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[EXHIBIT 10.1]
CONFIDENTIAL SEPARATION AGREEMENT AND GENERAL RELEASE
This Confidential Separation Agreement and General Release
(this "Agreement") is entered into as of March 15, 2000 between Wallace Computer
Services, Inc., a Delaware corporation (the "Company"), and Michael T.
Leatherman (the "Executive").
WHEREAS, the Executive currently serves as Executive Vice
President, Chief Administrative Officer and Chief Financial Officer of the
Company and as a director and officer of subsidiaries of the Company; and
WHEREAS, the Company and the Executive desire to set forth
herein their mutual agreement with respect to all matters relating to (i) the
Executive's resignation as an officer of, and cessation of employment with, the
Company, (ii) the Executive's resignation as a director and officer of
subsidiaries of the Company and (iii) the Executive's release of claims, all
upon the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and
agreements contained herein, the adequacy and sufficiency of which are hereby
acknowledged, the Company and the Executive hereby agree as follows:
1. Resignation; Termination of Employment. The Executive
hereby resigns as Executive Vice President, Chief Administrative Officer and
Chief Financial Officer of the Company, from all directorships and offices of
the Company's subsidiaries, as a member of the Wallace Retirement Plans
Committee, as a trustee of the trusts for the Wallace Computer Services, Inc.
Retirement and Profit Sharing Plan and the Graphic Industries, Inc. Profit
Sharing Plan and from all other positions (if any) with the Company and its
affiliates, effective as of the date hereof (the "Employment Termination Date").
On the Employment Termination Date, the Executive shall cease to be an employee
and officer of, or have any other position with, the Company or its subsidiaries
or any affiliate of the Company or its subsidiaries.
2. Payment of Accrued Obligations. (a) The Company shall pay
all Accrued Obligations (as defined in Section 2(b) hereof) to the Executive as
soon as reasonably practicable following the Employment Termination Date;
provided, however, that any portion of the Accrued Obligations subject to plans
or policies of the Company shall be determined and paid in accordance with the
terms of the relevant plan or policy as applicable to the Executive.
(b) For purposes of this Agreement, "Accrued Obligations"
shall mean, the following:
(i) the Executive's current base salary through the Employment
Termination Date to the extent not theretofore paid;
(ii) the cash balance accrued for the benefit of the Executive
under the Company's Capital Accumulation Plans, which cash balance
currently is $611,637.28 and shall be paid in a lump sum amount as soon
as practicable following the Employment Termination Date;
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(iii) amounts deferred by the Executive pursuant to the
Company's 2000 Capital Accumulation Plan following January 1, 2000,
which amounts shall be returned to the Executive pursuant to the terms
of such plan;
(iv) all benefits which have accrued as of the Employment
Termination Date under the Company's Profit Sharing Plan, which shall
be paid in accordance with the terms of such plan, and under the
Company's Supplemental Profit Sharing Plan, which shall be paid in a
lump sum amount as soon as practicable following the Employment
Termination Date; and
(v) any vacation pay and expense reimbursements accrued by the
Executive as of the Employment Termination Date to the extent not
theretofore paid.
3. Additional Payments and Benefits. Provided that the
Executive has not revoked the release contained in Section 9 hereof, and
provided that the Executive complies with Sections 6 and 7 hereof and complies
in all material respects with Section 13 hereof, the Company shall make the
payments and provide the benefits set forth in this Section 3, it being
understood that if the Executive fails to comply with Section 6 or 7 hereof or
fails to comply with Section 13 hereof in any material respect and if such
failure is not intentional, the Executive shall have 30 days to cure such
failure, to the extent that such failure is subject to cure, and if the
Executive effects such cure within such 30-day period, the Company's obligations
pursuant to this Section 3 shall not be affected by such failure:
(a) As soon as reasonably practicable following the Employment
Termination Date, the Company shall deliver to the Executive the shares of
common stock of the Company accrued for the benefit of the Executive under the
Company's Deferred Executive Incentive Plan, the number of which shares
currently is 7,197;
(b) As soon as reasonably practicable following the Employment
Termination Date, the Company shall pay to the Executive the amount of $133,610,
being the amount determined by subtracting the amount payable pursuant to
Section 2(b)(ii) hereof from the amount the Executive would have received under
the Company's Capital Accumulation Plans if the Executive's employment had
terminated on the Employment Termination Date by reason of retirement;
(c) During the period commencing on the day next following the
Employment Termination Date and ending one year following the Employment
Termination Date, the Company shall pay to the Executive amounts which in the
aggregate are equal to the Executive's current annual base salary, at the rate
of $330,000 per year, payable in bi-weekly installments in accordance with the
Company's regular payroll practices;
(d) As an additional severance benefit, the Company shall pay
to the Executive the aggregate amount of $70,000, such aggregate amount to be
paid in equal bi-weekly installments during the period commencing on the day
next following the Employment Termination Date and ending one year following the
Employment Termination Date, such payments to be made at the time of payment of
the amounts specified in Section 3(c) hereof;
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(e) The medical, dental and vision insurance and life
insurance benefits currently being provided to the Executive by the Company
shall continue to be provided to the Executive by the Company during the period
commencing on the Employment Termination Date and ending one year following the
Employment Termination Date, subject to any modifications thereto applicable to
active employees of the Company. During such period, the Company shall deduct
from amounts payable to the Executive amounts equal to the amounts that would
have been payable by the Executive for such coverage, and at the times such
amounts would have been payable, if the Executive had continued as an active
employee of the Company.
