EMPLOYMENT AND EXECUTIVE SEVERANCE AGREEMENT

 

         THIS EMPLOYMENT AGREEMENT (this "Agreement") is effective as of the

10th day of March 2003 (the "Effective Date"), by and between MAIL-WELL, INC., a

Colorado corporation (the "Company") and Paul V. Reilly ("Executive").

 

                              W I T N E S S E T H:

 

         WHEREAS, the Company is engaged in, among other businesses, the

businesses of commercial printing, envelope manufacturing and printing, printing

of custom business documents, and printing of labels ("Business");

 

         WHEREAS, Executive is recognized as having experience in the management

and operation of the Company, having served, successively, as Chief Financial

Officer, President and Chief Operating Officer, and Chief Executive Officer and

Chairman of the Board of the Company;

 

         WHEREAS, the Board of Directors of the Company (the "Board") has

determined that it is in the best interests of the Company and its stockholders

to enter into this Agreement to assure that the Company will have the continued

dedication of Executive;

 

         WHEREAS, the Board believes it is imperative (i) to diminish the

inevitable and significant distractions of Executive and dilution of the time of

Executive, by virtue of the personal uncertainties and risks created by a

pending or threatened Triggering Event; (ii) to encourage Executive's full

attention and dedication to the Company currently and in the event of any

threatened or pending Triggering Event; (iii) to provide Executive with

compensation arrangements in the event of a Triggering Event which provide

Executive with financial security, which are competitive with those of other

corporations; (iv) to ensure that following a Triggering Event Executive does

not engage in activities or business pursuits which may threaten or damage the

Company; (v) to retain the services of Executive for a reasonable period of time

following any Triggering Event; and (vi) to obtain a full and complete Release

from Executive should a separation of employment occur in connection with or

subsequent to a Triggering Event; and

 

         WHEREAS, in order to accomplish the objectives described in the

immediately preceding recitals, the Board desires to cause the Company to enter

into this Agreement as set forth herein.

 

         NOW, THEREFORE, in consideration of the premises, the mutual covenants

and agreements contained in this Agreement, and other good and valuable

consideration, the receipt and sufficiency of which are hereby acknowledged, the

Company and Executive hereby agree as follows:

 

 

 

 

 

                                    ARTICLE I

                        EMPLOYMENT, REPORTING AND DUTIES

 

         1.1  Employment. On the terms and subject to the conditions of this

              ----------

Agreement, the Company hereby employs and engages the services of Executive to

serve as President and Chief Executive Officer and Chairman of the Board, and

Executive agrees to diligently and competently serve as and perform the

functions of President and Chief Executive Officer and Chairman of the Board

(the "Office") for the term and for the compensation and benefits stated herein.

 

         1.2  Major Responsibilities; Authority. Executive shall have the

              ---------------------------------

authorities, duties, responsibilities and status (including offices, titles and

reporting requirements) usually associated with the Office of companies or

divisions of companies having operations, subsidiaries and assets similar in

nature and value to the operations, subsidiaries and assets of the Company or

its divisions. Executive shall also have such other duties as the Board shall

determine and Executive shall accept from time to time.

 

         1.3  Extent of Service. During the Term (as defined in Section 4.1),

              -----------------

and excluding any periods of vacation and sick leave to which Executive may be

entitled, Executive agrees to devote reasonable time and energies to the

Business consistent with past practice and shall not, during the Term, be

engaged in any business activity which would interfere or prevent Executive

from carrying out Executive's duties under this Agreement.

 

                                   ARTICLE II

                         COMPENSATION AND RELATED ITEMS

 

         2.1  Compensation.

              ------------

 

              (a) Base Salary. As compensation and consideration for the

                  -----------

         services to be rendered by Executive under this Agreement and for the

         performance by Executive of the usual obligations of such employment,

         the Company agrees to pay Executive during the Term, and Executive

         agrees to accept, a base salary ("Base Salary") of $600,000 per annum

         which shall be paid in accordance with Company's standard payroll

         practice. Executive's Base Salary may change from time to time, as

         determined by the Board of Directors, and after any such change,

         Executive's new level of Base Salary shall be Executive's Base Salary

         for purposes of this Agreement until the effective date of any

         subsequent change.

 

              (b) Additional Compensation. In addition to the Base Salary

                  -----------------------

         provided for in Section 2.1(a), Executive and/or Executive's family,

         as the case may be, shall be entitled during the Term to participate

         in, and shall receive benefits under:

 

                  (i)    any and all welfare benefit and similar

              employee benefit plans, programs, arrangements, or policies

              that are generally made available by the Company and its

              affiliates now or at any time in the future to other key

              employees or former key employees (to the extent such

              benefits remain available to former key employees), including,

              but not limited to, any hospitalization, medical,

 

                                       2

 

 

 

 

 

              prescription, dental, disability, salary continuance,

              individual life insurance, group life insurance, accidental

              death insurance, and travel accident insurance plans,

              programs, arrangements, and policies;

 

                  (ii)   any and all bonus, incentive, savings,

              retirement, profit sharing, pension, stock option, restricted

              stock, employee stock ownership, supplemental executive

              retirement and other employee benefit plans, programs,

              arrangements, and policies that are generally made available

              by the Company and its affiliates now or at any time in the

              future to officers and other key employees;

 

                  (iii)  annual vacations and sick leave in accordance

              with the vacation and sick leave policies of the Company and

              its affiliates that are now or at any time in the future in

              effect with respect to officers and other key employees,

              during which time Executive's compensation shall be paid in

              full; and

 

                  (iv)   fringe benefits in accordance with the fringe

              benefit policies of the Company and its affiliates that are

              now or at any time in the future in effect with respect to

              officers and other key employees.

