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Exhibit 10.4
EMPLOYMENT AGREEMENT
AGREEMENT (the "Agreement") dated this February 2, 2005 (the
"Effective
Date") made by and between Presstek, Inc.,
a Delaware corporation, its parents,
subsidiaries, divisions, or affiliated
entities, successors and assigns (the
"Employer"), and G. Michael McCarthy (the
"Employee").
WHEREAS, the Employee has been employed with the Company as
Vice
President, Business Integration and has
been promoted to, and is currently
employed as Senior Vice President,
Operations of the Employer and both the
Employer and the Employee now wish for the
Employee to continue to be employed
as Senior Vice President, Operations of the
Employer; and
WHEREAS, the Employee wishes to continue his employment with
the
Employer and the Employer wishes to
continue its employment of the Employee
under the terms of this Agreement on the
date this Agreement is executed by the
parties as set forth above.
NOW, THEREFORE, in consideration of the promises hereafter
contained,
and for other good and valuable
consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties
hereto AGREE as follows:
1.
Consideration. In consideration for the Employee's execution of
this
Agreement, the Employer agrees that the
Employee's employment shall continue as
set forth in this Agreement, the Employee
shall be permitted access to the
Employer's confidential information and
trade secrets and the Employee shall be
eligible to receive post-Term Severance
Payments (Section 9) or the Change in
Control payment (Section 12) as set forth
in this Agreement (subject to his
compliance with Sections 10 and 11 of this
Agreement). The Employee understands,
acknowledges and agrees that the Employee
would not receive the consideration
specified in this Section 1, except for the
Employee's execution of this
Agreement and the fulfillment of the
promises contained herein.
2. Employment. Commencing
from the date of this Agreement as set forth
above (the "Start Date"), the Employee
shall continue his employment as Senior
Vice President, Operations of the Employer
under this Agreement through the Term
of this Agreement. The Employee shall
render executive, policy, operations and
other management services to the Employer
as determined by the Chief Executive
Officer and President and/or Board of
Directors of the Employer (the "Board")
and shall perform such other related duties
as they may from time to time
reasonably direct.
3. Employment
Term. "Term," as used in this Agreement, shall refer to the
Term of this Agreement as defined in this
Section. The Term of the employment
under this Agreement shall commence on the
Start Date and shall initially end
three years thereafter, on the day
preceding the third anniversary of the Start
Date, unless terminated sooner in
accordance with the provisions hereof. The
Term of employment under this Agreement
shall, on each anniversary of the Start
Date thereafter (commencing with the third
anniversary of the Start Date), be
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automatically extended for an additional
year unless the Employer or the
Employee gives written notice to the other,
at least 180 days prior to such
anniversary date, that he or it does not
concur in such extension. If neither
party gives notice of non-concurrence in
such extension, the Term will be
automatically extended for an additional
year, unless terminated sooner in
accordance with the provisions hereof.
4.
Compensation.
(A) Salary. The Employer agrees to pay the Employee during the Term
of
this Agreement an annual base salary equal
to TWO HUNDRED AND TWENTY FIVE
THOUSAND U.S. DOLLARS AND ZERO CENTS
($225,000) with the salary to be reviewed
no less than annually during the Term of
this Agreement by the Board of
Directors or Compensation Committee of the
Employer. The base salary of the
Employee shall not be decreased at any time
during the Term of this Agreement
from the amount then in effect, unless the
Employee otherwise agrees in writing.
The salary shall be payable to the Employee
in accordance with the Employer's
payroll system, as determined by the
Employer, but not less frequently than
monthly. All payments and benefits in this
Agreement shall be subject to all
applicable federal, state and local
withholding, payroll and other taxes.
(B) Equity or Securities Compensation. Subject to the terms and
conditions of the Employer's 2003 Stock
Option and Incentive Plan (the "Plan"),
the Employee shall be granted, on the
Effective Date, options to purchase fifty
thousand (50,000) shares of common stock of
the Employer at a price per share
equal to the fair market value of the
shares on the Effective Date, such options
to be immediately exercisable on June 30,
2005. In addition, subject to the
terms and conditions of the Employer's 2003
Stock Option and Incentive Plan (the
"Plan"), and subject to the approval of the
Committee (as that term is herein
defined) the Employee shall be granted, on
the Effective Date, options to
purchase fifty thousand (50,000) shares of
common stock of the Employer at a
price per share equal to the fair market
value of the shares on the Effective
Date, such options to be exercisable as
follows:
16,667 options exercisable on June 30, 2006;
16,667 options exercisable on June 30, 2007; and
16,666 options exercisable on June 30, 2008.
