FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended June 30, 2002.
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the transition period from __________ to __________
Commission File Number: 0-22994
GUNTHER INTERNATIONAL LTD.
(Exact name of small business issuer as specified in its charter)
Delaware 51-0223195
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Winnenden Road, Norwich, Connecticut 06360
(Address of principal executive offices) (Zip Code)
860-823-1427
(Issuers Telephone Number)
Not Applicable
(Former name, former address and former fiscal year, if changed since last year)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
YES X NO __
The number of shares of the Registrant's Common stock outstanding as of July 29,
2002 was 19,372,200.
Transitional Small Business Disclosure Format (check one):
YES __ NO X
GUNTHER INTERNATIONAL LTD.
Index
Page
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PART I - CONDENSED FINANCIAL INFORMATION
Item 1. Financial Statements - (unaudited)
Condensed Consolidated Balance Sheets as of
June 30, 2002 and March 31, 2002 3-4
Condensed Consolidated Statements of Operations for
the three months ended June 30, 2002 and 2001 5
Condensed Consolidated Statements of Cash Flows for the three
months ended June 30, 2002 and 2001 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis or Plan of Operation 8-10
PART II - OTHER INFORMATION
Item 2. Changes in securities and use of proceeds 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
2
PART I. CONDENSED FINANCIAL INFORMATION
Item 1. Financial Statements
GUNTHER INTERNATIONAL LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2002 AND MARCH 31, 2002
June 30, 2002 March 31, 2002
------------- --------------
Assets
Current Assets:
Cash $ 269,532 $ 1,119,790
Restricted cash 100,549 100,054
Accounts receivable, less allowance 917,928 849,059
Costs and estimated earnings in excess
of billings on uncompleted contracts 658,780 776,278
Inventories 1,888,373 1,666,462
Prepaid expenses 163,288 228,265
------------ ------------
Total current assets 3,998,450 4,739,908
------------ ------------
Equipment and Leasehold Improvements:
Machinery and equipment 2,085,356 2,230,914
Furniture and fixtures 519,826 505,939
Leasehold improvements 153,612 135,962
------------ ------------
2,758,794 2,872,815
Accumulated depreciation and amortization (1,681,030) (1,518,098)
------------ ------------
1,077,764 1,354,717
------------ ------------
Other Assets:
Goodwill 2,551,429 2,551,429
Other 27,127 30,727
------------ ------------
2,578,556 2,582,156
------------ ------------
$ 7,654,770 $ 8,676,781
============ ============
Liabilities and Stockholders' Equity
Current Liabilities:
Current maturities of long-term debt $ 27,842 $ 27,842
Accounts payable 2,318,502 1,977,539
Accrued expenses 1,125,687 1,188,462
Billings in excess of costs and estimated
earnings on uncompleted contracts 346,277 515,903
Deferred service contract revenue 1,838,202 1,888,830
------------ ------------
Total current liabilities 5,656,510 5,598,576
------------ ------------
Long-term debt, less current maturities 55,529 62,078
------------ ------------
Total liabilities 5,712,039 5,660,654
------------ ------------
Commitments and contingencies
Stockholders' Equity:
Preferred Stock, $.001 par value: 500,000 shares authorized; none issued -- --
Common Stock, $.001 par value: 32,000,000 shares authorized; 20,300,190
shares issued at June 30, 2002 and 20,291,769 issued at March 31, 2002, 20,300 20,292
including shares held in treasury
Treasury stock, at cost (919,569 shares) (137,935) (137,935)
Additional paid-in capital 20,020,111 20,005,119
Accumulated deficit (17,959,745) (16,871,349)
------------ ------------
Total Stockholders' Equity 1,942,731 3,016,127
------------ ------------
$ 7,654,770 $ 8,676,781
============ ============
3
GUNTHER INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED JUNE 30, 2002 AND 2001
2002 2001
------------ -----------
Sales:
Systems $ 1,773,445 $ 2,095,788
Maintenance 2,741,095 2,724,705
Supplies 640,837 213,264
------------ -----------
Total sales 5,155,377 5,033,757
------------ -----------
Cost of sales:
Systems 1,814,142 1,736,094
Maintenance 2,179,317 2,028,151
Supplies 538,975 159,742
------------ -----------
Total cost of sales 4,532,434 3,923,987
------------ -----------
Gross profit 622,943 1,109,770
------------ -----------
Operating expenses:
Selling and administrative 1,508,669 1,261,308
Research and development 199,858 353,460
------------ -----------
Total operating expenses 1,708,527 1,614,768
------------ -----------
Operating loss (1,085,584) (504,998)
Interest expense, net (2,812) (157,579)
------------ -----------
Net loss $ (1,088,396) $ (662,577)
============ ===========
Net loss per share $ (0.06) $ (0.15)
============ ===========
Weighted average number of common shares outstanding 19,383,228 4,291,769
============ ===========
4
GUNTHER INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED JUNE 30, 2002 AND 2001
2002 2001
----------- ---------
Operating activities:
Net loss $(1,088,396) $(662,577)
Adjustments to reconcile net loss to net cash used for
operating activities:
Depreciation and amortization 166,531 143,406
Provision for doubtful accounts 7,109 12,000
Interest accrued on related party note payable -- 63,915
Deferred directors' compensation 15,000 12,500
Changes in operating assets and liabilities:
Accounts receivable (75,978) 331,456
Inventories (89,660) 192,994
Prepaid expenses 64,977 92,551
Accounts payable 340,963 (910,433)
Accrued expenses (62,775) (200,089)
Deferred service contract revenue (50,628) 928,801
Billings, costs and estimated earnings on
uncompleted contracts, net (52,128) (231,062)
----------- ---------
Net cash used for operating activities (824,985) (226,538)
----------- ---------
Investing activities:
Acquisitions of equipment and leasehold improvements (18,229) (112,204)
----------- ---------
Net cash used for investing activities (18,229) (112,204)
----------- ---------
Financing activities:
Repayment of notes payable and long-term debt (6,549) (4,898)
Transfer to restricted cash (495) --
----------- ---------
Net cash used for financing activities (7,044) (4,898)
----------- ---------
Change in cash (850,258) (343,640)
Cash, beginning of period 1,119,790 759,393
----------- ---------
Cash, end of period $ 269,532 $ 415,753
=========== =========
Supplemental Cash Flow Information:
Cash paid for interest $ 1,956 $ 95,385
5
GUNTHER INTERNATIONAL LTD.
