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Exhibit 10.33  

 
 

MASTER AGREEMENT    
  

RELATING TO:

CONTRACT SERVICES FOR BACTERIOPHAGE PRODUCT  

BETWEEN

Phage
Therapeutics International Inc.

19211-64th Place NE

Kenmore, WA

98028-3380 USA 

and

INTELLIgene
Expressions, Inc.

Edmonton Research Park

1938 - 94 Street

Edmonton, Alberta

T6N 1J3

Canada 

MASTER AGREEMENT

Contract Services for Bacteriophage Product

CONTENTS  

	

1.	
 	

Definitions of General Terms
	

2.	
 	

Work Orders
	

3.	
 	

Conduct of Project Services
	

4.	
 	

Supply of Material and Process Information by PTXX
	

5.	
 	

Representation and Warranties
	

6.	
 	

Indemnification
	

7.	
 	

Compensation
	

8.	
 	

No Warranty of Merchantability or Fitness
	

9.	
 	

Shipment of Samples or Product
	

10.	
 	

Confidentiality
	

11.	
 	

New Intellectual Property
	

12.	
 	

Publicity
	

13.	
 	

Liability
	

14.	
 	

Term and Termination
	

15.	
 	

Force Majeure
	

16.	
 	

Independent Contractors
	

17.	
 	

Ownership of Assets and Equipment
	

18.	
 	

Dispute Resolution
	

19.	
 	

Waiver
	

20.	
 	

Entirety
	

21.	
 	

Notices
	

Appendix A: Format of Standard Work Order

AGREEMENT  

THIS
MASTER AGREEMENT ("Agreement") is made effective as of Monday September 11, 2000 ("Effective Date") by and between INTELLIgene Expressions Inc. ("INTELLIgene"), a corporation
incorporated under the laws of the province of Alberta, with principal offices at Edmonton Research Park, 1938 - 94 Street, Edmonton, Alberta, Canada T6N 1 J3 and Phage
Therapeutics International Inc. ("PTXX"), a corporation incorporated under the laws of the State of Florida, USA with offices at 19211-64th Place NE, Kenmore, WA
98028-3380 USA. 

WHEREAS,
PTXX and INTELLIgene are desirous of establishing development, scale-up, and GMP manufacturing activities relating to PTXX's bacteriophage product (a.k.a. "Active Pharmaceutical
Ingredient"; "API"). 

NOW,
THEREFORE, in consideration of the mutual covenants set forth in this Agreement, PTXX and INTELLIgene hereby agree as follows: 

1.  Definitions of General Terms  

In
this Agreement, including this Article, the following defined terms have the meanings indicated: 

	1.1
	Intellectual Property means all information, data, design processes, ideas, concepts, processes, trade secrets,
know-how, discoveries, experimental methods, results, scientific plans and inventions whether the aforesaid are subject of a patent, copyright, industrial design, trade mark or other form
of protection or not.

	1.2
	PTXX Confidential Information shall mean all PTXX and its affiliates' technical and other information relating to the
Project Services as defined in Section 1.5 that is supplied or given by PTXX to INTELLIgene pursuant to this Agreement, whether patented or unpatented, and including without limitation: trade
secrets, know-how, processes, concepts, ideas, experimental methods, results and business and scientific plans.

	1.3
	PTXX Materials means all cell lines, biological agents, reagents, and products, supplied by PTXX or its affiliates or
third parties authorized by PTXX, to INTELLIgene for the conduct of Project Services, as well as all materials and products derived by INTELLIgene from the aforesaid. PTXX Material shall include, but
is not limited to, the strains of organism(s) producing the API, purified API reference standards, and any materials derived therefrom.

	1.4
	Product shall mean any one or all purified API produced by the organism strain(s) and any materials derived therefrom.

	1.5
	Project Services means the scope of activities as described in a Work Order. 

2.  Work Orders  

	2.1
	This
Agreement shall consist of the main body of this document and all Work Orders which are issued pursuant to this Agreement.

	2.2
	From
time to time, the parties may agree to issue a Work Order authorizing INTELLIgene to conduct Project Services in accordance with the terms of this Agreement and the Work Order.

	2.3
	Each
Work Order shall set forth: 
	(i)
	the
scope of Project Services to be carried out

	(ii)
	a
work schedule for carrying out the Project Services

	(iii)
	reporting
requirements for the Project Services

	(iv)
	compensation
for the project; and

	(v)
	other
relevant terms 

 

	2.4
	A
Work Order shall only become operative in accordance with the terms of this Agreement when it has been signed by both parties. A Work Order shall expire on the earlier of: 
	(i)
	the
date set out in Part 3, Paragraph (c) of the Work Order

	(ii)
	the
termination of this Agreement 

3.  Conduct of Project Services  

	3.1
	INTELLIgene
shall carry out the Project Services as set forth in a Work Order in accordance with the terms, conditions and provisions hereof.