In addition to the foregoing consideration, and subject to the
eligibility requirements that may be
applicable, the Employee may be entitled to
participate during the Term in any plan or
arrangement of the Employer relating
to a stock options, stock purchases,
pension, thrift, or profit sharing
benefits, or other benefits under qualified
or non-qualified deferred
compensation plans, group life insurance,
medical coverage, education or any
other employee benefits that the Employer
may, at its sole and unfettered
discretion, adopt or make available for the
benefit of the Employee.
Participation in discretionary bonuses, retirement and other
employee
benefit plans and fringe benefits shall not
reduce the salary payable to the
Employee under this Section 4, except as
provided in Section 4 (A) herein.
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5.
Discretionary Bonuses. During the Term of this Agreement, the
Employee
may be entitled to receive an annual cash
bonus of up to 40% of the Employee's
then annual base salary, based on the
Employee's contribution to the
accomplishment of key annual corporate
objectives mutually determined by the
Employee and the Employer. The
determination of whether to pay a discretionary
bonus, and the amount of the bonus, if any,
shall be made by the Employer in its
sole and absolute discretion. During the
Term of this Agreement, the Employee
also may be entitled to participate on the
same terms and conditions as other
similarly situated eligible executive
employees of the Employer in any other
incentive compensation and bonus programs
authorized and declared by the Board
of Directors or Compensation Committee of
the Employer for executive employees.
The determination of whether the Employee
is eligible to participate in any such
incentive compensation and bonus programs,
and the amount of incentive
compensation and bonus paid, if any, shall
be made solely by the Employer. No
other compensation provided for in this
Agreement shall be deemed a substitute
for the Employee's right to participate in
such incentive compensation or bonus
programs when and as declared.
6.
Participation in Retirement and Employee Benefit Plans; Fringe
Benefits.
Subject to the eligibility requirements that may be applicable,
the
Employee may be entitled to participate
during the Term in any plan or
arrangement of the Employer relating to
stock purchases, pension, thrift, or
profit sharing benefits, or other benefits
under qualified or non-qualified
deferred compensation plans, group life
insurance, medical coverage, education
or any other employee benefits that the
Employer may adopt or make available for
the benefit of the Employee or of similarly
situated executive employees
generally.
The Employer fully reserves its rights to change, modify or
discontinue
any of its stock purchase, retirement,
employee benefit or other fringe benefit
plans during the Term of this Agreement in
its sole and absolute discretion, and
in accordance with applicable law.
7. Standards.
The Employee shall perform his duties and responsibilities
under this Agreement in accordance with
such reasonable standards as are
established from time to time by the Chief
Executive Officer and President
and/or the Board of Directors of the
Employer, in their respective sole and
absolute discretions.
8. Voluntary
Absences; Vacations. The Employee shall be entitled to an
annual paid vacation during the Term of
this Agreement in accordance with the
Employer's policy of executives of four (4)
weeks per year or such longer period
as the Board of Directors may approve or
such longer periods to which the
Employee may be entitled as an employee of
the Employer. The timing of paid
vacations shall be scheduled in a
reasonable manner by the Employee.
9.
Termination of Employment.
The Employee's employment with the Employer may terminate either
by
either:
(a)
termination by the Employer either (i) for Cause (as defined
in Section 9(a)(iii) below) or (ii) without Cause;
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(b)
termination by the Employee either for (i) Good Reason (as
defined in Section 9(b) below or (ii) Not Good Reason (as
defined in Section 9(b); or
(c)
in the event of death or disability of the Employee.
(a) Termination by the
Employer.
