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EXHIBIT 10.6(a)
EMPLOYMENT AGREEMENT
This Agreement, effective as of May 1, 2000, is entered into by and
between Applied Graphics Technologies, Inc., a Delaware corporation ("AGT") and
Joseph D. Vecchiolla, (hereinafter referred to as the "Employee"), an individual
presently residing at 2707 Royal Lytham Court, St. Charles, Illinois 60174. In
consideration of the mutual covenants set forth herein, the parties agree as
follows:
1. Employment Term. Subject to the further terms and conditions of this
Agreement, AGT shall employ Employee for the period beginning on May 1,
2000 (the "Commencement Date") and ending on April 30, 2001 (the
"Term"). This Agreement will be automatically renewed for one
additional twelve-month period (also the "Term"), unless either party
provides notice no less than 180 days prior to the expiration of the
initial Term that it does not want to extend this Agreement for said
twelve month period. After the Term, Employee shall be an employee "at
will" and may be terminated by AGT at any time with or without cause.
2. Compensation.
(1) AGT will pay Employee a salary at the rate of Two Hundred and
Seventy-Five Thousand Dollars ($275,000) per annum.
(2) Employee shall be paid a cash bonus at the end of twelve
months of employment with AGT equal to One Hundred and Ten
Thousand Dollars ($110,000). The bonus set forth in the
preceding sentence shall accrue ratably during the Term. No
bonus shall be paid if Employee resigns his employment prior
to April 30, 2001. In the event this Agreement is renewed
beyond April 30, 2001, Employee shall be eligible to earn a
bonus calculated on such basis as the Board of Directors of
AGT, in its sole discretion, may annually determine consistent
with Employee's position in senior management.
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(3) In addition to the bonus set forth in subparagraph 2(b) above,
the Employee will receive a signing bonus of $37,500 payable
on or around May 30, 2000.
(4) The salary and bonuses referred to above represent all of
Employee's cash compensation, and accordingly, Employee shall
not be entitled to any overtime, weekend or holiday
compensation. All payments made pursuant to this Agreement
shall be less applicable withholdings and deductions.
(5) Employee shall be eligible to participate in those insurance,
retirement and other benefits generally provided to AGT's
other senior executives of similar rank and tenure from time
to time after 30 days of employment. Employee shall be
eligible to participate in the AGT 401(k) plan (or successor
plan) on the first enrollment date following satisfaction of
the applicable waiting period.
(6) Employee shall be reimbursed for all reasonable travel and
entertainment expenses incurred in the furtherance of AGT's
business, including but not limited to any amounts incurred by
Employee for pre-employment related interviews, upon
submission by Employee of appropriate documentation in
accordance with AGT's policies as are in effect from time to
time.
(7) AGT shall provide Employee with an all inclusive automobile
allowance of $800 per month.
3. Duties. Employee agrees to fulfill the duties of Senior Vice President
during the Term and the additional duties of Chief Financial Officer
from May 18, 2000 through the end of the Term, as such duties are
defined by AGT's Board of Directors or Chief Executive Officer.
Employee shall report to the Chief Executive Officer of AGT, and shall
devote all of his business efforts to the performance of his duties as
Chief Financial Officer, and shall do so to the best of his abilities.
It is expected that Employee's office will ultimately be located in
Chicago following the successful transition of the finance function
from New York to Chicago and Employee will travel both in the United
States and abroad as necessary and appropriate to fulfill his duties.
4. Vacation. Employee shall be entitled to four (4) weeks vacation during
each year of the Term, to be taken
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at such times as shall be agreed between Employee and the Chief
Executive Officer of AGT. Vacation days will accrue and be paid in
accordance with AGT's policies as are in effect from time to time.
5. Termination.
(1) This Agreement shall terminate prior to the expiration hereof
in the event of Employee's death, permanent disability, or
discharge for cause. "Cause" shall mean (i) indictment for,
conviction of or pleas of guilty or nolo contendre to any
felony or business-related misdemeanor; (ii) theft, fraud or
embezzlement; (iii) excessive absenteeism not related to
illness; (iv) the intentional failure to perform assigned
duties; (v) an act of gross neglect or gross misconduct; (vi)
a material breach of any of the provisions of this Agreement;
(vii) the commission of any other action with the intent to
harm or injure AGT, its parents, subsidiaries or affiliates;
or (viii) habitual drug or alcohol abuse. In the event that
AGT terminates Employee for Cause, Employee shall be entitled
to salary earned up to the date of termination, but no other
compensation (including without limitation any bonus set forth
in Paragraph 2(b)) and AGT reserves the right to seek
appropriate relief for whatever damage may have resulted from
the "Cause". Accordingly, without limiting the foregoing, if
the Employee is terminated for Cause, he is not entitled to
receive (i) any further payments or benefits pursuant to
Paragraphs 2(a), 2(b), 2(e) or 2(g) above or (ii) any payment
under Paragraph 2(b) for any bonus which has been accrued but
unpaid and AGT shall have no further obligation to Employee
pursuant to the Agreement. "Permanent disability" shall mean a
physical or mental illness, disability or disfigurement which
renders Employee incapable of performing his normal services
hereunder for a continuous period of 8 weeks, or an aggregate
of 16 weeks during any 52 week period. In the event Employee
is disabled for less than such 8 or 16 weeks, respectively,
Employee shall nonetheless be entitled to full compensation
during such period. In the event of Employee's permanent
disability or death, Employee shall be entitled to receive his
salary and benefits pursuant to Paragraph 2 herein until the
effective date of his termination, including any accrued but
unpaid pro rata bonus under the first sentence of Paragraph
2(b), and AGT shall have no further obligation to Employee
pursuant to the Agreement, including but not limited to
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Paragraphs 2(a), 2(b), 2(e), or 2(g) above.
