AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.2
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
This Amended and Restated Executive Employment Agreement (the “Agreement”) is entered into by
and between American Reprographics Company, a Delaware corporation (“ARC) as the employer, and
Xxxxx X. Xxx, a resident of California, an individual (“Executive”), as the employee, on March 21,
2011, effective as of March 31, 2011 (the “Effective Date”).
RECITALS
WHEREAS, ARC and Executive entered into an Employment Agreement dated January 7, 2005, as
amended (“Agreement”), under which Executive is employed as Chief Technology Officer of ARC.
WHEREAS, the term of the Agreement will expire on March 31, 2011.
WHEREAS, the parties now wish to amend and restate the Agreement as of the Effective Date.
WHEREAS, the parties now wish to amend and restate the Agreement as of the Effective Date.
Now, therefore, in consideration of the promises, covenants and agreements set forth in this
Agreement, the parties agree as follows:
1. Position and Duties
(a) ARC employs Executive as its Chief Technology Officer (“CTO”), and Executive agrees to
serve ARC in such capacity, upon the terms and conditions set forth herein.
(b) Executive shall report to ARC’s Chief Executive Officer (“CEO”). Executive’s primary
responsibilities shall be to:
(i) Design, develop and implement technology solutions as required for general business
planning regarding technology and systems required to maintain ARC’s business operations and
competitiveness;
(ii) recognize new developments in technology and anticipate trends;
(iii) update and improve technology solutions acquired by, or developed within, ARC to
facilitate ARC to maintain its competitive edge in the market place;
(iv) establish and advise ARC on long-term needs for information systems and plan strategies
for developing systems and acquiring hardware to meet ARC’s business needs;
(v) research, develop and establish the infrastructure required for the company’s information
management systems and to enable the company and its systems to remain current with industry
standards and trends;
(vi) serve as technical project manager or designate and oversee project managers related to
ARC systems and technology;
(vii) be responsible for the development, operation, protection and maintenance of ARC’s
software tools and products, including the PlanWell series of products, Abacus, BidCaster, EWO,
MetaPrint and OneView, and such new or additional products as may be owned or developed by ARC from
time to time;
(viii) manage and maintain ARC’s technology center(s) and oversee the training of technical
personnel;
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(ix) ensure that ARC’s intellectual property, including such software tools and products, are
at all times during the term of, and upon the expiration or termination of, this Agreement, fully
secured and documented in accordance with industry standards and best practices;
(x) ensure that, upon the expiration or termination of this Agreement, the duties and
responsibilities of Executive as CTO shall be transitioned to a new person hired or otherwise
designated by ARC as ARC’s new CTO in such a manner that there will be no disruptions or
interruptions to ARC’s business; and
(xi) perform other duties commonly incident to the office and such other duties and have such
other powers as ARC’s CEO shall designate from time to time.
Without limiting the foregoing, Executive shall have the authority generally incident and
necessary to perform such duties.
(c) During the term of this Agreement, Executive will devote all of his employment time and
attention to the affairs of ARC and use his best efforts to promote the business and interests of
ARC. Executive owes a fiduciary duty of loyalty, fidelity and allegiance to act at all times in
the best interests of ARC, and not to do any act which would injure the business, interests, or
reputation of ARC or any of its subsidiaries or affiliates.
2. Term
The term of this Agreement shall commence on the Effective Date hereof and continue until
March 31, 2014 unless otherwise terminated in accordance with the provisions hereof; provided,
however, that this Agreement will automatically be extended on a year-to-year basis on the
terms and conditions set forth herein, including the bonus provisions of Section 3(b),
unless either party gives written notice to the other at least one hundred twenty (120) days
prior to the expiration of the term of this Agreement, which includes any extensions, that this
Agreement shall terminate at the end of such term, or extension thereof.
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3. Direct Compensation
In consideration of the services to be provided by Executive, Executive shall receive
compensation, less all applicable taxes, social security payments and other items that ARC is
required by law to withhold or deduct therefrom, as follows:
(a) Base Salary. Executive’s annual Base Salary shall be $500,000 per year, payable
in installments in accordance with ARC’s customary payroll procedures; provided, however,
that as of the Effective Date and for the remainder of the fiscal year ending December 31, 2011
(the “2011 Base Salary Reduction Period”), the amount of Base Salary payable to Executive pursuant
to this Section 3(a) shall be reduced by ten percent (10%) (the “2011 Base Salary Reduction”).
Notwithstanding anything to the contrary contained in this Section 3(a), if Executive’s employment
with ARC is terminated other than for Cause during the 2011 Base Salary Reduction Period, any Base
Salary severance benefits payable to Executive under Sections 11(a), (c) and (d) of the Agreement
shall be calculated based on the $500,000 Base Salary amount, without taking into account the 2011
Base Salary Reduction.