(f) At the time of the payment of bonus amounts, if any, under
the Company's Annual Bonus Plan for the Company's fiscal year ending on July 31,
2000, the Company shall pay to the Executive the amount of the Executive's
bonus, if any, based on the Company's actual results for such fiscal year, with
the individual performance multiplier being one, which annual bonus shall be
prorated by multiplying such annual bonus by a fraction, the numerator of which
is the number of days during the Company's fiscal year ending on July 31, 2000
that the Executive was employed by the Company and the denominator of which is
366;
(g) All stock options granted to the Executive which shall be
outstanding on the Employment Termination Date and shall not have become
exercisable, other than the 62.5% of the performance-based stock options granted
to the Executive on September 5, 1996 that have not become exercisable, shall
become exercisable in full, effective as of the Employment Termination Date, and
the agreement relating to each stock option granted to the Executive and
outstanding on the date hereof shall be amended to provide that the period
during which such stock option may be exercised shall end on the date which is
two years following the Employment Termination Date or on the date of expiration
of such stock option, whichever occurs first, and each such stock option shall
expire if not exercised prior to such date; and
(h) The Company shall pay to the Executive the amount of
$30,000 as soon as practicable following the Employment Termination Date in lieu
of outplacement services.
4. COBRA Coverage. Pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"), the Executive may elect to continue
coverage for the Executive and his dependents under the Company's medical,
dental and vision insurance policies for a period of up to 18 months following
the first anniversary of the Employment Termination Date and the Executive shall
pay all expenses relating to such coverage in accordance with COBRA.
5. Federal and State Withholding. The Company shall deduct
from the amounts payable to the Executive pursuant to this Agreement the amount
of all required federal and state withholding taxes in accordance with the
Executive's Form W-4 on file with the Company and all applicable social security
taxes.
6. Confidentiality. The Executive shall not, at any time, make
use of or disclose, directly or indirectly, any (i) trade secret or other
confidential or secret information of the Company or of any of its subsidiaries
or (ii) other technical, business, proprietary or financial information of the
Company or of any of its subsidiaries not available to the public generally or
to the competitors of the Company or to the competitors of any of its
subsidiaries ("Confidential
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Information"), except to the extent that such Confidential Information (a)
becomes a matter of public record or is published in a newspaper, magazine or
other periodical, or on electronic or other media, available to the general
public, other than as a result of any act or omission of the Executive or (b) is
required to be disclosed by any law, regulation or order of any court or
regulatory commission, department or agency, provided that the Executive gives
prompt notice of such requirement to the Company to enable the Company to seek
an appropriate protective order. Within five days following the Employment
Termination Date, the Executive shall surrender to the Company all records,
memoranda, notes, plans, reports, computer tapes and software and other
documents and data which constitute Confidential Information that he may then
possess or have under his control (together with all copies thereof).