(i) The Employer may terminate the Employee's employment at any
time,
but any termination by the Employer other
than termination for Cause (as defined
in Section 9(a)(iii) below) shall not
prejudice the Employee's right to receive
compensation and other benefits under this
Agreement, except as stated otherwise
in this Agreement. In the event of a
termination for Cause, the Employee shall
have no right to receive payment,
compensation or other benefits, including
payment of legal fees and expenses
incurred, for any period after termination
for Cause except as otherwise required by
law. Where the Employee's employment,
is terminated other than termination for
Cause, the Employer shall continue to
be subject to any independent obligation to
the Employee under any employee
benefit plan in which the Employee is then
a participant. Where the Employee's
employment is terminated for Cause, the
Employer shall have no obligation to
continue to be subject to any independent
obligations to the Employee under any
employee benefit plan for which the
Employee is then a participant, except as
otherwise required by law.
(ii) In the
event that the Employee's employment ceases by reason of the
Employer's termination of the Employee's
employment during the Term other than
for Cause, the Employer shall be obligated
in lieu and replacement of the
Employee's entitlement to any compensation
and other benefits under this
Agreement pursuant to Section 9(a)(i), to
make severance payments to the
Employee in an amount equal to the
Employee's then current annual base salary
multiplied by a fraction, the denominator
of which shall be 12 and the numerator
of which shall be the number of months
remaining in the Term (collectively, the
"Severance Payments"). Notwithstanding the
foregoing, if the Employee's
employment ceases by reason of the
Employer's termination of the Employee's
employment other than for Cause, the amount
paid in Severance Payments to the
Employee under this Section shall not be
less than the Employee's annual base
salary for a period of one and one-half (1
1/2) years and shall not exceed the
Employee's then annual base salary for a
period of two (2) years. The amount
paid in Severance Payments to the Employee
under this Section shall be paid
after termination of employment in equal
monthly installments according to the
Employer's normal payroll practices then in
effect. However, if either party
provides the other party with written
notice of the party's non-concurrence in
the automatic extension of the Term, as set
forth in Section 3 of this
Agreement, notwithstanding the foregoing,
the Employer shall make Severance
Payments under this Section for a period of
one (1) year. However, if the
Employer's termination of the Employee's
employment without Cause occurs in
connection with, or within one and one-half
(1 1/2) years after, a "Change in
Control" as defined in Section 12(b)
hereof, the amount payable to the Employee
shall be determined exclusively under
Section 12(a) as limited by Section 12(c)
hereof, and the Employer shall not be
required to make the payments set forth in
this Section. The Severance Payments under
this Section 9(a)(ii) shall not be
reduced by any compensation
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which the Employee may receive for other
employment with another employer
after termination of his employment with
the Employer. In addition, the
Employee shall be entitled to have all
existing retirement or employee benefits
of the type referred to in Section 6 hereof
continued for the remainder of the
Term when the Agreement is terminated,
except as otherwise required by law or
provided in the related retirement or other
employee benefit plans or
agreements. Notwithstanding the foregoing,
the Employer shall have no obligation
to make any contributions to any retirement
plan applicable to the Employee
after the date the Employee ceases to be
employed by the Employer except as may
be required by such applicable plan.
Notwithstanding anything stated herein to
the contrary, and for purposes of clarity,
should the Employer terminate the
Employment of the Employee for Cause, the
Employee shall not be entitled to
receive Severance Payments. In the event of
a retirement plan, the Employee
shall be entitled to contributions made by
the Employer to the retirement plan
on the Employee's behalf prior to the date
of the Employee's termination, which
have vested and for which the Employee is
otherwise eligible in accordance with
the written terms of the official plan
documents governing any applicable
retirement plan. The Employer shall have no
obligation to make the Severance
Payments set forth in this Section unless
the Employee fully complies with his
obligations under this Agreement,
including, but not limited to, his obligations
under Sections 10 and 11 of this
Agreement.
(iii) References in this Agreement to "termination for Cause" shall
mean
termination on account of acts or omissions
of the Employee which constitute
Cause as defined below. Any determination
with respect to a termination for
Cause shall require the approval of the
Board of Directors of the Employer.