	3.2
	Subject
to the following, the Project Services may be carried out at facilities owned or leased by INTELLIgene. If Project Services are not carried out at INTELLIgene's premises,
PTXX reserves its right to approve or not to approve of the site. Upon request of PTXX, INTELLIgene shall provide PTXX with all information reasonably requested by PTXX in regard to the above sites
and potential subcontractors/partners of INTELLIgene. PTXX shall at any time be entitled to visit, inspect and audit INTELLIgene and all sites and entities where Project Services are carried out and
all documentation and records relating to the Project Services concerning compliance with the terms and conditions of this Agreement and the Work Orders as well as compliance with GMP and GLP (where
applicable and if specified in a Work Order) provided PTXX notifies INTELLIgene of such visits at least 5 working days in advance.

	3.3
	The
time period relating to the performance of INTELLIgene's obligations may be extended by any period during which INTELLIgene is unable to perform such obligations only by reason
of
circumstances beyond the reasonable control of INTELLIgene. In no event will INTELLIgene be liable to PTXX for any indirect, consequential or special loss or damages, except in cases where INTELLIgene
has been engaged in willful misconduct.

	3.4
	PTXX
may have one full-time authorized representative (at any given time) at the site where Project Services are to be performed in order to contribute to the success of
the Project. INTELLIgene will be responsible for project management, facility and equipment maintenance and supervision of its personnel. The representatives of PTXX may work in collaboration with
INTELLIgene personnel and interaction at the scientific and technical level is encouraged in order to contribute to the success of the project. However, PTXX personnel must comply with all applicable
Federal and Provincial Health and Safety Acts and Regulations, and all relevant policies and procedures imposed by INTELLIgene, its agents and subcontractors. In accordance with the Federal and
Provincial Health and Safety Acts and Regulations, PTXX representatives must be certified to be WHMIS trained or have equivalent laboratory safety training. This and any other training costs of the
PTXX Representatives shall be borne by PTXX, provided, however, that having the PTXX representatives at the site where the Project Services are performed is not considered as a training and therefore
no costs, compensation or payments have to be made by PTXX to INTELLIgene in this respect. Also, the PTXX on-site representatives will be required to abide by the Mutual
Non-Disclosure Agreement as well as respect the restricted and general access areas at the facilities of INTELLIgene. 

4.  Supply of Material and Process Information by PTXX  

	4.1
	PTXX
shall supply or make arrangements to supply INTELLIgene with PTXX Material, including relevant PTXX Confidential Information in order to permit INTELLIgene to execute the
Project Services. 

2

 

	4.2
	To
the extent available at PTXX and necessary for INTELLIgene to execute the Project Services, PTXX shall also furnish detailed descriptions of the existing process with respect to
production of API, purification of the API, in-process API analysis including all modifications made to the process and all associated process data. PTXX shall also specify any safe
handling procedures or precautions associated with the PTXX Organism strains and API. 

5.  Representation and Warranties  

PTXX
hereby represents and warrants the following to INTELLIgene: 

	5.1
	PTXX
is, to the best of its knowledge as of the Effective Date, free to supply the strains of PTXX Organism that are the source of the API, purified API reference standards, API
reagents and PTXX Confidential Information to INTELLIgene.

	5.2
	The
use by INTELLIgene of the strains of PTXX Organism that are the source of API and the PTXX Confidential Information pursuant to this Agreement will not result in the
infringement of intellectual property rights vested in any third party.

	5.3
	PTXX
has full corporate authority to enter into this Agreement and this Agreement is binding upon PTXX in accordance with its terms. 

INTELLIgene
hereby represents and warrants the following to PTXX: 

	5.4
	As
applicable, INTELLIgene shall, at its own cost and at all times, comply with applicable Federal and Provincial Law, Regulation and Bylaw orders such as, but not limited to the
Alberta Occupational Health and Safety Act and the Canadian Environment Protection Act and INTELLIgene shall conduct the Project Services according to GLP and GMP if it is specifically defined in a
Work Order.

	5.5
	INTELLIgene
has the full corporate authority to enter into this Agreement and this Agreement is binding upon INTELLIgene in accordance with its terms.

	5.6
	The
use of the methods and processes developed by INTELLIgene in carrying out the Project Services will not result in the infringement of intellectual property rights vested in any
third party. 