 

         2.2  Expenses. The Company agrees that, during the Term, Executive

              --------

shall be allowed reasonable and necessary business expenses in connection with

the performance of Executive's duties hereunder within guidelines established

by the Board as in effect at any time with respect to key employees ("Business

Expenses"), including, but not limited to, reasonable and necessary expenses for

food, travel, lodging, entertainment and other items in the promotion of the

Business within such guidelines. The Company shall promptly reimburse Executive

for all reasonable Business Expenses incurred by Executive upon Executive's

presentation to the Company of an itemized account thereof, together with

receipts, vouchers, or other supporting documentation. After termination of

Executive's employment under this Agreement, however such termination may come

about, Executive shall have ninety (90) days after the date of such termination

to submit Business Expenses incurred during the Term to the Company for

reimbursement.

 

         2.3  Working Facilities. Executive shall be furnished with an office of

              ------------------

a size and with other furnishings and appointments, administrative staff,

secretarial and other assistants, stenographic help, and such other facilities

and services as are suitable to Executive's position and adequate for the

performance of Executive's duties. Executive's place of employment will not be

relocated to a location in excess of thirty-five (35) miles from Englewood,

Colorado, except for required travel on Company business.

 

                                       3

 

 

 

 

 

                                   ARTICLE III

                                   EXCULPATION

 

         The Company agrees that Executive will not be liable for any losses,

expenses, costs or damages caused by or resulting from the recommendations,

suggestions, actions, errors, omissions or mistakes of Executive undertaken or

proposed by Executive if Executive acted in good faith and in a manner he

reasonably believed to be in or not opposed to the best interests of the

Company. Executive's rights under this Article III shall not be deemed exclusive

of, but shall be cumulative with, any and all other rights (including, but not

limited to, rights of indemnification and advancement of expenses) to which

Executive may now or at any time in the future be entitled under applicable law,

the Company's articles of incorporation, the Company's bylaws, any agreement

(including, but not limited to, this Agreement), any vote of stockholders, any

resolution of directors, or otherwise.

 

                                   ARTICLE IV

                              TERM AND TERMINATION

 

         4.1  Term. The term of Executive's employment under this Agreement

              ----

("Term") shall be, unless otherwise terminated pursuant to Section 4.2, for an

initial term of two years commencing on the Effective Date (the "Initial Term")

and shall automatically be renewed for successive periods of one year each

thereafter (each, a "Renewal Term") unless Executive delivers written notice of

termination to the Company, or the Company delivers written notice of

termination to Executive, at least 60 days prior to the end of the Initial Term

or any Renewal Term. Upon delivery of any such written notice of termination,

the Term shall expire at the end of the Initial Term or Renewal Term next

occurring after such delivery.

 

         4.2  Termination of Employment. Except as may otherwise be provided

              -------------------------

herein, Executive's employment under this Agreement may terminate, and the Term

shall terminate, upon the occurrence of:

 

              (a) Notice by Company. Ten (10) days after written notice of

                  -----------------

         termination is given by the Company to Executive;

 

              (b) Notice by Executive. One-hundred twenty (120) days after

                  -------------------

         written notice of termination is given by Executive to the Company;

 

              (c) Death or Disability. Executive's death or, at the

                  -------------------

         Company's option upon Executive's becoming Disabled (as defined in

         Section 4.6 hereof); or

 

              (d) Triggering Event. One hundred twenty (120) days after

                  ----------------

         written notice of termination is given by Executive to the Company upon

         the occurrence of a Triggering Event (as defined in Section 6.1 and

         6.2).

 

         Any notice of termination given by the Company to Executive under

Section 4.2(a) above shall specify whether such termination is with or without

Cause (as defined in Section 4.4 hereof). Any notice of termination given by

Executive to the Company under Section 4.2(b)

 

                                       4

 

 

 

 

 

above shall specify whether such termination is made with or without Good

Reason (as defined in Section 4.5 hereof). Any notice of termination given by

Executive to the Company under Section 4.2(d) above shall specify whether such

termination is made with or without Good Reason (as defined in Section 4.5

hereof).

