employment Agreement

Exhibit 10.4


EMPLOYMENT AGREEMENT


XIDEX UK LIMITED ("Xidex") whose registered office is situate at Intermediate Road, Brynmawr, Gwent NP3 4YA, United Kingdom (1)


ANACOMP INC ("Anacomp") whose registered office is situate at 12365 Crosthwaite Circle, Poway, California, 92064, USA (2)


AND


DR. PETER WILLIAMS of Vagaland, Dardy, Llangattock, Crickhowell, Powys NP8 1PH, United Kingdom ("the Employee") (3)


Date of Agreement: May 3, 1995 Effective Date of Agreement: October 1, 1995


1


EMPLOYMENT AGREEMENT


THIS EMPLOYMENT AGREEMENT (the "Agreement") is made this 3rd day of May 1995,


AMONG


(1) Xidex UK LIMITED, whose registered office is situate at Intermediate Road,
Brynmawr, Gwent NP3 4YA (hereinafter referred to as "Xidex"), of the one
part and


(2) Anacomp Inc whose registered office is situate at 12365 Crosthwaite Circle,
Poway, California, 92064 (hereinafter referred to as "Anacomp"); of the
other part and;


(3) Dr. Peter Williams of Vagaland, Dardy, Llangattock, Crickhowell, Powys NP8
1PU (hereinafter referred to as the "Employee").


The full identification of each party, Date of Agreement and Effective Date of Agreement are all also included on the cover sheet immediately preceding this page, which is incorporated herein by this reference. The following conditions and terms shall apply:


ARTICLE I

PRIOR AGREEMENT AND JURISDICTION


This Agreement takes effect in substitution for all previous contracts, agreements and arrangements, whether written or oral or implied among, Xidex, Anacomp and the Employee relating to the service of the Employee by Xidex, all of which contracts, agreement and arrangements shall be deemed to have been terminated by mutual consent as from the Effective Date of Agreement.


This Agreement shall be governed by and interpreted in accordance with English law and each of the parties hereto agrees to submit to the non-exclusive jurisdiction of the English Courts with respect to any claim or matter arising under this Agreement.


ARTICLE II

APPOINTMENT, SCOPE, TERM OF EMPLOYMENT AND COMPENSATION


The Employee's appointment as an employee of Xidex and its predecessor commenced on January 2, 1984, and such employment shall continue, subject as hereinafter provided, until terminated in accordance with Article IX hereof. Xidex and the Employee hereby agree that Addendum I, attached hereto and incorporated herein by this reference, is intended to define the Employee's scope of employment, as well as his assigned responsibilities, the location of his employment, and the Base Salary and Bonus payable to the Employee. The Employee acknowledges and agrees that his compensation is confidential, and that he will only discuss it with Anacomp's Chairman of the Board, President and/or Magnetics Group President, as required.


2


Because Xidex is a wholly-owned subsidiary of Anacomp, and because the Employee is only prepared to enter into this Agreement at the request of Anacomp and on the basis of the guarantee contained in this Article, Anacomp hereby guarantees to the Employee the observance and performance of the obligations of Xidex under this Agreement, and Anacomp hereby undertakes that upon any failure on the part of Xidex to perform any of its obligations hereunder, Anacomp will pay any monies and perform and observe any obligations on the part of Xidex contained in this Agreement.


ARTICLE III

CONTINUOUS EMPLOYMENT


For the purposes of determining the Employee's continuous period of employment pursuant to the Employment Protection (Consolidation) Act 1978, Xidex and Anacomp agree that the Employee's employment hereunder is continuous with Employee's previous employment with Control Data Limited since January 2, 1984.


ARTICLE IV

HOURS OF WORK


The Employee's hours of work will be Monday to Friday, 8:45am to 4:45pm, with a one-half hour for a luncheon break. Additionally, or as reasonably required, the Employee will work such other hours as may be necessary to carry out his duties hereunder.