(b) Incentive Bonus. During the term of this Agreement, Executive shall be eligible
to receive an annual Incentive Bonus (“Incentive Bonus”) in an amount equal to eighty percent (80%)
of Executive’s Base Salary per year contingent upon achievement of performance criteria to be
established by ARC’s CEO in consultation with Executive, and approved by the Compensation Committee
of ARC’s Board of Directors. The Incentive Bonus shall be paid no later than 60 days following the
close of each fiscal year, in cash or ARC common stock, or
partly in each, as elected by Executive at least 20 days before the date such Incentive Bonus
is paid. As a condition to receiving ARC common stock Executive must deposit with ARC on the date
of issuance cash in the amount, if any, by which the total of employee withholding taxes required
to be withheld with respect to the entire Incentive Bonus exceeds the cash portion of the Incentive
Bonus available for withholding. To be eligible to receive a bonus, Executive must have been
employed by ARC during the entire fiscal year to which such Incentive Bonus relates.
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(c) Additional Bonuses. ARC may from time to time, in its absolute discretion,
establish additional bonus programs for Executive.
4. General Benefits
During the term of this Agreement, Executive shall be entitled to other benefits provided by
ARC to its senior executives from time to time, including but not limited to, 401(k) and other
retirement plans, deferred compensation, paid holidays, sick leave and other similar benefits.
Executive shall be entitled to 4 weeks paid vacation each calendar year accrued and vested in
accordance with ARC’s vacation policy applicable to senior management.
5. Stock Plans
In the sole discretion of the Board of Directors of ARC, Executive shall be eligible to
participate in stock option, stock purchase, stock bonus and similar plans of ARC established from
time to time by ARC.
6. Group Insurance or Benefit Plans
During the term of this Agreement, Executive shall be automatically covered by ARC group
insurance programs (including any self-insured programs sponsored by ARC), including medical,
dental, vision, disability, and life, if any. Executive’s spouse and children which are eligible
for coverage may join the insurance programs, subject to ARC’s policies and applicable
laws. The premiums for all insurance programs for Executive and Executive’s spouse and eligible
children shall be paid by ARC.
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7. Special Benefits
Executive shall be allowed additional employer-paid benefits of his choice (“Special
Benefits”), including the lease of automobiles, social, golf or athletic club memberships and other
benefits not specifically provided for in this Agreement, provided, however, that the annual cost
to ARC shall not exceed $15,000. Any employer taxes imposed upon ARC by reason of the furnishing
of such Special Benefits shall be included in the annual $15,000 limitation. Any unused allowance
for Special Benefits shall not be carried over to a subsequent year.
8. Reimbursement of Business Related Expenses
Executive shall be entitled to receive prompt reimbursement for reasonable expenses incurred
by him in performing services hereunder during the term of this Agreement in accordance with the
policies and procedures then in effect and established by ARC for its employees. In addition to
the Special Benefits set forth in Section 7 above, Executive shall also be entitled to
reimbursement of Executive membership dues and related ongoing costs of appropriate professional
organizations which are approved by ARC’s CEO.
9. Obligations and Restrictive Covenants
(a) Obligations. During the term of this Agreement, Executive shall not engage in any
other employment, occupation or consulting activity for any direct or indirect remuneration. This
obligation shall not preclude Executive from: (i) serving in any volunteer capacity with any
professional, community, industry, civic, educational or charitable organization; (ii) serving as a
member of corporate boards of directors, provided that ARC’s CEO has given written consent, and
these activities or services do not materially interfere or
conflict with Executive’s responsibilities or ability to perform his duties under this
Agreement; or (iii) engaging in personal investment activities for himself and his family which do
not interfere with the performance of his duties and obligations hereunder.
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(b) Non-Competition; Non-Solicitation. The Parties hereto recognize that Executive’s
services are unique and the restrictive covenants set forth in this Section 9 are essential to
protect the business (including trade secret and other confidential information disclosed by ARC
to, learned by or developed by Executive during the course of employment by ARC) and the good will
of ARC. For purposes of this Section 9, all references to “ARC” shall include ARC’s predecessors,
subsidiaries and affiliates. As part of the consideration for the compensation and benefits to be
paid to Executive hereunder, during the term of this Agreement Executive shall not:
(i) Engage in any business similar or related to or competitive with the business conducted by
ARC described from time to time in ARC’s Annual Report on Form 10-K filed with the United States
Securities and Exchange Commission (the “Core Business of ARC”);
(ii) Render advice or services to, or otherwise assist, any other person, association,
corporation, or other entity that is engaged, directly or indirectly, in any business similar or
related to, or competitive with, the Core Business of ARC;
(iii) Transact any business in any manner with or pertaining to suppliers or customers of ARC
which, in any manner, would have, or is likely to have, an adverse effect upon the Core Business of
ARC; or
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(iv) Induce any employee of ARC to terminate his or her employment with ARC, or hire or assist
in the hiring of any such employee by any person or entity not affiliated with ARC.