7. Noncompetition; Nonsolicitation. (a) During the period
commencing on the Employment Termination Date and ending one year thereafter,
the Executive shall not, without the prior express written consent of the
Executive Committee of the Board of Directors of the Company, in any manner,
directly or indirectly, through any person, firm or corporation, alone or as a
member of a partnership or as an officer, director, stockholder, investor or
employee of or consultant to any other corporation or enterprise or otherwise,
engage or be engaged, or assist any other person, firm, corporation or
enterprise in engaging or being engaged, in any business, in which the Executive
was involved or had knowledge, being conducted by, or contemplated by, the
Company or any of its subsidiaries as of the Employment Termination Date in any
geographic area in which the Company or any of its subsidiaries is then
conducting such business; provided, however, that the Executive may accept
employment with any diversified corporation or enterprise having a business unit
which competes with the Company and a business unit which does not compete with
the Company if, prior to the acceptance of such employment, the Executive
delivers to the Company a written assurance from such corporation or enterprise
addressed to the Company and satisfactory to the Company that the Executive will
render services exclusively for the business unit which does not compete with
the Company and will not render services, directly or indirectly, for the
business unit which competes with the Company.
(b) During the period commencing on the Employment Termination
Date and ending two years thereafter, the Executive shall not in any manner,
directly or indirectly:
(i) induce or solicit, or attempt to induce or solicit, any
employee of the Company or any of its subsidiaries to leave the employment
thereof or in any way interfere with the relationship of such employee with the
Company or its subsidiaries; or
(ii) induce or solicit, or attempt to induce or solicit, any
customer, supplier, licensee or other individual, corporation or other business
organization having a business relation with the Company or its subsidiaries to
cease doing business with the Company or its subsidiaries or in any way
interfere with the relationship between any such customer, supplier, licensee or
other person and the Company or its subsidiaries.
(c) Nothing in this Section 7 shall prohibit the Executive
from being (i) a stockholder in a mutual fund or a diversified investment
company or (ii) a passive owner of not more than two percent of the outstanding
stock of any class of a corporation, any securities of
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which are publicly traded, so long as the Executive has no active participation
in the business of such corporation.
8. Scope of Covenants; Remedies. The following provisions
shall apply to the covenants of the Executive contained in Sections 6 and 7
hereof:
(a) the covenants contained in Section 6 shall apply on a
worldwide basis, which is the basis on which the Company is actively engaged in
the conduct of its businesses and in which customers are being solicited;
(b) without limiting the right of the Company to pursue all
other legal and equitable remedies available for violation by the Executive of
the covenants contained in Section 6 and 7 hereof, it is expressly agreed by the
Executive and the Company that such other remedies cannot fully compensate the
Company for any such violation and that the Company shall be entitled, in
addition to other rights and remedies existing in its favor, to a restraining
order or orders and other injunctive relief to prevent any such violation or any
continuing violation thereof; and
(c) the Company and the Executive each intends and agrees that
the covenants contained in Sections 6 and 7 hereof are reasonably designed to
protect the Company's legitimate business interests without unnecessarily or
unreasonably restricting the Executive's business opportunities, but that if in
any action before any court or agency legally empowered to enforce the covenants
contained in Sections 6 and 7 hereof any term, restriction, covenant or promise
contained therein is found to be unreasonable and accordingly unenforceable,
then such term, restriction, covenant or promise shall be deemed modified to the
extent necessary to make it enforceable by such court or agency.
(d) the Executive agrees that he will submit himself to the
personal jurisdiction of the courts of the State of Illinois in any action by
the Company to obtain injunctive or other relief.
9. General Release. The Executive, on behalf of himself and
anyone claiming through him, hereby agrees not to sue the Company or any of its
divisions, subsidiaries, affiliates or other related entities (whether or not
such entities are wholly owned) or any of the past, present or future directors,
officers, administrators, trustees, fiduciaries, employees, agents or attorneys
of the Company or any of such other entities, or the predecessors, successors or
assigns of any of them (hereinafter referred to as the "Released Parties"), and
agrees to release and discharge, fully, finally and forever, the Released
Parties from any and all claims, causes of action, lawsuits, liabilities, debts,
accounts, covenants, contracts, controversies, agreements, promises, sums of
money, damages, judgments and demands of any nature whatsoever, in law or in
equity, both known and unknown, asserted or not asserted, foreseen or
unforeseen, which the Executive ever had or may presently have against any of
the Released Parties arising from the beginning of time up to and including the
effective date of this Agreement, including, without limitation, all matters in
any way related to the Executive's employment by the Company or any of its
affiliates, the terms and conditions thereof, any failure to promote the
Executive and the termination or cessation of the Executive's employment with
the Company or any of its
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affiliates, and including, without limitation, any and all claims arising under
the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, the
Civil Rights Act of 1866, the Age Discrimination in Employment Act, the Older
Workers' Benefit Protection Act, the Family and Medical Leave Act, the Americans
With Disabilities Act, the Employee Retirement Income Security Act of 1974, the
Illinois Human Rights Act, the Chicago or Cook County Human Rights Ordinance or
any other federal, state, local or foreign statute, regulation, ordinance or
order, or pursuant to any common law doctrine; provided, however, that nothing
contained in this Section 9 shall apply to, or release the Company from, any
obligation of the Company (i) contained in this Agreement or in any benefit plan
of the Company in which the Executive participates or (ii) to indemnify the
Executive pursuant to the Company's certificate of incorporation or by-laws or
the Indemnification Agreement with Officer between the Company and the Executive
dated September 12, 1990 and the Addendum thereto dated as of November 4, 1998.
