EMPLOYMENT AGREEMENT dated as of October 19, 1998 (the
"Agreement") between AMERICAN COLOR GRAPHICS, INC., a New York corporation, (the
"Company") and STEPHEN M. DYOTT (the "Executive").
WHEREAS, the Executive is currently employed by the Company under
an employment agreement dated as of April 8, 1993 as amended (the "Prior
Agreement");
WHEREAS, the parties hereto desire to replace the Prior Agreement
with this Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. EFFECTIVENESS OF AGREEMENT
This Agreement shall become effective, and shall supersede
the Prior Agreement, as of the date set forth above (the "Effective Time").
2. EMPLOYMENT AND DUTIES
2.1. General. The Company hereby employs the Executive, and
the Executive agrees to serve, as Chairman of the Board, Chief Executive
Officer, President and Chief Operating Officer of the Company, upon the terms
and conditions contained herein. The Executive shall have all of the
responsibilities and powers normally associated with such offices. So long as
the Executive is employed by the Company as its Chief Executive Officer, the
Company shall nominate and use its best efforts to cause the Executive to be
elected as a member of the Board of Directors of the Company (the "Board"). The
Executive shall perform such other duties and services for the Company,
commensurate with the Executive's position, as may be designated from time to
time by the Board. The Executive agrees to serve the Company faithfully and to
the best of his ability under the direction of the Board.
2.2 Exclusive Services. Except as may otherwise be approved
in advance by the Board, and except during vacation periods and reasonable
periods of absence due to sickness, personal injury or other disability, the
Executive shall devote his full working time throughout the Employment Term (as
defined in Section 2.3) to the services required of him hereunder. The Executive
shall render his services exclusively to the Company during the Employment Term,
and shall use his best efforts, judgment and energy to improve and advance the
business and interests of the Company in a manner consistent with the duties of
his position.
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2.3 Term of Employment. The Executive's employment under
this Agreement shall commence as of the Effective Time and shall terminate on
the earlier of (i) the third anniversary of the Effective Time, or (ii)
termination of the Executive's employment pursuant to this Agreement; provided,
however, that each year the term of the Executive's employment shall be
automatically extended without further action of either party an additional
one-year period, unless written notice of either party's intention not to extend
has been given to the other party hereto at least one year prior to the
expiration of the then effective term. The period commencing and ending on the
third anniversary of the Effective Time, or such later date to which the term of
the Executive's employment under this Agreement shall have been extended, is
hereinafter referred to as the "Employment Term".
2.4 Reimbursement of Expenses. The Company shall reimburse
the Executive for reasonable travel and other business expenses incurred by him
in the fulfillment of his duties hereunder upon presentation by the Executive of
an itemized account of such expenditures, in accordance with Company practices
consistently applied.
3. SALARY
3.1 Base Salary. From the Effective Time, the Executive
shall be entitled to receive a base salary ("Base Salary") at a rate of $575,000
per annum, payable in arrears in equal installments not less frequently than
biweekly in accordance with the Company's payroll practices, with such increases
as may be provided in accordance with the terms hereof. Once increased, such
higher amount shall constitute the Executive's annual Base Salary.
3.2 Annual Review. The Executive's Base Salary shall be
reviewed by the Board of Director's of the Company (the "Board"), based upon the
Executive's performance, not less often than annually, and may be increased but
not decreased. In addition to any increases effected as a result of such review,
the Board at any time may in its sole discretion increase the Executive's Base
Salary.
3.3 Bonus. The Board shall annually adopt a bonus plan and
performance criteria upon which the bonuses of executives of the Company shall
be based. During his employment under this Agreement, the Executive shall be
entitled to participate in such bonus plan, under which the Executive shall be
entitled to receive a bonus of at least 75% of his Base Salary if the budget
performance criteria are satisfied.
4. EMPLOYEE BENEFITS
The Executive shall, during his employment under this
Agreement, be included to the extent eligible thereunder in all employee benefit
plans, programs or arrangements (including, without limitation, any plans,
programs or arrangements providing for retirement benefits, incentive
compensation, profit sharing, bonuses, disability benefits, health and life
insurance, or vacation and paid holidays) which shall be established by the
Company for, or made available to, its senior executives.
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5. TERMINATION OF EMPLOYMENT
5.1. Termination Without Cause; Resignation for Good
Reason.