For purposes of this Agreement, “affiliate” shall mean any entity which owns or controls, is
owned or controlled by, or is under common ownership or control, with ARC.
10. Confidentiality; Inventions
(a) Confidentiality. Executive acknowledges that it is the policy of ARC to maintain
as secret and confidential all valuable and unique information heretofore or hereafter acquired,
developed or used by ARC relating to the business, operations, employees and customers of ARC,
which information gives ARC a competitive advantage in the industry, and which information includes
technical knowledge, know-how or trade secrets and information concerning operations, sales,
personnel, suppliers, customers, costs, profits, markets, pricing policies, all matters referred to
in Section 10(b) below, and other confidential information and materials (the “Confidential
Information”).
(i) Non-Disclosure. Executive recognizes that the services to be performed by
Executive are special and unique, and that by reason of his duties he will be given, acquire or
learn Confidential Information. Executive recognizes that all such Confidential Information is the
sole and exclusive property of ARC and its subsidiaries or affiliates. Executive shall not, either
during or after his employment by ARC, disclose the Confidential Information to anyone outside ARC
or use the Confidential Information for any purpose whatsoever, other than for the performance of
his duties hereunder, except as authorized by ARC in connection with performance of such duties.
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(ii) Return of Confidential Information. Executive shall deliver promptly upon
termination of employment with ARC, or at any time requested by ARC, all memos, notes, records,
reports, manuals, drawings, and any other documents, whether in electronic form or otherwise,
containing any Confidential Information, including without limitation all copies of such materials
in any format which Executive may then possess or have under his control.
(b) Ownership of Inventions; Assignment of Rights.
(i) Disclosure of Inventions to Company. Executive agrees promptly to fully disclose
in writing to ARC and to hold in trust for the sole right and benefit of ARC, or its designee, all
of Executive’s rights, titles, and interests in and to any and all inventions, discoveries,
developments, concepts, improvements, trade secrets, formulas, techniques, processes, software, and
know-how, whether or not patentable and whether or not reduced to practice, all works of
authorship, whether or not copyrightable, and any and all other like developments or items
conceived, developed, or learned by Executive during the period of employment by ARC, either alone
or jointly with others, which relate to or result from the actual or anticipated business, work,
research, development or investigations of ARC, or which result, to any extent, from use of ARC’s
property, supplies, equipment or facilities or of the Proprietary Information (the foregoing
hereinafter collectively referred to as the “Inventions”).
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(ii) Inventions are Sole Property of ARC. To the extent Inventions include material
subject to copyright protection, such materials have been specially commissioned by ARC and they
shall be deemed “work for hire” as such term is defined under U.S. copyright law. Executive
acknowledges and agrees that all Inventions shall be the sole property of ARC or any other entity
designated by it, and Executive hereby irrevocably and
exclusively assigns to ARC, its successors, and assigns, without further consideration, all
right, title, and interest in and to all such Inventions including, without limit, any trademarks,
service marks, trade names, copyrights, patents, trade secrets, mask work rights or other
intellectual property or proprietary rights relating to the Inventions, in any and all countries,
whether or not registrable under United States or foreign trademark, copyright, patent or similar
laws and all applications for registration thereunder (“Rights”). Such assignment does not apply
to any invention which qualifies fully under the provisions of Section 2870 of the California Labor
Code (attached hereto for reference); provided, however, Executive shall maintain
contemporaneous written records of the process of creating such an invention; and provided further
that such invention (including the records relating thereto) remains subject to the disclosure
obligation of the preceding paragraph. To the extent any of Executive’s rights in Inventions,
including without limitation any moral rights, are not subject to assignment hereunder, Executive
further grants to ARC an exclusive, perpetual, irrevocable, royalty-free worldwide license to such
Inventions for use, sale, license and distribution, marketing, advertising, copying and to make
derivative works thereof or any other use ARC wishes. ARC or any other entity designated by it
shall be the sole owner of all Inventions and Rights pertaining to the Inventions. In case any
Invention is described in a patent application or disclosed to third parties by Executive within
three years after leaving the employ of ARC, it is to be presumed that the Invention was conceived
during the period of Executive’s employment by ARC and the Invention will belong to ARC unless
proved by Executive to have been conceived following termination of such employment. Executive
hereby irrevocably and forever waives, and agrees never to assert any Moral Rights, as defined
below, as applicable, in or to the Inventions which Executive may now have or which may accrue to
Executive’s benefit under U.S. or foreign copyright laws and any and all other residual rights and
benefits which arise
under any other applicable law now in force or hereafter enacted. The term “Moral Rights”
shall mean any and all rights of paternity or integrity of the Inventions and the right to object
to any modification, translation or use of the Inventions, and any similar rights existing under
the judicial or statutory law of any country in the world or under any treaty, regardless of
whether or not such right is denominated or referred to as a moral right.
