MUTUAL SEPARATION AGREEMENT
Exhibit
10.1
THIS
MUTUAL SEPARATION AGREEMENT (this
“Agreement”), is entered into by and among Xxxxx Xxxxxxx (hereinafter, the
“Executive”), Entertainment Distribution Company, Inc. (formerly, Glenayre
Technologies, Inc.), a Delaware corporation (the “Company”), Glenayre
Electronics, Inc., a Delaware corporation and subsidiary of the Company (“GEI”),
and Entertainment Distribution Company, LLC, a Delaware limited liability
company and subsidiary of the Company (“LLC”).
WHEREAS,
GEI, LLC and
Executive are parties to that certain Letter Agreement dated May 9, 2005
regarding Executive’s employment by LLC, as amended by that certain Letter
Agreement dated November 6, 2006 among the Company, GEI and Executive
regarding Executive’s employment by the Company and GEI (as so amended, the
“Employment Agreement”);
WHEREAS,
the Executive
is currently employed as (i) President and Chief Executive Officer of the
Company and serves as a Director on the Company’s board of directors (the
“Board”), (ii) President and Chief Executive Officer of GEI, (iii) President and
Chief Executive Officer of LLC and serves as a Director on LLC’s board of
directors (the “LLC Board”), and (iv) serves as a director of Entertainment
Distribution Holding GMBH and/or Entertainment Distribution Company GMBH
(collectively, “GMBH”);
WHEREAS,
the Company,
GEI and LLC together with Executive have mutually agreed that it is
in their respective best interests to bring the employment of the Executive
to
an end, in accordance with the term and conditions of this Agreement;
and
WHEREAS,
the parties
wish to set forth their mutual understanding concerning Executive’s
(i) separation from employment with each of the Company, GEI and the LLC
and (ii) continuing role as a non-executive member of the LLC
Board, including with respect to the continuation of compensation,
benefits and the other matters set forth herein.
NOW,
THEREFORE, in
consideration of the foregoing and of the mutual covenants and agreements
set
forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Effective
Date. The Executive’s last day of
employment as President and Chief Executive Officer of each of the Company,
GEI
and LLC shall be November 5, 2007 (the “Effective Date”). On the
Effective Date, Executive shall also cease to serve as a member of the Board
and
as a director of GMBH and in any other capacity with the Company’s subsidiaries
and affiliates, except as set forth in Section 2 of this Agreement.
2. Role
at LLC. From and after the Effective
Date and until termination of this Agreement pursuant to Section 7 hereof,
Executive shall continue on the LLC Board serving as non-executive
Chairman. During the term hereof, Executive shall devote his business
attention and ability to the performance of his duties as non-executive
Chairman, and shall not seek or obtain any other employment or perform any
services for or on behalf of any other person or entity; provided that Executive
may continue to serve on the Board of Directors of The XX Xxxxxx
Foundation.
3. Consideration. In
consideration of the Executive’s agreement to terminate his employment with the
Company, GEI, LLC and their affiliates and in consideration of his continuing
role as non-executive Chairman of the LLC Board, the Executive shall receive
the
payments and benefits described in this Section 3. The Executive
acknowledges and agrees that the payment and benefits provided in this Section
3
are in full satisfaction of any amounts provided for in the
Employment
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Agreement,
and are conditioned upon the Executive’s execution and non-revocation of this
Agreement. The Executive acknowledges and agrees that he is not
entitled to, and will not receive, any wage, commission, bonus, vacation,
sick,
personal, severance, expense, or other reimbursement or other payments or
benefits from the Company, LLC or any of their affiliates, other than those
provided in this Section 3. This Agreement supersedes and replaces
all provisions of the Employment Agreement relating to compensation, benefits
and severance.