 

         4.3  Obligations of the Company Upon Termination.

              -------------------------------------------

 

              (a) Cause; Without Good Reason. If the Company terminates

                  --------------------------

         Executive's employment under this Agreement with Cause pursuant to

         Section 4.2(a) hereof, or if Executive terminates his employment

         without Good Reason, then Executive's employment with the Company

         shall terminate without further obligations to Executive, other than

         those obligations owing or accrued to, vested in, or earned by

         Executive through the date of termination, including, but not limited

         to:

 

                  (i)    to the extent not theretofore paid, Executive's

              Base Salary in effect at the time of such termination through

              the date of termination;

 

                  (ii)   in the case of compensation previously deferred

              by Executive, all amounts previously deferred (together with

              any accrued interest thereon) and not yet paid by the Company;

              and

 

                  (iii)  all other amounts or benefits owing or accrued

              to, vested in or earned by Executive through the date of

              termination under the then existing or applicable plans,

              programs, arrangements, and policies of the Company and its

              affiliates, including, but not limited to, any such plans,

              programs, arrangements, or policies described in Section

              2.1(b) hereof;

 

                  The obligations owing or accrued to, vested in, or earned by

         Executive through the date of termination, including, but not limited

         to, such amounts and benefits specified in clauses (i), (ii), and (iii)

         of this section 4.3(a) shall be hereinafter collectively referred to as

         the "Accrued Obligations." The Accrued Obligations, shall be paid or

         caused to be paid by the Company to Executive in accordance with the

         plans, programs or agreements under which the Accrued Obligations were

         earned.

 

              (b) Good Reason; Without Cause. If Executive terminates

                  --------------------------

         Executive's employment under this Agreement with Good Reason pursuant

         to Section 4.2(b), or if the Company terminates Executive's employment

         without Cause, then Executive's employment with the Company shall

         terminate, and in lieu of any other severance benefit that would

         otherwise be payable to Executive:

 

                  (i)    the Company shall pay the aggregate of the

              following amounts to Executive in one lump sum within ninety

              (90) days after the effective date of such termination or in a

              manner and at such later time as specified by Executive,

              provided that all such payments must be made no later than the

              last day of the twenty-four (24) month period commencing on

              the date of such termination:

 

                                       5

 

 

 

 

 

                         (A) all Accrued Obligations;

 

                         (B) an amount equal to the sum: of (x) two

                  (2) times Executive's Base Salary in effect at the

                  time of such termination (but prior to giving effect

                  to any reduction therein which precipitated such

                  termination), and (y) two times Executive's target

                  bonus (at 100% of plan) for the calendar year in

                  which such termination occurred, and (z) the pro-rata

                  share of Executive's target bonus for the calendar

                  year in which such termination occurred based upon

                  the proportion that the number of complete months in

                  such calendar year up to the date of termination

                  bears to the complete calendar year;

 

                         (C) if Executive elects medical or dental

                  coverage under the Company's group medical or dental

                  plans pursuant to Section 4980B of the Internal

                  Revenue Code of 1986, as amended ("Code") ("COBRA

                  Coverage"), the Company shall reimburse Executive,

                  promptly upon request by Executive (upon presentation

                  of reasonable documentation showing prior payment),

                  an amount equal to the premium paid each month by

                  Executive for COBRA Coverage during the first twelve

                  (12) months of such COBRA Coverage (or during such

                  shorter period that COBRA Coverage for Executive is

                  in effect);

 

                         (D) such individual outplacement service as

                  is appropriate for Executive's position for up to 24

                  months after termination of employment for a cost not

                  to exceed $15,000; and

 

                         (E) assistance to Executive to be provided

                  by a nationally recognized accounting firm selected

                  by the Company or other mutually agreeable accounting

                  firm for federal and state income tax preparation for

                  Executive for the calendar year in which such

                  termination of employment occurs.

 

                  (ii)   nothing herein shall preclude the Company from

              granting additional severance benefits to Executive upon

              termination of employment.

 

              (c) Death. If Executive's employment is terminated under

                  -----

         Section 4.2(c) hereof by reason of Executive's death, the Company shall

         pay to Executive's legal representatives the full amount of the Accrued

         Obligations in accordance with the plans, programs, or agreements under

         which the Accrued Obligations were earned.

 

              (d) Disability. If Executive's employment is terminated under

                  ----------

         Section 4.2(c) hereof by reason of Executive becoming Disabled then the

         Company shall pay to Executive or Executive's legal representative the

         full amount of the Accrued Obligations in accordance with the plans,

         programs, or agreements under which the Accrued Obligations were

         earned.

 

                                       6

 

 

 

 

 

         4.4  Cause. As used in this Agreement, the term "Cause" means (i)

              -----

willful misconduct by Executive or gross neglect by Executive of his duties as

an employee, officer or director of the Company which continues for more than

thirty (30) days after Executive's receipt of written notice from the Board to

Executive specifically identifying the willful misconduct or gross negligence of

Executive and directing Executive to discontinue the same, (ii) the commission

by Executive of a crime constituting a felony, or (iii) the commission by

Executive of an act, other than an act taken in good faith within the course and

scope of Executive's employment, which is directly detrimental to the Company

and exposes the Company to material liability.