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(iii) Assignment of Inventions. Executive agrees to assist ARC, or its designee, at
ARC’s expense to secure ARC’s Rights in and to the Inventions and will disclose to ARC all
pertinent information and data with respect to the Inventions that is needed to secure the Rights
and will execute all applications, specifications, assignments and other instruments which ARC
reasonably requests to enable ARC to apply for and obtain the Rights, and to assign and convey to
ARC, its successors, assigns, and nominees the sole and exclusive rights, titles and interests in
and to such Inventions and Rights. Executive further agrees that his obligation to execute or
cause to be executed, any such instrument or papers shall continue after the termination of
employment with ARC. In the event that ARC is unable, after reasonable effort, to secure
Executive’s signature on any of the foregoing assignments, instruments or papers, whether because
of Executive’s physical or mental incapacity or for any other reason whatsoever, Executive hereby
irrevocably designates and appoints ARC and its duly authorized officers and agents as Employee’s
agent and attorney-in-fact, to act for and on Executive’s behalf and stead, to execute and/or file
any documents, and to do all other lawfully permitted acts to further the prosecution, issuance,
and enforcement of letters patent, copyright, trademark and other analogous rights or protections
thereon, or which are otherwise necessary to secure, apply for or obtain Rights, or to assign and
convey to ARC, its successors, assigns and nominees the sole and exclusive rights, titles and
interests in and to such Inventions and Rights with the same legal force and effect as if executed
by Executive. Executive’s obligation to assist ARC in
obtaining and enforcing Rights for the Inventions in any and all countries shall continue
beyond the termination of Executive’s relationship with ARC but ARC shall compensate Executive at a
reasonable rate after such termination for time actually spent by Executive at ARC’s request for
such assistance.
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(iv) Prior Inventions. Any and all prior inventions, discoveries and improvements
made by Executive prior to employment with ARC shall not be affected by this Agreement. Executive
acknowledges that he provided a complete list of such inventions, discoveries and improvements made
by Executive prior to Employee’s employment with ARC, in connection with, and incorporated by
referenced into, the Agreement.
(c) Use of Information. Executive shall not deliver, reproduce or in any way allow
Confidential Information to be delivered or used by any third party without specific direction or
consent of ARC’s CEO. Likewise, Executive shall not disclose to ARC, use in ARC’s business, or
cause ARC to use, any documents, information or material that is a trade secret of others.
(d) Predecessors, Subsidiaries and Affiliates. For purposes of this Section 10,
references to ARC include its predecessors, subsidiaries and affiliates.
11. Termination.
Notwithstanding any other term or provision contained in this Agreement, this Agreement and
the employment hereunder will terminate prior to the expiration of the term of this Agreement under
the following circumstances:
(a) Death. Upon Executive’s death.
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(b) Disability. Upon Executive becoming “Permanently Disabled”, which, for purposes
of this Agreement, shall mean Executive’s incapacity due to physical or mental illness or cause,
which, in the written opinion of Executive’s regular licensed physician, results in the Executive
being unable to perform his duties on a full-time basis for 6 months during a period of 12 months.
(c) Termination by ARC for Cause. Upon written notice Executive, ARC may terminate
this Agreement for Cause, which, for purposes of this Agreement, shall mean termination by ARC in
its reasonable discretion because of Executive’s:
(i) Willful refusal without proper cause to perform (other than by reason of physical or
mental disability or death) the duties set forth in this Agreement or delegated from time to time
in writing by ARC’s CEO, which remains uncorrected for 30 days following written notice to
Executive by ARC’s CEO; or
(ii) Gross negligence, self dealing or willful misconduct of Executive in connection with the
performance of his duties hereunder, including, without limitation, misappropriation of funds or
property of ARC or its subsidiaries or affiliates, securing or attempting to secure personally any
profit in connection with any transaction entered into on behalf of ARC or its subsidiaries or
affiliates, or any willful act or gross negligence having the effect of injuring the reputation,
business or business relationships of ARC or its subsidiaries or affiliates; or
(iii) fraud, dishonesty or misappropriation of ARC business and assets that xxxxx the business
of ARC or its subsidiaries or affiliates; or
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(iv) habitual insobriety, abuse of alcohol, abuse of prescription drugs, or use of illegal
drugs; or
(v) engaging in any criminal activity involving moral turpitude; or
(vi) indictment or being held for trial in connection with a misdemeanor involving moral
turpitude or any felony; or
(vii) conviction of a felony or entry into a guilty plea that negatively reflects on
Executive’s fitness to perform the duties or xxxxx the reputation or business or ARC or its
subsidiaries or affiliates; or
(viii) any material breach of any covenants under this Agreement or other material policy of
ARC, other than under clauses (i) through (vii) of this Section 11(c) which remains uncorrected for
30 days following written notice to Executive by ARC’s CEO.