a. Cash
Compensation. In consideration for execution of this
Agreement and Executive’s continued service as non-executive Chairman of the LLC
Board, the Company shall make to Executive (i) eight semi-monthly payments
of
$31,250 commencing on the regular payroll date on or about November 15, 2007
and
continuing on the same and last payroll day of November, 2007 and each of
the
succeeding and ensuing three calendar months thereafter, (ii) a single payment
of $62,500 on or before March 15, 2008, and (iii) a lump sum payment of $687,500
on the first payroll payment date in January 2008 (collectively the “Installment
Payments”). In addition, on or before November 15, 2007, the Company
shall make a final payment of accrued salary through November 2, 2007, accrued
but unused vacation up to $40,000 and any related 401(k) matching contribution
to Executive accrued and owed to Executive in connection with his employment
for
any period prior to, through and including November 2, 2007. Further,
within ten days after Executive’s submission of supporting evidence of the same,
the Company shall reimburse Executive for all expenses incurred by Executive
in
connection with his employment for any period prior to, through and including
the Effective Date, so long as such expenses conform to the Company’s
reimbursement policy described in Section 6 below. In addition to the
foregoing, Executive shall remain entitled to receive all accrued and vested
benefits owed to Executive under each of the Company's 401(k) plan and
deferred compensation plan, which benefits shall remain payable in accordance
with the terms of the governing plan under which such benefits are
provided.
b. Acceleration
of Payments. In the event that there is a sale or disposition of
all or substantially all of the assets of the Company or LLC, or a sale or
disposition of a majority of the outstanding equity of LLC, in either case
prior
to March 15, 2008, within two (2) weeks following the closing of any such
event,
the Company shall pay to Executive all Installment Payments remaining to
be paid
under Section 3a. above.
c. Health
Insurance Program. Notwithstanding anything to the contrary
contained in any of the Company’s health and welfare plans or other health
insurance programs (collectively, the “Health Insurance Program”), following the
Effective Date through October 31, 2008, the Executive and his dependent
family
members currently participating in such program shall continue to participate
pursuant to elections made prior to the Effective Date in the Company’s Health
Insurance Program as though the Executive was employed by the Company, at
the
Company’s expense, or if such continued participation is not permitted by the
Health Insurance Program, the Company shall pay the cost of Executive’s
continued participation in such program pursuant the Consolidated Omnibus
Budget
Reconciliation Act of 1985 (COBRA) through October 31, 2008. Subject
to the foregoing, it is the parties’ intent that Executive’s right to elect to
continue coverage for himself and his dependent family members under the
Health
Insurance Program pursuant to COBRA shall occur, commence and continue as
measured from and after March 15, 2008.
4. Withholding
Taxes. The Company reserves the right to withhold
applicable taxes from any amounts paid pursuant to this Agreement to the
extent
required by law. The Executive shall be responsible for any and all
tax liability imposed on amounts paid hereunder.
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5. Provision
of Office Space and
Equipment. During the term of this Agreement, the
Executive shall be provided with office space in the Company’s New York office
and office equipment, including, without limitation, a laptop, Blackberry
and
email access, in each case, sufficient to enable the Executive to perform
his
duties as non-executive Chairman of the LLC Board. Such office space
shall be provided for Executive’s use, although Executive may choose to work
from an alternative location so long as Executive makes himself available
to the
Company as required to satisfy his obligations under Section 2
hereof.
6. Expense
Reimbursement. During the term of this Agreement, LLC
shall reimburse Executive for entertainment expenses incurred by him in his
capacity as non-executive Chairman so long as such expenses are incurred
and
approved in accordance with the Company’s expense reimbursement policy, as
modified on September 2, 2007 and any individual expense exceeding $1,000
has
been pre-approved by the Chief Executive Officer of the Company.
7. Term. This
Agreement and Executive’s service as non-executive Chairman of the LLC Board
shall terminate upon the earlier to occur of (i) the five month anniversary
of
the date of this Agreement, or (ii) a sale or disposition described in Section
3b. of this Agreement, subject to satisfaction of any payments required by
Sections 3 of this Agreement.
