EMPLOYMENT AGREEMENT

Exhibit 10.43

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT by and among Vertis Inc., (the “Company”), Vertis Holdings, Inc. (“Holdings”) and Dean D. Durbin (the “Executive”), dated and effective as of August 31, 2003 (the “Effective Date”).

 

WHEREAS, the Company wishes to provide for the continued employment by the Company of the Executive, and the Executive wishes to continue to serve the Company, in the capacities and on the terms and conditions set forth in this Agreement;

 

NOW, THEREFORE, it is hereby agreed as follows:

 

1.                                       EMPLOYMENT AT WILL.  The employment of the Executive by the Company shall be at will and shall be terminable by either party upon 30 days prior written notice or as otherwise set forth in Section 4.  The provisions of Sections 4 and 5 shall govern the consequences of any termination of the Executive’s employment.

 

2.                                       POSITION AND DUTIES.

 

(a)                                  During his employment with the Company, the Executive shall serve as the Chief Financial Officer of the Company and shall perform such duties and have such responsibilities as are customarily assigned to such position, and shall also perform or hold such other duties and responsibilities with respect to the Company or its subsidiaries not inconsistent therewith as may from time to time be assigned to him by the Board of Directors of the Company (the “Board”).

 

(b)                                 During his employment with the Company, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive shall devote his full business attention and time to the business and affairs of the Company and shall use all reasonable efforts to carry out his responsibilities faithfully and efficiently.  However, the Executive may serve on corporate, industry, civic or charitable boards or committees, so long as these activities do not materially interfere with the performance of the Executive’s responsibilities to the Company.

 

3.                                       COMPENSATION.

 

(a)                                  BASE SALARY.  During his employment with the Company, the Executive shall continue to receive an annual base salary at the rate in effect on the Effective Date, as adjusted by the Board from time to time as set forth below (the “Annual Base Salary”).  The Annual Base Salary shall be paid in accordance with the Company’s regular payroll practice for its senior executives, as in effect from time to time.  The Annual Base Salary shall be reviewed for adjustment by the Board at least annually prior to the end of each calendar year during the Executive’s employment with the Company.

 

 

(b)                                 ANNUAL CASH BONUS.  For fiscal years during the Executive’s employment with the Company, the Executive shall participate in an annual cash incentive compensation plan (currently the Company’s Executive Incentive Plan), as adopted and approved by the Board from time to time, with applicable corporate and individual performance targets and maximum award amounts determined by the Board.  The target bonus of the Executive pursuant to the annual cash incentive compensation plan shall be determined in accordance with the Executive Incentive Plan (or the applicable replacement or successor plan) with respect to each such fiscal year.  Any cash bonuses payable to the Executive will be paid at the time the Company normally pays such bonuses to its senior executives and will be subject to the terms and conditions of the applicable annual cash incentive compensation plan.

 

(c)                                  LONG-TERM INCENTIVE COMPENSATION.  During the Executive’s employment with the Company, the Executive shall be eligible to receive long-term equity incentive compensation awards (which may consist of stock options or other types of awards, as determined by the Board in its discretion) pursuant to the Company’s equity incentive compensation plans and programs in effect from time to time.  These awards shall be granted in the discretion of the Board and shall include such terms and conditions (including performance objectives) as the Board deems appropriate.

 

(d)                                 OTHER BENEFITS.  During the Executive’s employment with the Company, the Executive shall be eligible to participate in the retirement, welfare benefit, and fringe benefit plans, practices, policies and programs of the Company (including any medical, prescription, dental, disability, life insurance, accidental death and travel accident insurance plans and programs maintained by the Company) to the same extent, and subject to substantially the same terms and conditions, as these arrangements are made available generally to the senior officers of the Company.

 

(e)                                  VACATION; EXPENSES.  The Executive shall be entitled to 4 weeks annual paid executive leave in accordance with the provisions of the Company’s executive leave policy as in effect from time to time, which shall be taken at times selected by the Executive with due regard for the business needs of the Company.  The executive leave does not accrue and may not be carried forward, nor is unused leave paid out upon termination of employment.  The Company shall pay or reimburse the Executive for ordinary and necessary business expenses incurred by him in the performance of his duties in accordance with the Company’s usual policies.