(d) Termination by ARC without Cause. Upon written notice to Executive, ARC may
terminate this Agreement at any time without any Cause or reason whatsoever.
(e) Termination by Executive with Good Reason. Upon written notice to ARC of any of
the following “Good Reasons,” and the failure of ARC to correct the reduction, change or breach
within 30 days after receipt of such notice, Executive may terminate this Agreement after the
occurrence of
(i) a material change by ARC in the nature of Executive’s title, duties, authorities and
responsibilities set forth in this Agreement without Executive’s express written consent; or
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(ii) a reduction in the nature of Executive’s compensation as established under this
Agreement, without Executive’s express written consent; or
(iii) a change in the officer (other than a change in the person who occupies such position)
to whom Executive reports without Executive’s express consent; or
(iv) a material breach by ARC of any material sections of this Agreement, other than as set
forth in clauses (i) through (iii) of this Section 11(e); or
(v) a Change of Control, as defined in Section 11(g), as a result of which Executive is not
offered the same or comparable position in the surviving company, or is offered such position but
within twelve (12) months after Executive accepts such position, Executive’s employment is
terminated either without cause or for a Good Reason described in subsections (i), (ii), (iii) of
this Section 11(e) or in subsection (iv) as to the employment agreement then applicable to
Executive.
(f) Termination by Executive without Good Reason. Upon 45 days prior written notice
to ARC, Executive may terminate this Agreement and resign from Executive’s employment hereunder
without any Good Reason.
(g) Change of Control.
(i) For purposes of this Agreement, “Change of Control” shall mean:
(A) ARC merges or consolidates with any other corporation (other than one of ARC’s
subsidiaries), as a result of which ARC is not the surviving company, or the shares of ARC voting
stock outstanding immediately after such transaction do not
constitute, become exchanged for or converted into, more than 50% of the Voting Shares of the
merged or consolidated company (as defined below);
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(B) ARC sells or otherwise transfers or disposes of all or substantially all of its assets;
(C) Any third person or entity shall become the Beneficial Owner, as defined by Rule 13(d)-3
under the Securities Exchange Act of 1934, in one transaction or a series of related transactions
within any 12 month period, of at least 50% of the Voting Shares of ARC’s then outstanding voting
securities.
(ii) For purposes of this Agreement, “Voting Shares” shall mean the combined voting securities
entitled to vote in the election of directors of a corporation, including ARC, or the merged,
consolidated or surviving company, if other than ARC.
(h) Expiration. For purposes of this Agreement, the expiration of this Agreement at
the end of its term, including any extensions, does not constitute a termination.
12. Severance Benefits
(a) Basic Benefits. Upon expiration or termination of this Agreement for any reason,
and subject to the provisions of Section 12(e), Executive will be entitled to: (i) payment for all
Base Salary and unused vacation accrued and prorated, but unpaid, as of the effective date of
termination, provided that payment for such amounts will be made no later than 30 days after the
effective date of termination, (ii) payment, when due, of any earned but unpaid Incentive Bonus for
the preceding fiscal year, (iii) any unreimbursed business expenses authorized by this Agreement,
provided that such reimbursement will be paid to Executive no later than 30 days after the
effective date of termination, (iv) continuation of any benefits under
Section 6 as required by applicable law (e.g., COBRA), and (v) such rights as then exist with
respect to then vested stock options, restricted stock or other rights under similar plans.
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(b) Termination by ARC for Cause or by Executive without Good Reason. If this
Agreement and Executive’s employment hereunder is terminated by ARC for Cause pursuant to Section
11(c), or by Executive without Good Reason pursuant to Section 11(f), Executive shall not be
entitled to any additional payments or benefits hereunder.
(c) Termination by ARC without Cause; Termination by Executive with Good Reason. If
this Agreement and Executive’s employment hereunder is terminated by ARC without Cause pursuant to
Section 11(d), or by Executive for Good Reason as defined in Section 11(e), subject to Executive’s
compliance with the provisions of Sections 15 and 16 below, Executive shall receive the following
additional payments or benefits:
(i) Executive’s then Base Salary for the remaining term of this Agreement, paid as and when
due as if this Agreement had not been terminated, provided, however, that if Section 11(e)(5) is
applicable to such termination, such Base Salary shall continue to be paid for the greater of the
remaining term of this Agreement or twelve (12) months;
(ii) Continuation of coverage and premium payments by ARC under ARC’s group insurance programs
for Executive and his eligible family members under Section 6 for the period during which Base
Salary is paid under Section 12(c)(i) above;
(iii) Continuation of the Special Benefits under Section 7 of this Agreement, for the period
during which Base Salary is paid under Section 12(c)(i) above; and
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(iv) All unvested stock options, restricted stock or similar rights granted to Executive shall
accelerate and become vested and exercisable immediately as of the effective date of termination.
