EXHIBIT 10.1
Quad Systems Corporation
0000 Xxxxxxxx Xxxx
Xxxxxx Xxxxx, XX
00000
March 30, 1998
HAND DELIVER
Xx. Xxxxx X. Xxxxx
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Re: Severance Agreement and General Release
Dear Xxxxx:
As you know, we would like to resolve all aspects of your separation from Quad
Systems Corporation (the "Company") on an amicable basis. To meet those goals,
we propose the following:
A. Your employment with the Company will terminate effective March 30,
1998 without cause. You hereby resign as President and Chief Executive Officer
of the Company and as any other officer of the Company or any of its
subsidiaries or affiliates. You also hereby resign as a director of the Company.
2. In consideration for your General Release set forth below in
Paragraph 4, and in compliance with the Company's Executive Severance Pay Plan
effective January 26, 1996 attached hereto (the "Plan"), the Company shall:
(a) Pay you the gross amount of $3,763.46 per week, less
usual withholding, for a period of thirty six
(36)weeks, in accordance with the Company's normal
payroll practices, subject to the terms and
conditions of the Plan, pursuant to which these
payments are made.
(b) Pay the cost of your coverage in the Company's group
health and dental program during the period in which
payments are made under Paragraph 2(a) above on the
same basis as for employees of the Company. Your
usual contribution for coverage will be due from you
during this period. Your coverage shall be pursuant
to terms, conditions and requirements of the
Consolidated Omnibus Budget Reconciliation Act
("COBRA").
3. Regardless of whether you enter into this letter agreement:
(a) You have the right to continue participation in the
Company's group health and dental program at your
expense pursuant to and subject to the requirements
and limitations of COBRA. (You will receive
notification of your COBRA rights under separate
cover.)
(b) All other benefits coverage will cease immediately.
You will be provided with information describing any
rights you may have to convert from group to
individual coverage.
(c) You will receive two (2) weeks' severance pay. No
bonus, commission, options, or other compensation or
benefits are or will become due.
4. In consideration for the Company's undertakings set forth above in
Paragraph 2(a) and (b) above, intending to be legally bound, you ("Employee")
release and forever discharge the Company, its past, present and future
officers, directors, attorneys, employees, owners, subsidiaries, divisions,
affiliates, and agents and their respective successors and assigns (collectively
"Releasees"), jointly and severally, from any and all actions, charges, causes
of action or claims of any kind (collectively, "Claims"), known or unknown,
which you, your heirs, agents, successors or assigns ever had, have or
thereafter may have against Releasees arising out of any matter, occurrence or
event existing or occurring prior to the execution of the General Release,
including without limitation: any claims relating to or arising out of
Employee's employment with and/or termination of employment with the Company;
any claims for unpaid or withheld wages, severance, benefits, commissions,
bonuses and/or other discrimination and/or harassment based on age, sex, race,
religion, color, creed, disability, handicap, citizenship, national origin,
sexual preference or any other factor prohibited by federal, state or local law
(such as the Age Discrimination in Employment Act, the Americans with
Disabilities Act, Title VII of the Civil Rights Act of 1964, as amended, and the
Pennsylvania Human Relations Act); any whistleblower and/or retaliation claims;
and/or any claims under the Employee Retirement Income Security Act; and/or any
common law claims, including, but not limited to, breach of contract,
negligence, libel, breach of covenant of good faith and fair dealing, slander,
fraud, wrongful discharge, promissory estoppel, equitable estoppel and
misrepresentation.
5. You agree that at all times the existence, terms and conditions of
this Agreement will be kept secret and confidential and will not be disclosed
voluntarily to any third party, except to the extent required by law, to enforce
the Agreement or to obtain confidential legal, tax or financial advice with
respect thereto.
6. You agree to pay any and all federal, state and local taxes assessed
against you with respect to any consideration received pursuant to this
Agreement to the extent not already withheld.
7. You acknowledge and agree that the money and other benefits you will
receive under Paragraph 2(a) and (b) above are in accordance with the Plan and
otherwise are in excess of the money and benefits to which you otherwise would
be entitled, and that the amount of such excess is sufficient consideration to
support the General Release in Paragraph 4 above and all other commitments in
this Agreement.
8. This Agreement and the Plan embody the complete understanding and
agreement between the parties hereto and supersedes any and all prior agreements
between the parties, oral or written, express or implied.
9. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania. You expressly waive any rule or
custom requiring construction against the drafter of the document.
10. If any provision of this Agreement is deemed unlawful or
unenforceable by a court of competent jurisdiction, the remaining provisions
shall continue in full force and effect.