 

         4.5  Good Reason.

              -----------

 

              (a) As used in this Agreement, the term "Good Reason" means:

 

                  (i)    a substantial diminution in the nature of

              Executive's authorities, duties, responsibilities or status

              (including offices, titles, reporting requirements and

              supervisory functions) from those in effect at the time of

              execution of this Agreement. Notwithstanding the foregoing,

              Executive shall not assert as "Good Reason" the sole fact that

              a portion of Executive's duties and responsibilities directly

              attributable to a change in the ownership of the Company or a

              Business Segment, as the case may be, has been eliminated (the

              "Eliminated Duties and Responsibilities"), unless the

              performance of all or a material portion of the Eliminated

              Duties and Responsibilities continue to be required;

 

                  (ii)   the required relocation of Executive's place

              of employment to a location in excess of thirty-five (35)

              miles from the Executive's place of employment at the time

              Executive terminates employment, except for required travel

              on Company business to an extent substantially equivalent to

              Executive's business travel obligations at the time of

              execution of this Agreement;

 

                  (iii)  any reduction by the Company of Executive's

              base salary, or a material reduction in Executive's bonus

              opportunities, profit sharing opportunities, or other

              incentive opportunities from those in effect at the time of

              execution of this Agreement;

 

                  (iv)   the Company breaches any material provision of

              this Agreement and such breach is not cured within thirty (30)

              days after the Company's receipt of notice thereof from

              Executive;

 

                  (v)    the failure of the Company to continue in

              effect Executive's participation in the Company's employee

              benefit plans, programs, arrangements and policies, at a level

              substantially equivalent in value to and on a basis consistent

              with the relative levels of participation of other similarly

              positioned employees; or

 

                  (vi)   the failure of the Company to obtain from a

              successor (including a successor to a material portion of the

              business or assets of the Company) a

 

                                       7

 

 

 

 

 

              satisfactory assumption in writing of the Company's

              obligations under this Agreement;

 

                  (vii)  the failure of the Company to continue to

              provide Executive with office space, related facilities and

              support personnel (including, but not limited to,

              administrative and secretarial assistance) that are both

              commensurate in all material respects with the Office and

              Executive's responsibilities to and position with the Company

              and not materially dissimilar to the office space, related

              facilities and support personnel provided to other key

              executive officers of the Company;

 

                  (viii) the Company notifies Executive of the

              Company's intention not to observe or perform one or more of

              the material obligations of the Company under this Agreement;

 

                  (x)    the failure or refusal of the Company to renew

              this Agreement (by giving Executive Notice of such decision

              pursuant to Section 4.1); or

 

                  (xi)   without, in each case, Executive's prior written

              consent, (A) the removal of Executive as Chairman of the Board

              of Directors of the Company, if it is a surviving entity in

              the change-in-control transaction of the type described in

              Section 6.1 herein, or (B) the failure of Executive to be

              named as Chairman of the Board of Directors of any successor

              to the Company (a "Successor Entity"), or (C) the failure of

              Executive to be nominated for election as Chairman of the

              Board of Directors of the Company or any Successor Entity or

              (D) the failure of Executive to be elected or reelected as

              Chairman of the Board of Directors of the Company or any such

              Successor Entity, or (E) the failure of Executive to be

              appointed as Chairman of the Board of Directors of any entity

              that controls the Company or any Successor Entity (a

              "Controlling Entity") or (F) the removal of Executive as

              Chairman of the Board of Directors of any Controlling Entity,

              or (G) the failure of Executive to be nominated for election

              as Chairman of the Board of Directors of any Controlling

              Entity, or (H) the failure of Executive to be elected or

              reelected as Chairman of the Board of Directors of any

              Controlling Entity.

 

              (b) New Office. If, at any time during the Term of this

                  ----------

         Agreement, whether before or after the occurrence of a Triggering

         Event, Executive receives a written description from the Company of the

         nature of Executive's authorities, duties, responsibilities, status,

         salary, bonus and other employee benefits, or job location thereafter,

         and Executive accepts in writing such new authorities, duties,

         responsibilities, status, salary, bonus and other employee benefits, or

         job location ("New Office") with the Company without determining that

         the New Office causes a Good Reason as set forth in Section 4.5(a),

         then for the remaining Term, the New Office shall be the authorities,

         duties, responsibilities, status, salary, bonus and other employee

         benefits, or job location to be used by Executive in determining

         whether Good Reason occurs thereafter pursuant to Section 4.5(a).

 

                                       8

 

 

 

 

 

 

         4.6  Disabled. As used herein, "Disabled" shall mean a mental or

              --------

physical impairment which, in the reasonable opinion of a qualified doctor

selected by the Company, renders Executive unable to perform with reasonable

diligence the ordinary functions and duties of Executive on a full-time basis in

accordance with the terms of this Agreement, which inability continues for a

period of not less than 180 consecutive days.

 

         4.7  Affiliate. As used herein, "affiliate" and "affiliates" shall

              ---------

mean, when used with respect to any specified entity, individual, or other

person, any other entity, individual, or other person which, directly or

indirectly, through one or more intermediaries controls, or is controlled by, or

is under common control with such specified entity, individual or person. The

term "control" and derivations thereof when used in the immediately preceding

sentence means the ownership, directly or indirectly, of 50% or more of the

outstanding voting equity interests of an entity or other person or possessing

the power to direct or cause the direction of the management and policies of

such entity or other person, whether through the ownership of voting equity

interests, by contract or otherwise.

