Change in Control shall be deemed to be a Without Cause Termination and the
applicable provisions of Section 5(a) shall apply.
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(c) For purposes of this Section 8, the effective date of
termination will be the closing date of the transaction giving rise to the
Change in Control and all compensation, reimbursement, and lump-sum payments due
the Executive shall be paid in full by the Company at or prior to such closing.
(d) A "Change in Control" for purposes of this Agreement shall be
deemed to have occurred if:
(i) Any person, firm or corporation acquires directly or
indirectly the Beneficial Ownership (as defined in Section 13(d) of the
Securities Exchange Act of 1934, as amended) of any voting security of the
Company and immediately after such acquisition, the acquirer has Beneficial
Ownership of voting securities representing 50% or more of the total voting
power of all the then-outstanding voting securities of the Company;
(ii) the individuals (A) who, as of the Commencement Date
constitute the Board of Directors of the Company (the "Original Directors") or
(B) who thereafter are elected to the Board of Directors of the Company (the
"Company Board") and whose election, or nomination for election, to the Company
Board was approved by a vote of at least 2/3 of the Original Directors then
still in office (such Directors being called "Additional Original Directors") or
(C) who are elected to the Company Board and whose election or nomination for
election to the Company Board was approved by a vote of at least 2/3 of the
Original Directors and Additional Original Directors then still in office, cease
for any reason to constitute a majority of the members of the Company Board;
(iii) The stockholders of the Company shall approve a merger,
consolidation, recapitalization or reorganization of the Company or consummation
of any such transaction if stockholder approval is not sought or obtained, other
than any such transaction which would result in at least 75% of the total voting
power represented by the voting securities of the surviving entity outstanding
immediately after such transaction being Beneficially Owned by holders of
outstanding voting securities of the Company immediately prior to the
transaction, with the voting power of each such continuing holder relative to
such other continuing holders being not altered substantially in the
transaction; or
(iv) The stockholders of the Company shall approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or a substantial portion of the Company's assets (i.e. 50%
or more in value of the total assets of the Company).
(e) The Company shall notify the Executive in writing promptly after
the Company becomes aware of or anticipates that a Change in Control is likely
to occur.
SECTION 9. NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be given in writing and
shall be deemed to have been duly given if delivered or mailed, postage prepaid,
or by use of an independent third party commercial delivery service for same day
or next day delivery and providing a signed receipt as follows:
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(a) To the Company:
Vestcom International, Inc.
0000 Xxxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Chief Executive Officer
(b) To the Executive:
Xxxxx XxXxxxxxxx
00 Xxxxxxxx Xxxx Xxxxxxx
Xxxxxxxx Xxxx, XX 00000
or to such other address as either party shall have previously specified in
writing to the other. Notice by mail shall be deemed effective on the second
business day after its deposit with the United States Postal Service, notice by
same day courier service shall be deemed effective on the day of deposit with
the delivery service and notice by next day delivery service shall be deemed
effective on the day following the deposit with the delivery service.
SECTION 10. NO ATTACHMENT. Except as required by law, no right to
receive payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation or to execution, attachment, levy, or similar process or
assignment by operation of law, and any attempt, voluntary or involuntary, to
effect any such action shall be null, void and of no effect; provided, however,
that nothing in this Section 10 shall preclude the assumption of such rights by
executors, administrators or other legal representatives of the Executive or his
estate and their conveying any rights hereunder to the person or persons
entitled thereto.
SECTION 11. SOURCE OF PAYMENT. All payments provided for under this
Agreement shall be paid in cash from the general funds of the Company. The
Company shall not be required to establish a special or separate fund or other
segregation of assets to assure such payments, and, if the Company shall make
any investments to aid it in meeting its obligations hereunder, the Executive
shall have no right, title or interest whatever in or to any such investments
except as may otherwise be expressly provided in a separate written instrument
relating to such investments. Nothing contained in this Agreement, and no action
taken pursuant to its provisions, shall create or be construed to create a trust
of any kind, or a fiduciary relationship, between the Company and the Executive
or any other person. To the extent that any person acquires a right to receive
payments from the Company hereunder, such right, without prejudice to rights
which employees may have, shall be no greater than the right of an unsecured
creditor of the Company.
SECTION 12. BINDING AGREEMENT; NO ASSIGNMENT. This Agreement shall
be binding upon, and shall inure to the benefit of, the Executive and the
Company and their respective permitted successors, assigns, heirs, beneficiaries
and representatives. This Agreement is personal to the Executive and may not be
assigned by him. Any attempted assignment in violation of this Section 12 shall
be null and void.
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SECTION 13. GOVERNING LAW; CONSENT TO JURISDICTION. The validity,
interpretation, performance, and enforcement of this Agreement shall be governed
by the laws of the State of New Jersey. In addition, the Executive and the
Company irrevocably submit to the exclusive jurisdiction of the courts of the
State of New Jersey and the United States District Court for the District of New
Jersey for the purpose of any suit, action, proceeding or judgment relating to
or arising out of this Agreement and the transactions contemplated hereby.
Service of process in connection with any such suit, action or proceeding may be
served on the Executive anywhere in the world by the same methods as are
specified for the giving of notices under this Agreement. The Executive
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. The Executive
irrevocably waives any objection to the laying of venue of any such suit, action
or proceeding brought in such courts and irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.
SECTION 14. ENTIRE AGREEMENT. This Agreement shall constitute the
entire agreement among the parties with respect to the matters covered hereby
and shall supersede all previous written, oral or implied understandings among
them with respect to such matters.
SECTION 15. AMENDMENTS. This Agreement may only be amended or
otherwise modified by a writing executed by all of the parties hereto.
SECTION 16. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when executed shall be deemed to be an
original and all of which together shall be deemed to be one and the same
instrument.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has signed this
Agreement, all as of the first date above written.
VESTCOM INTERNATIONAL, INC.
By: /s/ Xxxx Xxxxxx
________________________________
Name: Xxxx Xxxxxx
Title: President
/s/ Xxxxx XxXxxxxxxx
________________________________
Xxxxx XxXxxxxxxx
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