Notes to Condensed Consolidated Financial Statements
1. BASIS OF PRESENTATION:
In the opinion of management, the accompanying unaudited interim condensed
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States and contain all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the financial position and the results of operations and cash
flows for the interim periods presented. These financial statements should be
read in conjunction with the consolidated financial statements and related notes
included in the Company's Annual Report on Form 10-KSB for the fiscal year ended
March 31, 2002. The results of operations for the interim periods are not
necessarily indicative of results to be expected for the full year. The
condensed consolidated balance sheet as of March 31, 2002 was derived from the
audited financial statements at that date.
Certain prior period amounts have been reclassified to conform to the current
presentation.
2. LIQUIDITY:
The Company's primary need for liquidity is to fund operations while it
endeavors to increase sales and achieve consistent profitability. Historically,
the Company has derived liquidity through systems and maintenance sales
(including customer deposits), financing arrangements with banks and other third
parties and, from time to time, sales of its equity securities.
Under the Company's normal sales policy, approximately 50% of the sales price of
each system is received by the Company within 30 days from the time an order is
placed; approximately 40% is received at the time the system is shipped and the
remaining 10% is received approximately 30 days after delivery of the system. As
a result, the Company receives a significant cash flow benefit from the receipt
of new orders.
At June 30, 2002, backlog for high-speed assembly system and upgrade orders,
consisting of total contract price less revenue recognized to date for all
signed orders on hand, was $3.1 million compared to $1.9 million at March 31,
2002 and $1.1 million at June 30, 2001.
At June 30, 2002, the Company had a deficiency in working capital of $1,658,000.
Also, for the quarter ended June 30, 2002 the Company incurred a net loss of
$1,088,000 and used cash of $825,000 in operating activities.
On July 3 and August 7, 2002, the Company borrowed $700,000 and $100,000,
respectively, from a shareholder and member of the Board of Directors to
alleviate a cash deficiency. These borrowings were evidenced by 8% notes payable
which are due on or before December 31, 2002.
The ability of the Company to continue as a going concern may be dependent upon
obtaining long-term financing to support its liquidity needs until it achieves a
sufficient order flow to generate profitable operating results and positive cash
flows from operating activities. The accompanying financial statements do not
include any adjustments to the amounts or classification of assets and
liabilities which might be required should the Company be unable to continue its
operation in the ordinary course of business.
6
Item 2. Management's Discussion and Analysis or Plan of Operation
RESULTS OF OPERATIONS
System revenues consist of sales of high-speed assembly systems, upgrades to
previously sold systems and inc.jet imager systems.
Assembly system revenues for the three months ended June 30, 2002 decreased
$152,000, or 9%, to $1.5 million from $1.7 million for the three months ended
June 30, 2001. The Company utilizes the percentage of completion method to
determine assembly systems revenues. Under this method the amount of revenue
recorded in any one period is dependent upon the actual costs incurred during
the period and, as such, is subject to some volatility from period to period. A
summary of orders, revenue recognized and backlog for the each of the last four
fiscal quarters for the high speed assembly systems and related upgrades is as
follows:
(in millions)
--------------------------------------------------------------------------------------------------------------------
June 30, 2002 March 31, 2002 December 31, 2001 September 30, 2001
--------------------------------------------------------------------------------------------------------------------
Backlog, beginning of period $1.9 $2.3 $2.5 $ .3
--------------------------------------------------------------------------------------------------------------------
Orders 2.7 1.6 2.0 3.2
--------------------------------------------------------------------------------------------------------------------
Revenue recognized (1.5) (2.0) (2.2) (1.0)
--------------------------------------------------------------------------------------------------------------------
Backlog, end of period $3.1 $1.9 $2.3 $2.5
--------------------------------------------------------------------------------------------------------------------
Backlog consists of total contract price less revenue recognized to date for all
signed orders on hand. Based on the order backlog as of June 30, 2002, the
Company believes that second quarter revenues recognized for high-speed assembly
systems will be higher than the first quarter revenues stated above.
inc.jet imager revenues for the three months ended June 30, 2002 decreased to
$232,000, or 42%, from $403,000 for the three months ended June 30, 2001. The
decrease in revenues is primarily a result of customers deferring orders in
anticipation of the release of the V4 imager in the third quarter.
While maintenance revenues remained steady at $2.7 million for the three months
ended June 30, 2002 and June 30, 2001, actual maintenance contract revenue
increased year over year by $160,000, while special order maintenance revenues
declined as a result of a one-time event in 2001.
Supplies revenues consist of ink cartridges, bladders and miscellaneous parts
and supplies related to inc.jet. Revenues have increased 200% quarter over
quarter as a result of aggressive pricing and a marketing campaign begun in
fiscal 2002 to target the dealer market.
Total gross profit decreased by $487,000, or 44%, to $623,000 for the three
months ended June 30, 2002 from $1,110,000 for the three months ended June 30,
2001. The gross margin on system revenues decreased to a loss of $41,000 for the
three months ended June 30, 2002 from $360,000 profit for the three months ended
June 30, 2001. This was primarily due to a decrease in the volume of high-speed
assembly systems in production during the period, while certain overhead
expenses were not reduced in response to lower volume in an effort not to
jeopardize future production levels. inc.jet imager gross margin decreased from
68% for the quarter ended June 30, 2001 to 61% for the quarter ended June 30,
2002 primarily as a result of the under absorption of overhead costs because of
lower volume.
The gross margin on maintenance sales decreased to 20% for the three months
ended June 30, 2002 from 26% for the three months ended June 30, 2001. This
decrease is primarily attributable to the revenues remaining flat while costs
(primarily parts) increased by 7%. In the past, the Company has expensed service
parts when shipped to a customer location. The Company has embarked on a program
to repatriate a majority of this service parts inventory. As a result of the new
program, the Company will write the service parts back into inventory over a
period of time at zero value. As these parts are actually consumed, the Company
will recognize a favorable impact to cost of sales as a result of the zero cost
basis.
inc.jet supply gross margins have declined from 25% for the quarter ended June
2001 to 16% for the quarter ended June 2002 primarily as a result of price
pressure in the marketplace as well as an increase in sales volume to dealers
which generates a lower profit margin.