The consideration offered herein is accepted by the Executive as being in full
accord, satisfaction, compromise and settlement of any and all claims or
potential claims, and the Executive expressly agrees that he is not entitled to,
and shall not receive, any further recovery of any kind from the Company or any
of the other Released Parties, and that in the event of any further proceedings
whatsoever based upon any matter released herein, neither the Company nor any of
the other Released Parties shall have any further monetary or other obligation
of any kind to the Executive, including any obligation for any costs, expenses
or attorneys' fees incurred by or on behalf of the Executive. The Executive
agrees that he has no present or future right to employment with the Company or
any of the other Released Parties and that he will not apply for or otherwise
seek employment with any of them.
10. Authority. The Executive expressly represents and warrants
that he is the sole owner of the actual and alleged claims, demands, rights,
causes of action and other matters that are released herein; that the same have
not been transferred or assigned or caused to be transferred or assigned to any
other person, firm, corporation or other legal entity; and that he has the full
right and power to grant, execute and deliver the general release, undertakings
and agreements contained herein.
11. Nondisparagement. (a) The Executive shall refrain from all
conduct and statements, verbal or otherwise, that disparage or damage or could
disparage or damage the reputation, goodwill or standing in the community of the
Company or any of the other Released Parties; provided, however, that this
Section 11(a) shall not apply to conduct or statements of the Executive with
respect to a Released Party who on the date hereof is a director or corporate
officer of the Company if such conduct occurs or such statements are made after
such Released Party ceases to be a director or corporate officer of the Company.
(b) The Company covenants to the Executive that each director
of the Company and each corporate officer of the Company, so long as such person
is a director or corporate officer of the Company, shall refrain from all
conduct and statements, verbal or otherwise, that disparage or damage or could
disparage or damage the reputation, goodwill or standing in the community of the
Executive.
(c) Except for confirming the Executive's dates of employment
and job title or as otherwise required by law, the Company shall respond to any
inquiry regarding the
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Executive's cessation of employment with the Company in a manner which is in
substantial conformity with the letter of reference attached hereto as Exhibit
A.
12. Nondisclosure. The Executive agrees that unless and until
the Company discloses the terms of this Agreement to the public, the Executive
will not disclose the existence or terms of this Agreement to any third party,
except his accountants, attorneys and spouse, each of whom shall be bound by
this nondisclosure provision, or as may be required to comply with legal
process; provided, however, that the Executive shall be entitled to disclose
fully the terms of Sections 6, 7 and 8 hereof to any employer or prospective
employer of the Executive. If a person not a party to this Agreement requests or
demands, by subpoena or otherwise, that the Executive disclose or produce this
Agreement or any terms or conditions hereof prior to the public disclosure
thereof by the Company, the Executive shall immediately notify the Company and
shall give the Company an opportunity to respond to such notice before taking
any action or making any decision in connection with such request or subpoena.
The Executive understands and agrees that this nondisclosure requirement is a
material inducement to the Company to enter into this Agreement.