6.  Indemnification  

During
the term of this Agreement and thereafter each Party shall indemnify, defend and hold harmless (the "Indemnification Rights") the other party and its affiliates and their officers, employees,
agents and contractors from and against all losses, damages, costs and expenses (including, without limitation reasonable attorney's fees), including injury to persons or damage to property, resulting
from any breach of the representations and warranties made by it under Article 5 hereof. 

7.  Compensation  

	7.1
	In
consideration of INTELLIgene performing and carrying out the Project Services as set out in each Work Order, PTXX shall pay to INTELLIgene compensation in United States funds, as
set out in each Work Order. Such compensation shall be paid in accordance with Part 5 of the Work Order.

	7.2
	In
case the parties should agree that INTELLIgene will provide additional services beyond the scope of the Work Order, such additional services, the time for performance, the
consideration therefore and other relevant details shall be set forth in an amendment to the Work Order, which must be approved by PTXX in writing. 

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	7.3
	Unless
otherwise specified at the time of presentation, invoices presented by INTELLIgene are payable within ten (10) days of receipt by PTXX.

	7.4
	In
the event that PTXX fails to pay, when the same is due and payable to INTELLIgene, such unpaid amount shall bear interest after 10 days from the date of receipt by PTXX to
the date of payment at a rate per month equal to 1% with interest on overdue interest at the same rate. 

8.  No Warranty of Merchantability or Fitness  

INTELLIgene
warrants that any goods or products which are to be delivered by INTELLIgene to PTXX pursuant to the terms of this Agreement shall be in compliance with the specifications (if any)
pursuant to flee Work Orders. Except the aforesaid, INTELLIgene does not warrant any additional quality, state, merchantability or fitness for any purpose of any goods and products to be delivered
pursuant to this Agreement. Project Services will only be conducted under GMP and/or GLP compliance if it is specifically defined in the Work Order. 

9.  Shipment of Samples or Product  

If
INTELLIgene is required to deliver any goods and products to PTXX (or its designate) pursuant to this Agreement, all costs of delivery shall be borne by PTXX. PTXX shall be entitled to designate
the method of delivery and the destination of goods. PTXX will however be fully responsible for any costs, damages or deterioration of the goods or products from the time they are delivered to the
carrier by INTELLIgene for delivery to PTXX or its designate. 

10.  Confidentiality  

	10.1
	All
PTXX Confidential Information and all PTXX Material including information relating thereto as well as all New Intellectual Property (hereinafter collectively referred to as
"INFORMATION") shall be treated by INTELLIgene as strictly confidential, shall not be disclosed by INTELLIgene to any third party and shall be used by INTELLIgene for no other purpose than for
conducting the Project Services. However, the aforesaid obligations of INTELLIgene shall not apply to such INFORMATION, which 
	(i)
	prior
to the effective date of this agreement was in the public domain; or

	(ii)
	after
the effective date of this agreement becomes part of the public domain by publication or otherwise, other than by breach of its obligations
hereunder by INTELLIgene; or

	(iii)
	was
demonstrably in INTELLIgene's possession prior to the effective date of this agreement and was not acquired, directly or indirectly from PTXX;
or

	(iv)
	INTELLIgene,
after the effective date of this agreement, demonstrably receives from a third party, which did not acquire the INFORMATION directly
or indirectly from PTXX, provided that such third party had the unrestricted right to disclose such INFORMATION to INTELLIgene. 

	10.2
	INTELLIgene's
obligations pursuant to 10.1 above shall likewise apply to and INTELLIgene shall be fully responsible and liable for any breach of such obligations by INTELLIgene's
employees, officers and directors as well as INTELLIgene's affiliates, consultants, contractors, subcontractors, servants and agents and the directors, officers and employees of the aforesaid.

	10.3
	Information,
which was in INTELLIgene's possession prior to the effective date of this Agreement, remains the confidential property of INTELLIgene and will not be disclosed by 

4

 

INTELLIgene
or PTXX unless the recipient is under an obligation of confidentiality with respect to the information. 

	10.4
	This
Article 10 shall be valid for a period of ten (10) years and shall survive any expiration or termination of this Agreement. 

11.  New Intellectual Property  

All
information, data, design processes, and inventions that may be made, conceived, created, developed, or first reduced to practice during the conduct of the Project Services whether the aforesaid
are subject of a patent, copyright, industrial design, trademark and other form of protection or not ("New Intellectual Property") shall be disclosed by INTELLIgene to PTXX, and thereafter will be the
sole property of PTXX. INTELLIgene agrees to reasonably assist PTXX or its affiliates, against payment of a reasonable consideration by PTXX for such assistance, in filing and prosecuting of patent
applications and other forms of protection particularly by providing PTXX or its affiliates with all necessary signatures and declarations. 