 

         4.8  Return of Materials; Confidential Information. In connection with

              ---------------------------------------------

Executive's separation from employment for any reason, Executive shall return

any and all property belonging to the Company including, but not limited to, any

and all documents or other media containing Confidential and Proprietary

Information, any customer information, production information,

manufacturing-related information, pricing information, files, memoranda,

reports, pass codes/access cards, training or other reference manuals, Company

vehicle, telephone, gas cards or other Company credit cards, keys, computers,

laptops, including any computer disks, software, facsimile machines, printers,

telephones, pagers or the like.

 

         4.9  Legal Fees and Expenses. If Executive shall substantially prevail

              -----------------------

in any contest by the Company or others contesting the validity or enforcement

of, or liability under, any term or provision of this Agreement, the Company

shall pay any and all reasonable attorneys' fees and expenses incurred by

Executive as a result of any such contest. Otherwise, each party shall bear his,

her or its own expenses in connection with any such contest.

 

         4.10 Non-exclusivity of Rights. Nothing in this Agreement shall prevent

              -------------------------

or limit Executive's continuing or future participation in any benefit, bonus,

incentive or other plan, program, arrangement or policy provided by the Company

or any of its affiliates (including, but not limited to, any plan, program,

arrangement or policy described in Section 2.1(b) hereof) and for which

Executive and/or Executive's family may qualify, nor shall anything herein limit

or otherwise affect such rights as Executive and/or Executive's family may have

under the Indemnity Agreement previously entered into between Executive and the

Company, and all stock option agreements between Executive and the Company now

in effect or hereafter entered into.

 

         4.11 Full Payment; No Mitigation Obligation. The Company's obligation

              --------------------------------------

to make the payments provided for in sections 4.3(b)(i)(B)-(E) of this Agreement

and otherwise to perform its obligations hereunder shall be subject to any

set-off, counterclaim, recoupment, defense or other claim, right or action which

the Company may have against Executive, and is also contingent upon Executive's

execution of the release described in Section 4.12 below. In no

 

 

                                       9

 

 

 

 

 

event shall Executive be obligated to seek other employment or take any other

action by way of mitigation of the amounts payable to Executive under any of the

provisions of this Agreement.

 

         4.12 Delivery of Release. Within thirty (30) days after termination of

              -------------------

Executive's employment for any reason, the Company shall provide to Executive,

or Executive's legal representative, a form of written release, which form shall

be satisfactory to the Company and generally consistent with the form of release

used by the Company prior to such termination of employment (the "Release"). As

a condition to the obligation of the Company to make the payments provided for

in this Agreement and otherwise perform its obligations hereunder to Executive

upon termination of Executive's employment, Executive, or Executive's legal

representative, shall execute and deliver the Release to the Company.

 

         4.13 Allocations. The payments made under Section 4.3(b)(i)(B)-(E)

              -----------

shall, in the aggregate, be in consideration for the Executive's separate

agreements under Sections 4.12 and 6.4 and Article V of this Agreement and, in

part, to provide Executive certain additional severance benefits under the

circumstances set forth in this Section 4.3. The allocation of the aggregate

payment as the specific consideration for each separate agreement of Executive

and as an additional severance benefit shall be in the sole discretion of the

Company.

 

         4.14 Mitigation. Executive agrees to do anything reasonably requested

              ----------

by Company to mitigate the effects of Sections 280G and 4999 of the Internal

Revenue Code of 1986, as amended (the "Code") or any interest or penalties

incurred by Executive with respect to such excise tax (such excise tax, together

with any such interest or penalties, are hereinafter collectively referred to as

the "Excise Tax") by agreeing to a reallocation of the payments made by the

Company pursuant to Section 4.13 above. In addition, at the option of the

Executive, if a reduction in the payments made under Section 4.3(b)(i)(B)-(E)

would eliminate some or all of the Excise Taxes, the payment payable under such

Sections will be reduced by the amount that will eliminate the imposition of

such Excise Tax. Executive agrees that any such election shall be made based on

the independent tax advice received by the Executive.

 

         4.15 Exceptions. Section 4.3(b)(i)(B)-(E) shall not apply to the

              ----------

termination by the Company of Executive's employment if Executive continues

employment with, or is offered employment by the Company or its successor on

terms that would not otherwise qualify as Good Reason.

 

                                    ARTICLE V

                      NON-COMPETITION AND NON-SOLICITATION

 

         5.1  Non-Competition.

              ---------------

 

              (a) Executive acknowledges that during his employment with the

         Company he has enjoyed a position of trust and confidence that gave him

         complete access to Confidential and Proprietary Information, which has

         value to the Company.

 

              (b) Executive agrees that he will continue to protect the

         confidentiality of all such Confidential and Proprietary Information

         and will not disclose it to third parties for

 

                                       10

 

 

 

 

 

         a period of five (5) years from his separation from employment with

         the Company for any reason. It is understood that this prohibition

         may be enforced by injunctive relief because the disclosure of such

         information would be likely to result in irreparable injury to the

         Company.