Selling and administrative expenses increased $247,000, or 20%, to $1.5 million
for the three months ended June 30, 2002 from $1.3 million for the three months
ended June 30, 2001. Selling and administrative expenses, as a percentage of
total revenues, for the three months ended June 30, 2002 and 2001 were 29% and
25%, respectively. These increases are primarily attributable to an increase in
expenses related to inc.jet ($118,000), marketing expenses related to the
roll-out of the Series W product line ($50,000) and an increase in employee
health care costs ($30,000).
7
Research and development expenses decreased $154,000, or 43%, to $200,000 for
the three months ended June 30, 2002 from $354,000 for the three months ended
June 30, 2001. Research and development expenses for the three months ended June
30, 2001 were primarily attributable to the completion of certain features on
the Series W, documentation for the production of the Series W and development
of the V4 inc.jet imagers.
Interest expense declined substantially between the three month periods ended
June 30, 2002 and 2001 as a result of the extinguishment of the debt owed to
Gunther Partners, LLC and various other parties in November of 2001.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary need for liquidity is to fund operations while it
endeavors to increase sales and achieve consistent profitability. Historically,
the Company has derived liquidity through systems and maintenance sales
(including customer deposits), financing arrangements with banks and other third
parties and, from time to time, sales of its equity securities.
Under the Company's normal sales policy, approximately 50% of the sales price of
each high-speed assembly system is received by the Company within 30 days from
the time an order is placed; approximately 40% is received at the time the
system is shipped and the remaining 10% is received approximately 30 days after
delivery of the system. As a result, the Company receives a significant cash
flow benefit from the receipt of new orders.
At June 30, 2002, the Company had a deficiency in working capital of $1,658,000.
For the quarter then ended, the Company incurred a net loss of $1,088,000 and
used cash of $825,000 in operating activities. The Company's liquidity position
during the quarter was adversely affected by several nonrecurring factors. Of
most significance, there was an unexpected delay on a contract payment of
$610,000. This amount will ultimately be collected during the second and third
quarters of fiscal 2002. Several other customers delayed making scheduled
payments aggregating $125,000 which were due during the quarter. Management
expects that all of these amounts will be paid during the second quarter.
As a result of the cash deficiency caused by the foregoing factors, on July 3
and August 7, 2002, the Company borrowed $700,000 and $100,000, respectively,
from a shareholder and member of the Board of Directors to alleviate a cash
deficiency. These borrowings were evidenced by 8% notes payable which are due on
or before December 31, 2002.
On a going forward basis, management believes that it will have sufficient cash
to fund its obligations throughout the balance of the year. At March 31 and June
30, 2002, backlog for high-speed assembly system and upgrade orders, consisting
of total contract price less revenue recognized to date for all signed orders on
hand was $1.9 and $3.1 million, respectively, as compared to $1.3 and $0.3
million at March 31 and June 30, 2001, respectively. Assuming no new orders, the
backlog at June 30, 2002 is expected to generate approximately $1,600,000 of
cash during the second fiscal quarter and $1,500,000 of cash during the third
fiscal quarter. Assuming high-speed assembly system sales achieve budgeted
levels, management expects to receive approximately $700,000 in additional
customer deposits during the second fiscal quarter and $1,900,000 in customer
deposits during the third and fourth fiscal quarters. These amounts, when
aggregated with the other scheduled payments, are expected to be sufficient to
fund the Company's operations during the balance of the fiscal year.
The Company's cash needs may be affected by a number of factors, however, many
of which are beyond the control of management. See "Forward Looking Statements,"
below. Also, there can be no assurance that the Company's actual sales will
achieve budgeted levels. Thus, there can be no assurance that the Company will
not need significantly more cash than is presently forecasted by management or
that the Company's current and expected sources of cash will be sufficient to
fund the Company's ongoing operations.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended. In general, any
statements contained in this report that are not statements of historical fact
may be deemed to be forward-looking statements within the meaning of Section
21E. Without limiting the generality of the foregoing, the words "believes,"
"anticipates," "plans," "expects," and other similar expressions are intended to
identify forward-looking statements. Investors should be aware that such
forward-looking statements are based on the current expectations of management
and are inherently subject to a number of risks and uncertainties that could
cause the actual results of the Company to differ materially from those
reflected in the forward-looking statements. Some of the important factors which
could cause actual results to differ materially from those projected include,
but are not limited to, the following: general economic conditions and growth
rates in the finishing and related industries; competitive factors and pricing
pressures; changes in the Company's product mix; technological obsolescence of
existing products and the timely development and acceptance of new products;
inventory risks due to shifts in market demands; component constraints and
shortages; the ramp-up and expansion of manufacturing capacity; and the
continued availability of financing. The Company does not
8
undertake to update any forward-looking statement made in this report or that
may from time-to-time be made by or on behalf of the Company.
GUNTHER INTERNATIONAL LTD.
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
During the quarter ended June 30, 2002, the Company credited an
aggregate of 33,336 shares of Common Stock to the accounts of six
directors who were participating in the Gunther International Ltd.
Directors' Equity Plan (the "Plan"). In accordance with the terms of
the Plan, each participating director is entitled to receive grants of
Common Stock in lieu of a quarterly cash retainer. The number of shares
which each director is entitled to receive each fiscal quarter is equal
to (a) $2,500, divided by (b) the fair market value of a share of
Common Stock as of the last business day of the quarter. The fair
market value of the Common Stock on the last business day of the
quarter was $0.45 per share. Each director elected to defer receipt of
the shares credited to his account. In addition, an aggregate of 8,421
shares of Common Stock were actually delivered to one former director
as a result of his cessation of service. No underwriters were used in
connection with any of the foregoing transactions and, accordingly,
there were no underwriting discounts or commissions. The issuance of
these securities was exempt from registration under the Securities Act
of 1933 in reliance upon Section 4(2) thereof and the rules and
regulations promulgated thereunder.
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits required by Item 601 of Regulation S-B:
3.1 Restated Certificate of Incorporation of the registrant, dated as
of December 29, 1993 (filed as Exhibit 3.1 to the registrant's Form
10-QSB for the period ended September 30, 2001 and incorporated
herein by reference).
3.2 Certificate of Amendment to the registrant's Restated Certificate
of Incorporation dated as of October 22, 2001 (filed as Exhibit 3.2
to the registrant's Form 10-QSB for the period ended September 30,
2001, and incorporated herein by reference).