(d) Termination because of Death or Disability of Executive. If this Agreement and
Executive’s employment hereunder is terminated under Sections 11(a) or (b) by reason of Executive’s
death or by reason of being Permanently Disabled, Executive or his family shall be entitled to
continuation of coverage and premium payments by ARC under ARC’s group insurance programs for
Executive and his eligible family members under Section 6 for a period of 12 months after the
termination of employment.
(e) Parachute Payments. In the event that the severance, acceleration of stock
options and other benefits provided for in this Agreement or otherwise payable to Executive (i)
constitute “parachute payments” within the meaning of Section 280G (as it may be amended or
replaced) of the Internal Revenue Code of 1986, as amended or replaced (the “Code”) and (ii) but
for this Section 12(e), would be subject to the excise tax imposed by Section 4999 (as it may be
amended or replaced) of the Code (the “Excise Tax”), then Executive’s benefits hereunder shall be
either:
(i) provided to Executive in full; or
(ii) provided to Executive only as to such lesser extent which would result in no portion of
such benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into
account the applicable federal, state and local income taxes and the Excise Tax, results in the
receipt by Executive on an after-tax basis, of the greatest amount of benefits, notwithstanding
that all or some portion of such benefits may be taxable under the
Excise Tax. Unless ARC and Executive otherwise agree in writing, any determination required under this
Section 12(e) shall be made in writing in good faith by ARC ‘s independent public accountants (the
“Accountants”). In the event of a reduction in benefits hereunder, Executive shall be given the
choice of which benefits to reduce. For purposes of making the calculations required by this
Section 12(e), the Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations concerning the application
of the Code. ARC and Executive shall furnish to the Accountants such information and documents as
the Accountants may reasonably request in order to make a determination under this Section 12(e).
ARC shall bear all costs the Accountants may reasonably incur in connection with any calculations
contemplated by this Section 12(e).
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(f) 409A Compliance.
(i) 6-Month Delay Rule. Except as provided in paragraph (ii) below, in the event that
Executive is a “specified employee” (as defined in Section 409A(a)(2)(B)(i) of the Code and
regulations thereunder) at the time of the termination of his employment with ARC, payment of all
amounts subject to Section 409A of the Code that would otherwise be made under Section 12 of this
Agreement, including any installments, may not be paid before a date that is six months and two
days after the date of termination from employment (including death). Such amounts that otherwise
would have been paid during such six-month period will be paid as of the date that is six months
and two days after the date of employment termination.
(ii) Exception. In the event that payment of amounts under Section 12 of this
Agreement at the time(s) of payment specified under its terms (without regard to this Section
12(f)) does not cause any amount of the payment to fail to comply with the provisions of Section
409A of the Code, and does not result in any excise tax or additional tax penalty under
Section 409A, then the six-month delay rule of paragraph (i) above will not apply and payment
of such amounts will be made at the time(s) specified under the applicable terms of Section 12 of
this Agreement without regard to this Section 12(f).
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(iii) General Compliance. During the term of this Agreement, ARC and Executive agree
to modify and administer the Agreement to the extent possible to comply with Section 409A of the
Code and to avoid incurring any excise and other additional tax liability that might be imposed on
Executive or ARC.
13. Arbitration and Equitable Relief
(a) Arbitration. In consideration of Executive’s employment with ARC, its promise to
arbitrate all employment-related disputes and Executive’s receipt of the compensation paid to
Executive by ARC, at present and in the future, Executive agrees that any and all controversies,
claims, or disputes with anyone (including ARC and any employee, officer, director, shareholder or
benefit plan of ARC in their capacity as such or otherwise) arising out of, relating to, or
resulting from Executive’s employment with ARC or the termination of that employment with ARC,
including any provision of this Agreement, shall be subject to binding arbitration under the
arbitration rules set forth in the California Code of Civil Procedure section 1280 through 1294.2,
including section 1283.05 collectively (the “Rules”) and pursuant to California law. Disputes
which Executive agrees to arbitrate, and hereby agrees to waive any right to a trial by jury,
include without limitation, any common law claims, statutory claims under Title VII of the Civil
Rights Act of 1964, the Americans With Disabilities Act of 1990, the Age Discrimination In
Employment Act of 1967, the Older Workers Benefit Protection Act, the California Fair Employment
And Housing Act, the California Labor Code (except for workers
compensation or unemployment insurance claims), or ERISA, claims of harassment, discrimination
or wrongful termination and any other statutory claims under state or federal law.
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(b) Procedure. Any arbitration will be administered by JAMS and a neutral arbitrator
will be selected in a manner consistent with its rules for the resolution of employment disputes.