5.1.1 General. Subject to the provisions of Sections
5.1.2 and 5.1.3, if, prior to the expiration of the Employment Term, the
Executive's employment is terminated by the Company without Cause (as defined in
Section 5.3), or if the Executive terminates his employment hereunder for Good
Reason (as defined in Section 5.4), the Company shall (x) continue to pay the
Executive the Base Salary (at the rate in effect on the date of termination) for
a period of three years beginning as of the date of termination (the "Severance
Period"), at such intervals as the same would have been paid had the Executive
remained in the active service of the Company, and (y) pay the Executive a pro
rata portion of the bonus to which the Executive would have been entitled for
the year of termination pursuant to Section 3.3 had the Executive remained
employed for the entire year, which bonus shall be payable at the time bonuses
under the applicable bonus plan are paid to the Company's executive generally.
In addition, the Executive shall be entitled to continue to participate during
the Severance Period in all employee benefit plans (other than equity-based
plans, except to the extent otherwise provided therein, or bonus plans) that the
Company provides (and continues to provide) generally to its employees, provided
that the Executive is entitled to continue to participate in such plans under
the terms thereof. The Executive shall have no further right to receive any
other compensation or benefits after such termination or resignation of
employment except as determined in accordance with the terms of the employee
benefit plans or programs of the Company.
5.1.2 Conditions Applicable to the Severance Period.
If, during the Severance Period, the Executive materially breaches his
obligations under Section 8 of this Agreement, the Company may, upon written
notice to the Executive, terminate the Severance Period and cease to make any
further payments or provide any benefits described in Section 5.1.1.
5.1.3 Death During Severance Period. In the event of
the Executive's death during the Severance Period, payments of Base Salary under
this Section 5 shall continue to be made during the remainder of the Severance
Period to the beneficiary designated in writing for this purpose by the
Executive or, if no such beneficiary is specifically designated, to the
Executive's estate.
5.1.4 Date of Termination. The date of termination of
employment without Cause shall be the date specified in a written notice of
termination to the Executive. The date of resignation for Good Reason shall be
the date specified in the written notice of resignation from the Executive to
the Company; provided, however, that no such written notice shall be effective
unless the cure period specified in Section 5.4 has expired without the Company
having corrected, to the reasonable satisfaction of the Executive, the event or
events subject to cure. If no date of resignation is specified in the written
notice from the Executive to the Company, the date of termination shall be the
first day following such expiration of such cure period.
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5.2. Termination for Cause; Resignation Without Good
Reason.
5.2.1 General. If, prior to the expiration of the
Employment Term, the Executive's employment is terminated by the Company for
Cause, or the Executive resigns from his employment hereunder other than for
Good Reason, the Executive shall be entitled only to payment of his Base Salary
as then in effect through and including the date of termination or resignation.
The Executive shall have no further right to receive any other compensation or
benefits after such termination or resignation of employment, except as
determined in accordance with the terms of the employee benefit plans or
programs of the Company.
5.2.2 Date of Termination. Subject to the proviso to
Section 5.3, the date of termination for Cause shall be the date specified in a
written notice of termination to the Executive. The date of resignation without
Good Reason shall be the date specified in the written notice of resignation
from the Executive to the Company, or if no date is specified therein, 10
business days after receipt by the Company of written notice of resignation from
the Executive.
5.3 Cause. Termination for "Cause" shall mean termination
of the Executive's employment because of:
(i) Any act or omission that constitutes a material
breach by the Executive of any of his obligations under
this Agreement;
(ii) the continued failure or refusal of the Executive
to substantially perform the duties reasonably required of
him as an employee of the Company;
(iii) any willful and material violation by the
Executive of any Federal or state law or regulation
applicable to the business of the Company, its parent
company (the "Parent") or any of their respective
subsidiaries, or the Executive's conviction of a felony, or
any willful perpetration by the Executive of a common law
fraud; or
(iv) any other willful misconduct by the Executive
which is materially injurious to the financial condition or
business reputation of, or is otherwise materially
injurious to, the Company, the Parent or any of their
respective subsidiaries or affiliates (it being understood
that the good faith performance by the Executive of the
duties required of him pursuant to Section 2.1 shall not
constitute "misconduct" for purposes of this clause (iv));
provided, however, that if any such Cause relates to the
Executive's obligations under this Agreement, the Company
shall not terminate the Executive's employment hereunder
unless the Company first gives the Executive notice of its
intention to terminate and of the grounds for such
termination, and the Executive has not, within 20 business
days following receipt of the notice, cured such Cause, or
in the event such Cause is not susceptible to cure within
such 20 business day period, the Executive has not taken
all reasonable steps within such 20 business day period to
cure such Cause as promptly as practicable thereafter.