ARTICLE V

FRINGE BENEFITS


In addition to the Employee's Base Salary and Bonus compensation set forth in Addendum I hereto, the Employee shall be entitled to the following fringe benefits:


1. In addition to the normal 8 days public holidays, 27 days of paid holiday
per annum, the timing of which shall be taken with senior management's
prior approval. Xidex's holiday year runs from January to December. The
Employee's entitlement to holidays shall accrue pro rata throughout each
holiday year. The Employee may, with senior management's approval, carry
any unused holiday entitlement forward to a subsequent year, or at
Anacomp's or Xidex's option receive payment in lieu of such unused holiday
entitlement. Upon the termination of this Agreement for any reason
whatsoever, the Employee will be entitled to pay in lieu of any unused
holiday entitlement.


2. Xidex will make contributions on behalf of the Employee into the Xidex
Wales Employee Benefits Plan ("the Plan") in accordance with the Plan's
Trust Deed and Rules. The Plan includes the benefit of pension, life
assurance, and long term disability coverage. In the event of Xidex and/or
Anacomp terminates the Plan, Xidex and/or Anacomp will ensure that the
Employee is provided with the benefit of a similar benefits plan, which
plan shall not be less


3


favorable than the Plan. A contracting out certificate issued under the
Social Security Pensions Act of 1975 is in force with respect to the
Employee's employment with Xidex.


3. Xidex will provide and maintain coverage from the Private Patients Plan or
other similar private medical plan for the benefit of the Employee and his
immediate family, the extent of the coverage being executive coverage,
hospital band C.


ARTICLE VI

EXPENSES


Xidex will reimburse the Employee for all reasonable expenses incurred in the performance of his duties hereunder, in accordance with the terms and conditions of Xidex's standard reimbursement policy (or if Xidex does not have such policy, Anacomp's standard reimbursement policy).


Xidex will provide the Employee with a petrol payment card with respect to the Employee's business-related and private use of his car.


ARTICLE VII

INSURANCE


In the event that the Employee is required to work abroad, Xidex or Anacomp will provide and maintain suitable insurance to cover all costs, expenses and liabilities, including legal fees, which might be incurred as a result of personal injury occasioned to or by the Employee, including loss of or damage to the Employee's property. Xidex shall at its expense provide full coverage for the Employee under Xidex's Travel and Accident Insurance Scheme.


ARTICLE VIII

REDUNDANCY


In the event the Employee is terminated by reason of redundancy, Xidex will pay to the Employee, in addition to any payment required by Article X below, a lump sum payment in an amount equal to twice the Employee's Weekly Salary (as hereinafter defined) multiplied by the Employee's length of service (calculated in whole years). For purposes of this Article VIII, "Weekly Salary" shall be deemed to be the Employee's average, weekly cash compensation (Base Salary and Bonus) paid to the Employee during the preceding three (3) calendar years immediately prior to the redundancy. The Employee's Weekly Salary and length of service will be calculated as at the date of termination of the Employee's employment by reason of such redundancy.


4


ARTICLE IX

TERMINATION OF EMPLOYMENT


The parties agree that the Employee's employment with Xidex may be terminated as follows:


1. Without Cause.


Xidex may terminate the Employee at any time without cause by giving
the Employee not less than twelve (12) calendar month's notice in
writing.


2. With Cause.


Xidex may immediately terminate the Employee at any time "for cause",
upon written notice to the Employee specifying the cause and the
effective date of termination. As used herein, "for cause" shall
mean:

(a) The inability of the Employee due to ill health (as reasonably
determined by the Board of Directors of Xidex) to perform the
Employee's assigned duties on a full-time basis for any
continuous period of one hundred and twenty (120) days or an
aggregate of one hundred and eighty (180) days in any twelve (12)
month period, which period shall commence on the Effective Date
of Agreement and shall recommence upon every anniversary date of
the Effective Date of the Agreement;


(b) The willful a ...