12.  Publicity  

Neither
party shall originate publicity, news releases, public statements or announcements, whether written or oral, relating to the Project Services without prior written consent of the other party,
which consent may not be unreasonably withheld. 

13.  Liability  

	13.1
	Each
Party shall assume and be liable for its own losses, costs, damages, and expenses of any nature whatsoever which it may suffer, sustain, pay or incur, by reason of any matter
or thing arising out of, or in any way attributable to the Project Services except where such losses, costs, damages and expenses are the result of negligence or willful breach of any term hereof by
the other party or any other negligent act or omission by the other party or those of the other party's servants, agents, contractors, sub-contractors, consultants, affiliates or
employees, officers or directors of the aforesaid.

	13.2
	INTELLIgene
shall be fully responsible and liable for any and all acts and omissions of its servants, agents, sub-contractors, contractors, consultants and affiliates
as if such acts and omissions have been performed by INTELLIgene itself. However, INTELLIgene's total liability shall not exceed the compensation paid by Client to INTELLIgene during the term of this
Agreement or twelve (12) month period from date of execution of this Agreement, whichever is less.

	13.3
	INTELLIgene
shall, at its own expense and without limiting its liabilities herein, insure Its operations under a contract of Comprehensive or Commercial General liability, with an
insurer licensed in Canada, in an amount not less than $1,000,000 per occurrence (annual general aggregate, if any, not less than $2,000,000) insuring against bodily injury, personal injury, and
property damage including loss of use thereof. Such insurance shall include blanket contractual liability.

	13.4
	INTELLIgene
has no knowledge or awareness of or control over the manner in which PTXX intends to use the Product. Except as otherwise provided for below, INTELLIgene shall not be
liable to PTXX for any losses or damages, costs or expenses of any nature incurred or suffered by PTXX or by a third party, arising out of any dispute or other claims or proceedings made by or brought
against PTXX in respect with the supply of the Product or the use of or any other dealing with the Product by PTXX or by a third party (including, without limitation, product liability claims), nor
shall INTELLIgene be responsible in any way 

5

 

for
dealing with any such disputes, claims or proceedings. PTXX shall indemnify, defend and hold harmless, INTELLIgene and its affiliates and their officers, employees and agents from and against all
such losses, damages, costs and expenses (including without limitation, reasonable attorney's fees). Notwithstanding the above, INTELLIgene shall be liable for all direct costs and expenses associated
with any failed runs to the extent as they are related to any negligent or willful breach of any term hereof by INTELLIgene or any other negligent act or omission of INTELLIgene and INTELLIgene shall
be responsible for repeating any failed runs at no additional cost to PTXX. For the propose of this Agreement, a run will be designated as failed ("failed run") if the failure is due to equipment
malfunction, operator error or culture contamination unless the contamination is demonstrably shown to have occurred as a result of contaminated PTXX Material. Any other causes of failure resulting in
loss in expression levels, yield, purity or activity of the culture or Product shall not be deemed as a failed run and PTXX will have the option to provide INTELLIgene with a written request, to
repeat the failed run at PTXX's cost. 

14.  Term and Termination  

	14.1
	Subject
to the right of either party to terminate this Agreement as per Section 14.2 herein, the term of this Agreement shall be for a period of one (1) year
commencing on the Effective Date, unless otherwise mutually agreed in writing.

	14.2
	Either
Party may terminate this Agreement effective upon written notice if either one of the following event occurs: 
	(i)
	The
other Party commits a breach of a material provision of this Agreement and the breach is not remedied within thirty days after receipt of notice
identifying the breach and requiring its remedy, or

	(ii)
	The
other Party (a) becomes unable to pay its debts as they become due, (b) suspends payment of its debts, (c) enters into or
becomes subject to corporation rehabilitation or bankruptcy proceedings or liquidation or dissolution, (d) makes an assignment for the benefit of its creditors, or (e) seeks relief under
similar laws for debtor's relief. 

	14.3
	PTXX
may cancel any Work Order at any time provided in such event PTXX shall reimburse INTELLIgene a 6 week cancellation fee of 75% of the total project related to the Project
Services outlined in the Work Order, but in no event shall the amount of such reimbursement together with any amounts previously paid to INTELLIgene exceed the total project fee set forth in
Part 5A of the Work
Order. In addition, PTXX will be responsible for the costs of all "not included" items, listed in Part 5B of the Work Order incurred by INTELLIgene up to the date of cancellation of the Work
Order.