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5.4 Good Reason. For purposes of this Agreement, "Good
Reason" shall mean any of the following (without the Executive's prior written
consent):
(i) a decrease in the Executive's base rate of
compensation or a failure by the Company to pay material
compensation due and payable to the Executive in connection
with his employment;
(ii) a material diminution of the responsibilities or
title of the Executive with the Company;
(iii) the Company's requiring the Executive to be
based at any office or location more than 20 miles from his
principal employment location on the date of this
Agreement, except for any change in employment location
agreed to with the Executive prior to the Effective Time;
or
(iv) a material breach by the Company of any term or
provision of this Agreement; provided, however, that no
event or condition described in clauses (i) through (iv) of
this Section 5.4 shall constitute Good Reason unless (x)
the Executive gives the Company written notice of his
objection to such event or condition, (y) such event or
condition is not corrected by the Company within 20
business days of its receipt of such notice (or in the
event that such event or condition is not susceptible to
correction within such 20 business day period, the Company
has not taken all reasonable steps within such 20 business
day period to correct such event or condition as promptly
as practicable thereafter) and (z) the Executive resigns
his employment with the Company and its subsidiaries not
more than 60 days following the expiration of the 20
business day period described in the foregoing clause (Y).
6. DEATH, DISABILITY OR RETIREMENT
In the event of termination of employment by reason of
death, Permanent Disability (as hereinafter defined) or retirement, the
Executive (or his estate, as applicable) shall be entitled to Base Salary and
benefits determined under Sections 3 and 4 hereof through the date of
termination. Other benefits shall be determined in accordance with the benefit
plans maintained by the Company, and the Company shall have no further
obligation hereunder. For purposes of this Agreement, "Permanent Disability"
means a physical or mental disability or infirmity of the Executive that
prevents the normal performance of substantially all his duties as an employee
of the Company, which disability or infirmity shall exist for any continuous
period of 180 days.
7. NO MITIGATION OF DAMAGES
The Executive shall not be required to mitigate the amount
of any payment provided for in Section 5.1 by seeking other employment, and any
such payment will not be reduced in the event such other employment is obtained.
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8. NON-SOLICITATION; CONFIDENTIALITY; NON-COMPETITION
8.1 Non-solicitation. For so long as the Executive is
employed by the Company and continuing for two years thereafter, the Executive
shall not, without the prior written consent of the Company, directly or
indirectly, as a sole proprietor, member of a partnership, stockholder or
investor, officer or director of a corporation, or as an employee, associate,
consultant or agent of any person, partnership, corporation or other business
organization or entity other than the Company: (x) solicit or endeavor to entice
away from the Company, the Parent or any of their respective subsidiaries any
person or entity who is, or, during the then most recent 12-month period, was
employed by, or had served as an agent or key consultant of, the Company, the
Parent or any of their respective subsidiaries; or (y) solicit or endeavor to
entice away from the Company, the Parent or any of their respective subsidiaries
any person or entity who is, or was within the then most recent 12-month period,
a customer or client (or reasonably anticipated (to the general knowledge of the
Executive or the public) to become a customer or client) of the Company, the
Parent or any of their respective subsidiaries.
8.2 Confidentiality. The Executive covenants and agrees
with the Company that he will not at any time, except in performance of his
obligations to the Company hereunder or with the prior written consent of the
Company, directly or indirectly, disclose any secret or confidential information
that he may learn or has learned by reason of his association with the Company,
the Parent or any of their respective subsidiaries and affiliates. The term
"confidential information" includes information not previously disclosed to the
public or to the trade by the Company's management, or otherwise in the public
domain, with respect to the Company's, the Parent's or any of their respective
affiliates' or subsidiaries' products, facilities, applications and methods,
trade secrets and other intellectual property, systems, procedures, manuals,
confidential reports, product price lists, customer lists, technical
information, financial information (including the revenues, costs or profits
associated with any of the Company's products), business plans, prospects or
opportunities, but shall exclude any information which (i) is or becomes
available to the public or is generally known in the industry or industries in
which the Company operates other than as a result of disclosure by the Executive
in violation of his agreements under this Section 8.2 or (ii) the Executive is
required to disclose under any applicable laws, regulations or directives of any
government agency, tribunal or authority having jurisdiction in the matter or
under subpoena or other process of law.