 

              (c) Executive acknowledges that his service as President and

         CEO of the Company means that he comes within the statutory exception

         contained in subsection 2(d) of C.R.S. Section 8-2-113, which allows

         for non-competition agreements between employers and executives,

         managers, officers and professional staff. Because of his virtually

         unlimited access to Confidential and Proprietary Information, which is

         of value to the Company, Executive also acknowledges that his

         subsequent employment by a competitor would be more likely than not to

         result in the inevitable disclosure of the trade secrets of the

         Company.

 

              (d) Executive accordingly agrees that for the term of this

         Agreement and for a period of two (2) years following his separation

         from employment for any reason that he shall not directly or indirectly

         engage in competition with the Company by taking any of the following

         actions:

 

                  (i)    Owning, managing, operating, joining, controlling

              or providing services to (or participating in the ownership,

              management, operation or control of, other than as a holder of

              less than 5% of the shares of a public company), aiding or

              assisting any corporation, association, partnership, limited

              liability company, proprietorship or other business entity,

              regardless of form, that at any location in the United States

              or Canada engages in the business of commercial, envelope,

              label and/or office products printing, as such businesses are

              currently engaged in by the Company or as may be engaged in by

              the Company at the time of termination of Executive's

              employment;

 

                  (ii)   Serving as an employee, agent, consultant,

              officer, director, advisor, or creditor of any such business

              entity or enterprise described in (i) above;

 

                  (iii)  Inducing or attempting to induce any customer,

              supplier or business relation of the Company to cease doing

              business with the Company or in any other way interfering with

              the relationship between any customer, supplier or business

              relation and the Company; or

 

                  (iv)   Executive acknowledges that the restrictions set

              forth above are reasonable and appropriate to protect the

              Confidential and Proprietary Information of value to the

              Company, which would be inevitably disclosed if he competed,

              directly or indirectly, as set forth above. If however, a

              court determines that any of the foregoing restrictions are

              unreasonable in duration, scope or area of restriction, then

              Executive and the Company agree that the restrictions shall be

              applied only to the activities and territory, and only for the

 

                                       11

 

 

 

 

 

              period of time, that the court determines reasonable in light

              of all then-existing circumstances.

 

         5.2  Non-Solicitation of Employees. The Executive agrees that for the

              -----------------------------

term of this Agreement and for a period of two (2) years following his

separation from employment for any reason he shall not directly or indirectly

solicit or recruit, or attempt to solicit or recruit, or hire, or attempt to

hire, any employee of the Company who is employed by the Company or was employed

by the Company at any time during the last year of the Executive's employment

with the Company.

 

         5.3  Confidential Information. As used herein, "Confidential and

              ------------------------

Proprietary Information" means all information of a technical or business nature

such as ideas, discoveries, inventions, improvements, trade secrets, know-how,

manufacturing processes, specifications, writings and other works of authorship,

computer programs, software and data, source codes, financial figures and

reports, marketing plans and data, customer lists and data, business plans or

data which relate to the actual or anticipated business of the Company of any of

its affiliates or their actual or anticipated areas of research and development,

evaluations of, and the use or non-use by Company or any of its affiliates of,

technical or business information in the public domain, forecasts, strategic

plans, arrangements with manufacturers, suppliers, brokers and other third

parties, financing plans, personnel records, customer lists, manuals, records,

information regarding actual or potential customers or suppliers, marketing

plans, present and proposed trade marks, service marks, names, brands and

labels, packaging and advertising plans and data, product formulations,

regulatory plans, programs and data, legal matters, patent and trademark matters

and any proprietary or secret information (whether such information is owned by,

licensed to or otherwise possessed by the Company or any of its affiliates),

whether patentable or not. Executive shall, both during and after Executive's

employment with the Company, protect and maintain the confidential, trade secret

and/or proprietary character of all Confidential Information. Executive shall

not, during or after termination of Executive's employment, directly or

indirectly, use (for Executive or another) or disclose any Confidential

Information, except as may be necessary for the performance of Executive's

duties under this Agreement. Executive shall deliver promptly to the Company, at

the termination of Executive's employment, or at any other time at the Company's

request, without retaining any copies, all documents and other material in

Executive's possession relating, directly or indirectly, to any Confidential

Information. Each of Executive's obligations in this Section 5.3 shall also

apply to the confidential, trade secret and proprietary information learned or

acquired by Executive during Executive's employment from others with whom the

Company or any of its affiliates has a business relationship.

 

         5.4  Specific Enforcement; Modification. Executive acknowledges that

              ----------------------------------

the provisions of Sections 5.1, 5.2 and 5.3 are reasonable and necessary for the

protection of the Company and that the Company will be irrevocably damaged if

such provisions are not specifically enforced. Accordingly, Executive agrees

that, in addition to any other remedy to which the Company may be entitled, the

Company shall be entitled to seek and obtain injunctive relief from a court of

competent jurisdiction for the purposes of restraining it from any actual or

threatened breach of such provisions, without bond or other security being

required. Should a court of competent jurisdiction declare any of the covenants

set forth in Article V unenforceable, the court shall be

 

                                       12

 

 

 

 

 

empowered to modify and reform such covenants so as to provide relief reasonably

necessary to protect the interests of the Company and Executive and to award

injunctive relief, or damages, or both, to which the Company may be entitled.