	14.4
	PTXX
may reduce the scope of Project Services associated with a Work Order provided that an Amendment to the Work Order is executed at least 6 weeks prior to the termination date
of the Work Order and provided that in such event PTXX shall reimburse INTELLIgene a penalty fee. The penalty fee will be calculated as 50% of the reduction in project fees associated with a revised
scope of services. For instance, if the revised value of Project Services as outlined in the amended Work Order is $150,000.00 as opposed to the original Work Order value of $200,000.00 (project cost
reduced by $50,000.00), then INTELLIgene will invoice PTXX a penalty fee of $25,000.00 (50% of $50,000.00). However, in no event shall the amount of such reimbursement together with any amounts
previously paid to INTELLIgene exceed the total project fee set forth in Part 5A of the Work Order.

	14.5
	Upon
the expiration or termination of this Agreement, at PTXX's written request and instructions, INTELLIgene shall return or dispose all unused biological material as well as
material derived from it and shall promptly return all information relating to PTXX Materials 

6

 

and
all PTXX Confidential Information including information describing New Intellectual Property if developed by INTELLIgene during performance of this Agreement. 

15.  Force Majeure  

Neither
party shall be in breach of this Agreement if there is any failure of performance under this Agreement (except for payment of any amounts due hereunder) occasioned by any act of God, fire, act
of government or province, war, civil commotion, insurrection, embargo or any other reason beyond the reasonable control of either party. 

16.  Independent Contractors  

Each
of the parties hereto is an independent contractor and nothing herein shall be deemed to constitute the relationship of partners, joint venturers, nor of principal and agent between the parties
hereto. Neither panty shall hold itself out to third persons as purporting to act on behalf of, or serving as the agent of the other party except if and as specifically authorized in writing by the
other party. 

17.  Ownership of Assets and Equipment  

Unless
otherwise provided for in the Work Order, all materials, assets,,-and equipment acquired or purchased by INTELLIgene for the conduct of the Project Services shall be the property of
INTELLIgene. 

18.  Dispute Resolution  

Prior
to resort to adversarial proceedings, both parties shall attempt to settle any disputes concerning the interpretation hereof or their performance hereunder in an amicable way. 

19.  Waiver  

No
waiver of any term, provision or condition of this Agreement whether by conduct or otherwise in any one or more instances shall be deemed to be or construed as a further or continuing waiver of any
such term, provision or condition or of any other term, provision or condition of this Agreement. 

20.  Entirety  

This
Agreement and the attachments hereto constitute the full understanding of the parties and a complete and exclusive statement of the terms of their agreement and no terms, conditions,
understandings or agreements purporting to modify or vary the terms thereof shall be binding unless it is hereafter made in writing and signed by both parties. 

7

 

21.  Notices  

Any
notice or communication required or authorized to be given by the either party shall be personally delivered, sent by prepaid registered mail or facsimile transmission (with a copy via overnight
mail delivery) to the following: 

	

If to INTELLIgene
	Attn:	 	Dr. Fahar Merchant, President

Edmonton Research Park

1938 - 94 St

Edmonton, Alberta, Canada T6N 1J3

Fax #: (780) 430-1529
	

If to PTXX
	Attn:	 	Dr. Richard Honour, President

19211-64th Place NE

Kenmore, WA

98028-3380 USA

Fax #: (425) 482-0834

	

	
 	

 
	INTELLIgene EXPRESSIONS INC.	 	Phage Therapeutics International, Inc.
	

/s/ FAHAR MERCHANT   
 Dr. Fahar Merchant

President

Dated: Friday, September 08, 2000	
 	

/s/ RICHARD C. HONOUR   
 Dr. Richard Honour

President

Dated: Monday, September 11, 2000
	

	
 	

Per:
 Name: Richard C. Honour

Title: Director

Dated: 09.11.00

8

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MASTER AGREEMENTPrepared by MERRILL CORPORATION

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EXECUTIVE EMPLOYMENT AGREEMENT    
  

    This Employment Agreement ("Agreement") is made effective as of August 18, 2000 by and between Anacomp, Inc. ("Employer") and Jeffrey R.
Cramer ("Employee"). 

    The
parties agree as follows: 

    1.  Merger.  This Agreement between the parties shall supersede and terminate all prior employment
contracts and agreements between Employee and Anacomp. In the event of any conflict between this Agreement and such letter agreement, the terms of this Agreement shall govern. 