13. Cooperation. For the period commencing on the Employment
Termination Date and ending one year following the Employment Termination Date,
the Executive shall be reasonably available to the Company to respond to
requests by the Company for information pertaining to or relating to the Company
and its affiliates which may be within the knowledge of the Executive. The
Executive will cooperate fully with the Company in connection with any and all
existing or future litigation brought by or against the Company or any of its
affiliates, to the extent the Company reasonably deems the Executive's
cooperation necessary. The Executive understands that he may be required to
devote up to three days during each month of such one-year period to the
fulfillment of his obligations under this Section 13, provided that the devotion
of such time does not unreasonably interfere with the Executive's subsequent
employment and, provided further, that if the Executive, at the request of the
Company, devotes more than 10 days during such one-year period to the
fulfillment of such obligations, the Company will pay the Executive at the rate
of $165 per hour during each day in excess of such 10 days that the Executive is
required to fulfill such obligations. The Company also shall reimburse the
Executive for any reasonable out-of-pocket expenses incurred as a result of such
cooperation.
14. Successors; Binding Agreement. This Agreement shall inure
to the benefit of and be enforceable by the Executive and by his personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. In the event of the death of the Executive
while any amounts are payable to the Executive hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to such person or persons designated in writing by the Executive
to receive such amounts or, if no person is so designated, to the Executive's
estate.
15. Notices. All notices and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given by a party hereto when delivered personally or by overnight
courier or five days after deposit in the United States mail, postage prepaid to
the following address of the other party hereto (or to such other address of
such other party as shall be furnished in accordance herewith):
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If to the Company, to:
Wallace Computer Services, Inc.
2275 Cabot Drive
Lisle, Illinois 60532-3630
Attention: Chairman of the Board
with a copy to:
Wallace Computer Services, Inc.
2275 Cabot Drive
Lisle, Illinois 60532-3630
Attention: General Counsel
If to the Executive, to:
Mr. Michael T. Leatherman
17407 South Mulberry
Tinley Park, Illinois 60477
with a copy to:
Roger C. Siske, Esq.
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
16. Governing Law; Validity. The interpretation, construction
and performance of this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Illinois without
regard to the principle of conflicts of laws.
17. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original and both of which
together shall constitute one and the same instrument.
18. Miscellaneous. No provision of this Agreement may be
modified or waived unless such modification or waiver is agreed to in writing
and executed by the Executive and by a duly authorized officer of the Company.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. Failure by the Executive or the Company to insist upon strict compliance
with any provision of this Agreement or to assert any right which the Executive
or the Company may have hereunder shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
19. No Admission. Nothing in this Agreement is intended to, or
shall be construed as, an admission by the Company or any of the other Released
Parties that it violated
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any law, interfered with any right, breached any obligation or otherwise engaged
in any improper or illegal conduct with respect to the Executive or otherwise.
The Company, for itself and the other Released Parties, hereby expressly denies
any such illegal or wrongful conduct.
20. ACKNOWLEDGMENT BY EXECUTIVE. BY EXECUTING THIS AGREEMENT,
THE EXECUTIVE EXPRESSLY ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT CAREFULLY,
THAT HE FULLY UNDERSTANDS ITS TERMS AND CONDITIONS, THAT HE HAS BEEN ADVISED TO
CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS AGREEMENT, THAT HE HAS BEEN
ADVISED THAT HE HAS 45 DAYS WITHIN WHICH TO DECIDE WHETHER OR NOT TO EXECUTE
THIS AGREEMENT AND THAT HE INTENDS TO BE LEGALLY BOUND BY IT. DURING A PERIOD OF
SEVEN DAYS FOLLOWING THE DATE OF HIS EXECUTION OF THIS AGREEMENT, THE EXECUTIVE
SHALL HAVE THE RIGHT TO REVOKE THE RELEASE CONTAINED IN SECTION 9 OF THIS
AGREEMENT OF CLAIMS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT BY SERVING
WITHIN SUCH PERIOD WRITTEN NOTICE OF REVOCATION. IF THE EXECUTIVE EXERCISES HIS
RIGHTS UNDER THE PRECEDING SENTENCE, HE SHALL FORFEIT ALL AMOUNTS PAYABLE TO HIM
PURSUANT TO SECTION 3 OF THIS AGREEMENT.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by a duly authorized officer of the Company and the Executive has
executed this Agreement as of the day and year first above written.
WALLACE COMPUTER SERVICES, INC.
By_________________________________
EXECUTIVE:
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Michael T. Leatherman
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EXHIBIT A
LETTER OF REFERENCE
To whom it may concern:
This will confirm that Michael T. Leatherman resigned as Executive Vice
President and Chief Financial officer of Wallace Computer Services, Inc., by
mutual agreement effective March 15, 2000.
Wallace Computer Services, Inc.
By______________________________
A-1