 

         5.5  Provisions Not Exclusive. The provisions of Sections 5.1, 5.2, 5.3

              ------------------------

and 5.4 do not supercede or replace any non-competition, confidentiality or

non-solicitation agreements between Executive and the Company or any of its

affiliates now in effect or entered into in the future.

 

                                   ARTICLE VI

                      FUNDAMENTAL CHANGES/TRIGGERING EVENTS

 

         6.1  Triggering Event. As used herein, the term "Triggering Event"

              ----------------

shall mean the occurrence with respect to the Company of any of the following

events:

 

              (a) a report on Schedule 13D is filed with the Securities and

         Exchange Commission pursuant to Section 13(d) of the Securities

         Exchange Act of 1934, as amended (the "Exchange Act"), disclosing that

         any person, entity or group (within the meaning of Section 13(d) or

         14(d) of the Exchange Act), other than (i) the Company (or one of its

         subsidiaries) or (ii) any employee benefit plan sponsored by the

         Company (or one of its subsidiaries), is the beneficial owner (as such

         term is defined in Rule 13d-3 promulgated under the Exchange Act),

         directly or indirectly, of 50% or more of the outstanding shares of

         common stock of the Company or 50% or more of the combined voting power

         of the then outstanding securities of the Company (as determined under

         paragraph (d) of Rule 13d-3 promulgated under the Exchange Act, in the

         case of rights to acquire common stock or other securities);

 

              (b) an event of a nature that would be required to be reported

         in response to Item 1(a) of the Current Report on Form 8-K, as in

         effect on the date hereof, pursuant to Section 13 or 15(d) of the

         Exchange Act or would have been required to be so reported but for the

         fact that such event had been "previously reported" as that term is

         defined in Rule 12b-2 promulgated under the Exchange Act;

 

              (c) any person, entity or group (within the meaning of Section

         13(d) or 14(d) of the Exchange Act), other than (i) the Company (or one

         of its subsidiaries) or (ii) any employee benefit plan sponsored by the

         Company (or one of its subsidiaries), shall become the beneficial owner

         (as such term is defined in Rule 13d-3 promulgated under the Exchange

         Act), directly or indirectly, of 50% or more of the outstanding shares

         of common stock of the Company or 50% or more of the combined voting

         power of the then outstanding securities of the Company (as determined

         under paragraph (d) of Rule 13d-3 promulgated under the Exchange Act,

         in the case of rights to acquire common stock or other securities);

 

              (d) the stockholders of the Company shall approve any

         liquidation or dissolution of the Company;

 

                                       13

 

 

 

 

 

              (e) the stockholders of the Company shall approve a merger,

         consolidation, reorganization, recapitalization, exchange offer,

         acquisition or disposition of assets or other transaction after the

         consummation of which any person, entity or group (within the meaning

         of Section 13(d) or 14(d) of the Exchange Act) would become the

         beneficial owner (as such term is defined in Rule 13d-3 promulgated

         under the Exchange Act), directly or indirectly, of 50% or more of the

         outstanding shares of common stock of the Company or 50% or more of the

         combined voting power of the then outstanding securities of the Company

         (as determined under paragraph (d) of Rule 13d-3 promulgated under the

         Exchange Act, in the case of rights to acquire common stock or other

         securities);

 

              (f) individuals who constitute the Board on the date hereof

         ("Incumbent Board") cease for any reason to constitute at least a

         majority thereof, provided that any person becoming a director

         subsequent to the date hereof whose election, or nomination for

         election by the Company's stockholders, was approved by a vote of at

         least two-thirds of the directors comprising the remaining members of

         the Incumbent Board (either by a specific vote or by approval of the

         proxy statement of the Company in which such person is named as a

         nominee for director, without objection to such nomination) shall be,

         for purposes of this clause (f), considered as though such person were

         a member of the Incumbent Board; or

 

              (g) a recapitalization or other transaction or series of

         related transactions occurs which results in a decrease by 50% or more

         in the aggregate percentage ownership of the then outstanding common

         stock of the Company or 50% or more in the combined voting power of the

         outstanding securities of the Company held by the stockholders of the

         Company immediately prior to giving effect thereto (on a primary basis

         or on a fully diluted basis after giving effect to the exercise of

         stock options and warrants).

 

         6.2  Obligations of the Company upon Termination in Anticipation

              -----------------------------------------------------------

of, on or after a Section 6.1 Triggering Event.

----------------------------------------------

 

         Good Reason; Without Cause. If, during the Term of this Agreement,

         --------------------------

Executive terminates Executive's employment with the Company, pursuant to

Section 4.2(d), on or after the occurrence of a Triggering Event of the type

described in Section 6.1 above with Good Reason, or if during the Term of this

Agreement, the Company terminates Executive's employment with the Company

without Cause in anticipation of, on or after the occurrence of a Triggering

Event of the type described in Section 6.1 above and in lieu of any other

severance benefits that would otherwise be payable to Executive, the Company

shall pay that amount due and owing to Executive under Section 4.3(b) above,

plus an additional amount equal to (i) one (1) times Executive's Base Salary in

effect at the time of such termination (but prior to giving effect to any

reduction thereof which precipitated such termination). In consideration of such

additional payments by the Company to Executive, Executive agrees to extend the

term of his non-competition and non-solicitation obligations described in

Article V of this Agreement from a period of two (2) years following his

separation from employment to a period of three (3) years following his

separation from employment.