    2.  Duties.  

    2.1  Position.  Employee is employed in the position of Senior Vice President. Employee shall faithfully
and diligently perform these duties, as well as any other duties as assigned. Employer reserves the right to modify Employee's duties consistent with Employee's position at any time, in its sole and
absolute discretion. 

    2.2  Location of Employment.  Employee will be based at Employer's Poway, California facility, and will
be required to live within reasonable proximity to this facility. 

    2.3  Best Efforts/Full-time.  Employee will expend Employee's best efforts on behalf of Employer, and
will abide by all policies and decisions made by Employer, as well as all applicable federal, state and local laws, regulations or ordinances. Employee shall devote Employee's full business time and
efforts to the performance of Employee's duties and will act in the best interests of Employer at all times. It is anticipated that Employee shall generally work on average no less than 40 hours per
week. 

    3.  Compensation.  

    3.1  Base Salary.  As compensation for the proper and satisfactory performance of all duties to be
performed by Employee hereunder, Employee shall earn a base salary of One Hundred Ninety Thousand Dollars ($190,000.00). Such salary shall be payable on a biweekly basis in accordance with the normal
payroll practices of Employer, less required deductions for state and federal withholding tax, social security and all other employment taxes and payroll deductions. Employee's base salary will be
subject to being increased in accordance with Employer's annual salary review process. 

    3.2  Incentive Compensation.  Employee shall be eligible to earn incentive compensation in the amount of
One Hundred and Two Thousand and Three Hundred and Eight Dollars ($102,308.00) in accordance with the Management 1 Plan. 

    4.  Fringe Benefits.  Employee shall be eligible for all customary and usual fringe benefits generally
available to executive employees of Employer, such as holidays, vacations and health insurance, subject to the terms and conditions of the applicable benefit plans and provided Employee completes the
applicable enrollment forms, if any, on a timely basis. Employer reserves the right to change or terminate the fringe benefits on a prospective basis, at any time, upon written notice to Employee. 

    5.  Term of Employment.  The initial term of this Agreement shall be for a period of one year, from the
date that this Agreement is signed by Employer to June 30, 2001, unless terminated sooner in accordance with the provisions below. If not terminated at the end of the initial term, the
Agreement shall thereafter renew automatically for one year terms. Either party can terminate the Agreement at the end of the initial term or the end of any renewal term by providing the other with
written notice of nonrenewal at least 60 days before the expiration date. If this Agreement is terminated by Employer at the end of the initial term or any renewal term, such occurrence will be
deemed a termination without cause and Employee will be entitled to receive the severance package set forth in Section 5.2. The 

1

 

Agreement may also be terminated during the initial term or any renewal term, as provided below. In the event employment is extended beyond the initial term, this Agreement shall continue to govern
the terms and conditions of employment until termination of the Agreement, or unless the Agreement is modified by mutual agreement, in a writing signed by the parties. 

    5.1  Termination by Employee.  In the event Employee wishes to terminate the employment relationship,
Employee agrees to provide a minimum of 60 days notice so that arrangements for a replacement can be made. Employee shall be paid through the end of the notice period, provided Employee
continues working and cooperates fully with Employer during the transition process. Employer may elect to relieve Employee of all duties at any time during the notice period. In such case, no further
payment is required by Employer after Employee is relieved of all duties. 

    5.2  Termination by Employer Without Cause.  Employer may terminate Employee's employment at any time
without cause or advance notice, provided Employer provides Employee with a severance package that consists of Employee's biweekly base pay for a period of one year from the date of termination, such
payments to be made on Employer's regular paydays. The severance package shall also include continuation of Employee's health insurance benefits on Employer's plan pursuant to an election of COBRA by
Employee. Employer shall pay the COBRA payments for Employee for the sam timeframe Employee is receiving base salary continuation. Thereafter, it shall be Employee's obligation to make the COBRA
payments to keep the insurance in effect. Employee shall be entitled to receive the severance package only if Employee executes a general release, releasing the fullest extent permitted by law all
claims, known or unknown, that Employee may have against Employer, including those arising out of or in any way related to Employee's employment or the termination of Employee's employment up to the
date of execution of the release. For the purpose of the release, the term "Employer" includes Anacomp, Inc. and all subsidiary and related entities and their employees, officers, directors,
shareholders and agents. A termination without cause shall include a transfer of the Employee to another location which is more than 35 miles from the Poway, California facility. 