11. You agree and represent that: (a) you have read carefully the terms
of this Agreement, including the General Release; (b) you have had an
opportunity to and have been encouraged and advised to review this Agreement,
including the General Release, with an attorney of your choice, at your expense
regarding the meaning and binding effect of each term of this Agreement prior to
executing this Agreement; (c) you understand the meaning and effect of the terms
of this Agreement, including the General Release; (d) you were given not less
than twenty-one (21) days from today to determine whether you wished to enter
into and execute this Agreement, including the General Release; (e) the entry
into and the execution of this Agreement, including the General Release, is of
your own free and voluntary act without compulsion of any kind; (f) no promise
or inducement not expressed herein has been made to you; and (g) you agree that
any changes to this Agreement, whether material or immaterial, will not restart
the 21 day period described above.
12. Please note that if you sign this Agreement, you will retain the
right to revoke it for seven (7) days. The Agreement shall not be effective
until the revocation period has expired. To revoke this Agreement, you must send
a certified letter to the Board of Directors, Quad Systems Corporation, 0000
Xxxxxxxx Xxxx, Xxxxxx Xxxxx, XX 00000, Attn: Xxxxx X. Xxxxx.
If you agree with the proposed terms set forth above, please sign this letter
indicating your understanding and agreement.
QUAD SYSTEMS CORPORATION
By: /s/ Xxxxx Xxxxx
Xxxxx X. Xxxxx, Director
AGREED, UNDERSTOOD AND ACCEPTED:
/s/ Xxxxx X. Xxxxx List provided to Vah Xxxxxxxx
Xxxxx X. Xxxxx Tues morning for consideration
DWS 3-31-98
3-31-98
Date
Quad Systems Corporation
0000 Xxxxxxxx Xxxx
Xxxxxx Xxxxx, XX
00000
April 7, 1998
HAND DELIVER
Xx. Xxxxx X. Xxxxx
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Re: Amendment to Severance Agreement and General Release
Dear Xxxxx:
In response to your recent requests regarding the March 31, 1998 letter
agreement between Quad Systems Corporation (the "Company") and you (the
"Original Agreement"), the Company, in this letter (the "Amendment") proposes to
amend the Original Agreement as set forth herein. The Amendment incorporates the
Original Agreement and the "Plan" (as defined in the Original Agreement) as
though fully set forth herein. To the extent the terms of the Amendment conflict
with terms of the Original Agreement and the Plan, the terms of the Amendment
shall control. This letter hereby revokes the offers and all other terms
contained in the first letter sent to you on March 31, 1998 after execution of
the Original Agreement, proposing to amend the Original Agreement (the "Proposed
Amendment") and the Proposed Amendment therefore has no further force or effect.
1. Effective March 31, 1998 you have resigned as President and Chief
Executive Officer of the Company and as any other officer of the Company or any
of its subsidiaries or affiliates. You also resigned as a director of the
Company effective on that date. For purposes, however, of salary, benefits and
vesting of stock option grants, your employment otherwise terminated effective
as of 5 p.m. Philadelphia time on April 3, 1998. You may continue to use the
Company cellular phone you have been using, at Company expense, until July 31,
1998.
1. In Paragraph 2(a) of the Original Agreement, the words "twenty-four
(24) weeks" are deleted and replaced with the words "fifty-two (52) weeks,
commencing April 6, 1998." Subject to the provisions of Paragraph 6 of the
Amendment, the last sentence of Section 4.1 of the Plan (under which "Severance
Pay" (as defined in the Plan) need not be paid after you begin full-time
employment) shall not apply to "Severance Pay" (as defined in the Plan) paid to
you under the Original Agreement and the Amendment. Paragraph "A" of the
Original Agreement is hereby amended to be identified as Paragraph "1."
2. Under Paragraph 3 of the Original Agreement, if, during the seven
(7) day period referenced in the Original Agreement, you elect to revoke the
General Release set forth in Paragraph 4 of the Original Agreement and revoke
acceptance of the separation payments and other benefits described in Paragraph
2 of the Original Agreement, you will not receive any of such separation
payments and other benefits and instead, the following will apply to you:
(a) You have the right, after such revocation, to
continue participation in the Company's group health
and dental program at your expense pursuant to and
subject to the requirements and limitations of COBRA.
(You will receive notification of your COBRA rights
under separate cover.)
(b) All other benefits coverage will terminate effective
as of 5 p.m. Philadelphia time on April 3, 1998. You
will be provided with information describing any
rights you may have to convert from group to
individual coverage.