(2) AGT shall be entitled to terminate this Agreement at any time
during the Term without Cause (as defined above). However, in
the event AGT exercises its rights under this Paragraph 5(b),
except as provided in Paragraph 6, AGT's sole obligation
pursuant to this Agreement shall be (i) to continue to pay
Employee's salary under Paragraph 2(a) for six (6) months and
(ii) to pay any accrued but unpaid pro rata bonus determined
under the first sentence of Paragraph 2(b) and the bonus
provided for in Paragraph 2(c) if it has not previously been
paid.
(3) Amounts payable to Employee pursuant to the Paragraph 5 shall
be paid in accordance with AGT's usual payroll practices.
6. Change of Control. In the event that a Change of Control (as defined
below) results in an adverse change in the compensation, reporting
structure, key responsibilities, or title of Employee, or if Employee
is required permanently to move his primary office location out of the
Chicago metropolitan area, Employee shall be entitled to resign his
employment and AGT shall continue to pay Employee's salary under
Paragraph 2(a) for the period of twelve months following the Change of
Control. In such event, AGT shall have no further obligation to
Employee pursuant to this Agreement, including but not limited to
Paragraphs 2(a), 2(b), 2(e) or 2(g) above except to pay any accrued but
unpaid pro rata bonus determined under the first sentence of Paragraph
2(b). In the event that a Change of Control occurs and Employee's
employment is terminated without Cause, AGT shall continue to pay
Employee's salary under Paragraph 2(a) for the period of twelve months
following the Change of Control. Payment of twelve months salary to
Employee pursuant to this Paragraph 6 shall be in lieu of any amounts
owed to Employee pursuant to Paragraph 5(b) and AGT shall have no
further obligation to Employee pursuant to this Agreement, including
but not limited to Paragraphs 2(a), 2(b), 2(e) or 2(g) above except to
pay any accrued but unpaid pro rata bonus determined under the first
sentence of Paragraph 2(b).
For purposes of this Agreement, "Change of Control" means the
sale of more than 50% of the outstanding voting shares of AGT in a
single transaction and Derek Ashley is no longer Chief Executive
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Officer of AGT. The provisions of this Paragraph 6 shall not be
effective if, prior to the Change of Control, Employee has given notice
as provided in Paragraph 1 of an intention not to extend this Agreement
for an additional twelve-month period.
7. Noncompetition, Nonsolicitation and Confidentiality. As a material
inducement to employ him, Employee agrees to execute the
Noncompetition, Nonsolicitation and Confidentiality Agreement attached
hereto as Exhibit A, the terms of which are incorporated herein by
reference.
8. Absence of Restrictions. Employee represents and warrants that he is
not a party to any agreement or contract pursuant to which there is any
restriction or limitation upon him entering into this Agreement or
performing the duties called for by this Agreement.
9. Options. The Chief Executive Officer of AGT intends to recommend to the
Compensation Committee of the Board of Directors that options to
acquire 60,000 shares of AGT's common stock be granted to Employee,
under the AGT Amended and Restated 1998 Incentive Compensation Plan.
For purposes of vesting, Employee will receive credit retroactive to
the Commencement Date. Such options will be at a price determined by
the Compensation Committee and subject to the other terms and
conditions set forth in AGT's customary Stock Option Agreement and as
are established by the Compensation Committee of the Board of Directors
from time to time.
10. Notices. All notices, consents and other communications required or
permitted to be given hereunder shall be in writing and delivered
personally or sent by certified or registered mail, postage prepaid, as
follows:
(1) if to Employee, to: Joseph Dennis Vecchiolla, 2707 Royal
Lytham Court, St. Charles, Illinois 60174
(2) if to AGT, to: Derek Ashley, Chief Executive Officer, at 225
West Superior Street, Chicago, Illinois 606710, with a copy to
Martin D. Krall, Chief Legal Officer at 450 West 33rd Street,
New York NY 10001-2681.