8. Representations
and Promises: The Executive
acknowledges and agrees that:
a. This
Agreement is the entire agreement relating to Executive’s service with the
Company, GEI, and LLC and any claims or future rights that Executive might
have
with respect to the Company, GEL and LLC, except as expressly set forth or
referenced herein. This Agreement may be amended only by a written
agreement that is signed by all of the parties hereto. This Agreement
is a legally admissible, enforceable agreement governed by Federal law and
the
laws of New York.
b. When
Executive decided to sign this Agreement, Executive was not relying on any
representations that were not in this Agreement.
c. Executive
has not suffered any job-related wrongs or injuries, such as any type of
discrimination, for which Executive might still be entitled to compensation
or
relief in the future. Executive has properly reported all hours that
Executive has worked and Executive has been paid all wages, overtime,
commissions, compensation, benefits, and other amounts that the Company or
any
LLC should have paid Executive in the past.
d. If
the Company, LLC or Executive successfully asserts that any provision in
this
Agreement is void, the rest of the Agreement shall remain valid and enforceable
unless the other party to this Agreement elects to cancel it. If this
Agreement is cancelled by Executive, Executive will repay the consideration
and
other benefits Executive received for signing it.
e. If
Executive initially did not think any representation Executive is making
in this
Agreement was true or if Executive initially was uncomfortable making it,
Executive has resolved all of his doubts and concerns before signing this
Agreement. Executive has carefully read this Agreement, fully
understands what it means, is entering into it knowingly and voluntarily,
and
all of Executive’s representations in it are true. The Company would
not have given Executive the consideration or other benefits Executive is
getting in exchange for this Agreement but for Executive’s representations and
promises which Executive is making by signing it.
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f. Executive
has been given sufficient time to review this Agreement and has read and
understand the terms of this Agreement and has voluntarily accepted these
terms. Executive has consulted with an attorney prior to executing
this Agreement.
9. Return
of Company Property. On or before the termination date
set forth pursuant to Section 7 hereof and except as otherwise provided under
Section 3(d) of this Agreement, the Executive will return to the Company
(i) all
files, documents, records, and copies of the foregoing (whether in hard or
electronic form), (ii) any other any real, intellectual and/or other property
belonging to the Company or LLC or materials containing the Company’s or LLC’s
confidential information in the Executive’s possession or control and (iii) any
other Company or LLC property requested by the Company.
10. Communication. Executive
agrees to refrain from making any disparaging, derogatory or negative statements
about the Company, GEI, LLC or any of their affiliates, or any of their past
or
present officers, directors, agents or employees. The Company, GEI
and LLC agree to refrain from making and agree to cause their present officers,
directors, agents or employees to refrain from making any disparaging,
derogatory or negative statements about Executive. In addition, the
Company shall provide Executive with a copy of any public announcement,
disclosure, statement or other communication (including the Form 8-K to be
filed
by the Company upon execution of this Agreement) concerning Executive’s prior
relationship with or separation from service from any one or more of Company,
GEI, LLC or GMBH, prior to its release or filing with the Securities and
Exchange Commission.
11. Confidential
Information. Executive acknowledges that, in connection
with his employment, Executive has acquired or had access to non-public
information that the Company and LLC treat as proprietary or confidential,
including, without limitation, information relating to the Company’s and LLC’s
business, operations, assets, investments and strategic plans. Executive
agrees
to maintain the confidentiality of such information and not disclose or make
such information available to any third party, without the prior written
consent
of the Company. All such confidential information shall continue to
be subject to the restrictions and exceptions set forth in Section 4 of the
Employment Agreement, which section shall continue in full force and effect
in
accordance with the terms thereof following execution of this
Agreement.
12. Ownership
Interests in LLC. The parties acknowledge that Executive
owns certain “Class B Units,” “Tier One Profits Interests,” “Tier Two Profits
Interests” and “Tier Three Profits Interests” (each as identified or defined
under the Employment Agreement (including in particular Section 3(j) thereof)
and the LLC Agreement and all being collectively referred to herein as the
“Subject LLC Interests”) in the LLC which were previously or are currently
acquired, held or issued in Executive’s name. The parties
acknowledged that Executive has met the conditions set forth in Section 3(j)
of
the Employment Agreement with respect to the vesting of the Subject LLC
Interests referenced in such Section 3(j). Nothing in this Agreement
shall impair, amend, alter or in any way affect Executive’s continuing ownership
of the Subject LLC Interests or Executive’s continuing rights under the LLC
Agreement, the provisions of that certain letter agreement dated May 31,
2005
from GEI pertaining to such Subject LLC Interests, any provisions of the
Employment Agreement relating to such Subject LLC Interests and any other
written agreements relating thereto.