(c) You will receive two (2) weeks' severance pay, covering
the two weeks after the week ending April 3, 1998. No bonus,
commission, options, or other compensation or benefits
otherwise are or will become due; provided, however, that
with respect to deferred compensation as set --------
------- forth in the Company's Supplemental Deferred
Compensation Plan, as amended, and its associated "rabbi"
trust (collectively, the "Deferred Compensation Plan"),
filed as exhibits to the Company's reports to the Securities
and Exchange Commission ("SEC") and of which you have
previously received copies, and with respect to the
Company's 1993 Stock Incentive Plan, as amended (the "Option
Plan") (which Option Plan has been filed as an exhibit to
the Company's periodic reports to the SEC and of which you
have previously received a copy) or any option document
evidencing grants of options made to you under the Option
Plan prior to the date of the Original Agreement and of
which you received copies (collectively, "Options"), your
rights with respect to your termination of employment with
the Company effective April 3, 1998 will be as set forth in
the Deferred Compensation Plan, the Option Plan and the
agreements evidencing the Options (the "Option Documents").
3. In consideration for your undertakings in the Original
Agreement and the Amendment and pursuant to the Plan, and in
addition to your General Release set forth in Paragraph 4 of
the Original Agreement, the Company, intending to be legally
bound, hereby releases and forever discharges you, your
heirs, agents, successors and assigns (collectively
"Releasees"), jointly and severally, from any and all
actions, charges, causes of action or claims of any kind
(collectively, "Claims"), known or unknown, which the
Company, its agents, successors or assigns ever had, have or
thereafter may have against Releasees arising out of any
matter, occurrence or event existing or occurring prior to
the execution of the General Release in the Original
Agreement, including without limitation: any claims relating
to or arising out of your employment with and/or termination
of employment with the Company, except as otherwise provided
in the Original Agreement, the Amendment, the Plan, the
Deferred Compensation Plan, the Option Plan, the Option
Documents or any other document to which you are a party,
regarding benefits or conditions of employment
(collectively, the "Governing Documents").
4. Notwithstanding anything to the contrary set forth in any of the
Original Agreement, the Amendment, the Plan, the Option Plan or any Option
Document, upon execution and acceptance of the Amendment, the Board of
Directors, in exercise of the authority of the Board of Directors under the
Option Plan, hereby amends the Options and the related Option Documents so that
Options that would have vested if you were employed by the Company during the
period from March 31, 1998, up to and including April 3, 1999 (the "Vesting
Termination Date"), if any, shall be treated as though you were employed by the
Company on the Vesting Termination Date. Any such vesting Options shall be
exercisable as "incentive stock options" under the Internal Revenue Code of
1986, as amended (the "Code") (to the extent they otherwise so qualify under the
Code) until June 29, 1998, and from June 30, 1998 until the Vesting Termination
Date, such vesting Options shall be exercisable as options not qualifying as
"incentive stock options," under the Code, until 5 p.m. Philadelphia time on the
Vesting Termination Date.
5. In consideration of the increase in your severance payments set
forth in the Amendment over that set forth in the Original Agreement, and in
consideration of the extension of vesting of Options set forth in this
Amendment, you agree to make yourself reasonably available for and to render
consulting services (collectively, "Consulting Services") to the Company, as an
independent contractor without the authority to bind the Company, with respect
to such matters and as and to the extent the Company and its respective
officers, directors, agents, employees, representatives and consultants may
request, including without limitation, to be of assistance to the Company and to
third parties that contact you or the Company with any interest in concluding
any strategic alliance with the Company or in purchasing all or any portion of
the Company's assets or in making any investment in equity of the Company
representing a 5% or greater interest in the Company or in proposing any merger
between such third party and the Company or any of its subsidiaries
(collectively, "Strategic Alternatives"), it being understood that the Company
may not necessarily engage in any such Strategic Alternative, that no
irretrievable decision regarding any Strategic Alternative has been made by the
Company and that various Strategic Alternatives continue to be considered. Such
Consulting Services shall include providing oral or written reports to the
Company's Board of Directors (or a representative thereof designated by the
Board which the Board may designate and notify you of) regarding any meetings or
communications by or with any such third parties making inquiry with respect to
any Strategic Alternative, whether such third party is identified to you by the
Company or communicates with you directly. You agree that unless otherwise
requested or agreed in advance by the Company's Board of Directors, upon
execution of the Amendment, you will immediately cease all oral or written
communications with current and former employees, customers of, or suppliers to,
the Company (collectively, "Company Contacts"). You agree to render Consulting
Services, to the best of your ability, as a means and for the purpose of seeking