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Any notice so given shall be deemed received when delivered
personally, or, if mailed, three days after it is deposited, postage
prepaid, by certified mail, in the United States mail. Either party may
change the address to which notices are to be sent by giving written
notice of such change of address to the other party in the manner
herein provided for giving notice.
11. General.
(1) Any controversy or claim arising out of or relating to this
Agreement, or any breach thereof, shall be subject to
resolution in the state of federal courts in Illinois and
shall be governed by and construed and enforced in accordance
with the laws of the State of Illinois applicable to
agreements made and to be performed entirely in Illinois
without giving effect to principles of conflicts of laws
thereof.
(2) The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
(3) This Agreement sets forth the entire agreement and
understanding of the parties hereto concerning the subject
matter hereof, and supersedes all prior agreements,
arrangements and understandings between the parties hereto.
(4) AGT may assign its rights and obligations under this Agreement
to any successor thereto or to any corporation or other entity
controlled, or under common control with AGT or any of its
affiliates. This Agreement is personal to employee, and
neither this Agreement nor any of Employee's rights or
obligations hereunder may be assigned, pledged or encumbered
by him, without the prior written approval of AGT.
(5) This Agreement may be amended, modified, superseded or
canceled, and the terms or covenants hereof may be waived,
only by a written instrument executed by both parities hereto,
or, in the case of a waiver, by the party waiving compliance.
The failure of either party at any time or times to require
performance of any provision hereof shall in no manner affect
the right at a later time to
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enforce the same. No waiver by either party of the breach of
any term or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be
deemed to be, or construed as a further or continuing waiver
of any such breach or waiver of the breach of any other term
or covenant in this Agreement.
(6) In the event that any one or more of the provisions of this
Agreement shall be determined to be invalid or unenforceable
in any respect, the validity and enforceability of the
remaining provisions of this Agreement shall not in any way be
affected or impaired thereby.
(7) This Agreement may be executed in counterparts; each of which
shall be deemed to be an original but all of which together
shall be deemed to be one and the same instrument.
(8) Except with regard to employee's obligations under the
Noncompetition, Nonsolicitation and Confidentiality Agreement
attached hereto as Exhibit A, and with regard to AGT's
obligations under Paragraphs 5(b) and 6, this Agreement shall
be of no further force and effect and AGT shall have no
further obligations hereunder after the expiration or
termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
shown above.
Applied graphics Technologies, Inc.
By_____________________________
Title:_________________________
_______________________________
Joseph D. Vecchiolla
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EXHIBIT A
NONCOMPETITION, NONSOLICITATION
And Confidentiality Agreement
In consideration for the agreement of Applied Graphics Technologies, Inc.,
("AGT") to employ Joseph D. Vecchiolla ("Employee") as Senior Vice President and
Chief Financial Officer, (the "Employment Agreement") Employee hereby agrees as
follows:
1. In this Agreement, the term AGT includes Applied Graphics Technologies, Inc.,
as well as all of its parents, subsidiaries and affiliates.
2. Employee acknowledges that he will be furnished, or may otherwise receive or
have access to, private information which relates to AGT's past, present or
anticipated customer lists or other compilations for marketing or development,
or which relates to administrative, management, financial, marketing, sales or
manufacturing activities of AGT and that such information is not easily
accessible from public sources. All such information, including any materials or
documents containing such information, shall be considered by AGT and Employee
as proprietary and confidential ("Proprietary Information").
3. Both during and forever after the term of the Employment Agreement, Employee
agrees to preserve and protect the confidentiality of the Proprietary
Information and all physical forms thereof, whether disclosed to him before this
Agreement is signed or afterward. In addition, Employee shall not (i) disclose
or disseminate the Proprietary Information to any third party, including
employees of AGT, without a need to know, (ii) remove Proprietary Information
from AGT's premises without valid business purpose, or (iii) use Proprietary
Information for his own benefit or for the benefit of any third party.
4. Employee acknowledges and agrees that all proprietary Information used or
generated during the course of working for AGT is the property of AGT. Employee
agrees to deliver to AGT all documents and other tangibles (including diskettes
and other storage media) containing Proprietary Information, including all
copies of such documents or tangibles, immediately upon notice of the
termination of his employment with AGT.
5. While working for AGT and for one year following termination of his
employment from AGT for any reason, Employee will not attempt, either directly
or indirectly, to solicit, induce, entice or attempt to influence any employee
of AGT to leave AGT's employ or directly or indirectly hire or cause any other
entity to hire any person who has been an AGT employee in the 12 months
preceding the contact.
6. Noncompetition
a. Employee acknowledges that his agreement to forego competition
with AGT was a material inducement to AGT to employ him.