The arbitrator shall have the power to decide any motions brought by any party to the arbitration,
including motions for summary judgment and/or adjudication and motions to dismiss and demurrers,
prior to any arbitration hearing. The arbitrator shall have the power to award any remedies,
including attorneys’ fees and costs, available under applicable law. ARC will pay for any
administrative or hearing fees charged by the arbitrator or JAMS except that Executive shall pay
the first $200.00 of any filing fees associated with any arbitration Executive initiates. The
arbitrator shall administer and conduct any arbitration in a manner consistent with the Rules. To
the extent that the JAMS rules for the resolution of employment disputes conflict with the Rules,
the Rules shall take precedence. The decision of the arbitrator shall be in writing.
(c) Remedy. Except as provided by the Rules and this Agreement, arbitration shall be
the sole, exclusive and final remedy for any dispute between ARC and Executive. Accordingly,
except as provided for by the Rules and this Agreement, neither ARC nor Executive will be permitted
to pursue court action regarding claims that are subject to arbitration. Notwithstanding, the
arbitrator will not have the authority to disregard or refuse to enforce any lawful ARC policy, and
the arbitrator shall not order or require ARC to adopt a policy not otherwise required by law which
ARC has not adopted.
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(d) Availability of Injunctive Relief. In addition to the right under the Rules to
petition the court for provisional relief, ARC may also petition the court for injunctive relief,
notwithstanding any provision in this Agreement requiring arbitration, where ARC alleges or
claims a violation of this Agreement, or any separate agreement between Executive and ARC
regarding trade secrets, confidential information or non-solicitation, or California Labor Code
§2870. No bond shall be required of ARC. Executive understands and agrees that any breach or
threatened breach of this Agreement, including, without limitation, the provisions of Section 16,
or of any such separate agreement will cause irreparable injury to ARC or its subsidiaries or
affiliates and that money damages will not provide an adequate remedy therefore, and Executive
hereby consents to the issuance of an injunction. In the event either Party seeks injunctive
relief, the prevailing Party shall be entitled to recover reasonable costs and attorney fees
related thereto.
(e) Administrative Relief. This Agreement does not prohibit Executive from pursuing
an administrative claim with a local, state or federal administrative body such as the Department
of Fair Employment and Housing, the Equal Employment Opportunity Commission or the Workers’
Compensation Board. This Agreement does, however, preclude Executive from pursuing court action
regarding any such claim.
(f) Voluntary Nature of Agreement. Executive acknowledges and agrees that he is
executing this Agreement voluntarily and without any duress or undue influence by ARC or anyone
else. Executive further acknowledges and agrees that he has carefully read this Agreement, that he
has asked any questions needed for him to understand the terms, consequences and binding effect of
this Agreement, and that he fully understands this Agreement, including that he is waiving his
right to a jury trial. Finally, Executive acknowledges that he has been provided an opportunity to
seek the advice of an attorney of his choice before signing this Agreement.
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14. Governing Law
This Agreement shall be governed by and construed and interpreted in accordance with the laws
of the State of California without regard to California conflict of laws principles.
15. Release
In exchange for the benefits and other consideration under this Agreement to which Executive
would not otherwise be entitled, Executive shall enter into and execute a release substantially in
the form attached hereto as Exhibit A (the “Release”) upon his termination of employment. Unless
the Release is executed by Executive and delivered to ARC within thirty (30) days after the
termination of Executive’s employment with ARC, Executive shall receive only the basic severance
benefits provided under Section 12(a) of this Agreement and no additional benefits under Section
12.
16. Consulting Agreement
Upon the expiration or earlier termination of this Agreement, Executive shall continue to
provide limited services to ARC, at ARC’s request, for the sole purpose of carrying out the
provisions of Sections 1(b)(ix) and (x) for a period of up to 12 months, which Executive
acknowledges are vital to the welfare of ARC and its business and shareholders. Such services
shall be performed during normal business hours on normal business days, or at such other times and
days as Executive may reasonably request. Executive shall be paid at the hourly rate then
prevailing for consultants performing similar services in the San Francisco Bay Area. During such
consulting period, the provisions of Sections 10, 13, 14 and 16 through 21 will continue to apply.
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17. Notices
Any notices or other communications desired or required under this Agreement shall be in
writing, signed by the party making the same, and shall be deemed delivered when personally
delivered or on the second business day after the same is sent by certified or registered mail,
postage prepaid, addressed as follows (or to such other address as may be designated by like
written notice):
If to Executive: | At the last residential address known by ARC | ||
If to ARC: | American Reprographics Company 0000 Xxxxx Xxxxxxxx, Xxxxx 000 Xxxxxx Xxxxx, XX 00000 Attn.: Chief Executive Officer |
18. Severability
In the event that any provision of this Agreement becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full
force and effect without said provision.