13. Continuation
of Certain Terms of Employment Agreement. The parties
acknowledge that the confidential information, non-competition and
non-solicitation and ownership of intellectual property provisions set forth
in
Sections 4, 5 and 6 of the Employment Agreement shall continue in full force
and
effect in accordance with the terms thereof.
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14. Effect
on other Documents and
Agreements. Nothing in this Agreement shall impair,
alter or in any way affect either (i) the provisions of any one or more
of that certain Limited Liability Company Agreement of Entertainment
Distribution Company, LLC dated effective March 17, 2005 or the articles
of
formation, by-laws or other governing constituent documents for any one or
more of the Company, GEI, LLC, or GMBH (collectively the "Companies") including,
without limit, any provisions extending any rights of indemnification or
defense
to Executive in his capacity as an employee, officer, director, representative,
agent or fiduciary of any of the Companies or (ii) Executive's right to
receive coverage under, and in accordance with the terms of,
the liability insurance policies, if any, currently maintained by any one
or more of the Companies for the benefit of their past or present
employees, officers, directors, representatives, agents or fiduciaries, as
such
policies shall be amended, modified or otherwise altered by the Companies
from
time to time.
15. Remedies
for Early Termination. If the
Company terminates Executive’s position as non-executive Chairman on the LLC
Board prior to the termination of this Agreement pursuant to Section 7 of
this
Agreement, the Company shall promptly make all remaining payments required
to be
made to Executive pursuant to Section 3 of this Agreement, or if necessary
to
continue to qualify for exclusion from the provisions of Rule 409A of the
Internal Revenue Code, shall continue to make such payments on the schedule
set
forth in Section 3 of this Agreement. If Executive terminates his
position as non-executive Chairman on the LLC Board prior to the termination
of
this Agreement pursuant to Section 7 of this Agreement, the Company shall
have
no further obligation to make any payments to Executive pursuant to Section
3 of
this Agreement from the date of such termination.
16. Acknowledgement. The
Executive acknowledges that he has read this Agreement, fully understands
its
content and effect, and without duress or coercion, knowingly and voluntarily
assents to its terms.
17. Miscellaneous. This
Agreement shall be subject to and governed by the laws of the State of New
York. This Agreement constitutes the entire agreement between the
parties and supersedes all previous communications between the parties with
respect to the subject matter of this Agreement. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. No amendment to this
Agreement shall be binding upon either party unless in writing and signed
by or
on behalf of such party. This Agreement may be executed in
counterparts, each of which shall be binding on the parties and have the
full
legal effect of the original.
[Signatures
contained on the following page.]
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IN
WITNESS WHEREOF,
the parties hereto have executed or caused to be executed this Agreement
on the
respective dates specified below.
| /s/ Xxxxx Xxxxxxx | ||
| XXXXX XXXXXXX | ||
| Date: November 5, 2007 |
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COUNTERPART
SIGNATURE PAGE
| ENTERTAINMENT DISTRIBUTION COMPANY, INC. | ||
| By: /s/ Xxxxxx X. Xxxxxx | ||
| Name: Xxxxxx X. Xxxxxx | ||
| Title: Chairman | ||
| Date: November 5, 2007 |
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COUNTERPART
SIGNATURE
PAGE
| GLENAYRE ELECTRONICS, INC. | ||
| By: /s/ Xxxxxx X. Xxxxxx | ||
| Name: Xxxxxx X. Xxxxxx | ||
| Title: Chairman | ||
| Date: November 5, 2007 |
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COUNTERPART
SIGNATURE
PAGE
| ENTERTAINMENT DISTRIBUTION COMPANY, LLC | ||
| By: /s/ Xxxxxx X. Xxxxxx | ||
| Name: Xxxxxx X. Xxxxxx | ||
| Title: Chairman | ||
| Date: November 5, 2007 |
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