Employee also acknowledges that he will acquire much
Proprietary Information concerning AGT's financial status,
current and future marketing and advertising strategies,
pricing, and other confidential information as the result of
his employment and that such information is not easily
accessible from other sources. Employee further acknowledges
that the business in which AGT engages, including but not
limited to pre-press and digital archiving are very
competitive; that competition by him in those businesses
during his employment, or after his employment terminates,
would severely injure AGT; and that his agreements herein are
demonstrably necessary to protect those legitimate interests.
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b. During the term of his employment with AGT, Employee (i) will
devote all his professional and business time and effort to
and give undivided loyalty to AGT and (ii) will not engage in
any way whatsoever, directly or indirectly, in any business
that is competitive with AGT, nor directly or indirectly
solicit or in any other manner work for or assist any business
which is competitive with AGT.
c. The "Restricted Period" shall mean the period beginning on the
Commencement Date of the Employment Agreement and ending on
the later of the second anniversary thereof or six months
after Employee's employment is terminated. During the
Restricted Period, Employee shall not, whether alone or in
association with any other person, directly or indirectly (i)
engage in any business in the Specified Areas that is
competitive with any aspect of the business that is being
conducted or planned by AGT at the time Employee's employment
with AGT terminates; or (ii) have any interest or association
(including without limitation, as a shareholder, partner,
director, officer, employee, consultant, sales representative,
supplier, distributor, agent or lender) in or with any person
engaged in a business in the Specified Areas that Employee is
prohibited from engaging in pursuant to clause (i) securities
of any publicly traded company that is engaged in any such
business as long as Employee does not own at any time 5% or
more of any class of the equity securities of such company.
For purposes of the foregoing, the "Specified Areas" means each state or country
in which AGT makes any sales or performs any services during the 12 month period
preceding the date on which Employee's employment with AGT terminates.
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d. If any provision of this Agreement is determined by a court to
be overly broad thereby making the provision unenforceable,
Employee agrees that such court shall substitute a reasonable,
judicially enforceable limitation in place of the invalid part
of the provision and that as so modified the provision shall
be as fully enforceable as if set forth herein in the modified
form. If it is not possible to restate the provision in a
valid or legal manner, then that invalid or illegal portion
shall be deemed not a part of the Agreement and the remaining
provisions shall remain in full force and effect.
7. Employee acknowledges and agrees that:
a. (i) his contractual obligations under paragraphs 3, 4, 5, and
6 hereof have a unique and very substantial value to AGT, (ii)
he has sufficient assets and other skills to provide a
reasonable livelihood for himself while such paragraphs are in
force, and (iii) he is subject to immediate dismissal by AGT
for any breach of those provisions and that such dismissal
shall not relieve him from his continuing obligations under
this Agreement or from the imposition by a court of any
judicial remedies, such as money damages or equitable
enforcement of those provisions.
b. the terms and provisions of this Agreement are applicable to
all information and materials developed for, received from or
any advice provided to, AGT prior to or after the signing of
this Agreement; and
c. the termination of his employment with AGT for any reason,
shall not relieve him from complying with the undertakings and
agreements contained herein, which call for performance prior
or subsequent to the termination date, including, but not
limited to those undertakings and agreements set forth in
paragraph 3, 4 5 and 6 hereof.
d. in the event of his breach of any of the undertakings or
agreements set forth in paragraphs 3, 4, 5, and 6 of this
Agreement, AGT shall have the right to obtain an injunction or
decree of specific performance from any court of competent
jurisdiction to restrain him from violating such undertakings
or agreements or to compel him to perform such undertakings or
agreements. Nothing herein contained shall in any way limit or
exclude any and all other rights granted by law or equity to
AGT.
8. No act or failure to act by AGT will waive any right contained herein.
Any waiver by AGT must be in writing and signed by the Chairman of AGT
to be effective.
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9. In the event that any provision of this Agreement conflicts with the
law under which this Agreement is to be construed or if any such
provision is held invalid by a court or other authority with
jurisdiction over the parties to this Agreement, such provision shall
be deemed to be restated to reflect as nearly as possible the original
intentions of the parties in accordance with applicable law, and the
remainder of this Agreement shall remain in full force and effect. If
it is not possible to restate the provision in a valid or legal manner,
then that invalid or illegal portion shall be deemed not a part of the
Agreement and the remaining provisions shall remain in full force and
effect.
10. This Agreement shall be construed according to its terms and not
strictly for or against either party.
11. This Agreement shall be governed by the laws of the State of Illinois
without regard to its conflicts of laws provisions.
12. All remedies provided herein are cumulative and in addition to all
other remedies which may be available at law or in equity.
13. This Agreement shall be binding on both parties successors, heirs and
assigns.
Employee: Applied Graphics Technologies, Inc.:
________________________ _____________________________
Joseph D. Vecchiolla
By: ____________________________
Title: _________________________
________________________ _____________________________
Date Date