10.1 Employment agreement, dated as of April 1, 2001, between the
registrant and Jeremy H. Greshin.
10.2 Promissory Note, dated July 3, 2002, made by the registrant to the
order of Robert Spiegel.
10.3 Promissory Note, dated August 7, 2002, made by the registrant to
the order of Robert Spiegel.
10.4 Letter agreement between the registrant and John K. Carpenter dated
June 14, 2002.
99.1 Certification of Marc I. Perkins, Chief Executive Officer, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
99.2 Certification of John K. Carpenter, Chief Financial Officer,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
B. Reports on Form 8-K.
None
9
GUNTHER INTERNATIONAL LTD.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GUNTHER INTERNATIONAL LTD.
(Registrant)
/s/ John K. Carpenter Date: August 13, 2002
-------------------------------
John K. Carpenter
Chief Financial Officer and Treasurer
(On behalf of the Registrant and as
Principal Financial and Accounting Officer)
10
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into
as of the 1st day of April, 2001, by and between Gunther International, Ltd., a
Delaware corporation (the "Employer"), and Jeremy Greshin, an individual
resident in the State of Connecticut (the "Sales Executive").
RECITALS:
The Employer desires to secure the employment of the Sales Executive,
and the Sales Executive wishes to become employed by the Employer, upon the
terms and conditions set forth in this Agreement.
Now, therefore, the parties intending to be legally bound, hereby agree
as follows:
1. DEFINITIONS. For the purposes of this Agreement, the
following terms shall have the meanings specified or referred to in this
Section 1.
"AGREEMENT" shall mean this Employment Agreement, as amended from time
to time.
"BASIC COMPENSATION" shall mean Salary and Benefits.
"BENEFITS" shall have the meaning given to such term in Section 3.1(b)
hereof.
"BOARD OF DIRECTORS" shall mean the board of directors of the Employer.
"CONFIDENTIAL INFORMATION" shall mean and include any and all:
(a) trade secrets concerning the business and affairs of
the Employer, product specifications, data, know-how, formulae, compositions,
processes, designs, sketches, photographs, graphs, drawings, samples, inventions
and ideas, past, current, and planned research and development, current and
planned manufacturing or distribution methods and processes, customer lists,
current and anticipated customer requirements, price lists, market studies,
business plans, computer software and programs (including object code and source
code), computer software and database technologies, systems, structures, and
architectures (and related formulae, compositions, processes, improvements,
devices, know-how, inventions, discoveries, concepts, ideas, designs, methods
and information), and any other information, however documented, that is a trade
secret within the meaning of Chapter 625 of the Connecticut General Statutes;
and
(b) information concerning the business and affairs of the
Employer (which includes historical financial statements, financial projections
and budgets, historical and projected sales, capital spending budgets and plans,
the names and backgrounds of key personnel, and personnel training and
techniques and materials), however documented; and
(c) notes, analysis, compilations, studies, summaries, and
other material prepared by or for the Employer containing or based, in whole or
in part, on any information included in the foregoing.
"DISABILITY" shall have the meaning given to such term in Section 6.2
hereof.
"EFFECTIVE DATE" shall mean April 1, 2001.
"EMPLOYEE INVENTION" shall mean any idea, invention, technique,
modification, process, or improvement (whether patentable or not), any
industrial design (whether registerable or not), any mask work, however fixed or
encoded, that is suitable to be fixed, embedded or programmed in a semiconductor
product (whether recordable or not), and any work of authorship (whether or not
copyright protection may be obtained for it) created, conceived, or developed by
the Sales Executive, either solely or in conjunction with others, during the
Employment Period, or a period that includes a
1
portion of the Employment Period, that relates in any way to, or is useful in
any manner in, the business then being conducted or proposed to be conducted by
the Employer, and any such item created by the Sales Executive, either solely or
in conjunction with others, following termination of the Sales Executive's
employment with the Employer, that is based upon or uses Confidential
Information.
"EMPLOYMENT PERIOD" shall mean the term of the Sales Executive's
employment under this Agreement.
"FISCAL YEAR" shall mean the Employer's fiscal year, as it exists on
the Effective Date or as changed from time to time.
"FOR CAUSE" shall have the meaning given to such term in Section 6.3
hereof.
"FOR GOOD REASON" shall have the meaning given to such term in Section
6.4 hereof.
"PERSON" shall mean any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, or
governmental body.
"POST-EMPLOYMENT PERIOD" shall have the meaning given to such term in
Section 8.2 hereof.
"PROPRIETARY ITEMS" shall have the meaning given to such term in
Section 7.2(a)(iv) hereof.
"SALARY" shall have the meaning given to such term in Section 3.1(a)
hereof.
"SALES" shall mean the sum of all orders received for Gunther inserting
equipment and upgrades to existing Gunther equipment received during the
relevant period. An order shall be counted as such once Gunther has received a
signed contract and deposit from the purchaser. The exception shall be in the
case of the Federal Government, in which case a signed contract shall be
sufficient.
2. EMPLOYMENT TERMS AND DUTIES.
2.1 EMPLOYMENT. The Employer hereby employs the Sales
Executive, and the Sales Executive hereby accepts employment by the Employer,
upon the terms and conditions set forth in this Agreement.
2.2 TERM. Subject to the provisions of Section 6, the term
of the Sales Executive's employment under this Agreement shall commence as of
the Effective Date and continue until terminated by either party in accordance
with the provisions of Section 6 hereof.
2.3 DUTIES. The Sales Executive will have such duties as
are assigned or delegated to the Sales Executive by the Chief Sales Executive
Officer of the Employer. The Sales Executive will devote his entire business
time, attention, skill, and energy exclusively to the business of the Employer,
will use his best efforts to promote the success of the Employer's business, and
will cooperate fully with the Board of Directors in the advancement of the best
interests of the Employer. Nothing in this Section 2.3, however, will prevent
the Sales Executive from engaging in additional activities in connection with
personal investments and community affairs that are not inconsistent with the
Sales Executive's duties under this Agreement.
3. COMPENSATION.
3.1 BASIC COMPENSATION.
(a) SALARY. The Sales Executive will be paid an
annual salary of $135,000.00, from April 1, 2001 through March 31, 2002, subject
to adjustment as provided below, which will be payable in equal periodic
installments according to the Employer's customary payroll practices, but no
less frequently than monthly. From April 1, 2002 through March 31, 2003, the
Sales Executive will be paid an annual salary of $100,000, subject to adjustment
as provided below, which will be payable in equal periodic installments
according to the Employer's customary payroll practices,
2
but no less frequently than monthly. The Sales Executive's entitlement to Salary
is subject to the provisions of Section 6.
