EXECUTIVE EMPLOYMENT
AGREEMENT
This Executive Employment Agreement (the “
Agreement ”) is entered into by and between
American Reprographics Company , a Delaware corporation
(“ ARC ” ) as the employer; and John
Toth , a resident of California, an individual (“
Executive ”), as the employee, on July 18, 2011
(the “ Effective Date ”). ARC and Executive may
be referred to collectively in this Agreement as the
“Parties” and individually as a
“Party.”
ARC has agreed to employ Executive and Executive
has agreed to accept such employment, subject to the terms and
conditions set forth herein.
Now, therefore, in consideration of the
promises, covenants and agreements set forth in this Agreement, the
Parties agree as follows:
(a) ARC hereby employs Executive as its
Chief Financial Officer (“ CFO ”), 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 keep or
cause to be kept the books of account of ARC in a thorough and
proper manner and shall render statements of the financial affairs
of ARC in such form and as often as required by the Board of
Directors or ARC’s CEO. Executive, in his capacity as CFO,
subject to the order of the Board of Directors, shall have the
custody of all funds and securities of ARC, and shall attest to
financial statements, shall be responsible for ARC’s
compliance with financial reporting and disclosure laws and rules,
and shall perform other duties commonly incident to the office of
CFO, and shall also perform such other duties and have such other
powers as the Board of Directors or ARC’s CEO shall designate
from time to time. Executive shall have the authority generally
incident and necessary to perform such duties. Executive will be a
member of the executive team.
(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.
The term of this Agreement and of
Executive’s employment hereunder shall commence on the
Effective Date hereof and continue until the third (3rd)
anniversary of the Effective Date 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.
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 $300,000, paid in
installments in accordance with ARC’s customary payroll
procedures.
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(b) Incentive Bonus . During
the term of this Agreement, Executive shall be eligible to receive
an annual Incentive Bonus (“Incentive Bonus”) in an
amount not exceeding eighty percent (80%) of Executive’s Base
Salary per year under 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 value
of the Incentive Bonus shall be paid in cash no later than the
60 th
day after the close of each fiscal
year.
(c) Additional Bonuses . ARC
may from time to time, in its absolute discretion, establish
additional bonus programs for Executive.
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 four (4) weeks paid vacation each calendar year accrued and
vested in accordance with ARC’s vacation policy applicable to
senior management.
Executive shall be granted a one-time grant of
30,000 restricted shares of ARC common stock, to be approved by the
Compensation Committee of ARC’s Board of Directors. The
restricted shares of ARC common stock shall vest in equal
installments of twenty-five percent (25%) on each of the first four
anniversaries of the date of grant, subject to Executive’s
continued employment with ARC on each vesting date. In addition, 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 who 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.
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. 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.
8.
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 8 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 goodwill of ARC. For
purposes of this Section 8, 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 to its shareholders and Board of Directors (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
(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.
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, and other confidential information and materials
(the “Confidential Information”).
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(a) 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. 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.
(b) 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.
(c) Ownership of Inventions; Assignment of
Rights . Executive agrees that all information, inventions,
intellectual property, trade secrets, copyrights, trademarks,
content, know-how, documents, reports, plans, proposals, marketing
and sales plans, client lists, client files and materials made by
him or by ARC (the “Work Product”) are the property of
ARC and shall not be used by him in any way adverse to the
interests of ARC. Executive assigns to ARC any and all rights of
every nature which Executive may have in any such Work Product;
provided, however, that such assignment does not apply to any right
which qualifies fully under California Labor Code
Section 2870. This section shall survive any termination of
this Agreement and the employment relationship between Executive
and ARC. Executive shall not deliver, reproduce or in any way allow
such documents or things to be delivered or used by any third party
without specific direction or consent of the Board of Directors.
Likewise, Executive shall not disclose to ARC, use in ARC’s
business, or cause ARC to use, any information or material that is
a trade secret of others.
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(d) Predecessors, Subsidiaries and
Affiliates . For purposes of this Section 9,
references to ARC include its predecessors, subsidiaries and
affiliates.
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.
(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 six (6) months during a period of twelve
(12) months.
(c) Termination by ARC for Cause
. Upon written notice to 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 the Board of Directors or ARC’s
CEO, which remains uncorrected for thirty (30) days following
written notice to Executive by ARC’s CEO; or
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(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 affiliates,
securing or attempting to secure personally any profit in
connection with any transaction entered into on behalf of ARC or
its affiliates, or any willful act or gross negligence having the
effect of injuring the reputation, business or business
relationships of ARC or its affiliates; or
(iii) fraud, dishonesty or misappropriation
of ARC business and assets that harms the business of ARC or its
affiliates; or
(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 harms the reputation or business or ARC or
its 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 10(c), which remains uncorrected for thirty
(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.
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(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 thirty
(30) days after receipt of such notice, Executive may
terminate th
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