 

4.                                       TERMINATION OF EMPLOYMENT.

 

(a)                                  DEATH OR DISABILITY.  The Executive’s employment shall terminate automatically upon the Executive’s death during his employment with the Company.  The Company shall be entitled to terminate the Executive’s employment because of the Executive’s Disability.  “Disability” means that (1) the Executive is permanently disabled within the meaning of the long-term disability plan of the Company in which the Executive participates or (2) if there is no such plan in effect, that (i) the Executive has been absent from the full-time performance of the Executive’s duties with the Company for a period of 120 days, (ii) the Company shall have given the Executive a notice of

 

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termination for Disability, and (iii) within 30 days after such notice of termination is given, the Executive shall not have returned to the full-time performance of the Executive’s duties.  The effective date of any such termination for Disability shall be (A) in the case of a termination pursuant to clause (1), the date on which the Executive is determined to be disabled for purposes of such plan or, in the case of a termination pursuant to clause (2), the date which is 30 days following the notice of termination for Disability (either such date, the “Disability Effective Time”).

 

(b)                                 TERMINATION BY THE COMPANY.

 

(i)                                     The Company may terminate the Executive’s employment with the Company for Cause or without Cause.  Except as set forth in Section 4(b)(ii), “Cause” shall mean (i) gross negligence or willful misconduct by the Executive in connection with the performance of his duties hereunder that is materially injurious to the Company, monetarily or otherwise, (ii) the conviction of the Executive by a court of competent jurisdiction for felony criminal conduct or (iii) material violation by the Executive of the provisions of Section 6 of this Agreement, unless, in the case of clauses (i) or (iii), the event constituting Cause is curable and has been cured by the Executive within ten business days of his receipt of written notice from the Company that an event constituting Cause has occurred and specifying in reasonable detail the actions required to effect a cure.

 

(ii)                                  Notwithstanding the provisions of Section 4(b)(i), following a Change in Control (as defined herein), “Cause” shall only mean (A) the conviction of the Executive by a court of competent jurisdiction for felony criminal conduct; or (B) the willful engaging by the Executive in fraud or dishonesty which is demonstrably and materially injurious to the Company or its reputation, monetarily or otherwise.  For purposes of this Section 4(b), no act, or failure to act, on the Executive’s part shall be deemed “willful” unless committed, or omitted by the Executive in bad faith.

 

(iii)                               A termination of the Executive’s employment for Cause shall require a vote of a majority of the Board.  Following a Change in Control a termination of the Executive’s employment for Cause shall not be effective unless it is accomplished in accordance with the following procedures.  The Board shall give the Executive written notice (“Notice of Termination for Cause”) of its intention to terminate the Executive’s employment for Cause, setting forth in reasonable detail the specific conduct of the Executive that it considers to constitute Cause and the specific provision(s) of this Agreement on which it relies, and stating the date, time and place of the Special Board Meeting for Cause.  The “Special Board Meeting for Cause” means a meeting of the Board called and held specifically and exclusively for the purpose of considering the Executive’s termination for Cause.  The Special Board Meeting for Cause must take place not less than thirty business days after the Executive receives the Notice of Termination for Cause.  The Executive shall be given an opportunity, together with counsel, to be heard at the Special Board Meeting for Cause.  The Executive’s termination for Cause shall be effective when a resolution is duly

 

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adopted at the Special Board Meeting for Cause stating that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in the Notice of Termination for Cause and that such conduct constitutes Cause under the applicable provision of this Agreement.

 

(c)                                  TERMINATION BY THE EXECUTIVE.