(b) BENEFITS. The Sales Executive will, during
the Employment Period, be permitted to participate in such pension, profit
sharing, bonus, life insurance, hospitalization, major medical, and other
employee benefit plans of the Employer that may be in effect from time to time,
to the extent the Sales Executive is eligible under the terms of those plans
(collectively, the "Benefits"). The Sales Executive's entitlement to Benefits is
subject to the provisions of Section 6.
(c) AUTOMOBILE EXPENSES. In addition to the
foregoing, the Employer shall provide the Sales Executive with an allowance of
Three Hundred Fifty ($350.00) per month for expenses related to an automobile
used for business. The Sales Executive's entitlement to Automobile Expenses is
subject to the provisions of Section 6.
3.2 SALES INCENTIVE COMPENSATION. As additional
compensation for the services to be rendered by the Sales Executive pursuant to
this Agreement, the Sales Executive shall be entitled to a Sales Performance
Bonus. The Sales Executive's eligibility to receive a Sales Performance Bonus is
divided into three separate incentive periods as shown below: The Sales
Executive's entitlement to Sales Incentive Compensation is subject to the
provisions of Section 6. In the event the Sales Executive's employment is
terminated for any reason other than for cause, Sales Incentive Compensation
shall be paid through his last day of employment.
A. For the period beginning on April 1, 2001 and ending
September 30, 2001: .30% of Sales greater than $5,000,000 up to $5,625,000 (or a
maximum bonus of $1,875). An additional $5,000 bonus for sales greater than
$5,625,000; an additional $5,000 bonus for sales greater than $6,250,000; an
additional $5,000 bonus for sales greater than $6,875,000; an additional $5,000
bonus for sales greater than $7,500,000; an additional $5,000 bonus for sales
greater than $8,125,000; an additional $5,000 bonus for sales greater than
$8,750,000; an additional $5,000 bonus for sales greater than $9,375,000; an
additional $25,000 bonus for sales greater than $10,000,000. (For example, if
sales are greater than $10,000,000 for the six months ended September 30, 2001,
the Sales Executive will be entitled to a total Sales Incentive Bonus of $61,875
for the six-month period ($1,875 + $5,000 + $5,000 + $5,000 + $5,000 + $5,000 +
$5,000 + $5,000 + $25,000).
B. For the period beginning on October 1, 2001 and ending
March 31, 2002: .30% of Sales greater than $5,000,000 up to $5,625,000 (or a
maximum bonus of $1,875). An additional $5,000 bonus for sales greater than
$5,625,000; an additional $5,000 bonus for sales greater than $6,250,000; an
additional $5,000 bonus for sales greater than $6,875,000; an additional $5,000
bonus for sales greater than $7,500,000; an additional $5,000 bonus for sales
greater than $8,125,000; an additional $5,000 bonus for sales greater than
$8,750,000; an additional $5,000 bonus for sales greater than $9,375,000; an
additional $25,000 bonus for sales greater than $10,000,000. (For example, if
sales are greater than $10,000,000 for the six months ended March 31, 2002, the
Sales Executive will be entitled to a total Sales Incentive Bonus of $61,875 for
the six-month period ($1,875 + $5,000 + $5,000 + $5,000 + $5,000 + $5,000 +
$5,000 + $5,000 + $25,000).
C. For the period beginning on April 1, 2002 and ending
March 31, 2003: .30% of Sales. The Sales Executive will be paid a nonrefundable
draw of thirty thousand dollars against this incentive bonus. The Sales
Executive shall receive an additional $10,000 bonus for sales greater than
$10,000,000; an additional $10,000 bonus for sales greater than $11,250,000; an
additional $10,000 bonus for sales greater than $12,500,000; an additional
$10,000 bonus for sales greater than $13,750,000; an additional $10,000 bonus
for sales greater than $15,000,000; an additional $10,000 bonus for sales
greater than $16,250,000; an additional $10,000 bonus for sales greater than
$17,500,000; an additional $10,000 bonus for sales greater than $18,750,000; an
additional $50,000 bonus for sales greater than $20,000,000. (For example, if
the sales are equal to$20,000,000, the Sales Executive will be entitled to a
total Sales Incentive Bonus of $190,000 for the twelve month period ($60,000 +
$10,000 + $10,000 + $10,000 + $10,000 + $10,000 + $10,000 + $10,000 + $10,000 +
$50,000).
4. FACILITIES AND EXPENSES. The Employer will furnish the Sales
Executive office space, equipment, supplies, and such other facilities and
personnel as the Employer deems necessary or appropriate for the performance of
the Sales Executive's duties under this Agreement. The Employer
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will pay the Sales Executive's dues in such professional societies and
organizations as the Chief Executive deems appropriate, and will pay on behalf
of the Sales Executive (or reimburse the Sales Executive for) reasonable
expenses incurred by the Sales Executive at the request of, or on behalf of, the
Employer in the performance of the Sales Executive's duties pursuant to this
Agreement, and in accordance with the Employer's employment policies, including
reasonable expenses incurred by the Sales Executive in attending conventions,
seminars, and other business meetings, in appropriate business entertainment
activities, and for promotional expenses. The Sales Executive must file expense
reports with respect to such expenses in accordance with the Employer's
policies.
5. VACATIONS AND HOLIDAYS. The Sales Executive will be entitled
to three weeks' paid vacation during the first two years of his employment. If
still employed thereafter, he will be entitled to four weeks' paid vacation
annually. Vacation must be taken by the Sales Executive at such time or times as
approved by the Chief Executive Officer. The Sales Executive will also be
entitled to paid holidays and other paid leave, as set forth in the Employer's
policies. Vacation days and holidays during any Fiscal Year that are not used by
the Sales Executive during such Fiscal Year may not be used in any subsequent
Fiscal Year.