"Cause" shall mean any of the
following:
(A) conviction
of a felony,
(B) theft from
the Employer,
(C) breach of
fiduciary duty involving personal profit,
(D) sustained
and continuous conduct by the Employee
which adversely affects the reputation of the
Employer,
(E) continued
failure of the Employee to substantially
and satisfactorily perform his duties or obligations
under this Agreement following twenty (20) days'
notice by the Employer to the Employee and a failure
by the Employee to correct the deficiency cited in
such notice (other than any such failure resulting
from the Employee's incapacity due to physical or
mental illness).
(b)
Termination by the Employee.
The Employee shall have no right to terminate his employment under
this
Agreement prior to the end of the Term of
this Agreement, unless such
termination is either for Good Reason (as
described in Section 12(a) hereof) (i)
in connection with, or within one and
one-half (1 1/2) years after, a Change in
Control; or (ii) approved by the Board of
Directors of the Employer. For
purposes of this Agreement, the term "Not
Good Reason" shall mean such
termination by the Employee of his
employment for reasons other than for Good
Reason. In the
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event that the Employee terminates his
employment for Not Good Reason, the
Employee shall have no right to receive
compensation or other benefits,
including payment of legal fees and
expenses incurred, for any period after such
termination except as otherwise required by
law. . Where the Employee terminates
his employment for Good Reason, the
Employer shall continue to be subject to any
independent obligation to the Employee
under any employee benefit plan in which
the Employee is then a participant. Where
the Employee terminates his employment
for Not Good Reason, the Employer shall
have no obligation to continue to be
subject to any independent obligations to
the Employee under any employee
benefit plan for which the Employee is then
a participant, except as otherwise
required by law.
Notwithstanding anything stated herein to the contrary, and for
purposes of clarity, should the Employee
terminate his Employment for Not Good
Reason, the Employee shall not be entitled
to receive Severance Payments as
described in Section 9(a)(ii).
(c)
Death and
Disability.
The Employee's employment under this Agreement may also cease prior
to
the end of the Term of this Agreement in
the event of the Employee's death or
upon the Employee becoming "Totally
Disabled." For purposes of this Agreement,
"Totally Disabled" shall mean such
situation where the Employee, because of
injury (the "Injury") or sickness (the
"Sickness"), the Employee is unable to
perform the material duties of her regular
occupation for a specified period;
and, solely due to injury or sickness, she
is unable to earn more than the
percentage of their Indexed Covered
Earnings (as that term is defined in the
Employer's Long-Term Disability Summary
Plan Description) from working in her
regular occupation. Thereafter, "Totally
Disabled" shall mean such situation
where the Employee is disabled in that her
injury or sickness makes her unable
to perform the material duties of any
occupation for which she may reasonably
become qualified based on education,
training or experience; and solely due to
such Injury or Sickness, she is unable to
earn more than the percentage of their
Indexed Covered Earnings (as that term is
defined in the Employer's Long-Term
Disability Summary Plan Description). For
purposes of this Agreement the
Employee shall be "Totally Disabled" as of
the date he becomes entitled to
receive disability benefits under the
Employer's long term disability plan. In
the event that the Employee's employment is
terminated by his death or upon
becoming "Totally Disabled," the Employee
or the Employee's heirs or estate (as
applicable), shall be entitled to receive
(i) any accrued but unpaid salary for
services rendered to the date of
termination as determined pursuant to Section
4, (ii) any vacation accrued under the
Employer's policy to the date of
termination, and (iii) any accrued but
unpaid expenses pursuant to Section 14 of
this Agreement. The benefits to which the
Employee may be entitled upon
termination pursuant to the plans and
arrangements referred to in Section 6 of
this Agreement shall be determined and paid
in accordance with the terms of such
plans and arrangements.
(d) The Employer shall have no obligation to make the payments set
forth
herein if the Employee is in material
breach of the Employee's obligations under
this Agreement. The Employee shall be
obligated to execute a general release of
claims in favor of the Employer, its
current and former parents, subsidiaries,
subdivisions, divisions, shareholders,
Board of Directors, or affiliated
entities or persons, and the current and
former directors, officers, employees
and agents of the Employer, in a form
acceptable to the Employer (the
"Release"), as a condition to receiving the
Severance Payments described above.
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10.
Confidential Information and Non-Competition.
(a) "Confidential Information" shall mean trade secrets or
confidential
information relating to the Employer, its
customers, affiliates and their
respective businesses, including, but not
limited to, the id