 

(i)                                     The Executive may terminate employment with the Company for Good Reason or without Good Reason.  “Good Reason” shall mean the occurrence of any of the following events, without the Executive’s consent (other than in connection with an event constituting Cause): (a) any action by the Company which results in a significant diminution in the Executive’s position, authority, duties or responsibilities as contemplated by this Agreement; (b) a reduction in the Executive’s Annual Base Salary or the Executive’s annual cash bonus opportunity under the Executive Incentive Plan (or a successor plan) or a failure by the Company to timely pay any portion of the Executive’s current or deferred compensation; (c) the Company requiring the Executive to be based at an office that is greater than 50 miles from where the Executive’s office is located at such time except for required travel on the Company’s business to an extent substantially consistent with the business travel obligations which the Executive undertook on behalf of the Company prior to a Change in Control; or (d) the failure by the Company to obtain from any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company an express written assumption and agreement to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place unless, in each case, such action is remedied by the Company within ten business days after receipt of a Notice of Termination for Good Reason (as defined below) given by the Executive.

 

(ii)                                  Except in the case of a Limited Change in Control (as defined in Section 5(d) hereof) the Executive shall automatically be deemed to have Good Reason (“Deemed Good Reason”) despite the absence of any of the events or circumstances described in the second sentence of Section 4(c)(i) for the thirty day period commencing on the first anniversary of a Change in Control; provided, however, that if the Executive terminates his employment pursuant to the provisions of this subparagraph (ii), the Executive’s entitlement to the benefits provided in Section 5(d) (and the benefits provided in connection with a termination described in such Section) may be conditioned by the Company on the Executive continuing to serve the Company for up to six months following the Notice of Termination for Good Reason (the “Transition Period”).  A failure by the Executive to comply with such a request absent an event or circumstance described in the second sentence of Section 4(c)(i) (as such definition is modified by the last sentence of this Section 4(c)(ii)) will result in the termination being treated as a termination described in Section 5(a).  In the event that the Company invokes its right to require the Executive to continue to serve the Company during the Transition Period, the Executive’s Annual Base Salary shall not be reduced

 

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during such period, nor shall the Executive’s annual bonus opportunity (which bonus, if any, (i) shall be paid out on a pro-rata basis for the applicable period during which the Executive was employed, (ii) shall be paid at the time such bonuses are paid to the Company’s executives generally and (iii) shall be based upon the Company’s (and if applicable the Executive’s) scheduled performance against target applicable to the portion of the performance period during which the Executive was employed - in each case consistent with (and not in duplication of) the provisions of Section 5(g)).  Notwithstanding the definition of Good Reason set forth in the second sentence of Section 4(c)(i), the Company may, in its discretion, change the Executive’s authority, position, duties or responsibilities during the Transition Period, without such change constituting Good Reason.

 

(iii)                               A termination of employment by the Executive for Good Reason or Deemed Good Reason shall be effected by giving the Company written notice (“Notice of Termination for Good Reason”) of the termination, setting forth in the case of a termination for Good Reason in reasonable detail the specific conduct of the Company that constitutes Good Reason and the specific provision(s) of this Agreement on which the Executive relies.  A termination of employment by the Executive for Good Reason shall be effective ten business days following the date when the Notice of Termination for Good Reason is given, unless, if applicable, the event constituting Good Reason is remedied by the Company prior to that date.  Actions by the Company which constitute Good Reason shall be disregarded in the calculation of termination benefits described in Section 5.

 

(iv)                              A termination of the Executive’s employment by the Executive without Good Reason shall be effected by giving the Company 30 days’ written notice of the termination.

 

(d)                                 DATE OF TERMINATION; RESIGNATION.  The “Date of Termination” means the date of the Executive’s death, the Disability Effective Time or the date on which the termination of the Executive’s employment by the Company for Cause or without Cause or by the Executive for Good Reason or without Good Reason is effective.  Following termination of the Executive’s employment for any reason, the Executive shall immediately resign from the Board and from all other offices and positions he holds with the Company and its subsidiaries if requested by the Board.