6. TERMINATION.
6.1 EVENTS OF TERMINATION. The Employment Period, the
Sales Executive's Basic Compensation, and any and all other rights of the Sales
Executive under this Agreement or otherwise as an employee of the Employer will
terminate (except as otherwise provided in this Section 6):
(a) upon ninety (90) days' prior written notice
from one party to the other;
(b) upon the death of the Sales Executive;
(c) upon the disability of the Sales Executive
(as defined in Section 6.2) immediately upon notice from either party to the
other;
(d) For Cause (as defined in Section 6.3),
immediately upon notice from the Employer to the Sales Executive, or at such
later time as such notice may specify; or
(e) For Good Reason (as defined in Section 6.4)
upon not less than thirty days' prior notice from the Sales Executive to the
Employer.
6.2 DEFINITION OF DISABILITY. For purposes of Section
6.1, the Sales Executive will be deemed to have a "disability" if, for physical
or mental reasons, the Sales Executive is unable to perform the essential
functions of the Sales Executive's duties under this Agreement for 30
consecutive business days.
6.3 DEFINITION OF "FOR CAUSE." For purposes of
Section 6.1, the phrase "For Cause" means: (a) the Sales Executive's material
breach of this Agreement; (b) the Sales Executive's failure to adhere to any
written Employer policy after the Sales Executive has been given a reasonable
opportunity to comply with such policy or cure his failure to comply (which
reasonable opportunity must be granted during the ten-day period preceding
termination of this Agreement); (c) the appropriation (or attempted
appropriation) of a material business opportunity of the Employer, including
attempting to secure or securing any personal profit in connection with any
transaction entered into on behalf of the Employer; (d) the misappropriation (or
attempted misappropriation) of any of the Employer's funds or property; or (e)
the conviction of, the indictment for (or its procedural equivalent), or the
entering of a guilty plea or plea of no contest with respect to, a felony, the
equivalent thereof, or any other crime with respect to which imprisonment is a
possible punishment.
6.4 DEFINITION OF "FOR GOOD REASON." For purposes of
Section 6.1, the phrase "For Good Reason" means any of the following: (a) the
Employer's material breach of this Agreement; (b) the assignment of the Sales
Executive without his consent to a position, responsibilities, or duties of a
materially lesser status or degree of responsibility than his position,
responsibilities, or duties at the Effective Date; or (c) the relocation of the
Employer's principal Sales Executive offices to a location or
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place that is more than fifty miles from the location of the Employer's
principal Sales Executive officers as of the Effective Date or the requirement
by the Employer that the Sales Executive be based anywhere other than the
Employer's principal Sales Executive offices, in either case without the Sales
Executive's consent.
6.5 TERMINATION PAY. Effective upon the termination of
this Agreement, the Employer will be obligated to pay the Sales Executive (or,
in the event of his death, his designated beneficiary as defined below) only
such compensation as is provided in this Section 6.5, and in lieu of all other
amounts and in settlement and complete release of all claims the Sales Executive
may have against the Employer. For purposes of this Section 6.5, the Sales
Executive's designated beneficiary will be such individual beneficiary or trust,
located at such address, as the Sales Executive may designate by notice to the
Employer from time to time or, if the Sales Executive fails to give notice to
the Employer of such a beneficiary, the Sales Executive's estate.
Notwithstanding the preceding sentence, the Employer will have no duty, in any
circumstances, to attempt to open an estate on behalf of the Sales Executive, to
determine whether any beneficiary designated by the Sales Executive is alive or
to ascertain the address of any such beneficiary, to determine the existence of
any trust, to determine whether any person or entity purporting to act as the
Sales Executive's personal representative (or the trustee of a trust established
by the Sales Executive) is duly authorized to act in that capacity, or to locate
or attempt to locate any beneficiary, personal representative, or trustee.
(a) TERMINATION BY THE SALES EXECUTIVE FOR GOOD
REASON. If the Sales Executive terminates this Agreement For Good Reason, the
Employer will pay the Sales Executive (i) the Sales Executive's Salary for the
remainder, if any, of the calendar month in which such termination is effective
and for six (6) consecutive calendar months thereafter. Notwithstanding the
preceding sentence, if the Sales Executive obtains other employment prior to the
end of the six (6) months following the month in which the termination is
effective, he must promptly give notice thereof to the Employer, and the Salary
payments under this Agreement for any period after the Sales Executive obtains
other employment will be reduced by the amount of the cash compensation received
and to be received by the Sales Executive from the Sales Executive's other
employment for services performed during such period. The Sales Executive shall
also receive the Sales Incentive Compensation referred to in 3.2.
(b) TERMINATION BY THE EMPLOYER FOR CAUSE. If the
Employer terminates this Agreement for cause, the Sales Executive will be
entitled to receive his Salary only through the date such termination is
effective.
(c) TERMINATION UPON DISABILITY. If this Agreement
is terminated by either party as a result of the Sales Executive's disability,
as determined under Section 6.2, the Employer will pay the Sales Executive his
Salary through the remainder of the calendar month during which such termination
is effective and for the lesser of (i) three consecutive months thereafter, or
(ii) the period until disability insurance benefits commence under the
disability insurance coverage furnished by the Employer to the Sales Executive,
if any.
(d) TERMINATION UPON DEATH. If this Agreement is
terminated because of the Sales Executive's death, the Sales Executive will be
entitled to receive his Salary through the end of the calendar month in which
his death occurs.
(e) TERMINATION BY WRITTEN NOTICE. If this
Agreement is terminated by either party pursuant to Section 6.1(a) hereof, the
Sales Executive will be entitled to receive his Salary through the termination
date of his employment, which shall be at least ninety (90) days from the date
of the notice.
(f) BENEFITS. The Sales Executive's accrual of,
or participation in plans providing for, the Benefits will cease at the
effective date of the termination of this Agreement, and the Sales Executive
will be entitled to accrued Benefits pursuant to such plans only as provided in
such plans. The Sales Executive will not receive, as part of his termination pay
pursuant to this Section 6, any payment or other compensation for any vacation,
holiday, sick leave, or other leave unused on the date the notice of termination
is given under this Agreement.