    5.3  Termination by Employer for Cause.  Employer may terminate the employment relationship immediately
upon written notice to Employee for "cause," without the payment of any severance, unless Employee elects to offer it. If a severance package is
offered, it will be contingent upon the execution of a general release, as described above. "Cause" for termination shall be defined as: 

    5.3.1  Employee's
failure to substantially perform the duties of Employee's employment to the satisfaction of Employer, provided Employee has first been notified in
writing of any specific deficiencies and been given at least 60 days to correct them. In the event that Employee has not corrected the specific deficiencies within 60 days, Employee will
be notified in writing and be given a final 30 days to correct them. 

    5.3.2  Employee
becomes disabled, mentally or physically, and as a result is unable to diligently, expeditiously and competently perform all of the essential functions
and duties of his position, with or without reasonable accommodation, on a substantially full time basis in accordance with the provisions of this Agreement and after all applicable leaves of absence
required by law and Employer's policies have been exhausted. 

    5.3.3  Employee's
death. 

    5.3.4  Employee
engages in any conduct which has a substantial adverse effect on the name or public image of Employee or is otherwise detrimental to the business
interests of Employer. 

2

 

    5.4  Compensation Upon Termination.  Upon termination of employment, for whatever reason, Employee will
be entitled to receive Employee's base salary, Incentive Compensation and all accrued but unused vacation, prorated to the date of termination. 

    5.5  Return of Employer's Property.  Upon termination of employment for any reason, Employee agrees to
immediately return all property of Employer, including but not limited to, all computers, telephones and other equipment that has been issued to Employee, all plans, programs, customer lists,
proprietary data and all other data or objects acquired through Employee's employment with Employer. 

    6.  Business Expenses.  Employer agrees to reimburse Employee for all reasonable, out-of-pocket business
expenses incurred in the performance of Employee's duties on behalf of Employer. To obtain reimbursement, expenses must be submitted promptly with appropriate supporting documentation. 

    7.  Confidential Company Information.  Employee shall read, sign and strictly comply with the
Confidentiality, Non-Competition and Non-Disclosure Agreement which is attached as Exhibit B and incorporated by reference herein. 

    8.  Employee Innovations and Proprietary Rights Assignment Agreement.  Employee shall read, sign and
strictly comply with the Employee Innovations and Proprietary Rights Assignment Agreement, which is attached as Exhibit C and incorporated by reference herein. 

    9.  Competitive Employment.  During the term of Employee's employment with Employer, Employee will not
directly or indirectly compete with Employer in any way, and will not directly or indirectly, alone or with others, engage in or have any interest in, any business, firm, partnership or corporation,
whether as an employee, officer, director, agent, shareholder (except passive ownership of up to 5% of the securities in a corporation), volunteer, creditor, consultant or otherwise, that engages in
any activity that is the same or similar to, or in competition with, any activity engaged in by Employer. 

    10.  Non-Solicitation of Employees.  During Employee's employment with Employer and for a period of one
year thereafter, Employee will not directly or indirectly solicit any employee of Employer to leave Employer or to accept employment with another company, nor shall Employee otherwise induce or
attempt to induce a current employee of Employer to terminate his/her employment with Employer. 

    11.  Agreement to Arbitrate.  Employee and Employer agree to arbitrate any controversy, claim or dispute
between them arising out of or in any way related to this Agreement, their employment relationship, and any disputes upon termination of employment, except as provided in paragraph 11.1 below, to the
fullest extent permitted by law. This method of resolving disputes shall be the sole and exclusive remedy of the parties. Accordingly, the parties understand that, except as provided below or as
otherwise required by law, they are giving up their rights to have their disputes decided in a court of law and, if applicable, by a jury, and instead agree that their disputes shall be decided by
arbitration. 

    11.1  Scope of the Agreement.  The disputes subject to this agreement to arbitrate include all potential
claims between Employee and Employer relating to employment, such as breach of contract, tort, discrimination, harassment, wrongful termination, demotion or discipline, failure to accommodate, family
and medical or pregnancy disability leave, compensation or benefits claims, constitutional claims and claims for violation of any local, state or federal law or common law to the fullest extent
permitted by law. Claims for workers' compensation or unemployment insurance benefits are expressly excluded. For the purpose of this provision, references to "Employer" include Anacomp, Inc. and all
subsidiary and related entities and their employees, supervisors, officers, directors, shareholders, agents, benefit plans, benefit plan sponsors, fiduciaries, administrators, affiliates and all
successors and assigns of any of them, and this agreement to 

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arbitrate shall apply to them to the extent Employee's claims arise out of or relate to their actions on behalf of Employer. 

    11.2  Initiation of Arbitration.  Either party may exercise the right to arbitrate by providing the other
party with written notice of any and all claims forming the basis of such right in sufficient detail to inform the other party of the substance of such claims. In no event shall the request for
arbitration be made after the date when institution of legal or equitable proceedings based on such claims would be barred by the applicable statute of limitations. 