 

 

                                       14

 

 

 

 

         6.3  Stay-on Requirement. In consideration for the agreements of the

              -------------------

Company hereunder and as a condition for the payments to be made to pursuant to

Section 6.2 hereof, Executive agrees that Executive will not terminate his

employment with the Company prior to or within one hundred twenty (120) days

following a Triggering Event.

 

                                   ARTICLE VII

                               GENERAL PROVISIONS

 

         7.1  Governing Law. This Agreement shall be governed by and construed

              -------------

in accordance  with the laws of the state of Colorado.

 

         7.2  Assignability. This Agreement is personal to Executive and without

              -------------

the prior written consent of the Company shall not be assignable by Executive

other than by will or the laws of descent and distribution. This Agreement shall

inure to the benefit of and be enforceable by Executive's legal representatives

and heirs. This Agreement shall inure to the benefit of and be binding upon the

Company and its successors and assigns. The Company shall require any

corporation, entity, individual or other person who is the successor (whether

direct or indirect, by purchase, merger, consolidation, reorganization, or

otherwise) to all or substantially all of the business and/or assets of the

Company to expressly assume and agree to perform, by a written agreement in form

and substance satisfactory to Executive, all of the obligations of the Company

under this Agreement. As used in this Agreement, the term "Company" shall mean

the Company as hereinbefore defined and any successor to its business and/or

assets as aforesaid which assumes and agrees to perform this Agreement by

operation of law, written agreement, or otherwise.

 

         7.3  Withholding. The Company may withhold from any amounts payable

              -----------

under this Agreement such federal, state or local taxes as shall be required to

be withheld pursuant to any applicable law or regulation.

 

         7.4  Entire Agreement; Amendment. This Agreement constitutes the entire

              ---------------------------

agreement and understanding between Executive and the Company with respect to

the subject matter hereof and, except as otherwise expressly provided herein,

supersedes any prior agreements or understandings, whether written or oral, with

respect to the subject matter hereof. Except as may be otherwise provided

herein, this Agreement may not be amended or modified except by subsequent

written agreement executed by both parties hereto.

 

         7.5  Multiple Counterparts. This Agreement may be executed in multiple

              ---------------------

counterparts, each of which shall constitute an original, but all of which

together shall constitute one Agreement.

 

         7.6  Notices. Any notice provided for in this Agreement shall be deemed

              -------

delivered upon deposit in the United States mails, registered or certified mail,

addressed to the party to whom directed at the addresses set forth below or at

such other addresses as may be substituted therefor by notice given hereunder.

Notice given by any other means must be in writing and shall be deemed delivered

only upon actual receipt.

 

 

                                       15

 

 

 

 

 

         If to the Company:

 

                  Mail-Well, Inc.

                  8310 S. Valley Highway, #400

                  Englewood, Colorado 80112-5806

                  Attention:  Chairman of the Board

 

                  with a copy to:

 

                  Mail-Well, Inc.

                  8310 S. Valley Highway, #400

                  Englewood, Colorado 80112-5806

                  Attention:  General Counsel

 

         If to Executive:

 

                  Paul V. Reilly

                  68 Golden Eagle Lane

                  Littleton, CO 80127

 

         8.7  Waiver. The waiver of any breach of any term or condition of this

              ------

Agreement shall not be deemed to constitute the waiver of any breach of the same

or any other term or condition of this Agreement.

 

         8.8  Severability. In the event any provision of this Agreement is

              ------------

found to be unenforceable or invalid, such provision shall be severable from

this Agreement and shall not effect the enforceability or validity of any other

provision of this Agreement. If any provision of this Agreement is capable to

two constructions, one of which would render the provision void and the other

that would render the provision valid, then the provision shall have the

construction that renders it valid.

 

         8.9  Other Severance Benefits. This Agreement replaces and supercedes

              ------------------------

any and all provisions of and benefits under any other severance agreement or

program under which Executive would otherwise be entitled to severance benefits.

 

         8.10 Arbitration of Disputes. Except for disputes and controversies

              -----------------------

arising under Article V or involving equitable or injunctive relief, any dispute

or controversy arising under or in connection with this Agreement shall be

conducted in accordance with the rules set forth by the American Arbitration

Association. The decision of the arbitrator shall be binding on Executive and

the Company. Judgment may be entered on the arbitrator's award in any court

having jurisdiction.

 

                                       16

 

 

 

 

 

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the

Effective Date.

 

                                 MAIL-WELL, INC.

 

 

 

                                 By:

                                        ---------------------------------

                                 Name:  Brian Hairston

                                 Title: Vice President-Human Resources

 

 

 

                                 ----------------------------------------

                                 Paul V. Reilly