7. NON-DISCLOSURE COVENANT; EMPLOYEE INVENTIONS.
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7.1 ACKNOWLEDGMENTS BY THE SALES EXECUTIVE. The Sales
Executive acknowledges that (a) during the Employment Period and as a part of
his employment, the Sales Executive will be afforded access to Confidential
Information; (b) public disclosure of such Confidential Information could have
an adverse effect on the Employer and its business; (c) because the Sales
Executive possesses substantial technical expertise and skill with respect to
the Employer's business, the Employer desires to obtain exclusive ownership of
each Employee Invention, and the Employer will be at a substantial competitive
disadvantage if it fails to acquire exclusive ownership of each Employee
Invention; (d) the Buyer has required that the Sales Executive make the
covenants in this Section 7 as a condition to its purchase of the Employer's
stock; and (e) the provisions of this Section 7 are reasonable and necessary to
prevent the improper use or disclosure of Confidential Information and to
provide the Employer with exclusive ownership of all Employee Inventions.
7.2 AGREEMENTS OF THE SALES EXECUTIVE. In consideration of
the compensation and benefits to be paid or provided to the Sales Executive by
the Employer under this Agreement, the Sales Executive covenants as follows:
(a) CONFIDENTIALITY.
(i) During and following the Employment
Period, the Sales Executive will hold in confidence the Confidential Information
and will not disclose it to any person, except with the specific prior written
consent of the Employer or except as otherwise expressly permitted by the terms
of this Agreement.
(ii) Any trade secrets of the Employer
will be entitled to all of the protections and benefits under Chapter 625 of the
Connecticut General Statutes and any other applicable law. If any information
that the Employer deems to be a trade secret is found by a court of competent
jurisdiction not to be a trade secret for purposes of this Agreement, such
information will, nevertheless, be considered Confidential Information for
purposes of this Agreement. The Sales Executive hereby waives any requirement
that the Employer submit proof of the economic value of any trade secret or post
a bond or other security.
(iii) None of the foregoing obligations and
restrictions applies to any part of the Confidential Information that the Sales
Executive demonstrates was or became generally available to the public other
than as a result of a disclosure by the Sales Executive.
(iv) The Sales Executive will not remove
from the Employer's premises (except to the extent such removal is for purposes
of the performance of the Sales Executive's duties at home or while traveling,
or except as otherwise specifically authorized by the Employer) any document,
record, notebook, plan, model, component, device, or computer software or code,
whether embodied in a disk or in any other form (collectively, the "Proprietary
Items"). The Sales Executive recognizes that, as between the Employer and the
Sales Executive, all of the Proprietary Items, whether or not developed by the
Sales Executive, are the exclusive property of the Employer. Upon termination of
this Agreement by either party, or upon the request of the Employer during the
Employment Period, the Sales Executive will return to the Employer all of the
Proprietary Items in the Sales Executive's possession or subject to the Sales
Executive's control, and the Sales Executive shall not retain any copies,
abstracts, sketches, or other physical embodiment of any of the Proprietary
Items.
(b) EMPLOYEE INVENTIONS. Each Employee Invention
will belong exclusively to the Employer. The Sales Executive acknowledges that
all of the Sales Executive's writings, works of authorship, and other Employee
Inventions are works made for hire and the property of the Employer, including
any copyrights, patents, or other intellectual property rights pertaining
thereto. If it is determined that any such works are not works made for hire,
the Sales Executive hereby assigns to the Employer all of the Sales Executive's
right, title, and interest, including all rights of copyright, patent, and other
intellectual property rights, to or in such Employee Inventions. The Sales
Executive covenants that he will promptly:
(i) disclose to the Employer in writing
any Employee Invention;
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(ii) assign to the Employer or to a party
designated by the Employer, at the Employer's request and without additional
compensation, all of the Sales Executive's right to the Employee Invention for
the United States and all foreign jurisdictions;
(iii) execute and deliver to the Employer
such applications, assignments, and other documents as the Employer may request
in order to apply for and obtain patents or other registrations with respect to
any Employee Invention in the United States and any foreign jurisdictions;
(iv) sign all other papers necessary to
carry out the above obligations; and
(v) give testimony and render any other
assistance (but without expense to the Sales Executive) in support of the
Employer's rights to any Employee Invention.
7.3 DISPUTES OR CONTROVERSIES. The Sales Executive
recognizes that should a dispute or controversy arising from or relating to this
Agreement be submitted for adjudication to any court, arbitration panel, or
other third party, the preservation of the secrecy of Confidential Information
may be jeopardized. All pleadings, documents, testimony, and records relating to
any such adjudication will be maintained in secrecy and will be available for
inspection by the Employer, the Sales Executive, and their respective attorneys
and experts, who will agree, in advance and in writing, to receive and maintain
all such information in secrecy, except as may be limited by them in writing.
8. NON-INTERFERENCE.
8.1 ACKNOWLEDGMENTS BY THE SALES EXECUTIVE. The Sales
Executive hereby acknowledges that: (a) the services to be performed by him
under this Agreement are of a special, unique, unusual, extraordinary, and
intellectual character; (b) the Employer's business is national in scope and its
products are marketed throughout the United States; (c) the Employer competes
with other businesses that are or could be located in any part of the United
States; (d) the Employer has required that the Sales Executive make the
covenants set forth in this Section 8 as a condition to the Employer's
willingness to employ the Sales Executive pursuant to this Agreement; and (e)
the provisions of this Section 8 are reasonable and necessary to protect the
Employer's business.
8.2 COVENANTS OF THE SALES EXECUTIVE. In consideration of
the foregoing acknowledgments by the Sales Executive, and in consideration of
the compensation and benefits to be paid or provided to the Sales Executive by
the Employer, the Sales Executive covenants that he will not, directly or
indirectly:
(a) whether for the Sales Executive's own account
or the account of any other person (i) at any time during the Employment Period
and the Post-Employment Period, solicit, employ, or otherwise engage as an
employee, independent contractor, or otherwise, any person who is or was an
employee of the Employer at any time during the Employment Period or in any
manner induce or attempt to induce any employee of the Employer to terminate his
employment with the Employer; or (ii) at any time during the Employment Period
and for three years thereafter, interfere with the Employer's relationship with
any person, including any person who at any time during the Employment Period
was an employee, contractor, supplier, or customer of the Employer; or
(b) at any time during or after the Employment
Period, disparage the Employer or any of its shareholders, directors, officers,
employees, or agents.
For purposes of this Section 8.2, the term "Post-Employment
Period" means the three-year period beginning on the date of termination of the
Sales Executive's employment with the Employer.
If any covenant in this Section 8.2 is held to be
unreasonable, arbitrary, or against public policy, such covenant will be
considered to be divisible with respect to scope, time, and geographic area, and
such lesser scope, time, or geographic area, or all of them, as a court of
competent
7
jurisdiction may determine to be reasonable, not arbitrary, and not against
public policy, will be effective, binding, and enforceable against the Sales
Executive.