    11.3  Arbitration Procedure.  The arbitration will be conducted before a single neutral arbitrator in San
Diego, California. The parties are entitled to representation by an attorney or other representative of their choosing. The arbitrator shall have the power to enter any award that could be entered by
a judge of the Superior Court of the State of California, and only such power. The arbitrator's decision shall be final and binding. The parties agree to abide by and perform any award rendered by the
arbitrator. Judgment on the award may be entered in any court having jurisdiction thereof. 

    11.4  Costs of Arbitration.  Employer shall pay the costs of the arbitration proceeding, such as the cost
of the arbitrator. Each party will bear its own attorneys' fees and the costs incurred in the preparation and presentation of its case, except that the arbitrator may, in his or her discretion, award
reasonable attorneys' fees and costs to the prevailing party. 

    11.5  Knowing and Voluntary Agreement.  Employee acknowledges that at the time of entering this
Agreement, Employee was given the option of entering or not entering this agreement to arbitrate. Employee recognizes the potential benefits of arbitration, has read the arbitration provisions of this
section, and freely and voluntarily agrees to the same. 

    12.  General Provisions.  

    12.1  Representations and Warranties by Employee.  Employee hereby warrants and represents that (a) the
execution of this Agreement will not breach or conflict with any other contract, agreement or understanding between Employee and any other party or parties; and (b) Employee does not have trade
secret, confidential or proprietary information of any third party the disclosure of which to Employer would conflict with or violate the rights of any such third party or parties. 

    12.2  Successors and Assigns.  The rights and obligations of Employer under this Agreement shall inure to
the benefit of and shall be binding upon the successors and assigns of Employer. Employer shall have the right to assign its rights and obligations under this Agreement to a third party. Employee
shall not be entitled to assign any of Employee's rights or obligations under this Agreement. 

    12.3  Waiver.  Either party's failure to enforce any provision of this Agreement shall not in any way be
construed as a waiver of any such provision, or prevent that party thereafter from enforcing each and every other provision of this Agreement. 

    12.4  Severability.  In the event any provision of this Agreement, in whole or in part, shall be found
unenforceable by an arbitrator or, if applicable, a court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so
limited, it being intended that the parties shall receive the benefits contemplated herein to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of such
arbitrator or court, the unenforceable portion of such provision shall be deemed deleted, and the validity and enforceability of the remainder of this Agreement shall not be affected thereby. 

    12.5  Interpretation; Construction.  This Agreement has been drafted by Employer, but Employee has
participated in the negotiation of its terms. Furthermore, Employee has had the opportunity to review and revise the Agreement and have it reviewed by legal counsel, if desired, 

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and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. 

    12.6  Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the
State of California. 

    12.7  Notices.  Any notice required or permitted by this Agreement shall be in writing and shall be
delivered as follows with notice deemed given as indicated: (a) by personal delivery when delivered personally, (b) by overnight courier upon written verification of receipt, (c) by telecopy or
facsimile transmission upon acknowledgement of receipt of electronic transmission, or (d) by certified or registered mail, return receipt requested, upon verification of receipt. Notice shall be sent
to Employee at the address set forth below, or such other address as Employee may specify in writing. Notice to Employer shall be given to the General Counsel of Employer. 

    13.  Entire Agreement.  This Agreement, including the exhibits to this Agreement, constitutes the entire
agreement between the parties relating to this subject matter and supersedes all prior or simultaneous representations, discussions, negotiations, and agreements, whether written or oral. This
Agreement may be amended or modified only by a written agreement, signed by Employee and the President of Employer. No oral waiver, amendment or modification will be effective under any circumstances
whatsoever. 

    THE
PARTIES TO THIS AGREEMENT, HAVING READ THE FOREGOING AGREEMENT IN ITS ENTIRETY, FREELY AND VOLUNTARILY EXECUTE THIS AGREEMENT ON THE DATES SHOWN BELOW. 

	Dated:	 	August 18, 2000
	 	/s/ JEFFREY R. CRAMER
 Employee Signature
	

 	
 	

 	
 	

Jeffrey R. Cramer
 Jeffrey R. Cramer
	

 	
 	

 	
 	

	

 	
 	

 	
 	

 Employee Address
	

Dated:	
 	

8/21/00
	
 	

ANACOMP, INC.
	 	 	 	 	By:	 	/s/ PHIL SMOOT
 Phil Smoot

Chief Executive Officer

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EXECUTIVE EMPLOYMENT AGREEMENT

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