8.3 No Competing Employment. For so long as the Executive
is employed by the Company and continuing for three years thereafter, the
Executive shall not, directly or indirectly, as a sole proprietor, member of a
partnership, stockholder or investor (other than a stockholder or investor
owning not more than a 5% interest), officer or director of a corporation, or as
an employee, associate, consultant or agent of any person, partnership,
corporation or other business organization or entity other than the Company, the
Parent, or any of their respective subsidiaries, render any service to or in any
way be affiliated with a competitor (or any person or entity that is reasonably
anticipated (to the general knowledge of the Executive or the public) to become
a competitor) of the Company, the Parent or any of their respective
subsidiaries; provided,
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however, that if (x) the Company exercises its right not to extend the
Employment Term pursuant to Section 2.3 and (y) the Executive's employment is
terminated for any reason following the expiration of the Employment Term, the
Executive's obligations under this Section 8.3 shall terminate as of the date of
termination of employment.
8.4 Exclusive Property. The Executive confirms that all
confidential information is and shall remain the exclusive property of the
Company. All business records, papers and documents kept or made by the
Executive relating to the business of the Company shall be and remain the
property of the Company, except for such papers customarily deemed to be the
personal copies of the Executive.
8.5 Injunctive Relief. Without intending to limit the
remedies available to the Company, the Executive acknowledges that a breach of
any of the covenants contained in this Section 8 may result in material and
irreparable injury to the Company, the Parent or their respective affiliates or
subsidiaries for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach or threat thereof, the Company shall be entitled to seek a
temporary restraining order and/or a preliminary or permanent injunction
restraining the Executive from engaging in activities prohibited by this Section
8 or such other relief as may be required specifically to enforce any of the
covenants in this Section 8. If, for any reason, it is held that the
restrictions under this Section 8 are not reasonable or that consideration
therefor is inadequate, such restrictions shall be interpreted or modified to
include as much of the duration and scope identified in this Section 8 as will
render such restrictions valid and enforceable.
9. ENFORCEMENT OF AGREEMENT
In the event that legal action is undertaken by either
party to enforce any provision of this Agreement, the Company shall reimburse
the Executive for any related reasonable legal fees and out-of-pocket expenses
directly attributable to such action, provided that such legal fees are
calculated on an hourly, and not on a contingency fee, basis and provided,
further, that the Executive shall bear all such fees and out-of-pocket expenses
(and reimburse the Company for its portion of such expenses) if the relevant
trier-of-fact determines that the Executive's claim or position was frivolous
and without reasonable foundation.
10. MISCELLANEOUS
10.1 Notices. All notices or communications hereunder shall
be in writing, addressed as follows:
To the Company: American Color Graphics, Inc.
225 High Ridge Road
Stamford, CT 06905
Telecopier No.: (203) 978-5408
Attention: Timothy M. Davis
Senior Vice President,
General Counsel and Secretary
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with a copy to: Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, NY 10020
Telecopier No.: (212) 762-6471)
Attention: Eric Fry
To the Executive: Stephen M. Dyott
44 Wild Turkey Court
Ridgefield, CT 06877
Telecopier No.: (203) 438-3750
All such notices shall be conclusively deemed to be received and shall be
effective, (i) if sent by hand delivery, upon receipt, (ii) if sent by telecopy
or facsimile transmission, upon confirmation of receipt by the sender of such
transmission or (iii) if sent by registered or certified mail, on the fifth day
after the day on which such notice is mailed.
10.2 Severability. Each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
10.3 Assignment. The Company's rights and obligations under
this Agreement shall not be assignable by the Company except as incident to a
reorganization, merger or consolidation, or transfer of all or substantially all
of the Company's business and properties (or portion thereof in which the
Executive is employed). Neither this Agreement nor any rights hereunder shall be
assignable or otherwise subject to hypothecation by the Executive.
10.4 Entire Agreement. This Agreement represents the entire
agreement of the parties and shall supersede any and all previous contracts,
arrangements or understandings between the Company and the Executive including,
without limitation, the Prior Agreement. This Agreement may be amended at any
time by mutual written agreement of the parties hereto.
10.5 Withholding. The payment of any amount pursuant to
this Agreement shall be subject to applicable withholding and payroll taxes, and
such other deductions as may be required under the Company's employee benefit
plans, if any.
10.6 Governing Law. This Agreement shall be construed,
interpreted, and governed in accordance with the laws of the state of New York
without reference to rules relating to conflict of law.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
duly executed and the Executive has hereunto set his hand, as of the day and
year first above written.
AMERICAN COLOR GRAPHICS, INC.
By: /s/ Timothy Davis
-----------------------------------
Name: Timothy Davis
Title: Sr. V.P.
EXECUTIVE: /s/ Stephen M. Dyott
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Stephen M. Dyott