19. Assignment
Except as otherwise specifically provided herein, neither party shall assign this Agreement or
any rights hereunder without the consent of the other party, and any attempted or purported
assignment without such consent shall be void; provided that Executive’s consent under this
Agreement shall not be required hereby for any of the transactions involving a Change of Control.
This Agreement shall otherwise bind and inure to the benefit of the parties hereto and their
respective successors, assigns, heirs, legatees, devisees, executors, administrators and legal
representatives.
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20. Entire Agreement
This Agreement contains the entire agreement of the parties and supersedes all prior or
contemporaneous negotiations, correspondence, understandings and agreements between the parties
regarding the subject matter of this Agreement. Any prior employment agreement, bonus agreement or
other compensation agreement between Executive and ARC or any predecessor, subsidiary or affiliate
of ARC, is hereby amended and superseded on and as of the Effective Date. This Agreement may not
be amended or modified except in writing signed by both parties.
21. Waiver
If either party waives any breach of any provisions of this Agreement, he or it shall not
thereby be deemed to have waived any preceding or succeeding breach of the same or any other
provision of this Agreement.
22. Counterparts
This Agreement may be executed in counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first
hereinabove set forth.
AMERICAN REPROGRAPHICS COMPANY, a Delaware corporation |
EXECUTIVE | |||||||
By:
|
/s/ Kumarakulasingam Xxxxxxxxxxx
|
By: | /s/ Xxxxx X. Xxx
|
|||||
Title: Chief Executive Officer, President and Chairman of the Board |
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EXHIBIT A
RELEASE AGREEMENT
I understand that my position with American Reprographics Company (“ARC”) terminated effective
(the “Separation Date”). ARC has agreed that if I choose to sign this Agreement,
ARC will pay me severance benefits (minus the standard withholdings and deductions) pursuant to the
terms of the Amended and Restated Executive Employment Agreement entered into on ,
between myself and ARC (the “Severance Benefits). I understand that I am not entitled to the
Severance Benefits unless I sign this Agreement. I understand that in addition to the Severance
Benefits, ARC will pay me all of my accrued salary and vacation, to which I am entitled by law.
In consideration for the Severance Benefits I am receiving under this Agreement, I agree not
to use or disclose any of ARC’s proprietary information without written authorization from ARC, to
immediately return all Company property and documents (including all embodiments of proprietary
information) and all copies thereof in my possession or control, and to release ARC and its
officers, directors, agents, attorneys, employees, shareholders, and affiliates from any and all
claims, debts, liabilities, demands, causes of action, attorneys’ fees, damages, or obligations of
every kind and nature, whether they are known or unknown, arising at any time prior to the date I
sign this Agreement. This general release includes, but is not limited to: all federal and state
statutory and common law claims, claims related to my employment or the termination of my
employment or related to breach of contract, tort, wrongful termination, discrimination, wages or
benefits, or claims for any form of compensation. This release is not intended to release any
claims I have or may have against any of the released parties for (a) indemnification as a
director, officer, agent or employee under applicable law, charter document or agreement, (b)
severance and other termination benefits under my employment agreement and any related
written documents, (c) health or other insurance benefits based on claims already submitted or
which are covered claims properly submitted in the future, (d) vested rights under pension,
retirement or other benefit plans, or (e) in respect of events, acts or omissions occurring after
the date of this Release Agreement.
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In releasing claims unknown to me at present, I am waiving all rights and benefits under
Section 1542 of the California Civil Code, and any law or legal principle of similar effect in any
jurisdiction:
“A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected his
settlement with the debtor.”
I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have
under the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”). I also
acknowledge that the consideration given for the waiver in the above paragraph is in addition to
anything of value to which I was already entitled. I have been advised by this writing, as
required by the ADEA that: (a) my waiver and release do not apply to any claims that may arise
after my signing of this Agreement; (b) I should consult with an attorney prior to executing this
release, (c) I have twenty-one (21) days within which to consider this release (although I may
choose to voluntarily execute this release earlier); (d) I have seven (7) days following the
execution of this release to revoke the Agreement; (e) this Agreement will not be effective until
the eighth day after this Agreement has been signed both by me and by ARC (“Effective Date”); and I
will not be paid any of the Severance Benefits until this Agreement has become effective.
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This Agreement constitutes the complete, final and exclusive embodiment of the entire
agreement between ARC and me with regard to the subject matter hereof I am not relying on any
promise or representation by ARC that is not expressly stated herein. This Agreement may only be
modified by a writing signed by both me and a duly authorized officer of ARC. I accept and agree
to the terms and conditions stated above:
AMERICAN REPROGRAPHICS COMPANY, a Delaware corporation |
EXECUTIVE | |||||||
By:
|
By: | |||||||
Address: | ||||||||
Title: | ||||||||
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