to maximize the value of the Company to its shareholders. Notwithstanding the
second sentence of Paragraph 2 of the Amendment, if at any time a majority of
the Company's Board of Directors, in such majority's sole discretion, determines
that you have failed to provide Consulting Services in compliance with the terms
of this Paragraph 6, or otherwise have failed to comply with any of the terms of
the Original Agreement, the Amendment or any other Governing Document,
including, without limitation, any of: (i) failing to render Consulting Services
and information to third parties exploring Strategic Alternatives as identified
to you by the Company or (ii) failing to report any communications you have or
receive from anyone with any interest in exploring Strategic Alternatives (other
than any current directors or executive officers of the Company) or (iii)
contacting or responding to any Company Contact in any manner deemed unfavorable
to the Company, its officers or directors or its shareholders, or (iv) rendering
Consulting Services in a manner inconsistent with the best interests of the
Company's shareholders or the Company, then upon written notice to you from a
majority of the Board of Directors, (A) the Company will no longer request and
you will cease providing any Consulting Services, (B) the Company will no longer
be required to provide and you will no longer receive any additional "Severance
Pay" (as defined in the Plan) after the date of such notice and (C) all Options
will be governed by the Option Documents and other Governing Documents, with
only such rights as existed thereunder prior to the execution of the Original
Agreement, with none of the amendments set forth in the Original Agreement and
this Amendment, such rights of the Company to cease the payment of Severance Pay
and receipt of Consulting Services not to constitute an election of remedies.
6. You agree that at all times the existence, terms and conditions of
the Original Agreement, as amended by the Amendment (collectively, the
"Agreement") will be kept secret and confidential and will not be disclosed
voluntarily to any third party, except to the extent required by law, to enforce
the Agreement or to obtain confidential legal, tax or financial advice with
respect thereto. You also agree that you will not, in any oral or written form,
make any statements that would adversely affect the business or reputation, or
would otherwise disparage, any of the Company, its products or any of its
current, past or future officers or directors.
7. You agree to pay any and all federal, state and local taxes assessed
against you with respect to any consideration received pursuant to this
Agreement to the extent not already withheld.
8. The Original Agreement, the Amendment, the Plan and all other
Governing Documents embody the complete understanding and agreement between the
parties hereto and supersedes any and all prior agreements between the parties,
oral or written, express or implied.
9. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania. You expressly waive any rule or
custom requiring construction against the drafter of the document.
10. If any provision of this Agreement is deemed unlawful or
unenforceable by a court of competent jurisdiction, the remaining provisions
shall continue in full force and effect.
11. You agree and represent that: (a) you have read carefully the terms
of this Agreement, including the General Release; (b) you have had an
opportunity to and have been encouraged and advised to review this Agreement,
including the General Release, with an attorney of your choice, at your expense
regarding the meaning and binding effect of each term of this Agreement prior to
executing this Agreement; (c) you understand the meaning and effect of the terms
of the General Release contained in Paragraph 4 of the Original Agreement and
the other terms of the Original Agreement and the Amendment; and (d) you have
voluntarily resigned as President, Chief Executive Officer and a director of the
Company and that such resignation was not prompted by any disagreement you had
with the Board of Directors regarding proposed decisions with respect to the
Company other than proposed changes in the certain persons holding office as
executive officers of the Company.
12. This Amendment may be executed in one or more counterparts,
including by facsimile, and once executed by both parties shall be binding upon
both parties, their heirs, successors and assigns.
The Company also hereby notifies you that, notwithstanding any contrary
provisions in the Original Agreement, the Company hereby extends, until 5 p.m.
on April 10, 1998, the seven (7) day period referred to in the Original
Agreement, which was provided to you in compliance with the Older Workers
Benefit and Protection Act, pursuant to which you may revoke your agreement
providing the General Release contained in Paragraph 4 of the Original Agreement
and acceptance of the severance payment and other benefits referred to in the
Original Agreement during such seven (7) day period and that you may exercise
such revocation right by delivering to the Company a notice of such revocation
addressed to the Company and its Board of Directors, no later than 5 p.m. on
April 10, 1998, by hand or by facsimile (with answerback received and telephonic
confirmation to you of receipt of such revocation notice by an executive officer
of the Company or by Xxxxxxxxx Xxxxx).
If you agree with the proposed terms set forth above, please sign this letter
indicating your understanding and agreement.
QUAD SYSTEMS CORPORATION
By: /s/Xxxxx Xxxxx
Xxxxx X. Xxxxx, Director
AGREED, UNDERSTOOD AND ACCEPTED:
/s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
4/17/98
Date