 

5.                                       OBLIGATIONS OF THE COMPANY UPON TERMINATION.

 

(a)                                  TERMINATION BY THE COMPANY (OTHER THAN TERMINATIONS FOR CAUSE, DEATH OR DISABILITY), OR TERMINATION BY THE EXECUTIVE FOR GOOD REASON.  If the Company terminates the Executive’s employment for any reason other than for Cause (other than a termination for Disability or death), or the Executive terminates his employment for Good Reason, then, except for any termination to which Section 5(d) applies, the Company shall pay to the Executive (i) a cash payment equal to two times the sum of (A) the Executive’s Annual Base Salary immediately prior to the Date of Termination and (B) the greater of (1) the annual bonus earned by the Executive for the last completed fiscal year prior to the fiscal year in which

 

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the Date of Termination occurs and (2) the annual bonus the Executive would have earned for the fiscal year in which the Date of Termination occurs absent such termination (which amount shall be based upon the Company’s (and if applicable the Executive’s) actual performance against target (expressed as a percentage of achievement of targeted performance) applicable to the portion of the performance period during which the Executive was employed, with such percentage level of achievement annualized for the full fiscal year) (the greater of such amounts being referred to hereafter as the “Applicable Bonus Amount”); and (ii) any unpaid amounts of the Executive’s Annual Base Salary for periods prior to the Date of Termination and earned annual bonuses for completed fiscal years prior to the Date of Termination.  The payment described in clause (i) of the preceding sentence shall be made ratably over the two-year period following the Date of Termination, in accordance with the Company’s normal payroll practices and the payments described in clause (ii) of the preceding sentence shall be made within 30 days of the Date of Termination.  The Company shall also provide to the Executive (and, as applicable, his eligible dependents), in the event of such a termination continued participation at the Company’s expense in the Company’s medical, dental, prescription and vision care insurance plans (or substantially equivalent coverage under an alternative arrangement) for six months following the Date of Termination (or, if earlier, until the date the Executive obtains alternative coverage from a subsequent employer) following which, if no such alternative coverage has been obtained, the Executive will be entitled to elect continuation coverage (“COBRA”) in accordance with the provisions of Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”), which COBRA coverage period shall begin at the close of the period of such continued participation.  For purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated within the thirteen month period following a Change in Control and during the Term by the Company without Cause (and shall be governed by Section 5(d)), if the Executive’s employment is terminated by the Company without Cause either (i) during the 120 day period prior to the execution of an agreement, the consummation of which would result in a Change in Control or (ii) following the execution of an agreement, the consummation of which would result in a Change in Control and such termination is effective at the time, or during the pendency, of such Change in Control (in either case whether or not such Change in Control actually occurs).

 

(b)                                 DEATH AND DISABILITY.  If the Executive’s employment is terminated by the Company due to Disability or terminated automatically upon the Executive’s death then, (i) the Company shall pay to the Executive (or the Executive’s estate, as applicable) in a lump sum in cash within 30 days after the Date of Termination, any portion of the Executive’s Annual Base Salary earned through the Date of Termination that has not been paid and earned annual bonuses for completed fiscal years prior to the Date of Termination and (ii) all outstanding equity awards shall be treated according to the provisions of the plan and agreements under which such awards were granted.  The Company shall also provide to the Executive (and, as applicable, his eligible dependents), in the event of such a termination continued participation at the Company’s expense in the Company’s medical, dental, prescription and vision care insurance plans (or substantially equivalent coverage under an alternative arrangement) for six months following the Date of Termination (or, if earlier, until the date the Executive obtains alternative coverage from a subsequent employer) following which, if

 

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no such alternative coverage has been obtained, the Executive (or his eligible dependents, if applicable) will be entitled to elect COBRA continuation coverage in accordance with the provisions of Section 4980B of the Code, which COBRA coverage period shall begin at the close of the period of such continued participation.  In addition, notwithstanding anything to the contrary in any option plan or agreement of the Executive, outstanding options which are vested as of the Date of Termination shall remain exercisable until the earlier of (1) the date which is 180 days following the Date of Termination and (2) the maximum term of the option.