The period of time applicable to any covenant in this Section
8.2 will be extended by the duration of any violation by the Sales Executive of
such covenant.
The Sales Executive will, while the covenant under this
Section 8.2 is in effect, give notice to the Employer, within ten days after
accepting any other employment, of the identity of the Sales Executive's
employer. The Buyer or the Employer may notify such employer that the Sales
Executive is bound by this Agreement and, at the Employer's election, furnish
such employer with a copy of this Agreement or relevant portions thereof.
9. GENERAL PROVISIONS.
9.1 INJUNCTIVE RELIEF AND ADDITIONAL REMEDY. The Sales
Executive hereby acknowledges that the injury that would be suffered by the
Employer as a result of a breach of the provisions of this Agreement (including
any provision of Sections 7 and 8) would be irreparable and that an award of
monetary damages to the Employer for such a breach would be an inadequate
remedy. Consequently, the Employer will have the right, in addition to any other
rights it may have, to obtain injunctive relief to restrain any breach or
threatened breach or otherwise to specifically enforce any provision of this
Agreement, and the Employer will not be obligated to post bond or other security
in seeking such relief. Without limiting the Employer's rights under this
Section 9 or any other remedies of the Employer, if the Sales Executive breaches
any of the provisions of Section 7 or 8, the Employer will have the right to
cease making any payments otherwise due to the Sales Executive under this
Agreement.
9.2 COVENANTS OF SECTIONS 7 AND 8 ARE ESSENTIAL AND
INDEPENDENT COVENANTS. The covenants by the Sales Executive in Sections 7 and 8
are essential elements of this Agreement, and without the Sales Executive's
agreement to comply with such covenants, the Buyer would not have entered into
this Agreement or employed or continued the employment of the Sales Executive.
The Employer and the Sales Executive have independently consulted their
respective counsel and have been advised in all respects concerning the
reasonableness and propriety of such covenants, with specific regard to the
nature of the business conducted by the Employer.
The Sales Executive's covenants in Sections 7 and 8 are
independent covenants and the existence of any claim by the Sales Executive
against the Employer under this Agreement or otherwise, or against the Buyer,
will not excuse the Sales Executive's breach of any covenant in Section 7 or 8.
If the Sales Executive's employment hereunder expires or is
terminated, this Agreement will continue in full force and effect as is
necessary or appropriate to enforce the covenants and agreements of the Sales
Executive in Sections 7 and 8.
9.3 REPRESENTATIONS AND WARRANTIES BY THE SALES
EXECUTIVE. The Sales Executive represents and warrants to the Employer that the
execution and delivery by the Sales Executive of this Agreement do not, and the
performance by the Sales Executive of the Sales Executive's obligations
hereunder will not, with or without the giving of notice or the passage of time,
or both: (a) violate any judgment, writ, injunction, or order of any court,
arbitrator, or governmental agency applicable to the Sales Executive; or (b)
conflict with, result in the breach of any provisions of or the termination of,
or constitute a default under, any agreement to which the Sales Executive is a
party or by which the Sales Executive is or may be bound.
9.4 OBLIGATIONS CONTINGENT ON PERFORMANCE. The
obligations of the Employer hereunder, including its obligation to pay the
compensation provided for herein, are contingent upon the Sales Executive's
performance of the Sales Executive's obligations hereunder.
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9.5 WAIVER. The rights and remedies of the parties to
this Agreement are cumulative and not alternative. Neither the failure nor any
delay by either party in exercising any right, power, or privilege under this
Agreement will operate as a waiver of such right, power, or privilege, and no
single or partial exercise of any such right, power, or privilege will preclude
any other or further exercise of such right, power, or privilege or the exercise
of any other right, power, or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right arising out of this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement.
9.6 BINDING EFFECT; DELEGATION OF DUTIES PROHIBITED. This
Agreement shall inure to the benefit of, and shall be binding upon, the parties
hereto and their respective successors, assigns, heirs, and legal
representatives, including any entity with which the Employer may merge or
consolidate or to which all or substantially all of its assets may be
transferred. The duties and covenants of the Sales Executive under this
Agreement, being personal, may not be delegated.
9.7 NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand, (b) sent by facsimile, provided
that a copy is mailed by registered mail, return receipt requested, or (c) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
facsimile numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by notice to the other parties):
If to Employer:
Gunther International, Ltd.
One Winnenden Road
Norwich, CT 06360
Attn: Chairman of the Board
Facsimile No.: (860) 886-8889
If to the Sales Executive:
Jeremy Greshin
132 Old Canal Way
Simsbury, Connecticut 06089
9.8 ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
Stock Option contain the entire agreement between the parties with respect to
the subject matter hereof and supersede all prior agreements and understandings,
oral or written, between the parties hereto with respect to the subject matter
hereof. This Agreement may not be amended orally, but only by an agreement in
writing signed by the parties hereto.
9.9 GOVERNING LAW. This Agreement will be governed by
the laws of the State of Connecticut without regard to conflicts of laws
principles.
9.10 JURISDICTION. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
may be brought against either of the parties in the courts of the State of
Connecticut, County of Hartford, or, if it has or can acquire jurisdiction, in
the United States District Court for the District of Connecticut, and each of
the parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on either party anywhere in the world.
9.11 SECTION HEADINGS, CONSTRUCTION. The headings of
Sections in this Agreement are provided for convenience only and will not affect
its construction or interpretation. All references to "Section" or "Sections"
refer to the corresponding Section or Sections of this Agreement unless
otherwise specified. All words used in this Agreement will be construed to be of
such gender or
9
number as the circumstances require. Unless otherwise expressly provided, the
word "including" does not limit the preceding words or terms.
9.12 SEVERABILITY. If any provision of this Agreement is
held invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
9.13 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which will be deemed to be an original copy of
this Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement.
9.14 WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY
WAIVE A JURY TRIAL IN ANY LITIGATION WITH RESPECT TO
THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date above first written above.
GUNTHER INTERNATIONAL, LTD.
By: /s/ Marc I. Perkins
-----------------------------------------
Marc I. Perkins
President and Chief Executive Officer
Gunther International Ltd.
/s/ Jeremy Greshin
-----------------------------------------
Jeremy Greshin
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